Spiegel v. Ontario (Superintendent Financial Services), 2019 ONFST 2

FINANCIAL SERVICES TRIBUNAL

Citation: Spiegel v. Ontario (Superintendent Financial Services), 2019 ONFST 2 FST File No.: IA728-2017 Date: 2019/01/17

IN THE MATTER OF the Insurance Act, R.S.O. 1990, c. I.8, as amended (the "Act"), in particular sections 392.4(4) and 407.1;

AND IN THE MATTER OF the Notice of Proposal to Issue a Licence with Conditions, dated March 10, 2017 against Roland Spiegel, issued by the Director, Licensing Branch by delegated authority from the Superintendent of Financial Services;

AND IN THE MATTER OF a Hearing in accordance with subsection 407.1(3) of the Act.

B E T W E E N:

ROLAND SPIEGEL

APPLICANT

and

SUPERINTENDENT OF FINANCIAL SERVICES

RESPONDENT

BEFORE:

Audrey Mak – Chair of the Panel and Member of the Tribunal

Ian McSweeney – Member of the Panel and Chair of the Tribunal

Paul Farley – Member of the Panel and Member of the Tribunal

APPEARANCES:

For the Applicant – Self-represented

For the Superintendent of Financial Services – Ms. Deborah McPhail

DATE HEARD: September 20, 2018

REASONS FOR DECISION

I. INTRODUCTION

1Mr. Spiegel (the "Applicant") was licensed as a paralegal in 2008 with the Law Society of Upper Canada, now the Law Society of Ontario (hereinafter called the "Law Society").

2On December 11, 2014, the Law Society issued an Amended Notice of Application alleging that the Applicant engaged in professional misconduct and conduct unbecoming of a licensed paralegal.

3On July 20, 2016, the Applicant applied to the Superintendent of Financial Services (the "Superintendent") for an insurance agent licence.

4On March 10, 2017, the Superintendent issued a Notice of Proposal to Issue Licence with Conditions ("NOP") to the Applicant. Two conditions were proposed in the NOP. The first condition required the Applicant to arrange for enhanced supervision of his life insurance activities for two years. The second condition required the Applicant to provide a copy of the Law Society Tribunal's decision in respect of the allegations against the Applicant (the "Law Society Decision") to the Superintendent within 24 hours of having notice of it.

5The Applicant filed a Request for Hearing pursuant to subsection 407.1(3) of the Act on March 20, 2017.

6The Law Society Decision was issued on September 15, 2017. The Law Society Tribunal concluded that the Applicant engaged in professional misconduct contrary to specific provisions of the Paralegal Rules of Conduct and the Law Society Act.

7The Law Society Tribunal conducted a hearing with respect to penalty on November 7, 2017. The decision and the order of the Law Society Tribunal on penalty were both released on May 8, 2018 (collectively, the "Penalty Decision and Order"). The Law Society Tribunal ordered that the Applicant's paralegal licence be revoked effective immediately and that he pay costs to the Law Society in the amount of $175,000, to bear interest at 3% per year, if the costs or any portion were not paid within one year.

8The Applicant is appealing the Law Society Decision, and the Penalty Decision and Order (collectively referred to as the "Law Society Decisions").

9The Applicant has chosen to be self-represented in this proceeding.

10A six-day hearing was originally scheduled for this proceeding. Upon the Applicant's request (at the pre-hearing conference held on October 26, 2017), the six-day hearing was changed to six half days. At the pre-hearing conference on April 24, 2018 (after the determination of the Applicant's motion for particulars described below in Part III), the parties agreed to reduce the hearing to four half days. On August 31, 2018, the parties agreed that two half hearings days would be sufficient.

11The parties did not file an Agreed Statement of Facts nor an Agreed Book of Documents prior to the hearing.

12The hearing on September 20, 2018 was focussed on issues relating to the documents and evidence to be filed and admitted for this proceeding.

13After considering the submissions of the parties, we ordered that the Law Society allegations and the Law Society Decisions be admitted as evidence. We also ordered that the hearing be adjourned sine die until the Law Society Tribunal Appeal Division ("LST Appeal Division") has issued its decision on Mr. Spiegel's appeal of the Law Society Decisions. The written reasons for our decision are set out below.

II. Issues

14At the pre-hearing conference held on May 16, 2017, the parties agreed that the issues to be determined are as follows:

(a) Did the Applicant satisfy the requirements for qualification for a licence as enumerated in subsection 4(1) of Ontario Regulation 347/04? Specifically, is the Applicant of good character and reputation or otherwise a suitable person to receive a licence without conditions?

(b) If the answer to question (a) is no, is a licence with the conditions proposed in the NOP to Issue Licence with Conditions appropriate to be issued to the Applicant so as to ensure the protection of the public and to maintain public confidence in the regulated sectors?

(c) If the answer to question (b) is no, what conditions should be attached to any licence that might be issued to the Applicant?

15At the hearing, in her opening statement, Ms. McPhail noted that the second condition that was attached to the NOP (i.e., the Applicant was required to provide a copy of the Law Society Decision to the Superintendent within 24 hours of having notice of it) is now moot. The Superintendent did not become aware of the decision from Mr. Spiegel but through other means.

16Ms. McPhail also stated that in light of the severity of the Law Society Decisions, the Superintendent will be arguing that the Applicant should no longer be entitled to a conditional insurance agent licence, but rather, he should not be granted a licence at all.

III. BACKGROUND AND CONTEXT

17Between the date that the Request for Hearing was filed by the Applicant (i.e., March 20, 2017) and the date of this hearing, six pre-hearing conferences were held, and three motion decisions were issued. Details of the three motions and are set out below.

A. Motion 1 - Disclosure

18In the first motion brought by the Applicant, among several other requests, the Applicant asked for an order requiring the Superintendent to disclose and produce numerous unspecified documents, communications and materials from before 2005 and onward, relating to past investigations, actions or measures undertaken by the Superintendent resulting from complaints made to the Financial Services Commission of Ontario ("FSCO") in respect of the Applicant's activities as a statutory accident benefits representative ("SABS Representative") and a healthcare services provider.¹

19In a decision dated August 31, 2017, with some specific exceptions set out therein, we denied this particular disclosure request of the Applicant (the "Disclosure Motion Decision").²

B. Motion 2 - Adjournment

20The second motion was brought by the Superintendent after the Law Society Decision was issued and the Superintendent became aware of the Applicant's appeal of that decision. The Superintendent requested an order to adjourn the hearing dates in this proceeding sine die until the Applicant's proceeding before the Law Society, and any subsequent appellate or review proceedings that flow from it (collectively, the "Law Society Proceeding") are finalized. The Superintendent argued that if this hearing were to proceed before the Law Society Proceeding was concluded, the hearing would be premature and the issues in the hearing might be moot.

21The Applicant opposed the Superintendent's request for adjournment.

22Based on the submissions put forth by the parties at the time, we rejected the Superintendent's arguments and dismissed the Superintendent's motion in a decision dated January 17, 2018 (the "Adjournment Motion Decision").³

C. Motion 3 - Particulars

23The third motion was brought by the Applicant. He requested an order requiring the Superintendent to provide him with particulars of the evidence from the Law Society Proceeding on which the Superintendent intended to rely (for purposes of this proceeding), and the grounds for the NOP (and in particular, grounds for any allegations that the Applicant is not of "good character and reputation"). The Superintendent submitted that he does not intend to re-litigate any of the evidence from the Law Society hearing or call any of the witnesses or submit any document other than the Law Society allegations and the Law Society Decision, which the Superintendent says on their face support the Superintendent's case.

24In a decision dated April 12, 2018 (the "Particulars Motion Decision"), we dismissed the Applicant's motion. As stated in that decision, the Superintendent has been transparent as to the grounds of the NOP: the Law Society Proceeding "as a whole" (as opposed to any particular evidence therefrom) and the fact that the Law Society Decision exists. The Tribunal has no authority to order the Superintendent to adduce certain evidence or to rely on certain particulars stemming from the Law Society allegations for purposes of the NOP and the hearing. It is up to the Superintendent to call the evidence he chooses to call in support of the NOP and the findings he is urging the Tribunal to reach. Accordingly, there were simply no such particulars of evidence to be provided to the Applicant.⁴

IV. HEARING

A. Documents

25At the outset of the hearing, we led the parties through the documents that had been filed for the hearing, to mark them as exhibits. At the end of that process, the parties were asked if any other documents (that had already been shared between the parties before the hearing) should be included and marked as exhibits.

26Mr. Spiegel submitted that all materials and communications between himself and the Superintendent from before 2005 relating to Mr. Spiegel's activities as a SABS Representative and healthcare services provider, and the Superintendent's "scrutiny" of such activities (collectively, the "Prior Superintendent Materials"), have not been, but should be, in Mr. Spiegel's view, included as exhibits for purposes of this hearing. Mr. Spiegel did not share any of these documents with Ms. McPhail prior to the hearing as part of the required disclosure and production process. In addition, he did not have copies of such documents with him to submit as evidence at the hearing. Mr. Spiegel said he assumed Ms. McPhail already had copies of the Prior Superintendent Materials (and as such he did not need to disclose them prior to the hearing); he also assumed that these documents would have already been shared with the Tribunal by the Superintendent.

27We explained to Mr. Spiegel that if he would like to put the Prior Superintendent Materials before us to consider as evidence for the hearing, it is up to Mr. Spiegel, and not Ms. McPhail, to attempt to file these documents. Ms. McPhail submitted that the Superintendent is not relying on any of the Prior Superintendent Materials as evidence for the hearing and as such, she has not filed any of these documents with the Tribunal. Ms. McPhail also submitted that the Superintendent has made it clear to Mr. Spiegel for some time that the Superintendent's case will rely only on the Law Society allegations and the Law Society Decision itself. As we stated in the Particulars Motion Decision, the Superintendent cannot be ordered to submit evidence (e.g., any of the Prior Superintendent Materials) that the Superintendent does not wish the Tribunal to consider as a part of the Superintendent's case.⁵

28Mr. Spiegel submitted that he is not able to file all the Prior Superintendent Materials with the Tribunal (as he does not have them all) and that the Superintendent has boxes of documents with such materials. He said that although he asked the Tribunal to order the Superintendent to provide him with the Prior Superintendent Materials, he has not received them.

29We reminded Mr. Spiegel that the Tribunal already considered his request to order the Superintendent to provide him with the Prior Superintendent Materials and his request was denied (with some specific exceptions), as set out in the Disclosure Motion Decision.⁶ Accordingly, the Superintendent is not required to provide such documents to him. We advised Mr. Spiegel that we will not re-hear matters which we have already decided. We referred Mr. Spiegel to a copy of the Disclosure Motion Decision and offered to adjourn the hearing so that Mr. Spiegel would have an opportunity to review the decision again. Mr. Spiegel indicated that an adjournment was unnecessary.

30We reiterated to Mr. Spiegel that he is free to attempt the filing of any document with respect to evidence and any authority that supports the submission he plans to make, and after hearing the Superintendent's position, we would consider if the document is relevant evidence and whether it is admissible. Mr. Spiegel indicated that he would gather the documents he would like to file and provide them to us and to Ms. McPhail on September 21, 2018, the second and final scheduled day of the hearing.

31After Mr. Spiegel's above submissions, Ms. McPhail filed three additional documents (which had already been shared with Mr. Spiegel) for the hearing: certified copies of the Law Society Decision, and the Penalty Decision and Order.

B. Evidence of Superintendent

32Mr. Gary Logan was the Superintendent's only witness and his affidavit was added into evidence as an exhibit. He was cross examined by the Applicant.

33Mr. Logan is an investigator employed by FSCO since April 1, 2010. We found him to be a credible witness. Based on Mr. Logan's testimony and affidavit, we make the following findings of fact:

a) On July 20, 2016, the Applicant applied for an insurance agent licence with FSCO.

b) The Applicant responded to a question in the application dealing with another licence or registration to deal with the public that he was a licensed paralegal on temporary suspension due to money owed to the Law Society.

c) The Applicant also responded to a question as to whether he was subject to discipline by a regulatory authority and he advised the following (in part):

"Frivolous and vexatious complaints to the LSUC by insurance companies, none of the complaints were by the public consumers. Complaints were not with regard to my activities as a Paralegal. All insurers' contrived complaints were with reference to my activities, as medical & rehabilitation health care provider & consultant/case manager. The LSUC hearing has been concluded. No decision has been rendered by the LSUC Tribunal, as of yet and no such disciplinary actions had been imposed by the Tribunal."

d) The Applicant sent documents to Mr. Logan in support of his application to FSCO. The documentation Mr. Logan received pertained to a matter with which Mr. Logan was not involved, from a previous investigation conducted by FSCO. Since this documentation was not relevant to his investigation, Mr. Logan did not review the documents from the Applicant.

e) When the Applicant met Mr. Logan for his interview, Mr. Logan told the Applicant he wanted it to be clearly understood that the matter Mr. Logan was investigating was the matter before the Law Society, with respect to their findings pending the outcome of any decision.

f) Mr. Logan also received documents from the Applicant that dealt with the Law Society matter. Mr. Logan did not consider these documents for his investigation, and he did not "re-investigate" or investigate any matter before the Law Society. Mr. Logan's investigation was focused only on the allegations that were before the Law Society Discipline Committee on the Applicant's alleged misconduct, and not on any evidence.

C. Evidence of Applicant

34We asked Mr. Spiegel if he would like to start introducing his evidence or wait until the next day, given that he indicated that he would be providing documents to the Tribunal the following day. Mr. Spiegel replied that it would be problematic to provide us with the documents the following day (despite saying he would do so earlier in the hearing), as he would need to bring boxes of documents related to his past activities as a SABS Representative and healthcare services provider (which would include documents that were before the Law Society Tribunal). Mr. Spiegel argued it is necessary to file all these boxes of documents, as the Tribunal must make its own independent determination of his suitability to be issued an insurance agent licence, without regard to the Law Society allegations and the Law Society Decisions. He indicated that the preparation of all the documents, including making multiple copies for the Panel, would be time consuming and costly.

35Mr. Spiegel also submitted that the Law Society Tribunal's findings of fact in support of the Law Society Decision are "90 percent flawed", and thus it is necessary for him to lead evidence challenging those findings. He also argued that every element in the Law Society Decision is false or incorrect, and that there have been errors of law because the Law Society does not understand the SABS scheme and the case law.

36Finally, he indicated that he is appealing the Law Society Decisions and there could be a judicial review to follow. On that basis, he questions how the Tribunal could rely on the Law Society Decisions as evidence, if the ultimate outcome of the Law Society Proceeding is still to be determined.

37In summary, Mr. Spiegel requested that we make the following orders:

(i) the Law Society allegations and the Law Society Decisions are not admissible as evidence for this proceeding; and

(ii) if the Tribunal decides to accept the Law Society allegations and the Law Society Decisions as evidence, he should be entitled to adduce evidence with respect to the underpinning facts that support the Law Society Decisions.

38In response to Mr. Spiegel's requests, Ms. McPhail reiterated again that the Superintendent's case for denying Mr. Spiegel an insurance agent licence is based on the existence of (i) the Law Society allegations and (ii) the Law Society Decisions, and not on any of the underlying facts relied on by the Law Society Tribunal to reach their decisions. She stated that it is unfortunate that in the six previous pre-hearing conferences, Mr. Spiegel did not indicate that he would be challenging each piece of evidence considered by the Law Society, and if he insists on bringing boxes of materials to the Tribunal to do so, the Superintendent will have to argue how each piece of evidence is not relevant to the Superintendent's case. She noted that Mr. Spiegel's hearing before the Law Society Tribunal lasted 31 days.

39Ms. McPhail submitted that it is not the task of this Tribunal to determine whether the Law Society Decisions are wrong, as the Tribunal would be usurping the role of the appellate tribunal (i.e., LST Appeal Division). She reminded Mr. Spiegel that he had the option to have the hearing adjourned until the Law Society Proceeding was finalized, but that he had opposed the Superintendent's motion for an adjournment. The Superintendent is now asking the Tribunal to make its decision based on the Law Society Decisions as they currently stand. However, it is the position of the Superintendent that the Tribunal cannot be asked to delve into the underlying facts of the Law Society Decisions and decide which evidence should or should not have been before them, who was credible and who was not. Ms. McPhail submitted that this would be an impossible task that would take an inordinate amount of time; furthermore, it is not the role of this Tribunal to carry out that exercise.

40In his reply submissions, Mr. Spiegel reiterated that the Tribunal's role is to independently assess his character to determine if he should be granted an insurance agent licence, and the Tribunal should not rely on the Law Society's assessment of his character to make that determination; he argued that the Law Society lacks the expertise and jurisdiction to make any determination as to his activities as a SABS Representative, which has led to erroneous findings of fact that the Tribunal must ignore.

V. ANALYSIS

41The Tribunal is a statutory decision-making body established under subsection 6(1) of the Financial Services Commission of Ontario Act, 1997 (the "FSCO Act"). Unlike a court, the Tribunal has no inherent jurisdiction.⁷ Rather, the Tribunal draws its powers to conduct proceedings and issue orders exclusively from its enabling legislation. In determining whether to grant the orders requested by the Applicant, the Tribunal considered its jurisdiction and powers under the Act, the Statutory Powers Procedure Act ("SPPA"), as well as the FSCO Act and the Rules of Practice and Procedure for Proceedings Before the Financial Services Tribunal.

42On the first request of Mr. Spiegel, that the Law Society allegations and the Law Society Decisions are not admissible as evidence for this proceeding, we concluded that the Law Society allegations and the Law Society Decisions should be admitted into evidence for this proceeding.

43Under subsection 15(1) of the SPPA, the Tribunal is permitted to admit as evidence at a hearing, any oral testimony and any other document or other thing relevant to the subject-matter of the proceeding and may act on such evidence, but the Tribunal may exclude anything unduly repetitious. Subsection 15(2) of the SPPA provides that nothing is admissible in evidence at a hearing, (a) that would be inadmissible in a court by reason of any privilege under the law of evidence; or (b) that is inadmissible by statute under which the proceeding arises or any other statute.

44Since we must determine if the Applicant is of "good character and reputation or otherwise a suitable person to receive a licence without conditions", we conclude that the existence of the Law Society allegations and the Law Society Decisions are relevant to this determination and are admissible (i.e., subsection 15(1) of the SPPA). In addition, we conclude that this proposed evidence should not be excluded pursuant to subsection 15(2) of the SPPA. Finally, since Mr. Spiegel will have the opportunity to argue the probative value and weight to be given to this evidence, Mr. Spiegel is not prejudiced by our decision to admit the evidence.

45On the second request of Mr. Spiegel, that he should be entitled to adduce evidence with respect to the underpinning facts that support the Law Society Decisions, it is clear that in Mr. Spiegel's view, in order to be given a fair hearing, it is necessary for him to introduce the facts that were before the Law Society Tribunal and provide evidence to show that the Law Society Tribunal made errors in their findings of fact and errors in law. He submits this is the only way he can convince the Tribunal that he is of "good character and reputation". We have concluded that the proper forum for Mr. Spiegel's challenge of the findings of fact made by the Law Society Tribunal is the LST Appeal Division and not this Tribunal. It is, in our view, not appropriate for Mr. Spiegel to make a collateral attack on the findings of the Law Society Tribunal before this Tribunal.

46For all these reasons, it is important that the facts be finally determined by the appropriate process (i.e., the LST Appeal Division) before this proceeding can continue. Accordingly, we ordered that this proceeding be adjourned sine die until after the LST Appeal Division has issued its decision. At that time, we can reconvene and hear the arguments of the parties with respect to whether this proceeding should continue.

47Mr. Spiegel questioned our decision to adjourn the hearing at this time, since we had previously denied the Superintendent's motion to adjourn the hearing (i.e., the Adjournment Motion Decision). Mr. Spiegel referred to our comments in the Adjournment Motion Decision in relation to his argument that an adjournment of the hearing (at that time) would be prejudicial to him; he reiterated the same argument.⁸

48At the time we made our decision to dismiss the Superintendent's motion to adjourn this proceeding, it was not apparent to us that the Applicant was contesting the findings of fact by the Law Society Tribunal and that his intention was to introduce all those facts and submit evidence to challenge them in this proceeding. Mr. Spiegel's intention to re-litigate the Law Society case before this Tribunal (i.e., by challenging all the findings of fact) only became apparent at this hearing and without advance notice.

49In fact, we were surprised by this turn of events for two reasons. First, based on the Superintendent's submissions in the third motion, and the Particulars Motion Decision, Mr. Spiegel would have known that the Superintendent was not relying on any of the facts supporting the Law Society allegations or the Law Society Decision for this hearing. If Mr. Spiegel felt it was important to put those underlying facts before us, we expect he would have shared this evidence with the Superintendent prior to the hearing during the disclosure process and submitted copies to the Tribunal. Instead, he was not at all prepared to present these documents to us. Second, had Mr. Spiegel assumed that the Superintendent would share some or all the documents (e.g., Prior Superintendent Materials) with the Tribunal prior to the hearing, it was unlikely that he would have agreed to shorten the hearing from four half days to two half days on August 31, 2018. If Mr. Spiegel had intended to introduce all the facts that were introduced at the Law Society hearing of 31 days and bring evidence to show why the Law Society made errors in their findings of fact, this clearly would have taken more than two half days.

50We weighed Mr. Spiegel's concern with having a fair hearing against his argument that he will be prejudiced by a delay in the proceeding. Given Mr. Spiegel's position that it is critical for him to challenge the evidence that was before the Law Society in order for him to have a fair hearing, and the fact that this Tribunal should not and will not review the Law Society's findings of fact, it is simply not feasible or appropriate to proceed with the hearing at this time. Furthermore, even if the Tribunal were to agree to permit Mr. Spiegel to relitigate the facts from the Law Society hearing, a month-long hearing would be required; not only would this be an inefficient use of the Tribunal's time given the upcoming appeal of the Law Society Decisions (i.e., duplicated effort), from a practical perspective, it would be a challenge to schedule a month-long hearing in the near future based on existing commitments of the Tribunal and Ms. McPhail.

51After carefully considering the submissions of the parties and the present set of circumstances, we have concluded that this matter should be adjourned sine die.

VI. ORDER

52In summary, the Tribunal ordered that:

a) the Law Society allegations and the Law Society Decisions be admitted as evidence for purposes of this proceeding; and

b) this proceeding be adjourned sine die until the LST Appeal Division has issued its decision on Mr. Spiegel's appeal of the Law Society Decisions.

53Upon receiving notice from either of the parties that the LST Appeal Division has issued its decision on Mr. Spiegel's appeal, the Registrar will contact the parties to schedule a pre-hearing conference to discuss next steps and timing.

Footnotes

1. 1Spiegel v. Ontario (Superintendent Financial Services), 2017 ONFST 12
2. 2Ibid., paras 45 to 54.
3. 3Spiegel v. Ontario (Superintendent Financial Services), 2018 ONFST 1
4. 4Spiegel v. Ontario (Superintendent Financial Services), 2018 ONFST 6 at paras. 14 to 23.
5. 5Ibid., paras. 20 to 23.
6. 6Supra note 1.
7. 7Viau v. Ontario (Superintendent Financial Services), 2010 ONFST 8.
8. 8Supra note 3, at paras. 15 to 25.