Court File and Parties

DIVISIONAL COURT FILE NO.: 99/03 DATE: March 20, 2003

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

B E T W E E N:

UNIVERSAL SETTLEMENTS INTERNATIONAL INC. Applicant

• and -

ONTARIO SECURITIES COMMISSION Respondent

Counsel: Randy Bennett, for the Applicant Yvonne B. Chisholm, for the Respondent

HEARD: March 18, 2003

Endorsement

Benotto S.J.

[1] This is a motion for a stay of the order of the Ontario Securities Commission (OSC) dated January 31, 2003 and July 11, 2002. Therein, the OSC ordered that documents and business records of the Applicant (USI) be produced pursuant to s.11 of the The Securities Act. The documents are sought as part of an investigation by the OSC to determine if it has authority to regulate the affairs of USI. That question arises because there is some doubt about whether the product of USI constitutes securities or not.

[2] USI offers a “Viatical” settlement purchase program to Canadian residents. “Viatical settlement” is a term applied to transactions where a person holding a life insurance policy receives the payment prior to his or her death from a third party based on the value of the benefit under the policy. The cases are conflicting as to whether these products are securities or not. The Commission indicated that they “might well be” securities (see page 8 of the decision).

[3] The Commission entered its ordered under s.11 requiring USI to produce to investigators, documents and records relating to its business from January 1, 1999 to July 19, 2002. This order is subject to judicial review scheduled to be heard by the Divisional Court on May 22, 2003.

[4] The OSC argues that a stay of the order should not be granted because the investigation must continue until the hearing. It is argued that the public interest requires that the investigation continue and that USI will do “$263,000 in business in Ontario” in the next two months. There is no evidence, however, that USI has ever been the subject of a complaint.

[5] In my view, the applicant has met the three-pronged test for a stay to be granted. There is a serious issue to be determined regarding the jurisdictional limits of the OSC. Irreparable harm will be done to the applicant: the judicial review will be rendered moot if the stay is not granted. The very issue determined on appeal is the jurisdiction of the OSC to require production of the documents. The applicant also argued that privacy rights will be affected, although it was acknowledged that there is a low expectation of privacy that attaches to business records. Lastly, the balance of convenience favours the granting of the stay as the appeal will be heard in slightly more than two months.

[6] The stay is therefore allowed.

[7] If they are unable to agree, Counsel may exchange and send me written submissions as to costs within the next ten days.

[8] Counsel have agreed as to what materials should be before the panel on the judicial review application. No further certificates are necessary from the OSC in light of this agreement.

Benotto J.

Released: March 20, 2003