COURT FILE NO.: 325/07
DATE: 20071129
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
LANE, GANS AND SWINTON JJ.
B E T W E E N:
MICHAEL GOLLOGLY
Applicant
- and -
ONTARIO SECURITIES COMMISSION
Respondent
Bryan Finlay, Q.C. and Stephanie L. Turnham, for the Applicant
Anne Sonnen and Melanie Adams, for the Respondent
HEARD at Toronto: November 29, 2007
LANE J.: (Orally)
[1] This is a judicial review proceeding brought by Mr. Michael Gollogly, the applicant, a former officer of Nortel, seeking to prohibit the Ontario Securities Commission from proceeding with a hearing with respect to allegations against him. He seeks an order in the nature of prohibition to prevent the Commission from holding a hearing with respect to a Notice of Hearing and Statement of Allegations, dated March 12, 2007.
[2] Nortel is a reporting issuer in Ontario and accordingly subject to the jurisdiction of the Ontario Securities Commission. This application arises out of two separate but related Commission proceedings. The first was against Nortel on allegations that it, acting through its senior financial management, committed breaches of proper financial reporting leading to material misrepresentations as to the true financial picture of Nortel. It is common ground on this hearing that the senior financial managers whose activities led to the charges include the present applicant.
[3] Nortel and the Commission settled these charges. Nortel admitted that its managers had done on its behalf what the Commission alleged. None of the managers affected were still employed by Nortel when these admissions were made nor did they join in the settlement. The OSC held a hearing and approved the settlement arranged by its staff with Nortel and issued an order against Nortel requiring it to undertake certain remedial actions. The Commission staff then proceeded to bring the separate proceeding against the managers.
[4] The applicant submits that the result of the first proceeding is that the entire Commission is biased against him or that there is at the least a reasonable apprehension of such bias. Counsel submits that there is no reasonable expectation that a new panel of the Commission will reverse or alter the findings of the guilt of Nortel. Since that finding is based on Nortel’s admissions that the managers did what is alleged, the applicant submits that it follows that there is no reasonable basis for assuming that a new panel will exonerate the managers.
[5] We are unable to accept these submissions. In our view, the application is premature. The Court is being asked to intervene before the Commission has had an opportunity to consider the matter itself.
[6] The Court has frequently stated that applications for judicial review should not fragment proceedings before administrative tribunals and that the Court will generally refuse to hear the merits of an application for judicial review brought before a hearing has begun unless there are exceptional or extraordinary circumstances. See Ontario College of Art v. Ontario (Human Rights Commission) decided in this Court in 1993 and reported at 1993 3430 (ON SCDC), 11 O.R. (3d) 798. The applicant submitted that the extraordinary circumstances consisted of the settlement between the Commission and Nortel and in particular the admissions on which that settlement was based and the alleged resulting bias.
[7] In our view, there are no exceptional or extraordinary circumstances here to suggest that we should intervene because the Commission has stated a position on orders arising out of such settlements in Gaudet v. Ontario (Securities Commission) (1990), 13 OSCB 1405 as follows:
“We do not consider settlements on an uncontested statement of facts made by a respondent, as suggesting a determination of factual issues by the Commission in any way whatsoever.
The role of the Commission in such circumstances is to assess, on the assumption that the facts are correct, whether the settlement is in the public interest and in particular whether the penalty which the staff and the respondent have proposed is appropriate.”
[8] Notwithstanding that statement the applicant submits that we should not accept this position. Counsel refers to the publicity, to the scope of the order, the requirement for long-lasting remedial efforts by Nortel and primarily again to the fact that the conduct sanction, while nominally that of Nortel is actually that of the officers, including the applicant.
[9] As referred to previously however, the OSC has made no findings of fact on the actual role played by Mr. Gollogly. In our view, the Commission ought not to be prohibited from proceeding to review such evidence as may be brought before it on that actual role. It is entitled to be taken at its word that it does not consider the settlement as a finding of fact. A review of the settlement confirms that there are no findings of fact. There are only acceptances of the admissions.
[10] Mr. Gollogly’s actual involvement has never been decided and the proposed hearing is the place where the Commission intends to inquire and decide on his role based not on admissions but on evidence.
[11] In our view, the order for prohibition should not be made. The allegation of bias, can if Mr. Gollogly is so advised, be raised before the Commission at the hearing to be scheduled by it.
[12] For these reasons the application for judicial review is dismissed.
[13] I endorse the Application Record, “The application is dismissed for reasons given orally. Having heard submissions as to costs, we fix them at $10,000, inclusive of disbursements and GST, payable by the applicant forthwith.”
LANE J.
GANS J.
SWINTON J.
Date of Reasons for Judgment: November 29, 2007
Date of Release: January 3, 2008
COURT FILE NO.: 325/07
DATE: 20071129
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
LANE, GANS AND SWINTON JJ.
B E T W E E N:
MICHAEL GOLLOGLY
Applicant
- and -
ONTARIO SECURITIES COMMISSION
Respondent
ORAL REASONS FOR JUDGMENT
LANE J.
Date of Reasons for Judgment: November 29, 2007
Date of Release: January 3, 2008