Boock v. Ontario Securities Commission, 2010 ONSC 5974
CITATION: Boock v. Ontario Securities Commission, 2010 ONSC 5974
DIVISIONAL COURT FILE NO.: 96/10
DATE: 20101027
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
SWINTON, SACHS AND NADEAU JJ.
BETWEEN:
IRWIN BOOCK Applicant
– and –
ONTARIO SECURITIES COMMISSION Respondent
COUNSEL:
Marvin J. Huberman, for the Applicant
Sean Horgan and Amanda Heydon, for the Respondent
HEARD at Toronto: October 27, 2010
ORAL REASONS FOR JUDGMENT
NADEAU J. (ORALLY)
[1] Irwin Boock makes application for an order quashing the Decision of the Ontario Securities Commission (the “Commission”) dated February 9, 2010 ordering that certain Staff of the Commission (the “KSW Staff”) disclose Compelled Evidence, consisting of testimony and documents obtained by KSW Staff from the applicant on January 29 and 30, 2009 and thereafter, to the co-respondents to a Notice of Hearing issued by the Commission on October 16, 2008; and for an order prohibiting the Commission from ordering Staff of the Commission to disclose the Compelled Evidence to the co-respondents to the Notice of Hearing issued October 16, 2008.
[2] The Decision by the Commission concluded that:
(i) The undertaking given by Staff to Boock does not prevent disclosure by KSW Staff of the Compelled Evidence to the co-respondents.
(ii) Accordingly, KSW Staff shall disclose the Compelled Evidence to the co-respondents.
(iii) Staff shall maintain the Ethical Wall in place with respect to the Compelled Evidence. Staff shall continue to comply with the Protocol as it relates to the Compelled Evidence and SAT Staff may not have access to or review the Compelled Evidence and may not use that evidence in connection with the hearing on the merits in this Proceeding.
(iv) The co-respondents are entitled to make such use of the Compelled Evidence in the hearing on the merits as they may propose, subject to the overriding discretion of the Panel hearing the matter on the merits to decide on what basis they will permit the use of the Compelled Evidence as evidence at that hearing.
[3] In this application for our judicial review, there has been no dispute that the relevant chronology and facts are as set out in the ‘Background’ outlined in paras. 3 to 28 of the Reasons and Decision on Disclosure dated February 9, 2010 (the “Decision”) of the Commission. As well, we agree with both the applicant and the respondent that the appropriate standard of review to be applied to the Decision is ‘reasonableness’, except with respect to the issue of the application of the Charter to which the standard of ‘correctness’ applies.
[4] Counsel for the applicant, admittedly extremely fresh to these proceedings, has today raised for the first time the following submissions with his oral argument.
[5] Although not previously raised, and therefore not specifically addressed in the Decision by the Commission, it is essentially submitted that the Commission does not have the authority to order the Compelled Evidence to be so disclosed since it is “privileged information”.
[6] It is pointed out that s.5.4(2) of the Statutory Powers Procedure Act, R.S.O. 1990, c.S.22, as am., binding on the Commission, “does not authorize the making of an order requiring disclosure of privileged information.”
[7] It is also argued that the Staff’s broad duty to disclose according to the ‘Stinchcombe standard’ (R. v. Stinchcombe, 1995 130 (SCC), [1995] 1 S.C.R. 754) is not absolute, and is subject to the law of privilege. The suggestion once again is that the Compelled Evidence is “privileged information”.
[8] Counsel for the applicant today states that the source of this privilege arises from the Supreme Court of Canada decision in Slavutych v. Baker et al., 1975 5 (SCC), [1976] 1 S.C.R. 254 and more specifically from the Wigmore (Wigmore on Evidence, 3rd ed., (McNaughton Revision, 1961)) four fundamental conditions for the establishment of a privilege against the disclosure of a “communication”, which are set out in that decision at para. 15 as follows:
(i) The communications must originate in a confidence that they will not be disclosed.
(ii) This element of confidentiality must be essential to the full and satisfactory maintenance of the relation between the parties.
(iii) The relation must be one which in the opinion of the community ought to be sedulously fostered.
(iv) The injury that would inure to the relation by the disclosure of the communications must be greater than the benefit thereby gained for the correct disposal of litigation.
[9] It is suggested by counsel for the applicant that each of these four conditions are met here in this Compelled Evidence from the applicant, in that the scope of the ‘undertaking’ from Staff to the applicant is in his view sufficiently clear, and broad enough, to make the Compelled Evidence “privileged information”. And furthermore, as determined by the Commission at para. 53 of its Decision, “the Commission should honour an undertaking given by Staff to a respondent unless there is a good reason not to do so.”
[10] However, that is not what the Commission ultimately concluded with respect to “The Terms and Scope of the Undertaking.” At paras. 56, 57 and 58 of the Decision, the Commission outlines as follows:
[56] Counsel for Boock has submitted that the undertaking means that the Compelled Evidence cannot be used in any way, manner or form whatsoever in this Proceeding by Staff, the co-respondents or anyone else.
[57] We do not agree with that interpretation.
[58] In our view, the undertaking applies by its express terms to the use of the Compelled Evidence by the Commission and Staff. It does not by its terms apply to the disclosure of the Compelled Evidence to the co-respondents or the use by the co-respondents of the Compelled Evidence in this Proceeding. As noted above, we believe that the terms of the undertaking must be interpreted and understood within the regulatory context in which the undertaking was given. We will address that context below in considering Boock’s reasonable expectations in the circumstances.
[11] That was further expressed later in para. 71 of the Decision, as follows, when the Commission determined that:
[71] In our view, Boock must be taken to have known in receiving the undertaking that (i) as noted above, the Commission has an obligation to ensure that Staff meets a very high standard of disclosure to all respondents in any Commission proceeding; (ii) testimony and evidence compelled under section 13 of the Act can be used in a Commission proceeding in accordance with subsection 17(6) of the Act without the need for a Commission order; (iii) the undertaking was not legally binding on the Commission; and (iv) the Commission had the discretion to amend or modify any Commission order if doing so is in the public interest. In this latter respect, we note that the express terms of the Section 11 SEC Order at least contemplate the possibility of such a subsequent amendment or modification.
[12] In coming to our conclusion in this application, we appreciate that reasonableness is a deferential standard. The Courts in Dunsmuir v. New Brunswick 2008 SCC 9, [2008] 1 S.C.R. 190 and Taub v. Investment Dealers Association et al. (2009), 2009 ONCA 628, 98 O.R. (3d) 169, explained that deference is accorded out of respect for the expertise and experience of the decision making tribunal where the process it has used is justified, transparent and intelligible, and where the decision “falls within a range of possible acceptable outcomes which are defensible in respect of the facts and the law.”
[13] In our view, the Commission’s interpretation as to the scope of the undertaking was a reasonable one. It took into account the wording of the undertaking, the context in which it was given, and the reasonable expectations of Mr. Boock. Given their conclusions and the particular regulatory framework outlined by the Securities Act, it cannot be said that the Compelled Evidence was a communication that originated in a confidence that it would not be disclosed; and therefore it cannot be said that even the first Wigmore criterion for a finding of privilege has been met with respect to this Compelled Evidence.
[14] The second issue raised today for the first time by counsel for the applicant, and therefore also not specifically addressed in the Decision, is this argument that the Charter is engaged from the “risk” that the applicant may be subject to “quasi-criminal” proceedings; that is pursuant to s.128 of the Securities Act, R.S.O. 1990, c.S.5.
[15] Although this specific argument was not made to the Commission, paragraphs 87 through 102 outline how the Commission determined, in relation to this s.127 “administrative” proceeding, that the Charter does not apply to restrict the disclosure of the Compelled Evidence, and that it would not be “fundamentally unfair” to the applicant to order disclosure of the Compelled Evidence.
[16] Counsel for the applicant makes the “quasi-criminal” argument from the Notice of Hearing (Section 127 and 127.1) dated October 16, 2008, which stated as follows:
And take further notice that in the event that the Commission determines that any of the Respondents has not complied with Ontario securities law, Staff may request the Commission to consider whether, in the opinion of the Commission, an application should be made to the Superior Court of Justice for a declaration pursuant to s.128(1) of the Act that such persons have not complied with Ontario securities law, and that if such declaration be made, the Superior Court of Justice make such orders pursuant to section 128(3) of the Act as it considers appropriate.
[17] It is essentially being submitted that such a “risk” to the applicant elevates these proceedings to “quasi-criminal” proceedings, thereby engaging the Charter.
[18] In our view, not only was the Commission correct in its determination that the Charter did not apply to this disclosure of the Compelled Evidence, but we would not give any effect to this new argument. The “risk” s.128 may be invoked does not make this proceeding anything more than the “administrative” or “regulatory” proceeding that it is.
[19] In any event, we do not read s.128 as bringing with it the specter of incarceration.
[20] The applicant’s factum also raised a number of issues that were not raised in oral argument. Counsel for the applicant confirmed that he was not pursuing these issues.
[21] In any event, none of these other issues would lead us to interfere with the Decision of the Commission.
[22] Therefore, for all of these reasons, the application is dismissed.
SWINTON J.
[23] I have endorsed the Application Record: “This application is dismissed for oral reasons given by Nadeau J. Costs to the Commission fixed at $5,000.00 inclusive of HST and disbursements.”
NADEAU J.
SWINTON J.
SACHS J.
Date of Reasons for Judgment: October 27, 2010
Date of Release: November 9, 2010
CITATION: Boock v. Ontario Securities Commission, 2010 ONSC 5974
DIVISIONAL COURT FILE NO.: 96/10
DATE: 20101027
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
SWINTON, SACHS AND NADEAU JJ.
BETWEEN:
IRWIN BOOCK Applicant
– and –
ONTARIO SECURITIES COMMISSION Respondent
ORAL REASONS FOR JUDGMENT
NADEAU J.
Date of Reasons for Judgment: October 27, 2010
Date of Release: November 9, 2010