CITATION: Gong v. OSC, 2024 ONSC 1174

DIVISIONAL COURT FILE NO.: 117/23

DATE: 20240227

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: Xiao Hua Gong, Appellant/Moving Party

AND:

The ONtario sercurities Commission, Respondent

BEFORE: RSJ Edwards, Sachs and Davies JJ.

COUNSEL: Paul Stern and Margo Davis, for the Appellant/Moving Party

Mark Bailey and Braden Stapleton, for the Respondent

HEARD at Toronto (in writing): February 26, 2024

ENDORSEMENT

[1] Mr. Gong and his company were charged criminally with fraud in relation to the sale of health care products in 2017. The criminal charges were the product of an investigation by the Ontario Securities Commission (“OSC”).

[2] In 2021, the criminal charges against Mr. Gong were withdrawn after his company pled guilty to using forged documents and operating a pyramid scheme.

[3] In 2022, the OSC commenced proceedings against Mr. Gong before the Capital Markets Tribunal (“the Tribunal”). The allegations before the Tribunal are similar to the facts admitted by Mr. Gong’s company in the criminal proceedings. There has been no hearing on the merits of the allegations against Mr. Gong.

[4] Mr. Gong brought a pre-hearing motion before the Tribunal arguing that the OSC was required to seek the Attorney General’s consent to use the disclosure from the criminal prosecution in the proceedings before the Tribunal pursuant to the Court of Appeal’s decision in D.P. v. Wagg (2004), 2004 39048 (ON CA), 71 O.R. (3d) 229 (CA). The Tribunal dismissed Mr. Gong’s motion. The Tribunal found that the procedure established in D.P. v. Wagg did not apply because the documents the OSC intended to rely on were obtained through the OSC’s own investigation, not from the Crown or police.

[5] Mr. Gong filed a Notice of Appeal in the Divisonal Court seeking to appeal the Tribunal’s decision on his motion. The OSC brought a motion to quash Mr. Gong’s appeal on the basis that it was premature. Nishikawa J. granted the OSC’s motion and quashed Mr. Gong’s appeal: Gong v. OSC, 2023 ONSC 3718. Nishikawa J. found the Tribunal’s decision was not a final decision and, as a result, Mr. Gong’s appeal was premature because the Securities Act only provides for an appeal to the Divisional Court from a final decision of the Tribunal: Securities Act, R.S.O. 1990, c. S.5, s. 10.

[6] Mr. Gong now brings a motion for an order setting asider or varying Nishikawa J.’s decision dated June 21, 2023 quashing Mr. Gong’s appeal: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 21(5), Bernard Property Maintenance v. Taylor, 2019 ONCA 830 at para. 2.

[7] A motion under s. 21(5) of the Courts of Justice Act is not a de novo hearing. A panel of the Divisional Court will only interfere with a motion judge’s decision if the motion judge made an error of law or a palpable and overriding error of fact. If the motion judge exercised discretion, a panel of this court can also only interfere if the moving party shows the impugned decision is so clearly wrong that it amounts to an injustice or that the motion judge gave insufficient weight to relevant considerations: Guillaume v. Barney Rivers Investments Inc., 2022 ONSC 1123, at para. 4:

[8] Mr. Gong argues the motion judge erred in law in finding the Tribunal’s decision was not a final decision. Mr. Gong argues the Tribunal’s decision was a final decision in respect of third-party rights. He argues that if the hearing on the merits proceeds, the privacy interests of third-parties will be violated. Mr. Gong argues the motion judge failed to consider the unique purpose of the D.P. v. Wagg regime when deciding that the Tribunal’s decision was not a final decision.

[9] We do not accept Mr. Gong’s argument.

[10] The motion judge applied the correct law in deciding whether the Tribunal’s decision was final. This Court has previously found that a final decision under the Securities Act is one that determines the merits of the allegations against a defendant, including the imposition of a sanction: Cheng v. Ontario Securities Commission, 2018 ONSC 2502 (Div. Ct.). While the analysis might be different if a third-party to the proceedings was seeking to review a decision by the Tribunal that directly affects their privacy rights, the motion judge was correct in finding that Mr. Gong’s motion was premature because the Tribunal’s decision did not finally dispose of the proceedings against him: R. v. McNeil, 2009 SCC 3 at para. 9.

[11] Contrary to Mr. Gong’s submissions, the motion judge was alive to the unique nature of the issues raised by the application of the special procedure in D.P. v. Wagg. The motion judge cited another decision of this court that expressly addressed whether a decision on the application of the D.P. v. Wagg procedure is a final or interlocutory decision: Ontario (Attorney General) v. Ontario Secondray Schools Teacher Federation, 2015 ONSC 2438 (Div. Ct.).

[12] The motion judge made no error in finding that the Tribunal’s decision on Mr. Gong’s pre-hearing motion was not a final decision in this case and, as a result, this court has no jurisdiction to hear his appeal. This motion is, therefore, dismissed.

[13] The parties alluded to their positions on costs in their facta. Mr. Gong was seeking $500 if he was successful on this motion. The OSC is seeking costs on a substantial indemnity basis. Neither party filed costs outlines or made substantive submissions on the issue of costs.

[14] The OSC shall file a costs outline and written submissions of no more than two (2) pages on the issue of costs by 12:00 pm on February 28, 2024. Mr. Gong shall file responding cost submissions of no more than two (2) pages by 12:00 pm on February 29, 2024.

Edwards RSJ.

Sachs J.

Davies J.

Date: February 27, 2024