CITATION: Harold the Mortgage Closer Inc. v. Ontario (Financial Services Regulatory Authority, Chief Executive Officer), 2024 ONSC 4464

DIVISIONAL COURT FILE NO.: 507/23

DATE: 2024-08-12

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Backhouse, Lococo and Leiper JJ.

BETWEEN:

Harold the Mortgage Closer Inc. and Harold Gerstel Applicants

– and –

Chief Executive Officer of the Financial Services Regulatory Authority of Ontario and Attorney General of Ontario Respondents

COUNSEL:

Melvyn Solmon and Joanne Iskander Salmoon, for the Applicants

Michael Scott and Troy Harrison, for the Respondent FSRA

HEARD at Toronto: July 24, 2024

BACKHOUSE J.

REASONS FOR DECISION

Overview

[1] Harold Gerstel is the principal broker and sole director of Harold the Mortgage Closer Inc. (the “applicants”). Gerstel holds a mortgage broker licence under the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c. 29 (the “MBLAA”).

[2] The Financial Services Regulatory Authority of Ontario (“FSRA” or the “respondent”) initiated enforcement proceedings against the applicants by issuing a Notice of Proposal (“NOP”) pursuant to the MBLAA, which proposed to revoke and refuse to renew the applicants’ licences.

[3] Pursuant to FSRA’s policy to automatically publish on its website documents issued during enforcement proceedings (the “Transparency Guidance”), the NOP was published on FSRA’s website. The applicants filed a Request for Hearing (“RFH”) under the MBLAA which initiated a hearing before the Financial Services Tribunal (“FST”) and which responded in detail to the allegations in the NOP. The applicants requested that the FSRA publish their RFH on FSRA’s website, which FSRA declined to do.

[4] The applicants issued an application for judicial review to quash or amend the NOP and challenged its publication on FSRA’s website and the decision to refuse to publish the RFH. The applicants amended the application on November 8, 2023 to challenge the Transparency Guidance to automatically publish documents issued by FSRA on its website during enforcement proceedings.

[5] FSRA moved to quash the amended application. On April 16, 2024, Justice Myers (the “motion judge”) quashed the portions of the amended application which sought to strike or amend the NOP and which sought to compel the FSRA to take regulatory action against the applicants’ competitors. The motion judge found that mandamus relief was not available.

[6] The parts of the judicial review application that were not struck by the motion judge and are before this panel are:

a. The request for a declaration that FSRA’s Transparency Guidance to automatically publish on its website documents issued by FSRA during enforcement proceedings is unreasonable; and

b. The request for a declaration that FSRA’s refusal to publish the applicants’ RFH along with the NOP is not in compliance with s. 3(1)(f) of the Financial Services Regulatory Authority of Ontario Act, S.O. 2016, c. 37 (the “FSRA Act”) and is unreasonable.

[7] The applicants seek to vary the motion judge’s decision quashing their application to quash or amend the NOP on the basis that FSRA knowingly issued an incomplete, misleading and false NOP.

[8] FSRA requests that the motion to vary and the balance of the judicial review application that was not quashed by the motion judge be dismissed.

[9] For the reasons that follow, I would find that 1) the motion judge did not err in striking the applicants’ allegation that the FSRA knowingly issued an incomplete, misleading and false NOP; 2) the remainder of the claims in the application are not amenable to judicial review; 3) the impugned decisions of FSRA are, in any event, reasonable; and 4) the motion to vary and the application should be dismissed.

Background

[10] The applicants are licensed under the MBLAA. FSRA regulates the non-securities, financial services sectors in Ontario, including mortgage brokering. FSRA administers the MBLAA under the FSRA Act. In its regulatory activities, FSRA is guided by its statutory objects, which are set out in the FSRA Act and are reproduced at paragraph 58 below.

[11] In Ontario, mortgage brokering is governed by the MBLAA. The MBLAA provides a comprehensive licensing framework for mortgage brokerages, mortgage brokers, mortgage agents, and mortgage administrators. These licensees are required to comply with prescribed standards of practice, including disclosure, suitability and conflict of interest requirements.

[12] In May 2022, the Toronto Star published several articles questioning the conduct of the applicants. FSRA conducted a compliance examination of the applicant, Harold the Mortgage Closer Inc. FSRA also began a more detailed investigation into the applicants’ business dealings.

[13] FSRA may take regulatory action when individuals or entities contravene the MBLAA. Generally, before FSRA can impose licensing sanctions, general administrative penalties or compliance orders, FSRA must issue a notice of proposal (MBLAA, ss. 21, 35, 39). This triggers the right to a hearing before the FST, an independent tribunal. The FST holds a de novo hearing with no deference to FSRA’s NOP. The FST then issues an order which may direct FSRA to carry out the NOP with or without changes or substitute the FST’s opinion for that of FSRA.

[14] On June 22, 2023, FSRA issued a NOP proposing to revoke the licence of the applicant, Harold the Mortgage Closer Inc., and to refuse to renew the licence and to impose administrative penalties upon the applicant, Harold Gerstel.

[15] The NOP alleged that:

(a) Gerstel had provided false information to FSRA on its renewal application;

(b) in two previous civil proceedings, the courts raised concerns with respect to Gerstel, including in one case his honesty and integrity;

(c) during the FSRA investigation the applicants provided incomplete responses to FSRA’s regulatory inquiries; and

(d) Gerstel failed to attend for an examination under oath in response to a summons issued by FSRA pursuant to the MBLAA.

[16] The NOP states that the document contains allegations that may be subject to proof at a hearing.

[17] After the issuance of the NOP, the applicants knew in June 2023 that FSRA would publish the NOP on its website pursuant to its Transparency Guidance. The applicants asked FSRA not to publish the NOP which request was refused. FSRA states that it believes that the public’s interest in transparency necessitates publication before the sometimes-lengthy hearing process is concluded.

[18] On July 7, 2023, the applicants filed a RFH in which they disputed the allegations in the NOP and asserted that the NOP is unfair and defamatory as it includes allegations that are known to FSRA to be incomplete, unfair, unreasonable and misleading.

[19] On July 18, 2023, the applicants brought a motion before the FST requesting an interlocutory order to require FSRA to publish the RFH on its website, along with the NOP. On July 24, 2023, FST released its decision, reported at 2023 ONFST 6, declining to grant the requested order, holding that it did not have the jurisdiction or authority over FSRA’s conduct and could not compel FSRA to publish. The applicants did not seek to judicially review the FST’s decision on its jurisdiction to oversee FSRA.

[20] On August 30, 2023, the applicants issued the application for judicial review.

[21] In September 2023, FSRA posted on its website that an individual can access and obtain a copy of the applicants’ RFH by emailing a request to FST. At least two members of the public have requested and been provided with this document by the FST.

[22] Initially the application sought to quash or amend the NOP and challenged its publication and the decision to refuse to publish the RFH. The applicants amended the application on November 8, 2023 to challenge, for the first time, the Transparency Guidance.

[23] FSRA moved to quash the amended application on December 15, 2023. The order of the motion judge on April 16, 2024, reported at 2024 ONSC 2236 (“motion decision”), quashed the portions of the amended application that sought to strike or amend the NOP and that sought to compel the FSRA to take regulatory action against the applicants’ competitors. The motion judge found that mandamus relief was not available: motion decision, at paras. 31-32. The motion judge declined to strike portions of the application seeking a declaration with respect to publication of the NOP and the RFH, leaving that issue open to the panel of the Divisional Court hearing the application: motion decision, at para. 28.

[24] The applicants do not challenge the motion judge’s decision that mandamus is not available or his decision to strike the relief sought regarding FSRA’s refusal to investigate or reprimand or take enforcement action against the applicants’ competitors.

[25] In their factum, the applicants request an order requiring FSRA to publish their RFH on FSRA’s website and to amend the Transparency Guidance to provide for publication of the RFH. These claims are no longer available to the applicants, having been struck by the motion judge’s decision to quash the claims for mandamus relief: motion decision, at para. 31-32.

[26] The portions of the claims for relief in the application which survived the motion judge’s order and therefore remain to be determined by this panel are the claims for:

(a) An order declaring that the Transparency Guideline is not in compliance with s. 3(1)(f) of the FSRA Act and is unreasonable;

(b) An order declaring that FSRA’s decision to publish the NOP in accordance with the decision set out in the Transparency Guidance before the merits have been determined by the FST is unreasonable; and

(c) An order declaring that FSRA’s decision to refuse to publish the RFH alongside the NOP on FSRA’s website is contrary to s.3(1)(f) of the FSRA Act and is unreasonable.

Motion to Vary

[27] The applicants served and filed the motion to vary the order of the motion judge on April 22, 2024. The motion to vary seeks to restore to the application the relief struck out which sought an order declaring that FSRA has no jurisdiction or power under the MBLAA to issue an NOP that includes allegations that are false, misleading, unfair or unreasonable.

Court’s Jurisdiction on the Motion to Vary

[28] The Divisional Court has jurisdiction to hear this motion to vary under s.21(5) of the Courts of Justice Act, R.S.O. 1990, c. C.43, (“CJA”) which states:

A panel of the Divisional Court may, on motion, set aside or vary the decision of a judge who hears and determines a motion.

Standard of Review on the Motion to Vary

[29] The Divisional Court recently reiterated the standard of review to be applied to a s. 21(5) motion in Gong v. Ontario (Securities Commission), 2024 ONSC 1174 (Div. Ct.), at para. 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. [Emphasis added.]

[30] This standard of review has been repeatedly applied by the Divisional Court when considering s. 21(5) motions.[^1]

Analysis: motion to vary

[31] The applicants assert that the motion judge made two errors of law:

1. in finding that the FST hearing was an adequate alternative to the relief sought on the application for judicial review because the FST has determined that it has no jurisdiction to review, monitor or compel any conduct by FSRA

2. in failing to find exceptional circumstances as defined in Volochay v. College of Massage Therapists of Ontario, 2012 ONCA 541, 111 O.R. (3d) 561, in FST’s decline of jurisdiction over FSRA’s conduct.

[32] The applicants assert that the motion judge erred by not considering, as an exceptional circumstance, that the FST has declared that it does not have the authority or jurisdiction to review or monitor the conduct of the FSRA, or compel the FSRA, to strike all or part of the NOP, which is the requested relief sought in the application.

[33] The motion judge stated at paragraphs 19 and 20 of his reasons:

[19] I note that I do not necessarily agree with the tribunal’s decision in this case that it has no authority to review the conduct of the regulator or to cause it to take steps deemed necessary for fairness of the proceeding before the tribunal. The notice of proposal is not necessarily spent or rendered a dead letter by the delivery of the request for a hearing. The notice of proposal remains the regulator’s statement of allegations that guides the issues before the tribunal.

[20] But even if the applicants ask the tribunal to give some remedy against the regulator and the tribunal declines after a full hearing, the applicants will still have their appeal and review rights before the court. In those hearings, the court will be armed with a full evidentiary record, findings of fact on the contested evidence, and the specialist tribunal’s views and reasoning on the issues that were argued before it by the parties.

[34] The applicants submit that the motion judge in paras. 19 and 20, raises a serious issue of jurisdiction and procedural fairness. They assert that the conduct of FSRA cannot be reviewed or monitored by the FST without the necessary relevant evidence. However, the FST has determined that it has no jurisdiction to hear or determine any criticism of the conduct of the FSRA.

[35] FSRA submits that the motion should be denied as the motion judge correctly applied the law to the facts of the case. There is no error of law or palpable and overriding error of fact. In exercising his discretion, the motion judge gave appropriate weight to all relevant considerations and his decision results in no injustice.

The motion judge did not err in quashing the application against the NOP

[36] The motion judge correctly held that it was plain and obvious that the application to strike or amend the NOP could not succeed as it was premature: paragraph 10.

[37] The Ontario Court of Appeal set out the test for prematurity in Volochay, at para.68:

[U]nless exceptional circumstances exist, a court should not interfere in an administrative proceeding until it has run its course. The principle has particular force where adequate alternative remedies are available under the administrative scheme. Ordinarily an affected individual must pursue these remedies before seeking relief from the court. The Federal Court of Appeal has endorsed this approach as well in Dugré v Canada (Attorney General), 2021 FCA 8, at para 37, framing the rule against prematurity, or interlocutory relief, as “next to absolute”.

[38] This approach is also consistent with s. 138 of the CJA which specifically provides: “As far as possible, multiplicity of legal proceedings shall be avoided.”

[39] The motion judge considered whether each element of the Volochay test supported quashing the application with regard to the NOP. In particular, the motion judge found that the application was premature on the basis that:

a. There was an ongoing administrative proceeding: at para. 7;

b. The administrative proceeding provided an adequate alternative remedy: at paras. 8, 21; and

c. There were no exceptional circumstances: at para. 8.

a. Ongoing Proceedings

[40] The motion judge found at para. 7 that there were ongoing proceedings: “In response to the notice of proposal, the applicants exercised their right to require a hearing before the Financial Services Tribunal”. This finding is not in dispute on the motion to vary.

b. Adequate Alternative Remedy

[41] The motion judge found that the FST hearing provides an adequate alternative remedy. In particular, he found at paras. 7-8:

[7] …That [the FST] is a specialized tribunal charged with hearing proceedings in the financial services sector.

[8] Under the applicable statutory scheme, the applicants will be entitled to a full hearing process before the tribunal in respect of the allegations contained in the regulator’s notice of proposal. A very high degree of procedural protection is available to the applicants in light of the serious nature of the relief sought against them. The hearing is a full trial de novo. It is not just an appeal from the notice of proposal. The hearing outcome will be based on the evidence to be admitted, after pre-hearing disclosure, cross-examination of witnesses, and submissions.

[42] The motion judge also concluded at para. 18 that the proceedings before the FST were also a complete cure for the applicants’ concerns regarding procedural fairness:

[18] Moreover, any procedural unfairness caused to the applicants by the delivery of the notice of proposal containing incorrect facts can and will be cured by a full trial process before the tribunal with a high standard of procedural fairness and natural justice enforced.

[43] The motion judge’s decision in this regard follows the other jurisprudence on point, including that of the Court of Appeal in Volochay. The motion judge also found at para. 20 that if the applicants are not satisfied by the FST’s decision, they then have a further right of appeal or judicial review to the Divisional Court, which would have the benefit of a full record and the FST’s decision.

[44] The substantive remedy being sought by the applicants is a determination that they did not contravene the MBLAA, or if they did that the penalties should be less than what FSRA is proposing. Those issues are squarely before the FST for determination with the protections and appeal rights identified by the motion judge.

[45] FSRA argues that the applicants’ arguments relating to the FST’s jurisdiction to oversee FSRA are overly broad and should be rejected. I agree. The applicants did not seek to judicially review the FST’s decision on its jurisdiction to oversee FSRA. The issue was not argued before the motion judge, and he did not rule on this issue.

[46] FSRA will have to put forward evidence before the FST supporting its position on contraventions and remedies. The applicants will have an opportunity to respond to FSRA’s evidence and call their own. The FST will assess all of the evidence and decide on the merits in a hearing de novo. The FST can order that FSRA take no action if the evidence does not support FSRA’s position.

[47] The applicants will get a full and fair hearing de novo before the FST which resolves any alleged procedural fairness issues before FSRA. Once the FST renders a final decision, the applicants have a right of appeal from any licencing decisions and the ability to seek to judicially review any other decisions, including decisions by the FST on the scope of its jurisdiction to oversee FSRA.

[48] In LSBF Canada Inc. v. Scott, 2013 ONSC 4772, 311 O.A.C. 23 (Div. Ct.), relied upon by the applicants, there were two separate decisions by the Superintendent of Private Career Colleges. One of those decisions, dealing with a restraining order, was not subject to the statutory review process. In the present case, the FST conducts a hearing de novo. The FST has the authority to fully determine all of the substantive issues before it, including whether the applicants contravened the MBLAA and, if so, the appropriate penalties. In addition, the NOP (unlike the restraining order in LSBF) cannot be enforced against the applicants while the matter is before the FST.

c. No Exceptional Circumstances

[49] Exceptional circumstances are ones that bring the rule of law into disrepute, which goes beyond breaching procedural fairness or even acting without jurisdiction: Dugré, at para. 35.

[50] The motion judge expressly considered and rejected at para. 21 the applicants’ argument that their allegations about FSRA’s conduct, gave rise to exceptional circumstances:

There are no exceptional circumstances at play in my view. Mr. Solmon submits that this case is exceptional because the claim is that the regulator included untruthful allegations in the notice of proposal deliberately. That does not take the case outside the principle in Volochay. Moreover, the strategy that, “the best defence is a good offence” is not as unusual or exceptional before the court as Mr. Solmon surmises.

[51] The applicants have failed to show that their situation is different from that of any other applicant requesting a hearing before the FST, similar to the situation in Dugré.

[52] Ontario (Attorney General) v. Hanif, 2013 ONSC 6991, 315 O.A.C. 368 (Div, Ct.) relied upon by the applicants is distinguishable. The finding of exceptional circumstances by the court turned on issues specific to the facts of that case.

Conclusion on Motion to vary

[53] The motion judge correctly applied the law to the facts of the case. There is no error of law or palpable and overriding error of fact. In exercising his discretion, the motion judge gave appropriate weight to all relevant considerations and his decision results in no injustice.

[54] The motion is dismissed.

Judicial Review Application

[55] In the remaining heads of relief in the application, the applicants seek an order:

(a) declaring that the Transparency Guidance is not in compliance with s. 3(1)(f) of the FSRA Act and is unreasonable;

(b) declaring that FSRA’s decision to publish the NOP in accordance with the Transparency Guidance before the merits have been determined by the FST is unreasonable; and

(c) declaring that FSRA’s decision to refuse to publish the RFH on FSRA’s website, whether or not the NOP should be published, is contrary to s. 3(1)(f) of the FSRA Act and is unreasonable.

[56] The applicants submit that FSRA exercised its statutory power of decision to make the following decisions:

1. FSRA’s decision of January 11, 2022 to issue a guideline for publication pf documents that was not in compliance with its statutory objects and duties under s. 3 of the FSRA Act;

2. FSRA’s decision of July 31, 2023 to refuse to publish the RFH alongside the NOP on FSRA’s website; and

3. the automatic decision to publish the NOP on August 8, 2023, in accordance with the Transparency Guidance, before the merits have been determined (collectively “Decisions”).

[57] FSRA submits that the Decisions are not reviewable because they do not involve the exercise of a statutory power but rather, are natural person powers of FSRA. FSRA also submits that the challenge to the Transparency Guidance should be dismissed for delay.

Relevant Legislation

[58] Sections 3(1)(f) and 6 of the FSRA Act provide:

Objects of the Authority

3 (1) The objects of the Authority are,

(a) to regulate and generally supervise the regulated sectors;

(b) to contribute to public confidence in the regulated sectors;

(c) to monitor and evaluate developments and trends in the regulated sectors;

(d) to cooperate and collaborate with other regulators where appropriate;

(e) to promote public education and knowledge about the regulated sectors;

(f) to promote transparency and disclosure of information by the regulated sectors;

(g) to deter deceptive or fraudulent conduct, practices and activities by the regulated sectors; and

(h) to carry out such other objects as may be prescribed.

Powers and duties of the Authority

6 (1) The Authority has the capacity, rights, powers and privileges of a natural person for carrying out its objects, subject to the limitations under this Act and section 11.0.1 of the Ministry of Infrastructure Act, 2011.

Same

(2) The Authority shall,

(a) exercise the powers and duties conferred on or assigned to the Authority; and

(b) administer and enforce this Act and every other Act that confers powers on or assigns duties to the Authority, except to the extent that the powers or duties are assigned to or conferred on the Chief Executive Officer.

Same, no subsidiaries

(3) The Authority shall not establish, acquire or dissolve subsidiary corporations.

[59] The applicants argue that to allow for true transparency for the public, FSRA should not allow the NOP to be published on its website without also publishing the applicants’ RFH. Unlike the RFH, the NOP has no substantive effect as a matter of law once the RFH is filed. In the alternative, FSRA should not allow either document to be published on its website.

[60] The applicants submit that the policy is unreasonable and unfair because the NOP (which is just a proposed order) is available to be reviewed by the public without the corrections in the RFH being available on the same website. The applicants further submit that the guiding principles pursuant to s. 3(1)(f) of the FSRA Act that include promotion of disclosure, transparency and protection of the public should include publication of all steps in the proceeding, the RFH along with the NOP.

Transparency Guidance

[61] Following a public consultation period, on January 11, 2022, FSRA issued the Transparency Guidance.

[62] The Transparency Guidance describes when FSRA will publish documents issued during its enforcement proceedings. Pursuant to that policy, FSRA publishes its Notice of Proposal to revoke licence, refuse licence, or impose general administrative penalties under the MBLAA.

[63] The Transparency Guidance states that publication “increases public awareness of misconduct and of the sanctions taken to improve consumer protection and deter future misconduct in the regulated sectors.” The Transparency Guidance further states that a consistent and clear approach to transparency of enforcement action ensures that non-compliant regulated entities and individuals are treated evenly and know in advance when and how FSRA will inform the public that it is taking action for non-compliant activity.

[64] The Transparency Guidance is consistent with the practice of many other regulators who publish their enforcement actions before an adjudication of the merits before a disciplinary tribunal.

Jurisdiction and Standard of Review

[65] The Divisional Court has jurisdiction to hear applications for judicial review: Judicial Review Procedure Act, R.S.O. 1990, c. J.1, ss. 2, 6 (1).

[66] Any reviewable decision should be assessed on a reasonableness standard.[^2] None of the exceptions to reasonableness review apply here.[^3]

Issues on application

[67] The following issues arise on this application:

1. Is judicial review available?

2. Are the decisions unreasonable?

Analysis of Judicial review application

Issue 1: Is Judicial review available?

Nature of Decisions not amenable to judicial review

[68] The applicants assert that FSRA is exercising statutory powers under ss. 3 and 6 of the FSRA Act and the Decisions are amenable to judicial review.

[69] FSRA submits that the court does not have jurisdiction because the purported Decisions are not an exercise of statutory power and have no effect on the legal rights or obligations of the applicants. FSRA further submits that the application should be dismissed due to the applicants’ delay.

[70] FSRA is not specifically required or empowered by statute to issue the Transparency Guidance or publish the NOP. In this case, the Decisions were to provide a non-binding guidance document on FSRA’s administrative processes and to publish (or not publish) documents on FSRA’s website. Section 3 of the FSRA Act provides FSRA’s statutory objects: the goals FSRA strives to achieve. Section 3 does not confer any jurisdiction, authority, or a statutory power of decision upon FSRA. Section 6 provides FSRA’s natural person powers, empowers FSRA to administer and enforce legislation, and prohibits FSRA from establishing, acquiring, or dissolving subsidiary corporations. While the Transparency Guidance states that the policy achieves FSRA’s statutory objects, neither ss. 3 nor 6 confer any authority or obligation on FSRA to publish NOPs and FSRA does not rely on either section to do so.

[71] The applicants attempt to draw a parallel to The Christian Medical and Dental Society of Canada v. College of Physicians and Surgeons of Ontario, 2018 ONSC 579 (Div.Ct.), aff’d 2019 ONCA 393, 147 O.R. (3d) 398. In that case, the College of Physicians and Surgeons was found to have exercised a statutory power to establish standards for physicians in enacting policies which set broad expectations of physician behaviour which were expected to be persuasive in disciplinary hearings alleging professional misconduct.[^4] The facts in that case are distinguishable. In this case FSRA is not requiring any licensee to do anything.

[72] The nature of the Decisions in this case supports that they are not statutory powers of decision and that they are not amenable to judicial review.

No Effect on Legal Rights or Obligations of the Applicants

[73] To be subject to judicial review a decision must affect the applicants’ legal rights or obligations.[^5]

[74] The applicants allege that the publication of the NOP had an adverse effect on their reputation and that they have a right to have their reputation protected and dealt with fairly, specifically concerning publication of both the NOP and the RFH before the merits have been decided by FST.

[75] Although the applicants have an interest in their reputation, the publication of allegations by the regulator does not give rise to a right to judicial review. The Decisions here do not affect the legal rights, interests, property, privileges, or liberty of the applicants. The Transparency Guidance issued by FSRA simply describes when and how FSRA will publish documents related to its enforcement proceedings. Reputational damage in the circumstances of this case does not give rise to a right of judicial review.

Conclusion on availability of judicial review

[76] Having found that the Decisions do not affect the legal rights or obligations of the applicants, I conclude that judicial review is not available. In the event I am wrong in my conclusion, I go on to consider the issues of delay and reasonableness of the Decisions.

Delay

[77] The Judicial Review Procedure Act sets a presumptive deadline of 30 days to file an application for judicial review. The court may extend the time to make an application if “it is satisfied that there are apparent grounds for relief and that no substantial prejudice or hardship will result to any person affected by reason of the delay.”[^6]

[78] After public consultation, the Transparency Guidance was issued in January 2022. The applicants applied for judicial review in August 2023 – two months after the NOP was issued and published pursuant to the Transparency Guidance. FSRA specifically communicated to the applicants in June 2023 that the NOP would be published in accordance with the Transparency Guidance.

[79] The applicants waited over four months to challenge the Transparency Guidance in their November 2023 amended application for judicial review. The applicants were represented by counsel in June 2023 and throughout these proceedings. The applicants provide no explanation for why they failed to seek judicial review of the Transparency Guidance on time.

[80] FSRA submits that this is a clear case where the challenge to the Transparency Guidance should be dismissed for delay.

[81] FSRA has not made any claims of substantial prejudice or hardship. Had I found that there were apparent grounds for relief, I would have dismissed the challenge to the Transparency Guidance for delay. Given the conclusion that I have come to on the application as a whole, it is not necessary that I decide the issue of delay which applies only to the challenge to the Transparency Guidance.

Issue 2: Are the Decisions Unreasonable?

[82] The applicants submit that the Decisions are unreasonable, illogical, unjustified, and unfair; they possess an air of arbitrariness. There is no reason why the public should not have access to the applicants’ request for a hearing, following the NOP. FSRA and/or the CEO erred in law by misinterpreting ss. 3(1)(f) and 3(2)(b) of the FSRA Act, which state that the objects of FSRA are to promote transparency and disclosure of information by the regulated sectors and to protect the rights and interests of consumers.

[83] The applicants further submit that FSRA also erred in law by refusing to publish the request for hearing on its website; it acknowledges that publication can cause harm and has included this in their Transparency Guidance under the heading “Discretionary circumstances”. The applicants allege that FSRA’s failure to consider the submissions as to why the NOP should not be published deprived the applicants of procedural fairness, when FSRA knew that the publication would adversely affect the applicants’ reputation. The applicants say this was FSRA’s intent.

[84] The Transparency Guidance states that its purpose is to “increase public awareness of misconduct and of the sanctions taken to improve consumer protection and deter future misconduct in the regulated sectors”. It sets out under “Rational and principle” that “Greater transparency of Enforcement Action achieves FSRA’s statutory objects” which include (relevant here)

• To protect the rights and interests of consumers

• To regulate and generally supervise the regulated sectors

• To promote high standards of business conduct in the financial services sectors

• To contribute to public confidence in the regulated sector

• To deter deceptive or fraudulent conduct, practices, and activities by the regulated sectors.

[85] The Transparency Guidance also states that “a clear and consistent approach to transparency of Enforcement Action also ensures that non-compliant related entities and individuals are treated evenly and know in advance when and how FSRA will inform the public that it is taking action for non-compliant activity.” The Transparency Guidance sets out that FSRA ensures greater awareness of its Enforcement Action by making Enforcement Information publicly available on the enforcement section of the FSRA web site and through news releases. It states that FSRA issues a news release when Enforcement Action is taken and that the combination of a news release and public posting of the Enforcement Information (here, the NOP) on FSRA’s web site promotes public awareness and reduces risk to consumers.

[86] The applicants’ submission that FSRA acknowledges that publication can cause harm and has included this in their Transparency Guideline under the heading “Discretionary circumstances” is misplaced. On its face, “Discretionary circumstances” does not apply to enforcement action where formal legal action is initiated by FSRA to impose regulatory sanctions for noncompliance by the issuing of a NOP as is the case here.

[87] FSRA’s publication decisions are consistent with the practice of many other regulators which also publish their enforcement actions before an adjudication of the merits by a disciplinary tribunal. FSRA indicates in the published NOP that the document contains allegations that may be subject to proof at a hearing.

[88] The issuance of the Transparency Guidance is reasonable—as was the process by which it was developed—and it serves the public interest.

[89] The applicants have not identified a compelling reason for FSRA to depart from its standard publication practice. While the subjects of regulatory action often disagree with the allegations put forward by the regulator, there is a comprehensive statutory remedy, namely a de novo hearing before the FST. FSRA’s publication of the NOP is a reasonable application of the Transparency Guidance. The decision to publish the NOP is reasonable.

[90] FSRA’s decision not to publish the applicants’ RFH is also reasonable. A RFH may contain inaccurate information or otherwise objectionable material. The applicants essentially seek a mandamus order to compel FSRA to exercise its functions in a particular way but have not established they meet the requirements for seeking such an order. FSRA’s website advises the public that it can access the RFH by request from the FST, and at least two members of the public have requested and been provided with the applicants’ RFH by the FST.

[91] The applicants have not shown that the Decisions to issue the Transparency Guidance, to publish the NOP, and not publish the RFH, impact upon the fairness of their hearing before the FST. Decisions to adopt general policies are not subject to a duty of fairness.[^7]

[92] The Decisions have no impact on the applicants’ right to procedural fairness. FSRA decisions are subject to robust oversight by both the FST and the courts.

[93] The FST proceedings remain ongoing. As found by the motion judge, ultimately, the FST will hold a de novo hearing on the merits. The applicants will be able to fully argue their case on the facts and law before the FST. FSRA will have to prove its case before the FST, including calling evidence to support the facts upon which it relies. The applicants are entitled to full disclosure in advance of the hearing, to challenge FSRA’s evidence and to introduce their own and to make written and oral legal submissions. Following its hearing, the FST may direct that the NOP be carried out, with or without changes, or it may substitute its opinion. Until the FST makes a final order, the applicants remain licensed under the MBLAA.

[94] The applicants will then have a right of appeal to the Divisional Court on licensing decisions and can avail themselves of the remedy of judicial review on other issues.

[95] If FSRA’s conduct imperils a procedurally fair hearing, the FST can make an order as required to control its process and rectify the situation. If the applicants wish to challenge the FST’s decision-making, they should do so directly by applying for judicial review of the FST’s decision.

Conclusion on the application

[96] In the result, the Decisions are reasonable.

[97] The application is dismissed.

Costs

[98] The parties have agreed that the successful party on the motion to vary shall be entitled to costs of $5,000 and to costs of $10,750 on the application. Accordingly, as the successful party on both matters, FSRA shall be entitled to costs from the applicants in the amount of $15,750.

Backhouse J.

I agree _______________________________

Lococo J.

I agree _______________________________

Leiper J.

Released: August 12, 2024

CITATION: Harold the Mortgage Closer Inc. v. Ontario (Financial Services Regulatory Authority, Chief Executive Officer), 2024 ONSC 4464

DIVISIONAL COURT FILE NO.: 507/23

DATE: 2024-08-12

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Backhouse, Lococo, Leiper JJ.

BETWEEN:

Harold the Mortgage Closer Inc. and Harold Gerstel Applicants

– and –

Chief Executive Officer of the Financial Services Regulatory Authority, Financial Services Regulatory Authority of Ontario and Attorney General of Ontario Respondents

REASONS FOR DECISION

BACKHOUSE J.

Released: August 12, 2024

[^1]: See, for example: Liu v. Ontario (Labour Relations Board), 2024 ONSC 1253 (Div. Ct.), at para. 10; Ye v. Toronto District School Board, 2024 ONSC 869 (Div. Ct.), at para 3; Guillaume v. Barney Rivers Investments Inc., 2022 ONSC 1123 (Div. Ct.), at para 4. [^2]: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, at paras. 10, 16. [^3]: Vavilov at paras. 5, 34, 36, 55, 58, 63. There is no legislated standard of review and this is not a statutory appeal. Correctness review is not required by the rule of law: there is no constitutional question, general question of law of central importance to the legal system as a whole, or question regarding the jurisdictional boundaries between two or more administrative tribunals. There is also no concurrent first instance jurisdiction shared by tribunal and court: Society of Composers, Authors and Music Publishers of Canada v. Entertainment Software Assn, 2022 SCC 30, 471 D.L.R. (4th) 391, at para. 28. [^4]: Christian Medical (Div. Ct.), at para.64. [^5]: PC Ontario Fund v Essensa, 2012 ONCA 453 at para 12; Air Canada v. Toronto Port Authority, 2011 FCA 347, at para 42; Reisdorf v. Canada (Attorney General), 2023 FCA 188, at paras. 6, 8. [^6]: Judicial Review Procedure Act, s. 5. [^7]: Métis Nation of Alberta Association v. Alberta (Indigenous Relations), 2024 ABCA 40 at para 52.