Ontario’s Divisional Court sided with the Ontario Securities Commission (OSC), denying former executives at failed fund manager Bridging Finance Inc. a judicial review of a ruling by the Capital Markets Tribunal.
Earlier this year, the regulatory tribunal dismissed a motion from David and Natasha Sharpe seeking additional disclosure from the OSC, in connection with their efforts to get a pending OSC enforcement case against them stayed by the tribunal.
In that ruling, the tribunal found that they failed to establish a “tenable” case that warranted the additional disclosure they were seeking.
The Sharpes then turned to the courts, seeking a judicial review of the tribunal’s decision.
However, the court sided with the OSC, granting its motion to quash their application for a review on the basis that it was premature.
“There must be exceptional circumstances in order for the court to hear this application for judicial review at this early stage,” the court said in its decision, noting that courts are reluctant to disrupt ongoing regulatory proceedings.
In this case, a judicial review is premature for a couple of reasons, the court said. The tribunal has yet to rule of the Sharpes’ motion seeking a stay of the enforcement case against them. That is scheduled to be heard on May 23 and 26. Not only is it not yet known if the proceedings will be stayed, but the enforcement proceedings haven’t begun either. They are scheduled to start in June.
According to the court, the Sharpes argued that this is the kind of unusual case that deserves an early review because, among other things, the tribunal’s disclosure decision will make it a “near certainty” they will lose their motion for a stay, since the tribunal has already found they failed to establish a viable case for “abuse of process” by the OSC.
Since they failed to make their case for disclosure, the Sharpes fear they will inevitably lose the motion for a stay as well, the court noted.
However, the court did not come to the same conclusion. “I am not prepared to assume that the tribunal will fail to provide a fair hearing,” it said. “I do not accept that the stay motions have been predetermined by the disclosure decision. The outcome remains to be seen.”
Moreover, the court rejected the claim that it should interfere with the tribunal’s decision on the basis that it’s “clearly wrong” or “fatally flawed.”
Ultimately, it sided with the OSC, ruling that the application for a judicial review is premature.
“The stay motions have not yet been decided, nor have the merits of the underlying allegations,” it said, adding that any attempt to seek a judicial review of the outcome of the stay decision would likely also be premature.
“However, that issue should be decided if and when it arises, not now,” it concluded in granting the regulator’s motion and quashing the application for a judicial review.
Separately, the tribunal released another decision in the case, denying a motion from the Sharpes seeking summonses to five OSC staffers — including its CEO and head of enforcement — to provide evidence on their stay motion.
The panel rejected the request, concluding that it amounts to an effort to re-litigate issues already decided in the disclosure decision.
“The Sharpes … correctly submit that the applicable standard is a low bar. But there is a bar, and that bar requires us to assess whether we have any basis in the record to think that the requested summonses are more than a fishing expedition,” the panel said in its ruling.
“The Sharpes have identified nothing to suggest that the summonses would lead to relevant evidence that might indicate abusive conduct on the part of staff. It is not sufficient to speculate that such evidence might exist,” the tribunal added.
As a result, it concluded there is no reasonable basis for the Sharpes’ request, and it denied the requested summonses.