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Abuse of Process - Stay Remedy (2). Sharpe v. Ontario Securities Commission
In Sharpe v. Ontario Securities Commission (Ont Div Ct, 2026) the Ontario Divisional Court (mostly) dismissed two related Securities Act appeals, these brought against "decisions of the Capital Markets Tribunal" relating to the dismissal of "stay motions and related requests to produce documents for use in their stay motions".
Here the court considers a stay remedy to an alleged abuse of process:(ii) Stay Issue
[100] The appellants submit that the Tribunal erred in failing to stay the proceedings against them as an abuse of process. They submit that the unauthorized disclosure here is shocking and should be condemned by labelling it an abuse of process. They further submit that bad faith of Commission Staff should be implied, that they have been prejudiced, and that there is no alternative remedy to address the prejudice. Natasha Sharpe submits that there must be a stay “to punish” the Commission in the public interest and maintain the integrity of the disciplinary process. For the following reasons, I disagree.
[101] With respect to the legal test for a stay, the appellants have not pointed to a legal error in the applicable principles set out in the Stay Decision. Those principles are amply supported by the relevant authorities.
[102] As put by the Tribunal, a stay of proceedings is a drastic remedy. The threshold to establish an abuse of process is high. Based on the position that the appellants took on abuse of process (sometimes called the residual category: see R. v. O'Connor, 1995 CanLII 51 (SCC), [1995] 4 S.C.R. 411, at para. 73), the appellants had to show the following:(a) that prejudice to their right to a fair hearing, or to the integrity of the justice system, would be manifested, perpetuated, or aggravated through the conduct of the Commission hearing;
(b) that there was no alternative remedy capable of redressing the prejudice; and,
(c) if there was still uncertainty about whether the first two criteria justified a stay, the Tribunal should balance the interests in favour of granting a stay (e.g., denouncing misconduct and preserving the integrity of the justice system) against the interests in having a decision on the merits of this proceeding.
Citing R. v. Babos, 2014 SCC 16, [2014] 1 S.C.R. 309, at para. 32, quoting from R. v. Regan, 2002 SCC 12, [2002] 1 S.C.R. 297, at paras. 54, 57. [103] The appellants submit that abuse of process has previously been recognized where highly confidential information has been improperly disclosed including in a chartered accountant discipline case, Clark v. Complaints Inquiry Committee, 2012 ABCA 152, 524 A.R. 322. The Sharpes have also put forward criminal cases, including the recent case of R. v. Whitlock, 2025 ONSC 6006.
[104] I accept that an abuse of process was found in other cases involving disclosure, but that does not mean that this Tribunal erred in the Stay Decision. “The burden is on the moving party to prove the abuse of process on a balance of probabilities. A claim of abuse of process is necessarily fact specific as it expresses society's changing views about what is unfair or oppressive”: Paul Azeff et al., 2012 ONSEC 16, at para. 283, quoting R. v. D. (E.) (C.A.), (1990) 1990 CanLII 6911 (ON CA), 73 O.R. (2d) 758 (C.A.), at pp. 766-767.
[105] With respect to prejudice to their right to a fair hearing, at the Tribunal the appellants relied on unfairness arising from witnesses learning of their compelled testimony through the unauthorized disclosure. The Tribunal addressed that issue and no error in that regard has been alleged on these appeals. Other grounds for granting a stay were raised then and now.
[106] On prejudice to the integrity of the justice system, the appellants submit that the Commission’s conduct was egregious, and in breach of its own statute, and thus caused the appellants significant prejudice.
[107] The appellants submit that bad faith should be presumed because the Commission did not put forward evidence in response to the stay motions that explained Staff’s decision to use the compelled testimony in the receivership application without a s. 17 order. The authorities provided on this ground, such as Clark and Nixon, are highly distinguishable on their facts. Here, the Tribunal found, on the record before it, that they would not draw an adverse inference about the conduct of Staff. In doing so, they considered the emails put forward as well the other motion materials.
[108] The Tribunal recognized that, even in the absence of a showing of bad faith, the Commission Staff’s breach of its own governing legislation in the receivership application was a serious matter. However, the Tribunal did not find the breach was so egregious that going ahead with the Commission proceedings would be offensive and bring the administration of justice into disrepute.
[109] In reaching that decision, the Tribunal noted that the version of s. 17 of the Securities Act in force at the time of the receivership application did permit disclosure in proceedings before the Tribunal and that before the unauthorized disclosure took place, an amendment to s. 17 of the Securities Act had been passed although not yet in force. That amendment would permit disclosure in the receivership application without an order, suggesting the community’s sense of decency and fair play would not be shocked by the unlawful disclosure under the prior s. 17. The Tribunal followed the reasoning in the Unlawful Disclosure Decision regarding the receivership.
[110] The Tribunal further noted that David Sharpe’s request to preserve the confidentiality of the compelled testimony in the Commission’s cease trade proceedings had been dismissed, concluding that the public interest required that it be publicly available.
[111] The Tribunal found that the public and those regulated under the Securities Act would not come to believe that the Commission would carry out its mandate with disregard for its governing legislation – they would view this as a single instance where Staff proceeded on a mistaken interpretation of the previous version of s. 17.
[112] The appellants also rely on the prejudice they have suffered personally. I accept for the purposes of these appeals that the appellants were the subject of extensive negative media coverage immediately after the unlawful disclosure and, in the period between that disclosure and the later lawful disclosure of that same testimony, they would have suffered a loss of reputation and other prejudice. The appellants submit that this undermines the integrity of the justice system and cannot be remedied without a stay. The Tribunal considered these submissions and noted that David Sharpe still proceeded to request a sealing order from the Tribunal (unsuccessfully) and neither appellant sought either a sealing order or other redress in the receivership.
[113] The appellants have shown no error with the first step above, requiring prejudice to their right to a fair hearing, or to the integrity of the justice system, would be manifested, perpetuated, or aggravated through the conduct of the Commission hearing. That alone justifies denying a stay. Nor has an error been shown regarding prejudice under the second step.
[114] Although not required to do so, the Tribunal proceeded to undertake the balancing in step three. The Tribunal held that even if the appellants had established the first two steps, having a decision on the merits of the allegations against the appellants outweighed the interests in favour of granting a stay.
[115] The Tribunal noted that the appellants were registrants and the most senior leaders at Bridging Finance, which managed investment vehicles focused on making short-term loans to borrowers. The appellants were then alleged to have defrauded institutional and retail investors out of millions of dollars through their dishonesty and deceit, funneling investor funds to themselves and Bridging Finance, and obstructing the Commission’s investigation into their conduct.
[116] The Tribunal held that the allegations against the Sharpes were extremely grave and, if true, there would be great public interest in imposing significant sanctions possibly including removal from Ontario’s capital markets in order to protect investors. The Tribunal reasoned that the public interest in proceeding outweighed the interests in favour of granting a stay.
[117] I see no appealable error in this reasoning, which strongly supported the denial of a stay. . R. v. Abdella
In R. v. Abdella (Ont CA, 2026) the Ontario Court of Appeal dismissed a criminal appeal, this brought against a "conviction for possession of fentanyl for the purpose of trafficking" - here where the defendant elected for an Ontario Court trial, "his trial was set to conclude over the 18-month ceiling set in R. v. Jordan, 2016 SCC 27" and "the Deputy Attorney General of Canada[1] ... preferred a direct indictment, causing the appellant’s trial to proceed in the Superior Court of Justice".
Here the court considers whether this Crown action constituted an abuse of process (and thus violated prosecutorial discretion), and if so whether a stay of proceedings was the appropriate remedy:B. The Stay Application
[11] The appellant brought an application to stay the proceedings, arguing that he had a right to be tried in the Ontario Court of Justice pursuant to s. 7 of the Charter, a right that he argued vested upon his election. He maintained that the Crown breached this right by preferring a direct indictment after he made what he characterized as his constitutionally protected election to be tried in the provincial court. He said that nothing short of a stay of proceedings pursuant to s. 24(1) of the Charter could remedy that breach.
[12] In the alternative, the appellant argued that it was an abuse of process for the Crown to prefer a direct indictment to “escape the consequences of Crown conduct which caused the delay.” While the appellant accepted that the Crown could prefer a direct indictment from the outset of the prosecution, he objected to the “taking away” of his election to be tried in the provincial court once that election had been made.
[13] The application was dismissed on January 9, 2024.
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C. The Direct Indictment Was Not an Abuse of Process
[54] As his last ground of appeal, the appellant argues that the application judge erred in failing to find that the prosecution’s conduct amounted to an abuse of process warranting a stay of proceedings. The Crown is said to have acted upon an improper motive in preferring the indictment because it was done solely to avoid a stay of proceedings based on unreasonable delay caused by the prosecution. The appellant argues that it was abusive to override his choice to be tried in the provincial court simply to avoid a potential stay of proceedings.
[55] I see no error in the application judge’s approach.
[56] Of course, as always, the powers of the Attorney General are not without limits. Those limits come in different forms. As recently reviewed in Varennes, certain decisions fall within “core prosecutorial discretion” and are reviewable only on the basis of abuse of process, while other decisions are reviewable on a lesser standard.
[57] The parties appear to agree that the Attorney General’s decision to prefer a direct indictment is only reviewable on an abuse of process standard. So do I.
[58] A good deal of jurisprudential space has been allotted to discussing the exercise of Crown discretion and the basis upon which it can be reviewed. In Krieger, at paras. 30-32, the court acknowledged the independent decision-making power of the Attorney General in the exercise of “prosecutorial discretion”. This was referred to as a “fundamental principle of the rule of law under our Constitution”, leaving some decisions “beyond the legitimate reach of the court”, and subject only to the abuse of process doctrine: Krieger, at para. 32.
[59] While the Krieger court was quick to note that not every discretionary decision made by a Crown prosecutor is constitutionally protected, many are. This matters because exercises of “prosecutorial discretion” are owed strong deference and are only reviewable under the abuse of process doctrine: R. v. Anderson, 2014 SCC 41, [2014] 2 S.C.R. 167, at paras. 35-36; Krieger, at para. 45. The underlying rationale for this deference was addressed in Power, at p. 627:[T]he Crown cannot function as a prosecutor before the court while also serving under its general supervision. The court, in turn, cannot both supervise the exercise of prosecutorial discretion and act as an impartial arbitrator of the case presented to it. [60] Exercises of prosecutorial discretion constitute the “core of the Attorney General’s office” (emphasis added): Krieger, at para. 43. These core powers envelop a broad category of decision making, essentially decisions that relate to the “nature and extent of the prosecution and the Attorney General’s participation in it”: Krieger at para. 47. Examples of such decisions were provided in Krieger, at para. 46, and built upon in Anderson, where Moldaver J. included “the decision to prefer a direct indictment” as one that falls within the nature and extent of the prosecution: Anderson, at para. 44.
[61] More recently, in Varennes, Karakatsanis J. reaffirmed that preferring a direct indictment is an exercise of core prosecutorial discretion and is thus owed deference in order to respect the “separation of powers and the constitutional role of the Attorney General”: Varennes, at paras. 48-49; see also R. v. S.J.L., 2009 SCC 14, [2009] 1 S.C.R. 426, at para. 24; R v. Bulhosen, 2019 ONCA 600, 377 C.C.C. (3d) 309, at para. 88, leave to appeal refused, [2019] S.C.C.A. No. 423.
[62] Accordingly, judicial review of the decision on whether to prefer a direct indictment is subject to the abuse of process doctrine. That doctrine is aimed at “egregious” Crown conduct threatening the right to a fair trial or the integrity of the justice system: Anderson, at para. 50.
[63] There are two general categories of cases in which a stay of proceedings for an abuse of process is warranted. The first category concerns state conduct compromising the fairness of an accused’s trial. This is referred to as the “main” category. The second, “residual”, category involves state conduct that does not threaten trial fairness, but “risks undermining the integrity of the judicial process”: R. v. Babos, 2014 SCC 16, [2014] 1 S.C.R. 309, at para. 31. The appellant’s argument seems to span both categories. In my view, it fails on both.
[64] The test for both categories is the same. It is a three-step test, but I only address the first step here as it is dispositive of the appeal.
[65] The first question is whether there is prejudice to the accused’s right to a fair trial or the integrity of the justice system that will be manifested, perpetuated or aggravated by continuing the trial: Babos, at para. 32. In this case, the answer is no under both categories. The appellant’s right to a fair trial was not prejudiced: Babos, at para. 34. Nor was there conduct offensive to societal notions of fair play and decency such that proceeding with a trial in the face of the direct indictment would be harmful to the integrity of the justice system: Babos, at para. 35.
[66] There was no dispute about disclosure in this case. It was complete by the time of the direct indictment. The net effect of the direct indictment was merely to move the trial from the Ontario Court of Justice to the Superior Court. Both courts offer fair trials.
[67] As for the motive, the Deputy Attorney General was entirely transparent about why the direct indictment was preferred. As Crown counsel said in his email to defence counsel, “[g]iven our inability to accommodate the matter in [the Ontario Court of Justice] within 18 months, the Director of Public Prosecutions has signed the attached direct indictment.” Clearly, the underlying concern was the pace at which the matter was moving in the Ontario Court of Justice, meaning the trial could not be accommodated within the Jordan ceiling in that court.
[68] As it turned out, the Superior Court was able to provide an earlier trial date than the one scheduled in the provincial court. There is no indication as to whether the Crown knew that at the time the direct indictment was preferred. But it is a fact that the appellant received an earlier trial date because his matter was moved to the Superior Court, a trial date that came much closer to the 18-month ceiling that applied in the Ontario Court of Justice.
[69] The appellant contends that there is something inherently abusive about the Crown having taken steps to avoid what could have been a stay of proceedings for unreasonable delay. Respectfully, I do not share that view.
[70] There would have been nothing wrong with the Crown having preferred a direct indictment right after the charges were laid in this case. Had the Crown done so, the case would have been subject to a 30-month ceiling all along. This is simply a by-product of the ceilings set out in Jordan, ceilings that have served to awaken all justice participants to their responsibilities to move matters forward.
[71] It falls directly within the jurisdiction of the Chief Law Officer of the Crown to ensure that prosecutions are moved along as expeditiously as possible and seen through to completion: Jordan, at para. 112. In fulfilling its constitutional mandate to avoid unreasonable delay, the Crown may legitimately rely on direct indictments under s. 577: R. v. Burg and Khan, 2021 MBCA 77, 407 C.C.C. (3d) 103, at paras. 55-56, leave to appeal refused, [2021] S.C.C.A. No. 385; Charlie, at para. 32; Bulhosen, at paras. 89-90; and Ste-Marie c. R., 2022 QCCA 1137, at paras. 100-101, leave to appeal refused, [2023] S.C.C.A. No. 280.
[72] Although the direct indictment obviated the potential for a successful s. 11(b) application in the Ontario Court of Justice, that was precisely the point. The appellant did not have a right to a s. 11(b) stay; he had a right to a trial in a reasonable time. That right aligns with the societal right to a trial on the merits in a reasonable time. In intent and effect, the direct indictment facilitated that right by moving the trial forward.
[73] In sum, preferring the direct indictment afforded the appellant an earlier trial than would have been possible had he remained in the Ontario Court of Justice. There was no prejudice to his fair trial interests or to the integrity of the justice system. There was no abuse of process.
[74] Before concluding, I would observe that an accused is not without recourse under s. 11(b) when a direct indictment increases the applicable ceiling to 30 months. Jordan provides a framework for establishing unreasonable delay even if it falls below the presumptive ceiling.
[75] I acknowledge that in such cases the onus will fall to the defence to show that the delay is unreasonable by establishing that (i) it took meaningful steps showing a “sustained effort to expedite the proceedings”; and (ii) “the case took markedly longer than it reasonably should have”: Jordan, at para. 82. At the same time, it strikes me that where an indictment is preferred late in the day, adding 12 months to the ceiling, the entire procedural history of the case will have to be considered, including the fact that much of the delay was incurred in a court that has a lower ceiling. This would be an important contextual factor to take into account when considering whether the case took markedly longer than it should have. Such an approach would give full effect to the Supreme Court’s instruction to “step back from the minutiae and adopt a bird’s-eye view of the case”: Jordan, at para. 91.
[76] Here, the invocation of s. 577 of the Criminal Code afforded the appellant an earlier trial, an outcome entirely consistent with s. 11(b) of the Charter. In my view, the Deputy Attorney General had jurisdiction to prefer the direct indictment here and there was no abuse of process.
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