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Securities - Securities Act - Appeals. Feng v. Ontario Securities Commission
In Feng v. Ontario Securities Commission (Div Ct, 2025) the Divisional Court dismissed an appeal, here from "decisions of the Capital Markets Tribunal (the “Tribunal”) finding that the Appellants engaged in a course of conduct that they knew or ought to have known perpetrated a fraud on investors" [under SA s.126.1(1)(b)].
Here the court considered Divisional Court appeals under s.10 of the Securities Act:Jurisdiction and Standard of Review
[6] This court has jurisdiction over this appeal pursuant to s. 10(1) of the Act.
[7] An appellate standard of review applies to this appeal: correctness for questions of law and palpable and overriding error for questions of fact. Questions of mixed fact and law are reviewed on the deferential standard of review aside from “extricable questions of law” which are reviewed on a correctness standard: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65; Housen v. Nikolaisen, 2002 SCC 33.
[8] A “palpable” error is one that is “plainly seen” or “clearly wrong” or “unreasonable” or “unsupported by the evidence” (Housen, paras. 5-6; HL v. Canada (A.G.), 2005 SCC 25, paras. 55-56. An “overriding” error is one that is sufficiently significant to vitiate the impugned factual finding (Waxman v. Waxman (2004), 2004 CanLII 39040 (ON CA), 186 OAC 201, 44 BLR (3d) 165 (CA)). Findings of credibility “attract a very high degree of deference on appeal” [R. v. GF, 2021 SCC 20, para. 99; R. v. Griffin, 2023 ONCA 559, para. 81; R. v. Aird, 2013 ONCA 447, para. 39; Kitmitto v. Ontario (Securities Commission), 2024 ONSC 1412 (Div. Ct.), para. 11].
[9] It is not for this court, on appeal, to retry the case, re-weigh the evidence, or substitute inferences for those drawn by the Tribunal. In the absence of a palpable and overriding error of fact, this court is required to defer to the factual findings of the Tribunal: Quadrexx Hedge Capital Management Ltd. v. Ontario Securities Commission, 2020 ONSC 4392 (Div. Ct.), para. 86. As stated by the Court of Appeal in Finkelstein v. Ontario (Securities Commission), 2018 ONCA 61, para. 101:The function of a reviewing court, such as the Divisional Court, is to determine whether the tribunal’s decision contains an analysis that moves from the evidence before it to the conclusion that it reached, not whether the decision is the one the reviewing court would have reached: Ottawa Police Services v. Diafwila, 2016 ONCA 627, at para. 66…. [T]he Divisional Court]… impermissibly re-weighed the evidence and substituted inferences it would make for those reasonably available to the [tribunal]. That was an error. The findings of fact made and inferences drawn by the [tribunal]… were reasonably supported by the record. [10] This court will defer to the Tribunal’s Sanctions Decision unless the Tribunal erred in principle or the sanctions are clearly unfit. Sanctions are “clearly unfit” where it is shown that a sanctions decision is “manifestly deficient or excessive and is a substantial and marked departure from penalties in similar cases.” See Khan v. Law Society of Ontario, 2022 ONSC 1961, para. 77. . Kraft v. Ontario (Securities Commission)
In Kraft v. Ontario (Securities Commission) (Ont Divisional Ct, 2025) the Divisional Court dismissed an appeal, here from "two decisions of the Capital Markets Tribunal (the “Tribunal”) in regulatory proceedings brought under the Securities Act, R.S.O. 1990, c. S.5 (the “Securities Act” or the “Act”) by the respondents the Ontario Securities Commission (the “OSC”) and the Chief Executive Officer of the OSC".
Here the court sets out it's appellate jurisdiction:[27] The Divisional Court has jurisdiction to hear this appeal: Securities Act, s. 10(1). The appellate standards of review apply, as set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 8, 10, 19, 26-37; see also Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 2 S.C.R. 653, at para. 37. . Marrone v. Ontario Securities Commission
In Marrone v. Ontario Securities Commission (Div Court, 2024) the Divisional Court dismissed an appeal from an OSC hearings panel "that he breached his duty as a registered mutual fund salesperson".
Here the court consider the applicable SOR for this appeal:[16] The Securities Act provides a right of appeal from final orders of the Tribunal. Appellate standards of review apply: Quadrexx Hedge Capital Management Ltd. v. Ontario Securities Commission, 2020 ONSC 4392 (Div. Ct.) at paras. 74-81; Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, at para. 37.
[17] Questions of law and extricable questions of law from questions of mixed fact and law attract a correctness standard of review. For questions of fact and mixed fact and law, the standard of review is palpable and overriding error: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 8, 34-37.
[18] Sanctions decisions by regulatory tribunals should only be set aside if they are demonstrably unfit or are based on errors of law or of principle: Cabot v. College of Nurses of Ontario, 2023 ONSC 2977 (Div. Ct.) at para. 23, citing Budarick v. the Corporation of the Township of Brudewell, Lynch and Raglan (Integrity Commissioner) 2022 ONSC 640 (Div Ct.) at para. 40.
[19] This court has recognized that a specialized tribunal’s decisions on penalty, including costs awards, will be accorded “considerable deference”: Kitmitto v. Ontario (Securities Commission), 2024 ONSC 1412 at para. 29. These decisions will only be set aside if they do not fall within a range of legally and factually defensible outcomes: Kitmitto at para. 169 citing Peirovy v. College of Physicians and Surgeons of Ontario, 2018 ONCA 420, 143 O.R. (3d) 596 at para. 38. . Gong v. OSC
In Gong v. OSC (Div Court, 2024) the Divisional Court considered the final versus interlocutory order distinction, here in a Securities Act/Capital Markets Tribunal (CMT) context:[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. . Kadonoff v. OSC
In Kadonoff v. OSC (Div Court, 2023) the Divisional Court considered a s.9 Securities Act appeal of "a finding of the Ontario Securities Commission (“OSC”) that he engaged in fraudulent conduct pursuant to s. 126.1 of the Securities Act, and the penalty imposed by the [SS: now named] Capital Markets Tribunal in that proceeding".
In these quotes the court considers the SOR on such a court appeal:Standard of Review on Appeals under the Securities Act
[7] This is an appeal under sections 9 and 10 of the Securities Act. As such, appellate standards of review apply. The standard of correctness applies to questions of law. On questions and fact and credibility, the standard is palpable and overriding error: Housen v. Nikolaisen, 2002 SCC 33, [2002] S.C.R. 235, at para. 10.
[8] Where the evidence supports the inferences drawn by the decision-maker below, it is not for the court on appeal to second-guess those inferences or to reweigh the facts: Housen, at para. 23.
[9] Where the decision-maker has applied the law to the facts it has found, or inferred, and errs by failing to apply the correct legal principle to those facts, this amounts to an extricable error in law which is subject to correctness: Housen, at paras. 26-28; Quadrexx Hedge Capital Management Ltd. v. OSC, 2020 ONSC 439, 2020 ONSC 4392 (CanLII), 151 O.R. (3d) 709, at para. 80.
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