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Stays - Abuse of Process. 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.
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