2008 BCCA 404 Get Acceptance Corporation v. British Columbia (Registrar of Mortgage Br...

Transcription

1 Page 1 of 7 COURT OF APPEAL FOR BRITISH COLUMBIA Citation: Between: And Get Acceptance Corporation v. British Columbia (Registrar of Mortgage Brokers), 2008 BCCA 404 Get Acceptance Corporation and Keith Bryan Westergaard Date: Docket: CA Appellants (Plaintiffs) Her Majesty the Queen in Right of the Province of British Columbia (Financial Institutions Commission), Her Majesty the Queen in Right of the Province of British Columbia (Registrar of Mortgage Brokers, W. Alan Clark) and Her Majesty the Queen in Right of the Province Of British Columbia (Superintendent Financial Institutions, W. Alan Clark) Respondents (Defendants) Before: The Honourable Madam Justice Kirkpatrick The Honourable Mr. Justice Frankel The Honourable Mr. Justice Groberman D.J. Manson and S.C. Gilchrist K.A. Horsman and S. Wilkinson Place and Date of Hearing: Place and Date of Judgment: Place and Date of Reasons: Counsel for the Appellants Counsel for the Respondents Vancouver, British Columbia 17 September 2008 Vancouver, British Columbia 17 September 2008 Vancouver, British Columbia 15 October 2008 Written Reasons by: The Honourable Mr. Justice Frankel Concurred in by: The Honourable Madam Justice Kirkpatrick The Honourable Mr. Justice Groberman Reasons for Judgment of the Honourable Mr. Justice Frankel: Introduction [1] The issue on this appeal is whether an action commenced in the Supreme Court of British

2 Page 2 of 7 Columbia was properly dismissed on the basis that it amounts to an impermissible collateral attack on a decision of the Registrar of Mortgage Brokers and is, therefore, an abuse of that Court s process. [2] What lies at the heart of the action are notices posted on the website of the Financial Institutions Commission ( FICOM ) concerning a then pending hearing by the Registrar into allegations that Get Acceptance Corporation and Keith Bryan Westergaard engaged in improper mortgage-related practices. In their statement of claim, Get Acceptance and Mr. Westergaard seek declarations that the Registrar, FICOM, and the Superintendent of Financial Institutions, had neither the legal authority, nor a duty, to publish notices of hearing before the person whose conduct is being investigated has been given an opportunity to respond to the allegations. As well, Get Acceptance and Mr. Westergaard seek damages on the basis that posting the notices caused them to suffer losses of both reputation and business. [3] In dismissing the action, the chambers judge, Mr. Justice Leask, upheld the contention of the Registrar and the other defendants, that the posting of the notices could have been appealed to the Financial Services Tribunal and that it was, therefore, an abuse of process to seek to litigate this issue in the context of a tort action: (30 August 2007), Vancouver Registry No. S (B.C.S.C.). Get Acceptance and Mr. Westergaard have appealed that order. [4] At the conclusion of the hearing, the appeal was allowed with reasons to follow. These are those reasons. Factual Background [5] Get Acceptance is a registered mortgage broker. Mr. Westergaard is the president and sole director of Get Acceptance, and a registered sub-broker. W. Alan Clark is the Registrar of Mortgage Brokers. He is also the Superintendent of Financial Institutions, the Chief Executive of the Credit Union Deposit Insurance Corporation, the Superintendent of Real Estate, the Superintendent of Pensions, and the Chief Executive Officer of FICOM. Mr. Clark performs all of his functions out of FICOM s office. [6] FICOM maintains a website that provides information to the public with respect to the activities of the Registrar, and the other regulatory bodies operating out of FICOM s office. The Enforcement page on the website provides links to notices of hearing, decisions, and orders, issued by the Registrar. Each regulatory body is responsible for its own postings on the website. It appears that the Registrar, as a matter of policy, began posting hearing notices in the late 1990s, for the purpose of alerting members of the public to pending regulatory proceedings. [7] On January 15, 2007, the Registrar issued a notice of opportunity to be heard under s. 8 of the Mortgage Brokers Act, R.S.B.C. 1996, c. 313, directed to Get Acceptance, Mr. Westergaard, Evergreen Mortgage Corporation, and Frank Iantorno. That notice advised them that an investigation by the Registrar into their conduct was substantially complete, and indicated that they were entitled to appear to dispute the allegations at a hearing scheduled to begin at FICOM s office on September 10, The allegations of improper conduct were described in some detail in the notice. [8] Get Acceptance, Mr. Westergaard, Evergreen Mortgage, and Mr. Iantorno advised the Registrar that they disputed the allegations, and wished to have a hearing. The Registrar then issued a notice of hearing, containing the details of the alleged improper conduct. The Registrar advised Get Acceptance and the others that he intended to post that notice on FICOM s website. [9] Get Acceptance, Mr. Westergaard, Evergreen Mortgage, and Mr. Iantorno objected to the allegations being including in the notice. In the alternative, they asked that a statement be included in the notice indicating that the allegations were unproven, and were being disputed. [10] On March 21, 2007, a redacted version of the notice was posted on FICOM s website. That notice did not include the names of the other parties to the mortgage transactions in issue, but the details of the alleged improper conduct remained. Get Acceptance and Mr. Westergaard objected to the inclusion of the

3 Page 3 of 7 detailed allegations, but the Registrar s staff declined to remove them. The Registrar s staff also declined to post a disclaimer with respect to the allegations, or to permit Get Acceptance and Mr. Westergaard to post a rejoinder, in the form of a statement of defence. Later, the Registrar, in response to a letter from their counsel, indicated that if Get Acceptance and Mr. Westergaard were of the opinion that the posting of the notice affected their right to a fair hearing, then he was prepared to entertain a formal application in this regard. However, no such application was brought. [11] On May 11, 2007, Get Acceptance and Mr. Westergaard commenced an action against the Registrar, FICOM, and the Superintendent of Financial Institutions, seeking declarations that the defendants did not have the legal authority to post the notices, and damages. [12] Evergreen Mortgage and Mr. Iantorno elected to challenge the posting of the notice in a different way. They appealed to the Financial Services Tribunal. By virtue of s. 9(1) of the Mortgage Brokers Act, the Tribunal has jurisdiction to entertain appeals taken from a direction, decision, or order of the registrar. [13] The Financial Services Tribunal dismissed the appeal on June 15, 2007: FST It held that the Registrar s requirement that notices of hearing be published on FICOM s website constituted an appealable direction, and that the Registrar s refusal to remove the notices, or to allow the posting of a rejoinder, constituted an appealable decision. The Tribunal concluded that, as hearings before the Registrar are open to the public, the Registrar is, by necessary implication, authorized to publish advance notice of such hearings, including the allegations. Although the Tribunal found nothing allowing a person who is the subject of a hearing to post a rejoinder, it opined that the Registrar should post a disclaimer indicating that the allegations are unproven. Following the release of the Tribunal s decision, the Registrar amended the posted notice with respect to Get Acceptance, Mr. Westergaard, Evergreen Mortgage, and Mr. Iantorno, to add a disclaimer. [14] On June 14, 2007, Get Acceptance and Mr. Westergaard filed a notice of motion in their action, seeking a declaratory order that the Registrar and the other defendants did not have legal authority to post notices of hearing on the FICOM website. On June 25, 2007, the Registrar and the other defendants filed their own notice of motion, seeking dismissal of the action on the basis that it was an abuse of process, constituting a collateral attack on a decision of the Registrar; a challenge that should have been taken to the Tribunal. In the alternative, the Registrar and the other defendants sought dismissal of the action on the basis that a notice of hearing is a communication covered by absolute privilege. Relevant Provisions [15] The application brought by the Registrar and the other defendants was grounded in Rule 19(24)(a) and (d) of the Rules of Court, B.C. Reg. 221/90: At any stage of a proceeding the court may order to be struck out or amended the whole or any part of an endorsement, pleading, petition or other document on the ground that (a) (d) it discloses no reasonable claim or defence as the case may be,..., or it is otherwise an abuse of the process of the court, and the court may grant judgment or order the proceeding to be stayed or dismissed and may order the costs of the application to be paid as special costs. [16] A right to appeal from the Registrar to the Financial Services Tribunal is provided by s. 9(1) of the Mortgage Brokers Act: A person affected by a direction, decision or order of the registrar under this Act may appeal it to the tribunal, and, unless otherwise provided for in this Act, sections and of the Financial Institutions Act apply.

4 Page 4 of 7 Chamber s Judge s Reasons [17] Get Acceptance and Mr. Westergaard advanced two principal arguments in response to the position taken by the defendants that the action amounted to a collateral attack on a decision by the Registrar. The chambers judge summarized these arguments in paragraph 15 of his reasons: 1. that the Registrar s decision is not made under this Act as required by s. 9.1 of the Mortgage Brokers Act which confers the right to appeal; and 2. there is no statutory basis for the Registrar s decision to include the allegations of misconduct in the Notice of Hearing and publicize them to the world. Hence the Registrar s policy of doing so is an unauthorized assertion of a regulation-making power which the Registrar does not have. [Emphasis in original.] [18] The chambers judge rejected the first submission. In doing so, he adopted the Tribunal s reasons that Registrar s hearings should be open to the public. The chambers judge concluded that it followed from that proposition that the decision to post a notice identifying the subject matter of the hearing was a decision made under the Act: para. 24. [19] In rejecting the second submission, the chambers judge said: [39] The essence of the plaintiffs argument is that where the statute is silent on procedural matters and the Lieutenant Governor in Council has a power to make regulations prescribing the practice and procedure of a hearing under s. 8 [of the Mortgage Brokers Act], failure to make provision in the Regulations for procedural matters means that the Registrar cannot proceed. [40] I am unable to accept this proposition. The statute clearly contemplates hearings by the Registrar. I have already stated that I agree with the Tribunal s reasoning that the open courts doctrine applies to the Registrar. I do not accept that the Lieutenant Governor in Council's failure to provide a procedural code for the Registrar s hearings means that he is unable to conduct hearings. I do not regard the Registrar s posting of Notices of Hearing containing allegations of misconduct as an example of impermissible sub-delegation of regulatory powers. Hence, I reject the plaintiffs argument under this heading. [20] The chambers judge dismissed the action with costs. He did not address the second ground on which dismissal had been sought, i.e., that the posting of a notice of hearing is a communication covered by absolute privilege. On the appeal, the Registrar and other defendants did not raise absolute privilege as a basis for upholding the order dismissing the action. Analysis [21] Get Acceptance and Mr. Westergaard attack the chambers judge s decision on two bases in their factum. Their first argument is that, in dismissing the action against FICOM and the Superintendent of Financial Institutions, the chambers judge failed to have regard to the fact that these defendants are legal entities separate and apart from each other and, more importantly, from the Registrar. They argue that s. 9 (1) of the Mortgage Brokers Act has no relevance to their claims against FICOM or the Superintendent, as it does not provide for any right of appeal from their actions. With respect to the Registrar, Get Acceptance and Westergaard say that the chambers judge erred in finding that the decision to post the notice was made under the Act. [22] Both parties advanced the positions set out in their factums on the premise that the posting of notices by the Registrar is a decision for the purposes of s. 9(1) of the Act. However, as the members of the division hearing this appeal were of the view that the interpretation of the word decision needed to be

5 Page 5 of 7 considered, counsel were advised several days before the hearing that they should be prepared to address this issue. Notwithstanding the short notice, counsel provided the Court with written submissions on this point before the hearing commenced. As I will now discuss, this is the issue on which I would decide the appeal. [23] Section 9(1) of the Mortgage Brokers Act provides [a] person affected by a direction, decision or order of the registrar under this Act with an appeal to the Financial Services Tribunal. The Registrar and the other defendants argue for a broad interpretation of decision. During oral argument, they submitted that decision should be construed as including a decision under statute that is of significant impact on the party s interests, and there are sufficient compelling reasons to hear it on an interlocutory basis. On the other hand, Get Acceptance and Mr. Westergaard took the position that a decision must be one that the Registrar is mandated to make under the Act. In their view, this does not include the posting of hearing notices, which they say is purely a matter of administrative practice or policy. [24] The Tribunal raised the question of its jurisdiction on the appeal taken by Evergreen Mortgage and Mr. Iantorno. Although the Registrar initially objected to the Tribunal s jurisdiction, he later withdrew that objection. It, therefore, appears that both sides supported the Tribunal s jurisdiction to hear an appeal from the posting of a notice of hearing. [25] In holding that the appeal brought by Evergreen Mortgage and Mr. Iantorno was properly before it, the Tribunal stated: [13] The Registrar has generally required that notices of hearing be published on the FICOM website. That requirement is, in ordinary parlance, a direction. That general direction was applied specifically to the Appellants. A copy of that direction was filed and forms part of the record in this appeal (the Direction ). There are also specific determinations of the Registrar that decline to remove the Notice of Hearing from the website and decline to publish the defence of the Appellants. Again, in ordinary parlance those are decisions of the Registrar (the Decisions ). Those Decisions form part of the record in this appeal. [14] The other requirement of section 9(1) is that the person appealing be a person affected by the direction or decision. In my opinion, Iantorno and Evergreen, being persons subject to the Direction and their applications being the subject matter of the Decisions, are persons affected by the Direction and the Decisions.... [16] While the matter here in issue might be considered interlocutory, because the point would become mute [sic] were the matter not to be decided now, I am persuaded that in the circumstances of this case an appeal lies and this Tribunal has jurisdiction to hear the appeal. In urging this Court to reach the same conclusion, the Registrar and the other defendants submit that the Tribunal applied the proper principles and exercised its discretion properly. [26] I am unable to accept the proposition that the determination of whether an appeal lies under s. 9(1) of the Mortgage Brokers Act can involve discretion on the part of the Tribunal. Section 9(1) provides a right of appeal. It does not vest in the Tribunal any discretion with respect to whether it will hear an appeal, as would be the case if leave to appeal were required. If the subject matter of the appeal is a direction, decision, or order of the registrar under [the] Act, then the Tribunal must hear it. [27] What may properly be the subject matter of an appeal under s. 9(1) of the Act is to be determined through the application of the modern approach to statutory interpretation, namely, that the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament : Elmer A. Driedger, Construction

6 Page 6 of 7 of Statutes, 2nd ed. (Toronto: Butterworths, 1983) at 87, cited most recently in H.J. Heinz Co. of Canada Ltd. v. Canada (Attorney General), [2006] 1 S.C.R. 441, 2006 SCC 13 at paras. 21, 67. As decision is associated with direction and order, a consideration of all of these words must form part of the analysis: McDiarmid Lumber Ltd. v. God s Lake First Nation, [2006] 2 S.C.R. 846, 2006 SCC 58 at paras. 30, 34. [28] As a starting point, regard should be had to nature of the Registrar s function. This is discussed in Cooper v. British Columbia (Registrar of Mortgage Brokers), 2000 BCCA 151, 75 B.C.L.R. (3d) 54, affirmed (sub nom. Cooper v. Hobart) [2001] 3 S.C.R. 537, 2001 SCC 79, in which it was held that the Registrar does not owe a duty of care to investors. In arriving at this conclusion, both Madam Justice Newbury and Madam Justice Huddart (concurring) in their respective judgments for this Court, and Chief Justice McLachlin and Mr. Justice Major in their joint judgment for the Supreme Court of Canada, considered the powers and duties of the Registrar under the Act. The following from the judgment of Huddart J.A. reflects the views of both Courts: [63] The Registrar s important decisions are whether to register an applicant as a mortgage broker, and if so, whether with or without conditions, if, when, and how to investigate the affairs of a registered mortgage broker, if and when to suspend a registration, whether to suspend without notice, if and when to cancel a registration, whether and when to seek the appointment of a receiver-manager of a registered mortgage broker, and whether and when to instigate a proceeding against an alleged offender. The important function of the Registrar is to balance the various private interests his decisions will affect so that the marketplace works honestly, openly, and thereby efficiently, in the interest of the public as a whole. See also: Pugliese v. British Columbia (Registrar of Mortgage Brokers, Financial Services Tribunal), 2008 BCCA 130, 79 B.C.L.R. (4th) 383 at para. 31. [29] Part 1 of the Act Registration contains all of the adjudicative and coercive powers given to the Registrar for the purpose of carrying out his mandate. Section 4 gives him the power to decide whether to register a mortgage broker. He has the power to order that a person be appointed to conduct an investigation (s. 6(2.1.)), and the power to order a person to pay costs (s. 6(9)). By virtue of s. 7(1), he can issue a direction for the purpose of freezing funds. Under s. 8(1), the Registrar can decide to suspend or cancel a person s registration. Of note is that in s. 7(1)(b), the suspension or cancellation of a broker s registration is referred to as a direction, decision, order, or ruling. In addition, as recognized in Pugliese, the Registrar has implied power to do such things that are necessary in order for him to carry out his duties in an efficient and effective manner. In Pugliese, the Registrar, acting under s. 4 of the Act, declined to grant registration to Mr. Pugliese, who was on parole, serving a five year sentence. In his written reasons, the Registrar indicated that he would not consider another application from Mr. Pugliese until five years after completion of the sentence. This Court held that the Registrar had implicit jurisdiction to do so under s. 4 of the Act: para. 38. [30] Decision, order and direction are words of indeterminate meaning. Their meaning depends on the context in which they are used. In my view, the fact that s. 9(1) is found in the part of the Act that gives the Registrar the power to make certain types of decisions, and issue certain types of orders and directions, reflects a legislative intention to provide for appeals only when it is the power to make those decisions, orders, or directions that has been exercised. In other words, the legislature did not intend to confer on an affected person a right to appeal everything done by the Registrar in the course of performing his statutory functions which could, in ordinary parlance, be said be a decision, order, or direction. If that were the case, then, for example, a staff member affected by an employment-related decision of the Registrar could appeal to the Tribunal. [31] Assuming, without deciding, that the Registrar has authority to post notices containing allegations of misconduct, this action is more aptly described as a practice. Although, in some sense, it can be said that this practice exists as a result of a policy decision by the Registrar, or as a result of a direction given by him to his staff, such a decision/direction was not made in the exercise of any of the adjudicative or

7 Page 7 of 7 coercive powers in the Act. Rather, it falls into the category of an administrative or operational decision. The fact that the Registrar redacted the notice in this case in response to objections from Get Acceptance and Mr. Westergaard does not change the legal character of what was done, as those changes were not made as a result of the exercise of any adjudicative or coercive power. [32] Given that no appeal lies from the posting of notices of hearing, it follows that the chambers judge erred in dismissing this action as an abuse of process. Without an appeal to the Tribunal, the collateral attack rule has no application. [33] One final matter. The Registrar and the other defendants applied to file a supplemental appeal book containing the substantive and penalty decisions rendered earlier this year by the Registrar following the hearing into the allegations against Get Acceptance, Mr. Westergaard, Evergreen Mortgage, and Mr. Iantorno. Although the Registrar and the other defendants concede that this material does not constitute fresh evidence, and is not relevant to the outcome of this appeal, they say it should nevertheless be received to complete the record. Get Acceptance and Mr. Westergaard oppose the introduction of this material. In light of the conclusion I have reached, I see no need to deal with this application. Costs [34] As this appeal is being decided on a point not raised before the chambers judge, and not raised in this Court, I think each party should bear their own costs of this appeal. I would leave the costs of the chambers hearing to be decided by the judge who hears the trial. Conclusion [35] I would allow the appeal, set aside the order of the chambers judge, and remit the matter to the Supreme Court, without prejudice to the right of the Registrar and the other defendants to apply to have the action dismissed on the basis of absolute privilege. The Honourable Mr. Justice Frankel I AGREE: The Honourable Madam Justice Kirkpatrick I AGREE: The Honourable Mr. Justice Groberman