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Administrative - Jurisdiction. 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 considers whether the OSC has jurisdiction to decide issues of breach of regulations by a separate but related body:Analysis of the Issues
I) Did the Merits Panel lack jurisdiction to make findings concerning breaches of MFDA and IPC Rules?
[20] Mr. Marrone submits that the MFDA had sole jurisdiction to determine questions of breach of its Rules, by virtue of s. 21.1(3) of the Securities Act, which provides:21.1.(3) A recognized self-regulatory organization shall regulate the operations and the standards of practice and business conduct of its members and their representatives in accordance with its by-laws, rules, regulations, polies, procedures, interpretations and practices. [21] Mr. Marrone submits that the Merits Panel’s jurisdiction is limited to only making orders arising from breaches of “Ontario securities law” pursuant to ss. 127 and 127.1 of the Securities Act. He submits that the definition found in section 1 of the Securities Act of “Ontario securities law” does not include rules enacted by self-regulatory organizations such as the MFDA.[3] Thus, he argues that the MFDA is the only body empowered to make findings as to the scope and extent of its rules.
[22] We disagree. First, Ontario securities law as defined includes Commission Rule 31-505, which requires registrants to deal fairly honestly and in good faith with their clients. This was the overarching allegation before the Merits Panel, and it found that Mr. Marrone breached this Rule. He did so by failing to follow MFDA Rules and IPC policies in a manner that the Merits Panel found was serious and that in all the circumstances amounted to a breach of Rule 31-505. The question of his breach of the duty within Rule 31-505 was intertwined with the underlying facts and his obligations under the Rules to which he was subject. This was squarely within the Merits Panel’s jurisdiction.
[23] Second, in what we are told are unusual, if not unique, factual circumstances in this case, the Merits Panel heard evidence that after receiving the complaint about Mr. Marrone’s conduct, the MFDA sought the assistance of the Commission. The MFDA sought that assistance to compel the estates lawyer who drafted the will and POAs to produce MU’s client file. The MFDA did not have the power to compel production of that file. The MFDA and the Commission worked together to address the issues of misconduct before the Merits Panel and the Tribunal.
[24] This choice aligns with the regulatory scheme by which self-regulatory organizations such as the MFDA are “recognized” by the Commission pursuant so s. 21.1(1) of the Securities Act and made subject to terms and conditions imposed by the Commission, as part of its legislative mandate. Further, within that same section, the Commission is specifically empowered to “make any decision, if it is satisfied that to do so would be in the public interest, make any decision with respect of any by-law, rule, regulation, policy, procedure, interpretation or practice of a recognized self-regulatory organization.” This subsection gives the Commission jurisdiction to take the steps it did here as part of its mandate under the Securities Act.
[25] This interpretation of s. 21.1 accords with the purposes of the legislation as defined in s. 1.1 of the Securities Act, which are:(a) to provide protection to investors from unfair, improper or fraudulent practices;
(b) To foster fair, efficient and competitive capital markets and confidence in capital markets;
(b.1) to foster capital formation; and
(c) to contribute to the stability of the financial system and the reduction of systemic risk. [26] In addition, the MFDA’s regulatory functions were governed by the Commission’s Order recognizing the MFDA as an SRO in accordance with ss. 21.1(1) and (2) of the Securities Act. The MFDA Recognition Order is consistent with our finding that the MFDA and the Commission have concurrent and overlapping jurisdiction with respect to the MFDA’s regulatory functions:7. Compliance by Members with MFDA Rules
(A) The MFDA shall enforce, as a matter of contract between itself and its members, compliance by its members and their Approved Persons with the rules of the MFDA and, to assist the Commission with carrying out its regulatory mandate, the MFDA shall cooperate with the Commission in ensuring compliance with applicable securities legislation relating to the operations, standards of practice and business conduct of members and Approved Persons, without prejudice to any action that may be taken by the Commission under securities legislation [Emphasis added]. [27] Further, among the fundamental principles that the Commission is to consider in pursuing these purposes, are the requirements for “the maintenance of high standards of fitness and business conduct to ensure honest and responsible conduct by market participants.”: Securities Act, s. 2.1. 2. By definition, a registrant such as Mr. Marrone is a “market participant”: Securities Act, s. 1(1).
[28] We conclude that none of the purposes, principles or statutory framework suggest that the legislature intended to create a bifurcated, exclusive jurisdiction for a self-regulatory organization (“SRO”) independent of the Commission. This ground of appeal must fail. . Zoghibi v. Air Canada
In Zoghibi v. Air Canada (Fed CA, 2024) the Federal Court of Appeal considered an appeal of a JR challenging a CHRC decision, here stemming from a complaint by an airline passenger seeking 'financial relief' for alleged discrimination.
Here the court noted a change in law that decided that a tribunal (the CHRC) had jurisdiction to consider general questions of law:(2) Did the Commission have jurisdiction or reasonably find that it has jurisdiction to interpret the Montreal Convention and the Carriage by Air Act?
[41] The appellant submits that the Commission cannot determine questions of law beyond its enabling statute. Instead, it is limited to assessing the sufficiency of the evidence before it. It cites Cooper v. Canada (Human Rights Commission), 1996 CanLII 152 (SCC), [1996] 3 S.C.R. 854, 140 D.L.R. (4th) 193 at para. 53.
[42] On this issue, the Federal Court held (at paras. 30-39) that the Commission was not so limited. I agree with the Federal Court, for the reasons it gave. In this regard I also substantially agree with the submissions of the Commission, which intervened on this issue.
[43] As the Federal Court noted, the Supreme Court revisited Cooper in Martin, above, and, substantially overturned it. Martin stands for the proposition that if an administrative decision-maker has the authority to decide questions of law, either expressly or implicitly as a matter of legislative interpretation, it can deal with legal questions before it. As Martin suggests, this includes issues of constitutional law.
[44] In Martin, the Supreme Court stated that its particular holding in Cooper—that the Commission had no implicit or explicit authority to decide questions of law under a now-repealed provision of the Canadian Human Rights Act (s. 15(c))—remained valid. But it continued by stating that "“[t]o the extent that [Cooper] is incompatible with [Martin]…the ratio of the majority judgment in ""Cooper"" is no longer good law""”" (at para. 47).
[45] In Cooper, the Supreme Court attached significance to whether the question of law was general and limited or whether the administrative decision-maker was adjudicative, rather than just performing a screening function. In light of Martin, that is no longer the law. In Martin (at para. 47), the Supreme Court specifically ruled that adjudicative nature of the administrative decision-maker counts for very little. The clear implication is that screening bodies, such as the Commission, do have the power to consider questions of law necessary to fulfil their screening function.
[46] The notion of implicit jurisdiction or jurisdiction as a matter of legislative interpretation in Martin deserves closer examination. At paragraph 41, the Supreme Court in Martin observes that heed must be paid to, among other things, the "“statutory mandate of the tribunal”", "“whether deciding questions of law is necessary to fulfilling this mandate effectively”", and whether "“depriving the tribunal of the power to decide questions of law would impair its capacity to fulfill its intended mandate”". This is not unlike the identification of the implicit powers of tribunals the Supreme Court usefully explored in Chrysler Canada Ltd. v. Canada (Competition Tribunal), 1992 CanLII 68 (SCC), [1992] 2 S.C.R. 394, 92 D.L.R. (4th) 609.
[47] In this case, the Commission’s function under the Canadian Human Rights Act is to act as a screening body, to winnow out complaints that cannot possibly succeed on the facts or the law. A complaint that cannot possibly succeed on the facts or the law should not be sent to the Tribunal for a time-consuming, resource intensive hearing. The purpose of this is to ensure the wise use of resources and the efficient disposition of complaints. To find that the Commission cannot look at whether some law makes a complaint doomed to fail is to frustrate that statutory purpose.
[48] For good measure, this Court has thrice decided that the Commission, when conducting its screening function, has a large amount of latitude, including the ability to measure a complaint against applicable law to see whether it can potentially succeed: Canada (Attorney General) v. Ennis, 2021 FCA 95, [2021] 4 F.C.R. 154 at para. 61; Gregg v. Air Canada Pilots Association, 2019 FCA 218 (dissenting reasons but not opposed by the majority on this point); Bell Canada v. Communications, Energy and Paperworkers Union of Canada, 1998 CanLII 8700 (FCA), [1999] 1 F.C. 113, 167 D.L.R. (4th) 432 (C.A.) at para. 38; see also Northcott v. Canada (Attorney General), 2021 FC 289. On other occasions, it has had to decide whether other administrative decision-makers should handle a complaint, which requires it to examine and interpret the governing statutes of those administrators: Canada (House of Commons) v. Vaid, 2005 SCC 30, [2005] 1 S.C.R. 667 at para. 99; Eadie v. MTS Inc. 2015 FCA 173, 475 N.R. 174 at paras. 96-105; MacFarlane v. Day & Ross Inc., 2010 FC 556, [2011] 4 F.C.R. 117 at paras. 73-74.
[49] In this case, the Commission determined whether remedies were legally available for the alleged breach of the appellant’s human rights in light of the Carriage by Air Act and the Montreal Convention. It did not adjudicate the merits of the appellant’s complaint but rather assessed whether the complaint should be dealt with using objective benchmarks including relevant law and precedent. It concluded that this task fell within the powers, duties and functions conferred upon it by s. 41 of the Canadian Human Rights Act.
[50] The Federal Court held that the Commission’s conclusion was reasonable. I agree for the foregoing reasons and the reasons the Federal Court gave. . 1386146 Ont. Inc. v. 2520650 Ont. Inc. et al.
In 1386146 Ont. Inc. v. 2520650 Ont. Inc. et al. (Div Court, 2022) the Divisional Court considered the appeal of an interlocutory order from the Local Planning Appeal Tribunal (LPAT) under the Aggregate Resources Act. The court commented on a tribunal's lack of inherent jurisdiction, which - in this case - required a separate statutory provision to allow the tribunal to infer that it had jurisdiction by 'necessary implication':[22] Statutory bodies may exercise only those powers granted to them expressly, or impliedly, by Parliament or the provincial legislation.
R. v. 974649 Ontario Inc., 2001 SCC 81, [2001] 3 S.C.R. 575, at para. 26.
[23] When reviewing a statute to determine the jurisdiction of the Tribunal, the words of the governing legislation are to be read in their entire context and in their grammatical and ordinary sense. They are to be interpreted harmoniously with the scheme of the legislation, the object of the legislation, and the intention of Parliament.
Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27 at para. 21; ATCO Gas & Pipelines Ltd. v. Alberta (Energy & Utilities Board), 2006 SCC 4, [2006] 1 S.C.R. 140, at para. 37.
[24] As noted above, section 18(8) of the Aggregate Act provides only two explicit options to the Tribunal when considering a licence transfer:(1) The Tribunal may direct the Minister to carry out the proposal; or
(2) The Tribunal may direct that the Minister rescind the proposal. Given the foregoing jurisprudence and given the absence of an explicit power to impose conditions on a licence transfer, in order for the Tribunal to consider the financial impacts of said transfer, the Tribunal must derive that power as a result of the doctrine of necessary implication.
Necessary Implication
[25] Necessary implication may be acquired when the following conditions are met:(a) the jurisdiction sought is necessary to accomplish the objectives of the legislative scheme and is essential to the Board fulfilling its mandate;
(b) the enabling act fails to explicitly grant the power to accomplish the legislative objective;
(c) the mandate of the Board is sufficiently broad to suggest a legislative intention to implicitly confer jurisdiction;
(d) the jurisdiction sought must not be one which the Board has dealt with through use of expressly granted powers, thereby showing an absence of necessity; and
(e) the legislature did not address its mind to the issue and decide against conferring the power upon the Board.
ATCO Gas & Pipelines Ltd., at para. 73. [26] In determining whether implied powers exist, the legal provision in question must be considered in relation to other provisions in the legislation. The ultimate goal is to determine the clear intent of the legislature.
ATCO Gas & Pipelines Ltd., at paras. 49 and 77.
[27] The court may not simply ground implied powers as a result of only coherence, logic or desirability. Rather, the Supreme Court of Canada has held that implied power must be necessary for the administration of the terms of the legislation. A gap in the range of remedies provided in a statute does not mean that the legislature necessarily intended that the unstated remedies be incidental.
Canada (Human Rights Commission) v. Canadian Liberty Net, 1998 CanLII 818 (SCC), [1998] 1 S.C.R. 626 at paras. 16 and 18.
[28] Finally, the function of a statutory body is of principal importance in assessing whether it is vested with an implied power to grant the remedy sought.
R. v. 974649 Ontario Inc., 2001 SCC 81, [2001] 3 S.C.R. 575 at para. 71. . Canadian Merchant Service Guild v. Algoma Central Corporation
In Canadian Merchant Service Guild v. Algoma Central Corporation (Fed CA, 2022) the Federal Court of Appeal made the important point that parties may not impose jurisdiction on a tribunal (or a court) by their agreement:[8] Fourth, the Guild argues that the Board unreasonably refused to grant the order sought on the consent of the parties, based on the submissions of the non-party interveners, the Seafarer’s International Union and Unifor. It is true that, as a matter of labour relations policy, effect will ordinarily be given to agreements negotiated between the parties, and parties are encouraged to resolve their differences amicably - a value that is reflected in the Code itself. That said, the Board must nevertheless satisfy itself that it has the statutory authority necessary to grant the relief sought, and jurisdiction cannot be conferred on judicial or quasi-judicial bodies by the agreement of the parties: see, for example, Hillier v. Canada (Attorney General), 2019 FCA 44 at para. 4; Pfizer Canada Inc. v. Teva Canada Limited, 2016 FCA 218 at paras. 6-7. . Hershkovitz v. Canada (Attorney General)
In Hershkovitz v. Canada (Attorney General) (Fed CA, 2021) the Federal Court of Appeal states the administrative doctrine of 'jurisdiction by necessary implication':[8] Second, the applicant also argues that the Tribunal had jurisdiction to hear an issue of natural justice and procedural fairness under the doctrine of jurisdiction by necessary implication to ensure that the applicant was not deprived of his right to contest the violation. However, this argument is misconceived as the doctrine of jurisdiction by necessary implication finds no application in this case. Indeed, the purpose of this doctrine, as described by Justice Bastarache in ATCO Gas & Pipelines Ltd. v. Alberta (Energy & Utilities Board), 2006 SCC 4, [2006] 1 S.C.R. 140 [ATCO], is to ensure that:... the powers conferred by an enabling statute are construed to include not only those expressly granted but also, by implication, all powers which are practically necessary for the accomplishment of the object intended to be secured by the statutory regime created by the legislature… (at para. 51). [9] The doctrine may be applied in circumstances where the Court is satisfied that the jurisdiction sought is essential to the administrative body fulfilling its statutory mandate and is not one to which the legislature has clearly addressed its mind (ATCO, at paras. 51, 73). Here, the legislative language is clear that paying the penalty puts an end to the proceeding and precludes the possibility of review in the circumstances of this case. In deciding as it did, the Tribunal did just that: accomplished its statutory mandate given by Parliament.
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