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Securities - Ontario Securities Commission (OSC). Binance Holdings Limited v. Ontario Securities Commission
In Binance Holdings Limited v. Ontario Securities Commission (Ont CA, 2025) the Ontario Court of Appeal allowed joined appeals, here brought against investigative administrative "summons demanding the production of documents and, depending on how the summons is interpreted, responses to interrogatories (“information”) from Binance about its operations ...".
Here the court considers the range of SA s.144(1) ['Revocation or variation of decision'] regarding Ontario Securities Commission decisions:[45] I will begin by expressing my disagreement with a general contextual argument that Binance advances, namely that, given the recognition by the Supreme Court of Canada in York Region District School Board v. Elementary Teachers’ Federation of Ontario, 2024 SCC 22, 492 D.L.R. (4th) 613, at para. 90 of the important role administrative tribunals have in vindicating Charter rights, s. 144(1) should be interpreted to enable the Commission to vindicate Charter rights by revoking or varying a summons unreasonably issued by an appointed investigator.
[46] As Rowe J. explained at paras. 89-90 of York Region, tribunals play a “primary role in the determination of Charter issues falling within their specialized jurisdiction” (emphasis added). It follows that if a matter does not fall within the specialized jurisdiction of a tribunal, the tribunal does not play this role. He also explained at para. 90 that “Charter rights can be effectively vindicated [by tribunals] through the exercise of statutory powers and processes”. It follows that the Charter role that Rowe J. describes depends upon the scope of the tribunal’s specialized jurisdiction and statutory power. It would therefore be circular, and incorrect, to rely upon the importance of a tribunal’s role in vindicating Charter rights as a factor in defining the reach of its specialized jurisdiction and statutory power. The statutory discretion of the Commission provided by s. 144(1) is to be identified using the ordinary principles of statutory interpretation.
[47] In my view, Commissioner Kordyback applied those principles correctly. She identified them accurately and began with an examination of the ordinary, grammatical meaning of the provision, when read in the context of the entire statute: Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26. She found correctly that the opening phrase in s. 144(1), the “Commission may make an order revoking or varying a decision of the Commission”, imposes a jurisdictional constraint on the kind of decisions that can be revoked or varied. She noted, again correctly, that the issue before her was whether a summons is “a decision of the Commission”. She then recognized that s.11(1) of the Securities Act authorizes the Commission to “appoint one or more persons to make such an investigation”, whereas, in contrast, s. 13 authorizes, a “person making an investigation or examination under section 11 or 12” (emphasis added) to issue a summons. She noted that both “Commission” and “person” are defined terms in s. 1(1) of the Securities Act. “Commission” is defined as “the Ontario Securities Commission”, and makes no reference to persons, whereas “person” is defined as including “an individual”. She therefore found that whereas the decision to appoint an investigator pursuant to s. 11(1) is a decision of the Commission, a decision to issue a summons pursuant to s. 13 is a decision of the person appointed, and not of the Commission. I agree with this reasoning.
[48] Commissioner Kordyback went on to find that the definition of “decision” under s. 1(1) of the Securities Act “bolsters this interpretation”. The definition of “decision” is limited to “decisions of the Commission, the Tribunal or a Director”. She concluded that since the choice to issue a s. 13 summons is a decision of the person appointed to make an investigation and not of the Commission, it is not a “decision” within the meaning of s. 1(1). In this regard, she expressed agreement with an earlier Commission decision in B (Re), 2020 ONSEC 21, that a summons is not a “decision of the Commission” or a “Director”, and with the outcome in Universal Settlement International Inc. (Re), (2003), 26 O.S.C.B 1307, aff’d 2003 CanLII 23539 (ON SCDC), 67 O.R. (3d) 670 (Div. Ct.), another Commission decision that came to the same conclusion. In my view, the plain language of the provisions supports this interpretation.
[49] Binance argues, to the contrary, that when the statute is read in its entirety it must be recognized that the investigator “is the Commission” for the purposes of s. 144(1) because the statute makes plain that the investigation is undertaken for Commission purposes and the Commission exercises control over the results of the investigation. For example, the Commission has exclusive right to control the fruits of the investigation (s. 16(2)); the Commission Chair may require the investigator to provide a report (s. 15(2)), and it is the Commission that has authority to move for a finding of contempt if a summons is not complied with (s. 13(1)). Binance suggests that Commissioner Kordyback failed to recognize that the appointed investigator conducts their investigation “as the Commission” because she focused unduly on the language of the provision and failed to look at the substance of the entire statute. I disagree. The fact that the investigation is done in aid of the Commission’s work and the Commission ultimately controls the fruits of the investigation does not make the decision to issue a summons a Commission decision. As I have indicated, the plain meaning of the provisions indicates otherwise.
[50] So, too, does the apparent scheme of the Securities Act. Section 11(1) empowers the Commission to “appoint” a person or persons to make an investigation “by order”. An order of appointment is “to choose someone officially for a job or responsibility”: Cambridge Dictionary (online edition). A formal act of appointment would not be needed if the Commission was going to conduct the investigation itself. It could simply assign the task within its organization, without the exercise of a statutory power of appointment. In my view, the only sensible explanation for a provision authorizing the Commission to appoint an investigator or investigators is that the legislators sought to create a separation between those who investigate, on the one hand, and the Commission, the body with regulatory authority over the matter investigated, on the other. I therefore disagree with Binance. In my view, an investigator does not conduct the investigation “as the Commission”.
[51] Finally, Binance relies on the policy sense in placing applications for review before the Commission to support its interpretation. It argues that since applications to the Commission would be an appropriate, more expeditious and less expensive mechanism for reviewing investigative summons than a court application would be this court should interpret s. 144(1) as conferring that authority. Even if Commission review may be preferable to judicial review as a policy matter, this consideration cannot drive whether the Summons is a decision of the Commission since there is no basis for giving the legislation a purposive interpretation to achieve this outcome. It would not be appropriate to do so in my view, both because it is not an interpretation the plain language of the statute can bear, and indications of legislative intention are to the contrary.
[52] The Capital Markets Modernization Taskforce, in its final report of January 2021, at pp. 100-02, explicitly considered recommending that the Commission should have the power to review investigative summonses but declined to make that recommendation, balancing concerns about compromising and unduly delaying compliance. In its recommendations, it did suggest to the Minister that consideration should be given to “whether there is a need for a mechanism for parties to escalate summons-related issues beyond the CEO[4] potentially to the [Tribunal].” The Securities Commission Act, 2021, which created the Tribunal in March 2021, was introduced for the purpose of implementing recommendations made in the Capital Markets Modernization Taskforce report. The legislature clearly accepted the recommendation to create the Capital Markets Tribunal, but it did not change the relevant provisions of the Securities Act or recognize a right to have summonses reviewed by the Commission or Tribunal.
[53] In my view, Commissioner Kordyback interpreted the provisions correctly. I would dismiss this ground of appeal.
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