Ainsley Financial Corp. et al. v. Ontario Securities Commission et al.

• Jurisdiction: Ontario
• Court: Court of Appeal (Ontario)
• Judge: Dubin, C.J.O., Labrosse and Doherty, JJ.A.
• Citation: (1994), 77 O.A.C. 155 (CA)
• Date: 21 December 1994

Ainsley Financial v. Securities Comm. (1994), 77 O.A.C. 155 (CA)

MLB headnote and full text

Ainsley Financial Corporation, Arlington Securities Inc., Bregman Securities Corp., E.A. Manning Ltd., Glendale Securities Inc., Gordon-Daly Grenadier Securities, Marchment & MacKay Limited, Norwich Securities Ltd., Oxbridge Securities Inc. (plaintiffs/respondents) v. Ontario Securities Commission and Donald Page (defendants/appellants)

(File No. C16489)

Indexed As: Ainsley Financial Corp. et al. v. Ontario Securities Commission et al.

Ontario Court of Appeal

Dubin, C.J.O., Labrosse and Doherty, JJ.A.

December 21, 1994.

Summary:

A group of securities dealers challenged the validity of a policy statement drafted by the Ontario Securities Commission relating to the marketing and sale of penny stocks.

The Ontario Court, General Division, held that the policy statement was invalid. The Commission appealed.

The Ontario Court of Appeal dismissed the appeal.

Securities Regulation - Topic 1251

Regulatory commissions - Powers or jurisdiction - Guidelines - The Ontario Securities Commission drafted Policy Statement 1.10 which related to the mar­keting and sale of penny stocks - A group of securities dealers claimed that the Com­mission lacked the authority to issue Pol­icy Statement 1.10 - The Commission claimed that the Policy Statement was a guide to appropriate business practices in the marketing and sale of penny stocks - The Ontario Court of Appeal held that Policy Statement 1.10 was a mandatory provision and an attempt by the Commis­sion to impose a de facto legislative scheme with substantive requirements - The court held that the Commission lacked statutory authority to impose such a scheme.

Securities Regulation - Topic 1251

Regulatory commissions - Powers or jurisdiction - Guidelines - The Ontario Court of Appeal discussed the power of the Ontario Securities Commission to issue policy statements - The court stated "Nonstatutory instruments, like guidelines, are not necessarily issued pur­suant to any statutory grant of the power to issue such instruments. Rather, they are an ad­ministrative tool available to the regulator so that it can exercise its statu­tory au­thority and fulfil its regulatory mandate in a fairer, more open and more efficient manner. While there may be considerable merit in providing for resort to nonstatu­tory instruments in the re­gulator's enabling statute, such a provision is not a pre­requisite for the use of those instruments by the regulator." - See para­graph 12.

Cases Noticed:

Pezim v. British Columbia Securities Commission et al., [1994] 2 S.C.R. 557; 168 N.R. 321; 46 B.C.A.C. 1; 75 W.A.C. 1; 114 D.L.R.(4th) 385, refd to. [para. 9].

Hopedale Developments Ltd. v. Oakville (Town), [1965] 1 O.R. 259 (C.A.), refd to. [para. 11].

Maple Lodge Farms Ltd. v. Canada and Minister of Economic Development, [1982] 2 S.C.R. 2; 44 N.R. 354, refd to. [para. 11].

Capital Cities Communications Inc. et al. v. Canadian Radio-Television Commis­sion et al., [1978] 2 S.C.R 141; 18 N.R. 181; 81 D.L.R.(3d) 609, refd to. [para. 11].

Friends of the Oldman River Society v. Canada (Minister of Transport and Min­ister of Fisheries and Oceans), [1992] 1 S.C.R. 3; 132 N.R. 321; [1992] 2 W.W.R. 193; 88 D.L.R.(4th) 1, refd to. [para. 11].

Statutes Noticed:

Securities Act, R.S.O. 1990, c. S-5, sect. 27 [para. 6, footnote 1].

Authors and Works Noticed:

Canada Law Reform Commission, Report No. 26, Report on Independent Adminis­trative Agencies: Framework for Deci­sion Making (1985), pp. 29-31 [para. 11].

Janisch, Reregulating the Regulator: Ad­ministrative Structure of Securities Com­missions and Ministerial Responsibility (1989), Special Lectures of the Law Society of Upper Canada: Securities Law in the Modern Financial Marketplace, p. 107, refd to. [para. 14].

Ontario Task Force Report on Securities Regulation: Responsibility and Respon­siveness (June 1994), pp. 11, 12 [para. 12].

Counsel:

Dennis O'Connor, Q.C., and James Doris, for the appellants;

Brian Finlay, Q.C., Philip Anisman and J. Gregory Richards, for the respondents.

This appeal was heard on November 28, 29, 30, 1994, before Dubin, C.J.O., Labrosse and Doherty, JJ.A., of the Ontario Court of Appeal. Doherty, J.A., delivered the follow­ing judgment for the court and released the written reasons on December 21, 1994.