Curtis et al. v. Manitoba Securities Commission, (2006) 208 Man.R.(2d) 255 (CA)

• Judge: Scott, C.J.M., Monnin and Freedman, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: November 16, 2006
• Jurisdiction: Manitoba
• Citations: (2006), 208 Man.R.(2d) 255 (CA);2006 MBCA 135

Curtis v. Securities Comm. (2006), 208 Man.R.(2d) 255 (CA);

      383 W.A.C. 255

MLB headnote and full text

Temp. Cite: [2006] Man.R.(2d) TBEd. NO.040

Charles Curtis, Peter Olfert, Waldron (Wally) Fox-Decent, Lea Baturin, Albert Beal, Ron Waugh, Diane Beresford, Sylvia Farley, Robert Hilliard and Robert Ziegler (applicants/appellants) v. The Manitoba Securities Commission (respondent/respondent)

(AI 05-30-06277; 2006 MBCA 135)

Indexed As: Curtis et al. v. Manitoba Securities Commission

Manitoba Court of Appeal

Scott, C.J.M., Monnin and Freedman, JJ.A.

November 16, 2006.

Summary:

An investment fund ceased trading its shares because of issues respecting the valuation of the fund's portfolio. The Manitoba Securities Commission commenced an investigation and issued a notice of hearing, alleging that the fund's directors failed to act in the public interest. Prior to the hearing, a fund shareholder commenced a class action suit, not yet certified, against the directors and the Commission. The directors allegedly made material false representations and the Commission allegedly breached its duty of care. The directors requested that the Commission adjourn its hearing pending disposition of the class action suit, submitting that there existed a reasonable apprehension of bias because the Commission's ability to impartially prosecute the allegations was compromised by being named a defendant in that suit. The Commission declined an adjournment. The directors applied for, and obtained, leave to appeal (see 201 Man.R.(2d) 203; 366 W.A.C. 203; 2006 MBCA 1).

The Manitoba Court of Appeal allowed the appeal and stayed the proceedings pending further order of the court. There existed a reasonable apprehension of bias.

Administrative Law - Topic 2088

Natural justice - Constitution of board or tribunal (considerations incl. bias) - Bias -Apprehension of bias - An investment fund ceased trading its shares because of issues respecting the valuation of the fund's portfolio - The Manitoba Securities Commission commenced an investigation and issued a notice of hearing, alleging that the fund's directors failed to act in the public interest - Prior to the hearing, a fund shareholder commenced a class action suit, not yet certified, against the directors and the Commission as co-defendants - The directors allegedly made material false representations and the Commission allegedly breached its duty of care - The directors requested that the Commission adjourn its hearing pending disposition of the class action suit, submitting that there existed a reasonable apprehension of bias because the Commission's ability to impartially prosecute the allegations was compromised by being named a defendant in that suit - No actual bias was alleged - The Commission declined an adjournment - The Manitoba Court of Appeal ordered that the Commission proceedings be stayed until further order of the court - The fact that the Commission was a co-defendant in the class action raised a reasonable apprehension of bias - A reasonable and well-informed member of the public might believe that the Commission would be tempted to deflect blame onto the directors to absolve itself of liability in the action - The court rejected the submission that the rule of necessity operated to permit the Commission to hold the hearing.

Administrative Law - Topic 2097

Natural justice - Constitution of board or tribunal (considerations incl. bias) - Bias v. necessity - [See Administrative Law - Topic 2088 ].

Securities Regulation - Topic 1386

Regulatory commissions (incl. self-regulatory organizations) - Statutory appeal to courts or judicial review - Scope of appeal or standard of review - The Manitoba Securities Commission rejected the allegation of a reasonable apprehension of bias based on it being a co-defendant in an action commenced by investors against the directors being investigated by the Commission - Accordingly, the Commission refused to adjourn or stay the proceedings pending resolution of the action - The directors appealed - The Manitoba Court of Appeal held that the standard of review was correctness - See paragraphs 25 to 29.

Cases Noticed:

Bell Canada v. Canadian Telephone Employees Association et al., [2003] 1 S.C.R. 884; 306 N.R. 34; 2003 SCC 36, refd to. [para. 18].

Barry and Brosseau v. Alberta Securities Commission, [1989] 1 S.C.R. 301; 93 N.R. 1; 96 A.R. 241, refd to. [para. 18].

Robinson, Re (1993), 2 C.C.L.S. 130 (Ont. Sec. Comm.), refd to. [para. 22].

Caccamo v. Minister of Manpower and Immigration, [1978] 1 F.C. 366; 16 N.R. 405 (F.C.A.), dist. [para. 24].

Cartaway Resources Corp. et al., Re, [2004] 1 S.C.R. 672; 319 N.R. 1; 195 B.C.A.C. 161; 319 W.A.C. 161; 2004 SCC 26, refd to. [para. 26].

Bell Canada v. Canadian Radio-Television and Telecommunications Commission, [1989] 1 S.C.R. 1722; 97 N.R. 15, refd to. [para. 27].

Histed v. Law Society of Manitoba (2006), 208 Man.R.(2d) 44; 383 W.A.C. 44; 2006 MBCA 89, refd to. [para. 29].

Committee for Justice and Liberty Foundation et al. v. National Energy Board et al., [1978] 1 S.C.R. 369; 9 N.R. 115, refd to. [para. 30].

Benedict v. Ontario (2000), 136 O.A.C. 259; 51 O.R.(3d) 147 (C.A.), refd to. [para. 39].

Metropolitan Properties Co. (F.G.C.) Ltd. v. Lannon et al., [1968] 3 All E.R. 304, refd to. [para. 39].

Counsel:

K.A. Filkow, Q.C., and D.M. Stasiuk, for the appellants, C. Curtis, P. Olfert, W. Fox-Decent, L. Bautrin, A. Beal, D. Beresford, S. Farley and R. Ziegler;

M.G. Tadman, for the appellant, R. Hilliard;

D.A. Primeau, for the appellant, R. Waugh;

C.P. Besko, for the respondent;

K.R. Wittman, on a Watching Brief for Crocus Investment Fund.

This appeal was heard on October 17, 2006, before Scott, C.J.M., Monnin and Freedman, JJ.A., of the Manitoba Court of Appeal.

On November 16, 2006, Scott, C.J.M., delivered the following judgment for the Court of Appeal.