Ironside et al. v. Alberta Securities Commission, (2009) 454 A.R. 285 (CA)

• Judge: Picard, Costigan and Watson, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: April 09, 2009
• Citations: (2009), 454 A.R. 285 (CA);2009 ABCA 134

Ironside v. Securities Comm. (2009), 454 A.R. 285 (CA);

      455 W.A.C. 285

MLB headnote and full text

Temp. Cite: [2009] A.R. TBEd. AP.052

J. Gordon Ironside and Robert W. Ruff (appellants) v. Alberta Securities Commission (respondent)

(0501-0254-AC; 0501-0304-AC; 0701-0016-AC; 0701-0331-AC; 2009 ABCA 134)

Indexed As: Ironside et al. v. Alberta Securities Commission

Alberta Court of Appeal

Picard, Costigan and Watson, JJ.A.

April 9, 2009.

Summary:

Ironside and Ruff were officers of a corporation (Blue Range) that was subjected to a hostile takeover by another corporation (Big Bear). After the takeover, Blue Range was placed under court protection under the Companies' Credit Arrangement Act and its assets were liquidated. The Alberta Securities Commission investigated all matters "relating to trading in the securities of Big Bear and Blue Range and into the disclosure of material changes, material facts and financial information pertaining to Big Bear and Blue Range by their officers, directors, employees and agents" under s. 41 of the Securities Act. Ironside and Ruff were charged with a number of violations of the Act alleging breach of generally accepted accounting principles and material non-disclosure and misrepresentation in documents required to be filed or furnished under the Act. A Commission panel found that Ironside and Ruff acted contrary to the public interest in their capacity as officers of the corporation. They made material misrepresentations and breached generally accepted accounting principles respecting documents required to be filed or furnished under the Act. The balance of the allegations were dismissed. Ironside was stripped of certain exemptions, was prohibited from being an officer or director of an issuer for life, was subjected to an administrative penalty of $180,000, and was ordered to contribute $675,000 towards the costs of the proceedings. Ruff was prohibited from being a director or officer of an issuer for 10 years, subjected to an administrative penalty of $50,000, and was ordered to contribute $175,000 towards costs. Both Ironside and Ruff appealed the adverse findings against them and alleged a reasonable apprehension of bias. Ironside also appealed the penalty imposed on him.

The Alberta Court of Appeal dismissed the appeal. The panel's finding that Ironside and Ruff knowingly allowed documents that were required to be filed or furnished to contain material misrepresentations and violations of generally accepted accounting principles was reasonable. The court stated that "further, we are not persuaded that a reasonable person, fully informed of the facts and circumstances and having thought the matter through, would find a disqualifying reasonable apprehension of bias on the part of the panel or of its members in the prosecution of Ironside and Ruff". The court dismissed Ironside's appeal from the sanctions imposed.

Securities Regulation - Topic 1305

Regulatory commissions (incl. self-regulatory organizations) - Hearings - Apprehension of bias - Ironside and Ruff were officers of a corporation (Blue Range) that was subjected to a hostile takeover by another corporation (Big Bear) - After the takeover, Blue Range was placed under court protection under the Companies' Credit Arrangement Act and its assets were liquidated - The Alberta Securities Commission investigated all matters "relating to trading in the securities of Big Bear and Blue Range and into the disclosure of material changes, material facts and financial information pertaining to Big Bear and Blue Range by their officers, directors, employees and agents" under s. 41 of the Securities Act - A Commission panel found that Ironside, as an officer and director, and Ruff, as an officer, acted contrary to the public interest by making material misrepresentations and breaching generally accepted accounting principles respecting documents required to be filed or furnished under the Act - Those documents included financial statements, interim reports to shareholders, news releases and director's circulars - Examples included significantly inflating Blue Range's reserves and production of natural gas to the public, manipulating information to mislead the public, and providing misleading information to independent auditors - Ironside was stripped of certain exemptions, was prohibited from being an officer or director of an issuer for life, was subjected to an administrative penalty of $180,000, and was ordered to contribute $675,000 towards the costs of the proceedings - Ruff was prohibited from being a director or officer of an issuer for 10 years, subjected to an administrative penalty of $50,000, and was ordered to contribute $175,000 towards costs - Both Ironside and Ruff appealed, alleging a reasonable apprehension of bias - The Alberta Court of Appeal stated that "we are not persuaded that a reasonable person, fully informed of the facts and circumstances and having thought the matter through, would find a disqualifying reasonable apprehension of bias on the part of the panel or of its members in the prosecution of Ironside and Ruff" - No grounds were provided to substantiate a reasonable apprehension of bias, institutional bias or any lack of fairness in the investigation or charging process - See paragraphs 102 to 120.

Securities Regulation - Topic 1371

Regulatory commissions (incl. self-regulatory organizations) - Practice - Hearings - Costs - [See Securities Regulation - Topic 5310 ].

Securities Regulation - Topic 1386

Regulatory commissions (incl. self-regulatory organizations) - Statutory appeal or judicial review - Scope of appeal or standard of review - Two corporate officers appealed a finding by a panel of the Alberta Securities Commission that they acted contrary to the public interest in their capacity as officers of the corporation by making material misrepresentations and breaching generally accepted accounting principles respecting corporate documents required to be filed or furnished under the Securities Act - The Alberta Court of Appeal determined the standard of review as follows: "correctness applies to extricable questions of law that (a) are truly jurisdictional in nature or (b) transcend the interpretation of the tribunal's own statute or statutes closely connected to its function or (c) are matters of general law that is both of central importance to the legal system as a whole and outside the adjudicator's specialized area of expertise ... Correctness also applies ... to issues of procedural fairness ... By comparison, reasonableness, assayed on palpable and overriding error, applies to questions of fact or mixed fact and law ... Reasonableness also applies to sanction, absent an extricable issue of law for which correctness may apply" - See paragraphs 26 to 28.

Securities Regulation - Topic 5310

Trading in securities - Offences - Giving false or misleading information - Ironside and Ruff were officers of a corporation (Blue Range) that was subjected to a hostile takeover by another corporation (Big Bear) - After the takeover, Blue Range was placed under court protection under the Companies' Credit Arrangement Act and its assets were liquidated - The Alberta Securities Commission investigated all matters "relating to trading in the securities of Big Bear and Blue Range and into the disclosure of material changes, material facts and financial information pertaining to Big Bear and Blue Range by their officers, directors, employees and agents" under s. 41 of the Securities Act - A Commission panel found that Ironside, as an officer and director, and Ruff, as an officer, acted contrary to the public interest by making material misrepresentations and breaching generally accepted accounting principles respecting documents required to be filed or furnished under the Act - Those documents included financial statements, interim reports to shareholders, news releases and director's circulars - Examples included significantly inflating Blue Range's reserves and production of natural gas to the public, manipulating information to mislead the public, and providing misleading information to independent auditors - Ironside was stripped of certain exemptions, was prohibited from being an officer or director of an issuer for life, was subjected to an administrative penalty of $180,000, and was ordered to contribute $675,000 towards the costs of the proceedings - Ruff was prohibited from being a director or officer of an issuer for 10 years, subjected to an administrative penalty of $50,000, and was ordered to contribute $175,000 towards costs - Both Ironside and Ruff appealed the adverse findings against them - Ironside also appealed the penalty imposed on him - The Alberta Court of Appeal dismissed the appeal - The panel's finding that Ironside and Ruff knowingly allowed documents that were required to be filed or furnished to contain material misrepresentations and violations of generally accepted accounting principles was reasonable - The sanctions imposed were reasonable, given Ironside's previous history of regulatory misconduct, his lack of remorse or responsibility and the scale of the misconduct - If anything, the administrative penalty and costs penalty imposed were lenient - See paragraphs 1 to 101, 121 to 125.

Securities Regulation - Topic 5312

Trading in securities - Offences - By directors or senior officers - [See Securities Regulation - Topic 5310 ].

Securities Regulation - Topic 5322

Trading in securities - Offences - Penalties and punishments - Administrative penalties - [See Securities Regulation - Topic 5310 ].

Securities Regulation - Topic 5325

Trading in securities - Offences - Penalties and punishments - Misrepresentation in documents filed or given under securities laws - [See Securities Regulation - Topic 5310 ].

Cases Noticed:

F.H. v. McDougall (2008), 260 B.C.A.C. 74; 439 W.A.C. 74; 380 N.R. 82; 297 D.L.R.(4th) 193; 2008 SCC 53, refd to. [para. 6].

Ironside et al. v. Alberta Securities Commission, [2005] A.R. Uned. 61; 2005 ABCA 156, refd to. [para. 17].

Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817; 243 N.R. 22, refd to. [para. 22].

Hennig, Re, 2005 ABASC 745 (Sec. Comm.), refd to. [para. 22].

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1; 2008 SCC 9, refd to. [para. 26].

Alberta Securities Commission v. Brost et al. (2008), 440 A.R. 7; 438 W.A.C. 7; 2008 ABCA 326, refd to. [para. 26].

Canadian Union of Public Employees et al. v. Ontario (Minister of Labour), [2003] 1 S.C.R. 539; 304 N.R. 76; 173 O.A.C. 38; 2003 SCC 29, refd to. [para. 27].

McLeod et al. v. Alberta Securities Commission et al. (2006), 391 A.R. 121; 377 W.A.C. 121; 2006 ABCA 231, refd to. [para. 27].

Anderson v. Alberta Securities Commission (2008), 437 A.R. 55; 433 W.A.C. 55; 2008 ABCA 184, refd to. [para. 28].

Del Bianco v. Alberta Securities Commission (2004), 357 A.R. 36; 334 W.A.C. 361; 2004 ABCA 344, refd to. [para. 28].

R. v. Cook (D.W.), [1997] 1 S.C.R. 1113; 210 N.R. 197; 188 N.B.R.(2d) 161; 480 A.P.R. 161, refd to. [para. 40].

R. v. Darrach (A.S.), [2000] 2 S.C.R. 443; 259 N.R. 336; 137 O.A.C. 91; 2000 SCC 46, refd to. [para. 40].

R. v. Jolivet (D.), [2000] 1 S.C.R. 751; 254 N.R. 1; 2000 SCC 29, refd to. [para. 40].

Carrier v. Wan et al., [2008] A.R. Uned. 222; 2008 ABCA 318, refd to. [para. 52].

Hanke v. Resurfice Corp. et al., [2007] 1 S.C.R. 333; 357 N.R. 175; 404 A.R. 333; 394 W.A.C. 333; 2007 SCC 7, refd to. [para. 52].

Kerr et al. v. Danier Leather Inc. et al., [2007] 3 S.C.R. 331; 368 N.R. 204; 231 O.A.C. 348; 2007 SCC 44, refd to. [para. 72].

Bahcheli v. Alberta Securities Commission et al. (2007), 409 A.R. 388; 402 W.A.C. 388; 2007 ABCA 166, refd to [para. 75].

R. v. R.D.S., [1997] 3 S.C.R. 484; 218 N.R. 1; 161 N.S.R.(2d) 241; 477 A.P.R. 241, refd to. [para. 102].

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. 102].

Merchant v. Law Society of Alberta (2008), 440 A.R. 377; 438 W.A.C. 377; 2008 ABCA 363, leave to appeal dismissed (2009), 396 N.R. 398 (S.C.C.), refd to. [para. 103].

Boardwalk Reit LLP v. Edmonton (City) et al. (2008), 437 A.R. 199; 433 W.A.C. 199; 91 Alta. L.R.(4th) 49; 2008 ABCA 176, leave to appeal denied (2008), 386 N.R. 392 (S.C.C.), refd to. [para. 103].

Robertson v. Edmonton Chief of Police et al. (2004), 362 A.R. 44; 2004 ABQB 519, refd to. [para. 110].

Ruffo (Juge) v. Conseil de la magistrature et autres, [1995] 4 S.C.R. 267; 190 N.R. 1, refd to. [para. 110].

R. v. Gillis (E.J.) (1994), 149 A.R. 395; 63 W.A.C. 395; 91 C.C.C.(3d) 575 (C.A.), refd to. [para. 113].

R. v. Stenset (G.L.) (1999), 232 A.R. 284; 195 W.A.C. 284; 135 C.C.C.(3d) 112; 1999 ABCA 109, refd to. [para. 113].

British Columbia Securities Commission v. Branch and Levitt, [1995] 2 S.C.R. 3; 180 N.R. 241; 60 B.C.A.C. 1; 99 W.A.C. 1, refd to. [para. 113].

Histed v. Law Society of Manitoba (2006), 208 Man.R.(2d) 44; 383 W.A.C. 44; 274 D.L.R.(4th) 326; 2006 MBCA 89, leave to appeal denied (2007), 369 N.R. 396; 228 Man.R.(2d) 115; 427 W.A.C. 115 (S.C.C.), refd to. [para. 114].

R. v. McClure (D.E.), [2001] 1 S.C.R. 445; 266 N.R. 275; 142 O.A.C. 201; 2001 SCC 14, refd to. [para. 119].

Ryan v. Law Society of New Brunswick, [2003] 1 S.C.R. 247; 302 N.R. 1; 257 N.B.R.(2d) 207; 674 A.P.R. 207; 2003 SCC 20, refd to. [para. 124].

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. 124].

Counsel:

S. Carscallen, Q.C., and B.L. Robinson, for the appellant, Ironside;

J. Laycraft, Q.C., for the appellant, Ruff;

R.S. Abells, Q.C., D.A. Young and D.M. Volk, for the respondent.

This appeal was heard on December 2, 2008, at Calgary, Alberta, before Picard, Costigan and Watson, JJ.A., of the Alberta Court of Appeal.

The following memorandum of judgment was delivered by the Court and filed on April 9, 2009.