Pezim v. British Columbia Securities Commission et al., (1994) 46 B.C.A.C. 1 (SCC)

• Judge: Lamer, C.J.C., La Forest, Sopinka, Gonthier, McLachlin, Iacobucci and Major, JJ.
• Court: Supreme Court (Canada)
• Case Date: February 24, 1994
• Jurisdiction: Canada (Federal)
• Citations: (1994), 46 B.C.A.C. 1 (SCC)

Pezim v. Securities Comm. (1994), 46 B.C.A.C. 1 (SCC);

    75 W.A.C. 321

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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The Superintendent of Brokers (appellant) v. Murray Pezim, Lawrence Page and John Ivany (respondents) and The Attorney General of British Columbia, The Ontario Securities Commission, The Alberta Securities Commission and The Securities Dealers Society of Ontario (interveners)

The British Columbia Securities Commission (appellant) v. Murray Pezim, Lawrence Page and John Ivany (respondents) and The Attorney General of British Columbia, The Ontario Securities Commission, The Alberta Securities Commission, The Securities Dealers Society of Ontario (interveners)

(Nos. 23113; 23107)

Indexed As: Pezim v. British Columbia Securities Commission et al.

Supreme Court of Canada

Lamer, C.J.C., La Forest, Sopinka, Gonthier, McLachlin, Iacobucci and Major, JJ.

June 23, 1994.

Summary:

Prime and Calpine (a managed company) were reporting issuers whose common shares were listed for trading on the Vancouver Stock Exchange (VSE). Prime and Calpine were therefore both subject to the VSE's rules and policies concerning public disclo­sure of information and pricing of options. They were also subject to the continuing and timely disclosure requirements under s. 67 of the Securities Act (B.C.), which required disclosure of "material changes" in the affairs of a reporting issuer as soon as prac­ticable as well as the insider trading provi­sions under s. 68 of the Act. Pezim, Page and Ivany were directors and senior man­agement of both companies.

The Superintendent of Brokers, the chief administrative officer of the British Colum­bia Securities Commission, instituted pro­ceedings against the directors alleging viola­tions of the timely disclosure provisions (s. 67) and the insider trading provisions (s. 68). The Securities Commission held that the directors had contravened s. 67 by failing to disclose material changes in their affairs, but no contravention of the insider trading pro­vi­sions (s. 68) was found. The Commission suspended the directors from trading in shares for a period of one year through the removal of their trading exemp­tions under the Securities Act. Further, the directors were ordered to pay two-thirds of the costs incurred by the Commission and Superin­tendent. The directors appealed pursuant to s. 149 of the Securities Act.

The British Columbia Court of Appeal, in a decision reported 13 B.C.A.C. 1; 24 W.A.C. 1; 66 B.C.L.R.(2d) 257; 96 D.L.R. (4th) 137, Locke, J.A., dissenting, allowed the appeal and set aside the orders of the Commission. The directors were ordered to pay one-tenth of the costs incurred by the Commission and the Super­intendent. The Commission and Superin­tendent appealed.

The Supreme Court of Canada allowed the appeal, set aside the judgment of the Court of Appeal and substituted therefore the findings and orders of the Commission.

Administrative Law - Topic 9122

Boards and tribunals - Administrative appeals - Scope of appeal or standard of review - [See first Securities Regulation - Topic 1386 ].

Securities Regulation - Topic 6

General principles - Securities legislation - Nature of - The Supreme Court of Canada held that the Securities Act was regulatory in nature - "In fact, it is part of a much larger framework which regulates the securities industry throughout Canada. Its primary goal is the protection of the investor but other goals include capital market efficiency and ensuring public confidence in the system" - See paragraph 60.

Securities Regulation - Topic 1371

Practice - Hearings - Costs - The Securi­ties Commission (B.C.) found three cor­porate directors guilty of violations of the timely disclosure provisions (Securities Act, s. 67) - Pursuant to s. 144 of the Securities Act, the Commission ordered the removal of the directors' trading ex­emp­tions under the Act for one year and that the directors pay two-thirds of the costs of the proceedings - The Supreme Court of Canada held that the Com­mission's order must stand where the Commission had jurisdiction to make the order, and the order was not vexatious or erroneous in law - See paragraphs 104 to 110.

Securities Regulation - Topic 1386

Regulatory commissions - Statutory appeal to courts - Scope of appeal - The Supreme Court of Canada discussed the appropriate standard of review for an appellate court when reviewing a decision of a securities commission not protected by a privative clause, where there exists a statutory right of appeal and where the case turns on a question of interpretation - See paragraphs 61 to 77 - The court con­cluded that, as a general proposition, the decisions of the British Columbia Securi­ties Commission, falling within its exper­tise, warrant judicial deference - See para­graph 77.

Securities Regulation - Topic 1386

Regulatory commissions - Statutory appeal to courts - Scope of appeal - The Securi­ties Commission (B.C.) found three cor­porate directors guilty of violations of the timely disclosure provisions (Securities Act, s. 67) and imposed sanctions - The directors appealed under s. 149 of the Act - The British Columbia Court of Appeal set aside the Commis­sion's decision - The Commission appealed - The Supreme Court of Canada held that the majority of the Appeal Court erred in failing to ap­preciate the Commis­sion's role in an area requiring special knowledge and sophisti­cation and in fail­ing to recognize the Legislature's intent to confer a broad pub­lic interest mandate on the Commission to carry out its role - There was ample evi­dence to support each of the Commission's findings - There being no reviewable error of law, the majority of the Appeal Court erred in inter­fering with the Commission's findings.

Securities Regulation - Topic 5311

Trading in securities - Offences - Material changes - Nondisclosure - [See Securities Regulation - Topic 1371 ].

Securities Regulation - Topic 5311

Trading in securities - Offences - Material changes - Nondisclosure - Sec­tion 67(1)(a) of the Securities Act provided that "where a material change occurs in the affairs of a reporting issuer, the reporting issuer shall as soon as practicable issue and file a press release ... that discloses the nature and substance of the change ..." - The Securities Commission (B.C.), in pro­ceedings against three corporate directors for breaches of s. 67, determined what constituted "material changes" requiring disclosure - On an appeal under s. 149 of the Securities Act, the British Columbia Court of Appeal rejected certain of the Commission's findings on what constituted "material changes" - The Supreme Court of Canada held that the Appeal Court erred in interfering with the Commission's find­ings - See paragraphs 78 to 103.

Words and Phrases

As soon as practicable - The Supreme Court of Canada referred to the meaning of "as soon as practicable", as found in s. 67 of the Securities Act, S.B.C. 1985, c. 83 - See paragraphs 78 to 103.

Words and Phrases

Material change - The Supreme Court of Canada referred to the meaning of "material change", as found in s. 67 of the Securities Act, S.B.C. 1985, c. 83 - See paragraphs 78 to 103.

Words and Phrases

Material fact - The Supreme Court of Canada referred to the meaning of "material fact", as found in s. 68 of the Securities Act, S.B.C. 1985, c. 83 - See paragraphs 78 to 103.

Cases Noticed:

Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; 26 N.R. 341; 25 N.B.R.(2d) 237; 51 A.P.R. 237; 97 D.L.R.(3d) 417; 79 C.L.L.C. 14,209, refd to. [para. 63].

Syndicat national des employés de la com­mission scolaire régionale de l'Outaouais (CSN) v. Union des employés de service, local 298 (FTQ), [1988] 2 S.C.R. 1048; 95 N.R. 161; 24 Q.A.C. 244, refd to. [para. 63].

Union des employés de services, Local 298 v. Bibeault - see Syn­dicat national des employés de la com­mission scolaire régionale de l'Outaouais (CSN) v. Union des employés de service, local 298 (FTQ).

Domtar Inc. v. Commission d'appel en matiére de lésions professionnelles, [1993] 2 S.C.R. 756; 154 N.R. 104; 55 Q.A.C. 241, refd to. [para. 63].

Human Rights Commission (Ont.) and Bates v. Zurich Insurance Co., [1992] 2 S.C.R. 321; 138 N.R. 1; 55 O.A.C. 81, refd to. [para. 64].

Canada (Attorney General) v. Mossop, [1993] 1 S.C.R. 554; 149 N.R. 1, refd to. [para. 64].

University of British Columbia v. Berg, [1993] 2 S.C.R. 353; 152 N.R. 99; 26 B.C.A.C. 241; 44 W.A.C. 241, refd to. [para. 64].

Bell Canada v. Canadian Radio-Television and Telecommunications Commission, [1989] 1 S.C.R. 1722; 97 N.R. 15, refd to. [para. 66].

United Brotherhood of Carpenters and Joiners of America, Local 579 v. Bradco Construction Ltd., [1993] 2 S.C.R. 316; 153 N.R. 81; 106 Nfld. & P.E.I.R. 140; 334 A.P.R. 140, refd to. [para. 67].

Barry and Brosseau v. Alberta Securities Commission, [1989] 1 S.C.R. 301; 93 N.R. 1; 96 A.R. 241, refd to. [para. 69].

Brosseau v. Alberta Securities Commission - see Barry and Brosseau v. Alberta Securities Commission.

National Corn Growers' Association et al. v. Canadian Import Tribunal, [1990] 2 S.C.R. 1324; 114 N.R. 81; 74 D.L.R. (4th) 449; 45 Admin. L.R. 161, refd to. [para. 70].

Pacific Coast Coin Exchange of Canada et al. v. Ontario Securities Commission, [1978] 2 S.C.R. 112; 18 N.R. 52, refd to. [para. 74].

Four Star Management Ltd. v. British Columbia Securities Commission (1990), 46 B.C.L.R.(2d) 195 (C.A.), refd to. [para. 74].

Gordon Capital Corp. v. Ontario Securities Commission (1991), 50 O.A.C. 258; 140 O.S.C.B. 2713 (Div. Ct.), refd to. [para. 74].

Ontario Securities Commission v. Mitchell, [1957] O.W.N. 595 (C.A.), refd to. [para. 105].

Bay Street West Securities (1983) Inc., Morberg and Stroeder v. Alberta Securi­ties Commission (1984), 56 A.R. 19 (C.A.), refd to. [para. 105].

Statutes Noticed:

Company Act, R.S.B.C. 1979, c. 59, sect. 1, sect. 255, sect. 267, sect. 272 [para. 98].

Securities Act, S.B.C. 1985, c. 83, sect. 1(1) [para. 22]; sect. 4, sect. 14(1), sect. 14(2) [para. 71]; sect. 44(1), sect. 45(2), sect. 47(1), sect. 47(2), sect. 48(1), sect. 49(1), sect. 50(1) [para. 81]; sect. 67, sect. 68 [para. 22]; sect. 144(1) [para. 71]; sect. 144(1)(c), sect. 144(1)(d) [para. 22]; sect. 144.2 [para. 71]; sect. 149(1)(a), sect. 149(1)(b), sect. 149(1)(c) [para. 22]; sect. 153 [para. 71]; sect. 154.2 [para. 22].

Authors and Works Noticed:

Alboini, Victor P., Securities Law and Practice (2nd Ed. 1984), vol. 2 (loose leaf), pp. 18-13 [para. 82]; 18-14, 18-15 [para. 103]; 18-26 [para. 107].

Johnston, David L., Canadian Securities Regulation (1977), p. 1 [para. 60].

Stevens, George C., and Stephen D. Wort­ley, Murray Pezim in the Court of Appeal: Draining the Lifeblood from Securities Regulation (1992), 26 U.B.C. L. Rev. 331, generally [para. 89]; pp. 338 [paras. 93, 102]; 339 [para. 93].

Counsel:

M.J. Gregory Walsh and Catharine M. Esson, for the appellant, Superintendent of Brokers;

John L. Finlay and Susan E. Ross, for the appellant, British Columbia Securities Commission;

Alan J. Lenczner, Q.C., and Winton K. Derby, Q.C., for the respondents;

Deborah K. Lovett, for the intervener, the Attorney General of British Columbia;

Stephen T. Goudge, Q.C., and Sandra Forbes, for the intervener, Ontario Se­curities Commission;

Frances L. Zinger and Glenda A. Campbell, for the intervener, Alberta Securities Commission;

Bryan Finlay, Q.C., and Philip Anisman, for the intervener, Securities Dealers Society of Ontario.

Solicitors of Record:

Walsh & Company, Vancouver, British Columbia, for the appellant, Superin­tendent of Brokers;

Arvay, Finlay, Victoria, British Columbia, for the appellant, British Columbia Se­curities Commission;

Lenczner, Slaght, Royce, Smith, Griffin, Toronto, Ontario, for the respondents;

Attorney General of British Columbia, Victoria, British Columbia, for the intervener, the Attorney General of Brit­ish Columbia;

Davies, Ward & Beck, Toronto, Ontario, for the intervener, the Ontario Securities Commission;

Alberta Justice, Edmonton, Alberta, for the intervener, the Alberta Securities Com­mission;

Weir & Foulds, Toronto, Ontario, for the intervener, the Securities Dealers Society of Ontario.

This appeal was heard on February 24, 1994, before Lamer, C.J.C., La Forest, So­pinka, Gonthier, McLachlin, Iacobucci and Major, JJ., of the Supreme Court of Canada. The decision of the court was delivered in both official languages by Iacobucci, J., on June 23, 1994.