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OFFENCES AND ENFORCEMENT - Offences - Powers of Commission

Wednesday, July 24, 2019 @ 8:35 AM  

Last Updated: Thursday, July 25, 2019 @ 9:31 AM


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Appeal by C2 Ventures and its president Dobson from a decision of a Panel of the Financial and Consumer Affairs Authority that awarded compensation to four investors who the Panel found suffered financial losses caused by the appellants’ breaches of The Securities Act. In 2007, C2 sent a letter to several individuals, seeking investments in a real estate development project. In 2009, C2 informed investors that the project failed, that they did not co-own the project and that their investments were not secured. The appellants acknowledged they contravened registration and prospectus requirements of The Securities Act. In 2013, after negotiations between the Authority and the appellants, the parties obtained a consent order pursuant to which the appellant were to cease trading and were required to pay a $20,000 administrative penalty. The consent order did not address the issue of financial compensation for investors and did not set a date by which the Director had to apply for compensation as required by the Authority’s policy.

HELD: Appeal allowed. The Authority owed the appellants a high degree of procedural fairness. The negotiation of the consent order and the circumstances of its issuance did not take the matter outside of the Authority’s policy. The failure of the consent order to set out a date by which the Director had to issue the request for compensation, as it was required to do by the Authority’s policy, was a breach of procedural fairness and was an implicit recognition that the consent order resolved all statutory claims against the appellants. The Panel had no jurisdiction to proceed with the compensation hearing. The Authority failed to prove causation. There was no evidence before the Panel upon which it could make a finding the appellants’ contraventions had, in whole or in part, caused the investors’ losses. The compensation orders were set aside.

C2 Ventures Inc. v. Saskatchewan (Financial and Consumer Affairs Authority), [2019] S.J. No. 215, Saskatchewan Court of Appeal, R.K. Ottenbreit, N.W. Caldwell and L.M. Schwann JJ.A., June 14, 2019. Digest No. TLD-July222019007