Suppal v Investment Industry Regulatory Date:, 2018 MBCA 17

Citation: Suppal v Investment Industry Regulatory Date: 20180208 Organization of Canada et al , 2018 MBCA 17 Dockets: AI17-30-08981; AI17-30-08982 IN THE COURT OF APPEAL OF MANITOBA BETWEEN : ) R. K. Suppal RAVINDRA KUMAR SUPPAL ) on his own behalf ) (Appellant) Applicant ) K. T. Williams, ) T. H. Godfrey and ) K. A. Pedersen - and - ) for the Respondent The ) Investment Industry ) Regulatory Organization of THE INVESTMENT INDUSTRY ) Canada REGULATORY ORGANIZATION OF ) CANADA and THE MANITOBA ) S. A.

Gingera SECURITIES COMMISSION ) for the Respondent ) The Manitoba Securities (Respondents) Respondents ) Commission ) ) Chambers motion heard and ) Decision pronounced: ) February 8, 2018 CHARTIER CJM [ 1 ] The applicant moves to extend the time to submit an application for leave to appeal from a decision of the Manitoba Securities Commission (the MSC) dated March 24, 2017, and, if the extension is granted, moves for leave to appeal from that decision. He also moves for leave to appeal from the decision of the MSC dated November 30, 2017. After the hearing, I denied his motions with reasons to follow.

These are those reasons. [ 2 ] The applicant was registered with the Investment Industry Regulatory Organization of Canada (IIROC) or its predecessor, for approximately 30 years. An IIROC investigation into his conduct between 2005 and 2010 regarding his dealings with a client resulted in disciplinary proceedings. On June 10, 2013, IIROC found him liable on three counts: 1) failing to use due diligence to learn and remain informed of the essential facts relative to an account; 2) making unsuitable trades; and 3) making unauthorized trades.

That same panel issued its reasons with respect to the penalty decision on September 30, 2014, leaving the payment of the fine and costs on such terms as IIROC may permit. [ 3 ] The applicant appealed both the liability and penalty decisions to the MSC. He did so within the appeal period and before IIROC had determined the terms of payment of the fine and costs. On March 24, 2017, the MSC issued its reasons for decision (the March decision). It upheld IIROC’s finding on liability, but varied part of the penalty decision by reducing the fine from $150,000 to $50,000.

It did not disturb the $20,000 order of costs against the applicant. The March decision stated that the payment of the fine and costs was to be made on such terms as the MSC staff would determine. [ 4 ] On November 30, 2017, the Secretary of the MSC mailed a letter to the applicant and to IIROC (the November decision) stating the payment of the $50,000 penalty was to be paid in 24 equal payments on the 1st of each month commencing January 1, 2018, and that the $20,000 costs award was to be paid in full no later than December 1, 2018.

On December 27, 2017, the applicant filed these two motions (request to extend the time to appeal the March decision on liability and penalty and request for leave to appeal the November decision on the payment schedule). [ 5 ] On the extension of time request, for the applicant to be successful, he must meet three criteria: that there was a continuous intention to appeal from a time within the period when the appeal should have been commenced; that there is a reasonable explanation for the delay; and that there are arguable grounds of appeal on questions of law or jurisdiction (see Lughas v Manitoba Public Insurance Corp , 2014 MBCA 63 at para 3 ).

In addition, even if not all of the criteria are met, the Court may grant the extension if, in all of the circumstances, the justice of the case requires that it be granted ( see Hunter v Hunter , 2000 MBCA 134 ; and Rodych v Rasidescu , 2011 MBCA 89 at para 12 ). [ 6 ] Pursuant to

section 30 of The Securities Act , CCSM c S50 (the Act ), any appeal made by a person affected by a

direction, decision, order or ruling of the MSC must be commenced within 30 days after it is mailed. The March decision was mailed on March 27, 2017. The applicant, therefore, had until April 26, 2017 to move for leave to appeal.

As noted above, his request was made on December 27, 2017, eight months after the expiration of the 30-day appeal period. [ 7 ] The applicant submits, with respect to the first two criteria, that he always intended to appeal the March decision and that he delayed doing so until December 27, 2017 because he believed that the appeal period started only after the MSC had determined what would be the payment terms for the fine and costs (the November decision). In my view, this belief is not borne out either by his actions or by the evidence.

As noted above, both the IIROC and the MSC decisions stipulated clearly that the payment

schedule would be left to staff. The evidence shows that the applicant appealed the IIROC decision within the prescribed appeal period despite not having the payment

schedule determined. He could not explain why he understood the IIROC appeal procedure and not the similar MSC appeal procedure, nor could he explain how the

schedule of payment was a relevant consideration on the issue of liability or the quantum of the penalty. [ 8 ] Moreover, the applicant was unable to direct me to any communication which stated that he intended to appeal the March decision in regards to liability or quantum. In fact, the evidence shows the opposite.

For example, the applicant wrote in an October 16, 2017 email to the MSC staff: “As I have advised on many occasions, I am willing to pay the $70,000.00 that I have been ordered to pay” and again in a November 17, 2017 email to IIROC and the MSC staff: As everyone is aware I have been ordered to pay a fine of $50,000.00 and costs of $20,000.00 as a condition of being registered with IIROC.

Although I would have preferred an order that required me to pay no fine and no costs I accept the fact that I have been ordered to pay $70,000.00. [emphasis added] [ 9 ] I now move to the third criterion: whether the applicant has arguable grounds of appeal. As was explained by Hamilton JA in Bartel v Manitoba Securities Commission , 2004 MBCA 181 , while

section 30 of the Act does not specifically restrict appeals to questions of law or jurisdiction, the requirement for leave has the effect of limiting issues to questions of law or jurisdiction. As a result, it is understood that the “arguable grounds” criterion relates to only questions of law or jurisdiction. [ 10 ] The applicant submits that his arguable ground of appeal is that the MSC erred in law in failing to consider his “ability to pay” when determining the appropriate sanction and the quantum of the penalty.

I accept that the question of whether a tribunal failed to consider a relevant factor raises a question of law. I am also willing to accept that the applicant’s “ability to pay” is a relevant factor with respect to sanction and quantum of penalty considerations. [ 11 ] The applicant’s argument is straightforward. He contends that because the MSC never mentioned “ability to pay” in its decision, it did not consider it. The question I must determine is whether this ground of appeal is arguable or has the potential to succeed.

In my view it does not. [ 12 ] First, the evidentiary record shows that the applicant argued “ability to pay” before both the IIROC and on appeal to the MSC. The MSC was therefore alive to the issue. In addition, IIROC’s decision, which was being reviewed on appeal by the MSC, makes reference to his “ability to pay” argument on more than one occasion. It was rejected out of hand by IIROC because “[n]o net worth statement was provided, nor were tax returns [from 2005 to 2009] provided for the period during which the [applicant]” was making the unauthorized trades ( 2013 IIROC 33 at para 40 ).

The record also shows that the applicant failed to provide on appeal to the MSC, an authenticated net worth statement and tax returns for that same crucial period (2005 to 2009). [ 13 ] Second, t he fact that the applicant’s position was not referred to or retained does not mean that the MSC did not consider it. In the end, the decision reduced the applicant’s fine from $150,000 to $50,000.

In my view, when the MSC’s decision is read as a whole, it shows that the MSC panel took into consideration the full range of factors in reaching its appeal decision. [ 14 ] In the result, the applicant does not meet any of the three criteria, nor have I been persuaded that it is right and just in all of the circumstances that time for commencing the appeal be extended.

In light of my decision to deny the applicant’s extension of time request, I need not consider his leave application with respect to the March decision. [ 15 ] This leaves me with one final matter to consider: whether leave to appeal should be granted with respect to the November decision on the payment

schedule for the fine and costs. [ 16 ] On leave applications, the applicant must establish that the MSC erred on a question of law or jurisdiction which does not require the Court to assess or analyse conflicting factual issues. In addition, there must be an arguable case of substance in regards to the question of law or jurisdiction.

Finally, the question of law or jurisdiction must be of sufficient importance to warrant consideration by the province’s highest court—it must have a reasonable prospect of success (see Neufeld et al v The Manitoba Securities Commission , 2017 MBCA 107 at para 9 ) [ 17 ] The applicant submits that, in regards to the November decision, the MSC staff made the two following errors in law: 1) By ordering that the $70,000 had to be paid over a 24-month period without first considering whether it was appropriate to impose such a

schedule if doing so would effectively end his career in the financial services industry; and 2) By finding that the payment

schedule proposed by the applicant was not tenable and could not be accepted because it was

inconsistent with the deterrent effect that such penalties are meant to create. [ 18 ] This motion for leave can be quickly disposed. These questions are not questions of law or jurisdiction. At best, they are questions of mixed fact and law. Such questions will not engage the attention of the Court on an appeal. Moreover, they are not of sufficient importance to attract the attention of the province’s highest court. [ 19 ] As a result, the applicant’s motion to extend the time to submit an application for leave to appeal from the March decision and his motion for leave to appeal from the November decision are denied with costs. CJM