National Bank Financial Ltd. v. Nova Scotia (Securities Commission), 2012 NSCA 99

Editor’s Note: Corrigendum released on September 25, 2012. Original judgment has been corrected with text of corrigendum appended. NOVA SCOTIA COURT OF APPEAL Citation: National Bank Financial Ltd. v. Nova Scotia (Securities Commission) , 2012 NSCA 99 Date: 20120921 Docket: CA 392519 Registry: Halifax Between: National Bank Financial Ltd. and Mr. Eric Hicks Appellants v. The Nova Scotia Securities Commission, Staff of the Nova Scotia Securities Commission, The Attorney General of Nova Scotia, Mr. Kenneth G. MacLeod, Mr. Calvin Wadden and Daniel F. Potter Respondents Judges: Saunders, Hamilton and Bryson, JJ.A.

Appeal Heard: September 18, 2012, in Halifax, Nova Scotia Held: Appeal dismissed per reasons for judgment of the Court, with costs in the amount of $2,000 including disbursements, payable forthwith by the appellants to each of Messrs. MacLeod, Wadden and Potter Counsel: David G. Coles, Q.C. and James A. Hodgson, for the appellants Heidi G. Schedler, for the respondent, Staff of the Nova Scotia Securities Commission W. Dale Dunlop, for the respondents, Calvin Wadden and Kenneth G. MacLeod Daniel F. Potter, respondent, in person Edward A.

Gores, Q.C., for the respondents, Attorney General of Nova Scotia and Minister of Finance Reasons for judgment : [ 1 ] The appellants appeal Commissioner David W. Gruchy ’ s April 17, 2012 decision, dealing with, among other issues, the matter this Court remitted to him in the Amended Order issued pursuant to its decision reported as Nova Scotia (Securities Commission) v. Potter , 2012 NSCA 12 , ( “ the January 31 decision ” ).

[ 2 ] At the conclusion of the hearing, we unanimously dismissed the appeal and indicated we would provide brief reasons by the end of the week.

We choose to give our reasons as quickly as possible, in the hope that the quick disposition of this appeal will allow the proceedings before Commissioner Gruchy to proceed expeditiously as he considers appropriate. [ 3 ] To preserve the fairness and integrity of these ongoing proceedings and protect the public interest, these reasons, which will be published, will be kept deliberately brief and limited in detail. [ 4 ] The relevant background and principles of law governing disclosure and discoveries in the context of a hearing pursuant to s. 134 of the Securities Act , R.S.N.S. 1989, c. 418, such as the one to be conducted by Commissioner Gruchy, are set out in the January 31 decision. [ 5 ] The Amended Order issued following the January 31 decision provided: 1.

IT IS ORDERED THAT the appeal is allowed with no award of costs. 2. IT IS FURTHER ORDERED THAT the issue of the propriety of the questions asked, and any other procedural or evidentiary issues arising therefrom, is remitted to the Commissioner of the Nova Scotia Securities Commission for determination. 3. IT IS FURTHER ORDERED THAT pending further order of this court: (

a) The sealed decision of Justice Rosinski dated June 16, 2011 shall remain sealed; (

b) The order of this Court of August 25, 2011 issuing a publication ban and sealing order is hereby continued; (

c) The undertakings given pursuant to para. 63 of Justice Rosinski’s sealed decision dated June 16, 2011 are hereby continued. 4.

PROVIDED HOWEVER THAT nothing in clause 3 above shall fetter the Commissioner's freedom to entertain a renewed application to him by staff and to fully consider evidence, process and all other matters which the Commissioner considers necessary for the proper disposition of all issues arising from the application, including his receipt or subsequent disclosure of confidential matters which may be captured in clause 3 above; it being for the Commissioner to decide what he should receive by way of evidence, if, as, when and to whom disclosure should be made and what, if any, arrangements for confidentiality should be implemented. [ 6 ] Commissioner Gruchy directed that the impugned discovery question be answered and, after considering the public interest, made findings and ordered that other steps be taken in light of the documents before him and his

interpretation of Rule 15-501, the Nova Scotia Security Commission ’ s General Rules of Practice and Procedure . [ 7 ] The appellants argue Commissioner Gruchy erred by ordering that the discovery question be answered, making findings beyond his jurisdiction and ordering that other steps be taken. [ 8 ] Given (1) the expertise and specialization of the Commission, (2) the purpose (to protect the public by regulating the market and to foster the process of capital formation, (s. 1A)) and the complexity of the Act , its regulations and rules, (3) the fact that the issues central to this appeal fall squarely within the Commissioner ’ s mandate and application of his authority under the Act and (4) the context in which these issues arise (discovery and disclosure in preparation for the upcoming hearing into allegations of wrongdoing brought by the Commission ’ s enforcement branch against some of the respondents and motions by some of the respondents for revocation of the investigation orders due to alleged improprieties by the enforcement branch, bias and undue influence), the standard of review is one of

reasonableness; Dunsmuir v. New Brunswick , 2008 SCC 9 ; Newfoundland and Labrador Nurses ’ Union v. Newfoundland and Labrador (Treasury Board) , 2011 SCC 62 ; Alberta (Information and Privacy Commissioner) v. Alberta Teachers ’ Association , 2011 SCC 61 ; and Robinson v. Nova Scotia Power Inc. , 2012 NSCA 93 . [ 9 ] As this Court stated plainly in its Amended Order: the scope of discovery, and other procedural and evidentiary issues arising therefrom, are for the Commissioner.

Our January 31 decision makes it clear that (1) the Commissioner has a broad statutory mandate, including a mandate to set the parameters of the discoveries he ordered ( ¶ 16 and 19) and to control the process before him to the extent necessary to prevent an injustice and accomplish the statutory objectives ( ¶ 24); (2) the Commissioner has expertise in interpreting the Act , its regulations and rules, especially in terms of determining what is in the public interest; (3) that courts should be reluctant to intrude into control of a specialized tribunal ’ s process ( ¶ 26); and (4) that the Act gives the Commissioner extensive authority to deal with disclosure, which may involve balancing competing interests in light of the overall statutory scheme and the specific circumstances of the case, as set out in an earlier decision of this Court; Nova Scotia (Securities Commission) v.

Potter , 2006 NSCA 45 . [ 10 ] Commissioner Gruchy ’ s decision that the question be answered is reasonable, as are his other findings and his decision that other steps be taken. [ 11 ] As was done in the January 31 decision, in order to preserve the integrity of the process before the Commissioner, we (

a) continue the sealing order of Justice Rosinski ’ s sealed decision; (

b) continue the order of this Court of September 4, 2012 issuing a publication ban and sealing order; and (

c) continue the terms of undertakings sought and given as described in ¶ 63 of Justice Rosinski ’ s sealed decision. However, to be clear, the foregoing are not intended in any way to fetter Commissioner Gruchy. [ 12 ] Application may later be made to this Court for reconsideration of the foregoing orders ( ¶ 11(a), (

b) and (c)), once proceedings under the Act in this matter are fully resolved. [ 13 ] We have repeatedly said that the Commission is owed considerable deference in carrying out its statutory duties in the public interest. The Legislature has given the Commission a broad authority and central role to apply its specialized knowledge in managing a complex regulatory securities regime and protecting the investing public. We trust that this decision will enable Commissioner Gruchy to get on with his work. [ 14 ] As indicated previously, the appeal is dismissed.

Costs in the amount of $2,000 including disbursements are payable forthwith by the appellants to each of Messrs. MacLeod, Wadden and Potter. We do not order costs payable to the Staff of the Commission as their arguments supported the appellants in this appeal. Nor do we order the appellants to pay costs to the Attorney General of Nova Scotia as he did not request costs, given the reason for his participation which was to ensure that all public interest concerns were fully canvassed at the hearing. [ 15 ] After giving a brief

summary of our decision at the conclusion of the hearing, Mr. Coles requested a 2-week stay, to permit him time to obtain instructions concerning a possible effort by the appellants to seek leave to appeal our decision to the Supreme Court of Canada. We are not disposed as a panel to consider the request. A party seeking a stay should do so on notice in the normal course, if so advised. Per Curiam

Saunders, J.A. Hamilton, J.A. Bryson, J.A. NOVA SCOTIA COURT OF APPEAL Citation: National Bank Financial Ltd. v. Nova Scotia (Securities Commission) , 2012 NSCA 99 Date: 20120925 Docket: CA 392519 Registry: Halifax Between: National Bank Financial Ltd. and Mr. Eric Hicks Appellant v. The Nova Scotia Securities Commission, Staff of the Nova Scotia Securities Commission, The Attorney General of Nova Scotia, Mr. Kenneth G. MacLeod, Mr. Calvin Wadden and Daniel F. Potter Respondents Revised decision: The text of the original decision has been corrected according to this erratum dated September 25, 2012.

Judges: Saunders, Hamilton and Bryson, JJ.A. Appeal Heard: September 18, 2012, in Halifax, Nova Scotia

Held: Appeal dismissed per reasons for judgment of the Court, with costs in the amount of $2,000 including disbursements, payable forthwith by the appellants to each of Messrs. MacLeod, Wadden and Potter Counsel: David G. Coles, Q.C. and James A. Hodgson, for the appellants Heidi G. Schedler, for the respondent, Staff of the Nova Scotia Securities Commission W. Dale Dunlop, for the respondents, Calvin Wadden and Kenneth G. MacLeod Daniel F. Potter, respondent, in person Edward A.

Gores, Q.C., for the respondents, Attorney General of Nova Scotia and Minister of Finance Erratum: Under the heading “ Counsel ” Heidi G. Schedler is not counsel for the respondent, The Nova Scotia Securities Commission .