101115379 Saskatchewan Ltd., 101114386 Saskatchewan Ltd., Cryptguard Ltd., Alena Pastuch, Teamworx Productions Ltd., Idendego Inc. Appellants v. Financial and Consumer Affairs Authority, 2019 SKCA 31

Court of Appeal for Saskatchewan Citation: 101115379 Saskatchewan Ltd. v Saskatchewan (Financial and Consumer Affairs Authority) , 2019 SKCA 31 Date: 2019-03-29 Docket: CACV2576 Between: 101115379 Saskatchewan Ltd., 101114386 Saskatchewan Ltd., Cryptguard Ltd., Alena Pastuch, Teamworx Productions Ltd., Idendego Inc. Appellants And Financial and Consumer Affairs Authority Respondent Docket: CACV2655 Between: 101115379 Saskatchewan Ltd., 101114386 Saskatchewan Ltd., Cryptguard Ltd., Alena Pastuch, Teamworx Productions Ltd., Idendego Inc.

Appellants And Financial and Consumer Affairs Authority Respondent Before: Jackson, Whitmore and Ryan-Froslie JJ.A. Disposition: Appeals dismissed Written reasons by: The Honourable Madam Justice Ryan-Froslie In concurrence: The Honourable Madam Justice Jackson The Honourable Mr. Justice Whitmore On Appeal From: Financial and Consumer Affairs Authority Decision dated July 23, 2014 Appeal Heard: March 14, 2018 Counsel: Alena Pastuch on her own behalf and on behalf of the corporate appellants Sonne Udemgba and Nathaniel Day for the Respondents Ryan-Froslie J.A. I.

Introduction [ 1 ] On July 23, 2014, a panel appointed pursuant to s. 17 of The Securities Act, 1988 , SS 1988–89, c S-42.2 [ Securities Act ], found Alena Pastuch, 101114386 Saskatchewan Ltd., 101115379 Saskatchewan Ltd., Cryptguard Ltd., Idendego Inc. (also known as Strikeback Ltd.) and Teamworx Productions Ltd. [collectively the appellants] had breached ss. 27(2), 58(1), 44.1(2), 55.1(b), and 135.7(1) and (2) of the Securities Act [ Merits Decision ].

In a December 18, 2014, decision, that same hearing panel imposed an administrative penalty against the appellants of $100,000, ordered them to pay up to $100,000 to each person or company that had suffered financial loss as a result of their conduct and assessed costs against the appellants of $46,638. In addition, Ms.

Pastuch, who was the sole director and officer of all the corporate appellants, was prohibited pursuant to s. 134(1)(h.1) from becoming or acting as a registrant, an investment fund manager or a promotor [ Sanctions Decision ]. [ 2 ] The appellants now appeal both the Merits Decision and the Sanctions Decision pursuant to s. 11 of the Securities Act . The grounds for the appeals are numerous but in essence allege bias or a reasonable apprehension of bias on the part of the chair and the panel, a denial of procedural fairness and that the decisions were unreasonable.

The appellants contend these are questions of law, which resulted in a denial of fundamental justice and a breach of their ss. 7, 11 and 15 Charter rights. [ 3 ] In my view, for the reasons set out herein, the appeals must be dismissed. II. Background [ 4 ] Up until October 1, 2012, the Securities Act was administered by the Saskatchewan Financial Services Commission. As of that date, the Saskatchewan Financial Services Commission was continued as the Financial and Consumer Affairs Authority for Saskatchewan [FCAA].

In these reasons, FCAA should be taken as referring to the Saskatchewan Financial Services Commission where the context so requires. [ 5 ] In January 2008, the FCAA received a request for information with respect to Teamworx Productions Ltd. That inquiry led to an investigation by FCAA staff – April Stadnek, Ed Rodonets and Sandra Novak – as to whether the appellants were operating in contravention of the Securities Act . The investigation culminated in a notice of hearing dated August 27, 2010.

A public hearing was then held, which began on November 16, 2012, and continued for over a year finally concluding in December 2013. A sanctions hearing followed. During the hearings, Brian Pederson acted as a lay representative for the appellants and also testified on their behalf. [ 6 ] The appellants brought numerous applications both prior to and during the merits hearing. Those applications included multiple requests for disclosure, applications to remove the notice of hearing from FCAA’s website, motions requiring an investigation

into the conduct of FCAA investigators and for removal of the FCAA prosecutor, requests to stay the hearing, motions for the recusal of the chair and the hearing panel, and requests for a closed hearing, publication bans and confidentiality orders. In addition, there were numerous requests for adjournments, many of which related to Ms. Pastuch’s medical issues. Appendix A, attached to this judgment, summarizes the most significant of these proceedings. [ 7 ] On December 5, 2012, as testimony in the merits hearing was about to begin, Ms.

Pastuch requested an adjournment or a stay of proceedings on the basis that full disclosure had not been made by the FCAA. When that request was denied, the appellants decided not to attend the hearing. The chair made two phone calls on the record – one to Mr. Pederson and one to Ms. Pastuch. He left messages for both inquiring why the appellants had not appeared and advising them that the panel had no option but to proceed with the hearing in their absence. [ 8 ] The FCAA called its first witness – Ms. Stadnek. At the end of her testimony, the hearing was adjourned and resumed on December 10, 2012. Mr.

Pederson appeared on that date and requested the issuance of 17 subpoena duces tecum “to compel disclosure of evidence”. He asked that the hearing not proceed until all the material associated with the subpoenas had been provided and reviewed by the appellants. A publication ban was also requested. Mr. Pederson read a statement from Ms. Pastuch regarding her participation and appearance at the hearing. Ms. Pastuch indicated that if the proceedings continued, neither she nor any agent on the appellants’ behalf would be able to cross-examine the FCAA witnesses as the appellants had not received full disclosure.

She also alleged the hearing panel was not impartial. When the panel took a recess, Mr. Pederson left the proceedings and did not return. [ 9 ] The appellants were given notice that the merits hearing would proceed in their absence on numerous occasions including August 27, 2010, April 25, 2012, October 26, 2012, December 10, 2012, December 13, 2012, January 4, 2013, March 20, 2013, April 16, 2013, and May 10, 2013. [ 10 ] Other than to bring various applications, the appellants did not participate in the merits hearing until after the FCAA had closed its case.

All but one of the FCAA witnesses testified in the absence of the appellants and none of them were cross-examined by the appellants. [ 11 ] The appellants attended the merits hearing on June 21, 2013, after being notified by the chair that the panel would proceed to closing arguments if they did not appear and present evidence. The appellants then presented their case, which included testimony from both Mr. Pederson and Ms. Pastuch. [ 12 ] On July 12, 2013, Ms. Pastuch indicated that for health reasons she was unable to continue to testify orally.

The hearing panel suggested she give the remainder of her testimony-in-chief in writing. Ms. Pastuch agreed. She was given until close of business on July 22, 2013, to provide her written testimony. That deadline was extended to late September. While Ms. Pastuch provided some written testimony-in-chief, she never completed that testimony. By letter dated October 21, 2013, the hearing panel advised Ms. Pastuch there was little to be gained by delaying the hearing further and the parties were directed to and did file written arguments. [ 13 ] On July 23, 2014, the hearing panel rendered its decision on the merits.

It found the appellants had committed the following breaches of the Securities Act : (

a) trading in securities without registering as a dealer (s. 27(2)); (

b) trading in securities without filing a preliminary or other prospectus and obtaining the Director’s receipt (s. 58(1)); (

c) engaging in unfair practices (s. 44.1(2)); (

d) fraud (s. 55.1); and (

e) withholding and concealing information reasonably required for a hearing and hindering or interfering with investigators (s. 135.7). III. The Panel’s Decisions [ 14 ] Leading up to, and during the course of the merits hearing, the panel rendered numerous decisions on procedural and preliminary matters. Two of those decisions are of particular importance to this appeal. The first is the panel’s December 4, 2012, decision pertaining to preliminary motions [ Preliminary Decision ]. It addressed the appellants’ request to dismiss the proceedings due to lack of full disclosure.

It also addressed the appellants’ application to have the panel recuse itself on the basis of bias. The second decision was rendered on September 9, 2013 [ Recusal Decision ], and addressed the appellants’ request that the panel chair be recused on the basis of bias. A.

December 4, 2012, Preliminary Decision [ 15 ] In its December 4, 2012, Preliminary Decision , the panel dealt with a number of procedural complaints made by the appellants, including matters pertaining to disclosure and that the panel and chair should recuse themselves as being biased. [ 16 ] The panel first addressed the disclosure issues, which included an allegation that the FCAA had failed to provide the audio recording of an interview of J.K., one of the investors.

It found the FCAA had originally failed to provide the appellants with the digital audio recording of that interview because the recording had been lost or misplaced. However, once it had been found it was provided to the appellants. [ 17 ] Ms. Pastuch had also complained about a failure to disclose service contracts relating to the appellate companies, which she alleged were in a black binder provided to the FCAA by her legal counsel. The panel determined it was the appellants’ legal counsel, not FCAA staff, that had misplaced the black binder.

Further, based on the evidence before it, the panel found it was “unclear” whether the service contracts had ever been “handed over” to FCAA investigators or “whether they had been retained with (or misplaced by)” the appellants’ legal counsel. [ 18 ] With respect to other allegations of inadequate disclosure, including the FCAA’s failure to provide to the appellants all the documents in the possession of the appellants’ former accountant, Frank Garrett, and the appellants’ bank, the panel found there was “insufficient evidence” to support those allegations, which included a failure to provide full disclosure and an assertion that evidence had

been spoiled. The hearing panel indicated, however, that it would remain alert to those allegations during the course of the hearing. [ 19 ] The panel dismissed the appellants’ recusal application.

Its reasons for doing so were set out at page 5 of its decision: The evidence in support of these allegations of bias (or perceived bias) against the Hearing Panel and the Chairperson of the Hearing Panel were based almost exclusively on the Respondents’ opinion and perception of facts and events that are substantially different from what the Hearing Panel believed were the facts at the time, or what the Hearing Panel recalled from its collective memory of the particular events. There are two events which illustrate competing apprehensions or perceptions of bias.

At one instance, the Hearing Panel through the Commission Secretary requested witness availability from only one party rather than both parties, in deciding on when a hearing would be scheduled. This oversight was improper, even though the canvassed party would be proceeding first with its witnesses. However, that hearing never proceeded on those dates, and no prejudice ensued as a result. The process of canvassing both sides (or neither side) for availability for hearing dates was conducted in a more balanced approach thereafter.

On the other hand in the second instance, the Hearing Panel considered an earlier motion by the Respondents for an order to have the Notice of Hearing and Allegations removed from the Commission’s website because of concerns about the details contained in it. The Hearing Panel agreed with the Respondents’ motion and issued the requested order directing the investigation staff to remove the Notice of Hearing and Allegations. B. September 9, 2013, Recusal Decision [ 20 ] As indicated, the panel’s September 9, 2013, decision pertained to a motion by the appellants for recusal of the panel chair.

The grounds cited by the appellants as supporting recusal included: (

a) that one of the FCAA witnesses – D.B. – was a brother of one of the chair’s law partners; (

b) that there was outstanding civil litigation against one of the appellate corporations – Cryptguard – that involved another partner of the chair’s law firm; (

c) that the chair’s law firm had prepared an investment contract between D.B. and Cryptguard, one of the appellate corporations; (

d) that the chair had requested Ms. Pastuch’s doctor to release medical information without Ms. Pastuch’s consent; (

e) that the chair did not protect and keep confidential Ms. Pastuch’s medical information; (

f) that the chair had accused Ms. Pastuch of wrongdoing but failed to investigate wrongdoing by counsel and investigators of the FCAA; (

g) that the chair had refused to allow the appellants to recall FCAA witnesses; and (

h) that the chair had refused to permit the presentation of financial documents from the appellants’ bank without calling an officer of that bank to identify the documents. [ 21 ] The panel concluded that while one of the FCAA witnesses was the brother of a partner in the chair’s law firm, neither that witness nor the law partner were parties in the proceedings before the panel.

Further, when the witness had testified, the chair did not know who the witness was or that he was a sibling of one of his law partners. [ 22 ] The panel found as a fact that there was no active litigation file against Cryptguard involving the chair’s law firm. [ 23 ] The panel concluded that while the chair’s law firm had drafted an investment contract for one investor, the terms of that contract were not in question and the contract itself was “immaterial and irrelevant to the allegations” in issue. [ 24 ] The panel found that on August 17, 2011, Ms.

Pastuch’s doctor had written to the panel to advise there should be “no communication with Pastuch because of unspecified medical reasons” and stated that “no personnel from the Commission could contact Pastuch for any meetings or hearings”. In accordance with those instructions, the chair wrote Ms. Pastuch’s doctor requesting additional information from him. The chair reminded the doctor at that time that he would require permission from Ms. Pastuch before disclosing any medical information to the panel. In the circumstances, the panel concluded that portion of Ms.

Pastuch’s application was unfounded. [ 25 ] The panel had advised Ms. Pastuch and the appellants’ lay representative, Mr. Pederson, that it would be relying upon them to flag any sensitive medical issues that might arise during the hearing and that they believed should be kept out of the public realm. Ms. Pastuch and Mr. Pederson, however, absented themselves for the bulk of the hearing. The panel stated there were times when it “went in camera to question counsel about the relevance of the personal information that was being presented.

During such in camera meetings, counsel was required to justify the need for certain evidence and was instructed on the scope of medical information considered relevant and/or private”. [ 26 ] The panel also set out the basis for its belief that Ms. Pastuch had brought applications to delay or avoid the merits hearing. They referred to the “inordinate amount of motions, requests and submissions” and the fact that on occasion the information or statements submitted by Ms.

Pastuch were inconsistent with other information provided or were factually wrong. [ 27 ] The panel was unable to locate any witness list wherein the appellants proposed to call 30 witnesses. The list submitted by the appellants named 17 witnesses, many of whom had already testified for the FCAA. The appellants were not allowed to recall those witnesses as the appellants had decided not to attend the hearing or cross-examine them. Ms. Pastuch had indicated many of the subpoenas requested were not to compel a witness’s appearance for the purpose of testifying but rather to obtain documentation. The

panel viewed that as an improper use of the subpoenas. [ 28 ] Finally, the panel dealt with the appellants’ ongoing allegation of incomplete disclosure and the requirement that a bank official attend to introduce bank documents into evidence. The panel noted Ms. Pastuch had signing authority on the relevant bank accounts yet she had not asked for copies of the bank statements. A subpoena was in fact issued for the bank executive but there was no evidence it was served and the bank executive did not testify. [ 29 ] As a result of its findings, the panel dismissed the recusal application. C.

The July 23, 2014, Merits Decision [ 30 ] The panel identified “balance of probabilities” as the standard of proof to be applied in rendering its decision. [ 31 ] The panel determined that all of the corporate appellants had been directed and controlled by Ms. Pastuch.

It found the material supplied by the appellants “primarily through written submission, failed to focus on the key elements of the allegations against them … [t]oo often it contained general statements or a singular example, while failing to address the large number of detailed particulars that supported the allegations against them”. [ 32 ] The panel went on to conclude at paragraph 22 of its decision that: 22. … In order for the Panel to dismiss the large volume of evidence that was presented in an effort to prove the allegations, it would have to conclude that the investigators were both incompetent and unethical, and that the majority of the witnesses were lying to the Panel during their testimony. … [ 33 ] Based on the evidence, including that of Mr.

Pederson and Ms. Pastuch, the panel held that the appellants had traded in securities and that they had done so without being registered under the Securities Act in contravention of s. 27(2). Further, the panel found the appellants had not filed prospectuses as required by s. 58 of the Securities Act . By way of explanation, Ms. Pastuch had testified that she relied on advice from legal and financial advisors, which proved to be incorrect.

The panel viewed that testimony as an admission that s. 58 had been breached. [ 34 ] The panel then found the appellants had breached s. 44.1 of the Securities Act by engaging in unfair trading practices. Those practices included pressuring investors to make initial purchases quickly and to increase their investments; advising investors not to ask too many questions or they would be removed as investors and subjected to legal action or police investigation; and by falsely advising investors that their funds were “guaranteed” and that a trust fund had been established to cover initial investments.

The panel described those tactics as “overly aggressive threats combined with misinformation whenever someone questioned the authenticity of the investment” ( Merits Decision at para 39). [ 35 ] The panel found the appellants had also breached s. 55.1 of the Securities Act in that Ms. Pastuch had made misleading and untrue statements that had influenced both potential and existing investors and had lied to them about material facts to influence their perception of the value and security of their investment. As such, the hearing panel concluded Ms.

Pastuch had acted in a manner that was deceitful and dishonest and that she had been fraudulent. In effect, the panel found the appellants had sought and accepted people’s investment funds under fraudulent and false pretences and used those funds for personal purposes. [ 36 ] The panel then turned to the question of whether the appellants had breached s. 135.7 of the Securities Act . The panel found Ms. Pastuch had initially failed to provide a full list of investors when requested to do so by FCAA staff and that she had feigned confusion over what she was being asked to provide.

The panel also found that it took about a year for Ms. Pastuch to attend a meeting requested by FCAA investigators and for which she had been subpoenaed. The panel further found there had been obvious interference with the investigation as a result of excessive delays in meeting with the investigators and Ms. Pastuch’s reluctance to provide complete documentation on the investors. Finally, the panel found Ms. Pastuch had contacted investors about the ongoing investigation and directed them to sign a document refusing to cooperate with the investigators.

Based on those findings, the hearing panel convicted the appellants of breaching s. 135.7 of the Securities Act . D.

December 18, 2014, Sanctions Decision [ 37 ] Before rendering its Sanctions Decision , the panel requested and received further submissions from the appellants and the FCAA. [ 38 ] The FCAA had requested the panel apply the provisions of s. 135.6(4) of the Securities Act as amended by The Securities Amendment Act, 2012 , SS 2012, c 32 , s 21, which removed the maximum limit of $100,000 on financial compensation that can be ordered paid to persons affected by contraventions or non-compliance with the Securities Act .

The FCAA also requested costs of $71,178.10. [ 39 ] The panel was unwilling to apply s. 135.6(4) as amended as to do so would amount to a retroactive application of that

section as it had not been in existence when the appellants were served with the notice of hearing. [ 40 ] The panel went on to state: The Hearing Panel continues to be mindful of the fact that Alena Pastuch has accepted no responsibility for her actions. She continues to blame legal and financial advisors, the FCAA, the investigation staff, the Hearing Panel, and certain investors, among others. At no time did she express remorse for her actions and the impact that her actions had on those who invested in her business activities.

She consistently and persistently initiated steps and proceedings that can only be described as a deliberate abuse of process. On that basis, there are no mitigating factors for the Panel to consider in assessing the appropriate sanctions in this case. These factors influenced the

Panel’s conclusions in determining the appropriate sanctions as set out below. [ 41 ] The panel then imposed the following sanctions: (

a) that the appellants, individually and collectively, cease trading in any securities or exchange contracts pursuant to s. 134(1) (

d) of the Securities Act ; (

b) that the appellants, individually and collectively, cease acquiring securities or exchange contracts pursuant to s. 134(1)(d.

l) of the Securities Act ; (

c) that the appellants, individually and collectively, cease giving advice pursuant to s. 134(l)(

e) of the Securities Act ; (

d) that pursuant to s. 134(1)(

h) of the Securities Act , Ms. Pastuch: (

i) resign her position as a director or officer of an issuer, registrant or investment fund manager; (iv) be prohibited from becoming or acting as a director or officer of an issuer, registrant or investment fund manager; and (

v) not be employed by an issuer, registrant or investment fund manager; (

e) that Ms. Pastuch be prohibited from becoming or acting as a registrant, an investment fund manager or a promoter pursuant to s. 134(1)(h.

l) of the Securities Act ; (

f) that the appellants pay an administrative penalty of $100,000 pursuant to s. 135.1 of the Securities Act ; (

g) that the appellants pay financial compensation of up to $100,000 to each person who, or company that, has suffered a financial loss as a result of the appellants’ contravention of and failure to comply with Saskatchewan securities laws pursuant to s. 135.6 of the Securities Act ; and (

h) that the appellants pay costs of $46,638 with respect to the hearing pursuant to s. 161 of the Securities Act . [ 42 ] The panel indicated the hearing costs assessed against the appellants were “nominal” and significantly less than the actual costs incurred. The panel made the costs order it did because it did not wish “to have hearing costs negatively impact the potential for those persons who suffered a financial loss to receive the compensation to which they are entitled” pursuant to its decision. IV. Issues [ 43 ] Section 11(1) of the Securities Act grants a right of appeal to this Court on “matters of law only”. Some of the appellants’ grounds of appeal, namely, grounds (

d) and (

f) of their amended notice of appeal with respect to the Merits Decision and the costs portion of their sanctions appeal raise matters that do not constitute questions of law. Having said that, insofar as the appellants argue those alleged factual errors demonstrate a reasonable apprehension of bias or procedural unfairness, they will be addressed by this Court. [ 44 ] The appellants initiated two appeals – one pertaining to the Merits Decision and one pertaining to the Sanctions Decision . There was a significant overlap in the grounds for those appeals. Those grounds raise four distinct areas of concern. I would thus frame the issues for determination by this Court as follows: (

a) whether the appellants were denied procedural fairness (grounds A, E, G, H, J, L and N of the merits appeal and grounds B, D and E of the sanctions appeal); (

b) whether the hearing panel applied the proper standard of proof in arriving at its decision (ground M of the merits appeal); (

c) whether the appellants demonstrated bias or a reasonable apprehension of bias on the part of the chair and panel (grounds B, C, F, I, J and L of the merits appeal and A and B of the sanctions appeal); and (

d) whether there was witness tampering (ground K of the merits appeal). V. Standard of Review [ 45 ] Where an appellate court is considering allegations of procedural fairness and natural justice, the standard of review to be applied is one of correctness. As Binnie J., writing for the Supreme Court in Canada (Citizenship and Immigration) v Khosa , 2009 SCC 12 at para 43 , [2009] 1 SCR 339, stated: [43] Judicial intervention is also authorized where a federal board, commission or other tribunal (

b) failed to observe a principle of natural justice, procedural fairness or other procedure that it was required by law to observe; No standard of review is specified. On the other hand, Dunsmuir says that procedural issues (sub​ject to competent legislative override) are to be determined by a court on the basis of a correctness standard of review. Relief in such cases is governed by common law principles, including the withhold​ing of relief when the procedural error is purely technical and occasions no substantial wrong or miscarriage of justice ( Pal , at para. 9). … (Emphasis added)

See also Phillips Legal Professional Corp v Vo, 2017 SKCA 58, [2017] 12 WWR 779. [46] Claims of bias and reasonable apprehension of bias are facets of procedural fairness. They, too, must be considered with nodeference to the tribunal or agency that made the decision under appeal. VI. Preliminary Matter [47] The appellants filed two applications for leave to adduce fresh evidence on the hearing of their appeals. Those applicationsoverlap. In effect, the appellants sought leave to adduce the following documents: (

a) specific records the FCAA had been ordered to produce by Whitmore J.A. of this Court on September 14, 2017; (

b) a report from the Professional Conduct Committee of the Chartered Professional Accountants of Saskatchewan regarding theappellants’ former accountant, Mr. Garrett; (

c) Ms. Novak’s oath or declaration of office dated January 11, 2002; (

d) a series of emails between Ms. Pastuch and the Financial Planning Standards Council during the period January 8 to October2, 2015, advising that Ms. Novak had been a CFP professional from October 1, 1996, to March 31, 2012, but was no longer certified; (

e) a calendar regarding FCAA boardroom availability for the period December 12, 2011, to January 11, 2013; (

f) records of contracted services all dated March 22, 2010, between Cryptguard and nine individuals or companies; and (

g) a series of emails between Ms. Pastuch and the appellants’ former accountant, Mr. Garrett, dated March 2 to 11, 2009,regarding the scope of work to be done by Mr. Garrett for the appellants. [48] The appellants and counsel for the FCAA argued for and against the admission of this evidence based on the test set out bythe Supreme Court of Canada in R v Palmer, (SCC), [1980] 1 SCR 759 at 775. In my view, however, as a general rule,appeals of administrative decisions should be restricted to the evidentiary record that was before the administrative decision-maker whenit rendered its decision.

Key to the application of that rule is what constitutes the “record” for judicial review purposes. In this case, theLegislature in s. 9 of the Securities Act saw fit to define the record of a hearing panel acting under the auspices of the Securities Act. Therelevant portions of that

section read as follows: 9(8) All oral evidence received shall be taken down in writing or recorded by electronic means.

(9) All the evidence taken down in writing or recorded by electronic means and all documentary evidence and things received inevidence at a hearing or review forms the record of the proceeding. [49] The appellants’ application to adduce fresh evidence raises the question of when the hearing panel’s record should be“supplemented”.

That the Legislature envisioned the admission of fresh evidence on appeal is evident from s. 11 of the Securities Act,which provides for a right of appeal to this Court: 11(3) On an appeal pursuant to this section, the Court of Appeal may hear evidence and argument with respect to the matter of appeal. (Emphasis added) [50] The question is when such evidence should be allowed. [51] In Saskatchewan (Workers’ Compensation Board) v Gjerde, 2016 SKCA 30, [2016] 4 WWR 423 [Gjerde], this Court had anopportunity to consider when the record of an administrative tribunal should be supplemented.

As a general rule, judicial review of anadministrative tribunal’s decision should be restricted to the evidentiary record before the tribunal when the decision was made. Havingsaid that, as this Court noted at paragraph 41 of Gjerde, given the scope of administrative decision-making, which may give rise tojudicial review, there can be no “one size fits all” approach to that question.

As stated in Gjerde: [44] … [T]he appropriate approach to when the “record” should be supplemented on judicial review was set out by Stratas J.A. of theFederal Court of Appeal in Association of Universities and Colleges of Canada v Canadian Copyright Licensing Agency, 2012 FCA 22at paras 19 and 20, 428 NR 297. After acknowledging the general rule that judicial review should be restricted to the evidentiary recordthat was before the Board when it made its decision, Stratas J.A. went on to recognize there will be exceptions to that general rule,including evidence (

i) that provides general background (as opposed to addressing the merits) in circumstances where that informationmight assist in understanding the issues for judicial review, (ii) to bring to the attention of the judicial review court procedural defectsthat cannot be found in the evidentiary record such as fraud, bribery, or bias, and (iii) to highlight the complete absence of evidencebefore the administrative decision maker when making a particular finding. (See also Keeprite Workers’ Independent Union andKeeprite Products Ltd. (1980), (ON CA), 29 OR (2d) 513 (CA); Mr.

Shredding Waste Management v New Brunswick(Minister of Environment and Local Government), 2004 NBCA 69 at para 64, 274 NBR (2d) 340; Connolly v Canada (AttorneyGeneral), 2014 FCA 294 at para 20, 466 NR 44.) To these I would add the exception highlighted by Hartwig and SELI where, inappropriate circumstances, evidence may be received by a reviewing court to elucidate the record upon which the administrative body’sreasons were based.

This Court’s decision in Hartwig v Commission of Inquiry into matters relating to the death of Neil Stonechild, 2007 SKCA 74, 284DLR (4th) 268, is also instructive. [52] The exceptions to the general rule as described by Stratas J.A. in Association of University and Colleges of Canada v

Canadian Copyright Licensing Agency (Access Copyright) , 2012 FCA 22 at paras 19 and 20 , 428 NR 297, and this Court in Gjerde form a non-exhaustive list of when fresh evidence will be allowed on appeal of an administrative decision. [ 53 ] With these principles in mind, I turn to consider the evidence now sought to be adduced by the appellants. [ 54 ] I begin by noting that the fresh evidence, for the most part, does not relate to the appellants’ allegations of bias or procedural fairness but rather is directed at the substance of the hearing panel’s merits and sanctions decisions. A.

The Specific Records [ 55 ] The appellants contend the FCAA failed to comply with Whitmore J.A.’s September 14, 2017, order for production of certain documents to the appellants. The FCAA attests it complied with that order. This issue is not properly the subject of a fresh evidence application. Rather, it is an issue relating to disclosure and, accordingly, as the FCAA’s failure to provide full disclosure is one of the appellants’ grounds of appeal, it will be dealt with under that heading in the appeal proper. B. Report of the Professional Conduct Committee regarding Mr.

Garrett [ 56 ] The appellants seek to adduce as evidence a report by the accounting profession’s Professional Conduct Committee to its Discipline Committee. The report was rendered following the investigation of a complaint laid against Mr. Garrett, the appellants’ former accountant. The investigation was conducted pursuant to The Accounting Profession Act , SS 2014, c A-3.1 . The report is dated March 14, 2016, more than 20 months after the Merits Decision was rendered. [ 57 ] The report was made after an investigation into allegations of discreditable conduct by Mr. Garrett.

That alleged conduct included in part that Mr. Garrett had failed to exercise due care in his engagement with the appellants by failing to prepare or obtain and retain a written agreement as to the nature and scope of his engagement, that he did not explicitly limit the nature and scope of what he understood he was engaged to do and that he did not provide clarification of the separation of duties between himself, the appellants and the appellants’ lawyers. Some of the allegations relate to whether Mr.

Garrett was engaged to value the appellants’ business. [ 58 ] The Professional Conduct Committee recommended a hearing be held to determine whether the allegations were well founded. [ 59 ] This evidence does not relate to the questions of law raised by this appeal, nor does it assist the Court in understanding the issues before it. It does not elucidate the record, rather it constitutes new evidence tendered to support the appellants’ position that Mr. Garrett was the person who had valued the appellants’ business. Whether Mr. Garrett valued the business is a question of fact not law.

Further, the report merely identifies allegations. There is nothing to suggest those allegations were ever proven. Allegations do not establish that the appellants relied on Mr. Garrett to do a business valuation. Mr. Garrett himself testified and the hearing panel accepted his evidence that he did not prepare such a valuation. Further, the value of the business was only one of several misleading or fraudulent statements attributed to the appellants. The panel found that Ms.

Pastuch had lied to investors about the existence of a trust fund; that her statements to investors to the effect their investments were “guaranteed” was also untrue; as was the assertion that “three of us” had injected over a million dollars into the business. Thus, even if the fresh evidence established what the appellants say it does, namely, that it was their accountant, Mr. Garrett, who valued the business at twenty million dollars, the panel’s findings of fraud would not be impugned as that was only one of a number of lies the hearing panel found Ms. Pastuch had told to investors to induce them to invest.

C. Ms. Novak’s Oath or Declaration of Office [ 60 ] The appellants wish to have this document entered as evidence to elucidate how Ms. Novak, in the course of the FCAA investigation, breached her oath of office. However, the appellants have failed to establish this document meets the criteria for admission. D. Emails between Alana Pastuch and the Financial Planning Standards Council regarding Ms. Novak’s CFP Certification [ 61 ] This evidence consists of a number of emails exchanged between Ms. Pastuch and the Financial Planning Standards Council regarding whether Ms.

Novak was a CFP when she testified before the panel. That evidence goes to Ms. Novak’s credibility but, in my view, it does not qualify for admission as fresh evidence in this Court. Ms. Novak was only one of many witnesses who testified at the hearing. The crucial part of her evidence that was referred to by the panel in its decision was verified by independent evidence. Even without her testimony, there was sufficient evidence to convict the appellants on all charges.

Again, the appellants have not established any basis for departing from the general rule that judicial review should be restricted to the evidentiary record before the hearing panel. E. Calendar regarding FCAA Boardroom Availability – December 12, 2011, to January 11, 2013 [ 62 ] This evidence relates to the appellants’ contention that the costs awarded against them in the Sanctions Decision were unreasonable because the disbursement for rented facilities to host the hearing was unnecessary as the FCAA’s boardroom could have been used.

As indicated earlier in these reasons, the hearing panel’s assessment of that disbursement does not raise a question of law. Thus, the evidence is irrelevant to the matters before this Court. F. Records of Contracted Services

[ 63 ] The appellants wish to adduce records of contracted services to show they had expenses that were not taken into account by the FCAA investigators. There is no indication, however, who prepared the records, or why or when they were created, which raises concerns as to their admissibility. The records do not provide general background that would enable this Court to understand the issues before it nor do they raise procedural defects, highlight a lack of evidence with respect to any finding by the panel or elucidate the record.

In short, the appellants have failed to establish any reason for supplementing the record with these documents. G. Emails between Ms. Pastuch and Mr. Garrett [ 64 ] The emails being tendered consist of a chain of five communications between Mr. Garrett and Ms. Pastuch between March 2 and 11, 2009. In the email sent March 9, 2009, Ms. Pastuch wrote: … You are conducting our business valuation and our documents to raise funds.

If we are not on the same page, as to what you are doing, please let me know immediately. … [ 65 ] And then later: Bottom line, without losing the info already in there (it should all be contained in that document still), how do we make it a more easy read? without losing any info? and then the documents you are working on are our business valuation and our documents we provide to our investors to raise funds. … [ 66 ] Mr. Garrett’s response does not mention the business valuation. [ 67 ] Ms. Pastuch then emails Mr. Garrett again on March 11, 2009.

In that email she asks: When do you think you will have the business valuation that we hired you to conduct, ready for us, to review by? [ 68 ] In his reply that same day, Mr. Garrett makes no reference to the business valuation. [ 69 ] In her application to adduce fresh evidence, Ms. Pastuch does not indicate, either in her affidavit or the memorandum filed in support thereof, the purpose this email evidence would serve. In my view, the evidence has two potential uses: (

a) it supports the appellants’ position that Mr. Garrett valued the business; and (

b) it supports the appellants’ position that the FCAA did not provide full disclosure. [ 70 ] The email chain reinforces the appellants’ contention that Mr. Garrett was retained to provide a valuation of the business. However, whether Mr. Garrett actually did that valuation and, if so the value he attributed to the business, are separate and distinct issues. The panel found as a fact that Mr. Garrett did not value the business. Appeals to this Court are limited to questions of law.

Further, the issue of the business valuation relates to the charges against the appellants pertaining to both unfair practices and fraud. Even if Mr. Garrett did the business valuation as contended by the appellants, that would not upset the panel’s decision. This is so because there was significant other evidence before the hearing panel that supported a conviction on those charges such as Ms.

Pastuch’s pressuring investors and making false representations that the investments were guaranteed and that a trust fund had been created to protect initial investments. [ 71 ] The second possible use for this email evidence relates to the appellants’ continuing assertion that the FCAA did not provide full disclosure. There is evidence that Mr. Garrett provided to the FCAA all of his emails pertaining to the appellants. Mr. Garrett testified to that effect at T10 of the hearing transcript.

The appellants take the position they never received those emails as part of the FCAA’s disclosure. [ 72 ] The emails sought to be adduced were in existence at the time of the hearing. Ms. Pastuch attests she did not have possession of those emails until after the Merits Decision was handed down. She does not, however, explain why that was so when she authored three of those emails and was the recipient of the others.

While the evidence is relevant to the issue of whether the FCAA made full disclosure and thus to the question of procedural fairness, as my later reasons indicate, those emails would have had no effect on the ultimate result. As such, the evidence will not be admitted by this Court. H.

Documents Not Before the Panel [ 73 ] The FCAA raises the fact that the appeal book filed by the appellants contains numerous documents that were not part of the hearing panel’s record. [ 74 ] The documents objected to were identified on the last page of the FCAA’s memorandum of law relating to the appellants’ application to adduce fresh evidence. For clarification, a list of the documents is set out in Appendix B to this judgment.

As there was no application to adduce most of those documents as fresh evidence, and as the appellants did not indicate they opposed the FCAA’s position with respect to those documents, this Court has disregarded them for the purposes of this appeal. VII. Legislation [ 75 ] The relevant portions of the Securities Act , which the appellants were alleged to have breached, are as follows: 27

(2) No person or company shall:

(

a) act as a dealer or underwriter unless the person or company: (

i) is registered as a dealer; or (ii) is registered as a representative of a registered dealer and is acting on behalf of the dealer; (

b) act as an adviser unless the person or company: (

i) is registered as an adviser; or (ii) is registered as a representative of a registered adviser and is acting on behalf of the adviser; or (

c) act as an investment fund manager unless the person or company is registered as an investment fund manager. … 44.1

(1) In this section, “unfair practice” includes: (

a) putting unreasonable pressure on a person to purchase, hold, or sell a security or trade or hold a derivative; (

b) taking advantage of a person’s: (

i) inability or incapacity to reasonably protect their own interests because of physical or mental infirmity, ignorance, illiteracy or age; or (ii) inability to understand the character, nature or the language of any matter relating to a decision to purchase, hold or sell a security or trade or hold a derivative; and (

c) imposing terms, conditions, restrictions or limitations with respect to transactions that are harsh or oppressive.

(2) No person or company shall engage in an unfair practice with the intention of advising or effecting the purchase or sale of a security or trade of a derivative. … 55.11

(1) No person or company shall make a statement if that person or company knows or reasonably ought to know that: (

a) the statement either: (

i) is misleading or untrue in a material respect and at the time and in the light of the circumstances under which it is made; or (ii) does not state a fact required to be stated or that is necessary to make the statement not misleading in a material respect and at the time and in the light of the circumstances under which it is made; and (

b) the statement would reasonably be expected to have a significant effect on the market price or value of a security or derivative. … 58

(1) No person or company shall trade in a security on the person’s or the company’s own account or on behalf of any other person or company where the trade would be a distribution of the security unless: (

a) a preliminary prospectus relating to the distribution of that security has been filed and the Director has issued a receipt for it; and (

b) a prospectus relating to the distribution of that security has been filed and the Director has issued a receipt for it. … 135.7

(1) No person or company shall, or shall attempt to, destroy, conceal or withhold any information, property or thing reasonably required for a hearing, review or investigation pursuant to this Act.

(2) No person or company shall hinder or interfere with a member, employee, appointee or agent of the Commission in the performance of his or her powers, functions and duties pursuant to this Act.

(3) A person or company contravenes subsection (1) if the person or company knows or ought reasonably to know that a hearing, review or investigation is to be conducted and takes any action mentioned in subsection (1) before the hearing, review or investigation. VIII. Analysis A. Procedural Fairness [ 76 ] Administrative decision-makers have a duty of procedural fairness and natural justice. This was recognized by the Supreme Court of Canada in Dunsmuir v New Brunswick , 2008 SCC 9 , [2008] 1 SCR 190, where Bastarache and LeBel JJ., writing for the majority, stated:

[79] Procedural fairness is a cornerstone of modern Canadian administrative law. Public deci​sion makers are required to act fairly incoming to decisions that affect the rights, privileges or interests of an individual. … [77] Given the vast number of administrative decision-makers that exist and the many different ways their decisions are made,what constitutes procedural fairness will vary depending on the nature of the administrative decision-maker and the context in which thedecision is made.

This was discussed by the Supreme Court of Canada in Baker v Canada (Minister of Citizenship and Immigration), (SCC), [1999] 2 SCR 817 [Baker]. Justice L’Heureux-Dubé, writing for the majority in Baker, set out a non-exhaustivelist of factors to be considered in determining the degree of procedural fairness required of an administrative decision-maker: (

a) the nature of the decision being made and the process followed in making it (the closer an administrative process resembles ajudicial process the higher the duty of procedural fairness) (at para 23); (

b) the nature of the statutory scheme and the terms of the statute pursuant to which the body operates (at para 24); (

c) the importance of the decision to the persons affected (at para 25); (

d) the legitimate expectations of the person challenging the decision (at para 26); and (

e) the choices of procedure made by the administrative decision-maker, particularly where the enabling statute gives thedecision-maker the ability to choose the process or when the agency has an expertise in determining what procedures are appropriate inthe circumstance (at para 27). [78] In my view, all the Baker factors weigh in favour of a high degree of procedural fairness in this case. The process involvedclosely resembles a judicial process.

The Securities Act gives hearing panels many of the same rights a court has when hearing a civilaction including the right to subpoena witnesses and force their attendance through contempt proceedings (s. 9(4) and (5) of theSecurities Act). The decision in this case had a significant financial impact on the appellants and affected Ms. Pastuch’s ability to tradesecurities. The Securities Act generally sets out how hearings are to be conducted but a panel has the ability to choose how it receivesevidence and runs the hearing.

The general expectation of persons facing allegations of breaching the Securities Act or its Regulations isone of procedural fairness. [79] The appellants contend the merits and sanctions hearings were not “procedurally fair”. Their complaints may be summarizedas follows: (

a) that the FCAA did not provide full disclosure to the appellants; (

b) that the panel imposed “onerous conditions” on the appellants’ request to present financial information yet similarconditions were not imposed on the FCAA; (

c) that the appellants were unable to introduce testimony via video conference while the FCAA was allowed to do so; (

d) that the panel set an initial hearing date knowing no disclosure had been made; (

e) that the panel canvassed only the FCAA with respect to witness availability when setting the initial hearing date; (

f) that the panel chair warned the appellants’ agent not to make editorial comments about the investigators’ motives butprovided no similar warning to counsel for the FCAA; (

g) that the panel unfairly “censored” the release of the appellants’ testimony and evidence while permitting the release of all ofthe FCAA’s testimony and evidence; (

h) that the panel unfairly refused to issue subpoenas requested by the appellants; (

i) that the panel made false, fraudulent and misleading statements about Ms. Pastuch with respect to her contact with S.B., apartner in the chair’s law firm, and with respect to Ms. Pastuch’s medical conditions; (

j) that the panel failed to consider the appellants’ evidence and submissions; (

k) that the panel disregarded fresh evidence adduced by them; (

l) that the panel curtailed Ms. Pastuch’s testimony thus interfering with her right to make full answer and defence and her rightto a fair trial; (

m) that the panel denied the appellants the opportunity to cross-examine the FCAA’s witnesses; and (

n) that the panel lost jurisdiction when it breached Ms. Pastuch’s personal privacy. [80] I will deal with each of these complaints in turn. a. Disclosure [81] The appellants’ first procedural argument relates to disclosure. Specifically, the appellants assert they never received fulldisclosure from the FCAA and thus they were unable to make full answer and defence to the charges against them. In particular, theappellants contend they did not receive the following: (

a) all of the wire transfers from the appellants’ bank for the period March 2009 to October 2010;

(

b) all of the emails in the possession of the appellants’ accountant, Mr. Garrett; (

c) contracts with individuals whose services were retained by one or more of the appellants (these contracts were allegedly in ablack binder compiled by Ms. Pastuch and copies of the contents of that binder were allegedly turned over by Ms. Pastuch’s legalcounsel to investigators for the FCAA but the contracts are now missing from the binder); (

d) documents confirming a payment of $11,985 on April 8, 2009, to G.P., an investor; (

e) documents pertaining to the appellants’ bank transactions for the period April 1, 2009, to and including April 29, 2009; and (

f) summary notes allegedly referred to by Ms. Novak during her testimony, a copy of which was purportedly ordered to beproduced to the appellants by the hearing panel. [82] The appellants argue the FCAA’s failure to disclose offends the principles of natural justice, is against the FCAA’s policiesand is a breach of the appellants’ s. 7 Charter right to life, liberty and security of the person and their s. 11(

d) Charter right to a fair andpublic hearing by an independent and impartial tribunal. [83] The FCAA, on the other hand, maintains they have provided the appellants with full disclosure of everything in theirpossession. i. Background [84] From the inception of the charges against them, the appellants have repeatedly complained about disclosure.

Thosecomplaints began before the first hearing date was set. [85] On October 25, 2010, the panel ordered the hearing to commence on January 10, 2011, and that “[f]ull disclosure shall beprovided to [the appellants’ then legal counsel] as soon as practical, so that preparation for the hearing may commence”. [86] Disclosure was provided by the FCAA on December 16, 2010, subject to certain specified terms and conditions. Because theappellants did not have an opportunity to review that disclosure, the hearing was adjourned.

In addition, the appellants objected to therestrictions imposed by the FCAA on that disclosure, namely, that it would only be used by the appellants, their witnesses and advisorsfor hearing purposes. Ms. Pastuch did not agree with that restriction and in April 2011, the appellants applied to vary it and for an orderfor further disclosure.

The panel refused to vary the terms of disclosure and determined that full disclosure had been made based onaffidavit evidence filed by the FCAA investigators. [87] On June 20, 2011, before the appellants received the above decision, the appellants filed a further motion requesting a stay ofproceedings. One of the grounds for that motion was a lack of full disclosure. [88] On May 18, 2012, the appellants filed yet another application for full and complete disclosure.

On May 28, 2012, the panelissued a decision letter denying that request and indicating that the panel would deal with disclosure issues as they arose during thehearing. [89] On September 5, 2012, the appellants brought an application to dismiss the proceedings, one of the grounds of which was thatfull disclosure had been denied. [90] On December 4, 2012, after hearing viva voce evidence with respect to disclosure, the panel rendered a written decisionindicating there was “insufficient evidence” upon which to support the appellants’ allegations with respect to disclosure and “spoliation”of evidence.

The hearing panel, however, indicated it would “remain alert” to those allegations throughout the formal hearing. [91] The appellants then applied to the Court of Queen’s Bench for a stay of proceedings but that application was dismissed. [92] On December 5, 2012, at the commencement of the hearing proper, the appellants requested an adjournment or stay ofproceedings because full disclosure had not been made. When that request was denied, the appellants decided not to attend the hearing,which then proceeded in their absence.

As a result of the appellants’ decision, they did not cross-examine any of the FCAA witnessesabout disclosure. ii. The Law [93] Since the Supreme Court of Canada’s decision in R v Stinchcombe, (SCC), [1991] 3 SCR 326 (QL)[Stinchcombe], it is well settled that in criminal proceedings involving indictable offences the Crown has a duty to disclose to an accusedall information in its possession that is reasonably capable of affecting the accused’s ability to make full answer and defence. Thatincludes both inculpatory and exculpatory evidence.

This is so whether the Crown intends to use that evidence at trial or not(Stinchcombe at paras 19 and 29).

An accused person’s right to make full answer and defence is a fundamental principle of justice(Stinchcombe at para 17; R v La, (SCC), [1997] 2 SCR 680 at para 20). [94] Justice Sopinka, writing for a unanimous court in Stinchcombe, indicated disclosure includes the “fruits of the investigation”: [12] I would add that the fruits of the investigation which are in the possession of counsel for the Crown are not the property of theCrown for use in securing a conviction but the property of the public to be used to ensure that justice is done. … [95] Stinchcombe sets out a number of principles relating to disclosure including: (

a) The Crown’s obligation to disclose is not absolute. Disclosure may be limited by considerations such as relevance, privilegeand security of informants. Whether there is a valid reason for not disclosing evidence in any given case is subject to judicial review

(Stinchcombe at paras 20 and 21). (

b) In determining whether a failure to disclose is justified, trial judges should be guided by the general principle thatinformation ought not to be withheld if there is a reasonable possibility failure to disclose will impair the right of an accused to make fullanswer and defence. This is, of course, subject to considerations that would support denying disclosure (Stinchcombe at para 22). (

c) The onus of establishing full disclosure or that a failure to disclose is justified rests with the Crown (Stinchcombe at para 21). (

d) Disclosure issues should be brought to the attention of the trial judge at the earliest opportunity. Failure to do so is a factor tobe considered on appeal in determining whether a new trial should be ordered (Stinchcombe at para 24). (

e) Disclosure should occur as soon as practicable after charges are laid (Stinchcombe at para 28). (

f) The obligation to disclose is an ongoing one (Stinchcombe at para 29). (

g) Witness statements should be disclosed even if the individual will not be called by the Crown to testify (Stinchcombe at para33). [96] In May v Ferndale Institution, 2005 SCC 82, [2005] 3 SCR 809, the Supreme Court of Canada held that the disclosureprinciples set out in Stinchcombe do not apply to purely administrative decisions (at para 91).

Purely administrative decisions, of course,do not involve a hearing process. [97] In Charkaoui v Canada (Citizenship and Immigration), 2008 SCC 38, [2008] 2 SCR 326, the Supreme Court of Canada foundthe determination of whether a security certificate issued under the Immigration and Refugee Protection Act, SC 2001, c 27, isreasonable is not a purely administrative measure and thus disclosure was required. The Court stated: [59] It is not enough to say that there is a duty to disclose.

We must determine exactly how that duty is to be discharged in the contextof the procedures relating to the issuance of a security certificate and the review of its reasonableness, and to the deten​tion review.

The Court applied the Stinchcombe test of relevance. [98] With modifications as necessary, Stinchcombe has been applied to disclosure in the administrative decision-making contextwhere disciplinary proceedings and human rights violations have been involved (Ontario (Human Rights Commission) v Ontario (Boardof Inquiry into Northwestern General Hospital) (1994), (ON SCDC), 115 DLR (4th) 279 (Ont Ct J (Gen Div)) atparas 22–24; Hammami v College of Physicians and Surgeons (British Columbia), (BC SC), [1997] 9 WWR 301(BCSC); Howe v Institute of Chartered Accountants of Ontario (1994), (ON CA), 118 DLR (4th) 129 (Ont CA)). [99] In Ruby v Canada (Solicitor General), 2002 SCC 75 at paras 39–40, [2002] 4 SCR 3 [Ruby], the Supreme Court of Canadastressed the importance of adopting a contextual approach in assessing the rules of natural justice and the degree of procedural fairness towhich an individual is entitled before an administrative tribunal.

As the Court said in Ruby, procedural fairness in the administrativecontext may include disclosure, depending on the circumstances. [100] Finally, in Suresh v Canada (Minister of Citizenship and Immigration), 2002 SCC 1, [2002] 1 SCR 3, the Court per curiamstated: [115] What is required by the duty of fairness — and therefore the principles of fundamental justice — is that the issue at hand bedecided in the context of the statute involved and the rights affected: Baker, supra, at para. 21; Knight v. Indian Head School DivisionNo. 19, (SCC), [1990] 1 S.C.R. 653, at p. 682; Old St. Boniface Residents Assn. Inc. v.

Winnipeg (City), (SCC), [1990] 3 S.C.R. 1170, per Sopinka J.

More specifically, deciding what procedural protections must be provided involvesconsideration of the following factors: (1) the nature of the decision made and the procedures followed in making it, that is, “thecloseness of the administrative process to the judicial process”; (2) the role of the particular decision within the statutory scheme;(3) the importance of the decision to the individual affected; (4) the legitimate expectations of the person challenging the decisionwhere undertakings were made concerning the procedure to be followed; and (5) the choice of procedure made by the agencyitself: Baker, supra, at paras. 23-27.

This is not to say that other factors or considerations may not be involved. This list of factors isnon-exhaustive in determining the common law duty of fairness: Baker, supra, at para. 28. It must necessarily be so in determining theprocedures demanded by the principles of fundamental justice. (Emphasis added) [101] Based on the above jurisprudence, I conclude that the degree of disclosure required in administrative matters will depend on thecontext in which the issue arises.

If the issue of disclosure arises in a proceeding that closely resembles judicial proceedings and theresult of the hearing could significantly affect an individual’s livelihood or result in significant consequences, the degree of disclosure asan element of procedural fairness will be high. In such circumstances, the principles enunciated in Stinchcombe may apply with anymodification necessary to fit the proceeding or the statute involved.

At the very least, the Stinchcombe principles provide guidance. [102] In Deloitte & Touche LLP v Ontario (Securities Commission), 2003 SCC 61 at para 16, [2003] 2 SCR 713, the Supreme Courtof Canada upheld the Ontario Securities Commission’s and the Ontario Court of Appeal’s application of the Stinchcombe test of whatconstitutes relevant information for disclosure purposes, namely, any “material that has a reasonable possibility of being relevant to theability of a defendant to make full answer and defence”. [103] In the case under appeal here, the merits hearing was held to determine whether the appellants had breached provisions of theSecurities Act.

Witnesses were called and documentary evidence was presented. The hearing itself closely resembled a trial. Theconsequences of the panel’s decision were significant for the appellants as it affected their ability to operate under the Securities Act andresulted in an order requiring them to pay significant financial compensation to investors. Ms. Pastuch was prohibited from being or

acting as a registrant, an investment fund manager or a promoter. In my view, given those circumstances, a high degree of procedural fairness was warranted, including full disclosure. [ 104 ] Moreover, the FCAA has set out disclosure standards for hearings pursuant to the Securities Act in a policy statement – Saskatchewan Policy Statement 12-602 [Policy Statement]. [1]

Section 4.3 of the Policy Statement requires parties to hearings to provide each other with copies of all documents they intend to rely on at least 20 days before the commencement of the hearing. Of particular relevance to this appeal is s. 4.3(2), which requires the FCAA to provide copies of all documents and things in its possession or control to other parties so long as they are relevant to the hearing: 4.3(2) In the case of a hearing under

section 134 of the Act, Staff will provide to every other party copies of all other documents and things that are in the possession or control of Staff that are relevant to the hearing. Staff will provide copies as soon as is reasonably practicable after the Notice of Hearing is sent, and in any case at least 20 days before the commencement of the hearing. (Emphasis added)

Section 4.3(2) is restricted to hearings under s. 134 of the Securities Act . The hearing in issue here was held pursuant to s. 134 and orders were made against the appellants with respect to that section. [ 105 ] In my view, the Policy Statement required full disclosure by the FCAA of all relevant material in its possession whether or not the FCAA intended to use such material at the hearing. [ 106 ] For the purposes of this appeal, it is important to clarify the difference between disclosure and evidence.

The obligation to disclose requires the production of all relevant material in a party’s possession, whether in hard copy form or electronically, for the examination of another party. This is normally done by providing copies of that material. Just because something is disclosed, however, does not mean it will be used or accepted as evidence at a hearing. Evidence must be admitted by the trier of fact. iii. Application of the Law in this Case [ 107 ] From a review of the hearing record, it is clear some of the appellants’ complaints relating to disclosure are unfounded. The $11,985 payment to G.P. was disclosed.

Supplementary appeal book at 3262 indicates at item number 905215: G.P. Document #5 – bank record for partial return of investment Apr 08 09 $11,985; While neither this document nor the emails relating to the payment were entered as evidence at the hearing, they were provided by the FCAA to the appellants. [ 108 ] Similarly, while the flow chart prepared by the FCAA did not include transactions for the period April 1, 2009, to April 29, 2009, Mr. Garrett, the appellants’ accountant, provided logs for those periods.

The TD Canada Trust easy web account history for 101115379 Saskatchewan Ltd. also covered that period. Those records were disclosed. Whether they were entered as evidence at the hearing is a separate issue. [ 109 ] Some of the appellants’ complaints relate to documents that may either have been returned to the person providing them or were never in the FCAA’s possession. In either event, those documents could not be disclosed. This would include the TD Bank transfers, Mr. Garrett’s emails and the contracts from the black binder. [ 110 ] Ms.

Novak testified she requested account histories from the TD Bank, these being bank statements showing transactions. She did not request specific documents verifying those transactions such as deposit slips or wire orders. The appellants’ assertion that the FCAA did not disclose to them all of the bank’s “wire orders” is thus without factual foundation as there is no evidence the FCAA ever had copies of the wire orders in issue. [ 111 ] With respect to the service contracts, there was evidence those contracts were not in the black binder when it was given to the FCAA.

It goes without saying that the FCAA cannot disclose what it does not possess. [ 112 ] Finally, in my view, the record, even if supplemented by the emails between Mr. Garrett and Ms. Pastuch, does not substantiate that the FCAA had possession of those emails or that it failed to disclose them to the appellants. [ 113 ] Mr. Rodonets, when testifying at the disclosure hearing, distinguished between what the FCAA labels as exhibits and disclosure. He stated: … Again, we have to go back to what you’re -- what we’re talking about as exhibits and disclosure. Those are two different things totally.

These are items that would have been identified from Frank Garrett that were exhibited, given our exhibit numbers and put in an exhibit ledger and identified as exhibits. There may be other documents out there attributed to Frank Garrett, emails or other documents that weren’t made exhibits, but they would have been disclosed. There is nothing that I’m aware of that we possessed and received from Frank Garrett that was not disclosed that we kept and received. Information that we returned is not in here. We didn’t disclose it because, in our opinion, we were returning it to Ms. Pastuch because Mr.

Garrett was her agent. So it may not -- there may be something that’s attributed to Frank Garrett which is not exhibited, but it would have been disclosed. [ 114 ] An envelope containing documents was returned to Mr. Garrett by the FCAA in April 2011. There was no evidence what documents were in the envelope, which means the emails could have been returned to Mr. Garrett. Further, FCAA exhibit #905412 was an email from Mr. Garrett to Ms. Novak described as “Year 1 Financial Projections” with attachments .

Some attachments, specifically those contained in exhibit #905412E, were identified as “Other details - not used”. Mr. Garrett testified he forwarded to Ms. Novak all his emails (and some financial documents) after his interview by FCAA investigators. This exhibit is the only correspondence in the

record from Mr. Garrett to the FCAA. Unfortunately, there is no evidence what was included in the exhibit. [ 115 ] The biggest hurdle for the appellants to overcome with respect to the disclosure issue, however, is that the panel accepted the evidence of Ms. Novak and Mr. Rodonets that full disclosure had been made. At the disclosure hearing, Ms. Novak and Mr. Rodonets testified but were never asked if the FCAA had possession of the specific items the appellants say were not disclosed. This was so even though the panel chair told Mr.

Pederson he needed to ask those witnesses about specific disclosure the appellants asserted was missing. In the absence of such evidence, there is no identifiable error in the panel’s decision to accept Ms. Novak’s and Mr. Rodonets’ assertions that full disclosure had been made. [ 116 ] At the hearing of this appeal, the appellants also complained the FCAA had not complied with the September 14, 2017, disclosure order of Whitmore J.A. The order in issue was made in the context of an appeal management conference and read as follows: There will be an order that the FCAA will produce for the appellant: 1.

All correspondence between Frank Garrett and the appellant and/or Dave Bishop and Brian Pederson which is in the possession of the Respondent 2. Any documents in the Respondent’s possession relating to a $35,000 refund from William Seritello to Alena Pastuch 3. Copies of financial receipts and orders from the sale of products from the Appellant’s corporate entities in the possession of the Respondent 4.

Copies of notes and records of Sandy Novak in the Respondent’s possession relating to her testimony before the hearing panel These documents and records will be delivered to the appellant by October 2 2017. … [ 117 ] The appellants acknowledge that on September 29, 2017, the FCAA provided them with a package of five CDs. They assert, however, that none of the documents ordered to be produced by Whitmore J.A. are on those CDs. On the other hand, the FCAA contends it provided full disclosure as ordered and that it cannot produce what it does not possess.

The problem lies with the FCAA’s inability to prove a negative. That is, that it does not have possession of the specific documents in issue. [ 118 ] The appellants brought an application for contempt with respect to the FCAA’s performance of the order made by Whitmore J.A. in December 2017. A decision with respect to that application was rendered on December 12, 2017. In that decision, Whitmore J.A. determined legal counsel for the FCAA was not in contempt and had not wilfully disobeyed the September 14, 2017, order. He stated: [10] In the course of discussions in Court, Mr.

Udembga [FCAA’s legal counsel] may have said he was in the possession of the disputed documents and that he has seen them. However, I am not satisfied that anything that was said was a deliberate and willful attempt to mislead the Court. In my view, the exchanges between the parties and the Court were part of a process in coming to an order that satisfied the parties and that the parties were able to comply with.

The whole of the exchanges were to satisfy the appellants that certain documents be produced and, at the same time, the respondent could only commit to disclose what it had in its possession. [11] Thus, the order was clearly limited to documents in Mr. Udembga’s possession. I am not satisfied at all in the face of Mr. Udembga’s submissions that all documents in his possession have not been disclosed. [12] Further, I am not satisfied beyond a reasonable doubt that any statements made by Mr. Udembga were made with intent to mislead the Court. The appellants did not appeal that order.

Instead they raised the issue before this Court in what amounts to a collateral attack of Whitmore J.A.’s contempt decision. Such an attack is not permissible. [ 119 ] The next issue pertains to the provision of copies of the notes and records used by Ms. Novak in her testimony before the panel. A disclosure issue with respect to those documents arose when Ms. Novak began her testimony before the panel on January 3, 2013. At that point, FCAA legal counsel indicated Ms. Novak would like to refer to a

summary she had prepared of what various people had told her [summary notes] as well as a cash flow statement summarizing the banking information. [2] The panel determined that if Ms. Novak was going to refer to that material, it had to be disclosed to the appellants. Legal counsel for the FCAA then indicated he would provide both documents to Ms. Pastuch’s lawyer. At that point, Ms. Novak returned her

summary notes to the FCAA lawyer indicating they would review whether or not she should rely on them over the lunch hour. The chair indicated that was fine. [ 120 ] From a review of the transcript, Ms. Novak did not rely on her

summary notes. This was clarified on the record. Moreover, on the morning of January 4, 2013, the FCAA lawyer indicated that Ms. Novak would not be referring to her

summary notes and as such it was not necessary to provide copies of them to the appellants. The cash flow statement was referred to by Ms. Novak and it is uncontroverted that it was disclosed to the appellants. [ 121 ] In short, Ms. Novak did not rely on her

summary notes when testifying and thus neither the panel nor Whitmore J.A.’s order required their production. Those notes were Ms. Novak’s notes made in preparation for the hearing and, accordingly, would not normally qualify for disclosure. b. Onerous Conditions on Financial Evidence [ 122 ] Ms. Pastuch wanted to present financial information in the possession of a bank representative located in Calgary. The chair told her she could subpoena the bank executive and enter documents in his possession directly through him or through an “authorized

signatory”. I note Ms. Pastuch was an authorized signatory and could have entered the documents herself. Ms. Pastuch felt this ruling was unfair because the FCAA did not have to follow the same procedure. [ 123 ] Section 12(5)(

c) of the Securities Act provides that persons appointed to investigate a matter may “compel witnesses to produce documents, records, securities, derivatives and other property”. Certified copies of such documents are admissible in evidence pursuant to s. 12(5.1). No similar right is given to any other person. [ 124 ] In my view, the chair’s comments simply reflect the legislative provisions and, accordingly, were not unfair. c. Video Conference [ 125 ] While the appellants complained they were not allowed to call witnesses using video conferencing, a review of the hearing record does not support that contention.

In a decision letter dated June 20, 2011, the panel indicated to both the appellants and the FCAA that it would permit witnesses to testify by video conference on certain conditions, namely: (

a) that the parties test the technology to ensure it worked; (

b) that the panel had the right to halt the testimony if the method of communication was not satisfactory; (

c) that the parties must give notice to each other and the commission secretary before June 30, 2011, as to which witnesses would be using video conferencing; and (

d) that the FCAA must provide the appellants with summaries of the expected evidence. [ 126 ] On May 9, 2013, the appellants requested an expert testify by video conference with respect to Ms. Pastuch’s medical condition. The evidence was being tendered in support of an adjournment request by Ms. Pastuch. In a decision letter dated May 10, 2013, the panel refused the request because in its view the physician who was to testify had not been treating Ms. Pastuch and therefore his proposed testimony was not relevant to the issue before the panel.

This is the only witness the appellants requested to have testify by video conference. The panel’s decision did not disclose any procedural unfairness. d. Setting Initial Hearing Date without Disclosure e. Canvassing only FCAA with respect to Witness Availability [ 127 ] It is uncontroverted that the panel did set an initial hearing date without disclosure having been made by the FCAA to the appellants and without canvassing the availability of the appellants’ witnesses. Rather, the panel consulted only the FCAA with respect to witness availability.

Following the setting of that initial hearing date, the appellants applied to adjourn it and the panel granted that adjournment. [ 128 ] Later, the panel apologized for setting the hearing without consultation and ordered disclosure. [ 129 ] In my view, the panel denied procedural fairness by setting the initial hearing date when disclosure had not been made. That error was cured on October 25, 2010, by the panel setting new dates and ordering that full disclosure be provided by the FCAA “as soon as practical, so that preparation for the hearing may commence”.

None of the appellants suffered any prejudice as a result of that error. f. Directive Regarding Editorial Comments [ 130 ] The panel has the power to control its own process. Part of that power includes the right to ensure participants in the hearing process are treated with respect and that the hearing focusses on the issues at hand. Editorial comments in any judicial or quasi-judicial forum are to be discouraged as they add nothing to the process. Rather, they serve to drag out the hearing and often heighten tensions between the parties. [ 131 ] The fact the panel asked Mr.

Pederson and not the FCAA prosecutor to refrain from making editorial comments is not evidence of procedural unfairness. The panel gave both sides considerable latitude. The record supports the fact Mr. Pederson editorialized on numerous occasions and the panel was not unfair in asking him to refrain from doing so. g. Censoring Documents Released to the Media [ 132 ] The appellants submit the panel unfairly “censored” the release of their testimony and evidence while permitting the release of all of the FCAA’s testimony and evidence.

In support of their position, the appellants refer to emails between a media member and the FCAA Registrar. [ 133 ] The FCAA argues the emails referred to are fresh evidence and should not be accepted by this Court. Alternatively, the FCAA submits that even if the emails are considered by the Court, they do not support the conclusion that the panel acted inappropriately. [ 134 ] The email dated January 27, 2014, is from a member of the media and is directed to the FCAA Registrar. The media member had sought copies of the parties’ written arguments,

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