Inferences vs. Speculation

In a number of recent cases the courts have said that regulators should base their conclusions on evidence rather than speculation. What is often left unaddressed is the difference between drawing inferences from the evidence (which is permitted) and speculating based on the facts (which is not permitted). In Finkelstein v. Ontario Securities Commission, 2018 ONCA 61, the Court of Appeal for Ontario stated that reviewing courts should not intervene when a tribunal makes an inference from the evidence even if it is not the inference that the court would have made. The case dealt with insider tipping in the stock market where cases are almost always established through circumstantial evidence.

The Court then went on to accept the following definition of what constitutes an “inference”:

“An inference is a deduction of fact that may logically and reasonably be drawn from another fact or group of facts found or otherwise established in the proceedings. It is a conclusion the trier of fact may, but not must, draw in the circumstances.”: David Watt, Watt’s Manual of Criminal Evidence, 2017 (Toronto: Thomson Reuters, 2017), §12.01.

The Court of Appeal reviewed the Divisional Court’s handling of the evidence and the reasons of the tribunal and concluded:

The function of a reviewing court, such as the Divisional Court, is to determine whether the tribunal’s decision contains an analysis that moves from the evidence before it to the conclusion that it reached, not whether the decision is the one the reviewing court would have reached: Ottawa Police Services, at para. 66. With due respect to the Divisional Court, it failed to do so in the case of the Panel’s decision about Cheng. Instead, it impermissibly re-weighed the evidence and substituted inferences it would make for those reasonably available to the Panel. That was an error. The findings of fact made and inferences drawn by the Panel in respect of Cheng were reasonably supported by the record.

The difference between drawing valid inferences and engaging in speculation is a subtle one. Tribunals should take care to explain the reasons for the conclusions they draw from the evidence.

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