Leeway

There are certain core principles for tribunals when they write reasons for their decisions. The bad news is that it is easy to violate those principles. The good news is that reviewing bodies and courts give a bit of leeway if overall, the reasons for decision provide justification, transparency, and intelligibility for the outcome.

For example, in Eley v. Ontario Securities Commission, 2023 ONSC 2168 (CanLII) a regulator found that a registrant had altered, directed the altering of, or was wilfully blind to the alteration of client documents in an investment context. The regulator’s decision was upheld by the reviewing tribunal, and the tribunal’s decision was upheld by the Court. The challenges to the regulator’s decision were based largely on the wording of their reasons for it.

The first argument was that the regulator had reversed the burden of proof when it said that the registrant’s evidence had not persuaded it that the registrant had not participated in or knew about the altered documents. Reversing the burden of proof is a serious and fundamental legal error. While the language used was unfortunate, the tribunal and Court found that “a fair and contextual reading of the reasons as a whole” demonstrated that the burden had not been reversed. The regulator was simply saying that it did not find the registrant credible in his denial of involvement.

Similarly, the reviewing tribunal and Court found that the regulator had not made a legal error in finding that the registrant was not credible. The registrant’s lack of credibility did not automatically mean that the allegations had been proven. The regulator appreciated that even if it did not believe the registrant’s explanations, the allegations still had to be established by positive evidence. In this case, there was ample evidence to do that.

The reviewing tribunal and Court also found that the regulator had drawn reasonable and logical inferences about the registrant’s involvement in the altered documents based on the direct and circumstantial evidence tendered during the hearing. This evidence included the documents themselves, where the alterations were so obvious that the registrant must have recognized them, even if he did not directly or indirectly make them himself.

The regulator also made some factual errors which are often a basis for reversing a decision. Here, during the sanctioning phase of the hearing, the regulator referred to conduct that was not part of the statement of allegations. The regulator also referenced some items that it found to be innocuous and part of acceptable industry practice when discussing the registrant’s “pattern of behaviour”. However, these mistakes were related to peripheral items and there were so many established illustrations that the errors did not detract from the overall findings on the merits or on the sanctions imposed.

Reasons do not need to be perfect.

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