In discipline matters, abuse of process claims are generally premised on excessive delay and require prejudice to the registrant to result in a stay of proceedings: Law Society of Saskatchewan v. Abrametz, 2022 SCC 29 (CanLII). However, there is a residual category of abuse of process that applies where the regulator’s conduct is so offensive to society’s notions of fair play and decency that proceeding would be harmful to the integrity of the justice system. The concept of abuse of process is closely aligned with the principles of procedural fairness. Typically, in the residual category, the regulator’s conduct involves more than just delay and the concept of prejudice is broader than just the interests of the registrant.
The residual category was illustrated in Morabito v. British Columbia (Securities Commission), 2024 BCCA 377 (CanLII). The investigation related to concerns of insider trading by an airline executive. The executive asserted that the investigation amounted to an abuse of process. For example, there was an unannounced visit to the executive’s home at a time when it was likely the executive would be absent resulting in the questioning of his spouse. The investigation was intrusive including a demand for documents from the executive’s 80-year-old father and production of the family’s personal email accounts, including that of his teenage daughter. In addition, the executive’s assets were subject to a broad “freeze” order. The executive also expressed concern that during the investigation the regulator did not inform him that an important witness was terminally ill.
The Court found that the Panel created a flawed procedure for the hearing of the abuse of process motion. The process resulted in the regulator providing only one investigator witness who had not been involved in the investigation at the time. The Court found that the regulator was, in effect, shielding those involved in the impugned investigation. While parties generally have the choice of what witnesses to call, and while the burden of proving an abuse of process rested on the executive, in this case sufficient concerns had been raised by the executive about the investigation that the evidentiary burden shifted to the regulator to explain the investigative choices through witnesses who were actually involved in the events.
The process also involved rulings that prevented the executive from asking questions about the investigative choices by the regulator that supported his abuse of process claim. The Panel’s decision focussed on delay and prejudice to the executive and did not engage adequately with the residual category of abuse of process.
The Court said: “The procedure adopted by the Panel frustrated the [executive’s] ability to advance their claims of abuse of process—to the extent that the appellants were denied a fair hearing.” The Court also said: “… where there is a credible basis supporting allegations of state misconduct, as here, the Panel must proceed in a manner that allows for an airing of the allegations.”
The Court returned the matter to a differently constituted panel to hear the abuse of process objections in a fair manner.