Background

The appellant Patricia McLean had been the subject of Ontario Securities Commission proceedings relating to her time as a director of a mining corporation. While her time as a director ended in 2001, she only entered into a settlement agreement with the OSC in September 2008. In January 2010, Ms McLean received notice that the B.C. Securities Commission would be seeking an order pursuant to s. 161(6)(d) of the Securities Act (B.C.), which allows for sanctions, conditions, restrictions or requirements to be imposed on persons who have entered into an agreement with another jurisdiction's securities regulator. The proceedings under s. 161 are subject to a limitation period of no more than 6 years "after the date of the events that give rise to the proceedings."

At issue at the B.C. Securities Commission was whether "the events that give rise to the proceedings" referred to the underlying conduct, which had occurred in the years leading up to 2001, or to the entering of a settlement agreement with the OSC, which had taken place in 2008. If "the events" were the underlying conduct, the action by the Securities Commission would be statute-barred. Without giving reasons, the B.C. Securities Commission issued an Order on Ms McLean, implying that the proceedings in British Columbia had been triggered by the agreement with Ontario. On appeal, the British Columbia Court of Appeal applied a standard of review of correctness. Nonetheless, it upheld the decision of the B.C. Securities Commission.

The SCC Decision

The Supreme Court held that the appropriate standard of review was reasonableness, not correctness. Moldaver J. noted that his analysis on standard of review was meant to "bring a measure of predictability and clarity" to the law, which he noted had been the subject of "debate" with "strong opinions on all sides, especially in the recent jurisprudence of this Court." He reiterated the Court's view, previously expressed in Alberta (Information and Privacy Commissioner) v Alberta Teachers' Association, that an administrative decision maker's interpretation of its home or closely-connected statues "should be presumed to be a question of statutory interpretation subject to deference on judicial review", and he declined to find that an exception applied in this case. Notably, Moldaver J. rejected the appellant's argument that the interpretation of a limitation period is a general question of law that is both of central importance to the legal system as a whole and outside the adjudicator's specialized area of expertise. In so doing, he concluded the issue was really about the interpretation of the words "the events" and stated:

The answer, as this Court has repeatedly indicated since Dunsmuir, is that the resolution of unclear language in an administrative decision maker's home statute is usually best left to the decision maker. That is so because the choice between multiple reasonable interpretations will often involve policy considerations that we presume the legislature desired the administrative decision maker — not the courts — to make. Indeed, the exercise of that interpretative discretion is part of an administrative decision maker's "expertise".

Having concluded that the standard of review was reasonableness, Moldaver J. considered whether "the events" for the purposes of s. 161(6)(d) were the underlying misconduct that gave rise to the settlement agreement or the settlement agreement itself. He concluded that either interpretation was reasonable and therefore deference ought to be given to the interpretation adopted by the B.C. Securities Commission.

Potential Significance

The Court's decision includes important lessons for securities lawyers, but also for the evolution of Canadian administrative law more generally. Notably:

• The Court has reiterated that tribunals will generally be owed deference when they interpret "home or closely-connected" statutes;
• There are exceptions to the application of that presumption of deference, but the Court has signalled some disapproval of a "second wave" of "fashionable" arguments that seek to turn all questions of tribunal interpretation into questions that are of "central importance to the legal system as a whole" (Canada (Canadian Human Rights Commission) v. Canada (Attorney General), 2011 SCC 53);
• If the presumption applies, the tribunal "holds the interpretive upper hand" and can adopt a reasonable interpretation, even if there are competing interpretations that would also be reasonable. Correctness will be a more appropriate standard where "basic consistency" is essential, but in a home statute interpretation "is usually best left to the [administrative] decision maker." Significantly, Moldaver J. found that he would be "hard-pressed to conclude" on the facts before him that he would have rejected the Securities Commission's interpretation of the limitations period had it reached the opposite conclusion. On this point, Karakatsanis J. dissented strongly in a short set of reasons otherwise approving of Moldaver's analysis;
• The Court values inter-provincial cooperation and will take it seriously. Moldaver J. reviewed at some length the history of secondary proceedings legislation and efforts at inter-provincial cooperation to avoid "inefficient parallel and duplicative proceedings". The Court noted without an effective secondary proceedings system, "overlapping cases would clog up the legal system and overburden the securities commissions." These statements may be significant in light of the recent announcement of a move towards a "co-operative capital markets regulatory system" by the federal government and certain provinces;
• Although the Court acknowledged the concern that cascading proceedings in numerous provinces could undermine the very purpose of the limitation period (a concern discussed in our first post on this case), it also noted that the respondent Securities Commission had proposed certain limitations to guard against that risk. While it is not clear that these arise from the statute (or that they should now be seen as restrictions on securities commissions), Moldaver J. described them as making "eminent good sense";
• Moldaver J. also considered the fact that the B.C. Securities Commission failed to give reasons. The Supreme Court found that the argument advanced by the Executive Director of the B.C. Securities Commission, a party also able to make orders under sections 161(1) and 161(6) along with the Commission itself, demonstrated a basis for the interpretation and held that "though reasons would have been preferable, there is nothing to be gained here from requiring the Commission to explain on remand what is readily apparent now." This is interesting as it suggests reasons are not required so long as another party is able to put forward a basis for the decision.

Conclusion

It seems unlikely that Moldaver J.'s judgment in McLean will quiet the controversy that accompanied the Court's approach to standard of review since Dunsmuir v. New Brunswick, 2008 SCC 9. That should not be surprising given the multiplicity of disparate voices in debates about Canadian administrative law and the complexity involved in both framing the right questions for the Court to ask itself and in executing the analysis. It is notable that the panel deciding McLean included four justices appointed since Dunsmuir. The decision might suggest that the Court will continue to press forward with the logic of Dunsmuir for some time yet before again considering whether a more fundamental shift is required.

Note: This summary is a reprint of an article by Elder Marques, Ronald Podolny and Helen Richards of McCarthy Tetrault LLP.