British Columbia (Securities Commission) v. BridgeMark Financial Corp.

2020 BCCA 301 British Columbia (Securities Commission) v. BridgeMark Financial Corp.

COURT OF APPEAL FOR BRITISH COLUMBIA Citation: British Columbia (Securities Commission) v. BridgeMark Financial Corp., 2020 BCCA 301 Date: 20201102 Dockets: CA46425; CA46428 Docket: CA46425 Between: The British Columbia Securities Commission and the Executive Director of the British Columbia Securities Commission Respondents (Tribunal/Plaintiffs) And BridgeMark Financial Corp, Jackson & Company Professional Corp., Anthony Kevin Jackson and Kootenay Zinc Corp. Appellants (Defendants) And Lukor Capital Corp., Justin Edgar Liu, Rockshore Advisors Ltd. (formerly known as Cam Paddock Enterprises Inc.), Cameron Robert Paddock, Simran Singh Gill, JCN Capital Corp., John Rosarino Bevilacqua, Essos Corporate Services Inc., Sway Capital Corp., Von Rowell Torres, David Matthew Schmidt, Detona Capital Corp., Danilen Villanueva, Natasha Jon Emami, Altitude Marketing Corp., Ryan Peter Venier, Platinum Capital Corp., 658111 B.C. Ltd., Jason Christopher Shull, Tryton Financial Corp., Abeir Haddad, Tavistock Capital Corp., Robert John Lawrence, Jarman Capital Inc., Scott Jason Jarman, Northwest Marketing and Management Inc., Aly Babu Husein Mawji, Rufiza Babu Husein Mawji-Esmail, Denise Marie Trainor, Randy White, Escher Invest SA, Hunton Advisory Ltd., Kendl Capital Limited, 1153307 B.C. Ltd., Russell Grant Van Skiver, Bertho Holdings Ltd., Robert William Boswell, Haight-Ashbury

Media Consultants Ltd., Ashkan Shahrokhi, Saiya Capital Corporation, Tara Kerry Haddad, Keir Paul MacPherson, Tollstam & Company Chartered Accountants, Albert Kenneth Tollstam, 727 Capital, David Raymond Duggan, Viral Stocks Inc., 10X Capital, Cryptobloc Technologies Corp., New Point Exploration Corp., Green 2 Blue Energy Corp., BLOK Technologies Inc., Kootenay Zinc Corp, Affinor Growers Inc., Beleave Inc., Liht Cannabis Corp. (formerly known as Marapharm Ventures Inc.), PreveCeutical Medical Inc., Speakeasy Cannabis Club Ltd., and Abattis Bioceuticals Corp. Respondents (Defendants) And Camp Fiorante Matthews Mogerman LLP Respondent (Non-party Applicant) - and- Docket: CA46428 Between: British Columbia Securities Commission Respondent (Tribunal) And The Executive Director of the British Columbia Securities Commission Respondent (Plaintiff) And Justin Edgar Liu and Lukor Capital Corp. Appellants (Defendants) And BridgeMark Financial Corp, Jackson & Company Professional Corp., Anthony Kevin Jackson, Rockshore Advisors Ltd. (formerly known as Cam Paddock Enterprises Inc.), Cameron Robert Paddock, Simran Singh Gill, JCN Capital Corp., John Rosarino Bevilacqua, Essos Corporate Services Inc., Sway Capital Corp., Von Rowell Torres, David Matthew Schmidt, Detona Capital Corp., Danilen Villanueva, Natasha Jon Emami, Altitude Marketing Corp., Ryan Peter Venier, Platinum Capital Corp.,

658111 B.C. Ltd., Jason Christopher Shull, Tryton Financial Corp., Abeir Haddad, Tavistock Capital Corp., Robert John Lawrence, Jarman Capital Inc., Scott Jason Jarman, Northwest Marketing and Management Inc., Aly Babu Husein Mawji, Rufiza Babu Husein Mawji-Esmail, Denise Marie Trainor, Randy White, Escher Invest SA, Hunton Advisory Ltd., Kendl Capital Limited, 1153307 B.C. Ltd., Russell Grant Van Skiver, Bertho Holdings Ltd., Robert William Boswell, Haight-Ashbury Media Consultants Ltd., Ashkan Shahrokhi, Saiya Capital Corporation, Tara Kerry Haddad, Keir Paul MacPherson, Tollstam & Company Chartered Accountants, Albert Kenneth Tollstam, 727 Capital, David Raymond Duggan, Viral Stocks Inc., 10X Capital, Cryptobloc Technologies Corp., New Point Exploration Corp., Green 2 Blue Energy Corp., BLOK Technologies Inc., Kootenay Zinc Corp., Affinor Growers Inc., Liht Cannabis Corp. (formerly known as Marapharm Ventures Inc.), PreveCeutical Medical Inc., Speakeasy Cannabis Club Ltd., and Abbatis Bioceuticals Corp. Respondents (Defendants) And Camp Fiorante Matthews Mogerman LLP Respondent (Non-party Applicant) Before: The Honourable Mr. Justice Willcock The Honourable Mr. Justice Abrioux The Honourable Madam Justice DeWitt-Van Oosten On appeal from: A decision of the British Columbia Securities Commission, dated September 10, 2019 (Re BridgeMark, 2019 BCSECCOM 331). Counsel for the

Appellants in CA46425 (Respondents in CA46428), BridgeMark Financial Corp, Jackson & Company Professional Corp., Anthony Kevin Jackson, and Kootenay Zinc Corp. (via videoconference): P. Sullivan J. Cytrynbaum Counsel for the Appellants in CA46428 (Respondents in CA46425), Justin Edgar Liu and Lukor Capital Corp. (via videoconference): J.K. McEwan L.J. Smith Counsel for the Respondent, Simran Singh Gill (via videoconference): F. Lin Counsel for the Respondents in CA46425 and CA46428, Altitude Marketing Corp., Ryan Peter Venier, Tollstam & Company Chartered Accountants, and Albert Kenneth Tollstam (via videoconference): S. Marescaux Counsel for the Respondents in CA46425 and CA46428, The British Columbia Securities Commission and the Executive Director of the British Columbia Securities Commission (via videoconference): G. MacLennan Counsel for the Respondents in CA46425 and CA46428, Tryton Financial Corp., Abeir Haddad, Saiya Capital Corporation, and Tara Kerry Haddad (via videoconference): B. Richdale R. Sim Counsel for the Respondents in CA46425 and CA46428, Essos Corporate Services Inc., and Von Rowell Torres (via videoconference): S. Arrandale Counsel for the Respondents in CA46425 and CA46428, Sway Capital Corp., David Matthew Schmidt, Platinum Capital Corp., 658111 B.C. Ltd., Jason Christopher Shull, Tavistock Capital Corp., Robert John Lawrence, Bertho Holdings Ltd.,

Robert William Boswell, Cryptobloc Technologies Corp., New Point Exploration Corp., BLOK Technologies Inc., and Abbatis Bioceuticals Corp. (via videoconference): D. Yaverbaum Counsel for the Respondents in CA46425 and CA46428, Randy White, Escher Invest SA, Hunton Advisory Ltd., and Kendl Capital Limited, (via videoconference): T.M. Tomchak Counsel for the Respondents in CA46425 and CA46428, Jarman Capital Inc. and Scott Jason Jarman (via videoconference): D. Hepburn Counsel for the Respondents in CA46425 and CA46428, Green 2 Blue Energy Corp. and Affinor Growers Inc. (via videoconference): J.M. Young Counsel for the Respondents (non‑party applicants) in CA46425 and CA46428, Camp Fiorante Matthews Mogerman LLP (via videoconference): R. Mogerman, Q.C. P. Bennett N. Kovak Place and Date of Hearing: Vancouver, British Columbia September 11, 2020 Place and Date of Judgment: Vancouver, British Columbia November 2, 2020 Written Reasons by: The Honourable Mr. Justice Willcock Concurred in by: The Honourable Mr. Justice Abrioux The Honourable Madam Justice DeWitt-Van Oosten Table of Contents Introduction. 7 The Investigation. 8 The Glacier Media Application. 11 The Respondent Law Firm's Application. 12 The Issues. 14 Argument. 15 Standard of Review.. 15 Public Duty to Hold a Hearing. 15 Nature of the Hearing. 18 Release of Exhibits. 19 Exercise of the Discretion. 20 Analysis.

21 Applicable legislation. 21 The Public Duty of the Commission. 23 The Exercise of the Discretion. 26 The Nature of the Hearing. 27 Distinct Consideration of Documents. 28 The Use of the Documents. 29 Conclusion. 29 Summary: The appellants challenge a decision by the British Columbia Securities Commission to release to a third‑party documents entered into evidence at an interim hearing. They argue that the Commission erred in releasing documents compelled pursuant to its investigative powers and failed to uphold its confidentiality obligations. Held: Appeal dismissed. Once the Commission elected to hold a hearing, its enabling statutory framework imposed a duty to hold the hearing in public, to maintain a record of the hearing, and, consistent with the open court principle, to permit public access to the record unless doing so would be unduly prejudicial to a party or a witness and withholding access would not be prejudicial to the public interest. The Commission did not err in the exercise of its discretion by disclosing the exhibits that formed part of the record to a third party. Reasons for Judgment of the Honourable Mr. Justice Willcock: Introduction [1] The appellants contend the British Columbia Securities Commission erred in law by releasing documents obtained in the course of an investigation under the Securities Act to a firm of solicitors, Camp Fiorante Matthews

Mogerman. The firm intends to use the documents to advance a class action against the subjects of the investigation. The Commission's reasons are indexed as Re BridgeMark Financial, 2019 BCSECCOM 331. The order has been stayed pending the outcome of this appeal. [2] The application for access to the material required the Commission to interpret s. 11 of the Securities Act, R.S.B.C. 1996, c. 418 [Act]: 11 (1) Every person acting under the authority of this Act must keep confidential all facts, information and records obtained or provided under this Act, or under a former enactment, except so far as the person's public duty requires or this Act permits the person to disclose them or to report or take official action on them. [Emphasis added.] [3] The Commission exercised its discretion to hold a hearing before extending a temporary cease‑trading order made pursuant to the Act. From its perspective, it was mandated by regulation to hold the hearing in public. The Commission was also of the view it had a "public duty", within the meaning of the Act, to make evidence submitted in the hearing available to the public. The Commission regarded the public interest in open proceedings to be paramount, and held that it outweighed any potential prejudice to the parties arising from disclosure. To protect the privacy and other interests of third parties, the Commission redacted certain

personal information from the exhibits. [4] The appellants say: a) the Commission erred in concluding that it had a public duty to hold a "public hearing"; the Executive Director initially made temporary orders ex parte, and then exercised a discretion, not a duty, to give the appellants an opportunity to be heard in relation to the extension of the orders; b) the material sought by the firm came into the possession of the Commission pursuant to its statutory powers and was held on an implied undertaking that its confidentiality would be maintained and it would be used only for the purposes for which its production was compelled; c) the implied undertaking of confidentiality does not yield to the open court principle on the filing of material on an interlocutory process, but only after a hearing on the substantive underlying issue; d) the Commission erred in concluding that, having held a public hearing, it also had a public duty to release exhibits to the public; and e) the Commission erred in failing to appropriately balance the interests of confidentiality against the open court principle. The Investigation [5] On November 26, 2018, the Executive Director of the British Columbia Securities Commission issued a temporary order (cited as 2018 BCSECCOM 369) and served notice that the Commission intended to hold a hearing under s. 161(3) of the Act, to determine whether to extend

that order, upon the following individuals and companies: a) The appellants in appeal CA46425: BridgeMark Financial Corp., Jackson & Company Professional Corp., Anthony Kevin Jackson, and Kootenay Zinc Corp. (the "BridgeMark Appellants"); b) The appellants in appeal CA46428: Justin Edgar Liu and Lukor Capital Corp. (the "Liu Appellants"); c) A large group of individuals and corporations (respondents on this appeal), identified as members of what the Commission referred to, together with the appellants, as the "BridgeMark Group"; and d) the respondents Cryptobloc Technologies Corp., New Point Exploration Corp., Green 2 Blue Energy Corp., BLOK Technologies Inc., Kootenay Zinc Corp., Affinor Growers Inc., Beleave Inc., Liht Cannabis Corp. (formerly known as Marapharm Ventures Inc.), PreveCeutical Medical Inc., Speakeasy Cannabis Club Ltd., and Abattis Bioceuticals Corp. (identified by the Commission as "the Issuers"). [6] The Commission advised the recipients of the notice that members of its staff were investigating whether the BridgeMark Group and the Issuers had violated securities legislation by participating in a scheme that involved conduct abusive to the capital markets and the illegal distribution of securities. In particular, it was investigating: a) whether members of the BridgeMark Group had facilitated illegal distribution of securities in private placements by

purporting to be consultants when they were not, to generate profits for themselves; and b) whether the Issuers had paid most of the proceeds of the private placements back to the purchasers as consulting fees when little or no consulting services had been or were intended to be performed. [7] The temporary order and notice of hearing stated: The Executive Director, orders the following (theTemporary Orders): (a) Under section 161(1)(b)(ii), that members of the BridgeMark Group cease trading in, and are prohibited from purchasing, securities of the Issuers, (b) Under section 161(1)(c), that the exemption under section 2.24 of National Instrument 45-106 does not apply to the Issuers for a distribution to a consultant, and (c) Under section 161(1)(c), that the exemption under section 2.24 of National Instrument 45-106 for consultants does not apply to any issuer listed on the CSE for a distribution to a member of the BridgeMark Group. [8] Following a hearing on December 7, 2018, and considering submissions completed on December 12, 2018, the Commission, for reasons indexed as Re BridgeMark Financial, 2019 BCSECCOM 14, held that it was not in the public interest to proceed with a hearing to address the suspected violations until Commission staff concluded their investigation. It then turned to the question whether the Temporary Orders should be extended. In its reasons the

Commission stated: [21] The decision of this Commission in Re Fairtide Capital Corp., 2002 BCSECCOM 993 set out the following explanation of the sections and the operative test to extend a temporary order as follows: 25. An extension order made under section 161(3) is not limited to a specific period as in section 161(2), but can be made until the hearing under section 161(1) is held and a decision is rendered. [T]his discretion is not open ended. The Commission may make an extension order only if it meets the two-pronged test of being 'necessary and in the public interest'. The evidentiary threshold to conclude that an extension order is 'necessary and in the public interest' is obviously greater than that necessary to conclude (when first issuing the temporary order) that the length of time to hold a hearing 'could be prejudicial to the public interest'. [9] The Commission considered whether there was an evidentiary foundation upon which it could assess whether there was prima facie evidence of misconduct on the part of any of the respondents to the investigation and whether, in the circumstances, the extension order was necessary in the public interest. It amended and extended the Temporary Orders until April 10, 2019. The Temporary Order against seven issuers (Kootenay, Affinor, Beleave, Liht, PreveCeutical, Speakeasy and Abattis) and twelve non‑issuer respondents

(BridgeMark, Jackson & Company, Tryton, Saiya, Emami, 10X, Viral, 727 Capital, A. Haddad, T. Haddad, Duggan and Schmidt) was not extended. The amended extended Temporary Order provided: (a) under section 161(1)(b)(ii), that Jackson, Lukor, Liu, Cam Paddock Enterprises, Paddock, Gill, JCN, Bevilacqua, Essos, Sway, Torres, Detona, Villanueva, Altitude, Venier, Platinum, 658111 BC, Shull, Tavistock, Lawrence, Jarman, Scott Jarman, Northwest, Esmail, Trainor, Mawji, Escher, Hunton, White, Kendl, 1153307 BC, Van Skiver, Bertho, Boswell, Haight-Ashbury, Shahrokhi, MacPherson, Tollstam & Company and Tollstam, cease trading in, and are prohibited from purchasing, securities of Cryptobloc, New Point, Green 2 and BLOK; (b) under section 161(1)(c), that the exemption under section 2.24 of National Instrument 45-106 does not apply to Cryptobloc, New Point, Green 2 and BLOK for a distribution to a consultant; and (c) under section 161(1)(b)(ii), that Jackson, Lukor, Liu, Cam Paddock Enterprises, Paddock, Gill, JCN, Bevilacqua, Essos, Sway, Torres, Detona, Villanueva, Altitude, Venier, Platinum, 658111 BC, Shull, Tavistock, Lawrence, Jarman, Scott Jarman, Northwest, Esmail, Trainor, Mawji, Escher, Hunton, White, Kendl, 1153307 BC, Van Skiver, Bertho, Boswell, Haight-Ashbury, Shahrokhi, MacPherson, Tollstam & Company and Tollstam, be prohibited from purchasing any securities of an issuer

listed on the CSE that are distributed using the exemption set out in subparagraph (b) above. [10] On an application by the Executive Director for a further extension heard on April 9, 2019, the Commission, for reasons indexed as Re BridgeMark Financial, 2019 BCSECCOM 191, extended the Temporary Orders to May 27, 2020. The Glacier Media Application [11] On April 17, 2019, Glacier Media applied for access to certain exhibits and transcripts in the proceedings. In May 2019, for reasons later provided and indexed as Re BridgeMark Financial, 2019 BCSECCOM 218, the Commission granted access to the requested exhibits and transcripts, redacted for sensitive financial and personal information. The Commission held: [8] Section 19 of the Securities Regulation requires that hearings before the Commission be open to the public unless a public hearing would be unduly prejudicial to a party or a witness, and it would not be prejudicial to the public interest to order that the public be excluded from all or part of the hearing. This is reflected in section 7.5 of BC Policy 15-601 Hearings. [9] As also set out in section 7.5 of BCP 15-601, hearing materials, including transcripts of a hearing and exhibits, are not published on the Commission website, but are available on application to the Commission Secretary. [10] While section 11 of the Securities Act requires every person acting under the

authority of the Act to keep confidential all facts, information and records obtained or provided under the Act, there are exceptions to this requirement. One is that the person's public duty requires the person not to keep the information confidential. The Commission has a public duty to adhere to the requirement, set out in the Securities Regulation and consistent with principles of procedural fairness applicable to administrative tribunals, that hearings before it be public. This public duty extends to making evidence submitted in hearings and transcripts public, subject to other considerations in the public interest. [Emphasis added.] [12] That policy was considered to be consistent with the practice followed by other securities commissions in Canada and the open court principle described in Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41 at para. 52; Canadian Broadcasting Corp. v. New Brunswick (Attorney General), [1996] 3 S.C.R. 480 at para. 22; Re Mega-C Power Corporation et al., 2007 ONSEC 11 at para. 36; and Re Lutheran Church-Canada, the Alberta-British Columbia District, 2019 ABASC 43. The Respondent Law Firm's Application [13] On July 16, 2019, the respondent law firm applied for access to nine exhibits filed at the Commission hearings: two news releases published by certain respondents to the investigation, and seven affidavits. The application

made clear that the firm intended to use the evidence to advance civil proceedings that its clients wished to pursue against the respondents. [14] The appellants objected to the production of the affidavits on the basis that they had been filed in connection with proceedings related to temporary orders and not a hearing on the merits of the allegations in the notice of hearing. They described the hearing in question as analogous to an application for an interlocutory order in the superior courts, at which the protection of privacy interests may be given greater weight than the open court principle. They argued that the affidavits in question contained sensitive information that the Executive Director had compelled from the respondents and others in his investigation. [15] Further, they urged upon the Commission the view that the material in question had been received by the Commission on an implied undertaking to keep it confidential and use it for no purpose other than its investigation. [16] They argued that the principle of open tribunal proceedings should be balanced against other public interest objectives and, in particular, consideration of the purpose for which the documents should be used (as reflected in s. 19 of the Securities Regulation, B.C. Reg. 196/97 [Regulation], and s. 41 of the Administrative Tribunals Act, S.B.C. 2004, c. 45). [17] Relying on X and A Co.,

2007 ONSEC 1, the appellants took the position that the acknowledged purpose for which the firm sought the documents, to advance private litigation, is not an objective that should be served by the Commission. The law firm's clients had other avenues available to them to seek production of documents, the civil discovery process, and should not use the Commission's power to accomplish what they could and should accomplish by other means. In particular, the appellants argued that a disclosure order should not be made during the investigative stage of a proceeding. [18] The Commission referred to its reasons for releasing documents to Glacier Media as the "starting point" of its consideration of the application, and then noted that none of the appellants had applied for any form of confidentiality or an order that the extension hearing be conducted in camera. [19] It distinguished the authority upon which some of the appellants relied, X and A Co., on the ground that case dealt with an application to relieve a party from an implied undertaking relating to documents that had not yet become exhibits in a public hearing. [20] The Commission held: a) An implied undertaking attaching to records during the disclosure phase of an investigation by the Commission would have no application to affidavits that have become exhibits in a public hearing (at para. 13); b) The narrow issue before

the Commission was whether there was a public interest reason to deny public access to affidavits filed in a public hearing before the tribunal (at para. 14); c) A refusal to permit access to exhibits on the grounds they were obtained by use of the Commission's powers of compulsion would apply in every case and would lead to the exclusion of the public from all Commission proceedings (at paras. 15-16); and d) There is no fundamental difference between hearings to extend temporary orders and final hearings; it is equally important that these proceedings be open to the public and subject to public scrutiny (at para. 18). [21] The Commission therefore granted access to the affidavits sought, with redactions to avoid disclosure of certain personal information to the respondent law firm. The Issues [22] The BridgeMark Appellants frame the issues on appeal as follows: a) Did the panel err when it determined that the confidentiality obligations imposed by s. 11(1) of the Act were abrogated because the open court principle created a "public duty" to disclose the facts, records and information contained in the documents requested by the law firm? b) Did the panel err by failing to properly balance the relevant interests at play in deciding to grant the class action applicant access to the requested documents for a collateral purpose? c) Was the implied undertaking spent when the

requested documents were marked as exhibits on an interim proceeding? [23] The Liu Appellants frame the issues on appeal as follows: a) Did the panel err in concluding that it had a public duty to hold a public hearing on the applications for extension of temporary orders and thereby fail to properly apply s. 11(1) of the Act? b) Did the panel err in concluding it had a public duty to allow access to materials filed on the temporary order hearings for a use not mandated by the Act? Argument Standard of Review [24] It is common ground that, as the Act provides a statutory appeal mechanism, the standards of review on this appeal are those applicable on an appeal from a final judgment at trial, as described in Housen v. Nikolaisen, 2002 SCC 33. [25] The appellants say because certain questions, in particular the interpretation of s. 11(1) of the Act, are questions of law and questions of central importance to the legal system generally, the Commission's findings should be reviewed on a standard of correctness. [26] The Executive Director submits the panel made a discretionary decision after weighing the appellants' privacy interests against the public interest reflected in the open court principle. The appellate standard of review applicable to the exercise of discretion is highly deferential and a discretionary decision is reversible only where the tribunal has misdirected itself; has come to a decision that is so clearly wrong that it amounts to an injustice; or has given no weight or insufficient weight to relevant considerations: Griffioen v. Arnold, 2019 BCCA 83 at para.

53. Public Duty to Hold a Hearing [27] The appellants say the material sought by the firm came into the possession of the Commission pursuant to its statutory powers and was held on an implied undertaking that its confidentiality would be maintained and it would be used only for the purposes for which its production was compelled. The Commission acknowledges that it has a duty to maintain the confidentiality of documents it obtains pursuant to its investigatory powers (although it does not describe that duty as an implied undertaking). The question, the Commission says, is whether a public duty overrides that obligation. The appellants say the public duty exception is not engaged. [28] First, they say the Commission is under no duty to give the appellants a hearing. The appellants say the language of s. 161(3) gives the Commission a discretionary power to grant parties an opportunity to be heard on the extension of a temporary order. No public process is required. While the Regulation provides for a public hearing where one is required or permitted under the Act, the Regulation does not restrict the discretion afforded to the Executive Director and does not require a public hearing where the Act does not do so. [29] Second, the appellants say the Act provides that the subjects of an investigation may be afforded a right to be heard, as opposed to a hearing, on the extension of

a temporary order. The distinction is subtle, they say, but significant. [30] The Act describes orders that may be made, on the one hand, by either the Executive Director or the Commission and, on the other hand, orders that may be made only by the Commission. Further, it provides that certain orders may be made after a party has been given an opportunity to be heard, whereas others may be made only after a hearing. [31] They argue that s. 161(3), which provides for the measure that was taken in this case, the extension of a temporary order, serves as an interim measure "until a hearing is held". The fact that it allows for the possibility, but not the right, that a respondent under investigation may be afforded an opportunity to be heard before the temporary order is extended means that the opportunity to be heard is not equivalent to a hearing, as that word is used in this provision. [32] The Liu Appellants rely, in part, upon the fact that prior to amendments put in place by the Finance Statutes Amendment Act, S.B.C. 2011, c. 29, the language in s. 161 of the Act provided that the Commission could extend temporary orders "without a hearing" rather than "without providing an opportunity to be heard". They say the amendment speaks to an intention to draw a distinction. That distinction is reflected in comments with respect to the relevant amendment made in the Legislature by

the responsible minister: Hon. K. Falcon: The purpose here is to clarify when a temporary order may be made. The significance here is to make it clear that a temporary order can be extended without providing a person with an opportunity to be heard. Right now it says that currently a temporary order can be extended without a hearing. The idea here is that you don't want to necessarily have an entire full hearing. You want to make it clear that a temporary order can be extended without providing a person an opportunity to be heard, as opposed to a full hearing. British Columbia, Official Report of Debates of the Legislative Assembly (Hansard), 39th Parl., 4th Sess., Vol. 28, No. 10 (24 November 2011) at 9096. [Emphasis added.] [33] The Executive Director says the Commission can control its own processes and is entitled to hold hearings to make determinations under s. 161(3). The fact the section does not require a hearing is irrelevant to whether or not a hearing takes place. [34] It says the processes engaged in on December 7, 2018 and April 9, 2019 constituted hearings within the meaning of the Act and were considered to be such by the parties. The first temporary order and notice of hearing stated that the Commission "will hold a hearing under s. 161(3) of the Securities Act, to determine whether to extend the temporary order under section 161": 2018 BCSECCOM 369. It gave a

specific date, time and location for the first extension hearing under the heading "Hearing Process". All parties were entitled to participate fully in the extension hearings, and many parties, including the appellants, did so. There is no suggestion the hearings were held for the improper purpose of disclosing the investigatory file. In fact, as a rule, affected parties are given a right to be heard. BC [Securities Commission] Policy 15-601 - Hearings, as it was then in force, stated: 2.4 Temporary orders - The executive director may issue a temporary order without a hearing, but must issue a notice of hearing with the temporary order. The temporary order is effective for not more than 15 days, unless the Commission extends it. The Commission generally gives a party the opportunity to be heard on an application by the executive director to extend a temporary order. [Emphasis added.] [35] The Executive Director notes that in Burnley v. University of New Brunswick (1992), 130 N.B.R. (2d) 224 at para. 26, the New Brunswick Court of Appeal equated a right to be heard with a hearing in the following terms: A hearing does not mean that a person has the right to a procedure similar to a trial. A "hearing" in the sense of the circumstances of this case means the right to be heard by a decision maker with a full opportunity to lay before the decision maker all the pertinent facts which

support his side of the issues. Nature of the Hearing [36] The appellants, citing Bodnar v. The Cash Store Inc., 2010 BCSC 660; Re Inspektor, 2014 LNONOSC 2232 at paras. 36-39; Discovery Enterprises Inc. v. Ebco Industries Ltd. (1997), 42 B.C.L.R. (3d) 192 (S.C.); and Interclaim Holdings Ltd. v. Down, 2003 BCCA 266, argue the Commission failed to consider the distinction between affording access to exhibits filed at a hearing on the merits and affording access to exhibits filed on the equivalent of an interlocutory application. [37] They say (BridgeMark Appellants' factum at para. 61): The courts have recognized that the competing principles and policies behind the implied undertaking on the one hand, and the open court principle on the other, may require a different balancing on an interim application, as opposed to information produced at trial. In the former case, the implied undertaking is spent, while in the latter it is not. In the administrative context, tribunals have come to a similar result. [38] The appellants say it is appropriate to draw a distinction in principle between interim and final hearings because the evidentiary record of interim hearings may be untested. It can include evidence that is ultimately inadmissible, including hearsay and irrelevant evidence. The prejudice that can arise from the disclosure of such evidence should be weighed carefully. In

Interclaim, Southin J.A. said (at para. 32): [32] [I]n my opinion, in an appropriate case, the notion that everybody is entitled to have access to everything filed in civil proceedings including all documents on interlocutory proceedings in contradistinction to having the right to be present at every proceeding in which a final judgment is sought should be canvassed again. A legal system which has no decent respect for the privacy of litigants is as tyrannical as a legal system in which rights are determined behind closed doors. [39] The Executive Director says that once the decision was made to hold hearings, the panel was obliged to do so publicly. Section 14 of the Regulation sets out that Part 6 of the Regulation applies to a hearing that is required or permitted to be held under the Act or the Regulation. Section 19 of Part 6 of the Regulation provides: 19 (1) Subject to subsection (2), every hearing is open to the public. (2) If the person presiding considers that a public hearing would be unduly prejudicial to a party or a witness and that to do so would not be prejudicial to the public interest, the person presiding may order that the public be excluded for all or part of the hearing. Release of Exhibits [40] The BridgeMark Appellants argue the Commission erred "by conflating making Commission proceedings open to the public, with making the evidence given or filed in

those proceedings available to the public." They contend the Commission should have balanced the public interest in open hearings against the public interest in enforcing the implied undertaking of confidentiality, and could have done so by affording the public a right of access to the proceeding but not unfettered access to documents filed in the proceeding: Juman v. Doucette, 2008 SCC 8. [41] The Executive Director says the implied undertaking is spent once the documents are filed in a public proceeding. In Juman, the Court held (at para. 25): "The general idea, metaphorically speaking, is that whatever is disclosed in the discovery room stays in the discovery room unless eventually revealed in the courtroom or disclosed by judicial order" (emphasis added). The Court in Juman went on to say: [51] It follows that decisions to the contrary, such as the decision of the House of Lords in Home Office v. Harman (where a narrow majority held that the implied undertaking not to disclose documents obtained on discovery continued even after the documents in question had been read aloud in open court), should not be followed in this country. The effect of the Harman decision has been reversed by a rule change in its country of origin. Exercise of the Discretion [42] Finally the appellants say the Commission erred in failing to appropriately balance the interests of confidentiality

against the open court principle. Relying on X and A Co., they say that production of confidential materials obtained by the Commission using its powers of compulsion for use by a party in civil proceedings is not in and of itself in the public interest. [43] The respondents say the Commission correctly distinguished the decision in X and A Co. as one that dealt with an application to relieve a party from an implied undertaking relating to documents that had yet to become exhibits in a public hearing. [44] Further, the Executive Director argues, the time for any party to have addressed concerns about confidentiality of publicly filed documents was much earlier. It was open to any party to seek some form of protection for the hearing exhibits from the Commission, consistent with s. 19(2) of the Regulation. Analysis Applicable legislation [45] Much of the argument in this appeal turns upon the process leading to the filing of the affidavits before the Commission. The Act provides: 161 (1) If the commission or the executive director considers it to be in the public interest, the commission or the executive director, after a hearing, may order one or more of the following: (a) that a person comply with or cease contravening, and that the directors and officers of the person cause the person to comply with or cease contravening, (i) a provision of this Act or the regulations, (ii) a

decision, whether or not the decision has been filed under section 163, (iii) a bylaw, rule, or other regulatory instrument or policy or a direction, decision or similar determination (b) that (i) all persons, (ii) the person or persons named in the order, or (iii) one or more classes of persons cease trading in, or be prohibited from purchasing, any securities or derivatives, a specified security or derivative or a specified class of securities or class of derivatives; (c) that any or all of the exemptions set out in this Act, the regulations or a decision do not apply to a person; (2) If the commission or the executive director considers that the length of time required to hold a hearing under subsection (1), other than under subsection (1) (e) (ii) or (iii), could be prejudicial to the public interest, the commission or the executive director may make a temporary order, without providing an opportunity to be heard, to have effect for not longer than 15 days after the date the temporary order is made. (3) If the commission or the executive director considers it necessary and in the public interest, the commission or the executive director may, without providing an opportunity to be heard, make an order extending a temporary order until a hearing is held and a decision is rendered. (6) The commission or the executive director may, after providing an opportunity to be heard,

make an order under subsection (1) in respect of a person if the person (a) has been convicted in Canada or elsewhere of an offence , (b) has been found by a court in Canada or elsewhere to have contravened the laws of the jurisdiction respecting trading in securities or derivatives, (c) is subject to an order made by a securities regulatory authority, a self-regulatory body or an exchange, in Canada or elsewhere, imposing sanctions, conditions, restrictions or requirements on the person, or (d) has agreed with a securities regulatory authority, a self-regulatory body or an exchange, in Canada or elsewhere, to be subject to sanctions, conditions, restrictions or requirements. 162 (1) If the commission, after a hearing, (a) determines that a person has contravened (i) subject to subsection (2), a provision of this Act or of the regulations, or (ii) a decision of the commission, the executive director or a designated organization, whether or not the decision has been filed under section 163, and (b) considers it to be in the public interest to make the order, the commission may order the person to pay the commission an administrative penalty of not more than $1 million for each contravention. (2) If the commission, after a hearing, (a) determines that a person has contravened section 57.7, and (b) considers it to be in the public interest to make the order, the commission may

order the person to pay the commission an administrative penalty of not more than $5 million for each contravention. [Emphasis added.] [46] The Regulation provides: 19 (1) Subject to subsection (2), every hearing is open to the public. (2) If the person presiding considers that a public hearing would be unduly prejudicial to a party or a witness and that to do so would not be prejudicial to the public interest, the person presiding may order that the public be excluded for all or part of the hearing. [47] The Commission Policy with respect to hearings (then in force), BC Policy 15‑601, provided: 5.7 Record (a) Record of decision under review - The record for a decision under review includes the decision, reasons given for the decision, all records and things considered by the decision maker, a transcript of any oral evidence, and submissions. 7.5 Public attendance (a) Hearings are public - A hearing must be open to the public, unless the Commission considers that 1. a public hearing would be unduly prejudicial to a party or a witness, and 2. it would not be prejudicial to the public interest to order that the public be excluded for all or part of the hearing The public may review all published records for a hearing on the Commission website. If the Commission does not publish a record on the website, the public may inspect it during normal business hours at the Commission's

office. Copies are available from the secretary to the Commission upon payment of the applicable fees. A person who obtains hearing records must provide the Commission with an undertaking to protect personal information in those records. The Public Duty of the Commission [48] In my opinion, the Commission did not err in law in concluding that once it elected to hold a hearing, its enabling statutory framework gave rise to a public duty to make that hearing open to the public and it was bound to conduct itself in a manner consistent with the open court principle. [49] The applicable legislation clearly distinguishes between circumstances in which a hearing is required and circumstances in which the subject of an administrative action is not entitled, as of right, to an opportunity to be heard. The temporary orders and extension orders described in s. 161(2) and (3) may be made as an interim measure until there is a hearing on the merits, when the length of time required to hold such a hearing could be prejudicial to the public interest. In my view, the plain reading of the statute is consistent with the view expressed by the responsible minister, cited above. An opportunity to be heard on the interim measures is permissive and may consist of something less than a full, formal hearing. To paraphrase the wording employed in Burnley, a party is given an opportunity to be heard when

they are permitted to lay before the decision maker all the pertinent facts which support their side of the issue. [50] In this case, however, it is not necessary to further define what "opportunity to be heard" is afforded by s. 161(6) or how that is distinguished from the hearing required by ss. 161(1) or 162. The provision in question in this case, s. 161(3), permits action to be taken without giving the subject an opportunity to be heard. It does not impose upon the Commission or the Executive Director an obligation to give the subject of the proposed order an opportunity to be heard, whether in the form of a hearing or otherwise. Nevertheless, in my view, it is clear that the tribunal is permitted to afford the subject of a proposed temporary order a hearing. It was not argued before us that a hearing of the sort that was conducted in this case is not permitted or contemplated by the legislation. The conclusion that the Commission in this case held a hearing with a view toward determining whether to extend the Temporary Orders is inescapable. In my view, nothing turns on the fact the Commission had a discretion to extend the Temporary Orders without holding a hearing. The decision to hold a hearing was unchallenged, and there was a hearing. [51] Having decided to hold a hearing, the Commission was bound to act in a manner consistent with the Act and Regulation, and to hold

the hearing in public unless doing so would be unduly prejudicial to a party or a witness and an exclusion order would not be prejudicial to the public interest. Holding a public hearing necessarily engaged application of the open court principle. Neither the appellants nor the parties who provided information to the Commission sought to close the hearings. The Commission's policies called for it to maintain and make available to the public a record of the hearing, including "all records and things" considered. [52] It is clear the Commission considered itself to have a discretion to refuse to permit public access to the record. The Commission invited and considered submissions and made the formal decision before us on appeal. Certain appellants took the position before the Commission that s. 19 of the Regulation, s. 7.5 of BC Policy 15‑601, and s. 41 of the Administrative Tribunals Act gave the Commission a discretion to do so. Neither s. 19 of the Regulation nor Policy 15‑601 specifically provide for an order or appear to require a ruling on access to the record of a hearing. Section 4.1 of the Act specifies those provisions of the Administrative Tribunals Act that apply to the Commission and s. 41 is not included. [53] The appellants referred to the decision in X and A Co. in support of the argument that the Commission had a discretion to limit access to the record of

proceedings. The Ontario Securities Commission, in that case, heard an application by Y under s. 17(1) of the Ontario Securities Act, R.S.O. 1990, c. S.5 [OSA], for an order permitting it to use transcripts of examinations conducted pursuant to s. 13 of the OSA, in other civil proceedings. The application was expressly provided for in the OSA: 17 (1) If the Commission considers that it would be in the public interest, it may make an order authorizing the disclosure to any person or company of, ... (b) the name of any person examined or sought to be examined under section 13, any testimony given under section 13, any information obtained under section 13, the nature or content of any questions asked under section 13, the nature or content of any demands for the production of any document or other thing under section 13, or the fact that any document or other thing was produced under section 13; or (2.1) Despite subsection (2), if the Commission considers that it would be in the public interest, it may make an order without notice and without giving an opportunity to be heard authorizing the disclosure of the things described in clauses (1) (a) to (c) to any entity referred to in paragraph 1, 3, 4 or 5 of section 153. 2013, c. 2, Sched. 13, s. 1 (1). [54] The legislation in this Province makes no provision for such an order. To the contrary, the legislation appears to assume the

record will be public and permits an application to be brought to prevent disclosure. However, s. 19 of the Regulation may be read broadly so as to require the Commission to determine, on an application for access to the record of a hearing, whether permitting public access would be unduly prejudicial to a party or a witness, and that it would not be prejudicial to the public interest to preclude access to the document. [55] It is arguable that the discretion to keep evidence confidential should be exercised by closing all or part of a hearing pursuant to s. 19(2) of the Regulation, but that is not in issue before us. On this appeal, all parties took the position that the Commission had a discretion to refuse the firm's request, even after the public hearing and the reference to the evidence in question at that hearing. [56] In my view, the Commission was correct to say that, once it decided to hold a hearing, the statutory provisions imposed upon it a duty to hold the hearing in public, to maintain a record of the hearing, and, consistent with the open court principle, to permit the public to have access to the record unless doing so would be unduly prejudicial to a party or a witness and withholding access would not be prejudicial to the public interest. It engaged in the balancing of private and public interests by soliciting submissions from the parties and addressing those

submissions in its reasons. The Exercise of the Discretion [57] Did the Commission err in addressing that public interest question by misdirecting itself; has it come to a decision that is so clearly wrong that it amounts to an injustice; or has it given no weight or insufficient weight to relevant considerations? The appellants say that it did so by giving inadequate weight to the fact the documents were used only at an interim hearing, that it failed to distinguish between open courts and open access to documents, and that it failed to give appropriate weight to the use to which the documents would be put. The Nature of the Hearing [58] The Commission does not occupy a position analogous to a litigant. It gives no undertaking to either the subjects of its investigations or the third parties from whom it seeks documents. The use it can make of documents obtained with its powers to compel production is limited by statute, not convention. [59] The appellants, in their submission to the Commission, argued that the implied undertaking applies to Commission proceedings, relying upon Re Carnes, 2014 BCSECCOM 400. That case does not address the issue before us, the duty owed by the Commission to maintain the confidentiality of documents it obtains through the exercise of its statutory powers. In Carnes, the Commission considered whether terms should be imposed when it released

material collected by the Commission to a party. The Commission held: [5] [T]he panel does not consider it necessary to impose any additional conditions or restrictions on the disclosure of the requested records, beyond the usual implied undertaking that the respondent will not use information contained in the executive director's disclosure for any purpose other than answering the allegations made against him in the notice of hearing. [Emphasis added.] [60] For that reason, in my view, Bodnar is of little assistance to the appellants. It addresses the undertaking given by a litigant to the court in return for the benefit of the use of the court's process to obtain information on discovery. It does not address the obligations of the tribunal. [61] In Bodnar, Griffin J. (as she was) considered whether a litigant may regard the undertaking as "spent" when documents are filed on an interlocutory motion and relied upon in support of an order. It imposes a requirement that an application be made to the court whose process was employed to obtain the evidence, for leave to regard the undertaking as spent when evidence is filed but not adduced in open court. At para. 23 she described the open court principle, the rule that "once information is introduced in court it is available to the public" as "a fundamental underpinning of our justice system". She noted that in most cases evidence

filed on an interlocutory application that has been heard will be made available to the public. The measure she imposed was regarded as a means of ensuring interim applications were not used by litigants to avoid the implied undertaking: [39] When the materials have been legitimately filed in court as relevant to an interim application, and are thereby available to the public, in most cases it will not likely be difficult for a party to obtain leave from the implied undertaking. Given that the information is now public, the court may consider there is little prejudice to allowing the receiving party to use the information in other ways. But requiring leave will provide some safeguard against abuse of process, the concern of our Court of Appeal in Interclaim Holdings. [62] The distinction drawn in Bodnar and other cases between interlocutory and final hearings, intended to ensure the open court principle is not used as a means of avoiding an undertaking given to the court, is not inconsistent with the Commission's conclusion that, for its purposes, there is no fundamental difference between hearings to extend temporary orders and final hearings and it is equally important that the former and latter be open to the public and subject to public scrutiny. Distinct Consideration of Documents [63] Where, as in s. 41 of the Administrative Tribunals Act, specific provision is made for

public access to documents, the legislation describes a test that is similar to that described in s. 19 of the Regulation with respect to open hearings. The rule is that documents submitted in a hearing are accessible to the public unless the tribunal is of the opinion that the interests of any affected person or party in avoiding disclosure outweigh the value of adhering to the principle that hearings be open to the public. [64] The Commission having considered the appellants' submissions concluded there was no public interest reason to deny public access to affidavits filed in a public hearing before the tribunal. In my opinion, in doing so the Commission did not misdirect itself, and it has not been shown that it gave no weight or insufficient weight to any relevant consideration. The Use of the Documents [65] Finally, in my view, the Commission was not required to weigh the specific use for which the firm sought the evidence. The firm simply requested the Commission make accessible to the public the evidence adduced at a public hearing. It argues, rightly in my view, that the intended use of the information is irrelevant. As the Chief Justice noted in Discovery Enterprises: [21] A third-party spectator in the courtroom may record details of the materials read out in open court and use them for collateral purposes, short of purposes prescribed [sic] by law. This fact,

however, does not lead to the conclusion that the recipient may do so. The English decision of Sybron Corporation v. Barclays Bank, [1985] 1 Ch. 299 at 321 explains why a third party may do what the recipient litigant may not: It is necessary, in my judgment, to distinguish between the party on whom the undertaking is imposed on the one hand and third parties on the other hand. The undertaking binds the former, it does not bind the latter, who have given no undertaking. [66] The disclosure of the evidence to the public will not preclude the appellants from raising any available objection to its use in other proceedings, such as use "proscribed by law". Conclusion [67] In conclusion, I am of the opinion the Commission did not err in law in concluding it had a duty to make public the record of the December 7, 2018 and April 9, 2019 hearings to extend the Temporary Orders, and did not err in the exercise of its discretion in allowing the firm to have access to the exhibits that formed part of the record. [68] I would dismiss the appeal. "The Honourable Mr. Justice Willcock" I agree: "The Honourable Mr. Justice Abrioux" I agree: "The Honourable Madam Justice DeWitt-Van Oosten"