Party A v. British Columbia (Securities Commission)

2020 BCCA 382 Party A v. British Columbia (Securities Commission)

COURT OF APPEAL FOR BRITISH COLUMBIA Citation: Party A v. British Columbia (Securities Commission), 2020 BCCA 382 Date: 20201105 Docket: CA46596 Between: Party A, Party B, Party C, Party D and Party E Appellants And British Columbia Securities Commission and Executive Director of the British Columbia Securities Commission Respondents

SEALED FILE Before: The Honourable Madam Justice Bennett (In Chambers) On appeal from: A decision of the British Columbia Securities Commission, dated November 21, 2019 (Re Application to revoke certain orders No. 2, 2019 BCSECCOM 416). Oral Reasons for Judgment Counsel for the Appellants, Party A, Party B, Party C, and Party D (via teleconference): J. Narwal Counsel for the Appellant, Party E (via teleconference): B. Richdale R. Sim Counsel for the Respondents (via teleconference): D.J. Chapman D. Flood Place and Date of Hearing: Vancouver, British Columbia October 29, 2020 Place and Date of Judgment: Vancouver, British Columbia November 5, 2020 Summary: The applicants seek leave to appeal the decision of the British Columbia Securities Commission dismissing the applicant's application to set aside and revoke 12 freeze orders issued against the applicants' bank accounts, investment accounts, and real property pursuant to s. 151 of the Securities Act. The applicants submit that this appeal would allow this Court to establish a principled test for the issuance of freeze orders under s.

151. Held: application for leave to appeal is granted. The various legal issues raised by the applicants relating to the general issuance of freeze orders under s. 151 meet the Queens Plate criteria for granting leave to appeal. The proposed appeal raises questions of law dealing with the interpretation of a statute and issues relating to the scope of the Commission's jurisdiction, which are questions of importance to the practice. The pecuniary and proprietary interests currently "frozen" render this a significant issue to the parties involved. Given the significance of the issues and in light of the low threshold for determining the merits of an appeal, it is in the interests of justice to grant leave to appeal. BENNETT J.A.: Nature of the Application [1] Party A, Party B, Party C, Party D and Party E (collectively, the "Applicants"), seek leave to appeal the decision of a statutory body, the British Columbia Securities Commission (the "Commission"), pronounced on November 21, 2019 (the "Decision"). [2] The reasons for the Decision are indexed at 2019 BCSECCOM 416 (the "Reasons"). In the Decision, the Hearing Panel of the Commission (the "Panel") dismissed the Applicants' application to set aside and revoke twelve freeze orders pursuant to s. 151 of the Securities Act, R.S.B.C. 1996, c. 418 [Act]. The twelve freeze orders were issued as against the Applicants' bank accounts,

investment accounts, and real property (collectively, the "Freeze Orders"). Background Overview [3] On October 10, 2018, the Commission issued an investigation order against the Applicants under s. 142 of the Act. [4] The investigation was amended on January 22, 2019. [5] The relevant period for the purposes of the investigation was from September 1, 2014 onwards. [6] In early April 2019, the Chair of the Commission issued the Freeze Orders, which also authorized the filing of charges under the Land Title Act, R.S.B.C. 1996, c. 250 [LTA], against real property in which some of the Applicants have an interest: Reasons at para. 2. [7] The Applicants applied to the Commission under ss. 165 and 171 of the Act to revoke or vary the Freeze Orders: Reasons at para. 3. [8] The Applicants then gave notice to Attorney General of British Columbia of a constitutional challenge to s. 151 of the Act. [9] On May 8, 2019, the Attorney General of British Columbia requested that the Commission refer a stated case to the Supreme Court of British Columbia pursuant to the Administrative Tribunals Act, S.B.C. 2004, c. 45, s. 43(5) (the "Charter Case"), regarding the constitutionality of s. 151 of the Act under the Canadian Charter of Rights and Freedoms, Part of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.). 1982, c. 11 [Charter]. [10] The Decision therefore does not

refer to the Charter matters. [11] On March 4, 2020, the Applicants made a sealing order application in this Court "on the basis that the open court principle would harm the capital markets and the public interest as those subject to an investigation by the Commission would be negatively impacted by disclosure of the investigation and disclosure of an investigation can harm the ability of investors to make rational investment decisions". Justice Saunders granted the sealing order. The Factual Background [12] The background of this proposed appeal was set out in the Decision. The facts related to the proceedings were set out at paras. 9-12: [9] On October 10, 2018, the Chair of the Commission, acting as a single commissioner pursuant to the delegation of authority to a single commissioner under section 7(1) of the Act, issued an investigation order (the First Investigation Order) naming a number of trading subjects and issuer subjects. [10] On January 22, 2019, the Chair of the Commission issued an amended investigation order (Amended Investigation Order) which amended the First Investigation Order to add additional individuals and companies as trading subjects and additional matters to be investigated by staff of the Enforcement Division of the Commission. [11] In early April, 2019, the Chair of the Commission issued the Freeze Orders and authorized the Charges. [12] The Freeze

Orders were imposed on three of the Applicants' bank accounts freezing approximately $12 million, 22 brokerage accounts of one Applicant and 28 brokerage accounts of another Applicant. Charges were imposed on five properties in which certain of the Applicants have an interest. [13] As to evidence at the hearing of the Panel: [13] Each request by Enforcement Division staff for the issuance of the First Investigation Order and the Amended Investigation Order was supported by a memorandum (collectively, the Memoranda) to the Chair which set out the basis for each of these orders, based on the information gathered by the Enforcement Division at the time of each such request. [14] We note that the Memoranda, which were redacted to a minimal degree for privacy of third parties, were only provided to the Applicants a few days before the scheduled oral hearing date for the Applications. The panel admitted the Memoranda as exhibits as they were relevant to the Applications. The panel adjourned the oral hearing to afford the Applicants time to consider their positions in light of the Memoranda and to provide time for the executive director to prepare revised written submissions on the merits of the Applications. [15] The executive director delivered revised written submissions prior to the rescheduled oral hearing date. The Applicants elected not to deliver further written submissions

before the resumption of the oral hearing and relied on their written submissions prepared for the original oral hearing. However, counsel for one of the Applicants delivered further written submissions and other materials at the rescheduled oral hearing. [14] The type of information in the memoranda (which set out the basis for the Freeze Orders, see the excerpt above) included evidence and allegations, summarized at para. 25: · The Applicants were trading in securities. · Only one of the Trading Subjects was ever registered under the Act and that registration was no longer in effect. · Enforcement Division received a tip that certain Trading Subjects were engaged in unregistered trading and that one of the Applicants had invested a substantial amount in one of the Issuer Subjects without disclosing that that Issuer Subject was a related party. · A number of individual Applicants were close family members. · A number of the individual Applicants were officers or directors of a number of the corporate Trading Subjects and Issuer Subjects. · Certain Trading Subjects and their relatives and associates had accumulated large share positions in a number of the Issuer Subjects. · Certain of the Applicants paid for or arranged promotional materials for Issuer Subjects in which certain of the Applicants had large share positions. · A number of finder's fees appear to have been paid and

retainers entered into without required disclosure. · One of the Trading Subject's websites recorded numerous transactions raising funds for issuers that were not publicly disclosed, including the absence of disclosure of finder's fees. · Several Trading Subjects publicly announced what appeared to be arm's length transactions but which were with newly incorporated companies connected to the Trading Subjects. · There were significant spikes in trading volumes and prices in certain of the Issuer Subjects. · Substantial monies were deposited in various investment and bank accounts held by the individual Applicants and other Trading Subjects. · The investigation is ongoing. The Proceedings Below [15] The Panel began by canvassing the applicable law and policy, and the respective positions of the parties: Reasons at paras. 16-40. [16] In response to the Applicants' argument that the issuance of the Freeze Orders was "essentially an unauthorized delegation to the executive director", the Panel agreed that "the issuance of freeze orders, charges and other measures to maintain the status quo pending completion of an investigation requires an exercise of discretion by the Chair and requires consideration of the public interest in all the circumstances known at the time of the requests": Reasons at paras. 41-42. [17] After canvassing a recent decision of the Commission, the Panel held,

at para. 44: ... when issuing a freeze order, a single commissioner, exercising delegated authority under the Act, must assess the public interest, and balance that public interest against the interests of the persons who may be affected by the orders including the subject of the freeze order and innocent third parties. [18] The Panel confirmed that the evidentiary burden borne by the Executive Director "in supporting a recommendation that a freeze order be issued in the first instance is not a high hurdle": Reasons at para.

45. The Panel pointed to the "need to move quickly to preserve the status quo and protect potential assets in light of an unfolding investigation": Reasons at para. 45. [19] The Commission then canvassed this Court's decision in Exchange Bank & Trust Inc. v. British Columbia Securities Commission, 2000 BCCA 389: [46] As the Court of Appeal said in Exchange Bank & Trust Inc. v. British Columbia Securities Commission, 2000 BCCA 389 (Exchange Bank), at para. 12: "In seeking an investigation order, Commission staff does not face an onerous evidentiary burden. Staff must show that the circumstances relate to the trading in securities and is expected to provide a basis on which to conclude the subjects of the proposed investigation have acted, are acting or may act in a manner contrary to the public interest." These comments are also applicable to a freeze order, the object of which is to preserve the status quo and protect assets. The assets subject to a freeze order are not confiscated or seized but rather are preserved in the public interest pending the outcome of the investigation or subsequent revocation or variance. [47] In addition, the Exchange Bank decision states (at para. 12) that: "In our view, it is not possible to state an evidentiary test that must be met in every case to support a freeze order Where a freeze order is imposed to preserve property at an early stage of

an investigation, as in this case, the Commission expects staff to review the status of the order on the basis of the emerging evidence as the investigation unfolds and, if appropriate, to apply to have an order varied or revoked." [20] The Panel found that the memoranda: [49] ... satisfies the evidentiary burden set forth in Exchange Bank and thereby fully justified the issuance of the Freeze Orders and Charges. The information contained in the Memoranda indicated the possibility of multiple serious breaches of the Act with the potential of serious harm to investors and issuers if the status quo is not maintained. [21] Despite the Applicants' argument that an evidentiary test should be set, the Panel concluded: [51] In the present matter, the investigation is indeed in its early stages, given the possible multiple breaches of the Act, some of which are typically complex and multi-faceted and require careful investigation and evidence gathering. The basis for orders under section 151 of the Act is to maintain the status quo pending completion of the investigation. That there is no notice of hearing at this point is understandable. Section 151 contemplates the issuances of freeze orders and charges even before an investigation is underway. The absence of a notice of hearing or public allegations is irrelevant. [52] It is not appropriate, especially in the context of a complex

investigation at an early stage, to restrict the ability of the Commission to issue orders under section 151 by imposing tests or criteria that are not contained in the Act. We have confirmed that the issuance of a freeze order requires a consideration of the public interest and that provides a framework for such decisions. The availability of a review of any freeze orders under sections 165 and 166 and applications to revoke or vary under section 171 afford persons affected by such freeze orders an opportunity to have their concerns addressed by a panel of the Commission. [22] The Panel clearly stated that they "may only exercise these powers to revoke or vary the Freeze Orders and Charges or to make a different decision if we determine that to do so 'would not be contrary to the public interest'": Reasons at para. 57. [23] The Panel found that the Freeze Orders were "validly issued in the public interest": Reasons at para. 58. [24] The Panel further found that though the Applicants could request the Commission to vary the Freeze Orders, such a request "must be supported by sufficient evidence that would persuade the panel that varying the Freeze Orders and Charges would not be prejudicial to the public interest": Reasons at para.

59. Here, the Panel found that no such evidence was submitted. [25] Accordingly, the Panel dismissed the applications. Law Leave to Appeal [26] The governing authority on leave applications from statutory tribunals is Queens Plate Development Ltd. v. Vancouver Assessor, Area 09 (1987), 16 B.C.L.R. (2d) 104, 22 C.P.C. (2d) 265 at 109-110; see also British Columbia Securities Commission v. McLean, 2010 BCCA 454 at para.

4. In Queens Plate, Taggart J.A. (in Chambers) outlined the following factors which may be considered in determining leave in statutory appeals: (a) whether the proposed appeal raises a question of general importance as to the extent of jurisdiction of the tribunal appealed from ; (b) whether the appeal is limited to questions of law involving: (i) the application of statutory provisions ...; (ii) a statutory interpretation that was particularly important to the litigant ...; or, (iii) interpretation of standard wording which appears in many statutes ; (c) whether there was a marked difference of opinion in the decisions below and sufficient merit in the issue put forward ...; (d) whether there is some prospect of the appeal succeeding on its merits ... although there is no need for a justice before whom leave is argued to be convinced of the merits of the appeal, as long as there are substantial questions to be argued; (e) whether there is any clear benefit to be derived from the appeal ...; and (f) whether the issue on appeal has been considered by a number of appellate bodies [Internal citations omitted.] [27] In Smolensky v. British Columbia Securities Commission, 2006 BCCA 254 at para. 9, Finch C.J.B.C. added that leave applications from statutory tribunals also engage the standard factors for leave, as articulated in Hockin v. Bank of British Columbia (1989), 37 B.C.L.R.

(2d) 139 at 143: (1) whether the point on appeal is of significance both to the litigation before the court and to practice in general; (2) whether the appellant has an arguable case of sufficient merit; (3) the benefit to the parties of an appellate decision in practical terms; and, (4) most importantly, whether the appeal will unduly hinder the progress of the action. [28] This "extra" step has been followed in a number of decisions, most frequently with respect to appeals from the Commission: Botha v. British Columbia (Securities Commission), 2009 BCCA 214 at paras. 4−7; Sihota v. British Columbia Securities Commission, 2013 BCCA 473 at para. 12. [29] In Smith v. Global Plastics, 2001 BCCA 152, Hall J.A. noted that other matters may be relevant to the determination, including whether it would be likely to "cause great injustice to a party if leave was not granted": at para.

6. As Saunders J.A. has observed, the listed factors are "all considered under the rubric of the interests of justice": Vancouver (City) v. Zhang, 2007 BCCA 280 at para.

10. The "overarching concern is the interests of justice": Hanlon v. Nanaimo (Regional District), 2007 BCCA 538, 72 B.C.L.R. (4th) 341 at para.

2. Positions of the Parties Appellants/Applicants [30] The Applicants submit that the Panel erred in law: (1) by finding that the Freeze Orders were validly issued; (2) in dismissing the Applicants' application to revoke the Freeze Orders pursuant to s. 165 of the Act; and (3) in dismissing the Applicants' application to revoke the Freeze Orders pursuant to s. 171 of the Act. [31] The Applicants submit that this case would provide this Court with an opportunity to establish a principled test for s. 151 of the Act. In their memorandum of argument, the Applicants explain the functioning of s. 151: 14. Section 151 of the Act creates a scheme through which the Commission may issue an order to freeze - or more accurately, restrain - an individual's property, including land. Any and all property of a person may be frozen pursuant to s 151. The section offers no standard to be met prior to issuing such an order, which may continue for an indefinite period. Such orders are issued ex parte, at any time after a formal investigation or criminal proceeding has begun, or even where a formal investigation or criminal proceeding is "about to be" instituted and can be issued without notice. The effect of this scheme is that an individual may have the entirety of their property seized pending not just the outcome, but the onset, of a formal investigation. As this Court accepted in Party A, and the Executive Director does not dispute, such investigations often end with no enforcement action taking place.

15. The explicit purpose of such orders, in the words of the Commission itself, is "to preserve the status quo and protect potential assets in light of an unfolding investigation under the Act." This is done for both an administrative and a criminal law purpose. First, this property may later be disgorged through s 161(1)(g) or s 155.1 of the Act, which this Court in Poonian held has a criminal law purpose. Second, as the section can be triggered by a criminal investigation, the frozen property is effectively made better available for criminal forfeiture. [32] The Applicants argue that "despite s. 151's effects and its quasi criminal nature, the Act contains no statutory protections: It permits the order to be issued pursuant to no standard at all, and may easily cast an overbroad net, impacting individuals who have no relation to an investigation". [33] Furthermore, the Applicants argue that, "[t]here is no mandatory judicial review of a freeze order once issued, and the Act places an onerous reverse-burden on a person seeking to set aside a freeze order." The Applicants contrast this with the Ontario Securities Act, which "contains a robust review mechanism". [34] The Applicants submit that the fact that the lack of guidance surrounding the implementation of s. 151 of the Act means that the Commission will always approve the Director's request for a freeze orders. The

Applicants submit this "amounts to a de facto delegation to the Executive Director, contrary to the clear language of the Act", which, in their submission, comes down to a "subjective application of an individual actor". [35] The Applicants point to this Court's decision in Zhu v. British Columbia (Securities Commission), 2013 BCCA 248, to argue that the "day has come" for the "the issue of what guidelines, criteria, or tests for the Commission's exercise of discretion under s. 151 [to] be addressed". The Applicants submit, at para. 19, that: ... this case presents the ideal opportunity to examine what the boundaries of the Commission's discretion should be, given the extreme circumstances of the case: the freeze order arose during an investigation, which is not public, prior to any public allegations being made, and was issued on the basis of affidavits that provide no rationale for the issuance of the section 151 orders. These circumstances suggest that, without guidance from this Court, the Commission's discretion to order freeze orders under s 151 is unlimited, or perilously close to it. As the Commission appears content to interpret the lacuna of protections in the Act as a conferral of unfettered discretion, it now falls to this Court to apply the principles of statutory interpretation in order to ensure a procedurally fair exercise of discretion. [Emphasis added.] [36]

The thrust of the Applicants' argument is that "[w]ithout further guidance from this Court, the Commission's exercise of discretion will remain bound only by amorphous requirements which, by the Commission's own description, are not a high hurdle to meet, despite the profound impact a freeze order can have on an individual". [37] The Applicants argue that this is contrary to the rule of law. [38] The Applicants submit, "[w]ithout a test outlined by this Court, the Commission's discretion is virtually unlimited", citing to Supreme Court of Canada jurisprudence, including Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817 (S.C.C) and Roncarelli v. Duplessis, [1959] S.C.R. 121 (S.C.C). [39] The Applicants argue that the Supreme Court of Canada's decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 at paras. 36-37, affirms the Applicants' position that, through s. 167 of the Act, the legislature has signaled its intent for appellate oversight. Accordingly, the Applicants submit, matters relating to the interpretation of the Act are subject to a standard of correctness. [40] The Applicants propose that this case "provides an opportunity for this Court to examine the important issues of standards of review post-Vavilov". [41] The Applicants conclude by noting, at para. 27, that: ... the test in Queens Plate is met in this

case as the interpretation of s 151 of the Act is an issue of general importance, and a matter of significance both to the present litigation and practice in general before the Commission, and because it was not correct to issue freeze orders without any evidentiary basis to justify them. [Emphasis in original.] Respondents [42] The respondents submit that leave should be denied as the "freeze orders were validly issued and the commission committed no reviewable error when it exercised its discretion to dismiss the appellants' application". [43] The respondents submit that the proposed appeal does not meet the first Queens Plate factor of raising a question of general importance "as to the extent of the commission's jurisdiction to issue freeze orders", arguing that s. 151(1) of the Act already outlines the how and when the commission may issue a freeze order. The respondents point to Exchange Bank in arguing that this Court has endorsed this general test for a freeze order. [44] The respondents contend, "this Court has already considered and rejected setting down a further test for a freeze order. In Exchange Bank #1, the Chambers Justice cited with approval the [C]ommission's 1997 decision in H & R Enterprises Inc., [1997] 40 BCSC Weekly Summary 18] for the proposition that it is not possible to state an evidentiary test that must be met in every case to support a freeze

order. This Court also rejected setting down a further test for a freeze order in Zhu v. British Columbia (Securities Commission), 2013 BCCA 248". [45] The respondents submit that the Charter Case is the more appropriate forum to determine whether s. 151 of the Act is deficient. That case is set down in the Supreme Court of British Columbia, set to commence on November 16, 2020. [46] The respondents submit there is no practical benefit to this proposed appeal, arguing, "[t]he appellants are inviting this Court to formulate and read in a further test in s. 151 without challenging the constitutionality of the legislation". The respondents submit that because this Court is limited to reviewing the Decision of the Panel for errors of law, there is "no practical benefit to the appeal". [47] The respondents submit that the Freeze Orders were validly issued pursuant to a low evidentiary burden that must be met. [48] Section 171 of the Act allows applicants to apply to have a freeze order revoked or varied. However, the respondents submit that the Applicants attempted to do so without tendering the requisite evidence that the Commission would require in order to come to the conclusion that revoking or varying the Freeze Orders would not be prejudicial to the public interest. [49] Finally, the respondents conclude that when a matter is at the investigation stage, as it is here, the role

of this Court "is limited to ensuring that the rules of natural justice are observed and that the Commission acts within its jurisdiction", citing Exchange Bank & Trust Inc. v. British Columbia Securities Commission, 2000 BCCA 549 [Exchange Bank No. 2]. The Current State of the Act Section 151 [50] I note that significant amendments to the Act came into force on March 27, 2020, under the Securities Amendment Act, S.B.C. 2019, c. 383 [Amendment Act]. Section 151 of the Act was repealed on that date and the Commission's freeze order powers under that section were replaced by new preservation order powers under ss. 164.04 to 164.08 of the Act. [51] Section 151, reproduced below, is the version in force during the period in which all freeze orders against the Applicants were issued. Order to freeze property 151 (1) The commission may make a direction under subsection (2) if (a) it proposes to order an investigation in respect of a person under section 142 or during or after an investigation in respect of a person under section 142 or 147, (b) it or the executive director proposes to make or has made an order under section 161 in respect of a person, (c) criminal proceedings or proceedings in respect of a contravention of this Act or the regulations are about to be or have been instituted against a person and the commission considers the proceedings to be connected with or to arise

out of a security or exchange contract or a matter relating to trading in securities or exchange contracts, or out of any business conducted by the person, (d) a person fails or neglects to comply with financial conditions applicable to the person under this Act, or (e) it proposes to apply or has applied to the Supreme Court for an order under section 157, or the Supreme Court has made an order under section 157. (2) In the circumstances described in subsection (1), the commission may direct, in writing, (a) a person having on deposit, under control or for safekeeping any funds, securities, exchange contracts or other property of the person referred to in subsection (1), to hold those funds, securities, exchange contracts or other property, and (b) a person referred to in subsection (1) (i) to refrain from withdrawing any funds, securities, exchange contracts or other property from any person having them on deposit, under control or for safekeeping, or (ii) to hold all funds, securities, exchange contracts or other property of clients or others in the person's possession or control in trust for an interim receiver, custodian, trustee, receiver manager, receiver or liquidator appointed under the Bankruptcy Act (Canada), the Company Act, the Business Corporations Act, the Law and Equity Act, the Personal Property Security Act, the Winding-up Act (Canada), the Supreme Court Act

or this Act (5) In any of the circumstances referred to in subsection (1), the commission may, in writing, notify a land title office that proceedings are being or are about to be taken that may affect land belonging to the affected person. Section 171 [52] Section 171 of the Act sets out that the Commission may revoke or vary, in whole or in part, a decision that the Commission has made when it considers that to do so would not be prejudicial to the public interest. [53] Section 171 reads: Discretion to revoke or vary decision 171 If the commission, the executive director or a designated organization considers that to do so would not be prejudicial to the public interest, the commission, executive director or designated organization, as the case may be, may make an order revoking in whole or in part or varying a decision the commission, the executive director or the designated organization, as the case may be, has made under this Act, another enactment or a former enactment, whether or not the decision has been filed under section 163. [54] Commission Policy 15-601 ("Hearings Policy") on s. 171 applications is clear that "[b]efore the Commission changes a decision, it must consider that it would not be prejudicial to the public interest. This usually means that the party must show the Commission new evidence or a significant change in the circumstances": s. 8.10; Reasons at para.

21. Application Leave to Appeal [55] The Act provides that a person directly affected by a decision made by the Commission may appeal to the Court of Appeal with leave. Section 167(1) reads: 167 (1) A person directly affected by a decision of the commission, other than (a) a decision under section 48 or 76, (b) a decision under section 165 in connection with the review of a decision of the executive director under section 48 or 76, or (c) a decision by a person acting under authority delegated by the commission under section 7 may appeal to the Court of Appeal with leave of a justice of that court. [56] It is not contended that any of the specific limitations set out in paras. (a) to (c) apply in this case. [57] This is a statutory appeal. (i) Significance of Issues to the Practice [58] A question of law dealing with the interpretation of a statute, particularly one as important as the Act, is of importance to the practice. Furthermore, the proposed appeal raises issues relevant to the scope of the Commission's jurisdiction. In my view, these are significant. [59] One of the issues raised is whether the Commission's process for issuing freeze orders amounts to a de facto delegation of such powers to the Executive Director. Consideration of this more general issue could impact the current and future practice of issuing freeze orders, despite the recent repeal of s. 151. [60] For this reason, and because the interpretation of s. 171 is also at issue, I am persuaded by the arguments of the Applicants on this point. (ii) Significance of Issue to the Action/Benefit to be Derived [61] In the Charter Case, the Applicants are arguing that s. 151 infringes s. 8 of the Charter in a manner that cannot be justified by s.

1. The Applicants filed their written submissions for the Charter Case on September 9, 2020. The Charter Case is set to be heard the week of November 16, 2020 in the Supreme Court of British Columbia. [62] Similar arguments are made in this application in a non-Charter context with respect to s. 151. [63] The Applicants are also seeking to have this Court set a test under s. 171. [64] In my view, the proposed appeal raises issues that are significant to the action as the appeal could bring answers to the parties with respect to the validity and status of the Freeze Orders. [65] Additionally, the pecuniary and proprietary interests currently "frozen" render this a significant issue to the parties involved. Clearly, there is potentially a great benefit to the Applicants. (iii) Merits of the Appeal Alleged error in finding the Freeze Orders were validly issued [66] In light of the low threshold for determining the merits of an appeal, in my view, this appeal has merit. At this point, I cannot conclude that the Panel committed no reviewable error in dismissing the applications to revoke or vary the Freeze Orders. [67] I note that no division of this Court has rejected a mandatory evidentiary test for a freeze order. [68] In Zhu, on the issue of setting down an evidentiary test, the Court noted: [65] The Executive Director says that the approach adopted by the Commission and

reflected in these decisions is clearly within their mandate and does not lend itself to guidance by this Court by way of tests, mandatory criteria, or other guidelines which would tie the hands of the Commission. I agree with the submission of the Executive Director in this respect, particularly in the circumstances of this case. I would decline the appellants' invitation to set down guidelines, criteria or mandatory tests for the exercise of the Commission's discretion under either s. 151 or s. 171 of the Act. I will leave that issue for a future day when it is properly raised before the Commission in the first instance. [69] Thus, the door to this Court creating an evidentiary test for freeze orders was not completely shut. [70] I consider it important that the proposition of a test for the issuance of freeze orders was never rejected by this Court. Indeed, Newbury J.A., in Exchange Bank No. 2, noted: [8] ... any innocent person affected by the freeze order may apply under s. 171 of the Act for a variation. To date, no one has done so. (I must say parenthetically that I do take some comfort in the last point, since without it, the freeze order on its face seems a draconian measure which could bring about a crisis for an innocent party such as a small bank or a client thereof that happens to place a large deposit in the province in the normal course of business.) [Emphasis

added.] [71] In light of Newbury J.A.'s obiter that a freeze order seems, on its face, a draconian measure, there is merit to the general argument that an evidentiary test for the issuance of freeze orders under the Act ought to be considered by this Court. [72] In my view, the various legal issues raised by the Applicants relating to the general issuance of freeze orders under s. 151 meet the Queens Plate criteria and the interests of justice to hear the appeal. Alleged error in dismissing the application to revoke the Freeze Orders [73] In Zhu, this Court discussed the standard of review to be applied to decisions of the Commission and the rationale behind it: paras. 47-49. [74] The fact that there is a statutory appeal mechanism in the Act subjects the decisions of the Commission to appellate oversight: Vavilov at para.

36. This Court hearing such appeals is "to apply appellate standards of review to the decision": Vavilov at para. 37. [75] Vavilov, at para. 37, states: Where, for example, a court is hearing an appeal from an administrative decision, it would, in considering questions of law, including questions of statutory interpretation and those concerning the scope of a decision maker's authority, apply the standard of correctness in accordance with Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R 235, ... [76] Here we are dealing with a question of law, namely whether the Commission properly exercised their discretion in refusing to revoke the Freeze Orders under ss. 165 and 171. This relates to the "scope of the decision maker's authority". [77] In the Decision, the Applicants had applied to the Commission to have the Freeze Orders revoked. [78] The Panel refused to revoke the Freeze Orders, concluding that no evidence was presented on which to base a revocation, but stated the following: [62] It remains open to the Applicants to reapply under section 171 providing sufficient evidence to support that the revocation or variance of the Freeze Orders or Charges would not be contrary to the public interest [79] While the failure to present evidence is a hurdle for the Applicants, I cannot say that this ground is without merit. (iv) Whether the Appeal Would Unduly Hinder the Action [80]

There is no evidence, nor was there any argument by the respondents, that if the Court were to hear the proposed appeal, it could interfere with either the investigation or with the Charter Case. (iv) Interests of Justice [81] The Court will be slow to grant leave to appeal from decisions of the Commission that are not final decisions, although it may do so if it is in the interests of justice: Botha at para. 7, citing British Columbia (Securities Commission) v. Scharfe, 2002 BCCA 704. [82] The decision of the Commission not to revoke the Freeze Orders is not a final decision in the sense that it preserves the assets in question while an investigation is underway. It is not dispositive of the Applicants' entire case. [83] However, given my conclusions regarding the significance of the issues and the possible merit of the proposed appeal, I find that it is in the interests of justice to grant leave to appeal. [84] Therefore, I would grant leave to appeal. "The Honourable Madam Justice Bennett"