Abuse of process revisited? British Columbia Court of Appeal grants leave application from ruling of British Columbia Securities Commission

The British Columbia Court of Appeal will hear a case that raises important questions concerning how persons subject to prosecution by administrative bodies will have "abuse of process" allegations adjudicated. In response to a motion brought by certain respondents to an administrative proceeding brought by staff of the British Columbia Securities Commission (the BCSC) in Morabito v. British Columbia (Securities Commission), 2023 BCCA 395, the British Columbia Court of Appeal granted leave to appeal an interlocutory tribunal decision of the BCSC.

Background

In a Notice of Hearing issued October 7, 2021, the Executive Director of the BCSC (Director) alleged that Global Crossing Airlines Group Inc. (formerly known as Canada Jetlines Ltd.) (Jetlines) failed to make timely disclosure of material information contrary to the Securities Act, R.S.B.C. 1996, c. 418, and that Mark Morabito authorized the contravention and also engaged in insider trading.

As a result of compelled supplemental disclosure from the Director, the applicants learned BCSC staff had communicated with Jetlines’ former CEO Stanley Gadek during the investigation. In June 2021 the Director knew that Mr. Gadek was terminally ill, and Mr. Gadek passed away in August 2021 prior to the issuance of the Notice of Hearing.

The applicants brought a stay application founded upon abuse of process, on the basis that Mr. Gadek had evidence which would have aided their defense and that the whole of the proceeding had been so tainted by unfairness on the part of the Director as to make it an abuse of process. The BCSC declined to grant a stay, and the applicants applied for leave to appeal this decision before the British Columbia Court of Appeal.

The Court’s decision

In an application for leave to appeal from a decision of the BCSC, as with other statutory appeals, the overarching consideration is the interests of justice. The Court may consider specific factors drawn from the case law, such as the significance of the issues to the practice, the significance of the issues to the parties/litigation, the merits of the appeal, and whether the appeal would unduly hinder the litigation. Where, as here, the appeal is interlocutory in nature, precedent indicates that the usual practice is not to grant leave to appeal, but leave applications should not be dismissed solely on the basis that the proposed appeal is from an interlocutory decision.

Ultimately, the Court of Appeal found it was in the interests of justice to grant leave in this case, given the importance of the questions raised by the proposed appeal, the significance of the proposed appeal to the applicants, and the apparent merit in their proposed arguments. With respect to whether the appeal would unduly hinder the litigation (delaying it for perhaps as long as a year), the Court of Appeal found that this factor weighed against granting leave to appeal, but not strongly in the circumstances.

Significance of the issues to the practice

The Court of Appeal identified two important questions of law:

• Whether the analysis used in determining whether an administrative proceeding has become an abuse of process for reasons other than administrative delay alone requires an analysis substantially different from that established in Blencoe v. British Columbia (Human Rights Commission), 2000 SCC 44, and Law Society of Saskatchewan v. Abrametz, 2022 SCC 29, and
• Whether the BCSC erred in failing to require the Director to discharge an evidentiary burden to answer allegations of abusive conduct substantiated with some evidence.

Identified merits of the appeal

The Court of Appeal concluded that the applicants established there is significant apparent merit to the appeal.

Firstly, in the underlying decision, the Panel concluded that there was a strong foundation for a claim for abuse of process, but nevertheless dismissed the stay application. The Court of Appeal found there was an arguable case that the Panel erred in giving inappropriately heavy weight to the presence or absence of prejudice suffered by the applicants.

Secondly, the Court of Appeal also found that there is some prospect that on appeal, the Court of Appeal would find that the evidentiary burden may shift to the Director to respond in a meaningful way where the applicant has some evidence supporting allegations of unprofessional conduct or abuse.

Finally, the Court of Appeal found there was some prospect that on appeal, a division of the Court of Appeal would conclude the Panel erred by failing to give any weight to the fact that the Director effectively shielded investigators from cross-examination on their conduct. The Director did not put the principal investigator forward for cross-examination in this case, and the Panel held the Director is free to choose how to present their case. However, the Court of Appeal drew a distinction between how the Director may choose to prove its substantive case, and how the Director may preclude applicants from examining knowledgeable witnesses with respect to abuse allegations.

Takeaways

The Court of Appeal’s decision to grant leave in this case means that persons subject to prosecution by administrative bodies may soon have new guidance on how allegations of abuse of process, for reasons other than delay, will be dealt with by those administrative bodies and, ultimately, by the courts. The decision on leave to appeal indicates that there is significant apparent merit to the matters raised here, but the final decision of the division of the Court of Appeal remains to be seen.