Canadian Supreme Court Rules Limitations Period in Securities Act Triggered by Settlement of Enforcement Action not Underlying Misconduct

In a strong statement of judicial deference to the expertise of an administrative agency, the Canadian Supreme Court ruled that the six-year statute of limitations in the British Columbia Securities Act was triggered by the settlement of an Ontario Securities Commission enforcement action and not by the misconduct underlying the action. While both the actor and the British Columbia Securities Commission proposed reasonable interpretations of the Act, the Court employed a  reasonableness review under which judicial deference is due to any reasonable interpretation adopted by an administrative agency, even if other reasonable interpretations may exist.  Because the Commission’s interpretation has not been shown to be an unreasonable one, ruled the Court, there is no basis to interfere on judicial review. (McLean v. British Columbia Securities Commission, Supreme Court of Canada, No. 34593, Dec. 5, 2013)

On September 8, 2008, the securities professional entered into a settlement agreement with the Ontario Securities Commission regarding misconduct that occurred in Ontario, in 2001 or earlier.  The Ontario Securities Commission issued an order barring her from trading in securities for five years and banning her from acting as an officer or director of certain entities registered in Ontario for 10 years.  On January 14, 2010, the Executive Director of the British Columbia Securities Commission notified the actor that he was applying to the Commission for a public interest order against her based on the BC Securities Act. The Court of Appeal applied a correctness standard of review and upheld the Commission’s implied decision that the event for the purposes of the limitations  period that gave rise to the proceedings in British Columbia was the settlement agreement in Ontario. 

While the appeals court reached the right conclusion, the Supreme Court said that the court erred by applying a correctness standard of review.  The reasonableness standard with proper judicial deference was the right standard of review here, said the Supreme Court, which added that it is presumed that courts will defer to an administrative agency interpreting its own statute or statutes closely connected to its function.  Here, that presumption was not rebutted.

Nor does the question fall within any exceptional category that warrants a correctness standard.  Although limitation periods generally are of central importance to the fair administration of justice, said the Court, the issue here was statutory interpretation in a particular context within the Commission’s specialized area of expertise.  The possibility that other provincial securities commissions may arrive at different interpretations of similar statutory limitation periods is a function of the Constitution’s federalist structure and does not provide a basis for a correctness review. 

Finally, and most significantly, the modern approach to judicial review recognizes that courts may not be as qualified as an administrative tribunal to interpret that tribunal’s home statute.  In particular, the resolution of unclear language in a home statute is usually best left to the administrative tribunal because the tribunal is presumed to be in the best position to weigh the policy considerations often involved in choosing between multiple reasonable interpretations of such language.