The Ontario Capital Markets Tribunal (CMT) recently released reasons for decision on a respondent’s motion in Stableview Asset Management Inc (Re), 2022 ONCMT 14. The motion sought to expunge affidavit evidence intended for use at the merits hearing.
The respondent objected to three affidavits containing the intended testimony of Ontario Securities Commission (OSC) Staff members. The CMT granted the respondent’s motion and held that portions of each of the three affidavits were inadmissible on the main grounds that they were irrelevant and contained improper opinion evidence.
The decision highlights the gate-keeping role pre-hearing motions play in ensuring irrelevant and improper evidence is excluded from the record before the CMT at a merits hearing. The exclusion of irrelevant and improper evidence avoids prejudice to the fairness of a hearing and avoids an unnecessarily prolonged or delayed hearing.
Stableview Asset Management Inc. (Stableview) was a registered investment fund manager, portfolio manger, and exempt market dealer. Colin Fisher (Fisher) was the principal of Stableview. OSC Staff alleged that Stableview and Fisher committed breaches of securities laws by misleading clients about the investment parameters and restrictions that were being followed by Stableview and Fisher with respect to their management of client funds.
At issue in the pre-hearing motion were three draft affidavits which contained the intended testimony of three OSC Staff members. The CMT ordered these drafts to be served on Fisher in advance of being sworn and filed. Upon review, Fisher objected to portions of the affidavits being filed for use at the merits hearing, claiming they were inadmissible on the basis of irrelevance, improper opinion, and improper commentary on other evidence. The CMT agreed that certain portions of the affidavits were inadmissible at the enforcement hearing. OSC Staff reached a settlement with Fisher and Stableview before the start of the merits hearing.
The Motion Decision
The CMT’s Chief Adjudicator, Tim Moseley (CA Moseley), heard the motion. He found that certain portions of the impugned affidavits were irrelevant, contained improper opinion evidence, drew legal conclusions on issues to be determined by the tribunal, and/or improperly put forward the contents of a voluntary interview of Fisher by the OSC’s Compliance and Registrant Regulation Staff (or a summary of the testimony he gave at the interview). The core of CA Moseley’s reasons focused on irrelevance and opinion evidence.
The CMT restated the legal principles related to determining relevance. It held that relevance is defined by the issues set out in Staff’s Statement of Allegations. The test of relevance is a low threshold, but in order to be relevant, proposed evidence must have some tendency to influence the likelihood of a proposition for which it is advanced. CA Moseley further commented that these relevance principles must be followed in order to ensure that respondents receive proper notice of the case against them.
CA Moseley also confirmed that opinion evidence is inadmissible before the CMT. However, there is an exception that permits a properly qualified expert to give opinion evidence before the CMT if the opinion evidence is outside the CMT’s experience and knowledge, and if the evidence would enable the CMT to appreciate the matters at issue due to their technical nature.
CA Moseley noted another exception set out in the Supreme Court of Canada’s decision in R. v. Graat,  2 SCR 819, that provided a lay witness may be permitted to offer opinion evidence if the witness:
(i) has personal knowledge;
(ii) is in a better position than the trier of fact to form the opinion;
(iii) has the necessary experiential capacity to make the conclusion; and
(iv) gives the opinion as a compendious mode of speaking and could not as accurately, adequately and with reasonable facility describe the facts that they are testifying about.
CA Moseley held that the exception in R. v. Graat did not apply to the opinion evidence in OSC Staff’s affidavits, including the opinion that one of Stableview’s funds was overly concentrated in illiquid securities.
The Stableview decision illustrates the importance of timely pre-hearing motions to expunge evidence which might be prejudicial to a respondent in an enforcement proceeding.
Respondents subject to an enforcement hearing should carefully scrutinize OSC Staff’s intended testimony for relevance to the issues defined by the Statement of Allegations, as well as for improper opinion evidence.
More generally, pre-hearing motions may serve to narrow and clarify the issues in dispute between the parties. This, in turn, may lead to the settlement of the proceeding or a more expeditious hearing.
For additional information, please contact the Dentons’ Litigation and Dispute Resolution group.