A gavel rests on its sounding block with a several law books and a justice scale out of fucus in the background. A cool blue cast dominates the scene. (A gavel rests on its sounding block with a several law books and a justice scale out of fucus in t

The British Columbia Securities Commission (BCSC) was justified in releasing documents used in a regulatory hearing that may now form the basis for a proposed class action suit, a B.C. court says.

The Court of Appeal for British Columbia rejected an application from BridgeMark Financial Corp. and several other appellants claiming that the BCSC erred when it released certain documents that were entered into evidence at a hearing to consider extending a temporary cease trade order.

The BCSC obtained the documents as part of an investigation into whether BridgeMark and a group of issuers violated securities rules by engaging in an illegal distribution.

At the Court of Appeal, the appellants argued that the regulator violated its confidentiality obligations when it released documents that were obtained as part of the investigation to a law firm that “intends to use the documents to advance a class action against the subjects of the investigation.”

“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,’” the appeal court noted in its decision.

“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,” the court said.

However, the court sided with the BCSC, finding that once the BCSC decided to hold a hearing, it had a duty to hold that hearing in public and to permit public access to the evidence relied on as part of the hearing, unless releasing the evidence “would be unduly prejudicial.”

The court noted that 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,” adding that the BCSC redacted certain information from the exhibits to protect the privacy of certain third parties.

“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,” the court said.