The Court of Appeal for Ontario has dismissed an appeal from MRS Sciences Inc. and several individuals which sought to overturn a decision from the Divisional Court in November 2016. The Divisional court had upheld the findings of the Ontario Securities Commission (OSC) in a disciplinary proceeding against the company and individuals. The original enforcement proceedings arose in 2007 out of a scheme to sell shares in a high return venture fund.

In particular, the appellants objected to the fact that two different panels of OSC commissioners presided over their merits hearing, and the subsequent sanctions hearing. (The terms of the commissioners involved in the merits hearing expired before the sanctions hearing took place.) The appellants argued that the same panel of commissioners should preside over both the merits hearing and the sanctions hearing.

That objection was dismissed by the OSC, and again by the Divisional Court. In a split decision, the Divisional Court ruled that it was reasonable for the OSC to have different panels preside over the merits hearing and the sanctions hearing in a particular case. However, the minority decision concluded that “the principles of procedural fairness supported the view that a new panel ought not to be appointed when the merits panel continued to be available,” the Court of Appeal decision notes.

On appeal, MRS argued that the Divisional Court erred in finding that the standard of review of the OSC decision was whether it was reasonable, not whether it is correct.

The Court of Appeal, in a decision released earlier this week, dismissed that argument. “We are not satisfied that the issues in this appeal fall within one of the few recognized exceptional categories of cases where the presumption of reasonableness is rebutted,” it said.

The Court of Appeal also rejected a renewed objection to the composition of the OSC sanctions panel. “We accept the reasoning of the majority that both the interpretation advanced by the appellants and the one adopted by the commission are reasonable,” the appeal court said in its ruling.

“There is also no procedural unfairness or breach of natural justice in constituting a different sanctions panel,” the appeal court said. “Courts have frequently referred matters back to a different administrative tribunal for a decision on penalty and on occasion specifically indicated that a different panel should deal with those issues.”