A British Columbia court will hear an appeal from the respondents in an enforcement hearing before the B.C. Securities Commission (BCSC) who argue that the case against them should be dismissed for abuse of process.
The Court of Appeal for B.C. granted an application from Mark Morabito and Global Crossing Airlines Group Inc. (formerly known as Canada Jetlines Ltd.). The respondents in the BCSC enforcement action are seeking leave to appeal a decision by a BCSC hearing panel that dismissed their efforts to stay the proceedings against them.
In 2021, the executive director of the BCSC brought an enforcement case against Morabito and the company alleging that they violated securities law.
They sought to have the proceeding stayed by the hearing panel, alleging abuse of process.
Among other things, they claimed that the regulator failed to preserve evidence from the company’s former CEO, who died before the regulator filed its allegations, which could have helped in their defence. And they argued that they were prevented from cross-examining the investigators in the case.
Ultimately, the panel dismissed the stay applications. It found that the lack of testimony from the former CEO didn’t create significant prejudice to the applicants. And while there may have been flaws in the investigation, it found they didn’t amount to an abuse of process.
Morabito and the company then turned to the courts, seeking leave to appeal the panel’s decision and arguing that the hearing panel erred in its ruling.
According to the court, the BCSC “contends there is no merit to the proposed appeal and that an appeal would hinder the commission’s ability to carry out its statutory enforcement mandate in the public interest.”
However, the court sided with the applicants in the case. “[G]iven the significant merit in the proposed appeal, the general importance of the questions raised, and the importance of the proposed appeal to the applicants,” it said, “granting leave is in the interests of justice.”
The court found that the applicants “identified questions of law with implications of general importance to persons subject to prosecution by administrative bodies.”
It also concluded that “there is significant apparent merit in the proposed appeal” and that the hearing panel may made have made errors in its ruling.
While the court sided with the BCSC in finding that granting leave from an interim decision of the panel would delay the enforcement proceedings, it also found that “leave applications should not be dismissed solely on the basis the proposed appeal is from an interlocutory decision of the commission.”
“In my view, given the importance of the questions raised by the proposed appeal, the significance of the proposed appeal to the applicants, and the prima facie merit in their proposed arguments, granting leave is in the interests of justice in the circumstances of this case,” it said.
As a result, the court granted the applicants leave to appeal the panel’s decision that dismissed their stay applications, and it granted an order staying the enforcement case pending the outcome of the appeal in court.