Deloitte & Touche LLP v. Ontario (Securities Commission), 2003 SCC 61, [2003] 2 SCR 713

Deloitte & Touche LLP v. Ontario (Securities Commission), [2003] 2 S.C.R. 713, 2003 SCC 61

Deloitte & Touche LLP                                                                                   Appellant

v.

Ontario Securities Commission                                                                    Respondent

and

Attorney General of Ontario and Executive Director of

the British Columbia Securities Commission                                               Interveners

Indexed as:  Deloitte & Touche LLP v. Ontario (Securities Commission)

Neutral citation:  2003 SCC 61.

File No.:  29300.

2003:  June 10; 2003:  October 31.

Present:  McLachlin C.J. and Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour, LeBel and Deschamps JJ.

on appeal from the court of appeal for ontario

Securities — Ontario Securities Commission — Investigations and examinations — Power to compel testimony and production of documents — Disclosure by Commission — Securities legislation authorizing Commission to order disclosure of compelled material if Commission concludes that disclosure is “in the public interest” — Commission ordering auditors to disclose compelled material to corporation being investigated by Commission — Whether Commission properly ordered disclosure of compelled information — Securities Act, R.S.O. 1990, c. S.5, ss. 11, 13, 16(1), 17(1).

P. Corp. made a public offering of common shares in November 1997, followed by a series of disclosures revealing serious financial problems that had not been reflected in its material filed with the respondent (“OSC”).  As a result, its earnings dropped and it was eventually delisted.  All financial documents and audits had been prepared by the appellant (“D&T”).  An investigation into the adequacy of P. Corp.’s public offering disclosures was launched by the OSC, which exercised its power to compel documents and testimony from individuals from P. Corp. and from D&T.  This power was subject to a prohibition against disclosure of the compelled material unless found to be in the public interest.  D&T produced  a large number of files and several of its officers gave testimony to the OSC.  The OSC commenced a proceeding against P. Corp., raising a series of allegations concerning P. Corp.’ s financial transactions and the financial audits performed by D&T.  The OSC determined that all of the compelled material obtained from D&T was relevant to the proceedings and should be disclosed to P. Corp.  D&T objected to disclosing this material unless the OSC could demonstrate the relevance of any document or testimonial transcript.  The OSC concluded that disclosure was in the public interest, but this decision was overturned by the Divisional Court.  On appeal to the Court of Appeal, however, the OSC disclosure order was restored.

Held:  The appeal should be dismissed.

The OSC  did not act  unlawfully in finding it in the public interest to order disclosure to P. Corp. of the compelled material.  The OSC’s decision to order disclosure in the public interest attracts a standard of review of reasonableness.  The use of the relevance standard from Stinchcombe and its application in this case were both reasonable decisions.  Further, the OSC was correct in determining that the compelled material was to be disclosed as a whole so that P. Corp. could effectively mount its answer and defence.  The OSC properly balanced D&T’s privacy interests against P. Corp’s disclosure interests and its own obligation to conduct hearings under the Act fairly and properly by restricting the disclosure to that which was necessary to pursue its mandate.  Given the relationship between D&T and P. Corp., there was a reasonable possibility that all of the compelled material relating to D&T’s audit of P. Corp. would be relevant to the allegations against P. Corp.  D&T could have identified its concerns with some of the compelled material being disclosed.  If D&T had established that there was no reasonable possibility that a particular document was relevant to the allegations, it would have been improper for the OSC to order disclosure.

Cases Cited

Referred to:  Biscotti v. Ontario Securities Commission (1991), 1 O.R. (3d) 409; R. v. Stinchcombe, [1991] 3 S.C.R. 326; Dr. Q v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226, 2003 SCC 19; Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247, 2003 SCC 20.

Statutes and Regulations Cited

Rules of Practice of the Ontario Securities Commission (1997), 20 OSCB 1947, rr. 3.3(2), 3.7.

Securities Act, R.S.O. 1990, c. S.5 [am. 1994, c. 11], ss. 11, 13, 16, 17, 127, 127(1) [am. 1999, c. 9, s. 215], (4).

Statutory Powers Procedure Act, R.S.O. 1990, c. S.22.

APPEAL from a judgment of the Ontario Court of Appeal (2002), 159 O.A.C. 257, 26 B.L.R. (3d) 161, [2002] O.J. No. 2350 (QL), setting aside a decision of the Divisional Court and restoring an order of the Ontario Securities Commission.  Appeal dismissed.

J. L. McDougall, Q.C., Norman J. Emblem and Randall S. Bennett, for the appellant.

Hugh Corbett and Karen Manarin, for the respondent.

Sara Blake and Richard Coutinho, for the intervener the Attorney General of Ontario.

James A. Angus and Kristine M. Mactaggart, for the intervener the Executive Director of the British Columbia Securities Commission.

The judgment of the Court was delivered by

Iacobucci J. —

I.       Introduction

1                                   At a broader level, this appeal raises important questions about the appropriate balance between privacy rights and interests of third parties and the right to make full answer and defence by those subject to a hearing in the context of securities investigations.  More specifically, the main issue focusses on whether the respondent, the Ontario Securities Commission (“OSC”), properly ordered disclosure of compelled information which normally is to be kept confidential.

II.      Background

2                                   Because of the lucid and comprehensive reasons of Doherty J.A. in the Court of Appeal for Ontario, with which I substantially agree, I do not find it necessary to recite in detail the history, factual, and legal background of this appeal.  The relevant legislative provisions are found in the Annex to these reasons.

3                                   Philip Services Corporation (“Philip”) made a public offering of common shares in November 1997.  Shortly thereafter, Philip made the first of a number of revelations of serious financial problems that had not been reflected in the material filed with the OSC, which included a prospectus, audited financial statements for the years 1995 and 1996, and unaudited financial statements for the first nine months of 1997.  All of the financial statements were prepared by the appellant, Deloitte & Touche LLP (“Deloitte”).

4                                   The revelations of Philip significantly reduced its earnings as set out in its 1995 and 1996 financial statements and substantially altered its 1999 financial outlook.  The price of Philip shares dropped dramatically and it subsequently was de-listed and sought bankruptcy protection.

5                                   In May 1998, OSC Staff started an investigation into the adequacy of financial disclosures made by Philip with respect to its public offering.  The OSC Staff were concerned that Philip was aware of the negative financial information in November 1997 but chose not to disclose that until after completion of the public offering.

6                                   Staff investigators compelled information and testimony of individuals from Philip and Deloitte pursuant to s. 13 and s. 11 of the Ontario Securities Act, R.S.O. 1990, c. S.5 (the “Act”).  The power to compel documents and evidence under oath is subject to s. 16 of the Act, which prohibits disclosure of any of the compelled material.  However, the OSC can under s. 17(1) of the Act order disclosure of the compelled material if the OSC concludes that disclosure is “in the public interest”.

7                                   Deloitte assembled some 324 files in response to the OSC summons and it was agreed to keep these in a separate secure location to which Staff would have access.  Staff examined some but not all of the files and made copies of some of the documents.  In addition, six Deloitte partners were examined under oath, with this testimony and the files forming part of what Doherty J.A. described as the “compelled material” ((2002), 159 O.A.C. 257, at para. 2), a term that I will also use herein.

8                                   Staff initiated proceedings under s. 127 of the Act against Philip and several officers of Philip in August 2000 and in support thereof issued a Statement of Allegations by Staff.

9                                   The Statement of Allegations is some 36 pages in length consisting of detailed factual background and a series of allegations relating to Philip and the officers that in turn relate to various financial transactions and documents.  Many matters are covered in the allegations but it is obvious that the financial statements prepared by Deloitte and financial transactions of Philip and the officers are important parts of the Statement.  Suffice it to say that I agree with counsel for the OSC that the nature of the allegations is such that both the substance of the Deloitte audit as well as the process of auditing are issues in the s. 127 hearing.  Or as the Court of Appeal and the OSC put it, what Deloitte knew (the substance) and when it knew (the process) will be central to the determination of the issues before the OSC.

10                               Pursuant to Rule 3.3(2) of the OSC Rules of Practice ((1997), 20 OSCB 1947), Staff is required to disclose to Philip and the officers all “relevant” material in its possession.  Staff decided that all of the compelled material obtained from Deloitte was relevant to the s. 127 proceedings and should be disclosed to Philip and the officers.  Consequently, Staff sought an order from the OSC to disclose under s. 17(1) and Deloitte opposed disclosure unless and until Staff could demonstrate the relevance of any document or testimonial transcript.

11                               The OSC determined it was in the public interest to disclose and Deloitte appealed to the Ontario Divisional Court.  A majority of that court allowed the appeal and the Court of Appeal for Ontario overturned that decision and restored the disclosure order of the OSC.

III.    Court of Appeal for Ontario (2002), 159 O.A.C. 257

12                               Doherty J.A., after resorting to the applicable principles, found that the appropriate standard of review of the OSC’s decision was reasonableness, which entitled the OSC to substantial leeway in deciding what meaning should be given to “the public interest” and in deciding whether the circumstances warranted disclosure.

13                               Doherty J.A. then considered whether the OSC’s decision was unreasonable.  The first stage of the decision involved determining the meaning of “public interest”.  According to Doherty J.A., the OSC understood s. 17(1) as imposing an obligation to evaluate the extent to which the policies of the Act were served by the purpose for which the disclosure was sought and the harm done by disclosure to confidentiality interests.  The OSC recognized that it must weigh and balance these competing interests in determining whether the public interest favoured disclosure.  Doherty J.A. found that this approach was reasonable.

14                               Prior to considering the application of this test, Doherty J.A. discussed Biscotti v. Ontario Securities Commission (1991), 1 O.R. (3d) 409, in which the Court of Appeal considered whether disclosure of compelled testimony should be ordered.  In that case, the OSC held that disclosure of compelled testimony was warranted only “in the most unusual circumstances” (p. 413).  This approach was consistent with a policy then in effect, according to which it was generally not in the public interest to release information except when giving a witness a copy of his or her own testimony.  Doherty J.A., however, noted that disclosure under Biscotti was governed by precursor provisions which were quite different from the current provisions and made no express reference to the public interest.  He found that the Biscotti approach had been superseded by later developments in OSC policy — and that it was reasonable for the OSC to conclude that the adoption of Rule 3.3(2), which signals a commitment to full disclosure of relevant material to individuals facing proceedings under s. 127, significantly affected the public interest calculus required by s. 17(1).  It was not unreasonable for the OSC to decide that the old presumption against disclosure “except in the ‘most unusual circumstances’” had ceased to apply (para. 37).

15                               At the second stage, the OSC applied the standard of relevance described in R. v. Stinchcombe, [1991] 3 S.C.R. 326,  to fix the scope of the investigators’ obligation to make disclosure to the officers.  Counsel for Deloitte did not disagree with this approach.  Rather, Deloitte’s position was that the investigators failed to demonstrate relevance as defined in Stinchcombe on the basis of their failure to examine all the compelled material.

16                               Doherty J.A. noted that relevant material, under Stinchcombe, includes material that has a reasonable possibility of being relevant to the ability of a defendant to make full answer and defence.  On this standard, the investigators were obliged to take a generous view of relevance.  Doherty J.A. felt that there was an evidentiary basis for deciding that all the material was relevant.  Relevance occurs where the nature of the allegations and the content of the disclosed materials intersect.  In this case, the relationship between Deloitte and Philip, as it is related to 1995-97 audits, will be central to the proceeding against the officers.  The titles of the files, and even the simple fact that the documents were produced in response to a summons issued in the context of an investigation into the financial disclosure made by Philip in 1997, indicated that all the materials had at least some connection with the allegations.

17                               Doherty J.A. thus concluded that it was open to the OSC to conclude reasonably that all of the documents cleared the Stinchcombe relevance threshold, as did the testimony of the Deloitte partners (all of whom were involved in the 1997 audit).  Doherty J.A. added that the OSC was not under an obligation to consider each document independently.  In this case, there was considerable merit in the concerns expressed by the OSC over attempts to judge relevance on a document-by-document basis.  On these facts, the global approach adopted by the OSC was a reasonable one.

18                               Doherty J.A. also suggested that the conclusion of Dunnet J. for the majority in the Ontario Divisional Court could be linked to four factual errors in her reasons.  First, Dunnet J. said that the investigators presented no evidence of the position that the officers would take in the s. 127 proceedings.  Doherty J.A. disagreed.  He said that the evidence existed that the officers intended to place Deloitte’s conduct in issue.  Dunnet J. also said that the integrity of the audit did not form part of the allegations by the investigators.  Again, Doherty J.A. disagreed.  It was alleged that Philip failed to tell Deloitte about certain material financial information.  If the allegation was true, the integrity of the audit was obviously affected.  The integrity of the audit was thus a central issue in the proceedings.  Third, Dunnet J. appeared to believe that there were two separate investigations, one into Deloitte and the other into Philip.  Doherty J.A. felt that there was only one investigation, which started with Philip and later expanded to include Deloitte.  Finally, Dunnet J. said that the investigators failed to “provide any evidence as to the relevance of any particular document”.  In fact, many of the compelled documents were contained in the investigators’ brief for the s. 127 proceedings.  Doherty J.A. observed that the fact that a document was being used against the officers was the clearest possible demonstration of its relevance to the proceedings (par. 54).  It was a fair inference that other documents from the same file or related files would reach the threshold of relevance.

19                               Doherty J.A. concluded that the OSC properly balanced Deloitte’s privacy interest against the purpose of the disclosure order.  Its subsequent conclusion that the interests served by disclosure outweighed Deloitte’s right to confidentiality was a reasonable one.

IV.    Analysis

20                               The principal issue in this appeal is whether the OSC acted unlawfully in finding it in the public interest to order disclosure of the compelled material to Philip and the officers.  This raises the standard of review applicable to the OSC’s impugned decisions and the factors that should be examined in making the determination.

21                               Deloitte acknowledged the wide discretion of the OSC to determine what is in the public interest.  But Deloitte argued that burden was on the OSC to demonstrate that it is in the public interest to order disclosure even accepting that the Stinchcombe standard of relevance could be applied by the OSC.  Deloitte argued that the OSC never examined all of the documents in question to determine relevance and thereby failed to protect Deloitte’s privacy interests in the material obtained confidentially.  Deloitte asserted that it had no obligation to point to any prejudice which would result from the improper disclosure of information since it was the duty of the OSC to order disclosure of only that information that was connected with the allegations.  In oral argument, Deloitte recognized that if, in the hearing under s. 127, issues moved to the audit, the OSC could then decide whether disclosure could be made in the public interest.  As the OSC did not agree with the approach argued by Deloitte, the OSC’s decision was flawed and should be set aside.

22                               I agree with Doherty J.A. that the decision of the OSC to order disclosure  in the public interest attracts a standard of review of reasonableness in accordance with the applicable jurisprudence, including the recent cases of Dr. Q v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226, 2003 SCC 19, and Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247, 2003 SCC 20, which were decided after Doherty J.A.’s reasons in the instant appeal.  More specifically, the issue under appeal is whether the decision of the OSC to order disclosure of the compelled material, including documents that neither the investigators nor the OSC reviewed, was reasonable.  Like Doherty J.A., I find the decision of the OSC to be reasonable.

23                               The OSC acknowledged that the Staff had a disclosure obligation to Philip and its officers and defined the nature and scope of that obligation in terms of the “relevance” standard developed in Stinchcombe, supra, and its progeny.  The Court of Appeal fully examined the factors applied by the OSC in determining whether the compelled material reached the relevance threshold and found the analysis and determination of the OSC to be reasonable.

24                               In particular, the OSC considered: the nature of the allegations against Philip and the officers; that the files in issue had been produced by Deloitte in response to a summons arising out of an investigation into the adequacy of the financial disclosure in the prospectus and related financial statements; the indices provided by Deloitte describing the files; the representations by Staff to the OSC that at least two of the Philip respondents had gone on record as intending to challenge the credibility of the Deloitte auditors in the s. 127 proceedings, and that some of the compelled material would be relied on by Staff in presenting its case.

25                               In this respect, the OSC’s conclusion, cited by the Court of Appeal at para. 18, that all the material met the relevance threshold, was as follows:

[I]t seems obvious to us that, in light of Staff’s allegations, the conduct of Deloitte[] and of their audits, and what Deloitte[] knew when, would have to be considered by counsel for [the Philip respondents] in determining what their defences should be, and how to conduct them.  What Deloitte[] knew or said, and when they knew and said it, might well be relevant in the determination of whether sanctions should be imposed by the Commission, and, if so, what those sanctions should be.

26                               The use of the Stinchcombe relevance standard and its application in this case by the OSC were both reasonable decisions. The OSC reasonably rejected  Deloitte’s argument that the Staff could not establish relevance with respect to any documents it had not examined on the basis that, given the nature of the allegations made in the s. 127 proceedings and defences, the relevancy of the compelled material was to be determined as a whole.  In other words, as the OSC observed, documents which might appear irrelevant to the OSC Staff might have considerable relevance to the defence of Philip and the officers, and documents in isolation may not have relevance but might well have considerable relevance when studied in light of other information possessed by Philip or the officers.  This approach also answers the argument of Deloitte for “disclosure by installment”; surely it is reasonable to disclose all the material at once so Philip and the officers can effectively plan and construct their response.

27                               In short, like the Court of Appeal, I find that the decision of the OSC was reasonable and soundly based with respect to the disclosure of all the compelled material to Philip and the officers to allow them in the circumstances to mount a full answer and defence.  Also like the Court of Appeal, I agree that the relationship between Deloitte and Philip with respect to financial disclosure in the 1995, 1996 and 1997 audits will be central to the s. 127 proceedings.  There is a reasonable possibility that all of the compelled material relating to Deloitte’s audit of Philip will be relevant to the allegations against Philip and the officers.  Consequently, the application by the OSC of the relevance standard from Stichcombe was reasonable in all the circumstances.  In this connection, it is worth repeating Doherty J.A.’s elaboration on this point (at para. 48):

 In examining the reasonableness of the Commission’s conclusion, I think it is noteworthy that at no point did Deloitte suggest that any specific documents, file or group of files, were irrelevant.  While Staff bore the onus of demonstrating relevance, I think the Commission could properly take into consideration the absence of any suggestion by Deloitte that a particular document, file or group of documents, was clearly irrelevant.  Deloitte knew the contents of the compelled material better than anyone.  If some of that material was obviously beyond the pale of the s. 127 proceeding, Deloitte could have directed the Commission’s attention to that part of the compelled material.

28                               It should be noted that the OSC, in cases like this, is in an awkward position.  A proceeding has been ordered against respondents who are entitled to disclosure of information involving a third party.  The OSC must search for an approach that provides fair consideration for the respondents in jeopardy and enables them to meet the case against them yet also is sensitive to the third party’s privacy interests and expectations.  In that respect, I agree with Doherty J.A. that Deloitte could have identified its concerns with some of the compelled material being disclosed.  If Deloitte established that there was not a reasonable possibility that a particular document was relevant to the allegations, it would have been improper for the OSC to order disclosure.

29                               The OSC admittedly has a discretion owing to its expertise to order disclosure of the compelled information if found to be in the public interest.  Like Doherty J.A., I believe the OSC properly balanced the interests of disclosure to Philip and the officers along with the protection of the confidentiality expectations and interest of Deloitte.  In this respect, I am of the view that in making a disclosure order in the public interest under s. 17, the OSC has a duty to parties like Deloitte to protect its privacy interests and confidences.  That is to say that OSC is obligated to order disclosure only to the extent necessary to carry out its mandate under the Act.  In this case, the OSC properly weighed the necessary disclosure and the interests of Deloitte, as can be seen from the operative parts of the order of the OSC, which I reproduce below:

IT IS HEREBY ORDERED pursuant to section 17(1)(b) of the Act that:

(1)      Staff of the Commission may make disclosure of the Evidence to the Respondents;

(2)      Disclosure of the Evidence will be on the basis that:

(a) the Respondents and their counsel will not use the Evidence for any purposes other than for making full answer and defence to the allegations made against the Respondents in these Proceedings;

(b) any use of the Evidence other than for the purpose of making full answer and defence to the allegations made against the Respondents in these Proceedings, will constitute a violation of this Order;

(c) the Respondents and their counsel shall maintain custody and control over the Evidence, so that copies of the Evidence are not improperly disseminated; and

(d) the Evidence shall not be used for a collateral or ulterior purpose;

(3)      Staff of the Commission may, if otherwise admissible, disclose and use the Evidence in the proceedings against the Respondents;

30                               The order of the OSC properly balanced the interests of Deloitte and its own obligation to conduct hearings under the Act fairly and properly by restricting the disclosure to that which was necessary to pursue the OSC’s mandate.

V.       Conclusion

31                               Consequently, I would dismiss the appeal.  As a final matter, I would note that the Attorney General of Ontario intervened to argue that the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, should govern this appeal.  This argument was not raised in the courts below nor by the parties to this appeal and I do not believe it is appropriate for an intervener to extend legal argument well beyond what the courts below and the parties have advanced.

ANNEX

Securities Act, R.S.O. 1990, c. S.5

11. (1)  The Commission may, by order, appoint one or more persons to make such investigation with respect to a matter as it considers expedient,

(a)     for the due administration of Ontario securities law or the regulation of the capital markets in Ontario; or

(b)     to assist in the due administration of the securities laws or the regulation of the capital markets in another jurisdiction.

(2)     An order under this section shall describe the matter to be investigated.

(3)     For the purposes of an investigation under this section, a person appointed to make the investigation may investigate and inquire into,

(a)     the affairs of the person or company in respect of which the investigation is being made, including any trades, communications, negotiations, transactions, investigations, loans, borrowings or payments to, by, on behalf of, or in relation to or connected with the person or company and any property, assets or things owned, acquired or alienated in whole or in part by the person or company or by any other person or company acting on behalf of or as agent for the person or company; and

(b)     the assets at any time held, the liabilities, debts, undertakings and obligations at any time existing, the financial or other conditions at any time prevailing in or in relation to or in connection with the person or company, and any relationship that may at any time exist or have existed between the person or company and any other person or company by reason of investments, commissions promised, secured or paid, interests held or acquired, the loaning or borrowing of money, stock or other property, the transfer, negotiation or holding of stock, interlocking directorates, common control, undue influence or control or any other relationship.

(4)     For the purposes of an investigation under this section, a person appointed to make the investigation may examine any documents or other things, whether they are in the possession or control of the person or company in respect of which the investigation is ordered or of any other person or company.

13. (1)  A person making an investigation or examination under section 11 or 12 has the same power to summon and enforce the attendance of any person and to compel him or her to testify on oath or otherwise, and to summon and compel any person or company to produce documents and other things, as is vested in the Ontario Court (General Division) for the trial of civil actions, and the refusal of a person to attend or to answer questions or of a person or company to produce such documents or other things as are in his, her or its custody or possession makes the person or company liable to be committed for contempt by the Ontario Court (General Division) as if in breach of an order of that court.

16. (1)  Except in accordance with section 17, no person or company shall disclose at any time, except to his, her or its counsel,

(a)     the nature or content of an order under section 11 or 12; or

(b)     the name of any person examined or sought to be examined under section 13, any testimony given under section 13, any information obtained under section 13, the nature or content of any questions asked under section 13, the nature or content of any demands for the production of any document or other thing under section 13, or the fact that any document or other thing was produced under section 13.

(2)     Any report provided under section 15 and any testimony given or documents or other things obtained under section 13 shall be for that exclusive use of the Commission and shall not be disclosed or produced to any other person or company or in any other proceeding except in accordance with section 17.

17. (1)  If the Commission considers that it would be in the public interest, it may make an order authorizing the disclosure to any person or company of,

(a)     the nature or content of an order under section 11 or 12;

(b)     the name of any person examined or sought to be examined under section 13, any testimony given under section 13, any information obtained under section 13, the nature or content of any questions asked under section 13, the nature or content of any demands for the production of any document or other thing under section 13, or the fact that any document or other thing was produced under section 13; or

(c)     all or part of a report provided under section 15.

                                                                   . . .

127. (1)  The Commission may make one or more of the following orders if in its opinion it is in the public interest to make the order or orders:

                                                                   . . .

2.     An order that trading in any securities by or of a person or company cease permanently or for such period as is specified in the order.

                                                                   . . .

7.     An order that a person resign one or more positions that the person holds as a director or officer of an issuer.

                                                                   . . .

(4)  No order shall be made under this section without a hearing, subject to section 4 of the Statutory Powers Procedure Act.

Rules of Practice of the Ontario Securities Commission (1997), 20 OSCB 1947

3.3 . . .

(2)     In the case of a hearing under section 127 of the Securities Act and subject to Subrule 3.7, staff of the Commission shall, as soon as is reasonably practicable after the service of the notice of hearing, and in any case at least 10 days before the commencement of the hearing, make available for inspection by every other party all other documents and things which are in the possession or control of staff that are relevant to the hearing and provide copies, or permit the inspecting party to make copies, of the documents at the inspecting party’s expense.

                                                                   . . .

3.7      Despite any provision in this Rule 3, no disclosure is required to be made under this Rule 3 (i) which would contravene section 16 of the Securities Act or (ii) of a fact or matter which would not be admissible in evidence at a hearing by reason of subsections 15(2) or (3) of the Statutory Powers Procedure Act.

Appeal dismissed.

Solicitors for the appellant:  Fraser Milner Casgrain, Toronto.

Solicitor for the respondent:  Ontario Securities Commission, Toronto.

Solicitor for the intervener the Attorney General of Ontario:  Ministry of the Attorney General of Ontario, Toronto.

Solicitor for the intervener the Executive Director of the British Columbia Securities Commission:  British Columbia Securities Commission, Vancouver.