Canada: Securities Commissions And The "Public Interest" At The SCC: Court To Rule On Inter-Provincial Reciprocal Orders And Limitation Periods

The Supreme Court of Canada agreed earlier this summer to hear the appeal in Patricia McLean v. Executive Director of the British Columbia Securities Commission, an interesting case that raises several legal issues relevant to provincial securities commissions and the extra-provincial reach of securities litigation. With the Court's decision last week to dismiss the leave application in Torudag, McLean provides the Court with a unique opportunity to opine on extra-provincial issues in the securities regulation context. The specific issues in McLean deal with the scope of the "public interest" power of securities commissions as it relates to out-of-province settlements or findings. Provisions substantially identical to those in the B.C. Securities Act exist in all Canada's common law jurisdictions.

Background and Decisions Below

The appellant Patricia McLean entered into a settlement agreement with the Ontario Securities Commission in September 2008 which included a cease-trade order, a reprimand and a ten-year restriction on acting as officer or director of any reporting issuer. In January 2010, the British Columbia Securities Commission notified Ms McLean that it would be seeking an order under s. 161(6) of the Securities Act, which extends the Commission's enforcement power to include persons who have been breached the securities laws of other jurisdictions or are subject to orders or settlements with securities regulators of other jurisdictions. All enforcement orders under s. 161 – including reciprocal orders under s. 161(6) – require the Commission to provide the person with an opportunity to be heard before considering whether the order is "in the public interest."

Ms McLean responded to the proposed order by making written submissions advancing a limitation defence. The limitation period under s. 159 of the Securities Act is 6 years "after the date of the events that give rise to the proceedings." The Commission rejected the limitation period argument, without providing reasons but presumably having determined that the "events that gave rise to the proceedings" were the events of Ms McLean's 2008 settlement, not the underlying conduct in 2000 and 2001 which was the subject of the settlement.

The Court of Appeal found that the standard of review for the Commission's decision was correctness. It rejected the Executive Director's claim that a "reasonableness" standard should apply to the Commission's interpretation of the applicable limitation period. The Executive Director had argued that the interpretation of the limitation period in this context related to the "policy and application" of the Securities Act and thereby engaged the Securities Commission's expertise. The Court of Appeal relied on the Supreme Court of Canada's judgment in ATCO Gas & Pipelines Ltd. v. Alberta (Energy & Utilities Board) to find that the expertise of the decision-maker is evaluated in relation to the "specific nature of the issue before it" and not its "general expertise." The Court of Appeal therefore found that the standard was correctness given that:

"The interpretation of a limitation period, as it involves a question of general law, is unlikely to engage the specialized expertise of the tribunal; a court will generally have more expertise on the issue."

The Court of Appeal found that the Commission correctly interpreted the limitation period as being 6 years following the out-of-province settlement. It found that the reciprocal order power was only engaged once a conviction, finding, order, or settlement had been made and that therefore these were the "events" from which time began to run for the purposes of the s. 159 limitation period.

The Court of Appeal did allow the appeal, however, because the Commission had failed to provide reasons to explain how it considered the order to be "in the public interest." The Court found that absent reasons, the Court could not ascertain whether the Commission's discretion had been improperly fettered:

"The British Columbia order essentially replicates the substance of the Ontario order. Absent an explanation for the sanctions it imposes, there is a risk that the Commission merely reciprocally enforced the Ontario order, which would not be consistent with its mandate under s. 161 and which might amount to a fettering of discretion."

The Court of Appeal therefore remitted the matter back to the Commission to provide a "brief explanation" for its reasons.

Ms McLean's leave application was in respect of the limitation period issue.

Potential Significance

Every common law jurisdiction in Canada has reciprocal enforcement provisions that are substantially identical to those in s. 161(6) of the B.C. Securities Act. All of these jurisdictions also have statutory limitations periods that are specific to the securities context. Despite this, McLean stands alone in terms of some judicial consideration of how reciprocal provisions work and, in particular, how they work alongside statutory limitation periods. The Supreme Court of Canada will therefore not only provide guidance on the narrow question of whether the "events in question" are the underlying conduct or the out-of-province settlement, but may provide more general direction on how reciprocal provisions operate.

Direction on reciprocal orders may prove significant given that provincial securities commissions have taken different approaches to their operation. The British Columbia Securities Commission in Re Waxman viewed reciprocal orders as being designed to "facilitate cross-border enforcement" and therefore based "solely on the fact that the other jurisdiction has made orders." The Commission found that in considering whether to make a reciprocal order on the basis of an extra-provincial order:

"[The Commission] does not make any independent findings of fact or law, nor does it exercise any independent judgment as to the appropriateness of the orders made by the other jurisdiction. It reviews the orders made by the sanctioning jurisdiction and imposes corresponding orders."

This view of s. 161(6) seems wholly inconsistent with the Court of Appeal's concerns in McLean about the "risk" that the Commission may have improperly "fettered" its discretion in deciding whether to make a reciprocal order.

Both the Alberta Securities Commission and the Ontario Securities Commission have suggested that they must carefully consider the public interest in deciding whether or not to make a reciprocal order in given circumstances. In Re. Elliott, the Ontario Securities Commission found that the existence of an extra-provincial order "does not automatically lead to the conclusion that this Panel must make" a similar order. It found that the question of whether sanctions are necessary, and what they should be, depends on an analysis of what is necessary in the public interest at that time. Similarly, in Re. Leemhuis, the Alberta Securities Commission found that it will only exercise its reciprocal order power "when it is persuaded that doing so will be in the public interest" as that term has been interpreted in the context of the Alberta securities regime. It did note, however, that "the very nature of the misconduct found to have occurred in another Canadian jurisdiction will often suffice" to meet the public interest threshold.

It will be interesting to see whether the Supreme Court of Canada engages in any discussion of the degree to which an assessment of the "public interest" within a particular provincial legislative scheme necessitates a province-specific assessment. In the Reference re. Securities Act, the Court suggested that significant aspects of securities regulation – and the "trade or occupation" of those in the securities business – remained in many ways a local question.

In respect of the specific limitation period interpretation issue, the approach of the British Columbia Court of Appeal will force the Supreme Court of Canada to grapple with some difficult questions. The Court of Appeal's finding would permit a securities commission to wait six years following an extra-provincial order or settlement before taking action. Given that the initial proceeding might have only commenced nearly six years after the underlying conduct, action by the second securities commission may only occur nearly a dozen years after the impugned conduct took place. That would create a de facto extended limitation period even if the securities commission in question had actual knowledge of the conduct at or shortly after the time it occurred. Similarly, if the triggering "event" for the limitations period is an order by a securities commission, it is not clear whether a reciprocal order made in the second (or third, or fourth) jurisdiction would effectively re-start the clock each time. This would seem to be an absurd result that would permit a series of cascading limitations periods, undermining the very notion of a limitation period at all.

Case Information

Patricia McLean v. Executive Director of the British Columbia Securities Commission

Supreme Court of Canada Docket: 34593

Date of Decision: June 28, 2012

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.