Canada: Supreme Court Of Canada Clarifies The Limitation Period For Secondary Proceedings In Securities Enforcement Context

The Supreme Court of Canada has recently provided clarity on the limitation period applicable to "secondary proceedings" in the securities enforcement context. Subject to a few exceptions, these proceedings, brought in the public interest against persons who have agreed with another jurisdiction's securities regulator to be subject to regulatory action, must not be commenced more than six years after the date of "the events" that gave rise to the proceeding. In McLean v. British Columbia (Securities Commission), released earlier today, the Supreme Court upheld the B.C. Securities Commission's (BCSC's) reciprocal order, issued against an individual director in 2010 for conduct that occurred in Ontario in 2001 and for which the director entered into a settlement agreement with the Ontario Securities Commission in 2008. The "event," as found by the BCSC and affirmed by the Supreme Court, was the fact of having agreed with a securities regulator to be subject to regulatory action. The decision is noteworthy because the Supreme Court has clarified the standard of review for a tribunal when interpreting its own statute and reaffirms that deference is owed to administrative decision makers on interpretative matters. At the same time, the decision leaves open the possibility that other provincial and territorial securities commissions may arrive at different interpretations of their own statutory limitation periods. The decision also leaves open the prospect, albeit remote, of provinces "piggy-backing" reciprocal orders sequentially, with the result that a person may be subject to lengthy regulatory action. 


Between March 1996 and June 2001, the appellant, Janet McLean, served as a director of a reporting issuer in Ontario. On September 8, 2008, McLean entered into a settlement agreement with the Ontario Securities Commission (OSC) whereby she consented to an order that included a five-year cease trading ban, a reprimand, a ten-year ban from acting as officer or director of any reporting issuer or registrant, and a five-year period in which Ontario securities exemptions were not applicable. The conduct subject to sanction occurred in 2001. The OSC approved the settlement and issued the order that same day.

Approximately a year and a half later, in January 2010, McLean was notified that the Executive Director of the BCSC was applying for an order against her under s. 161(6)(d) of the Securities Act (B.C.) (the Act), commonly referred to as a secondary or reciprocal order. This section provides that the "commission or the executive director may, after providing an opportunity to be heard, make an order under subsection (1) in respect of a person if the person has agreed with a securities regulatory authority, a self regulatory body or an exchange, in Canada or elsewhere, to be subject to sanctions, conditions, restrictions or requirements."

In written submissions filed with the BCSC, McLean argued that no reciprocal order could be made since the six-year limitation period as prescribed in s. 159 of the Act had expired. This section provides that proceedings under this Act, other than an action referred to in s. 140, "must not be commenced more than 6 years after the date of the events that give rise to the proceedings." The same six-year limitation period is found in most of the other provincial and territorial securities statutes. McLean argued that the "events" that gave rise to the proceeding was the underlying misconduct.

On May 14, 2010, the BCSC issued the reciprocal order, which was in substance identical to that issued by the OSC. No written reasons were provided.

McLean appealed the order to the B.C. Court of Appeal. On the question of whether s. 159 of the Act applies to s. 161(6)(d), the Court found that a plain reading of that section meant that until McLean had entered into the agreement with the OSC, the BCSC could not make an order under s. 161(6)(d). Therefore, under s. 159, the "event" that gave rise to the proceeding was in fact the settlement agreement between McLean and the OSC and not the underlying events that gave rise to the agreement itself (i.e., the misconduct). As a result of this reasoning, the Court denied this ground of appeal. The appeal was ultimately granted on separate grounds – namely, the BCSC's failure to issue written reasons.

Leave to the Supreme Court of Canada was granted on June 28, 2012, and its decision was released on December 5, 2013.

The SCC Decision

Writing for the majority, Justice Moldaver found that the appropriate standard of review for the BCSC's decision is reasonableness and not correctness. Indeed, the interpretation of s. 159 in relation to s. 161(6)(d) of the Act, and in particular the meaning of "the events," is a "nuts-and-bolts question of statutory interpretation confined to a particular context." This, coupled with the current approach by the courts that decision makers are best left to interpret their home statutes, meant there was no question of law of general importance to the legal system as a whole, let alone one that fell outside the Commission's specialized area of expertise, requiring a correctness standard. Thus, while Justice Moldaver found that the statutory language was less than "crystal clear" and that the interpretations advanced by the appellant and the respondent were both reasonable, in light of the reasonableness standard of review, deference was owed to the BCSC's conclusion – namely, that the event giving rise to a proceeding under s. 161(6)(d) was the fact of the appellant having agreed with the OSC to be subject to regulatory action; absent an unreasonable interpretation, the decision should stand.

Justice Moldaver found that the BCSC's interpretation was supported by both the plain meaning of the language in the statute, as well as a contextual reading. Indeed, he stated that the open-ended language of s. 159 allows for secondary proceedings under s. 161(6)(d) of the Act to proceed in a meaningful way. Or, when viewed in the opposite, applying the appellant's interpretation would lead to the "troublesome" conclusion that the BCSC could be time-barred from proceeding under this provision before the triggering event even exists. This, he said, supports the legislative goal of interprovincial cooperation given that the triggering event is not the misconduct, thus leading to parallel proceedings, but the conclusion of proceedings in one jurisdiction and a reciprocal order enacted in a sister province. Justice Moldaver, while recognizing the appellant's concern that this approach could potentially lead to an extended duration of time that one is subject to regulatory action, found that comfort can be had in that no administrative order is immune from appellate review for its reasonableness.  

Agreeing with the disposition of the issue, Justice Karakatsanis disagreed with Justice Moldaver's finding that the Appellant's interpretation was reasonable.  Justice Karakatsanis found that the Appellant's interpretation, which the majority found to also be reasonable, would not give effect to the interprovincial cooperation within the securities context and has the potential to thwart legislative objectives of consistency and cooperation which underlie the secondary proceedings regime.


This decision by the Supreme Court clarifies the standard of review – reasonableness – for administrative bodies when interpreting their own statutes as this standard applies within the specific context of the agency's expertise. It is interesting to note that the decision makes room for differing interpretations regarding limitation periods from province to province. Indeed, the Court notes that this potential difference is the result of the Constitution's federalist structure and should not fall under the purview of administrative law standards of review. Finally, the decision leaves open the prospect – argued forcefully by the appellant – of provinces piggy-backing reciprocal orders sequentially, with the result that a person is subject to potential lengthy regulatory action. The Court specifically notes that this is not the case to determine whether secondary orders can be stacked one on the other or if they may issued if the original order has lapsed. The Court downplayed the significance of this potential outcome, reasoning that the authority of securities commissions is not unlimited and no order – secondary or otherwise – is immune from appellate review for its reasonableness; however, until such cases are litigated, the uncertainty remains.  

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.