The Quebec Court of Appeal recently dismissed the appeals launched by directors and officers of a reporting issuer, Nstein Technologies, against two judgments rendered by the Court of Quebec in a statutory appeal of a judgment by the Quebec securities tribunal, the Tribunal administratif des marchés financiers (the TMF).

The TMF had granted an application by the Quebec securities regulator, the Autorité des marchés financiers (the AMF), to impose administrative penalties against the appellants for breaches to insider trading and tipping provisions under the Québec Securities Act (the QSA). The AMF’s application essentially stemmed from a decision made by Nstein Technologies’ board of directors to grant options to employees and officers while discussions as to a potential acquisition involving the corporation had taken place.

In the first judgment, rendered on October 19, 2017, the Court of Québec dismissed the exception raised by one of the appellants, alleging that the AMF’s application before the TMF was time-barred as it was filed after the 3-year limitation period provided for by article 2925 of the Civil Code of Québec (the CCQ). In the second judgment, rendered on February 26, 2018, the Court of Québec dismissed the appeal of the TMF judgment.


In an unanimous decision, the Quebec Court of Appeal confirmed the two decisions rendered by the Court of Quebec and made a number of relevant findings as to the legal regime applicable to AMF’s applications for administrative penalties based on section 273.1 QSA, including the following:

  • The general regime of the CCQ does not apply – not even in a complementary manner – to these applications, which do not fall under the jus commune in matters of “persons, relations between persons, and property” pursuant to the CCQ’s preliminary provision.
  • Applications for administrative penalties based on section 273.1 QSA follow the exercise of an administrative power by the AMF, pursuant to a specific mission granted by the Quebec legislator, and do not constitute actions to enforce a “personal right” within the meaning of article 2925 CCQ.
  • Contrary to other recourses under the QSA (e.g., in penal matters), section 273.1 QSA does not provide for any limitation period, such that the criteria of “reasonable time” established by the Supreme Court of Canada for administrative matters is the one applicable. (See Blencoe v. British Columbia (Human Rights Commission), 2000 SCC 44 (“Blencoe“).
  • In order to obtain remedies for unreasonable delays in administrative matters, such as applications for administrative penalties by the AMF, evidence must be made “of significant prejudice which results from an unacceptable delay”(see para. 101 of Blencoe). This argument should therefore be made (along with the required evidence supporting it) before the administrative tribunal, such as the TMF, not for the first time in appeal.

Moreover, the Quebec Court of Appeal applied the new principles established by the Supreme Court of Canada in Canada (Minister of Citizenship and Immigration) v. Vavilov (2019 SCC 65) and in Bell Canada v. Canada (Attorney General) (2019 SCC 66), both released on December 19, 2019 after the judgments of the Court of Quebec discussed above, to the judicial review and statutory appeal of administrative decisions.  Further details on these decisions can be found in a previous blog post which can be found here.

The Court of Appeal confirmed that the Court of Quebec would have had to apply the standards of appellate review to the statutory appeal of the TMF judgment and proceeded to qualify the errors invoked by the appellants. In a nutshell, the Court of Appeal ruled that the appellants did not invoke any errors of law but only of fact or of mixed fact and law and, as such, that the standard of palpable and overriding error was applicable. The Court of Appeal refused to enter into any detailed analysis of these errors, being of the view that they pertained to the appreciation of the evidence by the TMF and were inside the scope of the latter’s expertise. The Court of Appeal noted that the 51-page judgment rendered by the TMF was detailed, that the conclusions reached were supported by the evidence and that the analysis was clear.

Of importance is also the remark of the Court of Appeal that the mere acceptance of options does not preclude insider trading. The Court relied on section 189.1 QSA, stating in part that “[n]o person prohibited from trading in securities of a reporting issuer (…) by the effect of section 187 or 189 may use the privileged information in any other manner unless he is justified in believing that the information is generally known to the public”, which extends the prohibition to the trading in options.