In a decision released on March 23, 2020, a Hearing Panel of the Ontario Securities Commission (OSC) ruled, over the objections of the respondents, that an oral hearing that had commenced under s. 127 of the Ontario Securities Act into allegations of fraud, misleading investors, unregistered trading and the illegal distributions of securities would continue at least partly in writing due to the COVID-19 pandemic (Re Paramount, 2020 ONSEC 9).
History of the Proceeding
The merits hearing began on March 10, 2020 and had been scheduled to resume on March 23. It had proceeded for three days before being interrupted by the Commission’s determination on March 17 not to hold any in person hearings until at least April 30 as a result of the pandemic.
Staff was in the middle of calling its witnesses when the Commission announced the halt to in person hearings. Up until that time, none of the respondents had attended or participated in the hearing, although one of the respondents was scheduled to testify in person on March 26.
The Commission’s Ruling
On March 17, the Commission invited submissions from the parties as to whether the hearing should be adjourned, or if not, how it should proceed.
The Hearing Panel agreed with Staff’s submissions that continuing by teleconference would be impractical given the number of individuals involved in the hearing and the volume of documents involved. It disagreed with the suggestion of certain of the respondents that the hearing should be adjourned, preferring Staff’s suggestion that permitting Staff to adduce the rest of its evidence in writing would cause no prejudice to the respondents. The Panel noted that submitting evidence in writing “is a common means of making hearings as efficient as possible, and causes no prejudice to the respondents”.
The Panel ruled that once the respondents had received Staff’s written evidence, they could decide whether to exercise their right to cross-examine any of the witnesses. If cross-examinations were to proceed, arrangements could be made to do so by video-conference. According to the Panel, [p]roceeding as Staff propose is consistent with the public interest in bringing the merits hearing to a timely and appropriate conclusion, in a manner that preserves the respondents’ right to procedural fairness”.
While not expressly referred to in by the Panel, the decision to continue the hearing partly in writing and partly by video-conference is permitted by Rule 23 of the Commission’s Rules of Procedure and section 5 of the Statutory Powers Procedure Act.
The Hearing Panel’s approach appears to be sensible in the circumstances, given the respondent’s lack of participation in the proceedings, the nature of the allegations, and in light of the uncertainty concerning for how long Ontario will be impacted by COVID-19.