Sharp v. Autorité des marchés financiers

Sharp v. Autorité des marchés financiers
Collection
Supreme Court Judgments
Date
2023-11-17
Neutral citation
2023 SCC 29
Case number
39920
Judges
Wagner, Richard; Karakatsanis, Andromache; Côté, Suzanne; Brown, Russell; Rowe, Malcolm; Martin, Sheilah; Kasirer, Nicholas; Jamal, Mahmud; O’Bonsawin, Michelle
On appeal from
Quebec
Subjects
Constitutional law
Notes
Case in Brief SCC Case Information
Decision Content
SUPREME COURT OF CANADA
Citation: Sharp v. Autorité des marchés financiers, 2023 SCC 29
Appeal Heard: January 18, 2023 Judgment Rendered: November 17, 2023 Docket: 39920
Between:
Frederick Langford Sharp Appellant
and
Autorité des marchés financiers Respondent
- and –
Attorney General of Quebec, Shawn Van Damme, Vincenzo Antonio Carnovale, Pasquale Antonio Rocca and Ontario Securities Commission Interveners
And Between:
Shawn Van Damme, Vincenzo Antonio Carnovale and Pasquale Antonio Rocca Appellants
and
Autorité des marchés financiers Respondent
- and -
Attorney General of Quebec, Frederick Langford Sharp and Ontario Securities Commission Interveners
Official English Translation: Reasons of Côté J.
Coram: Wagner C.J. and Karakatsanis, Côté, Brown,* Rowe, Martin, Kasirer, Jamal and O’Bonsawin JJ.
Joint Reasons for Judgment: (paras. 1 to 138)
Wagner C.J. and Jamal J. (Karakatsanis, Rowe, Martin, Kasirer and O’Bonsawin JJ. concurring)
Dissenting Reasons: (paras. 139 to 212)
Côté J.
Note: This document is subject to editorial revision before its reproduction in final form in the Canada Supreme Court Reports.
* Brown J. did not participate in the final disposition of the judgment.
Frederick Langford Sharp Appellant
v.
Autorité des marchés financiers Respondent
and
Attorney General of Quebec,
Shawn Van Damme,
Vincenzo Antonio Carnovale,
Pasquale Antonio Rocca and
Ontario Securities Commission Interveners
‑ and ‑
Shawn Van Damme,
Vincenzo Antonio Carnovale and
Pasquale Antonio Rocca Appellants
v.
Autorité des marchés financiers Respondent
and
Attorney General of Quebec,
Frederick Langford Sharp and
Ontario Securities Commission Interveners
Indexed as: Sharp v. Autorité des marchés financiers
2023 SCC 29
File No.: 39920.
2023: January 18; 2023: November 17.
Present: Wagner C.J. and Karakatsanis, Côté, Brown,* Rowe, Martin, Kasirer, Jamal and O’Bonsawin JJ.
on appeal from the court of appeal for quebec
Constitutional law — Extraterritoriality — Jurisdiction — Constitutional applicability of Quebec regulatory scheme to out‑of‑province residents — Quebec administrative tribunal claiming jurisdiction over out‑of‑province defendants in securities enforcement proceeding — Whether tribunal properly assumed jurisdiction — Civil Code of Québec, preliminary provision — Act respecting the Autorité des marchés financiers, CQLR, c. A‑33.2, s. 93 — Securities Act, CQLR, c. V‑1.1.
Four British Columbia residents (the “defendants”) are alleged by the administrative agency that regulates Quebec’s financial sector, the Autorité des marchés financiers (“AMF”), to have engaged in a transnational “pump‑and‑dump” securities manipulation scheme. The defendants allegedly acted in concert to (1) acquire the shares of a shell company, (2) give it a legitimate face, (3) promote its business, (4) sell their shares for a profit, and (5) distribute this profit among themselves. The AMF also alleged that the scheme had several ties to Quebec sufficient to apply Quebec’s securities regulatory scheme to the defendants: the shell company was a reporting issuer in Quebec with a Montréal business address; its director was a Quebec resident when the scheme was implemented; its promotional activities were accessible to Quebec residents; and, ultimately, Quebec investors lost money.
The AMF brought an originating pleading before Quebec’s Financial Markets Administrative Tribunal (“FMAT”) alleging that the defendants contravened the Quebec Securities Act. It asked the FMAT to make various orders against the defendants. The defendants filed motions for a declinatory exception challenging the FMAT’s jurisdiction over them as out‑of‑province defendants. The FMAT dismissed the defendants’ motions. It ruled that it had jurisdiction over them under s. 93 of the Act respecting the Autorité des marchés financiers, which grants the FMAT jurisdiction to make determinations under the Securities Act, in light of the Court’s decision in Unifund Assurance Co. v. Insurance Corp. of British Columbia, 2003 SCC 40, [2003] 2 S.C.R. 63, which held that a provincial regulatory scheme constitutionally applies to an out‑of‑province defendant when there is a “sufficient connection” or a “real and substantial connection” between the province and the defendant.
The Superior Court of Quebec dismissed the defendants’ applications for judicial review and held that the FMAT properly assumed jurisdiction. The court stated that the FMAT correctly recognized the limits of its extraterritorial reach by applying the “real and substantial connection” test set out in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, and that the FMAT correctly applied the Unifund test for the constitutional applicability of provincial legislation. The majority of the Court of Appeal of Quebec dismissed the defendants’ appeals. It concluded that the real and substantial connection test in Unifund addresses the constitutional applicability of the Quebec securities scheme to non‑residents who allegedly engaged in a securities manipulation scheme with connections to Quebec, and that the FMAT correctly concluded there is a real and substantial connection between Quebec and the defendants and properly assumed jurisdiction. The majority also ruled that although the Civil Code of Québec (“C.C.Q.”) acts as suppletive law for many matters, including certain aspects of public law, the private international law rules in Book Ten of the C.C.Q. do not apply when no private rights are at issue. The concurring judge would have held that the FMAT has jurisdiction over the out-of-province defendants under the rules of private international law in Title Three of Book Ten of the C.C.Q., either by analogy under art. 3148 para. 1(3) C.C.Q., or, alternatively, under art. 3136 C.C.Q.
Held (Côté J. dissenting): The appeal should be dismissed.
Per Wagner C.J. and Karakatsanis, Rowe, Martin, Kasirer, Jamal and O’Bonsawin JJ.: The FMAT has jurisdiction over the defendants under the Quebec securities scheme, which constitutionally applies to them. The FMAT has jurisdiction to make determinations under the Securities Act, including when there is a “real and substantial” connection, also described as a “sufficient connection”, between Quebec and out‑of‑province defendants. The allegations that the defendants used Quebec as the face of their securities manipulation and injured Quebec investors establish such a connection to give the FMAT jurisdiction over the defendants. The Quebec legislature has exercised its prescriptive legislative jurisdiction — its power to enact binding rules applicable to out‑of‑province parties with a real and substantial connection to Quebec. Those rules are engaged in the circumstances of the instant case. As a result, the FMAT also has adjudicatory jurisdiction, or the authority to hear this matter involving the defendants.
Under Quebec civil law, all interpretive exercises of laws governing persons, relations between persons, and property must begin with the C.C.Q., although special legislation can derogate from the C.C.Q. when the legislature expresses its intention to do so. As its preliminary provision announces, the C.C.Q. lays down the jus commune, or the law of general application, of Quebec in all matters within the letter, spirit, or object of its provisions. It has a suppletive role and can fill gaps in special statutes to the extent that legislation is silent on a given matter, thus preventing a legal vacuum. The proper interpretive methodology in determining the relationship between the C.C.Q. and special statutes governing persons, relations between persons, and property is to start with the jus commune in the C.C.Q., and then to ask whether the special statute complements or derogates from the jus commune.
The C.C.Q. does not simply lay down rules of private law on a narrow compass. The preliminary provision of the C.C.Q. provides that the C.C.Q. lays down the jus commune, and the C.C.Q. contains rules of public law and is an important source of administrative law in Quebec. As a result, the proper way to determine whether the C.C.Q. applies does not involve characterizing the right at issue as either a private law or public law matter. Book Ten of the C.C.Q., which codifies the rules of private international law in Quebec, therefore applies as the jus commune beyond matters of private law to all matters within the letter, spirit, or object of the C.C.Q.’s provisions, and it applies to administrative tribunals like the FMAT regardless of whether private rights are at issue, unless otherwise provided by law. Furthermore, Title Three of Book Ten applies not just in cases of conflict of jurisdiction; it applies more broadly to determine the “International Jurisdiction of Québec Authorities”.
The application of the interpretive methodology regarding the relationship between the C.C.Q. and special statutes in the instant case leads to the conclusion that the C.C.Q. does not grant the FMAT jurisdiction over the defendants. The FMAT’s jurisdiction does not arise from art. 3148 para 1(3) or from art. 3136 C.C.Q. Article 3148 para. 1(3) C.C.Q. does not apply directly because the proceeding before the FMAT does not involve a personal action of a patrimonial nature, which implies the assertion of rights that by their very essence have a monetary value and are transmissible as property. Rather, the AMF has brought an action before the FMAT in the public interest, rather than in a strictly personal capacity. Its action aims to prevent future harm to the Quebec securities market and is neither restorative nor punitive. It does not involve a person taking legal action against another based on personal rights that are transmissible as property. In addition, art. 3148 para. 1(3) C.C.Q. cannot be applied by analogy because there is no tenable analogy between a personal action of a patrimonial nature, which seeks the enforcement of a debt under private law, and a regulatory prosecution by the state, which seeks public interest remedies rather than simply private reparation. Such proceedings are of a fundamentally different legal character. As for art. 3136 C.C.Q., it does not provide a basis for the FMAT’s jurisdiction for two reasons. First, the AMF did not seek to rely on it — the Court has previously confirmed that it may be applied only if one of the parties raises it. Second, for it to apply, a Quebec authority must otherwise have no jurisdiction to hear a dispute. The FMAT, however, does have jurisdiction under the special jurisdictional rules of the Quebec securities scheme.
The FMAT has jurisdiction under two special statutes: the Quebec Securities Act and the Act respecting the Autorité des marchés financiers, now known as the Act respecting the regulation of the financial sector. Section 93 of the Act respecting the Autorité des marchés financiers provides that the FMAT’s function is to make determinations regarding matters brought under the Act respecting the Autorité des marchés financiers and other Acts listed in the provision, including the Securities Act. It thus grants the FMAT jurisdiction over the adjudication of matters brought under the Securities Act. Section 94 grants the FMAT jurisdiction to take any measure to ensure compliance with any of the Acts referred to in s. 93. Sections 265, 273.1, and 273.3 of the Securities Act empower the FMAT to act in a broad range of circumstances. These provisions must be read in conjunction with the Act respecting the Autorité des marchés financiers, which explicitly provides for the FMAT’s jurisdiction to make determinations over matters brought under the two Acts.
Neither the Securities Act nor the Act respecting the Autorité des marchés financiers expressly provide for the FMAT to assert jurisdiction over out‑of‑province parties, or otherwise limits the territorial reach of the Quebec securities scheme over interprovincial or international transactions. To evaluate whether these statutes may be applied in such circumstances, the Quebec securities scheme must be interpreted to determine its territorial reach. This involves consideration of the Court’s decision in Unifund, which holds that the permissible territorial application of provincial legislation is determined by assessing the sufficiency of the connection among the enacting jurisdiction, the subject matter of the legislation, and the individual or entity sought to be regulated, subject to the principles of order and fairness. The “real and substantial connection” test in Unifund is the accepted test for discerning the presumptively intended reach of federal legislation as well as the constitutionally permissible application of provincial legislation. It is concerned with the constitutional applicability of legislation and not with its constitutional validity. Moreover, it functions as a principle of statutory interpretation: it limits, or reads down, the territorial reach of otherwise broadly framed provincial legislation, consistent with the territorial restrictions on provincial legislative power in ss. 91 and 92 of the Constitution Act, 1867 , by insisting on a “sufficient connection” between the legislation and the out‑of‑province defendant. It also relates to prescriptive legislative jurisdiction, rather than adjudicatory jurisdiction. Furthermore, it is distinct from the “real and substantial connection” tests that the Court has developed elsewhere in the domain of conflicts of laws. The “real and substantial connection” test is a family of tests and requires different considerations in each of the varying contexts in which its formula is employed. For example, the “real and substantial connection” test set out in Van Breda applies in the context of tort claims at common law and does not apply in Quebec.
Interpreted in light of the Unifund test, the Quebec securities scheme provides for jurisdiction over out‑of‑province parties with a “sufficient connection” or “real and substantial connection” with Quebec. The “sufficient connection” analysis must recognize the transnational nature of modern securities regulation and the public interest in addressing international market manipulation. Securities regulation raises unique considerations that highlight the need for transnational enforcement. In the instant case, there is a sufficient connection between Quebec and the out‑of‑province defendants. The defendants allegedly used Quebec as the face of their alleged pump‑and‑dump scheme. They participated in marketing or financing efforts and partly targeted Quebec residents. The shell company through which the defendants operated their scheme was a reporting issuer in Quebec, and its director was a Quebec resident. It would defeat the purpose of the cross‑border nature of modern securities regulation to allow the defendants to escape the reach of Quebec’s regulatory oversight. Applying the Quebec regulatory regime is fair to the defendants: their entrance into Quebec’s market was not accidental or irrelevant, but rather was an integral part of their securities manipulation operation. Moreover, applying the Quebec regulatory scheme does not offend the principle of order or the related concept of interprovincial comity. Because contemporary securities manipulation and fraud are often transnational and extend across provincial and national borders, courts and tribunals must take a flexible and purposive approach when applying the principles of order and fairness in the securities context.
Per Côté J. (dissenting): The appeals should be allowed. At this stage of the proceedings, this case raises no issue regarding the constitutional applicability of the Securities Act but rather concerns the FMAT’s adjudicative jurisdiction. The limits of that jurisdiction must be analyzed in light of the rules of private international law set out in Title Three of Book Ten of the C.C.Q. The application of those provisions in this case leads to the conclusion that the FMAT does not have adjudicative jurisdiction over the defendants and therefore cannot hear the matter.
The majority’s approach conflates the concepts of adjudicative jurisdiction of a court or tribunal and constitutional applicability of legislation, as it deals interchangeably with the constitutional applicability of the Securities Act under the Unifund framework and the FMAT’s jurisdiction under the rules of private international law. Both concepts involve the existence of a real and substantial connection. In the constitutional context, the real and substantial connection test affirms the constitutionally imposed territorial limits that underlie the requirement of legitimacy in the exercise of the state’s power of adjudication. Thus, the applicability of provincial legislation to a defendant domiciled outside the province in question depends on there being a sufficient connection between the enacting jurisdiction and the out‑of‑province individual or entity. Although this test relates more specifically to the connection between a province and an action, the purpose of the Unifund analysis is essentially to determine whether there is a viable cause of action on the merits. Conversely, from a private international law perspective, the real and substantial connection test relates to the exercise of the state’s power of adjudication. The rules of private international law in force in a province are what confer adjudicative jurisdiction on a decision maker. In Quebec, these rules are set out in Book Ten of the C.C.Q. To be able to assume jurisdiction over a dispute, a provincial court or tribunal must have adjudicative jurisdiction under provincial legislation, which must itself have been validly enacted by the province in the exercise of its legislative jurisdiction. The jurisdiction of courts and tribunals of the Canadian provinces, the appropriateness of exercising that jurisdiction and the law that should apply to a dispute are all different concepts.
The adjudicative jurisdiction of a court or tribunal has two components: jurisdiction ratione materiae (subject‑matter jurisdiction) and jurisdiction ratione personae (territorial jurisdiction). The subject‑matter jurisdiction of a court or tribunal is that given to it to hear a case by reason of its subject matter, whereas territorial jurisdiction is assessed on the basis of a geographical connection. To have jurisdiction to hear a dispute, a court or tribunal must have the necessary subject‑matter jurisdiction and territorial jurisdiction. In this case, the objection raised by the defendants in their motions for declinatory exception relates not to the FMAT’s lack of subject‑matter jurisdiction but rather to its lack of territorial jurisdiction over them. The appeals therefore relate not to the extraterritorial applicability of the Securities Act but rather to the FMAT’s territorial jurisdiction under private international law.
The rules of private international law set out in the C.C.Q. apply to all proceedings that may be heard by Quebec authorities pursuant to the jurisdiction conferred on the province by the Constitution. Accordingly, the rules in Title Three of Book Ten of the C.C.Q. must be considered in this case unless a special law complements, makes exceptions to or derogates from them. Article 3076 C.C.Q. in fact provides that Book Ten applies subject to those rules of law in force in Quebec which are applicable by reason of their particular object. Those rules might include the Securities Act and the Act respecting the Autorité des marchés financiers, but these statutes do not themselves make exceptions to, derogate from or complement the C.C.Q.’s rules of private international law when it comes to the administrative proceedings brought by the AMF. It is clear from reading the provisions of these statutes that the legislature intended them to be supplemented by the C.C.Q.’s provisions on the international jurisdiction of Quebec authorities. Section 93 of the Act respecting the Autorité des marchés financiers establishes the FMAT’s subject‑matter jurisdiction in administrative proceedings instituted by the AMF under the Securities Act; it does not give the FMAT territorial jurisdiction. As for s. 94 of the Act respecting the Autorité des marchés financiers, it is not concerned in any way with territorial jurisdiction but relates rather to the measures that the FMAT may take once it is established that it has jurisdiction ratione personae to deal with a matter. This is also the case of ss. 265, 273.1, and 273.3 of the Securities Act. The FMAT can take the measures contemplated in those provisions only where it has jurisdiction under the rules of private international law set out in the C.C.Q.
The issue of the FMAT’s adjudicative jurisdiction must therefore be decided by applying the rules on international jurisdiction set out in Title Three of Book Ten of the C.C.Q., that is, arts. 3134 to 3154. The C.C.Q. contains a well‑developed set of rules and principles of private international law and codifies the “sufficient connection” test. However, no provision of the C.C.Q. can ground the FMAT’s jurisdiction in the proceedings brought by the AMF. There is agreement with the majority that no analogy can be drawn between a personal action of a patrimonial nature and the proceedings brought by the AMF. Article 3148 para. 1(3) C.C.Q. therefore cannot confer jurisdiction on the FMAT. As for art. 3136 C.C.Q., it recognizes the “forum of necessity” doctrine, which can serve as an exceptional basis for the jurisdiction of Quebec authorities. However, it can be applied only if one of the parties raises it, which the AMF did not do in this case. The AMF did not demonstrate that proceedings abroad had proved impossible or that it could not reasonably require the institution of proceedings abroad. Nor did it explain why it had not applied to the authorities having jurisdiction, in accordance with the provisions of the Securities Act concerning interjurisdictional cooperation. As a result, the AMF cannot rely on art. 3136.
Where the C.C.Q. does not establish the territorial jurisdiction of a court or tribunal and the legislature has not otherwise conferred territorial jurisdiction on it through special legislation, that must be the end of the analysis. Unifund cannot serve as a safety net, because it concerns an entirely different situation: it applies once it is established that a court or tribunal has jurisdiction to deal with a matter. It cannot give the FMAT territorial jurisdiction over the defendants, who are domiciled outside Quebec, in a manner that derogates from the well‑developed set of rules in the C.C.Q. The Unifund test is therefore of no assistance to the AMF and cannot ground the FMAT’s adjudicative jurisdiction over the defendants in this case.
Cases Cited
By Wagner C.J. and Jamal J.
Overruled: Donaldson v. Autorité des marchés financiers, 2020 QCCA 401; applied: Unifund Assurance Co. v. Insurance Corp. of British Columbia, 2003 SCC 40, [2003] 2 S.C.R. 63; Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653; considered: Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572; referred to: Spar Aerospace Ltd. v. American Mobile Satellite Corp., 2002 SCC 78, [2002] 4 S.C.R. 205; Air Canada v. McDonnell Douglas Corp., [1989] 1 S.C.R. 1554; McCabe v. British Columbia (Securities Commission), 2016 BCCA 7, 394 D.L.R. (4th) 197; Canada Post Corp. v. Canadian Union of Postal Workers, 2019 SCC 67, [2019] 4 S.C.R. 900; Society of Composers, Authors and Music Publishers of Canada v. Entertainment Software Association, 2022 SCC 30; Fédération des producteurs acéricoles du Québec v. Regroupement pour la commercialisation des produits de l’érable inc., 2006 SCC 50, [2006] 2 S.C.R. 591; Gilles E. Néron Communication Marketing Inc. v. Chambre des notaires du Québec, 2004 SCC 53, [2004] 3 S.C.R. 95; Finney v. Barreau du Québec, 2004 SCC 36, [2004] 2 S.C.R. 17; Prud’homme v. Prud’homme, 2002 SCC 85, [2002] 4 S.C.R. 663; Doré v. Verdun (City), [1997] 2 S.C.R. 862; Montréal (City) v. Octane Stratégie inc., 2019 SCC 57, [2019] 4 S.C.R. 138; Peoples Department Stores Inc. (Trustee of) v. Wise, 2004 SCC 68, [2004] 3 S.C.R. 461; Lefebvre (Trustee of), 2004 SCC 63, [2004] 3 S.C.R. 326; Quebec (Commission des normes du travail) v. Asphalte Desjardins inc., 2014 SCC 51, [2014] 2 S.C.R. 514; Béliveau St‑Jacques v. Fédération des employées et employés de services publics inc., [1996] 2 S.C.R. 345; Quebec (Public Curator) v. Syndicat national des employés de l’hôpital St‑Ferdinand, [1996] 3 S.C.R. 211; Compagnie d’immeubles Yale ltée v. Kirkland (Ville de), [1996] R.J.Q. 502; Dionne v. Commission scolaire des Patriotes, 2014 SCC 33, [2014] 1 S.C.R. 765; Lalonde v. Sun Life Assurance Co. of Canada, [1992] 3 S.C.R. 261; City of Ottawa v. Town of Eastview, [1941] S.C.R. 448; Gignac v. Gauvin, 2009 QCCS 524, 73 C.C.P.B. 47; Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, [2007] 2 S.C.R. 801; Barer v. Knight Brothers LLC, 2019 SCC 13, [2019] 1 S.C.R. 573; Ormuco inc. v. Ernst & Young, 2022 QCCA 405; Mines d’or Visible inc. v. Zara Resources Inc., 2013 QCBDR 95; Financière Manuvie v. Proteau, 2013 QCBDR 137; Newfoundland and Labrador (Attorney General) v. Uashaunnuat (Innu of Uashat and of Mani‑Utenam), 2020 SCC 4, [2020] 1 S.C.R. 15; St. Lawrence Cement Inc. v. Barrette, 2008 SCC 64, [2008] 3 S.C.R. 392; Kosoian v. Société de transport de Montréal, 2019 SCC 59, [2019] 4 S.C.R. 335; Autorité des marchés financiers v. Dominion Investments (Nassau) Ltd. (Dominion Investments Ltd.), 2008 QCBDRVM 4; GreCon Dimter inc. v. J.R. Normand inc., 2005 SCC 46, [2005] 2 S.C.R. 401; Lamborghini (Canada) inc. v. Automobili Lamborghini S.P.A., [1997] R.J.Q. 58; Anvil Mining Ltd. v. Association canadienne contre l’impunité, 2012 QCCA 117; Otsuka Pharmaceutical Company Limited v. Pohoresky, 2022 QCCA 1230; Droit de la famille — 1830, 2018 QCCA 24; Droit de la famille — 143017, 2014 QCCA 2188; Ontario College of Pharmacists v. 1724665 Ontario Inc., 2013 ONCA 381, 363 D.L.R. (4th) 724; Berger v. Saskatchewan (Financial and Consumer Affairs Authority), 2019 SKCA 89; Torudag v. British Columbia (Securities Commission), 2011 BCCA 458, 343 D.L.R. (4th) 743; Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, 2004 SCC 45, [2004] 2 S.C.R. 427; British Columbia v. Imperial Tobacco Canada Ltd., 2005 SCC 49, [2005] 2 S.C.R. 473; R. v. Hape, 2007 SCC 26, [2007] 2 S.C.R. 292; British Columbia v. Imperial Tobacco Canada Ltd., 2004 BCCA 269, 239 D.L.R. (4th) 412, aff’d 2005 SCC 49, [2005] 2 S.C.R. 473; Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077; Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416; Libman v. The Queen, [1985] 2 S.C.R. 178; Hunt v. T&N plc, [1993] 4 S.C.R. 289; Global Securities Corp. v. British Columbia (Securities Commission), 2000 SCC 21, [2000] 1 S.C.R. 494.
By Côté J. (dissenting)
Unifund Assurance Co. v. Insurance Corp. of British Columbia, 2003 SCC 40, [2003] 2 S.C.R. 63; Newfoundland and Labrador (Attorney General) v. Uashaunnuat (Innu of Uashat and of Mani‑Utenam), 2020 SCC 4, [2020] 1 S.C.R. 15; Transax Technologies inc. v. Red Baron Corp. Ltd, 2016 QCCA 1432; Spar Aerospace Ltd. v. American Mobile Satellite Corp., 2002 SCC 78, [2002] 4 S.C.R. 205; Air Canada v. McDonnell Douglas Corp., [1989] 1 S.C.R. 1554; Rosdev Investments Inc. v. Allstate Insurance Co. of Canada, [1994] R.J.Q. 2966; Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572; Lamborghini (Canada) inc. v. Automobili Lamborghini S.P.A., [1997] R.J.Q. 58; Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077; Hunt v. T&N plc, [1993] 4 S.C.R. 289; Tolofson v. Jensen, [1994] 3 S.C.R. 1022; United States of America v. Harden, [1963] S.C.R. 366; Canada Post Corp. v. Lépine, 2009 SCC 16, [2009] 1 S.C.R. 549; Barer v. Knight Brothers LLC, 2019 SCC 13, [2019] 1 S.C.R. 573; Compagnie d’immeubles Yale ltée v. Kirkland (Ville de), [1996] R.J.Q. 502; Perron‑Malenfant v. Malenfant (Trustee of), [1999] 3 S.C.R. 375; Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30, [2016] 1 S.C.R. 851; Autorité des marchés financiers v. Fournier, 2012 QCCA 1179; Donaldson v. Autorité des marchés financiers, 2020 QCCA 401; Fédération des producteurs acéricoles du Québec v. Regroupement pour la commercialisation des produits de l’érable inc., 2006 SCC 50, [2006] 2 S.C.R. 591; Yared v. Karam, 2019 SCC 62, [2019] 4 S.C.R. 498; Otsuka Pharmaceutical Company Limited v. Pohoresky, 2022 QCCA 1230; GreCon Dimter inc. v. J.R. Normand inc., 2005 SCC 46, [2005] 2 S.C.R. 401.
Statutes and Regulations Cited
Act mainly to improve the regulation of the financial sector, the protection of deposits of money and the operation of financial institutions, S.Q. 2018, c. 23, Part IV.
Act respecting administrative justice, CQLR, c. J‑3, s. 9.
Act respecting French, the official and common language of Québec, S.Q. 2022, c. 14.
Act respecting the Autorité des marchés financiers, CQLR, c. A‑33.2, ss. 93 [am. 2018, c. 23, s. 628], 94 [repl. 2018, c. 23, s. 629].
Act respecting the regulation of the financial sector, CQLR, c. E‑6.1, ss. 93, 94.
Charter of human rights and freedoms, CQLR, c. C‑12.
Charter of the French language, CQLR, c. C‑11.
Civil Code of Québec, preliminary provision, arts. 300, Book Five, 1376, Book Ten, 3076, Title Three, 3134 to 3154, 3155(6), 3162, 3164.
Code of Civil Procedure, CQLR, c. C‑25.01.
Code of Penal Procedure, CQLR, c. C‑25.1, art. 142.
Constitution Act, 1867 , ss. 91 , 92 .
Interpretation Act, CQLR, c. I‑16, ss. 12, 13.
Regulation 51‑105 respecting Issuers Quoted in the U.S. Over‑the‑Counter Markets, CQLR, c. V‑1.1, r. 24.1, s. 3.
Rules of the Supreme Court of Canada, SOR/2002‑156, r. 33(2).
Securities Act, CQLR, c. V‑1.1, ss. 68, Title VII, 195.2, 199.1, 202, 210, Title VIII, 213.1 et seq., 233.2, 235, 236.1, Title IX, 265, 273.1, 273.3, Title X, Chapter II, 307, 307.1.
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APPEALS from a judgment of the Quebec Court of Appeal (Marcotte, Mainville and Moore JJ.A.), 2021 QCCA 1364, 90 Admin. L.R. (6th) 25, [2021] AZ‑51794411, [2021] Q.J. No. 10996 (QL), 2021 CarswellQue 14741 (WL), affirming a decision of Collier J., 2019 QCCS 94, [2019] AZ‑51562732, [2019] Q.J. No. 175 (QL), 2019 CarswellQue 257 (WL), dismissing applications for judicial review of a decision of the Financial Markets Administrative Tribunal, 2017 QCTMF 114, 2017 LNQCTMF 114 (QL), 2017 CarswellQue 21707 (WL). Appeals dismissed, Côté J. dissenting.
Sean Griffin and Daniel Baum, for the appellant/intervener Frederick Langford Sharp.
Patrick Ferland and Sébastien C. Caron, for the appellants/interveners Shawn Van Damme, Vincenzo Antonio Carnovale and Pasquale Antonio Rocca.
Stéphanie Jolin and Jean‑Nicolas Boutin Wilkins, for the respondent.
Stéphanie Quirion‑Cantin and Stéphane Rochette, for the intervener the Attorney General of Quebec.
Katrina Gustafson and Alexandra Matushenko, for the intervener the Ontario Securities Commission.
The judgment of Wagner C.J. and Karakatsanis, Rowe, Martin, Kasirer, Jamal and O’Bonsawin JJ. was delivered by
The Chief Justice and Jamal J. —
I. Overview
[1] At issue in these appeals is whether a provincial administrative tribunal has jurisdiction over out-of-province defendants in a securities enforcement proceeding in Quebec. The appeals also raise the relationship between the Civil Code of Québec (“C.C.Q.”) and special statutes under Quebec law.
[2] The Financial Markets Administrative Tribunal (“FMAT”), a Quebec administrative tribunal, claims jurisdiction over the appellants, four British Columbia residents who are alleged to have contravened the Quebec Securities Act, CQLR, c. V‑1.1, by engaging in a transnational “pump-and-dump” securities manipulation scheme with links to Quebec. In a pump-and-dump scheme, promoters boost the price of a stock by releasing false or misleading statements and then profit by selling their holdings in that stock at inflated prices. The scheme is alleged to have injured investors, including investors in Quebec.
[3] The appellants challenged the FMAT’s jurisdiction over them as out-of-province defendants. However, the FMAT ruled that it has jurisdiction over the out-of-province appellants under s. 93 of the Act respecting the Autorité des marchés financiers, CQLR, c. A‑33.2,[1] which grants the FMAT jurisdiction to make determinations under the Securities Act. The FMAT interpreted and applied this jurisdictional provision in light of this Court’s decision in Unifund Assurance Co. v. Insurance Corp. of British Columbia, 2003 SCC 40, [2003] 2 S.C.R. 63, which held that a provincial regulatory scheme constitutionally applies to an out-of-province defendant when there is a “real and substantial connection”, also described as a “sufficient connection”, between the province and the defendant (Unifund, at paras. 55‑56). The FMAT highlighted several factors that, in its view, created such a connection between Quebec and the appellants’ alleged contraventions.
[4] The Superior Court of Quebec dismissed applications for judicial review from the FMAT’s decision. On appeal, the Court of Appeal of Quebec affirmed the FMAT’s jurisdiction, but the court divided on the appropriate legal basis for doing so. Speaking for the majority, Marcotte J.A. ruled that the FMAT correctly found a real and substantial connection between Quebec and the appellants under the test in Unifund. In separate reasons concurring in the result, Mainville J.A. w