R.S.O. 1990, c. S.5, AS AMENDED
921159 ONTARIO INC., 918211 ONTARIO INC.


March 6, 7, 1997
PANEL:J.F. Howard - CommissionerG.P.H. Vernon - CommissionerCOUNSEL:Lawrence Ritchie - OSC Special CounselSonia BjorkquistDarryl Mann - Counsel for Peter A. MitchellDuncan EmbryAllan Sternberg - Counsel for Glen Erikson and Christine EriksonLori StortzNairn Waterman - Counsel for Helen Siwanowicz


On March 6, 1997, the outstanding preliminary motions in this matter came on before us for hearing in view of the fact that a hearing on the merits is currentlyscheduled to begin April 2, 1997. In all, four Motion Records were presented for consideration along with voluminous material in support or opposed. Someaspects of some of the motions have been dealt with by Commission panels differently constituted and the matter has been scheduled for hearing on the merits onat least two occasions in the past.

In the hope of establishing some semblance of order to the chaos of paper before us, we began by marking the various volumes of documents before us withidentification numbers. The practice was continued as further material was filed during the two days of hearing.

Before identifying the material we have considered, we observe that this matter is what remains before the Commission of a proceeding which began by a Noticeof Hearing dated December 15, 1993. The original Statement of Allegations of Staff of the Enforcement Branch of the Ontario Securities Commission was alsodated December 15, 1993. At that time, there were eight named Respondents who no longer appear in the above style of cause. It is not necessary to recounthow this occurred except to say that all Counsel before us agreed that the Background and History of Proceedings at pages 2 to 11 of the Decision of theCommission dated December 3, 1996 was accurate ((1996) 19 OSCB, pp 6623 to 6626). We do point out, however, that the allegations in the original Notice ofHearing and Statement of Allegations were amended on March 1, 1996 after the proceedings as they formerly applied to what became known as the ManningGroup were withdrawn and as they applied to what became known as Marchment Group were severed on consent of all parties. Effective March 1, 1996 anAmended Notice of Hearing and an Amended Statement of Allegations were delivered limiting the issues to the remaining Respondents named in the style ofcause. At that time, this matter was set over to be heard during the three week period commencing September 16, 1996.

We now list the material which was before us at this hearing:

1. Motion Record submitted by Goodman and Carr on behalf of Glen Erikson and Christine Erikson dated January 24, 1996. The Motion seeks a stay forinadequate disclosure; alternatively further specific disclosure relating to the allegations in the Statement of Allegations of December 15, 1993; alternatively anadjournment pending adequate disclosure; and on the assumption that the proceedings as they apply to the Marchment Group would be severed, an adjournmentuntil after the conclusion of the hearing against the Marchment Group.

2. Motion Record submitted by Goodman and Carr dated June 7, 1996 returnable June 14, 1996. The motion seeks a stay pending the disposition of theMarchment Group proceedings.

3. Motion Record submitted by Goodman and Carr dated August 19, 1996 seeking an Order to prohibit Commissioner Stromberg sitting on the panel and anOrder for disclosure of when facts upon which the proceedings are based first came to the knowledge of the Commission; and an order staying proceedingsagainst the Eriksons on the grounds inter alia that the Enforcement Branch and the Commission itself has breached the duty of fairness owed to the EriksonRespondents, has prejudged the case, or that a reasonable apprehension of bias exists.

4. Affidavit of Glen Erikson submitted by Goodman and Carr on behalf of Glen Erikson and Christine Erikson dated August 27, 1996

5. Motion Record submitted by Torkin Manes on behalf of Peter Mitchell dated March 3, 1997. The Motion seeks a permanent stay of the proceedings againstPeter Mitchell for delay and failure to provide particulars. An earlier Motion for Particulars dated August 19, 1996 had been withdrawn, but is included in thisMotion Record.

5A Excerpt from text Solicitor-Client Privilege in Canada, submitted by Mr. Mann

5B Photocopied case submitted by Mr. Mann

6. Written Submissions of Staff (in Response to the motions brought by the Respondents Glen Erikson, Christine Erikson, Peter Mitchell, and the Salter Groupfor Particulars, et al.) dated August 27, 1996

7. Staff's Responding Motion Materials (Preliminary Motions Scheduled for August 28, 1996) dated August 26, 1996

8. Staff's Responding Motion Record dated March 5, 1997 (Preliminary Motions Scheduled for March 6 and 7, 1997)

9. Withdrawn Document

10. Supplementary Record submitted by Goodman and Carr (Mr. Allan Sternberg) undated, received March 6, 1997

11. Brief of Proceedings (black binder; submitted by Mr. Ritchie)

12. Factum submitted by Goodman and Carr (undated)

13. Package of Cases submitted by Goodman and Carr

14. Book of Authorities submitted by Torkin, Manes dated March 6, 1997

15. Transcript of Proceedings in the Marchment Group matter, heard before Commissioners Vernon and Korthals on September 26, 1996

16. Brief of Authorities submitted by Goodman and Carr

17. A. Vol. I Staff's Book of Authorities

B. Vol. II Staff's Book of Authorities

As the opening of the Hearing, we were advised by Mr. Waterman that Helen Siwanowicz was present in response to a summons, and that she had beencross-examined on an affidavit filed by OSC staff in response to the motion on behalf of the Eriksons (Document 3). We were advised by Mr. Sternberg that heanticipated a motion would be brought by OSC staff to quash the summons and that he in turn would apply to continue the cross-examination of HelenSiwanowicz if the summons was not quashed. In addition he advised that he anticipated advancing a motion for a number of summons to be issued to membersof the Commission staff to be identified presumably seeking evidence in support of his motion (Document 3). No formal motion has been filed seeking theissuance of these summons, but we understand that Mr. Sternberg has been advised that although it is not the practice of the Commission to issue summons to itsown staff, members of staff will be made available should their evidence be relevant and required. In the end, all applications with respect to summons and to theattendance of Helen Siwanowicz were adjourned to April 2, 1997.

Counsel were advised that formal motions with respect to any remedy sought should be filed well in advance of that date.

Counsel were also advised that Mr. Sternberg's "Glendale-type" motion would be heard April 2, 1997 and that if, as suggested in some correspondence, Mr.Sternberg intended to make a "rule-making" motion, he should make that motion returnable April 2, 1997 and file any material to be relied upon well in advance.

Finally, Mr. Sternberg advised that whatever the result of the motions currently before the Commission and the motions which he anticipates filing, he would bemaking a further motion for adjournment of the proceedings on the merits from the date presently fixed on April 2, 1997. All counsel were advised that it is theintention of the Commission to proceed with any outstanding preliminary motions beginning April 2, 1997 and should it be decided that no stay or adjournmentwill be granted, it would be the intention to proceed immediately with a hearing on the merits following the conclusion of the preliminary motions.

We then proceeded to hear counsel on the motion to stay for delay and the motions for disclosure and particulars. It is apparent from the record that Mr.Sternberg's motion for particulars on January 24, 1996 was before the Commission at the hearings of August 28 and 29, but was not dealt with. Mr. Mann had amotion for particulars dated August 19, 1996 which was before the Commission on August 28 and 29, 1996 but was not dealt with because as appears from thedecision he advised the panel that he was not pursuing it as the outstanding matters had been resolved.

It became apparent at this hearing that Mr. Mann made this decision having received a letter from Commission Counsel (Document 5, Tab E) after an earlierletter the same day (Document 5, Tab D) which lead him to believe that further particulars to those in Document 5, Tab D would be provided. This was clearlythe result of a misunderstanding between Counsel and Mr. Mann's Motion for Particulars has suffered and will suffer no prejudice as a result of the withdrawal ofhis motion of August 19, 1996.

It should also be observed that there was at that time a motion for particulars on behalf of Gary Salter, Elaine Salter, and Rodika Florika which was not dealtwith but which has been withdrawn.

In arguing his motion for a stay due to delay and failure to provide adequate particulars, Mr. Mann candidly conceded that should the Commission conclude thatthere has been no such delay as to justify a stay of proceedings, the Commission could cure any prejudice arising from inadequate particulars by addressing hiscomplaint with respect to the inadequacy of the particulars and requiring further and better particulars be provided. He contended, however, that if furtherparticulars were ordered an adjournment of the April 2nd hearing should also be granted to enable analysis of such further particulars to be made.

We then proceeded to hear all counsel on the two questions raised in the motion material:

1. Has there been delay sufficient to justify a stay of proceedings; and

2. Have sufficient particulars of the allegations against them been provided to the Respondents?


The question to be answered with respect to the delay in reaching and concluding a hearing on the merits where a delay of the nature experienced here hasoccurred is whether the delay will result in a denial of a natural justice or prejudice to the Respondents having regard to all of the circumstances surrounding thedelay. We have considered all of the cases referred to us by counsel. Although we recognize that the factors to be considered in determining whether a delay hasbecome unreasonable in a criminal case where a subject's liberty may be at risk may be more stringent than those to be considered in an administrative hearingsuch as the present case, we adopt the factors to be considered as outlined by Sopinka J. in R. v. Morin (1982) 71 CCC at 3d) 1 at p.13. The factors there set outare:

1. the length of the delay;

2. waiver of time periods;

3. the reasons for the delay, including

a) inherent time requirements of the case

b) actions of the accused

c) actions of the Crown

d) limits on institutional resources, and

e) other reasons for delay, and

4. prejudice to the accused

The time which has elapsed since December 1993 certainly calls for explanation. We do not propose to consider whether there has been waiver on the part of theRespondents as any waiver of a right to claim prejudice on the part of the Respondents may have been inadvertent. On the other hand, much of the delaycertainly until March 1, 1996 has been the result of procedures initiated by the Respondents. It is true that the Respondents who remain in these proceedingswere not the initiators of some of these proceedings, but at the relevant times they were not heard to object to the delays which inevitably occurred.

Moreover, even after the severance of the Marchment Group from these proceedings in March 1996, Counsel for the Eriksons brought the motion dated June 7,1996 (Document 2) and heard June 26, 1996 seeking a stay of these proceedings pending the disposition of the separate proceedings which were continuingagainst the Marchment Group. The Commission issued its decision dated July 4, 1996 (19 OSCB 3871) denying the application. In doing so, the history of theproceedings and the many procedural motions which had caused delay were reviewed in some detail. The Commission Panel also pointed out that the hearinghad been set to commence on September 16, 1996, and Counsel were urged to proceed promptly with all preliminary motions so that they might be resolvedprior to the date set for commencement of the hearing.

As it turned out, only the preliminary motion seeking to disqualify a Commissioner on the basis of a reasonable apprehension of bias was argued when themotions were scheduled for August 28, and 29, 1996. The hearing date set for September 16, 1996 had to be adjourned as this serious allegation was underreserve. No one was heard to complain at that time nor indeed on the hearing which occurred on September 16 to set a new hearing date that the delay whichwas occurring would result in a denial of natural justice or prejudice to the Respondents.

No factors which would lead to specific prejudice to the Respondents other than the fact that evidence will be stale and witnesses will suffer from faded memoryhave been cited. These two factors may well impinge on the staff case as well as on the case to be advanced on behalf of the Respondents.

It should be noted that at least some of the delay in reaching a hearing on the merits stems from a limit on the resources of the Commission having regard to thedisqualification of Commissioners appointed prior to 1993 which occurred as a result of the partial success of a motion for review to the Divisional Court. Asignificant part of recent delay arises from what is perhaps a systemic problem arising from attempts to accommodate all Counsel in fixing hearing dates.

Finally, it should be noted that while Mr. Sternberg enthusiastically supported the Motion for a Stay due to delay he at the same time advised of more plannedpreliminary motions and a further application for adjournment whatever the result of the motions being considered.

Having done our best to balance the undoubted right of the Respondents to a fair hearing in which their ability to respond to the allegations against them havenot been prejudiced through undue or unexplained delay, we have concluded that most if not all of the delay has been justified and that in the end theRespondents will suffer no undue prejudice and will receive the fair hearing to which they are entitled in spite of the delay which has occurred. Accordingly, themotion to stay the proceedings is denied.

Particulars and Disclosure

Again, we have considered all the cases referred to by Counsel dealing with the obligation to give particulars where the conduct of a person is called intoquestion in a proceeding. We have also, of course, considered Sections 6 and 8 of the Statutory Powers Procedure Act, RSO 1990, c.S.22. We presume tosummarize the obligations imposed to provide information with respect to the allegations in a proceeding of this nature require us to be satisfied that theRespondents have been given sufficient information to enable them to know the case they have to meet, and to ensure that there will be no surprises for theRespondents to face during the hearing.

Clearly it is somewhat difficult for us to be absolutely sure that these obligations have been met without examining the voluminous material which has beenprovided by OSC staff in addition to the Amended Notice of Hearing and the Amended Statement of Allegations. On the other hand, we have been given generalinformation as to the material which has been provided to the Respondents.

The nature of the material provided is described in the written submissions of the staff (Document 6) at paras. 18-20, and paras. 23 and 24. This description isupdated to August 26, 1996 in Document 7. In addition, we have been provided by Mr. Sternberg in his Motion Record (Document 1, Tab 2 E) with a letterfrom Counsel for the Commission dated December 22, 1995 and by Mr. Mann in his Motion Record (Document 5, Tab D) with a letter to all Counsel for theRespondents dated August 26, 1996. One cannot look at the general description of the information provided and the two letters referred to without concludingthat the Respondents have been provided with a vast amount of material. This material includes, when supplemented with three additional items which we weretold had been recently delivered, statements of all witnesses it is intended to call at the hearing together with an index identifying material in possession of thestaff which has not been produced and is not intended to be relied upon, but which is available for inspection by the parties.

In Schedule "A" to the motion by Mr. Sternberg (Document 1), and Schedule "A" to the Motion by Mr. Mann on behalf of Mr. Mitchell (Document 5, Tab C), itis clear that the complaint which is being made amounts to the fact that specific questions with respect to the evidence to be tendered in support of identifiedparagraphs in the Statement of Allegations (as amended to reflect the changed paragraphs numbers in the Amended Statement of Allegations) are being putforward as a description of the particulars to which the Respondents are entitled.

On the other hand, Mr. Ritchie on behalf of the staff, takes the position that this would require that the Respondents be furnished with his work product or a roadmap of his case and that having provided all the documents described, having provided also the staff's general theory of its case and the witness statements for allwitnesses to be called, staff has more than discharged its obligations under the Statute and the decided cases. It seems to us that the position of the Respondentsis that they have been provided with too much information. As was observed during the hearing, it amounts to a complaint that a forest of information has beenprovided, but it is up to the staff to identify which trees in the forest apply to each of the Respondents.

We cannot agree that it is up to the OSC staff to answer specific questions advanced by the Respondents as to what evidence applies to each of the Respondents.This is clearly the task of Counsel for the Respondents. We cannot conceive that any surprise will occur at the hearing which will derogate from the fairness ofthe hearing, but should that occur as a result of information not supplied in advance of the hearing, the shortcoming and any unfairness resulting can be dealt withat the time.

Accordingly, we conclude that no further disclosure or particulars are required and we dismiss the applications.

DATED at Toronto the 10th day of March 1997.

RELEASED the 11th day of March 1997.

"J.F. Howard" "G. P. H. Vernon"