The Registrar of Mortgage Brokers (the Appellant) successfully appealed a decision of the Supreme Court relating to the application of section 22(7) of the Mortgage Brokers Act to Mr. Westergaard’s (the Respondent) application for registration.

[2011] B.C.J. No. 1531

2011 BCCA 344

British Columbia Court of Appeal

L.S.G. Finch C.J.B.C., R.E. Levine and H. Groberman JJ.A.

Judgment: August 11, 2011

The Appellant (“Westergaard”) was initially denied registration by the Respondent, the Registrar of Mortgage Brokers (the “Registrar”). He was granted a conditional registration. He later applied to renew that registration without the conditions. The Registrar granted the renewal but refused to remove the conditions. Westergaard then re-applied for renewal and the Registrar denied that application relying on Westergaard’s conduct dating back several years. Westergaard appealed to the Financial Services Tribunal (the “Tribunal”) and objected to the Registrar considering his past conduct. The Registrar relied upon section 22(7) of the Mortgage Brokers Act in making this decision.

Section 22(7) of the Act states that “a proceeding under this Act may not be commenced more than 2 years after the facts on which the proceeding is based first come to the knowledge of the registrar”. Westergaard argued that this provision applied to suitability hearings and therefore prevented the Registrar from considering the past conduct which the Registrar had been aware of for more than 2 years. The Tribunal held the standard of review was reasonableness for questions of mixed fact and law but correctness for the interpretation of section 22(7). The Tribunal held that the Registrar was incorrect about the application of section 22(7). The Tribunal held section 22(7) was applicable. However, the Tribunal upheld the Registrar’s decision on the basis that the Registrar had sufficient information (within the 2 year time period) to support its decision. Both the Registrar and Westergaard appealed from this decision to the Supreme Court.

The Supreme Court Judge used the patently unreasonable standard when reviewing the Tribunal’s decision. The Supreme Court held that the Tribunal was not patently unreasonable in deciding that section 22(7) did apply to suitability hearings. However, the Supreme Court found the Tribunal’s decision to uphold the Registrar’s decision was patently unreasonable. The Judge remitted the matter back to the Registrar to re-consider Westergaard’s suitability.

On appeal to the Court of Appeal, the Registrar argued the Tribunal did not apply the correct standard of review when reviewing its interpretation of section 22(7). The Registrar argued the applicable standard of review was reasonableness (rather than correctness, which was the standard used by the Tribunal). The Registrar also argued, as a second position, the Supreme Court erred in its conclusion that section 22(7) applies to suitability hearings.

The Court of Appeal held that the Tribunal, in interpreting section 22(7) and reviewing the decision of the Registrar, was acting within its exclusive jurisdiction. The Court of Appeal held the Supreme Court was correct in its conclusion that the applicable standard of review was patent unreasonableness.

The Court of Appeal then considered whether the Tribunal’s interpretation of section 22(7) was patently unreasonable. The Court of Appeal concluded that it was patently unreasonable because it did not adequately consider the provision in the context of the public protection purpose of the Act. The Court of Appeal held that the Supreme Court erred in upholding the Tribunal’s decision that section 22(7) was applicable to suitability hearings; this decision was patently unreasonable. The Tribunal’s decision was quashed.