The OSC brought proceedings against Peter Sbaraglia, alleging that he was involved in a Ponzi scheme. A court-appointed receiver was also investigating Sbaraglia, his wife and their companies in relation to the same scheme. Sbaraglia reckoned that the receiver had materials that would be helpful in defending the OSC’s allegations. Sbaraglia obtained an order from the Superior Court for production of some of the documents. He then appealed, seeking production of more material; the receivercross-appealed, arguing that it had no obligation to disclose documents to Sbaraglia at all.
The Ontario Court of Appeal set aside the order requiring the receiver to produce: SA Capital Growth Corp v Mander Estate, 2012 ONCA 681. A receiver has a duty to make full disclosure to an ‘interested person’, but (perhaps somewhat counter-intuitively, given the fact that both the receivership and the OSC proceedings concerned Sbaraglia’s alleged involvement in the same Ponzi scheme) Sbaraglia was not such a party. An interested person is someone with a direct interest in the subject matter of the receivership, but who also needs to see documents in the hands of the receiver for a specific purpose related to the receivership – not for some collateral purpose. The OSC proceedings were ‘separate and distinct’ from the receivership, and Sbaraglia therefore wanted the documents in question for a purpose that was collateral to the receivership – that is, his defence before the OSC. The extent of Sbaraglia’s rights of procedural fairness in making a full answer and defence in the OSC proceedings was not something to be decided on an interlocutory motion, but instead by the ultimate decision-maker. It was up to the OSC to determine what procedural rights were to be afforded; if the OSC failed to do that correctly, Sbaraglia had ‘appropriate remedies’ like judicial review. The fact that a single commissioner of the OSC had ruled that he lacked jurisdiction to order production by the receiver did not preclude Sbaraglia from going back and trying again.
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