Case information

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Law of professions - Discipline - Competence and integrity required to protect investors - Administrative law - Natural justice - Whether Court of Appeal too deferential in circumstances - Whether it applied wrong test to question of incompetence of Mr. Gagné’s counsel at trial - Whether it refused to consider cumulative effect of breaches of natural justice.

At the relevant time, TIP Investment Advisors Ltd., of which the Applicant Gagné was the president and sole shareholder, was registered with the Commission des valeurs mobilières du Québec as a securities adviser with an unrestricted practice. TIP Investment managed TIP Funds Canada Ltd., which was subject to the Securities Act, R.S.Q., c. V-1.1 (“SA”), and had made a distribution of securities to the public and issued two classes of shares. Mr. Gagné was a securities adviser with an unrestricted practice for TIP Investment and the president of TIP Funds. In July 2002, the Respondent Autorité des marchés financiers (“AMF”) began investigating the activities of TIP Funds, TIP Investment and Mr. Gagné, and the use of the funds subscribed by investors. Following the investigation, TIP Investment and Mr. Gagné were called to a public hearing to determine whether certain facts uncovered during the investigation were true and to determine the appropriate penalty, if any. In January 2004, the Commission concluded that TIP Investment and Mr. Gagné did not have the competence and integrity required by s. 151 SA to ensure the protection of investors. In April 2004, the Bureau de décision et de révision en valeurs mobilières suspended — for a period of five years in light of the circumstances — the rights held by TIP Investment and Mr. Gagné as a result of their registration.

The AMF, TIP Investment and Mr. Gagné appealed the decisions to the Court of Québec. TIP Investment and Mr. Gagné argued that the Commission’s decision contained several errors and that several breaches of the rules of procedural fairness had occurred. Applying the reasonableness simpliciter standard of review, the judge refused to review the Commission’s decision, but it reviewed the Bureau’s decision on the penalty at the AMF’s request. According to the judge, a permanent suspension was necessary in the circumstances. Only Mr. Gagné appealed the decision. The Court of Appeal affirmed the Commission’s decision on competence and lack of integrity and restored the penalty imposed by the Bureau on the basis that it was not unreasonable in the circumstances.