Appeal Court upholds BCSC rulings

The Court of Appeal for British Columbia has rejected a mining company’s appeal of enforcement decisions by the B.C. Securities Commission (BCSC), which sanctioned the company for misleading statements about its mining claims.

Mountainstar Gold Inc. — and president and CEO Brent Hugo Johnson — sought to challenge the BCSC’s finding that they violated securities law by making misleading statements about the status of certain Chilean mining claims in regulatory filings. They also appealed the sanctions imposed on them as a result.

In 2019, a BCSC panel issued permanent trading bans on Mountainstar and Johnson and also imposed a $150,000 administrative penalty on Johnson.

Both the company and the executive argued they didn’t get a fair hearing at the commission and objected to the commission panel’s admission of certain evidence, its treatment of the evidence presented during the enforcement hearing and its assessment of sanctions.

But in its unanimous decision, the court ruled that the panel’s liability and sanctions decisions were procedurally fair.

“Mountainstar and Mr. Johnson have not demonstrated that the panel’s assessment of their evidence was marred by unfairness or palpable and overriding error,” Justice Leonard Marchand wrote.

The Appeal Court also rejected the argument that the penalty imposed by the BCSC was excessive, even though, as the appellants argued, there was no evidence of investor harm, there was no fraud involved, and no one was enriched by the misconduct.

Still, the court found that the regulator was justified in its ruling on sanctions, noting that the panel “expressed valid reasons for concluding that Mr. Johnson’s participation in the markets posed an unacceptable risk to investors that could only be addressed by permanent market bans.”

The court was not convinced that the panel “came to a decision that was so clearly wrong that it amounts to an injustice or gave no or insufficient weight to relevant considerations.”

It also rejected the claim that the panel’s reasons for the sanctions imposed in the case were inadequate.

“In my view, the panel’s liability and sanctions decisions were more than sufficient and disclose no error of law,” the court said in dismissing the appeal. “They comprehensively addressed the live issues, and explained what the panel decided and why in a manner that permitted effective appellate review.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.