TORONTO 鈥� A malicious prosecution lawsuit against securities regulators can go ahead, Ontario's top court ruled on Thursday in remitting the case for a hearing on its merits.聽
The ruling overturns a Superior Court finding last April that barred the plaintiffs, who are seeking $100 million in damages, from pressing their action.
The case arose in 2015, when the Ontario Securities Commission froze the assets of Xundong Qin, also known as Sam Qin, and his companies, who developed and managed solar-energy projects.
Qin raised millions of dollars, including in China, to fund his projects. He also made use of a provincial program allowing those making large investments in Ontario businesses to apply for permanent residence status in Canada.
The commission, however, claimed Qin had violated securities legislation because he neither had permission to sell securities nor had he filed a prospectus. After freezing his assets, the regulator began prosecuting him.
Qin turned to the courts, seeking release of his assets. However, Justice Laurence Pattillo refused, finding there was a "serious issue" to be tried.
In May 2016, a panel of the securities commission threw out the allegations and lifted the asset freeze. Qin sued the commission and three employees for damages resulting from malicious prosecution.
In his unproven statement of claim, Qin argues the allegations were false and had no basis. He also maintained the prosecution went ahead even after he had shown full compliance with securities legislation.
The commission responded by arguing Pattillo's earlier decision on the asset freeze effectively meant he had found the regulator to have had reasonable ground to prosecute Qin. Essentially, the commission argued Pattillo had already decided the issue, barring the lawsuit.
Superior Court Justice Grant Dow in April 2020 agreed with the commission. He struck the claim, something the Appeal Court said was wrong.
In quashing Dow's ruling, the higher court noted that Pattillo had properly based his decision on the asset freeze only on a "very limited" assessment of the commission's allegations. While he allowed the freeze to continue, he did not decide whether there were reasonable and probable grounds for the prosecution.
"(Pattillo) 鈥� was not engaged in an assessment of the ultimate merits, which would include any explanations offered by the defence," the Appeal Court noted.
"Nothing decided by (him) would preclude the appellants from arguing the OSC did not have reasonable and probable grounds to believe the appellants had breached the act, either when they initiated the freeze order, or when they commenced proceedings."
The Appeal Court ordered the lawsuit back to Superior Court to handle.
This report by The Canadian Press was first published March 18, 2021.
Colin Perkel, The Canadian Press
