Financial Services Tribunal & Pension Commission of Ontario Case Summaries/
Summaires des dcisions du Tribunal des services financiers et de la Commission des rgimes de retraite de l'Ontario

Case Name/nom du dossier:Sussman Mortgage Funding Inc. v. Ontario - M0073-1999

Type/type:Mortgage Brokers/Courtiers en hypothque

Decision Date/Date de la dcision:2003-02-25




Sussman Mortgage Funding Inc. v. Ontario (Superintendent of Financial Services)

FST File No.: M0073-1999

Date of Decisions: November 30, 2000
August 8, 2002
February 25, 2003

Panel Members: David E. Wires, Chair, Martha Milczynski and Judith E. Robinson

Parties to hearing: Sussman Mortgage Funding Inc.
The Superintendent of Financial Services



The Superintendent issued a Notice of Proposal to revoke the registration of Sussman Mortgage Funding Inc. (“SMFI”) under section 7 of the Mortgage Brokers Act (the “Act”). The Superintendent alleged that, based on the conduct of its two principals, SMFI would not conduct business in accordance with law and with honesty and integrity. The Superintendent argued that the principals had demonstrated a pattern of unwillingness to comply with the consumer protection provisions of the Act, namely accounting and disclosure requirements, putting third party mortgage investments at risk.

At the commencement of the hearing on the merits before the Tribunal, counsel for the Superintendent indicated that suspension for an unspecified period rather than revocation of registration would be an appropriate penalty if the Superintendent’s allegations were established. The submission was predicated on the assumption that monitoring visits occurring after the Notice of Proposal had been issued, would show that the misconduct had been rectified. The hearing proceeded over several months and during that time, the monitoring visits revealed, in the Superintendent’s opinion, that the misconduct was not rectified. Therefore the Superintendent returned to the original relief sought, namely revocation of the SMFI registration.

The November 30, 2000 Decision:

SMFI subsequently brought a motion for an order to strike the Superintendent’s Notice of Further and Other Particulars #2 (“NFOP #2") and for an order that the proceedings proceed on the basis of a suspension of registration, rather than a revocation.

The NFOP #2 provided particulars of SMFI’s failure to provide requested information and referred to breaches of an interim order consented to by SMFI two months after the original Notice of Proposal, which enabled examination of SMFI’s business operations.

The Tribunal found that the statement in regards to limiting the relief sought to the suspension of registration was subject to the pre-condition that monitoring visits show that the misconduct, which was the basis of the original Notice of Proposal had been rectified. Since the Superintendent asserted that the misconduct had not been rectified, the motion for an order that the proceeding be restricted to a suspension of registration was dismissed.

Relying on sections 2 and 8 of the Statutory Powers and Procedures Act, the Tribunal allowed the motion to strike the NFOP #2 in part, to the extent that SMFI was entitled to particulars of all allegations advanced, immediate production of all documents relevant to those allegations and time for its counsel to prepare.

The August 8, 2002 Decision:

At the hearing on the merits, the Tribunal found that the Sussmans’ had created two separate legal entities primarily to circumvent the requirements of the Act. One of the legal entities created was in fact carrying on business as a mortgage broker while unlicenced. In addition, the evidence indicated that throughout the period of 1996 to 2000 the Sussmans demonstrated an unwillingness or inability to comply with their statutory obligations. The Sussmans failed to produce records requested by the Superintendent for inspection and contested their production in some instances. The evidence further suggested that the Sussmans attempted to minimize detection of their non-compliance by misrepresenting the conduct of operations to the Superintendent. Between 1998 and 2000, charges were prosecuted for failure to furnish records for inspection and the Superintendent issued freeze orders, investigation orders, a cease and desist order and 2 Notices of Further and Other Particulars alleging contraventions of the Act and breaches of the freeze orders. Overall the Tribunal found that the Sussmans demonstrated an unwillingness to comply with directions and orders of the Superintendent.

The Tribunal ordered the Superintendent to carry out the terms of the Notice of Proposal to revoke the registration of SMFI.

The February 25, 2003 Decision:

The parties made submissions on costs. The Tribunal ordered SMFI to pay the costs of the Superintendent fixed in the amount of $15,000.00. The Tribunal took into account several factors including the fact that SMFI expanded the proceedings into matters that were not within the jurisdiction of the Tribunal; that allegations were made against the Superintendent and the Superintendent’s staff of acting unfairly or for purposes unrelated to their statutory mandate; and that SMFI made unsubstantiated challenges to the Superintendent’s witnesses thereby unduly extending the length of the proceedings.

Cases referred to:

Re: Takahashi and College of Physicians and Surgeons of Ontario (1979), 26 O.R. (2d) 353 (Div. Ct.)
Assn. of Professional Engineers of Ontario v. Smith (1989), 38 Admin L.R. 212 (Ont. H.C.)
Aamco Automatic Transmission Inc. v. Simpson (1980), 29 O.R. (2d) 565 (Div. Ct.)
Gaw v.Canada (1986), 19 Admin L.R. 137 (F.C. T.D.)


Sussman Mortgage Funding Inc. v. Ontario (Superintendent of Financial Services), [2004] O.J. No. 4551 (Div. Ct.) Appeal on the merits dismissed, order as to penalty set aside. The court ordered conditions to be attached to SMFI’s mortgage broker registration.

Motion for Leave to Appeal filed by the Superintendent with the Ontario Court of Appeal. Leave to Appeal granted March 11, 2005, [2005] O.J. No. 921.

In a decision released November 11, 2005, the Court of Appeal allowed the Superintendent’s appeal in part. It set aside the decision of the Divisional Court on penalty. It dismissed the Sussmans' appeal against the findings of misconduct. It ordered that a differently constituted panel of the FST conduct a penalty hearing. It ordered the Sussmans to pay $5,000 in costs.

The parties entered into Minutes of Settlement regarding penalty on April 3, 2006. Murray Sussman suspended for 6 months, and Sussman Mortgage Funding Inc. suspended for 1 month. Suspensions effective May 15, 2006. Sussman Mortgage Funding Inc. will continue filing monthly trust reconciliations until December 2006.

FST issued Order confirming Minutes of Settlement on May 4, 2006.

This summary is offered as a public service and should not be relied upon as legal advice. Many factors unknown to us may affect the applicability of any statement or comment made in the summary to your particular circumstances.

Sussman Mortgage Funding Inc. c. l’Ontario (Surintendant des services financiers)

No de dossier du TSF : M0073-1999

Date des dcisions : Le 30 novembre 2000
Le 8 aoft 2002
Le 25 fvrier 2003

Groupe d’experts : David E. Wires, prsident, Martha Milczynski et Judith E. Robinson

Parties B l’audience : Sussman Mortgage Funding Inc.
Surintendant des services financiers


Sommaire :

Le Surintendant a mis un avis d’intention de rvoquer l’inscription de Sussman Mortgage Funding Inc. ( SMFI ) en vertu de l’article 7 de la Loi sur les courtiers en hypothPques (la Loi ). S’appuyant sur la conduite de ses deux dirigeants, le Surintendant allguait que SMFI n’exerait pas ses activits de faon intPgre, honnLte et conforme B la loi. Le Surintendant avanait que les dirigeants avait dmontr une tendance B refuser de se conformer aux dispositions sur la protection du consommateur prvues dans la Loi, notamment aux exigences en matiPre de comptabilit et de divulgation, posant un risque aux placements hypothcaires de tierces parties.

Au dbut de l’audience sur le fond devant le Tribunal, l’avocat du Surintendant a dclar que si les allgations du Surintendant taient fondes une suspension pour une priode indtermine serait une sanction plus approprie que la rvocation de l’inscription. L’observation reposait sur l’hypothPse selon laquelle des visites de surveillance survenant aprPs l’mission de l’avis d’intention dmontreraient que l’inconduite avait t rectifie. L’audience a eu lieu sur plusieurs mois et, durant ce temps, les visites de surveillance ont rvl, selon le Surintendant, que l’inconduite n’avait pas t rectifie. Par consquent, le Surintendant est revenu au redressement originellement demand, B savoir la rvocation de l’inscription de SMFI.

Dcision du 30 novembre 2000 :

SMFI a subsquemment introduit une requLte en vue d’obtenir une ordonnance rejetant l’avis de renseignements supplmentaires et autres no 2 ( ARSA no 2 ) du Surintendant et une ordonnance dcrtant la poursuite de l’instance B partir d’une suspension de l’inscription plutt que d’une rvocation.

L’ARSA no 2 donnait des dtails sur le dfaut de SMFI de fournir l’information demande et faisait rfrence B des violations d’une ordonnance intrimaire autorisant l’examen des affaires de SMFI B laquelle cette derniPre avait consenti deux mois aprPs l’avis d’intention original.

Le Tribunal a conclu que la dclaration invoquant la restriction du redressement B la suspension de l’inscription tait assujettie B une condition pralable, B savoir que les visites de surveillance dmontreraient que l’inconduite, sur laquelle tait fonde l’avis d’intention original, avait t rectifie. tant donn que le Surintendant soutenait que l’inconduite n’avait pas t rectifie, la requLte en vue d’obtenir une ordonnance affirmant que l’instance se limiterait B une suspension de l’inscription a t rejete.

Se basant sur les articles 2 et 8 de la Loi sur l’exercice des comptences lgales, le Tribunal a accueilli la demande d’annulation partielle de l’ARSA no 2, dans la mesure oj SMFI avait droit aux dtails de toutes les allgations, B la production immdiate de tous les documents pertinents et B un dlai pour permettre B son avocat de se prparer.

Dcision du 8 aoft 2002 :

A l’audience sur le fond, le Tribunal a conclu que les Sussmans avaient cr deux entits juridiques distinctes principalement en vue de se soustraire aux exigences de la Loi. Une d’entre elles exerait en fait les activits de courtier en hypothPques sans permis. En outre, les preuves indiquaient qu’entre 1996 et 2000 les Sussmans avaient dmontr qu’ils ne voulaient ou ne pouvaient respecter leurs obligations statutaires. Ils avaient omis de produire les dossiers demands par le Surintendant aux fins d’inspection et contest leur production dans certains cas. Les preuves dmontraient en outre que les Sussmans tentaient d’entraver la dtection de leur non-conformit en prsentant la conduite des activits d’une maniPre inexacte au Surintendant. Entre 1998 et 2000, des accusations de dfaut de produire des dossiers aux fins d’inspection ont t portes et le Surintendant a mis des ordonnances de blocage, des ordonnances d’enquLte, une ordonnance de cesser et de s’abstenir et deux avis de renseignements supplmentaires et autres allguant des contraventions de la Loi et des enfreintes aux ordonnances de blocage. En gnral, le Tribunal a conclu que les Sussmans avaient dmontr qu’ils refusaient de se conformer aux directives et aux ordonnances du Surintendant.

Le Tribunal a enjoint au Surintendant d’excuter les dispositions de l’avis d’intention de rvoquer l’inscription de SMFI.

Dcision du 25 fvrier 2003 :

Les parties ont prsent des arguments sur les dpens. Le Tribunal a somm SMFI de payer les cofts du Surintendant fixs B 15 000 $. Il a pris en compte plusieurs facteurs, notamment le fait que SMFI avait largi l’instance B des affaires qui ne relevaient pas de la comptence du Tribunal; que des allgations de conduite injuste ou B des fins non conformes B leur mandat statutaire avaient t faites contre le Surintendant et son personnel; et que SMFI avait soumis les tmoins du Surintendant B des objections non fondes, prolongeant ainsi indfment la dure de l’instance.

Jurisprudence :

Re: Takahashi and College of Physicians and Surgeons of Ontario (1979), 26 O.R. (2d) 353 (Div. Ct.)
Assn. of Professional Engineers of Ontario v. Smith (1989), 38 Admin L.R. 212 (Ont. H.C.)
Aamco Automatic Transmission Inc. v. Simpson (1980), 29 O.R. (2d) 565 (Div. Ct.)
Gaw v.Canada (1986), 19 Admin L.R. 137 (F.C. T.D.)

Appel :

Sussman Mortgage Funding Inc. v. Ontario (Superintendent of Financial Services), [2004] O.J. No. 4551 (Div. Ct.) Appel sur le fond rejet, ordonnance sur la sanction infirme. La cour a ordonn que des conditions soient rattaches B l’inscription de SMFI comme courtier en hypothPques.

Demande d’autorisation d’interjeter appel dpose par le Surintendant auprPs de la Cour d’appel de l’Ontario. Autorisation d’interjeter appel accorde le 11 mars 2005, [2005] O.J. No. 921.

Dans une dcision publie le 11 novembre 2005, la Cour d’appel a accueilli l’appel du surintendant en partie en annulant la dcision de la Cour divisionnaire sur la sanction. Elle a rejet l’appel des Sussman portant sur les constatations d’inconduite. Elle a ordonn la tenue d’une audience sur la sanction par un comit du TSF constitu de membres diffrents. Elle a en outre ordonn aux Sussman de payer 5 000 $ de dpens.

Le 3 avril 2006, les parties ont sign un procs-verbal de transaction au sujet de la sanction. L’inscription de Murray Sussman est suspendue pendant 6 mois et celle de Sussman Mortgage Funding Inc. pendant 1 mois. Ces suspensions s’appliquent compter du 15 mai 2006. Sussman Mortgage Funding Inc. continuera de dposer des rapprochements mensuels de comptes en fiducie jusqu’en dcembre 2006.

Le 4 mai 2006, le TSF a rendu une ordonnance confirmant le procs-verbal de la transaction propose.

Ce sommaire est offert B titre de service public et ne saurait constituer des avis juridiques. Nombreux sont les facteurs que nous ignorons et qui peuvent avoir une incidence sur l’application de nos commentaires B votre cas particulier.