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

Case Name/nom du dossier:Continental Capital Inc. v. Superintendent of Financial Services

Type/type:Mortgage Brokers/Courtiers en hypothèque

Decision Date/Date de la décision:2009-07-30


Continental Capital Inc. v. Superintendent of Financial Services

FST Decision No.: M0369-2009-1

Date of Decision: July 30, 2009

Panel Member: Denis Boivin

Parties to hearing: Continental Capital Inc.
The Superintendent of Financial Services

Subject: Order to Pay an Administrative Monetary Penalty


The Superintendent issued a Notice of Proposal to Impose an Administrative Monetary Penalty of $1,000 on account of the failure of Continental Capital Inc. (“Continental”) to obtain and maintain errors and omissions liability insurance (“E&O insurance”) coverage as required pursuant to O. Reg. 188/08, section 42 of the Mortgage Brokerages, Lenders and Administrators Act, 2006 (“Act”).

The Decision:

The Tribunal directed the Superintendent to carry out his proposal to impose an Administrative Monetary Penalty upon Continental in the amount of $1,000.

Continental admitted that it did not have the required E&O insurance for a period of approximately eight months (July 1, 2008 to February 17, 2009). Continental did not contend that it was unaware that mortgage brokerages licensed under the new Act needed E&O insurance. Its Principal Broker testified that the only reason it did not secure the insurance was the inability of the brokerage to cover the cost of the premiums.

The Tribunal concluded that $1,000 was an appropriate Administrative Monetary Penalty based on the criteria in section 3 of the Administrative Monetary Penalties Regulation:

• Continental’s failure to secure E&O insurance coverage by July 1, 2008 was reckless at a minimum, if not intentional. Although the Principal Broker testified that Continental was unable to cover the cost of the premiums, Continental was able to borrow the required funds immediately when it was faced with the prospect of losing its licence;

• Continental did not engage in any mortgage business while it did not have E&O insurance coverage. Nonetheless, the public was exposed to potential harm because the Principal Broker admitted that he would have conducted mortgage business while Continental was uninsured if business had been available;

• Continental did not provide proof of insurance coverage until three days after the Superintendent issued the Notice of Proposal to Revoke Licence, the Notice of Proposal to Impose an Administrative Penalty, and the Interim Order to Suspend Licence. The Tribunal held that Continental’s failure to provide proof of insurance coverage sooner showed that Continental took minimal remedial action to mitigate its failure to have the required insurance coverage;

• Continental derived a modest economic benefit of $570, namely, the insurance premium cost that it saved during the eight months when it was an uninsured licencee.

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.