Richard R. Sugden, Q.C., for the appllicant. Mark L. Skwarok, for the respondent.

¶ 2     Subsection 149(1) of the Securities Act, S.B.C. 1985, c.85, as amended, provides that a person directly affected by a decision of the Commission may, with certain exceptions, appeal to this Court with leave of a justice.

¶ 3     The first ground of the proposed appeal is a denial of natural justice.  To place this in context requires a review of the facts.

¶ 4     The applicant, Mr. Danzig, was a director of a reporting issuer of securities (to which I will refer as "Boswell") from April, 1992 to 14 November 1994.  As an insider of Boswell Mr. Danzig was under a statutory duty to report his trades in its securities within 10 days of the end of each monthly period in which such trades occurred.

¶ 5 In July 1993, he and two other directors of Boswell, Ronald J. Craig and Peter A. Junger, formed a partnership to trade in Boswell's shares, each contributing an equal number of shares and each having a one-third interest in the partnership.  It was acknowledged by Mr. Danzig that the purpose of the partnership was "market making".

¶ 6     One member of this partnership had the trading authority to deal with its Boswell shares.  Mr. Danzig said he was ignorant of the trading activities as his role was confined to the technical side of the product Boswell was attempting to finance and bring to market.  He said he relied upon others to take care of any reporting requirements.

¶ 7     The partnership was wound up in November 1994.  In its 17-month life it apparently engaged in some 157 transactions.  In the aggregate it appeared to have acquired 439,500 shares and sold 477,600 shares.  Mr. Danzig also engaged in some personal transactions.  Directly or indirectly, he made or participated in transactions in each month of the partnership's life and failed to file any insider reports until 12 April 1994 when he filed 11 reports for the months of March 1992 to February 1994.  Of these and other reports the Commission said in its reasons for judgment:

The 18 insider reports were submitted in three bulk filings.  None of the 18 reports was filed within 10 days of the end of the month in which the transactions took place.  All but three reports required amendment before they were found to be acceptable by the Commission.  In three cases, the reports were more than one year late before they were found to be acceptable.  As well, the reports for September, October and November 1994 were not accompanied by the late filing fee of $50 per report set out in section 183(1) Item 35 of the Securities Regulation, B.C. Reg. 270/86.

¶ 9     The hearing was held as scheduled on 22 August 1995.  At the hearing, Commission counsel, who was not counsel before me, called one witness to prove trading records and other documentary material.  Mr. Danzig, who was unrepresented, gave evidence on his own behalf and made submissions at the conclusion of the oral evidence.  The Commission reserved its decision and stated it would issue reasons "... following all of the cases. ..."

¶ 10     It appears the cases to which the Commission referred involved Craig and Junger, the other two directors. Each had also received notice of a hearing before the Commission.

¶ 11     Before its decision was released the Commission received a letter dated 14 November 1995 from Mr. Kenneth W. Ball, a solicitor, which read in full:

Re:

Geoffrey Danzig

	We have recently been retained to examine proceedings taken before the Securities Commission on August 25, 1995 by the Superintendent of Brokers against the captioned individual.
	Given the review we have made of the transcript, we find the process offended, inter alia, rules of mutual (sic) justice.  Prior to the hearing Mr. Danzig was advised, or at least understood from advice by staff of the Superintendent, that the matter would be brief and would not entail serious consequences.  Based on any reading of the transcript, we are of the view that based on the prior information Mr. Danzig had been given by staff of the Superintendent, Mr. Danzig was not adequately represented and as a result was unprepared to meet the arguments made by staff for the Superintendent. He was certainly surprised in the circumstances when he was required to respond to a submission for fine, which in the circumstances of this case is very substantial, and a very serious consequence to him.
	As a result of the foregoing, we request an opportunity at the same time the related cases are before the Commission, to make further submissions on behalf of Mr. Danzig.  We may at that time also wish to call further evidence, but have in the time available, been unable to reach a firm conclusion in that regard.

¶ 13     Mr. Ball's letter was given to Commission counsel who, by letter to the Commission dated 17 November 1995, after denying any representations made to Mr. Danzig as to the consequences which might flow from the hearing, said in the concluding four paragraphs:

	As to the hearing itself, my recollection is that Mr. Danzig was given two full opportunities to respond to staff's submissions, as he requested the opportunity to more fully explain his position.  My recollection is that while Mr. Danzig expressed surprise at staff's submission, he did not indicate in any way that staff had misled him, as is now alleged.
	The Commission is governed by the rules of natural justice in determining whether a discretion to reopen ought to be exercised.  The burden of proof is on the applicant to prove that rules of natural justice were not followed so as to support the application to reopen.
	Counsel for Mr. Danzig has not given the Commission any guidance as to what new evidence, if any, he intends to introduce, the exclusion of which would offend the rules of natural justice.  Counsel for Mr. Danzig has not indicated the nature of any submissions he wishes to make, the exclusion of which would offend the rules of natural justice.
	Staff submits that counsel for Mr. Danzig has established nothing more than the fact that his client, in hindsight, wishes that he had, either through counsel or otherwise, more fully informed himself as to the nature and consequences of the hearing.  Staff submits that this is not a basis on which to reopen the hearing.

¶ 15     No further word was heard from or on behalf of the applicant before the Commission issued its reasons on 15 February 1996.

¶ 16     There were relevant intervening events.  The related cases of Craig and Junger were settled without a hearing before the Commission.  Consent orders were issued by the Superintendent of Brokers on 28 December 1995.  Each of these two admitted failure to file insider reports of his trading in Boswell shares.  Each was prohibited from acting as or becoming a director or officer of any reporting issuer for a period, in the case of Craig, of four years and, in the case of Junger, for three years.  Each was permitted to trade in shares beneficially owned subject to terms, including the payment to the Commission of $20,000 by Craig and $15,000 by Junger.  The benefit of certain statutory exemptions was removed in each case.

¶ 17     In its decision dated 15 February 1996 the Commission required the applicant to pay late filing fees in the amount of $450 in respect of insider reports; deprived him of the benefit of the statutory exemptions for a period of three years; prohibited him from acting as a director or officer until he completed a course of study with respect to the duties of a director and a period of three years had elapsed from the date of the decision; imposed an administrative penalty of $15,000; and, required him to pay the costs of the proceedings.

¶ 18     On this record Mr. Sugden, counsel for Mr. Danzig on this application, contends as the first ground of appeal that there has been a breach of the rules of natural justice in the sense of procedural unfairness arising out of pre-hearing communications between the applicant and Commission staff which "... induced a misunderstanding on the part of the applicant as to the jeopardy faced."

¶ 19     In submitting that Mr. Danzig had been unfairly dealt with and had suffered unduly harsh penalties as a result of being misled by Commission staff into believing that allegations against him could result in no more than a fine, Mr. Sugden referred to a judgment of the Quebec Court of Appeal reported in (1986), 24 Admin.L.R. 304 under the style Régie de L'Assurance-Maladie du Quebec v. Chamberland.

¶ 20     In my consideration of the case at bar and the application of the judgment of the Quebec Court of Appeal to it I assume, in the applicant's favour, that he genuinely believed he faced a minor fine at most when he decided to dispense with the assistance of counsel in the hearing before the Commission in August 1995.  This is not to say I accept the assertions contained in Mr. Danzig's affidavits over those of Commission counsel and the staff member who testified.  The assumption I make is solely for the purpose of testing the prospects of the applicant's success on the ground advanced.

¶ 21     In Régie de L'Assurance-Maladie du Quebec, supra, a review body intimated to a physician its intention to hold a hearing to determine whether professional services were medically justified.  The physician thought but 16 files were involved.  This number was mentioned in the review board's letter to the physician.  The fees thereby brought into question aggregated no more than $4,000 and the physician decided he did not need a lawyer to assist him in explaining his charges at the hearing.  He brought with him only the 16 files in question.  Prior to the hearing, members of the review board attended at the physician's office and conducted a search of the 16 files.  At the hearing the review board made it clear all fees between a certain period were in question and in the result the order made directed the physician to disgorge the sum of $125,000.

¶ 22     The Quebec Superior Court quashed the order and the appeal was dismissed by the Quebec Court of Appeal.  While the review board was held to have acted in good faith, the misunderstanding originated with it and the physician was thereby prejudiced.

¶ 23     In the case at bar it cannot be said Mr. Danzig's misapprehension of the seriousness of the charges facing him originated in the notice of the hearing or in any act of the Commission.  That, however, is not a distinction I would make if the matter ended there.

¶ 24     The reasons why I am persuaded leave ought not be granted on this issue can be summarized as follows:

1.		In his testimony and his submissions Mr. Danzig emphasized his lack of control over the trading account; his ignorance of its activities; the minimal nature of his personal trades; and, the technical nature of his responsibilities as a director.  When it became apparent Commission counsel was proposing a fine in the order of $25,000 and the other sanctions identified in the notice of the hearing, Mr. Danzig protested them to be excessive but he did not suggest he had been misled as to the seriousness of the consequences of his transgression by representations or observations made to him by Commission staff nor did he seek an adjournment.
2.		Almost two and one-half months passed before a solicitor on Mr. Danzig's behalf raised the issue of staff representations.  When this was promptly denied no response was forthcoming.
3.		On 28 December 1995 when his co-directors consented to orders imposing penalties that parallel in a significant degree those referred to in the notice of hearing sent Mr. Danzig and which were sought at the hearing, he would have become fully aware of the extent of their admitted liability and the sanctions imposed on them.
4.		Notwithstanding these facts, no request was made by Mr. Danzig or on his behalf to the Commission to re-open the hearing or to adduce fresh evidence that might be called if the hearing was re-opened.

¶ 26     I am therefore of the view that the prospect of success on the first ground is so slight that no panel of this Court is likely to find the Commission in breach of the rules of natural justice.  There is no suggestion of any unfairness in the Commission's conduct of the hearing itself.

¶ 27     I repeat that in my consideration of this ground I have assumed the Commission staff made the representations they are said to have made.  I expressly make no findings to this effect.

¶ 28     The second ground of appeal seeks relief from the penalties imposed upon the applicant.  A significant difference between the penalties imposed upon his co-directors in the consent orders and upon Mr. Danzig was that in the case of the former they were permitted to trade in securities beneficially owned by them.  No such allowance was made in Mr. Danzig's case.  The apparent disparity in treatment may not be wholly or reasonably attributable to Mr. Danzig's failure to seek a negotiated Settlement.

¶ 29     Without going further into the matter I would grant leave to appeal the penalties imposed on the applicant in the circumstances of this case.

¶ 30     I next consider whether there should be a stay of proceedings with respect to the Commission's order or any part thereof pending an appeal confined to the penalties imposed by the order.

¶ 31     Recently Madam Justice Rowles, sitting as a single justice in chambers on a leave application, reviewed fully the test to be applied on an application for a stay: Moore v. The British Columbia Securities Commission et al (22 February 1996), Vancouver Registry, CA020612 (and others) (B.C.C.A.).  Applying her analysis to the facts of the present case, and I would order a stay only in respect of the following items in the Commission's order:

4.		under section 144.1 of the Act that Danzig pay within 30 days from the date of this decision an administrative penalty of $15,000;
5.		under section 154.2 of the Act that Danzig pay prescribed fees and charges for the costs of or related to the hearing incurred by the Commission and the Executive Director, the amounts to be determined following further submissions from the parties.

¶ 33     Costs in the cause.

GOLDIE J.A.