Interim compliance order and Notice of proposal to impose compliance order against 1768293 Ontario Inc., Swarn Dhaliwal, Parbatee Kissoon

REGARDING the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29 (the "Act"), in particular sections 2, 9, and 35.

AND REGARDING  1768293 Ontario Inc., Swarn Dhaliwal, Parbatee Kissoon

 

INTERIM COMPLIANCE ORDER

and

NOTICE OF PROPOSAL TO IMPOSE COMPLIANCE ORDER

 

Section 35 of the Act provides that if, in the opinion of the Superintendent of Financial Services ("Superintendent"), a person or entity is committing any act or pursuing any course of conduct that contravenes or does not comply with a requirement established under this Act, or has committed or pursued any course of conduct that contravenes or does not comply with a requirement established under this Act, the Superintendent may propose to order the person or entity to cease committing an act or cease pursuing a course of conduct identified by the Superintendent or to perform such acts as, in the Superintendent’s opinion, are necessary to remedy the situation. Section 35(3) of the Act provides that where the Superintendent proposes to make such an order, he shall give written notice of the proposal to the person or entity, including reasons for the proposal. A notice of proposal to make a compliance order is set out below and written reasons for that proposal are attached to this notice.

 

Section 35(7) of the Act provides that, if in the Superintendent’s opinion the interests of the public may be adversely affected by any delay in making an order as result of the steps required by section 35, the Superintendent may, without notice, make an interim order and may do so before or after giving the notice required by section 35(3).

 

In the Superintendent’s opinion, the interests of the public may be adversely affected by any delay in making a compliance order against 1768293 Ontario Inc., Swarn Dhaliwal and Parbatee Kissoon for the following reasons:

 

  1. Swarn Dhaliwal and Parbatee Kissoon are the sole directors of 1768293 Ontario Inc, an Ontario business corporation. 
  2. In August, 2008, the corporation loaned $30,750 to a borrower secured by a second mortgage on the borrower’s property with a three month term.  The borrower was referred to the company by a mortgage agent for the purposes of securing a mortgage. The mortgage agent was the daughter of Parbatee Kissoon.
  3. The corporation charged an "administration fee" of $10,750. According to the terms of the mortgage, the interest rate was 21% and if it was not discharged in full at the end of the term, an additional penalty of $5,000 would be added to the principal and the interest rate would increase to 24%.
  4. The mortgage was discharged on April 22, 2009. Taking into account the interest, administration fee and penalty charge, the corporation’s profit on the transaction was approximately $20,957.
  5. According to the Act, "no person shall carry on business as mortgage lender in Ontario unless he, she, or it has a brokerage licence or is exempted from the requirement to have such a licence."
  6. For the purposes of the Act, "a person or entity is a mortgage lender in Ontario when he, she or it lends money in Ontario on the security of real property...".
  7. The corporation is neither licenced under the Act as a brokerage nor exempted from the requirement to have such a licence.    
  8. The corporation loaned money to the borrower and the loan was secured by a mortgage on the borrower’s property. The terms of the mortgage ensured that the corporation received a significant commercial benefit. The corporation thereby carried on business as a mortgage lender without a licence, in contravention of the Act.
  9. The result of the corporation operating without a licence is that its mortgage activity cannot be regulated to ensure compliance with the Act and there can be no assurance that borrowers are given the protections and rights to which they are entitled under the law.  
  10. In these circumstances, the Superintendent is of the opinion that the public is at risk and any delay in making an order to cease carrying on business as a mortgage lender will adversely affect the public interest.

INTERIM COMPLIANCE ORDER

It is ordered that 1768293 Ontario Inc., Swarn Dhaliwal, and Parbatee Kissoon:

Immediately cease carrying on business as a mortgage lender in Ontario, or holding themselves out as doing so.

 

The Interim Order takes effect immediately and will remain in effect until the expiry of the period for requesting a hearing about the Superintendent’s Notice of Proposal (15 days after the Notice is received, or deemed to have been received). If a hearing before the Financial Services Tribunal ("Tribunal") is requested, the Superintendent may extend the interim order until the proposal is finally determined.

Pursuant to sections 48(4) and 49(1) and (2) of the Act, every person who fails to comply with an order made under this Act is guilty of an offence and every individual convicted of an offence under the Act is liable to a fine of not more than $100,000.00 or imprisonment for a term of not more than a year or both a fine and imprisonment. Every corporation convicted of an offence under the Act is liable to a fine of not more than $200,000.00.

 

Pursuant to section 48(5) of the Act, every director or officer of a corporation that commits an offence under this Act who directed, authorized, assented to, acquiesced in or participated in the commission of the offence, or who failed to take reasonable care to prevent the corporation from committing the offence, is guilty of an offence, whether or not the corporation is prosecuted or convicted.

Section 48(6) provides that every partner of a partnership and every individual who is a member of the directing body of an entity, other than a person or partnership, who

directed, authorized, assented to, acquiesced in or participated in the commission of an act or omission by the partnership or entity which, if committed by a person, would be an offence under the Act, is guilty of an offence.  

NOTICE OF PROPOSAL TO IMPOSE COMPLIANCE ORDER

TAKE NOTICE THAT pursuant to section 35 of the Act, the Superintendent is proposing to order 1768293 Ontario Inc., Swarn Dhaliwal, and Parbatee Kissoon to:

 

Cease carrying on business as a mortgage lender in Ontario, or holding themselves out as doing so.

The reasons for the proposal to impose the compliance order will be served with this Notice.

 

AND TAKE NOTICE THAT pursuant to section 35(4) of the Act, a hearing before the Tribunal may be requested within 15 days after this Notice is received, or deemed to have been received. The request for a hearing shall be in writing (Form 1, Request for Hearing, sent to you along with this Notice) and shall be mailed or delivered:

 

TO:

Financial Services Tribunal
5160 Yonge Street, 14th Floor, Box 85
Toronto, ON  M2N 6L9
Attention:  Registrar Fax: 416.226.7750

 

AND TO:       

Superintendent of Financial Services
Senior Manager, Licensing Marketing Conduct Division
Licensing and Marketing Conduct Division
5160 Yonge Street, Box 85
Toronto, ON  M2N 6L9

 

If you do not request a hearing or do not make the request in accordance with section 35(4), section 35(6) of the Act provides that the Superintendent may carry out the proposal to impose a compliance order.

If you request a hearing, section 35(5) of the Act provides that the Tribunal may, by order, direct the Superintendent to carry out the proposal, with or without changes, or substitute its opinion for that of the Superintendent and the Tribunal may impose such conditions as it considers appropriate in the circumstances.

 

At the hearing, your good character, propriety of conduct or competence may be in issue.

The hearing before the Tribunal will proceed in accordance with the Rules of Practice and Procedure of the Tribunal made under the authority of the Statutory Powers Procedure Act, R.S.O. 1990, c. S. 22. The Rules of Practice and Procedure are available at the website of the Tribunal: www.fstontario.ca. Alternatively, a copy can be obtained by telephoning the Registrar of the Tribunal at 416.590.7294, or toll free at 1.800.668.0128 ext. 7294.

 

You may be furnished with further or other particulars in respect of any matter herein or in respect of any other matter, including further grounds to impose a compliance order. 

DATED at Toronto, Ontario, May 31, 2010.

 

Philip Howell

Superintendent of Financial Services

 

TO: 

1768293 Ontario Inc.
49 Hillcrest Ave. suite 207
Brampton, Ontario
L4W 4V4

 

AND TO:      

Swarn Dhaliwal
22 Arctic Fox Crescent
Brampton, Ontario
L6R  0J3

 

AND TO:      

Parbatee Kissooon
7 Cairnburg Drive
Brampton, Ontario
L6P  1X5                                       

 

AND TO:      

Stephen Scharbach, Counsel
Financial Services Commission of Ontario
Legal Services Branch
5160 Yonge Street, Suite 1700
Toronto ON  M2N 6L9
Tel: 416-590-7244
Fax: 416-590-7556