Executive Summary: Key Legal and Evidentiary Issues

• FSRA initiated a regulatory investigation after receiving a complaint about unlicensed insurance activity.

• Summonses were lawfully issued under section 444.1 of the Insurance Act to compel attendance for examination.

• Respondents failed to comply with multiple properly served summonses, including personal service.

• The court assessed the matter using the three-part civil contempt test adapted to administrative context.

• Knowledge of the summons was proven beyond a reasonable doubt through personal service and circumstantial evidence.

• Monetary penalties, including escalating daily fines, were imposed to compel compliance with regulatory examinations.

Background and investigation

This case originates from a 2023 complaint received by the Financial Services Regulatory Authority of Ontario (FSRA) involving suspected unlicensed insurance activities. The investigation centered on allegations that Kostyantyn Poshtarenko, in collaboration with Anatolii Stoliar and others, had been acting as an insurance agent without holding a valid license, contrary to the requirements of the Insurance Act.

As the investigation unfolded, additional contraventions of the Insurance Act emerged. To further its inquiry, FSRA issued multiple summonses to both individuals under section 444.1 of the statute. These summonses required the respondents to appear for examination and provide relevant information.

Failure to comply with summons

Despite proper service — including personal delivery to Mr. Stoliar and repeated mail and email service attempts to Mr. Poshtarenko — both respondents failed to attend as required. The third summons to Mr. Poshtarenko was served at his residence by leaving it with an adult household member who confirmed his residence, in accordance with s. 33 of the Insurance Act. No responses were received, and neither respondent appeared at the hearing.

Legal framework and test applied

FSRA proceeded by way of a stated case under section 444.1(6) of the Insurance Act, seeking a judicial finding that the respondents had failed to comply with their obligations. While not requesting a formal contempt finding, FSRA asked for penalties akin to civil contempt sanctions. Justice Nakatsuru applied the modified three-part test from Carey v. Laiken, which is used to determine civil contempt and adapted it to the regulatory context.

The court assessed:

1. Whether the summonses were clear and unequivocal.

2. Whether the respondents had knowledge of the summonses.

3. Whether their failure to comply was intentional.

The court concluded all elements were met beyond a reasonable doubt for both individuals.

Court’s findings on noncompliance

Justice Nakatsuru found the summonses to be clear in their instructions, including the time, place, authority, and legal consequences of noncompliance. Mr. Stoliar’s personal service established actual knowledge. In Mr. Poshtarenko’s case, the court inferred knowledge from the surrounding circumstances and repeated past service attempts. Their complete lack of engagement with the FSRA investigation supported the finding that their noncompliance was intentional and deliberate.

Sanctions imposed by the court

As a result, the court imposed the following penalties:

• A base fine of $5,000 for each respondent.

• An additional fine of $1,000 per day from the date of service of the court order until the respondent complies with the examination requirement, capped at $20,000 each.

• A mandatory order for both individuals to immediately contact FSRA and schedule a date for examination at FSRA’s Toronto office.

Implications for regulatory enforcement

This decision underscores the seriousness with which courts treat noncompliance with statutory summonses in regulatory investigations. It affirms the authority of regulators like FSRA to enforce cooperation using court sanctions that resemble civil contempt penalties. The case signals that deliberate evasion of regulatory obligations can lead to substantial financial consequences and court orders compelling cooperation.