Executive Summary: Key Legal and Evidentiary Issues

• Harold Gerstel and Harold the Mortgage Closer Inc. sought judicial review of the Financial Services Tribunal's March 31, 2025 decision, which ordered the FSRA to carry out the terms of a notice of proposal against them.
• Discretion to judicially review the licensing decision was declined because the applicants had a full statutory right of appeal, which they failed to perfect.
• Administrative penalties totalling $70,000 were imposed — $50,000 for failure to co-operate with the FSRA investigation and $20,000 for providing false and misleading information.
• Evidence before the Tribunal established that Mr. Gerstel was uncooperative, including failing to attend interviews despite being summonsed twice and providing vague, unresponsive answers to the FSRA.
• Procedural fairness arguments regarding the denial of an adjournment were dismissed because the issue was never raised before the Tribunal and the respondent had no notice of it.
• Allegations of bias against the Tribunal were rejected, as the high presumption of impartiality was not displaced by the applicants' evidence.

Facts of the case

Harold Gerstel held a mortgage broker licence in Ontario, and Harold the Mortgage Closer Inc. (HMC) was a licensed mortgage brokerage he owned. In May 2022, the Financial Services Regulatory Authority of Ontario (FSRA) became aware of allegations of misconduct involving Mr. Gerstel and a retired nurse, prompting an investigation. The FSRA issued two notices of proposal: the first on June 22, 2023, which related to allegations of dishonesty and failure to co-operate with the FSRA investigation and proposed administrative penalties totalling $70,000; and the second on April 30, 2024, which addressed Mr. Gerstel's interactions with a number of borrowers, including the retired nurse. Although the FSRA sought to have both notices heard together, the Tribunal denied that request. The first notice proceeded to a hearing, after which the Tribunal found overwhelming evidence that Mr. Gerstel had refused to co-operate with the investigation — delaying or withholding information, refusing to answer questions about prior litigation, and failing to comply with two FSRA summonses. The Tribunal also found an absence of honesty, integrity, and law-abiding nature, concluding that Mr. Gerstel was not suitable to be licensed as a mortgage broker. Because he was the sole owner, officer, and director of HMC, the Tribunal also revoked HMC's brokerage licence. The applicants sought judicial review of the Tribunal's decision before the Ontario Superior Court of Justice, Divisional Court.

Statutory framework and regulatory provisions at issue

Mortgage brokering in Ontario is governed by the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c. 29. Under the Act, where the FSRA seeks to refuse to renew a licence or impose an administrative penalty, it must give written notice of the proposal to the licensee, which triggers the right to a Tribunal hearing. Subsection 21(5) of the Act provides a full right of appeal to the Divisional Court from a Tribunal order made under s. 21(4) on licensing matters. By contrast, s. 39(5) authorizes the Tribunal to make orders regarding administrative penalties, but no right of appeal is provided for those decisions. The purpose of administrative penalties under the Act is to promote compliance and prevent licensees from deriving economic benefit from non-compliance.

Court's reasoning and analysis

The court addressed three main issues. First, on the licensing question, the court declined to exercise its discretion to conduct a judicial review. The applicants had a full statutory right of appeal under s. 21(5) of the Act — a more stringent avenue of review than judicial review — but failed to perfect it despite being granted three extensions of time. A fourth extension was denied by Shore J., and the applicants did not challenge that refusal. Relying on Yatar v. TD Insurance Meloche Monnex, 2024 SCC 8, and Caledon Residences Inc. v. Ontario Land Tribunal, 2025 ONSC 6546, the court held that permitting judicial review on issues for which a full right of appeal exists would undermine legislative intent.

Second, on the administrative penalties, the court applied the reasonableness standard from Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65. The applicants argued the Tribunal had failed to engage with the record on three findings: Mr. Gerstel's lack of co-operation; harm to the industry's reputation; and his continued economic benefit during the protracted proceedings. The court rejected each argument. On co-operation, ample evidence supported the finding, including Mr. Gerstel's one-page response to a detailed FSRA inquiry and his failure to attend interviews despite two summonses. On reputational harm, the Tribunal's finding was grounded in its characterization of Mr. Gerstel's contraventions as intentional and reckless. On economic benefit, the Tribunal found at para. 157(d) of its reasons that, although Mr. Gerstel claimed to have stopped conducting mortgage business since March 2023, he was facilitating loan transactions through his wife's company, Esther Gerstel Inc., as a private lender — a finding the court held was available on the evidence.

Third, the allegation that Mr. Gerstel was procedurally denied an adjournment — raised for the first time in oral submissions and supported by a document not originally in the court record — was dismissed. The issue was never put to the Tribunal, no adjournment was formally requested, and the respondent had no prior notice of the allegation. The court also dismissed allegations of bias, noting the high onus required to displace the presumption of impartiality had not been met.

Ruling and overall outcome

The Divisional Court dismissed the application in its entirety. The FSRA, as the successful respondent, was awarded costs in the agreed-upon amount of $7,500. The Tribunal's imposition of administrative penalties totalling $70,000 — $50,000 for failure to co-operate with the investigation and $20,000 for providing false and misleading information — was upheld as reasonable.