Promissory Notes under Securities Law

R. v. Knight
2015 CarswellBC 3931; 2015 BCPC 397
British Columbia Provincial Court
Securities – Offences – Unlawful trading in securities

Accused was ordered by Securities Commission to cease trading in securities or engaging in investor relations for three years — Accused and co-accused W created two companies to develop two properties into residential condominium buildings — Accused sought and obtained capital from complainants for development, with investments attached to specific condominium unit in which complainants would have rights on completion to purchase unit at discounted price or to receive profit on its eventual sale based on such price — Accused was charged with offences, including engaging in investor relations contrary to order under Securities Act, acting as investment advisor without registration, and unlawfully trading and distributing security — Accused convicted — Accused solicited, negotiated, and wrote promissory notes provided to complainants L and B that fell within definition of term "security" set out in s. 1(1)(d) of Securities Act — Accused's conduct in soliciting and negotiating promissory notes amounted to unlawful trade in security — Certain documents provided to other complainants also fell under definition of security and, as accused was key proponent of development involved in all aspects of business, his dealing with them were acts, solicitation, conduct or negotiations in furtherance of disposition of securities to investors amounting to unlawful trading of security — Complainant S's testimony that accused gave shareholders agreement, which fell under definition of security, to her was accepted such that he traded in security to her.