IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29, as amended (the “Act”), in particular sections 16, 19, and 21;

AND IN THE MATTER OF Michael Ryland Slattery and Skylark Holdings Limited

NOTICE OF PROPOSAL TO REFUSE TO RENEW LICENCE AND REVOKE LICENCE

TO: Michael Ryland Slattery

AND TO:
Skylark Holdings Limited
46 Village Centre Place
Mississauga ON L4Z1V9

Michael Ryland Slattery
Principal Broker

TAKE NOTICE THAT pursuant to sections 16 and 21 of the Act, and by delegated authority from the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (the “Chief Executive Officer”), the Director, Litigation and Enforcement (the “Director”) is proposing to refuse to renew the mortgage broker licence issued to Michael Ryland Slattery (licence # M08001002).

AND TAKE NOTICE THAT pursuant to sections 19 and 21 of the Act, and by delegated authority from the Chief Executive Officer, the Director is proposing to revoke the mortgage brokerage licence issued to Skylark Holdings Limited (licence # 10341).

Details of these contraventions and reasons for this proposal are described below. This Notice of Proposal includes allegations that may be considered at a hearing.

SI VOUS DÉSIREZ RECEVOIR CET AVIS EN FRANÇAIS, veuillez nous envoyer votre demande par courriel immédiatement à: contactcentre@fsrao.ca.

YOU ARE ENTITLED TO A HEARING BY THE FINANCIAL SERVICES TRIBUNAL (THE “TRIBUNAL”) PURSUANT TO SECTIONS 21(2) AND 21(3) OF THE ACT. A hearing by the Tribunal about this Notice of Proposal may be requested by completing the enclosed Request for Hearing Form (Form 1) and delivering it to the Tribunal within fifteen (15) days after this Notice of Proposal is received by you. The Request for Hearing Form (Form 1) must be mailed, delivered, faxed or emailed to:

Address:
Financial Services Tribunal
25 Sheppard Avenue West, 7^th Floor
Toronto, Ontario
M2N 6S6

Attention: Registrar

Fax: 416-226-7750

Email: contact@fstontario.ca

TAKE NOTICE THAT if you do not deliver a written request for a hearing to the Tribunal within fifteen (15) days after this Notice of Proposal is received by you, orders will be issued as described in this Notice of Proposal.

For additional copies of the Request for Hearing Form (Form 1), visit the Tribunal’s website at www.fstontario.ca

The hearing before the Tribunal will proceed in accordance with the Rules of Practice and Procedure for Proceedings before the Financial Services Tribunal (“Rules”) made under the authority of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, as amended. The Rules 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 extension 7294.

At a hearing, your character, conduct and/or competence may be in issue. You may be furnished with further and or other particulars, including further or other grounds, to support this proposal.

REASONS FOR PROPOSAL

I. INTRODUCTION

These are the reasons for the proposal by the Director to:
1. Refuse to renew the mortgage broker licence issued to Michael Ryland Slattery (“Slattery”); and
2. Revoke the mortgage brokerage licence issued to Skylark Holdings Limited (“Skylark”).

II. BACKGROUND

A. The Parties

Slattery is licensed as a mortgage broker under the Act (licence #M08001002) and was licensed as such during the relevant time. Slattery’s licence expired on March 31, 2024. Slattery applied for the renewal of his licence on March 21, 2024.
Skylark is licensed as a mortgage brokerage under the Act (licence #10341) and was licensed as such during the relevant time. Slattery is the sole director, officer, and principal broker of Skylark. Slattery is also the only mortgage broker working at Skylark.
Slattery was a director and was the chief executive officer (“CEO”) of Merk Investments Ltd. ("Merk”) during the relevant time. The primary business of Merk was to manage and administer mortgages arranged by Skylark.
Slattery was also a director and was the CEO of Skymark Finance Corporation (“Skymark”) during the relevant time. The primary business of Skymark was providing financing and leasing to consumer borrowers for home renovations, water systems, HVAC systems, and smart home improvements.
Merk and Skymark are not licensed under the Act.
By Order dated March 6, 2023, the Ontario Superior Court of Justice appointed Alvarez & Marsal Canada Inc. (the “Receiver”) as receiver and manager of all of the assets, undertakings, and properties of Merk and Skymark, following an application by certain creditors.
Slattery was involved in the day-to-day operations of Merk and Skymark prior to the appointment of the Receiver.

B. False and/or Deceptive Information relating to Mortgage Investments

In a complaint to FSRA, MO, the sole director of two numbered companies (collectively, the “MO Corporations”), stated that between July 2013 and December 2018, the MO Corporations invested in several mortgage transactions through Merk and Skymark (the “Mortgages”). The MO Corporations funded the whole, or part, of the principal amount of the Mortgages registered on the title of properties mostly located in Ontario.
Documents examined by FSRA show that the interests in the Mortgages were held in trust by Merk and/or Skymark for the relevant MO Corporation. Slattery signed trust declarations to that effect on behalf of Merk and Skymark.
The MO Corporations received monthly “interest” payments in exchange for funding the Mortgages. MO stated to FSRA that at the end of each mortgage term the MO Corporations were entitled to the funded amount and any outstanding interest.
On behalf of the MO Corporations, MO mostly dealt with Slattery regarding the Mortgages.
Between March 2015 and May 2022, at least 6 of the Mortgages, in which the MO Corporations had invested a total of $3,687,000 through Merk, were discharged from the title to the relevant properties.
However, until as recently as June 2022, Skymark and Merk regularly provided the MO Corporations with monthly statements (the “Mortgage Statements”) relating to the Mortgages which falsely represented that one or more discharged Mortgages were still registered on the title of the relevant properties.
As recently as June 2022, the MO Corporations regularly received monthly “interest” payments from Merk, for one or more discharged Mortgages.
Between March 2019 and June 2022 either Slattery or a bookkeeper employed at Skylark, provided at least 10 Mortgage Statements to MO by email. All these Mortgage Statements were either prepared by and/or communicated through Skylark.
By providing monthly statements containing false information and providing regular deceptive “interest” payments relating to one or more of the 6 discharged Mortgages, Merk, through Slattery and Skylark, misrepresented their status to MO and the MO Corporations.
On or about March 7, 2024, Slattery was charged with multiple offences under the Criminal Code, relating to the Mortgages.

C. False and/or Misleading Information to FSRA

Section 45(1) of the Act prohibits a person from giving false or misleading information to the Chief Executive Officer or a person designated by the Chief Executive Officer in respect of any matter related to the Act or the regulations.
Section 45(2) of the Act prohibits a person from including false or misleading information in any document required to be created, stored, or given to the Chief Executive Officer under the Act.
Slattery made false and misleading declarations in three licence renewal applications that he submitted to FSRA, contrary to Sections 45(1) and 45(2) of the Act.

i) 2024 Licence Renewal Application

Slattery filed his 2024 mortgage broker licence renewal application (the “2024 Renewal Application”) on March 21, 2024.
In the 2024 Renewal Application Slattery falsely declared that he, as a holder of a mortgage broker licence, was not the subject of an investigation or upcoming disciplinary proceeding that may result in a penalty being imposed, and that he was not subject to any charges for an offence.
When Slattery answered those questions, he had been arrested and charged with offences under the Criminal Code and had responded to investigative inquiries from FSRA on September 27 and 28, 2023.

ii) 2023 Licence Renewal Application

Slattery filed his 2023 mortgage broker licence renewal application (the “2023 Renewal Application”) on March 8, 2023.
In the 2023 Renewal Application, Slattery falsely declared that he was not currently a defendant in any civil proceeding.
In fact, Slattery was a defendant in a civil proceeding commenced by the MO Corporations and filed a Notice of Intent to Defend the action dated August 31, 2022.

iii) 2022 Licence Renewal Application

Slattery filed his 2022 mortgage broker licence renewal application (the “2022 Renewal Application”) on March 21, 2022.
In the 2022 Renewal Application, Slattery falsely declared that he had never been declared bankrupt or made a voluntary assignment in bankruptcy.
Slattery filed for bankruptcy in September 2009 and was discharged on June 16, 2010. Slattery disclosed the same in his renewal forms for the years 2010 - 2021 and 2023.
On all of the renewal applications, Slattery swore that he had truthfully answered the questions in the above noted renewal applications. Slattery was warned:

“Providing false or misleading information in this application/declaration and/or any attachment is an offence under the MBLAA, and doing so may be sufficient grounds to reject the application/declaration, revoke or refuse to renew a licence or, if you are an officer/director/partner, result in refusal of the brokerage or administrator licence applied for, or result in your prosecution.

By clicking the "Confirmed" button below, you swear that you have truthfully answered all questions contained within this electronic application and consent to the Collection, Use and Disclosure by FSRA of this information.”

III. GROUNDS FOR REVOCATION OR REFUSAL

Section 16(4) of the Act states that the Chief Executive Officer shall renew the licence of an applicant who satisfies the prescribed requirements for renewal of the licence unless the Chief Executive Officer believes, on reasonable grounds, that the applicant is not suitable to be licensed having regard to such circumstances as may be prescribed and such other matters as the Chief Executive Officer considers appropriate.
Section 19(1) of the Act states that the Chief Executive Officer may, by order, revoke a licence in any of the circumstances in which he or she is authorized to suspend a licence.
According to section 18(1) of the Act, such circumstances include:
1. if the licensee ceases to satisfy the prescribed requirements for issuance or renewal, as the case may be, of the licence;
2. if the Chief Executive Officer believes, on reasonable grounds, that the licensee is no longer suitable to be licensed having regard to the circumstances, if any, prescribed for the purposes of subsection 14(1) or 16(4) of the Act, as the case may be, and such other matters as the Chief Executive Officer considers appropriate; and
3. if the licensee contravenes or fails to comply with a requirement established under this Act

A. Refusal to Renew Slattery’s Mortgage Broker Licence

Section 10 of Ontario Regulation 409/07 under the Act states that in determining whether an individual is not suitable to be licensed as a mortgage broker or agent, the Chief Executive Officer is required by subsections 14(1) and 16(4) of the Act to have regard to the following prescribed circumstances:
1. Whether the individual’s past conduct affords reasonable grounds for belief that he or she will not deal or trade in mortgages in accordance with the law and with integrity and honesty.
2. Whether the individual has made a false statement or has provided false information to the Chief Executive Officer with respect to the application for the licence.
The Director believes, on reasonable grounds, that Slattery is no longer suitable to be licensed as a mortgage broker under the Act and that his licence renewal application should be refused.
Furthermore, the above described dishonest and fraudulent conduct of Merk with respect to the false and deceptive Mortgage Statements and Slattery’s role in participating in and directing and furthering such dishonest conduct affords reasonable grounds for belief that Slattery will not deal or trade in mortgages in accordance with the law and with integrity and honesty. Slattery was involved in the day-to-day activities of Merk and Skymark and was aware, or ought to have been aware, that the Mortgage Statements contained false and deceptive information.
Moreover, Merk’s dishonest behaviour, through Slattery and Skylark, involved the provision of false information to the MO Corporations while acting as a trustee. Slattery signed the relevant trust declarations on behalf of Merk and Skymark and sent at least 7 Mortgage Statements containing misleading information to MO.
Furthermore, as described above, Slattery contravened the Act by repeatedly providing false information to FSRA in three licence renewal applications that he submitted to FSRA, contrary to subsections 45(1) and 45(2) of the Act. This included a failure to disclose Criminal Code charges laid against him.
Finally, the seriousness of Slattery’s misconduct is compounded by the fact that he is the principal broker of Skylark and had a heightened responsibility regarding the regulatory requirements of the Act and its regulations.

B. Revocation of Skylark’s Mortgage Brokerage Licence

According to section 1(2) of Ontario Regulation 408/07, the circumstances that the Chief Executive Officer must consider when determining that a mortgage brokerage is not suitable to be licensed include:
1. Whether the past conduct of any director or officer of the corporation affords reasonable grounds for belief that the business of the corporation will not be carried on in accordance with the law and with integrity and honesty.
2. Whether a director or officer of the corporation has made a false statement or has provided false information to the Chief Executive Officer with respect to the application for a licence.
The Director believes, on reasonable grounds, that Skylark is no longer suitable to be licensed as a mortgage brokerage under the Act and that its licence should be revoked. The Director is satisfied that the past dishonest conduct of Slattery, who is Skylark’s sole director, officer, and principal broker, affords reasonable grounds for belief that the business of Skylark will not be carried on in accordance with the law and with integrity and honesty.
Furthermore, the repeated and intentional dishonest conduct of Merk, through Slattery and Skylark staff and resources, affords reasonable grounds for belief that the business of Skylark will not be carried on in accordance with the law and with integrity and honesty. This conduct includes the dissemination of the false and deceptive Mortgage Statements to the MO Corporations.
Finally, Slattery’s conduct raises doubts that he would take reasonable steps to ensure that Skylark, and each broker and agent authorized to deal or trade in mortgages on its behalf, complies with every requirement established under the Act, as required under Section 2(1) of Ontario Regulation 410/07.
Such further and other reasons as may come to my attention.

DATED at Toronto, Ontario, May 31, 2024.

Original signed by

Elissa Sinha
Director, Litigation and Enforcement

By delegated authority from the Chief Executive Officer

Si vous desirez recevoir cet avis en français, veuillez nous envoyer votre demande par courriel immediatement a : contactcentre@fsrao.ca.