their statute. The Alberta regime has its own built-in exemptions for the issuing
of securities to close friends and business associates, and no common-law
exception is appropriate.
Tiffin turns on the fact that all of the funds were raised from close friends
of Tiffin himself. It appears to suggest that a particular instrument would be
a “security” if used to raise funds from the general public, but not a “security”
if used to raise funds from friends. The Alberta statute does not recognize
a distinction in the characterisation of an instrument as a “security” depending on the identity of the purchaser or investor. The test is functional: Is the
issuer raising funds from the public for investment purposes? On the facts of
this case funds were raised from members of the public on the expectation
that they would participate in the gains to be made from the venture.
 I find the analysis of the Alberta Court of Appeal to be persuasive on this appeal, and I adopt it for the purposes of this decision. The court should not be creating exemptions that are not
found in the statute. The Ontario Securities Act, like its Alberta
counterpart, has its own built-in exemptions, and it is neither
necessary nor appropriate to formulate additional exemptions by
applying a judicially constructed test. The trial judge recognized
that a loan arrangement is a “note or other evidence of indebtedness” under s. 1 of the Act. The clear intent of the legislature is
that loan arrangements are not to be excluded from the definition
of “security” unless they fall within a specific statutory exemption. Altering the meaning of a definition that is fundamental to a
complex and carefully balanced regulatory regime is not a judicial
 It is clear that the TFC notes, as promissory notes representing interest-bearing loans, were “notes or other evidence of
indebtedness” and therefore fit branch (e) of the definition of
“security” in s. 1 of the Ontario Securities Act.
 The trial judge concluded, at para. 20 of his decision, that:
The evidence at trial shows that the TFC promissory notes were understood
by the parties to be loans to the accused through his business. They were
secured against assets of the business and carried no expectation of gain or
loss based on the fortune of the business. To apply securities law in this
context is contrary to the purpose of the Act.
 There is nothing in the Ontario Securities Act to exempt
promissory notes on the basis of what the parties “understood”.
As a general proposition, it is unlikely that most of the investing
public has any understanding what kind of lending transactions
fall within the ambit of the Act and which do not. The purpose of
the Securities Act is “to provide protection to investors from
unfair, improper or fraudulent practices” regardless of whether
the investors understand the nature of the transactions protected
or even want the protection of the Act.