British Columbia Securities Commission v. Branch

British Columbia Securities Commission v. Branch
Collection
Supreme Court Judgments
Date
1995-04-13
Report
[1995] 2 SCR 3
Case number
22978
Judges
Lamer, Antonio; La Forest, Gérard V.; L'Heureux-Dubé, Claire; Sopinka, John; Gonthier, Charles Doherty; Cory, Peter deCarteret; McLachlin, Beverley; Iacobucci, Frank; Major, John C.
On appeal from
British Columbia
Subjects
Constitutional law
Notes
SCC Case Information: 22978
Decision Content
British Columbia Securities Commission v. Branch, [1995] 2 S.C.R. 3
Bruce Douglas Branch and
Pal Arthur Levitt Appellants
v.
British Columbia Securities Commission Respondent
and
The Attorney General of Canada,
the Attorney General for Ontario,
the Attorney General of Quebec,
the Attorney General of Nova Scotia,
the Attorney General of Manitoba,
the Attorney General of British Columbia,
the Attorney General for Saskatchewan and
the Attorney General for Alberta Interveners
Indexed as: British Columbia Securities Commission v. Branch
File No.: 22978.
1994: February 28 and March 1; 1995: April 13.
Present: Lamer C.J. and La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory, McLachlin, Iacobucci and Major JJ.
on appeal from the court of appeal for british columbia
Constitutional law ‑‑ Charter of Rights ‑‑ Fundamental justice ‑‑ Self‑incrimination ‑‑ Right to silence ‑‑ Securities commission investigation ‑‑ Company's officers ordered to testify under oath and to produce documents pursuant to s. 128(1) of Securities Act ‑‑ Whether s. 128(1) infringes s. 7 of Canadian Charter of Rights and Freedoms ‑‑ Securities Act, S.B.C. 1985, c. 83, s. 128(1).
Constitutional law ‑‑ Charter of Rights ‑‑ Unreasonable search and seizure ‑‑ Securities commission investigation ‑‑ Company's officers ordered to produce documents pursuant to s. 128(1) of Securities Act ‑‑ Whether s. 128(1) infringes s. 8 of Canadian Charter of Rights and Freedoms ‑‑ Securities Act, S.B.C. 1985, c. 83, s. 128(1).
The British Columbia Securities Commission commenced an investigation into a company following a report by the company's auditors disclosing questionable expenditures. The appellants, two of the officers of the company, were served with summonses compelling their attendance for examination under oath and requiring them to produce all information and records in their possession relating to the company. The summonses were issued pursuant to s. 128(1) of the province's Securities Act. When the appellants failed to appear, the Commission petitioned the British Columbia Supreme Court for an order committing the appellants in contempt. In response, they applied for a declaration to the effect that s. 128(1) violates ss. 7 and 8 of the Canadian Charter of Rights and Freedoms . The application was dismissed. The superior court judge rejected the appellants' claims in respect of privilege against self‑incrimination and of a right to remain silent under s. 7 . He also concluded that the seizure authorized by s. 128(1)(c) of the Securities Act is not "unreasonable" within the meaning of s. 8 . The appellants were ordered to comply with the summonses, or, in default, to show cause or be held in contempt. An appeal to the British Columbia Court of Appeal was dismissed.
Held: The appeal should be dismissed.
(1) Section 7
Per Lamer C.J. and La Forest, Sopinka, Cory, McLachlin, Iacobucci and Major JJ.: In R. v. S. (R.J.), [1995] 1 S.C.R. 451, it was decided that the principle against self‑incrimination, one of the principles of fundamental justice protected by s. 7 of the Charter , requires that persons compelled to testify be provided with subsequent "derivative use immunity" in addition to the "use immunity" guaranteed by s. 13 of the Charter . The accused has the evidentiary burden of showing a plausible connection between the compelled testimony and the evidence sought to be adduced. Once this is established, in order to have the evidence admitted the Crown will have to satisfy the court on a balance of probabilities that the authorities would have discovered the impugned derivative evidence absent the compelled testimony. In order to trigger the derivative use immunity, the witness may only claim such protection in a subsequent proceeding where he is an accused subject to penal sanctions or in any proceeding which engages s. 7 .
In S. (R.J.), it was also decided that courts could, in certain circumstances, grant exemptions from compulsion to testify. The crucial question is whether the predominant purpose for seeking the evidence is to obtain incriminating evidence against the person compelled to testify or rather some legitimate public purpose. To qualify as a valid public purpose, compelled testimony in a criminal prosecution or prosecution under a provincial statute must be for the purpose of obtaining evidence in furtherance of that prosecution. It would be rare indeed that the evidence sought cannot be shown to have some relevance other than to incriminate the witness. If it is established that the predominant purpose is not to obtain the relevant evidence for the purpose of the proceeding, but rather to incriminate the witness, the party seeking to compel the witness must justify the potential prejudice to the right of the witness against self‑incrimination. If it is shown that the only potential prejudice is the possible subsequent derivative use of the testimony, then the compulsion to testify will occasion no prejudice for that witness since he will be protected against such use. If the witness can show any other significant prejudice that may arise from the testimony such that his right to a fair trial will be jeopardized, then the witness should not be compellable. The purpose of calling a particular witness will not be readily apparent and such purpose must be inferred in many cases from the overall effect of the evidence proposed to be called. If the overall effect is that it is of slight importance to the proceeding in which it is compelled but of great importance in a subsequent proceeding against the witness in which the witness is incriminated, then an inference may be drawn as to the real purpose of the compelled evidence. The issue of compellability may arise at the time when the witness is called to testify (subpoena stage) and at a subsequent penal proceeding against the witness (trial stage). The burden of proof with respect to the predominant purpose of the compelled testimony will be on the witness who asserts that it is not sought for a legitimate purpose. If this is established, the witness should not be compelled unless the party seeking to compel the witness justifies the compulsion.
The liberty interest under s. 7 of the Charter is engaged at the point of testimonial compulsion. Once it is engaged, the question is whether there has been a deprivation of this interest in accordance with the principles of fundamental justice. Here, s. 128(1) of the Securities Act does not violate s. 7 . The purpose of the Act, which is to protect our economy and the public from unscrupulous trading practices, justifies inquiries of limited scope. An inquiry such as the one at hand legitimately compels testimony as the Act is concerned with the furtherance of a goal which is of substantial public importance ‑‑ namely, obtaining evidence to regulate the securities industry. The inquiry is of the type permitted by our law as it serves an obvious social utility. The predominant purpose of the Commission's inquiry in this case is to obtain the relevant evidence for the purpose of the instant proceedings, and not to incriminate the appellants, and there is nothing in the record at this stage to suggest otherwise. The proposed testimony thus falls to be governed by the general rule applicable under the Charter , pursuant to which a witness is compelled to testify, yet receives evidentiary immunity in return. The appellants are also entitled to claim the protection of subsequent derivative use immunity. This is a protection that is afforded to witnesses notwithstanding that the source of their evidence may derive from corporate activity.
Documentary compulsion may also entail jeopardy in so far as it engages the appellants' liberty interest under s. 7 . The appellants, as representatives of the corporation, may receive the benefit of that protection in so far as they are personally implicated by their own evidence. At the stage of compellability, like the oral testimony, the documents are compellable subject to a possible claim against their subsequent use under the "but for" test. That test is not applicable to determining their compellability. The documents are properly compellable unless they are excluded on the basis of the principles applicable to testimonial compulsion. The rationale both at common law and under s. 7 for these principles is that in certain circumstances compellability would impinge on the right to silence. This right, however, attaches to communications that are brought into existence by the exercise of compulsion by the state and not to documents that contain communications made before such compulsion and independently thereof. If, as in this case, the person subpoenaed is compelled to testify, then all communications including those arising from the production of documents will be compelled. If not compelled, the communications arising from production of documents would also not be admissible. The communicative aspects of the production of documents may, however, be of significance at the derivative evidence stage at which the witness seeks to exclude all evidence which would not have been obtained but for the compelled testimony.
Per Gonthier J.: The reasons of Sopinka and Iacobucci JJ., and the additional comments of L'Heureux‑Dubé J. relating to evidence in a regulatory context, were agreed with.
Per L'Heureux‑Dubé J.: As expressed in the concurring reasons given in R. v. S. (R.J.), [1995] 1 S.C.R. 451, the possibility of imprisonment flowing from a failure to testify is sufficient to trigger s. 7 protection at the subpoena stage. Where the witness can demonstrate at that stage that, under the circumstances, it would be fundamentally unfair to require that he testify, then the principles of fundamental justice under s. 7 of the Charter require that he not be compellable. Where, however, there is no possibility that the individual may be deprived of liberty at the subsequent proceeding, he cannot claim that it would be fundamentally unfair to compel his testimony. As a corollary, the less proximate the possibility of a deprivation of liberty in the subsequent proceeding, the less likely it is that the fact of testimonial compulsion will, itself, be fundamentally unfair. A subpoena will only be quashed at the subpoena stage in the clearest of cases.
It is generally a satisfactory proxy for the existence of fundamentally unfair conduct on the part of the Crown, in violation of s. 7 , to inquire into whether the predominant purpose for seeking the evidence is to obtain incriminating evidence against the witness, rather than to further some legitimate public purpose. The regulatory context of the present appeal, however, requires that this test be applied with somewhat greater deference than might otherwise be the case. Conduct which may be fundamentally unfair in a traditional criminal context may not be so in the context of administrative proceedings in a highly complex and tightly regulated field, such as the securities industry. Activity in that industry is of immense economic value to society generally and, in order to safeguard the public welfare and trust, securities market participants, who are engaged in this licensed activity of their own volition, must conform with the extensive requirements set out by the provincial securities commissions and should expect to be questioned occasionally by regulators as to their market activities. Further, in view of the complex nature of the securities industry, the investigatory powers in s. 128(1) are the primary vehicle, and often the only tool, for the effective investigation and deterrence of trading practices contrary to the public interest. Finally, consideration must be given to the other Charter rights at stake. It would be ironic to conclude that a proceeding involving testimonial compulsion is contrary to the principles of fundamental justice if the only equally effective alternative, reasonably available to the state to pursue a pressing and substantial objective, would constitute a far more dramatic intrusion into individual rights. Here, notwithstanding that one of the primary purposes of an investigation under s. 128(1) is to engage in a form of civil discovery of the witness as well as of the company to illuminate or investigate irregularities, the appellants have not demonstrated that, in the present context and under the circumstances, it would violate their s. 7 rights to be compelled to testify at the Commission's inquiry. Courts must differentiate between unlicensed fishing expeditions that are intended to unearth and prosecute criminal conduct, and actions undertaken by a regulatory agency, legitimately within its powers and jurisdiction and in furtherance of important public purposes that cannot realistically be achieved in a less intrusive manner. Whereas the former may run afoul of s. 7 , the latter do not.
A person compelled to testify in a s. 128 inquiry shall enjoy, under s. 13 of the Charter , full testimonial immunity in any subsequent proceedings undertaken by the state. Even if the "but for" standard is an appropriate level of s. 7 protection in a purely criminal context, it may not be equally suited for use in predominantly regulatory contexts. Many of the interests underlying the principle against self‑incrimination are simply not engaged as dramatically in situations in which an individual voluntarily participates, for his own profit, in a licensed activity, the effective regulation of which is essential to pressing and substantial societal interests. The existence of derivative evidence immunity could significantly undermine the Commission's ability to administer and enforce securities regulations effectively. Without the benefit of a closer examination of the specific contexts in which imprisonment may arise as a possible eventual consequence under the Securities Act, it is inappropriate for this Court, at the subpoena stage, to define the exact parameters of appropriate derivative evidence immunity to come into effect at the trial stage. Although Sopinka and Iacobucci JJ. recognize some derivative evidence immunity at the trial stage, their reasons are taken to leave open the possibility that this protection may vary according to context.
As a practical matter, particularly in the regulatory context, authorities often seek a substantial fine rather than imprisonment upon conviction, notwithstanding that the legislation provides for the possibility of imprisonment. In such cases, agreement between all parties and the trial judge at the outset of the trial proceedings that imprisonment will not be sought as a sanction upon conviction will negate the need for a s. 7 -based derivative evidence immunity, since the individual accused will not face the possibility of a deprivation of liberty.
The compulsion to produce pre-existing documents in s. 128(1)(c) does not violate s. 7 if it is found that the person subpoenaed is compellable to testify. The compelled production of pre‑existing documents does not engage self-incriminatory concerns since they have not been generated subject to state compulsion. There is thus nothing fundamentally unfair in requiring the production of such documents and in the possibility that they may subsequently be relied upon by the state in a proceeding against the individual who has been compelled to produce them. The "but for" standard does not apply at the trial stage to pre‑existing documents.
(2) Section 8
Section 128(1) of the Securities Act does not violate s. 8 of the Charter . The Act is essentially regulatory legislation designed to protect the public, including the investors, and discourage detrimental forms of commercial behaviour. Persons involved in the securities market, a highly regulated industry, do not have a high expectation of privacy with respect to regulatory needs that have been generally expressed in securities legislation. They know or are deemed to know the rules of the game. The effective implementation of securities legislation, which has obvious implications for the nation's material prosperity, depends on the willingness of those who choose to engage in the securities trade to comply with the defined standards of conduct. The provisions of the Act are pragmatic sanctions designed to induce such compliance. The Act thus serves an important social purpose and the social utility of such legislation justifies the minimal intrusion that the appellants may face. The demand for the production of documents contained in the summonses is one of the least intrusive of the possible methods which might be employed to obtain documentary evidence. Moreover, documents produced in the course of a business which is regulated have a lesser privacy right attaching to them than do documents that are, strictly speaking, personal. Those who are ordered under s. 128(1) "to produce records and things" can claim only a limited expectation of privacy in respect of business records. Section 128(1) does not unreasonably infringe on this limited expectation of privacy. The Hunter criteria were not appropriate in the present context to determine the applicable standard of reasonableness.
Cases Cited
By Sopinka and Iacobucci JJ.
Applied: R. v. S. (R.J.), [1995] 1 S.C.R. 451; distinguished: Hunter v. Southam Inc., [1984] 2 S.C.R. 145; considered: Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425; R. v. McKinlay Transport Ltd., [1990] 1 S.C.R. 627; referred to: R. v. Hebert, [1990] 2 S.C.R. 151; Re Robinson and The Queen (1986), 28 C.C.C. (3d) 489; Re Transpacific Tours Ltd. and Director of Investigation & Research (1985), 25 D.L.R. (4th) 202; Haywood Securities Inc. v. Inter‑Tech Resource Group Inc. (1985), 24 D.L.R. (4th) 724; Bishop v. College of Physicians & Surgeons of British Columbia (1985), 22 D.L.R. (4th) 185; College of Physicians & Surgeons of British Columbia v. Bishop (1989), 56 D.L.R. (4th) 164; Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557; R. v. Amway Corp., [1989] 1 S.C.R. 21; Irwin Toy Ltd. v. Quebec (Attorney General), [1989] 1 S.C.R. 927; R. v. Collins, [1987] 1 S.C.R. 265; Gregory & Co. v. Quebec Securities Commission, [1961] S.C.R. 584; R. v. Borden, [1994] 3 S.C.R. 145; R. v. Kokesch, [1990] 3 S.C.R. 3; R. v. Wiley, [1993] 3 S.C.R. 263; R. v. Primeau, [1995] 2 S.C.R. 60; R. v. Jobin, [1995] 2 S.C.R. 78; Starr v. Houlden, [1990] 1 S.C.R. 1366; R. v. Container Materials Ltd., [1940] 4 D.L.R. 293; R. v. Famous Players, [1932] O.R. 307; Baron v. Canada, [1993] 1 S.C.R. 416; Ventouris v. Mountain, [1991] 3 All E.R. 472; R. v. Wurm (1979), 24 A.R. 380; Dubai Bank Ltd. v. Galadari, [1989] 3 All E.R. 769.
By L'Heureux‑Dubé J.
Referred to: R. v. S. (R.J.), [1995] 1 S.C.R. 451; Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425; R. v. Director of Serious Fraud Office, Ex parte Smith, [1993] A.C. 1; Dubois v. The Queen, [1985] 2 S.C.R. 350; Edmonton Journal v. Alberta (Attorney General), [1989] 2 S.C.R. 1326; R. v. Lyons, [1987] 2 S.C.R. 309; R. v. Wholesale Travel Group Inc., [1991] 3 S.C.R. 154; R. v. Ellis‑Don Ltd., [1992] 1 S.C.R. 840; Roper v. Royal Victoria Hospital, [1975] 2 S.C.R. 62; Irvine v. Canada (Restrictive Trade Practices Commission), [1987] 1 S.C.R. 181; Ontario Securities Commission v. Biscotti (1988), 40 B.L.R. 160; R. v. Beare, [1988] 2 S.C.R. 387.
Statutes and Regulations Cited
Canada Evidence Act, R.S.C., 1985, c. C‑5, s. 5(2) .
Canadian Charter of Rights and Freedoms, ss. 1 , 7 , 8 , 9 , 10 , 13 , 15(1) .
Securities Act, S.B.C. 1985, c. 83, ss. 126(1) [rep. & sub. 1988, c. 58, s. 16], 127, 128(1), (3), 144(1) [am. idem, s. 21], (2).
Authors Cited
Reid, Alan D., and Alison Harvison Young. "Administrative Search and Seizure Under the Charter " (1985), 10 Queen's L.J. 392.
APPEAL from a judgment of the British Columbia Court of Appeal (1992), 63 B.C.L.R. (2d) 331, 88 D.L.R. (4th) 381, [1992] 3 W.W.R. 165, dismissing the appellants' appeal from a judgment of Wood J. (1990), 43 B.C.L.R. (2d) 286, 68 D.L.R. (4th) 347, allowing the respondent's application for an order that the appellants be committed for contempt for failure to attend in answer to summons issued under s. 128 of the British Columbia Securities Act. Appeal dismissed.
Alastair Rees‑Thomas, for the appellants.
Mark L. Skwarok, for the respondent.
Michael R. Dambrot, Q.C., and John S. Tyhurst, for the intervener the Attorney General of Canada.
Leah Price and Michel Hélie, for the intervener the Attorney General for Ontario.
Jacques Gauvin and Gilles Laporte, for the intervener the Attorney General of Quebec.
Louise Walsh Poirier, for the intervener the Attorney General of Nova Scotia.
Marva J. Smith, for the intervener the Attorney General of Manitoba.
George H. Copley, for the intervener the Attorney General of British Columbia.
Graeme G. Mitchell, for the intervener the Attorney General for Saskatchewan.
Richard F. Taylor, for the intervener the Attorney General for Alberta.
The judgment of Lamer C.J. and La Forest, Sopinka, Cory, McLachlin, Iacobucci and Major JJ. was delivered by
1 Sopinka and Iacobucci JJ. -- This appeal raises issues also dealt with in three other appeals heard at the same time: R. v. S. (R.J.), [1995] 1 S.C.R. 451, R. v. Primeau, [1995] 2 S.C.R. 60, and R. v. Jobin, [1995] 2 S.C.R. 78. In particular, it asks whether individuals who might subsequently be charged with a criminal or quasi-criminal offence can be compelled to give evidence and produce documents. However, unlike those other appeals, this appeal asks questions about compellability outside of the criminal justice system. In that respect, the importance of this context and consequential issues regarding search and seizure are the focus of this appeal. Before turning to the facts of this appeal, however, we wish to consider the Court's decision in S. (R.J.).
2 In S. (R.J.), a majority of this Court held that the principle against self-incrimination, one of the principles of fundamental justice protected by s. 7 of the Canadian Charter of Rights and Freedoms , requires that persons compelled to testify be provided with subsequent "derivative use immunity" in addition to the "use immunity" guaranteed by s. 13 of the Charter . In addition, a majority of the members of the Court (albeit a different majority) were of the view that courts could, in certain circumstances, grant exemptions from compulsion to testify.
3 This appeal presents the opportunity to build on the consensus reflected in S. (R.J.), and achieve greater clarity and guidance on the rules to be applied in this area. Specifically, we offer additional comments on derivative use immunity and the circumstances relating to exemptions from compulsion to testify.
4 With respect to derivative use immunity, it should be remembered that what was discussed by Iacobucci J. on the subject was intended to be comments of general application only and that further refinement will have to await development that can only take place through the consideration of cases as they arise.
5 At pages 565-66 of S. (R.J.), Iacobucci J. discussed the burden of proof on the accused regarding derivative use immunity. He stated that the general Charter rule would operate, namely, the party claiming a Charter breach must establish it on a balance of probabilities. Iacobucci J. went on to state that as a practical matter the Crown will likely bear the burden of responding because it is the Crown which can be expected to know how evidence was, or would have been, obtained. This means that the accused has the evidentiary burden of showing a plausible connection between the compelled testimony and the evidence sought to be adduced. Once this is established, in order to have the evidence admitted, the Crown will have to satisfy the court on a balance of probabilities that the authorities would have discovered the impugned derivative evidence absent the compelled testimony. This is explained in more detail in the reasons of Iacobucci J. in S. (R.J.) (at p. 562). Finally, it goes without saying that in order to trigger the derivative use immunity, the former witness may only claim such protection in a subsequent proceeding where he or she is an accused subject to penal sanctions or in any proceeding which engages s. 7 of the Charter . We also refer to our further discussion on this matter below.
6 Regarding exemptions from compulsion, Iacobucci J., writing for the majority on "derivative use immunity", recognized that a colourable attempt to compel the evidence of a witness could in certain circumstances be objectionable. In S. (R.J.) it was not necessary to determine conclusively when such exemptions were available and there was no agreement on the precise test to be applied. There was, however, sufficient consensus to form the basis for a more precise and acceptable test which can be applied to resolve this appeal and the companion appeals of Primeau and Jobin.
7 In view of the conclusions reached in S. (R.J.), any test to determine compellability must take into account that if the witness is compelled, he or she will be entitled to claim effective subsequent derivative use immunity with respect to the compelled testimony or other appropriate protection. The common feature of the respective compellability tests proposed in the reasons in S. (R.J.) is that the crucial question is whether the predominant purpose for seeking the evidence is to obtain incriminating evidence against the person compelled to testify or rather some legitimate public purpose. This test strikes the appropriate balance between the interests of the state in obtaining the evidence for a valid public purpose on the one hand, and the right to silence of the person compelled to testify on the other.
8 In applying this test, the Court must first determine the predominant purpose for which the evidence is sought. To qualify as a valid public purpose, compelled testimony in a criminal prosecution or prosecution under a provincial statute must be for the purpose of obtaining evidence in furtherance of that prosecution. In S. (R.J.), Sopinka J. suggested some guidelines for determining whether this is the predominant purpose. In other proceedings, discerning the purpose is more complex. Where evidence is sought for the purpose of an inquiry, we must first look to the statute under which the inquiry is authorized. The fact that the purpose of inquiries under the statute may be for legitimate public purposes is not determinative. The terms of reference may reveal an inadmissible purpose notwithstanding that the statute did not so intend: see Starr v. Houlden, [1990] 1 S.C.R. 1366. Indeed, even if the terms of reference authorize an inquiry for a legitimate purpose in some circumstances, the object of compelling a particular witness may still be for the purpose of obtaining incriminating evidence.
9 It would be rare indeed that the evidence sought cannot be shown to have some relevance other than to incriminate the witness. In a prosecution, such evidence would simply be irrelevant. There may, however, be inquiries of this type and it would be difficult to justify compellability in such a case. In the vast majority of cases, including this case, the evidence has other relevance. In such cases, if it is established that the predominant purpose is not to obtain the relevant evidence for the purpose of the instant proceeding, but rather to incriminate the witness, the party seeking to compel the witness must justify the potential prejudice to the right of the witness against self-incrimination. If it is shown that the only prejudice is the possible subsequent derivative use of the testimony then the compulsion to testify will occasion no prejudice for that witness. The witness will be protected against such use. Further, if the witness can show any other significant prejudice that may arise from the testimony such that his right to a fair trial will be jeopardized, then the witness should not be compellable.
10 We recognize that the purpose of calling a particular witness will not be readily apparent and that such purpose must be inferred in many cases from the overall effect of the evidence proposed to be called. If the overall effect is that it is of slight importance to the proceeding in which it is compelled but of great importance in a subsequent proceeding against the witness in which the witness is incriminated, then an inference may be drawn as to the real purpose of the compelled evidence. If that relationship is reversed then no such inference may be drawn. As stated in S. (R.J.), the issue of compellability may arise at the time when the witness is called to testify (the subpoena stage) and at a subsequent penal proceeding against the witness (the trial stage). By reason of the foregoing, the true purpose of the evidence will often not be apparent until the latter stage.
11 As in the case of any breach of Charter rights, the burden of establishing a breach is on the party alleging it. In this context, the burden of proof with respect to the predominant purpose of the compelled testimony will be on the witness who asserts that it is not sought for a legitimate purpose. If this is established, the witness should not be compelled unless the party seeking to compel the witness justifies the compulsion as referred to above.
12 In light of the foregoing elaboration of the principles enumerated in S. (R.J.) we now turn to the facts and issues raised in this appeal.
I. Facts
13 Terra Nova Energy Inc. is a British Columbia company listed on the Vancouver Stock Exchange (the company is now called Sato Science International Inc., and it was formerly called Wesgold Resources Inc.). The appellants, Bruce Douglas Branch and Pal Arthur Levitt, were directors of Terra Nova from the time of its incorporation until December 1988.
14 In July 1987, Terra Nova published its annual financial statements. Included was a report from its auditors which disclosed that the auditors were unable to express an opinion as to whether the financial statements were fairly presented in accordance with generally accepted accounting principles. References were made to serious deficiencies in the control, documentation, and approval procedures of Terra Nova. Questionable expenditures exceeded $1.3 million. Ten days after the appearance of the statements, the Vancouver Stock Exchange halted trading in Terra Nova's shares, and soon after suspended trading pending clarification of the obvious concern.
15 On October 23, 1987, the respondent British Columbia Securities Commission made an order under s. 144(2) of the Securities Act, S.B.C. 1985, c. 83, requiring Branch and Levitt, along with other former officers of Terra Nova, to cease trading in Terra Nova's securities for 15 days (on November 3, 1987, the Commission ordered that the cease-trading order persist until the conclusion of a hearing held pursuant to s. 144(1) of the Act). Four days later, acting under s. 126(1) of the Act, the Commission appointed three individuals to conduct an investigation.
16 On June 27, 1988, summonses were served on Branch and Levitt compelling their attendance for examination. The summonses also required production of all information and records in the possession of Branch and Levitt relating directly or indirectly to Terra Nova and other named companies. The statutory authority for these orders can be found in s. 128(1) of the Act.
17 On June 30, 1988, Branch and Levitt attended at the Commission with their counsel, Mr. Hamilton. Hamilton stated on their behalf that the investigation appeared to be preliminary to possible criminal or quasi-criminal charges, and he indicated that Branch and Levitt would rely upon their right to remain silent. Hamilton indicated that Branch and Levitt would not submit to an investigation without further particulars or disclosure. On July 13, 1988, the Commission informed Branch and Levitt that such requests would not be honoured.
18 On July 14 and 15, 1988, respectively, Branch and Levitt were served with fresh summonses. On August 5, 1988, the Commission petitioned the Supreme Court of British Columbia for an order committing Branch and Levitt in contempt. In response, Branch and Levitt asked for a declaration to the effect that s. 128(1) of the Securities Act violates ss. 7 , 8 , 9 and 15(1) of the Charter .
19 The application for a declaration was dismissed: (1990), 68 D.L.R. (4th) 347, 43 B.C.L.R. (2d) 286. Wood J. ordered Branch and Levitt to comply with the summonses, or, in default, to show cause or be held in contempt. An appeal to the British Columbia Court of Appeal was dismissed: (1992), 88 D.L.R. (4th) 381, 63 B.C.L.R. (2d) 331, [1992] 3 W.W.R. 165. This Court granted leave to appeal: [1992] 2 S.C.R. v.
II. Relevant Constitutional and Statutory Provisions
Canadian Charter of Rights and Freedoms
7. Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.
8. Everyone has the right to be secure against unreasonable search or seizure.
13. A witness who testifies in any proceedings has the right not to have any incriminating evidence so given used to incriminate that witness in any other proceedings, except in a prosecution for perjury or for the giving of contradictory evidence.
Securities Act, S.B.C. 1985, c. 83
126. (1) The commission may, by order, appoint a person to make an investigation the commission considers expedient
(a) for the administration of this Act,
(b)to assist in the administration of the securities laws of another jurisdiction,
(c)in respect of matters relating to trading in securities in the Province, or
(d)in respect of matters in the Province relating to trading in securities in another jurisdiction.
. . .
127. (1) An investigator appointed under section 126 or 131 may, with respect to the person who is the subject of the investigation, investigate, inquire into and examine
(a)the affairs of that person,
(b)any records, negotiations, investigations, loans, borrowings and payments to, by, on behalf of, in relation to or connected with that person,
(c)any property, assets or things owned, acquired or disposed of in whole or in part by that person or by a person acting on behalf of or as agent for that person,
(d)the assets at any time held by, the liabilities, debts, undertakings and obligations at any time existing and the financial or other conditions at any time prevailing in respect of that person, and
(e)the relationship that may at any time exist or have existed between that person and any other person by reason of
(i) investments made,
(ii) commissions promised, secured or paid,
(iii) interests held or acquired,
(iv) the lending or borrowing of money, securities or other property,
(v) the transfer, negotiation or holding of securities,
(vi) interlocking directorates,
(vii) common control,
(viii) undue influence or control, or
(ix) any other relationship.
(2) An investigator may, for purposes of subsection (1),
(a)enter in or on the land or premises of a person at any reasonable time without a warrant for the purpose of carrying out an inspection or examination,
(b)require the production of any records, property, assets or things for inspection or examination, and
(c)on giving a receipt, remove any records or property inspected or examined under paragraph (b) for the purpose of making copies or extracts of the records or property.
(3) Any copying or making of extracts under subsection (2) shall be completed as soon as possible and the records or property shall be promptly returned to the person who produced or finished them.
(4) No investigator shall enter any room or place actually being used as a residence without the consent of the occupant, except under the authority of a warrant issued under the Offence Act.
(5) No person shall withhold, destroy, conceal or refuse to give or produce any information, record, property, asset or thing reasonably required for an investigation, inquiry or examination under this section.
128. (1) An investigator appointed under section 126 or 131 has the same power
(a) to summon and enforce the attendance of witnesses,
(b)to compel witnesses to give evidence on oath or in any other manner, and
(c) to compel witnesses to produce records and things
as the Supreme Court has for the trial of civil actions, and the failure or refusal of a witness
(d) to attend,
(e) to take an oath,
(f) to answer questions, or
(g) to produce the records and things in his custody or possession
makes the witness, on application to the Supreme Court, liable to be committed for contempt as if in breach of an order or judgment of the Supreme Court.
. . .
(3) A witness giving evidence at an investigation conducted under section 126 or 131 may be represented by counsel.
III. Judgments
Supreme Court of British Columbia (1990), 68 D.L.R. (4th) 347
20 Wood J. noted that Branch and Levitt claimed a right against self-incrimination and a right to remain silent under s. 7 of the Charter "at the investigative stage of any true penal consequence proceeding" (p. 355). He quickly made two points in respect of these claims. First, he said, it is wrong to suppose that s. 7 protects rights in the abstract; there must first be a deprivation of life, liberty, or security of the person. Second, he said that the applicants wrongly confused or equated the right to remain silent and the privilege against self-incrimination.
21 Wood J. apparently did not accept that a Commission investigation leads to "true penal consequences", in so far as the investigators are only empowered to report. Following Re Robinson and The Queen (1986), 28 C.C.C. (3d) 489 (B.C.S.C.), Wood J. held that the investigation could not result in a deprivation of life, liberty, or security of the person. For two reasons, however, Wood J. proceeded to assume that s. 7 was engaged: (1) because of the risk of imprisonment if the summonses were ignored; and (2) because the testimony of the applicants could generate derivative evidence which could later be used against them. However, he expressed "grave doubts" about whether s. 7 was actually engaged on the facts before him.
22 Wood J. proceeded to deal with the argument that a compulsion to testify violates a constitutionalized privilege against self-incrimination, and he followed Re Transpacific Tours Ltd. and Director of Investigation & Research (1985), 25 D.L.R. (4th) 202 (B.C.S.C.), in that regard. Wood J. stated that he was bound by Re Transpacific, and he rejected the privilege-against-self-incrimination argument.
23 On the question whether the applicants could claim a right to silence, Wood J. accepted such a right could exist in s. 7 of the Charter as a principle of fundamental justice (his decision being rendered before R. v. Hebert, [1990] 2 S.C.R. 151). To define its scope, he considered the pre-Charter context, reviewed case law, and then concluded in these terms (at p. 367):
Apart from the judgment of Munroe J. in Re Wilson Inquest, which was overruled on appeal, I have not been able to find any Canadian case where the right of a suspect to remain silent in the face of a statutory compulsion to testify under oath, has been recognized.
Furthermore . . . both federal and provincial statute books are replete with laws whic