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 which provide inquiry powers similar to those found in s. 128(1) of the Securities Act . . . [which suggests] that Canadian law has not heretofore recognized, as a principle of fundamental justice, the right of such persons to stand silent in the face of a statutory compulsion to speak.
24 Wood J. then turned to the post-Charter context. He cited Haywood Securities Inc. v. Inter-Tech Resource Group Inc. (1985), 24 D.L.R. (4th) 724 (B.C.C.A.), in which Macfarlane J.A. stated (at pp. 748-49):
I agree that if the sole aim and purpose of the proceeding was to obtain evidence to support a charge or to assist the criminal prosecution of the witness, it might be arguable that the witness ought not to be compelled to divulge information which might lead to his conviction. But, in my view, such a result would follow only if the proceedings, in which such evidence was given, were so devoid of any legitimate public purpose, and so deliberately designed to assist the prosecution of the witness that to allow them to continue would constitute an injustice. In such circumstances, the continuance of the proceedings could be said to constitute a violation of the principles of fundamental justice.
Wood J. characterized this passage as correctly reflecting the limit of the post-Charter right to remain silent. He stated (at p. 369), "it cannot be said that the statutory compulsion to testify found in s. 128(1) of the Act comes even close to meeting" the Haywood Securities test. Accordingly, Wood J. rejected the claims in respect of a right to silence.
25 Finally, Wood J. considered whether s. 128(1)(c) of the Securities Act authorizes an unreasonable search or seizure contrary to s. 8 of the Charter. He considered himself bound by British Columbia authority to find that s. 128(1)(c) authorizes a "seizure": Bishop v. College of Physicians & Surgeons of British Columbia (1985), 22 D.L.R. (4th) 185 (B.C.S.C.), and College of Physicians & Surgeons of British Columbia v. Bishop (1989), 56 D.L.R. (4th) 164 (B.C.S.C.). Turning to the question of the seizure's reasonableness, Wood J. followed the same authority and scrutinized the statute. First, he stated at p. 371 that the purpose of the Securities Act is "to protect the general public from being defrauded as a result of the dishonest activities of those who trade in securities", and he further suggested that this purpose is "regulatory and administrative, not criminal or quasi-criminal". Second, he stated that the targets of seizure were records and things which would provide "highly relevant" or even "crucial" evidence. Third, he discussed the character of the premises where the seizure might occur, and noted that "[t]here is no intrusion into the homes, offices or privacy of those who are the subject of an order" (p. 372). Finally, in terms of the legitimate expectations of the public and the individuals involved, he stated (at p. 372):
. . . the public has a legitimate expectation that the commission will discharge the regulatory duties entrusted to it, by effectively investigating those activities from which the trading public require protection, and by exercising its regulatory powers so as to ensure that the purpose of the legislation, namely, the protection of the public, is achieved.
On the other hand, the individual who is the object of such an investigation has from the outset known that he or she is participating in a highly regulated and controlled activity, namely, trading in securities. To apply to be licensed, which is a prerequisite to such participation, is to accept the expectation of constant and vigilant supervision. . . .
26 For these reasons, Wood J. concluded that the seizure authorized by s. 128(1)(c) of the Securities Act is not "unreasonable" within the meaning of s. 8 of the Charter.
27 Wood J. summarily disposed of other arguments based on ss. 7, 9 and 10 of the Charter. He ordered Branch and Levitt to attend the investigation and to answer questions put to them. Alternatively, he held that they would be required to show cause "why they should not be committed to jail, or fined, or both, for their contempt in wilfully disobeying the order of this court" (p. 374).
British Columbia Court of Appeal (1992), 88 D.L.R. (4th) 381
28 Southin J.A., for the court, stated that she "could find no error" in the reasons of Wood J. The only real question on appeal, she indicated, was whether the intervening decision of this Court in Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425, cast doubt upon his judgment. As regards s. 7 of the Charter, Southin J.A. adopted the approach of L'Heureux-Dubé J. in Thomson Newspapers, and so she effectively affirmed Wood J. on this point. With respect to s. 8 of the Charter, Southin J.A. suggested that Sopinka J.'s reasons in Thomson Newspapers were "compelling", such an order under s. 128(1)(c) might not constitute a seizure at all. But she held that Wood J. was correct to state that he was bound to find a seizure, and she concluded that if, in fact, a seizure was authorized, it was, "as both Mr. Justice La Forest and Madam Justice L'Heureux-Dubé held [in Thomson Newspapers], reasonable" (p. 384).
29 Southin J.A. dismissed the appeal.
IV. Issues
30 The following constitutional questions were stated on February 25, 1993:
1.[Does] s. 128(1) of the Securities Act, S.B.C. 1985, c. 83, infringe[] ss. 7 or 8 of the Canadian Charter of Rights and Freedoms?
2.If the answer is yes, is the limitation one which is reasonable, prescribed by law, and demonstrably justified pursuant to s. 1 of the Charter?
V. Analysis
31 This case is unlike S. (R.J.) in two respects. First, it is outside the criminal realm, and is within a regulatory regime. Secondly, since Bruce Branch and Pal Arthur Levitt are directors of Terra Nova, it must be discerned whether corporate officers may raise Charter violations.
32 The s. 7 Charter challenge against s. 128(1) of the Securities Act involves two issues:
(a) testimonial compulsion; and
(b) documentary compulsion.
(a) Testimonial Compulsion
33 In light of the four sets of reasons of this Court in S. (R.J.), supra, the trial judge erred as to when the liberty interest is engaged. The liberty interest is engaged at the point of testimonial compulsion. Once it is engaged, the investigation then becomes whether or not there has been a deprivation of this interest in accordance with the principles of fundamental justice.
34 The portion of s. 128(1) of the Securities Act which is relevant to testimonial compulsion reads as follows:
128. (1) An investigator appointed under section 126 or 131 has the same power
. . .
(b)to compel witnesses to give evidence on oath or in any other manner. . . .
We must determine the predominant purpose of such an inquiry at which a witness is compelled to attend. In Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557, Iacobucci J., writing for the Court referred to the regulatory nature of the Securities Act (at p. 589):
It is important to note from the outset that the [Securities Act] is regulatory in nature. In fact, it is part of a much larger framework which regulates the securities industry throughout Canada. Its primary goal is the protection of the investor but other goals include capital market efficiency and ensuring public confidence in the system: David L. Johnston, Canadian Securities Regulation (1977), at p. 1. [Emphasis added.]
The goal of protecting our economy is a goal of paramount importance. In Pezim, the preeminence of securities regulation in our economic system was emphasized (at pp. 593 and 595):
This protective role, common to all securities commissions, gives a special character to such bodies which must be recognized when assessing the way in which their functions are carried out under their Acts.
. . .
The breadth of the [British Columbia Securities] Commission's expertise and specialisation is reflected in the provisions of the [Securities Act]. Section 4 of the Act identifies the Commission as being responsible for the administration of the Act. The Commission also has broad powers with respect to investigations, audits, hearings and orders.
. . .
In reading these powerful provisions, it is clear that it was the legislature's intention to give the Commission a very broad discretion to determine what is in the public's interest. . . .
It must also be noted that the definitions in the [Securities Act] exist in a factual or regulatory context. They are part of the larger regulatory framework discussed above. They are not to be analyzed in isolation but rather in their regulatory context.
35 Clearly, this purpose of the Act justifies inquiries of limited scope. The Act aims to protect the public from unscrupulous trading practices which may result in investors being defrauded. It is designed to ensure that the public may rely on honest traders of good repute able to carry out their business in a manner that does not harm the market or society generally. An inquiry of this kind 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. Often such inquiries result in proceedings which are essentially of a civil nature. The inquiry is of the type permitted by our law as it serves an obvious social utility. Hence, the predominant purpose of the inquiry is to obtain the relevant evidence for the purpose of the instant proceedings, and not to incriminate Branch and Levitt. More specifically, there is nothing in the record at this stage to suggest that the purpose of the summonses in this case is to obtain incriminating evidence against Branch and Levitt. Both orders of the Commission and the summonses are in furtherance of the predominant purpose of the inquiry to which we refer above. 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: S. (R.J.), supra.
36 An issue may arise in subsequent proceedings as to who can claim the benefit of derivative use immunity, the individuals or the corporation or both. While this issue might be left to be determined when it arises in such proceedings, in view of the fact that the test for compellability is premised on the availability of subsequent derivative use immunity on the basis of the "but for" concept, we believe it should be addressed.
37 Clearly, the individuals Branch and Levitt are entitled to claim the protection of subsequent derivative use. This is a protection that is afforded to witnesses notwithstanding that the source of their evidence may derive from corporate activity. See R. v. Amway Corp., [1989] 1 S.C.R. 21. On the other hand, the protection depends on the applicability of s. 7 of the Charter. This Court has held that s. 7 does not apply to a corporation. See Thomson Newspapers, supra. It should be remembered that it will be up to the judge hearing the matter to decide the specific application of subsequent derivative use immunity having regard to all the circumstances.
(b) Documentary Compulsion
38 This appeal raises the possibility of documentary compulsion, which entails jeopardy in so far as it engages the appellants' liberty interest. Specifically, the likelihood of a self-incriminatory result is what is to be avoided. There are two main issues:
(i)the identity of the person facing the prospect of self-incrimination; and
(ii)most significantly, the nature of the compulsion, that is, whether the documents contain a compelled answer merely reduced to writing, or exist separately and apart from the compelled person.
(i) Identity of the Person Facing the Prospect of Self-Incrimination
39 The right against self-incrimination is a personal right that serves to protect an individual's liberty interest. Is a corporation or its officer(s) eligible for Charter protection against self-incriminatory effects? We do not believe that a right against self-incrimination can be applied to artificial entities in any meaningful way. It is the self-conscriptive effect of compulsion which the Charter guards against. This is a flesh and bone protection which cannot be easily extended to corporations. The following passage of Sopinka J. in Amway, supra, is pertinent (at p. 40):
Applying a purposive interpretation to s. 11(c), I am of the opinion that it was intended to protect the individual against the affront to dignity and privacy inherent in a practice which enables the prosecution to force the person charged to supply the evidence out of his or her own mouth. Although disagreement exists as to the basis of the principle against self-incrimination, in my view, this factor plays a dominant role.
In the United States it was this factor which was largely responsible for denying Fifth Amendment protection to corporations. The American situation is summed up in the following statement from Paciocco, Charter Principles and Proof in Criminal Cases, at p. 459:
Apart from this substantial obstacle, it appears that the most sensible way of resolving issues about the application of Charter provisions to corporations is to interpret them purposively. Even on this basis, section 13 should not be held to extend to corporations through the expedient of considering certain corporate officers to be the corporation for the purpose of testifying. This is because the principle that an accused should never be conscripted by his opponent to defeat him does not extend to corporations in a meaningful way. As stated in Wigmore on Evidence in recounting the American position which holds the privilege against self-incrimination to be inapplicable to corporations, "(t)his sentiment . . . is almost entirely confined to flesh-and-bone individuals." Why? Because it has to do with the intrinsic value of human beings and the necessity of according them a meaningful right to privacy until the real prospect of their guilt is raised so that they will truly be free. "(A) corporation, unlike an individual, cannot suffer the indignities prohibited by the amendment's protection of the accused's person and thoughts". [Emphasis added.]
40 It is now well settled that a corporation cannot avail itself of the protection afforded by s. 7 of the Charter. In Irwin Toy Ltd. v. Quebec (Attorney General), [1989] 1 S.C.R. 927, this Court stated that the word "Everyone" in s. 7 excludes corporations and other artificial entities incapable of enjoying life, liberty or security of person, and includes only human beings. However, as was stated above in our analysis of testimonial compulsion, Branch and Levitt, as representatives of the corporation may receive the benefit of immunity protection in so far as they are personally implicated by their own evidence. Hence, the issue turns to the nature of the compulsion.
(ii) Nature of the Compulsion
41 As a preliminary matter, the issue in respect of these documents is whether their production can be compelled in the investigative proceeding being conducted by the Commission and not their subsequent use. In S. (R.J.) the Court decided that with respect to oral testimony a witness who is subpoenaed to testify is entitled to raise compellability at the subpoena stage and, if compelled, to raise the matter again in subsequent proceedings against the witness in which the previous testimony may be used. In addition, if the subsequent proceeding is not stayed, the witness can object to any use of his or her previous testimony on the basis of the "but for" test. The "but for" test in S. (R.J.) does not apply to the subpoena stage. The "but for" test assumes that the witness has been compelled to testify and seeks to offer protection against self-incrimination by restricting the scope of subsequent use. The inquiry in issue in this appeal is not a subsequent proceeding necessitating resort to the "but for" test.
42 At the stage of compellability, therefore, 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. Moreover, the documents are not sought in a proceeding against the witness. Put another way, the "but for" test is a variant of the use immunity which is provided in s. 5(2) of the Canada Evidence Act, R.S.C., 1985, c. C-5. It takes over where that section leaves off providing greater use immunity. The circumstances under which they are applied, however, are the same. The witness must provide the evidence and rely on a prohibition with respect to its subsequent use for protection. To use the "but for" test when it is sought to introduce the document in the first instance would be analogous to using s. 5(2) to exclude a document in the same circumstances. In fact its purpose is the opposite.
43 Accordingly, so far as S. (R.J.) bears on this issue, the documents are properly compellable unless they are excluded on the basis of the principles mentioned above. The rationale both at common law and under s. 7 of the Charter 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. The participation of the compelled witness in the process of production is a relevant consideration, in so far as the state may lack alternate means of acquiring of the information. This is a distinction that is well recognized in our law and is applied generally in the rules of privilege. For example, a solicitor-client privilege cannot be claimed for all documents that have passed between solicitor and client for the purpose of obtaining legal advice unless the documents were brought into existence for this purpose. If a document is not privileged when the party to litigation receives it, merely depositing a copy of the document with a party's solicitor or making a copy of that document by the solicitor for litigious purposes would not make it privileged: Ventouris v. Mountain, [1991] 3 All E.R. 472 (C.A.); R. v. Wurm (1979), 24 A.R. 380 (Alta. S.C.T.D.); and Dubai Bank Ltd. v. Galadari, [1989] 3 All E.R. 769 (C.A.).
44 In Thomson Newspapers, supra, Sopinka J. illustrated this distinction between communications brought into existence by the exercise of state compulsion, versus documents that contain communications made before and independently of such compulsion, by reference to the law relating to the execution of search warrants. At page 608, Sopinka J. stated:
It is a distinction that is made virtually every day in connection with police investigations. While suspects are entitled to remain silent, their documents may be seized by means of a search warrant under the Criminal Code. No right to remain silent or privilege against self-incrimination will avail to protect against seizure of the documents. Examples abound of the routine admission of documentary evidence which has been seized: see for example Morris v. The Queen, [1983] 2 S.C.R. 190; R. v. Gaich (1956), 24 C.R. 196 (Ont. C.A.); and R. v. Hannam, [1964] 2 C.C.C. 340 (N.S.C.A.)
45 We know of no instance in which it was suggested that the common law right to silence which protected communications by a suspect to the police extended to documents of a suspect.
46 This distinction is one that was made by Lamer J. (as he then was), in R. v. Collins, [1987] 1 S.C.R. 265, in relation to the admissibility of evidence obtained in a manner that violated the Charter under s. 24(2). That is a distinction which we have continued to make.
47 In some cases, the production of documents from the possession of a person may have communicative aspects. Possession of a document may permit an inference of knowledge of the contents of the document. See R. v. Container Materials Ltd., [1940] 4 D.L.R. 293 (Ont. S.C.). Furthermore, if the party in possession has recognized, adopted or acted on the document an admission of acceptance of its contents as true may be inferred. See R. v. Famous Players, [1932] O.R. 307 (S.C.).
48 This aspect of the matter is, however, not of concern at the compellability stage. If 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 compelled. 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. We are not, however, at that stage in this case and it would not be useful to try to elaborate on this aspect of the matter until it arises. We also leave for future consideration the relevance of the regulatory context in determining the scope of s. 7 protection against self-incrimination in a case where the documents do not pre-exist the statutory compulsion to produce, but rather have been created by statutory compulsion.
49 To reiterate, the issue raised by this portion of the appeal is whether s. 128(1) of the Securities Act infringes s. 8 of the Charter. The foundation for a s. 8 analysis was laid by Dickson J. (as he then was) in Hunter v. Southam Inc., [1984] 2 S.C.R. 145. As Dickson J. stated, at pp. 159-60, one of the clear purposes of the Charter is the protection of the individual's reasonable expectation of privacy:
The guarantee of security from unreasonable search and seizure only protects a reasonable expectation. This limitation on the right guaranteed by s. 8, whether it is expressed negatively as freedom from "unreasonable" search and seizure, or positively as an entitlement to a "reasonable" expectation of privacy, indicates that an assessment must be made as to whether in a particular situation the public's interest in being left alone by government must give way to the government's interest in intruding on the individual's privacy in order to advance its goals, notably those of law enforcement. [Emphasis in original.]
50 Dickson J. set forth several criteria which had to be met in order that a search be reasonable. These criteria were summarized by Wilson J. at p. 499 of Thomson Newspapers:
(a)a system of prior authorization, by an entirely neutral and impartial arbiter who is capable of acting judicially in balancing the interests of the State against those of the individual;
(b)a requirement that the impartial arbiter must satisfy himself that the person seeking the authorization has reasonable grounds, established under oath, to believe that an offence has been committed;
(c)a requirement that the impartial arbiter must satisfy himself that the person seeking the authorization has reasonable grounds to believe that something which will afford evidence of the particular offence under investigation will be recovered; and
(d)a requirement that the only documents which are authorized to be seized are those which are strictly relevant to the offence under investigation.
51 It is important to note, however, that these criteria were articulated in the context of an appeal concerning the validity of a section which was, in essence, criminal or quasi-criminal. It is clear that the context within which the alleged violation takes place must be considered, for it is the context which determines the expectation of privacy that is legitimately expected. The following comments of Wilson J. in R. v. McKinlay Transport Ltd., [1990] 1 S.C.R. 627, at p. 645, are instructive:
Since individuals have different expectations of privacy in different contexts and with regard to different kinds of information and documents, it follows that the standard of review of what is "reasonable" in a given context must be flexible if it is to be realistic and meaningful.
52 Therefore, it is clear that the standard of reasonableness which prevails in the case of a search and seizure made in the course of enforcement in the criminal context will not usually be the appropriate standard for a determination made in an administrative or regulatory context: per La Forest J. in Thomson Newspapers. The greater the departure from the realm of criminal law, the more flexible will be the approach to the standard of reasonableness. The application of a less strenuous approach to regulatory or administrative searches and seizures is consistent with a purposive approach to the elaboration of s. 8: Thomson Newspapers.
53 While the expectation of privacy with respect to criminal matters seems certain, the standard of reasonableness to be applied in the regulatory and administrative realm is less well defined. Wilson J. found in McKinlay Transport, at pp. 645-46, that the point was aptly made by A. D. Reid and A. H. Young in "Administrative Search and Seizure Under the Charter" (1985), 10 Queen's L.J. 392, at pp. 398-99:
There are facets of state authority, generically associated with search or seizure, that are so intertwined with the regulated activity as to raise virtually no expectation of privacy whatsoever. . . . Other activities are regulated so routinely that there is virtually no expectation of privacy from state intrusion. Annual filing requirements for banks, corporations, trust companies, loan companies, and the like are inextricably associated with carrying on business under state licence.
There are other situations in which government intrusion cannot be as confidently predicted, yet the range of discretion extended to state officials is so wide as to create in the regulatee an expectation that he may be inspected or requested to provide information at some point in the future. This may arise in the form of an inspection carried out either on a "spot check" basis, or on the strength of suspected non-compliance. The search may be in the form of a request for information that is not prescribed as an annual filing requirement, but is required to be produced on a demand basis. For the most part, there is no requirement that these powers be exercised on belief or suspicion of non-compliance. Rather, they are based on the common sense assumption that the threat of unannounced inspection may be the most effective way to induce compliance. They are based on a view that inspection may be the only means of detecting non-compliance, and that its detection serves an important public purpose.
54 Thus, it is incumbent that an examination of the nature of the securities context be undertaken. As mentioned above, the primary goal of securities legislation is the protection of the investor, but other goals include capital market efficiency and ensuring public confidence in the system. In Pezim, supra, the Court noted that the British Columbia Securities Act is regulatory in nature and stated at p. 589 that it forms part of a much larger framework which regulates the securities industry throughout Canada:
Within this large framework of securities regulation, there are various government administrative agencies which are responsible for the securities legislation within their respective jurisdictions. The [British Columbia Securities] Commission is one such agency. Also within this large framework are self‑regulatory organizations which possess the power to admit and discipline members and issuers. The [Vancouver Stock Exchange] falls under this head. Having regard to this rather elaborate framework, it is not surprising that securities regulation is a highly specialized activity which requires specific knowledge and expertise in what have become complex and essential capital and financial markets.
55 With this in mind, the obvious question becomes what degree of privacy can those subject to investigation under the British Columbia Securities Act reasonably expect in respect of activities and matters with which such investigations may be concerned. The relevant provisions of the Act are reproduced below for ease of analysis.
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.
56 It is clear that in numerous instances a regulatory regime will be needed in order to act as a check on an individual's self-interest. There are surely times when one's own motivations and objective are not of benefit to society on a wider scale. As we have already mentioned, the primary goal of securities regulation is the protection of the investing public. The importance of this goal, as against the reasonable expectation of privacy of securities traders, is what we are considering here. At this intersection, the words of our colleague, La Forest J., in Thomson Newspapers, supra, at pp. 506-7, ring particularly true:
But the degree of privacy the citizen can reasonably expect may vary significantly depending upon the activity that brings him or her into contact with the state. In a modern industrial society, it is generally accepted that many activities in which individuals can engage must nevertheless to a greater or lesser extent be regulated by the state to ensure that the individual's pursuit of his or her self-interest is compatible with the community's interest in the realization of collective goals and aspirations. In many cases, this regulation must necessarily involve the inspection of private premises or documents by agents of the state. The restaurateur's compliance with public health regulations, the employer's compliance with employment standards and safety legislation, and the developer's or homeowner's compliance with building codes or zoning regulations, can only be tested by inspection, and perhaps unannounced inspection, of their premises. Similarly, compliance with minimum wage, employment equity and human rights legislation can often only be assessed by inspection of the employer's files and records.
57 There are areas of business, for example, that are subject to regulation as a matter of course. Persons who carry on the business of trading in securities realize that the industry is heavily regulated and for good reason. It is a crucial part of our economy that is at stake. In Pezim, supra, at pp. 592-93, this Court relied on the following position articulated by Fauteux J. in Gregory & Co. v. Quebec Securities Commission, [1961] S.C.R. 584, at p. 588:
The paramount object of the Act is to ensure that persons who, in the province, carry on the business of trading in securities or acting as investment counsel, shall be honest and of good repute and, in this way, to protect the public, in the province or elsewhere, from being defrauded as a result of certain activities initiated in the province by persons therein carrying on such a business.
58 In our opinion, persons involved in the business of trading securities do not have a high expectation of privacy with respect to regulatory needs that have been generally expressed in securities legislation. It is widely known and accepted that the industry is well regulated. Similarly, it is well known why the industry is so regulated. The appellants in this case were well aware of the dictates of the Securities Act. Once again, we rely on the words of La Forest J. at p. 507 of Thomson Newspapers:
It follows that there can only be a relatively low expectation of privacy in respect of premises or documents that are used or produced in the course of activities which, though lawful, are subject to state regulation as a matter of course. In a society in which the need for effective regulation of certain spheres of private activity is recognized and acted upon, state inspection of premises and documents is a routine and expected feature of participation in such activity. As A. D. Reid and A. H. Young point out in their article "Administrative Search and Seizure Under the Charter" (1985), 10 Queen's L.J. 392, at p. 399, there is a "large circle of social and business activity in which there is a very low expectation of privacy", and in which the "issue is not whether, but rather when, how much, and under what conditions information must be disclosed to satisfy the state's legitimate requirements".
59 Hence, the Securities Act is essentially a scheme of economic regulation which is designed to discourage detrimental forms of commercial behaviour. The provisions provided by the legislature are pragmatic sanctions designed to induce compliance with the Act. After all, the Act is really aimed at regulating certain facets of the economy and business. This has obvious implications for the nation's material prosperity: Thomson Newspapers. As such, the effective implementation of securities legislation depends on the willingness of those who choose to engage in the securities trade to comply with the defined standards of conduct. In this respect, we fully agree with Wilson J.'s comments that "[a]t some point the individual's interest in privacy must give way to the broader state interest in having the information or document disclosed": Thomson Newspapers, at p. 495.
60 Of equal importance is the nature of the seizure authorized by the Securities Act. 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. The importance of this distinction was stressed in Baron v. Canada, [1993] 1 S.C.R. 416. At page 443, the Court adopted the following statement from the reasons of Wilson J. McKinlay Transport, supra, at pp. 649-50:
In my opinion, s. 231(3) provides the least intrusive means by which effective monitoring of compliance with the Income Tax Act can be effected. It involves no invasion of a taxpayer's home or business premises. It simply calls for the production of records which may be relevant to the filing of an income tax return.
61 In R. v. Borden, [1994] 3 S.C.R. 145, it was stated that, "[t]he question of whether the seizure was unreasonable can be disposed of simply. In the absence of prior judicial authorization, a search or seizure will be unreasonable unless it is authorized by law, the law itself is reasonable and the manner in which the search was carried out is reasonable" (p. 165). In this case, the outstanding issue is whether the law is reasonable: R. v. Kokesch, [1990] 3 S.C.R. 3, R. v. Collins, supra, and R. v. Wiley, [1993] 3 S.C.R. 263. As we have indicated above, the Securities Act serves an important social purpose and the social utility of such legislation justifies the minimal intrusion that the appellants may face. The law in question, is therefore, reasonable.
62 As our final point, we note the distinction between business records and personal papers. We are of the view that in order to determine the relative privacy rights that attach, the type of document at issue is important. 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. Again, the words of La Forest J. in Thomson Newspapers, at pp. 517-18, are helpful:
While such records are not devoid of any privacy interest, it is fair to say that they raise much weaker privacy concerns than personal papers. The ultimate justification for a constitutional guarantee of the right to privacy is our belief, consistent with so many of our legal and political traditions, that it is for the individual to determine the manner in which he or she will order his or her private life. . . . But where the possibility of such intervention is confined to business records and documents, the situation is entirely different. These records and documents do not normally contain information about one's lifestyle, intimate relations or political or religious opinions. They do not, in short, deal with those aspects of individual identity which the right of privacy is intended to protect from the overbearing influence of the state. On the contrary, as already mentioned, it is imperative that the state have power to regulate business and the market both for economic reasons and for the protection of the individual against private power. Given this, state demands concerning the activities and internal operations of business have become a regular and predictable part of doing business. Under these circumstances, I cannot see how there would be a very high expectation of privacy in respect of records and documents in which this information is contained.
63 Therefore, we conclude that those who are ordered under s. 128(1) of the Securities Act "to produce records and things" can claim only a limited expectation of privacy in respect of these materials. The operative question becomes whether s. 128(1) unreasonably infringes on this limited expectation of privacy.
64 In our view it does not. We have already mentioned that in a highly regulated industry, such as the securities market, the individual is aware, and accepts, justifiable state intrusions. All those who enter into this market know or are deemed to know the rules of the game. As such, an individual engaging in such activity has a low expectation of privacy in business records. In fact, "there will be instances in which an individual will have no privacy interest or expectation in a particular document or article required by the state to be disclosed": McKinlay Transport, supra, at pp. 641-42. Under such circumstances, the state authorized inspection of documents under s. 128(1) of the Securities Act does not violate s. 8 of the Charter.
VI. Disposition
65 We thus answer the constitutional questions as follows:
1.[Does] s. 128(1) of the Securities Act, S.B.C. 1985, c. 83, infringe[] ss. 7 or 8 of the Canadian Charter of Rights and Freedoms?
Answer:No.
2.If the answer is yes, is the limitation one which is reasonable, prescribed by law, and demonstrably justified pursuant to s. 1 of the Charter?
Answer:It is not necessary to answer this question.
66 We would dismiss the appeal with costs.
The following are the reasons delivered by
67 L'Heureux-Dubé J. -- I agree with Sopinka and Iacobucci JJ. that this appeal should be dismissed and I would answer the constitutional question in the manner they propose. I agree with their analysis and conclusions regarding s. 8 of the Canadian Charter of Rights and Freedoms. However, given my concurring reasons in R. v. S. (R.J.), [1995] 1 S.C.R. 451, and in Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425, I feel bound to make the following additional comments with respect to the application of s. 7 of the Charter.
A. Self-Incrimination and Section 7 of the Charter
68 The English House of Lords in R. v. Director of Serious Fraud Office, Ex parte Smith, [1993] A.C. 1, at pp. 31-32, recently identified the following four rationales as underlying the immunities stemming from the principle against self-incrimination:
1. An assertion of personal liberty and privacy;
2. A long history of reaction against abuses of judicial interrogation, notably by the Star Chamber and the Council;
3. Instincts about rules of fair play; and
4. The desire to minimize the risk that an accused will be convicted on the strength of an extra-judicial confession.
In my reasons in S. (R.J.), supra, I also explored the first principles underlying much of the Charter and common law, including the right to silence and the principle against self-incrimination. I concluded that the main rationale in Canada for the devout protection at common law against self-incrimination was concern over the reliability of the compelled evidence, and its potential to mislead a trier of fact. Although notions of individual dignity, fairness and privacy were also relevant to the inquiry, I preferred to treat these notions separately, within the rubric of fundamental fairness. As such, I sought to elaborate upon an approach to self-incrimination that was tailored to the type of rationale engaged by the impugned conduct (i.e., reliability considerations as opposed to fairness considerations). Given the importance of balancing societal and individual interests as carefully as possible within s. 7 of the Charter, I preferred to steer clear of any universal application of the principle against self-incrimination that might, as a consequence, be overbroad.
69 I then analyzed derivative evidence against the underlying rationales of reliability and fairness. I concluded that where evidence is conscripted by the state yet is not communicative in nature, concerns about the use of that evidence at trial relate not to the reliability of that evidence or its potential to mislead, but rather to notions of privacy, dignity and fairness to the individual. Since compelled testimony may not, by virtue of s. 13 of the Charter, be used to prove the relevance at trial of evidence derived from the compelled testimony, it follows that derivative evidence will only be admissible if it can be independently and reliably connected to the individual accused. As such, although derivative evidence is incriminating, it is not self-incriminating in the sense envisioned by our common law and our principles of fundamental justice, because it does not potentially engage reliability interests.
70 Since derivative evidence is not per se in violation of the principles of fundamental justice, I concluded that any objection to its use at trial must relate to the manner in which it was obtained rather than to the fact that it exists. Thus, any residual s. 7 protections governing the use of such evidence at trial should develop in a manner consistent with the underlying notions of dignity and fairness rather than out of any abstract and potentially overbroad principle against self-incrimination.
71 In my reasons in S. (R.J.), I identified two stages at which s. 7 concerns might be addressed. The first stage is the subpoena stage (the time the witness is compelled). At this stage, the possibility of imprisonment flowing from a failure to testify is sufficient to trigger s. 7 protection. Where the witness can demonstrate at that time that, under the circumstances, it would be fundamentally unfair to require that he testify at all, then the principles of fundamental justice under s. 7 require that he not be compellable. The second stage that I identified in S. (R.J.) was the trial stage (the time the witness is tried). Again, at this stage, protections under s. 7 will only be triggered if the witness can demonstrate that he or she faces the possibility of a deprivation of life, liberty or security of the person as a result of the proceeding. In S. (R.J.), I noted that it would be open to an individual at the trial stage under such circumstances to demonstrate fundamentally unfair conduct by the Crown in its prior examinations of the witness.
72 The determination of whether there is a s. 7 violation at the subpoena stage is necessarily interrelated with the applicability of s. 7 at the trial stage. As I observed in S. (R.J.), since the fairness concerns underlying self-incrimination and the right to silence ultimately relate to the proceeding at which the individual is to be tried (see also Dubois v. The Queen, [1985] 2 S.C.R. 350, at pp. 362-63), it necessarily follows that the likelihood that an individual will actually face a charge involving a deprivation of liberty must be an important factor in the determination of compellability at the subpoena stage. Where there is no possibility that the individual may be deprived of liberty at the subsequent proceeding, then this individual cannot claim on the basis of s. 7 of the Charter that it would be fundamentally unfair to compel his or her testimony at the subpoena stage. 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. For these reasons, and in light of my discussion in S. (R.J.) on the speculative nature of many of the other considerations relating to determinations at the subpoena stage, the subpoena will only be quashed at the subpoena stage in the clearest of cases. I note that this now appears to be the conclusion of my colleagues Sopinka and Iacobucci JJ. as well.
B. Testimonial Compulsion
1. The "Subpoena Stage"
73 The appellants in this case argue that any proceeding under any statute which exposes a person to penal consequences and which denies that person the right to silence and the privilege against self-incrimination violates s. 7 of the Charter. They further submit that if a proceeding is designed or can be used to conscript a person against him or herself and true penal consequences can result, then the proceedings are in violation of s. 7. They therefore ask this Court either to recognize a right to silence on the part of the directors sought to be compelled by the British Columbia Securities Commission or to replace this protection with a protection that is co-extensive with that protection -- derivative evidence immunity. In many ways, their arguments embody much of what Wilson J. referred to in Edmonton Journal v. Alberta (Attorney General), [1989] 2 S.C.R. 1326, as the "abstract approach" to the Charter, for their arguments attach much importance to the abstract values of self-incrimination and right to silence without attempting to relate those values to the context in which they arise. The respondent and the interveners, by contrast, urge a more contextual examination of the question, which focuses on the nature of the securities industry as well as on the methods available to regulators to carry out their mandate of providing effective protection to the public against unscrupulous or misleading practices by market participants.
74 My colleagues Sopinka and Iacobucci JJ. state that a witness will not be compellable where the predominant purpose for seeking the evidence is to obtain incriminating evidence against the person compelled to testify, rather than further some legitimate public purpose. For the reasons I set out in S. (R.J.), supra, I believe this test generally to be a satisfactory proxy for the existence of fundamentally unfair conduct on the part of the Crown, in violation of s. 7 of the Charter. I feel it necessary, however, to make the following additional remarks.
75 In my respectful view, the regulatory context of the present appeal requires that this s. 7 test be applied with somewhat greater deference than might otherwise be the case. The importance of applying the principles of fundamental justice with sensitivity to the context in which they are applied has been underlined by La Forest J. in R. v. Lyons, [1987] 2 S.C.R. 309, at p. 361:
It is also clear that the requirements of fundamental justice are not immutable; rather, they vary according to the context in which they are invoked. Thus, certain procedural protections might be constitutionally mandated in one context but not in another.
(See also R. v. Wholesale Travel Group Inc., [1991] 3 S.C.R. 154, and R. v. Ellis‑Don Ltd., [1992] 1 S.C.R. 840.) Equally apposite is La Forest J.'s observation in Lyons, at p. 362, that
s. 7 of the Charter entitles the appellant to a fair hearing; it does not entitle him to the most favourable procedures that could possibly be imagined.
In my view, a standard of conduct which may be fundamentally unfair in the context of compelling the testimony of separately charged co-accused may not necessarily be fundamentally unfair in the context of administrative proceedings in a highly complex and tightly regulated field such as the securities industry. This, for several reasons.
76 First, the argument that fundamental fairness may require different standards in different contexts is evidenced by the different procedural protections that we generally accord to witnesses called to appear at hearings similar to that challenged in the present case. Although those conducting an investigation are always under a duty to act fairly, this Court has held that fairness in the context of such hearings does not require that the persons who are the "subjects" of the investigation participate in the examination of other witnesses, or that they be provided with an opportunity to adduce evidence or make submissions to the investigator: Roper v. Royal Victoria Hospital, [1975] 2 S.C.R. 62, and Irvine v. Canada (Restrictive Trade Practices Commission), [1987] 1 S.C.R. 181. See also Ontario Securities Commission v. Biscotti (1988), 40 B.L.R. 160 (Ont. H.C.).
77 Second, although activity in the securities sphere is of immense economic value to society generally, it must be remembered that participants engage in this licensed activity of their own volition and ultimately for their own profit. In return for permitting persons to obtain the fruits of participation in this industry, society requires that market participants also undertake certain corresponding obligations in order to safeguard the public welfare and trust. Participants must conform with the extensive regulations and requirements set out by the provincial securities commissions. Many of these requirements are fundamental to maintaining an efficient, competitive market environment in a context where imperfect information is endemic. They are also essential to prevent and deter abuses of such asymmetries of information, and therefore to maintain the integrity of the securities system and protect the public interest.
78 Third, given the nature and breadth of this obligation, as well as the important economic stake that the investing public holds in its proper fulfilment, I fail to see how market participants would not expect to be questioned by regulators from time to time as to their market activities, in order for the securities commissions to be able to ensure that they, or the corporations they represent, have complied with prescribed standards. Although similar comments are more frequently made in relation to the notion of "reasonable expectation of privacy" under s. 8 of the Charter, I believe such considerations to be equally relevant to the application of the principles of fundamental justice under s. 7 of the Charter in the context of securities regulation. Indeed, as La Forest J. observed in Thomson Newspapers, supra, at p. 539, referring to his reasons in Lyons, supra, and R. v. Beare, [1988] 2 S.C.R 387, one must "consider (the impugned legislation) against the applicable principles and policies that have animated legislative and judicial practice in the field".
79 A fourth consideration is the nature and complexity of the securities industry and the difficulties faced by regulators in ensuring the continued protection of the public. The Attorney General for Ontario identifies the three types of market players regulated by the Securities Act, S.B.C. 1985, c. 83: market professionals and traders, issuers of securities, and owners and/or holders of securities. She argues, convincingly in my mind, that the investigatory powers impugned in the present case are the primary vehicle for the effective investigation and deterrence of insider trading, stock manipulation, and other trading practices contrary to the public interest that may be engaged in by any or all of these three types of players. Moreover, she argues that such powers are the only investigative vehicle currently available in respect of owners and holders of securities.
80 Finally, the fundamental fairness of the powers of testimonial compulsion and document production in s. 128(1) of the Act must be evaluated in light of all other rights equally guaranteed under the Charter. Where a company officer is summoned to attend a hearing before investigators, he knows what the subject of the inquiry is. He can prepare himself for the questions. He will generally be accompanied by his lawyers. At the hearing itself, he will be treated with courtesy and will be given every opportunity to consult his lawyers and consider his answers. He will produce those documents requested by the investigators. It would be ironic to conclude that such a proceeding is, itself, 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. Given the profound asymmetries of information between market players and market regulators in the securities industry, such a reasonable alternative might very well require conferring upon securities regulators broad, intrusive and sweeping search and seizure powers. I raise this point to demonstrate why it is important not to contemplate Charter rights and principles in the abstract, without regard for the potential repercussions of certain conclusions on the enjoyment of other equally important Charter rights: see Wholesale Travel, supra, at p. 247, per Cory J.
81 To recapitulate, although the distinction may often be difficult to draw, courts must try to 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 of the Charter, the latter do not.
82 As such, notwithstanding that one of the primary purposes of an investigation under s. 128(1) of the Securities Act is to engage in a form of civil discovery of the witness as well as of the company to illuminate or investigate irregularities or suspicious conduct, I agree with Sopinka and Iacobucci JJ. that it has not been demonstrated that testimonial compulsion at these proceedings would be fundamentally unfair to the witnesses. As I recognized in Thomson Newspapers, supra, at p. 578, "[c]ompelling the attendance of witnesses is an established investigatory tool in this age of governmental regulation of the economy." Although such powers of investigation may not always be necessary in regulatory contexts, I conclude that they are indeed necessary in the present instance, given the profound asymmetry of information facing securities regulators, the close relationship between such investigatory powers and the obligations voluntarily undertaken by those participating in this regulated activity, and the lack of a less intrusive alternative means to investigate and deter market irregularities and improper conduct by market players.
83 I find additional support for this conclusion in the following four considerations: (1) these kinds of inquiries are purely administrative in nature and do not adjudicate upon the guilt or innocence of the subject of the investigation; (2) it is generally a matter of speculation at the time of the testimony to know whether the compelled witness is speaking for himself or for the company, and whether the information disclosed could lead the state to take action against the individual or the company; (3) at the outset of an investigation, it is often uncertain whether any breach of the law has even occurred and, if so, whether any persons summoned may be implicated in this breach; and (4) even if the individual is shown by the investigation to be implicated in a breach and the state decides to take further action, it is far from certain that this action will entail the possibility of a deprivation of liberty, thereby bringing the state action within the purview of s. 7 of the Charter. As I noted earlier, the more remote or speculative the possibility of imprisonment at the trial stage, the less likely that relief against testifying will be offered at the subpoena stage. The witnesses in this case have not demonstrated how any of these considerations are inapplicable to the present circumstances.
84 Finally, I reiterate that the principles of fundamental justice are derived from our common law tradition. What is or is not fundamentally unfair can be informed by examining these traditions. In the traditional criminal law domain, it has generally been seen as fundamentally unfair for the state to seek as its predominant purpose to compel an individual, subject to possible imprisonment for failure to answer, to respond to questions on matters that will incriminate that person, even if this power were accompanied by testimonial use immunity. I do not think that the same can necessarily be said with respect to the necessary regulation of complex industries, in which the information required for effective regulation is generally in the hands of private actors, and where no less intrusive alternative means of obtaining that information exists.
85 As such, I conclude that the directors have not demonstrated that, in these circumstances, it would violate their rights under s. 7 of the Charter for them to be compelled to testify at the inquiry under s. 128(1) of the Act.
86 At this juncture, I must add one last proviso. Having recognized that witnesses are entitled to challenge on substantive grounds the subpoena issued under s. 128(1) of the Act, we must be cognizant of the fact that the securities industry is acutely "time sensitive". The longer improper market activities are permitted to continue unabated, the greater the potential adverse impact on the investing public. In order to address this danger, the Commission is empowered with the ability, amongst other things, to suspend all trading of particular securities and to suspend particular individuals from trading securities without a hearing in appropriate circumstances. Expeditious investigation into irregularities and suspected market misconduct is an important way by which to minimize the severity of such orders. I would therefore urge that challenges to the subpoena, should they be made, be heard as expeditiously as possible.
2. The "Trial Stage"
87 It goes without saying that s. 13 of the Charter mandates that the compelled witnesses shall enjoy full testimonial immunity in any subsequent proceedings undertaken by the state. My colleagues, however, would also appear to allow those who have been compelled to testify in a s. 128 inquiry to enjoy an additional derivative evidence immunity at the trial stage, along the lines of the "but for" approach outlined by Iacobucci J. in S. (R.J.). With all due respect, I cannot agree with this conclusion for two reasons. First, as I stated in S. (R.J.), I am opposed in principle to such immunity, for the significant practical and theoretical problems that it raises. I see no point in reviving that discussion again.
88 Second, even if the "but for" standard is an appropriate level of s. 7 protection in a purely criminal context, this does not mean that it is equally suited for use in predominantly regulatory contexts. As I have already noted, this Court has on many occasions recognized that the principles of fundamental justice under s. 7 of the Charter may vary in their application, depending upon the context. Many of the interests underlying the principle against self-incrimination, such as elements of fairness, basic human dignity and privacy, 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. In this respect, I think it important to heed the admonition of Wilson J. in Edmonton Journal, supra, at pp. 1353-54:
One thing seems clear and that is that one should not balance one value at large and the conflicting value in its context. To do so could well be to pre-judge the issue by placing more weight on the value developed at large than is appropriate in the context of the case. [Emphasis added.]
In my respectful view, employing the identical "but for" standard in circumstances in which the underlying rationales of the principles against self-incrimination are not significantly engaged may elevate that principle to an exalted position that is not balanced, necessary or appropriate in many regulatory situations.
89 The potential difficulties of using such a rigid s. 7 standard within the ambit of the Securities Act is evident. Many of the interveners argue strenuously that it would significantly undermine their ability to administer and enforce securities regulations effectively if this Court were to grant blanket derivative evidence immunity to those who are subject to s. 128 investigations. I agree. Regulation is impotent unless it can also be effectively enforced, and information is of limited use unless it can be acted upon.
90 It is all very well to say that we are permitting the state to pursue certain important regulatory purposes by holding individuals to be compellable to testify at Securities Act investigations. At the same time, however, we must be careful not to defeat those very purposes by unconditionally granting derivative evidence immunity to those under investigation. The existence of such an immunity could neutralize in large part the regulators' ability to enforce the Act. As such, it would also frustrate one of the main purposes of the investigatory powers conferred under s. 128 of the Act.
91 I must emphasize again that, unlike the traditional criminal law domain, the very nature of the securities industry is such that the information necessary for effective enforcement will generally be in the hands of private parties. Compelling the testimony of certain individuals may be the only reasonable means by which regulators can obtain evidence or gain a full appreciation of important information. The alternative, which I believe to be far less palatable, is for investigators to resort to highly intrusive search and seizure powers. This Court has previously recognized and taken into consideration the difficulties involved in regulating activities in a licensed sphere, where important information is generally only in the possession of the private individuals whose activity is the focus of the regulation: Wholesale Travel, supra, and Ellis‑Don, supra. I believe that it is indisputable that the present case calls for a similarly contextualized application of s. 7 principles.
92 As always, a delicate balance must be forged. On one hand, of course, we must not deny individuals the fullest possible Charter protections where a reasonable and less intrusive alternative measure exists by which to address the pressing and substantial desired objective. Moreover, federalism concerns already dictate that provincial securities statutes not confer upon administrative or enforcement agencies powers that would trench upon the federal jurisdiction over criminal law and procedure. On the other hand, however, we must not so handcuff securities enforcement agencies within the Constitution as to prevent them from being able to perform their jobs effectively, and fulfil their mandate of protecting the public interest.
93 I accept the interveners' submission that the Securities Act provides for both civil and criminal penalties in order to address the full range of behaviour that may be involved. I further accept that imprisonment will generally be an exceptional remedy, saved for exceptional circumstances. Without the benefit of a closer examination of the specific contexts in which imprisonment may arise as a possible eventual consequence, I do not think that it is appropriate 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. To the extent that my colleagues recognize that individuals will enjoy some s. 7 derivative evidence immunity protection at the trial stage, I take them to leave open the possibility that this protection may vary according to context, and in particular according to the extent to which the various purposes underlying the principle against self-incrimination (e.g., reliability, privacy, dignity, fairness) are engaged in a given situation.
94 I would like to remark upon one last practical implication of coping with derivative evidence immunity. Often, particularly in the regulatory context, prosecuting authorities will seek a substantial fine rather than imprisonment upon conviction, notwithstanding that the legislation also provides for the possibility of imprisonment. In my opinion, if the authorities know at the outset of the prosecution that they will not be seeking imprisonment upon conviction, then I see no reason why they cannot apprise both the accused and the trial judge of this fact at the beginning of the trial proceedings. Under such circumstances, since no possibility of a deprivation of liberty would therefore exist, there would consequently be no need for a court to engage in any derivative evidence immunity analysis under s. 7 of the Charter. In this way, particularly in complex investigations, the spectre of lengthy voir dires into whether or not the Crown would have had the evidence "but for" the compelled testimony will not be necessary. Both the court and the parties involved will spare themselves considerable time and resources, and only those Charter protections consistent with the peril faced by the individual accused need be contemplated.
C. Document Production
95 I agree with Sopinka and Iacobucci JJ. that the compulsion to produce pre-existing documents in s. 128(1)(c) of the Securities Act does not violate s. 7 of the Charter if it is found that the person subpoenaed is compellable to testify. I believe it necessary to elaborate slightly upon their remarks, however.
96 Unlike testimonial compulsion, for which special considerations apply, it is not necessary to recognize any additional protections at the trial stage in order for pre-existing documents to be compellable at the subpoena stage. Indeed, as I noted in Thomson Newspapers, supra, at p. 588:
. . . an order requiring an individual or the officer of a corporation to produce documents does not involve the fabrication of evidence; the individual or officer acts as a "mere conduit" for the delivery of pre-existing records. . . . Thus, there is no suggestion that the use of such evidence in a subsequent trial would affect the fairness of the proceedings.
A clear line must be drawn between, on one hand, the compelled production of pre-existing documents and, on the other hand, the compelled production of documents which are themselves produced pursuant to statutory compulsion. While the latter may, indeed, engage some self-incriminatory concerns since the individual will have generated them under state compulsion, it is evident that the former should not engage such concerns since they have not been generated subject to any such compulsion.
97 This conclusion is fortified by some very real and pragmatic concerns. The securities domain is a licensed field, which individuals enter for their own profit. Pre-existing documents are often the focus of investigations under the Securities Act. It would render the Securities Act virtually unenforceable to preclude the authorities from relying upon such documents at subsequent proceedings against the individuals who produced them. Moreover, given the complexity of securities matters, I suspect that it would also be virtually impossible for the Crown to demonstrate that it did not use the documents to gain an appreciation of the evidence against the individual. Indeed, we must recall that the compelled production of documents is the least intrusive means possible by which the state can obtain the documents, and therefore the most consistent with maintaining the dignity and privacy of the individuals involved. It would be wholly counter-intuitive to conclude that the state could not use such documents, or evidence derived therefrom, to incriminate the individual unless it obtained those documents through a far more invasive search and seizure procedure which would, in turn, be far more likely to affront notions of privacy, dignity and fairness to the individual.
98 As a result, I am satisfied that there is nothing whatsoever that is fundamentally unfair or otherwise contrary to s. 7 of the Charter in requiring the production of such records and in the possibility that such records 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 adopted by the majority of this Court in S. (R.J.) does not apply at the trial stage to pre-existing documents. I also agree with my colleagues, however, that the question of the compellability of documents produced pursuant to statutory obligation is not raised in this appeal, and therefore remains to be addressed in future cases.
D. Disposition
99 Accordingly, I would dismiss the appeal, and answer the constitutional questions in the manner proposed by Sopinka and Iacobucci JJ.
The following are the reasons delivered by
100 Gonthier J. -- I agree with the reasons of Justice Sopinka and Justice Iacobucci. I also agree with the additional comments of Justice L'Heureux-Dubé relating to evidence in a regulatory context.
Appeal dismissed with costs.
Solicitors for the appellants: Rees‑Thomas & Company, Richmond, B.C.
Solicitor for the respondent: Mark L. Skwarok, Vancouver.
Solicitor for the intervener the Attorney General of Canada: John C. Tait, Ottawa.
Solicitor for the intervener the Attorney General for Ontario: George Thomson, Toronto.
Solicitor for the intervener the Attorney General of Quebec: The Department of Justice, Ste‑Foy.
Solicitor for the intervener the Attorney General of Nova Scotia: The Attorney General of Nova Scotia, Halifax.
Solicitor for the intervener the Attorney General of Manitoba: The Department of Justice, Winnipeg.
Solicitor for the intervener the Attorney General of British Columbia: The Ministry of the Attorney General, Victoria.
Solicitor for the intervener the Attorney General for Saskatchewan: W. Brent Cotter, Regina.
Solicitor for the intervener the Attorney General for Alberta: The Attorney General for Alberta, Edmonton.