Simon's Megalomaniacal Legal Resources

Evidence - Self-Incrimination [EA s.9(1-2)]

. Hogg v. Chief Executive Officer

In Hogg v. Chief Executive Officer (Ont Div Ct, 2025) the Ontario Divisional Court dismissed an appeal, here brought against a decision of a "panel of the Capital Markets Tribunal (the “Panel”) [that] found that the appellants committed two frauds contrary to the Securities Act, R.S.O. 1990, c S. 5. Additionally, the Panel found that the sale of tokens, without a prospectus and registration amounted to further breaches of the Securities Act.[1] Among the remedies ordered, Mr. Hogg was held jointly and severally liable for a portion of the disgorgement of the lost funds".

Here the court considers s.9(2) ['Answer not to be used in evidence against witness'] of Ontario's Evidence Act:

[56] Subsection 9(1) of Ontario's Evidence Act prevents a witness from refusing to answer questions by claiming the answer might incriminate them or establish liability in a civil proceeding. Subsection 9(2) states that such compelled answers cannot be used as evidence against the witness in any civil proceeding or in any proceeding under any Act of the Legislature.

[57] The appellants submit that where a party subject to an investigative interview under the Securities Act claims the protection of s. 9 of the Evidence Act, the transcript from the examination cannot be relied upon in the subsequent administrative hearing before the Tribunal. This is in part because an investigation under Part VI is not a part of the Panel proceeding, even if that proceeding is commenced because of the investigation. In arguing this, the appellants rely heavily on a Capital Markets Tribunal decision, Teknoscan Systems Inc. (Re), 2024 ONCMT 32, at para. 64.[3]

[58] The appellants point out that it was open to the respondent to summons Mr. Hogg as a witness to the hearing if they required his evidence, but they chose not to do so.

[59] I would not give effect to this ground of appeal.

[60] I find that Mr. Hogg’s reliance on s. 9 is not a bar to the use of his compelled interviews at the hearing because this regulatory proceeding under s. 127 of the Securities Act does not constitute a separate proceeding from the investigation in which the compelled interviews were taken. I conclude this for the following reasons.

[61] First, the regulatory context of the Securities Act involves the protection of the public from unscrupulous market trading practices which justifies inquiries of a limited scope to empower the regulator to obtain evidence to regulate the securities industry: British Columbia Securities Commission v. Branch, 1995 CanLII 142 (SCC), [1995] 2 S.C.R. 3, at para. 35.

[62] It is not contested that the predominant purpose of the compulsion of Mr. Hogg’s evidence was to further this regulatory purpose. Thus the admissibility of his compelled testimony did not depend upon rules regarding residual evidentiary immunity under s. 7 of the Canadian Charter of Rights and Freedoms: R. v. S.(R.J.), 1995 CanLII 121 (SCC), [1995] 1 S.C.R. 451, at pp. 558-564.

[63] In keeping with that, no Charter issues are raised by the appellants on appeal.

[64] Second, the jurisprudence does not support the appellant’s position.

[65] In Todorov v. Ontario Securities Commission, 2018 ONSC 4503, 142 O.R. (3d) 578, (Div. Ct.), this Court dealt with the very issue of the admissibility of a compelled interview under s. 13 of the Securities Act in a s. 127 proceeding. In that case, the appellants argued that the use of the s. 13 interview was contrary to the Charter. The Court rejected their submission and held that given this was an administrative proceeding, the admission and use of compelled testimony in the hearing against the appellants was permissible. The Charter did not apply. While likely obiter dictum, at para. 48, Thorburn J. (as she then was) succinctly disposed of any suggestion that s. 9 of the Evidence Act might preclude admission as well:

In this case, compelled testimony is not prohibited by s. 9(2) of the Ontario Evidence Act nor did the Appellants ever claim the protection of s. 9(2) during their interviews (Re Sextant Capital Management Inc. et al., 2011 ONSEC 15, 34 O.S.C.B. 5829, at para. 9.).

[66] Noteworthy is the fact that Thorburn J. cited the very authority that the panel in Teknoscan Systems Inc. declined to follow.

[67] In Alberta (Securities Commission) v. Brost, 2008 ABCA 326, 2 Alta. L.R. (5th) 102, at paras. 37-38, the court came to the same conclusion that s. 6 of the Alberta Evidence Act, R.S.A. 2000, c. A 18, a similar provision to s. 9 of the Ontario Evidence Act, did not affect the admissibility of compelled interviews under their securities legislation. At para. 37, the court found that the compelled interviews were “not used to incriminate…nor were they used in other proceedings”. They “were used in the same regulatory proceeding in which they were obtained.” Thus, the interviews were admissible.

[68] The reasoning in Brost was adopted by this Court in College of Physicians and Surgeons of Ontario v. Yazdanfar, 2013 ONSC 6420, 317 O.A.C. 53, (Div. Ct.), at paras. 65-68. At Dr. Yazdanfar’s discipline hearing over a failed liposuction operation, the College sought to introduce the transcripts of interviews conducted by a College investigator with Dr. Yazdanfar. Those interviews were deemed by the governing health professions legislation to have the protections found in s. 33 of the Public Inquiries Act, 2009, S.O. 2009, c. 33, Sched. 6, which are effectively the equivalent of s. 9 of the Evidence Act. In finding the transcripts admissible, Harvison-Young J. (as she then was) followed Brost and held that Dr. Yazdanfar’s interviews formed a part of the same regulatory proceeding initiated with the same ultimate regulatory purpose, that is, the protection of the public. Accordingly, the restriction found in s. 33 on the use of answers given in other proceedings was not applicable.

[69] In coming to this conclusion, Harvison-Young J. noted at para. 67 that “treating the Committee hearing as a separate or other proceeding would effectively undermine the purpose of the regulatory framework and the onerous obligation placed on self-regulating bodies to protect the public.”

[70] A similar observation can be made with regards to the circumstances presented in this case.

[71] Third, Teknoscan Systems Inc. is obviously not binding. But nor is it persuasive.

[72] Teknoscan Systems Inc. appears to stand alone in relation to other Capital Market Tribunal decisions on this issue. For example, in Sextant Capital Management Inc. et al., 2010 ONSEC 25, at paras. 2, 7-10, despite the subject having taken the protection of s. 9, the panel relying on Brost, found that the compelled testimony could be used in the same regulatory proceeding in which it was obtained because the investigative stage and the adjudicative stage were not separate proceedings, but rather stages in one proceeding. See also: Agueci (Re), 2013 ONSEC 45, at paras. 123-124; York Rio Resources Inc. et al., 2011 ONSEC 37, at paras. 67-76.

[73] The panel in Teknoscan Systems Inc. (at paras. 61-66) declined to follow the rulings in Sextant and Agueci because of their view that these decisions were predicated on the erroneous premise that a Part VI investigation under the Securities Act was part of, or one and the same as, an administrative enforcement proceeding under s. 127 of the Securities Act. It was significant to that panel that a Part VI investigation by the Commission could ultimately result in various processes and remedies that could be sought by the respondent: an administrative proceeding under s. 127 of the Securities Act; an application under s. 128 of the Securities Act before the Superior Court of Justice for declaratory and other ancillary relief; a prosecution under the Provincial Offences Act in respect of one or more alleged breaches of s. 122 of the Securities Act; and the delivery of a privileged report to the Commission as provided for in s. 15 of the Securities Act. Thus, in their view, the Securities Act contained no support for the suggestion that an investigation under Part VI either initiated or was part of a subsequent administrative proceeding brought under s. 127.

[74] Respectfully, the panel in Teknoscan Systems Inc. overemphasized the significance of the different remedies available to the Commission after the completion of a Part VI investigation. The various separate remedies that could arise from an investigation does not impart to them the character of separate proceedings for the purposes of s. 9. This interpretation is in keeping with the following comment set out in Wilder v. Ontario Securities Commission (2001), 2001 CanLII 24072 (ON CA), 53 O.R. (3d) 519, at para. 23, about the nature of the overall Securities Act:

... the overwhelming message (of the scheme) is one of remedial variety and flexibility, rather than one that creates hived-off areas of remedial exclusivity. A court should be loath to prefer a rigidly narrow and literal interpretation over one that recognizes and reflects the purposes of the Act.

Regardless of any amendments to the Securities Act since Wilder, the force of that principle remains.

[75] Finally, in coming to their decision, the panel in Teknoscan did not deal with any of the judicial cases above-mentioned, which, if not binding, certainly merited their careful attention.

. R. v. Yang

In R. v. Yang (Ont CA, 2023) the Court of Appeal allowed an appeal on grounds that a non-party witness intentionally waited until trial - where they would have the protection of Charter s.13 ['Self-incrimination'] and s.5 of the Canada Evidence Act ["Incriminating questions"] - before revealing that he had exonerating, though potentially self-incriminating, testimony:

[12] Mr. Yang argues that the trial judge’s reasoning – that Mr. Xu’s failure to clear Mr. Yang by going to the police and admitting ownership is inconsistent with his claim that he was “very happy to come to court to prove that it belonged to me” – is based on a misunderstanding of the law (the “failure to admit error”). Had Mr. Xu told the police before trial that he owned the marijuana he would have been self-incriminating and could have been charged, given the belief by the police that this marijuana was possessed for the purpose of trafficking. But if he waited until trial to give that explanation, he would be protected by s. 5 of the Canada Evidence Act, R.S.C., 1985, c. C-5, and s. 13 of the Charter from having his testimony used against him, either on this charge or for any charges arising from breach of the terms of his marijuana licence as a result of this incident.

....

[14] ... With respect to the “failure to admit error”, Mr. Xu’s decision to await trial before attempting to clear Mr. Yang would be a prudent and sensible choice, given the state of the law. By waiting, he could protect Mr. Yang without imperilling himself. There is therefore no inconsistency between refraining from self‑incriminating before trial and being happy to be able to take responsibility during trial when it is safe to do so. We are persuaded that the trial judge engaged in an illogical or irrational line of reasoning in support of the verdict, given the state of the law. Indeed, this reasoning error by the trial judge is on the periphery of an error of law since it depended on an oversight by the trial judge relating to the relative legal jeopardy Mr. Xu would be in by sharing his account before or during his testimony.