B.C. court upholds securities commission's investigative power

A recent ruling in the highest court in the province upholds the B.C. Securities Commission's (BCSC) power to conduct investigations.

The BCSC has the power to order witnesses to come in for interviews during an investigation into white collar crime. When people don't co-operate, they can be found in contempt, fined up to $1 million and face jail time. 

Ranvir Brar and Harjit Gahunia, two witnesses to a currently unresolved BCSC investigation who refused to show up for an interview, challenged the commission's power in the B.C. Court of Appeal. 

A decision last week found that power constitutional and protects the commission's ability to investigate financial and white-collar crimes. 

Cristie Ford, a securities and financial law professor at the University of British Columbia who read the decision, said the commission needs those powers in order to regulate B.C.'s investment markets.

"Prosecuting white collar criminal misconduct and securities fraud is a very hard thing to do," Ford said. "There's a constant problem of people not complying or of people trying to evade [the commission]."

Dispute over an ongoing investigation

In 2018, according to the court documents, the securities commission started an investigation into an unnamed third party. 

Two years into its investigation, it ordered Brar and Gahunia to attend an interview as witnesses. Neither one was the subject of the investigation.

According to Mikhael Magaril, Brar and Gahunia's lawyer, the witnesses were not told why they were asked to come in. 

Both Brar and Gahunia refused to show up for their interviews, court documents show. 

In 2021, the commission went to the B.C. Supreme Court to have the two witnesses found in contempt. In response, Brar and Gahuna filed notices that said the process was unconstitutional and that they did not have to comply.

"It's an unchecked use of power that's given to state actors," Magaril said. "It's a deprivation of one's liberty. One is entitled to keep their thoughts to themselves."

Magaril said the commission's power conflicts with Section 9 of the Criminal Code, a provision that protects people from being convicted under old laws, like those of Britain, that never made it into Canadian law.

Implications of the decision

The dispute went before Justice Janet Winteringham in the B.C. Court of Appeal. On July 16, Winteringham dismissed Brar and Gahunia's appeal, ruling in favour of the commission.

"The commission's power to enforce compliance with its investigations is essential to the effectiveness of its investigatory powers," Winteringham wrote in her decision. 

There is already legal precedent in the Supreme Court of Canada, dating back to 1995, that upholds the BCSC's power to compel witnesses to comply with investigations.

Amendments enacted in 2023 have bolstered the fines and penalties for failing to comply.

"If the court were to find [BCSC powers] unconstitutional, that would have knock-on effects on a lot of other administrative tribunals and agencies that have similar power," Ford said. "It would really undermine a lot of agencies."

In an email to CBC News, BCSC enforcement director Doug Muir said the commission is pleased with the decision but cannot comment further while the contempt proceedings are before the courts. 

Brar and Gahunia are less pleased, Magaril said.

"We finished in second place, so it was disappointing," he said. 

The dispute that kicked off this case has not yet been resolved — courts still have to determine whether Brar and Gahunia are in contempt of the ongoing BCSC investigation.

Magaril said he's waiting to see if his clients want to appeal the decision in the Supreme Court of Canada.