On June 22, 2012, the Quebec Court of Appeal (QCA) issued a groundbreaking judgment in Autorité des marchés financiers v. Fournier. Specifically, the QCA held that in the context of an examination conducted by an investigator of the AMF pursuant to an investigation under section 239 of the Quebec Securities Act (QSA), the attorney representing the investigated party cannot raise objections. The Fournier ruling raises important issues with respect to AMF investigators now being empowered with dual and conflicting roles of prosecutor and judge.
On January 26, 2006, the AMF launched an investigation pursuant to section 239 of the QSA in relation to the activities of Martin Tremblay and his brokerage firm Dominion Investments.
On January 14, 2008, Mr. Gilbert Fournier received a redacted subpoena duces tecum from an AMF investigator, compelling him to testify at a certain date and time, and requiring him to bring certain documents.
On February 14, 2008, the Respondent appeared for the examination, accompanied by his attorney. At the outset of the examination, the AMF investigator informed the Respondent that the investigation pertained to Martin Tremblay and Dominion Investments, and the attorney for the Respondent was provided with a redacted copy of the decision triggering the Investigation.
When the investigator asked his first question, i.e. whether the Respondent held a brokerage account, the Respondent's attorney objected on grounds of relevancy. The investigator replied that the attorney had no right to formulate an objection. The Respondent's attorney disagreed and suggested that the objection be submitted to a Superior Court judge for adjudication. The suggestion was refused by the investigator, who shortly thereafter terminated the examination. On March 12, 2008, the Respondent received a penal complaint from the AMF pursuant to section 195(4) of the QSA for refusal to testify. The Respondent successfully challenged the complaint before the Court of Québec and the Superior Court.
The AMF appealed before the QCA.
Decision of the QCA
The QCA granted the appeal and declared the Respondent guilty of refusing to answer questions asked in the context of an investigation conducted by the AMF.
Justice Dufresne acknowledged the right of a person examined by an investigator to be assisted by an attorney, which right is explicitly set forth at section 246 of the QSA. However, the Court ruled that the attorney may not raise objections in the context of the examination. The Court based its ruling on section 241 QSA, which states that: "No person called upon to testify in the course of an investigation or being examined under oath may refuse to answer or to produce any document on the ground that he might thereby be incriminated or exposed to a penalty or civil proceedings, subject to the Canada Evidence Act" [emphasis added].
The Court indicated that the attorney may counsel his client not to answer a question, but in such a case the client runs the risk of being found guilty for refusal to testify pursuant to section 195(4) of the QSA.
The QCA further stated that if an objection is raised by the attorney, it is up to the investigator to decide whether it is well-founded, and the investigator has no duty to motivate his decision. The QCA indicated that the Superior Court may intervene only where the investigator exceeded his powers or acted in violation of the principles of natural justice in disposing of the objection.
We believe that this QCA ruling is surprising in that it substantially softens the fundamental right to be assisted by an attorney (specifically provided for by section 246 of the QSA) and confers to investigators of the AMF extraordinary powers to ask questions and, at the same time, rule upon the legality of same.
Also to be noted is the QCA's decision to condemn the Respondent for refusing to answer questions, even where the refusals were solely based upon the advice of counsel.
Finally, section 11 of the Act respecting public inquiry commissions, to which the QSA refers, reads as follows: "Any person refusing to be sworn when duly required, or omitting or refusing, without just cause, sufficiently to answer any question that may be lawfully put to him, or to render any testimony in virtue of this Act, is in contempt of court and shall be punished accordingly." It is our opinion that the determination of whether the conditions in bold are met should be made by an independent and impartial judge or tribunal, as provided by section 23 of the Quebec Charter.
Unless the Fournier case is overturned by the Supreme Court of Canada, the QCA has essentially ruled that an attorney representing a person examined pursuant to an investigation held by the AMF has no right to object to the investigator's questions.
This decision will have an important impact on brokerage firms and their registered representatives who are the primary persons subject to investigations and examinations conducted by the AMF pursuant to section 239 of the QSA. A person examined by the AMF must be informed of the fact that it will have to potentially answer ALL of the questions posed by the AMF investigator, be prepared accordingly and that refusal to do so may lead to a penal complaint for refusal to testify pursuant to section 195(4) of the QSA.
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