The worst of both worlds: The lack of protection against self-incrimination for Canadians giving evidence in US actions

By Safina Lakhani, Polley Faith LLP

In Davidson v Barnhardt, 2012 ONSC 6016, Justice O’Neill held that a witness in Ontario who is compelled to give evidence in a US civil action pursuant to a Letter of Request is not allowed to invoke the right against self-incrimination in the Fifth Amendment to the United States Constitution.  As a result, such witnesses are left with neither the Canadian nor American protections against self-incrimination.

Letters of Request

A foreign litigant may request evidence from a Canadian citizen or resident through a Letter of Request.  The foreign litigant must obtain a Letter of Request from a court in its jurisdiction.  A Canadian court will then enforce or not enforce the request in its discretion.  If the request is granted, the Canadian court will issue an order compelling the production of the evidence.

Protections against self-incrimination in Canada and the US

In Canada, the right against self-incrimination is protected by the Charter.  Section 13 provides that “a witness who testifies in any proceedings has the right not to have any incriminating evidence so given used against that witness in any other proceedings, except in a prosecution for perjury or for the giving of contradictory evidence.”  A witness also has protections under section 9 of the Ontario Evidence Act and section 5(2) of Canada Evidence Act when giving a compelled statement.  The Canadian ‘use immunity’ regime requires that a witness answer questions that may incriminate him or her, but as a quid pro quo, provides immunity against the subsequent use of that statement.

The protection against self-incrimination in the US operates quite differently.  The Fifth Amendment states that “no person… shall be compelled in any criminal case to be a witness against himself.”  In order to invoke the right against self-incrimination in the US, the witness must refuse to answer the question.  The protection applies to both civil and criminal actions and its availability is related to the nature of the statement made and exposure it invites.  The privilege is also available to any “person,” and is therefore not limited to Americans.

Where evidence is collected for use in a US civil action, the Canadian use immunity regime will not protect the witness against self-incrimination in a US criminal proceeding.  The question of whether a Canadian witness is entitled to invoke the protections of the Fifth Amendment in an examination pursuant to a Letter of Request was not addressed until the Davidson v Barnhardt decision.

Davidson v Barnhardt, 2012 ONSC 6016

In Davidson v Barnhardt, the Ontario Superior Court was asked to give effect to a Letter of Request issued by a California court with respect to an action related to an alleged fraudulent offer of securities.  The applicant sought to compel testimony from an Ontario resident, Gertrude Barnhart, the mother of a defendant in the California proceeding (J. Barnhardt).  Ms. Barnhardt was independently sued for her involvement in the alleged fraud and Ms. Barnhardt’s case was referred to the Federal Bureau of Investigation for investigation.  There is evidence that Ms. Barnhardt was involved in creating a “shell company” which was used in a money laundering scheme related to the fraud.

The Ontario Superior Court gave effect to the Letter of Request and ordered that Ms. Barnhardt testify regarding certain allegedly fraudulent transfers of money in which she is alleged to have been involved.  During her examination, Ms. Barnhardt invoked the protection of the Fifth Amendment and refused to answer many of the questions put to her.

The applicant brought a motion to determine whether Ms. Barnhardt could ‘plead the Fifth.’  Justice O’Neill heard the motion and found that Ms. Barnhardt was not entitled to plead the Fifth.

Ms. Barnhardt argued that there is a gap in the respective legal systems in Canada and the US with respect to protection from self-incrimination.  If Ms. Barnhardt were examined in the US, she would be entitled to refuse to answer questions on the basis of the Fifth Amendment.  If Ms. Barnhardt were examined in Canada, the Canadian regime of use immunity would protect her against self-incrimination.  However, where a Canadian gives evidence for a civil action in the US, the witness is not protected from the subsequent use of that evidence in the US.

She further argued that Canadian courts have acknowledged the risk that they might put citizens or residents of Canada in the worst of both worlds – compulsion to testify in Canada followed by the use of the compelled material in the US.  Ms. Barnhardt argued that if deprived of the right to plead the Fifth, she is exposed to the risk that the FBI or its investigators could use the transcript of her evidence to bring or further support criminal charges against her.

Justice O’Neill acknowledged this argument, but disagreed that it was “necessary” for Ms. Barnhardt to invoke the Fifth Amendment in order to protect herself from self-incrimination.  In support of this conclusion, he commented that there was no evidence that the FBI investigation against Ms. Barnhardt had progressed, and that there was an undertaking from the applicant that he would not divulge the evidence that Ms. Barnhardt gave, except as required by law.  Justice O’Neill also commented that the sovereignty of a US court may be “impinged” or “underappreciated” if a Canadian court ruled on the validity or applicability of the witness’ Fifth Amendment rights.  He found that it was for the US court to rule on the admissibility of the evidence.

Finally, Justice O’Neill held that arguments relating to the rights and protections of the Fifth Amendment “remain available” to Ms. Barnhardt if and when she is subject to US criminal charges and seeks to oppose the admission of her compelled evidence.  He held that it is for the US court to determine whether the admission of the evidence would “shock the judicial conscience” or “violate the baseline due process requirements with respect to Ms. Barnhardt’s Fifth Amendment rights.”  As such, he found that Ms. Barnhardt was not entitled to invoke the Fifth Amendment in her examination.

Implications of the decision

This decision eviscerates the protection from self-incrimination of those Canadians that are compelled to give evidence for use in a US action.  Both Canada and the US have robust protections against self-incrimination, although the regimes are different.  The Barnhardt decision creates a lacuna within which the unfortunate witness is left without the protection of either regime.

Justice O’Neill creates a risk-threshold only beyond which a witness will be granted the right against self-incrimination.  In Ms. Barnhardt’s case, he found that it was not “necessary” to invoke the Fifth Amendment to protect her against self-incrimination.  However, he did not clarify the circumstances under which it would be necessary to invoke the protections of Fifth Amendment in order to protect a witness against self-incrimination.

While the lack of clarity of the threshold for necessity is troubling, more problematic is the implication that the witness’ right to protection against self-incrimination is only available when the Court deems it necessary.  This is counter to the regime for the protection against self-incrimination in Canada.  The use immunity rule is not contingent on anything.  (However, see R v Nedelcu, 2012 SCC 59, where the Court narrowed the definition of “incriminating evidence” that is protected by section 13 of the Charter and permitted non-incriminating evidence to be used to test a witness’ credibility at a subsequent criminal proceeding.)

Justice O’Neill further states that Ms. Barnhardt may assert her Fifth Amendment rights to oppose the admission of the compelled evidence if a US criminal proceeding is brought against her.  That is no substitute for her right to protection against self-incrimination.  A US court is entitled exclude evidence that would violate baseline due process requirements, but that discretion is unrelated to Ms. Barnhardt’s rights; it relates to the court’s jurisdiction to exclude evidence.

Oddly, the procedure to which Justice O’Neill alludes is similar to the Canadian use indemnity regime, whereby an accused may object to the admission of a prior compelled statement.  This scheme stands in stark contrast to the US regime, whereby a witness must refuse to answer a question in order to invoke the protections of the Fifth Amendment.  In light of this, Ms. Barnhardt’s only “protection” against self-incrimination is the hope that a US court will agree that the admission of her compelled evidence is a violation of due process.

The important practical implication is that a party to a US action that seeks evidence from a Canadian citizen or resident would prefer to use the Letter of Request procedure to compel the evidence.  By using this procedure, the witness is likely not entitled to refuse to answer questions on the basis of the Fifth Amendment.  The witness is therefore required to give far more evidence than he or she otherwise would be.  A strategic US litigant could easily take advantage of this loophole.

Perhaps the most troubling aspect of this decision is that the evidence sought from Ms. Barnhardt was pursuant to a Letter of Request.  The Court knew that the evidence sought was for use in a US action and that the use immunity rule would not protect Ms. Barnhardt against self-incrimination.  The Court knowingly put Ms. Barnhardt, who was compelled to testify in the US action, in the worst of both worlds.  Similarly situated witnesses will be left with no protection against the risk of self-incrimination, which is an affront to an overarching principle in our criminal justice system.