It is a delicate task to word an investigative summons to produce documents. On the one hand, the investigator wants to ensure that all helpful documents are produced. Yet, the wording should not be too broad, for the sake of both the registrant and the regulator. In Binance Holdings Limited v. Ontario Securities Commission, 2025 ONCA 751 (CanLII), Ontario’s highest court confirmed that an excessively broadly worded summons is contrary to the Canadian Charter of Rights and Freedoms.
Binance operates an online crypto asset trading platform used by thousands of Ontario investors. The Ontario Securities Commission (OSC) believed that Binance did not comply with Ontario securities requirements. As a result of the concerns, Binance entered into an undertaking with the OSC. However, the OSC subsequently claimed that Binance violated the undertaking. The OSC appointed an investigator who issued a summons requiring Binance to “provide all communications regarding Ontario (or Canada generally) among directors, officers, employees, contractors, agents and consultants of Binance Holdings Limited and related entities ….” Binance challenged the validity of the summons arguing, among other things, that it amounted to an unreasonable search or seizure contrary to s. 8 of the Charter.
The Court held that the OSC (which appointed the investigator and holds enforcement hearings) did not have the jurisdiction to review the validity of the summons issued by the investigator. There was also no constitutional right for Binance to require a court to affirm the validity of the summons before Binance was required to comply with it. However, there was discretion by the court to judicially review the validity of the summons in appropriate cases. In this matter, given the nature and obvious breadth of the summons and the unavailability of an alternative means to question it, the Court agreed that the application for judicial review should have been heard.
The Court imposed a fairly stringent test for challenging the summons. The level of relevance expected in criminal proceedings did not apply. The reasonable expectation of privacy of business records in a regulated sector is low. Regulators often legitimately use such summons as an “exploratory tool”. Regulators do not know what the documents say. “The most that can be expected is that the regulator will identify categories of documents that they have reason to believe may be relevant.” Further, some degree of flexibility in language is warranted where the registrant has already demonstrated an unwillingness to be forthcoming. All that is required is that there is a realistic foundation for believing that the requested documents will facilitate a proper inquiry.
The Court held that the summons in this case was worded too broadly:
However, the Summons demanded production, without limitation, of all communications between virtually anyone that may have managed, been employed by, or done work for either Binance or its related entities over a two-and-a-half-year period relating not only to Ontario but to all of Canada, regardless of the subject matter of those communications. This demand, enforceable by the threat of contempt proceedings, is staggering in its breadth and in my view was made without apparent concern about the relevance of what was being demanded, beyond mere speculation that there could be something relevant that would otherwise be missed. I am therefore persuaded that the s. 13 Summons issued in this case is unconstitutionally overbroad.
Some degree of specificity is also required to enable the recipient of the summons to understand what should be produced. Further, the scope of the summons in this case was clearly burdensome.
The Court also expressed concern that the provision authorizing the production of documents was being used, in part, to demand the recipient answer questions. A different investigative authority (which often exists for regulators) is required.
The OSC was ordered to return the documents already produced to Binance. However, the OSC was not precluded from issuing a new, Charter-compliant summons.
While the decision does not result in a requirement for high degree of precision in the wording of a summons, regulators should avoid excessively broad language.
