Professional Conduct Decision
What is a professional conduct decision?
An investigation into a Licensed Insolvency Trustees (LIT)'s professional conduct is initiated when there is information to suggest that the LIT has not properly performed the duties of a trustee or there has been improper administration of an estate or lack of compliance with the Bankruptcy and Insolvency Act (BIA).
In some cases, the findings are sufficiently serious to support a recommendation for sanctions against the LIT's licence (cancel or suspend a LIT's licence (subsection 13.2(5) of the BIA) or impose conditions or limitations (subsection 14.01(1) of the BIA)).
The professional conduct decision is deemed to be a decision of a federal board, commission or tribunal and may be judicially reviewed by the federal court.
Mr. Garry Wetzel
Department of Justice
235 Queen Street, 1st Floor, East Tower
Ottawa, Ontario K1A 0H5
Mr. Henry Sztern
Henry Sztern & Associés Inc.
7431 Kingsley Road, Apt. 704
Côte-St-Luc, Quebec H4W 1P1
Henry Sztern & Associés Inc.
c/o Mr. Emilio Monaco
6020 Jean-Talon Street
Montréal, Quebec H1S 3B1
Re: Proceedings pursuant to subsection 14.02(1) of the Bankruptcy and Insolvency Act on the professional conduct of Henry Sztern, holder of an individual trustee licence for the Province of Quebec, and Henry Sztern & Associés Inc., holder of a corporate trustee licence for the Province of Quebec
In his motion dated , Mr. Henry Sztern, in his capacity as trustee, is seeking to strike the allegations contained in items A.1, B.2 and B.3 of the report filed by Senior Analyst Sylvie Laperrière pursuant to section 14.02(1) of the Bankruptcy and Insolvency Act (the Act). This report by Senior Analyst Laperrière is dated .
Mr. Henry Sztern put forward the following in support of his motion:
That the Written Claim filed by Petitioners contains certain allegations that (i) disclose no reasonable cause of action, (ii) are vexatious, (iii) are immaterial and redundant, (iv) will prejudice and delay the fair trial of the action and (v) abuse the process of the Court:
This motion to strike allegations was a result of the following proceedings:
On , Senior Analyst Sylvie Laperrière submitted her report pursuant to section 14.02(1) of the Act. Her report included fifteen (15) allegations of offences under the Act and the Bankruptcy and Insolvency General Rules (the Rules).
Attached to this report were forty-three (43) series of documents (attachments) in support of each allegation.
On , Mr. Henry Sztern, in his capacity as trustee, presented before the undersigned a motion for particulars pertaining to the allegations contained in paragraphs A.1, B.2 and B.3 of the report by the abovementioned Senior Analyst.
On , as agreed upon at the pre-hearing conference held on , counsel for Senior Analyst Sylvie Laperrière produced for the record a letter constituting an initial response to the motion for particulars.
Mr. Henry Sztern responded to that letter the same day.
On , in a letter from her counsel, to which were appended a great many documents, Senior Analyst Laperrière produced her response to the motion for particulars made by Mr. Henry Sztern.
In the pre-hearing conference of , Mr. Henry Sztern informed the undersigned that with regard to the allegations in paragraphs G.9, J.15, K.17, L.18, M.19 and N.20, other legal proceedings were underway before the Civil Division of the Superior Court.
On , counsel for Senior Analyst Sylvie Laperrière produced for the record a letter, with documents attached, referring to the details of other proceedings that had been instituted with regard to items G.9, J.15, K.17, L.18, M.19 and N.20 of the report by Senior Analyst Sylvie Laperrière.
On , counsel for Senior Analyst Sylvie Laperrière produced a letter, also addressed to Mr. Henry Sztern and Henry Sztern & Associés Inc., and Mr. Emilio Monaco, counsel for Henry Sztern & Associés Inc. Attached to this letter was the report by Sonia Michaud, handwriting and document specialist for the Royal Canadian Mounted Police, in addition to her curriculum vitae and the documents that had been submitted to her for analysis.
By letter dated , addressed to the undersigned, to Mr. Henry Sztern and Henry Sztern & Associés Inc., and to Mr. Emilio Monaco, counsel for Senior Analyst Sylvie Laperrière produced an amended report from the Senior Analyst, including amendments to the original attachments to the report, i.e., attachments 11 and 12.
The motion to strike allegations was heard on .
The parties agree that the proceedings before the undersigned are "of a regulatory prosecution" or disciplinary nature.
The report by Senior Analyst Sylvie Laperrière refers to section 14.01(2) of the Act. This section stipulates that
"The Superintendent may delegate by written instrument, on such terms and conditions as are therein specified, any or all of the Superintendent's powers, duties and functions under subsection (1), subsection 13.2(5)(6)or(7) or section 14.02 or 14.03".
It is within section 14.01 and the powers described therein that is found the "regulatory prosecution" or disciplinary nature of the proceeding before the undersigned. It suffices to cite section 14.01 (1).
14.01 (1) Where, after making or causing to be made an investigation into the conduct of a trustee, it appears to the Superintendent that
- a trustee has not properly performed the duties of a trustee or has been guilty of any improper management of an estate,
- a trustee has not fully complied with this Act, the General Rules, directives of the Superintendent or any law with regard to the proper administration of any estate, or
- it is in the public interest to do so,
the Superintendent may do one or more of the following:
- cancel or suspend the licence of the trustee;
- place such conditions or limitations on the licence as the Superintendent considers appropriate including a requirement that the trustee successfully take an exam or enrol in a proficiency course;
- require the trustee to make restitution to the estate of such amount of money as the estate has been deprived of as a result of the trustee's conduct.
With regard to the disciplinary nature of these proceedings, the parties agree that these proceedings should be considered to be quasi-penal and subject to the duty to disclose.
Moreover, with regard to the issue of the duty to disclose, the Federal Court of Appeal in the matter of Todd Y. Sheriff, holder of a trustee licence, and Segal & Partners Inc. v. the Attorney General of CanadaFootnote 1 established the principles of this duty:
 The scope of disclosure in professional hearings continues to be expanded by provincial courts, which have applied the Stinchcombe principles in cases where the administrative body might terminate or restrict the right to practice or seriously impact on a professional reputation (see Hammami v. College of Physicians and Surgeons of British Columbia,  9 W.W.R. 301 (B.C.S.C.), at paragraph 75; Milner v. Registered Nurses Assn. of British Columbia (1999), 71 B.C.L.R. (3d) 372 (S.C.)). In Stinchcombe, the Supreme Court of Canada held that there is a general duty on Crown prosecutors to disclose all evidence that may assist the accused, even if the prosecution did not plan to adduce it. While these principles originally only applied in the criminal law context, the similarities between a criminal prosecution and a disciplinary hearing are such that the objectives are, in my analysis, the same, i.e. the search for truth and finding the correct result.
 In this case, the Trustees face a suspension of their licence and injury to their professional reputation. In order to fully understand the case against them and to ensure a fair disciplinary proceeding, the Trustees must have access to all relevant material which may assist them. This is consistent with the Superintendent's earlier ruling in this case that the SDA had a duty to disclose all documents unless they were "clearly irrelevant".
(ii) Statutory Disclosure Requirements
 I am further comforted that the Stinchcombe principles do apply in the present appeal, when one considers the obligation of the Superintendent pursuant to subsections 14.01(1), 14.02(1) and (2), as well as the procedures established by the Superintendent in a document entitled "Disciplinary Process under sections 14.01 and 14.02 of the Act" (hereinafter the Superintendent's Directive).
 Section 8 of the Superintendent's Directive further requires the Superintendent to provide a reasonable opportunity to a trustee to prepare for a public hearing following written notice to the trustee of an investigation as to his conduct that may justify a "disciplinary sanction". (See Appendix 1, appeal book, page 1578.)
 Some of the factors that are relevant in determining the level of procedural fairness in a given case were set out by the Supreme Court of Canada in Baker v. Canada (Minister of Citizenship and Immigration),  2 S.C.R. 817.
 First, as to the nature of the decision being made, the Court in Baker commented that the closer an administrative process is to a judicial process, the more procedural fairness is likely to be required. While the procedures before the Superintendent are informal (depending on the circumstances and a consideration of fairness), the Trustees do face the possible cancellation or suspension of their licences; consequences that affect both their income and professional reputation. Accordingly, the importance of the decision to the Trustee does, as per Baker, suggest that a higher level of procedural fairness is required (see Kane, at paragraph 31).
 The remaining contextual factors identified in Baker did not impact on the duty of fairness in the present appeal. Based on the facts before me, the other considerations from Baker, which include the nature of the statutory scheme, legitimate expectations and the choice of procedure, do not militate towards a higher or lower level of procedural fairness accorded to the Trustees.
 In sum, the procedural requirements for disciplinary proceeding pursuant to sections 14.01 and 14.02 which give rise to sanctions, as well as the Superintendent's Directive, collectively give rise to clear duty to afford the Trustees fulsome disclosure, similar to the Stinchcombe principles. Accordingly, I am respectfully of the view that the applications Judge erred in law when he restricted disclosure to the first report and the information upon which it was based.
The question raised by the motion to dismiss filed by Mr. Henry Sztern, which is akin to a "motion to quash" or a nonsuit, is to determine whether, at this stage of the proceeding, Senior Analyst Sylvie Laperrière performed this duty to disclose the evidence that she intends to file in support of her report.
This disclosure should be such that the respondents, Mr. Henry Sztern and Henry Sztern & Associés Inc., have sufficient information to be able to prepare a full and complete defence, or admit to the allegations, at a fair and impartial hearing.
On this subject, in the matter of R. v. Cote, (1977), 33 C.C.C. (2d) 353, 40 C.R.N.S. 308 (S.C.C):
the golden rule is for the accused to be reasonably informed of the transaction alleged against him, thus giving him the possibility of a full defence and a fair trial. When, as in the present case, the information recites all the facts and relates them to a definite offence identified by the relevant section of the Code, it is impossible for the accused to be misled. To hold otherwise would be to revert to the extreme technicality of the old procedure.
As well, in the matter of R. v. WIS Developments Corporation Ltd., (1984), 12 C.C.C. (3d) 129 (S.C.C.), at page 137, Justice Lamer of the Supreme Court of Canada wrote the following:
When accused, the citizen shall be treated fairly. This requires that he must be clearly able to identify what he is alleged to have done wrong so that he may prepare his case adequately, and that at the outset of his trial or thereafter once the trial is over and at some other court, he must be able to argue that he has already been acquitted or convicted of the offence or that he comes within the protective principles set out in Kienappel v. The Queen,  1 S.C.R. 729.
We must not confuse sufficient information with the probative weight to be given these facts and/or the elements required to uphold the allegations in the report of the Senior Analyst. This confusion appears evident on reading the motion to strike allegations.
In the case at bar, whereas the information contained in the report, including reference to sections of the Act; whereas identification of the alleged offences; whereas the information contained in the forty-three (43) attachments to said report; whereas the information contained in the particulars provided by the various documents produced, it appears to us that Senior Analyst Sylvie Laperrière has fulfilled her duty to disclose or inform, and that the applicant is reasonably informed of the allegations against him.
Accordingly, the motion to strike allegations is dismissed.
- Sam Levy and Associates Inc. v. Canada (Superintendent of Bankruptcy,  F.C.J. No. 882
- R. v. Côté,  1 S.C.R. 8
- Regina v. Ryan; Regina v. Charbonneau, 23 C.C.C. (3d) 1
- R. v. Wigglesworth,  2 S.C.R. 541
- R. v. Municipal Ready Mix Ltd.,  N.S.J No. 281
- Krieger v. Law Society of Alberta,  3 S.C.R. 372
- Toronto (City) v. Canadian Union of Public Employees (C. U.P.E), Local 79,  3 S.C.R. 77
- R. v. 3 for 1 Pizza & Wings Inc.,  O.J. No. 1623
- Toronto (City) v. Canada Land Corp.,  O.J. No. 4489
- Vojic v. Canada (M.N.R)(F.C.A.),  F.C.J No. 811
- Sagon v. Royal Bank of Canada (Sask. C.A.),  S.J. No. 197
- Olmstead v. Canada (Attorney General),  F.C.J. No. 1461
- Pfizer Canada Inc. v. Apotex Inc.,  F.C.J. No. 959
- Nelson v. Canada (minister of Customs and Revenue Agency),  F.C.J. No. 1548
- Daniels v. Canada (Minister of Indian Affairs and Northern Development),  F.C.J. No. 391
- Harris v. Canada (Attorney General),  F.C.J. No. 1304
- Getz v. Opseth,  S.J. No. 103
- Sanofi-Aventis Canada Inc. v. Novopharm Ltd.,  F.C.J. No. 548
- Polgrain Estate v. Toronto East General Hospital,  F.C.J No. 1479
- Lehoux v. Canada, 2004 FC 401 Distrimedic Inc. c. Dispill Inc., 2006 FC 832
- Tench v. Canada 2000 CanLII 15743 (F.C.)
- Sokolowska v. Canada, 2005 FCA 29
- Holland v. Saskatchewan (Minister of Agriculture, Food and Rural Revitalization), 2006 SkQB 99
- Kelly Lake Cree Nation v. Canada (T D), [1998) 2 F.C. 270, 1997
- International Paints (Canada) Ltd. v. Spirit of Columbus (la Plate-Forme), 1999
- Canadian Oplympic Association v. Usa Hockey, Inc., 1997 5256 (F.C.)
- Sheriff v. Canada (Attorney General), 2006 FCA 139
- Canada (Attorney General) v. Sheriff, 2005 FCA 1726
- Article 221(1) of the Rules of the Federal Court
- Article 183 and 192 of the Bankruptcy and Insolvency Act of Canada