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.
In the Matter of Professional Discipline Proceedings under the Bankruptcy and Insolvency Act
Respecting Sam Lévy & Associés Inc., a Corporate Licensed Trustee, and Sam Lévy, An Individual Licensed Trustee.
As discussed between the parties and myself some time ago, this matter came on for proof and hearing on November 10, 2003. Counsel for the corporate and individual licensed trustees had given notice that at that time they would present four preliminary motions, copies of which were sent to me and served on counsel for the Senior Analyst.
These motions, drafted in great detail, asked:
- That all proceedings against the trustees be stopped because the procedural safeguards contained in the underlying legislation were insufficient to guarantee a fair and equitable hearing;
- That, should the hearing proceed, it should be done in camera;
- That I declare the burden of proof which the Senior Analyst must meet in order to succeed, and
- That the hearing be delayed until such time as the Quebec Court of Appeal will have given judgment in the case of Métivier. Since this judgment was rendered prior to the hearing, the last motion became moot.
However, before proceeding to argument on the three remaining motions, counsel for the trustees produced a fifth motion, without notice either to me or to counsel for the Senior Analyst. It is entitled "Requête pour faire déclarer inopérants les articles 14.01, 14.02 et 14.03 de la Loi sur la faillite et l'insolvabilité et pour arrêt de procédures", and it concludes in terms suggested by the title.
The first question concerns my jurisdiction to hear a motion based on constitutional grounds. Certainly, I have no power to declare a law unconstitutional, and counsel for the trustees agree with this. But, they say, in light of the recent judgment of the Supreme Court of Canada in Martin v. Nova Scotia (Workers' Compensation Board) (October 3, 2003), I, sitting as a competent administrative tribunal, have the power to hear the constitutional argument and, should I find the impugned sections unconstitutional, to declare them to be inoperative insofar as the case before me is concerned.
At the conclusion of the argument on jurisdiction by counsel for the trustees, counsel for the Senior Analyst, having been taken by surprise, asked for time to obtain further instructions and to prepare a reply. I therefore adjourned the hearing at that point, and after two telephone conferences with all counsel, I ordered that the hearing resume on November 25th, which was done.
At that time, counsel for the Senior Analyst argued that I did not have jurisdiction to even entertain the motion, let alone rule on the contents.
Their argument, as set out in their Plan d'argumentation, rests on a number of propositions, which can be summarized as follows:
- Constitutional questions cannot be determined in a vacuum. Since the impugned sections of the Bankruptcy and Insolvency Act ("BIA") are 'neutral', their application by the tribunal charged to administer them must be considered, and this can only be done ex post facto.
- In any case, the questions raised by the motion are within the exclusive jurisdiction of the Federal Court.
I agree, based on Métivier v. Mayrand (Quebec Court of Appeal, October 30, 2003), that much will depend on how the tribunal — in this case, the Superintendent's delegate — applies the provisions of sections 14.01, 14.02 and 14.03. However, the presumption at this point is that the provisions will be applied in a manner designed to safeguard the constitutional rights of the trustees, and it is therefore premature to deal with some of the questions raised in the motion. But there are other issues as well, and I refer in particular to paragraphs 14 and following in the trustees' motion.
These are issues which do not, at first blush, depend on rulings made in the course of the hearing, and in my view, if indeed I have the necessary jurisdiction to consider them (a point with which I deal below), the trustees are entitled to raise them in limine.
Therefore, what I must now decide, is whether the rules set out in Martin are sufficiently broad to allow me to hear and decide the application now before me. If I do have jurisdiction, I will proceed to hear arguments on the merits of the motion; if I do not, that is the end of the matter, at least for now.
The key to jurisdiction — or absence thereof — is Martin. It is a unanimous judgment of a full bench of the Supreme Court of Canada. It holds, inter alia (in the words of the official headnote), that
Canadians should be entitled to assert the rights and freedoms that the Constitution guarantees them in the most accessible forum available, without the need for parallel proceedings before the courts. To allow an administrative tribunal to decide Charter issues does not undermine the role of the courts as final arbiters of constitutionality in Canada.
The headnote (which in my view is a correct summary of the judgment) adds that
[a]dministrative tribunal decisions based on the Charter are subject to judicial review on a correctness standard. In addition, the constitutional remedies available to administrative tribunals are limited and do not include general declarations of invalidity. A determination by a tribunal that a provision of its enabling statute is invalid pursuant to the Charter is not binding on future decision-makers, within or outside the tribunal's administrative scheme. Only by obtaining a formal declaration of invalidity by a court can a litigant establish the general invalidity of a legislative provision for all future cases.
On the practical application of this rule, the Court (again in the words of the headnote) had this to say:
Administrative tribunals which have jurisdiction, explicit or implied, to decide questions of law arising under a legislative provision are presumed to have concomitant jurisdiction to decide the constitutional validity of that provision. In applying this approach, there is no need to draw any distinction between "general" and "limited" questions of law. Explicit jurisdiction must be found in the terms of the statutory grant of authority. Implied jurisdiction must be discerned by looking at the statute as a whole. Relevant factors will include the statutory mandate of the tribunal in issue and whether deciding questions of law is necessary to fulfilling this mandate effectively; the interaction of the tribunal in question with other elements of the administrative system; whether the tribunal is adjudicative in nature; and practical considerations, including the tribunal's capacity to consider questions of law.
Let me say at once that I agree with the argument made by counsel for the Senior Analyst that there are important differences between the Nova Scotia Workers' Compensation Appeals Tribunal and the regime set up under the Bankruptcy and Insolvency Act to hear complaints against a trustee. For instance, section 164 of the Nova Scotia Workers' Compensation Act ("WCA") spells out that "[t]he Board may administer any Act of the Parliament of Canada" respecting the payment of compensation. No similar provision exists in the BIA. Again, and perhaps even more importantly, section 185(1) of the WCA explicitly gives the Board "exclusive jurisdiction to inquire into, hear and determine all questions of fact and law arising pursuant to this Part … " (emphasis added).
Finally — and I have only touched on the more important differences — decisions of the Workers' Compensation Board may be appealed to an Appeals Tribunal, and it was from a judgment of this tribunal that the appeals (Court of Appeal and S.C.C.) in Martin were heard.
Nevertheless, despite these difference, I find the judgment in Martin to be sufficiently broad to cover hearings held by the Superintendent or his delegate in virtue of sections 14.01, 14.02 and 14.03 of the BIA. The tribunal so convened is an administrative tribunal; it is implicitly (or, to use the words of Gonthier J. in Martin, "impliedly") authorized to decide questions of law; and it is competent (in a legal sense) to decide such questions.
There is also a built-in safeguard for the parties, and it is found in subsection 14.02(5) of the BIA, which "deems" any decision given by the Superintendent in virtue of subsection 14.02(4) "to be a decision of a federal board … that may be reviewed and set aside pursuant to the Federal Court Act."
I therefore feel confident that should I have erred in the decision I now make, or in decisions I will make in this case on future occasions, they will, in due course, be corrected by the Federal Court.
Therefore, for the reasons set out above, I dismiss the two-pronged objection by counsel for the Senior Analyst, and declare that I have jurisdiction to hear the motion presented by counsel for the trustees. The next step, then, will be to hear the motion on the merits, and I invite counsel to consult with me to fix a date for the continuation of this case.
Given in Toronto, Ontario, this .
Hon. Fred Kaufman, Q.C.,
Delegate of the Superintendent of Bankruptcy.
This document has been reproduced as submitted by the delegate of the Superintendent of Bankruptcy.