Laperrière v. MacLeod et al., 2010 FC 97

• Judge: Mainville, J.
• Court: Federal Court (Canada)
• Case Date: December 14, 2009
• Jurisdiction: Canada (Federal)
• Citations: 2010 FC 97;(2010), 362 F.T.R. 189 (FC)

Laperrière v. MacLeod (2010), 362 F.T.R. 189 (FC)

MLB headnote and full text

Temp. Cite: [2010] F.T.R. TBEd. JA.058

Sylvie Laperrière, in her capacity as Senior Analyst - Professional Conduct of the Office of the Superintendent of Bankruptcy (applicant) v. Allen W. MacLeod and D&A MacLeod Company Ltd. (respondents)

(T-327-09; 2010 FC 97)

Indexed As: Laperrière v. MacLeod et al.

Federal Court

Mainville, J.

January 28, 2010.

Summary:

An analyst with the Office of the Superintendent of Bankruptcy (applicant) alleged numerous professional conduct breaches by the bankruptcy trustees Allen W. MacLeod and D&A MacLeod Company Ltd. (respondents). A delegate of the Superintendent rejected most of the allegations, but imposed a reprimand against the respondents for delay in the administration of two estates. The applicant sought judicial review.

The Federal Court allowed the application in part. The court returned the case to the delegate solely for the purpose of determining the appropriate remedial measures or sanctions, if any, that were warranted concerning the proven allegations.

Editor's Note: The judgment was issued contemporaneously with the decision of the Federal Court dismissing the respondents' motion to set aside the application: see 362 F.T.R. 224; 2010 FC 96.

Bankruptcy - Topic 2631

Trustees - Discipline - General - The Federal Court stated that the professional conduct of bankruptcy trustees was under the control and supervision of the Superintendent of Bankruptcy - "For these purposes, the Superintendent is entrusted with supervising the activities of bankruptcy trustees and disciplining them in appropriate circumstances. The powers of investigation and discipline of bankruptcy trustees must be carried out with due regard to the rules of fundamental justice. Consequently, a particular scheme has been established under the Bankruptcy and Insolvency Act to afford trustees a fair hearing and certain procedural safeguards prior to imposing a measure or sanction under the Act. This scheme is principally set out in sections 14.01 and 14.02 of the Act" - See paragraphs 2 to 4.

Bankruptcy - Topic 2632

Trustees - Discipline - Sanctions - Section 14.01(1) of the Bankruptcy and Insolvency Act set out the available measures in the event of professional misconduct of a bankruptcy trustee - The Federal Court stated that "The overriding objective of this provision is to ensure the protection of the public ... For these purposes, two sets of measures are contemplated. The first are remedial in nature and seek to have the situation corrected for the future through measures involving the requirement for additional training, the restitution of amounts to estates and any other measure agreed to by the trustee which would be appropriate to remedy the situation. The second set of measures is disciplinary in nature and involves placing limitations or conditions on a licence, suspending a licence or, in appropriate and extreme cases, cancelling a licence. These remedial measures and disciplinary sanctions can be combined" - See paragraph 124.

Bankruptcy - Topic 2632

Trustees - Discipline - Sanctions - Section 14.01(1) of the Bankruptcy and Insolvency Act provided that, in the event of professional misconduct of a bankruptcy trustee, the Superintendent of Bankruptcy "may", among other measures, cancel or suspend the licence of the trustee; place conditions or limitations on the licence; and require the trustee to make restitution to the estate - The Federal Court noted that the use of the word "may" in the introductory provision of s. 14.01(1) "makes it clear that the option of not imposing any remedial measure or sanction against a trustee is available, even where the allegations of misconduct have been made out. The decision to impose or not such a measure or sanction is thus discretionary and falls within the exclusive authority or mandate of the Superintendent or his Delegate, taking into account all the circumstances of a particular case" - See paragraph 125.

Bankruptcy - Topic 2632

Trustees - Discipline - Sanctions - An analyst with the Office of the Superintendent of Bankruptcy (applicant) alleged numerous professional conduct breaches by bankruptcy trustees (respondents) - A delegate of the Superintendent of Bankruptcy rejected most of the allegations, but imposed what he called a "reprimand" against the respondents for delay in the administration of two estates - A "reprimand" was not specifically provided for under s. 14.01(1) of the Bankruptcy and Insolvency Act - The applicant challenged the legality of the sanction - The Federal Court stated that, although the sanction was not available to the delegate, "it is important to go beyond the use of specific expressions and to actually examine what the Delegate was attempting to achieve" - The delegate decided that no specific sanction contemplated by s. 14.01(1) was required since the liability decision and the process leading to it served the purposes of the Act - That option was available and was reasonable - Since the court had concluded that the delegate's findings concerning the adequacy of a due diligence defence could not be sustained in regard to certain allegations, the court returned the case to the delegate solely for the purpose of determining the remedial measures, if any, that were warranted in light of the proven allegations - See paragraphs 126 to 131.

Bankruptcy - Topic 2637

Trustees - Discipline - Standard of review - This judicial review application was the first to arise in the context of the disciplinary scheme set out in ss. 14.01 and 14.02 of the Bankruptcy and Insolvency Act, since the Supreme Court of Canada's decision in Dunsmuir - The bankruptcy trustees (respondents) argued that a standard of reasonableness, rather than that of correctness, should be applied to the issues of law raised by the proceeding - The Federal Court carried out a standard of review analysis - In conclusion, the court applied a standard of reasonableness to the review of all issues of fact or of mixed law and fact, and a standard of correctness to the two questions of law - See paragraphs 48 to 69.

Bankruptcy - Topic 2637

Trustees - Discipline - Standard of review - In this judicial review proceeding, a principal issue was the applicable standard of review with respect to two questions of law, namely if the allegations of professional misconduct against the bankruptcy trustees were subject to strict liability or absolute liability, and whether the Bankruptcy and Insolvency Act provided for a reprimand as a form of sanction or remedy - The Federal Court concluded that the appropriate standard of review was correctness, not reasonableness - The disciplinary scheme in ss. 14.01 and 14.02 was "intimately related" to the scheme of the Act itself - In addition, the issues transcended the interests of the parties - Further, the demarcation between strict liability and absolute liability flowed from the common law; consequently, the exception relating to the interpretation of the home statute did not apply to that legal issue - The same conclusion on the standard of review was reached in regard to the availability of a reprimand as a sanction under s. 14.01(1) - See paragraphs 61 to 68.

Bankruptcy - Topic 2638

Trustees - Discipline - Judicial review (incl. standard of) - A senior analyst with the Office of the Superintendent of Bankruptcy (applicant) alleged numerous professional conduct breaches by bankruptcy trustees (respondents) - A delegate of the Superintendent in Bankruptcy rejected most of the allegations - On judicial review, the applicant alleged that the findings of fact by the delegate in regard to the operation of an "interest account" and various related allegations ran contrary to the documentary evidence and the testimony in the record - The Federal Court did not disturb the findings of fact - The decision of the delegate was based on his assessment of the evidence, and particularly his assessment of the credibility of the testimony of the witnesses - There was ample evidence before the delegate to justify his findings of fact - "With all due respect, the Applicant is seeking to have this Court carry out a new assessment of the evidence and of the credibility of the witnesses, and to substitute this alternative assessment to the assessment carried out by the Delegate. The case law has consistently noted that a reviewing court has no authority to proceed in such a fashion, and this Court will not do so in this case" - See paragraphs 70 to 82.

Bankruptcy - Topic 2639

Trustees - Discipline - Defences (incl. due diligence) - A delegate of the Superintendent of Bankruptcy was of the view that the allegations of misconduct against the bankruptcy trustees (respondents) pursuant to the Bankruptcy and Insolvency Act, its regulations and any Directives, were strict liability offences, and consequently it was open for the respondents to prove that they took all reasonable steps in order to avoid a finding of misconduct (due diligence defence) - The Federal Court reviewed the case law that recognized the availability of strict liability defences in professional misconduct proceedings and concluded that a sui generis approach was appropriate - "The availability of such a defence in a particular case will depend on the nature of the alleged misconduct and on the terms of the legislative or regulatory provisions which are claimed to have been breached" - See paragraphs 12, 83 to 92.

Bankruptcy - Topic 2639

Trustees - Discipline - Defences (incl. due diligence) - The allegations of misconduct against the bankruptcy trustees were described as including applications for trustee discharge while having a bank balance in the estate account; minor errors in certain statements of receipts and disbursements; co-mingling of funds in consolidated trust accounts; "third party account" used to post estate transactions; and relatively small amounts of money not deposited forthwith in an account - The Federal Court concluded that the delegate of the Superintendent of Bankruptcy was correct in finding that a defence of due diligence was available in regard to the allegations - A review of the Bankruptcy and Insolvency Act and the Bankruptcy and Insolvency General Rules showed that for each of those allegations, the concerned sections of the Act and the Rules, read together, referred to wording such as "due care" or "reasonably ought to know", which implied that a defence of due diligence was available to the trustees - See paragraphs 93 to 106.

Bankruptcy - Topic 2639

Trustees - Discipline - Defences (incl. due diligence) - A delegate of the Superintendent of Bankruptcy found that the bankruptcy trustees (respondents) had discharged the evidentiary burden of establishing due diligence to counter certain allegations of misconduct - On judicial review, the applicant argued that the delegate committed reviewable errors in finding that the defence had been made out - The Federal Court addressed whether the findings of fact and the inferences of fact and of mixed fact and law drawn by the delegate fell within a range of possible outcomes defensible in respect of the facts and law - "This is not an exercise of reevaluating the evidence" - In the end result, the court concluded that the delegate's findings concerning the adequacy of a due diligence defence could not be sustained in regard to the allegations concerning the use of a "third party account" to post certain estate transactions, and concerning monies not deposited forthwith in the estate accounts - With no evidence of due diligence from the trustees on those allegations, and no explanation by the delegate as to why and how a due diligence defence was sustained in regard to those allegations, the court concluded that the findings warranted intervention - See paragraphs 107 to 121.

Statutes - Topic 2417

Interpretation - Interpretation of words and phrases - General principles - "May" and "shall" - [See second Bankruptcy - Topic 2632 ].

Words and Phrases

May - The Federal Court discussed the meaning of the word "may" found in s. 14.01(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 - See paragraph 125.

Cases Noticed:

Roy v. Poitras et al. (2006), 306 F.T.R. 83; 2006 FC 1386, refd to. [para. 48].

Roy v. Laperrière - see Roy v. Poitras et al.

Canada (Attorney General) v. Roy (2006), 311 F.T.R. 1; 2006 FC 1387, refd to. [para. 48].

Canada (Attorney General) v. Roy (2007), 381 N.R. 36; 2007 FCA 410, refd to. [para. 48].

Sheriff et al. v. Canada (Attorney General), [2005] F.T.R. Uned. B93; 2005 FC 305, refd to. [para. 49].

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1, refd to. [para. 49].

Lévy (Sam) & Associés Inc. et al. v. Mayrand et al. (2005), 277 F.T.R. 50; 2005 FC 702, refd to. [para. 51].

Lévy (Sam) & Associés Inc. v. Superintendent of Bankruptcy - see Lévy (Sam) & Associés Inc. et al. v. Mayrand et al.

Sheriff et al. v. Canada (Attorney General) (2006), 350 N.R. 230; 2006 FCA 139, refd to. [para. 51].

Khosa v. Canada (Minister of Citizenship and Immigration), [2009] 1 S.C.R. 339; 385 N.R. 206, refd to. [para. 61].

Proprio Direct Inc. v. Association des courtiers et agents immobiliers du Québec et al., [2008] 2 S.C.R. 195; 375 N.R. 1, refd to. [para. 62].

Nolan et al. v. Superintendent of Financial Services (Ont.) et al. (2009), 391 N.R. 234; 253 O.A.C. 256; 2009 SCC 39, refd to. [para. 62].

Nolan v. Kerry (Canada) Inc. - see Nolan et al. v. Superintendent of Financial Services (Ont.) et al.

Public Service Alliance of Canada v. Canadian Federal Pilots Association et al. (2009), 392 N.R. 128; 2009 FCA 223, refd to. [para. 62].

Canada (Attorney General) v. Mowat (2009), 395 N.R. 52; 2009 FCA 309, refd to. [para. 63].

Abdoulrab et al. v. Labour Relations Board (Ont.) et al. (2009), 251 O.A.C. 28; 2009 ONCA 491, refd to. [para. 63].

R. v. Sault Ste. Marie (City), [1978] 2 S.C.R. 1299; 21 N.R. 295, refd to. [para. 66].

Ghilzon v. Royal College of Dental Surgeons (Ont.) (1979), 94 D.L.R.(3d) 617 (Ont. Div. Ct.), refd to. [para. 84].

Chauvin v. Beaucage, 2008 QCCA 922, refd to. [para. 85].

Mann v. New Brunswick Pharmaceutical Society (1987), 77 N.B.R.(2d) 142; 195 A.P.R. 142; 35 D.L.R.(4th) 426 (T.D.), refd to. [para. 85].

Stuart v. College of Teachers (B.C.), [2005] B.C.T.C. 645; 254 D.L.R.(4th) 154 (S.C.), refd to. [para. 85].

Papa Holding Ltd. v. Northwest Territories, [1987] N.W.T.R. 96, refd to. [para. 86].

Whistler Mountain Ski Corp. v. Liquor Control and Licensing Branch (B.C.) (2002), 171 B.C.A.C. 231; 280 W.A.C. 231; 2002 BCCA 426, refd to. [para. 86].

Shooters 222 Restaurant v. Ontario Securities Commission, [2004] O.J. No. 5595 (Div. Ct.), refd to. [para. 86].

New Brunswick (Minister of Public Safety) v. 504174 N.B. Ltd. (2005), 279 N.B.R.(2d) 307; 732 A.P.R. 307; 2005 NBCA 18, refd to. [para. 86].

Gordon Capital Corp. v. Ontario Securities Commission (1991), 50 O.A.C. 258 (Div. Ct.), refd to. [para. 87].

Carruthers v. College of Nurses (Ont.) (1996), 96 O.A.C. 41; 31 O.R.(3d) 377 (Div. Ct.), refd to. [para. 87].

Béliveau v. Comité de discipline du Barreau du Québec, [1992] R.J.Q. 1822; 50 Q.A.C. 67 (C.A.), refd to. [para. 90].

R. v. Creighton, [1993] 3 S.C.R. 3; 157 N.R. 1; 65 O.A.C. 321, refd to. [para. 96].

Royal Oak Mines Inc. v. Canada Labour Relations Board et al., [1996] 1 S.C.R. 369; 193 N.R. 81, refd to. [para. 129].

Cartaway Resources Corp. et al., Re, [2004] 1 S.C.R. 672; 319 N.R. 1; 195 B.C.A.C. 161; 319 W.A.C. 161, refd to. [para. 129].

Donnini v. Ontario Securities Commission (2005), 194 O.A.C. 29; 76 O.R.(3d) 43 (C.A.), refd to. [para. 129].

Canada (Attorney General) v. Envoy Relocation Services (2007), 361 N.R. 367; 283 D.L.R.(4th) 465; 2007 FCA 176, refd to. [para. 129].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 5(5) [para. 99]; sect. 13.5 [para. 94]; sect. 14.01 [paras. 3, 123]; sect. 14.02 [para. 3]; sect. 25(1) [para. 99]; sect. 25(2) [para. 102]; sect. 154(1) [para. 94].

Bankruptcy and Insolvency Act Regulations (Can.), Bankruptcy and Insolvency General Rules, rule 36, rule 45 [para. 94]; rule 48(b) [para. 102]; rule 52 [para. 100].

Bankruptcy and Insolvency Act, Superintendent of Bankruptcy Directive 5, sect. 5, sect. 13 [para. 99].

Bankruptcy and Insolvency General Rules - see Bankruptcy and Insolvency Act Regulations (Can.).

Superintendent of Bankruptcy Directive 5 - see Bankruptcy and Insolvency Act.

Authors and Works Noticed:

Brown, Donald J.M., and Evans, John M., Judicial Review of Administrative Action in Canada (1998) (Looseleaf Ed.), para. 14:4523 [para. 67].

Counsel:

Bernard Letarte and Benoit de Champlain, for the applicant;

J. Alden Christian and Julia Martin, for the respondents.

Solicitors of Record:

John H. Sims, Q.C., Deputy Attorney General of Canada, Ottawa, Ontario, for the applicant;

Doucet McBride, LLP/S.R.L., Ottawa, Ontario, and Julia J. Martin, Ottawa, Ontario, for the respondents.

This application for judicial review was heard at Ottawa, Ontario, on December 14, 2009, by Mainville, J., of the Federal Court, who delivered the following reasons for judgment and judgment, dated January 28, 2010.