Sztern et al. v. Canada (Attorney General), (2010) 363 F.T.R. 224 (FC)

• Jurisdiction: Federal Jurisdiction (Canada)
• Court: Federal Court (Canada)
• Judge: Boivin, J.
• Citation: (2010), 363 F.T.R. 224 (FC),2010 FC 181
• Date: 26 January 2010
• Subject Matter: ADMINISTRATIVE LAW,CIVIL RIGHTS,BANKRUPTCY

Sztern v. Can. (A.G.) (2010), 363 F.T.R. 224 (FC)

MLB headnote and full text

Temp. Cite: [2010] F.T.R. TBEd. FE.025

Henry Sztern and Henry Sztern & Associés Inc. (applicants) v. The Attorney General of Canada (respondent)

(T-49-09; 2010 FC 181)

Indexed As: Sztern et al. v. Canada (Attorney General)

Federal Court

Boivin, J.

February 22, 2010.

Summary:

Following a disciplinary hearing with respect to 35 alleged offences, a Delegate of the Superintendent of Bankruptcy ordered that the trustee licences of Henry Sztern and Henry Stzern & Associés Inc. be cancelled, pursuant to s. 14.01 of the Bankruptcy and Insolvency Act. The central issue of the decision rested on the credibility of the witnesses and the appreciation of the evidence. More particularly, the Delegate found that Henry Sztern lacked credibility. The trustees applied for judicial review, requesting that the decision be quashed.

The Federal Court dismissed the application. The Delegate's decision was not unreasonable or unsupported by the evidence.

Administrative Law - Topic 551.2

The hearing and decision - Decisions of the tribunal - Reasons for decisions - Translation - On an application for judicial review, an applicant argued that the Delegate of the Superintendent of Bankruptcy contravened the Bankruptcy and Insolvency Act, the Charter, and the Official Languages Act by not immediately providing an English translated version of the decision in question, dated December 15, 2008 - The applicant requested translation on December 21, 2008, and obtained a translation on February 3, 2009 - The Federal Court found that this was an acceptable delay - The application was filed within the prescribed time limit; the applicant did not suffer any prejudice - The Delegate had rejected the applicant's motion for the services of an interpreter, finding that s. 14 of the Charter did not apply and that the applicant had not established that he did not have knowledge of French - Nonetheless, the respondent provided an interpreter - Further, the same issue had been previously decided by the Superior Court of Quebec and the Quebec Court of Appeal - See paragraphs 69 to 74.

Administrative Law - Topic 2006

Natural justice - Circumstances when rules applicable - [See first Bankruptcy - Topic 2632 ].

Administrative Law - Topic 2617

Natural justice - Evidence and proof - Disclosure - [See first Bankruptcy - Topic 2633 ].

Administrative Law - Topic 3202

Judicial review - General - Scope or standard of review - A Delegate of the Superintendent of Bankruptcy ordered that the trustee licences of Henry Sztern and Henry Stzern & Associés Inc. (the applicants) be cancelled - The central issue of the delegate's decision rested on the credibility of the witnesses and the appreciation of the evidence; particularly, the Delegate found that Henry Sztern lacked credibility - At the judicial review, the applicants argued for a reassessment of the evidence - The Federal Court stated that "[s]uffice it to say that in a judicial review proceeding, the role of the Court is not to reassess the credibility of witnesses or the appreciation of the documentary evidence filed before the Delegate ... As noted in Dunsmuir, the function of judicial review is to ensure the legality, reasonableness and fairness of the administrative process and its outcome" - See paragraph 55.

Administrative Law - Topic 3345.1

Judicial review - General - Practice - Evidence (incl. new evidence) - [See second Bankruptcy - Topic 2633 ].

Bankruptcy - Topic 2632

Trustees - Discipline - Sanctions - Section 14.02 of the Bankruptcy and Insolvency Act provided that, before making a decision affecting a trustee's licence, the Superintendent of Bankruptcy must afford the trustee a reasonable opportunity for a hearing - In the case at bar, a Delegate of the Superintendent noted that the proceeding under s. 14.02 was disciplinary in nature and that the alleged offences had been treated by the courts as similar to quasi-penal offences - The delegate also noted that the burden of rebutting the alleged offences rested on the trustees - The Federal Court stated that "[t]he recognition of the quasi-penal nature of the proof and the hearing before the Delegate does not make subsection 14.02(2) [procedure at the hearing] inoperative. The application of subsection 14.02(2) of the Act is subject to the rules of natural justice" - See paragraph 22.

Bankruptcy - Topic 2632

Trustees - Discipline - Sanctions - A Delegate of the Superintendent of Bankruptcy ordered that the trustee licences of an individual trustee and of a corporate trustee be cancelled - The central issue of the decision rested on the credibility of the witnesses and the appreciation of the evidence - At the judicial review hearing, the trustees argued that the delegate erred in his appreciation of the evidence and testimony - The Federal Court held that "the Superintendent, who by statute has the discretion to determine what is evidence and how it shall be weighed, did not err in law and his decision was entirely reasonable" - The specific errors in law alleged by the trustees were not established, and provided no basis for the court to intervene to quash the decision - The Delegate's conclusions were supported by ample facts and overwhelming evidence - It was open to him to exercise his discretion to cancel the licences - His decision was not capricious, biased or unreasonable as to constitute a reviewable error- See paragraphs 50 to 57.

Bankruptcy - Topic 2633

Trustees - Discipline - Disclosure requirements - The written notice of the Senior Analyst (Bankruptcy and Insolvency Act, s. 14.02) alleged that 35 offences were committed by the applicants, an individual trustee and a corporate trustee - Following a disciplinary hearing, their licences were cancelled - The Federal Court acknowledged that the trustees "must have access to all relevant material which may assist them. The Senior Analyst had a duty to disclose all documents unless they were clearly irrelevant. If it is established that relevant materials were not disclosed, it must be determined whether that failure to disclose impaired the applicants' right to explore possible avenues of investigation and to have the opportunity to answer and defend themselves ... The procedural requirements for disciplinary proceedings under the Act give rise to a clear duty to afford the trustees fulsome disclosure, similar to the Stinchcombe principles" - See paragraph 47.

Bankruptcy - Topic 2633

Trustees - Discipline - Disclosure requirements - A Delegate of the Superintendent of Bankruptcy ordered that the trustee licences of an individual trustee and of a corporate trustee be cancelled - After filing their application for judicial review, the trustees discovered new evidence, allegedly confirming that the Senior Analyst who investigated their conduct knowingly withheld critical evidence - The respondent replied that the new evidence was inadmissible as not part of the tribunal record, and should have been the object of a motion to file supplementary evidence - The Federal Court did not agree that the Senior Analyst withheld relevant information during the investigation - The new evidence did not open new lines of inquiry or change the result of the proceeding - There had been no failure by the respondent to disclose relevant evidence - See paragraphs 41 to 49.

Bankruptcy - Topic 2634

Trustees - Discipline - Jurisdiction of Superintendent in bankruptcy (incl. jurisdiction to stay proceedings) - [See first Civil Rights - Topic 4427 ].

Bankruptcy - Topic 2638

Trustees - Discipline - Judicial review - Standard of - A Delegate of the Superintendent of Bankruptcy ordered that the trustee licences of the applicants be cancelled - At the judicial review hearing, the applicants' main point of issue was the alleged lack of appreciation of the facts in evidence and the delegate's failure to consider the evidence and testimony in reaching his decision - The Federal Court found that the applicable standard of review was reasonableness - However, a common law duty of fairness was owed in proceedings under ss. 14.01 and 14.02 of the Bankruptcy and Insolvency Act - Accordingly, the standard of review on the disclosure issue was correctness - The standard of review on questions of law such as the scope of procedural fairness including procedural safeguards, impartiality of the investigation process and bias were reviewable on the standard of correctness - See paragraphs 37 to 40.

Civil Rights - Topic 2807

Language - Assistance of an interpreter - Before boards and inquiries - [See Administrative Law - Topic 551.2 ].

Civil Rights - Topic 4301

Protection against self-incrimination - General - Canadian Charter of Rights and Freedoms, s. 13 - The Federal Court stated that "[s]ection 13 of the Charter provides for the right against the use of incriminating evidence given by someone in one proceeding to incriminate that same person in subsequent proceedings and it is closely related to the rights protected by sections 11(c) and 11(d) of the Charter ... In terms of the nature of the proceedings to which these rights apply, the respective scopes of sections 11 and 13 of the Charter should generally be the same" - The court noted the characteristics which would bring an offence within the scope of s. 11, and that s. 13 was only invoked regarding hearings where the penalty involved true penal consequences - In the case at bar, the disciplinary hearing undertaken by a Delegate of the Superintendent of Bankruptcy resulting in the cancellation of trustee licences did not amount to a true penal consequence - Consequently, ss. 11 and 13 of the Charter did not apply - See paragraphs 65 to 68.

Civil Rights - Topic 4310

Protection against self-incrimination - General - Purpose and scope of rule - Canadian Charter of Rights and Freedoms, s. 13 - [See Civil Rights - Topic 4301 ].

Civil Rights - Topic 4427

Protection against self-incrimination - Proceedings to which protection applies - Professional discipline - Following a disciplinary hearing, a Delegate of the Superintendent of Bankruptcy ordered that the trustee licences of the applicants be cancelled - An issue at the judicial review hearing was whether ss. 11 and 13 of the Charter applied - The Federal Court stated that it must first address the role and function of the Superintendent and determine whether they were criminal or disciplinary in nature - "If the role and function are criminal, the Charter would apply. On the other hand, if the role and function are disciplinary, the next step is to identify whether the measures taken against the applicants are criminal or disciplinary in nature. In other words, the Court must determine whether the sanction amounts to a true penal consequence" - In the result, the court determined that ss. 11 and 13 of the Charter did not apply to the case at bar - See paragraph 60.

Civil Rights - Topic 4427

Protection against self-incrimination - Proceedings to which protection applies - Professional discipline - A Delegate of the Superintendent of Bankruptcy ordered that the trustee licences of the applicants be cancelled, pursuant to s. 14.01 of the Bankruptcy and Insolvency Act - An issue at the judicial review hearing was whether ss. 11 and 13 of the Charter applied to the disciplinary hearing - The Federal Court agreed with the court's observations in Lévy (Sam) & Associés Inc. that the scheme of the Act in general and the nature of ss. 14.01(1) and 14.01(2) were not of a penal or criminal nature - The court next decided whether the cancellation of the trustee licences amounted to a true penal consequence - See paragraphs 61 to 64.

Civil Rights - Topic 4427

Protection against self-incrimination - Proceedings to which protection applies - Professional discipline - During a disciplinary hearing under the Bankruptcy and Insolvency Act, a trustee objected to answering a question on the ground of possible self-incrimination, because the Senior Analyst's report referred to his testimony in the Superior Court on the same file (a civil action was filed by the guardian trustee against the applicants) - The trustee referred to s. 5(2) of the Canada Evidence Act and ss. 11 and 13 of the Charter - The Delegate dismissed the objection after he noted two voluntary testimonies before him in cross-examination and in the Superior Court - He concluded that the only purpose of the cross-examination in the present proceedings was to impeach the trustee's credibility - The Federal Court held that ss. 11 and 13 of the Charter did not apply to this case - The disciplinary hearing resulting in the cancellation of the licences did not amount to a true penal consequence - See paragraph 68.

Civil Rights - Topic 8305.1

Canadian Charter of Rights and Freedoms - Application - Section 11 - [See Civil Rights - Topic 4301 ].

Civil Rights - Topic 8426

Canadian Charter of Rights and Freedoms - Operation - Nature or true consequences test (s. 11) - [See Civil Rights - Topic 4301 ].

Cases Noticed:

Perrier et al. v. Superintendent of Bankruptcy (1995), 93 F.T.R. 127; 55 A.C.W.S.(3d) 902 (T.D.), refd to. [para. 22].

R. v. Henry (D.B.) et al., [2005] 3 S.C.R. 609; 342 N.R. 259; 376 A.R. 1; 360 W.A.C. 1; 219 B.C.A.C. 1; 361 W.A.C. 1; 2005 SCC 76, refd to. [para. 25].

R. v. Mannion, [1986] 2 S.C.R. 272; 69 N.R. 189; 75 A.R. 16, refd to. [para. 25].

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; 291 D.L.R.(4th) 577, refd to. [para. 37].

Roy v. Poitras et al. (2006), 306 F.T.R. 83; 2006 FC 1386, refd to. [para. 37].

Sheriff et al. v. Canada (Attorney General), [2005] F.T.R. Uned. B93; 137 A.C.W.S.(3d) 1102; 2005 FC 305, refd to. [para. 37].

Sheriff et al. v. Canada (Attorney General) (2006), 350 N.R. 230; 2006 FCA 139, refd to. [para. 39].

Ellis-Don Ltd. v. Labour Relations Board (Ont.) et al., [2001] 1 S.C.R. 221; 265 N.R. 2; 140 O.A.C. 201, refd to. [para. 39].

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

Lévy (Sam) & Associés Inc. et al. v. Mayrand et al., [2006] 2 F.C.R. 543; 277 F.T.R. 50; 2005 FC 702, affd. (2006), 359 N.R. 145; 2006 FCA 205, refd to. [para. 40].

R. v. Stinchcombe, [1991] 3 S.C.R. 326; 130 N.R. 277; 120 A.R. 161; 8 W.A.C. 161, refd to. [para. 42].

Lake v. Canada (Minister of Justice), [2008] 1 S.C.R. 761; 373 N.R. 339; 236 O.A.C. 371; 2008 SCC 23, refd to. [para. 55].

Khosa v. Canada (Minister of Citizenship and Immigration) (2009), 385 N.R. 206; 2009 SCC 12, refd to. [para. 55].

R. v. Dubois, [1985] 2 S.C.R. 350; 62 N.R. 50; 66 A.R. 202, refd to. [para. 65].

R. v. Wigglesworth, [1987] 2 S.C.R. 541; 81 N.R. 161; 24 O.A.C. 321; 61 Sask.R. 105, refd to. [para. 66].

McDonald v. Law Society of Alberta, [1994] 3 W.W.R. 697; 44 A.C.W.S.(3d) 681 (Alta. Q.B.), refd to. [para. 67].

Knutson v. Saskatchewan Registered Nurses' Association, [1991] 2 W.W.R. 327; 90 Sask.R. 120; 24 A.C.W.S.(3d) 706 (C.A.), refd to. [para. 68].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 14.01, sect. 14.02, sect. 14.03 [para. 33].

Canada Evidence Act, R.S.C. 1985, c. C-5, sect. 5(1), sect. 5(2) [para. 34].

Canadian Charter of Rights and Freedoms, 1982, sect. 11(c), sect. 11(d), sect. 13 [para. 35].

Evidence Act (Can.) - see Canada Evidence Act.

Counsel:

Henry Sztern, on his own behalf;

Vincent Veilleux, for the respondent.

Solicitors of Record:

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

This application for judicial review was heard on January 26, 2010, at Montréal, Quebec, by Boivin, J.,of the Federal Court, who delivered the following order and reasons for order, dated February 22, 2010, at Ottawa, Ontario.