Date: 20050404
Docket: T-510-05
Citation: 2005 FC 439
Ottawa, Ontario, this 4th day of April, 2005
Present: The Honourable Mr. Justice Simon Noël
BETWEEN:
JOHN TODD
Applicant
and
ATTORNEY GENERAL OF CANADA
Respondent
REASONS FOR ORDER AND ORDER
[1] This is a last-minute application for an interim Order of Prohibition directed to the Superintendent of Bankruptcy (the Superintendent) ordering an interim stay of disciplinary proceedings against the Applicant, presently set to be heard by the delegate of the Superintendent today, April 4, 2005.
ISSUE
[2] Whether the time that has passed between the Superintendent first receiving a report and the holding of a disciplinary proceeding in the matter has been subject to inordinate delay, thereby causing undue prejudice to the Applicant and tainting the fairness of the proceeding before the delegate of Superintendent.
FACTS
[3] The Applicant, John Todd (Mr. Todd, or the Applicant) has been a licensed Trustee in Bankruptcy for over 25 years. In September 1999, Mr. Todd acted as Trustee and Administrator of a joint consumer proposal (JCP) following insolvency filed by John and April Davies (Mr. and Mrs. Davies, respectively). Mr. and Mrs. Davies were the principals of a company called Alda Wholesale Ltd. (Alda), which in turn had assigned itself into bankruptcy on June 25, 1999, following a corporate resolution signed by the Davies. The Applicant was not the Trustee of Alda.
[4] One of the principal creditors in the Alda bankruptcy was Automotive Finance Corporation (AFC), which was owed, at the time of bankruptcy, $277,000 for Alda's floor plan financing. AFC also held both security under the Personal Property Security Act, R.S.B.C. 1996, c. 359, and a second mortgage on certain real estate, as well as guarantees from the Davies. However, in January and February 2000, for various reasons, AFC's debt had become unsecured and was not satisfied out of the Alda bankruptcy.
[5] When the Davies' JCPs were filed, notice was not given to AFC as it was not the Applicant's habit to give notice to contingent creditors.
[6] In 2001, subsequent to the decisions surrounding its security in Alda, AFC commenced action against the Davies on their guarantees. After being advised that the JCPs had been accepted by the Davies' creditors and performed, AFC brought an application to set aside and nullify the JCPs. It later abandoned its application against Mrs. Davies; however, it was successful against Mr. Davies, whose proposal was annulled.
[7] The resulting Reasons for Judgment in that matter were critical of the Applicant. Alda's Trustee subsequently brought the Reasons for Judgment to the attention of the Superintendent on April 22, 2002, who in turn forwarded them to the Division Assistant Superintendent (DAS), the delegate of the Superintendent in the Province of British Columbia and Yukon.
[8] Pursuant to his powers under ss. 5 and 6 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended (the "Act"), the DAS (or the Superintendent himself) has the power to investigate the administration of estates in bankruptcy by Trustees. Based on the results of such an investigation, the Superintendent (though not the DAS) may decide to investigate the professional conduct of the Trustee in accordance with Section 14.01 of the Act.
[9] In April and May of 2002, the DAS conducted an investigation into Mr. Todd's actions in connection with the Davies' bankruptcy (which included an analysis of the Alda bankruptcy). On May 29, 2002, the DAS forwarded his report to other officials at the Office of the Superintendent, concluding as to the mismanagement of the Davies' estate and possible misconduct on Mr. Todd's part, and recommending disciplinary action. He also recommended the matters proceed quickly. The Applicant was advised of the DAS' decision on May 31, 2002.
[10] On June 10, 2002, the Applicant requested that the Superintendent resolve the matter against him as expeditiously as possible.
[11] On October 25, 2002, the Deputy Superintendent instructed Anne Speers (Ms. Speers), a Senior Analyst in its new Discipline Department, to conduct a professional conduct investigation (PCI) in accordance with Section 14.01 of the Act. The Applicant was notified of this PCI on November 5, 2002.
[12] On June 16, 2003, Ms. Speers advised her supervisors that the PCI was complete and that she was in the process of writing her report. The Applicant, however, was not advised at this time. On June 3, 2004, Ms. Speers delivered her report. It reached essentially the same conclusions as the DAS report filed two years previously : that there had been misconduct on the part of the Applicant, and that disciplinary action against the Applicant was recommended so that he would be given the opportunity to present a defence.
[13] The Applicant filed a defence to Ms. Speers' report on September 29, 2004.
[14] The hearing in this matter was originally set for the week beginning January 31, 2005. However, due to the unavailability of one of the Superintendent's witnesses, it was adjourned to March 21, 2005, which was the next availability of both counsel. By letter dated February 11, 2005, Counsel for the Applicant advised the Respondent that the material included in its disclosure revealed a Charter argument pertaining to delay, and undertook to provide a decision on whether or not this argument would be pursued by February 25, 2005, and in which forum this argument would proceed. On March 7, 2005, Counsel for the Applicant indicated he would be proceeding with this argument before the Federal Court and that a hearing date of March 14, 2005 had been set. On March 9, 2005, Counsel for the Applicant advised the Motion was delayed until the following week. Consequently, the disciplinary hearing was rescheduled to April 4, 2005, in order that the Applicant might bring his Charter Motion. In a Special Sitting on March 31, 2005, it was agreed that the present Prohibition Order would be heard by teleconference on April 1, 2005.
SUBMISSIONS
[15] The Applicant claims prejudice on the following four grounds :
(a) Delay - Since the events of concern happened approximately five and a half years ago, the Applicant is in the unenviable position of trying to recall and explain now-distant actions and events;
(b) Credibility - The bulk of the evidence will consist of the recollections of events and meetings between the Applicant and the Davies, and will become a question of who is more believable;
(c) Stress - Despite having advised the Superintendent of the necessity to proceed expeditiously, and the fact the Superintendent was aware of the stress and difficulties the ongoing investigation was having on the Applicant, no effort was made by the Superintendent to resolve the matter quickly;
(d) Professional stigma - Because the Applicant was restricted in the conduct of his profession due to the ongoing investigation, he suffered stigma; most notably, in his inability to transfer his licence to a firm in New Brunswick and to transfer his business to different trustees within British Columbia on two separate occasions.
[16] The Applicant's argument focuses on the fact that three years' delay between the DAS report and the actual disciplinary hearing was inordinate. The Applicant notes that he has not contributed to the delay in any way, and that allowing the matter to proceed would amount to abuse of process. He also claims the undue delay has engaged and violated his rights under s. 7 of the Canadian Charter of Human Rights and Freedoms, in that his right to security and liberty of the person has been threatened because of the stress and professional stigma he has suffered during the course of the lengthy investigation.
[17] The Applicant submits that since it is clear on the facts that the delay has been inordinate and that serious prejudice is likely to arise if the case proceeds, the balance of convenience is clearly in the Applicant's favour, and the interim Prohibition Order should be granted.
THE RESPONDENT
[18] The Respondent's position, essentially, is that the Applicant has failed to show any irreparable harm and therefore cannot be granted the requested interim Prohibition Order. Any irreparable harm to which the Applicant refers is purely speculative at this point in time. The Applicant has also not established that the matter is urgent, necessitating such a stay of proceedings.
[19] The Respondent further argues that s. 7 of the Charter is not engaged in this case since economic hardship is not normally a right under the Charter. Furthermore, even if the Applicant were able to claim s. 7 economic hardship rights, the evidence indicates that this hardship was a direct result of the Applicant's conduct as a Trustee generally, rather than as a result of prejudice caused by the length of time taken to complete the Superintendent's investigations.
[20] Finally, the Respondent outlines the difference between the powers of the DAS and of a Senior Analyst of the Superintendent to investigate Trustees' conduct. The DAS only has the power to investigate complaints from creditors or any other interested person in an estate as to the management and administration of the estate. This may include investigating the Trustee's conduct, but only a Senior Analyst, under the delegated power of sections 14.01 and 14.02 of the Act, may conduct an investigation leading to actual disciplinary measures. Thus, only Ms. Speers was able to conduct a PCI leading to the recommendation of disciplinary measures; which she eventually did, based upon information received previously from the DAS' initial report into allegations of misconduct in the administration of the Davies' estate. This, in turn, was done in as expedient a manner possible, considering the other responsibilities allotted to Ms. Speers as a Senior Analyst.
[21] Finally, it is the opinion of the Respondent that since the delegate has jurisdiction to hear challenges for delay, the Applicant should present his concern to the delegate and not the Federal Court.
ANALYSIS
[22] There are three requirements to be met when a stay of proceedings is requested :
(1) There is a serious issue to be tried;
(2) Irreparable harm will result if the stay is denied; and,
(3) The balance of convenience is in the favour of the party requesting the stay.
(See RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311.)
[23] The first criterion above does not entail a determination of the matter on its merits, but rather a general assessment of whether the Applicant has been able to demonstrate the existence of a serious question to be tried, regardless of its ultimate merits : see RJR-MacDonald, supra, at paras. 44 et seq. The application must also be neither vexatious nor frivolous : see RJR-MacDonald, supra, at paras. 49-50.
[24] The concept of irreparable harm concerns the nature of harm rather than its magnitude. Essentially, where the refusal to grant relief "could so adversely affect the applicants' own interests that the harm could not be remedied" if the final decision did not agree with the result of the interlocutory application (e.g., if this stay is denied but Mr. Todd is ultimately successful, at the hearing, in his arguments regarding delay), irreparable harm may be suffered : RJR-MacDonald, supra, at paras. 57-61.
[25] Finally, the balance of convenience must be weighed; that is, a determination of which party would suffer a greater harm should the interlocutory application be granted : RJR-MacDonald, supra, at paras. 62 et seq.
[26] After having reviewed all the evidence, submissions and applicable case law provided by both counsel, the test as laid out in RJR-MacDonald has not been met by the Applicant since, as pointed out in Blencoe v. British Columbia (Human Rights Commission), 2000 SCC 44 at para. 117, by Justice Bastarache writing for the majority, it is a "heavy burden" to bear by the party requesting the stay.
[27] Counsel for the Applicant argued quite forcibly that there was a serious issue to be determined in that a preponderance of evidence indicated the delay incurred in the scheduling of the hearing was undue. While it is true that there is some evidence that the Superintendent was encouraged to ensure the matter was dealt with as expeditiously as possible, it is unclear whether the delay that did follow was, in fact, undue in the circumstances. Without deciding the point, there does seem to be a potential serious issue as to the question of whether the delay was reasonable.
[28] However, the Applicant has failed to demonstrate the existence of irreparable harm should this request for a stay be denied. While it was argued that the potential prejudice to Mr. Todd following a negative finding by the Superintendent in a procedure that might later turn out to be invalid for lack of jurisdiction would be insurmountable, this prejudice seems no more acute than it would be in any other proceeding. The other arguments forwarded by the Applicant - that of problems of memory and recollection, and of credibility - are better left to determination by the trier of fact. The Court notes that no medical evidence was presented and that it, on such an application for interim relief, is not in a position to properly assess such an argument. The Applicant has also pointed to stress and professional stigma risking his s. 7 Charter rights, those of security and liberty of the person; however, no evidence of the effects this alleged stress has had on him have been presented to the Court (other than the fact that Mr. Todd communicated the existence of such stress to the Superintendent at one point during the investigation process and his affidavit). Significantly, there is also no evidence that any stress and stigma suffered by Mr. Todd is any more prejudicial than that suffered by any person who may be investigated for misconduct in his or her profession. Again, in Blencoe, supra at paragraph 59, Justice Bastarache remarked that : "Stress, anxiety and stigma may arise from any criminal trial, human rights allegation, or even a civil action, regardless of whether the trial or process occurs within a reasonable time." On the evidence before me, there is no irreparable harm that has been suffered, and certainly no harm that cannot be otherwise remedied by traditional means, such as costs against the Superintendent should Mr. Todd be found blameless or should a future judicial review of the Superintendent's decision determine those proceedings were ab initio for delay.
[29] Finally, the balance of convenience lies more with the public interest in seeing justice be done than with Mr. Todd's personal interests in not having this matter proceed. It is acknowledged that Mr. Todd will incur not only legal costs, but also personal costs in the way of stress, a potential adverse finding, and potential damage to his reputation, if the hearing is held as scheduled, while the Superintendent, on the other hand, arguably only risks losing its jurisdiction over the matter if this interim stay is granted. The balance of convenience, however, is more complex than this, and it seems logical that if there has been professional misconduct by Mr. Todd in his activities as a Trustee in bankruptcy, the public ought to be aware of this. Likewise, if his conduct has been blameless, then it is in the interest of all parties - Mr. Todd as well as the public he may serve in the future - for Mr. Todd's innocence to be known. Therefore, while the Superintendent may run less personal risks than Mr. Todd in this matter, the public interest outweighs Mr. Todd's interests, and the hearing should proceed as scheduled on April 4, 2005.
[30] For these reasons, this request for an interim Order of Prohibition requesting an interim stay of proceedings by the Superintendent is rejected.
COSTS
[31] Both parties agreed that it would be unusual to award costs in this matter, and that it would be more appropriate for any costs in this Motion to follow the event.
ORDER
THIS COURT ORDERS THAT :
- The request for an interim Order of Prohibition ordering an interim stay of disciplinary proceedings against the Applicant by the Superintendent in Bankruptcy is dismissed with costs, if any, to follow the event.
"Simon Noël"
Judge
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-510-05
STYLE OF CAUSE: JOHN TODD v. THE ATTORNEY GENERAL OF
CANADA
PLACE OF HEARING: OTTAWA/ VANCOUVER
DATE OF HEARING: APRIL 1, 2005
REASONS FOR ORDER : THE HONOURABLE MR. JUSTICE SIMON NOËL
DATED: APRIL 4, 2005
APPEARANCES:
H.C. RITCHIE CLARK, Q.C. FOR THE APPLICANT
MALCOLM PALMER FOR THE RESPONDENT
SOLICITORS OF RECORD:
DEVLIN JENSEN FOR THE APPLICANT
VANCOUVER, BC
JOHN H. SIMS, Q.C. FOR THE RESPONDENT
DEPUTY ATTORNEY GENERAL
OF CANADA