Date: 20050225
Docket: T-1687-02
Citation: 2005 FC 305
BETWEEN:
TODD Y. SHERIFF, holder of a trustee license
and SEGAL & PARTNERS INC.,
holder of a corporate trustee license
Applicants
and
ATTORNEY GENERAL OF CANADA
Respondent
REASONS FOR ORDER
MacKAY D.J.:
[1] These reasons concern my decision to dismiss the application by the applicant trustees for judicial review of three interrelated decisions of the Superintendent of Bankruptcy acting under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended, ("the BIA" or "the Act").
[2] The decisions in question were made in proceedings concerning review of the conduct of the trustees following an investigation and a report by a senior disciplinary analyst ("SDA") concerning allegations of unprofessional conduct in the administration of two estates. The first decision concerned alleged misconduct by the trustees, a decision made September 3, 2002, following hearings conducted in the preceding May and June. By the second decision, made on February 12, 2003, the Superintendent dismissed a motion by the trustees for a stay of the proceedings or a rehearing, a motion based on the ground that there were alleged failures by the SDA to disclose material evidence in advance of the hearings in May and June 2002. The third decision, made June 23, 2003, concerned penalties imposed for failure of the trustees to meet professional standards expected of them.
[3] Under Rule 302 of the Federal Court Rules, 1998, SOR/98-106, unless the Court orders otherwise, an application for judicial review concerns a single decision of a federal board, tribunal or agency in respect of which relief is sought. The circumstances of this case warrant an Order, as the terms of the Order now issued confirm, that this proceeding relates to three interrelated and interdependent decisions made concerning the merits, a stay application and applicable penalties in the course of proceedings arising from investigation and hearings about alleged failure of the trustees to meet professional standards in the management of certain estates in bankruptcy.
[4] Proceedings in this application were extended following the hearing until January 2005 by written submissions, initiated by the applicants with responses by the Attorney-General, filed with leave of the Court. Those concern "fresh evidence" or information which it is urged has significance for this matter. After reviewing the background and the decisions in issue, these reasons then review developments after June 23, 2003 when the penalty decision was rendered, and the significance of those developments. Finally, these reasons deal with the merits of the issues raised in this application.
[5] The reasons proceed under the following headings:
A. The background and the decisions in issue.
B. Developments after June 23, 2003.
C. Significance of post-June 2003 developments.
D. The issues raised in judicial review.
1. The standard of review
2. The applicability of the Charter of Rights and Freedoms, sections 7 and 11
3. The applicability of the Canadian Bill of Rights
4. The appropriate standard of fairness
5. Specific errors alleged in law
6. Reasonableness of the decisions of the Superintendent
E. Conclusion
F. Costs
A. The background and the decisions in issue
[6] The applicant, Todd Y. Sheriff, is a licensed trustee under the BIA and he is the principal shareholder and an employee of the corporate applicant, Segal and Partners, Inc. which holds a corporate trustee licence under the Act. As a result of complaints about the administration by the trustees of two estates in bankruptcy, a Senior Disciplinary Analyst ("SDA"), exercising certain responsibilities of the Superintendent of Bankruptcy under the BIA, was directed to initiate an investigation of the work of the two trustees.
[7] Under the Act the Superintendent is responsible for licencing and supervision of trustees in their administration of estates as a fiduciary for the benefit of creditors. In the exercise of that responsibility the Superintendent receives complaints and he or his delegate may undertake an investigation or inspection of any matter to which the Act applies, including the conduct of a trustee.
[8] While the investigation of the SDA was underway, in March 2001 the corporate trustee reported concerns about alleged dishonesty of one of its staff who had been involved in the administration of the estates of interest to the SDA. That staff member (here called "A") was subsequently terminated in her employment. The investigation by the SDA led to two reports, the first on June 29, 2001, concerning alleged failures by the trustees to meet professional standards in administration of the two estates of concern. A second, supplementary report was completed October 25, 2001. Copies of both were provided to the trustees and preparations were made for a hearing by the Superintendent about the deficiencies, or the wrongdoing, reported by the SDA.
[9] Arrangements were made for hearings by the Superintendent with appropriate notice from the SDA's reports of the matters of concern, pursuant to section 14.02 of the BIA. Upon objection by the trustees to the form and content of the SDA's second report as inconsistent with directed requirements under the BIA, the Superintendent declined to deal with the second report, but commenced the hearing in relation to the first report. Prior to that hearing, the applicant trustees sought full disclosure of documents in possession of the SDA that were relevant to the anticipated hearing. The hearing was held May 27-30 and June 3, 2002, when decision was reserved. Subsequently on September 3, 2002, the Superintendent's decision found significant deficiencies in the administration by the trustees of the estates in question.
[10] Following the September 3, 2002 decision, the first of those here in question, the trustees raised objections to the admission, at the hearing, of the evidence of one, Mr. Webster. Since the Superintendent expressly stated by his decision that this evidence would be ignored, and it was not otherwise referred to in the decision, and it is not now said by the trustees that it was relied upon by the Superintendent, that objection has no merit. The second objection concerns alleged failure by the SDA to disclose in advance of or at the hearing, correspondence with another trustee, a third party, alleging dishonesty by A, the former employee of the applicant corporation, who had been employed by that third party after employment with the applicant trustee was terminated. That correspondence the applicants learned about only in November, 2002 when it was disclosed by the SDA as a document possibly relevant for the second report, which as we have noted, was completed October 25, 2002.
[11] The two objections of the trustees led them to apply to the Superintendent for a stay of proceedings or for a new hearing on the ground that the SDA had failed to disclose material evidence, i.e. the letter from a second corporate trustee concerning the alleged wrongdoing of A. They urged that had they known of that alleged wrongdoing by A, they might have called her as a witness and evidence of A's conduct could reasonably have resulted in a different decision concerning the applicants.
[12] That application by the trustees was heard on November 12, 2002 and was dealt with by decision of the Superintendent, dated February 12, 2003, the second decision here in question. No reason was found to order a new hearing or to stay proceedings. In his decision the Superintendent noted that a statement by A, included in the SDA's material evidence disclosed before the May-June 2002 hearing, a matter disputed by the trustees at the hearing, had specifically been excluded from his consideration, as stated in his decision. A had not been called as a witness at the hearing either by the SDA or by the trustees, though nothing precluded that.
[13] As for the failure to disclose the correspondence from the second corporate trustee, the Superintendent's decision found that the SDA had failed to meet appropriate standards for disclosing information that could have been relevant and of interest to the applicant trustees. Nevertheless, that "information would not itself have produced any different result, and in the circumstances of the case, on a balance of probabilities there was no reasonable possibility that the trustees were denied the opportunity to present a full answer and defence or that their right to a fair hearing was violated as a result of the failure to disclose the other trustee firm's report."
[14] Thereafter, submissions were made by the applicants and by the SDA to the Superintendent with respect to appropriate penalties. The decision, to impose penalties, was released on June 23, 2003. This is the third decision in issue in this application for judicial review. I return to the issues raised in this application after dealing with issues arising after the penalty decision in June 2003. The penalties then decided were not imposed, pending the outcome of this application.
B. Developments after June 23, 2003
[15] While the parties prepared for the hearing of this matter they were simultaneously involved in preparations for a hearing by a delegate of the Superintendent in regard to the second report of the SDA, which had originated on the basis of an audit of the applicant trustees' affairs following their report in 2001 of alleged wrongdoing by A, their former employee. In the course of preparations for that hearing concerning the second report the trustees continued to seek disclosure of information from the SDA. Further disclosure was made, in March and April 2004 when working papers of the SDA, excluding some claimed to be privileged, and a regulatory circular concerning management of third party accounts were produced by the SDA.
[16] That late disclosure led to a motion by the trustees to the Superintendent's delegate, that proceedings with regard to the second report be stayed. The motion was denied and preparations for the hearing on that matter continued with a view to commencing in the fall of 2004.
[17] The late disclosure with other concerns about the SDA's alleged failure to disclose relevant information was also a ground for argument in the hearing of this application concerning the decisions of the Superintendent. That ground I return to discuss, after first disposing of a second request by the trustees that this proceeding be stayed and the decisions here in question be set aside. That request was based upon "fresh evidence", said to have become available after the hearing of this application. That evidence is constituted by further disclosure of the SDA on November 2, 2004, of e-mail correspondence recently examined and perceived to be possibly relevant in relation to the hearing in regard to the second report. Submissions in respect of the significance of that fresh evidence were made in writing to this Court in December 2004, following a request in November by the applicants for leave to file a supplementary record.
[18] The disclosure made November 2, 2004, also became the basis for a second motion by the trustees to the Superintendent's delegate for a stay of proceedings in relation to the second report of the SDA. That motion, heard by the Honourable Fred Kaufman, the Superintendent's delegate, led to a decision dated January 6, 2005. That was sent to me by the trustees with a request for leave to file it in this matter, with additional submissions emphasizing the trustees' view that the reasoning of that decision has significance for this proceeding, and further supports their submission that this proceeding in relation to the first report be stayed or be ordered to be reheard by the Superintendent. That request the respondent Attorney General opposed by written submissions dated January 25, 2005.
[19] By his decision the Honourable Fred Kaufman, acknowledging that he was dealing with a different case than this, found that delayed disclosure, and some uncertainty whether all relevant information had been disclosed, put in question the integrity of the process in regard to the second report and so too the right and ability of the trustees to make full answer and defence in regard to that report. He found the wording of the Bankruptcy and Insolvency Act authorized him to grant a stay, and he stayed "the proceedings initiated against [the trustees'] by the Senior Discipline Analyst".
[20] By the Order now issued I confirm that the written submissions of the trustee, including the decision of January 6, 2005 by the Honourable Fred Kaufman, and the response by letter of the Attorney General, are filed in this proceeding. I do so in order to complete the record of submissions made before, at, and following the hearing of this application for judicial review.
C. Significance of post-June 2003 developments
[21] Having ordered the written submissions presented following the hearing of this matter to be filed, I am not persuaded that the fresh evidence revealed by the disclosure of information on November 2, 2004, or the decision of the Honourable Fred Kaufman have any significance for my decision. The November disclosure and the delegate's subsequent decision following the hearing of this application, and the earlier disclosures of March and April 2004, occurred long after the decisions of the Superintendent here in question. I note the trustees are concerned about alleged failure of the SDA to make timely disclosure of evidence or information in her possession at the time of the first report and also of the second report, and that both reports concern the same trustees and SDA, the same time period and some similar underlying facts.
[22] Nevertheless what is urged to be fresh evidence by disclosure in November 2004, as in March and April, 2004, mainly concerns conduct by A, the former employee of the trustees, contemplation of possible prosecution of A, and guidelines for managing third party accounts, matters which are not relevant for review of the decisions of the Superintendent here in question. Again, I note that any evidence of A was expressly excluded from consideration by the Superintendent when A was not called by the trustees or by the SDA at the hearing on the first report. Matters relating to third party accounts, possibly apart from the two estates of concern for the first report, are not relevant for review in this proceeding, and in any event the guidelines were not "fresh evidence" since they had been published for trustees some years ago.
[23] No substantive argument concerning the Superintendent's decision here in question is raised by the trustees on the basis of the "fresh evidence". They seek to support their claim for relief by relying on late disclosure, after the hearing, to bolster their similar argument made at the hearing of this application. They claim to have lost confidence in the fairness of the process followed by the SDA. That is unfortunate but their measure of the standard for fairness is not in itself persuasive.
[24] Finally, I am not persuaded that the decision of the Honourable Fred Kaufman, in relation to proceedings in preparation for the hearing on matters raised in the second report has significance for judicial review of the decisions made by the Superintendent in 2002 and 2003 in respect of matters raised in the first report. With respect for his decision, I note that it concerns different circumstances, although they involve the same trustees and SDA and the same general time period. It is a case different from this, as the delegate himself acknowledged. Each case concerns a different report, the first concerning perceived failure to meet professional standards, the second concerning perceived wrongdoing against the interests of beneficiaries of bankrupt estates.
D. The issues raised in judicial review
[25] I turn to the issues raised in the application records and the submissions made at the hearing of this judicial review of the decisions by the Superintendent in regard to the first report.
D.1. The standard of review
[26] The applicants urge that the standard of review in this application is correctness. While that may be the appropriate standard in relation to some or all of specific errors of law they urge were made by the Superintendent, I am not persuaded that standard is appropriate in assessing the decision of September 3, 2002 on the merits of the first report, and the penalty decision of June 23, 2003, when those are each considered as a whole.
[27] Under the BIA the Superintendent is responsible for supervision of the administration of all estates, with broad power to oversee the regime for management of bankruptcy and insolvency situations for the benefit of debtors, creditors and others interested in the estates. A primary means of supervision is through trustee licensing and regulation of the work of trustees. Under section 5 of the Act the Superintendent's supervisory responsibilities include:
| 5(3) The Superintendent shall, without limiting the authority conferred by subsection (2),
[...]
(e) from time to time make or cause to be made such inspection or investigation of estates or other matters to which this Act applies, including the conduct of a trustee or a trustee acting as a receiver or interim receiver, as the Superintendent may deem expedient and for the purpose of the inspection or investigation the Superintendent or any person appointed by the Superintendent for the purpose shall have access to and the right to examine and make copies of all books, records, data, including data in electronic form, documents and papers pertaining or relating to any estate or other matter to which this Act applies;
(f) receive and keep a record of all complaints from any creditor or other person interested in any estate and make such specific investigations with regard to such complaints as the Superintendent may determine; and
[...]
5(4) The Superintendent may [...]
(b) issue, to official receivers, trustees, administrators of consumer proposals made under Division II of Part III and persons who provide counselling pursuant to this Act, directives with respect to the administration of this Act and, without restricting the generality of the foregoing, directives requiring them
(i) to keep such records as the Superintendent may require, and
(ii) to provide the Superintendent with such information as the Superintendent may require;
(c) issue such directives as may be necessary to give effect to any decision made by the Superintendent pursuant to this Act or to facilitate the carrying out of the purposes and provisions of this Act and the General Rules, including, without limiting the generality of the foregoing, directives relating to the powers, duties and functions of trustees, of receivers and of administrators as defined in section 66.11;
(d) issue directives governing the criteria to be applied by the Superintendent in determining whether a trustee licence is to be issued to a person and governing the qualifications and activities of trustees; and
[...] |
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5(3) Le surintendant, sans que soit limitée l'autorité que lui confère le paragraphe (2) :
[...]
e) effectue ou fait effectuer les investigations ou les enquêtes, au sujet des actifs et autres affaires régies par la présente loi, et notamment la conduite des syndics agissant à ce titre ou comme séquestres ou séquestres intérimaires, qu'il peut juger opportunes et, aux fins de celles-ci, lui-même ou la personne qu'il nomme à cet effet a accès, outre aux données sur support électronique ou autre, à tous livres, registres, documents ou papiers se rattachant ou se rapportant à un actif ou à toute autre affaire régie par la présente loi, et a droit de les examiner et d'en tirer des copies ;
f) reçoit et note toutes les plaintes émanant d'un créancier ou d'une autre personne intéressée dans un actif, et effectue, au sujet de ces plaintes, les investigations précises qu'il peut déterminer ;
[...]
5(4) Le surintendant peut :
[...]
b) donner aux séquestres officiels, aux syndics, aux administrateurs au sens de la section II de la partie III et aux personnes chargées de donner des consultations au titre de la présente loi des instructions relatives à l'exercice de leurs fonctions, et notamment leur enjoindre de conserver certains dossiers et de lui fournir certains renseignements;
c) donner les instructions nécessaires à l'exécution de toute décision qu'il prend en vertu de la présente loi ou susceptibles de faciliter l'application de la présente loi et des Règles générales, et notamment en ce qui touche les attributions des syndics et des séquestres et celles des administrateurs au sens de l'article 66.11;
d) donner des instructions régissant les critères relatifs à la délivrance des licences de syndic, les qualités requises pour agir à titre de syndic et les activités des syndics;
[...]
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[28] Subsection 5(6) of the BIA provides:
| 5(6) A directive issued by the Superintendent under this section shall be deemed not to be a statutory instrument within the meaning and for the purposes of the Statutory Instruments Act. |
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5(6) Les instructions données par le surintendant ne sont pas des textes réglementaires au sens de la Loi sur les textes réglementaires. |
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[29] The Act also includes provisions concerning investigations by the Superintendent, as follows:
| 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) a trustee has not properly performed the duties of a trustee or has been guilty of any improper management of an estate,
(b) 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
(c) it is in the public interest to do so,
(2) 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.
14.02 (1) Where the Superintendent intends to exercise any of the powers referred to in subsection 14.01(1), the Superintendent shall send the trustee written notice of the powers that the Superintendent intends to exercise and the reasons therefor and afford the trustee a reasonable opportunity for a hearing. |
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14.01 (1) Après avoir tenu ou fait tenir une enquête sur la conduite du syndic, le surintendant peut prendre l'une ou plusieurs des mesures énumérées ci-après, soit lorsque le syndic ne remplit pas adéquatement ses fonctions ou a été reconnu coupable de mauvaise administration de l'actif, soit lorsqu'il n'a pas observé la présente loi, les Règles générales, les instructions du surintendant ou toute autre règle de droit relative à la bonne administration de l'actif, soit lorsqu'il est dans l'intérêt public de le faire :
a) annuler ou suspendre la licence du syndic;
b) soumettre sa licence aux conditions ou restrictions qu'il estime indiquées, et notamment l'obligation de se soumettre à des examens et de les réussir ou de suivre des cours de formation;
c) ordonner au syndic de rembourser à l'actif toute somme qui y a été soustraite en raison de sa conduite.
(2) Le surintendant peut, par écrit et aux conditions qu'il précise dans cet écrit, déléguer tout ou partie des attributions que lui confèrent respectivement le paragraphe (1), les paragraphes 13.2(5), (6) et (7) et les articles 14.02 et 14.03.
14.02 (1) Lorsqu'il se propose de prendre l'une des mesures visées au paragraphe 14.01(1), le surintendant envoie au syndic un avis écrit et motivé de la mesure qu'il entend prendre et lui donne la possibilité de se faire entendre. |
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[30] In the context of the pragmatic and functional approach to the standard of review as confirmed by the Supreme Court of Canada in Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247 at paras. 20, 26-27 and in Dr. Q v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226 at paras. 21-22, the decisions on the merits of the report and on any penalties are both decisions for which the standard of review is reasonableness. That standard rests on my assessment of the comparative expertise of the Superintendent relative to the Court in the supervision of trustees and of estates, of the purpose of the Act in general, and of sections 14.01 and 14.02 in particular, to ensure an appropriate exercise of fiduciary responsibilities in administration of estates, and of the nature of the ultimate issues for each decision, which are mixed questions of law and fact.
[31] In review of those decisions the Court owes deference to the conclusions reached by the Superintendent. Unless they are clearly unreasonable in light of the evidence considered by the Superintendent, the Court will not disturb his decisions on the merits and on penalties. That is particularly the case where in the course of a hearing the Superintendent "is not bound by any legal or technical rules of evidence" (the Act, subsection 14.02(2)(b)).
[32] Other decisions of the Superintendent, first in regard to the applicant's motion to stay proceedings based on alleged unfairness arising from failure of the SDA to provide full disclosure in advance of the hearing, and second in regard to alleged unfairness from the statute's vesting of various functions in the Superintendent, and third concerning specific errors of law claimed by the applicants, relate to the process followed by the Superintendent. For the first two mixed questions of fact and law, the standard of review applicable is also reasonableness. In assessing specific errors of law alleged, the standard is correctness.
[33] I turn to apply these standards to the decisions in issue after considering the applicants' claims in relation to the Canadian Charter of Rights and Freedoms, Constitution Act, 1982, Schedule B, Part I, and the Canadian Bill of Rights, S.C. 1960, c. 44.
D.2. The applicability of the Charter of Rights and Freedoms, sections 7 and 11
[34] In written submissions in the applicants' record it is urged that the application of sections 14.01 and 14.02 as applied in this case violate their rights assured by sections 7 and 11 of the Charter of Rights and Freedoms. It is urged those constitutional rights are engaged by reason of procedural guidelines issued by the Superintendent which provide that one objective of the process for decisions affecting a trustee's licence is to ensure compliance with the legal obligations provided for under the BIA, the general rules and directives applicable, and the Charter of Rights and rules of administrative law.
[35] Enunciation of that objective does not in itself engage sections 7 and 11 of he Charter of Rights. The guidelines are directives issued by the Superintendent and do not constitute law in the normal sense (Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557 at 591). The Charter is applicable in accord with its terms and relevant jurisprudence. Proceedings like those before the Superintendent are administrative in nature, controlling the practice of licenced trustees. At most they may affect economic interests and the privilege of practising as a licenced trustee. They do not affect rights to life, liberty and security of the person within the meaning of section 7 of the Charter (see Gosselin v. Quebec (Attorney General), [2002] 4 S.C.R. 429; Charles v. Canada (Attorney General), 1995 Carswell Ont. 1037 (Gen. Div.) aff'd 1998 Carswell Ont. 1297 (C.A.) at para. 47). Moreover subsection 11(d) of the Charter, referred to by the trustees, has no application to professional conduct proceedings under the BIA which proceedings are not penal in nature (R. v. Wigglesworth, [1987] 2 S.C.R. 541; Blencoe v. British Columbia (Human Rights Commission), [2000] 2 S.C.R. 307 at para. 88). Finally, it is well settled that the Charter rights here referred to do not protect the interests of the corporate trustee in any case.
[36] In my opinion, sections 7 and 11 of the Charter are not engaged by the proceedings conducted by the Superintendent under sections 14.01 and 14.02 of the BIA either directly, or indirectly as the trustees suggest by reason the objective stated for the process, or by reason of alleged failure of the SDA to disclose relevant information in advance of the hearing in May and June 2002.
D.3. The applicability of the Bill of Rights
[37] The trustees submit that in addition to their Charter rights their rights under the Canadian Bill of Rights are infringed by the proceedings, in particular those rights assured by subsection 1(a) which declares "the right of the individual to life, liberty, security of the person and enjoyment of property, and the right not to be deprived thereof except by due process of law", and by subsection 2(e) which provides "... no law of Canada shall be construed and applied so as to ...(e) deprive a person of the right to a fair hearing in accordance with the principles of fundamental justice for the determination of his rights and obligations".
[38] It is well settled that subsections 1(a) and 2(e) of the Bill of Rights are concerned with rights of natural persons, not with claimed rights of corporations. Canada (Attorney General) v. Central Cartage, (1990) 2 F.C. 641 (C.A.); Pfeiffer v. Redling, (1995) Carswell Nat 1570 (F.C.T.D.). Further, the Bill of Rights does not apply with regard to a claim for a privilege or for licenced authority (Pfeiffer, supra; Re Joys and Minister of Natural Revenue, [1995] 128 D.L.R. (4th) 385 (F.C.T.D.). I agree with submissions of the respondent that under the BIA, a trustee is licensed and regulated by the Superintendent; he has no right to a license and no vested interest in the license he may hold as a trustee.
[39] Further, as will be evident when I next consider the trustees' claims concerning the combination of functions under authority of the BIA and concerning failures of disclosure, claims relating to fairness of the process, I am not persuaded that they were not afforded a fair hearing in accord with the principles of fundamental justice. Thus, their claims do not establish a violation of rights ensured under the Canadian Bill of Rights in the process here followed by the Superintendent.
D.4. The appropriate standard of fairness
[40] The trustees raise two preliminary objections to the process which in my view concern the fairness of the proceedings. These concern the combination of functions authorized for the Superintendent, and the delay and failures in disclosure by the SDA.
[41] It is the case that under the BIA the Superintendent is responsible for investigation, reporting and adjudicating, including the imposition of penalties whenever concerns arise about the conduct and practice of a licensed trustee. Those functions may be delegated by the Superintendent, as the investigation and reporting were to the SDA in this case. In other cases the Superintendent may delegate to another the responsibility for a hearing and determinations of inadequacy or of penalties, as was done in regard to the second report completed with respect to the trustees concerned in this case.
[42] In Ocean Port Hotel Ltd. v. British Columbia (General Manager, Liquor Control and Licensing Branch), [2001] 2 S.C.R. 781 at para. 40, Madame Justice McLachlin wrote:
The mere fact that senior inspectors functioned both as investigators and decision makers does not automatically establish a reasonable apprehension of bias. [...]
In Bell Canada v. C.T.E.A., [2003] 1 S.C.R. 884 at para. 40, Chief Justice McLachlin and Bastarache J. commented, following the reasoning in Ocean Port:
The overlapping of investigative, prosecutorial and adjudicative functions in a single agency is frequently necessary for [an administrative agency] to effectively perform its intended role.
[43] In this case the Superintendent delegated his investigatory and reporting role to the SDA. The report became the basis for the hearing conducted by the Superintendent who, on the evidence presented by the SDA's report and the testimony and evidence of the trustees, reached decisions on the merits and ultimately on appropriate penalties. The Superintendent participated in one phase only and the various roles for which the office was responsible were not improperly confused. There was no inherent bias in the process. Moreover, the process was not criminal in nature and it did not lead to deprivation of basic rights or liberty. It was concerned with assessing and regulating the practices of licensed trustees. In my opinion, the structural framework established by the statute, as it was applied in this case did not constitute a breach of the appropriate standard of fairness.
[44] No basis is established concerning alleged violation of the Charter, or of the Canadian Bill of Rights, or of basic principles of fairness in process, that would warrant a finding that the statutory provisions, sections 14.01 to 14.03 are inoperative in the circumstances of this case.
[45] As earlier noted, the time this application was heard, in September 2004, and in subsequent written submissions to the Court, the trustees emphasized their concern about a lack of fairness in the process followed by reason of the lack of, and often belated, disclosure by the SDA both before and after the hearing by the Superintendent, a concern already noted and dealt with in part. I have declined to stay this proceeding, or the proceedings of the Superintendent, or to set those aside on the basis of the trustees' concerns about alleged failure of disclosure.
[46] Their concerns are based on principles concerning disclosure that have evolved in criminal law, now established by the decision in R. v. Stinchcombe, [1991] 3 S.C.R. 326 and the jurisprudence flowing from that. The proceedings here do not result in criminal penalties, they did not result in deprivation of the professional standing of a licensed trustee though the terms of their licenses were varied. I am not persuaded that in these disciplinary proceedings, to review the practices of licenses, criminal law standards for disclosure are necessary or appropriate.
[47] Rather, aside from exceptional circumstances not present in this case, in an administrative process for assessing and directing practices of licensed trustees, it is sufficient if disclosure extends to information upon which the report of the SDA is based, and the report itself, so that the person affected knows the case he is expected to meet and has a fair opportunity to answer that case.
[48] That basic standard of fairness of the process was met in this case, in my opinion. The case the applicant trustees had to meet was known to them in advance of the hearing, from the first report of the SDA and the documentary evidence produced before the Superintendent's hearing in May and June 2002 (D. & B. Co. of Canada Ltd. v. Canada (Director of Investigations and Research) 1994 Carswell Nat 1849 (F.C.A.); Re CIBA-Geigy Canada Ltd. 1994 Carswell Nat 1796). They had opportunity to provide evidence, to call witnesses and to make submissions before the Superintendent's decisions were made in September 2002 and in June 2003.
D.5. Specific errors alleged in law
[49] The trustees urged specific errors were made in failing to consider the significance of evidence revealed by belated disclosure. The first concerned failure to disclose, until after the first decision, information that became the basis for the trustees' motion to stay proceedings and for the Superintendent's second decision in February 2003, a matter I deal with in review of that decision. The second concerned an exculpatory statement by an employee of the Superintendent, which it is said might have had a significant bearing on results of the hearing. But the evidence of that employee, as in the case of the evidence of A, the trustees' former employee, was specifically excluded from consideration by the Superintendent, and the evidence in question was essentially a matter of opinion. In these circumstances, I am not persuaded that the information disclosed after the hearing would have had any bearing on the result had it been earlier available, and I note the trustees make no submissions except to speculate that the outcome might have been affected.
[50] Reference by the Superintendent in recitals of the penalty decision to a loan arranged by the trustees, when it is urged that loan was not established in the Superintendent's findings on the merits in the first report, is said to have been made without opportunity for the trustees to explain. That reference appears to me as a descriptive form of a recital, not as a factor relied upon in establishing the penalties imposed.
[51] The Superintendent is also said to have erred by failing to take into consideration in the penalty decision the trustees cooperation with the investigation and possible oppressive effects upon the trustees of undue emphasis on deterrence as a factor of the penalties imposed. This Court, however, defers to the Superintendent's assessment of appropriate penalties where no case is made that those are unreasonable in light of the evidence before him.
[52] In summary, the specific errors in law alleged by the trustees are not established, in my opinion and those submissions provide no basis for the Court to intervene to quash the decisions on the merits and on penalties.
D.6. Reasonableness of the decisions of the Superintendent
[53] By the decision of September 3, 2002 on the merits of the first report of the SDA the Superintendent found a number of specific errors in practice by the trustees in the management of the two estates that were subject to the investigation.
[54] Aside from concerns about the SDA's delay or failure in disclosing information in advance of the hearing, no sound argument is made by the trustees that the findings of the Superintendent were unreasonable. In written submissions they urge the appropriate standard of review of that decision is correctness, but as I have indicated the application of the pragmatic and functional test leads me to conclude that the standard is reasonableness. On the evidence before the Superintendent, from the report of the SDA with supporting documents and the evidence adduced by the trustees the findings of the Superintendent in relation to the merits of the first report were open to him and were reasonable.
[55] By the decision of February 12, 2003, the Superintendent dismissed the trustees' motion to stay proceedings or to order a new hearing because of the failure of the SDA to disclose correspondence from another corporate trustee about the conduct of A, a former employee of the trustees at the time of when the estates in question were administered by the trustees. In my opinion, the Superintendent did not err in law, nor did he reach an unreasonable decision, despite acknowledging failure by the SDA to meet her obligation to disclose the correspondence. No evidence from A, collected by the SDA and made available to the trustees and to the Superintendent, was considered by the latter; rather in his decision he expressly excluded it. A might have been called as a witness by the trustees but they did not do so. The correspondence from other corporate trustees, belatedly disclosed, dealt with A's conduct when employed by those other trustees after employment by the trustees had terminated.
[56] In the circumstances the Superintendent, who by statute has discretion to determine what is evidence and how it shall be weighed, did not err in law, and his decision was entirely reasonable. If the correspondence had been disclosed that would not have affected his determination of failures by the trustees to meet appropriate professional standards.
[57] By the penalty decision of June 23, 2003, the Superintendent ordered that the license of the corporate trustee be restricted for one month, that the license of the applicant Sheriff be suspended for six months and that he be restricted to administration of corporate estates for 18 months. As earlier noted, objections to the penalty decision raised by the trustees include specific allegations of errors in law by the Superintendent. Their objections also include the Superintendent's failure to refer in his decision to the applicants' cooperation with the SDA's investigation, or to the fact that some of the transgressions found prior to the hearing were readily addressed even before the hearing.
[58] In my view, none of these claims raises a serious issue about the penalty decision. Even if A's conduct had played a major role in the administration of the estates in question, an inference the Court is invited to draw, there is no evidence, and none was considered by the Superintendent to provide a basis for intervention by the Court. The conduct of the trustees in the course of the investigation is no more than would be expected of a licensed trustee. There is simply no basis for finding the penalty decision, made within the exercise of statutory discretion vested in the Superintendent, was unreasonable.
E. Conclusions
[59] In addition to incidental orders confirming procedural determinations on issues raised by the applicants by written submissions following the hearing of this matter, the Order now issued dismisses the trustees' application for judicial review, concerning the three interrelated decisions of the Superintendent in bankruptcy, in its entirety.
[60] For greater certainty I dismiss the applicants' requests for an Order:
a) declaring the discipline provisions (sections 14.01 to 14.03 of the BIA) inoperative pursuant to sections 7 and 11 of the Charter of Rights and Freedoms, and subsections 1(a) and 2(e) of the Canadian Bill of Rights;
b) quashing and setting aside the decisions of the Superintendent dated September 3, 2002, February 12, 2003 and June 23, 2003 and staying the proceedings; or
c) quashing and setting aside the three decisions here questioned and an Order staying the proceedings.
F. Costs
[61] Each of the parties seeks costs. As in the normal course, costs will follow the outcome. The respondent shall have costs as the parties may agree upon or, failing agreement within 45 days, as may be assessed by a taxing officer in accord with the mid-range of costs set by column III of the Court's tariff.
"W. Andrew MacKay"
D.J.F.C.
Ottawa, Ontario
February 25, 2005
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1687-02
STYLE OF CAUSE: Todd Y. Sheriff, holder of a trustee license and Segal & Partners Inc., holder of a coporate trustee license
and
Superintendent of Brankruptcy
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: September 27 and 28, 2004
REASONS FOR ORDER
AND ORDER OF The Honourable Mr. Justice W. Andrew MacKay
APPEARANCES:
Mr. Craig R. Colraine
Ms. Joanna Birenbaum FOR APPLICANT
Ms. Valerie J. Anderson FOR RESPONDENT
SOLICITORS OF RECORD:
Birenbaum, Steinberg, Landau,
Savin & Colraine, LLP
33 Bloor Street East
Suite 1000
Toronto, Ontario
M4W 3H1 FOR APPLICANT
Mr. John H. Sims, Q.C.
Deputy Attorney General of Canada
Department of Justice
Toronto, Ontario
M5X 1K6 FOR RESPONDENT