Jacques Roy —
Professional Conduct Decision
What is a professional conduct decision?
An investigation into a Licensed Insolvency Trustees (LIT)'s professional conduct is initiated when there is information to suggest that the LIT has not properly performed the duties of a trustee or there has been improper administration of an estate or lack of compliance with the Bankruptcy and Insolvency Act (BIA).
In some cases, the findings are sufficiently serious to support a recommendation for sanctions against the LIT's licence (cancel or suspend a LIT's licence (subsection 13.2(5) of the BIA) or impose conditions or limitations (subsection 14.01(1) of the BIA)).
The professional conduct decision is deemed to be a decision of a federal board, commission or tribunal and may be judicially reviewed by the federal court.
Bankruptcy District of the Province of Quebec
In the Matter of Disciplinary Proceedings Against Jacques Roy, Trustee
Jacques Roy, Trustee
Marc Mayrand, Superintendent of Bankruptcy
Decision regarding a motion to dismiss a motion to have sections 14.01, 14.02 and 14.03 of the Bankruptcy and Insolvency Act declared inoperative and for a stay of the disciplinary proceedings against the applicant Jacques Roy, Trustee
On , a complaint was filed with the Office of the Superintendent of Bankruptcy concerning the administration by the applicant trustee. A report on the applicant's professional conduct as a trustee was submitted to the Superintendent by the analyst on .
The undersigned was appointed delegate for the Superintendent of Bankruptcy, Marc Mayrand, respondent, under a delegation of powers made on , pursuant to section 14.01(2) of the Bankruptcy and Insolvency Act (B.I.A).
By motion dated , the applicant asked the undersigned to declare sections 14.01, 14.02 and 14.03 of the B.I.A to be inoperative against the applicant Jacques Roy.
A declaration of inopposability against the applicant and a stay of proceedings is sought by the applicant under paragraphs 1(a) and 2(e) of the Canadian Bill of Rights, section 7 of the Canadian Charter of Rights and Freedoms and section 52(1) of the Constitution Act, 1982. The applicant relied on a number of grounds, including security of tenure and financial security, the constitution of the disciplinary tribunal, the composition of the disciplinary tribunal, the nature of the decisions that may be made, the procedural guarantees at the hearing, the interim ex parte measures, and a legal argument in support of a general declaration of inopposability and a declaration of inopposability based on the absence of adequate procedural guarantees in relation to the conduct of the hearing.
The applicant is also seeking a declaration of inopposability and a stay of proceedings on the ground of excess of jurisdiction in the specific circumstances of this case and a declaration of inopposability and a stay of proceedings under section 1(a) of the Canadian Bill of Rights and section 41(8) B.I.A
In other words, the applicant is asking to have sections 14.01, 14.02 and 14.03 B.I.A declared inoperative against him, and seeking a permanent stay of the disciplinary proceedings concerning him.
As we have seen, the applicant formulated made his motion in order to obtain: (i) a declaration that sections 14.01, 14.02 and 14.03 B.I.A are inoperative against him, and (ii) a permanent stay of the disciplinary proceedings instituted against him.
More precisely, the applicant submits that the sections in question contain no structural guarantee that would assure him of a hearing before an independent and impartial tribunal in accordance with the principles of fundamental justice as guaranteed by paragraphs 1(a) and 2(e) of the Canadian Bill of Rights and by section 7 of the Canadian Charter of Rights and Freedoms, nor, he submits, does the application of those provisions provide such guarantees.
He submits that in so far as the delegate of the Superintendent of Bankruptcy under sections 14.01 and 14.02 B.I.A has no financial security, those sections violate [TRANSLATION] "the most elementary requirements in respect of the impartiality and independence of the courts".
He submits that there is a violation of sections 1(a) and 2(e) of the Canadian Bill of Rights and section 7 of the Canadian Charter of Rights and Freedoms in so far as the Superintendent of Bankruptcy himself hears a disciplinary proceeding, or appoints a delegate to do so, only after considering the outcome of an investigation and deciding that the allegations against the trustee were or seemed to be founded.
The applicant submits that in so far as, under section 14.01(2) B.I.A, the Superintendent retains a degree of control over the conduct of his delegate, when the Superintendent is one of the parties to a disciplinary proceeding, there is a flagrant violation of the rights of the person who is the subject of the proceeding.
As an agent of the superintendent, he submits, the delegate has the power to order the trustee to make restitution to the bankruptcy file, thereby indemnifying the Superintendent, in an amount corresponding to the costs incurred because of the measures taken by the Superintendent himself.
He submits that in so far as section 14.02(2) B.I.A provides that the Superintendent "is not bound by any legal or technical rules of evidence in conducting the hearing" the Act is defective and inoperative pursuant to sections 1(a) and 2(c) of the Canadian Bill of Rights and pursuant to section 7 of the Canadian Charter of Rights and Freedoms.
He submits that in so far as section 14.03 B.I.A allows the Superintendent to himself create the conditions that must be met in order for an investigation to be conducted, to himself decide what action to take, without any judicial or administrative authorization, and to keep that action in effect without any time limit, it also violates those provisions.
By motion to dismiss made orally on behalf of the senior analyst, it was argued that the delegate has no jurisdiction to assess whether sections 14.01 and 14.02 of the B.I.A are compatible with the Canadian Charter of Rights and Freedoms and the Canadian Bill of Rights.
Because sections 14.01 and 14.02 B.I.A are neutral sections, as was held by the Quebec Court of Appeal on , in Métivier v. Mayrand, J.E. 2003–2128, a determination of incompatibility can be made only after a complete review of the institution assigned to impose sanctions for unprofessional conduct by trustees and a factual examination of the manner in which the statutory scheme is applied by the Superintendent, including the manner in which the Superintendent exercises the powers deriving from that scheme. In the submission of counsel for the senior analyst, that examination is within the exclusive jurisdiction of the Federal Court, and the delegate does not have any authority in this respect, having regard to the determining distinctions of perspective and purpose, the decision of the Supreme Court in MartinFootnote 1 having no application in this case. He went on to say that the actual wording of sections 14.01 to 14.03 B.I.A leads to the conclusion that Parliament intended to exclude the Charter, including questions of constitutional law in general, from the questions of law subject to examination by the delegate as an administrative tribunal. Counsel argued that the applicant's challenge targets the entire statutory scheme put in place in sections 14.01 and 14.02 B.I.A
[TRANSLATION] In fact, he is asking the delegate himself to hear a motion the purpose of which is quite simply to cancel his statutory delegation. That is inconceivable. There is no legislative intention to be found in the law, either express or implied, to have or allow the delegate to declare the Act which creates his position to be declared constitutionally invalid.
The senior analyst advanced three major arguments, citing supporting case law:
- The main argument is based on the premise that constitutional issues must not be determined in a factual vacuum. Because sections 14.01 and 14.02 B.I.A are neutral provisions, particularly, the allegations must be based on facts. The absence of a factual foundation, he submits, is fatal.
- Moreover, an Act must, in so far as possible, be interpreted as being compatible with the Constitution. It cannot be assumed that the Act will necessarily be interpreted in an unconstitutional manner or in a manner that is incompatible with the Charter of Rights and Freedoms.
- The Superintendent or his delegate cannot assume administrative jurisdiction over federal administrative tribunals, which belongs to the Federal Court alone, in order to do a complete examination of the institution that is given responsibility for penalizing unprofessional conduct by trustees in bankruptcy.
In the submission of the senior analyst, the Federal Court alone has jurisdiction to do a detailed examination of the institution that is given responsibility for penalizing unprofessional conduct by trustees and for doing a factual examination of the application of the neutral statutory scheme by the Superintendent, including the manner in which the Superintendent may have exercised the powers deriving from that scheme.
Only after the delegate has proceeded and has heard the evidence and considered the Superintendent's report, therefore, may he determine whether the facts alleged result in a violation of the Act as regards the trustee's professional conduct, which the delegate determines by conducting the hearing that allows the trustee to be heard and by disposing of the questions that may arise, expeditiously and having regard to the circumstances and to fairness.
That is his role, and he is required to play it and to hear the case on the merits.
It is impossible to answer the question put to us without reviewing and considering the unanimous decision of the Supreme Court of Canada, per Charles D. Gonthier J., in Martin, supra, which established a new approach, different from the existing one, in relation to the power of an administrative tribunal to submit statutory provisions to Charter scrutiny.
As Gonthier J. held, at paragraph 48 of Martin:
48. The first question is whether the administrative tribunal has jurisdiction, explicit or implied, to decide questions of law arising under the challenged provision. Explicit jurisdiction must be found in the terms of the statutory grant of authority. Implied jurisdiction must be discerned by looking at the statute as a whole. Relevant factors will include the statutory mandate of the tribunal in issue and whether deciding questions of law is necessary to fulfilling this mandate effectively; the interaction of the tribunal in question with other elements of the administrative system; whether the tribunal is adjudicative in nature; and practical considerations, including the tribunal's capacity to consider questions of law. Practical considerations, however, cannot override a clear implication from the statute itself. If the tribunal is found to have jurisdiction to decide questions of law arising under a legislative provision, this power will be presumed to include jurisdiction to determine the constitutional validity of that provision under the Charter. The party alleging that the tribunal lacks jurisdiction to apply the Charter may rebut the presumption by pointing to an explicit withdrawal of authority to consider the Charter or convincing the court that an examination of the statutory scheme clearly leads to the conclusion that the legislature intended to exclude the Charter (or a category of questions that would include the Charter, such as constitutional questions generally) from the scope of the questions of law to be addressed by the tribunal. Such an implication should generally arise from the statute itself, rather than from external considerations.
28. First, and most importantly, the Constitution is, under s. 52(1) of the Constitution Act, 1982, "the supreme law of Canada", and "any law that is inconsistent with the provisions of the Constitution is, to the extent of the inconsistency, of no force or effect". The invalidity of a legislative provision inconsistent with the Charter does not arise from the fact of its being declared unconstitutional by a court, but from the operation of s. 52(1). Thus, in principle, such a provision is invalid from the moment it is enacted, and a judicial declaration to this effect is but one remedy amongst others to protect those whom it adversely affects. In that sense, by virtue of s. 52(1), the question of constitutional validity inheres in every legislative enactment. Courts may not apply invalid laws, and the same obligation applies to every level and branch of government, including the administrative organs of the state…
30. Second, Charter disputes do not take place in a vacuum …
In this respect, the factual findings and record compiled by an administrative tribunal, as well as its informed and expert view, it has as a specialized organization of the various issues raised by a constitutional challenge, will often be invaluable to a reviewing court: …
31. Third, administrative tribunal decisions based on the Charter are subject to judicial review on a correctness standard: see Cuddy Chicks, supra, at p. 17. An error of law by an administrative tribunal interpreting the Constitution can always be reviewed fully by a superior court. In addition, the constitutional remedies available to administrative tribunals are limited and do not include general declarations of invalidity. A determination by a tribunal that a provision of its enabling statute is invalid pursuant to the Charter is not binding on future decision makers, within or outside the tribunal's administrative scheme. Only by obtaining a formal declaration of invalidity by a court can a litigant establish the general invalidity of a legislative provision for all future cases. Therefore, allowing administrative tribunals to decide Charter issues does not undermine the role of the courts as final arbiters of constitutionality in Canada.
Turning to the applicable law:
33. In view of the policy considerations outlined above, this Court has adopted a general approach for the determination of whether a particular administrative tribunal or agency can decline to apply a provision of its enabling statute on the ground that the provision violates the Charter. This approach rests on the principle that, since administrative tribunals are creatures of Parliament and the legislatures, their jurisdiction must in every case "be found in a statute and must extend not only to the subject matter of the application and the parties, but also to the remedy sought": …. When a case brought before an administrative tribunal involves a challenge to the constitutionality of a provision of its enabling statute, the tribunal is asked to interpret the relevant Charter right, apply it to the impugned provision, and if it finds a breach and concludes that the provision is not saved under s. 1, to disregard the provision on constitutional grounds and rule on the applicant's claim as if the impugned provision were not in force.
34. Since the subject matter and the remedy in such a case are premised on the application of the Charter, the question becomes whether the tribunal's mandate includes jurisdiction to rule on the constitutionality of the challenged provision: see Douglas College, supra, at p. 596; Cuddy Chicks, supra, at p. 15. This question is answered by applying a presumption, based on the principle of constitutional supremacy outlined above, that all legal decisions will take into account the supreme law of the land. Thus, as a rule, "an administrative tribunal which has been conferred the power to interpret law holds a concomitant power to determine whether that law is constitutionally valid": …
35. In each case, the first question to be addressed is whether the administrative tribunal at issue has jurisdiction, explicit or implied, to decide questions of law arising under the challenged provision. While, as stated in the trilogy and CooperFootnote 5, … this question is one of legislative intent, it is crucial that the relevant intent be clearly defined. The question is not whether Parliament or the legislature intended the tribunal to apply the Charter. As has often been pointed out, such an attribution of intent would be artificial, given that many of the relevant enabling provisions pre-date the Charter: … That attribution of intent would also be incompatible with the principle stated above that the question of constitutional validity inheres in every legislative enactment by virtue of s. 52(1) of the Constitution Act, 1982. Therefore, in my view, to the extent that passages in the trilogy and Cooper, supra, suggest that the relevant legislative intention to be sought is one that the tribunal apply the Charter itself, those passages should be disregarded.(Emphasis added)
36. Rather, one must ask whether the empowering legislation implicitly or explicitly grants to the tribunal the jurisdiction to interpret or decide any question of law. If it does, then the tribunal will be presumed to have the concomitant jurisdiction to interpret or decide that question in light of the Charter, unless the legislator has removed that power from the tribunal. Thus, an administrative tribunal that has the power to decide questions of law arising under a particular legislative provision will be presumed to have the power to determine the constitutional validity of that provision. In other words, the power to decide a question of law is the power to decide by applying only valid laws.
39. … [T]he relevant question in each case is not whether the terms of the express grant of jurisdiction are sufficiently broad to encompass the Charter itself, but rather whether the express grant of jurisdiction confers upon the tribunal the power to decide questions of law arising under the challenged provision, in which case the tribunal will be presumed to have jurisdiction to decide the constitutional validity of that provision. The Charter is not invoked as a separate subject matter; rather, it is a controlling norm in decisions over matters within the tribunal's jurisdiction.
40. In cases where the empowering legislation contains an express grant of jurisdiction to decide questions of law, there is no need to go beyond the language of the statute. An express grant of authority to consider or decide questions of law arising under a legislative provision is presumed to extend to determining the constitutional validity of that provision.
41. Absent an explicit grant, it becomes necessary to consider whether the legislator intended to confer upon the tribunal implied jurisdiction to decide questions of law arising under the challenged provision. Implied jurisdiction must be discerned by looking at the statute as a whole. Relevant factors will include the statutory mandate of the tribunal in issue and whether deciding questions of law is necessary to fulfilling this mandate effectively; the interaction of the tribunal in question with other elements of the administrative system; whether the tribunal is adjudicative in nature; and practical considerations, including the tribunal's capacity to consider questions of law. Practical considerations, however, cannot override a clear implication from the statute itself, particularly when depriving the tribunal of the power to decide questions of law would impair its capacity to fulfill its intended mandate. As is the case for explicit jurisdiction, if the tribunal is found to have implied jurisdiction to decide questions of law arising under a legislative provision, this power will be presumed to include jurisdiction to determine the constitutional validity of that provision.
42. Once this presumption has been raised, either by an explicit or implicit grant of authority to decide questions of law, the second question that arises is whether it has been rebutted. The burden of establishing this lies on the party who alleges that the administrative body at issue lacks jurisdiction to apply the Charter. In general terms, the presumption may only be rebutted by an explicit withdrawal of authority to decide constitutional questions or by a clear implication to the same effect, arising from the statute itself rather than from external considerations. The question to be asked is whether an examination of the statutory provisions clearly leads to the conclusion that the legislature intended to exclude the Charter, or more broadly, a category of questions of law encompassing the Charter, from the scope of the questions of law to be addressed by the tribunal…
43. … [A]s noted above, considerations concerning an administrative body's practical capacity to address such issues may be relevant in determining the scope of a tribunal's implicit authority to decide questions of law, they generally will not suffice on their own to rebut the presumption that arises from such authority, whether explicit or implied, once that presumption has been found to apply. In my view, lower court cases which suggest otherwise, …
45. In applying the approach set out above, there is in my view no need to draw any distinction between "general" and "limited" questions of law, as was admittedly done in Cooper, supra. An administrative body will normally either have or not have the power to decide questions of law … Absent a clear expression or implication of contrary intent, such administrative bodies will also have jurisdiction to subject the statutory provisions over which they have jurisdiction to Charter scrutiny, while those tribunals without power to decide questions of law will not.
With respect for the contrary opinion, I cannot, having regard to the unanimous decision in Martin, supra, which, as we have seen, reversed an ample line of cases to the contrary on a number of relevant points, conclude that the delegate has no jurisdiction to determine whether sections 14.01 and 14.02 B.I.A are compatible with the Canadian Charter of Rights and Freedoms and the Canadian Bill of Rights.
I would also humbly adopt what Gonthier J. said at paragraph 29 of Martin:
29. From this principle of constitutional supremacy also flows, as a practical corollary, the idea that Canadians should be entitled to assert the rights and freedoms that the Constitution guarantees them in the most accessible forum available, without the need for parallel proceedings before the courts: see Douglas College, supra, at pp. 603–4. In La Forest J.'s words, "there cannot be a Constitution for arbitrators and another for the courts" (Douglas College, supra, at p. 597). This accessibility concern is particularly pressing given that many administrative tribunals have exclusive initial jurisdiction over disputes relating to their enabling legislation, so that forcing litigants to refer Charter issues to the courts would result in costly and time-consuming bifurcation of proceedings. As McLachlin J. (as she then was) stated in her dissent in Cooper, supra, …:
The Charter is not some holy grail which only judicial initiates of the superior courts may touch. The Charter belongs to the people. All law and law-makers that touch the people must conform to it. Tribunals and commissions charged with deciding legal issues are no exception. Many more citizens have their rights determined by these tribunals than by the courts. If the Charter is to be meaningful to ordinary people, then it must find its expression in the decisions of these tribunals.
For these reasons, I deny the motion to dismiss made by counsel for the senior analyst and declare that I have the necessary jurisdiction to hear the applicant's application to have sections 14.01, 14.02 and 14.03 of the Bankruptcy and Insolvency Act declared inoperative on the merits, and to stay the disciplinary proceedings concerning the applicant Jacques Roy, trustee.
The Superintendent's delegate is empowered to sit as an administrative tribunal, and as such is implicitly authorized to decide questions of law submitted to him, having the jurisdiction to do that.
The Superintendent's delegate, sitting as an administrative tribunal, therefore has jurisdiction to hear the applicant's motion in so far as it relates to the applicant's rights in the case before the delegate.
I will therefore hear the applicant's application as soon as possible.
Counsel made two other motions at the same time as this motion: one regarding the burden of proof that should apply in this case and the other for an order that the hearing be held in camera.
Counsel for the senior analyst indicated that he did not intend to contest the interlocutory decision made by the Hon. Benjamin J. Greenberg, as delegate, in Ann Speers and Henry Sztern and Henry Sztern & Assurées inc., on , holding that the burden of proof is on the analyst and that the trustee need rebut that evidence only in so far as the analyst has discharged that burden.
Because the parties all agreed on this point, the undersigned need not make any unnecessary ruling on the motion by the applicant trustee.
In his third motion, the applicant trustee sought an order that the hearing be held in camera. We reserved the applicant's right to make argument in support of that motion, if necessary, immediately before the commencement of the hearing of the case on the merits, if that hearing is held.
(s) Lawrence A. Poitras
This document has been reproduced as submitted by the delegate of the Superintendent of Bankruptcy.
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