Jean-Guy St-Georges and St-Georges Hébert Inc. —

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.

Canada
Province of Quebec

In the Matter of Professional Discipline Proceedings under the Bankruptcy and Insolvency Act Respecting St-georges Hébert Inc., a Corporate Licensed Trustee, and Jean-guy St-Georges, an Individual Licensed Trustee.

Decision on Preliminary Motions

This matter came on for proof and hearing before me on and , in respect of certain preliminary motions. The case has been set down for proof and hearing on the merits for one week commencing . The motions are as follows:

  1. Preliminary objection of the Intervenant, the Attorney-General of Canada, to my jurisdiction to deal with constitutional and Charter issues raised in the Trustees' motion to declare the applicable sections of the Bankruptcy and Insolvency Act (BIA) inoperative in the present case, and to order that the proceedings instituted herein to be stopped

    The Intervenant submits that, as an administrative tribunal, to wit, the Delegate of the Superintendent of Bankruptcy, I cannot deal with the constitutional and Charter issues raised by the Trustees in their motion.

    Having carefully considered the arguments on this point and the authorities cited by the parties, I have concluded that I have the right to declare sections 14.01, 14.02 and 14.03 of the BIA inoperative, although I agree with the Intervenant that I cannot declare them unconstitutional or bind any other persons.

    I rely in this regard on the opinion of Gonthier, J.S.C.C., in the unanimous decision of a full bench of the Supreme Court of Canada in Martin v. Nova Scotia (Workers' Compensation Board) rendered , which held that it was perfectly in order for an administrative tribunal to decide Charter issues. The Court noted that such a decision would be subject to judicial review, and that, in any event, the administrative tribunal could not make a general declaration of invalidity, but could only declare a provision of the enabling statute inoperative in the instant case, without in any way binding any future decision maker.

    In spite of the differences between the administrative regime in Martin and that under which I presently sit, Martin is sufficiently broad to cover hearings by the Superintendent or his Delegate under sections 14.01, 14.02 and 14.03 of the BIA, and I believe I am implicitly authorized to decide questions of law, including those arising under the Charter, and have the necessary competence to do so.

    I note also that any such decision by me would be reviewable under the Federal Court Act, in virtue of Subsection 14.02(5) of the BIA.

    In arriving at this conclusion, I am also following the decisions of my fellow Delegates, the Honourable Fred Kaufman, Q.C., on , in Sam Lévy and Associates, and the Honourable Lawrence A. Poitras, on , in Jacques Roy.

    For the above reasons, the preliminary objection of the Intervenant is dismissed.

  2. Motion of the Trustees to stop proceedings and declare the relevant sections of the BIA inoperative in the present case.

    Turning now to the merits of the Trustees' motion, Counsel have provided me with a large number of authorities and I have listened to their arguments with great interest. After studying the various points raised, I agree with the conclusions arrived at by my colleagues Kaufman (in Lévy on ) and Poitras (in Roy on ).

    Their decisions follow that of the Quebec Court of Appeal in Métivier v. Mayrand rendered on , which is most persuasive in this regard.

    Like the Court of Appeal, I find that the applicable sections are not intrinsically unacceptable and the question then becomes one of determining whether the actual practice in their implementation is offensive.

    As Dussault, J.A., points out in Métivier, if the manner in which a Delegate is named does not guarantee his independence, the Court would not declare sections 14.01 and 14.02 to be inoperative but would simply conclude that the process used in the particular case raises a reasonable fear of partiality.

    With respect, I do not believe that Counsel for the Trustees has demonstrated any reasonable apprehension of BIAs in the present case, e.g., because of the multi functional character of the Superintendent's office, or the fact that I, as Delegate, may be removed for cause, or do not have financial security in this position, or do not have the power to coerce witnesses by issuing subpoenas or punishing for contempt. Those grounds which are not clearly unfounded are, at the very least, premature and hypothetical, and would have to be dealt with if, as, and when the problem arises (for example, by compelling the attendance of a witness, etc., through the good offices of the Federal Court).

    It should also be mentioned that the "cumul des functions" in the Office of the Superintendent of Bankruptcy is very different from the situation in other cases on which Counsel for the Trustees wishes to rely, such as MacBain v. Lederman [1985] 1 F.C. 856, which the Quebec Court of Appeal was quite right to distinguish in Métivier.

    In Metivier, Dussault, J.A., refers to the substantial differences between the structures imposed by statute and the actual procedures involved in MacBain, (where two sequential decisions can be rendered by two different statutory bodies, the Human Rights Commission and the Human Rights Tribunal, the latter's members being selected by the former) and those in Métivier and the present case (where there is only one decision, by the Superintendent or his Delegate, after an investigation and report by an expert, the Senior Analyst).

    I should also mention the production by the Trustees of Exhibit R-14, a formal document emanating from the Superintendent dated July 12, 2001, which deals with the process for exercising the decision-making powers of the Superintendent (or his Delegate). This document confirms the care taken to ensure a fair hearing with no apprehension of BIAs in the disciplinary process and would appear to add further confirmation of the correctness of the decision in Métivier.

    As stated in Métivier, the guarantees of independence and impartiality do not have to be in the law itself, for an administrative tribunal, but rather in the practice, and the "cumul des fonctions" itself is not an intrinsic problem. In fact, it would appear that Métivier is fully relevant with the earlier case law, such as 2747-3174 Quebec Inc. v. RPAQ [1996] 3 SCR 919 (opinion of Gonthier J.S.C.C.).

    In sum, the statutory guarantees in the BIA itself are not inadequate for an administrative tribunal, and the practice of the OSB in the present case has not been shown to be unacceptable, by the Trustees, who have the burden of proof of imputing its sufficiency, but have failed to adduce any such evidence.

    For the foregoing reasons, the Trustees' motion is dismissed and the case will proceed on the merits as scheduled.

    Addendum: At the hearing on , Counsel for the Trustees indicated that he intended to object to the first witness called by the Senior Analyst at the hearing on the merits, because of my lacking the power to compel witnesses and punish for contempt, as a ground for an immediate "arrêt de procédures".

    Since I have already dealt with this problem above, I wish to put the parties on notice that I intend to reject this argument forthwith, should it be made again, and proceed immediately with the hearing, notwithstanding any such objection, which would be purely hypothetical.

  3. Motion by the Trustees to determine the burden of proof.

    This motion was discussed towards the end of the hearing on . The parties agreed in principle to the rules laid down by my fellow Delegate, the Honourable Benjamin Greenberg, in Henry Sztern and Associates Inc () and the Honourable Fred Kaufman in Lévy (), and they were to provide me with a joint wording for an order to be signed by me. Since they have been unable to do so, I hereby render my decision on this motion as well, as follows:

    I declare that I intend to accept the rules as to the burden of proof laid down by the Honourable Benjamin Greenberg in Sztern, and followed by the Honourable Fred Kaufman in Lévy.

    The Senior Analyst will first present his proof by tabling his report and providing the requisite testimony and documentary evidence, by himself and/or others, to establish its credible and trustworthy character. Once the accuracy of the report has been established, the Trustees will have the burden to show that the faults reproached are not supported by the facts proved. Thus, the Trustees' evidence will take place after the Senior Analyst declares his proof closed.

    Any questions concerning rebuttal or counter-rebuttal evidence will be decided if, as, and when they arise at the hearing on the merits.

Given at Montreal, Quebec, this day of

The Honourable Perry Meyer
Delegate of the Superintendent of Bankruptcy

Counsel for the Trustees:
Pierre Larue (not present at the hearing)
(Malo Dansereau)
Jean-Philippe Gervais
(Gervais & Gervais)

Counsel for the Senior Analyst, Michel Leduc: Louis-Philippe Delage

Counsel for the Attorney-General of Canada: Bernard Letarte
(Intervenant)



This document has been reproduced as submitted by the delegate of the Superintendent of Bankruptcy.

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