Samuel S. Lévy and Sam Lévy & Associés Inc. — May 4, 2004

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.

In the Matter of Professional Discipline Proceedings under the Bankruptcy and Insolvency Act Respecting Sam Lévy & Associés Inc., A Corporate Licensed Trustee, and Sam Lévy, an Individual Licensed Trustee.

I

Some time ago, with the consent of counsel for both parties, the hearing on the merits of this case was fixed for May 31 to . I subsequently heard two motions, one brought by the Respondents to declare certain sections of the Bankruptcy and Insolvency Act (the "Act") inoperative insofar as the proceedings now before me are concerned, the other by the Senior Analyst, to the effect that I did not have jurisdiction to hear the Respondents' motion.

I dismissed the Senior Analyst's objection on , and I refer to the written reasons then given. Accordingly, on and , I proceeded to hear the Respondents' motion, which I also dismissed, and I refer to the written reasons given on .

On , the Senior Analyst applied to the Federal Court of Canada (T-2473-03) to have my Decision given on , set aside, alleging that I committed "une erreur juridictionelle" in deciding that I was competent to hear the constitutional challenge. On , the Respondents made a similar application (T-75-04), alleging errors in fact and in law in my Decision dated .

It is relevant to note that a similar application was made on , in the case of Jacques Roy v. Marc Mayrand (T-547-04), where the Honourable Lawrence Poitras, sitting as the Superintendent's Delegate, had dismissed a constitutional challenge to the same sections of the Act as were impugned before me. I also note that in the course of a hearing I held on , the parties advised me that yet another motion for revision of a decision by a Delegate (the Honourable Perry Meyer) was likely to be brought before the Federal Court of Canada, once Mr. Meyer will have given his Decision on the identical question raised before him by the Respondents in Jean-Guy St-Georges et al. v. Marc Mayrand. While at first blush it may sound curious that a motion for revision might be considered even before the Decision is given, I presume that no matter which way the Delegate were to decide this question, the losing party would address itself to Federal Court of Canada to seek relief.

I was further advised that it was the intention of all the parties mentioned above to ask the Federal Court of Canada to join the four files (once the St-Georges case is inscribed) to have a single, hopefully expedited, hearing on the underlying questions, that is to say, 1. whether or not a Delegate is entitled to hear a constitutional challenge, and 2. to determine the status of the sections of the Act which have been called into question.

I was told by counsel for the Department of Justice that, if all the Rules are adhered to, at least 140 days would elapse before the matter could be put down for proof and hearing, and that, in the normal course, hearings are generally held between eight months and a year after the record has been perfected. In other words, barring an order for an expedited hearing, the questions raised might not be decided until sometime in 2005.

As a result, counsel for the Senior Analyst suggest that, in the absence of an order from the Federal Court of Canada, I should adhere to the schedule originally agreed upon, and hear the merits of the case beginning . On the other hand, counsel for the Respondents suggest that this would not only be impractical, but also unfair.

II

I have carefully considered the arguments of both parties. As counsel for the Senior Analyst suggests (supported by counsel for the Department of Justice), this is a very old case. There have been many procedures, all of them interlocutory, and we are no nearer to any findings of fact than we were three years ago. The record is ready – in fact, I have 16 binders containing exhibits which the Senior Analyst proposes to introduce – so why wait another year or more when potential witnesses may be harder to find and the issues so much further removed from the time when they occurred. Also, as the Senior Analyst's counsel points out, if the Respondents have good reasons for seeking another postponement, it would have been easy for them to apply to the Federal Court of Canada to obtain an order to prohibit me from sitting.

On the other hand, as counsel for the Respondents points out, his clients are perfectly entitled to request a postponement before me, a decision which falls well within a Delegate's case-management powers. Furthermore, it would be grossly unfair to put the Respondents, who have raised serious constitutional issues, to the expense of preparing a four-week hearing when, in the end, they may succeed in their challenge. Clearly, the Respondents add, the issue is of great importance, and what better proof than that the issue has already been raised in three cases in Quebec and one in Ontario.

The above is but a brief summary of the principal points raised at the hearing. But in the end the matter is one of discretion, and I propose to be guided by the balance of convenience (or inconvenience), which was so eloquently argued before.

Yes, the case is old, and no one would be happier than I to bring an end to this litigation. But the preliminary issues raised are serious, and as we already know, they may well affect not only the case now before me, but also many other cases pending in Quebec and elsewhere. A decision by a court of superior jurisdiction would, therefore, be welcome.

But there is more. In the case now before me, the Respondents have been enjoined by the Superintendent from taking new cases. This order remains in effect, and their practice is therefore restricted to the completion of cases now on hand. Furthermore, even this right is subject to certain conservatory measures, including the necessity to have an official cosign all cheques issued by the trustees. The public is therefore protected, and this removes some of the urgency. Nor can I overlook the fact, as was argued before me, that preparation for the hearing on the merits, as well as the hearing itself, would not only be time consuming but also very costly, and not just for the Respondents.

III

In the result, the hearing which was to begin on , is cancelled, and further hearings are postponed sine die, pending the outcome of the litigation now pending in the Federal Court of Canada.

Given in Toronto, Ontario, this .

Hon. Fred Kaufman
Delegate

Me Ronald Auclair, counsel for the Senior Analyst

Me Bernard Letarte, counsel for the Department of Justice

Me Bernard Des Aulniers, counsel for the Respondents



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

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