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 Conduct Proceedings Under the Bankruptcy and Insolvency Act Respecting St-Georges Hébert Inc., a Corporate Trustee, and Jean-Guy St-Georges, an Individual Licensed Trustee.

The Trustees' motion for postponement came on before me for hearing on . Previously, the case had been set down for hearing on the merits for one week commencing . The present motion seeks to postpone/suspend the hearing on the merits until such time as the Federal Court has ruled on a motion to revise my earlier decision, rendered in May after two days of hearing, rejecting the Trustees' objections to my jurisdiction, etc., on constitutional grounds. The best information I have at present is that the Federal Court will probably not hear this matter for at least several months, possibly even later.

Similar motions have been made in other professional conduct proceedings, notably in Roy, before the Honourable Lawrence Poitras, and in two cases before the Honourable Fred Kaufman: Levy, and more recently in Sheriff et al. In Levy, the Delegate granted the motion for postponement, noting the complexity of the case, the size of the file, the fact that the hearing would take four weeks and require a lot of preparation time and considerable expense, as well as the fact that conservatory measures were in place to protect the public interest. In Sheriff et al, however, the Delegate ruled otherwise on , refusing the postponement, and noting the relative simplicity of the file, the fact that only 2 weeks would be required for the hearing, and that no conservatory measures were in place. It should also be noted that in Levy the Senior Analyst had also asked the Federal Court to reverse the Delegate's decision that he had jurisdiction to rule on the constitutional issues, notwithstanding which the Analyst was opposed to the postponement!

It is clear that the granting or refusal of a postponement is a discretionary matter for the Delegate, and that each case is unique. Moreover, where (as may be true in the present instance) the motion is really for a de facto suspension or sursis, granting it may constitute an excess of jurisdiction or a refusal to exercise jurisdiction, and such a request should be left to the Federal Court, which clearly has the power to issue an in-suit injunction. (See Anheuser-Busch Inc. v. Carling Breweries, a decision of the Federal Court of Appeal, in [1983] 2 F.C. 71).

In my view, the facts in the present case are closer to those in Sheriff than in Levy. While there are conservatory measures in place, these are for the purpose of safeguarding the assets administered by the trustees, and in no way adequately protect the public interest. The individual trustee in this case is now working as a consultant/employee for another trustee to whom the files have been transferred and will apparently continue to do so. It appears that an early hearing on the merits will not cause any substantial prejudice, and will even be greatly to his benefit if he is exonerated. The costs involved are far less significant than in Levy, and could easily have been mitigated by the Trustees, by proceeding on the merits in June as originally agreed, where the same constitutional arguments could have been raised by them, and by their then taking only one proceeding in the Federal Court dealing with all the issues at the same time. Also, in the present case, the Senior Analyst, who opposes the postponement, has not himself proceeded in the Federal Court, as was the case in Levy.

In addition, were I to grant the motion, I believe this would be contrary to the letter and spirit of Section 14.02 of the BIA which requires as speedy and expeditious a hearing as the interests of justice and fairness will allow. It is likely that if the case proceeds in the near future, a decision on the merits would be rendered before the preliminary constitutional matter is even heard by the Federal Court; and in such event a new proceeding would be available to the Trustees, before the Federal Court, should they be dissatisfied with my decision, which proceeding could then even be joined with, and heard at the same time as, the motion now before it. Thus, no prejudice whatsoever would be caused by my refusing the postponement, except the costs of preparing and conducting the one week hearing itself. Surely this alone is not enough to justify my granting the present motion.

For the foregoing reasons, the motion for postponement/suspension is denied. I propose to hold a telephone conference with counsel as soon as possible in order to agree on a mutually convenient time for the hearing on the merits in the near future.

In conclusion, I should like to express my gratitude to Counsel for their written and oral arguments and the authorities and jurisprudence they have cited, which have been most helpful.

Given at Montreal this .

The Honourable Perry Meyer
Delegate of the Superintendent of Bankruptcy

Counsel for the Senior Analyst:
Louis-Philippe Delage (Industry Canada — Legal Services)

Counsel for the Trustees:
Jean-Philippe Gervais (Gervais & Gervais)
Pierre Larue (Malo Dansereau)

Counsel for the Attorney-General:
Bernard Letarte (Department of Justice)



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

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