Bank of Montreal, 404 Town Centre, 1111 Davis Drive, Newmarket, Ontario

Conservatory Measures

What is a conservatory measure?

The Superintendent of Bankruptcy puts in place conservatory measures when a bankruptcy or insolvency estate needs protection. It might be in cases of Licensed Insolvency Trustee (LIT) malfeasance or if serious wrongdoing on the part of a LIT puts estate files at risk. Conservatory measures may also be put in place if a LIT becomes ill or dies without a valid succession agreement. Finally, conservatory measures may be put in place if a LIT, for whatever reason, has allowed the administration of his or her practice to become substandard.

Canada

In the matter of:
Donna M. Leitch


Directions for Conservatory Measures
(Section 14.03 of the Bankruptcy and Insolvency Act)


Whereas the Bankruptcy and Insolvency Act (the Act) provides the Superintendent of Bankruptcy (the Superintendent) with the general power to supervise the administration of all estates and matters to which the Act applies;

Whereas Donna M. Leitch (the trustee) is the holder of an individual license as trustee in bankruptcy;

Whereas an investigation made by the Superintendent pursuant to section 5(3)(e) of the Act revealed that the trustee had a number of deficiencies in her administration and control of estate trust funds;

Whereas the trustee has failed to maintain employee fidelity insurance or a bond or other suitable financial arrangement, which is a condition of practice;

Whereas a Practice Review commenced in March of 2006 has revealed a number of banking and financial deficiencies detailed below;

Whereas the trustee has drawn funds without authorization from the consolidated trust account;

Whereas in her administration of the summary bankruptcy consolidated trust account the trustee has failed to comply with subsection 25(2) of the Act, which requires that all payments made by a trustee be by cheque drawn on the estate account;

Whereas the trustee has failed to comply with the provisions of Directive 5R, Estate Funds and Banking, which sets out the minimum standards for the accounting for and proper custody of estate trust funds, particularly by:

  • failing to maintain up-to-date books and records, including a control ledger, of estate funds;
  • failing to advise the Division Assistant Superintendent, in writing, of all outstanding errors that have not been corrected within seventy-five (75) days of the bank statement date;
  • failing to adequately document the monthly bank reconciliation with a complete, detailed list of outstanding cheques and deposits, including any cheques outstanding for more than six (6) months, as required;
  • permitting the payment of personal expenses from a trust account;
  • permitting trust accounts to be overdrawn and not immediately correcting the transactions that caused the overdraft; and
  • maintaining a sub-account within the consolidated trust account;

Whereas the deficiencies in the operation and administration of the consolidated trust account identified above have resulted in a reconciliation that is unverifiable;

Whereas the trustee failed to provide a requested response to an Audit Report that was issued to her on May 27, 2004, which identified a number of similar issues as described in these Directions;

Whereas the trustee has failed to ensure that adequate human resources are available to satisfactorily conduct and conclude the administration of estates under the trustee's supervision;

Whereas I believe on reasonable grounds that the estates require protection;

Whereas the Superintendent may, for the protection of an estate, exercise the powers set out in subsection 14.03(1) of the Act, in the circumstances referred to in section 14.03(2) of the Act;

Whereas the Superintendent has delegated to me, in accordance with section 14.01(2) of the Act, the powers of the Superintendent as specified at section 14.03(1) of the Act, in the circumstance referred to in section 14.03(2)(b), a copy of which delegation is attached, along with copies of sections 14.01, 14.02 and 14.03 of the Act;

I, Ann Speers, in my capacity as delegate for the Superintendent, direct the Bank of Montreal (404 Town Centre, 1111 Davis Drive, Newmarket Ontario, L3Y 2R9) that, pursuant to sections 14.03(1)(b) and (c) of the Act:

  1. it provide, by the close of business on April 13, 2006, a list of estate trust bank accounts in the name of, administered by or any other way in the control of Donna M. Leitch, Trustee in Bankruptcy, to Diane Tung, Senior Bankruptcy Analyst, Office of the Superintendent of Bankruptcy, 25 St. Clair Avenue East, Suite 600, Toronto, Ontario, M4T 1M2;
  2. it consider, upon receipt of the present directions, Diane Tung and Michael Cacciavillani, employees of the Office of the Superintendent of Bankruptcy, as the only two authorized co-signatories as relate to any operations of the funds credited to the estates of bankruptcies and proposals administered by Donna M. Leitch;
  3. it make no debit, payment or transfer of funds credited to, or which ought to have been credited to, the estates of bankruptcies and proposals administered by Donna M. Leitch without the countersignature of either Diane Tung or Michael Cacciavillani;
  4. it not pay out of these accounts: cheques, bills of exchange, bank drafts or other instruments, issued before the receipt of these directions which are presented for payment after the receipt of these directions, without these cheques, bills of exchange, bank drafts or other instruments being countersigned by either Diane Tung or Michael Cacciavillani;
  5. it submit all statement of accounts, accepted cheques and other documents or information having to do with the above-mentioned estate trust bank accounts, to Diane Tung, Senior Bankruptcy Analyst, Office of the Superintendent of Bankruptcy, 25 St. Clair Avenue East, Suite 600, Toronto, Ontario, M4T 1M2;

That these directions take effect immediately and will stay in place until such time as the undersigned is satisfied that the estates no longer require protection;

That in accordance with section 14.03(3) of the Act, these directions bind the Bank of Montreal, which must comply with them;

That, pursuant to section 14.03(4) of the Act, a person who complies with this direction is not liable for any act done by that person only to comply with this direction.

Signed at the City of Toronto, Ontario, this 27th day of March, 2006.

Ann Speers
Assistant Superintendent, Trustee Compliance

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