Henry Sztern and Henry Sztern & Associates Inc. — June 5, 2007

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.

Procedures pursuant to subsection 14.02(1) of the Bankruptcy and Insolvency Act with regard to the professional conduct of Henry Sztern, Holder of a Trustee Licence for the Province of Quebec, and Henry Sztern & Associates Inc., Holder of a Corporate Trustee Licence for the Province of Quebec.

Decision on the Motion for Disqualification

Pursuant to the letter from Mr. Henry Sztern and written representations from Mr.Henry Sztern and Mr. Garry Wetzel of the Department of Justice, the undersigned rules on the motion for disqualification presented by Henry Sztern as follows:

On , the undersigned accepted a mandate from the Superintendent of Bankruptcy to act as delegate under subsection 14.01(2) of the Bankruptcy and Insolvency Act with regard to the professional conduct of Henry Sztern, holder of a trustee licence, and Henry Sztern & Associates Inc., holder of a corporate trustee licence.

The undersigned has been a member of the firm Borden Ladner Gervais in Montréal since January 2006. Between , and , the Honourable Lawrence A. Poitras, also a member of the firm Borden Ladner Gervais in Montréal, had been acted as delegate of the Superintendent of Bankruptcy in this file.

In his letter of , Henry Sztern criticized the undersigned and the Honourable Lawrence A. Poitras for not having disclosed the fact that Mr. Marc Duchesne, also of the firm Borden Ladner Gervais in Montréal, had launched a suit against Henry Sztern & Associates Inc. in his capacity as trustee in the matter of Meco Limited, which matter is the subject of one of the 24 complaints or offences alleged against Henry Sztern and Henry Sztern and Associates Inc., and that as a result, there is a conflict of interest and a reasonable apprehension of bias.

It is true that Mr. Marc Duchesne represented certain creditors in file 500-11-000016-929 in the Superior Court (in the matter of the bankruptcy of Meco Limited) and in the Court of Appeal file in the same matter (500-09-010400-000).

It would be helpful to set out the sequence of events, the involvement of Mr. Duchesne, and Henry Sztern's knowledge of certain facts.

When the file was opened with Borden, Ladner Gervais on , which was when Mr. Duchesne arrived at the firm, the name Meco Limited appeared in the system for opening files. No reference was made to Henry Sztern or Henry Sztern & Associates Inc. The file was closed on .

The proceeding launched on behalf of Mr. Duchesne's client goes back to , when Mr. Duchesne was an associate with another law firm. This proceeding ended with the Court of Appeal decision dated , which upheld in part the decision rendered by the Superior Court on in favour of Henry Sztern & Associates Inc.

Henry Sztern & Associates Inc. was the respondent in the Superior Court and respondent/cross-appellant in the Court of Appeal, and H.H. Davis & Associates was the respondent in the continuance of proceedings/cross-appellant.

Throughout this period, i.e., from opening of the file at Borden Ladner Gervais on to the Court of Appeal decision on , Henry Sztern and Henry Sztern & Associates Inc. knew, or should have known, that Mr. Marc Duchesne of the firm Borden Ladner Gervais was acting on behalf of certain creditors in the bankruptcy of Meco Limited. On this front, it suffices to refer to the plumitif of the heretofore mentioned files and the proceedings in file 500-11-005714-973 et al. of the Superior Court (application to recover monies and for re-amended non-opposability) or Henry Sztern's re-amended objection dated , and more specifically, paragraphs 136 and following that relate certain facts referring to the Meco Limited affair. It appears clear to us that on (paragraph 141 of said objection), at a minimum, Henry Sztern knew of the involvement of Mr. Duchesne and Borden Ladner Gervais in file 500-09-010400-000 of the Court of Appeal, while the hearing on that file was pending.

It should also be recalled that since this file was opened with Borden Ladner Gervais, which was on , Henry Sztern and/or Henry Sztern & Associates Inc. participated in the progress of the disciplinary file without ever raising the issue of possible conflict of interest.

Among others, the file reveals:

  • Letter from Henry Sztern, , addressed to Garry Wetzel, copy to the Honourable Lawrence A. Poitras;
  • Letter from Henry Sztern, , addressed to Garry Wetzel, copy to the Honourable Lawrence A. Poitras;
  • Letter from Henry Sztern, , addressed to Garry Wetzel, copy to the Honourable Lawrence A. Poitras;
  • Letter from Henry Sztern, , addressed to Garry Wetzel, copy to the Honourable Lawrence A. Poitras;
  • Letter from Henry Sztern, , addressed to Garry Wetzel, copy to the Honourable Lawrence A. Poitras;
  • Letter from Marc Mayrand, Superintendent of Bankruptcy, addressed to Henry Sztern, Henry Sztern & Associates Inc. and Garry Wetzel, , informing them of the mandate given to the undersigned in place of the Honourable Lawrence A. Poitras;
  • Letter from Henry Sztern, , addressed to the undersigned;
  • Letter from Henry Sztern, , addressed to the undersigned re: the presence of Sylvie Laperrière at the preparatory conference;
  • Holding of a preparatory conference, , attended by the undersigned, Henry Sztern, Sylvie Laperrière and Garry Wetzel;
  • Letter from the undersigned to Henry Sztern, , attaching the minutes of the preparatory conference held on ;
  • Fax from Henry Sztern, , proposing changes to the minutes of the preparatory conference and informing the undersigned that Mr. Emilio Monaco was appearing in the file for Henry Sztern & Associates Inc.
  • Letter from Mr. Wetzel, , re: comments regarding the changes to the summary of the preparatory conference proposed by Henry Sztern, copy to Henry Sztern;
  • Letter from Henry Sztern, , addressed to the undersigned re: reply to Mr. Wetzel's document;
  • Letter from the undersigned, , addressed to Henry Sztern, Henry Sztern & Associates Inc. and Garry Wetzel, attaching the final version of the duly signed minutes of the preparatory conference;
  • Letter from the undersigned, , addressed to Emilio Monaco, counsel for Henry Sztern & Associates Inc., to the same effect;
  • Letter from Garry Wetzel, , addressed to the undersigned re: possible admissions, copy to Henry Sztern;
  • E-mail from Henry Sztern, , addressed to Garry Wetzel and the undersigned, asking for an additional postponement until , to present his motion for particulars;
  • E-mail from the undersigned, , addressed to Henry Sztern and Garry Wetzel, agreeing to the suggested postponement;
  • Letter from the undersigned, , addressed to Mr. Wetzel, Henry Sztern and Henry Sztern & Associates Inc., re: possible admissions;
  • Letter from Mr. Wetzel, , addressed to Henry Sztern, copy to the undersigned, re: possible admissions;
  • Letter from Mr. Wetzel, , addressed to Henry Sztern, Henry Sztern & Associates Inc. and the undersigned, re: response to Henry Sztern's Motion for particulars dated ;
  • Letter from the undersigned, , addressed to Garry Wetzel, Henry Sztern and Henry Sztern & Associates Inc., re: Motion for particulars;
  • Letter from Garry Wetzel, , addressed to the undersigned, copy to Henry Sztern, re: exclusion of offences;
  • letter from Garry Wetzel, copy to Henry Sztern, re: exclusion of six complaints, including that of Meco Limited – appended to that letter copies of the proceedings in Superior Court file no. 500-11-005714-973 et al. (request for recovery of money and re-amended non-opposability);
  • Letter from the undersigned, , to Garry Wetzel, Henry Sztern and Henry Sztern& Associates Inc., re: Motion to Strike Allegations;
  • , receipt of the Motion to Strike Allegations returnable to the undersigned;
  • Letter from Henry Sztern, , addressed to the undersigned, copy to Garry Wetzel, re: suggestions for change of schedule in view of the absence of the undersigned due to illness;
  • , return to office of undersigned and letter to Garry Wetzel, Henry Sztern and Henry Sztern & Associates Inc. requesting their availability re: Motion to Strike Allegations.

Under the circumstances, the motion from Henry Sztern is at the very least surprising and appears to be purely obstructive and dilatory.

The undersigned was never informed prior to April 3 of this year of a possible conflict of interest and did not at any time act in this file contrary to the rules applying to such matters. Any allegation to the contrary by Henry Sztern is groundless.

Conflict of Interest

There is no conflict of interest in this file as presented by Henry Sztern.

Deborah MacNair defines conflict of interest as follows:
Conflict of interest is a set of circumstances where the lawyers' exercise of their judgement, loyalty or the fulfillment of professional responsibilities to clients and others is likely to be influenced or compromised by other interests, whether tangible or not, to the detriment of clients and others to whom a professional duty is owed expressly or by implication.Footnote 1

Not only is Mr. Duchesne's file to which Henry Sztern refers closed, but

  • whereas the nature of the motion guided by Mr. Duchesne, which involved an application for a claim on a portion of federal sales tax refunds;
  • whereas in Mr. Duchesne's file, Henry Sztern & Associates was acting as trustee and Henry Sztern and Henry Sztern & Associates were not personally involved;
  • whereas the issue of protecting attorney/client confidentiality is not relevant in this matter;
  • whereas the report to be made to the Superintendent of Bankruptcy and its conclusions derived from application of the disciplinary and ethical principles flowing from the Bankruptcy Act and not principles related to the exercise of creditors' rights in a bankruptcy;
  • whereas no attorney/client privilege exists between the undersigned and Henry Sztern and Henry Sztern & Associates Inc.;
  • whereas the undersigned has no personal interest in Mr. Duchesne's file;

The alleged conflict is not founded in law.

Apprehension of Bias

In Wewaykum Indian Band v. CanadaFootnote 2, the Supreme Court, after having established that the "party arguing for disqualification must establish that the circumstances justify a finding that the judge must be disqualified," formulated a standard as criterion for disqualification based on the formulation of this criterion by Justice de Grandpré in Committee for Justice and Liberty v. National Energy Board:Footnote 3

… the apprehension of bias must be a reasonable one, held by reasonable and right minded persons, applying themselves to the question and obtaining thereon the required information. In the words of the Court of Appeal, that test is "what would an informed person, viewing the matter realistically and practically – and having thought the matter through – conclude. Would he think that it is more likely than not that [the decision-maker], whether consciously or unconsciously, would not decide fairly."

Considering the facts as set out above and for the reasons presented above, it does not appear to the undersigned that "an informed person, viewing the matter realistically and practically – and having thought the matter through" would conclude that the undersigned would not render a fair decision.

Therefore, the motion for disqualification is denied.

André Deslongchamps



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

Date modified: