Allen W. MacLeod, Donald A. MacLeod and D. & A. MacLeod Company Ltd. — July 5, 2010

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 the bankruptcy and insolvency act
r.s.o.
 1985, c. B-3

in the matter of the Superintendent of Bankruptcy

and in the matter of the alleged allegation of professional
misconduct as against Allen W. MacLeod, Donald A. MacLeod and
D.& A. MacLeod Company Limited

dealt in writing without
the appearance of parties

the honourable james b. chadwick, q.c.

Written submissions by Mark Taggart on behalf of the Superintendent of Bankruptcy
Written submissions by Julia Martin on behalf of the Trustees

Decision as to sanctions

[1] On I issued a decision in the above-mentioned matter regarding allegations against the trustees.

[2] On I issued my decision regarding sanctions and cost.

[3] Sylvie Laperrière in her capacity as Senior Analyst Professional Conduct of the office of the Superintendent of Bankruptcy, sought a judicial review of my decisions of and .

[4] The matter was heard by Mr. Justice Mainville of the Federal Court of Canada on . In his written reasons, Mainville J. referred these matters back to me. In his order he states as follows:

The application for judicial review is allowed in part only, and the case is returned to the Honourable James B. Chadwick solely for the purpose of determining the appropriate remedial measures or sanctions, if any, warranted pursuant to subsection 14.01 (1) of the Bankruptcy and Insolvency Act in regard to the proven allegations against the respondents under headings J, K and L, the whole without costs.

J. "Third-Party Account." Used to Post Estate Transactions. (Re the Estate of Ethel Marie Young and the Estate of Curtis Percy Young)

[5] The conduct for which the Trustee has been found liable is set out in paragraph 82 of the Report, being that the Trustee:

… deposited in the "Third-Party Account", on or about , an amount of $42,407.65 from the sale of a property and paid disbursements totaling $40,836.15 from the same account instead of depositing that amount in the estate trust account of the debtor and paying the disbursements from the estate trust accounts, thereby contravening sections 13.5, 25(1) and 25(2) of the Act and Rule 48(b).

[6] Alan MacLeod acknowledged his wrongdoing. In his testimony before me, he admitted that this was an error. These were two estates with one joint asset and the proceeds from the one sale were inadvertently deposited into the third-party account.

K. Improper Treatment of Estate Deposits. (Re the Estate of Donald John Deady and the Estate of Dorothy Ann Deady)

[7] Based on the evidence, the Trustee admitted his responsibility and that it was in contravention of paragraphs 87 and 88 of the Report, being that the Trustee:

…. did not forthwith deposit in a bank all monies received:

by not depositing the $200 cash received on and the $400 cash received on June 6, 2003 in the estate trust account of Donald John Deady;

by not depositing the $400 cash received on in the estate trust account of Dorothy Ann Deady;

thereby contravening subsection 25(1) of the Act, section 13.5 of the Act and Rule 40(b)

and

[the trustee] after he was informed that $200 cash received from Mrs. Deady on and $800 on were not deposited in the trust account for these estates, did not forthwith deposit the said amount in the estates of Donald John Deady and Dorothy Ann Deady, thereby contravening section 13.5 of the Act and Rule 36.

[8] Trustees are required to deposit estate funds immediately upon receipt. Contravention "K" relates to the trustee's failure to credit the estates of Donald John Deady and Dorothy Ann Deady with a series of payments totaling $1000.

[9] Alan MacLeod immediately acknowledged his mistake, and gave them full credit for their loss.

L. Delay in the administration of the estates (Re the Estate of Marie Elizabeth Ann Ruda and the Estate of 595880 Ontario Limited)

[10] The trustee admitted he took too long with reference to these two estates. As such I found that he was in breach of the provisions of the Act and Rules and did not complete the estates in a timely manner. These paragraphs provide as follows:

105. The [Trustee] did not carry out his functions… in a timely manner and with due care by:

a) failing to follow up on the June 24, 1991 letter from the trustee's to the major creditor, Cantu Furniture, in order to resolve the only outstanding matter regarding the amounts claimed in the bankruptcy;

b) disallowing the balance of the claim of the major Cantu Furniture in the estate only in December 2005;

c) failing to follow up on the April 4, 1994 letter from the debtor requesting to be informed of the outstanding balance of the estate;

d) holding over $48,000 in trust from January 1992 which the time of the debtor's last payment and allowing the amount to accumulate to $90,318.52 as at as a result of the interest earned and the inaction of the trustee,

thereby contravening sections 13.5, 136(2) and 151 of the Act and Rule 36.

106. The [Trustee] did not earn interest on the estate funds… from April 1996 to April 1997 inclusively, thereby contravening subsection 5(5) of the Act and subsections 4(1)(c) and 4(4) of Directive No. 5 on Estate Funds and Banking, issued on November 17, 1994.

107. The [Trustee] did not administer with due care the post income tax refund in the amount of $3,022.44 received on or about November 22, 1988 which was deposited in a bank account titled "Tax Refund Account" and not dealt with for more than 15 years and refunded to Mrs. Ruda without the interest earned on that amount, thereby contravening section 13.5 of the Act and Rules 36 and 48b).

[11] Mr. Taggart, on behalf of the senior analyst, set forth in detail the facts surrounding the contravention in items J, K, and L.

[12] In addition, and forming part of the submissions, he has provided relevant extracts from the proceedings. As such, I am not going to review the facts in detail but only summarize them.

[13] With reference to item "J", namely the third-party account, Alan MacLeod admits that he should not have deposited the proceeds from the sale of the joint held property into the third-party account, but it should have been divided between the estates of the two bankrupts.

[14] Re item "K" the Deady's paid $200 to the trustee on , and an additional $400 on . They received a receipt for the other deposit towards administration fees.

[15] Mr. MacLeod prepared the report on the bankruptcy application for discharge and sent a copy of the report to all interested parties, including the Deady's. On when Mrs. Deady saw there was no credit for the $600, she contacted the trustee and forwarded a copy of the receipt. The trustee agreed to correct the oversight by depositing the proper amount. Unfortunately this did not happen until after Richard Hunter, from OSB, brought it to his attention during the 2005 audit.

[16] The trustee opposed the discharge of the Deady's on a number of grounds, including the down payment of the administration fee. According to the evidence of Alan MacLeod, which I accepted at the hearing, the main reason for opposing the discharge was that the Deady's did not attend the second counseling session.

[17] There is no question, and Mr. MacLeod agrees, that this error should have been corrected earlier.

L. Delay in the administration of the estates (Re the Estate of Marie Elizabeth Ann Ruda and the Estate of 595880 Ontario Limited)

[18] Mrs. Ruda made an assignment in bankruptcy on . There was at least two contentious creditors namely Cantu and Kourdev. There was a disallowance of the Cantu claim on and the bankruptcy was finally annulled on .

[19] There is no question that this had to be one of the longest bankruptcies on record. If the matter had proceeded in the normal fashion and the estate was wound up back in the early 90s, then it appears that Mrs. Ruda would not have received anything. As it is, she received $71,406.89 and all the creditors were paid 100 cents on the dollar plus interest at 5% from 15 years. One creditor, the Bank of Nova Scotia, agreed to accept $3,200 in satisfaction of the $8,500. As a result Mrs. Ruda received an additional $5,500. Mrs. Ruda's legal counsel, Peter A. Hargadon, Q.C., and not the trustee, brought this about.

[20] One would have thought that Mrs. Ruda would have been upset with the delay in the administration of bankruptcy. In fact the opposite happened. Mrs. Ruda testified on behalf of Alan MacLeod and felt that he was not sufficiently compensated for all the work he did in the bankruptcy. She was very pleased with the final outcome.

[21] Her legal counsel, Peter A. Hargadon, Q.C also gave evidence on behalf of Alan MacLeod. He described in detail what took place before the deputy registrar in bankruptcy when he applied to annual Mrs. Ruda's bankruptcy. Counsel appeared on behalf of OSB and there were two representatives from OSB in the courtroom. From the transcript, which was filed in the proceedings, it was apparent that OSB and their position were not well received by the Deputy Registrar.

[22] In regards to 595880 Ontario Ltd. this also was a long outstanding bankruptcy. In paragraph 99 of my reasons of I state as follows:

[99] Counsel for the OSB attended the annulment hearing before the Deputy Registrar in Bankruptcy. They did not oppose the annulment; however, they raised other issues. The transcript before the Deputy Registrar was filed as an exhibit and it's fair to say that the OSB was not well received.

[23] For the purpose of this sanction hearing, I am not going to repeat my findings or conclusions in both my and reasons. However, I do adopt them for the purpose of these proceedings.

Factors to be considered on sanction

[24] In my decision I set forth the factors which should be considered in addressing sanctions.

[11] … In the cases dealing with self-regulatory bodies they set forth some for the criteria that must be considered. They can be summarized as:

(a) the interest of the public,

(b) general deterrence to other members of the profession, and

(c) specific deterrence to the member.

[12] In cases under the Bankruptcy and Insolvency Act you are dealing with a statutory authority that has the responsibility for licensing, supervising, prosecuting, and recommending sanctions involving trustees. The statute is for the benefit of creditors, debtors, trustee's and, more importantly, the general public.

[25] Mr. Taggart, at page 6 of his written submissions, defines the interests of the public, as follows:

The public has an interest in the fair and expedient operation of the insolvency system. The Superintendent of Bankruptcy is charged with protecting the integrity of this systemFootnote 27. Specific members of the public, being bankrupts and their creditors, have a heightened interest in the integrity of this system given the direct impact it has on their economic interests. Trustees have an interest in the maintenance of the integrity of this system, as, if the public loses confidence it will make the demanding task of compromising claims, realizing assets, and rehabilitating bankrupts all the more difficult. And this harms the public in general, as, if the integrity of the system is compromised, its important role in both rehabilitating the "honest but unfortunate debtor' and redeploying assets back into the Canadian economy as quickly as possible is adversely affected.Footnote 28 The public's interest is adversely affected when a trustee's conduct affects the system's integrity. The conduct of the Trustee raises several issues under this heading.

[26] In the ideal world, all insolvencies would run smoothly. However the reality of the situation is that this does not happen.

[27] One has to look at the nature of the business of Alan MacLeod, his late father Donald A. MacLeod, and D. & A. Macleod Company Ltd.

[28] In 2007 at the time of the investigation, the practice consisted of the following:

Current as of — Transaction Listing by Account Number —

Estates — 2,177

Number of Transactions — 89,268

Dollars Transacted — $14,531,042.44 + $7,064,651.97 = $21,595,694.41

Average Transaction Size — 241.92

Approximate Number of Estate Files Handled During Period of Report of Ms. Laperriere — 9,954

Estimated Total Dollar Value Transacted — 4.5723 × $21,595,694.41 = $98,741,993.55

Estimated Number of Transactions — 408,160

[29] It would appear to me to be a busy trustee practice. There was no evidence to the contrary.

[30] The MacLeods had been subject to an audit in 1997 and various audits thereafter. Mr. Hunter from OSB conducted an audit in May/June 2003 and prepared a report dated .

[31] This report of resulted in a department audit report of , to which the MacLeod responded on . The final report was issued August 2004.

[32] The OSB formal investigation commenced on about and the MacLeods were notified of the investigation on .

[33] The formal report, which was the subject matter of the complaint against MacLeod was dated .

[34] In the affidavit of Alan W. MacLeod sworn on the 3rd day of September 2008, Mr. MacLeod describes the difficulty their counsel was having in obtaining disclosure of documents. It was only after I made a formal order that the trustee's counsel received proper disclosure. Just prior to the scheduled hearing date, Mr. Hunter, from OSB, advised the MacLeods that the OSB was going to conduct a further practice review. MacLeod's counsel requested the practice review be postponed until after the hearing scheduled for . OSB refused and the scheduled hearing was adjourned.

[35] The practice review report was received by the MacLeods on and they had to prepare a reply, which was done on .

[36] In his affidavit, Alan W. MacLeod states as follows:

82. The OSB's scrutiny of our work is evidenced by the fact that we were subject to monitoring in 2001 and 2002, audits in 2003 and 2005, a two-year investigation resulted in this hearing, commencing in 2005, and the practice review, which was commenced in or about November of 2007.

83. In order to respond to all of the many requests, reviews, audits and investigations of the OSB and to continue running our business I have been working substantially 7 days a week. Generally, I arrive at the office before opening and leave after closing of business. In some instances my days ago to 11:00 p.m.

84. My father, as well has been required to work many weekends in order to respond to all of this scrutiny by the OSB.

85. The amount of work my father, I and staff have devoted to responding to all the requests from the OSB has detracted from our ability to run our business and as such, we have suffered financially. As a result of the actions of the OSB, the continuing investigation all of these years, without conclusion, my father stopped drawing a salary on .

criteria

(a) When Creditors are Harmed

[37] Mr Taggart makes the following comment in his written submissions:

The very involvement of creditors in an insolvency filing invariably means that their legitimate claims will be compromised in the form of reduced payment. Creditors are expected to accept this institutionalized loss in exchange for the benefits of an efficient insolvency system. When this system, however, results in additional losses due to the improper administration of the estate, public confidence in the insolvency system is harmed. This results in less creditor engagement. For this reason numerous trustee compliance decisions treat harm to creditors as an aggravating factor, and the absence of harm as a mitigating factor.

[38] I do not disagree with Mr. Taggart's submissions under this heading, I do disagree how he applies it to the facts in J, K and L.

[39] I have previously commented upon the facts in "J". In my view, the intermingling of the funds in these two estates was an administrative error and was subsequently corrected. I appreciate there was some delay in correcting the error, but there was no harm done to any creditor.

[40] In "K" Mrs. Deady got credit for the payments totaling $1,000. Mrs. Deady contacted the trustee when she saw that there was no credit in the trustees' report for the $1,000 payments. Mr. MacLeod immediately agreed to give the credit. There was some delay in entering the credit. It was only after it was brought to his attention by the OSB auditor that it was finally corrected. There were other factors which contributed to the delay in discharge.

[41] In "L" this is a rather unique matter. There is no doubt that it is one of the longest insolvency's in history, and it ends up with a bankruptcy being annulled and the legitimate creditors receiving the full amount of the claim including interest for 15 years. One of the creditors, the Bank of Nova Scotia, took a reduced amount in order to settle their claim. The ironic thing is that the bankrupt, Mrs. Rudy, testified on behalf of Alan MacLeod. Notwithstanding the time that the bankruptcy matter took, and the fact that she was on discharge for this period of time, she was very supportive of Mr. MacLeod. In fact, she felt that he did not receive proper compensation.

(b) When Bankrupts are Harmed

[42] Bankrupts lose all of their non-exempt assets and suffer the ignominy of the legal status of being a bankrupt. Bankrupts should only be involved in the system for the minimum period required such that Canada's philosophy of the "fresh-start principle" may be implemented. The public perception of the insolvency system is harmed when it improperly delays bankrupts' rehabilitation. For this reason trustee compliance decisions treat harm to bankrupts as an aggravating factor, and the absence of harm as a mitigating factor.Footnote 29

[43] Applying this principle to J, K and L, Mr. Taggart, in his submissions, sets forth the senior analyst position. He acknowledges that the bankrupts in "J" suffered no harm. He then proceeds to review the facts, as he sees them, regarding K and L.

[44] In "K", there was more than one reason why Mrs. Deady did not receive an earlier discharge. The payment of the trustees' fees was only one factor in the evidence to support the conclusion that this was a factor that caused the delay. Another serious factor was that they did not comply with the counseling requirements.

[45] In "L", there is no question that Mrs. Ruda was not discharged bankrupt from 1988 until 2006. When she gave evidence, she explained how the bankruptcy arose, and it was as a result of her husband's untimely death resulting in the failure of his business. The fact that she remained undischarged for such a long period of time did not seem to bother her. It was a very unique situation.

(c) When the Regulator is unable to Correct the Behaviour of the Trustee

[46] From 1997 through to the time of the hearing the trustees were under the scrutiny of the OSB. At the hearing I accepted the evidence of Alan MacLeod as to the problems created in their practice as a result of the numerous audits and investigation. They were working day and night to comply with the request from the OSB officials. I could not conclude that they were "unmanageable".

(d) When the Process is Harmed

[47] It goes without saying that Canada's insolvency system is a court driven process. Trustees play an important role in this process, with the court relying heavily on their expertise and integrity, and they are Officers of the Court.Footnote 30 When, however, improper management of funds and record keeping results in the court making discharge orders with inordinately high monetary conditions, as occurred in contravention "K", this adversely affects the integrity of the system. I do not disagree with Mr. Taggart's summary of this principle, however, I do disagree how he applies it to "K" and "L". For example, he suggests that the trustee was in breach of the court order when they settled with the Bank of Nova Scotia for a lesser sum than they were entitled to receive. According to the evidence of Mr. Hargadon, counsel for Mrs. Ruda, this occurred with the consent of the bank after negotiation.

deterrence

[48] Both general deterrence and specific deterrence must be considered in dealing with the appropriate sanctions to be applied, based upon the facts in this matter. Counsel for the senior analyst has reviewed in detail, the facts, from his perspective, under both headings. I will not repeat them.

[49] Section 14.01 (1) of the Bankruptcy and Insolvency Act, R.S., 1985, c. B-3 states as follows:

14.01(1) If, after making or causing to be made an inquiry or investigation into the conduct of a trustee, it appears to the Superintendent that

  • (a) a trustee has not properly performed the duties of a trustee or has been guilty of any improper management of an estate,
  • (b) a trustee has not fully complied with this Act, the General Rules, directives of the Superintendent or any law with regard to the proper administration of any estate, or
  • (c) it is in the public interest to do so, the Superintendent may do one or more of the following:
  • (d) cancel or suspend the licence of the trustee;
  • (e) place such conditions or limitations on the licence as the Superintendent considers appropriate including a requirement that the trustee successfully take an exam or enroll in a proficiency course;
  • (f) require the trustee to make restitution to the estate of such amount of money as the estate has been deprived of as a result of the trustee's conduct; and
  • (g) require the trustee to do anything that the Superintendent considers appropriate and that the trustee has agreed to.

[50] In my original decision regarding sanctions, I used the unfortunate terminology of "reprimand" to express my views that I felt the trustee and his company had suffered enough and therefore no sanctions should be imposed.

[51] Mr. Justice Mainville in his reasons on the application for Judicial Review makes the following comment regarding Section 14.01 (1) and available sanctions, at paragraph 124 he states:

[124] The overriding objective of this provision is to ensure the protection of the public: Sam Lévy & Associés Inc. v. Canada (Superintendent of Bankruptcy), supra, at paras. 127–128. For these purposes, two sets of measures are contemplated. The first are remedial in nature and seek to have the situation corrected for the future through measures involving the requirement for additional training, the restitution of amounts to estates and any other measure agreed to by the trustee which would be appropriate to remedy the situation. The second set of measures is disciplinary in nature and involves placing limitations or conditions on a licence, suspending a licence or, in appropriate and extreme cases, cancelling a licence. These remedial measures and disciplinary sanction can be combined.

[125] It is also useful to note that the use of the word "may" (in French "peut") in the introductory provision of subsection 14.01(1) of the Act makes it clear that the option of not imposing any remedial measure or sanction against a trustee is available, even where the allegations of misconduct have been made out. The decision to impose or not such a measure or sanction is thus discretionary and falls within the exclusive authority or mandate of the Superintendent of his Delegate, taking into account all the circumstances of a particular case. This was conclusively decided in Jacques Roy v. Sylvie Laperriere, supra, at paras. 75 to 80.

[126] In this case, the Delegate imposed what he called a "reprimand". A "reprimand" is not specifically provided for under subsection 14.01(1) of the Act. In light of the disciplinary nature of a reprimand, and taking into account the principle that disciplinary authority should be interpreted restrictively, the sanction of a reprimand was not available to the Delegate. However, it is important to go beyond the use of specific expressions and to actually examine what the Delegate was attempting to achieve in the Sanctions Decision.

[127] Though the use of the motion of a "reprimand" was unfortunate, when reading the Sanctions Decision as a whole, it becomes apparent that the Delegate was of the view that no specific sanction or measure contemplated by subsection 14.01(1) was required in this case principally in light of the fact the Respondents had been put through a rigorous investigation and ensuing hearing and decision, and this was sufficient punishment for the Respondents. The Delegate was also of the view that what the Respondents experienced in the disciplinary process will serve as a general deterrence to other trustees (para. 20 of the Sanctions Decision).

[128] Thus, as I read the Sanctions Decision of the Delegate, no specific remedial measure or sanction under subsection 14.01 of the Act was deemed appropriate by the Delegate. Though expressed in terms of a "reprimand", the net result was that the Delegate decided that in the particular circumstances of this case, no specific sanction or measure contemplated by subsection 14.01(1) of the Act was required since the Liability Decision and the process leading to it served the purposes of the Act. As noted by Justice Martineau in Sam Lévy & Associés v. Canada (Superintendent of Bankruptcy), supra, at paragraph 105, "[…] the public nature of the disciplinary record and the hearing, together with the publicity of the tribunal's proceedings and decisions, are likely to have a negative impact on the reputation, if not the future career, of any individual whose conduct is considered by the tribunal."

sanctions

[52] Mr. Taggart, counsel for the investigator, recommends the following sanctions:

  1. that the corporate licence of D. & A. MacLeod Company Ltd. be restricted for a period of five (5) weeks, during which time D. & A. MacLeod Company Ltd. shall not be appointed to any new mandates under the Act, and shall be limited to administering estates to which the corporate trustee has been appointed prior to the rendering of this sanction decision.
  2. that the licence of trustee Allen W. MacLeod be suspended for a period of five (5) weeks, during which time he may not act in the capacity of trustee, nor accept any mandate pursuant to the Act, either in his own name or that of the corporate trustee; that the suspension of the trustee licence of Allen W. MacLeod begin four (4) weeks after the date of the decision to allow the trustee to find a trustee that will administer the estates of D. & A. MacLeod Company Ltd. during the period of the suspension of his licence; and that the trustee Allen W. MacLeod, before the end of that four (4) week period starting from the date of the decision, inform the Office of the Superintendent of Bankruptcy of the name of the trustee who will administer the estates during the period of the suspension of his licence;
  3. in the alternative to paragraph 2 above, that the trustee licence of Allen W. MacLeod be restricted for a period of eight (8) weeks, during which time Allen W. MacLeod will not be appointed to any new mandates under the Act, but will be limited to the administration of estates for which he has already been appointed;
  4. that if the trustees fail to respect this order, they will be considered not to have met one of the conditions of their licence within the meaning of paragraph 13.2(5)(b) of the Act.

[53] As Justice Mainville points out in his reasons, there are two aspects to sanctions under section 14(01); one is remedial and the other is discipline.

[54] In considering the remedial aspects, Allen MacLeod and his company have been under the microscope of the OSB since 1997. All of their actions have been scrutinized since that time. There have been legitimate disagreements with the officials from OSB on the interpretation of rules and directives, from time to time.

[55] In my reasons dated , at paragraphs 45–47, I found the OSB staff was not impartial in dealing with the Macleods.

[56] The investigator does not seem to be suggesting any remedial penalty, notwithstanding that they go on to describe how unmanageable the Trustee's are.

[57] The main recommendation for suspension or restrictions appears to be disciplinary.

[58] In my original reasons on sanctions I found that the hardships placed upon the Trustee's was sufficient to satisfy both general and specific deterrence.

[59] Since the matter has been returned to me to deal with sanctions regarding J, K, and L, counsels' submissions on sanctions has been more detailed and voluminous. As such, I have reviewed my original decision on sanctions and asked myself if I was correct in not imposing a specific sanction. In answering that question, I have to consider the effects of the Investigators recommendations as to suspension and/or restrictions. What will that accomplish?

[60] Any restriction or suspension of license will only cause financial hardship to the Trustee's practice and hardship for their client. Granted they could be allowed to deal with current clients and be prohibited from taking on new clients.

[61] Mr. Taggart, on behalf of the Investigator argues that either restriction or suspension of license for a short period of time, will be a general deterrence to other Trustees.

[62] One has to recognize the Trustees carry on practice in the Ottawa area. There is a limited number of Trustees practicing in this area. I would expect they all know the hardships the Macleods have gone through over the past number of years. If that is not sufficient deterrent, I do not know what would be.

[63] Allen MacLeod, in his affidavit, sworn on , and filed as exhibit 16, in the proceedings before me, describes in detail the difficulties he and his father had in obtaining proper disclosure of documents prior to the hearing.

[64] The original scheduled hearing had to be adjourned because the OSB decided to do another audit while they were attempting to prepare for the hearing.

[65] One of the more serious issues addressed in the Macleod affidavit, was the disclosure of the investigation, by the OSB, to third parties. Ms. Perrault was hired as a trustee by Macleods, but was told by the Assistant Superintendent she should not work for them as they were under investigation. This was before any of the Macleods knew they were being investigated.

[66] In paragraphs 38 through 45 of his affidavit, he describes two other third parties that had been told about the investigation by the OSB, and the effects on the MacLeods.

[67] I am not going to repeat everything in the affidavit of Allen Macleod, but it is suffice to say they have suffered a great deal as a result of the conduct of the OSB.

[68] This whole investigation, preparation, disclosure, and hearings have been very costly for the Macleods. At the time of the original sanction hearing they had spent over $150,000.00. Since that time there has been a substantial increase in their legal costs.

authorities

[69] Both counsels have referred me to a number of authorities in support of their respective positions on sanctions. They are all very interesting, and informative, but turn upon their own facts.

  • Harry Bick and Friedman & Friedman Inc.
  • Re Blais 2003 CarswellQue 124 (Quebec Superior Court)
  • Douglas Jon Kovack
  • Ernest Leyshon-Hughes
  • Marchand Syndics Inc. c. Laperriere, 2006 CarswellNat 4509, (Federal Court of Appeal)
  • Frank Risman Associates (Canada) Limited and Frank Risman (Ontario)
  • Peter Wolkove — Decision on the Sanction
  • Groupe G. Tremblay Syndics Inc. v. Canada (Superintendent of Bankruptcy)
  • Michel Leduc v. Georges E. Marchand, and Bruno Marchand and Marchand Syndics Inc. () (liability decision)
  • Re Sally Creek Environs Corp., 2009 CarswellOnt 7608 (Ontario Superior Court of Justice [Commercial List])
  • Sidney Charles Schiff and Schiff & Associates Inc. —
  • Jacques Roy v. Sylvie Laperriere, 2006 F.C. 1386
  • College of Physicians and Surgeons (Ontario) v. Boodoosingh (1990), 73 O.R. (2d) 478 (Ont.Div.Ct.)
  • Ratsoy v. Architectural Institute (British Columbia) (1980), 113 D.L.R. (3d) 439 (B.C.S.C.)
  • College of Physicians and Surgeons v. Gillen (1990), 1 O.R. (3d) 710 (Div. Ct.)
  • Conforzi v. Association of Professional Engineers (1987), (Ontario) 25 OAC 276 (Div. Ct.)
  • Camgoz v. College of Physicians and Surgeons (Sask) (1993), 114 Sask.R. 161 (Q.B.)
  • Jawsal v. Newfoundland Medical Board (1996) 42 Admin. L.R. (2d) 233
  • Directions for Conservatory measures in the matter of Sidney Charles Schiff
  • Directions for Conservatory measures in the matter of John Brock Hobbs

conclusion

[70] After a review of all the written submissions and the supporting materials, for the reasons I have expressed I am of the opinion that there should be no sanctions imposed upon the trustees.

dated at Ottawa this 5th day of July, 2010.

 

space to insert signature

The Honourable James B. Chadwick, Q.C.

Delegate

 

in the matter of the bankruptcy and insolvency act
R.S.O. 1985, c. B-3

in the matter of the Superintendent of Bankruptcy

and in the matter of the alleged allegation of professional misconduct as against Allen W. MacLeod, Donald A. MacLeod and D. & A. MacLeod Company Limited


decision as to sanctions


The Honourable James B. Chadwick, Q.C.

Delegate


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

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