Date: 20041110
Docket: T-1116-04
Citation: 2004 FC 1584
Ottawa, Ontario, November 10, 2004
Present: Madam Justice Danièle Tremblay-Lamer
BETWEEN:
MARCHAND SYNDICS INC., Trustee
GEORGES E. MARCHAND, Trustee
BRUNO MARCHAND, Trustee
Applicants
and
SYLVIE LAPERRIÈRE
Respondent
REASONS FOR ORDER AND ORDER
[1] This is an application for judicial review of a decision by Ms. Sylvie Laperrière, in her capacity as a delegate of the Superintendent in Bankruptcy, imposing two series of conservatory measures directions under section 14.03 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the Act).
BACKGROUND
[2] The applicants were the subject of a number of reports of the Office of the Superintendent of Bankruptcy (OSB) for more than a decade because their administration displayed some chronic deficiencies in the time taken to close files. An audit report in January 1992 indicated, for example, that a file opened in February 1973 had never been closed. In February 2004, this file was still open and the monies had still not been distributed to the creditors, when the balance of the trust account in this case amounted to $575,505.30.
[3] That may represent the most extreme case, but other supervision and audit reports, in October 2000 and March 2003, indicate the same problems.
[4] Seven agreements in relation to closure plans were developed during the period from 1993 to 2001 by the OSB in collaboration with the applicants under which they would proceed to close their files that were more than three years old. Only one of these seven plans (the 1996 one) was implemented by the applicants.
[5] Moreover, during this period, many creditors complained about the slowness with which the applicants were completing the administration of their file and a number of judgments of the Superior Court of Quebec denounced their negligence.
THE FACTS
[6] On January 22, 2003, the applicant Georges Marchand requested a meeting with Mr. Marc Mayrand, the Superintendent of Bankruptcy, and this meeting was held on February 12, 2003. During this meeting, the applicants communicated their desire to clean up the backlog of files. Following this initial meeting further discussions were held during the spring and summer of 2003.
[7] In July 2003, the OSB began the Initiative for the Orderly and Timely Administration of Insolvency Estates (IAPO) throughout the country. Pursuant to paragraph 5(3)(e) of the Act, the OSB conducted a general investigation to identify all the trustees in Canada who had not managed to close their files in less than three years at an acceptable level. To be identified by this program, the ordinary administration files dating back more than three years had to make up more than 60% of the trustee's inventory, and summary administration files had to make up more than 15%.
[8] The goal of the IAPO was to lower these levels to less than 40% and 10% respectively. Ninety-nine trustees were identified in this investigation, and the applicants were included in this group.
[9] On August 5, 2003, Ms. Lorraine Provost, the OSB representative, wrote to the 99 trustees who had been identified urging them to provide, within 15 business days, a closure plan acceptable to the OSB and to demonstrate regular progress throughout the year. The monthly reports were to list, at minimum, the files closed in the preceding month and the files that would be closed in the current month, as well as provide any further information concerning the status of the other files that were to be closed under the plan. She explained that the OSB considered a file to be closed only when the trustee obtained his or her discharge, and not earlier.
[10] In the letter she sent to the applicants, she noted that 94.29% of the ordinary files and 57.76% of the summary files of Georges Marchand, and 97.70% of the ordinary files and 62.63% of the summary files of Bruno Marchand had been open for more than three years.
[11] The applicants and all the other trustees identified in the IAPO program were also informed that failure to produce the documents or comply with the requests for a closure plan acceptable to the OSB within the time allotted would expose them to conservatory measures under section 14.03 of the Act.
[12] On August 26, 2003, the applicants submitted to the OSB a table in which they indicated the number of files they planned to close for each of the following four quarters commencing September 1, 2003.
[13] The exchange of correspondence between the parties during this period is crucial, since it is at the heart of the litigation. It is important, therefore, to relate its content in some detail.
[14] On September 4, 2003, Mr. Georges Marchand sent a letter to Mr. François Leblanc of the OSB in which he stated that he had understood that the closure plan was to be more detailed, and further details were provided on September 8, 2003.
[15] In a letter sent on the same date, Ms. Provost explained that the suggested plan was not acceptable. To be acceptable, the plan had to indicate:
· the number of summary administration files of more than three years for which receipts and disbursements returns would be produced;
· the number of summary administration files of more than three years for which the trustee's discharge would be obtained;
· the number of ordinary administration files of more than three years for which receipts and disbursements returns would be produced;
· the number of ordinary administration files of more than three years for which the trustee's discharge would be obtained.
[16] The OSB also asked that the applicants supply a detailed list of the files that were to be closed within the next quarter.
[17] In a letter dated September 10, 2003, the applicants asked the OSB for clarifications as to all of the comments exchanged in the letter of August 5, 2003, and more particularly the reference to section 14.03 of the Act. The applicants further explained that in their opinion the decision of the Superior Court in Abderrazik (Syndic de), [2002] J.Q. No. 2241 (S.C.) (QL), the OSB did not have authority to demand a detailed list of the files to be closed.
[18] On September 19, 2003, in reply to this letter, Ms. Provost informed the applicants that the plan submitted was not accepted by the OSB. She explained that the expression [translation] "the files closed" meant that the OSB would receive, before the deadline, a document showing that the trustee had been discharged, i.e. the certificate of compliance or order of discharge.
[19] On September 25, 2003, the applicants' counsel wrote a further letter to Ms. Provost. He repeated that the plan submitted was acceptable and that the request for a detailed list went beyond the OSB's administrative authority. He suggested a meeting within 90 days, should that prove necessary, to discuss this matter.
[20] In a letter dated October 24, 2003, the OSB counsel again notified the applicants that the plan submitted was not acceptable and requested a written undertaking to close on a priority basis files dating back ten years or more with a bank balance of $25,000 or more, that is, a total of 17 ordinary administration files, a list of which was provided to them.
[21] On October 31, 2003, the applicant's counsel replied to the letter of October 24, 2003, providing some figures in respect of the closure of files and objectives to be achieved within the period in question. He suggested a meeting in early January 2004 to describe and review the efforts made for that purpose over a represented period of several months.
[22] On November 7, 2003, the OSB counsel stated that the case was very serious. He said that the OSB request in relation to the file closure plan remained unchanged.
[23] That same day, the applicant's counsel renewed his request for a meeting in early January 2004 and asked once again what statutory authority the OSB had to demand a sequential order of closure of the files.
[24] During this period Mr. Georges E. Marchand was also sending a series of letters dated November 5, November 21 and December 19, 2003 reporting statistics on the progress in closing files.
[25] In a letter sent on January 19, 2004, Ms. Provost made a final request to the applicants to submit no later than February 2, 2004, a detailed closure plan for administration files opened for more than three years. She considered the refusal to meet this requirement unacceptable. She repeated that a refusal by them to comply would expose them to conservatory measures under section 14.03 of the Act. She refused to meet with the applicants since such a meeting would not help to resolve the problem.
[26] On February 2, 2004, the applicants' counsel wrote a detailed letter to Ms. Provost in which he reminded the OSB that the applicants wanted to settle the question of volume of old files instead of spending time on the more complex files. As of January 19, 2004, the times for closing summary administration files were now considered satisfactory by the OSB.
[27] He also noted that the applicants had voluntarily reduced their turnover for more than a year and as a result of this process the proportionate number of old files had increased continually - the IAPO program is based on the percentage of files going back more than 36 months in the trustee's inventory - but that the respondent had not assigned any significance to the decrease in the number of new files accepted.
[28] He also mentioned that the process of closing a bankruptcy file is subject to some delays over which the trustee has no control. That is why the IAPO program normally gives the trustees 12 months in which to present their evidence. It was not fair that the respondent was suggesting the imposition of conservatory measures after only six months. The applicants were available to discuss the actual and meaningful progress in the closure process and thereby to avoid conservatory measures being taken.
[29] It was at that point, in view of the repeated refusal of the applicants to comply with the OSB requirements, that the respondent's decision to impose two series of conservatory measures directions crystallized. These measures were taken only in regard to the 48 files with large bank balances ($10,000 or more) since those are the files that are likely to produce a dividend for the creditor.
[30] The first series, which took effect on February 10, 2004, provided:
· that 48 active ordinary administration files opened for several years would be withdrawn from the applicants until the official receiver wound up their administration or a custodial trustee was appointed for that purpose; and
· that the applicants could not be assigned any new ordinary administration files by the official receiver.
[31] The second series, issued on February 24, 2004, resulted in the firm of H.H. Davis & Associés Inc. being instructed to wind up the administration of the 48 files withdrawn from the applicants.
PROCEDURAL BACKGROUND
[32] On February 12, 2004, by way of an ex parte motion in the Federal Court, the respondent obtained, on the basis of Ms. Laperrière's affidavit, an order of compulsory execution of the conservatory measures.
[33] On February 26, 2004, Jean Guibault J. of the Superior Court issued an interim protection order staying the application of the conservatory measures directions.
[34] On April 5, 2004, Robert Mongeon J. of the Superior Court allowed in part the declinatory exception filed by the respondent, declining to renew the protection order. However, he kept the order of Guibault J. in force until April 15, 2004, in order to allow the interested parties to appeal this judgment or to file an application for judicial review in the Federal Court.
[35] On April 14, 2004, while the applicants' counsel was on vacation, his colleague Mr. Des Aulniers filed a letter in the Federal Court Registry requesting a speedy hearing of 15 minutes duration to obtain an interim injunction pending a later, more extensive hearing on the injunction application.
[36] In a letter dated April 15, 2004, the respondent opposed the motion on the ground that it was completely irregular and inadmissible in the circumstances.
[37] On that same day, the last day on which the order of Guibault J. was still in force, the Court was informed of the application.
[38] As of that date, no application for judicial review had been filed. Moreover, it was evident from the very text of the letter that counsel was instead trying to obtain an extension of the time given by Mongeon J. in which to argue the motion for an injunction on the merits, since he was seeking only a hearing of a few minutes to obtain an interim injunction pending a more extensive hearing. Neither the Act nor the Federal Court Rules, 1998, SOR/98-106, nor the applicable injunction cases allow an interim injunction to be granted unless the tests laid down for obtaining such a remedy are met. I was of the view, therefore, that the last-minute application was inadmissible on its face and that it constituted an abuse of process since no application for judicial review had been filed and could consequently be the subject matter of a hearing.
[39] On June 9, 2004, the applicants filed an application for judicial review of the two series of conservatory measures directions.
[40] In a letter dated September 15, 2004, the applicants asked the Federal Court administration to assign a new judge to the file in view of the interlocutory orders I had issued in this case.
[41] In a letter dated September 16, 2004, the respondent opposed this request since no motion to recuse had been filed. It was the respondent's opinion, moreover, that my issuance of an ex parte order in this case did not disqualify me from hearing the matter on the merits. It is settled practice in the Federal Court that the judge who hears an ex parte application is the judge who hears the proceeding to dispute an order that is held pursuant to Rule 399 of the Federal Court Rules, 1998, supra. If such a situation creates no problem, a fortiori there ought not to be one in the present situation. As for the protection application made last April, it was inadmissible and was correctly dismissed.
[42] On September 17, 2004, I issued an oral direction that the matter should proceed on the merits since no motion was pending as of that date.
[43] On September 21, 2004, the eve of the judicial review hearing on the merits, the applicants tried to file in the Federal Court Registry a motion to recuse. Since in my opinion there was no justification for filing this motion out of time, which was prejudicial to the adverse party, I was not going to absolve the parties of their failure to file such a motion within the allotted periods, and I refused to allow the motion to be filed.
POSITION OF THE PARTIES
[44] The applicants submit that as of February 10, 2004 there was no circumstance compromising the protection of the estates that were being administered by the applicants. Thus the respondent exceeded her jurisdiction.
[45] Furthermore, if the respondent had jurisdiction to issue the directions for conservatory measures, she nevertheless acted in a way that is inconsistent with the principles of fundamental justice and procedural fairness, on the basis of erroneous information and arbitrary findings, made without taking into account the actual factual information provided by the applicants.
[46] The respondent, for her part, argues that when a trustee refuses or neglects to wind up his administration, she has in her opinion reasonable grounds to believe that the estates in question must be protected. Section 14.03 of the Act is not limited only to cases of fraud and embezzlement. In this case there were such reasons warranting the protection of the estates. The OSB is not unreasonably monitoring the trustees' practice but rather obtaining from them commitments to close the files which, in the OSB's opinion, should be closed in priority given their age and the size of the sums held in trust.
[47] The respondents note as well that a review of the conservatory measures directions in dispute shows that they lack the draconian character the applicants would attribute to them. They affect only a limited number of files that are considered problematic. Moreover, the applicants have retained full capacity to be assigned new summary administration or proposal files and to continue to administer all the files that were under their management prior to February 10 other than the 48 estate files referred to in the directions.
[48] The respondent submits therefore that she exercised her authority to issue directions in a lawful and reasonable way in the circumstances.
[49] She argues, finally, that the rules of natural justice were complied with since the applicants were informed by the OSB that they were risking conservatory measures if they refused to comply with the OSB requests, which were legitimate in view of the applicants' deficient administration.
Statutory provisions
[50] The relevant statutory provisions for the purposes herein are all contained in the Act. They are the following:
| 5 (3) The Superintendent shall, without limiting the authority conferred by subsection (2), |
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5 (3) Le surintendant, sans que soit limitée l'autorité que lui confère le paragraphe (2) : |
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| (a) receive applications for licences to act as trustees under this Act and issue licences to persons whose applications have been approved;
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a) reçoit les demandes de licences autorisant l'exercice des fonctions de syndic dans le cadre de la présente loi et délivre les licences aux personnes dont les demandes ont été approuvées;
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| [...](c) where not otherwise provided for, require the deposit of one or more continuing guaranty bonds or continuing suretyships as security for the due accounting of all property received by trustees and for the due and faithful performance by them of their duties in the administration of estates to which they are appointed, in any amount that the Superintendent may determine, which amount may be increased or decreased as the Superintendent may deem expedient, and the security shall be in a form satisfactory to the Superintendent and may be enforced by the Superintendent for the benefit of the creditors;
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c) lorsqu'il n'y est pas autrement pourvu, exige le dépôt d'un ou de plusieurs cautionnements continus pour garantir qu'il sera dûment rendu compte de tous les biens reçus par les syndics et assurer l'exécution régulière et fidèle de leurs fonctions dans l'administration des actifs auxquels ils sont commis, au montant qu'il peut fixer et qui est susceptible de l'augmentation ou de la diminution qu'il peut juger opportune; le cautionnement doit être en une forme satisfaisante au surintendant qui peut l'exécuter au profit des créanciers;
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| (e) from time to time make or cause to be made such inspection or investigation of estates or other matters to which this Act applies, including the conduct of a trustee or a trustee acting as a receiver or interim receiver, as the Superintendent may deem expedient and for the purpose of the inspection or investigation the Superintendent or any person appointed by the Superintendent for the purpose shall have access to and the right to examine and make copies of all books, records, data, including data in electronic form, documents and papers pertaining or relating to any estate or other matter to which this Act applies; |
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e) effectue ou fait effectuer les investigations ou les enquêtes, au sujet des actifs et autres affaires régies par la présente loi, et notamment la conduite des syndics agissant à ce titre ou comme séquestres ou séquestres intérimaires, qu'il peut juger opportunes et, aux fins de celles-ci, lui-même ou la personne qu'il nomme à cet effet a accès, outre aux données sur support électronique ou autre, à tous livres, registres, documents ou papiers se rattachant ou se rapportant à un actif ou à toute autre affaire régie par la présente loi, et a droit de les examiner et d'en tirer des copies; |
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| (f) receive and keep a record of all complaints from any creditor or other person interested in any estate and make such specific investigations with regard to such complaints as the Superintendent may determine; and |
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f) reçoit et note toutes les plaintes émanant d'un créancier ou d'une autre personne intéressée dans un actif, et effectue, au sujet de ces plaintes, les investigations précises qu'il peut déterminer; |
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| (g) examine trustees' accounts of receipts and disbursements and final statements. |
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g) examine les comptes de recettes et de débours et les états définitifs des syndics. |
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| 14.03 (1) The Superintendent may, for the protection of an estate in the circumstances referred to in subsection (2), |
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14.03 (1) Pour assurer la sauvegarde d'un actif dans les circonstances visées au paragraphe (2), le surintendant peut : |
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| (a) direct a person to deal with property of the estate described in the direction in such manner as may be indicated in the direction, including the continuation of the administration of the estate; |
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a) donner instruction à quiconque de s'occuper des biens de l'actif visé dans les instructions conformément aux modalités qui y sont indiquées, notamment d'en continuer l'administration; |
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| (b) direct any person to take such steps as the Superintendent considers necessary to preserve the books, records, data, including data in electronic form, and documents of the estate; |
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b) donner instruction à quiconque de prendre les mesures qu'il estime nécessaires à la sauvegarde des livres, registres, données sur support électronique ou autre, et documents de l'actif; |
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| (c) direct a bank or other depository not to pay out funds held to the credit of the estate except in accordance with the direction; and |
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| c) donner instruction à une banque ou autre dépositaire de ne faire aucun paiement sur les fonds détenus au crédit de cet actif, si ce n'est conformément à l'instruction;(d) direct the official receiver not to appoint the trustee in respect of any new estates until a decision is made under subsection 13.2(5) or 14.01(1). |
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d) donner instruction au séquestre officiel de ne plus nommer le syndic en cause pour administrer de nouveaux actifs tant qu'une décision n'est pas rendue au titre des paragraphes 13.2(5) ou 14.01(1). |
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| Circumstances
(2) The circumstances in which the Superintendent is authorized to exercise the powers set out in subsection (1) are where |
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Circonstances
(2) Le surintendant peut exercer les pouvoirs visés au paragraphe (1) dans les circonstances suivantes : |
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| (a) an estate is left without a trustee by the death, removal or incapacity of the trustee; |
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a) le décès, la destitution ou l'empêchement du syndic responsable de l'actif; |
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| (b) the Superintendent makes or causes to be made any investigation pursuant to paragraph 5(3)(e); |
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b) la tenue par lui de l'enquête prévue à l'alinéa 5(3)e); |
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| (c) the Superintendent exercises any of the powers set out in section 14.01; |
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c) l'exercice par lui des pouvoirs visés à l'article 14.01; |
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| (d) the fees referred to in subsection 13.2(2) have not been paid in respect of the trustee's licence; |
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d) le défaut de paiement de droits prévus au paragraphe 13.2(2) à l'égard de la licence du syndic; |
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| (e) a trustee becomes insolvent; |
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e) l'insolvabilité du syndic; |
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| (f) a trustee is convicted of an indictable offence or has failed to comply with any of the conditions or limitations to which the trustee's licence is subject; or |
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f) le syndic a été reconnu coupable d'un acte criminel ou n'a pas observé l'une des conditions ou restrictions de sa licence; |
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| (g) a circumstance referred to in paragraph 13.2(5)(c) or (d) exists and the Superintendent is considering cancelling the licence under subsection 13.2(5). |
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g) le fait qu'il envisage d'annuler la licence du syndic au titre des alinéas 13.2(5)c) ou d). |
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| Contents and effect of direction
(3) A direction given pursuant to subsection (1)
(a) shall state the statutory authority pursuant to which the direction is given;
(b) is binding on the person to whom it is given; and
(c) is, in favour of the person to whom it is given, conclusive proof of the facts set out therein. |
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Teneur et effet des instructions
(3) Les instructions énoncent la disposition législative conformément à laquelle elles sont données, lient leur destinataire et font pleinement foi de leur contenu en faveur de leur destinataire. |
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| Liability ceases on compliance
(4) A person who complies with a direction given pursuant to subsection (1) is not liable for any act done by the person only to comply with the direction. |
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Suppression de la responsabilité
(4) Quiconque obtempère aux instructions données en application du paragraphe (1) échappe à toute responsabilité pour les actes posés dans le seul but de s'y conformer. |
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ANALYSIS
[51] The applicants allege primarily that the Superintendent, in exercising his discretionary authority to impose conservatory measures, exceeded his jurisdiction, and that the Court must therefore set aside this decision (Federal Court Act, R.S.C. 1985, c. F-7, paragraphs 18.1(3)(b) and 18(4)(c) and (f)). There can be no doubt, however, that the superintendent was empowered to impose conservatory measures, because an investigation into the applicants' practices had been undertaken in accordance with paragraph 5(3)(e) of the Act.
[52] The issue is rather whether the decision made by the Superintendent in the exercise of his discretion amounts to an excess of jurisdiction. The courts have held more than once that a discretionary decision-maker such as the Superintendent exceeds his jurisdiction if he uses his discretionary authority for an improper purpose, exercises it arbitrarily or in bad faith or bases the exercise of this authority on irrelevant considerations.
[53] However, paragraph 18(4)(c) does not stand alone. Although section 18.1 does not expressly provide any standard of review, recent decisions of the Supreme Court of Canada require that the Federal Court add to the considerations already mentioned the notion of the pragmatic or functional analysis in determining the standard of review that is applicable in each case (Pushpanathan v. Canada (M.C.I.), [1998] 1 S.C.R. 982; Baker v. Canada (M.C.I.), [1999] 2 S.C.R. 817; Chieu v. Canada (M.C.I.), [2002] 1 S.C.R. 84; Dr. Q v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226). Consequently, in order to find that the Superintendent exceeded his jurisdiction, it is first necessary to find that his decision did not satisfy the applicable standard of review: the patently unreasonable decision, reasonableness simpliciter or correctness, a question we must now address.
Applicable standard of review
[54] At the heart of the review is the respondent's decision that conservatory measures were justified. The Court must therefore apply the pragmatic and functional approach to that decision, determine the applicable standard of review and draw a conclusion as to whether the decision should be upheld in light of that standard.
[55] This method calls upon a reviewing court to weigh a series of factors in an effort to discern whether a particular issue before the administrative body should receive exacting review, undergo significant searching or testing, or be left to the near exclusive determination of the decision-maker.
[56] Four major factors should be considered in determining which standard of judicial review is applicable to the decision of an administrative tribunal: the presence or absence of a privative clause; the purpose of the statute as a whole and of the particular provision; the relative expertise of the tribunal in comparison with that of the Court on the question at issue; and the nature of the question.
[57] In the case at bar there is no privative clause, which would indicate less deference. As to the purpose of the Act, section 14.03 is one of a set of provisions the subject matter of which is the supervision of the administration and conduct of trustees for the purpose of protecting the public interest in question. It should be kept in mind that the trustees act as fiduciaries and manage the property of others for the benefit of all the creditors.
[58] Where the purpose of the Act requires that a tribunal choose among a range of remedies or administrative measures, ensure the protection of the public, participate in establishing policies or balance more than one interest or factor, the reviewing court must display greater deference (Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557).
[59] In regard to the tribunal's expertise, I think the OSB has relatively greater expertise than the Court on the issue in dispute. An investigation under paragraph 5(3)(e) of the Act essentially engages the OSB's expertise to review the administration of the files and identify those cases in which that administration is inadequate. The OSB uses this expertise in determining whether conservatory measures or some other form of intervention is required.
[60] The final factor is that of the nature of the question. This calls for consideration of whether the question is one of fact or of law. The Court will display greater deference on a question of fact. However, there will be less deference if the issue tends instead to be one of law. In the case at bar, the decision to take conservatory measures is based essentially on a determination of fact, which leads to greater deference.
[61] Applying these factors of the pragmatic and functional approach, I conclude that the standard of the patently unreasonable decision is the applicable standard of review.
[62] The patently unreasonable decision will be one that has been described as "clearly irrational" or evidently not in accordance with reason (Canada (Attorney General v. Public Service Alliance of Canada, [1993] 1 S.C.R. 941, at pp. 963-64, per Cory J.; Centre communautaire juridique de l'Estrie v. Sherbrooke (City), [1996] 3 S.C.R. 84, paragraphs 9-12, per Gonthier J.). A decision that is patently unreasonable is so badly flawed that no degree of judicial deference can justify upholding it.
Application to the OSB's decision
(i) What were the reasons for the decision?
[63] In the present case, the record discloses some circumstances that differ from those in the case Groupe G. Tremblay Syndics Inc. v. Canada (Superintendent of Bankruptcy), [1997] 2 F.C. 719. By the end of 2002, the applicants had identified a problem with the backlog of old files, which led them to reduce the number of new assignments accepted in order to concentrate their efforts on the old files. And, as we saw earlier, a number of exchanges occurred with the OSB in an attempt to resolve the problem.
[64] However, the OSB was still running up against a refusal by the applicants to comply with its directives. For the OSB, the longer it took for the trustee to wind up its administration the greater the chances that the creditors would not receive the sums to which they were entitled under the Act. Clearly, the purpose of the Act was not being fulfilled, since the property was to be realized with diligence and the sums obtained were to be paid to the creditors as soon as possible (section 151 of the Act and Rules 36 and 48). So when, without valid reasons, some trustees prevent the achievement of these objectives, the OSB's view is that the estate must be protected since it is not being used for the purposes for which it is intended and some conservatory measures are justified.
(ii) In such circumstances, was the OSB's decision patently unreasonable?
[65] In the first place, was it unreasonable for the OSB to want to obtain an undertaking by the trustees to close, first, in sequence, the oldest files with the largest sums held in trust? I do not think so. On the contrary, the record discloses that the sums held in the oldest files were the largest, e.g. the Construction Morano file, dating back to 1973, in which $575,505 was still in trust, or the file in Vide et Traitement Canada Inc., dating back to 1992, with property held in trust amounting to $414,986.
[66] The Superintendent has the power to so act under the general power of review conferred on him in subsection 5(2) of the Act, and more particularly paragraph 5(4)(b), which provides:
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5.(2) The Superintendent shall supervise the administration of all estates and matters to which this Act applies. |
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5.(2) Le surintendant contrôle l'administration des actifs et des affaires régis par la présente loi. |
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| 5.(4) The Superintendent may |
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5.(4) Le surintendant peut : |
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| (b) issue, to official receivers, trustees, administrators of consumer proposals made under Division II of Part III and persons who provide counselling pursuant to this Act, directives with respect to the administration of this Act and, without restricting the generality of the foregoing, directives requiring them
(i) to keep such records as the Superintendent may require, and
(ii) to provide the Superintendent with such information as the Superintendent may require; |
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b) donner aux séquestres officiels, aux syndics, aux administrateurs au sens de la section II de la partie III et aux personnes chargées de donner des consultations au titre de la présente loi des instructions relatives à l'exercice de leurs fonctions, et notamment leur enjoindre de conserver certains dossiers et de lui fournir certains renseignements; |
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[67] Thus, the applicants' refusal to provide a more detailed closure plan that in the circumstances would have helped in tackling the more problematic files on a priority basis cannot be justified.
[68] The applicants argue that the OSB was unreasonable in its desire to monitor the applicants' practice, and that in light of the decision in Abderrazik (Syndic de), supra, they did not have to comply with the OSB's requirements.
[69] But in this case, contrary to Abderrazik, supra, there is no evidence that the OSB used its power to intervene for reasons extraneous to the case. Demanding that the applicants close some files in sequence, beginning with the oldest files, cannot be considered an unreasonable exercise of its power of intervention and supervision over the administration of the trustees.
[70] Furthermore, after repeating this request many times over several months, and each time being refused, the OSB attempted one last request in its letter of January 19, 2004, with advance notice, as in all the previous instances, that it would resort to conservatory measures. Once again, the applicants refused to comply with the directions. In such circumstances, it was not patently unreasonable to consider that the administration of the estates in the oldest files was compromised and that it was necessary to protect them by resorting to conservatory measures so that the administration of the files could be diligently wound up and the sums obtained would be paid to the creditors at the earliest opportunity.
[71] In my opinion, such a decision cannot be characterized as patently unreasonable since it is neither "clearly irrational" nor "evidently not in accordance with reason".
Procedural fairness
[72] The applicants argue that if the respondent should be found to have jurisdiction to issue the conservatory measures directions, her decision should nevertheless be set aside because she acted in a way that is inconsistent with procedural fairness and the principles of fundamental justice contained in paragraph 2(e) of the Canadian Human Rights Act, R.S.C. 1970, App. III.
[73] Although the decisions with procedural fairness implications that were made by the respondent have to do with the final decision that was made, the two should not be confused. Judicial review of an administrative decision is an exercise that differs from that of assessing procedural fairness: "The content of procedural fairness goes to the manner in which the Minister went about making his decision, whereas the standard of review is applied to the end product of his deliberations." (C.U.P.E. v. Ontario (Minister of Labour), [2003] 1 S.C.R. 539, paragraph 102.)
[74] Consequently, it is inappropriate to subject the issue of procedural fairness to the standard of review test (Moreau-Bérubé v. New Brunswick (Judicial Council), [2002] 1 S.C.R. 249, paragraph 74).
[75] Furthermore, the Court's review on the procedural fairness issue must be focussed on the alleged failings in the procedure and not on the final decision. If the decision is to be set aside for breach of procedural fairness, it will be the result of problems with the process - the fact, for example, that the parties were not given sufficient notice - and not the result of an assessment that the decision, in itself, was unfair.
[76] The Supreme Court explained in Baker, supra, that the concept of procedural fairness is specific to the context of the decision:
21 The existence of a duty of fairness, however, does not determine what requirements will be applicable in a given set of circumstances. As I wrote in Knight v. Indian Head School Division No. 19, [1990] 1 S.C.R. 653, at p. 682, "the concept of procedural fairness is eminently variable and its content is to be decided in the specific context of each case". All of the circumstances must be considered in order to determine the content of the duty of procedural fairness: Knight, at pp. 682-83; Cardinal, supra, at p. 654; Old St. Boniface Residents Assn. Inc. v. Winnipeg (City), [1990] 3 S.C.R. 1170, per Sopinka J.
[77] A number of factors are going to influence its content, including "the nature of the decision being made and the process following in making it"; "the nature of the statutory scheme"; "the importance of the decision to the individual or individuals affected"; "the legitimate expectations of the person challenging the decision"; and "the choices of procedure made by the agency itself" (Baker, supra, at paragraphs 23-28).
[78] In the case at bar, the OSB's decision to impose conservatory measures is closer to an administrative decision than to an adjudicative decision. This is apparent when one examines the statutory context. Unlike decisions made under the authority of section 14.01 of the Act, a hearing is not required in order to trigger the application of the conservatory measures contemplated by section 14.03 of the Act when any of the enumerated situations is present.
[79] As I pointed out in Groupe G. Tremblay Syndics Inc., supra, the legislation allows the OSB to act for the purpose of protecting the property of another. On the other hand, I recognize that the decision to issue conservatory measures has some significant repercussions for the applicants. "The more important the decision is to the lives of those affected and the greater its impact on that person or those persons, the more stringent the procedural protections that will be mandated." (Baker, supra, in paragraph 25; also Kane v. Board of Governors of the University of British Columbia, [1980] 1 S.C.R. 1105.)
[80] With these principles in mind, I am going to analyze the OSB's breaches of procedural fairness as alleged by the applicants.
[81] The applicants complain that the respondent never agreed to meet with them before issuing the conservatory measures. They also note that despite the many requests in this regard, they never received any answer as to the legal basis on which the OSB was relying in its request for a plan identifying the files that were going to be closed in sequence each month.
[82] In this case, I must take into consideration the efforts made by the OSB with its decision to begin the IAPO across the country, which led to a more specific investigation into the cases of administration of the applicants' active files. I note that once this process began between the OSB and the Syndics Marchand, the OSB informed the applicants that the failure to provide an acceptable closure plan could trigger some conservatory measures.
[83] The abundant correspondence exchanged between the applicants and the OSB indicates that the rules of natural justice were complied with since the applicants were informed on many occasions of the OSB's requirements and the consequences they were risking should they refuse to comply with those requirements.
[84] The applicants also think they had some legitimate expectations that a certain procedure would be followed. They state that the process contemplated by the IAPO program extended over a 12-month period, but that in their case the conservatory measures had been issued after only six months. I note, however, that the IAPO program required that a closure plan meeting the OSB's requirements be accepted at the outset. That did not happen in this case. The respondent did not contravene the procedure laid down by the IAPO program, therefore, since the applicants never provided an acceptable closure plan.
[85] In the circumstances, given the statutory framework, the OSB had no need to grant the applicants a hearing or to meet with them one last time, since all the previous attempts had proved unproductive. As I said in Groupe G. Tremblay, supra, a hearing is not necessary before taking conservatory steps since when they prove necessary it is imperative that the OSB act swiftly.
[86] I am satisfied, therefore, that the rules of natural justice were complied with in regard to the applicants and that the decision to issue conservatory measures directions does not contravene paragraph 2(e) of the Canadian Bill of Rights, supra.
[87] In conclusion, I draw attention to the settled principle that a superior court should not intervene in the exercise of a discretionary authority by an administrative body solely on the ground that it would not have made the same decision. As McIntyre J. noted in Maple Lodge Farms Limited v. Government of Canada et al., [1982] 2 S.C.R. 2, at pages 7 and 8:
Where the statutory discretion has been exercised in good faith and, where required, in accordance with the principles of natural justice, and where reliance has not been placed upon considerations irrelevant or extraneous to the statutory purpose, the courts should not interfere.
[88] That is the case in this instance. For these reasons the application for judicial review is dismissed with costs.
ORDER
THE COURT ORDERS that the application for judicial review be dismissed with costs.
"Danièle Tremblay-Lamer"
J.
Certified true translation
Jacques Deschênes, LL.B.
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-1116-04
STYLE: MARCHAND SYNDICS INC., Trustee
GEORGES E. MARCHAND, Trustee
BRUNO MARCHAND, Trustee
and
SYLVIE LAPERRIÈRE
PLACE OF HEARING: Québec, Quebec
DATE OF HEARING: September 22, 2004
REASONS FOR ORDER
AND ORDER: Madam Justice Danièle Tremblay-Lamer
DATED: November 10, 2004
APPEARANCES:
Daniel Des Aulniers
Jean-Philippe Gervais for the applicants
Bernard Letarte
Robert Monette for the respondent
SOLICITORS OF RECORD:
Grondin, Poudrier, Bernier
500 Grande-Allée E.
Suite 900
Québec, Quebec
G1R 2J7
Gervais et Gervais
500 Place d'Armes
Suite 2100
Montréal, Quebec
H2Y 2W2 for the applicants
Morris Rosenberg
Deputy Attorney General of Canada
Quebec Regional Office
Deblois & Associés, s.e.n.c.
Édifice Le Delta 1
2875 Laurier Blvd.
10th Floor
Ste-Foy, Quebec
G1V 2M2 for the respondent