Pfeiffer v. Canada (Superintendent of Bankruptcy)

Pfeiffer v. Canada (Superintendent of Bankruptcy) Court (s) Database Federal Court of Appeal Decisions Date 2004-05-21 Neutral citation 2004 FCA 192 File numbers A-695-02 Notes Digest Decision Content Date: 20040521 Docket: A-695-02 Citation: 2004 FCA 192 CORAM: DESJARDINS J.A. DÉCARY J.A. PELLETIER J.A. BETWEEN: SYDNEY H. PFEIFFER and PFEIFFER & PFEIFFER INC. Appellants AND: THE SUPERINTENDENT OF BANKRUPTCY (MARC MAYRAND) and THE DEPUTY SUPERINTENDENT OF BANKRUPTCY (ALAIN LAFONTAINE) Respondents Heard at Québec, Quebec, on May 3, 2004. Judgment delivered at Ottawa, Ontario, on May 21, 2004. REASONS FOR JUDGMENT BY: DESJARDINS J.A. CONCURRED IN BY: DÉCARY J.A. PELLETIER J.A. Date: 20040521 Docket: A-695-02 Citation: 2004 FCA 192 CORAM: DESJARDINS J.A. DÉCARY J.A. PELLETIER J.A. BETWEEN: SYDNEY H. PFEIFFER and PFEIFFER & PFEIFFER INC. Appellants AND: THE SUPERINTENDENT OF BANKRUPTCY (MARC MAYRAND) and THE DEPUTY SUPERINTENDENT OF BANKRUPTCY (ALAIN LAFONTAINE) Respondents REASONS FOR JUDGMENT DESJARDINS J.A. [1] This is an appeal of a decision of a motions judge of the Federal Court ([2000] F.C.J. No. 1670) in which he struck an application for judicial review brought by the appellants. The basis of the motions judge ruling was that the appellants had violated two rules of the Federal Court Rules, 1998, (the Rules), namely, they had not filed their affidavits in a timely fashion according to rule 306 and they had joined two distinct orders in one application, contrary to rule 302. 1. The proceedings before the motions judge [2] On April 9, 2002, Robert Massé, Senior Evaluation Officer at the Office of the Superintendent of Bankruptcy, sent a letter to the appellants confirming that he was given a mandate to conduct an audit on their professional trustee practice. The audit started on May 1, 2002, and was interrupted on June 19, 2002, after Mr. Massé reported to his managers a lack of cooperation on the part of the appellants. [3] On July 4, 2002, the appellants were advised of the decision of the Deputy Superintendent of Bankruptcy to undertake an investigation to determine whether a sanction should be recommended to the Superintendent concerning the licenses they held under the Bankruptcy and Insolvency Act, (R.S. 1985, c. B-3) (the Act). [4] On July 5, 2002, the Deputy Superintendent of Bankruptcy issued conservatory measures under section 14.03 of the Act. The said conservatory measures were addressed to the Royal Bank of Canada, National Financial Inc., Marcel Therrien, and the Official Receiver appointed under the Act, ordering them, inter alia, not to pay bills of exchange, cheques, bank drafts, certificates of exchange before the receipt of the conservatory measures, without a signature of certain named co-signers. [5] On July 10, 2002, the appellants filed an application for judicial review in respect of the decisions of the respondents to undertake an investigation of the appellants and issue conservatory measures. [6] The application indicated that the following material would be filed: (a) the affidavit of Sidney H. Pfeiffer and exhibits thereto; (b) the affidavit of Pauline Viau and exhibits thereto; (c) the affidavit of Diane Cloutier and exhibits thereto. [7] The appellants requested, in their application, that the respondents transmit to them the following: (i) all statements received by the respondents from third parties considering the administration of estates by the appellants, including any complaints made concerning the administration of estates; (ii) the entire discipline file kept by the respondents concerning the appellants from April 1992 to the present, including all internal memoranda, analyses, comments, referrals, opinions and any evidence gathered by the respondents since September 1999. [8] On August 21, 2002, the appellants filed a motion for direction under rule 318(3) and an order under rule 318(4), as well as for an order extending or abridging the time for the appellants to serve and file their evidence under rules 8 and 306. The appellants claimed that the documents requested by them in their notice of application were not provided within the twenty days required by rule 318(1). They informed the Court that the respondents had refused to provide the documents requested on the basis that such documents had been filed before the Federal Court so as to obtain an ex parte order, which was rendered by Blanchard J. on July 5, 2002, in Alain Lafontaine v. Pfeiffer & Pfeiffer Inc. et al., file no. T-1031-02. Since these documents had been sent to the appellants on July 9, 2002, the respondents felt they had complied with rule 317 and objected, under rule 318(2), to any further transmissions of documents. [9] The appellants contended, in their motion under rule 318(3) and (4), that the documentation provided to Blanchard J. on July 5, 2002, was deficient in that it did not disclose the fact that the respondents had referred the file of the appellants to the RCMP and that other documents would have been in the possession of the respondents at the time the decision was made to undertake an investigation and had not been transmitted. [10] The appellants claimed that the information requested was required in order to prepare their evidence in support of their application. They stated that they were delayed in the presentation of their evidence by the refusal of the respondents to provide the record requested and that, as a result of the discovery of a pre-existing investigation by the RCMP, an amendment to their notice of application may be required. No facts were given however to explain how, why and to what extent the alleged undisclosed RCMP investigation had any bearing on the appellants' capacity to provide evidence in support of their application. Furthermore, no facts were given to explain the impact of other documents on the preparation of the necessary affidavits. [11] On October 2, 2003, the respondents filed their motion to strike pursuant to rule 221(a)(b) and (e). They invoked violation by the appellants of rules 306 and 302. 2. The relevant rules [12] The relevant rules, referred to in this decision, are the following: PART 3 RULES APPLICABLE TO ALL PROCEEDINGS Failure to Comply with Rules Motion to attack irregularity 58. (1) A party may by motion challenge any step taken by another party for non-compliance with these Rules. When motion to be brought (2) A motion under subsection (1) shall be brought as soon as practicable after the moving party obtains knowledge of the irregularity. PART 4 ACTIONS APPLICATION OF THIS PART 169. Application - This Part applies to all proceedings that are not application or appeals ... [...] STRIKING OUT PLEADINGS Motion to strike 221. (1) On motion, the Court may, at any time, order that a pleading, or anything contained therein, be struck out, with or without leave to amend, on the ground that it (a) discloses no reasonable cause of action or defence, as the case may be, (b) is immaterial or redundant, [...] (e) constitutes a departure from a previous pleading, [...] PART 5 APPLICATIONS Limited to single order 302. Unless the Court orders otherwise, an application for judicial review shall be limited to a single order in respect of which relief is sought. Applicant's affidavits 306. Within 30 days after issuance of a notice of application, an applicant shall serve and file its supporting affidavits and documentary exhibits. MATERIAL IN THE POSSESSION OF A TRIBUNAL Material from tribunal 317. (1) A party may request material relevant to an application that is in the possession of a tribunal whose order is the subject of the application and not in the possession of the party by serving on the tribunal and filing a written request, identifying the material requested. Material to be transmitted 318. (1) Within 20 days after service of a request under rule 317, the tribunal shall transmit (a) a certified copy of the requested material to the Registry and to the party making the request; or (b) where the material cannot be reproduced, the original material to the Registry. Objection by tribunal (2) Where a tribunal or party objects to a request under rule 317, the tribunal or the party shall inform all parties and the Administrator, in writing, of the reasons for the objection. Directions as to procedure (3) The Court may give directions to the parties and to a tribunal as to the procedure for making submissions with respect to an objection under subsection (2). Order (4) The Court may, after hearing submissions with respect to an objection under subsection (2), order that a certified copy, or the original, of all or part of the material requested be forwarded to the Registry. PARTIE 3 RÈGLES APPLICABLES À TOUTES LES INSTANCES Inobservation des règles Requête en contestation d'irrégularités 58. (1) Une partie peut, par requête, contester toute mesure prise par une autre partie en invoquant l'inobservation d'une disposition des présentes règles. Exception (2) La partie doit présenter sa requête aux termes du paragraphe (1) le plus tôt possible après avoir pris connaissance de l'irrégularité. PARTIE 4 ACTIONS CHAMP D'APPLICATION 169. Application - La présente partie s'applique aux instances , autres que les demandes et les appels, ... [...] RADIATION D'ACTES DE PROCÉDURE Requête en radiation 221. (1) À tout moment, la Cour peut, sur requête, ordonner la radiation de tout ou partie d'un acte de procédure, avec ou sans autorisation de le modifier, au motif, selon le cas : a) qu'il ne révèle aucune cause d'action ou de défense valable; b) qu'il n'est pas pertinent ou qu'il est redondant; [...] e) qu'il diverge d'un acte de procédure antérieur; [...] PARTIE 5 DEMANDES Limites 302. Sauf ordonnance contraire de la Cour, la demande de contrôle judiciaire ne peut porter que sur une seule ordonnance pour laquelle une réparation est demandée. Affidavits du demandeur 306. Dans les 30 jours suivant la délivrance de l'avis de demande, le demandeur dépose et signifie les affidavits et les pièces documentaires qu'il entend utiliser à l'appui de la demande. OBTENTION DE DOCUMENTS EN LA POSSESSION D'UN OFFICE FÉDÉRAL Avis à l'office fédéral 317. (1) Une partie peut demander que des documents ou éléments matériels pertinents à la demande qui sont en la possession de l'office fédéral dont l'ordonnance fait l'objet de la demande lui soient transmis en signifiant à l'office fédéral et en déposant une demande de transmission de documents qui indique de façon précise les documents ou éléments matériels demandés. Documents à transmettre 318. (1) Dans les 20 jours suivant la signification de la demande de transmission visée à la règle 317, l'office fédéral transmet : a) au greffe et à la partie qui en a fait la demande une copie certifiée conforme des documents en cause; b) au greffe les documents qui ne se prêtent pas à la reproduction et les éléments matériels en cause. Opposition de l'office fédéral (2) Si l'office fédéral ou une partie s'opposent à la demande de transmission, ils informent par écrit toutes les parties et l'administrateur des motifs de leur opposition. Directives de la Cour (3) La Cour peut donner aux parties et à l'office fédéral des directives sur la façon de procéder pour présenter des observations au sujet d'une opposition à la demande de transmission. Ordonnance (4) La Cour peut, après avoir entendu les observations sur l'opposition, ordonner qu'une copie certifiée conforme ou l'original des documents ou que les éléments matériels soient transmis, en totalité ou en partie, au greffe. 3. The decision of the motions judge [13] The appellants requested, at the hearing before the motions judge, that their motion pursuant to rule 318 be adjourned sine die on account of a pending appeal of an objection made by the respondents during the cross-examination of the Deputy Superintendent, Mr. Lafontaine. It was the appellants' view that the appeal should be decided prior to a ruling on the motion. The motions judge adjourned the 318 motion sine die, as requested. [14] The motions judge indicated, however, that the appellants had a convincing argument concerning two documents that the Deputy Superintendent, Mr. Lafontaine, had before him when he made his decision and which had not been provided to the appellants. During the adjournment, the respondents provided the appellants with these two documents. One, dated June 26, 2002, was a summary of six pages as to the reasons the investigation had been interrupted and why it should go on. The other, dated June 27, 2002, was a summary of earlier documents. It concluded with a recommendation that the investigation into the conduct of the appellants be commenced. [15] The appellants submitted to the motions judge that since their motion pursuant to rule 318 was pending, they were automatically relieved of their obligation to file supporting affidavits and documentary exhibits under rule 306. The motions judge rejected the argument. He held that the appellants were obligated to comply with rule 306 and had given no valid reasons to justify the delay. [16] The motions judge considered the respondents' second contention, that the appellants' application for judicial review violated rule 302. He held that the decision of the respondents to investigate the professional practice of the appellants was distinct from the issuance of conservatory measures. The application for judicial review of the appellants was therefore in violation of rule 302 since two decisions had been joined in one application. [17] The motions judge did not make any specific ruling with regard to the appellants' motion under rule 306. In his formal judgment, he granted the respondents' motion to strike. By doing so, he implicitly rejected the appellants' motion for an extension of time under rule 306. 4. Analysis [18] With regard to their motion for an extension of time under rule 306, the appellants claim that, while there is no case law directly on point, except possibly Gabriel Azouz v. Attorney General of Canada, 99 DTC 5402 (F.C.T.D.), the logic behind rules 306, 317 and 318 suggests that since the federal board has twenty days from the service of the notice of application to transmit relevant documents, such transmissions must necessarily occur prior to the thirty days requirement of rule 306. This, the appellants say, would give them ten days to file their affidavits in full cognizance of the facts that were before the federal board when the decision was made. If the board refuses to transmit the documents, the appellants are justified in not filing their affidavits until they receive the documents from the board (note in this regard a decision of Reed J. in Abaev v. Canada (Minister of Citizenship and Immigration), [1999] F.C.J. No. 322, in support of this proposition). [19] The respondents cited, for a contrary view, the following decisions: Marwin v. Canada (Minister of Employment and Immigration) (F.C.A.), [1989] F.C.J. No. 116; McAleer v. Canada (Canadian Human Rights Commission) (1997), 221 N.R. 78 (F.C.A.); Saran v. Canada (Minister of Citizenship and Immigration), [1995] F.C.J. No. 384 (F.C.T.D.). None of these cases, however, are on all four with the case at bar. [20] In my view, the obligation directed to the appellants under rule 306 exists independently from the one imposed on the respondents by rule 318. The obligation under rule 306 is not conditional on the fulfilment of the one which exists under rule 318. There may be situations however when an applicant may find it necessary to obtain documents from a board prior to the filing of affidavits. In such cases, the motion requesting an extension of time would need to spell in detail the reasons why such fulfilment is necessary. This was not done in the case at bar. The motion filed by the appellants is void of reasons indicating to the Court the link that would exist between the requested documents and the evidence in support of the notice of application so as to justify the delay in filing the necessary affidavits. The motions judge was therefore justified in rejecting the appellants' contention in the absence of valid reasons. [21] Considering, however, that, at the hearing on the motion, the appellants were given two documents that had not been served in a timely fashion, the motions judge, in fairness to the appellants, should have extended the time for filing affidavits so as to allow the appellants to examine these two documents. [22] With regard to the alleged violation under rule 302, the appellants explain that the conservatory measures pronounced on July 5, 2002, are dependent on the validity of the decision to investigate, dated July 4, 2002. If the investigation is invalid, so are the conservatory measures. As a consequence, the appellants say, since the second decision does not have a life of its own, the second decision is not distinct. It is simply an accessory to the first. Only one decision is therefore impugned. [23] The appellants rely on paragraph 5(3)(e) of the Act, which empowers the Superintendent of Bankruptcy to: (e) make or cause to be made such inspection or investigation of estates ... [...] [Emphasis added.] e) effectue ou fait effectuer les investigations ou les enquêtes, au sujet des actifs ... [...] [Non souligné dans l'original.] [24] Subsection 14.03(1), and paragraph 14.03(2)(b) further read: Conservatory measures 14.03 (1) The Superintendent may, for the protection of an estate in the circumstances referred to in subsection (2), (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; (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; (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 (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). 14.03(2) Circumstances (2) The circumstances in which the Superintendent is authorized to exercise the powers set out in subsection (1) are where [...] (b) the Superintendent makes or causes to be made any investigation pursuant to paragraph 5(3)(e); [...] [Emphasis added.] Mesures conservatoires 14.03 (1) Pour assurer la sauvegarde d'un actif dans les circonstances visées au paragraphe (2), le surintendant peut_: 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; 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; 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) 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). 14.03(2) Circonstances (2) Le surintendant peut exercer les pouvoirs visés au paragraphe (1) dans les circonstances suivantes_: [...] b) la tenue par lui de l'enquête prévue à l'alinéa 5(3)e); [...] [Non souligné dans l'original.] [25] The appellants submit that paragraph 5(3)(e) distinguishes an audit from an investigation and that paragraph 14.03(2)(b) makes it clear that conservatory measures can only be pronounced within the framework of an investigation. Conservatory measures, they say, are therefore part of the investigation process and should be considered part of the investigation decision. [26] The fact of the matter, however, is that conservatory measures are not necessarily pronounced in the course of every investigation. They are pronounced "for the protection of an estate" which presupposes that the assets are in a state of danger. This Court, in Tremblay v. Canada (Superintendent of Bankruptcy) (2001), 277 N.R. 376 (F.C.A.) at page 9, stated that "[a] person using or wishing to use conservatory measures must have reasonable grounds to believe the estate is threatened and it is necessary to preserve it". Conservatory measures answer to different criteria than those of the investigation itself. It is conceivable that, in some cases, conservatory measures could be set aside while the investigation itself could be held valid. A decision to issue conservatory measures is therefore distinct from a decision to investigate. [27] Under the terms of rule 302, an application for judicial review is limited to a single order of which relief is sought. Two applications should therefore have been filed. [28] The remedy to be pronounced in case of violation of rule 302 is however not the granting of a motion to quash. The motions judge should have given the appellants extended time to file nunc pro tunc two applications for judicial review in replacement of the one they filed earlier. [29] A word should be said finally about the use by the respondents of rule 221. [30] Rule 221 is found in Part 4 of the Rules. According to rule 169, this Part "applies to all proceedings that are not applications or appeals ...". Rule 221 should therefore not have been used in the circumstances of this case. It is true that, in exceptional circumstances, there is jurisdiction, either inherent or through Rule 4 by analogy to other rules, to dismiss a notice of application in a summary manner if it is so clearly improper as to be bereft of any possibility of success (David Bull Laboratories (Can.) Inc. v. Pharamacia Inc., [1995] 1 F.C. 588, 58 C.P.R. (3d) 209 (sub. nom.) and Pharmacia Inc. v. Canada (Min. of National Health & Welfare) 176 N.R. 48 (C.A.)). But this was not such a case either, as only procedural matters were invoked. [31] A motion under rule 58 would have been more appropriate, considering that rules 56 to 60 are found in Part 3, under the heading "RULES APPLICABLE TO ALL PROCEEDINGS" and that they come specifically under the heading: "Failure to Comply with Rules". [32] Rule 59 empowers the Court to proceed in a number of ways, including, in paragraph (c), to: (c) set aside the proceeding in whole or in part. c) annuler l'instance en tout ou en partie. [33] In view of rule 56, which reads, 56. Non-compliance with any of these Rules does not render a proceeding, a step in a proceeding or an order void, but instead constitutes an irregularity, which may be addressed under rules 58 to 60. [Emphasis added.] 56. L'inobservation d'une disposition des présentes règles n'entache pas de nullité l'instance, une mesure prise dans l'instance ou l'ordonnance en cause. Elle constitue une irrégularité régie par les règles 58 à 60. [Non souligné dans l'original.] the setting aside of a proceeding in whole should be done in exceptional circumstances only. 5. Conclusion [34] I would allow this appeal with costs here and below, and I would set aside the decision of the motions judge. I would then pronounce the following order: · The appellants should be given leave to file nunc pro tunc, within 15 days of the present judgment, in replacement of their notice of application for judicial review dated July 10, 2002, two separate notices of application for judicial review, one dealing with the respondents' decision dated July 4, 2004, the investigation decision, and a second dealing with the respondents' conservatory measures dated July 5, 2004. Only one set of fees for filing should be required. · The appellants should file their supporting affidavits and documentary exhibits in each application within 30 days of the present judgment. J.A. FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-695-02 STYLE OF CAUSE: SYDNEY H. PFEIFFER and PFEIFFER & PFEIFFER INC. v. THE SUPERINTENDANT OF BANKRUPTCY (MARC MAYRAND) and THE DEPUTY SUPERINTENDANT OF BANKRUPTCY (ALAIN LAFONTAINE) PLACE OF HEARING: QUÉBEC, QUEBEC DATE OF HEARING: MAY 3, 2004 REASONS FOR JUDGMENT BY: DESJARDINS J.A. CONCURRED IN BY: DÉCARY J.A. PELLETIER J.A. DATED: MAY 21, 2004 APPEARANCES: Me Aaron Rodgers FOR THE APPELLANTS Me Vincent Veilleux Me Robert Monette FOR THE RESPONDENTS SOLICITORS OF RECORD: Montréal, Quebec FOR THE APPELLANTS Québec, Quebec FOR THE RESPONDENTS