Draft Overview of Trustee Professional Conduct Proceedings

Purpose

This document provides an overview of the process followed by the Office of the Superintendent of Bankruptcy (OSB) when conducting an investigation into the professional conduct of a trustee and when making a decision concerning a trustee's licence.

Background

The Superintendent of Bankruptcy (the Superintendent) has the authority under the Bankruptcy and Insolvency Act (BIA) to:

• issue a licence to a trustee once satisfied that the applicant is qualified (section 13 of the BIA);
• investigate the conduct of a trustee (paragraph 5(3)(e) of the BIA); and
• make a decision affecting a trustee's licence (cancel, suspend, impose conditions or limitations pursuant to subsections 13.2(5) and 14.01(1) of the BIA).

The Superintendent may appoint any person to make any inquiry or investigation of estates or other matters to which the BIA applies pursuant to paragraph 5(3)(e) of the BIA. Consistent with the OSB's professional conduct investigation process, the Superintendent assigns his roles of inquiry, investigation and prosecution to the Deputy Superintendent to ensure the Superintendent's impartiality when adjudicating a trustee professional conduct proceeding. Detailed information regarding a trustee professional conduct investigation is not shared with the Superintendent until the investigation is complete and the Deputy Superintendent forwards the professional conduct report to the OSB Registry.

Professional Conduct Investigation

An investigation into a trustee's professional conduct is initiated by an OSB employee (the investigator) when there is information to suggest that the trustee has not properly performed the duties of a trustee or there has been improper administration of an estate or lack of compliance with the BIA.

As part of the investigation, the investigator:

• informs the trustee in writing that an investigation is being undertaken;
• gathers and assesses evidence in relation to the allegations against the trustee(fact-finding), and reviews the results with the trustee; and
• determines, in consultation with the Deputy Superintendent, if the findings are sufficiently serious to support a recommendation for sanctions against the trustee's licence.

Following the fact-finding process and analysis, the investigator may conclude that the evidence does not warrant any sanctions against the trustee's licence. In these circumstances, the trustee is informed of the decision not to proceed any further.

However, the investigator may conclude that the evidence does warrant sanctions against the trustee's licence. The investigator will then prepare a draft professional conduct report.

Moreover, if the investigator has concerns, based upon reasonable grounds, that the trustee may have committed an offence as set out in the BIA or in the Criminal Code, the matter may also be referred to the Royal Canadian Mounted Police (RCMP) for investigation.

At various stages during the investigative process, the investigator communicates with the trustee in an effort to resolve the matter under investigation in a mutually agreeable manner. If it is possible to reach an agreement that may bring the matter or elements of it to a close, the proposed agreement will be forwarded to the Superintendent for consideration.

Mediation by a Third Party

When an agreement to conclude a professional conduct matter cannot be reached, mediation by a third party may be conducted before the professional conduct report is submitted.

When mediation fails to resolve the matter, the professional conduct report will be delivered to the trustee and to the Superintendent, along with recommendations regarding any sanctions to be imposed.

OSB Registry

The professional conduct report will be sent to the trustee and to the Superintendent by the Registry. Documents and correspondence regarding the professional conduct hearing shall be sent to the Registry at the following address:

Office of the Superintendent of Bankruptcy Registry
155 Queen Street, 4th Floor
Ottawa ON K1A 0H5
Telephone: 613-941-2694
Facsimile: 613-946-9205
Teletypewriter: 1-866-694-8389
Email: OSB-Registry-Registre-BSF-OSB-BSF@ic.gc.ca

Notice to the Trustee

The professional conduct report constitutes notice to the trustee pursuant to section 14.02 of the BIA. The trustee must advise the Superintendent in writing if they would like a hearing and whether they intend to make oral or written submissions.

Delegation

The Superintendent may decide to adjudicate the matter or may delegate that authority pursuant to subsection 14.01(2) of the BIA. For the purposes of this document, all references to the "adjudicator" refer to the Superintendent or the individual/panel to whom that authority has been delegated.

Hearing Process

The process for conducting a hearing is determined by the adjudicator and is set out in sections 14.01 and 14.02 of the BIA and in Directive No. 31, Procedure Governing Trustee Professional Conduct Proceedings. A hearing is normally preceded by a pre-hearing or case-management discussion. At a pre-hearing, the adjudicator seeks to narrow the issues to be decided, ensure relevant information has been prepared and shared by both parties, ensure expectations for the hearing process are well understood and establish timelines.

The OSB Registry maintains the hearing record, including the parties' submissions, all exhibits and any orders. The OSB Registry coordinates with the adjudicator and the parties to schedule the date, time and location of any pre-hearing conference and the hearing.

Where the trustee has requested a hearing and intends to make oral presentations, a notice of the hearing is posted on the OSB's website. It is also posted in each division office of the OSB with the names of the parties, along with the date, time and location of the hearing.

As per subsection 14.02(2)(c) of the BIA, the adjudicator shall deal with the matters set out in the professional conduct report as informally and expeditiously as the circumstances and a consideration of fairness permit. The investigator has the burden of proving the allegations in the professional conduct report on a balance of probabilities.

Record

The notice provided to the trustee (professional conduct report) and, where applicable, the summary of oral evidence, documentary evidence received by the adjudicator, any interlocutory decisions and the final decision form the record of the hearing. The record and the hearing are public, unless the adjudicator is satisfied that personal or other matters that may be disclosed are of such a nature that the desirability of avoiding public disclosure outweighs the desirability of public access to the record or the hearing in accordance with subsection 14.02(3) of the BIA.

Publication of the Decision

The decision of the adjudicator, with reasons therefore, shall be provided to the trustee no later than three months after the conclusion of the hearing in accordance with subsection 14.02(4) of the BIA. The decision will be posted on the OSB's website and in each division office of the OSB.

Review by the Federal Court

Pursuant to subsection 14.02(5) of the BIA, the decision is deemed to be a decision of a federal board, commission or tribunal and may be judicially reviewed by the federal court.