Weddell (Re), 2016 ABQB 248

Court of Queen ’ s Bench of Alberta Citation: Weddell (Re), 2016 ABQB 248 Date: 20160503 Docket: BE03 378032 Registry: Edmonton In the Matter of the Proposal of Annjanette Ruth Weddell and In the Matter of the Prior Bankruptcy of Annjanette Ruth Weddell Between: A.C.

Waring & Associates Inc., Proposal Trustee of the Estate of Annjanette Ruth Weddell and Former Trustee In Bankruptcy of the Estate of Annjanette Ruth Weddell and Arthur Charles Waring Applicants - and - Institute of Chartered Accountants of Alberta, Annjanette Ruth Weddell and Office of the Superintendent of Bankruptcy Respondents - and - Minister of Justice and Solicitor General of Alberta Intervener _______________________________________________________

Reasons for Judgment of the Honourable Mr. Justice K.G. Nielsen _______________________________________________________ I. Introduction [ 1 ] Arthur Charles Waring (Waring) and A.C.

Waring & Associates Inc. (Corporate Trustee) (collectively, the Applicants) seek a declaration that the Regulated Accounting Profession Act , RSA 2000, c R-12 ( RAPA ) has no application to actions taken by Waring or the Corporate Trustee in relation to either the bankruptcy proceedings or the Division 1 Proposal of Annjanette Ruth Weddell (Weddell) pursuant to the Bankruptcy and Insolvency Act , RSC 1985, c B-3 as amended ( BIA ) (the Application). [ 2 ] The Applicants provided notices to the Attorney General of Canada and the Minister of Justice and Solicitor General of Alberta (the Minister of Justice) pursuant to s 24 of the Judicature Act , RSA 2000, c J-2.

The Minister of Justice intervened in the Application. Neither the Attorney General of Canada, nor the Respondent, Office of the Superintendent of Bankruptcy (OSB), took

part in the Application. II. Background [ 3 ] Weddell was involved in a prior bankruptcy in 1996. [ 4 ] Effective June 30, 2010, Weddell made a voluntary assignment into bankruptcy. The Corporate Trustee was appointed as trustee of Weddell’s estate. [ 5 ] Weddell filed a complaint regarding the Applicants with the OSB in December 2010. In or around December 2010, a representative of the OSB advised Waring that Weddell had filed a complaint with the OSB against him and the Corporate Trustee but she had apparently told the OSB to hold the complaint in abeyance as it was her intention to seek a different trustee.

To Waring’s knowledge, nothing came of that complaint. [ 6 ] On December 7, 2011, Weddell filed a Consumer Proposal (the Consumer Proposal) pursuant to Division II of

Part III of the BIA through Leon Miller Group Inc. The Corporate Trustee applied to this Court sitting in bankruptcy and insolvency for an Order annulling the Consumer Proposal. The application to annul the Consumer Proposal was granted on February 8, 2012. [ 7 ] On March 20, 2013, Weddell filed a Commercial Proposal pursuant to Division I of

Part III of the BIA with the Corporate Trustee (the Commercial Proposal). Weddell is still operating pursuant to the terms of the Commercial Proposal and will be doing so until 2018. [ 8 ] Over the course of the bankruptcy administration, Weddell has submitted some further 40 complaints about the Applicants to the OSB, both by telephone and by letters of complaint. [ 9 ] In a letter dated December 7, 2012, an OSB Bankruptcy Analyst responded to Weddell with respect to these complaints. The complaints were grouped into 15 categories.

The Bankruptcy Analyst determined that with respect to the 15 categories of complaints: − Waring and the Corporate Trustee had complied with the BIA ; − the complaint was not within the OSB’s mandate to review and Weddell was referred to the Court; − the OSB took no positon; or − the OSB did not intend to take further action. [ 10 ] In November 2013, Weddell filed further complaints with the OSB. In a letter dated December 10, 2013, the same OSB Bankruptcy Analyst responded to Weddell with respect to the further complaints.

With respect to these additional complaints, the OSB: − determined that certain actions of Waring and the Corporate Trustee had complied with the BIA ; − determined that other actions had not complied with the BIA and directed Waring and the Corporate Trustee to rectify the issue; or − made no specific determination with respect to the complaint. [ 11 ] By letter dated March 23, 2015, Weddell complained about Waring to the Institute of Chartered Accountants of Alberta (the Institute). The Institute received the letter of complaint on March 25, 2015 (the Institute Complaint).

In the Institute Complaint, Weddell complained of: − Waring’s continued refusal to provide information related to Weddell’s file;

− breach of trust (honesty and integrity); − breach of provincial legislation; − lack of transparency; − misleading justice; − collusion; − threats and intimidation tactics; − defamation of character; and − falsifying documents. [ 12 ] By letter dated July 31, 2015, the Institute advised Waring that an investigation would be conducted with respect to the Institute Complaint pursuant to s 76(1) of RAPA . [ 13 ] The Institute has agreed to suspend the investigation of the Institute Complaint until this Application has been heard and decided. III.

Evidence [ 14 ] In Waring’s Affidavit sworn on September 18, 2015 in this matter, he deposed that he had contacted the OSB shortly before swearing the Affidavit and had been advised that there were no outstanding complaints at that time against himself or the Corporate Trustee with respect to the bankruptcy or Commercial Proposal of Weddell and all complaints had been dealt with. [ 15 ] Tony Ratcliffe was appointed to conduct the investigation for the Institute. Waring has deposed that Mr. Ratcliffe advised him that he is a retired policeman. Further, to Waring’s knowledge, Mr.

Ratcliffe is not a trustee in bankruptcy or a member of Canadian Association of Insolvency and Restructuring Professionals (CAIRP), nor does he have any knowledge or training in relation to the administration of a bankruptcy estate or a proposal estate. [ 16 ] Waring has further deposed that to his knowledge, neither the Institute nor the Chartered Professional Accountants of Alberta (CPAA) has a trustee in bankruptcy on staff, nor anyone with knowledge of, or a background in, insolvency work. [ 17 ] Weddell filed an Affidavit in response to the Application and was cross-examined on that Affidavit.

She deposed, inter alia , that the reason she chose Waring and the Corporate Trustee in her bankruptcy proceedings was because Waring held himself out as a Chartered Accountant. She attached as exhibits to her Affidavit excerpts from the web page information for the Corporate Trustee. Those documents indicate that Waring is a Chartered Accountant and that the Corporate Trustee has professional affiliations with, inter alia , the Institute and CAIRP. Weddell also exhibited a letter from the Corporate Trustee, the letterhead of which indicates that Waring is a Chartered Accountant. IV.

Regulatory Bodies [ 18 ] At the time of Weddell’s complaints, the Institute was the governing body for Chartered Accountants in Alberta pursuant to RAPA . [ 19 ] On July 1, 2015, the Chartered Professional Accountants Act , SA 2014, c C-10.2 was proclaimed in force. On that date, the Institute, the Certified General Accountants Association of Alberta and the Society of Management Accountants of Alberta were amalgamated into the CPAA.

Section 159(2) of that the Chartered Professional Accountants Act provides that any complaint with respect to a member of the Institute made prior to July 1, 2015 must be concluded pursuant to the provisions of RAPA . Therefore, the provisions of RAPA apply to this matter. The Institute is the professional body involved in the issues in the Application. [ 20 ] Waring was a member of the Institute from 1992 to July 1, 2015 when he became a member of the CPAA. His application to the Institute indicates that he was also member of the Institute of Chartered Accountants of Ontario, and had been since 1977.

The application also indicates that he had been a member of the Institute of Chartered Accountants of Saskatchewan.

The Corporate Trustee is not a registered member of CPAA nor was it ever registered as a member of the Institute. [ 21 ] When Waring applied for membership in the Institute in 1992, he made the following solemn declaration: I agree that if I register as a member I will be governed by the said Act [ Alberta Chartered Accountants Act ] and by the Regulations, By- laws and Rules enacted, and to be made and enacted, by the Institute of Chartered Accountants of Alberta. [ 22 ] Waring has been a general member of CAIRP or its predecessor since 1984.

CAIRP is a non-profit national professional organization established in 1979 which, according to its handbook, was established “to advance the practice of insolvency administration and the public interest related to it”. The members of CAIRP act as trustees in bankruptcy, receivers, agents, monitors and consultants in insolvency and restructuring matters. A trustee in bankruptcy may, but is not required to, be a member of CAIRP. CAIRP has enacted Rules of Professional Conduct governing the conduct of its members. Rule 13 provides that a member of CAIRP shall observe at all times the bylaws, rulings,

interpretations, standards and other pronouncements of CAIRP and to the extent applicable to the work of trustees, receivers, managers, agents, liquidators and other individuals involved in the practice of insolvency administration, observe the

rules,

interpretations, standards and other pronouncements of the Canadian Institute of Chartered Accountants and the provincial Institute of Chartered Accountants of the province in which the member of CAIRP normally resides. [ 23 ] Waring has been licenced as a trustee pursuant to the BIA since 1985. The Corporate Trustee has held a corporate licence as trustee pursuant to the BIA since 1994. The Corporate Trustee has 12 staff members. Waring is the sole director and shareholder of the Corporate Trustee. Waring has not performed any public accounting work since 1985.

The Corporate Trustee undertakes only bankruptcy and insolvency work and does not do any public accounting work. No evidence was provided as to the terms of the application for licensing at the relevant times. [ 24 ] Pursuant to s 5 of the BIA , a Superintendent of Bankruptcy (the Superintendent) is appointed with the general purpose of overseeing and supervising matters falling under the BIA . The OSB employs staff and maintains offices throughout Canada. [ 25 ] Pursuant to s 5(3) of the BIA , the Superintendent has duties and responsibilities in relation to the licencing of trustees.

The Superintendent has authority pursuant to s 5(4)(

d) of the BIA to issue directives governing the criteria to be applied by the Superintendent in determining whether a trustee licence is to be issued to a person, and governing the qualifications and activities of trustees. [ 26 ] In June 1979 a document entitled “Licencing Policy Relating to Individuals” was issued pursuant to the then Bankruptcy Act . The Licencing Policy Relating to Individuals provided that an applicant for a trustee licence “must enjoy a good reputation in the community”. [ 27 ] On July 1, 1989 a document entitled “Trustee Licencing Policy” was issued pursuant to the then Bankruptcy Act .

Section 4.02 of

Part 2 of the Trustee Licencing Policy provided that minimum qualifications required of an applicant included that the applicant “must be of good character and reputation”.

Section 8 of

Part 1 of the Trustee Licencing Policy provided guidelines as to what constituted good character and reputation. [ 28 ] On March 31, 2000, the Superintendent issued Directive No. 13 entitled “Trustee Licencing”. Directive No. 13 replaced the Trustee Licencing Policy.

Section 9(

e) of Directive No. 13 provided that an individual applying for a licence as a trustee must “be in good standing with, and not subject to any current disciplinary action by any professional organization of which the applicant is a member”.

Section 13 provided that an applicant must satisfy the Superintendent that any past findings of guilt of professional misconduct were not of a commercial or economic nature or were not likely to impair the public confidence in the applicant or in the bankruptcy and insolvency system in general. [ 29 ] Similar provisions have been contained in the revisions to Directive No. 13 including Revision 6 issued by the Superintendent on June 17, 2015 (the Directive). [ 30 ] The current requirements with respect to licencing are set out in the Directive.

The Directive provides that an applicant applying for an individual trustee licence must complete certain programs and examinations which are administered by CAIRP pursuant to a Memorandum of Understanding entered into between the Superintendent and CAIRP. The applicant must satisfy the Superintendent that s/he has “adequate knowledge, experience and skills to carry out the duties of a trustee”. Accreditation as a chartered accountant is not required in order to obtain a trustee licence. [ 31 ] Sections 9 and 10 of the Directive are applicable to applicants who are members of professional organizations: 9.

An applicant shall be in good standing with, and not be subject to, any current disciplinary action by any professional organization of which the applicant is or was a member. 10.

An applicant who has been found guilty of professional misconduct by any professional organization of which the applicant is or was a member shall satisfy the Superintendent that such finding is not of a nature that would impair the trustee’s capacity to perform his or her fiduciary duties or impair public confidence in the bankruptcy and insolvency system. [ 32 ] The current Application Form to be completed by applicants for a trustee licence provides that the applicant must disclose any professional organizations of which the applicant is or was a member and whether the applicant has ever been found guilty of professional misconduct by any such professional organization.

In addition, the applicant must attest that he or she is in good standing with and not subject to any current disciplinary proceedings by any professional organization of which the applicant is or was a member. [ 33 ]

Section 13.5 of the BIA provides that a trustee shall comply with the prescribed Code of Ethics. The Code of Ethics for trustees is set out in Rules 34 to 53 of the Bankruptcy and Insolvency General Rules , CRC, c 368 made under the BIA . V. Legislation A. BIA [ 34 ] The following sections of the BIA are relevant to the Application: 26(2) The estate books, records and documents relating to the administration of an estate are deemed to be the property of the estate, and, in the event of any change of trustee, shall forthwith be delivered to the substituted trustee.

(3) The trustee shall permit the books, records and documents referred to in subsection (2) to be inspected and copies of them made by the Superintendent, the bankrupt or any creditor or their representative at any reasonable time. ...

37 Where the bankrupt or any of the creditors or any other person is aggrieved by any act or decision of the trustee, he may apply to the court and the court may confirm, reverse or modify the act or decision complained of and make such order in the premises as it thinks just. ... 215 Except by leave of the court, no action lies against the Superintendent, an official receiver, an interim receiver or a trustee with respect to any report made under, or any action taken pursuant to, this Act. B. RAPA [ 35 ] The following sections of RAPA are relevant to the Application: Purpose of the Act 2 The purpose of this Act is (

a) to protect the interest of the public, (

b) to protect the integrity of the profession governed by this Act, (

c) to promote and increase the competence of registrants, and (

d) to regulate the conduct of registrants. ...

Part 5 Complaints Inquiry Process Division 1 Purpose and Jurisdiction Purpose 65(1) The purpose of this

Part is (

a) to protect the public interest, (

b) to enforce practice standards and rules of professional conduct for registrants, (

c) to provide a means by which complaints about the conduct of registrants and former registrants can be dealt with in a fair and expeditious way, and (

d) to preserve the integrity of the accounting profession. ... Complaints 67(1) Any person may make a complaint to an accounting organization about the conduct of a registrant or former registrant. ... Duty of the CIC chair 76(1) On receipt of a complaint and results of a review from the CIC secretary, the CIC chair must (

a) direct that no further action be taken regarding the complaint if (

i) the CIC chair is of the view that the conduct is not unprofessional conduct, (ii) the CIC chair is of the view that the conduct is not within the jurisdiction of the complaints inquiry committee or a discipline tribunal, or (iii) the CIC chair is of the view that the conduct complained about is too minor to warrant any sanction or further investigation, or (

b) appoint an investigator to investigate any matter.

(2) If the CIC chair directs that no further action be taken, the CIC chair must notify the investigated party and the complainant of the decision and give them a written explanation of it.

(3) If the CIC chair appoints an investigator, the CIC chair must provide a notice of investigation to the investigated party and the

complainant. ... Investigation powers 78(1) For the purpose of conducting an investigation, an investigator (

a) may, at any reasonable time, require a registrant or former registrant (

i) to attend meetings with the investigator or others, (ii) to answer any questions the investigator may have relating to the investigation and to answer the questions under oath, and (iii) to give to the investigator any records, information or thing that, in the opinion of the investigator, is or may be relevant to the investigation that the registrant or former registrant possesses or that is under the control of the registrant or former registrant, and (

b) may require a registrant or former registrant to give up possession of any records, information or thing described in clause (

a) to allow the investigator to take it away to copy, examine or perform tests on it, in which case the investigator must return it within a reasonable time of being given it but must return it after a hearing is completed and any right to an appeal is expired, and the registrant or former registrant must comply.

(2) The investigator may copy and keep copies of any records, information or thing given under subsection (1).

(3) An accounting organization, on the request of an investigator or its CIC chair, may apply to the Court of Queen’s Bench for (

a) an order directing a registrant or former registrant to comply with all or part of subsection (1), (

b) an order directing any other person (

i) to attend meetings with the investigator to answer any questions the investigator may have relating to the investigation and to answer those questions under oath, if the investigator requires, and (ii) to give to the investigator any records, information or thing that, in the opinion of the investigator, is or may be relevant to the investigation that the person possesses or that is under the control of the person, and (

c) an order directing any person to give up possession of any records, information or thing described in clause (

b) to allow the investigator to take it away to copy, examine or perform tests on it and return it within a reasonable time of being given it. ... Duty of complaints inquiry committee 79(1) Within a reasonable time after receipt of the investigator’s report, the complaints inquiry committee must (

a) direct that a further or other investigation be carried out by the same or another investigator under

section 77, (

b) decide that no further action is to be taken, in which case the complaints inquiry committee may also make recommendations or provide guidance in respect of future conduct or practice, or (

c) refer one or more allegations of unprofessional conduct to the discipline tribunal roster chair. ... Discipline tribunal hearing 81(1) When an allegation of unprofessional conduct is referred to the discipline tribunal roster chair, the chair must, in accordance with

section 123, convene a discipline tribunal to conduct a hearing into the allegation. ... Compellable witnesses 86(1) The investigated party and any other person who, in the opinion of the discipline tribunal, has knowledge relevant to the allegations of unprofessional conduct referred to it are compellable witnesses in any proceeding under this Act. ... Civil contempt proceedings 89(1) Proceedings for civil contempt of court may be brought against a witness

(

a) who fails (

i) to attend before a discipline tribunal in accordance with a notice to attend, or (ii) to produce records in accordance with a notice to produce them, (

b) who refuses to be sworn, or (

c) who refuses to answer any question that the person is directed to answer by a discipline tribunal. ... Unprofessional conduct 91(1) A discipline tribunal may find any of the following to be unprofessional conduct: (

a) conduct that is detrimental to the best interests of the public or harms the integrity of the accounting profession; (

b) conduct that contravenes this Act, the regulations or the bylaws; (

c) conduct that contravenes the rules of professional conduct or practice standards; (

d) conduct that displays a lack of competence; (

e) the contravention of or failure to comply with (

i) an order of a discipline tribunal, an appeal tribunal, the Court of Queen’s Bench or the Court of Appeal, (ii) a discipline order or undertaking made under a former Act, or (iii) a restriction, condition or undertaking on registration or practice made under a former Act; (

f) the failure or refusal to abide by a settlement agreement entered into under

section 73; (

g) the failure or refusal to abide by an agreement entered into under

section 74; (

h) the failure or refusal to answer questions or provide information or otherwise co-operate in an investigation of conduct or proceedings under this Part or

Part 6; (

i) the failure or refusal to co-operate in a practice review; (

j) the failure or refusal to comply with an order of, a condition imposed by or an undertaking provided to a governing body, a body established by a governing body or a body established or continued under this Act or under the regulations or a former Act. VI. Relief Sought [ 36 ] The Applicants seek declarations that: (

a) Part 5 of RAPA does not apply to the actions taken and decisions made by Waring and the Corporate Trustee under the BIA with respect to either the bankruptcy or the Commercial Proposal of Weddell (the BIA Administration Actions); (

b) the proper forum for any complaint by Weddell with respect to the BIA Administration Actions is this Court sitting in its bankruptcy and insolvency jurisdiction; (

c) in the alternative to (

a) and (b), the Institute must obtain leave of this Court sitting in its bankruptcy and insolvency jurisdiction pursuant to s 215 of the BIA before commencing an investigation pursuant to

Part 5 of RAPA with respect to the BIA Administration Actions; (

d) the investigation commenced by the Institute pursuant to

Part 5 of RAPA is a nullity. [ 37 ] In the event that the Court grants a declaration that the Institute must obtain leave pursuant to s 215 of the BIA , the Applicants request that such leave not be granted as Weddell is a vexatious complainant who has made the same complaints to the OSB as she now makes to the Institute, and such complaints were dismissed by the OSB. [ 38 ] In addition, the Applicants seek an Order restraining the Institute from taking any further steps pursuant to

Part 5 of RAPA with respect to the BIA Administration Actions. VII. Parties to this Application [ 39 ] The Institute argues that neither the Corporate Trustee nor Weddell is a proper party to this Application. [ 40 ] With respect to the Corporate Trustee, the Institute argues that the Corporate Trustee is not a member of the Institute, nor has

the Institute ever purported to have jurisdiction over the Corporate Trustee. [ 41 ] With respect to Weddell, the Institute argues that someone such as Weddell should be at liberty to forward complaints to the Institute, and that including Weddell as a party to the Application will have a chilling effect on future complainants. [ 42 ] In my view, both the Corporate Trustee and Weddell are proper parties to the Application. It is clear that they are both interested in this matter. [ 43 ] Waring has acted through the Corporate Trustee throughout the bankruptcy proceedings involving Weddell.

The Corporate Trustee has 12 staff members and it appears that some of the matters with which Weddell takes issue in the bankruptcy proceedings were undertaken by members of the staff of the Corporate Trustee. Obviously, the Corporate Trustee is interested in any disciplinary proceedings which may be taken against Waring by the Institute. [ 44 ] Weddell initiated the complaints to both the OSB and the Institute. The complaints arise in relation to her bankruptcy proceedings. She filed an Affidavit and was cross-examined on it. She is clearly interested in this matter.

In my view, had Weddell not been named as a party in the Application, she may very well have been successful in seeking intervener status in the matter. At no time did she object to being named as a party in the Application. [ 45 ] While neither the Corporate Trustee nor Weddell may be a necessary party to the Application, they are both certainly interested parties and I find there was nothing improper in either Waring being named as an Applicant, or Weddell being named as a Respondent in this matter. VIII. Positions of the Parties A. The Applicants [ 46 ] The Applicants do not contest the validity of

Part 5 of RAPA .

They do not dispute that the Alberta Legislature has the power to enact legislation to regulate professions as part of its power over property and civil rights in the province pursuant to s 92(13) of the Constitution Act, 1867 , nor that the Federal Parliament has jurisdiction over bankruptcy and insolvency pursuant to s 91(21) of the Constitution Act, 1867 . [ 47 ] However, the Applicants take the position that the BIA and the Bankruptcy and Insolvency General Rules pursuant to the BIA constitute a complete code designed to provide for the administration of bankruptcies and proposals by a trustee in accordance with the BIA without interference, except with leave of the Court.

Section 37 of the BIA allows a bankrupt or any other person who is aggrieved by

an act or decision of a trustee to apply to the Court to reverse or modify the act or decision complained of.

Section 215 of the BIA is designed to protect those that administer the BIA from vexatious and unwarranted intrusion and interference in relation to administrations pursuant to the BIA . [ 48 ] The Applicants submit that the authority that the Institute is attempting to exercise with respect to the BIA Administration Actions impairs the trustee’s administration of a bankruptcy or proposal pursuant to the BIA , the authority of this Court sitting in its bankruptcy and insolvency jurisdiction, and the authority of the OSB to govern and regulate the conduct of trustees. Given this impairment, the doctrine of interjurisdictional immunity should apply such that

Part 5 of RAPA be read down as not applying to the BIA Administration Actions. [ 49 ] The Applicants further argue that the operational effects of the application of

Part 5 of RAPA are incompatible with a federal purpose, namely a trustee’s administration of a bankruptcy or proposal pursuant to the BIA , and as such

Part 5 of RAPA should have no application to the BIA Administration Actions pursuant to the doctrine of federal paramountcy. [ 50 ] The Applicants also submit that s 26(3) of the BIA does not contemplate production by a trustee of documents and records relating to a bankruptcy estate to an investigator or a disciplinary tribunal pursuant to

Part 5 of RAPA . Therefore, pursuant to the doctrine of federal paramountcy, the provisions of

Part 5 of RAPA that allow an investigator and disciplinary tribunal to require production of documents and records from an investigated party is inoperative. [ 51 ] Underlying all of the Applicants’ legal arguments is their position that Weddell is a vexatious complainant who has made numerous unfounded allegations against Waring and the Corporate Trustee throughout the administration of the bankruptcy. [ 52 ] Counsel for the Applicants did acknowledge during oral argument that the Superintendent and the Institute have concurrent jurisdiction over a trustee who is also a Chartered Accountant (trustee/accountant), but not in respect of matters such as the BIA Administration Actions.

Counsel acknowledged that, for example, if a trustee/accountant committed fraud in the course of a bankruptcy administration, both the Superintendent and the Institute could investigate such a situation and take whatever actions the Superintendent and the Institute deemed appropriate. B. The Institute [ 53 ] The Institute argues that it has jurisdiction to investigate complaints against its members, even if such members also act in the capacity of a trustee under the BIA . It is not required to apply to the Court pursuant to the BIA for leave to investigate the conduct of its members.

Waring, at all material times was a registered member of the Institute. The Institute has jurisdiction to review his conduct upon a complaint from a member of the public to ensure Waring’s conduct accords with the applicable obligations of a member of the Institute, including the applicable Rules of Conduct. [ 54 ] The Institute concedes that if s 26(3) of the BIA restricts the disclosure of bankruptcy documents and records to the

individuals listed therein, its investigator’s powers to compel production would be limited. However, in the event of a dispute over whether documents can be provided, RAPA contains a mechanism for the Court to determine whether those documents are properly producible. C. The Minister of Justice [ 55 ] The Minister of Justice submits that regulation of Chartered Accountants, and in particular the investigation of complaints regarding their conduct and the taking of disciplinary action when required, is not part of the core of federal jurisdiction over bankruptcy and insolvency. Even if it was, the seriousness of any impairment of the core federal power by

Part 5 of RAPA is not sufficient to attract the doctrine of interjurisdictional immunity. [ 56 ] As for the doctrine of paramountcy, the Minister of Justice argues that a provincial law is rendered inoperative only to the extent that it is incompatible with a federal law. When the proper legal tests for the applicability and operability of provincial legislation are considered,

Part 5 of RAPA does not conflict with or frustrate ss 5, 26(3), 37 or 215 of the BIA , nor does it trench on the protected core of federal competence over bankruptcy and insolvency. The doctrine of paramountcy, therefore, has no application in this case. D. Weddell [ 57 ] Weddell retained Waring as her trustee as he was not only a licenced trustee, but also a Chartered Accountant. Weddell argues that the Institute Complaint raises issues and questions in relation to Waring in his capacity as a Chartered Accountant. The Institute Complaint is not vexatious.

The public is entitled to the protections afforded by RAPA . IX. Issues [ 58 ] The Court must determine the following issues: A. Does the doctrine of interjurisdictional immunity or the doctrine of paramountcy prevent the Institute from investigating the Institute Complaint? B. If not, is the Institute obliged to apply pursuant to s 215 of the BIA for leave of the Court to undertake such investigation? X. Analysis A. Jurisdiction to Conduct Investigation 1. Interjurisdictional Immunity a. Law [ 59 ] Peter W.

Hogg in Constitutional Law of Canada , 5th ed suppl (Toronto: Carswell, 2007-) at §15.7 and 15.8 explains the doctrines of interjurisdictional immunity and reading down: The term interjurisdictional immunity does not have a precise meaning. A law that purports to apply to a matter outside the jurisdiction of the enacting legislative body may be attacked in three different ways. The attack may go to (1) the validity of the law, or (2) the applicability of the law, or (3) the operability of the law. ...

A second way of attacking a law that purports to apply to a matter outside the jurisdiction of the enacting body is to acknowledge that the law is valid in most of its applications, but to argue that the law should be interpreted so as not to apply to the matter that is outside the jurisdiction of the enacting body. If this argument succeeds, the law is not held to be invalid, but simply inapplicable to the extra- jurisdictional matter. The technique for limiting the application of the law to matters within jurisdiction is the reading down doctrine...

The “reading down” doctrine requires that, whenever possible, a statute is to be interpreted as being within the power of the enacting legislative body. What this means in practice is that general language in a statute which is literally apt to extend beyond the power of the enacting Parliament or Legislature will be construed more narrowly so as to keep it within the permissible scope of power. Reading down is simply a cannon of construction (or

interpretation).

It is only available where the language of the statute will bear the (valid) limited meaning as well as the (invalid) extended meaning; it then stipulates that the limited meaning be selected... [ 60 ] In Quebec (Attorney General) v Canadian Owners and Pilots Association , 2010 SCC 39 at para 26 , [2010] 2 SCR 536, McLachlin C.J. for the majority of the Supreme Court noted that the doctrine of interjurisdictional immunity was initially developed in the context of federal undertakings and federally incorporated companies, and was later extended to protect a certain minimum content of every federal head of power.

She observed that the application of interjurisdictional immunity is generally limited to the cores of every legislative head of power already identified in the jurisprudence. [ 61 ] McLachlin C.J. explained that the first step is to determine whether the provincial law trenches on the protected "core" of a federal competence. If it does, the second step is to determine whether the provincial law's effect on the exercise of the protected federal power is sufficiently serious to invoke the doctrine of interjurisdictional immunity. She described the core of a federal power as the

authority that is absolutely necessary to enable Parliament to achieve the purpose for which exclusive legislative jurisdiction wasconferred. With respect to the seriousness of the provincial law’s effect on exercise of the federal power, McLachlin C.J. noted that thecase law reflects a growing resistance to the broad application of interjurisdictional immunity, informed by the concept of cooperativefederalism, a promotion of efficacy over formalism, and the contemporary views of Canadian federalism recognize that overlappingpowers are unavoidable.

In order for provincial legislation to amount to “impairment” of a federal power, it must not only affect the corefederal power, but must do so in a way that seriously or significantly trammels the federal power.

It requires a significant or seriousintrusion on the exercise of the federal power. [62] The Supreme Court of Canada in Husky Oil Operations Ltd v Minister of National Revenue, (SCC), [1995]3 SCR 453, [1995] SCJ No 77 held that the Canadian bankruptcy system serves two distinct goals: 1) to ensure the equitable distributionof a bankrupt debtor’s assets among the estate’s creditors inter se; and 2) the financial rehabilitation of insolvent individuals.

These goalswere affirmed by the Supreme Court of Canada in Alberta (Attorney General) v Moloney, 2015 SCC 51, [2015] 3 SCR 327. [63] Our Court of Appeal in Panamericana De Bienes Y Servicios (Receiver of) v Northern Badger Oil & Gas Ltd, 1991 ABCA181 , [1991] 5 WWR 577, [1991] AJ No 575 (CA) considered the interplay between provincial oil and gas legislation and theBIA: 63 ...The Alberta legislation regulating oil and gas wells in this province is a statute of general application within a valid provincialpower.

It is general law regulating the operation of oil and gas wells, and safe practices relating to them, for the protection of the public.It is not aimed at subversion of the scheme of distribution under the Bankruptcy Act though it may incidentally affect that distribution insome cases. It does so, not by a direct conflict in operation, but because compliance by the receiver with the general law means that lessmoney will be available for distribution. 64 I respectfully agree with the decision in Canada Trust Co. v. Bulora Corp., supra.

In my opinion, the receiver, the manager of thewells with operating control of them, was bound to obey the provincial law which governed them. 65 I would not attempt to define the limits of provincial regulatory authority in relation to the federal powers respecting insolvency andbankruptcy. The various levels of government regulate business in a myriad of ways. The extent to which these levels of governmentmay, in the exercise of their powers, affect in an incidental way the distribution of insolvent estates must depend, to a considerableextent, on the facts of the particular case. b.

Analysis [64] The first step for this Court is to determine if the sections in question of RAPA trench on the protected core of a federalcompetence pursuant to the BIA to ensure the equitable distribution of a bankrupt’s assets among its creditors and the financialrehabilitation of insolvent individuals. If not, the doctrine of interjurisdictional immunity has no application.

If the provincial law doestrench on this core federal competence, then it is necessary to consider whether the provincial law seriously affects or impairs the federalexercise of the core competence. [65] The Applicants submit that “the basic, minimum and unassailable content” (Quebec (Attorney General)) of federalbankruptcy and insolvency law includes: 1) dealing with the complaints of a bankrupt or insolvent person with respect to theadministration of a bankruptcy or proposal estate by a trustee, and 2) the supervision of the conduct of trustees acting under the BIA bythe Superintendent and the Superior Court sitting in its bankruptcy and insolvency jurisdiction.

They further submit any steps taken bythe Institute pursuant to RAPA in relation to investigating and disciplining a trustee/accountant “trenches on the protected core of afederal competence” (Quebec (Attorney General)), namely, bankruptcy and insolvency. [66] Past jurisprudence identifies two core competences of the BIA: ensuring the equitable distribution of a bankrupt’s assetsamong the estate’s creditors inter se and the financial rehabilitation of insolvent individuals.

The Applicants acknowledge that there is nojurisprudence that has held that dealing with complaints and the supervision of trustees by the Superintendent and the Superior Courtsare core functions of the operation of the BIA.

The Supreme Court of Canada has stated that the application of interjurisdictionalimmunity is generally limited to “every legislative head of power already identified in the jurisprudence” (Quebec (Attorney General)). [67] In my view, the matters referred to by the Applicants only come within “the basic minimum and unassailable content” of thelegislative power in the BIA insofar as the misconduct of a trustee may affect equitable distribution among creditors or the financialrehabilitation of insolvents, or otherwise affect the integrity of the bankruptcy regime.

As there is no requirement that trustees beaccredited accountants, the basic content of the BIA does not include regulation of the accounting profession, nor does it purport to do so.However, given the nature of the duties of a trustee, and the fact that some trustees are accountants, some trustee/accountant misconductmay have an impact on equitable distribution and financial rehabilitation, while at the same time constituting professional misconductpursuant to the regulation of accountants. [68] Turning to the second aspect of the doctrine of interjurisdictional immunity, assuming it is possible that the provisions ofRAPA in question could trench on a protected core pursuant to the BIA, in my view, the effect of those provisions on the exercise of theprotected federal powers is not sufficiently serious to invoke the doctrine of interjurisdictional immunity.

That is, any impact of RAPA inrelation to investigating and disciplining a trustee/accountant, does not seriously or significantly trammel the federal power. [69] It is clear that the activities of a trustee are governed by the BIA. The Superintendent supervises the administration of allestates and matters to which the BIA applies (s 5(2) BIA). The Superintendent is authorized to licence trustees and to make inquiries orinvestigations into the conduct of trustees (s 5(3) BIA). Trustees are bound to comply with the Code of Ethics as set out in theBankruptcy and Insolvency General Rules.

A Superior Court sitting in its bankruptcy and insolvency jurisdiction has authority to addressmatters arising in relation to a bankruptcy (ss 37 and 215 BIA). [70] Nothing in the BIA or the Regulations thereunder mandates that the Superintendent or the Superior Court have exclusivejurisdiction over investigations into, or disciplining of, the conduct of trustee/accountants. The current Directive and the Application

Form for a trustee licence require disclosure of an investigation by the Institute into an applicant’s conduct. Although there was no evidence of an ongoing obligation to disclose such information, the Application Form and ss 9 and 10 of the Directive make it clear that the Superintendent is fully aware that applicants may very well be members of professional organizations and applicants must be in good standing with such professional organizations. This has been the case for many years.

Had Parliament intended that investigating and disciplining trustee/accountants would be dealt with exclusively under the BIA , it could easily have said so. Parliament chose not to do so and, therefore, must be taken to expect that professional organizations of which a trustee is a member would have the right to conduct such investigations and carry out disciplinary actions as the organization deemed necessary within their authority. [ 71 ] The regulation of professionals clearly falls within the jurisdiction of the provinces pursuant to s 92(13) of the Constitution Act , 1867.

As was found in Panamericana , such legislation is a statute of general application within a valid provincial power. RAPA is legislation of general application in relation to protecting the public and regulating Chartered Accountants. Pursuant to s 65(1) of RAPA , the purpose of the complaints inquiry process is to, inter alia , protect the public interest and preserve the integrity of the accounting profession. [ 72 ] The Supreme Court of Canada has clearly stated that we are in an era of co-operative, flexible federalism.

Investigations into the conduct and discipline of trustees, who are also members of the Institute, can be conducted both by the Superintendent and the Institute. The functions of the Superintendent and the Institute in this regard are complementary. The interests of the federal and provincial legislators are aligned in terms of regulating misconduct of trustee/accountants. Although their spheres of concern may at times overlap, they are not incompatible, nor does either legislative regime purport to constitute a complete code regarding the conduct of a trustee/accountant.

The Superintendent could investigate the conduct of a trustee/accountant and find no breach of the BIA or the Bankruptcy and Insolvency General Rules , while the Institute may find that such conduct warrants investigation and discipline under RAPA . [ 73 ] In my view, although the provisions of

Part 5 of RAPA may in some cases relate to the core federal power which finds expression in the BIA , they do not seriously or significantly trammel that federal power. [ 74 ] For all of the foregoing reasons, there is no basis upon which

Part 5 of RAPA should be read down so that it does not apply to the BIA Administrative Actions. 2. Paramountcy a. Law [ 75 ] In Marine Services International Ltd v Ryan Estate , 2013 SCC 44 at paras 65-66 , [2013] 3 SCR 53, the Supreme Court of Canada explained that the doctrine of paramountcy deals with the way in which a power is exercised, whereas interjurisdictional immunity deals with the scope of the federal power.

Interjurisdictional immunity protects the core of the exclusive classes of subject created by ss. 91 and 92 of the Constitution Act, 1867 even if the relevant legislative authority has yet to be exercised. The doctrine of federal paramountcy applies where the operational effects of provincial legislation are incompatible with federal legislation, rendering the provincial legislation inoperative to the extent of the incompatibility. In other words, the doctrine is relevant where there is conflicting federal and provincial legislation.

Federal paramountcy can apply even where the provincial legislature acts within its primary powers, and Parliament acts pursuant to its ancillary powers. [ 76 ] In the companion decisions of Moloney and 407 ETR Concession Co v Canada (Superintendent of Bankruptcy) , 2015 SCC 52 , [2015] 3 SCR 397 the Supreme Court identified two ways in which provincial legislation can conflict with federal legislation and, as a result, be rendered inoperative under the doctrine of paramountcy.

Such a conflict will arise where: 1) it is impossible to comply with both laws, or 2) although it is possible to comply with both laws, the operation of the provincial law frustrates the purpose of the federal enactment. If so, the doctrine of federal paramountcy gives precedence to the federal legislation. [ 77 ] The majority in Moloney noted that it is often impossible for one level of government to legislate effectively within its jurisdiction without affecting matters that are within the other level's jurisdiction, or to make a statute fall squarely within a single head of power.

The tendency has been to allow the resulting overlap in the exercise of provincial and federal powers to occur as long as each level of government properly pursues objectives within its jurisdiction. However, at a certain point, the powers of one level of government must be protected against even incidental intrusions by the other level. [ 78 ] In Canadian Western Bank v Alberta , 2007 SCC 22 at para 75 , [2007] 2 SCR 3 the Supreme Court held that the onus is on the party relying on the doctrine of federal paramountcy to demonstrate that the federal and provincial laws are in fact incompatible. Where two

interpretations are available, the court should favour the

interpretation which would not result in conflict between the two statutes. [ 79 ] The majority in Saskatchewan (Attorney General) v Lemare Lake Logging Ltd , 2015 SCC 53 at paras 26-27 , [2015] 3 SCR 419 held that the burden on a party invoking paramountcy is high: clear proof of purpose is required. It does not suffice that provincial legislation restricts the scope of permissive federal legislation. Failing very clear language to the contrary, courts should not presume that Parliament intended to occupy the field and render provincial legislation on the subject inoperative. b. Analysis [ 80 ] The Applicants submit that there is an operational conflict between

Part 5 of RAPA and the BIA with respect to the production of documents and records. [ 81 ] Pursuant to s 78(1) of RAPA , an investigator may require a member of the Institute to provide records to the investigator in relation to the investigation, and the investigator may take copies of such records. Pursuant to s 86(1) of RAPA , a member of the Institute being investigated is a compellable witness in discipline proceedings and may face civil contempt proceedings pursuant to s 89(1) if the

member refuses to produce records in relation to the matter investigated. Pursuant to s 26(3) of the BIA a trustee must “permit” theSuperintendent, the bankrupt or any creditor or representative of the creditor to inspect and make copies of books, records and documentsin relation to the bankruptcy. [82] The Applicants argue that an investigator and discipline panel pursuant to RAPA are not included in s 26(3) of the BIA asparties entitled to inspect and copy records in relation to a bankruptcy.

Therefore, it is impossible for a member of the Institute to complywith both the provincial legislation and the federal legislation and the doctrine of paramountcy renders the provincial legislationinoperative. [83] I find that there is no operational conflict between the provisions of RAPA with respect to the production of records and s26(3) of the BIA. [84] Section 26(3) of the BIA is mandatory in that the trustee must permit access to the records, and the making of copies of them,to the parties specifically identified in that section, namely, the Superintendent, the bankrupt or any creditor.

It does not prohibitprovision of the records to anyone other than the Superintendent, the bankrupt or a creditor of the bankrupt. [85] In LW Houlden, GB Morawetz and JP Sarra, The 2015-2016 Annotated Bankruptcy and Insolvency Act (Toronto: CarswellThomson Reuters, 2015) (Houlden & Morawetz) at Note C47, the authors state that the purpose of s 26(3) is to enable information to beobtained about the administration of the bankrupt estate. The trustee can assert that the documents need not be produced because they areprivileged.

With respect to the production of documents, they cite Surrey Credit Union v Willson (1990), (BC CA),79 CBR (NS) 24, 47 BCLR (2d) 242 (CA); leave to appeal to SCC refused (1990), 80 CBR (3d) 171 (Note) (SCC) for the propositionthat the fact that the books and records are in the possession of the trustee will not shield them from being subpoenaed for courtproceedings, even if those court proceedings are in some other province. [86] Therefore, production of the books, records and documents in relation to a bankruptcy is not solely restricted to what isrequired within the bankruptcy proceedings. [87] RAPA clearly contemplates that a member of the Institute may refuse to produce records.

Section 78(3) of RAPA provides thatthe Institute may apply to the Court of Queen’s Bench for an Order directing a member of the Institute to provide records andinformation in relation to the investigation and to allow the investigator to take possession of any such records and make copies of same.Section 89(1) of RAPA provides for civil contempt proceedings in the event a member refuses to produce records in the course of adiscipline hearing.

Therefore, an accountant would have ample opportunity to have the Court of Queen’s Bench determine if any recordsor information sought in the course of a complaints inquiry process pursuant to

Part 5 of RAPA must be produced. This would apply toany records and documents relevant to a bankruptcy proceeding in which the accountant was involved as trustee. [88] I conclude that both s 26(3) of the BIA and

Part 5 of RAPA allow for the possibility of a judicial determination with respect toproduction of documents outside of the context of the bankruptcy proceedings. [89] A somewhat analogous situation was considered by Nadon J. in Vancouver Trade Mart Inc (Trustee of) v Canada (Ministerof National Revenue - MNR) (1997), (FC), 50 CBR (3d) 139, 1997 Carswell Nat 1622 (FC). In that case, theMinister of National Revenue had ordered a trustee in bankruptcy to produce working papers and account analyses concerning thebankrupt company and its shareholders, pursuant to s 231.2 of the Income Tax Act, RSC 1985, c

Section 231.2 of the Income Tax Actprovided that the Minister of National Revenue could require any person to provide information and documents for any purpose relatedto the administration or enforcement of the Income Tax Act. Nadon J. at para 25 adopted the following from the Brief of the AttorneyGeneral of Canada: No conflict is created between the Income Tax Act and the Bankruptcy and Insolvency Act by the application of

Section 231.2(1). All thatSection 231.2(1) does is oblige the Applicant to provide information for the enforcement of a regulatory Statute, it does not impair hisability to act as a trustee. Producing the documents in question in this case will not affect the creditors’ legal rights in any way. Thetrustee is still free to institute legal proceedings on behalf of the general creditors if that is in the best interests of the bankrupt estate.

Inshort, the trustee can comply with the Income Tax Act in this case without breaching any portion of the Bankruptcy and Insolvency Act. [90] In my view, the same can be said with respect to RAPA in this case. That is, the Applicants can comply with the provisions ofRAPA with respect to the production of documents in relation to Weddell’s bankruptcy estate without breaching s 26(3) of the BIA. Thereis no operational conflict between

Part 5 of RAPA and the BIA. [91] The Applicants also submit that the second branch of the doctrine of paramountcy is applicable in this case. They argue thateven if it is possible to comply with both statutes, the application of

Part 5 of RAPA to the BIA Administration Actions frustrates apurpose of the BIA.

That purpose is to have a single code governing the conduct of persons acting under the BIA and providing for theadministration of bankruptcy and proposal estates from start to finish. [92] As set out in Moloney, the question to be considered under this branch of the doctrine is whether operation of the provincialact is compatible with the federal legislative purpose. [93] It is true that there are cases which refer to the BIA as being a “complete code” for dealing with bankruptcy and insolvencymatters: Kalau v Dahl (1985), (AB KB), 59 AR 224, [1985] AJ No 572 at para 9 (QB); Miller v Miller, 2000 ABQB24 at para 12, 257 AR 380; Edell v Her Majesty the Queen (Canada Revenue Agency), 2008 FC 1306 at para 12, 49 CBR (5th) 173;Decker v Superintendent of Bankruptcy, 2010 ABCA 189 at para 29, 487 AR 282; Canada (Superintendent of Bankruptcy) v 407 ETRConcession Company Limited, 2013 ONCA 769 at para 40, 7 CBR (6th) 167, aff’d 2015 SCC 52, [2015] 3 SCR. [94] However, these cases refer to the BIA as being a complete code in the sense of providing a comprehensive method fordetermining all matters touching upon the rights and obligations of a bankrupt and those making claims against the bankrupt.

That is, noother federal legislation addresses the core federal power to ensure an equitable distribution of the debtor’s assets among the estate’screditors and the financial rehabilitation of insolvent individuals.

[95] The mere fact that there is federal legislation in a subject area does not lead to the conclusion that Parliament’s intention wasto exclude all provincial legislation which may overlap with it: Canadian Western Bank at paras 74-5; Lemare Lake Logging at para27. [96]

Section 72 of the BIA indicates that laws or statutes relating to property and civil rights are applicable so long as they are notin conflict with the BIA.

This confirms that the BIA was not intended to be a complete code and that provincial laws will be applicable inconjunction with the BIA. [97] Other courts have held that provincial professional associations are entitled to subject members to their disciplinary processesnotwithstanding that the conduct in question involved a matter under a federal legislative scheme: Re Imrie v Institute of CharteredAccountants of Ontario, (ON SC), [1972] 3 OR 275, [1972] OJ No 1846 (SC); Krieger v Law Society of Alberta,2002 SCC 65, [2002] 3 SCR 372. [98] There have also been situations in which both the Superintendent and an Institute of Chartered Accountants have investigatedand disciplined a trustee/accountant: Martin Daniel Bell and Graham Mathew Inc, Professional Conduct Decision No: 08-03 (Office ofthe Superintendent in Bankruptcy), Bell (Re), 2009 LNICAO 2 (Ontario Institute of Chartered Accountants); Henry Sztern and HenrySztern & Associés Inc - Professional Conduct Decision No: 03-02 (Office of the Superintendent in Bankruptcy), Sztern c Comptablesagréés (Ordre professionnel des), [2007] DTPQ no 67, 2007 QCTP 67; Domenic A Giustini - Directions for Conservatory Measures -2010 (Office of the Superintendent in Bankruptcy), Giustini (Re), 2011 LNICAO 21 (Ontario Institute of Chartered Accountants);Edward Bryce Quon and Quon & Associates Ltd, Professional Conduct Decision - 2007 (Office of the Superintendent in Bankruptcy),Quon (Re), 1998 LNICAO 11 (Ontario Institute of Chartered Accountants). [99] Frank Bennett in Bennett on Bankruptcy, 17th ed (Toronto: CCH Canadian, 2015) at 71-72 comments on the interplaybetween the BIA and professional associations: The amendments also give the creditors and other stakeholders two sources to review the performance of the trustee and the monitor.Both the Superintendent and the Court have the power to censure improper and wrongful conduct.

While there are numerous statutoryprovisions and directives dealing with the trustee’s improper conduct for which the Superintendent can censor, the Court also has thepower to deprive or reduce the trustee’s costs in the administration of an estate. If the trustee is also a member of the CanadianAssociation of Insolvency and Restructuring Practitioners (CAIRP), the Institute of Chartered Accountants or the Certified ManagementAssociation, those associations have standards of professional conduct or codes of ethics governing their members.

Any stakeholder in abankruptcy or receivership may lodge a complaint to the appropriate governing body. [100] As well, the following comment appears at 88 (footnote 38): ... The trustee’s conduct can be reviewed under the Code of Ethics contained in the Rules. If the trustee’s conduct warrants judicialreview, the creditors and the debtor may proceed under s 37 or they may proceed to obtain leave under

section 215 of the Act. If thetrustee is also a member of CAIRP, that association has standards of professional conduct as does the Institute of Chartered Accountantsand Certified Management Accountants. [101] Clearly, in the Canadian federal system, there will be interplay or overlap between provincial and federal legislation. TheSupreme Court has made it clear that courts should favour an

interpretation of such legislation which does not result in incompatibility.In my view, the BIA is not in any way intended to be a complete code to address any and all matters which may arise in relation to aparticular bankruptcy or insolvency. The BIA itself contemplates that provincial legislation continues to apply.

The above noteddecisions make it clear that it is entirely possible for both federal legislation (the BIA) and provincial legislation (those statutes dealingwith the regulation of professional bodies) to be applied to the investigation and discipline of trustees who are also members of otherprofessional bodies.

Rather than frustrating the provisions of the BIA as respects the conduct of trustees, the provisions in provinciallegislation such as RAPA may be interpreted so as to complement the provisions in the BIA. [102] Indeed, as previously mentioned, counsel for the Applicants acknowledged that the Superintendent and the Institute haveconcurrent jurisdiction over a trustee/accountant in certain situations. It would be improper for this Court to somehow attempt to limit inadvance the Institute’s jurisdiction to investigate and discipline a trustee/accountant - in for a penny, in for a pound.

However, it wouldalways remain open to a trustee/accountant to seek a remedy in appropriate cases through such avenues as judicial review, or appealwhere the exercise of concurrent jurisdiction clearly results in an injustice. [103] Waring has chosen to maintain his membership with the Institute. He must believe there is a benefit to such membership.Weddell deposed that she chose Waring in part because he was a Chartered Accountant. It would be anomalous for Waring to be able totake advantage of membership in the Institute and not be subject to its jurisdiction. [104] I conclude, therefore, that

Part 5 of RAPA does not frustrate the purpose of the BIA. [105] For the foregoing reasons, neither branch of the test for the application of the doctrine of federal paramountcy is met in thiscase. B. Leave under s 215 1. Law [106] In GMAC Commercial Credit Corporation - Canada v TCT Logistics Inc, 2006 SCC 35 at paras 58, 61, [2006] 2 SCR 123,the majority of the Supreme Court explained that the purpose of s 215 of the BIA relates to the trustee’s duty to protect the creditors andthe public interest in the proper administration of the bankrupt estate.

The leave requirement ensures that legitimate claims can beadvanced, but allows the trustee or receiver to avoid having to respond to frivolous, vexatious or unfounded claims or actions so that the

bankruptcy process is not made unworkable. The majority noted that this is consistent with the position that there must be explicitstatutory language before the BIA is interpreted so as to deprive persons of rights conferred under provincial law. [107] Marceau J. in Environmental Metal Works Ltd v Murray, Faber & Associates Inc, 2013 ABQB 479 at paras 49-50, 568 AR198, citing GMAC, held that s 215 did not apply to the action against the trustees in that case because the plaintiff did not advance aclaim provable in a bankruptcy, or any claim against the bankrupt.

Rather, it claimed outside of the bankruptcy for the misfeasance,negligence, and breach of fiduciary duty of the trustees in their personal capacity and not against the trustees as representative of thebankrupt estate. [108] In 596289 Saskatchewan Ltd v Pinder (Sub nom Willows Golf Corp (Bankrupt) Re) (1994), (SK KB), 119Sask R 208, 1994 CarswellSask 20 at paras 17, 19 (QB), Hunter J. explained that s 37 provides for a

summary and timely method duringthe bankruptcy administration by which the actions of the trustee can be reviewed and rectified by the bankruptcy court.

Section 215refers to actions in the ordinary court, for example actions for damages.

Hunter J. held that leave should only be granted under s 215 ifthe applicant demonstrates that the issue can be dealt with more advantageously in the ordinary courts and without disadvantage to theadministration of the estate, or that the bankruptcy court is unable to provide a remedy in the circumstances. [109] Houlden & Morawetz at Note K5(1) and (2) write that s 215 is of general application and is intended to protect those chargedwith the administration of the BIA from actions or other proceedings, save those which have the sanction of the court. Sections 37 and215 create alternative remedies.

No leave is required to bring an application under s. 37; if the allegations against the trustee relate toadministration of the bankrupt estate, the proper procedure is to bring an application in the court pursuant to s. 37. The authors do note,however, that some courts have held that since s. 37 and s. 215 are alternative modes of proceeding against the trustee, leave should begranted under s. 215 if a person wishes to proceed by action and the matter is not frivolous or vexatious, even though proceedings couldbe taken under s. 37. 2.

Analysis [110] The Applicants submit that if the Court finds that neither the doctrine of interjurisdictional immunity nor the doctrine of federalparamountcy applies in this case, the Institute is nevertheless required to seek leave pursuant to s 215 of the BIA to commence aninvestigation under

Part 5 of RAPA and to proceed with the relevant complaint inquiry process. They also point to s 37 of the BIA whichgives the Court jurisdiction to confirm, reverse or modify the act or decision of a trustee on the application of any aggrieved person. [111] All of the cases provided to the Court that have addressed either s 37 or s 215 of the BIA appear to have been in the context ofactions or applications brought in court.

Depending on the nature of the claim, a court action in relation to a bankruptcy could be heardby: the bankruptcy court under s 37, the regular court if leave is granted under s 215, or the regular court without leave if the claim isoutside of the bankruptcy, or against a trustee personally, according to Environmental Metal Works. None of the cases on ss 37 and 215address administrative proceedings initiated by a complaint to a professional body. [112] At this stage, the Institute has simply initiated an investigation in relation to the Institute Complaint.

The Institute is the properbody to consider whether an accountant has breached his or her professional duties. Neither the OSB, nor this Court sitting either inbankruptcy or as a Superior Court, has jurisdiction to perform the functions assigned in the first instance to the Institute under RAPA. [113] Although it relates to the bankruptcy of Weddell, the complaint against Waring in his role as an accountant is outside of thebankruptcy.

Acts of a trustee which may attract disciplinary actions by a professional body of which the trustee is a member are clearlyacts of the trustee “personally”, and not against the trustee as representative of the bankrupt estate. Therefore, leave is not required unders 215 of the BIA. [114] I conclude that an investigation conducted under

Part 5 of RAPA and any subsequent disciplinary proceedings do not requireleave of a Superior Court sitting in its bankruptcy and insolvency jurisdiction prior to being undertaken. [115] I am mindful of the Applicants’ concerns that the complaint is vexatious and duplicative, and that the investigator may not bewell equipped to investigate Waring’s conduct as an accountant, as distinct from his conduct as trustee. Nothing prevents Waring fromraising those concerns with the Institute.

Further, as mentioned previously, in appropriate circumstances Waring may well have otherremedies, including an appeal as contemplated in RAPA, or judicial review. XI. Conclusion [116] Neither the doctrine of interjurisdictional immunity nor the doctrine of paramountcy applies in this case to prevent the Institutefrom investigating the Institute Complaint. The Institute is not obliged to apply pursuant to s 215 of the BIA for leave of the Court toundertake such an investigation. XII.

Costs [117] While the parties in their written Briefs did address the matter of costs on the Application, no submissions were made on costsduring the course of oral argument. [118] The parties may speak to me within 60 days of the date of these Reasons for Judgment if they are otherwise unable to agree oncosts of the Application. Heard on the 15th day of March, 2016.

Dated at the City of Edmonton, Alberta this 3 rd day of May, 2016. K.G. Nielsen J.C.Q.B.A. Appearances: Brian W. Summers Dentons Canada LLP for the Applicants Julie C. Gagnon and Maya C. Gordon Reynolds, Mirth, Richards & Farmer LLP for the Institute of Chartered Accountants of Alberta Annjanette Ruth Weddell on her own behalf Lillian Riczu Alberta Justice, Constitutional Law for the Intervener