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ADMINISTRATION OF ESTATE - Administrative officials and appointees - Trustees - Trustees in bankruptcy - Discipline

Friday, June 16, 2017 @ 8:33 AM  

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Appeal by Waring and the corporate trustee, AC Waring & Associates, from a decision of a chambers judge finding that the Regulated Accounting Profession Act (RAPA) and its disciplinary proceedings applied to the Waring’s actions or decisions in relation to bankruptcy or proposal proceedings under the Bankruptcy and Insolvency Act (BIA) and that leave under s. 215 of the BIA was not required for commencement of disciplinary proceedings. Waring was a licensed insolvency trustee and a member of the Institute of Chartered Accountants of Alberta (Institute). The respondent Weddell made a voluntary assignment into bankruptcy in 2010. AC Waring & Associates was appointed trustee. In 2013, Weddell filed a Commercial Proposal with the corporate trustee. Over the course of the bankruptcy administration, Weddell filed numerous complaints against the appellants with the Office of the Superintendent of Bankruptcy and the Institute. In July 2015, the Institute advised Waring that it would conduct an investigation pursuant to the RAPA. The appellants then brought an application seeking a declaration that the Complaints Inquiry Process under Part 5 of the RAPA did not apply to their actions under the BIA with respect to Weddell’s bankruptcy or Commercial Proposal. In dismissing the application, the chambers judge held that the Institute was the proper body to consider whether an accountant had breached his or her professional duties. He stated that the acts of a trustee which might attract disciplinary proceedings were acts of the trustee personally, not as representative of the bankrupt, and that any disciplinary proceedings did not require leave of the bankruptcy court.

HELD: Appeal dismissed. A complainant did not require leave under s. 215 of the BIA before making a disciplinary complaint against an accountant acting as a trustee in bankruptcy. Leave was only required for the commencement of actions to determine whether the draft pleadings disclosed a cause of action against the trustee. There was no suggestion that Weddell proposed an action against Waring and there was no evidence of any draft statement of claim or other pleading. A complaint was not an action and the role of a complainant was not that of a party to an action. The gate-keeping function of s. 215 did not contemplate requiring a complainant to obtain leave of the court in order to make a complaint to the Institute. The BIA reflected Parliament’s intention to immunize trustees in certain circumstances, but it did not contain immunity from disciplinary proceedings.

Weddell Estate v. Institute of Chartered Accountants of Alberta, [2017] A.J. No. 504, Alberta Court of Appeal, J. Watson, P.A. Rowbotham and F.L. Schutz JJ.A., May 19, 2017. Digest No. TLD-June122017012