Superintendent of Bankruptcy v. PricewaterhouseCoopers Inc., Trustee in Bankruptcy [Indexed as: Superintendent of Bankruptcy v. PricewaterhouseCoopers Inc.]
65 O.R. (3d) 760
[2003] O.J. No. 2834
Docket No. C39059
Court of Appeal for Ontario,
O'Connor A.C.J.O., Rosenberg and Simmons JJ.A.
July 10, 2003
Bankruptcy and insolvency -- Trustee in bankruptcy -- Court approval of trustee's fees and disbursements -- Jurisdiction to tax or fix [page761] costs and to pass accounts -- Court having discretion to approve trustee's fees and disbursements on final basis before conclusion of bankruptcy -- Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 192.
Although, in ordinary circumstances, a judicial officer should exercise his or her discretion to fix the remuneration of a trustee in bankruptcy after the conclusion of the bankruptcy, the court has a broad discretion to set the trustee's fees and disbursements at such time as may be appropriate in the circumstances of a particular case.
APPEAL of an order approving the fees and disbursements of a trustee in bankruptcy.
Statutes referred to Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 120, 152, 192
Lawrence E. Thacker, for appellant. Daniel V. MacDonald, for respondent.
[1] BY THE COURT: -- The Superintendent of Bankruptcy appeals against the order of Ground J. dated October 4, 2002, insofar as that order approves on a final basis the fees and disbursements of the Trustee in Bankruptcy PricewaterhouseCoopers Inc. (the "Trustee") for the period February 1, 2002, to May 15, 2002.
[2] The Superintendent contends that the motion judge lacked jurisdiction to approve the Trustee's fees and disbursements on a final basis prior to the conclusion of the bankruptcy and prior to the submission, under s. 152 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 ("the Act"), of the Trustee's Final Statement of Fees and Disbursements. Further, the Superintendent contends that to hold otherwise would nullify several mandatory provisions of the Act, including, the inspectors' duty, under s. 120 of the Act, to review and approve the Trustee's Final Statement of Fees and Disbursements; the Superintendent's entitlement, under s. 152 of the Act, to comment on the Trustee's Final Statement of Fees and Disbursements; and the entitlement of interested parties, under s. 152 of the Act, to comment on the Trustee's Final Statement of Fees and Disbursements.
[3] Put another way, the Superintendent contends that the Act establishes a three step approval process for the Trustee's fees and disbursements, namely, approval by the inspectors, approval by the Superintendent and approval by the court; that the process does not commence until the conclusion of the bankruptcy, and that the court's jurisdiction to fix the Trustee's fees and disbursements is not engaged until the first two steps have been completed in the manner contemplated by the Act.
[4] We do not accept the Superintendent's submissions. [page762]
[5] Section 192(1)(i) of the Act confers jurisdiction on the registrars of the court "to tax or fix costs and to pass accounts [emphasis added]". The jurisdiction to pass accounts encompasses the jurisdiction to set the Trustee's fees and disbursements. There is no requirement in s. 192 that that jurisdiction be exercised at a particular time. Moreover, s. 192 (2) provides that the jurisdiction conferred by s. 192 "may . . . be exercised by a judge".
[6] We agree that the scheme of the Act is such that, in ordinary circumstances, a judicial officer should exercise his discretion under s. 192 to fix the remuneration of a trustee after the conclusion of a bankruptcy and after the completion of the various steps enumerated by Superintendent. However, in our view, ss. 120 and 152 of the Act do not derogate from the broad jurisdiction conferred by s. 192 to pass accounts in such manner and at such time as may be appropriate in the circumstances of a particular case.
[7] In the unique circumstances of this case, we see no error on the part of the motion judge in the exercise of his jurisdiction. In particular, we note the following circumstances that justified the exercise of the judge's jurisdiction to fix a portion of the Trustee's remuneration prior to the conclusion of the bankruptcy and prior to completion of the various steps enumerated by the Superintendent:
Canada 3000 Inc. ("Inc."), Canada 3000 Airlines Limited/ Lignes Aériennes Canada 3000 Limitée ("3000") and Royal Aviation Inc. ("Royal") (together referred to as the "Canada 3000 Group") ceased operations on November 9, 2001, and filed assignments in bankruptcy on November 11, 2001;
because of the large number of unsecured creditors of the Canada 3000 Group,5 and the fact that the Canada 3000 Group's records did not include the names or addresses of many of the unsecured creditors, the motion judge suspended the requirement of holding a first meeting of creditors for the Canada 3000 Group for several months and established a special claims process for unsecured creditors;
the first meetings of creditors for the Canada 3000 Group were held on May 15, 2002; the inspectors for 3000 and Royal were appointed on that date; however, no one agreed to act as an inspector for Inc.; [page763]
between November 11, 2001, and May 15, 2002, the Trustee prepared five reports to the court and sought approval from the court for various activities that normally would have been undertaken with the approval of the inspectors;
the fees and disbursements in issue on this appeal related to the Trustee's activities during the period between February 1, 2002 and May 15, 2002;
the inspectors were afforded an opportunity to review the material relating to the Trustee's fees and disbursements, to ask questions of the Trustee and to make submissions to the court; they asked no questions and made no submissions; and
the Superintendent was served with the motion seeking approval of the Trustee's fees and disbursements and therefore was afforded the opportunity to comment on the fees and disbursements claimed.
[8] In summary, given that the fees and disbursements approved by the motion judge related to a period during which there were no inspectors of the bankrupts' estates and during which the activities of the Trustee were approved directly by the court, and given that the Superintendent and the inspectors had the opportunity to review the material relating to the Trustee's claim and make submissions, we see no error in the motion judge's exercise of the jurisdiction conferred by s. 192(1)(i) of the Act.
[9] The appeal is therefore dismissed with costs fixed at $3,000 inclusive of disbursements and applicable GST.
Appeal dismissed with costs.