In the recent decision of Re Rieger Printing Ink Co., Justice Pepall of the Ontario Superior Court of Justice (Commercial List) considered the right to protection against selfincrimination in a Section 163 examination conducted under the Bankruptcy and Insolvency Act (the "BIA").
Rieger Printing Ink Company Limited ("Rieger") filed a Notice of Intention to Make a Proposal pursuant to the provisions of the BIA on July 29, 2008. On July 30, 2008, ABN Amro Bank Canada Branch ("ABN"), applied to the Court to appoint an interim receiver. Rieger was deemed bankrupt on October 15, 2008 on account of its failure to file a proposal by the date required.
Debbie Dion had served as Rieger's Chief Financial Officer for over seven years. The inspectors of the bankrupt company passed a resolution authorizing Grant Thornton Limited in its capacity as trustee in bankruptcy (the "Trustee") to examine Ms. Dion pursuant to Section 163(1) of the BIA. Ms. Dion took the position that she would not submit to an examination by the Trustee until her right against selfincrimination was fully protected. The Trustee therefore moved for an Order compelling Ms. Dion to attend at the examination and sought the Court's direction as to whether Ms. Dion's right against selfincrimination is adequately protected. Ms. Dion indicated that she was prepared to attend at the examination but requested that as a term of any Order made by the Court that the transcript of her evidence given at the Section 163(1) examination be sealed.
The Court reviewed the provisions of the BIA, including Section 163(1) of the BIA which provides that:
The trustee, on ordinary resolution passed by the creditors or on the written request or resolution of a majority of the inspectors, may, without an order, examine under oath before the registrar of the court or other authorized person, the bankrupt, any person reasonably thought to have knowledge of the affairs of the bankrupt or any person who is or has been an agent or a mandatory, or a clerk, a servant, an officer, a director or an employee of the bankrupt, respecting the bankrupt or the bankrupt's dealings or property and may order any person liable to be so examined to produce any books, documents, correspondence, or papers in that person's possession or power relating in all or in part to the bankrupt or the bankrupt's dealings or property.
Further, Section 163(3) of the BIA states:
The evidence of any person examined under this section shall, if transcribed, be filed in the court and may be read in any proceedings before the court under this Act to which the person examined is a party.
Section 167 of the BIA provides that any person being examined is bound to answer all questions relating to the business or property of the bankrupt and to the causes of the bankruptcy and the disposition of the property. After reviewing the statutory provisions of the BIA, the Court concluded that the Trustee was entitled to compel Ms. Dion to attend at the Section 163(1) examination and that the onus was therefore on Ms. Dion to establish that a Sealing Order sealing the evidence given at the Section 163(1) examination would be justified in the circumstances.
The Court considered the implied undertaking rule under the Rules of Civil Procedure and the principle expressed in jurisprudence from the Supreme Court of Canada that discovery in the context of litigation does not take place in open court and the implied undertaking rule recognizes that examinees privacy interest. However, the Court went on to compare and contrast examinations for discovery versus an examination pursuant to Section 163(1) of the BIA as follows:
In my view, an examination for discovery and a section 163 examination are quite different. The provisions of section 163 reflect a policy of public access, public scrutiny and transparency. It is clear that Parliament contemplated that the evidence of any person examined be public. Firstly, the evidence, if transcribed, must be filed with the court as set forth in section 163(3). This is mandatory. Secondly, this is not a private examination between private parties; rather, section 163(1) contemplates an examination by a trustee who is a court officer before the registrar who is a judicial officer (although it may also be conducted before an official examiner and indeed this is the practice in Ontario. See Bankruptcy Rule 115). The decision in Goodyear Canada Inc. v. Meloche reflected this policy distinction by concluding that s. 163 evidence is not subject to any implied undertaking rule. Furthermore, section 5 of the Canada Evidence Act, section 13 of the Charter of Rights and Freedoms and derivative use immunity as described by the Supreme Court of Canada in R. v. S. (R.J.) provide adequate protection for Ms. Dion’s rights against selfincrimination.
In the case before Justice Pepall, Ms. Dion was not challenging the constitutionality of Section 163(1) of the BIA. Justice Pepall concluded that Section 5 of the Canada Evidence Act and Section 13 of the Charter of Rights and Freedoms and certain other common law principles espoused by the Supreme Court of Canada provided adequate protection for Ms. Dion’s rights against selfincrimination.
Justice Pepall also considered whether a Sealing Order was appropriate in the circumstances of this case. In particular, she considered the authoritative case on this issue in Sierra Club of Canada v. Canada (Minister of Finance) from the Supreme Court of Canada. Justice Pepall wrote as follows:
At the hearing before me, I invited counsel to address Sierra Club of Canada v. Canada (Minister of Finance). That case deals with the granting of a confidentiality or sealing order. Although dealing with the Federal Court Rules, the Supreme Court held that a confidentiality order should only be granted when:
(1) an order is needed to prevent serious risk to an important interest because reasonable alternative measures will not prevent the risk, and
(2) the salutary effects of the order outweigh its deleterious effects, including the effects on the right to free expression, which includes public interest in open and accessible court proceedings.
In the case before me, no criminal charges have been laid nor is there any evidence of any criminal investigation. While I accept that there is an important interest at stake, there is no serious risk and as discussed, protective measures are available to Ms. Dion. The second branch of the test has also not been met. A sealing order is contrary to the spirit and intent of Parliament and the principle of open courts. Furthermore, the Trustee is obliged to fulfill its duties and to report to the inspectors and the court and a sealing order would inappropriately fetter its ability to do so.
Ms. Dion had failed to meet the test set out by the Supreme Court of Canada in Sierra Club of Canada v. Canada (Minister of Finance) in order for Justice Pepall to grant a Sealing Order sealing the transcript of any examination of her by the Trustee pursuant to Section 163(1) of the BIA. Justice Pepall went on to order that Ms. Dion attend at the examination pursuant to Section 163(1) of the BIA and that, “Her rights are adequately protected by the current state of the law and her request for a Sealing Order is denied.”
The Court further ordered costs payable by Ms. Dion to the Trustee in the amount of $2500.00.