Section 163 gives the trustee the broad power to examine the bankrupt, any person who would be reasonably thought to know the affairs of the bankrupt, or any person who is or has been an agent, clerk, officer, director or employee with respect to the bankrupt or the bankrupt’s dealings. Essentially, this section gives the trustee the power to examine any person who is capable of providing information on the bankrupt. While a trustee cannot act on their own in conducting an examination under section 163, they only require either an ordinary resolution of the creditors or a resolution passed by the majority of the inspectors. Most importantly, a trustee does not require an order of the Court to conduct such an examination. A trustee is also not limited to conducting the examination of a single person, but is entitled to examine as many persons as it considers necessary and for which it can obtain the requisite creditor or inspector approvals. A trustee may examine a person more than once under section 163.12
In addition to conducting an examination under section 163, a trustee can require the person being examined to produce any books, documents, correspondence, or other relevant papers relating to the bankrupt or the bankrupt’s property. This includes documents that would be otherwise confidential, unless they are subject to solicitor/client privilege.13 Counsel can be examined by a trustee under this rule on issues and communications that are not subject to solicitor/client privilege.14
Creditors are also entitled to conduct such examinations under subsection 163(2), but require an order of the court to do so. A creditor is entitled to examine the trustee, the bankrupt, an inspector, another creditor, or any other relevant person that can provide information on the administration of the bankrupt’s estate. If the creditor also seeks to have the examined person produce documents relevant to the administration of the bankrupt’s estate, the creditor must include this in their application for examination. However, the court will only grant the order where the creditor can show that their “efforts are directed at assisting the estate generally [and not at assisting the creditor’s] private remedies as a secured creditor of [the debtor], which is not a permissible use of [subsection] 163(2).”15
The powers of examination given under section 163 are very broad. A trustee is entitled to ask the person being examined any questions regarding the bankrupt, the bankrupt’s property, and the causes of bankruptcy. While a creditor is more limited in the scope of its examination, it is still entitled to ask any questions regarding the administration of the bankrupt’s estate. The courts have determined that a person being examined is not entitled to refuse to answer a relevant question on the grounds that it may incriminate them.16
Subsection 163(3) provides for the use of information obtained in an examination under either subsection 163(1) or 163(2), stating that a transcribed examination must be filed in the court.
This information can then be read in to any civil proceedings to which the examined person is a party. However, to the extent that such evidence is self‐incriminating, the information may not be used in criminal proceedings per section 13 of the Canadian Charter of Rights and Freedoms17 and subsection 5(2) of the Evidence Act, R.S.C. 1985, c. C‐5, although a trustee may use such evidence to obtain leave to institute criminal proceedings under section 205 of the BIA.18
Section 163 is an exceptionally useful tool for counsel to trustees and creditors, as it greatly assists in locating and collecting as much of the bankrupt’s assets as possible and leads to a more fulsome recovery for creditors. In addition, it provides evidence that can be read in at any other civil proceedings to which the examined person is a party. This would be particularly useful, for example, in a situation where a director of a bankrupt company was examined and the examining creditor was engaged in a proceeding against the director in his or her personal capacity.