|
Insolvency (BIA) - Discharge Exceptions - Fines [BIA s.178(1)(a). Poonian v. British Columbia (Securities Commission)
In Poonian v. British Columbia (Securities Commission) (SCC, 2024) the Supreme Court of Canada dismissed an appeal against a tribunal order that held "disgorgement orders and the administrative penalties" exempt from bankruptcy discharge, here under BIA s.178(1)(a) ['fines'] and (e) ['fraud'].
Here the court considers the BIA s.178(1)(a) 'fines' discharge exception:B. Do the Commission’s Claims Fall Within the Section 178(1) Exceptions?
(1) Section 178(1)(a)
[31] For a debt to survive bankruptcy under s. 178(1)(a), the creditor must establish that the debt is (1) a fine, penalty, restitution order or other order similar in nature, (2) imposed by a court, and (3) imposed in respect of an offence:178 (1) An order of discharge does not release the bankrupt from
(a) any fine, penalty, restitution order or other order similar in nature to a fine, penalty or restitution order, imposed by a court in respect of an offence, or any debt arising out of a recognizance or bail; [32] This appeal raises two questions with respect to the proper interpretation of s. 178(1)(a). First, must the fines, penalties and orders referred to in this section be imposed in either a criminal or quasi‑criminal context? Second, do the words “imposed by a court” capture orders that are initially imposed by an administrative tribunal but that are subsequently registered as judgments of a superior court?
(a) Section 178(1)(a) Is Not Limited to Orders Imposed in a Criminal or Quasi‑Criminal Context
[33] It is clear that the terms “fine” and “penalty” in s. 178(1)(a) include at least monetary penalties imposed as punishment for offences in criminal or quasi‑criminal proceedings (see Hennig (C.A.), at paras. 46‑51; Air Canada, Re (2006), 2006 CanLII 42583 (ON SC), 28 C.B.R. (5th) 317 (Ont. S.C.J.), at para. 42; Chaytor, Re, 2006 BCSC 1742, 26 C.B.R. (5th) 574, at para. 38; Belair v. Gottschlich, 2008 ABQB 47, 89 Alta. L.R. (4th) 268, at para. 25; R. v. Manzioros, 2004 MBQB 121, 183 Man. R. (2d) 279, at para. 40; Chambre des notaires du Québec v. Dugas, 2002 CanLII 41280 (QC CA), [2003] R.J.Q. 1, at para. 22; Simone v. Daley (1999), 1999 CanLII 3208 (ON CA), 43 O.R. (3d) 511, at p. 522; Buland Empire Development Inc. v. Quinto Shoes Imports Ltd. (1999), 1999 CanLII 1345 (ON CA), 123 O.A.C. 288, at para. 19; D. Brochu, Précis de la faillite et de l’insolvabilité (6th ed. 2022), at ¶31‑5).
[34] The chambers judge and Willcock J.A. both agreed that penalties imposed in a criminal or quasi‑criminal context are clearly captured by s. 178(1)(a), but they found that this section is not limited to fines, penalties and restitution orders imposed in such a context. The chambers judge held that the inclusion of restitution orders, which do not seek to punish but rather to compensate and restore, “implies a broader scope to s 178(1)(a) than criminal or quasi‑criminal offences” (para. 85). Justice Willcock agreed, holding that “s. 178(1)(a) has occasionally been interpreted too narrowly in that respect” (para. 39).
[35] Like the chambers judge and Willcock J.A., I am of the view that s. 178(1)(a) is not restricted to penalties associated with criminal or quasi‑criminal proceedings. The plain and ordinary meaning of s. 178(1)(a), a comparative reading of the English and French versions of this section, and the legislative history of the section all support this interpretation. While I have explained that the s. 178(1) exceptions must be interpreted narrowly, this interpretive principle does not have primacy over other principles of statutory interpretation that clearly support a particular meaning.
[36] As a first remark, I note that the plain and ordinary meaning of s. 178(1)(a) quite simply does not limit this section to penalties imposed in a criminal or quasi‑criminal context (see Vancouver (City) v. Alliston, 2003 BCPC 105, 47 C.B.R. (4th) 142, at paras. 19‑20 and 22). In fact, this section employs very broad language. The English version of s. 178(1)(a) merely requires that the fine, penalty, restitution order or other order be “in respect of an offence”. The words “in respect of” are of “the widest possible scope” in conveying a link between related subject matters (Nowegijick v. The Queen, 1983 CanLII 18 (SCC), [1983] 1 S.C.R. 29, at p. 39; Markevich v. Canada, 2003 SCC 9, [2003] 1 S.C.R. 94, at para. 26).
[37] The English and French versions of s. 178(1)(a) are slightly different. Importantly, the words “in respect of an offence” in the English version are absent from the French version. “The shared meaning rule for the interpretation of bilingual legislation dictates that the common meaning between the English and French legislative texts should be accepted” (Merck Frosst Canada Ltd. v. Canada (Health), 2012 SCC 3, [2012] 1 S.C.R. 23, at para. 203, citing R. Sullivan, Sullivan on the Construction of Statutes (5th ed. 2008), at pp. 99 et seq., and M. Bastarache et al., The Law of Bilingual Interpretation (2008), at pp. 32 et seq.). The shared meaning rule points to a broader reading of s. 178(1)(a) that encompasses any fine, penalty, restitution order or other order that is imposed by a court. Under this interpretation, there is no indication that such an order needs to be imposed in a criminal or quasi‑criminal context.
[38] Notwithstanding this difference between the English and French versions of s. 178(1)(a), I note that, in any event, the unqualified term “offence” is not necessarily restricted to a criminal or quasi‑criminal context. Offences can also exist in a regulatory context; statutes outside of the criminal or quasi‑criminal context frequently deem certain contraventions of their provisions to be offences (J. Swaigen and S. McRory, Regulatory Offences In Canada: Liability and Defences (2nd ed. 2018), at p. 9). Indeed, in this case, a contravention of s. 57 of the Securities Act is deemed to be an offence under s. 155(1)(b) of that Act.
[39] Furthermore, the legislative history of s. 178(1)(a) demonstrates that Parliament’s intention has been to expand the scope of this section, not to restrict it. A previous version of this section, as it appeared from 1985 until 1992, read as follows:178 (1) An order of discharge does not release the bankrupt from
(a) any fine or penalty imposed by a court or any debt arising out of a recognizance or bail bond; [40] In 1992, An Act to amend the Bankruptcy Act and to amend the Income Tax Act in consequence thereof, S.C. 1992, c. 27, s. 64, widened the scope of s. 178(1)(a):64. (1) Paragraph 178(1)(a) of the said Act is repealed and the following substituted therefor:
(a) any fine, penalty, restitution order or other order similar in nature to a fine, penalty or restitution order, imposed by a court in respect of an offence, or any debt arising out of a recognizance or bail; [41] Parliament intentionally added this more expansive language to s. 178(1)(a). Interpreting this broad language as capturing only penalties imposed in a criminal or quasi‑criminal context would run counter to Parliament’s intent and would also render the words or “other order similar in nature” surplusage (C.A. reasons, at para. 41). It is a well‑accepted principle that such an interpretation is to be avoided (R. v. Proulx, 2000 SCC 5, [2000] 1 S.C.R. 61, at para. 28; see further, R. Sullivan, The Construction of Statutes (7th ed. 2022), at § 8.03).
[42] Ultimately, if Parliament had intended to limit the application of this section to criminal or quasi‑criminal proceedings, it could have done so more clearly. The fines, penalties, restitution orders and other orders that it exempts are not restricted to those imposed in a criminal or quasi‑criminal context.
(b) The Words “Imposed by a Court” Do Not Capture Orders Made by Administrative Tribunals That Are Subsequently Registered as Judgments of a Court
[43] For a debt to survive bankruptcy pursuant to s. 178(1)(a), the creditor must establish that the debt is a fine, penalty, restitution order or other order similar in nature that was “imposed by a court”. There is some uncertainty about what constitutes a “court” for the purposes of s. 178(1)(a) and about what is meant by the term “imposed”.
[44] The word “court” as it appears in s. 178(1)(a) is undefined. While this word is defined in s. 2 of the BIA, the definition specifically excludes s. 178(1)(a):2 In this Act,
...
court, except in paragraphs 178(1)(a) and (a.1) and sections 204.1 to 204.3, means a court referred to in subsection 183(1) or (1.1) or a judge of that court, and includes a registrar when exercising the powers of the court conferred on a registrar under this Act; [45] Subsections 183(1) and (1.1) of the BIA refer to the superior courts of each province and territory. The exclusion of s. 178(1)(a) from the definition in s. 2 suggests that Parliament did not intend to limit the application of s. 178(1)(a) to fines, penalties or restitution orders made by superior courts (C.A. reasons, at para. 42). In this way, the s. 2 definition draws a distinction between a court administering the BIA process and other courts that may impose fines, penalties or restitution orders for the purposes of s. 178(1)(a) (J.R.B. v. Jimenez, 2018 ABQB 847, at para. 23 (CanLII)). Provincial courts, federal courts, appellate courts and this Court all fall within the meaning of “court” for the purposes of s. 178(1)(a) (see Sarra, Morawetz and Houlden, at § 1:26).
[46] However, the word “court” in s. 178(1)(a) does not capture administrative tribunals or regulatory bodies. The term “court” implies that a dispute will be adjudicated by a judge or judges (Black’s Law Dictionary (11th ed. 2019), at p. 444). By comparison, an “administrative tribunal” is “[a] court‑like decision‑making authority that resolves disputes [or] an administrative agency exercising a quasi‑judicial function” (p. 1814). A “regulatory agency” can be defined as “[a]n official body, esp. within the government, with the authority to implement and administer particular legislation” (pp. 77‑78 and 1538). “Court” refers to the judiciary, whereas administrative bodies are hybrid entities “falling between the judiciary and government departments created to perform as separate bodies functions transferred from both” (L. Sossin, Practice and Procedure Before Administrative Tribunals (loose‑leaf), at § 2:1).
[47] Moreover, for the purposes of s. 69.6 of the BIA, Parliament saw it fit to define the term “regulatory body”.[1] While the definition is limited to that section and does not apply to s. 178(1)(a), the decision to set out a specific definition of “regulatory body” further confirms that Parliament intended these different terms — “court” and “regulatory body” — to be understood as having different meanings (Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, [2013] 2 S.C.R. 559, at para. 81; Alberta (Information and Privacy Commissioner) v. University of Calgary, 2016 SCC 53, [2016] 2 S.C.R. 555, at para. 53). Thus, the word “court” in s. 178(1)(a) does not include administrative bodies. If Parliament had wanted fines, penalties, restitution orders or other orders similar in nature imposed by regulatory bodies, administrative tribunals or other administrative decision makers to be exempt from discharge under s. 178(1)(a), it could have said so expressly.
[48] Having defined the term “court”, I now consider what it means for a fine, penalty or order to be “imposed by a court”. The Commission argues that this language captures orders that are imposed by an administrative tribunal and that, once registered with a court, are deemed by statute to be enforceable as orders of that court (R.F., at para. 93). It argues that its disgorgement orders and administrative penalties fall within the ambit of s. 178(1)(a) of the BIA because, under s. 163(2) of the Securities Act, once a decision it has made is filed with the Supreme Court of British Columbia, the decision has the same force and effect as if it were a judgment of that court:163 (1) If the commission has made a decision under section 161 or 162, or if the executive director has made a decision under section 161, the commission or the executive director, as applicable, may file the decision at any time in a Supreme Court registry by filing a certified copy of the decision.
...
(2) Upon filing, a decision referred to in subsection (1), (1.1) or (1.2) or a notice, order or decision referred to in subsection (1.01) has the same force and effect, and all proceedings may be taken on it, as if it were a judgment of the Supreme Court. [49] The effect of an administrative decision being registered with a court is that the creditor is able to use civil methods to enforce the decision as if it were a judgment of that court. The registration of the decision does not change the fact that it was made and imposed by an administrative decision maker, nor does it overcome the BIA’s requirement that the exempt debt be imposed by a court (C.A. reasons, at para. 48; Hennig (C.A.), at para. 52). When a decision is registered with a court, the court’s involvement is passive, whereas the act of “imposing” a fine, penalty, restitution order or other order similar in nature requires that the court be actively involved in making the decision (see Hennig (C.A.), at para. 52).
[50] Justice Willcock correctly concluded in this case that s. 178(1)(a) “is broad enough to include at least fines, penalties and restitution orders imposed by courts other than the superior courts of the provinces, but cannot be read so broadly as to include fines imposed by tribunals that are registered in a court” (para. 44).
|
