Law Times

PAGE 14 CaseLawLaw SUPREME COURT OF CANADA Bankruptcy And Insolvency PRIORITIES No express statutory basis for concluding GST claims enjoy preferred treatment under Companies' Creditors Arrangement Act (Can.) or Bankruptcy and Insolvency Act (Can.) Debtor company obtained stay of proceedings pursuant to Companies' Creditors Arrange- ment Act (Can.) ("CCAA"), to allow it time to reorganize fi- nancial affairs. Company owed unremitted Goods and Ser- vices Tax ("GST") to Crown. Section 222(3) of Excise Tax Act (Can.) ("ETA"), created deemed trust over unremitted GST which operates despite any other enactment of Canada except Bankruptcy and Insol- vency Act (Can.) ("BIA"). Sec- tion 18.3(1) of CCAA provides that statutory deemed trusts in favour of Crown do not operate under CCAA. Chambers judge ordered $5 million payment to company's major secured creditor and ordered company to hold back unremitted GST pending outcome of reorgani- zation. When reorganization became impossible, company obtained leave for partial lift of stay in order to make assign- ment in bankruptcy. Crown's motion for immediate payment of unremitted GST dismissed and assignment in bankruptcy approved. Court of Appeal allowed appeal, finding that once reorganization efforts failed, chambers judge bound to allow payment of unremit- ted GST to Crown. Appeal allowed. Whether s. 222(3) of ETA displaces s. 18.3(1) of CCAA and gives priority to Crown's ETA deemed trust during CCAA proceedings concerns Crown priorities in context of insolvency. Ap- parent conflict between ETA and CCAA can be resolved by looking at broader approach taken to Crown priorities and by giving precedence to statu- tory language in manner that does not produce anomalous outcome. Review of history of BIA and CCAA indicates Par- liament's willingness to move away from asserting prior- ity for Crown claims in insol- vency law. Section 18.3(1) of CCAA provides that Crown's deemed trusts have no effect under CCAA. Parliament has legislated explicitly and elabo- rately in circumstances where it intended that Crown statu- tory deemed trusts continue in insolvency. Section 18.3(2) of CCAA and s. 67(3) of BIA expressly provide that deemed trusts for source deductions remain effective in insolvency. No express statutory basis for concluding that GST claims enjoy preferred treatment un- der CCAA or BIA. This also militates against upholding ETA deemed trust for GST since CCAA does not mention ETA. Protection provided to wages under Wage Earner Pro- tection Program Act (Can.), and priority under BIA ex- tends to money withheld or payments made by employer to third parties for benefit of employee. Ted Leroy Trucking Ltd. (Re) (Dec. 16, 2010, S.C.C., McLach- lin C.J.C., Binnie, LeBel, Des- champs, Fish, Charron, Roth- stein, Cromwell JJ. and dissent- June 20, 2011 • Law Times COURT DECISIONS CaseLaw is a weekly summary of notable civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. CaseLaw is a weekly summary of notable unreported civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. Single or multiple copies of the full text of any case digested in this issue can be obtained by: These cases may be found online in BestCase and other electronic resources from Canada Law Book. To subscribe, please call 1-800-565-6967. i) completing and mailing in the order form in this issue; or ii) calling CaseLaw's photocopy department at (905) 841-6472 in Toronto, (800) 263-3269 in Ontario and Quebec, or (800) 263-2037 in other provinces; or iii) faxing a copy of the completed order form to (905) 841-5085. ing - Abella J., File No. 33239) Decision at 178 A.C.W.S. (3d) 134 was reversed. 196 A.C.W.S. (3d) 27 (90 pp.). Courts JURISDICTION Section 18 of Federal Courts Act (Can.) does not have legal effect of ousting jurisdiction of provincial superior courts to deal with private law claims against federal Crown Due to labour dispute with Ca- nadian Food Inspection Agency ("CFIA"), veterinarians assigned to inspect slaughterhouses in Quebec did not report for work. CFIA issued direction that in absence of inspections during relevant period, meat and meat products did not meet Meat Inspection Regulations (Can.), requirements and had to be dis- posed of. Instead of challenging CFIA's decision, slaughterhouse operators commenced action in Quebec Superior Court seek- ing damages from veterinar- ians and their representative, Professional Institute of the Public Service of Canada. De- fendants argued that damages caused by CFIA's decisions and each called CFIA in warranty. CFIA brought motions to dis- miss recourses in warranty on ground its direction was deci- sion of federal board over which Superior Court could have no jurisdiction unless it was first quashed on judicial review by Federal Court. Superior Court dismissed motion and Court of Appeal upheld decision on ba- sis that defendants not contest- ing validity of CFIA's decision. Appeal dismissed. Section 18 of Federal Courts Act (Can.), which grants exclusive jurisdic- tion to Federal Court to hear and determine applications for judicial review of decisions of federal Crown and its agents, does not have legal effect of ousting jurisdiction of provin- cial superior courts to deal with private law claims against feder- al Crown. Party not required to successfully challenge adminis- trative decision of federal board on judicial review before bring- ing action for damages with re- spect to that decision. Agence canadienne de l' inspection des aliments v. Institut profession- nel de la fonction publique du Canada (Dec. 23, 2010, S.C.C., Binnie, LeBel, Deschamps, Abella, Charron, Rothstein and Cromwell JJ., File No. 32880) Decision at 174 A.C.W.S. (3d) 1056 was affirmed. 196 A.C.W.S. (3d) 97 (23 pp.). FEDERAL COURT Customs And Excise EXCISE TAX Applicants had to submit required documents in order to receive drawback Applicants dealt in purchase and export of automobiles in Canadian export industry. Ap- plicants had to obtain K32A form from companies who im- ported vehicles to Canada in order to obtain reimbursement from CBSA of custom duties, sales and excise tax. Compa- nies replied they had no obli- gation to submit forms. Agent informed applicant drawback files were closed because of non- filing of documents required. Application for judicial review was dismissed. Provisions were clear. Applicants had to submit required documents in order to receive drawback. Having not done so, decision to close drawback files was correct. Ap- plicants were treated equally to other Canadians and s. 119 of Customs Tariff and ss. 5 and 9 of Goods Imported and Export- ed Refund and Drawback Reg- ulations (Can.), were consistent with s. 15 of Canadian Charter of Rights and Freedoms. Sebag v. Canada (Minister of Public Safety and Emergency Pre- paredness) (Mar. 15, 2011, F.C., Scott J., File No. T-761-09) 200 A.C.W.S. (3d) 125 (14 pp.). ONTARIO CRIMINAL CASES Appeal GROUNDS Where accused made unsuccessful attempts to provide breath sample Crown may be required to prove that screening device was in good working order Accused appealed conviction for dangerous driving and failing to comply with breath demand. Accused made several attempts to blow into device and was ul- timately charged when she was not able to. No evidence was introduced regarding whether device was operating prop- erly. Appeal allowed and new trial ordered. In circumstances where accused made unsuccess- ful attempts to provide breath sample Crown may be required to prove that screening device was in good working order. R. v. Pinard (Apr. 7, 2011, Ont. S.C.J., Parfett J., File No. 09- 2213) 93 W.C.B. (2d) 771 (7 pp.). 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