File No. 33878
SUPREME COURT OF CANADA
(ON APPEAL FROM A JUDGMENT OF THE FEDERAL COURT OF APPEAL)
BETWEEN: TORONTO-DOMINION BANK
APPELLANT (appellant)
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HER MAJESTY THE QUEEN
RESPONDENT (respondent)
RESPONDENT'S FACTUM [COURTESY TRANSLATION]
Christian Boutin Pierre Landry Pier-Olivier Julien Noël & Associés Larivière, Meunier, avocats 111 Champlain Street Legal department of the Agence du revenu du Gatineau, Québec Québec J8X 3R1 For: The Deputy Attorney General of Canada Secteur 5-2-8
3800 de Marly Street
Québec, Québec
G1X 4A5
Tel.: 418 652-4932 Tel.: 819 771-7393 Fax: 418 528-0978 Fax: 819 771-5397 christian.boutin@revenuquebec. ca [email protected] [email protected]
Counsel for the Respondent Agent for the Respondent
Henri A. Lafortune Inc. 2005 Limoges Street Tel.: 450 442-4080 Longueuil, Québec J4G 1C4 Fax: 450 442-2040 www.halafortune.ca [email protected] L-3482-11 - 2 -
André Rousseau Pierre Landry Éric Potvin Noël & Associés Lapointe Rosenstein 111 Champlain Street Marchand Melançon, L.L.P. Gatineau, Québec Suite 1400 J8X 3R1 1250 René-Lévesque Blvd. West Montréal, Québec H3B 5E9
Tel.: 514 925-6389/925-6371 Tel. 819 771-7393 Fax: 514 925-5089/925-5071 Fax: 819 771-5397 [email protected] [email protected] [email protected]
Counsel for the Appellant Agent for the Appellant
TABLE OF CONTENTS
RESPONDENT’S FACTUM Page
BACKGROUND INFORMATION ON THE DISPUTE ...... 1
PART I – CONCISE STATEMENT OF THE FACTS ...... 5
PART II – QUESTION IN ISSUE ...... 6
PART III – STATEMENT OF ARGUMENT ...... 8
Transfer of ownership provided for in subsections 317(3) ETA and 224(1.2) ITA ...... 12
The parallel mechanism of deemed trusts ...... 19
Difference between the wording of subsection 317(3) ETA and subsection 224(1.2) ITA: explicit exclusion of the BIA ...... 23
Interaction with the BIA ...... 29
A requirement to pay has an immediate effect: the interception of amounts ...... 34
PART IV – SUBMISSIONS CONCERNING COSTS ...... 39
PART V – ORDER SOUGHT ...... 39
PART VI – ALPHABETICAL TABLE OF AUTHORITIES ...... 40
APPENDIX Consent signed by Me Éric Potvin ...... 44 - 1 -
Respondent's Factum Background Information on the Dispute
RESPONDENT'S FACTUM
BACKGROUND INFORMATION ON THE DISPUTE
1. The appellant is seeking the reversal of a unanimous judgment of the Federal Court of Appeal rendered on June 30, 2010, docket number A-490-09, in a case from the province of Québec.
2. By that judgment, the Federal Court of Appeal dismissed the appellant's appeal from a judgment rendered on November 10, 2009 by the Honourable Justice François Angers, of the Tax Court of Canada.
3. That initial judgment, docket number 2009-114(GST)I, dismissed the appellant's initial appeal from a notice of assessment, bearing number PQ-2008-11711, issued on September 26, 2008 (appellant's record, hereinafter "A.R.", at p. 108) under s. 317 of the Excise Tax Act (Part IX), hereinafter the "ETA".
4. The interaction between subsection 70(1) of the Bankruptcy and Insolvency Act (hereinafter the "BIA") and subsection 317(3) ETA is at the crux of the dispute. The latter provision provides for a collection instrument enabling the federal Crown to intercept amounts owed by a third party to its tax debtor. The provision therefore provides for an immediate transfer of ownership to the Crown, upon receipt of the so-called Requirement to Pay proceeding1 by the "garnishee" (A.R., at p. 115).
5. Subsection 317(3) ETA, which concerns only the goods and services tax (hereinafter "GST"), is one of a duo of collection measures outside the sphere of the general law. The second provision — section 224 of the Income Tax Act (hereinafter "ITA"), pertaining to
1 The term "enhanced garnishment" is also used; "enhanced" refers to the transfer of ownership provided for by Parliament. - 2 -
Respondent's Factum Background Information on the Dispute
amounts owed as source deductions2 — provides for a similar mechanism, with one fundamental difference, which will be discussed in our statement of argument.
6. In the present case, the tax debtor filed a notice of intention to make a proposal 11 days after the "garnishee" — the appellant — received the requirement to pay. The appellant did not make a voluntary remittance further to the requirement to pay, deciding instead to transmit the amounts concerned to the tax debtor's trustee in bankruptcy.
7. Given that subsection 317(8) ETA3 stipulates that every person mentioned in subsection 317(2)4 ETA who fails to comply with a requirement to pay becomes liable to pay an amount equal to the amount that the person was required to pay, the Crown assessed (A.R., at pp. 94-95) the appellant under subsection 317(9)5 ETA.
8. A notice of reassessment (A.R., at p. 108) was subsequently issued, the original assessment having been amended solely in regard to the quantum in order to take into account the issuance of a similar provincial notice of assessment6 for the same amounts. The appellant sought the cancellation of the notice of reassessment, setting up the precedence provided for in subsection 70(1) BIA against the requirement to pay.
9. Québec's tax legislation provides in effect for a similar mechanism, in section 15 of the Tax Administration Act (hereinafter the "TAA"7) — a proceeding called Notice of the Minister
2 Also "deductions at source" or "withholdings". 3 The text of this provision is reproduced on p. 51 of the official version of the respondent's factum, Part VII: Legislation. 4 The text of this provision is reproduced on p. 50 of the official version of the respondent's factum, Part VII: Legislation. 5 The text of this provision is reproduced on p. 51 of the official version of the respondent's factum, Part VII: Legislation. 6 The appellant was also assessed Québec sales tax (hereinafter "QST") under section 15 AMR (A.R., at p. 90). The appellant appealed that assessment before the Court of Québec, record number 500- 80-012830-098. The hearing in that case was stayed pending this Court's decision. This provincial tax legislation similar to section 317 ETA will be discussed later on. 7 This act replaced the Act respecting the Ministère du Revenu (hereinafter the "AMR") on April 1, 2011. - 3 -
Respondent's Factum Background Information on the Dispute
of Revenue to a Garnishee. Contrary to the duo of instruments benefiting the federal Crown, this lone provincial provision applies to both QST and source deductions.
10. Yet, despite the fact that these enabling provisions are very similar and have identical effects, at least as concerns subsection 317(3) ETA and section 15.3.1 TAA, to the extent that the latter is used to collect QST, there are nevertheless currently two contrary lines of authority among courts of appeal in Canada. This creates confusion, especially in the province of Québec, when applying these mechanisms in cases where the tax debtor turns to the BIA after a requirement to pay or a minister's notice has been sent to a "garnishee" and the latter does not act on it.
11. On the one hand, the Federal Court of Appeal (impugned judgment) and the appellate courts of Ontario8 and Saskatchewan9 have ruled in favour of the Crown in regard to the setting up, against trustees in bankruptcy and secured creditors, of requirements to pay sent by the tax authorities prior to a bankruptcy but "unpaid" at that time.
12. Conversely, the Court of Appeal of Québec has now twice10 ruled in favour of trustees in bankruptcy in disputes brought by the trustees concerning minister's notices to a garnishee issued under section 15 TAA.
13. As a result of the preceding, there are problems collecting GST, which should be recovered uniformly throughout Canada. This is because the precedents of the Court of Appeal of Québec, which concern only the equivalent provincial provision, are nonetheless set up against the federal Crown, the present case being the best example of this.
8 Bank of Montreal v. M.N.R., 66 O.R. (3d) 161 [2003], Book of Authorities of the Respondent, hereinafter "B.A.R.", Tab 6. 9 Encor Energy Corp. v. Ernst & Young Inc., [1995] G.S.T.C. 54 (B.A.R., vol. I, Tab 14). 10 SMRQ v. De Courval, [2009] R.J.Q. 597, this case also being listed as Québec (Sous-ministre du Revenu) v. Service de garantie Québec inc. (Syndic de) (B.A.R., vol. II, Tab 27); Giguère (Syndic de), [2001] R.D.F.Q. 39 (C.A.), 2001 [R.J.Q.] 2646 (B.A.R., vol. I, Tab 16). - 4 -
Respondent's Factum Background Information on the Dispute
14. Thus, and practically speaking, the two judgments of the Court of Appeal of Québec, although they do not relate stricto sensu to the collection of GST, are part of the backdrop to this case. Indeed, they are virtually the only precedents submitted by the appellant and, for that reason, should be discussed by this Court, as they were by the Federal Court of Appeal.
15. That is the background of the dispute giving rise to the appellant's appeal.
16. Incidentally, this is the first time11 that this Court, which has ruled several times on the parallel mechanism of deemed trusts,12 has been called on to determine the legal effect of requirements to pay transmitted prior to a bankruptcy or a proposal and not followed by a remittance on the same date.
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11 In Alberta (Treasury Branches) v. The Queen, [1996] 1 S.C.R. 963 (B.A.R., vol. I, Tab 4), this Court discussed the transfer of ownership provided for in the provisions of interest to us, but the matter of interaction with the BIA was not touched on. Incidentally, three files, one of which involved insolvency, were joined. 12 For example: First Vancouver Finance v. M.N.R., [2002] 2 S.C.R. 720 (B.A.R., vol. I, Tab 15); Quebec (Revenue) v. Caisse populaire Desjardins de Montmagny, [2009] 3 S.C.R. 286 (B.A.R., vol. II, Tab 26). - 5 -
Respondent's Factum Concise Statement of the Facts
PART I – CONCISE STATEMENT OF THE FACTS
17. The facts are not contested and the respondent agrees with the trial judge's description of them in paragraph 1 of his judgment (A.R., at pp. 3-4). That description was reproduced by the Federal Court of Appeal in paragraph 6 of its judgment (A.R., at p. 17).
18. That being so, the respondent reminds this Court that the appellant admitted that it received the requirement to pay on December 13, 2007 and that it did not act on it for the next 13 days before deciding to send the amounts claimed to the tax debtor's trustee in bankruptcy further to the filing, on December 24, 2007, of a notice of intention to file a proposal.
19. The respondent also wishes to clarify one point in the description of facts. In response to paragraph 4 of the appellant's factum, where the appellant indicates that there was no time limit for acting on the minister's request, the respondent points out that the following was indicated in the request: [TRANSLATION] "We inform you that these notices take effect as of the date of receipt" (A.R., at p. 115), the whole in accordance with the enabling legislative provision.
20. It is appropriate now to ask the question in issue raised in the appeal.
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Respondent's Factum Question in Issue
PART II – QUESTION IN ISSUE
21. The respondent submits that the question to be resolved is as follows:
22. Did the lower courts err in law in finding that subsection 70(1) BIA does not trump the transfer of ownership provided for in subsection 317(3) ETA?
23. The Crown submits that it is appropriate to answer that question in the negative, based on the following propositions.
24. Subsection 317(3) ETA entails a different legal effect from the deemed-trust mechanism, namely, a transfer of ownership which, in the present case, occurred 11 days prior to the filing of a notice of intention to make a proposal. In other words, Parliament replaced the claim of the Crown, initially the beneficiary, with a right of ownership.
25. This federal "intrusion" into an area of provincial jurisdiction—"ownership and civil law" — gave rise to much discussion when the provisions were passed. The validity of this legislative transfer of ownership was ultimately recognized by this Court in Alberta (Treasury Branches) v. M.N.R., [1996] 1 S.C.R. 963.
26. Moreover, the legislative history, which unfortunately was not taken into account by the Court of Appeal of Québec in its two aforementioned judgments, clearly confirms that the phrase in s. 317 ETA providing for the exclusion of the BIA was incorporated into the provision in order to delimit the period during which a requirement to pay may be exercised.
27. Thus, the amounts covered by the requirement to pay were deducted from the patrimony of the bankrupt debtor before the bankruptcy, with the result that there can be neither conflict with subsection 70(1) BIA, which provides for precedence, not cancellation, nor interference with the order of priority set forth in the BIA. - 7 -
Respondent's Factum Question in Issue
28. Lastly, payment as the traditional criterion for concluding that a transfer of ownership took place, reiterated in subsection 70(1) BIA, cannot trump the aforementioned mechanism subsequently adopted by Parliament.
29. After reproducing the principal legislative provisions, we will take up the above propositions in the same order, because we feel it is appropriate to determine the rights of the Crown in a "standard" context first, before examining interaction with the BIA.
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Respondent's Factum Statement of Argument
PART III – STATEMENT OF ARGUMENT
30. Subsection 317(3) ETA, the linchpin of the requirement to pay mechanism in GST matters, reads as follows:
EXCISE TAX ACT LOI SUR LA TAXE D'ACCISE
317(3) 317 (3) Despite any other provision of this Part, Malgré les autres dispositions de la any other enactment of Canada other présente partie, tout texte législatif than the Bankruptcy and Insolvency Act, fédéral à l'exception de la Loi sur la any enactment of a province or any law, if faillite et l'insolvabilité, tout texte the Minister has knowledge or suspects législatif provincial et toute règle de droit, that a particular person is, or will become si le ministre sait ou soupçonne qu'une within one year, liable to make a payment personne est ou deviendra, dans les douze mois, débitrice d'une somme à un débiteur (a) to a tax debtor, or fiscal, ou à un créancier garanti qui, grâce à un droit en garantie en sa faveur, a le (b) to a secured creditor who has a right to droit de recevoir la somme autrement receive the payment that, but for a payable au débiteur fiscal, security interest in favour of the secured creditor, would be payable to the tax debtor, il peut, par avis écrit, obliger la personne à verser au receveur général tout ou partie the Minister may, by notice in writing, de cette somme, immédiatement si la require the particular person to pay somme est alors payable, sinon dès qu'elle without delay, if the moneys are payable le devient, au titre du montant dont le immediately, and in any other case as and débiteur fiscal est redevable selon la when the moneys become payable, the présente partie. moneys otherwise payable to the tax debtor or the secured creditor in whole or in part to the Receiver General on account Sur réception par la personne de l'avis, of the tax debtor's liability under this Part, la somme qui y est indiquée comme and on receipt of that notice by the devant être versée devient, malgré tout particular person, the amount of those autre droit en garantie au titre de cette moneys that is so required to be paid to somme, la propriété de Sa Majesté du the Receiver General shall, despite any chef du Canada, jusqu'à concurrence du security interest in those moneys, montant dont le débiteur fiscal est ainsi become the property of Her Majesty in redevable selon la cotisation du ministre, right of Canada to the extent of that et doit être versée au receveur général par liability as assessed by the Minister and priorité sur tout autre droit en garantie au shall be paid to the Receiver General in titre de cette somme. priority to any such security interest. - 9 -
Respondent's Factum Statement of Argument
31. The inspiration for this provision came from subsection 224(1.2) ITA on source deductions, which was passed previously and which is similar to subsection 317(3), save one major difference, namely, that the ITA does not provide for the exclusion of the BIA,13 apart from a reference to sections 69(1) and 69.1 BIA. We will discuss this difference in the wording of the two sections later on. Subsection 224(1.2) ITA reads as follows:
INCOME TAX ACT LOI DE L’IMPÔT SUR LE REVENU
224(1.2) 224 (1.2) Notwithstanding any other provision of Malgré les autres dispositions de la this Act, the Bankruptcy and Insolvency présente loi, la Loi sur la faillite et Act, any other enactment of Canada, any l'insolvabilité, tout autre texte législatif enactment of a province or any law, but fédéral ou provincial et toute règle de subject to subsections 69(1) and 69.1(1) droit, mais sous réserve des paragraphes of the Bankruptcy and Insolvency Act and 69(1) et 69.1(1) de la Loi sur la faillite et section 11.4 of the Companies' Creditors l'insolvabilité et de l'article 11.4 de la Loi Arrangement Act, where the Minister has sur les arrangements avec les créanciers knowledge or suspects that a particular des compagnies, s'il sait ou soupçonne person is, or will become within one year, qu'une personne donnée est ou deviendra, liable to make a payment dans les douze mois, débiteur d'une somme : (a) to another person (in this subsection referred to as the "tax debtor") who is a) soit à un débiteur fiscal, à savoir une liable to pay an amount assessed under personne redevable du montant d'une subsection 227(10.1) or a similar cotisation en application du paragraphe provision, or 227(10.1) ou d'une disposition semblable;
(b) to a secured creditor who has a right to b) soit à un créancier garanti, à savoir une receive the payment that, but for a personne qui, grâce à une garantie en sa security interest in favour of the secured faveur, a le droit de recevoir la somme creditor, would be payable to the tax autrement payable au débiteur fiscal, debtor, le ministre peut exiger par écrit de la the Minister may in writing require the personne donnée que tout ou partie de particular person to pay forthwith, where cette somme soit payé au receveur the moneys are immediately payable, and général, sans délai si la somme est in any other case as and when the moneys payable immédiatement, sinon dès qu'elle become payable, the moneys otherwise devient payable, au titre du montant de la payable to the tax debtor or the secured cotisation en application du paragraphe
13 We will discuss this difference in paras. 78 et seq. - 10 -
Respondent's Factum Statement of Argument
creditor in whole or in part to the Receiver 227(10.1) ou d'une disposition semblable General on account of the tax debtor's dont le débiteur fiscal est redevable. Sur liability under subsection 227(10.1) or the réception de l'avis de cette exigence par similar provision, and on receipt of that la personne donnée, la somme dont le requirement by the particular person, paiement est exigé devient, malgré toute the amount of those moneys that is so autre garantie au titre de cette somme, required to be paid to the Receiver la propriété de Sa Majesté jusqu'à General shall, notwithstanding any concurrence du montant de la cotisation et security interest in those moneys, doit être payée au receveur général par become the property of Her Majesty to priorité sur toute autre garantie au titre de the extent of that liability as assessed by cette somme. the Minister and shall be paid to the Receiver General in priority to any such security interest.
32. Furthermore, as mentioned, subsection 317(3) ETA is essentially similar to14 sections 15 and 15.3.1 of the TAA, which must be examined here, because the appellant relied primarily on Québec precedents rendered in application of these provincial provisions, which read as follows:
TAX ADMINISTRATION ACT LOI SUR L’ADMINSTRATION (QUÉBEC) FISCALE (QUÉBEC) 15. Notice to third persons 15. Avis à un tiers The Minister may, by notice served or sent Le ministre peut, par avis signifié ou by registered mail, require that a person who, transmis par courrier recommandé, by virtue of an existing obligation, is or will exiger d’une personne qui, en vertu be bound to make a payment to a person d’une obligation existante, est ou sera owing an amount exigible under a fiscal law, tenue de faire un paiement à une pay to the Minister, on behalf of the person's personne qui est redevable d’un creditor, all or part of the amount that the montant exigible en vertu d’une loi person owes or will have to pay to the fiscale, qu’elle lui verse, à l’acquit de creditor, such payment to be made at the time son créancier, la totalité ou une partie the amount becomes payable to the creditor. du montant qu’elle a ou aura à payer à ce dernier et ce au moment où ce montant devient payable au créancier.
14 As mentioned by the Court of Appeal of Québec in SMRQ v. Compagnie Montréal Trust du Canada, 200-09-000378-957, March 2, 1999 at p. 2 (B.A.R., vol. II, Tab 30, p. 193), subsections 317(3) ETA and 224(1.2) ITA are [TRANSLATION] "essentially similar" to ss. 15 and 15.3.1 AMR. - 11 -
Respondent's Factum Statement of Argument
Secured creditor Créancier détenant une sûreté The same rule applies in respect of a Il en va de même à l'égard d'un paiement payment to be made to the secured devant être fait à un créancier détenant une creditor of a person owning an amount sûreté fournie par la personne redevable exigible under a fiscal law where the d'un montant exigible en vertu d'une loi payment, but for the security, would fiscale lorsque ce paiement, si ce n'était de have to be made to such person. la sûreté, devrait être fait à cette personne. 15.3.1 Property of the State 15.3.1 Remise à l’Etat Upon receipt of a notice from the Sur réception d’un avis du ministre Minister served or sent by registered signifié ou transmis par courrier mail, the amount indicated in the recommandé, le montant qui y est indiqué notice as having to be paid to him comme devant lui être versé devient la becomes the property of the State and propriété de l’État et doit lui être remis payment thereof to the Minister shall par priorité sur toute autre sûreté donnée take priority over any other security à l’égard de ce montant. granted in respect of the amount.
33. Where, after a requirement to pay has been sent, the tax debtor goes bankrupt, or files a proposal or a notice of intention to file a proposal, before the garnishee acts on the minister's request, the question of the priority of the rights of the various actors involved, taking into account subsection 70(1) BIA, comes into play, as in the present case. Subsection 70(1) BIA reads as follows:
BANKRUPTCY AND INSOLVENCY LOI SUR LA FAILLITE ET ACT L’INSOLVABILITÉ
70(1) 70 (1) Every receiving order and every Toute ordonnance de séquestre rendue et assignment made in pursuance of this Act toute cession faite en conformité avec la takes precedence over all judicial or présente loi ont priorité sur toutes saisies, other attachments, garnishments, saisies-arrêts, certificats ayant l'effet de certificates having the effect of jugements, jugements, certificats de judgments, judgments, certificates of jugements, jugements ayant l'effet judgment, judgments operating as d'hypothèques, exécutions ou autres hypothecs, executions or other process procédures contre les biens d'un failli, against the property of a bankrupt, except sauf ceux qui ont été complètement - 12 -
Respondent's Factum Statement of Argument
those that have been completely réglés par paiement au créancier ou à executed by payment to the creditor or son mandataire, et sauf les droits d'un his agent, and except the rights of a créancier garanti. secured creditor.
Transfer of ownership provided for in subsections 317(3) ETA and 224(1.2) ITA
34. Before discussing the difference in the wording of the first part of subsections 317(3) ETA and 224(1.2) ITA, we submit that it is important to discuss what they have in common, that is, transfer of ownership, which is effected in identical fashion in the latter part of the subsections.
35. As Professor Emeritus Pierre-André Côté pointed out in Interprétation des Lois, 4th ed. (Thémis, 2009), page 397, No. 1274, [TRANSLATION] "it is the common origin of two statutes that ordinarily renders the joint reading of them enlightening".
36. In addition, Professor Côté (supra No. 1270) stated that [TRANSLATION] "the presumption of coherence between statutes is all the more obvious when their subject- matter is the same, when they are 'in pari materia', as we are accustomed to saying", which is so in the present case regarding the ETA and the ITA.
37. The inspiration for subsection 317(3) ETA having been drawn directly from subsection 224(1.2) ITA, the Crown submits that, when interpreting the former, the legislative history of the latter, and the context in which it was passed by Parliament, must be taken into account.
38. The passage of the latter did not go smoothly, far from it. An initial amendment to section 224 ITA had been envisaged in 1986, in order to buttress the Crown's enforcement - 13 -
Respondent's Factum Statement of Argument
powers regarding garnishment of source deductions (S.C. 1986, c. 6, d. 118(2)).15 This was because third parties would systematically set up contractual assignments of previous debts against Crown claims, contending that ownership of the amounts subsequently "garnisheed" by the Crown had already been transferred to the secured creditors, thus trumping the contentions of the tax authorities.16 The draft amendment17 of course attracted the attention of financial institutions and, further to their representations, died on the order paper.
39. However, a less substantial amendment than the earlier draft amendment was made to section 224 ITA in 1987 (S.C. 1987, c. 46, a. 66). The article was essentially worded as it is today, but — and this is the major difference — transfer of ownership in favour of the Crown was not expressly stipulated at the time.
40. As one can imagine, the new provision caused disputes between the Crown and financial institutions, as well as bank trustees. The Court of Appeal for Alberta was the first appeal jurisdiction to be seized of the matter and, in its 1989 judgment Lloyds Bank Canada v. International Warranty Co., 68 Alta. L.R. (2d) 356, took the view that section 224, as it existed on June 2, 1989, was not sufficiently clear to allow for transfer of ownership without compensation. On page 362, Stratton J.A. wrote that "something further is required to accomplish" [the effect sought by the Crown].
15 The provision read as follows: "(10.2) Notwithstanding any other provision of this Act, any other enactment of Canada, any enactment of a province or any law, where a person has been assessed under subsection (10.1) or a similar provision the amount determined under subsection (10.3) is secured by a charge upon the property referred to in subsection (10.4) and the charge has priority over all other claims and all security interests". 16 This matter was discussed by a parliamentary committee: See Minutes of Proceedings and Evidence, Standing Committee on Finance and Economic Affairs, Issue No. 131, December 3, 1987, Second Session, Thirty-third Parliament, 1986-1987, pp. 131-56 to 131-61 (B.A.R., vol. II, Tab 42, pp. 407-412). 17 In Lloyds Bank Canada v. International Warranty Co., 68 Alta L.R. (2d) 356 at 362 (B.A.R., vol. II Tab 20, p. 22), the Court of Appeal for Alberta said that, had it been passed, it would have been a sufficient basis on which to conclude transfer of ownership to the Crown. - 14 -
Respondent's Factum Statement of Argument
41. After Lloyds Bank was rendered, Parliament tackled the matter again, in 1990 (S.C. 1990, c. 34, s. 1) and introduced the current phrase providing for transfer of ownership to the Crown.18 Subsection 317(3) ETA was passed relatively concomitantly (S.C. 1990, c. 45, s. 12), with Parliament being very careful to use different wording, namely, an exclusion of the BIA. This will be discussed later on; in the meantime, we will limit ourselves to the transfer of ownership in se.
42. The effect sought by Parliament at the time was nothing less than to legislatively change a claim into a right of ownership, a step that set a unique precedent. Incidentally, subsections 224(1.2) ITA and 317(3) ETA are, to our knowledge, the only19 provisions allowing for such an effect outside the sphere of the general law.
43. The new amendment caused such an uproar that, this time, it caught the attention of the provinces, with the federal government said to be "interfering" in an area of exclusive provincial jurisdiction, at least by Saskatchewan, which seized its appellate court of a reference in order to determine the constitutional validity of the federal initiative: (1993), 105 Sask. L.R. 211. This Court was seized of an appeal and ultimately ruled that the initiative was intra vires federal jurisdiction: Transgas Ltd. v. Mid-Plains Contractors Ltd., [1994] 3 S.C.R. 753.20
18 See House of Commons Debates, Official Report, 34th Parliament, 2nd Session, 39 Elizabeth II, Volume VIII, 1990, pp. 10242-10249 (B.A.R., vol. II, Tab 38, pp. 327-334). 19 Apart from, as mentioned, section 15 TAA, the similar Québec provision. Such an effect does not appear to be included in the provisions of Ontario's Retail Sales Tax Act, RSO 1990, c. R-31, s. 36; British Columbia's Financial Administration Act, RSBC 1996, c. 138, s. 83 or the Alberta Corporate Tax Act, RSA 2000, c. A-15, s. 60. 20 In Denis Cimaf inc. v. Caisse populaire d’Amos, 500-09-001379-932 (B.A.R., vol. I, Tab 12), Jean-Louis Baudouin J. went over the history of section 224 ITA. - 15 -
Respondent's Factum Statement of Argument
44. Thus, this Court recognized once again the right of Parliament to adopt the rules of its choice for the application of statutes relative to the areas of jurisdiction over which it has legislative authority.21
45. In the meantime, three similar cases made their way to this Court, which ruled on them together in Alberta (Treasury Branches), supra.
46. The appellant contends that that judgment is no longer relevant following the 1992 amendments to the BIA, because the facts date back to 1990.22 The respondent counters that the judgment is of particular interest expressly because it sets out the precise state of the law in 1990, which, in our view, must be taken into account in the reasoning necessary to resolve the present appeal.
47. This Court then examined the history of subsections 224(1.2) ITA and 317(3) ETA, Parliament having to that point attempted to confer on the Crown a transferable right of ownership that could be set up erga omnes. Both Cory J. (majority) and Major J. (minority) said that they were of the opinion that these two legal provisions were now clear enough to give the Crown the benefit sought, that is, to be considered owner with priority over, in particular, the interests of secured creditors.
48. Although the main issue in the above judgment had to do with the examination of the nature of a contractual assignment granted prior to collection by the Crown, the following remarks strike us as important in the context of the present dispute:
● Cory J., on behalf of the majority (at 971):
Major J. has concluded that the Alberta Court of Appeal was correct in finding that an assignee of a GABD is not a "secured creditor" within the meaning of s. 224(1.3) ITA or s. 317(3) ETA because the assignee does
21 This principle should be kept in mind, because the definition of "ownership" adopted by Parliament in the BIA will be looked at later on. 22 The Court of Appeal of Québec disposed of this judgment in two paragraphs [35-36] in De Courval (B.A.R., vol. II, Tab 27, p. 144) and in one paragraph [26] in Giguère (B.A.R., vol. I, Tab 16, p. 357). - 16 -
Respondent's Factum Statement of Argument
not hold a security interest "in the property of another person". Rather, the assignee is the owner of those book debts. With respect I cannot agree with that conclusion. However I am in complete agreement with these conclusions:
1. The definition of “security interest” is broad enough to include a general assignment of book debts even where that assignment is absolute.
2. The wording of s. 224(1.2) ITA23 as amended in 1990 is sufficiently clear and non-equivocal to allow a transfer of property in the garnished funds to the Minister of National Revenue (MNR) and to grant him a priority in circumstances where the balance of the section applies.
● Major, dissenting on the merits (at 998-999):
Apparently in order to deal with the competing lines of authority as to whether s. 224(1.2) was sufficient to grant a priority to the MNR, Parliament amended the section in 1990 by adding the following to the end of the section:
. . . and on receipt of that letter [i.e. the garnishment summons] by the particular person, the amount of those moneys that is required by that letter, to be paid to the Receiver General shall, notwithstanding any security interest in those moneys, become the property of Her Majesty and shall be paid to the Receiver General in priority to any such security interest.
This 1990 amendment was made to both the Income Tax Act and the relevant provisions of the Excise Tax Act. The three trial decisions in the cases at issue in these appeals are principally concerned with the issue of whether this amendment constituted the "something further" which Lloyds Bank had held was necessary to transfer the property interest in the funds to the MNR or to grant a priority to the MNR.
. . . I agree with Forsyth J. that the 1990 amendments to the Income Tax Act and the Excise Tax Act were sufficient to provide the "something further" which the Alberta Court of Appeal thought to be necessary in Lloyds Bank.
[Emphasis added.]
23 At the outset of his reasons, Cory J. wrote the following about the similarity between sections 224 ITA and 317 ETA: "At issue on these appeals is whether, on the facts of this case, lending institutions are secured creditors pursuant to the provisions of s. 224 of the Income Tax Act, S.C. 1970-71-72, c. 63 (ITA) and s. 317 of the Excise Tax Act, R.S.C., 1985, c. E-15 (ETA), which are practically identical in their provisions". - 17 -
Respondent's Factum Statement of Argument
49. As Noël J.A. pointed out in paragraph 47 of the impugned judgment (A.R., at pp. 34-35), [TRANSLATION] "No one takes issue [anymore] with the fact that . . . the Crown [becomes] the owner of the moneys subject to the requirement upon the garnishee's receipt of the requirement to pay".
50. In fact, this Court has declared twice now that subsection 224(1.2) ITA was unequivocal, such that it was clear24 that it resulted in a transfer of ownership: Royal Bank of Canada v. Sparrow Electric Group, [1997] 1 S.C.R. 411 at 48525 in addition to Alberta (Treasury Branches).
51. The only amendments to subsection 317(3) ETA over time were in regard to the reference to the Bankruptcy and Insolvency Act (BIA) rather than to the Bankruptcy Act (S.C. 1992, c. 27, para. 90(1)(p)), the means of communicating provided for (S.C. 1993, c. 27, s. 133) and the replacement of the original words "notwithstanding" and "nonobstant" by the words "despite" and "malgré" (S.C. 2000, c. 30, para. 95(5)). The explicit exclusion of the BIA, which we will comment on later, remained in both versions.
52. For now, let us not forget that, when subsection 317(3) ETA was passed in 1990, the Crown enjoyed privileged treatment in bankruptcy matters, not only in regard to source deductions, but also in regard to GST, so that there was no conflict at the time between the ETA and the BIA in respect of what could be called "the status of the Crown's rights".
53. The 1987 and 1990 amendments to subsection 224(1.2) ITA have already been dealt with. In 1994 [S.C. 1994, c. 7, Sched. V, s. 91], Parliament amended the subsection to change "nonobstant" to "malgré" ["notwithstanding" in the English statute remained unchanged]
24 It is now accepted that, in taxation matters, the court must apply the ordinary rules of interpretation: Québec (Communauté urbaine) v. Corp. Notre-Dame de Bon-Secours, [1994] 3 S.C.R. 3 at 8 (B.A.R., vol. II, Tab 25, p. 92), referring to Stubart Investments Ltd. v. The Queen [1984] 1 S.C.R. 536. 25 In that judgment, the Court refers to deemed trusts. With respect, and we discuss this in paragraphs 57 et seq., the Crown submits that the legal effects of the requirement to pay are different from those of the deemed-trust mechanism. - 18 -
Respondent's Factum Statement of Argument
and refer to sections 69 and 69.1 BIA, which stipulated that recovery measures could be stayed if a notice of intention or a proposal were filed, in all probability for coordination purposes with respect to subsection 60(1.1) BIA, which provides that source deductions must be paid in full within six months after the proposal has been approved and "are of a kind that could be subject to a demand under" section 224 ITA.26
54. Relative to this question of the transfer of ownership effected by the ETA and the ITA, it must be borne in mind that the BIA itself, particularly in section 67, defines the notion of "ownership"27 very broadly. The BIA is a statute that is English in its inspiration, and Parliament clearly followed the Common Law notions when it enacted section 2 BIA, which reads as follows:
Bankruptcy and Insolvency Act Loi sur la faillite et l’insolvabilité 2 ["property" – "biens"] 2 ["biens" – "property"] "property" means any type of property, Bien de toute nature, qu’il soit situé au whether situated in Canada or elsewhere, Canada ou ailleurs. Sont compris parmi and includes money, goods, things in les biens les biens personnels et réels, en action, land and every description of droit ou en equity, les sommes d’argent, property, whether real or personal, legal marchandises, choses non possessoires et or equitable, as well as obligations, terres, ainsi que les obligations, servitudes easements and every description of estate, et toute espèce de domaines, d’intérêts ou interest and profit, present or future, de profits, présents ou futurs, acquis ou vested or contingent, in, arising out of or éventuels, sur des biens, ou en provenant incident to property. ou s’y rattachant.
55. As a result of such a definition, this Court developed, for example in Saulnier v. Royal Bank of Canada, 2008 SCC 58, interesting legal concepts such as beneficial ownership, proprietory interest (para. 35), bundle of rights (para. 43) and interest created by statute (para. 51). The Crown submits subsidiarily that the right conferred on it by the
26 Lastly, in 1997 (S.C. 1997, c. 12, s. 128), a reference to the Companies' Creditors Arrangement Act was added. 27 This is in line with Transgas Ltd. v. Mid-Plains Contractors Ltd., [1994] 3 S.C.R. 75, referred to in paragraphs 43-44 (B.A.R., vol. II, Tab 32), about which we said that Parliament can adopt the rules of its choice to implement statutes relative to the areas of jurisdiction over which it has legislative authority. - 19 -
Respondent's Factum Statement of Argument
requirements to pay could in a way be considered to be at least a "proprietory interest" or an "interest created by statute".
56. Lastly, given the unequivocal language of the federal provisions under study with regard to the transfer of ownership, and in light of section 2 BIA, the Crown submits that it is not necessary28 to draw on the Civil Law of Québec, the province in which the appeal originated, in order to delimit the Crown's rights.
The parallel mechanism of deemed trusts
57. Since, in our discussion of the difference between the wording of subsection 317(3) ETA and subsection 224(1.2) ITA, we will refer to what are now commonly known as deemed trusts, it is appropriate at this time to look at the enabling provisions of that parallel mechanism. This will also help to distinguish deemed trusts from requirements to pay.
58. It is important at the outset to make clear that this is not a case involving the Crown's deemed trust, the Crown being perfectly aware that, since the 1992 amendments to the BIA, the deemed trust at its disposal for GST ceases to apply when its debtor has recourse to the BIA.
59. Both the ITA and the ETA provide for deemed trusts and a requirement to pay mechanism. The enabling provisions respecting these mechanisms are drafted differently, and it is our contention that they therefore have different legal effects.
60. Despite these different statutory provisions, there is all too often confusion of kind, both mechanisms being considered to fall under the general heading of "privilege of the Crown"
28 See sections 8.1 and 8.2 of the Interpretation Act, S.R. 1985, c. I-21; 2001, c. 4, s. 8. In application, see Attorney General of Canada v. National Bank of Canada, 2004 FCA 92. - 20 -
Respondent's Factum Statement of Argument
as if they were, according to the well-known expression, [TRANSLATION] "six of one, half a dozen of the other".29
61. The deemed trust for GST is provided for in section 222 ETA, which states that every person who collects an amount of GST "is deemed, for all purposes and despite any security interest in the amount, to hold the amount in trust for Her Majesty in right of Canada, separate and apart from the property of the person and from property held by any secured creditor of the person".
62. Paragraph 222(3)(a) ETA provides that the debtor's property is "deemed to be held in trust". Paragraph 222(3)(b) ETA states, for its part, that the property "is deemed to form no part of the estate or property of the person from the time the amount was collected". The last part of the section stipulates that the property is "property beneficially owned by Her Majesty".30
63. The deemed trust for source deductions is provided for in subsection 227(4) ITA, which states, in a manner similar to the ETA, that "[e]very person who deducts or withholds an amount under this Act is deemed, notwithstanding any security interest (as defined in subsection 224(1.3)) in the amount so deducted or withheld, to hold the amount separate and apart from the property of the person and from property held by any secured creditor . . . in trust for Her Majesty . . .".
64. Under paragraph 227(4.1)(a) ITA, property is "deemed to be held, from the time the amount was deducted or withheld by the person . . . in trust for Her Majesty", while, under paragraph 227(4.1)(b) ITA, property is "deemed to form no part of the estate" of the debtor
29 Attorney Philippe H. Bélanger, in his article entitled "Droits, priorités et super priorités des ministères du Revenu", 2001, 35 RJT 83 at 111 (B.A.R., vol. II, Tab 36, p. 257), sets forth the distinctions between deemed trusts and requirements to pay. 30 The English and French versions of section 222 ETA are reproduced on pages 45 and 49 of the official version of the respondent's factum (Part VII: Legislation). - 21 -
Respondent's Factum Statement of Argument
"from the time the amount was so deducted or withheld". The last part of the section also stipulates that the property is "property beneficially owned by Her Majesty".31
65. By this deemed-trust mechanism, Parliament thus created a presumption in favour of the Crown by granting it a floating charge over all the debtor's property, effective from the time collection was to take place, even though, in actual fact, the tax32 that was not collected or remitted cannot be identified in relation to, or traced to, the debtor's property: First Vancouver Finance v. M.N.R. [2002] 2 S.C.R. 720 at para. 4.
66. The benefit sought by Parliament was to exempt the tax authorities, as beneficiary and involuntary creditor, from having to identify which items of the debtor's property were intended for them.
67. As of 1992, only deemed trusts for source deductions survive bankruptcy, the Crown being relegated to the rank of unsecured creditor in regard to its GST claims, that is, in the vast majority of cases where a requirement to pay amounts assessed was not sent prior to the bankruptcy, so that the transfer of ownership of interest to us here could not have taken place before the bankruptcy.
68. This is where certain fundamental differences between deemed trusts and requirements to pay can be pointed out. First, whereas deemed trusts almost involve a "state" and exempt the Crown from taking any concrete step, requirements to pay oblige the tax authorities to take concrete action and, at least in the case of subsection 317(3) ETA, to necessarily do so before the debtor has recourse to the BIA.
69. Second, deemed trusts have a greater "temporal" effect in that they take effect "at the time of the default" in making remittances (GST) or deductions (at source), whereas requirements to pay concern instead amounts assessed.
31 The English and French versions of section 227 ITA are reproduced on pages 55 and 59 of the official version of the respondent's factum (Part VII: Legislation). 32 Or source deductions. - 22 -
Respondent's Factum Statement of Argument
70. Third, while deemed trusts create a charge on all of the debtor's property, both movable and immovable, the property affected by requirements to pay is necessarily movable and limited, namely, to amounts owed by a particular third party to a tax debtor.
71. In short, requirements to pay are considerably more restricted in application than deemed trusts, and the Crown submits to this Court that, at the time of the 1992 amendments to the BIA, Parliament was perfectly aware of these differences and deliberately left subsection 317(3) ETA intact.
72. It is one thing to stipulate, as in the provisions introducing deemed trusts, that an amount "deducted, withheld or collected" by the debtor under a tax law is deemed to be held by the debtor in trust for the Crown, but quite another to state, as in sections 317 ETA and 224 ITA, that a claim "garnisheed" from a third-party holder thereby becomes the property of the Crown.
73. Moreover, the BIA itself implicitly recognizes the operation of two separate mechanisms, in that, for example, subsections 67(2) and 67(3) BIA, under the heading "Deemed trusts", refer solely to section 227 ITA, not to section 224 ITA.
74. The Crown submits that the aforementioned reference solely to deemed trusts in section 67 BIA, along with the reference to the Crown's "provable claims", in section 86 BIA, are not determinative with respect to the status of amounts contemplated by requirements to pay, because the amounts became the property of the Crown prior to the bankruptcy.33
75. In De Courval, the Court of Appeal of Québec discussed deemed trusts at length (in paragraphs 28-34), referring, in particular, to section 20 AMR34 and section 67 BIA. The Court indicated (in paragraph 31) that [TRANSLATION] "the notice sent under section 15
33 In theory, the Crown could file a property claim (ownership) rather than a provable claim in addition to taking the recourse available to it under the tax legislation, that is, assess, as in the present case, the third party that failed to act on the requirement to pay. 34 In Québec, the provincial equivalent with respect to deemed trusts. - 23 -
Respondent's Factum Statement of Argument
AMR did not change the deemed trust into a real trust", then added (in paragraph 32) that [TRANSLATION] "the amounts were deemed to be held in trust under section 20 AMR, but there was no real trust".
76. With great respect, the Crown submits that these remarks reflect the confusion of kind referred to earlier. What is the point in referring to a real trust, when Parliament provided for the Crown's henceforth becoming owner of the amounts, with the result that they are withdrawn from the debtor's assets and, consequently, from the bankruptcy assets?
77. However, there is an important limitation on the Crown's exercise of the mechanism provided for in subsection 317(3) ETA, which will be discussed in the following part of this document.
Difference between the wording of subsection 317(3) ETA and subsection 224(1.2) ITA: explicit exclusion of the BIA
78. Now that the legislative right of ownership and the parallel mechanism of deemed trusts have been dealt with, it is appropriate to discuss the difference between the wording of subsections 317(3) ETA and 224(1.2) ITA.
79. First of all, it will be recalled, as pointed out by Professor Côté (supra No. 1282), that [TRANSLATION] "the formulation in a related statute may be invoked to serve as a foundation for a contrario reasoning: different drafting in statutes on the same subject can lead to a presumption of a different meaning", as Parliament does not speak, or, it may be added, speak differently, in vain.
80. The current difference between the two provisions is that subsection 224(1.2) ITA includes only the phrase "notwithstanding the Bankruptcy and Insolvency Act", whereas subsection 317(3) ETA contains the phrase "other than the Bankruptcy and Insolvency Act". - 24 -
Respondent's Factum Statement of Argument
81. As mentioned earlier in paragraph 53, "malgré" replaced "nonobstant" in the original French version of subsection 224(1.2) ITA (S.C. 1994, c. 7, Sched. V, s. 91); the same is true in the case of the ETA (S.C. 2000, c. 30, subs. 95(5)).35
82. Thus, in 1990, the year in which these two provisions were introduced, the only difference between them was that subsection 224(1.2) ITA included the phrase "notwithstanding the Bankruptcy Act", whereas subsection 317(3) ETA contained, and still contains, the phrase "other than the Bankruptcy and Insolvency Act".
83. For the reasons stated below, the respondent submits to this Court that the sole purpose of the use of the phrase "notwithstanding the Bankruptcy and Insolvency Act" in subsection 224(1.2) ITA, without an explicit exclusion of that Act, was to allow the federal tax authorities to serve a requirement to pay on a bankrupt tax debtor's trustee, that is, after the assignment of the debtor's property.
84. The answer to the question asked in this application for leave to appeal depends in large part on the meaning to be ascribed to the words "other than", as they have appeared in subsection 317(3) ETA since 1990.
85. The appellant contends that, on the basis of the ordinary meaning of the words and on the Québec Court of Appeal decision in De Courval, the words mean that, if any provision of the BIA, in this instance subsection 70(1), has the effect of countering subsection 317(3) ETA, the former prevails.
86. As pointed out by Noël J.A. in paragraph 41 of the impugned judgment:
[TRANSLATION] The opinion expressed above [in De Courval] which is based on the Court of Appeal's analysis of subsection 317(3) of the ETA, rests entirely on the premise that the phrase ("other than the [BIA]") causes that statute to prevail in the event of a conflict. That premise is held as
35 See paragraph 51. [As regards the English version of these two statutes, "notwithstanding" remained unchanged in the ITA, while "notwithstanding" was changed to "despite" in the ETA.] - 25 -
Respondent's Factum Statement of Argument
true without any discussion. Although in its reasons the Court of Appeal did analyze and distinguish numerous aspects of the Ontario Court of Appeal's decision in Bank of Montreal, it did not address the following conclusion (Bank of Montreal, paragraph 14):
. . . The words "other than the BIA" have meaning apart from the interpretation suggested by the appellant. They mean that any [Goods and services taxes (GST)] payments that become due after a receiving order in Bankruptcy has been made no longer can be collected in priority to other creditors. [Emphasis added.]
87. However, the Crown invites this Court to consider the historical and legislative context discussed in the first part of this document, and contends that the purpose of the phrase is, instead, to delimit the time within which the minister's power may be exercised, by preventing that power from being exercised after the tax debtor's bankruptcy. Here is why.
88. Returning to 1990, the year in which the phrase discussed was introduced into subsection 317(3) ETA, deemed trusts, which were dealt with in the second part of this document, had at the time, in the context of insolvency, the same effect regarding source deductions as regarding GST36 since Parliament did not introduce its amendments to the BIA until two years later.
89. As we have seen, these deemed trusts took effect as of the tax debtor's default and, contrary to today, both source deductions and GST survived bankruptcy, with the result that the amounts subject to these trusts at the time could never be part of the patrimony vested in the tax debtor's trustee in bankruptcy.37
90. As Noël J.A. rightly pointed out in paragraph 49 of the impugned judgment:
[TRANSLATION] Therefore, even if a requirement to pay was issued at a time which coincided with the tax debtor's bankruptcy, there was no conflict
36 In the words of Noël J., [TRANSLATION] "whether they pertained to source deductions or GST". 37 See paragraph 113, referring to Ouellet (B.A.R., vol. II, Tab 22) and Lefebvre (B.A.R., vol. II, Tab 19). - 26 -
Respondent's Factum Statement of Argument
possible between the BIA and the right of ownership conferred upon the Crown under subsection 317(3) of the ETA, or between the BIA and the right of ownership granted under 224 (1.2) of the ITA.
91. Parliament does not speak in vain, and the phrase cannot have been introduced in order for the BIA to prevail, because no conflict was on the horizon at the time (1990), the Crown's claims having priority ranking in any case.
92. This state of affairs, that is, the absence of conflict38 between the BIA and the translative right of ownership provided for in subsection 317(3) ETA, did not change until 1992, because deemed trusts for unpaid GST did not cease to have effect upon a tax debtor's bankruptcy until that time.
93. Due to the absence of conflict between the ETA and the BIA in 1990, subsection 317(3) ETA could not be read otherwise at the time and, when the BIA was amended two years later, Parliament deliberately left it intact, since the power originally set out in it, being exercisable only before the bankruptcy, was in keeping with the spirit of the 1992 amendments to the effect that the collection of source deductions was now special because the Crown was given priority in their regard.
94. The Crown submits that such an interpretation, in addition to being borne out by legislative history, also has the merit of avoiding statutory conflict (Côté, supra p. 406, No. 1296).
95. Moreover, the faculty of sending the notice — the only prerogative with a time constraint due to the explicit exclusion of the BIA — must not be confused with the right to demand payment and the right of ownership resulting from the transfer.
96. Thus, in 1990, Parliament chose to rely solely on deemed trusts, as concerns GST, while already at that time prioritizing the collection of source deductions, in all probability as a prelude to the 1992 amendments, because, in the case of source deductions, the effects of a
38 Now only a seeming conflict, we would add. - 27 -
Respondent's Factum Statement of Argument
requirement to pay, even one sent after a bankruptcy, were added to those of a deemed trust.
97. That is the conclusion reached as well by Philippe H. Bélanger, who, in his article entitled "Droits, priorités et super priorités des ministères du Revenu", (2001) 35 RJT 83, p. 120,39 had this to say about the different phrasing in the two federal provisions and about the conflicting case law on the matter:
[TRANSLATION] We are of the opinion that the best course of action is probably to give preference to the interpretation accepted by the Common Law courts and to conclude that the service of a requirement to pay prior to the bankruptcy can be set up against the tax debtor's trustee. If it is true, as pointed out by Justice Gomery,40 that subsection 317(3) ETA does not preclude application of the BIA, contrary to subsection 224(1.2) ITA, the provision nonetheless results in a transfer of ownership to the Crown as of the service of the requirement to pay. In that context, the amounts owed to the tax debtor will be excluded from the bankrupt's property vested in the trustee, as soon as the requirement to pay is served. In fact, the absence of an explicit exclusion of the provisions of the BIA in no way alters the fact that property of which the bankrupt is no longer the owner on the date of the bankruptcy cannot be passed to the trustee. However, once bankruptcy has occurred and the property has been vested in the trustee, the Crown can no longer serve the requirement to pay under section 317 ETA.41
[Emphasis added.]
39 (B.A.R., vol. II, Tab 36, pp. 266-267). The article was published around the time the Court of Appeal of Québec rendered judgment in Giguère (B.A.R., vol. I, Tab 16), and the Federal Court of Appeal later adopted the same approach. 40 In Central Guaranty Trust Co. v. Québec (Sous-ministre du Revenu), [1993] R.J.Q. 1559 (S.C.) (B.A.R., vol. I, Tab 10). 41 See also: Jean Fontaine, "Les priorités de la Couronne en situation d’insolvabilité", The Canadian Institute, September 2004, pp. 16-19 (B.A.R., vol. II, Tab 39, pp. 352-355); Alain Robichaud, "Nouveautés en matière de créances dues à et par la Couronne", Insight Information, Commercial Insolvency and Restructuring, 5th ed., pp. 9-10 (B.A.R., vol. II, Tab 43, pp. 424-425); Max Mendelsohn, and Éric Vallières, "TPS-TVQ – Quand la simple lecture de la loi ne suffit pas", Canadian Association of Insolvency & Restructuring Professionals, Insolvency Forum, May 28, 2007, p. 14 (B.A.R., vol. II, Tab 40, p. 381); the latter article confirms, in a manner that could be called a contrario, the aforementioned position of Philippe Bélanger. - 28 -
Respondent's Factum Statement of Argument
98. The above conclusion is shared not only by the Federal Court of Appeal in the impugned judgment, but also by the Court of Appeal for Ontario, in Bank of Montreal, 48 C.B.R. (4th) 173 (Ont. C.A.),42 a unanimous judgment rendered on July 11, 2003, that is, more than 10 years after the 1992 amendments to the BIA.43 This is what Madame Justice Weiler (with the support of Justices Laskin and Goudge) had to say on the matter:
[9] The Bank submits that the application judge erred and that the Receiving Order made against Vita Pharm takes precedence over and stays the rights of the CCRA to receive payments under the Requirements to Pay. [10] I would disagree with the Bank’s submission. As the application judge held, on receipt of the Requirement to Pay the funds become the property of Her Majesty to the extent of Vita Pharm’s liability as assessed by the Minister. Vita Pharm has no residual right in the funds and so the Trustee cannot acquire any rights. Vita Pharm’s bankruptcy cannot give the Bank any right to the funds because they never became the property of the Trustee. [11] This interpretation is supported by the decision of the Supreme Court of Canada in Alberta (Treasury Branches) v. M.N.R. [1996] 1 S.C.R. 963, at 971. . . . [12] These words44 are equally applicable to this case. In essence, s. 317 (3) provides a form of garnishment enabling the federal government to intercept monies owed to tax debtors. Once a notice to pay is served, the funds acquired thereafter never become the property of the tax debtor. [14] The appellant submits that under s. 70 (1) of the BIA a receiving order takes precedence over a garnishment that has not been completely executed by payment being made because s. 317 (3) of the ETA is made subject to the BIA. Otherwise, the appellant submits the court would not be giving effect to the words “other than the BIA”. The words “Other than the BIA” have meaning apart from the interpretations suggested by the appellant. They mean that any GST payments that become due after a receiving order in
42 In paragraph 135 of this factum, we refer to the judgment in first instance in Bank of Montreal. 43 While that judgment was rendered more than 10 years after the bankruptcy reform, the Court of Appeal of Québec, in De Courval, [2009] R.J.Q. 597 at para. 39 (B.A.R., vol. II, Tab 27, p. 144), rejected it on the ground that it was based on the Supreme Court judgment in Alberta Treasury Branches (B.A.R., vol. I, Tab 3), which was founded on facts that occurred prior to the 1992 amendments to the BIA. 44 That is, paragraphs 38-39 in the reasons of Cory J. in Alberta (Treasury Branches) (B.A.R., vol. I, Tab. 4, p. 68). - 29 -
Respondent's Factum Statement of Argument
Bankruptcy has been made no longer can be collected in priority to other creditors. [Emphasis added.]
99. This legislative history, which, in our view, helps to clarify the situation, was completely disregarded by the Court of Appeal of Québec in Giguère and De Courval. In fact, of all the courts that have analyzed the mechanism provided for in section 317 ETA, the Federal Court of Appeal is the only one to have done so from that standpoint.
100. Let us now discuss subsection 70(1) BIA, which, according to the appellant, bypasses the transfer of ownership to the Crown.
Interaction with the BIA
101. When, after a requirement to pay has been sent, a tax debtor goes bankrupt or files a proposal before the garnishee has acted on the minister's notice, the question of the priority of the rights of the various actors involved comes into play, as in the present case, taking into consideration subsection 70(1) BIA.
102. The principle set forth in subsection 70(1) BIA is not new law. As can be read in Perras v. Therrien, [1946] Q.B. 716 at 723 et seq., to which the Court of Appeal of Québec referred in Giguère45 and De Courval,46 the Bankruptcy Act (R.S.C. 1927, c. 11) already stipulated in 1925, in section 25, that "[e]very receiving order and every authorized assignment made in pursuance of this Act shall take precedence over (a) all attachments of debts by way of garnishment, unless the debt involved has been actually paid over to the garnishing creditor or his agent".
103. In fact, the 1927 BIA drew on section 40 of the English bankruptcy statute, The Bankruptcy Act, [1914], 4-5 Geo. 5, c. 59, which read as follows:
45 [2001] R.J.Q. 2584 (B.A.R., vol. I, Tab 16). 46 [2009] R.J.Q. 597 (B.A.R., vol. II, Tab 27). - 30 -
Respondent's Factum Statement of Argument
40. Where a creditor . . . has attached any debt due (to a debtor), he shall not be entitled to retain the benefit of . . . the attachment against the trustee in bankruptcy of the debtor, unless he has completed . . . the attachment before the date of the receiving order . . .
(2) For the purpose of this Act, an attachment is completed by receipt of the debt . . .
104. In settling the dispute of interest to us here, it is crucial to note that subsection 70(1) BIA provides for the precedence ("takes precedence"–"ont préséance") of the BIA, not cancellation of the legal effects created previously. In this regard, the respondent submits that the BIA must not be made to say what it does not, or more than what it does say.
105. Indeed, and as ruled by the Court of Appeal of Québec in Provi-Grain (1986) inc. (Syndic de), [1994] R.J.Q. 1804 at 1809 (Madame Justice Deschamps, for the majority), section 70 BIA [TRANSLATION] "does not provide for the nullity of garnishments, but for the priority of the receiving order affecting the garnishments".
106. When, in the BIA, Parliament wished to provide for inoperability or nullity relative to pre- bankruptcy legal effects, there can be no doubt that it did so clearly, as in section 95 BIA.
107. The respondent submits that this is one more element in support of the conclusion that the transfer of ownership discussed in the first part of this document cannot be set aside as a result of subsection 70(1) BIA alone.
108. What is more, as we mentioned earlier,47 it is true that sections 67, 86 and 87 BIA reveal Parliament's intention regarding Crown bankruptcy claims, manifested in 1992, but they cannot trump the transfer of ownership provided for in subsection 317(3) ETA, even when combined with subsection 70(1) BIA. Some may in fact submit that the cases provided for in that subsection and in subsection 224(1.2) ITA are now the only and exclusive "privileges" retained by Parliament for the Crown, apart from deemed trusts for source deductions.
47 In paragraphs 73-74. - 31 -
Respondent's Factum Statement of Argument
109. In fact, the "bankruptcy prism", which is ordinarily preponderant with respect to provable claims of the Crown, does not deform here the Crown's right of ownership, crystallized before the bankruptcy.
110. Indeed, section 67 BIA refers to bankruptcy property and the deemed trust for the Crown, and, because of the transfer of ownership provided for by Parliament, the appellant finds itself invoking a seeming conflict that simply does not exist.
111. Therefore, and as the trial judge rightly pointed out (A.R., at p. 12, para. 27), this transfer intended by Parliament must be taken into account in the analysis of the interaction with section 67 BIA, because that section [TRANSLATION] "contemplates only the property of the bankrupt debtor".
112. In fact, to conclude as sought by the appellant would be to claim that the BIA has ex post facto priority, seemingly justified by its subsection 70(1), while disregarding that the amounts contemplated by the Minister's garnishment cannot at any rate be included in what could be called the "bankruptcy patrimonial base", due to the pre-bankruptcy juridical act occasioned by subsection 317(3) ETA.
113. Concerning this notion of the bankrupt's patrimony, it seems relevant to us to point out that trustees in bankruptcy have no more rights than bankrupts themselves, as regards the bankrupt's patrimony at the outset of the bankruptcy: Lefebvre (Trustee of) [2004] 3 S.C.R. 326 and Ouellet (Trustee of), [2004] 3 S.C.R. 348.
114. This is where we are reminded of the words of author Bélanger,48 namely, that [TRANSLATION] the absence of an explicit exclusion of the provisions of the BIA (in subsection 317(3) ETA) in no way alters the fact that property of which the bankrupt is no longer the owner on the date of the bankruptcy cannot be vested in a trustee, or a secured creditor that has received a requirement to pay.
48 See the reproduction of the passage in paragraph 97. - 32 -
Respondent's Factum Statement of Argument
115. At the Federal Court of Appeal hearing, the question was raised as to whether a certain "retroactivity" was effected under subsection 70(1) BIA, because the only condition it poses for yielding to a "conflicting" proceeding is that payment have been made.
116. Now is the time to discuss this question of payment as the traditional criterion.
117. As mentioned in paragraph 102, the Court of Appeal of Québec referred to Perras v. Therrien, stating that [TRANSLATION] "a similar question" had been asked in that case. That judgment raised the question of the application of article 692 of the Code of Civil Procedure (hereinafter "C.C.P."), a provincial provision of general law49 that could therefore not obviate the Bankruptcy Act and that stated at the time that "[t]he judgment rendered upon a garnishee's declaration of indebtedness, is equivalent to a judicial assignment to the seizing creditor of the judgment debtor's title of debt, and effects subrogation".
118. A creditor saw in that provision a solid enough legal foundation on which to contend that the claim it had "garnisheed" was therefore no longer in its bankrupt debtor's patrimony.
119. With respect for the Court of Appeal, we believe that that judgment is not a decisive precedent for the outcome of the present case. First, the transfer of ownership is drafted in much more peremptory and affirmative language in subsection 317(3) ETA than in the former article 692 C.C.P. Second, nothing was said about the provincial legislator's having set aside the application of the general rules of the C.C.P. in tax garnishment matters, as can be seen from section 15.8 TAA.50
120. But, in the present case, Parliament, in order to avoid in future the situation referred to in paragraph 38, specifically eliminated the need for payment, which was ordinarily required
49 The Crown submits that the ETA may be considered legislation that is more "specific" than the Civil Code of Québec and Code of Civil Procedure. 50 The text of this provision, section 15.8 AMR at the time, is reproduced on p. 85, "Part VII: Legislation", of the official version of the respondent's factum. - 33 -
Respondent's Factum Statement of Argument
in order to conclude that transfer of ownership had occurred. Given that choice by Parliament, it now seems illogical and incongruous to analyze the interaction with subsection 70(1) BIA while maintaining the payment premise.
121. Both in Giguère and De Courval, the Court of Appeal of Québec appears to have analyzed the situation solely in light of the customary Civil Law, seemingly refusing to consider that the provision under examination at the time, namely, section 15.3.1 AMR, was in special legislation and was therefore "outside the sphere of the general law".
122. We also feel it is relevant to mention that, in the end but using slightly different reasoning,51 Common Law is to the same effect as Civil Law in the province of Québec, in that payment must ordinarily have been made following garnishment for it to be concluded that a transfer of ownership occurred.
123. Nevertheless, the courts of justice in several Common Law provinces have considered subsection 317(3) ETA to be sufficiently clear and to include the "something further", in the words of the Supreme Court in Alberta (Treasury Branches), making it possible to find that the provision effects a real transfer of ownership to the Crown: Encor Energy Corp. v. Ernst & Young Inc., [1995] G.S.T.C. 54 (C.A. Sask.); Re Canoe Cove Manufacturing Ltd., (1994) 25 C.B.R. (3d) 26052; Re San Diego Catering Ltd., (1995) 32 C.B.R. (3d) 132; Williston Wildcatters Oil Corp. (Re), [1996], G.T.C. 6188 (Sask. Q.B. in Bankruptcy); Canadian Imperial Bank of Commerce v. MNR, 1994 CanLII 3950 (Sask. C.A.). At the federal level, see also: Absolute Bailiffs inc. v. Canada, [2002] T.C.J. 549, confirmed by the F.C.A.: [2003] F.C.J. 397; Wa-Bowden Real Estate Reports Ltd. v. Canada (T.C.C.) [1997] G.S.T.C. 49; F.C.A.: A-585-97, May 13, 1998.
51 See, in this regard, the remarks of Marchand J. in Perras v. Therrien, [1946] Q.B. 716 at 721-727 (B.A.R., vol. II, Tab 23, pp. 55-61). 52 Thacray J.'s analysis in this judgment is worth reading, but too long to reproduce in this factum. - 34 -
Respondent's Factum Statement of Argument
A requirement to pay has an immediate effect: the interception of amounts
124. In analyzing this case, it is appropriate, in our view, to take the time to specify the rights of each party immediately prior to a bankruptcy. In this regard, the Crown submits that the receipt of a requirement to pay creates actual privity between the Crown and the amount covered by the requirement to pay.
125. In Québec, the province in which this appeal originated, section 15 TAA interacts very well in fact with the system of State rights brought in by the legislator with the introduction of the new Civil Code of Québec in 1994, more specifically with articles 2651 C.C.Q. et seq.,53 which state that the Crown, relative to its tax claims, holds a privilege on the movable property of its debtor. Some might even contend that the legislative transformation of the Crown's claim into a right of ownership under the application of section 15 TAA appears to be pretty much in line with the intention of the aforementioned provisions.
126. In this regard, it will be recalled that, in L’Industrielle-Alliance, Compagnie d’assurance sur la vie v. Sous-ministre du Revenu du Québec, 200-09-000540-952,54 the Court of Appeal of Québec ruled that [TRANSLATION] "sections 13 to 16 AMR (now the TAA) are a procedural vehicle enabling the State to exercise its rights stemming from the priority provided for in article 2653 C.C.Q.". Author Louis Payette supported that opinion.55
127. In another vein, the appellant's position is tantamount to saying that an event that is as yet uncertain on receipt of a requirement to pay, namely, filing for bankruptcy or filing a proposal, cancels a legal effect — the transfer of ownership — that has already occurred.
53 See p. 89, "Part VII: Legislation", of the official version of the respondent's factum. 54 At 11 (B.A.R., vol. I, Tab 18, p. 419), Lebel J. dissenting, however. 55 Louis Payette, Les sûretés réelles dans le Code civil du Québec, 2nd ed. (Cowansville, Qc.: Yvon Blais, 1994) at 75 (B.A.R., vol. II, Tab 41, p. 393). See also the most recent edition of his work: Louis Payette, Les sûretés réelles dans le Code civil du Québec, 4th ed. (Cowansville, Qc.: Yvon Blais, 2010) at 128 (B.A.R., vol. II, Tab 41, p. 402). - 35 -
Respondent's Factum Statement of Argument
128. However, the effect sought by Parliament in passing subsections 224(1.2) ITA and 317(3) ETA was instead to withdraw all discretion from the tax debtor and its other creditor, generally a financial institution, and permit the Crown to intercept the amount owed to the former.
129. Relative to this notion of interception, this Court very recently ruled, in Canada Trustco Mortgage Co. v. Canada, 2011 SCC 36 (July 15, 2011), on the interaction between section 224 ITA and the cheque collection mechanism provided for in the Bills of Exchange Act.
130. Although the dynamics of the transfer of ownership provided for in subsection 224(1.2) ITA were not dealt with in the above judgment, in which the issue to be resolved consisted instead in determining whether, under the law governing bills of exchange, the bank to which the cheques payable to the tax debtor had been remitted for deposit in a joint account was henceforward "liable to make a payment" within the meaning of section 224 ITA, certain reasons nonetheless seem relevant in light of the present case.
131. Indeed, the minority, per Madame Chief Justice McLachlin, discussed the scope of section 224 ITA and was not contradicted by the majority on that point.
132. After citing National Trust Co. v. Canada, (1998), 162 D.L.R. (4th) 704 (F.C.A.) at paragraph 63, which state that a requirement to pay provided for in section 224 ITA is "not confined to a debtor-creditor relationship, as is a garnishee order", the Chief Justice pointed out (in paragraph 65) that "[t]he scope of the operation of s. 224(1) is not narrowly confined" and that "[t]o adopt a [more] restrictive view of its content would be to undermine the proper functioning of the power the provision grants the Minister".
133. In regard to the immediate legal effect produced by a requirement to pay, the Chief Justice indicated, in paragraph 79, that "[a] requirement to pay in s. 224(1) ITA intercepts funds
while they are in transit", a fortiori, we would say, in a situation where, as in the present case, the impact of the law governing bills of exchange is not at issue. - 36 -
Respondent's Factum Statement of Argument
134. As Picard J.A. of the Court of Appeal for Alberta pointed out in the simplest of formulas in South Rock Ltd. v. Canada Revenue Agency, 2007 ABCA 115 (March 28, 2007), concerning the application of subsection 317(3) ETA in civil matters: "Timing is everything in this case".
135. In Bank of Montreal, to which we referred in paragraph 98, the judge in first instance,56 faced with the same question as in this case,57 had this to say about the effect produced by a requirement to pay: "However, in my view the issues [sic] in this case is one of timing as the Crown issued its notice before the bankruptcy, the money therefore became the property of the Crown and no longer can be considered the property of the Bankrupt, thus the money is not available for distribution under the BIA".
136. Furthermore, and in response to those who might dread an actual collection race and fear that the Crown would henceforward be entitled to waste no time in serving requirements to pay, only two points need to be made.
137. First, the courts have recognized 58 for some 20 years now that a requirement to pay issued under subsection 317(3) ETA and served prior to a bankruptcy has priority over the trustee and secured creditors. Clearly, that has not resulted in a revolution or, at least, if we are in the midst of a revolution, it is a very "quiet" one.
138. Second, practice shows that the Crown, as an involuntary creditor in a tax system based on self-reporting, is in a much worse position than a debtor or the debtor's secured creditor to gauge its financial situation. The debtor and the debtor's secured creditor can always decide to have recourse to the BIA without waiting for the Crown to send a requirement to pay.
56 Bank of Montreal v. Attorney General of Canada, Court File 31912, January 8, 2003 (unreported judgment) at 3, McGarry J. (B.A.R., vol. I, Tab 5, p. 97). 57 Hence in a context of bankruptcy. 58 Excluding Québec, of course, since 2001: Giguère (B.A.R., vol. I, Tab 16). - 37 -
Respondent's Factum Statement of Argument
139. The appellant also attempts to rely on this Court's judgment in Quebec (Revenue) v. Caisse populaire Desjardins de Montmagny, [2009] 3 S.C.R. 286.
140. At the time, this Court had to determine whether, once bankruptcy had been filed for, the sales taxes that had not been collected or remitted in advance59 by a bankrupt debtor on accounts receivable should go to the Crown, the trustee in bankruptcy or a secured creditor with a security interest on the receivables. The Crown contended that it beneficially owned60 the said amounts.
141. At the time, three cases were joined before this Court. A requirement to pay under subsection 317(3) ETA or a minister's notice under section 15.3.1 AMR was not sent to anyone before the bankruptcy in any of the cases. That being so, the effect of these provisions in a context of insolvency was not discussed at all by this Court in its judgment.
142. Accordingly, and to emphasize that the amounts at stake "did not belong" to the Crown, the respondent Caisse populaire Desjardins de Montmagny contended in its factum61 before this Court that, when Parliament had sought to effect a transfer and, as an exception, declare the Crown the owner of an amount, it had done so clearly. It cited, as an example of this . . . subsection 317(3) ETA.
143. In the context we described in paragraph 140 [mistakenly numbered 139 in the official French factum], this Court considered that the Crown did not hold a right of ownership, but instead a claim, the order of priority of which would be established pursuant to the BIA.
144. Lebel J. wrote in paragraph 28 of Caisse populaire Desjardins de Montmagny that the Crown's position "amounts to maintaining that the deemed trusts established by s. 222 ETA and s. 20 AMR continue to exist after a bankruptcy". The Crown respectfully submits that
59 Through the so-called ITC/ITR mechanism. 60 The Court referred instead to a "right of ownership" as opposed to the holding of a claim. 61 Docket 32486, Respondents' Factum, pp. 16-17 at paras. 66-67. - 38 -
Respondent's Factum Statement of Argument
such a conclusion cannot be reached in the present case, since the juridical act in the form of the requirement to pay transferred ownership to the Crown prior to the bankruptcy.
145. As for Century Services Inc. v. Canada (Attorney General), 2010 S.C.C. 60, [2010] 3 S.C.R. 379, invoked by the appellant, the respondent submits that that judgment must also be distinguished, because no requirement to pay was served in that case either.
146. For all of these reasons, the respondent submits to this Court that the Federal Court of Appeal correctly stated the law and that the impugned judgment is therefore well founded.
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Respondent's Factum Submissions Concerning Costs
PART IV – SUBMISSIONS CONCERNING COSTS
147. The respondent confirms that the parties agree to each waive any costs that may be awarded in this case before this Court.
148. However, the respondent asks this Court to rule that the costs awarded to it by the lower courts remain the respondent's regardless of the outcome of this appeal, the whole given the respondent's position on the appellant's application for leave to appeal.
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PART V – ORDER SOUGHT
FOR THESE REASONS, THE RESPONDENT therefore asks this honourable Court to:
DISMISS the appellant's appeal and
UPHOLD the Federal Court of Appeal's judgment of June 30, 2010 in the record A-490-09, which judgment in turn upheld that of the Honourable Angers J. of the Tax Court of Canada, rendered on November 10, 2009 in record 2009-114(GST)I, and therefore to
MAINTAIN notice of assessment PQ-2008-A1711, dated September 26, 2008.
Québec, September 1, 2011
______Christian Boutin Pier-Olivier Julien Larivière, Meunier, avocats Legal department of the Agence du revenu du Québec For: The Deputy Attorney General of Canada Counsel for the respondent - 40 -
Respondent's Factum Alphabetical Table of Authorities
PART VI – ALPHABETICAL TABLE OF AUTHORITIES
Cases Paragraph(s)
Absolute Bailiffs Inc. v. Canada, [2002] T.C.J. No. 549 ...... 123
Her Majesty the Queen v. Absolute Bailiffs Inc., [2003] F.C.J. 397 ...... 123
Alberta Treasury Branches v. Minister of National Revenue, 16 Alta. L.R. (3d) 2 (Alta C.A.) ...... 98
Alberta (Treasury Branches) v. M.N.R. [1996] 1 S.C.R. 963 ...... 16, 25, 45, 50, 98, 123
Bank of Montreal v. Attorney General of Canada (January 8, 2003), Court File 31912 (Ont. S.C.) ...... 135
Bank of Montreal, 48 C.B.R. (4th) 173 (Ont. C.A.) ...... 11, 98, 135
Canada (Attorney General) v. National Bank of Canada, 2004 FCA 92 ...... 56
Canada Trustco Mortgage Co. v. Canada, 2011 SCC 36 ...... 129
Canadian Imperial Bank of Commerce v. MNR, 1994 CanLII 3950 (SK CA) ...... 123
Canoe Cove Manufacturing Ltd. (Re), [1994] 2 G.T.C. 7151, [1994] G.S.T.C. 36 (B.S.S.C.) ...... 123
Central Guaranty Trust Co. v. Québec (Sous-ministre du Revenu), [1993] R.J.Q. 1559 (S.C.) ...... 97
Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, [2010] 3 S.C.R. 379 ...... 145
Denis Cimaf inc. v. Caisse populaire d’Amos (December 15, 1997), Montréal 500-09-001379-932 (C.A.) ...... 43
Encor Energy Corp. v. Ernst & Young Inc. (Sask. Q.B.), [1993] G.S.T.C. 25 ...... 11
Encor Energy Corp. v. Ernst & Young Inc. (Sask. C.A.), [1995] G.S.T.C. 54 ...... 123
First Vancouver Finance v. M.N.R. [2002] 2 S.C.R. 720 ...... 16, 65 - 41 -
Respondent's Factum Alphabetical Table of Authorities
Cases (cont’d) Paragraph(s)
Giguère (Syndic de), [2001] R.D.F.Q. 39 (C.A.), 2001 R.J.Q. 2646 ..46, 97, 99, 102, 121, 137
Industrielle-Alliance, compagnie d’assurance sur la vie v. Sous-ministre du revenu du Québec (October 28, 1997), Québec, 200-09-000540-952 (C.A.) ...... 126
Lefebvre (Trustee of), [2004] 3 S.C.R. 326 ...... 89, 113
Lloyds Bank Canada v. International Warranty Co., 68 Alta. L.R. (2d) 356 ...... 38, 40, 41
National Trust Co. v. Canada, (1998), 162 D.L.R. (4th) 704 (F.C.A.) ...... 132
Ouellet (Trustee of), [2004] 3 S.C.R. 348 ...... 89, 113
Perras v. Therrien, [1946] Q.B. 716 ...... 102, 117, 122
Provi-Grain (1986) inc. (Syndic de), [1994] R.J.Q. 1804 ...... 105
Québec (Communauté urbaine) v. Corp. Notre-Dame de Bon-Secours, [1994] 3 S.C.R. 3 ...... 50
Quebec (Revenue) v. Caisse populaire Desjardins de Montmagny, [2009] 3 S.C.R. 286 ...... 16, 139, 144
Québec (Sous-ministre du Revenu) v. Service de garantie Québec inc. (Syndic de), [2009] R.J.Q. 597 (C.A.) (De Courval) ...... 12, 46, 75, 85, 98, 99 ...... 102, 121
Royal Bank of Canada v. Sparrow Electric Corp., [1997] 1 S.C.R. 411 ...... 50
San Diego Catering Ltd. (Re), [1995] G.S.T.C. 25 (B.C.S.C.) ...... 123
Saulnier v. Royal Bank of Canada, 2008 SCC 58, [2008] 3 S.C.R. 166 ...... 55
SMRQ v. Compagnie Montréal Trust du Canada, 1999 CanLII 13690 (QC CA) ...... 32 - 42 -
Respondent's Factum Alphabetical Table of Authorities
Cases (cont’d) Paragraph(s)
South Rock Ltd. v. Canada Revenue Agency, 2007 ABCA 115 ...... 134
Stubart Investments Ltd. v...... 50
TransGas Ltd. v. Mid-Plains Contractors Ltd., [1994] 3 S.C.R. 753 ...... 43, 54
Wa-Bowden Real Estate Reports Ltd. v. Canada, [1997] G.S.T.C. 49 (Q.L.) (T.C.C.) ...... 123
Wa-Bowden Real Estate Reports Ltd. v. Canada, A-585- 97, May 13, 1998 ...... 123
Williston Wildcatters Oil Corp. (Re), [1996], G.T.C. 6188, [1996] G.S.T.C. 42 (Sask. Q.B. in Bankruptcy) ...... 123
Authors
Bélanger, Philippe H. Droits, priorités et super priorités des ministères du Revenu. Thémis, 2001...... 60, 97
Côté, Pierre-André. Interprétation des lois, 4th ed. Thémis, 2009...... 35, 36, 79, 94
Fontaine, Jean. Les priorités de la Couronne en situation d’insolvabilité. The Canadian Institute, September 2004...... 97
House of Commons Debates, Official Report, 34th Parliament, 2nd Session, 39 Elizabeth II, Volume VIII, 1990...... 41
Mendelsohn, Max, and Éric Vallières. "TPS-TVQ – Quand la simple lecture de la loi ne suffit pas". Canadian Association of Insolvency & Restructuring Professionals. Insolvency Forum, May 28, 2007...... 97
Minutes of Proceedings and Testimony, Standing Committee on Finance and Economic Affairs, Issue No. 131, December 3, 1987, Second Session, Thirty-third Parliament, 1986-1987...... 38
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Respondent's Factum Alphabetical Table of Authorities
Authors (cont’d) Paragraph(s)
Payette, Louis. Les sûretés réelles dans le Code civil du Québec, 2nd ed. Cowansville, Qc.: Yvon Blais, 1994...... 126
Payette, Louis. Les sûretés réelles dans le Code civil du Québec, 4th ed. Cowansville, Qc.: Yvon Blais, 2010...... 126
Robichaud, Alain. "Nouveautés en matière de créances dues à et par la Couronne". Insight Information, 5th ed. Commercial Insolvency and Restructuring...... 97