Alberta (Treasury Branches) v. Invictus Financial Corporation Ltd. et al., (1986) 68 A.R. 207 (QB)

• Judge: Stratton, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: January 08, 1986
• Citations: (1986), 68 A.R. 207 (QB)

Alta. v. Invictus Financial Corp. (1986), 68 A.R. 207 (QB)

MLB headnote and full text

Province of Alberta Treasury Branches v. Invictus Financial Corporation Ltd., Fahlman Development Corporation Ltd., W.G. Fahlman Enterprises Ltd., Frontier Land Company (Western) Ltd., Fahlman Dept. Stores Ltd., Frontier Land Company Ltd., Garden Holdings Ltd., Cardinal Construction Ltd., Merit Stores Ltd., 292830 Alberta Ltd., W.G. Fahlman & Associates Ltd., Fisher's Department Stores Ltd., Fisher's Holdings (Lloydminster) Ltd., and Plainsman Motor Inns Ltd.

(No. 8303 13970)

Indexed As: Alberta (Treasury Branches) v. Invictus Financial Corporation Ltd. et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Stratton, J.

January 8, 1986.

Summary:

A court appointed receiver applied for the court to determine the priority of the respective claims of the Workers' Compensation Board, the City of Lloydminster (pre-receivership and post-receivership business taxes), the City of Red Deer (post-receivership business taxes) and the debenture holder.

The Alberta Court of Queen's Bench ranked the claims as follows: (1) Workers' Compensation Board; (2) City of Lloydminster for pre-receivership business taxes; (3) Post- receivership business taxes payable by receiver/manager personally, but receiver/manager entitled to full indemnification from company assets in priority to the debenture and (4) debenture holder.

Receivers - Topic 3588

Claims - Secured creditor v. municipality - Post-receivership business taxes - A receiver/manager continued to operate the company - The Alberta Court of Queen's Bench held that the receiver/manager was therefore personally liable for business taxes accruing from that date - The court held that the receiver/manager was liable to the City of Red Deer under ss. 80 (1) and 124(2) of the Municipal Government Act and to the City of Lloydminster under ss. 258(1) and 311(1) of the Lloydminster Charter - The court also held that the receiver/manager was to be indemnified from the company assets in priority to the secured creditor's claim under the debenture - See paragraphs 53 to 68.

Receivers - Topic 3588

Claims - Secured creditors v. municipality - Pre-receivership business taxes - The Alberta Court of Queen's Bench held that pursuant to ss. 325(1) and 330 of the Lloydminster Charter, the City of Lloydminster's claim for business taxes owing before the date of a receivership took priority to the secured creditor's claim under the debenture - See paragraphs 20 to 47.

Receivers - Topic 5406

Liabilities of receivers - Personal liability - A receiver/manager continued to operate the company - The Alberta Court of Queen's Bench held that the receiver/manager was personally liable to the City of Red Deer for business taxes accruing after the date of receivership, because the receiver/manager was a "person carrying on the business" under ss. 80(1) and 124(2) of the Municipal Government Act - Similarly, the receiver/ manager was liable to the City of Lloydminster as "any person engaged in ... business" under ss. 258(1) and 311(1) of the Lloydminster Charter - The court also held that the receiver/manager was entitled to indemnification from the company assets in priority to the debenture - See paragraphs 53 to 68.

Workers' Compensation - Topic 9025

Assessments - Priority of - Claims ranking behind workers' compensation assessments - At the time of a receivership the Workers' Compensation Board had only a floating charge under s. 126 of the Workers' Compensation Act - Subsequently, the Act was amended to give the Board a "fixed, specific and continuous charge" - The Alberta Court of Queen's Bench held that the amended s. 126 gave the Board priority over a secured creditor under a debenture and over the claims of municipalities for both pre-receivership and post-receivership business taxes - See paragraphs 7 to 19.

Cases Noticed:

Caroma Enterprises Ltd., Re (1979), 23 A.R. 541; 108 D.L.R.(3d)(Alta. Q.B.), refd to. [para. 10].

Workmens' Compensation Board v. Provincial Treasurer of Alberta (1967), 59 W.W.R.(N.S.) 299 (Alta. S.C.A.D.), refd to. [para. 10].

Decker's Delicatessen, Re, [1925] 1 D.L.R. 652 (Ont. S.C.), appld. [para. 32].

Bankruptcy of Bate's Electric, Re, [1972] 6 W.W.R. 541 (Alta. S.C.), dist. [para. 34].

Saskatoon v. Mowbrey Stout, [1984] 2 W.W.R. 71; 29 Sask.R. 117, affd., [1985] 5 W.W.R. 573; 40 Sask.R. 177, appld. [para. 39].

Fotti v. 777 Management Inc., [1981] 5 W.W.R. 48 (Man. Q.B.), refd to. [para. 42].

Credit Foncier Franco Canadian v. Edmonton Airport Hotel Co. Ltd. (1966), 55 W.W.R.(N.S.) 734 (Alta. S.C.), refd to. [para. 62].

Robert F. Kowal Investments Ltd. v. Deeder Electric Ltd. (1975), 9 O.R.(2d) 84, refd to. [para. 72].

Statutes Noticed:

Workers' Compensation Act, S.A. 1981, c. W-16, sect. 126 [para. 9].

Workers' Compensation Act, S.A. 1985, c. W-16, sect. 126(1) [para. 12]; sect. 126(2) [para. 14].

Companies Act, R.S.A. 1980, c. C-20, sect. 120(1), sect. 283(1), sect. 283(2) [para. 17].

Municipal Taxation Act, R.S.A. 1980, c. M-35, sect. 80(1), sect. 124(2) [para. 54]; sect. 125(1) [para. 29]; sect. 128, sect. 325(1) [para. 25]; sect. 136 [para. 56]; sect. 137(1) [para. 27].

Lloydminster Charter, sect. 2(v), sect. 302 [para. 49]; sect. 258, sect. 311(1) [para. 65]; sect. 330 [para. 28]; sect. 380(2) [para. 23].

Authors and Works Noticed:

Kerr on Receivers (16th Ed.), p. 210 [para. 62].

Counsel:

D. Simpson, for the City of Red Deer;

D. Tkachuk, for the receiver, Coopers & Lybrand;

D.G. Milen, for the City of Lloydminster;

P.G. Yearwood, for Workers' Compensation.

This application was heard before Stratton, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following judgment on January 8, 1986.