Federal Business Development Bank v. Commission de la Santé et de la Sécurité du travail et al., (1988) 84 N.R. 308 (SCC)

• Judge: Beetz, Estey, Lamer, Wilson, Le Dain, Forest and L'Heureux-Dube, JJ.
• Court: Supreme Court (Canada)
• Case Date: May 26, 1988
• Jurisdiction: Canada (Federal)
• Citations: (1988), 84 N.R. 308 (SCC);84 NR 308;68 CBR (ns) 209;50 DLR (4th) 577;[1988] SCJ No 44 (QL);1988 CanLII 105 (SCC);[1988] 1 SCR 1061;14 OAC 140;14 QAC 140

FBDB v. WHSCC (1988), 84 N.R. 308 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

.........................

Federal Business Development Bank (appellant) v. La Commission de la Sante et de la Securite du Travail (respondent) and Le Protonotaire de la Cour Superieure du District de Quebec (mis en cause) and Workers' Compensation Board of Alberta and Workers' Compensation Board of British Columbia (interveners)

(No. 19858)

Indexed As: Federal Business Development Bank v. Commission de la Santé et de la Sécurité du travail et al.

Supreme Court of Canada

Beetz, Estey, Lamer, Wilson, Le Dain, Forest and L'Heureux-Dube, JJ.

May 26, 1988.

Summary:

In 1979, Structal Inc. made a trust deed to the Royal Trust Company to secure the payment of a bond for $1,800,000.00 issued to the Federal Business Development Bank (F.B.D.B.). Structal defaulted. In July 1982, Royal Trust, acting as trustee for the F.B. D.B., took possession of Structal's assets. Three months later, Structal went bankrupt. Royal Trust brought a hypothecary action in the Superior Court to have Structal's immoveables sold. The Superior Court granted the demand and authorized the judicial sale of Structal's immoveables. Before the sale, the Commission de la santé et de la sécurité du travail (C.S.S. T.) registered a statutory privilege against Structal's immoveables. In June 1983, Structal's immoveables were judicially sold. The deputy prothonotary prepared an order of collocation according to Quebec law: the C.S.S.T. ranked fourth and the F.B.D.B. seventh. The F.B.D.B. challenged the order of collocation and alleged that it should have been prepared in accordance with the federal Bankruptcy Act, in which case the F.B.D.B. would rank ahead of the C.S.S.T. The Superior Court allowed the challenge. The C.S.S.T. appealed.

The Quebec Court of Appeal, in a judgment reported at [1986] R.J.Q. 633, allowed the appeal. The F.B.D.B. appealed.

The Supreme Court of Canada allowed the appeal.

Bankruptcy - Topic 435

Property of the bankrupt - Particular property - Property mortgaged by bankrupt under Quebec law - A trustee appointed by a trust deed took possession of the debtor's immoveables to realize on the mortgage created by the trust deed - Three months later, the debtor went bankrupt but the trustee pursued the realization outside the bankruptcy - Were the immoveables part of the bankrupt's property within the meaning of s. 47 of the Bankruptcy Act? - The Supreme Court of Canada answered yes - The fact that property belongs to the bankrupt at the time of bankruptcy is sufficient to make it part of the bankrupt's estate and pass automatically to the trustee in bankruptcy - See paragraphs 6 to 12.

Bankruptcy - Topic 3642

Creditors, general - Priorities - Precedence of Bankruptcy Act over provincial legislation - A trustee appointed by a trust deed took possession of the debtor's immoveables to realize on the mortgage created by the trust deed - Three months later, the debtor went bankrupt but the trustee pursued the realization outside the bankruptcy by seeking and obtaining court permission to sell the immoveables - After the sale the question was raised as to whether provincial law or the Bankruptcy Act governed the order of priority respecting distribution of the proceeds - The Supreme Court of Canada held that when a bankruptcy occurs, the Bankruptcy Act applies and determines the order of priority - See paragraphs 13 to 20.

Cases Noticed:

Jacs Jackets and Crest Ltd., Re; Workers' Compensation Board (Alta.) v. Deloitte, Haskins and Sells Limited, [1985] 1 S.C.R. 785; 60 N.R. 81, appld. [para. 1].

Bourgault's Estate v. Deputy Minister of Revenue of Quebec, [1980] 1 S.C. R. 35; 30 N.R. 24, appld. [para. 5].

Rosenberg, Zeller and Rosenberg, Re (1949), 29 C.B.R. 103 (Ont. S.C.), refd to. [para. 8].

La manufacture de seaux et de boites de Trois-Rivieres v. Beliveau (1921), 30 B.R. 389, refd to. [para. 5].

In re Centre de golf Montpellier Inc.; Hebert v. Trust general du Canada, C.A.M. 09-000498-72, refd to. [para. 8].

Laliberte v. Larue, [1931] S.C.R. 7, refd to. [para. 10].

Trust general du Canada v. Roland Chalifoux Ltée, [1962] S.C.R. 456, refd to. [para. 10].

Serabec Ltee (Faillie) Re: Place Desjardins Inc. c. Perras, Fafard, Gagnon Inc., [1985] C.A. 212, consd. [para. 10].

Broydon Printers Ltd., Re (1975), 19 C.B.R.N.S. 226 (Ont. H.C.), consd. [para. 11].

Black Forest Restaurant Ltd., Re (1981), 37 C.B.R.N.S. 176 (N.S.S. C.), appld. [para. 17].

Statutes Noticed:

Bankruptcy Act, R.S.C. 1970, c. B-3, sect. 2, sect. 12(11), sect. 47, sect. 49, sect. 57, sect. 98, sect. 101, sect. 102, sect. 107(1).

Workmen's Compensation Act, R.S.Q., c. A-3, sect. 110 [para. 2].

Authors and Works Noticed:

Houlden, L.W. and C.H. Morawetz, Bankruptcy Law of Canada (1984), vol. 1, p. G-71 [para. 7].

Counsel:

P. Michel Bouchard and Michel Cordeau, for the Federal Business Development Bank;

Pierre Lessard and Albert Bohemier, for the Commission de la santé et de la sécurité du travail and the Protonotaire de la cour superieure du district de Québec;

Patrick G. Yearwood, for the Workers' Compensation Board of Alberta;

G.W. Massing, for the Workers' Compensation Board of British Columbia.

Solicitors of Record:

Hickson, Sirois, Martin & Blanchard, for the Federal Business Development Bank;

Lafontaine, Chayer, Cliche & Associates, for the Commission de la santé et de la sécurité du travail.

This case was heard on March 24, 1988, by Beetz, Estey, Lamer, Wilson, Le Dain, La Forest and L'Heureux-Dubé, JJ., of the Supreme Court of Canada.

The judgment of the Supreme Court of Canada was delivered on May 26, 1988, by Lamer, J.

Estey, J., took no part in the judgment.