Giffen (Bankrupt), Re, (1998) 222 N.R. 29 (SCC)

• Judge: Cory, McLachlin, Iacobucci and Major, JJ.
• Court: Supreme Court (Canada)
• Case Date: October 08, 1997
• Jurisdiction: Canada (Federal)
• Citations: (1998), 222 N.R. 29 (SCC);77 ACWS (3d) 433;JE 98-372;45 BCLR (3d) 1;[1998] 1 SCR 91;13 PPSAC (2d) 255;164 WAC 161;1998 CanLII 844 (SCC);1 CBR (4th) 115;[1998] CarswellBC 148;[1998] SCJ No 11 (QL);101 BCAC 161;[1998] 7 WWR 1;222 NR 29;155 DLR (4th) 332

Giffen (Bankrupt), Re (1998), 222 N.R. 29 (SCC)

MLB headnote and full text

[French language version follows English language version]

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

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Temp. Cite: [1998] N.R. TBEd. FE.015

R. West & Associates Inc. and the Attorney General of British Columbia (appellants) v. Telecom Leasing Canada (TLC) Limited (respondent) and the Attorney General of Canada, the Attorney General for Ontario and the Attorney General for Alberta (interveners)

(25193)

Indexed As: Giffen (Bankrupt), Re

Supreme Court of Canada

L'Heureux-Dubé, Sopinka*, Gonthier,

Cory, McLachlin, Iacobucci and Major, JJ.

February 12, 1998.

Summary:

The lessee under an unregistered com­mercial lease of an automobile made an assignment in bankruptcy. Bailiffs acting for the lessor seized the vehicle, which was sold at public auction. The trustee in bankruptcy applied for an order that the lessor pay the proceeds of sale to the trustee.

The British Columbia Supreme Court, in a decision reported in 90 B.C.L.R.(2d) 326, allowed the application. The lessor appealed.

The British Columbia Court of Appeal, in a decision reported 69 B.C.A.C. 161; 113 W.A.C. 161, allowed the appeal and ordered that the sale proceeds be paid to the lessor. The trustee appealed. The principal question raised was whether s. 20(b) (i) of the Per­sonal Property Security Act (B.C.) could render a lessor's unperfected security interest in personal property ineffective against the rights acquired in the property by the trustee in bankruptcy under the Bankruptcy and Insolvency Act (Can.).

The Supreme Court of Canada allowed the appeal. The court held that s. 20(b) (i) oper­ated, on the facts of this case, to defeat the unperfected security interest of the lessor in favour of the interest acquired by the trustee. The trustee was therefore entitled to the proceeds of the car.

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

Bankruptcy - Topic 431

Property of bankrupt - Particular property - Property leased by bankrupt - A lessor leased a car to an employer which leased the car to an employee (Giffen) - Subsequently Giffen went bankrupt - Because the lessor did not register fi­nancing statements under the Personal Property Security Act (P.P.S.A.) the les­sor's security interest in the car was not perfected as defined by the P.P.S.A. - The lessor seized and sold the vehicle - The bankruptcy trustee claimed the sale pro­ceeds pursuant to s. 20(b) (i) of the P.P.S.A. - Section 20(b) (i) provided that a security interest in collateral was not effec­tive against a bankruptcy trustee if the security interest was unperfected at the date of the bankruptcy - The Supreme Court of Canada held that the bankruptcy trustee was entitled to the proceeds - In accordance with s. 20(b) (i), the lessor's unperfected security interest was ineffec­tive against the possessory interest acquired by the trustee in bankruptcy.

Bankruptcy - Topic 2754

Trustees - Powers of - Respecting leases - [See Bankruptcy - Topic 431 ].

Bankruptcy - Topic 3641

Creditors - Priorities - General - The Supreme Court of Canada held that the principle that a trustee in bankruptcy can­not obtain greater rights to the property than the bankrupt had has been modified through the policy choices of the legisla­tures represented in s. 20(b) (i) of the Per­sonal Property Security Act (B.C.), and its equivalents in other provinces - Section 20(b) (i) provided that a security interest in collateral was not effective against a trustee in bankruptcy if the security interest was unperfected at the date of the bank­ruptcy - See paragraph 56.

Personal Property - Topic 6214

Security interests - Priorities - Trustee in bankruptcy - [See Bankruptcy - Topic 431 and Bankruptcy - Topic 3641 ].

Personal Property - Topic 6216

Security interests - Priorities - Lessor's interest - [See Bankruptcy - Topic 431 and Bankruptcy - Topic 3641 ].

Cases Noticed:

International Harvester Credit Corp. of Canada Ltd. v. Bell's Dairy Ltd. (Bank­rupt) (1986), 50 Sask.R. 177; 61 C.B.R.(N.S.) 193 (C.A), refd to. [para. 10].

Sinco Trucking Ltd. (Bankrupt), Re; Paccar Financial Services Ltd. v. Touche Ross Ltd. et al., [1989] 3 W.W.R. 481; 74 Sask.R. 181 (C.A.), refd to. [para. 11].

Paccar Financial Services Ltd. v. Sinco Trucking Ltd. (Trustee of) - see Sinco Trucking Ltd. (Bankrupt), Re.

Fleeming v. Howden (1868), L.R. 1 Sc. & Div. 372 (H.L.), dist. [paras. 15, 45].

Flintoft v. Royal Bank of Canada, [1964] S.C.R. 631, dist. [paras. 15, 45].

Canadian Imperial Bank of Commerce v. Perepeluk (Bankrupt), [1986] 2 W.W.R. 631; 47 Sask.R. 81 (C.A.), refd to. [para. 16].

Perepeluk, Re - see Canadian Imperial Bank of Commerce v. Perepeluk (Bank­rupt).

Canadian Imperial Bank of Commerce v. Touche Ross Ltd. - see Canadian Imperial Bank of Commerce v. Perepeluk (Bankrupt).

Robinson v. Countrywide Factors Ltd., [1978] 1 S.C.R. 753, refd to. [para. 17].

Husky Oil Operations Ltd. v. Minister of National Revenue et al., [1995] 3 S.C.R. 453; 188 N.R. 1; 137 Sask.R. 81; 107 W.A.C. 81, refd to. [paras. 18, 61].

Nishi Industries, Re, [1978] 6 W.W.R. 736 (B.C.C.A.), refd to. [para. 20].

Cadieux and Jas. A. Ogilvy's Ltd., Re (1952), 33 C.B.R. 15 (Que. S.C.), refd to. [para. 34].

Donaghy (Bankrupt), Re, [1992] 6 W.W.R. 70; 132 A.R. 155 (Q.B. Bkcy.), refd to. [para. 54].

Donaghy v. CNS Vehicle Leasing - see Donaghy (Bankrupt), Re.

North Sky Trading Inc. (Bankrupt), Re, [1996] 7 W.W.R. 332; 184 A.R. 291; 122 W.A.C. 291 (C.A.), refd to. [para. 55].

Morris (David) Fine Cars Ltd. v. North Sky Trading Inc. (Trustee of) - see North Sky Trading Inc. (Bankrupt), Re.

Bourgault's Estate v. Deputy Minister of Revenue of Quebec, [1980] 1 S.C.R. 35; 30 N.R. 24, refd to. [para. 62].

Deputy Minister of Revenue v. Rainville - see Bourgault's Estate v. Deputy Minis­ter of Revenue of Quebec.

Jacs Jackets and Crest Ltd., Re; Worker's Compensation Board (Alta.) v. Deloitte, Haskins and Sells Ltd., [1985] 1 S.C.R. 785; 60 N.R. 81; 63 A.R. 321, refd to. [para. 62].

Deloitte Haskins and Sells Ltd. v. Worker's Compensation Board - see Jacs Jackets and Crest Ltd., Re.

Federal Business Development Bank v. Commission de la santé et de la sécurité du travail et al., [1988] 1 S.C.R. 1061; 84 N.R. 308; 14 Q.A.C. 140, refd to. [para. 62].

British Columbia v. Henfrey Samson Belair Ltd., [1989] 2 S.C.R. 24; 97 N.R. 61, refd to. [para. 62].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 2 [para. 33]; sect. 30(1)(k), sect. 67(1), sect. 71, sect. 72, sect. 81, sect. 136(1) [para. 8].

Personal Property Security Act, S.B.C. 1989, c. 36, sect. 1 [para. 30]; sect. 2(1), sect. 3 [para. 8]; sect. 12(1)(b), sect. 12(2) [para. 32]; sect. 20(b)(i), sect. 21 [para. 8]; sect. 24, sect. 25 [para. 32].

Authors and Works Noticed:

Buckwold, Tamara M. and Cuming, Ronald C.C., The Personal Property Security Act and the Bankruptcy and Insolvency Act: Two Solitudes or Com­plementary Systems? (1997), 12 Banking & Finance L. Rev. 467, pp. 469, 470 [para. 26]; 471 [para. 36].

Cuming, Ronald C.C., Canadian Bank­ruptcy Law: A Secured Creditor's Heaven (1994), 24 Can. Bus. L.J. 17, pp. 25, 26 [para. 67]; 27, 28 [para. 38]; 29 [para. 39].

Waters, D.W.M., Law of Trusts in Canada (2nd Ed. 1984), pp. 299, 300 [para. 70].

Ziegel, Jacob S., Personal Property Se­curity and Bankruptcy: There is No War! - A Reply to Roman and Sweatman (1993), 72 Can. Bar Rev. 44, p. 50 [para. 66].

Counsel:

Geoffrey H. Dabbs, for the appellant, R. West & Associates Inc;

R. Richard M. Butler, for the appellant, the Attorney General of British Columbia;

John Douglas Shields and Alastair Wade, for the respondent;

Edward R. Sojonky, Q.C., and Jan Brongers, for the intervenor, the At­torney General of Canada;

Richard J.K. Stewart, for the intervenor, the Attorney General for Ontario.

James A. Baird, for the intervenor, the Attorney General for Alberta (written submissions).

Solicitors of Record:

Davis & Company, Vancouver, British Columbia, for the appellant, R. West & Associates Inc.;

R. Richard M. Butler, Victoria, British Columbia, for the appellant, the Attorney General of British Columbia;

John Douglas Shields Law Corporation, Vancouver, British Columbia, for the respondent;

The Deputy Attorney General of Canada, Ottawa, Ontario, for the intervenor, the Attorney General of Canada;

Richard J.K. Stewart, Toronto, Ontario, for the intervenor, the Attorney General for Ontario;

The Department of Justice, Edmonton, Alberta, for the intervenor, the Attorney General for Alberta.

This appeal was heard on October 8, 1997, before L'Heureux-Dubé, Sopinka*, Gonthier, Cory, McLachlin, Iacobucci and Major, JJ., of the Supreme Court of Canada. The fol­lowing decision was delivered for the court in both official languages by Iacobucci, J., on February 12, 1998.

*Sopinka, J., took no part in the judgment.