GMAC Commercial Credit Corp. - Canada v. T.C.T. Logistics Inc. et al., (2006) 351 N.R. 326 (SCC)

• Judge: McLachlin, C.J.C., Major, Bastarache, Binnie, LeBel, Deschamps, Fish, Abella and Charron, JJ.
• Court: Supreme Court (Canada)
• Case Date: July 27, 2006
• Jurisdiction: Canada (Federal)
• Citations: (2006), 351 N.R. 326 (SCC);2006 SCC 35

GMAC v. TCT Logistics Inc. (2006), 351 N.R. 326 (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: [2006] N.R. TBEd. JL.045

Industrial Wood & Allied Workers of Canada, Local 700 (appellant/respondent on cross-appeal) v. GMAC Commercial Credit Corporation - Canada (respondent/appellant on cross-appeal) and T.C.T. Logistics Inc., T.C.T. Warehousing Logistics Inc., KPMG Inc., The Interim Receiver and Trustee in Bankruptcy of T.C.T. Logistics Inc., T.C.T. Warehousing Logistics Inc., TCT Logistics Inc., TCT Acquisition No. 1 Ltd., Atomic TCT Logistics Inc., Atomic TCT (Alberta) Logistics Inc., TCT Canada Logistics Inc., Inter-Ocean Terminals (B.C.) Ltd., Atomic Transport Inc., TCT Warehousing Logistics Inc., TCT Warehousing Logistics No. 2 Inc., R.R.S. Transport (1998) Inc., TCT Acquisition No. 2 Ltd., Tri-Line Expressways Ltd. (a successor to Tri-Line Expressways Ltd. and TCT Acquisition No. 3 Ltd.), Tri-Line Expressways, Inc., 2984008 Canada Inc., High-Tech Express & Distribution Inc., 606965 British Columbia Ltd. and 606966 British Columbia Ltd. (respondents)

(30391; 2006 SCC 35; 2006 CSC 35)

Indexed As: GMAC Commercial Credit Corp. - Canada v. T.C.T. Logistics Inc. et al.

Supreme Court of Canada

McLachlin, C.J.C., Major, Bastarache, Binnie, LeBel, Deschamps, Fish, Abella and Charron, JJ.

July 27, 2006.

Summary:

T.C.T. Logistics Inc. and related com­panies (collectively TCT) became insolvent. KPMG Inc. was appointed an interim re­ceiver over TCT's assets and obtained an order giving it broad powers and deeming it not to be a successor employer under the On­tario Labour Relations Act. KPMG filed an assignment in bankruptcy on TCT's be­half. KPMG entered into an asset purchase agreement to sell the assets of TCT's ware­housing business to another company (Spec­trum). KPMG terminated all unionized em­ployees. Without seeking leave from the bank­ruptcy court, the union filed applications with the Ontario Labour Relations Board (OLRB) seeking, inter alia, a declaration that Spectrum was the successor employer to TCT and/or KPMG pursuant to s. 69 of the Ontario Labour Relations Act and was there­fore bound by the collective agreement be­tween the union and TCT. KPMG brought a mo­tion before the OLRB to stay the pro­ceedings on the basis that the order which appointed it interim receiver and s. 215 of the Bankruptcy and Insolvency Act pre­clud­ed proceedings against it without leave of the court. The OLRB granted the stay. The union moved in the bankruptcy court for, in­ter alia, leave to proceed before the OLRB.

The Ontario Superior Court, in a decision reported at [2003] O.T.C. 365, inter alia, denied the union leave to commence succes­sor employer proceedings before the OLRB. The union appealed.

The Ontario Court of Appeal, MacPherson, J.A., dissenting, in a decision reported at 185 O.A.C. 138 , allowed the appeal, set aside the decision below and remitted the matter to the bankruptcy court. The union appealed cer­tain aspects of the court's order. A se­cured creditor cross-appealed on the issue of the bankruptcy judge's jurisdiction.

The Supreme Court of Canada, Des­champs, J., dissenting, allowed the appeal and dismissed the cross-appeal.

Bankruptcy - Topic 1805

Interim receivers - Actions against - As successor employer - The Supreme Court of Canada held that a bankruptcy court had no jurisdiction to decide whether an in­terim receiver/trustee in bankruptcy was a successor employer within the meaning of Labour Relations Act (Ont.) (LRA) - Un­der s. 47(2) of the Bankruptcy and Insol­vency Act, the bankruptcy court was given powers to direct the interim re­ceiver's conduct - That section did not, explicitly or implicitly, confer authority on the bank­ruptcy court to make unilateral declarations about the rights of third par­ties affected by other statutory schemes - Section 114(1) of the LRA provided that the Labour Board had exclusive jurisdic­tion to make a suc­ces­sor employer deter­mination - If the s. 47 net were interpreted widely enough to permit interference with all rights which, though protected by law, represented an in­convenience to the bank­ruptcy process, it could be used to ex­tinguish all employ­ment rights if the bank­ruptcy court thought it "advisable" under s. 47(2)(c) - The bank­ruptcy court could mandate employ­ment- related conduct by the receiver, but as s. 47(2) was presently worded, the court could not, on its own, abrogate the right to seek relief at the labour board - See para­graphs 43 to 52.

Bankruptcy - Topic 1805

Interim receivers - Actions against - As successor employer - Section 215 of the Bank­ruptcy and Insolvency Act required a bankruptcy court to grant leave before any action could be taken against a trustee or interim receiver "with respect to ... any action taken pursuant to this Act" - The Ontario Court of Appeal stated that a s. 215 leave application to permit successor em­ployer proceedings before the Ontario Labour Relations Board required the bank­ruptcy court to go beyond the usual test (Mancini test) for granting leave under s. 215 - The Supreme Court of Canada held that there was no reason to dethrone Man­cini as the reigning test - The court re­viewed the Mancini test and held that there was no reason why the long-standing prin­ciples governing the granting of leave should be different when the dispute re­lated to the receiver's obligations to the debtors' employees represented by a union - A hierarchical approach to s. 215 which made it significantly more difficult for a successorship case to obtain leave would unduly give trustees and receivers more pro­tection from being answerable to the court for possible misconduct related to po­tential breaches of labour relations, and offered unique and enhanced protection for trustees who violated labour rights - Sec­tion 215 was not designed to protect the trustee from well-founded litigation - It was designed to afford protection from claims for which there was no factual foun­dation - See paragraphs 7 and 53 to 74.

Bankruptcy - Topic 1805

Interim receivers - Actions against - As successor employer - A company became in­solvent - An order was made appointing KPMG as an interim receiver - The com­pany later filed for bankruptcy - KPMG was appointed trustee in bankruptcy - KPMG agreed to sell most of the assets of the company to Spectrum - All unionized em­ployees at the company's Toronto ware­house were eventually terminated - A bank­­ruptcy judge, inter alia, denied the union leave under s. 215 of the Bankruptcy and Insolvency Act to bring successor em­ployer proceedings against KPMG before the Ontario Labour Relations Board - The union had argued that KPMG be­came the em­ployer of the employees after its ap­pointment as interim receiver when it initially decided to employ them in order to continue operating the Toronto ware­house - The Supreme Court of Canada grant­ed the union leave to bring the suc­cessor employer proceedings - It could not be said that the union's claim was frivo­lous or without an evidentiary foundation - See paragraphs 75 to 80.

Labour Law - Topic 448

Labour relations boards and judicial review - Boards - Jurisdiction - Successor rights and obligations - [See first Bankruptcy - Topic 1805 ].

Cases Noticed:

Mancini (Bankrupt) et al. v. Falconi (1993), 61 O.A.C. 332 (C.A.), refd to. [para. 6].

City National Leasing v. General Motors of Canada Ltd., [1989] 1 S.C.R. 641; 93 N.R. 326; 32 O.A.C. 332, refd to. [para. 29].

Global Securities Corp. v. British Colum­bia Securities Commission et al., [2000] 1 S.C.R. 494; 252 N.R. 290; 134 B.C.A.C. 207; 219 W.A.C. 207; 2000 SCC 21, refd to. [para. 29].

Kitkatla Indian Band et al. v. British Columbia (Minister of Small Business, Tourism and Culture) et al., [2002] 2 S.C.R. 146; 286 N.R. 131; 165 B.C.A.C. 1; 270 W.A.C. 1; 2002 SCC 31, refd to. [para. 29].

Royal Crest Lifecare Group Inc. (Bank­rupt), Re, [2003] O.T.C. Uned. 157; 40 C.B.R.(4th) 146 (Sup. Ct.), affd. (2004), 181 O.A.C. 115; 46 C.B.R.(4th) 126 (C.A.), refd to. [paras. 29, 39, 133].

Crystalline Investments Ltd. v. Domgroup Ltd., [2004] 1 S.C.R. 60; 316 N.R. 1; 184 O.A.C. 33; 2004 SCC 3, refd to. [para. 51].

Randfield v. Randfield (1861), 3 De G.F. & J. 766; 45 E.R. 1075, refd to. [para. 56].

Re Diehl v. Carritt; Ex. p. Clement (1907), 15 O.L.R. 202 (H.C.), refd to. [para. 56].

Danny's Cabaret Ltd. v. Horner, [1980] B.C.J. No. 1293 (C.A.), refd to. [para. 56].

Virden Credit Union Ltd. v. Dunwoody Ltd. and Kelleher (1982), 20 Man.R.(2d) 88; 45 C.B.R.(N.S.) 84 (Q.B.), refd to. [para. 56].

New Alger Mines Ltd. v. Thorne Riddell Inc. (1986), 14 O.A.C. 25; 59 C.B.R.(N.S.) 113 (C.A.), refd to. [para. 56].

RoyNat Inc. v. Omni Drilling Rig Partner­ship No. 1 (Receivership) (1988), 90 A.R. 173; 61 Alta. L.R.(2d) 165; 69 C.B.R.(N.S.) 245 (Q.B.), refd to. [para. 56].

B.N.R. Holdings Ltd. v. Royal Bank (1992), 14 C.B.R.(3d) 233 (B.C.S.C.), refd to. [para. 56].

Toronto-Dominion Bank v. Clark (Alex L.) Ltd. (1993), 22 C.B.R.(3d) 6 (Ont. Gen. Div.), refd to. [para. 56].

Nicholas v. Anderson (1996), 40 C.B.R.(3d) 32 (Ont. Gen. Div.), refd to. [para. 56].

Cougar Tool Inc. v. Coopers & Lybrand Ltd. et al. (1996), 193 A.R. 73; 135 W.A.C. 73; 45 Alta. L.R.(3d) 364 (C.A.), refd to. [para. 56].

Wenzel v. Cougar Tool Inc. - see Cougar Tool Inc. v. Coopers & Lybrand Ltd. et al.

Juneau (Bankrupt), Re; Burton v. Kideckel, [1999] O.T.C. 51; 13 C.B.R.(4th) 9 (Sup. Ct.), refd to. [paras. 56, 130].

Society of Composers, Authors and Music Publishers of Canada v. Armitage (2000), 137 O.A.C. 74; 50 O.R.(3d) 688; 20 C.B.R.(4th) 160 (C.A.), refd to. [paras. 56, 130].

Vanderwoude et al. v. Scott and Pichelli Ltd. et al. (2001), 143 O.A.C. 195; 25 C.B.R.(4th) 127 (C.A.), refd to. [paras. 56, 130].

Lévy (Sam) & Associés Inc. v. Azco Min­ing Inc., [2001] 3 S.C.R. 978; 280 N.R. 155; 2001 SCC 92, refd to. [paras. 63, 128].

Planet Development Corp. and Lester (W.W.) (1978) Ltd. v. United Associa­tion of Journeymen and Apprentices of the Plumbing and Pipefitting Industry in the United States and Canada, Local 740, [1990] 3 S.C.R. 644; 123 N.R. 241; 88 Nfld. & P.E.I.R. 15; 274 A.P.R. 15, refd to. [paras. 76, 99].

Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701; 219 N.R. 161; 123 Man.R.(2d) 1; 159 W.A.C. 1, refd to. [para. 81].

Ex parte James, In re Condon (1874), L.R. 9 Ch. App. 609, refd to. [para. 89].

Parsons v. Sovereign Bank of Canada, [1913] A.C. 160 (P.C.), refd to. [para. 90].

L'Heureux (syndic), Re, [1999] R.J.Q. 945 (C.A.), refd to. [para. 90].

Caisse populaire de Pontbriand v. Domaine St-Martin Ltée, [1992] R.D.I. 417 (C.A.), refd to. [para. 90].

Lévy (Sam) & Associés Inc. v. Azco Min­ing Inc., [2000] R.J.Q. 392 (C.A.), refd to. [para. 90].

Reed, Re (1980), 34 C.B.R.(N.S.) 83 (Ont. C.A.), refd to. [para. 90].

Canadian Union of Public Employees v. Metropolitan Parking Inc., [1980] 1 C.L.R.B.R. 197 (Ont.), refd to. [para. 100].

Lincoln Hydro Electric Commission, Re, [1999] O.L.R.B. Rep. May/June 397, refd to. [para. 100].

Adam v. Roy (Daniel) Ltd. et al., [1983] 1 S.C.R. 683; 50 N.R. 332, refd to. [para. 101].

Man of Aran, Re (1974), 6 L.A.C.(2d) 238 (Ont.), refd to. [para. 101].

Woodbridge Hotel, Re (1976), 13 L.A.C.(2d) 96 (Ont.), refd to. [para. 101].

Uncle Ben's Industries Ltd. and Prince George Breweries Ltd., Re, [1979] 2 Can. L.R.B.R. 126 (B.C.L.R.B.), refd to. [para. 101].

United Brotherhood of Carpenters & Join­ers of America, Local 3054 v. Cas­sin-Remco Ltd. et al. (1979), 27 O.R.(2d) 25; 105 D.L.R.(3d) 138 (H.C.), refd to. [para. 101].

Radio CJYQ-930 Ltd., Re (1978), 34 di 617, refd to. [para. 101].

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 108].

Hodge v. R. (1883), 9 App. Cas. 117 (P.C.), refd to. [para. 115].

Reference Re Employment Insurance Act, [2005] 2 S.C.R. 669; 339 N.R. 279; 2005 SCC 56, refd to. [para. 116].

Multiple Access Ltd. v. McCutcheon et al., [1982] 2 S.C.R. 161; 44 N.R. 181, refd to. [para. 117].

Law Society of British Columbia v. Man­gat, [2001] 3 S.C.R. 113; 276 N.R. 339; 157 B.C.A.C. 161; 256 W.A.C. 161; 2001 SCC 67, refd to. [para. 117].

Rothmans, Benson & Hedges Inc. v. Sas­katchewan et al., [2005] 1 S.C.R. 188; 331 N.R. 116; 257 Sask.R. 171; 342 W.A.C. 171; 2005 SCC 13, refd to. [para. 117].

Bourgault's Estate v. Quebec (Deputy Minister of Revenue), [1980] 1 S.C.R. 35; 30 N.R. 24, refd to. [para. 120].

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

Jacs Jackets and Crest Ltd., Re; Workers' Compensation Board (Alta.) v. Deloitte, Haskins and Sells Ltd., [1985] 1 S.C.R. 785; 60 N.R. 81; 63 A.R. 321; 19 D.L.R.(4th) 577; 38 Alta. L.R.(2d) 169, refd to. [para. 120].

Deloitte, Haskins and Sells Ltd. v. Work­ers' Compensation Board (Alta.) - see Jacs Jackets and Crest Ltd., Re; Workers' Compensation Board (Alta.) v. Deloitte, Haskins and Sells Ltd.

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; 50 D.L.R.(4th) 577, refd to. [para. 120].

British Columbia v. Henfrey Samson Be­lair Ltd., [1989] 2 S.C.R. 24; 97 N.R. 61, refd to. [para. 120].

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. [para. 120].

D.I.M.S. Construction Inc. (Bankrupt) v. Quebec (Attorney General), [2005] 2 S.C.R. 564; 2005 SCC 52, refd to. [para. 120].

Tranchemontagne v. Disability Support Program (Ont.) et al., [2006] 1 S.C.R. 513; 347 N.R. 144; 210 O.A.C. 267; 2006 SCC 14, refd to. [para. 128].

Alamo Linen Rentals Ltd. v. Spicer Mac­gillvary Inc. (1986), 63 C.B.R.(N.S.) 38 (Ont. Prov. Ct.), refd to. [para. 130].

Beatty Limited Partnership, Re (1991), 1 O.R.(3d) 636 (Gen. Div.), refd to. [para. 130].

Chastan Ventures Ltd., Re (1993), 23 C.B.R.(3d) 115 (B.C.S.C.), refd to. [para. 130].

Willows Golf Corp. (Bankrupt), Re (1994), 119 Sask.R. 208 (Q.B.), refd to. [para. 130].

McKyes, Re, 1996 CarswellQue 2575 (Sup. Ct.), refd to. [para. 130].

Nicholas v. Anderson, [1998] O.A.C. Uned. 433; 5 C.B.R.(4th) 256 (C.A.), refd to. [para. 130].

Gallo v. Beber et al. (1998), 116 O.A.C. 340; 7 C.B.R.(4th) 170 (C.A.), refd to. [para. 130].

Kearney v. Feldman, [1998] O.J. No. 5109 (Gen. Div.), refd to. [para. 130].

Mann v. KPMG Inc. (2000), 197 Sask.R. 181; 2000 SKQB 460, refd to. [para. 130].

Caswan Environmental Services Inc. (Ban­krupt), Re (2001), 287 A.R. 11; 24 C.B.R.(4th) 191; 2001 ABQB 240, refd to. [para. 130].

K.D.N. Distribution and Warehousing Ltd. (Bankrupt), Re, [2002] O.T.C. Uned. 223; 33 C.B.R.(4th) 77 (Sup. Ct. Reg.), refd to. [para. 130].

Canada 3000 Inc., Re, [2002] O.J. No. 3266 (Sup. Ct.), refd to. [para. 130].

MacLean v. Morash et al. (2003), 219 N.S.R.(2d) 83; 692 A.P.R. 83; 2003 NSSC 219, refd to. [para. 130].

Down et al. v. Andersen (Arthur) Inc. et al., [2003] B.C.T.C. Uned. 506; 46 C.B.R.(4th) 58; 2003 BCSC 1286, refd to. [para. 130].

Jiwani v. Devgan, [2005] O.J. No. 2868 (Sup. Ct.), refd to. [para. 130].

Goodeats Corp. (Bankrupt), Re, [2005] O.T.C. Uned. 567; 12 C.B.R.(5th) 122 (Sup. Ct.), refd to. [para. 130].

105497 Ontario Inc. v. Schwartz Levinsky Feldman Inc. - see Goodeats Corp. (Bankrupt), Re.

477470 Alberta Inc. (Bankrupt), Re (2005), 386 A.R. 175; 12 C.B.R.(5th) 125; 2005 ABQB 430, refd to. [para. 130].

588871 Ontario Ltd., Re (1995), 33 C.B.R.(3d) 28 (Ont. Bktcy.), refd to. [para. 131].

Mancini (Bankrupt) et al. v. Falconi et al. (1993), 61 O.A.C. 332 (C.A.), affing (1989), 76 C.B.R.(N.S.) 90 (Ont. S.C.), refd to. [paras. 135, 138].

Syndicat national de l'amiante d'Asbestos inc. v. Jeffrey Mines Ltd., [2003] Q.J. No. 264 (C.A.), refd to. [para. 152].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 47(2) [para. 44]; sect. 72(1) [para. 46]; sect. 215 [para. 54].

Labour Relations Act, S.O. 1995, c. 1, Schedule A, sect. 69(2) [para. 47]; sect. 114(1) [para. 48].

Authors and Works Noticed:

Adams, George W., Canadian Labour Law (2nd Ed. 1993) (2006 Looseleaf Update, Re­lease 25), pp. 8.4 ff. [para. 102]; 8-4 to 8-23 [para. 100]; 8-38.2 to 8-39 [para. 101]; 8-39 ff. [para. 102].

Auger, Jacques, and Bohémier, Albert, The Status of the Trustee in Bankruptcy (2002), 37 R.J.T. 57, pp. 99 to 100 [para. 90].

Bennett, Frank E., Bankruptcy (8th Ed. 2005), pp. 416, 417 [para. 56].

Bennett, Frank E., Receiverships (2nd Ed. 1999), p. 223 [para. 56].

Carter, Donald D., England, Geoffrey, Etherington, Brian, Trudeau, Gilles, Labour Law in Canada (5th Ed. 2002), pp. 280, 281 [para. 101].

Houlden, Lloyd W., Morawetz, Geoffrey B., and Sarra, Janis, Bankruptcy and In­sol­vency Law of Canada (3rd Ed.) (2006 Looseleaf Update, Release 5), vols. 1, paras. C§10, C§44 [para. 90]; 3, p. 7-118.2 [paras. 55, 56].

Lederman, W.R., The Concurrent Opera­tion of Federal and Provincial Laws in Canada (1963), 9 McGill L.J. 185, gen­erally [para. 117].

Roman, A.J., and Sweatman, M.J., The Conflict Between Canadian Provincial Property Security Acts and the Federal Bankrupcty Act: The War is Over (1992), 71 Can. Bar Rev. 77, pp. 39, 78, 79 [para. 121].

Tay, Derrick C.A., The Bankrupcty and Insolvency Act: Striking a Balance Be­tween the Rights of the Debtor and its Creditors, article VI in Implications of the New Bankruptcy and Insolvency Act (1993), p. 2 [para. 93].

Counsel:

Stephen Wahl and Andrew J. Hatnay, for the appellant/respondent on cross-appeal;

Orestes Pasparakis and Susan E. Rothfels, for the respondent/appellant on cross-ap­peal;

Benjamin Zarnett and Frederick L. Myers, for the respondent KPMG Inc.

Solicitors of Record:

Koskie Minsky, Toronto, Ontario, for the appellant/respondent on cross-appeal;

Ogilvy Renault, Toronto, Ontario, for the respondent/appellant on cross-appeal;

Goodmans LLP, Toronto, Ontario, for the respondent KPMG Inc.

This appeal and cross-appeal were heard on November 16, 2005, before McLachlin, C.J.C., Major*, Bastarache, Binnie, LeBel, Deschamps, Fish, Abella and Charron, JJ., of the Supreme Court of Canada.

The judgment of the Supreme Court of Canada was delivered in both official lan­guages on July 27, 2006, and the following opinions were filed:

Abella, J. (McLachlin, C.J.C., Bas­ta­rache, Binnie, LeBel, Fish and Char­ron, JJ., concurring) - see paragraphs 1 to 84;

Deschamps, J., dissenting - see para­graphs 85 to 167;

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