Investors Group Trust Co. v. Eckhoff et al., 2008 SKCA 18

• Judge: Jackson, Richards and Wilkinson, JJ.A.
• Court: Court of Appeal (Saskatchewan)
• Case Date: September 04, 2007
• Jurisdiction: Saskatchewan
• Citations: 2008 SKCA 18;(2008), 307 Sask.R. 164 (CA)

Inv. Group Trust v. Eckhoff (2008), 307 Sask.R. 164 (CA);

      417 W.A.C. 164

MLB headnote and full text

Temp. Cite: [2008] Sask.R. TBEd. FE.005

Gordon David Eckhoff (appellant/defendant) v. Her Majesty the Queen (Canada) and Canada Customs and Revenue Agency (respondents/defendants) and Investors Group Trust Co. Ltd. (respondent/plaintiff)

(No. 1345; 2008 SKCA 18)

Indexed As: Investors Group Trust Co. v. Eckhoff et al.

Saskatchewan Court of Appeal

Jackson, Richards and Wilkinson, JJ.A.

February 12, 2008.

Summary:

Eckhoff failed to file his income tax returns within the prescribed time limits. Consequently, certificates were signed and writs of execution were registered against him and his residence pursuant to the Income Tax Act. A requirement to pay was sent to Eckhoff's employer and, in accordance with the document, the employer paid 100% of Eckhoff's income to the Receiver General of Canada. Eckhoff was therefore unable to pay his mortgage payments in favour of the plaintiff, who commenced an action in foreclosure. A judicial sale was ordered and the proceeds of the sale were paid into court. Eckhoff applied for payment of the balance in court to the extent of $32,000 and $4,500 (furnishings) being the exemptions permitted under s. 2(1) of the Exemptions Act (Sask.).

The Saskatchewan Court of Queen's Bench, in a decision reported at 283 Sask.R. 94, dismissed the application and ordered that the proceeds in court be paid to the Receiver General. Eckhoff appealed.

The Saskatchewan Court of Appeal allowed the appeal. Since the Minister was precluded from seizing the assets in question under s. 223 of the Income Tax Act (ITA), the proceeds of their forced sale could not be garnisheed under s. 224 of the ITA. The result was that Eckhoff was entitled to assert an exemption in priority to the claim of the Minister with respect to the funds remaining in Court.

Crown - Topic 408

Statutes affecting the Crown - General principles - Application of provincial laws to federal Crown - [See Execution - Topic 748.1 ].

Execution - Topic 748.1

General rules - Exemptions - House - Eckhoff failed to file his income tax returns within the prescribed time limits - Consequently, certificates were signed and writs of execution were registered against him and his residence pursuant to the Income Tax Act (ITA) - A requirement to pay was sent to Eckhoff's employer and, in accordance with the document, the employer paid 100% of Eckhoff's income to the Receiver General of Canada - Eckhoff was therefore unable to pay his mortgage payments in favour of the plaintiff, who commenced an action in foreclosure - A judicial sale was ordered and the proceeds of the sale were paid into court - Eckhoff applied for payment of the balance in court to the extent of $32,000 and $4,500 (furnishings) being the exemptions permitted under s. 2(1) of the Exemptions Act (Sask.) - The applications judge dismissed the application - The Saskatchewan Court of Appeal allowed Eckhoff's appeal - The law in Saskatchewan was that registration of a writ of execution in the superior court bound and formed a lien and charge on exempt real property, but if it was sold by means of a forced sale, the proceeds to the extent of the exemption, could be claimed by the execution debtor - The writs of execution issued in this case charged and bound land "in the same manner and to the same extent" as a superior court writ and "proceedings may be taken in the province in respect of the memorial, including proceedings ... to enforce payment of the amount evidenced ... in the same manner and to the same extent" as a superior court writ - Consequently, the charge that was created by s. 223 of the ITA bound exempt land, but the sheriff could not seize it and its sale could not be compelled by the execution creditor - If it was sold at a forced sale, the proceeds, to the extent of the exemption, belonged to the debtor - To permit garnishment of the proceeds of the forced sale of an asset, which the Minister could not seize under the Exemptions Act, would defeat the whole purpose of the asset being exempt - If the Minister could not seize the asset pursuant to s. 223, the proceeds of its forced sale could not be garnisheed under s. 224(1) of the ITA - Accordingly, the Minister was bound by the provincially created exemptions for the home and contents, and the funds in court were the proceeds of the forced sale of those assets found to be exempt from seizure as against the Minister.

Execution - Topic 758

General rules - Exemptions - Household goods - [See Execution - Topic 748.1 ].

Cases Noticed:

Wanhella v. Agricultural Credit Corp. of Saskatchewan (1988), 68 Sask.R. 146 (Q.B.), refd to. [para. 13].

Wilkinson v. Agricultural Credit Corp. of Saskatchewan (1987), 60 Sask.R. 1 (Q.B.), refd to. [para. 13].

Sun Life Assurance Co. of Canada v. Minister of National Revenue et al. (1992), 103 Sask.R. 124 (Q.B.), refd to. [para. 13].

Marcoux v. Canada (Procureur général) (2001), 278 N.R. 19 (F.C.A.), refd to. [para.13].

Yancey's Men's Wear Ltd., Re; Canaday's Apparel Ltd. v. Yancey's Men's Wear Ltd. et al. (1982), 17 Sask.R. 287 (Q.B.), refd to. [para. 14].

Demaurez, Re (1900-1904), 5 Terr. L.R. 84, refd to. [para. 26].

Hayes, In re, [1931] 1 W.W.R. 301, refd to. [para. 26].

Bocz v. Spiller (1905), 1 W.L.R. 366, affd. 2 W.L.R. 280 (Terr. C.A.), refd to. [para. 26].

Purdy v. Colton (1908), 1 S.L.R. 288, refd to. [para. 26].

Tripp v. Gray et al., [1978] 4 W.W.R. 543 (Sask. Dist. Ct.), refd to. [para. 26].

Higgins Co. v. McNabb (1979), 2 Sask.R. 119 (C.A.), refd to. [para. 26].

Neuls (Bankrupts), Re; Touche Ross Ltd. v. First City Trust Co. et al. (1985), 37 Sask.R. 60 (C.A.), refd to. [para. 26].

Friends of the Oldman River Society v. Canada (Minister of Transport and Minister of Fisheries and Oceans), [1992] 1 S.C.R. 3; 132 N.R. 321, refd to. [para. 32].

Rizzo and Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 33].

Norfolk Trust Co. v. Hardy, Hardy, Saskatchewan and Canada (1984), 33 Sask.R. 198 (Q.B.), refd to. [para. 52].

Korycki v. Korycki, [1940] 3 D.L.R. 45 (Sask. C.A.), refd to. [para. 62].

Statutes Noticed:

Exemptions Act, R.S.S. 1978, c. E-14, sect. 2(1) [para. 23].

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 224(1) [para. 12].

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, generally [para. 22].

Counsel:

David G. MacKay, for Gordon David Eckhoff;

Gordon Berscheid and Marlon J. Miller, for Her Majesty the Queen (Canada) and Canada Customs and Revenue Agency;

No one appearing, for Investors Group Trust Co. Ltd.

This appeal was heard on September 4, 2007, by Jackson, Richards and Wilkinson, JJ.A., of the Saskatchewan Court of Appeal. Supplementary arguments were received from the Crown on October 3, 2007, and from the appellant on October 15, 2007. The following judgment of the Court of Appeal was delivered by Jackson, J.A., on February 12, 2008.