Kennedy, Re, (1997) 213 A.R. 120 (QB)

• Judge: D. Lee, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: October 30, 1997
• Citations: (1997), 213 A.R. 120 (QB)

Kennedy, Re (1997), 213 A.R. 120 (QB)

MLB headnote and full text

Temp. Cite: [1997] A.R. TBEd. DE.072

In The Matter Of The Legal Profession Act being R.S.A. 1980, Chap. L-9.1;

And In The Matter Of Donald W. Kennedy A Member of the Law Society of Alberta

(Action No. 9703 09514)

Indexed As: Kennedy, Re

Alberta Court of Queen's Bench

Judicial District of Edmonton

D. Lee, J.

December 12, 1997.

Summary:

Shafir was appointed custodian to the legal practice of Kennedy. Shafir located $38,301.12 in Kennedy's general accounts. That sum was deposited in Shafir's trust account. Kennedy also had "considerable assets". The Law Society of Alberta incurred "significant costs in connection with the custodianship in the form of remunerating Mr. Shafir and paying for disbursements made by him in the process." These costs totalled $42,908.32. Kennedy's creditors included: Kennedy's secretary Mogge, for vacation pay; the City of Edmonton, for business taxes; Revenue Canada, for income tax; Wooldridge & Co., chartered ac­countants, for legal accounting services; and Eldor-Wal Registrations, for Land Titles Office and Court House registering. The Law Society applied under s. 92(5) of the Legal Pro­fessions Act for directions. The Law Society sought an order directing Shafir to pay it the sum of $38,301.12 in priority to Ken­nedy's creditors.

The Alberta Court of Queen's Bench held that the Law Society of Alberta, Wooldridge & Co. and Eldor-Wal Registrations were ordinary unsecured creditors of Kennedy. Revenue Canada, Mogge and the City of Edmonton were, in that order, statutory priority creditors of Kennedy. The court held that the Law Society's remedy lay not in an application for directions under s. 92(5) of the Legal Professions Act but in an action for debt as provided by s. 94(2)(b).

Barristers and Solicitors - Topic 7709

Regulation - Custodian - Appointment of - Costs and fees - The custodian of Ken­nedy's law practice located $38,301.12 in Kennedy's general accounts - That sum was deposited in the custodian's trust account - Kennedy also had "considerable assets" - The Law Society of Alberta in­curred custodianship expenses of $42,908.32 - The Law Society applied under s. 92(5) of the Legal Professions Act (Alta.) for court directions and more spe­cifically for an order directing the custo­dian to pay it the sum of $38,301.12 in priority to Kennedy's creditors - The Al­berta Court of Queen's Bench did not make the order sought - The court held that the Law Society's remedy lay not in an application for directions under s. 92(5) of the Legal Professions Act but in an action for debt as provided by s. 94(2)(b) - See paragraphs 6 to 54.

Master and Servant - Topic 1993

Remuneration - Vacation pay - Trust fund for - Priorities - The creditors of lawyer Kennedy, whose practice was placed under custodianship, included the following persons who claimed statutory priority: Kennedy's secretary Mogge, for vacation pay (Alberta's Employment Standards Code); and the City of Edmonton, for business taxes (Alberta's Municipal Gov­ernment Act) - The Alberta Court of Queen's Bench held that Mogge ranked ahead of the City of Edmonton because: (1) the Employment Standards Code crea­ted a statutory deemed trust in favour of Mogge; (2) this trust was then deemed to be a security interest in Kennedy's prop­erty; and (3) this security interest, accord­ing to s. 109(5) of the Employment Stan­dards Code, took priority over any other security interest or lien despite any other Act - See paragraphs 58 to 63.

Statutes Noticed:

Administration of Estates Act, R.S.A. 1980, c. A-1, sect. 62(1) [para. 31].

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 136(1) [para. 25].

Dependent Adults Act, R.S.A. 1980, c. D-32, sect. 43(2) [para. 29].

Employment Standards Code, S.A. 1996, c. E-10.3, sect. 109(2), sect. 109(3), sect. 109(5) [para. 58].

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 224(1.2) [para. 56].

Legal Profession Act, S.A. 1990, c. L-9.1, sect. 92(1)(f) [para. 2]; sect. 92(5)(c), sect. 92(5)(d) [para. 14]; sect. 94(2) [para. 17].

Municipal Government Act, S.A. 1994, c. M-26.1, sect. 348 [para. 59].

Trustee Act, R.S.A. 1980, c. T-10, sect. 44(1), sect. 45 [para. 30].

Counsel:

Joseph Shafir, for the Law Society of Alberta;

M. Dodge (Lanette Mogge's Mother), for Lanette Mogge;

Teresa Moyer, for the City of Edmonton Business Tax Office;

Gary Wooldridge, C.A., for Wooldridge & Company;

Leslie Manca, for Eldor-Wall Registra­tions.

This application was heard in chambers on October 30, 1997, by D. Lee, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following decision on December 12, 1997.