Lane and Parsons v. Merchants Consolidated Ltd., (1990) 63 Man.R.(2d) 267 (QB)

• Judge: Coleman, J.
• Court: Court of Queen's Bench of Manitoba (Canada)
• Case Date: February 13, 1990
• Jurisdiction: Manitoba
• Citations: (1990), 63 Man.R.(2d) 267 (QB)

Lane v. Merchants Consolidated (1990), 63 Man.R.(2d) 267 (QB)

MLB headnote and full text

John Robert Lane (plaintiff) v. Merchants Consolidated Limited (defendant) and The Royal Bank of Canada (intervenor) Oliver Parsons (plaintiff) v. Merchants Consolidated Limited (defendant) and The Royal Bank of Canada (intervenor)

(Suit Nos. CI88-01-25749; CI88-01-25750)

Indexed As: Lane and Parsons v. Merchants Consolidated Ltd.

Manitoba Court of Queen's Bench

Winnipeg Centre

Coleman, J.

February 13, 1990.

Summary:

Creditors (Lane and Parsons) brought two separate actions against the same defendant debtor for monies owing under a contract. The debtor filed a statement of defence and counterclaim in each action. Jointly with the filing of the statement of claim the creditors obtained prejudgment garnishing orders. On application by the debtor, a Referee of the Manitoba Court of Queen's Bench ordered that the prejudgment garnishing orders be set aside on the debtor paying into court $100,000.00 in the action by Lane and $90,000.00 in the action by Parsons. The debtor complied. Subsequently, the Royal Bank, which already held debentures and a general assignment of book debts from the debtor, placed the debtor in receivership and appointed a receiver/manager of all undertakings, property and assets of the debtor. The issue in this case was the entitlement to the monies paid into court.

The Manitoba Court of Queen's Bench held that the Royal Bank was entitled to payment of the monies in court.

Choses in Action - Topic 363

Equitable assignments - What constitutes an equitable assignment - The defendant debtor paid monies into court in exchange for prejudgment garnishing orders being set aside - The Manitoba Court of Queen's Bench held that there was no equitable assignment of such monies by the debtor to the plaintiff creditors - See paragraphs 25 to 29.

Creditors and Debtors - Topic 4306

Garnishment by creditor - Garnishee order and priorities - Priority of garnishor over assignee of chose in action - The defendant debtor paid monies into court in exchange for prejudgment garnishing orders being set aside - A bank already held debentures and a general assignment of book debts from the debtor - After the payment into court, the bank appointed a receiver/manager, thereby crystallizing the bank's registered security - The Manitoba Court of Queen's Bench held that the bank had priority to the funds in court - See paragraph 34.

Personal Property - Topic 6204

Security interests - Priorities - Debentures - [See Creditors and Debtors - Topic 4306 ].

Personal Property - Topic 6205

Security interests - Priorities - Garnishment - [See Creditors and Debtors - Topic 4306 ].

Cases Noticed:

MacKay and Hughes (1973) Ltd. v. Martin Potatoes Inc.; Dominion Stores Ltd., Garnishee (1984), 4 O.A.C. 1; 46 O.R.(2d) 304 (C.A.), refd to. [para. 12, App.].

Zurich Insurance Co., Re (1984), 2 O.A.C. 183; 45 O.R.(2d) 343, refd to. [para. 12, App.].

Continental Bank of Canada v. Cranemaster Equipment Rentals Ltd. (1983), 44 A.R. 63; 146 D.L.R.(3d) 569 (C.A.), refd to. [para. 16, App.].

Gen'l. Brake and Clutch Service Ltd. v. W.A. Scott & Sons Ltd. (1975), 59 D.L.R.(3d) 741 (Man. C.A.), refd to. [para. 17, App.].

Coopers & Lybrand Limited v. National Caterers Ltd. (1982), 47 C.B.R. 57 (B.C.), refd to. [para. 18, App.].

Can. Credit Men's Trust v. Beaver Trucking (1959), 17 D.L.R.(2d) 161 (S.C.C.), refd to. [para. 19, App.].

Nelma Data Corporation v. K.B.S. Business Systems Ltd. (1985), 61 B.C.L. R. 311, dist. [para. 32, App.].

Kidd v. Harden/McConnal v. Harden, [1924] 3 W.W.R. 293 (B.C.S.C.), refd to. [App.].

Statutes Noticed:

Bankruptcy Act, R.S.C. 1952, c. 14, sect. 41(3) [para. 20].

Bankruptcy Act, R.S.C. 1985, c. B-3, sect. 70(1) [para. 21].

Authors and Works Noticed:

Canadian Encyclopedic Digest (Western, 2nd Ed.), vol. 3, pp. 1-37 [App.].

Kerr on Receivers (17th Ed. 1989), p. 159 [para. 14, App.].

Counsel:

Barry Steinfeld, for the plaintiffs;

Paul J. Brett, for the defendant (and its receiver);

D. Wayne Leslie and D. Kroft, for the intervenor.

These applications were heard before Coleman, J., of the Manitoba Court of Queen's Bench, Winnipeg Centre, whose decision was delivered on February 13, 1990.