Robinson, Little & Co. (Bankrupt) v. Manitoba (Minister of Labour), (1986) 43 Man.R.(2d) 275 (CA)

• Judge: Hall, O'Sullivan and Twaddle, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: September 12, 1986
• Jurisdiction: Manitoba
• Citations: (1986), 43 Man.R.(2d) 275 (CA)

Robinson, Little & Co. v. Man. (1986), 43 Man.R.(2d) 275 (CA)

MLB headnote and full text

Clarkson Gordon Inc. (the successor in name to the Clarkson Company Limited), the Trustee of the Estate of Robinson, Little & Company Limited, a Bankrupt v. Her Majesty the Queen in right of the Province of Manitoba, as represented by the Minister of Labour

(Suit Nos. 52/86; 216/86)

Indexed As: Robinson, Little & Co. (Bankrupt) v. Manitoba (Minister of Labour)

Manitoba Court of Appeal

Hall, O'Sullivan and Twaddle, JJ.A.

October 7, 1986.

Summary:

An employer became bankrupt. Certain employees claimed priority to $69,000. over the secured creditors. The employees argued that the funds claimed were unpaid pension contributions held in trust for the employees pursuant to s. 24(3) of the Manitoba Pension Benefits Act and that such trust funds, pursuant to s. 47(a) of the Bankruptcy Act, were not divisible among the bankrupt's creditors.

The Manitoba Court of Queen's Bench, in a decision reported in 37 Man.R.(2d) 88, agreed with the employees and held that the funds were held in trust and were not to be divided among the secured creditors.

In a separate action, the trustee in bankruptcy applied for directions on the payment of wages to employees of the bankrupt company. The Minister of Labour argued that pursuant to s. 3(4) of the Manitoba Payment of Wages Act, a deemed trust existed to secure wages, which circumvented the distribution scheme in s. 107(1) of the Bankruptcy Act.

The Manitoba Court of Queen's Bench, in Bankruptcy, in a decision reported in 41 Man.R.(2d) 54, held that the federal legislation was paramount and that the distributions scheme in s. 107(1) of the Bankruptcy Act prevailed.

Both these decisions were appealed. The two appeals were heard at the same time.

The Manitoba Court of Appeal allowed the appeal in the first decision. Accordingly, the Court of Appeal held that the statutory trust respecting employers' unpaid pension plan contributions did not constitute a trust within the meaning of s. 47(a) of the Bankruptcy Act and therefore were available for contribution to the bankrupt's secured creditors. The Court of Appeal dismissed the appeal in the second decision. Accordingly, the Court of Appeal affirmed that the distribution scheme in s. 107(1) of the Bankruptcy Act prevailed over the deemed trust in s. 3(4) of the Payment of Wages Act.

Bankruptcy - Topic 488

Property of bankrupt - Exclusions - Trust property - S. 24(3) of the Pension Benefits Act provided that an employer's contributions to a company pension plan were deemed to be held in trust by the employer - S. 3(4) of the Payment of Wages Act provided that an employer was deemed to hold the wages due or accruing due to an employee in trust for the employee - The Bankruptcy Act, s. 47(a), excluded from the property of a bankrupt as sets held by the bankrupt in trust for another - The Manitoba Court of Appeal held that the "deemed trusts" created by the Manitoba legislation were not trusts within the meaning of s. 47(a) of the Bankruptcy Act, but were debts.

Bankruptcy - Topic 3648

Creditors - Priorities - Wages - General - The Minister of Labour alleged that employees of a bankrupt company were entitled to wages pursuant to the Manitoba Payment of Wages Act, which deemed a trust to exist securing wages - The Manitoba Court of Appeal affirmed that payment of employees' wages had priority to the extent of the distribution scheme in s. 107(1) of the Bankruptcy Act.

Words and Phrases

Trust - The Manitoba Court of Appeal discussed the meaning of the word "trust" as found in s. 47(a) of the Bankruptcy Act, R.S.C. 1970, c. B-3.

Cases Noticed:

Re Phoenix Paper Products Limited (1983), 1 O.A.C. 215; 48 C.B.R. (N.S.) 113 (C.A.), refd to. [para. 4].

Jacs Jackets and Crests Ltd., Re; Workers Compensation Board (Alta.) v. Deloitte, Haskins and Sells Limited (1985), 60 N.R. 81; 55 C.B.R. (N.S.) 241 (S.C.C.), refd to. [para. 8].

Statutes Noticed:

Bankruptcy Act, R.S.C. 1970, c. B-3, sect. 47(a) [paras. 9, 13].

Payment of Wages Act, S.M. 1975, c. 21; C.C.S.M., c. P-15, sect. 3(4) [para. 19].

Pension Benefits Act, S.M. 1975, c. 38; C.C.S.M., c. P-32, sect. 24(3) [para. 16].

Authors and Works Noticed:

Lewin on Trusts [para. 13].

Counsel:

D.G. Ward, for Clarkson Gordon Inc.;

W.G. McFetridge and V.J. Matthews-Lemieux, for Her Majesty the Queen.

These appeals were heard before Hall, O'Sullivan and Twaddle, JJ.A., of the Manitoba Court of Appeal on September 12, 1986. The decision of the Court of Appeal was delivered by O'Sullivan, J.A., on October 7, 1986.