Marzetti v. Marzetti (Bankrupt), (1994) 155 A.R. 340 (SCC)

• Judge: McLachlin and Iacobucci, JJ.
• Court: Supreme Court of Canada
• Case Date: February 03, 1994
• Jurisdiction: Canada (Federal)
• Citations: (1994), 155 A.R. 340 (SCC)

Marzetti v. Marzetti (1994), 155 A.R. 340 (SCC);

    73 W.A.C. 340

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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Peat Marwick Thorne Inc., Trustee of the Estate of Arden Anthony Marzetti, A Bankrupt (appellant) v. The Director of Maintenance Enforcement, the Attorney General of Canada and the Attorney General of Alberta (respondents) and The Superintendent of Bankruptcy (intervenor)

Jacqueline Jeannine Marzetti (petitioner) v. Arden Anthony Marzetti (respondent)

(No. 23273)

Indexed As: Marzetti v. Marzetti (Bankrupt)

Supreme Court of Canada

La Forest, L'Heureux-Dubé,

Sopinka, Gonthier, Cory,

McLachlin and Iacobucci, JJ.

July 14, 1994.

Summary:

The Director of Maintenance Enforcement and the trustee in bankruptcy each claimed entitlement to a post-bankruptcy income tax refund owed to a bankrupt husband.

A Master of the Alberta Court of Queen's Bench, in a judgment reported 112 A.R. 70, held that the refund was property vesting in the trustee. The Director appealed.

The Alberta Court of Queen's Bench, in a judgment reported 123 A.R. 1, allowed the appeal and held that the Director was entitled to the refund. The bankrupt appealed.

The Alberta Court of Appeal, in a decision reported 131 A.R. 154; 25 W.A.C. 154, dismissed the appeal. The bankruptcy trustee appealed.

The Supreme Court of Canada dismissed the appeal.

Bankruptcy - Topic 401

Property of bankrupt - General - The Bankruptcy Act, s. 67, set out certain rules regarding what "property" will, and what "property" will not comprise "property of a bankrupt divisible among his creditors" - The Supreme Court of Canada interpreted s. 67 - See paragraphs 26 to 43.

Bankruptcy - Topic 401

Property of bankrupt - General - The Bankruptcy Act, s. 67, provided that the property of a bankrupt divisible among his creditors "shall comprise (c) all property wherever situated of the bankrupt at the date of his bankruptcy or that may be acquired by or devolve on him before his discharge, and (d) such powers in or over or in respect of the property as might have been exercised by the bankrupt for his own benefit" - The Supreme Court of Canada held that the word "and" in the English version of s. 67(c) must be read dis­junctively - The court held that it was fortified in this conclusion by the French text of s. 67 - See paragraphs 39, 40.

Bankruptcy - Topic 423

Property of bankrupt - Wages of bankrupt - The Bankruptcy Act, s. 67, set out cer­tain rules regarding what "property" will, and what "property" will not comprise "property of a bankrupt divisible among his creditors" - Section 68, provided that, notwithstanding s. 67, the trustee could apply to the court for an order directing the payment of certain salary, wages or other remuneration to the trustee - The Supreme Court of Canada interpreted s. 68, holding that it was a substantive provision providing a complete code respecting a bankrupt's salary, wages or other re­muneration - Therefore, such forms of property cannot be "property of a bankrupt divisible among his creditors" under s. 67 and do not vest in the trustee by operation of law - Rather, the trustee can access them through a court application as con­templated by s. 68 - See paragraphs 44 to 64.

Bankruptcy - Topic 423

Property of bankrupt - Wages of bankrupt - A bankrupt husband owed maintenance arrears - A post-bankruptcy income tax refund of employer withheld deductions was owed to the bankrupt - Both the Director of Maintenance Enforcement and the bankruptcy trustee claimed priority to the refund - The Supreme Court of Canada held that s. 68 of the Bankruptcy Act was a complete code governing the case - The post-bankruptcy income tax refund retained its character as wages for purposes of s. 68 and the trustee could access the refund only through a court application - No such application was made in this case; therefore, the Director, who had pursued garnishee proceedings, had priority - See paragraphs 65 to 83, 96.

Bankruptcy - Topic 440.2

Property of bankrupt - Post-bankruptcy income tax refunds - Both the Director of Maintenance Enforcement and a bank­ruptcy trustee claimed priority to a post-bankruptcy income tax refund owed to a bankrupt husband who owed maintenance arrears - The Director had filed a Notice of Continuing Attachment against the Crown under the Family Orders and Agreements Enforcement Assistance Act (Can.) to recover the income tax refund, instigating a process which led to a gar­nishee summons - The Supreme Court of Canada held that by taking steps to garnish the refund, the Director had priority, because the refund did not vest auto­matically in the trustee - The trustee could have accessed the refund only through an application under s. 68 of the Bankruptcy Act; however, no such application was made.

Bankruptcy - Topic 440.2

Property of bankrupt - Post-bankruptcy income tax refunds - The Bankruptcy Act, s. 67, set out certain rules regarding what "property" will, and what "property" will not comprise "property of a bankrupt divisible among his creditors" - The Supreme Court of Canada discussed whether a post-bankruptcy income tax refund owed to a bankrupt was "property" within the meaning of s. 67(c) and "prop­erty of a bankrupt divisible among his creditors" for purposes of s. 67 as a whole - See paragraphs 26 to 43.

Bankruptcy - Topic 440.2

Property of bankrupt - Post-bankruptcy income tax refunds - A husband who was in arrears of maintenance made a voluntary assignment in bankruptcy - He executed an "agreement letter" as requested by the bankruptcy trustee, authorizing the trustee to file his post-bankruptcy income tax return and authorizing that any refund be mailed to the trustee as an asset for dis­tribution to his creditors - The Supreme Court of Canada held that the "agreement letter" was rendered ineffective by s. 67 of the Financial Administration Act - Section 67 of the Act provided that Crown debts were not assignable, except as provided for by the Financial Administration Act or any other Act of Parliament - See paragraphs 84 to 94.

Choses in Action - Topic 248

What may be assigned - Obligations not assignable - Crown debts - [See third Bankruptcy - Topic 440.2 ].

Family Law - Topic 4054.1

Divorce - Corollary relief - Maintenance - Enforcement - Effect of bankruptcy of payor - [See second Bankruptcy - Topic 423 ].

Statutes - Topic 1806

Interpretation - Intrinsic aids - Bilingual statutes - Interpretation of one version by reference to the other - [See second Bankruptcy - Topic 401 ].

Statutes - Topic 2414

Interpretation - Words and phrases - Disjunctive words or phrases - [See sec­ond Bankruptcy - Topic 401 ].

Words and Phrases

And - The Supreme Court of Canada discussed the meaning of the word "and" as it was used in s. 67 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 - See paragraphs 39, 40.

Words and Phrases

Property - The Supreme Court of Canada discussed the meaning of the word "prop­erty" as it was used in s. 67 of the Bank­ruptcy and Insolvency Act, R.S.C. 1985, c. B-3 - See paragraphs 28 to 34.

Cases Noticed:

Northward Airlines Ltd., Re (1981), 36 A.R. 142; 37 C.B.R.(N.S.) 137 (Q.B.), disapproved [paras. 17, 90].

Tailby v. Official Receiver (1888), 13 App. Cas. 523 (H.L.), refd to. [para. 17].

Industrial Acceptance Corp. v. Lalonde, [1952] 2 S.C.R. 109, refd to. [para. 20].

Federal Commissioner of Taxation v. Official Receiver (1956), 95 C.L.R. 300 (Aust. H.C.), refd to. [para. 21].

Goulet, Re (1977), 24 C.B.R.(N.S.) 222 (Ont. S.C.), refd to. [para. 21].

Dauphin Plains Credit Union Ltd. v. Xyloid Industries Ltd. and The Queen, [1980] 1 S.C.R. 1182; 31 N.R. 301; 3 Man.R.(2d) 283; 108 D.L.R.(3d) 257, refd to. [para. 21].

Munich Reinsurance Co. (Canada Branch) v. Minister of National Revenue (1991), 91 D.T.C. 1137 (T.C.C.), refd to. [para. 30].

Hughes v. Minister of National Revenue (1991), 46 F.T.R. 17; 91 D.T.C. 5290 (F.C.T.D.), refd to. [para. 33].

Giroux, Re (1983), 45 C.B.R.(N.S.) 245 (Ont. S.C.), refd to. [para. 47].

McCullough, Re (1984), 52 C.B.R.(N.S.) 313 (Ont. S.C.), refd to. [para. 47].

Ali, Re (1987), 62 C.B.R.(N.S.) 64 (Ont. S.C.), refd to. [para. 47].

Beaton, Re (1979), 30 C.B.R.(N.S.) 225 (Ont. C.A.), disapproved [para. 49].

Hoffer, Re (1980), 4 Man.R.(2d) 1; 34 C.B.R.(N.S.) 222 (Q.B.), disapproved [para. 50].

Kellaway, Re (1977), 24 C.B.R.(N.S.) 14 (B.C.S.C.), disapproved [para. 51].

Vachon v. Canada Employment and Im­migration Commission et al., [1985] 2 S.C.R. 417; 63 N.R. 81, refd to. [para. 60].

Bertrand, Re, [1980] 2 N.Z.L.R. 72 (C.A.), dist. [para. 62].

Szatmari, Re (1972), 18 C.B.R.(N.S.) 309 (Ont. S.C.), refd to. [para. 66].

Walker, Re (1982), 43 C.B.R.(N.S.) 319 (Ont. S.C.), refd to. [para. 66].

Moge v. Moge, [1992] 3 S.C.R. 813; 145 N.R. 1; 81 Man.R.(2d) 161; 30 W.A.C. 161; [1993] 1 W.W.R. 481; 99 D.L.R.(4th) 456; 43 R.F.L.(3d) 345, refd to. [para. 81].

Statutes Noticed:

Bankruptcy Act, S.C. 1919, c. 36, sect. 25 [para. 27].

Bankruptcy Act, An Act to Amend the, and to amend the Income Tax Act in consequence thereof, S.C. 1992, c. 27, sect. 1, sect. 2 [para. 25]; sect. 34(1) [para. 75].

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 2, sect. 67, sect. 68(1), sect. 68(2), sect. 68(4), sect. 70(1), sect. 71(2), sect. 158(l), sect. 158(o) [para. 11].

Divorce Act, R.S.C. 1985 (2nd Supp.), c. 3, generally [para. 2].

Family Orders and Agreements Enforce­ment Assistance Act, R.S.C. 1985 (2nd Supp.), c. 4, sect. 23, sect. 24, sect. 28 [para. 11].

Family Orders and Agreements Enforce­ment Assistance Act Regulations (Can.), Family Support Orders and Agreements Garnishment Regulations, SOR/88-181, sect. 3(a) [para. 95].

Family Support Orders and Agreements Garnishment Regulations - see Family Orders and Agreements Enforcement Assistance Act Regulations (Can.).

Financial Administration Act, R.S.C. 1985, c. F-11, sect. 66, sect. 67 [para. 11].

Income Tax Act, R.S.C. 1952, c. 148, sect. 153(3) [para. 70]; sect. 164(1) [para. 31].

Maintenance Enforcement Act, S.A. 1985, c. M-0.5, sect. 4 [para. 2].

Tax Rebate Discounting Act, R.S.C. 1985, c. T-3, sect. 2(2) [paras. 11, 87].

Authors and Works Noticed:

Canadian Encyclopedia Digest (Ont.)(3rd Ed.), vol. 12, title 58, p. 93 et seq. [para. 63].

Canadian Encyclopedic Digest (Western)(3rd Ed.), vol 13, title 59, pp. 59-83 et seq. [para. 63].

Driedger, Elmer A., Construction of Stat­utes (2nd Ed. 1983), p. 18 [para. 39].

Hansard, House of Commons Debates, vol. VI, 1st sess. 27th Parl., June 16, 1966, p. 6488 [para. 58].

Houlden, L.W., and C.H. Morawetz, Bankruptcy and Insolvency Law in Canada (3rd Ed. 1993), vol. 1, pp. 3-6 [para. 38]; 3-39, 3-45, 3-47 [para. 63]; 3-126 [paras. 55, 60]; 3-127 [paras. 56, 80].

House of Commons Debates - see Hansard.

Counsel:

Michael J. McCabe, for the appellant;

Jeanette Fedorak, for the respondent, the Director of Maintenance Enforcement;

Ingrid C. Hutton, Q.C., and Robert Moen, for the respondent, the Attorney General of Canada;

No one appeared for the respondent, the Attorney General of Alberta;

Rick T.G. Reeson, for the intervenor.

Solicitors of Record:

Cruickshank Karvellas, Edmonton, Alberta, for the appellant;

Jeannette W. Fedorak, Edmonton, Alberta, for the respondent, the Director of Main­tenance Enforcement;

Ingrid C. Hutton and Robert Moen, Ed­monton, Alberta, for the respondent, the Attorney General of Canada;

Barr, Wensel, Nesbitt & Reeson, Ed­monton, Alberta, for the intervenor.

This appeal was heard on February 3, 1994, before La Forest, L'Heureux-Dubé, Sopinka, Gonthier, Cory, McLachlin and Iacobucci, JJ., of the Supreme Court of Canada. The decision of the court was delivered in both official languages on July 14, 1994, by Iacobucci, J.