Marzetti v. Marzetti (Bankrupt), (1992) 131 A.R. 154 (CA)

• Judge: Fraser, C.J.A., Harradence and Major, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: August 11, 1992
• Citations: (1992), 131 A.R. 154 (CA)

Marzetti v. Marzetti (1992), 131 A.R. 154 (CA);

    25 W.A.C. 154

MLB headnote and full text

In The Matter Of the Bankruptcy of Arden Anthony Marzetti

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

(Appeal No. 9103-0562-AC)

Indexed As: Marzetti v. Marzetti (Bankrupt)

Alberta Court of Appeal

Fraser, C.J.A., Harradence

and Major, JJ.A.

August 11, 1992.

Summary:

The Director of Maintenance Enforcement and the trustee in bankruptcy each claimed entitlement to an income tax refund owed to the 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 court agreed that the tax refund was not "wages" under s. 68 of the Bankruptcy Act, but that the Director was still entitled to the refund. The bankrupt appealed.

The Alberta Court of Appeal dismissed the appeal. The court held that the tax refund constituted "wages" and, even if the refund was not wages, the Director was still entitled to priority.

Bankruptcy - Topic 440.2

Property of bankrupt - Post-bankruptcy income tax refunds - Both the Director of Maintenance Enforcement and the trustee in bankruptcy claimed priority to a post-bankruptcy income tax refund owed to a bankrupt husband who owed maintenance arrears and was subject to a Notice of Continuing Attachment - The Alberta Court of Appeal held that the withholdings portion of the tax refund constituted "wages" under s. 68 of the Bankruptcy Act, therefore, the Director had priority - The court stated that the Director had priority even if the refund was not "wages" - The refund was not property vesting in the trustee and could not be assigned by the bankrupt to the trustee (ss. 67(c), 67(d)) and the refund was not property exempted from seizure under s. 67(b).

Family Law - Topic 4054.1

Divorce - Corollary relief - Maintenance - Enforcement - Bankruptcy of payor - Effect of - [See Bankruptcy - Topic 440.2 ].

Cases Noticed:

Industrial Acceptance Corp. Ltd. and T. Eaton Co. Ltd. v. Lalonde, [1952] 2 S.C.R. 109, refd to. [para. 7].

Kellaway, Re (1977), 24 C.B.R.(N.S.) 14 (B.C.S.C.), refd to. [para. 7].

Hoffer, Re (1980), 34 C.B.R.(N.S.) 222 (Man. Q.B.), refd to. [para. 7].

Goulet, Re (1977), 24 C.B.R.(N.S.) 222 (Ont. S.C.), refd to. [para. 10].

Walker, Re (1982), 43 C.B.R.(N.S.) 319 (Ont. S.C.), refd to. [para. 10].

Federal Commissioner of Taxation v. Official Receiver (1952), 95 C.L.R. 300 (Aust. H.C.), refd to. [para. 11].

Winterhaven Stables Ltd. v. Canada (At­torney General) (1988), 91 A.R. 114 (C.A.), refd to. [para. 12].

Dauphin Plains Credit Union Ltd. v. Xyloid Industries Ltd. and the Queen, [1980] 1 S.C.R. 1182; 31 N.R. 301; 108 D.L.R.(3d) 257, refd to. [para. 16].

Taylor (Bankrupt), Re (1991), 92 Sask.R. 153; 4 C.B.R.(3d) 276 (Q.B.), refd to. [para. 18].

Statutes Noticed:

Bankruptcy Act, R.S.C. 1985, c. B-3, sect. 2, sect. 67, sect. 68, sect. 71(2) [para. 6].

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

Family Orders and Agreements Enforce­ment Assistance Act, S.C. 1986, c. 5, generally [para. 3].

Financial Administration Act, R.S.C. 1985, c. F-11, sect. 66, sect. 67, sect. 69, sect. 70 [para. 19].

Counsel:

M.J. McCabe, for the appellant/respondent;

J.E. Fedorak, for the respondent/petitioner;

R.T.G. Reeson, for the Superintendent of Bankruptcy;

R.K. Moen, for the Attorney General of Canada;

S.H. Rutwind, for the Attorney General of Alberta.

This appeal was heard before Fraser, C.J.A., Harradence and Major, JJ.A., of the Alberta Court of Appeal.

On August 11, 1992, Major, J.A., delivered the following judgment for the Court of Appeal.