National Bank of Canada and Price Waterhouse Ltd. v. McArthur et al., (1986) 13 O.A.C. 321 (DC)

• Judge: Galligan, Southey and Eberle, JJ.
• Case Date: February 04, 1986
• Jurisdiction: Ontario
• Citations: (1986), 13 O.A.C. 321 (DC)

Nat. Bk. v. McArthur (1986), 13 O.A.C. 321 (DC)

MLB headnote and full text

National Bank of Canada and Price Waterhouse Limited v. James H. McArthur, Employment Standards Officer, Director of Employment Standards for the Ministry of Labour and Kenneth P. Swan, Referee

Indexed As: National Bank of Canada and Price Waterhouse Ltd. v. McArthur et al.

Ontario Divisional Court

Galligan, Southey and Eberle, JJ.

February 4, 1986.

Summary:

A meat company defaulted on a debenture and a general security agreement held by the National Bank. The bank appointed a receiver who liquidated the company. Pursuant to the Employment Standards Act, a referee ordered the receiver to pay, from the proceeds of the liquidation, vacation pay owing to the employees. The bank applied for judicial review of the referee's decision.

The Ontario Divisional Court, Eberle, J., dissenting in part, dismissed the application for judicial review and upheld the decision of the referee.

Bankruptcy - Topic 3645

Creditors - General - Priorities - Statutory liens and charges - Force and effect of - A meat company defaulted on a general security agreement held by the National Bank - The bank appointed a receiver who liquidated the company - Pursuant to the Employment Standards Act, the receiver was ordered to pay employees accrued vacation pay - The bank appealed - The Ontario Divisional Court dismissed the appeal - The court held that the statutory trust created by the Employment Standards Act operated notwithstanding the priorities and limitations of the Bankruptcy Act - See paragraph 5.

Master and Servant - Topic 1846

Remuneration - Statutory regulation - Employer - Defined - A meat company defaulted on a general security agreement held by the National Bank - The bank appointed a receiver who liquidated the company - Pursuant to the Employment Standards Act, the receiver was ordered to pay employees accrued vacation pay - The bank appealed on the ground that neither the bank nor the receiver was an employer under the Act - The Ontario Divisional Court held that the receiver, upon taking control, was directly or indirectly responsible for employment of the company's employees - The court stated that the receiver acted as an agent of the owner and fell within the definition of employer under the Act - See paragraphs 14 to 19.

Master and Servant - Topic 1992

Remuneration - Vacation pay - Trust fund for - Extent of employer's obligation - A meat company defaulted on a general security agreement held by the National Bank - The bank appointed a receiver who liquidated the company - Pursuant to the Employment Standards Act the receiver was ordered to pay employees accrued vacation pay - The Ontario Divisional Court held that the receiver acted as agent of the company for all purposes related to its assets and business; therefore, the trust obligation existed upon liquidation of the company.

Master and Servant - Topic 1993

Remuneration - Vacation pay - Trust fund for - Priorities - A meat company defaulted on a general security agreement held by the National Bank - The bank appointed a receiver who liquidated the company - Pursuant to the Employment Standards Act, the receiver was ordered to pay employees accrued vacation pay - The bank appealed - The Ontario Divisional Court held that the statutory trust established under s. 15 of the Ontario Employment Standards Act, takes priority over the interests created by the general security agreement - See paragraphs 20 to 29.

Personal Property - Topic 6207

Security interests - Priorities - Unpaid employees - Vacation pay - A meat company defaulted on a general security agreement held by the National Bank - The bank appointed a receiver who liquidated the company - Pursuant to the Employment Standards Act, the receiver was ordered to pay employees accrued vacation pay - The bank appealed - The Ontario Divisional Court held that the statutory trust established under s. 15 of the Ontario Employment Standards Act took priority over the interests created by a general security agreement - See paragraphs 20 to 29.

Cases Noticed:

Re Phoenix Paper Products Limited (1983), 40 O.R.(2d) 321, affd. 44 O.R.(2d) 225, appld. [paras. 5, 75].

Re Telegram Publishing Co. Ltd. and Amm (1979), 23 O.R.(2d) 103, refd to. [para. 6].

Re Telegram Publishing Co. Ltd. and Zwelling (1973), 1 O.R.(2d) 592, refd to. [para. 6].

Re Falconbridge Nickel Mines Limited and Egan (1983), 42 O.R.(2d) 179, refd to. [para. 12].

Re Dairy Maid Chocolates Limited, [1973] 1 O.R. 603; 17 C.B.R.(N.S.) 270, refd to. [paras. 28, 76].

Re Campeau Corporation and Provincial Bank of Canada et al. (1975), 20 C.B.R.(N.S.) 99, consd. [para. 43].

Re Zurich Insurance Company (1984), 2 O.A.C. 183; 50 C.B.R.(N.S.) 1, consd. [para. 64].

Re Urman (1983), 40 O.R.(2d) 248, consd. [para. 70].

Board of Industrial Relations v. Avco, [1979] 2 S.C.R. 699; 28 N.R. 140, consd. [para. 88].

Dauphin Plains v. Xyloid, [1980] 1 S.C.R. 1182; [1980] 3 W.W.R. 513; 31 N.R. 301; 3 Man.R.(2d) 283; 108 D.L.R.(3d) 257, consd. [para. 93].

Re Deslauriers Construction Products Ltd. (1970), 13 D.L.R.(3d) 551, refd to. [para. 96].

Statutes Noticed:

Bankruptcy Act, R.S.C. 1970, c. B-3 [paras. 5, 50].

Canadian Charter of Rights and Freedoms, sect. 7, sect. 11(d) [paras. 7, 8].

Constitution Act, 1867, sect. 96 [para. 6].

Employment Standards Act, R.S.O. 1980, c. 137, sect. 1 [para. 17]; sect. 3 [para. 41]; sect. 15 [paras. 1, 28, 29, 34-40, 52, 73-85, 100]; sect. 42 [para. 7]; sect. 47 [para. 15]; sect. 50 [paras. 1, 7, 10].

Excise Tax Act, R.S.C. 1970, c. E-13 [para. 65].

Income Tax Act, S.C. 1970-71-72, c. 63, sect. 227(5) [para. 98].

Personal Property Security Act, R.S.O. 1980, c. 375, sect. 3(1)(a) [paras. 21, 23, 41]; sect. 13(1) [para. 25].

Counsel:

G.C. Grierson, for the applicants;

J.E. Minor, for the respondents.

This appeal was heard on November 6, 7 and 8, 1985, before Galligan, Southey and Eberle, JJ., of the Ontario Divisional Court

The judgment of the court was delivered on February 4, 1986, when the following opinions were filed:

Southey, J. - see paragraphs 1 to 33;

Eberle, J., dissenting - see paragraphs 34 to 102.

Galligan, J., concurred with Southey, J.