Royal Bank of Canada v. Samra et al., 2011 ABQB 556

• Judge: Bensler, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: May 19, 2011
• Citations: 2011 ABQB 556;(2011), 527 A.R. 233 (QB)

Royal Bk. v. Samra (2011), 527 A.R. 233 (QB)

MLB headnote and full text

Temp. Cite: [2011] A.R. TBEd. OC.082

Royal Bank of Canada (plaintiff) v. Gurtej Samra, Bedaux Real Estate Inc., Khadim Hussain and Amtul Hussain (defendants)

(0901 03784; 2011 ABQB 556)

Indexed As: Royal Bank of Canada v. Samra et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Bensler, J.

September 21, 2011.

Summary:

A mortgagor defaulted on his mortgage and the mortgaged lands were sold by judicial process in this foreclosure action. After payment of the mortgage and costs, the balance was paid into court. Several writs were registered on title following the mortgage, including those filed by Her Majesty the Queen, as represented by the Minister of National Revenue. Her Majesty the Queen applied for an order directing that the money be paid to the Receiver General of Canada based on the Crown prerogative of priority to payment among creditors of equal degree. Two of the other creditors opposed the Crown's priority and asserted that the Crown had to share pro rata along with the other writ holders pursuant to s. 99(3)(g) of the Alberta Civil Enforcement Act (CEA) and as contemplated by s. 223 of the Income Tax Act (ITA). The following issues arose: (1) whether s. 99(3)(g) of the CEA was binding on the federal Crown in these circumstances; (2) whether s. 223 of the ITA contemplated the application of s. 99(3)(g) of the CEA to the federal Crown; (3) whether the Crown had waived its prerogative.

A Master of the Alberta Court of Queen's Bench, in a decision reported at 503 A.R. 256, held that (1) the CEA did not bind the federal Crown in these circumstances; (2) s. 223 of the ITA did not contemplate the application of the priority provisions of the CEA to the federal Crown; and (3) the Crown had waived its prerogative. Accordingly, the Crown did not have priority to the funds. Her Majesty the Queen appealed.

The Alberta Court of Queen's Bench dismissed the appeal.

Crown - Topic 410

Statutes affecting the Crown - General principles - Where Crown accepts benefits - The federal Crown issued a certificate in respect of a debtor's unpaid taxes - The Crown registered the certificate in the Federal Court resulting in it being deemed to be a Federal Court judgment - The Crown filed the writ in the Alberta Land Titles System and Personal Property Registry - The debtor's property was sold in a foreclosure action - After payment of the mortgage and costs, the balance was paid into court - The Crown claimed priority to the funds based on its prerogative of priority to payment among creditors of equal degree - A Master concluded that the registration of the Crown's writ in Alberta accorded the certificate the status of a writ under the Civil Enforcement Act - The hallmark of a writ under the Act was pro rata sharing - The benefit gained by the Crown's registration was not purely defensible - Rather, the Crown actively relied on its registration to secure positive rights - Through the registration it attained status as a creditor and was entitled to notification and orderly payment of funds - That benefit was sufficiently linked to the related burden of pro rata sharing for the benefit/burden exception to Crown immunity to apply - By filing and relying on the writ, the Crown waived its prerogative of priority of payment - The Alberta Court of Queen's Bench stated that it had some concern that the Master's determination would leave the Crown with no meaningful way to exercise its prerogative - However, the Crown had available to it other garnishment and seizure mechanisms - Accordingly, it was reasonable, to conclude that when the Crown chose to take advantage of the benefits afforded under the Civil Enforcement Act, it had to accept the concomitant burdens - See paragraphs 14 to 16.

Crown - Topic 2261

Crown privilege or prerogative - Priority of payment - General - [See Crown - Topic 410 ].

Crown - Topic 2261

Crown privilege or prerogative - Priority of payment - General - Section 223 of the Income Tax Act permitted the Minister of National Revenue to issue a certificate in respect of unpaid personal income tax - The certificate then could be registered with the Federal Court, giving it the same effect as a Federal Court judgment - Section 223(6) provided that, once filed, registered or recorded against property in a province, the writ bound that property "in the same manner and to the same extent" as if it were a judgment of a superior court - A Master concluded that while s. 223 authorized the federal Crown to access the procedures available in the superior courts of the provinces for enforcement of writs, it did not, in and of itself detract from the Crown's prerogative of payment - Something more was needed to achieve that result - The Alberta Court of Queen's Bench agreed with the Master's conclusion - See paragraphs 11 to 13.

Crown - Topic 3205

Prerogative remedies - Waiver of - [See Crown - Topic 410 ].

Execution - Topic 428

General principles - Priorities - Crown - [See Crown - Topic 410 and second Crown - Topic 2261 ].

Execution - Topic 1088

Writ of execution - Priorities and property affected - Crown - [See second Crown - Topic 2261 ].

Execution - Topic 1088

Writ of execution - Priorities and property affected - Crown - Section 99(3)(g) of the Alberta Civil Enforcement Act required pro rata sharing among creditors - A Master concluded that the weight of authority supported a constitutional immunity from provincial statutes for the federal Crown - The Alberta Court of Queen's Bench affirmed the conclusion - Absent a waiver of the Crown's prerogative, the Alberta legislature could not compel the Crown to share rateably with other creditors - See paragraphs 9 and 10.

Income Tax - Topic 9326

Enforcement - Judgments - Certificate of Minister - General - [See Crown - Topic 410 and second Crown - Topic 2261 ].

Cases Noticed:

Janvier et al. v. 834474 Alberta Ltd. et al. (2010), 511 A.R. 76; 2010 ABQB 800, refd to. [para. 15].

Statutes Noticed:

Civil Enforcement Act, R.S.A. 2000, c. C-15, sect. 99(3)(g) [para. 9]; sect. 223 [paras. 11, 12].

Counsel:

Jill L. Medhurst-Tivadar (Department of Justice Canada), for the appellant, Her Majesty the Queen in Right of Canada as represented by the Minister of National Revenue;

Inna Lazman (Fleming LLP), for the respondents, Liberty Mortgage Services Ltd. and DJ Will Holdings Limited.

This appeal was heard on May 19, 2011, by Bensler, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following memorandum of decision on September 21, 2011.