Century Services Inc. v. Canada (Attorney General)
| Century Services Inc v Canada (AG) | |
|---|---|
|
|
| Hearing: May 11, 2010 Judgment: December 16, 2010 |
|
| Citations | 2010 SCC 60, [2010] 3 SCR 379 |
| Docket No. | 33239 |
| Prior history | Appealed from Ted LeRoy Trucking Ltd. and 383838 B.C. Ltd. (re.), (2008 BCSC 1805, 2008 G.S.T.C. 221); Ted LeRoy Trucking Ltd. (Re), (2009 BCCA 205, 270 B.C.A.C. 167) |
| Court Membership | |
| Chief Justice | McLachlin C.J. |
| Puisne Justices | Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ. |
| Reasons given | |
| Majority | Deschamps J. |
| Concurrence | Fish J. |
| Dissent | Abella J. |
| Laws Applied | |
| Companies' Creditors Arrangement Act, Bankruptcy and Insolvency Act, Excise Tax Act (GST) | |
Century Services Inc v Canada (AG) is a decision of the Supreme Court of Canada that describes the interrelationship between the Companies' Creditors Arrangement Act and the Bankruptcy and Insolvency Act in governing Canadian insolvency law, and how other federal statutes are accordingly construed.
Ted LeRoy Trucking Ltd was one of the largest independent logging contractors on Vancouver Island. In December 2007, it was notified that, as it was in breach of certain loan covenants, its outstanding loans had to be immediately repaid. It promptly filed for protection under the CCAA. The court authorized LeRoy to dispose of certain redundant assets.
Century Services Inc was one of the major secured creditors of LeRoy. In April 2008, the court authorized a payment to Century not to exceed $5 million from the proceeds of disposal. As LeRoy also owed a significant liability with respect to Goods and Services Tax, it proposed that an amount equal to the liability be held back from the payment to Century and kept in the Monitor's trust account until the outcome of the reorganization was known. The court agreed and so ordered.
In September 2008, LeRoy concluded that reorganization was not possible, and accordingly applied for an assignment into bankruptcy. The Crown applied to have the holdback released for payment and remitted to settle the GST liability.
Under the Excise Tax Act, GST that is collected is deemed to be held in trust for the Crown, and that this takes precedence over any other statute other than the BIA. However, the CCAA states that, subject to certain exceptions (none of which relate to GST), deemed trusts do not exist in its proceedings. There was certain jurisprudence that held that the ETA took precedence. Was that correct?
The British Columbia Supreme Court ruled that, as the funds were being held pending the emergence of a viable reorganization plan, the fact that this was unsuccessful meant that the Crown would lose its priority as a result of the assignment into bankruptcy. Accordingly, the Crown's application was dismissed.
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