Century Services Inc v Canada (AG)

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is the decision of the Supreme Court of Canada describing the mutual relationship between the Company's Credit Policy Arrangement and the Laws of Canada Bankruptcy and Bankruptcy Conditions in regulating the laws of Canada's insolvency, and how other federal laws are interpreted.

Video Century Services Inc v Canada (AG)

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Ted LeRoy Trucking Ltd is one of the largest independent logging contractors on Vancouver Island. In December 2007, it was notified that, in violation of certain loan agreements, the loan must be settled. It immediately filed for protection under the CCAA. The court ordered LeRoy to remove certain redundant assets.

Century Services Inc. is one of LeRoy's principal creditors. In April 2008, the court authorized payments to Century not to exceed $ 5 million of proceeds. Since LeRoy also has significant liabilities in respect of Goods and Services Tax, it proposes that an amount equal to the liability be withheld from payments to Bank Century and deposited in the Monitor trust account until the reorganization results are known. The court agreed and ordered it.

In September 2008, LeRoy concluded that the reorganization was impossible, and therefore applied for the assignment into bankruptcy. The Crown filed an application to withhold suspension for payment and sent to settle GST obligations.

Maps Century Services Inc v Canada (AG)

The problem is

Under the Excise Tax Law , the GST collected is deemed held to trust Crown, and that it takes precedence over any law other than the BIA. However, the CCAA declares that, subject to certain exceptions (none related to GST), a belief that is not considered in the process. There is a certain jurisprudence which states that ETA is preferred. Is that true?

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The Supreme Court of British Columbia ruled that, when the funds were held up pending the emergence of a workable reorganization plan, the fact that this did not work meant that the Crown Prince would lose his priority as a result of his assignment into bankruptcy. Thus, the Crown application is dismissed.

This order was canceled while appealing to the British Columbia Court of Appeals. The Court unanimously holds:

• the court of first instance does not have the authority to disregard the application of the Crown, since ETA's priority scheme came into effect once the possibility of a successful reorganization plant no longer becomes
• the original orders of the judges have created a clear belief for the Crown, and the funds can not be diverted for other purposes.

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Canadian Supreme Court Decision

The Court of Appeal's decision was reversed. The following are identified as key issues in appeal:

• does ETA replace CCAA by prioritizing the trust that Crown considers in the CCAA process?
• does the court exceed its authority under the CCAA by lifting a stay to allow the debtor to make the assignment go bankrupt?
• did the April 2008 court order create a clear trust to support the Crown in connection with the suspension of GST?

The Court ruled that:

• The CCAA and BIA form an interlocking insolvency scheme for Canada, and ETA is under the scheme
• first-level courts have wide discretionary powers under the CCAA, which must be interpreted with due regard to the remedial nature of the CCAA and generally insolvency legislation
• there is no written trust made by court order

The purpose and scope of insolvency law

Since this is the first time a CCAA-related case has been heard by the Supreme Court - recognized in its decision - detailed analysis is provided in explaining the nature of the insolvency law in Canada.

BIA provides a more rule-based approach to solve the bankruptcy of corporate debtors, which must be closely watched. The CCAA, on the other hand, provides a more remedial discretionary approach, which must therefore be widely interpreted.

Although the CCAA was originally enacted in 1933, its widespread use only began in the economic downturn of the early 1980s. Recent legislation amendments from BIA and CCAA have served to harmonize key aspects, such as the use of a single process, the general priority of the structure of claims, and encourage reorganization of liquidation.

GST is considered trust based on CCAA

The legislative activities of the Canadian Parliament have recently tended to support the reduced priorities of the Kingdom in the BIA and CCAA processes, and both have been properly amended. Because ETA does not contain express language on the subject, ETA should be interpreted within the framework of insolvency laws.

The discretionary power of the court in reorganization of CCAA

This is recorded along with s. 11 of the CCAA, stating that the court may, "be subject to the restrictions set forth in this Act,... Make every order deemed fit in circumstances".

The decision notes the interrelated nature of the process under the CCAA and BIA:

Thus, the supervising judge has the authority necessary to make the order he does.

Express Trust

Creation of a clear belief requires the presence of three certainties: intentions, subjects, and objects. There is no certainty that the Crown will truly be a recipient, or object, of trust.

Therefore, no disclosed beliefs are made in this example.

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Significance

Regardless of the initial reference question in 1933 on the validity of the CCAA, this is the first time that an appeal has been heard by the Supreme Court. Until now, Canadian jurisprudence in this field comes from various provincial appeals courts. Century Services is the first opportunity to explain the full nature of Canadian bankruptcy laws and how each law works within that framework.

CCAA and BIA should not be viewed separately, as they have many features that form part of a harmonized structure. Therefore, forum shopping is not recommended and a single process is preferred. Because of its harmonious nature, other federal laws must be interpreted.

Courts must first interpret the CCAA text, and then the court may fill the legislative "gap" in accordance with its inherent or fair jurisdiction. In exercising CCAA authority, the court should consider the requirements of conformity, good faith and due diligence as a basic consideration. For compliance, the court will ask whether the order is seeking progress on CCAA's public policy objectives - avoiding the social and economic losses resulting from liquidation.

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References

Source of the article : Wikipedia