Century Services Inc. v. Canada (Attorney General)

Deschamps J. — For the first time this Court is called upon to directly interpret the provisions of the Companies’ Creditors Arrangement Act , R.S.C. 1985, c. C-36 (“CCAA ”). In that respect, two questions are raised. The first requires reconciliation of provisions of the CCAA and the Excise Tax Act , R.S.C. 1985, c. E-15 (“ETA ”), which lower courts have held to be in conflict with one another. The second concerns the scope of a court’s discretion when supervising reorganization. The relevant statutory provisions are reproduced in the Appendix. On the first question, having considered the evolution of Crown priorities in the context of insolvency and the wording of the various statutes creating Crown priorities, I conclude that it is the CCAA and not the ETA that provides the rule. On the second question, I conclude that the broad discretionary jurisdiction conferred on the supervising judge must be interpreted having regard to the remedial nature of the CCAA and insolvency legislation generally. Consequently, the court had the discretion to partially lift a stay of proceedings to allow the debtor to make an assignment under the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 (“BIA ”). I would allow the appeal.

1. Facts and Decisions of the Courts Below

Ted LeRoy Trucking Ltd. (“LeRoy Trucking”) commenced proceedings under the CCAA in the Supreme Court of British Columbia on December 13, 2007, obtaining a stay of proceedings with a view to reorganizing its financial affairs. LeRoy Trucking sold certain redundant assets as authorized by the order.

Amongst the debts owed by LeRoy Trucking was an amount for Goods and Services Tax (“GST”) collected but unremitted to the Crown. The ETA creates a deemed trust in favour of the Crown for amounts collected in respect of GST. The deemed trust extends to any property or proceeds held by the person collecting GST and any property of that person held by a secured creditor, requiring that property to be paid to the Crown in priority to all security interests. The ETA provides that the deemed trust operates despite any other enactment of Canada except the BIA . However, the CCAA also provides that subject to certain exceptions, none of which mentions GST, deemed trusts in favour of the Crown do not operate under the CCAA . Accordingly, under the CCAA the Crown ranks as an unsecured creditor in respect of GST. Nonetheless, at the time LeRoy Trucking commenced CCAA proceedings the leading line of jurisprudence held that the ETA took precedence over the CCAA such that the Crown enjoyed priority for GST claims under the CCAA , even though it would have lost that same priority under the BIA . The CCAA underwent substantial amendments in 2005 in which some of the provisions at issue in this appeal were renumbered and reformulated (S.C. 2005, c. 47). However, these amendments only came into force on September 18, 2009. I will refer to the amended provisions only where relevant.

On April 29, 2008, Brenner C.J.S.C., in the context of the CCAA proceedings, approved a payment not exceeding $5 million, the proceeds of redundant asset sales, to Century Services, the debtor’s major secured creditor. LeRoy Trucking proposed to hold back an amount equal to the GST monies collected but unremitted to the Crown and place it in the Monitor’s trust account until the outcome of the reorganization was known. In order to maintain the status quo while the success of the reorganization was uncertain, Brenner C.J.S.C. agreed to the proposal and ordered that an amount of $305,202.30 be held by the Monitor in its trust account.

On September 3, 2008, having concluded that reorganization was not possible, LeRoy Trucking sought leave to make an assignment in bankruptcy under the BIA . The Crown sought an order that the GST monies held by the Monitor be paid to the Receiver General of Canada. Brenner C.J.S.C. dismissed the latter application. Reasoning that the purpose of segregating the funds with the Monitor was “to facilitate an ultimate payment of the GST monies which were owed pre-filing, but only if a viable plan emerged”, the failure of such a reorganization, followed by an assignment in bankruptcy, meant the Crown would lose priority under the BIA (2008 BCSC 1805, [2008] G.S.T.C. 221).

The Crown’s appeal was allowed by the British Columbia Court of Appeal (2009 BCCA 205, 270 B.C.A.C. 167). Tysoe J.A. for a unanimous court found two independent bases for allowing the Crown’s appeal.

First, the court’s authority under s. 11 of the CCAA was held not to extend to staying the Crown’s application for immediate payment of the GST funds subject to the deemed trust after it was clear that reorganization efforts had failed and that bankruptcy was inevitable. As restructuring was no longer a possibility, staying the Crown’s claim to the GST funds no longer served a purpose under the CCAA and the court was bound under the priority scheme provided by the ETA to allow payment to the Crown. In so holding, Tysoe J.A. adopted the reasoning in Ottawa Senators Hockey Club Corp. (Re) (2005), 73 O.R. (3d) 737 (C.A.), which found that the ETA deemed trust for GST established Crown priority over secured creditors under the CCAA .

Second, Tysoe J.A. concluded that by ordering the GST funds segregated in the Monitor’s trust account on April 29, 2008, the judge had created an express trust in favour of the Crown from which the monies in question could not be diverted for any other purposes. The Court of Appeal therefore ordered that the money held by the Monitor in trust be paid to the Receiver General.

2. Issues

This appeal raises three broad issues which are addressed in turn:

(1) Did s. 222(3) of the ETA displace s. 18.3(1) of the CCAA and give priority to the Crown’s ETA deemed trust during CCAA proceedings as held in Ottawa Senators?

(2) Did the court exceed its CCAA authority by lifting the stay to allow the debtor to make an assignment in bankruptcy?

(3) Did the court’s order of April 29, 2008 requiring segregation of the Crown’s GST claim in the Monitor’s trust account create an express trust in favour of the Crown in respect of those funds?

3. Analysis

The first issue concerns Crown priorities in the context of insolvency. As will be seen, the ETA provides for a deemed trust in favour of the Crown in respect of GST owed by a debtor “[d]espite . . . any other enactment of Canada (except the Bankruptcy and Insolvency Act)” (s. 222(3)), while the CCAA stated at the relevant time that “notwithstanding any provision in federal or provincial legislation that has the effect of deeming property to be held in trust for Her Majesty, property of a debtor company shall not be [so] regarded” (s. 18.3(1)). It is difficult to imagine two statutory provisions more apparently in conflict. However, as is often the case, the apparent conflict can be resolved through interpretation.

In order to properly interpret the provisions, it is necessary to examine the history of the CCAA , its function amidst the body of insolvency legislation enacted by Parliament, and the principles that have been recognized in the jurisprudence. It will be seen that Crown priorities in the insolvency context have been significantly pared down. The resolution of the second issue is also rooted in the context of the CCAA , but its purpose and the manner in which it has been interpreted in the case law are also key. After examining the first two issues in this case, I will address Tysoe J.A.’s conclusion that an express trust in favour of the Crown was created by the court’s order of April 29, 2008.

3.1 Purpose and Scope of Insolvency Law

Insolvency is the factual situation that arises when a debtor is unable to pay creditors (see generally, R. J. Wood, Bankruptcy and Insolvency Law (2009), at p. 16). Certain legal proceedings become available upon insolvency, which typically allow a debtor to obtain a court order staying its creditors’ enforcement actions and attempt to obtain a binding compromise with creditors to adjust the payment conditions to something more realistic. Alternatively, the debtor’s assets may be liquidated and debts paid from the proceeds according to statutory priority rules. The former is usually referred to as reorganization or restructuring while the latter is termed liquidation.

Canadian commercial insolvency law is not codified in one exhaustive statute. Instead, Parliament has enacted multiple insolvency statutes, the main one being the BIA . The BIA offers a self-contained legal regime providing for both reorganization and liquidation. Although bankruptcy legislation has a long history, the BIA itself is a fairly recent statute — it was enacted in 1992. It is characterized by a rules-based approach to proceedings. The BIA is available to insolvent debtors owing $1000 or more, regardless of whether they are natural or legal persons. It contains mechanisms for debtors to make proposals to their creditors for the adjustment of debts. If a proposal fails, the BIA contains a bridge to bankruptcy whereby the debtor’s assets are liquidated and the proceeds paid to creditors in accordance with the statutory scheme of distribution.

Access to the CCAA is more restrictive. A debtor must be a company with liabilities in excess of $5 million. Unlike the BIA, the CCAA contains no provisions for liquidation of a debtor’s assets if reorganization fails. There are three ways of exiting CCAA proceedings. The best outcome is achieved when the stay of proceedings provides the debtor with some breathing space during which solvency is restored and the CCAA process terminates without reorganization being needed. The second most desirable outcome occurs when the debtor’s compromise or arrangement is accepted by its creditors and the reorganized company emerges from the CCAA proceedings as a going concern. Lastly, if the compromise or arrangement fails, either the company or its creditors usually seek to have the debtor’s assets liquidated under the applicable provisions of the BIA or to place the debtor into receivership. As discussed in greater detail below, the key difference between the reorganization regimes under the BIA and the CCAA is that the latter offers a more flexible mechanism with greater judicial discretion, making it more responsive to complex reorganizations.

As I will discuss at greater length below, the purpose of the CCAA — Canada’s first reorganization statute — is to permit the debtor to continue to carry on business and, where possible, avoid the social and economic costs of liquidating its assets. Proposals to creditors under the BIA serve the same remedial purpose, though this is achieved through a rules-based mechanism that offers less flexibility. Where reorganization is impossible, the BIA may be employed to provide an orderly mechanism for the distribution of a debtor’s assets to satisfy creditor claims according to predetermined priority rules.

Prior to the enactment of the CCAA in 1933 (S.C. 1932-33, c. 36), practice under existing commercial insolvency legislation tended heavily towards the liquidation of a debtor company (J. Sarra, Creditor Rights and the Public Interest: Restructuring Insolvent Corporations (2003), at p. 12). The battering visited upon Canadian businesses by the Great Depression and the absence of an effective mechanism for reaching a compromise between debtors and creditors to avoid liquidation required a legislative response. The CCAA was innovative as it allowed the insolvent debtor to attempt reorganization under judicial supervision outside the existing insolvency legislation which, once engaged, almost invariably resulted in liquidation (Reference re Companies’ Creditors Arrangement Act, [1934] S.C.R. 659, at pp. 660-61; Sarra, Creditor Rights, at pp. 12-13).

Parliament understood when adopting the CCAA that liquidation of an insolvent company was harmful for most of those it affected — notably creditors and employees — and that a workout which allowed the company to survive was optimal (Sarra, Creditor Rights, at pp. 13-15).

Early commentary and jurisprudence also endorsed the CCAA ’s remedial objectives. It recognized that companies retain more value as going concerns while underscoring that intangible losses, such as the evaporation of the companies’ goodwill, result from liquidation (S. E. Edwards, “Reorganizations Under the Companies’ Creditors Arrangement Act ” (1947), 25 Can. Bar Rev. 587, at p. 592). Reorganization serves the public interest by facilitating the survival of companies supplying goods or services crucial to the health of the economy or saving large numbers of jobs (ibid., at p. 593). Insolvency could be so widely felt as to impact stakeholders other than creditors and employees. Variants of these views resonate today, with reorganization justified in terms of rehabilitating companies that are key elements in a complex web of interdependent economic relationships in order to avoid the negative consequences of liquidation.

The CCAA fell into disuse during the next several decades, likely because amendments to the Act in 1953 restricted its use to companies issuing bonds (S.C. 1952-53, c. 3). During the economic downturn of the early 1980s, insolvency lawyers and courts adapting to the resulting wave of insolvencies resurrected the statute and deployed it in response to new economic challenges. Participants in insolvency proceedings grew to recognize and appreciate the statute’s distinguishing feature: a grant of broad and flexible authority to the supervising court to make the orders necessary to facilitate the reorganization of the debtor and achieve the CCAA ’s objectives. The manner in which courts have used CCAA jurisdiction in increasingly creative and flexible ways is explored in greater detail below.

Efforts to evolve insolvency law were not restricted to the courts during this period. In 1970, a government-commissioned panel produced an extensive study recommending sweeping reform but Parliament failed to act (see Bankruptcy and Insolvency: Report of the Study Committee on Bankruptcy and Insolvency Legislation (1970)). Another panel of experts produced more limited recommendations in 1986 which eventually resulted in enactment of the Bankruptcy and Insolvency Act of 1992 (S.C. 1992, c. 27) (see Proposed Bankruptcy Act Amendments: Report of the Advisory Committee on Bankruptcy and Insolvency (1986)). Broader provisions for reorganizing insolvent debtors were then included in Canada’s bankruptcy statute. Although the 1970 and 1986 reports made no specific recommendations with respect to the CCAA , the House of Commons committee studying the BIA ’s predecessor bill, C-22, seemed to accept expert testimony that the BIA ’s new reorganization scheme would shortly supplant the CCAA , which could then be repealed, with commercial insolvency and bankruptcy being governed by a single statute (Minutes of Proceedings and Evidence of the Standing Committee on Consumer and Corporate Affairs and Government Operations, Issue No. 15, 3rd Sess., 34th Parl., October 3, 1991, at 15:15-15:16).

In retrospect, this conclusion by the House of Commons committee was out of step with reality. It overlooked the renewed vitality the CCAA enjoyed in contemporary practice and the advantage that a flexible judicially supervised reorganization process presented in the face of increasingly complex reorganizations, when compared to the stricter rules-based scheme contained in the BIA . The “flexibility of the CCAA [was seen as] a great benefit, allowing for creative and effective decisions” (Industry Canada, Marketplace Framework Policy Branch, Report on the Operation and Administration of the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (2002), at p. 41). Over the past three decades, resurrection of the CCAA has thus been the mainspring of a process through which, one author concludes, “the legal setting for Canadian insolvency restructuring has evolved from a rather blunt instrument to one of the most sophisticated systems in the developed world” (R. B. Jones, “The Evolution of Canadian Restructuring: Challenges for the Rule of Law”, in J. P. Sarra, ed., Annual Review of Insolvency Law 2005 (2006), 481, at p. 481).

While insolvency proceedings may be governed by different statutory schemes, they share some commonalities. The most prominent of these is the single proceeding model. The nature and purpose of the single proceeding model are described by Professor Wood in Bankruptcy and Insolvency Law:

They all provide a collective proceeding that supersedes the usual civil process available to creditors to enforce their claims. The creditors’ remedies are collectivized in order to prevent the free-for-all that would otherwise prevail if creditors were permitted to exercise their remedies. In the absence of a collective process, each creditor is armed with the knowledge that if they do not strike hard and swift to seize the debtor’s assets, they will be beat out by other creditors. [pp. 2-3]

The single proceeding model avoids the inefficiency and chaos that would attend insolvency if each creditor initiated proceedings to recover its debt. Grouping all possible actions against the debtor into a single proceeding controlled in a single forum facilitates negotiation with creditors because it places them all on an equal footing, rather than exposing them to the risk that a more aggressive creditor will realize its claims against the debtor’s limited assets while the other creditors attempt a compromise. With a view to achieving that purpose, both the CCAA and the BIA allow a court to order all actions against a debtor to be stayed while a compromise is sought.

Another point of convergence of the CCAA and the BIA relates to priorities. Because the CCAA is silent about what happens if reorganization fails, the BIA scheme of liquidation and distribution necessarily supplies the backdrop for what will happen if a CCAA reorganization is ultimately unsuccessful. In addition, one of the important features of legislative reform of both statutes since the enactment of the BIA in 1992 has been a cutback in Crown priorities (S.C. 1992, c. 27, s. 39; S.C. 1997, c. 12, ss. 73 and 125; S.C. 2000, c. 30, s. 148; S.C. 2005, c. 47, ss. 69 and 131; S.C. 2009, c. 33, s. 25; see also Quebec (Revenue) v. Caisse populaire Desjardins de Montmagny, 2009 SCC 49, [2009] 3 S.C.R. 286; Deputy Minister of Revenue v. Rainville, [1980] 1 S.C.R. 35; Proposed Bankruptcy Act Amendments: Report of the Advisory Committee on Bankruptcy and Insolvency).

With parallel CCAA and BIA restructuring schemes now an accepted feature of the insolvency law landscape, the contemporary thrust of legislative reform has been towards harmonizing aspects of insolvency law common to the two statutory schemes to the extent possible and encouraging reorganization over liquidation (see An Act to establish the Wage Earner Protection Program Act, to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act and to make consequential amendments to other Acts, S.C. 2005, c. 47; Gauntlet Energy Corp., Re, 2003 ABQB 894, 30 Alta. L.R. (4th) 192, at para. 19).

Mindful of the historical background of the CCAA and BIA, I now turn to the first question at issue.

3.2 GST Deemed Trust Under the CCAA

The Court of Appeal proceeded on the basis that the ETA precluded the court from staying the Crown’s enforcement of the GST deemed trust when partially lifting the stay to allow the debtor to enter bankruptcy. In so doing, it adopted the reasoning in a line of cases culminating in Ottawa Senators, which held that an ETA deemed trust remains enforceable during CCAA reorganization despite language in the CCAA that suggests otherwise.

The Crown relies heavily on the decision of the Ontario Court of Appeal in Ottawa Senators and argues that the later in time provision of the ETA creating the GST deemed trust trumps the provision of the CCAA purporting to nullify most statutory deemed trusts. The Court of Appeal in this case accepted this reasoning but not all provincial courts follow it (see, e.g., Komunik Corp. (Arrangement relatif à), 2009 QCCS 6332 (CanLII), leave to appeal granted, 2010 QCCA 183 (CanLII)). Century Services relied, in its written submissions to this Court, on the argument that the court had authority under the CCAA to continue the stay against the Crown’s claim for unremitted GST. In oral argument, the question of whether Ottawa Senators was correctly decided nonetheless arose. After the hearing, the parties were asked to make further written submissions on this point. As appears evident from the reasons of my colleague Abella J., this issue has become prominent before this Court. In those circumstances, this Court needs to determine the correctness of the reasoning in Ottawa Senators.

The policy backdrop to this question involves the Crown’s priority as a creditor in insolvency situations which, as I mentioned above, has evolved considerably. Prior to the 1990s, Crown claims largely enjoyed priority in insolvency. This was widely seen as unsatisfactory as shown by both the 1970 and 1986 insolvency reform proposals, which recommended that Crown claims receive no preferential treatment. A closely related matter was whether the CCAA was binding at all upon the Crown. Amendments to the CCAA in 1997 confirmed that it did indeed bind the Crown (see CCAA , s. 21 , as added by S.C. 1997, c. 12, s. 126).

Claims of priority by the state in insolvency situations receive different treatment across jurisdictions worldwide. For example, in Germany and Australia, the state is given no priority at all, while the state enjoys wide priority in the United States and France (see B. K. Morgan, “Should the Sovereign be Paid First? A Comparative International Analysis of the Priority for Tax Claims in Bankruptcy” (2000), 74 Am. Bankr. L.J. 461, at p. 500). Canada adopted a middle course through legislative reform of Crown priority initiated in 1992. The Crown retained priority for source deductions of income tax, Employment Insurance (“EI”) and Canada Pension Plan (“CPP ”) premiums, but ranks as an ordinary unsecured creditor for most other claims.

Parliament has frequently enacted statutory mechanisms to secure Crown claims and permit their enforcement. The two most common are statutory deemed trusts and powers to garnish funds third parties owe the debtor (see F. L. Lamer, Priority of Crown Claims in Insolvency (loose-leaf), at §2).

With respect to GST collected, Parliament has enacted a deemed trust. The ETA states that every person who collects an amount on account of GST is deemed to hold that amount in trust for the Crown (s. 222(1)). The deemed trust extends to other property of the person collecting the tax equal in value to the amount deemed to be in trust if that amount has not been remitted in accordance with the ETA . The deemed trust also extends to property held by a secured creditor that, but for the security interest, would be property of the person collecting the tax (s. 222(3)).

Parliament has created similar deemed trusts using almost identical language in respect of source deductions of income tax, EI premiums and CPP premiums (see s. 227(4) of the Income Tax Act , R.S.C. 1985, c. 1 (5th Supp .) (“ITA ”), ss. 86(2) and (2.1) of the Employment Insurance Act , S.C. 1996, c. 23 , and ss. 23(3) and (4) of the Canada Pension Plan , R.S.C. 1985, c. C-8). I will refer to income tax, EI and CPP deductions as “source deductions”.

In Royal Bank of Canada v. Sparrow Electric Corp., [1997] 1 S.C.R. 411, this Court addressed a priority dispute between a deemed trust for source deductions under the ITA and security interests taken under both the Bank Act , S.C. 1991, c. 46 , and the Alberta Personal Property Security Act, S.A. 1988, c. P-4.05 (“PPSA”). As then worded, an ITA deemed trust over the debtor’s property equivalent to the amount owing in respect of income tax became effective at the time of liquidation, receivership, or assignment in bankruptcy. Sparrow Electric held that the ITA deemed trust could not prevail over the security interests because, being fixed charges, the latter attached as soon as the debtor acquired rights in the property such that the ITA deemed trust had no property on which to attach when it subsequently arose. Later, in First Vancouver Finance v. M.N.R., 2002 SCC 49, [2002] 2 S.C.R. 720, this Court observed that Parliament had legislated to strengthen the statutory deemed trust in the ITA by deeming it to operate from the moment the deductions were not paid to the Crown as required by the ITA , and by granting the Crown priority over all security interests (paras. 27-29) (the “Sparrow Electric amendment”).

The amended text of s. 227(4.1) of the ITA and concordant source deductions deemed trusts in the Canada Pension Plan and the Employment Insurance Act state that the deemed trust operates notwithstanding any other enactment of Canada, except ss. 81.1 and 81.2 of the BIA . The ETA deemed trust at issue in this case is similarly worded, but it excepts the BIA in its entirety. The provision reads as follows:

222. . . .

. . .

(3) Despite any other provision of this Act (except subsection (4)), any other enactment of Canada (except the Bankruptcy and Insolvency Act), any enactment of a province or any other law, if at any time an amount deemed by subsection (1) to be held by a person in trust for Her Majesty is not remitted to the Receiver General or withdrawn in the manner and at the time provided under this Part, property of the person and property held by any secured creditor of the person that, but for a security interest, would be property of the person, equal in value to the amount so deemed to be held in trust, is deemed . . . .

The Crown submits that the Sparrow Electric amendment, added by Parliament to the ETA in 2000, was intended to preserve the Crown’s priority over collected GST under the CCAA while subordinating the Crown to the status of an unsecured creditor in respect of GST only under the BIA . This is because the ETA provides that the GST deemed trust is effective “despite” any other enactment except the BIA .

The language used in the ETA for the GST deemed trust creates an apparent conflict with the CCAA , which provides that subject to certain exceptions, property deemed by statute to be held in trust for the Crown shall not be so regarded.

Through a 1997 amendment to the CCAA (S.C. 1997, c. 12, s. 125), Parliament appears to have, subject to specific exceptions, nullified deemed trusts in favour of the Crown once reorganization proceedings are commenced under the Act. The relevant provision reads:

18.3 (1) Subject to subsection (2), notwithstanding any provision in federal or provincial legislation that has the effect of deeming property to be held in trust for Her Majesty, property of a debtor company shall not be regarded as held in trust for Her Majesty unless it would be so regarded in the absence of that statutory provision.

This nullification of deemed trusts was continued in further amendments to the CCAA (S.C. 2005, c. 47), where s. 18.3(1) was renumbered and reformulated as s. 37(1):

37. (1) Subject to subsection (2), despite any provision in federal or provincial legislation that has the effect of deeming property to be held in trust for Her Majesty, property of a debtor company shall not be regarded as being held in trust for Her Majesty unless it would be so regarded in the absence of that statutory provision.

An analogous provision exists in the BIA , which, subject to the same specific exceptions, nullifies statutory deemed trusts and makes property of the bankrupt that would otherwise be subject to a deemed trust part of the debtor’s estate and available to creditors (S.C. 1992, c. 27, s. 39; S.C. 1997, c. 12, s. 73; BIA , s. 67(2)). It is noteworthy that in both the CCAA and the BIA, the exceptions concern source deductions (CCAA , s. 18.3(2) ; BIA , s. 67(3)). The relevant provision of the CCAA reads:

18.3 . . .

(2) Subsection (1) does not apply in respect of amounts deemed to be held in trust under subsection 227(4) or (4.1) of the Income Tax Act , subsection 23(3) or (4) of the Canada Pension Plan or subsection 86(2) or (2.1) of the Employment Insurance Act . . . .

Thus, the Crown’s deemed trust and corresponding priority in source deductions remain effective both in reorganization and in bankruptcy.

Meanwhile, in both s. 18.4(1) of the CCAA and s. 86(1) of the BIA , other Crown claims are treated as unsecured. These provisions, establishing the Crown’s status as an unsecured creditor, explicitly exempt statutory deemed trusts in source deductions (CCAA , s. 18.4(3) ; BIA , s. 86(3)). The CCAA provision reads as follows:

18.4 . . .

. . .

(3) Subsection (1) [Crown ranking as unsecured creditor] does not affect the operation of

(a) subsections 224(1.2) and (1.3) of the Income Tax Act ,

(b) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution . . . .

Therefore, not only does the CCAA provide that Crown claims do not enjoy priority over the claims of other creditors (s. 18.3(1)), but the exceptions to this rule (i.e., that Crown priority is maintained for source deductions) are repeatedly stated in the statute.

The apparent conflict in this case is whether the rule in the CCAA first enacted as s. 18.3 in 1997, which provides that subject to certain explicit exceptions, statutory deemed trusts are ineffective under the CCAA , is overridden by the one in the ETA enacted in 2000 stating that GST deemed trusts operate despite any enactment of Canada except the BIA . With respect for my colleague Fish J., I do not think the apparent conflict can be resolved by denying it and creating a rule requiring both a statutory provision enacting the deemed trust, and a second statutory provision confirming it. Such a rule is unknown to the law. Courts must recognize conflicts, apparent or real, and resolve them when possible.

A line of jurisprudence across Canada has resolved the apparent conflict in favour of the ETA , thereby maintaining GST deemed trusts under the CCAA . Ottawa Senators, the leading case, decided the matter by invoking the doctrine of implied repeal to hold that the later in time provision of the ETA should take precedence over the CCAA (see also Solid Resources Ltd., Re (2002), 40 C.B.R. (4th) 219 (Alta. Q.B.); Gauntlet).

The Ontario Court of Appeal in Ottawa Senators rested its conclusion on two considerations. First, it was persuaded that by explicitly mentioning the BIA in ETA s. 222(3) , but not the CCAA , Parliament made a deliberate choice. In the words of MacPherson J.A.:

The BIA and the CCAA are closely related federal statutes. I cannot conceive that Parliament would specifically identify the BIA as an exception, but accidentally fail to consider the CCAA as a possible second exception. In my view, the omission of the CCAA from s. 222(3) of the ETA was almost certainly a considered omission. [para. 43]

Second, the Ontario Court of Appeal compared the conflict between the ETA and the CCAA to that before this Court in Doré v. Verdun (City), [1997] 2 S.C.R. 862, and found them to be “identical” (para. 46). It therefore considered Doré binding (para. 49). In Doré, a limitations provision in the more general and recently enacted Civil Code of Québec, S.Q. 1991, c. 64 (“C.C.Q.”), was held to have repealed a more specific provision of the earlier Quebec Cities and Towns Act, R.S.Q., c. C-19, with which it conflicted. By analogy, the Ontario Court of Appeal held that the later in time and more general provision, s. 222(3) of the ETA , impliedly repealed the more specific and earlier in time provision, s. 18.3(1) of the CCAA (paras. 47-49).

Viewing this issue in its entire context, several considerations lead me to conclude that neither the reasoning nor the result in Ottawa Senators can stand. While a conflict may exist at the level of the statutes’ wording, a purposive and contextual analysis to determine Parliament’s true intent yields the conclusion that Parliament could not have intended to restore the Crown’s deemed trust priority in GST claims under the CCAA when it amended the ETA in 2000 with the Sparrow Electric amendment.

I begin by recalling that Parliament has shown its willingness to move away from asserting priority for Crown claims in insolvency law. Section 18.3(1) of the CCAA (subject to the s. 18.3(2) exceptions) provides that the Crown’s deemed trusts have no effect under the CCAA . Where Parliament has sought to protect certain Crown claims through statutory deemed trusts and intended that these deemed trusts continue in insolvency, it has legislated so explicitly and elaborately. For example, s. 18.3(2) of the CCAA and s. 67(3) of the BIA expressly provide that deemed trusts for source deductions remain effective in insolvency. Parliament has, therefore, clearly carved out exceptions from the general rule that deemed trusts are ineffective in insolvency. The CCAA and BIA are in harmony, preserving deemed trusts and asserting Crown priority only in respect of source deductions. Meanwhile, there is no express statutory basis for concluding that GST claims enjoy a preferred treatment under the CCAA or the BIA . Unlike source deductions, which are clearly and expressly dealt with under both these insolvency statutes, no such clear and express language exists in those Acts carving out an exception for GST claims.

The internal logic of the CCAA also militates against upholding the ETA deemed trust for GST. The CCAA imposes limits on a suspension by the court of the Crown’s rights in respect of source deductions but does not mention the ETA (s. 11.4). Since source deductions deemed trusts are granted explicit protection under the CCAA , it would be inconsistent to afford a better protection to the ETA deemed trust absent explicit language in the CCAA . Thus, the logic of the CCAA appears to subject the ETA deemed trust to the waiver by Parliament of its priority (s. 18.4).

Moreover, a strange asymmetry would arise if the interpretation giving the ETA priority over the CCAA urged by the Crown is adopted here: the Crown would retain priority over GST claims during CCAA proceedings but not in bankruptcy. As courts have reflected, this can only encourage statute shopping by secured creditors in cases such as this one where the debtor’s assets cannot satisfy both the secured creditors’ and the Crown’s claims (Gauntlet, at para. 21). If creditors’ claims were better protected by liquidation under the BIA , creditors’ incentives would lie overwhelmingly with avoiding proceedings under the CCAA and not risking a failed reorganization. Giving a key player in any insolvency such skewed incentives against reorganizing under the CCAA can only undermine that statute’s remedial objectives and risk inviting the very social ills that it was enacted to avert.

Arguably, the effect of Ottawa Senators is mitigated if restructuring is attempted under the BIA instead of the CCAA , but it is not cured. If Ottawa Senators were to be followed, Crown priority over GST would differ depending on whether restructuring took place under the CCAA or the BIA . The anomaly of this result is made manifest by the fact that it would deprive companies of the option to restructure under the more flexible and responsive CCAA regime, which has been the statute of choice for complex reorganizations.

Evidence that Parliament intended different treatments for GST claims in reorganization and bankruptcy is scant, if it exists at all. Section 222(3) of the ETA was enacted as part of a wide-ranging budget implementation bill in 2000. The summary accompanying that bill does not indicate that Parliament intended to elevate Crown priority over GST claims under the CCAA to the same or a higher level than source deductions claims. Indeed, the summary for deemed trusts states only that amendments to existing provisions are aimed at “ensuring that employment insurance premiums and Canada Pension Plan contributions that are required to be remitted by an employer are fully recoverable by the Crown in the case of the bankruptcy of the employer” (Summary to S.C. 2000, c. 30, at p. 4a). The wording of GST deemed trusts resembles that of statutory deemed trusts for source deductions and incorporates the same overriding language and reference to the BIA . However, as noted above, Parliament’s express intent is that only source deductions deemed trusts remain operative. An exception for the BIA in the statutory language establishing the source deductions deemed trusts accomplishes very little, because the explicit language of the BIA itself (and the CCAA) carves out these source deductions deemed trusts and maintains their effect. It is however noteworthy that no equivalent language maintaining GST deemed trusts exists under either the BIA or the CCAA .

It seems more likely that by adopting the same language for creating GST deemed trusts in the ETA as it did for deemed trusts for source deductions, and by overlooking the inclusion of an exception for the CCAA alongside the BIA in s. 222(3) of the ETA , Parliament may have inadvertently succumbed to a drafting anomaly. Because of a statutory lacuna in the ETA , the GST deemed trust could be seen as remaining effective in the CCAA , while ceasing to have any effect under the BIA , thus creating an apparent conflict with the wording of the CCAA . However, it should be seen for what it is: a facial conflict only, capable of resolution by looking at the broader approach taken to Crown priorities and by giving precedence to the statutory language of s. 18.3 of the CCAA in a manner that does not produce an anomalous outcome.

Section 222(3) of the ETA evinces no explicit intention of Parliament to repeal CCAA s. 18.3 . It merely creates an apparent conflict that must be resolved by statutory interpretation. Parliament’s intent when it enacted ETA s. 222(3) was therefore far from unambiguous. Had it sought to give the Crown a priority for GST claims, it could have done so explicitly as it did for source deductions. Instead, one is left to infer from the language of ETA s. 222(3) that the GST deemed trust was intended to be effective under the CCAA .

I am not persuaded that the reasoning in Doré requires the application of the doctrine of implied repeal in the circumstances of this case. The main issue in Doré concerned the impact of the adoption of the C.C.Q. on the administrative law rules with respect to municipalities. While Gonthier J. concluded in that case that the limitation provision in art. 2930 C.C.Q. had repealed by implication a limitation provision in the Cities and Towns Act, he did so on the basis of more than a textual analysis. The conclusion in Doré was reached after thorough contextual analysis of both pieces of legislation, including an extensive review of the relevant legislative history (paras. 31-41). Consequently, the circumstances before this Court in Doré are far from “identical” to those in the present case, in terms of text, context and legislative history. Accordingly, Doré cannot be said to require the automatic application of the rule of repeal by implication.

A noteworthy indicator of Parliament’s overall intent is the fact that in subsequent amendments it has not displaced the rule set out in the CCAA . Indeed, as indicated above, the recent amendments to the CCAA in 2005 resulted in the rule previously found in s. 18.3 being renumbered and reformulated as s. 37. Thus, to the extent the interpretation allowing the GST deemed trust to remain effective under the CCAA depends on ETA s. 222(3) having impliedly repealed CCAA s. 18.3(1) because it is later in time, we have come full circle. Parliament has renumbered and reformulated the provision of the CCAA stating that, subject to exceptions for source deductions, deemed trusts do not survive the CCAA proceedings and thus the CCAA is now the later in time statute. This confirms that Parliament’s intent with respect to GST deemed trusts is to be found in the CCAA .

I do not agree with my colleague Abella J. that s. 44 (f) of the Interpretation Act , R.S.C. 1985, c. I-21 , can be used to interpret the 2005 amendments as having no effect. The new statute can hardly be said to be a mere re-enactment of the former statute. Indeed, the CCAA underwent a substantial review in 2005. Notably, acting consistently with its goal of treating both the BIA and the CCAA as sharing the same approach to insolvency, Parliament made parallel amendments to both statutes with respect to corporate proposals. In addition, new provisions were introduced regarding the treatment of contracts, collective agreements, interim financing and governance agreements. The appointment and role of the Monitor was also clarified. Noteworthy are the limits imposed by CCAA s. 11.09 on the court’s discretion to make an order staying the Crown’s source deductions deemed trusts, which were formerly found in s. 11.4. No mention whatsoever is made of GST deemed trusts (see Summary to S.C. 2005, c. 47). The review went as far as looking at the very expression used to describe the statutory override of deemed trusts. The comments cited by my colleague only emphasize the clear intent of Parliament to maintain its policy that only source deductions deemed trusts survive in CCAA proceedings.

In the case at bar, the legislative context informs the determination of Parliament’s legislative intent and supports the conclusion that ETA s. 222(3) was not intended to narrow the scope of the CCAA ’s override provision. Viewed in its entire context, the conflict between the ETA and the CCAA is more apparent than real. I would therefore not follow the reasoning in Ottawa Senators and affirm that CCAA s. 18.3 remained effective.

My conclusion is reinforced by the purpose of the CCAA as part of Canadian remedial insolvency legislation. As this aspect is particularly relevant to the second issue, I will now discuss how courts have interpreted the scope of their discretionary powers in supervising a CCAA reorganization and how Parliament has largely endorsed this interpretation. Indeed, the interpretation courts have given to the CCAA helps in understanding how the CCAA grew to occupy such a prominent role in Canadian insolvency law.

3.3 Discretionary Power of a Court Supervising a CCAA Reorganization

Courts frequently observe that “[t]he CCAA is skeletal in nature” and does not “contain a comprehensive code that lays out all that is permitted or barred” (Metcalfe & Mansfield Alternative Investments II Corp. (Re), 2008 ONCA 587, 92 O.R. (3d) 513, at para. 44, per Blair J.A.). Accordingly, “[t]he history of CCAA law has been an evolution of judicial interpretation” (Dylex Ltd., Re (1995), 31 C.B.R. (3d) 106 (Ont. Ct. (Gen. Div.)), at para. 10, per Farley J.).

CCAA decisions are often based on discretionary grants of jurisdiction. The incremental exercise of judicial discretion in commercial courts under conditions one practitioner aptly describes as “the hothouse of real-time litigation” has been the primary method by which the CCAA has been adapted and has evolved to meet contemporary business and social needs (see Jones, at p. 484).

Judicial discretion must of course be exercised in furtherance of the CCAA ’s purposes. The remedial purpose I referred to in the historical overview of the Act is recognized over and over again in the jurisprudence. To cite one early example:

The legislation is remedial in the purest sense in that it provides a means whereby the devastating social and economic effects of bankruptcy or creditor initiated termination of ongoing business operations can be avoided while a court-supervised attempt to reorganize the financial affairs of the debtor company is made.

(Elan Corp. v. Comiskey (1990), 41 O.A.C. 282, at para. 57, per Doherty J.A., dissenting)

Judicial decision making under the CCAA takes many forms. A court must first of all provide the conditions under which the debtor can attempt to reorganize. This can be achieved by staying enforcement actions by creditors to allow the debtor’s business to continue, preserving the status quo while the debtor plans the compromise or arrangement to be presented to creditors, and supervising the process and advancing it to the point where it can be determined whether it will succeed (see, e.g., Chef Ready Foods Ltd. v. Hongkong Bank of Can. (1990), 51 B.C.L.R. (2d) 84 (C.A.), at pp. 88-89; Pacific National Lease Holding Corp., Re (1992), 19 B.C.A.C. 134, at para. 27). In doing so, the court must often be cognizant of the various interests at stake in the reorganization, which can extend beyond those of the debtor and creditors to include employees, directors, shareholders, and even other parties doing business with the insolvent company (see, e.g., Canadian Airlines Corp., Re, 2000 ABQB 442, 84 Alta. L.R. (3d) 9, at para. 144, per Paperny J. (as she then was); Air Canada, Re (2003), 42 C.B.R. (4th) 173 (Ont. S.C.J.), at para. 3; Air Canada, Re, 2003 CanLII 49366 (Ont. S.C.J.), at para. 13, per Farley J.; Sarra, Creditor Rights, at pp. 181-92 and 217-26). In addition, courts must recognize that on occasion the broader public interest will be engaged by aspects of the reorganization and may be a factor against which the decision of whether to allow a particular action will be weighed (see, e.g., Canadian Red Cross Society/Société Canadienne de la Croix Rouge, Re (2000), 19 C.B.R. (4th) 158 (Ont. S.C.J.), at para. 2, per Blair J. (as he then was); Sarra, Creditor Rights, at pp. 195-214).

When large companies encounter difficulty, reorganizations become increasingly complex. CCAA courts have been called upon to innovate accordingly in exercising their jurisdiction beyond merely staying proceedings against the debtor to allow breathing room for reorganization. They have been asked to sanction measures for which there is no explicit authority in the CCAA . Without exhaustively cataloguing the various measures taken under the authority of the CCAA , it is useful to refer briefly to a few examples to illustrate the flexibility the statute affords supervising courts.

Perhaps the most creative use of CCAA authority has been the increasing willingness of courts to authorize post-filing security for debtor in possession financing or super-priority charges on the debtor’s assets when necessary for the continuation of the debtor’s business during the reorganization (see, e.g., Skydome Corp., Re (1998), 16 C.B.R. (4th) 118 (Ont. Ct. (Gen. Div.)); United Used Auto & Truck Parts Ltd., Re, 2000 BCCA 146, 135 B.C.A.C. 96, aff’g (1999), 12 C.B.R. (4th) 144 (S.C.); and generally, J. P. Sarra, Rescue! The Companies’ Creditors Arrangement Act (2007), at pp. 93-115). The CCAA has also been used to release claims against third parties as part of approving a comprehensive plan of arrangement and compromise, even over the objections of some dissenting creditors (see Metcalfe & Mansfield). As well, the appointment of a Monitor to oversee the reorganization was originally a measure taken pursuant to the CCAA ’s supervisory authority; Parliament responded, making the mechanism mandatory by legislative amendment.

Judicial innovation during CCAA proceedings has not been without controversy. At least two questions it raises are directly relevant to the case at bar: (1) What are the sources of a court’s authority during CCAA proceedings? (2) What are the limits of this authority?

The first question concerns the boundary between a court’s statutory authority under the CCAA and a court’s residual authority under its inherent and equitable jurisdiction when supervising a reorganization. In authorizing measures during CCAA proceedings, courts have on occasion purported to rely upon their equitable jurisdiction to advance the purposes of the Act or their inherent jurisdiction to fill gaps in the statute. Recent appellate decisions have counselled against purporting to rely on inherent jurisdiction, holding that the better view is that courts are in most cases simply construing the authority supplied by the CCAA itself (see, e.g., Skeena Cellulose Inc., Re, 2003 BCCA 344, 13 B.C.L.R. (4th) 236, at paras. 45-47, per Newbury J.A.; Stelco Inc. (Re) (2005), 75 O.R. (3d) 5 (C.A.), at paras. 31-33, per Blair J.A.).

I agree with Justice Georgina R. Jackson and Professor Janis Sarra that the most appropriate approach is a hierarchical one in which courts rely first on an interpretation of the provisions of the CCAA text before turning to inherent or equitable jurisdiction to anchor measures taken in a CCAA proceeding (see G. R. Jackson and J. Sarra, “Selecting the Judicial Tool to get the Job Done: An Examination of Statutory Interpretation, Discretionary Power and Inherent Jurisdiction in Insolvency Matters”, in J. P. Sarra, ed., Annual Review of Insolvency Law 2007 (2008), 41, at p. 42). The authors conclude that when given an appropriately purposive and liberal interpretation, the CCAA will be sufficient in most instances to ground measures necessary to achieve its objectives (p. 94).

Having examined the pertinent parts of the CCAA and the recent history of the legislation, I accept that in most instances the issuance of an order during CCAA proceedings should be considered an exercise in statutory interpretation. Particularly noteworthy in this regard is the expansive interpretation the language of the statute at issue is capable of supporting.

The initial grant of authority under the CCAA empowered a court “where an application is made under this Act in respect of a company . . . on the application of any person interested in the matter, . . . subject to this Act, [to] make an order under this section” (CCAA , s. 11 (1)). The plain language of the statute was very broad.

In this regard, though not strictly applicable to the case at bar, I note that Parliament has in recent amendments changed the wording contained in s. 11(1), making explicit the discretionary authority of the court under the CCAA . Thus, in s. 11 of the CCAA as currently enacted, a court may, “subject to the restrictions set out in this Act, . . . make any order that it considers appropriate in the circumstances” (S.C. 2005, c. 47, s. 128). Parliament appears to have endorsed the broad reading of CCAA authority developed by the jurisprudence.

The CCAA also explicitly provides for certain orders. Both an order made on an initial application and an order on subsequent applications may stay, restrain, or prohibit existing or new proceedings against the debtor. The burden is on the applicant to satisfy the court that the order is appropriate in the circumstances and that the applicant has been acting in good faith and with due diligence (CCAA , ss. 11(3) , (4) and (6)).

The general language of the CCAA should not be read as being restricted by the availability of more specific orders. However, the requirements of appropriateness, good faith, and due diligence are baseline considerations that a court should always bear in mind when exercising CCAA authority. Appropriateness under the CCAA is assessed by inquiring whether the order sought advances the policy objectives underlying the CCAA . The question is whether the order will usefully further efforts to achieve the remedial purpose of the CCAA — avoiding the social and economic losses resulting from liquidation of an insolvent company. I would add that appropriateness extends not only to the purpose of the order, but also to the means it employs. Courts should be mindful that chances for successful reorganizations are enhanced where participants achieve common ground and all stakeholders are treated as advantageously and fairly as the circumstances permit.

It is well established that efforts to reorganize under the CCAA can be terminated and the stay of proceedings against the debtor lifted if the reorganization is “doomed to failure” (see Chef Ready, at p. 88; Philip’s Manufacturing Ltd., Re (1992), 9 C.B.R. (3d) 25 (B.C.C.A.), at paras. 6-7). However, when an order is sought that does realistically advance the CCAA ’s purposes, the ability to make it is within the discretion of a CCAA court.

The preceding discussion assists in determining whether the court had authority under the CCAA to continue the stay of proceedings against the Crown once it was apparent that reorganization would fail and bankruptcy was the inevitable next step.

In the Court of Appeal, Tysoe J.A. held that no authority existed under the CCAA to continue staying the Crown’s enforcement of the GST deemed trust once efforts at reorganization had come to an end. The appellant submits that in so holding, Tysoe J.A. failed to consider the underlying purpose of the CCAA and give the statute an appropriately purposive and liberal interpretation under which the order was permissible. The Crown submits that Tysoe J.A. correctly held that the mandatory language of the ETA gave the court no option but to permit enforcement of the GST deemed trust when lifting the CCAA stay to permit the debtor to make an assignment under the BIA . Whether the ETA has a mandatory effect in the context of a CCAA proceeding has already been discussed. I will now address the question of whether the order was authorized by the CCAA .

It is beyond dispute that the CCAA imposes no explicit temporal limitations upon proceedings commenced under the Act that would prohibit ordering a continuation of the stay of the Crown’s GST claims while lifting the general stay of proceedings temporarily to allow the debtor to make an assignment in bankruptcy.

The question remains whether the order advanced the underlying purpose of the CCAA . The Court of Appeal held that it did not because the reorganization efforts had come to an end and the CCAA was accordingly spent. I disagree.

There is no doubt that had reorganization been commenced under the BIA instead of the CCAA , the Crown’s deemed trust priority for the GST funds would have been lost. Similarly, the Crown does not dispute that under the scheme of distribution in bankruptcy under the BIA the deemed trust for GST ceases to have effect. Thus, after reorganization under the CCAA failed, creditors would have had a strong incentive to seek immediate bankruptcy and distribution of the debtor’s assets under the BIA . In order to conclude that the discretion does not extend to partially lifting the stay in order to allow for an assignment in bankruptcy, one would have to assume a gap between the CCAA and the BIA proceedings. Brenner C.J.S.C.’s order staying Crown enforcement of the GST claim ensured that creditors would not be disadvantaged by the attempted reorganization under the CCAA . The effect of his order was to blunt any impulse of creditors to interfere in an orderly liquidation. His order was thus in furtherance of the CCAA ’s objectives to the extent that it allowed a bridge between the CCAA and BIA proceedings. This interpretation of the tribunal’s discretionary power is buttressed by s. 20 of the CCAA . That section provides that the CCAA “may be applied together with the provisions of any Act of Parliament . . . that authorizes or makes provision for the sanction of compromises or arrangements between a company and its shareholders or any class of them”, such as the BIA . Section 20 clearly indicates the intention of Parliament for the CCAA to operate in tandem with other insolvency legislation, such as the BIA .

The CCAA creates conditions for preserving the status quo while attempts are made to find common ground amongst stakeholders for a reorganization that is fair to all. Because the alternative to reorganization is often bankruptcy, participants will measure the impact of a reorganization against the position they would enjoy in liquidation. In the case at bar, the order fostered a harmonious transition between reorganization and liquidation while meeting the objective of a single collective proceeding that is common to both statutes.

Tysoe J.A. therefore erred in my view by treating the CCAA and the BIA as distinct regimes subject to a temporal gap between the two, rather than as forming part of an integrated body of insolvency law. Parliament’s decision to maintain two statutory schemes for reorganization, the BIA and the CCAA, reflects the reality that reorganizations of differing complexity require different legal mechanisms. By contrast, only one statutory scheme has been found to be needed to liquidate a bankrupt debtor’s estate. The transition from the CCAA to the BIA may require the partial lifting of a stay of proceedings under the CCAA to allow commencement of the BIA proceedings. However, as Laskin J.A. for the Ontario Court of Appeal noted in a similar competition between secured creditors and the Ontario Superintendent of Financial Services seeking to enforce a deemed trust, “[t]he two statutes are related” and no “gap” exists between the two statutes which would allow the enforcement of property interests at the conclusion of CCAA proceedings that would be lost in bankruptcy (Ivaco Inc. (Re) (2006), 83 O.R. (3d) 108, at paras. 62-63).

The Crown’s priority in claims pursuant to source deductions deemed trusts does not undermine this conclusion. Source deductions deemed trusts survive under both the CCAA and the BIA. Accordingly, creditors’ incentives to prefer one Act over another will not be affected. While a court has a broad discretion to stay source deductions deemed trusts in the CCAA context, this discretion is nevertheless subject to specific limitations applicable only to source deductions deemed trusts (CCAA , s. 11.4). Thus, if CCAA reorganization fails (e.g., either the creditors or the court refuse a proposed reorganization), the Crown can immediately assert its claim in unremitted source deductions. But this should not be understood to affect a seamless transition into bankruptcy or create any “gap” between the CCAA and the BIA for the simple reason that, regardless of what statute the reorganization had been commenced under, creditors’ claims in both instances would have been subject to the priority of the Crown’s source deductions deemed trust.

Source deductions deemed trusts aside, the comprehensive and exhaustive mechanism under the BIA must control the distribution of the debtor’s assets once liquidation is inevitable. Indeed, an orderly transition to liquidation is mandatory under the BIA where a proposal is rejected by creditors. The CCAA is silent on the transition into liquidation but the breadth of the court’s discretion under the Act is sufficient to construct a bridge to liquidation under the BIA . The court must do so in a manner that does not subvert the scheme of distribution under the BIA . Transition to liquidation requires partially lifting the CCAA stay to commence proceedings under the BIA . This necessary partial lifting of the stay should not trigger a race to the courthouse in an effort to obtain priority unavailable under the BIA .

I therefore conclude that Brenner C.J.S.C. had the authority under the CCAA to lift the stay to allow entry into liquidation.

3.4 Express Trust

The last issue in this case is whether Brenner C.J.S.C. created an express trust in favour of the Crown when he ordered on April 29, 2008, that proceeds from the sale of LeRoy Trucking’s assets equal to the amount of unremitted GST be held back in the Monitor’s trust account until the results of the reorganization were known. Tysoe J.A. in the Court of Appeal concluded as an alternative ground for allowing the Crown’s appeal that it was the beneficiary of an express trust. I disagree.

Creation of an express trust requires the presence of three certainties: intention, subject matter, and object. Express or “true trusts” arise from the acts and intentions of the settlor and are distinguishable from other trusts arising by operation of law (see D. W. M. Waters, M. R. Gillen and L. D. Smith, eds., Waters’ Law of Trusts in Canada (3rd ed. 2005), at pp. 28-29, especially fn. 42).

Here, there is no certainty to the object (i.e. the beneficiary) inferrable from the court’s order of April 29, 2008 sufficient to support an express trust.

At the time of the order, there was a dispute between Century Services and the Crown over part of the proceeds from the sale of the debtor’s assets. The court’s solution was to accept LeRoy Trucking’s proposal to segregate those monies until that dispute could be resolved. Thus, there was no certainty that the Crown would actually be the beneficiary, or object, of the trust.

The fact that the location chosen to segregate those monies was the Monitor’s trust account has no independent effect such that it would overcome the lack of a clear beneficiary. In any event, under the interpretation of CCAA s. 18.3(1) established above, no such priority dispute would even arise because the Crown’s deemed trust priority over GST claims would be lost under the CCAA and the Crown would rank as an unsecured creditor for this amount. However, Brenner C.J.S.C. may well have been proceeding on the basis that, in accordance with Ottawa Senators, the Crown’s GST claim would remain effective if reorganization was successful, which would not be the case if transition to the liquidation process of the BIA was allowed. An amount equivalent to that claim would accordingly be set aside pending the outcome of reorganization.

Thus, uncertainty surrounding the outcome of the CCAA restructuring eliminates the existence of any certainty to permanently vest in the Crown a beneficial interest in the funds. That much is clear from the oral reasons of Brenner C.J.S.C. on April 29, 2008, when he said: “Given the fact that [CCAA proceedings] are known to fail and filings in bankruptcy result, it seems to me that maintaining the status quo in the case at bar supports the proposal to have the monitor hold these funds in trust.” Exactly who might take the money in the final result was therefore evidently in doubt. Brenner C.J.S.C.’s subsequent order of September 3, 2008 denying the Crown’s application to enforce the trust once it was clear that bankruptcy was inevitable, confirms the absence of a clear beneficiary required to ground an express trust.

4. Conclusion

I conclude that Brenner C.J.S.C. had the discretion under the CCAA to continue the stay of the Crown’s claim for enforcement of the GST deemed trust while otherwise lifting it to permit LeRoy Trucking to make an assignment in bankruptcy. My conclusion that s. 18.3(1) of the CCAA nullified the GST deemed trust while proceedings under that Act were pending confirms that the discretionary jurisdiction under s. 11 utilized by the court was not limited by the Crown’s asserted GST priority, because there is no such priority under the CCAA .

For these reasons, I would allow the appeal and declare that the $305,202.30 collected by LeRoy Trucking in respect of GST but not yet remitted to the Receiver General of Canada is not subject to deemed trust or priority in favour of the Crown. Nor is this amount subject to an express trust. Costs are awarded for this appeal and the appeal in the court below.

The following are the reasons delivered by

Fish J. —

I

I am in general agreement with the reasons of Justice Deschamps and would dispose of the appeal as she suggests.

More particularly, I share my colleague’s interpretation of the scope of the judge’s discretion under s. 11 of the Companies’ Creditors Arrangement Act , R.S.C. 1985, c. C-36 (“CCAA ”). And I share my colleague’s conclusion that Brenner C.J.S.C. did not create an express trust in favour of the Crown when he segregated GST funds into the Monitor’s trust account (2008 BCSC 1805, [2008] G.S.T.C. 221).

I nonetheless feel bound to add brief reasons of my own regarding the interaction between the CCAA and the Excise Tax Act , R.S.C. 1985, c. E-15 (“ETA ”).

In upholding deemed trusts created by the ETA notwithstanding insolvency proceedings, Ottawa Senators Hockey Club Corp. (Re) (2005), 73 O.R. (3d) 737 (C.A.), and its progeny have been unduly protective of Crown interests which Parliament itself has chosen to subordinate to competing prioritized claims. In my respectful view, a clearly marked departure from that jurisprudential approach is warranted in this case.

Justice Deschamps develops important historical and policy reasons in support of this position and I have nothing to add in that regard. I do wish, however, to explain why a comparative analysis of related statutory provisions adds support to our shared conclusion.

Parliament has in recent years given detailed consideration to the Canadian insolvency scheme. It has declined to amend the provisions at issue in this case. Ours is not to wonder why, but rather to treat Parliament’s preservation of the relevant provisions as a deliberate exercise of the legislative discretion that is Parliament’s alone. With respect, I reject any suggestion that we should instead characterize the apparent conflict between s. 18.3(1) (now s. 37(1)) of the CCAA and s. 222 of the ETA as a drafting anomaly or statutory lacuna properly subject to judicial correction or repair.

II

In the context of the Canadian insolvency regime, a deemed trust will be found to exist only where two complementary elements co-exist: first, a statutory provision creating the trust; and second, a CCAA or Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 (“BIA ”) provision confirming ― or explicitly preserving ― its effective operation.

This interpretation is reflected in three federal statutes. Each contains a deemed trust provision framed in terms strikingly similar to the wording of s. 222 of the ETA .

The first is the Income Tax Act , R.S.C. 1985, c. 1 (5th Supp .) (“ITA ”), where s. 227(4) creates a deemed trust:

(4) Every person who deducts or withholds an amount under this Act is deemed, notwithstanding any security interest (as defined in subsection 224(1.3)) in the amount so deducted or withheld, to hold the amount separate and apart from the property of the person and from property held by any secured creditor (as defined in subsection 224(1.3)) of that person that but for the security interest would be property of the person, in trust for Her Majesty and for payment to Her Majesty in the manner and at the time provided under this Act. [Here and below, the emphasis is of course my own.]

In the next subsection, Parliament has taken care to make clear that this trust is unaffected by federal or provincial legislation to the contrary:

(4.1) Notwithstanding any other provision of this Act, the Bankruptcy and Insolvency Act (except sections 81.1 and 81.2 of that Act), any other enactment of Canada, any enactment of a province or any other law, where at any time an amount deemed by subsection 227(4) to be held by a person in trust for Her Majesty is not paid to Her Majesty in the manner and at the time provided under this Act, property of the person . . . equal in value to the amount so deemed to be held in trust is deemed

(a) to be held, from the time the amount was deducted or withheld by the person, separate and apart from the property of the person, in trust for Her Majesty whether or not the property is subject to such a security interest, . . .

. . .

. . . and the proceeds of such property shall be paid to the Receiver General in priority to all such security interests.

The continued operation of this deemed trust is expressly confirmed in s. 18.3 of the CCAA :

18.3 (1) Subject to subsection (2), notwithstanding any provision in federal or provincial legislation that has the effect of deeming property to be held in trust for Her Majesty, property of a debtor company shall not be regarded as held in trust for Her Majesty unless it would be so regarded in the absence of that statutory provision.

(2) Subsection (1) does not apply in respect of amounts deemed to be held in trust under subsection 227(4) or (4.1) of the Income Tax Act , subsection 23(3) or (4) of the Canada Pension Plan or subsection 86(2) or (2.1) of the Employment Insurance Act . . . .

The operation of the ITA deemed trust is also confirmed in s. 67 of the BIA :

(2) Subject to subsection (3), notwithstanding any provision in federal or provincial legislation that has the effect of deeming property to be held in trust for Her Majesty, property of a bankrupt shall not be regarded as held in trust for Her Majesty for the purpose of paragraph (1)(a) unless it would be so regarded in the absence of that statutory provision.

(3) Subsection (2) does not apply in respect of amounts deemed to be held in trust under subsection 227(4) or (4.1) of the Income Tax Act , subsection 23(3) or (4) of the Canada Pension Plan or subsection 86(2) or (2.1) of the Employment Insurance Act . . . .

Thus, Parliament has first created and then confirmed the continued operation of the Crown’s ITA deemed trust under both the CCAA and the BIA regimes.

The second federal statute for which this scheme holds true is the Canada Pension Plan , R.S.C. 1985, c. C-8 (“CPP ”). At s. 23, Parliament creates a deemed trust in favour of the Crown and specifies that it exists despite all contrary provisions in any other Canadian statute. Finally, and in almost identical terms, the Employment Insurance Act , S.C. 1996, c. 23 (“EIA ”), creates a deemed trust in favour of the Crown: see ss. 86(2) and (2.1).

As we have seen, the survival of the deemed trusts created under these provisions of the ITA , the CPP and the EIA is confirmed in s. 18.3(2) of the CCAA and in s. 67(3) of the BIA . In all three cases, Parliament’s intent to enforce the Crown’s deemed trust through insolvency proceedings is expressed in clear and unmistakable terms.

The same is not true with regard to the deemed trust created under the ETA . Although Parliament creates a deemed trust in favour of the Crown to hold unremitted GST monies, and although it purports to maintain this trust notwithstanding any contrary federal or provincial legislation, it does not confirm the trust ― or expressly provide for its continued operation ― in either the BIA or the CCAA . The second of the two mandatory elements I have mentioned is thus absent reflecting Parliament’s intention to allow the deemed trust to lapse with the commencement of insolvency proceedings.

The language of the relevant ETA provisions is identical in substance to that of the ITA , CPP, and EIA provisions:

222. (1) Subject to subsection (1.1), every person who collects an amount as or on account of tax under Division II is deemed, for all purposes and despite any security interest in the amount, to hold the amount in trust for Her Majesty in right of Canada, separate and apart from the property of the person and from property held by any secured creditor of the person that, but for a security interest, would be property of the person, until the amount is remitted to the Receiver General or withdrawn under subsection (2).

. . .

(3) Despite any other provision of this Act (except subsection (4)), any other enactment of Canada (except the Bankruptcy and Insolvency Act), any enactment of a province or any other law, if at any time an amount deemed by subsection (1) to be held by a person in trust for Her Majesty is not remitted to the Receiver General or withdrawn in the manner and at the time provided under this Part, property of the person and property held by any secured creditor of the person that, but for a security interest, would be property of the person, equal in value to the amount so deemed to be held in trust, is deemed

(a) to be held, from the time the amount was collected by the person, in trust for Her Majesty, separate and apart from the property of the person, whether or not the property is subject to a security interest, . . .

. . .

. . . and the proceeds of the property shall be paid to the Receiver General in priority to all security interests.

Yet no provision of the CCAA provides for the continuation of this deemed trust after the CCAA is brought into play.

In short, Parliament has imposed two explicit conditions, or “building blocks”, for survival under the CCAA of deemed trusts created by the ITA , CPP, and EIA . Had Parliament intended to likewise preserve under the CCAA deemed trusts created by the ETA , it would have included in the CCAA the sort of confirmatory provision that explicitly preserves other deemed trusts.

With respect, unlike Tysoe J.A., I do not find it “inconceivable that Parliament would specifically identify the BIA as an exception when enacting the current version of s. 222(3) of the ETA without considering the CCAA as a possible second exception” (2009 BCCA 205, 98 B.C.L.R. (4th) 242, at para. 37). All of the deemed trust provisions excerpted above make explicit reference to the BIA . Section 222 of the ETA does not break the pattern. Given the near-identical wording of the four deemed trust provisions, it would have been surprising indeed had Parliament not addressed the BIA at all in the ETA .

Parliament’s evident intent was to render GST deemed trusts inoperative upon the institution of insolvency proceedings. Accordingly, s. 222 mentions the BIA so as to exclude it from its ambit ― rather than to include it, as do the ITA , the CPP, and the EIA .

Conversely, I note that none of these statutes mentions the CCAA expressly. Their specific reference to the BIA has no bearing on their interaction with the CCAA . Again, it is the confirmatory provisions in the insolvency statutes that determine whether a given deemed trust will subsist during insolvency proceedings.

Finally, I believe that chambers judges should not segregate GST monies into the Monitor’s trust account during CCAA proceedings, as was done in this case. The result of Justice Deschamps’s reasoning is that GST claims become unsecured under the CCAA . Parliament has deliberately chosen to nullify certain Crown super-priorities during insolvency; this is one such instance.

III

For these reasons, like Justice Deschamps, I would allow the appeal with costs in this Court and in the courts below and order that the $305,202.30 collected by LeRoy Trucking in respect of GST but not yet remitted to the Receiver General of Canada be subject to no deemed trust or priority in favour of the Crown.

The following are the reasons delivered by

Abella J. (dissenting) — The central issue in this appeal is whether s. 222 of the Excise Tax Act , R.S.C. 1985, c. E-15 (“ETA ”), and specifically s. 222(3), gives priority during Companies’ Creditors Arrangement Act , R.S.C. 1985, c. C-36 (“CCAA ”), proceedings to the Crown’s deemed trust in unremitted GST. I agree with Tysoe J.A. that it does. It follows, in my respectful view, that a court’s discretion under s. 11 of the CCAA is circumscribed accordingly.

Century Services argued that the CCAA ’s general override provision, s. 18.3(1), prevailed, and that the deeming provisions in s. 222 of the ETA were, accordingly, inapplicable during CCAA proceedings. Section 18.3(1) states:

18.3 (1) . . . [N]otwithstanding any provision in federal or provincial legislation that has the effect of deeming property to be held in trust for Her Majesty, property of a debtor company shall not be regarded as held in trust for Her Majesty unless it would be so regarded in the absence of that statutory provision.

As MacPherson J.A. correctly observed in Ottawa Senators Hockey Club Corp. (Re) (2005), 73 O.R. (3d) 737 (C.A.), s. 222(3) of the ETA is in “clear conflict” with s. 18.3(1) of the CCAA (para. 31). Resolving the conflict between the two provisions is, essentially, what seems to me to be a relatively uncomplicated exercise in statutory interpretation: Does the language reflect a clear legislative intention? In my view it does. The deemed trust provision, s. 222(3) of the ETA , has unambiguous language stating that it operates notwithstanding any law except the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 (“BIA ”).

By expressly excluding only one statute from its legislative grasp, and by unequivocally stating that it applies despite any other law anywhere in Canada except the BIA , s. 222(3) has defined its boundaries in the clearest possible terms. I am in complete agreement with the following comments of MacPherson J.A. in Ottawa Senators:

The legislative intent of s. 222(3) of the ETA is clear. If there is a conflict with “any other enactment of Canada (except the Bankruptcy and Insolvency Act)”, s. 222(3) prevails. In these words Parliament did two things: it decided that s. 222(3) should trump all other federal laws and, importantly, it addressed the topic of exceptions to its trumping decision and identified a single exception, the Bankruptcy and Insolvency Act . . . . The BIA and the CCAA are closely related federal statutes. I cannot conceive that Parliament would specifically identify the BIA as an exception, but accidentally fail to consider the CCAA as a possible second exception. In my view, the omission of the CCAA from s. 222(3) of the ETA was almost certainly a considered omission. [para. 43]

MacPherson J.A.’s view that the failure to exempt the CCAA from the operation of the ETA is a reflection of a clear legislative intention, is borne out by how the CCAA was subsequently changed after s. 18.3(1) was enacted in 1997. In 2000, when s. 222(3) of the ETA came into force, amendments were also introduced to the CCAA . Section 18.3(1) was not amended.

The failure to amend s. 18.3(1) is notable because its effect was to protect the legislative status quo, notwithstanding repeated requests from various constituencies that s. 18.3(1) be amended to make the priorities in the CCAA consistent with those in the BIA . In 2002, for example, when Industry Canada conducted a review of the BIA and the CCAA, the Insolvency Institute of Canada and the Canadian Association of Insolvency and Restructuring Professionals recommended that the priority regime under the BIA be extended to the CCAA (Joint Task Force on Business Insolvency Law Reform, Report (March 15, 2002), Sch. B, proposal 71). The same recommendations were made by the Standing Senate Committee on Banking, Trade and Commerce in its 2003 report, Debtors and Creditors Sharing the Burden: A Review of the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act; by the Legislative Review Task Force (Commercial) of the Insolvency Institute of Canada and the Canadian Association of Insolvency and Restructuring Professionals in its 2005 Report on the Commercial Provisions of Bill C-55; and in 2007 by the Insolvency Institute of Canada in a submission to the Standing Senate Committee on Banking, Trade and Commerce commenting on reforms then under consideration.

Yet the BIA remains the only exempted statute under s. 222(3) of the ETA . Even after the 2005 decision in Ottawa Senators which confirmed that the ETA took precedence over the CCAA , there was no responsive legislative revision. I see this lack of response as relevant in this case, as it was in Tele-Mobile Co. v. Ontario, 2008 SCC 12, [2008] 1 S.C.R. 305, where this Court stated:

While it cannot be said that legislative silence is necessarily determinative of legislative intention, in this case the silence is Parliament’s answer to the consistent urging of Telus and other affected businesses and organizations that there be express language in the legislation to ensure that businesses can be reimbursed for the reasonable costs of complying with evidence-gathering orders. I see the legislative history as reflecting Parliament’s intention that compensation not be paid for compliance with production orders. [para. 42]

All this leads to a clear inference of a deliberate legislative choice to protect the deemed trust in s. 222(3) from the reach of s. 18.3(1) of the CCAA .

Nor do I see any “policy” justification for interfering, through interpretation, with this clarity of legislative intention. I can do no better by way of explaining why I think the policy argument cannot succeed in this case, than to repeat the words of Tysoe J.A. who said:

I do not dispute that there are valid policy reasons for encouraging insolvent companies to attempt to restructure their affairs so that their business can continue with as little disruption to employees and other stakeholders as possible. It is appropriate for the courts to take such policy considerations into account, but only if it is in connection with a matter that has not been considered by Parliament. Here, Parliament must be taken to have weighed policy considerations when it enacted the amendments to the CCAA and ETA described above. As Mr. Justice MacPherson observed at para. 43 of Ottawa Senators, it is inconceivable that Parliament would specifically identify the BIA as an exception when enacting the current version of s. 222(3) of the ETA without considering the CCAA as a possible second exception. I also make the observation that the 1992 set of amendments to the BIA enabled proposals to be binding on secured creditors and, while there is more flexibility under the CCAA , it is possible for an insolvent company to attempt to restructure under the auspices of the BIA . [para. 37]

Despite my view that the clarity of the language in s. 222(3) is dispositive, it is also my view that even the application of other principles of interpretation reinforces this conclusion. In their submissions, the parties raised the following as being particularly relevant: the Crown relied on the principle that the statute which is “later in time” prevails; and Century Services based its argument on the principle that the general provision gives way to the specific (generalia specialibus non derogant).

The “later in time” principle gives priority to a more recent statute, based on the theory that the legislature is presumed to be aware of the content of existing legislation. If a new enactment is inconsistent with a prior one, therefore, the legislature is presumed to have intended to derogate from the earlier provisions (Ruth Sullivan, Sullivan on the Construction of Statutes (5th ed. 2008), at pp. 346-47; Pierre-André Côté, The Interpretation of Legislation in Canada (3rd ed. 2000), at p. 358).

The exception to this presumptive displacement of pre-existing inconsistent legislation, is the generalia specialibus non derogant principle that “[a] more recent, general provision will not be construed as affecting an earlier, special provision” (Côté, at p. 359). Like a Russian Doll, there is also an exception within this exception, namely, that an earlier, specific provision may in fact be “overruled” by a subsequent general statute if the legislature indicates, through its language, an intention that the general provision prevails (Doré v. Verdun (City), [1997] 2 S.C.R. 862).

The primary purpose of these interpretive principles is to assist in the performance of the task of determining the intention of the legislature. This was confirmed by MacPherson J.A. in Ottawa Senators, at para. 42:

. . . the overarching rule of statutory interpretation is that statutory provisions should be interpreted to give effect to the intention of the legislature in enacting the law. This primary rule takes precedence over all maxims or canons or aids relating to statutory interpretation, including the maxim that the specific prevails over the general (generalia specialibus non derogant). As expressed by Hudson J. in Canada v. Williams, [1944] S.C.R. 226, . . . at p. 239 . . . :

The maxim generalia specialibus non derogant is relied on as a rule which should dispose of the question, but the maxim is not a rule of law but a rule of construction and bows to the intention of the legislature, if such intention can reasonably be gathered from all of the relevant legislation.

(See also Côté, at p. 358, and Pierre-Andre Côté, with the collaboration of S. Beaulac and M. Devinat, Interprétation des lois (4th ed. 2009), at para. 1335.)

I accept the Crown’s argument that the “later in time” principle is conclusive in this case. Since s. 222(3) of the ETA was enacted in 2000 and s. 18.3(1) of the CCAA was introduced in 1997, s. 222(3) is, on its face, the later provision. This chronological victory can be displaced, as Century Services argues, if it is shown that the more recent provision, s. 222(3) of the ETA , is a general one, in which case the earlier, specific provision, s. 18.3(1), prevails (generalia specialibus non derogant). But, as previously explained, the prior specific provision does not take precedence if the subsequent general provision appears to “overrule” it. This, it seems to me, is precisely what s. 222(3) achieves through the use of language stating that it prevails despite any law of Canada, of a province, or “any other law” other than the BIA . Section 18.3(1) of the CCAA is thereby rendered inoperative for purposes of s. 222(3).

Section 37(1) of the current CCAA is almost identical to s. 18.3(1). These provisions are set out for ease of comparison, with the differences between them underlined:

37. (1) Subject to subsection (2), despite any provision in federal or provincial legislation that has the effect of deeming property to be held in trust for Her Majesty, property of a debtor company shall not be regarded as being held in trust for Her Majesty unless it would be so regarded in the absence of that statutory provision.

18.3 (1) Subject to subsection (2), notwithstanding any provision in federal or provincial legislation that has the effect of deeming property to be held in trust for Her Majesty, property of a debtor company shall not be regarded as held in trust for Her Majesty unless it would be so regarded in the absence of that statutory provision.

The application of s. 44 (f) of the Interpretation Act simply confirms the government’s clearly expressed intent, found in Industry Canada’s clause-by-clause review of Bill C-55, where s. 37(1) was identified as “a technical amendment to re-order the provisions of this Act”. During second reading, the Hon. Bill Rompkey, then the Deputy Leader of the Government in the Senate, confirmed that s. 37(1) represented only a technical change:

On a technical note relating to the treatment of deemed trusts for taxes, the bill [sic] makes no changes to the underlying policy intent, despite the fact that in the case of a restructuring under the CCAA , sections of the act [sic] were repealed and substituted with renumbered versions due to the extensive reworking of the CCAA .

(Debates of the Senate, vol. 142, 1st Sess., 38th Parl., November 23, 2005, at p. 2147)

Had the substance of s. 18.3(1) altered in any material way when it was replaced by s. 37(1), I would share Deschamps J.’s view that it should be considered a new provision. But since s. 18.3(1) and s. 37(1) are the same in substance, the transformation of s. 18.3(1) into s. 37(1) has no effect on the interpretive queue, and s. 222(3) of the ETA remains the “later in time” provision (Sullivan, at p. 347).

This means that the deemed trust provision in s. 222(3) of the ETA takes precedence over s. 18.3(1) during CCAA proceedings. The question then is how that priority affects the discretion of a court under s. 11 of the CCAA .

While s. 11 gives a court discretion to make orders notwithstanding the BIA and the Winding-up Act, R.S.C. 1985, c. W-11 , that discretion is not liberated from the operation of any other federal statute. Any exercise of discretion is therefore circumscribed by whatever limits are imposed by statutes other than the BIA and the Winding-up Act. That includes the ETA . The chambers judge in this case was, therefore, required to respect the priority regime set out in s. 222(3) of the ETA . Neither s. 18.3(1) nor s. 11 of the CCAA gave him the authority to ignore it. He could not, as a result, deny the Crown’s request for payment of the GST funds during the CCAA proceedings.

Given this conclusion, it is unnecessary to consider whether there was an express trust.

I would dismiss the appeal.