Bankruptcy and Insolvency

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^* A study presented to the Civil Law Section of the Department of Justice of Canada.
^[1] As some have observed, this is perhaps not the most appropriate word; instead, these provisions cease to have effect.
^[2] This was viewed as the most official version.
^[3] See Albert Bohémier, La faillite en droit constitutionnel canadien (Montreal: Presses de l'Université de Montréal, 1972), pp. 13-14.
^[4] Aside from references to decided cases, the discussion is based primarily on the following works: Peter W. Hogg, Constitutional Law of Canada, 3rd ed. (Carswell, 1992), pp. 631 et seq.; Pierre Carignan, "La compétence législative en matière de faillite et d'insolvabilité," (1979) 57 R. du B. 47; and A. Bohémier, supra note 3.
^[5] Jean Leclair,"L'interaction entre le droit privé fédéral et le droit civil québécois en matière d'effets de commerce: perspective constitutionnelle", (1995) 40 McGill L.J. 691, 714.
^[6] An Act in amendment of Chapter 124, Title 34 of the Revised Statutes "Of Insolvent Confined Debtors", (1868) N.B.S. 31 Vict., c. 16.
^[7] Queen v. Chandler, Cartwright, Cases decided on the British North America Act --1867, Toronto, vol. II, at pages 421 and 429 et seq.; (1867) 12 N.B.R. 556. Concerning this decision, it has been said that it would probably have been different if it had not been handed down immediately after Confederation: see Edgar v. Central Bank, (1888-89) 15 Ont. App. Rep. 193, 201.
^[8] Albert Bohémier, Faillite et Insolvabilité, vol. 1, Montreal, Éditions Thémis, Montreal 1992, pp.24 et seq.
^[9] Attorney General of Ontario v. Attorney General for the Dominion of Canada, [1894] A.C. 189.
^[10] To give only a few examples, Saskatchewan: An Act to confer Certain Powers upon the Lieutenant Governor in Council, S. S, 1914, c. 2; 1923, c. 64; 1924, c. 49; The Debt Adjustment Act, 1929, S. S. 1928-1929, c. 53. Alberta: The Drought Area Relief Act, (1922) 12 Geo. 5, c. 43; The Debt Adjustment Act, (1923) 13 Geo. 5, c. 43. Manitoba: The Debt Adjustment Act, 1932, (1932) 22 Geo. 5, c. 8; An Act to amend "The Debt Adjustment Act, 1932,"(1933) 23 Geo. 5, c. 9; (1934) 24 Geo. 5, c. 9; (1935) 25 Geo. 5, c.11. British Columbia.: Mortgagors' and Purchasers' Relief Act, 1932, (1932) 22 Geo. 5, c. 35.
^[11] William Archibald Mackintosh, The Economic Background of Dominion-Provincial Relations, Toronto, McClelland and Stewart, 1967, pp. 123 and 134 (Appendix III of the Royal Commission Report on Dominion-Provincial Relations).
^[12] Reference Re Companies' Creditors Arrangement Act, [1934] S.C.R. 659, 664. Similarly, Reference re Farmers' Creditors Arrangement Act, 1934, and its Amending Act, 1935, [1936]S.C.R. 384; The Canadian Bankers' Association v. Attorney General of Saskatchewan, [1956] S.C.R. 31, 46.
^[13] Attorney General for British Columbia. v. Attorney General for Canada, [1937] A.C. 391, 403 (Privy Council): arrangements between farmers and their creditors.
^[14] Reference as to Validity of the Debt Adjustment Act, Alberta -- 1937, [1942] S.C.R. 31; Attorney General for Alberta v. Attorney General for Canada, [1943] A.C. 356 (Privy Council).
^[15] The Canadian Bankers' Association v. Attorney General of Saskatchewan,supra note 12.
^[16] Validity of the Orderly Payment of Debts Act, 1959 (Alta.), [1960] S.C.R. 571.
^[17] See supra note 9.
^[18] Re Wentworth Insurance Co., (1968) 69 D.L.R. (2d) 448 (Ont. C.A.), affirmed by Attorney General for Ontario v. Policyholders of Wentworth Insurance Company [1969] S.C.R. 779.
^[19] See the judgment of Laskin JA, as he then was, at the Court of Appeal, at page 458; the Supreme Court adopted that opinion at page 785.
^[20] [1978] 1 S.C.R. 753.
^[21] According to section 95 of the Bankruptcy and Insolvency Act, a preferential payment must have been made within 3 months of the bankruptcy.
^[22] Robinson v. Countrywide Factors Ltd., [1978] 1 S.C.R. 753, 776.
^[23] [1985] 1 S.C.R. 785, (1985) C.B.R. n.s. 241. This is one of the "quartet" of decisions to which more recent commentary and cases refer.
^[24] "Subject to the rights of the secured creditors," ...
^[25] See, in the same vein, Deputy Minister of Revenue v. Rainville, [1980] 1 S.C.R. 35; Federal Development Bank v. Quebec (C.S.S.T.), [1988] 1 S.C.R. 1061.
^[26] Workers' Compensation Board v. Husky Oil Operations Ltd., rendered on October 19, 1995, J.E. 95-145, [1995] 3 S.C.R. 453.
^[27] At that time, claims resulting from occupational injuries legislation were listed in paragraph 136(1)(h) of the Bankruptcy Act. They were removed from the list in 1992.
^[28] See page 47 of the unreported judgment.
^[29] See the opinion of Gonthier J., at page 49 of the unreported judgment.
^[30] Workers' Compensation Board v. Husky Oil Operations Ltd., supra note 25; Deloitte Haskins and Sells Ltd. v. Workers' Compensation Board, [1985] 1 S.C.R. 785, 806; Federal Development Bank v. Quebec (C.S.S.T.), [1988] 1 S.C.R. 1061, 1071.
^[31] See, for example, Richmac Interiors Ltd., Re, (1994) 25 C.B.R. (3d) 31 (Alta. Q.B.).
^[32] Pierre Carignan, "La compétence législative en matière de faillite et d'insolvabilité" , (1979) 57 Can. Bar Rev. 47, 54 [emphasis added].
^[33] Robinson v. Countrywide Factors Factors Ltd., supra note 22.
^[34] Id., 803 and 804.
^[35] Id., 804 and 805.
^[36] Arthur Peltomaa, Constitutional Validity of Provincial Legislation Subordinating Unperfected Security Interests to Trustee in Bankruptcy, (1982) 42 C.B.R. n.s. 104.
^[37] Id., p. 109; see also Andrew J. Roman andt Jasmine Sweatman, "The Conflict Between Provincial Property Security Acts and the Federal Bankruptcy Act : The War is Over", (1992) 71 Can. Bar. Rev. 77, at page 100 et seq.
^[38] Hannah, Re, (1988) 68 C.B.R.n.s. 270 (Ont. S.C.); Paccar Fin. Services Ltd. v. Sinco Trucking Ltd., (1989) 73 C.B.R. n.s. 28 (Sask. C.A.); Passmore (Trustee of) v. Heinrichs Bros. Hldg. Co., (1990) 79 C.B.R. n.s. 306 (Sask. Q.B.).
^[39] Int. Harvester Credit Corp. of Canada Ltd. v. Bell Dairy Ltd. (Trustee of), (1986) 61 C.B.R.n.s. 193 (Sask. C.A.).
^[40] See also Jacob S. Ziegel, "Personal Property Security and Bankruptcy: There is no War!", (1993) Can. Bar Rev. 44.
^[41] Supra note 22, (1977) 72 D.L.R. (3d) 500 at pp. 528 and 535-539.
^[42] Supra note 32, at p. 59. On this point, see the comments of Beetz J. in Robinson, at pp. 535-539.
^[43] An identical definition is found in the provincial Interpretation Act, R.S.Q., c. I-16, art. 61(27).
^[44] The Insolvent Act of 1864 (1864) 27-28 Vict., c. 17, art. 1.
^[45] For example, while there may be doubt as to the meaning of the word "bankruptcy" in articles 327 and 2175(2) C.C.Q., it is clear that in articles 1635 and 2990, the reference is to bankruptcy within the meaning of the federal statute.
^[46] See for example In re Normandin: Inns v. Dominion Structural Steel Ltd., [1959] B.R. 14, 19.
^[47] Queen v. Chandler, supra note 7.
^[48] A. Bohémier, op. cit., note 3, p. 128 et seq.See also Edgar v. Central Bank, (1888-89) 15 Ont. App. Rep. 193, 201; Johnson v. Poyntz, (1880-81), 14 N.S.R. 193 (N.S.C.A.); Gould v. Ryan, (1893-94) 26 N.S.R. 461.
^[49] A.G. for Ontario v. A.G. for the Dominion of Canada, [1894] A.C. 189, 201; I Olmsted 304, 315, usually cited as the "Assignment Case". It is true that some have subsequently doubted the merits of that decision (Reference re the validity of the Orderly Payment of Debts Act, 1959) [1960] S.C.R. 571) but the rules it states appear totally valid to me. See Robinson v. Countrywide Factors Ltd., supra note 22, 808.
^[50] These provisions were contained in articles 763 to 780 and articles 797 to 815 of the Code of Civil Procedure of 1867.
^[51] A. Bohémier, op. cit., note 3, p. 133.
^[52] Robinson v. Countrywide Factors, supra note 22, at p. 804.
^[53] Id., 804; see also In re Harte and the Ontario Express and Transportation Company, (1893) O.R. 510, pp. 513 and 514.
^[54] P.W. Hogg, op. cit., note 3, p. 431.
^[55] A. Bohémier, op. cit., note 3, pp. 279 and 280.
^[56] See supra, p. 28.
^[57] See section 146 B.I.A.; In re Gingras Automobile Ltée, [1962] S.C.R. 676.
^[58] In this paper, bankruptcy is to be understood within the meaning of the federal legislation and not as in article 17(23) C.C.L.C.
^[59] P.W. Hogg, op. cit., note 4, p. 431.
^[60] Insolvent Act of 1864, supra note 44, art. 8(6).
^[61] Insolvent Act of 1869, 32-33, Vict., c. 16, s. 91.
^[62] Bankruptcy Act, see 1927 R.S.C., c. 11, s. 58.
^[63] A. Bohémier, op. cit. , note 3, p. 279 et eq.
^[64] A. Bohémier, op. cit. note 3, p. 215.
^[65] Note that, beginning in 1924, a similar right was given by the Civil Code of Lower Canada to the supplier of materials.
^[66] Note that the rights of the unpaid seller originated in articles 176 and 177 of the Coutume de Paris. Article 12 of The Insolvent Act, 1864 provided that these rights had to be exercised within 15 days of delivery in the case of insolvency.
^[67] Workers' Compensation Board v. Husky Oil Operations Ltd., supra, p. 26 of the unreported decision.
^[68] Id., p. 26, from Gonthier J.'s opinion.
^[69] In this respect, the same would be true of article 17(23), which is related.
^[70] Robinson v. Countrywide Factors, supra note 22, pp. 806-807.
^[71] This was the procedure used under the 1864 bankruptcy legislation in declaring the compulsory bankruptcy of a debtor. With the exception of assignment, this provision may have become partially inoperative, since the procedure it concerns has disappeared.
^[72] On the legislative history of these provisions, see Gingras v. General Motors of Canada Ltd., [1978] S.C.R.426, at pp. 433 to 435.
^[73] Id., p. 435.
^[74] Robinson v. Countrywide Factors, supra note 21, p. 806.
^[75] Subject to article 803(2), which explicitly concerned bankruptcy proceedings.
^[76] See supra, p. 573.
^[77] Robinson v. Countrywide Factors, supra note 22, p. 807.
^[78] See Promoteurs Inc. (Re), S.C., reported in Recueil de Jurisprudence, Droit de la faillite, Éditions Thémis, 1991, p. 789.
^[79] Albert Bohémier and Brigitte Lefebvre,"La faillite et le patrimoine familial", (1994) R.J.T. 367, at p. 369, see note 3.

Date modified:: 2025-07-31

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