The appellant Crown challenged court-ordered super-priority priming charges granted to an interim lender, monitor, and directors in CCAA restructuring proceedings, arguing that its deemed trust for unremitted employee source deductions under s. 227(4.1) of the Income Tax Act took priority over those charges.
The majority dismissed the appeal, holding that s. 227(4.1) does not create a proprietary interest in specific debtor assets and that court-ordered super-priority charges under s. 11 of the CCAA are not security interests within the meaning of s. 224(1.3) of the ITA, so no conflict arises between the two statutes.
The concurring justices agreed there was no conflict but relied on the CCAA's remedial flexibility and s. 6(3)'s requirement that the Crown be paid in full under any plan of compromise.
Four justices dissented, concluding that Parliament's use of broad notwithstanding language in s. 227(4.1) granted the Crown's deemed trust absolute priority over all claims including CCAA priming charges.
The appeal was dismissed with costs, Abella, Moldaver, Brown and Rowe JJ. dissenting.
