Francine Côté

The appellant general contractor subcontracted masonry work to a company that subsequently went bankrupt.

Relying on a clause in the general contract, the appellant paid a supplier of the bankrupt subcontractor directly, rather than paying the balance owed to the respondent trustee in bankruptcy.

The trustee sued for the balance.

The Supreme Court of Canada held that the direct payment clause could not be invoked after the bankruptcy to bypass the trustee, as the debt had vested in the trustee under the Bankruptcy Act.

The appeal was dismissed.

The appellants challenged the validity of the Pacific Pilotage Regulations, specifically provisions that conditioned exemptions and waivers from compulsory pilotage on a ship being registered in Canada or the United States.

The Supreme Court of Canada held that the regulations were not invalid due to conflict of interest or bias.

However, the Court found that conditioning exemptions on a ship's flag was not relevant to safety and was therefore ultra vires the Authority's regulation-making power under the Pilotage Act.

The Court concluded that the invalid words relating to ship registration could be severed from the rest of the regulations.