Jeffrey Oliver

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.

The appellants, a provincial energy regulator and an orphan well association, appealed from a decision holding that provincial oil and gas licensing obligations could not be enforced against a trustee in bankruptcy because they conflicted with the federal Bankruptcy and Insolvency Act.

The majority of the Supreme Court allowed the appeal, holding that the regulator's use of its statutory powers to enforce end-of-life abandonment and reclamation obligations did not create an operational conflict or frustration of purpose with the BIA.

The majority found that s. 14.06(4) of the BIA shields trustees only from personal liability, not the liability of the bankrupt estate, and that a bona fide public regulator enforcing public duties is not a creditor asserting a claim provable in bankruptcy.

Moldaver and Côté JJ. dissented, finding a genuine operational conflict and frustration of purpose under both branches of the paramountcy test, and that the Abitibi three-part test for provable claims was satisfied.