The trustee in bankruptcy sought a declaration that provincial statutory provisions allowing the CSST and CCQ to demand payment from employers for unpaid assessments and wages owed by a bankrupt contractor were inapplicable in bankruptcy.
The Supreme Court of Canada held that the provincial provisions do not subvert the scheme of distribution under the Bankruptcy and Insolvency Act.
The Court distinguished the Quebec mechanisms, which rely on civil law subrogation and compensation, from the deemed debt and withholding mechanism struck down in Husky Oil.
The Court also clarified that equitable set-off does not apply in bankruptcy in Quebec, as the civil law of compensation is the suppletive law.
