In the Matter of the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 and the Business Corporations Act, R.S.O. 1990, c. B.-16 And in the Matter of a Proposed Plan of Arrangement Amongst the Ottawa Senators Hockey Club Corporation et al. The Attorney General of Canada v. Fleet National Bank et al. [Indexed as: Ottawa Senators Hockey Club Corp. (Re)]
73 O.R. (3d) 737
[2005] O.J. No. 9
Docket: C41805
Court of Appeal for Ontario,
Laskin, MacPherson and Lang JJ.A.
January 6, 2005
Bankruptcy and insolvency -- Companies' Creditors Arrangement Act -- Priorities -- Federal Crown not having priority with respect to penalties and interest charged as result of failure to remit payroll deductions under Income Tax Act, Canada Pension Plan and Employment Insurance Act -- Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, ss. 18.2, 18.3, 18.4 -- Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 227 -- Canada Pension Plan, R.S.C. 1985, c. C-8 -- Employment Insurance Act, S.C. 1996, c. 23.
Bankruptcy and insolvency -- Companies' Creditors Arrangement Act -- Priorities -- Federal Crown having priority in relation to failure to remit Goods and Services Tax ("GST") -- Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, ss. 18.3, 18.4(1) -- Excise Tax Act, R.S.C. 1985, c. E-15, s. 222.
Statutes -- Interpretation -- Doctrine of implied exception - Companies' Creditors Arrangement Act -- Priorities -- Federal Crown having priority in relation to failure to remit Goods and Services Tax ("GST") -- "Generalia specialibus non derogant" maxim not applying -- "Notwithstanding any other enactment" language in later and general statute prevailing over same language in earlier and more specific statute -- Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, s. 18.3 -- Excise Tax Act, R.S.C. 1985, c. E-15, ss. 222 (1), (3).
The Ottawa Senators Hockey Club Corporation and several related companies (collectively, the "Senators") were declared to be debtor companies to which the Companies' Creditors Arrangement Act ("CCAA") applied. In the CCAA proceedings, the Minister of National Revenue (the "Crown") claimed priority for interest and penalties on account of unremitted payroll source deductions under the Income Tax Act ("ITA"), the Canada Pension Plan ("CPP") and the Employment Insurance Act ("EIA"). The Crown also claimed priority for unremitted GST and for interest and penalties under the Excise Tax Act ("ETA"). The Crown's claims to priority were disputed by Canadian Imperial Bank of Commerce and Fleet National Bank. On motion, Chadwick J. held that the Crown did not have priority. Excepting the finding that the Crown did not have priority with respect to GST interest and penalties, the Crown appealed. [page738]
Held, the appeal should be dismissed with respect to penalties and interest under the ITA, CPP, and EIA; the appeal should be allowed with respect to unremitted GST payments under the ETA.
Section 18.3 of the CCAA does not provide any special priority to the Crown for interest and penalties; therefore, the provisions of s. 18.4 would apply and the Crown would rank as an unsecured creditor regarding the penalty and interest. Although the Crown accepted this conclusion, it contended that Chadwick J. erred by not considering s. 18.2(1) of the CCAA. However, the appeal did not provide a proper forum to address this issue on the merits for three reasons. First, there was a real possibility that this issue was not argued before the motion judge. Second, the motion record was inadequate to properly consider the Crown's argument relating to s. 18.2 of the CCAA. Third, and much less significantly, there was, at most, $93,961.95 to potentially respond to the Crown's claim. Accordingly, the appeal should be dismissed with respect to penalties and interest under the ITA, CPP and EIA.
The appeal should be allowed with respect to unremitted GST payments under the ETA. The issue here was a conflict between provisions in two federal statutes, s. 18.3(1) of the CCAA, which was a specialized statute, and s. 222 of the ETA, which was a statute of general application. Section 18.3 of the CCAA was enacted on September 30, 1997; ss. 222(1) and (3) of the ETA were enacted on October 20, 2000. The effect of s. 18.3(1) of the CCAA was that GST amounts that are deemed to be a trust under the ETA would only be considered as trust property if they constituted a trust at common law or in equity, which the Crown conceded was not the case. However, s. 222(3) of the ETA stated the opposite. It provided that if an amount is deemed under s. 222(1) to be held in trust for the Crown and is not remitted according to the ETA, property of the debtor in an amount of equal value is deemed to be held in trust for the Crown and does not form a part of the property of the debtor. The conflict could not be resolved by the trumping words that are often found in statutes because both statutes contain such words: "notwithstanding any provision in federal or provisional legislation" in s. 18.3(1) of the CCAA, and "Despite . . . any other enactment of Canada (except the Bankruptcy and Insolvency Act)" in s. 222(3) of the ETA.
Chadwick J. resolved the conflict by applying the maxim of statutory construction of implied exception, under which the more specific CCAA provision would be removed from the ambit of the more general provision (generalia specialibus non derogant). His conclusion, however, was wrong for two reasons. First, the overarching rule of statutory interpretation is that statutory provisions should be interpreted to give effect to the intention of the legislature in enacting the law. This primary rule takes precedence over all maxims or canons or aids relating to statutory interpretation, including the maxim that the specific prevails over the general. The BIA and the CCAA are closely related federal statutes. It was not conceivable that Parliament would specifically identify the BIA as an exception, but accidentally fail to consider the CCAA as a possible second exception. The omission of the CCAA from s. 222(3) of the ETA was almost certainly a considered omission. Second, the motion judge erred in his treatment of the Supreme Court of Canada's decision in Doré v. Verdun (City), which, like this appeal, involved two statutes, both of which contained "notwithstanding any other enactment" provisions. The Doré judgment was authority that the "notwithstanding any other enactment" language in a later and general statute prevails over the same language in an earlier and more specific statute. Ordinary rules of interpretation hold that general statutes are set aside by subsequent general legislation, even without a "notwithstanding clause". Therefore, the only possible interpretation of "notwithstanding any inconsistent provision" is that it applies to prior special legislation, which would [page739] otherwise have precedence. By virtue of the rule of effectivity, such a clause must be construed as applying to prior special legislation. The decision in Doré was binding and the reasoning in the case dictated that the deemed trust provision of the ETA apply in CCAA proceedings, notwithstanding ss. 18(3) of the CCAA.
APPEAL from a judgment of Chadwick J. (2003), 2003 7010 (ON SC), 68 O.R. (3d) 603, [2003] O.J. No. 5201 (S.C.J.).
Cases referred to Canada v. Williams, 1944 51 (SCC), [1944] S.C.R. 226, [1944] 3 D.L.R. 225; Doré v. Verdun (City), 1997 315 (SCC), [1997] 2 S.C.R. 862, [1997] S.C.J. No. 69, 150 D.L.R. (4th) 385, 215 N.R. 81; Gauntlet Energy Corp. (Re) (2003), 352 A.R. 28, [2004] 10 W.W.R. 180, 49 C.B.R. (4th) 213, 2003 ABQB 894, 30 Alta. L.R. (4th) 192, [2003] A.J. No. 1504 (Q.B.); Solid Resources Ltd. (Re), [2002] A.J. No. 1651, 40 C.B.R. (4th) 219 (Q.B.) Statutes referred to Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 Canada Pension Plan, R.S.C. 1985, c. C-8 Cities and Towns Act, R.S.Q., c. C-19 Civil Code of Quebec, S.Q. 1991, c. 64 Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, ss. 4, 5, 6 [as am.], 18.2 [as am], 18.3 [as am.], 18.4 [as am.] Employment Insurance Act, S.C. 1996, c. 23 Excise Tax Act, R.S.C. 1985, c. E-15, s. 222 [as am.] Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), ss. 224(1.2), 227 [as am.] Authorities referred to Cote, P.-A., The Interpretation of Legislation in Canada, 3rd ed. (Scarborough: Carswell, 2000)
Roger Leclaire and April Tate, for appellant Attorney General of Canada. Kevin P. McElcheran, for respondent Canadian Imperial Bank of Canada. John A. MacDonald, for respondent Fleet National Bank.
The judgment of the court was delivered by
MACPHERSON J.A.: --
A. Overview
[1] This appeal arises out of a recent financial crisis experienced by the Ottawa Senators, a National Hockey League franchise. The dispute which gave rise to the litigation involves the Minister of National Revenue on one side and Canadian Imperial Bank of Commerce ("CIBC") and Fleet National Bank ("Fleet") on the other side.
[2] Specifically, the appellant, the Attorney General of Canada representing the Minister of National Revenue ("the Crown"), [page740] appeals a decision of Justice James Chadwick dated December 19, 2003, in which he held, inter alia, that:
(1) the Crown does not have priority over the respondent banks with respect to penalties and interest on deemed trust amounts required to be deducted from employees' wages; and
(2) the Crown does not have priority over the respondent banks with respect to the Goods and Services Tax ("GST") collected by the hockey team on behalf of the Crown but not remitted to the Receiver General.
B. Facts
(1) The parties and the events
[3] On the ice, with players like Daniel Alfredsson, Zdeno Chara and Wade Redden, the Ottawa Senators are a skilled and successful National Hockey League team.
[4] Off the ice, the story is different. For many years, the Ottawa Senators have been mired in serious financial difficulties, which reached crisis proportions in late 2002. Two of its major secured creditors were CIBC and Fleet, which were owed $40 million and $20 million respectively.
[5] On January 9, 2003, Chadwick J. made an order declaring the Ottawa Senators Hockey Club Corporation and several related companies (collectively, the "Senators") to be debtor companies to which the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 (the "CCAA") applied.
[6] Chadwick J. appointed PricewaterhouseCoopers Inc. (the "Monitor") as monitor and ordered the Senators to prepare and file a plan of arrangement or compromise under the CCAA. He also imposed a stay of proceedings, including enforcement proceedings by any government against the Senators.
[7] Initially, the Monitor explored a restructuring proposal advanced by the Bryden Group. When these negotiations foundered, the Monitor embarked on a process of selling the Senators' assets, which was authorized by para. 39 of the court order.
[8] On May 7, 2003, the Monitor filed its Fourth Report to the Court (the "Report"), in which it recommended the sale of the Senators to Capital Sports & Entertainment Inc. for $100 million. Attached as Appendix A of this report was a proposed Schedule of Interim Distribution as of Closing, including $25.7 million to CIBC and $12.8 million to Fleet, which was about two-thirds of the amounts they were owed by the Senators. [page741]
[9] In addition, the Monitor recommended that $2 million be set aside for distribution on the "CCRA Claim", which was the potential claim of the Canada Customs and Revenue Agency on account of unremitted payroll source deductions and GST, as well as interest and penalties, all for the month of December 2002. The Monitor described this component of its proposed distribution in the Report in this fashion:
In addition to the secured debt, the balance sheet prepared by Management as of February 28, 2003 indicates there is approximately $1.9 million owed to CCRA for amounts which may have priority to all of [the Senators'] secured and unsecured creditors.
[10] On May 9, 2003, Chadwick J. made an order under the CCAA and "In the Matter of a Proposed Plan of Arrangement" approving the sale of the Senators. The order provided:
- THIS COURT ORDERS that the Fourth Report of the Monitor and the activities of the Monitor as set out in the Fourth Report, including the Schedule of Interim Distribution set forth in Appendix "A" to the Fourth Report, be and are hereby ratified and approved.
(2) The litigation
[11] The Crown and the banks qua secured creditors agreed that the Crown was entitled to receive $1,718,567.80 from the sale proceeds. This amount represented collected but unremitted payroll source deductions to which the Crown was entitled under various deemed trust provisions in the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (the "ITA"), the Canada Pension Plan, R.S.C. 1985, c. C-8 (the "CPP"), and the Employment Insurance Act, S.C. 1996, c. 23 (the "EIA").
[12] Unfortunately, the parties disagreed about whether the Crown's claim for interest and penalties on account of unremitted payroll source deductions under the above-noted statutes takes priority over the claims of secured creditors. The amount in dispute in this category is $196,709.14.
[13] The parties also disagreed about whether the Crown's claim for unremitted GST, interest and penalties, collected under the Excise Tax Act, R.S.C. 1985, c. E-15 (the "ETA"), takes priority over the claims of secured creditors. The amount in dispute in this category is $187,470.25.
[14] The Crown brought the matter before Chadwick J. by way of a motion. The motion judge reviewed the many statutory provisions in issue and the leading case authorities and reached these conclusions:
(1) The Crown does not have priority over the banks with respect to penalties and interest on deemed trust amounts required to be deducted from employees' wages; and [page742]
(2) The Crown does not have priority over the banks with respect to unremitted GST, penalties and interest.
[15] The Crown appeals the motion judge's decision in (1) and his decision in (2) relating to unremitted GST. The Crown does not appeal the motion judge's decision in (2) relating to penalties and interest on unremitted GST.
[16] For the reasons that follow, I would dismiss the appeal with respect to (1) and allow the appeal with respect to (2).
C. Issues
[17] The issues are:
(1) Did the motion judge err in holding that the Crown does not have priority over secured creditors in CCAA proceedings with respect to penalties and interest on deemed trust amounts required to be deducted from employees' wages by the ITA, CPP and ETA?
(2) Did the motion judge err in holding that the Crown does not have priority over secured creditors in CCAA proceedings with respect to unremitted GST collected under the ETA?
D. Analysis
(1) Penalties and interest on unremitted deductions from employees' wages
[18] The motion judge delivered careful and comprehensive reasons for judgment. On this first issue, he considered the relationship between s. 227 of the ITA and ss. 18.3 and 18.4 of the CCAA. He concluded [at p. 608 O.R.]:
In my view, s. 18.3 does not provide any special priority to the Crown for interest and penalties and therefore the provisions of s. 18.3(4) [sic, s. 18.4] would apply. There does not appear to be any provisions in s. 18.4 which would exempt the Crown or change their priority as such they would rank as unsecured creditors regarding the penalty and interest. The Crown may have other remedies pursuant to s. 227.1(1) of the Income Tax Act.
[19] The Crown does not contest this analysis and conclusion. However, the Crown contends that the motion judge erred by not considering s. 18.2(1) of the CCAA, which provides:
18.2(1) If an order contains a provision authorized by subsection 11.4(1), unless Her Majesty consents, no compromise or arrangement shall be sanctioned by the court that does not provide for the payment in full to Her Majesty in right of Canada or a province, within six months after court sanction [page743] of the compromise or arrangement, of all amounts that were outstanding at the time of the application for an order under section 11 and that are of a kind that could be subject to a demand under
(a) subsection 224(1.2) of the Income Tax Act;
(b) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee's premium, or employer's premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts;
[20] The Crown contends that the sale of the Senators, approved by the court on May 9, 2003, was a compromise or arrangement within the meaning of s. 18.2(1) of the CCAA and that penalties and interest were payments that "could be subject to a demand" under s. 224(1.2) of the ITA and companion provisions in the CPP and EIA. Accordingly, the court could not sanction the sale without providing for payment in full of penalties and interest, in addition to the amounts actually collected from employees' wages.
[21] I do not believe that this appeal provides a proper forum to address this issue on the merits. I say this for three reasons.
[22] First, there is a real possibility that this issue was not argued before the motion judge. Two of three appeal counsel were also counsel on the motion; one thinks the argument was advanced, the other does not. I accept, absolutely, the honesty of both counsel. However, I note that the motion record filed by the Crown listed several statutory provisions on which the Crown would rely; s. 18.2 of the CCAA was not one of them. Moreover, the Crown factum was written almost entirely in terms of an argument grounded in s. 18.3 of the CCAA; there is but a single reference, in a 20-page factum, to s. 18.2. Not surprisingly, the bank's responding factum dealt exclusively with the Crown's extended argument relating to s. 18.3 of the CCAA.
[23] In addition, I observe that the motion judge engaged in an extensive analysis of s. 18.3 of the CCAA and a particularly full consideration of the GST issue. It is difficult for me to accept that he would completely ignore the argument grounded in s. 18.2 of the CCAA if it was squarely advanced before him.
[24] Second, we are hampered on this issue by an inadequate motion record which makes it difficult to properly consider the Crown's argument relating to s. 18.2 of the CCAA.
[25] The core of the Crown's argument is that a sale of the assets of a company is a compromise or arrangement that triggers the application of s. 18.2 of the CCAA. The words "compromise" [page744] and "arrangement" first appear in ss. 4 and 5 of the CCAA (they are not defined in the Act). Section 5 relates to secured creditors, such as the banks in this case, and provides:
- Where a compromise or an arrangement is proposed between a debtor company and its secured creditors or any class of them, the court may, on the application in a summary way of the company or of any such creditor or of the trustee in bankruptcy or liquidator of the company, order a meeting of the creditors or class of creditors, and, if the court so determines, of the shareholders of the company, to be summoned in such manner as the court directs.
[26] It can be seen that this provision ties together a compromise or an arrangement with a formal meeting of creditors. Section 6 of the CCAA then mandates an additional step, namely a sanctioning by the court of a compromise or arrangement if it is approved by a majority vote, representing two-thirds in value, of the creditors or class of creditors.
[27] In this appeal, the Crown asserts that a sale can be a compromise or an arrangement, and that a formal meeting of creditors to vote on it is irrelevant. The banks take the opposite position; they submit that the motion judge was not asked to approve a compromise or arrangement and therefore could ignore s. 18.2 of the CCAA.
[28] I think that the record that was before the motion judge provides an inadequate foundation on which to resolve these rather bald and opposing assertions. The Crown motion record consisted of a brief seven-paragraph affidavit from Brian Murphy, a research officer with the Canada Customs and Revenue Agency. There is nothing in this affidavit indicating whether the formal process for approval of a compromise or arrangement, as set out in ss. 4, 5 and 6 of the CCAA, was followed in this case. Without knowing whether the formal process was followed, I do not think that the motion judge, or this court, could engage in a proper analysis grounded in s. 18.2 of the CCAA.
[29] Third, and less significantly, I note that the Crown's claim on this issue is for $196,709.14. I observe that the court's order dated May 9, 2003 confirmed a proposed distribution to the Crown for "CCRA Claims" of $2 million. This component of the order was not appealed.
[30] On consent, the Crown has already received $1,718,567.80 pursuant to various statutory deemed trusts. In addition, my proposed disposition of the GST issue on this appeal would result in the Crown receiving an additional $187,470.25. These two amounts total $1,906,038.05. This means that there is, at most, $93,961.95 to potentially respond to the Crown's claim for $196,709.14. I confess that this is not a large factor in my mind, [page745] however, I am comforted in the knowledge that my unease about deciding a difficult legal issue without the benefit of a full record, and probably where the issue was not raised before the motion judge, appears to implicate much less money than the Crown asserts.
(2) Unremitted GST payments
[31] The second issue in this appeal arises out of a clear conflict between provisions in two federal statutes, s. 18.3(1) of the CCAA and s. 222(3) of the ETA.
[32] Section 18.3(1) of the CCAA provides:
18.3(1) . . . [N]otwithstanding any provision in federal or provincial legislation that has the effect of deeming property to be held in trust for Her Majesty, property of a debtor company shall not be regarded as held in trust for Her Majesty unless it would be so regarded in the absence of that statutory provision.
(Emphasis added)
[33] Section 222(1) of the ETA provides that every person who collects GST is deemed for all purposes to hold the amount in trust for the Crown, despite any security interest held by others. Section 222(3) provides:
222(3) Despite any other provision of this Act (except subsection (4)), any other enactment of Canada (except the Bankruptcy and Insolvency Act), any enactment of a province or any other law, if at any time an amount deemed by subsection (1) to be held by a person in trust for Her Majesty is not remitted to the Receiver General or withdrawn in the manner and at the time provided under this Part, property of the person and property held by any secured creditor of the person that, but for a security interest, would be property of the person, equal in value to the amount so deemed to be held in trust, is deemed
(a) to be held, from the time the amount was collected by the person, in trust for Her Majesty, separate and apart from the property of the person, whether or not the property is subject to a security interest, and
(b) to form no part of the estate or property of the person from the time the amount was collected, whether or not the property has in fact been kept separate and apart from the estate or property of the person and whether or not the property is subject to a security interest
and is property beneficially owned by Her Majesty in right of Canada despite any security interest in the property or in the proceeds thereof and the proceeds of the property shall be paid to the Receiver General in priority to all security interests.
(Emphasis added)
[34] The effect of s. 18.3(1) of the CCAA is that GST amounts that are deemed to be a trust under the ETA would, under the [page746] terms of the CCAA, only be considered as trust property if they constituted a trust at common law or in equity. The banks submit that GST amounts do not constitute trust property at common law or in equity. The Crown does not contend otherwise.
[35] Section 222(3) of the ETA states the opposite. It provides that if an amount is deemed under s. 222(1) to be held in trust for the Crown and is not remitted according to the ETA, property of the debtor in an amount of equal value is deemed to be held in trust for the Crown and does not form a part of the property of the debtor. Such property is considered to be beneficially owned by the Crown and the proceeds of the property are to be paid to the Receiver General in priority to all other security interests.
[36] Two other features of the ETA and CCAA provisions should be noted because they relate to well-known aids for the interpretation of statutes. The ETA is a statute of general application; the CCAA is a much more specialized statute. Section 18.3 of the CCAA was enacted on September 30, 1997; ss. 222(1) and (3) of the ETA were enacted on October 20, 2000.
[37] The conflict cannot be resolved by the trumping words that are often found in statutes because both statutes contain such words: "notwithstanding any provision in federal or provisional legislation" in s. 18.3(1) of the CCAA, and "Despite . . . any other enactment of Canada (except the Bankruptcy and Insolvency Act)" in s. 222(3) of the ETA.
[38] The motion judge resolved the conflict in favour of the CCAA. In so doing, he declined to follow two decisions of the Alberta Court of Queen's Bench that gave precedence to the ETA: Re Solid Resources Ltd., [2002] A.J. No. 1651, 40 C.B.R. (4th) 219 (Q.B.), and Re Gauntlet Energy Corp., 2003 ABQB 894, [2003] A.J. No. 1504, 352 A.R. 28 (Q.B.).
[39] The motion judge carefully reviewed the words in the two provisions, various maxims of statutory construction, the policy underlying the CCAA, the two decisions of superior court judges in Alberta and, especially, a highly relevant decision of the Supreme Court of Canada in Doré v. Verdun (City), 1997 315 (SCC), [1997] 2 S.C.R. 862, [1997] S.C.J. No. 69.
[40] The two maxims of statutory construction considered by the motion judge were implied repeal (potential result -- the later ETA provision impliedly repealed the earlier CCAA provision), and implied exception (potential result -- the more specific CCAA provision should be removed from the ambit of the more general ETA provision). In the end, he opted for the latter interpretation. He concluded [at pp. 613-14 O.R.]:
The doctrine of implied exception has been used in the past to interpret provisions of the Companies' Creditors Arrangement Act and notwithstanding a decision of the Alberta Queen's Bench, I would apply the doctrine to the [page747] interpretation here. As such, the Crown will not be entitled to a super priority in relation to GST but would rank as an unsecured creditor in accordance with the provisions of s. [18.4] of the Companies' Creditors Arrangement Act.
[41] With respect, I do not agree with the motion judge's conclusion on this issue, essentially for two reasons.
[42] First, the overarching rule of statutory interpretation is that statutory provisions should be interpreted to give effect to the intention of the legislature in enacting the law. This primary rule takes precedence over all maxims or canons or aids relating to statutory interpretation, including the maxim that the specific prevails over the general (generalia specialibus non derogant). As expressed by Hudson J. in Canada v. Williams, 1944 51 (SCC), [1944] S.C.R. 226, [1944] 3 D.L.R. 225, at p. 239 S.C.R.:
The maxim generalia specialibus non derogant is relied on as a rule which should dispose of the question, but the maxim is not a rule of law but a rule of construction and bows to the intention of the legislature, if such intention can reasonably be gathered from all of the relevant legislation.
See also: Pierre-André Côté, The Interpretation of Legislation in Canada, 3rd ed. (Scarborough: Carswell, 2000), at p. 361.
[43] The legislative intent of s. 222(3) of the ETA is clear. If there is a conflict with "any other enactment of Canada (except the Bankruptcy and Insolvency Act)", s. 222(3) prevails. In these words Parliament did two things: it decided that s. 222(3) should trump all other federal laws and, importantly, it addressed the topic of exceptions to its trumping decision and identified a single exception, the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the "BIA"). The BIA and the CCAA are closely related federal statutes. I cannot conceive that Parliament would specifically identify the BIA as an exception, but accidentally fail to consider the CCAA as a possible second exception. In my view, the omission of the CCAA from s. 222(3) of the ETA was almost certainly a considered omission.
[44] Second, and again with respect, I think that the motion judge erred in his treatment of Doré. Doré, like this appeal, involved two statutes, both of which contained 'notwithstanding any other enactment' provisions. The provision in the Cities and Towns Act, R.S.Q., c. C-19 (the "CTA"), relating to the time (15 days) within which a person seeking damages for bodily injury caused by an accident had to serve notice on a defendant municipality was both earlier and more specific than the provision in the Civil Code of Quebec, S.Q. 1991, c. 64 (the "Civil Code"), which set out a three-year notice period for actions relating to bodily injuries.
[45] After an extensive review of both statutes and the relevant principles of statutory interpretation, Gonthier J., writing for a [page748] unanimous court, concluded that the later, but more general, provision in the Civil Code prevailed. He stated at p. 887 S.C.R.:
The appellant argued in this Court that s. 585 C.T.A., which states that the prior notice requirement is applicable"any provision of law to the contrary notwithstanding", must take precedence over art. 2930 C.C.Q., which is a general provision of the Civil Code. It based this argument on the rule of interpretation that subsequent general legislation is deemed not to derogate from a prior special Act ("generalia specialibus non derogant"). This argument cannot be accepted. The legislature has expressly given art. 2930 C.C.Q. precedence: "Notwithstanding any stipulation to the contrary". It has therefore specified that the subsequent general legislation derogates from the prior special Act. Accordingly, it is not necessary to rely on the "generalia specialibus non derogant" rule of interpretation in this case. In The Interpretation of Legislation in Canada, supra, Professor Côté stated the following on this point at pp. 299-300:
A variety of well-known terms is used. The statute will declare that it applies "notwithstanding" provisions to the contrary.
Ordinary rules of interpretation hold that general statutes are set aside by subsequent general legislation, even without a "notwithstanding clause". Therefore, the only possible interpretation of "notwithstanding any inconsistent provision" is that it applies to prior special legislation, which would otherwise have precedence. By virtue of the rule of effectivity such a clause must be construed as applying to prior special legislation. [Citation omitted.]
Thus, although both provisions in issue here provide that they take precedence, the more recent, art. 2930 C.C.Q., must prevail.
[46] In my view, the situation in the present appeal is identical to the one in Doré. Section 18.3(1) of the CCAA is earlier and more specific than s. 222(3) of the ETA. Both provisions contain "notwithstanding any other enactment" language. Accordingly, the analysis in the passage set out above compels a decision giving precedence to s. 222(3) of the ETA.
[47] The motion judge chose to distinguish Doré on the basis that there are special features of the Civil Code that contributed to the analysis in Doré. For example, at p. 874 S.C.R., Gonthier J. stated that "unlike statute law in the common law, the Civil Code is not a law of exception, and this must be taken into account in interpreting it." This observation, and other passages in Gonthier J.'s reasoning, led the motion judge to conclude [at p. 612 O.R.]:
One can conclude from these remarks, the court does not have to apply this method of interpretation in each case and must examine the legislation in question to determine the proper interpretation.
[48] With respect, I do not agree with this conclusion. There were two issues in Doré. The first related to the substantive [page749] meaning or content of the Civil Code provision. On this issue, Gonthier J. discussed in some detail the special nature of the Civil Code, including how it differed from statute law in the common law system.
[49] However, having determined the first issue, Gonthier J. turned to the second issue, resolving the conflict between the CTA and the Civil Code. On this issue, his analysis and conclusion, especially in the passage at p. 887 S.C.R. set out above, are succinct and clear. The "notwithstanding any other enactment" language in a later and general statute prevails over the same language in an earlier and more specific statute. Accordingly, I agree with LoVecchio J. who said in Gauntlet Energy at para. 17:
The decision in Doré is binding on me and the reasoning in the case dictates that the deemed trust provision of the ETA apply in CCAA proceedings, notwithstanding ss. 18(3) of the CCAA.
E. Disposition
[50] I would dismiss the appeal on the issue of penalties and interest relating to deductions from employees' wages under the ITA, CPP and EIA. I would allow the appeal on the issue of unremitted GST payments under the ETA.
[51] I would award costs to the appellant fixed at $5,000, inclusive of disbursements and GST.
Order accordingly.