This motion concerns the taxation of three bankrupt estates following negative comments from the Office of the Superintendent of Bankruptcy (OSB).
The OSB challenged the trustee's practice of obtaining "GST Refund Assignment" agreements from bankrupts to retain Goods and Services Tax (GST) refunds for estate administration costs or conditional orders.
The trustee argued these agreements, if properly worded and understood by the bankrupt, could waive the exempt status of GST refunds, citing *Re McIntyre*.
The court disagreed, finding such agreements unenforceable as GST refunds are Crown debts not assignable under the *Financial Administration Act* and are expressly excluded from divisible property under the *Bankruptcy and Insolvency Act* (BIA) and its Rules when a dividend is available to creditors.
The court held that statutory law cannot be circumvented by contractual agreements, requiring the trustee to return the GST refunds to the bankrupts and restate the estate accounts.
