Electric Motor & Machinery Co. Ltd. v. The Bank of Montreal

Electric Motor & Machinery Co. Ltd. v. The Bank of Montreal

Subsections (q) and (r) of s.191 of the Bankruptcy Act, read in their ordinary present tense and context, apply to false statements made by a person after he has been adjudged bankrupt or has made an authorized assignment; therefore false statements made prior to the authorized assignment did not constitute offences under s.191 for the purpose of s.16(2), and the Bankruptcy Court erred in refusing approval of the compromise solely on that ground.

Citation
[1932] SCR 634
Parties
Appellant / Debtor: Electric Motor & Machinery Co. Limited; Trustee: Georges Duclos; Respondent / Contestant: The Bank of Montreal
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
15 June 1932
Procedural Posture
Bankruptcy and Insolvency / Appeal to Supreme Court of Canada From Court of King’s Bench (quebec) on Refusal to Approve Proposal of Compromise
Outcome
Appeal allowed; judgment of the Court of King’s Bench reversed in part; matter remitted to the Bankruptcy Court for further adjudication
Legal Topics
Proposal of Compromise, False Statements in Writing, Statutory Interpretation, Section 16(2) and Section 191(q) and (r)
Source Language
English
Bankruptcy and Insolvency Proposal of Compromise False Statements in Writing Statutory Interpretation Section 16(2) and Section 191(q) and (r)

Case Brief

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Parties

Electric Motor & Machinery Co. Limited

Appellant / Debtor

Georges Duclos

Trustee

The Bank of Montreal

Respondent / Contestant

Procedural Posture

Bankruptcy and Insolvency / Appeal to Supreme Court of Canada From Court of King’s Bench (quebec) on Refusal to Approve Proposal of Compromise

Legal Issues

  1. 1 Whether subsections (q) and (r) of s.191 of the Bankruptcy Act apply to false statements made before adjudication of bankruptcy or authorized assignment
  2. 2 Whether the Bankruptcy Court was bound under s.16(2) to refuse approval of a compromise proposal because of alleged offences under s.191(q) and (r)

Ratio Decidendi

Subsections (q) and (r) of s.191 of the Bankruptcy Act, read in their ordinary present tense and context, apply to false statements made by a person after he has been adjudged bankrupt or has made an authorized assignment; therefore false statements made prior to the authorized assignment did not constitute offences under s.191 for the purpose of s.16(2), and the Bankruptcy Court erred in refusing approval of the compromise solely on that ground.

Court Disposition

Appeal allowed; judgment of the Court of King’s Bench reversed in part; matter remitted to the Bankruptcy Court for further adjudication

Orders

  • Appeal allowed with costs
  • Record remitted to the Bankruptcy Court to adjudicate the remaining objections of the contesting respondent and the advisability of approving the proposal for compromise