In re The Bankruptcy of General Fireproofing Co. of Canada Ltd.

In re The Bankruptcy of General Fireproofing Co. of Canada Ltd.

The Court held that provincial statutory rights to collect municipal business taxes and municipal utility charges under the Ontario Assessment Act (s.112(11)) are liens or charges preserved by s.125 of the Bankruptcy Act and therefore the City of Toronto and the Toronto Electric Commissioners rank in priority after the Provincial Treasurer; the landlord's statutory preferential lien under Ontario law (Landlord and Tenant Act s.37) is preserved by s.126 but ranks after the municipality under provincial law; custodian/trustee costs and Workmen's Compensation are next under s.121; the Dominion's sales tax lacks a lien and is subject to Bankruptcy Act priorities (s.188), so it ranks only...

Citation
[1937] SCR 150
Parties
Bankrupt (debtor): General Fireproofing Company of Canada Ltd.; Provincial Tax Claimant: Treasurer of the Province of Ontario; Municipal Tax Claimant: City of Toronto; Municipal Utility Claimant: Toronto Electric Commissioners; Landlord: Gibson Bros. Ltd.; Trustee/custodian: Trustee in bankruptcy; Statutory Creditor: Workmen's Compensation Board (Ontario); Federal Tax Claimant: Attorney-General of Canada / Minister of National Revenue
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
2 February 1937
Procedural Posture
Bankruptcy and Insolvency Appeal / Appeal to Supreme Court of Canada From Ontario Court of Appeal (special Leave)
Outcome
Appeal allowed in part and Court of Appeal judgment varied; priorities among claimants fixed by Supreme Court.
Legal Topics
Priority of Claims, Statutory Liens and Charges, Municipal Taxation, Landlord Preferential Lien, Trustee's Costs and Fees, Crown Prerogative, Ultra Vires/severability
Source Language
English
Bankruptcy and Insolvency Taxation Property Law Administrative Law Costs Priority of Claims Statutory Liens and Charges Municipal Taxation +4 more

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Parties

General Fireproofing Company of Canada Ltd.

Bankrupt (debtor)

Treasurer of the Province of Ontario

Provincial Tax Claimant

City of Toronto

Municipal Tax Claimant

Toronto Electric Commissioners

Municipal Utility Claimant

Gibson Bros. Ltd.

Landlord

Trustee in bankruptcy

Trustee/custodian

Workmen's Compensation Board (Ontario)

Statutory Creditor

Attorney-General of Canada / Minister of National Revenue

Federal Tax Claimant

Procedural Posture

Bankruptcy and Insolvency Appeal / Appeal to Supreme Court of Canada From Ontario Court of Appeal (special Leave)

Legal Issues

  1. 1 Whether municipal business taxes and hydro charges rank ahead of landlord and trustee claims in bankruptcy
  2. 2 Whether s.112(11) of the Ontario Assessment Act (including 1922 amendment) validly gives priority against trustees in bankruptcy or is severable
  3. 3 Nature and priority of landlord's preferential lien under Ontario law and effect of s.126 of the Bankruptcy Act

Ratio Decidendi

The Court held that provincial statutory rights to collect municipal business taxes and municipal utility charges under the Ontario Assessment Act (s.112(11)) are liens or charges preserved by s.125 of the Bankruptcy Act and therefore the City of Toronto and the Toronto Electric Commissioners rank in priority after the Provincial Treasurer; the landlord's statutory preferential lien under Ontario law (Landlord and Tenant Act s.37) is preserved by s.126 but ranks after the municipality under provincial law; custodian/trustee costs and Workmen's Compensation are next under s.121; the Dominion's sales tax lacks a lien and is subject to Bankruptcy Act priorities (s.188), so it ranks only...

Court Disposition

Appeal allowed in part and Court of Appeal judgment varied; priorities among claimants fixed by Supreme Court.

Orders

  • No costs for or against any party in this Court or in the Court of Appeal except: trustee shall have his costs, as between solicitor and client, of the appeals to this Court to be paid out of the estate; Attorney-General of Canada and the Minister of National Revenue shall remain liable to pay to the trustee, to the...