Canada (Attorney General) v. National Bank of Canada, 2004 DTC 6527, 2004 FCA 92

Date: 20040305

                                                                                                                               Docket: A-626-02

Citation: 2004 FCA 92

CORAM:        DÉCARY J.A.

NOËL J.A.

NADON J.A.

BETWEEN

ATTORNEY GENERAL OF CANADA

Appellant

and

NATIONAL BANK OF CANADA

Respondent

Docket: A-627-02

BETWEEN:

ATTORNEY GENERAL OF CANADA

Appellant

and

CAISSE POPULAIRE D'AMOS

Respondent

Docket: A-628-02

BETWEEN:

ATTORNEY GENERAL OF CANADA

Appellant

and

CAISSE POPULAIRE DESJARDINS DE LEBEL-SUR-QUÉVILLON

Respondent

Docket: A-629-02

BETWEEN:

ATTORNEY GENERAL OF CANADA

Appellant

and

NATIONAL BANK OF CANADA

Respondent

Hearing held at Montréal, Quebec, on February 4, 2004.

Judgment delivered at Ottawa, Ontario, on March 5, 2004.

REASONS FOR JUDGMENT:                                                                                           NOËL J.A.

CONCURRING:                                                                                                            DÉCARY J.A.

                                                                                                                                      NADON J.A.

Date: 20040305

                                                                                                                               Docket: A-626-02

Citation: 2004 FCA 92

CORAM:        DÉCARY J.A.

NOËL J.A.

NADON J.A.

BETWEEN

ATTORNEY GENERAL OF CANADA

Appellant

and

NATIONAL BANK OF CANADA

Respondent

Docket: A-627-02

BETWEEN:

ATTORNEY GENERAL OF CANADA

Appellant

and

CAISSE POPULAIRE D'AMOS

Respondent

Docket: A-628-02

BETWEEN:

ATTORNEY GENERAL OF CANADA

Appellant

and

CAISSE POPULAIRE DESJARDINS DE LEBEL-SUR-QUÉVILLON

Respondent

Docket: A-629-02

BETWEEN:

ATTORNEY GENERAL OF CANADA

Appellant

and

NATIONAL BANK OF CANADA

Respondent

REASONS FOR JUDGMENT

NOËL J.A.

[1]         These are four appeals from decisions handed down by Mr. Justice Martineau on October 11, 2002, dismissing the appellant's actions to recover source deductions that were deducted and not remitted (A.G.C. v. National Bank of Canada, 2002 DTC 7468; A.G.C. v. National Bank of Canada, 2002 DTC 7477; A.G.C. v. Caisse Populaire Desjardins de Lebel-sur-Quévillon, 2002 DTC 7493; and A.G.C. v. Caisse Populaire d'Amos, 2002 DTC 7484).

[2]         Martineau J. dismissed each of the actions, essentially on the ground that the appellant had to comply with provincial law in order to give effect to the deemed trust mechanism created under subsections 227(4) and (4.1) of the Income Tax Act (the ITA) and subsection 86(2.1) of the Employment Insurance Act (the EIA) and had failed to do so.

Context

[3]         In each of the cases, the record indicates that movable hypothecs on property belonging to their respective debtors were registered by the respondents in the Register of Personal and Movable Real Rights.

[4]         The debtors had failed to repay the loans guaranteed by these hypothecs. They had also failed to remit to the tax authorities the amounts withheld from the salaries paid to their employees.

[5]         Subsections 227(4) of the ITA and 86(2) of the EIA stipulate that every person who deducts or withholds any amount under these Acts is deemed to hold the amount in trust for Her Majesty. Subsections 227(4.1) of the ITA and 86(2.1) of the EIA provide that where the amount is not paid, this trust extends as well to the property of the person, including property held by a secured creditor which, absent such secured interest, would be that of the person, and stipulate that the Receiver General "shall be paid" in priority out of the proceeds of such property.

[6]         The full text of these provisions reads as follows:

Income Tax Act

Employment Insurance Act

[7]         The respondents appear to acknowledge that they are "secured creditors" within the meaning of subsection 224(1.3):

[8]         After complying with the relevant provisions of the Civil Code of Québec and the Code of Civil Procedure, the respondents seized, took in payment or obtained by surrender the movable property secured by their movable hypothec and they eventually received the proceeds of their sale on account of their claim.

[9]         In the case of the Banks, they were the ones that made the sale after taking the property in payment pursuant to a forced surrender judgment in docket A-626-02 and after a voluntary surrender in docket A-629-02.

[10]       In the case of the Caisse populaire d'Amos, the sale was made by judicial authority pursuant to a judgment granting the forced surrender and leave to sell by agreement. In the case of the Caisse populaire Lebel-sur-Quévillon, the sale was made by bailiff after the Caisse seized the property subject to its movable hypothec pursuant to a judgment against its debtor.

[11]       Under subsection 227(4.1) of the ITA and subsection 86(2.1) of the EIA, the appellant gave formal notice to the respondents to pay the Receiver General the proceeds from the sale of the property subject to their security interest up to the amount of the source deduction "[translation] withheld but not remitted" by the tax debtors. In the case of the National Bank of Canada (docket A-629-02), two such notices were given.

[12]       The four respondents ignored these notices, and recovery proceedings were commenced by way of a simplified action in the Trial Division of the Federal Court. The statements of claim filed in support of these actions allege in each of the cases the failure to pay to the Receiver General the proceeds from the sale of the property in violation of the provisions of subsections 227(4.1) of the ITA and 86(2.1) of the EIA, and ask that the respondents be ordered to pay the proceeds of sale to the extent of the amounts withheld and not remitted by their respective debtors.

[13]       On October 11, 2002, Martineau J. dismissed these actions, citing in support a hundred or so unnumbered "whereases", which were repeated in each of the cases with a few minor variations reflecting their particular facts.

Decision under appeal

[14]       Since "the federal provisions do not indicate the manner or specific procedure whereby Her Majesty may assert her beneficial ownership", the provincial provisions must be followed as they are "neither contrary to nor inconsistent with the federal provisions, and do not prevent Her Majesty exercising her beneficial right and relying on her preferred claim". Accordingly, since the appellant has not become a party to the provincial proceedings brought by the respondents, the latter retain their title to the property taken in payment, seized or surrendered, and to the proceeds of their sale. The notion of "beneficial ownership", which is unknown in Quebec, does not affect this result in any way.

[15]       Going one step further, Martineau J. cites the "Rule of Law" and finds that the provincial provisions must apply in this case.

[16]       The trial judge criticized the appellant not only for failing to challenge the proceedings undertaken by the respondents but also for failing to take steps against the recalcitrant debtors. Although the appellant explained, in files A-627-02 and A-628-02, that it is generally unable to take timely action, the judge criticized it for failing to prove that it was unable to act. He added that the Crown's inability to act should not bar the application of the provincial law.

[17]       Subsections 227(4.1) of the ITA and 86(2.1) of the EIA "[do] not as such confer any real right or right of pursuit over the property". The respondents, being "bona fide purchaser[s]", must be protected against personal actions brought against them by the appellant if we are to ensure certainty in commercial and legal transactions. If Parliament intends to hold third parties liable for the debts of others, it must do so clearly and explicitly.

[18]       Finally, the trial judge notes that "since the federal provisions indicate no deadline for asserting Her Majesty's beneficial ownership and priority claim, she should have asserted them within the deadlines" laid down in the provincial law.

Issues

[19]       According to my reading of the judgments that are under appeal and the submissions made by the parties, the Court must answer the following questions:

1.          Did the trial judge err in law by applying provincial law in a suppletive capacity to the federal scheme governing the appropriate procedure by the Crown in asserting its rights under subsection 227(4.1) of the ITA and subsection 86(2.1) of the EIA?

2.          Did the trial judge err in law in characterizing the respondents as bona fide purchasers, thereby excluding from the deemed trust the property they had taken in payment, seized or obtained by surrender?

Analysis and decision

[20]       To begin with the second question, I am of the opinion that the recent decisions of the Supreme Court of Canada provide a complete and definitive answer.

[21]       In Royal Bank of Canada v. Sparrow Electric Corp., [1997] 1 S.C.R. 411, the Bank and the Minister of National Revenue both claimed title to the proceeds of disposition of the property appearing in the inventory of the tax debtor.

[22]       The provisions then at issue were subsections 227(4) and (5) of the ITA, which read as follows:

[23]       As a secured creditor, the Bank had a fixed and specific lien on the property contained in the tax debtor's inventory, so that in case of default the Bank became the owner of the property in the possession of the tax debtor. The Court held that since the Bank's security interest already encumbered the property in question at the time the deductions at the origin of the deemed trust were made, the Bank's right to this property had priority over the right arising under the deemed trust.

[24]       After confirming the Bank's priority, the Court thought it was necessary to explain that Parliament remained free to assign absolute priority to the deemed trust by using precise language (Sparrow Electric, paragraph 112):

Finally, I wish to emphasize that it is open to Parliament to step in and assign absolute priority to the deemed trust. A clear illustration of how this might be done is afforded by s. 224(1.2) ITA, which vests certain moneys in the Crown "notwithstanding any security interest in those moneys" and provides that they "shall be paid to the Receiver General in priority to any such security interest". All that is needed to effect the desired result is clear language of that kind. [Emphasis added]

[25]       Parliament responded to this invitation by amending the deemed trust provisions and adopting the current wording, which is reproduced in paragraph 6 of these reasons.

[26]       The Supreme Court had occasion to consider this new language in First Vancouver Finance v. M.N.R., [2002] 2 S.C.R. 720. At issue in this case was certain property purchased by the tax debtor following the crystallization of the deemed trust. The property in question had been sold by the tax debtor in the normal course of business to a bona fide third party and the Minister claimed that the property continued to be subject to the deemed trust notwithstanding this sale.

[27]       The Court held that the property, at the time of its acquisition by the tax debtor, was part of the deemed trust but that its sale to a third party in the normal course of business had removed it from the trust. Throughout its reasons, the Court compares the situation of the third party purchaser for value to that of the secured creditor, and finds that while property acquired by the third party purchasers was not caught by the amendments to the deemed trust provisions, in the absence of specific language to that effect, property taken in payment by the secured creditors in the exercise of their security interest was covered. In respect of the secured creditors, the Court was unambiguously of the view that the new provisions responded to the invitation it had issued to Parliament to give the Crown an "absolute priority".

[28]       It is worth reproducing the Court's reasoning in regard to the effect of these amendments:

[27]          In response to Sparrow Electric, the deemed trust provisions were amended in 1998 (retroactively to 1994) to their current form. Most notably, the words "notwithstanding any security interest . . . in the amount so deducted or withheld" were added to s. 227(4). As well, s. 227(4.1) (formerly s. 227(5)) expanded the scope of the deemed trust to include "property held by any secured creditor . . . that but for a security interest . . . would be property of the person". Section 227(4.1) was also amended to remove reference to the triggering events of liquidation, bankruptcy, etc., instead deeming property of the tax debtor and of secured creditors to be held in trust "at any time an amount deemed by subsection (4) to be held by a person in trust for Her Majesty is not paid to Her Majesty in the manner and at the time provided under this Act". Finally, s. 227(4.1) now explicitly deems the trust to operate "from the time the amount was deducted or withheld".

[28]          It is apparent from these changes that the intent of Parliament when drafting ss. 227(4) and 227(4.1) was to grant priority to the deemed trust in respect of property that is also subject to a security interest regardless of when the security interest arose in relation to the time the source deductions were made or when the deemed trust takes effect. This is clear from the use of the words "notwithstanding any security interest" in both ss. 227(4) and 227(4.1). In other words, Parliament has reacted to the interpretation of the deemed trust provisions in Sparrow Electric, and has amended the provisions to grant priority to the deemed trust in situations where the Minister and secured creditors of a tax debtor both claim an interest in the tax debtor's property.

[29]          As noted above, Parliament has also amended the deemed trust provisions in regard to the timing of the trust. Reference to events triggering operation of the deemed trust such as liquidation or bankruptcy have been removed. Section 227(4.1) now states that the deemed trust begins to operate "at any time [source deductions are] . . . not paid to Her Majesty in the manner and at the time provided under this Act" (emphasis added). Thus, the deemed trust is now triggered at the moment a default in remitting source deductions occurs. Further, pursuant to s. 227(4.1)(a), the trust is deemed to be in effect "from the time the amount was deducted or withheld". Thus, while a default in remitting source deductions triggers the operation of the trust, the trust is deemed to have been in existence retroactively to the time the source deductions were made. It is evident from these changes that Parliament has made a concerted effort to broaden and strengthen the deemed trust in order to facilitate the collection efforts of the Minister.

[29]       As the Court explains later in its reasons, the deemed trust resembles a floating charge that hovers over all the assets of the tax debtor in the amount of the default. The trust continues to apply to all the assets for as long as the default continues. The only property that may be immune to it is property that the tax debtor alienates in the normal course of its business, in which case the trust extends to the proceeds of sale or the replacement property (reasons, paragraph 40).

[30]       This decision, which is not referred to by the trial judge in his reasons, establishes unambiguously that the Banks or the Caisses in the present cases are not comparable to third party purchasers. They are secured creditors and the property over which they asserted their security interest continued to be subject to the deemed trust and remained so at the time of its sale. It follows that, in accordance with the final words of subsections 227(4.1) of the ITA and 86(2.1) of the EIA, the proceeds from the sale had to be "paid" to the Receiver General in priority to the security interest they held.

[31]       This leads us to the second question. According to the trial judge, the ITA and EIA are silent as to the mode of recovery of this debt, so the Civil Code of Québec and the Code of Civil Procedure apply as suppletive law.

[32]       The possibility that provincial law may apply as supplementary law is now provided by Parliament in sections 8.1 and 8.2 of the Interpretation Act, R.S.C. 1985, c. I-21; 2001, c. 4, s. 8 which read as follows:

[33]       Thus, if, in interpreting the application of a federal enactment in a province, one is to refer to the province's law of property and civil rights as suppletive law, reference to that law must be necessary and there must be no provision to the contrary in federal law.

[34]       However, the ITA and EIA deemed trust provisions are complete and explicit as to their effect on property taken in possession by secured creditors in the exercise of their security interest, judging from the Supreme Court's reasons in First Vancouver: the Crown has an absolute priority over the proceeds from the property subject to the deemed trust, which must be paid to the Receiver General. Where this obligation is breached, section 222 of the ITA provides the following remedy:

[Emphasis added]

Subsection 86(1) of the Employment Insurance Act is to the same effect.

[35]       In view of this language, I fail to see how one could refer to Parliament's silence concerning the mode of collection of the tax debt arising out of the deemed trust mechanism.

[36]       It appears to be Mr. Justice Martineau's opinion that the obligation to pay the Receiver General is not sufficiently defined to be enforced by the Court. When Parliament decides to allocate liability for payment to a third party other than the tax debtor, he says, it does so expressly, providing that a request for payment shall be sent to the third party, as in the case of section 224 ITA. Similarly, when Parliament imposes a joint liability on persons other than the tax debtor, it proceeds by way of assessment (sections 160 and 227.1 of the ITA are cited in this regard).

[37]       With respect, Parliament is not confined to any particular method in establishing collection measures. Where a third party is to be made liable for paying on behalf of another, such liability must be imposed in clear and unambiguous language. As it happens, the positive obligation imposed on the secured creditor to pay the Receiver General the proceeds from the property subject to the trust could not be clearer.

[38]       It was this clear language that the Supreme Court noted in First Vancouver, when confirming the application of subsections 227(4) and (4.1) to secured creditors but not to third party purchasers for value (paragraph 43):

... It is significant in this regard that purchasers for value are not included in ss. 227(4) and 227(4.1) whereas secured creditors are. In Pembina on the Red Development, supra, Twaddle J.A. took note of the "long-established principle of law that, in the absence of clear language to the contrary, a tax on one person cannot be collected out of property belonging to another" (p. 46). In Sparrow Electric, supra, at para. 39, Gonthier J. also referred to this principle, stating that:

[T]his provision does not permit Her Majesty to attach Her beneficial interest to property which, at the time of liquidation, assignment, receivership or bankruptcy, in law belongs to a party other than the tax debtor. Section 227(4) and (5) are manifestly directed towards the property of the tax debtor, and it would be contrary to well-established authority to stretch the interpretation of s. 227(5) [now s. 227(4.1)] to permit the expropriation of the property of third parties who are not specifically mentioned in the statute. [Emphasis added.]

Thus, in the absence of an express reference to third party purchasers, there is no basis upon which to allow the Minister's interest in the tax debtor's property to continue once such property has been sold to third parties. [Emphasis added.]

[39]       Martineau J. further states that the deductions the appellant is attempting to recover are not amounts for which the respondents are personally liable. According to him, subsections 227(4.1) of the ITA and 86(2.1) of the EIA are not sufficiently clear to establish the existence of a cause of action in favour of the appellant against the respondents.

[40]       It seems obvious to me that a secured creditor who does not comply with his statutory obligation to "pay" the Receiver General the proceeds of property subject to the deemed trust in priority over his security interest is personally liable and thereby becomes liable for the unpaid amount. The amount is "payable" out of the proceeds flowing from the property and, as we have seen, section 222 of the ITA provides that "All... amounts payable under this Act are debts due to Her Majesty and recoverable as such...." (Emphasis added). In light of these provisions, and since the respondents concede that they received the proceeds from the sale of the property subject to their security interest, without making the remittance that was payable, the appellant has a cause of action to recover these amounts.

[41]       The trial judge also noted that the proceeding used by the appellant would not be subject to any limitation period if the civil law did not apply. It is true that the recovery provisions under the ITA and the EIA , including those at issue here, do not provide any deadline for their implementation. However, the general six-year limitation period provided for in section 32 of the Crown Liability and Proceedings Act, R.S.C. 1985, c. 50, does apply.

[42]       That was what the Supreme Court held in Markevich v. Canada, [2003] 1 S.C.R. 94, regarding the recovery of amounts payable under the ITA. In reaching this conclusion, the Court referred to the disparity in the limitation periods under provincial law and the importance of a uniform limitation rule in federal tax legislation.

[43]       The Court held that the "cause of action" from which the limitation period was calculated was "a set of facts that provides the basis for an action in court" (Markevich, paragraph 27). Since in that case the tax debt had to be certified through an assessment, the Court held that the "cause of action" was constituted by the existence of the debt and the expiration of the 90-day period that must elapse following the issuance of an assessment before the Minister can initiate collection measures (see section 225.1 ITA).

[44]       Applying the same reasoning to the instant case, and bearing in mind that the tax debt resulting from a breach of the obligation under subsections 227(4.1) of the ITA and 86(2.1) of the EIA is not subject to the assessment process, the cause of action would arise at the time when the Minister becomes aware of the failure by the secured creditor to pay the Receiver General the amounts payable from the proceeds resulting from the property subject to the deemed trust.

[45]       The trial judge also seemed to be of the opinion that allowing the Crown to be paid in priority to the Banks and the Caisses in this case would "be likely to create legal uncertainty that would be harmful to the security of commercial transactions and would also compromise the operation and effectiveness of the provincial provisions in the province of Quebec".

[46]       But it must be understood that the Supreme Court in First Vancouver, in upholding the Crown's right to be paid in priority on the proceeds of the property subject to the deemed trust, was conscious of the uncertainty that such priority could engender. The deemed trust mechanism, whether applied in Quebec or elsewhere, effectively creates in favour of the Crown a security interest which arises from an omission, unknown to anyone other than the person at fault (i.e. the one who makes deductions from wages without remitting them to the tax authorities), and gives this security interest absolute priority over those interests held by the secured creditors irrespective of whether those creditors have priority under the applicable provincial law.

[47]       According to the Supreme Court, this priority is justified by the fact that source deductions are "at the heart" of income tax collection in Canada and, "in contrast to a tax debtor's bank", the Minister is not familiar with the tax debtor's business. The Minister is, so to speak, "an involuntary creditor" (reasons, paragraph 23).

[48]       Finally, the trial judge questions the use in Quebec of the notion of "beneficial ownership", on the ground that it is a concept that is obviously derived from the common law. Although he acknowledges Parliament's right to enact the rules of its choice in giving effect to laws over which it has legislative authority, he notes the uncertainty that arises from the use in Quebec of common law concepts.

[49]       It is not the task of the judiciary to determine whether it is appropriate for Parliament to use common law concepts in Quebec (or to use civil law concepts elsewhere in Canada) for the purpose of giving effect to federal legislation. The task of the courts is limited to discovering Parliament's intention and giving effect to it.

[50]       In this case, Parliament's intention is not hard to decipher, notwithstanding the use of a legal concept from the common law. Parliament evidently wished to confer on the Crown an ongoing interest in the property that is deemed to be held in trust for as long as the tax debtor's default persists, and to subject the secured creditor to the obligation to remit to the Receiver General the proceeds arising from the property held in trust in absolute priority, to the extent of the unpaid debt.

[51]       The trial judge did not have to determine whether, prior to the sale of the property subject to the deemed trust, the Crown's "beneficial ownership" did or did not have priority over the respondents' rights under the civil law and, if so, how the Crown could assert this right in opposition to those of the respondents (see, in this regard, the decision this Court is delivering this very day in New Court Financial Ltd. v. The Queen, A-529-02). He simply had to record the fact that the respondents had received the proceeds of the property subject to the deemed trust and enforce their obligation to pay these proceeds to the Receiver General in priority over their security interest.

[52]       For these reasons, the appeals shall be allowed, the trial court judgment reversed and the actions of the appellant (plaintiff at trial) allowed. The respondents shall be ordered to pay to the Receiver General the amounts claimed by the appellant from the proceeds of the sale of the property subject to the deemed trust. The appellant shall be entitled to its costs both on appeal and at trial.

                          "Marc Noël"

                                                                  J.A.                                

"I concur.

Robert Décary, J.A."

"I concur.

M. Nadon, J.A."

Certified true translation

Suzanne Gauthier, C.Tr., LL.L.

FEDERAL COURT OF APPEAL

SOLICITORS OF RECORD

DOCKET:                                           A-626-02

STYLE:                                                Attorney General of Canada

v.

National Bank of Canada

PLACE OF HEARING:                     Montréal, Quebec

DATE OF HEARING:                        February 4, 2004

REASONS FOR JUDGMENT:        Noël J.A.

CONCURRING:                               Décary J.A.

Nadon J.A.

DATE OF REASONS:                        March 5, 2004

APPEARANCES:

Patrick Vézina                                                   FOR THE APPELLANT

Reynald Auger                                                   FOR THE RESPONDENT

SOLICITORS OF RECORD:

Morris Rosenberg                                                          FOR THE APPELLANT

Deputy Attorney General of Canada

Ottawa, Ontario

KRONSTRÖM DESJARDINS S.E.N.C.                     FOR THE RESPONDENT

Sainte-Foy, Quebec

FEDERAL COURT OF APPEAL

SOLICITORS OF RECORD

DOCKET:                                           A-627-02

STYLE:                                                Attorney General of Canada

v.

Caisse populaire d'Amos

PLACE OF HEARING:                     Montréal, Quebec

DATE OF HEARING:                        February 4, 2004

REASONS FOR JUDGMENT:        Noël J.A.

CONCURRING:                               Décary J.A.

Nadon J.A.

DATE OF REASONS:                        March 5, 2004

APPEARANCES:

Patrick Vézina                                                   FOR THE APPELLANT

Jocelyn Geoffroy                                                           FOR THE RESPONDENT

SOLICITORS OF RECORD:

Morris Rosenberg                                                          FOR THE APPELLANT

Deputy Attorney General of Canada

Ottawa, Ontario

GEOFFROY, MATTE, KÉLADA et ASS.                    FOR THE RESPONDENT

Amos, Quebec

FEDERAL COURT OF APPEAL

SOLICITORS OF RECORD

DOCKET:                                           A-628-02

STYLE:                                                Attorney General of Canada

v.

Caisse populaire Desjardins de Lebel-sur-Quévillon

PLACE OF HEARING:                     Montréal, Quebec

DATE OF HEARING:                        February 4, 2004

REASONS FOR JUDGMENT:        Noël J.A.

CONCURRING:                               Décary J.A.

Nadon J.A.

DATE OF REASONS:                        March 5, 2004

APPEARANCES:

Patrick Vézina                                                   FOR THE APPELLANT

Jocelyn Geoffroy                                                           FOR THE RESPONDENT

SOLICITORS OF RECORD:

Morris Rosenberg                                                          FOR THE APPELLANT

Deputy Attorney General of Canada

Ottawa, Ontario

GEOFFROY, MATTE, KÉLADA et ASS.                    FOR THE RESPONDENT

Amos, Quebec

FEDERAL COURT OF APPEAL

SOLICITORS OF RECORD

DOCKET:                                           A-629-02

STYLE:                                                Attorney General of Canada

v.

National Bank of Canada

PLACE OF HEARING:                     Montréal, Quebec

DATE OF HEARING:                        February 4, 2004

REASONS FOR JUDGMENT:        Noël J.A.

CONCURRING:                               Décary J.A.

Nadon J.A.

DATE OF REASONS:                        March 5, 2004

APPEARANCES:

Patrick Vézina                                                   FOR THE APPELLANT

Reynald Auger                                                   FOR THE RESPONDENT

SOLICITORS OF RECORD:

Morris Rosenberg                                                          FOR THE APPELLANT

Deputy Attorney General of Canada

Ottawa, Ontario

KRONSTRÖM DESJARDINS S.E.N.C.                     FOR THE RESPONDENT

Sainte-Foy, Quebec