MNR v. Sinclair, 93 DTC 5239, [1993] 2 CTC 70 (FCTD)

Rothstein, J.:—The issue in this case is whether a Registered Retired Savings Plan (RRSP) may be subject to execution under the Manitoba Executions Act, R.S.M. 1987, c. E-160, as amended.

On October 23, 1992, the Minister of National Revenue (the Minister) filed a certificate in the Federal Court of Canada indicating a tax indebtedness of John Loring Patrick Sinclair to Revenue Canada in the amount of $94,574.80. The Winnipeg Collections Unit of Revenue Canada determined that Mr. Sinclair had assets in the form of a RRSP contract no. 4928982 held with First City Trust (now North American Trust Company) in Winnipeg. "Requirement to pay” letters were issued by the Minister pursuant to subsection 224(1) of the Income Tax Act, S.C. 1970-71-72, c. 63, as amended, to North American Trust Company but no moneys were paid pursuant to the letters.

On October 23, 1992, a writ of fieri facias was issued out of the Federal Court. On December 17, 1992, an officer of the sheriff of the Winnipeg Judicial Centre attended at North American Trust Company in Winnipeg and placed under seizure RRSP contract no. 4928982. The sheriff's officer instructed North American Trust Company not to collapse the RRSP contract until there had been a determination of the exigibility of the RRSP, the sheriff having taken the position that he was unsure as to whether a RRSP is exigible under the Executions Act of Manitoba.

The matter came before the Court by way of a notice of motion for directions as to the measures to be taken by the sheriff in carrying out a federal writ of fieri facias against a RRSP.

Section 56 of the Federal Court Act, R.S.C. 1985, c. F-7, as amended, provides that writs of execution or other processes for the enforcement of judgments or orders of the Court are to be executed as nearly as possible in the same manner as similar writs or process, issued out of the superior court of the province in which the property to be seized is situated, are required to be executed. Section 56 provides:

56. (1) In addition to any writs of execution or other process that are prescribed by the rules for enforcement of its judgments or orders, the Court may issue process against the person or the property of any party, of the same tenor and effect as those that may be issued out of any of the superior courts of the province in which any judgment or order is to be executed; and where, by the law of that province, an order of a judge is required for the issue of any process, a judge of the Court may make a similar order with respect to like process to issue out of the Court.

(2) No person shall be taken into custody under process of execution for debt issued out of the Court.

(3) All writs of execution or other process against property, whether prescribed by the Rules or authorized by subsection (1), shall, unless otherwise provided by the Rules, be executed, with respect to the property liable to execution and the mode of seizure and sale, as nearly as possible in the same manner as such similar writs or process, issued out of the superior courts of the province in which the property to be seized is situated, are, by the law of that province, required to be executed, and the writs or other process issued by the Court shall bind property in the same manner as similar writs or process issued by the provincial superior courts, and the rights of purchasers thereunder are the same as those of purchasers under those similar writs or process.

(4) Every claim made by any person to property seized under a writ of execution or other process issued out of the Court, or to the proceeds of the sale of such property, shall, unless otherwise provided by the Rules, be heard and disposed of as nearly as may be according to the procedure applicable to like claims to property seized under similar writs or process issued out of the courts of the province.

It was submitted that since the Federal Court process in respect of the enforcement of judgments is to be analogous to the process of the Court of Queen's Bench of Manitoba, that Queen's Bench Rule 60.16 was applicable. Rule 60.16 provides:

60.16 Where a question arises in relation to the measures to be taken by a sheriff in carrying out an order or writ, the sheriff or any interested person may make a motion to the court for directions.

Accordingly, this application was brought before this Court.

The parties appearing before me were The Minister of National Revenue and the sheriff for the Winnipeg Judicial Centre.

Proof of service of the notice of motion on the North American Trust Company and John Loring Patrick Sinclair was filed but neither was represented at the hearing of the motion.

Counsel for the sheriff, while appearing to oppose the Minister's motion, indicated that his intention was to ensure that the Court was provided with a full argument as to the construction of subsections 7(1) and 5(1) of the Executions Act of Manitoba and their applicability, if any, to RRSPs.

A RRSP is a registered plan which allows an individual to contribute to the plan up to a prescribed maximum and deduct the contributions from income for the purpose of calculating income tax. The plan must be registered with the Minister in order to enable the deduction of contributions for income tax purposes. The relationship between a depository such as a trust company and a contributor is one of trustee and cestu/ que trust. As long as the plan is registered and the assets are left in the plan, this relationship subsists.

The Minister takes the position that subsection 7(1) or subsection 5(1) of the Executions Act of Manitoba gives the sheriff the authority to effect seizure of the RRSP in this case. Subsection 7(1) states:

7 (1) Any sheriff or bailiff to whom a writ of execution is directed, or who may have the execution of the writ, shall seize and take any mortgages of real or personal estate, cheques, bills of exchange, bonds, promissory notes, or other securities for money of the judgment debtor against whom the writ issued, or in which he has any interest.

The RRSP in this case is clearly not a mortgage of real or personal estate, nor a cheque or bond. Nor is it a bill of exchange or promissory note as contemplated by the Bills of Exchange Act, R.S.C. 1985, c. B-4, as amended. If the RRSP is to fall under subsection 7(1) it must come within the term "other securities for money".

Counsel for the Minister in this case explained that the Judgments Act of 1838, 1 & ll Victoria c. 110, was the precursor of the Executions Act of Manitoba. He submitted that subsection 7(1) was necessary since historically intangibles could not be seized under a writ of fieri facias. The words “securities for money" in section 12 of the Judgments Act of 1838, has been held to be ejusdem generis with the preceding words "money, or bonds, notes . . . and any cheques, bills of exchange, promissory notes, bonds, specialties”. See Re: Rollason, 34 Ch. D. 495, at page 497. This construction was adopted by Rimmer, District Court Judge in Jones v. Jesse, [1909] W.L.R. 607 at page 629.

While I agree that the term “securities for money" is to be construed as being ejusdem generis with the preceding words in subsection 7(1), the categorization of instruments in the list is broad. For example, a promissory note (i.e. with no endorsements or guarantees) is not security. It is only evidence of an indebtedness.

The term “securities for money" is preceded by the word "other". I construe the statutory language to mean that the term "other securities for money" includes not only security documents as such, but other entitlements to money analogous to promissory notes or cheques. I do not see why a RRSP contract would not fall within this broad construction of the term "other securities for money".

Halsbury's Laws of England, 4th edition, volume 50, Wills, paragraph 479 defines securities as follows:

479. "Securities". According to its literal meaning, “securities” includes such money as is secured either on property or on personal security (including even promissory notes and bills of exchange), and any stock or other investment which, by the terms of its creation, is a security for the payment of money; but it does not include money for which a mere acknowledgement of indebtedness has been given, or the ordinary description of stock and shares in a public company. "Securities" is, however, very commonly used as a synonym for investments, or property dealt with on the stock exchange, and this meaning may readily be attributed to the word, and generally other meanings may be given to it, according to the context of the will and the circumstances of the case.

[Emphasis added.]

It is apparent that this is a very broad definition of the term "securities".

The context of subsection 7(1) does not suggest to me that technical distinctions between different types of instruments was intended. The purpose of the Executions Act is as an aid in the recovery of judgments by judgment creditors. The section is intended to broaden the types of assets that may be seized by judgment creditors from what may have been possible under the common law. In view of the breadth of the type of instruments contemplated by subsection 7(1) and the purpose of the subsection, I am of the opinion that a RRSP falls within the category of "other securities for money” as contemplated by the subsection.

Of course, RRSPs were not known when subsection 7(1) of the Executions Act of Manitoba was enacted. But I do not think the terminology of the section is to be construed as being frozen in time so as to apply only to the types of securities, investments or evidences of entitlements to money that existed when the section was first enacted. With respect to the term "other securities for money" in subsection 7(1) of the Executions Act of Manitoba, I would adopt the interpretative approach used by Bridge, L.J. in Barker v. Wilson, [1980] 2 All E.R. 81, [1980] 1 W.L.R. 884 (Q.B.) in which, at page 83 (W.L.R. 887) he stated:

The Bankers’ Books Evidence Act 1879 was enacted with the practice of bankers in 1879 in mind. It must be construed in 1980 in relation to the practice of bankers as we now understand it. So construing the definition of “ bankers’ books" and the phrase “an entry in a banker's book”, it seems to me that clearly both phrases are apt to include any form of permanent record kept by the bank of transactions relating to the bank’s business, made by any of the methods which modern technology makes available, including, in particular, microfilm.

The inclusion of RRSPs as exigible assets under the Executions Act of Manitoba was dealt with by Morse, J. in Canadian Imperial Bank of Commerce v. Meltzer and Essers, [1991] 5 W.W.R. 506, 74 Man. R. (2d) 105 (Q.B.). In that case, one issue was whether RRSPs constituted the property of the bankrupt under the Bankruptcy Act, R.S.C. 1985, c. B-3. Paragraph 67(b) of the Bankruptcy Act provided :

67. The property of a bankrupt divisible among his creditors shall not comprise.

(b) any property that as against the bankrupt is exempt from execution or seizure under the laws of the province within which the property is situated and within which the bankrupt resides ....

At page 512 (Man. R. 111), Morse, J. found:

These RRSPs do not, in my opinion, come within paragraph 67(b) of the Bankruptcy Act.

Section 146 (of the Income Tax Act) does not contain any provision exempting a registered retirement savings plan from execution or seizure. Nor is there any Manitoba statute which exempts a RRSP from execution or seizure. This being the case, it follows that the RRSPs in question are not exempt from execution or seizure, and do not, therefore, come within paragraph 67(b) of the Bankruptcy Act.

[Emphasis added.]

I am of the view that my decision is consistent with the decision of Morse, J. in Bank of Commerce, supra.

Counsel for both parties advanced a number of authorities dealing with the treatment of RRSPs under the legislation of other provinces. However, the terminology of the legislation of other provinces is different than the terminology of the Manitoba Executions Act. I do not find these decisions of assistance for that reason.

In coming to my conclusion, I recognize that depending upon the specific circumstances of a RRSP, it may or may not be exigible under the Executions Act. For example, in Bank of Commerce, supra, Morse, J. found that a RRSP that was governed by subsection 173(2) of the Insurance Act of Manitoba was exempt from execution and seizure. [1] In the case at bar, no circumstances are present such as those to which subsection 173(2) would apply.

It was suggested by counsel for the sheriff that the trust relationship that exists in the case of a RRSP might exclude a RRSP from the definition of "other securities for money" in subsection 7(1) of the Executions Act. The question of whether or not an equitable interest of a judgment debtor in personal property was exigible under execution when the legal interest was held by a trustee was dealt with in Stevens v. Hince (1914), 110 L.T. 935, 30 T.L.R. 419. At page 937 (L.T.), Bailhache, J. stated:

He had before then put his case upon this simple proposition, that a judgment creditor cannot under a writ of fieri facias seize goods which are at the equitable disposition only of the judgment debtor, and that in this case the legal estate in the goods, if I may use the words "legal estate" in reference to chattels, was in the trustees.

That was the point upon which counsel for the claimants rested his argument, and it is that point, and that point only, I am going to decide. In my opinion, although that is true as a general proposition, it is not true where the whole of the equitable and beneficial interest in the chattels is vested in the judgment debtor or the judgment debtors as the case may be. I do not think that in this case the trust can be set up as any sort of a defence to an execution. The judgment debtors can themselves deal with the property exactly as they please, and the trustees will have no right to intervene or to interfere. It would be intolerable, in my opinion, if these goods were to be considered beyond the reach of a judgment creditor.

Under subsection 7(1) of the Manitoba Executions Act, property includes property "of the judgment debtor against whom the writ is issued, or in which he has any interest”. It seems to me to be clear that where the judgment debtor has an interest in property such as an equitable interest under a trust, the words of the subsection indicate that the property is subject to execution.

Counsel for the sheriff brought to my attention Clarke v. Preston (1895), 3 Terr. L.R. 329, in which Wetmore, J. stated at page 331:

A security for money is something that the owner thereof can assign or transfer in law or equity.

He argued that a RRSP is neither assignable nor transferable and is therefore not "other securities for money".

Wetmore, J. cited no authority in support of the proposition in Clarke, supra. Undoubtedly, many securities for money are assignable or transferable. However, I do not construe assignability or transferability as a condition that attaches to the definition of “other securities for money". The definition of “securities” in Halsbury, supra, contains no such restriction. Even securities that are normally assignable or transferable, in specific circumstances, may be subject to a non-transferability or assignability provision. I do not think such a clause would take the instrument outside of the definition of "other securities for money”. If the interpretation placed on the words "securities for money" by Wetmore, J. is restricted to something that can be assigned or transferred, I must respectfully disagree. I am of the opinion that the term "other securities for money" in subsection 7(1) of the Executions Act of Manitoba includes securities that are redeemable only such as is the case with RRSPs.

In the circumstances, I find that the RRSP in this case is exigible under the Executions Act of Manitoba and is therefore properly subject to the writ of fieri facias issued out of this Court.

In view of my disposition of this matter based upon my interpretation of subsection 7(1) of the Executions Act, it is not necessary for me to deal with the arguments of counsel respecting subsection 5(1) of that Act.

The application of the plaintiff is granted with costs.

Application granted.