Lloyd's Bank Canada v. International Warranty Co. (1989), 60 DLR (4th) 272 (Alta. C.A.)

A company ("IW") had made an assignment of book debts to the td Bank. After ceasing business operations, it paid salaries to its employees without withholding and paying source deductions. Revenue Canada thereafter issued a requirement to pay pursuant to s. 224(1.2)(b).

Stratton J.A. held:

"that the proceedings under s. 224(1.2) are at the most a form of extra-judicial attachment which could bring the funds in question into the custody of Revenue Canada. The section falls short of effecting the transfer of property in the funds or establishing priority of Revenue Canada's claim. Something further is required to accomplish either purpose."

Accordingly, the Minister did not have priority over the TD Bank.

A company ("IW") had made an assignment of book debts to the td Bank. After ceasing business operations, it paid salaries to its employees without withholding and paying source deductions. Revenue Canada thereafter issued a requirement to pay pursuant to s. 224(1.2)(b).

The court indicated that Revenue Canada would have had priority over the TD Bank if s. 227(10.2) had been proclaimed in force by the relevant time.

In finding that s. 224(1.2)(b) was not intended to expropriate the vested rights of secured creditors, the court adopted the statement in the Avco case that:

"If the Legislative Assembly intends to produce by statute results that are so brutal and piratical, it has the power to do so, but the Courts will hold that that was its intention only if the language of the statute compels that interpretation."