Corp. Steckmar/Steckmar Corp., Re, 2004 FC 581

Date: 20040419

Docket: ITA-1096-99

Citation: 2004 FC 581

In re the Income Tax Act

- and -

In re one or more assessments made by the Minister of National Revenue pursuant to one or more of the following statutes: the Income Tax Act, the Canada Pension Plan and the Employment Insurance Act

AGAINST:

LA CORPORATION STECKMAR/

STECKMAR CORPORATION

Judgment debtor

and

STECKMAR NATIONAL REALTY

AND INVESTMENT CORPORATION

Garnishee

REASONS FOR ORDER

RICHARD MORNEAU, PROTHONOTARY

[1]        This is a motion by the judgment creditor, Her Majesty the Queen, for a final garnishment order against Steckmar National Realty and Investment Corporation (the garnishee) applicable to advances which it received without interest over the last 25 years from the judgment debtor La Corporation Steckmar/Steckmar Corporation, a corporation associated with the garnishee.

[2]        The judgment debtor and the garnishee are in fact associated, since 49% of the shares in the judgment debtor are held by Arthur Steckler, 49% by his sister and 2% by his mother, while all the shares in the garnishee belong to Mr. Steckler.

[3]        Mr. Steckler acts inter alia as the garnishee's director and manager. He was put forward as representative of the judgment debtor and garnishee for the purposes of these proceedings.

[4]        The advances received by the garnishee - which consisted of a loan within the meaning of article 2314 of the Civil Code of Quebec (C.C.Q.) - total the sum of $4,255,534.41.

[5]        It should be noted from the outset that although the judgment creditor sought to garnish this entire amount, she actually intended ultimately to be paid not all of it but the sum of $126,666.39, plus interest accrued on this amount since October 1997. That sum corresponds to the judgment debtor's tax debt and was set out in a certificate filed in this Court which, pursuant to the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, as amended, has the same force and effect as a judgment of this Court.

[6]        The garnishment accordingly seeks to attach a little less than 4% of the advances received by the garnishee.

[7]        Pursuant to the interim garnishment order, Mr. Steckler, as director and manager of the garnishee, filed in the record of this Court a statement reading as follows:

[TRANSLATION]

1.             The garnishee acknowledges owing the judgment debtor the sum of $4,255,545.41.

2.             The debt described in the preceding paragraph is not interest-bearing.

3.             This debt was not recorded in writing and it is agreed between the judgment debtor and the garnishee that repayment of the capital of the debt will be made as the garnishee's financial situation permits.

4.             At the time of the garnishment, the garnishee did not have the necessary liquid funds to repay its debt to the judgment debtor so that its debt is not immediately payable.

5.             The garnishee does not at present hold or have in its possession any movable property belonging to the judgment debtor.

[Emphasis added.]

[8]        This statement by the garnishee accordingly amounts to establishing that the parties agreed that the repayment of the loan, that is the due date, would be when the garnishee was financially able to repay it, and on the date of the interim garnishment, which was issued on December 13, 1999, that was still not the case. The loan essentially has still not been repaid, even at this date, since it appeared from the record that only the sum of about $776,525 has been repaid to the judgment debtor in the past by the garnishee, that is an amount of $749,330 in 1996 and possibly $27,195 in fall 1999 (the evidence for this latter payment is not very clear).

[9]        On March 31 and November 17, 2000, the judgment creditor examined Mr. Steckler on affidavit.

[10]      The garnishee objected to the final garnishment from it of the amount corresponding to the judgment debtor's tax debt, putting forward a series of arguments.

[11]      A review and analysis of the principal arguments made by the garnishee will allow us to see whether any of them is really able to prevent the final garnishment sought by the judgment creditor.

Analysis

[12]      The judgment creditor did not dispute as such the truth of the terms of the agreement made between the judgment debtor and the garnishee, namely that payment would be made as the garnishee's financial situation allowed. However, it considered that the Federal Court Rules, 1998 (the Rules) on garnishment and the C.C.Q. allow this Court to consider the loan as immediately payable in accordance with and for the purposes of the garnishment.

[13]      The garnishee submitted, as its first ground of objection, that as it did not dispute either the debt or its obligation to pay, simply when the debt was payable, the structure of Rules 451(2) and 453 is such that the Court can only make an order consistent with the approach contemplated by subsection 451(2) of the Rules, namely a final garnishment order simply requiring that the garnishee pay the judgment creditor when the debt is payable.

[14]      Rules 451 and 453 read as follows:

[15]      Based on the argument between the parties as to the time the loan is payable, and in accordance with the statements and examinations since the interim garnishment order, I do not think it can be said that this case really falls within the objective context of subsection 451(2) of the Rules and that the Court cannot consider an order under Rule 453.

[16]      At the outset, it should be noted that subsection 451(2) is permissive, in that it provides that the Court "may", not "must", make an order for payment when the debt becomes payable.

[17]      Secondly, subsection 451(2) should not be read in isolation from Rule 453. I think subsection 451(2) is really and objectively applicable when there is no dispute between the parties as to whether the debt is due and payable.

[18]      However, in the case at bar although the garnishee submitted that it did not dispute its obligation to pay, I think that is not necessarily the case since at the very least it differs from the judgment creditor as to an important aspect of the payment, namely whether the due date has arrived.

[19]      Rule 453 is therefore applicable in the case at bar.

[20]      Alternatively, in the event the Court found Rule 453 applicable, the garnishee submitted that the relief sought by the judgment creditor exceeded the jurisdiction of this Court.

[21]      As to this relief, the Court can agree entirely with the garnishee and conclude that it consists of the following:

            (a)        setting a term to the loan contract made between the judgment debtor and the garnishee, pursuant to article 1512 C.C.Q.;

            (b)        recognizing its right to act in place of the judgment debtor pursuant to article 1627 C.C.Q.

[22]      Although this relief is determined by the application of provincial rules of law, it seems to me to involve issues under provincial law which arise incidentally in connection with the compulsory enforcement of a judgment made against the judgment debtor, consistent with the principles laid down by the Federal Court of Appeal in The Queen v. Gadbois and Transport H. Cordeau Inc., 2002 FCA 228 (Gadbois) and Le Bois de Construction du Nord (1971) Ltée v. The Queen, [1986] 2 C.T.C. 227 (Le Bois de Construction du Nord (1971) Ltée).

[23]      As the Federal Court of Appeal pointed out in Gadbois, at paragraphs 13 to 15 and 26:

[13]         Under subsections 223(2) and (3) of the Act, the certificate of the Minister registered in the Court has the same effect as if the certificate were a judgment obtained in the Court. It is deemed to be a judgment of the Court. All proceedings may be taken thereon as if the certificate were a judgment obtained in the Court. It is therefore at the stage and in the context of the enforcement of the Court's judgment that the application for garnishment based on section 224 of the Act was made.

[14]         There is no doubt that the Court has the power to ensure that its judgments are enforced, and in that context, it may be required to dispose incidentally of issues under provincial law that are raised against that enforcement: Le Bois de Construction du Nord (1971) Ltée v. The Queen, [1986] 2 CTC 227 (F.C.A.). As Mr. Justice Marceau wrote at page 233, "the Court's power to rule on a point of provincial law which arises incidentally in the course of exercising its proper jurisdiction is not in any doubt." The Supreme Court of Canada expressly recognized that jurisdiction in ITO - Int'l Terminal Operators v. Miida Electronics, [1986] 1 S.C.R. 752, at page 781:

The Federal Court is constituted for the better administration of the laws of Canada. It is not, however, restricted to applying federal law in cases before it. Where a case is in "pith and substance" within the Court's statutory jurisdiction, the Federal Court may apply provincial law incidentally necessary to resolve the issues presented by the parties.

[15]         Still at page 233 of Le Bois de Construction du Nord (1971) Ltée, Marceau J.A. properly described as follows the complementary aspect, which is essential and necessary for the jurisdiction of a Court, that the compulsory execution of judgments represents:

The Court's power to rule on a point of provincial law which arises incidentally in the course of exercising its proper jurisdiction is not in any doubt. It is clear that the power conferred on the Court to dispose of an action is not limited to that of ruling on the existence of the right claimed, but carried with it that of ensuring by legal means that the judgment is enforced. Otherwise its function would be a purely academic one. The power of jurisdiction implies the complementary one of compulsory execution, a power of execution which, be it said in passing, is necessarily the same whatever the source of the power of jurisdiction, that is, whatever the Act of the Parliament of Canada on which the judgment is based. Just as the Court has the power to rule on a question of provincial law which arises incidentally in the course of exercising its jurisdiction of power, so it has the power to dispose of a question of a provincial law which arises in exercising its power of execution. Accordingly, it cannot be concluded merely from the fact that in the case at bar the objection made by the respondent to negative declarations raises question[s] of provincial law that the Court does not have jurisdiction to determine.

. . . . .

[26]         I agree with the appellant. That argument does not challenge the validity of the transactions but, rather, is intended to prevent the immunity of the legal person being set up against a person in good faith in cases where the juridical personality of that legal person is set up to conceal fraudulent acts. Again, the appellant's reply to the respondent's opposition does not go beyond the recovery of a debt in a situation involving the execution of a judgment made by an appropriate court. The following observations of Marceau J.A. in Le Bois de Construction du Nord (1971) Ltée v. The Queen, supra, at page 233, seem appropriate in this case:

If the Court thus had to withdraw immediately a question of provincial law [that] came before it in connection with the disposition of an action in the Court, not many actions could be taken to their conclusion. It is actions based on a cause independent of federal law which the Court cannot hear and dispose of, and in fact, to be precise, completely independent.

[24]      Here, I do not think these rules can be set aside simply because it is the judgment creditor, not the garnishee, which is desiring the Court to apply various articles of the C.C.Q. In fact, as in Gadbois, it can be said that for the judgment creditor the loan was prima facie payable at the time of the application for an interim garnishment order, and that it was because of the position taken by the garnishee in its statement later that these questions of provincial law arose. In any case, it seems to the Court that regardless of who brought up these questions, they were raised in opposition to enforcement of the judgment made against the judgment debtor, and that is what matters.

[25]      Accordingly, I am not persuaded that the relief sought by the judgment creditor is beyond the jurisdiction of this Court. Here, the judgment creditor is not seeking to alter or transform the loan agreement between the parties. She is simply seeking to exercise in place of her judgment debtor a remedy, that in article 1512 C.C.Q., which in principle is open to the latter.

[26]      Alternatively, the garnishee submitted that the garnishment proceeding is not a proper forum for dealing with remedies arising from articles 1512 and 1627 C.C.Q.

[27]      Those articles read as follows:

[28]      The parties were agreed that the loan at issue was a loan on a suspensory condition (see Boisvert v. Investissements D.M.A. inc., 99 BE-537 (C.A.), hereinafter Boisvert).

[29]      In the submission of the judgment creditor, she is entitled by precedent to rely on article 1512 C.C.Q. in the case at bar in asking the Court to set the term of the loan.

[30]      The garnishee saw the first problem here in the use of article 1512 by the judgment creditor. In the garnishee's submission, that article provides that it is the parties to the loan, not a third party such as the judgment creditor, who can rely on article 1512. The judgment creditor's answer was that article 1627, cited above, allowed her to exercise her debtor's rights.

[31]      I think that here the judgment creditor meets all the conditions of article 1627. Her claim in respect of the judgment debtor is certain, liquid and exigible and the judgment debtor, on account of the number of years that have elapsed without a real repayment of the loan, can undoubtedly be seen as negligent of the right to make use of article 1512 C.C.Q.

[32]      Nevertheless, the garnishee argued that article 1627 requires an action, and that here we are dealing with an application by summary proceeding.

[33]      I think the garnishee is mistaken regarding the need for an action. The writers Denis Ferland and Benoît Emery recognize that garnishment is an oblique remedy:

[TRANSLATION]

Garnishment is a compulsory enforcement proceeding on a personal action covered by article 569(2), which provides that a creditor may in all cases cause to be garnished from a third party monies and effects owed or belonging to its debtor. It is a special form of the oblique action which, under article 1627 of the Civil Code of Quebec, allows the creditor to exercise the debtor's rights and actions. The creditor accordingly has a practical remedy of a subrogatory nature which puts the debtor's claim in the hands of the Court to be transferred.

EMERY, B. and D. FERLAND, Précis de procédure civile du Québec, vol. 2, 3d ed., Cowansville, Les Éditions Yvon Blais inc., 1997, p. 198.

[34]      Prof. Philippe Ferland, for his part, does not appear to make a distinction between garnishment and the oblique remedy (the old 1031 C.C.L.C.).

[TRANSLATION]

An ordinary court seizure allowed the judgment creditor to exercise the right conferred on him by art. 1031 C.C.: "Creditors may exercise the rights and actions of their debtor, when to their prejudice he refuses or neglects to do so; with the exception of those rights which are exclusively attached to the person".

In accordance with these purposes we could describe the garnishment, a court summons by which the creditor of an enforceable judgment places in the court's hands by a seizure, v. ch. VIII, this property belonging to the debtor in his judgment, but seized from the possession of a third party, so that the third party will not dispose of it before the court decides what is to be done with it, and so that the judgment debtor will have the option of "show[ing] cause why the seizure should not be declared valid": art. 625 C.C.P.

. . . . .

(2)           the judgment debtor, B, the party seized which may itself be the creditor of a third party, C, and as such assign to a fourth person, D, its claim against the third party, C, or if not, the seizing party may exercise against the third party rights which the party seized does not exercise: art. 1031 C.C. . . .

FERLAND, P., Traité de procédure civile, Montréal, Les Établissements Henri-Bourrassa Ltée, 1969, t. 2, pp. 534 and 537.

[35]      Baudoin J. and Prof. Jobin also agree that the oblique action and the garnishment are interchangeable:

[TRANSLATION]

698. - Direct action and garnishment - When possible, the creditor will prefer either a direct and personal remedy, which the law gives him in certain cases, or the procedure of garnishing from a third party. In fact, it is only where he is denied the direct action and cannot conveniently rely on garnishment that the creditor in practice will proceed by an oblique action.

BAUDOIN, J.-L. and P.-G. JOBIN, Les Obligations, 5th ed., Cowansville, Les Éditions Yvon Blais inc., 1998, p. 537.

[36]      In Bélanger et autres v. Cheynet et Ses Fils S.A. et Cheynet et Ses Fils (Canada) Limitée et autre, [1973] R.P. 209, at 211, the Superior Court pointed out:

[TRANSLATION]

                Seizure from third parties is based on the rule in article 1031 C.C., which allows a creditor to exercise the rights and actions of his debtor, and when it is possible to do so, he should use garnishment rather than the subrogatory action so as to avoid a pyramid of proceedings and costs: see Trudel, Traité de droit civil, vol. 7, p. 430; Dame Gardner v. Goudreault et Breton, [1944] S.C. 125; The Western Assurance Co. v. Couture et Bruchési, [1961] Q.B. 164.

                A creditor who obtains judgment against his debtor may seize from a third party a debt which the latter owes the defendant. If during the proceeding on the garnishment the creditor finds that the garnishee is damaging the property and that his debtor, the judgment defendant, is doing nothing to protect his rights, there is no question the creditor may under 1031 C.C. exercise his debtor's rights and actions to protect his own debt, and at the same time that of his debtor: in the case at bar, he may obtain a writ of garnishment before judgment on the garnishee's property. If after obtaining judgment the creditor proceeded by a subrogatory action under 1031 C.C. against his debtor's debtor, there is no question that recourse to garnishment before judgment would be open to him.

[37]      In Investissements Étrusques inc. v. Frato Construction inc., [1984] S.C. 573, at 575, in connection with an objection by the defendant to the seizure by the plaintiff of a right of action exercised by the defendant, the Superior Court wrote:

[TRANSLATION]

If the debt against Pisapia Inc. in case 500-05-003853-783 is in fact owed to Frato Construction Inc., the plaintiff's debtor, garnishment would be required, not the seizure in execution proceeding. Trudel tells us that "seizure is still possible, even if the third party denied his debt: the judgment creditor may always challenge the garnishee's negative statement and establish his debtor status". Trudel adds that "In doing so, he is substantially exercising the rights conferred by article 1031 C.C.". The direct subrogatory action in place of the debtor clearly cannot be brought unless the creditor is unable to garnish directly, Trudel concludes. It is thus impossible for the creditor to garnish when the debtor neglects to bring an action for damages. If there is no liquidation of damages, nothing is yet payable. The creditor will then be compelled to bring the action in place of his debtor himself.

[38]      Additionally, I do not think here that the fact the parties to the loan may consider that the loan is not payable is a circumstance that impedes the garnishment and requires a creditor, such as the judgment creditor, to proceed by oblique action so as first to ensure that the obligation to pay the loan is part of the judgment debtor's estate.

[39]      As mentioned earlier in Investissements Étrusques:

[TRANSLATION]

It is thus impossible for the creditor to garnish when the debtor neglects to bring an action for damages. If there are no liquidated damages, nothing is yet payable. The creditor will then be compelled to bring the action in place of his debtor himself.

(See also, for a situation of this kind, Shore v. Shore, REJB 1998-09666 (S.C.), in which the existence of the debt which was to be garnished had not even been established. In that case the Court held that it would be necessary to bring an oblique action, since the garnishment could not be used to give rise to the debt that was to be intercepted by the garnishment.)

[40]      In the case at bar, the parties to the loan admitted that the debt existed. Only its time of payment remained to be decided following the statement by the garnishee.

[41]      On this question of the payment date I think that Rule 453, which provides that the Court may determine any question of a garnishee's liability, enables the Court to consider the possible application of article 1512 C.C.Q. in connection with a garnishment.

[42]      Further, relying on Income Tax Act et al. v. Auberge Bon Conseil (1988) inc., a judgment dated November 20, 2000, case ITA-4127-95 (per Nadon J., as he then was), the garnishee argued that a summary proceeding is not appropriate for hearing an oblique remedy.

[43]      That decision dealt primarily with an objection to a seizure in execution.

[44]      Secondly, in the event of garnishment Rule 453 expressly provides that the summary proceeding may be used.

[45]      Additionally, in Gadbois, supra, paragraph [22], the Federal Court of Appeal (the bench consisting of Nadon J.A.) had to decide the same question, namely whether the summary procedure was fair and appropriate in a garnishment in which Her Majesty the Queen was asking that the corporate veil be lifted in respect of the judgment debtor, and that an assignment of debt not be set up against her. At paragraphs 28 to 31, the Court said the following:

[28]         The respondent contended that the questions raised by the appellant could not be resolved in a fair and appropriate manner with the use of affidavit evidence, even if the affiants were cross-examined. Again, we should recall that it is not the appellant who raises questions with respect to opposability and simulation but, in fact, the respondent who is seeking to avail itself of a secret contract, an assignment of debt and releases by setting them up against the appellant. The respondent is hard-pressed to complain of a dispute that it created and of the process associated with it.

[29]         Further, I am not satisfied that in this case the issues in dispute cannot be adequately argued on the basis of the documentary evidence in the record, affidavit evidence and cross-examinations of the affiants, as is the usual procedure in connection with motions in Federal Court, and consequently, that we must deviate from the general scheme applicable to motions. The arguments of the garnishee, for the most part, raise issues of law, as is often the case when enforcing a judgment, whether it is a Federal Court judgment or a judgment from a provincial court.

[30]         As provided in Rule 371 of the Federal Court Rules, 1998, it is always possible for a party to a motion to request, in special circumstances, leave to call a witness on issues of fact. The Court may then grant that request if it considers it vital to the exercise of its jurisdiction, which, need we point out, is not dependent on difficulties in assessing evidence.

[31]         Furthermore, when a garnishment is being disputed, Rule 453 specifically gives the Court the authority to order that the questions concerning the garnishee be determined in such a manner as it may direct rather than by summary procedure. That Rule therefore provides the flexibility needed to do justice between the parties.

[46]      To return to article 1512 C.C.Q., the garnishee also challenged its use. As indicated earlier, that article reads as follows:

[47]      Strictly according to the wording of that article, the Court can only intervene where one or another of the following three possibilities exists:

            1.         the parties have agreed to delay determination of the term and have not done so within a reasonable time;

            2.         one of the parties, which was to determine the term, has not done so within a reasonable time;

            3.         the agreement does not provide for a term.

[48]      According to the judgment creditor, the situation in the case at bar puts us in the first possibility contemplated by that article, namely where the parties have agreed to delay determination of the term and have not done so within a reasonable time.

[49]      I am not sure that, strictly speaking, it can really be said that is the case here. In the situation before the Court, the parties have not "delayed the determination" of the term as such. The term was stated in the agreement between the parties from the outset. It would be [TRANSLATION] "when the garnishee's financial situation allows".

[50]      The garnishee vigorously maintained that when a term has been determined in the contract by the parties, the Court cannot intervene under article 1512 C.C.Q. and depart from the agreement existing between those parties. Its intervention is thus limited to noting whether the event constituting the term has occurred.

[51]      The garnishee referred the Court to the writers Baudoin and Jobin, where it states:

[TRANSLATION]

An obligation for a debtor to pay "when he can", or "when he has the means to do so", is not a conditional potestative obligation, but a term obligation: the Court is sometimes obliged to intervene to determine whether in fact the term has actually occurred.

BAUDOIN, J.-L. and P.-G. JOBIN, Les Obligations, 5th ed., Cowansville, Les Éditions Yvon Blais inc., 1998, pp. 452 and 453, No. 573.

[52]      In its submission, if the debtor is capable of paying the Court must set the term. The Court may even determine the conditions of payment. The Court may also set a term where the debtor is acting in bad faith.

[53]      In the case at bar, according to the garnishee, there is no evidence the judgment debtor and garnishee are not in good faith. It maintained that the garnishee did not for the time being have the necessary liquidity to repay the judgment debtor. Moreover, the judgment debtor has never by notification requested repayment of the money loaned or the setting of a term.

[54]      However, precedent appears to allow the Court to go beyond simply deciding whether the borrower's ability to pay means that the term should be regarded as having occurred and the payment as being due. It follows from Binette v. Globensky (1931), 71 S.C. 111, that regardless of the borrower's ability to pay, the Court may under article 1512, the predecessor of which was article 1783 of the Civil Code of Lower Canada, intervene and set a payment deadline for the borrower when it is found that the latter is taking too long to repay the loan. At page 113 of Binette, the Court said the following:

[TRANSLATION]

The obligation assumed by a debtor to pay when he can, when he has the means to do so, is not a conditional obligation, that is, one the performance of which can only be sought when he is really in a position to do it, but a term obligation the payment of which may be sought as soon as the debtor is in a condition to pay, but the due date of which may be set by the Court, taking all the circumstances into account and adopting, as a case cited below says, a compromise between a too severe demand by the creditor and too long a delay by the debtor. Consequently, when the term is set in this way the debtor, whatever the state of his funding, must pay at that term. The Napoleonic Code contains an article which says this expressly:

[TRANSLATION] 1901. If it has only been agreed that the borrower will pay when he can or when he has the means to do so, the judge will set a term for payment depending on the circumstances.

[Emphasis added.]

[55]      The garnishee suggests that case should be distinguished since the ultimate term with which the Court is concerned in the case at bar was set as a matter of grace, not by contract. I do not think this point is such as to exclude the rule cited above. In that case, when the Court considered the point raised here by the garnishee, the Court at once decided it could intervene. It is the length of the time given to the borrower that the Court regarded as the question of grace raised by the garnishee.

[56]      Binette was followed in 1998 in Passfield v. Truchon, 99BE-454.

[57]      The judgment creditor also referred the Court to Boisvert, supra, paragraph [28]. The garnishee considered that this case was not applicable here since, according to the way it read the case, the loan in question had no specific provisions as to the due date. Although there appears to be some uncertainty in this regard, in my opinion the Court in Boisvert ultimately concluded that it had to deal with a loan subject to a suspensory term similar to the one in the case at bar. At pages 2 and 3, the Court indicated its position and intervened, setting a term as follows:

[TRANSLATION]

The Court concludes that essentially the three shareholders had agreed on a term, namely that the business would repay the loans to the shareholders when it had the means to do so, when its financial situation permitted: this uncertain condition was taken as certain and they therefore agreed to delay setting the term. In all likelihood, the plaintiff may find it difficult to argue that this was a loan repayable on demand, having in any case admitted that the loan was an investment, having agreed not to set a precise due date, and even having waived the payment of interest.

In the Court's opinion the weight of the evidence was that in the case at bar this was an obligation with a suspensive term, within the meaning of article 1508 of the Civil Code of Quebec:

An obligation with a suspensive term is an existing obligation that does not become exigible until the occurrence of a future and certain event.

Accordingly, the plaintiff clearly cannot validly argue that this was a loan payable on demand, when the evidence actually showed that the loan was subject to a term, namely when the company had the means to make repayment, and that term has not to date been determined or set by the parties. Article 1512 of the Civil Code of Quebec states that:

Where the parties have agreed to delay the determination of the term or to leave it to one of them to make such determination and where, after a reasonable time, no term has been determined, the court may, upon the application of one of the parties, fix the term according to the nature of the obligation, the situation of the parties and the circumstances.

The court may also fix the term where a term is required by the nature of the obligation and there is no agreement as to how it may be determined.

The pleadings filed contain no application to set the due date of the loan; however, counsel for the parties both referred to this in their pleadings, alternatively to their principal conclusions, which enables the Court to dispose of the application in the case at bar. Since the essence of a loan of money is that it be repaid on a date agreed between the parties or set by the Court, it is in the interests of the parties for the due date of the loan to be determined by this judgment.

In the case at bar, the loan was made by the plaintiff on March 21, 1996, and at the date of the hearing on December 5, 1997, that is nearly 19 months later, the parties had not determined the due date: the Court considers that the parties had a reasonable time to do this and as they have not done so proceeds to set the term. The Court finds that a term of five years seems appropriate in the circumstances, and the due date is set at March 21, 2001.

[58]      I therefore consider that the Court may intervene here pursuant to article 1512 C.C.Q.

[59]      As we saw above, under article 1512 C.C.Q., this Court may set a "term according to the nature of the obligation, the situation of the parties and the circumstances".

[60]      The case at bar involves a simple loan (2314 C.C.Q.), without interest, between related companies. (The shares of the judgment debtor, Corporation Steckmar, are held 49% by Arthur Steckler, 49% by his sister and 2% by his mother. The shares of the garnishee all belong to Mr. Steckler.)

[61]      For a period of 25 years, until 10 years ago, the judgment debtor advanced money to the garnishee totalling over four million dollars ($4,255,534.41), so the latter could lend it to Marina Development Inc., a U.S. company building hydroelectric dams, all of whose shares were held by Arthur Steckler.

[62]      Over those 25 years, the garnishee made very little repayment.

[63]      Although more elaborate documents were apparently requested by the judgment creditor to corroborate Mr. Steckler's statements regarding repayments by the garnishee, only a quite brief note and the examination of Mr. Steckler support the conclusion that between September 1995 and September 1996 the item for advances between the judgment debtor and garnishee was reduced by $749,330: this represents the only proof of repayment in the 25 years and is only 15% of the total debt at that time.

[64]      Further, the interim garnishment order against the garnishee was made on December 13, 1999, and was served on it on or about December 30, 1999.

[65]      The garnishee has already had additional time of over four years since the interim garnishment order was made.

[66]      In my opinion, there is no justification under article 1512 C.C.Q. for the garnishee to have additional time to avoid an order for the immediate and final garnishment, assignment and transfer to Her Majesty the Queen in right of Canada of any amounts due or to become due to the judgment debtor by the garnishee, and in particular the sum of $4,255,534.41 transferred to the garnishee by the judgment debtor as a loan, in satisfaction of and up to the amount remaining due under the certificate filed in this Court on February 3, 1999, pursuant to section 223 of the Income Tax Act, namely the sum of $126,666.39, plus interest compounded daily on the said amount as prescribed under the Income Tax Act for the period from October 26, 1999, to the date of payment, plus the costs of these garnishment proceedings.

[67]      An order will be made accordingly following the approach taken in the interim garnishment order issued in the past.

Montréal, Quebec

April 19, 2004

Certified true translation

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

                                                             FEDERAL COURT

                                                      SOLICITORS OF RECORD

DOCKET:                                     ITA-1096-99

STYLE OF CAUSE:                     In re the Income Tax Act

- and -

In re one or more assessments made by the Minister of National Revenue pursuant to one or more of the following statutes: the Income Tax Act, the Canada Pension Plan and the Employment Insurance Act

AGAINST:

LA CORPORATION STECKMAR/ STECKMAR CORPORATION

Judgment debtor

and

STECKMAR NATIONAL REALTY AND INVESTMENT CORPORATION

Garnishee

PLACE OF HEARING:                                             Montréal, Quebec

DATE OF HEARING:                                               February 11, 2004

REASONS FOR ORDER BY:                                  Richard Morneau, prothonotary

DATED:                                                                      April 19, 2004

APPEARANCES:

CLAUDE BERNARD                                                  FOR THE JUDGMENT CREDITOR

BASILE ANGELOPOULOS                                       FOR THE JUDGMENT DEBTOR AND GARNISHEE

SOLICITORS OF RECORD:

MORRIS ROSENBERG                                              FOR THE JUDGMENT CREDITOR

DEPUTY ATTORNEY GENERAL OF CANADA

ANGELOPOULOS, KIRIAZIS                                   FOR THE JUDGMENT DEBTOR AND

MONTRÉAL, QUEBEC                                              GARNISHEE