Date: 20040531
Docket: GST-2423-02
Citation: 2004 FC 792
Montréal, Quebec, May 31, 2004
Present: RICHARD MORNEAU, PROTHONOTARY
IN THE MATTER OF THE EXCISE TAX ACT
and
IN THE MATTER OF AN ASSESSMENT OR ASSESSMENTS
ISSUED BY THE DEPUTY MINISTER OF REVENUE OF QUEBEC
UNDER THE EXCISE TAX ACT
AGAINST:
9049-4907 QUÉBEC INC.
Debtor
and
METROMEC EQUIPMENT INC.
Garnishee
REASONS FOR ORDER AND ORDER
[1] This is a motion by counsel for the judgment debtor under article 2651(1) of the Civil Code of Québec (C.C.Q.) that he be paid $6,800.
[2] This amount was made available to the judgment debtor pursuant to a settlement reached between it and the garnishee Metromec Equipment Inc. (Metromec) in a proceeding filed in Superior Court (docket 500-17-008656-006) by the judgment debtor in which the latter sued Metromec for the malfunctioning and poor state of repair of some equipment it had purchased from Metromec.
[3] Counsel for the judgment debtor argues that it is his professional work that led to getting the out-of-court settlement. Since he has about $12,000 in professional fees owing to him from the debtor, he thinks article 2651(1) of the C.C.Q. authorizes him to a prior claim on the settlement amount.
[4] Article 2651(1) C.C.Q. reads:
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Art. 2651. The following are the prior claims and, notwithstanding any agreement to the contrary, they are in all cases collocated in the order here set out:
(1) legal costs and all expenses incurred in the common interest;
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Art. 2651. Les créances prioritaires sont les suivantes et, lorsqu'elles se rencontrent, elles sont, malgré toute convention contraire, colloquées dans cet ordre :
1. Les frais de justice et toutes les dépenses faites dans l'intérêt commun;
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[5] It should be noted here that the amount of this settlement is also subject to an interim garnishment order in favour of the Deputy Minister of Revenue of Quebec in this case to satisfy a tax debt of the judgment debtor. Accordingly, if the judgment debtor's counsel is not right on this motion, the interim garnishment order will be made a final order through a separate order.
Analysis
[6] Unfortunately for the judgment debtor's counsel, I do not think that in the circumstances his claim for professional fees can be considered to have priority under article 2651(1) C.C.Q.
[7] In this case, the judgment debtor's fees were incurred at the request of the debtor, who instructed him to sue in his own interest, and not by a creditor in the common interest of the creditors.
[8] It turns out that the expenditures made in the common interest are those made, at a time when steps leading to the execution and realization of the patrimony are underway, in order to protect the assets that are subject to the common pledge. They do not include those made in the individual interest of the creditor, still less the debtor. (See Louis Payette, Les Sûretés dans le Code civil du Québec (Les Éditions Yvon Blais Inc.), page 57.)
[9] It turns out as well that the legislature created this priority for reasons of collective interests in order to encourage creditors to take the initiative in the realization of the debtor's property. If this preference did not exist, each would wait for another creditor to incur the costs and then participate in the distribution of the funds. It is therefore a priority of execution, which does not really confer any advantage on those who will simply be reimbursed the costs incurred in the collective interest of all the creditors. (See Denise Pratte, Priorités et hypothèques (Les Éditions Revue de droit), pages 348 and 349.)
[10] For these reasons, the motion by counsel for the judgment debtor is dismissed with costs.
"Richard Morneau"
Prothonotary
Certified true translation
Suzanne Gauthier, C.Tr., LL.L.
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: GST-2423-02
STYLE: In the matter of the Excise Tax Act
- and -
In the matter of an assessment or assessments issued by the Deputy Minister of Revenue of Quebec representing Her Majesty the Queen in right of Canada under the Excise Tax Act
AGAINST:
9049-4907 QUÉBEC INC.
Debtor
and
METROMEC EQUIPMENT INC.
Garnishee
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: May 28, 2004
REASONS FOR ORDER: Richard Morneau, Prothonotary
DATED: May 31, 2004
APPEARANCES:
Louis Pelletier FOR THE DEPUTY MINISTER OF REVENUE OF QUEBEC
Gordon M. Selig FOR HIMSELF, AS ADVERSE CLAIMANT
Leonard Kliger FOR THE GARNISHEE, METROMEC EQUIPMENT INC.
SOLICITORS OF RECORD:
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Veillette & Associés
Montréal, Quebec
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FOR THE DEPUTY MINISTER OF REVENUE OF QUEBEC
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Gordon M. Selig
Montréal, Quebec
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FOR HIMSELF, AS ADVERSE CLAIMANT
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Leonard Kliger
Montréal, Quebec
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FOR THE GARNISHEE, METROMEC EQUIPMENT INC.
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