Wellgate International Inc. v. Canada (Minister of National Revenue), docket T-662-99

Date: 200006-

Docket: T-662-99

BETWEEN:

                     WELLGATE INTERNATIONAL LTD.

                                                                                          Applicant

AND:

               THE MINISTER OF NATIONAL REVENUE

                                                                                     Respondent

AND:

                                                                                      ITA-2429-99

       DANS L'AFFAIRE de la Loi de l'impôt sur le revenu

                                                  - et -

DANS L'AFFAIRE d'une cotisation ou des cotisations établies par le ministre du Revenu national en vertu d'une ou plusieurs des lois suivantes: la Loi de l'impôt sur le revenu, le Régime de pensions du Canada, la Loi sur l'assurance-emploi

CONTRE:

                     SERVICES M.L. MARENGÈRE INC.

                                                                         Débitrice judiciaire

ET:

                           RICHTER ET ASSOCIÉS INC.

                                                                                    Tierce-saisie

ET:

                     WELLGATE INTERNATIONAL LTD.

                                                                                 Mise-en-cause

                                REASONS FOR ORDER

ROULEAU J.

[1]     These two applications arise from the same facts and were heard together. In T-662-99, the applicant Wellgate International Ltd. seeks, by way of judicial review, an order setting aside the Requirement to Pay notices issued by the respondent Minister under subsection 224(1) of the Income Tax Act (the "Act") which had been directed to Richter and Associates Inc. In ITA-2429-99, the Minister of National Revenue, having issued a certificate against Services M.L. Marengère Inc., a debtor under subsection 223(2) of the Act and having registered it in the Federal Court pursuant to subsection 223(3) of the Act, obtained an ex parte order for garnishment also directed to Richter and Associates Inc. The garnishee, having not responded, this application is directed to render executory the garnishment order pursuant to Rule 451 of the Federal Court Rules and is now being opposed by the judgment debtor, Services M. L. Marengère Inc. and the Interested Party, Wellgate International Inc.

[2]                 Michel Marengère, through his personal services corporation, Services M. L. Marengère Inc., had been retained as Chairman and Chief Executive Officer of Dominion Bridge Corporation in February of 1995 and his personal corporation has filed annual income tax returns.    As a result of information obtained in late 1998 and early 1999, the Minister of National Revenue, on March 5, 1999, proceeded to reassess Services M. L. Marengère Inc. for the taxation years ending September 30, 1995, 1996 and 1997 for a total of arrears, interest and penalties in the amount of $881,848. The Minister further issued an assessment for the 1998 taxation year claiming taxes owing, interest and penalties in the amount of $1,192,545. He proceeded to apply and obtained from this Court an Order of Forfeiture under subsection 225(2) of the Act. He also directed notices to garnishee pursuant to subsection 224(1) of the Act to Richter and Associates Inc.; finally, an ex parte order was obtained from this Court in July, 1999, pursuant to rule 449 of the Federal Court Rules. Both the latter proceedings are the object of this debate.

[3]                To better understand this dispute, it is important to outline the association of various corporate entities. Services M.L. Marengère Inc., a Quebec corporation controlled by Mr. Michel Marengère; Wellgate International Inc., a British Virgin Island corporation of which Mr. Marengère is Chairman ("Wellgate"); and, Dominion Bridge Group of Companies (the Dominion Bridge Group), formerly the Cedar Group. The Dominion Bridge Group has several components. The parent Dominion Bridge Corporation ("DBC") is a Delaware holding corporation and Cedar Group Canada Inc. ("Cedar Canada") is a wholly owned subsidiary of DBC and itself a holding company with interests in four separate units: Cedar Group Australia Pty Limited which owned 63.8% of an operating engineering firm known as McConnell Dowell ("McConnell"); Dominion Bridge Inc., a Canadian operating company ("DBI"); Steen Contractors Ltd. ("Steen"), a Canadian company with two subsidiaries, Becker Contractors Ltd. and Les Entreprises Becker Inc.; and, Davie Industries Inc., a shipyard operator in Quebec ("Davie") with a wholly owned subsidiary M.I.L. Intermodal Inc.

[4]                On February 1, 1995, a Services Agreement was entered into between Cedar Group Inc. (now DBC) and "Michel L. Marengère, an individual resident in the Province of Quebec, and his company "Services M.L. Marengère Inc." which was to provide the services of Mr. Marengère to DBC (the "Services Agreement"). Pursuant to the agreement, Mr. Marengère was to act as Chairman and Chief Executive Officer of DBC and all the attendant responsibilities for the Dominion Bridge Group as a whole. The services were to be performed primarily in Montreal for a three year term subject to a further three year renewal clause.

[5]                On September 26, 1997, a Credit Agreement was entered into between the Bank of New York ("BNY Financial") as lead lender and others and Cedar Canada, as borrower, with its four business units as guarantors. The credit provided to Cedar Canada was a revolving line of credit of up to $40 million, the proceeds of which would be used to repay certain indebtedness of Cedar Canada to BT Commercial Corporation, to finance the working capital requirements of Cedar Canada, and DBI Steen and Davie in the ordinary course of business and to pay fees and expenses incurred in connection with the transaction.

[6]                On April 6, 1998, another Credit Agreement was entered into between Lamar Investments, Inc. and Wellgate International Ltd. as lenders and Cedar Group as borrower with its four business units as subsidiary guarantors. The first recital of this agreement provided as follows:

A. The Borrower has requested that the Lenders make available to the Borrower credit accommodations in an aggregate principal amount at any one time outstanding owing to Wellgate under the Settlement, Release and Discharge Agreements between the Parent and Messrs. Marengère, Matossian and Amyot, (the "Settlement Obligations"), to repay certain outstanding tax obligations owed to Revenue Canada and to finance working capital requirements of the Borrower and DBI, Steen and Davie in the ordinary course of business and to pay fees and expenses incurred in connection herewith.

[7]                On April 28, 1998, as the result of a falling out between DBC and Michel Marengère as well as two other Canadian corporate executives, their services were terminated and Settlement and Release Agreements were entered into with each of the three corporate executives totalling compensation of $4.8 million U.S. The agreement was "among MICHEL L. MARENGÈRE, ("Mr. Marengère"), a resident of Quebec, Canada, SERVICE M.L. MARENGÈRE INC., a Canadian services corporation ("Services MLM" and others), and DOMINION BRIDGE CORPORATION, a Delaware corporation (the "Corporation")." Services MLM is to be compensated for the remaining portion of the personal services contract as well as damages. The crucial provision of the Settlement and Release Agreement which is of primary interest in this dispute states:

The Corporation agrees to pay Services MLM or its assignees for the said termination and the extra contractual damages, the sum of Two Million Seven Hundred Thousand Dollars ($2,700,000). These payments will be made by delivery at the time of execution of this Agreement to Pouliot Mercure as trustee for Wellgate International, Ltd. ("Wellgate") of the Corporation's 11.5% Convertible Note (the "Note") in the principal amount of Four Million Eight Hundred Thousand Dollars ($4,800,000), in which Services MLM will have a beneficial interest equal to $2,700,000. The Note is convertible into shares of Common Stock, $.001 par value per share, of the Corporation at the conversion rate of $2.60 per share. A copy of the Note is attached hereto as Exhibit B.

[8]                The agreement also provided that as an incentive to Services MLM and Wellgate to accept the Note, Dominion Bridge would issue a common stock purchase warrant to Wellgate to purchase 333,708 shares of common stock at $.001 par value per share of the Corporation at $3.00 per share for a three year period commencing on April 28, 1998, during which time Services MLM would have a beneficial interest to purchase 187,711 shares. The note for $4.8 million U.S. payable to Services M.L. Marengère Inc. In which it retained a beneficial interest of $2.7 million U.S. was due 18 months after the execution of the Settlement and Release Agreement or sooner in the event that DBC was unable to meet the repayment undertakings as provided in the Loan Agreement of April 6, 1998.

[9]                On the same date, April 28, 1998, Michel Marengère personally and through Services MLM, his personal services corporation, transferred and assigned to Wellgate the contractual and economic benefits owed to them by DBC under the Settlement and Release Agreement. Other assignors joining in the instrument include Nicolas V. Matossian, personally and Greyhorse Resources (Canada) Ltd. ("Greyhorse"), a Canadian services corporation controlled by Mr. Matossian and Rene Amyot (the two other executives formerly employed by DBC who retained the beneficial interest of the remainder of the $4.8 million U.S.). Mr. Marengère and Mr. Matossian, as officers of Wellgate, executed the document accepting as assignee the transfer and assignment. This instrument stated that in consideration for the assignment and transfer, Wellgate "hereby issues a convertible promissory note to the Assignors in the principal amount of U.S. $4,800,000".

[10]            On October 26, 1998, BNY, as a secured creditor, petitioned the Quebec Superior Court (Bankruptcy and Insolvency Division) in the matter of Cedar Canada's proposal under the Bankruptcy and Insolvency Act. The objective was to force the sale of the McConnell shares, which was the most significant asset owned by Cedar Canada.

[11]            On February 17, 1999, the Quebec Superior Court (in bankruptcy) directed Richter and Associates Inc. to sell the McConnell shares for $84,000,000 (Australian funds), to receive the funds and deposit them into a trust account in a Canadian chartered bank to be dealt with in accordance with the applicable provisions of the Civil Code of Quebec and the Civil Code of Procedure.

[12]            On February 19, 1999, Wellgate filed a claim with Richter and Associates Inc. claiming the $4.8 millions U.S. due under the Settlement and Release Agreement which had been assigned to it by Services M. L. Marengère Inc. and others.

[13]            It is alleged, under the Credit Agreement of April 6, 1998, that Wellgate made available to Cedar Canada a loan in the amount of U.S. $4,800,000 which was secured by a specific charge on the McConnell shares.

[14]            Having reassessed Services M. L. Marengère Inc. for the taxation years 1995, 1996 and 1997 and having assessed the corporation for the 1998 taxation year, and being aware of the claim by Wellgate, on March 15, 1999, the Minister issued to Richter and Associates Inc. Requirements to Pay under subsection 224(1) of the Income Tax Act, naming Wellgate International Ltd. as a "tax debtor". On the same day, the Minister transmitted a number of letters under the same section of the Act to various parties, requiring them to pay to the Minister amounts payable by them to Services M.L. Marengère Inc. and/or Wellgate International Ltd.

[15]            Wellgate International Ltd. now brings an application in file T-662-99 for judicial review seeking an order setting aside the Requirement to Pay notices issued by the Minister under subsection 224(1) of the Act alleging primarily that it is not a "tax debtor" and only Services M.L. Marengère Inc. could be so described.

[16]            The Minister then brought an ex parte motion before this Court under Rules 449 and 451 of the Federal Court Rules for a garnishment order against Services M.L Marengère Inc., Richter & Associates Inc., and Wellgate International Ltd. By order dated July 19, 1999, the Court granted the garnishment order in favour of the Crown. A hearing was scheduled to proceed on November 3, 1999 before Prothonotary Morneau with respect to obtaining a final garnishment order. The hearing was rescheduled to the week of April 11, 2000, at which time it was agreed by the parties that since the application in file ITA-2429-99 dealt with the same issues as those raised in the judicial review application in T-662-99, the matters would be heard together. That hearing took place before me in Montreal on April 18, 2000.

[17]            I have given careful consideration to the arguments and submissions of the parties and am satisfied that the proper course to follow in both applications is to stay these matters pending the final disposition of an ongoing action in the Quebec Superior Court (court file no. 500-05-052021-993) commenced September 23, 1999. In the action before the Superior Court of Quebec, the Minister is seeking to set aside the transfer of the beneficial interest that Services M.L. Marengère Inc. has assigned to Wellgate claiming fraud and ultimately setting aside the corporate veil.

[18]            Wellgate disputes owing any money to Revenue Canada and further denies any responsibility for the alleged debts of Services M.L. Marengère Inc. The underlying basis of the Minister's position on the other hand, is that the validity of the transactions and contracts entered into in April of 1998 are fraudulent and invalid thereby rendering Wellgate responsible for the money owed.

[19]            The Minister argues in his submissions that there is no possible claim that Wellgate can assert vis-à-vis the Cedar Group since there was no consideration advanced by Wellgate to the Cedar Group pursuant to the agreement entered into on April 6, 1998 and since there was no actual loan the contract should be set aside. He relies on Article 2314 of the Quebec Civil Code which states as follows:

[20]            He further asserts that the assignment between Services M.L. Marengère Inc. and others to Wellgate should be set aside because of the doctrine of simulation and refers the Court to Article 1451 of the Quebec Civil Code which provides as follows:

[21]            He then refers me to Article 1452 of the Quebec Civil Code stating that third persons in good faith have a right to claim an interest:

[22]            He further submits that this transaction is fictitious and disguises true meaning; that there was in fact an intent to deceive and the agreement should be set aside.

[23]            He also refers to Articles 317 and 1631 of the Quebec Civil Code stating that the agreement should be set aside because of fraud and that a creditor cannot render himself insolvent in such a way as to defeat a valid creditor and that such conduct or agreement may be set aside:

[24]            Finally, the Minister seeks to have the Court lift the alleged corporate veil and find that Wellgate is nothing more than a figurehead for Services M.L. Marengère Inc. In short, the integral question here and its resolution encompasses the validity of contracts entered into between private parties. As a result, I have grave doubts as to whether this Court has jurisdiction to entertain these matters.   

[25]            The Supreme Court of Canada has developed a three-pronged test for the determination of Federal Court jurisdiction. In ITO-Int. Terminal Operators Ltd. v. Miida Electronics Inc., [1986] 1 S.C.R. 752, the Court stated at p. 766:

The general extent of the jurisdiction of the Federal Court has been the subject of much judicial consideration in recent years. In [1977] 2 S.C.R. 1054">Quebec North Shore Paper Co. v. Canadian Pacific Ltd., [1977] 2 S.C.R. 1054 and in [1977] 2 S.C.R. 654">McNamara Construction (Western) Ltd. v. The Queen, [1977] 2 S.C.R. 654, the essential requirements to support a finding of jurisdiction in the Federal Court were established. They are:

1. There must be a statutory grant of jurisdiction by the federal Parliament.

2. There must be an existing body of federal law which is essential to the disposition of the case and which nourishes the statutory grant of jurisdiction.

3. The law on which the case is based must be a "law of Canada" as the phrase is used in s. 101 of the Constitution Act, 1867.

[26]            In order to satisfy the second requirement for this Court's jurisdiction, the existing body of federal law must be "essential to the disposition of the case" and must "nourish" the statutory grant of jurisdiction. The question which continues to arise in cases raising a jurisdictional issue is how much federal law is sufficient to confer jurisdiction. In McNamara the Supreme Court held that the mere fact that the federal Crown is plaintiff is not enough. Nor is it enough that the cause of action depends upon another cause of action that is within the Court's jurisdiction. In [1980] 1 S.C.R. 695">R. v. Thomas Fuller Const. Co. (1958) Ltd., [1980] 1 S.C.R. 695, the majority of the Supreme Court rejected the argument that a third party proceeding by the Crown for contribution and indemnity against a private party came within the Federal Court's jurisdiction because it arose from and was dependent upon the plaintiff's claim against the Crown, which itself was founded upon federal law. The majority held that the Federal Court was without jurisdiction to entertain the third party proceeding because federal law could not be said to embrace the issues on the third party notice, since that claim arose not out of liability of the Crown, but only out of the contract of indemnity and the provincial legislation.

[27]            The question of the Court's jurisdiction was again canvassed by Bastarache J. of the Supreme Court of Canada in the case Canadian Human Rights Commission v. Canadian Liberty Net, [1998] 1 S.C.R. 626. There is no doubt that in this particular case the Court was dealing with a federal tribunal over which the Federal Court of Canada had some supervisory jurisdiction. The Supreme Court analyzed and put forward certain tests for determining the existence of jurisdiction as opposed to the appropriateness of exercising jurisdiction. At page 653, Bastarache J. wrote the following passage from Professor Hogg:

Section 101 does not authorize the establishment of courts of general jurisdiction akin to the provincial courts. It only authorizes courts "for the better administration of the laws of Canada". This has two important consequences. First, it means that the Federal Court of Canada has no inherent jurisdiction; its jurisdiction is confined to those subject matters conferred upon it by the Federal Court Act or other statute. Secondly, it means that the Federal Court can be given jurisdiction over only subject matters governed by the "laws of Canada".

[28]            At pages 658-659, Bastarache J. wrote the following:

As is clear from the face of the Federal Court Act, and confirmed by the additional role conferred on it in other federal Acts, in this case the Human Rights Act. Parliament intended to grant a general administrative jurisdiction over federal tribunals to the Federal Court. Within the sphere of control and exercise of powers over administrative decision-makers, the powers conferred on the Federal Court by statute should not be interpreted in a narrow fashion. This means that where an issue is clearly related to the control and exercise of powers of an administrative agency, which includes the interim measures to regulate disputes whose final disposition is left to an administrative decision-maker, the Federal Court can be considered to have a plenary jurisdiction.

[29]            He went on to conclude:

Many federal Acts do not provide for the exercise of administrative decision-making authority. Where that is the case, the reasoning adopted here with respect to the broad supervisory jurisdiction of the Federal Court is inapplicable.

I do not believe that anything in this approach undermines the special position of s. 96 courts, or that there is any likelihood of s. 101 courts acting beyond their constitutional competence. The third requirement of the ITO, supra, test - that the law be a constitutionally valid law of Canada - guarantees that from a doctrinal perspective. From an institutional perspective, i believe the ultimate guarantee is provided by this Court, whose purpose is to serve as the court of appeal for the federal and each provincial superior court system, and to ensure tahat each remains within its jurisdictional limits. Nor should anything which I have said in the foregoing be taken to undermine the long-established principle that where there is no federal law in a matter of federal jurisdiction, provincial superior courts continue to have jurisdiction by virtue of the doctrine of inherent jurisdiction. Even where federal law has been enacted, but there is no administrative decision-maker subject to the operation of the Federal Court Act or any other grant of jurisdiction to the Federal Court in the Act in question, then s. 96 courts continue to exercise an inherent jurisdiction.

(emphasis added)

[30]            I find that reasoning equally applicable to the matters now before me. When the "conclusions of the action" are examined here, it is clear that the Crown is not simply seeking to realize a debt of the judgment debtor. On the contrary, what the Minister is endeavouring to establish is that certain agreements and contracts entered into between private parties are invalid and fraudulent. According to the Crown, if a finding of that nature is made, there could be no question that the applicant owes the money in question and that the Requirement to Pay notices issued under section 224 of the Income Tax Act were proper and that a final garnishment order under the Federal Court Rules is warranted.

[31]            In Le Bois de Construction du Nord (1971) Ltée. v. The Queen [1986] 2 C.T.C. 227, the judgment debtor, a company incorporated under the Quebec Companies Act, was insolvent. Its only assets were promissory notes. The company declared a dividend of the amount due in on the notes. The notes were then replaced by notes in favour of the shareholders of the company. One of the shareholders and director of the company was also one of the partners indebted under the notes. The Minister issued an assessment, registered it with the Federal Court and obtained a provisional order of seizure against the partners . They appealed on the basis that they owed nothing. The Crown contested the partners' declaration that they did not owe any money, asking, inter alia, that the replacement of the promissory notes be declared illegal, fraudulent and of no effect. The appellant's argued that the Crown's application was beyond the jurisdiction of the Federal Court as a matter of provincial law.

[32]            Marceau J., in dissent, found that the Court did not have jurisdiction, stating his reasons in part as follows:

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 jurisdictional power, so it has the power to dispose of a question of 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 rises question of provincial law that the Court does not have jurisdiction to determine

The fact remains however that, even though what the appellants said in support of their argument cannot be accepted, the argument itself may still have some basis. The power of the Court to consider the respondent's objection depends on one essential condition, namely that the proceeding is merely a phase of compulsory execution, and to determine whether this condition is met it must first be asked what is involved in compulsory execution of a judgment which orders a party to pay a sum of money, as is the case here.

. . . therefore, the question is whether the respondents's objection in the case at bar is in fact still within the limits of compulsory execution . It can readily be seen from examining the conclusions of the action that it is not. The respondent does speak of a "fraudulent transaction", but the Court must look at exactly what is involved. The respondent does not dispute that the garnishees did actually pay their debt to the shareholders: what she is asking if I understand correctly is that the declaration of a dividend be ruled illegal and be voided, thus making it clear that the debt to the shareholders was only apparent, which would establish that the transfer of payment was a purely gratuitous act towards them. Even that is not all, for even if the transfer of payment and the payment were gratuitous, it does not follow that the garnishees should pay again as if they had not made the payment. The payment is a matter of fact and it extinguished the debt. For the garnishees to be required to pay again, there would have to b a debt equivalent to that extinguished, but based on some other cause that the one giving rise to the initial debt. I suppose it is quite possible for the Court to have the legal power to give effect to this group of claims on proof of fraud, provided that all the parties concerned are in court, the shareholders as well as the members of the partnership, and possibly the other creditors as well, and their position could then be determined, each in respect of the others, that is, who owes who and on what basis; but I think it is clear that the focus of such a group of claims is no longer simply distraint on the assets of the debtor and is completely outside the scope of execution proceedings. The respondent is not seeking to realize a debt of the judgment debtor, she is seeking to exercise an action which belongs only to her. In my opinion, this Court does not have jurisdiction to entertain it.

                 (emphasis added)

[33]            In argument before me, counsel for the Crown admitted that what the Minister is seeking is a lifting of the corporate veil and a finding that Wellgate International is nothing more than a figurehead for Services M.L. Marengère Inc. As suggested by Marceau J., I suppose it is possible for this Court to have the power to give effect to the Crown claims on proof of fraud provided that all of the parties involved are in Court. But, as in Le Bois de Construction du Nord, the focus of the Crown's position is no longer simply on the assets of the judgment debtor. Instead, the judgment debtor denies owing the money because of the validity of agreements between private parties while the Crown's position is based entirely on their invalidity. What of the interest of Matossian and Amyot who claim some beneficial interest in the $4.8 million U.S. promissory note?

[34]            The contractual issue therefore, cannot be considered to be in some way incidental to the Court's jurisdiction nor is it merely a phase of compulsory execution. Neither the Income Tax Act, which confers jurisdiction on the Court to review the Minister's discretion in issuing the Requirement to Pay notices, nor the Federal Court Rules, which grant jurisdiction to issue a final garnishment order, can in any way seem to bestow or nourish jurisdiction on this Court to undertake an examination of the circumstances surrounding the transactions and agreements in question and to make a determination with respect to the Crown's allegations of fraud, allegations which concern incidents that occurred some 8 months prior to this event. The question to be determined here and the remedies being sought are, in my view, completely outside the scope of execution proceedings or judicial review.

[35]            It should always be foremost in our mind that the Federal Court has no jurisdiction except that assigned to it by statute. The complete ouster of jurisdiction from the provincial superior courts in favour of vesting exclusive jurisdiction in a statutory court requires clear and explicit statutory wording.

[36]            In any event, even if I am wrong with respect to the jurisdictional question, a resolution of the issues involved here can not be fairly or adequately achieved on the basis of affidavit evidence alone, by this or any other Court. The allegations of fraud being made by the Minister are profound and have far-reaching consequences, not only for the parties to the litigation, but for the other signatories of the impugned agreements as well. A determination of that nature requires that the best evidence be available to the Court, namely, viva voce evidence subject to vigorous and meaningful cross-examination. It is understandable that the best evidence is not available here since the applications now before me are clearly intended to be dealt with in a summary fashion. The relevant sections of the Income Tax Act and the Federal Court Rules were never intended to deal with complex and intricate disputes of this nature nor are they procedurally designed to allow for the type of inquiry which needs to be undertaken.

[37]            Given the uncertainty concerning the Federal Court's jurisdiction and the inadequacy of summary proceedings for resolving the complex and difficult questions involved, I am convinced that the Quebec Superior Court, where an action has already been commenced, and which unquestionably has jurisdiction over the impugned contracts, is the proper forum for the resolution of the dispute between the parties.

[38]            For these reasons, both applications are stayed pending the final disposition of the action in the Quebec Superior Court (court file no. 500-05-052021-993) or, in the alternative, resolution by the Federal Court of Appeal or the Supreme Court of Canada ultimately determining the jurisdiction of the Court in this matter. The monies which have been deposited into a joint trust account by Richter & Associates in accordance with an agreement entered into by the parties on July 23, 1999, are not to be released until all issues have been resolved in the Quebec Superior Court, the Federal Court Trial Division, the Federal Court of Appeal or any other court of competent jurisdiction.

     JUDGE

OTTAWA, Ontario

FEDERAL COURT OF CANADA TRIAL DIVISION

NAMES OF SOLICITORS AND SOLICITORS ON THE RECORD

COURT FILE NO.:                      ITA-2429-99

STYLE OF CAUSE:Impot c. Services M.L. Marengère Inc. et al.

PLACE OF HEARING:              Montreal, Quebec

DATE OF HEARING:                 April 18, 2000

REASONS FOR ORDER:         The Honourable Justice Mr. Rouleau

DATED:                                       June 19, 2000

APPEARANCES

Mr. Aaron Rodgers                                                                               FOR PLAINTIFF

Mr. Daniel Beauchamp                                                                     FOR DEFENDANT

SOLICITORS OF RECORD:

Spiegel Sohmer                                                                     FOR PLAINTIFF     Montreal, Quebec

Morris Rosenberg                                                                  FOR DEFENDANT Deputy General of Canada

Montreal, Quebec