Deputy Minister of Rev. (Que.) v. Rainville, [1980] 1 SCR 35

SUPREME COURT OF CANADA

Deputy Minister of Rev. (Que.) v. Rainville, [1980] 1 S.C.R. 35

Date: 1979-11-20

Deputy Minister of Revenue Appellant; and

Paul Rainville, in his capacity as trustee of Raymond Bourgault, a bankrupt Respondent.

1979: March 13; 1979: November 20.

Present: Martland, Ritchie, Pigeon, Beetz, Estey, Pratte and McIntyre JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC

Bankruptcy — Secured creditor — Interpretation — Crown privilege — Retail sales tax — Cancellation of privilege — Bankruptcy Act, R.S.C. 1970, c. B-3, ss. 2, 107 — Civil Code, art. 1989 — Retail Sales Tax Act, R.S.Q. 1964, c. 71, s. 30.

The Deputy Minister of Revenue (the appellant) reg­istered a privilege on the immovable property of Ray­mond Bourgault (the bankrupt) pursuant to s. 30 of the Retail Sales Tax Act. The trustee (the respondent) was authorized to sell this immovable property, and the Deputy Minister objected to this judgment. The trustee thereupon submitted a motion to cancel the privilege, based on s. 107(1)(j) of the Bankruptcy Act. The Supe­rior Court upheld the Deputy Minister's submission, namely that he was a "secured creditor" within the meaning of s. 2 of the Bankruptcy Act, and dismissed the motion. A majority of the Court of Appeal refused to follow the opinion expressed by it earlier in Supertest Petroleum v. Jacques-Cartier Automobile Inc. and Shink, [1963] Que. Q.B. 336, where it was held that the Crown was a secured creditor, and the Court ruled in favour of the trustee. Hence the appeal to this Court.

Held (Estey J. dissenting): The appeal should be dismissed.

Per Martland, Ritchie, Pigeon, Beetz, Pratte and McIntyre JJ.: Following upon the Supertest case, the Legislature amend art. 1989 C.C., and the restriction which it placed on the provincial tax collector's privilege seems to imply admission of the correctness of the unanimous decision of the Court of Appeal on the nature and extent of the privilege. For this reason, there is no need to consider whether the privilege in question constitutes a real right in the immovable property of the debtor.

It is only necessary to examine the scope of, first, the definition of "secured creditor" in s. 2 of the Bankrupt­cy Act and, second, subs. (1)(j) of s. 107, the section setting out the scheme of distribution of the property of

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a bankrupt. While there is no conflict in the English version, which uses the word "privilege" in the definition and "preference" in s. 107(1)(j), in French, on the other hand, "secured creditor" is defined as a person "qui détient ... un privilège sur ou contre les biens du débiteur ...", and the same word appears in s. 107(1)(j): " ... nonobstant tout privilège statutaire à l'effet contraire".

It is abundantly clear that s. 107(1)(j) was Intended to put on an equal footing all claims by her Majesty in right of Canada or of a province, except in cases where it was provided otherwise: the legislator therefore cannot have intended to allow provincial statutes to confer any higher priority. As the provision in question is federal law intended to override provincial law in Canada, this is not a case for interpretation on the basis of technical meaning. If the contention of the appellant was upheld, it would mean that the Quebec tax collector, provided his privilege was registered before the bankruptcy, would obtain a special preference on the proceeds of the sale of the immovable property in question, instead of having only the pari passu priority contemplated in the Bankruptcy Act. Such a result would be contrary to the intent of the federal legislator and no imperfection in drafting could justify it. Due to the "notwithstanding" it is clear that he intended by s. 107(1)(j) to deal with the preferential rights of the federal and provincial tax collectors, just as he intended in s, 107(1)(e) and (f) to define those of municipal corporations and of lessors. Furthermore, s. 107(3) shows that, despite the reserva­tion of the rights of "secured creditors", it derogates from the rights of some secured creditors, because it provides that a secured creditor whose "rights are restricted" ranks as an "unsecured creditor".

Estey J., dissenting: It can be concluded from constru­ing s. 107(1)(j) and the definition of "secured creditor", in particular the word "charge" contained in that defini­tion, that the claim of the province in question is a secured claim. By registering that claim in accordance with art. 1989 C.C. the Crown has charged the immov­able property of the debtor. This charge is embraced by the federal statute, in the definition of "second credi­tor". Section 107 operates only for the purpose of pro­viding for its realization ahead of the ten preferred claims mentioned in the scheme of distribution.

[Supertest Petroleum v. Jacques-Cartier Automobile Inc. and Shink, [1963] Que. Q.B. 336 (disapproved in part); Re St. Lawrence Investment and Trust Co., Sun Life Assurance v. Brown (1937), 63 Que. K.B. 546; Riordon Co. v. Danforth Co., [1923] S.C.R. 319; R. v. Popovic, [1976] 2 S.C.R. 308;

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Re Midland Book Centre Ltd. and City of Winnipeg (1976), 66 D.L.R. (3d) 169; Produits de Caoutchouc Marquis Inc. v. Trottier, [1962] S.C.R. 676; In Re Clemenshaw (1962), 4 C.B.R. 238; In re Silver Brothers Ltd., [1932] A.C. 514; Larue v. Royal Bank of Canada, [1926] S.C.R. 218, aff. [1928] A.C. 187; Board of Industrial Relations v. AVCO Financial Services Realty Ltd., [1979] 2 S.C.R. 699, referred to.]

APPEAL from a decision of the Court of Appeal of Quebec[1] reversing a judgment of the Superior Court. Appeal dismissed, Estey J. dissenting.

Yves Ouellette, André St-Jean and Serge Gloutnay, for the appellant.

Guy Roy, for the respondent.

English version of the judgment of Martland, Ritchie, Pigeon, Beetz, Pratte and McIntyre JJ. delivered by

PIGEON J.—This appeal is from a majority decision of the Court of Appeal of the Province of Quebec, [1978] R.D.F.Q. 153, which reversed the judgment of the Superior Court on a motion to cancel a privilege. This motion made by the respondent trustee prayed for the cancellation of a privilege registered on May 12, 1975, on immov­able property of the debtor Raymond Bourgault, in the amount of $5,474.08 owing under the Retail Sales Tax Act (R.S.Q. 1964, c. 71) s. 30 of which provides:

30. Every sum due to the Crown under this act shall constitute a privileged debt ranking immediately after law costs.

The debtor made an authorized assignment on February 24, 1976, and on June 5, 1976, the trustee was authorized to sell by private sale the immovable property on which the privilege was registered. This authorization was attacked by the Deputy Minister of Revenue, whereupon the trus­tee submitted his motion to cancel. This was based on para. (1) (j) of s. 107 of the Bankruptcy Act (R.S.C. 1970, c. B-3), which is as follows:

Scheme of Distribution

107. (1) Subject to the rights of secured creditors, the proceeds realized from the property of a bankrupt

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shall be applied in priority of payment as follows:

(a) in the case of a deceased bankrupt, the reasonable funeral and testamentary expenses incurred by the legal personal representative of the deceased bank­rupt;

(b) the costs of administration, in the following order,

(i) the expenses and fees of the trustee,

(ii) legal costs;

(c) the levy payable under section 118;

(d) wages, salaries, commissions or compensation of any clerk, servant, travelling salesman, labourer or workman for services rendered during three months next preceding the bankruptcy to the extent of five hundred dollars in each case; together with in the case of a travelling salesman, disbursements properly incurred by him in and about the bankrupt's business, to the extent of an additional three hundred dollars in each case, during the same period; and for the purposes of this paragraph commissions payable when goods are shipped, delivered or paid for, if shipped, delivered or paid for within the three-month period, shall be deemed to have been earned therein;

(e) municipal taxes assessed or levied against the bankrupt within two years next preceding his bank­ruptcy and that do not constitute a preferential lien or charge against the real property of the bankrupt, but not exceeding the value of the interest of the bankrupt in the property in respect of which the taxes were imposed as declared by the trustee;

(f) the landlord for arrears of rent for a period of three months next preceding the bankruptcy and accelerated rent for a period not exceeding three months following the bankruptcy if entitled thereto under the lease, but the total amount so payable shall not exceed the realization from the property on the premises under lease, and any payment made on account of accelerated rent shall be credited against the amount payable by the trustee for occupation rent;

(g) the fees and costs referred to in subsection 50(2) but only to the extent of the realization from the property exigible thereunder;

(h) all indebtedness of the bankrupt under any Workmen's Compensation Act, under any Unemployment Insurance Act, under any provision of the Income Tax Act or the Income War Tax Act creating an obligation

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to pay to Her Majesty amounts that have been deducted or withheld, pari passu;

(i) claims resulting from injuries to employees of the bankrupt to which the provisions of any Workmen's Compensation Act do not apply, but only to the extent of moneys received from persons or companies gua­ranteeing the bankrupt against damages resulting from such injuries;

(j) claims of the Crown not previously mentioned in this section, in right of Canada or of any province, pari passu notwithstanding any statutory preference to the contrary.

(2) Subject to the retention of such sums as may be necessary for the costs of administration or otherwise, payment in accordance with subsection (1) shall be made as soon as funds are available for the purpose.

(3) A creditor whose rights are restricted by this section is entitled to rank as an unsecured creditor for any balance of claim due him.

The Deputy Minister, for his part, maintained that he was a "secured creditor" within the definition of that expression in s. 2 of the Act:

"secured creditor" means a person holding a mortgage, hypothec, pledge, charge, lien or privilege on or against the property of the debtor or any part thereof as security for a debt due or accruing due to him from the debtor, or a person whose claim is based upon, or secured by, a negotiable instrument held as collateral security and upon which the debtor is only indirectly or secondarily liable;

In the Superior Court, an oral judgment by Barbeau J. upheld the Deputy Minister's submis­sion and dismissed the trustee's motion. On appeal Crête J.A., with the concurrence of Turgeon J.A., Casey J.A. dissenting, ruled in favour of the trus­tee. He disagreed with the opinion expressed by Owen J.A. in the unanimous decision in Supertest Petroleum v. Jacques-Cartier Automobile Inc. and Shink[2] where, after deciding that the privilege in question applied to movable and immovable property, it was held that, as a result, the Crown was a "secured creditor".

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It should be noted at once that, following upon that case, the Legislature enacted a statute assented to on March 19, 1964 (c. 67) entitled An Act to protect borrowers against certain abuses and lenders against certain privileges. Section 2 of this Act added to art. 1989 C.C. the following paragraph:

2. Nevertheless, notwithstanding any provision to the contrary, no privilege of the Crown or of an agent of the Crown shall rank ahead of that of the vendor of an immoveable, or ahead of an hypothec, unless it was registered before the sale or hypothec.

Section 5 further provided:

5. Section 2 shall apply to existing privileges.

These provisions, which put a restriction on the provincial tax collector's privilege, implied, in my view, an admission of the correctness of the unani­mous decision which had just been rendered by the highest Court of the Province on the nature and extent of such privilege. For this reason, I do not think there is any need for me to consider whether the Court below came to the correct conclusion when holding, as in the earlier case Re St. Law­rence Investment and Trust Co., Sun Life Assurance v. Brown[3], that the privilege in question constitutes a real right in the immovable property of the debtor.

I shall accordingly take this for granted and examine only the scope of the relevant provisions of the Bankruptcy Act. Their legislative history is quite simple. The definition of "secured creditor" has remained practically unchanged since it was enacted by the Bankruptcy Act of 1919 (9-10 Geo. V, c. 36, s. 2(gg)). The 1949 Act only added the last part of the sentence concerning negotiable instruments held as collateral security. In the 1919 Act the definition read:

(gg) "secured creditor" means a person holding a mortgage, hypothec, pledge, charge, lien or privilege on or against the property of the debtor, or any part thereof, as security for a debt due or accruing due to him from the debtor;

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In the French version of the 1949 Act, the wording of this definition was somewhat improved. Paragraph 107(1)(j) was introduced by s. 95 of the 1949 Act.

The first observation to be made regarding these provisions is that in the English version of para. 107(1)(j) the essential word used to describe what Parliament intended to eliminate in the event of bankruptcy, is "preference", a word which is not to be found in the definition of "secured creditor". It will be seen, therefore, that if one considers only the English version there is no conflict between para. 107(1)(j) and "secured creditor". The prob­lem is due to the French version in which the word used is "privilège", which also appears in the definition of "créancier garanti".

We are confronted here by a major problem in the interpretation of federal legislation, and, at this juncture, it is proper to stop to consider the difficulty of the task facing our legislative draftsmen. They must not only formulate all legislative provisions in two languages, but also more often than not they must do so in terms of two different legal systems; the civil law of Quebec and the common law of the other provinces. In bankruptcy legislation, which everywhere impinges upon every area of public and private provincial law, the task is particularly difficult. It is therefore not surpris­ing that major problems should be encountered. Moreover, it is a fact which cannot be ignored that the Bankruptcy Act of 1949, like the Bankruptcy Act of 1919, was not only derived almost entirely from English sources but was also poorly served by the authors of the French version. One example will suffice. In various provisions of the French version, the word "privilège" corresponds to the following words in the English version:

Section             French version           English version

2-                       privilège                     privilege

14(g)                 privilège                     charge

50(7)                 privilèges                   liens

52(2)                 privilège                     charge

(3)                      privilège                     charge

53                      privilège                     charge

58                      privilège                     charge

59(4)                 privilège                     lien

64(1)                 privilège                     privilege

(2)                      privilège                     privilege

68                      privilège                     privilege

69 (Heading)    privilèges                   Preferences

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Section             French version           English version

97(5)                 créancier privilégié   preferred creditor

100(3)               privilège                     privilege

107(e)               charge privilégiée     preferential lien

107(j)                 privilège                     preference

118                    créancier privilégié   preferred creditor.

As I pointed out in The Queen v. Popovic[4] (at p. 319) the source of the difficulty is that in most cases the legal concept expressed by a French word does not correspond exactly to any English legal term, and vice versa. Such is the case for the "preference" of the Crown mentioned in para. 107(1)(j). It is the right to be paid in priority from the proceeds of a sale of a debtor's property under execution process, but it is not a real right in such property. At common law, a "mortgage creditor" is an assignee of the title to the land in which the debtor, somewhat like a seller with right of redemption, only retains an equity of redemption. If the land is sold by court order, the mortgage creditor gets the proceeds of the sale as being those of his property, because he holds the title subject to the right of the debtor or of the latter's creditors to receive any surplus realized, such surplus repre­senting the value of the equity. It is obvious that in this system, the Crown's preference can be set up only against unsecured creditors, not against mortgage creditors.

Cases prior to 1949 on the meaning of the expression "secured creditor" do not appear of any great help. In fact, the only important decision is the judgment of this Court in Riordon Co. v. Danforth Co.[5] It was held that a creditor holding a builder's privilege within the meaning of art. 2013 C. C. was a "secured creditor" within the meaning of the Bankruptcy Act, Anglin J. saying inter alla (at p. 327):

… The privileged creditor under the law of Quebec occupies much the same position as the lien-holder in the English law. Both are alike covered by the definition.

In the common law provinces builders' privileges are known as "mechanics' liens". These are clearly of a different kind from what is at issue here and I

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accordingly cannot look to that case for a solution of the problem presently before this Court.

Similarly, I do not think I need examine the decision of the Court of Appeal of Quebec in Re Ferme St-Antoine Limitée, Cité de Montréal v. Duclos[6], in which that Court held that a municipal corporation was a "secured creditor". I think the point is now clearly settled by para. 107(1)(e), which implies that this is so for taxes which consti­tute a charge against real property and not for other municipal taxes, for which a restricted pri­ority is given. This provision was thus construed in Re Midland Book Centre Ltd. and City of Winnipeg[7] relying on the decision of this Court in Produits de Caoutchouc Marquis Inc. v. Trottier[8].

In this last case the landlord's privilege was in issue. He claimed to be a "secured creditor" for all that for which he was entitled to a privilege under the Civil Code. Speaking for a unanimous Court, Abbott J. said (at p. 680):

... in the event of bankruptcy, the right of the landlord to be collocated and paid by preference, and the extent of that preference, are clearly provided for in s. 95. Shortly stated, such preference ranks sixth in order of priority. It is limited to three months' arrears of rent prior to the bankruptcy and to accelerated rent for a period not exceeding three months following the bank­ruptcy. Any amount payable by preference is limited to the amount realized from property on the lease prem­ises, and any payment on account of accelerated rent must be credited against any amount due by the Trustee for occupation rent.

Due to the "notwithstanding", I find it even clearer in para. 107(1)(j) that the federal Parlia­ment intended to deal with the preferential rights of the federal and provincial tax collectors, just as it intended in para. 107(1)(e) and (f) to define those of municipal corporations and of lessors. I am aware that the Court of Appeal of British Columbia held otherwise for para. (h) (workmen's

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compensation assessments), but its decision (In Re Clemenshaw[9]) appears to have been rendered in ignorance of the decision of this Court which I have just cited, and the wording of the paragraph is also quite different.

Accordingly, I find that the case turns upon the interpretation of para. 107(1)(j). When s. 95 (now 107) of the 1949 Bankruptcy Act is compared with s. 51 of the 1919 Bankruptcy Act, it is apparent that by the new Act, Parliament has established a much more elaborate "Scheme of Distribution". Its power to legislate concerning the provincial as well as federal Crown privilege, in the case of bankruptcy, having been established by In re Silver Brothers Ltd.[10], the provision clearly indi­cates its intention to do so and the only question remaining is as to the scope of the provision. It is abundantly clear that this was intended to put on an equal footing all claims by Her Majesty in right of Canada or of a province except in cases where it was provided otherwise, namely, para. (c), the levy, and para. (h), workmen's compensation or unemployment insurance assessments and withholdings for income tax. Paragraph (j) ends with the following words. "notwithstanding any statutory preference to the contrary". The purpose of this part of the provision is obvious. Parliament intended to put all debts to a government on an equal footing; it therefore cannot have intended to allow provincial statutes to confer any higher pri­ority. In my opinion, this is precisely what is being contended for when it is argued that, because the Quebec statute creates a privilege on immovable property effective from the date of registration, the Crown thereby becomes a "secured creditor" and thus escapes the effect of the provision which gives it only a lower priority.

As the provision in question is federal law intended to override provincial law throughout Canada, this is not a case for interpretation on the basis of technical meaning. However, even on a literal construction, I see no insurmountable dif­ficulty. There is of course a contradiction between the reservation at the outset of the rights of

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secured creditors which include privileges and "notwithstanding any statutory preference ..." However, it is certainly clear that the reservation is a general rule and the "notwithstanding" an exception which takes precedence wherever appli­cable. Furthermore, subs. 3 shows that s. 107 does derogate from the rights of some secured creditors by providing that a secured creditor whose "rights are restricted" ranks as an "unsecured creditor".

In any event, in my opinion this is a situation in which, as in Larue v. Royal Bank of Canada[11], the Court may not refuse to give effect to a federal statute because it does not use the expression that would be correct in a provincial Act, and I think this disposes of the objection based on the English version in which one finds "preference" rather than "privilege".

There is no need to consider the scope of the expression "claims of the Crown". It is quite clear that this applies to claims of provincial govern­ments for taxes and I think it is obvious that it does not include claims not secured by Her Majes­ty's personal preference, but by a privilege which may be obtained by anyone under general rules of law, such as a vendor's or a builder's privilege.

Finally, I think I should be allowed to rely on considerations of the same kind as those on which the judgment of this Court was based in Board of Industrial Relations v. AVCO Financial Services Realty Ltd.[12] The appellant was claiming for the payment of wages an absolute priority over all other creditors, including a mortgage creditor, under the following provision:

5A. (1) Notwithstanding any other Act, the amount of wages set forth in a certificate issued under section 5 constitutes a lien and charge in favour of the Board payable in priority over any other claim or right, includ­ing those of the Crown in right of the Province, and, without limiting the generality of the foregoing, such priority shall extend over every assignment, including an assignment of book debts, whether absolute or otherwise, every mortgage of real or personal property, and every debenture.

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Speaking for a unanimous Court, Martland J. said:

Another example of the difficulty created by the Board's broad interpretation of s. 5A is the case of an employer purchasing a family residence from a vendor under an agreement for sale, title to land remaining in the vendor. If the Board's contention is correct, a lien under s. 5A arising after the agreement for sale was made would attach to the land, rather than to the employer's equity in the land and could deprive the vendor of his title, even though the purchaser's equity in the land was minimal.

When it legislated to safeguard the rights of vendors and of hypothecary creditors, the Quebec legislature did not have to be concerned with the rights of those who had only given a promise of sale, because in the civil law the promisee, as well as a tenant, has no real right in the land.

If the contention of the Deputy Minister of Revenue in the case at bar was upheld, it would mean that the Quebec tax collector, provided his privilege was registered before the bankruptcy, would obtain a special preference on the proceeds of the sale of the immovable property in question, instead of having only the pari passu priority contemplated in the scheme of distribution estab­lished by the Bankruptcy Act. In my opinion, such result would be contrary to the intent of Parlia­ment and no imperfection in drafting could justify it.

I am of the opinion that the appeal should be dismissed. In accordance with the terms under which leave was granted, the appellant will pay respondent's costs on a solicitor and client basis.

The following are the reasons delivered by

ESTEY J. (dissenting)—I have had the opportu­nity of reading the judgment of my colleague, Pigeon J. but, with all deference, have reached a different conclusion.

The provincial Crown has a claim for debt under the Retail Sales Act of Quebec. This claim, described in s. 30 of that Act as "a privileged debt," the Province caused to be registered against the lands of the debtor, now the bankrupt, under the appropriate land registry provisions of the

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Civil Code. Such registration was authorized by art. 1989 of the Code, which provides as follows:

The Crown has certain rights and privileges resulting from the laws relating to customs, and from other provisions contained in special statutes concerning mat­ters of public administration.

Nevertheless, notwithstanding any provision to the contrary, no privilege of the Crown or of an agent of the Crown shall rank ahead of that of the vendor of an immoveable, or ahead of a hypothec, unless it was registered before the sale or hypothec.

Further reference is made to such registered claims of the Crown in art. 2121 of the Code, para. 1 and 2:

The judgments and judicial acts of the civil courts confer hypothecs when they are registered, from the date only of the registration of a notice specifying and describing the immoveable of the debtor upon which the creditor intends to exercise his hypothec.

The same rule applies to all claims of the crown to which any tacit hypothec or privilege is attached by law.

Clearly, the effect of such registration in provin­cial law is to give priority over subsequent claimants against the land on which the claim is registered.

This being the status of the claim under the law of the Province, we then turn to the Bankruptcy Act. By s. 2 of that Act a "secured creditor" is defined as follows:

"secured creditor" means a person holding a mortgage, hypothec, pledge, charge, lien or privilege on or against the property of the debtor or any part thereof as security for a debt due or accruing due to him from the debtor, or a person whose claim is based upon, or secured by, a negotiable instrument held as collateral security and upon which the debtor is only indirectly or secondarily liable;

It would seem reasonable to construe the defini­tion of a secured creditor as including a person (here the Crown) as having " ... a charge ... against the property of the debtor ... as security for a debt due ..." Section 107 of the Act then establishes the "scheme of distribution" of the

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assets of the bankrupt's estate and it provides in part as follows:

Scheme of Distribution

107. (1) Subject to the rights of secured creditors, the proceeds realized from the property of a bankrupt shall be applied in priority of payment as follows:

There then follow ten types of claims to be paid by the Trustee in the priority or ranking thereby established out of any residue remaining after payment of secured creditors. The tenth claim is described as follows:

(j) claims of the Crown not previously mentioned in this section, in right of Canada or of any province, pari passu notwithstanding any statutory prefer­ence to the contrary.

It may be said that para. (j) has the effect of overriding any other provision and thereby ranks a claim by the Crown of the kind now before the Court after the previous nine classes of claims. However, in my view, it is unnecessary to consider the meaning of para. (j) because such a subclause, inserted only to rank or create priorities of claims after the payment of secured claims, cannot be construed as somehow reducing the definition of a secured creditor under the Act. If the Crown is indeed within the definition of a secured creditor, as I have concluded above, then as such the Crown will recover the assets of the estate to the satisfac­tion of its claim or the exhaustion of those assets, whichever first occurs. The succeeding paragraphs operate only after the secured claim is paid off, and then only if assets remain in the hands of the Trustee.

The sequence of the legal events with which we are here concerned can be described in another way. By s. 30, the Crown has a claim therein described as a "privileged debt". By registration of such claim pursuant to art. 1989 of the Civil Code, the Crown has charged a specific asset of the debtor, the debtor's interest in land. This charge is embraced in the definition of a "secured creditor" in the federal statute. Section 107 prescribes a

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distribution plan for claimants other than secured creditors. To increase the radius of operation of such distribution plan would require another provi­sion in the federal statute either in the form of a revision of the definition of "secured creditor" in s. 2 or a revision of the plan of distribution in s. 107(1) by the addition of another subsection in s. 107 as indeed was done in the case of subs. (3). It is, however, the federal Act as now constituted with which we are of course concerned.

Subsection (1)(j) of s. 107 raises many inter­pretative problems.

1. By its very position in the statute it does not qualify or affect the introductory wording of the subsection itself, that is subs. (1) of s. 107. When such an effect is desired, the draftsman logically, and indeed imperatively in the circumstances created by the structure and phraseology adopted in subs. (1) itself, must go to the use of another paragraph as has been done, for example, in the case of subs. (2) and (3) of this same section. The only contrary approach is to read the opening of subs. (1) as not including of necessity anything contained in the subsequent paragraphs. Thus it may be said that one first must construe the paragaphs in order to interpret the opening and controlling words. This procedure in turn requires an interpretation of these paragraphs before a meaning can be assigned to the definition of "secured creditor," the term employed in the open­ing of subs. (1) of s. 107, and defined in s. 2. In the end, one must, in such a process, conclude that the definition of "secured creditor" may not include a creditor referred to in the paragraphs of subs. (1) of s. 107.

2. The phrase "not previously mentioned" is capable of at least two meanings; firstly, that a Crown claim falling within the definition of "secured creditor" is "previously mentioned" in subs. (1) and therefore excluded from the para. (j); or con­versely, to be excluded from (j) a Crown claim must have been specifically so described, as in the case of para. (h), in order to be excluded from para. (j). If I were required to place an interpreta­tion on these words (which I am not by reason of the approach taken above) I would conclude that

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the interpretation of this paragraph must, if possi­ble, be in consonance with the plain and ordinary meaning of the introductory and basic provision of the subsection and hence I would read (j) as not including a secured Crown claim.

3. The term "notwithstanding any statutory pref­erence to the contrary" also raises an uncertainty apart altogether from differences in the two offi­cial language versions of the subsection. Either the phrase modifies the expression "applied…  [to]... claims of the Crown," or the expression "pari passu". To complicate matters further, a comma follows pari passu in the French but not in the English version. Again, in order to produce symmetry in the entire subs. (1), my view of the interpretative canons requires the adoption of a meaning which the words used in the paragraph will bear and which is in sympathy with the princi­ple enunciated in the subsection itself. According­ly, I would read the phrase as qualifying pari passu and conclude that the comma in the French version has been casually inserted to facilitate reading of the clause and not with a view to straining the plain meaning or to introduce a concept contrary to the general provision under which (j) forms but a paragraph.

4. The expression "statutory preference" may refer to a preference «whatever that term may mean) created in the applicable law of the prov­ince or by the Bankruptcy Act or other federal enactment or both. Paragraph (h), for example, refers to both provincial and federal legislation and directs that such claims rank pari passu. The general pattern of priorities in subs. (1) would indicate that the term "statutory" is all-embracing and includes both federal and provincial enact­ments.

I find comfort in reaching the conclusion which I have in the unanimous decision of the Court of Appeal of the Province of Quebec in the judgment in Supertest Petroleum v. Jacques-Cartier Automobile Inc. and Shink[13]  wherein Owen J. stated:

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In my opinion s. 95 (now s. 107) of The Bankruptcy Act has no application to the Crown in the present case because the Crown was a secured creditor.

The claims of the Crown arose in that proceeding under the Sales Tax Act and the Corporation Tax Act, both of which contain sections identical to s. 30 of the Retail Sales Tax Act set out above, and s. 95(1) is in the same terms as s. 107(1).

The critical provision, in my view, therefore is the definition of "secured creditor" in s. 2 and that definition in turn raises the principal question in these circumstances as to the meaning of the word "charge" which is undefined in the statute. In Jowitt's Dictionary of English Law the following is found at p. 321:

"Charge" as applied to property signifies that it is security for the payment of a debt or performance of an obligation. It is a general term, and therefore includes mortgages, liens, writs of execution, etc., but is also applied in a restricted sense to cases where the security has no special name, and where there is not necessarily a personal debt.

Further on the same page the following appears:

Land charges (q.v.) are usually void against a purchaser for value of the lands unless such charges are registered in the register of land charges which is kept at the Land Registry.

A discussion of the term "charge" in Re Price: Ex parte Tinning[14], at p. 160, sets out what is general­ly understood by the term in the law.

Australia-The words 'charge' and 'lien' are often inter-changeable. The quality of each ... is that, so far as is necessary, it appropriates or sets aside some particular property, real or personal, by making a deduction from the absolute ownership of it, in favour of someone who is given by law, or by agreement, will, or otherwise, the right to resort to the property to satisfy or discharge some obligation. They add to the right in personam a limited right in rem.

The same concept has been expressed as follows:

The word 'charge' may well be used to describe a burden imposed upon land, and if a payment has to be

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made in respect of land, and it can only be enjoyed subject to the liability for that payment, I cannot think that there would be any great straining of language if it were spoken of as charged upon the land.

Payne v. Esdaile[15], per Lord Herschell, L.C., at pp. 623, 624.

In our country the Court of Appeal of British Columbia had occasion to consider the meaning of "charge" under The Bankruptcy Act as it existed in 1932 in Dinning v. Workmen's Compensation Board[16] where the Chief Justice of British Columbia referred to a debenture blanket mortgage on real estate as "a specific charge upon the property" after crystallization on the happening of the bankruptcy. Macdonald C.J.B.C. then con­tinued:

The proceeds of the appellant's security is, I think, to be paid to the appellant and forms no part in the property to be distributed amongst the unsecured creditors unless it can be said that the indebtedness of the bankrupt to the Workmen's compensation Board is by the words of secs. 121 and 125 a charge on the debtor's property or on the property in the hands of the trustee (per Mac­donald C.J.B.C. at p. 374-5).

Sections 121 and 125 of the then Bankruptcy Act, in providing for priority of claims in s. 121, stated in s. 125:

125. Nothing in the four last preceding sections shall interfere with the collection of any taxes, rates or assess­ments payable by or levied or imposed upon the debtor or upon any property of the debtor under any law of the Dominion, or of the province wherein such property is situate, or in which the debtor resides, nor prejudice or affect any lien or charge in respect of such property created by any such laws.

The definition of "secured creditor" in the Eng­lish version (which I have set out above) makes specific reference to a charge in describing a secured creditor, and the term "une charge" appears as well in the French language version. The traditional French language dictionaries do not set out a meaning for this word as it may be employed in connection with legal matters, but in the absence of any indication to the contrary either in the statute or in an authoritative work, one must

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assume that the word carries the same general meaning in both languages, particularly where, as here, each word appears at the same point in the definition.

The provincial claim here in issue therefore, in my view, is a secured claim and s. 107 operates only for the purpose of providing for its realization ahead of the subsequently mentioned ten preferred claims. This being so, I do not find it necessary to deal with the apparent differences between the French and English versions of para. (j). Nor do I find it necessary to deal with the question as to whether the concluding words of para. (j), quoted above, can be reconciled with the words adopted by Parliament in the definition of "secured credi­tor." Had I not taken the foregoing view of the effect of para. (j) and its opening words, I would have been in complete agreement with the analysis made by my brother Pigeon J. of para. (j) and the impact thereon of the law of Quebec.

I therefore would allow the appeal and restore the disposition made in the Superior Court with costs.

Appeal dismissed, ESTEY J. dissenting.

Solicitors for the appelant: St-Jean, Fortin & Associés, Montreal.

Solicitors for the respondent: Roy & Charbon­neau, Montreal.