Coopers & Lybrand Ltd. v. Bank of Montreal, [1993] GSTC 36 (Nfld. S.C.T.D.)

Garnishment demands issued under s. 317(3) to account debtors of a corporation ("Lundrigans") were effective notwithstanding the prohibition on the previous court appointment of a receiver-manager for Lundrigans against any "action, application or the proceedings" from being taken against Lundrigans without seven day's notice to the court.

The garnishment demands attached only the monies owing in respect of sales arising before the appointment of the receiver-manager, and not in respect of subsequent sales. In the absence of full argument on the issue, the court declined to consider whether an assignment of book debts is an absolute transfer of property and, therefore, outside the reach of s. 317(3).

In its 3 June 1992 order appointing Coopers & Lybrand as the receiver-manager of an insolvent company (“Lundrigans”), the Newfoundland Supreme Court order “that no action, application or other proceedings…shall be taken against the Debtor…without the prior consent of the Receiver and Manager.” In finding that an assessment of Lundrigans a month later by the CRA for $1.3 million of GST did not violate this order, Osborn J stated (at p. 36-16):

The assessment, which is not to be confused with the demands, is issued by the… Minister…pursuant to subsec. 296(1)… . It represents a formal notification to the tax debtor of the amount asserted to be owing and breaks that amount down into taxes, interest, penalties and other specified categories. The assessment, of itself, does nothing other than provide information to the debtor. If nothing follows the assessment, it is of no legal consequence. …

In my view, the issuance of an assessment for GST is not an "action, application or other proceeding" within the contemplation of paragraph 8 of the Order.