Rites-Miguens (Re), 2019 ABQB 721

Can a trustee take an assignment of future GST refunds from a bankrupt to cover future obligations? (Take 3)

The Licensed Insolvency Trustees (“LIT”) brought an application for advice and directions with respect to whether a Goods and Services Tax Refund can form part of a bankrupt’s receipts. In similar circumstances in MacIntyre (Re), 2018 ABQB 380, the Court considered whether s. 67(1)(b.1) and Rule 59 of the Bankruptcy and Insolvency Act (the “BIA“) precluded the assignment of GST Refunds. (Our summary of that case is HERE.)

The Court in MacIntyre accepted the position advanced by the Office of the Superintendent of Bankruptcy (the “OSB”) that the purported assignment of the bankrupt’s interest in the GST Refund was not properly worded and was not acceptable in the circumstances. In obiter, the Court stated that a properly worded assignment could be used and could comply with s. 67(1)(b.1) and Rule 59 of the BIA, without the need for multiple deposits and withdrawals. The Court cautioned about the importance of ensuring that the bankrupt understood the effect of the choice they were making when executing such an assignment.

Subsequently, Master Mills, of the Ontario Superior Court of Justice, rendered her decision in Glasgow (Re), 2018 ONSC 4608, declining to follow the reasoning advanced in MacIntyre. Master Mills found that a GST Refund was a Crown debt as defined in the Financial Administration Act (the “FAA“). She held that s. 67 of the FAA expressly prohibited the assignment of a Crown debt such that no transaction purporting to be an assignment of a Crown debt is effective to confer on any person any rights or remedies in respect of that debt. Our summary of this case is HERE.

In the face of these two conflicting decisions, the OSB published an Issue Paper dated March 4, 2019, which directs the LIT not to enter into assignment agreements with respect to GST/HST credit payments.

The LIT brought this application for direction as to whether trustees in Alberta should follow the Issue Paper of the OSB or this Court’s decision in MacIntyre.

The Court accepted and adopted as its own the analysis of Master Mills in Glasgow. Any GST Refunds held by the LIT must be returned to the bankrupt and the Statement of Receipts and Disbursements issued for the estate must comply with this direction. By adopting the reasoning in Glasgow, the Court brought the Alberta jurisprudence in line with the OSB’s Issue Paper.

AppearancesJames Moses of Moses Advisory Group for the Bankrupt and Randy Thompson for the Office of the Superintendent of Bankruptcy appearing by written submission only


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