2020 QCCA 1612, 2020 QCCA 1612

Unofficial English Translation of the Judgment of the Court Procureur général du Canada c. Caisse Desjardins de Limoilou 2020 QCCA 1612 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF QUEBEC No.: 200-09-009862-183 (200-17-023145-154) DATE: December 3, 2020 CORAM: THE HONOURABLE FRANCE THIBAULT, J.A. MARIE-FRANCE BICH, J.A. SUZANNE GAGNÉ, J.A. ATTORNEY GENERAL OF CANADA APPELLANT INCIDENTAL RESPONDENT – Defendant in this contestation v.

CAISSE DESJARDINS DE LIMOILOU RESPONDENT INCIDENTAL APPELLANT – Plaintiff in this contestation and GAGNON SÉNÉCHAL COULOMBE INC., HUISSIERS DE JUSTICE IMPLEADED PARTY – Impleaded party JUDGMENT [ 1 ] The appellant incidental respondent appeals from a judgment of the Superior Court, District of Quebec (the Honourable Madam Justice Johanne April), rendered on August 27, 2018, which allowed the respondent incidental appellant’s contestation of the collocation scheme in the impleaded party’s report. [1] [ 2 ] For the reasons of Gagné, J.A., with which Thibault and Bich, JJ.A. agree, THE COURT : [ 3 ] ALLOWS the appeal in part; [ 4 ] SETS ASIDE paragraphs 37 and 39 of the Judgment under appeal; [ 5 ] ORDERS the bailiff to modify the order of collocation so as to give priority of rank to the Caisse Desjardins de Limoilou with respect to the Crown’s deemed trust, up to the amount of its prescribed security interest, that is, $103,906.63; [ 6 ] DISMISSES the incidental appeal; [ 7 ] THE WHOLE , with legal costs in favour of the appellant incidental respondent, both at first instance and on appeal.

FRANCE THIBAULT, J.A. MARIE-FRANCE BICH, J.A. SUZANNE GAGNÉ, J.A. Mtre Martin Lamoureux Mtre Mélyne Félix DEPARTMENT OF JUSTICE OF CANADA For the appellant incidental respondent

Mtre Reynald Auger Mtre Maxime Chouinard LANGLOIS LAWYERS For the respondent incidental appellant Date of hearing: November 3, 2020 REASONS OF GAGNÉ, J.A. I. Overview [ 8 ] The Income Tax Act (“ ITA ”) [2] creates a deemed trust for the benefit of the Crown that allows it to have priority over other creditors to recover the amounts deducted at source by employers. Certain secured creditors are, however, [ translation ] “in part spared from the effects of the deemed trust” [3] through the prescribed security interest (“PSI”) exception whereby creditors with an immovable hypothec retain their priority up to the amount of the PSI. [4] [ 9 ] This appeal concerns the

interpretation of paragraph 2201(2) (

a) of the Income Tax Regulations (“ Regulations ”). [5] The issue to be decided is whether the value of a suretyship held by a secured creditor must be included in the calculation of the amount of the PSI.

The incidental appeal also raises the question of the validity of subsection 2201(2) with respect to the theory of vagueness and the rule prohibiting the attribution by regulation of a purely discretionary power. [ 10 ] For the reasons that follow, I am of the opinion that “all the rights of the secured creditor securing the obligation / droits du créancier garanti garantissant l’obligation ” – the value of which reduces the amount of the PSI – include both personal and real rights. [6] The value of the suretyship held by the respondent incidental appellant, Caisse Desjardins de Limoilou (“Caisse”), must therefore be deducted from the amount of its priority claim with respect to the Crown’s deemed trust. [ 11 ] Moreover, I am in agreement with the trial judge that subsection 2201(2) of the Regulations provides sufficient guidance for legal debate; it is neither overbroad nor attributive of a purely discretionary power.

II. Background [ 12 ] In July 2014, the Caisse held a first-ranking conventional hypothec on an immovable owned by Maison Chambois inc. (“Chambois) as security for a loan.

It also held a general suretyship from Chambois’ shareholders in the amount of $55,000. [7] [ 13 ] From July 15, 2014, to October 15, 2015, Chambois failed to remit to the Receiver General the amounts deducted from the remuneration of its employees pursuant to the ITA and the Employment Insurance Act (“ EIA ”). [8] [ 14 ] On December 8, 2015, the Superior Court authorized the sale of the immovable under judicial authority by agreement or auction.

Around the same time, the Caisse released Chambois’ directors from their suretyship. [ 15 ] The immovable was ultimately sold by agreement on July 24, 2017, for $225,000, leaving an amount of $212,401.88 to distribute. [ 16 ] After the sale, the Caisse filed a statement of claim for $202,007.04 and the Canada Revenue Agency (“CRA”) filed a deemed trust claim for $12,646.40. [9] The bailiff charged with the distribution determined the order of collocation by giving priority to the Crown’s deemed trust over the Caisse’s hypothecary claim. [ 17 ] The Caisse contested the collocation scheme within the prescribed time limit and asked the Court to order the bailiff to [ translate ] “rank the CRA’s claim at $0”.

On March 5, 2018, it informed the Attorneys General of Quebec and Canada of its intention to contest the validity of subsection 2201(2) of the Regulations . The Caisse relied on

section 7 of the Canadian Charter of Rights and Freedoms (“ Charter ”) and the doctrine of vagueness as well as the rule according to which a regulation cannot confer a purely discretionary power on the authority charged with its application. [ 18 ] The appellant incidental respondent, the Attorney General of Canada (“AGC”), defended the validity of the impugned provision. With respect to the collocation scheme, the AGC admitted that part of the Caisse’s hypothec has priority over the deemed trust, but only up to the amount of the PSI, which he calculated as follows: Calculation of the PSI: Balance of hyp. on 2014-07-15 $216,590.96 Payments made (cap. and int.) $57,684.33

Suretyship $55,000.00 Their PSI $103,906.63 [ 19 ] The amounts were not contested, only the deduction of the value of the suretyship. III.

Judgment under appeal [ 20 ] After a recital of the facts and the applicable law, the trial judge stated the issues as follows: [ translation ] [14] This dispute, that is, what is the amount of the Caisse’s security interest that must be ranked in priority over the debt due to the Crown protected by the deemed trust, will be resolved through an analysis of the following sub-issues: 1- Is Regulation 2201, as drafted: a. vague, due to the lack of a clear definition of the word “security interest”?

In particular, should a suretyship be included in that definition or not? b. attributive of a discretionary power not authorized by the legislation? 2- In the event of a positive answer to (

a) or (b), can Regulation 2201 be excluded or declared invalid only in part? [ 21 ] To resolve these issues, she examined the objective of

section 2201 of the Regulations . In that regard, she noted that it has a retroactive effect [10] and, accordingly, it must [ translation ] “be applied in such a way as to provide relief to the taxpayer”. [11] She determined that the purpose of that provision is to reduce the base of the Crown’s deemed trust in favour of certain secured creditors. [ 22 ] Without deciding whether or not

section 7 of the Charter applies, the judge found that subsection 2201(2) of the Regulations is not vague to the point of infringing fundamental justice.

According to her, although the term “security interest” is not defined in the ITA or in the Regulations , the context as a whole allows [ translation ] “the meaning to be understood and establishes sufficient guidance for legal debate”. [12] [ 23 ] Moreover, referring to the explanatory notes of the Regulations , the judge concluded that a suretyship [ translation ] “does not constitute another security interest within the meaning of the ITA and Regulation 2201 that must be taken into account in calculating the PSI”, unlike an immovable hypothec. [ 24 ] Last, the judge accepted from the evidence that the Regulations require the application of a purely mathematical formula, without any choice of options, any discussion, or any use of discretion.

She therefore dismissed the Caisse’s argument based on the attribution of a discretionary power. [ 25 ] Ultimately, the judge allowed the Caisse’s contestation of the collocation scheme and modified the scheme by calculating the PSI without taking into account the value of the suretyship. IV.

Issues [ 26 ] The AGC’s appeal raises only one issue: • Is the suretyship held by the Caisse included in “all the rights of the secured creditor securing the obligation”, the value of which reduces the amount of the PSI? [ 27 ] With respect to the incidental appeal by the Caisse, it will be enough to examine the following issues to decide it: • Is subsection 2201(2) of the Regulations vague to the point of not providing sufficient guidance for legal debate? • Is it attributive of a purely discretionary power? V. Analysis A.

The general context of the Crown’s deemed trust [ 28 ] The ITA requires employers to withhold amounts from their employee’s pay for the purpose of income tax collection and other contributions. These amounts, collectively called source deductions, must be remitted to the Receiver General within a certain time frame. [ 29 ] According to

section 227 ITA , the employer is deemed to hold these amounts in trust for the Crown, separate and apart from its own property, and from property held as security by its creditors. If the employer does not pay the Receiver General, all of the employer’s property, including property encumbered by a security interest, is deemed to be held in trust for the Crown and not part of its patrimony. This deemed trust confers on the Crown beneficial ownership of all of the employer’s property in case of default, even if that property or the proceeds thereof are encumbered by a security interest.

In addition, the proceeds of such property are paid to the Receiver General in priority to all such security interests. [13] [ 30 ] Parliament, however, set out an exception to the deemed trust rule, the PSI, which is defined in

section 2201 of the Regulations . [14]

[ 31 ] It is useful at this stage to reproduce subsections 227(4) to (4.2) ITA and 2201(1) and (2) of the Regulations : Income Tax Act : 227

(4) Every person who deducts or withholds an amount under this Act is deemed, notwithstanding any security interest (as defined in subsection 224(1.3)) in the amount so deducted or withheld, to hold the amount separate and apart from the property of the person and from property held by any secured creditor (as defined in subsection 224(1.3)) of that person that but for the security interest would be property of the person, in trust for Her Majesty and for payment to Her Majesty in the manner and at the time provided under this Act.

(4.1) Notwithstanding any other provision of this Act, the Bankruptcy and Insolvency Act (except sections 81.1 and 81.2 of that Act), any other enactment of Canada, any enactment of a province or any other law, where at any time an amount deemed by subsection 227(4) to be held by a person in trust for Her Majesty is not paid to Her Majesty in the manner and at the time provided under this Act, property of the person and property held by any secured creditor (as defined in subsection 224(1.3)) of that person that but for a security interest (as defined in subsection 224(1.3)) would be property of the person, equal in value to the amount so deemed to be held in trust is deemed (

a) to be held, from the time the amount was deducted or withheld by the person, separate and apart from the property of the person, in trust for Her Majesty whether or not the property is subject to such a security interest, and (

b) to form no part of the estate or property of the person from the time the amount was so deducted or withheld, whether or not the property has in fact been kept separate and apart from the estate or property of the person and whether or not the property is subject to such a security interest. and is property beneficially owned by Her Majesty notwithstanding any security interest in such property and in the proceeds thereof, and the proceeds of such property shall be paid to the Receiver General in priority to all such security interests.

(4.2) For the purposes of subsections 227(4) and 227(4.1), a security interest does not include a prescribed security interest. Income Tax Regulations : 2201

(1) For the purpose of subsection 227(4.2) of the Act, prescribed security interest, in relation to an amount deemed by subsection 227(4) of the Act to be held in trust by a person, means that part of a mortgage securing the performance of an obligation of the person, that encumbers land or a building, where the mortgage is registered pursuant to the appropriate land registration system before the time the amount is deemed to be held in trust by the person. Loi de l’impôt sur le revenu : 227

(4) Toute personne qui déduit ou retient un montant en vertu de la présente loi est réputée, malgré toute autre garantie au sens du paragraphe 224(1.3) le concernant, le détenir en fiducie pour Sa Majesté, séparé de ses propres biens et des biens détenus par son créancier garanti au sens de ce paragraphe qui, en l’absence de la garantie, seraient ceux de la personne, et en vue de le verser à Sa Majesté selon les modalités et dans le délai prévus par la présente loi.

(4.1) Malgré les autres dispositions de la présente loi, la

Loi sur la faillite et l’insolvabilité (sauf ses articles 81.1 et 81.2 ), tout autre texte législatif fédéral ou provincial ou toute règle de droit, en cas de non-versement à Sa Majesté, selon les modalités et dans le délai prévus par la présente loi, d’un montant qu’une personne est réputée par le paragraphe (4) détenir en fiducie pour Sa Majesté, les biens de la personne, et les biens détenus par son créancier garanti au sens du paragraphe 224(1.3) qui, en l’absence d’une garantie au sens du même paragraphe, seraient ceux de la personne, d’une valeur égale à ce montant sont réputés :

a) être détenus en fiducie pour Sa Majesté, à compter du moment où le montant est déduit ou retenu, séparés des propres biens de la personne, qu’ils soient ou non assujettis à une telle garantie;

b) ne pas faire

partie du patrimoine ou des biens de la personne à compter du moment où le montant est déduit ou retenu, que ces biens aient été ou non tenus séparés de ses propres biens ou de son patrimoine et qu’ils soient ou non assujettis à une telle garantie. Ces biens sont des biens dans lesquels Sa Majesté a un droit de bénéficiaire malgré toute autre garantie sur ces biens ou sur le produit en découlant, et le produit découlant de ces biens est payé au receveur général par priorité sur une telle garantie.

(4.2) Pour l’application des paragraphes (4) et (4.1), n’est pas une garantie celle qui est visée par règlement. Règlement de l’impôt sur le revenu : 2201

(1) Pour l’application du paragraphe 227(4.2) de la Loi, est une garantie visée par règlement, quant à un montant qu’une personne est réputée, par le paragraphe 227(4) de la Loi, détenir en fiducie, la

partie d’une hypothèque garantissant l’exécution d’une obligation de la personne, qui grève un fonds de terre ou un bâtiment, à condition que l’hypothèque soit enregistrée, conformément au régime d’enregistrement foncier applicable, avant le moment où la personne est réputée

(2) For the purpose of subsection (1), where, at any time after 1999, the person referred to in subsection (1) fails to pay an amount deemed by subsection 227(4) of the Act to be held in trust by the person, as required under the Act, the amount of the prescribed security interest referred to in subsection (1) is deemed not to exceed the amount by which the amount, at that time, of the obligation outstanding secured by the mortgage exceeds the total of (

a) all amounts each of which is the value determined at the time of the failure, having regard to all the circumstances including the existence of any deemed trust for the benefit of Her Majesty pursuant to subsection 227(4) of the Act, of all the rights of the secured creditor securing the obligation, whether granted by the person or not, including guarantees or rights of set-off but not including the mortgage referred to in subsection (1), and (

b) all amounts applied after the time of the failure on account of the obligation, so long as any amount deemed under any enactment administered by the Minister, other than the Excise Tax Act, to be held in trust by the person, remains unpaid. détenir le montant en fiducie.

(2) Pour l’application du paragraphe (1), dans le cas où, après 1999, la personne visée à ce paragraphe ne paie pas, comme l’exige la Loi, un montant qu’elle est réputée, par le paragraphe 227(4) de la Loi, détenir en fiducie, le montant de la garantie visée au paragraphe (1) est réputé ne pas dépasser l’excédent du montant de l’obligation garantie par l’hypothèque qui est impayé au moment du défaut sur la somme des montants suivants :

a) les montants représentant chacun la valeur, déterminée au moment du défaut, compte tenu des circonstances, y compris l’existence d’une fiducie présumée établie au profit de Sa Majesté conformément au paragraphe 227(4) de la Loi, des droits du créancier garanti garantissant l’obligation, consentis par la personne ou non, y compris les garanties et droits de compensation, mais à l’exclusion de l’hypothèque visée au paragraphe (1);

b) les montants appliqués en réduction de l’obligation après le moment du défaut. Cette présomption s’applique tant que demeure impayé un montant que la personne est réputée détenir en fiducie en vertu d’un texte législatif, sauf la

Loi sur la taxe d’accise, dont l’application relève du ministre. [ 32 ] In his book on the deemed trust, author Louis L’Heureux provides a good explanation of the effect of the PSI on the rights of secured creditors: [ translation ] Because this hypothecated property falls under the deemed trust, Her Majesty beneficially owns this property and all proceeds thereof must be paid in priority to the Receiver General of Canada. That being said, certain hypothecary creditors are in part spared from the effects of the deemed trust through subsection 227 (4.2) ITA and

section 2201 of the Income Tax Regulations , which have the effect, to a certain extent, of leaving the priority to creditors holding a hypothec in land or a building. …

Section 2201 ITR is usually raised by hypothecary creditors during the judicial sale of an immovable. The officer drawing up the collocation scheme must therefore grant priority to the hypothecary creditors covered by

section 2201, up to the value of their security interest. The value of the hypothecary creditor’s security interest for the purposes of

section 2201 is usually lower than the actual value, as calculated by the creditor. [15] [References omitted] [ 33 ] Thus, as an exception to the Crown’s deemed trust, creditors with an immovable hypothec retain their priority up to the amount of the PSI. However, the restrictions set forth in subsection 2201(2) of the Regulations mean that that amount does not necessarily correspond to the balance of the hypothecary claim. B.

Determining the amount of the PSI [ 34 ] The parties agree that the amount of the PSI must be calculated according to the following formula: Balance of the debtor’s obligation towards the creditor holding a hypothec on an immovable at the time of the failure to pay source deductions ( subsection 2201(1) of the Regulations ); Minus the total of: (

a) The value of all the other rights of the secured creditor (including guarantees or rights of set-off) securing the obligation of the secured creditor ( paragraph 2201(2) (

a) of the Regulations ); and (

b) The amounts applied in reduction of the obligation after the time of the failure to pay source deductions ( paragraph 2201(2) (

b) of the Regulations ); [ 35 ] The question is whether “all the rights of the secured creditor securing the obligation / droits du créancier garanti garantissant

l’obligation ” includes personal rights, such as a suretyship. [ 36 ] I find that it does. [ 37 ] First, the ordinary meaning of the words “all the rights of the secured creditor / droits du créancier garanti ” applies to all of the patrimonial rights of the secured creditor securing the obligation. Nothing in the language of paragraph 2201(2) (

a) of the Regulations justifies limiting those rights to the secured creditor’s real rights. Here, the Caisse does not contest that at the time of the failure to remit the source deductions it held a suretyship of $55,000 securing Chambois’ obligation to repay the hypothecary loan. It is a general suretyship, which according to the very terms of the contract [ translation ] “does not replace but adds to any other security interest that the Caisse holds or may hold”. [16] [ 38 ] Second, Parliament was careful to add “including guarantees or rights of set-off / y compris les garanties et droits de compensation ”.

These are examples that serve to illustrate the type of rights in question. [17] The word “guarantees/ garanties ” must be taken in the broad sense of the word, which includes suretyships. If Parliament had intended to restrict this example to real rights, it would have said so.

With respect to “rights of set-off / droits de compensation ”, the AGC is correct to point out that these are personal rights. [18] [ 39 ] In other words, not only are the words “all the rights of the secured creditor / droits du créancier garanti ” sufficiently broad to encompass personal rights held by the secured creditor, but the two examples given by Parliament belong to this category. [ 40 ] Third, the explanatory notes to the Regulations support this

interpretation. These rights are considered [ translation ] “collateral security granted to guarantee the obligation”. [19] According to L’Heureux, this may include sureties, collateral hypothecs or rights of set-off (rights of set-off being expressly provided for under the provision). [20] Indeed, he uses the example of a surety elsewhere to illustrate the restriction provided for in paragraph 2201(2) (

a) of the Regulations : [ translation ] With respect to this restriction, it should be noted that, practically speaking, in addition to the Caisse’s conventional hypothec in the land and building owned by Mr. Chaput’s business, it had a personal surety from Mr. Chaput’s spouse, the realization value of which was at least equal to the debt owed to the Caisse. In accordance with paragraph 2201(2)(

a) of the ITR , this personal surety reduced to nil the value of the exception with respect to hypothecs in land and buildings under

section 2201 of the ITR. This is why Her Majesty ultimately had priority over the land and buildings. [21] [ 41 ] Fourth, this

interpretation, in addition to adhering to the ordinary and grammatical meaning of the terms, is in harmony with the spirit of the Act , its object, and Parliament’s intention to preserve the Crown’s deemed trust to the extent possible. This intention appears clearly from the explanatory notes to the Regulations : [ translation ] Paragraph 2201(2)(

a) first has the effect of limiting the prescribed security interest to the amount of the obligation which is secured by the mortgage, after deducting the value of all the rights of the secured creditor securing the obligation (that is, the collateral security granted to secure the obligation). It is a form of ordering imposed in relation to the prescribed security interest that requires secured creditors who have multiple security interests to first exhaust the security interests that leave the limited security of the Crown intact.

Thus, if a secured creditor enters into a security or general guarantee agreement including collateral security that together with the mortgage on land or building, secures an obligation, the value to the secured creditor of the collateral security will reduce the amount of the prescribed security interest. In other words, the value of the collateral security interests will reduce the security granted under the mortgage and the amount that may be realized in priority over the Crown’s deemed trust.

This restriction only applies only to competing priorities with the Crown and not to priorities between other secured creditors.

The value of the collateral security will be calculated based on the applicable net realization value. [22] [Emphasis added] [ 42 ] L’Heureux adds: [ translation ] These few restrictions limiting the value of the security interest have been incorporated, on the one hand, to prevent the hasty erosion of the base of the deemed trust and, on the other hand, to encourage secured creditors to monitor the progress of source deduction payments by the tax debtor. [23] [ 43 ] All of this leads to the conclusion that “all the rights of the secured creditor securing the obligation / droits du créancier garanti garantissant l’obligation ” includes both personal and real rights.

The value of the Caisse’s suretyship therefore accordingly reduces the amount of its priority with respect to the Crown’s deemed trust. [ 44 ] With respect to the

interpretation of paragraph 2201(2) (

b) of the Regulations , I believe that it is useful to add an observation, even though this issue is not really in dispute. [24] In my opinion, all of the amounts paid by Chambois after the time of the failure to remit, including the interest paid on the loan, must be applied in reduction of the PSI. This

interpretation is compatible with the double objective of [ translation ] “encouraging [secured creditors] to make sure that their debtors are paying the source deductions” and preventing [ translation ] “possible abuses as well as the windfalls from which secured creditors may benefit”. [25] Indeed, the interest collected by the Caisse after Chambois’ failure to remit the source deductions to the Receiver General may be viewed as a windfall. C. The validity of subsection 2201(2) of the Regulations . [ 45 ] The judge did not err in dismissing the arguments presented by the Caisse.

[ 46 ]

Section 7 of the Charter – which guarantees that everyone has the right to life, liberty and security of the person – does not apply to legal persons. [26] Moreover, even though the definition of the PSI in

section 2201 of the Regulations also applies to natural persons, there is no evidence of an infringement of the right to life, liberty or security of the person. As the Supreme Court noted in Siemens v. Manitoba (Attorney General) , this right “encompasses fundamental life choices, not pure economic interests”. [27] [ 47 ] The theory of vagueness may nevertheless be raised from the perspective of administrative law. Moreover, according to professor Garant, the standard is the same in public, constitutional, and administrative law. [28] [ 48 ] It is an exacting standard.

Gonthier, J., writing for the Supreme Court, described it as follows in R. v. Nova Scotia Pharmaceutical Society : A vague provision does not provide an adequate basis for legal debate, that is for reaching a conclusion as to its meaning by reasoned analysis applying legal criteria. It does not sufficiently delineate any area of risk, and thus can provide neither fair notice to the citizen nor a limitation of enforcement discretion. Such a provision is not intelligible, to use the terminology of previous decisions of this Court, and therefore it fails to give sufficient indications that could fuel a legal debate.

It offers no grasp to the judiciary. This is an exacting standard, going beyond semantics. […] [29] [ 49 ] In this case, it cannot be said that subsection 2201(2) of the Regulations offers no grasp to the judiciary. As discussed above, the meaning of the words “all the rights of the secured creditor securing the obligation / droits du créancier garanti garantissant l’obligation ” and “guarantees / garanties ” can easily be discerned by applying the modern method of

interpretation. [ 50 ] There remains the rule prohibiting the attribution by regulation of a purely discretionary power. According to the Caisse, determining the value of the rights of secured creditors under paragraph 2201(2) (

a) of the Regulations is the equivalent of a sub- delegation of discretionary power. [ 51 ] This argument is without merit. Applying a standard to a particular case always includes an element of discretion, but, as professor Garant explains, it is the attribution of a pure discretionary power that is prohibited: [30] [translation] As previously discussed, what is formally prohibited is the attribution through a regulation of a purely discretionary power.

However, leaving a certain amount of appreciation to the person who will have to apply this regulation is not prohibited provided that sufficiently specific standards exist in the law and regulation as a whole. […] [31] [ 52 ] In this case, it is for the bailiff who proceeded with the sale under judicial authority to determine the order of collocation [32] and, if needed, establish the amount of the PSI based on the value of the secured creditor’s rights. [33] The bailiff must take into consideration the circumstances, including the existence of a deemed trust in favour of the Crown, to deduct only the [ translation ] “net realization value” of the rights of the secured creditor. [34] [ 53 ] Certainly, determining the value of a right or a security interest involves a [ translation ] “certain amount of appreciation” but, in the event of a contestation, the court decides the amount of the PSI.

The bailiff is not at liberty to exempt the CRA from the application of the PSI or to ignore the calculation method set out in subsection 2201(2) of the Regulations . [ 54 ] It goes without saying that the CRA employee who prepares the claim sent to the bailiff does not have more discretionary power within the meaning of the rule raised in this case and even less so decision-making power. [ 55 ] Subsection 2201(2) of the Regulations is therefore not attributive of a purely discretionary power. VI.

Conclusion [ 56 ] For these reasons, I would allow the principal appeal and dismiss the incidental appeal, with costs. SUZANNE GAGNÉ, J.A.