2014 QCCA 1922, 2014 QCCA 1922

Girard (Syndic de) 2014 QCCA 1922 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-024077-133 (705-11-007278-097) DATE: OCTOBER 21, 2014 CORAM: THE HONOURABLE NICOLE DUVAL HESLER, C.J.Q. ALLAN R. HILTON, J.A. FRANÇOIS DOYON, J.A. IN THE MATTER OF THE BANKRUPTCY OF SYLVAIN GIRARD DEBTOR and ATTORNEY GENERAL OF CANADA APPELLANT -Applicant v. JEAN-MARC POULIN DE COURVAL, in his capacity as trustee in bankruptcy of Sylvain Girard RESPONDENT - Respondent JUDGMENT * [ 1 ] THE COURT: On the appeal of the appellant from the judgment of the Superior Court, District of Joliette (the Honourable Mr.

Justice Claude Auclair) rendered on November 28, 2013 dismissing its motion in respect of the applicable procedure to contest the proof of claim in bankruptcy of the Canada Revenue Agency; [ 2 ] For the reasons of Doyon, J.A., with which the Chief Justice and Hilton, J.A. agree: [ 3 ] DISMISSES the appeal, with costs. NICOLE DUVAL HESLER, C.J.Q. ALLAN R. HILTON, J.A. FRANÇOIS DOYON, J.A. Mtre Pierre Lamothe Mtre Julie Mousseau Department of Justice of Canada For the Appellant Mtre Jean-Philippe Gervais For the Respondent Date of hearing: June 4, 2014 REASONS OF DOYON, J.A.

[ 4 ] Does the notice of assessment issued by the Canada Revenue Agency ("CRA") against a bankrupt constitute an "action, execution or other proceedings, for the recovery of a claim provable in bankruptcy" within the meaning of

section 69.3 of the Bankruptcy and Insolvency Act (" BIA )? [1] If so, is the CRA required to obtain leave from the court pursuant to

section 69.4 BIA so that the process may continue and the specific rules governing objections against a notice of assessment may apply? [ 5 ] Contrary to the appellant's arguments, I find that the notice of assessment constitutes a measure taken in view of recovery of a provable claim and is therefore dependent on a decision of the court, in this case the Superior Court, to lift the stay under paragraph 69.3 BIA . [ 6 ] Before going any further, here are the two provisions at issue: 69.3

(1) Sous réserve des paragraphes (1.1) et (2) et des articles 69.4 et 69.5, à compter de la faillite du débiteur, ses créanciers n’ont aucun recours contre lui ou contre ses biens et ils ne peuvent intenter ou continuer aucune action, mesure d’exécution ou autre procédure en vue du recouvrement de réclamations prouvables en matière de faillite.

(1.1) Le paragraphe (1) cesse de s’appliquer à tout créancier le jour de la libération du syndic. … 69.4 Tout créancier touché par l’application des articles 69 à 69.31 ou toute personne touchée par celle de l’article 69.31 peut demander au tribunal de déclarer que ces articles ne lui sont plus applicables. Le tribunal peut, avec les réserves qu’il estime indiquées, donner suite à la demande s’il est convaincu que la continuation d’application des articles en question lui causera vraisemblablement un préjudice sérieux ou encore qu’il serait, pour d’autres motifs, équitable de rendre pareille décision. 69.3

(1) Subject to subsections (1.1) and (2) and sections 69.4 and 69.5, on the bankruptcy of any debtor, no creditor has any remedy against the debtor or the debtor’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy. (1.1) Subsection (1) ceases to apply in respect of a creditor on the day on which the trustee is discharged. … 69.4 A creditor who is affected by the operation of sections 69 to 69.31 or any other person affected by the operation of

section 69.31 may apply to the court for a declaration that those sections no longer operate in respect of that creditor or person, and the court may make such a declaration, subject to any qualifications that the court considers proper, if it is satisfied (

a) that the creditor or person is likely to be materially prejudiced by the continued operation of those sections; or (

b) that it is equitable on other grounds to make such a declaration. BACKGROUND [ 7 ] The facts are not disputed. [ 8 ] On May 15, 2009, Sylvain Girard declared bankruptcy. In his statement of affairs, he declared debts totalling $1,742,198.60. [ 9 ] On July 16, 2009, the CRA filed a proof of claim for $89,225.43 with the trustee, which is in an amount equal to a previously issued notice of assessment.

That proof of claim was a secured one that was not disputed and was paid in full on February 23, 2010. [ 10 ] On January 22, 2010, the CRA filed an amended claim for $731,774.46 in addition to the amount of the previous claim, this time however as an unsecured claim. A few days later, on January 25, 2010, the CRA issued "Notices of Reassessment" attesting to the addition of this latter claim.

These notices were for fiscal years 2004 and 2005, and concerned capital gains and income that it alleges the bankrupt did not declare. [ 11 ] On November 26, 2012, after requesting further information, the respondent (the trustee in bankruptcy of Sylvain Girard), issued a notice of disallowance of the amended proof of claim. The trustee began by writing the following: [ translation ] (

i) The claim and underlying assessment were issued after the date of the bankruptcy; (ii) No leave to bring proceedings against the assets or the debtor was solicited or obtained from the Superior Court of Quebec under the provisions of subsection 69.4 BIA ; (iii) Accordingly, the trustee considers that the notice of assessment issued for the said amount of $731,774.46 after the date of the

bankruptcy merely constitutes a statement of account rather than an originating document initiating the tax challenge process, whichwould have required leave from the Bankruptcy Court; [12] The trustee went on to disallow the claim, outlining why he believed it to be groundless. It is not necessary in the context of thisappeal to reproduce his reasons. [13] On December 21, 2012, the CRA appealed to the Superior Court, raising two main arguments: (1) an assessment is not a"proceeding" within the meaning of

section 69.3 BIA, and (2) the trustee cannot disallow a proof of claim concerning an assessment; theassessment is presumed to be valid, the trustee must therefore object within ninety days as provided in

section 165 of the Income Tax Act("ITA"),[2] and the outcome of this objection falls within the exclusive purview of the tax courts. [14] Mr. Justice Claude Auclair of the Superior Court dismissed the appeal on November 28, 2013. [15] That judgment is the subject of the present appeal. THE SUPERIOR COURT JUDGMENT [16] Auclair J. noted that the only issue in dispute was whether the CRA must obtain prior leave from the court pursuant to section69.4 BIA.

It is generally admitted that it falls to the Tax Court of Canada to determine the quantum of the assessment. [17] Upon analyzing the case law cited by the parties, the judge found that M & D Farm Ltd. v. Manitoba Agricultural Credit Corp., (SCC), [1999] 2 S.C.R. 961, authorized him to dismiss the CRA's argument that, unlike recovery measures, the noticeof assessment is a proceeding that is not covered by

section 69.3 BIA. Here are his comments on the subject: [translation] [28] In this case, the CRA argued that the notice of assessment was merely an administrative act. The Court does not share thisopinion. The notice of assessment triggers the time limitation period for an objection to the assessed amount of tax debt under section152. It is tantamount to a motion to institute proceedings.

Moreover, if no objection is filed within the time limit, the debt is deemed tobe established. [29] If, during the bankruptcy, when all proceedings are stayed, the CRA wishes to benefit from a trustee’s failure to contest within90 days of the notice of assessment, it must apply to have the stay lifted. In this case, the CRA issued the notice of assessment after thedate of the bankruptcy.

Accordingly, it had to obtain leave from the Bankruptcy Court to trigger the time periods for objection so that thenotice of assessment could produce its effects, including the running of the 90-day limitation period for a notice of objection or achallenge. [30] This case features a significant parallel with M & D Farm, where the Supreme Court stated that, in response to the creditor’sapplication, the debtor was required to raise all grounds of objection.

So long as the notice to stay proceedings is not lifted, the time limitdoes not run – I repeat – as the notice triggers the entire objection procedure. [31] The CRA argues that only the Tax Court may rule on the failure to act. Is the trustee required to file the application with the TaxCourt? The Court does not share this opinion because it is up to the Bankruptcy Court to lift the stay. Thereafter, the Tax Court willdetermine the quantum of the notice of assessment. [18] He added: [33] Parliament is presumed to be consistent and logical; it did not exempt the CRA from the application of

section 69. If it had wishedto clarify or reduce the scope of

section 69, it had numerous opportunities to do so when it repeatedly amended the Bankruptcy andInsolvency Act, after both M & D Farm, rendered in 1999, and Vachon, rendered in 1985. The Court has reviewed the Act and has notedthe large and appreciable number of amendments to the Act since 1985. Therefore, the limitation period does not run because the noticeof assessment was not enforceable in law. [34] The obligation to obtain leave from the Bankruptcy Court is in a certain way logical because, in most situations, the trustee doesnot have the appropriate information to contest a notice of assessment.

Thus, if the CRA absolutely wants to benefit from the limitationperiod for objection, it must trigger all of the mechanisms so that the trustee is aware that if he fails to act, the debt will be certain, liquidand enforceable against all parties. [19] In short, a notice of assessment is a proceeding subject to sections 69.3 and 69.4 BIA, a statute that applies to the CRA as it doesto any other creditor.

Insofar as the CRA has not sought leave to institute proceedings, the notice of assessment has no legal effect.Auclair J. concluded as follows: [38] CONCLUDES that the CRA must apply for leave from the Bankruptcy Court to trigger the limitation periods for objecting to anotice of assessment if the CRA wishes to benefit from the effects of such uncontested notice of assessment for a pre-bankruptcy taxdebt issued after the bankruptcy; [39] Accordingly, SETS THE DATE of the motion to appeal from the trustee's rejection of a proof of claim for January 16, 2014,pro forma.

THE PARTIES' RESPECTIVE POSITIONS The appellant

[20] According to the appellant, the objective of

section 69.3 BIA is to prevent a creditor with a provable claim from enforcing itsclaim against a debtor's assets to the detriment of the other creditors. A notice of assessment does not have this effect, however, andtherefore does not fall within the scope of a stay of proceedings. [21] The establishment of the assessment must be distinguished from recovery measures, and the trial judge erred by confusing thetwo concepts. Only recovery measures constitute execution within the meaning of

section 69.3 of the BIA. The establishment of theassessment, on the other hand, sets in motion a series of consequences that have nothing to do with recovery measures, such as thepresumption of validity of the notice of assessment, the triggering of the limitation period for objecting to it and the procedure to do so. [22] According to the appellant, the effect of the trial judgment is to deprive the CRA of any participation in the dividend, which runscontrary to the spirit and purpose of the BIA.

The tax claim that is established by a notice of assessment thus becomes moot. [23] In addition, the establishment of a notice of assessment carries immediate legal effects, such as the triggering of the limitationperiod for objecting to it and the objection process, which falls within the exclusive jurisdiction of the Tax Court of Canada and is notsubject to the discretionary power of a court sitting in bankruptcy. [24] The trial judgment also interferes with the presumption of validity of the assessments.

It unduly creates a significant differencebetween the tax treatment of bankrupt taxpayers and that of other taxpayers. Subsection 165(1) ITA, which provides that the taxpayermay object to the notice of assessment within ninety days, applies to the trustee, and it is not up to the CRA to prove its validity. The respondent [25] The respondent notes that the Crown is bound by

section 4.1 and subsection 86(1) of the BIA and that, with some exceptions, itsclaims rank as unsecured claims. [26] It is not appropriate to distinguish the establishment of the assessment from recovery measures, as the appellant argues. Oncebankruptcy occurs, the only possible measure for a creditor (including the CRA) to recover a provable claim is to file its claim with thetrustee and to receive its part of the dividend if it is accepted. [27] The courts have afforded a broad scope to the stay contemplated by

section 69.3 BIA, which applies to any measure – be itadministrative, judicial, or quasi-judicial – seeking to recover a debt. [28] In the respondent’s view, the notice of assessment is the first step in a process leading to the establishment of the tax debt andtherefore to its recovery in accordance with the proportion of the dividend attributed to it. Accordingly, the CRA acts with a view tocollecting a "claim provable in bankruptcy" by improving its position in respect of the eventual distribution of the dividend.

Moreover, inthis case, the situation of the other ordinary creditors would be [translation] "greatly affected" by the filing of this new proof of claimsince it would entitle the CRA to nearly 70% of the available dividend. [29] The CRA is in the same situation as any other creditor and if it wants the procedure for objecting to a notice of assessment to betriggered, it must apply to the Court pursuant to

section 69.4 BIA since it constitutes a proceeding with a view to recovering a claim. [30] The respondent adds that, in other contexts, the CRA itself has argued that a notice of assessment is an action or proceeding. Forexample, in Manago v. M.N.R., 910 DTC 1889 at 1893, the Tax Court of Canada accepted the CRA's point of view, stating thefollowing: … the phrase action or proceedings to recover is not confined to proceedings that are solely legal in nature.

The subject phrase is wordedbroadly enough to encompass and include the administrative act of recovery of the liability in the form of a notice of assessment orreassessment. [31] In Larocque v. M.N.R., (TCC), 91 DTC 899 at 901, the Tax Court of Canada also found that the notice ofassessment was a proceeding to recover an amount of money: … the assessment while not a legal proceeding is an administrative one aimed to ultimately recover an amount of money. [32] Finally, the broad

interpretation accepted by the Supreme Court in M & D Farm Ltd. v. Manitoba Agricultural Credit Corp., (SCC), [1999] 2 S.C.R. 961 and Vachon v. Canada Employment and Immigration, (SCC), [1985] 2S.C.R. 417, is determinative and leads to the conclusion that the notice of assessment is simply one step in a more general proceedingultimately seeking the recovery of a claim and that it is therefore subject to the stay under

section 69.3 BIA. ANALYSIS [33] As Deschamps J. notes in Century Services Inc. v. Canada (Attorney General), 2010 SCC 60 , [2010] 3 S.C.R. 379 atpara. 22, the BIA sets out a special proceeding for debt recovery: [22] While insolvency proceedings may be governed by different statutory schemes, they share some commonalities. The mostprominent of these is the single proceeding model.

The nature and purpose of the single proceeding model are described by ProfessorWood in Bankruptcy and Insolvency Law: They all provide a collective proceeding that supersedes the usual civil process available to creditors to enforce their claims. Thecreditors’ remedies are collectivized in order to prevent the free-for-all that would otherwise prevail if creditors were permitted toexercise their remedies. In the absence of a collective process, each creditor is armed with the knowledge that if they do not strike hardand swift to seize the debtor’s assets, they will be beat out by other creditors. [pp. 2-3]

The single proceeding model avoids the inefficiency and chaos that would attend insolvency if each creditor initiated proceedings to recover its debt. Grouping all possible actions against the debtor into a single proceeding controlled in a single forum facilitates negotiation with creditors because it places them all on an equal footing, rather than exposing them to the risk that a more aggressive creditor will realize its claims against the debtor’s limited assets while the other creditors attempt a compromise.

With a view to achieving that purpose, both the CCAA and the BIA allow a court to order all actions against a debtor to be stayed while a compromise is sought. [ 34 ] In other words, by creating a [ translation ] "one stop" proceeding, the BIA places all ordinary creditors on an equal footing and subjects their claims to a [ translation ] "single control".

Thus, the objective of the statute is to treat all ordinary creditors the same way, without preference, and the CRA is an ordinary creditor subject to the BIA , save for certain specific provisions (section 4.1). [ 35 ] Since no ordinary creditor should be favoured over the others, the proceedings they could bring are stayed (

section 69.3 ) unless the court decides otherwise (

section 69.4 ). All parties must prove their claims to the satisfaction of the trustee. This is one of the main objectives of the BIA , and it is an important criterion when it comes to interpreting its provisions: Léger v. Ouellet , 2011 QCCA 1858 . [ 36 ] Since the parties are of the view that the Tax Court of Canada should determine the quantum of the CRA's claim, this issue was not argued and need not be decided here.

The only issue before the Court is whether the CRA is obliged to obtain prior leave from the court for the procedure in the ITA to be applicable, including the ninety-day limitation period to object to the notice of assessment. [ 37 ] I note that in the present case, the respondent does not challenge the presumption of validity of the notice of assessment. Instead, he maintains that the presumption is stayed under

section 69.3 until the court rules otherwise. As a result, the appellant's arguments on the issue of the presumption of validity are not determinative. [ 38 ] Furthermore, I cannot conclude, as the respondent contends, that the outcome of the appeal can be decided by M & D Farm Ltd. alone. After all, in that case, which did not concern a taxation statute, the Manitoba Agricultural Credit Corporation sought to take possession of the debtors' farm, which was the subject of the security, while in this case the CRA is simply an unsecured creditor.

The situation is very different. [ 39 ] I do believe, however, that certain principles adopted by the Supreme Court in that case, which concern a statutory provision analogous to

section 69.3 BIA , are applicable in this appeal. For example, the Supreme Court rejected the argument of the Manitoba Agricultural Credit Corporation to the effect that the application for leave at issue was not a proceeding prohibited by the provision because it was only a prerequisite to such a proceeding.

After pointing out that the Act was intended to help farmers settle temporary financial issues in cooperation with their creditors, Binnie J. wrote the following on this subject, at paragraphs 27 to 29: 27 In light of the statutory scheme read as a whole, and particularly the short time frames, my view is that the s. 23 moratorium prohibits the making of a leave application which is directed to the end result of debt collection or depriving the farmer of his or her land or other security.

The foreclosure, possession and sale of mortgaged farmland will involve numerous steps and (as the respondent’s original Notice of Motion illustrates), multiple proceedings. It is artificial to isolate the leave application from this multi-faceted process and, having isolated it, contend that it is exempt from the s. 23 stay . 28 A court proceeding places a drain on the farmer’s resources at the very moment all parties should have their focus on a potential arrangement.

A leave application does not itself result in dispossession, but it requires the farmer to put together a defence and this will likely involve hiring a lawyer (despite the fact that the farmer is ex hypothesi insolvent) to assist in the cross-examination on affidavits, preparing opposing affidavits and dealing with adjournments, and the cost and disruption of litigation.

All of this is to be done at the very time the Board is attempting to assist in putting together an arrangement with creditors that would render such litigation superfluous. 29 A leave application under s. 8 of The Family Farm Protection Act is so intimately connected with the proceedings listed in s. 23 that, giving the

section a purposive

interpretation, the leave application itself is also prohibited during the currency of a s. 23 stay . … [Emphasis added.] [ 40 ] The notion that the leave application is part of the procedures as a whole and therefore prohibited even though on its own it does not enable the recovery of a debt applies in the present case. Indeed, even if the notice of assessment does not on its own give rise to the recovery of a provable claim, it remains an essential step in any subsequent recovery proceedings and is so intimately connected with it that it too must be prohibited or at the very least its effects stayed.

In short, the fact that the notice of assessment predates recovery does not change its status: it is the first stage in a process that is ultimately aimed at recovering a claim. [ 41 ] Moreover, as Beetz J. points out in Vachon at page 426, the administrative nature of a notice of assessment is not sufficient to exempt it from

section 69.3 BIA : The Bankruptcy Act governs bankruptcy in all its aspects. It is therefore understandable that the legislator wished to suspend all proceedings, administrative or judicial, so that all the objectives of the Act could be attained. [ 42 ] In short, the fact that the notice of assessment is an administrative measure does not way modifiy the prohibition in

section 69.3 BIA . [ 43 ] Similarly, the

interpretation in M & D Farm Ltd. of the words " for the recovery" or " pour le recouvrement ", which signify "with a view to" (as in the present case), is equally relevant to this appeal. Binnie J. stated the following: [29] ... Great stress is placed by MACC on the words “for the recovery”, etc., but the ordinary meaning of the word “for” includes “[w]ith a view to; with the object or purpose of: as preparatory to… [c]onducive to” ( The Oxford English Dictionary (2nd ed. 1989), vol. 6, at pp. 23-24). The word “ pour ” used in the French text has a similarly elastic meaning, including “ [e]n ce qui concerne ”, “ marquant la

destination figurée . . ., le but, l’intention”, and “[e]n vue de” (Le Grand Robert de la langue française (2nd ed. 1986), vol. 7, at p. 659).The leave application is clearly “preparatory to… [c]onducive to” the ultimate dispossession of the farmer from his or her land. Whenthis language is then placed in the context of the federal scheme, the conclusion is inescapable that a leave application comes within theprohibition of “any proceedings or any action, execution or other proceedings, judicial or extra-judicial, for the recovery of a debt, therealization of any security or the taking of any property out of the possession of the farmer”. [44]

Section 69.3 BIA prohibits actions and proceedings "with a view to the recovery of provable claims". The ordinary meaning ofthe words conflicts with the appellant's position that the notice of assessment is not a recovery measure. While it is true, as stated above,that the notice does not enable recovery on its own, the fact remains that it is issued with a view to recovering this claim, even though therecovery is carried out subsequently, from the bankrupt's assets that are collected by the trustee.

In short, the CRA wishes to recover itsdebt, and its notice of assessment is part of a series of measures to do so. The fact that the recovery does not target a specific asset but theassets as a whole changes nothing: the notice of assessment is the first step in a longer process and, to paraphrase paragraph 27 of M & DFarm Ltd., it would be artificial to isolate it from this process and, having isolated it, contend that it is exempt from the

section 69.3 stay. [45] I note that, although the proceeding of the Manitoba Agricultural Society in M & D Farm Ltd. sought to recover a specific asset(the farmer's farm) to realize on its security, Binnie J. wrote in paragraph 27 of that judgment that the rule requiring a stay applies notonly to cases where a party seeks to deprive farmers of their land or other security, but also to those where the objective is moregenerally the collection of a debt. ...my view is that the s. 23 moratorium prohibits the making of a leave application which is directed to the end result of debt collection ordepriving the farmer of his or her land or other security. [46] The CRA wishes to recover its claim, even if only in part, by collecting from the assets as a whole.

I do not agree with theappellant's contention that the objective of the assessment is not to appropriate the assets of the bankrupt because it would not allow theCRA to do anything more than to receive a share of the dividend on a pro rata basis with the other creditors. Whatever the case, itconstitutes the recovery of a debt, either in whole or in part. [47] It therefore appears that the stay in

section 69.3 BIA applies in the present case, be it as a result of the objective of the Act or theordinary meaning of the words. [48] Moreover, no ordinary creditor may be put in a better position, and that includes the CRA. The appellant's argument wouldunduly benefit the CRA, particularly with respect to the short limitation period available to the trustee to object, the fact that the burdenwould fall on the trustee (unlike in other cases, where the burden is on the creditor), and the consequences in the event there is noobjection.

These are benefits that run contrary to the objectives of the scheme established by the BIA. [49] On the subject of the case law, the respondent maintains that the trial judge was justified in not following Re Norris, (1989), (ON CA), 69 O.R. (2d) 285 (Ont. C.A.), Gestion Manoir St-Sauveur inc. (Syndic de), J.E. 93-657 (Sup. Ct.), and St-Pierre (Syndic de), 2011 QCCS 7499, all cited by the appellant. I share his view. [50] First, Re Norris and Gestion Manoir St-Sauveur inc. (Syndic de) were decided before M & D Farm Ltd. and therefore withoutthe benefit of the broad

interpretation given by the Supreme Court. [51] In addition, in Re Norris, the Court of Appeal for Ontario found that it was within the power of the trustee to ask for moreinformation after the Crown filed its claim, but that the notice of assessment, which is presumed to be valid, was a full answer to therequest, such that the claim could be disputed only by way of the procedure set out in

section 165 ITA and not by a disallowance by thetrustee.

The Court found that the trustee's disallowance was contrary to law in that it was the result of a process which, under the ITA,falls exclusively within the jurisdiction of the Tax Court of Canada, and that there was no provision in the BIA supporting any otherconclusion. [52] Two aspects distinguishing that case from the present appeal, however, are worth noting. [53] First, the claim in that case was the action of a preferred creditor, as the Court notes: In 1986, Her Majesty the Queen filed a claim as a preferred creditor against the bankrupt estate of Albert John Norris. [54] Second and more importantly, the argument that sections 69.3 and 69.4 of the BIA require that the procedure for objecting tothe notice of assessment be stayed and leave from the court be obtained for it to be applicable was not raised before the Court of Appealfor Ontario.

That judgment may appear to indicate that the Court would have rejected the argument, but the fact remains that it was notconsidered and never explicitly decided. [55] In Gestion Manoir St-Sauveur inc. (Syndic de), the situation was unique. The trustee conceded that he could object to a notice ofassessment by using the procedure in the ITA but argued that because the notice in that case was issued after proof had been filed inresponse to a request by the trustee, the procedure should be the one in the BIA.

The Superior Court judge rejected this argument and,consequently, held that the procedure to be used was that found in the ITA. The rest of the judgment, which is based on Re Norris andconcludes that the ITA procedure is the one that applies, should therefore be considered obiter dictum. Moreover, as in Re Norris, thesubmission that the respondent advances in this appeal case was not argued. [56] Finally, in St-Pierre (Syndic de), the situation was analogous to the one this case presents.

The claim was presented by RevenuQuébec as an unsecured creditor, and the notice of assessment was not contested in the manner required by the provincial statute. Theissue in dispute was described by the Superior Court as follows: [translation] In other words, is the trustee bound by the notices of assessment and the appeal procedure set out in the applicable tax statutes?

[ 57 ] Being of the view that the notice of assessment is not covered by

section 69.3 BIA , the judge found that in the objection process, the trustee was bound by the tax scheme. To so conclude, the judge referred to Re Norris , among other cases, without however taking into account the distinctions I mentioned earlier. [ 58 ] Thus, these two Superior Court judgments – the one that is the subject of this appeal and the one in St-Pierre (Syndic de) – are contradictory. [ 59 ] Of course, the trial judge was not bound by St-Pierre (Syndic de) .

He was free to arrive at a different conclusion, and he explained why he did so: the case law on which his colleague based himself predated M & D Farm Ltd ., and the issue of staying the measure and applying sections 69.3 and 69.4 BIA was not considered. [ 60 ] While both opinions are well reasoned, I am of the opinion, with respect for the contrary point of view and for the reasons outlined above, that the conclusion of Auclair J. is the one that should be accepted. [ 61 ] I agree with his remark: [ translation ] [34] The obligation to obtain leave from the Bankruptcy Court is in a certain way logical because, in most situations, the trustee does not have the appropriate information to contest a notice of assessment. […] [ 62 ] Indeed, from a purely practical perspective, the trustee does not have the same knowledge as the bankrupt of his tax situation, especially when, as is the case here, the CRA alleges subterfuge to hide income.

In other words, in many cases, the trustee cannot be expected to grasp the entire situation in less than 90 days. Otherwise, he would, as a result, systematically object in every case merely because there might be a basis of contestation, only to withdraw that objection later if it turns out not to be the case. I cannot believe that the statute would require such a potentially pointless, inefficient and onerous process. [ 63 ] Moreover, it seems to me that the appellant's contention could have another negative and unfavourable consequence for the other creditors.

If the notice of assessment remains valid so long as the trustee has not successfully objected to it, the CRA would in the meantime be entitled to a percentage of votes as an ordinary creditor equal to the amount of its claim, which in some cases (such as the one here) could allow it to take control of the decisions of the meeting of creditors for months, if not years, even if its claim later turns out to be unfounded. In my view, even retroactive invalidation under

section 108 BIA , if applicable, would be an unsatisfactory solution. [ 64 ] It is important to liquidate and distribute the assets of the bankruptcy efficiently and quickly. If this is not done, they could be used up entirely by the liquidation fees.

That is why the trustee has the obligation to accept or reject the provable claims summarily, even if they are based on a notice of assessment, or a judgment for that matter, both of which, in the bankruptcy context, constitute nothing more than evidence of a claim. [ 65 ] The trustee is the "trustee for the estate" and has no obligation in any way relating to liabilities.

He must consider the provable claims, but only in accordance with the mechanism set out in the BIA . [ 66 ] That is why the CRA, if it is dissatisfied with the decision of the trustee, must dispute the disallowance of its provable claim – not of its assessment – before the court. [ 67 ] Moreover, when the CRA amends its proof of claim, which it may like any other creditor, the process of its consideration by the trustee and the review before the court starts again. [ 68 ] In conclusion, if the CRA submits a claim to the trustee, it may issue a notice of assessment.

Because this notice of assessment constitutes a proceeding with a view to recovering a provable claim, however, it will not have the legal effects conferred upon it by the ITA unless the CRA obtains leave from the Court. In other words, if the CRA seeks to have the procedure for objection to the notice of assessment in the ITA to be applicable, particularly in regard to the limitation period for objection, it must address the court and obtain its authorization, pursuant to

section 69.4 BIA . [ 69 ] For these reasons, the appellant’s position cannot be sustained, and I would accordingly dismiss the appeal, with costs. FRANÇOIS DOYON, J.A.