Topolniski J

3.9: Service of originating application and evidence
9.15: Setting aside, varying and discharging judgments and orders
11.14: Service on statutory and other entities

Case Summary

With respect to the priority of security interests in an Application relating to restructuring under the Companies’ Creditors Arrangement Act (“CCAA”), the Canada Revenue Agency (“CRA”) sought to vary the prioritization of charges made in favour of certain individuals, and argued that there was a statutory deemed trust in its favour which gave it a proprietary interest in the Debtors’ assets, which could not be subordinated; or, if the CRA was a secured creditor, that it should be placed ahead of other priority charges.

Prior to its submissions respecting its deemed trust, the CRA argued that it had standing to make its Application because it had applied pursuant to Rule 9.15(1), and it had not been adequately served in the initial receivership proceedings. Justice Topolniski noted that, under Rule 9.15(1) the Court may set aside, vary, or discharge an Order or Judgment to correct a mistake or if there was not adequate notice of a Trial, or if it was made without notice to an affected individual. With respect to service, Justice Topolniski reviewed Rule 11.14(1)(b), which governs service upon statutory entities and noted that it is effective through recorded mail addressed to the entity at the entity’s principal place of business. Pursuant to Rule 11.14(2)(b), “recorded mail” includes courier delivery, which was the method used in this case.

Topolniski J. also noted that under Rule 3.9, an Originating Application and supporting Affidavit must be served more than 10 days prior to the return date. Her Ladyship held that the Debtors “effected service, albeit short notice service, on CRA, which the Court deemed to be good and sufficient”. Justice Topolniski noted that short service was common in insolvency proceedings and that the CRA was a “seasoned and sophisticated player” in the insolvency arena. Topolniski J. also noted that the CCAA is more concerned with balancing interests than technical compliance. As such, the Court had the jurisdiction to hear the CRA’s variance Application, but ultimately held that the CRA’s interest was subordinate to the other priority charges.

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