What Comes First: Deemed Trusts or Court-Ordered Super Priority Charges? ABCA Weighs In

Blake, Cassels & Graydon LLP

This decision affirms that a deemed trust in favour of the Canada Revenue Agency for unremitted source deductions can be primed by court-ordered charges such as a charge securing debtor-in-possession financing granted in a proceeding under the CCAA.

Justice Wakeling provided a lengthy dissent and maintained that the Crown has a claim to a deemed trust created under the ITA that supersedes any claim by those holding priming charges under the CCAA. He further concluded that nothing in the CCAA is inconsistent with this determination, and expressly called Parliament to act if it finds the decision to accord first priority to the Crown in the ITA was unwise and should be reversed.

We would be pleased to provide additional details or advice about specific situations if desired.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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