Case information

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Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

On October 3, 1998, the debtor D.I.M.S. Construction (D.I.M.S.) gave notice to the Commission de la santé et de la sécurité du travail (CSST) that its 1988 payroll needed to be revised upwards because of contracts signed in the course of the year for work that had not been foreseen at the start of the year. On November 4, 1998, the CSST assessed D.I.M.S. for an additional $191,212.12. When D.I.M.S. failed to pay the amount, the CSST issued notices of assessment pursuant to s. 316 of the Act respecting industrial accidents and occupational diseases to the employers registered with the CSST that were under contract with D.I.M.S. to perform various construction jobs in 1988. Quebec’s Ministère du Transport was assessed by the CSST for $170,500, Pavages Chenail Inc. (Chenail) for $24,622 and the Compagnie de Pavage d’asphalte Beaver (Beaver) for $18,948.26. They failed to pay the assessments and were sent default notices by the CSST. At the same time, the Commission de la construction du Québec (CCQ) claimed from these employers the wages owed by D.I.M.S., pursuant to s. 54 of the Act respecting labour relations, vocational training and manpower management in the construction industry.

On November 23, 1998, D.I.M.S. filed a notice of intention to make a proposal to its creditors. On April 1, 1999, the proposal was refused by the creditors and, as provided for in the Bankuptcy and Insolvency Act, D.I.M.S. was deemed to have made an assignment in bankruptcy. The Respondent was appointed to act as trustee and claimed from Beaver, Chenail and the Ministère du Transport the payment of the amounts owed. The Ministère du Transport and Beaver did not make any payments to the CSST, the CCQ or the trustee. Chenail paid the trustee in return for an undertaking by the trustee to reimburse Chenail should it be required to pay the CSST or the CCQ

This situation led the trustee to make a motion for directions asking the Superior Court (1) to prohibit the CSST and the CCQ from sending requests for payment to D.I.M.S. subcontractors or any other of its debtors with respect to any amounts owed by D.I.M.S.; and (2) to declare that the CSST and CCQ claims are to be collocated as those of ordinary creditors in the bankruptcy. The trustee also requested the Court to declare section 316 of the Act respecting industrial accidents and occupational diseases and section 54 of the Act respecting labour relations, vocational training and manpower management in the construction industry to be inapplicable in bankruptcy matters.

The Superior Court dismissed the trustee’s motion. The Court of Appeal allowed the appeal and declared that s. 316 of the Act respecting industrial accidents and occupational diseases and section 54 of the Act respecting labour relations, vocational training and manpower management in the construction industry are inapplicable against Beaver, Chenail and the Ministère du Transport, since they are debtors of the bankrupt company and since the application in this case of the said provincial provisions would have the effect of modifying the order of priorities and the scheme of distribution set out in the Bankruptcy and Insolvency Act and would, for this reason, be in conflict with the federal legislation.