Vachon v. Canada Employment and Immigration Commission,  2 S.C.R. 417
André Vachon Appellant;
Canada Employment and Immigration Commission Respondent;
Attorney General of Canada Mis en cause.
File No.: 17252.
1984: December 14; 1985: November 21.
Present: Dickson C.J. and Beetz, Estey, McIntyre, Chouinard, Lamer and Wilson JJ.
on appeal from the federal court of appeal
Bankruptcy ‑‑ Property of bankrupt ‑‑ Stay of proceedings ‑‑ Overpayment of unemployment insurance benefits before bankruptcy ‑‑ Overpayment reimbursed by source deduction from benefits payable to bankrupt during bankruptcy ‑‑ Whether s. 49 of Bankruptcy Act contravened ‑‑ Unemployment Insurance Act, 1971, 1970‑71‑72 (Can.), c. 48, s. 49(3) ‑‑ Bankruptcy Act, R.S.C. 1970, c. B‑3, s. 49.
Appellant received unemployment insurance benefits to which he was not entitled. When he made an assignment of his property under the Bankruptcy Act, appellant owed respondent Commission $922. The latter filed its proof of claim with the trustee. During the bankruptcy, respondent, relying on s. 49(3) of the Unemployment Insurance Act, 1971, reimbursed itself from the benefits it would normally have paid appellant. As unemployment insurance benefits are exempt from execution, they are not part of the common fund available to creditors. After being discharged, appellant asked the Federal Court to declare that the deduction at source by respondent was unlawful. His action was dismissed and the Federal Court of Appeal affirmed the judgment. The appeal at bar is to determine whether recovery of an overpayment by deduction from the benefits at source is a remedy or proceeding against the debtor or his property within the meaning of s. 49(1) of the Bankruptcy Act.
Held: The appeal should be allowed.
The retentions made by respondent from the unemployment insurance benefits payable to appellant contravened s. 49(1) of the Bankruptcy Act. The remedies and proceedings mentioned in that subsection must be broadly interpreted and cover any kind of recovery, judicial or extrajudicial. These remedies and proceedings are not confined to property of the bankrupt which is part of the fund available for his creditors. The word "property" used in s. 49(1) is defined in s. 2, and is given a very broad definition not including such a limitation. Literal interpretation of the clear wording of the section supports the objectives of the Act, which is concerned not only with an equitable distribution of the debtor's property but also with his rehabilitation.
In re Standard Pharmacy Ltd. (1926), 7 C.B.R. 424; Hudson v. Brisebois Bros. Construction Ltd. (1982), 42 C.B.R. (N.S.) 97; Re Plastiques Valsen Inc.; Gaz Metropolitain Inc. v. St‑Georges (1981), 41 C.B.R. (N.S.) 7; Industrial Acceptance Corp. v. Lalonde,  2 S.C.R. 109, referred to.
Statutes and Regulations Cited
Act respecting the Québec Pension Plan, R.S.Q. 1977, c. R‑9, s. 148.
Bankruptcy Act, R.S.C. 1970, c. B‑3, ss. 2 "property", 47, 48, 49(1), 107(1)(h), 187.
Canada Pension Plan Act, R.S.C. 1970, c. C‑5, s. 65 [am. 1974‑75‑76 (Can.), c. 4, s. 33].
Code of Civil Procedure, art. 553.12.
Old Age Security Act, R.S.C. 1970, c. O‑6, s. 22 [rep. & subs. R.S.C. 1970 (2nd Supp.), c. 21, s. 10; am. 1974‑75‑76 (Can.), c. 58, s. 8].
Pension Act, R.S.C. 1970, c. P‑7, s. 23(8) [rep. & subs. 1976‑77 (Can.), c. 28, s. 34].
Social Aid Act, R.S.Q. 1977, c. A‑16, s. 25.
Unemployment Insurance Act, 1971, 1970‑71‑72 (Can.), c. 48, ss. 48 [am. 1974‑75‑76 (Can.), c. 80, s. 18; 1976‑77 (Can.), c. 54, s. 44], 49.
Unemployment Insurance Regulations, SOR/71‑324, s. 175.
Black’s Law Dictionary, 5th ed., St. Paul, Minn., West Publishing Co., 1979, "remedy".
Côté, P.‑A. The Interpretation of Legislation in Canada, Cowansville, Ed. Yvon Blais Inc., 1984.
Driedger, E. A. Construction of Statutes, 2nd ed., Toronto, Butterworths, 1983.
Houlden, L. W. and C. H. Morawetz. Bankruptcy Law of Canada, Current Service, vol. 1, Toronto, Carswells, 1979.
Jowitt’s Dictionary of English Law, 2nd ed., vol. 2, by J. Burke, London, Sweet & Maxwell Ltd., 1977, "remedy".
APPEAL from a judgment of the Federal Court of Appeal1, affirming a judgment of the Trial Division2. Appeal allowed.
1 F.C., No. A‑436‑80, January 28, 1982.
2 F.C., No. T‑3791‑79, June 5, 1980.
Guy Morin, André‑Gilles Brodeur and Micheline Plante, for the appellant.
Gaspard Côté, Q.C., and Guy Leblanc, for the respondent and the mis en cause.
English version of the judgment of the Court delivered by
1. Beetz J.
I‑‑Facts and Proceedings
2. The parties were agreed on the facts summarized by the unanimous judgment of the Federal Court of Appeal:
1. Appellant owed respondent Commission the sum of $922.00 when he made an assignment of his property under the Bankruptcy Act;
2. This sum of $922.00 was owed by appellant under sections 47 and 49 of the Unemployment Insurance Act, 1971; however, the debt had been incurred without fraud on the part of appellant, with the result that it was a debt from which he should normally be released by the order of discharge (see section 148 of the Bankruptcy Act);
3. The claim of the Commission was [a] claim provable in bankruptcy and the Commission filed its proof of claim with the trustee;
4. During the bankruptcy, when the Commission had not yet received anything from the trustee and appellant had not yet been discharged, unemployment insurance benefits became payable to appellant;
5. Rather than paying appellant all the benefits owing to him, the Commission withheld the sum of $922.00 owed to it by appellant from these benefits.
3. On July 3, 1979 an order of discharge was made concerning appellant, and on July 27, 1979 he brought against respondent a declaratory action in which he asked the Federal Court to
[TRANSLATION] declare that defendant acted unlawfully in retaining unemployment insurance benefits amounting to $951, benefits which plaintiff was entitled to during his bankruptcy.
4. (Counsel for the appellant admitted at the hearing that the amount at issue is in fact $922, as stated by the Federal Court of Appeal, and not $951.)
5. The Federal Court dismissed the action and the Federal Court of Appeal, which considered the action as one for recovery of the monies retained, affirmed the trial judgment: hence the appeal.
6. In addition to the facts, the two parties admitted that:
7. (a) the Crown and respondent are bound by the Bankruptcy Act, R.S.C. 1970, c. B‑3, in view of s. 187 of that Act;
8. (b) respondent's claim was a preferred debt under s. 107(1)(h) of the Bankruptcy Act, a debt which, if it had not been for the retention of benefits, would have been paid before the claims of ordinary creditors, had there been a distribution;
9. (c) unemployment insurance benefits which had become payable to appellant could not be assigned, charged, attached, anticipated or given as security, as a consequence of s. 48 of the Unemployment Insurance Act, 1971, 1970‑71‑72 (Can.), c. 48, s. 47 of the Bankruptcy Act and art. 553.12 of the Code of Civil Procedure.
II‑‑Legislation and Point at Issue
10. Section 49 of the Unemployment Insurance Act, 1971 is what imposes on a claimant a duty to repay any overpayment and which provides the procedure for recovery, including in subs. (3) retention from subsequent payments, which respondent applied in the case at bar:
49. (1) Where a person has received benefit under this Act or the former Act for a period in respect of which he is disqualified or any benefit to which he is not entitled, he is liable to repay an amount equal to the amount paid by the Commission in respect thereof.
(2) All amounts payable under this section or section 47, 51 or 52 are debts due to Her Majesty and are recoverable as such in the Federal Court of Canada or any other court of competent jurisdiction or in any other manner provided by this Act.
(3) Where a benefit becomes payable to any claimant, the amount of any indebtedness described in subsection (1) or (2) may, in the manner prescribed, be deducted and retained out of the benefit payable to him.
11. This method of recovering an overpayment, by retention from subsequent benefits, is a technique which is found in many statutes having a social purpose, federal as well as provincial. See, for example, Canada Pension Plan, R.S.C. 1970, c. C‑5, s. 65; Old Age Security Act, R.S.C. 1970, c. O‑6, s. 22; Pension Act, R.S.C. 1970, c. P‑7, s. 23(8); Social Aid Act, R.S.Q. 1977, c. A‑16, s. 25; Act respecting the Québec Pension Plan, R.S.Q. 1977, c. R‑9, s. 148.
12. The provision on which respondent's principal argument is based is s. 47 of the Bankruptcy Act:
47. The property of a bankrupt divisible among his creditors shall not comprise
(b) any property that as against the brankrupt is exempt from execution or seizure under the laws of the province within which the property is situated and within which the bankrupt resides.
13. Finally, the provision which is at the heart of the dispute is s. 49(1) of the Bankruptcy Act, which must be cited in both versions:
49. (1) Upon the filing of a proposal made by an insolvent person or upon the bankruptcy of any debtor, no creditor with a claim provable in bankruptcy shall have any remedy against the debtor or his property or shall commence or continue any action, execution or other proceedings for the recovery of a claim provable in bankruptcy until the trustee has been discharged or until the proposal has been refused, unless with the leave of the court and on such terms as the court may impose.
49. (1) Lors de la déposition d'une proposition faite par une personne insolvable ou lors de la faillite de tout débiteur, aucun créancier ayant une réclamation prouvable en matière de faillite n'a de recours contre le débiteur ou contre ses biens, ni ne doit intenter ou continuer une action, exécution ou autres procédures pour le recouvrement d'une réclamation prouvable en matière de faillite, tant que le syndic n'a pas été libéré ou que la proposition n'a pas été refusée, sauf avec l'autorisation du tribunal et aux conditions que ce dernier peut imposer.
14. This provision is preceded by the subheading "Suspension des procédures", "Stay of Proceedings".
15. The question that must be decided is the following: does the recovery of an overpayment by retention from subsequent benefits, applied by respondent, constitute within the meaning of s. 49(1) of the Bankruptcy Act a remedy against the debtor or his property, an action, execution or other proceeding which had been stayed except, as provided by this section, with leave of the Court or on such terms as the Court might impose?
III‑‑Trial Judgment and Judgment a quo
16. The trial judgment simply cited and approved the submissions made by counsel for the defendant Commission. Among the arguments so approved by the trial judge, the following are the two principal ones:
[TRANSLATION] (1)...the setoff allowed by . . . the Unemployment Insurance Act, is neither a remedy nor a proceeding within the meaning of s. 49 of the Bankruptcy Act. It is in fact an administrative act of recovery which is allowed by a specific statute and which, in my opinion, is not in the nature of a proceeding.
(2)...by thus reimbursing itself by recovery, the Unemployment Insurance Commission is not making payments to itself which are preferential over all other creditors, for its benefits cannot be attached and are not part of the fund available for creditors.
17. It would appear that the Federal Court of Appeal only adopted the first argument approved by the trial judge. Its entire reasoning is contained, be it said with respect, in one sibylline sentence:
In my view the right granted to the Commission under subsection 49(3) of the Unemployment Insurance Act, 1971 is not a remedy, action, execution or proceeding. Subsection 49(1) of the Bankruptcy Act does not therefore prevent it from being exercised.
18. The Federal Court of Appeal did not say why the right granted to the Commission by s. 49(3) of the Unemployment Insurance Act, 1971 is not a remedy or a proceeding. It may be that this is because the right is not a remedy or proceeding of a judicial nature. It is also possible that this is for other reasons which the Federal Court of Appeal did not disclose.
19. In this Court, counsel for the appellant sought to show, first, that the remedies and proceedings covered by s. 49(1) of the Bankruptcy Act are not confined to remedies and proceedings of a judicial nature and may include recovery by retention from subsequent benefits, such as that applied by respondent. Counsel for the appellant also sought, on the other hand, to answer the second argument approved by the trial judge, and adopted by counsel for the respondent, with further clarification, in support of the findings of the Federal Court of Appeal.
20. These two points must now be discussed.
IV‑‑ General Nature of Stay of Proceedings Imposed by s. 49(1) of the Bankruptcy Act
21. Appellant in my view properly relied upon the English version of s. 49(1) of the Bankruptcy Act, where the word recours is rendered by the word "remedy", giving to it and to the words "autres procédures" ("other proceedings") a very broad meaning which covers any kind of attempt at recovery, judicial or extrajudicial. Black’s Law Dictionary (5th ed. 1979), defines "remedy":
The means by which a right is enforced or the violation of a right is prevented, redressed, or compensated.
Remedy means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal.
22. Jowitt’s Dictionary of English Law (2nd ed. 1977), vol. 2, gives an almost identical definition:
the means by which the violation of a right is prevented, redressed, or compensated. Remedies are of four kinds: (1) by act of the party injured . . .; (2) by operation of law . . .; (3) by agreement between the parties ...; (4) by judicial remedy, e.g. action or suit. The last are called judicial remedies, as opposed to the first three classes which are extrajudicial.
23. The courts have also interpreted the stay of proceedings imposed by s. 49(1) of the Bankruptcy Act very broadly.
24. Thus, in In re Standard Pharmacy Ltd. (1926), 7 C.B.R. 424, the City of Edmonton wished to use a proceeding mentioned in its Charter to collect unpaid taxes, consisting alternatively of a distress of personal property or a simple notice to the trustee that there were taxes which had not been paid by the bankrupt. Tweedie J. of the Supreme Court of Alberta, sitting in bankruptcy, cited s. 8B of the Bankruptcy Act‑‑now s. 49(1)‑‑and wrote, at pp. 430‑31:
This section applies to both judicial and extra‑judicial proceedings; and distress being a remedy within the meaning of that section the section is, in my opinion, an absolute bar to any proceedings judicial or otherwise to enforce payment of taxes without the leave of the Court, which was not granted to, nor applied for on behalf of, the city.
In regard to the notice to be given by "the collector or other person authorized to collect the taxes" to the trustee in bankruptcy as provided in sec. 376a of the Charter it is evident from the reading of that section that the notice is a substitute for the distress, and that it was intended that such simple method, instead of the actual physical seizure of the property, should be the remedy to be pursued. Notice is a remedy or proceeding within the meaning of sec. 8B of The Bankruptcy Act and what has been said in regard to distress applies with equal force in regard to the notice and the city is deprived of its right to enforce payment in priority by the provisions of sec. 8B of The Bankruptcy Act.
25. At page 430, he gave the reason underlying this decision:
The city by reason of the authorized assignment was deprived of any opportunity of gaining priority in the distribution of the assets which it might have acquired in the enforcement of its remedies.
26. In Hudson v. Brisebois Bros. Construction Ltd. (1982), 42 C.B.R. (N.S.) 97, the Alberta Court of Appeal ordered that the trustee be repaid money distributed by the sheriff to certain creditors, in ignorance that the debtor was bankrupt at the time of the distribution. At page 103, Lieberman J. wrote in the unanimous reasons of the Court:
Section 49(1) has the effect of staying the proceedings taken by the appellant prior to the payment out by the sheriff. Thus the payment out by the sheriff, although completely innocent, contravenes s. 49(1) and is without authority.
27. In Quebec, public utilities have used s. 73 of the Gas, Water and Electricity Companies Act, R.S.Q. 1977, c. C‑44, as authority for interrupting the service of a bankrupt subscriber. In a judgment, Re Plastiques Valsen Inc.; Gaz Metropolitain Inc. v. St‑Georges (1981), 41 C.B.R. (N.S.) 7 (Que. S.C.), Jacques Dugas J. reviewed the decided cases, which as he recognized are far from being unanimous: but he nevertheless dismissed an application by Gaz Metropolitain Inc. for an order directing the trustee to give him access to the bankrupt's premises in order to cut off the natural gas service. He wrote (at pp. 10‑11):
[TRANSLATION] Applicant enjoys no guarantee under the Bankruptcy Act. The rule for distributing property of a bankrupt is that the ordinary creditors receive equal shares of the common fund, once the trustee's expenses and secured debts have been paid. It would be contrary to the scheme of the Bankruptcy Act if it could by threatening to interrupt the service obtain more than the other ordinary creditors would get.
In Re Colonial Indust. Equipment Ltd.; Mercure v. Compagnie Bell Téléphone du Can.,  C.A. 564, the Court of Appeal vacated the payment which the telephone company had succeeded in prising from its debtor, six days before its bankruptcy, by threatening to interrupt service: this was a cancellable preferential payment. It would be unusual, to say the least, if the applicant could obtain from the trustee preference which the debtor could not give it: surely this is what the applicant is seeking here by making its threat of interrupting service.
The Court considers that the threat to interrupt service made by applicant is designed to obtain from the trustee preferential treatment for its debt, and this is contrary to the Bankruptcy Act. The Court has a duty to protect creditors against abusive use of s. 73 of the Gas, Water and Electricity Companies Act so as to obtain advantageous treatment at variance with the scheme of the Bankruptcy Act.
28. This Court of course does not have to decide whether the conclusions of these judgments are correct, but in my opinion the courts were right to give, expressly or by implication, a broad meaning to the stay of proceedings imposed by s. 49(1) of the Bankruptcy Act. This broad meaning is confirmed by the fact that the legislator took the trouble to exclude actions against either the creditor or his property.
29. As Houlden and Morawetz wrote in Bankruptcy Law of Canada, vol. 1, p. F‑70.1, under s. 49 of the Bankruptcy Act:
An ordinary unsecured creditor with a claim provable in bankruptcy can only obtain payment of that claim subject to and in accordance with the terms of the Bankruptcy Act. The procedure laid down by that Act completely excludes any other remedy or procedure.
30. 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.
31. Accordingly, I consider that s. 49(1) of the Bankruptcy Act is sufficiently broad to include recovery by retention from subsequent benefits, such as the recovery at issue here.
V‑‑ Section 49(1) of the Bankruptcy Act and the Immunity from Seizure of Unemployment Insurance Benefits
32. Respondent replied, however, through its counsel, that even if s. 49(1) of the Bankruptcy Act is so broadly worded as to include an extrajudicial remedy or proceeding, such a remedy or proceeding is not a remedy or proceeding within the meaning of s. 49(1) when its purpose is to recover property of the bankrupt which, in view of its immunity from seizure, does not fall within the fund available for his creditors, as provided by s. 47 of the Bankruptcy Act.
33. Respondent submitted that s. 49(1) of the Bankruptcy Act must be interpreted in accordance with the principles underlying the Act, and what is in its submission the purpose or reason for the stay of proceedings imposed by s. 49(1).
34. In the factum submitted by its counsel, respondent explained the purpose of s. 49(1) of the Bankruptcy Act as follows:
[TRANSLATION] The true meaning of this section is determined by certain general principles underlying the Bankruptcy Act, both as regards the bankrupt's property and with respect to unsecured creditors.
So far as property owned by the bankrupt is concerned, it is worth recalling the rule in s. 50(5) of the Bankruptcy Act, that on a receiving order being made or an assignment being filed with an official receiver, "a bankrupt ceases to have any capacity to dispose of or otherwise deal with his property, which shall, subject to this Act and subject to the rights of secured creditors, forthwith pass to and vest in the trustee named in the receiving order or assignment...."
As we know, bankruptcy does not have the effect of depriving a bankrupt of all his assets, without exception. The property which passes to the trustee is limited to that which, under s. 47 of the Bankruptcy Act, constitutes what the Act calls the property of the bankrupt "divisible among his creditors", that is, property the proceeds from which are to be distributed pari passu among the unsecured creditors.
The property in question includes anything belonging to the bankrupt on the date of the bankruptcy or which may devolve upon him before his discharge. On the other hand, it does not include property which, as against the bankrupt, is immune from seizure. It accordingly follows that in a bankruptcy proceeding the property of a bankrupt actually falls into two categories: what falls within the assets of his bankruptcy and what remains external to it.
If the situation is considered from the standpoint of unsecured creditors, the fundamental principle of the Act is that the latter are to be regarded as on an equal footing in relation to each other: their rights are limited to being collocated pari passu in the proceeds of sale of property held by the bankruptcy, in accordance with the order of priority specified in s. 107 of the Bankruptcy Act.
So as to give full effect to the fundamental principles discussed above, it was necessary for the legislator to put property that would be part of the bankruptcy fund beyond the reach of individual actions that might be brought by any of the bankrupt's creditors, seeking payment of their own debts from the property in question and so obtaining an advantage over other creditors. The solution decided on by the legislator was to provide that, from the date of the bankruptcy, no creditor with a claim provable in bankruptcy shall have any remedy, including an execution proceeding, against the debtor or his property, unless with leave of the Court and on such terms as the Court may impose. As can be seen from the wording of s. 49(1), such a prohibition applies to any type of remedy the aim of which is to recover a claim provable in bankruptcy, regardless of whether it is a remedy that can be exercised by an action, or is a remedy in the nature of an execution proceeding.
35. Respondent concluded with this argument, which constitutes the crux of its second submission:
[TRANSLATION] It follows, therefore, that the only remedies to which s. 49(1) applies are those the effect of which is to take out of the property included in the bankruptcy anything which under the Act devolves on the trustee for the common benefit of creditors of the bankrupt. This section thus clearly cannot be interpreted, in our opinion, as prohibiting the exercise of a right which has no adverse effect on the common fund available to creditors of the bankruptcy.
36. Respondent submitted that, as unemployment insurance benefits are property which is immune from seizure, they are not part of the common fund available to creditors, and the retentions made by respondent did not have the effect of depriving the ordinary creditors of anything which belonged to the bankruptcy creditors' common fund. Such retentions cannot then be regarded as contravening s. 49(1) of the Bankruptcy Act.
37. To this apparently plausible argument, the gist of which is contained in respondent's factum, counsel for the latter added another in their oral pleading, which also at first sight seems to carry considerable weight. It is the following: in reimbursing itself by retentions from subsequent benefits due to appellant, respondent did something which conferred a benefit on the mass of ordinary creditors‑‑not only did it pay itself from property to which they had no right, but, at the same time, it released those ordinary creditors from the lien which it is given by s. 107(1)(h) of the Bankruptcy Act and in accordance with which it would have been paid before them in the event of a distribution.
38. However, the interpretation suggested by respondent comes up against a major obstacle: without adequate justification, it rejects the method of grammatical or literal interpretation of a very clear provision. This interpretation suggests that words be added to s. 49(1) of the Bankruptcy Act, by interpreting the word "property" as referring to "property divisible among his creditors". These words, which are contained in s. 47, are not found in s. 49(1) of the Act. That subsection uses only the word "property", of which s. 2 of the Act gives a broad definition not including the limitation in s. 47.
39. In The Interpretation of Legislation in Canada (1984), Prof. Pierre‑André Côté wrote at p. 209:
Assuming a statute to be well drafted, an interpretation which adds to the terms of its provisions or deprives them of meaning is suspect.
Since the judge's task is to interpret the statute, not to create it, as a general rule he should reject an interpretation which adds to the terms of the law. Legislation is deemed to be well drafted and to express completely what the legislator wanted to say:
"It is a strong thing to read into an Act of Parliament words which are not there, and in the absence of clear necessity it is a wrong thing to do." Per Lord Mersey, Thompson v. Goold & Co.,  A.C. 409, 420.
40. Respondent is thus asking the Court to make a distinction where the legislator makes none, and this prima facie is an error of interpretation.
41. Respondent sought to justify this distinction in reliance on a fundamental objective of the Bankruptcy Act, namely, an equitable distribution of property to the creditors.
42. First, it should be said that this is not the sole objective of the Bankruptcy Act. As Estey J. wrote, in giving the unanimous judgment of this Court in Industrial Acceptance Corp. v. Lalonde,  2 S.C.R. 109, at p. 120:
The purpose and object of the Bankruptcy Act is to equitably distribute the assets of the debtor and to permit his rehabilitation as a citizen, unfettered by past debts.
43. The rehabilitation of the bankrupt is not the result only of his discharge. It begins when he is put into bankruptcy with measures designed to give him the minimum needed for subsistence. These measures are contained in s. 47 of the Bankruptcy Act concerning, inter alia, the exemption from execution of certain property, and in s. 48, regarding the wages of the bankrupt, which applies notwithstanding s. 47 and which empowers the Court to make
an order directing the payment to the trustee of such part of the salary, wages or other remuneration as the court may determine having regard to the family responsibilities and personal situation of the bankrupt.
44. The part of the wages paid to creditors does not necessarily correspond to the part which may be attached. It may be more or less "having regard to the family responsibilities and personal situation of the bankrupt". Houlden and Morawetz, op. cit., vol. 1, write at pp. F‑66 and F‑69:
Since the enactment of s. 48, wages have been removed from the operation of s. 47 so that no part thereof vests in the trustee to be divided among creditors unless he makes an application under s. 48 and then only to the extent allowed by the court: Re Giroux (1983), 45 C.B.R. (N.S.) 245, 41 O.R. (2d) 351, 146 D.L.R. (3d) 103 (S.C.).
Applications under s. 48 of the Bankruptcy Act come down not to a question of law, but of fact; that is, whether the bankrupt after being given credit for his reasonable living expenses has excess funds which might be used to pay creditors. The Senate Committee poverty lines, while not binding on the court, are persuasive evidence: Re Michael; Re Superior Films Shops (1980), 34 C.B.R. (N.S.) 1 (Ont. S.C.).
45. In my view, appellant was right to see an analogy between the wages of a bankrupt and unemployment insurance benefits, and to argue that the partial or complete elimination of the latter may deprive the bankrupt of his means of subsistence, contrary to another objective of the Bankruptcy Act. If retentions from unemployment insurance benefits cannot be made without the Court's authority, as specified in s. 49(1), the Court will ensure that this other objective is not lost sight of.
46. Moreover, the sole objective of the Bankruptcy Act mentioned by respondent, namely an equitable distribution of the bankrupt's property to his creditors, and the interests of the latter, will also be taken into account by the Court, to which the respondent will apply pursuant to s. 49(1) for authority to recover the overpayment by retention from subsequent benefits. The Court may grant such authorization, refuse it or grant it only in part or on certain conditions, taking all the circumstances into account.
47. In other words, the grammatical or literal interpretation of s. 49(1) of the Bankruptcy Act, which makes retentions from unemployment insurance benefits subject to authorization by the Court, is not an obstacle to pursuing any of the objectives of the Bankruptcy Act. On the contrary, it makes possible the coherent pursuit of those various objectives, under the supervision of the Court. It may be added that it will also have the effect of facilitating the administration of the bankruptcy by the trustee, who will thus automatically be informed of retentions made by creditors who have also filed claims in the bankruptcy.
48. I accordingly consider that not only has respondent not shown any justification for an interpretation of s. 49(1) of the Bankruptcy Act other than the grammatical or literal one, but the latter is the only possible one in view of the general scheme of the Act. As Elmer A. Driedger writes, in an oft‑cited passage from his text Construction of Statutes (2nd ed. 1983), at p. 87:
Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.
49. Before concluding, it may be worth mentioning that the Unemployment Insurance Regulations, SOR/71‑324, also take into account the fundamental needs of a claimant, and even his bankruptcy. Section 175 of the Regulations in effect in 1977, when the bankruptcy in the case at bar occurred, provides:
Write‑off of benefit wrongly paid
175. (1) Amounts owing under sections 47, 49, 51 and 52 of the Act may be declared by the Commission to be no longer due and owing, where
(a) the sums in the aggregate do not exceed five dollars, and a benefit period is not current;
(b) the claimant is deceased;
(c) the claimant is a discharged bankrupt;
(d) the claimant is an undischarged bankrupt, the final dividend has been received and the trustee has been discharged; and
(e) the Commission considers that, having regard to all the circumstances,
(i) the sums are uncollectable, or
(ii) the repayment of the sums would result in undue hardship to the claimant.
(2) Where the Commission, pursuant to subsection (1), declares that an amount is no longer due and owing, that amount shall be written off.
50. Neither of the two parties relied on this provision, which was not discussed. Counsel for the respondent simply referred to it in his oral argument, saying that he had not reproduced it in his factum, as he did not see how it was relevant.
51. It is probably unnecessary to say any more on the point. However, it may be observed that the additional benefit given to the bankrupt by this provision depends on the discretion of an administrative commission. It exists in addition to the rule stated in s. 49(1) of the Bankruptcy Act, but it in no way detracts from it.
52. I am of the view that we should allow the appeal, set aside the judgments of the Federal Court of Appeal and the trial court, allow appellant's action and declare that respondent acted unlawfully by withholding, without the authorization of the bankruptcy court, unemployment insurance benefits totalling $922, to which appellant was entitled during his bankruptcy. The whole with costs in all courts.
Appeal allowed with costs.
Solicitor for the appellant: Guy Morin, Sherbrooke.
Solicitors for the respondent and the mis en cause: Gaspard Côté and Guy Leblanc, Montréal.