Century Services Inc. v. Canada (Attorney General), 2010 SCC 60

Succeeded in appeal before the Supreme Court of Canada for a secured lender in a case involving priority of unremitted GST proceeds in a failed restructuring under the Companies’ Creditors Arrangement Act.

In Century Services Inc v. Canada (Attorney General), 2010 SCC 60, Owen James was co-counsel to the appellant in a successful appeal to the Supreme Court of Canada. The appeal was significant as it marked the first time the Supreme Court of Canada directly interpreted key provisions of the Companies’ Creditors Arrangement Act (the CCAA), the legislation preferred for complex insolvencies and restructurings.

In addition to reconciling an apparent conflict between the CCAA and the Excise Tax Act, which lower courts across Canada had previously interpreted as conferring a priority for goods and services taxes on the Crown in CCAA proceedings, this decision provided important guidance on the court’s jurisdiction and discretion when supervising a CCAA reorganisation. The majority of the court noted the broad authority conferred on a CCAA court and observed that the incremental exercise of judicial discretion has been the primary method by which the CCAA has adapted and evolved to meet contemporary business and social needs. The court held that a CCAA court’s discretion is grounded in the CCAA itself, through the broad authority conferred under its s. 11 stay power; the requirements of appropriateness, good faith and due diligence are baseline considerations that a court should always bear in mind when exercising that authority; a CCAA court must be cognizant of the various interests at stake in a CCAA restructuring; and in determining what orders should be made in the course of a CCAA restructuring, the key question for the court is whether the order sought will usefully further efforts to achieve the remedial purpose of the CCAA, which is to avoid the social and economic losses resulting from liquidation of an insolvent company.