T-558-78
In re the Income Tax Act, Canada Pension Plan
and Unemployment Insurance Act, 1971 and in re
Gero
Trial Division, Walsh J.—Montreal, June 11;
Ottawa, June 14, 1979.
Income tax — Practice — Application by Crown to seize
money deposited in registered retirement savings plans for
taxes owing — Whether or not sums in registered retirement
savings plans are seizable — Income Tax Act, S.C. 1970-71-
72, c. 63, s. 146 — Code of Civil Procedure, art. 553(7).
Robitaille v. Hins-Dion [1979] 1 S.C.R. 359, applied. Re
Lifshen 25 C.B.R. (N.S.) 12, agreed with.
APPLICATION.
COUNSEL:
Claude Joyal for the Queen.
No one appearing for judgment debtor.
SOLICITORS:
Deputy Attorney General of Canada for the
Queen.
The following are the reasons for judgment
rendered in English by
WALSH J.: This concerns a garnishee order to
show cause applied for by the solicitor for Her
Majesty the Queen directed to the Royal Trust
Company, 630 Dorchester Boulevard West, Mon-
treal, to attach the amount of approximately
$10,665.49 deposited in Registered Retirement
Plan number 10-242180000 in partial satisfaction
of the amount of $183,118.68 due and unpaid at
the time of the motion with additional interest as
prescribed by subsection 161(1) of the Income Tax
Act, S.C. 1970-71-72, c. 63, on the sum of $111,-
669.10 from January 25, 1978 as appears from a
certificate having the same force as a judgment
registered against the said Stephen Gero on Febru-
ary 9, 1978. A similar garnishment is sought
against the Farmers and Merchants Trust Co.,
1450 St. Catherine Street West, Montreal for the
amount of $4,735 deposited in Registered Retire
ment Plan No. 07-05516.
Neither garnishee appeared to contest the sei
zures although duly served. Nothing in section 146
of the Income Tax Act specifically provides that
payments made into a registered retirement plan
shall be unseizable. In the recent Supreme Court
case of Robitaille v. Hins-Dion [1979] 1 S.C.R.
359 concerning the claim of a trustee in bankrupt
cy to the proceeds of a life insurance policy on the
life of respondent's husband which it was contend
ed were unseizable, Pigeon J. in rendering the
judgment of the Court stated [at page 362]:
It is quite clear that one cannot by a contract protect one's
property from seizure by one's creditors except under a special
enactment such as in the Supplemental Pension Plans Act
(S.Q. 1965, c. 25, s. 31). Thus it is perfectly clear that one
cannot make a bank deposit stipulating that the money will be
exempt from seizure.
The Saskatchewan case of Re Lifshen 25 C.B.R.
(N.S.) 12 held that "A registered retirement sav
ings plan has certain tax deferral benefits, but that
does not make it other than `property', nor does
the fact that it may provide periodic payments to
the owner commencing at a future date under
some arrangement selected by him or, failing a
selection by him, by the plan trustee. A registered
retirement savings plan contract is in effect a trust
for the handling of moneys belonging to the bank
rupt." It was held to be vested in the trustee and
did not re-vest in the bankrupt following his
discharge.
It is of some interest to note that article 553(7)
of the Quebec Code of Civil Procedure exempts
from seizure "Pensions granted to employees out
of retiring or pension funds, as well as the instal
ments paid or to be paid to form such funds". It is
evident that this applies only to pensions of an
employee, and not to a voluntary retirement sav
ings plan established by an individual for himself.
Although he has the option of withdrawing the
funds from time to time on paying income tax on
the withdrawals in the year when they are made,
or converting the deposits to a pension at any time
not later than attaining the age of 71, and hence
the use of the funds are subject to his control, this
does not mean that they are sheltered from seizure
by his creditors, in the absence of a special provi
sion to this effect. They resemble demand bank
deposits made by him which are undoubtedly
seizable.
On a strict interpretation of Rule 2300 of the
Rules of this Court it is arguable that these sums
are not debts "owing or accruing" to the judgment
debtor unless and until he requests the trust com
panies to make payment to him, but it would be
contrary to the whole principle of garnishment
proceedings to adopt such an interpretation and
hence provide a means for an individual to shelter
his assets from seizure by his creditors.
Whether the debtor is liable for income tax on
the amounts withdrawn as the result of the seizure
is another question. In the event that the seizing
creditor were not the same Minister of National
Revenue the issue might well arise as to the priori
ty of the Minister for income tax due on the
amounts withdrawn as a result of the seizure,
leaving only the balance for the seizing creditor
but that is not an issue which needs to be decided
here.
ORDER
The garnishee orders are maintained and the
Royal Trust Company and the Farmers and Mer
chants Trust Co. are respectively ordered to pay to
Her Majesty the Queen the sums due by them to
Stephen Gero by virtue of his deposits in their
respective Registered Retirement Plans Nos.
10-242180000 and 07-05516 or so much thereof as
may be sufficient to satisfy the Certificate regis
tered on February 9, 1978, together with the costs
of the garnishee proceedings.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.