ITB Marine Group Ltd. v. Northern Transportation Company Limited, 2017 BCSC 2007 (2017-11-06)
Facts: In 2013 ITB and NTCL entered into a conditional sale type transaction whereby ITB sold 19 vessels to NTCL. NTCL was to have the use and possession of the vessels but title was to remain in ITB until the purchase price was paid in full. The interest of ITB in the vessels was registered in the Personal Property Security Registry. Subsequently, in 2016 NTCL became insolvent and later made an assignment in bankruptcy. The Trustee in Bankruptcy sold the vessels for an amount that was less than the amount owing to ITB. ITB sought the proceeds from the sale of the vessels. However, the administrator of the pension plan of NTCL claimed priority to the proceeds on the basis of a deemed trust under the Pension Benefits Standards Act, 1985, RSC 1985, c. 32 (2nd Supp) (the “PBSA”).
Decision: ITB has priority.
Held: ITB argues that the deemed trust under the PBSA does not arise as the deemed trust can only attach to assets owned by the debtor and the vessels were owned by it and not by NTCL. However, NTCL does hold a proprietary interest in the vessels by virtue of its interest under the conditional sales contract and the deemed trust will apply to the equity of NTCL in the vessels. Nevertheless, under the Bankruptcy and Insolvency Act, RSC 1985, c B-3, the deemed trust does not have priority over the secured interest of ITB.