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.

Commercial law - Bankruptcy - Civil Code (Interpretation) - Agency-mandate - Arbitration clause - Contract for services between trustee and tax expert under which tax expert was to realize portion of bankrupt's assets that might be owed to it as provincial and federal research and development tax credits - Remuneration clause providing for 75% of amounts recovered - Arbitration clause - Amounts recovered nearing $900,000 - Action to annul contract for services - Whether Superior Court's exclusive jurisdiction over bankruptcy defeats arbitration clause - Civil Code of Québec, arts. 2638, 2639 - Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 16(4), 183(1.1).

Boyadjian was the trustee in the bankruptcy of the E.T.I. company and, as such, wanted to realize as many assets as possible. Kustec, a tax expert, was consulted and he thought that research and development tax credits of nearly $100,000 net could be recovered from the two levels of government. A contract for services was authorized by the inspectors and then entered into: Kustec was to take the necessary steps to realize that asset. His remuneration was set at 75% of the amount recovered, and the contract contained an arbitration clause. It seems that the bankrupt was in actual fact owed $897,208.90 in tax credits. Kustec claimed his 75%. The trustee refused to pay, arguing fraud. After being put in default in July 2003, the trustee brought an action in the Superior Court (Commercial Division, called the Bankruptcy Court) the following December to have the contract for services annulled. The action was authorized by the inspectors. Kustec raised a declinatory exception and argued that the case should be referred to arbitration.