Cushing v Dupuy

Cushing v Dupuy is a decision of the Judicial Committee of the Privy Council that dealt with:
It was also notable for holding that, though the Privy Council would only exceptionally depart from its own previous decisions, it was not bound by them.
Background.
On 19 July 1877, the brewing company McLeod, McNaughten and Léveillée became insolvent, and Dupuy became its official assignee under a writ of attachment in insolvency. Cushing, a notary, produced a contract of sale executed as a notarial instrument dated 14 March 1877, by which the firm had agreed to sell its plant and effects to him, and demanded their delivery to him. On the same March date, a lease had also been executed by which Cushing agreed to lease back the same assets to the principals of the firm for three years.
In his petition, Cushing asserted that he had taken possession of the assets in March, but no removal took place, and the assets remained in the possession of the firm.
The question posed to the lower courts, which attracted much discussion in their deliberations, was whether the transaction was a valid sale within the meaning of ss. 1027 and 1472 of the "Civil Code of Lower Canada".
The courts below.
In the Superior Court on 5 October 1877, Cushing's petition was granted. This ruling was subsequently reversed on 22 March 1878 by the Court of Queen's Bench. In the appellate decision written by Dorion CJ, and concurred in by Cross and Tessier JJ., it was held that the sale was not a genuine but a simulated sale, intended to create a security on the assets and thus avoid the delivery of possession that was essential for the validity of a pledge under ss. 19661970 of the "Civil Code".
On 22 June 1878, the Court of Queen's Bench refused Cushing leave to appeal its judgment, on the grounds that, under s. 128 of the "Insolvent Act of 1875", its decision was final. Cushing then petitioned the Privy Council directly for special leave to appeal, which was granted on 27 November 1878, reserving to Dupuy the power to question whether jurisdiction existed as to whether to entertain such appeal.
The following points were raised in the appeal:
Judgment of the Privy Council.
The ruling of the Quebec Court of Queen's Bench was upheld by the Board, in a judgment delivered by Sir Montague Smith.
The case at hand.
In considering the right to appeal, two questions had to be considered:
The first question was answered in the affirmative, as the Parliament's jurisdiction over "Bankruptcy and Insolvency" arose from s. 91 of the "British North America Act, 1867". As the Board noted:
As the procedure provided under the federal Act was for its own proceedings, and not for those under the provincial Code, such provision did not entrench on the royal prerogative. In addition, Colonial legislatures had in several circumstances already deemed certain judicial decisions to be final and not subject to further appeal. Therefore, the Court of Queen's Bench was correct in stating that it must refuse leave in this matter.
As to the ability for the Privy Council to grant special leave to appeal, it was unnecessary to consider whether the Parliament had the power to abrogate it, as the general principle was that the rights of the Crown may only be removed by express words, and that the power of the Crown to allow the appeal was not affected by the Act.
As to the second question, it was noted that s. 33(7) of the "Interpretation Act" declared:
As this Act governed the interpretation of the "Insolvent Act", it affirmed the general principle noted above, and therefore special leave to appeal was unaffected.
The ability to grant special leave to appeal.
The Board also felt it necessary to discuss the state of jurisprudence with respect to how special leave may be granted, as several of its previous cases had arrived at different conclusions on the matter:
"Cuvillier" did not allude to the principle that the prerogative rights of the Crown could only be removed by express words in a statute. "Marois" later suggested that this ruling was open to review, and later jurisprudence has been opposed to it. While "Théberge" turned on the question of the rights of the Legislative Assembly, as opposed to ordinary civil rights, the Lord Chancellor took the occasion in that case to declare:
Aftermath.
The crux of the case, in its holding that the sale was not genuine under s. 1027 of the "Civil Code", has since been overtaken by subsequent legal developments in Quebec law, including the rejection of Dorion CJ's contention that creditors are entitled to property remaining in the possession of their debtor as against a third party to whom it has been sold in a "bona fide" transaction.
While "Cushing" was notable within Canada for being one of the foundation cases for the doctrine of ancillary powers in Canadian constitutional law, it has also been noteworthy across the Commonwealth for the more general propositions relating to: