1. The "Château d'Amos" Case
On October 19, 1999, the Quebec Court of Appeal rendered a decision in the Château d'Amos case, on the issue of unpaid municipal and school taxes when the owner of an immovable property became bankrupt, in view of the new provisions of the Civil Code of Québec (the "CCQ").
Before the CCQ came into force on January 1, 1994, the provisions of the Civil Code of Lower Canada granted municipalities, cities and school boards a privilege on the immovable property in question to guarantee the payment of property taxes which included a "droit de suite" (i.e: the right to follow the property in whosever hands it may pass). As a result, municipalities, cities and school boards were secured creditors within the meaning of the Bankruptcy and Insolvency Act (the "BIA"). In 1994, with the coming into force of the CCQ, the rules governing securities were amended to replace the concept of "privilege" by the concept of "prior claim", which do not constitute real rights
