Stone,
J.:—This
appeal
is
from
a
judgment
rendered
April
8,
1988
by
McNair,
J.
in
the
Trial
Division,
whereby
he
dismissed
a
claim
by
the
appellant
for
recovery
of
a
sum
of
money
which
the
respondent
had
set
up
in
statutory
set-off!
against
a
debt
of
equal
amount
for
unpaid
taxes
and
customs
duties
owing
by
a
Manitoba
company
called
Aero
Trades
(Western)
Ltd.,
then
in
receivership.
Statutory
Authority
for
the
Set-off
The
statutory
authority
relied
upon
for
the
set-off
is
to
be
found
in
section
224.1
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148,
as
amended
by
S.C.
1980-81-82-83,
c.
140,
subsection
52(9)
of
the
Excise
Tax
Act,
R.S.C.
1970,
c.
E-13
as
amended
and
subsection
95(1)
of
the
Financial
Administration
Act,
R.S.C.
1970,
c.
F-10
as
amended,
the
respective
provisions
reading
as
follows:
Income
Tax
Act
224.1
Where
a
person
is
indebted
to
Her
Majesty
under
this
Act
or
under
an
act
of
a
province
with
which
the
Minister
of
Finance
has
entered
into
an
agreement
for
the
collection
of
the
taxes
payable
to
the
province
under
that
act,
the
Minister
may
require
the
retention
by
way
of
deduction
or
set-off
of
such
amount
as
the
Minister
may
specify
out
of
any
amount
that
may
be
or
become
payable
to
such
person
by
Her
Majesty
in
right
of
Canada.
Excise
Tax
Act
52.
(9)
Where
a
person
is
indebted
to
Her
Majesty
under
this
Act
the
Minister
may
require
the
retention
by
way
of
deduction
or
set-off
of
such
amount
as
the
Minister
may
specify
out
of
any
amount
that
may
be
or
become
payable
to
such
person
by
Her
Majesty.
Financial
Administration
Act
95.(1)
Where,
in
the
opinion
of
the
Minister
of
Justice,
any
person
is
indebted
to
Her
Majesty
in
right
of
Canada
in
any
specific
sum
of
money,
the
Treasury
Board
may
authorise
the
Receiver
General
to
retain
by
way
of
deduction
or
set-off
the
amount
of
any
such
indebtedness
out
of
any
sum
of
money
that
may
be
due
or
payable
by
Her
Majesty
in
right
of
Canada
to
such
person.
Summary
of
Facts
A
difficulty
arises
because
the
action
below
was
tried
on
an
agreed
statement
of
facts,
no
viva
voce
evidence
being
adduced
before
the
trial
judge.
Nevertheless,
I
distil
from
the
record
the
following
as
the
essential
facts
upon
which
this
appeal
must
be
determined.
(1)
By
written
instrument
dated
June
21,
1981,
Aero
Trades
(Western)
Ltd.
entered
into
a
General
Security
Agreement
with
the
Canadian
Imperial
Bank
of
Commerce
"as
a
general
and
continuing
collateral
security
for
payment
of
all
existing
and
future
indebtedness
and
liability
.
.
.
wheresoever
and
howsoever
incurred
and
any
ultimate
unpaid
balance
thereof
.
.
.".
The
word
"collateral"
is
defined
in
clause
2
to
mean
and
include
"all
the
above
named
undertaking
and
property
whether
now
owned
or
hereafter
acquired
and
whether
tangible
or
otherwise”.
Included
in
the
"Description
of
Property"
that
is
made
the
subject
of
the
security
were
"Receivables",
defined
as
“all
debts,
accounts,
claims,
moneys
and
choses
in
action
now
or
hereafter
due
or
owing
to
or
owned
by
the
undersigned”.
Clause
9
of
this
contract
contains
provisions
for
“default”,
the
first
part
of
it
reading:
9.01
Upon
default
by
the
undersigned
in
payment
of
all
or
any
part
of
the
indebtedness
or
liability
of
the
undersigned
to
the
Bank
or
in
performance
or
observance
of
any
of
the
provisions
hereof
(in
this
agreement
called
"default")
the
Bank
may
appoint
in
writing
any
person
to
be
a
receiver
(which
term
shall
include
a
receiver
and
manager)
of
the
Collateral,
including
any
rents
and
profits
thereof,
and
may
remove
any
receiver
and
appoint
another
in
his
stead,
and
such
receiver
so
appointed
shall
have
power
to
take
possession
of
the
Collateral
and
to
carry
on
or
concur
in
carrying
on
the
business
of
the
undersigned,
and
to
sell
or
concur
in
selling
the
Collateral
or
any
part
thereof.
Any
such
receiver
shall
for
all
purposes
be
deemed
to
be
the
agent
of
the
undersigned
.
.
.".
(2)
By
written
agreement
dated
January
4,
1983
the
respondent,
acting
in
the
name
of
the
Minister
of
Supply
and
Services,
entered
into
a
contract
with
Aero
Trades
(Western)
Ltd.
for
the
supply
of
air
charter
services
during
the
period
June
16
to
September
15,
1983.
The
provisions
of
this
contract
are
fundamental
to
a
determination
whether
the
debts
(or
any
part
of
them)
resulting
from
work
and
service
performed
pursuant
to
its
terms
and
conditions,
could
be
made
the
subject
of
set-off
by
the
respondent.
This
will
require
a
close
analysis
of
the
entire
agreement,
which
I
intend
to
make
presently.
(3)
As
of
June
28,
1983
Aero
Trades
(Western)
Ltd.
appears
to
have
been
indebted
to
the
respondent
for
unpaid
taxes
and
customs
duties
in
the
aggregate
sum
of
$72,148.56.
(4)
By
a
document
dated
June
28,
1983,
Aero
Trades
(Western)
Ltd.
invoiced
the
respondent
the
sum
of
$36,100
for
use
of
the
helicopter
for
a
minimum
of
95
hours
at
the
hourly
rate
of
$380
from
June
16
to
July
15,
1983.
(5)
By
its
letter
of
June
30,
1983
the
Canadian
Imperial
Bank
of
Commerce,
pursuant
to
the
General
Security
Agreement,
appointed
the
appellant
its
receiver
and
manager
with
instructions
"to
take
all
necessary
actions
required
to
take
possession
of
and
to
realize
on
the
security”
for
its
"benefit".
There
was
then
owing
to
the
Bank
close
to
$2
million
in
indebtedness.
(6)
Pursuant
to
the
Bank's
application,
on
July
8,
1983
the
Manitoba
Court
of
Queen's
Bench
formally
appointed
the
appellant
to
be
the
receiver
and
manager
of
all
the
undertakings,
property
and
assets
of
Aero
Trades
(Western)
Ltd.,
with
authority,
inter
alia,
"to
carry
on
the
business”
of
that
company.
(7)
By
a
document
dated
July
31,
1983
on
the
letterhead
of
Aero
Trades
(Western)
Ltd.,
the
respondent
was
invoiced
the
sum
of
$18,050
for
use
of
the
helicopter
for
a
minimum
of
47.5
hours
at
the
hourly
rate
of
$380
during
the
period
July
16
to
July
31,
1983;
this
was
followed
by
a
further
invoice
(undated)
in
the
sum
of
$36,100
for
use
of
the
helicopter
for
a
minimum
of
95
hours
at
the
same
hourly
rate
during
the
period
August
1
to
August
31,
1983.
(8)
During
the
contract
period
expiring
on
September
15,
1983,
the
appellant
performed
the
work
and
services
under
the
contract
to
the
extent
shown
in
the
aforesaid
invoices.
It
also
performed
additional
or
casual
air
services
for
which
separate
invoices
were
rendered.
The
aggregate
amount
of
all
invoices
rendered
to
the
respondent
up
to
September
15,1983
was
$98,351.65.
(9)
All
air
charter
services
extended
to
the
respondent
from
and
after
the
appointment
of
the
appellant
as
receiver
and
manager
on
June
30,
1983
were
apparently
fully
authorized
by
the
appellant
in
its
appointed
capacities.
(10)
Acting
pursuant
to
the
statutory
provisions
already
recited,
the
respondent
set
off
the
aggregate
sum
of
$72,148.56
against
the
sum
of
$98,351.65.
(11)
In
their
agreed
statement
of
facts,
the
parties
defined
the
issue
before
the
Court
as:
Is
the
Crown
entitled
to
set
off
monies
owed
by
Aero
Trades
to
the
Crown
against
monies
owed
by
the
Crown
to
The
Clarkson
Company
Limited,
as
receiver
and
manager
of
Aero
Trades,
by
virtue
of
section
224.1
of
the
Income
Tax
Act,
section
52(9)
of
the
Excise
Act
(sic),
and
section
95
of
the
Financial
Administration
Act?
Relevant
Legal
Principles
I
begin
by
summarizing
the
four
common
law
principles
which
would
appear
to
be
relevant
to
the
present
discussion.
They
are
that,
(a)
the
appointment
of
a
receiver
by
a
security
holder
pursuant
to
the
terms
of
a
floating
charge
crystallizes
that
charge
upon
the
assets
(including
any
outstanding
debts
owing
to
the
security
giver)
that
are
subject
to
it,
and
results
in
an
equitable
assignment
of
those
assets
to
or
for
the
benefit
of
the
security
holder:
see
e.g.
Business
Computers
Ltd.
v.
Anglo-
African
Leasing
Ltd.,
[1977]
1
W.L.R.
578
(Ch.D.)
at
582;
[1977]
2
All
E.R.
741
at
745;
Canadian
Imperial
Bank
of
Commerce
v.
Tuckerr
Industries
Inc.
et
al.
(1983),
46
B.C.L.R.
8
(B.C.C.A.),
at
9;
(b)
a
receiver
takes
assets
so
assigned
subject
to
any
right
of
set-off
that
may
then
exist:
see
N.W.
Robbie
&
Co.,
Ltd.
v.
Witney
Warehouse
Co.,
Ltd.,
[1963]
1
W.L.R.
1324
(C.A.),
at
1338;
(c)
to
be
the
subject
of
a
set-off,
debts
must
be
mutual
in
the
sense
that
they
arise
between
the
same
parties
and
are
in
existence
at
the
time
the
equitable
assignment
occurs:
see
e.g.
United
Steel
Corporation
v.
Turnbull
Elevator
Ltd.,
[1973]
2
O.R.
540
(C.A.),
at
542;
34
D.L.R.
(3d)
492
at
494;
(d)
a
debt
may
be
set
off
against
another
if
it
exists
before
an
assignment
occurs
even
though
it
may
not
be
payable
until
some
future
time:
see
e.g.
Re
Pinto
Leite
and
Nephews,
[1929]
1
Ch.
221,
at
233,
236;
Business
Computers
Ltd.
v.
Anglo-African
Leasing
Ltd.,
supra,
at
584
(All
E.R.
747).
Mutuality
of
Parties
I
respectfully
agree
with
the
learned
trial
judge
that
there
was
here
a
mutuality
of
parties.
The
General
Security
Agreement
which
authorized
the
receiver's
appointment
expressly
provided
in
clause
9.01
that
the
receiver
"shall
be
deemed
for
all
purposes
to
be
the
agent"
of
Aero
Trades
(Western)
Ltd.
This,
then,
was
the
authority
under
which
the
appellant
acted
until
its
appointment
was
confirmed
by
the
Court
on
July
8,
1983,
and
in
consequence
of
which
it
was
authorized,
inter
alia,
"to
carry
on
the
business"
of
the
company.
That
authority,
it
may
be
said,
was
already
possessed
pursuant
to
the
earlier
appointment,
an
authority
which
it
may
reasonably
be
presumed
had
been
exercised.
Like
the
learned
judge,
I
think
this
point
should
be
decided
in
line
with
the
decision
of
the
Privy
Council
in
Parsons
v.
Sovereign
Bank
of
Canada,
[1913]
A.C.
160
at
167-8
where
Viscount
Haldane,
L.C.
stated:
.
.
.
in
the
present
case
the
receivers
and
managers
were
by
the
terms
of
the
orders
of
the
Court
obviously
intended
to
carry
on
the
actual
business
of
the
company
with
as
little
breach
of
continuity
as
possible;
and
there
was
no
reason
why
they
should
not
use
the
name
and
powers
of
the
company
for
the
purpose
of
fulfilling
existing
orders
.
.
.
.
But
in
the
present
case
the
contracts
were
contracts
entered
into
before
the
receivers
and
managers
were
appointed,
and
had
been
entered
into
in
the
ordinary
course
of
the
business
of
the
company
in
manufacturing
and
delivering
paper;
and
there
is,
in
their
Lordships'
opinion,
no
ground
for
presuming
that
the
receivers
and
managers
intended
to
act
otherwise
than
in
the
name
of
the
company
to
carry
to
a
conclusion
the
business
which
was
current,
or
that
they
meant
to
repudiate
the
obligations
of
the
company.
In
the
absence
of
a
liquidation
the
persona
of
the
contracting
company
remained
legally
intact
though
controlled
by
the
receivers
and
managers.
I
do
not
see
how
it
can
be
said
that
the
receiver
was
not
acting
for
and
in
the
name
of
the
company
in
carrying
out
the
terms
of
a
pre-
receivership
contract
which
it
elected
to
perform
and
did
perform.
Mutuality
of
Debts
The
learned
trial
judge
took
the
further
view
that
there
was
also
mutuality
of
debts
having
regard
to
the
provisions
of
the
contract
of
January
4,
1983.
He
took
note
of
the
contractual
limitation
on
the
respondent's
liability
to
$150,000,
and
laid
further
emphasis
on
the
fact
that
the
contract
had
stipulated
the
estimated
flying
hours,
a
fixed
hourly
rate,
a
flat
rate
for
ferrying
the
aircraft
to
and
from
Frobisher
Bay
and
had
also
estimated
crew
expenses
as
well
as
expenses
for
fuel
and
unspecified
miscellaneous
matters.
He
was
also
impressed
with
the
contract's
invoicing
procedures.
In
the
light
of
all
this
evidence
he
came
to
the
conclusion
that
the
liability
to
pay
the
amounts
charged
for
air
charter
services
came
into
existence
before
the
receiver
was
appointed
and,
further,
that
the
total
amount
payable
was
ascertainable
by
reference
to
the
terms
of
the
contract.
In
his
view,
this
rendered
the
debts
mutual.
These
conclusions
appear
at
pages
20-21
of
his
reasons
for
judgment
(Appeal
Book,
pages
176-177):
I
find
on
the
evidence
that
the
contract
was
one
for
the
provision
of
air
charter
services
required
to
be
billed
periodically
over
the
term
of
the
contract,
for
which
the
amounts
invoiced
in
respect
thereof
became
due
and
payable
immediately
upon
receipt
of
billings.
All
of
these
billed
amounts
arose
out
the
contract
which
the
receiver
undertook
to
complete
as
the
official
persona
of
the
debtor
company.
At
the
moment
of
crystallization
of
the
floating
charge
of
the
security
instrument,
Aero
Trades
was
indebted
to
the
Crown
for
income
and
excise
taxes
for
which
a
right
of
set-off
was
exigible
against
an
amount
payable
or
indebtedness
due
by
the
Crown.
The
receiver
and
manager
took
subject
to
this
right
of
set-off
when
he
stepped
into
the
shoes
of
the
debtor
company
with
respect
to
its
contract
to
provide
air
charter
services.
In
my
opinion,
the
amount
payable
for
these
services
was
ascertainable
by
reference
to
the
contract
between
the
parties
in
terms
of
an
existing
right
to
be
paid
or
reimbursed
for
those
services
in
accordance
with
the
contract.
In
the
result,
it
is
my
opinion
that
the
question
posed
in
the
Agreed
Statement
of
Facts
must
be
answered
in
the
affirmative.
This
being
the
view
I
take
of
the
case,
the
plaintiff’s
action
necessarily
fails.
I
need
hardly
add
that
if
I
felt
that
the
contract
read
as
a
whole
and
in
the
light
of
relevant
circumstances
supported
this
final
conclusion,
I
would
have
no
hesitation
in
concurring
in
it.
In
saying
this,
I
am
fully
conscious
of
the
difficulty
faced
by
the
trial
judge
(especially
so
in
the
absence
of
live
witnesses)
in
interpreting
the
January
4,
1983
agreement
which
I
would
not
regard
as
a
model
of
clarity
by
any
standard.
Our
fate,
nonetheless,
is
to
consider
and
try
to
make
business
sense
of
it.
I
agree
that
the
answer
to
the
pivotal
question
of
whether
the
debts
for
air
charter
services
came
into
existence
before
or
after
the
receiver
was
appointed
depends
primarily
upon
the
intention
of
the
parties
as
disclosed
by
the
language
they
employed
in
tne
contract.
The
task
of
discovering
that
intention
is
not
made
any
easier
because
of
the
form
in
which
the
contract
is
cast.
It
is
clearly
an
amalgam
of
three
separate
documents,
the
major
portion
being
written
on
four
pages
in
both
official
languages.
It
contains
the
contract's
serial
number
on
its
face
page
and
identifies
Aero
Trades
(Western)
Ltd.
as
the
"Carrier"
and
the
Department
of
Indian
Affairs
and
Northern
Development
as
the
"Charterer".
The
first
page
indicates
acceptance
of
a
proposal
"to
.
.
.
supply
.
.
.
upon
terms
and
conditions
set
out
herein
and
on
reverse
sides
hereof,
the
.
.
.
services
listed
herein
and
on
any
attached
sheets
at
the
price
or
prices
set
out
therefor",
and
is
signed
by
the
respondent's
representative.
It
identifies
the
services
as
“Air
Charter
Service—Class
4”
and
requires
Aero
Trades
(Western)
Ltd.
to
"provide
the
Charterer
listed
hereunder
with
Air
Charter
Services
as
detailed
in
Appendix
A".
This
page
goes
on
to
require
that
the
Charterer
"be
provided
with
the
air
charter
services
specified
in
this
document
except
when,
in
the
judgment
of
the
Carrier
or
pilot-in-command,
conditions
likely
to
create
a
hazard
to
the
flight,
intervene".
The
pilot-in-command
is
then
required
to
act
upon
instructions
for
the
scheduling
and
operational
use
of
the
aircraft
given
by
the
Charterer's
authorized
representative
“subject
to
the
serviceability
of
the
aircraft
and
weather
conditions".
At
the
foot
of
this
same
page
is
found
the
acceptance
of
the
contract
by
the
signature
of
an
Aero
Trades
(Western)
Ltd.
representative
on
January
13,
1983.
The
three
other
pages
of
this
document,
bearing
the
same
serial
number,
lay
down
additional
terms
and
conditions
under
a
variety
of
headings.
I
find
of
particular
significance
the
following
provisions
as
they
appear
in
the
English
text:
Unless
otherwise
specifically
provided
in
the
Contract
the
specifications
describing
this
requirement
and
the
conditions
under
which
supply
is
to
be
made
or
services
rendered
shall
not
be
modified,
changed,
altered
or
amended
by
anyone,
including
the
Carrier,
consignee,
or
others,
without
written
instructions
from
the
Minister.
INSPECTION
AUTHORITY:
All
services
provided
shall
be
subject
to
the
approval
of
and
acceptance
by
the
Charterer
or
his
authorized
representative
who
will
have
the
right
to
inspect
the
aircraft,
its
equipment,
any
document
relating
to
the
airworthiness
of
the
aircraft,
and
operational
documentation
including
flight
plan
or
flight
notification,
loading
records,
logs,
in
order
to
ensure
compliance
with
the
terms
and
conditions
of
the
contract.
The
Carrier
is
to
provide:
Aircrew
and
maintenance
crew
suitable
for
the
operation
and
satisfactory
to
the
Charterer.
At
any
time
during
the
course
of
the
operations,
when
the
flight
crew
or
maintenance
crew
are
deemed
by
the
Charterer
to
be
not
satisfactory
for
safety
or
other
reasons,
the
Charterer
should
so
state
in
writing,
whereupon
the
Carrier
is
to
withdraw
such
crew.
The
aircraft
involved
shall
be
considered
unserviceable
until
a
satisfactory
crew
resumes
operations.
BASIS
OF
PAYMENT:
As
at
Appendix
"A".
All
services
provided
under
this
contract
and
any
cancellation
or
termination
charges
are
subject
to
Carrier's
applicable
Charter
Tariff
on
file
with
the
Air
Transport
Committee
and
in
effect
on
December
6/82
the
closing
date
for
receipt
of
proposals.
Payment
for
fuel
and
oil
surcharges,
crew
expenses
and
incidental
charges
shall
be
based
on
actual
costs
incurred,
with
no
allowance
for
overhead
or
profit,
and
subject
to
discretionary
Government
Audit.
The
applicable
details
of
the
tariff
are
outlined
on
Appendix
A.
EXTENSION
OF
CHARTER:
It
is
hereby
understood
and
agreed
that
the
Charterer
may
during
the
charter
period
extend
the
term
of
the
charter
to
permit
completion
of
the
project
or
to
perform
additional
related
work;
and
that
the
rules,
rates
and
charges
for
such
period
of
extension
shall
be
in
accordance
with
the
contract
in
effect
for
the
original
period
of
charter.
The
extension
period
shall
be
confirmed
in
writing
by
the
Department
of
Supply
and
Services
fourteen
days
prior
to
the
original
expiry
date.
The
extension
may
be
confirmed
in
less
than
fourteen
days
if
it
is
acceptable
to
the
Carrier,
but
in
any
event
must
be
prior
to
completion
of
the
original
charter
period.
LIMITATION
OF
EXPENDITURE:
Her
Majesty’s
liability
to
the
Carrier
under
this
contract
shall
not,
unless
otherwise
authorized
in
writing
by
the
Minister
exceed
the
sum
of
$750,000.00.
The
Carrier
shall
not
be
obliged
to
perform
any
work
or
services
to
supply
any
articles
which
would
cause
the
total
cost
to
Her
Majesty
hereunder
to
exceed
the
said
sum.
If
at
any
time
the
Carrier
considers
that
the
said
sum
may
be
exceeded,
it
shall
promptly
notify
Department
of
Supply
and
Services,
Supply
Administration,
Hull,
Quebec,
K1A
0S5,
Attention:
Section
"GW",
in
order
that
the
Minister
may,
in
his
discretion,
authorize
an
increase
in
the
said
sum.
DISTRIBUTION
OF
INVOICES:
Each
original
invoice
for
flying
shall
be
supported
by
charter
tickets
signed
by
the
Charterer
after
each
flight,
showing
that
the
service
covered
by
the
accompanied
invoice
has
been
completed
in
accordance
with
the
contract.
Each
original
invoice
for
fuel
and
oil
surcharges,
crew
expenses
and
incidental
charges
shall
clearly
identify
the
nature
of
the
charge
and
shall
be
supported
by
appropriate
receipt
vouchers.
All
invoices
for
services
rendered
or
for
other
charges
under
this
contract
in
respect
of
matters
occurring
after
acceptance
of
this
contract
shall
be
submitted
as
aforesaid
by
the
Carrier
within
three
months
after
such
service
was
performed
or
such
charge
incurred
and
not
afterwards.
There
are
two
additional
contract
documents.
The
second,
on
a
single
page
and
also
in
both
official
languages,
contains
21
printed
conditions
under
five
different
headings,
none
of
which
appear
to
have
any
direct
bearing
on
the
question
we
have
to
decide.
This
is
followed
by
what
is
referred
to
in
the
four
page
document
as
Appendix
A,
being
three
typed
sheets
in
the
English
language
only.
It
provides,
inter
alia,
for
“Aircraft
Requirements",
"Crew
Requirements",
and
"Crew
Expenses".
Clauses
1-4,
10,
11,
13
and
14
are
of
some
significance.
They
read:
1.
REQUIREMENT:
To
provide
the
Charter
with
the
exclusive
services
of
one
(1)
Bell
206B
helicopter.
2.
BASE
OF
OPERATIONS:
The
aircraft
will
operate
primarily
out
of
Frobisher
Bay,
N.W.T.
3.
PERIOD
OF
CONTRACT:
The
aircraft
is
required
for
the
period
from
June
16
to
September
15,
1983,
both
dates
inclusive.
4.
ESTIMATED
UTILIZATION:
Flying
is
estimated
at
285
hours.
10.
INVOICE
INSTRUCTIONS:
All
invoices
are
to
be
made
out
to
the
Charterer
and
mailed
in
triplicate
to:
Regional
Finance
Officer,
Dept.
of
Indian
Affairs
and
Northern
Development
P.O.
Box
1500
Yellowknife,
N.W.T.
X1A
2R3
A.
Invoices
showing
contract
number
will
be
mailed
to
the
Department
on
the
25th
day
of
the
month
to
cover
the
minimum
hours
or
the
monthly
charge.
B.
Ten
(10)
days
after
month
end,
the
following
will
be
mailed
to
the
above
address:
(a)
the
monthly
summary
with
the
applicable
charter
tickets;
(b)
crew
expenses
with
receipts,
if
applicable.
(c)
fuel
charges
with
receipts,
if
applicable.
C.
An
invoice
showing
reconciliation
of
hours
flown
for
the
total
period
of
the
contract
will
be
forwarded
as
soon
as
possible
after
termination
of
the
contract.
11.
Flight
tickets
or
daily
flight
reports
are
to
be
signed
by
Department
of
Indian
Affairs
and
Northern
Development
authorizing
officer
on
a
daily
basis.
13.
Basis
of
Payment:
Payments
will
be
based
on
the
Carrier's
tariff
which
is
part
of
this
contract
and
the
following:
A.
Ferrying:
From
this
hodgepodge
of
provisions,
some
harmonious
and
some
conflicting,
we
are
required
to
divine
the
intention
of
the
parties
as
to
when
debts
for
the
air
services
were
to
come
into
existence.
Three
possibilities
must
be
canvassed.
The
first
is
that
debts
were
created
at
the
time
the
contract
was
formally
entered
into,
regardless
of
performance.
If
that
be
so
it
would
follow
(as,
indeed,
the
learned
trial
judge
concluded)
that
the
debts
in
question
were
in
existence
before
the
receiver
was
appointed
and,
accordingly,
were
the
proper
subject
of
a
set-off.
An
alternative
to
this,
though
weak,
is
that
debts
were
created
only
after
all
services
were
actually
performed
and
which,
for
the
most
part,
occurred
only
after
the
receiver
was
appointed.
I
will
not
pursue
this
possibility
as
I
believe
the
invoicing
provi-
sions
of
the
contract
exclude
it.
À
second
alternative,
however,
is
that
there
was
an
intention
to
create
debts
as
and
when
invoices
were
issued
in
conformity
with
the
contractual
provisions.
|
Cost
to
position
machine
at
Frobisher
Bay
|
$
2,250.00
|
|
Cost
to
deposition
from
Frobisher
Bay
|
2,250.00
|
|
B.
Minimum
hours
for
the
period
June
16
to
September
15
|
285
hours
|
|
C.
Firm
rate
per
flying
hour
|
$380.00/hour
|
|
14.
Estimated
Expenditure:
|
|
|
A.
Flying
285
hours
@
$380.00
|
$108,300.00
|
|
B.
Ferrying
|
4,500.00
|
|
C.
Crew
rotations
|
Nil
|
|
D.
Crew
expenses
(estimated)
|
18,000.00
|
|
E.
Fuel
(estimated)
|
16,200.00
|
|
F.
Miscellaneous
expenses
(estimated)
|
3,000.00
|
|
$150,000.00
|
It
is,
I
think,
fair
to
say
that
the
trial
judge’s
conclusion
relies
heavily
on
the
content
of
Appendix
A
to
the
contract
of
January
4,
1983.
There
is,
in
my
view,
additional
evidence
as
to
the
parties’
intention
in
other
language
they
employed.
The
references
to
"services",
"services
rendered",
"services
provided",
“services
specified”,
"services
.
.
.
performed",
“services
.
.
.
completed
in
accordance
with
the
contract",
“compliance
with
the
terms
and
conditions
of
the
contract”,
etc.
suggests
that
both
sides
contemplated
performance
of
services
as
a
fundamental
requirement
of
the
contract
for
and
in
respect
of
which
payments
would
be
made.
In
saying
this,
I
must
acknowledge
the
possibility
of
an
intention
to
create
a
debt
upon
formation
of
the
contract.
Other
possibilities
are
also
open,
however.
Our
task
is
to
discover
the
true
intention
of
the
parties,
a
task
which
I
think
can
best
be
done
by
examining
the
words
of
the
contract,
the
conduct
of
the
parties
in
relation
to
the
invoicing
procedures
followed
and
the
law
by
which
the
respondent
was
obliged
to
certify
invoices
before
they
could
be
paid.
The
parties
contemplated
performance
of
the
services
specified
up
to
a
limit
of
285
estimated
flying
hours,
and
that
actual
flying
hours
during
the
three
month
contractual
period
might
fall
short
of
that
figure
(which
in
fact
turned
out
to
be
the
case).
A
procedure
was
made
available
to
Aero
Trades
(Western)
Ltd.
whereby
it
could
secure
payment
in
respect
of
the
helicopter
it
had
committed
exclusively
to
the
contract
by
rendering
interim
invoices
on
the
basis
that
a
final
reconciling
invoice
for
hours
flown
would
issue
at
the
end
of
the
contract.
According
to
the
agreed
statement
of
facts,
the
work
and
services
were
"performed"
as
reflected
in
three
invoices,
namely,
Nos.
12860
(June
28,
1983),
12906
(July
31,
1983)
and
12938
(August
31,
1983)
and
aggregated
237V2
flying
hours
at
the
fixed
hourly
rate.
I
cannot
accept
the
submission
that
a
debt
was
created
for
the
full
cost
of
these
services
upon
the
formation
of
the
contract.
To
do
so
would
be
to
ignore
the
heavy
emphasis
in
the
contract
upon
performance
of
these
services
by
acceptable
equipment
and
crews
and
under
the
general
direction
of
the
respondent,
upon
the
requirements
for
submitting
invoices
to
secure
payment
for
services
and
upon
the
control
over
payment
of
invoiced
amounts
which
the
respondent
could
exercise
pursuant
to
statute.
I
concede
that
the
picture
is
somewhat
clouded
by
the
rather
vague
and
ambiguous
terms
of
the
“Invoice
Instructions"
in
clause
10
of
Appendix
A.
It
is
not
clear,
for
example,
what
precisely
was
intended
by
item
A
of
that
clause
requiring
the
mailing
of
invoices
"to
cover
the
minimum
hours
or
the
monthly
charge".
Item
B
called
for
submission
to
the
Charterer
of
certain
kinds
of
supporting
documentation
(i.e.
charter
tickets
and
receipts)
in
unspecified
circumstances,
while
item
C
required
the
Carrier
to
forward
an
invoice
"showing
reconciliation
of
hours
flown
for
the
total
period
of
the
contract”
after
termination
thereof.
In
my
view,
this
clause
suggests
an
intention
that
Aero
Trades
(Western)
Ltd.
should
have
some
degree
of
flexibility
in
securing
payments
under
the
contract.
This
it
could
do
periodically
by
invoicing
the
respondent
at
the
fixed
hourly
rate
on
the
basis
of
either
minimum
hours
or
actual
hours
flown
or
both,
the
total
hours
flown
not
in
any
event
to
exceed
285,
the
aggregate
of
all
charges
not
to
exceed
$150,000
unless
any
excess
were
authorized
by
the
Minister
of
Supply
and
Services,
and
a
reconciling
invoice
based
on
hours
flown
to
be
ultimately
submitted.
I
conclude
from
the
foregoing
that
the
parties
intended
to
bring
a
debt
into
existence
only
upon
submission
of
invoices
rendered
in
full
compliance
with
the
invoicing
instructions
contained
in
the
contract.
Such
invoices
could
reflect
actual
or
minimum
hours
flown
or
a
combination
of
both,
and
were
subject
to
being
reconciled
in
the
manner
already
stated.
As
the
parties
were
apparently
satisfied
that
the
"work
and
services"
for
the
various
invoiced
charges
had
been
"performed"
(as
is
indicated
by
paragraph
6
of
the
agreed
statement
of
facts)
and
that
they
fell
within
the
limits
of
the
contract,
there
was
evidently
no
need
for
a
reconciling
invoice
in
this
case.
Bearing
in
mind
the
settled
common
law
principles
I
have
already
discussed,
it
would
seem
that
the
only
debt
that
could
be
subject
to
set-off
was
that
created
by
Invoice
No.
12860.
Because
the
period
for
which
air
services
were
charged
in
that
invoice
straddled
the
date
on
which
the
receiver
was
first
appointed
(June
30,
1983),
a
question
arises
as
to
whether
the
full
amount
of
the
invoice
or
only
such
portion
of
it
as
pre-dated
the
appointment
may
be
considered
as
a
debt
susceptible
to
set-off.
This
question
must
primarily
be
decided
upon
the
contract
of
January
4,
1983
and
particularly
upon
such
of
its
provisions
as
pertain
to
the
rendering
of
invoices.
As
we
have
seen,
clause
10
of
Appendix
A
provides
for
the
sending
of
invoices
on
the
25th
day
of
the
month
"for
minimum
hours
or
monthly
charges",
calls
for
the
subsequent
submission
of
supporting
documentation
and,
ultimately,
for
the
reconciliation
invoice
reflecting
all
the
"hours
flown”
during
the
whole
period
of
the
contract.
I
have
already
indicated
the
difficulty
presented
in
interpreting
clause
10.
For
invoicing
purposes,
for
example,
it
is
not
clear
that
the
parties
had
in
mind
a
calendar
month
or
a
period
of
time
amounting
to
the
approximate
duration
of
a
calendar
month
as
would
result
from
dividing
the
contract
period
into
three
more
or
less
equal
time
segments.
On
the
other
hand,
the
sending
of
the
first
invoice
before
the
end
of
June
1983
suggests
that
Aero
Trades
(Western)
Ltd.,
for
its
part,
interpreted
the
clause
in
this
latter
fashion;
and
it
is
also
significant
that
no
protest
was
raised
by
the
respondent
to
either
the
sending
of
this
invoice
or
to
its
content,
in
that
it
was
certified
on
July
4,
1983
pursuant
to
the
provisions
of
section
27
of
the
Financial
Administration
Act.
Conduct
of
this
kind
(especially
in
the
face
of
those
provisions),
though
it
could
not
add
to
or
alter
the
terms
of
an
ambiguous
contract,
is
of
assistance
in
resolving
any
ambiguity
and
thereby
in
discovering
the
true
intention
of
the
parties:
see
e.g.
Adolph
Lumber
Company
v.
Meadow
Creek
Lumber
Company,
[1919]
58
S.C.R.
306
at
307;
Hoefle
v.
Bongard
&
Company,
[1945]
S.C.R.
360
at
377,
384.
In
the
circumstances,
I
think
Invoice
No.
12860
upon
being
sent
to
the
respondent
created
a
debt
to
the
full
extent
of
$36,100.
If
that
be
correct,
then
that
debt
came
into
existence
before
the
receiver
was
appointed
on
June
30,
1983
when
the
equitable
assignment
also
occurred
and
was
thereby
rendered
subject
to
the
respondent's
statutory
right
of
set-
off.
It
follows
from
the
foregoing
that
all
of
the
remaining
amounts
invoiced
to
the
respondent
after
June
30,
1983
were
not
subject
to
that
right
in
that,
not
then
being
in
existence,
they
were
not
captured
by
that
assignment
for,
to
adopt
the
words
of
Chief
Justice
Jackett
in
The
Clarkson
Company
Limited
et
al.
v.
The
Queen,
[1979]
1
F.C.
630
(C.A.),
footnote
8
at
page
635;
[1979]
C.T.C.
96
at
99,
there
can
be
”.
.
.
no
right
against
which
there
could
be
a
setoff
until
everything
has
happened
that
is
necessary
to
create
the
chose
in
action
.
.
.”.
Statutory
Construction
One
further
point
that
is
relevant
to
this
last
conclusion
was
raised
by
counsel
for
the
respondent.
Both
the
provisions
of
the
Income
Tax
Act
and
the
Excise
Tax
Act
are
cast
in
identical
form,
i.e.
the
Minister
may
set
off
"any
amount
that
may
be
or
become
payable”
against
the
debt
owing
to
the
Crown.
This
may
be
contrasted
with
the
provisions
of
the
Financial
Administration
Act
which
limits
the
right
of
set-off
to
"money
that
may
be
due
or
payable”.
It
was
suggested
that
by
use
of
the
phrase
"become
payable”
the
first
two
statutes
had,
in
effect,
worked
a
change
in
the
common
law
by
making
set-off
available
notwithstanding
that
an
obligation
to
pay
arises
some
time
subsequent
to
appointment
of
a
receiver.
I
am
not
persuaded
by
this
argument.
While
the
right
to
set
off
was
obviously
intended
as
a
measure
by
which
certain
Crown
assets
might
be
protected
and
preserved,
that
right
avails
only
where
a
"person
is
indebted
to
Her
Majesty”.
Thus,
in
order
to
take
advantage
of
these
statutes
it
remains
necessary,
first
and
foremost,
that
a
debt
exist,
in
which
event
set-off
is
available
whether
that
debt
"be
.
.
.
payable”
or
“become
payable”
in
the
future.
This
is
quite
in
harmony
with
one
of
the
common
law
principles
I
referred
to
above,
whereby
a
debt
in
existence
may
be
the
proper
subject
of
a
set-off
though
it
may
not
be
payable
until
some
future
time
—
debitum
in
praesenti
solendum
in
futuro.
I
am
unable
to
read
the
statutory
language
as
disclosing
an
intention
by
Parliament
to
fundamentally
alter
the
common
law
on
this
subject
when
the
presumption
to
do
so
is
quite
the
other
way:
see
e.g.
George
Wimpey
&
Co.
Ltd.
v.
British
Overseas
Airways
Corporation,
[1955]
A.C.
169
(H.L.),
per
Lord
Reid
at
page
191.
Summary
and
Disposition
In
summary,
only
the
debt
created
by
Invoice
No.
12860
dated
June
28,
1983
in
the
sum
of
$36,100
was
properly
set
off
against
the
debt
owing
to
the
respondent
for
unpaid
income
taxes
and
customs
duties
and
that,
correspondingly,
none
of
the
remaining
debts
(reflected
in
the
other
invoices
listed
in
paragraph
8
of
the
agreed
statement
of
facts)
were
properly
set
off
by
the
respondent.
Accordingly,
I
would
allow
this
appeal,
set
aside
the
judgment
appealed
from
and
would
order
that
the
respondent
pay
to
the
appellant
the
sum
of
$62,151.65
being
the
extent
to
which
the
amount
taken
in
satisfaction
of
the
debt
for
unpaid
taxes
and
customs
duties
exceeded
the
amount
of
the
debt
legally
available
for
set-off.
Pre-judgment
interest
was
not
addressed
at
the
hearing
before
us,
nor
claimed
as
such
in
the
Court
below.
I
would
allow
the
appellant
its
costs
both
here
and
at
trial,
seeing
that
it
has
enjoyed
substantial
success.
Appeal
allowed.
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