Tremblay,
T.C.C.J.:—
1.
Point
at
issue
The
point
at
issue
is
whether
the
appellant
company
is
correct
in
the
computation
of
its
income
for
the
1988
taxation
year
ending
on
September
30,
to
claim
an
investment
tax
credit
and
to
deduct
a
capital
cost
allowance
in
the
amount
of
$2,871
and
$8,100
respectively
in
relation
to
a
1988
white
G.M.C.
Tandem
truck.
According
to
the
appellant,
the
contract
was
passed
with
the
seller,
Louns-
bury
Company
Ltd.
(hereinafter
called"
Lounsbury”)
on
September
30,
1988
for
$95,713.
The
delivery
of
the
truck
was
provided
for
October
17,
1988,
because
it
had
to
be
painted
with
gold
line
colours.
The
respondent
disallowed
the
capital
cost
allowance
on
the
contention
that
the
purchase
contract
was
concluded
after
September
30,
1988,
that
the
truck
was
registered
in
the
name
of
the
appellant
with
the
Motor
Vehicle
Registrar
on
October
18,
1988
and
for
warranty
purposes
on
October
17,
1988,
and
that
the
effect
of
the
perishing
of
the
truck,
if
it
would
have
had
happened,
were
not
supported
by
the
company
on
or
prior
to
September
30,
1988.
2.
Burden
of
proof
2.01
The
burden
of
proof
is
on
the
appellant
to
show
that
the
respondent's
reassessments
are
incorrect.
This
burden
of
proof
results
particularly
from
several
judicial
decisions,
including
the
judgment
delivered
by
the
Supreme
Court
of
Canada
in
Johnston
v.
M.N.R.,
[1948]
S.C.R.
486,
[1948]
C.T.C.
195,
3
D.T.C.
1182.
2.02
In
the
same
judgment,
the
Court
decided
that
the
assumed
facts
on
which
the
respondent
based
his
reassessments
were
also
deemed
to
be
correct.
In
the
present
case,
the
assumed
facts
are
described
in
paragraphs
9(a)
to
(f)
of
the
reply
to
notice
of
appeal
as
follows:
9.
In
assessing
the
appellant
for
its
1988
taxation
year,
the
Minister
of
National
Revenue
made,
inter
alia,
the
following
assumptions
of
fact:
(a)
at
all
material
times,
Gold
Line
Transport
Ltd.,
hereafter
called
the
Company,
was
a
company
incorporated
under
the
law
of
New
Brunswick;
[admitted]
(b)
for
the
1988
taxation
year,
the
Company's
year
end
was
on
September
30,
1988;
[admitted]
(c)
after
September
30,
1988,
the
Company
concluded
a
contract
with
Lounsbury
Company
Ltd.,
for
the
purchase
of
a
1988
white
G.M.C.
Tandem
truck,
hereafter
called
the
truck;
[denied]
(d)
the
truck
was
registered
in
the
name
of
the
company
with
the
Motor
Vehicle
Registrar
on
October
18,
1988;
[admitted]
(e)
the
truck
was
registered
by
the
Company
for
warranty
purposes
on
October
17,
1988;
[denied]
(f)
the
effect
of
the
perishing
of
the
truck,
if
it
would
have
had
happened,
were
not
supported
by
the
Company
on
or
prior
to
September
30,
1988;
[denied]
3.
Facts
3.01
The
appellant
Gold
Line
Transport
Ltd.
(hereinafter
called
"Gold
Line")
is
a
trucking
company
incorporated
under
the
laws
of
the
province
of
New
Brunswick.
For
the
1988
taxation
year,
Gold
Line's
year
end
was
on
September
30,
1988.
3.02
On
September
30,
1988,
Gold
Line
purchased
a
1988
white
G.M.C.
Tandem
truck
from
Lounsbury
for
the
amount
of
$95,713
(Exhibit
A-2).
During
the
direct
examination,
Mr.
Jardine,
the
president
of
Gold
Line
explained
the
circumstances
of
the
purchase:
Q.
You
were
there
on
the
28th.
Would
you
tell
His
Honour
why
you
were
there
on
the
28th
and
what
occurred?
A.
Well,
we
just
went
down
to
check
on
the
truck
that
was
getting
repairs
done.
We"ve
had
a
lot
of
trouble
with
that
engine
and
that's
one
of
the
reasons
we
decided
to
trade
it.
And
we
took
a
—the
Volvo
out
for
a
drive
and
liked
it.
And
then
we
discussed
it
for
a
while
on
our
way
home
and
came
back
down
on
the
30th
and
decided
to
purchase
it.
(T.S.,
page
42)
3.03
In
consequence,
Gold
Line
bought
the
truck
for
$95,713
and
traded
in
for
the
amount
of
$41,713
the
1985
International
that
was
getting
repaired
at
Lounsbury's.
On
October
17,
1988,
Lounsbury
received
a
cheque
from
Gold
Line
to
the
amount
of
$54,000
which
was
the
difference
between
the
selling
price
($95,713)
and
the
trade-in
allowance
($41,713)
(Exhibit
A-4).
3.04
By
a
separate
contract
dated
October
3,
1988,
Gold
Line
agreed
with
Lounsbury
to
have
his
new
truck
painted
with
Gold
Line’s
colours
for
the
amount
of
$2,000
(Exhibit
A-3).
During
the
cross-examination
by
Mr.
Meghji,
Mr.
Jardine,
the
president
of
Gold
Line,
commented
on
the
agreement
as
follows:
Q.
[Mr.
Meghji]
Sir,
when
you
bought
the
truck
and
you
agreed
to
get
the
Gold
Line
stripes
put
on,
you
were
expecting
to
pick
up
a
truck
in
October
with
the
stripes
on
it.
Is
that
correct?
A.
[Mr.
Jardine]
Well,
we
just
decided
to
get
it
painted,
yeah.
And—we
didn't
have
to
get
it
painted.
They
just
seen
an
opportunity,
had
some
time
to
do
it.
And
Lounsbury
told
us
we
could
use
their
truck
which
we
had
traded
in
when
it
was—
when
it
came
out
of
the
garage,
when
it
was
ready.
So
we
took
them
up
on
the
opportunity
and
that's
all
there
was
to
it.
(T.S.,
page
50)
Mr.
Jardine
also
testified
that
previous
experience
showed
him
that
if
he
did
not
get
the
truck
painted
right
away,
it
would
probably
never
get
done.
In
consequence,
having
the
opportunity
to
be
able
to
use
the
1985
International
while
the
new
truck
was
getting
painted,
he
agreed
to
have
it
done
right
away
for
$2,000.
3.05
Mr.
Gaston,
Branch
Manager
for
Lounsbury
Company
Ltd.
Truck
Division,
testified
that
on
September
30,
1988,
the
truck
was
in
a
deliverable
state
and
that
there
was
not
anything
to
be
done
to
make
it
usable.
During
his
direct
examination
by
Mr.
Mockler,
he
commented
on
the
situation
as
follows:
A.
Well,
in
our
business
when
we
deliver
a
truck
there's
two
conditions
that
it
may
be
under.
It
may
be
what
we
call
an
“incomplete
vehicle”,
in
other
words,
it's
a
truck
and
a
sic]
chassis
with
nothing
to
hook
on
to
the
back
of
it,
no
body
or
no
wheel.
This
is
a
highway
road
tractor,
which
means
it’s
going
to
haul
a
trailer
of
some
sort
and
it
would
have
to
have
a
fifth
wheel
on
it
on
which
the
kingpin
of
the
trailer
is
hooked
up.
When
we
order
a
highway
tractor,
we
order
it
from
the
factory
equipped
with
the
fifth
wheel
and
the
air
hoses
to
hook
up
that
trailer.
It’s
complete.
Q.
The
fifth
wheel
is
the
hook-up
for
the
trailer,
is
it
not?
A.
It’s
the
hook-up
for
the
trailer,
yes.
Q.
Yes.
And
this
one
came
with
that
hook-up?
A.
Yes.
Q.
And
so
am
I
correct
that
the
day
that
was
driven
or
on
September
30th
you
could
have
hooked
a
trailer
to
that
tractor?
A.
That's
right.
(T.S.,
pages
16-17)
3.06
Later
in
his
testimony,
he
explained
the
nature
of
the
guarantee
that
goes
with
the
truck
bought
by
Gold
Line:
When
we
sell
a
truck
of
this
nature,
we
administer
the
warranty
for
a
white
G.M.C.
that
covers
the
warranty
on
the
truck.
That
covers
for
a
certain
term
in
mileage
and
repairs
on
that
truck
to
the
major
components.
We
have
to
warranty
register
that
to
our
manufacturer,
otherwise
notify
them
when
the
truck
officially
goes
on
the
road.
We
have
a
date—we
have
a
grace
period
up
to
90
days
which
we
can
hold
back
registration
to
be
sure
that
that
truck
is
in
service
at
the
time.
Because
warranties
are
important
to
these
customers
and
it’s
very
expensive
if
they
don’t
have
it.
So
the
manufacturer
does
allow
us
up
to
90
days
to
warranty
register
the
truck.
Q.
So
you
might
sell
a
truck
on
day
one
and
the
warranty
doesn't
get
registered
till
day
10
or
even
up
to
day
90,
I
take
it.
A.
Normally
that's
what
happens,
yes.
Q.
Has
the
registration
of
the
warranty
got
anything
to
do
with
when
you
sell
the
truck?
A.
No.
The—selling
the
truck
is
our
responsibility.
The
warranty
registration
is
the
date
that
we
are
telling
the
manufacturer
that
we
are—we
want
that
warranty
to
start."
(T.S.,
pages
23-24)
3.07
The
three
appellants
witnesses
interrogated
during
the
trial,
respectively
Mr.
Gaston
(branch
manager
of
Lounsbury)
Mr.
Jardine
(president
of
Gold
Line),
and
Mr.
Donald
Luspy
(working
in
general
insurance
with
Jones
Foster
Ltd.
doing
business
with
Gold
Line
since
1968),
testified
that
if
ever
the
truck
(G.M.C.)
would
have
been
damaged
(during
the
time
it
was
sitting
at
Louns-
bury’s
to
get
painted)
the
perishing
of
it,
if
such
would
have
happened
on
or
after
September
30,
1988,
would
have
been
covered
by
Gold
Line.
According
to
them,
in
the
event
of
any
damage
to
or
perishing
of
the
truck,
on
or
after
September
30,
1988,
the
truck
was
covered
by
Gold
Line's
insurance.
In
consequence,
Gold
Line
and
not
Lounsbury
would
have
been
responsible
for
the
payment.
Mr.
Gaston
during
the
cross-examination
by
Mr.
Meghji
commented
as
follows:
Q.
[Mr.
Meghji]
So
if
there
had
been
any
damage
to
the
truck,
say
by
vandalism
or
fire
or
any
such
thing,
say
on
October
1st
of
1988,
you
would
not
have
told
Gold
Line
that,"
It's
your
problem.”
Presumably
your
insurance
would
have
covered
it.
Is
that
correct?
A.
[Mr.
Gaston]
No.
Our
insurance
would
not
have
covered
it
because
at
that
time
the—of
the
type
of
insurance
that
we
carried.
We
would—basically,
he
would
have
been
responsible.
I
don’t
know
if
we
have
in
our
purchase
agreement,
but
on
our—vehicles
left
in
our
care,
we
have
it
on
there
that
we
are
not
responsible
for
damages
on
our
lot,
although
it's
a
very
gray
area
when
it
comes
down
to
actually
who's
going
to
pay
(T.S.,pages
28-29).
3.08
Mr.
Donald
Luspy
from
Royal
Insurance
explained
the
fleet
policy
existing
between
Royal
Insurance
and
Gold
Line
(Exhibit
A-5).
Q.
Now,
Mr.
Luspy,
what
I'd
like
you
to
do
is
explain
to
His
Honour
how
the
insurance
worked.
A.
Well,
sir,
we
have
what
we
call
a
blanket
fleet
insurance
for
Gold
Line
which
covers
all
vehicles
registered,
owned,
operated
or
leased
to
the
named
insured.
The
named
insured
in
this
particular
case
is
Gold
Line
Transport
Ltd.
He
carries
the
mandatory
limits
for
public
liability
and
property
damage.
He
carries
at
his
choice
certain
deductibles
on
various
values
on
vehicles.
For
instance,
on
tractors
he
carries
a
twenty-five
hundred
deductible
all
peril.
On
trailers
he
carries
a
fifteen
hundred
deductible
all
peril.
And
on
any
other
types
of
vehicles,
such
as
private
passenger
cars,
light
trucks
and
so
on,
he
carries
a
five
hundred
deductible.
His
policy
expires
on
June
12th
each
year.
A
month
or
so
prior
to
expiry,
we
ask
the
principals
of
Gold
Line
to
provide
us
with
an
up-to-date
list
of
vehicles.
From
that
up-to-date
list
we
prepare
a
renewal.
There
is
an
endorsement
attached
to
the
face
sheet
of
the
policy
which
is
a
21-A,
which
basically
means
that
all
vehicles,
as
long
as
they
are
registered
or
owned
or
leased
to
the
named
insured,
are
covered
for
the
ensuing
period.
It's
not
necessary
for
him
to
provide
us
any
information
with
vehicles
acquired
between
June
12th
of
one
year
and
June
12th
of
the
following
year.
And
the
deductibles
as
per
the
type
of
vehicle
will
apply
to
any
vehicle
that
he
acquires
after
he
has
given
us
his
list
for
the
ensuing
year.
Q.
Now,
Mr.
Luspy,
the
evidence
is
here
that
they
purchased
a
vehicle
from
Lounsbury
on
September
the
30th,
1988.
Could
you
tell
His
Honour,
would
that
vehicle
have
been
covered
by
this
insurance?
A.
That
vehicle
would
have
been
covered
the
same
as
any
other
vehicle
that
was
covered
on
the
policy,
from
September
30th
through
until
June
12th
of
the
following
year.
Q.
Okay.
And
counsel
for
the
Minister
here
asked
the
question,
if
this
truck
had
been
vandalized
while
it
was
still
at
Lounsbury’s
on
September
the
30th,
whether
or
not
it
would
be
covered.
I"m
asking
you,
would
it
have
been
covered
under
your
policy?
A.
In
my
opinion,
it
would
be.
I
have
had
experience
in
the
past
that—where
a
bill
of
sale
has
been
made
up
and
a
registration
not
—or
the
vehicle
not
registered.
The
insuring
company—in
other
words,
ownership
transferred
the
minute
the
bill
of
sale
was—then
we
would
be
on
the
hook,
that's
right.
(T.S.,
pages
53-55)
3.09
The
truck
got
painted
as
agreed
by
the
parties
and
on
or
about
October
17,
1988,
Gold
Line
brought
back
the
1985
International
to
Lounsbury
(3.04)
and
got
its
new
truck
(G.M.C.)
painted
with
Gold
Line
colors.
4.
Law—cases
at
law—analysis
4.01
Law
The
main
provisions
involved
in
the
present
case
are
sections
18
and
19
of
the
Sale
of
Goods
Act,
R.S.N.B.
1973,
c.
S-1
as
amended.
They
read
as
follows:
18(1)
Where
there
is
a
contract
for
the
sale
of
specific
or
ascertained
goods
the
property
in
them
is
transferred
to
the
buyer
at
the
time
that
the
parties
to
the
contract
intend
it
to
be
transferred.
18(2)
For
the
purpose
of
ascertaining
the
intention
of
the
parties
regard
shall
be
had
to
the
terms
of
the
contract,
the
conduct
of
the
parties,
and
the
circumstances
of
the
case.
R.S.,
c.
199,
section
18.
19.
Unless
a
different
intention
appears,
the
following
are
rules
for
ascertaining
the
intention
of
the
parties
as
to
the
time
at
which
the
property
in
the
goods
passes
to
the
buyer:
Rule
1.
Where
there
is
an
unconditional
contract
for
the
sale
of
specific
goods
in
a
deliverable
state,
the
property
in
the
goods
passes
to
the
buyer
when
the
contract
is
made,
and
it
is
immaterial
whether
the
time
of
payment
or
the
time
of
delivery,
or
both,
be
postponed.
Rule
2.
Where
there
is
a
contract
for
the
sale
of
specific
goods
and
the
seller
is
bound
to
do
something
to
the
goods
for
the
purpose
of
putting
them
into
a
deliverable
state,
the
property
does
not
pass
until
that
thing
is
done,
and
the
buyer
has
notice
thereof.
The
provisions
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
and
Income
Tax
Regulations
concerning
capital
cost
allowance
and
investment
tax
credit
will
apply
or
not
depending
whether
the
contract
was
passed
on
September
30,
1988
or
after.
It
is
not
necessary
to
quote
those
provisions.
4.02
Cases
at
law
Counsel
for
the
parties
referred
the
Court
to
the
following
cases
at
law:
1.
Jerome
v.
Clements
Motor
Sales
Ltd.,
15
D.L.R.
(2d)
689,
[1958]
O.R.
738
(O.C.A.);
2.
Alexander
Gibson
v.
William
G.
McKean
&
Archibald
Randolf,
[1876]
16
N.B.R.
299;
3.
M.N.R.
v.
Wardean
Drilling
Ltd.,
[1969]
2
Ex.
C.R.
166,
[1969]
C.T.C.
265,
69
D.T.C.
5194;
4.
Kirsch
Construction
Ltd.
v.
M.N.R.,
[1985]
2
C.T.C.
2387,
85
D.T.C.
675
(T.C.C.);
5.
Kirsch
Construction
Ltd.
v.
The
Queen,
[1988]
2
C.T.C.
338,
88
D.T.C.
6503
(F.C.T.D.);
6.
Yorkton
Broadcasting
Co.
v.
M.N.R.,
[1987]
1
C.T.C.
2222,
87
D.T.C.
165
(T.C.C.)
4.03
Analysis
4.03.1
The
issue
of
this
case
turns
on
the
effect
of
the
purchase
contract
passed
between
Gold
Line
and
Lounsbury
on
September
30,
1988.
In
consequence,
the
Court
has
to
decide
whether
or
not
the
property
in
the
truck,
on
September
30,
1988,
effectively
passed
to
Gold
Line.
4.03.2
In
their
simplest
form,
the
parties'
arguments
can
be
summarized
as
follows:
4.03.2(1)
Counsel
for
the
appellant
1.
Referring
to
section
18
of
the
Sale
of
Goods
Act
(4.01)
he
contends
that
on
September
30,
1988,
it
was
the
intention
of
the
parties
that
the
property
in
the
truck
would
pass
to
Gold
Line.
Therefore,
even
if
some
act
would
have
remained
to
be
done
to
the
truck
by
Lounsbury,
the
property
in
it
was
passed
anyway.
2.
He
also
refers
to
the
Jerome
v.
Clements
Motor
Sales
Ltd.
case
(4.02(1))
in
which
Schroeder,
J.A.
stated
at
page
700
(D.L.R.)
that:
There
is
no
doubt
but
that
the
operation
of
rule
2,
section
19
is
subordinated
to
the
real
intention
of
the
parties
as
to
when
the
property
in
the
subject-matter
of
the
sale
should
pass
to
the
purchaser
if
that
intention
has
been
manifested
in
some
other
manner.
In
consequence,
counsel
for
the
appellant
submits
that
it
was
the
real
intention
of
the
parties
that
the
property
in
the
truck
pass
to
Gold
Line
on
September
30,
1988,
and
therefore
the
Rules
outlined
in
section
19
of
the
Sale
of
Goods
Act
are
subordinated
to
the
real
intention
of
the
parties
on
September
30,
1988.
3.
He
subsidiarily
contends
that
if
the
truck
would
have
got
damaged
on
or
after
September
30,
1988
(3.02)
it
would
have
been
supported
by
Gold
Line's
insurance
coverage.
He
consequently
refers
to
subsection
21(1)
of
the
Sale
of
Goods
Act
which
reads
as
follows:
21(1)
Unless
otherwise
agreed,
the
goods
remain
at
the
seller's
risk
until
the
property
therein
is
transferred
to
the
buyer,
but
when
the
property
therein
is
transferred
to
the
buyer
the
goods
are
at
the
buyer’s
risk
whether
delivery
has
been
made
or
not,
except
that
where
delivery
has
been
delayed
through
the
fault
of
either
buyer
or
seller
the
goods
are
at
the
risk
of
the
party
in
fault
as
regards
any
loss
that
might
not
have
occurred
but
for
such
fault.
4.03.2(2)
Counsel
for
the
respondent
He
submits
that
the
property
in
the
truck
was
not
transferred
to
the
appellant
until
after
September
30,
1988
for
the
following
reasons:
1.
The
appellant
did
not
have
the
incidents
of
ownership.
He
did
not
have
possession
nor
use
of
it
because
it
was
still
sitting
at
Lounsbury’s
being
painted.
At
that
time,
the
truck
was
not
in
a
deliverable
state.
He
referred
the
Court
to
the
Wardean
Drilling
Ltd.
case
(4.02(3))
where
Mr.
Justice
Cattanach
stated
on
the
same
question
as
to
when
property
is
acquired.
He
stated
at
pages
270-71
(D.T.C.
5197):
Test
to
determine
acquisition
of
property
The
decision
in
this
appeal
turns
on
the
question
as
to
when
the
rig
and
substructure
were
"acquired"
by
the
respondent.
The
submission
on
behalf
of
the
respondent
was,
as
I
understood
it,
that
goods
are
acquired
by
a
purchaser
thereof
when
the
vendor
and
the
purchaser
have
entered
into
a
binding
and
enforceable
contract
of
sale
and
purchase.
The
test
and
concept
of
a
contract
was
that
adopted
by
the
Tax
Appeal
Board
in
the
decision
now
under
appeal.
With
all
deference
I
cannot
accede
to
that
view.
In
my
opinion
the
proper
test
as
to
when
property
is
acquired
must
relate
to
the
title
to
the
property
in
question
or
to
the
normal
incidents
of
title,
either
actual
or
constructive,
such
as
possession,
use
and
risk.
Counsel
for
the
respondent
contends
that
the
present
case
is
similar
to
the
Wardean
Drilling
Ltd.
case
(4.02(3))
and
consequently
he
submits
that
even
if
the
appellant
may
have
some
property
rights
under
the
purchase
contract
(302),
he
does
not
own
the
property
in
the
truck.
The
D.T.C.
headnote
of
that
case
reads
as
follows
at
page
5194:
Held:
The
Minister’s
appeal
was
allowed.
The
respondent
company
was
not
entitled
to
deduct
the
capital
cost
allowance
it
had
claimed
in
1963
on
the
drilling
rig
and
the
subsidiary
equipment.
Neither
item
had
been
acquired
by
the
company
in
1963.
It
was
true
that
the
contracts
for
the
purchase
ana
sale
of
the
rig
and
equipment
were
completed
prior
to
the
end
of
1963.
However,
this
was
not
the
proper
test
to
be
applied.
A
purchaser
has
acquired
property
of
a
class
in
Schedule
8
to
the
Regulations
when
title
has
passed,
assuming
that
the
assets
exist
at
that
time,
or
when
the
purchaser
has
all
the
incidents
of
title,
such
as
possession,
use
and
risk,
although
legal
title
may
remain
in
the
vendor
as
security
for
the
purchase
price,
as
is
the
commercial
practice
under
conditional
sales
agreements.
An
examination
of
the
relevant
provisions
of
the
Alberta
Sale
of
Goods
Act
(which
governed
the
present
matter)
led
to
the
conclusion
that
the
property
in
the
drilling
rig
and
in
the
subsidiary
equipment
did
not
pass
to
the
company
until
1964.
2.
He
also
submits
that
the
evidence
of
the
purchase
agreement
(Exhibit
A-2)
is
not
enough
to
make
the
transfer
occurred.
He
contends
that
regarding
the
Yorkton
Broadcasting
Co.
case
(4.02(6))
and
the
Jerome
case
(4.02(1)),
it
is
not
enough
to
simply
say
that
both
parties
had
the
intention
to
transfer
the
property
in
the
goods.
There
has
to
be
much
more
compelling
evidence
such
as
an
express
clause
or
something
to
that
effect.
3.
He
therefore
submits
that
the
title
did
not
transfer
to
Gold
Line
on
September
30,
1988
and
consequently
in
case
of
the
perishing
of
the
truck,
it
would
have
been
Lounsbury's
and
not
Gold
Line's
responsibility.
4.
He
also
submits
that
the
rule
of
subsection
19(2)
of
the
Sale
of
Goods
Act
applies
to
the
present
case
and
therefore,
the
property
in
the
truck
cannot
have
been
passed
to
Gold
Line
on
September
30,
1988.
4.04
Opinion
of
the
Court
The
answer
to
the
question
in
the
present
appeal
is
governed
by
provisions
in
the
Sale
of
Goods
Act
(4.01)
pertaining
to
when
property
in
the
goods
is
transferred
to
the
buyer
under
a
contract
of
sale.
4.04.1
According
to
subsection
18(1)
of
the
Sale
of
Goods
Act
(4.01),
the
question
whether
and
when
the
property
passes
to
the
buyer
is
theoretically
dependent
upon
the
intention
of
the
parties.
Subsidiarily,
subsection
18(2)
of
the
Sale
of
Goods
Act
also
prescribed
that
the
intention
of
the
parties
may
be
ascertained
by
regard
to
the
terms
of
the
contract,
the
conduct
of
the
parties
and
the
circumstances
of
the
case.
However,
since
the
parties
may
have
not
clearly
expressed
their
intention
in
regard
to
the
transfer
of
the
property,
section
19
of
the
Sale
of
Goods
Act
(4.01)
contained
a
number
of
presumptions
which
are
to
be
applied
unless
a
different
intention
appears.
4.04.2
It
seems
clear
and
logical
that
the
governing
principle
must
be
the
one
contained
in
section
18
of
the
Sale
of
Goods
Act
(4.01).
The
rules
outlined
in
section
19
are
only
presumptions
and
therefore
unless
a
different
intention
appears
from
the
terms
of
the
contract,
the
conduct
of
the
parties
and
the
circumstances
of
the
case,
there
will
be
no
need
in
consequence
to
refer
to
the
rules
laid
down
in
that
section
of
the
Sale
of
Goods
Act.
4.04.3
Counsel
for
the
respondent
has
referred
the
Court
to
subsection
19(2)
of
the
Sale
of
Goods
Act
(4.03.2(2)4).
Do
the
circumstances
of
the
present
case
command
the
Court
to
refer
to
the
presumption
of
subsection
19(2)
of
the
law?
A
positive
answer
would
mean
that
none
of
the
elements
of
section
18
put
in
the
case
at
bar
would
ascertain
the
intentions
of
the
parties
to
transfer
property
in
the
goods.
4.04.4
There
is
no
doubt
that
a
purchase
contract
(Exhibit
A-2)
was
passed
between
the
parties
on
September
30,
1988.
Once
again,
the
question
is:
Did
it
transfer
the
property
to
Gold
Line?
4.04.5
First
of
all,
it
is
important
to
realize
that
property
in
the
goods
(truck)
has
to
be
distinguished
from
the
possession
of
it.
In
fact,
the
property
in
the
goods
may
have
been
transferred
to
the
buyer
before
or
after
the
goods
have
been
delivered
to
him.
In
consequence,
the
fact
that
the
truck
was
still
at
Lounsb-
ury's
being
painted
until
October
17,
1988
(4.03.2(2))
is
not
necessarily
significant.
In
the
case
at
bar,
it
is
not.
Section
21
of
the
Sale
of
Goods
Act
(4.03.2(1)3.)
illustrated
in
fact
that
once
the
goods
have
been
transferred,
it
is
of
little
importance
who
between
the
buyer
or
the
seller
actually
has
the
possession
of
them.
4.04.6
However,
according
to
the
Court,
the
fundamental
rule
is
that
risk
passes
with
property.
Consequently,
the
question
of
on
which
party
stands
the
location
of
the
risk
has
all
its
importance
to
determine
who
between
Gold
Line
and
Lounsbury
has
the
real
ownership
of
the
truck.
In
the
present
case,
which
party
would
be
responsible
for
the
perishing?
4.05
The
purchase
contract
(Exhibit
A-2)
does
not
expressly
mention
who
would
be
responsible
in
the
case
of
the
perishing
of
the
truck.
However,
this
is
not
conclusive.
The
intention
of
the
parties
may
be
deducted
from
their
conduct
and
from
the
circumstances
of
the
case
(section
18
of
the
Sale
of
Goods
Act).
Both
parties
(Gold
Line
and
Lounsbury)
have
testified
that
their
intention
was
to
transfer
property
when
they
concluded
the
sale
contract.
Therefore
they
also
testified
that
in
the
case
of
the
perishing
of
the
truck,
on
or
after
September
30,
1988,
the
loss
would
have
been
assumed
by
Gold
Line's
insurance
company
(3.08).
Mr.
Luspy
(worker
for
Gold
Line's
insurance
company)
also
commented
in
that
sense
(3.07)
when
he
explained
to
the
Court
how
the
insurance
(the
blanket
fee
insurance)
worked.
4.06
As
to
the
circumstances
of
the
present
case,
the
Court
believes
that
it
is
of
significant
importance
to
consider
the
fact
that
the
painting
contract
concluded
between
the
parties
(Exhibit
A-3)
was
concluded
after
the
purchase
contract
(Exhibit
A-2).
Therefore,
the
sale
of
the
truck
was
not
conditional
to
the
painting
work
the
parties
agreed
on
afterwards
(3.04).
The
painting
contract
(Exhibit
A-3)
was
independent
from
the
sale
contract
concluded
earlier
by
Gold
Line
and
Lounsbury.
Nothing
in
the
purchase
contract
tends
to
indicate
that
Lounsbury
was
Nothing
in
the
purchase
contract
tends
to
indicate
that
Lounsbury
was
bound
to
paint
the
truck
to
make
it
in
a
deliverable
state.
4.07
The
Jerome
case
(4.02(1))
referred
to
during
the
present
appeal
also
questioned
the
acquirement
of
the
property.
The
substance
of
that
case
is
described
as
follows
in
the
D.L.R.
headnote
of
the
judgment
at
page
689:
Where,
in
the
absence
of
a
contrary
intention,
the
passing
of
title
to
specific
goods
depends
on
whether
they
have
been
put
in
a
deliverable
state
and
the
buyer
has
notice
thereof
(as
provided
by
rule
2
of
section
19
of
the
Sale
of
Goods
Act,
R.S.O.
1950,
c.
345),
the
fact
that
the
things
to
be
done
are
trivial
in
nature
does
not
affect
the
question.
A
conditional
sale
agreement
for
the
purchase
of
a
car
for
which
the
buyer
agreed
to
pay
by
turning
in
two
used
cars
and
paying
the
balance
in
cash
provided
for
certain
repairs
to
be
made
by
the
seller
as
part
of
the
deal
and
for
the
installation
in
the
purchased
car
of
the
battery
presently
in
one
of
the
cars
to
be
turned
in.
The
buyer
kept
this
car
in
the
meantime
but
turned
in
the
other,
transferred
the
ownership
of
both
to
the
seller
and
paid
the
cash
balance.
She
also
signed
for
the
transfer
of
the
ownership
licence
of
the
purchased
car
and
this
licence
was
completed
and
placed
in
the
car
on
July
9th.
The
buyer
was
to
take
possession
on
July
12th
or
13th.
All
repairs
save
the
changing
of
the
battery
were
completed
on
July
Tith
and
the
car
was
put
in
the
seller's
showroom.
Early
next
morning
a
fire
destroyed
the
seller's
premises
and
the
car
was
badly
damaged.
Held,
on
appeal,
Laid
law
J.A.
dissenting,
the
trial
Judge
had
rightly
found
that
the
risk
of
loss
was
on
the
seller
because
title
had
not
passed
to
the
buyer.
The
difference
between
the
Jerome
case
(4.02(1))
and
the
present
case
is
that
in
the
first
one
the
seller
was
bound
to
do
some
work
on
the
car
which
he
had
not
completed.
Moreover,
the
terms
of
their
contract
indicate
a
conditional
purchase.
The
present
case
does
not
suggest
the
same
circumstances.
The
evidence
has
shown
to
the
satisfaction
of
the
Court
that
on
the
day
the
purchase
contract
was
passed
between
Lounsbury
and
Gold
Line,
the
truck
was
effectively
in
a
deliverable
state
(3.05).
Moreover,
the
fact
that
the
warranty
registration
was
dated
October
17,
1988
does
not
affect
the
position
of
the
appellant
(3.06)
as
the
evidence
demonstrated.
The
purchase
contract
was
not
made
subject
to
a
condition
which
suspended
the
passing
of
property.
It
was
not
conditional
to
and
dependent
on
the
painting
work
to
do.
In
the
Court's
view,
the
rule
number
2
set
forth
in
section
19
of
the
Sale
of
Goods
Act
is
not
applicable
to
the
circumstances
of
this
case.
Lounsbury
was
not
bound
to
paint
the
truck
for
the
purpose
of
putting
it
into
a
deliverable
state.
In
the
Wardean
Drilling
Ltd.
case
(4.02(3)),
the
seller
was
bound
to
add
certain
things
to
the
drill
rig.
In
the
Yorkton
Broadcasting
Co.
case
(4.02(6)),
the
transfer
of
the
Cessna
was
conditional
to
when
the
full
purchase
price
was
paid.
Therefore,
the
present
case
is
distinguished
from
those
above.
On
the
evidence,
I
am
satisfied
that
the
appellant
must
succeed.
Considering
the
conduct
of
the
parties
as
well
as
the
circumstances
of
the
present
case
(Exhibits
A-2
and
A-3),
the
Court
arrives
at
the
conclusion
that
on
September
0,
988,
the
property
in
the
truck
transferred
to
Gold
Line.
5.
Conclusion
For
the
above
reasons,
the
appeal
is
allowed
with
costs
and
the
matter
is
referred
back
to
the
respondent
for
reconsideration
and
reassessment.
Appeal
allowed.
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