Pinard
J
.:--In
case
no.
T-3460-90,
the
plaintiff
Coopérative
fédérée
de
Québec
(the
"CFQ")
is
appealing
the
judgment
of
the
Tax
Court
of
Canada
dated
November
30,
1990,
dismissing
its
appeal
of
the
assessments
made
against
it
by
the
Minister
of
National
Revenue
on
November
6,
1987,
concerning
its
taxation
years
ending
in
1982
and
1983.
In
case
no.
T-3461-
90,
the
CFQ
is
appealing
the
judgment
of
the
Tax
Court
of
Canada
dated
November
30,
1990,
dismissing
its
appeal
of
the
assessments
made
against
it
by
the
Minister
of
National
Revenue
on
September
10,
1987,
concerning
its
taxation
years
ending
in
1978,
1979,
1980
and
1981.
By
consent
of
the
parties,
the
two
cases
were
heard
together
and
will
be
decided
on
the
same
evidence.
The
plaintiff
is
a
cooperative,
duly
registered
under
the
Act
to
revise
the
charter
of
the
Société
Coopérative
Fédérée
des
Agriculteurs
de
la
Province
de
Québec,
S.Q.
1968,
c.
116,
as
amended,
and
a
corporation
within
the
meaning
of
the
Civil
Code
of
Lower
Canada.
On
February
8,
1985,
it
objected
to
the
notices
of
assessment
made
against
it
for
its
taxation
years
ending
in
1978,
1979,
1980
and
1981.
On
July
10,
1987,
it
also
objected
to
the
notices
of
assessment
made
against
it
for
its
taxation
years
ending
in
1982
and
1983.
The
grounds
set
out
in
the
notices
of
objection
related,
inter
alia,
to
the
refusal
of
the
Minister
of
National
Revenue
to
allow
a
deduction
for
inventory
relating
to
the
cheese
it
had
on
hand
on
the
first
day
of
each
of
its
taxation
years.
It
is
that
refusal
that
is
essentially
the
subject
of
these
proceedings.
The
relevant
provisions
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act”)
as
it
applies
to
this
case
are
as
follows:
20(1)
Notwithstanding
paragraphs
18(1)(a),
(b)
and
(h),
in
computing
a
taxpayer’s
income
for
a
taxation
year
from
a
business
or
property,
there
may
be
deducted
such
of
the
following
amounts
as
are
wholly
applicable
to
that
source
or
such
part
of
the
following
amounts
as
may
reasonably
be
regarded
as
applicable
thereto:
(gg)
an
amount
in
respect
of
any
business
carried
on
by
the
taxpayer
in
the
year,
equal
to
that
portion
of
three
per
cent
of
the
cost
amount
to
the
taxpayer,
at
the
commencement
of
the
year,
of
the
tangible
property
(other
than
real
property
or
an
interest
therein)
that
was
(i)
described
in
the
taxpayer’s
inventory
in
respect
of
the
business,
and
(ii)
held
by
him
for
sale
or
for
the
purpose
of
being
processed,
fabricated,
manufactured,
incorporated
into,
attached
to,
or
otherwise
converted
into
or
used
in
the
packaging
of,
property
for
sale
in
the
ordinary
course
of
the
business
that
the
number
of
days
in
the
year
is
of
365;
10(1)
For
the
purpose
of
computing
income
from
a
business,
the
property
described
in
an
inventory
shall
be
valued
at
its
cost
to
the
taxpayer
or
its
fair
market
value,
whichever
is
lower,
or
in
such
other
manner
as
may
be
permitted
by
regulation.
(2)
Notwithstanding
subsection
(1),
for
the
purpose
of
computing
income
for
a
taxation
year
from
a
business,
the
property
described
in
an
inventory
at
the
commencement
of
the
year
shall
be
valued
at
the
same
amount
as
the
amount
at
which
it
was
valued
at
the
end
of
the
immediately
preceding
year
for
the
purpose
of
computing
income
for
that
preceding
year.
248(1)
In
this
Act,
“cost
amount"
to
a
taxpayer
of
any
property
at
any
time
means,
except
as
expressly
otherwise
provided
in
this
Act,
(a)
where
the
property
was
depreciable
property
of
the
taxpayer
of
a
prescribed
class,
that
proportion
of
the
undepreciated
capital
cost
to
him
of
property
of
that
class
at
that
time
that
the
capital
cost
to
him
of
the
property
is
of
the
capital
cost
to
him
of
all
property
of
that
class,
(b)
where
the
property
was
capital
property
(other
than
depreciable
property)
of
the
taxpayer,
its
adjusted
cost
base
to
him
at
that
time,
(c)
where
the
property
was
property
described
in
an
inventory
of
the
taxpayer,
its
value
at
that
time
as
determined
for
the
purpose
of
computing
his
income,
(d)
where
the
property
was
eligible
capital
property
of
the
taxpayer
in
respect
of
a
business,
the
cumulative
eligible
capital
of
the
taxpayer
in
respect
of
the
business
at
that
time,
(e)
where
the
property
was
a
debt
owing
to
the
taxpayer
(other
than
a
debt
the
amount
of
which
was
deducted
under
paragraph
20(1
)(p)
in
computing
the
taxpayer’s
income
for
a
taxation
year
ending
before
that
time)
or
any
other
right
of
the
taxpayer
to
receive
an
amount,
the
amount
of
the
debt
or
other
right
that
was
outstanding
at
that
time,
and
(f)
in
any
other
case,
the
cost
to
the
taxpayer
of
the
property
as
determined
for
the
purpose
of
computing
his
income,
except
to
the
extent
that
such
cost
has
been
deducted
in
computing
his
income
for
any
taxation
year
ending
before
that
time;
"inventory"
means
a
description
of
property
the
cost
or
value
of
which
is
relevant
in
computing
a
taxpayer’s
income
from
a
business
for
a
taxation
year;
It
is
important
to
note
that
the
inventory
allowance
provided
for
in
paragraph
20(1
)(gg)
was
added
to
the
Income
Tax
Act
in
the
year
preceding
the
first
of
the
six
consecutive
taxation
years
in
issue.
As
Hugessen
J.A.
noted
in
Saskatchewan
Wheat
Pool
v.
The
Queen,
[1985]
1
C.T.C.
31,
85
D.T.C.
5034
(F.C.A.),
at
C.T.C.
page
391:
The
inventory
allowance
permitted
by
paragraph
20(1
)(gg)
was
introduced
into
the
Income
Tax
Act
in
1977.
Its
obvious
purpose
was
to
allow
some
relief
to
businesses
from
the
increased
tax
liability
due
to
"false"
profits
created
by
the
effect
of
high
inflation
on
year-end
inventories.
Later
in
his
reasons
for
judgment
at
page
C.T.C.
35
(W.W.R.
393),
Hugessen
J.A.
pointed
out
that
paragraph
20(1
)(gg)
provides
for
an
exception
to
the
general
rule
relating
to
computing
income
for
tax
purposes;
for
a
taxpayer
who
wishes
to
benefit
from
it,
this
implies
a
duty
to
clearly
establish
that
the
provision
in
question
applies
to
him:
Paragraph
20(1
)(gg)
provides
for
an
exception
from
the
general
rule
for
computing
income
for
the
purposes
of
taxation.
A
taxpayer
seeking
to
benefit
from
such
exception
must
bring
himself
clearly
within
the
language
of
the
legislation.
The
conditions
that
a
taxpayer
must
meet
in
order
to
benefit
from
the
inventory
allowance
provided
for
in
paragraph
20(1
)(gg)
of
the
Act
were
clearly
laid
down
by
my
colleague
Joyal
J.
in
Burrard
Yarrows
Corp.
v.
The
Queen,
[1986]
2
C.T.C.
313,
86
D.T.C.
6459
(F.C.T.D.),
at
page
316
(D.T.C.
6461);
aff’d
[1988]
2
C.T.C.
90,
88
D.T.C.
6352
(F.C.A.):
Before
a
taxpayer
is
eligible
to
claim
a
paragraph
20(1
)(gg)
inventory
allowance,
four
preconditions
must
be
met.
First,
the
allowance
must
be
claimed
on
the
cost
amount
of
the
property
in
question
at
the
beginning
of
each
taxation
year
in
question.
Next,
the
property
against
which
it
is
claimed
must
be
tangible
property
other
than
real
estate
or
an
interest
therein.
Thirdly,
it
must
be
established
that
the
property
was
described
in
the
taxpayer’s
inventory
in
respect
of
his
business,
and
finally,
that
it
was
held
for
sale
or
to
be
processed,
manufactured,
incorporated
into,
attached
to,
or
otherwise
converted
into
property
for
sale
in
the
ordinary
course
of
that
business.
Failure
to
establish
the
existence
of
any
one
of
these
elements
results
in
a
disentitlement
to
a
reserve
under
that
paragraph.
The
subsequent
decision
in
The
Queen
v.
Dresden
Farm
Equipment
Ltd.,
[1989]
1
C.T.C.
99,
89
D.T.C.
5019
(F.C.A.),
at
page
106
(D.T.C.
5023),
specified
that
a
taxpayer
who
wishes
to
benefit
from
this
inventory
allowance
must
be
the
owner
of
the
property
that
he
wishes
to
have
considered
as
part
of
that
inventory:
..there
can
be
no
doubt,
in
my
view,
that...for
the
paragraph
to
apply...the
taxpayer
must
have
a
property
interest
in
the
inventory
upon
which
he
seeks
the
allowance.
Accordingly,
in
my
view,
the
trial
judge
erred
in
holding,
as
he
seems
to
have
done,
that
ownership
or
property
in
the
inventory
in
issue
is
not
required
so
long
as
"it
be
part
of
the
taxpayer’s
stock-in-
trade".
It
is
obviously
because
of
these
last
comments
by
Urie
J.A.
of
the
Federal
Court
of
Appeal
that,
having
regard
to
the
circumstances
in
the
case
at
bar,
counsel
for
the
parties
acknowledged
that
the
answer
to
the
following
question
was
conclusive
in
resolving
the
issue
between
them:
In
law,
who
was
the
owner
of
the
cheese
that
the
plaintiff
wanted
to
be
considered
as
property
in
its
inventory,
and
against
whom
were
the
assessments
made
by
the
Minister
of
National
Revenue
for
the
taxation
years
in
issue?
[Translation.]
The
evidence
establishes
that
at
the
time
in
question
the
plaintiff
required
that
its
principal
customers,
the
wholesale
companies
J.M.
Schneider
Inc.,
Balderson
Cheese
Limited,
Koffman
Foods
Limited
and
Crescent
Cheese
Storage
of
Woodstock
Limited,
inform
it
of
the
quantities
of
cheese
that
they
intended
to
purchase
monthly
for
a
12-month
period.
Apparently,
this
enabled
the
plaintiff
to
procure
adequate
supplies
from
other
cooperatives
which
were
located
in
the
countryside,
and
which
manufactured
cheese.
It
was
these
written
agreements
between
the
plaintiff
and
each
of
these
wholesalers
which
governed
the
parties
in
this
respect,
having
regard
to
the
large
quantities
of
cheese
involved.
A
standard
form
agreement
relating
to
each
of
the
four
wholesalers
was
produced.
These
four
agreements
essentially
contain
the
same
clauses
and
therefore,
for
the
purposes
of
deciding
these
proceedings,
have
the
same
effects
in
terms
of
the
parties’
rights
and
obligations.
It
therefore
seems
to
me
to
be
appropriate
to
quote
the
entire
text
of
one
of
these
standard
form
agreements:
the
one
between
the
plaintiff
and
Balderson
Cheese
Limited,
the
only
wholesaler
for
which
a
representative
was
called
to
testify
at
trial:
Montreal,
February
12
Balderson
Cheese
Ltd.
Balderson,
Ontario
KOF
lAG
Attention
Mr.
Yves
Leroux
Dear
Sir:
In
accordance
with
our
telephone
conversation
with
you,
we,
Cooperative
Federee
de
Quebec
agree
to
sell
to
Balderson
Cheese
Limited
and
Balderson
Cheese
Limited
agree
to
purchase
the
following:
PRODUCT:
Canadian
cheddar
cheese
colored,
heat
treated
QUALITY:
Canada
first
grade
QUANTITY:
Approx.
1,000,000
pounds
to
be
manufactured
as
follows:
April
1980:
85,000
lbs.
May
1980:
95,000
Ibs.
June
1980:
95,000
lbs.
July
1980:
95,000
Ibs.
August
1980:
95,000
lbs.
Sept.
1980:
80,000
lbs.
Oct.
1980:
75,000
lbs.
Nov.
1980:
80,000
lbs.
Dec.
1980:
70,000
lbs.
Jan.
1981
75,000
lbs.
Feb.
1981:
75,000
lbs.
March
1981:
80,000
lbs.
CONDITIONS:
1.
Commencing
with
the
month
of
April
1980,
Cooperative
Federee
de
Quebec
shall
place
in
storage
at
Montreal
on
behalf
of
Balderson
Cheese
Limited
such
type
and
quantities
of
Canadian
cheddar
cheese
as
described
above.
2.
Cooperative
Federee
de
Quebec
shall
give
Balderson
Cheese
Limited
written
notice
of
the
amount
of
cheese,
the
base
market
price
plus
$0.035
at
the
time
of
grading
and
the
date
of
manufacturing
of
each
lot
placed
into
storage
hereunder
during
the
preceding
month.
3.
The
purchase
price
to
be
paid
by
Balderson
Cheese
Limited
for
the
cheese
shall
be
based
on
the
average
price
at
which
the
colored
or
white
cheese
shall
be
sold
at
the
Belleville
Auction
the
week
the
cheese
is
graded.
4.
The
carrying
charge
covering
storage,
interest
and
insurance
shall
commence
at
the
date
of
grading
and
shall
be
added
to
the
base
price
plus
$0.035
at
the
rate
of
$0.0235
per
pound
per
month
or
per
part
of
month.
5.
The
cheese
to
be
stored
and
delivered
hereunder
shall
be
Canada
first
grade
at
the
time
it
is
put
into
storage
and
shall
be
re-examined
for
Balderson
Cheese
Limited
protection
by
Cooperative
Federee’s
grader
after
five
months.
Should
a
representative
of
Balderson
Cheese
Limited
wish
to
attend
this
inspection,
Cooperative
Federee
will
advise
Balderson
Cheese
Limited
of
the
date
of
each
inspection.
6.
Any
cheese
stored
beyond
twelve
months
from
the
date
of
grading
shall
be
invoiced
to
Balderson
Cheese
Limited
and
all
storage
charges
shall
be
paid
by
Balderson
Cheese
Limited
from
then
on.
7.
Should
Cooperative
Federee
de
Quebec
not
be
in
a
position
to
place
into
storage
the
total
quantity
required
for
one
specific
month,
it
is
understood
that
the
Cooperative
Federee
will
give
additional
quantities
during
the
following
months
to
cover
shortage.
8.
Neither
party
shall
be
held
responsible
in
any
way
for
failure
to
perform
this
contract
on
its
part
caused
by
strikes,
accidents,
riots,
government
orders,
decreases
in
milk
quota,
damage
to
or
destruction
or
other
causes
beyond
the
control
of
such
party.
When
the
execution
is
delayed
for
such
a
cause,
the
other
party
may,
at
its
option,
cancel
the
contract
by
a
registered
mail
notice
to
the
other
party
or
delay
the
execution
of
the
contract
for
the
same
length
of
time.
9.
Payment
will
be
according
to
the
policies
of
the
Cooperative
Federee
de
Quebec.
10.
The
selling
price
will
be
FOB
Montreal.
11.
Our
order
no.
4003.
Trusting
this
will
be
to
your
entire
satisfaction
and
thanking
you
for
this
business,
we
remain,
Yours
very
truly,
Cooperative
Federee
de
Quebec
Fernand
Morin
Director
of
Marketing
Dairy
Products
Division
After
the
cheese,
which
is
a
heat
treated
type
of
cheese,
was
manufactured
by
the
cooperatives
in
the
countryside
and
before
it
was
delivered
to
the
wholesalers
in
question,
it
was
first
delivered
to
the
plaintiff
for
storage,
although
samples
were
retained
by
the
manufacturers
for
the
purposes
of
the
classification
that
had
to
be
done
by
Agriculture
Canada.
The
cheese
was
generally
classified
within
60
days
of
the
date
it
was
manufactured.
The
cheese
could
be
stored
either
at
the
plaintiff’s
premises
or
in
public
storage
facilities,
until
it
had
been
aged
for
the
desired
length
of
time.
Immediately
after
Agriculture
Canada
issued
the
certificate
attesting
to
the
quality
of
the
cheese
on
the
day
it
was
classified,
the
cooperatives
in
the
countryside
invoiced
the
plaintiff.
The
plaintiff
then
sent
each
of
its
wholesaler
customers
a
monthly
confirmation
in
writing
of
the
precise
quantity
of
cheese
that
had
been
manufactured,
retained,
classified
and
stored
on
the
wholesaler’s
behalf
during
the
preceding
month.
The
document
further
stated
the
base
market
price
of
the
cheese
at
the
time
it
was
classified,
the
date
each
lot
stored
was
manufactured
and
the
financing
charges
associated
therewith;
a
schedule
even
stated
specific
details
relating
to
the
number
of
each
vat,
the
number
of
boxes,
the
weight
of
each
and
the
classification
level.
Lastly,
the
document
stated
that
the
cheese
was
insured
by
the
plaintiff
against
loss
or
damage
by
fire
and
that
its
agreement
to
store
the
cheese
was
subject
to
terms
and
conditions,
including
any
additions
or
amendments
set
out
in
the
usual
sale
contract
between
the
storage
facility
and
the
wholesale
customer.
The
wholesaler
incurred
no
expense
upon
receipt
of
this
written
confirmation.
An
invoice
was
issued
to
it
by
the
plaintiff
only
when
the
cheese
was
delivered.
First,
the
plaintiff
contended
that
it
was
still
the
owner
of
the
cheese
until
it
was
delivered
to
the
wholesaler
in
Montreal,
when
an
invoice
was
issued
"as
proof
of
sale"
[translation].
The
defendant
argued,
on
the
other
hand,
that
when
the
plaintiff
delivered
the
written
monthly
confirmation
document
to
the
wholesaler
this
caused
the
immediate
transfer
of
the
ownership
of
the
cheese
described
therein
to
that
wholesaler.
We
would
note
that
if
the
second
argument
is
accepted,
given
that
the
quantities
of
cheese
and
amounts
of
money
in
issue
are
not
otherwise
in
dispute,
the
plaintiff
then
acknowledges
that
the
Minister’s
assessments
which
are
the
subject
of
these
proceedings
are
valid.
On
the
other
hand,
if
the
first
argument
is
accepted,
the
plaintiff’s
actions
must
succeed.
As
the
parties
also
acknowledge,
given
that
all
the
relevant
facts
in
this
case
arose
in
Quebec,
the
nature
and
effects
of
the
real
contract
between
the
plaintiff
and
the
wholesaler
must
be
determined
having
regard
to
the
Civil
Code
of
Lower
Canada,
and
not
the
new
Civil
Code
of
Québec,
since
this
case
had
already
been
commenced
when
the
new
Civil
Code
of
Québec
came
into
force
(section
9
of
the
Act
respecting
the
implementation
of
the
reform
of
the
Civil
Code).
Thus,
by
its
own
terms,
the
initial
written
agreement
between
the
plain-
tiff
and
its
wholesaler
is
clearly
a
sale.
In
the
standard
form
agreement
reproduced
supra,
the
plaintiff
clearly
states
that
"we
agree
to
sell"
to
its
wholesaler,
which
"agree
to
purchase
[sic]",
cheese
("Canadian
cheddar
cheese
colored,
heat
treated"),
at
the
price
set
out
in
clauses
3
and
4.
Given
that
the
consent
of
the
parties
to
the
agreement
and
their
legal
capacity
to
contract
were
not
disputed,
it
therefore
appears
that
the
other
elements
that
are
essential
to
the
formation
of
the
contract
of
sale—object
and
price—are
present.
On
this
point,
Michel
Pourcelet
wrote
in
his
book
La
Vente
(5th
edition,
Montréal,
Les
Éditions
Thémis
Inc.),
at
page
5:
Sale
is
subject
to
the
conditions
set
out
in
articles
984
et
seq.
of
the
Civil
Code
relating
to
the
validity
of
agreements:
the
consent
of
the
parties,
the
legal
capacity
to
contract,
the
object
and
lawful
cause
or
consideration.
Article
1472
reiterates
the
requirement
that
these
conditions
be
met:
Sale
is
a
contract
by
which
one
party
gives
a
thing
to
the
other
for
a
price
in
money
which
the
latter
obliges
himself
to
pay
for
it....
Article
1482
provides:
The
capacity
to
buy
or
sell
is
governed
by
the
general
rules,
relating
to
the
capacity
to
contract,
contained
in
chapter
first,
of
the
title
Of
Obligations.
There
are
therefore
four
elements
that
are
essential
to
the
formation
of
a
contract
of
sale:
if
one
of
the
first
three
elements
is
missing
(consent,
object,
price),
the
contract
of
sale
cannot
be
formed.
As
well,
if
one
of
the
contractors
lacks
capacity,
annulment
of
the
contract
entered
into
may
be
sought.
[Translation.]
The
fact
that
the
object
of
the
sale
entered
into
was
cheese
that
was
not
yet
manufactured
and
that
the
sale
therefore
had
as
its
object
a
future
thing
cannot
vitiate
the
contract;
the
sole
effect
of
this
is
to
delay
transfer
of
ownership
of
the
cheese
until
it
is
individualized,
as
Pourcelet
wrote
in
the
book
referred
to,
supra,
at
page
89:
(B)
The
sale
of
future
things
Article
1061,
para.
1
of
the
Civil
Code
lays
down
the
principle
that
"future
things
may
be
the
object
of
an
obligation".
Accordingly,
a
contract
of
sale
may
have
as
its
object
a
thing
that
does
not
yet
exist
but
that
will
exist
in
the
future.
It
may
be
a
contract
for
the
sale
of
natural
fruits
(crops
to
be
harvested
in
future),
for
a
thing
yet
to
be
fabricated
(a
ship,
piece
of
furniture,
house,
apartment)
or
for
a
work
of
art
(painting)
yet
to
be
created.
The
fact
that
the
thing
does
not
exist
at
the
time
the
contract
is
made
makes
it
impossible
to
transfer
ownership:
the
buyer
cannot
be
the
owner
on
the
day
the
contract
is
made
since
the
thing
does
not
exist.
Ownership
will
be
transferred
only
on
the
day
when
the
thing
is
individualized,
or
has
identity.
[Translation.]
We
also
know
that
it
is
not
necessary
for
the
price
to
be
definitely
determined
in
order
for
a
contract
of
sale
to
be
formed;
it
is
sufficient
if,
as
here,
it
is
capable
of
being
determined.
This
is
confirmed
by
Pourcelet,
again,
in
La
Vente,
supra,
at
page
80:
Section
1.
Determination
of
price
Price
may
be
determined
by
the
parties
themselves
or
may
be
fixed
by
a
third
party
(an
expert),
inter
alia
when
the
parties
do
not
agree
as
to
the
amount
of
the
transaction.
It
is
not
necessary
for
the
price
to
be
definitely
determined
in
order
for
the
contract
to
be
formed.
It
is
sufficient
for
it
to
be
capable
of
being
determined.
A
price
which
is
of
the
essence
of
the
contract
of
sale
must
be
a
certain
and
determined
price.
It
is
not
necessary
that
it
be
absolutely
determined;
it
is
sufficient
that
it
be
such
that
it
must
become
determined.
Thus
it
is
not
important
that
the
price
be
expressly
determined
in
the
offer,
but
there
must
be
elements
in
the
offer
that
make
it
possible
to
establish
the
price
subsequently.
[Translation.]
Since,
in
addition,
this
sale
refers
to
a
particular
sort
of
cheese,
with
a
specified
quality,
and
to
be
manufactured
in
precise
monthly
quantities
for
twelve
months
to
come,
I
am
of
the
opinion
that
it
is
apparent
that
we
have
here
a
sale
of
non-individualized
goods,
of
the
"by
weight,
number
or
measure"
type
contemplated
in
article
1474
of
the
Civil
Code
of
Lower
Canada:
Art.
1474.
When
things
moveable
are
sold
by
weight,
number
or
measure,
and
not
in
the
lump,
the
sale
is
not
perfect
until
they
have
been
weighed,
counted
or
measured;
but
the
buyer
may
demand
the
delivery
of
them
or
damages
according
to
circumstances.
As
an
exception
to
Article
1472
of
the
Civil
Code
of
Lower
Canada,
which
provides
that
the
sale
is
perfected
by
the
consent
alone
of
the
parties,
although
the
thing
sold
be
not
then
delivered,
Article
1474
delays
the
transfer
of
ownership
of
the
goods
sold
until
the
time
when
they
are
individualized
by
being
weighed,
counted
or
measured.
On
this
point,
Pourcelet
wrote,
at
page
87
of
his
book,
supra:
1.
Sales
by
weight,
number
and
measure
Ownership
may
apply
only
to
an
individualized
thing.
A
thing
is
said
to
be
individualized
when
it
is
identified.
This
is
the
Roman
species,
that
is,
the
set
of
traits
that
characterize
an
object
and
make
it
recognizable.
Ownership
is
transferred
only
at
the
time
when
the
thing
is
determinate,
that
is,
when
it
becomes
an
ascertained
object.
The
terms
of
Article
1026
are
absolute,
and
buttress
the
effect
of
Article
1474:
If
the
thing
to
be
delivered
be
uncertain
or
indeterminate,
the
creditor
does
not
become
the
owner
of
it
until
it
is
made
certain
and
determinate,
and
he
has
been
legally
notified
that
it
is
so.
In
a
sale
by
weight,
number
or
measure,
individualization
is
effected
by
weighing,
counting
or
measuring,
which
must
be
done
in
accordance
with
the
intention
expressed
by
the
parties....
The
essential
effect
of
individualization
by
the
procedures
referred
to
above
is
to
transfer
ownership
to
the
buyer
immediately.
[Translation.]
In
his
book
Les
obligations
(Cowansville,
Les
Éditions
Yvon
Blais
Inc.),
Jean-Louis
Baudoin
stated
the
same
opinion,
at
page
280:
(b)
Sale
of
a
thing
belonging
to
a
class
486.
Non-individualized
object
Since
ownership
passes
by
simple
consent,
the
intention
of
the
parties
must
relate
to
a
precise
object.
The
physical
object
of
the
obligation
to
deliver
must
therefore
have
been
individualized,
that
is,
identified
precisely.
The
sale
of
a
thing
belonging
to
a
class,
which
is
more
accurately
called
a
sale
by
weight,
number
or
measure,
is
a
sale
in
which
weighing,
counting
or
measuring
is
necessary
not
to
determine
the
price,
but
to
identify
the
actual
object
of
the
obligation
to
deliver....
In
a
sale
by
weight,
number
or
measure,
ownership
is
therefore
transferred
only
when
the
object
sold
is
individualized
and
identified
and
the
buyer
is
so
notified.
[Translation.]
Not
only
do
the
other
clauses,
terms
and
conditions
and
details
included
in
the
initial
written
agreement
and
the
confirming
document
not
operate
to
alter
the
specific
nature
of
the
contract
of
sale,
but
on
the
contrary,
they
provide
confirmation
of
that
fact,
on
the
whole.
On
this
point,
we
need
only
refer
to
clauses
1,
5
and
6
of
the
standard
form
agreement
reproduced,
supra:
clause
1
provides
that
the
cheese
must
be
stored
"on
behalf
of
Balderson
Cheese
Limited",
the
wholesaler;
clause
5
provides
for
additional
examinations
of
the
quality
of
the
cheese
while
it
is
in
storage,
for
the
wholesaler’s
benefit;
and
clause
6
provides
that
after
the
cheese
has
been
stored
for
12
months
the
wholesaler
is
required
to
pay
the
sale
price,
including
storage
charges,
and
shall
pay
all
storage
charges
from
then
on.
It
is
quite
clear,
on
the
facts
as
a
whole,
that
once
the
monthly
written
confirmation
was
delivered,
the
plaintiff
no
longer
had
the
attributes
which
are
exclusively
attached
to
ownership
of
the
cheese
described
therein,
such
as
the
right
to
use
the
property
as
it
wished
and
for
its
own
personal
advantage,
and
consume,
destroy
or
dispose
of
it
(see
Saskatchewan
Wheat
Pool,
supra,
at
page
36).
In
the
circumstances,
therefore,
I
am
satisfied
that
in
each
case,
the
delivery
of
the
written
monthly
confirmation
by
the
plaintiff
to
its
wholesaler
relating
to
their
prior
written
agreement
operated
to
confirm
the
individualization
of
part
of
the
cheese
that
was
the
object
of
the
sale
made
under
that
agreement
and
to
bring
about
the
immediate
transfer
of
ownership
of
the
cheese
thus
individualized
to
the
wholesaler.
The
testimony
offered
by
the
plaintiff,
which
was
that
in
some
cases,
inter
alia
that
of
Balderson
Cheese
Limited,
it
sometimes
permitted
the
wholesaler
not
to
take
delivery
of
the
total
quantity
of
cheese
stored
for
it
under
their
written
agreement,
without
any
obligation
or
penalty,
changes
nothing
in
respect
of
the
ownership
of
the
cheese
in
question.
First,
the
evidence
on
that
point
was
extremely
vague;
it
did
not
refer
to
any
precise
case,
involving
any
particular
quantity
of
cheese
for
any
specific
period
of
time.
In
addition,
this
sort
of
occasional
waiver
of
its
rights
by
the
plaintiff
certainly
did
not
operate
generally
to
change
the
nature
of
the
rights
and
obligations
clearly
resulting
from
the
terms
of
the
original
written
agreement
between
the
plaintiff
and
its
wholesaler,
and
from
the
monthly
written
confirmations
relating
thereto.
In
my
view,
the
probative
effect
of
written
agreements
made
by
businesspeople
worthy
of
the
name
must
prevail.
Lastly,
the
plaintiff’s
alternative
argument,
based
on
section
B.08.044.
of
the
Food
and
Drug
Regulations,
which
was
that
no
person
may
sell
any
cheese
that
is
not
made
from
a
pasteurized
source,
unless
the
cheese
has
been
stored,
must
be
rejected.
If,
by
reason
of
that
provision,
the
cheese
in
question
had
to
be
considered
to
be
something
that
was
not
an
object
of
commerce
and
that
could
therefore
not,
under
Article
1059
of
the
Civil
Code
of
Lower
Canada,
be
the
object
of
a
sale
or
become
the
property
of
the
wholesalers,
then
nor
could
it
be
the
object
of
a
sale
by
the
manufacturers
to
the
plaintiff,
or
be
part
of
the
plaintiff’s
inventory
within
the
meaning
of
the
Income
Tax
Act.
In
any
event,
the
facts
in
evidence
in
this
case
would
justify
applying
the
exception
set
out
in
section
B.08.045.
of
the
Food
and
Drug
Regulations,
the
relevant
provisions
of
which
are
as
follows:
B.08.045.
Notwithstanding
B.08.044,
cheese
that
has
not
been
manufactured
from
a
pasteurized
source
and
has
not
been
stored
but
is
marked
or
branded
with
the
date
of
the
beginning
of
the
manufacturing
process,
may
be
sold
to
(a)
a
wholesaler;
For
all
these
reasons,
I
must
conclude
that
the
plaintiff
was
not
the
owner
of
the
cheese
which
it
sought
to
have
considered
as
part
of
its
inventory,
and
which
is
the
subject
of
the
Minister’s
assessments
in
issue.
Accordingly,
both
of
the
plaintiff’s
actions
must
be
dismissed
with
costs.
Actions
dismissed
with
costs.
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