Chevalier D.J.:
1 These are appeals from two judgments, the first by Pinard J. (file no. A-464-93) in The Queen v. Mercantile Bank of Canada et al.,and the second by Nation J. (file no. A-607-94) in Minister of National Revenue v. National Bank of Canada,which were heard jointly on appeal.
The Facts
2 By supplementary letters patent, the National Bank of Canada and the Mercantile Bank of Canada were incorporated as a single corporation under the corporate name National Bank of Canada.
3 They granted a line of credit to Admiral Corporation Ltd. (Admiral), a manufacturer which held a licence issued under the Excise Tax Act,subparagraph 27(1)(a)(i) of which requires a manufacturer of this sort to pay sales tax to the appellant on the price of all goods delivered to a purchaser.
4 To guarantee repayment of the advances made, Admiral gave security under section 178 of the Bank Act (formerly section 88 and now section 427).
5 When the debtor defaulted on the payment of its debt ($40,000,000), the banks decided to realize on their security and instructed their agent to take possession of all the goods covered by the security, consisting of raw materials, inventories of finished products and accounts receivable.
6 At the same time, pursuant to subsection 52(10) of the Excise Tax Act, the Minister of National Revenue claimed $302,009.17 from the National Bank of Canada, an amount equivalent to the sales tax he claimed was payable in respect of the goods sold and delivered by the two banks after they took possession of the goods that comprised the security given to them.
7 Ultimately, Admiral declared bankruptcy and the Minister filed his claim with the trustee.
8 In the case at bar, an action has been brought against the banks for failing to respond to the demand made by the Minister for payment of his claim.
9 The facts in the preceding case are the same as in this instance, except that the National Bank of Canada was the only lending institution, the amount owed by the borrower King Seagrave (1982) Inc. was different ($995,433) and the Minister's claim was $113,506.70.
The Judgments a quo
10 Pinard J. dismissed the appellant's application. He did not state his reasons, and simply referred the parties to a judgment in another case, Canada v. National Bank of Canada.It should be noted that in so doing he failed to address the real problem, which in fact was not identical to that in Canada v. National Bank of Canada, as that case did not involve section 178 of the Bank Act.
11 Nadon J. showed the application. He treated the claim as if it were for federal sales tax. He also concluded that subsection 52(10) of the Excise Tax Act was applicable to the security held by the bank under the Bank Act.
Analysis
12 It is my view that the appeal in file no. A-464-93 should be dismissed but that the appeal in file no. A-607-94 should be allowed.
13 In both of the instant cases, the real problem that arose was whether, having regard to the specific nature of the security given by the borrowers to the lending institutions, subsection 52(10) of the Excise Tax Act could apply to allow the Minister to claim excise tax from the banks in question.
14 The parties filed identical statements of claim on one specific point. The security given by the borrowers was given in the form and substance prescribed by (then) section 178 of the Bank Act.
15 The relevant portion of that section reads as follows:
178. (1) A bank may lend money and make advances,(b) to any person engaged in business as a manufacturer, on the security of goods, wares and merchandise manufactured or produced by him or procured for such manufacture or production and of goods, wares and merchandise used in or procured for the packing of goods, wares and merchandise so manufactured or produced,
(2) Delivery of a document giving security on property to a bank under the authority of this section vests in the bank in respect of the property therein described(a) of which the person giving security is the owner at the time of the delivery of the document, or
(b) of which that person becomes the owner at any time thereafter before the release of the security by the bank, whether or not the property is in existence at the time of the delivery,
(c) if the property is properly on which security is given under paragraph 1(a), (b), (e), (f) or (i), .... the same rights and powers as if the bank had acquired a warehouse receipt or bill of lading in which such property was described. ...
16 Subsection 179(1) of that Act is also relevant:
179. (1) All the rights and powers of a bank in respect of the property mentioned in or covered by a warehouse receipt or bill of lading acquired and held by the bank, and the rights and powers of the bank in respect of the property covered by a security given to the bank under section 178 that are the same as if the bank had acquired a warehouse receipt or bill of lading in which such property was described, have, subject to subsection 178(4) and subsections (3) to (6) of this section, priority over all rights subsequently acquired in, on or in respect of such property, and also over say claim of any unpaid vendor.
17 The reference in the above provision to the expressions “bill of lading” and “warehouse receipt” should be noted. Both are defined in the Act (s. 2):
“bill of lading” includes all receipts for goods, wares and merchandise accompanied by an undertaking(a) to move the goods, wares and merchandise from the place where they were received to some other place, by any means whatever, or
(b) to deliver at a place other than the place where the goods, wares and merchandise were received a like quantity of goods, wares and merchandise of the same or a similar grade or kind.
“warehouse receipt” includes
18 Lastly, the rights and remedies granted to a bank and deriving from such security are set out in subsections 179(7) and (14):
179....
(7) In the event of non-payment of any debt, liability, loan or advance, as security for the payment of which a bank has acquired and holds a warehouse receipt or bill of lading or has taken any security under section 178, the bank may sell all or any part of the property mentioned therein or covered thereby and apply the proceeds against such debt, liability, loan or advance, with interest and expenses, returning the surplus, if any, to the person by whom such security was given.
(14) A bank may assign to any person all or any of its rights and powers in respect of any property on which security has been given to it under paragraph 178(1)(f), (g), (h), (i) or (j), whereupon such person has all or any of the assigned rights and powers of the bank under such security.
19 As for the provisions of the Excise Tax Act that are relevant to these proceedings, subsection 27(1) thereof starts by saying that the tax in question is a consumption or sales tax on the sale price of all goods:
(a) produced or manufactured in Canada
20 Subsection 52(10) of this Act then provides:
52. (10) When the Minister has knowledge that any person has received from a licensee any assignment of any book debt or of any negotiable instrument of title to any such debt, he may, by registered letter, demand that such person pay over to the Receiver General out of any moneys received by him on account of such debt after the receipt of such notice, a sum equivalent to the amount of any tax imposed by this Act upon the transaction giving rise to the debt assigned.
21 There is conclusive case law as to the precise nature of the rights conferred by section 178, supra.
22 First, it tells us that the effect of a lien created by this provision must be determined solely by applying the Bank Act.
23 Second, it says that this right is a sui generis property right.The legal title is as complete as the borrower's title in the property that is the subject of the security, whether the property exists at the time the security was given or comes into the borrower's possession at a later date.
24 In the event that the borrower fails to pay the debt, the bank has the absolute right to sell the property that is the subject of the security, find the moneys it obtains upon the sale belong to the bank as against any other creditor of the borrower. This is what La Forest J. held in Bank of Montreal v. Hall when he referred with approval to the opinion of Muldoon J. in Canadian Imperial Bank of Commerce v. R.:
In the interpretation of the Bank Act security enunciated by the Supreme Court of Canada and latterly by Grant D.J., one can appreciate the great commercial utility and overriding importance which is inherent in Parliament's creation of that security. The bank obtains and may assert its rights to the goods and their proceeds against the world, except as only Parliament itself may reduce or modify those rights. [Emphasis added]
25 As can be seen supra, subsection 52(10) of the Excise Tax Act allows the Minister to claim the tax from “any person [who] has received from a licensee any assignment of any book debt or of any negotiable instrument of title to any such debt”. (Emphasis added.)
26 It seems clear that there is no relationship between the book debt to which this provision refers and the bill of lading or warehouse receipt to which sections 178 and 179 of the Bank Act apply. It seems to me to be an unassailable fact that, as a logical consequence, Minister may not exercise his remedy against either the bank or the trustee where the debtor has declared bankruptcy, any more than he can where the debtor is solvent, otherwise than under paragraph 107(1)(j):
Subject to the rights of secured creditors, the proceeds realized from the property of a bankrupt shall be applied in priority ... as follows:
(j) claims of the Crown not previously mentioned in this section, in right of Canada or of any province, ... notwithstanding any statutory preference to the contrary.
27 On this point, Judson J. stated the following in Flintoft Western Millwork Ltd. v. The Royal Bank of Canada:
Section 88 is a unique form of security. I know of no other jurisdiction where it exists. It permits certain classes of persons not of a custodier [ sic] character, in this case a manufacturer, to give security on their own goods with the consequences above defined. Notwithstanding this, with the consent of the bank, the one who gives the security sells in the ordinary course of business and gives a good title to purchasers from him. But this does not mean that he owns the book debts when he has sold the goods. To me the fallacy in the dissenting reasons is the assumption that there is ownership of the book debts in the bank's customer once the goods have been sold and that the bank can only recover these book debts if it is the assignee of them.
We are not concerned here with the rights of a purchaser for value without notice of the proceeds of the sale of the bank's security. It is true that s. 63 of the Bankruptcy Act avoids in favour of the trustee the assignment of book debts held by the bank because of defective registration. Subject to this, the trustee has no higher rights than the bankrupt and he takes the property of the bankrupt merely as a successor in interest and not as an innocent purchaser for value without notice. He takes the property of the bankrupt subject to the express trust created by the agreement noted above, which, in my opinion, cannot be characterized as an assignment of books debts in another form. When these debts, the proceeds of the sale of the s. 88 security, come into existence they are subject to the agreement between bank and customer. As between these two the customer has nothing to assign to the bank. The actual assignment of book debts which was signed does no more than facilitate collection. Any other assignment, whether general or specific, of these debts by the customer to a third party would fail unless the third party was an innocent purchaser for value without notice.
28 In short, a clear distinction must be drawn between the security that results from an assignment of debts and the security defined in section 178. The first falls within provincial jurisdiction over property and civil rights, while the second is exclusively the creature of a federal statute, the Bank Act. It is the Bank Act that must be considered in order to determine the rights of the parties, and it seems clear to me that in order to claim what is owing to him, the Minister will have to look elsewhere to find what remedy may be available to him.
29 In light of this conclusion, I do not believe it would be useful to discuss the other arguments presented by the parties involved in each of the instant appeals.
30 For these reasons, it is my view that the appeal in file no. A-607-94 should be allowed and that the respondent's application should be dismissed with costs in both courts.
31 In file no. A-464-93, the appeal should be dismissed with costs and judgment at trial affirmed.
Décary J.A.:
33 With respect, I cannot concur in the reasons of my colleague Chevalier D.J., who chose to write reasons in respect of file no. A-444-93 and A-445-93 (decisions of Rothstein J.) and separate reasons in respect of file nos. A-464-93 (decision of Pinard J.) and A-607-94 (decision of Nadon J.). My preference is to write reasons that will apply to the four cases in issue, which I shall place on the record in each one.
34 The National Bank of Canada (“the Bank”) has presented two main arguments.
35 In file nos. A-464-93 (Canadian Admiral Corporation Ltd. (“Admiral”)) and A-607-94 (King Seagrave (1982) Inc. (“King Seagrave”)), in which the Bank held security under section 178 of the Bank Act upon the property of those of its debtors covered by that section, the Bank contends that subsection 52(10) of the Excise Tax Act does not apply since the security given under the Bank Act is not “any assignment of any book debt” within the meaning of that subsection.
36 In the Admiral case, and in file nos. A-444-93 (IHEC Ltd. (“IHEC”)) and A-445-93 (Trush Incorporated (“Trush”)), the Bank contends that when the three debtors in question became bankrupt subsection 52(10) of the Excise Tax Act ceased to have any application.
37 I am of the opinion that the Bank is trying to import concepts into these cases that are associated with the Bank Act and the Bankruptcy Act which are not relevant in these circumstances. In so doing, the Bank has complicated and distorted an issue which seems to be to be really quite simple.
38 I shall first reproduce the text of subsections 52(10) and (11) and subsection 52(1.4) of the Excise Tax Act, on the basis of which, in my opinion, this matter may be disposed of:
Procedure
52.[...]
(10) When the Minister has knowledge that any person has received from a licensee any assignment of any book debt or of any negotiable instrument of title to any such debt, he may, by registered letter, demand that such person pay over to the Receiver General out of any moneys received by him on account of such debt after the receipt of such notice, a sum equivalent to the amount of any tax imposed by this Act upon the transaction giving rise to the debt assigned.
(11) The person receiving any such demand shall pay the Receiver General according to the tenor thereof, and in default of payment is liable to the penalties provided in this Act for failure or neglect to pay the taxes imposed by Parts III to V.
(1.4) All taxes or sums payable under this Act are debts due to Her Majesty and are recoverable as such in the Federal Court or in any other court of competent jurisdiction.
Procédure
52.[...]
(10) Lorsque le Ministre sait qu'une personne a reçu d'un titulaire de licence la cession d'une dette active ou de tout titre négociable de propriété à pareille dette, il peut, par lettre recommandée, exiger que cette personne verse au receveur général, à même les deniers qu'elle a reçus à compte de cette dette, après réception de cet avis, une somme équivalente au montant de toute taxe imposée par la présente loi sur l'opération dommant lieu à la dette cédée.
(11) La personne qui reçoit cette sommation doit verser au receveur général la somme mentionnée dans la sommation, et, à défaut de paiement, elle est passible des peines prévues dans la présente loi pour omission ou négligence concernant le paiement des taxes imposées par les Parties III à V.
(1.4) Toutes taxes ou sommes exigibles sous le régime de la présente loi sont des créances de Sa Majesté et sont recouvrables comme telles devant la Cour fédérale ou devant tout autre tribunal compétent.
39 The text of subsection 52(10) is clear: once there has been any assignment of any book debt by the manufacturer to the Bank, once the notice has been given to the Bank by the Minister, once the transaction that resulted in the assigned debt has been completed, and once the moneys “on account of” the assigned debt have been received by the Bank, the Bank becomes indebted to the Minister for “a sum equivalent to the amount of any tax imposed by this Act”. Accordingly, the Bank then has an independent fiscal debt, and is indebted not for the tax per se, but for a sum equivalent to the tax. In short, once the proceeds of the sale, including the amount payable as excise tax, have become part of the Bank's assets, the Minister may demand that the Bank itself pay a sum equivalent to the amount of the tax that the manufacturer has not paid.
40 If the Bank's argument were to be sound, requirements would have to be read into the text of subsection 52(10) that are quite simply not there.
I. The argument relating to the security given under section 178 of the Bank Act
41 In the Admiral case, the Bank had been granted a general assignment of book debts on August 21, 1981. On November 5, 1981, the Minister served the notice required under subsection 52(10) of the Excise Tax Act. On November 4, 1985, the Minister commenced recovery proceedings; the text of paragraphs 5, 6, 7 and 8 of that claim is set out below:
5. A General Assignment of Book debts was executed between the Defendant, the National Bank, and Canadian Admiral on the 21st day of August, 1981.
6. On or about the 5th day of November, 1981, the Minister of National Revenue, pursuant to the provisions of the Act, served on the Defendant Banks demands for payment of moneys received by the Defendant Banks subsequent to the service of the said demands equivalent to the amount of tax imposed by the Act upon the transactions giving rise to the debts assigned by Canadian Admiral to the Defendant Banks pursuant to the General Assignments of Book Debts referred to in paragraphs 4 and 5 hereof.
7. After service of the demands referred to in paragraph 6 hereof, the Defendant Banks collected various amounts pursuant to the General Assignments of Book Debts, of which amounts the sum of $302,009.17 was a sum equivalent to the sales tax payable upon the transactions giving rise to the debt assigned by Canadian Admiral and which sum the Defendant Banks did not remit to the Plaintiff.
8. Despite the subsequent demands for the unremitted sum, as set out in paragraph 7 thereof, the Defendant Banks have refused or neglected to remit the sum of $302,009.17 or any part thereof to the Plaintiff. [A.R. A-464-93, Appendix I, at pp. 2–3]
42 At paragraphs 3 and 6 of the defence it filed on April 18, 1986, the Bank made the following admissions:
[TRANSLATION]
3. They admit paragraphs 4 and 5 of the statement of claim, subject to what is hereinafter pleaded;
4. They admit paragraph 6 of the statement of claim;
5. They admit, in paragraph 7 of the statement of claim, that if the position taken by the plaintiff is sound in law and if the rights she claims to have take priority over the rights of the defendants, $302,009.71 is the correct amount, and they deny the rest of that paragraph;
6. They admit paragraph 8 of the statement of claim and they add that it is their position that they owe nothing to the plaintiff; [A.R. A-464-93, Appendix I, at pp. 6–7]
43 Accordingly, the Bank has acknowledged that a book debt was assigned and that the assignment is the reason why the Minister proceeded under subsection 52(10) of the Excise Tax Act. The fact that, apart from that assignment, security was given, and possession then taken under section 178 of the Bank Act, in no way changes the basic element demanded by subsection 52(10), that on November 5, 1981, there was in fact an assignment within the meaning of that subsection. I fail to see how the fact that the Bank had obtained the additional security that the Bank Act allowed it to obtain could vitiate the fact that it had also obtained an assignment. If the Bank had obtained only the security provided for in the BankAct, it could likely have argued, although I make no finding on this point, that that security is not an assignment such as is contemplated by subsection 52(10). Since the Bank obtained both an assignment and security, I fail to understand how it could argue that there was no assignment simply because there was also security.
44 That would mean adding a requirement to the provision that it does not contain, which would exclude any bank that obtained security from its debtor under section 178 of the Bank Act, in addition to obtaining the traditional general assignment of book debts, from the operation of subsection 52(10). In my opinion, that would amount to imputing to Parliament a profound misapprehension of commercial reality, and giving banks special status which is not consistent with Parliament's stated intention, which Rothstein J. described as follows, at page 227:
In the notes of argument supplied by counsel for the Bank, and excerpt from the House of Commons Debates of June 2, 1936, at page 3344 was provided. This appears to have been the time at which subsection 52(10) was first enacted. The Honourable J.T. Ilsley stated:Mr. ILSLEY: This is an administrative change. This section is designed to make it incumbent upon persons who receive assignments of book debts or trade papers, which include sales tax, to pay the amount of such tax to the public revenues. In the past there has been no authority in the act to collect the tax in such cases, and if the taxpayer were in a precarious financial position or about to go into liquidation the amounts represented by the tax were collected by the person holding the collateral for his own account, and became a non-collectable account as far as the public revenues were concerned.
Mr. FACTOR: Does this include banks as well?
Mr. ILSLEY: Yes.
45 I further note that Rothstein J. himself stated the opinion, again at page 227:
... that in the absence of a bankruptcy, I see no reason why subsection 52(10) of the Excise Tax Act should not have the effect argued for by counsel for the Minister. [Emphasis mine]
He concluded, at page 228:... that the words of subsection 52(10) are clear and unambiguous and are effective in carrying out their stated purpose, except in the case of bankruptcy. [Emphasis mine]
46 The King Seagrave case contains allegations and admissions that are analogous to those found in the Admiral case, the difference being that the Bank stated that it had no knowledge of the allegation that the Bank received $15,024.81 pursuant to subsection 52(10). Since then, the amount in question has risen to $27,662.00 and at the hearing, counsel for the Bank did not pursue the objections he had raised in his factum with respect to the origins and accuracy of that figure.
47 I therefore conclude that in both the Admiral case and the King Seagrave case the first requirement for subsection 52(10) of the Excise Tax Act to apply, namely that there have been an assignment of a book debt, has been met.
48 Moreover, in The Queen v. Canadian Imperial Bank of Commerce,this Court held that the debtor may not assign sums equivalent to the amount of the excise tax to its creditor for the simple reason that those sums do not belong to the debtor. Accordingly, the Bank may not set up its security against the Minister since the security does not extend to the sums in issue. On this point, I adopt the following comments by Nadon J. in King Seagrave:
I must frankly confess that I see no substance in any of the arguments put forward by the bank. The bank, pursuant to an assignment of book debts and to security held under s. 178 of the Bank Act, collected from customers of its defaulting client payment of accounts which were outstanding on December 18, 1984. A portion of these accounts represented the applicable F.S.T. upon the sale of the goods. The bank collected monies which never belonged to its client. As Mr. Justice Muldoon stated in the Canadian Imperial Bank of Commerce case, supra, at page 450 thereof:
..., but they (the bank's defaulting customers) could not give or assign to the bank this specific tax on the sale price of their goods. The amount of that tax was, once identified, not yet paid, and demanded — and it is still — not theirs to give.
Since the tax claimed by the Minister under s. 52(10) of the Act never belonged to Seagrave, the bank did not and could not obtain an assignment of this tax pursuant to the general assignment of book debts. Furthermore, to repeat myself, as the tax did not belong to Seagrave, the amount of the tax could not be the property of the bank as provided for in section 5 of the Agreement. Whichever way one looks at the problem, the Bank is not entitled to the amount of the tax when, as in the present instance, the Minister has diligently exercised his statutory right under s. 52(10) of the Act.
Were I to give s. 52(10) of the Act the interpretation which the Defendant proposed, I certainly would not be giving effect to the clear intention of Parliament. ... [Emphasis mine]
II. The argument concerning the bankruptcy
49 In the HEC, Trush and Admiral cases, the debtors in question all declared bankruptcy. The Bank's argument comes down to this: when a bankruptcy occurs, the debts assigned are considered to form part of the property of the bankrupt and the provisions of the Bankruptcy Act apply, including, inter alia, those provisions (section 107) relating to the scheme of distribution of the proceeds realized from the property of a bankrupt. Accordingly, the Minister's claim has the priority assigned to it by paragraph 107(1)(j):
Scheme of Distribution
107. (1) Subject to the rights of secured creditors, the proceeds realized from the property of a bankrupt shall be applied in priority of payment as follows:(h) all indebtedness of the bankrupt under any Workmen's Compensation Act, under any Unemployment Insurance Act, under any provision of the Income Tax Act or the Income War Tax Act creating an obligation to pay to Her Majesty amounts that have been deducted or withheld, pari passu;
(j) claims of the Crown not previously mentioned in this section, in right of Canada or of any province, pari passu notwithstanding any statutory preference to the contrary.
Plan de répartition
107. (1) Sous réserve des droits des créauciers garantis, les montants réalisés provenant des biens d'un failli doivent être distribués d'après l'ordre de priorité de paiement suivant:h) toutes dettes contractées par le failli sous l'autorité d'une loi sur les accidents du travail, d'une loi sur l'assurancechômage, d'une disposition quelconque de la Loi de l'impôt sur le revenu ou de la Loi de l'impôt de guerre sur le revenu créant une obligation de rembourser à Sa Majesté des sommes qui ont été déduites ou retenues, pari passu;
j) les réclamations, non précédemment mentionnées au présent article, de la Couronne du chef du Canada ou d'une province du Canada, pari passu, nonobstant tout privilège statutaire à l'effet contraire.
50 Here again, I believe that there has been a misapprehension. The claim in question in all these cases is the Minister's claim against the Bank under subsection 52(10) of the Excise Tax Act, and not the Minister's claim against the defaulting manufacturers. Under subsection 52(10), the Bank becomes indebted to the Minister regardless of its debtor's financial status; when the Bank receives moneys on account of the debt, it is indebted to the Minister for a sum equivalent to the amount of the tax imposed on the manufacturer.
51 In my view, it is of little consequence whether the Bank receives these moneys in the context of a bankruptcy or otherwise. Where the transaction giving rise to the debt assigned takes place, and where the Bank receives the moneys and receives them on account of the manufacturer's debt, it becomes indebted itself for the tax. In this instance, it seems certain to me, having regard to the admissions and the evidence, that the sums that the Bank received by itself realizing the security it held in respect of payment of the manufacturers' debts, although it did so under the Bankruptcy Act, were received “on account of” those debts. Since the only assets that are relevant in these cases are the Bank's, it being the only tax debtor against which the Minister has brought proceedings, the bankruptcy of the manufacturer cannot interfere with these proceedings.
52 It is worth recalling, at this point, that even if, in theoretical terms, the Bank realizes its security as a secured creditor recognized by the Bankruptcy Act, nonetheless, in practical terms, it realizes it in the same manner as if there had been no bankruptcy, or, in the words of Lamer J. (as he then was) in Federal Business Development Bank v. Quebec (Commission de la santé et de la sécurité du travail),“outside the bankruptcy proceedings”,as provided by subsection 49(2) of the Bankruptcy Act. The sums that thus became part of the Bank's assets are the same whether or not there has been a bankruptcy, and so the Crown can look to those assets for what is owed to it under subsection 52(10) of the Excise Tax Act.
53 In addition, if I am right in concluding earlier, relying on the decision of this Court in The Queen v. Canadian Imperial Bank of Commerce,that the excise tax does not belong to the debtor and accordingly cannot be assigned by it to the Bank, then that tax is not, properly speaking, part of the property of the bankrupt and the trustee has no authority over it. That is also why I would be much more reluctant to apply the comments of Lamer J. in Federal Business Development Bank, in relation to the Bankruptcy Act, to this case. What Lamer J. concluded in that case was that the immovable in question was the property of the bankrupt within the meaning of the Bankruptcy Act since “[e]ven if the trustee takes possession of the immovable before the bankruptcy, the bankrupt remains the owner of his property”.This is not the situation in this case.
54 The Bank contends that subsection 52(10) amounts to a disguised expropriation of its property, without compensation. That argument cannot stand. Subsection 52(10) takes nothing away from the Bank, since the debts that are transferred to it pursuant to the realization of its security consist in part of a tax that belongs to the Crown. What the Crown is recovering is its own property, which is not and has never been the property of the Bank.
55 I therefore conclude that in the four cases at bar the requirements for subsection 52(10) to apply have been met: a book debt was assigned to the Bank; the Minister gave notice to the Bank; a business transaction took place that gave rise to excise tax; the Bank received moneys as a result of that transaction and those moneys included a sum equivalent to the excise tax. The Crown's actions are sound.
III. Limitation
56 One question remains to be resolved: the limitation that applies to the proceedings brought by the Crown in the Admiral and King Seagrave cases.
57 Subsection 52(1) of the Excise Tax Act provides:
... no proceedings to recover taxes or sums payable under this Act shall be commenced after four years from the time the taxes or sums first became payable.
58 The Bank contends that the four-year period began to run from the date when the goods produced by Admiral and King Seagrave were sold or when those goods were delivered to the purchasers, and that in this instance the Crown took more than four years before commencing its proceedings.
59 That argument does not stand up to analysis. in the case of proceedings brought by the Minister against the Bank under subsections 52(10) and (11) of the Excise Tax Act, the limitation cannot begin to run before the Bank has at least received the notice from the Minister. Accordingly, in the instant case, the proceedings that the Crown commenced within four years of receipt of the notice are not prescribed.
Disposition
60 I would dismiss the appeal in file no. A-607-94 with costs.
61 In file nos. A-444-93, A-445-93 and A-464-93, I would allow the appeal, set aside the judgment at trial, allow the appellant's action and order that the respondent Bank pay the appellant $79,998.60 in file no. A-444-93, $54,877.33 in file no. A-445-93 and $302,009.17 in file no. A-464-93, with interest in each of these cases from service of the actions, at the rate prescribed by the Courts of Justice Act, R.S.O. 1990, c. C.43, and costs in both divisions of this Court.
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