THORSON,
P.:—This
is
an
action
to
recover
consumption
or
sales
tax
on
the
sale
price
of
certain
steel
and
other
metal
goods
manufactured
and
produced
by
the
defendant
and
sold
by
it
to
certain
purchasers.
The
information
shows
that
the
defendant
sold
certain
goods
to
The
J.
H.
Ashdown
Hardware
Company
Limited
of
Winnipeg
in
Manitoba
in
March
and
April
of
1944,
to
Marshall
Wells
Company
Limited
of
Port
Arthur
in
Ontario,
Winnipeg
in
Manitoba
and
Calgary
in
Alberta
in
April
and
May
of
1944,
to
North
Hardware
Company
Limited
of
Edmonton
in
Alberta
in
May
of
1944
and
to
Walter
Woods
Limited
of
Winnipeg
in
Manitoba
in
May
of
1944.
Particulars
of
invoice
numbers,
dates,
prices
and
nature
of
goods
are
given
in
paragraphs
2,
3,
4
and
5
of
the
information
and
are
not
in
dispute.
It
is
contended
that
the
tax
is
due
and
payable
under
Section
86(1)
of
the
Special
War
Revenue
Act
(now
the
Excise
Tax
Act),
R.S.C.
1927,
c.
179,
as
amended
in
1936,
Statutes
of
Canada,
1936,
c.
45,
Section
5,
the
relevant
portions
of
which
read
as
follows:
“86.
(1)
There
shall
be
imposed,
levied
and
collected
a
consumption
or
sales
tax
of
eight
per
cent
on
the
sale
price
of
all
goods,—
(a)
produced
or
manufactured
in
Canada,
payable
by
the
producer
or
manufacturer
at
the
time
of
the
delivery
of
such
goods
to
the
purchaser
thereof.
Provided
Provided
further
that
in
any
case
where
there
is
no
physical
delivery
of
the
goods
by
the
manufacturer
or
producer,
the
said
tax
shall
be
payable
when
the
property
in
the
said
goods
passes
to
the
purchaser
thereof.’’
The
facts
are
not
in
dispute.
I
shall
deal
first
with
the
sales
to
The
J.
H.
Ashdown
Hardware
Company
Limited.
These
were
of
nails,
staples
and
barbed
wire.
The
orders
for
the
goods
were
placed
with
the
defendant’s
sales
office
in
Winnipeg
and
transmitted
by
it
to
the
defendant’s
Montreal
plant
for
filling.
It
was
the
practice
of
the
Winnipeg
sales
office
to
send
post
card
acknowledgements
to
its
customers
for
less
than
carload
quantities
and
letter
acknowledgement
in
the
case
of
carload
lots
(Exhibit
2).
The
details
of
the
sales
are
set
out
in
the
defendant’s
invoices
dated
from
March
14,
1944,
to
April
14,
1944.
Under
the
heading
Route
the
invoices
carried
the
following
notations,
namely,
‘‘CSL
when
navigation
opens”
or
‘‘
Canada
Steamship
Lines
Ltd.’’
or
“Canada
Steamship
Lines’’
or
‘‘CSL
&
Rail”
or
simply
“CSL”.
All
the
goods
were
to
be
shipped
when
navigation
opened.
Under
the
heading
F.O.B.
all
the
invoices
except
one
carried
the
notation
‘‘Hd.
of
Lakes’’.
The
invoices
also
specified
that
the
goods
were
sold
to
‘‘The
J.
H.
Ashdown
Hardware
Co.
Ltd.
Winnipeg,
Man.’’
and
that
they
were
to
be
shipped
to
‘‘
Winnipeg,
Man.”
All
the
invoices
except
one
called
for
the
freight
to
be
‘‘collect’’
but
there
was
also
an
item
in
them
providing
for
freight
allowances
under
various
captions,
namely,
“Alice
Freight
Montreal
to
Head
of
Lakes’’
or
simply
“Alice
Freight’’.
In
each
case
the
amount
of
the
allowance
was
deducted
from
the
price
of
the
goods.
The
invoices
were
sent
by
the
defendant’s
Montreal
office
to
The
J.
H.
Ashdown
Hardware
Company
Limited
at
Winnipeg.
On
various
dates
the
defendant
caused
the
goods
covered
by
the
invoices
to
be
delivered
by
a
carter
to
Canada
Steamship
Lines
Limited
for
shipment
to
its
purchaser.
The
dates
of
the
receipts
by
Canada
Steamship
Lines
Limited
are
set
out
in
Exhibit
P.
3.
The
defendant
also
made
out
the
bills
of
lading
covering
the
goods
in
triplicate
for
signature
by
Canada
Steamship
Lines
Limited.
These
were
dated
at
Montreal,
April
17,
1944,
or
April
18,
1944.
The
bills
of
lading
show
that
the
goods
covered
by
them
were
consigned
to
‘‘The
J.
H.
Ashdown
Hdwe
Co.
Ltd.’’
with
destination
‘‘Winnipeg’’
and
route
“C.S.L.
Port
Arthur
&
C.N.R.”
or
‘‘C.S.L.
Fort
William
&
C.P.R.’’
or
destination
‘‘Port
Arthur’’
and
route
‘‘C.S.L.’’
or
destination
“Fort
William”
and
route
‘‘C.S.L.’’.
The
bills
of
lading
also
showed
that
the
goods
covered
by
them
were
addressed
to
or
otherwise
identified
as
goods
consigned
to
the
consignee
named
in
the
bill
of
lading.
One
copy
of
each
bill
of
lading
was
retained
by
Canada
Steamship
Lines
Limited
and
two
copies
signed
by
it
were
delivered
back
to
the
defendant.
It
kept
one
of
these
and
sent
the
other
to
The
J.
H.
Ashdown
Hardware
Company
Limited
at
Winnipeg
along
with
the
invoices.
The
facts
are
similar
with
respect
to
the
sales
to
Marshall
Wells
Company
Limited,
North
Hardware
Company
Limited
and
Walter
Woods
Limited.
On
or
about
May
5,
1944,
all
the
goods
referred
to
in
the
information,
while
still
at
the
Ottawa
Street
shed
of
Canada
Steamship
Lines
Limited
in
Montreal,
were
destroyed
by
fire.
On
these
facts
the
question
arises
whether
the
goods,
prior
to
their
destruction,
had
been
delivered
by
the
defendant
to
the
purchasers
within
the
meaning
of
paragraph
(a)
of
Section
86(1)
of
the
Special
War
Revenue
Act
or
whether
the
property
in
them
had
passed
to
the
purchasers
within
the
meaning
of
the
second
proviso.
It
is
an
elementary
principle
that
a
contract
is
formed
by
the
acceptance
of
an
offer
and
that
an
offer
is
accepted
when
the
acceptance
is
made
in
a
manner
prescribed
or
indicated
by
the
offeror:
vide
Anson’s
Law
of
Contract,
20th
Edition,
page
34.
And
the
same
author
says,
at
page
39,
that
the
rule
that
a
contract
is
made
when
the
acceptance
is
communicated
involves
as
a
result
the
further
rule
that
a
contract
is
made
where
the
acceptance
is
communicated
and
points
out
that
this
may
be
of
importance
in
determining
what
law
governs
the
validity
of
the
contract
or
the
procedure
by
which
it
may
be
enforced.
In
the
present
case
it
is
clear
that
the
offer
to
buy
the
goods
was
made
to
the
defendant
at
its
sales
office
in
Winnipeg.
That
is
where
the
orders
for
the
goods
were
placed.
While
the
evidence
as
to
the
acceptance
of
the
offer
and
its
communication
to
the
purchasers
is
not
as
precise
as
would
be
desirable
it
was
the
practice
of
the
defendant’s
sales
office
at
Winnipeg
to
transmit
the
orders
to
the
defendant’s
office
in
Montreal
and
then
send
a
post
card
or
letter
in
confirmation
of
them
to
the
purchasers
and
there
is
no
reason
to
assume
that
this
practice
was
not
followed
in
the
present
case.
I
am,
therefore,
of
the
view
that
the
contract
between
the
defendant
and
its
purchasers
was
made
in
Winnipeg
and
that
the
law
applicable
to
it
is
the
law
of
Manitoba
as
found
in
the
Sale
of
Goods
Act,
R.S.M.
1940,
c.
185.
It
was
contended
for
the
defendant
that
it
was
not
liable
for
tax
under
Section
86(1)
of
the
Special
War
Revenue
Act
either
under
paragraph
(a),
because
there
was
never
any
delivery
of
the
goods
to
the
purchasers
within
the
meaning
of
the
paragraph,
or
under
the
second
proviso,
because
it
was
intended
by
the
parties
that
the
property
in
the
goods
should
not
pass
to
the
purchasers
until
they
had
been
delivered
F.O.B.
head
of
the
lakes
and
no
such
delivery
had
been
made.
Counsel
for
the
defendant
submitted
that
it
was
an
essential
term
of
the
contract
between
the
defendant
and
its
purchasers
that
it
should
deliver
the
goods
F.O.B.
head
of
the
lakes,
that
this
meant
that
it
was
obliged
to
deliver
them
to
the
head
of
the
lakes,
that
is
to
say,
Port
Arthur
or
Fort
William
and
there
place
them
free
on
board
and
that
since
this
term
of
the
contract
had
not
been
complied
with
it
could
not
be
said
that
there
had
been
any
delivery
of
the
goods
to
the
purchasers
within
the
meaning
of
paragraph
(a)
and
that
it
was,
therefore,
not
applicable.
On
the
other
hand,
counsel
for
the
plaintiff
relied
upon
Section
33(1)
of
the
Sale
of
Goods
Act
which
provides
that
where,
in
pursuance
of
a
contract
of
sale,
the
seller
is
authorized
or
required
to
send
the
goods
to
the
buyer,
delivery
of
the
goods
to
a
carrier,
whether
named
by
the
buyer
or
not,
for
the
purpose
of
transmission
to
the
buyer
is
prima
facie
deemed
to
be
a
delivery
of
the
goods
to
the
buyer
and
contended
that
when
the
defendant
delivered
the
goods
to
Canada
Steamship
Lines
Limited
for
the
purpose
of
transmission
to
the
purchasers
it
had
delivered
the
goods
to
the
purchasers
within
the
meaning
of
paragraph
(a)
of
Section
86(1)
of
the
Act.
Counsel
also
submitted
that
the
term
“F.O.B.
Hd.
of
Lakes’’
meant
only
that
the
goods
should
be
free
from
freight
charges
at
the
head
of
the
lakes
or,
in
other
words,
that
the
defendant
was
to
absorb
the
freight
in
them
up
to
the
head
of
the
lakes.
I
am
unable
to
agree
with
the
defendant’s
construction
of
the
term
“F.O.B.
Hd.
of
Lakes’’.
It
was
clearly
intended
by
the
parties
that
carriage
of
the
goods
was
to
be
by
water
from
Montreal
to
the
head
of
the
lakes
and
by
rail
from
there
to
their
destination
and
that
the
defendant
should
deliver
the
goods
to
Canada
Steamship
Lines
Limited
at
Montreal
for
carriage
by
it
to
the
head
of
the
lakes
as
soon
as
navigation
opened.
The
point
of
delivery
by
the
defendant
to
a
carrier
for
the
purpose
of
transmission
to
the
buyer
was,
therefore,
Montreal,
not
the
head
of
the
lakes.
It
also
seems
clear
to
me
that
the
carriage
of
the
goods
by
water
was
to
be
free
from
freight
charges
to
the
purchasers.
The
invoices
show
that
the
freight
was
to
be
“collect”
but
the
defendant
gave
its
purchasers
a
freight
allowance
up
to
the
head
of
the
lakes
and
deducted
it
from
the
price
of
the
goods.
It
is
thus
clear
that
it
was
agreed
between
the
parties
that
éach
should
pay
a
share
of
the
freight,
that
the
defendant
should
absorb
it
up
to
the
head
of
the
lakes
so
that
the
goods
should
be
free
of
freight
when
they
got
there
and
that
the
purchasers
should
pay
the
rail
freight
on
the
goods
from
the
head
of
the
lakes
to
their
final
destination.
There
was
thus
a
delivery
of
the
goods
to
a
carrier
for
the
purpose
of
transmission
to
the
buyer
within
the
meaning
of
Section
33(1)
of
the
Sale
of
Goods
Act
and,
therefore,
a
prima
facie
delivery
of
the
goods
to
the
buyer.
If
paragraph
(a)
of
Section
86(1)
stood
by
itself
and
was
not
qualified,
as
I
think
it
was,
by
the
second
proviso
I
would
accept
the
submission
of
counsel
for
the
plaintiff
that
there
had
been
a
delivery
of
the
goods
to
the
purchasers
within
the
meaning
of
paragraph
(a).
But
it
appears
to
me
from
the
proviso,
which
qualifies
paragraph
(a),
vide
The
King
v.
Dominion
Engineering
Co.
Ltd.
(1947),
1
D.L.R.
1,
that
the
delivery
contemplated
by
paragraph
(a)
means
actual
physical
delivery
rather
than
a
constructive
or
‘‘deemed’’
delivery
within
the
meaning
of
Section
33(1)
of
the
Sale
of
Goods
Act
and
that
since
there
was
no
actual
physical
delivery
of
the
goods
to
the
purchasers
paragraph
(a)
of
Section
86(1)
is
not
applicable.
Thus
to
make
the
defendant
liable
for
tax
it
must
appear
that
the
facts
bring
the
case
within
the
ambit
of
the
second
proviso
of
Section
86(1),
that
is
to
say,
that
the
property
in
the
goods
passed
to
the
purchasers
prior
to
their
destruction
by
fire.
It
was
contended
for
the
plaintiff
that
if
there
had
been
no
delivery
of
the
goods
to
the
purchasers
within
the
meaning
of
paragraph
(a)
the
property
in
them
had
passed
to
the
purchasers
and
the
second
proviso
was
applicable.
But
counsel
for
the
defendant
argued
that
by
the
term
“F.O.B.
Hd.
of
Lakes’’
the
parties
had
expressed
their
intention
that
the
property
in
the
goods
should
not
pass
until
they
had
been
delivered
at
the
head
of
the
lakes
and
that
since
there
had
not
been
any
such
delivery
the
property
had
not
passed
and
the
second
proviso
was
not
applicable.
I
am
unable
to
agree
that
the
term
expresses
or
implies
any
such
intention.
At
the
time
of
the
agreement
between
the
defendant
and
the
respective
purchasers
the
goods
which
were
the
subject
of
it
were
unascertained
goods.
The
agreement
was,
therefore,
an
agreement
to
sell
the
goods
and
not
a
sale
of
them.
Section
18
of
the
Sale
of
Goods
Act
provides
that
where
there
is
a
contract
for
the
sale
of
unascertained
goods
no
property
in
the
goods
is
transferred
to
the
buyer
unless
and
until
the
goods
are
ascertained.
Then
Section
19(1)
states
that
when
there
is
a
contract
for
the
sale
of
specific
or
ascertained
goods
the
property
in
them
is
transferred
to
the
buyer
at
such
time
as
the
parties
to
the
contract
intend
it
to
be
transferred.
The
intention
of
the
parties
is
paramount.
This
may
be
expressed
or
implied
and
Section
19(2)
provides
that
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.
Then
Section
20
lays
down
certain
rules
for
ascertaining
the
intention
of
the
parties.
It
opens
with
the
following
statement
:
“20.
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
is
to
pass
to
the
buyer
:
’
’
And
then
five
rules
are
given
of
which
the
first
three
read
as
follows:
“
(a)
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
;
(b)
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
such
thing
is
done,
and
the
buyer
has
notice
thereof
;
(c)
Rule
3.—Where
there
is
a
contract
for
the
sale
of
specific
goods
in
a
deliverable
state,
but
the
seller
is
bound
to
weigh,
measure,
test,
or
do
some
other
act
or
thing
with
reference
to
the
goods
for
the
purpose
of
ascertaining
the
price,
the
property
does
not
pass
until
such
act
or
thing
is
done,
and
the
buyer
has
notice
thereof.’’
These
three
rules
have
no
bearing
on
the
question
in
issue
for
the
contracts
between
the
parties
were
not
for
the
sale
of
specific
goods.
And
Rule
4
need
not
be
referred
to.
But
Rule
5
is
important.
It
reads
as
follows:
“(e)
Rule
5.—Where
there
is
a
contract
for
the
sale
of
unascertained
or
future
goods
by
description,
and
goods
of
that
description
and
in
a
deliverable
state
are
unconditionally
appropriated
to
the
contract,
either
by
the
seller
with
the
assent
of
the
buyer,
or
by
the
buyer
with
the
assent
of
the
seller,
the
property
in
the
goods
thereupon
passes
to
the
buyer.
The
assent
may
be
expressed
or
implied,
and
may
be
given
either
before
or
after
the
appropriation
is
made.
Where,
in
pursuance
of
the
contract,
the
seller
delivers
the
goods
to
the
buyer
or
to
a
carrier
or
other
bailee
(whether
named
by
the
buyer
or
not)
for
the
purpose
of
transmission
to
the
buyer,
and
does
not
reserve
the
right
of
disposal,
he
is
deemed
to
have
unconditionally
appropriated
the
goods
to
the
contract.
’
’
In
my
judgment,
the
facts
of
this
case
bring
it
squarely
within
Rule
5.
The
contract
between
the
defendant
and
its
respective
purchasers
was
a
contract
for
the
sale
of
unascertained
or
future
goods
by
description.
The
defendant
put
goods
of
that
description
into
a
deliverable
state
by
packing
them
in
kegs
or
otherwise,
as
indicated
by
the
invoices,
and
unconditionally
appropriated
them
to
the
contract
by
identifying
them
by
marks,
tags
or
otherwise
as
the
goods
intended
for
the
respective
purchasers,
as
shown
by
the
bills
of
lading.
It
was
clearly
intended
by
the
purchasers
that
the
defendant
should
deal
with
the
goods
in
this
way.
There
was
thus
an
implied
assent
by
them
to
the
appropriation
of
the
goods
to
the
contract.
It
was
also
intended
by
the
parties
that
the
defendant
should
deliver
the
goods
to
Canada
Steamship
Lines
Limited
for
the
purpose
of
transmission
to
the
purchasers
and
the
defendant
made
such
delivery
and
did
not
reserve
any
right
of
disposal
of
the
goods.
Thus
all
the
facts
required
for
the
application
of
Rule
5
are
present.
Under
the
circumstances,
I
have
no
hesitation
in
finding
that
the
defendant
unconditionally
appropriated
the
goods
to
the
contract
with
its
respective
purchasers
within
the
meaning
of
Rule
5
and
that
the
property
in
the
goods
thereupon
passed
to
the
purchasers.
It
must
be
noted
that
Rule
5
applies
only
if
a
different
intention
does
not
appear.
In
my
opinion,
there
is
no
reasonable
ground
for
assuming
any
different
intention.
On
the
contrary,
the
facts
negative
a
different
intention.
When
the
goods
were
delivered
to
Canada
Steamship
Lines
Limited
it
acknowledged
receipt
of
them
and
issued
bills
of
lading
for
them
in
favour
of
the
purchasers
which
the
defendant
sent
to
the
purchasers
along
with
the
invoices
for
the
goods.
These
became
documents
of
title
to
the
goods
in
the
names
of
the
respective
purchasers
and
they
had
sole
control
over
them.
There
is
no
substance
in
the
contention
that
the
bills
of
lading
were
not
intended
to
be
documents
of
title
until
the
goods
were
delivered
at
the
head
of
the
lakes.
There
is
nothing
in
the
facts
to
warrant
such
a
submission.
If
there
had
been
any
such
intention
the
bills
of
lading
would
have
been
taken
out
in
the
name
of
the
defendant
or
some
other
indication
of
it
other
than
the
term
“F.O.B.
Hd.
of
Lakes’’
would
have
been
given.
For
the
reasons
stated
I
have
come
to
the
conclusion
that
the
property
in
the
goods
passed
from
the
defendant
to
the
several
purchasers
of
them,
at
the
latest,
at
the
time
of
their
delivery
to
Canada
Steamship
Lines
Limited
for
the
purpose
of
transmission
to
the
purchasers
and
the
case
therefore
falls
within
the
ambit
of
the
second
proviso
of
Section
86(1)
of
the
Special
War
Revenue
Act
and
the
defendant
is
liable
for
the
tax
claimed.
There
is
no
dispute
as
to
the
amount
of
tax
if
the
claim
is
well
founded
or
as
to
the
amount
of
the
penalties
under
Section
106
of
the
Act,
the
former
being
$1,659.22
and
the
latter
$781.38,
making
a
total
of
$2,440.60.
There
will,
therefore,
be
judgment
in
favour
of
the
plaintiff
as
against
the
defendant
for
$2,440.60
and
costs.
Judgment
accordingly.
Email this Content