Belair, Cie D’assurances v. R., [1996] 2 CTC 2374, 95 DTC 642 (Informal Procedure)

Couture C.J.T.C.C.: — This is an appeal pursuant to the rules of the informal procedure from an assessment issued by the respondent under subsection 224(4) of the Income Tax Act, the “Act”. The relevant legislation reads:

224(1) Where the Minister has knowledge or suspects that a person is or will be, within 90 days, liable to make a payment to another person who is liable to make a payment under this Act (in this subsection and subsections (1.1) and (3) referred to as the “tax debtor”), the Minister may, by registered letter or by a letter served personally, require that person to pay forthwith, where the moneys are immediate payable, and in any other case, as and when the moneys become payable, the moneys otherwise payable to the tax debtor in whole or in part to the Receiver General on account of the tax debtor’s liability under this Act.

224(1.2) Notwithstanding any other provision of this Act, the Bankruptcy Act, any other enactment of Canada, any enactment of a province or any law, where the Minister has knowledge or suspects that a particular person is or will become, within 90 days, liable to make a payment

(a) to another person (in this subsection referred to as the “tax debtor”) who is liable to pay an amount assessed under subsection 227(10.1) or a similar provision, or

(b) to a secured creditor who has a right to receive the payment that, but for a security interest in favour of the secured creditor, would be payable to the tax debtor,

the Minister may, by registered letter or by a letter served personally, require the particular person to pay forthwith, where the moneys are immediately payable, and in any other case, as and when the moneys become payable, the moneys otherwise payable to the tax debtor or the secured creditor in whole or in part to the Receiver General on account of the tax debtor’s liability under subsection 227(10.1) or a similar provision, and on receipt of that letter by the particular person, the amount of those moneys that is required by that letter to be paid to the Receiver General shall, notwithstanding any security interest in those moneys, become the property of Her Majesty and shall be paid to the Receiver General in priority to any such security interest.

(1.3) In subsection (1.2), “secured creditor” — “secured creditor” means a person who has a security interest in the property of another person or who acts for or on behalf of that person with respect to the security interest and includes a trustee appointed under a trust deed relating to a security interest, a receiver or receiver-manager appointed by a secured creditor or by a court on the application of a secured creditor, a sequestrator, or any other person performing a similar function.

224(4) Failure to comply. Every person who fails to comply with a requirement under subsection (1), (1.2) or (3) is liable to pay to Her Majesty an amount equal to the amount that he was required under subsection (1), (1.2) or (3), as the case may be, to pay to the Receiver General.

The parties admitted at the opening of the hearing that they agreed on the relevant facts and that they relied on the facts alleged in the Notice of Appeal. Those facts are related at paragraphs 1 to 9 of Part A and read as

follows:

1. The assessment was made against the Appellant under subsection 224(4) of the Act pursuant to a presumed failure by the latter to comply with a requirement to pay issued on July 31, 1992 in respect of tax and interest payable by the Tax Debtor;

2. The Appellant is a large insurance company whose head office is located in Montréal and having branches located in a large number of cities of the province of Quebec, including Chicoutimi;

3. Each of the Appellant’s branches is independent, has its own clientele, its own administration and takes charge itself of settling the files of its policyholders in case of a claim;

4. Following a fire on the premises of two of its policyholders who had taken out an insurance policy with the Appellant’s Chicoutimi branch, the Appellant’s policyholders retained the Tax Debtor’s services through Gestion Marc Ouellet Inc., Public Adjuster, in order to proceed with the cleaning of the damaged premises;

5. In accordance with its obligations contained in the insurance contract binding it to its policyholders, on June 18, 1992, the Appellant issued a cheque to its policyholders in payment of the expenses incurred by the latter in the cleaning of the damaged premises. In accordance with the Appellant’s practice, the compensation cheque was issued jointly in the names of the Appellant’s policyholders and of the Tax Debtor;

6. On July 27, 1992, the Appellant was advised by Yvon Boudreault, the Appellant’s Claims Expert, to cancel the compensation cheque payable to its policyholders and to issue a new cheque for the same amount payable jointly to the order of the Bank of Montréal and Yvon Delwaide, Trustee, the Tax Debtor’s trustee in bankruptcy, pursuant to a general transfer of book debts executed by the Tax Debtor in favour of the Bank of Montreal on November 24, 1989 and registered at the Registry Division of Lac St-Jean-Est on November 27, 1989 (the “General Transfer of Book Debts"")',

7. On or around August 3, 1992, the requirement to pay mentioned at paragraph 2 above was received at the Appellant’s head office in Montréal requiring the Appellant to pay the Receiver General the maximum amount of $16,937.96 as the tax liability of the Tax Debtor;

8. On the same day, an employee of the Appellant’s head office sent, by messenger from Montréal to Chicoutimi, the requirement mentioned at paragraph 1, which was received by an officer of the Appellant at the Chicoutimi branch on August 6, 1992;

9. At the time of receipt of the requirement to pay on August 6, 1992 by the Appellant’s officer at the Chicoutimi branch, the insurance benefit cheque payable to the Appellant’s policyholders, but subsequently issued jointly to the order of the Bank of Montreal and Yvon Delwaide, Trustee, had already been handed over to Yvon Delwaide, Trustee, for cashing.

[Translation.]

The arguments of counsel for the appellant against the assessment’s validity are as follows:

10. Subsection 224(1.2) of the Act provides that the Minister may, if he has knowledge or suspects that a particular person is or will become, within 90 days, liable to make a payment to another person who is liable to pay an amount either to a Tax Debtor or to a secured creditor, require the particular person to pay those moneys in whole or in part to the Receiver General. Since there is no creditor-debtor relationship between the Appellant and the Tax Debtor, the Appellant respectfully submits that, not being liable to pay any sum in respect of the Tax Debtor, but liable to pay a sum in respect of its policyholders pursuant to the insurance contract binding it to the latter, the Appellant is not and never has been liable to pay an amount in respect of a tax debtor within the meaning of subsection 224(1.2) and in this respect cannot be liable under subsection 224(4) of the Act;

11. Alternatively, and without prejudice to the foregoing, the Appellant respectfully submits that, since, pursuant to the General Transfer of Book Debts, the Tax Debtor assigned to the Bank of Montreal full and complete ownership of the debts that might be payable to it including that which might be payable to it by the Appellant, the Bank of Montreal does not constitute a secured creditor within the meaning of subsection 224(1.3) of the Act and consequently the Minister cannot require the Appellant to pay him any amount payable to the Bank of Montreal pursuant to the General Transfer of Book Debts;

12. Alternatively, and without prejudice to the foregoing, the Appellant respectfully submits that, if it is concluded that subsection 224(1.2) can permit the Minister of National Revenue to require the Appellant to pay him every sum payable to the Bank of Montreal despite the General Transfer of Book Debts, subsection 224(1.2) must be declared ultra vires of the powers of Parliament because it has the effect of amending the rules with respect to the property rights affecting property and civil rights, which constitute an exclusive jurisdiction of the provinces under subsection 92(13) of the Constitution Act of 1867;

13. Alternatively, and without prejudice to the foregoing, the Appellant respectfully submits that, in order to fail to comply with a requirement to pay, one must have prior knowledge of the latter’s existence. At the time the Appellant’s officer at the Chicoutimi branch actually handed over the compensation cheque to its policyholders on June 18, 1992, and subsequently the cheque issued in replacement to Yvon Delwaide, Trustee, he had no knowledge that a requirement to pay had been issued so that it could not fail to comply therewith and thus be liable under subsection 224(4) of the Act;

14. Alternatively, and without prejudice to the foregoing, if it were concluded that the Appellant was in any way liable in respect of the Tax Debtor’s taxes pursuant to subsection 224(4) of the Act, which is vigorously disputed, the Minister of National Revenue would have to reduce the Appellant’s liability to take into account the possibility that a claim might be sent to the directors of the Tax Debtor pursuant to section 227.1 of the Act in respect of the tax and interest concerned by the Assessment.

[Translation.]

In her Reply to the Notice of Appeal, counsel for the respondent alleged at paragraph 6:

6. In particular, the Minister took the following facts for granted in order to make this assessment against the appellant:

(a) the debtor declared bankruptcy on July 2, 1992;

(b) the debtor failed to remit to the Receiver General the federal income tax withheld from the salary which it paid to its employees, that is:

PERIOD ASSESSED: FEDERAL TAX: U.I. EMPLOYEES AND EMPLOYER

T4 1991 Diff.: $6,641.96: $2,428.58

Remittances January to April 1992: $3,305.60: $2,418.09

(c) the debtor also failed to pay the penalties and interest relating to the federal tax not remitted which amount to $1,289.79 for the T4 1991 difference period and $774.87 for the remittance period from January to April 1992;

(d) on July 31, 1992, requirements of payment were issued pursuant to subsection 224(1.2) of the Income Tax Act, the “Act”, to the debtors of the debtor, claiming the sum of $16,937.96;

(e) following an audit, it became possible to establish that the amount of $4,975.50 was owed to the debtor by the appellant;

(f) on August 3, 1992, the appellant received from the Minister a requirement

to pay the amount of $16,937.96 which was owed by the debtor;

(g) the appellant failed to comply with the requirement of August 3, 1992;

(h) a demand to pay was issued on October 5, 1992, requiring the appellant to pay the sum of $4,975.50;

(i) since the appellant never confirmed [1] with the demand to pay of October 5, 1992, the Minister issued notice of assessment no. 14843 dated April 7, 1993 for the amount of $4,975.50.

In a notice of assessment bearing the number 14843 issued on April 7, 1993, the Minister of National Revenue, the “Minister”, required the appellant to pay the sum of $4,975.50 because it had not complied with a requirement that he had sent respecting a tax liability of 2420-4398 Quebec Inc., doing business under the style Le Grand Nettoyeur Enregistré, the “tax debtor”.

Counsel for the appellant set forth as his principal argument that there must be a creditor-debtor relationship between the person required to make a payment and the tax debtor for subsection 224(1.2) to apply since reference is made in that subsection to the expression “liable to make a payment”. The relevant portion of the subsection reads: “...has knowledge or suspects that a particular person is or will become, within 90 days, liable to make a payment...”

It is therefore logical that if, on the one hand, the particular person is “liable” [2] for the purposes of the Act, the person to whom the payment is made must therefore himself be a creditor of that debtor. The first cannot exist without the second. In other words, a person cannot have the quality of a debtor unless there is a legal obligation on his part to pay a debt to another person who is always identified in a legal context as his creditor.

Moreover, subsection 224(1), which authorizes the respondent to issue a garnishee, refers to “...a person [who] is or will be, within 90 days, liable to make a payment...” In its legal meaning, the word payment is a method of extinguishing an obligation. The obligation in the circumstances is that existing between a debtor and his creditor. The dictionary definitions are to the same effect. The word “payment” confirms the claim that Parliament was contemplating the situation of a creditor-debtor relationship because, unless this relationship exists, there can be no payment within the legal meaning of the term. The Privy Council has already considered the issue of the expressions used by Parliament in a statute. Lord Green stated the following in R. v. Singh, [1950] A.C. 345, [1950] 2 W.W.R. 835, at page 356 (W.W.R. 843):

...where the legislature selects technical words to convey its meaning it is not in general to be supposed that it uses them in any but their technical sense or that their technical sense was unfamiliar to it.

In my opinion, this statement reaffirms the argument that in using the word “liable” [3] and “payment” in the text of subsection 224(1), Parliament did so knowingly and wanted to limit the scope of that legislation to a situation in which the debtor-creditor relationship existed between the particular person and the tax debtor.

There was no creditor-debtor relationship between the appellant and the tax debtor in the instant case. In fact, there was no legal relation, direct or indirect, between these two parties. In light of the foregoing, it is therefore clear that the provisions of subsections 224(1) and (1.2) have no application in respect of the appellant. To conclude otherwise would be to admit that the respondent has the right to appropriate the assets of a taxpayer without compensation, a concept that goes against the most fundamental principles of social justice in a democratic country.

According to the second argument of counsel for the appellant, the Bank of Montreal does not constitute a secured creditor within the meaning of subsection 224(1.3) since, under the general transfer of “book debts” (assignment of debts) mentioned in paragraph 6 of the Notice of Appeal, the Bank became owner of the debts in question when the debtor executed the agreement.

Counsel for the respondent, for her part, saw no difficulty in the application of subsection 224(1.2) and she contended that the assignment of debts to the Bank of Montreal did not necessarily convey the assignor’s right of ownership because it was only in the nature of a collateral security as is mentioned in the document itself. Thus, since the transfer of ownership was not absolute, in her view, in that situation the bank remained a secured creditor within the meaning of the Act. She referred to the comments of Bernier J. of the Quebec Court of Appeal in Place Québec Inc. c. Desmarais et autre, [1975] C.A. 910. She added that since the transfer of debts had initially been made by the tax debtor in order to secure its debt with the Bank, this was therefore a security interest within the meaning of subsection 224(1.3) and such a security interest met the requirements of the legislation and authorized the Minister to proceed with the garnishment.

So as not to be mistaken as to the part of her argument, I take the liberty of citing her comments at pages 44 and 45 of the transcript:

Janie Payette: So if you look at subsection 224(1.3), Parliament gives the definition of secured creditor and also security interest. So it says that:

secured creditor means a person who has a security interest in the property of another person....

So what the courts have said in saying that the section, that the beneficiary of a general transfer of book debts was not a secured creditor is that he is not...he was himself the owner of the property, so it was not a property that belonged to another person.

However, what I submit to you is that subsections 224(1.2) and (1.3) concern every security interest, whatever the contractual form whereby the security interest was created, whether it be by a pledge or by a transfer of ownership of the debt on a condition subsequent; it is nevertheless a security interest.

[Translation.]

Unfortunately, this claim cannot be allowed since, under the applicable legislation and case law, the Bank, by way of the assignment of debts, stopped being a creditor with respect to the debtor and became the owner of the debts. Extensive case law supports this proposition. For subsection 224(1.2) to apply, the agreement between the tax debtor and the particular person must be in the nature of a security interest at the time the requirement is served by the respondent. The subsection does not apply where this legal relation is absent.

In Dessureault v. Bastien, [1962] S.C.R. 97, the Supreme Court of Canada held unanimously that the transfer of debt could not constitute a security interest unless it carried a qualification clearly indicating that it was made as a security interest. Abbott J. states at pages 99-100:

The words “cède et transporte” used in the transfer, in the absence of some qualifying term, mean a transfer of the ownership of the debt — Laliberté v. Larue et Les Appartements Lafontaine. I find no such qualification in the agreement. Indeed the whole tenor of the document is in the opposite sense and the concluding words of the transfer cannot, in my view, have the effect of constituting the contract merely one of pledge.

The document giving effect to the transfer of debts in the instant case provides:

2420-4398 Québec Inc. (hereinafter called “the undersigned” or “assignor”) for good and valuable consideration hereby assigns and transfers to the Bank of Montreal (hereinafter called the “Bank”), hereby accepting all debts, demands and claims....

[Translation.]

The expressions of the parties to this agreement could not be clearer. No other qualification of these terms appears in the agreement.

To support her claim further, counsel for the respondent appeared to attach special importance to the fact that the assignment of debts as mentioned in the agreement was as “collateral security” and she invoked the decision of the Court of Appeal of the Province of Quebec in Place Québec Inc. v. Desmarais, supra, in an attempt to show that what was involved in the circumstances was indeed a collateral security, not a transfer of ownership.

Bernier J. was very specific as to the legal effect of an assignment of debts. He stated at page 126:

An assignment of debts is a conveyance of ownership and the assignee’s title is enforceable against third parties and is binding on the assignee when the act of assignment has been delivered to him (articles 1570, 1571 and 1578 C.C.).

Like every other conveyance of property, the assignment of debts may be pure and simple or include conditions. If is pure and simple, there is absolute and final divestiture on the assignor’s part; the debts assigned are no longer part of his capital; they become the property of a third party. However, if the assignment is conditional, the divestiture is not final, that is to say whether it becomes final depends on the realization of the condition. If the condition is suspensive, the assignor will own an interest, conditional it is true but an interest nevertheless, in the debts assigned as long as the condition is not fulfilled (articles 1079 and ss. C.C.).

[Translation.]

The agreement on assignment of debts between the Bank and the tax debtor contains no condition, that is to say that it is pure and simple, and thus results in the tax debtor’s absolute and final divestiture of its debts in the Bank’s favour.

Counsel for the respondent drew the Court’s attention to a sentence in one of the paragraphs of the agreement which reads: “This assignmenttransfer will be as a permanent collateral security in the Bank’s favour...”, and she attached special importance to the term “collateral security” saying: “So that was to emphasize that this therefore is indeed not an absolute but a conditional transfer, that is to say that it is a security interest; it is an assignment, a transfer by way of a guarantee.”

I find it hard to understand this reasoning. Even if this were a conditional transfer as counsel would have it, the essence of an assignment of debts is to transfer their ownership to the assignee unless, as the Supreme Court has stated, it is subject to a contrary condition. Bernier J. made the following comments concerning the assignment of debts whereby the transfer of ownership is not absolute:

Consequently, it must not be taken for granted that the assignment of debts as a collateral security for the repayment of a loan as is here the case is a pledge, a pawning (articles 1966 and 1968 C.C.), which confers on the creditor only the right to payment in priority out of the proceeds of the sale of the thing pledged through a proceeding directed against his debtor. The assignment of debts as a collateral security is a conditional and contingent transfer with respect to the assignee, his proprietary interest ceasing by right without the need for an act of reassignment, when the condition is fulfilled, that is the extinguishing of the principal debt....

[Translation; Emphasis added.]

This means that, as long as the condition has not been fulfilled, the assignee owns the debts and they are not accessible to another creditor of the debtor by garnishment.

The phrase “permanent collateral security” cannot be interpreted as counsel for the respondent claims. If the parties had wanted the agreement to consist only of a guarantee, they would have stated accordingly in the first paragraph by inserting the words “as a collateral security all debts...” after the words “assigns and transfers to the Bank of Montreal”.

An agreement may not be interpreted on the basis of a single word or single expression in its text, as counsel for the respondent seems to wish. The authors and the case law on the interpretation of agreements agree that one must consider the text as a whole in order to understand its scope and from this exercise draw out the parties’ intention. To determine that intention, a reading of the following paragraphs may make matters easier to understand:

AND the undersigned expressly authorizes the Bank to realize from time to time these debts, demands and claims and security interests hereby transferred in the manner and at the time which the Bank itself deems appropriate (but it will not be required to realize these debts, demands and claims unless it deems such appropriate); and the Bank may, entirely at its discretion, allot or allocate the proceeds thereof to the account of such parts of these debts and obligations, secured or not secured, as the Bank deems most appropriate; and those allotments and allocations may be changed or modified from time to time as the bank wishes; and before making these allotments or allocations, the Bank may deduct all reasonable costs, charges and expenses, including commissions, fees and disbursements paid or repaid to third parties for collections or for any other operation necessary to the protection, preservation or collection of the debts assigned.

THE Bank may grant extensions, take or abandon security interests, accept transactions, give releases and discharges and generally negotiate these debts, demands, claims and security interests entirely at its discretion without the consent of the undersigned and without it being notified, and the Bank will not be liable for any loss or damage that may result from the negligence of an official, agent or attorney in the collection or realization of those debts, demands, claims and security interests.

IN CASE of payment to the undersigned of the amount of any one of these debts, demands, claims or security interests, the undersigned (or one of the undersigned who shall receive payment) hereby undertakes to receive that amount as an agent of the Bank and to remit it immediately to the latter.

THE undersigned hereby undertakes to do all other things and to sign all other documents which may from time to time be required by the Bank or by any official of the Bank so that these debts, demands, claims and security interests which are hereby transferred or which it is agreed will be transferred accrue to the Bank or for their collection; and the Bank or one of its employees authorized for this purpose and its manager or acting manager of the branch at 530 Sacré-Coeur ouest, Alma, Québec and each of them personally are irrevocably authorized to execute every assignment or every other document for the above purposes on behalf of the undersigned or the undersigned’s legal representatives and heirs or legatees, executors or administrators.

[Translation.]

It appears clear from the above that, once the agreement was entered into with the tax debtor, the Bank held all the constituent elements of the right of ownership. It is undeniable in light of this text that the debtor clearly intended to transfer ownership of its debts to the Bank of Montreal, and this permanently, as is stated in the agreement.

The foregoing responds to the argument submitted by counsel for the appellant in support of the assessment’s validity.

Pembina on the Red Development Corp. v. Triman Industries Ltd., [1992] 1 C.T.C. 133, 92 D.T.C. 6174 (the French version is not available), was submitted to the Court’s attention by counsel for the appellant in support of his argument as to the assessment’s validity. This is the most recent decision on the application of subsection 224(1.2) in circumstances similar to those which concern the appellant. Chief Justice Scott of the Manitoba Court of Appeal conducted a thorough analytical study of the application of subsections 224(1) and (1.2) of the Income Tax Act, the “Act”. He considered them in relation to the authority of Canada’s Parliament to legislate and enact legislative provisions which at first glance appear to fall within the civil law and thus under provincial jurisdiction. On this aspect of the problem, he came to the conclusion that the collection of income taxes by the federal government was an integral part of its taxation powers and thus came within the ambit of subsection 91(3) of the Constitution Act, 1867. They are firmly within the limits of Parliament’s powers under that subsection, which permits it to collect moneys by any mode of taxation. In his view, this is an ancillary power for effective application of the Act.

He further considered their application in a situation in which the facts were appreciably similar to those relevant in the instant appeal. He summarized those facts as follows at page 136 (D.T.C. 6176):

At all material times Triman Industries Limited (“Triman”) was a customer of and substantially indebted to the Royal Bank of Canada (the “bank”). In July 1987 Triman gave the bank an accounts receivable security agreement which was registered under the Personal Property Security Act (the PPSA). As such, the bank continues to hold a perfected first specific charge against the receivables and the proceeds therefrom. Triman defaulted and in November 1989 the bank appointed the respondent Coopers & Lybrand Limited as receiver and manager. A receiving order in bankruptcy was subsequently issued in December 1989. Triman’s receivables secured in favour of the bank by the assignment totalled in excess of $246,000 as of March 1990. On November 14, 1989, pursuant to the section, Revenue Canada sent requirements to pay to various debtors of Triman. The total of this and a subsequent demand amounted to almost $100,000. Shortly before Revenue Canada’s requirement to pay was served on Triman’s debtors, the receiver, on behalf of the bank, demanded the receivables from the same debtors of Triman’s pursuant to the bank’s duly registered assignment of accounts receivables.

The position of the appellant in that case (Attorney General of Canada) was that the provisions of subsection 224(1.2) were clear and unequivocal and consequently enabled him to seize the accounts receivable which Triman Industries Limited had transferred to the Royal Bank of Canada by means of a transfer of accounts receivable duly registered in accordance with the requirements of the legislation.

The claim of the respondent (Coopers & Lybrand Limited appointed by the Bank to administer its accounts receivable) was that, in accordance with a well-recognized principle, unless specifically stated, there is a presumption that an individual’s property rights cannot be taken away from him without compensation. Chief Justice Scott cited the following text by Cross, Statutory Interpretation (London: Butterworth’s, 1987), at page 180 (C.T.C. 140, D.T.C. 6179):

There is a general presumption that Parliament does not intend to take away property rights unless the contrary is clearly indicated. Lord Atkinson stated that there is a canon of interpretation ‘that an intention to take away the property of a subject without giving to him a legal right to compensation for the loss is not to be imputed to the legislature unless that intention is expressed in unequivocal terms’. After all, the protection of property is generally regarded as one of the fundamental values of a liberal society.

And the Chief Justice continued 142 (D.T.C. 6180-81):

To summarize, it is my conclusion that the legislation fails by virtue of a defect in language to accomplish its apparent purpose, namely, to effectively attach moneys that are already at the time of the issuance of the third-party notice the property of a secured creditor.

It follows from that judgment that since the debts were thus owned by the assignee, the provisions of subsection 224(1.2) as drafted did not in the circumstances permit the respondent to acquire that property under the registered letter served on the assignee as provided in that subsection.

The application of the legislation which counsel for the respondent wished to obtain in a situation such as that of the appellant was to enable the Minister to attach moneys of that taxpayer, which was not indebted to the Department of Revenue, solely on the ground that it wanted to discharge an obligation towards another taxpayer, which was also not indebted to that department.

Three courts of appeal in Canada have ruled similarly in situations identical to that concerning the appellant, to the effect that the legislation as drafted did not authorize the respondent to issue the demand provided at subsection 224(1). [4] In Royal Bank v. R. (sub nom. Royal Bank of Canada v. The Queen), [1984] C.T.C. 573, 84 D.T.C. 6439, a judgment by Muldoon J. of the Federal Court of Canada, unanimously confirmed by the Federal Court of Appeal, [1986] 2 C.T.C. 211, 86 D.T.C. 6390, the latter wrote as follows at page 582 (D.T.C. 6446):

To equate the respective rights of the assignee and the assignor in and upon the book debts is to overlook the very nature and effect of the assignment, for the assignee owns the book debts and the assignor does not.

[Emphasis added.]

He added in a subsequent paragraph:

Allowing that money is distinct from real property in that money is the principal medium of exchange and the very specie in which taxes are paid, still the Crown is not entitled to confiscate, for a mortgagor’s tax arrears, the property of a mortgagee only because the mortgagor once possessed clear title but has since conveyed it away or lost it. If the Crown in Right of Canada would lawfully effect such a confiscation, then no one’s property rights would be secure, whether by common law or pursuant to provincial real or personal property statutes modifying the common law.

They confirmed the fact that, following an assignment of debts, the debts were the property of the assignee.

It seems to me that, in light of these authorities, three unanimous decisions, the respondent had no justification for serving the garnishment on the appellant or subsequently for issuing the assessment.

For all these reasons, the appeal is allowed with costs.

Appeal allowed.