Guy
Tremblay
[TRANSLATION]:—This
case
was
heard
in
Quebec
City,
Quebec
on
December
11,
1980.
1.
Point
at
issue
At
issue
is
whether
the
appellant
was
justified
in
not
including
in
his
income
$132,074
for
1975
and
$636,075
for
1976.
These
amounts
represent
holdbacks
equivalent
to
10%
of
the
payments
made
by
Hydro-Québec
to
the
appellant
during
the
years
in
question
pursuant
to
a
contract
for
the
manufacture,
delivery
and,
in
part,
pouring
of
concrete
in
connection
with
the
development
of
the
Outardes
II
hydro-electric
station.
According
to
the
respondent,
these
sums
represent
taxable
accounts
receivable
under
paragraph
12(1
)(b).
According
to
the
appellant,
these
sums
are
not
accounts
receivable.
2.
Burden
of
Proof
The
burden
is
on
the
appellant
to
show
that
the
respondent’s
assessment
is
incorrect.
This
burden
of
proof
derives
not
from
one
particular
section
of
the
Income
Tax
Act
but
from
a
number
of
judicial
decisions,
including
the
judgment
delivered
by
the
Supreme
Court
of
Canada
in
Johnston
v
MNR,
[1948]
CTC
195;
3
DTC
1182.
According
to
the
same
judgment,
the
facts
on
which
the
respondent
relies
to
support
the
assessments
must
also
be
deemed
to
be
true.
3.
Facts
alleged
by
the
respondent
The
facts
relied
on
by
the
respondent
are
described
in
paragraph
3
of
the
reply
to
the
notice
of
appeal.
They
read
as
follows:
3.
In
assessing
the
appellant
for
the
1975
and
1976
taxation
years,
the
respondent
relied,
inter
alia,
on
the
following
facts:
(a)
in
1974,
the
appellant
signed
a
contract
with
Hydro-Québec
for
the
manufacture
and
delivery
of
concrete
to
be
used
in
the
development
of
the
Outardes
II
power
station;
(b)
under
the
terms
of
the
contract,
the
appellant
was
to
supply
Hydro-Québec
with
a
predetermined
quantity
of
concrete
(cubic
yards);
(c)
the
pouring
of
the
concrete
was
not
handled
by
the
appellant;
(d)
clause
17
of
the
contract
stipulates:
“17.
CONDITIONS
OF
PAYMENT
The
conditions
of
payment
are
as
follows:
Upon
presentation
of
invoices,
the
Supplier
shall
receive
payments
representing
NINETY
PER
CENT
(90%)
of
the
total
amount
of
materials
delivered,
the
Said
payments
to
be
made
within
THIRTY
(30)
days
of
receipt
of
the
monthly
invoices.
The
holdback
of
TEN
PER
CENT
(10%)
shall
be
payable
within
THIRTY
(30)
days
of
the
contract
expiry
date.’’
(e)
the
appellant
did
not
operate
a
construction
firm;
4.
Facts
proven
4.01
The
appellant
was
incorporated
in
1962
and
merged
in
1973
with
two
other
companies,
Béton
Provincial
(Baie
des
Chaleurs)
Limitée
and
Béton
Provincial
(Hauterive)
Limitée
(Exhibit
A-3).
The
appellant’s
principal
purposes
are
the
manufacture,
sale
and
delivery
of
concrete
products:
pipes,
blocks
and
ready-to-pour
mixes
(cement,
liquid
sand)
delivered
by
concrete
mixer.
4.02
Following
a
reply
by
the
appellant
in
1974
to
a
call
for
tenders
from
Hydro-Québec
(Exhibit
A-1),
a
contract
(Exhibit
A-2)
was
entered
into
by
the
two
companies
on
December
6,
1974
under
which
the
appellant
was
primarily
responsible
for
supplying
240,000
cubic
yards
of
concrete
for
the
development
of
the
Outardes
II
hydro-electric
dam.
4.03
According
to
Mr
Jean-Yves
Sirois,
an
engineer
and
the
appellant’s
secretary-treasurer,
the
contract
entered
into
with
Hydro-Quebec
was
in
fact,
for
the
appellant,
an
exceptional
contract.
Ordinarily,
the
contracts
signed
by
the
appellant
merely
required
it
to
deliver
concrete
products
to
the
client,
products
that
had
been
manufactured
at
the
appellant’s
factory
in
accordance
with
the
usual
standards.
In
the
1974
contract
with
Hydro-Quebec,
provisions
were
made
for,
among
other
things:
(a)
manufacturing
concrete
products
on
the
Outardes
II
construction
site,
in
accordance
with
specific
standards
set
by
Hydro-Québec;
(b)
to
this
end,
building
an
on-site
factory
with
a
capacity
of
eighty
yards
per
hour,
the
said
factory
to
be
constructed
according
to
specific
criteria
set
by
Hydro-Québec;
(c)
transporting
the
product
to
the
designated
location
on
the
site,
with
the
appellant
sometimes
responsible
for
pouring
the
prepared
mix,
either
alone
or
in
conjunction
with
other
companies;
(d)
removing
the
factory
upon
completion
of
the
work
and
leaving
the
site
in
such
a
condition
as
to
satisfy
the
requirements
of
the
Department
of
the
Environment;
and,
(e)
completing
all
work
by
December
31,
1977.
4.04
In
the
course
of
the
work,
Hydro-Québec
introduced
new
requirements
that
were
in
fact
set
out
in
the
form
of
written
agreements.
The
most
important
among
these
were
that:
(a)
the
total
number
of
yards
to
be
delivered
should
be
increased
from
240,000
to
300,000,
without
the
completion
date
for
the
work,
that
is,
December
31,
1977,
being
moved
back;
and
(b)
as
a
result,
the
concrete
production
capacity
was
to
rise
from
eighty
to
120
yards
of
concrete
an
hour.
To
this
end,
it
was
necessary
to
construct
an
additional
factory.
4.05
The
conditions
of
payment
are
specified
in
the
contract
in
Exhibit
A-1,
page
E-15,
clause
17.
This
clause
reads
as
follows:
17.
CONDITIONS
OF
PAYMENT
The
conditions
of
payment
are
as
follows:
Upon
presentation
of
invoices,
the
Supplier
shall
receive
payments
representing
NINETY
PER
CENT
(90%)
of
the
total
amount
of
materials
delivered,
the
said
payments
to
be
made
within
THIRTY
(30)
days
of
receipt
of
the
monthly
invoices.
The
holdback
of
TEN
PER
CENT
(10%)
shall
be
payable
within
THIRTY
(30)
days
of
the
contract
expiry
date.
The
amounts
resulting
from
adjustments
owing
to
increases
in
the
indexed
prices,
following
the
application
of
the
specified
index,
shall
be
invoiced
separately.
The
amounts
thus
due
shall
then
be
paid
within
SIXTY
(60)
days
of
the
date
of
receipt
of
the
invoice.
In
the
event
of
a
decline
in
the
index,
the
corresponding
amount
shall
be
deducted
from
the
amounts
payable
to
the
Supplier
or
invoiced
to
the
latter
by
Hydro-Qué-
bec.
4.06
According
to
Mr
Sirois,
this
10%
holdback
does
not
exist
in
regular
contracts,
where
the
appellant
is
only
required
to
deliver
the
concrete
products
to
the
specified
location.
The
holdbacks
amounted
to
$132,074
in
1975
and
$636,075
in
1976.
4.07
Mr
Sirois
maintained
that
when
the
1974
contract
was
signed,
the
appellant
was
fully
aware
that
the
10%
holdback
represented
a
guarantee
of
performance
for
Hydro-Quebec,
ensuring
that
the
appellant
would
discharge
its
principal
obligations
under
the
contract.
For
example,
according
to
Mr
Sirois,
if
the
appellant
had
not
met
the
conditions
of
the
Department
of
the
Environment,
Hydro-Québec
would
have
contracted
the
work
out
to
another
company
and
paid
it
from
the
10%
holdback.
Furthermore,
according
to
the
solemn
statement
made
by
the
appellant
and
filed
as
Exhibit
A-4,
the
same
situation
would
have
obtained
had
the
appellant
failed
to
pay
its
employees’
wages,
or
had
it
reneged
on
payments
owing
to
its
subcontractor,
“Les
Carrières
du
Boulevard
Inc’.
4.08
The
second
witness
for
the
appellant
was
Mr
Fernand
D’amours,
an
engineer
and
administrator
who
has
been
in
the
employ
of
Hydro-Quebec
for
eighteen
years.
He
has
worked
for
ten
years
as
a
technical
administrator
in
construction.
His
work
consists
in
preparing
the
technical
and
administrative
documentation
necessary
to
drawing
up
contracts.
According
to
Mr
D’amours,
the
solemn
declaration
of
December
12,
1977
(Exhibit
A-4),
that
Hydro-Québec
had
its
contractors
sign,
is
based
on
the
declaration
used
by
the
Canadian
Construction
Association
for
the
same
purpose.
This
solemn
declaration
form
is
now
included
in
Hydro-Québec’s
calls
for
tenders
book,
whereas
it
was
not
in
1974.
The
essential
part
of
the
solemn
declaration
signed
on
December
12,
1977
reads
as
follows:
IT
IS
SOLEMNLY
DECLARED
THAT:
I,
Jean-Yves
Sirois,
residing
at
441
Avenue
Desjardins
in
the
City
of
Matane
in
the
province
of
Quebec
do
solemnly
declare:
-1.
That
I
am
Secretary-Treasurer
(title
or
position)
of
BETON
PROVINCIAL
LTEE
(name
of
company
or
partnership)
the
Contractor
named
in
the
contract
above
mentioned,
and
as
such
I
have
personal
knowledge
of
the
following
facts.
-2.
That
all
labour
employed
in
performance
of
the
contract,
all
amounts
owing
to
subcontractors
and
suppliers
of
materials
and
services,
as
well
as
all
other
legitimate
claims
arising
out
of
the
work
implementation
have
been
satisfied
and
paid
with
the
exception
of
the
guarantee
holdbacks,
details
of
which
are
set
out
below:
|
Name
of
Debt-Claim
Holder
|
Type
of
Subcontract
|
Holdback
%
|
Amount
|
|
Les
Carrieres
du
|
crushing
and
grinding
|
10%
|
$77,598.30
|
|
Boulevard
Inc
|
|
and
the
contractor
hereby
undertakes
to
pay
the
said
amounts
within
ten
days
of
receipt
by
the
said
contractor
of
the
holdback
or
guarantee
deposit.
-3.
That
all
labour
employed
in
the
performance
of
this
contract
has
been
paid
in
accordance
with
the
decrees,
ordinances
and
statutes
in
force.
-4.
That
all
contributions
payable
and
deductions
made
under
the
Quebec
Workmen’s
Compensation
Act,
the
Minimum
Wage
Act,
the
Unemployment
Insurance
Act,
the
Quebec
Pension
Plan
and
all
other
statutes,
decrees
and
ordinances
in
force
have
been
remitted
to
those
concerned.
AND
I
MAKE
THIS
SOLEMN
DECLARATION
conscientiously
believing
it
to
be
true
and
knowing
that
it
is
of
the
same
force
and
effect
as
if
made
under
oath
by
virtue
of
the
Canada
Evidence
Act.
DECLARED
before
me
at
Matane
)
in
the
province
of
Quebec
on
this
)
12th
day
of
December,
1977
)
)
Robert
Otis,
JP
)
)
Commissioner
for
)
Oaths,
Notary,
Justice
of
the
Peace,
)
and
so
on.
)
)
J
Y
Sirois
)
)
4.09
On
page
D-2
of
the
call
for
tenders
book,
the
word
“contract”
is
defined:
(e)
Contract
The
word
“contract”
or
the
pronoun
that
replaces
it
means
the
call
for
tenders
document
in
complete
form
and
the
addenda,
the
submission
from
the
contractor
as
it
was
accepted
by
Hydro-Québec,
the
letter
of
understanding
and
the
purchase
order
issued
by
Hydro-Québec.
4.10
The
Outardes
II
development
work
was
completed
by
December
31,
1977
as
required
under
the
contract.
4.11
The
accumulated
holdback
then
stood
at
one
million
dollars
($1,000,000).
4.12
The
release
of
this
holdback
did
not
however
take
place
within
thirty
days,
owing
to
a
problem
involving
federal
sales
tax
which
arose
following
an
initial
audit
by
Hydro-Québec.
(The
provincial
sales
tax
posed
no
problem.)
In
this
regard,
clause
18
of
pages
E-16
and
E-17
of
the
call
for
tenders
book
(Exhibit
A-1)
stipulates
as
follows:
18.
FLUCTUATIONS
IN
THE
COST
OF
READY-MIXED
CONCRETE
If
Hydro-Québec
awards
a
contract
under
Section
2
of
the
Tender
Form,
the
sole
source
of
reference
that
Hydro-Québec
will
recognize,
in
applying
the
clause
concerning
fluctuations
in
the
cost
of
ready-mixed
concrete,
will
be
the
index
“173480016
Ready-Mixed
Concrete
—
Quebec”,
from
catalogue
No
62-002
published
monthly
by
Statistics
Canada
under
the
title
“Prices
and
Price
Indexes”.
Base
prices
will
be
adjusted
according
to
the
ratio
of
the
published
index
for
the
delivery
month
in
question
to
the
published
index
for
the
month
of
the
tender,
that
is,
to
the
base
index.
For
information
purposes,
the
index
for
February
1974
was
199.1.
The
effects
resulting
from
the
indexes
will
be
applied
on
a
monthly
basis
(immediately
upon
publication
of
the
indexes
by
Statistics
Canada)
and
to
those
quantities
of
ready-mixed
concrete
delivered
during
the
corresponding
month.
The
said
fluctuations
will
be
calculated
by
multiplying
the
monthly
total
of
invoices
for
ready-mixed
concrete
by
the
ratio
of
the
index
for
the
month
in
question
to
the
base
index.
No
further
adjustments
will
be
considered
on
the
basis
of
cost
variations,
whatever
they
may
be.
In
applying
this
clause,
Hydro-Québec
will
remit
or
withhold
an
amount
to
cover
the
difference
in
cost
of
the
federal
sales
tax.
4.13
The
problem
concerned
the
cement
powder
used
by
the
appellant.
Hydro-Québec
claimed
that
a
portion
of
the
tax
could
still
be
outstanding.
4.14
As
early
as
January
1978,
the
appellant
was
aware
of
this
federal
sales
tax
problem
raised
by
Hydro-Québec.
The
issue
was
addressed
in
a
letter
from
the
appellant
dated
January
17,
1978
(Exhibit
1-1):
Matane,
January
17,
1978.
Hydro-Quebec
75
Dorchester
Blvd
W
Montréal,
PQ
Attn:
Mr
Fernand
D’amours
SUBJECT:
Call
for
tenders
CCH-74-19105
Payment
of
holdback
Dear
Sir:
Further
to
our
conversation
earlier
today,
we
hereby
confirm
the
following:
(1)
we
accept
the
immediate
repayment
of
one
million
dollars
($1,000,000)
on
the
above
contract
holdback;
(2)
the
balance
of
the
holdback
being
payable,
pending
a
thorough
audit
by
your
treasury
department,
such
audit
to
be
performed
in
a
reasonably
expeditious
manner;
(3)
in
the
event
that
corrections
(deductions)
should
prove
necessary
following
a
complete
audit,
and
the
balance
of
the
holdback
is
less
than
the
deductions
to
be
made,
we
agree
that
the
shortfall
will
be
applied
to
our
1978
contract,
call
for
tender
CCH-77-19169.
We
thank
you
for
your
prompt
attention
to
this
matter.
Yours
sincerely,
Jean-Yves
Sirois
Secretary-T
reasurer
For:
BETON
PROVINCIAL
LTEE
|
cc:
B
Lévesques
Montreal
|
Orens
Gadreau
Outardes
—
II
|
|
L
Normandeau
Montreal
|
Paul
Gremeaux
Outardes
—
II
|
4.15
The
contract
made
provision
(pages
E-15,
E-16
and
E-17,
clauses
17
and
18
of
Exhibit
A-1)
for
a
variation
in
the
base
unit
price
of
a
cubic
yard
of
concrete.
This
price
varied
each
month
according
to
the
price
set
by
the
Government
of
Quebec,
which,
using
federal
statistics,
took
into
account
sales
in
the
various
regions
of
Quebec.
The
appellant
introduced
two
methods
of
invoicing
yards
of
concrete,
one
based
on
the
unit
price
and
the
other
based
on
the
indexed
price.
In
both
cases,
Hydro-Québec
made
the
10%
holdback.
4.16
As
a
result
of
the
discussions
generated
by
this
tax
problem,
the
payment
of
holdbacks
was
delayed
pending
resolution
of
the
problem.
In
fact,
the
final
payment
was
made
on
July
12,
1978.
4.17
In
filing
its
income
tax
returns
for
1975
and
1976,
the
appellant
did
not
include
in
the
computation
of
income
the
sums
of
$132,074
and
$636,075
respectively,
these
sums
constituting
holdbacks
by
Hydro-Québec
and
not
payable
until
thirty
days
after
the
expiry
of
the
contract.
4.18
The
respondent
included
these
sums
in
the
appellant’s
income
on
the
grounds
that
they
represented
accounts
receivable.
5.
Act
—
Case
Law
—
Analysis
5.01
Act
The
principal
legal
provisions
of
the
new
Income
Tax
Act
involved
in
the
case
at
bar
are
paragraphs
12(1
)(a)
and
(b).
These
paragraphs
read
as
follows:
12.
(1)
There
shall
be
included
in
computing
the
income
of
a
taxpayer
for
a
taxation
year
as
income
from
a
business
or
property
such
of
the
following
amounts
as
are
applicable:
(a)
any
amount
received
by
the
taxpayer
in
the
year
in
the
course
of
a
business
(i)
that
is
on
account
of
services
not
rendered
or
goods
not
delivered
before
the
end
of
the
year
or
that,
for
any
other
reason,
may
be
regarded
as
not
having
been
earned
in
the
year
or
a
previous
year,
or
(ii)
under
an
arrangement
or
understanding
that
it
is
repayable
in
whole
or
in
part
on
the
return
or
resale
to
the
taxpayer
of
articles
in
or
by
means
of
which
goods
were
delivered
to
a
customer;
(b)
any
amount
receivable
by
the
taxpayer
in
respect
of
property
sold
or
services
rendered
in
the
course
of
a
business
in
the
year,
notwithstanding
that
the
amount
or
any
part
thereof
is
not
due
until
a
subsequent
year,
unless
the
method
adopted
by
the
taxpayer
for
computing
income
from
the
business
and
accepted
for
the
purpose
of
this
Part
does
not
require
him
to
include
any
amount
receivable
in
computing
his
income
for
a
taxation
year
unless
it
has
been
received
in
the
year;
5.02
Case
Law
The
parties
referred
the
Board
to
the
following
case
law
and
authorities:
1.
—
HMQ
v
Lagueux
&
Frères
Inc,
[1974]
CTC
687;
74
DTC
6569;
2.
—
Thibault
v
Auger,
[1950]
CS
343;
3.
—
Carey
v
Carey,
42
CS
471;
4.
—
Kenneth
B
S
Robertson
Ltd
v
MNR,
[1944]
CTC
75;
2
DTC
655;
5.
—
Sandy
v
Yukon
Construction
Co
Ltd,
[1961]
26
DLR
(2d)
254;
6.
—
Terreau
et
Racine
Limitée
v
Trudel,
[1963]
CS
271;
7.
—
Mathers
v
Peltier
Handling
Equipment
Co
Ltd,
[1970]
CA
1;
8.
—
Lebel
v
St-Georges,
[1961]
CS
66;
9.
—
Emond
et
al
v
Saad
(1927),
65
CS
188;
10.
—
Morissette
v
Beaudet
et
Archambault
(1928),
45
QB
73;
11.
—
Grover
v
Stirling
Bonding
Co,
[1935]
3
DLR
481;
Type
of
Contract:
Supplier
of
Materials
12.
—
L’Union
Canadienne
Co
d’Assurancea
v
Structal
Inc,
[1973]
CA
1051;
Amounts
Receivable:
Income
Tax
Act
13.
—
MNR
v
Benaby
Realties
Ltd,
[1967]
CTC
418;
67
DTC
5275;
14.
—
MNR
v
John
Col
ford
Contracting
Co
Ltd,
[1962]
CTC
546;
62
DTC
1338;
15.
—
J
L
Guay
Ltée
v
MNR,
[1971]
CTC
686;
71
DTC
5423;
16.
—
Maple
Leaf
Mills
Limited
v
MNR,
[1976]
CTC
324;
76
DTC
6182;
17.
—
Marvin
L
Hannem
v
MNR,
[1980]
CTC
2089;
80
DTC
1091.
Suspensory
Condition:
Obligation
with
a
Term
18.
—
Traité
de
Droit
Civil
du
Québec,
Vol
8,
L
Faribault,
pp
15-23
and
95-99;
and
19.
—
Théorie
du
Droit
des
Obligations,
PUL
1975
by
Maurice
A
Tancelin,
pp
159
to
164.
5.03
Analysis
5.03.1
The
problem
in
its
essence
is
whether
the
amounts
withheld
by
Hydro-Québec
constitute
amounts
receivable
within
the
meaning
of
paragraph
12(1
)(b)
of
the
Act
as
amended
in
1974.
An
amount
receivable
within
the
meaning
of
the
said
section
must
be
included
in
income
“notwithstanding
that
the
amount
or
any
part
thereof
is
not
due
until
a
subsequent
year”.
Having
reviewed
the
case
law
and
the
authorities
cited
by
the
parties,
the
Board
considers
that
an
account
is
receivable:
(1)
where
only
the
term,
that
is
the
time
allowed
for
payment,
precludes
its
collection
in
the
current
year,
and
accordingly
(2)
where
its
legality
is
not
in
question
and/or
there
are
no
conditions
governing
this
payment.
This
definition
is
supported,
inter
alia,
by
the
principle
set
forth
in
Kenneth
B
S
Robertson
Ltd
v
MNR,
[1944]
CTC
75;
2
DTC
655,
to
the
effect
that
income
is
taxable
to
the
extent
that
the
right
to
the
income
is
absolute
and
cannot
be
subject
to
any
contractual
or
other
restriction
as
to
its
enjoyment,
use
and
disposition.
In
amending
paragraph
12(1
)(b)
in
1974,
it
would
appear
that
Parliament
has
limited
this
principle
somewhat
by
including
in
income
accounts
for
which
payment
is
due
in
a
subsequent
year.
Moreover,
in
MNR
v
John
Colford
Contracting
Co
Ltd,
[1960]
CTC
178;
60
DTC
1131,
the
Exchequer
Court
refers
to
“A
Dictionary
for
Accountants”
(1957
edition)
by
Eric
L
Kohler,
in
which
“receivable”
is
defined
as:
“Collectible,
whether
or
not
due”.
5.03.2
In
the
case
at
bar,
owing
to
the
evidence
presented,
it
would
appear
that
it
is
not
the
term
of
payment
alone
that
may
preclude
collection.
The
holdback
did
in
fact
guarantee
that
the
appellant
would
discharge
his
principal
obligations
under
the
contract
including,
among
others,
the
employees’
wages,
the
payments
owing
to
his
subcontractors
(para
4.07),
and
undoubtedly,
federal
sales
tax
payments.
Indeed,
it
is
known
that
the
problems
arising
from
this
question
of
sales
tax
(paras
4.11
to
4.15)
delayed
payment
of
the
holdback
until
July
1978
(para
4.16).
5.03.3
The
Board
is
of
the
opinion
that
the
appellant
did
not
have
an
absolute
right
to
the
holdbacks
as
long
as
all
the
obligations
under
the
contract
had
not
been
fulfilled
by
the
appellant,
and
while
fulfillment
of
these
obligations
is
conditional
on
action
on
the
part
of
the
appellant,
the
said
obligations
further
depend
on
all
the
conditions
stipulated
by,
inter
alia,
the
Department
of
the
Environment
(para
4.03(d)),
the
Department
of
National
Revenue
and
the
departments
administering
the
Workmen’s
Compensation
Act,
the
Unemployment
Insurance
Act
and
so
on
(Exhibit
A-4).
All
these
conditions
may
vary
during
the
life
of
the
contract,
depending
on
new
legislation
that
may
itself
depend
on
social
and
economic
developments.
The
holdback
may
only
be
paid
once
the
solemn
declaration
(Exhibit
A-4)
has
been
signed.
However,
even
if
the
declaration
is
signed,
that
does
not
mean
that
all
the
conditions
have
been
satisfied
as
intended
by
Hydro-
Quebec.
An
example
of
this
is
the
sales
tax
issue.
5.03.4
The
case
at
bar
involves
not
an
ordinary
service
contract
providing
for
the
delivery
of
goods
(para
4.06),
but
an
undertaking
in
construction.
The
contract
entered
into
by
the
appellant
and
Hydro-Québec
(Exhibits
A-1
and
A-2)
as
well
as
the
facts
adduced
in
evidence
(paras
4.02,
4.03
and
4.04)
leave
no
doubt
that
we
are
concerned
here
with
a
construction
contract.
The
solemn
declaration
(Exhibit
A-4)
(para
4.08)
is
based
on
the
one
the
Canadian
Construction
Association
has
its
contractors
sign.
This
solemn
declaration
is
made
only
for
the
purpose
of
obtaining
the
holdback
(para
4.07).
There
is
no
holdback
when
the
contract
merely
calls
for
the
delivery
of
concrete
products
(para
4.06).
5.03.5
In
MNR
v
John
Colford
Contracting
Co
Ltd,
[supra]
the
payment
of
the
holdback
hinged
upon
the
issuance
of
the
engineer’s
certificate:
the
Exchequer
Court
of
Canada,
upheld
by
the
Supreme
Court
of
Canada,
ruled
that
the
holdback
was
not
an
account
receivable
as
long
as
the
certificate
had
not
been
issued.
In
the
instant
case,
there
is
no
condition
involving
the
issuance
of
a
certificate
by
an
engineer.
The
conditions
stipulated
by
Hydro-
Québec
and
described
above
are
nevertheless
indispensable
conditions
for
the
payment
of
the
holdback,
no
less
than
the
issuance
of
a
certificate
by
an
engineer.
lt
would
appear
to
the
Board
that
the
holdbacks
made
in
1975
and
1976
cannot
be
considered
accounts
receivable
as
long
as,
in
the
first
instance,
the
solemn
declaration
had
not
been
signed
by
the
appellant,
which
was
done
on
December
12,
1977
and,
in
the
second
instance,
as
long
as
Hydro-
Québec
itself
was
not
satisfied
that
all
other
conditions
(including
the
payments
owing
to
the
various
government
agencies)
had
been
fulfilled,
which
was
not
the
case
until
August
1978.
6.
Conclusion
The
appeal
is
allowed
and
the
matter
referred
back
to
the
respondent
for
assessment
in
accordance
with
the
foregoing
reasons
for
judgment.
Appeal
allowed.
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