LACOURCIÈRE,
J.:—This
application
is
an
appeal
from
the
report
of
G.
W.
Dunn,
Master,
dated
October
20,
1969,
on
a
reference
herein
directed
by
the
Senior
Master,
as
a
result
of
interpleader
proceedings
instituted
by
the
garnishee
herein.
The
learned
Master
gave
reasons
determining
the
validity
of
various
claims
and
their
respective
priority
against
the
fund
in
Court.
There
is
no
question
in
the
present
appeal
as
to
the
priority
of
W.
L.
Harvey
Paving
Limited
and
Pedlar
People
Limited
who
were
properly
held
to
be
first
in
priority
by
virtue
of
the
trust
fund
under
the
provisions
of
Section
3
of
The
Mechanics’
Lien
Act,
R.S.O.
1960,
c.
233.
The
only
dispute
concerns
the
priority
as
between
the
claimant,
the
Attorney-General
of
Canada,
found
to
be
second
in
priority
in
the
report,
and
the
Royal
Bank
of
Canada,
the
applicant
herein,
found
to
be
third
in
priority.
The
bank’s
claim
rests
on
a
general
assignment
of
debts
made
by
the
judgment
debtor
in
favour
of
the
bank
applicant
dated
October
1,
1965.
The
form
of
assignment
was
registered
on
October
4,
1965,
as
#2712
for
the
County
of
York.
Notice
of
the
assignment
was
given
to
the
garnishee
by
the
bank
by
letter
dated
June
21,
1968.
The
form
of
the
assignment
need
not
be
set
out
here
but
is
admittedly
a
valid
assignment
of
all
debts
to
be
held
by
the
bank
as
a
general
and
continuing
collateral
security
for
the
fulfilment
of
all
obligations,
present
or
future,
absolute
or
contingent,
matured
or
not.
The
judgment
debtor
has
at
all
material
times
been
indebted
to
the
bank
by
virtue
of
an
overdraft
on
its
account.
In
addition,
the
judgment
debtor
executed
a
guarantee
and
postponement
of
claim
agreement
under
seal
dated
August
2,
1966,
guaranteeing
any
and
all
indebtedness
of
Mario
Vespi
Construction
to
the
bank
up
to
$15,000
and
interest.
By
registered
letter
of
January
9,
1969,
the
bank
demanded
payment
from
the
judgment
debtor
of
the
said
amount
of
$15,000
plus
interest
at
834%.
It
will
be
noted
that
the
demand
of
this
amount
was
subsequent
to
the
notification
of
the
garnishee
by
the
bank.
The
indebtedness
of
the
judgment
debtor
to
Her
Majesty
the
Queen
in
Right
of
Canada
represented
by
the
Attorney-
General
is
for
employee
deductions
under
the
provisions
of
the
Income
Tax
Act,
R.S.C.
19.52,
c.
148,
and
the
Canada
Pension
Plan,
1964-65
(Can.),
c.
51.
The
Attorney-General
of
Canada
claims
priority
by
virtue
of
three
demands
on
third
parties
which
were
served
on
the
garnishee
as
follows:
(a)
a
demand
on
third
parties
dated
February
27,
1968,
in
the
amount
of
$3,310.40
;
(b)
a
demand
dated
March
27,
1968,
in
the
amount
of
$214.76
;
(c)
a
demand
dated
October
16,
1968,
in
the
amount
of
$8,206.84.
All
the
said
demands
were
in
similar
form,
and.
required
the
garnishee
to
deduct
from
moneys
payable
to
the
debtor
Kipling
Paving
Company
Limited
and
pay
over
to
the
Receiver-General
of
Canada
the
amounts
for
which
the
third
party
was
indebted
“until
the
aforesaid
liability
has
been
paid
in
full’’.
Each
subsequent
demand
was
accompanied
by
a
letter
from
the
director
of
the
accounts
section
stating
that
the
enclosed
demand
setting
out
the
amount
was-'
in
addition
to
the
demand
forwarded
on
the
previous
date.
Both
parties
rely
on
the
decision
in
Bank
of
Montreal
v.
Union
Gas
(
o.
of
Canada
Ltd.,
[1969]
2
OR.
776;
7
D.L.R.
(3d)
25;
[1969]
C.T.C.
686.
In
his
reasons
the
Master
also
relied
on
this
judgment
as
authority
for
holding
that
the
claims
of
the
Attorney-General
of
Canada
stood
in
priority
to
the
claims
of
the
bank.
The
Master
could
see
no
way
that
that
case
could
be
fairly
distinguished
from
the
case
then
before
him.
The
Master
appears
to
have
treated
the
three
demands,
although
given
on
different
dates
and
for
separate
amounts,
on
an
equal
footing.
It
is
submitted
by
the
present
applicant
that
this
decision
establishes
that
the
rights
arising
under
a
demand
on
third
parties
are
by
way
of
equitable
charge
crystallized
by
the
state
of
affairs
at
the
time
of
the
delivery
of
the
demand.
In
my
opinion
it
makes
no
difference
whether
the
demand
is
delivered
pursuant
to
the
Income
Tax
Act
or,
as
here,
for
contributions
under
the
Canada
Pension
Plan.
By
virtue
of
Section
24(2)
of
the
Canada
Pension
Plan,
the
provisions
of
Section
120,
inter
alia,
of
the
Income
Tax
Act
apply
mutatis
mutandis
in
relation
to
all
contributions
payable
by
an
employer
under
the
Act.
A
charge
is
therefore
created,
but
in
my
opinion
the
charge
extends
only
to
the
amounts
owing
at
the
time
when
the
demand
is
delivered.
There
can
be
no
question
that
a
charge
was
created
in
favour
of
the
Attorney-General
for
the
amounts
mentioned
in
the
demands
dated
February
27
and
March
27,
1968.
I
say
this
notwithstanding
Mr.
Weislo’s
argument
that
the
three
demands
are
not
separate
demands
but
one
continual
claim
for
which
notice
was
given
to
the
garnishee.
I
cannot
accept
the
submission
that
the
three
demands
formed
part
of
one
transaction:
the
situation
is
thus
different
from
the
situation
which
obtained
in
Bank
of
Montreal
v.
Union
Gas
of
Canada
Ltd.
(supra)
where
a
second
demand,
for
the
undischarged
balance
of
the
amount
mentioned
in
the
first
demand,
was
regarded
as
having
been
delivered
ex
abundanti
cautela.
I
am
satisfied
that
the
rights
of
the
bank
were
perfected
by
service
of
its
notice
of
assignment
of
book
debts
on
the
garnishee
on
June
21,
1968;
from
that
time
on,
the
garnishee
could
not
pay
over
to
the
judgment
debtor
the
amount
owing
by
it.
In
other
words,
title
to
the
book
debt
as
a
chose
in
action
was
in
the
bank,
subject
only
to
the
two
demands
of
prior
date
and
the
trust
created
under
The
Mechanics’
Lien
Act.
We
therefore
have
an
equitable
charge
created
by
the.
judgment
debtor’s
assignment,
and
an
equitable
charge
created
by
the
demand
on
third
parties.
I
read
the
Court
of
Appeal
decision
referred
to
as
authority
for
the
proposition
that
as
between
two
claims
founded
in
equity,
priority
goes
to
him
who
first
gives
notice.
This
rests
on
the
authority
of
Tailby
v.
Official
Receiver
(1888),
13
App.
Cas.
523.
The
bank’s
notice
having
been
given
before
October
16,
1968,
it
follows
that
the
bank
is
prior
in
time
and
consequently
prior
in
right
to
the
third
demand
of
the
Attorney-General.
I
cannot
accept
as
applicable
the
authorities
relied
upon
by
counsel
for
the
respondent
dealing
with
the
Crown’s
prerogative.
I
am
satisfied
that
with
respect
to
equitable
claims
of
the
Crown
and
of
the
subject
company
the
rule
of
priority
in
time
must
apply.
Neither
in
my
opinion
does
it
make
a
difference
that
the
request
for
payment
by
the
judgment
debtor
to
the
bank
with
respect
to
the
Mario
Vespi
Construction
guarantee
only
came
on
January
9,
1969;
it
is
true
that
as
of
June
21,
1968,
the
judgment
debtor’s
indebtedness
to
the
bank
was
limited
to
the
amount
of
overdraft.
However,
the
notice
of
assignment
served
by
the
bank
upon
the
garnishee
referred
to
an
assignment
covering
‘‘all
monies
owing
or
to
become
owing”.
The
latter
expression
would
no
doubt
take
care
of
the
judgment
debtor’s
contingent
liability
under
the
guarantee
and
postponement
of
claim.
I
would
therefore
allow
the
appeal
and
vary
the
order
of
Master
Dunn
to
provide
that
the
Attorney-General
of
Canada
is
second
in
priority
as
to
the
sum
of
$3,525.16
plus
interest
accruing.
thereon,
from
February
4,
1969
;
that
the
Royal
Bank
of
Canada
is
third
in
priority
for
the
total
mentioned
in
para.
3
of
the
Master’s
order
of
October
20,
1969,
namely,
$17,799.94
and
interest
from
the
said
date;
that
the
Attorney-General
of
Canada
is
fourth
in
priority
with
respect
to
the
amount
of
$8,206.84
the
subject
of
its
third
demand,
and
that
all
other
priorities
in
the
Master’s
order
of
October
20,
1969,
remain
undisturbed
and
are
hereby
confirmed.
In
the
circumstances
I
do
not
think
there
should
be
any
costs
of
this
appeal.
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