Ontario Development Corp. v. Bourgault (F.P.) Industries Cultivator Division Ltd. et al., (1995) 133 Sask.R. 311 (QB)

• Judge: Laing, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: August 21, 1995
• Jurisdiction: Saskatchewan
• Citations: (1995), 133 Sask.R. 311 (QB)

Ont. Dev. Corp. v. Bourgault Ind. (1995), 133 Sask.R. 311 (QB)

MLB headnote and full text

Ontario Development Corporation (plaintiff) v. F.P. Bourgault Industries Cultivator Division Ltd. and F.P. Bourgault Industries Air Seeder Division Ltd. (defendants)

(1994 Q.B. No. 113)

Indexed As: Ontario Development Corp. v. Bourgault (F.P.) Industries Cultivator Division Ltd. et al.

Saskatchewan Court of Queen's Bench

Judicial Centre of Melfort

Laing, J.

August 21, 1995.

Summary:

A creditor's floating charge on a company's accounts receivable crystalized. The creditor sued the company's debtors for monies owing to the company. The debtors claimed that the amount owing was offset by a dam­age claim it had against the company.

The Saskatchewan Court of Queen's Bench allowed the creditor's action and refused the debtor's claim for set-off.

Company Law - Topic 5428

Borrowing - Debentures - Crystallization of a floating charge - Steele's Wire Springs issued a debenture to ODC that included a floating charge on accounts receivable - Default under another security agreement constituted default under ODC's debenture - Steele's defaulted under a debenture held by the Royal Bank - Royal appointed a receiver - On March 9, 1993, Steele's notified its debtors of the appoint­ment - ODC sued Steele's debtors - The debtors claimed that ODC's charge crystal­lized on April 30, 1993 when ODC pro­vided notice of the receiver's appointment and they were entitled to set off a claim for damages which predated crystallization - The Saskatchewan Court of Queen's Bench concluded that the appointment crystallized both Royal and ODC's charges on March 9, 1993 and ODC was not required to provide additional notice - Fur­ther, notice is irrelevant when a party requests equitable set-off on an unliqui­dated claim not accrued due - See para­graphs 15 to 20.

Practice - Topic 1843

Pleadings - Counterclaim and set-off - Set-off - Circumstances when set-off cannot be claimed - [See first Practice - Topic 1850 ].

Practice - Topic 1850

Pleadings - Counterclaim and set-off - Set-off - Equitable set-off - Steele's Wire Springs issued a debenture to ODC that included a floating charge on accounts receivable - Steele's went into receivership and ODC's charge crystallized - ODC sued debtors for payment for monies owing under post-receivership contracts with Steele's - The debtors claimed equi­table set-off for damages for defective goods delivered by Steele's prior to the receivership - ODC asserted that pre-receivership contracts were not closely connected with contracts completed post-receivership - In allowing ODC's action, the Saskatchewan Court of Queen's Bench denied set-off - There was no inter­dependency or nexus between the individ­ual contracts - The ongoing cus­tomer relationship could not be described as a "series of events" - Allowing set-off might cause an injustice to unsecured creditors if ODC pursued other assets - Denying it would not - See paragraphs 21 to 29.

Practice - Topic 1850

Pleadings - Counterclaim and set-off - Set-off - Equitable set-off - [See Com­pany Law - Topic 5428 ].

Practice - Topic 1851

Pleadings - Counterclaim and set-off - Set-off - Bars - [See first Practice - Topic 1850 ].

Cases Noticed:

Business Computers Ltd. v. Anglo-African Leasing Ltd., [1977] 2 All E.R. 741 (C.A.), consd. [para. 15].

Robbie (N.W.) & Co. v. Whitney Ware­house Co., [1963] 3 All E.R. 613 (C.A.), refd to. [para. 16].

Federal Business Development Bank v. Prince Albert Fashion Bin Ltd., Prince Albert Credit Union Ltd. and Kawula, [1983] 3 W.W.R. 464; 22 Sask.R. 111 (C.A.), consd. [para. 18].

Telford v. Holt, [1987] 2 S.C.R. 193; 78 N.R. 321; 81 A.R. 385; [1987] 6 W.W.R. 385; 54 Alta. L.R.(2d) 193; 21 C.P.C.(2d) 1; 46 R.P.R. 234; 41 D.L.R.(4th) 385; 37 B.L.R. 241, consd. [para. 20].

Mercantile Bank of Canada et al. v. Leon's Furniture Ltd. (1992), 62 O.A.C. 187; 98 D.L.R.(4th) 449 (C.A.), dist. [para. 21].

Aboussafy v. Abacus Cities Ltd., [1981] 4 W.W.R. 660; 29 A.R. 607 (C.A.), consd. [para. 21].

Coba Industries Ltd. v. Millie's Holdings (Canada) Ltd., [1985] 6 W.W.R. 14 (B.C.C.A.), consd. [para. 24].

Counsel:

Diana K. Lee, for the plaintiff;

Christopher C. Boychuk, for the defen­dants.

This case was heard before Laing, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Melfort, who delivered the following judgment on August 21, 1995.