Canadian Admiral Corp. Ltd. v. L.F. Dommerich & Co. Inc.

Canadian Admiral Corp. Ltd. v. L.F. Dommerich & Co. Inc.

On receipt of notice of assignment of a particular invoice the debtor may set off against the assignee any amount due from the assignor to the debtor that existed at the time of that notice; the debtor has no duty to volunteer such set-off absent fraud or knowledge of deception; the 1954 factoring letter was not an equitable assignment of future debts and, if treated as such, would be void for non-registration under the Assignment of Book Debts Act. Therefore Admiral was entitled to set off the amounts owing by Rotor that existed at the dates of notice of assignment and the appeal is allowed.

Citation
[1964] SCR 238
Parties
Defendant/appellant: Canadian Admiral Corporation Ltd.; Plaintiff/respondent: L.F. Dommerich & Company Incorporated
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
28 January 1964
Procedural Posture
Collection (bankruptcy/insolvency) / Appeal to Supreme Court of Canada From the Court of Appeal for Ontario
Outcome
Appeal allowed
Legal Topics
Factoring Agreement, Assignment of Accounts Receivable, Right of Set Off Against Assignee, Duty to Disclose Set Off, Assignment of Book Debts Act R.s.o. 1950 C.25
Source Language
English
Bankruptcy and Insolvency Contract Equity Property (assignments) Commercial Law Factoring Agreement Assignment of Accounts Receivable Right of Set Off Against Assignee +2 more

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Parties

Canadian Admiral Corporation Ltd.

Defendant/appellant

L.F. Dommerich & Company Incorporated

Plaintiff/respondent

Procedural Posture

Collection (bankruptcy/insolvency) / Appeal to Supreme Court of Canada From the Court of Appeal for Ontario

Legal Issues

  1. 1 Whether a debtor may exercise against an assignee the same right of set-off he would have had against the assignor at the time of notice of assignment
  2. 2 Whether the factoring agreement constituted an equitable assignment of future choses in action
  3. 3 Whether the debtor had a duty to volunteer information about a set-off to the assignee absent fraud or knowledge of deception

Ratio Decidendi

On receipt of notice of assignment of a particular invoice the debtor may set off against the assignee any amount due from the assignor to the debtor that existed at the time of that notice; the debtor has no duty to volunteer such set-off absent fraud or knowledge of deception; the 1954 factoring letter was not an equitable assignment of future debts and, if treated as such, would be void for non-registration under the Assignment of Book Debts Act. Therefore Admiral was entitled to set off the amounts owing by Rotor that existed at the dates of notice of assignment and the appeal is allowed.

Court Disposition

Appeal allowed

Orders

  • Appeal allowed with costs in this Court and in the Court of Appeal; judgments at trial and on appeal set aside.
  • Declaration that the letter of September 1954 is not an equitable assignment of future debts owing to Rotor by Admiral.