Canning v. C.F.M. Fuels (Ontario)

Canning v. C.F.M. Fuels (Ontario)

On proper construction the warranty term 'depreciation' is an accounting concept and did not require the vendors to have applied the capital cost allowance system so as to make accounting depreciation identical to tax CCA; the auditors' letter referred only to use of CCA 'rates' in computing accounting depreciation and the books did show full accounting depreciation for periods in service, therefore no breach and appeal allowed.

Citation
[1977] 2 SCR 207
Parties
Appellants / Plaintiffs: Hugh James Canning and Basil Leo Canning; Respondent / Defendant: C.F.M. Fuels (Ontario) Limited
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
20 December 1976
Procedural Posture
Contract Sale of Business / Sale of Shares / Appeal to the Supreme Court of Canada From the Court of Appeal for Ontario (judgment at Trial by Donohue J. Affirmed Below)
Outcome
Appeal allowed; judgment for appellants; Court of Appeal decision set aside.
Legal Topics
Warranty Interpretation, Depreciation Vs Capital Cost Allowance, Sale of Shares, Remedies and Damages, Contract Construction
Source Language
English
Contract Tax Law Corporate Law Property Warranty Interpretation Depreciation Vs Capital Cost Allowance Sale of Shares Remedies and Damages +1 more

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Parties

Hugh James Canning and Basil Leo Canning

Appellants / Plaintiffs

C.F.M. Fuels (Ontario) Limited

Respondent / Defendant

Procedural Posture

Contract Sale of Business / Sale of Shares / Appeal to the Supreme Court of Canada From the Court of Appeal for Ontario (judgment at Trial by Donohue J. Affirmed Below)

Legal Issues

  1. 1 Whether the warranty that the company 'has claimed on its tax returns and has reserved on its books at least the depreciation referred to' meant that accounting depreciation had to equal tax capital cost allowance (CCA) amounts
  2. 2 Whether the vendors breached that warranty
  3. 3 Whether purchaser proved damage and entitlement to set-off of $21,882

Ratio Decidendi

On proper construction the warranty term 'depreciation' is an accounting concept and did not require the vendors to have applied the capital cost allowance system so as to make accounting depreciation identical to tax CCA; the auditors' letter referred only to use of CCA 'rates' in computing accounting depreciation and the books did show full accounting depreciation for periods in service, therefore no breach and appeal allowed.

Court Disposition

Appeal allowed; judgment for appellants; Court of Appeal decision set aside.

Orders

  • Appeal allowed and Court of Appeal judgment set aside
  • Judgment entered in favour of appellants for $21,882 plus interest at 6.75% per annum from December 4, 1968