Ex. C.R. EXCHEQUER COURT OF CANADA 103 HIS MAJESTY THE KING PLAINTIFF; 1928 March 2. V THE COSGRAVE EXPORT BREWING ( DEFENDANT. CO. LTD. AND HIS MAJESTY THE KING PLAINTIFF; v. JOHN LABATT, LIMITED DEFENDANT. Practice Crown—Information—Set-off—Fiat—Jurisdiction The Crown by its information claimed that the defendants were indebted to it for certain duties and asked for judgment accordingly. By its answer to said information defendant set off a claim to recover certain other duties that had been paid to the Crown, and which were absolutely distinct from what was claimed by the information. Held, that the set-off and counter-claim confer definite and independent remedies upon a defendant against the plaintiff, and are two separate claims or causes of action, and as one cannot sue the Crown without a fiat, such set-off or counter-claim could not be pleaded by way of answer to the information. (The Queen v. Whitehead (1884) 1 Ex. C.R. 134 distinguished.) 2. That to allow a counter-claim or set-off the court must as a condition precedent be vested with the jurisdiction of hearing both the action and the counter-claim or set-off, and that this court has no jurisdiction to hear the counter-claim until a fiat has been given to hear the same. MOTION by the Crown to strike put paragraph 11 from the defence in the first case and paragraph 12 from the defence in the second case. The motion was heard before the Honourable Mr. Justice Audette at Ottawa. F. P. Varcoe for the Crown. George Macdonnell for the defendants. The facts are stated in the reasons for judgment. AUDETTE J., now (March 2, 1928), delivered judgment. The question of set-off and counterclaim against the Crown was settled in this Court in its early days. Dealing first with the point relied on by Mr. Macdonnell that technical objections to the pleadings after they are
104 EXCHEQUER COURT OF CANADA [ 1928] 1928 closed are excluded from consideration, this Court is not THE KING. much concerned with technical objections. The Court v. CosdRAVE wants to go to the pith and marrow and merits of the case, DEPORT and endeavours to do justice between the parties. We have BCRO E. , LTD. a special rule, Number 338, enacting that no proceeding THE the Exchequer Court shall be defeated by any mere KIN(}, in V. formal objection. That takes care of Mr. Macdonnell's LJOHN ABATT arg uument. LTD. Dealing now with the matter on its merits one must Audette J. bear in mind that this is a claim for duties that have not — been paid but were due. Now, you want me to allow you to set off a claim to recover back some other duties that have been paid and that are absolutely distinct from what is claimed in the present action. And coming to the case of The Queen v. Whitehead (1) cited by Mr. Macdonnell, I may preface my remarks by saying that this is a case of special circumstances which must be distinguished from the present one. Whilst in the present case the amounts of the claim are not mixed or interwoven with the matter set forth in the paragraph of the defence above mentioned, in the Whitehead case the items or amounts were inseparable. Indeed the Whitehead case is a case of special circumstances, so to speak. The head-note reads as follows: Where the dealings of the parties thereunder were so continuous and inseparable—[Inseparable does not meet this case, because the taxes to be paid as absolutely distinct to the taxes that have been paid long before.] —that the claims on one side could not properly be investigated apart from those of the other, the rule against pleading a set-off to a declaration for money due to the Crown did not apply, and the demurrer to said plea should be overruled. Yet the Whitehead case recognizes the rule against pleading set-off against the Crown, but decides that when the amounts are so linked and interwoven that you could not deal with one part without dealing with the other you had to let in the set-off. Under the present system of practice in England I find that set-off and counterclaim must be regarded as conferring definite and independent remedies upon a defendant against the plaintiff. They are two separate claims or causes of action. And until the fences of the prerogatives of the Crown are removed one cannot sue the Crown with- (1) (1884) 1 Ex. C.R. 134.
Ex. C.R. EXCHEQUER COURT OF CANADA 105 out a fiat. That comes back to a fundamental principle. 1928 No counterclaim can be set off at common law against the THE KING. Crown. The subject must proceed by petition of right. V. COSGRAVE There can be no set-off against the Crown in so far as it EXPORT BREWING is a substantive course of action. Co., LTD. The case of Fortier v. Langelier (1) which also deals THE KING. with a matter of this kind, holds: 1st that compensation y. JOHN does not take place between a debt due to the government LABATT, for a direct personal tax and . a debt due by the government LTD. to the person owing such tax; and 2nd, no action can be Audette J. sustained against the government except by petition of right allowed by the express consent or fiat of the Lieuten- ant-Governor, and to permit a plea of compensation to be set up, would be equivalent to permitting a suit to be pro- secuted against the government without such consent or fiat. There is a similar decision in the case of Côté v. Cie du chemin de fer du comté de Drummond (2). Juge: 1. On ne peut plaider compensation à une demande de la cou-ronne sans avoir recours à la pétition de droit. A substantive cause of action cannot be pleaded as an incidental demand or counterclaim to an information by the Crown. Queen v. The Montreal Woollen Mills Co. (3). The same principle was also recognized in the two cases: Hogaboom v. The King (4) ; and The King v. British American Bank Note Co. (5). To allow a counterclaim or set-off the court must as a condition precedent be vested with the jurisdiction of hearing both the action and the counterclaim or set-off, and that this court has no jurisdiction to hear the counterclaim until a fiat has been given to hear the same; it is the fiat that gives the court jurisdiction to hear it. Following the judgment of Lord Gorell, in the case of Bow McLachlan et al v. Ship Camosun (6), I have come to the conclusion that the real contest between the parties in the present instance, is with regard to a matter which is not a defence proper, and over which, if put forward as a claim, the Exchequer Court has no jurisdiction until a fiat (1) (1895) Q.R. 5 K.B. 107. (4) (1901) 7 Ex. C.R. 292. (2) (1898) Q.R. 15 S.C. 561. . (5) (1901) 7 Ex. C.R. 119. (3) (1895) 4 Ex. C.R. 348. (6) (1909) A.C. 597 at p. 613.
106 EXCHEQUER COURT OF CANADA [ 1928] 1928 is obtained to so hear the claim. The contest should be THE KING. left to be settled by a cross action in a court having juris- ,-, O B V GR . AVE diction. EXPORT The motions to strike out are granted and paragraph 11 BREWING Co., LID. in the first case of the statement of defence ,andparagrap h — 12 in the second case in the statement of defence, are THE KING. v. stricken out and deleted from the plea. The whole with JOHN LABATT, of the ap p p p lication in favour o tfhpel aintiff. LTD. Judgment accordingly. Audette J.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.