http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/99654/index.do 
Canada v. Caisse Desjardins de Québec (November 27, 2014 – 2014 FCA 279, Nöel CJ (author), Gauthier, Boivin JJA).
Précis: A requirement to pay was served on the Caisse Desjardin in connection with one of its customers. Although the customer had money in its account when the requirement was received it was also indebted to the Caisse on a variable credit contract; the Caisse applied the money in the account to that debt rather than paying it in accordance with the requirement. The Tax Court of Canada held that the requirement to pay served on the Caisse was ineffective. It did so by striking out paragraph 6 of the variable credit contract between the Caisse and its customer. In the alternative it held that the customer was insolvent prior to the service of the requirement and that paragraph 6 operated to make the requirement ineffective. The Federal Court of Appeal allowed the Crown’s appeal on the first ground, i.e., held that paragraph 6 was operative. However the Court of Appeal found that there was no basis to interfere with the Tax Court’s factual finding that the customer was insolvent prior to the service of the requirement and that the requirement was therefore ineffective under the terms of paragraph 6 of the variable credit contract.
Decision: This is an appeal from a decision of the Tax Court which was blogged earlier on this site. The facts were relatively simple. A requirement was served on the Caisse on January 24, 2011. There was evidence, which was accepted by the Tax Court Judge, that the customer in question was insolvent prior to that date. Although the customer had money in its account when the requirement was received it was also indebted to the Caisse on a variable credit contract; the Caisse applied the money in the account to that debt rather than paying it in accordance with the requirement. The operative provisions of the variable credit agreement between the customer and the Caisse were as follows:
[translation]
4. REQUEST FOR REPAYMENT
The Caisse reserves the right to demand at any time the immediate repayment of any balance owed in principal, interest, costs and accessories. The Caisse will then have the option to cancel the contract, without prejudice to all its other rights and recourses.
6. DEFAULT
If the Borrower draws a cheque that brings the line of credit balance to an amount higher than the amount authorized hereunder, if it goes bankrupt, if it transfers its property or becomes insolvent or fails to meet any of the conditions and obligations stipulated herein, any balance then owing in principal, interest, costs and accessories shall become immediately exigible.
[Emphasis added [by the Court of Appeal].]
The Crown argued that paragraph 6 limited the application of paragraph 4. The Tax Court held that paragraph 6 was the result of a drafting error and therefore inoperative:
[10] According to the Crown, clauses 4 and 6 of the variable credit contract have to be harmonized, and the wording of these provisions makes it clear that in situations not anticipated in clause 6, the debt of the Caisse is not exigible unless notice is provided.
[11] The TCC judge recognized that these two clauses, when read according to the principles of interpretation set out in the C.C.Q. (that is, according to standard practices), have the effect suggested by the Crown (reasons at paragraph 14). He found, however, that clause 6 was the result of a drafting error (reasons at paragraphs 16 and 20). Disregarding clause 6 and citing clause 4, the TCC judge concluded that the balance owed, that is, the “principal, interest and accessories”, were exigible at any time (reasons at paragraph 15).
The Court of Appeal rejected this conclusion but accepted the Tax Court’s alternative conclusion that the customer was insolvent prior to January 24, 2011 and the requirement was therefore ineffective:
[20] The TCC judge also offered an alternative reason to justify his conclusion. This time relying on clause 6, he concluded that the tax debtor became insolvent before the service of the requirement on January 24, 2011, thus making the debt to the Caisse exigible before this date under the clause (reasons at paragraphs 21 to 27).
[21] The Crown is also challenging this conclusion as part of this appeal. In the Crown’s opinion, the documents on which the TCC judge relied to conclude that the tax debtor was insolvent do not demonstrate this [translation] “clearly” (Crown’s memorandum at paragraph 53). Better evidence would have been required to conclude that the tax debtor was insolvent.
[22] With respect, the question of whether the tax debtor was insolvent before January 24, 2011, is one of fact. The conclusion drawn by the TCC judge in response to this question cannot be set aside in the absence of a palpable and overriding error. No such error was shown.
In the result the appeal was dismissed with costs.