A customer ("Canvrac") made a deposit of $200,000 with the Caisse and entered into a "Term Savings Agreement" under which Canvrac agreed that its deposit would be for a term of five years, it would not negotiate or transfer the deposit and the term deposit could be given as security, but only in favour of the Caisse. Canvrac and the Caisse also agreed that to secure repayment of sums owing by Canvrac to the Caisse under a line of credit, Canvrac would maintain the deposit of $200,000 and consented to the Caisse withholding repayment of the sum of $200,000 as long as the line of credit remained outstanding.
Although a bare right of set-off by the Caisse would not have given it a security interest in the deposit, here the agreement between the Caisse and Canvrac created a security interest in the deposit because encumbrances placed on Canvrac's deposit ensured that Canvrac's claim again the Caisse for its deposit would continuously exist in order to ensure that the set-off remedy would be effective.