Supreme Court of Canada
Smith v. Rural Municipality of Vermilion Hills, (1914) 49 S.C.R. 563
Date: 1914-03-23
Alexander Smith (Defendant) Appellant;
and
The Rural Municipality of Vermilion Hills (Plaintiff) respondent.
1914: February 12, 23.
Present: Sir Charles Fitzpatrick C.J. and Idington, Duff, Anglin and Brodeur JJ.
ON APPEAL FROM THE SUPREME COURT OF SASKATCHEWAN.
Assessment and taxes—Lease of Crown lands—Interest of occupier— Constitutional law—Exemption from taxation—Construction of statute—“B.N.A. Act, 1867,” s. 125— (Sask.) 6 Edw. VII., c. 36, “Local Improvements Act”—(Sask.) 7 Edw. VII., c. 3, “Supplementary Revenue Act”—Recovery of taxes—Non-resident—Action for debt—Jurisdiction of provincial courts.
The Saskatchewan statutes, 6 Edw. VII., ch. 36 (“The Local Improvements Act”) and 7 Edw. VII., ch., 3 (“The Supplementary Revenue Act”) and their amendments, authorizing the taxation of interests in Dominion lands held by persons occupying them under grazing leases, or licences from the Minister of the Interior, are not in contravention of the provision of section 125 of the “British North America Act, 1867,” exempting from taxation all lands or property belonging to the Dominion of Canada; consequently, these enactments are intra vires of the provincial legislature. The Calgary and Edmonton Land Co. v. The Attorney-General of Alberta (45 Can. S.C.R. 170), followed.
For the purposes of the collection of taxes so levied the provincial legislature may authorize their recovery by personal action, as for debt, against persons so occupying such lands, in the civil courts of the province, notwithstanding that the residences of such persons may be outside the limits of the province.
The judgment appealed from (24 West. L.R. 903; 4 West. W.R. 1219) was affirmed.
APPEAL from the judgment of the Supreme Court of Saskatchewan[1], affirming the judgment of Newlands
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J. at the trial[2], which maintained the plaintiff’s action with costs.
The circumstances of the case are set out in the judgment of Mr. Justice Duff now reported.
Ewart K.C. for the appellant.
H. Y. MacDonald K.C. for the respondent.
T. A. Colclough K.C. Deputy Attorney-General of Saskatchewan, for the Attorney-General of Saskatchewan.
The Chief Justice.—I would dismiss this appeal with costs.
Idington J.—The facts in question herein as well as the substance of the enactments in question are set forth in the opinion judgment of the learned Chief Justice of the Supreme Court of Saskatchewan.
Upon these facts, which, by the way, appear to be admitted, I cannot see how this case in regard to the application of the statutes and principles of law which must govern our decision can be distinguished from the case of The Calgary and Edmonton Land Co. v. The Attorney-General of Alberta[3]. The statutes in question are substantially the same.
The right of respondent to sue for any taxes imposed by them or their officers or their predecessors seems clearly given.
The enactments upon which such taxation rest do not attempt to tax the land so far as vested in the Crown. In the absence of any such express attempt the statutes must be read as bearing only upon the interest of others in the lands and in this case of the
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appellant as lessee or occupant. The claim that these assessments are so excessive as to shew that they exceeded the value of the land cannot be raised herein.
The justice or injustice of the rating is something which we can have nothing to do with.
The local court for determining any such question can alone be appealed to or, default that, the legislative authority.
Then it is suggested that appellant was a nonresident and hence the attempt to tax his interest in the lands or him in respect of such interest is ultra vires.
There is no evidence of appellant’s residence except his description in the grazing lease granted him by the Dominion Government. It does not follow that he was, therefore, not resident in the province at the times involved in the imposition of these taxes. Nor does it follow that he as occupant of the lands can set up any such contention in law or in fact.
And as at present advised I do not think the power of direct taxation given by the “British North America Act” to the province can be circumscribed or limited in the case of taxation relative to lands by anything involved in the question of the owner’s place of residence.
It may well be that in attempting to enforce by action in courts beyond the province, claims for taxes the municipality might find some difficulty.
But the courts of the province when duly constituted by its Legislature under and by virtue of the “British North America Act” and given thereby jurisdiction to enforce such a claim as if a debt, must be bound by the law of the province in everything pertaining
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to direct taxation and to property and civil rights in the province.
For the purposes of this appeal we must assume that the taxation of land or any interest therein or of any person in relation to any land in the province, or interest in any such land is direct taxation Within the meaning of the “British North America Act”; and that if the legislature had declared taxes so rightfully imposed to be or constitute a debt within the province due by those who enjoy the protection relative to such land and advantages thereof, for which the taxation is a compensation, it has acted within its power over property and civil rights in the province and that the courts duly constituted by the province to administer its laws must enforce them even if in doing so they may have to deal with people domiciled beyond the province and their property within the province.
The argument founded upon the provision of the statutes in question anticipating and providing for enforcement of the tax liens by way of sale of the lands seems to move in a circle for it is only that interest the owner taxed may have that can be reached. And if that remedy by any mode of construction can be made to appear otherwise it would simply be in that view inoperative as the Crown is not made subject to these enactments.
The appeal should be dismissed with costs.
Duff J.—I agree with the learned Chief Justice of Saskatchewan and, for his reasons, that if the taxes sued for in this action were lawfully imposed at all they can now be recovered by the respondent municipality. In 1909, the area comprised within the limits of the municipality was included in Large Local Improvement
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District C(3) and the appellant was assessed in that year for local improvement tax at the rate of cents an acre by the Local Improvement Branch of the Provincial Government under section 73 of the “Local Improvements Act” of 1906. In December, 1909, the respondent municipality was organized and the appellant in the years 1910 and 1911 was assessed at the rates of 3½ cents and 3 cents an acre respectively under the authority of sections 50 and 51 of the Act of 1906. In each of the years 1909, 1910 and 1911 the appellant was assessed at the rate of ½ cent per acre under the authority of the “Supplementary Revenue Act.” The lands in respect of which the appellant was assessed were, when the assessments were made, the property of the Crown in the right of the Dominion of Canada, subject to the grazing leases that had been granted to the appellant. It is admitted that in each of the years in question the appellant used these lands for grazing purposes under his leases; and it is further admitted that if he is assessable in respect of them such assessment was duly made. I think also that the result of the admissions is that the appellant was an occupier of these lands within the meaning of the statute. I think, moreover, that section 50 (as amended by section 7, chapter 25, statutes 1909), section 55 and section 59 of the Act of 1906 taken together had the effect of making taxes levied within the limits of a local Improvement District and unpaid a debt due to the District. It is admitted that the respondent municipality is entitled to recover these taxes unless the legislation under the authority of which they are levied is itself ultra vires or the taxing authority has exceeded the powers conferred upon it by the legislation. The first question
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is: Has the Legislature of Saskatchewan authority to tax the appellant as occupant of these lands, the appellant himself residing outside the province, and to provide effectively for the recovery of the taxes in the courts of the province as a debt?
As to this point, very little need be said. Primâ facie, the authority of the province under section 92(2) of the “British North America Act, 1867,” to legislate in relation to the subject of direct taxation in the province includes the power to levy taxes upon the occupants of the property within the province in respect of their occupation, whether they are residents or non-residents.
It would appear also that as reasonably incidental to the authority of the province in relation to that subject there must be vested in the legislature the right to empower the taxing authority to recover as a debt any taxes assessed upon or in respect of property owned or occupied within the province. That is the view that has always been taken and acted upon in the Canadian provinces and until the argument of this appeal I do not think I have heard a doubt expressed as to the correctness of it. Of course, one ought not to lose sight of the fact that under section 92 (13) and section 92(14) the province has exclusive legislative authority in respect to property and civil rights in the province and the administration of justice. I may further observe that we are not concerned with any question here whether provincial legislation, enacting that a tax assessed upon the property of nonresidents, shall be recoverable as a debt, has or has not the effect of creating an obligation enforceable beyond the limits of the province. The general rule is that the revenue laws of one country are not taken
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notice of in another country and it appears to be on this principle that judgments proceeding upon such laws are not recognizable. Planché v. Fletcher[4]. It is also on this principle that it has been held in the United States (Henry v. Sargeant[5], at page 332, per Parker C.J.) that the courts of one state cannot be used as a means of collecting the taxes imposed by another. In Municipal Council of Sydney v. Bull[6] Mr. Justice Grantham dismissed an action brought by the Municipal Council of Sydney to enforce the payment of a local improvement rate levied on the authority of an Act of the Legislature of New South Wales, whereby the Council was authorized to recover the amounts levied under the Act, by action. It was held that the action was analogous to an action brought in one country to enforce the revenue laws of another country and consequently would not lie.
It was, moreover, held in the last mentioned case that the enactment on its true construction established only a liability to be enforced in the courts of New South Wales; and it may be that the true intendment and effect of the Act of 1906 is to create in respect of these taxes a debt recoverable by action in the courts of Saskatchewan only. At all events it could be forcibly argued that this particular provision ought to be read in the light of the recognized principle of private international law to which I have referred and if when so read it offends against no limitation imposed by the “British North America Act” upon the legislative powers of the province, one would not, of course, be justified in ascribing to it a
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construction and effect which would make it ultra vires.
The point the appellant really endeavours to make in this connection is that the legislation infringes the prohibition of section 125 of the “British North America Act,”
no lands or property belonging to Canada or any province shall be liable to taxation.
Now, first, it is beyond question that the appellant is assessed in respect of the occupation of the lands in question, which lands, as I have already said, are (subject to the interest vested in him by virtue of his leases) the property of the Crown in the right of Canada. If this legislation really and truly authorizes the taxation of the appellant in respect of the property of the Crown then I have no hesitation in saying that it does infringe this provision. If, on the other hand, what the Legislature has done is to tax the appellant in respect of his own interest or in respect of his occupation in right of his own interest, it appears to me to be unobjectionable. I think it is hardly arguable that section 125 prohibits the levying of taxation by the Dominion or by a province upon or in respect of a particular interest held by a subject in Crown lands. The section may easily be read as exempting from taxation the interest of the Crown in Crown lands only. And the alternative reading suggested would have the effect of exempting from taxation a large variety of interests such, for example, as those arising under timber leases, mining leases, fishing leases, with which we are very familiar in this country, and it is not a construction which commends itself to my judgment.
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Then does this particular legislation exceed the limits set by the enactment mentioned either in itself or in the manner in which the respondent municipality has professed to put it in operation? First, as to the legislation itself: I do not think it was seriously argued that the tax imposed by the “Supplementary Revenue Act” of one-half of one cent per acre upon lands held under grazing leases is ultra vires. At all events, I am quite at a loss to understand on what ground it could be plausibly contended that this particular enactment ought not to be read as imposing a tax upon the lessee or occupant in respect of his occupation or his interest. The provisions relating to local improvement tax are sections 50 and 51 and sections 73 and 74 of the Act of 1906. These sections are as follows:—
50. The council may cause to be levied in each year for the general purposes of the district a tax not less than one and one-quarter cents and not more than five cents per acre upon every owner or occupant in the district for land owned or occupied by him:
Provided that any person whose assessment would be less than fifty cents shall be assessed fifty cents.
51. The rate per acre of the said tax shall be fixed by a resolution of the council.
73. In large districts the rate of assessment shall be one and one-quarter cents per acre:
Provided that in any large district if the commissioner is satisfied that the said rate of assessment would raise a sum greater than would be necessary to effect the improvements required in such district the rate of assessment may be reduced to such less amount per acre as the commissioner may determine.
Provided further that any person whose assessment would be less than fifty cents shall be assessed fifty cents.
74. As soon as possible after the beginning of each year or after the organization of a large district an assessment roll shall be prepared for each large district upon which shall be entered as accurately as may be the following information:—
(a) Each lot or parcel of land owned or occupied within the district and the number of acres it contains;
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(b) The name and post office address of the person assessed as owner or occupant of each lot or parcel;
(c) The amount of assessment;
(d) The amount of previous assessments which have not been paid.
First.—Of the sections 73 and 74 under which the rate for the year 1906 was levied:—Is the tax thereby imposed a tax upon Crown lands within the meaning of section 125 of the “British North America Act?” I think, perhaps, there was some misapprehension in relation to this point as to the effect of Calgary and Edmonton Land Co. v. The Attorney-General of Alberta[7]. It will be found, I think, that the decision in that case really rested upon the view taken by the majority of the court that the whole beneficial interest in the lands in question (subject to a lien for a fee payable to the Department of the Interior) had become vested in the land company. In the present case the contention is that looking at the provisions of these enactments as a whole and especially the provisions relating to the proceedings for the recovery of the tax levied through the sale of the lands themselves one sees that the tax is intended to be levied against and made a charge upon the fee simple or the equivalent of the fee simple in all the lands in the province. In the case of lands in respect of which the legal title is vested in the Dominion, but the entire beneficial interest is vested in the subject there would seem, and that was the view taken in the Calgary and Edmonton Case7, to be nothing to prevent such provisions having their full operation. But where the Crown in the right of the Dominion retains a substantial beneficial interest, as well as the legal title in the lands, then a different question entirely arises;
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and I have no manner of doubt that if the effect of the legislation in this respect is what the appellant contends for then it is obnoxious to section 125 of the “British North America Act.”
I concur, however, in the view which was expressed in some of the judgments of the Calgary and Edmonton Case[8] to the effect that the interpretation clause entitles us where that is necessary to make the legislation effective and reasonably possible to read “land” and “lands” in these enactments as meaning “interest in land”; and, I think, we ought to give to these provisions a construction in so far as the language of them is reasonably capable of it, consistent with the assumption that the Legislature did not intend to offend against the section 125 of the “British North America Act”; and on the other hand, having regard to the circumstances of the Province of Saskatchewan and the obvious injustice of exempting from taxation limited interests such as those in question here we must, I think, read these provisions in light of the strong probability that the Legislature did not intend to sanction such, a sweeping exemption. In other words, the entire exclusion from the operation of these Acts of all interests in Dominion Crown lands would operate so unfairly that one really can not suppose the Legislature to have contemplated it.
Whatever difficulties there may be in putting into operation some of the provisions of these statutes in respect of an assessment such as that in question here I can see no good reason against holding that the essential enactment by which the liability to pay the tax is created may be given effect to in proceedings
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in personam against the occupier; who is at the same time owner of a limited interest in Dominion Crown lands.
At first sight it appeared that a difficulty might arise by reason of the fact that the rate is a uniform one with reference to owners and occupiers. But if the rate be conceived as having been fixed primarily with reference to the occupation value which may very well have been the case, one can quite understand the Legislature having resolved that the owners of lands which are unoccupied should not by reason of that fact alone escape taxation.
Coming now to sections 50 and 51, the only point necessary to refer to is that from admission No. 5 it appears that the rate imposed by the resolution of the respondent municipality was a uniform rate levied alike upon the owners and upon the occupants of land. Any objection founded on that circumstance must stand or fall with the objection just dealt with.
I think the appeal should be dismissed with costs.
Anglin J.—For the reasons given by the Chief Justice of Saskatchewan, in which I respectfully concur, I am satisfied that the respondent municipality had the right to collect the taxes in question if they were validly imposed.
Their validity is impugned on one ground only; namely, that they are in contravention of section 125 of the “British North America Act,” which exempts from provincial taxation lands belonging to the Crown in right of the Dominion. In The Calgary and Edmonton Land Company v. Attorney-General of Alberta[9], we held legislation similar to, if not identical
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with, that now impeached to be intra vires of a provincial legislature. We regarded it as authorizing, in the case of Dominion Crown lands, only the taxation of any interest in them with which the Crown had parted. It was suggested — indeed argued at some length — that in the present case the tax is not upon an interest so parted with, but upon the lands themselves. It may be that the tax on the defendant’s interest as holder of a grazing lease is excessive, but that is not a matter with which we can deal. There is no evidence that it was intended to tax any interest in the lands still held by the Crown. Nor is it established that the tax in question will indirectly affect the interest of the Crown to any greater extent than that interest is necessarily affected by the prospect that when parted with it becomes subject to provincial taxation.
It is also urged that because the defendant is a non-resident the provincial legislature cannot make him liable to a personal action for these taxes. I see no. reason why the legislature may not authorize the recovery in its own courts of a personal judgment against the owner, wherever resident, for arrears of taxes levied upon an interest in lands situate within the province. That judgment will be enforceable only against property of the defendant within the province. It can be enforced against his person only if he should come within the provincial boundaries. If he should be sued upon it in any other jurisdiction it is quite possible that some very nice questions of international law would arise. But the purchaser of an interest in land buys it subject to provincial legislation, whether present or future, affecting it and the incidents of its ownership within the province, and cannot be heard
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to say in a court of the province, or on appeal therefrom, that he is not bound by legislation which makes him personally liable within the province for taxes validly imposed in respect of such interest.
I would dismiss this appeal with costs.
Brodeur J.—In my opinion the case of Calgary and Edmonton Land Co. v. The Attorney-General of Alberta[10] disposes of the present appeal.
That case determined that the provincial legislatures had the right and the power to authorize the taxation of beneficial or equitable interests in lands wherein the Crown in the right of the Dominion of Canada holds some interest and the legal estate.
The interest of the appellant in the Dominion lands in question then can be taxed. It may be that in this case the municipal valuation of that interest is larger than it should be, but we have no evidence to guide us on that issue.
The appeal should be dismissed with costs.
Appeal dismissed with costs.
Solicitors for the appellant: Knowles, Hare & Benson.
Solicitors for the respondent: McKenzie, Brown & Co.