Sandner v. MNR, 93 DTC 901, [1993] 2 CTC 2193 (TCC)

Rowe, D.T.C.C.J.:—The appellant, Douglas W. Sandner, appeals from a reassessment of income tax with respect to his 1982 and 1983 taxation years. Also appealing from reassessments of income tax on the same matter were Kenneth G. Sandner—87-2170(IT) and Charles L. Sandner—87-2171(IT). Counsel for all appellants and counsel for the respondent agreed that the evidence on each appeal be applied by agreement to the others.

On March 12, 1976, all three appellants had guaranteed the payment of funds borrowed from the Bank of Montreal by Sandner Brothers Lumber Co., referred to as Lumber Ltd., to the extent of $600,000.

On March 17, 1976, the appellants Kenneth G. Sandner and Douglas W. Sandner guaranteed the payment of funds borrowed from the Bank of Montreal by Sandner Brothers Transport Ltd.—referred to as Transport Ltd.—to the extent of $130,000.

Originally, each appellant had claimed an allowable business investment loss in the 1984 taxation year in respect of the one guarantee of $600,000 and the other of $130,000 and claimed loss carry-backs to prior taxation years. However, counsel for the appellants advised that the extent of the claim for deduction by each appellant would be limited to that amount actually paid and, in the case of Charles L. Sandner, he did not in fact sign the guarantee to the Bank of Montreal for $130,000.

The respondent's reassessments with regard to the appellants rejected the claim for any allowable business investment loss relating to the guarantees to the Bank of Montreal on the basis that at no time during the 1984 taxation year did any appellant make a payment on any guarantee.

Douglas W. Sandner testified he lives in Christina Lake, B.C. and is a businessman. The appellant, Kenneth G. Sandner is his brother and the appellant, Charles L. Sandner is his uncle. On March 12, 1976, he and the other two appellants guaranteed payment of funds to the extent of $600,000 borrowed from the Bank of Montreal by Lumber Ltd. On March 17, 1976, he and Kenneth G. Sandner guaranteed payment of funds to the extent of $130,000 borrowed from the Bank of Montreal by Transport Ltd. In the month of June 1984, the bank demanded payment of the guarantees as the two corporate entities were in default of the loans. Douglas W. Sandner stated that he was then of the opinion that there were adequate assets in both companies sufficient to satisfy the combined obligation to the bank in the approximate sum of $1.3 million. Lumber Ltd. owed $1.1 million and while he was aware that he and the other guarantors were liable to pay any shortfall, the assets of both companies had sold at an auction for $1.1 million and additional sale of inventory and certain licenses brought in the further sum of $250,000. On December 20, 1984 the Bank of Montreal obtained judgment against all appellants, jointly and severally, in the sum of $600,000 and the judgment was registered in the Kamloops land title office on December 21, 1984. On October 1, 1985 the Bank of Montreal obtained judgment against Douglas W. Sandner in the sum of $70,996.33 and against Kenneth G. Sandner in the sum of $73,736.67. The said judgments were registered in the Kamloops Land Title Office on October 3, 1985. On August 24, 1992 the Bank of Montreal sued all three appellants and Cecelia Catherine Sandner, mother of Douglas W. and Kenneth G. Sandner, alleging that the granting of a mortgage dated June 1, 1984 by the appellants to Cecelia Catherine Sandner on certain lands was a fraudulent preference. The statement of claim was filed as Exhibit A-1. Douglas

W. Sandner stated that the bank then began selling off certain parcels of land against which the judgments had been registered but that he and the other appellants never received any accounting as to the amounts received by such sales despite having requested such information. Douglas W. Sandner testified that he and the other appellants assisted the bank in obtaining the best possible value for the lands against which the bank was proceeding by way of execution upon the judgments. He referred to a schedule of properties, filed as Exhibit A-2, as the properties against which the judgments had been registered and the value of each parcel in his opinion as set forth in an affidavit used in other court proceedings. In 1984, the properties were owned, usually one- third each by the appellants personally. Since 1985, the following properties were sold by the Bank in accordance with execution procedure on the judgments:

Douglas W. Sandner stated that neither he nor any of the other appellants received any proceeds whatsoever from the sales and the information he was able to relate was garnered by him from personally obtaining the information from the various real estate offices participating in the transactions. The Sandner family has been in the Christina Lake area for 96 years and as a local businessman he was familiar with property values in that area.

In cross-examination Douglas W. Sandner stated that he did not have a list of liabilities of the two Sandner companies, Lumber Ltd. and Transport Ltd. but his best estimate is that as of June 1, 1984 the combined liabilities were about $1.1 million. The loans to the Bank of Montreal were demand loans on a revolving credit line and some equipment was secured by way of chattel mortgage. As for the schedule of properties with assigned values contained in Exhibit A-2, the point to be made was that the bank had adequate protection to secure the outstanding indebtedness. The state of title certificate, Exhibit R-2, indicated the title was in the name of Sandco Industries Ltd., a company owned by Febco Holdings Ltd., of which Douglas W. Sandner, his wife, and others were shareholders. A mortgage to the Grand Forks District Savings Credit Union was paid off personally by the appellants as was a debt to the Employment Standards branch of the government of British Columbia.

Counsel for the appellants submitted that when the Bank of Montreal obtained judgments jointly and severally against all three appellants on December 20, 1984 in the sum of $600,000 and said judgment was registered against all lands in their names on December 21, 1984 that such action was tantamount to payment by them pursuant to the said guarantee. Similarly, the judgment of October 1, 1985 against Douglas W. Sandner and Kenneth G. Sandner, registered on October 3, 1985 against their lands had the same effect. As of December 31, 1984 the effect of the judgment against all three appellants and the registration thereof against their lands meant that they had effectively lost all of their interest in that land and the bank had chosen such means as a method of obtaining payment from them on the guarantee of $600,000. Counsel advised that the calculation of the loss of the appellants was difficult due to the lack of information flowing from the bank but that the Minister of National Revenue, having also registered judgments against the same lands, would have received full information on the selling price and net proceeds of each parcel as it was sold. The best approach permitted by the evidence therefore, in counsel’s submission, was that each appellant should be able to claim a business investment loss in accordance with certain calculations he had made and set out in a written submission, based on each appellant having a one- third interest in the lands despite some of the title searches to the contrary. As for the loss flowing from the guarantee for $130,000 executed by Douglas W. and Kenneth G. Sandner, the payment thereon, by way of money flowing to the bank in pursuance of it selling off various pieces of land under execution process permitted by the judgment, was apparently in the sum of $70,000, which amount was to be divided equally between them. The argument then is that by the bank taking judgment and registering same against the land, it opted to receive delivery, in kind, of the appellants’ total interest in the lands at a time in which the total value of the lands exceeded $1.2 million. While counsel conceded the appellants retained an equity of redemption, he contended that for all practical purposes their right to deal with the land was extinguished.

Counsel for the respondent submitted that the appellants were not deprived of the use of their property by virtue of the bank having registered a judgment against it. The appellants still retained the right to sell the property or otherwise to deal with it but in order to do so they would have had to satisfy the outstanding judgments. The appellants bear the burden of proving what was paid, when, and how much and before it can be said that a transaction constitutes payment it must have the assent of the creditor.

There was no relevant authority submitted upon which a finding could be made on the evidence that the taking out of a judgment against the appellants, jointly and severally, and registering said judgment against their lands in December of 1984 somehow constituted payment by them, jointly and severally, of the amount owing under the $600,000 guarantee. It may be that the Bank of Montreal in pursuing all of its remedies and apparently failing to account to the appellants has breached some duty to them but it cannot be said the bank regarded the issuance of the judgment as payment as it continually proceeded by way of execution to sell parcels of land from 1985 on through 1991. The tying up of the lands by registering a judgment against them was only part of the recovery process permitted by law and there is nothing to indicate the bank, as judgment creditor, accepted the judgment and subsequent registration thereof at the Kamloops land title office as either a payment or as an accord and satisfaction of the debt owed by the appellants. It is clear on the evidence that no proceeds were realized by the bank in 1984 from selling off any land owned by the appellants in their personal capacity. The exact dates, times and amounts of sales from that point on are not known on the evidence but it may well be that each sale and application of proceeds on the judgment, based on the guarantees, could, in other proceedings, be identified so as to establish and quantify an actual loss to each appellant in whatever amount could be made out. However, that kind of information is not before me and is not relevant, in any event to these appeals.

Douglas W. Sandner appealed from reassessments for his 1982 and 1983 taxation years whereby the respondent disallowed the appellant's claim for non-capital loss carry-backs to his 1982 and 1983 taxation years from his 1984 taxation year because there was no payment made by the appellant to the bank and therefore no business investment loss incurred by him in 1984.

Kenneth G. Sandner appeals from reassessments for his 1981, 1982, 1983 and 1985 taxation years whereby the respondent disallowed his claim for deduction for a business investment loss in his 1984 taxation year and for non-capital loss carry-backs to his 1981, 1982 and 1983 taxation years and a non-capital loss carryforward to his 1985 taxation year because the appellant made no payment to the bank and therefore no business investment loss was incurred by him in 1984.

Charles L. Sandner appealed from reassessment for his 1982 and 1985 taxation years whereby the respondent disallowed the appellant's claim for a non-capital loss carry-back to his 1982 taxation year and a non-capital loss carryforward to his 1985 taxation year from his 1984 taxation year because the appellant made no payment to the bank and therefore no business investment loss was incurred by him in 1984.

The evidence established that at the end of December 1984 the lands secured by the Bank of Montreal judgment for $600,000 together with interest still remained in the names of the appellants personally or through corporations controlled by one or more of them. In the event those lands were worth $1.2 million as stated by Douglas W. Sandner in his testimony, then they were able, as a matter of law, to mortgage, sell, trade, lease, or even transfer them to the bank in satisfaction of all liabilities but such was not done. All that happened was the bank, by registering the judgment, put a "brick" on their real estate holdings, effectively ensuring that any transactions bringing in money as a result of dealing with the land, would flow to the Bank to the extent of the indebtedness outstanding at the time.

The reassessments of the Minister as they affect each appellant are correct and the appeal of each appellant is hereby dismissed.

Appeals dismissed.

William T. Ross v. Her Majesty The Queen (informal procedure)

[Indexed as: Ross (W.T.) v. Canada]

Tax Court of Canada (Christie, A.C.J.T.C.C.), May 27, 1993 (Court File No. 92-1914).

Income tax—Federal—Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72,

c. 63)—63—Canadian Charter of Rights and Freedoms—1, 15(1), 24(1), 32(1)—

The appellant and his wife had two children, born November 16, 1986 and January 27, 1989. In computing his income for 1990 the appellant deducted $8,000 for child care expenses. The wife cared for the children and the appellant paid her $8,000 in cash for such care. The rate was $83.33 per week for 48 weeks or a total of $4,000 for each child. The wife also cared for three other children and the rate for those children was $125 per week. The appellant testified that he only paid his wife $4,000 per child because any amount in excess of $8,000 would have been double taxed. The ground for the appeal was that section 63 of the Income Tax Act infringes the equality rights under subsection 15(1) of the Canadian Charter of Rights and Freedoms in that amounts paid for child care do not qualify for deductions if the care is provided by certain persons related to the child and in particular the mother of the child, which constitutes discrimination on the basis of family status. In addition, the appellant challenged subsection 63(2) which required the wife to claim the deduction for child care expenses because her income was lower than the appellant's.

HELD:

The basic social purpose of the legislation is certainly within the legislative competence of Parliament and the court was unable to set the legislation aside in whole or in part because of the requirement that the child care services in respect of which the deduction for child care expense is sought be provided by someone other than the father or the mother of the eligible child. Such a condition precedent was perfectly reasonable and understandable in light of the purpose of section 63 and it did not constitute discrimination of the kind alleged. Furthermore, the same concepts applied to the general rule that the deduction must be taken by the spouse with the lower income. That was not constitutionally prohibited discrimination either. Appeal dismissed.

Marvin Huberman and Stuart English for the appellant.

Sandra Phillips for the respondent.

Cases referred to:

Stubart Investments Ltd. v. The Queen, [1984] 1 S.C.R. 536, [1984] C.T.C. 294, 84 D.T.C. 6305;

Fiset v. M.N.R., [1988] 1 C.T.C. 2335, 88 D.T.C. 1226;

McLaren v. M.N.R., [1988] 1 C.T.C. 2371, 88 D.T.C. 1259 (T.C.C.); aff'd [1990] 2 C.T.C. 429, 90 D.T.C. 6566 (F.C.T.D.);

The Queen v. Symes, [1991] 2 C.T.C. 1, 91 D.T.C. 5397;

The Queen v. Schachter, [1992] 2 S.C.R. 679, 93 D.L.R. (4th) 1;

Smith, Kline & French Laboratories Ltd. v. Canada, [1987] 2 F.C. 359, 34 D.L.R. (4th) 584;

Andrews v. Law Society of British Columbia, [1989] 1 S.C.R. 143, 56 D.L.R. (4th);

Ontario Public Service Employees Union v. National Citizens Coalition Inc.,

[1987] 2 C.T.C. 59, 87 D.T.C. 5270 (H.C.J. Ont.); aff'd [1990] 2 C.T.C. 163, 90 D.T.C. 6326 (Ont. Ct. of Appeal);

Public Service Alliance of Canada v. Canada, [1987] 1 S.C.R. 424, 38 D.L.R. (4th) 249,

Christie, A.C.J.T.C.C.:—This appeal is governed by the informal procedure prescribed by section 18 and following sections of the Tax Court of Canada Act.

In computing his income for 1990 the appellant deducted $8,000 for child care expenses. The deduction relates to two children: Khirstyn born November 16, 1986, and Hillary born January 27, 1989. Deductions of this kind are authorized under section 63 of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act"). [1] He also deducted $20,400 in alimony payments. Deductions for alimony are authorized under paragraph 60(b) of the Act. [2] Both deductions were disallowed on reassessment by the Minister of National Revenue. The first notice of appeal was filed in the registry of the Court on August 20, 1992. It appealed from the disallowance of both deductions. An amended notice of appeal filed on November 6, 1992, dropped any reference to alimony payments. [3] It refers only to the child care deduction. The grounds of appeal in the amended notice of appeal in their entirety are:

Section 63 of the Income Tax Act infringes the right to equality under subsection 15(1) of the Charter of Rights and Freedoms in that amounts paid for child care do not qualify for deductions if the care is provided by certain persons related to the child, constituting discrimination on the basis of family status.

The appellant has been married to Catherine Ross for seven years. He paid the $8,000 claimed as a deduction to her. Payment was in cash. The rate was $83.33 per week for 48 weeks or a total of $4,000 for each child. Catherine Ross provided child care services for their children and the children of two additional families. The services were provided in the Ross residence. A maximum of three children, in addition to Khirstyn and Hillary, were involved. The income and expenses related to the provision of the services were reported in a return of income for 1990 filed by Catherine Ross. The reason given by the

appellant for entering into these arrangements is: "We were concerned for the welfare of our children. We had some very bad experiences to the point of one of my daughters going to the hospital because of inadequate day care in the past.” He added that they also "saw a business opportunity” and desired to give their children personal quality care "so that we could pass on our values as successful citizens to our children.” The appellant is an electrical engineer and works in the area of product design. In 1990 he was employed by Bell Northern Research. The appellant was asked about how his wife supplying child care services to their children affected his duties of employment. He replied: "Very dramatically” and went on : Having the peace of mind of knowing my children were well cared for and not have to adhere to an external day care schedule I was able to stay later at work, work substantial overtime that year which generated substantial tax revenues, and my career has flourished as a result.”

Two tables of tax calculations prepared by the appellant were placed in evidence to show that for the Ross “family” to benefit from a child care deduction it would have to be made in computing the appellant's income. This concluded his evidence-in-chief.

In cross-examination the appellant was asked how $83.33 per week for each child was arrived at. He replied: “If I had to pay Cathy any more we would have ended up at a tax liability to our family. It would have been a losing proposition to pay her any more because I would not have been able to deduct anything more and it would become income for Cathy that would be basically double taxed. That income in excess of $8,000 is subject to tax in my hands and in Cathy's hand also.”

Catherine Ross testified that the rate for the children other than her own was $25 per day ($125 per week) for full-time care. This is 33.5 per cent more than was charged for the Ross children. The rate for half-time was $15 per day and $6 per day before and after school.

In 1990 she filed a return of income [4] that included a statement of revenues and expenses regarding day care. Revenue was $14,321, expenses $5,027.75 for a net profit of $9,293.25. Her net income including the $8,000 received from her husband was $8,437. This is considerably less than that of her husband. Excluding the $8,000 her net income was $437.

To my mind it is clear that applying the currently prevailing approach to the construction of section 63 of the Act [5] the appellant is not entitled to a deduc- tion for child care expenses in computing his income for 1990. My understanding is that counsel for the appellant does not dispute this, but he relies on certain provisions of the Canadian Charter of Rights and Freedoms as overriding the impediments in section 63 to making the deduction and allowing this Court to fashion a remedy permitting the deduction to be made. In opening his argument he said:

The ground for the appeal is that section 63 of the Income Tax Act infringes the equality rights under subsection 15(1) of the Charter in that amounts paid for child care do not qualify for deductions if the child care is provided by certain persons related to the child and in particular the mother of the child which constitutes discrimination on the basis of family status. That is the hub of this case.

In addition section 1, subsections 24(1) and 32(1) of the Charter and subsection 52(1) of the Constitution Act, 1982, were referred to in the course of argument. They and subsection 15(1) provide:

1. The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.

15. (1) Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

24. (1) Anyone whose rights or freedoms, as guaranteed by this Charter, have been infringed or denied may apply to a court of competent jurisdiction to obtain such remedy as the court considers appropriate and just in the circumstances.

32. (1) This Charter applies

(a) to the Parliament and government of Canada in respect of all matters within the authority of Parliament including all matters relating to the Yukon Territory and Northwest Territories; and

(b) to the legislature and government of each province in respect of all matters within the authority of the legislature of each province.

52. (1) The Constitution of Canada is the supreme law of Canada, and any law that is inconsistent with the provisions of the Constitution is, to the extent of the inconsistency, of no force or effect.

Reverting to section 63 the appellant focuses in particular on clauses (A) and (B) of subparagraph 63(3)(a)(ii) and subsection 63(2) of the Act.

“Child care expense" is defined in paragraph 63(3)(a) of the Act and clauses (A) and (B) are part of that definition. What is relevant to this appeal therein provides that “child care expense" means an expense incurred in a taxation year for the purpose of providing in Canada, for an eligible child of a taxpayer, child care services including babysitting services or day nursery services if the services were provided to enable the taxpayer, or the supporting person of the child for the year, who resided with the child at the time the expense was incurred, to perform the duties of employment or to carry on a business and the services were provided by a resident of Canada other than a person who is the father or the mother of the child or who is a supporting person of the child. Paragraph 63(3)(d) defines "supporting person”. That portion of the definition relevant for present purposes states that a supporting person of an eligible child of a taxpayer for a taxation year means a parent of the child if the parent resided with the taxpayer at any time during the year and at any time within 60 days after the end of the year.

The effect of subsection 63(2) of the Act, when read in conjunction with subsection 63(1), is that where a taxpayer's income exceeds the income of a supporting person of the child for the year the deduction for child care expense must generally be claimed by the supporting person. [6] The exceptions to this general rule are in subparagraphs 63(2)(b)(iii) to (vi). They need not be explored in these reasons.

Counsel for the appellant requests a determination that pursuant to subsection 52(1) of the Constitution Act, 1982 the words "other than a person who is the father or the mother of the child or who is a supporting person of the child” in clauses 63(3)(a)(ii)(A) and (B) are "of no force or effect". He also requests: "A determination that to the extent that subsection 63(2) requires Catherine Ross as opposed to William T. Ross to claim the deduction for child care expenses, that subsection is to be treated as having no force or effect with respect to the appellant in the 1990 taxation year.” In other words the general rule requiring the spouse with the lower income to deduct child care expense is being constitutionally challenged.

“Family status” is not a ground of discrimination enumerated in subsection 15(1). The appellant relies on the phrase as being an analogous ground of discrimination. If a ground of discrimination is properly recognizable in law as being analogous to the enumerated grounds, it is settled by the Supreme Court of Canada that such discrimination carries with it the same consequences as discrimination based on the enumerated grounds. The Court accepts, for the purposes of this appeal, that family status can be an analogous ground of discrimination.

In 1969 in a publication entitled “Proposals for Tax Reform—E. J. Benson, Minister of Finance" the government of the day addressed the matter of financial difficulties relating to the major social development of working parents with dependent children. Paragraph 2.7 of that paper reads:

We propose to permit deduction of the child care expenses that face many working parents today. The problem of adequately caring for children when both parents are working, or when there is only one parent in the family and she or he is working, is both a personal and a social one. We consider it desirable on social as well as economic grounds to permit a tax deduction for child care expenses, under carefully controlled terms, in addition to the general deduction for children.

The policy decision adopted by Parliament in this regard was embodied in section 63 of the Act as enacted by Statutes of Canada 1970-71-72, c. 63. Amendments to section 63 followed. All of this is set out in more detail in the reasons for judgment delivered by Mr. Justice Décary for the Federal Court of Appeal in The Queen v. Symes, [1991] 2 C.T.C. 1, 91 D.T.C. 5397 at page 4 (D.T.C. 5400) under the heading "Fiscal history of child care expenses". [7]

The basic social purpose of the legislation is certainly within the legislative competence of Parliament and I cannot appreciate how this Court could properly set the legislation aside in whole or in part because of the requirement that the child care services in respect of which the deduction for child care expense is sought be provided by someone other than the father or the mother of the eligible child. This condition precedent is perfectly reasonable and understandable in the light of the purpose of section 63 and it does not constitute discrimination of the kind alleged in this appeal. The same applies to the general rule that the deduction shall be taken by the spouse with the lower income. It is not constitutionally prohibited discrimination. Presumably this general rule was chosen because it would have the lesser unfavourable impact on the Consolidated Revenue Fund. [8] The making of such a choice by Parliament cannot, in the context of section 63, be said to transgress a taxpayer's rights or freedoms when regarded as fundamental values in the Canadian society. It is the guarantee of rights and freedoms so regarded that is the purpose of the Charter.

Further, even if it could be said that clauses 63(3)(a)(ii)(A) and (B) of the Act are of no force and effect by operation of subsection 52(1) of the Constitution Act, 1982, it does not follow, as was submitted in argument, that subsection 63(2) of the Act is consequently tainted in the sense that this Court thereby has jurisdiction to mutate what Parliament has enacted by resorting to reading down (severance) or reading in [9] in respect of subsection 63(2) to produce a result that would authorize the appellant to take the child care expense deduction in computing his income. The appellant says that not only are he and his wife entitled to decide who should take the deduction, [10] but the amount paid for the child care services and hence the deduction can be whatever amount yields the maximum benefit to them without reference to the actual market value of the child care services.

There being no discrimination, the applicability of the proviso in section 1 does not arise. Nor does a requirement for the creation of a remedy materialize.

In Symes, supra, Décary, J.A. said at pages 10-11 (D.T.C. 5404-05):

. . . the respondent cited the following extracts from the opinion of Lamer, J. (as he then was) and L’Heureux-Dubé, J. in, respectively, Slaight Communications Inc. v. Davidson, [1989] 1 S.C.R. 1038 at page 1078, and Hills v. Attorney-General (Canada), [1988] 1 S.C.R. 513 at page 558.

Although this Court must not add anything to legislation or delete anything from it in order to make it consistent with the Charter, there is no doubt in my mind that it should also not interpret legislation that is open to more than one interpretation so as to make it inconsistent with the Charter. . . .

Lamer, I.

Appellant, while not relying on any specific provision of the Charter, nevertheless urged that preference be given to Charter values in the interpretation of a statute, namely freedom of association. I agree that the values embodied in the Charter must be given preference over an interpretation which would run contrary to them . . . .

L'Heureux-Dubé, J.

I do not think that by these statements the Supreme Court of Canada intended to say that legislation should be minutely examined to determine whether, by an extreme interpretation, it might not be possible to implicate the Charter directly or indirectly. Strictly speaking any legislation is an invasion of a right, and in the field of taxation in particular, everything or nearly everything can be immediately or remotely connected in some way to the concept of equality.

Mr. Justice Décary also cited passages from the reasons for judgment in Smith, Kline & French Laboratories Ltd. v. Canada, [1987] 2 F.C. 359, 34 D.L.R.

(4th) 584; Andrews v. Law Society of British Columbia, [1989] 1 S.C.R. 143, 56 D.L.R. (4th) 1; Ontario Public Service Employees Union v. National Citizens' Coalition Inc., [1987] 2 C.T.C. 59, 87 D.T.C. 5270 at page 61 (D.T.C. 5272) (Ont. H.C.J.) (aff'd on appeal to the Ontario Court of Appeal, [1990] 2 C.T.C. 163, 90 D.T.C. 6326) and Public Service Alliance of Canada v. Canada , [1987] 1 S.C.R. 424, 38 D.L.R. (4th) 249. These can usefully be repeated in relation to this appeal. In Smith, Kline, supra, Hugessen, J.A. said at pages 367-68 (D.L.R. 591):

The rights which [section 15] guarantees are not based on any concept of strict, numerical equality amongst all human beings. If they were, virtually all legislation, whose function it is, after all, to define, distinguish and make categories, would be in prima facie breach of section 15 and would require justification under section 1. This would be to turn the exception into the rule. Since courts would be obliged to look for and find section 1 justification for most legislation, the alternative being anarchy, there is a real risk of paradox: the broader the reach given to section 15 the more likely it is that it will be deprived of any real content.

And at page 369 (D.L.R. 592):

While the generalization will no doubt require refinement, it would seem to me that, since the Charter's primary focus is upon personal rights, liberties and freedoms, categories whose main impact is elsewhere, such as on property and economic rights, will be less subject to scrutiny.

And at page 371 (D.L.R. 594):

To succeed, plaintiffs have to urge, as they do, that section 15 guarantees absolute equality to every individual in every conceivable circumstance and that every possible distinction that can result in one receiving a benefit or incurring a disadvantage which is not enjoyed or suffered by all can only be justified, if at all, under section 1 .... As I have attempted to indicate, that view seems to me to be untenable.

In Andrews, supra, Madam Justice Wilson said at page 154 (D.L.R. 34):

If every distinction between individuals and groups gave rise to a violation of section 15, then this standard might well be too stringent for application in all cases and might deny the community at large the benefit associated with sound and desirable social and economic legislation.

Mr. Justice La Forest said at page 194 (D.L.R. 38):

That having been said, I am convinced that it was never intended in enacting section 15 that it become a tool for the wholesale subjection to judicial scrutiny of variegated legislative choices in no way infringing on values fundamental to a free and democratic society. Like my colleague, I am not prepared to accept that all legislative classifications must be rationally supportable before the courts. Much economic and social policy-making is simply beyond the institutional competence of the courts: their role is to protect against incursions on fundamental values, not to second guess policy decisions.

Mr. Justice Maclntyre said at pages 168-69 (D.L.R. 13):

It is not every distinction or differentiation in treatment at law which will transgress the equality guarantees of section 15 of the Charter. It is, of course, obvious that legislatures may—and to govern effectively—must treat different individuals and groups in different ways. Indeed, such distinctions are one of the main preoccupations of legislatures. The classifying of individuals and groups, the making of different provisions respecting such groups, the application of different rules, regulations, requirements and qualifications to different persons is necessary for the governance of modern society.

In Ontario Public Service Employees Union, supra, Mr. Justice Galligan said at page 61 (D.T.C. 5272):

The argument advanced with respect to subsection 15(1) is that the circumstances disclosed in paragraphs 10 and 11 of the statement of claim show that certain taxpayers could be disentitled to equal benefit of the tax laws. I have some difficulty in understanding how tax laws can be said to bestow benefits on taxpayers. But, having said that, it is clear that some taxpayers are entitled to certain deductions from their income while others are not. The Income Tax Act is full of examples where one taxpayer for certain reasons has certain deductions which another taxpayer does not have. Also, certain taxpayers are called upon to pay more taxes than others. Some taxpayers are called upon to pay taxes at a higher rate than others.

The Charter, as it has been said in many, many cases, too numerous to mention, is an important piece of legislation which constitutionally protects important rights and freedoms of people who live in this country. It seems to me that it comes very close to trivializing that very important constitutional law, if it is used to get into the weighing and balancing of the nuts and bolts of taxing statutes.

In Public Service Alliance of Canada, supra, Dickson, C.J., dissenting, said at page 442 (D.L.R. 261):

In my opinion, courts must exercise considerable caution when confronted with difficult questions of economic policy. It is not our judicial role to assess the effectiveness or wisdom of various government strategies for solving pressing economic problems. The question how best to combat inflation has perplexed economists for several generations. It would be highly undesirable for the courts to attempt to pronounce on the relative importance of various suggested causes of inflation, such as the expansion of the money supply, fiscal deficits, foreign inflation, or the built-in inflationary expectations of individual economic actors. A high degree of deference ought properly to be accorded to the government's choice of strategy in combatting this complex problem. Due deference must be paid as well to the symbolic leadership role of government. Many government initiatives, especially in the economic sphere, necessarily involve a large inspirational or psychological component which must not be undervalued. The role of the judiciary in such situations lies primarily in ensuring that the selected legislative strategy is fairly implemented with as little interference as is reasonably possible with the rights and freedoms guaranteed by the Charter.

The appeal is dismissed.

Appeal dismissed.