Rip,
T.C.J.:—
Havlik
Enterprises
Limited
("Havlik"),
the
appellant,
has
appealed
from
an
assessment
of
non-resident
tax
pursuant
to
subsection
215(6)
of
the
Income
Tax
Act
("Act"),
notice
of
which
was
dated
March
23,
1984.
The
respondent,
the
Minister
of
National
Revenue,
assessed
the
appellant
tax
on
the
basis
it
failed
to
deduct
and
remit
a
tax
of
$14,539.45
on
$58,157.80
of
interest
paid
or
credited
in
1982
to
an
agent
of
the
Government
of
the
People’s
Republic
of
China
("China"),
a
non-resident
of
Canada,
in
accordance
with
paragraph
212(1)(b)
and
subsection
215(1)
of
the
Act.
Issue
The
issue
before
the
Court
is
whether
the
$58,157.80,
the
aggregate
of
amounts
by
which
various
letters
of
credit
issued
by
the
Bank
of
Nova
Scotia
were
increased,
was
interest
as
claimed
by
the
respondent
or
a
fee
or
compensation
paid
for
services
to
the
non-resident,
as
stated
by
the
appellant.
Facts
Havlik
carries
on
the
business
of
designing
and
building
special
purpose
machine
tools
and
importing
and
exporting
machine
tools
for
sale.
Mrs.
Gwen
Havlik,
the
secretary-treasurer
of
the
appellant,
testified
that
she
and
her
husband,
the
majority
shareholder
and
president
of
Havlik,
visited
China
in
1973
and
saw
various
machine
tools
in
that
country
which
they
considered
would
be
marketable
in
Canada.
Havlik
soon
began
to
import
the
machinery
through
an
agency
of
the
Chinese
government,
China
National
Machinery
&
Equipment
Import
&
Export
Corporation
("China
National”).
She
testified
that
by
1981
Havlik
was
doing
"a
lot
of
business"
with
China;
however,
in
1982
their
“Canadian
business
took
a
nose
dive".
In
1981
Abbott
Machinery
Ltd.
("Abbott"),
a
Canadian
corporation
based
in
Edmonton,
Alberta,
expressed
a
desire
to
create
dealerships
in
Canada
for
the
sale
of
Chinese
manufactured
machinery.
In
October
1981
Abbott
ordered
from
Havlik
approximately
$5,200,000
of
the
machinery.
Havlik
had
only
$300,000
of
the
machinery
in
stock
and
therefore
on
receipt
of
the
orders
from
Abbott,
Havlik
got
in
touch
with
China
National
to
determine
if
the
latter
could
fill
the
orders
for
the
specific
equipment
on
various
delivery
dates.
China
National
confirmed
the
orders
and
forwarded
the
sales
contracts
to
Havlik
for
signature.
Separate
contracts
were
entered
into
between
Havlik
non-resident
person,
that
person
is
liable
to
pay
as
tax
under
this
Part
on
behalf
of
the
non-resident
person
the
whole
of
the
amount
that
should
have
been
deducted
or
withheld,
and
is
entitled
to
deduct
or
withhold
from
any
amount
paid
or
credited
by
him
to
the
non-resident
person
or
otherwise
recover
from
the
non-resident
person
any
amount
paid
by
him
as
tax
under
this
Part
on
behalf
thereof.
and
China
National
for
each
type
of
machinery
being
purchased
since
each
type
of
machinery
was
manufactured
in
a
different
area
of
China;
in
all
some
50
to
60
contracts
were
completed.
The
sales
contracts
required
Havlik
to
obtain
from
its
banker
an
"irrevocable
transferable
and
without
recourse
letter
of
credit
in
favour
of
the
sellers,
payable
at
360
days
after
the
date
of
Bill
of
Lading
against
presentation
of
the
shipping
documents
at
the
port
of
shipment”.
The
letter
of
credit
was
to
reach
the
sellers
two
months
before
the
date
of
shipment
and
was
to
remain
valid
for
negotiation
in
China
15
days
after
the
date
of
shipment.
No
shipment
could
leave
China
unless
China
National
had
a
letter
of
credit
in
the
amount
of
the
particular
contract.
Havlik
obtained
the
various
letters
of
credit
from
its
banker,
the
Bank
of
Nova
Scotia
in
Kitchener,
Ontario.
When
a
particular
letter
of
credit
was
due
the
bank
would
draw
the
face
amount
of
the
letter
of
credit
from
Havlik's
account
and
make
payment
to
China
National
through
the
Bank
of
China.
According
to
Mrs.
Havlik
it
usually
would
take
one
month
from
the
time
Havlik
made
an
order
with
China
National
and
the
latter's
confirmation
of
the
order.
The
time
span
between
the
making
of
the
order
and
the
delivery
would
be
approximately
six
months
to
one
year.
In
the
meantime,
that
is
after
Havlik
contracted
for
the
machinery,
the
Canadian
economy
entered
a
recession
and
Abbott
was
unable
to
set
up
its
dealership
network.
On
April
27,
1982,
the
president
of
Abbott
wrote
to
Havlik
advising
that
Abbott
was
cancelling
the
orders.
Havlik
had
a
problem:
it
had
entered
into
contracts
with
China
National
and
as
well,
according
to
Mrs.
Havlik,
"we
were
committed
to
the
Bank
of
Nova
Scotia
and
the
Bank
of
Nova
Scotia
was
committed
to
China”.
When
Havlik
received
Abbott's
letter
of
cancellation,
a
representative
of
China
National,
a
Mr.
Wu,
was
at
the
offices
of
Havlik.
Mr.
and
Mrs.
Havlik
explained
to
Mr.
Wu
the
economic
situation
in
Canada
and
Havlik’s
problems
with
the
Bank
of
Nova
Scotia
as
a
result
of
the
letters
of
credit.
They
also
pointed
out
that
as
a
result
of
the
cancellation
by
Abbott,
Havlik
had
no
cash
flow
and
if
it
was
to
be
held
to
honour
the
orders
it
would
become
bankrupt.
Accordingly,
the
Havliks
requested
Mr.
Wu
to
return
to
China
and
to
explain
Havlik's
problems
and
to
try
to
obtain
an
extension
of
time
for
payment
of
23
outstanding
letters
of
credit
and
cancel
the
outstanding
contracts.
Mrs.
Havlik
explained
priority
was
to
be
given
to
obtaining
extensions
of
time
for
the
letters
of
credit
since
some
were
soon
coming
due.
Mrs.
Havlik
testified
that
not
all
the
orders
for
Abbott
had
been
completed
by
April
27,
1982
because
China
National
had
not
advised
Havlik
of
delivery
dates
for
several
of
the
orders;
no
letter
of
credit
on
an
order
was
to
be
delivered
to
China
National
until
60
days
after
notification
of
its
particular
delivery
date.
On
June
25,
1982,
Havlik
received
a
telegram
from
China
National
agreeing
to
postpone
payment
of
each
of
the
23
outstanding
letters
of
credit
by
six
months.
China
National
agreed
to
delay
the
letters
of
credit
but
with
a
"5
percent
per
cent
[sic]
increase
to
the
amount
of
each
L/C
to
compensate
our
interest
loss
.
.
."
.
Havlik
then
arranged
with
the
Bank
of
Nova
Scotia
for
the
outstanding
letters
of
credit
to
be
amended
reflecting
an
extension
of
time
for
payment
to
six
months
and
an
increase
in
the
amount
of
the
letter
credit
by
five
per
cent
of
the
face
amount.
The
Bank
of
Nova
Scotia
telexed
the
Bank
of
China
confirming
that
the
Bank
of
Nova
Scotia
agreed
to
pay
an
additional
five
per
cent
on
the
face
amount
of
the
various
drafts
drawn
against
the
various
letters
of
credit
payable
to
China
National.
On
September
17,
1982,
Havlik
received
a
further
telex
from
China
National
agreeing
to
cancel
all
outstanding
contracts.
In
cross-examination
Mrs.
Havlik
stated
that
Mr.
Wu
had
never
indicated
the
additional
five
per
cent
was
on
account
of
interest.
Mr.
and
Mrs.
Havlik
testified
Mr.
Wu
was
asked
to
try
to
investigate
an
extension
of
time
for
the
letters
of
credit
and
a
settlement
of
the
outstanding
contracts.
Mr.
Wu
conveyed
Havlik's
concerns
to
his
superiors.
The
letters
of
credit,
as
amended,
issued
by
the
Bank
of
Nova
Scotia
totalled
$1,205,336
and
had
due
dates
from
July
26,
1982
to
December
13,
1982.
The
five
per
cent
incease
in
the
face
amount
of
the
letters
of
credit
outstanding
was
$60,266.80.
By
July
31,
1982,
Havlik
had
paid
China
National
$58,157.80
in
full
satisfaction
of
the
five
per
cent
increase
of
each
letter
of
credit;
the
difference
in
the
amount
of
$60,266.80
and
$58,157.80,
that
is,
$2,109,
represented
five
per
cent
of
a
$32,180
letter
of
credit,
the
due
date
of
which
was
to
be
extended
but
which
was
in
fact
honoured
on
its
original
due
date.
How
Havlik
paid
or
caused
this
amount
to
be
paid
before
the
due
date
of
the
last
letter
of
credit
was
not
explained.
Appellant's
Position
1)
Amount
Not
Interest
The
appellant
is
of
the
view
that
the
five
per
cent
increase
in
the
letter
of
credit
was
not
on
account
of
interest,
which
was
the
basis
of
the
assessment,
but
was
a
fee
for
extending
the
letters
of
credit
and
work
involved
to
cancel
the
contracts
valued
at
$4,900,000.
According
to
the
appellant,
the
word
"interest"
in
the
telex
of
June
25,
1982,
did
not
refer
to
interest
as
a
monetary
interest
charge
as
known
in
Canada.
It
is
the
appellant's
view
that
in
1982
interest
for
the
use
of
money
was
a
concept
foreign
to
the
Chinese
economy
and
the
word
"interest"
in
the
telex
was
not
intended
to
mean
interest
as
contemplated
by
section
212
of
the
Act.
The
appellant
produced
a
letter
from
China
National,
dated
October
17,
1988,
two
days
before
the
trial,
addressed
to
Revenue
Canada,
which
stated
that
the
choice
of
the
word
“interest”
in
their
June
25,
1982,
telex
was
“unfortunate
if
it
conveys
any
other
impression
than
our
interest
in
a
broad
sense”.
China
National
"regarded
the
5%
increase
as
a
surcharge
for
the
extra
cost
to
us
of
production
changes
and
for
the
administrative
time
spent
in
renegotiating
the
terms
of
the
agreement.
In
every
sense
the
additional
5%
represented
a
renegotiated
price
for
the
goods
being
sold
under
different
terms
than
those
originally
agreed".
ii)
Not
Liable
for
Interest
In
the
event
this
Court
holds
that
the
amount
of
$58,157.80
was
interest,
appellant's
counsel
submitted,
the
Bank
of
Nova
Scotia,
not
the
appellant,
ought
to
have
been
assessed
pursuant
to
subsection
215(6)
since
it
was
the
bank
a
resident
of
Canada,
who
paid
the
amount
of
interest
to
the
non-
resident
and
failed
to
deduct
or
withhold
the
amount
of
tax
and
remit
that
amount
to
the
Receiver
General
in
accordance
with
subsection
215(2).
Analysis
Submission
I
Havlik
requested
China
National
to
delay
payment
of
each
of
the
letters
of
credit
for
six
months
and
to
cancel
outstanding
contracts:
the
payment
of
the
additional
five
per
cent
of
the
purchase
price
was
to
compensate
China
National
for
its
costs
in
renegotiating
these
arrangements
or
an
increase
in
the
price
of
goods
sold,
according
to
the
appellant.
I
cannot
agree
with
the
appellant's
contentions.
The
increase
in
the
letters
of
credit
by
five
per
cent
is
more
characteristic
of
interest
than
compensation
for
services
or
damages
or
an
increase
in
the
price
of
goods
sold.
The
letter
of
October
17,
1988
does
not
reflect
what
actually
transpired.
For
example,
one
of
the
23
letters
of
credit,
the
due
date
of
which
was
to
be
extended
by
six
months
and
the
amount
increased
by
five
per
cent,
was
paid
on
its
due
date
and
the
amount
of
the
original
letter
of
credit
was
not
increased
by
five
per
cent
nor
was
the
price
of
the
goods
increased.
If
the
additional
five
per
cent
represented
compensation
or
an
increase
in
the
goods
sold,
and
not
interest,
one
would
have
expected
the
five
per
cent
ought
to
have
been
added
to
each
letter
of
credit
that
was
renegotiated.
Hannan
and
Farnsworth
write
that
“interest
of
money
generally
arises
where
capital
is
lent
or
invested,
or
is
represented
by
unpaid
purchasemoney".
"Sometimes,"
the
authors
state,
“it
takes
the
form
of
charges
in
respect
of
overdue
debts.
.
.."
The
authors
quote
an
excerpt
from
the
judgment
of
Lord
Wright
in
Westminster
Bank
Ltd.
v.
Riches
as
epitomizing
the
general
characteristics
of
interest:
The
essence
of
interest
is
that
it
is
a
payment
which
becomes
due
because
the
creditor
has
not
had
his
money
at
the
due
date.
It
may
be
regarded
either
as
representing
the
profit
he
might
have
made
if
he
had
the
use
of
the
money,
or
conversely
the
loss
he
suffered
because
he
had
not
that
use.
The
general
idea
is
that
he
is
entitled
to
compensations
for
the
deprivation.
Interest
has
also
been
defined
as
compensation
for
delay
in
payment.
Halsbury
states
two
requirements
must
generally
be
satisfied
for
a
payment
to
be
an
amount
of
interest:
(1)
there
must
be
a
sum
of
money
by
reference
to
which
the
payment
is
to
be
ascertained
and
(2)
that
sum
of
money
must
be
a
sum
which
is
due
to
the
person
entitled.
Both
these
requirements
are
present
in
the
case
at
bar.
Each
letter
of
credit
had
a
fixed
sum
of
money
that
was
payable
and
that
sum
of
money
was
due
to
China
National.
The
creditor,
China
National,
was
entitled
to
compensation
for
the
deprivation
of
the
money.
The
five
per
cent
increase
in
each
letter
of
credit
was
interest.
Aside
from
the
letter
received
shortly
before
trial,
there
is
no
evidence
that
China
National
included
the
five
per
cent
amount
in
the
price
of
the
material
and
was
included
in
the
cost
to
the
appellant
of
the
goods
purchased.
There
was
no
bill
of
sale
or
contract
adduced
in
evidence
indicating
an
increase
in
the
price
of
the
goods.
I
also
do
not
find
any
reason
to
agree
with
the
appellant
that
during
the
year
in
appeal,
interest,
as
contemplated
in
paragraph
212(1)(b),
was
a
concept
unknown
in
Chinese
business
practice.
The
sample
sales
contract
in
a
form
prepared
by
China
National
is
written
in
normal
commercial
language
and
refers
to
annual
interest.
While
interest
contemplated
in
paragraph
212(1)(b)
may
not
have
been
a
concept
used
in
the
internal
economy
of
China,
I
have
no
doubt
that
such
interest
was
a
concept
well
known
by
the
Government
of
the
People’s
Republic
of
China
and
applied
in
its
international
trade.
Submission
II
I
now
deal
with
the
alternative
submission
of
the
appellant,
namely
that
the
Bank
of
Nova
Scotia,
not
the
appellant,
is
liable
for
tax
pursuant
to
subsection
215(6).
Both
counsel
agreed
the
Bank
of
Nova
Scotia
was
the
agent
of
Havlik
when
making
payments
under
the
letters
of
credit;
the
Bank
of
Nova
Scotia
is
not
a
party
to
these
proceedings
and
I
therefore
make
no
such
finding.
Because
this
submission
was
not
raised
in
the
pleadings
I
requested
counsel
to
prepare
written
arguments.
I
considered
this
alternative
submission
only
to
determine
whether
Havlik,
as
debtor,
is
freed
of
liability
under
subsection
215(1)
for
reason
only
his
purported
agent
is
liable
under
subsection
215(2).
Appellant’s
counsel
made
the
following
arguments:
a)
Subsection
215(6)
imposes
tax
on
a
single
person
who
fails
to
comply
with
subsection
215(1).
No
cumulative
liability
is
created
by
subsection
215(6).
If
Parliament
had
intended
more
than
one
person
to
be
liable
the
opening
words
of
subsection
215(6)
would
read
"where
persons
have
failed”,
not
"where
a
person
has
failed”.
b)
If
more
than
one
resident
taxpayer
is
liable
for
withholding,
uncertainty
would
be
created
amongst
the
debtors
and
excessive
withholding
would
be
encouraged.
c)
The
intention
of
Parliament
in
enacting
subsections
(1),
(2)
and
(3)
of
section
215
is
to
make
liable
the
resident
of
Canada
who
has
final
control
over
the
payment
to
the
non-resident.
d)
The
ejusdem
generis
rule
in
interpreting
subsection
215(2)
should
be
liberally
interpreted
and
one
ought
to
look
at
the
object
or
mischief
aimed
at
by
the
statute.
The
mischief
intended
to
be
corrected
by
Parliament
in
subsection
215(2)
was
the
interception
of
taxable
income
payable
by
debtor
agents
where
the
agent
has
final
control
of
payment
to
a
nonresident.
e)
The
Bank
of
Nova
Scotia
had
a
direct
contractual
obligation
to
China
National,
independent
of
the
appellant,
and
therefore
the
bank
is
liable
under
subsection
215(1)
as
well.
f)
In
cases
of
ambiguity
in
interpreting
a
tax
statute,
construction
most
favourable
to
the
individual
is
to
be
adopted.
The
respondent's
counsel
made
two
submissions.
Firstly,
he
stated
that
section
215
creates
obligations
to
withhold
tax
in
certain
situations:
subsection
(1)
creates
the
obligation
in
the
payor
or
debtor,
subsection
(2)
creates
a
somewhat
narrower
obligation
to
withhold
in
an
agent
or
other
person
paying
or
crediting
on
behalf
of
a
debtor
and
subsection
(3)
creates
an
obligation
in
the
creditor's
agent
who
had
received
the
amount.
In
any
event,
the
initial
responsibility
to
withhold
rests
with
the
debtor
and
not
his
agent.
Subsection
215(2)
does
not
extinguish
the
debtor's
obligation
in
subsection
(1);
such
a
result
would
frustrate
Parliament's
intention
to
create
an
obligation
to
withhold
in
a
class
of
persons
who
have
dealings
with
certain
funds
and
ensure
tax
payable
by
non-residents
is
collected.
The
obligations
of
subsections
215(1)
and
(2)
are
cumulative
and
not
mutually
exclusive
and
subsections
215(2)
and
(3)
make
the
responsibility
to
withhold
a
joint
and
several
one.
Otherwise
subsection
(3),
creating
an
obligation
in
the
creditor's
agent
to
withhold,
would
extinguish
the
obligations
of
the
debtor
and
his
agent
to
withhold.
Such
was
not
the
intention
of
Parliament.
A
primary
debtor
cannot
avoid
responsibility
to
withhold
merely
by
having
an
agent
pay
over
the
funds.
Secondly,
respondent's
counsel
suggested
that
subsection
215(2)
does
not
apply
to
the
facts
of
this
appeal.
The
subsection
refers
to
an
amount
paid
or
credited
"by
way
of
redemption
of
bearer
coupons
or
warrants
or
otherwise.
.
.”.
Neither
subsection
(1)
or
(3)
contains
similar
wording.
Subsection
(2)
must
therefore
only
apply
in
the
restricted
situations
described
in
that
provision.
The
only
words
in
subsection
(2)
which
possibly
could
cover
the
payment
of
a
letter
of
credit
are
the
words
"or
otherwise"
since
in
the
case
at
bar
there
is
no
redemption
of
bearer
coupons
or
warrants.
To
determine
the
meaning
of
the
words
"or
otherwise"
requires
application
of
the
ejusdem
generis
rule.
"Or
otherwise"
are
general
words
which
follow
an
enumeration
of
things
which
form
a
genus
and
accordingly
these
general
words
are
not
to
be
given
the
widest
possible
meaning
but
must
be
read
as
applying
only
to
things
of
the
same
type
or
class
as
those
specifically
enumerated.
The
words
"or
otherwise”
must
therefore
mean
either
"or
other
type
of
bearer
instrument"
or
"other
type
of
redemption".
Counsel
adds
that
the
words
"or
otherwise”
do
not
mean
“in
any
manner
whatsoever"
which
would
be
the
necessary
meaning
for
the
appellant
to
succeed.
In
addition
the
words
"or
otherwise”
would
have
to
relate
back
to
the
words
"paid
or
credited"
in
subsection
(2).
If
this
was
the
intention
of
Parliament,
he
argued,
there
would
be
no
need
for
the
words
“by
way
of
redemption
of
bearer
coupons
or
warrants"
to
precede
"or
otherwise".
Parliament
did
not
use
similar
wording
in
subsection
(1)
and
(3)
of
section
215.
In
drafting
subsection
(2)
in
the
manner
it
has,
counsel
concluded,
Parliament
must
have
intended
to
create
a
limited
obligation
on
the
agent
or
other
person
paying
or
crediting
on
behalf
of
the
debtor
as
opposed
to
a
more
general
obligation
on
the
debtor
and
creditor's
agent.
Part
I
of
the
Act
imposes
tax
on
non-residents
of
Canada.
Subsection
215(1)
compels
a
person
who
pays
or
credits
or
is
deemed
to
pay
or
credit
an
amount
on
which
an
income
tax
is
payable
under
Part
I
to
deduct
or
withhold
from
the
payment
the
amount
of
tax
and
remit
that
amount
to
the
Receiver
General
for
Canada
on
behalf
of
the
non-resident
person
on
account
of
the
tax.
Subsection
215(2)
provides
that
in
cases
where
an
amount
is
paid
or
credited
by
an
agent
or
other
person
on
behalf
of
the
debtor
''either
by
way
of
redemption
of
bearer
coupons
or
warrants
or
otherwise",
the
agent
or
other
person
shall
deduct
or
withhold
and
remit
the
tax.
The
words
“by
way
of
redemption"
modify
the
words
“paid
or
credited”.
The
payment
or
credit
of
the
debt
is
by
way
of
redeeming
bearer
coupons
or
warrants.
The
word
"warrants"
in
subparagraph
215(2)
contemplates
"a
writing
which
authorizes
one
person
to
pay
or
deliver,
and
another
to
receive,
a
sum
of
money":
The
Shorter
Oxford
English
Language
Dictionary
On
Historical
Principles.
A
bearer
warrant
is
thus
a
debt
instrument
in
bearer
form.
The
French
language
version
of
the
phrase
"either
by
way
of
redemption
of
bearer
coupons
or
warrants
or
otherwise"
is:
.
.
.soit
à
titre
de
rachat
de
coupons
ou
titres
au
porteur,
soit
autrement.
.
.
Bearer
debt
instruments
are
not
registered
as
to
ownership
and
the
debtor
normally
does
not
know
the
names
and
residences
of
the
owners
of
the
bearer
debt
instruments,
its
creditors.
When
the
debt
instrument
is
redeemed
and
payment
is
made,
it
is
usually
an
agent
of
the
debtor
who
deals
with
and
pays
the
creditors.
Subsection
215(2)
makes
the
agent
who
has
failed
to
withhold
or
deduct
liable
to
pay
the
tax.
The
word
"otherwise"
("autrement")
means
“in
other
manner
.
.
.
in
another
way,
or
in
other
ways,
differently.
.
.":
Shorter
Oxford
English
Dictionary
On
Historical
Principles.
Thus,
the
words
"or
otherwise"
in
subsection
215(2)
provide
that
an
agent
or
other
person
who
pays
or
credits
an
amount
on
behalf
of
the
debtor
in
a
manner
other
than
by
redemption
is
to
withhold
or
deduct
tax
and
if
he
fails
to
do
so,
subsection
215(2)
makes
him
liable
to
pay
the
tax
he
has
not
withheld
or
deducted.
The
provisions
of
subsection
215(2)
do
not
extinguish
the
debtor's
obligation
to
withhold
or
deduct
under
subsection
215(1).
Subsection
215(6)
provides
that
the
person
who
has
failed
to
withhold
or
deduct
is
liable
to
pay
a
tax
under
Part
I
on
behalf
of
the
non-resident
the
whole
amount
that
should
have
been
deducted
or
withheld.
In
the
event
the
amount
of
tax
has
not
been
deducted
or
withheld
the
debtor
and
his
agent
or
the
person
who
has
paid
or
credited
an
amount
on
behalf
of
the
debtor
are
jointly
liable
for
the
payment.
Under
the
common
law
and
the
civil
law
a
principal
is
liable
for
the
actions
of
his
agent.
The
law
recognizes
that
the
agent
has
power
to
affect
the
principal's
legal
position
by
acts
which,
though
performed
by
the
agent,
are
to
be
treated
in
certain
respects
as
if
they
were
acts
of
the
principal.
The
payment
by
the
agent
of
the
amount
to
the
creditor
without
any
amount
withheld
or
deducted
is
quite
clearly
to
be
treated
as
an
act
of
the
principal.
The
words
"deemed
to
have
paid”
are
used
in
subsection
215(1)
in
addition
to
the
words
"pays"
and
"credits".
Something
more
than
what
a
person
normally
considers
"pays"
and
"credits"
is
added
to
these
words.
Beetz,
J.
explained
in
The
Queen
v.
Verrette™
that:
A
deeming
provision
is
statutory
fiction;
as
a
rule
it
implicitly
admits
that
a
thing
is
not
what
it
is
deemed
to
be
but
decrees
that
for
some
particular
purpose
it
shall
be
taken
as
if
it
were
that
thing
although
it
is
not
or
there
is
doubt
as
to
whether
it
is.
A
deeming
provision
artificially
imports
into
a
word
or
an
impression
an
additional
meaning
which
they
would
not
otherwise
convey
beside
the
normal
meaning
which
they
retain
where
they
are
used.
.
.
.
The
words
"deemed
to
have
paid”
in
subsection
215(1)
extend
the
meaning
of
the
provision
to
what
one
would
not
ordinarily
consider
what
a
person
pays
or
credits.
Black's
Law
Dictionary,
5th
edition,
defines
"deem"
as:
To
hold;
consider;
adjudge;
condemn;
determine;
treat
as
if;
construe.
Viscount
Simonds
said
he
regarded
the
primary
function
of
the
word
"deem"
when
used
in
a
statute
"as
to
bring
in
something
which
would
otherwise
be
excluded".
Mr.
Justice
Heald
of
the
Federal
Court
of
Appeal
agreed
with
that
interpretation
in
Hillis
&
Hillis
v.
The
Queen,
[1983]
C.T.C.
348;
83
D.T.C.
5365
at
page
361
(D.T.C.
5376).
Subsection
215(1)
thus
includes
not
only
a
payment
or
credit
that
is
actually
made
by
a
person
to
a
non-resident
but
also
any
amount
that
is
"deemed
to
have
been
paid
or
credited"
by
the
person.
The
words
"deemed
to
have
paid"
in
subsection
215(1)
contemplate
not
only
circumstances
where
a
debtor
pays
or
credits
an
amount
but
also
circumstances
where
the
debtor
can
be
reasonably
considered
to
pay
or
credit
an
amount,
namely
a
payment
or
credit
of
an
amount,
by
another
person
on
his
behalf.
In
both
cases
the
debtor
or
the
person
paying
on
his
behalf
is
to
deduct
or
withhold
pursuant
to
subsection
215(1)
and
in
the
event
of
failure
to
do
so
the
debtor
is
liable
for
tax
under
subsection
215(6).
An
agent
is
liable
for
tax
not
deducted
or
withheld
in
the
circumstances
described
by
subsection
215(2).
In
an
appeal
to
this
Court,
a
taxpayer
appeals
against
an
assessment
of
tax
issued
against
him
by
the
Minister
of
National
Revenue.
The
Court
determines
whether
the
Minister
has
properly
assessed
the
taxpayer
and
either
dismisses
the
appeal
or
allows
the
appeal
vacating
or
varying
the
assessment
or
referring
it
back
to
the
Minister
for
reconsideration
and
reassessment:
subsection
171(1).
The
Court
does
not
determine
the
tax
liability
of
a
third
party.
Thus,
for
example,
whether
the
Bank
of
Nova
Scotia
is
liable
for
tax
pursuant
to
subsection
215(6)
is
not
for
me
to
decide
in
the
appeal
at
bar.
My
sole
duty
in
this
appeal
is
to
determine
whether
the
assessment
against
Havlik,
the
appellant,
is
good
or
bad,
nothing
more.
The
law
in
my
view
is
quite
clear:
the
assessment
is
a
good
one.
The
opening
words
of
subsection
215(6),
"where
a
person
has
failed”
may
refer
to
either
a
debtor
or
his
agent.
The
liability
of
a
person
under
certain
conditions
for
failure
of
another
person
to
withhold
and
deduct
does
not
extinguish
the
latter's
liability
under
the
Act.
No
excessive
withholding
is
encouraged.
Parliament
made
liable
to
withhold
or
deduct
any
person
who
makes
a
payment
or
credit
to
a
non-resident,
or
who
makes
such
payment
or
credit
on
his
behalf
or
for
his
benefit.
The
theory
of
exclusive
liability
to
the
person
who
has
final
control
over
the
payment
to
the
non-resident,
propounded
by
appellant's
counsel,
is
not
valid.
The
appeal
is
dismissed.
Appeal
dismissed.
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