OPSEU v. National Citizens' Coalition, 90 DTC 6326, [1990] 2 CTC 163 (Ont CA)

Blair, J.A.:— The issue in this appeal is whether taxpayers can claim relief under the Canadian Charter of Rights and Freedoms if they are less favoured than other taxpayers under the Income Tax Act, S.C. 1970-71-72, c. 63 (the ITA). This is an appeal from the judgment of Galligan, J. [[1987] 2 C.T.C. 59; 87 D.T.C. 5270] in which he dismissed the appellants’ action for a declaratory judgment on a motion made under Rule 21 on the ground that the statement of claim disclosed no reasonable cause of action against the respondents. There is also a cross-appeal against the finding of Galligan, J. that the action was not frivolous, vexatious and an abuse of process.

The Factual Background

The appellant, Ontario Public Service Employees Union (OPSEU) is a trade union whose members are employees of the Ontario government. The indi- vidual appellants are respectively the president and a member of OPSEU. The respondent, The National Citizens’ Coalition Inc. (NCC), is a non-profit corporation whose primary objective is the advocacy and dissemination of ideological and political views. The appellants sought a declaration that their rights under paragraphs 2(b) and (d) and section 15 of the Charter were infringed by the alleged preference accorded by the ITA to contributors to NCC over contributors to OPSEU.

The Government of Canada collects personal and corporate income tax from residents of Ontario under the Ontario Income Tax Act, R.S.O. 1980, c. 213 and the Ontario Corporations Tax Act, R.S.O. 1980, c. 97. The provisions of the Ontario Acts relevant to this appeal are the same as those of the ITA and need not be referred to in this judgment.

Corporations and individuals carrying on business are taxable on the profit of that business: ITA, subsection 9(1). Profit is computed by deducting from the revenue of the business all expenses incurred "for the purpose of gaining or producing income": ITA, paragraph 18(1)(a). No similar deduction is allowed from a taxpayer's employment income, from which only specified expenses relating to that employment and trade union dues may be deducted: ITA, subsection 5(1) and subsection 8(1). The appellants allege that, as a result, the ITA permits taxpayers with business income to reduce their tax by deducting contributions made to NCC as expenses in computing their taxable income but does not permit taxpayers with employment income to reduce their tax by deducting contributions to OPSEU or other organizations advocating ideological or political views.

The statement of claim alleges that:

(a) the appellants’ equality rights under section 15 of the Charter are infringed because taxpayers with business income can deduct contributions to NCC but taxpayers with employment income cannot deduct contributions to organizations advocating views which they support;

(b) the appellants’ freedom of expression under paragraph 2(b) of the Charter is infringed because the market place of ideas in Ontario and Canada is skewed by the subsidization of the advocacy of ideological and political views by persons earning business income but not persons earning employment income; and

(c) the appellants’ freedom of association under paragraph 2(d) of the Charter is infringed because they are forced to subsidize the advocacy by persons earning business income of political opinions with which persons earning employment income do not agree.

Galligan, J. properly instructed himself that, in a motion under Rule 21, he had to assume that all allegations contained in the statement of claim were capable of being proved and that, before allowing the motion to dismiss, he had to conclude with certainty that, even if the allegations were proved, the action could not succeed. In his reasons, he said that he could not "see how different tax treatment of certain taxpayers could affect the freedom of a taxpayer to express herself or himself” or affect "a person's freedom of association". He also held [at page 61 (D.T.C. 5272)] that:

. . . the fact that a taxpayer who earns his living by operating a business is entitled to a deduction which is not available to a taxpayer whose income is earned by way of wages or salary does not amount to that denial of equal benefit under the law which is contemplated by section 15 of the Charter.

He concluded that the statement of claim disclosed no cause of action and that the appellants had no chance of success.

Were the Appellants' Equality Rights under Section 15 of the Charter Infringed?

Section 15 of the Charter provides:

S. 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.

In this case, the most relevant of the four equality rights specified in the section is that of “equal benefit of the law”.

After the decision of Galligan, J., a trilogy of decisions by the Supreme Court of Canada placed a more restrictive interpretation on section 15 than had been applied previously by this court: Andrews v. Law Society of British Columbia, [1989] 1 S.C.R. 143, 56 D.L.R. (4th) 1, Reference re Workers' Compensation Act, 1983 (Nfld.) ss. 32, 34, [1989] 1 S.C.R. 922, 56 D.L.R. (4th) 765, and R. v. Turpin, [1989] 1 S.C.R. 1296, 48 C.C.C. (3d) 8. The threshold question under section 15 is no longer whether similarly situated groups are differently treated by legislation. It is now whether the law in question discriminates against a group within the meaning of subsection 15(1). The Supreme Court of Canada trilogy has been followed by this court in Catholic Children's Aid Society of Metropolitan Toronto v. S.(T.) (1989), 69 O.R. (2d) 189; 60 D.L.R.

(4th) 397 and Mirhadizadeh v. Ontario (1989), 69 O.R. (2d) 422; 60 D.L.R. (4th) 597.

The approach taken by the court in Andrews to the interpretation of subsection 15(1) was described by McIntyre, J. at pages 179-80 S.C.R. and page 22 D.L.R. as one which:

. . . adopts the concept that discrimination is generally expressed by the enumerated grounds. Section 15(1) is designed to prevent discrimination based on these and analogous grounds. The approach is similar to that found in human rights and civil rights statutes which have been enacted throughout Canada in recent times.

Later, at page 183 S.C.R., page 24 D.L.R., he described non-citizens, whose rights were in issue in that case, as “a good example of a 'discrete and insular minority’ who come within the protection of s. 15.”

In the Workers' Compensation Act case, supra, at page 924 S.C.R., page 766 D.L.R., La Forest, J. described the group of workers and dependents alleging discrimination under the Workers' Compensation Act of Newfoundland as being “in no way analogous to those listed in s. 15(1)". In Turpin, supra, Wilson, J. stated at page 1333 S.C.R., pages 35-36 C.C.C.:

Differentiating for mode of trial purposes between those accused of s. 427 offences in Alberta and those accused of the same offences elsewhere in Canada would not, in my view, advance the purposes of s. 15 in remedying or preventing discrimination against groups suffering social, political and legal disadvantage in our society. A search for indicia of discrimination such as stereotyping, historical disadvantage or vulnerability to political and social prejudice would be fruitless in this case. . . .

The Supreme Court of Canada recognized that Parliament and the legislatures must make distinctions and treat groups differently in the enactment of legislation. McIntyre, J. said in Andrews, supra, at page 168 S.C.R., page 13 D.L.R.:

It is not every distinction or differentiation in treatment at law which will transgress the equality guarantees of s. 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 my opinion, Canadian taxpayers earning income from employment, who constitute the great majority of the working population, do not constitute a group suffering discrimination on grounds analogous to those enumerated in subsection 15(1) of the Charter. This huge group of taxpayers is not a "discrete and insular minority". It is a large segment of the population which we described in Mirhadizadeh, supra, at page 426 as "not linked by any personal characteristics relating to them as individuals or members of a group”. They are what we called in Mirhadizadeh, supra, at page 426 "a disparate and heterogeneous group", linked together only by the fact that they are taxed on their employment income. They are incapable of being discriminated against on grounds analogous to those enumerated in subsection 15(1). The appellants’ claim that ITA infringes the equality rights of taxpayers earning income from employment must fail.

Does the ITA Infringe Freedom of Expression under paragraph 2(b) of the Charter?

Paragraph 2(b) provides:

2. Everyone has the following fundamental freedoms:

(b) freedom of. . . expression . . .

Galligan, J., in my opinion, was correct in holding that different methods of taxing income from a business or employment do not place any direct restriction on the appellants’ freedom of expression under paragraph 2(b). They are free to express views of any kind and by whatever means they may choose. The appellants, however, maintained that their argument that the effect of the ITA was to infringe their paragraph 2(b) rights was reinforced by two decisions of the Supreme Court of Canada delivered after the judgment of Galligan, J. in this case: A.-G. Quebec v. Irwin Toy Ltd; Moreau et al., [1989] 1 S.C.R. 927, 58 D.L.R. (4th) 577; Ford et al. v. A.-G. Quebec, [1988] 2 S.C.R. 712, 54 D.L.R. (4th) 577. In my opinion, these decisions have no special relevance to this case. They are important only in describing the nature of free expression and whether and to what extent it may be infringed by government action. The two decisions add nothing to the argument that the market place of ideas is skewed by the ITA.

In this branch of their argument, the appellants relied on a decision of the United States Supreme Court that tax deductibility was the equivalent of a governmental cash grant or subsidy to the organization benefiting from it: Regan v. Taxation with Representation of Washington (TWR), 461 U.S. 540 (1983) per Rehnquist, J., at page 544. This, however, affords no support for the appellants in this case because the Supreme Court went on to hold that the denial of deductibility of contributions to support TWR's lobbying activity did not violate its "freedom of speech" under the First Amendment to the American Constitution.

The Court also held that the rights of TWR under the equal protection component of the Fifth Amendment's due process clause were not violated by another section of the Internal Revenue Code. This section permitted taxpayers to deduct contributions to other veterans' organizations engaged in lobbying activities. The Court found there was no invidious discrimination in the denial of exemption for contributions to TWR. In my opinion, Regan v. TWR, supra, does not support the appellants' argument under paragraph 2(b) or section 15. On the contrary, it is consistent with my conclusions on these issues.

The Supreme Court of Canada's decision in MacKay v. Manitoba, [1989] 2 S.C.R. 357, 61 D.L.R. 385 also supports my conclusion that differential tax treatment does not affect the paragraph 2(b) rights of the appellants. The Manitoba legislation provided for contributions from public funds to the expenses of candidates in provincial elections receiving more than ten per cent of the votes cast in any constituency. It was attacked as a violation of Charter rights under section 15 because candidates receiving less than ten per cent of the vote were denied benefits. The Supreme Court dismissed the appeal primarily because a proper factual foundation had not been laid for the case. Nevertheless, Cory, J. concluded his judgment by rejecting the argument that the appellant's right of freedom of expression under paragraph 2(b) of the Charter was infringed. He said at pages 366-67 S.C.R., page 392 D.L.R.:

The appellants also argued an issue that does not require a factual foundation. It was said that the statutory funding of candidates could, whenever a losing candidate or candidates received 10% of the vote, force a taxpayer to support a candidate whose views are fundamentally opposed to that of the taxpayer. This enforced support of a contrary view was said to infringe the taxpayer's right to freedom of expression. I cannot accept that contention. The Act does not prohibit a taxpayer or anyone else from holding or expressing any position or their belief in any position. Rather, the Act seems to foster and encourage the dissemination and expression of a wide range of views and positions. In this way it enhances public knowledge of diverse views and facilitates public discussion of those views.

Does the ITA Infringe the Appellants’ Freedom of Association under paragraph 2(d) of the Charter?

Section 2(d) provides:

2. Everyone has the following fundamental freedoms:

(d) freedom of association.

The argument that the freedom of association of the appellants under paragraph 2(d) of the Charter is infringed can be disposed of shortly. By virtue of the tax subsidy alleged to have been given to taxpayers receiving income from a business, the appellants contended that taxpayers receiving income from employment were forced to support the advocacy of political and ideological opinions by NCC. This was reminiscent of the plaintiffs’ argument in Re Lavigne and Ontario Public Service Employees Union et al. (1986), 55 O.R. (2d) 449; 86 C.L.L.C. 14,039 (H.C.J.). There, a member of a bargaining unit represented by OPSEU, who was not himself a member of OPSEU, objected, with the financial support of NCC, to diversion of part of his compulsory union dues to support political and ideological views with which he disagreed. White, J. held that the member's "freedom of association" under paragraph 2(d) of the Charter had been infringed. This judgment was reversed on appeal by this court: Re Lavigne and OPSEU et al. (1989), 67 O.R. (2d) 536; 89 C.L.L.C. 14,011 (C.A.). Counsel for the appellants properly conceded, in oral argument, that we were bound by our decision in Lavigne to hold that no grounds existed for alleging an infringement of the right of association under paragraph 2(d) of the Charter.

Since the substantive grounds on which the action was commenced and this appeal was based have been rejected, the appeal, in my opinion, should be dismissed. It is not necessary, therefore, to deal with the other important and complex issues raised by the parties. One, however, deserves mention: whether the appellants had standing to challenge the constitutionality of the ITA and related statutes under the Charter. All members of the court took the view that, because of the importance of the Charter issues raised in the appeal, it was essential that they be decided. Consequently, it was assumed, without deciding, that the appellants had standing to bring this case.

Cross-appeal

In its cross-appeal, NCC asserted that the trial judge erred in concluding that the action was not frivolous, vexatious and an abuse of the process of the court. NCC claimed, as a result, that it should be awarded costs on the basis of solicitor and his own client.

There is no doubt that animosity exists between OPSEU and NCC. It was fomented by the Lavigne action against OPSEU, supra, which was financed by NCC. The animosity is also evidenced by the flamboyant press release issued by OPSEU when this action was commenced. It is, in my opinion, unrealistic to expect that litigation between two public organizations holding opposing ideological and political views can be conducted without animosity developing between the parties.

In Foy v. Foy (1978), 20 O.R. (2d) 747; 88 D.L.R. (3d) 761 Dubin, J.A. observed at page 748 (D.L.R. 763) that “only on rare occasions" would a court strike an action as abusive. In Ontario, the courts have held that the elements of the tort of abuse of process should be applied in determining whether an action ought to be stayed or dismissed as abusive. This means that the process of the court is used for an improper purpose and that there is a definite act or threat in furtherance of such purpose: see, for example, Tsiopoulos v. Commercial Union Assurance Company (1986), 57 O.R. (2d) 117; 13 C.P.C. (2d) 279 at 120-22 (H.C.). In Tsiopoulos, Henry, J. stated at page 119 that the collateral or improper purpose must be "entirely outside the ambit of the legal claim upon which the court is asked to adjudicate”. This is consistent with the English rule that an action will not be dismissed as an abuse of process unless the litigant is pursuing an ulterior purpose unrelated to the subject matter of the litigation and “but for" the ulterior purpose, the action would not have been commenced at all: Goldsmith v. Sperrings Limited, [1977] 2 All E.R. 566 (C.A.) at 585-86.

In my opinion, the appellants were justified in seeking an adjudication of their rights and freedoms under the Charter with respect to NCC and the other named defendants. Whether or not they had other motives, which might or might not have been ulterior, does not detract from their undoubted right to bring the action in order to have these important Charter issues determined. I therefore agree with Galligan, J. that this action cannot be characterized as frivolous or vexatious or otherwise an abuse of process.

In the result, I would dismiss the appeal and the cross-appeal, both with costs.

Appeal dismissed.