Goyer Estate v. The Queen, 78 DTC 6159, [1978] CTC 205 (FCTD)

Walsh, J:—This is an action by appellant against an assessment dated February 28, 1977, in which the Minister of National Revenue did not take into account interest payable to the estate Felix Goyer in reimbursing the sum of $87,445.45 of overpaid succession duties. Two questions are in issue:

1. Whether appellant has any right to such interest.

2. In the event that it had whether its right is merely to simple interest or to compound interest as it calculates in its demand.

These proceedings result from an earlier action between the parties in which judgment was rendered in favour of appellant on January 7, 1974* [1] which was subsequently confirmed in the Court of Appeal by judgment dated May 14, 1976.t [2] Two issues had been raised in that action, the first being whether the terms of the will had resulted in the conferring of a general power of appointment on the deceased’s widow so that all the estate would be taxable in her hands or ff, since a substantial portion was to be used for philanthropic works, study and research bursaries and hospital works bearing the deceased’s name as the widow determined, this portion was therefore exempt from the assessment; and second the evaluation of immoveable property owned by the estate. The estate succeeded on both issues, the value of the immoveable property in question which on August 31, 1964 the Minister had fixed at $525,000 following an appeal from an assessment of January 14, 1960, fixing the value at $600,000, being reduced by the Court to $440,000.

In discussing the question of interest the judgment read as follows on pages 90-92 [6080-81]:

The question of the interest to be charged also gives rise to some difficulty and cannot, I believe, be settled on the information before the Court. Interest commences to run six months after death and the return was duly filed within this period on November 14, 1956. In this return the figure of $90,000 was shown as the value of the property in question which I have found to be far too low. There is a figure on the first page of the return under the heading of “Minister's figures” indicating duties were claimed in the amount of $353,937.45. This is apparently the assess- ment of July 4, 1957 which assessment was not, however, produced and resulted from an increase in the value of the property by the Minister to $200.000, still considerably less than what I have found it should have been assessed at. On the other hand, the estate was apparently assessed on the basis that the entire assets should be considered as having passed to the widow Dame Dagenais, which conclusion I have rejected. In its declaration, plaintiff asks that all interest be cancelled from the period commencing on the day when the duties established by the original assessment were paid, but no proof was made as to the date of this payment. A period of 2 / years elapsed before the new assessment of January 14, 1960 and it was in this assessment that a credit was shown of: $192,233.93 for amounts paid on account. The Minister continued to assess the entire estate as if it were passing to Dame Dagenais and also now evaluated the property at $600,000, more than I have found to be its proper value at the date of death. so this assessment was erroneous on both counts and it would appear unreasonable to collect interest based on the executor’s refusal to pay an erroneous assessment. This was appealed to the Minister on both counts on April 11, 1960 and it was not until over four years later, on August 31, 1964. that the Minister made a decision on this appeal reducing the property valuation from $600,000 to $525,000, which is still above the figure which I have fixed, and at the same time the assessment was ratified in all other respects. Again, the executors would seem to be within their rights in refusing to pay interest based on this assessment. They brought a notice of dissatisfaction contesting this decision on September 22. 1964 and this time nearly five years elapsed before. the Minister replied on July 10. 1969 confirming it in all respects.

The delay from the filing of the return on November 14, 1956 until July 4, 1957 for the making of the initial assessment may not have been excessive in view of the substantial size of the estate and variety of its assets, so as to constitute an infringement of section 22 of the Act requiring the Minister to examine the return with “all due despatch’’. However, the delay of 2% years until January 14. 1960 before the Minister decided to increase the valuation of the property to $600.000, was not explained but would appear to be motivated by the rapid increase of the value of the property in the interval as established by the sale price obtained by the executors for it in 1959, which increase in value was not, however, a factor which the Minister was entitled to take into consideration in establishing the value as of the date of death. The subsequent delays of 4 / years and 5 years respectively following the notice of appeal and notice of dissatisfaction before the Minister made his decision in each case are even harder to justify, so that it would appear that plaintiff has a very real grievance with respect to interest charges which might justify the application by the Court of section 45 if, in fact, plaintiff can establish that it suffered prejudice by the accumulation of interest charges resulting from these excessive delays. On the other hand, it must be borne in mind that plaintiff had in the interval the use of any sums which it may be called upon to pay as a result of this judgment in excess of the amount already paid on account of duties. and to the extent that any such additional duties result from it having declared a value of $90,000 for the property, which the Court has now evaluated at $440,000 it should be liable for the interest on these duties.

Before a final decision on the question of interest can be made, therefore, it is necessary that the matter be returned to the Minister for reassessment on the basis that Lot 101 should be evaluated at $440,000, that the interest of Dame Dagenais in the estate should be considered as a life interest, the value of same being calculated in accordance with section 35 of the Act, and that the residue of the late Felix Goyer’s estate should be assessed on the basis of $120,000 being distributed to his deceased sister’s twelve grandchildren with the balance left for religious, educational and charitable purposes. As a result of this reassessment it will be possible to establish what duties were properly due and payable and after comparing this with the sum actually paid and establishing the date of such payment, reach a conclusion on the question of interest, at which time the parties, if they Cannot agree on same, may speak to this matter.

Section 45 of the Dominion Succession Duty Act, RSC 1952, c 89, in effect at the time read as follows:

45. Subject to the provisions of this Act. the Exchequer Court shall have exclusive jurisdiction to hear and determine all questions that may arise in connection with any assessment made under this Act and in delivering judgment may make any order as to payment of any duty, interest or penalty or as to costs as to the said Court may seem right and proper.

It is evident from the judgment that the Court’s attention had not been directed to the fact that in fact the succession duties claimed as a result of the assessment under appeal had already been overpaid so that there was no question of relieving the estate from further interest claims by the Crown, but on the contrary the question was whether the estate should not be paid interest on the amounts of the overpayment which it-had been forced to make. This is apparent from the statement, “On the other hand, it must be borne in mind that plaintiff had in the interval the use of any sums which it may be called upon to pay as a result of this judgment in excess of the amount already paid on account of duties.’’ While the Court did not have the necessary figures before it on which the calculation of interest could be made it is evident from the general tenor of the remarks that the Minister was found at fault for very excessive delays of various assessments and reassessments as a result of which the plaintiff had a real grievance with respect to interest which might be remedied by the application of section 45. It was contemplated that the parties could agree as to the interest between themselves but if not they were invited to speak on the matter. In the event, no such application was ever made to the Court in view of the fact that respondent takes the position that section 45 does not give the Court discretion to award any interest whatsoever against the Crown, and accordingly made its assessment of February 28, 1977 pursuant to the judgment calculating the refund due to appellant without including any interest.

In the appeal from the trial judgment the only question which appears to have been raised was the first one, namely whether the deceased’s widow had a power of appointment, so although that judgment, which was not appealed, makes the two substantive questions raised at the trial of the action res judicata it, is doubtful whether the same can be said with respect to the question of interest, especially since the trial judgment merely invited the parties to address the Court on this subject, without making any definite finding that interest would be payable, although indicating that this was a matter which under the circumstances merited serious consideration.

A timetable of events will be helpful at this stage:

There is no dispute as to the figures, an agreed statement of facts having been filed in connection with them. The evidence at trial was that of Maurice Dupras, vice-president of the Trust and Estates Department of appellant who verified the compound interest calculations made by appellant in its statement of claim in the present proceedings as a result of which in addition to a small amount of $17.47 claimed as interest on the overpayment of $25,506.73 (ie $130,000 less $104,493.07) for five days from February 26, 1958 to March 3, 1958, and after the small payments made on that date of further interest of $208.31 for 50 days from March 3, 1958 to April 22, 1958 when the larger payment of $57,344.58 was made, calculated interest at 5% from April 22, 1958 to May 8, 1961 in the amount of $13,278.69, at which date for some unexplained reason a small payment of $500 was made. He then calculates interest each year from May 8 to the following May 8 for the years from May 8, 1961 to May 8, 1976 at 5% until May 8, 1968, 7% from then until May 8, 1969, 7 /4% until May 8, 1970, 8% until May 8, 1971, reducing to 5 /2% until May 8, 1972, 6 /2% to May 8, 1973, 6 /s% to May 8, 1974, 9 /4% to May 8, 1975, and 7%4% to May 8, 1976. Finally he calculates interest at 9 /2% for 339 days from May 8, 1976. to April 12, 1977, when the refund payment was made by the Minister. In each year throughout these calculations the interest is added to the previous balance due so that in effect compound interest is being claimed at varying rates. Witness justified this by stating that as a matter of sound business practice the trust company would be obliged to invest moneys it received at current interest rates and he considered it conservative to place them at current rates for a 1-year term deposit although higher rates would have been available for deposits for longer terms. He filed as an exhibit a table showing current rates of interest for a 1-year term loan as of the end of April in each of the years in question. He stated that interest resulting from a loan would have to be reinvested in the same manner and that had the trust company had possession of these funds during the period in question this would certainly have been done so that the compounding feature would have taken effect. He added that otherwise the money would have been invested in 5-year term certificates which would yield a higher rate of interest and partially make up for the absence of compounding.

Here again there is no dispute as to the actual figures but merely as to the principle of whether appellant has any right to claim compound interest by virtue of the application of section 45 of the Act, if in fact it has the right to claim any interest at all.

Recent jurisprudence is to the effect that interest cannot be claimed against the Crown unless there is specific provision for it in the Statute or contract. In the case of Hochelaga Shipping and Towing Company Limited v His Majesty the King, [1944] SCR 138 at 142, Rinfret, J stated:

. . . The Crown is not liable to pay interest, unless the statute or contract provides for it; and such is not the case here.

This principle was reiterated in His Majesty the King v The Royal Bank of Canada and Marie E Racette, [1948] SCR 28. Both these cases were referred to and confirmed in His Majesty the King v Dame Juliette Caroll et al, [1948] SCR 126 at 132, where Taschereau, J Stated:

. . . It is settled jurisprudence that interest may not be allowed against the Crown, unless there is a statute or a contract providing for it.

Section 35 of the Federal Court Act is to the same effect. It reads:

35. In adjudicating upon any claim against the Crown, the Court shall not allow interest on any sum of money that the Court considers to be due to the claimant, in the absence of any contract stipulating for payment of such interest or of a statute providing in such a case for the payment of interest by the Crown. (Emphasis mine.)

It is of interest to note that under the former Exchequer Court Act, RSC 1952, c 98, there was a similar provision under paragraph 47(b):

47. In adjudicating upon any claim arising out of any contract in writing the Court shall decide in accordance with the stipulations in such contract, and shall not allow

(b) interest on any sum of money that the court considers to be due to the claimant, in the absence of any contract in writing stipulating for payment of such interest or of a statute providing in such a case for the payment of interest by the Crown. (Emphasis mine.)

In an 1896 case of Emmanuel St Louis v Her Majesty the Queen, 25 SCR 649, arising out of a contract in the Province of Quebec Taschereau, J in rendering the majority judgment of the Court allowed interest from the date of filing of the petition of right. This was followed in the Exchequer Court in the case of Lainé v Her Majesty the Queen, 5 Ex CR 103 at 128-9, the Court finding that interest must have been allowed on the basis that this was the practice in Quebec where the proceedings on the contract originated. In a subsequent Supreme Court case in The Queen v Henderson, 28 SCR 425, also in a breach of contract case arising in Quebec, Taschereau, J allowed interest from the date of the reference of the claim to the Exchequer Court stating that the law of the Province of Quebec ruled in the case and according to that law this interest must be allowed and that the section of the Exchequer Court Act did not apply since the proceedings were not based on a written contract.

I do not find these cases helpful to appellant however. We are here dealing with a federal statute, namely the Succession Duty Act and not with a contract made in the Province of Quebec, even though the will in the present case had to be interpreted according to the laws of that province. Neither can it be said that appellant’s claim is based on a demand for interest from the date of institution of proceedings. It is a demand for interest on overpayment which it was forced to make to the Crown as a result of assessments of succession duties which were subsequently found to be erroneous and excessive. Certainly there was an unjust enrichment in favour of the Crown in that it had the possession and use of these moneys from the dates on which they were paid and a similar impoverishment of the appellant which as a result of the demands made in the assessment was deprived of the use of moneys properly belonging to the estate to the extent that the payments it was obliged to make were in excess of the amounts eventually determined to constitute a proper assessment. Moreover the delays by the Minister in making the several assessments and reassessments would be difficult to explain and certainly unreasonable and unjustifiable in view of the fact that the Minister was enjoined by section 22 of the Act to check and examine the declaration “with all due despatch”. The initial assessment was not unduly delayed, being made reasonably promptly on July 4, 1957 resulting in a payment of duties by the estate on February 26, 1958, and additional payments on March 3. The reassessment on March 14, 1958 resulted in payment of further substantial sums by the estate on April 22. Nearly two years later however the Minister, erroneously, as the Court subsequently found reassessed again on January 14, 1960, evaluating real estate at $600,000 which was promptly appealed on April 11, 1960. It is impossible to justify a delay of over 4 years until August 31, 1964 before the Minister acted on this, reducing the property valuation $525,000 (still higher than the Court allowed). Notice of dissatisfaction was then promptly filed by the taxpayer. There was a further incomprehensible delay of nearly 5 years until July 10, 1969 before the assessment was confirmed by the Minister.

It is abundantly clear that in equity the appellant should not have been deprived of the use of some of its funds for what is now nearly 20 years as a result of an erroneous assessment by the Minister and further unjustifiable delay by the Minister which greatly contributed to the total elapsed time before the issues in question could finally be resolved by the Court. However just and equitable appellant’s claim may be however, it cannot succeed unless the statute in question permits the Court to order payment of interest by the Crown in these circumstances. The whole issue must revolve therefore on the interpretation which can be given to section 45 of the Succession Duty Act (supra) since, at the time the estate devolved and in fact at the time the payment of $130.000 was made by it, which first created the overpayment, which was subsequently enlarged by subsequent payments, there was no specific provision in the Succession Duty Act requiring the Crown to pay interest.

Appellant concedes that this was so but contends that a distinction must be made between a statutory requirement that the Crown must pay interest and a discretion vested in the Court to allow it which appellant contends section 45 provides. Respondent contends however that section 45 is merely a jurisdiction section giving jurisdiction to the Exchequer Court to determine all questions that may arise in connection with assessments made under the Act and its discretion under the section is limited to ordering, in addition to the payment of duty, interest or penalty or costs to the Crown if this seems right and proper but is not a section by virtue of which the Crown can at the discretion of the Court be ordered to pay interest on the overpayment of an assessment. In support of this argument it is pointed out that the word “interest” is associated with the word ‘‘penalty’’.: Certainly no penalty can be awarded by the Court against the Crown although it could award any penalties provided for in the Act against the taxpayer. While there is considerable force to this argument the present proceedings are only concerned with interest, so there is no question of imposing any “penalty” against the Crown. The payment of interest by any party cannot be equated with the imposition of a penalty against the party, and there is of course no inherent objection to ordering payment of interest by the Crown if a statute or contract allows it.

Respondent made reference to section 28 of the Act which reads as follows:

28. Where the Minister is satisfied that the duty leviable in respect of any succession cannot without excessive sacrifice be raised at once, or for any other reason satisfactory to the Minister, he may allow payment to be postponed for such period, to such extent, and on payment of such interest not exceeding five per cent or any higher interest yielded by the property, and on such terms as the Minister thinks fit.

and subsection 36(4) which reads:

36. (4) The Minister, upon proof to his satisfaction that an overpayment of duty has been made, may refund the amount of such overpayment, but no such refund shall be made after the expiration of one year from the receipt by the Minister of an amount purporting to be in full settlement of the duty.

contending that section 45 might have been intended to give the right to the Court to make an order which the Court might deem “right and proper’’ in connection with these sections. I do not adopt this argument for section 28 clearly gives the discretion to the Minister and not to the Court and moreover the discretion only relates to the postponement of payment of the duty on payment of interest not exceeding 5% or any higher interest yielded by the property. I do not believe section 45 could be used so as to permit the Court to substitute its discretion for that of the Minister in this connection, especially since section 45 commences with the words “Subject to the provisions of this Act’’. Similarly with respect to subsection 36(4) it is quite categoric that no refund should be made after the expiration of one year from the receipt by the Minister of an amount purporting to be in full settlement of the duty. I do not believe that section 45 could be used so as to extend this delay if that issue had arisen. Since the assessment by the Minister was always in dispute it was presumably felt that the payment of $130,000 on February 26, 1958 did not purport to be “in full settlement of the duty”, and the same applies to the subsequent payments so that the refund of the overpayment could properly be claimed.

It is of interest to note that the Income War Tax Act, RSC 1927, c 97, contained a section 66 dating back to the 1923 statute, c 52, section 7, identical in wording to section 45 of the Succession Duty Act with which we are now dealing. This section does not appear to have been carried forward into the Income Tax Act, RSC 1952, c 148, which in section 60 merely provides for an appeal to the Exchequer Court but makes no reference as to discretion with respect to interest or penalties. The Income Tax Act in the 1952 Revised Statutes originated in the statutes of 1948, c 52. By an amendment in 1951* [3] to section 52 provision was made for the payment of interest by the Minister on overpayments. By 1967 when President Jackett, as he then was, decided the case of Terra Nova Properties Ltd v MNR, [1967] 2 Ex CR 46; [1967] CTC 82; 67 DTC 5064, this section, which had become section 57, had been further amended by the addition of subsection (3a) to provide that when by decision of the Court tax was reduced to an amount less than the assessment, interest was payable on the overpayment computed at 6% instead of 3%. In rendering judgment the learned President stated at page 48 [84, 5065]:

Prior to 1951, while there was the provision to which I have already referred for payment of interest by a taxpayer on an underpayment of tax, there was no provision for payment of interest to a taxpayer in respect of an overpayment of tax. regardless of the length of time that had elapsed between the time when the taxpayer had paid more than, as ultimately determined, the law required him to pay, and the time that the excess was refunded to him. This situation has now been altered as appears from a reading of subsection (3) and subsection (3a) of Section 57, . . .

There was no need for him in that case to consider the possible application of section 66, so as to allow interest on an overpayment at the discretion of the Court, prior to the 1951 amendment, and the question does not ever seem to have been dealt with. When the 1951 amendment was made to the Income Tax Act to permit the payment of interest by the Minister on overpayment no similar amendment was made to the Dominion Succession Duty Act so that, as already stated, on February 26, 1958 when the overpayment was made in the present case there was no specific provision requiring payment of interest by the Minister on the overpayment.

The Estate Tax Act, RSC 1970, c E-9, came into effect to replace the Dominion Succession Duty Act with respect to estates of any person dying after December 31, 1958, and contained a provision in section 21 of the Act (1958 Statutes, c 29) which is now section 23 of the Act in Revised Statutes, similar to that in the Income Tax Act requiring. payment of interest on overpayments ordered by judgment of the court at the rate of 5% (instead of 6%) but this was of course not applicable in the case of the present estate where the deceased died on May 16, 1956, so the provisions of the Succession Duty Act have to be applied. Section 26 of the Act (section 24 in the 1958 statute) merely provides for the jurisdiction of the Exchequer Court and does not contain any provision similar to section 45 of the Succession Duty Act. If I have gone to some length into subsequent Statutes which do not govern the present case it is in answer to respondent’s argument that the philosophy of the Crown (whether we take the relevant time as the date of death on May 16,..1956 or the date of the first overpayment on February 26, 1958) is not to pay interest on overpayments. This statement would have to be limited in any event to overpayments of succession duty since the Crown had been paying interest on overpayments of income tax since 1951.

Both parties made extensive references to the rules of interpretation and the authorities commenting on same. Appellant referred to section 11 of the Interpretation Act, RSC 1970, c 1-23, which reads as follows:

11. Every enactment shall be deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects.

and laid stress on the wording of section 45 permitting the Court to make any order “as to the said Court may seem right and proper’’. Respondent made reference to a number of quotations from Driedger, The Construction of Statutes. At page 2 counsel quotes from the statement of Chief Justice Tindal in the Sussex Peerage Case, 8 ER 1034, that:

if the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense.

At page 18 the author refers to a statement of Viscount Simon in the Nokes v Doncaster Amalgamated Collieries Ltd case, [1940] AC 1014 at 1022, in which he stated:

Judges are not called upon to apply their opinions of sound policy so as to modify the plain meaning of statutory words, but where, in construing general words the meaning of which is not entirely plain there are adequate reasons for doubting whether. the Legislature could have been intending so wide an interpretation as would disregard fundamental principles, then we may be justified in adopting a narrower construction.

At pages 69-70 he states:

To say that a statute must be read as a whole means not merely that the meaning of the words contained in a particular provision is to be gathered from reading them in their verbal and grammatical context; it means that the substance of the particular provision must be seen in the context of the ideas expressed in the whole Act, “because” as Lord Reid said in Inland Revenue Commissioners v Hinchy, [1960] AC 748, at p 766, “one assumes that in drafting one clause of a Bill the draftsman had in mind the language and substance of other clauses, and attributes to Parliament a comprehension of the whole Act”.

At page 71 reference is made to the case of The King v Board of Commissioners of Public Utilities (1926), 54 NBR 138 at 143, in which White, J said:

In deciding which of these two meanings the Legislature intended the section to bear, I think that the construction should be adopted which, upon a reading of the Act and its amendments as an entire enactment, appears to better accord with the body of the enactment than does the alternative construction.* [4]

At page 72 we find another quotation from Viscount Simon in Hill v William Hill (Park Lane Ltd), [1949] AC 530 at 546-7:

. . . though a Parliamentary enactment (like parliamentary eloquence) is capable of saying the same thing twice over without adding anything to what has been said once, this repetition in the case of an Act of Parliament is not to be assumed. When the legislature enacts a particular phrase in a statute the presumption is that it is saying something which has not been said immediately before. The rule that a meaning should, if possible, be given to every word in the statute implies that, unless there is good reason to the contrary, the words add something which would not be there if the words were left out.

The author comments at page 7/3:

In a well drafted statute there is a coherent scheme and every word in the statute has a place in that scheme. Words should not be put into a statute unless they have a grammatical or substantive function.

As quite frequently happens some of these quotations, depending on how they are interpreted, may be at least as helpful to appellant as to respondent.

On the one hand it must be said that some meaning should be given to section 45 of the Dominion Succession Duty Act and I have already indicated that I do not accept respondent’s argument that its purpose was to override ministerial discretion granted to the Minister under section 28 or to make refunds under subsection 36(4). When provision was made in 1951 for payment of interest on overpayments under the Income Tax Act, then section 66 of the former Income War Tax Act which was identical to section 45 of the Dominion Succession Duty Act was no longer necessary, and similarly when section 21 of the Estate Tax Act provided in 1958 for the payment of interest on overpayments there was no longer any need in it for a section similar to section 45 of the Dominion Succession Duty Act.

It can be contended therefore that in order to give section 45 some meaning it must be interpreted as giving the Court discretion to award interest on overpayments at a time when no specific provision had been made for a compulsory payment of same by the Minister, and that this is certainly “right and proper” in the circumstances of the present case, where unless this can be done there will be an unjust enrichment of respondent resulting from the Minister’s own errors and delays.

Respondent’s argument is to the effect that the very fact that provision was subsequently made in the Estate Tax Act for payment of interest on overpayments indicates that legislation was necessary in order to provide for this, and in line with the long line of jurisprudence to this effect, and the absence of such statutory provision or contractual obligation, no interest can be claimed from the Crown.

The fact that an amendment was made in 1951 to the Income Tax Act to provide for interest on overpayments and provision for this in connection with estates was first made in the Estate Tax Act in 1958 is not necessarily conclusive in establishing that before these dates no interest could be allowed on overpayments despite the existence of section 66 in the Income War Tax Act and section 45 in the Dominion Succession Duty Act. Of some interest in this connection is the case of Her Majesty the Queen v Scheer Limited, [1974] SCR 1046, although it dealt with an entirely different matter. Legislation had been passed to bring self-employed fishermen within the provisions of the Unemployment Insurance Act, but in this case self- employed taxi drivers were being brought within its coverage by a regulation passed by virtue of an allegedly enabling section of the Act. In the trial court it had been stated ([1970] Ex CR 957 at 964-6) in reference to the section permitting the regulation:

The authority given to make “such modifications and adaptations of the provisions of this Act’’ appears to go very far. Despite this, however, Parliament apparently considered it necessary, when coverage was to be extended to self-employed fishermen otherwise excepted under s 27(b), to add s 29(2) of the Act.

No satisfactory explanation was given as to why the same procedure was not deemed necessary when coverage was extended by s 64B of the Regulations, with which we are here concerned, to taxi drivers whether self-employed or not, or to barbers or hairdressers whether self-employed or not, as was done by s 64A of the Regulations.

In the Supreme Court this argument was rejected, Spence, J, after dealing with the submission, stating at page 1054;

I, therefore, am of the opinion that the statutory reference in s 29(2) to those not covered by the contract of service cannot be interpreted to imply that those who are not covered by a contract of service cannot be dealt with by an order under s 26(1 )(d) of the statute.

At page 1055 he states:

I am not ready to explain the apparent redundant nature of s 26(1)(d), if it does not apply to cases of contracts other than contracts of service, on the basis of the maxim ex abundant! cautela and I subscribe to Lord Halsbury’s statement in Commissioners of Income Tax v Pemsell, at p 549:

“But I do not think it competent for any court to proceed upon the assumption that the legislature had made a mistake. Whatever the real fact may be, I think a court of law is bound to proceed on the assumption that the legislature is an ideal person that does not make mistakes.’’

The fact that legislation was subsequently passed to provide specifically that the Minister “shall” pay interest on overpayments, does not of itself mean that the Court could not order such payments by virtue of section 45 of the Act in cases where it considers this “right and proper” and Parliament must have intended section 45 to be given some meaning at the time it was adopted.

Certainly the Court cannot by judgment usurp the powers of Parliament or on the grounds of equity permit a claim of a nature which Parliament only saw fit to permit by legislation at a later date. The question is whether Parliament did not indirectly in section 45 permit the Court in its discretion to allow a claim for interest on overpayments which Parliament only made mandatory at a later date. The wording of section 45 is quite broad in that the Court is permitted “to hear and determine all questions that may arise in connection with any assessment made under this Act”. I find some difficulty however with the words that it may make any order “as to payment of any duty, interest or penalty’’ since the use of the word “payment” would seem to imply that this is a section which can only be applied in favour of the Crown, since the word “repayment” is not used. Certainly if a “penalty” were involved this could only be applied against the taxpayer and not against the Crown so it is perhaps giving too wide an interpretation to the section to hold that with respect to interest this can be applied in favour of the taxpayer.

With considerable hesitation, and in order to give the word “interest” some meaning since interest in favour of the Crown is established on a mandatory basis or on the basis of ministerial discretion in other sections of the Act, I believe that judgment should be rendered in favour of appellant.

On the further argument of appellant, based on the evidence of Mr Dupras as to proper commercial practice, calling for the calculation of interest on a basis compounded annually at variable rates in accordance with the current rates for 1-year term loans, I do not believe that appellant should succeed. While, as appellant points out, if interest is to be allowed on a discretionary basis by the application of section 45 of the Act there is no limitation on the rate of interest or on the awarding of compound interest and the Court has the right to do what may seem “right and proper”,, and compound interest at the current rate at any given time would be right and proper, this is, as appellant concedes, a discretionary matter. I do not consider that the Court would be. justified in awarding compound interest since interest in favour of the Crown whether on income tax, succession duty, or estate tax payments is never compounded, nor is interest on judgments, and in fact the principle of compounding is only used where there is a contract or statute providing for it. In all other cases interest is normally allowed at the legal rate in effect at the time of 5%. The fact that the Income Tax Act had allowed interest at 6% however from the 1953 taxation year* [5] on refunds of overpayments pursuant to a judgment of the Court, and that these rates were for the most part lower than those established by the evidence of Mr Dupras,. especially following 1960, leads me to believe that a rate of 6% should be allowed.

Simple interest will therefore be allowed at 6% on $25,506.73 from February 26, 1958 to March 3, 1958, on $30,396.08 from March 3, 1958 to April 22, 1958, on $86.945.27 (adding $57,344.58 — $795.39 or $56,549.19 to previous overpayment) from April 22, 1958 to May 8, 1961, and on $87,445.27 from May 8, 1961 to April 12, 1977, and judgment will be rendered accordingly with costs.