Jacobs (George Porky) Enterprises Ltd. v. City of Regina, [1964] SCR 326

Supreme Court of Canada

Jacobs (George Porky) Enterprises Ltd. v. City of Regina, [1964] S.C.R. 326

Date: 1964-03-23

George (Porky) Jacobs Enterprises Ltd. (Plaintiff) Appellant;

and

City of Regina (Defendant) Respondent.

1964: February 17,18, 19; 1964: March 23.

Present: Taschereau CJ. and Martland, Ritchie, Hall and Spence JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR SASKATCHEWAN.

Mistake—Annual licence fee—Overpayment—Mistake as to existence of by-laws calling for licence fee on per day basis—Mistake of fact—Payments made under compulsion—Right of taxpayer to recover.

One J, who was engaged in the business of promoting wrestling matches, caused the appellant company to be incorporated and subsequently assigned his business to that company. However, notwithstanding the incorporation of the company, J continued to conduct the business. Under a by-law passed by the respondent city in 1947 a licensing fee for professional boxing or wrestling exhibitions was fixed at $100 and by virtue of schedule "A" of the by-law this was an annual fee. The by-law was amended on three occasions, namely, in 1948, 1955 and 1957. The 1948 amendment changed the fee to a "per day" fee of $25; the 1955 amendment increased the fee to $37.50 and the 1957 amendment further increased it to $50. Neither the amendment of 1955 nor that of 1957 fixed the fee as a per day fee, and, accordingly, under schedule "A" of the original by-law the fee was an annual fee, not having been otherwise specified. The city's licensing inspector and J erroneously believed that the 1955 and 1957 amendments provided for per day fees. In the years 1955 to 1959 J paid on the per day basis $8,125 more than he would have paid had the licence fees been collected on an annual basis. After the discovery of the error the appellant brought an action in which it claimed repayment of the $8,125; the trial judgment in favour of the appellant was reversed by the Court of Appeal.

Held: The appeal should be allowed.

The appellant was entitled to succeed on either or both of the following grounds: (1) The payments were made not under a mistake of law but under a mistake of fact. The mutual mistake of fact was as to the existence of one or more by-laws calling for a licence fee on a per day basis. Both the licence inspector and J believed that such by-laws existed in fact but they did not actually exist at all so the mistake was one as to the fact of the existence of the by-laws and not one of interpretation of by-laws that in any way purported to stipulate a per day fee. (2) The payments were made under compulsion of urgent and pressing necessity and not voluntarily as claimed by the respondent.

Other grounds raised by the respondent, i.e., (i) that the appellant company had never been organized and capable of doing business as required by The Companies Act, R.S.S. 1953, c. 124, (ii) that any right which J may have had was not assigned to the appellant company and that the appellant company never at any time acquired any rights against the respondent, (iii) that the claim was barred by the provisions of s. 34 of The Tax Enforcement Act, R.S.S. 1953, c. 156, and

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(iv) that the appellant was not entitled to recover because of laches, also failed.

Maskell v. Horner (1915), 84 L.J.K.B. 1752; Municipality of Saint John et al. v. Fraser-Brace Overseas Corporation et al., [1958] S.C.R. 263; Kiriri Cotton Co. Ltd. v. Dewani, [1960] A.C. 192, referred to.

APPEAL from a judgment of the Court of Appeal for Saskatchewan1, allowing an appeal from a judgment of MacPherson J. Appeal allowed.

E. C. Leslie, Q.C., for the plaintiff, appellant.

A. M. Nicol, Q.C., and H. F. Feuring, for the defendant, respondent.

The judgment of the Court was delivered by

Hall J.:—For a considerable period prior to August 1956, one George Jacobs promoted and put on periodic wrestling exhibitions within the city of Regina, a municipal corporation in the province of Saskatchewan. On June 8, 1956, Jacobs caused the appellant company to be incorporated under The Companies Act of Saskatchewan. By an agreement in writing made in August 1956 but undated, Jacobs assigned to the appellant his business as a wrestling promoter in the province of Saskatchewan including his property and assets, if any, and also all debts owing to him in connection with the said business. Notwithstanding the incorporation of the company, he continued to conduct the business and promote his wrestling exhibitions as he had done prior to incorporation and prior to the agreement just mentioned.

In the year 1947 the respondent city of Regina passed a by-law, no. 2252, providing, amongst other things, for the licensing of professional boxing or wrestling exhibitions in the city of Regina. The by-law provided in s. 6 that unless specifically mentioned therein to be for a shorter period the licence granted was for the current year, and in Schedule "A" of the said by-law it was provided that the licence fee was an annual fee unless otherwise specified.

The said by-law no. 2252 was amended on three occasions as follows:

(a) By-law no. 2313—passed December 7, 1948, amending by-law no. 2252.

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Boxing or wrestling exhibitions (Professional) per Day ………………………………...………………...$              25.00

(b) By-law no. 2741—passed January 6, 1955, amending by-law no. 2252.

Boxing or wrestling exhibitions (Professional) …..$        37.50

(c) By-law no. 3043—passed December 24, 1957, amending by-law no. 2252.

Boxing or wrestling exhibitions (Professional)……$       50.00

The licence fee in by-law no. 2252 was $100, and by virtue of Schedule "A" it was an annual fee. By-law no. 2313 changed the fee to a "per day" fee of $25. By-law no. 2741 changed the licence fee to $37.50 and by-law no. 3043 increased the licence fee to $50. Neither by-law no. 2741 nor by-law no. 3043 fixed the fee as a per day fee, and, accordingly, under Schedule "A" of the original by-law no. 2252 the fee was an annual fee, not having been otherwise specified.

It was said by counsel for the respondent that the omission of the "per day" provisions in by-laws 2741 and 3043 was due to an error. Mr. Justice Brownridge seems to have accepted the error theory when he said:

On January 6, 1955, the licensing by-law was amended. From the exhibits filed, there is no doubt that the amendment was intended to raise the licence fee from $25 per day to $37.50 per day, but through an error, the words "per day" were omitted and it was clearly stated in the schedule of fees, "licence fee annual unless otherwise specified".

A careful reading of the whole record and of the exhibits fails to disclose any admissible evidence of this so-called error by the body which had the legislative power to pass, amending by-laws 2741 and 3043, namely, the Regina city council. It is true the licence inspector erroneously believed that the amending by-laws provided for per day fees and so did Jacobs but that is not evidence of an actual error by the council which enacted the amendments.

There was no suggestion that either by-law 2741 or bylaw 3043 was invalid in any way nor was the right of the city of Regina to a licence fee either on an annual or a per day basis challenged. The city of Regina had the power to impose a per day fee. It could exercise that power by by-law but it did not do so.

Prior to each Wrestling exhibition, Jacobs applied to the Regina Boxing and Wrestling Commission for a permit to hold the exhibition. After by-law 2741 was passed on January 6, 1955, Jacobs was required to pay a per day

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licence fee of $37.50 for each exhibition until by-law 3043 was passed on December 24, 1957, after which he was required to pay a per day fee of $50 for each exhibition. He paid altogether the sum of $8,125 on this per day basis in the years 1955 to 1959 inclusive, more than he would have paid had the licence fees been collected on an annual basis. The appellant's position is that this $8,125 was paid: (a) under a mutual mistake of fact; and (b) under compulsion. In either event it claims repayment of the $8,125 so paid to the city of Regina.

It is common ground that the licence inspector for the respondent city erroneously believed that the amending bylaws 2741 and 3043 provided for per day fees and so did Jacobs. The respondent city takes the position that the $8,125 was a voluntary payment and that it was not paid under a mutual mistake of fact but under mistake of law and that the appellant has no right to recover. The respondent city goes further and says that any right which Jacobs may have had was not assigned to the appellant company and that the appellant company never at any time acquired any rights as against the city of Regina and that, in fact, the appellant company had never been organized and capable of doing business as required by the Saskatchewan Companies Act, R.S.S. 1953, c. 124. The respondent also argued that the claim, whether by Jacobs or the appellant company, was barred by the provisions of s. 34 of The Tax Enforcement Act, R.S.S. 1953, c. 156, and in any event that the appellant was not entitled to recover because of laches.

Dealing, first, with the question of whether the mistake was one of fact or of law, I am of opinion that it was a mistake of fact. I agree with Brownridge J. when he states that the distinction between what is a mistake in law and what is a mistake in fact is often one of difficulty but I do not see the distinction here as being a difficult one. Interpretation of the amending by-laws 2741 and 3043 was never in question in the action. These by-laws never purported to stipulate for a per day fee. There was no mistake either of fact or of law in respect of what the by-laws actually said. The mutual mistake of fact here was as to the existence of one or more by-laws calling for a licence fee on a per day basis. Both the licence inspector and Jacobs believed that such by-laws existed in fact but they did not actually exist at all so the mistake is one as to the fact of

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the existence of the by-laws and not one of interpretation of by-laws that in any way purported to stipulate for a per day fee.

I am also of opinion that the payments were made under compulsion of urgent and pressing necessity and not voluntarily as claimed by the respondent. The law on this subject was aptly summarized by Lord Reading C.J. in Maskell v. Horner2 at p. 1755 as follows:

If a person with knowledge of the facts pays money which he is not in law bound to pay, and in circumstances implying that he is paying it voluntarily to close the transaction, he cannot recover it. Such a payment is in law like a gift, and the transaction cannot be re-opened. If a person pays money which he is not bound to pay, under the compulsion of urgent and pressing necessity, or of seizure, actual or threatened, of his goods, he can recover it as money had and received. The money is paid, not under duress in the strict sense of the term, as that implies duress of person, but under the pressure of seizure or detention of goods, which is analogous to that of duress. Payment under such pressure establishes that the payment is not made voluntarily to close the transaction—Atlee v. Backhouse (7 L.J. Ex. 234, per Lord Chief Baron Abinger, at p. 237, and per Baron Parke, at pp. 238–9; 3 M. & W. 633, at pp. 645–6, 650). The payment is made for the purpose of averting a threatened evil, and is made, not with the intention of giving up a right, but under immediate necessity and with the intention of preserving the right to dispute the legality of the demand.

The question was reviewed by this Court in Municipality of Saint John et al. v. Fraser-Brace Overseas Corporation et al.3 Rand J. at p. 272 dealt with the subject of voluntariness as follows:

In considering the question of voluntariness or coercion, the status and circumstance of the party resisting is a matter to be taken into account. As representing the United States the contractors were firm in their objection to the taxation, and the municipal authorities, with all the information before them, equally insistent on pressing it. In that state of things, to require either the contractors or the United States Government to take proceedings that might later be obviated, or to await action taken to seize the property is going beyond what is necessary to rebut the inference of voluntary payment. "Voluntariness" implies acquiescence, the absence of pressure inducing payment. (The italics are mine.)

The learned trial judge found that the per day licence fees were paid under compulsion. With that finding I respectfully agree. It is clear from the evidence that the licence inspectors were firm in telling Jacobs that a per day fee had to be paid if he was to continue the business of promoting wrestling exhibitions in the city of Regina.

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Believing that the by-law in force for the time being called for a per day fee, Jacobs had no actual alternative but to pay the fee being demanded by the agents of the respondent. Jacobs had asked to be shown the by-law and was told that there was not a copy available. In these circumstances the statement by Lord Denning in Kiriri Cotton Co. Ltd. v. Dewani4 is particularly in point. He said at p. 204:

Nor is it correct to say that money paid under a mistake of law can never be recovered back. The true proposition is that money paid under a mistake of law, by itself and without more, cannot be recovered back. James L.J. pointed that out in Rogers v. Ingham, (1876) 3 Ch. D. 351, 355. If there is something more in addition to a mistake of law—if there is something in the defendant's conduct which shows that, of the two of them, he is the one primarily responsible for the mistake—then it may be recovered back. Thus, if as between the two of them the duty of observing the law is placed on the shoulders of the one rather than the other—it being imposed on him specially for the protection of the other—then they are not in pari delicto and the money can be recovered back; see Browning v. Morris, (1778) 2 Cowp. 790, 792, by Lord Mansfield. Likewise, if the responsibility for the mistake lies more on the one than the other— because he has misled the other when he ought to know better—then again they are not in pari delicto and the money can be recovered back; see Harse v. Pearl Life Assurance Co., [1904] 1 K.B. 558, 564, by Romer L.J. These propositions are in full accord with the principles laid down by Lord Mansfield relating to the action for money had and received.

On either or both of these grounds the appellant is entitled to succeed unless the other defences urged by the respondent are fatal to the appellant.

The first point taken by the respondent was that the appellant company had never been organized and capable of doing business as required by the Saskatchewan Companies Act, R.S.S. 1953, c. 124, if it was a public company. In the first place there was no evidence that it was a public company, and in the second by para. 2 of its defence the respondent admitted the allegation contained in para. 2 of the statement of claim that: "The Plaintiff is a body corporate, duly registered and licensed to carry on business in the Province of Saskatchewan."

The next objection was based on the contention that, after purporting to assign his business to the appellant company, Jacobs continued to carry on business in his own name as he had previously done and that the respondent city was never advised of the assignment or that the appellant company had any interest in Jacobs' business as a

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promoter. The learned trial judge rightly disposed of this objection. He accepted Jacobs' evidence that the payments made after the execution of the agreement in August 1956 had been made on behalf of the appellant company. With respect, he was entitled to apply the rule set out in Bowstead on Agency, 12th ed., p. 202, where the learned author states:

A principal is entitled to sue for the recovery of money paid by an agent on the principal's behalf where the payment is made under mistake of fact or upon a consideration that fails or in consequence of fraud, duress or any other circumstance ordinarily entitling a person paying money to recover it from the payee.

Jacobs' right to recover the excess payments made prior to the agreement of August 1956 was, as the learned trial judge found, a chose in action which was assigned to the appellant company by Jacobs under the agreement of August 1956 and was covered by the clause in the agreement which read: "All other property and assets, if any, of the Vendor in connection with the said business."

It was also objected that the appellant's claim was barred by s. 34 of The Tax Enforcement Act, R.S.S. 1953, c. 156, which reads:

No action for the return by the municipality of any moneys paid to it, whether under protest or otherwise, on account of a claim, whether valid or invalid, made by the municipality for taxes shall be commenced after the expiration of six months from the date of payment of such moneys, and after the expiration of such period of six months without any action having been commenced, the payment made to the municipality shall be deemed to have been a voluntary payment.

This limitation section was not pleaded in the defence. Rule 145 of the Rules of Court of the Court of Queen's Bench for the province of Saskatchewan requires that such a defence be pleaded. That disposes of this objection, but, apart from the matter of pleading, it is doubtful if the section relied upon applies in the instant case at all. A similar section in The Tax Recovery Act, R.S.A. 1942, c. 161, s. 27 was held not applicable in Wells Construction Co. Ltd. v. Municipal District of Sugar City No. 55.

The respondent also alleged laches. It is impossible on the facts of this case to discern any laches on the part of the appellant. It appears to have acted without undue delay after it learned that it had been paying on a per day basis when it should not have been required to do so.

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The appeal should accordingly be allowed and the judgment of the learned trial judge restored with costs throughout.

Appeal allowed and judgment at trial restored with costs throughout.

Solicitors for the plaintiff, appellant: Goetz & Murphy, Regina.

Solicitor for the defendant, respondent: C. R. Johnson, Regina.