Ministery of Mines (Ontario) v. Sheridan Geophysics, [1977] 2 SCR 384

Supreme Court of Canada

Ministery of Mines (Ontario) v. Sheridan Geophysics, [1977] 2 S.C.R. 384

Date: 1976-10-05

The Minister of Mines and Northern Affairs for the Province of Ontario (Plaintiff) Appellant;

and

Sheridan Geophysics Limited, North Canadian Enterprises Limited and Kidd Copper Mines Limited (Defendants) Respondents.

1976: March 30; 1976: October 5.

Present: Laskin C.J. and Martland, Judson, Ritchie, Spence, Pigeon, Dickson, Beetz and de Grandpré JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Taxation—Mines and minerals—Mining tax—Right to consolidate three mining locations—Right to claim depreciation—Deductibility of pre-production expenses—The Mining Tax Act, R.S.O. I960, c. 242 (now R.S.O. 1970, c. 275).

Costs—Costs before Mining Commissioner against Crown disallowed by provincial statute—Power of final appellate Court to award costs in the courts below and before Mining Commissioner—Supreme Court Act, R.S.C. 1970, c. S-19, s. 49—The British North America Act, 1867, ss. 92, 101—The Mining Tax Act, R.S.O. 1960, c. 242, s. 10(6).

The three substantive issues in the appeal relating to certain mining matters were resolved in the Supreme Court of Canada against the appellant without calling on counsel for the respondents. There remained for consideration only the cross-appeal for the costs of proceedings before the Mining Commissioner.

Held (Laskin C.J. and Judson, Spence and de Grandpré JJ. dissenting): The cross‑appeal should be dismissed.

Per Martland, Ritchie, Pigeon, Dickson and Beetz JJ.: By s. 92(14) of B.N.A. Act, 1867, a province has the power to legislate with regard to costs in civil proceedings, while by s.101 Parliament may legislate with regard to costs in the Supreme Court of Canada. Section 10(6) of the Mining Tax Act, R.S.O. 1960, c. 242 prohibits an award of costs against the Crown in proceedings before the Mining Commissioner. It has the same effect in the Court of Appeal, which could not hold the Mining Commissioner in error in failing to award costs

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when the governing legislation denied him that right. The general discretion to award costs at s. 49 of the Supreme Court Act, R.S.C. 1970, c. S-19 is not properly applied in overriding the local statute.

Further, in view of the latent constitutional question viz. whether Parliament has legislative authority to empower the Supreme Court of Canada to award costs in proceedings in a provincial court notwithstanding provincial legislation precluding such provincial court from awarding such costs, and as the award of costs by s. 49 is discretionary the discretion should be exercised against an award of costs until the question is the subject of proper constitutional argument.

Per Laskin C.J. and Judson, Spence and de Grandpré JJ. dissenting: Section 10(6) is on its face, an in terrorem provision appearing to discourage appeals against a mining tax assessment. The excepting of The Mining Tax Act, and hence of s. 10(6), from the application of s. 17 of The Crown Proceedings Act, R.S.O. 1970, c. 365 need be carried no farther than its very terms which refer to the award of costs by the Mining Commissioner and do not touch the award of costs by a superior Court sitting in appeal from a decision of the Commissioner.

In any event the Supreme Court of Canada derives its power to award costs under s. 49 of its constituent Act regardless of the limitations that may have been placed on provincial courts by provincial legislation. Section 49 expressly authorizes the Supreme Court to award costs in the Courts below unless the Court decides as a matter of its discretion not to do so. The discretion should here be exercised in favour of the respondents.

APPEAL and CROSS-APPEAL from a judgment of the Court of Appeal for Ontario[1] in the matter of an order of the Mining Commissioner settling assessments under The Mining Tax Act, R.S.O. 1960, c. 242. Appeal dismissed from the bench; cross-appeal dismissed, Laskin C.J. and Judson, Spence and de Grandpré JJ. dissenting.

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T.H. Wickett, and D.E. Cavill, for the appellant.

R.E. Shibley, Q.C., and L. O’Brien, and G.J. Corn, for the respondents.

The judgment of Laskin C.J. and Judson, Spence and de Grandpré JJ. was delivered by

THE CHIEF JUSTICE (dissenting)—At the conclusion of the submissions on behalf of the appellant on the three points that it put in issue in the appeal, the Court stated that it did not need to hear the respondents because it had not been satisfied that the Ontario Court of Appeal, whose reasons for judgment were delivered by Kelly J.A., had come to a wrong conclusion on any of those three points. The appeal was, accordingly, dismissed with costs. The respondents had, however, brought a cross-appeal in which they claimed the costs of the lengthy proceedings before the Mining Commissioner, and submissions were made on this issue by counsel for the respondents as cross-appellants and counsel for the appellant as cross-respondent.

The issue as to those costs arose in this way. The mining tax assessment had come before the Mining Commissioner by way of appeal and he, having concluded that success was divided, ordered that there be no costs. The respondents herein succeeded substantially on further appeal to the Court of Appeal, and that Court awarded the costs of the appeal to them. Judgment had been reserved by the Court of Appeal at the conclusion of argument and nothing had been said with reference to the costs before the Mining Commissioner, it having been perhaps assumed that those costs would be considered by the Court of Appeal in the ordinary way. When its reasons appeared on February 16, 1972 and no reference was made to the costs before the Mining Commissioner, the Court of Appeal was asked to entertain further submissions as to those costs and it did so.

In the meantime, an appeal had been launched to this Court by the appellant Minister on March 20, 1972, and the respondents then filed a notice of cross-appeal on April 14, 1972 with respect to the costs of the proceedings before the Mining Com-

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missioner. In supplementary reasons on this issue, delivered on April 18, 1973, Kelly J.A., for the Court, indicated quite clearly that he favoured the claim of the respondents to those costs but, because the matter had already been carried to the Supreme Court, he felt that that Court should deal with it. He appeared to be of the opinion that the Court of Appeal was either functus or should defer to this Court.

I do not think that at this stage, and after so long a lapse of time before this appeal came on for hearing in this Court, we should be concerned with the niceties of whether the Court of Appeal was functus, and I propose to deal with the costs issue on the merits.

Two obstacles were put forward by the cross-respondent to bar the award to the cross‑appellants of costs of the proceedings before the Mining Commissioner, costs which the Court of Appeal was disposed to award. The first obstacle was said to reside in s. 10(6) of the Mining Tax Act, R.S.O. 1960, c. 242 (which was in force at the material time), and it reads as follows:

In any such proceedings or investigation, or on an appeal, the Mining Commissioner or the Ontario Municipal Board may order the appellant, or the person causing the investigation by reason of false or incorrect statements or failure to keep books and accounts or to otherwise conform to this Act, to pay the costs of such appeal, proceeding or investigation, and may direct that they be taxed by a taxing officer of the Supreme Court and added to the tax for which such person is liable under this Act.

The second obstacle put forward took up an observation from the Bench as to whether the Crown could be made to suffer costs against it unless there was express provision to that effect. Indeed, counsel for the cross-respondent seemed prepared to push this point to preclude costs against the Minister, arising out of a mining tax assessment, in the Court of Appeal and in this Court as well as in the proceedings before the Mining Commissioner.

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The position taken on s. 10(6) of the Mining Tax Act by counsel for the Minister is more than an application of the maxim inclusio unius est exclusio alterius. It fastens as well on the fact that the scheme of the Act contemplates appeals to the Mining Commissioner only by the taxpayer, and also on the fact that statutory tribunals (the Mining Commissioner being of that class) have no power to award costs unless the power is expressly granted, and a fortiori where the Crown is a party. Thus, it is contended by the Minister that s. 10(6) must be given its plain operation as providing for costs against a taxpayer if he loses his appeal but not for costs to him against the Minister if his appeal succeeds. The Mining Commissioner, in deciding not to award any costs because success was divided, may have had in mind that only the Minister would have been entitled to claim costs had the taxpayer’s appeal failed entirely, and not that costs might have been awarded against the Minister if the appeal had in the main succeeded. Counsel were unable to assist the Court on the question whether the Mining Commissioner’s practice was to award costs against the Minister to a successful appellant taxpayer.

Section 10(6) is, on its face, an in terrorem provision, appearing to discourage appeals to the Mining Commissioner against a mining tax assessment. It hardly comports with the standards of fairness and equity associated today with the position of the Crown as a litigant. It has, however, been in the Mining Tax Act since that Act was first enacted in 1907 under the title The Supplementary Revenue Act, 1907, by 1907 (Ont.), c. 9, being then s. 13(6). A year earlier an extended Mining Act (now R.S.O. 1970, c. 274) had been passed by 1906 (Ont.), c. 11, and under it the position of Mining Commissioner had been created. I see no escape from the provisions of the now s. 10(6) but the central question in this cross-appeal is the determination of how far those provisions go.

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The Crown Proceedings Act, R.S.O. 1970, c. 365, s. 17 puts the Crown in the same position, as nearly as possible, as if it were an ordinary litigant, and empowers the Court to “make any order that it may make in proceedings between persons and [it] may otherwise give such appropriate relief as the case may require”. Although “Court” as used in s. 17 is not separately defined under the Act, nor indeed under the Interpretation Act, R.S.O. 1970, c. 225 (which, however, defines Court of Appeal, Divisional Court and High Court separately in s. 30), I take it on that account that the word is used in an embracive sense to include appellate courts as well as courts of first instance. Standing alone, I would read s. 17 as authorizing costs against the Crown in the same way as costs are ordered against any ordinary litigant. However, s. 17 is qualified by the prefatory words “except as otherwise provided in this Act” and one of the exceptions found in s. 2 of the Act expressly excludes the application of the Act to the Mining Tax Act and to other enumerated Acts, among them other Acts under which the Crown is involved as a taxing authority. When the Proceedings against the Crown Act was first enacted by 1952 (Ont. 1st sess.), c. 78 the Mining Tax Act was not among the statutes declared by s. 2 not to be affected by the Proceedings against the Crown Act. It was however specified as an excluded Act when the Proceedings against the Crown Act was re-enacted by 1962-63 (Ont.), c. 109.

Whatever the reason for excepting the Mining Tax Act, whether it be to avoid construction problems that would otherwise arise or for some reason of policy, I take the exception to carry no farther than its very terms. Those terms (and for present purposes I am concerned only with s. 10(6)) refer to the award of costs by the Mining Commissioner. They do not touch the award of costs by a superior Court sitting in appeal from a decision of the Mining Commissioner. The question is, however, whether the Superior Court to which an appeal is taken may, if it is empowered to deal with costs and to award them against the Crown, include in its award costs of the proceedings before the

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Mining Commissioner which he himself could not have awarded against the Crown.

Section 10(8) of the Mining Tax Act which provides for appeals to the Court of Appeal from decisions of the Mining Commissioner where the amount of the tax involved exceeds $1,000 stipulates that “the procedure upon and governing such appeals shall be, as far as may be, the same as upon an appeal to the Court of Appeal in an action”. Although this does not refer to costs, there is nothing in the Act that makes inapplicable the ordinary practice of the Court of Appeal in respect of costs. An appellate Court, such as the Ontario Court of Appeal, is empowered in litigation between persons to make orders as to costs of the proceedings at first instance as well as orders as to costs of the appeal before it. I see nothing in s. 10(6) of the Mining Tax Act or in s. 2 of the Proceedings against the Crown Act to preclude the Ontario Court of Appeal, in the light of the provisions of s. 17 of the Proceedings against the Crown Act, from ordering costs against the Minister in respect of proceedings before the Mining Commissioner where the order is made in the course of appeal proceedings regularly taken against a mining tax assessment. The limitation imposed by s. 10(6) upon the Mining Commissioner should not be taken to fetter a higher Court sitting in appeal from his decision. I do not read s. 10(6) as being preclusive against the exercise by a higher Court of its jurisdiction to award costs, albeit against the Crown, in respect of proceedings at first instance as well as on appeal to the higher Court.

There are, however, more compelling considerations which lead me to conclude that this Court can deal with the costs in the present case in respect of all the proceedings through which the case has come, ending in this Court. I begin with the judgment of the Judicial Committee in Johnson v. The King[2], where it said (at p. 824) that “over and over again before this tribunal the Crown has been treated in the matter of costs just

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like a private litigant”. The point had apparently not been previously argued, and the Privy Council announced that in the future it would be governed by the common law rule, adhered to by the House of Lords, that “the Crown neither pays nor receives costs unless the case is governed by some local statute, or there are exceptional circumstances justifying a departure from the ordinary rule” (at p. 825).

Since this ruling was made, and even before it, Courts in Canada have, in cases deemed by them exceptional or in pursuance of a liberal construction of statutes respecting costs in matters where the Crown was a party, awarded costs against the Crown. I refer to two cases, one antedating the judgment in Johnson v. The King and the other coming much later. The cases are Attorney-General of Ontario v. Toronto General Trusts Corp.[3], a judgment of Chancellor Boyd, and R. v. Guidry[4], a judgment of the Appeal Division of the New Brunswick Supreme Court where a number of authorities are collected. There, Bridges C.J.N.B. said that justice required that costs be awarded against the Crown and Ritchie J.A. invoked the support of “exceptional circumstances”.

The attitude taken towards costs against the Crown, manifested in the two cited cases, is reinforced by the progression of legislation across the country putting the Crown in the position of an ordinary litigant; and this, in my view, is a factor to be considered in construing s. 10(6) of the Mining Tax Act in the narrow way that I would view it. There are, however, cases which take a stricter view of costs where the Crown is a party unless there is statutory authority to award them, and Rex and Attorney-General of Saskatchewan v. Meilicke (No. 2)[5], is illustrative. Whatever their

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force at the provincial appellate level, they are not germane to the position in this Court.

The matter, in my view, takes on a different complexion in this Court. Section 49 of the Supreme Court Act, R.S.C. 1970, c. S-19 is as follows:

49. The Court may, in its discretion, order the payment of the costs of the court appealed from and of the court of original jurisdiction, and also of the appeal, or any part thereof, as well when the judgment appealed from is varied or reversed as when it is affirmed.

I draw particular attention to the words “and of the court of original jurisdiction” which were introduced into the Act in the 1927 revision of the Statutes of Canada: see R.S.C. 1927, c. 35, s. 48; otherwise the provision as to costs has remained constant since the establishment of the Supreme Court by 1875 (Can.), c. 11: see s. 38 of the Act. In Lovitt v. Attorney-General of Nova Scotia[6], at p. 368, this Court considered a motion to vary the judgment in the case as settled by the Registrar by striking out an award of costs to the Crown in right of Nova Scotia. In dismissing the motion, Chief Justice Taschereau said this:

The Court is of opinion that the motion must be refused with costs.

Section 62 of the Supreme and Exchequer Courts Act provides as follows:

The Supreme Court may, in its discretion, order the payment of the costs of the court appealed from, and also of the appeal, or any part thereof, as well when the judgment appealed from is varied or reversed as where it is affirmed.

For twenty-five years this section, as all the other sections of the Act, has been construed as applicable to the Crown. It was so interpreted, for instance, in the cases of Attorney General v. Flint [16 S.C.R. 707] and The Queen v. The Bank of Nova Scotia [11 S.C.R. 1]; and in The Maritime Bank v. The Queen [17 S.C.R. 657], and The Liquidators of the Maritime Bank v. Receiver General of New Brunswick [20 S.C.R. 695] no costs were given in this court because the court was of

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opinion that they were not proper cases for so doing, but upon appeal to the Privy Council costs were given to the Crown against the appellants upon the dismissal of their appeals: [8 T.L.R. 677].

The jurisdiction of this Court in the matter, until overruled by the Privy Council, will be followed in cases in which the Crown is concerned as well as in all other cases.

A reporter’s note to the foregoing reasons, at p. 369, lists eight other cases in which costs were awarded where the Crown was a party.

Although the Lovitt case was decided before the Privy Council’s judgment in Johnson v. The King there is no incompatibility between them in view of the construction and application by the Supreme Court of the provisions of its constituent Act respecting the award of costs. This Court has followed its practice of treating the Crown as an ordinary litigant in respect of costs in later cases: see, for example, Attorney-General of Canada v. Western Higbie and Albion Investments Ltd.[7]

The inclusion in s. 49 of the words “and of the Court of original jurisdiction” does not detract from the practice consistently followed by this Court, but simply amplifies it to embrace costs in all Courts in which proceedings have been taken which have ended up in the Supreme Court. I am satisfied that, having regard to the powers of the Mining Commissioner under Part VIII of the Ontario Mining Act and the provisions therein for appeals from the Mining Commissioner to the Ontario Court of Appeal, the Mining Commissioner is a “court of original jurisdiction” for the purposes of s. 49 of the Supreme Court Act.

In my view, apart from the question whether s. 10(6) of the Mining Tax Act is exhausted, as I think it is, once the tax proceedings go beyond the Mining Commissioner, and apart from the effect of s. 17 of the Proceedings against the Crown Act, so far as concerns the power of the Ontario Court of Appeal to award costs against the Crown, this Court’s powers under s. 49 of its constituent Act govern on a question of costs where the Crown is a

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party once the matter comes here: cf. Crown Grain Co. Ltd. v. Day[8].

In exercising its statutory authority to award costs in respect of proceedings in a “Court of original jurisdiction”, this Court is exercising an independent authority expressly conferred upon it. The situation would be no different if it were acting under its powers respecting a stay of execution where provincial legislation or provincial Rules of Court provided there be no stay. So far as costs are concerned, the powers given to this Court are express in respect of Courts of original jurisdiction as well as of Courts appealed from, and no question arises either of construction by this Court of its own powers or of any diminution of the statutory authority of the Provinces. Once a case comes to this Court, it is this Court’s powers that govern its disposition, regardless of the limitations that may have been placed upon provincial Courts by provincial legislation.

Whether such legislation can limit this Court in the exercise of powers conferred upon it under its constituent statute is not a question that arises here. Indeed, for the purposes of the present case it must be taken (since no constitutional question was raised by the parties) that both the provincial provision, s. 10(6) of the Mining Tax Act, and s. 49 of the Supreme Court Act were validly enacted, and it remains only to give effect to them according to their respective terms. Section 10(6) of the Mining Tax Act does not purport to govern the disposition of costs in this Court; s. 49, however, is express in authorizing this Court to award costs in the Courts below as well as in this Court, and I see no escape from exercising this authority unless, as s. 49 indicates, this Court decides as a matter of its discretion not to do so. The present case, in my opinion, is one in which the discretion should be exercised in favour of the respondents cross-appellants.

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In the result I would allow the cross-appeal with costs and direct that the respondents as cross-appellants should have their costs of the proceedings before the Mining Commissioner and as well costs in respect of that issue in the supplementary proceedings before the Ontario Court of Appeal.

The judgment of Martland, Ritchie, Pigeon, Dickson and Beetz JJ. was delivered by

DICKSON J.—The three substantive issues raised in this appeal related to (i) the right of the taxpayer to consolidate, for the purposes of the Mining Tax Act of Ontario R.S.O. 1960, c. 242 three separate mining locations; (ii) the right to claim certain depreciation; (iii) the deductibility of substantial pre-production expenses. These issues were resolved in this Court against the appellant, the Minister of Mines and Northern Affairs for the Province of Ontario, without calling upon counsel for the respondents. There remains for consideration only the question of costs, more particularly the claim advanced by way of cross-appeal by respondents for costs of the proceedings before the Mining Commissioner.

The cross-appeal turns upon three statutory provisions, namely, s. 47 and s. 49 of the Supreme Court Act R.S.C. 1970, c. S-19, and s. 10(6) of the Mining Tax Act. Sections 47 and 49 of the Supreme Court Act read:

47. The Court may dismiss an appeal or give the judgment and award the process or other proceedings that the court, whose decision is appealed against, should have given or awarded. R.S., c. 259. s. 46.

49. The Court may, in its discretion, order the payment of the costs of the court appealed from and of the court of original jurisdiction, and also of the appeal, or any part thereof, as well when the judgment appealed from is varied or reversed as when it is affirmed. R.S., c. 259. s. 48.

Section s. 10(6) of the Mining Tax Act reads:

In any such proceedings or investigation, or on an appeal, the Mining Commissioner or the Ontario Municipal Board may order the appellant, or the person

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causing the investigation by reason of false or incorrect statements or failure to keep books and accounts or to otherwise conform to this Act, to pay the costs of such appeal, proceeding or investigation, and may direct that they be taxed by a taxing officer of the Supreme Court and added to the tax for which such person is liable under this Act.

Clearly, a province can legislate with regard to the award of costs in civil proceedings under authority conferred by s. 92(14) of the British North America Act, 1867, and as well, possibly, by certain enumerated heads of s. 92 (in the context of an administrative scheme). The provisions of the Mining Tax Act are a legitimate exercise of such provincial power. Similarly, Parliament can legislate with regard to costs in the Supreme Court of Canada under authority conferred by s. 101 of the British North America Act, 1867.

In enacting s. 10(6) of the Mining Tax Act, the Legislature of Ontario manifested the expression of legislative intent in the matter of costs on appeals under the Mining Tax Act. By empowering the Mining Commissioner to order costs against the appellant, the Legislature by necessary implication denied the Mining Commissioner the right to award costs against the other party to the proceedings, namely, the Minister of Mines and Northern Affairs. This comports with the object and scheme of the Act, which is to raise revenue for provincial purposes through the taxation of mines, and harmonizes with common statutory policy of limiting or denying costs in the first level of appeal from a tax assessment. The exclusion of the Mining Tax Act from the Proceedings Against the Crown Act 1962-63 (Ont.), c. 109 reflected anew this legislative policy.

I am satisfied that the Mining Commissioner could not properly have awarded the costs of the proceedings against the Crown. I am equally of the view that s. 10(6) has the effect of withholding from the Ontario Court of Appeal the right to award costs against the Crown in respect of proceedings before the Mining Commissioner. An

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appellate court is a review court, the primary task of which is to correct error. The Court of Appeal could not hold the Mining Commissioner in error in failing to award costs against the Crown when the governing legislation denied him that right.

I do not consider that this Court should award costs against the Crown in respect of the proceedings before the Mining Commissioner. The matter of costs before the Mining Commissioner should be governed by the local statute, the Mining Tax Act, and in particular s. 10(6) thereof. The award by this Court of costs which, by local statute, the court of original jurisdiction was precluded from awarding, does not appear to me to be a proper application of s. 49 of the Supreme Court Act. The general discretion conferred by s. 49 of the Supreme Court Act should not be exercised to defeat the legislative purpose of s. 10(6) of the Mining Tax Act.

This Court is being asked to award costs against the Crown in proceedings before the Mining Commissioner when the Legislature of the Province of Ontario, as I construe the Mining Tax Act, has declared in effect that costs are not to be awarded against the Crown in proceedings before the Mining Commissioner. A provincial legislature has the authority to regulate the award of costs in its own courts and tribunals under s. 92(14) of the British North America Act. While Parliament can legislate with regard to the award of costs in the Supreme Court of Canada, and has done so in s. 49 of the Supreme Court Act, I do not think that Parliament should be taken to have intended to override the exercise of provincial legislative authority by the general words contained in s. 49. This is not a case like Crown Grain Co. Ltd. v. Day[9], where a provincial legislature tried to inhibit appeals to this Court. Here, the Legislature competently exercised its legislative authority, and I find no resulting inconsistency with s. 49 of the Supreme Court Act.

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There is an important constitutional question latent in this discussion, namely, whether the Parliament of Canada has legislative authority to empower this Court to award costs in proceedings in a provincial court notwithstanding provincial legislation precluding such provincial court from awarding costs in such proceedings. An award of costs would bring the constitutional question squarely before the Court, and answer it affirmatively. The question was not raised by counsel in argument, due perhaps in part to the fact that costs before the Mining Commissioner were of minor importance in the overall appeal and in part to the fact that notice of the constitutional question had not been given to the provincial Attorneys General pursuant to Rule 18 (now 17) of the Rules of this Court. The award of costs by s. 49 of the Supreme Court Act is discretionary. It seems to me that the discretion should be exercised against an award of costs until such time as the question can be made the subject of proper constitutional argument with provincial participation pursuant to Rule 18 (now 17) of this Court.

I would dismiss the cross-appeal of the respondents, with costs in this Court and in the supplementary proceedings before the Ontario Court of Appeal.

Appeal dismissed from the bench; cross-appeal dismissed, LASKIN C.J. and JUDSON, SPENCE and DE GRANDPRE JJ. dissenting.

Solicitor for the appellant: J.D. Hilton, Toronto.

Solicitors for the respondents: Shibley, Righton & McCutcheon, Toronto.