B B Fast & Sons Distributors LTD v. Her Majesty the Queen, [1984] CTC 626, 84 DTC 6554

Muldoon, J:—This action arises by way of appeal from a decision of the former Tax Review Board. The presiding member of that board, Guy Tremblay dismissed the taxpayer’s appeal, not on the bais of substantive conclusions on the law and the facts, but rather as a matter of judicial comity. At page 12 of his reasons, Mr Tremblay wrote:

In the present case, my personal opinion is to the effect that the two companies (the appellant and Willmar Ltd) are not associated. If I had heard the present case and given my judgment before the Wynndel Logging Co Ltd et al v MNR and Roclar Leasing Ltd et al v MNR cases, I would have allowed the appeal. However, despite my personal opinion and the fact that I do not share the opinions of Messrs Dubrule and Taylor, as there are two judgments given by two different members of the Board and for different reasons, I think a good rule is to follow their conclusions to give the Board continuity in its decisions.

However, such a rule is logical inasmuch as an appeal is possible for the loser, as in the present case for the appellant.

It may be noted that of the two previous Board decisions mentioned by Judge Tremblay (as he now is) the Roclar Leasing decision only is appealed and yet to be heard and determined by the Trial Division of this Court.

The issue before the Court in the case at bar is a narrow one, turning on the meaning of paragraph 256(1 )(e) of the Income Tax Act as it applied in and to the 1975, 1976 and 1977 taxation years. That section relates to and defines associated companies. Indeed the issue to be resolved between the parties turns upon the meaning, in paragraph (e) of subsection 256(1), of the words “and either of the related groups owned directly or indirectly, in respect of each corporation, not less than 10 per cent of the issued shares of any class of the capital stock thereof’.

The parties, through their respective solicitors and counsel filed an agreed statement of facts and a further agreed statement of facts which have become Exhibits 1A and 1B in these proceedings. It must be noted that while the defendant did agree to the facts expressed in Exhibit 1B, the defendant does not agree as to the relevance of them in this appeal. Good counsel — and that expression pre-eminently includes counsel who appeared in this case — agree to facts which, they are convinced, can be amply proved by documents on testimony at trial. The facts which they have stated in Exhibit 1 are clearly and concisely stated in a straightforward manner which presents no difficulty. It should be noted, almost parenthetically, that since Mr and Mrs William Fast were, by common consent, husband and wife resident at all material times in the province of Manitoba, no inference can be drawn from the agreed facts to the effect that they were in any community of property marital regime in regard to their respective shares in Willmar Ltd. Indeed, the obvious inference is that they owned their respective 50 per cent, totalling 150 shares each in Willmar, separately each in his or her own right. Nevertheless, Mr & Mrs William Fast, it is admitted, constituted a related group — and one can regard two persons as a group — by which Willmar Ltd was controlled.

Mr William Fast was at all material times a member of a group of five siblings — clearly a related group — by which the plaintiff was controlled. Each of the members of that sibling group owned 100 shares or 20 per cent of the plaintiff. Accordingly, each of the members of the sibling group was related to both of the members of the marital group and vice versa, Mrs Fast having been related by marriage to all of the five Fast siblings including, of course, her husband who is one of the five siblings.

The question is whether either related group owned, in respect of each corporation not less than 10 per cent of the issued shares of that corporation.

Mr William Fast owned 50 per cent of Willmar and 20 per cent of the plaintiff corporation. Mrs Fast owned 50 per cent of Willmar and nothing at all of the plaintiff corporation. Then, did the marital group consisting of Mr and Mrs Fast own directly or indirectly in respect of the plaintiff corporation not less than 10 per cent of the issued shares of the plaintiff corporation. Despite the highly articulate and lucid arguments of the defendant’s counsel, the short answer to that question is “no’’, because Mrs Fast owned none of the shares of the plaintiff corporation and, since a group, as President Jackett held in Buckerfield’s Limited et al v MNR, [1964] CTC 504; 64 DTC 5301 at 509 [5304], means “any number of persons from two to infinity”, it follows that the marital group of two, of which she was a member did not own not less than 10 per cent of the issued shares of the plaintiff corporation. Her husband, a member of that exclusive marital group owned, in his own right, 20 per cent of the shares in the plaintiff corporation, but since those shares were not owned jointly or in common or in any other species of partnership with Mrs Fast, it cannot be said that the group owned them. Only one of the members of the group owned that 20 per cent and one human individual of a group — even a group of two — cannot be equated with the whole group. In modern times, the secular law of property has completely turned away from the traditional religious notion of husband and wife being “one”. But even so, on any basis of logic one unit of a multiplicity of units cannot be considered to be totality of that multiplicity, nor can the whole be subsumed into one unit, one person or one individual.

The appellant (the plaintiff) must succeed on the substantive reasoning and the substantive conclusions expressed by Judge Tremblay which are adopted and ratified for purposes of this appeal, as are the arguments of the plaintiffs counsel in the case at bar.

The obvious manner in which to determine the legislative intent of Parliament is to give plain meaning to the words and phrases enacted by the statute in which Parliament expressed its intent. The section of the Act being and including paragraph 256(1 )(e) having referred to related groups in context must be interpreted to mean the same thing, that is a plurality of persons, not just one person, when it later expresses that notion in those very words. This interpretation is not repugnant to any discernible scheme of the Act in regard to associated companies. But if it be repugnant to some concept in the mind of the instructing minister or the legislative drafters who tried to give expression to their instructions, the court cannot presume to take on the role of a clairvoyant, to divine a meaning other than that which is signified by the words employed by Parliament in enacting the statute. Nor may the court purport to supply words or expressions, since it is for Parliament, and not the court, to legislate. Thus a “related group” in the opening lines of paragraph 256(1 )(e) must be taken to mean no more — and no less — than a “related group” expressed in the latter lines of the paragraph.

For the foregoing reasons including and adopting the reasons of Judge Tremblay and the argument of the plaintiff in these proceedings, this action by way of appeal must succeed and be allowed. The matter should be referred back to the Minister to be reassessed in accordance with these reasons. Counsel may prepare a formal judgment, if possible in a form at least, agreeable to both sides.

The court is grateful to counsel on both sides for their lucidity in presenting their respective arguments in this case.