The Toronto Real Estate Board v. Minister of National Revenue, [1982] CTC 162, 82 DTC 6144

Urie, J:—The Applicant in this section 28 application seeks to set aside the decision of the respondent that the applicant’s publication “Real Estate News” is not a “newspaper” within the meaning of section 3 of Part III to Schedule III of the Excise Tax Act, RSC 1970, c E-13 and thus is not exempt from sales tax.

The relevant facts, which are undisputed, are set out in the applicant’s memorandum of points to be argued as follows:

1. The Applicant, the Toronto Real Estate Board, is a corporation without share Capital, the members of which are real estate brokers and salespersons in Metropolitan Toronto. The Applicant has 10,748 members of which 2,161 are brokers and 8,587 are salespersons.

2. Commencing in 1971, the Appellant began publication of a newspaper called “Toronto Real Estate’’. The name of the newspaper was subsequently changed to “Real Estate News’’ in October, 1979.

3. On 20 March, 1973, a ruling was received from the Department of National Revenue regarding the Applicant’s publication, which ruling stated:

“The sample submitted indicates that the publication is regularly issued at stated intervals with a masthead showing the name of the publication and the date, month and year of issue.

The ‘Toronto Real Estate’ containing news items and articles of general interest to the recipients, qualifies for exemption from sales tax as a ‘newspaper’ under Part III (3) of Schedule III of the Excise Tax Act.

A copy of this ruling should be forwarded to Webb Offset Publications Ltd to Claim exemption from the sales tax.”

4. On October 11, 1978, a further communication was received by the Applicant from Revenue Canada. That letter stated:

“We have conducted a review of your publication, ‘Toronto Real Estate’ in recent months, regarding the classification of this printed matter for purposes of the Excise Tax Act.

We have found, from the issues examined, that this publication does not now qualify for exemption from sales tax as a ‘newspaper’ for purposes of section 3 of Part III of Schedule III of the Excise Tax Act, as they contain insufficient editorial content in comparison to the advertisements.

In view of the above, the previous ruling exempting this publication dated March 20, 1973 . . . is hereby revoked as of November 1, 1978.”

5. Submissions were then made and a written Brief forwarded to the then Minister of National Revenue, Anthony C Abbot. However, the ruling of 11 October, 1978 of taxability was confirmed by the Minister by letters dated 2 and 16 October, 1979.

6. The Applicant commenced proceedings in the Federal Court of Canada, Appeal Division to set aside the decision of the Minister on 25 October, 1979.

7. By judgment dated the 7th day of November, 1980, the Federal Court of Appeal gave the following judgment in the case of The Toronto Real Estate Board v MNR (Court File A-622-79):

“The within Section 28 application is allowed. The decision of the Respondent Minister herein that the publication ‘Toronto Real Estate News’ is subject to tax under the Excise Tax Act is set aside and the matter is referred back to the Respondent Minister for a determination on the basis of the application of the relevant statute and jurisprudence to the facts of the case.”

8. A further written Brief was forwarded to the Respondent under cover of letter dated 24 February, 1981 and, on 10 March, 1981, representatives of the Applicant and its counsel met with the Respondent at his office in Ottawa.

9. During the course of discussing the Brief with the Respondent, representatives of the Applicant orally advised the Respondent that Real Estate News was not distributed to homes by the Applicant but rather by way of demand pick-up by the public from approximately 1,550 locations in and around Toronto, comprising approximately 790 newspaper boxes, 360 stands (in malls and other enclosed areas) and 400 other locations in the offices of broker members of the Applicant.

10. The Respondent was also shown a photograph as evidence of the status of the Respondent’s publication as a newspaper.

11. On 19 May, 1981, the solicitors for the Applicant received a letter from the Respondent whereby the Respondent gave his decision (the “Decision”) that the Applicant’s publication was not a “newspaper” for the purposes of the Excise Tax Act, such that the publication is subject to federal sales tax. The Respondent Stated, inter alia:

“I have reviewed the Brief and the publication in light of the judgments rendered by the Supreme Court of Canada in ‘The King vs the Montreal Stock Exchange and the Federal Court of Appeal in ‘E W Bickle Ltd and the Minister of National Revenue’, and I have concluded that the publication ‘Real Estate News’ not to be a newspaper for purposes of the Excise Tax Act.

Rather, ! am of the opinion that this publication is an advertisement circular in that it is aimed primarily at advertising properties listed in the Multiple Listing Service, a commercial service provided by the Board, and promoting the services and goodwill of members of the Board, and, as such, is subject to federal sales tax.”

It is from the last-mentioned decision that this section 28 application is brought.

Subsection 27(1) of the Excise Tax Act imposes a consumption or sales tax on all goods produced or manufactured in Canada. Subsection 29(1) provides that the tax imposed by section 27 does not apply to the sale or importation of the articles set forth in Schedule III. Part III of that Schedule provided inter alia, as at the relevant date, viz: November 1, 1978 that:

3. College and school annuals; magazines and literary papers unbound regularly issued at stated intervals not less frequently than four times yearly; newspapers; sheet music; materials for use exclusively in the manufacture thereof.

The Minister shall be the sole judge as to whether any printed material comes within any of the classes mentioned in sections 1, 3, 5 and 8 of this Part.

The applicant submitted that the Minister’s decision that the applicant’s publication is subject to tax, not being a “newspaper”, ought to be set aside on the following grounds:

(1) That in reaching his decision the Minister had been in breach of a rule of natural justice in that he failed to apprise the applicant of all of the evidence and arguments upon which he intended to base his decision;

(2) That the Minister acted beyond his jurisdiction in that the March 20, 1973 decision was a final binding determination by him of the tax status of the applicant’s publication which, absent either a change in the facts, the law or statutory authorization, he could not reconsider;

(3) That the respondent’s decision was unreasonable given the totality of the evidence; and

(4) That, in deciding whether or not a publication is a “newspaper” for the purpose of the Excise Tax Act, the word “newspaper” is to be accorded the ordinary meaning of that word and, in particular, the meaning given it in The King v Montreal Stock Exchange, [1935] SCR 614.

I have not been persuaded that either of the first two grounds of attack had sufficient merit to warrant a finding that there has been reviewable error. However, I have concluded that the fourth ground, amplified as it was during the course of argument, does disclose that the Minister erred in applying the test laid down in the Montreal Stock Exchange case (supra) with the result that his decision as to the nature of the publication derived from the totality of the evidence may not have been reasonable, as alleged in ground three.

In E W Bickle Ltd v MNR, [1979] 2 FC 448; [1979] CTC 228, this Court held that the Minister’s decision under Part III of Schedule III of the Excise Tax Act was reviewable pursuant to section 28 of the Federal Tax Act. The King v Montreal Stock Exchange, supra, dealt with the scope of the word “newspapers” in Schedule III. The publications in issue there were daily reports showing the transactions on the Exchange during its morning and afternoon sessions as well as a weekly “comparative review of transactions” thereon. From time to time they contained notices of dividends, annual meetings and the loss of certificates in connection with companies whose securities were listed on the Exchange. Members of the Exchange were the primary users of the sheets although others were among the subscribers. At 616 of the report, Kerwin, J, as he then was, had this to say:—

The term “newspapers” is not defined in the Act and while we were referred to various definitions in other Dominion and provincial statutes, the statement of the present Chief Justice, in delivering the judgment of the Court in Milne-Bingham Printing Co Limited v The King (1) is peculiarly appropriate.

The usage of that word in other statutes may be looked at, if the other statute happens to be in pari materia, but it is altogether a fallacy to suppose that because two statutes are in pari materia, a definition in one can be bodily transferred to the other. .. .

In the instant case, the word under discussion is not defined in any statute in pari materia and it remains only to give to it the ordinary meaning that it usually bears. Webster’s New International Dictionary may be taken as giving a definition of “newspaper” which is expressed in corresponding terms in other well recognized dictionaries:—

a paper printed and distributed at stated intervals . . . and other matters of public interest.

The sheets in question meet these requirements; the mere fact that any particular publication is meant to interest only a section of the public does not limit the meaning of the expression as a reference to religious or fraternal publications contain not merely a record of transactions on the Exchange to curb market but also information to those desiring it as to such transactions; and other items from time to time included give “tidings, new information, fresh events reported,” (vide Concise Oxford Dictionary defining “news”).

(1) (1930) SCR 282, at 283.

In a second case, E W Bickle Ltd v MNR, [1981] CTC 25; 81 DTC 5013, this Court held that the Minister’s task under Part III of Schedule III to the Act is to formulate an opinion. Facts must be established to enable the formulation of the opinion. In that case it was held that there was evidence in the record upon which the Minister could properly have reached the conclusion that the publications there in issue were not “newspapers” within the meaning of the exempting provisions of the Act and as that term was interpreted in the Montreal Stock Exchange, case, (Supra) with the result that the section 28 application was dismissed.

While an excerpt from the Minister’s letter to the Applicant’s solicitors, apparently dated May 14, 1981, has already been included earlier herein, for convenience’ sake I will repeat that excerpt.

I have reviewed the Brief and the publication in light of the judgments rendered by the Supreme Court of Canada in "The King v Montreal Stock Exchange" and the Federal Court of Appeal in “E W Bickle Ltd v MNP", and I have concluded that the publication “Real Estate News” not to be a newspaper for purposes of the Excise Tax Act.

Rather, I am of the opinion that this publication is an advertisement circular in that it is aimed primarily at advertising properties listed in the Multiple Listing Service, a commercial service provided by the Board, and promoting the services and goodwill of members of the Board, and, as such, is subject to federal sales tax.

Clearly the first paragraph above quoted indicates that the Respondent was cognizant of both the Montreal Stock Exchange and the E W Bickle cases, supra. Had he left it at that and applied the test enunciated therein, counsel for the applicant conceded that he would have had difficulty in attacking the decision. However, the second quoted paragraph makes it clear, in my opinion, that the Minister expanded the test of what is a “newspaper”, formulated in the Montreal Stock Exchange case. It appears that he considered that because, in his view, the publication was “aimed primarily at ad- vertising properties listed in the Multiple Listing Service, . . . and promoting the services and goodwill of members of the Board . ..” it could not be a “newspaper”. The employment of such criteria is clearly contrary, in my view, to the ratio decidendi of the judgment in the Montreal Stock Exchange case.

To paraphrase the words of Kerwin, J in that case, the publication in issue here meets the requirement of the definition of “newspaper” given its ordinary meaning. The fact that is is aimed at a particular segment of the public for the benefit of another segment does not limit the meaning of the term. The publication contains not only advertisements in respect of properties listed in the Multiple Listing Service but also “information” of interest to property owners, from various sources falling well within the phrase “other matters of public interest”.

For these reasons I have concluded that the Respondent, in reaching his decision, did not confine himself to the test enunciated by Mr Justice Kerwin and that, therefore, the decision must be set aside. In reaching that conclusion I have not overlooked the submission of counsel for the respondent that the opinion formulated by the Minister accorded with the view of this Court that a “newspaper” consisted of something more than a mere “advertising circular” as expressed by Jackett, CJ in the first E W Bickle case, supra, where he said at 456 [233] :—

As I understand them, they are not mere “advertising circulars” in the sense of advertising by the person who distributes them. On the contrary they contain information (news) as to what is available in particular fields of commerce even though such information is conveyed by way of advertising by third parties who have things to sell.

I do not think that Chief Justice Jackett in the above excerpt from his judgment intended in any way to vary the ambit of the definition of “newspaper” given by Mr Justice Kerwin. As I interpret his comment he distinguished the publications where were before the Court in the Bickle case from the “advertising circulars”, colloquially described as “flyers”, which merchants, suppliers of services and others distribute to households by hand or perhaps even as newspaper inserts to promote the sale of their goods and services. Those “advertising circulars”, in Jackett, CJ’s view, differ from publications which “contain information (news) as to what is available in particular fields of commerce .. .” In my opinion the Respondent failed to apply only the appropriate definition to the facts of the case. He misdirected himself by applying additional criteria for which neither the Montreal Stock Exchange or the E IV Bickle cases are authority.

Accordingly, the section 28 application should be allowed. The decision referred to therein should be set aside and the matter should be referred back for reconsideration on the basis of the application of the statute as interpreted in the relevant jurisprudence, to the facts.