Herbert J Harman v. Minister of National Revenue, [1978] CTC 2144, 78 DTC 1138

Guy Tremblay:—This case came before the Board at Montreal, Quebec, December 16, 1976.

1. The Crux of the Matter

The crux of the matter is whether the respondent is right in assessing the personal use of an automobile by including an amount of $486 in the appellant’s income for the 1972 taxation year.

2. The Onus of Proof

The appellant has the responsibility to show that the respondent’s assessment is unjustified. This burden of proof is based not on one particular section of the Income Tax Act, but on a number of judicial decisions, one of which is the judgment delivered by the Supreme Court of Canada in R IV S Johnston v MNR, [1948] CTC 195; 3 DTC 1182.

3. The Facts

The facts are clear and not contested. The testimony of Mr McDiarmid, the Finance Director and Administrator of the employer company, is confirmed by the appellant.

3.1. The appellant is a salesman with Brooke Bond Foods Ltd.

3.2. He was paid a salary and also received commission on sales.

3.3. In 1972 the employer made a car available to him. The car was the property of the company. The company paid the insurance premiums. The company’s sales director and not the salesmen decided what kind or model of automobile salesmen were provided with. Of 150 automobiles owned by the company, 135 were provided to sales personnel and only 15 were provided to the executive group.

3.4. The appellant had the right to use the car for business purposes and personal use.

3.5. The appellant used the car mainly for business purposes. According to the evidence, the appellant used it for personal reasons only for 1,270 miles as he used it for nearly 25,000 miles for business purposes.

3.6. The cost of the upkeep of the automobile is finally borne by the company.

3.7. The appellant had to pay 0.05¢ per mile to the company for personal use of the car. But as in 1971 he did not have an accident, he was allowed 1,000 free miles of personal use in 1972. More than 30 companies have the same policy according to document A-3 of Montreal Board of Trade.

3.8. The cost of the car was $4,054.96.

3.9. Brooke Bond Foods Ltd has 142 salesmen, 110 of them are sales representatives like the appellant. Their function is to sell and promote the 25 to 30 different products. Each salesman has his own territory. The territory of the appellant was a rural territory of 10,000 square miles situated in the east of Toronto.

3.10. The appellant was not obliged to go to the head office. Incidentally, he went two to three times during the year. In fact, there was no space for the salesmen at the head office and there was no parking for their car.

3.11. The salesmen had to fill out and send to the head office a weekly report concerning their business work and the automobile expenses. According to Exhibit A-8, the appellant filed his 50 weekly reports made during 1972. The report was filed every Saturday morning.

3.12. Many times, explained the appellant, he had to use his wife’s car to go and mail his weekly report, the nearest mail box being 5 miles from his home. The weekly report was mailed ordinarily on Saturday morning.

3.13. In their trips to visit the retail stores, the salesmen filled the automobiles with many types of cartons, racks, supplies of various products and office forms. These materials remained in the automobiles even during the weekends.

3.14. For approximately nine nights every four weeks the appellant was required to stay over in a hotel or motel because of the travelling required by his work.

3.15. The respondent, by assessment dated March 11, 1974, added $486 to the appellant’s revenue. That amount was calculated according to paragraphs 6(1 )(e) and 6(2)(a) of the new Act: 12% of $4,054.96 =

$486.

3.16. On May 15, 1974, a notice of opposition was filed. On February 11, 1975 the Minister by notification maintained the assessment.

3.17. The appellant appealed to the Tax Review Board on May 7, 1975.

4. The Law

Three sections [s/c] of the new Act may apply to the present appeal:

Amounts to be included as Income from Office or Employment

6. (1) There shall be included in computing the income of a taxpayer for a taxation year as income from an office or employment such of the following amounts as are applicable:

(a) Value of benefits.—the value of board, lodging and other benefits of any kind whatever (except the benefit he derives from his employer’s contributions to or under a registered pension fund or plan, group sickness or accident insurance plan, private health services plan, supplementary unemployment benefit plan, deferred profit sharing plan or group term life insurance policy) received or enjoyed by him in the year in respect of, in the course of, or by virtue of an office or employment;

(e) Standby charge for automobile.—where his employer made an automobile available to him in the year for his personal use (whether for his exclusive personal use or otherwise), the amount, if any, by which an amount that would be a reasonable standby charge for the automobile for the aggregate number of days in the year during which it was made so available (whether or not it was used by the taxpayer) exceeds the aggregate of

(i) the amount paid by him in the year to his employer for the use of the automobile, and

(ii) any amount included in computing his income for the year by virtue of paragraph (a) in respect of the use by him of the automobile in the year; . . .

(2) Reasonable standby charge minimum amount.—For the purposes of paragraph (1)(e) “an amount that would be a reasonable standby charge for the automobile” for the aggregate number of days in a taxation year during which it was made available by an employer shall be deemed not to be less than,

(a) where the employer owned the automobile at any time in the year, an amount in respect of its capital cost to the employer equal to the percentage thereof obtained when 1% is multiplied by the quotient obtained when such of the aggregate number of days hereinbefore referred to as were days during which the employer owned the automobile is divided by 30 (except that if the quotient so obtained is not a full number it shall be taken to be the nearest full number or, if there is no nearest full number, then to the full number next below it), and

(b) where the employer leased the automobile from a lessor at any time in the year, an amount equal to /3 of the amount by which the amounts payable by the employer to the lessor for the purpose of leasing the automobile for the aggregate number of days hereinbefore referred to exceeds the portion of those amounts that may reasonably be regarded as having been paid to the lessor in respect of all or part of the cost to him of insuring against

(i) loss of, or damage to, the automobile, or

(ii) liability resulting from the use of the automobile.

Depending on the interpretation of these sections and on the application of paragraph 6(1)(a) in lieu of paragraph 6(1)(e) and subsection 6(2), the taxable amount could be different.

The appellant contends among other things that he is not taxable under the provisions of paragraph 6(1 )(e).

Because of the importance of the present case in regard to numerous salesmen in the same situation, and also because of the seriousness of the written submissions of the lawyers representing the parties, the Board largely cites their arguments in law.

5. The Parties’ Arguments

5.1. The main appellant’s arguments:

Three elements must be present before Respondent may apply the deeming provisions of paragraph 6(1)(e):

1. That the employer made an automobile available to him:

2. That the automobile be made available to him for his personal use, and

3. That it be available for his personal use (whether for his exclusive personal use or otherwise).

These three elements are conjunctive and must all exist simultaneously for the paragraph to apply.

It is submitted that the evidence clearly establishes that the Company supplied specified vehicles to its salesmen as part of the terms of employment, the purpose of which is to enable the salesmen to perform their duties (Examination-in-Chief, p 16, line 11-21; p 17, line 1-12) and in no sense were automobiles made available to them. Under the circumstances, the automobiles were in effect forced upon the salesmen.

For purposes of, argumentation, we will deal with the third element before dealing with the second one.

It is submitted that the words “or otherwise’’ can be taken to qualify the words “exclusive use’’ thereby including both “exclusive personal use” and the personal use of the automobile by someone else (eg a fellow employee or officer or possibly Appellant’s wife).

The French text of s 6(1)(e) readily clears up this ambiguity by showing that the words “or otherwise” qualify exclusive use and not personal use.

“. . . lorsque son employeur a mis dans l’année une automobile à sa disposition pour son usage personnel (à titre exclusif ou autre) . . .”

This interpretation is further corroborated by looking at subsection 15(5) which deals with automobiles which are made available to shareholders, and which contains the same wording as found in paragraph 6(1)(e).

“15. (5) Where a corporation has made an automobile available to a Shareholder in a taxation year for his personal use (whether for his exclusive personal use or otherwise), the amount, if any, by which an amount that would be a reasonable standby charge for the automobile for the aggregate number of days in the year during which it was made so available (whether or not it was used by the shareholder) exceeds the aggregate of

(a) the amount paid in the year by the shareholder to the corporation for the use of the automobile, and

(b) any amount included in computing the shareholder’s income for the year by virtue of Subsection (1) in respect of the use by him of the automobile in the year,

shall be included in computing his income for the year.”

It is obvious that a shareholder, in his capacity of shareholder, cannot possibly use a company-supplied automobile otherwise than for personal use. And therefore the term ‘‘or otherwise” can only be taken to mean non-exclusivity (eg sharing with other shareholders or possibly their Spouses). In the case of Archibald v Royer, [1924] 1 DLR 897 Ritch, J held at p 900 that:

“It would, I think, be a departure from the ordinary rules of construction to give the word district’ in that subsection a meaning different from its meaning when used in other parts of the same section, the more especially so, as one is not driven to that end in order to give the word a reasonable meaning. I think the word must have the same meaning throughout.”

Furthermore, Anders J in Edmonton National System of Baking Limited v MNR, [1947] CTC 169 [3 DTC 1009] said that the use of the words ‘‘or otherwise” when used in a statute denotes ambiguity and incertitude.

“Does it come within the scope of the very general and indefinite words ‘or otherwise’, too often used in statutes by legislators who have not a clear and precise notion of the subject [treated]?’’ (p 188)

Appellant is in full agreement with this and submits that where in a taxing Statute there appears a section of that statute which is at best ambiguous, as is the case with paragraph 6(1 )(e), and there can be found an identical section in another part of the statute which is not subject to this ambiguity, as is the case with subsection 15(5), then the Courts, Boards or other Tribunals which have occasion to interpret such taxing statutes should assume that Parliament meant the same thing in both cases (The King v BC Electric Rlwy Co Ltd, [1946] CTC 224 [2 DTC 839], Miln-Bingham Printing Co v R, [1930] SCR 282). This interpretation appears to be the most reasonable and logical one.

To summarize the above, it is Appellant’s contention that the words ‘‘or otherwise” are to be taken to qualify the words “exclusive use” thereby including both exclusive personal use by the person to whom the automobile was made available as well as by someone else (eg a fellow employee or officer or possibly Appellant’s wife), and that there is no legal or other justification for any other possible interpretation.

We come now to the discussion of the second element which must be present before Respondent may invoke the provisions of paragraph 6(1 )(e). This question IS whether or not the Company made an automobile available to Appellant for ‘his personal use”.

It is submitted that the phrase is to be interpreted to apply only to those cases wherein an automobile is made available to an employee predominantly or primarily for personal use and not to cases where only incidental personal use is permitted.

It is an established principle in the interpretation of statutes that one should apply the grammatical or ordinary sense of words unless that would lead to some absurdity, or some repugnancy or inconsistency with the rest of the Income Tax Act.

We refer the Board to the following cases:

. Morch v MNR, [1949] CTC 250 at 255 [4 DTC 649]

O’Reilly & Bélanger Ltd v MNR, [1917-27] CTC 332 at 335 [1 DTC 121]

North Pacific Lumber Co Ltd v MNR, [1917-27] CTC 336 at 342 [1 DTC 117]

W M O’Connor v MNR, [1943] CTC 255 at 262 [2 DTC 637]

Fasken Estate v MNP, [1948] CTC 265 at 276 [4 DTC 491]

The King v Morris, [1950] CTC 186 at 188 [4 DTC 766]

A simple glance at the operational words of paragraph 6(1)(e) which are being discussed here (“where an employer made an automobile available to him . . . for his personal use’’), it is obvious that what was intended was to cover benefits which arise as a result of an employer making an automobile available predominantly or primarily for personal use exclusively or on a non-exclusive basis. Had Parliament intended paragraph 6(1 )(e) to cover even incidental and minimal personal use, it would have qualified the Said paragraph in such a way as to clearly and unambiguously cover any personal use, however limited such use may be. The fact that Parliament did not include incidental and minimal use is indicative that such use was not intended to be taxed by paragraph 6(1)(e) but under paragraph 6(1)(a).

There is considerable uncontradicted evidence before the Board to show that the Company supplied an automobile to Appellant solely for ‘‘business use’’ and not “personal use’’.

Taking the mass of evidence which. was submitted before the Board, one cannot escape the conclusion that the Company’s automobile was supplied to Appellant as well as its other Sales Representatives solely for business purposes, and that the said automobile was not really suitable nor was it made available for personal use (Cross-Examination, p 83, line 9-26) and in fact (Examination-in-Chief, p 126, line 6ff) the employee used his own automobile on numerous occasions for business purposes. The infrequent personal use does not affect the general contention that the automobile was provided for business purposes.

This interpretation is further strengthened by Parliament's use of the phrase “number of days in the year during which it was made so available” as in paragraph 6(1)(e). Appellant submits that the use of the words “number of days’’ and avoiding the inclusion of fractions of days or any part of a day clearly indicates that Parliament never had any intention to tax incidental and very infrequent use.

There is no definition of the word “day” in the Income Tax Act, however in the case of Taylor v Drake (1902), 9 BCR 54 it was held that:

‘as a general rule, subject to certain exceptions with respect to priority of right, and other matter not now necessary to allude to, the law does not regard the fraction of a day."

In Re Town of Thornbury and County of Grey (1893), 15 PR 192 it was held that:

“The day, according to our law, commences at midnight and ends the following midnight: Co Litt 135a; Williams v Wash, 28 Beav 93.”

In the case of Beer v Lea (1913), 29 OLR 255 it was held that:

“The law applicable to the computation of time where an act is to be done on a certain day or within a certain period was fully discussed in Startup v Macdonald (1843), 6 Man & G 593. Alderson, B, stated the general rule to be that ‘wherever, in cases not governed by particular customs of trade, the parties oblige themselves to the performance of duties within a certain number of days, they have until the last minute of the last day, to perform their obligation’ (p 622); and the rule was thus stated by Parke, B (pp 623-4); ‘The law appears to have fixed the rule; and it is this, that a party who is bound, by contract, to pay money, or to do a thing transitory, to another, anywhere, on a certain day, has the whole of the day, and if on one of several days, the whole of the days, for the performance of his part of the contract; and until the whole day, or the whole of the last day, has expired, no action will lie against him for the breach of such contract’.”

The Shorter Oxford Dictionary defines the word “day” as follows:

‘‘The time occupied by the earth in one revolution on its axis, in which the same terrestrial meridian returns to the sun; the space of twenty-four hours.”

The Black’s Law Dictionary defines the word ‘‘day” as:

‘‘A period of time consisting of twenty-four hours and including the solar day and the night. The period of time during which the earth makes one revolution on its axis. The space of time which elapses between two successive midnights. The whole or any part of period of 24 hours from midnight to midnight.”

It is thus clear that both the general definition as well as the judicial interpretation of the word “day” is fairly broad. Appellant respectfully submits that it would be unreasonable to contend that in order for paragraph 6(1)(e) to apply, the automobile had to be available for personal use for the 24 hours in that day. However, Appellant also submits that it would be equally unreasonable to contend that the mere fact of having such an automobile at one’s disposition for personal use for any portion of a day, however limited, is sufficient to render paragraph 6(1)(e) applicable. The only reasonable and justifiable interpretation is that the paragraph is drafted in such a manner as to affect only the preponderant or majority availability for personal use during any day.

In Guy Bureau v MNR, [[1976] CTC 2451] 76 DTC 1332, the Tax Review Board held that even though the taxpayer used his employer’s automobile for personal purposes on a few occasions, it was established that he used his own car more frequently for his employer’s purposes. As in the Bureau case, the Appellant used his own automobile for business use which at the very least should affect the personal use of the Company’s automobile (Examination-in-Chief, p 126, line 6ff). The only difference between the Bureau case and the present one is in the former case the taxpayer refused the employer’s offer to use the automobile for his own personal use. Appellant submits that this refusal when viewed in the light of the subsequent personal use of the automobile indicates that the existence of such refusal does not affect the principles upon which this case was decided. These principles are as follows:

1. A taxing statute is to be interpreted restrictively;

2. Any doubt is to be interpreted in the taxpayer’s favour;

3. De minimis non curat praetor.

These principles, if applied to the present case, clearly establish that paragraph 6(1)(e) cannot apply to incidental, infrequent or trivial personal use when the main reason for the availability of the automobile is for business purposes unless it is clearly expressed in the statute.

It should also be noted that in the Bureau case and the present one, both taxpayers had their own automobiles. Although this may be indicative of the intention not to use the company-supplied automobile for personal purposes, it is the actual personal use which is important, and when such personal use is small or incidental, then the maxim ‘‘De minimis non curat praetor” applies rendering paragraph 6(1)(e) inapplicable.

To briefly Summarize the above, it is Appellant’s contention that paragraph 6(1 )(e) applies only in the case of an automobile supplied primarily or predominantly for personal use (a fringe benefit), and that there is no justification whether legislative or jurisprudential which could support another interpretation of paragraph 6(1 )(e) as it is presently drafted.

C. Calculation of Reasonable Standby Charge under 6(2)

Should the Board arrive at the conclusion that s 6(1)(e) does apply to the present case, then the appellant alternatively submits that the minimum standby charge should be calculated as hereinafter set out.

Subsection 6(1)(e) provides that “where his employer made an automobile available to him in the year for his personal use, the amount, if any, by which an amount that would be a reasonable standby charge for the automobile for the aggregate number of days in the year during which it was made so available exceeds the aggregate of

(i) the amount paid by him in the year to his employer for the use of automobile; and

(ii) any amount included in computing his income for the year as being the value of benefits received by virtue of his employment, in respect of the use by him of the automobile in the year.”

Subsection 6(2) provides for a formula for calculating the reasonable standby charge as follows:

A X 1% x C.-C.

30

“A” means the aggregate number of days in the year during which the automobile was made available to the employee by the employer. Therefore, it becomes obvious that if the aggregate number of days during which the automobile is made available, if any, to the employee covers not only full days but half days or days on which the automobile is made available for a few hours if not a few minutes only, then, of course, the capital cost of the automobile will probably have to be multiplied by 12% since it would be obvious then that the automobile is made available 365 days a year to the employee.

We submit that this is not a reasonable construction of subsection 6(1)(e) and subsection 6(2).

The arguments with respect to the interpretation of the word “day” which were presented above have equal application here. There is nothing to indicate that the word “days” as it is used in subsection 6(2) is intended to cover any availability for personal use regardless of how minute such availability may be. The legal maxim “De minimis non curat praetor” would preclude such an interpretation unless Parliament imposes such judicial notice of trivia upon the Courts by clear and express language, which is not the case in subsection 6(2).

Appellant submits that if it can reasonably be determined that the Company’s automobile was made available only those days on which the Company’s automobile was available predominantly or primarily for personal use should be used to calculate the minimum standby charge, that is to say:

weekends —	X days
statutory holidays	X days
weeks vacation —	X
TOTAL	XXX days

Therefore, it is this resulting figure which should be used as “A” in the above-mentioned formula for calculating the minimum reasonable standby charge.

D. General Observations

In concluding his arguments, Appellant would like to make a few general observations with respect to the problem which is presently before the Tax Review Board. The interpretation which the Respondent would like to apply to the present case is contrary to the general principles which are to be found within the Income Tax Act. Even when one looks at the various deeming provisions of the Act, if one looks at the theory behind these sections, it can be seen that they are logical and have the effect of preventing the realization of tax or other benefits which, due to certain specific situations. are not intended by Parliament. All of these sections deal with benefits which are received or receivable. Respondent would ask that this Board interpret paragraph 6(1)(e) and subsection 6(2) in such a way as would not only tax a benefit which is received or receivable, (used or available). but also to impute a benefit under conditions where no benefit is either received or receivable. To tax the Appellant. who can only utilize the company-supplied automobile for personal purposes for a very small part of any day, the same amount as a taxpayer who receives a Company automobile solely or primarily for personal use (a fringe benefit), is. in effect, to tax a benefit which is neither received nor receivable and is therefore non-existant: This is contrary to the theory behind any Income Tax Legislation.

The Courts should only allow such an interpretation if faced with the most specific wording, which is not the case with either 6(1)(e) or 6(2).

A further inconsistency in the Respondent’s reasoning is amply illustrated by paragraph 3 of Interpretation Bulletin IT-63-R which states that:

“An employer is considered to make an automobile available for an employee’s personal use when he gives the employee the custody and control of the automobile and he does not impose strictly enforced rules prohibiting its use by the employee for his own personal purposes. However when an employer gives an employee custody and control of an automobile strictly for business purposes, if the employee in fact uses it for his own personal purposes contrary to the employer’s rules, he obtains a benefit which is included in income by virtue of 6(1)(a)”.

This would mean that a taxpayer who is honest and reports occasional personal use and is thus subject to 6(1)(e) Is to be taxed more than the dishonest taxpayer who is caught. There is jurisprudence to the effect that a person may not increase his rights of [s/c] improve his tax situation as a result of unlawful acts. and it is only natural to suppose that a lawful act will not incur a greater tax liability.

A close look at the various paragraphs of section 6 shows that these variouS paragraphs all deal with various types of fringe benefits or advantages which an employee receives as a result of or aS a direct consequence of his office or employment. Taken within this context, it is evident that paragraph 6(1)(e) should likewise be interpreted as to have application only in the case where an automobile is supplied to an employee as a fringe benefit and not as in Appellant’s case where the said automobile is Supplied as a Working tool for business purposes, and that availability for personal use is purely an incidental factor.

5.2. The respondents main arguments, including the answer to appellant:

ARGUMENTATION

3.1. L’interprétation

Les principes d’interprétation des lois sont énoncés par Lord Donovan dans l’arrêt Mangin vs IRC, [1971] AC, p 739, où il dit à la page 746:

“First, the words are to be given their ordinary meaning. They are not to be given some other meaning simply because their object is to frustrate legitimate tax avoidance devices . . . , (m)oral precepts are not applicable to the interpretation of revenue statutes.

Secondly, . . . one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.’ per Rowlatt J in Cape Brandy Syndicate vs IB Comrs.

Thirdly, the object of the construction of a statute being to ascertain the will of the legislature it may be presumed that neither injustice. nor absurdity was intended. If therefore a literal interpretation would produce such a result, and the language admits of an interpretation which would avoid it, then such an interpretation may be adopted.

Fourthly, the history of an enactment and the reasons which led to its being passed may be used as an aid to construction.”

En appliquant ces principes à la présente cause, il ressort clairement que l’on ne doit pas chercher dans le texte de loi des mots qui n’y sont pas. Le paragraphe 2 de l’affirmation du juge Donovan est particulièrement pertinente.

Les tribunaux ont cependant fait remarquer que le principe à l’effet que les lois d'impôt doivent recevoir une interprétation stricte signifie simplement que sauf disposition de la loi, exprimée en termes clairs, un contribuable n’est pas sujet à l’imposition. [1] Lord Atkinson disait dans Ormond Inv Co v Betts, [1928] AC 143, à la page 102:

“It is well established that one is bound, in construing Revenue Acts, to give a fair and reasonable construction to their language without leaning to one side or the other, that no tax can be imposed on a subject by an Act of Parliament without words in it clearly showing an intention to lay the burden upon him, that the words of the statute must be adhered to, and that so called equitable constructions of them are not permissible.

Les tribunaux ont aussi decide que ‘the imposition of tax must be effectued [sic] in plain words”. [3] En admettant que les mots utilises par le législateur soient susceptibles de plus d'une signification, la théorie à l'effet que la Cour donnera gain de cause au sujet de la Couronne est inexacte. Si l’intention de la législature est d'imposer, si les mots sont susceptibles de plus d’une signification ou interpretation, l’on ne peut interpréter l'article de la loi de façon à annihiler l’intention au législateur. (Reine vs Dickson, 1865, 11 House of Lords Cas 175).

Les Cours ont reconnu que l'on ne doit pas chercher l'intention du parlement au delà du texte tel qu’adopté: ainsi dans /RC vs Hinchy, [1960] AC 748, Lord Reid disait à la page 767:

“What we must look for is the intention of Parliament . . . But we can only take the intention of Parliament from the words which they have used in the Act, and therefore the question is whether these words are capable of a more limited construction. If not, then we must apply them as they stand, however unreasonable or unjust the consequences, and however strongly we may suspect that this was not the real intention of Parliament.”

Voir aussi Partington vs AG, 4 HL 100. à la page 122:

“The duty of Judges in construing statutes is to adhere to the literal construction unless the context renders it plain that such a construction cannot be put on the words. This rule is especially important in cases of statutes which impose taxation.” Lumsden vs Commissioners of Inland Revenue, [1914] AC 877. “There can be only two cases in which it is permissible to depart from the ordinary and natural sense of the words of an enactment. It must be shown either that the words taken in their natural sense lead to some absurdity or that there is some other clause in the body of the Act inconsistent with or repugnant to the enactment in question construed in the ordinary sense of the language in which (such other clause) is expressed.” Vacher vs London Society of Compositors, [1913] AC 107, 118; followed in CNA vs R (1922), 64 SCR 264 at 271.

Quelle absurdité nous permettrait donc de franchir la lettre de la loi et nous permettre de modifier son application. L’intention du législateur est claire. Il s'agit d’eciter la multiplicité de procès qui affligèrent tant la Commission de Revision de l’impôt que la Cour Fédérale sur de bénignes questions de faits. D’où je soumets que l’on doit s’en remettre au texte de la loi tel qu’il existe, car tel que disait Lord Donovan: ‘‘There is no equity about tax.”

3.2. La Loi

Les conditions d’application du paragraphe 6(1)(e) sont doubles:

1— automobile fourie par l’employeur

2— à la disposition du contribuable pour son usage personnel (à titre exclusif ou autre)

La premiere condition est clairement établie (témoignage de M McDiarmid, pages 16 et 17). Cependant, nulle part est-il fait mention de la contrainte à laquelle réfère l’appelant à la page 6 de ses notes (paragraphe 2).

La seconde condition peut à mon avis, créer plus de difficultés. L’expression anglaise ‘‘available” est définie par Black, dans son Law Dictionary, à la page 171 :

‘‘available: usable, suitable.”

Dans Oxford, à la page 126:

‘‘Available: capable of producing a desired result.”

En Australie, la Cour devait trancher si un logement était ‘‘available” au sens de la loi et l’a défini ainsi: ‘‘capable of being used”. (Rowan vs McWalley, [1941] SAJR 200, à la page 204 per Napier.)

En Grande-Bretagne, les tribunaux en décidant si un logement était “available” ont decide: “Available in this section means that the court must be satisfied of the existence of the alternative accommodation [sic] existing at term of making the order.” (Neville vs Hardy, [1921] 1 Ch 404, Kimpson vs Markhem, [1921] 2 KR 157).

Au Canada, le juge Riddell de la Cour d’Appel d’Ontario disait dans Devitt vs Mutual Life Insurance Co of Canada (1915), 33 OLR 473, à la page 478:

“Available does not mean existing. It means in such a condition as that it can be taken advantage of.”

Le juge Urquhart disait dans Re Rubin Enterprises Ltd, [1949] 2 DLR 369, à la page 376:

“The word available has a number of meanings but I am of the opinion that in this act, the word means obtainable or at its disposal most likely the latter.”

(Voir enfin: Hanna vs Galand, [1954] NZLR 954, Gordon vs Coldicutt, [1956] NZLR 834, Donovan vs Costburn, [1963] NZLR 322, per Woodhouse p 323).

De cette abondante jurisprudence, il est clair que le critère appliqué est celui de la disponibilité de l’automobile et non de son usage réel. L’intention du législateur est de taxer un droit et non une utilisation. La voiture était- elle disponible?

Extrait du témoignage de M McDiarmid, pp 87-88-89, M Harman, pp 140- 141.

L’appelant soutient à la page 8 de ses notes que 6(1 )(e) ne s’applique que lorsque ‘available predominantly or primarily for personal use’’. Or, l’article ne fait nulle part une telle distinction. Le but de cet article est de mettre fin aux querelles constantes qui opposaient les officiers du Ministère et les différentes catégories d’employés quant au quantum des bénéfices imposables. Cet article impose un minimum auquel l’employé qui dispose d’une automobile est assujetti. Toute interprétation fondée sur l'utilisation réelle rallumerait la discorde que le législateur a voulu éviter.

Cette interprétation est confirmée part l’utilisation des mots “qu’elle ait été ou non utilisée par le contribuable’’. La distinction sur laquelle repose l’argument de l’appelant est sans fondement et contraire aux règles d’interprétation mentionnées plus haut.

L’appelant, à la page 5 de ses notes, soutient que:

“in no sense were automobiles made available to them. Under the circumstances the automobiles were in effect forced upon the salesmen.”

Il est soumis que cette prétention de l’appelant n’est pas fondée.

L’appelant insiste beaucoup sur les mots:

“whether for his exclusive personal use or otherwise’’.

La version française des textes de 6(1 )(e) et 15(5) est très différente et détruit l’argument de l’appelant à l’effet que le texte français va trancher l’interprétation de 6(1)(e). L’intimé soumet que face à cette dicothomie, l’on doit s’en remettre à la version anglaise. Les mots, ainsi utilisés par le législateur, indiquent clairement que le législateur visait tout le cas où l’appelant disposait de l’automobile exclusivement pour usage personnel et le cas où l’automobile était également partagée entre l’usage personnel et l’usage commercial de cet automobile. Le paragraphe 15(5) peut également contempler le cas où l’automobile mis à la disposition de l’actionnaire le serait tant pour fins commerciales que pour fins personnelles et ce sans que violence soit faite au texte.

En outre, le sous-paragraphe 6(1 )(e) réfère à “son usage personnel” et non son seul usage personnel et vise non seulement le cas où l’appelant partage son utilisation entre fins personnelles et fins commerciales, mais aussi le cas où l’appelant n’utiliserait son véhicule que pour fins commerciales uniquement à condition qu'il ait libre jouissance de l’automobile car encore une fois l’article assujettit tous ceux qui ont une automobile à leur disposition et le revenu imposable est déterminé en fonction de cette disponibilité et non l’usage réel.

L’appelant prétend à la page 11 de ses notes que l’automobile n’était pas disponible pour usage personnel. Avec tout le respect je ne puis souscrire à cette constatation. Non seulement l’employeur ne décourageait-il pas l’utilisation de l’automobile mais il offrait 1000 milles gratuitement à tout employe qui n’encourrait pas d’accident pendant une année. L’appelant n'avait pas à retourner l’automobile. Il en avait pleine jouissance. Encore une fois, il est respectueusement soumis que l’utilisation de l’automobile n’est pas pertinente à la solution du présent litige.

Cette cause diffère de l’arrête Guy Bureau vs MNR, 1976 DTC 332, où le contribuable avait refuse l’offre de la compagnie quant à l’utilisation du véhicule. Ici, la preuve n’a pas révélé que M Harman ait refusé l’offre de Brook Bond Foods Ltd.

After the quotation of subsection 6(2) in French and in English, the following comments are made:

L'automobile fut mise à la disposition de l’appelant pendant 12 mois. D'où le calcul du minimum des frais pour droits d’usage est comme suit:

12% x $4,054.96 $486.00

5.3. Reply by the appellant to respondent’s arguments:

Respondent at page 3 of his Notes has mistated Appellant’s position in the present case. Appellant contends that one must adhere to the letter of the law. However, he also contends that the wording of paragraph 6(1)(e) is clearly aimed only at those who are provided with an automobile principally or predominantly for personal use.

Respondent also refers to the fourth principle of interpretation which is found in Mangin v IRC, [1971] AC 739 at page 746, and is cited at the top of page 4 of the Notes which states that

. . . the history of an enactment and the reasons which led to its being passed may be used as an aid to construction.”

should be clarified.

In Salkeld v Johnson, 2 CB 749 at page 757, Tindal, CJ stated that:

“we are not at liberty to infer the intention of the legislature from any other evidence than the construction of the Act itself;”

In The Queen v Hartford College (1878), 3 QPD 693 at p 707, Lord Coleridge, CJ, delivering the judgment of the Court of Appeal stated that

“We are not, however concerned with what Parliament intended, but simply with what it had said in the statute. The statute is clear, and the parliamentary history of a statute is wisely inadmissible to explain it if it is not".

In Rex v West Riding of Yorkshire County Council, [1906] 2 KB 676 at p 716, Farwell, LJ, stated that

“It was suggested that the view. taken by us of the Act is not in accordance with the intention of the House of Commons or with public understanding of the effect of the Act; . . . but we have only to deal with the construction of the Act as printed and published”.

Respondent seems to accept this at page 5 of his Notes when he cites IRC v Hinchy, [1960] AC 748. In spite of this at paragraph 1 of page 5 and 6 and the last paragraph of page 7 of his Notes, Respondent assumes the intention of Parliament which Appellant submits is nowhere to be found in the Income Tax Act. Therefore, Respondent’s argument concerning Parliament’s intention is unfounded. It is a well established principle that the intent of Parliament may only be inferred from the text of the Act itself. In other words, by interpreting the Act we discover Parliament’s intent, and not the other way around.

In the words of the Earl of Halsbury in the case of Hilden v Dexter, [1902] AC 474 at p 477.

"I have.. more than once had occasion to say that in construing a statute, I believe the worst person to construe is the person who is responsible for its drafting. He is very much disposed to confuse what he intended to do with the effect of the language which, in fact, has been employed. At the time he drafted the statute, at all events, he may have been under the impression that he had given full effect to what was intended, but he may be mistaken in construing it afterwards just because what was in his mind was what was intended . . .”

The only legitimate and relevant question before the Tax Review Board is whether or not paragraph 6(1)(e) applies to automobiles supplied to salesmen for business use.

Respondent’s statement in paragraph 3, on page 4 of his Notes states that

“Les tribunaux ont cependant fait remarquer que le principe à l’effet que les lois d’impôt doivent recevoir une inteprétation stricte signifie simplement que sauf disposition de la loi, exprimée en termes clairs, un contribuable n’est pas sujet à l’imposition.”

Appellant submits that this is not a proper interpretation of this rule in the light of the relevant jurisprudence. The cases upon, which Respondent bases his interpretation of the above do not support his conclusion. In Pryce v Monmouthshire Canal & Rail Cos, 4 AC 197 at p 203, the Court merely stated that

“. . . the taxpayer had a right to stand upon a literal construction of the words used, whatever might be the consequence.”

In Ormond Inv Co v Betts, [1928] AC 143 at p 151, the Court stated that:

“I have not overlooked the cardinal principle relating to Acts that impose taxation on the subject, a principle well known to the common law and that has not been and ought not to be weakened—namely, that the imposition of a tax must be in plain terms. In the words of Lord Blackburn in Coltness Iron Co v Black (1881) 6 App Cas 315, 330: ‘No tax can be imposed on the subject without words in an Act of Parliament clearly showing an intention to lay a burden on him.’ It is in that respect kindred to the creation of a penalty or the establishment of a crime. The subject ought not to be involved in these liabilities by an elaborate process of hair-splitting arguments.”

These cases confirm only the principles that a taxing section must show a clear intention to impose a burden on a taxpayer before it can apply, and that there is no equity in tax law. This in no way supports Respondent’s conception of the rule of strict interpretation of statutes. The same applies to the cases of Partington v AG and Peariberg v Varty, which are cited in footnote 2 on page 4 of the Notes.

In a similar vein, Respondent, in paragraph 1 of page 5, implies that Appellant is seeking to defeat Parliament’s intention as a result of his Stand. In support of this he cites the case of Regina v Dickson (1865), 11 HL 175 which dealt with licence duties on the sale of spirits. The Act in question established a general duty rate for the sale of spirits and a lower rate was levied if a grocer did not sell more than 1 or 2 quarts at a time and the spirits were not consumed in the premises. Parliament. later amended the Act and said that there had to be a minimum sale of 1 pint. The taxpayer tried unsuccessfully to hold that by establishment of the minimum sale, the maximum sales were revoked and he was therefore entitled to the lower duty rate even though he sold more than 1 or 2 quarts at a time. The situation in the present case is completely different from the Dickson case.

Again Respondent “assumes” the intention of Parliament without regard to the wording of the Act. Appellant in no way is trying to annihilate Parliament’s intention. In the Dickson case, supra, the Taxpayer’s arguments would have voided a section of the relevant statute, whereas, in the present case, Appellant merely wishes 6(1 )(e) to be interpreted in accordance with its literal interpretation, and not as Respondent would like to have it applied.

In any event, as interesting as these English cases may be, our own Canadian courts have consistently held that a taxing statute is to be construed strictly against taxing authorities, and not as Respondent’s above- mentioned assertion.

In P v Anderson (1925), 4 DLR 116 at p 126, Mathers CJKB, states that

“It is a well recognized principle of construction that in construing a taxing statute no presumption is to be made in favour of the taxing power.”

In The Canadian Northern Ry Co v The King 64 SCR 264, at p 275 Brodeur, J of the Supreme Court of Canada stated that:

“A law imposing taxation shall always be construed strictly against the taxing authorities, since it restricts the public in the enjoyment of its property.”

This judgment was confirmed by the Judicial Committee of the Privy Council, whose decision is reported at [1923] 3 DLR 719.

The judicial decisions which were cited by Respondent at pages 6-7 of his Notes, to support a broad definition of the word “available” as found in paragraph 6(1 )(e), are not relevant to the present case. In all cases cited by Respondent, the word “available” was used in an unrestricted sense. There were no qualifying words in those statutes to restrict the word “available”. In the present case, paragraph 6(1)(e) requires that the automobile be made available for his personal use. This qualification considerably restricts the meaning of the word “available”. To quote Judge Urquarth at page 7 of the Notes “The word available has a number of meanings”. There was ample evidence which was submitted to the Tax Review Board at trial to the effect that Brooke Bond Foods Ltd. placed an automobile at Appellant’s disposition for business use. The very fact that Parliament qualified the word “available”, in Appellant’s submission, clearly shows Parliament’s intent to limit the application. of paragraph 6(1 )(e). Had Parliament intended otherwise, it would have been easy to say so in clear and unambiguous language simply by not including the qualification ‘‘for his personal use’’. Respondent is seeking to tax an incidental and non-existent benefit, which is a principle completely alien to the Income Tax Act, and therefore should not be permitted unless faced with the most explicit wording, which is not the case here.

Respondent seems to be under the impression that Appellant is contending that actual use should be the criteria used to establish the applicability of paragraph 6(1)(e). Such is not the case. Appellant’s reasons for presenting evidence with respect to its actual use was to show that Appellant actually paid a reasonable amount for his personal use of the automobile, and to prove that actual personal use was minimal. Appellant could not reasonably have contested the Minister’s assessment if the actual personal mileage versus business mileage had been, say, 60% 40%.

Respondent’s assertion that the French version of 6(1 )(e) and 15(5) differ in their translation of the phrase “whether for his exclusive personal use or otherwise” is correct. Respondent claims that due to the differing French translations, one must look to the English version. Appellant submits that the conclusions he draws from this difference are wrong.

In The King v Dubois, [1935] SCR 378, at page 401-402, Duff, CJ, in rendering the judgment of the Supreme Court of Canada stated that

“Before calling attention to the effect of this language, it is right to mention, first of all, that the statutes of the Parliament of Canada in their French version pass through the two Houses of Parliament and receive the assent of His Majesty at the same time and according to the same procedure as those statutes in their English version. The enactment quoted is an enactment of the Parliament of Canada just as the enactments of the same section, expressed in English are . . . It seems equally clear that, in construing section 19 of the Exchequer Court Act, the statute in its French version cannot be ignored.”

See also: J S Irwin v MNR, [1962] CTC 572, 584-585 [62 DTC 1356].

In light of the above, Appellant respectfully submits that Respondent is wrong in claiming that we can ignore the French versions of 6(1)(e) and 15(5) because they are ambiguous.

Appellant submits that the difference between the French versions of 6(1)(e) and 15(5) clearly demonstrates the ambiguity created by this entire Situation. The English texts of these same articles are identical, and deal with the same subject matter. Minimum standby charges under 6(1)(e) and 15(5) are to be calculated in accordance with subsection 6(2). It is obvious from the French version of 15(5) that only personal usage is intended, and not business usage.

Respondent contends that business usage is also covered by subsection 15(5). With all due respect, Appellant submits that a literal interpretation of 15(5) does not support this view. Subsection 248(1) defines shareholder as follows:

“includes a member or other person entitled to receive payment of a dividend.”

In R v BC Fir & Cedar, [1932] AC 441. the Privy Council said that the word “includes” in a section incorporates not only whatever the section declares, but also what the word signifies according to its natural meaning.

Subsection 3(1) of the Canada Corporations Act defines “shareholder” as:

“any subscriber for or holder of a share in the capital stock of the company and includes the personal representatives of a deceased shareholder and every person, who agrees with the company to become a shareholder and every person who agrees with the company to become a shareholder;”

Based on the above, Appellant submits that 15(5) cannot apply to business use by a shareholder in his capacity of shareholder, as the definition does not allow for any such use. Any business or non personal use would have to be in another, capacity, such as agent, mandatary. officer or employee.

Appellant also submits that the French version of 6(1)(e) and 15(5) mean the same thing, and that 15(5) shows that business use could not possibly be contemplated in paragraph 6(1)(e).

At the top of page 9 of his Notes, Respondent states that paragraph 6(1 )(e) refers to “son usage personnel” and not “son seul usage personnel”. The absence of the word “seul” would not change the meaning of 6(1 )(e). The phrase “à titre exclusif ou autre” qualifies “son usage personnel” and not “usage personnel”, thereby confirming the Appellant’s interpretation of 6(1)(e). Subsection 15(5) confirms this interpretation, but is not necessary to Appellant’s case.

At the bottom of page 9 of his Notes, Respondent distinguishes the Guy Bureau v MNR 76 DTC 1332 case, on the basis that Mr Bureau refused the company’s offer of personal use of the automobile. In spite of this refusal, Mr Bureau used the automobile for personal use. With the doctrines of shams, similacra and substance over form. Appellant submits that the mere refusal of the personal use of the automobile when viewed in light of the subsequent personal use is not sufficient to distinguish it from the present case.

To the above response of the appellant’s lawyer, the respondent’s lawyer wrote to the Board: ‘‘Me Lesarge, dans ses notes, n’apporte aucun élément nouveau. Je n’entends produire aucune réplique.”

6. Comments

6.1. Consequently, to the arguments of the two lawyers, the Board wishes to affirm what it considers as fundamental even if the Board will not consider all of them in arriving at the decision:

(a) paragraph 6(1)(e) is a taxing section;

(b) if a taxing section is ambiguous, not clear, it must be interpreted in favour of the taxpayer;

(c) paragraph 6(1 )(e) must be strictly interpreted and only according to the ordinary meaning of the words;

(d) subsections 15(5) and also 6(2.1) can be used to understand the meaning of paragraph 6(1)(e);

(e) “In construing an enactment, both its versions in the official languages are equally authentic’’ (Official Languages Act, subsection 8(1)).

Paragraph 6(1)(a) is the general statement which applies in the absence of any other specific taxing provision of the Act.

The problem is to know if paragraph 6(1 )(e) applies.

First the Board is not in accord with the appellant’s opinion to the effect that as “the automobiles were in effect forced upon the salesmen’’, they were not available to them for their personal use. Consequently, according to the appellant, paragraph 6(1 )(e) would not apply to the salesmen and they would be ruled by paragraph 6(1 )(a) only.

To be obliged to use the employer’s automobile is a working condition just like any other. If a salesman does not want to accept that working condition, he does not have to accept the job. However once he accepts the working conditions thereof, which is the use of the employer’s automobile, the facts must be accepted as they are. In the present case, to accept to pay 0.05¢ per mile for personal use is plainly significant just as enjoying the benefit of 1,000 miles for personal use free of charge for being accident-free the year before.

According to the appellant, paragraph 6(1)(e), as drafted, applies only to persons who use automobiles mainly for personal use in the year. As the appellant uses the automobile mainly for business purposes therefore according to him paragraph 6(1)(e) does not apply.

The Board does not accept that contention. Subsection 6(2.1) can help to interpret paragraph 6(1)(e) because it deals with the same problem. In that subsection 6(2.1) it is clearly stated that the main purpose for using the automobile is to sell automobiles. In that section the legislator specified the nature of the employment because the automobile salesman profits from a special rate as compared to the rate in 6(2). Subsection 6(2) explains the calculation mentioned in 6(1 )(e). These aforementioned sections apply generally to an employee who uses the employer’s automobile.

So it is clear to the Board that paragraph 6(1 )(e) must be interpreted as applying also to an employee who uses the automobile not principally for personal use but also to an employee who uses the automobile mainly for business purposes.

The Board is of the opinion that paragraph 6(1)(e) must apply in the present case even if paragraph 6(1 )(a) may also apply.

6.2. In reading paragraph 6(1 )(e), the Board’s attention is caught by the fact that the calculation to be made in arriving at the charge for the automobile to be included in the taxpayer’s revenue must be from the aggregate number of days in the year during which the automobile was available for personal use. This fact seems essential to the Board to construe that section in a practical way.

Independent of the meaning which can be given to the words “whether for his personal use or otherwise”, the Board’s opinion is to the effect that when an automobile is used during a day by a person (by the involved taxpayer or another person) for the purpose of the employer’s business, that same automobile during the same day cannot be available to the taxpayer for his personal use. The Board evidently gives to the word “day” the meaning of 24 hours. The Board agrees with the jurisprudence cited and does not regard the fraction of a day. The principle de minimis non curat praetor applies in that situation. A salesman who, for instance, after a working day with the employer’s automobile, uses that automobile to go and see a play with his wife, must not calculate that day in “the aggregate number of days” during which the automobile was available to him for personal use.

In fact, in a week the number of days during which the employer’s automobile is available to a salesman for his personal use (even if he does not use it) is ordinarily two: Saturday and Sunday (unless that during those two days the automobile was left at the employer’s office). We must add also the statutory holidays and annual leave.

In the present case, there must be calculated firstly 104 days (52 weeks X 2). No evidence, if I am not mistaken, was given concerning statutory holidays and annual leave. To settle that matter, the Board fixes the number of days at 120. Consequently the charge must be calculated in the following manner, according to paragraph 6(1)(e) and subsection 6(2):

From that $162.20 should be deducted first the amount paid by the appellant in the year to his employer for the personal use of the automobile (nothing was paid), and secondly the amount included in computing his income for the year by virtue of paragraph (a) in respect of the use by him of the automobile for 1,270 miles (no amount was included).

Consequently, the amount of $162.20 must be included in computing the appellant’s income.

7. Conclusion

The appeal is allowed in part and the matter is referred back to the respondent for reassessment in accordance with ithe reasons for judgment.

Appeal allowed in part.