Her Majesty the Queen v. Joseph Machacek, [1961] CTC 1, [1961] DTC 1022

MARTLAND, J.:—The respondent was charged on April 20, 1959, under the Income Tax Act, with having made false statements in his income tax returns for each of the years 1953 to 1956 inclusive. With the exception of the charge relating to the year 1953, the charges were laid more than six months, but less than five years, from the time when the subject matter arose. The charge with respect to the year 1953 was laid more than six months after the subject matter arose, but within one year from the day certified by the Minister of Internal Revenue as the day on which evidence, sufficient, in his opinion, to justify a prosecution for the offence, came to his knowledge.

The respondent was convicted on all four charges, which convictions were affirmed, on appeal, by the Chief Judge of the District of Southern Alberta. The Appellate Division of the Supreme Court of Alberta, by a majority of two to one, allowed the respondent’s appeal from this decision on the grounds that, contrary to the provisions of Section 693(2) of the Criminal Code, the proceedings had been instituted more than six months after the time when the subject matter of the proceedings arose. There were four other grounds of appeal raised before the Appellate Division, but the ground on which the majority decision was rested was the only one which was regarded as meriting consideration. Leave was granted to the appellant to appeal to this Court.

The ground on which the appeal was allowed raises the issue as to whether the time within which the proceedings had to be commenced was governed by subsection (4) of Section 136 of the Income Tax Act, R.S.C. 1952, c. 148, or by subsection (2) of Section 693 of the Criminal Code. The relevant subsection of the Income Tax Act and Section 693 of the Criminal Code provide as follows:

* 136. (4) An information or complaint under the provisions of the Criminal Code relating to summary convictions, in respect of an offence under this Act, may be laid or made on or before a day 5 years from the time when the matter of the information or complaint arose or within one year from the day on which evidence, sufficient in the opinion of the Minister to justify a prosecution for the offence, came to his knowledge, and the Minister’s certificate as to the day on which such evidence came to his knowledge is conclusive evidence thereof.

693. (1) Except where otherwise provided by law, this Part applies to proceedings as defined in this Part.

(2) No proceedings shall be instituted more than six months after the time when the subject matter of the proceedings arose.”

“Proceedings”, for the purpose of Part XXIV of the Criminal Code, are defined in Section 692(1) (d) as follows:

“(d) ‘proceedings’ means

(i) proceedings in respect of offences that are declared by an Act of the Parliament of Canada or an enactment made thereunder to be punishable on summary conviction, and

(ii) proceedings where a justice is authorized by an Act of the Parliament of Canada or an enactment made thereunder to make an order;”

The provision of the earlier Criminal Code, which preceded Section 693, was Section 1142, which read as follows:

‘1142. In the case of any offence punishable on summary conviction, if no time is specially limited for making any complaint, or laying any information, in the Act or law relating to the particular case, the complaint shall be made, or the information laid, within six months from the time when the matter of the complaint or information arose, except in the Northwest Territories and the Yukon Territory, in all which Territories the time within which such complaint may be made or such information laid shall be twelve months from the time when the matter of the complaint or information arose.”

The Income Tax Act, as part of the Revised Statutes of Canada of 1952, was proclaimed in force on September 15, 1953. The present Criminal Code received royal assent on June 26, 1954, and took effect on April 1, 1955. The contention of the respondent, which succeeded before the Appellate Division, was that subsection (4) of Section 136 of the Income Tax Act was repealed by implication by subsection (2) of 693 of the Criminal Code. The issue was defined and resolved in the majority decision of the Appellate Division as follows:

“In relation to the points in issue in the present case, it does seem to me that there are two reasonable constructions to be placed upon Section 693(2) of the Criminal Code, the first being that its meaning is governed by the expression appearing in Section 693(1) ‘Except where otherwise provided by law’, and the second, that the limitation period of six months is of general application and would apply to Section 132(1) (a) of the Income Tax Act, notwithstanding the provisions of Section 136(4) of the latter Act.

Though I lean to the first construction as being the more reasonable, nevertheless I canont say that the second construction is not reasonably possible. In other words, I have a reasonable doubt of the meaning of Section 693, which the application of the canons of interpretation has failed to solve. I am in doubt whether the words of Section 693(2) can have their proper operation without altering the effect of the limitation clause of the Income Tax Act.

Such being the case, it seems to me that considering that the statute is a penal one, I should give the benefit of the doubt to the accused and adopt the construction which is the more lenient one. When the liberty of the subject is involved, it seems to me that the legislation pertaining thereto should be so clear as to leave no room for reasonable doubt.”

The issue had been decided adversely to the respondent in the courts below on the ground that the application of Section 136(4) of the Income Tax Act was preserved by virtue of subsection (1) of Section 693 of the Criminal Code. Johnson, J.A., who delivered the dissenting judgment in the Appellate Division, rested his decision on the proposition that the two subsections should stand independently of each other and that Section 136(4) of the Income Tax Act had not been repealed by implication. Ne referred to the proposition stated by A. L. Smith, J., in Kutner v. Phillips, [1891] 2 Q.B. 267 at page 271:

“Now a repeal by implication is only effected when the provisions of a later enactment are so inconsistent with or repugnant to the provisions of an earlier one, that the two cannot stand together, in which case the maxim, ‘ Leges posterior es contrarias abrogant’ (2 Inst. 685) applies.

Unless two Acts are so plainly repugnant to each other, that effect cannot be given to both at the same time, a repeal will not be implied, and special Acts are not repealed by general Acts unless there is some express reference to the previous legislation, or unless there is a necessary inconsitency in the two Acts standing together: Thorpe v. Adams (1871), L.R. 6 C.P. 125, 40 L.J.M.C. 52.”

The conclusion of Johnson, J.A., respecting this issue, was as follows:

“Prosecutions for income tax offences, particularly of the kind we are considering, present particular problems. Because of the large number of returns which must be made before a certain date and because violations can only be detected after investigations which involve an examination of the suspect’s books and records and other records (in the present case the records of banks and the wheat board provided some of the evidence) it becomes clear that a longer than ordinary limitation period must be required for such eases. To apply the limitation of the Criminal Code subsection to such cases would mean that few, if any, prosecutions could be laid under the summary trial provisions of the Code, and an accused could only be prosecuted, except in very few instances, by indictment with its heavier and mandatory penalties.

These are matters which we are entitled to consider in deciding whether or not Section 136(4) has been impliedly repealed.”

My opinion is that Section 136(4) of the Income Tax Act is properly applicable to the present proceedings. These were “proceedings” within the definition contained in Section 692

(1) (d) of the Criminal Code. By virtue of Section 693(1), Part XXIV of the Criminal Code was applicable to them ‘‘except where otherwise provided by law’’. I have considered carefully the view expressed by Coady, J.A., in Jorgenson v. North Vancouver Magistrate et al. (1959), 28 W.W.R. 265 at page 267, as to the effect of this subsection, but I construe those words as meaning not only that the application of the whole of Part XXIV may be excluded where it is otherwise provided by law, but also that, although Part XXIV may be generally applicable, any portion of it may be excluded from operation if otherwise provided by law. Subsection (2) of Section 693 is a part of Part XXIV and, in my view, its application in these proceedings was excluded because Section 136(4) of the Income Tax Act otherwise provided when it stated :

“An information or complaint under the provisions of the Criminal Code relating to summary convictions, in respect of an offence under this Act, may be laid or made on or before a day 5 years from the time when the matter of the information or complaint arose . . .”

In addition, I also agree with the conclusions reached by Johnson, J.A., for the reasons which he states, that this is not a case in which it can be said that there has been any repeal of Section 136(4) by implication.

The respondent raised other grounds to support the quashing of the convictions, which had previously been submitted to the Appellate Division, and also one additional ground relating to the jurisdiction of this Court.

It was contended that in summary conviction proceedings for income tax offences an assessment made under the Income Tax Act is binding on the court of criminal jurisdiction which deals with the matter. In the present case no re-assessment had been made of the income tax payable by the respondent for the years in question and it was, therefore, urged that the magistrate who tried the charges was bound by the assessment which had been made. There does not appear to be any substance in this contention. The charges were laid, under Section 132(1) (a) of the Income Tax Act, for unlawfully making false statements in the returns filed by the respondent. It seems to me that the assessment of tax made by the Minister on the basis of those returns had no bearing whatever in relation to these charges and certainly did not preclude the magistrate from trying them.

It was also argued that, in so far as the charges relating to the years 1954 to 1956 inclusive were concerned, they were barred even under the provisions of Section 136(4) of the Income lax Act. This argument rested on the proposition that the charges in question had not been brought within one year from the date when the Minister had sufficient evidence to justify a prosecution. No certificate as to the Minister’s knowledge had been filed in respect of these three charges.

As I read Section 136(4), the charges could be laid within five years from the time when the matter of the information or complaint arose, irrespective of the day on which, in the Minister’s opinion, there was sufficient evidence to justify a prosecution. It seems to me that the two periods of time mentioned in Section 136(4) are alternative and these charges were properly laid within the five-year time limit provided in the subsection.

As to the next point raised in argument, the material to which we were referred by counsel for the respondent does not justify the contention that the respondent had been deprived of a fair trial.

Finally it was contended that this Court was without jurisdiction to hear the appeal because the Supreme Court Act, R.S.C. 1952, c. 259, as amended, gives no right of appeal to the Attorney General of Canada from a judgment of a provincial court of appeal quashing a conviction for a non-indictable offence.

It is clear that under Section 41 of the Supreme Court Act leave may be given for an appeal from a final or other judgment of the highest court of final resort of a province upon a question of law in relation to an offence other than an indictable offence. Leave was given in this case on a motion made on behalf of Her Majesty the Queen, who had been described as the respondent in the notice of appeal filed by the present respondent, when he appealed to the Appellate Division of the Supreme Court of Alberta. In my opinion, leave could properly be given to the appellant named in the present appeal to appeal, on the questions of law stated, from the judgment which had been rendered by the Appellate Division. The case of Dennis v. The Queen, [1958] S.C.R. 473, which was referred to in argument by the respondent, does not assist his contention. That case was concerned with the matter of the proper person to be served with a notice of appeal on an appeal under the provisions of Part XXIV of the Criminal Code. It was held that, on an appeal under that Part by the accused, the notice of appeal must be served upon the informant. I do not see how the decision has any application to the present issue.

For the foregoing reasons, in my opinion the appeal should be allowed and the convictions restored.

Appeal allowed.