WELLS,
J.:—This
is
an
application
by
way
of
stated
case
from
a
finding
of
M.
G.
Gould,
a
Magistrate
in
and
for
the
District
of
Nipissing.
It
is
stated
as
follows
:
“
(1)
On
the
1st
day
of
February,
A.D.
1957,
an
informa-
tion
was
laid
before
C.
A.
Tayler,
Justice
of
the
Peace
by
the
above
named
Albert
J.
St.
Louis
for
the
said
Harvey
P.
Lamothe,
of
the
Town
of
Mattawa,
in
the
Province
of
Ontario,
being
a
person
who
paid
salary,
wages
or
other
remuneration
to
officers
or
employees
and
who,
during
the
month
of
August,
1956,
deducted
from
the
said
salaries,
wages
or
other
remuneration,
amounts
stipulated
by
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
as
amended
and
regulations
made
thereunder,
unlawfully
did
fail
to
remit
on
or
before
15th
September,
1956,
to
the
Receiver
General
of
Canada
the
amount
so
deducted,
namely
$468.75,
thereby
contravening
see.
47(1)
and
committing
an
offence
under
sec.
131(2)
of
the
said
Act.
(2)
On
the
3rd
day
of
May,
A.D.
1957,
the
said
charge
was
duly
heard
before
me
in
the
presence
of
both
parties,
and
after
hearing
the
evidence
adduced
and
hearing
what
was
alleged
by
counsel
for
both
parties,
I
found
the
said
Harvey
P.
Lamothe
not
guilty
of
the
said
offence
and
dismissed
the
said
charge,
but
at
the
request
of
Counsel
for
the
said
informant
I
state
the
following
case
for
the
opinion
of
this
Honourable
Court:
It
was
shown
before
me
that:
(A)
Harvey
P.
Lamothe
was
at
all
material
times
a
person
who
paid
salary,
wages
or
other
remuneration
to
officers
or
employees.
(B)
In
or
about
the
month
of
April,
A.D.
1956,
the
said
Harvey
P.
Lamothe
filed
with
the
proper
officers
of
the
Department
of
National
Revenue
a
personal
income
tax
return
whereby
he
claimed
a
retund
of
more
than
Two
Thousand
Dollars
as
being
due
to
him
from
the
Receiver
General
of
Canada
on
account
of
his
personal
income
tax
returns
for
the
years
1954
and
1955.
(C)
The
said
claims
for
refund
was
justified
and
the
said
Harvey
P.
Lamothe
was
in
fact
entitled
to
recover
from
the
Receiver
General
of
Canada
the
sum
of
$2015.12.
(D)
No
finding
in
respect
of
the
said
claim
for
refund
was
made
by
the
officers
of
the
Department
of
National
Revenue
until
the
14th
day
of
December,
A.D.
1956,
on
which
date
the
said
officers
made
an
assessment
declaring
that
the
said
Harvey
P.
Lamothe
was
entitled
to
a
refund
on
account
of
his
personal
income
tax
returns
in
the
amount
of
$2015.12.
(E)
During
the
month
of
August,
A.D.
1956,
the
said
Harvey
P.
Lamothe
deducted
from
the
salary,
wages
or
other
remuneration
of
his
officers
and
employees
the
amounts
stipulated
by
the
Income
Tax
Act,
R.S.C.
1952,
chapter
148
as
amended,
and
regulations
made
thereunder,
in
the
total
sum
of
$468.75.
(F)
The
said
Harvey
P.
Lamothe
did
not
remit
the
said
sum
of
$468.75
to
the
Receiver
General
of
Canada
on
or
before
the
15th
day
of
September,
A.D.
1956.
Counsel
for
the
said
informant
desires
to
question
the
validity
of
the
said
dismissal
on
the
ground
that
it
is
erroneous
in
point
of
law,
the
questions
submitted
for
the
Judgment
of
the
Honourable
Court
being
:
(1)
Whether
I
was
right
in
holding
that
on
the
15th
day
of
September,
A.D.
1956,
the
Receiver
General
of
Canada
was
indebted
to
the
said
Harvey
P.
Lamothe
in
the
sum
of
$2015.12,
notwithstanding
that
no
final
assessment
in
respect
of
the
claim
for
refund
was
made
until
a
later
date.
(2)
Whether
I
was
right
in
holding
that
in
respect
of
the
said
sum
of
$468.75,
the
said
Harvey
P.
Lamothe
was
a
debtor
of
the
Receiver
General
of
Canada
and
was
entitled
to
set
off
against
such
debt
the
debt
due
to
him
from
the
Receiver
General
of
Canada
and
to
refrain
from
remitting
the
said
sum
of
$468.75.”
The
case
is
stated
under
the
provisions
of
Section
734
of
the
Criminal
Code.
As
I
see
the
matter,
the
first
question
asked
by
the
learned
Magistrate,
that
is,
whether
he
was
right
in
holding
that
on
September
15,
1956,
the
Receiver
General
of
Canada
was
indebted
to
Lamothe
in
the
sum
of
$2,015.12
notwithstanding
no
final
assessment
in
the
matter
had
been
made,
is
irrelevant
to
the
point
in
issue,
as
it
makes
no
difference,
in
the
view
I
take,
whether
the
Receiver
General
of
Canada
was
indebted
to
Lamothe
or
not.
I
think
it
is
quite
clear
that,
whether
the
amount
had
been
ascertained
or
not,
subsequent
events
would
appear
to
establish
that
he
was
entitled
to
this
sum.
This
is
set
out
in
an
earlier
part
of
the
stated
case.
The
real
question
at
issue
is
whether
Lamothe
is
entitled
to
set
off
against
this
sum
of
$2,015.12
moneys
which
he
was
obliged
to
pay
in
respect
of
another
taxation
year,
pursuant
to
the
provisions
of
Section
47(1)
of
the
Income
Tax
Act,
R.S.C.
1952,
ce.
148,
without
acting
in
breach
of
the
statute.
As
amended
at
the
time
the
matter
was
dealt
with,
Section
47(1)
is
as
follows:
“47.
(1)
Every
person
paying
(a)
salary
or
wages
or
other
remuneration
to
an
officer
or
employee,
(b)
a
superannuation
or
pension
benefit,
(ce)
a
retiring
allowance,
(d)
an
amount
upon
or
after
the
death
of
an
officer
or
employee,
in
recognition
of
his
service,
to
his
legal
representative
or
widow
or
to
any
other
person
whatsoever,
(da)
an
amount
as
a
benefit
under
a
supplementary
unemployment
benefit
plan,
(e)
an
annuity
payment,
or
(f)
fees,
commissions
or
other
amounts
for
services,
at
any
time
in
a
taxation
year
shall
deduct
or
withhold
therefrom
such
amount
as
may
be
prescribed
and
shall,
at
such
time
as
may
be
prescribed,
remit
that
amount
to
the
Receiver
General
of
Canada
on
account
of
the
payee’s
tax
for
the
year
under
this
Part.
’
’
Under
Section
131
of
the
same
statute,
subsection
(2),
every
person
who
has
failed
to
comply
with
or
contravened
subsection
(1)
of
Section
47
is
guilty
of
an
offence
and
is
liable
on
conviction
to
a
fine
or,
in
the
discretion
of
the
magistrate,
to
a
fine
and
imprisonment.
Lamothe
apparently
claimed
by
way
of
defence
to
the
charge
laid
against
him
under
these
sections
that
he
was
entitled
to
set
off
the
moneys
he
had
not
sent
in
to
the
Receiver
General
of
Canada
against
the
moneys
the
Receiver
General
later
acknowledged
he
owed
him.
Set-off
is
not
a
common
law
right
but
a
statutory
one
and
was
originally
based
on
the
English
Statutes
of
1729,
2
Geo.
IT,
ec.
22,
Section
13,
and
1735,
8
Geo.
II,
c.
24,
Section
5,
which,
it
is
said,
formed
part
of
the
law
of
England
introduced
into
Upper
Canada
by
the
Legislature
of
that
Province
in
1792.
As
far
as
I
know,
these
statutes
never
became
part
of
the
general
law
of
the
Provinces
of
Canada,
that
is,
Upper
and
Lower
together
and
there
would
therefore,
in
my
opinion,
be
no
statutory
right
to
set-off
in
a
matter
of
involving
the
Government
of
the
Dominion
as
a
whole.
The
present
sections
governing
the
matter
in
Ontario
are
found
in
The
Judicature
Act,
R.S.O.
1950,
c.
190,
Sections
126
and
127,
but
these,
I
think,
would
have
no
application
in
respect
of
claims
against
the
Crown
in
the
right
of
the
Dominion.
The
matter
was
discussed
by
the
Court
of
Appeal
in
the
recent
judgment
of
Martin
et
al.
v.
McCall,
10
D.L.R.
(2nd)
284,
where
my
brother
Schroeder
dealt
with
the
matter
at
pp.
286
and
287.
The
matter
has
also
been
discussed
in
England
in
the
ease
of
Attorney-General
v.
Guy
Motors
Ltd.,
[1928]
2
K.B.
78,
where
Rowlatt,
J.,
at
p.
80,
said:
“In
this
case
the
only
question
I
have
to
decide
is
whether
a
set-off
can
be
pleaded
to
an
information.
It
seems
to
me
that
the
Crown
must
be
right
in
saying
that
it
cannot,
and
for
a
very
short
reason.
Hither
a
set-off
depends
upon
the
Act
of
George
II
or
it
does
not.
If
it
does
it
has
always
been
stated
in
books
of
authority,
whether
there
be
decisions
to
that
effect
or
not,
that
that
statute
does
not
bind
the
Crown,
and
I
am
certainly
not
going
to
say
otherwise.
But
in
fact
that
statute
is
repealed,
and
the
matter
now
stands
on
the
Supreme
Court
of
Judicature
(Consolidation)
Act,
1925,
and
Order
XIX.,
r.
3,
of
the
Rules
of
the
Supreme
Court.
But
by
the
Order
LX
VIII.,
r.
1(C),
of
the
Rules,
they
do
not
apply
to
Crown
Proceedings.
It
seems
to
me
that
there
is
no
way
out
of
that.
No
doubt
the
Act
applies
to
the
Crown
in
some
cases.
It
alters
the
name
and
constitution
of
the
Courts
in
which
the
Crown
finds
itself.
In
that
sense
it
does
not
apply
to
the
Crown,
but
not
in
any
way,
speaking
generally,
so
as
to
affect
the
rights
of
the
Crown.
I
think
it
right
to
point
out
that
at
the
back
of
the
apparently
hard
rule
that
there
can
be
no
set-off
in
this
case
against
the
Crown
there
lies
this
fact,
that
the
subject
cannot
make
good
a
claim
against
the
Crown
except
in
a
particular
way,
and
my
decision
merely
shows
that
he
cannot
get
round
that
by
refusing
to
pay
a
debt
to
the
Crown
and
then
asserting
his
claims
by
setting
it
off.
Income
tax
must
be
paid
as
assessed,
and
other
considerations
are
not
to
be
involved.
I
must
give
judgment
on
this
demurrer
for
the
Crown.”’
In
about
the
same
year
the
matter
was
considered
in
Canada
in
respect
of
the
Customs
Act
by
the
Exchequer
Court
of
Canada.
That
case,
which
is
the
case
of
The
King
v.
Cosgrave
Export
Brewing
Co.
Ltd.
and
The
King
v.
John
Lahatt
Ltd.,
[1928]
Ex.
C.R.
103,
is
a
judgment
of
Audette,
J.,
and,
at
p.
104,
he
deals
with
the
matter
from
the
viewpoint
of
a
Dominion
statute,
as
follows:
“Under
the
present
system
of
practice
in
England
I
find
that
set-off
and
counterclaim
must
be
regarded
as
conferring
definite
and
independent
remedies
upon
a
defendant
against
the
plaintiff.
There
are
two
separate
claims
or
causes
of
action.
And
until
the
fences
of
the
prerogatives
of
the
Crown
are
removed
one
cannot
sue
the
Crown
without
fiat.
That
comes
back
to
fundamental
principle.
No
counterclaim
can
be
set
off
at
common
law
against
the
Crown.
The
subject
must
proceed
by
petition
of
right.
There
can
be
no
set-off
against
the
Crown
in
so
far
as
it
is
a
substantive
course
of
action.
The
case
of
Fortier
v.
Langelier
(1895),
Q.R.
5
Q.B.
107,
which
also
deals
with
the
matter
of
this
kind,
holds:
1st
that
compensation
does
not
take
place
between
a
debt
due
to
the
government
for
a
direct
personal
tax
and
a
debt
due
by
government
to
the
person
owing
such
tax;
and
2nd,
no
action
can
be
sustained
against
the
government
except
by
petition
of
right
allowed
by
the
express
consent
or
fiat
of
the
Lieutenant-
Governor,
and
to
permit
a
plea
of
compensation
to
be
set
up,
would
be
equivalent
to
permitting
a
suit
to
be
prosecuted
against
the
government
without
such
consent
or
fiat.
There
is
a
similar
decision
in
the
ease
of
Coté
v.
Cie
du
chemin
de
fer
du
comté
de
Drummond
(1898),
Q.R.
15
S.C.
561.
‘Juge
:
1.
On
ne
peut
plaider
compensation
à
une
demande
de
la
couronne
sans
avoir
recours
à
la
petition
de
droit.
’
A
substantive
cause
of
action
cannot
be
pleaded
as
an
incidental
demand
or
counterclaim
to
an
information
by
the
Crown.
Queen
v.
The
Montreal
Woollen
Mills
Co.
(1895),
4
Ex.
C.R.
348.
The
same
principle
was
also
recognized
in
the
two
cases:
Hogaboom
v.
The
King
(1901),
7
Ex.
C.R.
292;
and
The
King
v.
British
American
Bank
Note
Co.
(1901),
7
Ex.
C.R.
119.
To
allow
a
counterclaim
or
set-off
the
court
must
as
a
condition
precedent
be
vested
with
the
jurisdiction
of
hearing
both
the
action
and
the
counterclaim
or
set-off,
and
that
this
court
has
no
jurisdiction
to
hear
the
counterclaim
until
a
fiat
has
been
given
to
hear
the
same;
it
is
the
fiat
that
gives
the
court
jurisdiction
to
hear
it.
Following
the
judgment
of
Lord
Gorell,
in
the
case
of
Bow
McLachlan
et
al.
v.
Ship
Camosun,
[1909]
A.C.
597
at
p.
613,
I
have
come
to
the
conclusion
that
the
real
contest
between
the
parties
in
the
present
instance,
is
with
regard
to
a
matter
which
is
not
a
defence
proper,
and
over
which,
if
put
forward
as
a
claim,
the
Exchequer
Court
has
no
jurisdiction
until
a
fiat
is
obtained
to
so
hear
the
claim.
The
contest
should
be
left
to
be
settled
by
a
cross
action
in
a
court
having
jurisdiction.”
Reference
may
be
also
made
to
the
earlier
decision
of
the
Exchequer
Court
in
the
case
of
the
King
v.
British
American
Bank
Note
Co.,
7
Ex.
C.R.
119,
at
136.
These
decisions
of
our
Exchequer
Court
relate
to
the
right
to
claim
a
set-off
in
an
action
brought
on
behalf
of
the
Crown
in
the
right
of
the
Dominion
against
the
subject,
and
do
not
deal
with
the
quasicriminal
type
of
defence
which
was
concerned
here
and
which
arose,
as
I
have
already
indicated,
from
the
provisions
of
Section
131,
subsection
(2),
of
the
Income
Tax
Act.
With
respect,
while
the
reasoning
of
Audette,
J.,
which
I
have
quoted,
in
The
King
v.
Cosgrave
Export
Brewing
Co.
Ltd.
and
The
King
v.
John
Lab
at
t
case,
seems
to
me
to
be
conclusive
on
the
contention
raised
by
the
accused,
all
this
appears
to
me
to
be
somewhat
beside
the
point.
Under
Section
47
of
the
Income
Tax
Act,
there
is
a
statutory
duty
cast
upon
every
person
paying
salary
or
wages,
or
the
other
allowances
mentioned
in
this
section,
to
deduct
from
such
payments
and
remit
to
the
Receiver
General
on
account
of
such
person’s
tax.
That
duty
is
not
qualified
in
any
way,
and
the
mere
tact
that
the
Receiver
General
may
owe
the
person
paying
money
does
not,
it
seems
to
me,
quite
apart
from
any
question
of
set-off,
afford
a
defence
to
an
information
alleging
a
failure
to
observe
an
obligation
imposed
by
the
statute.
Section
131,
subsection
(2),
creates
an
offence
for
every
person
who
has
failed
to
comply
with
subsection
(1)
of
Section
47,
and
if
there
is
such
a
failure,
it
seems
to
me
that
what
may
be
regarded
as
the
moral
fairness
of
the
situation
is
not
a
matter
which
has
any
application
in
view
of
the
positive
duty
which
Parliament
has
seen
fit
to
impose
on
the
subject.
Consequently,
in
view
of
the
nature
of
the
application,
the
question
of
whether
there
was
any
right
to
set-off
would
appear
to
me,
with
respect,
to
be
irrelevant
and,
both
on
the
basis
of
the
decisions
as
to
set-off
and
on
this
ground,
in
my
view
Lamothe
was
not
entitled
to
the
benefit
of
the
defence
which
he
raised.
Consequently
question
1
of
the
stated
case
will
not
be
answered
and
question
2
will
be
answered
by
stating
that,
in
my
opinion,
the
learned
Magistrate
was
not
right
in
holding
as
he
did
but
was
wrong
in
law
in
coming
to
the
conclusion
which
he
reached.
The
case
should,
accordingly,
be
remitted
back
to
the
Magistrate
and
be
dealt
with
by
him
pursuant
to
the
answers
given
and
the
reasons
herein
set
forth.
In
my
view,
this
is
not
a
proper
case
for
costs,
and
there
will
accordingly
be
no
order
as
to
costs.
Judgment
accordingly.
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