ANGLIN,
A.M.:—This
is
an
action
brought
by
the
plaintiff
to
enforce
the
security
created
by
a
certain
mortgage
of
lands,
which
mortgage
is
held
by
the
plaintiff
and
was
made
by
the
defendant
Leroy
S.
Harron
(hereinafter
called
Harron).
Harron
is
the
owner
of
the
ultimate
equity
of
redemption
in
the
mortgaged
lands
(hereinafter
called
the
mortgaged
premises).
In
the
course
of
the
hearing
by
me
of
the
reference
directed
by
the
judgment
in
this
action
certain
submissions
have
been
made
as
to
the
rates
of
interest
to
which
the
defendant
Her
Majesty
the
Queen
is
entitled
and
as
to
priorities
as
between
Her
Majesty
and
the
other
encumbrancers.
I
am
now
dealing
with
the
subject
matter
of
those
submissions.
I
deal
first
with
the
matter
of
rates
of
interest.
Amounts
assessed
against
Harron
for
deductions
by
him
from
remuneration,
where
no
writ
of
execution
has
been
issued
on
behalf
of
Her
Majesty.
With
regard
to
these
amounts,
while
Her
Majesty
is
entitled
to
recover
from
Harron
interest
at
10%
per
annum
on
the
amounts
deducted
by
Harron
and
not
remitted
by
him,
but
not
interest
on
the
penalties
imposed
(Income
Tax
Act,
R.S.C.
1952,
e.
148,
Section
123(9)),
Her
Majesty
claims
herein
no
charge
upon
the
mortgaged
premises
in
respect
of
such
interest
or
in
respect
of
such
penalties.
Amounts
assessed
against
Harron
for
deductions
by
him
from
remuneration,
where
a
certificate
has
been
registered
in
the
Exchequer
Court
of
Canada
pursuant
to
Section
119(2)
of
the
Income
Tax
Act
for
such
amounts
with
penalties
and
with
interest
at
10%
per
annum
on
such
amounts
to
the
date
of
the
certificate
and
for
additional
interest
at
10%
per
annum
on
such
amounts
from
the
date
of
the
certificate
to
the
date
of
payment,
and
a
writ
of
execution
has
been
issued
and
filed
with
the
sheriff
for
such
amounts,
penalties,
interest
and
additional
interest.
With
regard
to
these
amounts,
there
can
be
no
question
that
Her
Majesty
is
entitled
to
simple
interest
at
10%
per
annum,
to
the
date
of
the
aforesaid
certificate,
on
the
amounts
deducted
by
Harron
and
not
remitted
by
him,
but
not
to
interest
on
the
penalties
(Income
Tax
Act,
Section
123(9)),
and
has,
by
virtue
of
the
inclusion
of
that
interest
on
those
amounts
in
the
writ
of
execution,
a
charge
on
the
mortgaged
premises
for
that
interest.
As
to
the
rate
of
interest
on
those
amounts
from
the
date
of
the
aforesaid
certificate,
but
for
Section
119(2)
of
the
Income
Tax
Act
it
would
appear
that
the
rate
would
be
5%
per
annum
(Exchequer
Court
Rules
189,
200
and
209
and
Form
36
appended
to
those
Rules).
However,
Section
119(2)
provides
that
the
certificate
is
to
be
treated
as
if
it
‘‘were
a
judgment
obtained
in
the
[Exchequer]
Court
for
a
debt
of
the
amount
specified
in
the
certificate
plus
interest
to
the
day
of
payment
as
provided
for
in
this
Act’’.
(The
italics
are
mine.)
The
interest
“as
provided
for
in
this
Act’?
is
10%
per
annum
(Section
123(9)).
I
do
not
see
how
proper
effect
can
be
given
to
the
words
“to
the
day
of
payment”
unless
the
writ
of
execution
directs
(as
it
does
in
this
case)
that
interest
be
levied
at
10%
per
annum,
from
the
date
of
the
certificate,
upon
the
amounts
deducted
and
not
remitted.
I
think
that
the
more
specific
provision
of
Section
119(2)
applies
rather
than
the
more
general
provisions
of
the
Exchequer
Court
Rules
and
Form.
In
this
connection
I
have
been
referred
to
Sections
13
to
15
of
the
Interest
Act,
R.S.C.
1952,
c.
156,
but
I
think
that
those
sections
are,
by
reason
of
Section
12
of
that
Act,
quite
inapplicable
to
any
of
the
matters
before
me
on
this
reference.
I
think
that
the
writ
of
execution
properly
directs
the
levying
of
such
interest
at
10%
per
annum
from
the
date
of
the
certificate,
and
that
that
interest
at
that
rate
(simple
interest,
of
course)
is,
by
virtue
of
the
writ
of
execution,
a
charge
on
the
mortgaged
premises.
In
view
of
this
conclusion
by
me,
it
is
not
necessary
for
me
to
consider
whether
a
writ
of
execution
issued
out
of
the
Exchequer
Court
must
be
given
effect
according
to
its
terms
unless
it
is
successfully
attacked
in
the
Exchequer
Court.
Her
Majesty
does
not
claim
interest,
before
or
after
the
certificate,
upon
the
penalties
imposed
in
respect
of
the
unremitted
deductions
from
remuneration.
Amounts
assessed
against
Harron
for
income
tax,
certificates
having
been
registered
in
the
Exchequer
Court
of
Canada
pursuant
to
Section
119(2)
of
the
Income
Tax
Act
for
such
amounts
with
interest
at
6%
per
annum
on
such
amounts
to
the
date
of
the
certificates
and
for
additional
interest
at
6%
per
annum
on
such
amounts
from
the
dates
of
the
certificates
to
the
date
of
payment,
and
writs
of
execution
having
been
issued
and
filed
with
the
sheriff
for
such
amounts,
interest
and
additional
interest.
Here
again
there
can
be
no
question
that
Her
Majesty
is
entitled
to
simple
interest,
in
this
case
at
6%
per
annum,
to
the
dates
of
the
certificates,
on
the
amounts
of
the
tax
{Income
Tax
Act,
Section
54(1)),
and
has,
by
virtue
of
the
inclusion
of
that
interest
in
the
writs
of
execution,
a
charge
on
the
mortgaged
premises
for
that
interest.
Here
again,
also,
in
view
of
Section
119(2)
of
the
Income
Tax
Act,
the
interest
1
‘as
provided
for
in
this
Act’’
referred
to
in
Section
54(1)
being
6%
per
annum,
and
the
writs
of
execution
directing
that
interest
at
6%
per
annum
be
levied,
from
the
dates
of
the
certificates,
on
the
amounts
of
the
tax,
I
think
that
such
interest
from
the
dates
of
the
certificates
(simple
interest
again,
of
course)
is,
by
virtue
of
the
writs
of
execution,
a
charge
on
the
mortgaged
premises.
Interest
on
costs
incidental
to
the
certificates
registered
in
the
Exchequer
Court
and
to
the
writs
of
execution
issued
on
behalf
of
Her
Majesty.
Each
of
these
writs
of
execution
provides
for
interest
at
5%
per
annum
on
costs
of
$11
only,
and
I
do
not
think
that
Her
Majesty
is
entitled
to
a
charge
on
the
mortgaged
premises
for
interest
upon
those
costs
at
any
higher
rate
or
upon
any
other
costs.
I
am
not,
of
course,
dealing
here
with
any
costs
of
Her
Majesty
of
or
incidental
to
this
present
mortgage
action.
I
now
come
to
the
matter
of
priorities.
The
solicitors
for
all
parties
to
this
action
(though
the
point
may
not
concern
all
of
them)
have
on
the
hearing
of
this
reference
consented
to
its
being
taken
for
the
purpose
of
this
reference
that
the
plaintiff,
in
respect
of
his
mortgage
in
question
in
this
action,
is,
to
the
extent
of
$11,000,
subrogated
to
the
position
of
two
earlier
mortgagees
(William
T.
Sloan
and
Coupland
Acceptance
Limited)
under
their
registered
mortgages
(both
dated
January
29,
1951,
and
registered
on
January
31,
1951)
of
the
mortgaged
premises
in
question
herein.
The
solicitor
for
the
plaintiff
consented
to
having
it
so
taken
that
this
subrogation
is
to
the
extent
of
$11,000
only.
The
solicitor
for
Her
Majesty
concedes
that
Her
Majesty
now
has
no
claim
for
unremitted
deductions
by
Harron
from
remuneration
which
became
due
to
Her
Majesty
prior
to
the
taking
of
those
two
earlier
mortgages
and
therefore
that,
to
the
extent
of
the
plaintiff’s
above-mentioned
subrogation,
the
plaintiff’s
claim
under
his
mortgage
is
prior
to
any
claim
of
Her
Majesty
for
unremitted
deductions
by
Harron.
The
solicitor
for
Her
Majesty
also
concedes
that
any
charge
in
favour
of
Her
Majesty
upon
the
mortgaged
premises
by
virtue
of
the
writs
of
execution
issued
in
respect
of
income
tax
due
from
Harron
is
subsequent
to
all
and
every
part
of
the
amount
of
the
encumbrance
of
the
plaintiff
by
virtue
of
his
mortgage.
I
think
that
it
follows
that
the
plaintiff
is
first
in
priority
in
respect
of
$11,000
of
the
principal
now
owing
on
his
mortgage
and
in
respect
of
that
portion
of
unpaid
interest
which
has
accrued
or
will
accrue
upon
the
$11,000
portion
of
the
principal.
The
solicitor
for
Her
Majesty
submits
that,
subject
to
the
plaintiff’s
rights
by
virtue
of
his
above-mentioned
subrogation,
Her
Majesty
takes
priority
over
the
plaintiff
for
the
amounts
of
unremitted
and
unpaid
deductions
by
Harron
from
remuneration
which
should
have
been
remitted
by
him
to
Her
Majesty
after
January
29,
1951,
and
before
June
29,
1954
(the
date
of
the
plaintiff’s
mortgage).
The
solicitor
for
the
plaintiff
denies
that
Her
Majesty
is
entitled
to
such
priority.
I
think
that
Section
123(6)
of
the
Income
Tax
Act
gives
Her
Majesty
such
priority,
and
that
Her
Majesty
retains
that
priority
notwithstanding
the
registration
in
the
Exchequer
Court,
pursuant
to
Section
119(2),
of
a
certificate
in
respect
of
the
unremitted
deductions
and
the
issuing
and
filing
with
the
sheriff
of
a
writ
of
execution
under
that
certificate.
In
this
connection
I
have
considered
the
following
cases
cited:
(a)
by
the
solicitor
for
Her
Majesty—Commissioners
of
Taxation
for
the
State
of
New
South
Wales
v.
Palmer
et
al.,
[1907]
A.C.
179;
The
King
v.
Wells
and
Allnutt
(1807),
16
East
278%;
Re
Rosenberg
et
al.,
[1948]
O.W.N.
637;
[1948]
4
D.L.R.
205;
29
C.B.R.
103;
Industrial
Development
Bank
v.
Valley
Dairy
Limited
et
al.,
[1953]
O.R.
70;
[1953]
C.T.C.
132;
[1953]
1
D.L.R.
788;
The
Trusts
and
Guarantee
Company
Limited
+.
The
Lake
Shore
Country
Club
Limited,
[1945]
O.W.N.
3;
(b)
by
the
solicitor
for
the
plaintiff—Sandberg
et
al.
v.
Meurer
et
al.
and
The
Minister
of
National
Revenue,
56
Man.
R.
391,
[1949]
C.T.C.
35;
[1949]
1
W.W.R.
117;
[1949]
1
D.L.R.
422
;
and
In
re
Reid
and
Canadian
Farm
Loan
Board,
45
Man.
R.
357;
[1937]
3
W.W.R.
1;
[1937]
4
D.L.R.
248.
The
charge
created
by
Section
123(6)
does
not,
however,
extend
to
penalties
in
respect
of
or
to
interest
upon
unremitted
deductions
from
remuneration,
and
I
think
that
the
plaintiff
has
complete
priority
over
Her
Majesty
in
respect
of
such
penalties
and
interest.
As
between
Her
Majesty
and
the
other
execution
creditors
claiming
herein
I
think
that
the
position
is
as
follows:
(a)
With
regard
to
the
amounts
assessed
against
Harron
for
unremitted
deductions
by
him
from
remuneration,
but
with
respect
to
which
no
writ
of
execution
has
been
issued
on
behalf
of
Her
Majesty—by
virtue
of
Section
123(6)
of
the
Income
Tax
Act
these
amounts
are
a
charge
on
the
mortgaged
premises
in
priority
to
the
executions
of
the
other
execution
creditors,
but
Her
Majesty
claims
herein
no
charge
upon
the
mortgaged
premises
for
penalties
respecting
or
interest
upon
such
unremitted
deductions.
(b)
With
regard
to
amounts
assessed
against
Harron
for
unremitted
deductions
by
him
from
remuneration,
with
respect
to
which
a
certificate
has
been
registered
in
the
Exchequer
Court
and
a
writ
of
execution
has
been
issued
and
filed
with
the
sheriff,
these
amounts
(so
far
as
they
are
still
unpaid)
are
a
charge
on
the
mortgaged
premises
in
priority
to
the
executions
of
the
other
execution
creditors.
This
follows
from
Section
123(6)
and
from
the
priority
which
an
execution
issued
on
behalf
of
Her
Majesty
generally
enjoys
over
competing
executions.
As
to
this
priority
as
between
executions
issued
on
behalf
of
Her
Majesty
and
other
competing
executions,
see
The
King
v.
Wells
and
Allnutt,
supra;
Commissioners
of
Taxation
for
the
State
of
New
South
Wales
v.
Palmer
et
al.,
supra,
and
In
re
General
Fireproofing
Company
of
Canada,
Ltd.,
[1937]
S.C.R.
150;
[1937]
2
D.L.R.
30;
18
C.B.R.
159,
and
The
King
v.
Star
Kosher
Sausage
Manufacturing
Company
Limited,
48
Man.
R.
147;
[1940]
3
W.W.R.
127
;
[1940]
4
D.L.R.
365.
Because
of
this
priority
as
between
such
executions,
Her
Majesty
also
has
priority
over
all
the
other
execution
creditors
in
respect
of
the
unpaid
penalties
and
interest
included
in
the
writ
of
execution
issued
in
respect
of
the
unremitted
deductions
by
Harron
from
remuneration.
(c)
Because
of
the
above-mentioned
priority
as
between
executions
issued
on
behalf
of
Her
Majesty
and
other
competing
executions,
Her
Majesty
has
priority
over
all
the
other
execution
creditors
in
respect
of,
and
for
the
full
unpaid
amounts
of,
the
executions
issued
on
behalf
of
Her
Majesty
in
respect
of
income
tax
assessed
against
Harron.
Judgment
accordingly.
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