AUDETTE,
J.:—This
is
an
appeal,—under
the
provisions
of
sec.
19
et
seq.
of
The
Income
War
Tax
Act,
1917,
and
amendments
thereto—from
the
assessment
of
the
appellant
company
in
the
sum
of
$8,371.14
in
respect
of
alleged
income
received
by
it
from
the
date
of
liquidation,
namely,
the
29th
July,
1926,
to
30th
November,
1927.
This
income
consists
of
the
sum
of
$136,563.84
received
by
the
liquidator
as
interest
during
the
period
in
question
on
account
of
deferred
instalment
of
purchase
money
from
sale
of
capital
assets,
after
the
respondent
had
credited
the
sum
of
$31,216.60
in
respect
of
certain
expenses,
disbursements,
and
carrying
charges.
The
appellant
is
a
duly
incorporated
company,
under
a
Dominion
charter,
bearing
date
the
17th
June,
1889,
with
a
fully
paid-up
capital
of
$750,000
at
the
present
time,
for
the
purpose
of
carrying
on
the
business
of
manufacturing
lumber,
etc.,
the
whole
as
more
fully
set
out
in
the
charter,
and
is
and
was
the
owner,
for
the
purpose
of
its
business,
of
large
and
valuable
timber
limits
in
British
Columbia.
In
1914
business
being
bad,
the
company
ceased
operations
and
closed
down
a
mill
which
it
has
erected
at
an
approximate
cost
of
$1,000,000.
In
1916
it
passed
a
resolution
"‘to
turn
into
cash
as
quickly
as
possible
the
liquid
assets
of
of
the
company
and
to
apply
the
same
in
reduction
of
the
indebtedness,
and
to
bend
every
energy
towards
a
satisfactory
sale
of
the
business,
in
whole
or
in
part.
‘
‘
Since
the
year
1920,
as
set
out
in
par.
6
of
the
statement
of
claim,
‘‘all
the
property
and
assets
of
the
appellant
company
have
been
disposed
of,
with
the
exception
of
one
timber
lease,
namely,
Lease
46,
Sayward
District,
Vancouver
Island,
and
some
foreshore
property
situate
in
and
at
Burrard
Inlet,
B.C.
The
fixed
capital
assets
so
disposed
of
consisted
of
a
sale
of
provincial
lease
50,
Vancouver
Island,
sold
on
May
1,
1920,
for
$550,000,
on
deferred
purchase
terms,
which
agreement
has
been
fully
performed
and
completed
by
the
purchaser
:
a
further
sale
of
timber
berth
and
provincial
timber
lease
439,
embracing
timber
situate
near
Chilliwack,
B.C.,
sold
for
$600,000,
on
deferred
purchase
terms,
which
said
agreement
of
purchase
has
been
fully
performed
and
completed
by
the
purchaser;
the
sale
of
the
company’s
sawmill,
site
and
plant
situate
at
Barnet,
Burrard
Inlet,
British
Columbia,
sold
on
13th
March,
1924,
to
the
Barnet
Lumber
Company,
Limited,
for
$750,000,
of
which
$250,000
was
paid
in
cash
and
the
balance
of
$500,000
secured
by
a
purchase
money
mortgage,
instalments
of
principal
to
be
paid
at
the
rate
of
$10,000
monthly,
the
said
mortgage
bearing
interest
at
the
rate
of
six
per
cent.
There
remains
due
on
this
mortgage
the
sum
of
$125,000;
and
lastly,
a
sale
on
28th
January,
1925,
to
Bloedel,
Stewart
and
Welch
Corporation,
Limited,
of
provincial
timber
leases
47,
48
and
51
for
$2,850,000,
payable
as
to
$500,000
in
eash
and
the
balance
$175,000
on
28th
January
and
July,
1927,
$200,000
on
28th
days
of
January
and
July
in
the
years
1928,
1929,
1930,
1931
and
1932,
with
interest
on
the
unpaid
balance
at
six
per
cent,
payable
half
yearly
on
which
said
agreement
there
is
approximately
$1,750,000
accruing
due
and
unpaid.”
On
the
29th
July,
1926,
the
company
was
authorized
to
be
wound
up
and
on
the
10th
September,
1926,
Robert
Maclaren
Kenney
was
appointed
permanent
liquidator
of
the
company.
From
1914
to
1926—the
year
of
the
liquidation—the
company
had
ceased
operating
and
was
only
engaged
in
the
business
or
occupation
of
disposing
of
its
assets
and
paying
its
debts.
The
debts
of
the
company—with
the
exception
of
the
claim
for
income
tax
herein—have
all
been
paid
and
satisfied,
and
it
stands
to
make
large
profits
and
surplus
out
of
the
sale
of
its
assets.
While
the
company
was
not
operating
since
1914
to
the
date
of
the
appointment
of
a
liquidator,
it
was
yet
paying
income
tax
to
the
crown
upon
the
interest
earned.
by
the
deferred
payments
of
the
capital;
but
it
now
refuses
to
do
so,
since
the
appointment
of
the
liquidator.
We
have
had
in
this
case,
on
behalf
of
the
appellant,
every
argument
that
could
conceivably
have
been
urged
with
great
ingenuity,
and,
among
others,
it
was
contended
that
when
a
winding-up
takes
place
under
the
Winding-Up
Act,
that
there
is
a
notional
change
in
the
character
of
the
company,
so
that
the
distinction
between
what
was
formally
capital,
profits,
interest,
is
lost
with
regard
to
what
is
left
and
it
becomes
only
assets,
and
that
acordingly
a
company
in
liquidation
is
not,
under
the
term
of
The
Income
Tax
Act,
that
which
connotes
to
be
a
person
carrying
on
business
or
a
person
under
the
Act.
This
contention
would
seem
to
postulate
some
undisclosed
text
of
law.
The
claim
of
the
Crown
rests
upon
the
Taxing
Act
and
it
is
for
interest
earned
on
deferred
payment
for
the
sale
of
capital
assets
under
contract
passed
before
the
liquidation.
Assuming
that
under
the
Winding-Up
Act
equality
of
the
rule
of
distribution
had
been
established
(a
questionable
matter
since
that
Act
deals
with
secured
and
preferred
claims)
the
Crown
is
not
bound
thereby.
The
general
rule
of
construction
of
statutes—as
held
by
the
Supreme
Court
of
Canada
in
the
case
of
The
Queen
v.
Nova
Scotia
Bank
(1885)
11
S.C.R.
1,
is
that
the
Crown
is
not
bound
by
a
statute
unless
therein
mentioned,
citing
in
support
Maxwell
on
Statutes
(2nd
ed.
161
et
seq)
:
“When
a
statute
is
general
and
thereby
any
prerogative,
right,
title
or
interest,
is
diverted
or
taken
away
from
its
King,
in
such
case
the
King
shall
not
be
bound,
unless
the
statute
is
made
by
express
words
to
him
..
.’’
And
the
Court
in
that
case
expressly
decided
that
the
Crown
was
not
bound
by
the
Winding-Up
Act.
Section
16
of
the
Canadian
Interpretation
Act
(R.S.C.
1906,
c.
1)
is
also
to
the
same
effect
as
the
finding
in
the
Nova
Scotia
case
(ubr
supra).
Nowhere
in
the
Winding-Up
Act
is
the
Crown
named
and
accordingly
there
is
no
pretence
for
saying
that
the
Crown
should
be
bound
thereby;
therefore
the
respondent’s
rights
are
free
from
any
restraint
that
might
be
invoked
under
the
provisions
of
the
Winding-Up
Act
and
in
respect
of
the
liquidator
appointed
thereunder.
The
rights
of
the
Crown
cannot
be
altered
to
its
prejudice
by
mere
implication.
However,
in
the
present
case,
the
Crown
rests
upon
the
Taxing
Act
which
superabundantly
justifies
the
present
claim.
Even
if
the
Winding-Up
Act
applied
to
the
Crown
it
would
seem
that
the
appellant
could
not
succeed
in
its
contention.
Indeed,
the
Winding-Up
Act
was
primarily
instituted
to
protect
the
creditors
and
a
just
and
legal
claim
cannot
be
defeated
thereby
under
a
mere
notional
or
imaginary
conception.
The
denial
of
the
Crown’s
claim
is
repugnant
to
the
very
character
of
the
Winding-Up
Act.
To
deny
the
claim
because
the
company
appears
to
have
passed
into
the
hands
of
a
liquidator,
would
moreover
amount
to
reading
the
Taxing
Act
against
its
very
intent,
meaning
and
spirit.
(See.
15,
Interpretation
Act.)
Under
sec.
33
of
the
Winding-Up
Act
the
liquidator,
upon
his
appointment,
receives,
takes
under
his
custody
and
controls
all
the
property,
effects
and
choses
in
action
of
the
company.
What
is
a
chose
in
action,
if
not
a
right
to
receive
or
recover
a
debt
or
money,
which
can
be
enforced
by
action.
The
interest
due
on
the
deferred
purchase
price
and
earned
by
that
capital
is
a
revenue
of
the
company
subject
to
the
income
tax,
and
which
becomes
a
debt
due
to
the
Crown,
for
which
the
company
is
liable.
It
is
not
sought
here
to
collect
the
same
from
the
liquidator
personally,
but
as
the
agent
of
the
company,
as
the
person
who
administers
the
company,
receiving
and
paying
moneys.
The
effect
of
the
Winding-Up
Order
is
explained
by
sec.
20
of
the
Act.
The
company
from
the
date
of
the
winding-up
has
continued,
through
the
liquidator,
to
do
what
it
was
doing
from
1914
to
1926,
that
is,
not
carrying
on
the
business
mentioned
in
its
charter,
but
the
business
of
adjusting
and
winding
up
the
business
of
the
company.
A
company
which
is
not
actively
engaged
in
business
is
not.
by
reason
of
that
fact
necessarily
exempt
from
taxation.
If
it
has
income,
it
becomes
liable
to
taxation.
Plaxton
and
Vareoe,
Dominion
Income
Tax
Law
and
eases
therein
cited.
The
company,
under
the
provisions
of
sec.
20,
retains
its
corporate
state
until
its
affairs
are
wound
up,
and
under
sec.
69
all
claims
against
the
company,
present
or
future,
must
be
considered.
The
liquidator
must
maintain
an
impartial
hand
between
all
persons
interested
and
has
no
right
to
deny
a
creditor
his
just
claim
without
justification.
The
nature
and
character
of
a
debt
does
not
change
from
the
fact
that
the
affairs
of
the
company
have
passed
under
the
control
and
custody
of
the
liquidator.
The
main
function
of
a
liquidator
is
to
collect
and
realize
all
the
assets
of
the
company
to
be
applied
in
discharge
*
of
its
liabilities.
5
Hals.
445.
Some
stress
was
laid
at
trial
upon
the
state
of
the
law
in
England
of
a
liquidator
under
similar
circumstances
and
cases
cited;
but
all
of
this
must
be
cast
aside.
There
is
no
analogy
whatsoever
between
the
English
and
the
Canadian
law
with
respect
to
income
tax
under
similar
circumstances.
In
fact,
a
ease
like
the
present
could
not
arise
in
England
for
the
obvious
reason
that
the
tax
is
payable
at
the
source.
In
other
words
when
the
interest
on
the
deferred
payments
would
come
into
the
hands
and
controls
of
the
liquidator,
the
tax
would
have
already
been
paid.
The
party
who
paid
such
interest
would
have
been
obliged
to
deduct
therefrom
the
income
tax
and
pay
it
to
the
Government.
The
party
paying
the
interest
must
remit
the
tax.
The
obligation
to
pay
interest—which
is
income
under
the
Taxing
Act—Hudson’s
Bay
Company
v.
Thew
(1919)
7
K.T.C.
206—was
duly
discharged
before
the
liquidator
was
appointed,
and
that
obligation
has
passed
into
the
hands
of
the
liquidator.
The
tax
is
the
debt
of
the
company
and
the
liquidator
is
the
agent
of
the
company
clothed
with
the
obligation
to
discharge
it;
the
company
and
not
the
liquidator
is
responsible
for
the
debt.
They
are
two
distinct
entities.
One
is
the
principal,
the
other
is
the
agent.
Knowles
v.
Scott
[1891]
1
Ch.
717
at
723;
In
re
Anglo-Moravian,
etc.,
Ry.
Co.
(1875)
1
Ch.
D.
130
at
133:
Pulsford
v.
Devensh
[1903]
2
Ch.
625
at
636;
John
Hood
&
Co.
V.
Magee
(1918)
7
R.T.C.
327,
at
p.
350.
Under
the
Canadian
Taxing
Act
it
must
be
found
that
the
liquidator
is
truly
an
individual
and
a
person
who
represents
a
corporate
body,
also
a
person
under
the
Act,
residing
in
Canada.
The
word
corporate
body
in
the
interpretation
of
the
word
"‘person’’
covers
a
company.
Yet
it
is
contended
that
as
the
name
of
"‘liquidator’’
is
not
mentioned
in
the
interpretation
clause
of
the
Act
defining
the
word
‘‘person,’’—that
both
the
liquidator
and
the
company
escape
taxation.
But
it
must
first
be
clearly
borne
in
mind
that
it
is
the
company
which
is
sought
to
be
taxed
in
this
case
and
not
the
liquidator
and
the
company
clearly
comes
within
the
definition
of
‘‘persons.’’
That
is
quite
sufficient
for
the
purposes
of
this
case.
The
company
is
only
approached
through
the
liquidator
because
he
happens
to
be
the
agent
who
administers
the
company
and
in
whose
hands
the
assets,
the
annual
profits
and
gains
of
the
company
are,
under
a
special
Act,
administered
by
him.
s
It
cannot
be
contended
that
because
the
interpretation
clause
defining
the
word
"
"
person
‘
‘
does
not
mention
the
word
"
"
liquidator”
that
he
must
escape.
Does
it
mean
that
the
clause
must
cover
all
classes
of
persons
to
bring
them
under
the
Act
and
that
because
the
words
‘‘lawyer,’’
‘‘notary,’’
etc.,
are
not
in
that
clause
that
they
become
free
from
taxation?
Yet
the
liquidator
must
be
a
person
just
as
much
as
a
lawyer
or
a
notary.
Moreover,
an
interpretation
clause
in
an
Act
of
Parliament
which
extends
the
meaning
of
a
word
does
not
by
any
means
take
away
its
ordinary
meaning.
As
I
had
occasion
to
say
in
a
recent
judgment,
in
the
interpretation
of
statutes
it
is
the
duty
of
the
court
to
ascertain
the
real
intention
of
the
legislature
by
carefully
regarding
the
whole
scope
of
the
statute
to
be
construed.
And
in
each
case
the
court
must
look
at
the
subject-matter,
consider
the
importance
of
the
provisions
and
the
relation
of
that
provision
to
the
general
object
intended
to
be
secured
by
the
Act.
Liverpool
Borough
Bank
v.
Turner
(1861)
30
L.J.
Ch.
379-380.
Light
on
the
true
meaning
of
the
words
used
in
the
statute
has
to
be
sought
from
the
context
and
the
scheme
of
taxation
with
reference
to
which
they
are
used.
There
is
no
occasion,
by
specious
argument,
to
endeavour
beclouding
the
question
at
issue
by
endeavouring
to
exempt
the
appellant
company
from
paying
its
just
and
lawful
taxes,
because
the
word
liquidator”
is
not
in
the
interpretation
clause.
The
liquidator
is
only
there
to
settle
the
business
of
the
company
and
to
carry
on
the
winding-up
of
its
affairs
and
the
company
is
the
one
which
has
been
found
liable
to
pay
and
not
the
liquidator;
but
the
liquidator
is
there
to
pay
the
debts
of
the
company
out
of
the
company’s
assets.
The
liquidator
is
however
mentioned
in
some
clauses
in
the
Act,
establishing
by
necessary
implication
that
he
is
considered
as
a
person
accessible
to
the
arm
of
the
law
under
the
Act.
See
sec.
9
and
also
sec.
8,
subsec.
(c).
And
the
word
”winding-up”
is
also
to
be
found
in
see.
3,
subsec.
9.
The
true
test
of
the
controversy
is
solved
from
the
very
facts
that
the
appellant,
the
party
lawfully
taxed,
is
a
company
;
that
its
capital
assets
have
earned
annual
profits
or
revenues
in
the
nature
of
interest
on
deferred.
payment
of
capital
and
that
such
profits
are
taxable
under
the
Taxing
Act.
The
appeal
is
dismissed
with
costs.
Judgment
accordingly.