Attorney-General of Canada, Attorneygeneral of British Columbia and Canadian Pacific Railway Company v. City of Vancouver, [1943] CTC 74

McDONALD C.J.B.C. :—This case involves the validity of municipal taxes on land owned by the respondent railway and leased to the Dominion and Province. In particular we are concerned with taxes relating to two buildings on this land, known as the Boeing Aircraft Bldg, and the Fumigation Bldg.

The Dominion and Province sued for a declaration that these buildings were not subject to taxation, and the railway company sued for a declaration that it was not liable to be assessed or taxed in respect of the buildings, and also claimed to recover back taxes already paid by it thereon. The judgment appealed from granted all the relief claimed, except that it ordered repayment to the railway company of only one year’s taxes. These had been paid under protest, whereas earlier taxes had not.

Coady J. based his decision for the respondents partly on the Crown’s ownership of the two buildings, but also on the alternative ground that these buildings were ‘‘held by’’ His Majesty, within the meaning of s. 46 of the Vancouver Incorporation Act, 1900 (B.C.), c. 54, (now 1921, 2nd Sess., c. 55, s. 46), which exempted "‘all property vested in or held by Her Majesty’’. The respondents also relied on s. 125 of the B.N.A. Act, by which " " No lands or property belonging to Canada or any province shall be liable to taxation/ ‘ I do not attribute much importance to this legislation, except so far as s. 46 may extend the common law by the words " 4 held by’’, since, apart from statutory exemptions, the city could not tax Crown property without very express authority.

The appellant attacks the trial Judge’s finding that the Crown owned these buildings. As they are held under different leases, they must be considered separately.

The lease of the Boeing Bldg. is from the railway company to the Dominion alone. This provides (para. 15) that at the end of the lease the lessee shall forthwith remove ‘‘his’’ buildings from the demised premises, failing which the lessor may remove them at the lessee’s expense, or keep them without compensation. I think the necessary inference from this is that the buildings put up by the lessee belong to him, even though his title may be defeasible.

Against this, appellant argues that in law the buildings are fixtures and so part of the land, and that though the parties may by contract change their rights inter se, they remain unchanged as against a third party, 2.e., the taxing authority. A number of cases have been cited, which I do not think are in point. They are cases of contracts made between the claimant of fixtures and someone who had only a partial interest in the land, the decisions holding that the latter could not give a right to sever as against the owner of the fee. But here it is the owner of the fee who gives the right, and I see no reason why any outsider should challenge it.

I have not overlooked the cases that have held an agreement by the owner of the fee for severance of fixtures to be invalid as against a purchaser of the fee, where the claimant of the fixtures had failed to register in the Land Registry. There the claimant loses out, not because his agreement is insufficient, but because the Land Registry Act, R.S.B.C. 1936, ce. 140, gives a purchaser for value prior rights over unregistered instruments. That element does not enter in here.

Appellant also argues that even if the lessee will own the building when he severs it, in the meantime it is part of the land and must belong to the owner of the land. That is, the lessee’s right is not a right of property, but only a contractual right. I cannot accept this view. It may be, though I doubt it, that the lessee has no legal ownership; but at least I think it clear that it has an equitable title (see e.g., Tailby v. Official Receiver (1888), 13 App. Cas. 523) and I see no reason why the Crown’s equitable estates should not be as exempt as its legal estates.

So far as the Boeing Bldg. is concerned, then, I think the Crown’s title is established.

The situation is however different as to the Fumigation Bldg. The lease of that is to the Dominion and Province jointly, but. I look in vain for any clause to indicate that the building shall belong to the lessees. All I find is provision that during the term of the lease buildings shall be ‘‘moved, removed” &e. by the lessees at their own expense as the lessor may instruct. This seems entirely equivocal, and quite insufficient to support the Judge’s finding. Respondents called the general superintendent of the railway, who stated that the railway disclaimed all interest in the building. That, however, hardly advanced matters. <A right of property can hardly be established in that way. In my view then, the learned Judge’s ruling as to the Fumigation Bldg, cannot be supported on the ground of the Crown’s ownership of the building. We have to see, however, whether it can be supported on some other ground.

So far as the Crown is concerned, its exemption from taxation extends to its leasehold interests, no less than to its freeholds, and for several reasons I think that lands ‘‘held by’’ the Crown under s. 46 extend to its leaseholds. Obviously there must always be difficulty in enforcing a tax in rem against lands in which the Crown has an interest, because tax-sale is the only remedy in rem, and it is inconceivable that the Crown should be so deprived of land, without the most express legislation allowing that course, legislation that is entirely wanting here. Of course I realize the feasibility, where the Crown is not the only party interested, of the Crown’s interests being segregated from those of others, and only those latter interests being taxed and proceeded against. However, that process requires special authority, for it involves special machinery, and we have to consider whether the authority is given here.

If land leased to the Crown were not land "held by’’ the Crown, it seems difficult to give those words any meaning, especially where the Crown is in possession, as it certainly is of the Fumigation Building.

However, appellant argues that even if one building is owned by the Crown and the other held by it, it is still entitled to impose taxes in respect of them, not only a tax on the railway company’s interest in the building but a tax on the railway company itself, a tax in personam that is not dependent on the legal ownership of land, but only referable to land in that the land is the basis of computation.

Appellant has cited a number of cases in the Supreme Court of Canada and the Privy Council, in which individuals have been taxed in respect of land which the Crown owned or had some estate in. Perusal of these cases shows that one of the crucial points is the incidence of such a tax.

It may be well to recall that a tax may be directed entirely in rem; and if ownership of land is divided into more than one interest, one may be taxable and another exempt. On the other hand, a tax may be directed entirely in personam, even though the reason for the tax may be that the person taxed owns land, and though the tax may be computed according to the value of the land. Or again, a person may be subject to a tax in personam because he is an occupier of land, or has any other arbitrary relation to land, land that itself may be exempt from a tax in rem. Or both the owner of land and the land itself may be taxed for the one sum, the tax being enforceable both in rem and in personam. Again, personal liability in such a case may be imposed directly, or the person may be declared to be liable because his land is liable.

In examining the Vancouver Incorporation Act to see what type of taxation it authorizes, we should recall that municipal taxation in connexion with land involves two processes: first an assessment is made, and then a rate is imposed. One often hears loose language suggesting that assessment amounts to taxation; but clearly there is no tax until the rate is imposed, even though assessment is a necessary preliminary. In effect when the municipality prepares its assessment roll, it declares: "‘We assert that the lands taxable by us are those set out, and that the persons whom we will treat as owners for the purposes of appeal and taxation are those set out; unless our roll is disturbed in the meantime, these are the persons and the lands whom our rate will tax.’’ Then comes the rate to fix the amount, based on the values in the assessment roll.

However, the mere appearance of a person’s name in the assessment roll is equivocal ; it may be put there only for convenience in sending tax notices, and does not necessarily impute personal liability. We have to look to the governing statute to see exactly the significance of entering the name on the roll, and the type of tax that is authorized.

The city’s Act shows singular ineptitude in the drafting. We find the words "‘ratable'' and "‘assessable'' used as though they were interchangeable, language is constantly used that implies that mere assessment imposes liability, which it obviously cannot, and it everywhere appears that the draftsman did not appreciate the distinction between taxation in rem and in per- sonam. It does become clear that owners (or persons treated as owners for the purpose) have their names put on the assessment roll so that they may be "‘assessed’’. But it does not follow that they are ‘ 4 rated”, and rating is what imposes liability. Section 57 is the one that deals with rating, and all it provides for is ‘‘levying a rate or rates on all the ratable property on the said roll.’’ If this stood alone, I should think it clear that the tax was one merely in rem. However, s. 58 requires the city clerk to make up a tax roll; in s. 59 it is implied, though not stated, that the persons whose names appear in the tax roll shall be ‘‘liable’’ for the taxes; but it is not even shown whence these names are obtained. By s. 60 the collector is to send demands for taxes to all persons whose names appear on the tax roll, and by s. 61, as supplemented by the amendment of 1921, c. 69, s. 4, the collector is later to collect the ‘‘rates or taxes’’ by suit, and ‘‘Production of a copy of the Collector’s roll showing the rates or taxes to be due by such person sued shall be prima facie evidence of the debt, and that the notices required . . . . to be sent to the person liable . . . . were duly sent. ‘ ‘

The ‘‘collector’s roll’’ presumably means the "tax roll’’; such uncertainty of language is characteristic of this Act. We can hardly escape the conclusion, even from such a collection of ineptitudes that an assessed owner, after rating, becomes personally liable for taxes legally imposed on his land; but I can see no reason to go farther and hold that he is liable, apart from the liability of his land.

Has the land here been legally assessed? Appellant argues that by s. 40(1) (d) the assessor is authorized to assess the registered owner, and can and should ignore mere charges, such as leases. That is all very well, where the charges are not exempted from taxation by provisions that general language cannot cut down. But s. 40 cannot derogate from the Crown’s rights. However, the appellant argues that it can tax the railway company’s interests, severing them from the Crown’s. I doubt whether there is any machinery in the Act for doing this, where the Crown holds the charges. It is true that s. 46(2),

(3) and (3a) provides for taxing a charge separately where the Crown is the owner of the land and the subject owner of the charge. But there is no provision for the converse situation, and express provision seems to me necessary.

Even if this were not so, appellant is faced with the difficulty that it never attempted to tax the railway company’s interests only; it has proceeded to tax the interests of all parties, ignoring the fact that the Crown is one of the parties. Appellant has attempted to justify this by claiming that it did not tax the buildings, but only the land in respect to the buildings. Even if this was a good argument, in view of the Crown’s holding leaseholds, I do not think it is borne out by the facts. The statement that the buildings are not themselves taxed is inconsistent with the Act. By s. 45 "‘The Council may by by-law exempt from taxation, wholly or in part, any improvements, erections and buildings.’’ This necessarily implies that buildings are themselves taxable.

I do not think the appellant is assisted by any of the decisions before the Supreme Court of Canada or the Privy Council, wherein taxation of a subject in respect of his charge on Crown lands was upheld. These are mostly cases where the subject was taxed on his particular interest only, as in Calgary c Edmonton Land Co. v. A.-G. of Alta. (1911), 45 S.C.R. 170; Smith v. Vermilion Hills, 30 D.L.R. 83, [1916] 2 A.C. 569; Montreal v. A.-G. Can., 70 D.L.R. 248, [1923] A.C. 136; Southern Alberta Land Co. v. McLean (1916), 29 D.L.R. 403, 53 S.C.R. 151, and North West Lumber Co. v. Lockerbie, [1926], 1 D.L.R. 20 at p. 25, S.C.R. 155 at p. 161.

The case of Halifax v. Fairbanks, [1927] 4 D.L.R. 945, [1928] A.C. 117 raises other points, and is one of the few in which the Crown is owner of the charge, not of the fee. There it was held that a ‘‘business tax” imposed in respect of property leased to the Crown was valid. Loose language in the judgment raises a little difficulty but after careful consideration I am satisfied that this decision turned on the fact that the tax was directed in personam, even though computed on the value of land, and that the headnote stating that the tax was a tax on property is misleading.

The actual language of the taxation statute is given in the report of the case in [1925] 1 D.L.R. at p. 330, and reads: ‘‘Such property shall be deemed to be in the occupation of the owner thereof . . . . and he shall be assessed and rated for household tax or business tax.” That language leaves no doubt that the tax was a tax in personam. It is also plain that that was seen in the Privy Council. Both counsel so argued. Lord Cave who gave the judgment, said [1927] 4 D.L.R. 945:

“The substantial question . . . . is whether a tax imposed . . . . on the estate of John P. Fairbanks as the owner of certain real premises in the city is valid.’’

Again at p. 946 he said, quoting from the statute : ‘‘ Property let to the Crown . . . . shall be deemed to be in the occupation of the owner . .. and he shall be assessed and rated. . ”

Again at p. 947: "‘Their Lordships do not consider that a tax on the owner of premises let to the Crown in right of the Dominion can be held to be a tax on the property of Canada.’’ And on the same page: ‘‘The owner is made liable for a tax.” Similarly on pp. 948-9 he referred to * the business tax imposed on an owner. 9 ’ (All the above. italics are my own).

The only difficulty (apart from the misleading A.C. headnote) is occasioned by Lord Cave’s saying [1927] 4 D.L.R. at p. 950: "‘It may be true to say of a particular tax on property, such as that imposed on owners by s. 394 of the Halifax Charter, that the taxpayer would very probably seek to pass it on to others; but it may none the less be a tax on property and remain within the category of direct taxes.”

Here it may be observed, all within one sentence Lord Cave describes the tax twice as a tax on property and once as a tax on the owner, a tax that he has already described five times as a tax on the owner. For good measure, lower on the same page of the report, he refers again to "‘the business tax imposed on an owner.”

This welter of inconsistencies is apparently to be explained by the fact that Lord Cave was concerned only with the point whether the tax was direct or indirect, and for that purpose it did not matter whether it was a tax in rem or in personam. At all events, the wording of the statute, as seen, leaves no doubt at all that it was a tax in personam.

In view of the authorities, it can hardly be denied that the Legislature could, by apt words, have authorized the city to Impose a personal tax on the railway company, even one based on the value of buildings and leaseholds owned by the Crown. But the appellant’s difficulty is that the Legislature has not done this. No section empowers the city to impose any tax that relates to Crown interests, except s. 46(2), (3) and (3a), and these are not wide enough to embrace the situation here, which remains casus omissus. Moreover, as I have pointed out, the Act, especially s. 57 and following sections, appears to me to make all personal liability conditional on the valid charging of the land. The difference in the governing legislation thus appears to me to distinguish this case from Halifax v. Fairbanks, supra. There the statute expressly authorized the city to impose a direct tax on the owner for the entire value of the land, notwithstanding that the Crown owned one interest in it. Here the statute does not, and the governing authority would seem to be A.-G. Can. v. Montreal (1885), 13 S.C.R. 352, a decision which I do not regard as overruled by Halifax v. Fairbanks, supra.

I next consider the argument that even if the tax is illegal the remedy by action is not open, and respondents should have proceeded by appealing the assessment to the various Courts of Revision. This is completely answered by Victoria v. Bishop of Vancouver Island, 59 D.L.R. 399, [1921] 2 A.C. 384, a case in which the same point was raised. All these assessment tribunals, including tribunals for review, possess only truncated jurisdiction, a power to consider only questions of quantum and not of taxability. Their decisions can only create estoppel as to points into which they can enquire. Shannon Realties Ltd. v. St. Michel, [1924], 1 D.L.R. 119, A.C. 185 and MacLeod v. Campbell (1918), 44 D.L.R. 210, 57 S.C.R. 517 are decisions on quantum.

The railway company, which had paid taxes for several years before beginning this action, sued to get them back. Coady J. held it could only get back those for the last year, which alone it had paid under protest. Appellant argues that it should not have recovered back any, that all the taxes were paid voluntarily and the protest did not make the last payment any less voluntary. Were it not for the case of Sift on v. Toronto, [1929], 3 D.L.R. 852, S.C.R. 484, I think I should have taken this view. That is not a very satisfactory case, since it fails to deal with the many decisions inconsistent with it; but there it stands, so far as I can see, a general decision that taxes paid under protest can be recovered if they were not legally due. Until the Supreme Court of Canada explains it away, I feel I must follow it.

I cannot accept the appellant’s argument that the Crown Costs Act, R.S.B.C. 1936, c. 67, applies to the Dominion. And from the foregoing it follows that both the Dominion and Province were entitled to sue for the declarations claimed. There was nothing in the appellant’s proceedings to show that it was not claiming charges on the Crown’s interests, charges to be enforced by tax sale. I would therefore dismiss the appeal.

SLOAN J.A. dissenting) :—The question herein for decision may be shortly stated as follows: Is a municipal tax imposed upon the land of a private owner an attempt to tax the Crown when that land is leased to and occupied by the Crown? With deference I would answer that question in the negative.

In my view this case falls within and is governed by Halifax v. Fairbanks, [1927] 4 D.L.R. 945. Viscount Cave L.C. in delivering the judgment of the Board said (at p. 947) in answer to a similar question: "Their Lordships do not consider that a tax on the owner of premises let to the Crown in the right of the Dominion can be held to be a tax on the property of Canada. ‘ ‘

The learned Judge below considered that Halifax v. Fairbanks, was distinguishable from this case because herein the Crown erected the buildings it occupied on the leased premises. He said in his reasons:

* Here the Crown as the owner of the buildings is the owner of an interest in land and, in addition, is in occupation thereof. When the defendant endeavours to tax these premises, viz., the buildings it is in effect taxing property of the Crown.’’

With respect I am unable to agree with that proposition for the primary reason that the City of Vancouver is not endeavouring to tax the buildings, qua buildings. Under the relevant provisions of the city’s Act of Incorporation the buildings are assessed as improvements in order to fix the quantum of the tax to be imposed upon the "‘rateable'' land.

The assessor is not concerned with whatever rights of ownership may be created by contract between proprietor and tenant. He is concerned with the simple fact of registered title to the land and with the legal incidents of such title.

Ownership of the land is the only interest the taxing authority is permitted to recognize. Were this not so the result would be that buildings in Vancouver might be regarded, in law, and for taxation purposes, as severed from the freehold when by contract subject to a separate ownership than the land upon which they are erected. Such a situation could never have been within the contemplation of the framers of the city’s statutory charter, nor in my view does the city’s Act contain any provisions which can be properly construed as supporting such a conception. The jurisdiction of the city to levy its tax on land stems from the title thereto recorded in the Land Registry Office as of the 20th of November in each year (s. 40). That jurisdiction does not vest and divest with each change in the character of the tenant of the owner, even if, as Strong J. said in A.-G. Can. v. Montreal, 13 S.C.R. at p. 362: "The proprietors . . . . may happen to have the good fortune to have the Crown as tenants.”

The registered owner of the land in question is the Canadian Northern Pacific Railway Co. It is upon the land of the railway company that the contested taxes have been imposed. The city has made no claim against the Crown for these taxes or any part thereof. There has been no attempt made by the city to impose any of the taxes in question upon Crown property as such.

In my opinion therefore the taxes in question imposed by the city upon the land of the private owner—the railway company— are not a violation of either s. 125 of the B.N.A. Act or s. 46(1) of the Vancouver Incorporation Act 1921 and amending Acts.

I would in consequence and with deference allow the appeal and dismiss the action.

Fisher J.A. :—This is an appeal by the defendant the City of Vancouver from the judgment of Coady J. whereby it was declared inter alia that certain buildings known as the Boeing Aircraft Bldg. and the Vancouver Fumigation Station Bldg., situate on Lot G, Plan 1341 in the City of Vancouver, British Columbia, are the property of His Majesty the King or held by His Majesty the King within the meaning of s. 46 of the Vancouver Incorporation Act 1921 and are not liable to taxation by the defendant and that the plaintiffs are not liable to be assessed and are not liable for payment of taxes in respect of the said buildings.

By lease dated January 1, 1923, (ex. 1, A.B. 77), still in full force and effect, His Majesty, represented by the Honourable the Minister of Agriculture for the Dominion of Canada, and the Honourable the Minister of Agriculture of British Columbia, jointly, leased from the plaintiff (respondent) railway company a vacant portion of said Lot "‘G‘‘ and subsequently, as required by the said lease, erected thereon a building known as the Fumigation Station Bldg, or Fumigation Bldg. The said building thereafter was and still is used and occupied jointly by the Department of Agriculture of the Federal and British Columbia Governments (Plant Protection Division) for the inspection and fumigation of imports against insect life.

By lease dated May 1, 1940, (ex. 2, A.B. 84), still in full force and effect, His Majesty, represented by the Honourable the Minister of Munitions and Supply of the Dominion of Canada, leased from the plaintiff (respondent) railway company another vacant portion of Lot "‘G‘, aforesaid, and subsequently a building known as the Boeing Bldg. was erected thereon for and at the expense of the Crown pursuant to a contract made between the Crown and the Boeing Aircraft of Canada Ltd. The said building thereafter was and still is used by the said Boeing Aircraft of Canada in the manufacture of airplane parts under its contract with the Crown.

The main issue in the appeal is whether the taxation in question herein imposed by the appellant is legal or in other words duly authorized under its Act of Incorporation. It is contended by the respondents that the Crown is the owner and occupant of the said buildings and also holds an interest in the land on which they stand and that the buildings are therefore exempt from taxation.

Some admissions were made by the parties which materially reduced the issues of fact. The appellant admits that the two buildings in question were included in the assessment of Lot G aforesaid against the respondent railway company but not that the assessor was entitled to or did in fact assess either of the said buildings separately from the rest of the improvements on Lot G aforesaid and the respondents admit that the buildings in question are substantial structures affixed to the freehold and that the respondent railway company is the registered owner under indefeasible title of Lot G aforesaid, being the unsubdivided lot on which said buildings are situate.

Counsel for the respondents relies upon the leases as aforesaid and it must first be noted that the Boeing Building lease contains a clause (para. 15), not contained in the Fumigation Bldg. lease, providing that at the termination of the lease the lessee shall remove his buildings failing which the lessor shall be entitled to remove the same at the expense of the lessee or retain them without compensation. The Fumigation Bldg, lease only provides that all buildings, etc. placed upon the said demised premises, shall during the existence of the lease be "‘removed’’ etc. by the lessees at their own cost and in accordance with the instructions of the lessor. Under both leases however the buildings have been erected upon portions of said Lot G for and at the cost and expense of the Crown itself. I also find as a fact that the Fumigation Bldg. since its completion has been continuously used and occupied solely by the Crown and has been for the public use of the Dominion of Canada and the Province of British Columbia. I agree also with the learned trial Judge that the Crown is in occupation of the Boeing Bldg., the occupancy of the Boeing Co. being the occupancy of the Crown in the carrying out of such a contract with the Crown. See Halifax v. Halifax Harbour Com’rs, [1935], 1 D.L.R. 657, S.C.R. 215. Having carefully considered the leases and contract as aforesaid I have no hesitation in holding as I do that the Crown is not only in occupation of the said buildings but also either owns them or holds an interest in them and also holds a leasehold interest in the lands on which they are situate.

I cannot see that the authorities cited with regard to fixtures and relied upon by counsel for the appellant govern a case such as this where the owners in fee of the land enter into such leases as aforesaid and taxation by the municipality is the issue. I propose to deal at length however with what I think are substantial submissions on behalf of the appellant, viz., that, until the buildings are in fact severed from the freehold, they are the property of the owner of the freehold for the purposes of assessment and taxation or in other words are assessed and taxed as land and that in any event it is not the Crown that has been assessed or taxed but a subject viz., the respondent railway company. These submissions bring up the questions of what is taxed and who is taxed under the provisions of the Vancouver Incorporation Act 1921 and amendments thereto. It thus becomes necessary to consider what such statute authorizes the city to do and what the city has attempted to do thereunder with regard to the taxation in question herein.

Reference may be made first to s. 46 in connection with which it is submitted by counsel on behalf of the appellant that the words “registered owner thereof” in s. 40(1) (d) do not mean the registered owner of the improvements referred to in section 40(1) (c) but the registered owner of the "‘rateable parcel of land” referred to in section 40(1) (a). In other words, it is argued that this subsection does not require that all or any of the improvements should be actually owned by the registered owner of the rateable parcel. It is submitted by counsel for the appellant that said s. 46 should be read with said s. 40 and that when they are read together it is apparent that the assessor is not required to and cannot go beyond the Land Registry records, so that in the case of lands registered in the name of a subject the registered owner goes on the assessment roll for taxation and therefore pursuant to the said statute the respondent railway company is taxed as registered owner of the land which includes all buildings affixed to the land. The submission amounts to this, that the buildings themselves have not been taxed, or, if so, they have not been taxed as buildings or improvements but as land and that once the Buildings have been affixed to the freehold in the way admitted by the respondents they are land for the purposes of taxation. It is also submitted that the assessor’s valuation of the improvements on Lot G is in accordance with the statute and in accordance with the definition of ""rateable parcel” as contained in s. 2(22a) [1935 (B.C.), c. 92, s. 2; am. 1937 (B.C.), c. 82, s. 2] of the Act which is as follows:

° 'Rateable parcel of land’ shall mean any lot or parcel of land, and may include two or more lots or parcels of land on which improvements have been constructed so as to form a single unit situate upon such lots or parcels. ‘‘

I agree that the sections that would appear to have any bearing on the matter should be read together and each in the light of the others before one reaches a conclusion as to the legality of the taxation. Reading the sections in this way however I have to say that the sequence of the sections should be noted and the use of certain expressions therein. It should be noted that s. 40 which uses the expressions "‘assessment roll’’, ‘‘rateable parcel of land’’, ‘‘improvements’’ and ‘‘registered owner thereof” is preceded by section 39 which uses the expression ‘‘all rateable property or any interest therein’’ (the italics being mine) and provides for, all of it being estimated in a certain way ‘‘the value of the improvements (if any) being estimated separately from the value of the land on which they are situate”. Sections 45 and 46 read as follows:

""45. The Council may by by-law exempt from taxation, wholly or in part, any improvements, erections, and buildings erected on any land within the city, notwithstanding that they may be part of the real estate.”

""46. Except as otherwise in this Act provided, all land, real property, improvements thereon, machinery and plant, being fixtures therein and thereon, in the city shall be liable to taxation, subject to the following exemptions, that is to say:

""(1) All property vested in or held by His Majesty or for the public use of the Provinee, and also all property vested in or held by His Majesty or any other person or body corporate in trust for or for the use of any tribe or body of Indians, and either unoccupied or occupied by some person in an official capacity :

""(2) When any property mentioned in the preceding clause is occupied by any person other than in an official capacity, the occupant. shall be assessed in respect of his interest therein, and shall be personally liable to taxation in respect thereof, but the land . . . . shall not be liable to tax sale, nor shall such taxes become a lien or charge on said land:

""(3) When any right or interest, whether legal or equitable, in any property mentioned in subsection (1) of this section is held, possessed, or enjoyed by any person other than in an official capacity, the owner of any such right or interest therein shall be assessed in respect of such right or interest, and shall be personally liable to taxation in respect thereof.

"‘(3a) Notwithstanding anything contained in this section, any lessee or sub-lessee of His Majesty, either in the right of the Province or the Dominion, or any person owning or enjoying any right or interest under any agreement with His Majesty, either in the right of the Province or the Dominion, in respect of any property mentioned in subsection (1) of this section, or any lessee or sub-lessee of any Board of Harbour Commissioners, or any person owning or enjoying any right or interest under any agreement in respect of any property owned or controlled by any such Board, shall be assessed in respect of his right or interest therein on the basis of the actual cash value of the lands (including land covered with water) and improvements so occupied, used, held, possessed, or enjoyed by him, pursuant to the provisions of section 39 of this Act, and shall be taxed in respect thereof as if he were the actual owner of such lands and improvements, so long as such lessee or sub-lessee, or such other person as aforesaid, shall continue to occupy, use, hold, possess, or enjoy the same for any commercial purpose, and any such occupant or lessee or sub-lessee, or other person as aforesaid, holding under any such agreement as aforesaid, shall be liable to pay any or all general and special taxes, rates, and assessments levied in respect thereof: Provided nevertheless that except as to improvements henceforth placed upon the land no such occupant, lessee, sub-lessee, or other such person as aforesaid shall in any year up to and including 1942 be so assessed in a greater amount than the assessment for the preceding year plus twenty per cent. of the difference between the assessment for the year 1937 and the actual cash value of such property. ‘ ‘

Then s. 57 provides for "‘levying a rate or rates on all the rateable property’’ on the assessment roll. The rateable property in any year is property legally liable to taxation and may thus vary from year to year. Compare what was said by Macdonald J.A. (afterwards C.J.B.C.) in the case of Macdonald- Buchanan v. District of Coldstream, [1935] 1 D.L.R. 213 at pp. 215-16, 49 B.C.R. 163 at pp. 169-170 in referring to the words ‘‘rateable property’’ as used in certain by-laws passed under the Municipal Clauses Act. There is thus a clear distinction made between the process of assessment and that of imposing rates. Then we have certain sections beginning with s. 59 providing for the collection of rates. Under s. 59 the collector of taxes makes out a tax roll which in s. 60 is called the "‘collector’s roll’’. It is apparent that the names of the owners or those treated as owners of a rateable parcel of land on the assessment roll reach the collector’s roll. The difference however between the provisions of the sections of the statute relating to collec

tion of rates and those of s. 40 must be noted. It is apparent from s. 40 that the assessor sets down on his roll in addition to each and every rateable parcel of land ‘‘every exempt parcel of land’’ and with respect to such the same particulars as are required in respect to every rateable parcel of land. Then intervening sections having provided for the rating and the exemptions we find in s. 59 instead of the words ‘‘each and every rateable parcel of land’’ and ‘‘every exempt parcel of land’’ the words ‘‘each parcel of land upon which taxes have been imposed 9 and instead of s-ss. (b) and (c) as in s. 40(1) we have as (c) in s. 59 (the italics being mine): ‘‘The value at which the land and improvements (exclusive of exemptions) are assessed. ‘ ‘

The collector therefore in making out the collector’s tax roll pursuant to s. 59, sets down only the taxed parcels of land and the exempt parcels of land do not appear. It is quite apparent therefore that the expression “exclusive of exemptions’’ which occurs in both ss. 59(c) and 60(c) refers only to improvements and that there may be improvements wholly exempt upon land upon which taxes have been imposed. Some assistance may be obtained from the case of Victoria v. Bishop of Vancouver Island, 59 D.L.R. 399 where Lord Atkinson dealing with sections of the Municipal Act (B.C.) somewhat similar to those we have here, said at p. 403 (the italics being mine) :

‘‘Mr. Robertson, in his forcible argument on behalf of the appellants, insisted much upon the fact that under the system of taxation set up by this Act of 1914, and earlier statutes, ‘land’ and ‘improvements’ in the sense defined, which includes buildings, were separately assessed (s. 199) and rates were levied on the land and improvements so assessed (s. 201). That, no doubt is so. . . .”’

After careful reading of all the sections I have come to the conclusion, with all deference to contrary opinion, that under the statute as aforesaid taxes are imposed upon the buildings as improvements and not as land and before the total amount of taxes imposed is set down in the said tax roll with respect to any particular property (this being the amount to be paid—see s. 60) the Act requires consideration of the exemptions and their exclusion. Having in mind all the provisions of the statute itself I do not think it can reasonably be contended that, if and when the name of the assessed owner of any parcel of land goes on the collector’s tax roll, the improvements necessarily go on and are taxed as part of or as included in the land. In other words I do not think that the city is authorized under s. 40 to place the registered owner on the assessment roll for taxation with respect to the improvements irrespective of any other consideration. The other sections must be considered and these show that the improvements may or may not be taxed. Section 40 is concerned with assessment and valuation specifically and not taxation even though assessment is a necessary preliminary to taxation. I am satisfied that the improvements may be exempt even though the land on which they are is not and though the name of the assessed or registered owner of the land has been set down on the collector’s roll.

I hold therefore that the buildings are separately assessed and taxed as so assessed under the statute as aforesaid and, if I am right in this and in also holding that the buildings in question herein or interests therein belong to the Crown and that the buildings are occupied by the Crown, the appellant is faced with the difficulty that it is precluded from taxing such Crown property without express legislative enactment. See A.-G. Can. v. Montreal, 13 S.C.R. 352 esp. at p. 355. If I understand aright the argument of counsel for the appellant, he seeks to meet this difficulty by contending that the Crown is not taxed here but the subject, the respondent railway company, is personally taxed with respect to Crown property or its interest therein. Counsel relies especially upon Halifax v. Fairbanks, [1927] 4 D.L.R. 945, and contends that the Privy Council in such ease overruled the decision in the Montreal case, supra, and made it clear that taxing a subject with respect to Crown property (in other words making Crown property the yardstick as counsel puts it) was not taxing the Crown. In my view however the Fairbanks case did not overrule the Montreal case, supra, but only held that express authority could and had been given by certain sections of the Halifax Charter to impose a "‘business’’ tax that was payable by the occupier of real property according to its capital value, upon the owner personally though the property was occupied by the Crown under a lease. This is apparent from the legislation itself and also from what Viscount Cave said in allowing the appeal from the Supreme Court of Canada, [1927] 4 D.L.R. at p. 947 and from what Duff J. (dissenting in the Court below) said in the case as reported in [1926] 1 D.L.R. at pp. 1106 and 1109 as follows: (the italics being mine)

"‘The question mainly discussed in the Courts below was whether or not the legislation in question, s. 394 of the Charter of Halifax, offends against the prohibition of s. 125 of the B.N.A. Act, 1867. This question is much the same as that which was passed upon in the City of Montreal v. A.-G. Can. (1922), 70 D.L.R. 248, [1923] A.C. 136. There, the legislation provided for the assessment of proprietors of land, and, subsidiarily, enacted that where land exempt from taxation, including Crown land of the Dominion or of the Province, was occupied by a private person for industrial or commercial purposes, the occupant should be deemed, for the purposes of assessment to the property tax, to be the proprietor, and should be assessed accordingly.

"'It was contended on behalf of the Dominion that this in effect amounted to an assessment of Crown lands, where the lands assessed in virtue of such occupancy were the property of the Dominion, and that it was consequently obnoxious to s. 125. This contention was rejected on the authority of the previous decision in Smith v. Rur. Mun. of Vermilion Hills, (1916), 30 D.L.R. 83.

“In principle, this decision, in so far as concerns the suggestion that the legislation now before us infringes upon s. 125, seems to govern the present case . . .

"In the legislation in question in the Montreal case the occupier of exempt property for industrial or commercial purposes was held as if proprietor. Under the legislation before us the owner of property in occupation of an exempt occupier ts held as if he were occupier."

Sections 371(1) and 394 of the Halifax City Charter read as follows: (the italics being mine)

"371. (1) The business tax shall be a tax payable by every occupier of any real property for the purposes of any trade, profession or other calling carried on for purposes of gain, except such as is exempt as is herein provided, and shall be payable by the occupier whether as owner, tenant or otherwise, and whether assessed as owner of such property for real property tax or not. ‘ ‘

"394. Except as is herein otherwise provided, if any property is let to the Crown or to any person, corporation or association exempt from taxation, such property shall be deemed to be in the occupation of the owner thereof for business or residential purposes as the case may be, and he shall be assessed and rated for household tax or business tax according to the purpose for which it is occupied.”

I pause here to point out that in the case of Montreal v. A.-G. Can., 70 D.L.R. 248 (followed by this Court in Vancouver v. Chow Chee, 57 B.C.R. 104, [1942] 1 W.W.R. 72 and referred to by Duff J., as he then was, in the passage from his judgment in the Fairbanks case hereinbefore set out) the legislation before the Court was art. 326-A of the City of Montreal Charter, which provided that persons occupying for commercial or industrial purposes Crown buildings or lands should be taxed as if they were the actual owners and should be held liable to pay the taxes, and it was held by the Privy Council that, as the tenant was liable only so long as his occupancy continued, the taxation was in respect of his interest as lessee and accordingly was not a tax on Crown lands so as to be ultra vires under section 125 of the British North America Act. At pp. 250-1 Lord Parmoor, delivering the judgment of their Lordships, said:

"‘On the other hand, the respondent does not allege that persons occupying Crown property for commercial or industrial purposes are not liable to provincial taxation in respect of their tenancy or occupation, provided that the taxation is imposed in such a form that it is in reality a taxation on the interest of the tenant or occupant, and not on the property of the Crown. It would not be possible after the decision of their Lordships in Smith v. Rur. Mun, of Vermilion Hills, 30 D.L.R. 83, [1916] 2 A.C. 569, to contend that tenants who occupy Crown property, not as officials of the Crown, but for commercial or business purposes, are not liable to provincial taxation so long as the assessment is based on their interest as occupants/ ‘

Reverting now to the present case I have to say that I find the situations before the Courts in the Fairbanks and City of Montreal cases as aforesaid much different from that here and also the legislation quite different. In the said Montreal case the city was taxing the subject in respect of his interest in property owned by the Crown but occupied by the subject. In the Fairbanks case the city was taxing the subject in respect of property owned by the subject but occupied by the Crown. In the present case the appellant city is attempting something altogether different, viz., to tax the subject, not in respect of property occupied or owned by the subject, but in respect of property, or in respect of an interest therein, as if the subject were the actual owner of the property, which the Crown occupies and which it either owns or has an interest in as I have found. It may be that the Legislature could have authorized the city to tax the subject personally in such case but in my view it has not done so but on the contrary has inserted in s. 46 of the City Charter a subsection (1) which recognizes such a case as an exemption. Counsel relies upon s-ss. (2), (3) and (3a) of said s. 46. Dealing with s-s. (3) first, I have to say that I do not think such subsection enables the appellant to do what it is doing here, as it is not purporting to tax the railway company as the owner simply of some possible reversionary interest in the buildings as suggested by counsel but as if it were the actual owner of the buildings. As to said s-ss. (2) and (3a) I think these subsections authorize the city to assess and tax the subject personally in respect of exempt property only when and so long as it is "‘occupied’’ by the subject (s-s. (2)) or in respect of an interest in exempt property as if the subject were the actual owner of such property only when and so long as the subject "'shall continue to occupy, use, hold, possess or enjoy the same for any commercial purpose’’ (s-s. (3a)). In my view the buildings in question herein cannot be said to be "occupied” by the respondent railway company nor can the said railway company be said to be continuing to ‘‘occupy, use, etc.”, them within the meaning of the subsections in the absence of a provision similar to that in the City of Montreal Charter or that in the Halifax Charter. As Duff J. (afterwards C.J.C.) intimated in the Fairbanks case above, the Montreal Charter provided in effect that the occupier of exempt property should be deemed to be the owner though in fact he was not and should be taxed accordingly and the Halifax Charter provided in effect that the owner of property in occupation of an exempt occupier should be deemed to be the occupier though in fact he was not and should be taxed accordingly. In the present case, as I have already intimated, we have as a matter of fact an exempt occupier owning or having an interest in exempt buildings and.we have no enabling legislation taking care of the situation and saying in effect that the situation shall be deemed to be otherwise than it is in fact and treated accordingly.

My conclusion therefore is that, though the name of the subject, the respondent railway company, may have appeared on the collector’s roll, there was no authority given to the city to tax the respondent railway company with respect to the said buildings or any interest therein under the circumstances existing here and the taxation imposed was illegal. In the result I am thus in agreement with the learned trial Judge on the main issue In this appeal.

As to the contention of the appellant that this Court is without jurisdiction herein I have only to say that in my view the contention is without foundation as this is a question of the taxation being illegal and the case of Victoria v. Bishop of Vancouver Island, 59 D.L.R. 399 applies.

As to the appeal against that part of the judgment whereby the trial Judge directed that the respondent railway company should recover against the appellant the sum of $1,178.40 and that the appellant should pay the Attorney-General of Canada and Canadian Northern Pacific Railway Co. certain costs I have only to say that I think the learned trial Judge reached the right conclusion on these matters.

I would therefore dismiss the appeal.

Appeal dismissed.