Bell Telephone Company v. City of Montreal, [1944] CTC 207

BOND, ACTING C.J.:—The plaintiff seeks to have declared ultra vires a tax for the year 1943 so far as it purports to impose a business tax in respect of its ownership and use of part of its plant and equipment, namely, poles, wires, overhead cables, underground cables, underground conduits and station equipment.

Reasons for judgment. . . .A preliminary point is raised by the defendant’s plea to the effect that the present contention on the part. of the plaintiff should have been brought before the Board of Revision in accordance with the provisions of s. 379 and following, of the charter of the City of Montreal, within the delay fixed for so doing, and that having failed to follow this course the plaintiff’s recourse is prescribed by the expiration of the delay for so doing.

On the other hand, the plaintiff invokes art. 50 C.P.

This question has frequently come before the Courts and was the subject of considerable discussion both in the Supreme Court and in the Judicial Committee of the Privy Council in Shannon Realties Ltd. v. Ville de St-Michel (1929), 47 (Que.) K.B. 416, where certain broad principles were enunciated.

Reference may also be had to the following cases: Donohue Bros. v. St-Etrenne-de-la-Malbaie [1924] S.C.R. 511, Côté v. Drummond [1924] S.C.R. 186. In Corporation du village de St-Ulric-de-la-Rivière-Blanche v. Corp. du comté de Matane (1925), 38 (Que.) K.B. 247, 251, the earlier authorities were reviewed and it was held that the recourse under art. 50 C.P. should be restricted to cases where ultra vires was in question. That case related to proceedings under art. 430 M.C. and Mr. Justice Rivard who rendered the judgment, in discussing this point, said (p. 251) :

"‘La jurisprudence sur ce point me paraît, dans tous les cas, encore assez flottante pour qu'il soit convenable de juger, s’il est possible, la présente cause comme si le recours de l’article 430 laissait intact, du moins dans l’espèce, celui de l’art. 50 C.P.”

In Corp. de la Rivière-du-Gouffre v. Larouche (1925), 39 (Que.) K.B. 267, it was held that an interested party might invoke the provisions of art. 50 C.P. where the nullity of a municipal proceeding was involved on the ground that it was ultra vires. In Nova Scotia Coal and Steel Co. v. City of Montreal, [1912] 3 D.L.R. 750, Charbonneau J. held that:

"Objections to the imposition of taxes by municipal assessors may be made at any time if the objects assessed are not taxable by law, as this would constitute an ultra vires assessment, radically null. ‘ ‘

While there is no doubt that the City Charter provides a remedy by way of a complaint before the Board of Revision which must be brought within a limited time, the recourse open under art. 50 C.P. may nevertheless be invoked after the expiration of that time where the proceedings in question are attacked as being ultra vires and radically null, though in other cases involving irregularities in the preparation of valuation and tax rolls no doubt the provisions of the City Charter are applicable. Such complaints so made under the City Charter must be made within the period prescribed and are otherwise valueless as being out of time.

In the present instance, no complaint is advanced in respect of the valuation of the items assessed; what is in issue is the right of the defendant to tax these items at all for the purposes of a business tax. It is the clear contention of the plaintiff that such an attempt to tax these items is ultra vires and radically null, and in my opinion if that contention be well founded the recourse provided for by art. 50 C.P. is open to the plaintiff in the present instance, and the plaintiff’s present action cannot be dismissed on the ground that it has failed to follow the provisions of the City Charter as to the manner and time within which its complaint should have been formulated.

As a consequence of this conclusion, it becomes necessary to enquire into the merits of the plaintiff’s complaint.

By the terms of the Charter of the City of Montreal, s. 363, it is provided as follows:

"The City may also impose and levy, by by-law, a tax to be called the “business tax” on all trades, manufacturers, financial or commercial institutions, premises occupied as warehouses or storehouses, occupations, arts, professions, or means of profit or livelihood, carried on or exercised by any person or persons, in the city; provided that such business tax does not exceed ten per cent of the annual value of the premises in which such trades, manufactures, financial and commercial institutions, oc- cupations, arts, professions or means of profit or livelihood are respectively exercised or carried on ; and all persons, companies and corporations engaged in or carrying on such trades, manufactures, financial or commercial institutions, occupations, arts, professions or means of profit or livelihood, shall be directly responsible for the payment of such tax. ‘ ‘

In accordance with the foregoing provisions of the Charter, the City (on July 19, 1940) enacted by-law 1642, art. 1 of which reads as follows (English and French versions).

"‘An annual tax, called "‘the business tax’’, is hereby imposed and shall be levied upon all trades, manufactures, financial or commercial institutions, premises occupied as warehouses or storehouses, occupations, arts, professions or means of profit or livelihood carried on, exercised or operated by any person or persons in the City, and such business tax shall be ten per cent of the annual rental value, as established by the tax collection roll, of the premises in which such trades, manufactures, financial or commercial institutions, occupations, arts, professions or means of profit or livelihood are respectively carried on, exercised or operated; and all persons, companies or corporations, engaged in or carrying on such trades, manufactures, financial or commercial institutions, occupations, arts, professions or means of profit or livelihood shall be directly responsible for the payment of such tax.

"Une taxe annuelle, dite ‘taxe d’affaires’, est par les présentes imposée et sera prélevée sur tous les commerces, manufactures, établissements financiers ou commerciaux, les lieux occupés comme maisons d’entrepôt ou d’emmagasinage, occupations, arts, professions ou moyens de profit ou d’existence exercés ou exploités par une personne ou des personnes dans la cité ; et ladite taxe d’affaires sera de dix pour cent de la valeur locative annuelle, telle que portée au rôle de perception des taxes, des lieux dans lesquels ces commerces, manufactures, établissements financiers ou commerciaux, occupations, arts, professions ou moyens de profit ou d’existence sont respectivement exercés ou exploités; et toutes personnes, compagnies ou corporations exerçant ou exploitant ces commerces, manufactures, établissements financiers ou commerciaux, occupations, arts, professions ou moyens de profit ou d’existence sont directement responsables du payment de ladite taxe.”

For the year 1943, the plaintiff has otherwise been assessed for and has paid a business tax of $33,426.75 for the carrying on of its business in Montreal, which assessment and tax was based on the annual rental value of the offices, buildings or premises in which its said business was carried on, subject, however, to the reserve mentioned in the defendant’s plea. No dispute arises in connection with the foregoing business tax or the method by which it was ascertained. But the defendant in the said year 1948 apparently for the first time asserted a right to exact a business tax amounting to a further sum of $56,224.80, upon the annual rental value of the property now in question, namely, the poles, wires, cables, conduits and station equipment, as falling within the terms of the Charter and of the by-law as being "‘premises'' in which the occupation of the plaintiff was carried on. The question that thus arises is whether or not the plant and equipment in question falls legally within the meaning of the terms "‘premises in which the plaintiff’s occupation is carried on, exercised or operated. ’ ’ There can be no doubt that the offices, buildings or premises in which the plaintiff’s business is carried on are liable to taxation under the bylaw in question, but it is the contention of the plaintiff that these particular items, namely, poles, wires, conduits and station equipment, cannot be regarded as premises in which the business is carried on. It is submitted that they are plant, tools, equipment by means of which, or through which, the business is carried on, but they cannot. be regarded as premises in which the business is carried on.

Certain general principles should be stated in regard to the interpretation of statutes. In Beal’s Cardinal Rules of Legal Interpretation (1924), 3rd ed., it is stated:

(P. 491) ‘‘Fiscal Taxing and Charging Statutes. Fiscal, taxing, or other statutes imposing a burden upon the subject receive the same interpretation as any other statute.

"‘The words used are to be interpreted in their popular sense, unless they have acquired a technical or other special meaning.

"‘In cases of doubtful expressions, the party sought to be made liable is to be deemed to be exempt.”

(P. 495) "It is stated in Maxwell on Statutes, 1st Ed. (1875), p. 299, that ‘‘statutes which impose pecuniary burdens are subject to the rule of strict construction. It is a well settled rule of law that all charges upon the subject must be imposed by clear and unambiguous language, because in some degree they operate as penalties. The subject is not to be taxed unless the language by which the tax is imposed is perfectly clear and free from doubt’’. For this proposition several decisions and dicta are cited, and there is no doubt as to its being a correct statement of the law. Of course the learned author does not mean to say that where the plain language of a statute imposes a tax or duty, any Court is to construe it according to any other principle than they would apply to the construction of another statute (Clifford v. Commissioners of Inland Revenue [1896] 2 Q.B. 187, 192, 193; 65 L.J.Q.B. 582, 585, Pollock B.)."

(P. 496) "‘It is a wholesome principle which has often been recognized, that Taxing Acts must be reasonably clear and precise as to the subjects which are intended to be taxed (Horan v. Hayhoe [1904] 1 K.B. 288, 290; 73 L.J.K.B. 133, 135, Lord Alverstone, C.J.).”

The Act upon the construction of which the question in this case turns is a Taxing Act, and, being so, must in my opinion be construed strictly, and the onus lies upon the Crown to show that the persons whom it is sought to tax fall clearly within its operation.

It must be kept in mind that there is no question in the present case as to whether the items with which we are presenly concerned are movables or immovables, for by s. 361, para. 3, it is provided as follows:

"‘Immovable property shall also comprise all pipes, poles, wires, rails, tunnels, conduits and other constructions and apparatus of every nature used to produce or distribute for public use, motive power, light, heat, water, electricity or for traction purposes, constructed or placed on, over or under property, streets, highways, or elsewhere within the limits of the City, or for conveying or receiving telegraph, telephone or pneumatic messages. ”’

No doubt the City is authorized to impose taxes for certain purposes upon immovable property including such as is now under consideration, but when we turn to the power of the City to impose a tax to be ealled the "‘business’’ tax, the authorization conferred is not an authorization to impose a tax on all immovables but is restricted to a tax upon premises occupied for certain purposes and "‘in which’’ the business is carried on. The question arises thus whether such words are apt words to describe poles, wires, conduits, and station equipment which in the ordinary sense cannot be described as being occupied but rather utilized as a means through or by which the business conducted by the plaintiff Company in its offices is operated or carried on. In other words, unless these poles, wires, conduits and station equipment can fairly be said to be premises occupied, then they do not fall within the provisions of the Charter authorizing the imposition of a business tax in respect of them.

In the ordinary use of language, poles, wires, etc., may be ‘‘used’’ and the word "occupied” is not a suitable one in that connection. In the same way, the words "‘premises'' is not an apt word to describe such property. Little assistance can be derived from dictionary definitions of the words premises, as will appear upon reference to some of the following definitions from standard authorities which have been quoted :

Words c Phrases (1932-39) 5th Series, Vol. 4, Verbo Premises, p. 832; Black’s Law Dictionary (1910) 2nd Ed., Verbo Premises, p. 931; Bouvier’s Law Dictionary (1914) 3rd Ed., Vol. 3, Verbo Premises, p. 2668; Corpus Juris (1930) Vol. 49, Verbo Premises, para. 3, p. 1328.

Quillet, Dictionnaire encyclopédique (1935), Verbo Lieu, p. 2621; Nouveau Larousse illustré, Vol. 5 Verbo Lieu, p. 683; Rolland de Villargues, Dictionnaire du Droit civil (1848) 4e éd., Vol. 5, Verbo Lieu, p.. 459.

Quillet. op. cit., Verbo Local, p. 2693.

Nouveau Larousse illustré, Vol. 1, Verbo Bâtiment, p. 776 ; Rolland de Villargues, op. cit., Vol. 2, Verbo Bâtiment, p. 125.

Bell Telephone Co. v. Town of Summerlea (1889) 15 S.C. 64: "The Statute 58 Viet. (Q.) ch. 57, by which the Town of Summerlea was authorized to levy a tax on " every merchant, trader, and firm doing business of any kind whatsoever in a store, warehouse or shop’, does not cover a telephone company which had merely placed a telephone in the hall of a private residence, where, instead of exacting the ordinary rental of a telephone from the proprietor of the house, it received in lieu of rental a certain proportion of the fees paid by those using the instrument. ’ ’

The Modern Law of Rating by E. M. Konstam (1927), pp. 23 and 24 ;

Rapalje & Lawrence, Dictionary of American & English Law (1883) Vol. 2, verbo Premises, para. 3, p. 996;

It must always be kept in mind that these poles, ete., are taxable as immovables under other provisions of the Charter. But in the present instance this is a personal tax payable by the company and it is only for the purpose of fixing the amount of that tax under the by-law that reference is to be had to the annual value of the premises in which the business is carried on. The absence in this connection of any reference to (‘im- movables’’ or "‘immovable property’’ of the company is very significant. The reference is only to the premises in which the business is earried on and it is thus much more restricted than would have been the case had the words "immovable property’’ been used seeing that by the definition in the Charter itself the words "‘immovable property’’ expressly include poles, wires and conduits.

Again, it must be remembered that this is not a claim for exemption from the taxation which, according to the ordinary rules of interpretation, would be subject to a restricted interpretation. It is precisely the converse, namely, the assertion of a right to tax, and as pointed out above that right must be clear and unambiguous.

Reference may also be had to s. 370 of the Charter which reads as follows:

" " The business tax shall be payable for every establishment of such trade, business or occupation, when it shall be carried on by the same person, firm or persons or company in two or more distinct and separate buildings or places of business. ‘ ‘

Once again, the words used in this section, namely, ^establishment”, "‘distinct and separate buildings’’, "‘places of business”, are not applicable in their ordinary and usual meaning to poles, wires, conduits and receiving sets.

It is contended on behalf of the defendant that these various items now in controversy become taxable as premises in which the business is carried on because they constitute a part of the whole system (réseau).- That point was expressly dealt with in the decision of the Judicial Committee of the Privy Couneil in Bell Telephone Co. v. Ville St-Laurent (1926), 60 K.B. (Que.) 101, 111. At p. 111, Lord Thankerton said:

" " The question whether the structure of which it is claimed to be part, is commercially able to operate without its assistance is irrelevant, in the opinion of their Lordships, and, apart from that suggestion, it is clearly incorrect to say that the switchboard is physically incorporated in the structure composed of poles, wires and cables belonging to the appellant’s undertaking.”

I have not overlooked Nova Scotia Coal and Steel Co. v. City of Montreal, [1912] 3 D.L.R. 750, 751. In that case Mr. Justice Charbonneau held that Coal towers forming part of a coal plant, and depending on the power house for power, may be said to form part of the business premises of the owner thereof and are therefore liable to taxation under the provisions of the charter of the city of Montreal.

In that case, the learned judge said :

" " It has been said at the hearing that these coal towers are on wheels and moved at the will of the enigneer in charge; that they are nothing, therefore, but a sort of wheel-barrow for carting, unloading and reloading coal.

"‘It is true that these coal towers, although limited to a certain space on the wharves by the length of their tracks, may be moved somewhere else if these tracks are extended, but they were built to work within that special surface of ground and are attached to that surface by a power house, on which they depend for their power and therefore for their utilization. There is no doubt that they have been made immovable by destination as a part of the fixed plant and placed on the real property for a permanency and incorporated therewith (art. 379 C.C.). The only objection in this case would be that the Company is not proprietor of the ground on which these tracks are laid. But art. 362a of the city charter (7 Edw. 7, ch. 63, s. 19) was evidently enacted to cover that kind of exception. It is provided in that article that the exemption given to the harbour commissioners and other privileged bodies shall not apply to persons occupying for commercial or industrial purposes buildings or lands belonging to the board of harbour commissioners who shall be taxed as if they were the actual owners of such immovables. Therefore, in this case, the Coal Company, for the purposes of all taxation, must be considered as the actual owners of the part of the wharves occupied by it for its coal business and as a consequence the coal towers installed and working on that space of ground, as well as the power house erected thereon, must be considered as incorporated thereto, and are immovable property as long as they remain there, according to the article of the code above mentioned.

"‘There is, therefore, no objection to calling that part of the wharf rented for the coal towers and the power house, the business of the Company.’’

It may be possible, I think, to distinguish that case from the present one, but in any event, I am with great respect, not disposed to follow it in view of the subsequent observations of Lord Thankerton that I have quoted above. On the whole, I reach the conclusion that the expression "‘premises in which’’ is not sufficiently clear and unambiguous as to warrant its extension so as to include equipment. of the nature now under consideration within its terms, and as a consequence the inclusion of these poles, wires, conduits and station equipment in the defendant’s tax roll for the purpose of assessing’ a business tax thereon is illegal and ultra vires.

For these reasons, the Court doth maintain the plaintiff’s action with costs; doth declare wltra vires, illegal, null and void, the tax roll of the defendant for the year 1943 in so far as the Same purports to impose and levy the business tax now in question on the plaintiff in respect of its ownership and use of the poles, wires, overhead cables, underground conduits, underground cables and station equipment entered in the said tax roll.