RAND,
J.
(concurred
in
by
KELLOCK,
J.)
:
The
respondent
was
incorporated
in
1897
under
the
Companies
Act
(Imperial),
1862-
1893,
and
was
registered
as
an
extra-provincial
company
under
the
British
Columbia
Companies
Act
of
1897
on
January
3rd,
1898.
The
head
office
is
in
Canada,
all
directors
and
officers
are
residents
of
Canada
and
all
meetings
of
shareholders
and
directors
are
held
in
Canada.
The
business
of
the
Company
is
that
of
supplying
electric
power
and
light
and
operating
electric
railways
and
motor
buses;
and
all
of
it,
except
such
formal
administrative
matters
as
are
required
by
statute
or
its
articles
of
association
to
be
transacted
at
its
registry
office
in
London,
England,
is
carried
on,
all
of
its
income
earned
and
all
of
its
assets,
except
certain
records
and
books
of
account,
are
in
Canada.
The
company’s
principal
register
is
kept
at
London
and
in
accordance
with
see.
103
of
the
Companies
Act
(1929)
(Imperial)
a
dominion
register
at
Vancouver,
on
both
of
which
holdings
of
its
five
per
cent
cumulative
perpetual
preference
stock
are
registered
;
a
duplicate
of
the
dominion
register
is
kept
in
London
and
is
deemed
there
to
be
part
of
the
principal
register.
Stock
registered
in
the
dominion
office
can
be
transferred
only
upon
that
register
and
all
other
only
upon
the
register
in
London,
but
there
is
provision
for
change
of
registry.
The
controversy
concerns
dividends
paid
to
the
holders
of
the
perpetual
preference
stock
who
reside
in
England.
They
were
paid
by
the
company’s
registrar
and
paying
agent
in
London
after
funds
had
been
remitted
to
London
from
Canada.
The
Crown
has
assessed
taxes
under
section
9B
of
the
Income
War
Tax
Act
on
these
dividends,
and
the
right
to
do
so
is
the
question
presented
for
decision.
Section
9B,
subsections
2
and
4,
are
the
charging
provisions
and
are
as
follows:
"‘2.
In
addition
to
any
other
tax
imposed
by
this
Act
an
income
tax
of
five
per
centum
is
hereby
imposed
on
all
persons
who
are
non-residents
of
Canada
in
respect
of
(a)
all
dividends
received
from
Canadian
debtors
irrespective
of
the
currency
in
which
such
payment
is
made.
and
.
.
.”
"
‘4.
In
the
case
of
interest
or
dividends
in
respect
of
fully
registered
shares,
bonds,
debentures,
mortgages,
or
other
obligations,
taxes
imposed
by
this
section
shall
be
collected
by
the
debtor
who
shall
withhold
five
per
centum
of
the
interest
or
dividend
on
the
obligation
and
remit
the
same
to
the
Receiver
General
of
Canada.”
It
is
the
contention
of
the
Crown
that
under
this
language
the
company
is
a
Canadian
debtor
and
that
it
is
bound
to
deduct
the
tax
imposed
from
the
dividends.
The
President
of
the
Exchequer
Court
construed
the
expression
‘‘Canadian
debtors’’
in
paragraph
(a)
to
mean
"Canadian
company
debtors’’
and
4
‘Canadian
company’’
a
company
incorporated
in
Canada:
and
he
dismissed
the
action.
The
substitution
of
‘
"
Canadian
company
debtors
‘
‘
for
"
"
Canadian
debtors’’
in
paragraph
(a)
effects
a
subtle
transfer
of
meaning
which
I
think
has
escaped
the
President.
Undoubtedly
"
"
Canadian
company
’
‘—and
the
expression
is
used
in
a
number
of
instances
in
the
Act—imports
a
national
characteristic,
but
that
is
due
to
the
special
and
abstract
nature
of
the
concept
“company”
which
is
not
present
in
the
collocation
‘‘
Canadian
debtors.’’
What
is
done
by
the
importation
is
in
fact
to
qualify
the
meaning
of
‘‘Canadian
debtors’’
by
introducing
a
new
and
significant
word.
The
same
expression
is
used
in
paragraph
(&)
of
s.s.
2:
“All
interest
received
from
or
credited
by
Canadian
debtors
if
payable
solely
in
Canadian
funds,
except
the
interest
from
all
bonds
of
or
guaranteed
by
the
Dominion
of
Canada.
‘
‘
If
the
meaning
so
given
to
‘‘Canadian’’
in
(a)
is
applied
to
(b),
it
means
that
(b)
in
relation
to
natural
persons
is
applicable
only
to
Canadian
nationals.
It
would
exempt
foreign
citizen
debtors
who
might
have
spent
their
lifetime
in
Canada
and
whose
nationality
would
have
no
relevancy
to
their
being
debtors
in
Canada.
We
would
have
also
the
apparent
anomaly
in
(a)
of
Canadian
companies
carrying
on
their
entire
business
outside
of
Canada
being
forced
to
pay
over
monies
in
respect
of
dividends
which
would
never
be
in
Canada
and
would
move
within
or
between
foreign
countries.
It
was
argued
by
Mr.
Geoffrion
that
the
expression,
itself
ambiguous,
18
in
(a)
limited
to
one
of
two
interpretations,
either
Canadian
company
or
foreign
company,
that
in
neither
case
was
any
further
qualification
to
be
attached,
and
that,
construing
the
section
in
the
light
of
the
presumptions
as
to
inherent
limitations
on
jurisdiction
and
the
rules
of
comity
between
states,
the
judicial
choice
must
be
the
former.
But
I
see
nothing
in
the
statutory
matter
to
drive
us
to
any
such
exclusive
or
limited
alternatives,
certainly
not
as
the
initial
step
in
interpretation.
He
argued
also
that
"‘Canadian
debtor’’
meant
the
debtor
of
a
Canadian
debt,
i.e.,
a
debt
arising
by
virtue
of
Canadian
law;
that
the
dividend
as
a
debt
arose
from
English
law
and
that
it
was
therefore
outside
the
scope
of
the
provision.
But
there
is
nothing
in
the
context
of
the
statute
that
gives
significance
to
the
place
of
origin
of
the
debt
or
the
law
from
which
it
arises,
and
where
the
creditor
is
admittedly
a
non-resident,
it
would
be
quite
unwarranted
and
in
fact
is
invidious
to
do
so.
"Canadian
debtor’’
must,
I
think,
be
considered
from
the
point
of
view
of
the
Canadian
Parliament.
It
can
be
said
with
some
force
that
here
we
have
a
creditor
in
England
who
purchased
his
stock
in
England,
who
receives
his
dividend
from
the
agent
of
the
company
at
the
registry
office
in
England,
and
who
looks
only
to
the
symbol
of
the
company
as
that
is
present
in
England.
But
the
creditor
knows
that
the
substance
of
the
company
is
in
Canada,
that
it
‘‘
keeps
house
and
does
its
business
‘
‘
there,
a
business
completely
within
Canadian
legislative
power
;
and
that
he
must
look
to
Canada
for
the
act
of
the
company
which
declares
the
dividend
and
for
the
dividends
themselves.
The
fact
that
the
money
is
remitted
in
a
lump
sum
to
England
and
there
distributed
among
the
shareholders
entitled
is
not
significant.
The
cheques
could
have
issued
direct
to
the
shareholders
from
the
head
office,
as
they
were
to
shareholders
shown
as
resident
in
Canada
on
the
principal
register
and
to
all
shareholders
on
the
dominion
register.
The
imposition
of
the
tax
on
the
non-resident,
s.s.
2(a),
and
the
obligation
of
the
debtor
‘‘to
withhold’’
and
to
pay
to
the
Receiver
General,
s.s.
4,
are
express:
and
it
is
chiefly
the
latter
provision
by
which,
I
think,
are
indicated
the
distinctive
marks
of
the
debtor
intended
to
be
charged
:
a
person
over
whom
there
is
actual
power
of
compulsion;
from
whom
in
Canada
payment
of
the
debt
is
to
proceed;
on
whom
there
is
an
obligation
to
pay
the
dividend
qua
dividend
;
and
who,
in
the
course
of
that
act,
is
‘‘to
withhold.’’
The
expression,
then,
means
a
debtor
resident
in
Canada
by
whom
the
act
of
paying
the
dividend
as
such
is,
under
the
obligation
itself,
to
be
initiated
in
and
the
payment
to
proceed
from
this
country.
It
may
be
and
doubtless
is
the
case
that
such
an
exercise
of
taxing
power
or,
as
it
may
be
called,
exacting
power,
is
so
extraordinary
that
the
court
should
require
a
clear
identification
of
any
relation
to
which
it
is
proposed
to
be
applied.
With
the
policy
of
legislation
we
have,
of
course,
nothing
to
do,
but
1
think
the
subject-matter
with
reference
to
which
the
non-resident
is
taxed
is
here
clearly
identified,
and
that
it
embraces
the
correlatives
of
the
obligations
of
the
respondent
under
consideration.
The
legislative
competence
of
Parliament
to
tax
non-residents
was
challenged.
It
is
argued
that
the
power
"‘to
make
laws
having
extraterritorial
operation’’
as
enacted
by
the
Statute
of
Westminster,
1931,
section
3,
is
subject
to
two
conditions:
that
the
legislation
deal
with
matter
assigned
by
the
British
North
America
Act
to
the
federal
legislature;
and
that
it
be
of
such
a
nature
as
under
international
public
or
private
law
would
be
accorded
extraterritorial
effect.
It
is
then
contended
that
the
power
of
the
Dominion
under
section
91(3),
"‘the
raising
of
money
by
any
Mode
or
System
of
Taxation,
‘
‘
does
not
extend
to
taxation
of
non-citizens
outside
the
boundaries
of
Canada;
and
that
international
comity,
apart
from
any
rule
against
giving
effect
in
one
state
to
fiscal
measures
of
another
state,
would
not
for
any
purpose
recognize
the
validity
of,
much
less
enforce,
what
Parliament
is
said
to
purport
by
this
legislation
to
do.
The
power
of
the
Dominion
to
tax
is
to
be
interpreted
as
being
‘‘as
plenary
and
as
ample
within
the
limits
prescribed
by
section
92(1)
as
the
Imperial
Parliament
in
the
plenitude
of
its
power
possessed
or
could
bestow’’:
Hodge
v.
The
Queen,
9
App.
Cas.
117.
But
there
is
obviously
a
distinction
between
the
standing
of
legislative
enactments
by
a
sovereign
state
within
its
boundaries
and
beyond
them.
In
an
effective
sense,
a
declaration
by
such
a
legislature
that
it
imposes
a
tax
upon
a
citizen
of
a
foreign
country
toward
whom
there
is
no
internationally
recognized
bond
or
relation,
is,
beyond
the
territories
of
that
state,
a
futile
act,
and
it
is
futile
for
the
reason
that
beyond
them
it
is
incapable
of
enforcement.
Within
the
state,
however,
it
becomes
an
obligatory
rule
to
be
enforced
whenever
enforcement
is
feasible.
The
specific
investment
of
extraterritorial
power
by
section
3
of
the
Statute
of
1931
was
designed
no
doubt
to
remove
the
generally
accepted
limitation
of
colonial
legislative
jurisdiction,
a
limitation
which
the
courts
of
the
colony
itself
were
bound
to
recognize:
McLeod
v.
New
South
Wales,
[1891]
A.C.
455;
and
any
such
jurisdictional
inadequacy
no
longer
hampers
the
legislative
freedom
of
the
Dominion.
Within
its
field,
there
is
now
a
legislative
sovereignty.
That
the
enactment
of
section
9B
is
an
exercise
of
taxing
power
within
that
jurisdiction
does
not,
I
think,
admit
of
doubt.
It
is
an
assessment
uniformly
imposed
in
respect
of
special
items
of
a
general
class
of
defined
subject-matter
in
an
elaborated
tax
system;
there
is
admitted
jurisdiction
over
an
act
essential
to
the
subject-matter,
i.e.,
the
act
of
performance
of
an
obligation;
and
these,
taken
with
the
language
used,
satisfy
the
taxation
criteria.
Legislation
so
enacted
will
be
effective
in,
and
must
be
enforced.
by
the
courts
of,
this
country.
To
what
extent,
if
at
all,
it
will
receive
recognition
in
the
tribunals
of
foreign
countries
depends
upon
different
considerations
:
but
that
circumstance,
apart
from
its
function
in
interpretation,
is
not
one
in
which
the
local
tribunal
is
interested.
I
would,
therefore,
allow
the
appeal
and
direct
judgment
against
the
respondent
for
such
sum
as
may
be
found
to
be
owing,
with
costs
throughout.
Appeal
allowed.
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