San Antonio Gold Mines Limited v. Attorney-General for Manitoba, [1950] CTC 429

Williams, C.J.K.B.:—By consent these actions were tried together on admissions made in each case for the purpose of the trial. Each of the plaintiffs is an operator of a gold mine and liable to pay royalty tax under The Mining Royalty and Tax Act, 1948, ch. 52. The sole question to be determined is whether sums received by the plaintiffs respectively under The Emergency Gold Mining Assistance Act, 1948, ch. 15 (Dom.) form part of the respective incomes of the plaintiffs as " income ‘ ‘ is defined in the Manitoba Act.

The taxing section of the Manitoba Act is sec. 7, which, as here relevant, reads:

“7. (1) . . . the operator of each mine in the province shall pay an annual royalty tax . . . on the income derived from the operation of the mine.. . .’’

With this must be read the following sections:

"‘2. (1) (f) ‘income,’ as used in reference to mining operations, means the net profit derived . . . from mining operations

"‘(q) ‘net profit’ means the profit earned in a calendar year, and ascertained as provided in section 3.

“3. (1) Net profit shall be ascertained in the following manner: The amount of the gross revenue from the output of the mine for the year shall be ascertained, and from that amount there shall be deducted the expenses, payments, and allowances, essential to the production of the output of the mine set out in subsection (3) . . . and no other deductions.

“2. (1) (s) ‘output’ means the minerals taken or gained from a mine . . .”

Each of the plaintiffs has received ‘‘assistance payments’’

under The. Emergency Gold Mining Assistance Act, supra, which is entitled “An Act respecting Emergency Payments to assist in meeting increased Cost of Production of Gold.’’ These payments were made pursuant to sec. 3(1) of that Act which appears under heading ‘‘ Assistance Payments’’ and reads:

‘ ‘ The Minister of Mines and Resources may pay to a person engaged in operating a gold mine a sum not exceeding an amount calculated in the manner prescribed in this section with respect to gold that is produced from the mine during a designated year and that, during the designated year, is sold to His Majesty at the Royal Canadian Mint or at a branch thereof, or is exported from Canada and sold.”

See. 3(2) sets up the formula for determining the amount of assistance payments which may be made. This formula computes the amount by reference to the cost of production of gold from a mine.

It was stated during the argument that each plaintiff sells all the ore produced by it and does not process any of its mineral products.

The provisions of the taxing Act set out above are to me clear and unambiguous and I ean find in them no words which make the ‘‘assistance payments’’ in question part of the income to be taxed. The intention of the Legislature to impose a tax must be gathered from the words used and, giving the words used in the sections quoted their plain and ordinary meaning, I can find no intention to include "‘assistance payments” in the ‘‘income’’ to be taxed, or to impose a tax upon them.

We have, in The Mining Royalty and Tax Act, a special definition of “income,” one quite different, for example, from the definition in the Income War Tax Act, R.S.C. 1927, ch. 97. Here the income to be taxed is that derived from the operation of the mine and the Act plainly says that that income is the net profit derived from mining operations. But the net profit is to be ascertained in a certain way clearly set out in the statute.

The first step is to take the gross revenue from the output of the mine, and that output is specifically stated to mean the minerals taken or gained from the mine. The next and final step is to make the deductions specified in see. 3(1). The net profit is then and thus ascertained, and that is the “income” to be taxed.

I can see nothing in the Manitoba Act to authorize adding to this “income” the amount of the ‘‘assistance payments” received under the Dominion Act. But Mr. Allen argues that the words in sec. 7, supra, “income derived from the operation of the mine,’’ mean income derived ‘‘as a result of’? the operation of the mine, and, therefore, as the ‘‘assistance payments” are made only to ‘‘a person engaged in operating a gold mine” (sec. 3 of the Dominion Act) and as those payments are income (a point I shall deal with later), they are income within the meaning of the taxing section (sec. 7).

In support of the first branch of his argument, the interpretation of the word “from” as meaning ‘‘as a result of,’’ Mr. Allen relies on the definition of the word given in Murray’s New English Dictionary, vol. IV, p. 562, No. 14, ‘‘ Denoting ground, reason, cause or motive: Because of, on account of, owing to, as a result of, through; now replaced in some uses by for,’’ and the reference in Murray to ‘‘1883, 11 Q.B.D. 597.’’ This was the case of Munster v. Lamb (1883), 11 Q.B.D. 588, 92 L.J.Q.B. 726, a defamation action where counsel, in argument in discussing an earlier case, said that it decided that an action for damages was not competent against Judge or counsel in certain cases for censures passed by them ‘‘although it was alleged that the censure had been made injuriously and from motives of private malice.’’

With great respect I am unable to see how this definition, even if in some eases it might be of assistance, can prevail against the plain wording of the statute which contains a complete definition of the "‘income’’ sought to be taxed.

Furthermore, even if the section were read as Mr. Allen wishes, the income derived as a result of the operation of the mine is clearly defined by the Act which states specifically how it is to be determined. Nor does the fact that ‘‘assistance payments” are only made to persons operating a mine lead me to the conclusion that such payments are “income” within the meaning given to that word in the Manitoba Act.

Mr. Allen summarized his argument in two propositions: (1) The payments under the Dominion Act were revenue as distinguished from capital; and (2) They were revenue from the output of the mine.

He cited St. John Dry Dock & Shipbuilding Co. v. Minister of National Revenue, [1944] C.T.C. 106, [1944] Ex. C.R. 186, Thorson, P., and Wilson v. Minister of National Revenue, [1938- 39] C.T.C. 161, [1938] Ex. C.R. 246, Maclean, P. These two cases were decided upon the provisions of the Income War Tax Act which were and are entirely different from the provisions of the Manitoba Mining Royalty and Tax Act.

In the Wilson ease it was decided that the premium received by the taxpayer from dividends on mining stocks owned by him, paid in United States funds, was ‘‘income derived from mining” and the taxpayer was entitled to the deduction for depreciation authorized by the Income War Tax Act.

The Dry Dock case raised the question whether a Dominion Government subsidy paid under the authority of The Dry Docks Subsidies Act, 1910, ch. 17, as amended (now R.S.C. 1927, ch. 191) constituted taxable income of the appellant under the Income War Tax Act. It was held that it did not. But in the

course of his judgment Thorson, P. discussed many "‘subsidy’’ cases including Lincolnshire Sugar Co. Ltd. v. Smart, [1937] A.C. 697, 106 L.J.K.B. 185 (H.L.) and Mr. Allen places great reliance on that decision. It was there held that advances made under the British Sugar Industry (Assistance) Act, 1931, ch. 35, to a company carrying on business as manufacturers of sugar from beets grown in Great Britain were trading receipts of the company and liable to income tax under Case I of Schedule D . to the Income Tax Act, 1918, ch. 40.

These cases, however, were decided on the interpretation of the special statutes involved and I am unable to find anything in them to induce or compel me to give the taxing statute in this case an interpretation other than that which I think the plain words bear.

Whether or not the ‘‘assistance payments’’ should be considered as ‘‘income’’ in other contexts, they are not “income” in the limited sense of the Manitoba Act. Nor can I believe that, whatever these payments were, they were ‘‘revenue from the output of the mine.’’ Under the Act that must be revenue arising from the sale of the minerals taken or gained from the mine. As I have already pointed out the Dominion Act does not compute the “assistance payments” on any basis of production. It computes them with reference to the cost of production. But again I must come back to the definition of ‘‘income’’ given in the taxing Act. It is the income so defined, and no other, that is taxable.

At the opening of the trial Mr. Allen tendered in evidence the annual report of the International Monetary Fund, April 30, 1948, pp. 79, 80 and 81. These were two appendices: VI—statement on gold subsidies communicated to all members, and VII— fund’s statement on the Canadian Government’s proposed gold production subsidy communicated to all members. Mr. Hoskin objected to the admissibility of these and it was arranged that these parts of the document should be admitted subject to his objection. Mr. Allen did not refer to them in his argument. I am satisfied they were not admissible and have disregarded them.

It follows that the respective plaintiffs succeed and are entitled to the declarations they ask and there will be judgment accordingly with costs.