Mahoney,
J:—The
plaintiff
appeals
income
tax
assessments
for
its
taxation
years
ended
December
31
in
each
of
the
years
1968
to
1975,
both
inclusive.
By
order
made
July
4,
1978,
this
and
seven
other
actions
against
the
defendant
are
test
actions.
The
judgments
in
the
test
actions
are
to
be
final
in
respect
of
a
further
88
actions.
The
plaintiff
in
each
action
is
a
colony
of
the
Darius-Leut
Conference
of
the
Hutterian
Brethren
Church.
By
the
same
order,
all
subsequent
proceedings
in
all
test
actions
have
been
taken
in
this
action.
At
trial,
all
test
actions
were
heard
together
on
common
evidence.
All
of
the
plaintiffs
in
the
test
actions
are
corporations
except
the
Hutterian
Brethren
of
Lakeside
Colony.*
That
colony’s
income
has
been
assessed
on
the
basis
of
the
income
having
been
received
by
a
trustee.
The
others
have
all
been
assessed
as
corporations.
The
eight
test
action
involve
four
colonies.
In
each
case,
the
corporate
plaintiff
with
the
word
“Church”
included
in
its
name
was
incorporated
during
1973
or
1974
and
assumed
the
property
and
operations
of
its
similarly
named
predecessor.
It
is
acknowledged
that
there
may
be
some
duplication
in
the
assessments
of
respective
successors
and
predecessors.
The
order
of
July
4,
1978,
provided
that
‘‘the
tax
liability
of
two
corporations
representing
each
colony
is
joint
and
several”
and
directed
withdrawal
of
all
duplicate
assessments.
That
provision
is
expressly
contingent
on
the
dismissal
of
one
or
more
of
the
test
actions.
I
do
not
have
the
material
upon
which
to
base
a
more
precise
order;
however,
note
that
some
of
the
predecessors,
at
least,
are
not
corporations.
If
the
order
is
not
complied
with,
appropriate
proceedings
to
enforce
it
can
be
taken.
Aside
from
that,
the
arithmetic
of
the
assessments
was
not
disputed.
The
total
amount
of
tax
liability
in
issue
in
all
96
actions
is
not
in
evidence;
however,
in
argument,
the
figure
mentioned
was
$37,000,000.
A
brief
history
of
the
recent
relationship
between
the
Hutterian
Brethren
and
the
exchequer
is
desirable.
Prior
to
1951,
the
Hutterian
Brethren,
as
a
church,
operated
under
the
aegis
of
a
North
Dakota
corporation.
The
individual
colonies
in
Canada
were
assessed
and
paid
income
tax.
In
1951,
The
Hutterian
Brethren
Church
was
incorporated
by
a
special
Act
of
Parliament!
with
“the
objects
of
engaging
in
and
carrying
on
the
Christian
religion,
Christian
worship
and
religious
education
and
teaching
and
to
worship
God
according
to
the
religious
belief
of
the
members
of
the
Corporation”.
Nothing
in
its
objects
expressly
contemplates
that
corporation
engaging
in
any
business
and,
in
particular,
the
business
of
farming.
After
that
incorporation,
the
Minister
of
National
Revenue
ceased
assessing
the
individual
colonies
to
income
tax
and,
further,
reassessed
to
the
extent
that
such
was
not
statute
barred
with
resulting
refunds.
Beginning
in
1961,
efforts
to
tax
the
colonies
resumed.
The
Hutterian
Brethren
Church
in
Canada
is
made
up
of
three
groups
of
colonies:
the
Darius-Leut,
the
Lehrer-Leut
and
the
Schmeid-Leut.
The
colonies
of
the
latter
two
groups,
in
1968,
entered
into
an
agreement
with
the
Minister
of
National
Revenue
whereby
each
colony,
for
the
years
1961
to
1967,
inclusive,
was
assessed
income
tax
on
the
notional
basis
that
the
colony’s
income
was
personal
income
of
its
members
in
equal
shares
in
accor-
dance
with
a
detailed
formula.
Thereafter,
the
corporate
assessments
of
colonies
in
the
Lehrer-Leut
and
Schmeid-Leut
groups
were
cancelled,
new
assessments
on
that
notional
basis
issued
and
tax
paid.
Actions
in
the
Exchequer
Court
relative
to
such
corporate
assessments
were
dismissed
by
consent
judgments
May
15,
1969.*
It
appears
that
colonies
of
the
Lehrer-
Leut
and
Schmeid-Leut
continued
between
1968
and
1975,
inclusive,
to
be
assessed
and
pay
tax
on
that
basis.
The
Darius-Leut
colonies
refused
to
go
along
with
the
fiction
that
the
income
of
a
colony
was
that
of
its
members.
They
were,
nevertheless,
assessed
on
that
basis
for
the
years
1961
to
1966,
inclusive.
Those
assessments
were
successfully
appealed.
While
the
proceedings
respecting
those
assessments
moved
toward
their
ultimate
resolution
by
the
Supreme
Court
of
Canada,
the
Darius-Leut
colonies
filed
corporate
income
tax
returns
for
the
years
presently
in
issue,
1968
to
1975,
inclusive.
Those
returns
were
not
assessed
until
after
the
decision
of
the
Supreme
Court
of
Canada
rendered
February
11,
1976.
The
assessments
in
issue
were
issued
December
23,
1976,
in
respect
of
the
Wilson
colony;
December
29,
1976,
in
respect
of
the
Lakeside
colony;
March
31,1977,
in
respect
of
the
Mixburn
colony
and
April
6,
1977,
in
respect
of
the
Scotford
colony.
By
agreement,
the
assessments
in
respect
of
the
Mixburn
colony
for
1967
and
1968
are
to
be
vacated.
Otherwise,
but
subject
to
the
possible
duplication
previously
referred
to,
the
Defendant
asserts
the
validity
of
all
assessments.
The
plaintiffs
argue
that
some
of
the
assessments
are
statute
barred.
They
argue
that
all
are
entirely
invalid
by
reason
of
a.
the
Exchequer
Court
decisions
in
the
Rock
Lake
and
Hutterville
actions;
b.
an
absence
of
natural
justice
in
the
assessment
process;
c.
the
discriminatory
impact
of
corporation
tax
on
the
Plaintiffs
compared
to
that
on
the
Lehrer-Leut
and
Schmeid-Leut
colonies;
d.
their
being
charitable
organizations;
e.
a
deprivation
of
freedom
of
religion.
They
argue
that
all
should
be
referred
back
to
the
Minister
for
reassessment
by
reason
of
his
failure
to
reduce
their
income
by
the
fair
market
value
of
the
labour
which
their
membership
has
contributed
to
each—an
amount,
in
each
year
for
each
colony,
said
to
be
equal
to
its
net
profit.
The
plaintiffs
adduced
no
evidence
whatever
in
support
of
the
propositions
that,
by
agreement,
the
judgments
in
the
Rock
Lake
and
Hutterville
cases
were
to
apply
to
‘all
Hutterian
colonies
which
were
parties
to
appeals
at
that
time”
including
the
“predecessor
of
the
present
plaintiff”
and
that
the
present
Darius-Leut
colonies
are
in
exactly
the
same
position
at
the
colonies
to
which
the
judgments
applied.
The
compelling
inference
to
be
drawn
from
the
evidence
is
that
those
consent
judgments,
both
involving
Lehrer-Leut
colonies,
ensued
upon
the
settlement
the
Darius-Leut
rejected.
Likewise,
the
evidence
does
not
support
the
alleged
absence
of
natural
justice
in
the
assessment
process.
In
fact,
the
argument
did
not
suggest
to
me
just
where
a
requirement
of
natural
justice,
as
I
understand
the
term,
could
possibly
arise
in
the
assessment
process,
assuming
that
process
to
be
initiated
by
the
taxpayer
filing
a
return
and
concluded
by
the
Minister
issuing
an
assessment.
Thereafter
procedures
for
objection
and
appeal
with
the
opportunity
to
be
heard
exist
and,
in
this
case,
were
invoked
by
the
plaintiffs.
In
the
scheme
of
the
Act,
the
Minister’s
reconsideration
of
an
assessment
on
a
notice
of
objection
is
a
step
in
the
appeal,
not
the
assessment,
process.
The
legality
of
the
arrangement
with
the
Lehrer-Leut
and
Schmeid-Leut
is
not
in
issue
in
this
action.
The
evidence
is,
and
I
have
no
doubt
of
the
fact,
that
the
amount
of
income
tax
payable
by
a
colony
under
that
arrangement,
all
else
being
equal,
was
substantially
less
than
had
it
been
assessed,
as
the
plaintiffs,
to
corporate
tax.
While
one
must
respect
the
stated
reasons
of
the
Darius-Leut
for
rejecting
the
same
arrangement,
they
had
the
opportunity
to
enter
into
it.
They
also
had
the
opportunity
to
be
taxed
on
that
basis
without
entering
into
such
an
arrangement
and,
as
was
their
right,
rejected
that
opportunity
by
their
successful
appeal.
The
Darius-Leut
opted
against
being
taxed
on
that
basis.
Even
if
the
arrangement
with
the
other
groups
was
illegal,
that
fact
is
no
ground
for
declaring
the
plaintiffs’
assessments
invalid.
The
actual
cost
to
each
colony
of
labour,
being
the
cost
of
goods
and
services
supplied
to
and
consumed
by
members
and
their
families
has
been
allowed.
The
cost
of
outside
purchases
is
deducted
from
revenue
in
arriving
at
taxable
income
while
the
value
of
goods
and
services
produced
on
the
colony
is
simply
ignored
for
both
revenue
and
expense
purposes.
There
is
no
basis
for
the
proposition
that
the
fair
market
value
of
donated
labour
should
be
deducted
from
the
net
profit
of
a
colony.
It
is
not
among
the
deductions
from
income
allowed
to
a
taxpayer
in
the
calculation
of
taxable
income.
In
support
of
the
allegation
that
the
assessment
to
tax
is
contrary
to
the
exemption,
by
paragraph
149(1)(f)
of
the
Act,
of
the
income
of
a
charitable
organization,
the
plaintiffs
included,
in
each
Statement
of
Claim,
the
following
passage
from
the
decision
of
Ritchie,
J,
in
Hofer
v
Hofer,
[1970]
SCR
958
at
968.
I
am
satisfied
after
having
read
a
great
deal
of
the
material
submitted
by
both
sides
in
this
case
and
after
having
considered
the
analysis
thereof
as
contained
in
the
judgments
of
the
learned
trial
judge
and
the
Court
of
Appeal,
that
the
Hutterite
religious
faith
and
doctrine
permeates
the
whole
existence
of
the
members
of
any
Hutterite
Colony
and
in
this
regard
I
adopt
the
language
which
the
learned
trial
judge
employed
in
the
course
of
his
reasons
for
judgment
where
he
said:
To
a
Hutterian
the
whole
life
is
the
Church.
The
colony
is
a
congregation
of
people
in
spiritual
brotherhood.
The
tangible
evidence
of
this
spiritual
community
is
the
secondary
or
material
community
around
them.
They
are
not
farming
just
to
be
farming—it
is
the
type
of
livelihood
that
allows
the
greatest
assurance
of
independence
from
the
surrounding
world.
The
Minister
is
the
spiritual
and
temporal
head
of
the
community.
It
allows
in
my
view
that,
notwithstanding
the
fact
that
the
Interlake
Colony
was
a
prosperous
farming
community,
it
cannot
be
said
to
have
been
a
commercial
enterprise
in
the
sense
that
any
of
its
members
was
entitled
to
participate
in
its
profits.
The
Colony
was
merely
an
arm
of
the
church
and
the
overriding
consideration
governing
the
rights
of
all
the
Brethren
was
the
fulfilment
of
their
concept
of
Christianity.
To
the
Hutterian
Brethren
the
activities
of
the
community
were
evidence
of
the
living
church.
In
this
context
I
find
it
impossible
to
view
the
Interlake
Colony
as
any
form
of
partnership
known
to
the
law.
Counsel
read
the
passage
in
argument
and
would
have
reread
a
good
portion
of
it,
as
quoted
by
Thurlow,
J
A,
as
he
then
was
in
Wipf
v
The
Queen,[1975]
CTC
79;
75
DTC
5034
had
I
not
stopped
him.
His
adamant
position
that
I
am
bound
by
a
finding
of
fact
in
another
action
is
without
merit.
That
said,
nothing
in
the
evidence
in
this
case
leads
me
to
a
radically
different
conclusion.
The
Hutterites
who
testified
are
not
farming
just
to
be
farmers;
farming
is
the
commercial
activity
that
is
most
compatable
in
this
day
and
age
to
the
lifestyle
dictated
by
their
religious
faith
and
doctrine.
In
earlier
times
other
commercial
activities,
such
as
small
manufacturing,
were
compatable
but
are
no
longer
found
so.
I
also
agree
that
none
of
the
plaintiffs
can
be
said
to
have
been
a
commercial
enterprise
in
the
sense
that
any
of
its
members
was
entitled
to
participate
in
its
profits.
That
said,
each
was
a
commercial
farming
enterprise,
employing
up
to
date
farming
equipment
and
techniques
and
purchasing
and
marketing
with
a
view
to
maximum
profits.
Surplus
funds
were
likewise
invested.
There
is
no
evidence
that
the
assessments
in
any
way
impinge
on
the
plaintiff’s
right
to
freedom
of
religion.
To
the
extent
that
the
argument
was
based
on
the
Darius-Leut’s
relatively
less
favourable
tax
treatment
to
that
enjoyed
by
the
Lehrer-Leut
and
Schmeid-Leut,
it
has
already
been
dealt
with.
It
was
freely
chosen
by
the
Darius-Leut.
It
is
true
that,
as
a
result,
the
Darius-Leut
have
less
money
than
otherwise
would
be
available
for
“church”
purposes.
However,
the
income
of
a
church
is
not
per
se
exempt
from
income
tax.
The
income
of
certain
charitable
organizations
is,
of
course,
exempt
and
a
church
may
be
such
an
organization
and
qualify
for
the
exemption.
The
plaintiffs
are
not
natural
persons
and
there
is
no
evidence
whatever
that
the
assessments
in
any
way
affect
the
ability
of
an
individual
member
to
practice
his
religion
as
he
chooses.
Two
of
the
witnesses,
Bishop
John
K
Wurz
and
Reverend
John
K
Hofer,
said
their
sole
objection
to
paying
income
tax
was
a
matter
of
conscience:
part
of
it
(in
Reverend
Hofer’s
view
86%)
goes
to
war
and
preparation
for
war.
The
requirement
that
a
corporation,
of
which
he
is
a
member,
pay
tax
which
may
be
used
for
a
purpose
to
which
he,
in
conscience,
is
opposed
can,
in
no
way,
be
considered
as
impinging
on
an
individual’s
freedom
of
religion.
Returning
to
the
question
of
whether
the
plaintiffs
are
charitable
organizations
and
their
income,
therefore,
exempt,
the
relevant
provision,
as
it
stood
during
the
period
in
issue,
is
paragraph
149(1)(f)
of
the
Act.
149.(1)
No
tax
is
payable
under
this
Part
upon
the
taxable
income
of
a
person
for
a
period
when
that
person
was
(f)
a
charitable
organization,
whether
or
not
incorporated,
all
the
resources
of
which
were
devoted
to
charitable
activities
carried
on
by
the
organization
itself
and
no
part
of
the
income
of
which
was
payable
to,
or
was
otherwise
available
for
the
personal
benefit
of,
any
proprietor,
member
or
shareholder
thereof;
While
no
part
of
the
plaintiffs’
income
was
payable
to
their
members,
part
of
it
was
certainly
applied
for
their
personal
benefit.
Indeed,
a
fundamental
concept
of
the
colony-member
relationship,
is
that
the
member
take
an
oath
of
poverty
and
donate
all
his
worldly
goods
and
labours
to
the
colony
in
ex-
change
for
the
colony’s
commitment
to
provide,
thereafter,
all
his
worldly
needs.
On
that
ground
alone,
the
argument
fails.
While
variously
expressed,
the
Memorandum
of
Association
of
each
corporate
plaintiff
sets
forth
both
religious
and
commercial,
particularly
agricultural,
objects.
The
evidence
is
that
both
are
pursued
concurrently.
In
addition,
the
evidence
establishes
that
the
plaintiffs’
religious
activities,
as
distinct
from
its
commercial
activities,
are
almost
exclusively
internal.
Their
outward
looking,
non-commercial,
activities
do
not
extend
beyond
the
minimal
demands
of
neighborliness.
The
plaintiffs’
non-commercial
activities,
even
if
they
stood
alone,
would
not
qualify
as
charitable
activities
in
the
legal
sense
of
the
term,
lacking
the
element
of
public
benefit.*
As
to
the
allegation
that
some,
at
least,
of
the
assessments
are
statute
barred,
the
relevant
provisions
of
the
Act
are
subsections
(1),
(3)
and
(4)
of
section
152.
152.(1)
The
Minister
shall,
with
all
due
despatch,
examine
each
return
of
income
and
assess
the
tax
for
the
taxation
year
and
the
interest
and
penalties,
if
any,
payable.
(3)
Liability
for
the
tax
under
this
Part
is
not
affected
by
an
incorrect
or
incomplete
assessment
or
by
the
fact
that
no
assessment
has
been
made.
(4)
The
Minister
may
at
any
time
assess
tax,
interest
or
penalties
under
this
Part
or
notify
in
writing
any
person
by
whom
a
return
of
income
for
a
taxation
year
has
been
filed
that
no
tax
is
payable
for
the
taxation
year,
and
may
(a)
at
any
time,
if
the
taxpayer
or
person
filing
the
return
(i)
has
made
any
misrepresentation
that
is
attributable
to
neglect,
carelessness
or
wilful
default
or
has
committed
any
fraud
in
filing
the
return
or
in
supplying
any
information
under
this
Act,
or
(ii)
has
filed
with
the
Minister
a
waiver
in
prescribed
form
within
4
years
from
the
day
of
mailing
of
a
notice
of
an
original
assessment
or
of
a
notification
that
no
tax
is
payable
for
a
taxation
year,
and
(b)
within
4
years
from
the
day
referred
to
paragraph
(a)(ii),
in
any
other
case,
reassess
or
make
additional
assessments,
or
assess
tax,
interest
or
penalties
under
this
Part,
as
the
circumstances
require.
The
plaintiffs’
first
argument
is
that
many
of
the
assessments
were
not
made
“with
all
due
despatch”
as
required
by
subsection
152(1).
It
is
agreed
that
“throughout
the
years
1967
to
1975
inclusive
the
plaintiffs
filed
corporation
income
tax
returns”.
The
copies
of
the
returns
transmitted
by
the
Minister
in
compliance
with
subsection
176(2)
are,
in
many
cases,
too
faint
to
read.
However,
since
none
of
the
assessments
invoke
a
penalty,
I
infer
the
returns
were
filed
on
time
and
that,
therefore,
a
notice
of
assessment
may
have
issued
as
much
as
eight
years
after
the
return,
to
which
it
relates,
was
filed.
The
defendant
argues
that
it
was
entirely
reasonable
for
the
Minister
to
delay
assessment
of
the
corporation
tax
returns
pending
disposition
of
the
appeal
process
on
the
personal
assessments
and
that,
indeed,
it
would
have
been
unreasonable
for
him
to
have
done
otherwise.
In
the
defendant’s
submission,
the
time
lag
to
be
considered
in
the
context
of
“all
due
despatch”
is
the
period
that
commenced
with
the
decision
of
the
Supreme
Court
of
Canada,
February
11,
1976.
I
agree.
The
returns
were,
in
the
cir-
cumstances,
assessed
with
all
due
despatch
and
it
is
unnecessary
for
me
to
consider
what
the
consequences
would
be
if
they
had
not
been,
particularly
in
view
of
subsection
152(3).
The
plaintiffs
also
invoke
the
four
year
limitation
period
in
subsection
152(4).
It
is
acknowledged
that
there
is
no
waiver,
wilful
default
or
fraud
established.
The
Hutterian
Brethren
of
Lakeside
Colony
filed
T-2
corporation
returns
in
respect
of
taxation
years
when
it
should
have
filed
T-3
estate,
trust
or
agency
returns.
That
necessarily
involved
a
number
of
misrepresentations.
The
assessments
in
issue
are
all
original
assessments,
not
reassessments
or
additional
assessments.
The
words
“or
assess
tax,
interest
or
penalties
under
this
part,
as
the
circumstances
require’’
were
added
at
the
end
of
subsection
152(4)
by
the
same
amendment
that
added
the
words
‘‘a
notification
that
no
tax
is
payable
for
a
taxation
year’’
to
subparagraph
152(4)(a)(ii).*
Those
words
impose
the
four
year
limitation
period
on
the
issue
of
a
notice
of
an
original
assessment
as
well
as
of
a
reassessment
or
an
additional
assessment.
The
four
year
period
is
stipulated
to
run
from
“the
day
of
mailing
of
a
notice
of
an
original
assessment
or
of
a
notification
that
no
tax
is
payable”.
It
says
nothing
of
the
day
the
return
was
filed.
In
the
case
of
an
original
assessment,
as
here,
the
four
year
period
commences
to
run
with
the
mailing
of
a
notification
that
no
tax
is
payable.
No
such
notifications
were
mailed
to
any
of
the
plaintiffs.
The
assessments
are
not
statute
barred
and
it
is,
therefor,
unnecessary
to
deal
with
the
misrepresentations
previously
mentioned.
The
plaintiff’s
action
fails.
So
do
the
other
test
actions.
A
copy
of
these
reasons
will
be
included
in
the
record
of
the
other
test
actions.
No
representations
for
a
special
order
as
to
costs
were
made.
The
plaintiff’s
action
is
dismissed
with
costs.