E.W. Bickle Ltd. v. MNR, 79 DTC 5170, [1979] CTC 228 (FCA)

The Chief Justice:—This is a section 28 application to set aside a decision of The Minister of National Revenue that certain publications to wit:

(a) Rapid Auto Mart Magazine,

(b) The Century Gold Post,

(c) Real Estate Victoria, and

(d) Buy, Sell and Trade,

are not newspapers for the purpose of the exemption from federal sale tax provided in section 3 of Part III of Schedule III to the Excise Tax Act.

The “Case” material, insofar as it seems to be relevant, consists of:

1. a letter from The Department of National Revenue to the applicant dated May 2, 1978, reading in part:

The assessment has been reviewed by the District Manager, Victoria District Excise Tax Office and the following confirms the tax status rulings with respect to the publications assessed.

The weekly publication “Buy Sell & Trade”, sample dated February 14-20, has been examined, and as it contains almost 100 percent advertising has been ruled to be a taxable publication.

The weekly publication “Real Estate Victoria”, sample dated February 10-16, has been examined, as it contains over 95 percent advertising has also been ruled to be a taxable publication.

The “Century 21 Gold Post”, issued on a random basis, containing 100 percent advertising is a taxable publication. The notation “an advertising supplement to the Comox District Free Press”, printed on the bottom of the back cover page, does not qualify it as a part of a newspaper.

The publication ‘‘Rapid Auto Mart Magazine”, sample dated February 28,1978 has been examined and as it contains 100 percent advertising, is a taxable publication.

The present criteria for defining a “Newspaper” which is exempt of tax under the provisions of Schedule III, Part III, Section 3 of the Excise Tax Act is as follows:

It should be a periodical publication

— resembling a newspaper format, made up of one or more numbered pages

—with a masthead on the front page showing the date of issuance and the year of production

—containing considerable editorial content such as news items of local or common interest, some advertising and such other printed text that may or may not be found in a bona fide newspaper eg, recipes, fashion notes, stories, poems, etc.

— it must be a medium of communication for public or general circulation issued at frequent intervals (usually daily, weekly, bi-weekly or monthly) and

— it must not have more than seventy percent of the space in more than fifty percent of the issues of such publication devoted to advertising.

The notation of advertising supplement on the “Century 21 Gold Post” was not sufficient to meet the requirements of having the date of issuance and the year of production appearing on the front page of the publication.

The other publications, not being supplements to a newspaper do not meet the last requirement noted above in that they must not have more than 70 percent of advertising in more than 50 percent of the issues.

It is understood that you wish to dispute the above rulings and resulting assessment, and as discussed the matter should now be taken up with Mr H G Billingsley, Regional Director, Vancouver Region, PO Box 69090, Station “K”, Vancouver, BC.

2. a letter from solicitors for the applicant to the Department dated June 6, 1978, reading in part:

As we discussed over the telephone, I am writing to you for the purposes of setting forth our case in support of the proposition that a number of publications are exempt from tax under the Excise Tax Act. The publications in question are the Rapid Auto Mart Magazine, Century 21 Gold Post, Real Estate Victoria, and Buy, Sell & Trade.

It is our position that all of these publications are newspapers within the meaning of that expression as used in section 3 of Part III of Schedule III of the Excise Tax Act. Accordingly, they should all be exempt.

Although the Department may have established detailed criteria for the purposes of determining whether or not a publication is a newspaper, those criteria do not have the force of law.

One must look instead to the statute itself and to the cases decided by the courts. The statute itself refers simply to “newspapers”. So far I have been able to find only one case dealing with this issue and I am enclosing a copy thereof for your information. You will notice that the case went before both the Exchequer Court of Canada and the Supreme Court of Canada. It was decided in 1935 and to the best of my knowledge has not been challenged. It deals directly with the use of the word “newspapers” in the Excise Tax Act. It gives an extremely broad definition to that word. In my opinion, the definitions referred to by both the Supreme Court of Canada and the Exchequer Court are broad enough to include the publications of my client.

As you know, Mr Billingsly drew my attention to the closing paragraph of Part III of Schedule III of the Excise Tax Act. That paragraph purports to make the Minister of National Revenue the sole judge as to whether any printed material is a newspaper. That paragraph is quite possibly successful in ousting the jurisdiction of the Tariff Review Board under the Excise Tax Act. Accordingly, there is no other appeal from a decision of the Minister thereunder except to the Federal Court of Appeal under Section 28 of the Federal Court Act. I am enclosing a copy of that section.

You will notice that it operates notwithstanding the provisions of any other act and this would include the Excise Tax Act. Although the Department may consider the decision of the Minister herein to be of an administrative nature and not to be made on a judicial or quasi judicial basis, the provision in the Excise Tax Act actually states that the Minister shall be the sole “judge” and his decision involves an interpretation of a statute which affects the rights of many taxpayers. The courts tend to interpret administrative decisions as decisions related to public policy and public convenience. They do not look favourably upon decisions being made on a non-appealable basis by government officials, including Ministers of the Crown.

My understanding from you is that the Minister has not yet made a decision in this matter. If he does make a decision in this matter contrary to the opinion that I have expressed, I expect my client to instruct me to appeal the decision under section 28 of the Federal Court Act and I expect the Federal Court of Appeal to uphold my interpretation of the law.

3. a letter dated July 6, 1978 from the solicitors for the applicant confirming the position previously taken and adding:

Finally, I confirm that a formal decision from the Minister will only be necessary with respect to the following:

1. The edition of Real Estate Victoria dated February 3-9, 1978.

2. The edition of Rapid Auto Mart Magazine bearing expiry date Feb 28, 1978.

3. Issue 16 of Volume 3 of Buy, Sell & Trade bearing the date April 18-24.

4. Edition 21 of the Century 21 Gold Post.

A decision by the Minister with respect to each of these particular editions will be accepted by us as a decision respecting all of the editions of these publications up to the present time. My understanding is that the Minister and his officials will be bound with respect to all editions of these publications up to the present time by any board or court decision made with respect to the four publications selected. If my understanding is correct, we also agree to be bound by any such decision with respect to all editions of these publications currently in existence.

4. a letter dated August 24, 1978 from the applicant’s solicitors to The Minister of National Revenue reading:

Pursuant to the instructions of Mr I Ferguson, Regional Chief, Excise Tax Administration in Vancouver, I am enclosing all of the extra copies of the publications in this case which are available to my client, E W Bickle Ltd.

I assume that Mr Ferguson and Mr Hugh Anderson, MP have provided you with all the other material necessary for a decision by you.

We are asking that you rule that the enclosed publications are newspapers for the purposes of the exemption given under section 3 of Part III of Schedule III of the Excise Tax Act. Our request is based upon the definition of newspaper set out in the case of The King v Montreal Stock Exchange and Exchange Printing Co (1 DTC 288 and 307).

5. a letter from the Minister to the solicitors for the applicant dated September 28, 1978 reading in part:

Thank you for your letter of August 24, 1978, concerning the application of federal sales tax to the “Rapid Auto Mart Magazine”, “The Century Gold Post”, “Real Estate Victoria” and “Buy Sell & Trade” which are published by E W Bickle Ltd of Courtenay, BC.

I have examined these publications and have found that they are essentially advertising circulars. Publications of this kind have not been granted exempt status as newspapers, and I can only confirm the previous decisions that they are subject to sales tax.

I have noted your reference to the case of “The King v Montreal Stock Exchange and Exchange Printing Co” and I must tell you that, over the years, this case has been mentioned by other persons writing to my Department. After reference to legal counsel, our position is that it is not a precedent and does not preclude the exercise of statutory descretion conveyed to the Minister of National Revenue by the Excise Tax Act.

(This letter from the Minister is the decision being attacked by this section 28 application).

Section 27 of the Excise Sales Tax Act imposes a sales tax on goods produced or manufactured in, or imported into, Canada, and subsection 29(1) thereof exempts from that tax articles mentioned in Schedule III to that Act. Section 3 of Part III of Schedule III mentions inter alia “newspapers”. At the end of Part III appear the words

The Minister shall be the sole judge as to whether any printed material comes within any of the classes mentioned in sections 1, 3, 5 and 8 of this Part.

In The King v Montreal Stock Exchange, [1935] SCR 614, [1935-37] CTC 107; 1 DTC 288, a question arose with reference to the scope of the word “newspapers” in Schedule III at a time when the quoted words did not appear in Part III. That case was initiated by an action for sales tax in which the defendant claimed the exemption; and the reasons for judgment of the Supreme Court of Canada, insofar as relevant, read as follows:

For some years the Montreal Stock Exchange and later the Exchange Printing Company printed, about noon of each day that the Exchange was in session, a sheet showing the transactions on the Exchange during the morning, and in the afternoon a similar record of the transactions for the remainder of the day. In like manner were published the transactions on the Montreal Curb market. Each week was printed a “comparative review of transactions” on the Exchange and a “comparative review of transactions” on the curb.

These sheets from time to time contained notices of dividends, annual meetings and the loss of certificates, the connection with companies whose stock was listed on the Exchange. The weekly publications besides summaries of the week’s business, contained a tabulation comparing the business of that particular week with the business of the corresponding week in the previous year.

The members of the Exchange formed the greater bulk of the users of these sheets for which they paid on a sliding scale but copies were also exchanged with similar institutions in Canada and the United States. Some were sold to outsiders and the result of the evidence of the acting secretary-treasurer of the Exchange is that any member of the public might become a subscriber.

In the instant case, the word under discussion is not defined in any statute in pari materia and it remains only to give to it the ordinary meaning that it usually bears. Webster’s New International Dictionary may be taken as giving a definition of “newspaper” which is expressed in corresponding terms in other well recognized dictionaries:—

a paper printed and distributed at stated intervals *** to convey news *** and other matters of public interest.

The sheets in question meet these requirements; the mere fact that any particular publication is meant to interest only a section of the public does not limit the meaning of the expression as a reference to religious or faternal publications will at once make clear. The sheets in question contain not merely a record of transactions on the Exchange or curb market but also information to those desiring it as to such transactions; and the other items from time to time include give “tidings, new information, fresh events reported”, (vide Concise Oxford Dictionary defining “news”).

Being of opinion that the publications are newspapers for the purposes of the Special War Revenue Act, the respondents have brought themselves within the language of an exempting proviso.

The first question that has to be considered on this section 28 application is whether the decision attacked is a decision contemplated by subsection 28(1) of the Federal Court Act*.

While the decision being attacked was made under a statutory provision that made the Minister the “sole judge’’ as to whether the publications in question came within the word “newspapers”, in my view, the use of the word “judge” does not make the decision a decision of a judicial character as opposed to a decision of an administrative character. In effect, the provision confers on the Minister, who is charged with the administration of the Act, the exclusive power to decide, in the course of such administration, what articles fall within the exempting provision. Nevertheless, while the decision is, in my view, an administrative decision, it is one that must be exercised on a quasi-judicial basis, for it is a decision whereby taxability or non taxability is determined.! [2] That being so, in my view, since the enactment of section 28 of the Federal Court Act, such a decision may be reviewed under subsection 28(1) thereof, whether or not it could have been questioned before that time as having been made on a wrong view of the legal ambit of the exemption.

The further question to be considered is whether the Minister’s decision should be set aside as having been based on an error of law.

Very briefly, as I understand it, there has been a long-standing exemption of “newspapers” from sale tax under the Excise Tax Act and, more recently, the Minister has been made the “judge” of whether a particular publication falls within that exemption. The Minister has not, however, as I understand the statute, been empowered, arbitrarily or otherwise, to vary the ambit of the exemption. In making a decision as to whether the exemption applies, the Minister’s duty as I conceive it, is to find the facts and apply the exempting words. In this case, the vital word—newspaper—has been the subject of a judgment of the Supreme Court of Canada and, in making his decision, the Minister has rejected that judgment and has laid claim to a “statutory discretion”, which he, apparently, regards as giving him a power to vary the

Subsection 28(1) reads:

Notwithstanding section 18 or the provisions of any other Act, the Court of Appeal has jurisdiction to hear and determine an application to review and set aside a decision or order, other than a decision or order of an administrative nature not required by law to be made on a judicial or quasi-judicial basis, made by or in the course of proceedings before a federal board, commission or other tribunal, upon the ground that the board, commission or tribunal

(a) failed to observe a principle of natural justice or otherwise acted beyond or refused to exercise its jurisdiction;

(b) erred in law making in its decision or order, whether or not the error appears on the face of the record; or

(c) based its decision or order on an erroneous finding of fact that it made ina perverse or capricious manner or without regard for the material before it.

ambit of the exemption from what it would be if the Supreme Court’s view were applied. In taking this view, I am of opinion that the Minister erred in law, as I find nothing in the statute empowering him to do anything other than be the “judge” as to whether the law contained in the particular section of Part III applied to the facts before him.

I am further of opinion that it cannot be said that the Minister’s decision might not have been different if he had applied the ordinary meaning of the word “newspaper” instead of applying, as it seems probable that he did, the arbitrary definition that had already been conveyed by his Department to the Applicant. While I recognize that opinions may differ, when I read the publications that were the subject matter of the decision attacked in the light of The Supreme Court’s judgment in the Montreal Stock Exchange case, I can see room for the conclusion that they are “newspapers” even though they consist exclusively, or almost exclusively of advertisements. As I understand them, they are not mere “advertising circulars” in the sense of advertising by the person who distributes them. On the contrary they contain information (news) as to what is available in particular fields of commerce even though such information is conveyed by way of advertising by third parties who have things to sell.

I am of opinion that the section 28 application should be allowed, that the decision referred to therein should be set aside and the matter should be referred back for reconsideration on the basis of the application of the Statute to the facts.

Application allowed.