The Queen v. McLaughlin, 78 DTC 6406, [1978] CTC 602 (FCTD)

Marceau, J:—During his 1974 taxation year, the defendant taxpayer received a $10,000 award from the MacMillan Trust for his achievements in agriculture. The issue in this action is whether or not this award was “an amount received by him as or on account of a . . . prize for achievement in a field of endeavour ordinarily carried on by the taxpayer” within the meaning of paragraph 56(1 )(n) of the Income Tax Act, with the consequence that it had to be included in his income for that year.

The said trust was settled, in 1966, by H R MacMillan, a citizen of Vancouver, BC, with a view to establishing a fund “for the purpose of granting awards from time to time for outstanding achievements in agriculture at the University of Guelph”. An award of $10,000 was to be given on the first day of May 1969 and $10,000 on the first day of May each and every five years thereafter.

The “H R MacMillan Laureate in Agriculture” is selected by a committee appointed by the President of the University of Guelph and comprised by deans of the various agricultural colleges and other agriculturists throughout Canada. The only term of reference given the committee is that must be chosen “the individual who has made the most creative contribution to Canadian agriculture in the previous five-year period’’. The committee invites the Deans of Agriculture and Chairmen of Agrology Institutes across the country to nominate candidates from each province. A biography of each individual recommended and a summary of the contribution made by him are submitted for consideration. The names of the candidates considered are never publicized; only the person selected is, in due time, invited to accept the award.

In 1974, the defendant was selected as the second MacMillan Laureate. Until the news was conveyed to him he had no knowledge whatsoever of his being considered; in fact the very existence of the Laureate was only very vaguely known to him. He was then still Chairman of the Ontario Milk Marketing Board, a position to which he had been appointed from 1965 to 1968 and to which in subsequent years he was elected by his fellow members of the Board who themselves were elected by milk producers in their respective regions of the province. Of course, the way he had performed his duties at the head of the Board was an important factor in his being selected but it was by no means tne sole factor. He had always given, in the eyes of the selection committee, a strong leadership in the establishment of sound programs for the dairy farming and milk distributing at the national level, and he had been himself a highly successful farmer.

The Tax Appeal Board found that the award did not fall under the terms of paragraph 56(1 )(n) of the Act, because it was not a “prize for an endeavour ordinarily carried on by (the taxpayer)”. In the opinion of the Board, a “prize” is “given as a symbol of victory for superiority arising out of a competitive situation”, whereas there was no competition involved here, and moreover the award was given for “general meritorious conduct in the field to which (the defendant) devoted his life, and not for a specific achievement in the dictionary sense within the limits of his profession or business”.

I completely agree with the decision of the Board. In my opinion, the word “prize” connotes something striven for in a competition, in a contest, and ! don’t think there can be a competition or a contest in the real sense without the participants being aware that they are involved. Moreover, if that is the meaning of the word “prize”, as I believe it is, the achievement. contemplated in the enactment must be a specific one, not achievements in the sense of personal merits of a general nature like those for which the defendant was here granted the award.

Counsel for the plaintiff raised two arguments against this interpretation of paragraph 56(1)(n).

(a) His first contention is that the French version of paragraph 56(1) (n), as it now stands, does not support such a strict interpretation. When the enactment was first adopted in 1972 the word “prix” was used in the French text, but in 1973 (1973-74 Statutes of Canada, chapter 14, section 15), the word “récompense” was substituted therefor. Counsel argues that the word “récompense” has a very broad meaning and does not necessarily refer to something given as a symbol of victory in a competition. I am ready to agree that the word “récompense” is more comprehensive than the word “prix” and does not necessarily connote a contest in the strict sense of that word. But it certainly cannot be contemplated that Parliament intended to broaden the meaning of the enactment itself by simply adopting a new version thereof in one of the two official languages. In any event, in construing the enactment, regard must be had to both its versions, English and French, and preference must be given to the version thereof that better corresponds to the true spirit, intent and meaning of the enactment (Official Languages Act, RSC 1970, chapter 0-2, section 8). In my view, the meaning conveyed by the English version is much more in keeping with the apparent scheme and philosophy behind the section taken as a whole, however sweeping it was intended to be. Moreover, this is a taxing enactment which, as it is well known, requires a strict interpretation (see Canadian Eagle Oil Co v R, [1946] AC 119) and if it can be said that a difference exists between the two versions, the narrower one must prevail.

(b) Counsel’s second argument is that if paragraph 56(1 )(n) were not to be interpreted as covering awards like the one here in issue, its introduction in 1972 would have been useless and meaningless since the case law was already to the effect that a prize received as a result of a competition in the field of endeavour of the taxpayer had to be included in his income, and in support of his statement he refers to the case of MNR v F H Watts, [1966] CTC 260; 66 DTC 5212. The answer to this argument is twofold. Firstly, the purpose of a new enactment may very well be merely to confirm unequivocally a situation already arrived at in jurisprudence and, in any event, it is not the role of the court to construe a legislative enactment beyond its normal and common sense meaning to make it achieve a result supposedly contemplated by its draftsmen. Secondly, I do not agree with the statement that under the former Act a prize received as a result of a competition was always taxable: on the contrary, the courts have consistently held that, (and I am quoting here the words of Mr Justice Gibson in the very case referred to by counsel): “Because it is not possible to lay down any comprehensive definition of “gift” or “income” under the Income Tax Act, each case must fall to be considered on its facts in matters such as are in issue in this particular case”. (See: Vincent Rother v MNR, [1955] Tax ABC 379; 55 DTC 227; Federal Farms Limited v MNR, [1959] CTC 98; 59 DTC 1050.)

In my view, the award received by the defendant taxpayer from the H R MacMillan Trust for his achievements in agriculture was in the nature of a gift, ie a transfer of property from one to another gratuitously with no valuable and legal consideration whatsoever being in- volved. Such an award does not fall within the meaning of paragraph 56(1 )(n) of the Act.

The action will therefore be dismissed with costs.