Date: 20010620
Docket: 2001-428-IT-I
BETWEEN:
LINDA RUSSELL,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Bowman, A.C.J.
[1]
These appeals are from assessments for 1996 and 1997. The
Minister of National Revenue assessed the appellant to deny her
claim for a Goods and Services Tax Credit under
section 122.5 of the Income Tax Act. In those years
her income was $24,664 and $23,888 respectively and her
husband's income was $34,736 and $11,961 respectively. The
total family income was $59,400 and $35,849.
[2]
The GST tax credit provided in section 122.5 is intended to
alleviate in part the burden of the goods and services tax on low
income earners by creating a notional payment on account of
tax.
[3]
The appellant was married in the years in question and lived with
her spouse. She had no "qualified dependants", as
defined, living with her.
[4]
She challenges the denial of the tax credit on the grounds that,
although she and her husband had the total income set out above,
she was, as a practical matter, the only real breadwinner and
responsible person in the family, her husband having been
something of a spendthrift who had gone through two personal
bankruptcies and who frittered his money away on gadgets. I have
great sympathy for her but I do not think this is a good reason
to give her a tax credit that the law does not permit.
[5]
Subsection 122.5(3) provided, in the years in question, for
a credit equal to the amount by which [1/4 x [$190 + $190]]
(paragraphs 122.5(3)(a) and (b);
paragraphs (c), (d) and (e) have no
application here) exceeds 5% of the amount by which the
individual's adjusted income for the year exceeds $25,921.
(paragraph 122.5(3)(f)).
[6]
Obviously if we only had to take into account the appellant's
income the figure would be zero and she would be entitled to the
tax credit.
[7]
The question then is whether her "adjusted income" as
defined in subsection 122.5(1) includes her spouse's
income. The definition reads:
"adjusted income" of an individual for a taxation
year means the total of all amounts each of which would be the
income for the year of
(a)
the individual, or
(b)
the individual's qualified relation for the year if no amount
were included in respect of a gain from a disposition of property
to which section 79 applies in computing that income.
[8]
The definition is not felicitously drafted. Counsel argued that
Bowie J. in McFadyen v. R., [2000]
2 C.T.C. 2777, aff'd [2001] 1 C.T.C. 140,
had held that "or" meant "and" and that this
justified totalling the appellant's and her husband's
income for the purpose of arriving at her "adjusted
income".
[9]
Courts have struggled for years to determine whether
"or" was disjunctive or conjunctive (see Maxwell on
The Interpretation of Statutes, Twelfth Edition,
pages 232-234). Piesse on The Elements of Drafting (Eight
Edition by J.K. Aitken) devotes an entire chapter to the
"Problems of "and" and "or"".
[10] In
ordinary parlance "and" is conjunctive and
"or" is disjunctive, but sometimes a departure from
this rule is justified if sense is to be made of a legislative
provision or to ensure that Parliament's legislative intent
is not defeated. (Radage v. The Queen,
96 DTC 1615). I do not read the judgment of
Bowie J. in McFadyen as having dealt with this
specific point. It was simply assumed that the definition
required a totalling of the two incomes. Bowie J. at
p. 2781 said "The Appellant, in argument, did not
suggest that the Minister had misconstrued the Act".
He dealt only with the question of the constitutional validity of
section 122.5, as did the Federal Court of Appeal. I do not
therefore consider the McFadyen decision as binding
authority for the proposition that the spouse's income must
be added to that of the claimant in determining the
claimant's adjusted income.
[11] It should
not be automatically assumed without some analysis that
"or" in the definition is conjunctive. At the very
least the court should consider whether the provision was
ambiguous and whether the ambiguity should be resolved in favour
of the taxpayer. (Stubart Investments Limited v.
The Queen, 84 DTC 6305; Fries v. The
Queen, 90 DTC 6662).
[12] I start
from the premise that "or" is prima facie
disjunctive and that it should not be treated as conjunctive
without good reason.
[13]
"Or" can however be conjunctive if the context requires
it. If one starts by working backward from the tentative
conclusion that "or" in the definition is disjunctive
it would seem to mean that one must look to the income of either
the individual or the individual's qualified relation (her
spouse) but not both. If one starts from the tentative conclusion
that "or" means "and" then it seems clear
that one totals the income of both spouses. If this was the
intention then what principle of legislative drafting requires
that "or" be used?
[14] In
section 3 of the Income Tax Act, one finds both. In
subparagraph 3(b)(i) we find the total of (A)
and (B). In paragraph 3(d) we find "the
total of all amounts each of which is [x] or [y]". In
subparagraph 66.7(3)(a)(i) we find "the total of
(A) and (B)". In subsection 66.7(4) we find
... the total of ...
(ii)
all amounts each of which is an amount ...
(iii)
all amounts each of which is an amount ... and
(iv) all
amounts each of which is an amount ...
The same construction is found in
subparagraphs 66.7(4)(b)(ii) and (iii).
[15] To the
same effect subparagraphs 127.52(1)(b)(i) and (ii)
and 127.52(1)(c)(i) and (ii) contain the words "all
amounts each of which is an amount ..." and are joined by
"and". I had hoped to find a pattern in which
"or" was used as the conjunction in a list of amounts
where the wording was "the total of all amounts each of
which is an amount..." but "and" was used where
there is a simple list (as in subparagraph 3(b)(i)).
That is not, however, the case, as can be seen from the above
provisions.
[16] It is
fruitless to seek a consistent pattern.
[17] I have
difficulty in seeing in the definition of adjusted income why the
legislative draftsperson would have thought that "or"
was required when "and" was meant. What in the section
would compel me to give to "or" anything other than its
plain and ordinary meaning? The main clue relied on by counsel
for the respondent is the use of the word "total" in
the opening words of the definition but this is a rather slender
reed on which to base the construction of the statute. If I say
"the total of all amounts each of which is A or B" am I
saying the same as "the total of all amounts each of which
is A and B"? The answer is not free from doubt but one must
assume that if Parliament uses a different word it means to
convey a different idea. If Parliament meant "and" why
did it say "or"?
[18]
Nonetheless, whatever I may think of the drafting, I have to give
effect to the interpretation that best carries out the scheme of
the Act and the intention of Parliament. In
Trans-Canada Investment Corp. Ltd. v.
M.N.R., 53 DTC 1227 at 1231, (aff'd
55 DTC 1191 (S.C.C.)), Cameron J. said:
I agree that it is possible to interpret the language of the
section as requiring that the dividend must have been received
directly from the paying corporation. But in my view, there is
another interpretation that may be put upon it, an interpretation
which I think is more consonant with the intention of Parliament
as I deem it to be from the language itself.
In Caledonian Railway v. North British Railway, (1881) 6
A.C. 114, Lord Selborne said at p. 122:
The more literal construction of a statute ought not to
prevail if it is opposed to the intentions of the Legislature as
apparent by the statute, and if the words are sufficiently
flexible to admit of some other construction by which the
intention can be better effectuated.
Again, in Shannon Realties v. St. Michel, (1924) A.C. 192,
it was stated that if the words used are ambiguous, the Court
should choose an interpretation which will be consistent with the
smooth working of the system which the statute purports to be
regulating.
[19] To the
same effect, Cartwright J., in Highway Sawmills Ltd. v.
M.N.R., 66 DTC 5116, said at p. 5120:
The answer to the question what tax is payable in any given
circumstances depends, of course, upon the words of the
legislation imposing it. Where the meaning of those words is
difficult to ascertain it may be of assistance to consider which
of two constructions contended for brings about a result which
conforms to the apparent scheme of the legislation.
[20] I doubt
that irreparable damage would be done to the scheme of the
Act if I interpreted "or" as disjunctive. Nor do
I think that one interpretation as opposed to the other leads to
an absurdity. (Victoria City v. Bishop of Vancouver
Island, [1921] 2 A.C. 384).
[21] What
assistance does one derive from the French version? It reads
« revenu rajusté » Quant à
un particulier pour une année d'imposition, le total
des montants qui représenteraient chacun le revenu pour
l'année du particulier ou de son proche admissible
pour l'année si aucun montant n'était
inclus dans le calcul de ce revenu au titre d'un gain
provenant d'une disposition de bien à laquelle
s'applique l'article 79.
[22] I do not
find in the French version any particular clarification.
Presumably the word "ou" is susceptible of the same
disjunctive/conjunctive interpretation as "or"
depending on the context. (Marzetti v. Marzetti (Bankrupt)
[1994] 2 S.C.R. 765).
[23] In
Glaxo Wellcome Inc. v. The Queen,
96 DTC 1159, aff'd 98 DTC 6638, I
endeavoured to set out the principles of statutory interpretation
that I considered useful in construing words in statutes but none
of those principles are of much assistance here.
[24] I revert
then to the question: in using "or" in the definition
of "adjusted income" did Parliament mean to say
"and", or, put differently, is there anything in the
context that requires that "or" be conjunctive? I
referred above to the word "total" as a slim reed on
which to construe an ambiguous provision. If one adds to this,
however, the fact that in the definition "amounts" is
plural, whereas "income" is singular, it would seem
that the interpretation that is more consonant with the
legislative intent is that "or" is conjunctive. I note
that the definition of adjusted income in section 122.6 is
virtually the same as that in section 122.5. Three judges of this
court have all held that that definition required a totalling of
the spouse's income. Sanford v. R., [2001]
1 C.T.C. 2273; Ford v. R., [1999]
1 C.T.C. 2540; Monette v. R.,
[1998] 3 C.T.C. 2348. Consistency would require that I
give the same interpretation to section 122.5.
[25] One can
test this conclusion by postulating four hypotheses and choosing
those that best conform to the apparent scheme of the
Act.
1.
The GST credit is either available to one spouse or is reduced if
his or her income falls below the $25,921 threshold regardless of
what the other spouse's income is.
2.
The GST credit is either not available to either spouse or is
reduced if the income of either one exceeds the $25,921
threshold.
3.
The GST credit is not available to either spouse if the total of
their incomes exceeds $25,921 even though the income of each,
taken individually, is below $25,921.
4.
The GST credit is available to one and only one spouse only if
the total of their combined incomes is less than $25,921.
In this case the credit is reduced to zero where the
"adjusted income" exceeds $25,921 plus $1,900.
[26] The last
three seem to be what the legislative draftsperson was driving
at. I find the first hypothesis somewhat hard to reconcile with
the verbiage of the definition.
[27] It is
unfortunate that such uncertainty can be created by the use of a
disjunctive part of speech if logic, grammar and usage would
dictate a conjunctive one. The people who draft legislation are
supposed to be experts in the precise and comprehensible
articulation of concepts. To deduce from the legislative language
a concept as simple as the one that the definition of adjusted
income seeks to express should not require pages of analysis
together with the combined skills of a logician, a grammarian and
a mediaeval schoolman.
[28] The
problem is compounded by the use of the words "all amounts
each of which is [or would be]." This formula, which is
endemic throughout the Act in one form or another, is not
necessary and adds nothing. There is no reason why the definition
could not have read "adjusted income of an individual means
the total of the incomes of the individual and of the
individual's qualified relation, computed as if no amount in
respect of a gain from the disposition of property to which
section 79 were included".
[29] This
appears to be what was meant, notwithstanding the ambiguity of
the drafting.
[30] The
appeals are dismissed.
Signed at Montréal, Canada, this 20th day of June
2001.
"D.G.H. Bowman"
A.C.J.
COURT FILE
NO.:
2001-428(IT)I
STYLE OF
CAUSE:
Between Linda Russell and
Her Majesty The Queen
PLACE OF
HEARING:
Toronto, Ontario
DATE OF
HEARING:
June 4, 2001
REASONS FOR JUDGMENT BY: The
Honourable D.G.H. Bowman
Associate Chief Judge
DATE OF
JUDGMENT:
June 20, 2001
APPEARANCES:
For the
Appellant:
The Appellant herself
Counsel for the
Respondent:
P. Tamara Sugunasiri
COUNSEL OF RECORD:
For the
Appellant:
Name:
--
Firm:
--
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-428(IT)I
BETWEEN:
LINDA RUSSELL,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on June 4, 2001 at Toronto,
Ontario, by
The Honourable Donald G.H. Bowman
Associate Chief Judge
Appearances
For the
Appellant:
The Appellant herself
Counsel for the Respondent: P. Tamara
Sugunasiri
JUDGMENT
It is
ordered that the appeals from assessments made under the
Income Tax Act for the 1996 and 1997 taxation years be
dismissed.
Signed at Montréal, Canada, this 20th day of June
2001.
A.C.J.
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