The Canadian Pacific Railway Company v. The City of Winnipeg, (1900) 30 SCR 558

Supreme Court of Canada

The Canadian Pacific Railway Company v. The City of Winnipeg., (1900) 30 SCR 558

Date: 1900-10-8

The Canadian Pacific Railway Company (Defendant)

Appellants

And

The City of Winnipeg (Plaintiff)

Respondent.

1900: May 22; 1900: May 23; 1900: October 8.

Present:—Sir Henry Strong C.J., and Taschereau, Gwynne, Sedgewick, King and Girouard JJ.

ON APPEAL FROM THE COURT OF QUEEN’S BENCH FOR MANITOBA.

Assessment and taxes—Exemption from municipal rates—School taxes.

By-law No. 148 of the City of Winnipeg, passed in 1881, exempted for ever the C. P. R. Co. from “all municipal taxes, rates and levies and assessments of every nature and kind.”

Held, reversing the judgment of the Court of Queers Bench, (12 Man. L. R. 581), that the exemption included school taxes.

The by-law also provided for the issue of debentures to the company, and by an Act of the Legislature, 46 & 47 Vict. ch. 64, it was provided that by-law 148 authorising the issue of debentures granting by way of bonus to the C. P. R. Co. the sum of $200,000 in consideration of certain undertakings on the part of the said company; and by-law 195 amending by-law No. 148 and extending the time for the completion of the undertaking * * * be and the same are hereby declared legal, binding and valid. * * *

Held, that notwithstanding the description of the by-law in the Act was confined to the portion relating to the issue of debentures the whole by-law including the exemption from taxation, was validated.

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APPEAL from a decision of the Court of Queen’s Bench for Manitoba ([1]) affirming the judgment at the trial in favour of the plaintiff.

The question for decision on the appeal was whether or not the railway company was liable to be assessed for school rates by the city. The company claimed to be exempt under a by-law of the city validated by an Act of the legislature. The city claimed that the exemption in the by-law did not cover school taxes, and also that the portion of the by-law creating the exemption was not validated.

The material parts of the by-law and of the validating Act are set out in the above head-note, and in the judgment of the court.

Aylesworth Q.C. and Atkins Q.C. for the appellant.

Howell Q.C. and Chrysler Q.C for the respondent.

The judgment of the court was delivered by:

SEDGEWICK J.—The original design of the Canadian Government in fulfilment of its obligations with British Columbia and of its successor in the enterprise, the present appellant company, contemplated the crossing of the Red River by the railway at Selkirk, some thirty miles down the river from the City of Winnipeg, thence westerly by the North Saskatchewan Valley, through the Yellow Head Pass of the Rocky Mountains and on to the Pacific Ocean. The City of Winnipeg, a few years before created by the legislature of the province a municipality, was anxious that the main line of the railway should pass through the city limits, and was prepared to offer very great inducements to secure that end. An agreement was consequently entered into between the city and the company, which was afterwards embodied in a

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by-law passed by the city council on the 5th of September, 1881. This by-law, after various recitals, wherein it was declared that a line of railway south westerly from Winnipeg towards the westerly limit of Manitoba, through the Pembina Mountain district, should be built; that it was desirable to secure the location of the workshops and stock-yards of the company at Winnipeg as a central point on the main line of the railway; that the company had agreed to construct such railway and to establish and continue their principal shops and stock-yards for the Province in Winnipeg; and further, that it was expedient for the city, in consideration of the premises to grant to the company, by way of bonus, debentures to the amount of two hundred thousand dollars with interest

and to exempt the property now owned or hereafter to be owned by the said Tail way company for railway purposes within the City of Winnipeg from taxation for ever,

enacted as follows:

Upon the fulfilment by the said company of the conditions and stipulations herein mentioned by the said Canadian Pacific Railway Company, all property now owned or that hereafter may be owned by them within the limits of the City of Winnipeg for railway purposes, or in connection therewith, shall be forever free and exempt from all municipal taxes, rates and levies and assessments of every nature and kind.

The company, within the proper time, carried out its part of the contract, the city doing the same, but inasmuch as there was a grave question as to whether the by-law above recited and a subsequent by-law, No. 195, slightly amending it, were intra vires of the city corporation, the Legislature of Manitoba, by chapter 64 of the Acts of 1883, passed an Act validating these by-laws, the enacting, words being in part:

By-law No. 148 * * * and by-law No. 195, amending it, * * * are hereby declared legal, binding and valid.

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The chief question arising upon this appeal is as to the extent of the exempting privileges created by the by-law as confirmed by the Act of 1883. In other words, is the exemption sufficiently wide to embrace the moneys raised by the City of Winnipeg for public school purposes ? Are school taxes included in the phrase “ municipal taxes, rates and levies and assessments of every nature and kind ?”

A question was discusssd at the argument as to whether the Act validating the by-law in question really made valid the exemption clause. I entertain no doubt upon this point. The whole and every part of the by-law was in express words confirmed, and it would be in violation of the plain meaning and express words of the enactment to hold otherwise. Exemption from taxation was as much a bonus to the company, as perhaps a larger one than, the two hundred thousand dollars issue of debentures, and it might just as well be argued that the Act, while validating the exemption, did not validate the debenture issue.

The main question, therefore, is this: Does the exemption include school taxes ?

In order to reach a conclusion on the point in question, it will be well shortly to state the statute law in force in relation to common schools and to the authority of the municipal council in respect to taxation for public schools at the date of the passing of the bylaw, inasmuch as the contracting parties must have had before their minds the then existing state of the law applicable both to the school corporation and to the city. The school trustees of the City of Winnipeg were incorporated before the incorporation of the city, and at first they were given statutory authority not only to impose school taxes but also to collect them. See the Act of 1876, (39 Vict. ch. 1, secs. 11 and 15).

This latter section (sec. 15), however provided as follows:

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In case the boards of school trustees of cities and towns deem it advisable so to do, they may make out an estimate of the sum required in any year for educational purposes, and on or before the first day of March in each and every year, they shall provide the clerk of the city or town with such estimate accompanied with a list of the names of the persons liable to be assessed for the support of the public school or schools of which the board applying are the trustees, and it shall be the duty of the council of such city or town to levy and collect the amount demanded with the corporation taxes and to pay over the same to the boards of school trustees when collected, or the council may from time to time advance to the boards of school trustees within their municipalities, any sum or sums which they may think proper, pending the collection of the school taxes; provided that nothing in this Act shall prevent the boards of school trustees from levying and collecting the school rates and taxes themselves, if they should think proper so to do.

That section was re-enacted in the school Act in force when the by-law was passed, (44 Vict. ch. 44, sec. 51), except in regard to the proviso at the end, which was eliminated, so that when the by-law was passed the school trustees of the city had no power to tax for school purposes. That duty was imposed, and wholly imposed, upon the municipal authorities. There were still left in the statute traces and indications that at a previous period the collection of school taxes was with the school trustees, and section fifty-one of the Act just referred to would seem to indicate that it was a matter of choice with the trustees whether they should collect the taxes or employ the civic machinery for that purpose, but their power of collection was gone, and in the case of the Winnipeg School Trustees v. The Canadian Pacific Railway Co. ([2]), Chief Justice Sir Thomas Taylor says, at page 166:

It is true that the fifty-first section of the Act now in force only says that an estimate is to be made out and sent to the council “if the board of trustees deem it advisable so to do,” but practically the Legislature has given them Hobson’s choice in the matter. If they do not deem it advisable so to do, the statutes do not, so far as I can find,

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confer upon them any power to assess, levy or collect taxes themselves, and they must go without a revenue.

The law, therefore, at the date of the by-law, would seem to be this: The school trustees had the right of determining without question the amount which was to be raised for public school purposes within the city limits and of authoritatively calling upon the city authorities to collect and hand over that amount, while, the latter authorities were under an absolute obligation to obey the behests, in that regard, of the school trustees.

It may be well, too, here to state that the municipal council had legislative authority to pass by-laws

for encouraging manufactures within the limits of the city, by exempting from taxation, in the whole or in part, for a period of one or more years, such industrial establishments as are now or may hereafter be carried on in said city, and which, in the public interests, may by said council seem advisable. (38 Vict. ch. 50, sec. 107, as amended by 42 Vict. ch. 4, sec. 20.)

Also for granting bonuses to any railway or bridge company (sec. 4, ch. 42); 44 Vict. ch. 21 (1881) enacted that it should be lawful for any incorporated city

to exempt from all taxes assessments and Municipal imposts whatsoever for a period not exceeding twenty years any manufactory. * * *

It is evident from these statutes that the city had, at the time of the passing of the by-law, the power to exempt property from taxation for certain purposes, and I do not doubt but that these powers were before the minds of the contracting parties at the time the by-law was passed, as well as the general law in regard to the collection of school taxes.

The question then is: Are schools taxes exempt under this phrase “ exempt from all municipal taxes, rates and levies and assessments of every nature and kind?”

Apart from the main inquiry, the words themselves are not altogether free from ambiguity. I think,

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according to the rules of grammatical expression, the adjective “municipal” applies only to “taxes, rates and levies,” and does not qualify “assessments.” If the first conjunction “and” were not there, the adjective would qualify “ assessments,” but it is there, and, according to the literal construction of the sentence the property is exempt not only from all “municipal taxes, rates and levies.” but also from “assessments of every nature and kind.” If this literal construction is to be given, and I think it should be given, the case is at an end.

But we much prefer to rest our judgment upon the main ground that municipal taxes include school taxes, and that the property of the company is exempt from any liability to contribute towards the support of the city schools.

Mr. Justice Bain, in his judgment in this case, states as follows ะ

The widest definition I could give to the expression “ municipal taxes ” would be that they are taxes imposed by the governing body of a municipality for the purposes of the municipality.

And this definition is approved of by Killam C.J.

I accept this definition. Taxes imposed for the support of schools in a municipality, in my view, are taxes for the purposes of the municipality. The promotion of education in a community is as much a municipal purpose as the promotion of health in a community, or of physical training, or of any other object having in view the well being of the citizens. Many cities have statutory authority to impose taxes for the support of hospitals, or public libraries, gymnasiums and athletic associations of all kinds. Are these any more municipal purposes than education? There is not, in my view, any difference in principle between them.

There is another view, however, which so far has not been put forward. I submit that any taxation by

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a municipal body for the purpose of raising money to relieve itself from a municipal obligation, is taxation for a municipal purpose. The obligation of imposing this tax and of collecting it was one of the city’s legislative burdens. Relief from that burden must therefore necessarily be a municipal purpose, and the moneys raised therefor a municipal tax.

With the greatest possible deference, we have come to the conclusion that the judgment appealed from is wrong.

The appeal will be allowed with costs in all the courts and the action dismissed.

Owing to illness, the Chief Justice was prevented taking part in the judgment of the court.

Appeal allowed with costs.

Solicitor for the appellant: J. A. M. Aikins.

Solicitor for the respondent: John Stanley Hough.