Minister of Finance of B.C. v. Royal Trust Co., (1920) 61 SCR 127

Supreme Court of Canada

Minister of Finance of B.C. v. Royal Trust Co., (1920) 61 S.C.R. 127

Date: 1920-06-21

The Minister of Finance of British Columbia (Dependant) Appellant;

and

The Royal Trust Company (Petitioner) Respondent.

1920: May 4; 1920: June 21

Present: Idington, Duff, Anglin, Brodeur and Mignault JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR BRITISH COLUMBIA

Succession duty—Deceased domiciled without the province—Property within and without the province—Method of taxation on property within—"Succession Duty Act," R.S. B.C. (1911), c. 217, s. 7, as amended by (B.C.) 1915, c. 58, s. 4.

Where a person domiciled out of the province of British Columbia dies leaving property both in and out of the province, the provincial authorities have the right, for the purpose of computing succession duty according to section 7 of the "Succession Duty Act," to take into account all the property.

Judgment of the Court of Appeal ([1919] 3 W.W.R. 76) reversed, Anglin and Mignault JJ. dissenting.

APPEAL from the judgment of the Court of Appeal for British Columbia^[1], affirming the judgment of the trial judge, Hunter C. J.^[2], and maintaining the respondents' petition.

[Page 128]

The material facts of the case and the questions in issue are fully stated in the above head—note and in the judgments now reported.

J. A. Ritchie, for the appellant.

Charles Wilson K.C., for the respondent.

IDINGTON J.—The late Sir William Van Horne was domiciled in Quebec when he made his last will and testament and died on the 11th of September, 1915, possessed of an estate of the aggregate value of $6,371, 374.31, of which $300,000 worth was situated in the Province of British Columbia. The questions raised herein relative to the amount of the succession duties collectable upon or out of that part of the estate so situated, must be determined by the true interpretation and construction of the "Succession Duties Act," as amended, of said province, if and so far as intra vires the legislature thereof.

The judgment of the Court of Appeal for British Columbia^[3] holds that the scale applied by the appellant in estimating the duties payable in question would be ultra vires the power of the said legislature to enact, and hence, the "Succession Duty Act" so construed would be ultra vires.

It should tend to clarity of thought upon the subject to bear in mind that the right of any one to claim any part of the estate of a deceased rests entirely upon the legislative enactments, in force where the property so left, may chance to have provided.

[Page 129]The succession duties, so called, requiring a part of the estate situated in any province at the time of death to be handed over to the Minister of Finance or other authority declared by the legislature entitled to demand and receive same, is clearly within the power of the legislature to enact.

The scale by which such duties are to be measured and the conditions upon and by which it is to be applied also fall within the said power.

There is no attempt made by the enactment here in question to tax, directly or indirectly, any part of the estate lying beyond the province.

All that is attempted, is to apply a scale of assessment to that now in question presumed to be fitting the case of a wealthy man's estate.

Similar distinctions are, rightly or wrongly, made in an infinite variety of ways in that kind of legislation in the cases of those domiciled within a province.

Two of the most prevalent of those distinctions are the cases of the men of wealth, as distinguished from their poorer neighbours, or of men with a family, or next of kin, as distinguished from those who have none.

No one has ever, so far as I know, tried to maintain that such distinctive conditions are beyond the power of the legislature having absolute authority over property and civil rights, to impose as a term of the necessary recognition by local authority, in order to entitle any one to claim the succession of any part of the property of a deceased person.

For aught I can see, as matter of law, the like distinction might be so made in favour of or against the sex or colour of him or her who has died, or him or her who is to become entitled to receive by virtue of legislative authority what has been left, if the legislature saw fit to do so.

[Page 130]

It seems to me necessary, from experience of the mode of thought with which enactments such as that in question are sometimes approached, in trying to interpret and construe them, that a full realization of the foregoing elementary principles is necessary.

The amended statute now in question if viewed in light of such conceptions is to my mind very clear and simple.

I agree it might have been expressed in some way that would have rendered the construction put upon it below impossible.

Yet if we pay heed to the interpretation of the definitions of the phrases "aggregate value" and "net value" when used in the enactment, how, I submit with great respect, can the clauses wherein they occur be construed otherwise than as embracing both property within and without the province?

The phrases are defined respectively as follows:—

"Aggregate value" means the value of the property before the debts, incumbrances, or other allowances authorized by this Act are deducted therefrom, and shall include property situate without the province as well as property situate within the province.

"Net value" means the value of the property, both within and without the province, after the debts, incumbrances, or other allowances or exemptions authorized by this Act are deducted therefrom.

What right have we to read them in any sense which will discard this statutory meaning? And what right have we to read into the enactments in which they appear another meaning than that would give?

And when we look at the whole purview of the statute is it not clear that there is no pretence of intention to tax anything situated beyond the province but merely to apply by means of the ascertainment thereof a scale of tax applicable to that within the province according to certain conditions?

[Page 131]

These conditions I think were properly appreciated by the appellant and duly applied by the rules of proportion he has adopted.

And, curiously enough, as illustrative of how the prepossessions and self-interest of men will tend to mislead them, we have the respondent quite content to adopt the rule of proportion so invoked when it is applied to the deduction of the testator's debts of which none existed in the province.

And that is accepted by the court as quite right.

It would have been quite competent, but for the testamentary disposition, for the respondent to have paid all the debts out of British Columbia assets.

The necessary relevant authorities are cited in the dissenting judgments below and need not be repeated here.

I think the appeal should be allowed with costs.

DUFF J.—The decision of this appeal turns upon the proper construction of section 7 of the "Succession Duty Act" as amended by the legislation of 1915. The section so amended provides that where the net value of the property of the deceased exceeds $25,000 and passes through a certain course of succession mentioned in the statute, then

all property situated within the province * * * shall be subject to duty as follows.

Then follows three sub-paragraphs, A, B, & C, of which paragraph C only has relevancy to the present appeal. That paragraph is in these words:

(c) Where the net value exceeds $200,000, at the rate of $1.50 for every $100 of the first $100,000, $2.50 for every $100 of the second $100,000, and five dollars for every $100 above the $200,000.

[Page 132]

Net value as defined in the interpretation section means a net value ascertained by taking into account the value of all property both within and without the province. It seems reasonably clear that the scheme contemplated by the legislature as brought into force by paragraph (c), is that for the purpose of ascertaining the rate in the case of estates falling within that paragraph, the net value of the estate is to be divided into three parts, the first being the sum of one hundred thousand dollars, the second also being the sum of one hundred thousand dollars, the third being the difference between the sum of two hundred thousand dollars and the sum representing aggregate net value; the net value in every case as already mentioned being ascertained by reference to the whole of the property both within and without the province. This division having been made, the rate prescribed by paragraph (c) is the rate of one dollar and fifty cents notionally applied to the whole of the first one hundred thousand dollars of the net value; the sum of two dollars and fifty cents for every one hundred dollars on the second one hundred thousand dollars notionally applied to the whole of that sum, and five dollars for every one hundred dollars above the two hundred thousand dollars notionally applied to the whole estate both within and without the province. In this manner the rate of taxation is ascertained. The property taxed, however, is only the property situated within the province, and in the case of each of the parts only that part of the first one hundred thousand, the second one hundred thousand or the excess over two hundred thousand, as the case may be, which is so situate is subject to taxation according to the several rates prescribed by sub-section (c), for the parts mentioned. This appears to be a simple

[Page 133]

and perfectly intelligible scheme applicable alike to estates partly situated within and partly situated without the province, and to estates wholly situated within the province, and the intention of the legislature seems to be expressed with reasonable clearness. The alternative interpretation proposed by Mr. Wilson in his able argument, I think, cannot be maintained on any construction of "net value" in sub-section (c), which is not inconsistent with the definition of that phrase given in the interpretation section.

ANGLIN J. (dissenting).—Although it would appear that in the opinion of the majority of the learned judges who have dealt with this case its determination should turn on whether s. 7 of the British Columbia "Succession Duty Act" (R.S.B.C., c. 217), as amended by s. 4 of c. 58 of the statutes of 1915, is or is not intra vires of the Provincial Legislature, I am, with profound respect, unable to discern in it any arguable question of constitutional validity. The subject matter of the taxation being admittedly within the province, I fail to appreciate how it can transcend its legislative jurisdiction to prescribe that the rate of the tax which it is to bear shall depend upon the amount of the decedent's entire estate, whether situate wholly within, or partly without and partly within, the province, or how it could be said if the rate of taxation on the domestic assets were made to increase with the amount of the "net value" of an entire estate comprising foreign assets, that the greater tax consequently levied on the domestic assets in that case would involve an indirect tax on the foreign assets. I agree with Mr. Justice Martin that

it is not a matter of indirect taxation at all but simply the fixing of a basis of domestic assessment in varying circumstances, domestic and foreign.

[Page 134]

The respondent's petition does not claim freedom from succession duties. It does not challenge the constitutionality of s. 7 of the statute. It asks merely a declaration that the amount of the duty payable under it in respect of the $290,463.25, net value of the estate of the late Sir William Van Horne, K.C.M.G., situate in British Columbia, is $8,523.16 and not $14,242.10 as claimed by the province. Both parties are agreed that the amount of the taxable property in British Columbia is the "net value" of the decedent's assets in the province and that this "net value" is to be ascertained by deducting from the gross or aggregate value of such assets a part of the debts of the decedent which bears to his whole indebtedness the same proportion as the aggregate value of his British Columbia assets bears to that of his entire estate. Whether this practice is correct or is sanctioned by the statute is therefore a question not presented for our consideration.

The difference between the parties arises from a divergence of views as to the mode of computation directed by s. 7, the material parts of which, as amended, read as follows:—

When the net value of the property of the deceased exceeds twenty-five thousand dollars, and passes under a will, intestacy, or otherwise, either in whole or in part, to or for the use of the father, mother, husband, wife, child, daughter-in-law, or son-in-law of the deceased, all property situate within the Province, or so much thereof as so passes (as the case may be) shall be subject to duty as follows:—

(a) not applicable.

(b) not applicable.

(c) Where the net value exceeds two hundred thousand dollars, at the rate of one dollar and fifty cents for every one hundred dollars of the first one hundred thousand dollars, two dollars and fifty cents for every hundred dollars of the second one hundred thousand dollars, and five dollars for every one hundred dollars above the two hundred thousand dollars.

[Page135]

Counsel representing the Minister of Finance contends that it is not on the entire "first one hundred thousand dollars" worth of property situate in British Columbia that duty at the rate of 1 1/2% is to be levied, but on the proportion thereof which would be subject to that rate if the entire estate had been situate within the province—and in like manner as to the "second one hundred thousand dollars' " worth of assets situate in British Columbia. He would read the words "every one hundred dollars of the first one hundred thousand dollars" and "every one hundred dollars of the second one hundred thousand dollars" as meaning in each case, "that portion of every one hundred dollars which bears to it the same proportion as the amount of the net value of the estate within British Columbia bears to the net value of the whole estate wherever situate." The respondent executor, on the other hand, maintains that this construction involves interpolating an idea which is not only not expressed in the statute but is excluded by its terms. One hundred dollars, he says, means that sum and not some part or proportion of it varying as the relative amount of foreign assets comprised in the estate is greater or less.

With Mr. Justice Galliher I view this as the real, if not the sole, question for decision; and with that learned judge I would determine it in the respondent's favour. While unable to read the words "net value" in clause (c) as the learned Chief Justice of the Court of Appeal does (i.e., as having a meaning different from that which the same words bear in the first line of s. 7—viz., the meaning given to it by the definition found in s. 2), I agree with what I understand to be that learned judge's view and also that of Mr. Justice Galliher, that it is the entire first one hundred thousand

[Page 136]

dollars' worth of "all property (of the decedent) situate within the province" that is declared by clause (c) of s. 7 to be liable to a duty of 1 1/2% and the entire second one hundred thousand dollars' worth of the same property that is declared to be liable to a duty of 2 1/2%, and that the 5% rate of duty applies only to the excess over the two hundred thousand dollars worth of assets situate within the province. The statute, in my opinion, plainly says so.

Omitting the introductory forty-six words of s. 7, which serve to define the cases that fall within the operation of the section as a whole, and also the introductory words of clause (c) "where the net value exceeds two hundred thousand dollars," which in like manner serve to define the cases that fall within the purview of that particular clause, the operative part of the section, as applicable to the case before us, reads as follows:—

All property situate within the province * * * shall be subject to duty as follows:—

At the rate of one dollar and fifty cents for every one hundred dollars of the first one hundred thousand dollars, two dollars and fifty cents for every one hundred dollars of the second one hundred thousand dollars, and five dollars for every one hundred dollars above the two hundred thousand dollars.

That this provision was intended to apply to estates consisting of property wholly within the province as well as to those comprising property partly within and partly without the province is conceded. While in the former case the appellant takes the statute just as it is and says that it fully expresses the intention of the legislature, in the latter, he would apply clause (c) as if it read as follows, the words in brackets being interpolated, except the concluding words, which are substituted:

[Page 137]

(c) Where the net value exceeds two hundred thousand dollars, (and part of the estate consists of property not within the province) at the rate of one dollar and fifty cents for (a part of) every one hundred dollars of the first one hundred thousand dollars, (which bears to the sum of one hundred dollars the same proportion as the net value of the estate within British Columbia bears to the net value of the entire estate of the decedent) two dollars and fifty cents for (a like part of) every hundred dollars of the second one hundred thousand dollars, and five dollars for every one hundred dollars (worth of the rest of the estate within the province).

In the case at bar the appellant would apply the 1 1/2% rate to $4,683.84, the 2 1/2% rate to $4,683.84 and the 5% rate, not as the statute says to "every one hundred dollars above the two hundred thousand dollars," but to "every one hundred dollars above $9,366.48."

Not only does clause (c) of s. 7 appear to say in such plain language that the lower rates of 1 1/2% and 2 1/2% are the rates of duty to be taken in respect of the first one hundred thousand dollars' worth and the second one hundred thousand dollars' worth of property situate within the province respectively that no excuse is afforded for any departure from Lord Wensleydale's well-known "golden rule of construction," but as part of a taxing Act it does not admit of an equitable construction in favour of the Crown in order to carry out some presumed intention of the legislature in the direction of equality which has not been expressed. Lumsden v. Commissioners of Inland Revenue^[4]. The subject of taxation must come within the letter of the law. We cannot justify reading into this taxing statute any words such as counsel for the Minister argues the legislature must have meant it to contain to increase the burden of the tax, whether on a plea of equalization or any other. It may be that if the Act be read literally, as I think it must be, the taxation on the $300,000 of British Columbia assets

[Page 138]

owned by the decedent will be less than it would have been had all the rest of his estate of $6,371,374.75 been likewise situate within the province. But, if that be a result which the legislature did not intend, it is reached merely because it has expressed an intention to that effect and has failed to express any other intention. The remedy is in its hands and must be sought from it and not from the courts. Attorney General v. Milne^[5].

I would dismiss the appeal with costs.

BRODEUR J.—The question in this case is whether the British Columbia Government should levy a succession duty, on Sir Wm. Van Horne's Estate, of $14,242.10, as claimed by the appellant, or of only $8,523.16, as contended by the respondent and as decided by the courts below.

The whole difficulty is as to the construction of section 7 of the "Succession Duty Act" of British Columbia and as to the way of computing the rate of duty. There was a suggestion by one of the judges below that the Province had no right to take into account the extra-provincial assets to determine the net value of the estate. But this constitutional aspect was not, and with reason, accepted by the other judges. It seems to me that a province acts within its power in enacting that the property of a deceased person situate outside the province should be considered in arriving at the aggregate value. Re Renfrew^[6]. There is no attempt in the present statute to tax property outside the province; but it simply declares that the property situate within the province will bear a heavier duty when the whole estate is larger.

[Page 139]

The provincial authorities in determining the rate of duty in this case have taken into account all the property of the deceased both within and without the province and have subjected the proportionate part of such property within the Province to the duty which would have been payable if the whole estate had been within the province. This mode of calculation is not only a fair and equitable one, but is the one authorized by the statute.

The respondent contends that the rate of succession duty should be determined with reference only to the net value of the property of the deceased within the Province.

Section 2 of the "Succession Duty Act" enacts that the net value mentioned in section 7 means the value of the property both within and without the Province.

It is common ground that the liabilities of the estate should be charged proportionately on the property in the province and it seems to me that the same rule should be observed as to the payment of the rates of succession duty.

The appeal should be allowed with costs throughout and the claim as made by the British Columbia Minister of Finance be declared valid.

MIGNAULT J. (dissenting).—As I view this case, it involves merely the construction of the British Columbia "Succession Duty Act," chapter 217 of the Revised Statutes of 1911, as amended by section 4 of chapter 58 of the statutes of 1915. No constitutional problems arise and the right of the British Columbia legislature to levy a succession duty of any amount on property within the province passing by the death of a person domiciled within or without the province, has not been disputed.

[Page 140]

The late Sir William Van Horne left an estate of the aggregate value of $6,371,374.73, with liabilities of $169,989.56, so that the net value of the estate was $6,201,385.17. Out of the aggregate value, 2,000 shares in the British Columbia Sugar Refinery, Limited, were in British Columbia and their agreed value was $300,000. The appellant demanded $14,242.10, as succession duty, and the respondent, managing executor of the estate, petitioned the court to have it declared that the claim of the appellant proceeded upon an erroneous basis, and that the sum payable for succession duty was $8,523.16, and no more.

By the statute "aggregate value" means

the aggregate value of the property before the debts, incumbrances, or other allowances authorized by this Act are deducted therefrom, and shall include property situate without the Province as well as property situate within the Province,

while "net value" is defined as

the value of the property, both within and without the Province, after the debts, incumbrances, or other allowances or exemptions authorized by this Act are deducted therefrom.

Section 7 of the statute is as follows:

When the net value of the property of the deceased exceeds twenty-five thousand dollars, and passes under a will, intestacy, or otherwise, either in whole or in part, to or for the use of the father, mother, husband, wife, child, daughter-in-law, or son-in-law of the deceased, all property situate within the Province, or so much thereof as so passes (as the case may be) shall be subject to duty as follows:

(a) Where the net value exceeds twenty-five thousand dollars, but does not exceed one hundred thousand dollars, at the rate of one dollar and fifty cents for every one hundred dollars;

(b) Where the net value exceeds one hundred thousand dollars but does not exceed two hundred thousand dollars, at the rate of one dollar and fifty cents for every one hundred dollars of the first hundred thousand dollars and two dollars and fifty cents for every one hundred dollars above the one hundred thousand dollars;

(c)Where the net value exceeds two hundred thousand dollars, at the rate of one dollar and fifty cents for every one hundred dollars of the first one hundred thousand dollars, two dollars and fifty cents for every hundred dollars of the second one hundred thousand dollars, and five dollars for every one hundred dollars above the two hundred thousand dollars.

[Page 141]

I am of opinion, on the construction of this section, that the property subject to succession duty is "all property situate within the province," and inasmuch as the property in British Columbia of this estate exceeded in value $200,000. the succession duty must be calculated according to paragraph (c) of section 7.

The property in British Columbia belonging to the estate amounted, I have said, to $300,000. It appears to have been common ground between the parties that from this $300,000 should be deducted the sum of $9,536.75, being a share of the total liabilities of the same proportion as the sum of $300,000 when compared with the aggregate value of the whole estate, thus leaving a net value in British Columbia of $290,463.25. It is on the basis of this reduction of the assets in British Columbia that both parties have proceeded, and I express no opinion whether the reduction should have been made.

The appellant's mode of calculation, which I copy, correcting some misprints in figures, from the respondent's factum, no objection having been taken to the accuracy of the statement by the appellant's counsel, is as follows:

Total amount of estate, less debts, $6,207,385.07; agreed value of property in B.C. after deducting proportion of debts, $290,463.25. The appellant then divided $6,207,385.07, the whole estate, by $290,463.25, the agreed net value of the British Columbia property, the quotient being 21.3496. Then to ascertain the duty payable he divides the first $100,000 by 21.3496, which is $4,683.84, and 1 1/2% on this sum is $70.24.

The same process for the next $100,000 at 2 1/2% produces $117.09.

Then the appellant deducts twice $4,683.84, i.e., $9,367.68, from the value of the property in British Columbia after deducting the proportion of the debts, viz.: $290,463.25, leaving $281,095.57, and upon this sum charges 5%, i.e., $14,054.77; the result being: first $100,000 at 1 1/2%, $70.24; second $100,000 at 2 1/2%, $117.09; the remainder, viz., $281,095.57, at 5%, $14,054.77. Total, $14,242.10.

The appellant strongly relies on the statutory definitions of "aggregate value," and "net value" given

[Page 142]

above, and contends that when paragraph (c) of section 7 speaks of the "net value" exceeding $200,000, the "net value" referred to is the net value of the property both within and without the province. Even supposing this construction to be sound, the rule of paragraph (c) must nevertheless be followed, and the rate of taxation is 1 1/2% on the first hundred thousand dollars, 2 1/2% on the second hundred thousand dollars, and 5 per cent above the two hundred thousand dollars. The intention of the legislature is clearly shown by the amendment made in 1915 to section 7, which section, before this amendment, in the case of a succession of more than $200,000.00, required the payment of $5.00 on every $100.00 of the net value of the estate. The effect of the amendment was to charge, even in the case of a net value of more than $200,000.00, 1 1/2per cent, on the first $100,000.00, 2 1/2 per cent. on the next $100,000.00 and 5 per cent. on the excess over $200,000.00. Moreover, as stated, the subject of this taxation is "all property situate within the province" (see also subsection (a) of section 5) and unless the legislature be held to have intended to impose a tax on property outside the province, which it could not do, the property only which was situate within the province is taxed according to the scale indicated.

Calculating therefore in conformity with this scale the succession duty on the sum of $290,463.25, agreed upon as the net value of the assets in British Columbia, the amount due is $8,523.16, as found by the two courts below.

I am therefore of opinion that the appeal should be dismissed with costs.

Appeal allowed with costs.

Solicitor for the appellant: Wm. D. Carter.

Solicitors for the respondent: Wilson & Whealler.