Woodward Estate v. Minister of Finance, [1973] SCR 120

Supreme Court of Canada

Woodward Estate v. Minister of Finance, [1973] S.C.R. 120

Date: 1972-06-29

The Executors of the Estate of Percival Archibald Woodward, Deceased Appellants;

and

The Honourable the Minister of Finance Respondent.

1972: February 14, 15; 1972: June 29.

Present: Fauteux C.J. and Abbott, Martland, Judson, Hall, Spence and Pigeon JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR BRITISH COLUMBIA

Certiorari—Privative provision—Minister’s determination that gift to charitable organization not exempt from succession duty—Determination made without notice to executors—Denial of natural justice—Excess of jurisdiction—Effect of statutory provision ratifying “any determination” of Minister—Succession Duty Act, R.S.B.C. 1960, c. 372, s. 5(1) (h), (2), 1970 (B.C.), c. 45, ss. 5, 6, 12(1), (4).

The testator, by his will, directed his executors to transfer all the residue of his estate to “Mr. and Mrs. P.A. Woodward’s Foundation”, for use by it in carrying out its charitable objects. The testator died on August 27, 1968. The Minister in determining, pursuant to s. 20 of the Succession Duty Act, R.S.B.C. 1960, c. 372, the amount of succession duty payable, assessed the residuary gift to the foundation as if it were a gift to a person unrelated to the testator.

Section 5(1) of the Act stated that the Act did not apply, so far as liability to pay succession duty is concerned, “to any property transferred… for religious, charitable, or educational purposes…”. Section 5(2) then provided that “For the purpose of subsection (1), the Minister, in his absolute discretion, may determine whether any purpose or organization is a religious, charitable, or educational purpose or organization.” This subsection was amended by 1970 (B.C.), c. 45, to provide that “the determination of the Minister is final, conclusive, and binding on all persons and… is not open to appeal, question or review in any Court, and any determination of the Minister made under this subsection is hereby ratified and confirmed and is binding on all persons.” The amendment did not apply in respect of estates in which the death of the deceased

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occurred on or after April 1, 1970, but was deemed to have come into force on April 1, 1968.

On an application by the executors for a writ of certiorari, the substantial issue, on which the trial judge decided in the applicant’s favour, was whether the Minister lacked jurisdiction to determine that the gift to the foundation was not exempt from succession duty in that the said determination, being of a judicial or quasi-judicial character, was made without notice to the executors, contrary to the principles of natural justice. It was held that there having been a denial of natural justice, the amendment to s. 5(2) could not make effective the determination made by the Minister, which was a nullity at law.

The Court of Appeal, by a majority, reversed this decision. The majority’s opinion was that the amendment to s. 5(2) was effective to make valid the determination of the Minister which, otherwise, would have been a nullity. The executors appealed from the judgment of the Court of Appeal to this Court.

Held: The appeal should be dismissed.

The authorities support the proposition that that portion of s. 5(2), as amended, which prohibited any review of the Minister’s determination in any Court, would not preclude such a review, by way of certiorari, if he had acted beyond his jurisdiction or had failed to observe the rules of natural justice when making his determination. However, the statutory provision under consideration did not stop at that point. The words “any determination of the Minister made under this subsection is hereby ratified and confirmed and is binding on all persons” gave statutory ratification to all determinations of the Minister made under s. 5(2), as amended, even though such determination would, in the absence of the provision, have been invalid.

Toronto Newspaper Guild v. Globe Printing Co., [1953] 2 S.C.R. 18; Anisminic Ltd. v. Foreign Compensation Commission, [1969] 2 A.C. 147; The Board of Health for the Township of Saltfleet v. Knapman, [1956] S.C.R. 877, referred to.

APPEAL from a judgment of the Court of Appeal for British Columbia[1], allowing an appeal from a judgment of Munroe J. Appeal dismissed.

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J.J. Robinette, Q.C., and D.M.M. Goldie, Q.C., for the appellants.

J.I. Bird, Q.C., and B.J. MacKinnon, Q.C., for the respondent.

John D. Hilton, Q.C., for the Attorney-General of Ontario.

Jean Leahy, Q.C., for the Attorney-General of Quebec.

The judgment of the Court was delivered by

MARTLAND J.—By his will, made on August 21, 1962, the late Percival Archibald Woodward, hereinafter referred to as “the testator”, directed his executors to grant, transfer, assign, deliver and set over to Mr. and Mrs. P.A. Woodward’s Foundation, hereinafter referred to as “the Foundation”, for use by it in carrying out its objects, all of the residue of his estate. He died on August 27, 1968.

The Foundation is a society, incorporated on October 29, 1951, under the Societies Act of British Columbia. Its objects are to operate exclusively in that province as a charitable organization. It is to apply the whole of its net income each year for those charitable objects defined in the declaration pursuant to which it was incorporated.

Following the testator’s death, his executors, as required by the provisions of the Succession Duty Act, R.S.B.C. 1960, c. 372, hereinafter referred to as “the Act”, filed an affidavit of value and relationship. The Minister of Finance, who is the Minister designated in the Act, determined, pursuant to s. 20 of the Act, the amount of succession duty payable at $1,730,536.88. In so doing, he assessed the residuary gift to the Foundation as if it were a gift to a person unrelated to the testator.

Section 5(1) of the Act, as it was at the time of the testator’s death, provided for certain exemptions from the liability to pay succession duty. Paragraph (h) of that subsection stated that the

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Act did not apply, so far as liability to pay succession duty is concerned,

(h) to any property transferred by grant or gift, whether made in contemplation of death or otherwise, or devised or bequeathed by any person for religious, charitable, or educational purposes to be carried out in the Province, or on the amount of any unpaid subscription for any like purpose made by any person so dying for which the estate of the deceased is liable;

Subsection (2) of that section then provided that:

(2) For the purpose of subsection (1), the Minister, in his absolute discretion, may determine whether any purpose or organization is a religious, charitable, or educational purpose or organization.

Section 43 of the Act provided for a right of appeal to the Minister from the statement of the duty payable which the Minister was required to send after he had determined the amount of succession duty under s. 20. Section 44 provided for a right of appeal from the Minister’s decision under s. 43, to a judge of the Supreme Court or to a judge of the County Court within the territorial limits of which the appellant resided or carried on business. A further appeal, on a point of law, could be made to the Court of Appeal under s. 45.

The appellants, the executors of the testator’s estate, appealed to the Minister, under s. 43, in response to which the assessment of succession duty was revised in relation to a matter not in issue in these proceedings. Thereafter a further appeal was made to the Minister, which evoked no response. An appeal to the Supreme Court, under s. 44, was dismissed on the ground that it was premature, as, at that time, there had been no decision of the Minister under s. 43 from which to appeal. An appeal to the Court of Appeal from this decision was made but, before it was heard, amendments were made to s. 5 of the Act, by reason of which, it was conceded, before the Court of Appeal, that the substratum of the appeal was gone. The appeal was dismissed for that reason.

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The amendments were contained in An Act to Amend the Succession Duty Act, 1970 (B.C.), c. 45, which received royal assent on April 3, 1970. The relevant provisions of that Act are as follows:

5. Subsection (2) of Section 5 of the Act is amended by adding, at the end, the following: “and the determination of the Minister is final, conclusive, and binding on all persons and, notwithstanding section 43 or 44 or any other provision of this Act to the contrary, is not open to appeal, question, or review in any Court, and any determination of the Minister made under this subsection is hereby ratified and confirmed and is binding on all persons.

6. Section 5 of the Act is further amended by inserting, after subsection (2) as amended, the following as subsection (2a):—

(2a) Subsection (2) does not apply in respect of estates in which the death of the deceased occurs on or after the first day of April, 1970.

12. (1) This Act, excepting section 5, comes into force on the first day of April, 1970.

…

(4) Section 5 shall be deemed to have come into force on the first day of April, 1968, and is retroactive to the extent necessary to give full force and effect to the provisions it amends on or after that date, and applies to property passing on the death of a person dying on, from, and after that date.

As Bull J.A., in his reasons in the Court of Appeal, says:

The strange result of these amendments is that for persons dying before April 1, 1968, the old exemption under s. 5(1) and the old s. 5(2) giving the absolute discretion to the Minister to make a determination (subject to full rights of appeal) applied irrespective of whether such determination be made at any time before or after April 1, 1970. But for persons dying after March 31, 1968, but before April 1, 1970, the old exemptions applied, but any determination, whether made during that period or at any time thereafter, was declared final, conclusive and binding and not open to appeal, question, or review by any Court and any such determination made by the Minister under s. 5(2) is ratified and confirmed. As the deceased died after March 31, 1968, and before April 1, 1970, the second category applied to his estate, and the determination of the

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Minister made on May 1, 1969, against the charitable status of the residuary bequest to the Foundation purported to become subject to those retroactive privative provisions added to s. 5(2) by the 1970 amendment.

The present proceedings were commenced on March 18, 1970, by way of a notice of motion for a writ of certiorari. Four grounds were stated in the notice, but the substantial issue, on which the learned trial judge decided in the appellants’ favour, was the first ground stated; i.e.:

1. That the Honourable the Minister of Finance lacked jurisdiction to determine that the said gift to the said Foundation was not exempt from succession duty in that the said determination, being of a judicial or quasi-judicial character, was made without notice to the Executors of the Estate of Percival Archibald Woodward, deceased, contrary to the principles of natural justice.

In his reasons for judgment, the learned trial judge says:

Counsel for the Minister conceded during the hearing that no such notice was given and conceded also, rightly I think, that when the Minister made such determination he was exercising judicial or quasi-judicial duties, particularly in the light of the 1970 amendments: Giese v. Williston (1963), 41 W.W.R. 331. Accordingly, the law is clear that he must act in good faith and give a fair opportunity to the executors and to the Foundation for correcting or contradicting any relevant statement prejudicial to their view: Board of Education v. Rice, [1911] A.C. 179; Western Mines Ltd. v. Greater Campbell River Water District (1967), 58 W.W.R. 705.

He went on to hold that, there having been a denial of natural justice, the amendment to s. 5(2) could not make effective the determination made by the Minister on May 1, 1969, which was a nullity at law.

The Court of Appeal, by a majority of two to one, reversed this decision. Tysoe J.A. and Bull J.A. were of the opinion that the amendment

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to s. 5(2) was effective to make valid the determination of the Minister which, otherwise, would have been a nullity. Branca J.A., dissenting, took the view that s. 5(2) as amended did not and could not have reference to a determination made without notice to the parties affected and without hearing representations from them.

Upon the hearing before this Court a new ground of appeal was raised, namely, that s. 5(2) of the Act was ultra vires of the Legislature of the Province of British Columbia as being an infringement of the appointing powers of the Governor in Council and the legislative powers conferred upon the Parliament of Canada under ss. 96 to 100 of the British North America Act. It was contended that, under the subsection, the Minister would be exercising powers analogous to those exercised by a Superior, District or County Court Judge. The Attorney‑General for Ontario and the Attorney-General of Quebec intervened on this issue to oppose the appellants’ submission.

We were all of the opinion, after hearing the argument submitted on behalf of the appellants in respect of this contention, that it could not be supported successfully, and, accordingly, it was unnecessary to hear argument on this point on behalf of the respondent or the intervenants.

The issue which must be determined on this appeal is as to the meaning and effect of the words which were added to s. 5(2) of the Act by the 1970 amendment. Following the amendment, s. 5(2), as from April 1, 1968, provided as follows, the portion added by the amendment being underlined:

For the purpose of subsection (1) the Minister, in his absolute discretion, may determine whether any purpose or organization is a religious, charitable, or educational purpose or organization and the determination of the Minister is final, conclusive, and binding on all persons and, notwithstanding section 43 or 44 or any other provision of this Act to the contrary, is not open to appeal, question, or review in any Court, and any determination of the Minister made under this subsection is hereby ratified and confirmed and is binding on all persons.

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The latter part of this provision is unlike any other which has previously been considered by the Courts. That part of it which provides that the Minister’s determination is not open to appeal, question, or review in any Court is a privative provision similar to many other like enactments, the effect of which has been considered in a number of decided cases. The effect which has been given to a provision of this kind is that, while it precludes a superior court from reviewing, by way of certiorari, a decision of an inferior tribunal on the basis of error of law, on the face of the record, if such error occurs in the proper exercise of its jurisdiction, it does not preclude such review if the inferior tribunal has acted outside its defined jurisdiction. The basis of such decisions is that if such a tribunal has acted beyond its jurisdiction in making a decision, it is not a decision at all within the meaning of the statute which defines its powers because Parliament could not have intended to clothe such tribunal with the power to expand its statutory jurisdiction by an erroneous decision as to the scope of its own powers.

In this Court the proposition was stated by Kerwin J. (as he then was) in Toronto Newspaper Guild v. Globe Printing Company[2], at p. 23, as follows:

We start with the proposition that when an administrative tribunal has been set up by a paramount legislative body it is the intention that such tribunal keep within the powers conferred upon it. In England and in Canada the decisions have been uniform that a Superior Court is invested with the power and duty of seeing that such a tribunal as the Ontario Labour Relations Board does not act without jurisdiction.

Similar views were expressed by the House of Lords in the case of Anisminic Ltd. v. Foreign Compensation Commission[3]. Lord Wilberforce, in that case, said, at pp. 207 and 208:

It is sometimes said, the argument was presented in these terms, that the preclusive clause does not operate on decisions outside the permitted field because they are a nullity. There are dangers in the use

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of this word if it draws with it the difficult distinction between what is void and what is voidable, and I certainly do not wish to be taken to recognise that this distinction exists or to analyse it if it does. But it may be convenient so long as it is used to describe a decision made outside the permitted field, in other words, as a word of description rather than as in itself a touchstone.

The courts, when they decide that a “decision” is a “nullity”, are not disregarding the preclusive clause. For, just as it is their duty to attribute autonomy of decision of action to the tribunal within the designated area, so, as the counterpart of this autonomy, they must ensure that the limits of that area which have been laid down are observed (see the formulation of Lord Sumner in Rex v. Nat Bell Liquors Ltd. [1922] 2 A.C. 128, 156). In each task they are carrying out the intention of the legislature, and it would be misdescription to state it in terms of a struggle between the courts and the executive. What would be the purpose of defining by statute the limit of a tribunal’s powers if, by means of a clause inserted in the instrument of definition, those limits could safely be passed?

There is no purpose in reviewing the many other authorities on this point, except to say that this Court, in The Board of Health for the Township of Saltfleet v. Knapman[4], held that a privative section in a statute did not preclude a review, by way of certiorari, of a decision of a local board of health which was in breach of the audi alteram partem rule of natural justice.

These authorities, however, go no further than to support the proposition that that portion of s. 5(2), as amended, which prohibited any review of the Minister’s determination in any Court, would not preclude such a review, by way of certiorari, if he had acted beyond his jurisdiction or had failed to observe the rules of natural justice when making his determination.

However, the statutory provision now under consideration does not stop at that point. It goes on to say that “any determination of the Minister made under this subsection is hereby ratified and confirmed and is binding on all persons.” In my

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opinion those words gave statutory ratification to all determinations of the Minister made under s. 5(2), as amended, even though such determination would, in the absence of the provision, have been invalid.

The appellants’ contention is that, because the Minister failed to recognize the rules of natural justice, his “determination” in this case was a nullity, and therefore not a “determination” at all, and that such a “determination” was not a determination “under this subsection”, which could be ratified and confirmed. In my opinion this interpretation of the latter part of the subsection does not accord with the intention of the Legislature as expressed in the words which it used when considered in relation to the provisions of the subsection as a whole.

The writ of certiorari has been the means by which a superior court may control the conduct of an inferior tribunal in two instances: (1) where the tribunal has exceeded its jurisdiction; and (2) where there has been an error of law on the face of the record. The decided cases have held that a privative provision is effective to exclude a review in the latter case. There is such a privative provision here. What remains, to which the latter portion of the subsection can apply, is a determination made in excess of jurisdiction. The Legislature has provided that such a determination is ratified and confirmed.

Without these words, the Minister’s determination would have been without legal force or effect, but it cannot be treated as though it had never existed. A determination had been made on May 1, 1969, which, by itself, was ineffective. But the Legislature clearly had power to breathe life into it, to give it a statutory confirmation. The words “under this subsection” make it clear that it is only ministerial determinations made under s. 5(2) to which its provisions apply. An administrative decision which has received statutory confirmation cannot be reviewed on certiorari.

As the majority of the Court of Appeal has pointed out, the interpretation for which the appellants contend would deprive the latter words of s. 5(2) of any effect whatever. It would mean that the ratification provision could only apply to a determination made within the Minister’s juris-

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diction and after observing the rules of natural justice. But such a determination requires no ratification or confirmation. In view of the earlier privative provisions of the subsection it is not subject to any review because of error on the face of the record and, accordingly, it would be binding without any ratification or confirmation. In my opinion the Legislature intended to ratify, confirm and make binding any determination of the Minister, under s. 5(2), which, otherwise, would have been invalid.

It is not the function of this Court to consider the policy of legislation validly enacted. Such legislation must be enforced in accordance with its terms. In my opinion the Minister’s determination of May 1, 1969, was ratified and confirmed by statute and is binding on all persons.

My conclusion on the main issue makes it unnecessary to deal with the appellants’ request that, if their appeal were allowed, the judgment at trial should be varied by making a declaration that the gift to the Foundation was exempt from succession duty, instead of referring the matter back to the Minister.

I would dismiss the appeal.

Appeal dismissed.

Solicitors for the appellants: Russell & Du-Moulin, Vancouver.

Solicitors for the respondent: Owen, Bird & McDonald, Vancouver.