Brent W Swanick v. Minister of National Revenue, [1985] 2 CTC 2352, 85 DTC 630

Bonner, TCJ:—This is an appeal from an assessment of income tax for the 1982 taxation year. The facts are not in dispute. The appellant was employed by Markborough Properties Limited from 1978 to the end of February 1982. The appellant was then fired without notice. He asserted a claim for damages which was settled by payment to him by Markborough of $40,000. In January of 1983 the appellant filed his return of income for 1982. He included in the computation of income an amount equal to half of the $40,000 on the basis that the amount included was a “‘termination payment” within the meaning of the subjection 248(1) definition and thus subject to inclusion by virtue of subparagraph 56(1)(a)(viii) of the Income Tax Act.

By assessment of tax made on September 9, 1983, the respondent included in the computation of income the entire sum of $40,000. It was the position of the respondent that the tax treatment which the appellant sought with respect to the $40,000 was brought to an end by subsections

(13) and (21) of section 128 of an Act to amend the Income Tax Act.* [1] Those provisions read:

128 (13) The definition "termination payment” in subsection 248(1) of the said Act is repealed.

(21) Subsections (10) and (13) are applicable with respect to amounts received in respect of any termination of an office or employment after November 12, 1981.

The assessment rested in part on subsection 128(10) of the same amending statute which, in combination with subparagraph 56(1)(a)(ii), brought the full $40,000 payment into income. Subsection 128(10) reads:

128 (10) The definition “retiring allowance” in subsection 248(1) of the said Act is repealed and the following substituted therefor:

“retiring allowance” means an amount (other than a superannuation or pension benefit or an amount received as a consequence of the death of an employee) received

(a) upon or after retirement of a taxpayer from an office or employment in recognition of his long service, or

(b) in respect of a loss of an office or employment of a taxpayer, whether or not received as, on account or in lieu of payment of, damages or pursuant to an order or judgment of a competent tribunal

by the taxpayer or, after his death, by a dependant or a relation of the taxpayer or by the legal representative of the taxpayer;

The appellant admitted that the assessment was correct if the amending provisions applied in his case. However, he pointed to the fact that the amending legislation did not receive Royal Assent until March 30, 1983, some sixteen months after the November 1981 budget announcement. He submitted that: .. the application of the November 1981 budget to my case amounts to a deprivation of property without due process of law.”

The argument proceeded:

In short, I filed my return within the time required by the law, the taxing authority took sixteen months to get its budget passed, and it is my submission that a delay of sixteen months between an announced change and enactment is so great that if I file my return in the interim that I am bound by the law as it existed when I filed my return.

I am arguing that we are supposed to be in this country subject to a rule of law, not a rule of intention or expectation. Due process of law means more than a hearing, right to counsel, the right to natural justice. It also means being subject to a rule of law, not a rule of intention or expectation.

There is little law on what constitutes due process, but I submit that due process means more than just the so-called principles of natural justice. It also means the right to be subject to a rule of law.

I can find no merit in this argument. It seems to assume that the assessment relies for its validity on two things:

(a) the making of a statement of budgetary intent prior to the happening of the event that triggers the tax; and

(b) the implementation of that intent by prompt passage of legislation.

Not surprisingly, the appellant was unable to point to any authority supporting his argument. The assessment of tax now in question rested on statutory provisions which had been duly enacted before the assessment was made. That assessment did not in any way rest on a budget speech. It is true that subsections (10) and (13) of section 128 of the amending Act must, if the assessment is to be regarded as valid, be construed as having retrospective operation. In Gustavson Drilling (1964) Limited v MNR, [1977] 1 SCR 271 at 279; [1976] CTC 1 at 6, Dickson, J, as he then was, had this to say:

First, retrospectivity. The general rule is that statutes are not to be construed as having retrospective operation unless such a construction is expressly or by nec- essary implication required by the language of the Act. An amending enactment may provide that it shall be deemed to have come into force on a date prior to its enactment or it may provide that it is to be operative with respect to transactions occurring prior to its enactment. In those instances the statute operates retrospectively.

This is a case, however, in which subsection 128(21) of the amending Act expressly requires that retrospective operation be given to the amendments. Thus, the assessment rests on valid legislation and not, as the appellant suggests, on the expression by a Minister of his intention to seek legislative change.

For the foregoing reasons the appeal will be dismissed.

Appeal dismissed.