His Majesty the King v. H. J. Crabbs, [1928-34] CTC 288, [1920-1940] DTC 272

HUGHES, J.:—This action was brought against the respondent for the recovery of $499.48 alleged to be due as a debt for stamp taxes payable on sales of shares of stock under the Special War Revenue Act.

Sec. 58 of Part VII of the statute provides that no person shall sell or transfer the stock or shares of any association, company or corporation, or any bond other than a bond of the Dominion of Canada or of any province of Canada, unless there is affixed to or impressed upon the document evidencing ownership or a document shewing the transfer thereof stamps of certain values as in the statute provided.

Sec. 59, sub sec. 1, provides among other things that where the evidence of sale or transfer is shewn only by the books of the company, the stamp shall be placed or impressed upon such books. Sec. 50, subsec. 3, is as follows :

"‘In case of an agreement to sell or where the transfer is by delivery of the certificate or bond assigned in blank, or bond payable to bearer, there shall be made and delivered by the seller to the buyer a bill or memorandum of such sale or transfer to which the stamp shall be affixed or impressed.’’

Sec. 63 provides that any person who violates any of the provisions of that part of the statute shall be liable to a penalty not exceeding five hundred dollars.

The action, however, as above stated, was not for the recovery of penalties, but was an action for the stamp taxes. The provision relied upon is sec. 108, Part XIV, of the Act which reads in part as follows :

"‘All taxes or sums payable under this Act shall be recoverable at any time after the same ought to have been accounted for and paid, and all such taxes and sums shall be recoverable, and all rights of His Majesty hereunder enforeed, with full costs of suit, as a debt due to or as a right enforceable by His Majesty, in the Exchequer Court or in any other court of competent jurisdiction.’’

The respondent admitted that during the period in question, he was a stock broker carrying on business as a member of the Vancouver Stock Exchange. He admitted that during that period he had sold or transferred stock or shares on which the taxes would have been the amount claimed by the appellant ; but he testified, and there was no evidence to the contrary, that none of the shares was his own property and that he sold only as agent or broker for various clients and customers, receiving as his remuneration a commission on each transaction. The respondent therefore contended that there was no debt due by him or right enforceable against him by His Majesty within see. 108.

In Partington v. Attorney-General (1869) L.R. 4 H.L. 100, Lord Cairns, at page 122, stated the rule of interpretation of fiscal legislation as follows:

"‘I am not at all sure that, in a case of this kind—a fiscal case—form is not amply sufficient; because, as I understand the principle of all fiscal legislation, it is this: if the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. In other words, if there be admissible, in any statute, what is called equitable construction, certainly such a construction is not admissible in a taxing statute where you simply adhere to the words of the statute.’’

And again in Pryce v. Monmouthshire Canal and Railway Companies (1878) 4 App. Cas. 197 at 202, 203, as follows:

" " My Lords, the cases which have decided that Taxing Acts are to be construed with strictness, and that no payment is to be exacted from the subject which is not clearly and unequivocally required by Act of Parliament to be made, probably meant little more than this, that, inasmuch as there was not any à priori liability in a subject to pay any particular tax, nor any antecedent relationship between the taxpayer and the taxing authority, no reasoning founded upon any supposed relationship of the taxpayer and the taxing authority could be brought to bear upon the construction of the Act. and therefore the taxpayer had a right to stand upon a literal construction of the words used, whatever might be the consequence.’’

In Oriental Bank Corporation v. Wright (1880) 5 App. Cas. 842, Lord Blackburn, delivering the opinion of the Judicial Committee of the Privy Council, said at page 856 :

‘‘Their lordships, therefore, having regard to the rule that the intention to impose a charge on the subject must be shown by clear and unambiguous language, are unable to say that the obligation of the bank to make the return applied for, and its consequent liability to pay duty on the notes put in circulation by its Kimberly branch, are so clearly and explicitly imposed by the present Act as to satisfy this rule.’’

In Tennant v. Smith [1892] A.C. 150, Lord Halsbury stated the rule as follows, page 154:

“This is an Income Tax Act, and what is intended to be taxed is income. And when I say ‘what is intended to be taxed,’ I mean what is the intention of the Act as expressed in its provisions, because in a taxing Act it is impossible, I believe, to assume any intention, any governing purpose in the Act, to do more than take such tax as the statute imposes. In various eases the principle of construction of a taxing Act has been referred to in various forms, but I believe they may be all reduced to this, that inasmuch as you have no right to assume that there is any governing object which a taxing Act is intended to attain other than that which it has expressed by making such and such objects the intended subject of taxation, you must see. whether a tax is expressly imposed.

‘Cases, therefore, under the Taxing Acts always resolve themselves into a question whether or not the words of the Act have reached the alleged subject of taxation. Lord Wens- leydale said In re Micklethwait (1855) 11 Ex. 452 at 456: ‘It is a well-established rule, that the subject is not to be taxed without clear words for that purpose; and also, that every Act of Parliament must be read according to the natural construction of its words.’ ”’

In Attorney-General v. Milne [1914] A.C. 765, Viscount Haldane, Lord Chaneellor, said at page 771:

“It may be that, if probabilities, apart from the words used, are to be looked at, there is, on the construction which the Court of Appeal have put on the statute, a casus omissus which the Legislature was unlikely to have contemplated. But, my Lords, all we are permitted to look at is the language used. If it has a natural meaning we cannot depart from that meaning unless, reading the statute as a whole, the context directs 11s to do so. Speculation as to a different construction having been contemplated by those who framed the Act is inadmissible, above all in a statute which imposes taxation.’’

In Lumsden v. Commissioners of Inland Revenue [1914] A.C. 877, Viscount Haldane, Lord Chaneellor, at pages 896 and 897 said :

" " My Lords, I said at the beginning that the duty of judges in construing statutes is to adhere to the literal construction unless the context renders it plain that such a construction cannot be put on the words. This rule is especially important in eases of statutes which impose taxation.’’

In the Matter of the Finance Act, 1894, and in the Matter of the Estate of the Rev. George Studdert [1900] 2 I.R. 400 at 410, the rule of interpretation applicable to a taxing Act was stated thus by Fitzgibbon L.J.:

“If it be doubtful or difficult of interpretation, which I do not think it is, the Finance Act is subject to the rule that no tax can be imposed except by words which are clear, and the benefit of the doubt is the right of the subject.’’

Referring now to the provisions we have to construe, it is quite clear that persons falling within the incidence of the prohibition enacted by sec. 58 are, by reason of the penalty created by sec. 63, affected by a motive of considerable weight not to disregard the prohibition ; in other words, to see that the documents mentioned in sec. 58 are duly stamped. It does not follow, however, that the statute creates a civil obligation on the part of such persons to pay the value of the necessary stamps, or indeed, any sum, to the Crown. These sections do not profess to create such an obligation, They enact a prohibition and impose a penalty upon the person who acts in contravention of the prohibition. Nor does the statute in terms penalize the failure to purchase or pay for stamps. The settled principles, as indicated in the passages quoted above from the judgments of the highest courts touching the interpretation of taxing statutes, do not permit us to read these sections as constituting such an obligation.

Counsel for the Crown relies upon sec. 61, which refers to "‘the tax imposed by this Part’’. This, it is said, is a statutory construction of Part VII; and necessarily implies that the persons affected by the prohibition created by sec. 58 are directly charged with a civil obligation to pay to the Crown, in respect of the transactions falling within sec. 58, the cost of the stamps required for conformity with the provisions of the section. It appears to us that there is no such necessary implication.

There could, we think, be no impropriety in speaking of secs. 58 and 63 as in a practical sense imposing a tax; but they do not necessarily imply an intention to create a civil obligation to pay any sum of money to the Crown.

Sec. 108, Part XIV, it should be observed, presupposes the existence of a tax or sum ‘‘payable under this Act’’, the existence, that is to say; of a legal duty, imposed by the statute upon the person from whom the “debt” is alleged to be “due” or the “right enforceable’’ to pay to the Crown the sum sued for.

Leave to appeal was granted in this case upon terms that the appellant should pay the costs of the respondent as between solicitor and client. The result is that the appeal should be dismissed with costs as between solicitor and client.

Appeal dismissed.