SIDNEY
SMITH,
D.J.:—This
appeal
is
taken
under
Section
14
of
the
Excess
Profits
Tax
Act,
which
makes
Sections
40-87
of
the
Income
War
Tax
Act
apply
to
Excess
Profits
Tax.
Sections
60-63
of
the
latter
Act
govern
appeals.
Appellant
was
assessed
for
1947
tax
under
Section
3
of
the
Excess
Profits
Tax
Act.
Section
3
makes
all
corporations
subject
to
tax;
but
the
proviso
thereto
exempts
from
tax
during
their
first
year
of
operations
companies
that
(1)
Carry
on
a
substantially
new
business
with
substantially
new
assets;
or
(2)
Began
business
after
the
26th
June,
1944
(as
the
appellant
did)
unless
the
company
continued
a
previous
business
(as
the
appellant
did)
and
some
person
or
persons
had
a
"substantial
interest’’
both
in
the
previous
business
and
in
the
new
business.
The
appellant
first
began
business
in
1947
and
so
was
exempt
under
the
latter
provision
unless
caught
by
both
the
exceptions
to
the
exemption.
Admittedly
the
appellant
is
caught
by
the
exception
dealing
with
continuous
business,
so
the
question
is:
Is
it
also
made
out
that
someone
had
a
‘‘substantial
interest”
both
in
its
business
and
in
the
business
that
it
continued
?
The
case
set
up
by
the
Crown
is
that
one
Fred
Manning
and
his
wife
held
all
the
shares
but
one
in
Manning
Lumber
Mills
Ltd.,
(whose
business
appellant
continued)
and
that
the
Mannings
and
the
Lumber
Company
held
49%
of
the
shares
in
the
appellant
company.
Appellant
concedes
that
the
Mannings
had
a
“substantial
interest’’
in
the
old
company,
but
denies
that
the
holders
of
49%
in
the
new
(appellant)
company
had
a
“substantial
interest’’
in
it
within
the
meaning
of
the
proviso
to
Section
3.
Appellant
says
that
whatever
meaning
would
be
given
the
term
“substantial
interest’’
if
it
had
no
context,
the
context
here
shows
that
in
Section
3
‘‘substantial
interest’’
must
mean
“main
interest’’
according
to
all
established
canons
of
construction,
and
by
“main
interest’’
appellant
means
controlling
or
majority
interest,
1.e.,
over
50%
of
the
shares.
I
have
given
appellant’s
powerful
argument
my
best
consideration,
but
I
am
simply
unable
to
see
that
there
is
any
context
here
which
would
enable
me
to
construe
‘‘substantial’’
as
“majority”.
I
am
fortified
in
this
view
by
the
following
passage
from
the
speech
of
Viscount
Simon
in
Falser
v.
Grinling,
[1948]
1
All
E.R.
1
at
p.
11
:
‘What
does
‘substantial
portion’
mean?
It
is
plain
that
the
phrase
requires
a
comparison
with
the
whole
rent,
and
the
whole
rent
means
the
entire
contractual
rent
payable
by
the
tenant
in
return
for
the
occupation
of
the
premises
together
with
all
the
other
covenants
of
the
landlord.
‘Substantial’
in
this
connection
is
not
the
same
as
‘not
unsubstantial,’
i.e.,
just
enough
to
avoid
the
de
minimis
principle.
One
of
the
primary
meanings
of
the
word
is
equivalent
to
considerable,
solid
or
big.
It
is
in
this
sense
that
we
speak
of
a
substantial
fortune,
a
substantial
meal,
a
substantial
man,
a
substantial
argument
or
ground
of
defence.
Applying
the
word
in
this
sense,
it
must
be
left
to
the
discretion
of
the
Judge
of
fact
to
decide
as
best
he
can
according
to
the
circumstances
in
each
case,
the
onus
being
on
the
Landlord.
If
the
Judgment
of
the
Court
of
Appeal
in
Palser’s
case
were
to
be
understood
as
fixing
percentages
as
legal
measure,
that
would
be
going
beyond
the
powers
of
the
Judiciary.
To
say
that
everything
over
20%
of
the
whole
rent
should
be
regarded
as
a
substantial
portion
of
that
rent
would
be
to
play
the
part
of
a
legislator.
If
Parliament
thinks
fit
to
amend
the
Statute
by
fixing
percentages,
Parliament
will
do
so.
Aristotle
long
ago
pointed
out
that
the
degree
of
precision
that
is
attainable
depends
on
the
subject-matter.
There
is
no
reason
for
this
Court
to
differ
from
the
conclusion
reached
in
these
two
cases
that
the
portion
was
not
substantial,
but
this
conclusion
is
justified
by
the
view
taken
on
the
facts,
not
by
laying
down
percentages
of
general
application.”
If
I
were
to
accede
to
appellant’s
argument,
I
would
be
doing
precisely
what
Lord
Simon
says
I
must
not
do,
viz.,
playing
the
part
of
a
legislator.
It
seems
to
me
I
have
no
alternative
but
to
dismiss
the
appeal
with
costs.
Appeal
dismissed.
Email this Content