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Canada (Attorney General) v. Burke, 2022 FCA 44

absurd interpretation was reversed

In 1997, Ms. Burke’s application for old age security benefits (which incorrectly represented that she had resided in Canada for 10 years when this clearly was not the case) was approved. In 2015, the Minister determined that Ms. Burke had never qualified for benefits and asked her to repay over $115,000 in benefits. The Appeal Division had found that s. 37 of the Old Age Security Act, which provided that a person who has received a benefit payment to which the person is not “entitled” shall forthwith return the amount of the benefit payment, did not authorize a full return of the benefits because, once an application was approved, the person became “entitled” to thereafter receive benefits, and this entitlement could only be reassessed thereafter on a going-forward basis. A provision entitling the Minister to investigate a person’s eligibility for the benefit did not permit a retroactive change to such entitlement.

In finding that this interpretation was contrary to the text, context and purpose of the Act, and after also noting (at para. 107) that it produced “an absurd result”, Mactavish JA referred (at para. 111) to “the Appeal Division’s unreasonable conclusion that the legal basis for entitlement to benefits was the Minister’s approval, and not whether Ms. Burke met the residency requirements of the Act,” and then stated (at para. 113) that such an interpretation “that allows people to keep benefits despite their not meeting the specific residency requirements of the Act is one that is inconsistent with a scheme that provides benefits only to people who meet the eligibility requirement of residence.”

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Federal Courts Act - Section 52 - Paragraph 52(c) - Subparagraph 52(c)(i) an administrative tribunal decision reversed rather than referred back for reconsideration 277

Stonehouse Group Inc. v. Ontario (Finance), 2021 ONCA 10

“the principle that governments have the right to legislate illogically” was “not … persuasive”

As a result of being reassessed to deny the carryback of a loss, the taxpayer was required to pay the reassessed taxes – but, following success in its objection, later was refunded the tax. The logical application of an interpretation of a Corporations Tax Act (Ontario) provision advanced by the Ontario Ministry of Finance would have been to deny any interest to the taxpayer on this refund.

After noting that the provision could also potentially be interpreted more narrowly so as to avoid this result, and before finding for the taxpayer, Nordheimer JA stated (at paras. 26, 30):

[T]he respondent’s reliance on the principle that governments have the right to legislate illogically is not a persuasive one. It is also not a principle of statutory interpretation to be readily invoked. …

The language in s. 79(7) is not unambiguous when read in its entire context. While it is not necessary to resort to it in this case … there remains “a residual presumption in favour of the taxpayer” … . Given the history of the legislative provisions regarding the payment of interest, an interpretation which favours the underlying policy choice of fairness to the taxpayer is to be preferred.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Ontario - Corporations Tax Act - Section 79 - Subsection 79(7) s. 79(7) merely dealt with the timing of when interest began to accrue 376

Markevich v. Canada, 2001 DTC 5305, 2001 FCA 144

Before concluding that s. 32 of the Crown Liability and Proceedings Act (Canada) applied to statutory collection procedures under the Act as well as to Court procedures, Rothstein J.A. noted that to interpret s. 32 as applying only to court procedures would lead "to the perplexing conclusion that while court proceedings are subject to provincial limitation laws, the statutory collection procedures are not" and stated (at p. 5313):

"The Income Tax Act may contain incongruous provisions or provisions that appear to be inconsistent. However, where it is possible to construe legislation according to its words, so as to avoid incongruity or inconsistency, such construction is to be preferred."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 222 120

The Queen v. Consumers' Co-Operative Refineries Ltd., 87 DTC 5409, [1987] 2 CTC 204 (FCA)

Pratte, J.A. stated (at p. 5411) that he was willing to adopt, with respect to s. 132(2) an interpretation that "stretches the meaning of the words used in the section" but which is "in harmony with the obvious purpose of the provision" and which avoids an absurd result.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 135 - Subsection 135(2) 100
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Amount allocation in proportion to patronage could be made at a zero rate 18

Delesalle v. The Queen, 85 DTC 5613, [1986] 1 CTC 58 (FCTD)

"Where the language of a statute is reasonably capable of two constructions the court, as interpreter and not legislator, may adopt that which is just and reasonable rather than one which is patently unreasonable." (p. 5621)

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Partnership Interests partnership interest buyback not distribution 62
Tax Topics - Income Tax Act - Section 96 - Subsection 96(1.1) departing partner required to agree to the s. 96(1.1) allocation 271

Laurentide Rendering Inc. v. The Queen, 84 DTC 6153, [1982] CTC 400 (FCTD), aff'd 88 DTC 6331, [1988] 2 CTC 200 (FCA)

"In interpreting a statute the Court must opt for an interpretation that does not lead to an illogical result which Parliament is not deemed to have wished." (p. 6156) The taxpayer's argument that there was an "'immense loophole' in the Act and that owing to this 'loophole' the Act cannot apply to its situation" was rejected.

Attorney General of British Columbia v. Canada Trust Co. et al., [1980] 2 S.C.R. 466, [1980] CTC 338

The phrase "in respect of" in a section was given the meaning "with reference to", "in order to give sense and purpose to the section and avoid incongruous results ... . The fact that the Legislation chose to proceed by piecemeal amendments, resulting in an inelegant jumble of tax bases and internal inconsistencies, is no reason to frustrate the obvious intention of the Legislature"

Words and Phrases
in respect of

See Also

O'Brien v. The King, 2023 TCC 132 (Informal Procedure)

literal statutory wording not applied to avoid an absurdity

When the taxpayer’s husband died, she rightfully expected that her family income for the relevant pre-death period for purposes of computing her Canada child benefit (CCB) would pursuant of s. 122.62(5)(b) not include her husband’s income under the Ontario Disability Support Program (the ODSP payments). Unfortunately, s. 56(1)(u)(ii) deemed the ODSP payments to be the income of the higher-income spouse (herself) – so that on a literal reading of the combined effect of s. 122.62(5)(b) and s. 56(1)(u)(ii), her family income included not only her actual income but also the income attributed to her under s. 56(1)(u)(ii).

Before allowing the taxpayer’s appeal, Russell J found that the Explanatory Notes suggested that this result was unintended and quoted from Villa Ste-Rose in stating (at para. 34):

Analogously [to that case], in the present case there is “a literal interpretation which may produce illogical or absurd results [and so] must be set aside”.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 122.62 - Subsection 122.62(5) - Paragraph 122.62(5)(b) adjusted income of the taxpayer for pre-death base taxation year did not include income of her deceased husband that was attributed to her under s. 56(1)(u)(ii) 402
Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(u) - Subparagraph 56(1)(u)(ii) s. 56(1)(u)(ii) deeming provision was not applied for purposes of determining taxpayer’s income under s. 122.62(5)(b) 258

Hancock & Anor v Revenue and Customs, [2019] UKSC 24

Luke principle that a stained interpretation can be adopted to implement clear Parliamentary intention

Lady Arden referred with apparent approval to the principle in Luke v Inland Revenue Comrs [1963] AC 557, stating (at para. 24):

This enables the court, when interpreting a statute, to adopt (my words) a strained interpretation in place of one which would be contrary to the clear intention of Parliament.

Although she confirmed an interpretation of a provision that effectively read the phrase “or include” out of it, she did not consider it necessary to apply the Luke principle to do so as she considered that the wording of the provisions themselves evinced an intention that effectively ignored those two words.

Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Redundancy/reading in words phrase read out of provision to give effect to intent 352