Absurdities

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.”

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.

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."

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.

"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)

"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.

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"