FIRST DIVISION COURT, COUNTY OF PEEL.

FREDERICK M. MORSON v. CORPORATION OF THE CITY OF TORONTO.

Written argument on behalf of the plaintiff, dealing with the provisions of the Ontario Assessment Act so far as they affect the case of the plaintiff.

R. A. Reid, D.C.L., counsel for the plaintiff.

1. The above named plaintiff, Frederick M. Morson, is the Junior Judge of the County Court of the county of York, and was so appointed by the Government of Canada by Orderin-Council at a fixed salary, and resides in the city of Toronto in the province of Ontario.

2. He receives from the Government of the Dominion of Canada a certain fixed salary payable monthly as remuneration for his services to the Government of Canada as such Judge, and has occupied this position for a number of years, and is engaged in no business, profession or calling of any nature or kind other than being in the employ of the Government of the Dominion of Canada, and the said plaintiff has no income of any nature or kind except the remuneration which he receives from the Government of the Dominion of Canada under his said appointment as County Court Judge.

3. The said plaintiff was assessed in the year 1911 by the said city of Toronto, assuming to act under and by virtue of the provisions of the Assessment Act of Ontario, levying and assessing upon him the sum of $65.21, being an assessment for taxes on the remuneration derived by the said plaintiff as compensation for his services as Junior Judge of the County Court of the county of York, and which said remuneration is paid to him by the said Government of the Dominion of Canada as aforesaid.

4. The said plaintiff has paid the said taxes so assessed upon him as aforesaid in respect of his said remuneration under protest, and has brought an action for the recovery of the amount so paid by him against the said City of Toronto, and claims that he is not liable to be assessed on said remuneration in the manner and under the circumstances aforesaid on the ground that such remuneration is received by him by

virtue of his said position as County Court Judge engaged in the service of the Government of the Dominion of Canada, and, as such, is not assessable by the city of Toronto for municipal or any other purposes.

(a) If the opinion of the Court should be that the plaintiff is rightly assessed on said income, judgment is to be given for the defendant.

(b) If the opinion of the Court should be that he is not rightly assessed on said income for the reasons hereinafter stated, then judgment is to be for the plaintiff.

The defendant assumes to tax the remuneration of the plaintiff under and by virtue of the Ontario Assessment Act, R. S. O. 1897, ch. 224, as amended by ch. 23 of the Ontario Statutes for 1904, being the new Ontario Assessment Act, and which is still in force. It is the imposition of this income tax which the defendant objects to on the ground that he is the junior Judge of the County Court of the County of York, appointed as such by the Government of Canada, and exempt from income tax, and he further contends that the Act does not, and did not, intend to tax Judges' salaries, but that it is only the Municipality that assumes they have the right to do so under the Act. This part of the argument for the plaintiff deals only with the Assessment Act referred to, and on this branch of the case it is contended for the plaintiff that a "Judge" is not a "person" within the meaning of any part of that Act, relating to the taxation of income, that the remuneration or allowance which a Judge receives is not "income" within the meaning of section 2, sub-section 8 of the said Act, and that if it was intended to tax the remuneration of the "judiciary," or the "Judges of the Courts" as income, they should have been specially mentioned in the Act. Let us turn for a moment to section 2, sub-section 8 referred to, which is the section defining the meaning of "income" and see what is said. The section has not been altered or amended since 1904, and is as follows:

"INCOME."

8. "Income" shall mean the annual profit or gain "or gratuity (whether ascertained and capable of computation as being wages, salary or other fixed amount or unascertained as being fees or emoluments, or as being profits from a trade or commercial or financial or other business or calling) dir

ectly or indirectly received by a person from any office or employment, or from any profession or calling, or by any trade, manufacture or business, as the case may be; and shall include the interest, dividends or profits directly or indirectly received from money or interest upon any security or without security, or from stocks, or from any other investment, and also profit or gain from any other source whatever." (New). While on this branch of the case it might be as well to cite here section 7 of the same Act which is of some importance in this connection, it says:

EXEMPTION OF CERTAIN OFFICERS OF SUPERIOR COURTS ABOLISHED AS TO FUTURE APPOINTMENTS.

7. "Exemption to which certain officers connected with the Superior Courts were, at the time of their appointment, and on the 5th day of March, 1880, entitled by Statute, in respect of the salaries, is abolished as respects all persons appointed by the Lieutenant-Governor to such offices after the said 5th day of March, 1880, and shall continue in respect of such officers only as were appointed before that date. R. S. O. 1897, ch. 224, sec. 12."

The officers referred to in the said sec. 7 of the Ontario Assessment Act, 1904, will be found named in the Revised Statutes of Ontario, 1877, vol. I., at page 411, being ch. 40, sec. 15; an Act referring to the administration of justice and the Court of Chancery in Ontario. The officers referred to are the Master in Ordinary, the Registrar, the Referee, Clerk of Master's Office and the Clerk of the Registrar. Subsection 2 of the said section 15 sets forth that the salaries of these officers, and of all officers of the said Court, shall be paid free from all taxes and deductions. This Act of 1877 makes a distinction between "officers" and "Judges," the two classes being entirely distinct and separate as a refererce to the said Act will shew.

The Judges did not come within this latter clause, nor were they any of the officers referred to in the Statutory Exemption therein mentioned. Let us assume for the sake of argument that the Assessment Act so far as it assumes to tax Dominion officials is intra vires which the plaintiff does not admit but denies. It will be noticed that by sec. 7 the exemption referred to therein is abolished "as respects all persons appointed by the Lieutenant-Governor to such offices after March, 1880." Here again we have an excellent guide

to the intention of the Ontario Legislature when passing the Assessment Act, 1904. The reference is to persons appointed by the Lieutenant-Governor of Ontario. That means appointments made by the Provincial Government of Ontario. The reference to the year 1880 comes 2 years after 1878, when the case of Leprohon v. City of Ottawa was decided. There is no reference to the Federal or Dominion appointments, nor any interference with their salaries or exemption, because Leprohon v. City of Ottawa had settled that matter 2 years before. The Provincial Legislature of Ontario had no jurisdiction in this respect, and so when passing the Ontario Assessment Act of 1904 they continued sec. 7 as it had appeared in the previous Assessment Acts of Ontario. It might also be mentioned that the provisions of the present section appear in the Ontario Statutes of 1880, 43 Vict. ch. 27, sec. 5, for the first time. This clearly shews what the Legislature had in mind when passing the present Assessment Act, and that it recognized the limits of its jurisdiction. Now at the time sec. 7 was inserted in the Assessment Act, R. S. O. 1897, ch. 224 and sec. 2, sub-sec. 8 in the new Act of 1904, the case of Leprohon v. City of Ottawa, 2 Ont. App. Rep. 522 (1878), had been decided and was law. It was decided by the Ontario Court of Appeal in March, 1878. That case, together with 12 or 15 other cases subsequently decided by the Superior Courts in the different provinces of Canada on this very same question (to be cited on another branch of the case for the plaintiff) decided that under the British North America Act, 1867, the salaries of officials of the Dominion Government could not be taxed by the province, nor were they seizable or attachable by Court process, nor could they be compelled to pay a judgment debt by instalments, and further, that the province had no authority to confer such power on the municipalities, and these decisions are well known all over Canada, and by every legislature and judicial tribunal.

The law is clear that it is presumed that the Legislature has informed itself as to the state of the law on any subject as to which it undertakes to legislate, and makes new laws or amends old laws accordingly. This rule is very well stated by Lord Blackburn in the case of Young v. Major, &c., of Leamington (1883), 8 App. Cases 517, 526, where he says: "The Courts ought in general in construing an Act of Parliament, to assume that the Legislature knows the existing

state of the Law." And in the case of Mulcahy v. R. L. R., 3 H. L. 306, at p. 319, the Judges said that the Treason Act, 1796," did in terms sanction and embody the received interpretation of the Statute of Treasons, with which it must be presumed that the Legislature was acquainted, and which it left undisturbed."

And in MacMillan v. Dent (1907), 1 Ch. 114, Lord Justice Moulton said: "In interpreting an Act of Parliament you are entitled, and in many cases bound, to look to the state of the law at the date of the passing of the Act in order to properly interpret the Statute in question."

In the case of The Dean, &c., of Ely v. Bliss (1842), 5 Beav. 574, at p. 582; 11 L. J. Ch. 351 at p. 354, Lord Langdale M.R., says: "Every Act of Parliament must be considered with reference to the state of the law subsisting when it came into operation, and when it is to be applied; it cannot otherwise be rationally construed. Every Act is made, either for the purpose of making a change in the law, or for the purpose of better declaring the law, and its operation is not to be impeded by the mere fact that it is inconsistent with some previous enactment."

In the case of Yorkshire Insurance Co. v. Clayton, 8 Q. B. D. 421, at p. 426; 51 L. J. Q. B. 82, at p. 85, Brett, L.J., says: "It is a well known rule or canon of construction that in construing an Act of Parliament one ought to take into account the state of the law and of judicial decisions at the time the Act is passed."

Now the case of Leprohon v. City of Ottawa, was decided in 1878, and from that date up to the completion of the Revised Statutes of Ontario, 1897, when all the laws of Ontario were revised and consolidated, no mention is made of taxing the remuneration of Dominion Government officials, and between 1897 and 1904, when ch. 23 of the Statutes of Ontario, 1904, was passed, the law was in a similar state. So that up to 1904 the Ontario Legislature impliedly upheld the decision of Leprohon v. City of Ottawa; or for a period of 26 years, and the said Statute has not been amended or altered since 1904, so far as this part of the Act is concerned.

Therefore, with full knowledge of the then present state of the law (and the Legislature is presumed to legislate at all times with full knowledge of the then state of the law), at the time they passed the Assessment Act of Ontario in R. S. O., 1897, and again in 1904, when the new Assessment Act