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dignitaries of our judicial system, and in their presence does the Court subsist. Officials of inferior grade and standing are necessary for the efficient handling of the business before the Courts, and the fact that sec. 7 designated the inferior official as exempt to the exclusion of the superior can clearly be relied upon as evidence of the distinction of the exemption provided for the purpose of the Act, and that “Judges’ were not intended to be among the individuals exempt from income taxation. It is submitted for consideration that the law does not exempt the income, of Judges or other federal officials, as decided in the following cases: (1) Webb v. Outrim (1907), A. C. 91. This was an appeal from a judgment of the Supreme Court of Victoria, which upheld the respondent’s objection to being assessed by the Victorian State income tax in respect of his salary as a federal official. It was held that the respondent, an officer of the Australian Commonwealth resident in Victoria, and receiving his official salary in that state, is liable to be assessed in respect therefor for income tax imposed by an Act of the Victorian Legislature. In giving judgment, their Lordships say: “It is impossible to suppose that the question now in debate was left to be decided upon an implied prohibition when the power to enact laws upon any subject whatsoever was before the Legislature. For these reasons their Lordships are not able to acquiesce in the reasoning of the High Court judgments governing the judgment under appeal. They will, therefore, humbly advise His Majesty that the judgment of the Superior Court of Victoria ought to be reversed, that it ought to be declared that the salary in question was rightly included in the said assessment and was liable to income tax, . . .” (2) Abbott v. City of St. John, 40 S. C. of Can. Rep. This was an appeal from the Supreme Court of New Brunswick on the interpretation of the powers designated under section 91 and section 92 of the British North America Act (1867), when it was held that a civil or other officer of the Government of Canada may be lawfully taxed in respect of his income as such by the municipality in which he resides. Davies, J., in delivering judgment, said:—“Now, it seems to me the questions before us are, first, whether or not the power to legislate upon the subject of taxation given to the province are wide and broad enough to cover the cases of Dominion officials resident within the province; and if they are, whether or not such power is in conflict with or inconsistent with the powers given to the Dominion Parliament under the 91st section.” “Section 92 gives the Provincial Legislatures ‘power exclusively to make laws in relation to matters coming within the classes of subjects next hereinafter enumerated. Subsection 2. Direct taxation within the provinces in order to the raising of a revenue for provincial purposes.’ Now, it does not seem to me open to argument that these words are large and broad enough to cover a provincial income tax reaching all residents of the province. Unless, therefore, there is some implied exception, or some conflict with the power given to the Dominion Parliament, under the 91st section, there would be an end to the case. Such conflict, however, it is contended, is found in subsec. 8 of sec. 91: ‘the fixing of and providing for the salaries and allowances of civil and other officers of the Government of Canada.’


I am unable, however, to see any necessary conflict be. tween the two powers conferred. The Dominion fixes and provides the salary, and the Province says: ‘You shall pay to us the same income tax upon your salary as all other residents of the Province have to pay upon their incomes.’ The conflict is to my mind an imaginary one. The Province does not attempt to interfere directly with the exercise of the Dominion power, but merely says that when exercised the recipients of the salaries shall be amenable to provincial legislation in like manner as all other residents.” It is said, the Legislature might authorize an income tax denuding a Dominion official of a tenth or even a fifth of his official income, and in this way paralyse the Dominion service and impair the efficiency of the service. But it must be borne in mind that the law does not provide for a special tax on Dominion officials, but for a general undiscriminating tax upon the incomes of residents, and that Dominion offic. ials could only be taxed upon their incomes in the same ratio and proportion as other residents. . I fail to find any provisions in our British North America Act exclusively vesting in its Parliament or withdrawing from the Provincial Legislatures the power of taxing incomes earned within the state, whether by Dominion officials or others.”

(3) Dugas v. Macfarlane (1911), 18 Western Law Reporter, (Canadian) 727.

This was an action brought by a Judge of the Territorial Court seeking to have it declared that the income and living allowance of a Judge of the Territorial Court of the Yukon Territory was not taxable by a municipality; and it was held, under the authorities, that the salary of a Judge is in the same position as the salary of any other officer of the Dominion Government, and liable to income tax. In delivering judgment, Craig, J., said:—“One of the main questions raised by the plaintiff was as to the salaries of Judges being not liable to taxation. I think perhaps I need not go into this either, as I view the law, but as it was argued as the main question, I should perhaps deal with it. If I am to follow the case of Leprohon v. City of Ottawa, 2 A. R. 522, I would hold that the salary is not taxable, but I think I am bound by the cases of Abbott v. City of St. John, 40 S. C. R. 597, and Webb v. Outrim (1907), A. C. 81. If the salary of a Judge is in the same position as the income of any other officer of the Dominion Government living in a municipality subject to income tax, then the income of a Judge, under the decisions in these cases, is liable to taxation. The only argument urged against this is the argument of public policy, and the case which I am considering and the position of the Judges here in this territory as applicable to this case is a striking example of the force of that argument. The position of the Judges has been guarded in many ways, and their independence guarded in many ways, which I need not recite, but which are within the knowledge of all lawyers. I might cite the many Acts of Parliament which provide for their independence and the non-impairment of their incomes, and especially our own Federal Act, which provides that the income of Judges shall not be impaired by any federal tax. But, I think these citations would not have any effect, in the face of these decisions, if, as I say, the income of a Judge is in the same position as that of any other officer of the Federal Government. Now, while public policy might be a very good argument to address to a political body or legislature, I do not think, as a Judge, that I can consider it unless I can find direct authority to support me. I am not in the position of a legislator. The local Parliaments and Legislatures, within their jurisdictions, have as full and ample power, I think, as the Imperial Parliament has, and I need not extend the argument along these lines any further than to refer to the cases lately decided in the Ontario Courts, namely: Smith v. City of London, 20 O. L. R. 133, and Beardmore v. City of Toronto, 20 O. L. R. 165; 21 0. L. R. 505. Local Legislatures have power to tar income. Judges are officers as defined by the Act; and until the direct question as to Judges' salaries as distinguished from other officers come up in a higher Court, I feel that I am bound by the decisions I have cited.” In conclusion, it is submitted that, in view of the existing state of the law in Canada on this question, and for other reasons herein set forth, we should wait for a settlement of the law by a decision of the Privy Council, and, in the meantime, your Honour should be guided by and follow the case of Webb v. Outrim, as decided by the Privy Council, and followed in the cases of Abbott v. City of St. John, as decided by the Supreme Court, and Dugas v. Macfarlane, and give judgment for the defendant with costs. William Johnston, solicitor for defendant,




Dissenting opinions of H. A. Powell and C. A. Magrath, Commissioners.

Mr. Powell:—The application in this case was for the approval by the International Joint Commission of a contemplated dam at Kettle Falls. The falls are situated on the Kettle River at its entrance into Rainy Lake. Kettle River is a boundary water between the province of Ontario and the State of Minnesota. The application was made, with the assent of the United States, by the Rainy River Improvement Company. The dam across the river has been authorized by the United States, and the necessary approval by the department of the United States Government charged with the duty of looking after obstructions in navigable waters has been secured. A dam across the river has also, it is claimed been authorized by the Parliament of Canada, but on conditions that have not yet been fulfilled. The charters were granted to different companies which, however, are acting in unison. The application came up for consideration at a session of the Commission held at Ottawa in the month of October last, when the Commission of its own motion raised two objections to considering it: 1. The Commission has no jurisdiction in the matter, as the dam, the approval of which is sought, commences at the United States shore, and extends across the river to the opposite bank. 2. The United States Congress and the Parliament of Canada, have passed concurrent legislation authorizing the erection of the dam, and consequently there is no dispute to adjust. A third objection was urged before the Commission to "he consideration of the application at the present time, viz.: both the United States and the Canadian Governments have referred to the Commission for investigation and report the question of the level and use of the Lake of the Woods and its tributary waters; and the question of a dam at Kettle Falls is involved in this larger question.

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