Eurig Estate (Re)

Eurig Estate (Re)
Collection
Supreme Court Judgments
Date
1998-10-22
Report
[1998] 2 SCR 565
Case number
25866
Judges
Lamer, Antonio; L'Heureux-Dubé, Claire; Gonthier, Charles Doherty; Cory, Peter deCarteret; McLachlin, Beverley; Iacobucci, Frank; Major, John C.; Bastarache, Michel; Binnie, William Ian Corneil
On appeal from
Ontario
Subjects
Constitutional law
Notes
SCC Case Information: 25866
Decision Content
Eurig Estate (Re), [1998] 2 S.C.R. 565
Marie Sarah Eurig, as Executor of the
Estate of Donald Valentine Eurig Appellant
v.
The Registrar of the Ontario Court (General Division)
and the Attorney General for Ontario Respondents
and
The Attorney General of Quebec,
the Attorney General of British Columbia
and the Attorney General for Alberta Interveners
Indexed as: Eurig Estate (Re)
File No.: 25866.
1998: April 27; 1998: October 22.
Present: Lamer C.J. and L’Heureux‑Dubé, Gonthier, Cory, McLachlin, Iacobucci, Major, Bastarache and Binnie JJ.
on appeal from the court of appeal for ontario
Constitutional law ‑‑ Estates ‑‑ Executors and administrators ‑‑ Probate fees ‑‑ Provincial regulation providing for probate fee based on value of estate administered ‑‑ Whether probate levy a fee or a tax ‑‑ Whether ad valorem levy ultra vires on ground that it is an indirect tax ‑‑ Whether ad valorem levy invalid on ground that it was imposed by body other than provincial legislature ‑‑ O. Reg. 293/92, s. 2(1) ‑‑ Administration of Justice Act, R.S.O. 1990, c. A.6, s. 5 ‑‑ Constitution Act, 1867, ss. 53 , 54 , 90 , 92(2) .
The appellant is the executor of her late husband’s estate. Pursuant to s. 2(1) of O. Reg. 293/92, made under the Administration of Justice Act, the total value of the estate required payment of $5,710 in probate fees in order to obtain letters probate. Section 5(c) of the Administration of Justice Act provides that the Lieutenant Governor in Council may make regulations requiring the payment of “fees in respect of proceedings in any court” and prescribing the amounts thereof. Section 2(1) of O. Reg. 293/92 sets out a schedule of ad valorem fees which must be paid in order to obtain a grant of probate. The appellant applied to the Ontario Court (General Division) for an order that she be issued letters probate without payment of the probate fee and for a declaration that the regulation which required that payment was unlawful. The application and subsequent appeal to the Ontario Court of Appeal were both dismissed.
Held (Gonthier and Bastarache JJ. dissenting): The appeal should be allowed.
Per Lamer C.J. and L’Heureux-Dubé, Cory, Iacobucci and Major JJ.: The probate levy as enforced at present is a tax, not a fee, according to the criteria set out in this Court’s decision in Lawson. With respect to the first criterion, the levy is compulsory and therefore enforceable by law. While probate is not the foundation of the executor’s title but only the authentic evidence of it, that authentication is nonetheless a practical and legal necessity in most cases. The criterion that the fee must be levied by a public body is also satisfied here. The probate levy also meets the criterion that the levy be intended for a public purpose, as the revenue obtained from probate fees is used for the public purpose of defraying the costs of court administration in general, and not simply to offset the costs of granting probate. Another factor that generally distinguishes a fee from a tax is that a nexus must exist between the quantum charged and the cost of the service provided in order for a levy to be considered constitutionally valid. In determining whether that nexus exists, courts will not insist that fees correspond precisely to the cost of the relevant service. As long as a reasonable connection is shown, that will suffice. The evidence in this appeal fails to disclose any correlation between the amount charged for grants of letters probate and the cost of providing that service, indicating that the levy is a tax and not a fee. Although the probate levy is properly characterized as a tax, it is a direct tax and therefore intra vires the province pursuant to s. 92(2) of the Constitution Act, 1867 .
While the Ontario legislature has the authority to implement a direct tax, it must do so in accordance with the requirements set out in the Constitution. Section 53 of the Constitution Act, 1867 mandates that bills for imposing any tax shall originate in the House of Commons. By virtue of s. 90 , s. 53 is rendered applicable to the provinces. Thus, all provincial bills for the imposition of any tax must originate in the legislature. The probate fees in this instance are in substance a tax imposed by the Lieutenant Governor in Council without having originated in the legislature. Since s. 53 was not expressly amended, the province was obliged to abide by its terms. Its failure to do so renders the probate tax imposed under O. Reg. 293/92 unconstitutional.
Regardless of whether s. 53 was complied with, or even if s. 53 is considered redundant at the provincial level, the probate levy is not enforceable as it was not authorized by s. 5 of the Administration of Justice Act. While s. 5 authorizes the Lieutenant Governor in Council to impose fees, it does not constitute an express delegation of taxing authority. The Act clearly does not authorize the imposition of a tax, albeit a direct one.
Since s. 54 of the Constitution Act, 1867 concerns the appropriation of taxes, and not the imposition of taxes, it is not relevant to this appeal.
Per McLachlin and Binnie JJ.: As found by Major J., the probate “fee” imposed under O. Reg. 293/92 is in reality a tax which is ultra vires s. 5 of the Administration of Justice Act. The interpretation of s. 5 is not assisted by the legislative history of the probate fee under different and more specialized enactments. Section 5 does not contemplate a fee based on the size of the bank account of the person or estate requesting a service or initiating an action as opposed to the cost, however broadly calculated, of providing or administering same. However, Major J. was disagreed with in his conclusion that the tax is unconstitutional by virtue of non‑compliance with s. 53 of the Constitution Act, 1867 , which applies to the province by virtue of s. 90 . Section 53 requires that money bills originate in the House of Commons. The analysis of Major J. reads the word “bills” out of the section, and takes the section out of the context of the series of sections in the Constitution Act, 1867 of which it forms a part. Section 53 addresses a state of affairs prior to any “legislation” coming into existence. Regulation 293/92 is not, and never was, a “bill”. General principles can and should be used to expound the Constitution, but they cannot alter the thrust of its explicit text.
Per Gonthier and Bastarache JJ. (dissenting): While the probate fee is a tax, and a direct tax within the legislative authority of the province, it is not invalid on the ground that it was imposed by a body other than the legislature of Ontario in contravention of s. 90 (incorporating by reference ss. 53 and 54 ) of the Constitution Act, 1867 . The purpose of s. 53 is to provide that bills concerning taxation originate in the House of Commons rather than the Senate. With the abolition of bicameral legislatures in the provinces, s. 53 no longer has significance at the provincial level. Even if s. 53 of the Constitution Act, 1867 continues to apply to the provinces, the fact that the legislature has authorized the executive to prescribe fees in the form of a tax does not violate s. 53 . The tax in the form of probate fees is imposed by s. 5 of the Administration of Justice Act. This Act was introduced in the Legislative Assembly of Ontario and therefore cannot violate s. 53 . All that the legislature has done is delegate to the Lieutenant Governor in Council the authority to provide for the details of the tax through regulation. The provincial legislature is entitled to delegate taxing powers to its subordinate bodies, including the Lieutenant Governor in Council. Section 54 of the Constitution Act, 1867 is not relevant to this appeal. Moreover, the probate fees are authorized under s. 5 of the Administration of Justice Act. According to the ordinary rules of interpretation, including the legislative history of the impugned provision, s. 5(c) of the Administration of Justice Act, which authorizes the Lieutenant Governor in Council to prescribe fees in respect of proceedings in any court, is broad enough to authorize the Lieutenant Governor in Council to impose a direct tax on persons applying for probate.
Cases Cited
By Major J.
Distinguished: Cotton v. The King, [1914] A.C. 176; referred to: Lawson v. Interior Tree Fruit and Vegetable Committee of Direction, [1931] S.C.R. 357; Allard Contractors Ltd. v. Coquitlam (District), [1993] 4 S.C.R. 371; Ontario Home Builders’ Association v. York Region Board of Education, [1996] 2 S.C.R. 929; The King v. National Fish Co., [1931] Ex. C.R. 75; Reference re Agricultural Products Marketing Act, [1978] 2 S.C.R. 1198; Air Canada v. British Columbia, [1989] 1 S.C.R. 1161.
By Binnie J.
Referred to: Reference re Secession of Quebec, [1998] 2 S.C.R. 217.
By Bastarache J. (dissenting)
Hodge v. The Queen (1883), 9 App. Cas. 117; Shannon v. Lower Mainland Dairy Products Board, [1938] A.C. 708; Irving Oil Ltd. v. Provincial Secretary of New Brunswick, [1980] 1 S.C.R. 787; Allard Contractors Ltd. v. Coquitlam (District), [1993] 4 S.C.R. 371; Ontario Home Builders’ Association v. York Region Board of Education, [1996] 2 S.C.R. 929; Procureur général du Canada v. Compagnie de Publication La Presse, Ltée, [1967] S.C.R. 60.
Statutes and Regulations Cited
Act to establish a Court of Probate in this Province, and also a Surrogate Court in every District thereof, S.U.C. 1793, 33 Geo. 3, c. 8.
Administration of Justice Act, R.S.O. 1990, c. A.6, s. 5.
Constitution Act, 1867, ss. 53 , 54 , 90 , 92(2) , (14) .
Constitution Act, 1982, ss. 45 , 52(1) .
Estates Act, R.S.O. 1990, c. E.21.
O. Reg. 293/92, s. 2(1) [rep. & sub. O. Reg. 802/94, s. 1].
Ontario. Standing Orders of the Legislative Assembly [as amended in 1992]. Standing Order 56.
Authors Cited
Anson, William R. The Law and Custom of the Constitution, Part 1, 3rd ed. Oxford: Clarendon Press, 1897.
Driedger, Elmer A. “Money Bills and the Senate” (1968), 3 Ottawa L. Rev. 25.
Dussault, René, and Louis Borgeat, Administrative Law: A Treatise, vol. 1, 2nd ed. Translated by Murray Rankin. Toronto: Carswell, 1985.
La Forest, G. V. The Allocation of Taxing Power Under the Canadian Constitution, 2nd ed. Toronto: Canadian Tax Foundation, 1981.
Macdonell, Sheard and Hull on Probate Practice, 4th ed. By Rodney Hull and Ian M. Hull. Scarborough, Ont.: Carswell, 1996.
McConnell, William H. Commentary on the British North America Act. Toronto: Macmillan of Canada, 1977.
Mill, John Stuart. Principles of Political Economy. New York: D. Appleton, 1884.
New Shorter Oxford English Dictionary on Historical Principles, vol. 1. Oxford: Clarendon Press, 1993, “fee”.
Ontario. Law Reform Commission. Report on Administration of Estates of Deceased Persons. Toronto: The Commission, 1991.
Rintoul, Margaret E. The Solicitor’s Guide to Estate Practice in Ontario, 2nd ed. Toronto: Butterworths, 1990.
Small, Joan. “Money Bills and the Use of the Royal Recommendation in Canada: Practice versus Principle?” (1995), 27 Ottawa L. Rev. 33.
APPEAL from a judgment of the Ontario Court of Appeal (1997), 31 O.R. (3d) 777, 96 O.A.C. 354, [1997] O.J. No. 101 (QL), affirming a decision of the Ontario Court (General Division) (1994), 20 O.R. (3d) 385, 5 E.T.R. (2d) 304, [1994] O.J. No. 2570 (QL), dismissing the appellant’s application for a declaration that the imposition of an ad valorem levy for grants of letters probate was unlawful. Appeal allowed, Gonthier and Bastarache JJ. dissenting.
Peter W. Hogg, Q.C., Peter T. Fallis, and J. Gregory Richards, for the appellant.
Tanya Lee, for the respondents.
Monique Rousseau, for the intervener the Attorney General of Quebec.
George H. Copley, Q.C., for the intervener the Attorney General of British Columbia.
Robert J. Normey, for the intervener the Attorney General for Alberta.
The judgment of Lamer C.J. and L’Heureux-Dubé, Cory, Iacobucci and Major JJ. was delivered by
1 Major J. -- At issue in this appeal is whether the province of Ontario acted within its legislative authority in imposing an ad valorem levy for grants of letters probate.
I. Facts
2 The appellant is the executor of her late husband’s estate. The total value of the estate was $414,000 which, pursuant to s. 2(1) of O. Reg. 293/92, subsequently amended by O. Reg. 802/94, required payment of $5,710 in probate fees in order to obtain letters probate. The regulation was purported to be under the authority of the Administration of Justice Act, R.S.O. 1990, c. A.6.
3 The appellant applied to the Ontario Court (General Division) for an order that she be issued letters probate without payment of the probate fee and for a declaration that the regulation which required that payment was unlawful. The application and subsequent appeal to the Ontario Court of Appeal were both dismissed.
II. Judicial History
A. Ontario Court (General Division) (1994), 20 O.R. (3d) 385
4 Morrison J., in assessing the probate charge, held that the difference between a fee and a tax is that a tax is compulsory, while a fee is only required to be paid where one seeks the services for which it is imposed. In concluding that the charge for probate is a fee and not a tax, he held that probate fees lack the universal application characteristic of a tax. In certain circumstances, executors can administer and distribute the bequest of a deceased without applying for a grant of probate. Also, living persons can arrange their affairs so that there is no necessity for probate. Morrison J. also held that “sliding scale” fees can be supported as ancillary or adhesive to a valid provincial regulatory scheme.
5 In rejecting the appellant’s submission that the Administration of Justice Act does not authorize escalating fees as prescribed by the Regulations, Morrison J. held that the language used in s. 5(c) of the Act, together with the long history of similarly worded statutes providing for escalating probate fees, demonstrated the intention of the legislature to authorize volumetric fees. He therefore dismissed the application.
B. Ontario Court of Appeal (1997), 31 O.R. (3d) 777
6 Morden A.C.J.O. held that, in light of the legislative evolution of the probate fee system in Ontario, the ad valorem fee structure imposed by the Regulations is properly authorized by s. 5(c) of the Administration of Justice Act and is not a revenue-generating device enacted for a purpose not authorized by the Act.
7 He also held that the charge for probate is a fee and not a tax. A tax is a levy which is enforceable by law, imposed under the authority of the legislature by a public body, and made for a public purpose: Lawson v. Interior Tree Fruit and Vegetable Committee of Direction, [1931] S.C.R. 357, at p. 363. Although the fee is compulsory and therefore enforceable by law, Morden A.C.J.O. found that it is legislation in relation to s. 92(14) of the Constitution Act, 1867 and is not aimed at raising a revenue under s. 92(2) . Thus, the charge for probate did not meet all the requirements of a tax.
8 Morden A.C.J.O. held that the question of whether the taxing power could be delegated to the Lieutenant Governor in Council pursuant to ss. 53 and 54 of the Constitution Act, 1867 did not arise because the fees in question are not taxes. He concluded that even if the fees were considered to be taxes, they were ingredients of a regulatory scheme not covered by ss. 53 and 54 . The appeal was dismissed.
III. Issues
9 On November 27, 1997, the Chief Justice stated the following constitutional questions:
1. Is the probate fee, which was imposed by Ontario Regulation 293/92, which was made under s. 5 of the Administration of Justice Act, R.S.O. 1990, c. A.6, invalid on the ground that it is an indirect tax that is outside the legislative authority of the province of Ontario under s. 92(2) of the Constitution Act, 1867 ?
2. Is the probate fee, which was imposed by Ontario Regulation 293/92, which was made under s. 5 of the Administration of Justice Act, R.S.O. 1990, c. A.6, invalid on the ground that it was imposed by a body other than the Legislature of Ontario in contravention of s. 90 (incorporating by reference ss. 53 and 54 ) of the Constitution Act, 1867 ?
IV. Relevant Constitutional, Statutory and Regulatory Provisions
A. Constitutional Provisions
10 Constitution Act, 1867
53. Bills for appropriating any Part of the Public Revenue, or for imposing any Tax or Impost, shall originate in the House of Commons.
54. It shall not be lawful for the House of Commons to adopt or pass any Vote, Resolution, Address, or Bill for the Appropriation of any Part of the Public Revenue, or of any Tax or Impost, to any Purpose that has not been first recommended to that House by Message of the Governor General in the Session in which such Vote, Resolution, Address, or Bill is proposed.
90. The following Provisions of this Act respecting the Parliament of Canada, namely, -- the Provisions relating to Appropriation and Tax Bills, the Recommendation of Money Votes, the Assent to Bills, the Disallowance of Acts, and the Signification of Pleasure on Bills reserved, -- shall extend and apply to the Legislatures of the several Provinces as if those Provisions were here re-enacted and made applicable in Terms to the respective Provinces and the Legislatures thereof, with the Substitution of the Lieutenant Governor of the Province for the Governor General, of the Governor General for the Queen and for a Secretary of State, of One Year for Two Years, and of the Province for Canada.
92. In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next here-inafter enumerated; that is to say, --
. . .
2. Direct Taxation within the Province in order to the raising of a Revenue for Provincial Purposes.
. . .
14. The Administration of Justice in the Province, including the Constitution, Maintenance, and Organization of Provincial Courts, both of Civil and of Criminal Jurisdiction, and including Procedure in Civil Matters in those Courts.
Constitution Act, 1982
45. Subject to section 41, the legislature of each province may exclusively make laws amending the constitution of the province.
B. Statutory Provisions
11 Administration of Justice Act, R.S.O. 1990, c. A.6
5. The Lieutenant Governor in Council may make regulations,
(a) requiring the payment of fees for any thing required or authorized under any Act to be done by any person in the administration of justice and prescribing the amounts thereof;
(b) providing for the payment of fees and allowances by Ontario in connection with services under any Act for the administration of justice and prescribing the amounts thereof;
(c) requiring the payment of fees in respect of proceedings in any court and prescribing the amounts thereof.
C. Regulations
12 Ontario Regulation 293/92 (pursuant to the Administration of Justice Act, R.S.O. 1990, c. A.6, s. 5)
2. -- (1) The following fees are payable in estate matters:
1. For a grant of probate, administration or guardianship, not being a double probate, cessate grant or administration de bonis non administratis.
i. on the first $50,000 of the value of
the estate being administered, per
thousand dollars or part thereof ......................................... $ 5.00
ii. on the portion of the value of the estate
being administered that exceeds $50,000, per
thousand dollars or part thereof ......................................... 15.00
The above section was re-enacted by O. Reg. 802/94, s. 1, which reads as follows:
2. -- (1) The following fees are payable in estate matters:
1. For a certificate of appointment of estate trustee, other than a certificate of succeeding estate trustee or a certificate of estate trustee during litigation,
i. on the first $50,000 of the value of
the estate being administered, per
thousand dollars or part thereof ......................................... $ 5.00
ii. on the portion of the value of the estate
being administered that exceeds $50,000, per
thousand dollars or part thereof .......................................... 15.00
V. Analysis
13 In Ontario, letters probate (now referred to as “certificate of appointment of estate trustee with a will”) are issued by the Ontario Court (General Division). The purpose of probate is to certify that a will and codicils have been duly proved and registered in the court and that administration of the property of the deceased has been committed by the court to the persons named in the will as executors. Ontario Regulation 293/92 (subsequently re-enacted as O. Reg. 802/94) sets out a schedule of ad valorem charges which must be paid in order to obtain a grant of probate. The appellant challenges the legality of those charges.
A. Is the Probate Levy a Fee or a Tax?
14 The appellant contends that the probate levy prescribed by s. 2(1) of O. Reg 293/92 is a tax rather than a fee. This distinction is important because a tax may be either direct or indirect, and pursuant to s. 92(2) of the Constitution Act, 1867 , a province only has jurisdiction to impose a direct tax. Conversely, a province may charge a fee, regardless of whether it is an indirect tax, provided that it is validly enacted under a provincial head of power other than the taxing power: see Allard Contractors Ltd. v. Coquitlam (District), [1993] 4 S.C.R. 371, at p. 412, and Ontario Home Builders’ Association v. York Region Board of Education, [1996] 2 S.C.R. 929, at p. 988.
15 Whether a levy is a tax or a fee was considered in Lawson, supra. Duff J. for the majority concluded that the levy in question was a tax because it was: (1) enforceable by law; (2) imposed under the authority of the legislature; (3) levied by a public body; and (4) intended for a public purpose.
16 The first, third and fourth criteria pertain to the nature of the levy, while the second criterion involves a consideration of the manner in which the levy was imposed. In this appeal the first concern is identifying the nature of the probate levy. The manner in which the levy was imposed will be considered later.
17 The Court of Appeal held that with respect to the first Lawson criterion the probate fee is compulsory and therefore enforceable by law. I agree. A practical compulsion usually exists for the executor to obtain probate in order to comply with his or her legal obligations. Although probate is not the foundation of the executor’s title but only the authentic evidence of it, that authentication is nonetheless a practical and legal necessity in most cases, as illustrated by R. Hull and I. M. Hull in Macdonell, Sheard and Hull on Probate Practice (4th ed. 1996), at p. 188:
Any debtor of the testator is justified in refusing to pay his debt to the executor until probate is produced. All proceedings in an action by the executor to enforce such payment will be stayed until the plaintiff obtains probate. Similarly an action to recover possession of the testator’s goods, or for damages for their wrongful conversion, brought by the executor, must fail unless the executor has proved the will. In the absence of special statutory provisions to the contrary, the executor will fail whenever it is necessary to establish title as the personal representative of the deceased.
See also The Solicitor’s Guide to Estate Practice in Ontario, by M. E. Rintoul (2nd ed. 1990), at pp. 35-36, wherein protection for the executor and administrative efficiency are identified as practical and legal reasons that frequently compel an executor to obtain probate. The fact that in some instances probate may be avoided does not lessen the fact that in Ontario letters probate are the rule in virtually all estate affairs.
18 The criterion that the fee must be levied by a public body is also satisfied here as probate fees in Ontario are levied by the Ontario Court (General Division).
19 The probate levy also meets the fourth Lawson criterion for a tax as the proceeds were intended for a public purpose. The Ontario Law Reform Commission concluded in 1991 that it is difficult to discern a principled justification for ad valorem probate fees, and that “[t]he only rationale for the graduated fee schedule appears to be that it has been regarded as a suitable vehicle for raising revenue” (Report on Administration of Estates of Deceased Persons, at p. 286).
20 Those conclusions are supported by the evidence before this Court which showed that probate fees do not “incidentally” provide a surplus for general revenue, but rather are intended for that very purpose. The revenue obtained from probate fees is used for the public purpose of defraying the costs of court administration in general, and not simply to offset the costs of granting probate.
21 Another factor that generally distinguishes a fee from a tax is that a nexus must exist between the quantum charged and the cost of the service provided in order for a levy to be considered constitutionally valid: see G. V. La Forest, The Allocation of Taxing Power Under the Canadian Constitution (2nd ed. 1981), at p. 72. This nexus was also considered relevant to determining the nature of a municipal charge in Allard Contractors, supra. In that case the Court engaged the question of whether an indirect tax levied by a province was validly enacted as incidental to a matter of provincial jurisdiction. Addressing the relationship between a charge and the cost of the underlying service, Iacobucci J. wrote (at p. 411):
A surplus itself is not a problem so long as the municipalities made reasonable attempts to match the fee revenues with the administrative costs of the regulatory scheme. . . .
22 In determining whether that nexus exists, courts will not insist that fees correspond precisely to the cost of the relevant service. As long as a reasonable connection is shown between the cost of the service provided and the amount charged, that will suffice. The evidence in this appeal fails to disclose any correlation between the amount charged for grants of letters probate and the cost of providing that service. The Agreed Statement of Facts clearly shows that the procedures involved in granting letters probate do not vary with the value of the estate. Although the cost of granting letters probate bears no relation to the value of an estate, the probate levy varies directly with the value of the estate. The result is the absence of a nexus between the levy and the cost of the service, which indicates that the levy is a tax and not a fee.
23 Having determined that the probate levy is enforceable by law, is levied by a public body, is intended for public purposes, and that no nexus exists between the amount of the levy and the cost of the service for granting letters probate, the compelling conclusion is that the probate levy as presently enforced is a tax.
B. Is the Probate Levy a Direct or Indirect Tax?
24 Section 92(2) of the Constitution Act, 1867 confers upon the provinces the power to raise revenue for provincial purposes only by means of direct taxation: see Allard Contractors, supra, at p. 394, per Iacobucci J. It therefore has to be determined whether the probate levy is a direct or indirect tax.
25 In Principles of Political Economy (1884), Book V, ch. II, at p. 550, John Stuart Mill defined the distinction between direct and indirect taxes. That oft repeated definition has not been much improved upon and is frequently referred to by courts in determining whether a levy is direct or indirect:
A direct tax is one which is demanded from the very persons who, it is intended or desired, should pay it. Indirect taxes are those which are demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another. . . .
26 Applying Mill’s definition, the tax would be indirect if the executor was personally liable for payment of probate fees, as the intention would clearly be that the executor would recover payment from the beneficiaries of the estate. However, the legislation does not make the executor personally liable for the fees. Payment is made by the executor only in his or her representative capacity. As a result, this case is readily distinguishable from Cotton v. The King, [1914] A.C. 176 (P.C.), where the succession duty was intended to be paid by one person and recouped from another. Here, as the amount is paid out of the estate by the executor in his or her representative capacity with the intention that the estate should bear the burden of the tax, the probate fees fall within Mill’s definition of direct tax. The probate levy does not fall within the more expansive definition of an “indirect tax” in Allard Contractors, per Iacobucci J., at p. 396.
27 Thus, although the probate levy is properly characterized as a tax and not a fee, it is a direct tax and therefore intra vires the province pursuant to s. 92(2) of the Constitution Act, 1867 . As a result there is no need to consider whether it would survive as an indirect tax on the basis that it was ancillary to a valid regulatory scheme. Such a result in any event is doubtful on the facts.
C. Did the Implementation of the Probate Tax Violate Sections 53 or 54 of the Constitution Act, 1867 ?
28 While the Ontario legislature has the authority to implement a direct tax, it must do so in accordance with the requirements set out in the Constitution. Section 53 of the Constitution Act, 1867 mandates that bills for imposing any tax shall originate in the House of Commons. By virtue of s. 90 of the Constitution Act, 1867, s. 53 is rendered applicable to the provinces. Thus, all provincial bills for the imposition of any tax must originate in the legislature.
29 To date, s. 53 has been the subject of only limited academic and jurisprudential discussion. It has been suggested that the purpose of s. 53 is to prevent the introduction of taxation legislation in the Senate, and that with the abolition of bicameral legislatures in the provinces it has become redundant: see, e.g., W. H. McConnell in Commentary on the British North America Act (1977), at p. 132.
30 In my view, the rationale underlying s. 53 is somewhat broader. The provision codifies the principle of no taxation without representation, by requiring any bill that imposes a tax to originate with the legislature. My interpretation of s. 53 does not prohibit Parliament or the legislatures from vesting any control over the details and mechanism of taxation in statutory delegates such as the Lieutenant Governor in Council. Rather, it prohibits not only the Senate, but also any other body other than the directly elected legislature, from imposing a tax on its own accord.
31 In our system of responsible government, the Lieutenant Governor in Council cannot impose a new tax ab initio without the authorization of the legislature. As Audette J. succinctly stated in The King v. National Fish Co., [1931] Ex. C.R. 75, at p. 83, “[t]he Governor in Council has no power, proprio vigore, to impose taxes unless under authority specifically delegated to it by Statute. The power of taxation is exclusively in Parliament.”
32 The basic purpose of s. 53 is to constitutionalize the principle that taxation powers cannot arise incidentally in delegated legislation. In so doing, it ensures parliamentary control over, and accountability for, taxation. As E. A. Driedger stated in “Money Bills and the Senate” (1968), 3 Ottawa L. Rev. 25, at p. 41:
Through the centuries, the principle was maintained that taxation required representation and consent. The only body in Canada that meets this test is the Commons. The elected representatives of the people sit in the Commons, and not in the Senate, and, consistently with history and tradition, they may well insist that they alone have the right to decide to the last cent what money is to be granted and what taxes are to be imposed.
33 The conclusion that s. 53 continues to be binding upon the provinces is supported by the fact that the applicability of s. 53 to the provinces was not removed when the Constitution was amended in 1982, even though bicameral legislatures had ceased to exist at the provincial level by that time.
34 Section 53 is a constitutional imperative that is enforceable by the courts. A contrary opinion was expressed in Reference re Agricultural Products Marketing Act, [1978] 2 S.C.R. 1198, where Pigeon J. for the majority commented in obiter that ss. 53 and 54 are not entrenched in the Constitution and can be indirectly amended through inconsistent legislation. Those comments, however, were made before the passage of the 1982 amendments to the Constitution.
35 By virtue of s. 45 of the Constitution Act, 1982 , the legislature of each province retains the discretion to exclusively make laws amending the constitution of the province. That power must be read in association with s. 52(1) of the Constitution Act, 1982 , which stipulates that any law that is inconsistent with the provisions of the Constitution is, to the extent of the inconsistency, of no force or effect. Subsection 52(1) effectively requires any provincial legislation that seeks to amend the constitution of the province to do so expressly: see J. Small in “Money Bills and the Use of the Royal Recommendation in Canada: Practice versus Principle?” (1995), 27 Ottawa L. Rev. 33, at p. 50. Otherwise, the legislation is liable to being struck down on the basis that it is inconsistent with the Constitution.
36 Nothing in the Administration of Justice Act purports to amend the constitutional requirement for imposing tax legislation set out in s. 53 . The Ontario legislature did not delegate to the Lieutenant Governor in Council the authority to impose a tax. Therefore whether it could constitutionally do so does not need to be addressed. The only power conferred by s. 5 of the Act was to make regulations regarding the payment of fees, not the imposition of taxes. Yet the probate fees in this instance are in substance a tax imposed by the Lieutenant Governor in Council without having originated in the legislature. While the legislature of Ontario may well be competent to establish probate taxes under the terms of the Administration of Justice Act, s. 53 requires that they do so explicitly. Since s. 53 was not expressly amended, the province was obliged to abide by its terms. Its failure to do so renders the probate tax imposed under O. Reg. 802/94 (previously O. Reg. 293/92) unconstitutional. The unconstitutionality of the impugned legislation is an important reminder of the fact that the imposition of a tax has both political and legal dimensions which require the legislature to act carefully if the tax is to be successfully implemented.
37 The appellant also challenges the validity of the probate tax on the ground that it violates s. 54 of the Constitution Act, 1867 . However, since s. 54 concerns the appropriation of taxes, and not the imposition of taxes (see Small, supra, at p. 40), it is not relevant to this appeal.
D. Is the Probate Levy Authorized by Section 5 of the Administration of Justice Act?
38 Regardless of whether s. 53 was complied with, or even if s. 53 is considered redundant at the provincial level, the probate levy is not enforceable as it was not authorized by s. 5 of the Administration of Justice Act. Section 5 reads:
5. The Lieutenant Governor in Council may make regulations,
(a) requiring the payment of fees for any thing required or authorized under any Act to be done by any person in the administration of justice and prescribing the amounts thereof;
(b) providing for the payment of fees and allowances by Ontario in connection with services under any Act for the administration of justice and prescribing the amounts thereof;
(c) requiring the payment of fees in respect of proceedings in any court and prescribing the amounts thereof.
39 While these provisions authorize the Lieutenant Governor in Council to impose fees, they do not constitute an express delegation of taxing authority. Whether the province may delegate its taxing authority was not fully argued before this Court, is obiter in the result, and should be considered only when the issue has been raised in the courts below. Of relevance to this appeal is that the Act clearly does not authorize the imposition of a tax, albeit direct.
40 The constitutional requirement for a clear and unambiguous authorization of taxation within the enabling statute also provides the reply to Bastarache J.’s concerns. Once it has been determined that the probate fees levied by the impugned regulation are a direct tax, the question is whether the Administration of Justice Act, and the action of the Lieutenant Governor in Council in enacting O. Reg. 293/92, fulfil the legal and constitutional requirements for the imposition of a tax. Section 53 constitutionally mandates the court to strictly construct enabling legislation, such as s. 5 of the Administration of Justice Act, when determining whether it properly creates a taxation power. This simply strengthens the general principle of interpretation that “[i]f Parliament wants to give the Executive or some administrative agency the power to raise a tax by regulation, it must do so in a specific and unequivocal provision” (R. Dussault and L. Borgeat, Administrative Law: A Treatise (2nd ed. 1985), vol. 1, at p. 445).
41 Bastarache J. states that the authorization extended to the Lieutenant Governor in Council in the Administration of Justice Act to prescribe fees “includes the power to implement a direct tax” (para. 60). With respect, this conclusion cannot be sustained. The distinction between these two forms of charges cannot be erased by simply interpreting the word “fees” to include taxes. This distinction is both legally and constitutionally significant to determining the validity of the enactment. As s. 53 of the Constitution Act, 1867 , Standing Order 56 of the Ontario legislature, and the general law on construction of taxing statutes all demonstrate, the imposition of taxes is an act of unique political significance, subject to special rules and requirements, none of which the impugned scheme meets. Ontario Regulation 293/92 is both unconstitutional and ultra vires as it seeks to impose a tax without clear and unambiguous authorization from the legislature to do so.
42 The appellant also argued that s. 5 does not authorize the imposition of ad valorem probate fees. Given my conclusion that the probate levy is a tax and not a fee, it is not necessary to address this issue. I would add, though, that the wording of the Act does not appear to restrict the type of fee that may be imposed provided that it possesses the characteristics of a fee, including inter alia the existence of a nexus between the amount charged and the cost of the service provided.
E. Disposition and Remedy
43 Section 52(1) of the Constitution Act, 1982 provides that the Constitution is the supreme law of Canada and any law that is inconsistent with the provisions of the Constitution is, to the extent of the inconsistency, of no force or effect. The probate fee levied by O. Reg. 293/92 is in substance a direct tax which has not been imposed in accordance with the requirements of s. 53 of the Constitution Act, 1867 . Thus the regulation is invalid and of no force or effect.
44 An immediate declaration of invalidity would deprive the province of the revenue derived from probate fees, with no opportunity to remedy the legislation or find alternative sources of funding. Probate fees have a lengthy history in Ontario, and the revenue derived therefrom is substant