C.P.R. v. A.G. for Saskatchewan

C.P.R. v. A.G. for Saskatchewan
Collection
Supreme Court Judgments
Date
1952-06-30
Report
[1952] 2 SCR 231
Judges
Rinfret, Thibaudeau; Kerwin, Patrick; Taschereau, Robert; Rand, Ivan Cleveland; Kellock, Roy Lindsay; Estey, James Wilfred; Locke, Charles Holland; Cartwright, John Robert; Fauteux, Joseph Honoré Gérald
On appeal from
Saskatchewan
Subjects
Constitutional law
Decision Content
Supreme Court of Canada
C.P.R. v. A.G. for Saskatchewan, [1952] 2 S.C.R. 231
Date: 1952-06-30
Canadian Pacific Railway Company et al (Plaintiffs) Appellants;
and
The Attorney General for the Province of Saskatchewan
and
The Minister of Natural Resources and Industrial Development of the Province of Saskatchewan (Defendants) Respondents,
and
The Attorney General for the Province of Alberta Intervenant.
1952: February 27, 29; March 3, 4; June 30.
Present: Rinfret C.J. and Kerwin, Taschereau, Rand, Kellock, Estey, Locke, Cartwright and Fauteux JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR SASKATCHEWAN
Constitutional law—Mineral Taxation—Imposition of tax on owner of minerals—Tax based on acreage and assessed value—Whether direct or indirect—Whether land tax—Whether intention to have it passed on—Severability—Mineral Taxation Act, 1948 (Sask.), c.24, ss. 3, 6, 22—B.N.A. Act, 1867, s. 92(2).
By virtue of the Mineral Taxation Act, 1948, c. 24 and amendments, the Province of Saskatchewan purported to impose an annual tax on each owner of minerals within the Province regardless of whether minerals were or were not present within, upon or under the land. "Owner" was defined as a person registered in a land title office as the owner of any minerals. "Mineral" means the right existing in any person by virtue of a certificate of title to work, win and carry away any mineral or minerals within, upon or under the area described in the certificate of title, and also any mineral or minerals within, upon or under any land.
The Act provided that in a "non producing area", the tax would be at the rate of 3 cents per acre of land. The Lieutenant-Governor was given the power to declare any area in the province a "producing area", and provision was made for the assessment at their fair value of minerals in a producing area. Until an assessment was made the owner was liable to pay at the rate of 50 cents per acre of land and fraction thereof in such an area. Following an assessment, the owner would be liable to pay a tax at the rate prescribed from time to time by the Lieutenant-Governor in Council but not exceeding ten mills on the dollar of the assessed value of the minerals. Non-payment of the tax resulted in forfeiture of the minerals to the Crown. The trial judge held that the Act was intra vires as imposing direct taxation. The Court of Appeal for Saskatchewan held that the 3 cent tax was a direct tax, but that the 50 cent tax and the mill rate tax were indirect.
Held (the Chief Justice dissenting), that the appeal should be dismissed and the cross-appeal allowed.
Each of the three taxes is a land tax, is clearly direct taxation and not imposed with the intention that it should be passed on to someone else.
City of Halifax v. Fairbanks' Estate [1928] A.C. 117; A.G. for B.C. v. Esquimalt and Nanaimo Ry. Co. [1950] A.C. 87; A.G. for B.C. v. C.P.R. [1927] A.C. 934; A.G. for Manitoba v. A.G. for Canada [1925] A.C. 561 and Glenwood Lumber Co. v. Phillips [1904] A.C. 405 referred to.
APPEAL and CROSS-APPEAL from the judgment of the Court of Appeal for Saskatchewan 1 which had reversed the judgment of the trial judge and had declared the Act ultra vires in part.
E. C. Leslie, I. D. Sinclair and Allan Findlay for appellants. The Act is not in pith and substance in relation to direct taxation and is therefore beyond provincial competence. The tax is imposed upon the owner in respect of mineral rights and in respect of the minerals themselves. A tax thus imposed is analogous to a tax on the producer of a commodity in respect of a commodity and such a tax is indirect taxation: Bank of Toronto v. Lambe. 2; The Security Export Co. v. Hetherington 3. It appears from the reasoning in the judgment of Caledonian Collieries v. The King 4 that had the tax been imposed in respect of the coal before its sale or while it was still in the ground, there could have been no question that it would be an indirect tax because an allowance would be made for such a tax in the price charged. This view is also supported by the case of Esquimalt 5 in this Court. And in the Privy Council 6 it would have been quite unnecessary for Lord Greene to have drawn the careful distinction he did between a land tax and a tax on standing timber if a tax on standing timber was regarded as a direct tax. If a tax in respect of minerals which have been removed is an indirect tax, a tax in respect of the right to remove the minerals is also an indirect tax, because here also, an allowance would be made for the tax in the price of sale.
The validity of the submission that the tax is direct because it will not in fact be passed on will disappear when the operation of the legislation is examined. But the fact that it may not be possible in a given case to pass it on does not effect the general tendency of the tax on mineral rights which is that it will be passed on. The legislature contemplated that this would be its normal effect and tendency. The Security Export Co. v. Hetherington (supra), Esquimalt (supra), Grain Futures Case 7; The A.G. for British Columbia v. C.P.R. 8; The A.G. for Manitoba v. The A.G. for Canada 9 and the City of Charlottetoion v. Foundation Maritime Limited 10. This is not as contended, a land tax within the case of City of Halifax v. Fairbanks' Estate 11.
The interest in land in respect of which the tax in question is imposed is the right to extract or produce from the land a commodity which will be the subject of commercial transactions. Such an interest in land cannot be considered as falling within the well recognized class of land taxes that have always been regarded as direct taxes. The situation here is analogous with the tax on growing crops of the Agricultural Land Relief Act case 12.
Licenses which have been held to be a tax may be supported under section 92 para. 9 even though it be an indirect tax: Lawson v. Interior Tree Fruit 13 and Shannon v. Lower Mainland Dairy Products Board 14.
The provisions imposing the 3 cent rate are not severable and accordingly if the two other rates are ultra vires, the entire enactment is ultra vires. It is apparent from a consideration of the Act as a whole that it was intended to work out a single comprehensive scheme of taxation. If parts of it are invalid, the remaining parts cannot stand unless it can be assumed that the legislature would have enacted such remaining parts without the invalid parts and the converse is true. The A.G. for Alberta v. The A.G. for Canada 15; The A.G. for Manitoba v. The A.G. for Canada 16 and The A.G. for British Columbia v. The A.G. for Canada 17..
M. C. Shumiatcher, Q.C. for the respondent, Minister of Natural Resources. The Act is clearly a taxing statute intended to raise a revenue for the purposes of the province. The tax is imposed with respect to property or alternatively, the tax is imposed upon property. The cases of Glenwood Lumber Co. v. Phillips 18, Macpherson v. Temiskaming 19, Clarkson v. Bouchard 20 and Gowan v. Christie 21 are relied on.
Minerals being land or an interest in land, a mineral tax of the type here imposed is not new or unusual. Mineral rights have been the subject of taxation for a considerable number of years in Saskatchewan, Alberta, Ontario and British Columbia. The impost under the Act in pith and substance constitutes direct taxation. There is no relation between the tax and the amount of product produced, therefore it cannot be a tax on a commodity. The tax is on capital, i.e. the value of the land. Bank of Toronto v. Lambe 22. The effect of the judgment in City of Halifax v. Fairbanks' Estate 23 is that a tax upon land and interests in land is a direct tax. The situation here is somewhat similar to the Brewers Case 24. There is a difference between a growing crop and minerals, the time limit being so short in the crop case as to be immaterial. The tax is directed at the crop which is a chattel in contemplation of severance. Timber and minerals are an interest in the land. The crops, whether growing or not, are chattels. The fact that the tax or a portion thereof may be said to be passed on in no way alters the fact that, being a tax upon property or an interest in property, it is direct taxation. The A.G. for British Columbia v. King come Navigation Co. Ltd. 25; The King v. Caledonian Collieries Ltd. 26 and the Agricultural Land Relief Act case 27. There is no such tendency as in the case of Charlottetown v. Foundation Maritime Ltd. 28 inherent in the provisions of the present statute since there exists no relationship between the tax and the marketable commodity. The Mineral Tax Act provides for a levy upon or in respect of the land and contemplates payment by the owner of that land. No passing on is contemplated. Furthermore, if the tax was a direct tax when set at 1 cent per acre, it did not become an indirect tax when it was increased to 3 cents per acre. The nature of a tax does not alter with its quantum.
The acreage tax in R. M. Bratts v. Hudson's Bay Co. 29 was held to be a direct tax. The cases of Rattenbury v. Land Settlement Board 30 and the City of Montreal v. The A.G. for Canada 31 are also of assistance.
P. G. Makaroff, Q.C. for the respondent, the A.G. for Saskatchewan. The tax is taken directly from the registered owner of minerals apparently for the reasonable purpose of getting contributions for provincial purposes from those who are making or stand to make profits from the ownership of mineral rights. The difference in the three taxes is not in character but only in the method of assessment. The validity of a taxing statute is not affected by the method of assessment.
There is a presumption at law that the legislature has not exceeded its power.
The principles of severability are well known and reference is made to Toronto v. York Township 32 and the Rattenbury case 30. If there is any doubt as to the constitutional validity of any one of the procedures adopted or capable of adoption and application, such is clearly severable in the event that one procedure is held to be ultra vires, that provision ought to be severed from the balance of the statute which, read as a whole, is a taxing statute imposing direct taxation in the province. As the 3 cent tax is a blanket tax over the whole of the province, the two other taxes may be taken away and the Act will still be complete. The legislature would have enacted the Act just for the 3 cent tax. J. J. Frawley, Q.C. for the Intervenant, the A.G. for Alberta, adopted the arguments advanced on behalf of the respondents.
The Chief Justice (dissenting)—The appellants sought to have the Minerals Taxation Acts and Amendments of the Province of Saskatchewan declared ultra vires. There were other conclusions in their statement of claim and some of them were passed upon by the Court of Appeal of the Province of Saskatchewan 33, but before this Court the only point discussed was whether the tax imposed ought to be classed as an indirect tax and, therefore, outside the powers of the Legislature of the Province of Saskatchewan.
The task of deciding the point, to my mind, is not an easy one. In City of Halifax v. Estate of J. P. Fairbanks 34, Viscount Cave, delivering the judgment of their Lordships of the Privy Council, insisted upon the fact that in considering the question raised it was important to bear in mind that the problem to be solved was one of law and that the framers of the British North America Act evidently regarded taxes as divisible into two separate and distinct categories—namely, those that are direct and those which cannot be so described. From this he inferred that the distinction between direct and indirect taxation was well known before the passing of the British North America Act and, he says, it is undoubtedly the fact that before that date the classification was familiar to statemen as well as to economists, and that certain taxes were then universally recognized as falling within one or the other category. Viscount Cave stated that the well known formula of John Stuart Mill no doubt was valuable as providing a logical basis for the distinction already established between direct and indirect taxes, and perhaps also as a guide for determining as to any new or unfamiliar tax which may be imposed in which of the two categories it is to be placed.
That judgment was handed down in 1928, but the Judicial Committee in Attorney General for British Columbia v. Esquimalt and Nanaimo Rly. Co. 35 said this about Viscount Cave's judgment in the Fairbanks case:—
Lord Cave, in delivering the judgment of the Board, used expressions which, if not correctly understood, might appear to lay down too rigid a test for the classification of taxes; but, as is pointed out by Lord Simon L.C. in the judgment of the Board in the later case of Atlantic Smoke Shops, Ltd. v. Cordon (1943) A.C. 550, those expressions "should not be understood as relieving the courts from the obligation of examining the real nature and effect of the particular tax in the present instance, or as justifying the classification of the tax as indirect merely because it is in some sense associated with the purchase of an article".
In Bank of Toronto v. Lambe 36, Lord Hobhouse, delivering the judgment of the Board, made some useful observations as to the mode in which the question should be approached, and stated that the drafters of the British North America Act "must have contemplated some tangible dividing line referable to and ascertainable by the general tendencies of the tax and the common understanding of men as to those tendencies".
This language was approved by the Board in The King v. Caledonian Collieries, Ltd. 37.
In view of these pronouncements of the Judicial Committee, I feel that Lord Cave's suggested classifications should not be strictly adhered to.
In City of Charlottetown v. Foundation Maritime, Ltd. 38, this Court said:—
The question of "direct taxation" as defining the sphere of provincial legislation has often been the subject of pronouncements by this Court and by the Judicial Committee of the Privy Council. The effect of the decisions, when analyzed, is substantially as follows:
In every case, the first requisite is to ascertain the inherent character of the tax, whether it is in its nature a direct tax within the meaning of section 92, head 2, of the British North America Act, 1867 (Attorney General for British Columbia v. McDonald Murphy Lumber Co. Ltd. (1930) A.C. 357 at 363 and 364). The problem is primarily one of law; and the Act is to be construed according to the ordinary canons of construction: the court must ascertain the intention of Parliament when it made the broad distinction between direct and indirect taxation.
These taxes (in 1867) had come to be placed respectively in the category of direct or indirect taxes according to some tangible dividing line referable to and ascertainable by their general tendencies.
As applied, however, to taxes outside these well recognized classifications, the meaning of the words "direct taxation", as used in the Act, is to be gathered from the common understanding of these words which prevailed among the economists who had treated such subjects before the Act was passed (Attorney General for Quebec v. Reed (1884) 10 A.C. 141 at 143) ; and it is no longer open to discussion, on account of the successive decisions of the Privy Council, that the formula of John Stuart Mill (Political Economy ed. 1886, vol. 11, p. 415) has been judicially adopted as affording a guide to the application of section 92, head 2. Mill's definition was held to embody "the most obvious indicia of "direct and indirect taxation" and was accepted as providing a logical basis for the distinction to be made between the two. The expression "indirect taxation" connotes the idea of a tax imposed on a person who is not supposed to bear it himself but who will seek to recover it in the price charged to another. And Mill's canon is founded on the theory of the ultimate incidence of the tax, not the ultimate incidence depending upon the special circumstances of individual cases, but the incidence of the tax in its ordinary and normal operation. It may be possible in particular cases to shift the burden of a direct tax, or it may happen, in particular circumstances, that it might be economically undesirable or practically impossible to pass it on (The King v. Caledonian Collieries, Ltd., (1928) A.C. 358). It is the normal or general tendency of the tax that will determine, and the expectation or the intention that the person from whom the tax is demanded shall indemnify himself at the expense of another might be inferred from the form in which the tax is imposed or from the results which in the ordinary course of business transactions must be held to have been contemplated.
In the present case there are really only two sections of The Mineral Taxation Act (Chapter 24 of the Statutes of Saskatchewan, 1948, as amended by Chapter 23 of the Statutes of 1949 and Chapter 22 of the Statutes of 1950) which have to be considered. These are section 3 imposing a tax at the rate of three cents for every acre on "every owner of minerals" … "not situated within the producing area", and section 22 imposing a tax at the rate of fifty cents for every acre of land on the "owner of minerals within, upon or under any land situated within a producing area".
By force of section 5 of the Act "producing areas" are those which are so declared by order of the Lieutenant Governor in Council, and the latter may designate the mineral or minerals in respect of which the portion of the province therein described is constituted a "producing area". For those areas so designated assessors are provided to assess "at their fair value all minerals, within, upon or under any parcel of land so constituted". They prepare an assessment roll in which shall be set out as accurately as may be a brief description of each such parcel of land, a brief description of the minerals assessed, the names and addresses of the owners of the minerals and the assessed value thereof.
Section 7 deals with the method of assessment and section 6, dealing with the imposition of the tax, states:
Every owner whose name appears on the assessment roll mentioned in section 7 shall be liable for and shall on or before the thirty-first day of December in each year pay to the minister a tax at such rate as the Lieutenant Governor in Council may from time to time prescribe not exceeding ten mills on the dollar of the assessed value of his minerals as shown on the assessment roll subject to any changes made on appeal.
We were told that so far no assessment has been made under these sections and we need not trouble ourselves with the question as to how the assessors are to arrive at the "fair value" of minerals which are within, upon or under the land and, indeed, which may not exist at all, for, it should be mentioned, that apparently the Act is to apply whether there are or are not minerals within, upon or under the land.
What we have to consider for the purpose of this appeal is, therefore: What is the true nature of the tax imposed under section 3 or under section 22 of the Act, the first applying to every owner at the rate of three cents for every acre, and the second to the owners of minerals, within a producing area, at the rate of fifty cents for every acre of land in respect of which they are such owners? Of course, we are not concerned about the question of how the Act may be made to work, or even whether it is workable at all. The only point is whether it is ultra vires of the Legislature of Saskatchewan. The answer to be given is not helped by the definition of the word "mineral" in the Act. Subsection 4 of section 2 is as follows:—
"Mineral" means the right existing in any person by virtue of a certificate of title to work, win and carry away any mineral or minerals within, upon or under the area described in the certificate of title, and also any mineral or minerals within, upon or under any land …
Then there are certain exceptions with which we need not concern ourselves for the purpose of the present decision.
The peculiarity of that definition is:
(1) It comprises an incorporeal right and a corporeal thing, to wit, the right to work, win and carry away minerals and also the mineral itself.
(2) It proceeds to define "mineral" by the same word.
We are told that "mineral" is a "mineral" and while one might say that such a definition is clearly insufficient, it might also be pointed out that defining a word by the same word is hardly a way of indicating the meaning of the word.
On the other hand, the word "land" is not defined in the Act and I fail to see how, for the purpose of knowing what the Legislature had in mind, we may go to some other statute where that word may be defined. In the latter case the definition is evidently that given as usual for the purpose of that particular Act and it may not be imported into The Mineral Tax Act of 1948. It does not matter that the "certificate of title" as set out in subsection 2 of section 2 is stated to mean "a certificate of title granted pursuant to the provisions of The Land Titles Act". We are asked to say that the tax provided for by the legislation which is the subject of the appeal is a tax on land, and when "land" is not defined in the statute under consideration it seems to me to be contrary to the usual canons of construction to look for the meaning of the word "land" in a different statute.
Here we are dealing with The Mineral Tax Act, 1948, and, therefore, with taxation on minerals. The least that we can say is that the attempt to tax a right existing in any person by virtue of a certificate of title to work, win and carry away any mineral or minerals within, upon or under the area described in the certificate of title, is certainly a tax which, at the time of Confederation, could not find its place in the two categories of taxation spoken of in the Fairbanks case; and from all points of view it should be considered as a new species of taxation, sufficient to satisfy Viscount Cave in the Fairbanks case and obliging the Court to apply the Mill's formula "as a guide for determining as to any new or unfamiliar tax which may be imposed in which of the two categories it is to be placed" (City of Halifax v. Fairbanks' Estate 39). It is clearly a tax which does not belong to the "established classification of the old and well known species of taxation" and which "makes it necessary to apply a new test to every particular member of those species".
We are not called upon here to transfer a tax universally recognized as belonging to one class to a different class of taxation in accordance with the Mill's formula. It is undoubtedly a new form of taxation, the nature of which must be ascertained in order to decide whether it is direct or indirect.
As I said before, the obvious intention of the Act is to tax minerals. Not only must we gather this from the title of the Act itself, but from its whole purport. Of course, the owner of the minerals is taxed and that is in accordance with the observations of Lord Thankerton in Provincial Treasurer of Alberta v. Kerr 40, where he says:—
Generally speaking, taxation is imposed on persons, the nature and amount of the liability being determined either by individual units, as in the case of a poll tax, or in respect of the taxpayers' interests in property or in respect of transactions or actings of the taxpayer. It is at least unusual to find a tax imposed on property and not on persons …
But it is clear from the Act that the subject matter of the tax is not the person of the owner, but the minerals and, in the circumstances, I find some difficulty in assimilating the tax with which we are concerned to a tax on land. With respect, I repeat that we cannot, for that purpose, look for the definition of the word "land" in some other statute. The Mineral Tax Act does describe the words "parcel of land", but the definition there given applies to a different subject.
If it is correct to look at the tax as a tax on minerals and not as a tax on land, then it cannot be taken as belonging to the obvious category of direct taxation; and the nature of the tax is rather to be assimilated to what was under consideration in the Caledonian Collieries case supra. Indeed, as it happened in that case, coal was the subject matter of the tax, and both in this Court and in the Judicial Committee the tax was considered to apply to a commodity and to the sale of that commodity. At p. 362 of the judgment of the Privy Council it is stated :—
Their Lordships can have no doubt that the general tendency of a tax upon the sums received from the sale of the commodity which they produce and in which they deal is that they would seek to recover it in the price charged to a purchaser. Under particular circumstances the recovery of the tax may, it is true, be economically undesirable or practically impossible, but the general tendency of the tax remains.
Much reliance was placed by the respondents on the decision of the Privy Council in Attorney General for British Columbia v. Esquimalt and Nanaimo Railway Co. 41. I may say that I am not at all embarrassed by the decision of the Judicial Committee in that appeal. First, it must be remembered that that judgment was given on a reference and it has been invariably stated that judgments on references are not necessarily binding, because in a concrete case the circumstances might alter the general application of the principle laid down in such judgments; and, secondly, in the Nanaimo case the reference was not made on existing legislation, but the question was only whether the proposed legislation might be adopted by the Legislature of British Columbia along the lines of the report of Chief Justice Sloan. As to that Lord Greene had this to say at p. 114:—
In construing questions of this nature, which do not purport to give more than an outline of the proposed legislation, the method applicable in construing a statute must not, in their Lordships' opinion, be too rigidly applied. In the completed legislation many sections of an explanatory or machinery nature would be included. Ambiguities would be cleared up, gaps would be filled, and it may often be necessary in construing what is no more than a "projet de loi" to assume a reasonable intention in that regard on the part of the legislature.
And at p. 113 Lord Greene repeated:—
The answer to the question whether the tax is or is not a direct tax is to be found in their opinion primarily by an examination of the nature and effect of the tax as collected from the language describing it.
Moreover, the Nanaimo judgment insists upon the fact that the judicial committee is there dealing with what was undoubtedly a tax on land:—
It will be the owner of the land and not the owner of the timber who will be liable to the Crown for the tax.
(p. 116).
The conclusion, therefore, at which their Lordships have arrived is that the tax is in reality a tax on land and not a timber tax.
(p. 118).
This case, in their Lordships view, affords a good example of the caution with which the "pith and substance" principle ought to be applied. The object of that principle is to discover what the tax really is; it must not be used for the purpose of holding that what is really a direct tax is an indirect tax on the ground that an equivalent result could have been obtained by using the technique of indirect taxation. The use of the word "camouflage" in the argument of the respondents appears to their Lordships to be due to a misapplication of the principle.
(p. 120).
It will be seen, therefore that the foundation of the judgment in the Nanaimo case was that their Lordships came to the conclusion that it was the land which was to be assessed and that the tax was imposed on the land; and they quoted from the judgment of O'Halloran J.A., who dissented in the Court of Appeal for British Columbia, as follows:—
Because land bears a tax which is measured by the reflected value of its products is no reason to say that the tax on the land is a colourable tax on its products, and that such a tax is not in truth a tax on the land itself.
All that was said because the contention on behalf of the respondent, the Esquimalt and Nanaimo Rly. Co.—a contention which found favour in this Court 42, was that it was in reality a tax on timber and not a tax on land. On the contrary, in the present case there is no question of taxing the land. The acreage tax under section 3 is upon the owner of minerals and not upon the owner of land, and so it is under section 5 and still more so under sections 6 and 7, because what the assessor is to ascertain is the "fair value of all minerals within, upon or under any parcel of land situated within a producing area". The assessor is to give a "brief description of the minerals assessed"; and the tax prescribed by section 6, if the occasion should occur, is to be at a certain rate "not exceeding ten mills on the dollar of the assessed value of his minerals as shown on the assessment roll". Then, if we turn to section 22, we find that "every owner of minerals . . . . shall be liable for and shall, on or before the thirty-first day of December in each year in which such minerals have not been assessed under the provisions of this Act, pay to the minister a tax at the rate of fifty cents for every acre and every fraction of an acre of such land in respect of which he is such owner". This remark is strengthened by the very definite definition of the word "mineral" in subsection 4 of section 2, where it is stated to mean "the right existing in any person by virtue of a certificate of title to work, win and carry away any mineral or minerals within, upon or under the area described in the certificate of title, and also any mineral or minerals within, upon or under any land . . . ."
I would think that it is significant that the Act itself does not give any definition of the word "land". It is to the "minerals" and not to the "land" that the Act is directed. I am of the opinion, therefore, that the present case is distinguishable from the Nanaimo judgment and, on the contrary, falls within the Caledonian Collieries judgment. If that be so, as I think it is, I would agree with Gordon J.A., in the Court of Appeal for Saskatchewan, and declare the Act in toto ultra vires of the legislature of the Province of Saskatchewan. Of course, incidentally I also agree with that part of the judgment of Martin C.J., concurred in by Proctor J.A., insofar as they declare ultra vires that part of the Act which relates to the "producing area."
In view of my conclusion it becomes unnecessary to pass upon the question of severability.
I would, therefore, allow the appeal with costs throughout and dismiss the cross-appeal with costs against the respondent.
The judgment of Kerwin, Taschereau, Cartwright and Fauteux, JJ. was delivered by:
Kerwin J.:—The appellants are the Canadian Pacific Railway Company and certain other companies who brought an action against the respondents, the Attorney General for the Province of Saskatchewan and the Minister of Natural Resources and Industrial Development of the Province of Saskatchewan, in the King's Bench in Saskatchewan, for a declaration that The Mineral Taxation Act of Saskatchewan, being chapter 27 of the Statutes of 1944 (2nd Session) and amendments were ultra vires the legislature of the province, and for certain other relief. At the date of the trial this Act and the amendments thereto had been repealed and replaced by The Mineral Taxation Act, being chapter 24 of the 1948 Statutes and the appellants were permitted to amend their statement of claim so that the important question raised was whether the last, mentioned Act (as amended in 1949, after the commencement of the action but before the trial) was ultra vires. In 1950, after the conclusion of the trial and before judgment, other amendments were enacted but it is not contended that the latter are not relevant since, by express provision, they were made retroactive. What we are called upon to decide, therefore, is whether the 1948 Act as thus amended in 1949 and 1950 is ultra vires. The trial judge and the Court of Appeal 43 dealt with several other matters raised by the parties who, however, have now abandoned their contentions with respect thereto. The appellants no longer claim (a) that the delegation of certain powers to the Lieutenant-Governor in Council by subsections 1 and 2 of section 5, is ultra vires; (b) that even if the 1948 Act is intra vires in all respects, it is inoperative in respect of the appellant Canadian Pacific Railway Company. On the other hand, the respondents abandoned their claim that the action was not properly brought against the Attorney General and the Minister of Natural Resources and Industrial Development.
The 1948 Mineral Taxation Act and the amendments thereto of 1949 and 1950 (hereafter referred to compendiously as the Act) provide for the imposition of taxes. Under the general scheme of the Act all the land in the Province of Saskatchewan may be divided into two categories, one of which, for convenience, may be termed the non-producing area, and the other of which will mean producing areas or a producing area. In the non-producing area a tax is imposed by section 3 on the owner of minerals within, upon, or under any land, at the rate of three cents per acre or fraction thereof.
A producing area is established by a declaration of the Lieutenant-Governor in Council under the authority of subsection 1 of section 5, which also delegates to that body the power to increase, decrease or abolish any producing area. In any such declaration, the Lieutenant-Governor in Council may, by virtue of subsection 2 of section 5, designate the mineral or minerals in respect of which the designated area is being, or was, constituted a producing area. Provision is made for the appointment of an assessor who, by section 7, is to assess at their fair value all minerals upon or under any parcel of land situated within a producing area and within the boundaries of which land minerals are then being produced or to the knowledge of the assessor have at any time been produced. By section 6, everyone whose name appears on the assessment roll, prepared by the assessor, shall be liable for and shall on or before the thirty-first day of December in each year pay to the Minister a tax at such rate as the Lieutenant-Governor in Council may from time to time prescribe, not exceeding ten mills on the dollar of the assessed value of his minerals. By section 22, every owner of minerals within, upon or under any land situated within a producing area shall be liable for and shall, on or before December 31st, in each year in which such minerals have not been assessed, pay to the Minister a tax at the rate of fifty cents per acre or fraction thereof. What happened was that by successive orders of the Minister of Natural Resources and Industrial Development upon whom the powers were conferred by the 1944 Act (and also the 1948 Act before amendment), a certain area was declared a producing area; that area was increased; coal was designated as the only mineral; and, finally, the producing area was decreased. No assessment was ever made in the producing area. In the result, therefore, under section 22 a tax was imposed of fifty cents per acre on every "owner" of the "mineral" coal in the producing area, while in the non-producing area, in which is included all other owners, a tax of three cents per acre became payable under section 3. However, the terms of the Act providing for a tax at an annual rate on the dollar must be considered together with the other relevant provisions.
The trial judge, Thomson J., declared that all classes of taxation were valid and in the Court of Appeal 44, Culliton J.A. (with whom McNiven J.A. agreed) came to the same conclusion. The Chief Justice (with whom Proctor J.A. agreed) considered that only the taxation in the non-producing area was valid while Gordon J.A. considered the Act ultra vires in toto.
The main contention is that the Act does not impose direct taxation within the Province under section 92(2) of the British North America Act but in my view that argument is not sound. Dealing first with a non-producing area, section 3 imposes the three cents per acre tax upon "every owner of minerals, whether of all kinds or only one or more kinds, within, upon or under any land". By paragraph 6 of subsection 1 of section 2, " 'owner' means a person who is registered in a land titles office as the owner of any mineral or minerals whether or not the title thereto is severed from the title to the surface;" By paragraph 4 of subsection 1 of section 2:—
"mineral" means the right existing in any person by virtue of a certificate of title to work, win and carry away any mineral or minerals within, upon or under the area described in the certificate of title, and also any mineral or minerals within, upon or under any land,
By paragraph 2 of subsection 1 of section 2:—" 'certificate of title' means a certificate of title granted pursuant to The Land Titles Act". The Land Titles Act is presently R.S.S. 1940, chapter 98, and under section 2(1) thereof " 'certificate of title' means the certificate (Form A) granted by the registrar and entered and kept in the register". By section 10 of The Land Titles Act:—
10. "Land" or "lands" means lands, messuages, tenements and hereditaments, corporeal and incorporeal, of every nature and description, and every estate or interest therein, whether such estate or interest is legal or equitable, together with paths, passages, ways, watercourses, liberties, privileges and easements, appertaining thereto, and trees and timber thereon, and mines, minerals and quarries thereon or thereunder lying or being, unless any such are specially excepted;
These provisions make it plain that the tax in the non-producing area is imposed upon the owner of any mineral or minerals within, upon or under any land, or the owner of the right to work, win and carry away such minerals. Where a person appears from a certificate of title under The Land Titles Act as the owner of the mines or minerals or has the right to work, win and carry them away, he is liable to the tax of three cents per acre whether there be minerals in the land or not. This is a land tax and is clearly direct taxation: Halifax v. Fairbanks 45; Attorney General for British Columbia v. Esquimalt and Nanaimo Railway Co. 46. In substance this is the view of all, save one, of the members of the Courts below who have considered the matter.
If, in the Act, no provisions had been made in producing areas for an assessment roll and the imposition of a tax at an annual rate on the dollar, and section 22 had merely provided that every owner of minerals within a producing area should pay a tax at the rate of fifty cents per acre, the same result would follow. The mere fact that provision is made for an assessment roll, etc., does not in my opinion change the character of the tax. Section 7 provides that the assessor is to assess at their fair value all minerals within, upon or under any parcel of land situated within a producing area and within the boundaries of which land minerals are then being produced, or to the knowledge of the assessor have at any time been produced. In such assessment roll there is to be set out, among other things, a brief description of each such parcel of land and of the minerals a