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

C.P.R. v. A.G. for Saskatchewan
Collection
Supreme Court Judgments
Date
1950-11-20
Report
[1951] SCR 190
Judges
Rinfret, Thibaudeau; Kerwin, Patrick; Taschereau, Robert; Kellock, Roy Lindsay; Estey, James Wilfred; Locke, Charles Holland; Cartwright, John Robert
On appeal from
Saskatchewan
Subjects
Constitutional law
Decision Content
Supreme Court of Canada
C.P.R. v. A.G. for Saskatchewan, [1951] S.C.R. 190
Date: 1950-11-20
Canadian Pacific Railway Company Appellant;
and
The Attorney General for Saskatchewan Respondent.
1950: March 8, 9, 10, 13, 14; 1950: November 20.
Present: Rinfret C.J. and Kerwin, Taschereau, Kellock, Estey, Locke and Cartwright.
ON APPEAL FROM THE COURT OF APPEAL FOR SASKATCHEWAN
Constitutional law—Railways—Taxation of C.P.R. in respect of its branch lines in Saskatchewan—"Canadian Pacific Railway"—Effect of clauses 16 and 14 of contract between Dominion and C.P.R. in schedule to chapter 1 of S. of C. 1881—Saskatchewan Act, S. of C. 1905, c. 42, s. 24—Act respecting the Canadian Pacific Railway, S. of C. 1881, c. 1— Constitutional Questions Act, R.S.S. 1940, c. 72.
The Saskatchewan Act (S. of C. 1905, c. 42) which constituted the Province of Saskatchewan provides that the powers granted to that province shall be exercised subject to the provisions of clause 16 of the contract set forth in the schedule to Chapter 1 of the Statutes of 1881 (Canada), being an Act respecting the Canadian Pacific Railway, by which statute the contract was approved and ratified. Clause 16 provides that: "The Canadian Pacific, and all stations and station grounds, work shops, buildings, yards and other property, rolling stock and appurtenances required and used for the construction and working thereof, and the capital stock of the Company, shall be forever free from taxation by the Dominion, or by any province hereafter to be established, or by any municipal corporation therein …" Clause 14 gave to the Company the right to construct and work branch lines of railway from any point along its main line to any point or points within the territory of the Dominion.
The appellant company contended that the exemption extended to all municipal taxation upon and in respect to properties both upon its main line and upon branch lines constructed under the powers conferred by clause 14.
Held: (Affirming the Court of Appeal) that the exemption from taxation provided by clause 16 of the contract does not apply to the stations and station grounds, work shops, buildings, yards and other property, rolling stock and appurtenances situate on the branch lines built in Saskatchewan under the authority of clause 14 of that contract, except as to such of these properties as are also required and used for the working of the main line, as described in ss. 1, 2 and 3 of 37 Victoria, c. 14.
Held: (Reversing the Court of Appeal) Estey J. dissenting, that the exemption extends to the so-called business taxes referred to in the questions submitted to the Court in respect of the business carried on as a railway upon, or in connection with, the railway as described in the said sections 1, 2 and 3 of 37 Victoria, c. 14, and upon such other properties situate upon its branch lines in Saskatchewan as are entitled to the benefit of the exemption from taxation under clause 16 as being required and used for the construction and working of that portion of the line referred to in the said sections.
APPEAL from the decision of the Court of Appeal for Saskatchewan 1 answering certain questions referred to the Court by His Honour the Lieutenant Governor of Saskatchewan respecting the extent of exemption from taxation provided for the Canadian Pacific Railway by clause 16 of the contract between the Government of Canada and certain parties acting on behalf of the Company, dated October 21, 1880, and approved in 1881 by 44 Victoria, c. 1 (Canada).
The legislature of the Province of Saskatchewan having enacted in 1946 and 1947 certain municipal statutes to provide for (a) the assessment and taxation of the railway roadway and other lands owned by the railway companies in the province, and (b) the assessment and taxation in respect of their business carried on as a railway within the province, and certain disputes having arisen between various municipalities and the C.P.R. with respect to this legislation, the Executive Council of the Province of Saskatchewan, acting under the Constitutional Questions Act (R.S.S. 1940, c. 72), referred to the Court of Appeal for Saskatchewan the following questions for hearing and consideration :
Question 1. Does clause 16 of the contract set forth in the Schedule to Chapter 1 of the Statutes of Canada, 44 Victoria (1881), being an Act respecting the Canadian Pacific Railway, exempt and free from taxation the stations and station grounds, work shops, buildings, yards, and other property, used for the working of the branch lines of the Canadian Pacific Railway Company situated in Saskatchewan?
Question 2. Does clause 16 of the contract aforesaid exempt and free the Canadian Pacific Railway Company from taxation in Saskatchewan in respect of the business carried on as a railway
(a) based on the area of the land or the floor space of buildings used for the purposes of such business,
(b) based on the rental value of the land and buildings used for the purposes of such business,
(c) based on the assessed value of the land and buildings used for the purposes of such business, but not made a charge upon such land or buildings? Question 3. Are the provisions of the said The Village Act, 1946, The Rural Municipalities Act, 1946, The Local Improvement Districts Act, 1946, The City Act, 1947, and The Town Act, 1947, all as amended, relating to the assessment and taxation of the real estate of railway companies, operative in respect of branch lines of Canadian Pacific Railway Company in the Province of Saskatchewan constructed pursuant to clause 14 of the said contract?.
Question 4. Are the provisions of the said The Village Act, 1946, The Rural Municipalities Act, 1946, The Local Improvement Districts Act, 1946, The City Act, 1947, and The Town Act, 1947, all as amended, relating to the assessment and taxation of railway companies in respect of the business carried on as a railway, operative with respect to Canadian Pacific Railway Company in respect of the stations, workshops, and other buildings, used for the working of
(a) the main line of its railway in Saskatchewan, and
(b) its branch lines in Saskatchewan?
The Court of Appeal (declining to answer Questions 2(b) and 2(c)) answered Questions 1 and 2(a) in the negative and Questions 3, 4(a) and 4(b) in the affirmative (Gordon J.A. dissenting as to Questions 1 and 3).
This Court (Estey J. dissenting as to Questions 2 and 4), answered as follows:
Question 1. No, except such properties, if any, real or personal, enumerated in clause 16, situate upon the branch lines in Saskatchewan as are entitled to the benefit of the exemption from taxation as being required and used for the construction and working of the railway described in sections 1, 2 and 3 of the Act 37 Victoria, c. 14.
Question 2. Yes, as to the business carried on as a railway upon or in connection with the railway as described in sections 1, 2 and 3 of the Act 37 Victoria, c. 14, and upon such other properties, if any, real or personal, of the Company situate upon its branch lines in Saskatchewan as are entitled to the benefit of exemption from taxation under clause 16 as being required and used for the construction and working of that portion of the line referred to in the said sections of the statute.
Question 3. Yes, except in respect of such real estate, if any, situate upon branch lines constructed pursuant to clause 14 of the contract as is entitled to the benefit of the exemption from taxation under clause 16 as being required and used for the construction and working of the railway as described in sections 1, 2 and 3 of the Act 37 Victoria, c. 14.
Question 4.
(a) No.
(b) Yes, subject to the limitation stated in the answer to Question 2.
C. F. H. Carson, K.C., H. A. V. Green, K.C. and A. Find-lay for the appellant.
E. C. Leslie, K.C. and R. S. Meldrum, K.C. for the respondent. The judgment of the Chief Justice and of Taschereau J. was delivered by
The Chief Justice: The Province of Saskatchewan was established in 1905 by Statutes of Canada 4-5, Edw. VII, c. 42.
By force of that Statute (Section 3), the provisions of the British North America Acts, 1867 to 1886, apply to that Province "in the same way and to the like extent as they apply to the provinces heretofore comprised in the Dominion as if the said Province of Saskatchewan had been one of the provinces originally united", except insofar as varied by that Statute or except such provisions as are in terms made or by reasonable intendment may be held to be specially applicable to or only to affect one or more and not the whole of the said provinces.
Section 24 of the Saskatchewan Act provides that the powers granted to the said Province shall be exercised subject to the provisions of Section 16 of the contract set forth in the Schedule to Chapter 1 of the Statutes of 1881, being An Act Respecting the Canadian Pacific Railway Company.
Clause 16 of that contract provides:
16. The Canadian Pacific Railway, and all stations and station grounds, workshops, buildings, yards and other property, rolling stock and appurtenances required and used for the construction and working thereof, and the capital stock of the Company, shall be forever free from taxation by the Dominion or by any province hereafter to be established, or by any Municipal Corporation therein; and the lands of the Company, in the North-West Territories, until they are either sold or occupied, shall also be free from such taxation for twenty years after the grant thereof from the Crown.
Clause 1 of the contract provides:
1. For the better interpretation of this contract, it is hereby declared that the portion of railway hereinafter called the Eastern section, shall comprise that part of the Canadian Pacific Railway to be constructed, extending from the Western terminus of the Canada Central Railway, near the East end of Lake Nipissing, known as Callander Station, to a point of junction with that portion of the said Canadian Pacific Railway now in course of construction extending from Lake Superior to Selkirk on the East side of Red River; which latter portion is hereinafter called the Lake Superior section. That the portion of said railway, now partially in course of construction, extending from Selkirk to Kamloops, is hereinafter called the Central section; and the portion of said railway now in course of construction, extending from Kamloops to Port Moody, is hereinafter called the Western section. And that the words "The Canadian Pacific Railway", are intended to mean the entire railway, as described in the Act 37th Victoria, chap. 14. The individual parties hereto, are hereinafter described as the Company; and the Government of Canada is hereinafter called the Government.
The description referred to in the Act 37th Vict. c. 14, is contained in Sections 1 to 4 of that Statute and reads as follows:
1. A railway to be called the "Canadian Pacific Railway" shall be made from some point near to and south of Lake Nipissing to some point in British Columbia on the Pacific Ocean, both the said points to be determined and the course and line of the said railway to be approved of by the Governor in Council.
2. The whole line of the said railway, for the purpose of its construction, shall be divided into four sections: the first section to begin at a point near to and south of Lake Nipissing, and to extend towards the upper or western end of Lake Superior, to a point where it shall intersect the second section hereinafter mentioned; the second section to begin at some point on Lake Superior to be determined by the Governor in Council, and connecting with the first section, and to extend to Red River, in the Province of Manitoba; the third section to extend from Red River, in the Province of Manitoba, to some point between Fort Edmonton and the foot of the Rocky Mountains, to be determined by the Governor in Council; the fourth section to extend from the western terminus of the third section to some point in British Columbia on the Pacific Ocean.
3. Branches of the said railway shall also be constructed as follows; that is to say:
First—A branch from the point indicated as the proposed eastern terminus of the said railway to some point on the Georgian Bay, both the said points to be determined by the Governor in Council.
Secondly—a branch from the main line near Fort Garry, in the Province of Manitoba, to some point near Pembina on the southern boundary thereof.
4. The branch railways above mentioned shall, for all intents and purposes, be considered as forming part of the Canadian Pacific Railway, and as so many distinct sections of the said railway, and shall be subject to all the provisions hereinafter made with respect to the said Canadian Pacific Railway, except in so far as it may be otherwise provided for by this Act.
The Canadian Pacific Railway Company was constituted pursuant to Statutes of Canada, 44 Vict., c. 1, assented to on the 15th of February, 1881, by Letters Patent granted by His Excellency the Governor-General under the Great Seal of Canada, under date 16th February, 1881.
The contract which the Court is called upon to construe was executed between the Crown, in the right of the Dominion of Canada, and George Stephen and others relating to the Canadian Pacific Railway and was dated October 21, 1880. It was appended as a Schedule to the Statute 44 Vict. c. 1, and it was ratified by that Statute; the wording of the contract being incorporated in the Letters Patent.
Section 4 of the Schedule to the said contract provides that
All the franchises and powers necessary or useful to the Company to enable them to carry out, perform, enforce, use, and avail themselves of, every condition, stipulation, obligation, duty, right, remedy, privilege, and advantage agreed upon, contained or described in the said contract, are hereby conferred upon the Company.
The contract provides for the incorporation of Canadian Pacific Railway Company and the construction by it of a main line of railway from Callendar Station near Lake Nipissing, in the Province of Ontario, the western terminus of the existing railway system of Canada, to Port Moody located on the seaboard of British Columbia.
The contract provided for the construction of branch lines by Clause 14 as follows:
14. The Company shall have the right from time to time, to lay out, construct, equip, maintain, and work branch lines of railway from any point or points along their main line of railway, to any point or points within the territory of the Dominion. Provided always, that before commencing any branch they shall first deposit a map and plan of such branch in the Department of Railways. And the Government shall grant to the Company the lands required for the road bed of such branches, and for the stations, station grounds, buildings, workshops, yards and other appurtenances requisite for the efficient construction and working of such branches, in so far as such lands are vested in the Government.
The area through which the Canadian Pacific Railway was to be constructed between the western boundary of Manitoba, as then constituted, and the eastern boundary of British Columbia was then part of the North-West Territories and was administered by the Dominion Government.
The Province of Saskatchewan, having been established as aforesaid in 1905, certain municipal statutes were subsequently passed in the years 1946 and 1947, which provided:
(a) That the railway roadway and other land within the province owned by railway companies shall be assessed and taxed, and
(b) That railway companies, whether their property is liable to assessment and taxation or not, shall be liable to assessment and taxation in respect of the business carried on as a railway within the Province at a rate per square foot of the floor space of each building or part thereof used for business purposes.
Disputes having arisen between various municipalities and the Canadian Pacific Railway with respect to the latter legislation, the Executive Council of the Province of Saskatchewan, on the recommendation of the Attorney-General and pursuant to the provisions of the Constitutional Questions Act, being c. 72 of the Revised Statutes of Saskatchewan, 1940, was pleased to refer to the Court of Appeal for Saskatchewan 2 the following questions for hearing and consideration (see ante, p. 191).
The Court of Appeal of Saskatchewan by a majority answered "No" to Questions Nos. 1 and 2(a); "Yes" to Questions Nos. 3, 4(a) and 4(b); but declined to answer Questions Nos. 2(b) and 2(c). Mr. Justice Gordon dissented as to the answer given by the majority of the Court to Questions Nos. 1 and 3.
From that judgment the Canadian Pacific Railway Company appeals to this Court and we heard counsel for the Company and for the Attorney-General for Saskatchewan.
It is apparent that the answers to be given to the several questions submitted to the Court depend upon the construction to be put on the contract between the Crown and George Stephen and others already referred to, and, more particularly, on Sections 1, 14, 16 and 22 thereof.
Sections 1, 14 and 16 form part of the Order of Reference and have been above reproduced.
Section 22 reads as follows:
22. The Railway Act of 1879, in so far as the provisions of the same are applicable to the undertaking referred to in this contract, and in so far as they are not inconsistent herewith or inconsistent with or contrary to the provisions of the Act of incorporation to be granted to the Company, shall apply to the Canadian Pacific Railway.
By Questions 1 and 3 the Court of Appeal was asked, in effect, whether the freedom from taxation in Clause 16 applies to branch lines constructed under the authority of Clause 14 of the contract.
By Questions 2 and 4 the Court of Appeal was asked, in effect, whether the freedom from taxation in Clause 16 applies to business taxes provided for in certain Statutes of the Province of Saskatchewan.
It will be observed that Question No. 1 is so worded as to apply to all branch lines of the Appellant in Saskatchewan. In the Court of Appeal, however, only branch lines constructed under the authority of the contract were in issue and the Appellant stated in this Court that it did not contend that the freedom from taxation in Clause 16 of the contract extends to branch lines other than those constructed under the authority of Clause 14.
The same observation should not be made of Question No. 3, since it is in terms limited to branch lines constructed pursuant to Clause 14.
The Company submitted that the true answer to be given to Question No. 1 should be in the affirmative; but that even if the Court of Appeal was to be upheld in its view, then Question No. 1 should not be answered unreservedly in the negative, but that there should be added to the word "No" the following words:
… Provided, however, that Clause 16 does exempt and free from taxation such stations and station grounds, workshops, buildings, yards and other property required and used for the construction and working of the Canadian Pacific Railway (meaning "the entire railway as described in the Act 37 Vict. c. 14", that is to say: the four main line sections, the Georgian Bay branch, the Pembina branch and the Winnipeg Branch).
The Company further submitted that Question No. 3 should be answered in the negative; but that, at all events, if the Court of Appeal should be upheld in its view, Question No. 3 should not be answered unreservedly in the affirmative, but that there should be added to the word "Yes" the following words:
… Provided, however, that such provisions are not operative in respect of stations and station grounds, workshops, buildings, yards and other property located on such branch lines and required and used for the construction and working of the Canadian Pacific Railway (meaning "the entire railway as described in the Act 37 Vict. c. 14", that is to say: the four main line sections, the Georgian Bay branch, the Pembina branch and the Winnipeg branch).
As to Question No. 2, the Company submitted that it should be answered in the affirmative and that Question No. 4 should be answered in the negative.
At bar, counsel for the Respondent stated that the Province would be agreeable to a qualified answer being given to Question No. 1, so that it would read as follows:
No. Provided, however, that the fact that such property is used for the working of the branch lines would not, of itself, defeat any exemption to which such property might be entitled by reason of its being required and used for the working of the main line of the Canadian Pacific Railway in Saskatchewan.
Of the Statute of Canada of 1881 (44 Vict., c. 1), which is entitled "An Act Respecting the Canadian Pacific Railway", very little need be said. The preamble states that the Parliament of Canada has expressed a preference for the construction and operation of the railway by means of an incorporated company aided by grants of money and land and that certain statutes have been passed to enable that course to be followed, but the enactments therein contained have not been effectual for that purpose.
It further states that a contract has been entered into for the construction of the railway; that the contract has been laid before Parliament and that it is expedient to approve and ratify it, as well as to make provision for the carrying out of the same.
A copy of the contract is annexed to the Statute. It is declared. approved and ratified and the Government is authorized to perform and carry out the conditions thereof; and that, for the purpose of incorporating the persons mentioned in the contract and those who shall be associated with them in the undertaking the Governor may grant to them, in conformity with the contract, under the corporate name of the Canadian Pacific Railway Company, a charter conferring upon them the franchises, privileges and powers embodied in the schedule, and that such charter, being published in the Canada Gazette, shall have force and effect as if it were an Act of Parliament, and shall be held to be an Act of incorporation within the meaning of the contract.
The Statute provides that the Government may make to the Company certain grants of money and land upon the terms and conditions agreed upon in the contract; that the Government may permit the admission free of duty of certain materials to be used in the original construction of the railway and convey to the Company the possession of and right to work and run the several portions of the railway, as the same shall be hereafter completed; and the Government shall also take security for the continuous operation of the railway during the ten years next subsequent to the completion thereof in the manner provided by the contract.
It is apparent, therefore, that the Statute, in effect, was passed with the object of approving and ratifying the contract without adding anything to it and that it is to the contract, and not to the Statute, that we must look for the purpose of answering the questions submitted to the Court.
The difference is important for a term of a contract is quite another thing from an exemption section in a taxing Act. Canadian Pacific Railway v. Burnett 3.
Here, the Appellant does not claim a special treatment as was the case decided by the Judicial Committee in Montreal v. Collège Sainte-Marie 4. The exemptions claimed by the Appellant are the result of a quid pro quo, the company receiving these exemptions as a consideration for the fact that they undertook the construction and the working of the railway throughout Canada. In that respect, the Statute added nothing to the consideration given by the Government; the provisions relating thereto are entirely contained in the contract.
Now, Clause 1 of the contract is stated to be inserted "for the better interpretation of this contract". It may be said, however, that the definition there given of "the Canadian Pacific Railway" far from helping in that interpretation is rather confusing. It states that the words "the Canadian Pacific Railway" are intended to mean the entire railway, as described in the Act 37 Vict., c. 14, and it adds that the individual parties to the contract "are hereinafter described as the Company". As a matter of fact, the entire railway, as described in that Act of 1874, consisted of seven sections, four of which were described in Section 2, two of which were described in Sections 3 and 4, and the seventh of which was described in an Amending Act of 1879, this Amending Act expressly providing that all the provisions of the 1874 Act, with respect to branches of the railway, were to apply to this added branch. The seventh section of the 1874 railway, known as the Winnipeg Branch, is not expressly mentioned in the contract. It had, however, at that time been constructed, or was in the course of construction, probably as part of the main line, and it was conveyed to the Company pursuant to Clause 7 of the contract.
But, by Clause 1 of the contract of 1880, only four sections are provided for. The section corresponding with the first section of the 1874 railway is called the Eastern Section. The section corresponding with the second section of the 1874 railway is called the Lake Superior Section. The section extending from Selkirk to Kamloops is called the Central Section which corresponds with the third section and part of the fourth section of the 1874 railway; and the section extending from Kamloops to Port Moody is called the Western Section and corresponds with part of the fourth section of the 1874 railway.
The fifth section of the 1874 railway, known as the Georgian Bay branch, is not provided for in the contract of 1880 and was never built.
The sixth section of the 1874 railway, known as the Pembina branch, is not expressly mentioned in the contract of 1880. It had then been completed and was later conveyed to the Company pursuant to Clause 7 of the contract.
The seventh section of the 1874 railway, known as the Winnipeg branch, is not provided for by the contract of 1880, and, as such, was not built.
By the contract, the Government was to cause to be completed the Lake Superior section and the Western section. The Company was to construct the Eastern section and the Central section. Upon completion of those two last sections by the Company, the Government was to convey to the Company those parts of the railway which the Government undertook to construct.
Thus, the railway contemplated by the 1880 contract is not accurately described in Clause 1 thereof in the Act 37 Vict., c. 14 (1874); and one may not rely upon that so-called description for the purpose of construing the contract of 1880, for the railway provided for by the 1880 contract was a different railway from the entire railway described in the 1874 Act.
It is common ground that one of the principal concepts underlying the 1880 contract was for the purpose of constructing a railway to open up the North-West Territories. For this purpose, the railway was to consist of a main line and of an indeterminate number of branches, as shown by the authority given to the contractors by Clause 14. By that clause, the Company was given the right, from time to time, to lay out, construct, equip, maintain and work branch lines of railways from any point or points along their main line to any point or points within the territory of the Dominion. The only proviso was that before commencing any branch the railway had first to deposit a map and plan of such branch in the Department of Railways. Further, the Government undertook to grant to the Company the lands required for the road bed of such branches and for the stations, station grounds, buildings, workshops, yards and other appurtenances requisite for the efficient construction and working of such branches, insofar as such lands were vested in the Government.
Moreover, for twenty years from the date of the contract, no line of railway was to be authorized by the Dominion Parliament to be constructed South of the Canadian Pacific Railway from any point at or near the railway, except such line as shall run South West or to the Westward of South West; nor to within fifteen miles of Latitude 49. And in the establishment of any new province in the North-West Territories, provision shall be made for continuing such prohibition after such establishment until the expiration of the said period of twenty years (Clause 15 of the 1880 contract).
It is quite clear, therefore, that describing the railway contemplated by the contract as being described in the Act 37 Vict. c. 14 (1874) was quite inappropriate. If it had any meaning at all, it must have been for the purpose of identifying the Canadian Pacific Railway for the construction of which the Act of 1874 provided. It must be given a meaning and I cannot find any other.
Now, Question No. 1 is put in respect of stations and station grounds, workshops, buildings, yards and other property used for the working of the branch lines ….. situated in Saskatchewan.
If we turn to the railway described in Sections 1 to 4 of the Statute 37 Vict. cap. 14, it is to be noted that the branches are there specifically described as "a branch from the point indicated as the proposed eastern terminus of the said railway to some point on the Georgian Bay" and "a branch from the main line near Fort Garry, in the Province of Manitoba, to some point near Pembina on the southern boundary thereof"; and Section 4 states that "the branch railways above mentioned shall be considered as forming part of the Canadian Pacific Railway, and as so many distinct sections of the said railway, and shall be subject to all the provisions hereinafter made with respect to the said Canadian Pacific Railway".
It would seem to me, therefore, that the branch lines to which the benefit of the exemption applies, under Clause 16 of the contract, were meant to be only those which are described in Paragraphs 3 and 4 of the Act 37 Vict. cap. 14 and not to apply to the branch lines referred to in Clause 14 of the contract, which were not included in the description contained in Sections 3 and 4 of the Act 37 Vict.
This conclusion, however, should be qualified, as suggested by the Appellant, by saying that Clause 16 does exempt and free from taxation such stations and station grounds, workshops, buildings, yards and other property required and used for the construction and working of the entire railway as described in the Act 37 Vict. cap. 14.
This qualification, moreover, agrees with the statement made by counsel for the Respondent to the effect "that the fact that such property is used for the working of the branch lines would not, of itself, defeat any exemption to which such property might be entitled by reason of its being required and used for the working of the main line of the Canadian Pacific Railway in Saskatchewan".
By force of Section 4 of Schedule "A", annexed to the contract, and referred to in Section 21 thereof (already reproduced at the beginning of these reasons), all the advantages agreed upon, contained or described in the contract of 1880 were "conferred upon the company", but, of course, this cannot be read as having extended the tax exemption. What the company thereby acquired was the exemption described in Section 16 of the contract and nothing more.
This is further emphasized by the wording of the "Act Respecting the Canadian Pacific Railway" (44 Vict. c. 1). By that Statute, the contract was approved and ratified and it was therein provided that for the purpose of incorporating the persons mentioned in the contract and those who shall be associated with them in the undertaking, the Governor may grant to them in conformity with the contract, under the corporate name of the Canadian Pacific Railway Company, a charter conferring upon them the franchises, privileges and powers embodied in the schedule. This made clear the intention of Parliament that the tax exemption contained in Clause 16 was conferred upon the company exactly as described in the said clause. The object was only to specify that the exemption was to apply to the corporate entity or person, but only in respect of the property described in Clause 16 (Provincial Treasurer of Alberta v. Kerr 5; Lindley J. in Hartley v. Hudson 6).
As for the business tax, that is only a form of municipal taxation and as, under Clause 16 of the contract and Section 4 of the Schedule, the company is "forever free from taxation by the Dominion or by any province hereafter to be established, or by any municipal corporation therein", I am of opinion that, as to the business carried on as a railway (both main line and branches, as described in Sections 1 to 4 of the Act 37 Vict. cap. 14), Clause 16 of the contract exempts and frees the Canadian Pacific Railway Company from taxation in Saskatchewan in respect of its business.
In 1905, when the Province of Saskatchewan was constituted, Section 24 of the Saskatchewan Act provided that the powers of the province should be exercised subject to Clause 16 of the contract. The Respondent is, therefore, bound by that clause, and, in my humble opinion, the answer to each of the questions submitted should be as follows:
1. Question No. 1—No, provided, however, that the fact that such property is used for the working of the branch lines would not, of itself, defeat any exemption to which such property might be entitled by reason of its being required and used for the working of the main line of the Canadian Pacific Railway in Saskatchewan;
2. Questions Nos. 2(a), (b) and (c)—Yes. As to the business carried on as a railway (both main line and branches, as described in Sections 1 to 4 of the Act 37 Vict. cap. 14), Clause 16 of the contract exempts and frees the Canadian Pacific Railway Company from taxation in Saskatchewan in respect of its business;
3. Question No. 3—Yes, provided, however, that such provisions are not operative in respect of stations and station grounds, workshops, buildings, yards and other property located on such branch lines and required and used for the construction and working of the Canadian Pacific Railway, as described in the Act 37 Vict. cap. 14;
4. Question No. 4(a)—No; Question No. 4(b)—Yes, subject to the limitations already stated in the answers to Questions Nos. 1, 2(a), (b), (c) and to Question No. 3.
For the above reasons, the appeal should be allowed, in accordance with the above answers, with one-half of its costs of this appeal to the Appellant.
Kerwin J.: I agree with the reasons for judgment of Mr. Justice Locke.
Kellock, J. This is an appeal from the judgment of the Court of Appeal for Saskatchewan 7 answering certain questions referred to that Court by the Lieutenant Governor in Council.
Stated generally, the questions involve the extent of exemption from taxation provided for by paragraph 16 of the contract of October 21, 1880, and approved by 44 Vic. c. 1, Canada (1881).
Appellant first contends that the exemption extends to branch lines which the appellant was authorized by paragraph 14 of the contract from "time to time" to construct and work. These paragraphs are as follows:
14. The Company shall have the right, from time to time, to layout, construct, equip, maintain and work branch lines of railway from any point or points along their main line of railway, to any point or points within the territory of the Dominion. Provided always, that before commencng any branch they shall first deposit a map and plan of such branch in the Department of Railways. And the Government shall grant to the Company the lands required for the road bed of such branches, and for the stations, station grounds, buildings, workshops, yards and other appurtenances requisite for the efficient construction and -working of such branches, in so far as such lands are vested in the Government.
16. The Canadian Pacific Railway, and all stations and station grounds, work shops, buildings, yards and other property, rolling stock and appurtenances required and used for the construction and working thereof, and the capital stock of the Company, shall be forever free from taxation by the Dominion, or by any Province hereafter to be established, or by any Municipal Corporation therein; and the lands of the Company, in the North-West Territories, until they are either sold or occupied, shall also be free from such taxation for 20 years after the grant thereof from the Crown.
Appellant says that "the Canadian Pacific Railway" in paragraph 16 includes the branch lines contemplated by paragraph 14, while the contention of the respondent is that, by reason of the definition of "the Canadian Pacific Railway" in paragraph 1 of the contract, the appellant's contention is excluded. Paragraph 1 together with the introductory words with which the contract commences are as follows:
That the parties hereto have contracted and agreed with each other as follows, namely:
1. For the better interpretation of this contract, it is hereby declared that the portion of railway hereinafter called the Eastern section, shall comprise that part of the Canadian Pacific Railway to be constructed, extending from the Western terminus of the Canada Central Railway, near the East end of Lake Nipissing, known, as Callander Station, to a point of junction with that portion of the said Canadian Pacific Railway now in the course of construction extending from Lake Superior to Selkirk on the East side of Red River; which latter portion is hereinafter called the Lake Superior section. That the portion of said railway, now partially in course of construction, extending from Selkirk to Kamloops, is hereinafter called the Central section; and the portion of said railway now in course of construction, extending from Kamloops to Pont Moody, is hereinafter called the Western section. And that the words "the Canadian Pacific Railway" are intended to mean the entire railway, as described in the Act 37th Victoria, chap. 14. The individual parties hereto, are hereinafter described as the Company; and the Government of Canada is hereinafter called the Government.
"The entire railway, as described in the Act 37th Victoria, c. 14" is to be found in the first four sections of that statute. Section 1 reads:
A railway, to be called the "Canadian Pacific Railway", shall be made from some point near to and south of Lake Nipissing to some point in British Columbia on the Pacific Ocean, both said points to be determined and the course and line of the said railway to be approved of by the Governor in Council.
By section 2 it is provided that the whole line of the said railway shall be divided into four sections, and the sections are delimited therein. Sections 3 and 4 are as follows:
3. Branches of the said railway shall also be constructed as follows, that is to say:
First:—A branch from the point indicated as the proposed eastern terminus of the said railway to some point on the Georgian Bay, both the said points to be determined by the Governor in Council.
Secondly:—A branch from the main line near Fort Garry, in the Province of Manitoba, to some point near Pembina on the southern boundary thereof.
4. The branch, railway above mentioned shall, for all intents and purposes, be considered as forming part of the Canadian Pacific Railway, and as so many distinct sections of the said railway, and shall be subject to all the provisions hereinafter made with respect to the said Canadian Pacific Railway, except in so far as it may be otherwise provided for by this Act. Mr. Carson, for the appellant, contends that the definition of "the