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Supreme Court of Canada

Municipal corporation—Taxation by-law—Discrimination—Unconstitutionality—Defendant bound by course of trial—Cities and Towns Act, R.S.Q. 1941, c. 233, s. 523 [now R.S.Q. 1964, c. 193, s. 525].

In 1961, the defendant adopted a by-law imposing a tax “on all yards or depots for rough, sawn or manufactured wood, on all depots, in reservoirs, of gasoline, petroleum, oil or other inflammable liquids, on all yards or depots for coal or other articles of commerce kept for sale”. In implementing the by-law, the officials treated it as referring only to stocks kept in outside depots in addition to products held in the reservoirs of large petroleum companies. A declaration of nullity was sought for discrimination and unconstitutionality. The Superior Court allowed the action on the first ground after rejecting the other. The Court of Appeal affirmed the judgment on the first without deciding on the second. In this Court, the defendant no longer contended that the by-law was valid although discriminatory. Conceding that there had been discrimination in the application, it contended that this was due to an erroneous interpretation.

Held: The appeal should be dismissed.

The rule stated in City of Verdun v. Sun Oil Co., [1952] 1 S.C.R. 222, that the city was bound by the manner in which it conducted its defence, should be applied. The by-law having been properly declared void for discrimination, it was undersirable to examine the constitutional question.

[Page 534]

APPEAL from a judgment of the Court of Queen’s Bench, Appeal Side, province of Quebec[1], affirming a judgment of McNicoll J. Appeal dismissed.

Jacques Flynn, Q.C., for the defendant, appellant.

Charles Stein, Q.C., and Pierre Marseille, Q.C., for the plaintiffs, respondents.

Rodrigue Bédard, Q.C., for the Attorney General of Canada.

Claude Gagnon, Q.C., for the Attorney General of Quebec.

John D. Richard, for the Attorney General of Alberta.

The judgment of the Court was delivered by

PIGEON J.—On December 23, 1961, appellant adopted the following by-law:

[TRANSLATION]

BY-LAW No. 465

ORDERING THE LEVY OF A TAX
ON STOCKS KEPT IN DEPOTS

WHEREAS the Council has the right to impose and levy annually on all yards or depots for rough, sawn or manufactured wood or lumber; and on all yards or depots for coal or other articles of commerce kept for sale, a tax of not more than one per cent (1%) of the estimated average value of such stock in trade or other articles of commerce;

WHEREAS the Council believes it must create additional revenues for its administration;

WHEREAS the fire protection service must be continuously improved and kept in a state of efficiency because of the immense depots of gasoline and various other inflammable liquids within the limits of the City;

WHEREAS the cost of maintaining the streets of the City does not cease to rise due to the continuous increase in traffic of heavy trucks, trailers and especially tank trucks with or without trailers carrying petroleum products;

[Page 535]

WHEREAS the Council deems it necessary to levy the said tax especially on depots of gasoline, petroleum products and other inflammable liquids;

WHEREAS notice of the present By-law has been given; it is resolved as follows:

1. The above preamble is part of the present By-law;

2. On all yards or depots for rough, sawn or manufactured wood, on all depots, in reservoirs of gasoline, petroleum, oil or other inflammable liquids, on all yards or depots for coal or other articles of commerce kept for sale, a tax of one per cent (1%) of the estimated average value of such stock in trade is hereby imposed;

3. Such average value of stock kept in depot shall be established by the assessors.

At the outset, it should be noted that the words I have underlined in s. 2 of the By-law are not in the first paragraph of the preamble while the penultimate paragraph of the preamble shows that those are the depots specially aimed at. Then, if one examines the legislative provision on which the By-law was founded, the underlined words are not found therein. This provision is s. 523 of the Cities and Towns Act (R.S.Q. 1941, c. 233, now R.S.Q. 1964, c. 193, s. 525) which reads as follows:

523. The council may impose and levy annually:

1° On the stock in trade or articles of commerce of all descriptions kept by merchants and dealers and exposed for sale in shops, or kept in vaults, warehouses or store-houses; on all yards or depots for rough, sawn or manufactured wood or lumber; and on all yards or depots for coal or other articles of commerce kept for sale, a tax of not more than one per cent of the estimated average value of such stock in trade or other articles of commerce;

2° On all tenants paying rent in the municipality, an annual tax of not more than eight cents in the dollar on the amount of their rent or of the annual value of the property as entered on the valuation role.

[Page 536]

Every person, occupying property or part of any property of which he is neither the owner nor the lessee, shall be liable for the payment of such tax.

In implementing By-law No. 465 and s. 5 of By-law No. 466 ordering that the tax mentioned in the former be levied for the year 1962, the municipal officials treated By-law No. 465, as referring only to stocks kept in outside depots in addition to products held in the reservoirs of large petroleum companies. Consequently, the assessors rated for this tax, besides eight large petroleum companies, only four other concerns where they found stocks kept outside: a nursery-garden, a hardware store, a heating appliance store and scrap yard, all for trifling amounts totalling $197.79, while the eight petroleum companies were being called upon to pay a total of $61,226.18. Six of them paid a sum of $46,346.96 under protest and brought action claiming reimbursement and a declaration that By-law No. 465 and s. 5 of By-law No. 466 were void. The other plaintiff prays only that the By-laws be declared void. Such declaration is sought on two grounds: discrimination and unconstitutionality.

The Superior Court allowed the action on the first ground after rejecting the other. The Court of Appeal affirmed the judgment on the first ground without deciding on the second.

In this Court, appellant no longer contended, as in first instance and in the Court of Appeal, that the By-law was not discriminatory because the power to tax on which it rests would be divisible. Also it was no longer denied that a discriminatory by-law is void, especially a tax by‑law. The only argument submitted was that the By-law was not discriminatory because it was in reality applicable to all articles of commerce kept for sale in the municipality.

Appellant’s counsel conceded that there had been discrimination in the application of the Bylaw but he contended that this was due to an erroneous interpretation and that nothing restricted the general meaning of the expression

[Page 537]

“other articles of commerce”. Consequently, he argued, all that respondents could complain of was a wrong application of the By-law, the only injustice towards them consisting in the tax not having been levied on the value of the stocks of all merchants in the locality. To correct this situation, various remedies were available to them but not an action for a declaration of nullity.

It does not appear necessary to examine the merits of this contention respecting a by-law in which, a preamble, that is a part thereof, declares the intention to tax “especially” “depots of gasoline, petroleum products and other inflammable liquids”, great care being taken to omit therefrom that which the Act mentions in the first place: “stock in trade”.

In the present case we must apply the rule stated in the reasons of this Court by Fauteux I., now Chief Justice, in City of Verdun v. Sun Oil Co. Ltd.[2], as follows:

The City cannot now adopt, before this Court, a different view on the facts to gain a new ground in law; it is bound by the manner in which it conducted its defence. (The Century Indemnity Company v. Rogers (1932) S.C.R. 529 at 536. Sullivan v. McGillis and others (1949) S.C.R. 201 at 215).

Having come to the conclusion that the By-law was properly declared void for discrimination, it appears undesirable for this Court, as for the Court of Appeal, to examine the constitutional question raised by the respondents.

For these reasons, the appeal should be dismissed with costs, and without costs to the intervening parties.

Appeal dismissed with costs.

Solicitors for the appellant: Flynn, Rivard, Jacques, Cimon, Lessard & Lemay, Quebec.

Solicitors for the respondents: Létourneau, Stein, Marseille, Bienvenue, Délisle & Larue, Quebec.

 



[1] [1968] Que. Q.B. 854.

[2] [1952] 1 S.C.R. 222 at 231, [1952] 1 D.L.R. 529.

 

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