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BC Sessional Papers

IN THE SUPREME COURT. CANADIAN PACIFIC RAILWAY vs. THE QUEEN. British Columbia. Legislative Assembly 1894

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 57 Vict. Judgment—Canadian Pacific Railway v. The Queen. 1209
(Full Court.—The Chief Justice, Mr. Justice Crease, Walkem, Drake.)
This was an appeal from the judgment of the Court of Revision, which reduced the
assessed value of the real estate of the Canadian Pacific Railway Company in British Columbia,
under the "Assessment Act," B. C. Rev. Statutes, 1888, Cap. 11, p. 947, and the amending
Act of 1891, at $2,929,176.00 instead of the amount then contended for by the Company,
The learned Counsel for the appellant contended before the Court that the land alone on
which the railway was situate should be taxed; but the Act says, in section 3, that the land
liable to be taxed (vide interpretation clause) is to include all buildings, machinery, and other
things affixed to the realty, i. e., fixed on to it or imbedded in it.
But the Act, while making a railway generally subject to taxation, has created several
exemptions, namely : " Snowsheds, bridges, aqueducts, trestles, cribbing, culverts, and other
" improvements made to the real estate of the Railway Company in the improvement of their
" road-bed."
While, therefore, the articles and things included in the above exemption are free—all
real estate, buildings, machinery, and things affixed to the soil, such as rails, ties, fish-plates,
and the like fixtures in the road-bed, and being of the like kind as the things exempted, are
taxable—and for the purposes of the " Assessment Act," constitute the " railway " which is to
be taxed under the Statute.
The evidence, both on the part of the plaintiff and defendant, is practically very scanty,
and although the Court called for affidavits and another examination of skilled witnesses to
testify what the value of the railway so taxable was, no satisfactory evidence could be elicited.
What evidence there was was chiefly confined to estimates of value based on the original
cost of the several component parts of such (taxable) railway, ties, rails, ballast, fish-plates,
and so forth, and not according to the rule laid down in section 24 of the Act, which assesses
the value of the railway, or rather the taxable portion of it, "as the cash value at which it
would be appraised in payment of a just debt from a solvent debtor."
Not one of the witnesses, from the superintendent downwards, engineers, contractors, and
others familiar with the construction and working of railways, could give this. Various
attempts were made to arrive at appoxiraate values of the parts of the railway above
mentioned, but unsuccessfully.
Indeed, if regarded as separate from the soil, the taxable portions of the railway, rails,
ties, and what not, would become personal estate and cease to be realty or taxable as real
estate, unless specially so declared under the Act.
There is no express provision for approximation to actual value in the Act, without which
an approximate valuation would be illegal. That, I am aware, was from the first the Chief
Justice's difficulty. It is clear and acknowledged law that tax Acts are to be construed
Only the mode of assessment and collection prescribed by the Act can be followed.
Indeed, Partington v. The Attorney General, 4 Eng. and Irish Appeals, confirms this, both
upon form and upon substance. The principle of all fiscal legislation is this : If the person
taxed comes within the letter of the law he must be taxed, however great the hardship to the
judicial mind may appear to be. On the other hand, if the Crown seeking cannot bring the
subject within the letter of the law, the subject is free, however within the spirit of the law
the case might otherwise appear to be. In other words, if there be admissable in any Statute
what is called an equitable construction, certainly such a construction is not admissable in a
taxing Statute, where you can simply adhere to the words of the Statute. 1210 Judgment—Canadian Pacific Railway v. The Queen. 1894
Adopting Lord Cairns' canon of construction, the mode prescribed in the case before us
has been found impracticable. That portion of the- Act consequently must be declared
unworkable. That being the case, I am of opinion, therefore, that the Court has no option
but to allow the appeal and to declare the assessment invalid, and that, therefore, is cancelled.
The assessment not appealed against is allowed. As, however, the difficulty arises from
no fault of either party, it will be without costs.
Henry P. Pellew Ceease, J.
Maech, 19th, 1894.
This is an appeal by the Canadian Pacific Railway Company from an assessment made
for the fiscal year 1892, by the Court of Revision—the contention of the company being that
their railway has been excessively taxed.
It is a well established rule of law, both in the English and American courts, that Tax
Acts are to be construed strictly and, where doubt arises, in favour of the subject. In the
case of the Attorney-General v. Partington (L, R. 4 E. and I. app. 122) Lord Cairns observes:
" If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the
Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the
subject is free, however apparently within the spirit of the law the case might otherwise
appear to be. In other words, if there be admissable, in any statute, what is called an
equitable construction, certainly such a construction is not admissable in a taxing statute,
where you can simply adhere to the words of the statute." Moreover, "if," as Lord Esher
states, " the words of an Act are clear, you must follow them, even though they lead to a
manifest absurdity."—Reg. v. the Judge of the City of London Court, 1 Q, B. (1892) 290.
Such being the law applicable to our Assessment Act, the question as to whether
excessive taxation has taken place or not becomes unimportant, for although the appellants'
railway is within the taxing provisions of the Act, still it has not been brought within the
letter of the Act in the process of taxation. In other words, the railway has been taxed on a
principle of valuation wholly different from that prescribed by the Legislature in section 24 of
the Act, and therefore on a wrong and illegal principle. That section declares that " Real
and personal property shall be estimated at their actual cash value, as they would be appraised
in payment of a just debt from a solvent debtor." The rule or principle thus laid down is
clearly stated. No deviation from it is permissible, for the language of the Legislature is
imperative. But in the present case it has been deviated from, inasmuch as the Court of
Revision based the assessment in question, not on any estimate equivalent to an appraisal
made for the satisfaction of a debt due by the appellants, but on the cost of material and labour
used in the construction of the railway. This was, no doubt, due to the fact that the valuation or appraisement required by the section was found to be impracticable. At all events,
this has been our experience, for none of the railway engineers who were examined before us
would, when asked to do so, venture to give an opinion as to what would be a fair valuation
of the railway a.s if appraised in payment of a debt. It was proved that the railway was not
self-sustaining, and that its value to the appellants consisted in its being part of their transcontinental line. It was also shown that if it were severed from that line for the purpose of
sale its assessable value, or, in other words, what it would fetch, would altogether depend upon
whether satisfactory arrangements of an inter-traffic character on the severed lines could be
made by an intending purchaser with the appellants. In view of these circumstances, the
engineers referred to had no hesitation in stating that a valuation according to the statute was
impracticable. It is hardly necessary to add that this difficulty could of itself confer no
power on the Court- of Revision to substitute the principle of valuation it followed for the
principle laid down in the statute. Such a power could only be conferred by the Legislature.
The assessment by that Court having been illegally made must be set aside and accordingly
cancelled on the assessment roll by the officer who has charge of it. The appellants, although
successful, are not in my opinion, entitled to the costs of this appeal, as they were parties to
the mistake that occurred in the Court of Revision, and as they failed there, as they have
done here, to take the legal point on which the case now turns. Our decision, it may be well
to mention, does not affect the appellants' branch line to Okanagan, as its assessment has not
been appealed from. 57 Vict. Judgment—Canadian Pacific Railway v. The Queen. 1211
Apart from all this, a careful consideration shows that, independently of the railway in
question, which occupies, as will be evident, an exceptional position, section 24 cannot be
practically applied to a railway. The value of a railway, for instance, depends on its earnings,
and if those earnings fall short of profits, it is obvious that no sane person would purchase it,
nor would a creditor accept it in satisfaction of his debt, however small, as it would prove to
be an incumbrance instead of an asset. It would, therefore, on appraisal, be necessarily
estimated as valueless and, hence, be unassessable on the principle laid down in the section.
Besides, profits or losses are not the standard of assessable values contemplated by the section.
Were it otherwise, the railway I have instanced would, as I have said, be free; the dwelling
house in which no profits are made would also escape ; while the shop or wholesale establishment in which large profits happen to be made would be unduly taxed.
During the argument of this appeal, reference was made by counsel to Ontario legislation
with respect to the taxation of railways, and to cases decided under it by the Ontario courts.
From the view we have been obliged to take of our own legislation, that reference was of no
assistance to us ; but it was of service in showing that an equitable system of taxing railways
prevails there, and hence is practicable. Whether it should be adopted here or not is, of
course, a question of legislative policy. In any event, the present inefficient system obviously
requires a change.
Geo. A. Walkem, J.
The " Assessment Act, 1888," defines lands, real property, and real estate, as including
all buildings and other things erected upon or affixed to the land, and also all machinery and
all other things so fixed to any building as to form in law part of the realty.
By section 30, as amended by section 9 of the Act of 1891, the Legislature breaks away
from its original interpretation and gives a more restricted meaning to the the term " land,"
and enacts that land occupied and claimed as right of way for railroads and all sub-structures
and superstructures which support the same, except bridges, aqueducts, trestles, cribbing, and
other improvements made to the real estate of the Bailway Company in the construction of
their road bed, shall be assessed for taxes as in section 6.
Bails fastened to sleepers which are imbedded in ballast are fixtures and become portion
of the real estate as defined by the interpretation clause ; and if authority were wanted—see
Turner v. Cameron, 5 L. B., Q. B., 306.
I think section 30 has to be read with section 2, although in the case of the Great
Western Bailway Company v. Bouse, 15 O. B., 168, it was held that where land was defined,
much in the same language as in our Act, the words used were to be treated as general words
of the language used in the subsequent sections defining the mode of assessing railways, was to
be treated as an exception to and as governing the general words, because under section 2 the
rails, ties, bridges, trestles, cribbing, and buildings of every description in the right of way
became part of the realty; and by section 4 of the Act of 1891, bridges, aqueducts, trestles,
cribbing, and other improvements made to the real estate of the Bailway Company in construction of their road-bed are exempt from assessment; in fact, these improvements, or rather
additions to the realty, are excluded from the operation of clause 6, which enacts that there
shall be assessed, levied and collected two-thirds of one per cent, upon the assessed value of
real estate ; therefore the real estate has to be valued excluding these particular items. We
have come to clause 24, which says that real and personal property shall be estimated at their
actual cash value as they would be appraised in payment of a just debt from a solvent debtor.
The assessor placed a general value on the line, including, it is presumed, all the items
which under clause 2 went to make up the real estate.
The Railway Company appealed, and in support of their appeal they dissected the
component parts of the railway itself, the buildings, fencing and telegraph, and contended
that the assessment was too high considering what the cost of construction and present value
of materials was, but no one was able to even estimate the assessable value of the line on the
basis of section 24.
The criterion which they offered for our consideration was no doubt under the circumstances the nearest approximation that could be arrived at as to value at the date of
assessment, but it was not the statutory value. 1212 Judgment—Canadian Pacific Railway v. The Queen. 1894
I can well understand the difficulty that surrounds this question. This line is part of
a trans-continental system, but for the purposes of assessment it can only be valued as confined
to the limits of the Province, and I imagine no two persons would arrive at any approximation
in figures as to its saleable value.
The principle laid down in the Act for valuation is one not appropriate for railway works.
It is a general principle adapted to other descriptions of property, and is spoken of with
approval by some eminent Judges as the proper mode of estimating the value of property for
assessment, but in a new country where the land is subject to such great fluctuations in value
from year to year, it is an open question whether it is the best way of arriving at the
assessable value.
The Legislature has, however, adopted this criterion, and the Courts have to give effect
to it whenever practicable.
Is it practicable here, and has it been carried out ? I think not. No word of evidence
has been submitted to us in support of the statutory definition of value. Statutes imposing
pecuniary burdens are subject to the rule of strict construction, and it would not be right to
impose a different mode of valuation on to the subject than that laid down in the Act itself.
In my opinion there has been no valuation of the Company's property in accordance with
section 24, and the Crown, when further evidence was asked for in order to elucidate some
obscure points in the evidence, did not attempt to show, as they might have done, that the
railway valuation was based on any appraisement under section 24. The appeal will be
allowed, and assessment cancelled, except as to Okanagan Railway.
M. W. Tyewhitt Deake, J.
Printed by Richard Wolfhxdkn, Printer to the Queen's Most Excellent Majesty .


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