Gendis Inc. v. Canada (Attorney General) et al., (2006) 205 Man.R.(2d) 164 (CA)

JudgeScott, C.J.M., Monnin and Hamilton, JJ.A.
CourtCourt of Appeal (Manitoba)
Case DateJune 06, 2006
JurisdictionManitoba
Citations(2006), 205 Man.R.(2d) 164 (CA);2006 MBCA 58

Gendis Inc. v. Can. (A.G.) (2006), 205 Man.R.(2d) 164 (CA);

    375 W.A.C. 164

MLB headnote and full text

Temp. Cite: [2006] Man.R.(2d) TBEd. JN.026

Gendis Inc. (applicant/appellant) v. Attorney General of Canada, Minister of National Revenue and The Government of Manitoba (respondents/respondents)

(AI 04-30-05998; 2006 MBCA 58)

Indexed As: Gendis Inc. v. Canada (Attorney General) et al.

Manitoba Court of Appeal

Scott, C.J.M., Monnin and Hamilton, JJ.A.

June 6, 2006.

Summary:

The Canada Customs and Revenue Agency issued Notices of Reassessment to General Distributors Ltd. (GDL) with respect to its taxation year ended January 31, 1996. The Notices of Reassessment added a taxable capital gain of $106,547,920 to GDL's taxable income under s. 53.2 of the Manitoba Income Tax Act (MITA), resulting in income tax of $18,113,146 owing to the Province of Manitoba. Gendis Inc., GDL's successor, applied for a declaration that the Attorney General of Canada and the Minister of National Revenue had no jurisdiction or authority to collect the tax imposed pursuant to s. 53.2 of the MITA.

The Manitoba Court of Queen's Bench, in a decision reported at 186 Man.R.(2d) 61, dismissed the application. Gendis appealed.

The Manitoba Court of Appeal dismissed the appeal.

Constitutional Law - Topic 15

General principles - Effect of federal-provincial agreements - The Manitoba Court of Appeal held that the Tax Collection Agreement between Canada and Manitoba was a private agreement which did not create public rights - See paragraphs 140 to 149.

Constitutional Law - Topic 604.1

Powers of Parliament and the legislatures - Delegation of power - Delegation of legislative power - Validity of - [See second, third and fourth Constitutional Law - Topic 605 ].

Constitutional Law - Topic 605

Powers of parliament and the legislatures - Delegation of power - Taxing powers -The appellant argued that the Attorney General of Canada and the Minister of National Revenue had no jurisdiction or authority to collect a tax imposed pursuant to s. 53.2 of the Manitoba Income Tax Act - The appellant contended that the Canada Customs and Revenue Agency (CCRA) could only exercise the authority granted to it by Parliament and that the authority granted to it was limited to the collection of the specific income taxes set out in the Tax Collection Agreement (TCA) between Canada and Manitoba, which did not include the s. 53.2 tax - The Manitoba Court of Appeal rejected the argument - The CCRA's mandate set out in s. 5(1) of the CCRA Act included responsibility for "implementing agreements between the Government of Canada or the Agency and the government of a province or other public body performing a function of Government in Canada" - It was incorrect to narrowly read "agreements" in s. 5(1) as only referring to the TCA - It also included the reciprocal legislation enacted by Canada and Manitoba - The CCRA's ability to collect taxes was therefore not strictly limited by the terms of the TCA - See paragraphs 87 to 122.

Constitutional Law - Topic 605

Powers of parliament and the legislatures - Delegation of power - Taxing powers - The appellant argued that the Attorney General of Canada and the Minister of National Revenue had no jurisdiction or authority to collect a tax imposed pursuant to s. 53.2 of the Manitoba Income Tax Act - The appellant argued that Manitoba could not unilaterally impose administrative duties and financial burdens on the federal government - The appellant submitted that there was a distinction between Canada's ability to delegate down to a province and the province's ability to delegate up - The Manitoba Court of Appeal rejected the submission - There had been cases which had accepted an interdelegation of powers from a province to a federal body - The court held that the provinces were not foundationally limited in their ability to "delegate up" to the federal government or one of its agencies - See paragraphs 123 to 124.

Constitutional Law - Topic 605

Powers of parliament and the legislatures - Delegation of power - Taxing powers -The appellant argued that the Attorney General of Canada and the Minister of National Revenue had no jurisdiction or authority to collect a tax imposed pursuant to s. 53.2 of the Manitoba Income Tax Act - The appellant argued that Manitoba could not unilaterally impose administrative duties and financial burdens on the federal government and that by virtue of the unilateral delegation Manitoba had improperly affected a core federal power and breached the federal government's "interjurisdictional immunity" - The Manitoba Court of Appeal rejected the argument - There was reciprocal legislation and a Tax Collection Agreement between Canada and Manitoba - This was not a case of "unilateral delegating up" or a breach of Canada's interjurisdictional immunity, but an example of consensual administrative interdelegation - See paragraphs 125 to 133.

Constitutional Law - Topic 605

Powers of parliament and the legislatures - Delegation of power - Taxing powers -The appellant argued that the Attorney General of Canada and the Minister of National Revenue had no jurisdiction or authority to collect a tax imposed pursuant to s. 53.2 of the Manitoba Income Tax Act - The appellant argued that Manitoba could not unilaterally impose administrative duties and financial burdens on the federal government - The appellant submitted that Manitoba's action constituted a unilateral attempt to impose financial obligations on Canada and a federal official could not accept a delegation of authority or commit the federal government to an expenditure of funds without an express grant of governmental authority - The Manitoba Court of Appeal rejected the argument - So long as there was de facto consent on the part of the federal government that was sufficient - Federal legislation need not speak to the acceptance of delegation in explicit legislative terms - See paragraphs 134 to 139.

Constitutional Law - Topic 2511

Determination of validity of statutes or acts - General principles - Interjurisdictional immunity - [See third Constitutional Law - Topic 605 ].

Income Tax - Topic 9226

Enforcement - Collection - General - [See first Constitutional Law - Topic 605 ].

Statutes - Topic 522

Interpretation - General principles - Taxing statutes - [See Statutes - Topic 2614 ].

Statutes - Topic 2614

Interpretation - Interpretation of words and phrases - Modern rule (incl. interpretation by context) - Legislative context - The appellant argued that the "tax legislation" under consideration on the appeal was to be interpreted using the plain meaning rule - The Manitoba Court of Appeal stated that the narrow interpretation of the plain meaning rule advocated by the appellant did not accord with the modern approach to the interpretation of legislation, including taxation legislation - The Supreme Court of Canada had recognized that except in the rarest of cases where the language admitted of absolutely no doubt or ambiguity, the object and purpose of legislation played a fundamental role in any statutory interpretation - The provisions in issue were to be read in their entire context, in their grammatical and ordinary sense, harmoniously with the statutory scheme, its objects, and the intention of Parliament - See paragraphs 74 to 86.

Cases Noticed:

Van Buren Bridge Co. v. Madawaska (Municipality) (1958), 15 D.L.R.(2d) 763 (N.B.C.A.), refd to. [para. 40].

Lofstrom and Murphy, Re (1971), 22 D.L.R.(3d) 120 (Sask. C.A.), refd to. [para. 40].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 42].

Stubart Investments Ltd. v. Minister of National Revenue, [1984] 1 S.C.R. 536; 53 N.R. 241, refd to. [para. 50].

Friesen v. Minister of National Revenue, [1995] 3 S.C.R. 103; 186 N.R. 243, refd to. [para. 50].

British Columbia (Attorney General) v. Canada (Attorney General), [1937] A.C. 377 (P.C.), refd to. [para. 52].

Nova Scotia (Attorney General) v. Canada (Attorney General), [1951] S.C.R. 31, refd to. [para. 51].

Prince Edward Island Potato Marketing Board v. H.B. Willis Inc., [1952] 2 S.C.R. 392, refd to. [para. 51].

Milk Marketing Board (B.C.) v. Bari Cheese Ltd. et al. (1996), 79 B.C.A.C. 34; 129 W.A.C. 34; 26 B.C.L.R.(3d) 279 (C.A.), refd to. [para. 51].

R. v. Decorte (C.), [2005] 1 S.C.R. 133; 330 N.R. 225; 196 O.A.C. 1; 2005 SCC 9, refd to. [para. 52].

R. v. Stephens (J.G.) (1995), 86 O.A.C. 155; 102 C.C.C.(3d) 416 (C.A.), refd to. [para. 52].

Alberta (Attorney General) v. Putnam, [1981] 2 S.C.R. 267; 37 N.R. 1; 28 A.R. 387, refd to. [para. 52].

Finlay v. Canada, [1986] 2 S.C.R. 607; 71 N.R. 338, refd to. [para. 54].

Friends of the Island Inc. v. Canada (Minister of Public Works), [1993] 2 F.C. 229; 61 F.T.R. 4 (T.D.), refd to. [para. 54].

Oil Sands Hotel (1975) Ltd. et al. v. Gaming and Liquor Commission (Alta.) et al. (1999), 241 A.R. 45 (Q.B.), refd to. [para. 54].

Minister of National Revenue v. Canada Trustco Mortgage Co., [2005] 2 S.C.R. 601; 340 N.R. 1; 2005 SCC 54, refd to. [para. 57].

Bell ExpressVu Limited Partnership v. Rex et al., [2002] 2 S.C.R. 559; 287 N.R. 248; 166 B.C.A.C. 1; 271 W.A.C. 1; 2002 SCC 42, refd to. [para. 57].

Samson v. R. et al., [1957] S.C.R. 832, refd to. [para. 61].

Markevich v. Minister of National Revenue, [2003] 1 S.C.R. 94; 300 N.R. 321; 2003 SCC 9, refd to. [para. 63].

Moore (Geoffrey L.)  Realty Inc. v. Manitoba Motor League (2003), 173 Man.R.(2d) 300; 293 W.A.C. 300; 2003 MBCA 71, refd to. [para. 63].

Hodge v. R., [1883] 9 A.C. 117 (P.C.), refd to. [para. 68].

Maritime Bank of Canada (Liquidators) v. New Brunswick (Receiver General), [1892] A.C. 437 (P.C.), refd to. [para. 68].

City National Leasing Ltd. v. General Motors of Canada Ltd., [1989] 1 S.C.R. 641; 93 N.R. 326; 32 O.A.C. 332, refd to. [para. 68].

Coughlin v. Highway Transport Board (Ont.), [1968] S.C.R. 569, refd to. [para. 69].

Agricultural Marketing Products Act, Re, [1978] 2 S.C.R. 1198; 19 N.R. 361, refd to. [para. 69].

Reference Re Goods and Services Tax, [1992] 2 S.C.R. 445; 138 N.R. 247; 127 A.R. 161; 20 W.A.C. 161, refd to. [para. 71].

Friesen v. Minister of National Revenue, [1995] 3 S.C.R. 103; 186 N.R. 243, refd to. [para. 77].

Minister of National Revenue v. Alberta (Treasury Branches) et al., [1996] 1 S.C.R. 963; 196 N.R. 105; 184 A.R. 1; 122 W.A.C. 1, refd to. [para. 79].

Québec (Communauté urbaine) et autres v. Corporation Notre-Dame de Bon-Secours, [1994] 3 S.C.R. 3; 171 N.R. 161; 63 Q.A.C. 161, refd to. [para. 80].

65302 British Columbia Ltd. v. Minister of National Revenue, [1999] 3 S.C.R. 804; 248 N.R. 216, refd to. [para. 81].

Will-Kare Paving & Contracting Ltd. v. Minister of National Revenue, [2000] 1 S.C.R. 915; 255 N.R. 208; 2000 SCC 36, refd to. [para. 82].

Singleton v. Minister of National Revenue, [2001] 2 S.C.R. 1046; 275 N.R. 133; 2001 SCC 61, refd to. [para. 82].

Mathew v. Canada - see Kaulius et al. v. Minister of National Revenue.

Kaulius et al. v. Minister of National Revenue, [2005] 2 S.C.R. 643; 339 N.R. 323; 2005 SCC 55, refd to. [para. 84].

Huth v. Clarke (1990), 25 Q.B.D. 391 (C.A.), refd to. [para. 90].

Shannon v. Lower Mainland Dairy Products Board (B.C.), [1938] 4 D.L.R. 81; [1938] A.C. 708 (P.C.), refd to. [para. 93].

Reference Re Natural Products Marketing Act, 1934, [1937] 1 D.L.R. 691 (P.C.), refd to. [para. 98].

Bonanza Creek Gold Mining Co. v. R., [1916] 1 A.C. 566; 26 D.L.R. 273 (P.C.), refd to. [para. 104].

Fédération des producteurs volailles du Québec et al. v. Pelland, [2005] 1 S.C.R. 292; 332 N.R. 201; 2005 SCC 20, refd to. [para. 108].

Monsanto Canada Inc. v. Superintendent of Financial Services (Ont.) et al., [2004] 3 S.C.R. 152; 324 N.R. 259; 189 O.A.C. 201; 2004 SCC 54, refd to. [para. 113].

Milk Board (B.C.) v. Grisnich et al., [1995] 2 S.C.R. 895; 183 N.R. 39; 61 B.C.A.C. 81; 100 W.A.C. 81, refd to. [para. 123].

Paul v. Forest Appeals Commission (B.C.) et al., [2003] 2 S.C.R. 585; 310 N.R. 122; 187 B.C.A.C. 1; 307 W.A.C. 1; 2003 SCC 55, refd to. [para. 128].

Ordon et al. v. Grail, [1998] 3 S.C.R. 437; 232 N.R. 201; 115 O.A.C. 1, refd to. [para. 128].

Mississauga (City) v. Greater Toronto Airports Authority et al. (2000), 138 O.A.C. 1; 192 D.L.R.(4th) 443; 50 O.R.(3d) 641 (C.A.), refd to. [para. 128].

DFS Ventures Inc. v. Liquor Control Commission (Man.) et al. (2003), 173 Man.R.(2d) 76; 293 W.A.C. 76; 2003 MBCA 33, refd to. [para. 128].

Friends of the Oldman River Society v. Canada (Minister of Transport and Minister of Fisheries and Oceans), [1992] 1 S.C.R. 3; 132 N.R. 321, refd to. [para. 130].

Barrie Public Utilities et al. v. Canadian Cable Television Association et al., [2003] 1 S.C.R. 476; 304 N.R. 1; 2003 SCC 28, refd to. [para. 130].

Keable and Quebec (Attorney General) v. Canada (Attorney), [1979] 1 S.C.R. 218; 24 N.R. 1, refd to. [para. 131].

Canada Mortgage and Housing Corp. v. Iness et al. (2004), 184 O.A.C. 55; 70 O.R.(3d) 148 (C.A.), refd to. [para. 134].

Reference as to the Liability of the Province of Nova Scotia for Expenses Incurred in Calling Out Troops in Aid of the Civil Power in Cape Breton, [1930] S.C.R. 554, refd to. [para. 136].

Manchester Ship Canal Co. v. Manchester Racecourse Co., [1900] 2 Ch. 352 (Ch. Div.), affd. [1901] 2 Ch. 37 (C.A.), refd to. [para. 142].

Alberta (Attorney General) v. West Canadian Collieries Ltd. et al. and Manitoba (Attorney General) et al., [1953] 3 D.L.R. 145 (P.C.), refd to. [para. 142].

Masse et al. v. Ontario (Minister of Community and Social Services) (1996), 89 O.A.C. 81; 134 D.L.R.(4th) 20 (Gen. Div.), refd to. [para. 144].

Finlay v. Minister of Finance of Canada et al., [1984] 1 F.C. 516; 48 N.R. 126, refd to. [para. 146].

Statutes Noticed:

Canada Customs and Revenue Agency Act, S.C. 1999, c. 17, sect. 5(1) [para. 31].

Authors and Works Noticed:

Bernier, Ivan and Lajoie, Andree, Regulations, Crown Corporations and Administrative Tribunals (1985), p. 5 [para. 103].

Ballem, John B., Constitutional Law - Delegation - Approach of Supreme Court of Canada to the B.N.A. Act (1951), 29 C.B.R. 79, p. 84 [para. 96].

Cheshire, Geoffrey Chevalier, Fifoot, C.H.S., and Furmston, Michael P., The Law of Contract (12th Ed. 1991), p. 28 [para. 117].

Driedger, Elmer A., Construction of Statutes (2nd Ed. 1983), p. 87 [para. 76].

Fridman, Gerald Henry Louis, The Law of Contract in Canada (3rd Ed. 1994), p. 7 [para. 117].

Hogg, Peter W., Constitutional Law of Canada (1997 Looseleaf Supp.), vol. 1, p. 14-29 [para. 109].

Hogg, Peter W., Constitutional Law of Canada (2003 Looseleaf Update), vol. 1, pp. 15-37, 15-38 [para. 69].

La Forest, Gerard V., Delegation of Legislative Power in Canada (1975), 21 McGill L.J. 131, pp. 140, 141 [para. 69].

Smith, Ernest H., Federal-Provincial Tax Sharing and Centralized Tax Collection in Canada, Special Studies in Taxation and Public Finance No. 1 (1998), p. 165 [para. 114].

Sullivan, Ruth, Sullivan and Driedger on the Construction of Statutes (4th Ed. 2002), generally [para. 63].

Tuck, Raphael, Delegation - A Way Over the Constitutional Hurdle (1945), 23 C.B.R. 79, generally [para. 90]; p. 93 [para. 93].

Counsel:

C.M. Fien, B.P. Schwartz, E.B. Eva and P.K. Grower, for the appellant;

P.A. Vita, Q.C., and P.M. Derksen, for the respondents, Attorney General of Canada and Minister of National Revenue;

E.W. Olson, Q.C., E. Szach and R.A. McFadyen, for the respondent, Government of Manitoba.

This appeal was heard on November 22 to 24, 2005, by Scott, C.J.M, Monnin and Hamilton, JJ.A., of the Manitoba Court of Appeal. The following judgment of the Court of Appeal was delivered by Scott, C.J.M., on June 6, 2006.

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