Porter, C.J.O.:—This is an appeal by the appellant Bank from the judgment of the Honourable Mr. Justice Morand dismissing the appellant’s claim for a declaration.
The appellant brought this action against the respondent by a writ issued September 15, 1960 claiming a declaration that it is not under any obligation to furnish the information or produce the documents relating to the accounts of its customer, The Union Bank of Switzerland, called for by a requirement (under Section 126(2) of the Income Tax Act, R.S.C. 1952, e. 148) for information and production of documents contained in a registered letter from the Department of National Revenue dated August 17, 1960 and addressed to the General Manager of the appellant.
By agreement between the parties a special case was stated for the opinion of the Court which was heard before the Honourable Mr. Justice Morand on April 14, 1961 and judgment against the appellant was given on May 1, 1961.
The facts, as agreed upon between the parties, are set out in the special case as follows (Appeal Book, page 9) :
“1. The Plaintiff is a chartered bank of Canada and a taxpayer under the Income Tax Act of Canada.
2. The requirement mentioned in the Writ of Summons herein does not relate in any way to the administration or enforcement of the Income Tax Act as respects the liability for tax of the Plaintiff itself.
3. The Union Bank of Switzerland, referred to in the Writ of Summons herein, is one of the major banks in Switzerland and is a customer of the Plaintiff.
4. The Minister of National Revenue (the ‘Minister’) sent to the Plaintiff herein a registered letter dated the 17th day of August, A.D. 1960 (which letter was referred to in the Writ of Summons as the ‘Requirement’ and is hereinafter referred to as the ‘Requirement’). The Requirement was received by the Plaintiff and is attached hereto as Exhibit ‘A’.
The Plaintiff has failed to comply in whole or in part with the Requirement.
5. The Plaintiff has 861 branches throughout Canada, 12 branches in the West Indies, 5 branches or agencies in the United States and 2 branches in London, England. The standing internal instructions of the Plaintiff require that its International Division at its head office be notified of any account opened in the name of a foreign bank. Accordingly, the International Division of the Plaintiff should be aware of all accounts of the Plaintiff in the name of its customer, Union Bank of Switzerland, but the Plaintiff can have no absolute assurance in this regard without circulating its branches, which has not been done.
6. To the knowledge of the International Division of the Plaintiff its customer, Union Bank of Switzerland, has 18 ledger accounts with the Plaintiff, of which 7 are in Toronto, 5 in Montreal, 5 in New York and 1 in London, England. In addition the Plaintiff has security safekeeping accounts for the Union Bank of Switzerland in Toronto, Montreal and New York.
1. In the period in question there are approximately 5,400 entries in the ledger accounts of the Plaintiff for the Union Bank of Switzerland in Toronto and over 600 additional entries in the security safekeeping accounts of the Plaintiff for the Union Bank of Switzerland in Toronto. Each such entry is supported by a voucher from which the names and details relating to such entry could be obtained. Such vouchers, for all customers, are filed by calendar years and not by customers. Merely to collect the vouchers relating to all such entries from the files and archives of the Plaintiff, would require a complete search of such daily filing and on the basis that such search would produce a voucher every two minutes, would require approximately 200 hours of clerical work or the full-time service of a single clerk for from 5 to 6 weeks.
8. In addition to the foregoing other transactions in securities have occurred in Toronto and Montreal for the account of the Union Bank of Switzerland in the period in question which appear in the daily security records of the Plaintiff rather than the safekeeping records, since transactions with complete instructions (e.g. sale transfer delivery) are not recorded in the safekeeping records. The daily security records of the Plaintiff are filed in the form of tickets relating to individual transactions and are filed by number and not by either customer or day. In the period in question there are approximately 30,000 such tickets relating to transactions in Toronto, all of which would have to be reviewed to collect together the Toronto daily security transactions of the Union Bank of Switzerland. To search the 30,000 tickets to collect the transactions relating to the Union Bank of Switzerland would take approximately the full time of one clerk for 1 week.
J. The Plaintiff has not investigated the work and time required for the same purposes in respect of accounts in Montreal, New York and London, England, but from general knowledge of the activities of the accounts would estimate Montreal at less than Toronto, New York at substantially less than Montreal, and London at substantially less than New York.
10. The correspondence, advices, directions and reports passing between the Plaintiff and its customer, the Union Bank of Switzerland, are filed by the Plaintiff under the customer’s name and for the period in question, represent approximately a full filing drawer divided among the various departments of the Plaintiff.
11. The information to be gathered together and produced to comply with the said Requirement includes a great deal of private information in respect of the business and affairs of the Union Bank of Switzerland and of many other corporations and individuals, some resident in Canada and some not resident in Canada.
QUESTION FOR THE OPINION OF THE Court
Is the Plaintiff entitled to the relief claimed in the Writ of Summons herein, namely:
a declaration that it is not under any obligation to furnish the information or produce the documents relating to the accounts of its customer, The Union Bank of Switzerland, called for by the Requirement for Information and Production of Documents hereinafter described, that the said Requirement is unauthorized and is of no force or effect and that the Plaintiff is not subject to the penalty threatened therein for failure to comply therewith.’
The parties concur in stating the above question of law, in the form of this Special Case for the opinion of the Court pursuant to Rule 126.’’
The following communication was sent to the appellant Bank.
‘ QUIREMENT FOR Information AND
PRODUCTION OF DOCUMENTS
Ottawa, 17th August, 1960 The General Manager,
The Canadian Bank of Commerce,
25 King Street West,
Toronto, Ontario.
Dear Sir,
The Umon Bank of Switzerland
1. For the purposes related to the administration or enforcement of the Income Tax Act, pursuant to the provisions of Section 126(2) of the said Act, I require from you on or before 19th September, 1960, information and production of documents as follows:
(a) A statement setting out all entries in all accounts that are known to be or to have been operated or controlled by, for, or on behalf of the persons named above or any of them and all entries that are known to be or to have been related to the affairs of those persons or any of them, in all other accounts including Casual, Manager’s, Sundry and similar accounts for the period beginning 1st January 1955 and ending 31st December 1959, both dates inclusive.
(b) A statement setting out particulars of all transactions, including loans and discounts and collateral thereto, safety deposit box rentals and security dealings with, for, or on behalf of the persons named above or any of them, or any person or persons known to be or to have been acting on behalf of those persons or any of them for the period beginning 1st January 1955 and ending 31st December 1959, both dates inclusive.
(c) Production of all documents, including authorizations, powers of attorney, mail and telegraphic transfers, accounts, vouchers, letters, contracts, letters of credit and statements that are known to be or to have been related to the entries or transactions set out in the statements required under (a) and (b) above, for he period beginning 1st January 1955 and ending 31st December 1959, both dates inclusive.
2. To comply with this requirement you should forward the information and documents hereby required to the Deputy Minister of National Revenue for Taxation, 444 Sussex Drive, Ottawa, Ontario, by registered mail, within the time specified in paragraph 1. Photostatic or certified copies of the documents will be sufficient.
3. If you so request in your acknowledgement of this requirement, arrangements will be made for an officer of the Taxation Division to attend at your office to receive the information and inspect the documents required. Provision of the information and production of the documents to that officer at the time of his attendance at your office will be considered as compliance with this requirement if your acknowledgement is received on or before 19th September, 1960.
4. Your attention is directed to the penalty provided in subsection (2) of section 131 of the Income Tax Act for default in complying with this requirement.
Yours truly,
Assistant Deputy Minister of National
Revenue for Taxation’’
By Section 2 of the Income Tax Act, income tax shall be paid upon the taxable income of every person resident in Canada and upon non-residents employed in Canada and non-residents who carry on business in Canada. The Act gives to the Minister various powers enabling him to obtain information which may relate to tax liability. The provisions in question in this appeal are Sections 126(2) and 131(2). They read as follows:
“126. (2) The Minister may, for any purposes related to the administration or enforcement of this Act, by registered letter or by a demand served personally, require from any person
(a) any information or additional information including a return of income or a supplementary return, or
(b) production, or production on oath, of any books, letters, accounts, invoices, statements (financial or otherwise) or other documents,
within such reasonable time as may be stipulated therein.
131. (2) Every person who has failed to comply with or contravened subsection (1) of section 47, subsection (5) of section 123, section 125 or section 126 is guilty of an offence and, in addition to any penalty otherwise provided is liable on summary conviction to
(a) a fine of not less than $200 and not exceeding $10,000, or
(b) both the fine described in paragraph (a) and imprisonment for a term not exceeding 6 months. ’ ’
The first issue to be determined in this appeal is whether Section 126(2) confers upon the Minister, acting for purposes related to the administration or enforcement of the Act, the power to require the Canadian Bank of Commerce, whose tax liability is not under investigation, information and production of documents in its possession which may relate to the tax liability of third persons.
The requirement in this case was made by the Assistant Deputy Minister of National Revenue for Taxation. It was conceded, however, that pursuant to Section 117(1) (f) of the Act the Assistant Deputy had been authorized to perform the duties of the Minister. The power of the Assistant Deputy Minister would in the circumstances of this case, be the same as that of the Minister.
In the requirement ‘‘The Union Bank of Switzerland’’ appears at the head of the document. Various references are then made to ‘‘the persons named above’’. Although these words indicate on their face a number of persons, there is only the one person “named above’’, viz., the Union Bank of Switzerland. It is clear, I think, that the Bank of Switzerland is a person under investigation. It has not been shown otherwise, and the Bank having been named the onus to show that this Bank was not the person under investigation would fall upon the appellant. Although, as stated in paragraph 11 of the Special Case, the information sought includes much private information as to the affairs of other persons in addition to the affairs of the Bank of Switzerland, this Bank is the only person mentioned in the requirement. The volume of transactions of this Bank appearing on the records of the appellant, as shown in the special case, is such that it could not fairly be said that the Minister would be unjustified in attempting to seek all available information as to the Bank’s transactions so as to determine whether it was carrying on business in Canada for itself or as agent for other persons, and liable to taxation. The fact that the information sought will disclose private transactions in which a number of persons were involved who are not under investigation, and may not be liable to tax, does not, in my opinion, affect the power. It is obvious that in the process of an authorized investigation some and perhaps much of the information obtained will turn out to be irrelevant and useless. I do not think that this probability, by itself, removes the enquiry from the ambit of ‘‘purposes related to the administration or enforcement of the Act’’.
The issue as to whether the Minister has the power involves solely the interpretation of Section 126(2), and as such is properly before the Court for determination.
The question involves the meaning in their context and in relation to the general intent and purpose of the Act, of the words ‘‘any person’’, and ‘‘any information or additional information”, “including a return of income or a supplementary return’’ and “any books, letters, invoices, statements (financial or otherwise), or other documents’’. These words are not ambiguous. If taken in their ordinary meaning and disregarding their context, these general words would on their face apply to any person whether or not his tax liability were under investigation.
An examination of subsections (1) and (3) of Section 126, it was contended, indicates that the power given to enter premises is restricted to the premises of a person whose tax liability is under investigation and that subsection (2) should, read in the context, be construed as being similarly restricted.
Assuming, but not deciding, that this subsection is restricted to entry of premises occupied by a person whose tax liability is under investigation and seizure of books and records required to be kept by Section 125 of the Act, as contended by counsel for the appellant, the procedures permitted are more drastic than the requirement for information in Section 126(2), and I do not think that subsection (1), even if construed as contended, would be of assistance in construing the words used in subsection (2). Further, it may be that subsection (1) should not be given such a restricted meaning. The opening words of the subsection are general, and the “premises or place where’’ entry may be made are described disjunctively, and the books and records are only one out of several separate items.
Subsection (3), which provides upon the order of a Judge of the Exchequer Court for entry and seizure if necessary by force, any building for documents which may afford evidence as to the violation of any provision of the Act’’, on its face would appear to apply to any building whether or not occupied by a person under investigation. Section 124(4) provides for an enquiry relating to anything relating to the administration of the Act’’.
Section 126A provides for the protection of solicitor and client privilege, where a lawyer is prosecuted for failure to comply with a requirement. This section clearly implies that a lawyer who has information or documents of a client in his possession is obliged to comply with a requirement, except as to information subject to privilege, although the solicitor himself is not under investigation. This section thus throws considerable light upon the intention of Parliament as expressed by the general words in Section 126(2), which if read in its whole context, and particularly in relation to Section 126A, would appear to include the power to require from a person not under investigation, information as to the affairs of a third person.
The general principles of construction applicable are set forth in the judgment of Anglin, J., in In re Price Bros. & Co. and the Board of Commerce of Canada (1919-20), 60 8.C.R. 265 at page 282, as follows:
“Lord Wensley dale’s golden rule that the grammatical and ordinary sense of words is to be adhered to unless that would lead to some absurdity, repugnance or inconsistency so great as to convince the court that the intention could not have been to use them in that ordinary signification, applies to general words, as to other words. Generalia verbia sunt generaliter intelligenda, 3 Inst. ce. 21, p. 76; Attorney General v. Mercer, 8 App. Cas. 767, at p. 778.
On the other hand general words must be restricted to the fitness of the subject matter (Bacon’s Maxim, No. 10) and to the actual apparent objects of the Act (River Wear Commissioners v. Adamson, 1 Q.B.D. 546; 2 App. Cas. 743, at pp. 700-1) ‘gathered from the necessity of the matter and according to that which is consonant to reason and good discretion’. Stradling v. Morgan, Plowden 199 ; Cox v. Hakes, 15 App. Cas. 5906, at pp. 517-8.”
In the course of the argument before us it was suggested that the words in subsection (2) (a), “including a return of income, or a supplementary return . . .” should be construed as having a restrictive effect upon the meaning of the preceding general words, ‘‘any information or additional information’’. It was suggested that a return of income, being a form of information to be supplied by a person who may be liable to tax, the general words preceding it should be limited in their meaning to a specific person whose tax liability is in question. In my view, these words extend, rather than restrict, the powers given by the section. They provide for information to be given in a special form, which would not be compellable under this section without these words. They are used here as they are generally used to enlarge the meaning of the general words: they clearly are not the equivalent of ‘‘mean and include”. Cf. Dilworth v. Commissioner of Stamps, [1899] A.C. 99, where Lord Watson said at page 105:
“It is not said in terms that ‘charitable bequest’ shall mean one or other of the things which are enumerated, but that it shall ‘include’ them. The word ‘include’ is very generally used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. But the word ‘include’ is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to shew that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to ‘mean and include’ and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions. ’ ’
Counsel for the appellant contended that, even if the sections were to be interpreted broadly, it was not intended, despite its wide language, to permit, and properly interpreted does not permit, an onerous general requirement for information or for production, but it is limited to obtaining specified and limited particular information and production. In my view the requirement in question is not general. It requires information of all transactions of the Union Bank of Switzerland known to the appellant between certain specified dates and production of documents relating to these transactions. It is not suggested that the requirement cannot be met by reason of uncertainty as to what information is required. The authorities cited on this point are not, I think, of assistance in interpreting the statute before us. The case of Burghes v. A.-G., [1911] 2 Ch. 139, and [1912] 1 Ch. 178, which was submitted to be most closely in point, is, I think, distinguishable. In that case, for the purposes of the valuation of all lands in the United Kingdom prescribed by Section 26 of the Finance (1909-10) Act, 1910, Section 31(1) provided that
“Every person who pays rent in respect of any land, and every person who as agent for another person receives any rent in respect of any land, shall, on being required by the Commissioners, furnish to them within thirty days the name and address of the person to whom he pays rent or on behalf of whom he receives rent, as the case may be.”’
By their demand the Commissioners required the plaintiff in that case, a rent collector, to give the names and addresses of persons and descriptions and precise situations of lands within a certain borough in respect of which rent was received. The Commissioners did not specify the particular parcels in respect of which they required the information. In the Court of Appeal, [1912] 1 Ch. 186, Fletcher Moulton, L.J., said:
“Section 31, under which the notice in this case was given, is directed to enabling the Commissioners to ascertain the names of the persons who pay rent or who as agents for others receive rent in respect of any land. Subsection 1 reads as follows: (His Lordship read the subsection, and continued.) I have no doubt that the meaning of this subsection is that the Commissioners may in respect of any specific land require from a person who pays rent for such land the name and address of the person to whom he pays it and from a person who as agent for another receives any rent in respect of such land the name and address of the person on whose behalf he receives such rent. The inquiries are to be in respect of a specified parcel of land. If the language of subsection 1 left any doubt on my mind in that respect it would be cleared up by the language of subsection 4, which makes the name and address so given sufficient for service on any owner or person interested. This subsection would be meaningless if the name and address were not given in respect of some specific piece of land, and in further confirmation of this I may point out that in default of the address being ascertained the service may be effected by causing a notice, &e., to be put up in some conspicuous place on the land, phraseology which shews that the whole of the subsection and by implication subsection 1 relate to specific plots of land with regard to which the name and address of the owner or person interested have been obtained under subsection 1 or are unknown as the case may be.’’
For these reasons I conclude that the subsection confers upon the Minister the power to require from the appellant, ‘‘for any purpose related to the administration or enforcement of the Act’’, the information and documents sought to be given and produced as specified in the requirement.
Having decided that the Minister has such power, the second question to be determined is whether in this case the Minister acted for ‘ ‘ any purpose related to the administration or enforcement of the Act’’.
I think it is obvious, from the terms of the Act itself, that one of its main purposes is to enable the Minister to determine tax liability of all persons. In view of the special nature of income tax, and the responsibility necessarily placed upon each person to disclose his income, a genuine and serious enquiry by the Minister into the tax liability of persons would be an adjunct of his administrative and enforcement responsibilities, and thus a purpose contemplated by the Act. The terms of the requirement and the facts stated in the Special Case clearly indicate, in my opinion, that the requirement was for such a purpose, and not for some other purpose unrelated to income tax liability.
At the hearing of the appeal, counsel for the appellant submitted that certain inferences of fact should be drawn from the Special Case as follows :
“(a) The Minister is proceeding in good faith in the sense
that he honestly believes he is proceeding in accordance with his powers.
(b) The said Requirement relates to a genuine and serious inquiry into the tax liability of some specific person or persons.
(c) The Minister has reason to believe that such person or persons under investigation are among those referred to in the Special Case.
(d) Neither the Union Bank of Switzerland nor many of the persons referred to in the Special Case, para. 11 are among the person or persons under investigation.”
Counsel for the Attorney-General adopted the first three of these submissions. I see no reason for refusing to draw such inferences. I shall therefore proceed upon the basis that submissions (a), (b) and (c) may be taken as admitted facts in this case.
Counsel for the Attorney-General would not admit that the inference should be drawn as stated in submission (d). I do not think that such inference could be drawn in view of the volume of transactions indicated in the special case and the words used in paragraph 11 thereof, and the naming of the Bank in the requirement.
Counsel for the appellant submitted that it is a condition precedent to the validity of a requirement under the subsection that it be ‘‘for a purpose related to the administration or enforcement of the Act’’, and that the Minister is not authorized to act on his ‘‘opinion’’, ‘‘belief’’, or ‘‘decision’’, but must in fact have a purpose related to the administration or enforcement of the Act. In view of the admissions of fact above referred to, there is no dispute as to the good faith of the Minister, or that the requirement relates to a genuine and serious enquiry into the tax liability of some specific person or persons, or that the Minister has reason to believe that such person or persons under investigation are among those referred to in the special case. Although the appellant has not admitted that the Union Bank of Switzerland is under investigation, the Bank is named in the requirement, and it has not been shown that the Bank is not a person under investigation.
In my view, from these admitted and undisputed facts, and the facts set forth in the stated case, and the terms of the requirement itself, it has conclusively been shown that the Minister was acting for purposes relating to the administration or enforcement of the Act.
In reaching this conclusion, I do not rely upon the mere recital contained in the requirement, but upon the facts and circumstances above mentioned. I am not prepared to accede to the proposition put by counsel for the Attorney-General that good faith being admitted, such a recital by the Minister must as a general rule be accepted. There is a difference, I think, between the cases where an official is empowered to act when it appears to him, or he is satisfied, or has reasonable grounds to believe, that certain conditions exist, and this case where it must be shown that his purpose relates to the administration or enforcement of the Act. The first class of cases involves a subjective condition, and the question as to whether the official acting in an administrative capacity is in fact satisfied or has reasonable grounds to believe, is generally not subject to review. In the present case the condition is objective, and the question whether he is acting for the purpose specified in the Act, is subject to review, even though he may be acting in an administrative capacity. This question involves an interpretation of the Act and its application to the circumstances disclosed. However, once it is established as in this case, that the Minister is acting for the purposes specified in the Act, his acts within this scope are administrative and not judicial, and as such are not subject to review. The question whether the Minister in performing his duties has placed upon the appellant an unnecessarily onerous burden, would not, in my opinion, be subject to review.
In Nakkuda Ali v. Jayaratne, [1951] A.C. 66, the Privy Council considered a regulation, No. 62, of the Defence (Control of Textiles) Regulations, 1945, of Ceylon. The Controller of Textiles was empowered to cancel a textile licence ‘ where the Controller has reasonable grounds to believe that any dealer is unfit to be allowed to continue as a dealer’’. The Controller cancelled the licence of the respondent in the appeal. It was held that the words in the regulation were to be treated as imposing a condition that there must in fact exist such reasonable grounds, known to the Controller, before he could validly exercise the power of cancellation. It was further held, however, that the Controller was not acting in a judicial capacity. Lord Radcliffe said at page 78:
‘‘In truth when he cancels a licence he is not determining a question; he is taking executive action to withdraw a privilege because he believes, and has reasonable grounds to believe, that the holder is unfit to retain it. But, that apart, no procedure is laid down by the regulation for securing that the licence holder is to have notice of the Controller’s intention to revoke the licence, or that there must be any inquiry, public or private, before the Controller acts. The licence holder has no right to appeal to the Controller or from the Controller. In brief, the power conferred on the Controller by reg. 62 stands by itself on the bare words of the regulation and, if the mere requirement that the Controller must have reasonable grounds of belief is insufficient to oblige him to act judicially, there is nothing else in the context or conditions of his jurisdiction that suggests that he must regulate his action by analogy to judicial rules.
For these reasons their Lordships are of opinion that the case of Abdul Thassim, 48 C.N.L.R. 121, was wrongly decided on this point, and that the respondent’s argument that he is not amenable to a mandate in the nature of certiorari in respect of action under reg. 62 must prevail. That in itself is sufficient to dispose of the appeal.”
The appeal should be dismissed.
The appellant will undoubtedly be put to much inconvenience and expense in complying with the requirement, and the appellant is not itself under investigation. In view of these considerations there should be no costs in the appeal.
SCHROEDER, J.A.:—The plaintiff bank appeals from the judgment of Morand, J., pronounced on May 1, 1961, whereby he dismissed the plaintiff’s action for the declaratory relief sought by it and ordered the plaintiff to provide the information and to produce the documents demanded by the terms of a written requirement signed by the assistant Deputy Minister of National Revenue for Taxation.
When the bank received the requirement of the assistant Deputy Minister, it sought the advice of its solicitors, since compliance with its terms involved the disclosure of information of a highly confidential nature not only as between the plaintiff bank and its immediate customer, the Union Bank of Switzerland, but also as between the latter institution and its customers who may or may not have been resident in Canada, and therefore not liable under its income tax law. Having concluded that the obligation sought to be imposed upon it was of highly doubtful validity, and being desirous of avoiding prosecution for the penalties of non-observance of the requirement, the plaintiff instituted this action endorsing the writ of summons as follows:
“The Plaintiff’s claim is for a declaration that it is not under any obligation to furnish the information or produce the documents relating to the accounts of its customer, The Union Bank of Switzerland, called for by the Requirement for Information and Production of Documents hereinafter described, that the said Requirement is unauthorized and is of no force or effect and that the Plaintiff is not subject to the penalty threatened therein for failure to comply therewith.
The said Requirement is contained in a registered letter dated August 17th 1960, addressed to The General Manager of the Plaintiff, signed by the Assistant Deputy Minister of National Revenue for Taxation, and purports to require the Plaintiff, for purposes related to the administration or enforcement of the Income Tax Act, pursuant to the provisions of Section 126(2) of the said Act, to furnish complete information and produce all documents relating to the accounts of the Plaintiff’s customer, The Union Bank of Switzerland.
The Plaintiff’s claim is against The Attorney General of Canada as representing Her Majesty the Queen in right of Canada.’
It is evident that the solicitors for the Attorney-General recognized the reasonableness and soundness of the plaintiff’s attitude, for both parties concurred in stating the question of law arising out of the premises in the form of a special case for the opinion of the Court. The judgment in appeal is founded upon the facts as set out in the special case and upon the terms of the requirement of the Assistant Deputy Minister of National Revenue for taxation attached thereto as Exhibit A. It will be convenient at this time to set out those terms and the question of law propounded for the Court’s opinion, and it is reproduced hereunder :
[For terms and question of law referred to, see pp. 41 to 43.]
Exhibit A, attached to and forming part of the Special Case, being the requirement for information and production of documents, reads as follows:
[For terms of Exhibit A referred to, see pp. 48 to 5. I
The Assistant Deputy Minister in transmitting the written request to the plaintiff bank purported to do so in exercise of the powers conferred upon the Minister by the terms of Section 126(2) of the Income Tax Act, R.S.C. 1952, c. 148, which reads as follows:
‘126. (2) The Minister may, for any purpose related to the administration or enforcement of this Act, by registered letter or by a demand served personally, require from any person
(a) any information or additional information, including a return of income or a supplementary return, or
(b) production, or production on oath, of any books, letters, accounts, invoices, statements (financial or otherwise) or other documents,
within such reasonable time as may be stipulated therein.’’
References should also be made to Section 116(1) and Section 117(1) (f) which are relevant for consideration. Section 116(1) reads:
“116. (1) The Minister shall administer and enforce this Act and control and supervise all persons employed to carry out or enforce this Act and the Deputy Minister of National Revenue for Taxation may exercise all the powers and perform the duties of the Minister under this Act. ’ ’
Section 117(1) (f) reads:
“117. (1) The Governor in Council may make regulations
(f) authorizing a designated officer or class of officers to exercise powers or perform duties of the Minister under this Act.”
Regulations were passed pursuant to the provisions of the latter section and by Regulation 900(1) the power to make requirements under the provisions of Section 126(2) was extended to the Assistant Deputy Minister. By the terms of Regulation 900(2) (k), it was further extended to officials of the department holding the office of Director of Taxation in a Taxation District. Regulation 900(3) (d) confers the same power on the Director and Assistant Director of the Legal Branch, and by Regulation 400(4) (b) it was extended to the Chief Investigator and the Assistant Chief Investigator of the Department.
Attention should be directed to the fact that the requirement in question admittedly did not relate in any way to the administration or enforcement of the Income Tax Act with respect to the liability for tax of the plaintiff bank itself. Moreover, it was admitted in paragraph 11 of the Stated Case that the information to be gathered together and produced to comply with the said requirement, included a great deal of private information in respect of the business and affairs of the Union Bank of Switzerland and of many other corporations and individuals, some resident in Canada and some not resident in Canada.
It need hardly be argued that the exercise of the powers conferred by the terms of Section 126(2) are conditional upon the existence of a purpose ‘ ‘ related to the administration or enforcement of this Act’’. That section is couched in words of the widest signification and insofar as the obligation expressed in those broad terms is sought to be imposed upon a person who is not himself a tax delinquent, its far-reaching and extraordinary implications, should those words be given unlimited scope and meaning, afford the gravest cause for pause and demand the most serious consideration of the character and extent of the authority which a Government official claims the right to exercise against the bank and its customer in this instance.
Counsel for the Attorney-General contends that the words of the section are clear and unambiguous and should be given a literal interpretation. He argues that so construed, the section plainly constitutes authority for the demand made upon the plaintiff bank without further qualification or modification. For the plaintiff it is argued that upon the true construction of the words of Section 126(2), despite the wide language in which it is couched, the powers conferred thereby must be confined within reasonable limits, to the extent, at least, of not permitting an onerous general requirement for information or for production, but restricting its exercise to the immediate objective of obtaining specified and defined information and production; that the words ‘‘for any purpose related to the administration or enforcement of this Act ’ ’ constitute a condition precedent to the validity of a requirement issued under the section, and it is not sufficient that the Minister or other official entertains an opinion or belief, or has come to a decision that that purpose exists; hence its existence is not established by the mere declaration of the Minister or the departmental officer exercising his powers, but the Court must be convinced that the condition precedent has in fact been satisfied. The latter contention is challenged by counsel for the Attorney-General who maintains that the powers conferred upon the Minister and the other officials mentioned are executive or administrative in character, and since they involve questions of opinion or policy, of which the Minister or his authorized officials are the sole judges, he or they are not bound by any fixed or objective standards reviewable by a Court so long as they act in good faith.
Whatever may be the true scope or extent of the powers which Parliament intended to bestow upon the Minister and the officials designated in the Act or the regulations, one is impressed 2” limine with the realization that if the claim made for the wide and unlimited construction of these words should be given effect, the most extraordinary and far-reaching results would follow in the wake of any attempt on the part of these officers to roam unchecked in the field of private enterprise, and doubts arise at once as to whether Parliament could have intended to grant such unbridled power to a public servant and in particular, to one below the rank of a Minister of the Crown, especially in time of peace. These doubts are increased upon consideration of the fact that the requirement under review does not relate in any way to the administration or enforcement of the Income Tax Act as against the plaintiff bank in respect of its own tax liability. Since the Union Bank of Switzerland is a foreign corporation having no office in Canada and therefore a non-resident, it is not liable for income tax under the provisions of the Income Tax Act except in respect of dividends payable to it upon its holdings in corporations resident or doing business in this country, which would be subject to a 15% withholding tax. But in those instances the authorities would look to the resident Canadian corporations for payment of that particular tax since, under the terms of the Act, they are obliged to withhold it and pay it over to the Department of National Revenue. It should be observed here that a non-resident person who carried on business in Canada at any time in the year is liable for income tax under the provisions of Section 2(2) (b) of the Act, and by the terms of Section 31(1) for the purposes of the Act, a nonresident person’s taxable income earned in Canada for a taxation year is:
“ (a) the part of his income for the year that may reasonably be attributed to the duties performed by him in Canada or the business carried on by him in Canada. ’ ’
The word “business” as used in this subsection and in Section 2(2) (b) imports ‘‘something which is followed and which occupies time, attention, and labour for profit’’ as the word is defined by Osler, J.A., in The Rideau Club v. The Corporation of the City of Ottawa (1907), 15 O.L.R. 118 at page 122, adopted and applied by this Court in City of London v. London Club Ltd., [1952] O.R. 177. There is nothing in the formal requirement addressed to the plaintiff which suggests in the vaguest or remotest way how or why the Union Bank of Switzerland, manifestly a non-resident corporation, is said to be taxable ; nor is it suggested that it has ever been required to file an income tax return.
For the appellant, great emphasis is laid upon the admission that the information to be gathered and produced in compliance with the terms of the departmental requirement includes much private information in respect of the business and affairs not only of the Union Bank of Switzerland but of many other corporations and individuals, some residents, and others nonresidents of this country. It follows that as to the Union Bank of Switzerland and its non-resident customers there cannot exist a purpose related to the administration or enforcement of the Act, and the mere ipse dixit of the Minister or his designated officials cannot in law create that essential condition, if it is essential to the validity of the requirement. Counsel for the Attorney-General, on the other hand, makes the widest possible claims for the scope and extent of the powers created by provisions of Section 126(2) and goes so far as to contend that that section by its terms authorizes what has been referred to in the course of argument as a “fishing expedition’’; that so long as it is declared by the Minister or a designated official that the requirement is for a purpose related to the administration or enforcement of the Act, its terms must be obeyed even if the investigation is purely exploratory in its character and essence, i.e., something comparable to a roving commission for the purpose of discovery. These, then, are the broad issues as they are stated by the parties.
I am unable to assent to the appellant’s submission that Section 126(2) should be held to apply only to information and production of documents relating to the possible liability for income tax of the person to whom the requirement is addressed and not to the attainment of information and production of documents from persons whose liability to tax is not in question although the information or production required might affect the liability for income tax of third persons. Prima facie that would seem to be implied by the terms of Section 126(2) (a), since one can hardly envisage a person other than a taxpayer or his agent who is in possession of information which would enable him to make a complete or partial income tax return on behalf of the taxpayer. Section 126(2) (b), however, is couched in language which supports a very much wider construction. If there were any doubt upon the point it is resolved by a reference to Section 126A(2) relating to a requirement directed to a lawyer and which may impugn the solicitor and client privilege existing with respect to material documents or information. I entertain no doubt upon that point.
Adverting now to the words of Section 126(2) (b), which are relied upon as authorizing the requirement under consideration, should they be so construed as to be applied without limitation? Apart from such a statutory obligation, no banker, broker or confidential agent or representative of any person or corporation could be compelled to make a disclosure of his customers” or his principals’ private affairs, except in a court of competent Jurisdiction or before a judicial officer authorized by law, and then only within certain prescribed limits governed and controlled by such factors as relevance to an identified matter in issue and considerations as to the admissibility of evidence. If Parliament intended to make such a great inroad upon well- recognized and well-settled rights or immunities, one would expect it to say so in language that would leave no room for doubt or obscurity upon the question. There is no want of authority for the proposition that the Court is warranted in putting a limitation upon the construction of wide and general words used in a statute in order to give effect to what it deems to be the real intention of the legislators. Where, as here, it is urged that a literal construction must be placed on general words conferring such extraordinarily wide and sweeping powers upon a Minister or lower government official, powers which in peacetime are wholly unprecedented, it is right and proper not only to look at the terms of Section 126(2) (b) upon which the alleged authority is founded, but at any other provision found in connection therewith and which may throw light upon it, to see if they afford some indication that those general words were not intended to be applied without some reasonable limitation. It is impossible to read Section 126(1) or 126(2) (a) as not being confined in their application to a definitely ascertained and identified person or corporation. The terms of Section 126(2) (b) which may extend not only to the person against whom Section 126(2) (a) is aimed, but as well to any person who by production or production on oath of any books, letters, accounts, invoices, statements (financial and otherwise) or other documents may further the investigation into the affairs of the person or persons directly affected by the terms of Section 126(2) (a)—the person whose liability for income tax is the subject of investigation—should be likewise restricted in the scope of their operation. Further light is thrown upon the scope and meaning of Section 126(2) (b) by the provisions of Section 126A for unless a solicitor was made aware of the identity of the person as to whom information was sought, he could not determine whether or not that person’s rights came within the protection of the solicitor and client privilege, and indeed Section 126A(2)(b) refers in express terms to a ‘‘named client”? of the solicitor. The legislators having taken such pains to preserve the solicitor and client privilege, cannot have intended to give the Minister or lesser officials the power to order the banks of Canada to open for inspection or to make copies of all their books and records within this country’s territorial limits without either specifying the person or persons whose liability is under investigation or otherwise particularizing the information sought, through the simple expedient of having an official merely declare that the requirement was for a purpose related to the administration or enforcement of the Act. It may be that at most the official merely entertains the belief that he might thereby discover names of tax delinquents who have failed to make returns or who have made faulty or inaccurate returns. It is no answer to say that ‘Brutus is an honourable man’’, for there is always a danger that the official may be labouring under a misconception of his powers and functions and he may mistakenly decide that matters very remote from an immediate objective falling within the compass of the practical administration and enforcement of the Act are legally enforceable against the subject. The implications arising from these hypothetical circumstances assume an even more alarming aspect when it is considered that the person to whom the requirement is addressed is punishable either by the imposition of a substantial fine or by a term of imprisonment under the terms of Section 131(2), if he fails to comply with the demands set forth in the requirement. I am not at all convinced that Parliament ever intended to confer such tyrannical and despotic powers upon the Minister, much less that it intended to clothe a lesser official with such untrammelled authority. The contextual influence of the other provisions of the statute to which I have referred require that Section 126(2) (b) be construed as authorizing a demand for information or production either with reference to a specified person or corporation or that it be otherwise particularized, in contradistinction to a requirement stated without particularity and in such vague and general terms as to leave no doubt that its real purpose is to launch a ‘‘fishing expedition”, a proceeding which, in my view, the statute neither authorizes nor requires. To the extent that the scope and meaning of the words of Section 126(2) (b) are doubtful in the sense which I have indicated, there is an ambiguity which justifies the Court in placing upon the statute a construction which will not result in injustice, oppression, hardship, or inconvenience. The rule of construction which calls for an interpretation according to the plain ordinary meaning of the language used, admits of certain exceptions and the case at bar presents a striking instance of a case in which it would be vindicable to depart from that rule.
As I see it, the words are capable of two constructions, and the principle to be deduced from the judgment of Bowen, L.J., in Wandsworth Board of Works v. United Telephone Company, 13 Q.B.D. 904, has a peculiar application here. In that case the learned jurist stated at page 920:
If a word in its popular sense, and read in an ordinary way, is capable of two constructions, it is wise to adopt such a construction as is based upon the assumption that Parliament merely intended to give such power as was necessary for carrying out the objects of the Act and not to give any unnecessary powers. ’ ’
If the words are susceptible of a reasonable and an unreasonable construction, the former construction should prevail: Boon v. Howard, L.R. 9 C.P. 277, per Keating, J., at page 308; A.-G. Ontario v. National Trust Co. Ltd., [1931] O.R. 122, per Middleton, J.A., at page 136 (the latter judgment later reversed by the Privy Council, [1931] A.C. 818).
Having due regard to the object of the enactment and the practical effect attributed to it by the opposing submissions of counsel, I entertain no doubt that if the powers conferred by Section 126(2) (b) are confined within the limits which I have indicated, the real object of the legislation, namely to facilitate enforcement of its provisions against a defaulting taxpayer in the due administration of the Act, will be adequately met and its effectiveness will not be destroyed. It is not necessary, in my view, so to construe the section as to impose onerous police duties upon subjects of the state who are not themselves delinquents, and to force them at their own considerable cost and expense to do work for the performance of which a veritable host of government employees are being paid out of the public coffers.
The Special Case is silent upon the question as to whether the Union Bank of Switzerland was ever required to file an income tax return in accordance with the provisions of Section 126(2) (a), and it would indeed be singular if the provisions of Section 126(2) (b) were resorted to by the Minister or his deputy before he had first made a demand upon the Union Bank under the former subsection. This again would stronely suggest that the requirement in question was made to launch a fishing expedition of unlimited scope which, in my view, the statute does not authorize.
A striking example of the insistence of the Courts upon the authorities stating with particularity the information required by legislation of this type is to be found in Burghes v. A.-G., [1912] 1 Ch. 178, where it was held that a form sent out by government commissioners requiring certain information of a rent. collector was wholly unauthorized, inasmuch as it did not specify particular parcels of land in respect of which he was required to furnish names and addresses, and inasmuch as it also required the person to whom it was addressed to give the descriptions and precise situations of the lands in respect of which rent was paid or received. F'arwell, L.J., stated at page 188 :
‘The Commissioners in making valuations have necessarily to deal with specific parcels of land in detail : as appears from their own Form 4 they have no difficulty in extracting from the rate-books the names of every occupier of property and its description, situation, extent and rateable value. If they desire information as to the ownership of any particular property they can inquire of the occupier of such land to whom he pays rent in respect of it, and if the answer shews only the name of an estate agent, further inquiry can be made from such agent. An army of officials to make such inquires has been appointed by the Government at a cost to the country of between £300,000 and £400,000 a year. It is admitted that the officials usually fill up the particulars of the property, but it is said that, if they fail to do the work for which they are paid by the public, other members of the public can be compelled to incur trouble and expense to supply their deficiencies. It would require very plain words in the Act to persuade me that the Legislature intended to impose such a corvée, and that too not upon the landowners who are taxed, but upon third persons who have nothing but an official or business connection with the land.”
A very useful analogy may be drawn between the present case and a series of cases having to do with the application of procedural rules relating to production and discovery of documents in the hands of third persons, or the attendance of such persons in response to a subpoena duces tecum. I refer to these eases as illustrating the strictness with which the Courts always protected third parties who were strangers to the litigation, and as demonstrating the Court’s insistence upon particularity in the description of documents required to be produced and exercising care to compel strict adherence to rules as to relevancy and admissibility. The authorities which I wish to cite on this point are as follows: Burchard v. Macfarlane Ex Parte Tindall and Dryhurst, [1891] 2 Q.B. 241 (C.A.) ; Harcourt v. Homer
L. Gibson & Co. Ltd., 40 O.W.N. 95; Elder v. Carter (1890), 25 Q.B.D. 194 (C.A.) ; A.-G. v. Wilson, 9 Sim. 526; 59 E.R. 461; 47 R. R. 305; Lee v. Angas (1866), 2 L.R. Eq. 59.
The above cited cases were concerned mainly with procedural rules and their application, but in Radio Corporation of America v. Rauland Corporation, [1956] 1 All E.R. 549, the Court of Appeal in England considered and applied the same principles upon an application made pursuant to a statute, namely, the Foreign Tribunals Evidence Act, 1856. Letters rogatory had been granted in the course of pre-trial discovery proceedings in the United States of America to enable the defendants in the proceedings to obtain discovery of documents from two English corporations and discovery of documents and oral evidence from the directors of those companies. In granting letters rogatory the judge of the American District Court stated among his reasons :
‘ ‘ It seems obvious that examination of the officers and agents of alleged co-conspirators may lead to the discovery of relevant evidence, and that is all that is required.”
Accordingly, an application was made for an order for the disclosure of certain documents by the English companies and for the examination on oath of certain directors under Section 1 of the Foreign Tribunals Evidence Act, on the ground that ‘‘a Court of competent jurisdiction in a foreign country before which a civil or commercial matter was pending was desirous of obtaining the testimony in relation to such matter’’ of witnesses in England. The application failed because it was held that the words ‘‘testimony in relation to such matter’’ meant testimony relevant to the issues to be tried in the foreign action and did not extend to other material the disclosure of which merely might lead to a line of inquiry which itself might disclose relevant testimony, and it had been made apparent that the purpose was merely to obtain discovery of material which might lead to the obtaining of evidence relevant to the issues ultimately to be tried by the foreign court. Goddard, C.J., stated :
“It is an endeavour to get in evidence by examining people who may be able to put the parties in the way of getting evidence. That is what we should call mainly a fishing proceeding, which is never allowed in the English courts. I think that that of itself would be a complete objection and ought to justify this court in refusing to make the order.”
These cases are not directly in point but they do lay down a broad general policy of the law which our legislators could scarcely have ignored or overlooked. It is surely beyond the bounds of possibility that Parliament could have intended to entrust such uncontrolled and arbitrary powers to a. mere gov- ernment official, when, in a court of law, where there is every conceivable safeguard thrown around a third party, a judge is compelled by well settled principles to keep the inquiry within carefully circumscribed bounds.
In support of his contention that the mere assertion of the Assistant Deputy Minister that he requires the information and production of documents for a purpose related to the administration or enforcement of the Income Tax Act is sufficient to impose the statutory obligation of compliance on the addressee of the requirement, counsel for the defendant cites and relies upon the judgment of the House of Lord in Liversidge v. Anderson, [1942] A.C. 206. There the appellant had been detained under a regulation of the Defence (General) Regulations 1939, the material words of which were :
‘‘If the Secretary of State has reasonable cause to believe any person to be of hostile origin or association and that by reason thereof it is necessary to exercise control over him, he may make an order against that person directing that he be detained.”
The question before the House of Lords was whether the Secretary of State when challenged was called upon to prove the reasonableness of his belief or whether it was sufficient for the Secretary of State to declare that he had such belief; that is to say, whether the question should be tested objectively or subjectively. If the latter test were applicable it was sufficient for the Secretary of State to decide whether he had a reasonable cause of belief, and if he acted in good faith he could not be called upon to disclose to anyone the facts and circumstances which induced his belief or to satisfy anyone but himself that those facts and circumstances constituted a reasonable cause of belief, as stated by Lord Macmillan at page 248. Lord Atkin, who dissented, favoured the objective view but the subjective view, as described by Lord Macmillan, was adopted by the other law Lords.
In a later case, Nakkuda Ali v. Jayaratne, [1951] A.C. 66, a cognate question arose for consideration and determination. In that case the relevant words were ‘‘where the controller has reasonable grounds to believe that any dealer is unfit to be allowed to continue as a dealer’’ and it was held that those words were to be treated as imposing a condition that there must in fact exist such reasonable grounds known to the controller before he could validly exercise the power of cancellation. The dicta in Inversidge v. Anderson (supra) were discussed in the Judgment of Lord Radcliffe and I quote from his opinion at pages 76 and 77 as follows:
It would be impossible to consider the significance of such words as “Where the Controller has reasonable grounds to believe . . .’ without taking account of the decision of the House of Lords in Liversidge v. Sir John Anderson, [1942] A.C. 206. That decision related to a claim for damages for false imprisonment, the imprisonment having been brought about by an order made by the Home Secretary under the Defence (General) Regulations, 1939, reg. 18B, of the United Kingdom. It was not a case that had any direct bearing on the court’s power to issue a writ of certiorari to the Home Secretary in respect of action taken under that regulation: but it did directly involve a question as to the meaning of the words ‘If the Secretary of State has reasonable cause to believe any person to be of hostile origin or associations . . .’ which appeared at the opening of the regulation in question. And the decision of the majority of the House did lay down that those words in that context meant no more than that the Secretary of State had honestly to suppose that he had reasonable cause to believe the required thing. On that basis granted good faith, the maker of the order appears to be the only possible judge of the conditions of his own jurisdiction.
Their Lordships do not adopt a similar construction of the words in reg. 62 which are now before them. Indeed, it would be a very unfortunate thing if the decision of Liversidge’s case, [1942] A.C. 206, came to be regarded as laying down any general rule as to the construction of such phrases when they appear in statutory enactments. It is an authority for the proposition that the words ‘if A.B. has reasonable cause to believe’ are capable of meaning ‘if A.B. honestly thinks that he has reasonable cause to believe’ and that in the context and attendant circumstances of Defence Regulation 18B they did in fact mean just that. But the elaborate consideration which the majority of the House gave to the context and circumstances before adopting that construction itself shows that there is no general principle that such words are to be so understood; and the dissenting speech of Lord Atkin at least Serves as a reminder of the many occasions when they have been treated as meaning ‘if there is in fact reasonable cause for A.B. so to believe’. After all, words such as these are commonly found when a legislature or law-making authority confers powers on a minister or official. However read, they must be intended to serve in some sense as a condition limiting the exercise of an otherwise arbitrary power. But if the ques- tion whether the condition has been satisfied is to be conclusively decided by the man who wields the power the value of the intended restraint is in effect nothing. No doubt he must not exercise the power in bad faith: but the field in which this kind of question arises is such that the reservation for the case of bad faith is hardly more than a formality. Their Lordships therefore treat the words in reg. 62, ‘where the Controller has reasonable grounds to believe that any dealer is unfit to be allowed to continue as a dealer’ as imposing a condition that there must in fact exist such reasonable grounds, known to the Controller, before he can validly exercise the power of cancellation.’’
In Co-operative Committee on Japanese Canadians v. A.-G. Canada, [1947] A.C. 87, Lord Wright stated at page 107:
“Their Lordships do not doubt the proposition that an exercise of the power for an unauthorized purpose would be invalid, and the only question is whether there is apparently any matter which justifies the judiciary in coming to the conclusion that the power was in fact exercised for an unauthorized purpose.”
In Liversidge v. Anderson (supra) and Rex v. H alliday, [1917] A.C. 260, effect was given a regulation under the Defence of the Realm Act which permitted the government to detain without trial a person of alleged ‘‘hostile origin or associations”? (Rex v. Halliday), and ‘‘if the Secretary of State has reasonable cause to believe any person to be of hostile origin or association and that by reason thereof it is necessary to exercise control over him’’ {Liversidge v. Anderson). These regulations gave rise to acute controversy among the lawyers of the day, and if reliance is to be placed on the judgment in Liversidge v. Anderson {supra), it must be remembered that in that case the Court was considering the effect to be given to a regulation passed at a time of grave national peril. It is important to note carefully what Lord Macmillan had to say in this connection at page 251 :
“But in a time of emergency when the life of the whole nation is at stake it may well be that a regulation for the defence of the realm may quite properly have a meaning which because of its drastic invasion of the liberty of the subject the courts would be slow to attribute to a peace time measure. The purpose of the regulation is to ensure public safety, and it is right so to interpret emergency legislation as to promote rather than to defeat its efficacy for the defence of the realm. That is in accordance with a general rule applicable to the interpretation of all statutes or statutory regulations in peace time as well as In war time . . .
I also note as indicative of the abnormal and temporary character of the legislation that it is expressly limited in duration. With its expiry the power of detention will, of course, also come to an end.’’
Later at page 252 Lord Macmillan continued :
‘‘In the next place, it is relevant to consider to whom the emergency power of detention is confided. The statute has authorized it to be conferred on a Secretary of State, one of the high officers of State who, by reason of his position, is entitled to public confidence in his capacity and integrity, who is answerable to Parliament for his conduct in office and who has access to exclusive sources of information. In a question of interpreting the scope of a power it is obvious that a wide discretionary power may more readily be inferred to have been confided to one who has high authority and grave responsibility.”
Significantly, in the case at bar, the Court is concerned with peace time legislation and with the exercise of a power not granted to a high officer of State alone, but to public servants of considerably lower rank and in a far less responsible position.
Among the many rules of construction which the courts have applied in the interpretation of statutes the paramount rule remains that every statute is to be expounded according to its manifest or expressed intention. Had Parliament intended to confer upon the Minister of National Revenue or his officials powers as broad in scope and as wide in range as claimed on behalf of the defendant, that intent could have been made manifest by the use of appropriate language as e.g. in the National Powers Act, 1945, of Canada, which provided by Section 2(1) :
“The Governor in Council may do and authorize such acts and things, and make from time to time such orders and regulations, as he may, by reason of the continued existence of the national emergency arising out of the war against Germany and Japan, deem necessary or advisable for the purpose of—. .. (c) maintaining, controlling and regulating supplies and services, prices, transportation, use and occupation of property, rentals, employment, salaries and wages to ensure economic stability and an orderly transition to conditions of peace; . . .”
In A.-G. Canada v. Hallet and Carey Ltd. et al., [1952] A.C. 427, this particular section was construed, and it was held, reversing the judgments in the Canadian Courts, that the enabling words there used conferred deliberately the most extensive discretion upon the Governor in Council, and that it was not competent for the Courts to ‘‘canvass the considerations which had led the Governor in Council to deem it necessary or advisable” to enact the measures challenged by the plaintiff whose property had been appropriated.
The Planning Act, R.S.O. 1960, c. 296, Section 28(5), affords another example of a grant by legislation of an ample discretion in the exercise of stated powers. That section provides:
“The Minister may impose such conditions to the approval of a plan of subdivision as in his opinion are advisable . . .”’
This particular enactment came before this Court, differently constituted, in Re Highbury Development Limited, heard and decided on October 5, 1961. Laidlaw, J.A., delivering the judgment of the Court commented upon the effect to be given to that section, and I quote from his reasons as follows :
“The Minister is then empowered by subsection (5) to impose such conditions to the approval of a plan of subdivision ‘as in his opinion are advisable’. Certain conditions which may be imposed are set forth in particular in the subsection but it is provided expressly that the generality of the powers vested in the Minister are not restricted by such particularization. Thus it will be apparent at once that the Minister in the exercise of his general powers vested in him to impose conditions to the approval of a plan of subdivision is unfettered and is wholly free to decide what conditions ‘in his opinion’ are advisable. Assuming, as is proper, that his opinion is exercised in good faith and that he has decided what conditions to the approval of any particular plan of subdivision under consideration by him are advisable, it is not the function or the right of this Court to review his judgment or to determine whether or not any condition which in his opinion is advisable should or should not have been imposed by him. Any condition or conditions deemed advisable in the opinion of the Minister to the approval by him of a plan of subdivision is wholly and exclusively a matter for the exercise of his discretion and judgment and this Court cannot substitute its opinion in that matter for that of the Minister. Likewise, where the Minister has referred to matter to the Ontario Municipal Board pursuant to section 34 of The Planning Act the discretion exercisable by the Minister may be exercised by the Ontario Municipal Board and conditions to the approval of a plan of subdivision which in its opinion are advisable may be lawfully imposed by it and this Court cannot interfere with the proper exercise of that power. ’ ’
There is a marked distinction between the enabling words of the section under review in the present case and in the two instances to which I have referred. Here Parliament has deliberately refrained from using language which would confer upon the Minister or the named departmental officers such unrestricted discretionary powers. Upon a fair and proper construction of the words used the “purpose related to the administration or enforcement of the Act’’ is not a purpose which rests solely upon the judgment or opinion of the Minister or his officers, but it is a purpose which exists in fact, and one which is to be determined objectively and not subjectively.
It may well be that the Assistant Deputy Minister was acting in good faith in the sense that he honestly believed that he was proceeding in accordance with the powers conferred upon him by statute; that the requirement in question related to a genuine and serious enquiry into the tax liability of some identifiable person or persons, and that he had reason to believe that such person or persons were among those referred to in the special case. Nevertheless, I take the view that the words ‘‘for any purpose related to the administration or enforcement of this Act” must be treated as imposing a condition that such a purpose does in fact exist. If the bank were to be prosecuted under the provisions of Section 131(2), for failure to comply with the requirement made pursuant to Section 126, ‘‘the purpose’’ when challenged could not, in my opinion, be proven by the mere declaration of the Minister or the official in question. The offence would not be proven unless it was established that the terms of the condition precedent were in fact satisfied, and the mere statement of his belief or opinion by the Minister or the designated official would not be sufficient to satisfy that burden. I would adopt the language of Lord Radcliffe in Nakkuda AU v. Jayaratne (supra),
“After all, words such as these are commonly found when a legislature or law-making authority confers powers on a minister or official. However read, they must be intended to serve in some sense as a condition limiting the exercise of an otherwise arbitrary power. But if the question whether the condition has been satisfied is to be conclusively decided by the man who wields the power the value of the intended restraint is in effect nothing. ’
These words apply with particular force and emphasis to the questions in controversy here and in the proceeding under review, which has the ready concurrence of the Attorney-General as a desirable method of having the question at issue determined, the same onus is cast upon the defendant as if the position of the parties were reversed and the defendant were prosecuting the plaintiff for its failure to comply with the requirement’s terms. Moreover, the actual ‘‘purpose’’ being peculiarly within the knowledge of the agent or agents of the Crown, a contrary ruling upon this point would be repugnant to reason and good sense. The defendant has not attempted to satisfy that burden, but insists that the mere assertion of the minister or one of the empowered officials that the information or production is required for ‘‘purposes related to the administration or enforcement of the Income Tax Act” is sufficient under the statute to impose the obligation of compliance with the requirement upon the addressee. That is a contention to which I cannot assent.
The fact that the Union Bank of Switzerland and some of its customers referred to in paragraph 11 of the special case are not and cannot be among the persons under investigation since, being non-residents, they are not chargeable under the Income Tax Act, makes it apparent at once that the requirement is invalid in part, for there can be no ‘‘purpose related to the administration or enforcement of the Act’’ quoad such persons insofar as the requirement relates to them; to that extent, at least, it is not authorized by the statute, and therefore the whole of the requirement addressed to the plaintiff is invalid in accordance with the principle laid down in Dyson v. A.-G., [1912] 1 Ch. 158. On that ground alone the plaintiff is justified in refusing to comply with the exigencies thereof.
I should like to add just a word as to the procedure which has been followed by the plaintiff. In the early stages of the hearing of the appeal I entertained some doubt as to whether or not an action for a declaration should be entertained since the making of the declaration would be to pronounce a judgment declaring that the plaintiffs had or had not committed the offence created by the terms of Sections 126 and 131 of the Income Tax Act: Smith v. A.-G. Ontario, 53 O.L.R. 572, affirmed [1924]
S. C.R. 331, and A.-G. Ontario v. Canadian Wholesale Grocers Association, 53 O.L.R. 627. Upon further consideration my doubts have been resolved and I am now convinced that in the present case the Court should exercise its discretion by granting the declaratory relief sought by the plaintiff. Dyson v. A.-G., [1911] 1 K.B. 410 and [1912] 1 Ch. 158, and Burghes v. A.-G., [1912] 1 Ch. 173, [1911] 2 Ch. 139, are authorities in favour of this form of action as the most convenient one for testing and determining such questions. Moreover, in the present case the Attorney-General, far from opposing this mode of securing an adjudication upon the questions which have arisen, has concurred with the plaintiff in the submission of those questions to the Court by way of a special case. This is precisely the kind of proceeding which was also taken in England in A.-G. v. National Provincial Bank Limited, 44 T.L.R. 701, for determination of the question as to whether or not the defendant bank was bound to prepare and deliver certain lists demanded by the Commissioners of Inland Revenue. Here the bank does not desire to oppose or to impede the authorities in any way but, having regard to its duty to its customers, it is understandably concerned to know if the requirement served upon it constitutes an unwarranted interference with rights arising out of its relations with its customers and is an attempt to impose upon it an obligation which, if not authorized by law, would subject it to severe censure from its principals. This is an appropriate and convenient way of testing these questions without subjecting the plaintiff to the opprobrium attached to and flowing from a prosecution for an alleged breach of a public statute and to the penalties thereby prescribed.
For the reasons stated I would allow the appeal, set aside the judgment in appeal and direct that in place thereof judgment should issue in favour of the plaintiff declaring that it is entitled to the declaratory relief for which it has prayed, answering the question propounded for the opinion of the Court in the affirmative. In view of the circumstances I would make no order as to costs.