M. F. Esson & Sons Ltd. v. Minister of National Revenue, [1966] CTC 439, 66 DTC 5303

THURLOW, J.:—The issue in this appeal, which is from reassessments of income tax for the years 1963 and 1964, is whether the appellant and Esson Motors Limited were, in the taxation years in question, ""associated with each other’’ for the purpose of Section 39 of the Income Tax Act, R.S.C. 1952, c. 148, as amended by 1960, c. 43. The issue turns on whether at relevant times both corporations were controlled by the same group of persons.* [1]

For each of the years in question the appellant’s fiscal period ended on March 31, and for it these taxation years accordingly ran from April 1, 1962 to March 31, 1963 and from April 1, 1963 to March 31, 1964. Throughout both periods the whole of the issued share capital of the appellant was owned and registered in the names of Miller F. Esson, Sr., Miller H. Esson, Jr. and John F. Esson, the three of whom admittedly constituted a related group which controlled the company.

From April 1, 1962 to May 9, 1962, that is to say, during part of the 1963 fiscal period of the appellant the same three persons were the registered owners of all the issued shares of Esson Motors Limited. On the latter date, pursuant to a contract dated May 7, 1962 and made between the members of the group and Esson Motors Limited, of the one part, and Edward Earle McKenna, Jr., of the other part, the members of the group trans- ferred to McKenna, who was not related to any of them, 50 per cent of the issued shares of Esson Motors Limited to hold as his own. By the terms of the contract they also gave McKenna an irrevocable option to purchase the remaining issued shares of the company during a period of one year commencing on May 29, 1965 at a price to be determined according to a formula set out in the contract. It was also provided that if McKenna should fail to exercise the option the shares transferred to him should revert to and again become the property of the members of the group.

The object of these arrangements was to induce McKenna to undertake the management of the company. The company had been losing money and by May 1962 was in poor financial condition. Its property was heavily mortgaged and in addition Miller F. Esson, Sr. had given personal guarantees of its indebtedness to the extent of about $100,000. The contract provided that the company should immediately delegate to McKenna complete and exclusive authority to conduct the affairs of the company (with certain minor exceptions in which the concurrence of McKenna and the Essons was required) during the three year term of the contract. The Essons as shareholders, directors and officers of the company also waived their rights to allowances to be paid by the company by way of salary, bonuses, dividends, directors’ fees or otherwise during the term and they further undertook not to cause the issue of any new shares. That the contract was a bona fide transaction and that it was carried out in accordance with its terms are not challenged.

Esson Motors Limited had been incorporated in 1953 by letters patent issued under the Companies Act, R.S.N.B. 1952, ©. 3. of the Province of New Brunswick and its 1963 and 1964 fiscal periods ran in each year from January 1 to December 31. Section 192 of the Companies Act provided that:

"‘In the absence of other provisions in that behalf in the letters patent or by-laws of the company,

(ce) all questions proposed for the consideration of the shareholders at such meetings shall be determined by the majority of votes, and the chairman presiding at such meetings shall have the casting vote in ease of an equality of the votes.’’

The letters patent and by-laws of the company contained no "other provisions in that behalf’’ but the by-laws did provide that

"The President shall preside at meetings of the board. He shall act as Chairman of the Shareholders’ meetings if present.’’

From the time of the making of the contract with McKenna to the end of the period material to these proceedings the three Essons continued to be the directors of the company, the remaining 50 per cent of the issued shares continued to be registered in their names and Miller 13‘. Esson, Sr. continued to be the president of the company, an office to which he had been elected in 1953. It thus appears that Miller I’. Esson, Sr., if present, was entitled to act as chairman of any meetings of the shareholders that might be held and that under Section 102(c) of the Act he was entitled to exercise a casting vote in case of a tie though he was never at any material time aware that he had a casting vote and he never had occasion to cast one.

As the re-assessments are based solely on Section 39(4) (b) of the Income Tax Act the question to be resolved is whether the three Essons, who at all material times controlled the appellant, also controlled Esson Motors Limited at material times. The Minister’s case for upholding the re-assessments is that prior to May 9, 1962 Esson Motors Limited was controlled by the three Essons by reason of their holding 100 per cent of the issued shares of the company and that after that time the company was controlled by them by reason of their holding 50 per cent of the issued shares coupled with the power of Miller F. Esson, Sr., as chairman of shareholders’ meetings to exercise a casting vote in the case of a tie and that by reason of such control by the Essons of Esson Motors Limited and their admitted control of the appellant the two companies were associated with each other for the purpose of Section 39 in both of the taxation years in question. In support of his position counsel for the Minister raised and argued three submissions.

It was said first that the appellant and Esson Motors Limited were associated for the 1963 taxation year by reason of the admitted control of both companies by the Essons during the period from April 1, 1962 to May 9, 1962. Since under Section 39(4) of the Income Tax Act, R.S.C. 1952, c. 148, as amended by 1960,

e. 48, s. 11(1), corporations are associated with each other’? if the appropriate control exists at any time in the year” this submission is unanswerable if the period from April 1, 1962 to May 9, 1962 was a material time with respect to the 1963 taxation year. Plainly the period was part of the appellant’s 1963 fiseal period but it was not part of the 1963 fiscal period of Esson Motors Limited.

What then is the material period? Counsel for the Minister urged that the word year” in the expression if at any time in the year’’ in Section 39(4) refers to the expression taxation year’’ appearing earlier in the subsection, that the latter expression can refer only to the taxation year of the particular corporation whose taxation is being considered and that it is immaterial whether the period of association is also within the fiscal period of the other company for the same taxation year. While the manner in which Section 39(4) is worded lends some colour to the submission, particularly when the subsection is read by itself, in my opinion the submission cannot prevail. In Section 39(2) and Section 39(3) two or more corporations are referred to and the taxation years of all of them are referred to by the expression ‘‘in a taxation year’’. Two or more corporations as well are involved in the allocations of $35,000 between them contemplated by Section 39(3) and Section 39 (3a) for the purpose of fixing the taxation of their incomes for the same taxation year. Two corporations also, not merely one, are referred to by the expression ‘‘one corporation is associated with another” in Section 39(4) and the taxation of both for the same taxation year is affected thereby. When therefore Section 39(4) refers to ‘‘any time in the [taxation] year’’ it is, I think, to be interpreted as referring to any time that is in the taxation year of both corporations and where their fiscal periods do not coincide the subsection can, in my opinion, refer only to a time that is in such portion of the fiscal periods of the two corporations for the taxation year as is common to both.

In my opinion therefore since the period from April 1, 1962 to May 9, 1962 was not within the fiscal period of Essen. Motors Limited for the 1963 taxation year the control of both that corporation and the appellant by the Essons during that period is immaterial. The Minister’s submission accordingly fails.

The second submission was that the fact that Section 139 (5d)(b) might, because of Section 39(4a)(c), be applicable to McKenna so as to cause it to be deemed that he had the same position in relation to the control of Esson Motors Limited as if he owned the shares which he had an option to purchase in the future, could not affect the application of Section 39(4) when considering whether the Essons ‘‘controlled’’ Essen Motors Limited for the purpose of Section 39. This submission was raised in answer to the main submission of the appellant that the effect of Section 39 (4a) (ce) coupled with Section 139 (5d) (b) was that McKenna must be deemed to have been in control of Esson Motors Limited at all material times from which it followed that the Essons could not be regarded as having “controlled” the company for the purpose of Section 39. I am not persuaded that the appellant’s position on this point is sound but in view of the conclusion which I have reached on the first and third submissions, which are sufficient to dispose of the appeal, it is not necessary to decide the point.

The third submission was that the Essons continued to control Esson Motors Limited at all material times after May 9, 1962 by reason of their ownership of 50 per cent of the issued shares and the right of Miller F. Esson, Sr., if present, to preside as chairman of shareholders’ meetings which, having regard to Section 102(c) of the Companies Act and to the letters patent and by-laws of the company, conferred on him power to exercise a casting vote in case of a tie.

A similar contention was put forward in this Court in Pender Enterprises Limited v. M.N.R., [1965] C.T.C. 343 at 357, where Noel, J., after referring to the judgment of the President of this Court in Buckerfield’s Limited v. M.N.R., [1965] 1 Ex. C.R. 299; [1964] C.T.C. 504, dealt with the point as follows:

“Now although this interpretation was given in connection with Section 39 of the Income Tax Act, I can see no reason why it should not apply as well to Section 139 (5a) of the Act in which case Lee could not have control of the appellant corporation as he held only 50% of its shares and, therefore, could not be said to have a number of shares such that he carries with it the right to a majority of the votes in the election of the board of directors or that his shareholding in the company was such that ‘he was more powerful than all the other shareholders in the company put together in general meeting’ as set down by Cameron, J. in Vancouver Towing Company Limited v. M.N.R., [1946] Ex. C.R. 623 at 632; [1947] C.T.C. 18. It indeed appears to be clearly settled that control of a corporation requires at least a bare majority in shareholding and as Lee here has not this majority, he cannot be considered as controlling the appellant and I say this notwithstanding the articles of association adopted by the appellant which gives its president a preponderant vote in the case of an equality of votes at every general meeting of the company. Indeed, such a power given to the president of the present corporation, in view of the particular circumstances of the instant case, could not, in my view, give Lee effective control over the appellant corporation which he would not otherwise have by virtue of his shareholdings because any control he would wish to exercise by virtue of his preponderant vote could not, in practice, be implemented. There being two shareholders only, Lee could not hold a general meeting of the appellant corporation without Wong’s consent and as one director cannot constitute a meeting, he could not use his preponderant vote.’’

The contention was again raised in the Aaron cases, [1966] C.T.C. 330, where though it was unnecessary to decide the point I expressed a doubt as to its validity.

More recently in Alpine Drywall & Decorating Ltd. v. M.N.R., [1966] C.T.C. 359, Cattanach, J., while expressing doubt that there was any basic distinction between the case before him and that of B. W. Noble Ltd. v. C.I.R. (1926), 12 T.C. 923, held the contention invalid on the basis of the earlier expressions of opinion in this Court, including that of the President in the Buckerfield’s case as to the meaning of ‘‘controlled’’ in Section 39(4) of the Act. In view of the decision of Cattanach, J., and in the absence of any expression of opinion to the contrary by the Supreme Court I think that in this Court the matter should be taken as decided but it may be useful nevertheless to make some further comment on the point.

The meaning of ‘‘controlled’’ in Section 39(4) of the Income Tax Act was considered in Buckerfield’s Limited v. M.N.R., [1965] 1 Ex. C.R. 299; [1964] C.T.C. 504, where the President of this Court said at pp. 302, 507:

‘“Many approaches might conceivably be adopted in applying the word ‘control’ in a statute such as the Income Tax Act to a corporation. It might, for example, refer to control by ‘management’, where management and the Board of Directors are separate, or it might refer to control by the Board of Directors. The kind of control exercised by management officials or the Board of Directors is, however, clearly not intended by Section 39 when it contemplates control of one corporation by another as well as control of a corporation by individuals (see subsection (6) of Section 39). The word ‘control’ might conceivably refer to de facto control by one or more shareholders whether or not they hold a majority of shares. I am of the view, however, that, in Section 39 of the Income Tax Act, the word ‘controlled’ contemplates the right of control that rests in ownership of such a number of shares as carries with it the right to a majority of the votes in the election of the Board of Directors. See British American Tobacco Co. v. C.I.R., [1943] 1 All E.R. 13, where Viscount Simon, L.C., at page 15, says:

‘The owners of the majority of the voting power in a company are the persons who are in effective control of its affairs and fortunes.’

See also M.N.R. v. Wrights’ Canadian Ropes Ltd., [1947] A.C. 109; [1947] C.T.C. 1, per Lord Greene, M.R., at pages 118, 6, where it was held that the mere fact that one corporation had less than 50 per cent of the shares of another was ‘conclusive’ that the one corporation was not ‘controlled’ by the other within Section 6 of the Income War Tax Act.

Where, in the application of Section 39(4) a single person does not own sufficient shares to have control in the sense to which I have just referred, it becomes a question of fact as to whether any ‘group of persons’ does own such a number of shares. ’ ’

The definition of control as that arising from shareholding is supportd by the opinion of the House of Lords in British American Tobacco Co. Ltd. v. C.I.R., [1943] 1 All E.R. 13, a decision which has on several occasions been referred to and applied in decisions of this Court* [2] both in cases arising under the Income War Tax Act and in cases arising under the Income Tax Act. In the British American Tobacco case Lord Simon, L.C., in considering the meaning of ‘‘controlling interest’? said at p. 19:

“It is true that in such circumstances company No. 1 owns none of the assets of company No. 2, and a fortiori owns none of the assets of company No. 3, and that in that sense neither owns, nor has an interest in, company No. 3. But that is to treat the phrase ‘controlling interest’ as capable of connoting only a proprietary right, that is, an interest in the nature of ownership. The word ‘interest’, however, as pointed out by Lawrence, J., is a word of wide connotation, and I think the conception of ‘controlling interest’ may well cover the relationship of one company towards another, the requisite majority of whose shares are, as regards their voting power, subject, whether directly or indirectly to the will and ordering of the first-mentioned company. If, for example, the appellant company owns one-third of the shares in company X, and the remaining two-thirds are owned by company Y, the appellant company will none the less have a controlling interest in company X if it owns enough shares in company Y to control the latter.

In my opinion this is the meaning of the word ‘interest’ in the enactment under consideration, and, where one company stands in such a relationship to another, the former can properly be said to have a controlling interest in the latter. This view appears to me to agree with the object of the enactment as it appears on the face of the Act. I find it impossible to adopt the view that a person who, by having the requisite voting power in a company subject to his will and ordering, can make the ultimate decision as to where and how the business of the company shall be carried on, and who thus has, in fact, control of the company’s affairs, is a person of whom it can be said that he has not in this connection got a controlling interest in the company.

As to what may be the requisite proportion of voting power, I think a bare majority is sufficient. The appellant company has, in respect of each of the foreign companies referred to in the case, the control of the majority vote. I agree with the interpretation of ‘controlling interest’ adopted by Rowlatt, J., in Noble v. Commissioners of Inland Revenue when construing that phrase in the Finance Act, 1920, s. 53(2) (c). He said at p. 926 that the phrase had a well-known meaning and referred to the situation of a man

‘. . . whose shareholding in the company is such that he is more powerful than all the other shareholders put together in general meeting.’

The owners of the majority of the voting power in a company are the persons who are in effective control of its affairs and fortunes. ’ ’

The definition of ‘‘controlling interest’’ as referring to the man whose shareholding is such that he is more powerful than all the other shareholders put together in general meeting seems to me to coincide precisely with the definition of “controlled” formulated by the President of this Court in the Buckerfield’s case and to be inapt to describe the position of the Essons as a group with respect to Esson Motors Limited during the material period. Their shareholding plainly was not such that they were more powerful than McKenna in general meetings. Moreover, Viscount Simon’s expression ‘‘the owners of the majority of the voting power’’ also seems inappropriate to characterize the casting vote of a chairman since it is not a subject of ownership at all but is, as I view it, a mere adjunct of the office exercisable, not as his personal interest alone may dictate, but bona fide in the interest of the company as a whole. Its nature is also such that it is exercisable by whoever happens to occupy the chair at a meeting when the occasion to exercise such a vote arises and it is then exercisable only by the person himself and not by anyone on his behalf. I do not think it was intended by Parliament to make the taxation of corporations vary according to exigencies of that nature and reading the provisions of Section 39 and giving the word “controlled” in Section 39(4) what appears to me to be its ordinary meaning I do not think that anything but a sufficient number of votes arising from shareholding to dictate decisions to be taken by the company can be regarded as within the generally understood meaning of control in the sense in which the word ‘‘controlled’’ is used in the statute. Moreover, even if the matter were regarded as doubtful in the sense that the word used in the statute was such that it might or might not have been intended to cover a case of this kind the situation would seem to me to be one for the application of the principle that clear words are required to authorize taxation and that any doubt as to the meaning of the expression used should be resolved in favour of the taxpayer.

The principal case relied on by the Minister in support of his position was that of B. W. Noble Limited v. C.I.R. (1926), 12 T.C. 923, a decision of Rowlatt, J., rendered in 1926 on the meaning of ‘‘controlling interest’’ in Section 53 of the Finance Act, 1920. In that case the appellant company had been formed to acquire and operate an insurance business carried on by Noble. Half of the company’s voting shares were held by Noble and the remainder by two others but, under a contract made at the time when the company was organized and to which all three shareholders and the company itself were parties, Noble was entitled as against the other shareholders and the company itself to be chairman of shareholders’ meetings and thus under the articles of the company to a casting vote in case of a tie. Rowlatt, J., said [(1926), 12 T.C. at 926] :

“It seems to me that ‘controlling interest’ is a phrase that has a certain well known meaning; it means the man whose shareholding in the Company is such that he is the shareholder who is more powerful than all the other shareholders put together in General Meeting. That is really what it comes to. Now, this gentleman has just half the number of shares, but those shares, in the circumstances of this case, are reinforced by the position that he occupies of Chairman, a position which he occupies not merely by the votes of the other shareholders or of his Directors elected by the shareholders but by contract ; and, so reinforced, inasmuch as he has a casting vote, he does control the General Meetings—there is no question about that

—and inasmuch as he does possess at least half of the shares he can prevent any modifications taking place in the constitution of the Company which would undermine his position as Chairman.

Therefore, on the whole, giving what I think is the most obvious meaning of these words in the Sub-section and having regard to the object of the Section, I think the contention of the Crown is right, . . .”?

It will be observed that Rowlatt, J. did not hold that as a general proposition half the shares of a company plus the right to be chairman and to exercise a casting vote in case of a tie, would give a ‘‘controlling interest’’ in the company. What he appears to me to have said is that half the shares plus the right arising by contract with both the company itself and the other shareholders to be chairman and thus to exercise a casting vote in the case of a tie in the circumstances enabled Noble to control general meetings of the company, that in the circumstances he was, because of his shareholding, in a position to prevent constitutional changes that might undermine his position and that on the whole and having regard to the object of the section under consideration he was of the opinion that Noble had a “controlling interest’’ in the company.

The statement of Rowlatt, J. with respect to the meaning of ‘‘controlling interest’’ was approved by the House of Lords in the British American Tobacco case* [1] already referred to but so far as I am aware his application of it to the facts of the particular case has not been discussed in any higher court. It does seem to me that after stating the meaning of “controlling interest” by reference to shareholding Rowlatt, J. proceeded to his conclusion by taking into account additional facts chief among which was that of the contract between Noble and the company and the other shareholders under which Noble was entitled to be chairman of the company and thus to exercise a casting vote. As I view the matter it is not necessary to decide in the present case whether it is permissible in cases arising under Section 39 of the Income Tax Act to take into account the casting vote of a chairman where the chairman is entitled by contract to exercise such a vote because here there was no contract giving Miller F, Esson, Sr., any such right. However, if the implication of the decision on its particular facts of the Noble case is that a casting vote is to be taken into account and I am thus faced with a choice between the decision in the Noble case and the principles to which I have referred including those which have been established by this Court and by the House of Lords since the decision in the Noble case I think the principles so established should be followed rather than the implication from a decision on its own particular facts.! [2]

Another case relied on was C.I.R. v. Monmck Lid. (1949), 29 T.C. 379, where in the course of holding on particular facts that the respondent company was not one of the directors whereof had a controlling interest: therein, though two persons who for the purpose of the statute under consideration were to be regarded as directors held half the shares, Croom-Johnson, J. said at page 385 ;

It is perfectly true that if this Company had a board of directors—and it has not—and if that board of directors had appointed a chairman, and if that chairman had happened to be Mr. Mark Monnickendam, the result would no doubt have been that he would have been in control. I do not shut my eyes to that as a possibility.”

To my mind this was no more than a description for purposes of illustration of a possible situation which was not then before the Court and though the learned Judge at one point used the expression [44] no doubt’’ it is noticeable that he also referred to “a possibility”. Accordingly, apart from the statement being: obiter, I do not think that it should be regarded as expressing a concluded opinion on the point.

I am accordingly of the opinion that the proposition that the casting vote of the chairman in a situation such as the present confers control of the company is not sustainable as a general proposition in view of the principles which have been established for determining control in cases arising under Section 39 of the: Income Tax Act and that the shareholding of the Essons, upon which control for the purpose of ‘Section 39 depended, was not sueh as to afford them control of Esson Motors Limited at any time material to these proceedings. The Minister’s submission therefore fails.

The appeal will be allowed with costs and the re-assessment will be referred back to the Minister for re-assessment on the basis that the appellant and Esson Motors Limited were not BRITISH COLUMBIA POWER CORPORATION, LIMITED, ..... Appellant,

and

MINISTER OF NATIONAL REVENUE, Respondent.

Exchequer Court of Canada (Sheppard, D.J.), July 6, 1966, on a motion by the appellant to have a portion of the Minister's Reply to the Notice of Appeal struck out.

Income tax—Federal—Income Tax Act, R.S.C. 1952, c. 148—Sections

At the opening of this appeal (which is reported at p. 454) the appellant brought a motion to have three paragraphs of the Minister’s Reply to the: Notice of Appeal struck out on the ground that because the appeal was from an assessment [as contemplated by Section 60(2)] rather than from a decision of the Tax Appeal Board [as contemplated by Section 60(1)] the Minister did not have any right of appeal {which was the substance of the disputed paragraphs of the Minister’s Reply]. The relevant paragraphs of the Minister’s Reply to the Notice of Appeal are’ reproduced below and the motion brought by the appellant was to have paragraphs 14, 15 and 19 struck out.

Paragraphs 12, 14, 15 and 19 of the Reply to the Notice of Appeal were as follows:

**12. B. C. Power in its taxation year 1963 received the sum of $4,286,233 in lieu of interest on the purchase price of its shares

in British Columbia Electric Company Limited for the period August 1st, 1961 to September 16th, 1963, and did not include the said sum in computing its income for its 1963 taxation year.

The assessment for the 1963 taxation year of B.C. Power referred to in the Notice of. Appeal did not include the said sum in the income of B.C. Power.

14. As to the amount of $233, 779.11 described in the foregoing paragraph 11 as ‘Payments for loss of office’, the said sum represents two-thirds of a total amount of $330,112.00 paid by B.C. Power and claimed by it as a deduction in computing its income for its 1963 taxation year in respect of payments to officers and ‘employees. of B.C. Power on termination of their employment upon the winding up of B.C. Power, and the Respondent says that the whole of the said sum. should be disallowed. as a deduction because _, no part of it was an outlay or expense made or incurred by B.C. Power for the purpose of gaining or producing income from property or a business of B.C. Power.

15. The Respondent further says that the sum of $4,286,233. 00 referred to in the foregoing paragraph 12 is to be included in computing the income of B.C. Power for its 1963 taxation year and submits that the assessment for the 1963 taxation year of the Appellant should be referred back to him for reassessment in accordance with this and the foregoing paragraph.

19. The Respondent: says that the amount of $4, 286, 233.00 referred to in the foregoing paragraph 12 should be included in computing the income of B.C. Power for its taxation year 1963.”

HELD:

Section 99(la) was merely procedural and was subordinate to Section 98(1). The latter section conferred on the taxpayer and the Minister alike the right of appeal from an assessment. It followed that the Minister had the right to appeal from his own assessment. Motion dismissed.

CASES REFERRED to :

Harris v. M.N.R., [1964] C.T.C. 562; [1966] C.T.C. 226;

Farris v. M.N.R., [1963] C.T.C. 345;

Distillers Corporation Seagram’s Ltd. v. M.N.R., [1958] C.T.C.

305.

Douglas McK. Brown, Q.C., for the Appellant.

P. N. T horst einsson, for the Respondent.

SHEPPARD, D.J.:—Dealing with the motion to strike out paragraphs 14, 15 and 19 of the Minister’s reply the ground is raised that the Minister has no right or jurisdiction to appeal against assessment by the Minister. I observe that Section 98, which is the initial section under Division J, or 98(1) in particular, deals with appeals to the Exchequer Court by either the taxpayer or the Minister and the latter part of the section reads :

‘‘And if the appeal is from the Tax Appeal Board.”

The use there of the conjunctive necessarily implies that the first part of the section deals with something other than an appeal from the Tax Appeal Board and that that right of appeal is given both to the taxpayer and to the Minister.

Now, what is the other matter which falls within the first part of Section 98(1)? I think that necessarily includes an assessment by the Minister and therefore the section provides for an appeal by the Minister or by the taxpayer from an assessment by the Minister. It has this result, that the Minister would appear to have various remedies in respect of his own assessment.

(1) He can re-assess, (2) he can appeal to the Exchequer Court under Section 98(1), or (3) he can appeal to the Tax Appeal Board under the second part of Section 98(1), and that that appeal is given by the second part of Section 98(1) is shown by, or shown and affirmed by 99(la) which reads:

“Instead of filing a notice of appeal under Section 98”—

Hence it definitely speaks of Section 98 as having given the Minister a right of appeal and, therefore, a right of appeal from his own assessment. Now, it follows that 99(la) which provides for a cross-appeal in the event of an appeal from a decision of the Tax Appeal Board, should therefore be regarded as procedural, otherwise, if it is construed as conferring a right of appeal or jurisdiction, it would be mere surplusage having regard to the effect of Section 98(1).

I think that the only importance of Section 99(la) in this particular motion depends upon the application of the principle expressio unius est exclusio alterius, and that expressly providing for a cross-appeal on appeal from the Tax Appeal Board impliedly excludes a cross-appeal under other occasions.

I do not think that principle can here apply for several reasons. In the first place 99 (la), being regarded as procedural, must be read as subordinate to Section 98. Secondly, Section 99(la) is expressly made subordinate to Section 98, that is, by reason of the words ‘instead of filing a notice of appeal under Section 98” and also, thirdly, the use of the word “may”, the verb used in Section 99(la), is permissive. I think, therefore, that 99(la) should be read, not only as procedural, but also as subordinate to Section 98, and, being procedural, the provision for a cross-appeal can be regarded as merely provided ex abundanti cautela, not as indicating it is the only method, but providing that, in that particular instance, there may be that provision and leaving to stand the question of whether there is a cross-appeal under other occasions.

As there is a right of appeal and jurisdiction in the Minister from his own assessment, the question is whether or not this cross-appeal complies with the rules. It is not a matter of right or jurisdiction; and complying with the rules is not the point of this motion. I find nothing in the cases, either in the Harris case, [1964] C.T.C. 562; [1966] C.T.C. 226, nor in the Farris case, [1963] C.T.C. 345, which assists. Neither does the Distillers Corporation Seagram case, [1958] C.T.C. 305, help me. There the reference, as pointed out by Mr. Brown, was in respect of items raised by the taxpayer’s own appeal. It seems not to be this case. And in any event that case seems to fall within Section 99 (la) as a procedural section. However, for the reasons which I have given, I think that the Minister has jurisdiction to appeal from his own assessment. That is conferred by Section 98(1). For that reason the motion is refused.