Attorney-General for Manitoba, v. Frederick F. Worthington,, [1935-37] CTC 168

DENNISTOUN, J.A. (dissenting) :—I agree with the reasons for judgment of my brother Robson.

The Act to Impose a Special Tax on Incomes (Special Income Tax Act), 1933 (Man.), c. 44, passed by the Legislature of the Province of Manitoba, imposes a wage tax of 2% upon the amount of all wages earned or accruing due to employees after May 1, 1933.

The defendant is an officer of His Majesty’s Forces holding a captain’s commission in the Princess Patricia’s Canadian Light Infantry, a regiment which is part of the Permanent Militia Force.

After being served with a County Court writ in this action, and before trial, he was transferred from Military District No. 10 at Winnipeg to Military District No. 2 at Toronto, where he is now serving.

Judgment has been given against him for $44.58, being 2% on $2,229.50, the amount of his pay and allowances from May to December, 1933, made up as follows:

We have now to decide whether the pay so received, and the allowances made, are "wages”, within the meaning of the provincial statute, and subject to the 2% tax.

The statute, sec. 2(l)(d)(ii) specifically mentions certain classes of persons as in receipt of ""wages” who obviously would not be considered 11 employees” unless expressly declared to be such. They are members of the Senate and House of Commons of the Dominion, members of provincial legislative councils and assemblies, members of municipal councils, Judges of any Dominion or provincial Court, all of whom are to be taxed 2% on the amount of their salaries, indemnites, or other remuneration. It will be noticed that officers and soldiers of His Majesty’s Forees are not mentioned, though it is argued that the final words of the section, "‘and of all persons whatsoever, whether such salaries, indemnities, or other remuneration are paid out of the revenues of His Majesty in right of the Dominion or in right of any province thereof, or any persons’’, are wide enough to include them.

In my view these general words do not make taxable the pay and allowances of His Majesty’s Forces for several reasons.

The status of the soldier is different from the status •of those specifically named, in this respect, that the soldier has no enforceable contract with the Crown for the payment of wages or emoluments. What the soldier receives is the King’s bounty, not an earned wage, and no one but the King can interfere with it, or deprive the soldier of the full use and enjoyment of that bounty. The King in relation to the soldier, is the King in right of the Dominion. The organization and administration of Militia and Defence is committed by the B.N.A. Act to the Dominion alone, by sec. 91(7).

The Dominion, with the King’s consent, may withhold the bounty or tax it at pleasure, but the King in right of the Province has, in my judgment, no such right:

To attempt to do so is to derogate from the King’s prerogative in respect to his troops who are maintained for the defence of the whole of Canada and all the Provinces thereof, and may be moved from one Province to another at will.

That the pay of the soldier is a royal bounty and not enforceable except at the King’s pleasure is clear from the following cases.

In Williams v. Howarth [1905] A.C. 551, the Judicial Committee of the Privy Council considered a contract made by the Government of New South Wales with the respondent for military services in South Africa at a certain rate of pay. The New South Wales Government deducted from the pay agreed upon certain sums which were paid to the soldier by the Imperial Government, and he sued for the amount so deducted. The trial Judge held that there was no evidence that the Imperial Government purported to pay on behalf of the local Government and directed a verdict for the balance claimed. The Lord Chancellor, The Earl of Halsbury, in giving judgment, said, at p. 554:

" The plaintiff was in the service of the Crown, and his payment was to be made by the Crown. Whether the money by which he was paid was to be found by the Colony or the Mother Country was not a matter which could in any way affect his relation to his employer, the Crown.

"‘The learned Acting Chief Justice in giving his judgment in this case said: ‘The King has no concern with payments for services rendered in this Colony; the obligation is with the Government of New South Wales’, and, so far as their Lordships can understand, this is the ground upon which the judgment rests. But with great respect to the learned judge, this is entirely erroneous. The Government in relation to this contract is the King himself. The soldier is his soldier, and the supplies granted to His Majesty for the purpose of paying his soldiers, whether they be granted by the Imperial or the Colonial Legislature, are money granted to the King, and the Appropriation Act, whenever an Appropriation Act is passed, simply operates to prevent its being applied to any other purpose.

‘ 4 Under these circumstances the money paid was money paid for the services rendered to the King, and no other payment could possibly be due upon the contract declared on. ’

In Mitchell v. The Queen, reported in a.footnote, in [1896] 1 Q.B. 121, Lord Esher, M.R. said (p. 122) :

"‘I agree with Mathew J. that the law is as clear as it can be, and that it has been laid down over and over again as the rule on this subject that all engagements between those in the military service of the Crown and the Crown are voluntary only on the part of the Crown, and give no occasion for an action in respect of any alleged contract.”

The headnote summarizes the judgment in these words:

"‘No engagement made by the Crown with any of its military or naval officers in respect of services either present, past, or future, can be enforced in any court of law.”

In re Tufnell (1876) 3 Ch. 164, is to the same effect, where Malins, V.C., at p. 176, says:

4 Nothing can be more clear than that, now that Mr. Tufnell is retained on half-pay, if the Crown thinks fit to withhold the half-pay, he has no remedy whatever, but is entirely at the merey of the Crown, and by no petition of right or any other proceeding can he enforce the payment even of his half-pay. ” It is argued on behalf of the Attorney-General that this is an income tax, and that when money is received it matters not where it comes from so long as the recipient is able to use it as income, but the words of the statute make it a tax on wages specifically, and impose the duty on the employer of paying it before the money reaches the hands of the employees. The Crown (Dominion) has ignored this provision and has declined to become a tax gatherer for the Province.

It is a matter of common knowledge, and of special knowledge on my own part, that no taxation of the pay and allowances of Canadian soldiers was made by the Imperial Government when they were serving overseas. Canadian soldiers were in receipt of the bounty of the King in right of the Dominion of Canada, and the Crown (Imperial) while taxing its own soldiers who had resided in England for more than six months, recognized that the taxing power in respect to Canadian soldiers was the Dominion and not the Mother Country. It may be said that this was a matter of state policy or comity as between countries which had independent jurisdictions, but is it too much to suggest that state policy, or comity, should be recognized between Provinces and the Dominion, as well as between the Dominion and the Mother Country?

Returning to the case before us, the B.N.A. Act, see. 125, prohibits the taxation of lands or property belonging to Canada. The barracks containing officers’ quarters in Military District No. 10 are exempt under this section. Nevertheless, so soon as a married officer is put into possession of a suite of rooms, the Government of Manitoba attempts to collect from him 2% of the value of that apartment on a rental basis. In my opinion this is equivalent to a tax on militia quarters which is prohibited. The quarters are assigned to the officer to enable him to perform his military duties, and any diminution of their value by an outside agency, to that extent decreases their value to the occupants : Tennant v. Smith [1892] A.C. 150: Bent v. Roberts (1877) 3 Ex. D. 66; Lister v. Regina [1922] 2 W.W.R. 1162; and the important judgment of MeCardie, J., in Bayley v. Bayley [1922] 2 K.B. 227, in which it was held that allowances for lodging, fuel, light, and rations, were not part of an officer’s pay, and were not to be taken into account in fixing alimony to be paid a former wife.

Similarly the officer is taxed on the value of the heat and light which are necessary to enable him to perform his duty. The value of the uniform, rations, boots, clothing of the private soldier may be taxed in the same way if the judgment appealed from is sound.

By see. 6(2) of the Act under consideration every person who contravenes any provision of the Act for which no other penalty is provided is liable to a fine not exceeding $500 for each day’s default, and may be proceeded against under see. 7 by the procedure laid down in the Manitoba Summary Convictions Act, R.S.M. 1913, c. 189, which may involve imprisonment.

As this is said to be a test case it may be that at the present time all the military forces in the Province are liable to incarceration. Such a possibility is a direct interference with the powers of the Dominion to use its troops for military purposes as it sees fit.

I refer to Rex v. Anderson (1930) 39 Man. R. 84, in which this Court recently held that the Provincial Government has no power to compel an officer driving a motor ear belonging to the Crown (Dominion) to take out a driver’s licence. At p. 322, my brother Trueman said :

"‘The issue is a constitutional one, affecting the sovereignty of the Dominion and the powers of the Province. As it is apparent that if the respondent may not use the car without taking out a chauffeur’s licence or permit, the cost of which must be borne by the Dominion Crown, unless he voluntarily assumes it, there is interference by the Province with Dominion property and agencies as well as taxation thereof, it is difficult to conceive how anyone considered it worth while to raise the question. ’ ’

I would adopt this reasoning and apply it to the present case. Here the soldier may be prevented from performing his military duties, and the property of the Crown, quarters, light, and heat, are made subject to taxation.

There is the further objection that the deductions which are made by the Dominion from the King’s bounty to provide. the soldier with a pension on retirement are taxed, though they have never come into the soldier’s hands, and will never be available to him unless the Crown so determines.

Moreover a tax of 10% of the soldier’s pay and allowances imposed by the Crown (Dominion) and which never reaches the soldier, is taxed 2 % by the Province, something the Act never contemplated, in my humble judgment.

My brother Robson has referred me to the case of Rex v. Crabbs [1934] 4 D.L.R. 324, at p. 327, in which Hughes, J., delivering the judgment of the Supreme Court of Canada, collects, and comments on a number of leading eases which deal with taxing Acts, and quotes with approval the words of Kitz- Gibbon, L.J., in Re Finance Act, 1894, & Studdert [1900] 2 Ir. R. 400, at p. 410:

il If it be doubtful or difficult of interpretation, which I do not think it is, the Finance Act is subject to the rule that no tax can be imposed except by words which are clear, and the benefit of the doubt is the right of the subject.’ ‘‘

I would allow the appeal with costs.

TRUEMAN, J. A. :—This is an action in the County Court of Winnipeg by the Attorney-General of the Province on behalf of the King in the right of the Province to recover from the defendant Frederick F. Worthington a 2% tax levied by the Province under the Special Income Tax Act, on wages paid to him from the revenues of the King in the right of the Dominion from May 1, 1933, to December 31, 1933, which wages were earned by him in said months as an officer of the Active Militia of Canada, Permanent Force, while resident during said months in the Province. The amount sued for is $44.58. A pro forma judgment for that amount was entered by His Honour Judge Whitla.

Sec. 3(1) of Part I of the statute provides that: "‘In addition to all other taxes to which he is liable under this or any other Act, every employee shall pay to His Majesty for the raising of a revenue for provincial purposes a tax of two per centum upon the amount of all wages earned by or accruing due to him on or after the first day of May, 1933, which tax shall be levied and collected at the times and in the manner prescribed by this part. ‘ ‘

See. 4 enacts as follows :

" " ( 1 ) Every employer at the time of payment of wages to an employee shall levy and collect the tax imposed on the employee by this part in respect of the wages of the employee earned or accruing due during the period covered by the payment, and shall deduct and retain the amount of the tax from the wages payable to the employee, and shall, on or before the fifteenth day of the month next following that in which the payment of wages takes place, or at such other time as the regulations prescribe, pay to the administrator the full amount of the tax. No employee shall have any right of action against his employer in respect of any moneys deducted from his wages and paid over to the administrator by the employer in compliance or intended compliance with this section.

"‘(2) Every employer shall, with each payment made by him to the administrator under this section, furnish to the administrator a return showing all taxes imposed by this part on the employees of the employer in respect of wages during the period covered by the return, which shall be in the form and verified in the manner prescribed by the administrator.

(3) Every employer who deducts or retains the amount of any tax under this part from the wages of his employee shall be deemed to hold the same in trust for His Majesty and for the payment over of the same in the manner and at the time provided under this part.”

See. 5 provides that certain records shall be kept by every employer, to be produced for inspection when requested by the Income Tax Administrator. By sec. 6 payment of a penalty by an employer who fails to collect and pay said tax is provided for. The concluding provision is sec. 7, which is as follows :

"‘In case the wages earned or accruing due to an employee are paid to him without the tax imposed thereon being deducted therefrom by his employer, it shall be the duty of the employee to forthwith pay the tax, and all the provisions of sections 23, 234, 24 and 25 of ‘The Income Tax Act’ shall, mutatis mutandis, apply to the collection and recovery of the tax so imposed from the employer and employee, or either of them. ‘ ‘

By sec. 2(1) . . . .

"‘(b) ‘Employee’ means any person who is in receipt of or entitled to any wages;

“ (0) 'Employer’ includes every person, manager, or representative having control or direction of or responsible, directly or indirectly, for the wages of any employee, and in case the employer resides outside the province, the person in control within the province shall be deemed to be the employer ;

(d) ‘Wages’ includes all wages, salaries, and emoluments from any source whatsoever, including

“ (i) any compensation for labour or services, measured by the time, piece, or otherwise ;

" (ii) the salaries, indemnities, or other remuneration of members of the Senate and House of Commons of the Dominion and officers thereof, members of the Provincial Legislative Councils and Assemblies, members of municipal councils, commissions, or boards of management, and of any judge of any Dominion or provincial court, and of all persons whatsoever, whether such salaries, indenmities, or other remuneration are paid out of the revenues of His Majesty in right of the Dominion or in right of any province thereof, or any person;

"‘(iii) personal and living expenses and subsistence when they form part of the profit or remuneration of the employee;

and

"" (v) emoluments, perquisites, or privileges incidental to the office or employment of the employee which are reducible to a money value.

"‘(2) The value of that part of the wages of an employee which is within the scope of sub-paragraphs (iii) or (iv) of the definition of wages in subsection (1) shall be determined by the administrator at the actual amount thereof if payable in money, or otherwise in accordance with any prevailing rates. ‘ ‘

By see. 92(2) of the B.N.A. Act, a Provincial Legislature may exclusively make laws relating to direct taxation within the Province for raising revenue for provincial purposes. In Abbott v. St. John (1908) 40 S.C.R. 597, the Supreme Court of Canada held that as under this power a provincial income tax applying to all residents of the Province may be enacted, a civil or other officer of the Government of Canada may be lawfully taxed in respect to his income, earned by him as such, by the municipality in which he resides, there being no conflict or inconsistency between the power vested in the Province and the exclusive authority given by sec. 91(8) of the Constitutional Act to the Parliament of Canada to fix and provide "‘for the Salaries and Allowances of Civil and other Officers of the Government of Canada’’. Davies, J., as he then was, said (pp. 606-8) :

" " The Dominion fixes and provides the salary and the province.says ‘you shall pay to us the same income tax upon your salary as all other residents of the Province have to pay upon their incomes’. . . . The province does not attempt to interfere directly with the exercise of the Dominion power, but merely says that, when exercised, the recipients of the salaries shall be amenable to provincial legislation in like manner as all other residents. . . . It is said, the legislature might authorize an income tax denuding a Dominion official of a tenth or even a fifth of his official income and, in this way, paralyze the Dominion service and impair the efficiency of the service. But it must be borne in mind that the law does not provide for a special tax on Dominion officials but for a gen- eral undiscriminatory tax upon the incomes of residents and that Dominion officials could only be taxed upon their incomes in the same ratio and proportion as other residents.

"At any rate, if, under the guise of exercising power of taxation, confiscation of a substantial part of official and other salaries were attempted, it would be then time enough to consider the question and not to assume beforehand such a suggested misuse of the power.

"‘Then, it was argued that inasmuch as at common law the salaries of officials of the Crown were incapable of being assigned, pledged or charged by the acts of the officials or bv process of law’ any attempt to make them liable, like other residents, as income-taxpayers would be an illegal interference with the prerogative of the Crown as executive head of the Dominion.

"‘I confess myself quite unable to follow this argument.

“The question before us has nothing to do with the common law privileges or immunities of office holders. It is a question of statutory construction. Has the statute or has it not conferred the power claimed? It is admitted it has so far as provincial officials are concerned, and I am unable to appreciate the fine distinction which admits the King’s prerogative was constitutionally interfered with in right of the province while it was excepted in right of the Dominion. The words conferring the power are, to my mind, too clear and broad and general to admit of the exception sought to be read into them.”

Abbott v. St. John was applied in Toronto v. Morson (1917) 40 O.L.R. 227, where it was held by the Appellate Division that the salary of the defendant, as one of the Judges of the County of York, was not exempt from municipal taxation authorized by the Assessment Act of the Province. The Court dealt with the further point that the defendant had exemption from taxation by a provision of the Assessment Act, which exempted ‘‘The full or half-pay of any officer, non-commissioned officer or private of His Majesty’s regular Army or Navy ; and any pension, salary, gratuity or stipend derived by any person from His Majesty’s Treasury, and the income of any person in such Naval or Military services, on full pay, or otherwise on actual service.”

In holding that the exemptions referred to Imperial officers only, Mulock, C.J.Ex. pointed out that Canada maintains no regular army or navy. The Court also brushed aside the contention that a ‘‘Judge’’ is not a “person” and that his ‘‘salary’’, which is paid out of the Consolidated Revenue Fund, is not "‘income’’ within the Assessment Act.

As it always has been and continues to be. the: attitude of Canada that a constitutional question is not disposed of until passed upon by the Judicial Committee, the occasion was presented in Caron \. The King [1924] 4 D.L.R. 105, to have Abbott v. St. John reviewed. The question there for consideration by the Judicial Committee was whether or not the Income War Tax Act, 1917 (Can.), e. 28, and the amending Act of 1919 (Can.), e. 55, which imposed an income tax on every person residing or ordinarily residing, or carrying on business in Canada, applied to the appellant, a Minister of the Government of the Province of Quebec, in respect of his salary as such and his indemnity as a member of the Legislative Assembly.: The Judicial Committee, affirming the judgment of the Supreme Court of Canada, [1923] 1 D.L.R. 1173, held that it did apply. In their reasons for judgment, which was delivered by Viscount. Cave, the Board adopted views -expressed in the judgment of Davies, J., above quoted, and expressly approved the reasoning in the Abbott ease. Lord Phillimore (p. 110) characterized the Income Tax Acts in question "‘as statutes for imposing on all citizens contributions according to their annual means, regardless of, or it may be said not having regard to, the source from which their annual means are derived’’.

What then is there in this appeal that calls for attention? One contention is that in its application to the appellant the tax is not direct taxation. How can that be said? It is levied on his wages; its payment is demanded from him; he alone bears it; he is now sued for it in an action of debt under the provisions of the Act. It is useless to submit that as under see. 4 provision is made for the collection of the tax by the employer and payment over to the Provinee, the tax is primarily placed on the employer, to be passed on by him to the employee. See Brandon v. Municipal Commissioner c A.-G .Man., 39 Man. R. 982, [1931] 1 D.L.R. 830. Equally outside serious argument is the view with which the Court was pressed that the Act does not apply since the appellant’s employer, His Majesty the King in the right of the Dominion, is not and cannot be made subject to the duties imposed on employers by sec. 4, for which reason it is said the appellant is not an "‘employee''. The Province is not obliged to rely upon this section in enforcing payment of the tax but may proceed, at its option, against the delinquent employee under the provisions of sec. 7, as it is now doing. An effort was made to invest the position occupied by Captain Worthington in the Permanent Force with a personal or mystical relationship to His Majesty the King, which gave to the appellant the samé immunity from legislation that the Crown enjoys unless expressly named. With respect, I do not know from what source this idea is derived. The Militia Act, R.S.C. 1927, ce. 132, cer- tainly gives no countenance to it. It provides (inter alia) that there shall continue to be a Permanent Force which shall consist of such permanently embodied corps, not exceeding 10,000 men, enrolled for continuous service, as are, from time to time, authorized by the ov ernor in Council, and for the appointment by the Governor in Council of a general staff, etc., and such other officers as are from time to time deemed expedient. By sec. 32, the pay and allowances of the officers of the general staff, etc., shall be fixed by the Governor in Council. By sec. 48, officers, warrant officers and non-commissioned officers of the Permanent Force shall be entitled to daily pay and allowances at rates to be prescribed. There is thus left no ground for thinking that the pay received by the appellant in respect to which the tax in question is imposed is not "‘wages’’ within the statute. It may here be pointed out that by Schedule E of the Income Tax Act, 1918 (Imp.), c. 40, and the Rules applicable thereto, income tax is required to be paid by officers in His Majesty’s navy; commissioned officers in His Majesty’ s military forces, and commissioned officers in His Majesty’s air force.

The amount sued for is based on an income of $2,229.50, made up as follows : $1,626.80, pay for the eight months in question ; $105,35, deductions for said period under the Militia Pension Act, RS.C. 1927, c. 133; $154.35, deductions of 10% for said period under the 1. ncome War Tax Act; and $343, for allowances for said period for lodging quarters, fuel and light at Fort Osborne Barracks, where Captain Worthington and his family resided.

The deduction of 5% under the Militia Pension Act is made from the appellant’s pay, which is calculated on his total emoluments, including the amounts granted for lodging, fuel and light, notwithstanding that he may be provided with these in kind instead of money: See sec. 10(1) of the Act and art. 43 of the Pay and Allowance Regulations. I think it is not open to question that this deduction is subject to the provincial Act, there being no provision therein for its. exclusion. Imperial legislation allows deductions in computing the amount on which income tax shall be paid in respect of any sums paid by an employed person towards a pension or superannuation fund, or to secure an annuity to his widow or provision for his children after death. A like exemption is provided for in the Dominion and the Manitoba Income Tax Act.

The inclusion in the appellant’s pay of 10% tax paid by him to the Dominion under the Income War Tax Act, R.S.C. 1927, €. 97, is, in my opinion, wrong. This tax was first imposed upon the salaries or pay paid by the Dominion to, among others, the commissioned officers of the military, naval and air forces of Canada by e. 44 of the Dominion Acts of 1932. It is therein referred to as a special income tax and is applied only to the salaries or pay received during or in respect of the fiscal year commencing April 1, 1932, and ending March 31, 1933. It is made payable in eleven equal monthly instalments on the last day of each month, commencing in May, 1932. A provision in the amendment is that "‘Every payment made on account of the said special tax shall be deductible from income of the year in which the payment is made, for the purpose of determining income liable to income tax other than the special tax imposed by this section (sec. 9A(5))‘. The Act was expected to be required for no more than the time mentioned in it and was not an income tax measure but a means of bringing about a reduction for the time being in the salaries affected by it. Due to the continuance of the exigency which prompted the legislation, the amendment was continued in force until March 1934, by

e. 15 of the statutes of 1932-33. See. 2 of this enactment made provision, the details of which need not be stated, by which instead of making payment by monthly instalments, direction could be given that the amount should be deducted from the salary in accordance with the Salary Deduction (Continuance ) Act, 1933 (Can.), e. 19. A further renewal of the 10% tax for the year from April 1, 1934, and ending March 31, 1935, is provided for in c. 19 of the statutes of 1934. Sec. 3 of the provincial Act, quoted supra, provides that every employee shall pay to His Majesty for the raising of a revenue for provincial purposes a tax of two per centum upon the amount of all wages earned by or accruing due to him. . . .” In one construction it can be said that the salary earned by the appellant was the amount paid to him, and thus the amount on which he should pay the provincial tax. The opposing view called for by the circumstances is that his salary was reduced 10% not by an income tax in its characteristic and universal sense but by a method which, while denominated a tax, was preferred to the alternative device of making a deduction from the salary at the time it was paid. The judgment should therefore be reduced by $3.08.

Allowances for lodging, fuel and light are within the inclusive language of the Act, which provides (sec. 2(1)) that "‘wages’’ includes ‘‘(d) emoluments from any source whatsoever, in- eluding . . . (iii) personal and living expenses and subsistence when they form part of the profit or remuneration of the employee; and (iv) emoluments, perquisites, or privileges incidental to the office or employment of the employee which are reducible to a money value”. By subsec. (2) "‘The value of that part of the wages of an employee which is within the scope of sub-paragraphs (iii) and (iv) of the definition of wages in subsection (1) shall be determined by the administrator at the actual amount thereof if payable in money, or otherwise in accordance with any prevailing rates’’. The Pay and Allowance Regulations provide (art. 76) that if an officer or soldier is not provided with quarters, the allowance for lodging, fuel, light, etc., laid down in art. 74 will be paid. Rates therefor in accordance with rank are set out in tabulated form in art. 74. There can thus be no question that lodging, fuel and light furnished to the appellant under the Pay and Allowance Regulations are ""wages” within the above definition. The language of the Act is much wider than that of the Imperial statute and considered in Robinson v. Corry [1933] 2 K.B. 521; affd [1934] 1 K.B. 240. There an established civil servant was appointed by the Lords Commissioners of the Admirality to a post which necessitated his residing in a colony for several years. During that time he received, in addition to the salary appropriate to his rank in the civil service, a colonial allowance to provide for the increased cost of living in the colony. During part of the time he occupied an official house provided for him, and during other parts of the time he received a housing allowance in lieu of an official house. By the Income Tax Act, 1918, Sch. E., "Tax under Schedule E shall be charged in respect of every public office or employment of profit . . .” By Rule 1 applicable to the Schedule: ‘‘Tax under this Schedule shall be annually charged on every person having an office or employment of profit mentioned in this Schedule . . . in respect of all salaries, fees, wages, perquisites or profits whatsoever therefrom. . . .” It was’ held that the tax was chargeable not only on salary, but also on the colonial allowance and housing allowance and that the annual value of the official residence was not income chargeable with tax, since it was not money, nor convertible into money.

Pertinent to the general discussion are some trenchant remarks by Stratford, J.A., in Krause v. Corner of Inland Revenue (1929) App. D. 286, (referred to in 45 L.Q. Rev., p. 291) in which the Appellate Division of the Supreme Court of South Africa decided that the salary of a Judge of the Transvaal Division of the Supreme Court was subject to tax under the Income Tax Act. Sec. 100 of the South African Act, 1909. taken from art. 3, sec. 1- of the American Constitution, provides that Judges of the: Supreme Court shall receive such remuneration as Parliament prescribes and that their remuneration shall not be diminished: during their continuance in office: The argument was made that while the Income Tax Act was in its terms wide enough to include the salary of a Judge it did not override the foregoing provisions of the Union Act. Stratford, J.A., said that before this contention could be accepted the proposition would have to be established that the effect of sec: 100 was to relieve Judges from the duty of paying income tax. "The prohibition is directed against the diminution of the salaries of judges as such, and cannot be construed to protect judges from the incidence of a tax of general applicability.”

I would dismiss the appeal.

Robson, J.A. (dissenting) :—This action was commenced in the County Court of Winnipeg by the Attorney-General for Manitoba, who sues for and on behalf of His Majesty the King in the right of that Province. The defendant is in the amended statement of claim, stated to be a married person and an officer in the Active Militia of Canada, Permanent Force, holding the rank of captain in the said militia, and it is alleged that at the date of the service of the writ herein and during the whole of the year 1933 and prior thereto the defendant was within the Province of Manitoba and resided or lived at the date of the service of the writ and during the whole of the year 1933 and prior thereto in the said Province; that the defendant as such officer aforesaid has earned ‘‘wages’’ within the meaning of the Special Income Tax Act, continuously from May 1, 1933, to December 31, 1933, both inclusive, which said ""wages” earned as aforesaid, it is alleged, were paid to the defendant by and out of the revenues of His Majesty in the right of the Dominion of Canada on or about the last day of each and every month during the said period and which said payments were in the amount of $282.10 for the months of May, July, August, October and December in the said year 1933 and were in the amount of $273 for the months of June, September and November in the said year 1933.

The plaintiff proceeds to allege that under the provisions of the said Act the defendant became liable to pay to His Majesty the King in the right of the Province of Manitoba, for the raising of a revenue for provincial purposes, a tax of 2% upon the amount of all such "" wages” earned by him as aforesaid, all of which wages” were paid to the defendant without the said tax having been deducted therefrom, but that the defendant has neglected and refused to pay the said tax or any part thereof.

The Attorney-General claimed $44,58.

There is a long statement of defence which aises, all important points.

Admissions of fact. were made and a pro for ma judgment in favor of plaintiff was taken in the County Court. The defendant appealed.

From the statement of facts it appears that defendant was a captain in Princess Patricia’s Canadian Light Infantry having been commissioned on January 1, 1920; he was stationed at Montreal till January, 1923. Defendant was general staff officer at Tuxedo, Manitoba, from January, 1923, till March, 1934, when he was transferred to Toronto. Defendant’s residence at Tuxedo was, till and including, 1931, featured by certain absences in other Provinces on military duty. Defendant’s "‘pay and allowances’’ are set forth: pay $6 per diem; ration allowance, 50c per diem; servant allowance, 400 per diem; staff pay at 300 per diem; married allowance 500 per diem. There are deductions from pay and certain items of 5% for pension under Militia Pension Act, also 10% under the Income War Tax Act. So that in 31-day monthe defendant received in cash $205.84 and in 30-day months $199.20.

In the argument much was said as to the voluntary nature of pay for army officers. Several cases so stating the law for a long time back are collected by Audette, J., in Bacon v. The King (1921) 61 D.L.R. 455. That circumstance does not, in my view, form the chief consideration in this case.

Blackstone, vol. 1, p. 417, says, although soldiers are placed under stricter discipline and severer restrictions than most other subjects of the realm yet they enjoy some peculiar advantages ; and the text goes on to mention pensions and other relief.

Chapter 4 of 1869 (Imp.), is intituled, "‘An Act for punishing Mutiny and Desertion, and for the better payment of the Army and their Quarters. ’ ’

The association of topics is significant.

The preamble recites “whereas it is adjudged necessary by Her Majesty and this present Parliament that a body of forces should be continued for the safety of the United Kingdom, and the defence of the possessions of Her Majesty’s Crown.”

The fact that military officers have a special status is in my view important here. In the case of Re Grimley (1890) 137 U.S. 147, Brewer, J., at p. 155, referred to the case of Tyler v. Pomeroy (1864) 8 Allen 480, and said:

"‘In that case, Mr. Justice Gray, then a member of the Supreme Court of Massachusetts, in an opinion reviewing all the authorities in England and in this country, drew a distinction between an agreement to enlist, which, if broken, simply gives a right of action for damages, and an enlistment, which changes the status of the party, transfers him from civil to military life, and renders him amenable to military jurisdiction. ‘ ‘

Brewer, J. elaborated on the subject himself in the following words (pp. 152-3) :

"‘By enlistment the citizen becomes a soldier. His relations to the State and the public are changed. He acquires a new status, with correlative rights and duties ; and although he may violate his contract obligations, his status as a soldier is unchanged. He cannot of his own volition throw off the garments he has once put on, nor can he, the State not objecting, renounce his relations and destroy his status on the plea that, if he had disclosed truthfully the facts, the other party, the State, would not have entered into the new relations with him, or permitted him to change his status. . . .

"While our regular army is small compared with those of European nations, yet its vigor and efficiency are equally important. An army is not a deliberative body. It is the executive arm. Its law is that of obedience. No question can be left open as to the right to command in the officer, or the duty of obedience in the soldier. Vigor and efficiency on the part of the officer and confidence among the soldiers in one another are impaired if any question be left open as to their attitude to each other. So, unless there be in the nature of things some inherent vice in the existence of the relation, or natural wrong in the manner in which it was established, public policy requires that it should not be disturbed. ‘ ‘

An infant who enlists "‘becomes subject to the paramount control of the state’’: per Bayley, J.; in Rex v. Lytchet Matraverse, 7 B. & C. 226, at p. 232, 108 E.R. 707 ; and Rex v. Rotherfield Greys, 1 B. & C. 345, at p. 347, 107 E.R. 128.

The pay of an officer may be subject to penal deductions: Army Act, 1881 (Imp.), c. 58, see. 137.

The being in pay as a soldier fixes the military character upon him and very wisely: per Lord Loughborough in Grant v. Sir Chas. Gould, 2 Bl.H. 69, at page 103, 126 E.R. 434.

The upkeep of the personnel of the army required extraordinary provisions, some of which are found in 1869 (Imp.),

e. 4, and in the Army Act, 1881, whereby limit was placed upon the legal processes under which a soldier might be liable to be taken out of the Crown’s service: Army Act, sec. 144.

It appears to me that see. 136 of the Army Act, which is in force here as applicable to Canada, reading as follows: "‘136. The pay of an officer or soldier of His Majesty’s regular forces shall be paid without any deduction other than the deductions authorised by this or any other Act or by any royal warrant for the time being or by any law passed by the Governor- General of India in Council,” is a declaration of state policy (of which sec. 141 mentioned later is an example) that the soldier shall get his pay for his own use.

In Flarty v. Odlum, 3 T.R. 681, at p. 682, 100 E.R. 801, Lord Kenyon said: “Emoluments of this sort are granted for the dignity of the State, and for the decent support of those persons who are engaged in the service of it. It would therefore be highly impolitic to permit them to be assigned; for persons, who are liable to be called out in the service of their country, ought not to be taken from a state of poverty. Besides an officer has no certain interest in his half-pay; for the King may at any time strike him off the list.”’

And Ashurst, J. (p. 683) : “All voluntary donations of the Crown are for the honor and service of the State. ’ ’

It seems to me that if half-pay or pension should be so classified a fortiori full pay of an officer on duty should.

See also Lidderdale v. Duke of Montrose, 4 T.R. 248, 100 E.R. 1000, where the principle of public policy was again applied.

Reference may be made to the reporter’s note to Stuart v. Tucker, 2 Bl. W. 1137, 96 E.R. 671, referring to Arbuckle v. Cowtan, 3 B. & P. 321, 127 E.R. 177, where, at p. 328, Lord Alvanley, C.J., said: “It is now clearly established, that the half-pay of an officer is not assignable ; and unquestionably, any salary, paid for the performance of a public duty, ought not to be perverted to other uses than those for which it is intended/ 9

This rule was, with respect to the army, put into statutory form at least as early as the Army Act, 1881, see. 141. That Act, as already noted, is declared to apply to the Canadian militia. See the Militia Act, see. 69.

Sec. 141 is as follows: ‘ ‘ Every assignment of, and every charge on, and every agreement to assign or charge any deferred pay, or military reward payable to any officer or soldier of any of His Majesty’s forces, or any pension, allowance, or relief payable to any such officer or soldier, or his widow, child, or other relative, or to any person in respect of any military service, shall, except as far as the same is made in pursuance of a Royal Warrant for the benefit of the family of the person entitled thereto, or as may be author ized by any Act for the time being in force, be void.”

Sec. 141 was applied in Ontario with respect to the assignment of an officer of a gratuity in Union Bank of Canada v. Newcomen (1924) 55 O.L.R. 17.

I would take it to be clear that the application of sec. 141 to Canada amounted likewise to a declaration of parliamentary policy here. as to the destination and purpose of army pay.

I think it must be that the matter of pay is fixed by Parliament with relation to the various considerations present as to upkeep of the forces and that no outside authority can by taking a percentage reduce the measure so made of what should be the soldier’s or officer’s pay.

I think it is too narrow a view to suggest that while the Province cannot require the Dominion to make the deduction of the tax from a soldier’s pay yet when the soldier once receives the pay he shall be liable to pay the tax himself.

I think that although the matter of payment for services is ordinarily a provincial subject, yet the pay of an army is a matter of importance to its upkeep and morale and that as the subject of militia and defence is especially and exclusively a Federal one, the matter of pay is wholly within Federal power as a matter pertaining to efficiency and that therefore the Federal authority can prohibit assignments as it has done. In the Newcomen case a Court that could not miss the point held that sec. 141 prevailed.

In view of the considerations I have mentioned, it seems to me that officer’s ""pay” is here one of the incidents of status and that taxing an officer because of pay is infringing upon status. It seems to me that the alleged right to tax in respect of value of quarters and allowances merely emphasizes the objections there are to the tax itself.

I think there is no analogy in law between the relation of military officer or soldier to the Crown and that of a servant to his master. There is only the appearance of one. I think employees in governmental business services are in entirely different positions.

I would think that where there is already a wide field of clear application for the general meanings given by the statute to " 1 employee ‘ ‘ and " " wages ‘ ‘ those terms should not be strained to cover a doubtful category. In a taxing statute this cannot be done. See The King v. Crabbs [1934] 4 D.L.R. 32,4 and the authorities cited there by Hughes, J.

I think that the Legislature used clause (ii) of subsec. (d) of sec, 2(1) of the Special Income Tax Act to specify the persons of special status who were intended to be taxed and that it exhausted its list with the enumeration it made. I do not think the words "‘military icers’’ can be read into: clause (ii) so as to introduce another class merely on the strength of the words ‘‘ and of all. persons whatsoever

In the result, I would hold that the Province could not by any means take away from the pay or allowance of military officers and further that the Act should not be read as intending to do so.

I would allow the appeal.

RICHARDS, J.A. agrees with TRUEMAN, J.A.

Appeal dismissed.