HENDERSON J. A.:—This is an appeal upon a case stated by His Honour, Judge Macdonell, County Judge of the County of York, dated May 21, 1942, in the following terms:
"‘The respondent is a company occupying premises on Eastern Ave. in the City of Toronto for the purpose of manufacturing soap and distributing its products. In 1941, it occupied premises at 116 Yonge St. in the said city, which it called a ‘Free Gift Store’, and where it displayed and distributed such articles as tableware, clocks, clothes brushes, and manicure sets. There were some 125 different gifts which could be obtained by persons by presenting coupons from wrappers of soap manufactured by the respondent, or by presenting part coupons and part cash. No article could be obtained for cash only.
"‘The respondent sells its product through wholesale merchants and large retail merchants. It does not sell direct to the public nor to the persons who present the coupons. Advertisements are published by the respondent advocating the collection of coupons from soap wrappers, stating the list of articles that can be obtained in exchange for coupons or for coupons and cash, and advising that such articles may be obtained at the "Free Gift Store’, 116 Yonge St., Toronto. The said articles are purchased by the respondent at the wholesale rates, and are "marked up’ 30% for the purpose of fixing the number of coupons or the number of coupons and amount of cash at which the article is offered. Each coupon has a value known to the respondent and this value is included in determining the cost of the product. The occupation of the premises is part of an advertising plan to promote the sale of soap.
"‘A catalogue listing the above-mentioned gifts is issued for the benefit of persons outside the City of Toronto. They may send in their coupons or their coupons and cash to the manufacturing premises of the respondent and ‘gifts’ will be forwarded to them in exchange. The store on Yonge St. is occupied at a convenient location for persons in Toronto to see and select from the said articles.
" The assessed value of the premises occupied by the respondent in 1941 was $26,800, and the Court of Revision determined that the respondent should be assessed for 60% of the assessed value, or $16,080, under el. (e) of s. 8(1) of the Assessment Act, R.S.O. 1937, c. 272. The respondent appealed, and asked to be assessed for 25% of the assessed value, or for $6,700, under cl.
(i) of the said section—‘the business of a retail merchant’; or under el. (k)—‘any business not before in this section or in clause (l) specially mentioned.’
"DECISION
«The appeal was heard by me on January 15, 1942. I allowed the appeal and reduced the assessment to $6,700.
"‘REASONS FOR MY DECISION
«The city contends that the store is part and parcel of the business of manufacturing and that the premises should be assessed under s. 8 of the Assessment Act as those of a manufacturer, and that 60% of the assessed value should be charged. It is contended by the Company on the other hand that, irrespective of what is the object of opening the store, what is being carried on there is either a retail business, in which case the provisions of s-s. (4) of s. 8 govern, or that in any event it is not a manufacturer and that the provisions of s-s. (1)(k) govern, and that what is being carried on is a business not otherwise mentioned in the section.
"‘It is argued by counsel for the Company that the general scheme of this section of the Act is to divide occupations into what is actually done on the premises, as well exemplified in s-s. (1) (d) of s. 8. I do not think there is any doubt that is the general scheme of the section. On the other hand, my attention is called by counsel for the city to the decision in Ke Assessment Act, Toronto v. Belding-Corticelli Ltd., [1939] 3 D.L.R. 73, O.R. 409, and the Studebaker case in (1919), 49 D.L.R. 326, 46 O.L.R. 78, which it is contended established the principle that branch stores operated as branches in which the product of the manufacturer is sold constitute part of the business of manufacturing.
"‘Reading the section of the Act as a whole, it is clear that what the city should be concerned with is the actual business which is carried on in the premises in question, and not the business of the Company as a whole.
"‘Having reached this conclusion as to the meaning of the Act, what I have to decide is a straight question of fact, whether what is being carried on on the premises, so far as the city is concerned, is manufacturing, or whether it is a retail store or something else.
"‘It is always difficult to draw the line in cases of this kind but I think it should be drawn here. I must find as a fact that what is being carried on is a retail business. In any event, it is far more in the nature of a retail business than it is manufacturing. It is quite true the object of the Company, in carrying on whatever business it carries on at the store, is advertising which may be said to be part of selling its product. If the general business of the Company as a whole should govern in every case it is clear that quite ridiculous results might arise. For example, I do not think that the city would agree that a factory operated by a department store such as the T. Eaton Co. should be assessed as a retail store.
"For these reasons I think the appeal should be allowed and the assessment should be entered at 25% of the value of the property in place of 60% as at present.
"‘QUESTION
"1. Upon the facts above stated, and upon a true construction of the Assessment Act, particularly s. 8 thereof, as applied to such facts, was I right in deciding that the assessment should be decided by determining the actual business carried on in the premises in question, rather than by determining the business of the Company as a whole, and therefore that the respondent should be assessed for business assessment for 25% of the assessed value of the premises occupied by it at 116 Yonge St., in the City of Toronto?
"2. If Q. 1 is answered in the negative, is the respondent assessable for business assessment in respect of the said premises as a manufacturer for 60% of the assessed value of the premises occupied by it, pursuant to cl. (e) of s. 8(1) of the said Act?’’
As will be seen, the matter involves the consideration of s. 8 of the Assessment Act, R.S.O. 1937, c. 272. I refer to the foregoing words in the stated case:
"‘Reading the section of the Act as a whole, it is clear what the city should be concerned with is the actual business which is carried on in the premises in question, and not the business of the Company as a whole.
‘‘Having reached this conclusion as to the meaning of the Act, what I have to decide is a straight question of fact, whether what is being carried on on the premises, so far as the city is concerned, is manufacturing, or whether it is a retail store or something else.’’
What is necessary under s. 8 of the Assessment Act is to determine the real character of the business for the purpose of which the land is occupied or used, It may be necessary in some cases to look beyond the activities upon the premises to ascertain the real character of the business. For example in Re Studebaker Corp. c Windsor, 49 D.L.R. 326, where the premises were used to display and sell motor cars, the Court, looking beyond that, determined that this was merely one part of the business of a manufacturer, although no manufacturing was done there. In Re Assessment Act, Toronto v. Belding- Corticelli Ltd., [1939] 3 D.L.R. 73, where the premises were principally used for supplying the wholesale trade with goods of the occupant ‘s manufacture, the Court held that the occupant should be assessed for business assessment as a manufacturer.
In the present case the County Judge has found "‘the occupation of the premises is part of an advertising plan to promote the sale of soap.’’ Respondent is a manufacturer of soap. The respondent itself publicly announces these premises as a "‘Free Gift Store’’, and the stated case sets forth the manner in which it is used to promote the sale of soap of respondent’s manufacture.
To classify the business for which the premises are occupied as that of a retail business is simply to close one’s eyes to its real character. The business carried on is part of the respondent’s manufacturing business as the learned County Judge himself has said.
I am therefore of opinion that the appeal should be allowed with costs, and that the assessment appealed from should be restored.
Appeal allowed.