Bond C.J.S.C.:—For the sake of precision I set forth at length the joint factum or case as submitted:
‘The facts which give rise to the question of law, the question of law involved and the conclusions of the parties are as follows, that is to say:
"‘1. On October 28, 1940, a contract (hereinafter called the ‘Construction Contract’) was made between the intervenant, the plaintiff and American Locomotive Co., wherein it was agreed, amongst other things, that the plaintiff :
“ (a) would sell, transfer, make over and assign unto the intervenant the premises therein described forming part of the premises of the plaintiff located at Longue Pointe in the City of Montreal; and
"(b) would construct thereon, for and on behalf of the intervenant and as his Agent and at his expense and subject to the supervision, direction and control of the intervenant through the Honourable the Minister of Munitions and Supply, a new plant (hereinafter sometimes called the ‘new plant’) to remain the property of the intervenant and to be capable of producing gun carriages and tanks;
the whole as more completely and exactly appears from the terms of the said Construction Contract, and deleted copy of which, with the consent of the parties hereto, is filed herewith as ex. P-1.
"2. On October 23, 1940, a contract (hereinafter called the ‘Production Contract’) was made between the intervenant, the plaintiff and American Locomotive Co., wherein it was agreed amongst other things, that the plaintiff, acting on behalf of the intervenant and as his agent and with the co-operation and assistance of American Locomotive Co., shall administer, manage and operate the new plant and shall produce therein for the account of the intervenant, gun carriages and tanks, at a reasonable fee per gun carriage and per tank, respectively, the whole aS more completely and exactly appears from the terms of the said Production Contract, a deleted copy of which, with the consent of the parties hereto, is filed herewith as ex. P-2.
"3. The said new plant is, and has always been the property of the intervenant and the defendant was so informed by the Deputy Minister of Munitions and Supply by his letter referred to in para. 18 hereof and filed herewith as ex. P-14.
"‘4. The said new plant is ‘administered, managed and operated by the plaintiff, with the co-operation and assistance of American Locomotive Co., in accordance with the provisions of said Production Contract ex. P-2.
"5. On demand by the plaintiff, November 7, 1941, the land upon which the new plant was located and which formed part of original lot No. 21 of the official plan and book of reference of the cadastre of the Parish of Longue Pointe in the County of Hochelaga was properly subdivided in accordance with the provisions of the Civil Code of the Province of Quebec to form Lot No. 2210 of Original Lot No. 21 of the official plan and book of reference of the cadastre of the Parish of Longue Pointe in the County of Hochelaga, as appears by the said plan filed as ex, P-3.
"6. On February 27, 1942, the plaintiff by deed of sale in authentic form, confirmed the sale to the intervenant of the said land known as Lot No. 21-2210 of the official plan and book of reference of the Parish of Longue Pointe in the County of Hochelaga, the whole as more completely and exactly appears from the terms of the said deed of sale made between the plaintiff and the intervenant on February 27, 1942, before Mtre. Joseph
C. B. Walsh under No. 13263 of his minutes, a duly certified copy of which, in notarial form, is filed herewith as ex. P-4.
"17. On February 28, 1942, the said deed of sale, a duly certified copy whereof in notarial form is filed herewith as ex. P-4, was duly registered under No. 518606 of the Registration Division of Montreal.
" " 8. On the valuation roll for the year beginning on the 1st of May 1941, the plaintiff was entered as proprietor of civic No. 5781 Notre Dame St. East and 5790-5910 Notre Dame East for cadastral No. P-21 and P-27 and the valuation roll was as follows: land $368,400, building $775,600, rails $6,000, motive power $50,000 and as a neutral for school tax, at values as follows: land and building $1,144,000, rails $6,000, motive power $50,000, as appears by a copy of the valuation roll filed as ex. P-5, and by the plan filed as ex. P-16.
"9. On the real estate assessment roll for the municipal fiscal year beginning on May 1, 1941, the plaintiff was billed to the amount of $35,858.59 according to the valuations mentioned in the preceding paragraph as increased in accordance with the provisions of s. 34 of c. 73 of the Statutes of Quebec, 1941, the whole as appears by the bill filed as ex. P-7, and the details filed as ex. P-6.
"‘10. On September 30, 1941, the bill mentioned in the preceding paragraph was paid by the plaintiff.
(‘11. On or about February 19, 1941, a permit was issued by the defendant upon the application of Sutherland Construction Co. for work to be done in connection with the new plant, as appears by a copy of such permit filed herewith as ex. P-9.
^12. On or about May 5, 1941, a permit was issued by the defendant upon the application of L. G. 0 ‘Gilvie & Co. Ltd. for work to be done in connection with the new plant, as appears by a copy of such permit filed herewith as ex. P-10.
"‘13. On November 10, 1941, the assessors gave notice to the chief assessor that they had assessed the new building and the motive power in the name of the plaintiff on Notre Dame St., No. 5781 on Cadastral No. P-21, at $1,264,200 for the new building and $138,600 for the motive power, as appears by a copy of the said notice, ex. P-11.
(14. The Chief Assessor referred the said valuation to the Board of Revision of Valuations according to art. 375a of the charter of the defendant.
(‘15. On November 20, 1941, the secretary of the Board of Revision of Valuations advised the plaintiff of the said valuation, and to appear within a delay of fifteen days, before the said Board, as appears by a copy of the said notice, ex. P-12.
"16. On November 28, 1941, Mr. John E. L. Duquet of counsel for the plaintiff, attended before the chairman and one of the members of the Board of Revision of Valuations and protested against the valuation of the new building and the motive power in the name of the plaintiff, either as owner, occupant or otherwise, informing the said chairman and member of the said Board of the situation with respect to the new building and motive power under the provisions of the Construction Contract P-1, and the Production Contract, P-2, whereupon the chairman and the said member of the said Board informed Mr. Duquet that the jurisdiction of the Board of Revision of Valuations extended only to the fixing of the amount of the valuations, that, if the amount of the valuation of the new building and motive power were not contested, they would be fixed at the amount set forth in the notice by the assessors to the chief assessor, ex. P-11, and that any contestation of the right of the defendant to tax the plaintiff with respect to the new building and motive power would have to be discussed with the chief assessor.
<4 17. On November 26. 1941. a letter was sent to the Board of Revision of Valuations on behalf of the plaintiff by M. Kearney, Duquet & MacKay, Attorneys, informing the Board that the new plant and motive power were the property of the intervenant and were operated by the plaintiff for and on behalf of the intervenant as manager under the said Production Contract P-2, the whole as more completely and exactly appears by the terms of the said letter, a copy of which is filed herewith as ex. P-13.
^18. On December 1, 1941, the Deputy Minister of Munitions and Supply acting for and on behalf of the intervenant advised the secretary of the Board of Revision of Valuations of the terms under which the new plant was constructed and operated, drawing to the attention of the Secretary that the new plant was the property of the intervenant, that the plaintiff had no rights therein either as owner, lessee, occupant or otherwise and that the plaintiff was operating the new plant for the account of the intervenant, the whole as more completely and exactly appears by the terms of the said letter addressed by the Deputy Minister of Munitions and Supply to Albert Perusse, secretary of the Board of Revision of Valuations, dated December 1, 1941, a copy of which is filed herewith as ex. P-14.
"19. On December 3, 1941, the secretary of the Board of Revision of Valuations acknowledged receipt of the letter of
M. Kearney, Duquet & MacKay dated November 26, 1941, as appears by a copy of the letter of acknowledgement filed as ex. P-15.
"‘20. On December 4, 1941, the secretary of the Board of Revision of Valuations acknowledged receipt of the letter of the Deputy Minister of Munitions and Supply dated December 1, 1941, as appears by a copy of the letter of acknowledgement filed as ex. P-16.
" " 21. On December 4, 1941, the secretary of the Board of Revision of Valuations referred to the chief assessor the letters received from M. Kearney, Duquet & MacKay and from Mr. Pettigrew, Deputy Minister of Munitions and Supply, filed herewith as exs. P-13 and P-14 respectively, as appears by the letter addressed by Albert Perusse, secretary of the Board of Revision of Valuations to A. E. Hulse, chief assessor, dated December 4, 1941, a copy of which is filed herewith as ex. P-17.
"‘22. On December 4, 1941, the chief assessor replied to the letter of M. Kearney, Duquet & MacKay filed herewith as ex. P-13, as appears by the said reply, a copy of which is filed as ex. P-18, the defendant, however, admitting that the said reply filed as ex. P-18, does not make proof of the facts therein alleged with respect to the explanations given to the chief assessor by Mr. Duquet in view of the contention of the plaintiff that the explanations given to the chief assessor by Mr. Duquet were misunderstood or misinterpreted by the chief assessor, and that such explanations confirmed the facts set forth in this joint factum or case.
"‘23. On December 8, 1941, the Deputy Minister acknowledged receipt of the letter of the secretary of the Board of Revision of Valuations dated December 4, 1941, as appears by the letter of acknowledgement, a copy of which is filed as ex, P-19.
(24. On December 9, 1941, M. Kearney, Duquet & Mackay sent a letter to the Board of Revision. declaring that the plaintiff does not contest the valuation, but contests the right to assess the said company, as more completely and exactly appears by the terms of the said letter, a copy of which is filed herewith as ex. P-20.
4< 25. On December 9, 1941 M. Kearney, Duquet & MacKay sent a letter to the chief assessor contesting the right to assess the plaintiff as more completely and exactly appears by the terms of the said letter, a copy of which is filed herewith as ex. P-21.
"‘26. On December 11, 1941, the chief assessor sent a letter to M. Kearney, Duquet & MacKay giving his reasons for assessing the plaintiff as appears by his letter filed as ex. P-22.
(27. On December 12, 1941, the Board of Revision of Valuations issued a certificate for the fiscal year 1941-1942 fixing the valuation of the new building at $1,264,200 and motive power $13,600, and indicating that the new building and motive power were ready to be occupied on November 1, 1941, as appears by the certificate filed as ex. P-23.
"‘28. On December 12, 1941, the secretary of the Board of Revision of Valuations advised Mr. Pettigrew, Deputy Minister of Munitions and Supply, of the decision of the said Board, as more completely and exactly appears by a copy of a letter filed as ex. P-24.
"‘29. On December 12, 1941, the secretary of the Board of Revision of Valuations advised M. Kearney, Duquet & MacKay of the decision of the said Board, as more completely and exactly appears by copy of letter filed as ex. P-25.
"30. On December 18, 1941, the chief assessor advised in writing the Director of Finance that the new building and motive power of the plaintiff on lot cadastral P-21 have been assessed as follows: Building $1,264,200, motive power $13,600, as appears by the certificate of the Board of Revision of Valuations No. 364, ex. P-26, and the original roll was amended as appears by copy of the said roll filed as ex. P-27.
"‘31. The new building and motive power were added by the Director of Finance on his real estate assessment roll in the name of the plaintiff according to the certificate of the chief assessor for 181 days, from November 1, 1941, to April 30, 1942, at $18,934.78, as appears by the bill produced as ex. P-28, and the details filed as ex. P-8.
" " 32. On April 10, 1942, the chief assessor, issued a certificate No. 692 to the Director of Finance for the business tax at No. 0781 Notre Dame St. East with respect to the new building and motive power from November 1, 1941, to April 30, 1942, as appears by the certificate of the chief assessor filed as ex. P-29.
^33. The Director of Finance entered on his tax roll for business tax with respect to the new building and motive power, the name of the plaintiff from November 1, 1941 to April 30, 1942, according to the certificate of the chief assessor for the amount of $3,425.22 as appears by the bill filed as ex. P-30.
" '34. On the valuation roll for the fiscal year beginning May 1, 1942, the plaintiff was entered as occupant of the building, motive power and land, being lot cadastral No. 21, subdivision No. 2210, owned by the intervenant and the said property was valued as follows: land $99,100, building $1,264,200, motive power $13,600, and for school purpose as neutral at $1,376,900, as appears by the copy of the roll filed as ex. P-31, and by the plan filed as ex. P-32.
"35. On the real estate assessment roll the plaintiff was billed at the sum of $41,141.77 as occupant of the new building, motive power and land, being lot cadastral No. 21, subdivision No. 2210, as appears by copy of the said roll filed as ex. P-33.
"36. On the business tax roll the plaintiff was billed at the sum of $6,850.44 with respect to the new building, motive power and land, being lot cadastral No. 21, subdivision No. 2210, for the year 1942-1943, as appears by copy of the said bill filed as ex. P-34.
"37. The defendant is claiming from the plaintiff the following taxes:
"(a) Property taxes on the new building and "‘(d) Business tax on the same property as herein
motive power from 1st of November 1941 to April 80th 1942 $18,934.78 "(b) Business tax on the same property as herein before mentioned in subparagraph (a) here of, for the same period 3,425.22 "(c) Property tax on the land, building and motive power on lot 21, subdivision 2210, as occupant of the property of the intervenant for the municipal fiscal year commencing May 1st 1942 41,141.77
before mentioned in subparagraph (c) here of for the same year 6,850.44
with interest at the rate of 5% from the date when those taxes were due.
"‘37A. The foregoing paragraphs are not intended to be interpretative of exs. P-1 to P-34 both inclusive which speak for themselves and must be interpreted according to their own terms.
"‘38. The defendant contends:
"‘(a) That for the period from November 1, 1941 to April 30, 1942, the new building and the said motive power were built on the property of the plaintiff, Lot P-21, that the same were occupied by the plaintiff for commercial and industrial purposes, and are therefore subject to municipal taxation in the hands of the plaintiff by the defendant in accordance with the provisions of the charter of the defendant, and that the plaintiff doing business at the said new plant is also subject to the business tax for the same period in accordance with By-law 1642.
"‘(b) That for the municipal fiscal year beginning May 1, 1942, the said new building, the said motive power and the said land known as Lot No. 21-2210, are the property of the intervenant, but that the same are occupied by the plaintiff for commercial and industrial purposes and are therefore subject to municipal taxation in the hands of the plaintiff by the defendant, in accordance with the provisions of the charter of the defendant and more particularly s. 362a thereof and the taxing by-laws of the defendant passed in accordance therewith, being By-law No. 1704 of the defendant, and that the plaintiff doing business at the new plant is also subject to the business tax for the same period in accordance with By-law No. 1642; and subsidiarily :
" (i) That the plaintiff should pay to the defendant the muni- cipal taxes on immoveable property claimed by the defendant as hereinbefore set out with respect to the said new building and the said motive power for the period from November 1, 1941, up to April 30, 1942; and the business taxes on the said place of business for the same period ;
"‘(ii) That the plaintiff should pay to the defendant the municipal taxes on immoveable property claimed by the defendant as hereinbefore set out with respect to the said new building, the said motive power and the said land known as Lot No. 21-2210 for the period from May 1, 1942 to April 30, 1943, and the business taxes on the said place of business for the same period and thereafter so long as the plaintiff is found to occupy the said new building, motive power and land for commercial or industrial purposes.
(39. The plaintiff and the intervenant deny the contentions of the defendant and contend:
«(a) That for the period from November 1, 1941, to April 30, 1942, the new building and the said motive power were the property of the intervenant and were not occupied by the plaintiff for commercial or industrial purposes or otherwise and are therefore not subject to municipal taxation in the hands of the plaintiff, either as owner, occupant or otherwise and that the plaintiff was not doing business at the said new plant and is not subject to the business tax for the same period.
«(b) That for the municipal fiscal year beginning May 1, 1942, the said new building, the said motive power and the said land known as Lot No. 21-2210 are the property of the intervenant and that the same are not occupied by the plaintiff for commercial or industrial purposes or otherwise and are therefore not subject to municipal taxation in the hands of the plaintiff by the defendant, either as owner, occupant or otherwise, and that the plaintiff does not do business at the new plant and is not subject to the business tax for the same period;
and subsidiarily :
« (1) That the plaintiff is not bound to pay to the defendant the municipal taxes on immoveable property claimed by the defendant as hereinbefore set out in para. 38 hereof with respect to the said new plant and the said motive power for the period from November 1, 1941, up to April 30, 1942, nor the business tax on the said place of business for the same period;
" (ii) That the plaintiff is not bound to pay to the defendant the municipal taxes on immoveable property claimed by the defendant as hereinbefore set out in para. 38 hereof with respect to the said new plant, the said motive power and the said land known as Lot No. 21-2210 for the period from May 1, 1942 to April 30, 1943, nor the business taxes on the said place of business for the same period nor for any period thereafter.
<f 40. The question of law to be decided by this Honourable Court upon the facts as hereinbefore set out is whether the contention of the plaintiff as hereinbefore stated in para. 39 hereof or the contention of the defendant as hereinbefore stated in para. 38 hereof is well founded in law in whole or in part.
<4 41. The intervenant is interested herein and has become a party to these proceedings to hear judgment rendered and any recommendations which may be made by this Honourable Court.
" 42. The documents submitted herewith as exs. P-1 and P-2 are confidential by order of the intervenant.
"WHEREFORE the parties hereto conclude and ask that judgment be rendered upon the foregoing submission, and, in the event of a finding in whole or in part in favour of the plaintiff, that order be given to the defendant to amend its valuation and assessment roll and its tax roll in such manner as may be appropriate, and in the event of a finding in favour of the defendant that judgment be rendered condemning the plaintiff to pay to the defendant such of the taxes hereinbefore mentioned as this Honourable Court may determine to be due by the plaintiff to the defendant with interest on each item at 5% from the time when such taxes respectively became due, and that order be given to the appropriate official of this Honourable Court to return ex. P-1 and ex. P-2 to the plaintiff without giving access thereto to any party other than the parties to this submission, the whole upon such terms and conditions as to costs as this Honourable Court may see fit to determine.”
From the above submission it will be seen that (more briefly resumed) in October, 1940, the plaintiff company, a duly organized and continuing company, agreed to sell to the intervenant a certain block of land in the City of Montreal for an agreed nominal consideration, and the plaintiff further undertook, with the co-operation and assistance of the intervenant to design, construct and equip thereon a new plant suitable for the production of certain war material. The plaintiff was authorized to incur and pay on behalf of the intervenant, and as its agent, all costs necessary or incidental to the performance of the agreement subject to such control of the Minister of Munitions and Supply of Canada ‘‘as he may desire to exercise with respect thereto ‘
The intervenant agreed to pay to the plaintiff all proper and reasonable costs and expenses incurred by the company plaintiff including "‘such administrative and general overhead expenses, as in the opinion of the Minister, might be properly apportionable to the performance of this agreement’’—which would seem to indicate that this was not the exclusive occupation of the plaintiff company.
The intervenant acknowledged and agreed that the plaintiff company was acting on behalf of the Government and as its agent, and it was stipulated that the title to the new plant and equipment, as well as material on hand, should be vested in the Government which has assumed all risks and liabilities incidental to such ownership.
Provision was also made in the agreement for the terms upon which the plaintiff company might re-acquire the land in question, for the same consideration, and also the new plant and equipment in preference to anyone else.
The Government undertook to pay to the plaintiff (in addition to the costs provided for) a fee per each item produced, or in other words, the remuneration provided for by the Government to the company plaintiff, was on a basis of costs, and in addition thereto an agreed fee per item on production and satisfactory inspection.
On November 7, 1941, the land so to be conveyed under the agreement for sale was surveyed and entered upon the cadastral plan under a new and distinct number or subdivision number.
It was not until February 27, 1942, that a formal deed of sale to the intervenant was executed and registered on the following day.
The real estate taxes for the year beginning on May 1, 1940, and ending on April 30, 1941, have been paid, and no dispute arises under that head. On the Real Estate Assessment Roll of the City of Montreal of May 1, 1941, for the ensuing civic year, the plaintiff is entered as proprietor of civic No. 5781 Notre Dame St. East and 5790-5910 Notre Dame St. East for Cadastral No. P-21 and P-27. The cadastral number given to the land upon which the new plant was located and which formed part of the original Lot No. 21 formed Lot Subdivision No. 2210 of original Lot No. 21 (ex. P-3). The plaintiff was billed in accordance with the valuations set out in the joint case, and the amount thereof was paid by the plaintiff on September 30, 1941 (joint case, paras. 8 and 10).
On February 19, 1941, and May 5, 1941, permits were issued by the defendant for the work in connection with the new plant which appears to have proceeded apace, and on November 10, 1941, the assessors reported that they had assessed the new building and the motive power in the name of the plaintiff (joint case, para. 13). It will be remembered that the land in question at that time was still registered in the name of the plaintiff company.
On the valuation roll for the civic year beginning May 1, 1942, the plaintiff was entered as ‘‘occupant’’ of the new building, motive power and land (Subdivision No. 2210 of Lot Cadastral No. 21, case para. 34), and charged accordingly, that is, as occupant thereof (joint case, para. 35), and in addition thereto the plaintiff company was also charged the business tax with respect to the foregoing properties.
It should be observed that the valuation placed upon these properties is not contested but what is contested is the right to assess in respect thereto, and that is now the subject of the present controversy.
Two distinct periods have to be considered, namely:
(1) That from November 1941 to April 30, 1942, when the assessment was imposed in November 1941, upon the new building and the motive power, the land on which the buildings were erected and the motive power house was still registered in the name of the plaintiff, and indeed, the sale was not formally completed until the end of February, 1942, although it is agreed that the defendant had been advised of the foregoing transactions in November and December 1941.
It is true that the registered owner is the reputed owner, but the maxim aedificium solo cedit is not always applicable, for there may be ownership of buildings as distinguished from ownership of the land on which the buildings are constructed (2 Mignault, pp. 493 and 494; Lacombe v. Brunet (1905), 14 Que. K.B. 465).
Whatever right the defendant may have had, or may still have, to assess the plaintiff as occupant” (which I shall consider under the second period), I do not consider that in view of the full disclosure made it was open to the defendant to assess the plaintiff as ‘‘owner’’ of these buildings and motive power for the period presently under review, thus creating a real charge upon the property.
(2) The second period is that beginning on May 1, 1942, when the plaintiff was assesed in respect to its occupation of these buildings along with the motive power under art. 362a of the Charter. The word ‘‘occupant’’ as used in the Charter of the City of Montreal is defined in s. 1 (h) as follows: ""The word "occupant’ shall mean any person who occupies an immovable in his own name, otherwise than as proprietor, usufrac- tuary or institute, and who enjoys the revenues derived from such immovable”.
It is true that by the contracts the plaintiff is designated as the ‘‘agent’’ of the intervenant, but it is almost trite to say that it is not the name given to a contract by the parties thereto which necessarily defines its true character. That has to be ascertained otherwise. (Montreal L., H. & P. Co. v. Quinlan, [1929], 3 D.L.R. 568, S.C.R. 385).
In the present instance, the situation, created by contract between the defendant and intervenant, in no way resembles that which arose in the case of Halifax v. Halifax Harbour Com’rs, [1935], 1 D.L.R. 657, S.C.R. 215, nor in the ease of Recorder^ Court v. Can. Broadcasting Corp., [1941] 2 D.L.R. 551, 70 Que. K.B. 65. In both of those eases, the corporations were expressly incorporated for the purpose of exercising certain powers as an instrumentality of government. They were said to be ‘‘emanations of the Crown’’, and by virtue of the very statutes creating them they were constituted agents of the Crown and invested with peculiar powers and attributes.
The Commissioners are a public body appointed by the Crown and hold office during pleasure; their occupation is for the purpose of managing and administering a public harbour the property of the Crown; their powers are derived from a statute of the Parliament of Canada, the surplus of revenue after providing for costs of services and the interest on the debenture debt goes into a sinking fund under the direction of the Minister. The services contemplated are not only public services in the broad sense but also in the strictest sense, Government services. The occupation of the Government property with which they are concerned is, an occupation by persons "using” that property exclusively in and for the service of the Crown (see the observations to that effect by Sir Lyman P. Duff C.J.C. in Halifax v. Halifax Harbour Com’rs, [1985], 1 D.L.R. 657 at pp. 664-5, S.C.R. 215 at pp. 226-7).
In the case of the Radio Broadcasting Corporation, the Governors are likewise appointed by the Governor in Council and are removable by him for cause; their salaries are fixed by the statute, and the powers they exercise are subject to the control of the Minister. All monies derived belong to the Government.
In the case now under consideration, all that has occurred is that an ordinary commercial corporation has received assistance from the Government in order to facilitate and expedite the execution of certain wartime contracts. Similar examples of such governmental assistance can be found in subsidies, grants, exemptions, special depreciation and other instances of like nature. Here, the Government provided the funds for the new buildings and motive power, taking the precaution of first acquiring the land but making provision for the re-conveyance of the whole to the plaintiff on the execution of the contracts on terms set out.
It is true that the plaintiff is designated as ‘‘agent’’, but, as I have pointed out, that is not conclusive. The plaintiff company, then engaged in manufacturing, undertook to manufacture certain objects for the intervenant according to specifications, and certain control was vested in the Minister enabling him to supervise the work, control the expenses, and to reject where necessary. But the Construction Contract, by art. 6, expressly provides as regards ‘‘control’’ as follows :—
"Control AND SUPERVISION. The Company shall, subject to such supervision, direction and control as the Minister may from time to time in writing advise the Company that he desires to exercise, have full control over the design, construction and equipment of the new plant, the selection of contractors and subcontractors and the type of contract to be made with them, the selection and purchase of construction materials, machinery, tools and other equipment and over all other matters incidental to the full completion of the new plant. ‘ ‘
If it is necessary to find a name for such a contract, I should say it was one of lease and hire of work rather than a contract of agency (C.C. 1667, 1683, 1684). As pointed out in Mignault, vol. 7, pages 238 and following, the distinction is sometimes very difficult to make between these two forms of contract, but in any event the plaintiff is an ordinary commercial corporation carrying on business in its own interests and that of its shareholders for a fixed remuneration, and in the execution of such contract it occupied these new buildings and uses the motive power provided for it by the intervenant. Looking at the contract as a whole, I am satisfied the plaintiff is not an "‘agent’’ or "‘serv- ant’’ of the Crown, (Montreal L., H. & P. Co. v. Quinlan, [1929], 3 D.L.R. 568, S.C.R. 385; Planiol & Reipert, vol. 11, No. 774).
In this connection, Manning "‘Assessment & Rating”, 2nd ed., p. 189, has this to say: ‘‘The test has been put upon this basis, ‘that a servant may occupy a tenement of his master’s, not by way of payment for his services, but for the purpose of performing them; it may be that he is not permitted to occupy, as a reward, in the performance of his Master’s contract to pay him, but required to occupy in the performance of his contract to serve his master’. In the former case he is, and in the latter he is not, ratable. The real test is who occupies the lands? Is it the master or the servant? And as to that the nature of the premises occupied and whether the apartments are really separated from the exempt lands of the master is material.”
See also Hyde on Rating, 7th ed., No. 122, p. 127, where it is pointed out that the tax is not exigible where the property is in the occupation of the Crown by itself or by its servants whose occupation amounts to the occupation of the Crown. The plaintiff company elects its own directors, appoints its own personnel, receives and applies to its own uses any profits or surplus realized as would an independent contractor (see Construction Contract para. 23). The control reserved to the Minister relates only to the satisfactory execution of the contract according to its terms.
In the case of A.-G. Can., A.-G. B.C. and C.N.P.R. Co. v. Vancouver, [1943] C.T.C. 74, it was held that a person may be subject to a tax in personam because he is an occupier of land not itself taxable. The Legislature may authorize the imposition of such a personal tax even if based upon the value of buildings or leaseholds owned by the Crown (per McDonald C.J.B.C., at p. 517); and see also Smith v. Vermilion Hills, 30 D.L.R. 83, [1916] 2 A.C. 569; and also Montreal v. A.—G. Can. and A.-G. Que. (1922), 70 D.L.R. 248, [1923] A.C. 136; Fraser v. Montreal (1914), 23 Que. K.B. 242.
This is what has occurred in the present instance, for by s. 362a of the Charter of the City of Montreal, the Legislature has expressly authorized the imposition of just such a tax. It is not a tax upon Crown property which would be admittedly contrary to the B.N.A, Act as also the provisions of the Interpretation Act, R.S.Q. 1941, e. 1, s. 42.
To my mind it is quite irrelevant to say that the tax will fall upon the Crown, which is prohibited. It may well be that under the terms of the contract between the plaintiff and the intervenant the incidence of the tax may be upon the intervenant. But that is not the result of the imposition of the tax but rather the result of a contract to that effect. Parties may, by contract, change their rights inter se, but those rights (or liabilities remain unchanged as against a third party, e.g. the taxing authority. In the case of Montréal V. La Société Administration Générale (1925), 38 Que. K.B. 521, Sir Mathias Tellier C.J. (as he later became) said, at p. 528:
" ‘ On se retranche derrière la clause du bail que j’ai reproduite ci-haut, et on dit: ‘Si la Cour fait droit à l’action, c’est la Couronne qui, à cause de la dite clause, va se trouver tenue de payer les taxes’. A cela, je réponds: Il n’est rien demandé à la Couronne. La demanderesse ne pourrait rien lui demander. S’il a plu à la Couronne d’assumer les obligations de ls succession François Benoit, cela la regarde, et la demanderesse n’a rien à y voir. Pour la demanderesse, ce qui est stipulé dans le bail, au sujet des taxes, est res inter alios acta”.
This, it seems to me, is the view clearly expressed in the case of Montreal V. A.-G. Can. and A.-G. Que., 70 D.L.R. 248, [1923] A.C. 136 where it was held: ""as the tenant was liable only so long as his occupancy continued the taxation was in respect of his interest as lessee, and accordingly was not a tax on Crown lands so as to be ultra vires under s. 125 of the British North America Act, 1867”.
It has been contended that that case may be distinguished because Lord Parmoor said, at p. 251 D.L.R. p. 141 A.C., "‘No copy of the by laws was attached to the case, but it was assumed throughout the argument that they had been made in due form’’. But in answer to this, it must be pointed out that the tax in question is not imposed by by-law but it is imposed by an Act of the Legislature of the Province of Quebec, namely: the Charter of the City of Montreal, s. 362a, which is the crucial article reading as follows:
‘‘The exemptions enacted by Article 362 shall not apply either to persons occupying for commercial or industrial purposes buildings or lands belonging to His Majesty or to the Federal and Provincial Governments, or to the Board of Harbor commissioners, who shall be taxed as if they were the actual owners of such immovables and shall be held to pay the annual and special assessments, the taxes and other municipal dues.
"‘If the occupant, whose name appears on the valuation roll, quits before the 1st of May the premises leased, he shall not be held to pay the taxes imposed for the year beginning on the 1st of May.
"‘If the immovable becomes occupied for the purposes mentioned in this article by another person, either on the 1st of May or on another date during the fiscal year, the name of such person shall be entered on the roll.
"‘In the case of any other property belonging to the Federal or Provincial Governments or to the National Harbour Board, and becoming occupied on or after the 1st of May by any other persons for commercial or industrial purposes, the director of finance, on receipt of a certificate to that effect from the board of revision, shall enter on the real estate assessment roll the name of such new occupant, who shall pay the taxes imposed for the current fiscal year, according to the valuation shown on the said certificate.
"‘In all such cases, the provisions of Article 375a shall apply to this article, mutatis mutandis’’.
The by-laws merely give effect to it by fixing the rate or amount of such assessment. It is true again that the by-law speaks of the imposition of an assessment "‘on taxable immovables”, and it is contended on behalf of the plaintiff that since the premises were the property of the intervenant they were not "" taxable immovables’’. The answer to that, however, I should say, was that the exemptions mentioned in the Charter do not apply to occupants of Crown property, and the present tax now disputed is a tax upon the occupancy of certain Crown lands, and the Charter expressly makes such occupancy taxable. (Fraser v. Montreal, 23 Que. K.B. 242).
Within its proper sphere the Legislature is supreme, and there has been no attempt in the present instance by the Legislature to transcend that sphere by taking Crown property as such. It is, I repeat, the occupation by the plaintiff in the performance of a commercial undertaking that is taxed, and even if the incidence of such tax rests ultimately upon the intervenant that results not from the original imposition of the tax but as a result of the assumption thereof under the contract by the intervenant, if indeed that be the true result as to which I express no opinion.
I have carefully considered the case of Can. Locomotive Co. and C.N.R. v. Kingston ( [1942] C.T.C. 280) decided in the County Court of the County of Frontenac, Ontario. The facts are strikingly similar, but the case appears to have been decided under the provisions of the Ontario Assessment Act, R.S.O. 1937, c. 272.
I reach the conclusion that for the period now under review, that is from May 1, 1942, the plaintiff is subject to the tax imposed as "‘occupant’’.
There remains to be considered the business tax which is likewise a personal tax authorized by art. 363 of the Charter and given effect by By-law No. 1642. By this article of the Charter, the city is authorized "‘to impose and levy by by-law a tax to be called the ‘business tax’ on all trades, manufactures, financial or commercial institutions’’.
As I have already reached the conclusion that the plaintiff carries on an occupation falling within the terms of the article in question, and is not a servant of the Crown exempting it from liability, it follows that the plaintiff is liable for such business tax.
Considering that as respects the claim of the defendant for the sum of $18,934.78 "‘Property taxes on the new building and motive power from 1st of November 1941 to April 30th 1942”, the said claim is directed against the plaintiff as " " proprietor ” and not as occupant”;
Doth reject the said item.
Considering that as respects the three following items, the defendant has established its right thereto against the plaintiff as ""occupant”, namely i6 (b) Business tax on the same property as hereinbefore mentioned in subparagraph (a) hereof, for the same period $3,425.22; (c) Property tax on the land, building and motive power on Lot 21, subdivision 2210, as occupant of the property of the Intervenant for the municipal fiscal year commencing May 1st 1942 . . . . $41,141.77 ; (d) Business tax on the same property as hereinbefore mentioned in subparagraph (c) hereof for the same year . . . . $6,850.44”;
Doth condemn the plaintiff to pay to the defendant the said sums: $3,425.22, $41,141.77 and $6,850.44, together with inter- est at the rate of 5% from the date when the said taxes respectively were due, add also the costs of the present action.
Doth dismiss the intervention except as to the foregoing item of $18,934.78, and doth recommend that the intervenant pay to the defendant the costs upon such intervention.
And doth order the Prothonotary of this Court to return to the plaintiff exhibits Nos. P-1 and P-2 without giving access thereto to any party other than the parties to the present submission.
Judgment for defendant.