Martin C.J.S.—This is an appeal by way of stated case from a decision of the Saskatchewan Assessment Commission dated July 22, 1944, whereby the Commission held that the appellant had been validly assessed for business tax by the respondent. The case is stated under the provisions of s. 498a(2) of the City Act, as enacted by e. 22, s. 15 of the Statutes of Saskatchewan, 1943, and the questions, upon which the opinion of the Court is asked, are whether the Saskatchewan Assessment Commission was right in holding, (1) that the buildings and other property referred to in the assessment were occupied and/or used by the appellant for business purposes within the meaning of the City Act and that the appellant was liable to assessment for the whole of the said buildings and property, and (2) that the appellant was liable for assessment although solely engaged in performing a contract for the Crown.
According to the evidence adduced before the Commission, Regina Industries Ltd. was incorporated by letters patent under the Dominion Companies Act for the purpose of entering into a contract with the Department of Munitions and Supply for the production of anti-tank gun carriages. On October 17, 1940, an agreement was executed by His Majesty the King represented by the Minister of Munitions and Supply, Regina Industries Ltd. (referred to as the contractor) and General Motors of Canada Ltd. (referred to as the controlling company). Under the terms of the agreement the controlling company undertook to lease to His Majesty the automobile assembly plant of the controlling company in the City of Regina together with such machinery and equipment owned by the controlling company and situate in the plant as should be required by the contractor for the purpose of carrying out the covenant of the contractor to manufacture gun carriages as provided in the agreement.
On the same date pursuant to the terms of the agreement a lease was executed by General Motors of Canada Ltd. whereby the premises described in the agreement were leased to His Majesty the King represented by the Minister of Munitions and Supply. Regina Industries Ltd., as the contractor, was a party to the lease, and the Minister of Munitions and Supply covenanted to pay the rental therein stipulated.
The contractor agreed to forthwith remove from the plant all machinery and equipment not required for the performance of the contract and to purchase or otherwise acquire or manufacture and install certain machinery and equipment described in a schedule of the agreement; and it is provided that the items so acquired and installed shall be the property of His Majesty.
In s. 9. of the agreement the contractor agrees to manage and operate the plant on behalf of His Majesty, ‘ and to manufacture therein for the account of His Majesty and/or His Majesty’s Government in the United Kingdom of Great Britain and Northern Ireland Two-Pounder and/or Six-Pounder Anti-tank gun carriages (in this agreement sometimes referred to as " carriages and in the General Conditions referred to as ‘the Articles’) in such quantities as the Minister may from time to time direct in writing, and to supply and deliver to or to the order of His Majesty all carriages from time to time manufactured hereunder.”
In s. 13 the contractor and the controlling company represent that the contractor has been expressly organized for the purpose of performing the contract and that the contractor has no liabilities other than those incurred in contemplation of the performance of the contract and both the contractor and the controlling company agree that the contractor will not, without the consent of His Majesty, “engage in any other business activity other than that called for by the provisions of this contract until this contract shall have been terminated. ’
This undertaking is followed by a provision for reimbursement of the contractor as follows: "‘It is therefore expressly agreed that subject as herein expressly provided, all costs and expenses of any kind whatsoever properly incurred by the Contractor in contemplation of the performance of this contract, in connection with the performance thereof and in connection with the proper termination thereof, including the protection (after the termination of this contract and until turned over to His Majesty) of any property of His Majesty under the control of the Contractor, shall be included in the costs of performance of this contract for which the Contractor is to be fully reimbursed by His Majesty.”
There is however a proviso to the effect that the contractor shall not be entitled to be reimbursed in respect of a number of items among them the following: Federal and provincial income taxes, excess profits or surtaxes, salaries or other remuneration of corporate and executive officers other than those exclusively engaged in the work called for in the contract, amounts paid or payable to any director as such, expenses of incorporation and organization of the contractor, and costs and expenses of and incidental to the negotiation and the settling of the terms of the contract.
It is also provided in s. 13 that the Minister shall have general supervision and control over all costs and expenses and if, after investigation and discussion with the contractor, the Minister is of the opinion that any items of expenditure or of costs are excessive or unnecessary he may by notice in writing require the contractor to refrain from making such expenditure or incurring such costs as may be specified in the notice and the items so specified shall be excluded from costs for the purpose of the contract, except in so far as the contractor was obligated therefor prior to the giving of the notice; it is stipulated, however, that except to the extent provide in the contract the Minister will not, in the exercise of the power and control over expenditures interfere with the management and conduct of the work by the contractor in the absence of any gross negligence or wilful default on the part of the contractor.
As to payments of amounts due the contractor it is provided that they shall be paid out of the Special Account referred to in the General Conditions which are made a part of the contract. According to the General Conditions the contractor must submit to the Minister on or before the 20th day of the month an itemized statement showing the amount estimated by the contractor to be requisite and sufficient to provide for payment of the amounts properly payable by the contractor during the succeeding calendar month in respect of the cost of work and any other cost to which the contractor is entitled to reimbursement; and subject to his approval of the statement the Minister agrees to pay into a special account in a chartered bank in Canada on or before the last day of the month in which the statement is submitted, the estimated amount as shown by the statement. According to the evidence of one Schnell, the Resident Comptroller of Regina Industries Ltd. the operations of the contractor are financed by overdraft guaranteed by the Department of Munitions and Supply.
Section 15 provides that in addition to the amounts from time to time payable to the contractor under s. 13, "‘His Majesty shall pay to the Contractor a fee of One Hundred and Twenty- five dollars for each complete Carriage manufactured by the Contractor and accepted on behalf of His Majesty; provided, however, that such fee at the said rate shall be payable only in respect of the first eight hundred and seventy (870) complete carriages so manufactured and accepted. Such fee shall be deemed to include and cover all management and supervisory services (exclusive of reasonable and proper travelling expenses) performed by the Contractor or the Controlling Company for the purpose of or in connection with the work . . .‘17
Provision is also made that when 870 complete carriages shall have been manufactured the Minister shall cause an audit to be made by accountants selected by him of the contractor’s costs of production of 870 carriages together with costs of production of the last 170 to 200 carriages comprised in the total quantity of 870. Upon the costs having been determined by the accountant, the Minister and contractor shall commence negotiations with a view to agreeing upon "‘the fee or other remuneration or profit’’ to which the contractor shall be entitled in respect of carriages made in excess of the first 870 carriages. In the event of the Minister and contractor failing to agree upon the fee within a reasonable time the matter is to be decided by arbitration as provided in the General Conditions.
It is also provided that in the event of payment being made on the basis of cost plus a fixed fee per carriage, such fee shall not exceed an amount equal to 3% of the amount of the cost thereof as certified in writing by an auditor appointed by the Minister. By an amendment to the agreement dated September 17, 1943 it was agreed that the contractor would be paid a fee of $50.04 for each additional carriage and a bonus of 25% of the amount (if any) by which the cost of production should be less than $1,667.89 per carriage, such cost of production to be determined by audit made by an accountant selected by- the Minister.
The witness Schnell, the Comptroller, testified at the hearing before the Saskatchewan Assessment Commission, that the fee received by the contractor for each vehicle was a management fee and that when it was paid to the contractor the Department of Munitions and Supply had no control over it; he also said that the management fee would be the profit of the contractor. It is of interest also to note that in the contract the words "‘fee or other remuneration or profit’’ are used, and in the lease made by General Motors Ltd. to the Crown provision is made for a review of the rentals at the time of the fixing ‘‘of the fee or other remuneration or profit” to be paid to the contractor in respect of carriages in excess of the first 870.
In s. 20 of the agreement His Majesty represented by the Minister of Munitions and Supply undertakes to indemnify the contractor against any action, claim or proceeding relating to the infringement of any patent or design and to pay any royalties which may be payable in respect of any of the carriages or any part thereof. Section 21 provides that the Minister may at any time by notice in writing to the contractor direct that operations under the contract shall cease as regards all or any of the work which the contractor has on hand and in such ease all costs and expenses for which His Majesty is liable shall be paid or reimbursed to the contractor in accordance with the provisions of s. 13; and in addition there shall be paid to the contractor the fees prescribed in s. 15 in respect of all work completed before the giving of such notice and a further amount representing a fair and reasonable fee in respect of work not completed before the giving of such notice.
It is further provided that on the termination of the contract the contractor shall deliver to His Majesty at the plant all completed and uncompleted carriages on hand and all government equipment in the possession of the contractor and shall also deliver to His Majesty possession of the plant for the remainder of the term of the lease.
Section 460 of the City Act, R.S.S. 1940, c. 126 is as follows: " Subject to the other provisions of this Act, the municipal and school taxes of the city shall be levied upon. (1) lands; (2) businesses; and (3) special franchises.” Section 463(1) provides that ‘‘The assessor shall assess either the owner or occupant of every parcel of land in the city, and every person who is engaged in business or is the owner of a special franchise, and shall prepare an assessment roll showing the name of each person assessed, the property in respect of which he is assessed and the assessed value of the property.’’ Section 463(7) provides that in assessing businesses the Assessor shall fix a rate per square foot (not to exceed a sum fixed by the statute) of floor space of each building or part thereof used for business purposes and that he shall so far as he deems practicable classify the various businesses and may fix a different rate for each class. Section 465 provides that: ‘‘The occupant of any building liable to taxation under section 463 shall be liable for the business tax though he may also be the owner of the premises and liable as such owner to taxation on the land.’’ The tax on business is a personal tax and not a tax on property ; it is a tax in personam and not a tax in rem. Moose Jaw v. Br. American Oil Co., [1937] 2 W.W.R. 309 at pp. 314 and 315; Kitchener v, Allen Theatres (1922), 22 O.W.N. 231; Re Hertzman and Hertzman (1931), 40 O.W.N. 561.
That the appellant contractor occupies the premises leased from the-Crown by General Motors Ltd. there can be no doubt. “Occupant” is defined in the City Act, R.S.S. 1940, c. 126, as amended by e. 22 of the Statutes of 1941, s. 2, as follows: ‘‘ ‘Oc cupant’ includes the resident occupier of land or, if there is no resident occupier, the person entitled to the possession thereof, a leaseholder and a person having or enjoying in any way for any purpose whatever the use of land otherwise than as owner. ‘ ‘
The definition is very wide and includes any person who has or enjoys the use of land for any purpose whatever. Here the appellant contractor is in possession of the premises held under lease by the Crown and enjoys the use thereof for the purpose of carrying on the business of making anti-tank gun carriages. It will be observed that among the covenants on the part of the contractor contained in the agreement is one to deliver up possession of the premises to His Majesty on the determination of the agreement.
^Business” is defined in s. 2(4) of the City Act as follows: "" "Business’ includes any trade, profession, calling, occupation or employment. ’ ’
In Northern Sask. Flying Training School v. Buckland, Prince Albert Air Observers’ School v. Buckland, [1944] 1 D.L.R. 285 at pp. 292-3, the Court considered a definition of "‘business'' and provisions as to the assessment of business contained in the Rural Municipality Act, R.S.S. 1940, c. 129, which are similar to the definition of business and provisions as to assessment contained in the City Act. The conclusion reached was that the intention of the Legislature was to enable the municipality to levy a tax upon any person who is engaged in any trade, profession, calling, occupation or employment within the municipality "‘which occupies the time and attention and labour . . . for profit.” Vide Smith v. Anderson, (1880), 15 Ch. D., 247 at p. 208; Rideau Club v. Ottawa (1907), 15 O.L.R. 118, Osler J.A. at p. 122; Maclaren J.A. at p. 124.
It was suggested by counsel for the appellant that the contractor is merely a servant or agent of the Crown. The contractor however is given control over the purchase of supplies, the employment of labour and generally the management and the conduct of the plant in carrying out its agreement to manufacture gun carriages for His Majesty.
The provisions of the agreement heretofore referred to establish in my opinion that the contractor operates the plant on his own account and has full control of the operations thereof subject only to the right of the Minister to inspect and exercise control over expenditures made to produce the carriages and for which His Majesty is obligated to pay; it is provided however that the Minister in the exercise of his power and control over the expenditures will not interfere with the management and conduct of the work by the contractor.
Certain provisions of the agreement would not be necessary if the contractor were acting merely as a servant or agent of the Crown, for example the provision that the Minister and inspectors may have access to the plant, the provision that the Minister may exercise control over the expenditures in order to see that the carriages are being produced at a reasonable price, the provision that the equipment purchased shall be the property of His Majesty and the covenant of the contractor that on the termination of the agreement it will deliver all government equipment to His Majesty and deliver up possession of the premises to His Majesty.
Moreover, as stated above, among the items of expenditure for which the Minister is not to be liable are federal and provincial income taxes, excess profits and surtaxes ; these exceptions indicate clearly that the contractor is not the agent of the Crown and that in the contemplation of the parties the contractor may be called upon to pay certain taxes for which the Crown could not be liable.
In support of the contention that the contractor cannot be assessed for business on the ground that it is performing a service for the Crown on Crown property, reference was made on the argument to the decision of the Supreme Court of Canada in Halifax v. Halifax Harbour Com’rs, [1935] 1 D.L.R. 657, S.C.R. 215. There is, however, no analogy between the facts in that case and the facts here under consideration. Vide remarks of Duff C.J.C. at pp. 664-5 D.L.R., pp. 226-7 8.C.R.; Northern Sask. Flying Training School v. Buckland, [1944] 1 D.L.R. 285 at p. 291.
The provisions of the agreement and the evidence adduced before the Assessment Commission make it clear that the appellant carries on the business of manufacturing anti-tank gun carriages on premises held under lease by the Crown; that it is in occupation of the premises under its agreement with the Crown as represented by the Minister of Munitions and Supply, and carries on business for profit as an independent contractor ; it is therefore subject to be assessed for business tax under the provisions of the City Act.
The fact that the business is carried on on Crown property can make no difference as a person may be assessed for business carried on by him on Crown property ; the interest of the Crown is not affected by the levy of the business tax on the appellant.
I would answer both questions in the stated case in the affirmative and dismiss the appeal with costs.
Appeal dismissed.