Thorson, JA:—This is an appeal from a judgment of the Divisional Court, dismissing the appellant’s application for judicial review of a decision made by the Minister of Revenue for Ontario, refusing to refund to the appellant an alleged overpayment of tax which it claims to have made under The Retail Sales Tax Act, RSO 1970, c 415, as amended, as a result of two payments of tax which it made on February 23, 1973 and April 23, 1973, respectively.
The total of the two payments was $492,218. This was the amount which the appellant had estimated to be payable by it as tax, according to its calculation of the taxable value of certain tangible personal property that had been included in the purchase price of a sulphur recovery plant which the appellant had purchased in the transaction giving rise to liability for tax.
Some months after it made the two payments, the appellant decided that it had overstated the taxable value of the tangible personal property in question, and in 1974, pursuant to subsection 2(8) of the Act as it then read, it made a claim for a refund. In due course, it received a refund of the full amount claimed by it.
In May of 1975, on still further reflection, the appellant again decided that, even taking into account the refund it had claimed and received in 1974, it had still paid more tax in 1973 than it should have, and on June 13, 1975 it applied for an additional refund. The Minister refused to consider the appellant’s application, on the ground that subsection 2(8) of the Act, as it had by then been amended with effect from April 8, 1975, left the Minister with no authority to consider the application or to make any refund of taxes based on it, inasmuch as the application made on June 13, 1975 was not made within two years from April 23, 1973, the date of the final payment of tax made by the appellant in that year.
In 1973, when the tax in question was paid by the appellant, the applicable provision of The Retail Sales Tax Act governing the making of refunds of tax in the circumstances with which we are here concerned was, as it still is, subsection 2(8) of the Act. At that time subsection 2(8) contained no limitation period during which a claim for a refund need be made. Rather, it provided only that the Treasurer of Ontario “may” refund any overpayment of tax upon receipt of satisfactory evidence that the amount paid as tax was “wrongfully paid”. In 1974, the wording of subsection 2(8) was changed in certain respects which are not material to this appeal, except that the “Treasurer of Ontario” became the “Minister of Revenue”. In April of 1975, however, a major change was made in subsection 2(8) affecting its substance. As a result of this change, the subsection thereafter provided that the amount of any overpayment of tax made by a person “shall be refunded if, within two years following the date of payment of such amount, an application for the refund is made to the Minister and it is established within such two years to the satisfaction of the Minister that the amount that may be refunded was not payable as tax under this Act”.
As a result, the appellant was met with the argument that because its application for a refund of tax was not made on or before April 23,1975, the application could not be considered or acted upon by the Minister. It would follow, of course, that by May of 1975, when the appellant apparently first came to realize that it might have a claim to an additional refund, the time for asserting its claim was already past. Indeed, it was already past by April 24, 1975, the day on which the amendment to subsection 2(8) received royal assent, since the amendment was deemed by the 1975 amending legislation to have come into force on April 8,1975, sixteen days before it received royal assent.
In May of 1978, the appellant brought its application for judicial review of the Minister’s decision before the Divisional Court, having been advised by the Minister that this was the appropriate method for testing the matter before the courts. The ground stated by the appellant in its application for judicial review was that the Minister’s refusal of a refund was based on the erroneous legal conclusion that the appellant’s right to apply for a refund expired on April 23, 1975, and that payment of the refund was therefore precluded by law. Essentially the position taken by the appellant before the Divisional Court was that it had a right, under the terms of subsection 2(8) as it was before the 1975 amendment, to a refund of any amount which could be established to have been overpaid by it, and that the 1975 amendment imposing a limitation period did not operate to take away that right.
In support of this position, the appellant argued that in the pre-1975 formulation of subsection 2(8), the word “may” ought in its context to be read as “shall”. That is to say, the word “may” ought not to be considered as merely permissive, in the sense of connoting a discretion in the Minister, but rather, in its context in the statute in which the word appeared, as mandatory or imperative. In the terms in which this argument has been put in the appellant’s statement before this Court, the appellant sought to rely on the “well-recognized canon of construction” (so described in Craies on Statute Law (7th ed.) 1971 at 285, quoting from a statement of Lord Cairns in Julius v Bishop of Oxford (1880), 5 App Cas 214) that “where a power is granted by statute to a public officer for the purpose of being used for the benifit of certain persons if certain conditions are met, the courts will require that power to be exercised; in such circumstances “may” in the Statute means “shall”.”
On this premise, it was argued before the Divisional Court, the appellant had a right to a refund which, even if it had not accrued before the 1975 amendment, was at least “accruing” by that time, so that applying the principle of construction that is given statutory expression in paragraph 14(1 )(c) of The Interpretation Act, RSO 1970 c 225, the repeal of the earlier version of subsection 2(8) by the 1975 amendment cannot be construed as affecting that right, in the absence of language in the amending legislation indicating a contrary intention. Accordingly, the appellant submitted, the Minister was under a duty to refund the amount of tax in question upon being satisfied that there was in fact an overpayment, even although the application for refund was not made until after the 1975 amendment.
The Divisional Court dismissed the application for judicial review of the Minister’s decision. Mr Justice Galligan, speaking for the Court, was of the opinion that a reading of the pre-1975 provisions of the Act indicated that it was the intention of the Legislature in fact to confer upon the Minister a discretion as to whether or not a refund would be made in the circumstances of any particular case. He noted that in the pre-1975 legislation, the subsection immediately preceding subsection 2(8) also dealt with the subject of refunds, yet that subsection provided that in the case of a payment of tax made in the special circumstances described therein, “such payment shall be refunded” on evidence that the tax was wrongfully paid. In Mr Justice Galligan’s view, the use of the word “shall” in subsection 2(7), contrasted with the use of the word “may” in subsection 2(8), made it appeal that the Legislature intended the Minister to have a discretion and that when, in 1975, the would “shall” replaced the word “may” in subsection 2(8), it must be taken that the Legislature intended to remove from the Minister the discretion which it had previously intended him to have.
Mr Justice Galligan then concluded that the right of the appellant to “seek the exercise of a discretion in its favour” is not an accrued right, nor it it a “vested right” (presumably in the sense of a right which could be argued to be unaffected by the 1975 amendment). In the result, in his opinion, the limitation period in the 1975 amendment applied to bar the appellant’s claim for refund, and the Minister was correct in law in refusing to consider the claim.
On the appeal to this Court, and in response to questions put by members of the Court designed to clarify what this Court took to be two alternative positions advanced by the appellant, counsel for the appellant Stated his position to be as follows:
1. If this Court were to accept his argument that the word “may” in the pre-1975 version of subsection 2(8) means “shall”, then the appellant is entitled to a refund of tax as claimed by it upon producing evidence satisfactory to the Minister as to the amount of the overpayment made by it, since the appellant had either an accrued or an accruing right to a refund in that case, which right was unaffected by the repeal of the legislation by which the right was conferred.
2. Alternatively, if this Court were to reject his argument that “may” means “shall” in the pre-1975 version of subsection 2(8), then the appellant is entitled to have the Minister at least consider its application for a refund and either accept it or reject it based on considerations that are proper considerations to be applied in reaching a decision thereon, since the appellant had either an accrued or an accruing right to have its application considered on that basis upon producing evidence satisfactory to the Minister as to the amount of the overpayment made by it, and since that right was similarly unaffected by the repeal of the legislation by which it was conferred.
In considering these alternative positions, I propose to deal first with the argument that the word “may” in the pre-1975 version of subsection 2(8) should read as “shall”.
In my opinion, the Divisional Court was correct in its conclusion that the word “may” in the above context was permissive only and was not to be taken to mean “shall”. I agree with the reasoning by which Mr Justice Galligan reached that conclusion. It was, in my opinion, clearly open to the Divisional Court to draw the inference which it did from the contrasting language of subsection 2(7) and subsection 2(8) and to look to the presumed intention of the Legislature in 1975 when it amended subsection 2(8) as it did. In this latter regard I do not accept that the “deeming” provisions of sections 17 and 18 of The Interpretation Act can be invoked, as counsel for the appellant has suggested, somehow to make it “improper” for a court to seek assistance, in arriving at a conclusion as to the previous state of the law, by looking to the presumed intention of the Legislature in amending the law in the way in which it has.
I do not, however, disagree with the proposition that in certain circumstances the word “may” in a statute must indeed to be taken to mean “shall”. In some contexts, of course, the word “may” is neither necessarily permissive nor necessarily imperative, but rather merely empowering. Its function is to empower some person or authority to do something which, otherwise, that person or authority would be without any power to do. In such a case, the word “may” merely removes an impediment to the doing of that thing, leaving it open to be determined, in the context of the legislation in question, whether or not the Legislature intended that, where the conditions if any prescribed for the exercise of the power are met, the power will in fact be exercised.
Examples of such empowering “mays” occur with some frequency in our revenue laws and in other statutes which contain provisions for making payments out of the Consolidated Revenue Fund of the Province, since it is fundamental that no payment may be made out of the duties and revenues raised by the Province which form its Consolidated Revenue Fund except by or with the authority of the Legislature. Thus any refund of tax which calls for a payment out of the Consolidated Revenue Fund necessarily requires either the Legislature’s permission or the Legislature’s direction to make the payment.
As already mentioned, however, it is the context in which this kind of empowering language appears that will determine whether the legislation is to be construed as permissive or imperative. For the reasons already mentioned, I am satisfied that in the pre-1975 formulation of subsection 2(8) of The Retail Sales Tax Act, the intention was to confer a discretion on the Minister to make or refuse to make a refund. That said, however, it is clear that the discretion conferred on the Minister was not one which may be exercised capriciously or arbitrarily. Rather, it was a discretion which may be exercised only on proper principles, and only on the basis of such considerations as may properly be taken into account by the Minister in assessing the merits of a particular claim.
Although I therefore conclude that the appellant in this case had no right to a refund of the overpayment which it claimed to have made, there remains to be considered the alternative position taken by counsel for the appellant, namely, that it had a right, either accrued or accruing, to have its claim considered by the Minister, even if the end result of such consideration might be that the claim was rejected. Coupled with this position, of course, is the appellant’s assertion that the 1975 amendment did not have the effect of taking away that right.
Mr. Justice Galligan, speaking for the Divisional Court, dealt with this argument very briefly in the following two sentences:
The decision of the Judicial Committee of the Privy Council in Director of Public Works and Another v Ho Po Sang and Others, [1961] 2 All ER 721 is authority that the right to seek the exercise of a discretion in one’s favour is not an accrued right. I likewise think that the right to seek the favourable exercise of a discretion in one’s favour is not a vested right.
With great respect, I think the learned Divisional Court judge erred in equating the “right” with which the Ho Po Sang case was concerned with that which is asserted by the appellant in its alternative position here described, and in applying the reasoning in the Ho Po Sang case to reach the conclusion he reached on the facts of this case.
In the Ho Po Sang case the Judicial Committee was concerned with a Hong Kong ordinance which authorized the tenants of a lessee of lands leased from the Crown to appeal, by way of petition to the Governor in Council of Hong Kong, against any proposal of the Director of Public Works to issue a re-building permit to such a lessee entailing the demolition of existing structures on the leased lands. The Crown lessee had sought such a permit and the tenants had filed a petition against the Director’s proposal to issue it, when the relevant provisions of the ordinance were repealed without any express provision being made enabling consideration to be given to the subsequent issue of the certificate then sought or to any pending petitions against its issue. Some time thereafter, however, the Governor in Council directed that a rebuilding certificate be issued by the Director, and the tenants sought a declaration that, after the repeal, the Director had no authority to issue such a certificate.
The Judicial Committee held that at the time when the relevant provisions of the ordinance were repealed, the lessee had no “right” under the repealed legislation which was capable of being preserved by the provision of the Interpretation Ordinance of Hong Kong corresponding to paragraph 14(1 )(c) of The Interpretation Act of this Province. In their Lordships’ view, the lessee’s entitlement to have its cross-petition against the petition of its tenants considered by the Governor in Council was not such a right. The issue of whether or not the lessee would be given a re-building certificate “rested in the future’’ and its outcome could not be known until the matter had been considered by the Governor in Council. In the words of Lord Morris of Borth-y-Gest, at 731:
The lessee had no more than a hope or expectation that he would be given a rebuilding certificate, even though he may have had grounds for optimism as to his prospects.
Shortly thereafter a more general observation is made:
It may be .. . that, under some repealed enactment, aright has been given but that, in respect of it, some investigation or legal proceeding is necessary. The right is then unaffected and preserved. It will be preserved even if a process of quantification is necessary. But there is a manifest distinction between an investigation in respect of a right and an investigation which is to decide whether some right should or should not be given. On a repeal, the former is preserved by the Interpretation Act. The latter is not. (Emphasis added)
Although counsel for the appellant argued that subsequent to the Ho Po Sang case, the Privy Council in Free Lanka Insurance Co Ltd v A E Rana- singhe, [1964] AC 541 held that a person could “acquire a right’’ against someone pursuant to legislation even though that right might be called “inchoate’’ or “contingent”, and that accordingly the Divisional Court erred in accepting the Privy Council’s earlier decision in the Ho Po Sang case as determinative of the issue in the present case, I do not think it is necessary to attempt to distinguish the Ho Po Sang case on this basis, in order to make the point that his alternative position ought not to have been rejected by the Divisional Court on the reasoning of the Ho Po Sang case.
The Ho Po Sang case has been considered and applied in a number of Canadian cases. One of these is Merck & Co Inc v Sherman & Ulster Ltd (1971), 65 CPR 1, which involved an appeal to the Exchequer Court of Canada from a grant of a licence under the Patent Act. One of the issues was whether the respondent, upon filing its application for a licence, had an accrued, or alternatively an accruing, right to such licence on the ground that, as argued by counsel for the respondent, “by making the application it had done all that was required as a statutory condition of its obtaining a licence”. Thurlow, J concluded on this point that, as in the Ho Po Sang case, “what the applicant had . . . was nothing more than a hope”. He then went on, however, to add the following observation at 12:
Nor do I think what the respondent had at that state [ie before the decision on the application was made] can be regarded as an “accru-ing” right (or privilege) within the meaning of paragraph 36(c) [the provision of the Interpretation Act of Canada corresponding to paragraph 14(1)(c) of the Ontario Act] since the difficulty lies not with the words “accrued" or “accruing" but with the lack of anything that answers to the description of the words “right" or “privilege" in paragraph 36(c). (Emphasis added)
The emphasized words above in italics, in my view, what is the real problem in this case. On April 8, 1975 when the 1975 amendment to subsection 2(8) of The Retail Sales Tax Act was stated to have become effective, did the appellant have a “right” which the law will recognize as such? If so, is it a right which is protected by paragraph 14(1)(c) of The Interpretation Act as being one which, at that time, either had “accrued” or was “accruing” in the appellant’s favour?
In my opinion the appellant did have such a right. It arose by virtue of the pre-1975 legislation, which in my opinion clearly contemplated that a claim for a refund or tax could be asserted by a taxpayer in the situation of the ap- pellant, and that such a claim would, when it was received by the Minister, be considered by the Minister even if, as previously noted, the end result of such consideration might be that the claim was rejected.
There is no dispute that the appellant paid the tax here in question. Having paid an amount as tax in excess of what it could then or subsequently establish by satisfactory evidence to be the amount which in law it was required to pay, it had a right, which was not limited in time by the then applicable law governing refunds, to advance a claim to the Minister to have the amount of the overpayment refunded to it, and to have its claim considered and either accepted or rejected by the Minister, applying the principles and taking into account the considerations properly applied and taken into account by her in the exercise of the discretion which she had to make or refuse to make such a refund.
Given that the Minister’s discretion in the matter was, at most, a limited discretion as already mentioned, I do not think it can be said that what this appellant had was “no more than a hope or expectation” such as the Crown lessee was found to have had in the Ho Po Sang case. That case is clearly distinguishable from the present case as regards the nature of the right asserted, and in my opinion the decision in the Ho Po Sang case does not apply to bar this appellant from succeeding on the basis of the alternative position stated and argued by counsel on its behalf.
In reaching this conclusion, I am not unmindful of the fact that in 1974, when the appellant first claimed and received a refund, the appellant must be presumed to have been in full possession of all of the facts and information on the basis of which it later applied for an additional refund, after the time provided therefore under the 1975 amendment had gone by. In this regard there is, in my opinion, no evidence that in 1974 the Ministry or its officials misled the appellant or that they were somehow at fault in not then drawing to the attention of the appellant that it should alter its claim to include the full amount which it claimed the following year. If fault is to be found, the fault appears to lie with the appellant, who overpaid the tax under a misapprehension as to its liability in law to do so and who failed to appreciate the full extent of its mistake until more than two years later.
Nor am I unmindful that in this particular case no claim for refund was outstanding before the Minister at the time when the legislative provision which gave rise to the asserted right was repealed by the legislature in favour of another, very different, legislative regime governing such refunds. Counsel for the respondent on this appeal pressed the point during his argument that the existence of such an outstanding claim, whether or not it took the form of what would now be termed an “application”, was at least a minimum requirement to be met before any “right” to or in respect of a refund could be found in the appellant’s favour. Without any such claim having been in fact made, he argued, how could it be said that whatever right the applicant had was more than merely theoretical? In the Ho Po Sang case, it is to be noted, there was at least a petition and counter-petition before the Governor in Council at the time of the repeal, and in the Merck & Co Inc case there was at least a licence that had been issued by the Commissioner of Patents.
While I would be prepared to accept that in other circumstances there might well be some force in such an argument, I have nevertheless concluded that it cannot prevail in the unusual circumstances in which this appellant found itself as a result of the 1975 amendment to s 2(8) of the Act. Although both counsel on this appeal referred the Court to various cases in which, in other jurisdictions, an Interpretation Act provision similar to paragraph 14(1)(c) of the Ontario Act was considered and applied by the courts of those jurisdictions, neither counsel was able to refer us to any case in which such a provision was considered or applied in a situation comparable to this. In this case, if one were to accept the respondent’s argument, whatever right the appellant could have asserted, if it had become aware “in time” that it has a right which could be asserted, vanished entirely as a result of the 1975 amendment. Furthermore, whatever right the appellant could have so asserted disappeared even before that amendment received royal assent. In the result, therefore, the appellant could not possibly have sought to apply for a refund under the provisions of the amended law without immediately being met by the argument that the time limited for the making of such an application had already passed.
Nor can I agree that because no claim for a refund was outstanding at the time of the 1975 amendment, whatever right the appellant had at that time was merely “theoretical”. A right is no less a right recognized by the law solely because all of the steps necessary to be taken before it can be acted upon may not yet have been taken. In this case the right to claim a refund came into being once the overpayment of tax had been made. At that time there was no restriction in the law on the time within which the claim could be advanced; as already noted it was not until the 1975 amendment that a limitation was added doing away with the right of a taxpayer to seek a refund of tax more than two years after the date of payment of such tax.
Quite clearly, under the pre-1975 version of subsection 2(8), the Minister could not be required or expected to act upon a claim for refund until the person asserting the claim had provided to the Minister “satisfactory evidence that the amount was wrongfully paid”. As I see it, however, this was essentially an evidentiary requirement, just as it continues to be an evidentiary requirement under the amendment legislation that the Minister must be satisfied that “the amount that may be refunded was not payable as tax under this Act”.
In my opinion it is not necessary for this Court to involve itself in drawing fine distinctions as to whether the right which the appellant had at the time of the repeal in question was an “accrued” right or merely an “accruing” right within the meaning of paragraph 14(1)(c) of The Interpretation Act. Although I think it may properly be said to be a right which, in all essential respects, accrued to the appellant at the time the overpayment was made, the right here found reaches beyond the claiming of the refund to include as well the right to have the claim for refund considered and either accepted or rejected by the Minister. To the extent that it can be argued on this basis that the right did not fully mature until the evidentiary requirements for its consideration by the Minister were met, I would be prepared to accept that it was an “accruing” right. Certainly I do not think it is helpful to seek to categorize it in other terms, for example as to whether it was an “inchoate”, “conditional” or “contingent” right. Nor does it assist to categorize it, as did the learned Divisional Court judge, as not being a “vested” right. These terms tend to obscure what Thurlow, J, in the passage quoted earlier, pinpointed as the real difficulty in this kind of case, which is to determine whether there is “anything that answers to the description” of the word “right” in the applicable Interpretation Act legislation.
In reaching the above conclusion as to the outcome of this appeal, I wish to make it clear that I express no view on whether, in the circumstances of this case, the appellant is entitled to succeed in its claim for a refund on the merits. That is a matter for the Minister to decide, and this Court will not interfere with the exercise of the Minister’s discretion so long as it is exercised on proper principles and on the basis of considerations properly taken into account by her in that regard. In disposing of this appeal it is neither necessary nor desirable for this Court to attempt to spell out those principles and considerations. Equally it is unnecessary to express any view on the question, which was raised during the hearing of the appeal, as to whether s 2(8) of the Act, as amended in 1975, would preclude a taxpayer from pursuing some other avenue of legal recourse for the recovery of an overpayment where the overpayment resulted not from a mistake of law on the part of the taxpayer, as appears to be the case here, but rather from a mistake of fact.
For the reasons given I am of the opinion that the appeal should be allowed. Paragraph 2 of the order of the Divisional Court dated June 15, 1979 should be set aside, and in its place there should be an order declaring that Minister of Revenue is under an obligation in law to receive and consider the appellant’s claim for a refund of tax under The Retail Sales Act, and to take such action on the claim as is then indicated, in accordance with the reasons for judgment of this Court herein.
The appellant is entitled to its costs in the Divisional Court and of this appeal.