COURT FILE NO.: 00-CV-14232
DATE.- 20000831 

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

The Applicant (Thomas Kennedy )
David Lindsay, agent for the Applicant

- and -

Canada Customs and Revenue Agency and Roger Leclaire, for the
Respondent Canada Customs and Revenue Agency
and
theOttawa-Carleton District School Board and Roger Mills
for the Respondent Ottawa-Carleton District School Board 

(Respondents)

HEARD.- July 20, 2000

REASONS FOR JUDGMENT

Sedgwick J.

[1] The applicant Thomas Kennedy was employed as a teacher by the Ottawa-Carleton District School Board (the "Board").  He retired at the end of the 1999-2000 school year.  On October 5,1998, he sent a "Constructive Notice" to the Minister of the National Revenue terminating "any supposed or assumed contract" obliging him to file an income tax return and pay income tax..  He did so as "a natural person of commoner status", stating that, as such, he was "not a, 'person' included in the
Income Tax Act of Canada who is subject to the income tax" (Applicant's Book of Authorities, Tab 1).

[2] Subsequently, the respondent Canada Customs and Revenue Agency (the "Agency") issued a Requirement to Pay (Form T1118B) to the Board requiring the deduction of certain amounts from the applicant's pay and the remittance of them to the Agency under s. 224(l.2) of the Income Tax Act (Applicant's Book of Authorities, Tab 2).

[3] During the month of June 2000, the Board deducted a total amount of $1,402.30 from the applicant's pay in accordance with the Requirement to Pay (Form T1118B). On June 22, 2000, Kealey J. ordered the Board to hold in trust this amount and any other amount to be deducted from the applicant's pay in accordance with the Requirement to Pay.

[4] The Board appeared on the return of this application to inform the court that the moneys are being held in trust to abide the result of this motion and to assure the court that the moneys will be remitted as directed by the court.  The Board did not participate in the argument of this application.  The Attorney-General of Canada and the Attorney-General of Ontario were also given notice of this application and have chosen not to appear.

[5] A preliminary objection was raised by counsel for the Agency as to the status of Mr. Lindsay to act as agent for the applicant in presenting his submissions. As Mr. Lindsay had previously appeared before Kealey J. on June 22, 2000, the court allowed him to continue to act as agent for the applicant.

[6] This application raises the issue whether the position taken by the applicant in his Constructive Notice to the Minister of National Revenue, dated October 5, 1999, is correct.  Is the payment of income tax a voluntary act?  Is a natural person a person included in the Income Tax Act who is subject to the income tax?

[7] In my opinion, the answers to these questions depend on the interpretation of the words used in the Income Tax Act and the general rules used by the courts to interpret words used by Parliament or a Legislature in enacting a statute.

[8] The general rule of statutory interpretation is that words and sentences must be construed in their ordinary meaning or common or popular sense, unless the context requires some special or particular meaning to be given to them. The rule was stated by Lord Tenderden in Attorney- General v. Winstanley, (1831) 2 D.&CI. 302, 310, "the words of an Act of Parliament which are not applied to any particular science or art" shall be construed "as they are understood in common language".

[9] Under  s. 2 of the Income Tax Act, the liability to pay income tax is imposed on resident or non-resident "persons".  Under s. 248(l) of the, Act, a "person" is defined as follows:

"person", or any word or expression descriptive of a person, includes any corporation, and any entity exempt, because of subsection 149(l), from tax under Part I on all or part of the entity's taxable income and the heirs, executors, administrators or other legal representatives of such a person, according to the law of that part of Canada to which the context extends;

In his submissions, Mr. Lindsay emphasized the words "includes any corporation". By inference, he says, Parliament intended to exclude natural persons from this statutory definition of a "Person". At least that is what I understand to be the essence of his submission.

(10] Under s. 248(l) of the Income Tax Act, a "taxpayer" includes any "person" whether or not liable to pay tax.  Therefore, in .Mr.  Lindsay's submission, if someone is not a "person" as defined in the Income Tax Act, then that someone cannot be a "taxpayer" as defined by the Act.

[11] In support of this submission, Mr. Lindsay has drawn my attention to Blackstone's Commentaries as to the Rights of Persons and to Magna Carta which, as he rightly reminded me, Lord Denning has described as the greatest constitutional document of all time.  As Blackstone points out,

"Persons are divided by the law into either natural persons or artificial".  He goes on to explain.

Natural persons are such as the God of nature formed us; artificial are such as are created and devised by human laws for the purposes of society and government, which are called corporations or bodies of politic.

[12] It is significant for our present purposes that Blackstone considers both artificial persons and natural persons to be persons
although they may have different characteristics (see para. [20] below.

[13] I was also referred to the definitions of "person"  in The Business Profits War Tax Act, 1916, S.C., 6-7 Geo V, c.11 and in The Income War Tax Act, 1917, S.C., 7-8 Geo 

V., c.28 forerunners of the present Income Tax Act.  These statutes contain identical definitions of "person", in the following terms:

"person" means any individual or person and any syndicate, trust, association or other body and any body corporate, and the heirs, executors, administrators, curators and assigns or other legal representatives of such person, according to the law of that part of Canada to which the context extends;

[14] Unlike its forerunners, the definition of a "person" in the current Income Tax Act does not expressly mention "any individual or person" (see para. [9] above).  I am asked by the applicant to infer from this omission, that, in enacting the current definition, Parliament intended to relieve natural persons from their previous statutory obligation to pay income taxes.

[15] Who is a "person"' within the meaning of the Income Tax Act? Applying the established rules of statutory interpretation (see para, [8] above), the question may properly be restated: what is the ordinary meaning or common or popular sense of the word , "person"?  The Canadian Oxford Dictionary (1998), gives as the primary meaning of the word, "an individual human being".  The Nelson Canadian Dictionary of the English Language (1997) gives as the primary meaning of the word, "a living human being". Dictionaries are a recognized aid to the courts in determining the ordinary meaning or common or popular sense of a word used in a statute in accordance with the general rules of statutory interpretation.

[16] Black's Law Dictionary (7th Ed.) (1999) gives as the primary meaning of the word "person", "a human being" and, as a secondary meaning, "an entity (such as a corporation) that is recognized by law as having the rights and duties of a human being". Osborn's Concise Law Dictionary (7th Ed.), (1983) defines a "person" as:

The object of rights and duties, that is, capable of having rights and of being liable to duties. Persons are of two kinds, natural and artificial. A natural person is a human being; an artificial person is a collection or succession of natural persons forming a corporation.

In the Dictionary of Canadian law (2nd Ed.) (1995), a "person" is a "natural person"' and "includes a body corporate or politic" Blackstone himself made the same distinction between natural and artificial persons and treated them all as persons in the eyes of the law (see para. [11] above).

[17] These definitions taken from dictionaries including dictionaries of legal terms are uniform and clear.  A "person" in its ordinary meaning includes a human being or a natural person as well as an artificial person such as a corporation.  The primary sense of the word is a natural person; the secondary sense, an artificial person such as a corporation.

[18] The Interpretation Act (Canada) is consistent with this ordinary meaning.  Section 35 of that Act defines a "person" as follows:

"person" or any word or expression, descriptive of a person includes a corporation.

The use of the verb "includes" extends the definition to include a corporation.  The definition does not exclude a human being.  In the French text of the Act, the meaning is even clearer:

"personne" Personne physique ou morale; l'une ou l'autre notions sont visées dans des formulations générales, impersonnelles ou comportant des pronoms ou adjectifs indéfinis.

A "personne physique" is a natural person; a "personne morale" is a corporation.

[19] I am, therefore, driven to the conclusion that in its ordinary meaning and in its common or popular sense, the word "person" in a statute includes both natural persons and corporations.

[20] I am also driven to the conclusion that there is nothing in the context of the Income Tax Act, or in the authorities to which Mr, Lindsay has referred me, that would support the interpretation that in the Income Tax Act, Parliament intended the word "person" to be used in the narrower sense of comprising only corporations or other artificial persons.  The statutory definition of a "person" in section 248(l) of the Income Tax Act includes "the heirs, executors, administrators ... of such a person".

Only a natural person who has died has "heirs, executors, administrators …".  A corporation or other artificial person does not.  As the English jurist Lord Chancellor Thurlow (1731-1806) is quoted as saying: "Did you ever expect a corporation to have a conscience, when it has no soul to be damned, and nobody to be kicked?" J. Poynder, Literary Extracts, (1844)
Vol. 1, page 268.

[21] I find that a "person" as defined in s. 248(l) of the Income Tax Act includes both a natural person and an artificial person.  It follows that the applicant is a "person" and a "taxpayer". I also find that he is a person "resident" in Canada. Either a corporation or a person may be "resident" or, indeed, for other legal purposes "domiciled", in Canada or elsewhere. As a "person", the applicant has the, same rights and obligations as any other "person" under the Income Tax Act.  His
obligations include the filing of annual income tax returns and the payment of any income tax owing under his returns.

[22] The more fundamental submission by the applicant, that payment of income tax is a voluntary act of the taxpayer in the name of a contract,was not fully developed before me by Mr. Lindsay in a legal sense. Rather, the proposition seems to be taken as self-evident. The apparent failure of the Agency to deny the proposition is inconclusive. Rule 25.07(2) of the Ontario Rules of Civil Procedure, to which Mr. Lindsay referred me, applies only to pleadings in an action; not to application records or factums.  The Latin maxims upon which the applicant relies on this branch of his case are devoid of any context that would make them applicable to this application.

[23] The Income Tax Act is valid legislation enacted by the Parliament of Canada and applicable in accordance with its terms.  It is a public Act of Parliament and not a private Act as suggested by the applicant. I have already expressed my view that the applicant is one of the "persons" to whom the Act applies .(para. [22] above). In my view, there is no support in "the common law, aka the rule of law" for the extremely broad proposition that all taxes are voluntary. The rule of law refers to the supremacy of law over the exercise of arbitrary power, JA. Corry & JE. Hodgetts, Democratic Government & Politics, (1959) 3rd Ed., page 96.  The Income Tax Act is a law of general application enacted by an elected legislature. It does not represent an exercise of arbitrary power.

[24]  The applicant also raised objections as to the constitutional validity of the federal legislation under which the governments of Canada and its provinces have entered into tax collection arrangements whereby Canada collects income tax on behalf of itself and the provinces. He said that this legislation is invalid as a delegation of legislative powers by the provinces. This argument has been rejected by the courts in Winterhaven Stables Ltd. v. Canada (Attorney General), [1998] A.C. No.
924 (Alta.C.A.) and other cases.

[25] Finally, the applicant objected to the Form of the Requirement to Pay (Form T1118B) issued by the Agency to the Board is on a number of grounds, including the absence of a signature by the Director-Taxation.

I have considered his objections and find no merit in them. I find that the Requirement to Pay valid and enforceable against the applicant.

[26] Accordingly, this application is dismissed with costs fixed at $500 and payable to the Agency. An order will issue requiring the Board to remit to the Agency all amounts now or in future held in trust by the Board under the order made by Kealay J. on June 22, 2000.

Released: August 31, 2000

COURT FILE NO.: 00-CV- 14232
DATE: 20000831

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

Thomas Kennedy

Applicant

and -

Canada Customs and Revenue Agency and Ottawa- Carleton District School Board

Respondents

REASONS FOR JUDGMENT
                                                       
Sedgwick J.