T-4230-77
The Queen (Plaintiff)
v.
George R. McLaughlin (Defendant)
Trial Division, Marceau J.—Toronto, June 27;
Ottawa, August 16, 1978.
Income tax — Income calculation — Award given taxpayer
for achievements in agriculture — Defendant unaware of his
being considered for award until after selection — Whether or
not award taxable as a prize within meaning of s. 56(1)(n) —
Income Tax Act, S.C. 1970-71-72, c. 63, s. 56(1)(n).
During his 1974 taxation year, defendant taxpayer, a farmer
and a chairman of an agricultural marketing board, received a
$10,000 award for his achievements in agriculture. Until
informed of his selection, defendant had no knowledge of his
being considered. The issue in this action is whether or not the
award was "an amount received by him as or on account of a
... prize for achievement in a field of endeavour ordinarily
carried on by the taxpayer" within the meaning of paragraph
56(1)(n) of the Income Tax Act. If the award were a prize
within the meaning of that section, it would have to be included
in the taxpayer's income for that year.
Held, the action is dismissed. The word "prize" connotes
something striven for in a competition, in a contest, and there
cannot be a competition or a contest in the real sense without
the participants being aware that they are involved. Moreover,
the achievement contemplated in the enactment must be a
specific one, not achievements in the sense of personal merits of
a general nature like those for which defendant was granted the
award. Defendant's award was in the nature of a gift, a transfer
of property from one to another gratuitously with no valuable
or legal consideration being involved. The award does not fall
within the meaning of paragraph 56(1)(n).
Canadian Eagle Oil Co. v. The King [1946] A.C. 119,
referred to. Minister of National Revenue v. Watts [1966]
Ex.C.R. 1043, referred to. Rot her v. Minister of National
Revenue (1955) 12 Tax A.B.C. 379, referred to. Federal
Farms Ltd. v. Minister of National Revenue [1959]
Ex.C.R. 91, referred to.
ACTION.
COUNSEL:
Wilfrid Lefebvre for plaintiff.
Richard G. Pyne for defendant.
SOLICITORS:
Deputy Attorney General of Canada for
plaintiff.
Pyne & Rovet, Toronto, for defendant.
The following are the reasons for judgment
rendered in English by
MARCEAU J.: During his 1974 taxation year,
the defendant taxpayer received a ten thousand
dollar award from the MacMillan Trust for his
achievements in agriculture. The issue in this
action is whether or not this award was "an
amount received by him as or on account of a ...
prize for achievement in a field of endeavour
ordinarily carried on by the taxpayer" within the
meaning of paragraph 56(1)(n) of the Income Tax
Act, S.C. 1970-71-72, c. 63, with the consequence
that it had to be included in his income for that
year.
The said Trust was settled, in 1966, by H. R.
MacMillan, a citizen of Vancouver, B.C., with a
view to establishing a fund "for the purpose of
granting awards from time to time for outstanding
achievements in agriculture at the University of
Guelph". An award of $10,000 was to be given on
the first day of May 1969 and $10,000 on the first
day of May each and every five years thereafter.
The "H. R. MacMillan Laureate in Agricul
ture" is selected by a committee appointed by the
President of the University of Guelph and com
prised by deans of the various agricultural colleges
and other agriculturists throughout Canada. The
only term of reference given the committee is that
must be chosen "the individual who has made the
most creative contribution to Canadian agriculture
in the previous five-year period". The committee
invites the Deans of Agriculture and Chairmen of
Agrology Institutes across the country to nominate
candidates from each province. A biography of
each individual recommended and a summary of
the contribution made by him are submitted for
consideration. The names of the candidates con
sidered are never publicized; only the person
selected is, in due time, invited to accept the
award.
In 1974, the defendant was selected as the
second MacMillan Laureate. Until the news was
conveyed to him he had no knowledge whatsoever
of his being considered; in fact the very existence
of the Laureate was only very vaguely known to
him. He was then still Chairman of the Ontario
Milk Marketing Board, a position to which he had
been appointed from 1965 to 1968 and to which in
subsequent years he was elected by his fellow
members of the Board who themselves were elect
ed by milk producers in their respective regions of
the province. Of course, the way he had performed
his duties at the head of the Board was an impor
tant factor in his being selected but it was by no
means the sole factor. He had always given, in the
eyes of the selection committee, a strong leader
ship in the establishment of sound programs for
the dairy farming and milk distributing at the
national level, and he had been himself a highly
successful farmer.
The Tax Appeal Board found that the award did
not fall under the terms of paragraph 56(1)(n) of
the Act, because it was not a "prize for 'an
endeavour ordinarily carried on' by .. . [the tax
payer]". In the opinion of the Board, a "prize" is
"given as a symbol of victory for superiority aris
ing out of a competitive situation", whereas there
was no competition involved here, and moreover
the award was given for "general meritorious con
duct in the field to which [the defendant] devoted
his life, [and] not ... for a specific achievement in
the dictionary sense within the limits of his profes
sion or business".
I completely agree with the decision of the
Board. In my opinion, the word "prize" connotes
something striven for in a competition, in a con
test, and I don't think there can be a competition
or a contest in the real sense without the partici
pants being aware that they are involved. More
over, if that is the meaning of the word "prize", as
I believe it is, the achievement contemplated in the
enactment must be a specific one, not achieve
ments in the sense of personal merits of a general
nature like those for which the defendant was here
granted the award.
Counsel for the plaintiff raised two arguments
against this interpretation of paragraph 56(1)(n).
(a) His first contention is that the French ver
sion of paragraph 56(1)(n), as it now stands, does
not support such a strict interpretation. When the
enactment was first adopted in 1972 the word
"prix" was used in the French text, but in 1973
(S.C. 1973-74, c. 14, section 15), the word
"récompense" was substituted therefor. Counsel
argues that the word "récompense" has a very
broad meaning and does not necessarily refer to
something given as a symbol of victory in a compe
tition. I am ready to agree that the word "récom-
pense" is more comprehensive than the word
"prix" and does not necessarily connote a contest
in the strict sense of that word. But it certainly
cannot be contemplated that Parliament intended
to broaden the meaning of the enactment itself by
simply adopting a new version thereof in one of the
two official languages. In any event, in construing
the enactment, regard must be had to both its
versions, English and French, and preference must
be given to the version thereof that better corre
sponds to the true spirit, intent and meaning of the
enactment. (Official Languages Act, R.S.C. 1970,
c. O-2, s. 8.) In my view, the meaning conveyed by
the English version is much more in keeping with
the apparent scheme and philosophy behind the
section taken as a whole, however sweeping it was
intended to be. Moreover, this is a taxing enact
ment which, as it is well known, requires a strict
interpretation (see Canadian Eagle Oil Company
v. The King [1946] A.C. 119) and if it can be said
that a difference exists between the two versions,
the narrower one must prevail.
(b) Counsel's second argument is that if para
graph 56(1)(n) were not to be interpreted as cover
ing awards like the one here in issue, its introduc
tion in 1972 would have been useless and
meaningless since the case law was already to the
effect that a price received as a result of a compe
tition in the field of endeavour of the taxpayer had
to be included in his income, and in support of his
statement he refers to the case of M.N.R. v. Watts
[1966] Ex.C.R. 1043. The answer to this argu
ment is twofold. Firstly, the purpose of a new
enactment may very well be merely to confirm
unequivocally a situation already arrived at in
jurisprudence and, in any event, it is not the role of
the Court to construe a legislative enactment
beyond its normal and common sense meaning to
make it achieve a result supposedly contemplated
by its draftsmen. Secondly, I do not agree with the
statement that under the former Act a prize
received as a result of a competition was always
taxable: on the contrary, the Courts have consist
ently held that, (and I am quoting here the words
of Mr. Justice Gibson in the very case referred to
by counsel): "Because it is not possible to lay down
any comprehensive definition of `gift' or `income'
under the Income Tax Act, each case must fall to
be considered on its facts in matters such as are in
issue in this particular case". (See: Rother v.
M.N.R. (1955) 12 Tax A.B.C. 379; Federal
Farms Limited v. M.N.R. [1959] Ex.C.R. 91.)
In my view, the award received by the defendant
taxpayer from the H. R. MacMillan Trust for his
achievements in agriculture was in the nature of a
gift, i.e. a transfer of property from one to another
gratuitously with no valuable and legal consider
ation whatsoever being involved. Such an award
does not fall within the meaning of paragraph
56(1)(n) of the Act.
The action will therefore be dismissed with
costs.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.