T-351-87
Extendicare Health Services Inc. (Applicant)
v.
Minister of National Health and Welfare
(Respondent)
INDEXED AS: EXTENDICARE HEALTH SERVICES INC. V.
CANADA (MINISTER OF NATIONAL HEALTH AND WELFARE)
Trial Division, Jerome A.C.J.—Toronto, May 25;
Ottawa, September 18, 1987.
Customs and excise — Excise Tax Act — S. 44.25 certifi
cate — "Bona fide public institution" — Applicant operating
homes providing long-term nursing care for aged, infirm or
incapacitated persons — Services available to anyone needing
them provided residency requirements met — Homes run for
profit — Applicant satisfying conditions of government aid
and providing care for aged in Excise Tax Act, s. 44.25 — Not
"bona fide public institution" — Tax exemptions reserved for
organizations which, in addition to providing health care to
public, either publicly owned or operated — Object of s. 44.25
to relieve organizations supported entirely by tax money from
paying further taxes — Excise Tax Act, R.S.C. 1970, c. E-13,
s. 44.25 (as added by S.C. 1986, c. 9, s. 34) — Federal Court
Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 18.
Construction of statutes — Excise Tax Act, s. 44.25
"Bona fide public institution" — Statute to be construed to
prevent any clause, sentence or word from being superfluous
— When legislature enacting particular phrase in statute,
presumption that saying something not said immediately
before — Parliament intending to emphasize tax exemptions
reserved for organizations which, in addition to providing
health care to public, either publicly owned or operated —
Excise Tax Act, R.S.C. 1970, c. E-13, s. 44.25 (as added by
S.0 1986, c. 9, s. 34).
This is an application for mandamus requiring the respon
dent to issue certificates pursuant to section 44.25 of the Excise
Tax Act. The applicant operates nursing homes, which provide
long-term care for aged, infirm or incapacitated persons. Each
home receives provincial aid and operates under provincial
nursing home legislation. Services are available to anyone who
needs them provided certain residency requirements are satis
fied. The homes are, however, run for profit. The Department
refused certification on the ground that the term "bona fide
public institution", used to define "certified institution", meant
one which derives its operational authority and support from
public sources, as opposed to one which is owned and operated
for private purposes or personal gain. There are three prerequi
sites for an institution to be certified under section 44.25: 1) it
must be a bona fide public institution 2) it must provide care
for children or aged, infirm or incapacitated persons; and 3) it
must be in receipt annually of aid from the Government of
Canada or a province. The Extendicare homes satisfy the
second and third requirements, so the issue is whether they are
"bona fide public institutions".
Held, the application should be dismissed.
The applicant argues that by meeting two conditions, it also
meets the third condition. To accept that interpretation would
be to conclude that the first condition is superfluous and adds
nothing to the law. The words "bona fide" cannot be ignored.
After considering the canon of construction that no word shall
be superfluous, the meaning given to "institution" in Re Attor-
ney-General of Ontario and Tufford Rest Home et al. (1980),
30 O.R. (2d) 636 (Co.Ct.), and dictionary definitions of "pub-
lic", "public institution", and "bona fide", it is clear that
Parliament used these specific words to emphasize that tax
exemptions should be reserved for organizations which, in
addition to providing health care to the public, are either
publicly owned or operated. That appears to be the only
interpretation which would accomplish the statute's purpose.
The object of section 44.25 is to relieve organizations which are
supported entirely by tax money from paying further taxes.
There is no reason to conclude that Parliament intended by
section 44.25 to improve the profit picture of a privately owned
company, even if it does provide health care services to the
public.
CASES JUDICIALLY CONSIDERED
APPLIED:
Reg. v. Bishop of Oxford (1879), 4 Q.B.D. 245; Hill v.
William Hill (Park Lane), Ld., [1949] A.C. 530 (H.L.);
Re Attorney-General of Ontario and Tufford Rest Home
et al. (1980), 30 O.R. (2d) 636 (Co.Ct.).
CONSIDERED:
Struthers v. Town of Sudbury (1900), 27 O.A.R. 217
(C.A.).
REFERRED TO:
In re C.P.R. and Lac Pelletier R.M., [1944] 3 W.W.R.
637 (Sask. C.A.).
COUNSEL:
Michael J. W. Round and John T. Morin,
Q.C. for applicant.
Marilyn Doering-Steffen for respondent.
SOLICITORS:
Campbell, Godfrey & Lewtas, Toronto, for
applicant.
Deputy Attorney General of Canada for
respondent.
The following are the reasons for order ren
dered in English by
JEROME A.C.J.: The applicant seeks an order by
way of mandamus under section 18 of the Federal
Court Act [R.S.C. 1970 (2nd Supp.), c. 10]
requiring the respondent to issue certificates pur
suant to section 44.25 of the Excise Tax Act,
R.S.C. 1970, c. E-13 [as added by S.C. 1986, c. 9,
s. 34]. The matter came on for hearing in Toronto,
Ontario, on May 25, 1987.
The application is supported by the affidavit of
Douglas J. Harris, Extendicare's Controller. It
reveals that the applicant, an incorporated com
pany, operates a large number of institutions
across Canada, under the name "Extendicare".
The Extendicare homes are all owned by incorpo
rated companies controlled by the applicant. They
all provide long-term nursing care for aged, infirm
or incapacitated persons. Each home is in receipt
of aid from the government of the province in
which it is located and operates under provincial
nursing home legislation. Services are available to
anyone who needs them and who satisfies certain
residency requirements. The provincial govern
ments pay between 50 and 80% of the total per
diem ward rate and the residents pay the remain
der. The applicant admits that the homes are run
for profit, which presumably is distributed as divi
dends to shareholders.
On June 3, 1985, Extendicare submitted
applications to Health and Welfare Canada for
certification of two of its homes under the prede
cessor to section 44.25 of the Excise Tax Act.
That section reads as follows:
44.25 (1) In this section,
"certified institution" means an institution that by a certificate
issued by the Minister of National Health and Welfare is
certified to be, as of the day specified in the certificate,
(a) a bona fide public institution whose principal purpose is
to provide care for children or aged, infirm or incapacitated
persons, and
(b) in receipt annually of aid from the Government of
Canada or the government of a province for the care of
persons described in paragraph (a);
"specified day" in relation to an institution, means the later of
(a) the day specified in a certificate referred to in the
definition "certified institution" as the day on which the
institution became an institution as described in paragraphs
(a) and (b) of that definition, and
(b) the first day of the fiscal year in which the application for
a certificate referred to in the definition "certified institu
tion" was made.
(2) Where tax under Part V has been paid in respect of any
goods and a certified institution has purchased the goods on or
after the specified day for the sole use of the institution and not
for resale, an amount equal to the amount of that tax shall,
subject to this Part, be paid to that institution if it applies
therefor within two years after it purchased the goods.
(3) Where tax under Part V has been paid in respect of any
goods and an institution under construction that subsequently
becomes a certified institution, or a person acting on behalf of
such an institution, has purchased the goods within two years
before the specified day for the sole use of the institution and
not for resale, an amount equal to the amount of that tax shall,
subject to this Part, be paid to that institution if it applies
therefor within two years after the day on which the certificate
was issued in respect of the institution.
Applications for the other homes were submitted
thereafter. An official of the respondent Depart
ment replied to these applications, indicating that
the term "bona fide public institution" had been
defined in Department guidelines as being one
which derives its operational authority and support
from public sources as opposed to one which is
owned and operated for private purposes or per
sonal gain. Because the applicant's institutions are
profit-making, they fall outside this definition.
Extendicare's argument on this application is
that profit is irrelevant and that since Extendicare
has fulfilled all conditions set out in the Act, the
Minister is under a duty to issue the certificates. I
must therefore consider whether the Extendicare
homes qualify for certification under section 44.25.
There is no question that they satisfy the require
ments of government aid and providing care for
aged or infirm persons. The remaining question is
whether they constitute "bona fide public institu
tions".
There is no definition of the term in the statute,
so the search for meaning must begin elsewhere. I
was referred during the hearing to a decision of
the Ontario Court of Appeal which deals with the
definition of a "public hospital". In Struthers v.
Town of Sudbury (1900), 27 O.A.R. 217, the
Court of Appeal considered a section of The
Assessment Act, R.S.O. 1887, c. 193, s. 7, which
exempted from taxation "Every ... public hospital
...". The issue was whether Sudbury General
Hospital, which was privately owned and managed
for profit, qualified for the exemption. The appli
cants here laid great stress on the following pas
sage from this decision (at page 221):
That an institution is established for private gain or is held in
a private hand is not necessarily inconsistent with its being in
its nature of a public character.
It is important, however, to put this statement in
context. The Court prefaced its holding in this
matter by noting [at page 220]:
Other clauses of the exemption section do not throw much, if
any, light on the subject.
and [at page 222]:
In the absence of any legislative declaration on the subject, and
the words "public hospital" having no technical meaning or any
precise legal meaning, it seems more reasonable to hold that
they are used in their popular sense and that any institution
which, though not in a strictly legal right, in a popular sense
may be called a public hospital, may claim exemption ....
We are more fortunate in this case in that the
other paragraphs of section 44.25 serve to cast
considerable light on the meaning of a "bona fide
public institution". There are three prerequisites
for an institution to be certified under this section:
1. it must be a bona fide public institution;
2. it must provide care for children or aged,
infirm or incapacitated persons; and
3. it must be in receipt annually of aid from the
Government of Canada or a province.
There is no disagreement that Extendicare
meets conditions 2 and 3. Essentially, the appli
cant's argument is that by doing so it also meets
condition number 1. To accept that interpretation
is to conclude that the first condition is superfluous
and adds nothing to the law. Since Parliament has
taken the trouble to confine the benefit of these
provisions, not just to public institutions, but to
bona fide public institutions, those words cannot
be ignored.
It has been recognized as a "settled canon of
construction" that
... a statute ought to be so construed that, if it can be
prevented, no clause, sentence, or word shall be superfluous,
void, or insignificant. (Reg. v. Bishop of Oxford (1879), 4
Q.B.D. 245, at page 261).
This principle was given even clearer articulation
by Viscount Simon in Hill v. William Hill (Park
Lane), Ld., [ 1949] A.C. 530 (H.L.), at pages
546-547:
... it is to be observed that though a Parliamentary enactment
(like parliamentary eloquence) is capable of saying the same
thing twice over without adding anything to what has already
been said once, this repetition in the case of an Act of Parlia
ment is not to be assumed. When the legislature enacts a
particular phrase in a statute the presumption is that it is
saying something which has not been said immediately before.
The rule that a meaning should, if possible, be given to every
word in the statute implies that, unless there is good reason to
the contrary, the words add something which would not be
there if the words were left out.
This doctrine of construction has also found
approval in Canada. (See, for example, In re
C.P.R. and Lac Pelletier R.M., [1944] 3 W.W.R.
637 (Sask. C.A.).)
What, then, is a bona fide public institution?
The word "institution" was given careful consider
ation by Kovacs Co.Ct.J. in Re Attorney-General
of Ontario and Tufford Rest Home et al. (1980),
30 O.R. (2d) 636 (Co.Ct.). In that case he was
deciding whether a privately-owned nursing home
was subject to inspection under the The Public
Institutions Inspection Act, 1974, S.O. 1974, c. 64.
He began with dictionary definitions (at pages
639-640):
I was given various definitions of "institution". The New
Oxford Dictionary defines "institution" as:
3. Organization for promotion of some public object, reli
gious, charitable, reformatory, etc.; building used by this;
(esp. pop.) building used by benevolent or educational
institution.
The Oxford English Dictionary gives the definition:
7. An establishment, organization, or association, instituted
for the promotion of some object, esp. one of public or
general utility, religious, charitable, educational, etc., e.g., a
church, school, college, hospital, asylum, reformatory, mis
sion, or the like.
It would appear that the connotation of "institution" bears
with it the concept of it having a public object. The evidence
was that the private company operating the nursing home in
this instance had the object of operating a nursing home for
private profit. I hold that the concept of private profit is alien
to the generally-accepted meaning of an institution. I note as
well that the Act is entitled, in s. 9, as "The Public Institutions
Inspection Act, 1974". (Emphasis added.) Accordingly, the
concept of "institution" having a connotation of a public object,
as distinguished from a private enterprise, is reinforced by the
adjective "public" used in the title to the Act.
I accordingly hold that privately operated nursing homes are
not "institutions" within the meaning of s. 4 of the Public
Institutions Inspection Act, 1974.
I find this analysis very appropriate to the problem
we are considering in this case. I would observe
that, as in the statute before Kovacs Co.Ct.J.,
section 44.25 reinforces the word "institution"
with the adjective "public". Black's Law Diction
ary [Fifth Edition] defines a "public institution"
as:
Institution ... .
Public institution. One which is created and exists by law or
public authority, for benefit of public in general; e.g., a
public hospital, charity, college, university, etc.
The Shorter Oxford English Dictionary [Third
Edition] gives the adjective "public" as meaning:
1. Of or pertaining to the people as a whole; ... 2. Done or
made by or on behalf of the community as a whole; ... 3. That
is open to may be used by, or may or must be shared by, all
members of the community; generally accessible or available
... Also (in narrower sense), That may be used, enjoyed,
shared or competed for, by all persons legally or properly
qualified; ... 4. Open to general observation; ... 5. Of, pertain
ing to, or engaged in the affairs or service of the
community .... 6. Of or pertaining to a person in the capacity
in which he comes in contact with the community; ...
7. Devoted or directed to the promotion of the general welfare;
public-spirited, patriotic. Now chiefly in phr. p. spirit ... .
Finally, the term "bona fide", when used as an
adjective, is generally taken to mean "honestly",
"genuinely" or "in good faith". (See Stroud's
Judicial Dictionary, 4th Ed., (London, 1971), at
pages 302-305). It seems obvious that Parliament
used these specific words to emphasize that tax
exemptions should be reserved for organizations
which, in addition to providing health care to the
public, are either publicly owned or publicly
operated.
Indeed, that appears to be the only interpreta
tion which would accomplish the statute's purpose.
The object of section 44.25 is to relieve organiza
tions which are supported entirely by tax money
from paying further taxes. If an institution is
created and supported by the taxpayers through
one taxing authority, it doesn't make sense for it to
pay taxes to another. There is no reason to con
clude, however, that, Parliament intended by sec
tion 44.25 to improve the profit picture of a pri-
vately-owned company even if it does provide
health care services to the public.
I therefore find that the Extendicare homes are
not entitled to be granted certificates under section
44.25 of the Excise Tax Act. The application will
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.