Hamilton Kilty Hockey Club Inc. v. The Attorney General of Ontario et al. [Indexed as: Hamilton Kilty Hockey Club Inc. v. Ontario (Attorney General)]
64 O.R. (3d) 328
[2003] O.J. No. 1163
Docket No. C38918
Court of Appeal for Ontario
Borins, MacPherson and Cronk JJ.A.
April 9, 2003
*Application for leave to appeal to the Supreme Court of of Canada dismissed with costs November 20, 2003 (Iacobucci, Binnie and Arbour JJ.).
Civil procedure -- Summary judgment -- Holder of licence to sell break open lottery tickets (BOTs) bringing class action for declaration that provincial administration fee is unconstitutional as form of indirect taxation and for restitution of fees remitted to provincial government -- [page329] Government bringing motion for summary judgment striking claim for restitution -- Government adducing evidence that licence-holder did not bear burden of provincial fee -- Licence-holder having evidential burden to show that issue of who bore burden of provincial fee is genuine issue for trial -- Licence-holder adducing no responding evidence -- Licence- holder could not rely on fact that government refused to answer certain written interrogatories -- Licence-holder failing to discharge evidential burden -- Motions judge proceeding on assumption that provincial fee is unconstitutional -- Motions judge correctly determining that no genuine issue for trial arose concerning licence-holder's entitlement to restitution in light of settled law on entitlement to restitution of unlawful tax.
The appellant held a licence to sell break open lottery tickets (BOTs). Ontario introduced a provincial administration fee of a maximum of 5 per cent of the gross selling price of each box of BOTs in 1997. The appellant commenced proceedings against the respondents under the Class Proceeding Act, 1992, S.O. 1992, c. 6 in which it claimed (i) a declaration that the Provincial Fee contravened s. 207(1)(b) of the Criminal Code, R.S.C. 1985, c. C-46 and was, accordingly, ultra vires and of no force or effect; (ii) alternatively, a declaration that the Provincial Fee, as a form of indirect taxation, was unconstitutional as it contravened s. 92 of the Constitution Act, 1867; (iii) restitution to the appellant and to each of the proposed class members for the amount of the Provincial Fee remitted by them; and (iv) pre- and post-judgment interest. The respondents brought a motion under Rule 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for summary judgment striking out the restitution and pre- and post-judgment interest claims. For the purpose of the motion, the motions judge was invited to assume, without deciding, that the Provincial Fee was unconstitutional. The motions judge granted the motion and struck out the claims for restitution and pre- and post-judgment interest. The appellant appealed.
Held, the appeal should be dismissed.
The moving party on a motion for summary judgment under Rule 20 must establish that there is no genuine issue of material fact requiring trial. When the moving party meets that onus, the party opposing summary judgment must then demonstrate that its claim is one with a real chance of success. There was no genuine issue for trial concerning the question of who bore the burden of the Provincial Fee. The respondents led uncontradicted evidence on the summary judgment motion that the terms of the appellant's BOT licence precluded it from paying the Provincial Fee from any source other than the gross proceeds of the sale of BOTs. The evidence before the motions judge established a prima facie case that the appellant did not bear the burden of the Provincial Fee. Both the Provincial Fee collection and the applicable BOTs refund systems supported the conclusion that the Provincial Fee scheme is a user-pay system, which is financed and indirectly, but ultimately, paid for by consumers through reduction of the prize board. In the face of that evidence, it was incumbent on the appellant to adduce evidence on the motion establishing specific facts showing that there was a genuine issue for trial. While the failure to file responding evidence on a motion for summary judgment will not inevitably result in summary judgment, the appellant had an evidential burden, in the circumstances, to show that the issue of who bore the burden of the Provincial Fee was a genuine issue for trial. It did not discharge that burden. The motion proceeded on the basis of written interrogatories. The appellant could not rely on the fact that the respondents had declined to answer a series of questions posed in the interrogatories relating to the incidence or burden of the Provincial [page330] Fee. The appellant chose to lead no opinion or other evidence on the motion concerning the issues raised by the challenged interrogatory questions. The questions themselves were not evidence nor were the respondent's refusals to answer those questions.
The appellant failed to establish before the motions judge that, as the holder of the BOT licence, it was deprived of profit from the sale of BOTs which would otherwise have accrued to it but for the imposition of the Provincial Fee. There was no demonstration by the appellant that it had sustained any damage, loss or detriment as a result of the introduction of the Provincial Fee. The motions judge did not err in finding that there was no genuine issue for trial concerning the appellant's asserted entitlement to restitutionary relief in light of settled law regarding restitution of an unconstitutional tax.
APPEAL by a plaintiff from a judgment of Crane J., [2002] O.J. No. 3817 (Quicklaw) (S.C.J.).
Cases referred to Aguonie v. Galion Solid Waste Material Inc. (1998), 1998 954 (ON CA), 38 O.R. (3d) 161, 156 D.L.R. (4th) 222, 17 C.P.C. (4th) 219 (C.A.), revg (1997), 1997 12145 (ON SC), 33 O.R. (3d) 615 (Gen. Div.); Air Canada v. British Columbia, 1989 95 (SCC), [1989] 1 S.C.R. 1161, 36 B.C.L.R. (2d) 145, 59 D.L.R. (4th) 161, 95 N.R. 1, [1989] 4 W.W.R. 97, 41 C.R.R. 308; Canadian Pacific Airlines Ltd. v. British Columbia, 1989 94 (SCC), [1989] 1 S.C.R. 1133, 36 B.C.L.R. (2d) 185, 59 D.L.R. (4th) 218, 96 N.R. 1, [1989] 4 W.W.R. 137, supp. reasons 1989 3 (SCC), [1989] 2 S.C.R. 1067, 63 D.L.R. (4th) 768n, 102 N.R. 75; Dawson v. Rexcraft Storage & Warehouse Inc. (1998), 1998 4831 (ON CA), 164 D.L.R. (4th) 257, 20 R.P.R. (3d) 207, 111 O.A.C. 201, [1998] O.J. No. 3240 (Quicklaw) (C.A.); Guarantee Co. of North America v. Gordon Capital Corp., 1999 664 (SCC), [1999] 3 S.C.R. 423, 178 D.L.R. (4th) 1, 247 N.R. 97, 49 B.L.R. (2d) 68, [2000] I.L.R. 1-3741, 39 C.P.C. (4th) 100; Hi- Tech Group Inc. v. Sears Canada Inc. (2001), 2001 24049 (ON CA), 52 O.R. (3d) 97, 11 B.L.R. (3d) 197, 4 C.P.C. (5th) 35 (C.A.); Irving Ungerman Ltd. v. Galanis (1991), 1991 7275 (ON CA), 4 O.R. (3d) 545, 83 D.L.R. (4th) 734, 1 C.P.C. (3d) 248, 20 R.P.R. (2d) 49n (C.A.), revg (1989), 13 R.P.R. (2d) 102 (Ont. H.C.J.); Lang v. Kligerman, 1998 4866 (ON CA), [1998] O.J. No. 3708 (Quicklaw) (C.A.); Meditrust Healthcare Inc. v. Shoppers Drug Mart (2002), 2002 41710 (ON CA), 61 O.R. (3d) 786, 220 D.L.R. (4th) 611, 28 B.L.R. (3d) 163, [2002] O.J. No. 3891 (Quicklaw) (C.A.); Peel (Regional Municipality) v. Canada, 1992 21 (SCC), [1992] 3 S.C.R. 762, 98 D.L.R. (4th) 140, 144 N.R. 1, 12 M.P.L.R. (2d) 229; Rogers Cable TV Ltd. v. 373041 Ontario Ltd. (1994), 1994 7367 (ON SC), 22 O.R. (3d) 25 (Gen. Div.); Transamerica Occidental Life Insurance Co. v. Toronto-Dominion Bank (1999), 1999 3716 (ON CA), 44 O.R. (3d) 97, 173 D.L.R. (4th) 468, 28 E.T.R. (2d) 113 (C.A.), revg in part (1998), 22 E.T.R. (2d) 106 (Ont. Gen. Div.) Statutes referred to Class Proceedings Act, 1992, S.O. 1992, c. 6 Constitution Act, 1867 (U.K.), 30 & 31 Vict., c. 3, s. 92 Corporations Act, R.S.O. 1990, c. C.38 Courts of Justice Act, R.S.O. 1990, c. C.43 Criminal Code, R.S.C. 1985, c. C-46, s. 207(1)(b), (2) Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 20, 20.04(1), 21.01(1)
John W. McDonald and Margaret L. McCarthy, for appellant. Hart Schwartz and Elaine Atkinson, for respondents. [page331]
The judgment of the court was delivered by
1CRONK J.A.: -- Hamilton Kilty Hockey Club Inc., a registered charity and a non-share capital corporation incorporated under the Corporations Act, R.S.O. 1990, c. C.38, commenced class proceedings against the respondents in August 2001. It claimed, amongst other relief, restitution for amounts remitted by it and other members of the proposed class in payment of a fee imposed by the Crown as part of a provincial scheme for the sale by charities of instant win lottery tickets. The appellant also claimed pre- and post-judgment interest on the amounts remitted.
2On September 20, 2002, Crane J. of the Superior Court of Justice granted the respondents' summary judgment motion and struck out the appellant's claims for restitution and pre- and post-judgment interest. The appellant appeals that decision.
3For the reasons that follow, I would dismiss the appeal.
I. Background
4Instant win lottery tickets are "break open" lottery tickets variously known as pull tabs, Nevada tickets, or "BOTs". They are made of laminated cardboard with windows. When opened, the windows reveal symbols, the correct combination of which entitles the holder to a cash prize. The appellant holds a licence issued by the Alcohol and Gaming Commission of Ontario to sell BOTs through a commissioned sales person at a kiosk at a retail store in the City of Hamilton.
5In general terms, the BOTS lottery scheme in Ontario permits licensed charities to sell BOTS to the public. A licensee is required to comply with all of the terms and conditions of its licence, and must use the gross proceeds realized from the sale of BOTS for charitable or religious purposes, less the cost of the prizes awarded and the reasonable and necessary expenses of the management and conduct of the lottery as specified in the terms and conditions of the licence. BOTS, once obtained by licensees from gaming equipment and services suppliers, are sold directly by the licensees to members of the public for prices which are regulated by the Crown. Particulars of the regulatory framework which governs the BOTs lottery scheme are as follows.
(1) Regulatory framework
6The sale of BOTs in Ontario by charities is regulated through the Registrar of Alcohol and Gaming (the "Registrar") under the combined authority of s. 207(1)(b) of the Criminal Code, R.S.C. 1985, c. C-46, [page332] as amended, Order in Council Number 2688/93, as amended (the "OIC"), and the terms and conditions of licences issued to charities pursuant to the OIC.
7Section 207(1)(b) of the Criminal Code, which pertains to permitted lotteries in Canada, provides that it is lawful "for a charitable or religious organization, pursuant to a licence issued by the Lieutenant Governor in Council of a province . . . to conduct and manage a lottery scheme" if the proceeds from that scheme are "used for a charitable or religious object or purpose". Under s. 207(2) of the Criminal Code, licences may contain terms and conditions "relating to the conduct, management and operation of or participation in the lottery scheme to which the licence relates".
8The OIC authorizes the Registrar and municipalities to issue BOT licences on certain terms and conditions. Under s. 11(1)(b) of the OIC, a BOT licence in Ontario must contain the following term and condition:
(b) the gross proceeds from the lottery shall be used for the charitable or religious objects or purposes providing a direct benefit to the residents of Ontario as set out by the licensee in the application for a licence, less the cost of the prizes awarded and such reasonable and necessary expenses actually incurred in the management and conduct of the lottery, and such expenses shall be restricted to those set out in the terms and conditions of the licence;
9The Registrar is also authorized under the OIC to set maximum fees for the issuance of a BOT licence. Further, pursuant to the OIC, the Registrar sets the size of the "prize board", that is, the percentage of the proceeds of the sale of BOTs that is to be set aside for the payment of prizes.
10Through the issuance of licences, the Registrar regulates the information that must appear on BOTs, who may sell BOTs, and how they must be displayed and handled. Further, under a typical licence, the Registrar sets the percentage of the proceeds of the sale of BOTs that may be paid in commissions to ticket vendors, gaming equipment suppliers, and gaming service suppliers. A typical BOT licence also contains the following additional terms and conditions:
(i) charities are required to purchase their BOTs from a manufacturer approved by the Registrar;
(ii) charities are prohibited from using monies from any source other than the gross receipts of the sales of BOTs to pay for expenses related to the BOTs lottery; and
(iii) charities are required to produce financial reports and records, detailing the expenses incurred by them in the sale of BOTs. [page333]
(2) Introduction of the provincial fee
11Prior to 1997, the structure of the BOTs lottery scheme gave rise to opportunities for fraudulent activities. In response, the production system for BOTs was restructured to enhance enforcement measures and consumer protection. As part of the restructuring measures, a provincial administration fee of a maximum of 5 per cent of the gross selling price of each box of BOTs was introduced in December 1997 (the "Provincial Fee"). The licence application fee of a maximum of 3 per cent of prizes remained unchanged.
12The amount of the Provincial Fee was imposed on the prize board. The price of the BOTs did not change upon introduction of the Provincial Fee. Rather, the province reduced the prize board by approximately 5 per cent, with the stated intention of ensuring that the Provincial Fee had no impact on the net profit of charitable organizations. Essentially, the Provincial Fee was intended to be revenue- neutral for the charities, that is, the charities' net revenues from the sale of BOTs would not be reduced, on account of the Provincial Fee, from pre-1997 levels.
(3) Net profit realized under the BOTs lottery scheme
13The respondent's uncontradicted evidence on the summary judgment motion indicated that the net profit realized by charities from the sale of BOTs following the introduction of the Provincial Fee exceeded the net profit realized by them prior to December 1997. Under the approved lottery game in place before December 1997, the net profit to charities was 5.7 cents per 50 cent ticket, or 11.43 per cent of the gross proceeds of the sale of BOTs. During the period from December 1997 to December 1999, the net profit to charities was 6.1 cents per 50 cent ticket, or 12.14 per cent of the gross proceeds of the sale of BOTs. Since December 1999, the net profit to charities has been 5.8 cents per 50 cent ticket, or 11.63 per cent of the gross proceeds of the sale of BOTs.
14The appellant's financial records for the fiscal year ending June 30, 2000 indicate that its net proceeds from the sale of BOTs for that year were $16,348. During the same period, it paid Provincial Fees in the sum of $6,804. The Provincial Fees remitted by the appellant during the two-year period ending June 30, 2000 were in the aggregate amount of $11,843.20.
(4) Collection of the provincial fee
15The BOTs lottery scheme involves several participants in addition to the province, as the regulator, and charities, as licensees. They include municipalities, ticket manufacturers, gaming equipment suppliers, gaming services suppliers and consumers. [page334] The respondents submit that the Provincial Fee is financed and paid for by consumers, as the end-users of BOTs. In contrast, the appellant alleges that it bore the burden of the Provincial Fee in connection with its sales of BOTs and the Provincial Fee was not paid by the purchasers of BOTs, thereby reducing the profit realized by the appellant from the sale of BOTs.
(5) Proceedings to date
16On August 7, 2001, the appellant commenced proceedings against the respondents under the Class Proceedings Act, 1992, S.O. 1992, c. 6, in which it claimed, on its own behalf and on behalf of the members of the proposed class as defined in the appellant's statement of claim: (i) a declaration that the Provincial Fee contravenes s. 207(1)(b) of the Criminal Code, in consequence of which it is ultra vires its enabling legislation, invalid, and of no force and effect; (ii) in the alternative, a declaration that the Provincial Fee, as a form of indirect taxation, is unconstitutional by reason of contravention of s. 92 of the Constitution Act, 1867 (U.K.), 30 & 31 Vict., c. 3; (iii) restitution to the appellant and to each of the proposed class members for the amount of the Provincial Fee remitted by or on behalf of each of them; and (iv) pre- and post-judgment interest thereon pursuant to the Courts of Justice Act, R.S.O. 1990, c. C.43.
17In June 2002, the respondents brought a motion under Rule 20 and subrules 21.01(1)(a) and (b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for summary judgment. The respondents' motion, as framed, sought to "strike out" the restitution and pre- and post-judgment interest claims of the appellant. For the purpose of that motion, it is common ground that the motions judge was invited to assume, without deciding, that the Provincial Fee is unconstitutional on one or both of the grounds alleged by the appellant. Accordingly, the only issue on the summary judgment motion was whether the appellant was entitled to restitution and interest in respect of the Provincial Fee, as claimed.
18On September 20, 2002, the motions judge granted the respondents' motion for summary judgment, and struck out the appellant's claims in its statement of claim for restitution and pre- and post-judgment interest. Although he did not expressly refer to Rule 20 of the Rules of Civil Procedure, it is clear from his brief reasons that the motions judge decided the respondents' motion on the basis of that Rule.
II. Issues
19The parties have framed the issues on this appeal somewhat differently. In my view, this appeal concerns two issues, [page335] namely, whether the motions judge erred by implicitly concluding that no genuine issue for trial arises concerning: (i) the question of who bore the burden of the Provincial Fee; and (ii) the appellant's asserted entitlement to restitutionary relief, given the current applicable jurisprudence regarding the law of restitution in relation to the payment of an unconstitutional tax.
III. Analysis
(1) The applicable principles on a Rule 20 motion
20It is well-established that the moving party on a motion for summary judgment under Rule 20 must establish that there is no genuine issue of material fact requiring trial. When the moving party meets that onus, the party opposing summary judgment must then demonstrate that its claim is one with a real chance of success: Guarantee Co. of North America v. Gordon Capital Corp., 1999 664 (SCC), [1999] 3 S.C.R. 423, 178 D.L.R. (4th) 1, at pp. 434-35 S.C.R. It must "lead trump or risk losing": Meditrust Healthcare Inc. v. Shoppers Drug Mart (2002), 2002 41710 (ON CA), 61 O.R. (3d) 786, [2002] O.J. No. 3891 (Quicklaw) (C.A.) at para. 23. See also Hi-Tech Group Inc. v. Sears Canada Inc. (2001), 2001 24049 (ON CA), 52 O.R. (3d) 97, 4 C.P.C. (5th) 35 (C.A.); Transamerica Occidental Life Insurance Co. v. Toronto-Dominion Bank (1999), 1999 3716 (ON CA), 44 O.R. (3d) 97, 173 D.L.R. (4th) 468 (C.A.); Aguonie v. Galion Solid Waste Material Inc. (1998), 1998 954 (ON CA), 38 O.R. (3d) 161, 156 D.L.R. (4th) 222 (C.A.); Dawson v. Rexcraft Storage & Warehouse Inc. (1998), 1998 4831 (ON CA), 164 D.L.R. (4th) 257, 111 O.A.C. 201 (C.A.); Lang v. Kligerman, 1998 4866 (ON CA), [1998] O.J. No. 3708 (Quicklaw) (C.A.); Rogers Cable TV Ltd. v. 373041 Ontario Ltd. (1994), 1994 7367 (ON SC), 22 O.R. (3d) 25 (Gen. Div.); and Irving Ungerman Ltd. v. Galanis (1991), 1991 7275 (ON CA), 4 O.R. (3d) 545, 83 D.L.R. (4th) 734 (C.A.). Subrule 20.04(1) sets out the applicable principle in clear and straightforward terms:
20.04(1) In response to affidavit material or other evidence supporting a motion for summary judgment, a responding party may not rest on the mere allegations or denials of the party's pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue for trial.
(2) Whether there is a genuine issue for trial concerning the question of who bore the burden of the provincial fee
21The respondents led uncontradicted evidence on the summary judgment motion that the terms of the appellant's BOT licence precluded it from paying the Provincial Fee from any source other than the gross proceeds of the sale of BOTs. In addition, the evidence before the motions judge demonstrated that: [page336]
(i) the appellant's net profit from the sale of BOTs was higher after introduction of the Provincial Fee than it was prior to its introduction;
(ii) the Provincial Fee was imposed by the province on the prize board, that is, on that part of the total proceeds of BOTs sales reserved for the funding of prizes;
(iii) as acknowledged by the appellant on this appeal, the Provincial Fee is first collected by BOTs manufacturers and is invoiced by them, at the time of shipment of BOTs, to gaming equipment suppliers. Those suppliers then invoice charities for the Provincial Fee upon shipment of BOTs to the charities. Thereafter, when charities sell BOTs to consumers, they deduct the Provincial Fee, together with other expenses, from the total gross proceeds of the sales of BOTs;
(iv) also as acknowledged by the appellant on this appeal, the appellant's financial records and reports, required of it under the terms of its BOTs licence, indicate that it deducted the Provincial Fee as a disbursement from its proceeds of the sale of BOTs when calculating annual net proceeds from such sales; and
(v) charities, including the appellant, are entitled to obtain a credit or refund for unsold BOTs.
22In my view, contrary to the assertion of the appellant on this appeal, those facts established a prima facie case that the appellant did not bear the burden of the Provincial Fee. Both the Provincial Fee collection and the applicable BOTs refund systems support the conclusion that the Provincial Fee scheme is a user-pay system, which is financed and indirectly, but ultimately, paid for by consumers through reduction of the prize board.
23In the face of that evidence, while the appellant was not required on the summary judgment motion to establish that it bore the burden of the Provincial Fee, it was incumbent on it to adduce evidence on the motion, in affidavit or other form, establishing specific facts showing that there is a genuine issue for trial. While the failure to file responding evidence to a motion for summary judgment will not inevitably result in summary judgment, the appellant had an evidential burden, in the circumstances here, to show that the issue of who bore the burden of the Provincial Fee was a genuine issue for trial. I conclude, for the following reasons, that it did not discharge that burden. [page337]
24On the summary judgment motion, the appellant relied on an affidavit by Robert Nichols, a director and an officer of the appellant. That affidavit was sworn in August 2001, almost 11 months prior to the respondents' motion. It concerned the corporate status of the appellant, the terms and conditions of the appellant's BOT licence, manufacturer and gaming equipment supplier invoices, and financial records and reconciliations of the appellant. It did not respond to the direct evidence of the respondents regarding the impact on charities of the Provincial Fee, the user-pay characteristics of the Provincial Fee scheme, and the related collection and refund systems for the Provincial Fee. No additional affidavit or other evidence was filed by the appellant.
25The summary judgment motion proceeded on the basis of written interrogatories. In opposing the motion, in addition to the affidavit of Mr. Nichols, the appellant also relied on the fact that the respondents had declined to answer a series of questions posed in the interrogatories, which allegedly relate to the incidence or burden of the Provincial Fee. The appellant argues that the issues raised in the unanswered questions require expert evidence to be heard at trial.
26In my view, the appellant cannot rely on unanswered interrogatory questions posed by counsel to ground its claim that a genuine issue for trial exists. The appellant chose to lead no opinion or other evidence on the summary judgment motion concerning the issues raised by the challenged interrogatory questions. The questions themselves are not evidence, nor are the respondents' refusals to answer those questions.
27Further, many of the relied-upon interrogatory questions concern theories of economics, taxation, gaming, and zero sum mathematics, and the application of those theories to the BOTs lottery scheme. The appellant led no evidence before the motions judge concerning those theories to establish their content or their application, if any, to the BOTs lottery scheme and the Provincial Fee at issue here.
28On this appeal, the appellant argues that any analysis of the burden of the Provincial Fee must be conducted on a macro, as opposed to a micro, basis so as to take into account the proceeds of the sale of all BOTs in the province and, presumably, the total revenues generated by the Provincial Fee on those sales. The appellant urges us to consider the mathematics of the sale of successive boxes of BOTs and the impact of such successive sales on purchasing consumers and vendor charities. Similar arguments were advanced by the appellant before the motions judge. [page338]
29However, there is simply no evidentiary foundation on the record before this court to support the appellant's argument that inferences of fact could be drawn on those matters to demonstrate that the appellant, in fact, bore the burden of the Provincial Fee, or that there is a genuine issue for trial concerning whether the appellant did so. Moreover, the motions judge was precluded on the summary judgment motion from weighing the evidence, making findings of fact or drawing inferences of fact, all of which are functions reserved to the trial judge. The brief reasons of the motions judge indicate no error in that regard.
30I conclude that the appellant failed to discharge its evidential burden on the summary judgment motion to demonstrate that a genuine issue for trial arises concerning the question of who bore the burden of the Provincial Fee. While the appellant's assertions concerning the application to the Provincial Fee scheme of theories of economics, taxation, gaming, and zero sum mathematics may theoretically have some foundation, the bald assertion by counsel of such application, without supporting evidence, is insufficient to support the refusal of summary judgment.
(3) Whether there is a genuine issue for trial concerning the appellant's asserted entitlement to restitutionary relief
31As I mentioned, at the invitation of the parties, the motions judge proceeded on the assumption that the Provincial Fee is unconstitutional as a form of indirect taxation by the province. On that assumption, he framed one of the key issues on the motion as follows:
The issue in the motion before me is whether the law is settled to the effect that in order for a plaintiff to qualify for the benefit of an order in restitution as to an unlawful tax paid to a government, that plaintiff must show, on evidence, that it, he or she, bore the burden of the tax.
32The motions judge concluded that, in Canada, that issue was settled in the affirmative by the Supreme Court of Canada in Air Canada v. British Columbia, 1989 95 (SCC), [1989] 1 S.C.R. 1161, 59 D.L.R. (4th) 161; Canadian Pacific Air Lines Ltd. v. British Columbia, 1989 94 (SCC), [1989] 1 S.C.R. 1133, 59 D.L.R. (4th) 218; and Peel (Regional Municipality) v. Canada, 1992 21 (SCC), [1992] 3 S.C.R. 762, 98 D.L.R. (4th) 140.
33The appellant argues that the issue of whether recovery or restitution is available for the payment of an unconstitutional tax has not been fully settled by the Supreme Court of Canada. It submits, therefore, that its claim for restitution regarding the Provincial Fee should not be determined summarily but, rather, should proceed to trial. [page339]
34In my view, on the facts of this case, the appellant's argument fails for the following reasons.
35The appellant failed to establish before the motions judge that, as the holder of a BOT licence, it was deprived of profit from the sale of BOTs which would otherwise have accrued to it but for the imposition of the Provincial Fee. There was no demonstration by the appellant that it sustained any damage, loss or detriment as a result of the introduction of the Provincial Fee.
36The price of BOTs is controlled by the province, the appellant is expressly prohibited from using its own funds -- other than the gross proceeds of the sale of BOTs -- to pay the Provincial Fee, the prize board was reduced by the province to accommodate the Provincial Fee, and there is no evidence that payment of the Provincial Fee reduced or otherwise suppressed the appellant's profit from the sale of BOTs. Indeed, the evidence concerning the appellant's net profit is to the contrary. Moreover, the appellant acknowledged before the motions judge and before this court that it was not arguing that the Provincial Fee caused a reduction in the sale of BOTs. In any event, there was no evidence before the motions judge that the imposition of the Provincial Fee accounted for decreases in the volume of the sales of BOTs. Finally, no evidence was led by the appellant before the motions judge which challenged the respondents' evidence that, under the BOTs regulatory scheme, consumers bear the burden of the Provincial Fee, as the end-users of BOTs, by virtue of a reduced fund for prize moneys.
37Consequently, and under the current law regarding restitution as articulated by a majority of the Supreme Court of Canada in Air Canada v. British Columbia, supra, I am not persuaded that the motions judge erred in concluding, as he implicitly did, that no genuine issue for trial arises concerning the appellant's entitlement to restitutionary relief.
IV. Disposition
38For the reasons given, I would dismiss the appeal. The respondents are entitled to their costs of the appeal on a partial indemnity basis fixed in the amount of $5,000 inclusive of disbursements, Goods and Services Tax not being exigible against the respondents.
Appeal dismissed. [page340]
