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Since 1989, there has been uncertainty regarding the scope of LaForest J's decision in Air Canada v British Columbia. It now appears that it is not as difficult as once seemed for taxpayers to recover payments made pursuant to unconstitutional demands.

In Re Eurig Estate (22 October 1998), the appellant was executor of her husband's estate. The province of Ontario required payment of $5710 in probate fees. The Supreme Court of Canada determined that that demand was contrary to s 53 of the Constitution Act and therefore of no force or effect. Writing for a majority, Major J then briefly addressed the restitutionary implications:

"45. The final issue is whether the appellant is entitled to a refund of the probate fees of $5,710 paid by her as executor for her late husband's estate.

46. In Air Canada v. British Columbia, [1989] 1 S.C.R. 1161, La Forest J. for three of the six members of the Court held that there is a general rule against recovery of taxes paid under unconstitutional statutes, with exceptions where the relationship between the state and a particular taxpayer resulting in the collection of the tax is unjust or oppressive in the circumstances.

47. Even if this Court were to adopt the rule articulated by La Forest J., it would not prevent recovery by the appellant in this case. An exception has been recognized where taxes are paid under compulsion or protest: Air Canada, supra, at pp. 1209-10. Here, the appellant has challenged the validity of the regulation imposing the probate fee from the outset. She paid the fee in order to fulfil her legal obligations as executor of the estate only after the Ontario Court (General Division) held that the regulation was legally valid. Had the proper decision been rendered at first instance, the appellant would not have paid the fee. It would therefore be inequitable to deny recovery at this stage.

48. The appeal is accordingly allowed with costs and the appellant refunded the $5,710 paid by her."

The full decision can be read at: http://www.droit.umontreal.ca/ doc/csc-scc/en/rec/ index.html

Mitchell McInnes
University of Western Ontario
London, Ontario, Canada