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David Mullan gave a very thorough answer to Eoin's inquiry about the constitutionality of retrospective taxes. I thought I would just add that if I am not mistaken the same kind of legislation was used successfully in the great Air Canada v. British Columbia imbroglio. That is, La Forest's J. judgment denying recovery to the airlines is based first of all on the constitutionality of a retroactive taxing statute like the new Ontario one, and he spoke for five of the six judges on that point; the restitution stuff (recovery for mistake of law, but not if it would cause fiscal chaos) was added because the point had been so fully argued. See eg Maddaugh & McCamus, p. 273-4. I suppose that makes all of the restitution stuff obiter, since that part of the judgment is based on the statute's being ultra vires, which it was not. I should add that I am no friend of the mistake of law rule, and do not want to provoke anyone into a discussion about whether the case can stand for what everyone thinks it stands for - I am happy that it should do so, at least along with Canadian Pacific v. B.C. But anyone who was not a fan of "fiscal chaos" could build on this, as well as on the fact that La Forest J. spoke for only three of six; and as Mitchell McInnes originally noted, the Court itself may have signalled its intention to do this in Eurig.

The basis of the constitutional argument was Amax Potash Ltd. v. Saskatchewan [1977] 2 SCR 576, 71 DLR (3d) 1. In that case the Saskatchewan Proceedings Against the Crown Act was amended so as to preclude actions against the government in respect of anything done pursuant to legislation later found to be ultra vires. Those amendments were held themselves ultra vires. But the holding in Air Canada seems to say that this does not extend to the situation where the retroactive tax is one which could have been validly enacted prospectively. It seemed to be accepted, even by Wilson J. who dissented on the Amax point and on other points, that there is no general bar to retroactive tax in Canada. Section 7 of the Charter was raised without success.

Lionel