The Queen's Bench held the user charge was an unconstitutional indirect tax, but denied recovery because Kingstreet had passed the burden on in increased prices.
Robertson JA for the Court of Appeal held by a majority that restitution should be made for money from the time of legal proceedings, as that was the start of the protest.
Bastarache J for the Supreme Court, because unjust enrichment principles are ill-suited to determine constitutional issues of ultra vires taxes, that is the wrong approach.
Parliament can prevent fiscal chaos by suspending declarations of invalidity and enacting valid taxes and applying them retroactively.
The passing on defence is inconsistent with restitution law, it confuses compensation matters, and is not concerned with the possibility that the claimant may receive a windfall.
There are three major criticisms of the passing-on defence: first, that it is inconsistent with the basic premise of restitution law; second, that it is economically misconceived; and third, that the task of determining the ultimate location of the burden of a tax is exceedingly difficult and constitutes an inappropriate basis for denying relief.
The defence of passing on has developed almost exclusively in the context of recovery of taxes and other charges paid under a mistake of law... 46.