[1994] 1 F.C. 524
T-1709-90
Seaspan International Ltd. (Plaintiff)
v.
Her Majesty the Queen (Defendant)
Indexed as: Seaspan International Ltd. v. Canada (T.D.)
Trial Division, Joyal J.—Vancouver, May 10; Ottawa, September 2, 1993.
Customs and Excise — Excise Tax Act — Act, s. 3, Part VI, Sch. III and s. 23(8)(c) exempting from sales and excise taxes diesel fuel and fuel oil respectively used in generation of electricity, unless used primarily in operation of vehicle — Determination of question of law: whether “vehicle” including tugboats, train ships — Principles of statutory interpretation applicable to taxing statutes — Reference to Parliamentary debates, departmental interpretation, dictionary definitions, case law — “Vehicle” including tugboats, train ships.
Construction of statutes — Excise Tax Act, s. 3, Part VI, Sch. III and s. 23(8)(c) — Plain meaning rule now applied to taxing statutes replacing strict interpretation whereunder ambiguities in charging provision resolved in taxpayer’s favour — Parliament’s intention determined by examining Act in total context — Object of Act to raise revenue by imposing tax on all diesel fuel except such fuel used to generate electricity — Exemption not applicable if electricity used to operate vehicle — Meaning of “vehicle” — Word not defined in Act — More purposive or functional inquiry allowing reference to Parliamentary debates, departmental interpretation, case law, dictionary definitions — “Vehicle” reasonably interpreted as including tugboats, train ships — Interpretation in keeping with tenor of Act, intention of Parliament.
The parties agreed to have the issue in this action resolved by determination of a question of law. From April to June 1988 the plaintiff paid tax under the Excise Tax Act on diesel fuel purchased for the generation of electricity used in the operation of its tugboats and self-propelled train ships. The former are used to tow barges carrying goods to destinations along the B.C. coast, assist in ship-berthing, ship-towage and log-towing. The latter carry rail cars from the Vancouver lower mainland area to Vancouver Island. Excise Tax Act, paragraph 23(8)(c), exempts from excise tax diesel fuel for use in the generation of electricity, except where the electricity so generated is used primarily in the operation of a vehicle, and subsection 51(1) of the Act together with section 3 of Part VI of Schedule III exempts from sales tax fuel oil for use in the generation of electricity, except where the electricity is used primarily in the operation of a vehicle. The plaintiff’s application for a refund of the excise and sales taxes paid on the diesel fuel was denied on the basis that ships (marine vessels), including tugs and train ships were vehicles. The Excise Tax Act does not define “vehicle”. The issue was whether tugboats and train ships are vehicles for the purpose of the Excise Tax Act.
Held, the point of law should be determined in favour of the defendant.
The doctrine of strict interpretation of taxing statutes, whereby ambiguities in the charging provision were resolved in favour of the taxpayer, no longer applies. Courts today apply the plain meaning rule, but in the substantive sense so that if a taxpayer is within the spirit of the charge, he may be held liable. The Act should be examined in its total context to determine Parliament’s intent, the object and scheme of the Act. The object of the Act was to raise revenue. A tax was imposed on all diesel fuel, except when it was for use in the generation of electricity. If the electricity was used primarily in the operation of a vehicle, the exemption did not apply and the diesel fuel so used was taxable. Therefore the general rule was that fuel for vehicles was taxable and any exception invited a narrow interpretative approach, whereas the word “vehicle” invites a more generic or wider approach. It could be said that the narrower the approach to “use in the generation of electricity”, the wider the interpretation of the wording used in taxing an item generally including diesel fuel, no matter for what general purpose it might be used. In this regard one had not to become preoccupied with the double exception in the structure of the statute: diesel fuel is taxable when used in vehicles; the exemption applied only to the generation of electricity. As to Parliament’s intent with special regard to a vehicle which used fuel-oil-generated electricity, such a propulsive force is not the exclusive habitat of motor vehicles or other conveyances running on land. It is probably found more often in marine installations than otherwise.
Some weight should be given to the Parliamentary debates which recorded the Minister’s statement that the intention was to eliminate the exemption in connection with diesel fuel used for transportation, and that “vehicle” included a ship and an aircraft. Also, Revenue Canada has interpreted “vehicle” as referring to carriages or conveyances of all kinds which are used to carry or transport persons or goods, i.e. ships, trucks, tractor-trailers, locomotives and railway rolling stock. While the Department’s interpretation of a statutory provision is not binding on the Court, it was at least consistent with the interpretation originally expressed in Parliament. Case law was also referred to wherein “vehicle” was held to include vessels and ferryboats. The dictionary definitions were somewhat ambiguous. Some included any conveyance by land, sea or air. Others gave the word a more restricted meaning. None explicitly excluded conveyance by way of ships or vessels, and some specifically included them. While indicative of the issue, such sources were not determinative. That the definition of “vehicle” in the Immigration Act included conveyances used for transportation by water was not material. “Vehicle” can reasonably bear an interpretation whereby it includes conveyances of the kind in issue here, and such an interpretation was in keeping with the general tenor of the statute and Parliament’s intention in adopting it.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
Customs Act, R.S.C. 1970, c. C-40, s. 2(1).
Excise Tax Act, R.S.C. 1970, c. E-13, s. 21(3.1)(c) (as am. by S.C. 1986, c. 9, s. 11).
Excise Tax Act, R.S.C., 1985, c. E-15, ss. 2, 23(8)(c) (as am. by R.S.C., 1985 (2nd Supp.), c. 7, s. 10), 50(7) (as am. by R.S.C., 1985 (2nd Supp.), c. 1, s. 190; c. 7, s. 16; (4th Supp.), c. 12, s. 16), 51(1), Sch. III, Part VI, s. 3.
Federal Court Rules, C.R.C., c. 663, R. 474 (as am. by SOR/79-57, s. 14).
Highway Travel Act (The), R.S.O. 1914, c. 206.
Immigration Act (The), S.C. 1952, c. 42.
Income Tax Act, R.S.C. 1952, c. 148, s. 11(7).
Interpretation Act, R.S.C., 1985, c. I-21, s. 12.
Motor Vehicles Act (The), R.S.C. 1914, c. 207.
Ontario Temperance Act (The), S.O. 1916, c. 50, s. 70(2).
CASES JUDICIALLY CONSIDERED
APPLIED:
Stubart Investments Ltd. v. The Queen, [1984] 1 S.C.R. 536; [1984] CTC 294; (1984), 84 DTC 6305; 53 N.R. 241; Lor-Wes Contracting Ltd. v. The Queen, [1986] 1 F.C. 346; [1985] CTC 79; (1985), 85 DTC 5310; 60 N.R. 321 (C.A.); McLean, S.G. v. Minister of National Revenue (1956), 56 DTC 119 (T.A.B.); R. v. Sullivan, [1991] 1 S.C.R. 489; (1991), 55 B.C.L.R. (2d) 1; 63 C.C.C. (3d) 97; 3 C.R. (4th) 277; 112 N.R. 166; R. v. Mailloux, [1988] 2 S.C.R. 1029; (1988), 44 C.C.C. (3d) 193; 67 C.R. (3d) 75; 89 N.R. 222; 30 O.A.C. 358; International Forest Products Ltd. v. Canada, [1991] 2 C.T.C. 246; (1991), 46 F.T.R. 237 (F.C.T.D.); Calgary School District No. 19 v. R. (1990), 43 C.L.R. 194; 38 F.T.R. 222 (F.C.T.D.); Morguard Properties Ltd. et al. v. City of Winnipeg, [1983] 2 S.C.R. 493; (1983), 3 D.L.R. (4th) 1; [1984] 2 W.W.R. 97; 25 Man. R. 302; 6 Admin. L.R. 206; 24 M.P.L.R. 219; 50 N.R. 264.
DISTINGUISHED:
Fleming v. Spracklin (1921), 50 O.L.R. 289; 64 D.L.R. 382; 38 C.C.C. 99 (App. Div.).
CONSIDERED:
In re Sault Ste Marie Provincial Election, 1903, Galvin and Coyne Cases (1905), 10 O.L.R. 356 (H.C.); General Supply Co. of Canada Ltd. v. Deputy Minister of National Revenue et al., [1954] Ex.C.R. 340; Westar Mining Ltd. v. Minister of National Revenue (1990), 38 F.T.R. 137; 3 TCT 5325 (F.C.T.D.); affd Westar Mining Ltd. v. The Queen (1991), 4 TCT 6197 (F.C.A.); Magnatrim Equipment Ltd. and Deputy M.N.R. (Customs and Excise) (1988), 18 C.E.R. 13 (T.B.); The Gas Float Whitton No. 2, [1896] P. 42 (C.A.).
REFERRED TO:
The Queen v. Nova, An Alberta Corporation, [1988] 2 C.T.C. 167; (1988), 88 DTC 6386; 87 N.R. 101 (F.C.A.); British Columbia Telephone Company Ltd. v. The Queen (1992), 92 DTC 6129 (F.C.A.); Conder v. Griffith, 111 N.E. 816 (Ind. App. 1916); Partington v. The Attorney-General (1869), L.R. 4 H.L. 100; Vaillancourt v. Deputy M.N.R., [1991] 3 F.C. 663; [1991] 2 C.T.C. 42; (1991), 91 DTC 5408 (Eng.); (1991), 91 DTC 5352 (Fr.) (C.A.).
AUTHORS CITED
Ballentine’s Law Dictionary, 3rd ed. Rochester, N.Y.: Lawyers Co-operative Pub. Co., 1969.
Black’s Law Dictionary, 5th ed. St. Paul, Minn.: West Publishing Co., 1979.
Bouvier’s Law Dictionary and Concise Encyclopedia, 3rd revision. Buffalo: William S. Hein Co., 1984.
Canada. House of Commons Debates, vol. VII, 1st Sess., 27th Parl., June 23, 1966.
Dictionary of Canadian Law. Toronto: Carswell, 1991.
Driedger, Elmer A. Construction of Statutes, 2nd ed. Toronto: Butterworths, 1983.
Drieger, Elmer A. The Construction of Statutes, Toronto: Butterworths, 1974.
Funk & Wagnalls Canadian College Dictionary, Toronto: Fitzhenry& Whiteside Limited, 1986.
Grand Larousse de la langue française, tome 7 Paris: Librairie Larousse, 1978.
Le Petit Robert I, Dictionnaire alphabétique et analogique de la langue française, Paris: Le Robert, 1990.
Oxford English Dictionary, 2nd ed. Oxford: Clarendon Press, 1989.
Shorter Oxford English Dictionary on Historical Principles, 3rd ed. Oxford: Clarendon Press, 1978.
Webster’s New World Dictionary of the American Language, Second College Edition. New York: Simon and Schuster, 1980.
DETERMINATION of question of law: tugboats and trains ships are vehicles for the purpose of the Excise Tax Act.
COUNSEL:
A. N. Robertson for plaintiff.
Max Weder for defendant.
SOLICITORS:
Bull, Housser & Tupper, Vancouver, for plaintiff.
Deputy Attorney General of Canada for defendant.
The following are the reasons for judgment rendered in English by
Joyal J.: The sole issue for determination in this matter is whether or not tugboats and train ships are vehicles for the purpose of the Excise Tax Act, R.S.C., 1985, c. E-15.
BACKGROUND
The plaintiff is a company incorporated under the laws of the province of British Columbia, having an office in North Vancouver, B.C., and carrying on the business of operating a tug and barge service in Canadian and international waters on and around the coast of British Columbia.
The plaintiff owns and operates 42 tugboats and two self-propelled train ships as well as numerous dump barges which are towed by the tugs. The tugs range from 39 to 142 ft. in length, from 440 to 5,570 in horsepower and carry from two to nine crew members.
Some of the uses of the tugs include towing the barges in the plaintiff’s fleet which carry all manner of goods to destinations up and down the B.C. coast. As well, the tugs are used to assist in ship-berthing, ship-towage and log-towing. The train ships carry rail cars from the Vancouver lower mainland area to Vancouver Island.
The defendant is Her Majesty the Queen in right of Canada.
During the period of April 1988 through June 1988, the plaintiff paid tax, under the Excise Tax Act, on diesel fuel purchased for the generation of electricity used in certain aspects of the operation of those of its vessels which are tugboats and train ships. On September 27, 1989, the plaintiff applied for a refund of excise tax in the amount of $20,924.40 and sales tax in the amount of $13,862.43 paid on the diesel fuel at the time of purchase, on the basis that the diesel fuel was tax exempt under paragraph 23(8)(c) [as am. by R.S.C., 1985 (2nd Supp.), c. 7, s. 10], which provides a specific exemption for excise tax payable in the case of diesel fuel for use in the generation of electricity (except where the electricity so generated is used primarily in the operation of a vehicle), and subsection 51(1) of the Act, together with section 3 of Part VI of Schedule III to the Act, which provides a specific exemption for sales tax on fuel oil for use in the generation of electricity (except where the electricity is used primarily in the operation of a vehicle).
The Minister of National Revenue, on behalf of the defendant, notified the plaintiff that its application for a refund was denied on the basis that ships (marine vessels), including tugs and train ships, were vehicles.
By notice of objection dated December 20, 1989, the plaintiff objected to the determination made by the Minister of National Revenue.
By notice of confirmation dated March 16, 1990, the defendant confirmed the determination on the basis that tugboats are vehicles for purposes of section 3 of Part VI of Schedule III and paragraph 23(8)(c), as ships engaged in the conveyance of goods from one point to another. The plaintiff now appeals to this Court for a more favourable determination. In the process of bringing this action to trial, both the plaintiff and defendant agreed to have the issue possibly resolved pursuant to Rule 474 [Federal Court Rules, C.R.C., c. 663 (as am. by SOR/79-57, s. 14)] by determination of a point of law founded on an agreed statement of facts.
PLAINTIFF’S SUBMISSIONS
The plaintiff submits that, read in its grammatical and ordinary sense in light of the intention of Parliament embodied in the Act as a whole, the object of the Act and the scheme of the Act, the term “vehicle”, as used in the provisions of the Act pertinent here, does not embrace a ship or any other type of marine vessel. (See section 12 of the Interpretation Act, R.S.C., 1985, c. I-21; Stubart Investments Ltd. v. The Queen, [1984] 1 S.C.R. 536; The Queen v. Nova, An Alberta Corporation, [1988] 2 C.T.C. 167 (F.C.A.); British Columbia Telephone Company Ltd. v. The Queen (1992), 92 DTC 6129 (F.C.A.); E. A. Driedger, The Construction of Statutes (Toronto: Butterworths, 1974), at pages 6, 7 and 81.)
The plaintiff places great reliance on the decision of Fleming v. Spracklin (1921), 50 O.L.R. 289. The plaintiff argues that in that case, the majority of the Ontario Court of Appeal was of the view that in its ordinary sense, the word “vehicle” was rarely applied to watercraft, and therefore, the word “vehicle” did not apply to a ferry-boat. (See also Conder v. Griffith, 111 N.E. 816 (Ind. App. 1916).)
As well, the High Court of Ontario has determined that a steamboat is not even a conveyance In re Sault Ste. Marie Provincial Election, 1903, Galvin and Coyne Cases (1905), 10 O.L.R. 356.
The plaintiff disputes the decision of the Income Tax Appeal Board in McLean S.G. v. Minister of National Revenue (1956), 56 DTC 119, which held that the word “vehicle” includes a ship. The plaintiff argues that the Board’s finding was based on a phrase pronounced by a judge last century, where it was referred by the said Judge [at page 120] to “rafts found anchored in a stream … they are not vehicles intended for the navigation of the sea” (underline mine). The plaintiff submits that this phrase offers no support for the suggestion that the word “vehicle”, as used in its ordinary and popular sense in the provisions of the Act pertinent here, embraces a ship or any other marine vessel.
The plaintiff further relies on definitions of “vehicle” found in dictionaries to argue that these definitions do not embrace a ship or other marine vessels such as the plaintiff’s tugboats and train ships, as they refer to a conveyance with wheels or runners or means of land transportation. (See W. L. Little, H. W. Fowler & J. Coulson, The Shorter Oxford English Dictionary on Historical Principles, vol. 2, 3rd ed. (Oxford: Clarendon Press, 1978), at page 2457: Funk & Wagnalls Canadian College Dictionary (Toronto: Fitzhenry & Whiteside, 1986), at page 1484; A. Rey & J. Rey-Debove, Le Petit Robert I, Dictionnaire alphabétique et analogique de la langue française (Paris: Le Robert, 1990), at page 2069; Grand Larousse de la langue française, tome 7 (Paris: Librairie Larousse, 1978), at page 6394; J. Bouvier, Bouvier’s Law Dictionary and Concise Encyclopedia, vol. 3, 3rd revision (Buffalo: Williams S. Hein Company, 1984), at page 3389; and J. A. Ballentine, Ballentine’s Law Dictionary, 3rd ed. (Rochester: The Lawyers Co-Operative Publishing Company, 1969, at page 1334.)
The plaintiff submits that when one reads the Act as a whole, one finds in subsection 50(7) [as am. by R.S.C., 1985 (2nd Supp.), c. 1, s. 190; c. 7, s. 16; (4th Supp.), c. 12, s. 16] an explicit reference to “ship or other marine vessels”, indicating an intention of Parliament to exclude such craft from the definition of “vehicle”.
Finally the plaintiff refers to The Immigration Act [S.C. 1952, c. 42] passed in 1952 and its subsequent amendments, in which “vehicle” is specifically defined to include any conveyance that may be used for transportation by water. The plaintiff submits that if the word “vehicle” meant what it was defined to mean in The Immigration Act, there would have been no need for the definition. The fact that a definition was included illustrates that, in the mind of Parliament, the meaning to be attributed to the word for purposes of the pertinent provisions of The Immigration Act, was not the word’s ordinary or popular meaning.
It is submitted that if Parliament, for purposes of the provisions of the Act pertinent here, intended that the word “vehicle” refer to any ship or other marine vessel, then Parliament would have inserted in the Act a definition of “vehicle” similar to the definition inserted, and several times amended, in The Immigration Act. This indicates that Parliament did not intend that the word “vehicle” in the Act have the expanded meaning of the word set out specifically in The Immigration Act, but rather something different, e.g. its ordinary meaning.
The plaintiff concludes by stating that, read in its grammatical and ordinary sense, consonant with Parliament’s intent, and on the basis of the authorities referred to, the term “vehicle” does not include the plaintiff’s tugboats and train ships.
DEFENDANT’S SUBMISSIONS
The defendant submits that as the word “vehicle” is not defined in the Act, its interpretation must be made in light of the modern principle of statutory interpretation: namely, the words of the Act are to be read in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. (See Driedger, Construction of Statutes, (2nd ed., 1983), as cited in Westar Mining Ltd. v. Minister of National Revenue (1990), 38 F.T.R. 137 (F.C.T.D.), at page 142; affirmed at (1991), 4 TCT 6197 (F.C.A.)).
The defendant relies on definitions of “vehicle” found in various dictionaries and claims that the ordinary meaning of the word is broad enough to include any conveyance by way of land, sea or air. A vehicle serves to transport passengers or cargo; tugboats and train ships come within this definition. (See A. Rey & Rey-Debove, Le Petit Robert I, Dictionnaire alphabétique et analogique de la langue française (supra); D. A. Dukelow & B. Nuse, The Dictionary of Canadian Law (Toronto: Carswell, 1991), at page 1133; H. C. Black, Black’s Law Dictionary, 5th ed. (St. Paul Minn.: West Publishing Co., 1979), at page 1393; D. B. Guralnik, Webster’s New World Dictionary of the American Language, 2nd College ed. (Simon and Schuster), at page 1574; and W. L. Little, H. W. Fowler & J. Coulson, The Shorter Oxford English Dictionary on Historical Principles (supra).)
The definition of “vehicle” in the context of the Excise Tax Act [R.S.C. 1970, c. E-13] has been considered in Westar Mining Ltd. v. Minister of National Revenue (supra). At the Trial Division, Mr. Justice McNair had to consider whether an ore hauler was a vehicle. In finding that it was, His Lordship approved the Tariff Board’s Ruling 7120/28 [at page 144], in which it was held that a vehicle includes a boat or a ship, as it “is used to carry or convey persons or objects”. The Federal Court of Appeal affirmed McNair J.’s findings and his approach to statutory interpretation.
The defendant also relies on a decision of the Tax Appeal Board, where Mr. Fordham found that a ship was a vehicle for the purposes of the Income Tax Act [R.S.C. 1952, c. 148]. (See McLean, S.G. v. Minister of National Revenue (1956), 56 DTC 119, at page 121).
In the decision of Fleming v. Spracklin (1921), 50 O.L.R. 289, the Appellate Division of the Ontario Supreme Court considered whether a yacht riding on international waters was a “vehicle on the public highway or elsewhere” within the meaning of section 70 of The Ontario Temperance Act [S.O. 1916, c. 50]. A majority of the Court found that a yacht was not a vehicle. In the defendant’s view, however, that reasoning by the Court of Appeal was based on the view that The Ontario Temperance Act did not apply to transactions in liquor in international waters between citizens of Ontario and those of foreign countries, and that in that context, a yacht could not possibly be a vehicle.
The defendant submits that the intention of Parliament can also be determined through an examination of the Debates of the House of Commons. The relevant statement by the Minister of Finance indicates that marine vessels were contemplated in the definition of vehicle. (See Bill C-198, 1st Session, 27th Parliament, House of Commons Debates, June 23, 1966, page 6812; and Vaillancourt v. Deputy M.N.R., [1991] 3 F.C. 663 (C.A.).)
The administrative position of the Minister of National Revenue has also been consistent in treating marine vessels as vehicles for the purposes of the Excise Tax Act. In Excise Communiqué 191/T1 (December 1989), the Minister’s stated position is that the definition of vehicle is broad and includes ships.
The defendant argues that there is no apparent purpose in interpreting the Act to exclude marine vessels from the definition of “vehicle”. If the plaintiff’s position is correct, then Parliament would be seen to be preferring one mode of conveyance (by sea) over another, without any rationale for so doing. The exemption in the relevant portion of the Excise Tax Act is that diesel fuel to produce electricity is exempt from tax, unless it is used in the operation of a vehicle. A functional approach indicates that to exclude “vessels” from the definition would be to create a distinction without a difference.
Finally, it is submitted that when considering the definition of “vehicle” in its ordinary meaning, in keeping with the object of the Act and the intention of Parliament, the plaintiff’s tugboats and train ships are vehicles within the meaning of the Excise Tax Act.
ANALYSIS
The Excise Tax Act provides no definition of the term “vehicle”. The meaning of that word “vehicle” in paragraph 23(8)(c) of the Act and in section 3 of Part VI of Schedule III to the Act is the subject-matter of the present application.
Section 3 of Part VI of Schedule III to the Excise Tax Act provides an exemption from sales tax for:
3. Fuel oil for use in the generation of electricity except where the electricity so generated is used primarily in the operation of a vehicle.
In addition, paragraph 23(8)(c) of the Act provides an exemption from excise tax for:
23. (8) …
(c) diesel fuel for use in the generation of electricity, except where the electricity so generated is used primarily in the operation of a vehicle.
1. Principles of statutory interpretation
In order to determine the proper meaning of the word “vehicle”, it is useful to examine the principles of statutory interpretation which have been established by our courts.
In International Forest Products Ltd. v. Canada, [1991] 2 C.T.C. 246 (F.C.T.D.), Madam Justice Reed summarizes the law on principles of interpretation. The Court was concerned with the question whether jet fuel fell under the definition of diesel fuel in section 2 of the Excise Tax Act. In her review of principles of statutory interpretation, Reed J. stated, at pages 247 and 248, footnote 3:
At one point, as a general rule, taxation statutes were said to require strict construction. Any ambiguities or doubts on a literal reading of the words were to be resolved in the taxpayer’s favour….
Recently, however, the courts have moved away from strictly construing taxation statutes, and have instead adopted the same rule of interpretation applicable to all statutes. In Stubart Investments Ltd. v. The Queen, [1984] 1 S.C.R. 536; [1984] C.T.C. 294, Estey, J., after examining the developments of interpretative approaches to taxation statutes, stated the modern method as follows:
Courts today apply to this statute [the Income Tax Act] the plain meaning rule, but in the substantive sense so that if a taxpayer is within the spirit of the charge, he may be held liable.
…
While not directing his observations exclusively to taxing statutes, the learned author of Construction of Statutes (2nd ed. 1983) at page 87, E.A. Driedger, put the modern rule succinctly:
Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.
In Lor-Wes Contracting Ltd. v. The Queen, [1986] 1 F.C. 346; (1985) 2 C.T.C. 79; 85 D.T.C. 5310, an income tax case, Mr. Justice MacGuigan followed the approach set out in Stubart. He stated the appropriate principle of interpretation as follows:
It seems clear from these cases that older authorities are no longer to be absolutely relied upon. The only principle of interpretation now recognized is a words-in-total-context approach with a view to determining the object and spirit of the taxing provisions.
The same approach is applicable when dealing with the Excise Tax Act as when dealing with the Income Tax Act. The “words-in-total-context” approach of MacGuigan, J.A. was adopted in Westar Mining Ltd. v. Canada, [1990] 2 C.T.C. 547; 3 T.C.T. 5325 (F.C.T.D.), when dealing with the definition of “vehicles” under the Excise Tax Act.
MacGuigan J.A.’s approach in Lor-Wes Contracting Ltd. v. The Queen (supra), was followed in Calgary School District No. 19 v. R. (1990), 43 C.L.R. 194 (F.C.T.D.). At page 202, Jerome A.C.J. stated:
It follows then that the “words-in-total-context” principle of statutory interpretation must be applied in this instance to determine the meaning of the phrase “for use exclusively in the construction of a building for that institution” found in s. 44.27 of the Excise Tax Act. As well, I note that s. 11 of the Interpretation Act. R.S.C. 1985, c. I-21, directs me to give a fair, large and liberal construction and interpretation as best ensures the attainments of the Act’s objectives. Accordingly, I must endeavour to assign to the words chosen by Parliament a meaning consistent with the apparent objectives of the provision in question.
Other opinions on the subject have been expressed. In the Supreme Court of Canada’s decision in Morguard Properties Ltd. et al. v. City of Winnipeg, [1983] 2 S.C.R. 493, Estey J., on the construction of tax legislation, said at page 509:
In more modern terminology the courts require that, in order to adversely affect a citizen’s right, whether as a taxpayer or otherwise, the Legislature must do so expressly. Truncation of such rights may be legislatively unintended or even accidental, but the courts must look for express language in the statute before concluding that these rights have been reduced. This principle of construction becomes even more important and more generally operative in modern times because the Legislature is guided and assisted by a well-staffed and ordinarily very articulate Executive. The resources at hand in the preparation and enactment of legislation are such that a court must be slow to presume oversight or inarticulate intentions when the rights of the citizen are involved. The Legislature has complete control of the process of legislation, and when it has not for any reason clearly expressed itself, it has all the resources available to correct that inadequacy of expression. This is more true today than ever before in our history of parliamentary rule.
In his book The Construction of Statutes, E. A. Driedger, sets out more elaborately his doctrine with respect to interpreting statutes generally. At page 81, he wrote:
The decisions examined thus far indicate that the provisions of an enactment relevant to a particular case are to be read in the following way:
1. The Act as a whole is to be read in its entire context so as to ascertain the intention of Parliament (the law as expressly or impliedly enacted by the words), the object of the Act (the ends sought to be achieved), and the scheme of the Act (the relation between the individual provisions of the Act).
2. The words of the individual provisions to be applied to the particular case under consideration are then to be read in their grammatical and ordinary sense in the light of the intention of Parliament embodied in the Act as a whole, the object of the Act and the scheme of the Act, and if they are clear and unambiguous and in harmony with that intention, object and scheme and with the general body of the law, that is the end.
3. If the words are apparently obscure or ambiguous, then a meaning that best accords with the intention of Parliament, the object of the Act and the scheme of the Act, the one that the words are reasonably capable of bearing is to be given them.
4. If, notwithstanding that the words are clear and unambiguous when read in their grammatical and ordinary sense, there is disharmony within the statute or statutes in pari materia, then a less grammatical or less ordinary meaning that will produce harmony is to be given the words, if they are reasonably capable of bearing that meaning.
2. Interpretation of “Vehicle” by the Courts
In Westar Mining Ltd. v. Minister of National Revenue, (supra), the plaintiff appealed from the Minister of National Revenue’s disallowance of its claim for refund of federal sales and excise taxes paid on diesel fuel purchased and used in the generation of electricity required to operate the plaintiff’s ore haulers. The issue was whether the plaintiff’s ore haulers were “vehicles” within the meaning of the relevant provisions of the Excise Tax Act. The Court dismissed the application, and held that the ore haulers were used primarily as “vehicles” within the plain meaning of that word as defined in the case law and in recognized dictionaries. Accordingly, the diesel fuel used to generate electricity in their operation was specifically excluded from the diesel fuel exemption contained in paragraph 21(3.1)(c) [as am. by S.C. 1986, c. 9, s. 11] of the Excise Tax Act. At page 145, McNair J. concluded:
In short, I am of the opinion that the subject ore haulers were used primarily as vehicles within the ordinary meaning of the word in moving overburden or raw ore from one place to another, and that the legislative expression employed in this instance does not permit the restriction of such vehicular activity to movement by road or rail or the carrying of coal as a finished, saleable product. In my view, any other interpretation of the language used in the taxing provisions of the Act would only serve to circumvent their object and spirit and defeat the expressed intention of Parliament. In the result, the plaintiff fails to qualify for the exemption and claim for refund.
Hugessen J.A., for the Federal Court of Appeal stated, at page 6197 (supra):
… we can see no basis for disagreeing with McNair, J.’s very thorough reasons for judgment. He found the Appellant’s “ore haulers” to be “vehicles” within the intendment of ss. 21(3.1)(c) (now paragraph 23(8)(c)) and Schedule III of the Excise Act when those provisions are read in their entire context and in conformity with the statutory scheme and their ordinary grammatical meaning.
In McLean S.G. v. Minister of National Revenue, (supra), the sole issue to be determined was whether the word “vehicle” included a ship. The appellant was a marine engineer on a coastal ferry. During the year 1954, the appellant spent a certain sum for board and lodging while away from his home port. In his return for that year, he deducted the amount he had disbursed for board and lodging in accordance with subsection 11(7) of the Act which provided a deduction for such expenses where the employee travels away from his employer’s place of business in a “vehicle” of the employer. The Minister disallowed this deduction, claiming that a ship was not a “vehicle” within the meaning of subsection 11(7). The appellant’s appeal was allowed. In its reasons, the Tax Appeal Board stated, at pages 120 and 121:
… I came across a case that appears to me to set the question at rest. It is Polpen Shipping Co. v. Commercial Union Assce. Co., (1943) 1 K.B. 161. There, Atkinson, J., held that a flying boat was not a “ship or vessel” within the meaning of a certain insurance policy. In so finding, he had occasion to deal rather exhaustively with the meaning or significance of the word “ship”. At page 165, he quotes from the judgment of Lord Esher, M.R., in The Gas Float Whitton No. 2, (1896) Probate, 42, who said with reference to certain rafts found anchored in a stream:
They are not vehicles intended for the navigation of the sea, or the arms of the sea; they are not recognized as instruments of commerce of navigation by an Act of Congress. They are piles of lumber, and nothing more, fastened together and placed upon the water until suitable vehicles are ready to receive them and transport them to their destined port.
Lord Esher, in turn, was quoting with approval from the judgment in an American case, Nicholson v. Chapman, rendered as early as 1793. The passage cited makes it evident, I think, that for many years ships have been viewed judicially as vehicles for the navigation of the seas. In the light of this and other authorities cited by Atkinson, J., it appears to me that to interpret vehicle as being restricted to a conveyance on wheels or runners for carrying persons or goods on land is taking an unduly narrow view of the word’s meaning. A ship performs the same functions on water as does a wheeled conveyance on land and I think that to treat a ship as has been done in the assessment appealed from is to create a distinction without the difference where the application of section 11(7) is involved. [Underline mine.]
In Magnatrim Equipment Ltd. and Deputy M.N.R. (Customs and Excise) (1988), 18 C.E.R. 13, the Tariff Board concluded that the skateboards in issue fell within the definition of the word “vehicle” as set out in subsection 2(1) of the former Customs Act [R.S.C. 1970, c. C-40], which read: “any cart, car, wagon, carriage, barrow, sleigh, aircraft or other conveyance of any kind whatever, whether drawn or propelled by steam, by animals … and the fittings, furnishings and appurtenances of the vehicle” (underline mine). In support of its conclusion, the Board relied on the case of General Supply Co. of Canada Ltd. v. Deputy Minister of National Revenue et al., [1954] Ex.C.R. 340, where Cameron J. stated, at page 352:
In view of the context, I think that “conveyance” as here used is limited to a vehicle which is not only capable as a whole of moving from one location to a different location, but is designed for that purpose and whose function, while so moving, is the carrying or transporting of goods or passengers. “To convey” means more than the capacity to move from place to place; it involves the carrying or transporting of persons or of things other than its own component parts.
The Board was of the opinion that the skateboards met all three requirements as set out in the General Supply case (supra).
I have already referred to Fleming v. Spracklin where the Ontario Court of Appeal held that a yacht riding upon international waters was not a “vehicle on the public highway or elsewhere” within the meaning of subsection 70(2) of The Ontario Temperance Act. The usefulness of this case, as was pointed out by the Tax Review Board in the McLean case, at page 121 (supra) is diminished by the fact that the Court only considered the meaning of “vehicle” in connection with specific words of the Act in issue, being “a vehicle on the public highway”. The Court of Appeal also referred to other enactments to reinforce its position, such as The Highway Travel Act [R.S.O. 1914, c. 206], The Motor Vehicles Act [R.S.O. 1914, c. 207], and The Snow Roads Act [R.S.O. 1914, c. 208], which all state that the word “vehicle” is a wheeled or runnered conveyance such as is used on the roads. Again, such definitions of the word “vehicle” is limited to those specific Acts and does not offer any assistance to determine the issue before us. Those statutes quite evidently address themselves to a subject different from the one presently in issue.
3. Meaning of “Vehicles” in Dictionaries
Both parties provided ample definitions of the word “vehicle” as taken from various dictionaries. I will enumerate only a few, as I believe that in the present case, the intention of Parliament can be clearly determined by examining the Act in its total context, and by referring to the authorities examined above and to reports such as parliamentary debates and others, as they relate to the Act. The following definitions, among others, have been submitted by the parties:
“vehicle”: A means of conveyance provided with wheels or runners and used for the carriage of persons or goods; a carriage, cart, wagon, sledge, etc. (Shorter Oxford English Dictionary on Historical Principles (supra).)
“vehicle”: An instrumentality for the carrying of goods or people…. A broader term than motor vehicle…. Any carriage or contrivance used or capable of being used as a means of transportation on land…. The word is commonly understood as something which moves or runs on the land, not something which flies in the air, although etymologically the term might be considered as broad enough to cover a conveyance propelled in the air. (Ballentine’s Law Dictionary (supra).)
“vehicle”: The word includes every description of carriage or other artificial contrivance used or capable of being used as a means of transportation on land … a street sprinkler is a vehicle … but not a street car … or a ferry boat. (Bouvier’s Law Dictionary and Concise Encyclopedia (supra).)
“vehicle”: Any means of carriage, conveyance, or transport … vehicles carrying people, whether ships or aircrafts” (The Oxford English Dictionary, 2nd ed., 1989.)
“vehicle”: That in or on which persons, goods, etc. may be carried from one place to another, especially along the ground…. Term refers to every device in, upon or by which a person or property is or may be transported upon a highway. (Black’s Law Dictionary (supra).)
“vehicle”: [A]ny device or contrivance for carrying or conveying persons or objects, including land conveyances, vessels, aircraft, and spacecraft: sometimes specif. restricted to land conveyances on wheels, runners, treads, etc. (Webster’s New World Dictionary of the American Language (supra).)
“vehicle”: 1. Any conveyance that may be used for transportation by sea, land or air. 2. Any truck, automobile or other conveyance for use on land but does not include any vehicle running only on rails to which the Railway Act applies. 3. Includes a street car. 4. Any motor vehicle, aircraft or other conveyance designed to be driven or drawn by any means including muscular power, and any part thereof, and includes any equipment necessary for the proper operation of the vehicle and any appurtenances of the vehicle. (The Dictionary of Canadian Law (supra).)
“conveyance”: 3. Includes ships, vessels, aircrafts, trains, and motor and other vehicles. (The Dictionary of Canadian Law (supra).)
“véhicule”: [translation] wheeled or powered device used to transport persons or goods. V. Bus … boat … “Current. Method of road transport. (Le Petit Robert I, supra.)
As will be noted, the definitions offered by the various dictionaries are somewhat ambiguous. Some include any conveyance by land, sea or air. Others give it a somewhat more restricted meaning. These various sources might be indicative of the issue but they are by no means determinative. Further, they somehow beg the question as to whether or not within the context of the Excise Tax Act, the word “vehicle” includes motorized water craft.
CONCLUSION
Adopting again the Driedger approach to the construction of statutes, it might be wise to start with an examination of the object of the Act. It is clearly the raising of revenue. Among the items on which a tax is imposed is diesel fuel. This tax applies to all diesel fuel except when the diesel fuel is for use in the generation of electricity. Even this exemption, however, is limited. If the electricity generated is used primarily in the operation of a vehicle, the exemption does not apply and the diesel fuel so used is taxable.
Noting that no issue is raised as to the impact of the words “primarily” or “operation”, in respect of the subject vessels, the question is therefore more narrowly restricted to the meaning of “vehicle”.
I also note that though the word “vehicle” has often been associated with conveyances running on land, it is often shorthand for a motor vehicle. “Vehicle” standing alone, may in a legislative context be justifiably restricted to conveyances running on land.
In the statute before me, a proper construction of its charging provision is to impose a tax on diesel fuel, including of course, a tax on diesel fuel used primarily in the operation of a vehicle. The exemption only applies when such fuel is for use in the generation of electricity. The general rule is therefore that fuel for vehicles is taxable and any exception invites a narrow interpretative approach. A contrario, therefore, the word “vehicle” invites a more generic or wider approach. It could be said that the narrower the approach to “use in the generation of electricity”, the wider the interpretation of the wording used in taxing an item generally including of course diesel fuel, no matter for what general purpose it might be used.
In this regard, one must avoid becoming preoccupied with the double exception in the structure of the statute. I would repeat, diesel fuel is taxable when used in vehicles. The exemption only applies in the generation of electricity.
One can then look into the intent of Parliament with special regard to a vehicle which uses fuel oil generated electricity for its operation. Such a propulsive or motive force is not the exclusive habitat of motor vehicles or other conveyances running on land. It is found in probably more marine installations than otherwise. To suggest therefore that Parliament, by the use of the word “vehicle”, intended to restrict the meaning to vehicles running on land and thereby apply the tax with respect to all other means of conveyances used to carry goods and people, raises an anomalous situation. In effect, it would suggest that there were good or substantial economic, policy or political grounds to favour water-borne craft. In this connection, it is in evidence that when the Excise Tax Act was being debated in Parliament, the Minister, the Honourable M. Sharp at that time, said, at page 6812 of Hansard for June 23, 1966:
The essential point is that what we are exempting is diesel fuel used in the generating of electricity for commercial and industrial uses and so on. It was our intention to eliminate it in connection with diesel fuel used for transportation. [Underline mine.]
And later, when the Minister was asked whether the term “vehicle” included a ship or boat, the Minister’s reply was a categorical “[y]es, it includes a ship and an aircraft”.
There is further evidence provided in Excise Communique 191/TI of July 1989 issued by Revenue Canada that in its interpretation, the word “vehicle” has a broad meaning, referring to carriages or conveyances of all kinds which are used to carry or transport persons or goods; for example, ships, trucks, tractor-trailers, locomotives and railway rolling stock. Admittedly, the Department’s interpretation of a statutory provision is not binding on this Court, but it is at least consistent with the interpretation originally expressed in Parliament many years earlier.
Referring now to case law, the Supreme Court of Canada in Stubart Investments Ltd. v. The Queen, [1984] 1 S.C.R. 536, went to great length in analyzing the history of judicial interpretation of taxing statutes. Estey J. at pages 575 et seq., recalled that in an earlier period, the doctrine of strict interpretation applied whereby ambiguities in the charging provision of a tax statute were to be resolved in favour of the taxpayer; the taxing statute was classified as a penal statute. Not so today, said Estey J., who, in adopting the comments of Professor John Willis, observed [at page 578] that “[c]ourts today apply to this statute the plain meaning rule, but in the substantive sense so that if a taxpayer is within the spirit of the charge, he may be held liable”.
In Lor-Wes Contracting Ltd. v. The Queen, [1986] 1 F.C. 346, MacGuigan J.A. said, at page 352:
It seems clear from these cases that older authorities are no longer to be absolutely relied upon. The only principle of interpretation now recognized is a words-in-total-context approach with a view to determining the object and spirit of the taxing provisions.
Another relevant view of the meaning of the word “vehicle” may be found in Ruling 7120/28 of the Tariff Board. In that case, the Tariff Board was dealing with diesel fuel on board drill ships to produce electricity from diesel electric generators. When used for the purpose of heating and lighting and the operation of drilling equipment, said the Board, diesel fuel exemption applied. It did not apply when used for the purpose of moving the ship from one location to another or keeping it in position while drilling. Obviously, the Board had no difficulty in finding that the word vehicle included vessels when it said:
The definition of a vehicle is that it is a device or contrivance for carrying or conveying persons or objects. A boat or a ship is used to carry or convey persons or objects, therefore, it can be considered to be a vehicle for purposes of this section of the Act.
Similarly, in McLean S.G. v. Minister of National Revenue (1956), 56 DTC 119, the Income Tax Appeal Board had no difficulty in ruling that the word “vehicle” as found in subsection 11(7) of the Income Tax Act relating to deductions with respect to travel costs of an employee in a “vehicle” of the employer, included a ferry-boat. The Board [at page 125] found that for many years “ships have been viewed judicially as vehicles for the navigation of the seas” quoting in that respect The Gas Float Whitton No. 2, [1896] P. 42 (C.A.), at page 60, where Lord Esher M.R. said, in reference to certain rafts found anchored in stream:
They are not vehicles intended for the navigation of the sea. [Underline mine.]
I observe that the Crown’s position in the McLean case on the interpretation of “vehicle” in one taxing statute was diametrically opposed to the position it has taken before me with respect to another taxing statute. Having lost in one, it now evidently seeks to harmonize both.
There is no doubt that plaintiff’s counsel, in his references to dictionary meanings, to case law and to various canons of statute interpretation, raised intelligently arguable points. I should note, however, that dictionary sources do not provide a clear-cut answer. None of them explicitly excludes conveyance by way of ships or vessels, and some of them specifically include them.
Plaintiff’s counsel’s reference to the definition section in the Immigration Act might raise a supercilious eyebrow, but I am not satisfied that it is particularly material in dealing with the Excise Tax Act.
I should take a similar stance with respect to the authorities that plaintiff’s counsel has cited on the interpretation of taxing statutes. I find myself much more in agreement with the doctrine of more recent vintage expressed in Stubart (supra) or in Lor-Wes Contracting (supra) than I am with the views expressed by Lord Cairns in 1869 in Partington v. The Attorney-General (1869), L.R. 4 H.L. 100.
With respect to any guidance which case law on similar or analogous issues might provide, I should find more conforming the view of the Tax Appeal Board in the McLean case (supra) or the view of the Tariff Board in Ruling 7120/28.
With respect to Parliamentary debates, some weight must, in my view, be given to that source of assistance. The constructionist or formalistic approach evident in earlier years has now gradually evolved to permit a more purposive or functional enquiry when dealing with ambiguous provisions in a statute. References to Parliamentary debates are an example of this and I need only refer to the Supreme Court decisions in R. v. Sullivan, [1991] 1 S.C.R. 489, and R. v. Mailloux, [1988] 2 S.C.R. 1029, where that kind of extraneous evidence has been admitted.
Finally, notwithstanding some authority which suggests that Parliament’s intention is more properly determined by what it did say than by what it intended to say, I find that to include in the meaning of the word “vehicle” conveyances of the kind in issue is one that the word itself can very reasonably bear and is more in keeping with the general tenor of the statute and Parliament’s intention in adopting it.
I therefore rule that the point of law raised by the parties should be determined in favour of the defendant, the whole without costs.
The parties are to be commended for having proceeded in this expeditious and relatively inexpensive fashion to resolve the substantive issue between them. A formal judgment will issue accordingly.