T-1181-87
MacMillan Bloedel Limited (Plaintiff)
v.
Her Majesty the Queen (Defendant)
INDEXED AS: MACMILLAN BLOEDEL LTD. V. CANADA (T.D.)
Trial Division, McNair J.—Vancouver, April 17;
Ottawa, October 19, 1990.
Construction of statutes — Excise Tax Act, s. 27(1) —
Federal sales tax imposed on imported diesel fuel — Anomaly
in drafting of s. 27(1) making calculation of tax impossible
except by "reading in" words since added by legislative
amendment — Judicial power of rectification of legislation to
be exercised only where absolutely necessary and where ob
stacles created by minor and obvious imperfections of lan
guage — To do so here would constitute arbitrary and unwar
ranted intrusion on role of Parliament — Rule of strict
interpretation of taxing statutes no longer in vogue —
Words-in-total-context approach now utilized — Presump
tion in taxpayer's favour if that approach not resolving
ambiguity.
Customs and excise — Excise Tax Act — Federal sales tax
on imported diesel fuel in 1986 — M.N.R. assessed taxes in
accordance with Excise Tax Act, s. 27(1) — As calculation of
tax under Act, s. 27(1) impossible due to drafting anomaly,
M.N.R. should not have assessed taxes thereunder but accord
ing to general taxing provision of s. 27(1.1)(d).
In the Spring of 1986, the plaintiff imported three shipments
of diesel fuel from the United States for use in its integrated
forest products business in British Columbia. The Minister
reassessed federal sales tax in the amount of $399,846.17 and
rejected the plaintiff's application for a refund on the last
shipment. This was an appeal from the reassessment and the
rejection of refund application.
The dispute hinged on the proper interpretation of subsection
27(1) and paragraph 27(1.1)(c) of the Excise Tax Act. The
charging provision in that paragraph was inapplicable to the
present case as the formula calculations prescribed therein
required that a dollar value be multiplied by a dollar per litre
rate, thus yielding in turn "squared dollars" and a nonsensical
mathematical result. Essentially, the question was how far the
Court could go in construing legislation by adding or ignoring
words to achieve the result said to have been intended. Parlia
ment has since corrected the error by adding the words "or on
the volume", thereby effectively imposing a tax on a per volume
basis where no coherent scheme existed before.
Held, the appeal should be allowed.
The old rules, which called for the strict interpretation of
taxing statutes, had recently fallen into disfavour. Now, the
governing principle in construing statutes, including taxing
statutes, is the "words-in-total-context" approach. Although
the presumption in favour of the taxpayer has not been abol
ished, it has been attenuated leaving a residual principle that
any reasonable doubt may be resolved in taxpayer's favour if
the statutory ambiguity cannot be resolved by the words-in-
total-context approach. However, the combined effect of sub
sections 27(1) and 27(1.1), with section 27.1 and Schedule II.1,
even on the most liberal words-in-total-context approach, fails
to provide a coherent scheme for the taxation of diesel fuel on a
volume basis.
Any judicial power of rectification with respect to legislation
ought only to be exercised where absolutely necessary to
achieve the clear manifestation of legislative intent in the face
of obstacles created by very minor and patently obvious imper
fections of language. To fill the gap by writing in the words "or
on the volume" would constitute an arbitrary and unwarranted
intrusion on the role of Parliament. While the plaintiff has
discharged the onus of proving that the Minister's assessment
was erroneous, the Minister may impose the percentage rate of
tax prescribed by paragraph 27(1.1)(d) on the three shipments
of fuel (11 per cent on the first two and 12 per cent on the last
shipment) for a total federal sales tax amount of $195,463.48.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Excise Tax Act, R.S.C. 1970, c. E-13, ss. 26(1) (as am.
by S.C. 1980-81-82-83, c. 68, s. 8(3)), 27(1) (as am. by
S.C. 1986, c. 9, s. 16; c. 54, s. 4), (1.1) (as am. idem)
(a),(b),(c),(d), Schedule II.1 (as enacted idem).
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; Johns-Manville Canada Inc. v. The Queen, [1985] 2
S.C.R. 46; (1985), 21 D.L.R. (4th) 210; [1985] 2 CTC
111; 85 DTC 5373; 60 N.R. 244.
DISTINGUISHED:
R. v. Mullin, [1947] 2 D.L.R. 682; 87 C.C.C. 394; 3 C.R.
70; 19 M.P.R. 298 (N.B.C.A.); Re Lynn Terminals Ltd.
Assesment (1963), 40 D.L.R. (2d) 925; 44 W.W.R. 604
(B.C.S.C.); Worgan (T.K.) & Son Ltd. v. Gloucestershire
County Council, [1961] 2 Q.B. 123 (C.A.); Federal
Steam Navigation Co Ltd v Department of Trade and
Industry, [1974] 2 All ER 97 (H.L.); Wentworth Securi-
ties Ltd. v. Jones, [1980] A.C. 74 (H.L.); City of Ottawa
v. Hunter (1900), 31 S.C.R. 7; Minister of Transport for
Ontario v. Phoenix Assurance Co. Ltd. (1973), 1 O.R.
(2d) 113; 39 D.L.R. (3d) 481; [1973] L.L.R. 1-560
(C.A.); Société des Acadiens du Nouveau-Brunswick
Inc. and Association des Conseillers Scolaires Franco-
phones du Nouveau-Brunswick v. Minority Language
School Board No. 50 and Association of Parents for
Fairness in Education, Grand Falls District 50 Branch
(1987), 82 N.B.R. (2d) 360; 40 D.L.R. (4th) 704; 208
A.P.R. 360 (C.A.); Sask. Govt. Insur. Office v. Anderson
(1966), 57 W.W.R. 633 (Man. Cty. Ct.); Massey-Harris
Co. Ltd. v. Strasbourg, [1941] 4 D.L.R. 620 (Sask.
C.A.).
AUTHORS CITED
Côté P.-A. The Interpretation of Legislation in Canada,
Cowansville, Qué.: Editions Yvon Blais Inc., 1984.
Driedger E. A. Construction of Statutes, 2nd ed.
Toronto: Butterworths, 1983.
COUNSEL:
L. A. Green for plaintiff.
Barbara A. Burns for defendant.
SOLICITORS:
Thorsteinsson, Mitchell, Little, O'Keefe &
Davidson, Vancouver, for plaintiff.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
McNAIR J.: This action is an appeal by the
plaintiff from the Minister of National Revenue's
reassessment of the amount of federal sales tax
levied or imposed on the importation of three
shipments of diesel fuel from the United States in
the spring of 1986. The plaintiff also appeals the
Minister's notice of determination rejecting its
application for refund in respect of sales tax
imposed on the third shipment of diesel fuel. The
plaintiff concedes that if any federal sales tax is
due on the shipments, then the most that could
have been assessed was $195,463.48. The defend
ant, on the other hand, maintains that the
$399,846.17 of federal sales tax actually imposed
was properly computed. There is a sharp differ
ence of $204,382.69 between the two amounts.
The dispute between the parties, however, hinges
on questions of law involving the proper interpreta
tion of subsection 27(1) [as am. by S.C. 1986, c. 9,
s. 16] and paragraph 27(1.1)(c) [as am. idem, s.
16(2)] of the Excise Tax Act, R.S.C. 1970, c.
E-13, as amended by S.C. 1986, c. 54.
Counsel for the plaintiff argues that the charg
ing provision contained in paragraph 27(1.1)(c) of
the Act is so ambiguous as to render it totally
inapplicable to the present case, inasmuch as the
application of the formula for the imposition of tax
leads to a nonsensical result. It therefore follows,
in his submission, that there is either no tax owing
at all or, alternatively, the amount is much less by
virtue of being determinable under
paragraph 27(1.1)(d) of the Act. Counsel for the
defendant acknowledges the gap or anomaly in the
legislative provisions, which she says are attribut
able to drafting error. Consequently, she urges me
to disregard or judicially rectify any noted defici
encies in that regard. Essentially, the question is
how far the Court can go in construing legislation
by adding or ignoring words to achieve the result
which the Crown says was intended.
The parties submitted an agreed statement of
facts, which reads as follows:
1. The Plaintiff is a corporation incorporated pursuant to the
laws of the Province of British Columbia, and carries on an
integrated forest products business in that Province and else
where in Canada.
2. The Plaintiff uses and consumes diesel fuel in its operations
in British Columbia.
3. On or about March 14, 1986, the Plaintiff purchased diesel
fuel in Washington State for importation into Canada. The
Plaintiff imported the diesel fuel at Vancouver, British
Columbia, pursuant to Canada Customs B3 Import_ Entry
Coding Form L178451 (hereinafter referred to as "Shipment
No. I").
4. The relevant details of Shipment No. 1 are as follows (all
dollar references in this Agreed Statement of Facts are to
Canadian dollars, unless otherwise stated):
(a) Volume of Diesel Fuel 3,998,645.73 litres
(b) Purchase Price (U.S. Dollars) U.S. $441,450.49
(c) Exchange rate
(Canadian/U.S. Dollars) $ 1.42
(d) "Duty Paid Value" $626,860.00
(e) Sales tax charged at
11% of Duty Paid Value $ 68,954.56
(f) Excise Tax at $0.02 per Litre $ 79,972.91
(g) Total Sales and Excise Taxes $148,927.47
5. The Plaintiff paid the sales and excise taxes referred to in
paragraph 4 herein upon importation.
6. On or about April 3, 1986, the Plaintiff purchased diesel
fuel in Washington State for importation into Canada. The
Plaintiff imported the diesel fuel at Nanaimo, British
Columbia, pursuant to Canada Customs B3 Import Entry
Coding Form V300070 (hereinafter referred to as "Shipment
No. 2").
7. The relevant details of Shipment No. 2 are as follows:
(a) Volume of Diesel Fuel 3,194,164 litres
(b) Purchase Price (U.S. Dollars) U.S. U.S. $352,635.70
(c) Exchange Rate
Canadian/U.S. Dollars $ 1.40
(d) "Duty Paid Value" $493,690.00
(e) Sales Tax charged at
11% of Duty Paid Value $ 54,305.90
(f) Excise tax at $0.02 per Litre $ 63,883.28
(g) Total Sales and Excise Taxes $118,189.18
8. The Plaintiff paid the sales and excise taxes referred to in
paragraph 7 herein upon importation.
9. On or about May 15, 1986, the Plaintiff purchased diesel
fuel in Washington State for importation into Canada. The
Plaintiff imported the diesel fuel at Nanaimo, British
Columbia, pursuant to Canada Customs B3 Import Entry
Coding Form V300795 (hereinafter referred to as "Shipment
No. 3").
10. The relevant details of Shipment No. 3 are as follows:
(a) Volume of Diesel Fuel 4,400,134 litres
(b) Purchase Price (U.S. Dollars) U.S. $436,007.71
(c) Exchange Rate
Canadian/U.S. Dollars $ 1.38
(d) "Duty Paid Value" $601,691.00
(e) Sales Tax charged
at $0.0366 per Litre $161,044.92
(f) Excise Tax at $0.02 per Litre $ 88,002.68
(g) Total Sales and Excise Taxes $249,047.60
11. The Plaintiff paid the sales and excise taxes referred to in
paragraph 10 herein upon importation.
12. By way of Notice of Assessment No. 53 dated July 9, 1986,
the Minister of National Revenue (hereinafter "the Minister")
assessed additional sales tax on the Plaintiff's purchases of
Shipments Nos. 1 and 2. The assessment was based upon the
assumption that the sales tax imposed by Subsection 27(1) of
the Excise Tax Act should properly have been calculated and
imposed according to the provisions of Paragraph 27(1.1)(c) of
the Act on the basis of the specified rate ($.0332) per litre of
diesel fuel imported and not on the basis calculated by the
Plaintiff which was in accordance with the provisions of Para
graph 27(1.1)(d) of the Act at a rate of 11 percent of the "duty
paid value" of the diesel fuel imported.
13. The Plaintiff paid the taxes as assessed.
14. The Plaintiff duly objected to the assessment by way of a
Notice of Objection dated July 23, 1986. The Minister con
firmed the assessment by way of a Notice of Decision dated
March 3, 1987. The Plaintiff appealed therefrom to this Hon
ourable Court pursuant to Section 51.2 of the Excise Tax Act.
15. The Plaintiff filed a refund application with respect to
Shipment No. 3 on July 11, 1986, claiming a refund which the
parties now agree would have been in the amount of $88,842.00
if allowed. The Plaintiffs refund claim was based upon its
position that the sales tax payable in respect of Shipment No. 3
should properly have been calculated and imposed on the basis
of a rate of 12 percent of the "duty paid value" of the diesel
fuel imported and not on the basis of a rate per litre as asserted
by the Minister.
16. By way of Notice of Determination No. 03094 dated
September 5, 1986, the Minister rejected the Plaintiffs refund
claim on the basis that the sales tax was properly calculated
and imposed upon the basis of the specified rate ($0.366) per
litre of diesel fuel imported and not upon the basis asserted by
the Plaintiff.
17. The Plaintiff duly objected to the determination by way of
Notice of Objection dated October 6, 1986. The Minister
confirmed the determination by way of Notice of Decision
dated March 3, 1987. The Plaintiff appealed therefrom to this
Honourable Court pursuant to Section 51.2 of the Excise Tax
Act.
18. Based upon the method employed by the Plaintiff, the
federal sales tax due upon the importation of shipments Nos. 1,
2 and 3 should have been $195,463.48.
19. Based upon the method employed by the Minister, the
federal sales taxes actually imposed total $399,846.17, a differ
ence of $204,382.69.
Although the facts are relatively straightfor
ward, the statutory provisions in question are not
so clear. The relevant sections under review [as
am. by S.C. 1986, c. 9] read as follows:
27. (1) There shall be imposed, levied and collected a con
sumption or sales tax at the rate specified in subsection (1.1) on
the sale price of all goods
(b) imported into Canada, payable by the importer or trans-
feree who takes the goods out of bond for consumption at the
time when the goods are imported or taken out of warehouse
for consumption;
(1.1) Tax imposed by subsection (1) is imposed
(c) in the case of regular gasoline, unleaded gasoline, premi
um leaded gasoline, premium unleaded gasoline and diesel
fuel, at the rate set opposite the applicable item in Schedule
11.1, adjusted according to subsection 27.1(1) and multiplied
by the rate of tax specified in paragraph (d), expressed as a
decimal number and multiplied by one hundred; and
(d) in any other case, at the rate of eleven per cent.
SCHEDULE II.1
SPECIFIC TAX RATES ON
PETROLEUM PRODUCTS
(Subsection 27(1.1))
1. Gasoline, regular $0.0032 per litre.
2. Gasoline, unleaded $0.0035 per litre.
3. Gasoline, premium leaded $0.0036 per litre.
4. Gasoline, premium unleaded $0.0036 per litre.
5. Diesel fuel $0.0029 per litre.
There are also several definitions in the Act which
are worth noting:
26. (1) ...
"duty paid value" means the value of the article as it would be
determined for the purpose of calculating an ad valorem
duty upon the importation of such article into Canada under
the laws relating to the customs and the Customs Tariff
whether such article is in fact subject to ad valorem or other
duty or not, plus the amount of the customs duties, if any,
payable thereon;
"sale price" [as am. by S.C. 1980-81-82-83, c. 68, s. 8(3)], for
the purpose of determining the consumption or sales tax,
means ... in the case of imported goods, the sale price shall
be deemed to be the duty paid value thereof, and ...
Both counsel were in agreement that the error or
anomaly in legislative drafting stems from the fact
that subsection 27(1) purports to impose sales tax
"on the sale price of all goods" at the rate speci
fied in subsection 27(1.1). Unfortunately, the for
mula prescribed by paragraph 27(1.1)(c) for cal
culating the consumption or sales tax on diesel
fuel, when combined with the applicable rate set
out in Schedule II.1, leads to a result expressed in
terms of price per litre. Incidentally, the formula
requires the basic rate found in Schedule II.1 of
the Act to be adjusted for industry performance
levels and then to be multiplied by the rate
expressed in paragraph 27(1.1)(d). As a matter of
fact, this latter rate was fixed at 11 per cent for
the first two shipments of fuel purchased by the
plaintiff, and at 12 per cent for the third shipment.
In final analysis, the formula calculations pre
scribed by paragraph 27(1.1)(c) require that a
dollar value be multiplied by a dollar per litre rate,
thus yielding in turn "squared dollars" and a
nonsensical mathematical result.
The error or anomaly contained in subsection
27(1) of the Act has since been corrected. In An
Act to amend the Excise Tax Act and the Excise
Act, S.C. 1986, c. 54, s. 4, Parliament added the
words "or on the volume" immediately after the
words "on the sale price" appearing therein. The
addition of these four words serves to fill the gap
and effectively impose a tax on a per volume basis,
where no coherent scheme existed before. The
amendment was given retroactive effect, but only
to June 12, 1986. As the plaintiff's three shipments
all occurred prior to that date, they do not fall
within the scope of the amendment. Cases such as
the plaintiff's were left to be resolved by the
courts.
The old rules calling for a strict interpretation of
taxing statutes have fallen into disfavour in recent
times. In Stubart Investments Ltd. v. The Queen,
[1984] 1 S.C.R. 536, Estey J., speaking for the
majority, thus explained the more modern
approach at pages 576-578:
In all this, one must keep in mind the rules of statutory
interpretation, for many years called a strict interpretation,
whereby any ambiguities in the charging provisions of a tax
statute were to be resolved in favour of the taxpayer; the taxing
statute was classified as a penal statute. See Grover & Iacobuc-
ci, Materials on Canadian Income Tax (5th ed. 1983),
pp. 62-65.
At one time, the House of Lords, as interpreted by Professor
John Willis, had ruled that it was "not only legal but moral to
dodge the Inland Revenue" ((1938), 16 Can. Bar Rev. 1, at p.
26), referring to Levene v. Inland Revenue Commissioners,
[1928] A.C. 217, at p. 227. This was the high water mark
reached in the application of Lord Cairns' pronouncement in
Partington v. Attorney-General (1869), L.R. 4 H.L. 100, at
p. 122—
Professor Willis, in his article, supra, accurately forecast the
demise of the strict interpretation rule for the construction of
taxing statutes. Gradually, the role of the tax statute in the
community changed, as we have seen, and the application of
strict construction to it receded. Courts today apply to this
statute the plain meaning rule, but in a substantive sense so
that if a taxpayer is within the spirit of the charge, he may be
held liable. See Whiteman and Wheatcroft, supra, at p. 37.
While not directing his observations exclusively to taxing
statutes the learned author of Construction of Statutes (2nd ed.
1983), at p. 87, E.A. Dreidger [sic], 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.
However, this is not to say that all presumption
of doubt in favour of the taxpayer has been totally
abolished. Rather, it would seem to be the case
that it has become much more attenuated. In
Johns-Manville Canada Inc. v. The Queen, [1985]
2 S.C.R. 46, the question on appeal, as framed by
Estey J. [at page 48] in delivering the judgment of
the Court, was "whether the taxpayer-appellant
ha[d] the right under the Income Tax Act of
Canada to charge to expense, rather than to capi
tal, the cost of purchase of land at the periphery of
an open pit mine, in the course of its mining
operations." The Court held that he had. Estey J.
conducted an extensive review of the authorities,
and concluded at page 72:
... the appropriate taxation treatment is to allocate these
expenditures to the revenue account and not to capital. Such a
determination is, furthermore, consistent with another basic
concept in tax law that where the taxing statute is not explicit,
reasonable uncertainty or factual ambiguity resulting from lack
of explicitness in the statute should be resolved in favour of the
taxpayer. This residual principle must be the more readily
applicable in this appeal where otherwise annually recurring
expenditures, completely connected to the daily business opera
tion of the taxpayer, afford the taxpayer no credit against tax
either by way of capital cost or depletion allowance with
reference to a capital expenditure, or an expense deduction
against revenue. [Emphasis added.]
If I apprehend the matter correctly, the "residu-
al principle" referred to by Mr. Justice Estey
simply means that in cases where a statutory
ambiguity cannot be resolved by the contemporary
"words-in-total-context" approach to the scheme
of the Act as a whole, then any reasonable doubt
still persisting may be resolved in favour of the
taxpayer.
Côté, The Interpretation of Legislation in
Canada (Yvon Blais, 1984), gives this analysis of
the contemporary approach to statutory interpre
tation at page 398:
If the taxpayer receives the benefit of the doubt, such a
"doubt" must nevertheless be "reasonable". A taxation statute
should be "reasonably clear". This criterion is not satisfied if
the usual rules of interpretation have not already been applied
in an attempt to clarify the problem. The meaning of the
enactment must first be ascertained, and only where this proves
impossible can that more favourable to the taxpayer be chosen.
The presumption in favour of the taxpayer is now merely a
subsidiary one.
See also Driedger, Construction of Statutes, 2nd
ed., at pages 203-207.
As previously mentioned, counsel for the plain
tiff argued that paragraph 27(1.1)(c) of the Act
was unclear and ambiguous, conduced to an
absurd or nonsensical result, and therefore ought
not to be applied. He submitted that while Parlia
ment may have intended to levy a tax on a volume
basis, it had failed to do so in clear and explicit
terms. The result was that no tax could be levied.
He further submitted that long-standing canons of
interpretation required that any reasonable uncer
tainty or factual ambiguity be resolved in favour of
the taxpayer. Failing these arguments, he urged
the Court to find that the plaintiff had acted
reasonably in paying sales tax at the percentage
rate prescribed by paragraph 27(1.1)(d) of the
Act, which imposes a flat percentage rate of tax in
all cases not covered by paragraphs 27(1.1)(a),(b)
or (c) thereof.
Crown counsel presented two arguments in sup
port of the Minister's factual assumptions regard
ing the applicability of paragraph 27(1.1)(c) of the
Excise Tax Act. Her first argument was based on
the principle or maxim generalia specialibus non
derogant which, being literally translated, simply
means general words do not derogate from special.
The application of this principle, in her submis
sion, makes it possible to view the tax rate pre
scribed by paragraph 27(1.1)(c) as a specific
exemption to the general scheme of subsection
27 (1) under which a rate of tax was to be levied on
the sale price of all goods. Counsel urged that
paragraph 27(1.1)(c) effectively established a spe
cific scheme to tax diesel and other fuels based on
the volume of the goods in question rather than on
their sale price, and that this interpretation was
manifestly what Parliament intended. She but
tressed her argument with case law to the effect
that courts have applied the principle generalia
specialibus non derogant in order to give effect to
the legislative intent, even in cases where such a
construction did result in some repugnancy or
apparent conflict between general and specific
statutory provisions: see R. v. Mullin, [1947] 2
D.L.R. 682 (N.B.C.A.); Re Lynn Terminals Ltd.
Assessment (1963), 40 D.L.R. (2d) 925
(B.C.S.C.); and Worgan (T.K.) & Son Ltd. v.
Gloucestershire County Council, [1961] 2 Q.B.
123 (C.A.).
In my view, the authorities cited by Crown
counsel are not at all persuasive. This is not a case
where a statutory provision gives specific and
precise directions for something which another
more general provision contradicts. Para
graph 27(1.1)(c) of the Act is neither specific nor
precise in mandating an operative tax scheme.
Regardless of any general legislative intent to tax
imported diesel fuel, the fundamental basis for the
imposition of such tax was left very much in the
air. Moreover, reading the words of paragraph
27(1.1)(c) in the context of the whole Act does
little to solve the conundrum. In my opinion, the
combined effect of subsections 27(1) and 27(1.1),
with section 27.1 and Schedule II.1, even on the
most liberal words-in-total-context approach, fails
to provide a coherent and lucid scheme for the
taxation of diesel fuel on a volume basis.
This brings me to Crown counsel's alternative
argument. The gist of it is that the present case is
one where the Court could properly exercise its
power of rectification and read into subsection
27(1.1) the omitted words "or on the volume" in
order to give effect to Parliament's intention to tax
transportation fuels. Counsel acknowledged that
rectification is a narrowly limited power, more so
in England than in Canada, but nevertheless is one
which the courts may use in appropriate circum
stances. She alluded to the innovative directions
given by the British House of Lords in Federal
Steam Navigation Co Ltd v Department of Trade
and Industry, [1974] 2 All ER 97; and Wentworth
Securities Ltd. v. Jones, [1980] A.C. 74, and
submitted that these authorities postulate the fol
lowing four conditions for the exercise of the
power of rectification, viz.:
(1) Without rectification, the provision in ques
tion would have to be unintelligible, absurd
or repugnant to another provision, or create
an unreasonable result.
(2) It would have to be possible to determine,
within the context of the statute as a whole,
what the mischief was that Parliament
intended to remedy or, put more simply, the
purpose and object of the provision would
have to be clear from the whole context.
(3) Due to drafting omission, error or inadvert
ence, the plain language of the provision
would have to be irreconcilable, as it reads,
with the parliamentary intent.
(4) It must be possible to determine with cer
tainty what the draftsman would have
inserted and what Parliament would have
approved, if the error or omission had been
recognized at the time the enactment passed
into law.
Counsel for the defendant submitted that the
present case met all the above conditions. She
emphasized, however, that Canadian courts have
been less disposed toward imposing such stringent
tests as their English counterparts. In her submis
sion, Canadian courts have read in or deleted
words from a statute in cases where there is an
obvious repugnancy or absurdity in the face of a
clear legislative intent. She cited in this regard
the following cases: City of Ottawa v. Hunter
(1900), 31 S.C.R. 7; Minister of Transport for
Ontario v. Phoenix Assurance Co. Ltd. (1973), 1
O.R. (2d) 113 (C.A.); Société des Acadiens du
Nouveau-Brunswick Inc. and Association des
Conseillers Scolaires Francophones du Nouveau-
Brunswick v. Minority Language School Board
No. 50 and Association of Parents for Fairness in
Education, Grand Falls District 50 Branch
(1987), 82 N.B.R. (2d) 360 (C.A.); Sask. Govt.
Insur. Office v. Anderson (1966), 57 W.W.R. 633
(Man. Cty. Ct.); and Massey-Harris Co. Ltd. v.
Strasbourg, [1941] 4 D.L.R. 620 (Sask. C.A.).
Before stating my final conclusion on the point,
I must stress first of all that the rectification of a
legislative text is a drastic step for any court to
undertake. With respect, I feel compelled to reject
the alternative submission of defendant's counsel. I
agree with the submission of plaintiff's counsel
that the present case is one where Parliament may
well have intended to levy a sales tax on imported
diesel fuel, but failed to do so in sufficiently clear
terms on the present wording of subsection 27(1)
and paragraph 27(1.1)(c) of the Act, before the
amendment. Moreover, I am of the opinion that
any judicial power of rectification with respect to
legislation ought only to be exercised in the rarest
of circumstances, that is, where absolutely neces
sary to achieve the clear manifestation of legisla
tive intent in the face of obstacles created by very
minor and patently obvious imperfections of lan
guage. To fill the gap by writing in the words "or
on - the volume" would constitute, in my opinion, an
arbitrary and unwarranted intrusion on the role of
Parliament. Notwithstanding that the gap or omis
sion was corrected by the subsequent amendment
enacted by Parliament, I am not prepared to
extend the therapeutic effect of such amendment
beyond its given retroactive date of July 12, 1986.
I conclude, therefore, that the plaintiff has dis
charged the onus of proving that the Minister's
assessment was erroneous. However, that is not to
say that the plaintiff may escape scot-free from all
tax liability. Although paragraph 27(1.1)(c) of the
Act cannot be applied to support the present basis
of assessment, the Minister may still impose the
percentage rate of tax prescribed by
paragraph 27(1.1)(d) on the three shipments of
diesel fuel. In the result, the duty paid value of the
first two shipments would be taxed at 11 per cent
and, in the case of the third shipment, at
12 per cent. According to the plaintiff's calcula
tions, the result would be a federal sales tax
amount of $195,463.48.
For the foregoing reasons, the plaintiff's appeal
is allowed in the main, with costs.
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