Docket:
A-78-13
Citation: 2014 FCA 108
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CORAM:
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PELLETIER J.A.
STRATAS J.A.
NEAR J.A.
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BETWEEN:
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HER MAJESTY THE QUEEN
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Appellant
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and
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QUINCO FINANCIAL INC.
(formerly LANDEX INVESTMENTS COMPANY)
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Respondent
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REASONS FOR
JUDGMENT
THE COURT
[1]
We are of the view that the appeal from the
judgment of D’Auray J. of the Tax Court of Canada, reported at 2013 TCC 20,
should be dismissed.
[2]
We have not been persuaded by the
Crown’s arguments, all of which involve a strained interpretation of the
provisions of the Excise Tax Act, R.S.C. 1985, c. E-15 so as to avoid a
result that the Crown, for obvious reasons, regards as a windfall.
[3]
This case falls to be decided by the usual principles that govern
the interpretation of provisions in taxation statutes. The Supreme Court has
set out the governing principles in Canada Trustco Mortgage
Co. v. Canada, 2005 SCC 54, [2005] 2 S.C.R. 601.
[4]
The Tax Court correctly identified Canada
Trustco as the leading authority and, in our view,
correctly interpreted the principles in it: see the Tax Court’s reasons at
paragraph 30.
[5]
In Canada Trustco, the Supreme Court held that in
interpreting provisions in taxation statutes one must look to the text, context
and purpose of the provision. However, where the particular words of a
provision are precisely-worded and unequivocal, the ordinary meaning of those
words plays a “dominant role” in the process. The Supreme Court expressed this
at paragraph 10 of Canada Trustco:
It has
been long established as a matter of statutory interpretation that “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”: [citation omitted]. The interpretation
of a statutory provision must be made according to a textual, contextual and
purposive analysis to find a meaning that is harmonious with the Act as a
whole. When the words of a provision are precise and unequivocal, the ordinary
meaning of the words play [sic] a dominant role in the interpretive
process. On the other hand, where the words can support more than one
reasonable meaning, the ordinary meaning of the words plays a lesser role. The
relative effects of ordinary meaning, context and purpose on the interpretive
process may vary, but in all cases the court must seek to read the provisions
of an Act as a harmonious whole.
[6]
The Supreme Court in Canada Trustco (at
paragraph 13) also noted that the Income Tax Act is “an instrument
dominated by explicit provisions dictating specific consequences,” and
this invites “a largely textual interpretation”: Canada Trustco, at
paragraph 13. The same can be said for the Act before us in this appeal: CIBC
World Markets Inc. v. Canada, 2011 FCA 270 at paragraph 29.
[7]
On the dominant role that the particular words
of taxation statutes play in the statutory interpretation process, Canada
Trustco does not stand alone. A few years earlier, the Supreme Court
emphasized that where a provision in a taxation statute is “clear and
unambiguous,” its words “must simply be applied”: Shell Canada Ltd. v.
Canada, [1999] 3 S.C.R. 622 at paragraph 40. And one year after Canada
Trustco, the Supreme Court emphasized that in cases where the language is
precise one cannot posit a purpose behind a provision and then use it “to
create an unexpressed exception to clear language” or “supplant” clear
language: Placer Dome Canada Ltd. v. Ontario (Minister of Finance), 2006
SCC 20 at paragraph 23.
[8]
Overall, the Act consists of clear, precise
rules to facilitate ease of application, consistency and predictability. This
underscores the dominance of the plain meaning of the text of the Act in the
process of interpreting provisions of the Act.
[9]
There may be cases where precisely-worded
provisions or their interaction creates an advantage or a windfall for a
registrant under the Act. But we do not interpret taxation provisions in a tendentious
or result-oriented way to enhance the federal treasury: Shell Canada, supra
at paragraphs 39 and 40. Instead, absent words allowing us to address
situations of abuse or windfall, where the provisions are precisely-worded,
clear and unambiguous, they must be given their plain effect.
[10]
In this case, we agree with D’Auray
J.’s interpretation of the combined effect of subsections 169(1), 232(2) and
paragraph 232(3)(c) of the Act.
[11]
As a result, the appeal will be
dismissed with costs.
“J.D.
Denis Pelletier”
“David
Stratas”
“David
Near”
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