Reed,
J.:—The
issue
in
this
case
is
the
proper
classification
for
capital
cost
allowance
purposes
of
certain
equipment
purchased
by
the
taxpayer
in
the
1982,
1983
and
1984
taxation
years.
That
equipment
is
described
as
follows:
D8
Caterpillar
Tractor;
D7G
Caterpillar
Tractor;
966
Cat
Front-End
Loader;
980
Cat
Front-End
Loader;
Cat
Feller
Buncher
—
235
Excavator.
The
plaintiff
argues
that
the
equipment
falls
within
class
22
of
Schedule
II
of
the
Income
Tax
Regulations,
1971,
as
amended,
as
"power-operated
moveable
equipment
designed
for
the
purpose
of
excavating,
moving
.
.
.
earth,
rock
.
.
.”.
There
is
no
doubt
that
this
is
the
case.
The
agreed
statement
of
facts
admits
that
the
equipment
is
of
this
nature
although
it
is
also
designed
and
used
for
other
purposes.
In
order
to
fall
within
class
22,
equipment
need
not
be
designed
“exclusively”
for
the
purposes
mentioned
in
that
class.
It
is
sufficient
if
the
design
encompasses
the
purposes
stated
in
class
22.
See:
Armand
Guay
Inc.
v.
The
Queen,
[1974]
C.T.C.
168;
74
D.T.C.
6328
(F.C.T.D.).
The
defendant
argues
that
the
equipment
falls
within
class
10(o)
as
"mechanical
equipment
acquired
for
logging
operations
.
.
.”.
There
is
no
doubt
that
the
equipment
also
falls
within
this
category.
It
was
acquired
by
the
plaintiff
primarily
for
use
in
its
logging
operations
and
was
used
mainly
for
those
purposes.
I
have
no
doubt
that
the
equipment
in
question
properly
falls
in
both
class
22
and
class
10(0).
Class
22
focusses
on
the
nature
of
the
equipment
itself
and
the
purpose
for
which
it
was
designed.
Class
10(0)
focusses
on
the
use
for
which
the
taxpayer
acquired
the
equipment.
Thus
it
is
quite
understandable
that
the
equipment
can
legitimately
fall
within
both
categories.
If
the
equipment
is
in
class
22
a
capital
cost
allowance
of
50
per
cent
is
allowed
by
the
Income
Tax
Act.
If
the
equipment
falls
in
class
10
a
capital
cost
allowance
of
30
per
cent
is
allowed.
Counsel
for
the
plaintiff
argues
that
class
22
predominates
over
class
10(0).
His
argument
is
based
on
paragraph
(b)
of
class
22.
Class
22
includes
property
described
as
follows:
Property
acquired
after
March
16,
1964
that
is
power-operated
moveable
equipment
designed
for
the
purpose
of
excavating,
moving,
placing
or
compacting
earth,
rock,
concrete
or
asphalt,
except
a
property
included
in
(a)
Class
7;
or
(b)
Class
10
by
virtue
of
paragraph
(t)
of
that
Class.
It
is
argued
that
if
class
22
did
not
prevail
over
class
10
there
would
be
no
need
to
have
included
paragraph
(b)
in
that
provision.
Counsels'
argument
is
as
follows:
It
should
also
be
noted
that
paragraph
(b)
of
Class
22,
subparagraph
(h)(i)
of
Class
10,
and
paragraph
(t)
of
Class
10
were
all
added
by
P.C.
1979-1487,
SOR/79-426,
Canada
Gazette,
part
II,
Volume
113,
No.
11,
p.
2227.
The
Explanatory
Note
to
the
regulation
states
that
the
amendments
were
introduced
to
clarify
the
capital
cost
allowance
treatment
of
oil
and
gas
drilling
equipment.
Thus,
the
Governor-in-
Council
must
have
thought
Class
22
would
have
overridden
paragraph
10(t)
if
it
did
not
exempt
paragraph
(t)
of
Class
10
from
Class
22
by
virtue
of
paragraph
(b)
of
Class
22.
No
sensible
explanation
has
been
given
to
me
as
to
why
paragraph
(b)
was
added
to
class
22
but
despite
that
fact
I
am
not
willing
to
draw
the
conclusion
which
counsel
urges.
Class
10
has
two
separate
parts:
paragraphs
(a)
to
(f)
inclusive
are
stated
to
apply
to
"property
not
included
in
any
other
class";
paragraphs
(g)
and
following
are
stated
to
apply
to
"property
that
would
otherwise
be
included
in
another
class
in
this
Schedule".
Thus,
on
the
clear
wording
of
class
10
itself
paragraph
(o)
of
class
10
must
prevail
over
class
22.
Paragraph
(b)
of
class
22
may
have
a
purpose
related
to
cross-references
which
exist
elsewhere
in
the
Income
Tax
Act
or
it
may
have
no
purpose;
it
may
simply
be
redundant.
I
think
counsel
for
the
plaintiff
correctly
stated
his
argument,
when
he
said
that
the
conclusion
that
class
22
prevailed
over
class
10
was
founded
on
the
“implication”
arising
out
of
paragraph
(b)
of
class
22.
I
do
not
think
that
that
implication
can
override
the
clear
words
preceding
paragraph
(g)
in
class
10.
Another
argument
must
be
considered.
There
is
another
category
in
class
10,
other
than
paragraph
10(0),
within
which
the
plaintiff's
equipment
might
arguably
be
categorized:
paragraph
10(h).
The
two
paragraphs
are
worded
as
follows:
(h)
contractor's
movable
equipment,
including
portable
camp
buildings,
except
a
property
included
in
(i)
this
Class
by
virtue
of
paragraph
(t);
(ii)
a
separate
class
prescribed
by
subsection
1101(2b),
or;
(iii)
Class
22:
(o)
mechanical
equipment
acquired
for
logging
operations,
except
a
property
included
in
Class
7;
It
is
conceded
that
if
the
equipment
can
justifiably
be
classified
into
two
categories
the
taxpayer
should
have
the
choice.
I
will
first
indicate
that
I
do
not
accept
counsel
for
the
plaintiff's
argument
that
if
the
equipment
falls
within
paragraph
(h)
then
one
does
not
need
to
consider
paragraph
(o)
because
category
(h)
comes
first
in
the
list
of
classes
of
property.
It
seems
to
me
this
proposition
is
not
supported
by
the
usual
rules
of
statutory
interpretation,
which
require
a
section
to
be
read
in
context
and
which
do
not
accord
any
priority
to
the
first
term
in
a
list,
over
those
which
follow,
unless
there
is
some
express
or
clearly
implied
reason
to
do
so.
Counsel
for
the
plaintiff
supports
his
argument
that
paragraph
(h)
takes
precedence
over
paragraph
(o)
by
reference
to
subparagraph
(i)
of
paragraph
(h)
which
makes
a
specific
reference
to
paragraph
(t)
and
exempts
the
property
described
therein
from
the
scope
of
application
of
paragraph(h).
Again,
no
explanation
has
been
given
as
to
why
subparagraph
(i)
is
included
with
paragraph
(h)
but
I
am
not
willing
to
draw
the
conclusion
therefrom
which
counsel
seeks.
A
number
of
arguments
were
made
on
the
scope
of
paragraph
(h).
Counsel
for
the
defendant
argued
that
"moveable"
in
paragraph
(h)
meant
"removeable"
in
the
sense
of
portable
rather
than
self-propelled.
Reference
was
made
to
the
Tax
Appeal
Board
decision
in
Dominic
Supports
and
Forms
Ltd.
v.
M.N.R.,
[1971]
Tax
A.B.C.
144
at
154;
71
D.T.C.
117
at
123.
I
do
not
think
that
decision
stands
for
the
proposition
cited.
It
was
argued
that
paragraph
(h)
referred
to
a
construction
contractor's
moveable
equipment
and
not
to
contractors
in
general.
Reference
was
made
to
Mr.
Justice
Cullen's
decision
in
Nowsco
Well
Service
Ltd.
v.
The
Queen,
[1988]
2
C.T.C.
24
at
41;
88
D.T.C.
6300
at
6313.
Counsel
also
argued
that
paragraph
(h)
cannot
be
used
in
its
widest
sense
to
include
all
contractors,
whatever
their
field
of
endeavour,
because
of
the
inequalities
that
would
create
in
industries
such
as
the
forestry
industry,
where
owner-operators
might
be
engaged
in
an
identical
field
of
endeavour
to
that
of
contractors.
While
the
argument,
that
the
paragraph
read
literally
is
too
broad,
is
persuasive,
one
has
to
ask
why
if
that
category
is
limited
to
the
construction
industry
subparagraphs
(i)
and
(ii)
are
necessary.
In
any
event,
on
reflection
I
am
persuaded
by
counsel
for
the
defendants'
argument
that
paragraph
10(h)
is
simply
not
relevant,
for
other
reasons.
She
argues
that
whatever
may
be
the
type
of
property
to
which
paragraph
10(h)
applies,
it
simply
cannot
include
class
22
property
because
subparagraph
10(h)(iii)
so
provides.
She
argues
that
the
boundaries
of
category
10(h)
are
defined
as
excluding
class
22
property
and
therefore
by
virtue
of
the
fact
that
the
plaintiff's
equipment
admittedly
comes
within
class
22,
it
cannot
come
within
class
10(h).
If
this
is
so,
the
taxpayer
cannot
have
the
option
of
choosing
to
classify
the
equipment
in
question
as
within
either
class
10(o)
or
class
10(h).
The
choice
is
between
class
10(o)
and
class
22
and
as
between
these
categories,
for
the
reasons
given
above,
class
10(o)
must
prevail.
As
indicated,
I
think
counsel
for
the
defendants'
argument
is
correct
in
this
regard.
The
plaintiff's
claim
will
therefore
be
dismissed.
Claim
dismissed.
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