Citation: 2011 TCC 248
Date: 20110506
Docket: 2008-3997(ATA)G
BETWEEN:
HOPE AIR,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Rip C.J.
[1]
Hope Air is a charitable
organization registered in accordance with provisions of the Income Tax Act ("ITA").
From time to time it receives gifts of airline points to pursue its charitable
activities. Hope Air uses these points to donate air travel to individuals who require
medical care not available in their community and who cannot otherwise afford
the cost of the travel. The question in this appeal by Hope Air is whether it is
required by section 11 of the Air Travellers Security Charge Act ("Act")
to pay to the Crown a charge in respect of the air transportation services it
acquires and which it then donates to the said individuals for no
consideration. The Minister of National Revenue assessed the appellant on the
basis it was liable for charges for periods during January 4, 2002 to
June 30, 2007.
[2]
Subsection 11(1.1)
of the Act provides that:
|
Every person
who acquires from a designated air carrier all or part of an air
transportation service that includes a chargeable emplanement shall pay to
Her Majesty a charge as determined under this Act in respect of the
service.
|
Quiconque
acquiert d’un transporteur aérien autorisé tout ou partie d’un service de
transport aérien qui comprend un embarquement assujetti doit payer à Sa
Majesté le droit déterminé selon la présente loi relativement au service.
|
|
(1.1) No
charge is payable in respect of an air transportation service that is
acquired:
…
|
(1.1) Aucun
droit n’est exigible relativement au service de transport aérien qui, selon
le cas:
…
|
|
(b) by a registered charity from an air carrier for no
consideration, if the service is donated by the charity to an individual for
no consideration and in pursuit of its charitable purposes.
|
b) est acquis par un organisme de
bienfaisance enregistré d’un transporteur aérien à titre gratuit, si
l’organisme fait don du service à un particulier à titre gratuit et dans le
cadre de la poursuite de ses fins de bienfaisance.
|
[3]
The issue in this appeal
is whether Hope Air acquired the air transportation for no consideration
(« à titre gratuit »), pursuant to paragraph 11(1.1)(b)
of the Act. The parties agree that the transportation was donated by
Hope Air to an individual for no consideration and Hope Air did so in pursuit
of its charitable purposes.
[4]
The appeal proceeded on
the basis of the testimony of Mr. Douglas Keller‑Hobson,
Executive Director of Hope Air, and Ms. Michele Meier, General
Manager, Corporate Affairs, Group Aeroplan, and on the following Partial
Statement of Agreed Facts:
THE APPELLANT
1. The appellant is a registered charity
whose purpose is to organize air transportation for individuals who need
medical care but cannot afford the cost of travelling. These individuals are
the patients and, where applicable, their medical escorts (collectively the
"Clients").
2. The appellant has been in operation for
over 24 years. It currently organizes approximately 2,500 flights per year
across Canada, mostly on
commercial airlines.
AIR CANADA DONATIONS TO HOPE AIR
3. Aeroplan members can donate or relinquish
their Aeroplan Points, also known as Aeroplan Miles, to approved registered
charities such as the Stephen Lewis Foundation, Médecins sans Frontières and
Air Canada's charitable giving
program, Kids' Horizons.
4. Air Canada has donated Aeroplan Points to the appellant on various occasions
during the periods at issue in this appeal. The periods at issue in this appeal
are between April 1, 2002 and June 30, 2007 (collectively, the
"Relevant Period").
5. Each year during the Relevant Period, Air Canada donated the Aeroplan Points to the appellant
in one annual instalment. For each of those years, the process was as follows:
(a) The appellant approached Air Canada in the summer or fall to
have an idea of the support Air Canada would offer to the appellant in the forthcoming (calendar) year.
For that purpose, the appellant completed a questionnaire, a representative
sample of which is found at Tab 8 of the Joint Book of Documents.
(b) After considering the appellant's request for support, Air Canada would, in the fall of each year, confirm
its support (in passes and Aeroplan Points) to the appellant for the
forthcoming year and advise the appellant accordingly. The level of support
from Air Canada to the
appellant has varied over the years.
(c) In these communications with Air Canada, the appellant dealt
with: (1) Lyse Charette, Director, Provincial Government and
Community Relations up to 2004; and (2) Micheline Villeneuve, Kids'
Horizons Manager, from 2005 until today.
6. The Aeroplan Points donated by Air Canada are deposited into Hope Air's
Aeroplan account. Once a flight is arranged for a Client by the appellant using
Aeroplan Points, the appellant's Aeroplan account is debited by the number of
points corresponding to the flight in question. Air Canada donates the Aeroplan Points to the appellant on the understanding
that the appellant uses those points only for arranging flights for Clients. At
all material times, the appellant used Aeroplan Points only to arrange flights
for Clients.
7. The appellant did not pay any money to Air
Canada for the Aeroplan Points.
However, the appellant acknowledges the support of Air Canada and its Kids' Horizon program (and that of other donors as well) in
its promotional materials. The appellant does not issue tax receipts to Air Canada in respect of the Aeroplan Points.
8. On occasion, the appellant has asked Air Canada to provide the appellant with an
estimate of the monetary value of the flights for which points and passes are
donated by Air Canada to the
appellant. The appellant used this information only in its promotional
materials to state that 90% of all contributions it received (i.e., donations
in cash and in kind) go directly to its charitable mission, spending only 10%
on administration and fundraising annually.
REFUND CLAIMS AND SUBSEQUENT EVENTS
9. Beginning in 2003, the appellant made
10 claims for refund of the charges it had paid under the Air
Travellers Security Charge Act (Canada) (the "Act")
based on the exception under subsection 11(1.1), which makes the charge
(the "Charge") under the Act inapplicable to registered
charities. The refund claims covered the Relevant Period and totalled
$56,303.81. The refund claims are included in the Joint Book of Documents
(Tabs 10 to 19). The supporting schedules have been omitted because they
list personal information relating to the Clients.
10. The Minister of National Revenue
(the "Minister") assessed the appellant's ten applications. The
Minister allowed the portion of the appellant's claim for a refund of the
Charge which related to air transportation services acquired by use of flight
passes, which were donated by Air Canada (and other air carriers). The Minister denied the portion of the
appellant's claim for a refund of the Charge which related to air
transportation services acquired by redemption of Aeroplan Points donated by
Air Canada.
11. This portion amounts to $41,657.83. The
particulars of the assessments are identified in the pleadings and are as
follows:
|
No.
|
Application
No.
|
Assessment
No.
|
Assessment
Date
|
Period
Assessed
|
Original
Refund
Claim
|
TCC
Appeal
Refund
Claim
|
|
1
|
200307070201
|
2007905SOR104
|
05.09.07
|
01.04.02 to
31.12.02
|
$21,425.22
|
$21,425.22
|
|
|
|
|
|
|
|
|
|
2
|
200307030302
|
2007905SOR102
|
05.09.07
|
01.01.03 to
31.05.03
|
7,016.02
|
7,016.02
|
|
|
|
|
|
|
|
|
|
3
|
200708130401
|
20071203SOR111
|
03.12.07
|
06.10.03 to
10.12.03
|
3,709.51
|
3,646.56
|
|
|
|
|
|
|
|
|
|
4
|
200711260602
|
20071203SOR101
|
03.12.07
|
01.01.04 to
30.06.04
|
2,953.08
|
2,423.01
|
|
|
|
|
|
|
|
|
|
5
|
5200708130403
|
20071203SOR102
|
03.12.07
|
01.07.04 to
31.12.04
|
2,994.09
|
2,002.88
|
|
|
|
|
|
|
|
|
|
6
|
200708130404
|
20071203SOR104
|
03.12.07
|
01.01.05 to
30.06.05
|
4,168.99
|
1,435.66
|
|
|
|
|
|
|
|
|
|
7
|
200708130405
|
20071203SOR104
|
03.12.07
|
01.07.05 to
31.12.05
|
2,614.79
|
752.30
|
|
|
|
|
|
|
|
|
|
8
|
200708130406
|
20071203SOR105
|
03.12.07
|
01.01.06 to
30.06.06
|
3,191.45
|
1,400.78
|
|
|
|
|
|
|
|
|
|
9
|
200708130407
|
20071203SOR106
|
03.12.07
|
01.07.06 to
31.12.06
|
2,448.80
|
654.30
|
|
|
|
|
|
|
|
|
|
10
|
200708130408
|
20071203SOR107
|
03.12.07
|
01.01.07 to
30.06.07
|
5,781.86
|
901.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
$56,303.81
|
$41,657.83
|
12. The Minister confirmed the assessments. The
Notices of Confirmation were each dated September 18, 2008.
13. In determining the appellant's refund under
the Act, the Minister made the following assumptions:
(a) At all relevant times, the appellant was a registered
charity;
(b) At all relevant times, the appellant organized air
transportation for individuals who needed to travel for medical care but could
not afford the cost of transportation;
(c) At all relevant times, the air transportation services
acquired by the appellant were donated to an individual for no consideration;
(d) At all relevant times, Air Canada was a designated "air carrier" within the meaning of the Act;
(e) During the Relevant Period, Air Canada donated transportation services to the appellant by way of a
combination of flight passes and its Aeroplan Points customer loyalty program;
(f) During the Relevant Period, Aeroplan Points were
relinquished to Air Canada by its customers through the Air Canada designated
charitable giving program and, in turn, Air Canada donated the Aeroplan Points to various registered charities;
(g) During the Relevant Period, the appellant used the
Aeroplan Points to acquire air transportation services in pursuit of its
charitable purposes; and
(h) In redeeming the Aeroplan Points to acquire air transportation,
the appellant acquired air transportation services from Air Canada for consideration.
14. The facts stated in paragraph 13(a) to
(g) above are true (and so is the fact that the Minister assumed those facts in
determining the appellant's refund, as alleged in paragraph 11 of the
Reply).
15. The appellant takes issue with the
statement in paragraph 13(h) above. In particular, while the appellant
agrees that it acquired air transportation services from Air Canada, it is the appellant's position that
it did so for no consideration.
AEROPLAN AND AEROPLAN
POINTS
16. The Aeroplan program was established in
1984 and was operated by Air Canada. From January 1, 2002 until 2005 the Aeroplan program was
operated by a wholly‑owned limited partnership, subsidiary or affiliate
of Air Canada. The Aeroplan
program is currently operated by Aeroplan Canada Inc., which has as its parent
company Groupe Aeroplan Inc., a public company. The Aeroplan program has been
operated by a separate legal entity from Air Canada since no later than January 1, 2002 (such separate legal
entity from Air Canada since no
later than January 1, 2002 (such separate legal entity or entities are
hereinafter referred to as "Aeroplan").
17. Air Canada and Aeroplan have each been carrying on their respective businesses
from at least January 1, 2002 onwards.
18. The popularity of Aeroplan Points has grown
since the program was introduced in 1984. The use of frequent flyer points, not
just Aeroplan's but those of other airlines as well, is common in today's
world.
19. The general terms and conditions of
Aeroplan as of November 14, 2010 are attached as Schedule A to this
statement.
Other than the provisions dealing with the expiry of Aeroplan Points the
parties believe that the terms and conditions are the same as those which were
in effect during the Relevant Period.
20. Effective January 1, 2002, commercial
arrangements were put in place between Aeroplan and Air Canada to address the terms upon which they
would transact in respect of the Aeroplan program. Under these commercial
arrangements
(a) Aeroplan derives its revenue from the sale of Aeroplan
Points and marketing services to a number of partners. Among the partners with
whom Aeroplan has entered into commercial arrangements are Air Canada, banks, gasoline companies, rental
car agencies and hotel companies ("Aeroplan Partners"). Sales of
Aeroplan Points to Aeroplan Partners (including Air Canada) is the primary source of revenue for Aeroplan. Air Canada is the most significant Aeroplan Partner.
Prior to 2002, Air Canada
(through the Aeroplan program) entered into similar agreements with Aeroplan
partners.
(b) Accordingly, Air Canada pays money to Aeroplan for Aeroplan Points which Air Canada uses to
distribute as rewards to Aeroplan Members for goods or services.
(c) The price at which Aeroplan Points are purchased by each
partner from Aeroplan is negotiated separately with each partner, and is
commercially sensitive information.
(d) Aeroplan Members accumulate Aeroplan Points. Upon redemption
of the Aeroplan Points by the Members, Aeroplan purchases, from its Aeroplan
partners, the goods and services for which the Aeroplan Points have been
redeemed by the Aeroplan Members.
(e) Accordingly, Aeroplan pays money to Air Canada in respect of each flight for which Aeroplan
Points have been redeemed by Aeroplan Members. Aeroplan is obligated to
purchase, on an annual basis, a minimum number of reward travel seats on Air Canada and its affiliates, which number is
based generally on the number of seats utilized in previous years.
(f) Historically, Aeroplan Points that are not expected to
be redeemed by the Aeroplan Members represent approximately 17% of the Aeroplan
Points purchased by the various Aeroplan Partners ("Breakage").
MISCELLANEOUS
21. When the appellant redeems Aeroplan Points
for flights on Air Canada, the
appellant's status as a registered charity is irrelevant to the terms upon
which it is eligible to redeem Aeroplan Points for flights.
22. Via the Aeroplan website, during the booking
process Aeroplan members can purchase Aeroplan Miles to "top up"
their balance of Aeroplan Miles to the level required to acquire a reward
flight, up to a maximum of 50% of the total mileage required. The current price
for such Miles is stated on the Aeroplan website to be $0.03 (Cdn) per Mile
(plus applicable taxes).
23. Air Canada provided "promotional
passes" to charities (such as the appellant) or other persons (such as
those referred to in the letter dated November 12, 2003 from Air Canada to the appellant). Promotional
passes could be used for flights, subject to certain terms and conditions, for
example, relating to flight booking classes, etc. (not unlike regular airline
fares). To the extent that a promotional pass had been used to acquire a seat
on a particular flight, such seat would subsequently be unavailable to be
otherwise sold by Air Canada.
[5]
Mr. Keller‑Hobson
confirmed many of the agreed facts. He recalled that historically Hope Air has
relied on Canada's major national airlines, currently WestJet and Air Canada, as
well as smaller regional airlines, to donate empty capacity which Hope Air then
arranges to give to people in need. The national airlines have discussions with
Hope Air at the beginning of each year as to what the anticipated needs of Hope
Air will be. The airlines make a decision and give Hope Air an annual grant,
which may be promotional passes and, in the case of Air Canada, Aeroplan Points as well.
[6]
For regional airlines,
Mr. Keller‑Hobson stated, Hope Air is able to obtain space if there
is empty capacity on these airlines at the time required. There have been
occasions before 2010 when Hope Air had to purchase seats on commercial
flights. Mr. Keller‑Hobson explained this was a "very, very
rare circumstance", usually when a person is stranded in a location and could
not get back home. Starting in 2010, however, the British Columbia government gives funding so Hope Air can now purchase
commercial flights within British
Columbia. In all other
provinces, Hope Air uses only donated passes or points.
[7]
Mr. Keller-Hobson
explained there are three criteria for eligibility to obtain flights with Hope
Air. The first is financial need, the second is that the individual must be
going to a locality with an approved medical appointment and the third is that
Hope Air has availability on the route required (which may not always be the
case). Hope Air "rarely" turns down someone because he or she does
not meet the criteria.
[8]
The average household
income of people provided with free flights by Hope Air is below the poverty
line, the average income is about $22,000. These people live in rural Canada and major centres, often in single-parent families,
and include a very high number of cancer and organ transplant patients. Hope
Air flies "a lot of people" to Toronto
for treatment with specialists. Mr. Keller‑Hobson said that at the
relevant times none of the provincial governments provided air travel as part
of health care so, he stated, "whoever falls down into that gap and needs
to travel long distance comes to us for assistance".
[9]
Further, any patient
who is 18 years of age and under is provided with a free seat for a
medical escort, which may be a parent or a social worker. If a doctor certifies
that a medical specialist is required to accompany the patient, then Hope Air
will provide a seat to that person as well.
[10]
Every year, on average,
Mr. Keller‑Hobson stated, Air Canada
donates about a 100 promotional return-flight passes to Hope Air. In
addition Hope Air will receive about 3 million Aeroplan Points. Hope Air
gives nothing, no money, and nothing in kind to Air Canada in return for the
points or the passes; Hope Air does not issue any tax receipts to Air Canada for the points or for the passes. Hope Air does
publicly acknowledge the gift of points from Air Canada,
however.
[11]
When Hope Air redeems
Aeroplan Points to arrange a flight for a patient, it does so through the
Aeroplan website. Hope Air does not deal directly with Air Canada. Hope Air will then decide if the number of points
required for the flight is an efficient use of points, in order to maximize the
number of flights it can provide with the points donated. The number of points
for a flight is influenced by many factors, including the time of day of the
travel. If the ticket is not an efficient use of points (short flight between
two proximate cities), Hope Air may pay for the flight instead.
[12]
Hope Air's position is
that it does not pay Air Canada for the Aeroplan points it receives, but rather
receives them as a donation. In turn, it uses these points to acquire passage
on Air Canada. In its view, the word
"consideration" in paragraph 11(1.1)(b) means
consideration in money or in kind, which is consideration susceptible of being
paid or payable. There is "no consideration" passing between Hope Air
and Air Canada and Hope Air is not paying any
consideration for the points.
[13]
Ms. Meier testified
for the Crown. She is an officer with Group Aeroplan and is responsible for "corporate
social responsibility". She explained that the Aeroplan website lists
different charities or programs to which Aeroplan members may donate their
points. Kids' Horizons is such a program, although it is not a charity itself.
Members donate points to the program online and Aeroplan's only role, she
stated, is simply to make the program available and then manage the work of transferring
points from a member's account to the program or charity account. Air Canada itself, she explained, does not purchase Aeroplan
Points to give to charities.
[14]
Aeroplan treats donated
points to Hope Air in the same way it treats points collected by Aeroplan
members. She stated that "We know when we track what happens in our
members accounts. So we know if miles have been transferred to a charity. It is
like a redemption … from a donation perspective. … we have tracked exactly
what's going into a member's accounts [and] … what's going out of a member's
account".
Parties' Positions
[15]
The appellant's principle argument
is that it did not acquire the flights in issue for consideration, since the
flights were acquired for no cost. The appellant stated that a "textual,
purposive, and contextual" interpretation of section 11 of the Act
shows that the flights acquired were meant to be exempt from the security
charge. Appellant’s counsel made several arguments in support of its position.
[16]
First, counsel argued that
"consideration" is a term that is inherently ambiguous, and so must
be interpreted in a way to best give effect to the purpose of the exemption. A
contextual analysis of the term, with respect to the Act, shows "consideration"
should be taken to mean something "paid or payable", which means
money. The common law concept of consideration is not appropriate to this
particular statute since applying that meaning would produce an absurd result.
He also argued that since the appellant acquired the Aeroplan points by
donation, the flights Hope Air acquired cost nothing. Since nothing was
exchanged, no consideration was paid, and the flights are compliant with the
requirements of the exemption.
[17]
Appellant's counsel also referred
to the disparate terms in the French and English versions of the Act.
The English version uses "for no consideration" in the exemption, the
French version uses "à titre gratuit". Further, in other parts of the
Act, for example, subsection 11(2), the French word
"contrepartie" is used in the same way "consideration" is
used in the English. The ambiguity of "consideration", he suggested,
can be resolved by looking at the French version of the Act and the use
of the term "contrepartie", which indicates "consideration"
was intended to mean "money".
[18]
The appellant also contended that
the underlying purpose of the exemption is to prevent the security charge from
applying to flights acquired and given away to individuals for charitable
purposes. Since the flights in question were acquired and given away under such
circumstances, the flights are in accord with the purpose of the exemption and
the appeal should be allowed.
[19]
The respondent, on the other hand,
takes the position that the security charge under the Act applies any
time a person acquires air travel. The exemption under paragraph 11(1.1)(b)
operates for charities only in limited circumstances, where a flight is
acquired and given away for no consideration. The word "consideration"
in the Act is no different than its definition in common law. It is
"some right, interest, profit, or benefit accruing to one party, or some
forbearance, detriment, loss, or responsibility, given, suffered, or undertaken
by the other".
Frequent flyer points have value, so when the appellant exchanges Aeroplan
points for flights, it acquires those flights for consideration, the value of
the points: Johnson v. Canada.
[20]
Respondent's counsel also submitted
that there is no difference between the French and English versions of
paragraph 11(1.1)(b). Both "no consideration" and "à
titre gratuit" share the same meaning.
[21]
Counsel for the respondent took issue
as well with the limited meaning of "consideration" put forward by
the appellant. In his view, the appellant derives its argument by looking at a provision,
subsection 11(2) of the Act, which only deals with timing of the
charge.
Analysis
[22]
In Johnson, the
appellant had flown from Thunder Bay to Chicago for medical treatment using Aeroplan points. He tried
to claim the value of the flight as a medical expense for tax purposes. The
Minister of National Revenue refused, saying that since the flight was paid for
with Aeroplan points, which have no value, the ticket also had no value. Paris J.
considered the meaning of the phrase "an amount paid" in
subsection 118.2(2) of the ITA, the meaning of "amount"
in section 248 of the ITA and relevant case law concerning the
meaning of the phrase "amount paid". He opined that:
… the phrase
"amount paid" would include payments made by means of a transfer of a
right or thing where the value of the right or thing can be expressed in terms
of an amount owing, and is not limited to a transfer or delivery of money alone.
[23]
Justice Paris also noted the
comments of Bowie J. in Hallett who
explained that:
If the value
of payments in kind were not payments for the purposes of the Act the profits
derived from a great many business transactions would be immune from taxation;
it is for that reason that Parliament defined "amount" the way it did.
[24]
Paris J. declined to follow the
treatment of "amount paid" in Blais. He stated that limiting
"pay" to a transfer of money or a handing over of funds was not
appropriate. With regards to Aeroplan points, Paris J. held that they had
a value that could be an "amount paid":
I find that
the points given up by the Appellant for the ticket were a right, since they
were exchangeable for air transportation services at his request, and that they
had a value that could be expressed in money since the services for which they
could be exchanged was offered for sale to arm's length parties at a fixed
price … By redeeming his points, the Appellant gave what was due for the
services and therefore "paid" for them within the ordinary meaning of
that word.
[25]
While Johnson determined
that points have a value for purposes of the ITA, it would not be
unreasonable to conclude that points have a value for the purpose of the Act
as well. Aeroplan points have a commercial value; one may receive air
transport in exchange for the points; the points are given in consideration for
the flight. Or, they are the "contrepartie" a person is giving to the
air carrier so that the air carrier will provide flight passage. In the appeal
at bar, there is an onerous contract between Hope Air and Air Canada for the flights.
[26]
The Supreme Court in Québec c.
Notre-Dame de Bonsecours
declared that ordinary principles of statutory interpretation apply when
interpreting tax legislation. Ambiguity in statutes was no longer to be construed
in favour of any party by default, but rather, would be "resolved openly
by reference to legislative intent".
The Court went further, acknowledging that statutes can have several policies
and purposes underlying them:
By submitting
tax legislation to a teleological interpretation it can be seen that there is
nothing to prevent a general policy of raising funds from being subject to a
secondary policy of exempting social works. Both are legitimate purposes which
equally embody the legislative intent and it is thus hard to see why one should
take precedence over the other.
[27]
Later, in Rizzo & Rizzo
Shoes Ltd.,
an appeal dealing with the Ontario Employment Standards Act ("ESA"), the Supreme Court cited
with approval the following passage from Elmer Driedger on Construction of
Statutes:
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.
[28]
The issue in Rizzo was
whether employees of a bankrupt employer could make a provable claim in
bankruptcy for termination pay and severance under the ESA. The Court
found that it was contrary to the purposes of the ESA to exclude
employees who lost their jobs as a result of their employer's bankruptcy.
[29]
The Court held that statutory
interpretation cannot be founded on the wording of the legislation alone. 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, its object and the
intention of Parliament. Further, section 12 of Canada's Interpretation
Act, similar to section 10 of Ontario's Interpretation Act,
provides that every act is "deemed remedial", and directs that every
act "shall be given such fair, large and liberal construction and
interpretation as best ensures the attainment of its object."
[30]
The Supreme Court also provided a
procedure for interpreting bilingual legislation in Daoust, specifically where there
are differences in the French and English versions of an Act. The approach has
been summarized in The Law of Bilingual Interpretation by former Justice
Michel Bastarache, as the following:
1. The first step consists of examining the two versions to
determine whether there is a discordance between the two versions. "Discordance"
here has the same meaning as "conflict" does in many of the earlier
cases: the important notion here is simply that the two versions are different.
If the two versions are the same, there really is no issue. If there is
discordance, the interpreter must proceed to the next step.
2. The second step consists in determining the nature of the
discordance, and determining the shared meaning. There are three possibilities
here:
a. The versions are in “absolute conflict”. Each is clear and
no shared meaning can be found.
b. One version is ambiguous and the other clear. The clear
version provides the shared meaning.
c. One version is broad and the other narrow. The narrow
version provides the shared meaning.
…
3. The third step consists of an appeal to extrinsic methods
of determining the intention of the legislator with respect to the provision.
There are two possibilities here:
a. The extrinsic evidence of intent allows for a choice
between the two conflicting versions as to which provides the true meaning of
the provision.
b. The extrinsic evidence of intent is examined to ensure that
the shared meaning is not inconsistent with it.
[31]
As stated previously, the
appellant has submitted that the term "consideration" is ambiguous
and so must be interpreted. Counsel declared that the proper interpretation of
consideration is something capable of being paid, meaning money, and not the
common law meaning.
[32]
With regards to the ambiguity of
"consideration", the appellant appears to confuse ambiguity with
scope. The definition of "consideration" in Currie suggests
that just about anything of value can fit under the term ‘consideration’, and
this has been the case for over a hundred years. However, this does not
mean the term is ambiguous; it simply means that the term is so broad that a
great deal can fit under it. If Parliament’s intent was that anything given in
exchange for air travel will cause the security charge to be payable, then
using the term "consideration" was entirely appropriate to
communicate that intent.
[33]
However, the appellant added that
the ambiguity in the term "consideration" can be resolved by looking
at the French version of the Act. That version uses
"contrepartie"; the appellant argues the word
"contrepartie" supports a meaning of consideration limited only to
something paid or payable, meaning money. I do not agree.
[34]
Appellant's counsel is of the view
that his position is supported by the use of the word "contrepartie"
in the French version of paragraphs 11(2)(b) and (c) and argued that since the
words "aucune contrepartie" are used in paragraphs 11(2)(b)
and (c) and not "à titre gratuit", the legislator must have
meant that "à titre gratuit" and "aucune considération"
have different meanings, and in particular that "à titre gratuit"
does not mean "for no consideration".
[35]
I have difficulty accepting this
reasoning. The difference in the French wording is one of semantics. The
expression "à titre gratuit" is used in paragraph 11(1.1)(b)
because it agrees with the language structure of that provision. It is proper
use of the phrase to unite "un service de transport aérien […] acquis […] à titre
gratuit". The legislator made an exception to a payment of a charge when a
charity acquired air transportation from an air carrier for no consideration;
"à titre gratuit" satisfies this exception as do the words "no
consideration". There is no conflict
between the two official versions of paragraph 11(1.1)(b) of the Act.
Both versions support the ordinary meaning of the English word
"consideration".
[36]
Reference to the Civil Code of
Quebec ("Civil Code") is instructive to assist in
resolving this problem. The Civil Code distinguishes between an onerous
contract and a gratuitous contract. Article 1381 reads as follows:
|
A contract is onerous when each party obtains an advantage in return for
his obligation.
|
Le contrat à titre onéreux est celui par lequel
chaque partie retire un avantage en échange de son obligation.
|
|
When one party obligates himself to the other for the benefit of the
latter without obtaining any advantage in return, the contract is gratuitous.
|
Le contrat à titre gratuit est celui par lequel
l'une des parties s'oblige envers l'autre pour le bénéfice de celle-ci, sans
retirer d'avantage en retour.
|
[37]
According to Article 1553 of
the Civil Code:
|
Payment means not only the
turning over of a sum of money in satisfaction of an obligation, but also the
actual performance of whatever forms the object of the obligation.
|
Par paiement
on entend non seulement le versement d'une somme d'argent pour acquitter une
obligation, mais aussi l'exécution même de ce qui est l'objet de
l'obligation.
|
[38]
I doubt that air transportation
provided by Air Canada to Hope Air is a gratuitous contract, that is, a "contrat
à titre gratuit". To repeat what I said earlier: when Hope Air acquires
passage for a patient, it is giving up points, something of value, in return
for the passage. In civil law, this is a payment. Aeroplan purchases a flight for
Hope Air, with Air Canada, for consideration: Hope Air redeems points on
Aeroplan for passage on Air Canada, which Aeroplan has obligated itself to provide.
There is no gratuitous contract. The contract between Hope Air, a holder of
Aeroplan points, and Aeroplan is, in civil law, an onerous contract. There is
consideration passing between Aeroplan and Hope Air.
[39]
In fact, what
paragraph 11(1.1)(b) is saying in both languages is this: if the
charity acquires air transportation from the airline for free, without any
conditions, there is no charge. On the facts before me there is no free passage
when Aeroplan points are used.
[40]
There remains to consider the meaning
of "consideration" within the whole statute in order to determine the
purpose and scope of the exemption. This requires a textual, contextual, and
purposive analysis of not only the term, but the provision, and the Act
as a whole. The appropriate interpretation of "consideration" will be
one that supports not only the purpose of the exemption, but also the purpose
of the statute.
[41]
The overall scheme of the Act
is to provide a way to enforce, administer, and collect a charge on air travel.
The Act in this case is more akin to a taxing statute such as the Income
Tax Act. The issue at bar concerns exemption from that charge for specific
charitable activities. Therefore, the provision at issue should not be interpreted
to include as many potential beneficiaries as possible, as in Rizzo. Rather, Bonsecours should be followed, and
all purposes and policies underlying a statute should be considered when
interpreting it.
[42]
Looking at the Act as a
whole, Parliament has created a technical scheme for the collection of the
security charge. The charge is meant to apply to all air travel in Canada, and
the term "no consideration", with the very broad scope of the meaning
of "consideration" from the common law and the meaning of "à
titre gratuit" from the civil law, was used to accomplish this.
[43]
Contained within this scheme is
the narrow exemption that prescribes in very specific terms and language when
it will apply: when a registered charity (under the ITA) acquires air
travel from "a person who carries on a business of transporting
individuals by air" and gives it to an individual for its charitable
purposes, that flight is exempt from the charge. Therefore, both
transactions, donation of points to Hope Air and acquisition of air travel by
Hope Air, must be completed for no consideration. The meaning of "no
consideration" must coincide with its use elsewhere in the statute,
meaning anything of value given in exchange for the ticket.
[44]
The appellant insisted that the
exemption was intended to apply to any flights given for charitable purposes.
It does not make sense, counsel suggested, that the exemption does not operate
solely because Aeroplan points were used to acquire the flight. In support of
this argument, counsel referred to Hansard records where the purpose of the
exemption was debated. On the second reading of the exemption, Mr. James Bezan,
M.P. stated:
Bill C-40 proposes that the air travellers
security charge will not be payable for air travel that is donated by an air
carrier at no cost to a registered charity as long as the charity donates the
air travel to an individual, also at no cost, in pursuit of the charitable
purpose.
[45]
Further, on third reading, the
Honourable Rick Dykstra commented:
Third and
finally are air travel security charge measures. The bill would relieve the
charge in respect of air travel donated by an air carrier to a registered
charity that arranges free flights for individuals as part of its charitable
purposes. It means that certain charities that arrange free air transportation
services for people who cannot otherwise afford the cost of flights for medical
care will not have to pay the air travel security charge.
[46]
These comments, unfortunately, do
not support the argument of the appellant. Both these speakers refer to the
flight itself being donated for no cost, and do not speak to flights acquired
using donated Aeroplan points redeemed through the Aeroplan program.
[47]
I note that the exemption in subsection 11(1.1)
was added to the Act several years after the Act was created. The term
"consideration" was already being used within the scheme, and there
is no indication Parliament intended the meaning of that term to change when
the exemption was added.
[48]
The transactions at issue here are
also non-compliant with the exemption for another reason. The exemption
requires that the air travel at issue must be acquired from an air carrier. An "air
carrier" is defined in the Act as a person who provides air travel
services. When Hope Air redeems Aeroplan points for flights, it does so through
Aeroplan (an entirely separate legal entity from Air Canada), not
through the air carrier, Air Canada. It is Aeroplan that purchases the flight from Air Canada for the
benefit of the Hope Air passenger. Neither side addressed the possibility that
in these circumstances Aeroplan is acting as an agent for Hope Air when it
acquires these flights. However, I would not have dismissed the appeal on this
basis only. As argued, the transportation services were not acquired in the
manner required to obtain the exemption.
[49]
Hope Air provides a valuable and
essential service to people who need it. Unfortunately, Aeroplan points have a
value and when one reads paragraph 11(1.1)(b) one is presented with
a quid pro quo between Hope Air and Aeroplan: Hope Air gives
Aeroplan points; Hope Air returns the points to Aeroplan for passage on an Air
Canada flight. For whatever reason, Parliament did not exempt from the charge
the use of points as consideration for the flights when it amended the Act.
As a result, the money available for Hope Air to carry on its charitable
activities is reduced to the extent it is forced to pay charges on the flights
it acquires for its charitable works. The Crown may wish to consider whether,
in such circumstances, it is just to return the charges or whether it is in the
public interest to remit the amount of the charges to Hope Air pursuant to
subsection 23(2.1) of the Financial Administration Act.
[50]
The appeal will be dismissed
without costs.
Signed at Ottawa, Canada,
this 6th day of May, 2011.
"Gerald J. Rip"
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