Citation: 2008TCC99
Date: 20080404
Docket: 2006-1214(GST)G
BETWEEN:
LE SYNDICAT DES PRODUCTEURS DE BOIS
DE LA GASPÉSIE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Angers J.
[1]
This is an appeal from
a notice of assessment of Goods and Services Tax (GST) dated August 10, 2005,
concerning the period from May 1 to May 31, 2005, and made under
the Excise Tax Act ("the Act"). The Minister of National
Revenue ("the Minister") assessed the Appellant, Le Syndicat des
producteurs de bois de la Gaspésie ("the SPBG"), disallowing its
GST rebate claims in the amount of $92,421.94 for the period in question. The SPBG
is a GST registrant and was an agent of the Minister for the purpose of
collecting and remitting GST during the period in question.
[2]
The SPBG is a
non-profit corporation, incorporated under the Act respecting the
marketing of agricultural, food and fish products, R.S.Q., c. M‑35.1
("ARMAFFP"). Under ARMAFFP, as few as ten producers can join and submit a draft joint plan setting out
modalities of production and marketing of an agricultural product (in this case,
forest products) originating from a designated territory (the Gaspé
Peninsula); and, with a view to the implementation thereof, the plan can
provide for the creation of a producer marketing board or, as in the case
at bar, a professional syndicate composed exclusively of producers of the
agricultural product to be marketed under the draft plan whose sole object is
the marketing of such product (see sections
45 and 50 of ARMAFFP).
[3]
The region designated
by the SPBG contains roughly 7,000 wood producers or woodlot owners that
are covered by the joint plan contemplated by ARMAFFP. Some of these
producers can join the SPBG as members, and roughly 3,000 have availed
themselves of that privilege, which entitles them to vote at the meetings, and eventually,
to be administrators, or delegates at the annual general meeting.
[4]
The activities of 900
of these producers are sufficiently limited (less than $30,000 per year) for
them not to be registrants under the Act. Those are the producers this appeal
relates to.
[5]
The 900 producers in
issue paid for the services that the SPBG rendered to them. The terms and
conditions of those payments were established by the SPBG and the producers,
and came into force following their approval by the Régie des marchés agricoles,
alimentaires et de la pêche. In general terms, the Appellant's marketing
activities include, among other things, the purchase and sale of wood on behalf
of Gaspé Peninsula wood producers; the SPBG collects the selling prices from
the buyers and then remits them to the producers.
[6]
The SPBG takes a share
of those sales proceeds to cover transportation costs, the agency's
administration costs, and amounts called "prélevés" (levies) which
are provided for in section 2 of the Règlement sur la contribution des
producteurs de bois de la Gaspésie pour l’administration du plan conjoint and
section 2 of the Règlement sur le fonds forestier des producteurs de bois de
la Gaspésie (R.Q. c. M‑35, r. 28.9 and R.Q., c. M-35.1,
r. 110). Those are the services in issue in the case at bar.
[7]
The SPBG thus collected
and remitted the GST on the services that it rendered to the 900 Gaspé
Peninsula wood producers, and it now seeks to get back $92,421.94. Thus, the
issue is whether the SPBG must collect GST on the services that it renders to
the 900 non-registrant producers.
[8]
The SPBG's main
function is to market wood in accordance with the Joint Plan of Gaspésie
Region Wood Producers, referred to in section 2 of the Règlement sur le
plan conjoint des producteurs de bois de la Gaspésie ("the Joint Plan
Regulation, or JPR").
[TRANSLATION]
2. In this Plan, "marketing" means the
sale, grading, processing, purchasing, storage, and shipping for purposes of
sale, offering for sale and transportation of any farm product, and the advertising
and financing of operations related to the selling of such product on the
market.
[9]
Section 5 of the
JPR defines the product in question, and section 6 provides that the SPBG
is responsible for the implementation and the administration of the plan.
Section 11 defines the SPBG's role as follows:
[TRANSLATION]
11. The Syndicate is the negotiating and selling agent
for the products covered; as such and as administrator of the Plan, it has
the powers, prerogatives and duties prescribed in the Act for such a body.
[10]
The powers, duties and
prerogatives of the SPBG are set out in sections 14 through 18 of the JPR,
which are reproduced in an appendix to these Reasons for Judgment.
[11]
The producers subject
to a joint plan are required to make contributions so that the plan can be carried
out. Section 122 of ARMAFFP, and the regulations thereunder, provide for the
payment of those contributions. I shall reproduce sections122, 123 and 124 of ARMAFFP:
122. The producers subject to a joint
plan shall pay the expenses incurred for the purposes of the plan and by-laws
by means of contributions prescribed in the plan or in a by-law made under
section 123 or 124.
1990, c. 13, s. 122.
By-laws
123. A general meeting of the producers,
called for that purpose, may make by-laws
1) to vary the amount of the contribution prescribed in the
plan;
2) to classify the producers into groups and fix for each group
the level of contribution required from each producer who is a member of it for
the purposes of the plan, the by-laws and this Act;
3) to impose a special contribution to pay the expenses related
to the carrying out of a provision of a plan, a by-law or this Act;
4) to impose a special contribution to cover losses resulting
from the marketing of the product marketed under the plan, whether or not such
product is produced by the producer required to pay the contribution;
5) to impose a special contribution to permit the equalization
or adjustment among producers of sums of money received from the sale of the
product marketed under the plan, during such period as the board may determine;
6) to impose a special contribution to permit the board to pay
its share of the activities and operating costs of a coordination and
development chamber;
7) to impose, on all the producers or on those who meet certain
criteria, a special contribution for the purposes of a by-law made under
section 100.1 and to satisfy the obligations incurred in respect of the special
fund established for the purposes of the by-law.
1990, c. 13, s. 123; 1992, c. 28, s. 16.
By-laws
124. The producer marketing board,
if authorized to do so by a general meeting of the producers called for that
purpose, may, by by-law, establish
1) a reserve fund or working capital to pay expenses relating
to the administration of a plan or the carrying out of a by-law;
1.1) a special fund for the purposes of a by-law made under
section 100.1;
2) a contribution, which may vary, to permit it to fulfil
obligations contracted under Chapter VIII;
3) methods to be used for the collection or calculation of a
contribution imposed under this chapter.
1990, c. 13, s. 124; 1992, c. 28, s. 17.
[12]
Thus, the two
regulations provide for the amounts to be paid to the SPBG. In the case of
the Règlement sur la contribution des producteurs de bois de la Gaspésie
pour l’administration du plan conjoint, section 2 provides that a producer
must pay a contribution of $0.85 per cubic metre of the product. Section 3
provides that the contributions received defray the expenses incurred by the SPBG.
According to the evidence, the SPBG uses these amounts to negotiate contracts
and to plan the marketing. The amounts that the purchasers pay to the SPBG are subject
to a direct withholding.
[13]
As for the Règlement
sur le fonds forestier des producteurs de bois de la Gaspésie, section 2
provides that a producer must make a $0.15 contribution to the SPBG for each
unit of volume of the marketed product. Subsection 5(e) provides
that this amount is to fund a newsletter for wood producers.
[14]
According to SPBG
executive director Jean-Pierre Rivière, the two contributions, which total
$1.00, serve mainly to defray the costs of negotiations with carriers; the
costs of ensuring that the work, such as the scaling of timber, is done
properly; and the costs of performance, supervision, verification and human
resource administration.
[15]
The SPBG also collects
a contribution of $0.41 per stacked cubic metre on all wood sold. This amount
defrays costs related to management as such. (see Exhibit A-7, a
resolution). Lastly, in addition to the costs related to the regulations and
the resolution, there are transportation costs.
[16]
The situation common to
the 900 producers in issue is that they are not GST registrants. Two typical
transactions covered by the rebate claim were explained. The payment
records issued to the producers show that no GST was charged to the recipients
of the sales, and the records clearly set out the levies or contributions that
the producers paid to the SPBG. Those contributions are in issue here, and the
question to be decided is whether the SPBG must collect the GST on the
contributions that it receives from the producers.
[17]
On cross-examination, Jean-Pierre
Rivière, the SPBG's executive director, confirmed that the contributions used for
the administration of the SPBG are deducted off the invoices paid by the
purchasers, and are set by regulation. The SPBG does not collect
commissions from the producers. Its mission is to ensure that wood is marketed
correctly and in compliance with ARMAFFP on the Gaspé Peninsula.
[18]
Section 45 of ARMAFFP
provides that the SPBG has the status of producer marketing board for the
purpose of carrying out a plan. Section 66 specifies that the SPBG has the
powers and prerogatives of a producer marketing board. It reads as follows:
66. A body designated under
section 50 to administer a plan is vested with the powers, duties and
prerogatives of a producer marketing board; it shall exercise such powers,
duties and prerogatives through its board of directors except those reserved
for the general meeting of producers. It shall keep separate accounting records
for the management of the plan. The body may apply to the Régie to be exempted
from the requirement of keeping separate accounting records if it carries on no
activity other than the administration of the plan.
[19]
The powers that ARMAFFP
confers on a marketing board are set out, inter alia, in
sections 92 to 99, which I shall reproduce here:
Regulatory powers
92. A marketing board may, by
by-law,
1) determine conditions governing the production, storage,
preparation, handling and transport of the product marketed under the plan it
administers, as well as standards respecting the quality, form and composition,
container or packaging and the inscription which must appear on the product,
its container or packaging;
2) prescribe the classification and identification of the
product marketed under the plan it administers, determine for that purpose
particular grades, categories and appellation and determine the conditions on
which such classification and identification must be made.
1990, c. 13, s. 92.
Regulatory powers
93. A marketing board
may, by by-law, fix production and marketing quotas for the product marketed
under the plan it administers and, for that purpose, subject production and
marketing to the conditions, restrictions and prohibitions it determines.
Quotas
Without restricting the scope of the first paragraph, a board may,
by by-law,
1) determine the times and places a product marketed under the
plan it administers may be produced and marketed;
2) require that every producer be the holder of an individual
quota allocated by the board and authorizing him to produce or market the
product marketed under the plan it administers, fix the minimum and maximum quotas
the producer may hold, individually or in association with other persons, and
determine the proportion of the quota each producer must produce himself within
his operation;
3) determine the conditions governing the allocation,
maintenance or renewal of an individual quota, and the manner in which it is
issued;
4) establish equivalences based on the area under cultivation
or operation or the number of animals reared or marketed, for the purpose of
fixing the quota of a producer;
5) determine the manner and conditions applicable to the
temporary or permanent reduction of the quota of a producer who produces or
markets a larger or smaller quantity of the product marketed under the plan
than is permitted by his quota;
6) impose on any producer who contravenes a by-law made under
this section, a penalty based on the volume or value of the product marketed or
the area under cultivation or operation, and prescribe the use of this penalty
for particular purposes;
7) provide for the cancellation or use by another person of any
part of a quota not produced or marketed during a specified period;
8) determine the circumstances, the extent and the conditions
on which a producer holding a quota may produce or market a product otherwise
than according to his quota or a standard determined by the marketing board;
9) establish an overall limit of individual quotas which may be
allocated to producers by the marketing board, and prescribe standards for
proportional reduction of the quotas when the limit has been or is about to be
reached;
10) determine standards for periodical adjustment of individual
quotas according to market needs;
11) determine the manner and conditions according to which the
board may reallocate quotas which have been suspended, reduced or cancelled;
12) determine any part of the overall quota and of individual
quotas which have been suspended or permanently reduced that it may keep in
reserve;
13) establish the manner and conditions governing the
allocation or reallocation of the reserve referred to in paragraph 12, and
limit the allocation of quotas from the reserve to one or more classes of
producers;
14) determine the cases of and the conditions applicable to the
transfer of a quota from one producer to another, set aside a part of that quota
for the reserve mentioned in paragraph 12, determine the terms, conditions and
modalities of such a transfer, and make any such transfer subject to its
approval;
15) determine the terms and conditions according to which a
quota or part of a quota may be leased from a producer to another;
16) determine the conditions subject to which an operation may
be leased by a producer who wishes to produce all or part of his quota
elsewhere than within his own operation, and make such lease subject to the
approval of the marketing board;
17) suspend any transfer of individual quotas for a specified
period or for a period which may be determined according to the standards
established by the marketing board;
18) divide the territory covered by the plan into zones and
restrict or prohibit the transfer of quotas from one zone to another;
19) determine the length of time allowed to a new holder of a
quota or the holder of a new quota to produce or market the product subject to
the quota.
1990, c. 13, s. 93.
Quota required
94. Where a marketing board makes a
by-law under section 93, no person may produce or market the product concerned
unless he holds a quota, except in the circumstances and on the conditions
determined in the by-law.
1990, c. 13, s. 94.
Holder of quota
95. Only the person or partnership
producing the product marketed under a plan may hold and exploit a quota
allocated by a marketing board.
New producer
However, this provision shall not prevent a new producer from
becoming the holder of a quota.
Exception
The first paragraph does not apply to a creditor who temporarily
holds a quota in execution of a guarantee, provided he disposes or takes
measures to dispose of the quota within a reasonable time.
1990, c. 13, s. 95.
Price
96. A marketing board may, by by-law,
establish methods for fixing the price of the product marketed under the plan
it administers, or of a class or variety thereof. The price may vary from
one region to another.
1990, c. 13, s. 96.
Obligations of producers
97. A marketing board may, by by-law,
1) require any producer of the product marketed under the plan
it administers to register his operation in the manner and in accordance with
the terms and conditions it prescribes;
2) determine the information and documents that the producers
of the product marketed under the plan it administers must keep and furnish for
the purposes of the plan and the by-laws made under this chapter.
1990, c. 13, s. 97.
Joint offer of sale
98. A marketing
board may, with regard to the product subject to the plan it implements, make
by-laws to
1) establish a procedure of joint offer for sale
permitting producers to receive, after deduction of all or part of the
marketing costs determined by the board, the same price for an identical product
of equal quality and in the same quantity marketed during a particular period
on a particular market, independently of the variation in the sales price due
to reasons unconnected with the actual value of the product;
2) determine the method and conditions according to which a
product may be marketed and offered for sale jointly;
3) determine the standards for the fixing and payment of the
sales price; these standards may provide for the fixing of a provisional price
before sale and a final price after sale;
4) determine the terms and conditions of payment of the sales
price applicable to all buyers; these standards may provide for the payment of
an initial instalment on delivery and subsequent instalments at intervals
determined by the marketing board;
5) determine the terms and conditions of apportionment among
the producers of the net profit from the sale of the product or a particular
class of it;
6) require every buyer to pay the price of the product to the
marketing board or to the sales agent designated for its apportionment among
the producers;
7) require every producer to sell the product to or through the
board or designated sales agent;
8) retain, out of the sales price, the amounts necessary for
marketing the product, together with any other contribution imposed under this
Title;
9) determine what constitutes the net profit on sales for the
purposes of this section.
1990, c. 13, s. 98.
Transport costs
99. A board may, by
by-law, establish a procedure to apportion and pool the transport costs of the
product so each producer, or each producer in a group determined in the by-law,
pays the same price for the transport of his product, in equal quantity,
independently of the distance between the production site and the place of
delivery.
1990, c. 13, s. 99.
[20]
The cross-examination
of Mr. Rivière also revealed that, therefore, the purpose of these
contributions is to help fund the SPBG's activities through the marketing of wood.
Thus, they constitute a financing method, not remuneration. The payment is
mandatory for all producers, and the SPBG can sue any producer that does not
pay.
[21]
The SPBG's financial
statements were tendered in evidence. They contain no item for "fees"
or "commissions".
[22]
The issue, then, is
whether the SPBG must collect GST on the services that it renders to Gaspé
Peninsula wood producers, under section 177 of the Act.
[23]
Counsel for the
Appellant submits that all the conditions that must be fulfilled in order for
subsection 177(1) of the Act to apply have been met, and that, accordingly, the
Appellant is not required to collect GST on the levies that it makes for the
services offered to the 900 non-registrant wood producers. Subsection 177(1)
reads as follows:
AGENTS
Supply on behalf of person not required to collect tax
177. (1) Where
(a) a person (in this subsection referred to as the "principal")
makes a supply (other than an exempt or zero-rated supply) of
tangible personal property to a recipient (otherwise than by auction),
(b) the principal is not required to collect tax in respect
of the supply except as provided in this subsection, and
(c) a registrant (in this subsection referred to as the
“agent”), in the course of a commercial activity of the agent, acts as agent
in making the supply on behalf of the principal,
the following rules apply:
(d) where the principal is a registrant and the property was
last used, or acquired for consumption or use, by the principal in an endeavour
of the principal, within the meaning of subsection 141.01(1), and the principal
and agent jointly elect in writing, the supply of the property to the recipient
is deemed to be a taxable supply for the following purposes:
(i) all purposes of this Part, other than determining whether the
principal may claim an input tax credit in respect of property or services
acquired or imported by the principal for consumption or use in making the
supply to the recipient, and
(ii) the purpose of determining whether the principal may claim an
input tax credit in respect of services supplied by the agent relating to the
supply of the property to the recipient, and
(e) in any other case, the supply of the property to the
recipient is deemed, for the purposes of this Part, to be a taxable
supply made by the agent and not by the principal and the agent is
deemed, for the purposes of this Part other than section 180, not to have made
a supply to the principal of services relating to the supply of the property to
the recipient.
[Emphasis added.]
[24]
Thus, counsel for the
Appellant submits that it is the producers' agent (mandatary) for the purpose
of marketing. He submits that, regardless of whether the contributions that the
SPBG takes from the amounts payable to producers are described as commissions
or remuneration, the Act requires only that services be involved.
Consequently, he asserts that the SPBG provides services to the producers, and
that those services are associated with the supply of wood. And since the
statutory conditions have been met, he submits that the presumption provided
for in paragraph 177(1)(b) applies, with the result that the
services rendered to the producers are not taxable and the SPBG does not have
to collect the tax from the 900 wood producers because they are not
registrants.
[25]
In support of these
submissions, counsel for the Appellant asserts that the conditions specified in
articles 2130 et seq. of the Civil Code of Québec have been met.
He argues that a mandate is clearly established because section 65 of
ARMAFFP provides that the SPBG is the producers' negotiating agent as well as the
sales agent. As to whether services are being provided, counsel for
the Appellant submits that the SPBG's mission is to market wood, and that this
includes a multitude of services offered by the SPBG to wood producers. Those
services are not free, and are tied to the supply of wood; if it were not
for these considerations, there would be no services.
[26]
Lastly, counsel for the
Appellant submits that Parliament cannot have intended to claim GST payments
from these 900 producers because they do not have to collect GST themselves. In
his submission, Parliament intended to make small suppliers' transactions
tax-free, and it is implausible that Parliament would want to tax such
suppliers because they are doing business with an agent (mandatary).
[27]
For his part, counsel
for the Respondent submits that the SPBG is not a seller of wood, but, rather,
an economic regulator, in the form of a board, responsible for the marketing of
agricultural products. Moreover, he submits that the SPBG also offers an integrated
marketing service, not simply a wood selling service, which it would have to be
offering for subsection 177(1) of the Act to apply.
[28]
The Respondent further
submits that the SPBG is not an agent (mandatary). Sections 92 et seq.
of ARMAFFP grant the SPBG powers far more extensive than those of a mere
mandatary. The SPBG even has more rights than the principal (mandator) because it
can, among other things, require the principal to sell specific quantities of
wood. The Respondent submits that Parliament intended subsection 177(1) of
the Act to apply to cases where a principal, or mandator, pays commissions
to an agent, or mandatary, to supply goods. In the case at bar, the amounts
paid are not commissions, because the SPBG is a non‑profit organization that
reports no commission income, and whose financial statements show no item for
commissions or remuneration. In denying that an agency (mandate) relationship exists,
counsel for the Respondent adds that the marketing service is not a service performed
by a mandatary, because the service is rendered even when the SPBG is not
acting as a mandatary.
[29]
Lastly, the Respondent
notes that the levies and contributions are not made for services provided by
the SPBG. They are statutory, and are used to fund the SPBG's activities, since,
under section 125 of ARMAFFP, they can be calculated not only on the basis
of production volume, but several other criteria as well. As to the question of
transportation costs, counsel for the Respondent submits that they are not supply
services, because they are provided for by section 8 of ARMAFFP and are made
compulsory by regulation.
[30]
Thus, the intent of
subsection 177(1) of the Act is to make services rendered under a mandate (agency)
relationship tax-free. The most recent technical notes published by the
Minister of Finance read as follows:
[July 10, 1997]: Section 177 deals with supplies
made by agents, including auctioneers, on behalf of principals. The
existing rules provide for different treatment depending on whether the
principal is disclosed or undisclosed and is a registrant or non-registrant.
They also set out special rules for auctioneers.
Amended subsection 177(1) sets out the new rules that apply where
an agent, acting in the course of a commercial activity, makes a supply of
tangible personal property (other than an exempt or zero-rated supply)
otherwise than by auction on behalf of a principal who, but for
this subsection, would not be required to collect tax on the supply (i.e.,
the principal is an unregistered person or did not last acquire or use the
property in the course of a commercial activity.)
Amended subsection 177(1) deems these supplies to be taxable. Tax
applies on the full selling price of the property.
The general case is that the agent is deemed to have made the
supply of the property to the recipient and is therefore the one responsible
for accounting for the tax. Under this general rule, the agent is
deemed not to have made a supply to the principal. As a result, the
agent's service supplied to the principal (i.e., the agent's commission) will
not be taxable. The supply made by the agent is deemed not to be a
supply for the purposes of Part IX of the Act other than section 180,
which deals with the situation where a non-resident unregistered person is the
legal importer of a good to be sold by an agent on the non-resident's behalf
and the non-resident is required to pay tax on the importation. The intention
of section 180 is to treat the agent in these cases as having paid the tax
the non-resident (i.e., the principal) was required to pay. This would allow
the agent to claim an input tax credit for the tax paid by the principal.
[Emphasis added.]
[31]
Five conditions must be
met for subsection 177(1) to apply. The first one, which is in issue here,
is that there must be an agency (mandate) relationship. The second is that the
principal (mandator) must be a person who is not required to collect the tax.
Here, this condition is met because the 900 producers are not registrants
within the meaning of the Act. The third condition is that the supply made by
the principal (mandator) must be the supply of tangible personal property
(corporeal movable property) and must not be an exempt or zero-rated
supply. In the case at bar, the 900 producers produce wood, corporeal movable
property that is neither exempt nor zero‑rated. The fourth condition is
that the agent (mandatary) must be a registrant acting in the course of its
commercial activities. Here, the SPBG is a registrant within the meaning of the
Act and its commercial activity is the marketing of wood on the Gaspé Peninsula.
The last condition is that the agent (mandatary) must make the supply on behalf
of the principal (mandator). Thus, in the case at bar, we must determine
whether the SPBG makes supplies of wood to recipients on behalf of the 900 non-registrant
wood producers.
[32]
Have the first and last
conditions been met? Is there a mandator-mandatary relationship between the SPBG
and the 900 wood producers, and, in the affirmative, does the SPBG make
supplies of wood on behalf of the 900 producers?
[33]
The Act does not define
the concept of agency (mandate). However, the Civil Code of Québec
provides a definition at article 2130, which reads as follows:
NATURE AND SCOPE OF MANDATE
2130. Mandate is a contract by
which a person, the mandator, empowers another person, the mandatary, to
represent him in the performance of a juridical act with a third person, and
the mandatary, by his acceptance, binds himself to exercise the power.
The power and,
where applicable, the writing evidencing it are called the power of attorney.
[34]
The terms of the
relationship between the 900 wood producers and the SPBG are set out in
ARMAFFP. The Appellant places particular emphasis on section 65 of that
statute in support of his position that the wording is very consistent with the
mandator-mandatary concept since it identifies the board (the SPBG) as the
producers' negotiating agent and as the sales agent for the product marketed
under the plan. That provision enables the board to carry out any function pertaining to the production
and marketing of the product in order to promote, defend and develop the
interests of the producers that are covered by the plan.
[35]
As for the Respondent,
she relies on sections 92 et seq. of ARMAFFP with a view to showing
that the SPBG's regulatory powers are much more extensive than the powers that
a mere mandatary would have. In view of the facts, does the mandatary actually
have more power than the mandator?
[36]
In Glengarry Bingo
Association v. Canada, [1999] F.C.J. No. 316, the Federal Court
of Appeal referred to CRA Policy Statement P-182 as a helpful tool in
determining whether an agency relationship exists. Paragraph 32 of the
decision reads as follows:
32 P-182
identifies three essential qualities of agency. These are the consent of both
the Principal and Agent, the authority of the Agent to Affect the Principal's
Legal Position and the Principal's Control of the Agent's Action. Since I find
that GBA did not have the capacity to affect the legal position of its Members,
I find it unnecessary to address the other factors which Revenue Canada has
indicated are required for a finding of agency.
[37]
With respect to the
last essential quality, the policy statement in question adds:
In a relationship
of agency, it should be clear that the principal has a degree of power over the
actions of the agent; the agent would be acting as an extension of the
principal and, therefore, would be under the principal's general direction and
control.
[38]
In light of the
foregoing comment, it would, in my opinion, be very difficult for the Appellant
to show, on a balance of probabilities, that the mandators (the producers
in the instant case) have the kind of power that can be characterized as direction
and control over the mandatary (the SPBG).
[39]
Section 1 of the Règlement
des producteurs de bois de la Gaspésie sur la mise en marché provides that all
the wood covered by the joint plan, i.e. the wood produced by the 900 producers
in question, must be marketed under the direction and supervision of the SPBG.
That provision reads as follows:
[TRANSLATION]
1. With the exception of firewood and lumber or
peeler quality hardwood, the wood to which the Plan conjoint des producteurs de
bois de la Gaspésie (O.C. 73-88, 88-01-20) [the joint plan] applies shall be
marketed under the direction and supervision of [the SPBG].
[40]
Indeed, I must approve
to the arguments of counsel for the Respondent, to the effect that the
provisions of ARMAFFP, and sections 92 to 98 in particular, grant the SPBG
powers that go beyond those that the mandator has, not to mention powers more
extensive than those of a mere mandatary.
[41]
Along the same lines,
one must ask whether it is the producers that grant the SPBG the power to
represent them in selling their wood, or whether, in fact, it is ARMAFFP and
the regulations that empower the SPBG to act.
[42]
The Quebec Court of
Appeal decided a similar question in Maltais v. Corporation du Parc
régional du Mont Grand-Fonds Inc., REJB 2002‑30662 (CA). The question
was whether the Commission des normes du travail [Quebec's labour standards
commission] was acting as the employee's mandatary. The Court ruled on the issue
in the following terms:
[TRANSLATION]
16 Based on this definition, I find it hard to characterize the
relationship between the Appellant and the Commission as a mandate. Indeed, the
Commission does not derive its authority to sue Grand-Fonds from the
Appellant's intent, but, rather, from the provisions of the Act
respecting labour standards . . . . This provision grants the Commission
the power to "institute in its own name and on behalf of an
employee, where such is the case, proceedings to recover amounts due by the employer . . . notwithstanding
any . . . opposition or any express or implied waiver by
the employee."
17 In the case at bar, it is not from the Appellant, but
indeed from the Act, that the Commission derives its authority to act on behalf
of the Appellant.
[Emphasis added.]
[43]
Here, the SPBG is a lot
more than a mere seller of wood on behalf of a producer. The statutory
provisions combine to create a much broader context, which includes "marketing"
as defined by section 2 of the regulation.
[44]
In my view, the SPBG
cannot be considered a mandatary of the producers because it is not subject to
their direction and control, but, rather, must act in compliance with ARMAFFP
and the regulations thereunder.
[45]
Although my ruling
disposes of the instant appeal, I must add that the fifth condition precedent
to the application of subsection 177(1), namely that the Appellant is
required to make the supply on behalf of the wood producers, is not met in the
case at bar.
[46]
Contrary to the
argument made by counsel for the Appellant, subsection 177(1) only
encompasses cases where a person makes a supply of tangible personal property
(corporeal movable property). In my view, it does not provide that these terms
also include everything related to the production of the supply. In view
of the evidence as a whole, and the legislative provisions, the SPBG makes no
supplies; rather, it acts as a regulatory board.
[47]
The amounts deducted
from the proceeds of sale of wood for the producers are deducted in accordance
with the statutes, regulations and by-laws governing forestry activities in the
region. The following amounts are deducted:
·
The transportation
costs withheld from the gross selling price of the wood are considered
marketing costs under section 3 of ARMAFFP.
·
The amounts called "prélevés"
(levies) are statutory, and are set out in section 2 of the Règlement
sur la contribution des producteurs de bois de la Gaspésie pour
l’administration du plan conjoint and section 2 of the Règlement
sur le fonds forestier des producteurs de bois de la Gaspésie.
·
The costs related to
the agency's administration and the exclusive agent are set out in
section 12 et seq. of the Règlement sur la mise en marché des
produits agricoles, alimentaires et de la pêche.
[48]
In my view, these costs
result from services that cannot be considered the supply of tangible personal
property, because all the services are prescribed by regulations aimed at
regularizing and facilitating the coordination of the production and sale of
wood on the Gaspé Peninsula. The services offered by the SPBG have already been
itemized. In view of the foregoing, they cannot be included in
subsection 177(1), and are therefore subject to the GST.
[49]
For these reasons, the
appeal is dismissed, with costs.
Signed at Ottawa, Canada,
this 4th day of April 2008.
"François Angers"
Translation
certified true
on this 12th day
of May 2009.
François Brunet,
Reviser
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