Perrier Group of Canada Inc. v. Canada, [1996] 1 CTC 167

Linden J.A.: — This appeal raises the same issues of law as are raised in Court File No. A-612-93. A copy of the reasons for judgment in that file, as annexed, shall constitute the reasons for judgment in this court file.

The issue in these appeals is whether the water sold under the trade name of Perrier is a “carbonated beverage” within the meaning of subsection 1(c) of Part V of Schedule III to the Excise Tax Act. The relevant provisions of the Excise Tax Act are as follows:

50. (1) There shall be imposed, levied, and collected a consumption or sales tax at the rate prescribed in subsection (1.1) on the sale price or on the volume sold of all goods ...

(b)imported into Canada, payable in accordance with the provisions of the Customs Act by the importer, owner or other person liable to pay duties under that Act ...

51. (1) The tax imposed by section 50 does not apply to the sale or importation of the goods mentioned in Schedule III ...

Schedule III, Part V, which I reproduced here both in English and French, states:

1. Food and drink for human consumption (including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of the food and drink), other than

(a) wine, spirits, beer, malt liquor and other alcoholic beverages;

(b) non-alcoholic malt beverages;

(c) carbonated beverages and goods for use in the preparation of carbonated beverages;

(d) non-carbonated fruit juice beverages and fruit flavoured beverages, other than milk-based beverages, containing less than twenty-five per cent by volume of

(i) a natural fruit juice or combination of natural fruit juices, or

(ii) a natural fruit or combination of natural fruit juices that have been reconstituted into the original state,

and goods that, when added to water, produce a beverage described in this paragraph;

(e) candies, confectionery that may be classed as candy, and all goods sold as candies, such as candy floss, chewing gum and chocolate, whether naturally or artificially sweetened ...

1. Aliments et boissons destinés à la consommation humaine (y compris les édulcorants, assaisonnements et autres ingrédients devant être mélangés à ces aliments et boissons ou être utilisés dans leur préparation), sauf:

a) les vins, spiritueux, bières, liqueurs de malt et autres boissons alcoolisées;

b) les boissons de malt non alcoolisées;

c) les boissons gazeuses et les marchandises devant servir à leur préparation;

d) les boissons de jus de fruits et les boissons à saveur de fruits non gazeuses autres que les boissons à base de lait, contenant moins de vingt- cinq pour cent par volume:

(i) de jus de fruits naturel ou d’une combinaison de jus de fruits naturels,

(ii) de jus de fruits naturel ou d’une combinaison de jus de fruits naturels qui ont été reconstitués à l’état initial,

et les marchandises qui, lorsqu’elles sont ajoutées à de l’eau, produisent une boisson visée dans le présent alinéa;

e) les bonbons, les confiseries qui peuvent être classées comme bonbons, et toutes les marchandises qui sont vendues au titre de bonbons, telles la barbe à papa, le chewing gum et le chocolat, qu’elles soient naturellement ou artificiellement sucrées ...

Facts

The facts are not disputed. The appellants import, distribute, and sell Perrier water in Canada. By Notice of Determination dated November 4, 1987, the Minister of National Revenue assessed the two appellants in the amount of $1,077,209.43 as tax owing pursuant to the Excise Tax Act. The Minister assessed the appellants on the basis that Perrier is a “carbonated beverage” within subsection 1(c) of Part V of Schedule III of the Act, and that the product, accordingly, is subject to the import tax imposed by section 50. The appellants objected to the assessment, and the Minister disallowed this objection. The appellants appealed to the Canadian International Trade Tribunal, which found in the Minister’s favour. A further appeal to the Trial Division of the Federal Court was likewise unsuccessful, at which point the appellants appealed to this Court.

Perrier is a carbonated mineral water sold in bottles and cans. Both the water and the carbon dioxide for the carbonization derive exclusively from what is called the Source Perrier in Vergéze in the south of France. The hydrogeological system which makes up the Source Perrier is about ten kilometres wide and two or three kilometres deep, and works somewhat as follows. Rain water falling on the limestone hills in the vicinity of the Source percolates toward a nearby plain, eventually entering a large siliceous sand aquifer. Beneath this aquifer lies a large carbonate rock formation. Heat from the earth’s magma convected upward through faults and fractures heats this porous rock formation to a temperature sufficient to cause it to release carbon dioxide into the water that inhabits it. This deep water is then forced upward under natural conditions into the sand aquifer through fissures in the rock. The highly carbonated deep water mixes with the water in the aquifer, giving rise to a naturally occurring carbonated water.

The final product bearing the Perrier name, however, is not merely a bottled form of the carbonated water described above. Rather, what goes by the name Perrier is something of a processed version of It.

Though both the water and carbonation components of Perrier derive from the Source Perrier, each are separately extracted. The water is taken from a bore hole sunk 40 meters into the Source Perrier aquifer, and the carbon dioxide taken from the CO2 saturated deep-water through a bore hole sunk to approximately 450 meters. The two are shipped to the Perrier bottling facility and, after processing, are eventually recombined to create the final product.

Recombination and the processes associated with it are necessary for two reasons deserving mention. First, through recombination, CO2 saturation levels can be strictly controlled, providing for a consistency that would not naturally occur. Second, and more importantly, the CO2 in its original state in the Source Perrier contains impurities that, for marketing and health reasons, must be filtered out before the final product may be sold. One filtered impurity is hydrogen sulphide. This gas is lethal in even small concentrations, and imparts the smell of putrid eggs to any substance it inhabits. Another impurity is benzene, yet another poisonous gas in small concentrations. Other filtered impurities include nitrogen, helium, argon, neon, and certain hydrocarbons such as ethane, methane, propane, and toluene.

After recombination and subsequent bottling, the product is ready for sale. In its bottled state, Perrier water contains about 6500 mg/L of carbon dioxide. This concentration approximates the saturation level that would be present in the water of Source Perrier at a depth of 40 meters. I say “would be present” because the two bore holes sunk into the Source Perrier have caused pressure changes within the system, and CO2 levels are now markedly less than if the boreholes had not been drilled.

The decisions at first and second instance

The Tribunal decided that Perrier is a “carbonated beverage” and is therefore subject to tax. In so deciding, the Tribunal first noted that the language used in the English and the French versions of the Act contains an apparent conflict requiring reconciliation. The French version uses the word “boisson”, which the Tribunal took to mean any liquid that can be drunk. However, the English equivalent, “beverage”, seemed to the Tribunal to have a more restricted meaning, referring generally to prepared drinks and ordinarily excluding water. The Tribunal thus attempted to reconcile the English and French versions by selecting a meaning common to both, and consistent with the purpose and general scheme of the Acct.

The Tribunal looked for traces of such a scheme within the context of section 1. It noted that subsections 1(a), (b), and (d) all list beverages that require a certain degree of preparation. This suggested that the beverages contemplated by subsection 1(c) would likewise be of a prepared sort. This view was reinforced, in the Tribunal’s opinion, by the presence of the word “carbonated” in subsection 1(c), which implies an action or process through which CO2 is added. It thus seemed to the Tribunal that a common meaning of the French and English versions could be found in the notion of “prepared drink” and that this meaning respected the scheme apparent in section 1. Implicit in this conclusion is that the English word “beverage” does not necessarily exclude water, and that the French word “boisson” does not necessarily include water; but both may include water if it is a prepared drink. And because Perrier, in the Tribunal’s view, is a prepared drink, it is a “carbonated beverage”. The Tribunal stated:

if water is submitted to a process that adds CO2 in such a way as to increase the volume of that gas dissolved in the water beyond the concentration of carbon dioxide found in nature at surface level, water becomes a “carbonated beverage” or “boisson gazeuse”.

It had been argued that Perrier was a naturally sourced product which is subjected to only minimal forms of processing. The Tribunal considered the nature of Perrier water, however, and concluded that it was a prepared product. It stated:

Perrier water falls precisely within the range of “carbonated beverages” that Parliament had in mind when the Act was amended in 1985, 1.e., liquids for drinking that have been through a certain process or preparation during which a given quantity of carbon dioxide was added. ... The water was purposefully carbonated and the purposeful addition of CO2 made the resulting product a beverage and hence taxable.

The appeal was accordingly dismissed.

During the hearing before the Trial Judge, counsel for the appellants presented a range of arguments intended to undermine the Tribunal decision. One primary argument was that English dictionaries tend to exclude water from the scope of the definition of “beverage”. The Trial Judge attached little weight to this argument and suggested that the many dictionary definitions “indicate that there is both a broad and a narrow usage of the term beverage.” She furthermore suggested that ordinary uses of the word “beverage” confirms that the word means a variety of things in different contexts. As a result, the Trial Judge was not persuaded that word “beverage” in subsection 1(c) should be restrictively interpreted to exclude water.

Counsel also presented a large number of primarily American cases,and including one from the Ontario Court of Appeal, where the meaningof beverage was in issue. The Trial Judge did not see the relevance ofthe cases. According to her, they were generally directed to differentissues and were drawn from a background of disparate types oflegislation.

Another important argument presented by counsel was that the phrase “carbonated beverages” was intended to include only artificially carbonated beverages, and that Perrier, being a natural product, was therefore excepted. The Trial Judge was also unpersuaded by this argument. She stated:

minimal processing are included in the taxable items. If one had to find a common classification to describe the types of items that are taxed, I think one would say that these are all of a type which are luxuries or which are nutritionally non- essential, eg. alcoholic beverages, candies, chewing gum. I have not been convinced that reading the words “carbonated beverages” in the light of the purpose of the Act and in the context of the Act’s provisions as a whole, leads to the conclusion that only artificially manufactured carbonated beverages are intended to be encompassed therein.

The Trial Judge dismissed the appeal.

Analysis

The issue on these appeals is substantially as presented to both the Tribunal and the Trial Judge, and can be simply stated: is Perrier water a “carbonated beverage”? The issue is primarily one of statutory interpretation and involves answering two questions in succession. First, does the term “beverage” in section 1 include water? Second, is the phrase “carbonated beverage” confined to artificially carbonated beverages or does it also contemplate those which are naturally carbonated?

“Beverage”

The appellants contend that Perrier water is not a “beverage” because that term, when construed in its ordinary and popular sense, excludes water. This is evidenced, they suggest, by the large number of English and American dictionaries that define “beverage” as expressly excluding water. To be sure, the Court was referred to a long list of such definitions, some from dictionaries bearing very unfamiliar names, and indeed many of these definitions are as unambiguous as the appellants suggest. On the other hand, there are dictionary meanings which disagree and indicate that “beverage” does not exclude water. The Concise Oxford Dictionary, (8th ed.), for example, defines “beverage”, simply as “a drink”. The Concise Oxford Dictionary, of course, is not an insignificant source for the meanings of English words, especially in Canada. The definitions above suggest that the range of ordinary and acceptable uses of the word “beverage” clearly includes water within its scope.

Although they are often used to advantage by Courts in proper cases, this Court is not bound by dictionary definitions. Statutory construction has never been merely a matter of consulting dictionaries. Nor is it an exercise of counting the number of dictionaries that support a particular meaning. It is a more sophisticated exercise than that. A fundamental principle of statutory construction is that words are to be construed in their ordinary and popular sense. This process is often assisted by the many good dictionaries to which a Court may look for help. But this technique is only one among many required to interpret a document as specialized as a statute.

Counsel also referred to a number of cases where the meaning of “beverage” was in issue. One of these cases was an Ontario Court of Appeal decision R. v. Rouse, [1936] 4 D.L.R. 797, 66 C.C.C. 225 (Ont. C.A.). That case dealt with branded or trade marked milk bottles, and turned on the question of whether milk was a beverage. In deciding the matter, the Court of Appeal found that milk was not a beverage for the purpose of the provision in question because a beverage is “generally a drink artificially prepared”. In dealing with this case, the Trial Judge stated:

This would seem to be an example of the adage that hard cases make bad law. I note that while the Court of Appeal upheld the trial judge, the Court of Appeal did not give reasons of its own. Also, there would appear to have been a decision of the Nova Scotia Court of Appeal going the other way. The Rouse case is old. It relates to a different type of legislation from that in issue here and, frankly, its reasoning is not strong.

Although this treatment by the Trial Judge was criticized by counsel for the applicant, I cannot say that this reasoning was wrong. The other cases referred to were mainly American, which the Trial Judge felt were distinguishable by their context. I cannot find fault with her analysis.

An analysis of the French version of the legislation is most helpful. Subsection 18(1) of the Constitution Act, 1982 states that the French and English versions of an Act are equally authoritative. [1] This statement requires that, where the ordinary meanings of the French and English versions of a statute seem to point in different directions, the Court is obliged to choose an interpretation that best reconciles the wording used in both. MacGuigan J.A. commented on this obligation in Nitrochem Inc. v. Deputy Minister of National Revenue for Customs and Excise, [1984] C.T.C. 608, 53 N.R. 394 (F.C.A.), per MacGuigan J.A. as follows:

With respect to the reconciliation of English and French texts, a judge’s responsibility is not to seek some primary instance of ordinary usage in one language to which the meaning in the other language must be made to conform, but rather to try to grasp the whole meaning in both languages. [2]

The appellants have urged that we do what MacGuigan J.A. above suggests should not be done, that is, to accept “some primary instance of ordinary usage” in the English language version to which the French version would then be made to conform. The French version of section 1 uses “boisson” as the equivalent of three different English words used in the legislation, they being “drink”, “water” and “beverage”. Several observations may be made about this use of “boisson”. First, it is a term of general meaning. It is not like the English word “beverage”, which ordinarily connotes a more specialized sort of drink.

Rather, “boisson” ordinarily designates any kind of drink. Its primary definition given by Le Petit Robert is “Tout liquide qui se boit.” Translated, this definition means simply “a liquid suitable for drinking”. Water is certainly such a liquid.

As a second observation, I note that the closest French equivalent to the English word “beverage” is not “boisson” but “breuvage”. This latter term, as its spelling suggests, is the etymological equivalent to “beverage”. One of the meanings of “boisson” set out in Le Petit Robert is “breuvage”. Not surprisingly, the popular meanings of the two words are very similar. Again as given by Le Petit Robert, the primary definition of “breuvage” is:

1. Boisson d’une composition spécial ou ayant une vertu particulière.

Translated somewhat literally, this definition reads: “A drink having a special composition (mix) or particular property (characteristic)”.

What is important about this definition is not its exactly translated meaning, but the simple fact that a “breuvage” is a specialized form of a “boisson”. This much is plain from the definition and reinforces the first observation that the French version deliberately chose a term with a general rather than a specific meaning.

Counsel for the appellants referred the Court to a document published by l’Office de la langue française in the Province of Quebec, [3] where it suggests that the words “boisson gazeuse” be used to denote soft drinks or soda pop, and that “eau gazeuse” be employed to describe “les eaux minérales gazeuses”. This publication also stated “boisson englobe eau, eau n’englobe pas boisson,” which contradicts the submissions counsel made earlier. As interesting as this document is, and though it may be influential in improving French usage in the future, its advice, like that of the dictionaries, cannot bind this Court. Thus, in my view, since both versions of the legislation are equally authentic, and since we must adopt the meaning that both versions share, “beverage” and “boisson”, as used in the legislation, both mean any type of drink, including water.

If a server in a Canadian restaurant asked a customer which “beverage” to bring and the customer responded, “Perrier, please”, would the server be surprised that the customer thought that Perrier was a beverage? I think not. Would the server respond to the customer saying, “Perrier is a water, and I shall bring it, but do you want a ‘beverage’ as well?” I think not. In our common speech, most Canadians, in my view, would include water, especially sparkling water, within the meaning of beverage, despite the many dictionary definitions excluding it. Similarly, if a server in French- speaking Canada asked what the customer wished as a “boisson”, the response “Perrier” would not surprise the server. No one would think that Perrier is not a “boisson”, despite the advice of the Office de la langue française. Though the word may not always be used to refer to water, therefore, I am of the opinion that it is more natural to interpret “beverage” as including water.

“Carbonated beverages”

The second question concerns whether the phrase “carbonated beverages” refers only to artificially carbonated beverages, or whether it also contemplates naturally carbonated beverages. Subsection 1(c) clearly includes artificially carbonated products. As to whether it includes naturally carbonated drinks, I need not decide the issue, for on the facts as found in these cases, Perrier water is not a naturally carbonated product. What one finds in a bottle of Perrier is not what emerges at the Source Perrier. The final product in the Perrier bottle is the result of a significant production process. The CO2 is sourced, extracted, filtered, liquefied if stored, and eventually reconstituted with the Source Perrier artesian water. The reconstitution is itself an exacting production process where the water is impregnated with the processed CO2 to create a product with a CO2 saturation level measurably consistent across production batches. Gone, therefore, is the saturation inconsistency of the unprocessed waters of the Source Perrier. Gone also are the poisonous gases, the putrid stench, and a variety of other impurities inhabiting the unprocessed CO2. Consequently, Perrier water is not a naturally carbonated product, but it certainly is a carbonated beverage. I leave to future cases to decide precisely of what a naturally carbonated drink consists and whether subsection 1(c) of part V of Schedule III covers such a “boisson”.

Counsel also referred to a Tariff Board decision, Grand Specialties Ltd. v. Deputy of Minister of National Revenue for Customs and Excise (1987), 12 T.B.R. 60, 13 C.E.R. 233 (Can. Tariff Board) where the interpretation issue in question, which arose out of a different statute, was whether flavoured Perrier was a “prepared beverage” or whether it was a “natural mineral water”. In deciding the matter, the Board stated:

The goods are the product of a high speed automated process in which small measured amounts of a natural flavouring are injected into the natural mineral water during the bottling process. The result is a mineral water with a less than overpowering but distinctive odour and taste different from mineral water that does not have the flavouring added. The difference is enough to warrant marketing each of the flavours offered under different labels. /t is a product different from the unflavoured product as constituted by nature and it is not a natural mineral water. [4]

Counsel argues that this statement supports the view that unflavoured Perrier water, the subject matter of these appeals, is a natural mineral water and, hence, is not a “carbonated beverage”. It seems to me that the above decision, even if it were binding on this Court, does not have quite the suggestive power counsel believes. The issue presently before us was not before the Board, nor was the subject matter of this case, unflavoured Perrier. Furthermore, these cases and the above Tariff Board case deal with two different statutes.

In the result, these appeals will be dismissed with costs.

Appeals dismissed.