Continental Aerial Services LTD v. Attorney General for Canada, [1985] 2 CTC 374, [1985] DTC 5534

Esson, JA:—This appeal is by the defendant Continental Aerial Services Ltd against a judgment by which it was held liable for excise tax, pursuant to the provisions of the Excise Tax Act, RSC 1970, c E-13, in respect of the sale of certain items during the years 1978 and 1979.

The sole issue on the appeal is whether the items in question are exempt from a consumption or sales tax imposed by that Act because they come within the following language:

. . . paintings, drawings and pastels by artists, all of the foregoing when valued at not less than $20 each

Such items were described in the customs tariff applicable to the years 1978 and 1979 and, if within those words, were exempt from the tax by virtue of section 1 of Part VII of Schedule III to the Act applicable to those years.

The narrow question is whether they are paintings. They are submitted by the respondent to be something different, that is, painted aerial photographs. The issue is essentially one of fact and it is, therefore, necessary to have regard to the evidence and the facts which emerge from it.

There is no substantial issue as to the facts.

The procedure by which the items in question were produced can be described as follows: aircraft are used from which to photograph residential properties in the three most western provinces; that is generally done during the summer months. The exposed film is taken by the appellant to its premises at Kelowna and there developed into ordinary black and white photographs. Salesmen in the employ of the appellant, on a commission basis, get in touch with the owners of the properties which have been photographed and attempt to persuade them to agree to purchase a picture of their property which will be created from the photographic reproduction. At this point I am purposely using the neutral word picture.

On receiving an order, and it would appear that many orders were received in the relevant years, the salesman records on the photograph the colours and subject matter of the photograph. For that purpose, he relates the colours of the subject matter to a colour tone chart prepared by the company from the oil paints used, as described later. The photograph with the colour tone recorded on it is returned by the salesman to the appellant’s premises. The negative is printed in whatever size the picture is desired to be and is then delivered to one of about twelve artists employed by the appellant to work for it on a piece work basis. The artist, working at his or her own premises, uses Grumbacher oils to paint the black and white images in conformity with the colour chart. The picture is then sprayed with a lacquer for protective purposes and, in most instances, is placed in a frame before being delivered to the purchaser. In some instances the picture is delivered to the purchaser without first being placed in a frame. That is a matter of option.

It is common ground that the sale price and the value of each picture was in excess of $20.

The trial judge heard evidence from three witnesses. On behalf of the present respondent (which was the plaintiff in the court below) Mr Wong gave evidence. He is a professional photographer with long experience and was Called to testify and was accepted as an expert. He was asked to examine several typical pictures which were put in evidence, and which were shown to us on this hearing. It was his opinion that those had been created by tinting photographs and applying transparent colours on top of black and white photographs, and it was his opinion that while at least some of his customers might call the product a painting, he would not.

On behalf of the appellant, its manager, Mr Deptuck, was called to describe the process, and most of the facts that I have already outlined are based on his evidence. He also said that no photographic dyes are used in creating the products, that no part of the original photographic image is to be left visible, although in most cases, of course, the shapes of the buildings and other objects are those which appear on the photographs. He said that on occasion the customer gives instructions and these instructions are passed on to the artist to paint alterations to the physical structures in the photographs, or to alter the appearance of the photograph, perhaps by inserting or removing buildings. On occasion also customers request that the colour perspective of the product be changed.

As an expert witness the respondent called Mr Caruso, who is an artist of long experience and an instructor in fine arts. He said that in recent years artists have created paintings from photographic images using photographs, directly or indirectly. He said that the painted prints in issue here use a technique which is frequently employed by contemporary artists and that in his view it is as legitimate to call the painted prints a painting as it is to call a product of any other technique other than one which is a wholly mechanical form of painting. He looked at the exhibits and observed that they exhibited the use of colour changes and enhanced forms, patterns and shapes. He said that multi-media prints are included in the purview of paintings and the use of the word is not restricted to canvas and brush oil paints. He also expressed the view that what separates these products from the work of other artists is the difference in degree of sophistication and aesthetic value achieved.

The trial judge in his reasons for judgment referred to some other aspects of the evidence of Mr Caruso. I quote a passage from his reasons:

Mr Caruso in his evidence referred to the alterations to the three exhibits by the particular artist which he said creates a time change and the image change created thereby is an obvious one. He said there are fragmental colour changes, darker tones, and pattern changes, and he said all these conjure up changes from the original photograph. He went on to say that this is what he would describe as multi-media, not just a photograph. Painting is not just oil and brushes, he said, and he referred to such well-known artists as Jack Shadbolt, Andy Warhol and Jasper Johns as individuals who utilize as a basis for certain paintings, photographic images. Notwithstanding that these photographs are a basis for the creations of these particular artists they are nonetheless paintings in his view.

The expert evidence called on the two sides, to the extent that it consists merely of the subjective view of a witness as to whether the items are paintings, is, I think, of limited value. The reasons given, the examples provided, and the other details put forward in support of the view, can be and are of assistance. For one thing, that is evidence of good usage; it can inform the court of practices and methods which have a bearing on that. Sometimes such evidence may be open to objection that a witness is being used to argue the case. My impression, based on both the trial judge's summary of the evidence and on my reading of it, is that Mr Wong, to a much greater extent than Mr Caruso, put forward a subjective opinion, whereas Mr Caruso, whose qualifications, I think, because of his background, were greater, marshalled a good deal more support for his view. When Mr Wong's evidence is analyzed I think it comes down to saying that he would choose to call these coloured photographs.

The fact that they might be called something other than paintings does not, of course, resolve the question of whether they are paintings for the purpose of this taxing statute.

Mr Caruso, in his evidence, does put forward facts which support the view that the items are, as a matter of good and ordinary usage, within the word “paintings”. For that reason I have placed some emphasis on Mr Caruso’s evidence.

The trial judge, although he found against the appellant, appears to have accepted Mr Caruso’s evidence and, therefore, it is not a question of going behind any finding of the trial judge with respect to the credibility of witnesses or the relative weight to be given their evidence.

The trial judge’s decision is based almost entirely, if not entirely, on the case of Woodward v London and North Western Railway Co (1877), 3 Ex D 121. He said that that case is virtually on all fours with this case and that it is directly on point with it. In taking that view of the Woodward case, which apparently was not submitted to him by counsel, the trial judge, in my respectful view, fell into error.

The value of the case is that it did deal, as does this one, with the question whether certain articles were paintings. Beyond that the differences are great and are of much greater importance.

In particular, the nature of the item is quite different. In that case they were painted carpet and rug patterns and carpet designs. The owner of them was a carpet manufacturer who apparently used them for the purpose of selling carpets. The matter of the purpose had some bearing on the court’s view of the question whether they were paintings. There are two judgments. Baron Cleasby, near the end of his judgment, said this:

In reality their value is not as paintings for the ordinary purposes for which paintings are valuable as works of art, but from their being attractive models and designs to get orders and to work by.

The pictures in question here are, of course, things which have value because they are used for the ordinary purposes for which paintings are valuable as works of art

The question in the Woodward case was also quite different. It was whether the things were excluded by statute from the carrier’s obligation to carry safely. That is a wholly different context from that in the case at bar and it is one to which very different rules and approaches apply. As Mr Gilchrist conceded, the principles applicable to the interpretation of a taxing statute are those which must be applied here.

There are other major distinctions between the two cases. I will mention only one. That is, that the passage of 100 years is not without significance. It is reasonable to assume that the word “painting” today expresses many things that would not have been so described in 1877, even if the processes and materials had existed, which in many instances they did not. Mr Warhol’s can of tomato soup is an example which comes to mind. One wonders what Baron Cleasby and Mr Justice Hawkins would have thought of the suggestion that that should be called a painting. But today, it is.

So, the case is distinguishable at least on those three grounds: that the article was basically different, the context was entirely different and usage has changed in 100 years.

The appellant, in support of its submission that these are paintings, also relies on the modern dictionary definitions and I consider that they clearly support that position. The Oxford Universal Dictionary defines “painting” as follows:

1. The result or product of applying paint; colouring; pictorial decoration.

2. A representation of an object or scene on a surface by means of colours; a picture.

3. The representing of objects or figures by means of colours laid on a surface; the art of so depicting objects.

The New Webster Encyclopedic Dictionary of the English Language defines “painting” as follows:

The act, art, or employment of laying on colours; the art of representing objects by means of figures and colours on a plane surface so as to produce the appearance of relief; a painted picture.

The items here in question are, in my view, clearly within that language.

As I have said, the issue is essentially one of fact. There is no question of credibility. The trial judge appears to have accepted the evidence of Mr Deptuck and given greater weight to the evidence of Caruso than he did to that of Wong, but to have felt bound to follow the decision in Woodward in coming to his conclusion. He said this:

I have considered Mr Caruso’s eidence concerning the famous artists he discussed, but I am not satisfied that his opinion should cause the "line” as spoken of by Pollock, CB, supra, to be shifted. These items, the painted photographs, are "without the line”.

That language is taken from the last paragraph of the judgment of Mr justice Hawkins in the Woodward case where he said this:

It may be asked, how is one to tell whether that which is painted is a painting or a mere painted design? where is the line to be drawn? I answer this question by adopting the language of Pollock, CB, in Brunt v Midland Ry Co (1), "The line is shifted according to the circumstances, but the question that we have to answer Is not where to draw the line, but whether this is within the line? I think for all practical and reasonable purposes, wherever the line may be, and leaving the line in a state of doubt (which is a doubt that belongs to every line attempted to be drawn, either in nature or in the social exigencies of life), that this is without the line.” I think therefore that the verdict for the plaintiff ought to stand, and the rule to be discharged.

In my view, it was error in principle to treat Woodward as laying down a line which can be applied in this case. As Chief Baron Pollock said in the quotation which is just set out, “the line is shifted according to the circumstances”. When one has regard to the circumstances of this case I think the only possible conclusion is that these items are within the line, they are paintings by artists valued at not less than $20 and so they were not subject to duty.

I would allow the appeal, set aside the judgment appealed from and dismiss the action.

Appeal allowed.