Plastibeton Inc v. The Minister of National Revenue and the Attorney General of Canada, [1985] 1 CTC 319, 85 DTC 5240

Dubé, J:—The issue to be resolved in this action is whether the plaintiff (“Plastibeton”), a Montreal manufacturer of precast polymer concrete goods, may benefit from the exempting provisions of paragraphs 26(4)(a), (b) or (c) of the Excise Tax Act* [1] with reference to concrete channels, precast polymer panels and median polymer strips it manufactured, sold and emplaced on the Montreal Metropolitan Boulevard.

The relevant paragraphs read as follows:

26. (4) Where a person

(a) manufactures or produces a building or other structure otherwise than at the site of construction or erection thereof, in competition with persons who construct or erect similar buildings or structures not so manufactured or produced,

(b) manufactures or produces otherwise than at the site of construction or erection of a building or other structure, structural building sections for incorporation into such building or structure, in competition with persons who construct or erect buildings or other structures that incorporate similar sections not so manufactured or produced,

(c) manufactures or produces concrete or cinder building blocks, or

he shall, for the purposes of this Part, be deemed not to be, in relation to any such building, structure, building sections, building blocks or fabricated steel so manufactured or produced by him, the manufacturer or producer thereof.

Plastibeton manufactures high density polymer concrete products made of aggregates and sands fused together with polymers. Those goods are mostly custom-made and sold as panels, channels, or barriers for buildings or highways. The product called “HDPC”, patented in the name of Plastibeton, claims specific superior properties of high technology, including remarkable strength-to- weight ratio, extraordinary resistance to corrosive chemicals and durability.

The channels, strips and panels for which the exemptions are claimed will be dealt with separately in these reasons for judgment.

1. Concrete channels

The concrete channels are structural sections to be used as conduits for cables and wires to be embedded under the surface, or within other materials. In their defence the defendants admit that these goods are exempt from tax pursuant to subsection 26(4) of the Excise Tax Act.

2. Median polymer strips

These strips, or barriers, were used to replace the pre-existing concrete traffic division on the Metropolitan Boulevard. Plastibeton claims in a commercial pamphlet that its median barriers are made of polymer concrete and, unlike conventional concrete, are not affected by de-icing salts or freeze/thaw degradation. Their highly visible white surface, it is advertised, stays impeccably clean and untouched by severe winter conditions. Trucking costs are reduced as 16 twenty-foot sections may be carried on one forty-foot trailer. The sections can be installed at the rate of about 30 per day.

The sections are manufactured at the plaintiffs plant at St Léonard, PQ. They are empty shells which were bolted to the surface in the centre of the boulevard and filled in with cheap concrete for weight and ballast (the actual filling was carried out by another sub-contractor). Plastibeton is the only company producing polymer concrete but it competed with conventional concrete producers for that particular contract. The plaintiff claims, and it is not disputed by the defendants, that the Quebec Department of Transport was prepared “to pay a small premium” to obtain the polymer barrier. The finished product is a low wall, shaped like an elephant’s foot, about two feet eight inches in height. A traffic fence and street light poles were erected on the barrier and the poles were driven through it for support.

The defendants admit that the median polymer strips were manufactured by the plaintiff in its plant and then installed on the construction site in competition with persons who construct such goods on site, but they allege that the barriers are not an integral or constitutional element of the load-bearing system of the elevated highway and were not designed and manufactured with the principal objective of being so used. With that I agree. The strips would not qualify as “structural building sections” under paragraph 26(4)(b) of the Act. There remains, however, to determine whether they are a “structure” under paragraph 26(4)(a) of the Act.

“Structure” is defined as follows in the Shorter Oxford English Dictionary: Structure: 4. concr. That which is built or constructed; a building or edifice of any kind, esp. one of considerable size and imposing appearance, 1615. 5. More widely: A fabric or framework of material parts put together 1677.

Black’s Law Dictionary Revised Fourth Edition; Structure: Any construction, or any production or piece of work artificially built up composed of parts joined together in some definite manner. That which is built or constructed; an edifice or building of any kind.

The Living Webster Encyclopedic Dictionary; Structure: Something built or constructed; a building; an edifice; a bridge, dam or framework; any construction; anything composed of parts arranged together in some way.

In Superior Pre-Kast Septic Tanks Ltd and Lloydminster Pre-Kast Septic Tanks Ltd v The Queen, [1978] 2 SCR 612; [1978] CTC 431, the Supreme Court of Canada held that a precast concrete septic tank was a structure within the meaning of subsection 26(4) of the Act. The Court noted that the word “structure”, being preceded by the word “other”, certainly indicated that it was intended to refer to something other than a building. Martland J said as follows at 620 (CTC 435):

The septic tanks in question here are things which are built or constructed. They are designed to be placed underground and become a part of the land in which they are installed. They are manufacured in competition with persons who construct such tanks at the site. In my opinion they are structures within the meaning of s. 26(4) and the appellants are entitled to the exemption provided by that subsection.

The meaning of the word “structure” was also discussed in Regina v Bedard, 31 CCC (2d) 559, an Ontario Court of Appeal decision wherein an accused was charged with having wilfully set fire to a “structure” contrary to paragraph 389(l)(a) of the Criminal Code. The accused allegedly had set fire to two trailers in a trailer park. The Court referred to the Shorter Oxford English Dictionary definition above mentioned and also to a 1944 British decision, Hobday v Nicol, [1944] 1 All ER 302, wherein Humphreys, J in considering whether a row of tanks filled with earth and kept in position by their own weight were structures within the meaning of a by-law. He said as follows:

“Structure”, as I understand it, is anything which is constructed; and it involves the notion of something which is put together, consisting of a number of different things which are so put together or built together, constructed as to make one whole, which then is called a structure.

The Court also referred to Denning, LJ, in Cardiff Rating Authority et al v Guest Keen Baldwins Iron & Steel Co, [1949] 1 All ER 27, who stated that one of the characteristics of a structure was that it was “intended to remain permanently on a permanent foundation”.

The word “structure” was also defined in a Tax Appeal Board Case, Chan- tecler Hotel Ltd v MNR (1951), 4 Tax ABC 126; 5 DTC 180. W S Fisher, KC referred to Lord Goddard, CJ in Mills and Rockleys Ltd v Leicester City Council, [1946] 1 All ER 424, who said at 427:

To say that a wall is not a structure seems to me to be really impossible. “Structure” means something which is constructed. It is not everything that is “constructed” that would ordinarily be called “building”, but every building is a “structure”. I can see no ground for saying that the use of a wall is not the use of a structure and therefore it can be prohibited as an advertising station under the Act.

In British Columbia Forest Products Ltd v MNR, [1972] SCR 101; [1971] CTC 270, a 1971 Supreme Court decision, Martland, J said at 111 (CTC 277):

The tanks and the recovery unit are, in my opinion, structures, if they are not buildings. I do not think that the word “structure” as used in Class 3 must be construed ejusdem generis with the word “building”. It is preceded by the word “other”, thus contemplating structures other than buildings.

And then on at 112 (CTC 278):

A structure is something which is constructed, but not everything which is constructed is a structure. A ship, for instance, is constructed, but is not a structure. A structure is something of substantial size which is built up from component parts and intended to remain permanently on a permanent foundation but it is still a structure even though some of its parts may be movable as for instance above a pivot thus a windmill or a turntable is a structure.

In Cefer Designs Ltd v The Queen, 74 DTC 6333, Collier, J of this Court found that floating concrete docks (float modules produced at the plant and coupled together at the site to form a floating complex) were permanent installations resting partly on, or connected to land and therefore “structures” under subsection 26(4) of the Act. They were constructed out of long hollow parallelepiped of concrete for a specific customer at Richmond, British Columbia. He referred to several of the cases above mentioned and said that “what is important, to my mind, is that these docks are permanent installations, resting partly on or connecting to land”.

I am satisfied that the Plastibeton barrier constitutes a “structure” within the meaning of paragraph 26(4)(a) of the Act. It is something built or constructed, other than a building. It is of substantial size. It is a fabric or framework put together. It is composed of parts arranged in some way. Somewhat like a tank, it comes in as an empty shell which is filled in on location and firmly attached to another structure. It stand by itself as a wall. It has a specific purpose, namely to separate the traffic and prevent cross-overs from vehicles. It is constructed so as to make one whole. It is permanent, even more so than floating docks.

3. Precast polymer panels

The panels are made from the same polymer concrete material as the barriers. They were affixed to the sides of the Metropolitan Boulevard, an elevated highway, for two purposes: firstly, to prevent corrosion from salt washing over the sides of the bridge and wearing away the concrete; secondly, to shore up the sides of the bridge so as to prevent chunks of concrete from falling off and dropping dangerously on the traffic below. Those panels were manufactured at the Plastibeton plant and custom-made for that contract. Each panel is steel- reinforced and weighs about 1,500 pounds.

In my view, those panels are clearly not “structures” under the exempting paragraph 26(4)(a) and are not claimed to be. However, it ought to be considered whether they are “structural building sections for incorporation into such building or structure” under paragraph 26(4)(b).

In The Queen v Monarch Steelcraft Ltd, [1977] CTC 168; 77 DTC 5154, a 1977 Federal Court decision, Addy, J considered whether door frames were “structural building sections” under paragraph 26(4)(b). He said that the expression did not simply mean “pertaining to a structure” but that it contemplated a component which “contributed substantially to the strength and solidarity of a building”, as opposed to mere fixtures such as doors and windows which merely contributed to the proper use and enjoyment of the building. He held that the door frames did not qualify. He said as follows at 169 (DTC 5156):

To constitute a section manufactured for use in a building or other structure or “structural building section” not only must the material composing the section possess a load-bearing capacity but the section itself must be designed and manufactured with the principal object of its being used ultimately as an integral or constitutional element of the load-bearing system of body of the building, erection or structure. To be loadbearing in this context it must necessarily be substantially load-bearing to the extent that it is commonly used for that purpose because all matter, even gaseous matter, possesses a certain strength or load-bearing capacity as it can withstand certain forces exerted on It.

The Monarch decision was adopted recently by the Federal Court of Appeal in Harris Steel Group Inc v MNR, [1985] 1 CTC 181; 85 DTC 5140. MacGuigan, J, on behalf of the Court, said that he understood Addy J as saying “that the article in question must have as its principal object the characteristic of loadbearing, not that it must do so by itself”. He added that the words “structural building sections” are “words used in the construction trade and have a particular meaning within that trade”, namely “that the word in question refer to the elements of a building or other structure which are load-bearing”. He also referred to the French text which utilizes the terms, “éléments porteurs”.

In the light of that jurisprudence, I cannot consider the Plastibeton panels as being “structural building sections” within the meaning of paragraph 26(4)(b). Again, the fundamental purposes of those panels are to prevent corrosion and to stop chunks of concrete from [breaking away].

The panels were not placed there mainly to bear a load. They are definitely not “élément porteurs”. They are more akin to door frames which do not essentially contribute to the load-bearing capacity of a building.

In the alternative, the plaintiff invites the Court to consider the panels as being “concrete or cinder building blocks” under paragraph 26(4)(c).

Even if the Plastibeton panels, made of precast polymer concrete (excluding cement), qualified as “concrete” (which normally includes cement), I cannot see how they could be described as “building blocks”.

1 have found no dictionary definition of “building blocks” but in common parlance a building block means a cubical or rectangular block used in the building trade. The Living Webster Encyclpedic Dictionary defines “brick” as ‘a block of clay, usually rectangular” and as “blocks used for building which are made from another material; as, a concrete brick; block shaped objects”. In the French version the word used in paragraph 26(4)(c) is “parpaing” which is defined in le Petit Robert as a ‘‘bloc (de plâtre, de ciment) formant l’épaisseur d’une pario”.

I fail to see how these fender-shaped hollow panels could be described as “building blocks”. Blocks, like bricks, are to be superimposed in the erection of a wall or a building. The Plastibeton panels are not so shaped that they could be stacked evenly one over the other for building purposes. They were not made for that.

In conclusion therefore, it is hereby declared that the concrete channels and the median polymer strips are exempt from tax pursuant to subsection 26(4) of the Excise Tax Act and that the precast polymer panels are not. Under the circumstances, costs to the plaintiff.

Appeal allowed in part.