Superior Pre-Kast Septic Tanks LTD and Lloydminster Pre-Kast Septic Tanks LTD v. Her Majesty the Queen, [1974] CTC 26

Sheppard, DJ:—The issue is whether the plaintiffs’ concrete septic tanks are “other structures” within paragraph 26(4)(a) of the Excise Tax Act, RSC 1970, c E-13.

The plaintiffs, Superior Pre-Kast Septic Tanks Ltd and Lloydminster Pre-Kast Septic Tanks Ltd, brought an action against the Crown for a declaration that the plaintiffs are neither manufacturers nor producers of precast septic tanks as defined by paragraph 29(2)(b) of the Excise Tax Act, RSC 1952, c 100, and amendments thereto. At the time of the commencement of the action the Revised Statutes were in 1952 but reference may now be made to the Excise Tax Act, RSC 1970, c E-13.

The Superior Pre-Kast Septic Tanks Ltd, one of the co-plaintiffs, was incorporated in 1969 and carried on business for three years at Nanaimo, BC and then sold to another company and the co-plaintiff. Lloydminster Pre-Kast Septic Tanks Ltd is the only company of the two now operating. The action is therefore dismissed as to the Superior Pre- Kast Septic Tanks Ltd as the declaration asked is for merely academical or hypothetical questions (Annual Practice 1973, p 212; Tindall v Wright, [1922] WN 124; Re Barnato, [1949] Ch 258 (CA)).

The remaining plaintiff, the Lloydminster Pre-Kast Septic Tanks Ltd, is incorporated and carries on business at Lloydminster, Alberta. The parties admit that this plaintiff (Lloydminster) manufactures and produces precast septic tanks otherwise than at the site of use. Snelgrove carries on the business of manufacture of septic tanks at Vermilion, Alberta, and began casting on the site of use but now precast tanks are in rising demand. Young, of Victoria, BC, has been in the business of manufacturing septic tanks and makes them at the site. Porter, of Nanaimo, BC, makes precast tanks which are sold on Vancouver Island as far south as Victoria. Belsher is President of a Saskatchewan company which makes and delivers in Saskatchewan precast septic tanks.

Paragraph 26(4)(a) of the Excise Tax Act reads 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,

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.

It is not contended by either party that a septic tank constitutes a building within paragraph 26(4)(a).

The plaintiff contends that the precast septic tanks produced by it are within the words “or other structure”, appearing in paragraph 26(4)(a), and therefore this plaintiff is exempt from being manufacturer or producer under subsection 26(4) and from the sales tax imposed by subparagraph 27(1 )(a)(i) upon the manufacturer or producer. Therefore the sole question is whether the precast septic tanks produced by the plaintiff the Lloydminster company are “other structure” within paragraph 26(4)(a). That must be held against the plaintiff for the following reasons:

(A) To include septic tanks within “other structure” results in a conflict with other sections of the Act. Subsection 29(3) reads:

29. (3) There shall be imposed, levied and collected only eight-ninths of the tax imposed by section 27 on the sale or importation of the articles enumerated in Schedule V.

Item 17 of Schedule V reads: “septic tanks and grease traps therefor”. Hence subsection 29(3) declares that section 27 imposes a tax on the sale of septic tanks as the articles specifically enumerated in Schedule V (item 17). But on the other hand, if septic tanks were a “structure” within subsection 26(4) then this plaintiff, by virtue of subsection 26(4), is deemed not to be a “manufacturer or producer”, and hence is under no obligation with respect to sales tax imposed under subparagraph 27(1)(a)(i). Therefore, subsection 29(3) would in effect have imposed a tax of 8/9ths of nothing, rather than 8/9th of 9%, the tax imposed by subsections 27(1 )(a)(i) and 29(3). This conflict would be avoided if the words “other structure” in subsection 26(4) were construed so as not to include “septic tanks”.

The onus is on the plaintiff to bring the septic tanks within paragraph 26(4)(a), an exempting statute (Kool-vent Awnings Ltd v The Queen, [1957] SCR 614, per Nolans, J for the Court at p 620). Also there must be strict compliance with the exempting statute (Moirs Ltd v Deputy MNR, [1964] Ex CR 428; [1963] CTC 457; 63 DTC 1303).

(B) A restricted meaning must be placed upon the words “or other structure” under the rule of noscitur a sociis by virtue of the concluding words of subsection 26(4), viz “any such building, structure, building sections” from which it appears that “structure” from its associates would be understood to be in the nature of a building or a usual section thereof.

(C) The rule of ejusdem generis applies to the words in paragraph 26(4)(a) ‘‘a building or other structure” so as to restrict “other structure” to something in the nature of a building.

In United Towns Electric Co Ltd v The Attorney General for Newfoundland, [1939] 1 All ER 423, Lord Thankerton held that the principle of ejusdem generis did not apply in that ‘‘a single species—for example water rates—does not constitute a genus”.

Maxwell on Interpretation of Statutes, 12th edition, p 299, states ‘but the authority for this is very slight,” and quotes authorities to the contrary.

In Hadley v Perke, [1866] 1 QB 144, the expression was “having in possession or conveying in any manner whatsoever”.

Blackburn, J at p 457 stated, “I think however that the two expressions were intended to mean the same thing. But ‘having or conveying’ I think must be limited, making the one co-extensive with the other, and confining it to being ejusdem generis with conveying.”

In Ashbury Carriage and Iron Co v Riche (1875), LR 7 HL 653, the interpretation was of the words of the memorandum of association “to carry on the business of mechanical engineers and general contractors” and Lord Cairns, LC at page 665 stated:

To carry on the business of mechanical engineers and general contractors that again is the specification of an object complete in itself and according to the principles of construction, the term “general contractor” would be referred to that which goes immediately before, and would indicate the making generally of contracts connected with the business of mechanical engineers— such contracts as mechanical engineers are in the habit of making and are in their business required or find it convenient to make for the purpose of carrying on their business.

On this plaintiff’s contention, this plaintiff could avoid any excise tax by selling only to the ultimate user, that is, the person building his own septic tank. Under subparagraph 27(1)(a)(i) the tax is payable only by a manufacturer or producer, and under subsection 26(4) this plaintiff is not a manufacturer or producer if “structure” within that section includes septic tanks, as the plaintiff contends. On the other hand the plaintiff could obtain exemption and thereby avoid double taxation to the extent intended by the statute under paragraph 27(2)(a) by selling as a licenced manufacturer to another licenced manufacturer and that exemption would avoid any exemption by selling to the ultimate user.

The question herein is whether a septic tank is a structure within the meaning of paragraph 26(4)(a) of the Excise Tax Act and it is therefore not conclusive to find the meaning given to structure in some other statute unless structure arises in the same context.

In the following judgments cited by the plaintiff “structure” is used in a different context and in a different statute. In Cardiff Rating Authority v Guest Keen Baldwin's Ltd, [1949] 1 KB 385, the question was whether a furnace on rollers was in the phrase “building or structure or in the nature of a building or a structure” under an English statute. In Springman v The Queen, [1964] SCR 267, the question was whether a bunkhouse was within “buildings or structures” under paragraph 374(1 )(a) of the Criminal Code. In The City of London v John Labatt Ltd, [1953] OR 800, the question was whether within “structures and fixtures” or “fixed machinery used for manufacturing . . . purposes” under The Assessment Act of Ontario. In Imperial Oil Ltd v Town of Listowell, [1929] 1 DLR 479, the question was whether within “structures, machinery and fixtures” under The Assessment Act of Ontario. In The. Assessment Equalization Act Re Trans Mountain Oil Pipeline Co (1966), 56 WWR 705 (BCCA), the question was whether it was within “improvements which include all buildings, fixtures, machinery, structures and similar things’’, etc under the Assessment Equalization Act of BC. In British Columbia Forest Products Ltd v MNR (1971), 19 DLR (3d) 657 (SC) at 664 and 665 ([1971] CTC 270; 71 DTC 5178), the question was whether the items were “a building or other structure” within Class 3 of the Regulations under the Income Tax Act.

In the following judgments cited by the plaintiff “structure” is not used in the section there in question nor is the statute there to be construed that statute in the case at bar.

In the City of Victoria v Bishop of Vancouver Island, [1921] 2 AC 384 (PC), the question was whether there was a building set apart and in use for the public worship of God under the Municipal Act of British Columbia. In The Rector and Church Warden of the Parish of St Nicholas Acons v London County Council, [1928] AC 469, the question was whether a transformer chamber was a building within section 3 of the Disused Burial Grounds Act, an English statute.

In the case at bar septic tanks are specifically taxed under subsection 29(3) of the Excise Tax Act and Schedule V thereto and therefore septic tanks are not a “structure” within paragraph 26(4)(a) of the Act, otherwise they would be exempt.

In the result the precast septic tanks made by the plaintiff Lloyd- minster Pre-Kast Septic Tanks Ltd do not come within “other structure” of paragraph 26(4)(a) and the action is dismissed with costs payable by the plaintiffs to the defendant.