British Columbia Forest Products Limited v. Minister of National Revenue, [1969] CTC 156, 69 DTC 5127

SHEPPARD, D.J.:—This appeal is by British Columbia Forest Products Limited from an assessment by the Minister of National Revenue for income tax for the year 1963 on the ground of the following alleged errors.

1. That the disputed assets

(a) come within Class 8 of Schedule B to the Income Tax Regulations with a capital cost allowance of 20%, and

(b) do not come within Class 3, the class assigned by the Minister, with an allowance of 5%.

2. That under Section 41A of the Income Tax Act, the Minister should have allowed a credit against income tax payable on the basis of the total amount levied by the Province under the Logging Tax Act and paid to the Province by the appellant as taxpayer, whereas the Minister allowed only those portions of the provincial tax allowed by the regulations enacted pursuant to the Income Tax Act.

The appellant, British Columbia Forest Products Limited, operates a paper mill in Crofton, British Columbia, in respect of which assessment was made, and also holds timber limits on which it operates logging camps from which it sells or trades logs which are not suitable to be made into paper, and manufactures in its paper mill from such logs as are suitable for that purpose. In respect of the logs so marketed the question (2) arises on the basis of the credit under Section 41A to be allowed against income tax otherwise payable.

The appellant contends that the disputed assets are part of the process of making paper and are therefore equipment and “property” within Class 8, while the Minister contends that the disputed assets are part of the plant and therefore land and not within Class 8 but are within ‘‘building or other structure’’ within Class 3. The circumstances raising these contentions are as follows.

The appellant’s plant makes paper for newsprint by a mechanical process; pulp is thereby produced, and part thereof treated by chemicals, then manufactured into newsprint paper [ Exhibit (13), Swallow’s Affidavit]. The mill consists of the following rooms :

1. A wood room where the wood is cut to lengths of 4 feet suitable for the grinders.

2. A grinder room in which carborundum grinders, which are grindstones each of the weight of 16 tons, operate in pairs to grind the wood to pulp, which, mixed with water (to the amount of 12,000 to 15,000 gallons for each ton of the 300 to 395 tons of paper produced each day), passes to the coarse screen chest.

3. À screen room in which the stock (that is the pulp mixed with water) is pumped through the coarse screen chest, through screens over deckers (which thickens the stock by removing water) to the ground wood chest, and then is pumped to the zine hydro tower for bleaching, then pumped over bleach washers in the screen room to the ground wood high density tank, and from there to the ground wood bleaching tank, and next is combined with bleached kraft stock and ‘‘broke’’ stock (which consists of trim or broken parts of paper to be reduced to pulp) to a machine chest in the paper machine room.

4. A machine room, where the machine stock is pumped from the machine chest, located in the machine room, to a fan pump where it is mixed with ‘‘back water’’, then through a deculator (which takes out the air) and through a second fan pump, then through the paper machine.

There is also an ancillary recovery system connected with the machine room. At the wet end or beginning of the newspaper machine, there is removed a certain amount of the liquid, which is called ‘‘ white water’’, and there recovered in the white water chest, the warm white water chest, the hot white water chest, the tailings chest and the refined tailings chest. Also there is the couch pit, a photo of which appears in Exhibit 3, A.S.F. photo 26, in which are recovered the trimmings from the newsprint machine and broken parts of paper which are again reduced to pulp, and re-introduced in the manufacture of paper. These chests and couch pit are part of the recovery system.

The plant also consists of the following outside the mill proper:

1. a chemical recovery unit—which serves to recover chemicals used in the process of burning off impurities;

2. a ground wood high density tank—which produces stock to be mixed with that from the kraft high density tank;

3. a kraft high density tank—which bleaches the stock;

4. a blending tank—which maintains the quality of paper produced ;

5. a broke tank—which breaks down defective stock recovered to be reprocessed.

A diagram of the manufacturing process of the plant appears in Exhibit 2 (plan Swallow 14).

The disputed assets which the appellant alleges come within Class 8 are set out in Exhibit (1), Agreed Statement of Facts [(A.:S.F.), page 10] and fall into two classes:

1. those in the mill proper, being items 1 to 18 inclusive, other than items 8 and 9 ;

2. those disputed assets which form part of the chemical recovery unit and the tanks, being items 19 to 24 inclusive and 8 and 9 (Exhibit 1, A.S.F.).

The appellant Company must assume the onus of proving:

1. that the assessment of the disputed assets does come within Class 8 and not within Class 3 of Schedule B to the Regulations ;

2. that under Section 41A the credit should be allowed on the basis of the Logging Tax Act of British Columbia as levied and paid and not on the basis of the Regulations under the Income Tax Act.

I (a)

As appellant the Company contends that the claim for capital cost allowance for the disputed assets comes within Class 8 of Schedule B on the ground that such disputed assets perform a vital function in the manufacturing of paper and therefore are equipment in the operation of that manufacturing process. Class 8 reads as follows:

Property that is a tangible capital asset that is not included in another class in this Schedule except land, or any part thereof or any interest therein, and also excepting

(a) an animal,

(b) a tree, shrub, herb or similar growing thing,

(c) a gas well (other than a gas well that is part of the equipment of a farm and from which the gas produced is not sold),

(d) a mine,

(e) an oil well,

(f) radium,

(k) a right of way,

(l) a timber limit, and

(m) tramway track.

On the other hand the Minister contends that these disputed assets have become part of a building or structures which become part of the land by having foundations let into the land and by being constructed of reinforced concrete and thereby made immovable and necessarily dedicated to the land; that as a result the disputed assets have become affixed to the mill building or to the recovery unit and tanks, which are structures— and are therefore land and as land are not within Class 8.

The meaning of Class 8 depends largely upon the words, "‘ex- cept land’’. The appellant contends that the words mean that the value of the land is deducted from the property as required by Regulation 1102(2). That Regulation reads as follows :

1102. (2) The classes of property described in Schedule B shall be deemed not to include the land upon which a property described therein was constructed or is situated.

The difficulty with the appellant’s construction of the words "‘except land’’ is that it assigns the same meaning as Regulation 1102(2) but that value of the land would have been already deducted from the "‘Property'' hence the words "‘except land’’ are made to be a mere surplusage. Words should not be construed as a surplus unless some other meaning cannot be assigned. In Ditcher v. Denison (1858), 11 Moo. P.C.C. 324, Knight Bruce, L.J. at 337 stated,

It is also a good general rule in jurisprudence that one who reads a legal document, whether public or private, should not be prompt to ascribe, should not, without necessity of some sound reason, impute to its language tautology or superfluity and should be rather at the outset inclined to suppose each word intended to have some effect, or be of some use.

In Yorkshire Fire and Life Insurance Company v. Clayton (1881), 8 Q.B.D. 421 (C.A.), Jessel, M.R. at 424 stated,

And although it may not always be possible to give a meaning to every word used in an Act of Parliament, yet as a general rule it is right not to treat words as surplusage if a meaning can be fairly given to them.

36 Halsl)ury s Laws of England, 3rd ed., p. 389, para. 583.

Here, a different meaning can be assigned to the words ‘‘except land’’. Those words except, that is exclude, land from that ‘Property” included in Class 8 and thereby exclude land from Class 8. Hence, Class 8 by excluding land is confined to “Property” purely personal. That meaning is confirmed by the words following—‘‘and also excepting’’. That word “excepting” necessarily means that these following items are excluded from ‘‘Property’’ and from the class and that is done by excepting the items from the word ‘‘Property’’. The word “also” here implies a repetition so that ‘‘also excepting” mean that the preceding words, ‘‘except land”, must necessarily be the first exclusion.

Further confirmation is from item (d) ‘‘a mine’’, which is one of those excluded from Class 8. A mine may be held by grant in fee, or by a grant of a profit à prendre that is as an interest in land, or by demise, or chattel real, or by a licence in which event the miner would have no interest in land whatsoever, Wood v. Leadbitter (1845), 13 M. & W. 838, unless the licence can be described as creating an equitable interest as in Winter Garden Theatre (London) Ltd. v. Millenium Productions Ltd., [1947] L.J.R. 1422, but ex ahundanti cautela that difficulty is avoided by "‘a mine” being expressly excluded from Class 8. As a result, Class 8 means that whatever is "‘land or any part thereof or any interest therein’’, is excluded from Class 8.

The contention of the Minister is therefore that the disputed assets are land ; that is, that they are integral parts of a building or structure let into and forming part of land and therefore the disputed assets are land under the maxim quicquid plantatur solo, solo cedit.

In Bain v. Brand (1876), 1 App. Cas. 762, Lord Cairns, L.C. at page 767 stated,

That which is affixed to the inheritance becomes part of the inheritance at the present day as much as it did in the earliest times.

What is "‘affixed to the inheritance’’ is defined in Alway v. Anderson (1888), 5 U.C.Q.B. 34, by Macaulay, J. at page 41 as follows:

What then is meant by annexation? In Amos & Ferrand p. 2 it is said to be necessary, in order to constitute a fixture, that the article should be let into or united to the land, or to substances previously connected therewith; not merely laid upon or brought into contract (contact) with the land, but something more than mere juxtaposition, as, that the soil shall have been displaced for the purpose of receiving the article, or that it should be cemented or otherwise fastened to some fabric previously attached to the ground—Elwes v. Maw, 3 East 35; How v. Baker, 9 East 215; Davis v. Jones, 2

B. & A. 165.

There has arisen a class of removable fixtures where affixed by a person with some limited interest but we are not concerned with that here. As in Bain v. Brand (1876), (supra), Lord Cairns, L.C. at page 770 stated,

The fixture does not become part of the inheritance; it does not remain a move-able- quoad omnia; we are here concerned with the question whether it has become part of the land.

In Haggert v. The Town of Brampton (1897), 28 S.C.R. 174, King, J. (for the Court) at page 180 adopted the test of Holland v. Hodgson (1872), L.R. 7 C.P. 328 as follows:

It is a question which must depend on the circumstances of each case, and mainly on two circumstances as indicating the intention, viz. the degree of annexation, and the object of annexation.

One circumstance is that the plant was built by the appellant as owner and the question remains whether or not the disputed assets were part of the plant, as fixtures. It has been held a part of the building and immovable under the following circumstances.

In Holland v. Hodgson (1872) (supra), the owner of a mill attached looms to the floor through holes in the feet of the looms into the floor and in some cases into beams built into the stone. It was held that the looms passed as party of the realty to the mortgagor of the realty.

In Hobson v. Gorringe, [1896] 1 Ch. 182, a gas engine was affived by bolts and screws to prevent it rockings and it was held a fixture passing to the mortgagee of the land against the conditional vendor of the engine.

In Haggert v. The Town of Brampton (1897) (supra) it was held where articles were slightly affixed in a manner appropriate to their use but with the object of enhancing the value of the mortgaged premises or of improving their usefulness for the purposes to which they had been applied there would be sufficient ground in a dispute between a mortgagor and his mortgagee for concluding that both as to the degree and object of the annexation they became part of the realty. King, J. (for the Court) stated at page 182,

So also in Holland v. Hodgson, where the looms were attached by nails for the purpose of steadying them and keeping them in a true direction.

In passing upon the object of the annexation, the purposes to which the premises are applied may be regarded; and if the object of setting up the articles is to enhance the value of the premises or improve its usefulness for the purposes for which it is used, and if they are affixed to the freehold even in a slight way, but such as is appropriate to the use of the articles, and showing an intention not of occasional but of permanent affixing, then, both as to the degree of annexation and as to the object of it, it may very well be concluded that the articles are become part of the realty, at least in questions as between mortgagor and mortgagee. See the cases already referred to, and also Walmsley v. Milne, and Wiltshear v. Cotterell.

In the Haggert case the learned judge had to consider a safe not attached but surrounded by a partition so that the safe could not be taken out without destroying a portion of the building and the safe was held to be a part of the realty. King, J. at page 183 stated:

As to the safe, the learned judges of the Court of Appeal were evenly divided, and it is impossible to feel confident on such a question. But considering that the safe was put in a place structurally adapted for it and was so enclosed in it by a wooden structure subsequently built that it could not be taken out without destroying what was a portion of the realty, and that it was put there not for a temporary purpose but to be permanently there, it would seem reasonable to conclude that it was so affixed as an adjunct to the building, to improve its usefulness as such, considering the purpose to which the building was applied.

In Stack V. T. Eaton Co. Ltd. (1902), 4 O.L.R. 335, shelving in sections, attached to the wall of the building, and chandeliers attached in the ordinary way to connect with current and removable by being unscrewed without damage to the chandeliers or building were held part of the land and passed by conveyance. Meredith, C.J. at page 339 stated:

If a shop counted affixed by a tenant becomes, as Lord Blackburn was of opinion that it did, a part of the freehold, subject to the right of the tenant to bring it back to its state of a chattel again by severing it, I am unable to see why the shelving affixed by Guinane, when he was the owner of a freehold, for the purpose of the business he carried on there, is not to be deemed a part of the land; and I can see nothing in the degree or object of the annexation of it to lead to the conclusion that such an intention existed as is necessary to alter the prima facie character of the article arising from the fact of its being affixed, but the contrary.

The title to the gas and electric light fittings is, as it seems to me, to be determined by the same considerations, which lead necessarily, I think, to the conclusion that, when, affixed as they were, they became part of the land and passed by the conveyance of it to the respondents.

In this part of the case we are concerned only with the disputed assets in three rooms of the mill proper; the grinder room, the screen room, and the machine room. In them, the liquid stock passes through screens to a machine which converts it into paper for newsprint. Each room requires foundations to support not only the dead weight of the floor supporting the machinery therein, but also the live weight from the vibrations set up by these machines in motion. That support is obtained, at least in part, from the chests and pit constructed in the ground floor.

In the basement, or ground floor, that is the floor below the operating level of the three rooms, there are built a series of chests and pits of reinforced concrete with heavy walls lined with tile for holding the liquid stock. It is important that the pulp be suspended in liquid and therefore many of the chests have a middle wall (or feather) which is extended towards the end of the chest to form a narrow opening, which increases the speed with which the circulating stock passes and ensures that the circulating stock in liquid form has the solid matter suspended. These chests or pits are built with walls not only to withstand the pressures from the floor above, but also the lateral pressure from the circulating stock. The chests and pit are further lined with tile to prevent the corrosion of the cement walls. As a result, the mill is built with concrete footings, let into the ground below the ground level and these footings are built into the basement floor, upon which are superimposed walls of reinforced concrete which have the dual purpose of supporting the next floor and, in part, the walls, and also constituting chests or pits into which may be placed the circulating stock. These chests and pits are open to the floor above and form part of the construction thereof in order to permit the entry of the circulating stock or to deliver it. The manner in which these chests and pit are constructed into the framework of the building is seen in the grinder room, [Exhibit (2), plan A.S.F. 1], the screen room, [Plan A.S.F. 6], the machine chests and pit, [Plan, A.S.F. 21].

In addition there are piers which are built on footings sunk into the ground and support the grinders in the grinder room, or the machine in the machine room. The piers are built of reinforced concrete and the upper part of the piers is an integral part of the floor in that the reinforcing rods extend into the floor. The piers supporting the grinder are described in paragraphs 69 to 78 inclusive of the Affidavit of Swallow. The grinder room is supported by a series of sixteen piers, I Exhibit (2), Plans A.S.F. 1 and 22] located below the four grinder rotators on the floor above. The piers are of reinforced concrete and run vertically from the ground floor to the grinder room floor above. They are connected to both the lower floor and the upper floor in that the piers are made of concrete with steel reinforcing rods running from the floor into the piers. The piers also contribute to the support of the floor and four of the piers indirectly contribute to the support of the roof portion of the building. Swallow states in paragraph 78, "The piers came into being and exist solely to provide an equipment base for the grinder motors and grinders. They are essential to the grinder motors’’. Although that may be, they are also an integral part of the building in that they are built into it. They support the floor, and, indirectly, support the walls. The removal of these piers would damage the building. That is equally true of the piers supporting the machine room.

Another disputed asset consists of the steel uprights in the grinder room and in the machine room. These steel uprights support the walls and the roof of the building but are unusually heavy because they also support the crane which is used in the erinder room to service the grinder I Exhibit (2), Plan A.S.F. 20] and also the crane to remove the rolls of paper from the papermaking machine, and parts of the paper-making machine in servicing. [Exhibit (2), Plans A.S.F. 1, A.S.F. 29, and A.S.F. 4, or Swallow Exhibits 4 and 17] These heavy uprights are, at stated intervals, running along both the grinder room and the machine room and are unusually heavy in order to support the crane in the manner appearing in Exhibit (2), Plan A.S.F. 4 or Swallow, Exhibit (21), that is, there is a brace which is fastened to the steel upright or column to distribute the weight of the crane and on top of the brace are placed a plate, an eye-beam, and a channel iron, and on top of that, a track, running longitudinally on each side of the grinder room and of the machine room on which tracks the crane moves in the grinder room and in the machine room. A photograph of these heavy uprights and of the longitudinal tracks for the cranes appear in Exhibit (3), A.S.F. Photo 836. Above the heavy uprights, lesser uprights continue support upwards to the walls and the roof of the building.

The disputed assets include tracks for the newsprint or paper machine, piers supporting the tracks and some supporting pillars. In the machine room there are two tracks for the newsprint machine which consist of a girder of reinforced concrete about five feet deep, two feet in breadth and 280 feet long running longitudinally on each side of the machine room and on top of each girder is a flat steel plate to provide a level surface. These two girders with the plates are the two tracks on which the paper machine rests. [Exhibit (2), Plan A.S.F. 22 and 23.]

The machine room portion of the mill from the basement is built as follows. There are footings, on pilings, let into the ground to support piers, pillars and the weight thereby supported including the chests and couch pit. On footings on each side of the basement are pillars to support the walls and roof. Also on footings there are two rows of piers which support the machine tracks and one row of the piers also supports the floor of the machine room, the mezzanine floor and the fan floor. On other rows of footings are pillars that support the floor. [Exhibit (2), Plans 24, 25 and 26.] All of the foregoing are built of reinforced concrete, the piers are tied into the girders and the piers and pillars are tied into the portions supported including the floor and walls. Further walls of chests and some feathers are incorporated into piers, with the result that piers, pillars and footings are tied into the girders, walls and floors to make one mass of reinforced concrete.

Other disputed assets in the machine room are the fan floor and the mezzanine floor [items 14, 15, 17 and 18 in Exhibit (1) A.S.F.]. These are also described in Swallow’s Affidavit, I Exhibit (13), paragraphs 107 to 114] and appear in Exhibit (3), A.S.F. Photo 32. On the fan floor there are four fans which provide for the air conditioning of the machine room in order to provide working conditions and also a deculator which: removes air from stock. There is considerable vibration from this equipment, and to control that vibration the fan floor has been constructed of cement. Below the fan floor and 19 feet above the paper machine floor is found the mezzanine floor, of which the floor is constructed of reinforced concrete—390' x 21’ and 30’ x 21’ [paragraph 111, Exhibit (13), Swallow’s affidavit]. There is considerable equipment situated on the mezzanine floor which is for the deculator, and also designed to control the heating and ventilation systems, hence the concrete is used as a mass to reduce the vibrations of the equipment when in operation. A stairway runs from the floor of the machine room to the mezzanine floor and then through to the fan floor directly above. The stairway and floors are provided with handrails of which the bases are sockets set in the cement in which are inserted the uprights of the handrails; but the stairs are welded in certain places [Exhibit (2), Plan A.S.F. 34]. Also, the landing of the stairway in the machine room provides for the ceiling of a washroom. Therefore, the stairs, mezzanine and the fan floor are permanently fixed as parts of the building.

It therefore follows that units 1 to 18 inclusive excepting 8 and 9 have become integral parts of this mill which in turn has become a part of the land.

Another disputed asset is the chemical recovery unit in respect of which the appellant claims that the concrete floors and foundations, steel stairs and platforms and the steel frame alone come within Class 8, see Items 19, 20 and 21.

The chemical recovery unit, [Exhibit (5)], is built to recover chemicals that have gathered impurities in manufacturing paper. The impure chemicals are burned by spraying them into the base of the recovery unit where they burn to produce a heat of 2000° and the pure chemicals in the form of steam rise in the unit and are reduced to a liquid and then returned to be used in the process of making paper. The chemical recovery unit is suspended from a transverse grid approximately 100 feet above the ground. This grid is supported by six upright columns and on the grid is superimposed the roof; below the grid is suspended the unit. The unit is suspended from the grid to allow for expansion from the intense heat produced in burning the impurities and also as a protection against earthquakes. On two sides of the unit are steel frames which support the floors, platforms and stairs which permit the inspection and servicing of the respective parts of the unit [Exhibit (2), Plan A.S.F. 37]. The appellant’s claim is that these floors, foundations, the steel stairs, platforms, and the steel frame should come within Class 8. However, all these disputed assets are part of a permanent and immovable structure which is built on foundations sunk into the land and are therefore part of the land.

The appellant claims in respect of four tanks [Exhibit (4), items 22 to 24]. The ground wood high-density tank I Exhibit (3), A.S.F, Photo 18] produces stock which is mixed with that from the kraft high-density tank. The kraft high-density tank [Exhibit (3), A.S.F. Photo 56] is to bleach stock which would otherwise have too dark a colour for newsprint. The blending tank is used to maintain the quality of paper and the broke tank [Exhibit (8), A.S.F. Photo 16] is used to break down defective stock before it is reprocessed.

The disputed assets in respect of the tanks are stated to be the wood stave walls of each tank [Exhibit (1) A.S.F. Items 22 to 24] but Item 8 [Exhibit (1)] consists of tank staircases and platforms and refers to photos of these tanks [Exhibit (3), A.S.F. Photos 11 to 15] and Item 9 consists of tank foundations and walls and refers to photos of tanks [Exhibit (3), A.S.F. Photos 16, 17 and 18]. Hence in respect of the tanks the Appellant claims that the foundations, the wood stave walls, the staircases and platforms are within Class 8.

These tanks are built on circular foundations of concrete let into the ground and lower walls are built thereon of reinforced concrete. On top of the concrete walls is a recess into which are inserted timbers 8" x 8’ or 8" x 10" which timbers stand vertically side by side and are fastened together by outside straps to form a tank. On the outside of the tanks are platforms connecting with the operating floor of the pulp mill.

The appellant has contended that the tanks, as well as the chemical recovery unit are part of the manufacturing process of making paper, to provide stock in liquid form and to assure uniform quality and colour and as such were not to be regarded as buildings but rather as equipment and thus within Class 8. However, the question is whether these assets are part of the land. Each tank is composed of concrete foundations let into the land on which are concrete walls, then wooden walls and the roof. The tanks have been let into the land so as to become part thereof and they are therefore excluded from being in Class 8.

I (b)

The further question is whether the disputed assets come within Class 3. If properly within Class 3, there has been no error in the assessment under appeal.

Class 3 reads as follows :

Property not included in any other class that is

(a) a building or other structure, including component parts such as electric wiring, plumbing, sprinkler systems, air- conditioning equipment, heating equipment, lighting fixtures, elevators and escalators,

(b) a breakwater (other than a wooden breakwater), (c) a dock,

(d) a trestle,

(e) a windmill,

(f) a wharf, or

(g) an addition or alteration made after March 31, 1967, to a building that would be included in this class but for the fact that it is included in Class 20.

No words have excluded land from this class, although no doubt the value of the land will have been deducted from the assets coming within this Class 3, as required by Regulation 1102(2), but the building or other structure may come within Class 3 although affixed to land.

The appellant contends that the disputed assets are not a "‘building or other structure’’ within Class 3 because they are a part of the manufacturing process and therefore are equipment, or, in any event, part of the property referred to in Class 8, and not part of the mill and hence not part of the building or structure within Class 3.

The Minister contends that the disputed assets are a part of the building or other structure. The question then arises as to whether, "‘a building or other structure’’ as appearing in Class 8 is to be construed according to the ejusdem generis rule. Because the rule ejusdem generis is a canon of construction and not a rule of law as Shelley’s Case, it is applied only as a means of ascertaining the implied intention and is therefore excluded by a contrary intention being otherwise shown or by the intention being clearly expressed. In Williams v. Goldring (1865), L.R. 1 C.P. 69 where the statute required one month’s notice of accuser against "‘any district-surveyor or other person’’, it was held that a person employed by the building owner was not an other person’’ and therefore not entitled to notice of action. Erle, C.J. at p. 78 stated :

The Statute clearly was not intended to protect every person who, meaning to do something under the Building Act, might be guilty of a wrong to his neighbour. I come to that conclusion because I find that there were several previous statutes in which this sort of protection was given and every person acting in pursuance of their provisions; whereas here the protection is confined to any “district-surveyor or other person” which to my mind shows that it was intended to restrict it to the class of persons ejusdem generis with the district-surveyor, and that a tradesman who is employed by a building-owner in doing work on his own premises for the better enjoyment of them, and upon whom no duty is cast by the Statute, it is not an “other person” of the same class as the “district surveyor”. I think that class was intended to embrace only those who are clothed with an official character, or upon whom some statutable duty is cast, so that they may be said to be acting or intending to act in pursuance of the statute.

The rule does require that there be a genus followed by general words as in Casher v. Holmes (1831), 2 B. & Ad. 592, where the provision, copper, iron, lead, tin and on all other metals not enumerated, was held not to include precious metals such as gold or silver. It will be observed that there the words, "‘and other metals’’ were not reduced to a mere surplusage but were sufficiently general to include other metals than those specifically enumerated. However, if there be no genus, then the rule cannot apply.

In Umted Towns Electric Co. Ltd. v. Attorney General for Newfoundland, [1939] 1 All E.R. 423, the Privy Council held the mention of a single species, for example water rates, does not constitute the genus. The statute provided that the Company should be liable for water rates and otherwise should be exempt from taxation. Lord Thankerton, in delivering the judgment said:

Their Lordships regret that they are unable to agree with the reasoning of the Supreme Court. In their opinion there is no room for the application of the principle of ejusdem generis in the absence of any mention of a genus since the mention of a single species—for example water rates—does not constitute a genus.

On the other hand, the intention to limit the general words may be otherwise apparent and a single word may be taken to constitute a genus as in Williams v. Golding (1865), L.R. 1 C.P. 69, where the statute required "‘notice, in writing, of action to be given to any district-surveyor or other person’’ was held to be limited to persons in a public position.

In Cork and Brandon Railway v. Goode (1858), 22 L.J. C.P. 198 the Civil Procedure Act limited the time for action "‘upon any bond or other specialty’’ and it was held the expression "‘other specialty’’ was within the ejusdem generis rule. However, the rule does not require the use of the word ‘‘other’’, but the question must always be whether there is a genus followed by general words which, by the application of the ejusdem generis rule, will not be reduced to a mere surplusage. Hence, the intention to apply the rule may be inferred when the general words, after the application of the rule ejusdem generis will still be capable of including others of the same genus of the particular words and not be reduced to a mere surplusage. For that reason, " " building” is not a genus, nor can the words "‘or other structure” be regarded as general words in Class 3. In The Shorter Oxford English Dictionary, "‘building’’ is defined as "‘that which is built, a structure, edifice’’, and ^structure” is defined in example 4, "‘that which is built or constructed, a building or edifice of any kind especially one of considerable size and imposing appearance 1615. 5 More widely a fabric or framework of material parts put together 1677’’. These definitions make the meanings of ^building” and "‘structure’’ so alike as to preclude building” being a genus or particular word and "structure” being a general word capable of including other like words. The authorities preclude the ejnsdem generis rule applying to ‘‘building or other structure’’ in Class 3.

In London County Council v. Tann, [1954] 1 W.L.R. 371, the statute there provided, "‘that no building or structure shall without the consent in writing of the Council be erected’’. The question was whether or not the ejusdem generis rule should be applied to the words "‘or structure’’. Lord Goddard, C.J. at page 373 said:

The Magistrate found that this was not a structure and, if it were a mere matter of fact, we should of course be bound by his decision, but it seems to me that he has not asked himself the proper questions. I think that the Magistrate was wrong in saying that he may construe the term "structure" as ejusdem generis for the term "building". To start with there is no genus, but it is quite obvious that the Act is meant to include something wider than a building. If one had simply to construe the word "structure" ejusdem generis with the word "building" and say that "struc- ture" meant a building, there would have been no necessity for the legislature to use both words. The real question is, leaving out "building" altogether: is this a structure?

In Roll v. Hemmings et al., [1951] 1 K.B. 676, Lord Goddard, C.J., as to the words "‘to any quay or other place’’, said at page 679:

. . . the words "or other place" are not to be confined to something ejusdem generis with "quay".

In Springman v. The Queen, [1964] S.C.R. 267, Hall, J., in holding a portable camp on wheels to be not a building or structure within the meaning of Section 3741A of the Criminal Code, stated at page 272:

I accept that the term "structure" is not to be construed ejusdem generis to the term "building". London County Council v. Tann. However, both “buildings” and “structures” do possess certain essential characteristics some of which are common to both.

In the result in Class 3 ‘‘building and other structures’’ are not to be read subject to the ejusdem generis rule but each will receive its own meaning to the same extent as if read separately. Hence an object can be either a building or a structure in order to come within Class 3.

In the absence of the eyusdem generis rule the characteristics of a building have been decided as follows. In Coburg Hotel v. London County Council (1899), 81 L.T. 450, the Hotel had built a glass and iron portico or shelter which projected beyond the general building line of the street and was dove-tailed into the main structure of the Hotel. That was held to be within the statute stating that "‘no building or structure shall without the consent in writing of the Council be erected’’. Ridley, J., at page 451 said:

It is by virtue of the fact that it is a part of a building that it is a building, but I think perhaps one would in more ordinary language call it a structure if you deal with it taken by itself— it is a structure—I think therefore it is in that sense a building. The Coburg Hotel is a building and this is a portion of it. It is also, I think, a “structure”.

In Cardiff Rating Authority v. Guest Keen Limited, [1949] 1 All E.R. 31, the question was whether certain furnaces were "‘a building or structure’’ or "‘in the nature of a building or structure’’ within the rating Statute and Denning, L.J. (as he then was) at page 31 stated :

In the present case the learned recorder seems to have thought that these were not structures or the nature of structures because they were movable. In my opinion that was a misdirection. 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 about a pivot thus a windmill or a turntable is a structure. A thing which is not permanently in one place is not a structure, but it may be “in the nature of a structure” if it has a permanent site and has all the qualities of a structure, save that it is, on occasion, moved on or from its site.

[A portion of this statement was quoted in Springman v. The Queen (supra) by Hall, J. at page 273.] and at page 36 Denning, L.J. continued :

It would be undesirable to attempt and indeed I think impossible to achieve any exhaustive definition of what is meant by the words “a building or structure or in the nature of a building or structure”. They do, however, indicate certain main characteristics. The general range of things in view, consists of things built or constructed. I think, in addition to coming within this general range, the things in question must in relation to the hereditament answer the description of buildings or structures or at all events, be in the nature of buildings or structures. That suggests built or constructed things of substantial size—I think of such size that they either have been, in fact, or would normally be, built or constructed on the hereditament as opposed to being brought onto the hereditament ready made. It further suggests some degree of permanence in relation to the hereditament, i.e., things which, once installed on the hereditament, would normally remain in situ and only be removed by a process amounting to pulling down or taking to pieces.

In Hiram Walker & Sons Limited v. The Corporation of the Town of Walkerville, [1933] S.C.R. 247, the question was whether racks used for the storage of barrels of whisky were real property or were within the exemption of the Assessment Act, "‘Machinery’’ or ‘‘ Fixed Machinery Used for Manufacturing Purposes’’. Smith, J. at 248 said:

The network of timbers and cross-pieces is all bolted or spiked together in such a way that, when completed, it makes a strong structure, one of those in question accommodating 55,000 barrels of whisky. This structure and the walls surroundings it are erected together, the outer wall being fastened to the uprights of the rack next the walls by means of bolts protruding inwardly from the wall on each side of an upright, across which bolts a strap if iron is placed and fastened on the inner side of the upright. This fastening is repeated at proper intervals throughout the length of the walls and at each storey. The outer walls are of brick, twenty-two inches thick at the bottom, tapering to twelve inches at the top. The roof of the building rests, not on the walls, but upon the rack.

I am of the opinion, notwithstanding the able argument of appellant’s counsel, that the Court of Appeal was right in concluding that the rack and building constitute a single structure, so interlaced and bound together that one cannot be separated from the other so that it may be said that the rack is a chattel separate from the building.

In Moran & Son Limited v. Marsland, [1909] 1 K.B. 744, the question was whether reservoirs which had a flooring of concrete with walls and brickwork backed by concrete and earth, covered in by a series of brick arches supported by brick piers twenty feet high, were "‘every building or structure’’ within the London Building Act. Lord Alverstone, C.J. at page 754 said:

Section 82 of the Act shews that there may be buildings or structures within the scope of the Act other than those above mentioned, and as these reservoirs are obviously buildings or structures in the ordinary acceptation of those terms, I am unable to accede to the contention that they are not buildings or structures within the Act.

In Adel Building Corporation Limited v. The Minister of National Revenue (1962), 29 Tax A.B.C. 309, the question was whether steel partitions in an office building affixed to the walls and floors by brackets and screws were within Class 3, buildings and other structures’’, or within Class 8. The Board by Mr. Fordham, Q.C., held that the partitions were properly regarded as buildings or structures within Class 3 and at page 310 said :

As may be noted, the partitions are not loose or detached, but securely fixed to the bare fabric of the building by screws and joints and thereby give the impression of being part and parcel of it.

At page 311 :

The partitions are shown to be note of a flimsy or short-lived type, but more than likely to last at least as long as the appellant’s Adelaide Street premises.

Further at page 311:

Do the said partitions come within the governing words used in the regulations in describing the scope of Class 3? It appears to me that once the partitions in question are assembled or put together a "structure"—that word being used in the ordinary sense—results and that when affixed to the building in which erected, this structure thereby and automatically becomes an integral part of that building and inseparable therefrom. An office building must have interior separating walls and these, whether of steel, brick, wood or plaster, are walls of the building in which erected and not to be regarded as though something apart and distinct from the building as a whole. Strong support for this view is to be found, I think, in such cases as—and I mention just two here—Coburg Hotel v. London County Council (1899), 81 L.T. 450, and Regent’s Canal & Dock Co. v. London County Council (1900), 73 J.P. 276, which will repay reading.

The following cases illustrate what is a structure. In Hopday v. Nicol, [1944] 1 All E.R. 302, a row of tanks filled with earth were kept in position by their own weight and were held to be structures. Humphreys, J., in delivering judgment for the division, said at page 303 :

Therefore I come to the conclusion that it is a question of mixed fact and law which this Court has to decide as to whether this particular arrangement was a "structure" within the meaning of the bye-law which I have read. Upon that question I for my part can entertain no doubt whatever. "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.

What was this thing? We see from the photographs, and from the admirably clear description in the case, that it was a thing of very considerable size. We are told by Counsel for the Appellant, who has been at pains to add them up, that there are 53 of these separate receptacles. They are called tanks. They were originally properly water-tanks; but they are receptacles. They were put in in a certain form; in some places a single line of them, and in some places two tiers one above the other with some object: they were put there so that they might be permanent; and for that purpose they were filled with earth or rubble or hard core so as to make them heavy and keep them in place where they were.

A portion of that quotation was adopted in Re Trans-Mountain Oil Pipe Line Company (1966), 58 D.L.R. (2d) 97 by Lord, J.A. in the Court of Appeal of British Columbia.

In British Portland Cement Manufacturers Limited v. Thurrock, U.D.C., et al. (1950), 66 T.L.R. (Part 2) 1003, a rotating kiln was held to be in the nature of a structure. Somervell. L. J. at page 1006 stated :

I would adopt this sentence from the judgement of Lord Justice Denning in Cardiff Rating Authority and Cardiff Assessment Committee v. Guest Keen Baldwins Iron and Steel Company Limited (65, The Times L.R., 159) :

“The question is what is the proper conclusion from these primary facts. In so far as that involves the proper interpretation of the words of the order, it is a question of law. Once, however, those words have received a clear interpretation, which can be applied by laymen as well as by lawyers then, so long as there is a proper direction as to their meaning, the conclusion of fact is one for the tribunal of fact, with which an Appellate Court will not interfere, unless the conclusion is one which could not reasonably be drawn from the primary facts.”

That case is a good illustration of how what is plainly a question of law can arise; for it was sought to say there that plant or machinery could not be a structure or in the nature of a structure if it were movable or if part of it moved. That, as a proposition of law, was negatived in that case.

Vaisey, J. at page 1007:

I am satisfied that there was ample evidence before the tribunal below to justify their finding that the objects herein questioned were, first a combination of plant and machinery; secondly kilns; and thirdly, in the nature of structures. At any rate, I am convinced that I could come to that conclusion: the judgment of the Lord Chief Justice carries that conviction to my mind.

In The City of London v. John Labatt Ltd., [1953] O.R. 800, the question was whether certain equipment used in the manufacturing of beer consisting of tanks, tuns, etc., held in place only by their own weight, was assessable and taxable, and it was held that although it was clearly ‘‘structures’’ and ‘‘fixtures’’ within the Act, they were exempt as "‘fixed machinery used for manufacturing purposes’’ within another section of that Act. Spence, J. at page 801 stated:

It would be better to deal first with this alternative defence. Whether or not the devices and equipment to which I shall refer subsequently in detail are “machinery”, certainly I am of the opinion that they are “structures” and “fixtures” within Section l(i) (iv). “Structure” is defined in the Shorter Oxford English Dictionary as inter alia “that which is built or constructed, a building or edifice of any kind . . . a fabric or framework of material parts put together. The word is so broad in this connoation that Ayles- worth, J.A., in The Northern Broadcasting Company Limited v. The Improvement District of Mountjoy, [[1949] O.R. 695 at 702], [[1949] 8 D.L.R. 739] affirmed [[1950] S.C.R. 502] [[1950] 3 D.L.R. 721] remarked that “a chair is a structure”.

In Re Trans Mountain Oil Pipe Inne Company (supra), large metal tanks used in conjunction with an oil pipeline were held to be structures in majority judgments of Lord, J.A. and Branea, J.A. and therefore liable to be assessed as such.

Certain cases cited by the appellant are distinguishable. It was contended that the words in Class 3 " such as electric wiring, plumbing” etc., were words of limitation limiting the word "‘structure’’ to such articles as contained those components. There is no such implied limitation. These words of Class 3 "‘including component parts”, etc., do not necessarily require that such component parts do exist but merely indicate that when they do exist, they are to be regarded as part of the building or structure.

The Queen v. Randall and Sanders (1855), 4 El. & Bl. 564, was cited to show the limitation implied from the words "‘such- as’’ but that case is distinguishable. There the statute enacted that property be rated for poor relief, provided that the same shall also extend to such woods, mines and quarries of stone or other hereditaments as have heretofore been usually rated to the highways’’, and it was held that new mines were by the proviso rateable to the highway rate, if mines of a similar description were usually rated. Whiteman, J. at page 209 stated :

Now the words, "such" as have been usually rated certainly may refer to the genus; and unless this construction be put upon the act new mines will be exempt from a liability to which old mines of a precisely similar character are subject, which could hardly be the intention of the legislature. That was Mr. Everett’s argument; and I think it forcible. And to judge from the language of the reports, three at least of the four judges who decided Regina v. Row (6 Q.B. 153 1 New Sess. Ca. 272) seem to have been of that opinion. I think “such as” here means “of such description as”.

In the Randall case the subject matter is "‘such description as” hence "‘such—as” are definitive and excluding. In Class 3, the subject matter is "‘component parts’’ and the words "‘such as”? are merely illustrative and not excluding.

Thibodeau Express Limited v. M.N.R. 40 Tax A.B.C. 419, and in the Exchequer Court, is distinguishable as it turns upon the temporary nature of the alleged "‘structure'' and impliedly if the use had been permanent the asset would have been a "‘structure''.

The appellant has also cited Chantecler Hotel Limited v. M.N.R., 4 Tax A.B.C. 126, wherein the Board held that by reason of the words of Class 3, ‘‘including component parts such as electric wiring, plumbing, sprinkler systems’’, etc., therefore a structure, to come within Class 3, must have "‘some one or other of the component parts—or some other component parts similar to those indicated’’ and therefore a concrete terrace is not a structure within Class 3. That case should not be followed for two reasons:

1. that construction would appear to reduce 66 structure” to the equivalent of building and therefore make " " structure ‘ ‘ or the words, "‘other structure’’, entirely superfluous. That is not a proper construction. Ditcher v. Demson (supra) ; Yorkshire Fire and Life Insurance Company v. Clayton (supra).

2. those words of Section 3 "including component parts such as electric wiring’’, e-tc., contain no words necessarily requiring such components to be present in a structure and the Chantecler Hotel case conflicts with those cases holding to be a structure things which had not one of the components as Hobday v. Nicol (supra), Hiram Walker & Sons Ltd. v. The Town of Walkerville (supra), The City of London v. John Labatt Ltd. {supra), Trans Mountain Oil Pipe Line Company (supra), and moreover tends to make ‘‘building’’ and ‘‘structure’’ identical which is precluded by Springman v. The Queen {supra).

Elmsthorpe Rural Municipality v. Dominion Fire Brick and Clay Products Limited^ [1943] 3 W.W.R. 440; [1944] 2 D.L.R. 386, is distinguishable as there the question arose under a stated case and was limited to the point of law whether there was evidence on which the Commission might find that the kilns in question were not buildings under that Saskatchewan Statute. That is not the issue or statute here.

The disputed assets in Items 1 to 18 inclusive excepting Items 8 and 9 are all within the mill proper. All such items are built into and are part of the mill. Coburg Hotel v. London County Council {supra). The mill is a building as it is built or constructed. Springman v. The Queen {supra). These items are attached to the mill and hence are mill and not machinery. Hiram Walker c Sons Ltd. v. The Town of Walkerville {supra). Adel Building Corporation Ltd. v. M.N.R. {supra).

The remaining disputed assets consist of the chemical recovery unit (Exhibit 1, Items 19 to 21 inclusive), and the tanks (Exhibit 1, Items 8 and 9 and 22 to 24 inclusive). All these are structures. They are built up from component parts and intended to remain permanently on a permanent foundation as in Cardiff Rating Authority v. Guest Keen Ltd. (supra). They are composed of different things put together or built together and constructed to make one whole as in Hopday v. Nicol (supra). They are built or constructed, a building or edifice as defined in The Shorter Oxford English Dictionary, City of London v. John Labatt Ltd. (supra). It is not necessary to decide whether these structures among the disputes assets are also buildings.

It may be added that buildings are usually erected for a specific purpose and are therefore of different kinds such as stores, or residences, or blacksmith shops, or pulpmills. These variations are not costs of operating but costs or construction. In erecting a dance hall the owner may foresee that a crowd may stamp in unison with the minority breaking step and may provide for that increased strain by columns and girders increased in number or size or both. The workmen in inserting such increased columns and girders are engaged in construction, not in dancing, the only alternative activity, and similarly the owner in providing such increased strength is not engaged in operating a dance hall, but incurring the costs of construction. So it is with this paper mill, the unit and tanks here in question.

No doubt the Governor in Council may make such allowances as he may choose for capital costs and for such allowances may sever the land and buildings; he appears to have done so in Class 8 and Class 3 in the manner hereinbefore indicated. Also, in Trans Mountain Oil Pipe Line Company (supra), tanks used in conjunction with an oil pipeline were held to be structures. Therefore all the disputed assets are within the words "‘building or other structure’’ and hence within Class 3.

The appellant also falls under the principle generalia speciali- bus non derogant. Class 3 is qualified by the words "‘not included in any other class’’ and Class 8 is qualified by similar words so the two classes are, in that respect, equivalent. But Class 3 begins "‘a building or other structure’’, and these are particular words as against the word "‘property” (in Class 8) which is a general word capable, without qualification, of including “building” and ‘‘other structure’’. Therefore “building or other structure’’ (Class 3), being particular words, are not to be read as derogated from or limited by ‘‘property’’ (Class 8), 36 Halsbury’s Laws of England, 3rd ed., page 397, paragraph 597, Maxwell on Interpretation of Statutes, 11th ed., pages 168 to 174, or the words “building or other structure’’, are to be deemed exceptions to and therefore qualifying the word ‘‘property’’ in Class 8. In the result, all the disputed assets are properly included in Class 3.

II

The remaining issue arises under Section 41A of the Income Tax Act which reads, in part, as follows:

41 A. (1) There may be deducted from the tax otherwise payable by a taxpayer under this Part for a taxation year an amount equal to the lesser of

(a) /3 of the logging tax paid by the taxpayer to the government of a province in respect of income for the year from logging operations in the province; or

(b) 6% % of the taxpayer’s income for the year from logging operations in the province referred to in paragraph (a).

DEFINITIONS

(2) In subsection (1),

“INCOME FOR THE YEAR FROM LOGGING OPERATIONS IN THE PROVINCE”

(a) “income for the year from logging operations in the province” has the meaning given to that expression by regulation;

“LOGGING TAX”

(b) “logging tax” means a tax imposed by the legislature of a province that is declared by regulation to be a tax of general application on income from logging operations; and

“TAX OTHERWISE PAYABLE BY A TAXPAYER

UNDER THIS PART”

(c) “tax otherwise payable by a taxpayer under this Part” for a taxation year means the tax for the taxation year otherwise payable by the taxpayer after making any deduction under section 33, 38 or 40 and before making any deduction under section 41 or this section.

The appellant contends in Section 41A the words, " income for the year'' or "‘income for the year from logging operations in the province’’ mean the basis for the income tax under the Logging Tax Act as computed and levied by the Province of British Columbia and paid by the appellant as taxpayer to that Province, and that such meaning is the natural meaning of the words used in Section 41A; that Section 41A(2)(a) provides for the reduction of the amount fixed by regulation and while the regulations have not the same wording throughout as the provincial Logging Tax Act, nevertheless, the natural meaning of the words of the regulations and of the Logging Tax Act of British Columbia is submitted to be the same. The appellant contends that the same words should receive the same meaning in the regulations as in the provincial Statute and cites the Wolfe Company v. The King (1921), 63 C.S.R. 141, Mignault, J., at page 155, Maxwell on Interpretation of Statutes, 11th ed., page 311, 36 Halsbury’s Laws of England, 3rd ed., page 396, Craies on Statute Law, 5th ed., 159, Archibald v. Royer (1924), 57 N.S.R. 12, all to the effect that the same words should receive the same meaning in the same statute and the appellant therefore argued that the same words appearing in the provincial Logging Tax Act should receive the same meaning in the Income Tax Act of Canada and the Regulations pursuant thereto.

The appellant further contends that the deductions, i.e. the credit against the income tax of Canada for the amount paid under the provincial Logging Tax Act is incentive legislation and therefore the intention must be to retain that incentive, citing Anglo-Canadian Oils Limited v. M.N.R., [1947] C.T.C. 47, where Cameron, J., with reference to that statute which related to the cost of drilling an oil well and the reduction allowed therefor under the Income War Tax Act, stated at page 53 :

Section 90 of the [Income] War Tax Act (called Part XIV) was first enacted by Section 17 Chap. 46, Statutes of 1939. By Chapter 55, Section 16, Statutes of 1946, it was entirely repealed. It was manifestly incentive taxation legislation to encourage capital expenditures as a means of helping the general economic condition of the country. It was a clear departure from the general scheme of the Act that capital expenditures are not allowed as deductions from income or from tax. It is limited in its operation to costs incurred in the specified twelve months and by Section 4 certain capital costs are excluded from permissible deductions. From the general tenor of the whole section it seems to have been designed to encourage the outlay of capital to create productive work of one sort and another. The section should therefore be interpreted, if possible, in such a way as to give effect to the intention of Parliament.

On the other hand, and against the appellant’s contention, Section 41A provides for the reduction of the amount to be paid to Canada for income tax by some portion of the tax payable by the taxpayer to the Province under the Logging Tax Act. Constitutionally, only Canada could allow a credit to the debt payable to Canada and it is therefore essential to consider those limitations which Parliament has imposed upon the credit which is to be allowed in the reduction of the tax payable to Canada. Section 12(1) (a) of the Income Tax Act provides, "‘in computing income no deductions shall be made in respect of, (a) an outlay or expense except to the extent that it was made or incurred by the taxpayer for the purpose of gaining or producing income from property or a business of the taxpayer’’. Section 11(1)(b) reads as follows:

11. (1) Notwithstanding (a), (b) and (h) of subsection (1) of section 12, the following amounts may be deducted in computing the income of a taxpayer for a taxation year:

(b) such amount as an allowance in respect of an oil or gas well, mine or timber limit, if any, as is allowed to the taxpayer by regulation;

The payment of the Logging Tax Act of British Columbia is not an outlay for the purpose of producing income within Section 12(1) (a) because payment of the logging tax is made in respect of the income earned and in hand, therefore a deduction from income of the amount of such payment is precluded by Section 12(1) (a). Section 41A(2) reads:

In subsection (1)

(a) “income for the year from logging operations in the province” has the meaning given to that expression by regulation.

Part 7 of the Regulations was enacted to provide for the allowance authorized by Section 11(1) (b) and Regulation 700(1) thereof provides, in part, ‘‘ Except as provided in subsection (2), for the purpose of Section 41A of the Act ‘income for the year from logging operations in the province’ means the aggregate of’’, the following being a series of methods for computing such income under varying circumstances.

The effect of the Income Tax Act Section 41A and of the Regulations makes ‘‘income for the year from logging operations in the province’’ mean the amount computed according to the appropriate method provided in the Regulations, Part VII. These are the only deductions allowed within Section 41A and not excluded by Section 11(1) (b) or 12(1) (a). The intention is explicitly provided for by Parliament saying by Section 41A(2) (a) that the words ‘‘income for the year from logging operations in the province’’ are to be given the meaning provided for in the Regulations. Hence Regulations Part VII contain the only method of computing the deduction permitted by Section 41A and not prohibited by the Income Tax Act. As the intention of Parliament has been expressly declared, that intention must be applied and it is not possible to speculate about the natural meaning of these words or what their ordinary meaning might imply. In M.N.R. v. Spruce Falls Power and Paper Company Limited, [1953] 2 S.C.R. 407, Rand, J. stated at page 420 with reference to a statute in pari materia,

By para. (3) “income derived from logging operations” is defined for both the case of logs which are cut and prepared and then sold, and where they are carried into further manufacture; and a basis is laid down for computing income “with reference to the value of the logs at the time of such delivery”, meaning, where further operations are carried on, the delivery of the sawmill, pulp or paper plant or other place where they commence.

Para. (1) of the regulation was amended on March 6, 1948 by a re-enactment providing that the amount deductible under para,

(w) shall not exceed

the proportion of the total taxes therein mentioned [in para. (w)] paid by him to

(a) the government of a province . . . that the part of his income that is equal to the amount of

(d) income derived by him from logging operations as defined herein is of the total income in respect of which the taxes therein mentioned [para, (w)] were so paid.

The important words are “income . . . from logging operations as defined herein” that is, the basis set up in the regulations. In other words, if that basis should produce only one-half of the amount of income taxed by the province, then only one-half of the taxes paid could be deducted under (w). The Dominion did not intend to allow deduction on the basis of larger income than that produced by the application of its own formula. What is clear is that the denominator of that fraction is a figure determined not by the Minister or any court but by the province. This, in turn, is connected with the Dominion-Provincial taxing agreements to which I shall later refer.

Some of the reasons for Parliament to define the method of computing such credit and for not allowing as a base the total tax paid to the Province are seen in the regulations issued pursuant to the Logging Tax Act of British Columbia. Provincial Regulation Clause (a) provides for disbursements or expenses not necessarily laid out or expended for the purpose of earning income. This is contrary to Section 12(1) (a) of the Income Tax Act of Canada, which excludes an outlay or expense except one made or incurred for the purpose of producing income.

Under provincial Regulation (e) there is a provision for an allowance for doubtful accounts not approved by the Minister of Finance of the Province but under the Income Tax Act, Section 11(1) (e) provides for a reasonable amount for the reserve therefor.

Provincial Regulation (i) provides for the discretion of the Minister of Finance for allowing for the capital cost but on the other hand, there is no such discretion in the Income Tax Act of Canada and any deduction for capital cost allowance is a matter of right under Regulations by virtue of Section 11(1) (b) and other allowance is forbidden by Section 12(1) (a). Nothing in the Income Tax Act of Canada or Regulations permits the variations contended for by this appellant and particularly the discretion of the Minister of Finance of the Province to override the the provisions of the federal Act or its Regulations. There is no suggestion that the Minister of National Revenue failed to compute the credit as required by the Income Tax Act and Regulations, and accordingly no error has been demonstrated in this assessment.

In conclusion, it was stated during the hearing and by consent [Exhibit (1), A.S.F. Paragraph 9 under the heading Section 41A] that the appeal should be allowed in part by being referred back to the Minister for reconsideration and re-assessment in respect of the charitable donations referred to in paragraph 9. Subject thereto the assessment is not in error and the appeal is therefore dismissed with costs payable by the appellant to the respondent.