Her Majesty the Queen v. Canadian Pacific Railway Company, [1969] CTC 641, 69 DTC 5434

DUMOULIN, J :—By means of an Information, Her Majesty

the Queen seeks to recover from the defendant company taxes in

an amount of $110,567.77.

In justification of this claim, it is alleged in the information that:

2. The Defendant owned, held, claimed or used proprietary or other rights to certain railway ties and other lumber products being manufactured or produced for and on its behalf by Dominion Tar & Chemical Company Limited at Delson in the Province of Quebec between June 14, 1963, and December 31, 1964, both inclusive and, inter alia, by virtue of section 2(1) (aa) (ii) of the Excise Tax Act, the Defendant is the manufacturer or producer of the said railway ties and other lumber products within the meaning of the Excise Tax Act.

3. The said railway ties and other lumber products were manufacutred or produced under such circumstances or conditions as render it difficult to determine the value thereof for the consumption or sales tax because they were for use by the Defendant and not for sale and by virtue of section 31(1) of the Excise Tax Act the transactions are for the purposes of the Excise Tax Act regarded as sales and therefore subject to the consumption or sales tax imposed by Section 30 of the Excise Tax Act.

There next appears an itemized list of the value for the tax of these railway ties and other lumber products as determined by the Minister of National Revenue on January 14, 1966 for the periods of June 14, 1963 to March 31, 1964, and those of April 1, 1964 to December 31, 1964. The total value of all railway ties and other lumber products supposedly manufactured or produced as aforesaid’’ was set at $2,139,328.60 and the taxation figure imposed thereon at $128,233.78.

For unstated motives, mention is made in paragraph 5 that on April 21, 1966 (P.C. 1966-19/707) the Governor in Council remitted a portion of the said tax in a sum of $17,661.01 and penalty accrued thereon, under the provisions of Section 48 of the Excise Tax Act, leaving a balance due of $110,567.77.

A. fitting prologue to the statement of defence and to the very circumstantial Agreed Statement of Facts, would be to quote the pertinent texts of the statutory provisions at issue herein, to wit, Sections 2(1) (aa) (ii), 30(1) (a) and 31(1) (d) of the Excise Tax Act, R.S.C. 1952, c. 100 and amendments, they read thus :

2. (1) In this Act,

(aa) “manufacturer or producer” includes

(ii) any person, firm or corporation that owns, holds, claims, or uses any patent, proprietary, sales or other right to goods being manufactured, whether

by them, in their name, or for or on their behalf by others, whether such person, firm or corporation sells, distributes, consigns, or otherwise disposes of the goods or not.

30. (1) There shall be imposed, levied and collected a consumption or sales tax of nine per cent (plus a 3 per cent Old Age Security tax) on the sale price of all goods

(a) produced or manufactured in Canada.

31. (1) Whenever goods are manufactured or produced in Canada under such circumstances or conditions as render it difficult to determine the value thereof for the consumption or sales tax because

(d) such goods are for use by the manufacturer or producer and not for sale;

the Minister may determine the value for the tax under this Act and all such transactions shall for the purposes of this Act be regarded as sales.

Section 48 of the Act is consequential only, applicable if and when remissness is found.

The defendant’s plea is a total disclaimer of plaintiff’s interpretation of the basic facts, as may be ascertained from the citations hereunder :

2. It denies that it had manufactured or produced for it or on its behalf by Dominion Tar and Chemical Company Limited railway ties and other lumber products as alleged in paragraph 2 of the Information and avers that inasmuch as no manufacturing or production of railway ties or lumber products took place section 2(1) (aa) (ii) of the Excise Tax Act is not applicable.

9. In the course of its operations, the Defendant (viz, the Canadian Pacific Railway Co.) uses railway ties and other lumber products;

10. The said ties and other lumber products are purchased from various suppliers already manufactured or produced for railway purposes;

11. The manufacturing or production of railway ties and other lumber products, in issue in this action, took place before they were received at the Delson Plant of the Dominion Tar and Chemical Company Limited.

12. Railway ties and other lumber products were used and are still used, to a limited extent, after having been thus manufactured or produced and Defendant reaffirms that no manufacturing or producing of the railway ties and other lumber products took place at the Delson Plant of the Dominion Tar and Chemical Company Limited.

This much for the defence, which, jointly with the information, is supplemented by a not too clear agreement of facts describing at length the intricacies of the preservative process at Delson ‘‘for the handling, treating and machining of railway ties and other materials owned by the Defendant and required by it for its own use in the operation of its railway”. Paragraph 6 declares that:

6. The Defendant purchased the untreated ties from suppliers at various locations in Canada and paid sales tax at the time of purchase on all such ties purchased after June 13, 1963. The ties were cut to the required shape and length by the suppliers before they were delivered to the Defendant.

The admissions both precede and follow the paragraph above, and are drafted as hereafter :

2. . . .

The Defendant now admits:

(a) that the “other lumber products” (quotation marks in text) were manufactured or produced at the Delson plant of Dominion Tar and Chemical Co.

(b) that the value thereof for the tax was $60,164.49 but no more, and,

(c) that it is, accordingly, liable for tax in the amount of $4,122.55.

Thus the issues left to be determined are:

(a) whether the railway ties were manufactured or produced, and,

(b) whether the Minister in determining the value of the railway ties and of the other lumber products, erred by including therein the values of untreated ties, timber, lumber, creosote oil and petroleum purchased or ordered before June 14, 1963, and

(c) whether the Defendant may challenge in this Court the Minister’s determination of values.

For some years past, the Canadian Pacific Railway has had “an agreement with the Dominion Tar & Chemical Company Limited (hereinafter referred to as “Domtar”) for the handling, treating and machining of railway ties and other materials owned by the Defendant and (as previously said) required by it for its own use in the operation of its railway’’. True copies of these agreement were filed and marked as Appendix 1, Appendix 2 and Appendix 3. Attached to the latter exhibits and marked Appendix 4 and Appendix 5 ‘‘are true copies of the lists of handling prices in effect during the years 1963 and 1964”. Appendix 6 ‘‘is a true copy of the list of treating and machining prices in effect throughout the period of time covered by this action”.

A more precise enunciation of the problem is formulated in paragraph 5 :

5. It is agreed that if the goods were “manufactured or produced” (emphasis in the text) at Delson then the Defendant is liable to pay sales tax on the value thereof by virtue of sections 2(1) (aa) (ii), 30(1) (a) and 31(1) (d) of the Excise Tax Act, and that if they were not “manufactured or produced” at Delson the Defendant is not liable to pay the tax.

In matters of this kind, the guideline of investigation is to be found in The King v. Vandeweghe, [1934] S.C.R. 244 at 248; [1928-34] C.T.C. 257 at 260, the oft-quoted statement of Duff, C.J. that:

The words “produced” and “manufactured” are not words of any very precise meaning and, consequently, we must look to the context for the purpose of ascertaining their meaning and application in the provisions we have to construe.

Statutory enactments devise a framework in which is ultimately inserted a picture drawn up by the material facts. Relatively speaking, the law is static, the facts changing.

Cross-ties of soft or hardwood are hewed in the forests, cut to the required shape and length by various suppliers, undoubtedly inspected by a qualified lumber agent of the railway company and accepted if satisfactory. In this original condition, they could serve their purpose but for a useful duration of no more than 10 years. It is in evidence that a minute proportion of these indispensable components are now used, untreated, ‘ in temporary trackage and on rough parts of the roadbed where severe mechanical wear necessitates early replacement’’ (cf. agreed statement of facts, para. 20). The near totality of ties are, after delivery to the defendant, expedited to the Domtar plant at Delson, Quebec, where they are subjected to a preservative creosoting process by the Reuping or ‘ empty-cell method’’. A greatly enhanced span of durability is thereby imparted to the cross-ties as explained in paragraph 22 of the agreed statement of facts, which I quote:

22. Ties which have been pressure treated with creosote, after proper seasoning have a much longer service life than they would have if untreated. Untreated ties must be replaced after about 10 years because they are weakened by the action of wood-rotting fungi. Pressure treated ties have a protective shell of creosote which is highly toxic to fungi. So long as the creosote shell remains unbroken the ties cannot be weakened by fungi and their service life is determined mainly by mechanical wear. The Defendant’s experience with treated ties indicates that 7 pounds of creosote per cubic foot of wood is sufficient preservative to protect the ties for the duration of their 35 years mechanical life.

A benefit of such magnitude, both a money saving boon and a security measure for the travelling public, is understandably sought for and only suffers the rarest exceptions.

Three principal phases are successively undergone in the application of this protective treatment after the ties, stacked in square piles, have been air seasoned for three to twelve months to free them of water and allow the required amount of preservative to be subsequently injected into them. These threefold steps in successive order can be designated as : Boring, Incising and Creo- soting. It will now be my duty to concisely review these operations in an attempt to determine their true nature in relation to the plaintiff’s averment that they objectively constitute a process of manufacture or production.

BoRING

Paragraph 11 of the agreed statement of facts describes this initial stage :

11. The first of the milling processes is “boring” or “drilling” . . . In the boring machine the tie is automatically positioned over a battery of drills which bore groups of 4, 5, or 6 holes near the ends, depending upon any of three boring patterns. The holes are drilled at the positions in which track spikes will ultimately be driven into the tie to hold the tracks on the ties.

Four main reasons of boring or drilling spike holes are given in paragraph 12:

(a) It is easlier to drive the track spikes into the holes of drilled ties than it is to drive them into undrilled ties.

(b) Spikes driven into drilled holes are held more firmly than spikes driven into undrilled ties.

(c) There is less damage to the wood fibres in the tie if the spike holes are predrilled than there is if the spikes are driven into undrilled ties.

(d) The predrilling of the spike holes permits the creosote preservative to penetrate the area which will ultimately surround the spike. This results in greater absorption and penetration of preservative at the rail-seat, which is the point of maximum wear on the tie.

The first three paragraphs above indicate a self-evident necessity of boring holes for the insertion of adhesive spikes facilitated by predrilling but is this an act of ‘‘manufacture’’ or simply readying for use something previously ‘‘produced’’? On the supposition that one of the Canadian Pacific’s workshops or, else, some carpentering firm, had performed the drilling job, as well they might, could it be said that the cross-ties were “manufactured or produced’ in the former shops or by the latter firm? Hardly so, I would think. Whether this assumption be correct or not, I strongly tend to believe that the overriding explanation is found in paragraph (d) subordinating all else to the paramount purpose of ensuring the deepest possible penetration of the creosote, an essential prerequisite of its long-lasting effects. The motivating cause, here, appears to be the application of a preservative treatment, through the ancillary means of boring spike holes.

Of far greater sifinificance than my opinion on this point is the professional experience of trained experts whose affidavits (exhibits D-1, D-2, D-3, D-4) were accepted by the litigants ‘‘as if they had been read in Court’’.

Exhibit D-1 is that of Harold Jack Parsneau, of Pointe-Claire, Quebec, “at the present time General Manager of all Wood Preserving Divisions of Domtar Limited’’ from whose depositions I will quote several paragraphs :

7. THAT as a result of my experience as aforesaid, I am fully familiar with the process of treating untreated railway ties with creosote and creosote solution by the “Reuping Method”.

17. THAT while boring also serves the purpose of allowing rail spikes to penetrate the railway ties, such operation is carried out before the creosoting treatment in order to avoid the exposure of untreated wood which would almost certainly result from a field operation and to ensure a better penetration of the preservative.

18. THAT incising is also a necessary operation in that it greatly facilitates the achievement of a uniform depth of preservative penetration.

19. THAT the creosote treatment in no way alters the form of the wood or the nature of the wood substance itself.

20. THAT the preservative simply adheres to the cell walls providing a continuous film which protects the wood substance from attack by decay producing fungi.

Another affidavit, that of George McMonies Hunt, Wood Preservation Consultant, bears witness to the importance of boring the spike holes before applying the preservative; I cite paragraph 9 of this deposition.

9. THAT railway ties can be bored either before or after treatment of the tie with preservative but when the boring is carried out prior to treatment the preservative enters the bored holes and penetrates the wood surrounding them thus obtaining especially good absorption and penetration in the rail-base area of the tie which is particularly vulnerable to decay.

Paragraph 12 completes this technician’s evidence, attesting that :

12. . . . When ties are bored after treatment the boring exposes untreated surfaces which allow fungi to gain entrance to the un- treated interior of the tie thus lessening the effects of applying preservative.

A third affidavit emanates from one Prentiss Buchanan May- field, a bachelor of science in chemical engineering (1926, Texas A & M College) and a Past President of the American Wood Preservers’ Association, who in his paragraphs 14 and 15 states that :

14. . . . I am informed and do verily believe that subsequent to the receipt by the defendant of untreated railway ties at Delson, Quebec, the ties are air-seasoned, have S-irons implanted and are bored and incised before the application of creosote or creosote solution.

15. THAT all of the work described in paragraph 14 hereof is necessary to ensure the best application of creosote or creosote solution and is necessarily ancillary to the application of preservative by the “Reuping Method”.

INCISING

The ‘‘next step’’ is incising. In the proper machine “the tie moves through toothed rollers which punch /8th inch deep incisions at regular intervals on all four sides thereof. The incisions permit deeper and more even penetration of the preservative. After emerging from the incisor the ties are elevated about 6 feet and moved laterally to a position near the door of the mill where thep drop into dollies for carriage to the creosoting plant”, (cf. paras. 14 and 15 of the agreed statement of facts. )

CREOSOTING

Constitutes the third and terminal part of the treatment; it is outlined in paragraph 18 of the agreed statement of facts, some excerpts of which are hereunder reproduced. It is achieved by means of a loaded cylinder

. . . filled with compressed air at a pressure of forty to sixty pounds per square inch. After the air pressure has been maintained for about 30 minutes the cylinder is filled, without releasing the pressure, with a preservative consisting of about 50% creosote oil and 50% bunker fuel oil. The preservative enters the cylinder from a “working tank” located above the cylinder in the retort building. The preservative is introduced at a temperature of 200° Fahrenheit and it is maintained at that temperature throughout the process by heat from steam coils in the base of the cylinder. The length of time required to fill the cylinder with preservative is approximately 30 minutes. . . . The total treatment time is generally 6 to 7 hours, depending upon the species of the wood and the degree of air seasoning thereof prior to treatment. The preservative is forced into the ties to an average depth of about one inch beyond both the outside surface of the tie and the interior surfaces of the spike-holes. The Dependant specifies that 7 pounds of preservative be injected into each cubic foot of wood. A number one tie contains approximately 3^ cubic feet of wood. Thus it contains approximately 24^ pounds of preservative after treatment and its overall weight is increased by that amount.

Added to the beneficial effects detailed previously, it is stated in paragraph 23 of this agreed statement that :

23. Creosoting also has other advantages in that it waterproofs the wood, thus reducing shrinking and swelling, and in that its oiling effect minimizes mechanical wear.

Such are the operations taking place at Domtar’s Delson plant which, so far as the undersigned can perceive, do not result in ‘‘manufacturing or producing’’ but in prolonging to a great extent the serviceable life of things alerady “manufactured or produced”.

At this stage, it seems advisable to dispose of an incident the purport of which was not devoid of all confusion. Defendant’s learned counsel, Mr. Aylen, read into the record of the case some statements made by D. L. Fenwick, the Canadian Pacifies General Tie and Lumber agent, in the course of an examination for discovery held in Montreal on May 2 and October 25, 196% (cf. transcription, vol. 1, page 19).

To the question :

Were all the ties and lumber treated by Domtar for C.P.R. at its Delson plant for use by the C.P.R. and not for sale?

the witness answered:

We do sell a small percentage of the ties, we creosote, to outside parties to maintain and construct sidings adjacent to our lines, the usual procedure is we supply the material for sidings under certain types of siding agreements, we may sell the ties to outside parties.

At the October, 1967, resumption of his examination, the C.P.R. lumber agent was asked again (cf. transcription, vol. 2, page 46) :

During the period in question between June 13th, 1963 and December 31st, 1964, was the Canadian Pacific Railway Company prepared to sell treated lumber or ties to anyone who wished to purchase treated lumber or ties?

the reply was:

We are not in the tie business — we will supply ties to people who ask us to maintain private sidings or maintain it themselves on request, if they are unable to obtain the ties themselves, we do not actively pursue the sale. We are buying ties for our own use, but we will sell ties to people to accommodate them, but we are not anxious to sell them.

Needless to say, any sale of ties by the defendant to whomsoever and for whatever purpose would be subjected to the sales tax pertaining thereto. Strangely enough, however, neither plaintiff’s information nor the agreed statement of facts bear any trace of the matter, unless some involved allusion to it can be derived from the defendant’s admission that ‘‘the other lumber products’’ (emphasis in text) were manufactured or produced at Domtar’s Delson plant for a tax value of $60,164.49, entailing a taxation liability of $4,122.55 (ef. agreed statement of facts, para. 2(1)(b)(c)).

This is said for duty’s sake only, since the material contents of those ‘‘other lumber products’’ were not divulged in Court. At any rate, this unexplained episode should not be considered as being before the Court.

Before reviewing the authorities cited, another point calls for a solution; it is the query in sub-para. (c) of the agreed facts’ paragraph 2, to wit :

(c) whether the Defendant may challenge in this Court the Minister’s determination of values.

A paramount consideration militates in favour of the defendant’s right of defence.

The issue herein strikes at the root of the Minister’s contention that the railway ties were ‘‘manufactured or produced’’ for the C.P.R. at Delson. The determination of values can arise only if the essential issue be affirmatively answered.

In my humble opinion, a challenge to the Minister’s prerogative of “determining values’’ might come to the fore only if his substantive viewpoint met with the Court’s approval that the application of a preservative treatment to prefabricated railway ties were a form of ‘‘manufacture or production’’.

This issue does not deal with the Minister’s jurisdiction but with the intrinsic and initial merits of his decision. Therein would lie an essential distinction from the Supreme Court decisions in The King v. Noxzema Chemical Company of Canada, Ltd., [1942] S.C.R. 178 at 180-186; [1942] C.T.C. 21; Weddel Ltd. v. The King, [1945] C.T.C. 245; Watt & Scott (Toronto) Ltd. v. The King, [1945] C.T.C. 259; Tees & Persse Ltd. v. The King, [1946] S.C.R. 499 at 515; [1945] C.T.C. 259.

An imposing array of cases was referred to and commented upon as the contending parties addressed the Court. Many of those precedents being to the same effect, that of M.N.R. v. Dominion Shuttle Co. (Ltd.) (1934), 72 Que. S.C. 15 at 16, 17, 18, 23 seems particularly suited, mutatis mutandis, to the present circumstances.

Dominion Shuttle Company, the defendant, was a licensed manufacturer and producer operating a plant at Lachute, Quebec. “Since 1924, they (had) been selling, on different occasions, to the Canadian Pacific Railway ‘cross arms’ which they delivered from their plant at Lachute to different points in Quebec, as requested by their buyers.’’ The defendant bought the lumber in lengths in British Columbia and, as the president of the company stated in his evidence: “We deal with the sawmill in British Columbia and we have the lengths come in for the purpose of being finished and sold as cross arms’; we creosote them, roof them, round them at the top, bore holes to instal the insulators, at Lachute’’.

The plaintiff’s submission that sales tax should be paid on the freight of lumber lengths from British Columbia, elaborated the extent of the work done to those lengths of wood at the defendant’s shop. Thus, on page 16, we see that, upon reception at the plant,

. . . these lengths of lumber are not “cross arms”, but blank “cross arms” which only become “cross arms” after going through the manufacturing process at Lachute, and that without that process, these lengths of lumber could be used for other purposes; and without it they cannot be used as “cross arms” ; .. . defendant

(is) the real manufacturer of the “cross arms”.

Defendant denied liability to sales tax on the ground that it did not ‘‘manufacture these cross arms’ at Lachute, but only (prepared) them for delivery, the cross arms’ being manufactured at the mill in British Columbia’’.

Mr. Justice Archambault found as follows:

The evidence shows that these lengths of lumber were sold and delivered by the saw-mill in British Columbia to defendants at Lachute, in lengths of 20', 16’ and 25’ and at so much per thousand feet.

The work done on these lengths by defendant was : first, to cut them in lengths of 10’, or 8’; second, to creosote them, or dip them in creosoting oils to preserve them against the elements of the weather (for which defendants have a special plant); third, to round them or mill or dress the lumber to the rounded shape; fourth, to bore holes in them in order to insert the pin on which the insulator is placed; and after this work was done, they were sold to the Canadian Pacific Railway at the price, not based on so much a thousand feet, but based on so much per hundred “cross arms”.

The learned trial judge’s understanding of ‘‘ what is a manufacturer” appears on page 18 of the official report:

. . . the Court gathers that to manufacture is to fabricate; it is the act or process of making articles for use; it is the operation of making goods or wares of any kind ; it is the production of articles for use from raw or prepared material by giving to these materials new forms, qualities and properties or combinations whether by hand or machinery.

This is exactly what the defendant company did. They received the raw material or prepared raw material, or lengths of lumber, and put them through the processes already mentioned to make “cross arms” and sold them to the consumer.

The concluding lines, on page 23, are:

Defendants’ attorney contended that when the lumber lengths were shipped from British Columbia to Lachute, they were “cross arms” and could not be used as anything else but “cross arms”.

The Court does not agree with the defendants’ attorney on this point. These lumber lengths shipped from British Columbia could not be used as “cross arms” before the process was passed upon them by defendant company; furthermore, they could be used for something else . . . (italics are mine).

Contrarily, in the case at bar, the ties entrusted for creosoting to Domtar surely ‘could not be used for something else’’.

Whenever applicable to the context, the basic or statutory words of a fiscal law should receive their ‘‘ordinary, popular and natural sense’’ (ef. Gruen Watch Company of Canada Limited et al. v. The Attorney-General of Canada, [1950] O.R. 429 at 441). Presumably, were a furnisher of these ties asked what goods he sold to the Canadian Pacific, his answer in the “ordinary, popular and natural sense’’, could be none other than ‘‘I am selling them railroad ties’’.

It is far from unusual that interpretation of a fact, material or intellectual, elicits contradictory opinions; to this human trait, the actual problem is no exception, as will be seen in the four United States decisions.

Of these, the first is that of State v. American Creosote Works, Inc., Supreme Court of Louisiana, March 28, 1927*; [1] I quote:

Corporation engaged in business of converting rough lumber into telephone poles, paving blocks, car bumpers, etc., and rendering it practically imperishable and more valuable and useful through creosoting process; held a “manufacturer”.

. . .. Creosote oil is applied under pressure, taking the place of the resin, sap, and water forced out and filling up the expanded cells of the wood.

We think the of regoing process is essentially a manufacturing process . . .

To all appearances, the theory of stare decisis is not one of the prized traditions of Louisiana’s Supreme Court, which 20 years before handed down a different judgment in re: Shreveport Creosoting Co., Limited v. City of Shreveport et al., 44 South. 329, May 27, 1907:

Conditions existing in the year 1906 did not justify plaintiff’s claim for an exemption from taxation for that year. The creosoting process on which its right to exemption was predicated was applied to cross-ties already existing as articles of wood, and which it had purchased from a company which had already made them. The process in question was not creative in character, but merely preservative.

A striking analogy, indeed, to the matter under examination.

Next in line is the decision of the Supreme Court of Indiana, December 23, 1936, in the affair of Indiana Creosoting Co. v. McNutt, 5 N.E. 810 at 314, wherein it was held that:

The process of creosoting the ties cannot in any sense be considered manufacturing. Could it be said that one who paints buggies and wagons after all parts have been made and assembled is engaged in the manufacturing business? We think not. The injection of oil into the ties is no different than the painting of a buggy, wagon, or house. All is done for the preservation of the material. The oil is supposed to preserve the ties, and the paint is to preserve the wagons, buggies, or house. The process by which it is done, whether by machinery or labor, is not manufacturing, but merely service, or labor, in doing the work. Under no definition of any dictionary that we are able to find is the word “manufacture”, or “manufacturing,” defined to include the work done by appellant.

A similar finding was arrived at, March 17, 1947, by the Supreme Court of Akansas, in the case of North Little Rock Special School Dist. et al. v. Koppers Co. Inc., et al., 200 S.W. 2nd Series 519, 521. The Court decided that:

A company engaged in drying and treating timbers and poles sent to it by its customers for preservative treatment was not a “manufacturer” within the meaning of statute requiring a manufacturer to list for taxation all property received or held in any process of operation of manufacturing.

Also quoted approvingly was the Indiana Supreme Court’s assertion in re: Indiana Creosoting Company v. McNutt, supra, that ‘‘the process of creosoting the ties cannot in any sense be considered manufacturing ’ ’.

An exhaustive review of the pros and cons of this suit impels the undersigned to adopt the defendant’s claim and. hold that Domtar’s action was not of a ‘manufacturing or producing” order but consisted, as pleaded, in the application to prefabricated ties of the preservative creosoting treatment.

Therefore this Court enacts and orders as follows:

1. Conformably to its admission in the agreed statement of facts, defendant shall pay to plaintiff a sales tax in the sum of $4,122.55 and costs pertaining thereto ;

2. For the surplus, the plaintiff’s information should be dismissed; a recommendation is made that Her Majesty the Queen pay the costs of suit to the defendant.