MNR v. Plastibeton Inc., 86 DTC 6400, [1986] 2 CTC 211 (FCA)

Marceau, J.:—I agree with my brother MacGuigan that this appeal must succeed. The learned trial judge has reached his conclusion on the sole basis that precast polymer concrete in the form of a median strip on a highway constitutes a separate "structure” from the highway, and I, too, think that this finding was not open to him in view of the meaning that the word "structure” must be given in the context of subsection 26(4) of the Excise Tax Act.

I feel obliged to say however that I have much difficulty in following my brother when he reads the reasons of Martland, J. in Superior Pre-Kast Septic Tanks Ltd. and Lloydminster Pre-Kast Septic Tanks Ltd. v. The Queen, [1978] 2. S.C.R. 612; [1978] C.T.C. 431, as endorsing criteria of a general application for determining the existence of a "structure” within the meaning of the provision. These reasons are obviously extremely helpful in the general discussion of the problem, but they appear to me to be only concerned with the very particular facts therein involved. The decision they support clearly stands for the proposition that physical separation of two "constructions” which, being of a certain size and designed to be fixed to the ground, both have the main characteristics of a structure, will be sufficient to displace the idea of both forming one structure only. It does not help, however, in the case of two such constructions attached to one another as here, to determine whether these constructions become two parts of one structure or remain two distinct structures.

If I share the opinion of my brother in the present case, it is because I think that in order to decide whether two constructions so attached to one another form one structure only or remain two structures, one has to look at the functions assigned to each of them. If the two functions are, in effect, common, in the sense that they are meant to combine to realize one general purpose for which the whole is set up, then they become parts of one structure, and this is, to me, undoubtedly, the situation here.

I would dispose of the appeal as suggested by my colleague.

MacGuigan, J. (Lacombe, J. concurring):—The principal question in this case is whether, for excise tax purposes, precast polymer concrete in the form of a median strip on an elevated highway can be said to be a separate structure from the highway or is merely part of the structure of the highway.

The trial judge described the product in question as follows:

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

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

Subsection 26(4) of the Excise Tax Act is as follows:

After surveying various meanings of the term "structure", the learned trial judge found as follows:

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

The leading authority with respect to the meaning of structure in paragraph 26(4)(a) is Superior Pre-Kast Septic Tanks Ltd. and Lloydminster Pre- Kast Septic Tanks Ltd v. The Queen, [1978] 2 S.C.R. 612; [1978] C.T.C. 431. That case concerned precast concrete septic tanks, rectangular in shape, of poured concrete reinforced with steel reinforcing rods. The concrete was poured into two moulds in order to form two sections which were delivered at the site and assembled.

The unanimous holding of the Supreme Court most clearly appears in contrast with the decision of this Court in the same case, [1977] 2 F.C. 542, at 548; [1977] C.T.C. 156 at 161-162, as expressed by Jackett, C.J.:

In my view, a septic tank used as part of the sanitary system of a residence that is not on the sewer line is not a “structure” within the words “building or other structure” any more than a furnace or other similar fixture inside a building and forming a part thereof essential for its efficient use is such a structure. As I see it, all such equipment is essentially part of the building or an accessory to the building and in the phrase “building or structure” as used in section 26(4)(a), the word “structure” is something other than a “building”, a part of a building or an accessory to a building.

However, Martland, J. in the Supreme Court of Canada saw the issue differently, supra, at 619-20 (C.T.C. 435):

With respect, in my opinion the fact that a septic tank is used as a part of the sanitary system of a residence, not on a sewer line, does not make it a part of the residence building. I would consider a water tower constructed to store water for use in the residence to be a structure in itself. It is not a part of the building, though constructed for the use of the residents of the building.

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

It seems to me that in this analysis Martland, J. endorses three criteria for determining the existence of a structure: (1) it must be built or constructed; (2) it must rest on or in the ground (3) it must not be “a part” of another structure.

The first criterion is so obvious as not to be likely to be in dispute in any case to reach litigation. The second was given a broad interpretation by Collier, J. in The Queen v. Cefer Designs Ltd. (1974), 74 D.T.C. 6333 to include floating concrete docks which were permanent installations resting partly or are connected to land. In the present case, however, by no stretch of the imagination can the median strip be said to rest on the ground.

Nevertheless, what is to my mind more decisive is Martland, J.’s third criterion. “Being not a part of another structure” implies that the substance in question has not only an internal unity and identity (its positive characteristic) but a certain separateness or apartness from the other structure (its negative characteristic).

The learned trial judge here adequately took account of the positive characteristic but not of the negative one. The median strip has no purpose other than that of forming part of the highway. It is a common, even a usual feature, of such highways. It is not separate and apart from the highway like a tower or a Cabin, but is entirely co-extensive with it, having no distinctive shape or existence. It is a part or incident of the highway, and cannot therefore qualify as an “other structure” from it for purposes of paragraph 26(4)(a).

The respondent also argued paragraphs (b) and (c) of subsection 26(4). In Harris Steel Group Inc. v. M.N.R., [1985] 1 C.T.C. 181; 85 D.T.C. 5140, this Court held that structural building sections have to be load-bearing elements to qualify under paragraph 26(4)(b). Here, to the extent that the median sections are load-bearing even in an extended sense, it is only when struck by vehicles; the support they give in such cases is to the vehicles and not to the highway.

Finally, the respondent urged that the polymer concrete in question should be considered to be "concrete building blocks” in the English version of paragraph 26(4)(a), or "des agglomérés” in the French version. However, these are not parallel texts, agglomérés in the French version being the equivalent of "cinder building blocks” in the English. The respondent has to remain with "concrete building blocks” in English and parpaings in French. The expression “building blocks” (parpaings) has a distinctive meaning, as defined by the trial judge with respect to another of the respondent's products (which is not in issue on this appeal):

I have found no dictionary definition of “building blocks” but in common parlance a building block means a cubical or rectangular block used in the building trade. The Living Webster Encyclopedic Dictionary defines “brick” as “a block of clay, usually rectangular” and as “blocks used for building which are made from another material; as, a concrete brick; block shaped objects”. In the French version the word used in paragraph 26(4)(c) is “parpaing” which is defined in le Petit Robert as a “bloc (de plâtre, de ciment) formant l'epaisseur d'une paroi”. .. Blocks, like bricks, are to be superimposed in the erection of a wall or a building. The Plastibeton panels are not so shaped that they could be stacked evenly one over the other for building purposes. They were not made for that.

With respect, I entirely agree.

In the result, I would allow the appeal and set aside that part of the declaration made by the trial judge to the effect that the median polymer strips are exempt from tax pursuant to subsection 26(4) of the Excise Tax Act, with costs to the appellants here and below.

Appeal allowed.