Mcintyre
J:—In
this
appeal
from
the
Federal
Court
of
Appeal
the
appellant
seeks
to
have
the
Court
declare
that
it
is
a
manufacturer
or
producer
of
electrical
energy
in
the
circumstances
about
to
be
described.
Such
a
declaration
would
entitle
the
appellant
to
an
exemption
from
the
consumption
or
sales
tax
levied
in
subsection
27(1)
of
the
Excise
Tax
Act,
RSC
1970,
c.
E-13
(the
Act),
by
virtue
of
the
combined
effect
of
subsection
29(1)
of
the
Act
and
section
1
of
Part
XIII
of
Schedule
III
to
the
Act.
The
appellant
bank
is
the
owner
of
the
Royal
Bank
Plaza
(the
Plaza),
a
building
complex
in
Toronto,
in
which
certain
banking
offices
and
facilities
are
contained
and
in
which
space
is
leased
to
tenants
for
retail,
commercial
and
office
use.
The
appellant
procures
its
principal
electrical
supply
for
the
Plaza
from
Toronto
Hydro,
the
municipal
utility.
The
voltage
at
which
this
power
is
delivered
to
the
Plaza
exceeds
that
which
is
required
for
the
electrical
services
in
the
building.
It
is
reduced
to
the
required
levels
by
the
use
of
seventeen
primary
transformers
for
distribution
within
the
building.
Where
necessary,
it
is
further
reduced
by
secondary
transformers
throughout
the
building.
The
appellant
has
also
installed
four
diesel-powered
electrical
generators
in
the
building
together
with
ancillary
equipment.
The
purpose
of
these
generators
is
to
supply
emergency
or
back-up
power
to
operate
elevators,
water
pumps,
emergency
lighting
in
hallways
and
public
areas,
and
alarms
in
the
event
of
an
interruption
of
the
regular
service.
Prior
to
the
installation
of
the
generators,
ten
of
the
primary
transformers
had
been
purchased
and
installed
in
the
Plaza.
The
generators
are
capable
of
producing
approximately
ten
per
cent
of
the
peak
electrical
requirement
of
the
Plaza
and
are
capable
of
use
as
a
supplement
to
normal
supply.
The
main
purpose
of
the
generators
is
to
provide
a
stand-by
power
source
and
they
are
operated
for
about
one
hundred
hours
per
year,
fifty
hours
for
testing
and
fifty
hours
for
production.
It
is
these
generators
which
are
the
subject-matter
of
this
appeal.
The
appellant
applied
to
the
Tariff
Board
under
section
59
of
the
Act
for
a
declaration
that
the
generators
were
exempt
from
the
taxation
imposed
by
subsection
27(1)
of
the
Act
by
virtue
of
the
provisions
of
subsection
29(1).
The
application
was
dismissed
and
an
appeal
to
the
Federal
Court
of
Appeal
failed.
The
appeal
to
this
Court
is
pursuant
to
leave.
The
statutory
provisions
are
set
out
below:
There
shall
be
imposed,
levied
and
collected
a
consumption
or
sales
tax
of
twelve
per
cent
on
the
sale
price
of
all
goods
(a)
produced
or
manufactured
in
Canada
subsection
29(1)
The
tax
imposed
by
section
27
does
not
apply
to
the
sale
or
importation
of
the
articles
mentioned
in
Schedule
III.
Schedule
III;
Part
XIII;
section
1
(as
amended)
1.
All
the
following:
(a)
machinery
and
apparatus
sold
to
or
imported
by
manufacturers
or
producers
for
use
by
them
directly
in:
(i)
the
manufacture
or
production
of
goods
(ii)
the
development
of
manufacturing
or
production
processes
for
use
by
them,
or
(iii)
the
development
of
goods
for
manufacture
or
production
by
them.
It
was
common
ground
that
electricity
comes
within
the
meaning
of
the
word
“goods”
in
Schedule
III,
Part
VI,
section
3
to
the
Act.
It
was
not
questioned
that
the
generators
were
machinery
sold
to
the
appellant
and
subject
to
tax
under
subsection
27(1)
of
the
Act
unless
exempted
under
subsection
29(1)
and
the
aforesaid
provisions
of
Schedule
III.
It
is
apparent
at
once
that
to
be
eligible
for
the
exemption
under
subsection
29(1)
of
the
Act
the
appellant
must
be
a
manufacturer
or
producer
of
goods,
and
the
generators
must
be
machinery
purchased
and
used
directly
in
the
manufacture
of
goods.
The
Court
of
Appeal
held
that
the
appellant
could
not
be
considered
to
be
a
manufacturer
within
the
meaning
of
the
Act
and
therefore
declined
to
make
the
exempting
declarations
sought.
The
Court
reached
this
conclusion
on
a
consideration
of
the
Act
as
a
whole
and,
while
it
recognized
that
on
the
plain
meaning
of
the
words
“producer
and
manufacturer”
the
appellant
would
qualify,
the
fact
that
the
use
of
the
generators
was
so
limited
and
formed
only
an
incidental
part
of
the
appellant’s
operation
indicated
that
it
could
not
have
been
the
parliamentary
intention
to
allow
an
exemption
in
these
circumstances.
Urie,
J,
for
the
court,
said:
While
undoubtedly,
applying
these
definitions
[standard
dictionary
definitions
of
manufacturer
and
producer]
very
broadly,
the
appellant’s
use
of
generators
for
emergency
electricity
could
be
described
as
manufacturing,
using
the
definitions
in
the
context
of
the
Act
and
schedule
leads
me
to
conclude
that
the
purpose
for
which
they
are
used
is
much
too
limited
in
scope
and
duration
to
qualify
for
the
exemption
available
to
true
manufacturers
or
producers.
In
approaching
this
case
it
is
important,
in
my
opinion,
to
consider
the
appellant’s
position
in
the
matter
as
that
of
an
owner
and
operator
of
a
commercial
building
and
not
as
a
banker.
This
is
important
because
the
expenditures
made
by
the
appellant
for
the
generators
and
their
installation
were
made
in
the
construction
and
operation
of
the
building.
The
supply
of
electrical
power
to
the
tenants
of
the
building
is
accordingly
much
more
than
an
incidental
part
of
the
appellant’s
operation.
It
is
a
highly
important
step
in
the
performance
of
its
contractual
obligations
to
its
tenants
and
an
important
part
of
its
business
as
a
building
operator.
The
fact
that
the
generators
produce
only
a
small
portion
of
the
electricity
supplied
by
the
system
seems
to
me
to
be
of
no
significance.
The
generators
form
a
part
of
the
total
system
and
their
services
when
needed
are
available
for
the
tenants
on
the
same
footing
as
the
regular
power
supply,
and
the
provision
of
such
an
emergency
or
back-up
service
is
no
more
than
a
prudent
step
taken
to
complete
a
total
electrical
service.
The
vital
question
here
is:
Can
the
appellant
qualify
as
a
manufacturer
or
producer?
The
appellant
argues
that
the
generation
of
electric
current
by
the
generators,
when
in
operation,
constitutes
the
manufacture
of
goods
(electricity)
and
says
there
is
nothing
in
the
Act
to
justify
the
restricted
interpretation
of
its
plain
words
adopted
by
the
Court
of
Appeal.
The
words
of
the
Act,
it
is
asserted,
clearly
bring
the
appellant
within
the
exemption
provisions.
There
can
be
no
doubt
in
my
mind
that
the
appellant
is
manufacturing
electricity
when
its
generators
are
in
operation.
Indeed,
this
was
scarcely
contested.
I
find
it
impossible
to
apply
any
restrictive
definition
to
the
term
“manufacturing”
since
the
Act
itself
does
not
do
so.
There
is
no
definition
of
manufacturing
or
manufacture
in
the
Act,
but
I
accept
a
definition
given
by
Spence,
J
in
The
Queen
v
York
Marble,
Tile
and
Terrazzo
Limited,
[1968]
SCR
140;
[1968]
CTC
44;
68
DTC
5001
where
he
said
at
145
[48,
5003]:
For
the
present
purposes,
I
wish
to
note
and
to
adopt
one
of
the
definitions
cited
by
the
learned
judge,
[Archambault,
J
in
the
MNR
v
Dominion
Shuttle
Company
Limited
(1933),
72
Que.
SC
15)]
i.e.,
that
“manufacture
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”.
Of
even
greater
significance
on
this
question
is
the
case
of
Bank
of
Nova
Scotia
v
His
Majesty
the
King,
[1930]
SCR
174,
where
this
Court
held
that
a
bank
operating
a
stationery
department
for
the
production
(for
its
own
use
and
that
of
its
various
branches)
of
stationery,
including
various
banking
forms
and
books
and
other
banking
documents,
was
a
manufacturer
as
a
result
of
such
efforts.
This
conclusion
was
reached
notwithstanding
the
fact
that
the
product
of
the
stationery
department
was
used
exclusively
by
the
bank
itself,
whereas
in
the
case
at
bar
the
electricity
produced
by
the
generators
in
question,
when
in
operation,
is
supplied
for
the
benefit
not
only
of
the
appellant
but,
in
addition,
the
tenants
and
those
frequenting
the
tenants’
premises,
which
fact
it
would
seem
would
strengthen
the
appellant’s
contention
that
it
is
a
manufacturer
of
electrical
current.
In
my
view,
these
cases
support
the
appellant’s
argument,
and
I
conclude
that
the
appellant
is
performing
the
Act
of
manufacturing
electricity
by
the
use
of
the
generators
and,
being
unable
to
find
anything
in
the
Act
to
dictate
otherwise,
I
conclude
that
the
appellant
becomes
a
manufacturer
by
producing
electric
current
by
the
operation
of
the
generators.
The
appellant
advanced
an
alternative
argument
asserting
that
even
if
the
operation
of
the
generators
did
not
constitute
it
as
a
manufacturer,
the
operation
of
the
seventeen
generators
required
to
reduce
the
voltage
of
the
power
supplied
by
Toronto
Hydro
to
levels
suitable
for
use
in
the
building
had
that
effect.
In
view
of
the
conclusion
which
I
have
reached,
it
is
not
necessary
to
deal
with
that
argument.
I
would
allow
the
appeal
and
make
the
declarations
sought
to
the
effect
that
the
appellant
is
entitled
to
the
exemption
provided
in
the
Act
and
to
its
costs
throughout.