Canada (Minister of National Revenue) v. Cast Terminals Inc., 2003 FCT 535

Date: 20030430

Docket: T-1951-00

Citation: 2003 FCT 535

         IN THE MATTER OF AN APPEAL pursuant to Section 81.24

of the Excise Tax Act, to the decision rendered by the Canadian

International Trade Tribunal, on June 22, 2000,

Appeal nos. AP-98-093 and AP-98-094,

under Section 81.19 of the Excise Tax Act R.S.C. 1985, c. E-15

BETWEEN:

                      MINISTER OF NATIONAL REVENUE

                                                                Plaintiff

                                   and

                          CAST TERMINALS INC.

                                   and

                    TERMINUS RACINE (MONTRÉAL) LTD.

                                                               Defendants

                                                            REASONS FOR ORDER

LEMIEUX J.:

A.         INTRODUCTION AND BACKGROUND

[1]                 The Minister of National Revenue (the "Minister), pursuant to sections 81.24 and 81.28 of the Excise Tax Act (the "Act), appeals two decisions of the Canadian International Trade Tribunal, (the "Tribunal") dated June 22, 2000 in appeal numbers AP-98-093 and AP-98-094. In those two appeals, the Tribunal reversed, under section 81.19 of the Act, rulings by the Minister who denied applications for refund of excise tax paid by the defendants on diesel fuel used to generate electricity to power their Le-Tro-porters, which are machines used in handling containers at the terminals of Cast Terminals Inc. ("Cast") and Terminus Racine (Montreal) Ltd. ("Racine") in the Port of Montreal. The refund sought for Racine was $117,696.96 covering the period November 15, 1994 to October 31, 1996. The amount for Cast was $66,563 and the period covered was between May 1, 1995 and April 30, 1997.

[2]                 Section 81.24 of the Act provides "any party to an appeal to the Tribunal under section 81.19 ... may, ... appeal the decision to the Federal Court, Trial Division".

[3]                 Paragraph 81.28(1)(b) of the Act indicates how an appeal by the Minister under section 81.24 is to be instituted in the Federal Court, Trial Division "[it] shall be instituted ... in the manner provided by the rules made pursuant to the Federal Court Act for the commencement of an action".

[4]                 Subsection 81.28(3) of the Act spells out the procedure in an appeal. An appeal is "deemed to be an action in the Federal Court to which the Federal Court Act and the rules made pursuant thereto applicable to an ordinary action apply ...". The subsection carves out exceptions which are not relevant here.

[5]                 Subsection 23(1) of the Act imposes an excise tax on goods mentioned in Schedules I and II of that Act. Diesel fuel other than aviation fuel is item 9.1 of Schedule I. However, paragraph 23(8)(c) stipulates the tax imposed under subsection 23(1) is not payable in the case of diesel fuel for use in the generation of electricity yet that same paragraph denies the exemption where the electricity so generated is used primarily in the operation of a vehicle. "Vehicle" is not defined in the Act.

[6]                 Paragraph 23(8)(c) of the Act reads as follows:

[7]                 The narrow issue before the Tribunal and this Court is whether the Le Tro-porters are vehicles within the meaning of the Act and, if so, whether the electricity generated by the consumption of diesel fuel in the Le Tro-porters was used primarily in their operation.

B.        THE TRIBUNAL'S DECISION

[8]                 In a summary of its reasons for decision, the Tribunal stated:

The evidence adduced in these appeals clearly leads to the conclusion that Le Tro-porters are material handling equipment and not "vehicles" within the meaning to be given to that word in the Excise Tax Act. The Tribunal is persuaded that the goods in issue are used essentially for handling containers in terminals and not for transportation. In the Tribunal's view, the transportation function of the Le Tro-porters is incidental to their main functions, which are lifting, lowering, moving and placing containers. Therefore, the Tribunal finds that the diesel fuel used to generate electricity for use in the Le Tro-porters qualifies exemption from excise tax pursuant to paragraph 23(8)(c) of the Act. [emphasis mine].

[9]                 The Tribunal heard the evidence of Michael Fratianni, Comptroller for both Cast and Racine. He provided a video showing the functions of the Le Tro-porters and testified the basic business of each terminal operated by Cast and Racine was the loading and unloading of container vessels on behalf of international shipping companies. He stated the Le Tro-porters were used to lift and handle containers in the shipyard and, as such, are container handling equipment. The Tribunal summarized Mr. Fratianni's evidence:

He stated that Le Tro-porters essentially lift containers either from stacks onto a trailer bed or from one section of a pile onto a higher section of another pile, as opposed to horizontal transportation. He further testified that Le Tro-porters use telescopic spreaders to grab the containers, which are an integral part of the goods in issue. The spreader is adjustable depending on the container that it is handling. Mr. Fratianni testified that Le Tro-porters are not designed to travel long distances because the weight of the container puts a lot of stress on the boom and also because the driver's visibility is obscured by the container which is suspended from the spreader.

In answering questions from the Tribunal, Mr. Fratianni testified that the Le Tro-porters are referred to as machinery and not as trucks. He further testified that the Le Tro-porters are not structurally designed to travel longer distances than the distance in the yard between the tractor-trailer flatbed and the stack. He also stated that, for security reasons, Le Tro-porters are not designed for travelling in the yard with weights suspended in mid-air, as the container could move sideways and provide for a very dangerous and unsafe situation. [emphasis mine]

[10]            Racine and Cast also called the expert evidence of Dr. Genest and the Tribunal summarized his testimony:

He testified that the prime source of power of a Le Tro-porter is its diesel engine that is used to produce electricity. This engine does not directly contribute to hoisting containers or moving the Le Tro-porter. He also testified that the Le Tro-porter has separate electric motors for hoisting containers, for controlling the spreader, for moving and for steering. He explained that there are four types of work performed by a Le Tro-porter, namely, lifting and lowering containers, controlling the spreader, moving back and forth, and steering. He noted that the objective of his report was to try and estimate the proportion of fuel used by Le Tro-porters for handling containers, as opposed to moving the machine. He estimated that at least 58% of the work performed by Le Tro-porters is the hoisting of containers. [emphasis mine]

[11]            The Tribunal, in its reasons, also referred to the evidence of James C. Patry on behalf of the Minister. He responded to Dr. Genest's expert report and provided the Tribunal with his own findings based on the same time and motion information, the same technical specifications, and the same raw data with certain modifications Dr. Genest used in preparing his report. The Tribunal stated "by adjusting some of the numbers, Mr. Patry estimated that at least 48% of the work performed by Le Tro-porters is the lowering and lifting of containers".

[12]            After noting there was no definition of the term "vehicle" in the Act, the Tribunal stated "as recognized by the Tribunal in previous decisions, the Tribunal will, therefore, look to the ordinary meaning of the word as found in conventional dictionaries". It also considered some jurisprudence in this Court and in the Supreme Court of Canada to the effect a "vehicle must be a means of conveyance with wheels and used for the carriage of persons or goods". It concluded:

In the Tribunal's view, the essential elements of the term "vehicle" are that is a receptacle with wheels used as a means of conveyance for transporting persons or goods. There remains to determine whether the goods in issue fall within that description. [emphasis mine]

[13]            The Tribunal provided the following analysis in concluding the Le Tro-porters were not vehicles for the purposes of paragraph 23(8)(c) of the Act:

The evidence before the Tribunal is that the main purpose of the Le Tro-porters is to handle containers. Their functions consist of locking onto a container with a spreader, lifting or lowering the container from a flatbed truck or a pile of containers and then moving that container over a short distance to the location where it is to be stored or to another flatbed for further movement. The Le Tro-porter lifts, lowers and tilts containers with its telescopic spreader. The carrying capacity of the Le Tro-porters is restricted to a 20 foot or 40 foot container and their lifting capacity is up to three containers high. The Le Tro-porter does not have a receptacle in which containers can be placed in order to be moved, nor is it a receptacle itself in which containers can be transported. It is by the action of the spreaders that containers are lifted and carried.

The Tribunal notes that Le Tro-porters are not designed to transport containers over any great distance, since they can easily tip forward or be severely damaged when operating on uneven surfaces. The Tribunal also acknowledges that, because of the Le Tro-porters' design, the operator's vision is impaired when it is carrying a container because the container is directly in his line of vision.

The Tribunal accepts the evidence that the Le Tro-porters are used to lift and handle containers in the shipyard and, as such, are container handling equipment. The Tribunal agrees that the goods in issue are used essentially for handling containers in terminals and not for transportation. The Tribunal further agrees that the transportation function which are lifting, lowering, moving and placing containers either from stacks onto a trailer bed or from one section of a pile onto a higher section of another pile. While the evidence is clear that Le Tro-porters are engaged in a minor amount of transportation, that transportation is incidental to their main purpose, which is material handling.

Finally, the Tribunal acknowledges the testimony of both experts, which assists the Tribunal in determining whether the Le Tro-porters should be considered "vehicles". In the Tribunal's view, it is obvious, from the expert's evidence on the calculations of the percentage of fuel used by the Le Tro-porters to perform each of their function, that lifting, lowering and placing containers are the key attributes of the Le Tro-porters. [emphasis mine]

[14]            As can be seen in the Tribunal's reasons, it found the Le Tro-porters by purpose, design, and function are used "essentially for handling containers and not for transportation". It accepted the Le Tro-porters had a transportation function but that function "is incidental to their main functions ...". It found "while the evidence is clear that the Le Tro-porters are engaged in a minor amount of transportation, that transportation is incidental to their main purpose, which is material handling".

C.        THE PROCEEDINGS IN THIS COURT AND THE EVIDENCE

[15]            By agreement between the parties, the evidence and exhibits which were before the Tribunal and the discovery of Michael Fratianni, in this action, constituted the evidence before me and could be supplemented by such other admissible evidence tendered.

[16]            It was also agreed Cast and Racine would lead off which they did by playing a silent video showing a Le Tro-porter in operation. They called no witness.

[17]            The Minister called two witnesses: Mr. Fratianni, whose deposition on discovery was also filed, and James C. Patry, P.Eng., who was qualified as an expert in mechanical engineering related to vehicle technology. Prior to the hearing, Mr. Patry had filed an expert report. He also, during his testimony, referred extensively to documents contained in the Minister's amended affidavit of documents which, by agreement, constituted evidence in this action.

(1)        The evidence from Cast and Racine

[18]            The video demonstrated how the Le Tro-porter functioned and operated. As noted, Le Tro-porters are used to handle containers, in this case, in the yards of the Cast and Racine port terminals in Montreal.

[19]            Physically, a Le Tro-porter looks like a forklift machine. Its chassis sits on four big articulated wheels, six feet tall, and it is operated by a person sitting in the cab where the controls are found. Its engine is back of the cab and, in the front, it has a specially designed front end described as a spreader consisting of an adjustable claw sitting on a ladder frame enabling it to modify its grip to pick-up and hold twenty or forty foot containers and move up and down.

[20]            The video showed the making of stacks of containers side by side and up to three high as the Le Tro-porter's main function. Containers, when they are unloaded from or loaded on a ship will have multiple destinations and to be smoothly and efficiently loaded, they must be segregated in separate stacks according to those multiple destinations. This is what stacking does. Numerous stacks may be formed in a container yard at any one time.

[21]            The basic operations captured on the video had the Le Tro-porter parked a short distance away from a stack awaiting the arrival of a container brought to it by a yard shunter pulling a trailer flatbed carrying the container. The Le Tro-porter would then advance to the trailer, grip the container and lift it off the flatbed. The flatbed would then be drawn away by the tractor. The Le Tro-porter would then advance a very short distance to the stack and by raising the container put it in its designated place. Once this is accomplished, the Le Tro-porter would back up to the spot where it had been parked before to await another yard shunter hauling a container for stacking. These basic movements were repeated several times for the several containers handled.

[22]            That same Le Tro-porter was then shown without a container clasped in the spreader, travelling between container stacks to another stack where the basic operation would be repeated.

(2)        The Minister's evidence

(a)        Mr. Fratianni

[23]            As noted, the Minister called as his first witness Mr. Fratianni whose examination for discovery transcript in this action was also filed.

[24]            On discovery, Mr. Fratianni reiterated his testimony before the Tribunal that the Le Tro-porter is not used by Cast and Racine to carry containers from one stack to another or from one area of the terminal yard to another. The Cast Terminal comprises 54 acres and the banana shaped Racine Terminal is spread over 62 acres. The basic function of its Le Tro-porters, he stated, is strictly for lifting and handling containers, stacking or unstacking them and occasionally sorting them. The marshalling of containers in the yard, where travel and transportation is required, is assigned to the tractor pulling flatbeds. Mr. Fratianni confirmed that Le Tro-porters do move, without containers, from one area of the yard to another.

[25]            On discovery, Mr. Fratianni answered several questions related to the physical characteristics of the Le Tro-porter. It is 44 feet in length with a 225 horsepower Cumming engine powering maximum speeds of 20 miles per hour. It has turning signal lights and an alarm when backing up. It has working lights but no mirrors.

[26]            The Le Tro-porters must each have an off-road plate for registration purposes issued by Quebec's Highway Department. While its operators do not require driving licences, they receive training on how to operate it.

[27]            In the witness box, Mr. Fratianni was asked a few questions by counsel for the Minister and he was not cross-examined.

[28]            He confirmed he was an accountant, was comptroller of both the Racine and Cast Terminals, was not an engineer, had no knowledge of the mechanics of the Le Tro-porter, does not know how it works mechanically, does not know how to repair it and has never driven one nor is he trained to do so.

[29]            He stated he was not familiar with the Le Tro-porter's maintenance manual and confirmed Le Tro-porter is a brand name.

[30]            He stated Cast and Racine had a wide range of container handling equipment from rubber-tired gantries, front-end loaders, small lift trucks, ship to shore gantries and a fleet of tractors and trailers.

[31]            He confirmed Cast and Racine had three brands of front-end loaders to handle containers: the Le Tro-porter, the Ferrari and the Heisler units. He objected to their description as lift trucks.

[32]            He described the overall functioning of the terminals: the receiving, whether by truck or rail, and forwarding of containers to and from the terminals. Le Tro-porters are also used to unload containers from rail flatbeds.

[33]            He confirmed the video was shot by Dr. Genest and it accurately described the operations at Cast and Racine in terms of the Le Tro-porters.

(b)        James Patry

[34]            James Patry's direct evidence explained his expert report, then commented on some aspects of the Tribunal's decision and the evidence of Michael Fratianni relied upon by the defendants in their memorandum of fact and law before this Court. His expert report had a different purpose than the one he had filed with the Tribunal.

[35]            In his expert report, Mr. Patry reviewed the literature published by industry and standards organizations such as the Society of Automotive Engineers ("SAE"), the American Society of Mechanical Engineers ("ASME") and the International Organization for Standardization ("ISO") as well as the literature published by user groups, manufacturers and regulators.

[36]            He formulated his own generalized definition of a vehicle:

A vehicle is a mobilized mechanism, manned or unmanned, used to perform specific functions.

[37]            He acknowledged this definition was very broad in scope and that industry and professional organizations had broken down the general category "vehicle" into a number of classifications and further subclassifications that relate a vehicle's application. He identified four main classifications of vehicles found in the literature:

                         Space Vehicles                          such as the lunar re-entry vehicle.

                                  Air Vehicles                               such as aircraft and aircushion vehicles.

                                  Marine Vehicles                        such as ships, ferries, tugboats, pleasure craft.

                                  Ground Vehicles      all ground surface operating vehicles.

(Note: ASME refers to this group as Land Vehicles).

      According to his report, the classification of ground vehicles is what should interest us and he subdivided that group into three types: rail vehicles, track vehicles (operating on threads), and wheeled vehicles which covered vehicles that use wheels, to travel over either highways or unprepared ground. He further subdivided wheeled vehicles into highway vehicles, commercial vehicles, military vehicles, off-road vehicles, airport vehicles and powered industrial vehicles.

[39]            His further interest focussed on powered industrial vehicles which he framed as:

Vehicles specifically designed for use in an industrial, off-road environment within and outside of industrial plants, warehouses, shipyards, and marine terminals for performing manufacturing, maintenance and materials handling functions. These vehicles may, from time to time, use the public roadway but do not do so in normal operational use. Typical vehicles in this classification are sweepers, scrubbers, personnel carriers, scissor lifts and Powered Industrial Trucks (forklifts, lift trucks, front/side loader trucks, tow tractors, low lift trucks, high lift trucks, man lifts, rider trucks, amongst other common names). [emphasis added]

[40]            He then examined terminology in common use within industry and government related to vehicles and said there were many words of common usage within the industry and government that can confuse the understanding of the classification of vehicles. He gave as one example of common usage in the Public Works and Government Services Canada's Supply Operations Service Customer Manual which covers the purchase or leasing of vehicles. In that document are found the following two definitions:

Motor vehicle: self-propelled, wheeled or tracked equipment used primarily for transporting passengers or cargo. This includes automobiles, motorcycles, cars, station wagons, snowmobiles, pick-up trucks, vans, buses, commercial trucks and truck tractors, but excludes all military pattern vehicles.

Specialized vehicles: self-propelled, wheeled or tracked equipment not used primarily for transporting passengers or cargo. This includes airfield specialized trucks, tractors, forklift and pallet trucks, graders, scrapers, mobile cranes, fire trucks, crash/rescue vehicles, snowplows, snowblowers and mobile construction eguipment. Also included are all military pattern vehicles. [emphasis mine]

[41]            Mr. Patry then sharpened his focus on industrial powered trucks, a sub­category of industrial powered vehicles. He stated powered industrial trucks are used in almost every industry to move, raise, lower and/or transport large objects or a number of smaller objects on pallets, or in boxes, crates or other containers. He reviewed several definitions used by organizations such as the Occupational Safety and Health Administration, U.S. Department of Labour ("OSHA"), the ASME, the Ontario Ministry of Labour Guideline for Safe Operation and Maintenance of Power Lift Trucks (the "Ontario Guideline"), where the "term, 'powered lift truck' can itself be defined as "a mobile, power-propelled, self-loading truck equipped with a load carriage and attachments for lifting, transporting and stacking materials".

[42]            He then turned to the characteristics of the Le Tro-porter and stated, in his report, the Le Tro-porter is used in marine terminals for shore-side marine cargo handling, specifically to lift, lower and transport ISO containers from onepoint to another within the terminal property. It was his opinion the Le Tro-porter was a vehicle which could be further classified as a powered industrial vehicle/powered industrial truck, stating the Le Tro-porter is a counterbalanced front lift truck with the forks replaced permanently with the container spreader attachment. He expressed the opinion the Le Tro-porter also fit the characteristics of a Class-5 Powered Industrial Truck in the Ontario Guideline. In support of his opinion he stated:

*              the Letro-Porter is mobile, powered and self-propelled.

*              the Letro-Porter has a diesel internal combustion engine and pneumatic tires.

*              the Letro-Porter has a front mounted mast, hoisting assembly and load carriage.

*              the Letro-Porter has a spreader attachment permanently attached to the load carriage in lieu of forks.

*              the Letro-Porter moves, lifts and lowers, transports and stacks containers of goods/materials.

*              the Letro-Porter is self-loading, requiring only the driver/operator to perform its function.

[43]            In his conclusions, at page 14 of his report, Mr. Patry repeated his opinion the Le Tro-porter was a vehicle in the classification Powered Industrial Vehicles and, specifically, was a powered industrial truck and fully described it as "a high-lift (3 containers high), internal combustion engine powered (diesel), pneumatic tired, container handling (due to the spreader attachment), counterbalanced, sit down rider type, front loader lift truck". It is a "wheeled vehicle that has a load carriage to receive materials, goods or objects and has the ability to lift, move, carry, transport and stack these items". It is "designed to and is able to travel in a loaded condition (that is with a container held in the spreader attachment) from any location in a marine terminal to any other location in the terminal".

[44]            Furthermore, he opined the Le Tro-porter met the following dictionary meaning taken from the concise Oxford Dictionary which defines "vehicle" as "a means of conveyance usually with wheels, for transporting people, goods, etc.; a car, cart, truck, carriage, sledge, etc.... Any means of carriage or transport; a receptacle in which something is placed in order to be moved".

[45]            Mr. Patry expressed the view the Le Tro-porter had the same operational, safety and operator training issues as vehicles in the Powered Industrial/Powered Industrial Truck category of vehicles and stated "issues such as restrictions to speed, gradability, driver visibility and general operational safety are typical of vehicles in this category". He stated "those parameters defined the operating issues related to the vehicle but did not change the Le Tro-porter or other vehicles in the category to non-vehicles".

[46]            In his direct examination, his counsel took him to the following extract of the Tribunal's decision:

The Tribunal notes that Le Tro-porters are not designed to transport containers over any great distance since they can easily tip forward and be severely damaged when operating on uneven surfaces. The Tribunal also acknowledges that because Le Tro-porter's design, the operator's vision is impaired when it's carrying a container because the container is directly in its line of vision.

[47]            Mr. Patry's answer is at page 77 of the transcript in this proceeding:

The Le Tro-porters or devices of this type are not inherently designed to be unstable. This would be unacceptable from a worker's safety point of view. So, the Le Tro-porter is stable carrying its load up to the specified manufacturer's load, carried in an appropriate defined operating procedure as outlined by the manufacturer.

The vision issue is not unusual in this class of vehicle, just as a transport truck has different vision issues related to it, with a big trailer on the back compared to an automobile. The Le Tro-porter has vision issues related to the use of that machine, and those are operator training issues that had to be considered rather than anything that defines what the definition of the vehicle or device is. [emphasis mine]

[48]            In support of that statement, Mr. Patry often referred to the Le Tro-porter maintenance manual and particularly to a paragraph relating to operating sequence (page 332 of the amended affidavit documents) which provides for instructions to operators in circumstances when travelling empty or travelling with containers. He pointed to paragraph (j) which instructs, after gripping the container and clearing a rail car, the operator should "move the potentiometer forward travel and move container to tow away trailer, marshalling yard or other designated area".

[49]            His counsel then took him to the following statement made by Mr. Fratianni at the Tribunal, relied upon by the defendants in their memorandum of argument:

Again, I sort of made a quick reference to it, but for safety and security reasons as well, we wouldn't want one of the Le Tro-porters travelling in the yard with .. you know forty (40) foot containers suspended up in mid-air travelling certain distances. That would not be very very safe, and the equipment is not designed for that. I think structurally that they are not designed to do that either.

[50]            Mr. Patry's comment is at page 79 of the transcript where he answered:

I think in the first case, the statement that the equipment is not designed for that, given the manufacturer's specifications for the equipment, it is designed for that. In my opinion, the manufacturer has designed a machine to carry 40 foot containers and transport them as he states in his manufacturing data, and its manual and his other literature.

I think as far as being unsafe and these are logistic decisions made by the particular yard operators and should a different yard operator have this vehicle operating, it is my opinion that they may well use it in a different logistics mode. In other words, within this particular operation, they may use it that way, but in a global sense the vehicle is designed to be used for full utilization of its capabilities to lift, load and transport containers. [emphasis mine]

[51]            His counsel took Mr. Patry to another statement made by Mr. Fratianni to the Tribunal on the reasons why Racine and Cast do not use the Le Tro-porter to travel with containers in their yards. Mr. Fratianni spoke about visibility and about the equipment not being designed for travel as well as the stress of handling an average container. Mr. Patry, again turning to the manufacturer's literature, stated the Le Tro-porter was designed to handle a high level of container weight well within the average tonnage of containers handled by Racine and Cast. He reiterated his view about its transportation capabilities pointing to the manufacturer's specifications.

[52]            I retain from Mr. Patry's cross-examination by counsel for Cast and Racine the following elements.

[53]            First, this exchange at page 100 and 101 of the transcript on his understanding of what a vehicle is:

Q. In your understanding of what a vehicle is though, is it an essential element in your understanding of what a vehicle is that the vehicle be used, at least to some degree for the transportation of goods or persons ?

A. That is a general definition. Yes, most of them are. There probably are some vehicles that perform specific functions. They do transport something ... So they all . . they all in some form carry some form of material. They do some functions that involves material.

Q. So, your understanding of the definition of the word "vehicle" is that it out of necessity must perform some transportation of persons or things. It can do other things? It can do hoisting and pushing or whatever, but it must . . I'm asking you the question. Must a piece of equipment, in order to be a vehicle in your understanding of the word, do at least some transportation, some carriage of either persons and things?­

A. Things, yes.

Q. And does it matter, in your definition, how much of the activity of the vehicle is dedicated towards the transportation of persons or things? In other word, if a vehicle spent 10% of its time transporting persons or things and the other 90% doing lifting and hoisting is that a vehicle?

A. Yes, as a taxi cab that drove around with no customers in it, for example, would still be a vehicle even though it didn't .. it wasn't in the process of a taxi carrying passengers back and forth, but rather sitting, waiting and doing those things. It's the same sort of thing. It's doing some functions, but its main function is to .. as a taxi, is to carry passengers. Its main function is to lift, carry and to transport containers.

Q. But you're saying its main function is to lift, carry and transport containers?

A. Yes.

Q. Do you not make any differentiation in your determination of whether something is or is not a vehicle, the division between those various functions.

A. No.

Q. O.K. So as far as you're concerned, as long as it does some transportation of persons or things, no matter what else it does, it's still a vehicle?

A. Yes. [emphasis mine]                                   

[54]            Second, counsel for Cast and Racine and Mr. Patry had a discussion whether Mr. Patry took issue with Mr. Fratianni's testimony that, yes, the Le Tro-porter does transport the container, but the primary purpose of the Le Tro-porter was to load and unload.

[55]            Mr. Patry's answers are found at page 92 of the transcript where, once again, he distinguished between the logistics of the Cast and Racine operations which was a matter of their choice, an issue separate from the design of the vehicle. He reiterated the Le Tro-porter, and its inherent design, is designed to lift, load, carry or transport containers. He added:

In other words, in another rail yard, in another or ship yard, these vehicles are totally capable of being used to move containers anywhere you wish within the yard. This is the decision made by Cast Terminals. [emphasis mine]

[56]            As a follow-up question, Mr. Patry was asked whether he had seen any other container yard where the Le Tro-porters did, in fact, transport containers great distances throughout the yard. Mr. Patry, at pages 93/94 of the transcript, answered yes. He mentioned the rail yards in Winnipeg where Heisters and Ferrari vehicles, which were the same as the Le Tro-porters, were used in this manner.

[57]            In follow-up questions, Mr. Patry stated containers were moved from one stack to another, about the St-John's shipyard which he estimated was in the magnitude from twenty-five (25) to seventy-five (75) acres. He stated the containers would have moved, within the entire distance, from one track to another, down wide isles and that sort of thing (transcript page 94). He said of the stacks themselves, one stack might be at one end of the seventy (70) acre yard and the other stack would be at the other end and the Le Tro-porter would carry the container from one stack to another stack moving the full breadth or full length of the container yard. He was asked whether he had seen that. Mr. Patry answered yes and said he observed that movement when he stayed at a hotel in St, ­John's which overlooks the shipping yard.

D.        ANALYSIS

            (1)         Standard of Review

[58]            In Canadian National Railways Co. (C.N.R.) v. Canada, [1993] F.C.J. No. 258 (T.D.) (QL), Justice Denault said this about the appeals under the Act to this Court:

These appeals were heard together and deal with identical issues. The procedure on an appeal pursuant to sections 81.24 and 81.28 of the Excise Tax Act is in the nature of an action, that is to say a trial de novo. [emphasis mnine]

[59]            Justice Gibson came to the same conclusion in Shaklee Canada Inc. V. Canada, [1995] F.C.J. No. 330 (T.D.) (QL), as did Justice MacKay in Mustang Engineering and Construction Ltd. v.Canada (Minister of National Revenue), [2001] F.C.J. No. 49 (T.D.) (QL).

[60]            Counsel for the Minister suggests that a trial de novo is not an appeal per se and means that I do not have to consider the CITT decision at all, particularly so when I hear new evidence not before the Tribunal, which is the case here. In the circumstances, he stated I should give no weight to the Tribunal's decision.

[61]            He took me to the definition of trial de novo in Black's Law Dictionary, 7^th ed., West Group, St. Paul, Minnesota, 1999, as follows:

Trial de novo - a new trial on the entire case - that is, on both questions of fact and issues of law - conducted as if there had been no trial in the first instance.

[62]            Counsel for the Minister's view has support in what Justice Denault said in C.N.R., supra, at page 4:

Counsel for CP insisted on the fact that this appeal is deemed to be an action and must proceed as a de novo trial. I agree with counsel that the role of the Court in such a procedure is not to satisfy itself that the tribunal committed an error but rather to arrive at its own conclusions based on the evidence adduced. [emphasis mine]

[63]            This view, by somewhat of an analogy, is consistent with the standard applied by this Court in trademark matters under section 56 appeals from the Registrar of trademarks where new evidence can be introduced. Justice Rothstein, writing the majority reasons in the Federal Court of Appeal in Molson Breweries v. John Labatt Ltd., [2000] 3 F.C. 145 at 168, stated at paragraph 51:

[...] However, where additional evidence is adduced in the Trial Division that would have materially affected the Registrar's findings of fact or the exercise of his discretion, the Trial Division judge must come to his or her own conclusion as to the correctness of the Registrar's decision. [emphasis mine]

It is to be noted here that the parties did not proceed completely by way of trail de novo because the entire evidentiary record before the CITT was, by agreement, made part of the record in this trial. In the circumstances, I am not prepared to give no weight to the CITT decision as suggested by counsel for the Minister but would accord that decision some deference, particularly on findings of fact, if the evidence, on the point, is substantially similar to the evidence before me.

[64]            Counsel for Cast and Racine cited a recent Federal Court of Appeal decision in Les Industries Vogue Ltée v. Her Majesty The Queen, [2002] FCA 135, for the application of a higher standard and he referred me to paragraph 2 of Justice Noël's reasons:

[TRANSLATION] In this regard, we consider that the trial judge made no manifest error in his assessment of the facts, including the testimony of the expert witnesses, and that he correctly understood and applied the Trial Division's judgment [...]

[65]            As pointed out by counsel for the Minister, this standard is inapplicable because the Federal Court of Appeal was reviewing a trial judgment for which that standard is applicable but that is not the circumstance in which I find myself, namely, conducting a trial de novo.

[66]            Counsel suggested to me Justice Campbell's decision in Brooks Wetsuits Ltd. v. Canada (Minister of National Revenue) (1999), 177 F.T.R. 310 (F.C.T.D.) (QL), is opposite, a case dealing with an appeal under section 135 of the Customs Act. He had new evidence before him which the Minister did not have when he made his decision. I consider Justice Campbell's decision in line with the views cited by my brother judges as to the nature of the appeal before me.

(2)        Principles

[67]            In Sunoco Inc. v. Canada , 2001 FCT 731, (2001), 206 F.T.R. 278 (F.C.T.D.), I expressed certain principles of statutory interpretation and on the interpretation of the Excise Tax Act, which my colleague Justice Gibson recently adopted in the Shell Canada Products Ltd. v. Canada, 2002 FCT 1304, [2002] F.C.J. No. 1796 (T.D.) (QL), I reproduce paragraphs 13 to 15 in the Sunoco, supra case:

¶ 13 In Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, Iabobucci J. at pages 40-41, speaks to the relevant principle of statutory construction with respect to interpreting legislative dispositions:

Although much has been written about the interpretation of legislation (see, e.g., Ruth Sullivan, Statutory Interpretation (1997); Ruth Sullivan, Driedger on the Construction of Statutes (3rd ed. 1994) (hereinafter "Construction of Statutes"); Pierre-André Côté, The Interpretation of Legislation in Canada (2nd ed. 1991)), Elmer Driedger in Construction of Statutes (2nd ed. 1983) best encapsulates the approach upon which I prefer to rely. He recognizes that statutory interpretation cannot be founded on the wording of the legislation alone. At p. 87 he states:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

I also rely upon s. 10 of the Interpretation Act, R.S.O. 1980, c. 219, which provides that every Act "shall be deemed to be remedial" and directs that every Act shall "receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit".

Although the Court of Appeal looked to the plain meaning of the specific provisions in question in the present case, with respect, I believe that the court did not pay sufficient attention to the scheme of the ESA, its object or the intention of the legislature; nor was the context of the words in issue appropriately recognized. I now turn to a discussion of these issues.

¶ 14 I take the following principle of statutory interpretation from the Supreme Court of Canada's decision in Shell Canada Limited v. Her Majesty The Queen, [1999] 3 S.C.R. 622, when dealing with a taxing statute such as the Income Tax Act (and I add the Excise Tax Act) which was before that Court. McLachlin J., as she then was, made the following points:

[40] Second, it is well established in this Court's tax jurisprudence that a searching inquiry for either the "economic realities" of a particular transaction or the general object and spirit of the provision at issue can never supplant a court's duty to apply an unambiguous provision of the Act to a taxpayer's transaction. Where the provision at issue is clear and unambiguous, its terms must simply be applied...

[43] ... courts must therefore be cautious before finding within the clear provisions of the Act an unexpressed legislative intention: ... under the guise of purposive interpretation runs the risk of upsetting the balance Parliament has attempted to strike.

[45] The Court 's role is to interpret and apply the Act as it was adopted by Parliament.

¶ 15 With specific respect to interpreting the ETA, I share the view of Malone J.A. in Her Majesty the Queen v. RJR MacDonald, [2001] 2 F.C. 191, where he states:

[5] Other panels of this Court have struggled with interpreting the provisions of the Excise Tax Act which has been the subject of numerous amendments. Those difficulties were recently identified by my colleague Décary J.A. in the following words:

When dealing with ... piecemeal legislation such as the Excise Tax Act, ... which, unlike, for example, the Income tax Act, has no coherent structure and contains no basic rules to start with and which is amended on a routine basis to accommodate or redress specific situations in a constantly evolving commercial reality, the Court should be reluctant to compare microscopically the words of provisions devised at different times and in a different context and meant to address distinct concerns.

[6] I share that reluctance given the Byzantine history of Parts III and VI of the Act, and the changing administrative policies advanced by the Department since 1935. My task then is to interpret the meaning of the words used in subsections 23 (1),(2) and (10) and their interrelationship so as to ascertain the true intention of Parliament.

[emphasis mine]

(3)       Application and conclusions

[68]            In interpreting the word "vehicle" for the purposes of paragraph 23(8)(c) of the Act, I have the benefit of two decisions of judges of the Trial Division, both sustained by the Federal Court of Appeal, interpreting this same legislative provision or its predecessor.

[69]            Those two cases are the judgment of Justice McNair in Westar Mining Ltd. v. The Queen (1990), 38 F.T.R. 137; affm'd Westar Mining Ltd. v. The Queen (1991), 4 T.C.T. 6197 (F.C.A.) and the judgment of Justice Joyal in Seaspan International Ltd. v. Her Majesty the Queen, [1994] 1 F.C. 524; affm'd Seaspan International Ltd. v. Her Majesty The Queen (1998), 229 N.R. 132.

[70]            The approach taken to statutory interpretation by both Justices McNair and Joyal is in tune with the principles of statutory interpretation established in Rizzo Shoes, supra.

[71]            In particular, Justice McNair in Westar, supra, considered the dictionary definition of the words "carriage" and "vehicle" in the Shorter Oxford Dictionary. He did so in the context of two Supreme Court of Canada decisions.

[72]            The first decision he referred to was that of Justice Rand in [1950] S.C.R. 450"> Sugar City (District) No. 5 v. Bennett & White (Calgary) Ltd., [1950] S.C.R. 450 where he stated the following at page 463:

The word "vehicle" in its original sense conveys the meaning of a structure on wheels for carrying persons or goods. We have generally distinguished carriage from haulage, and mechanical units whose chief function is to haul other units, to do other kinds of work than carrying, are not usually looked upon as vehicles. But that meaning has, no doubt, been weakened by the multiplied forms in which wheeled bodies have appeared with the common feature of self-propulsion by motor. (emphasis mine)

[73]            The second Supreme Court of Canada judgment referred to by Justice McNair is [1978] 2 S.C.R. 504">Farr v. Township of Moore, [1978] 2 S.C.R. 504, where Justice Spence was interpreting the meaning of the word "vehicle" by reference to the Shorter Oxford Dictionary which defined that word as:

A means of conveyance provided with wheels or runners and used for the carriage of persons or goods; a carriage, cart, wagon, sledge, etc.

A receptacle in which anything is placed in order to be moved. (emphasis mine)

Justice McNair emphasized the reference to the ordinary meaning of vehicle had to be assessed in the total context approach with a view of determining the object and spirit of the taxing provision.

[74]            Justice Joyal, in Seaspan International Ltd., supra, adopted what Justice Reed had stated as being the proper principle of interpretation in International Forest Products Ltd. v. Canada, [1991] 2 C.T.C. 243 (F.C.T.D.) who cited that passage in E.A. Driedger's Construction of Statutes, 2^nd ed., 1983, endorsed by Justice Iacobucci in Rizzo Shoes, supra.

[75]            In Westar, supra, Justice McNair held that ore-haulers used in Westar's open pit mining operations for the removal of overburden and the transportation of raw ore to a conveyor belt system were vehicles and therefore the diesel fuel used for the purpose of generating electricity to drive the electrical motors which provided power to the ore-haulers' wheels were not excise tax exempt.

[76]            He rejected the plaintiff's argument the electricity driving the ore-hauler was used primarily in the operation of mining equipment (because the ore-haulers did not run on public highways and did not carry saleable goods but rather raw coal) as opposed to transportation equipment. He also rejected the argument that the ore-haulers were not only "primarily" but exclusively used as an integral part of the plaintiff's mining operations. Justice McNair concluded:

   To my mind, there can be little or any doubt that the diesel fuel was used to generate electricity as the principal means of motive power and propulsion for the subject ore haulers.

[77]            Justice McNair also found the electricity generated by the use of diesel fuel was primarily used in the operation of a vehicle. He said this:

I find that to be the fact in the present case. In short, I am of the opinion that the subject ore haulers were used primarily as vehicles within the ordinary meaning of the word in moving overburden or raw ore from one place to another, and that the legislative expression employed in this instance does not permit the restriction of such vehicular activity to movement by road or rail or the carrying of coal as a finished, saleable product. In my view, any other interpretation of the language used in the taxing provisions of the Act would only serve to circumvent their object and spirit and defeat the expressed intention of Parliament. In the result, the plaintiff fails to qualify for the exemption and claim for refund. (emphasis mine)

[78]            The Federal Court of Appeal sustained Justice McNair with Justice Hugessen, then on the Federal Court of Appeal, stating:

Despite the best efforts of counsel for the Appellant we can see no basis for disagreeing with McNair, J.'s very thorough reasons for judgment. He found the Appellant's "ore haulers" to be "vehicles" within the intendment of s.s. 21 (3.1)(c) [now paragraph 23(8)(c)] of the Excise Tax Act when those provisions are read in their entire context and in conformity with the statutory scheme and their ordinary grammatical meaning. We are in agreement with that finding and have nothing to add.

[79]            In Seaspan, supra, Justice Joyal decided Seaspan's forty-two tugboats and two self-propelled train ships were vehicles for the purposes of paragraph 23(8)(c) of the Act.

[80]            He described some of the uses of the tugs to include "towing the barges in the plaintiff's fleet which carry all manner of goods to destinations up and down the B.C. Coast. As well, the tugs are used to assist in ship-berthing, ship-towage and log-towing. The train ships carry rail cars from the Vancouver lower mainland area to Vancouver Island.

[81]            He rejected the argument that, read in its grammatical and ordinary sense in the light of the intention of Parliament embodied in the Act as a whole, the object of the Act and the scheme of the Act, the term "vehicle" as used in the Act, does not embrace a ship or any other type of marine vessel.

[82]            In extensive reasons for reasons, Justice Joyal examined the principles of statutory interpretation noted above, the interpretation of "vehicle" by the courts and he specifically referred to Justice McNair's decision in Westar Mining, supra, and Justice Hugessen's reasons in the Federal Court of Appeal. Justice Joyal also examined various dictionary definitions of "vehicle" and he concluded as follows:

¶ 41       Adopting again the Driedger approach to the construction of statutes, it might be wise to start with an examination of the object of the Act. It is clearly the raising of revenue. Among the items on which a tax is imposed is diesel fuel. This tax applies to all diesel fuel except when the diesel fuel is for use in the generation of electricity. Even this exemption, however, is limited. If the electricity generated is used primarily in the operation of a vehicle, the exemption does not apply and the diesel fuel so used is taxable.

[83]            Justice Joyal noted the word "vehicle" has often been associated with conveyances running on land, and is often shorthand for a motor vehicle. He stated "vehicle" standing alone, may in a legislative context be justifiably restricted to conveyances running on land but he added:

¶ 44       In the statute before me, a proper construction of its charging provision is to impose a tax on diesel fuel, including of course, a tax on diesel fuel used primarily in the operation of a vehicle. The exemption only applies when such fuel is for use in the generation of electricity. The general rule is therefore that fuel for vehicles is taxable and any exception invites a narrow interpretative approach. A contrario, therefore, the word "vehicle" invites a more generic or wider approach. It could be said that the narrower the approach to "use in the generation of electricity", the wider the interpretation of the wording used in taxing an item generally including of course diesel fuel, no matter for what general purpose it might be used.

[84]            Justice Joyal then went on to look into the intent of Parliament with special regard to a vehicle which uses diesel oil generated electricity for its operation. He said "[S]uch a propulsive or motive force is not the exclusive habitat of motor vehicles or other conveyances running on land. It is found in probably more marine installations than otherwise. To suggest therefore that Parliament, by the use of the word "vehicle", intended to restrict the meaning to vehicles running on land and thereby apply the tax with respect to all other means of conveyances used to carry goods and people, raises an anomalous situation".

[85]            After referring to other related jurisprudence, he concluded that "I find that to include in the meaning of the word "vehicle" conveyances of the kind in issue is one that the word itself can very reasonably bear and is more in keeping with the general tenor of the statute and Parliament's intention in adopting it".

[86]            As noted, Justice Joyal was sustained by the Federal Court of Appeal. The material part of Justice Marceau's reasons are as follows:

¶ 3       We have no difficulty in agreeing with him that there is some ambiguity as to the common and ordinary meaning of the word "vehicle" when used alone, as in the provision in question. This ambiguity necessitated resort to the general principles of statutory interpretation, especially the words-in-total context rule and the purposive approach. It is obvious to us that Parliament intended that the word "vehicle" would be as inclusive as the motions judge read it. (Empahsis mine)

[87]            I note in a recent judgment of the Federal Court of Appeal in Penner International Inc. v. Her Majesty The Queen, [2002] F.C.A. 453, Justice Rothstein considered subsection 68.1(1) of the Excise Tax Act providing for a rebate of excise tax paid on goods exported from Canada. He said this at paragraph 13:

¶ 13       At paragraph 35, the Trial Judge refers to the Excise Tax Act as a taxation statute that is designed to generate revenues for the government. I agree with her. However, the Act also provides for rebates and the provisions pertaining to rebates must be given effect.

[88]            To resolve the issue of whether the Le Tro-porters are vehicles for the purpose of paragraph 23(8)(c) of the Act, I follow the approach laid down by Justices McNair and Joyal which the Federal Court of Appeal has endorsed.

[89]            As I read the relevant judgments, particularly in Seaspan, supra, the courts have not given a restrictive meaning to the word "vehicle" in that paragraph but one which takes the ordinary dictionary meaning and gauges it against the context (the exemption is for diesel fuel used in the generation of electricity generally but not where the electricity generated in that manner is used primarily in the operation of a vehicle) against the object of the Act which has a revenue raising purpose.

[90]            I agree with counsel for the Minister "vehicle" for the purposes of paragraph 23(8)(c) of the Act should, as mandated by Seaspan, supra, be given a broad and generic interpretation and that it is inappropriate for the Court to fence the term "vehicle" with a number of restrictions which Parliament did not impose.

[91]            In saying this, I should not be taken to agree with that part of Mr. Patry's evidence in which he sought to give meaning to the term "vehicle" by reference to technical terminology in use by standards associations, regulators and users. The scope of the term "vehicle" should be determined by its ordinary usage contextually appreciated.

[92]            I find artificial the distinction between lifting and lowering a container and its transportation which was put forward by counsel for Cast and Racine based on the Tribunal's reasoning. Lifting or lowering is a manner of carrying or transportation especially when transportation includes the notion of conveying or carrying from one place to another. (See Oxford Dictionary of the English Language, 2d ed.)

[93]            I must review the evidence before me de novo and come to my own conclusion. There was significant evidence put before me which was not in front of the Tribunal particularly in relation to the manufacturer's specifications for the Le Tro-porter and on issues of driver visibility, carrying capacity, design stability and actual use in other terminals or railway yards.

[94]            On this last point, I agree with counsel for the Minister that the way Cast and Racine used their Le Tro-porters is not determinative of whether that machine is a vehicle or not. Whether a Le Tro-porter is a vehicle must be assessed by objective criteria and not how it is used by a particular company.

[95]            I have no doubt in concluding the Cast and Racine Le Tro-porters are vehicles within the meaning of paragraph 23(8)(c) of the Act. Assessing the design characteristics of that machine, appreciating what it is designed to do and what it actually does clearly fits with the ordinary meaning of a vehicle contextually appreciated.

[96]            In essence, the Le Tro-porter carries or moves containers from one place to another from the trailer flatbed to the stack and from the stack to the trailer flatbed and, in other yards, from one stack to another.

[97]            Having found the Le Tro-porters vehicles within the meaning of paragraph 23(8)(c) of the Act, I must determine whether the electricity generated by the diesel fuel is used primarily in the operation of the Le Tro-porters.

[98]            Counsel for Cast and Racine argues that operation of a "vehicle" in the relevant paragraph of the Act means "motive force" or "propulsion" i.e., simply moving backward and forward but does not encompass the lifting or lowering work of the Le Tro-porter.

[99]            He turned to Dr. Genest's evidence before the Tribunal which is evidence in this appeal and was not contested anew by Mr. Patry when he testified before me. Dr. Genest concluded that fifty-eight (58%) percent of the work performed by the Le Tro-porters is the hoisting of the containers.

[100]        Counsel for Cast and Racine urged upon me the Tribunal's decision of September 28, 1993, in appeal number AP80-91-190 to AP-91-200 in the matter of Via Rail Canada Inc. and the Minister of National Revenue, which was adopted by Justice Blais in Seaspan International Ltd. v. Her Majesty The Queen, [2002] F.C.T 675. (Seaspan No. 2)

[101]        In Via Rail, supra, the Tribunal drew a distinction in the use of the electricity generated by the diesel fuel on Via Rail's trains. That distinction was between electricity which was used to propel the train from electricity used to heat, light and air-condition passenger cars (referred to as hotel services).

[102]        In Seaspan No. 2, supra, Justice Blais accepted the distinction applied to tugs and tranships where crews remained onboard continuously for lengthy periods of time - sometimes up to two weeks and where the electricity generated by the consumption of the diesel fuel was for the provision of hotel services "for the crews and others (cooking, heating the accommodations, running the fridges, ventilation, air conditioning and supply of water)".

[103]        On the evidence before me, I am not prepared to adopt the Via Rail, and Seaspan No. 2, supra, distinction. The perspective I take is operation, again in its ordinary meaning, is working, carrying out an activity, functioning (see the New Shorter Oxford Dictionary).

[104]        First, there are no hotel services on the Le Tro-porters; second, the distinction between the lifting and lowering movements from the moving back and forth movements of the Le Tro-porters is meaningless which leads to the conclusion that all of the electricity generated by the consumption of diesel fuel by the Le Tro-porters is all for use in their operation.

[105]        For all of these reasons, this appeal is allowed with costs. It follows Cast Terminals Inc. and Terminus Racine (Montreal) Ltd. are not entitled to the claimed refund.

                 "François Lemieux"                

                             Judge                             

Montreal, Quebec

April 30, 2003

                                                                FEDERAL COURT OF CANADA

                                                                                 TRIAL DIVISION

Date: 20030430

Docket: T-1951-00

IN THE MATTER OF AN APPEAL pursuant to Section 81.24 of the Excise Tax Act, to the decision rendered by the Canadian International Trade Tribunal, on June 22, 2000, Appeal nos. AP-98-093 and AP-098-094, under Section 81.19

of the Excise Tax Act R.S.C. 1985, c. E-15

BETWEEN:

                          MINISTER OF NATIONAL REVENUE

                                                                            Plaintiff

                                          and

                                 CAST TERMINALS INC.

                                          and

                          TERMINUS RACINE (MONTRÉAL) LTD.

                                                                           Defendants

                                                                         REASONS FOR ORDER

                                                                FEDERAL COURT OF CANADA

                                                                                 TRIAL DIVISION

                                          NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                                         T-1951-00

             IN THE MATTER OF AN APPEAL pursuant to Section 81.24

of the Excise Tax Act, to the decision rendered by the Canadian

International Trade Tribunal, on June 22, 2000,

Appeal nos. AP-98-093 and AP-098-094,

under Section 81.19 of the Excise Tax Act R.S.C. 1985, c. E-15

BETWEEN:

                          MINISTER OF NATIONAL REVENUE

                                                                            Plaintiff

                                          and

                                 CAST TERMINALS INC.

                                          and

                          TERMINUS RACINE (MONTRÉAL) LTD.

                                                                           Defendants

PLACE OF HEARING:                                  Montreal, Quebec

DATE OF HEARING:                                    November 26, 2002

REASONS FOR ORDER : THE HONOURABLE MR. JUSTICE LEMIEUX

DATED:                                                             April 30, 2003

APPEARANCES:

Mr. Claude Morrissette

Ms. Marie-Josée Bertrand                                                                          FOR PLAINTIFF

Mr. Michael Kaylor                                                                                     FOR DEFENDANTS

SOLICITORS OF RECORD:

Morris Rosenberg                                                                                        FOR PLAINTIFF

Deputy Attorney General of Canada

Ottawa, Ontario

Lapointe Rosenstein                                                                                     FOR DEFENDANT

Montreal, Quebec