Pfizer Co. Ltd. v. Deputy Minister of National Revenue, [1977] 1 SCR 456

Supreme Court of Canada

Pfizer Co. Ltd. v. Deputy Minister of National Revenue, [1977] 1 S.C.R. 456

Date: 1975-10-07

Pfizer Company Limited Appellant;

and

The Deputy Minister of National Revenue For Customs and Excise Respondent.

1975: March 4; 1975: October 7.

Present: Laskin C.J. and Judson, Spence, Pigeon and Beetz JJ.

ON APPEAL FROM THE FEDERAL COURT OF APPEAL

Statutes—Interpretation—Tetracycline and its “derivatives”—Common meaning of words in statutes dealing with scientific matters—Meaning in each of the official languages—Publications not put in evidence—No judicial notice—Natural justice—Customs Tariff Act, R.S.C. 1970, c. C-41, s. 12, Schedule A, No. 92444-1—Tariff Board Act, R.S.C. 1970, c. T-1, s. 5(9)—Official Languages Act. R.S.C. 1970, c. 0-2, s. 8(2)(b).

Prior to December 1968, salts of the antibiotic oxytetracycline were imported free (under the name of “Terramycin”) from the United Kingdom by appellant. On December 20, 1968 an order was issued. It provided, inter alia, that antibiotics were exempt from duty, except for penicillin and its derivatives and tetracycline and its derivatives. The Tariff Board held that the salts imported by appellant, which were derivatives of oxytetracycline, were therefore derivatives of tetracycline and fell within the scope of the exception. The Federal Court of Appeal upheld this conclusion, Choquette D.J. dissenting. Hence the appeal to this Court.

Held: The appeal should be allowed.

The rule that statutes are to be construed according to the meaning of the words in common language is quite firmly established and it is applicable to statutes dealing with technical or scientific matters. Even though the word “derivative” may have a broader meaning in some scientific works, its primary meaning in common language is that of a thing obtained from another. Oxytetracycline is a biological product obtained from cultures of a micro-organism, and not a chemical product derived from tetracycline. It cannot therefore be concluded that oxytetracycline is a derivative of tetracycline. Even though both substances are part of the “tetracycline” class, if this whole family of antibiotics was intended to be subjected to import duty, this should have been stated.

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Moreover, although derivative can have an extended meaning in English, the only definition of “derive” given in French was “Substance obtained from another substance by way of transformation of the latter”. Since the Official Languages Act requires that each version be read in the language in which it is written, the Board could not ascertain the meaning of the enactment under consideration, taking together the English and French dictionaries as if just one language was to be considered. The concept must be selected which is applicable to both versions, that is, in the case at hand, a thing actually derived from another: that is the primary meaning of the word derivative and it is also the meaning of the word “derivé”.

Finally, the Board referred in its decision to two texts which were not put in evidence nor referred to at the hearing. As these texts are not among those of which a board may take judicial notice and tend to contradict the oral evidence, the Board is in error in relying on them. It is contrary to the rules of natural justice to rely on information obtained after the hearing without disclosing it to the parties and giving them an opportunity to meet it.

Continental Soya Co. Ltd. v. J.R. Short Milling Co. (Canada) Ltd., [1942] S.C.R. 187; Laboratoire Pentagone Ltée v. Parke, Davis & Co., [1968] S.C.R. 307, 55 C.P.R. 111, reversing 53 C.P.R. 236, restoring 46 C.P.R. 171; Burton Parsons Inc. v. Hewlett-Packard Ltd. (1975), 17 C.P.R. (2d) 97, referred to.

APPEAL from a decision of the Federal Court of Appeal,[1] affirming a decision of the Tariff Board. Appeal allowed with costs.

John H. Gomery, Q.C., and Jack R. Miller, for the appellant.

S.M. Froomkin, for the respondent.

The judgment of the Court was delivered by

PIGEON J.—This is an appeal from a judgment of the Federal Court of Appeal affirming, Choquette D.J. dissenting, a declaration by the Tariff Board upholding the tariff classification made by the respondent of three products imported from the United Kingdom by the appellant. These products are salts of the antibiotic oxytetracycline for which the appellant’s name is “Terramycin”.

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Prior to December 1968, oxytetracycline salts were imported free under British preferential tariff as “drugs of a kind not produced in Canada” (Tariff item 20839-1). However, the antibiotic tetracycline, being then produced in Canada, was subject to duty of 15% under British preferential tariff.

On December 19, 1968, tariff item 20839-1 was struck out and a special tariff item was enacted for “antibiotics” being number 92944-1, whereby the duty under British preferential tariff was 10%. The amending Act (1968-69, c. 12) authorized the Governor in Council to reduce or remove any duty under this item and others. Under that authority, the Governor in Council issued an order dated December 20, 1968 (SOR/69-8). Section 4 of this Order provides as follows:

4. During the period commencing January 1st, 1969, and ending on January 31st, 1970, all goods classified under the tariff items listed in Column I of Schedule A to this Order, other than those goods listed in Column II of Schedule A opposite each such tariff item, when entitled to admission under British Preferential Tariff, shall be admitted free of duty.

Schedule A of the Order, as amended, provides in part as follows:

Column I	Column II
92944-1	Penicillin and its derivatives (not including crude penicillin and semisynthetic penicillin) Tetracycline and its derivatives.

As a result of this Order and subsequent extensions, the importation of antibiotics under British preferential tariff was exempt from duty when those antibiotics were other than penicillin and its derivatives (not including crude penicillin and semi-synthetic penicillin) and tetracycline and its derivatives.

The three imported salts are admittedly derivatives of oxytetracycline. The question is whether they are derivatives of tetracycline. These antibiot-

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ics are not synthetic products. Oxytetracycline is extracted from cultures of a micro-organism of the species streptomyces rimosus. Tetracycline and chlortetracycline are obtained from cultures of other micro-organisms of. the streptomyces family and have a slightly different chemical structure. Oxytetracycline is not obtainable directly from those other micro‑organisms which do not produce it and it is not obtained by transformation of what they produce, but exclusively from streptomyces rimosus.

Thus, it is an established fact that the imported antibiotic is not derived from tetracycline. However, the Board held it to be a “derivative” of tetracycline. They relied essentially on some dictionary definitions to hold that oxytetracycline, while admittedly not derived from tetracycline, was nevertheless a “derivative” within the meaning of the Order in Council.

The majority in the Federal Court of Appeal upheld this conclusion. Choquette D.J. dissented on the basis that the Order in Council was to be interpreted according to the meaning of the words in common language. He also pointed out that “dérivé”, the word used in the French version of the Order in Council, did not appear to have any meaning other than the primary meaning of “derivative”, that is, a thing obtained from another. In my view, he reached the correct conclusion on both points.

Under the Order in Council, the exemption of antibiotics from duty became the general rule, therefore it was for the respondent to show that oxytetracycline was within the exception as being a “derivative” of tetracycline. Such is not the case according to the primary meaning of the word “derivative” which is also its only meaning in common language. In the Oxford English Dictionary, the first meaning of “derivative” as a substantive is:

A thing of derived character; a thing flowing, proceeding, or originating from another.

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The rule that statutes are to be construed according to the meaning of the words in common language is quite firmly established and it is applicable to statutes dealing with technical or scientific matters, such as the Patent Act: Continental Soya Co. Ltd. v. J.R. Short Milling Co. (Canada) Ltd.[2]; Laboratoire Pentagone Ltée v. Parke, Davis &. Co.[3] and Burton Parsons Inc. v. Hewlett-Packard Ltd.[4] Of course, because “tetracycline” designates a specific substance the composition of which has been determined in terms of a chemical formula, resort may be had to the appropriate sources for ascertaining its meaning. In my view, this does not imply that “derivative” is to be construed as it might be in a scientific publication. The question concerns the meaning of “derivative” not of “tetracycline”.

In its reasons the Board referred to the “orismology” of “tetracycline” and “oxytetracycline”, the argument apparently being that the name of the second substance coming from the first by the addition of a prefix implied that it is a derivative. This inference is, in my view, totally unwarranted. Once again, what we are concerned with in this case is the meaning of “derivative”. If regard is to be had to etymology, it should be with respect to that word. No extensive reference to lexicographers is required to find out the obvious namely, that “derivative” comes from the same root as “to derive” which means “to obtain from”.

There is no doubt that in some scientific publications “derivative” is sometimes used with an extended meaning such as that which was stated by one Dr. George Macaskill, a veterinary surgeon called by the respondent in this case, who said: “my understanding of a derivative of a drug is a drug of a similar group”. On that basis, where is one going to stop? In a way, all the antibiotics form one group of drugs. Of course, such an extended meaning cannot have been intended. Respondent’s contention is that tetracyclines form a group and they are all to be considered as derivatives of tetracycline.

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In its reasons the Board quotes from Antibiotic and Chemotherapy by Garrod and O’Grady, 2nd ed., 1968, pp. 138 and 139 which were put in evidence as an exhibit by the respondent, the following:

The tetracyclines are a family of closely related antibiotics, now numbering at least seven, of which three have been in use for over 10 years. The first, aureomycin, was so called from the golden yellow colour of the colony of Streptomyces aureofaciens, the organism forming it. Two years later (1950) ‘Terramycin’, derived from Streptomyces rimosus, was introduced, and within a further two years, their structure was ascertained (Fig. above), which differs only in the presence of a C1 atom in one and an OH in the other.

In my view, this quotation as well as similar statements taken from American Hospital Formulary Service, do not really support respondent’s view. What they do show is that the “tetracyclines” are considered as a group or a family of antibiotics. However, the Order in Council did not make dutiable the “tetracyclines” generally but “tetracycline and its derivatives”.

In its reasons, the Board also referred to a report it had made to the Minister prior to the tariff changes with which we are concerned and quoted from that report what a spokesman for Cyanamid of Canada Limited, the intervenant before the Board in this case, had said:

I would suggest that, because of their similar characteristics, all the tetracyclines be considered; that is, chlortetracycline, tetracycline itself, demethylchlortetracycline and oxytetracycline.

I find it unnecessary to say anything respecting the propriety of making use in a later case of statements made by another party in a previous case and not again brought in evidence. This statement having been included in the report made to the Minister tends to show, in my view, that if the Government had intended that the “tetracyclines” as a class be dutiable, this expression would have been used. This is not what was done. Tetracycline only was mentioned with its derivatives. It was well known that what was being imported was not

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tetracycline, but some salts derived from it, hence the necessity of the mention of derivatives. The proper inference must be that, if this whole family of antibiotics was intended to be subjected to import duty, it would have been mentioned rather than a single member.

Concerning the meaning of “derivative” in scientific publications as stated in dictionaries, I will note first that the extended meaning is not to be found in the Great Oxford Dictionary or in the Supplement published in 1972. Funk & Wagnalls New Standard Dictionary, American College Dictionary, Random House Dictionary merely refer to a substance obtained from or “regarded” as obtained from another, they do not say when a substance is to be so regarded. Dr. James Booth, respondent’s chemical expert witness, agreed that Funk & Wagnalls’ definition did not “fit very well”. However, he said Webster’s definition was “exactly analogous”. That definition reads:

4 a: a chemical substance that is so related structurally to another substance as to be theoretically derivable from it even when not so obtainable in practice (the methoxy derivative of naphthalene).

b: a substance that can be made from another substance in one or more steps (nitration of benzene to the metadinitro derivative).

To say that this is “exactly analogous” is not to say that it applies, because oxytetracycline is not a chemical substance. As is stated in an extract from Taber’s Encyclopedic Medicine that was put in evidence, it is “biosynthetized”. It is a biological product extracted by a chemical process, not a chemical. It is described in chemical terms but this does not mean that it is to be regarded as a chemical. If it was to be regarded as a chemical, it would be properly described as a “derivative”, but it is admittedly a biological product, not a synthetic chemical and Webster’s definition is not directly applicable but only by analogy. There is a difference of opinion among scientists as to the propriety of the application by analogy.

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After discussing the dictionary meanings, the Board said in its declaration:

…For the actual derivation of tetracycline or oxytetracycline, the negative oral evidence that one may not be actually derived from the other is seriously put in question by two of the texts; the Condensed Chemical Dictionary states affirmatively that tetracycline “can also be prepared by catalytic hydrogenation of chlortetracycline or oxytetracycline”; Stedman’s Medical Dictionary also states affirmatively that tetracycline is “prepared from chlortetracycline (aureomycin) or from oxytetracycline (Terramycin).

Counsel for the appellant has pointed out that the two publications there mentioned had not been put in evidence nor referred to at the hearing, and took exception to this procedure. In my view, the objection is well founded. While the Board is authorized by statute to obtain information otherwise than under the sanction of an oath or affirmation (Tariff Board Act, c. T‑1, s. 5(9)), this does not authorize it to depart from the rules of natural justice. It is clearly contrary to those rules to rely on information obtained after the hearing was completed without disclosing it to the parties and giving them an opportunity to meet it.

What the Board calls “the actual derivation of tetracycline or oxytetracycline” is not like the usual meaning of words, a matter of which a court or a board exercising judicial or quasi‑judicial authority may take judicial notice. It is clearly a question of fact to be decided on evidence and it had been the subject of evidence by qualified expert witnesses at the hearing. The negative evidence given by appellant’s expert witnesses was not contradicted by respondent’s experts who were heard before the Board and questioned on the point. The two texts mentioned by the Board were not mentioned. Counsel for the respondent did not put them before appellant’s witnesses in cross-examination as he did for other texts. In my view, it was a grave error to rely on those texts in its decision as against the oral evidence.

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I should also add that this could not at any rate be considered as reliable evidence from a scientific point of view. Any scientist who wished to be taken seriously when contradicting the statement that there was no known process for a given result, such as obtaining oxytetracycline from tetracycline, must have been able to supply a complete description of the process such as is the invariable practice of all authoritative publications like Chemical Abstracts and Science. Without such a description or a proper reference thereto, he could not be taken seriously. Furthermore, the members of the Board were well aware of the unreliability of such publications as those they quoted from. One of them said during the hearing:

If we could see into the offices of these editors of these dictionaries I think we could be sometime quite shocked. I think the evidence they have at their disposal would be, well, certainly second-hand. They are getting information from all over the place.

In his observations respecting the meaning of the French version, Choquette D.J. quoted two French dictionary definitions of “dérivé” to show that the meaning of this word was limited to a substance actually derived from another. Nothing was cited by anybody as giving a more extended meaning in the French language. The only definition of “dérivé” quoted by the Board taken from Grand Larousse Encyclopédique 1960 fully bears this out. It reads: “Substance obtained from another substance by way of transformation of the later”. However, the Board pointed out that the same Grand Larousse Encyclopédique, under “Tétracycline” in vol. 10, describes it as “Antibiotic of which terrafungine (syn. oxytetracycline) is an oxygenated derivative”. That single quotation does not establish a general usage as against the definition in the same publication and all other dictionaries.

In my view, the meaning of the enactment under consideration could not be ascertained by the Board as it did, taking together the English and French dictionaries as if just one language was to be considered. The Official Languages Act clearly

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requires that each version be read in the language in which it is written. Paragraph (b) of subs. 2 of s. 8 reads:

(b) subject to paragraph (c), where in the enactment there is a reference to a concept, matter or thing the reference shall, in its expression in each version of the enactment, be construed as a reference to the concept, matter or thing to which in its expression in both versions of the enactment the reference is apt;

Applying this principle to the case at hand, it appears to me that the conclusion should be that the “concept” to be selected as being equally applicable to both versions is that of a thing actually derived from another. This is the primary meaning of the word “derivative” and it is also the meaning of the word “dérivé”.

I would allow the appeal with costs throughout and substitute for the declaration of the Tariff Board a declaration that appellant’s imported products were not subject to duty during the period in issue, that is from August 1, 1969 to January 5, 1970.

Appeal allowed with costs.

Solicitors for the appellant: Martineau, Walker, Allison, Beaulieu, Phelan & MacKell, Montreal.

Solicitor for the respondent: D.S. Maxwell, Ottawa.