Dillingham Corporation Canada LTD v. Her Majesty the Queen, [1981] CTC 107, 81 DTC 5096

Gibson, J:—The Province of British Columbia established a sea bus system connecting North Vancouver with the Vancouver city centre, which system opened in 1977. The Province of British Columbia did this, according to the evidence, to provide a third crossing between the north shore and Vancouver city centre in lieu of building a third bridge. In establishing this sea bus system, the Province of British Columbia also caused it to be a part of an integrated public transit system between North Vancouver and West Vancouver and Vancouver city centre. This integration was accomplished in a manner that permitted members of the public, if they chose to do so, to buy a one fare ticket which was valid on buses travelling in Vancouver city, on sea bus ferries and on buses in both West Vancouver and in North Vancouver irrespective of the ownership of any of the various systems or of who were the operators of said systems.

In respect of this sea bus system, the Province of British Columbia, by three separate contracts with the plaintiff Dillingham Corporation Canada Ltd, constructed the north shore, the North Vancouver main terminal, the floating maintenance terminal and the south shore, Vancouver city centre main terminal.

At the same time the Province of British Columbia entered into long term 21-year plus options leases with Marathon Corporation Limited in respect to the Vancouver main shore landing area and with National Harbours Board in respect to the North Vancouver, north shore landing area.

The Province of British Columbia, at all material times, is and was the owner of this sea bus system and the lessee of all the landing areas necessary to effectively operate the system.

The plaintiff, Dillingham Corporation Canada Ltd., in the process of performing the contracts mentioned above, purchased certain goods and incorporated these goods into the facilities which it had agreed to construct under the contracts. Taxes under Parts III, IV and V of the Excise Tax Act in the amount of $217,138.49 were included in the purchase price to Dillingham of these goods and paid.

Dillingham applied to the defendant for a refund of these taxes but the defendant refused to refund them.

Dillingham seeks a declaration that it is entitled to a refund of these taxes plus interest, plus costs, pursuant to the provisions of subsection 44(2) of the Excise Tax Act.

In The Queen v Stevenson Construction Co Ltd et al, [1979] CTC 86, 79 DTC 5044, the Court of Appeal of this Court, in a somewhat similar case, affirmed the conclusion of the trial judge that ferry terminals and landings (such as are the subject matters in this case) on which work was done were at all relevant times part of the Provincial highways system under the jurisdiction of the Department of Highways of British Columbia and are not to be considered to be a public utility within the meaning of subsection 44(2) of the Excise Tax Act; that paragraphs (a) and (b) of subsection 44(2) of the Excise Tax Act contemplate an enterprise that is separate from the government’s departmental structure; and that the various area terminals and landings, the subject matters in that case, formed part of the highways system.

The facts in that case are distinguishable only from the facts in this case in one aspect, namely that when the subject construction was practically completed in 1976, the Province of British Columbia decided that it would cause to arrange for BC Hydro to operate its sea bus system; and BC Hydro did so for two successive years by way of two contracts for one year only (see Exhibits 6 and 7). Then in 1980 the Province of British Columbia, on a one year basis, decided the Urban Transit Authority employing Metro Transit Operating Company as the operator would operate this sea bus system.

The Province of British Columbia kept control of this sea bus system and paid BC Hydro for the yearly operation losses.

According to the evidence, the Province of British Columbia at all material times intended to and did provide this sea bus system as a provincial matter, and responsibility, intervening directly, so to speak, into what would normally be local municipal responsibility for urban transportation.

The sole question for decision is whether or not the relevant goods incorporated into these facilities of the sea bus system which are the subject matters of these three contracts were purchased on behalf of and for the Province of British Columbia for use by itself or for use by BC Hydro within the meaning of paragraph 44(2)(b) of the Excise Tax Act.

There is no statutory definition to assist in determining the meaning of the word “use” in this context.

The submission supporting the refusal to refund appears, among other things, to be based on the claim that BC Hydro was the user of these facilities because it was the operator of the sea bus system for two years under the two said yearly contracts or, alternatively, that BC Hydro was the user because the sea bus system was integrated into the land bus transportation systems operating in Vancouver, North Vancouver and West Vancouver.

In the Shorter Oxford English Dictionary a definition of user is:

User: continued use, exercise, or enjoyment of a right; presumptive right arising from use.

In Black’s Law Dictionary the definition of “use” in conveyancing sense is:

Use: literally means “benefit”

and in the non-technical sense:

Use: The “use” of a thing means that one is to enjoy, hold, occupy, or to have some manner of benefit thereof.

Black’s Law Dictionary also defines “operate”:

Operate: This word, when used with relation to automobiles, signifies a personal act in working the mechanism of the automobile: that is, the driver operates the automobile for the owner but the owner does not operate the automobile unless he drives it himself.

Applying these definitions in considering what actually the Province of British Columbia did in respect to this sea bus system, as one part of an integrated urban transit system, in the light of and based on the whole of the evidence, it is my view that the British Columbia government at all material times was not only the owner of this sea bus system, (which as stated not only includes the facilities but also the leasehold rights in the landing areas) but it also was the user in the sense contemplated in the Excise Tax Act exercising or enjoying all such ownership matters and rights, whereas BC Hydro during the said two years was a mere or bare operator of the system and not the user of these facilities. It follows that BC Hydro did not use the subject goods which were incorporated into the facilities of this sea bus system in the manner prescribed in paragraph 44(2)(b) of the Excise Tax Act. Instead, the Province of British Columbia did; and as a consequence such use by the Province of British Columbia does not attract excise tax.

Accordingly, the Dillingham Corporation Canada Ltd is entitled to a declaration that it is entitled to a refund of excise tax paid in the amount of $217,138.49, but in view of the jurisprudence is not entitled to any declaration that it is entitled to any interest on this sum. Dillingham is also entitled to a declaration that it is entitled to its costs of this action.