Hamlyn
J.T.C.C.:
—
This
is
an
appeal
from
a
Notice
of
Reassessment
issued
on
March
11,
1994,
by
the
Minister
of
National
Revenue
(the
“Minister”)
and
bearing
number
3816937
in
respect
of
the
taxation
year
ended
May
31,
1989,
of
Cargill
Grain
Company
Limited.
The
Appellant,
Cargill
Limited
(“Cargill”)
is
a
Canadian
resident
corporation,
which
is
the
continuation
of
Cargill
Grain
Company
Limited.
In
computing
its
income
for
the
taxation
year
ended
May
31,
1989,
Cargill
Grain
Company
Limited
claimed
a
deduction
in
respect
of
capital
cost
allowance
pursuant
to
paragraph
20(1
)(a)
of
the
Income
Tax
Act
(the
“Act”)
and
Class
10
of
Schedule
II
of
the
Income
Tax
Regulations
(the
“Regulations”)
on
depreciable
capital
property
commonly
described
as
wheeled
farm
implements,
and
consisting
of
fertilizer
spreaders
and
dry
fertilizer
applicators.
The
Minister
disallowed
the
deduction
of
capital
cost
allowance
pursuant
to
Class
10
and
allowed
a
deduction
of
capital
cost
allowance
pursuant
to
Class
8
of
Schedule
II
of
the
Regulations.
In
reassessing,
the
Minister
considered
the
classification
of
the
assets
in
question.
In
assessing
as
she
did
the
Minister
assumed
that
the
assets
in
question
are
properly
classified
in
Class
8
of
Schedule
II
of
the
Regulations.
Issue
The
sole
issue
to
be
decided
is
whether
the
said
wheeled
farm
implements
are
properly
classified
as
Class
10
property
pursuant
to
Schedule
II
of
the
Regulations.
The
Appellant’s
position
The
Appellant
states
that
all
of
the
said
wheeled
farm
implements
are
properly
described
as
‘trailers’
and/or
‘wagons’
and
that
they
are
properly
classified
as
Class
10
property
pursuant
to
Schedule
II
of
the
Regulations.
The
Respondent's
position
The
Respondent
submits
that
the
Class
10
classification
is
factually
inappropriate
and
wrong
in
law;
that
the
wheeled
farm
implements
have
a
function
such
that
it
would
be
wrong
to
classify
these
as
“trailers”
and/or
“wagons”
which
carried
with
it
a
connotation
of
“transport”
of
goods.
Facts
The
Appellant
is
in
the
business
of
handling,
storing,
processing,
merchandising
and
transporting
agricultural
products.
The
various
wheeled
pieces
of
equipment
are
used
by
the
Appellant
to
promote
the
sale
of
its
products
by
facilitating
their
transportation
and
delivery.
Each
piece
of
equipment
generally
consists
of
a
tank,
hopper
or
box
supported
on
a
frame
with
an
axle
or
wheels,
some
pieces
of
the
equipment
may
incorporate
an
applicator
mechanism
such
as
a
spreader
or
a
sprayer.
Each
piece
of
equipment
that
has
a
tank,
hopper
or
box
is
filled
with
product
(e.g.
fertilizer,
herbicide
or
seed)
by
the
Appellant
at
its
outlets,
to
be
picked-up
at
the
outlets
by
the
Appellant’s
customers.
The
customers,
using
their
own
tractors
or
other
motorized
vehicles
or,
on
some
occasions,
vehicles
of
the
Appellant,
will
tow
it
to
the
customer’s
location.
The
cus-
tomers
then
tow
the
equipment
to
that
portion
of
the
property
that
is
to
be
treated.
The
product
is
then
applied
to
the
property,
either
by
using
the
applicator
mechanism
built
into
the
equipment
or
by
attaching
the
equipment
to
an
applicator
of
some
description,
provided
by
the
customer.
Each
wheeled
piece
of
equipment
must
be
hitched
to
a
tractor
or
some
other
motorized
vehicle
and
be
towed
from
one
place
to
another.
The
tank,
hopper
or
box
of
each
wheeled
piece
of
equipment
is
loaded
with
some
chemical
or
fertilizer,
which,
once
it
is
transported
to
the
farmer’s
location,
is
applied
to
the
fields
of
the
farm.
Each
wheeled
piece
of
equipment
consists,
essentially
of
the
following
components:
(a)
a
frame,
(b)
wheels,
(c)
some
connecting
device
by
which
it
is
attached
to
the
means
of
pulling
the
piece
of
equipment,
(d)
a
tank,
hopper
or
box
for
the
contents,
and
(e)
hoses,
etc;
Lastly,
each
wheeled
piece
of
equipment
is
towed
on
public
highways
by
the
customer
or
by
the
Appellant
from
a
depot
owned
by
the
Appellant
where
it
has
been
loaded
with
the
product
sold
by
the
Appellant
and
taken
to
the
customer’s
property.
When
it
has
been
emptied,
it
is
towed
back
and
refilled.
Legislation
Relevant
classes
of
assets
for
purposes
of
capital
cost
allowances
are
found
in
Schedule
II
of
the
Regulations.
Class
10
assets
are
described,
in
relevant
part,
as
follows:
Property
not
included
in
any
other
class
that
is
(d)
a
sleigh
or
wagon,
(e)
a
trailer,
Class
8
assets
are
described,
in
relevant
part,
as
follows:
Property
not
included
in
Class
2,
7,
9,
11
or
30
that
is
(i)
a
tangible
capital
property
that
is
not
included
in
another
class
in
this
Schedule
except
...
[none
of
the
exceptions
applies]
Analysis
As
is
common
in
statutory
interpretation
the
Court
must
look
at
the
plain
meaning
of
words
used
in
the
legislation
to
determine
the
legislative
effect.
The
words
in
issue
are
‘wagon’
and/or
‘trailer’.
The
words
‘wagon’
and
‘trailer’
are
not
defined
by
statute.
Defining
jurisprudence
in
relation
to
this
specific
issue
is
not
in
abundance.
Counsel
referred
in
argument
to
the
following
decisions:
-
Nowsco
Well
Service
Ltd.
v.
Canada
(sub
nom.
Nowsco
Well
Service
Ltd.
v.
The
Queen),
[1990]
1
C.T.C.
416,
(sub
nom.
R.
v.
Nowsco
Well
Service
Ltd.)90
D.T.C.
6312
(F.C.A.);
-
Terroco
Industries
Ltd.
v.
Minister
of
National
Revenue,
[1993]
1
C.T.C.
2614,
93
D.T.C.
1
(T.C.C.);
and
-
Cumberland
Ready
Mix
Ltd.
v.
R.
(sub
nom.
Cumberland
Ready
Mix
Ltd.
v.
Canada),
[1994]
1
C.T.C.
12,94
D.T.C.
6079
(F.C.T.D.).
In
all
three
cases
the
issue
was
whether
the
taxpayer
was
entitled
to
claim
investment
tax
credits
with
respect
to
certain
equipment.
The
Minister
argued
in
each
case
that
the
equipment
was
“designed
for
use
on
highways
or
streets”
within
the
meaning
of
paragraph
4600(2)(e)
of
the
Regulations
and
thus
could
not
be
used
as
a
basis
for
claiming
investment
tax
credits.
These
cases
interpret
the
particular
wording
of
paragraph
4600(2)(e)
of
the
Regulations
and,
in
my
opinion,
have
little
relevance
to
the
issue
raised
in
this
appeal.
The
definitions
of
the
words
“wagon”
and
“trailer”
are
found
in
the
following
dictionaries.
The
Random
House
Dictionary
of
the
English
Language,
Second
Edition
Unabridged
(1987):
trailer
1.
a
large
van
or
wagon
drawn
by
an
automobile,
truck,
or
tractor,
used
esp.
in
hauling
freight
by
road...
wagon
I.
any
of
various
kinds
of
four-wheeled
vehicles
designed
to
be
pulled
or
having
its
own
motor
and
ranging
from
a
child’s
toy
to
a
commercial
vehicle
for
the
transport
of
heavy
loads,
delivery,
etc....
Webster's
Ninth
New
Collegiate
Dictionary
(1985):
trailer
(3
a):
a
highway
or
industrial-plant
vehicle
designed
to
be
hauled
(as
by
a
tractor)
wagon
(1
a):
a
usu.
four-wheel
vehicle
for
transporting
bulky
commodities
and
drawn
orig.
by
animals...
The
Concise
Oxford
Dictionary
of
Current
English
(7th
ed.)
(1982):
trailer:
...
wheeled
vehicle
...
drawn
by
another.
It
is
to
be
noted
a
trailer
is
defined
by
reference
to
a
wagon
(i.e.
a
wagon
is
a
trailer).
And
further,
from
these
definitions,
it
is
possible
to
find
common
elements
that
make
up
a
trailer
and/or
wagon.
These
include:
(i)
a
wheeled
vehicle;
(ii)
drawn
by
another;
(iii)
that
is
non-motorized;
(iv)
is
easily
mobile
(designed
to
be
hauled);
and
(v)
is
used
to
transport
goods.
At
the
outset
of
the
appeal,
both
counsel
confirmed
they
had
agreed
that
the
wheeled
farm
implements
known
as
“Caddywagon”
used
for
anhydrous
ammonia
was
a
“wagon”
and/or
a
“trailer”
for
the
purposes
of
Class
10
of
Schedule
II
of
the
Regulations
and
a
“Blue
Jet
Cultivator”
used
for
seeding
and
dry
herbicide
applications
fell
into
the
catchall
provisions
of
Class
8
of
Schedule
IT
of
the
Regulations.
This
left
the
remainder
wheeled
farm
implements
(pieces
of
equipment)
known
as
the
“Bandwagon”,
the
“Dry
Fertilizer
Spreader’,
the
“Concord”
and
the
“Nodet”
as
subjects
of
this
litigation.
In
this
case
the
business
of
the
Appellant
includes
the
handling,
storing,
processing,
merchandising
and
transporting
of
agricultural
products.
The
chief
witness
for
the
Appellant
stated
clearly
that
to
sell
the
products
(fertilizer
and
herbicides)
the
Appellant
deems
it
necessary
to
provide
transportation
of
product
and
also
to
provide
a
means
of
application
of
the
product.
The
Bandwagon
and
the
Concord
are
used
strictly
for
transporting
product.
Product
applicators
must
be
attached
to
these
implements.
The
Bandwagon
and
the
Concord
are
used
as
trailers
to
haul
product,
whereas
the
Dry
Fertilizer
Spreader
and
the
Nodet
are
used
for
transporting
product
as
well
as
application
of
the
product
(i.e.
product
applicators,
cultivators
or
spreaders
are
part
of
the
implements).
Each
of
these
four
implements
is
a
four
wheeled,
non
motorized,
mobile
piece
of
equipment,
designed
to
carry
the
Appellant’s
product
and
drawn
by
a
separate
motorized
vehicle.
All
these
elements
are
common
to
the
definition
of
a
trailer
and/or
wagon
as
previously
herein
summarized.
In
addition
to
these
elements,
as
indicated,
the
Dry
Fertilizer
Spreader
and
the
Nodet
serve
another
function,
that
is,
the
application
of
product.
This
additional
application
function
coexists
with
the
hauling
function.
Therefore
the
Nodet
and
the
Dry
Fertilizer
Spreader
are
designed
to
haul
and
to
apply
product.
Before
the
product
can
be
applied,
it
must
be
hauled
to
the
application
site.
Thus,
while
its
design
purpose
is
two
fold,
hauling
precedes
the
application
function
and
the
two
functions
coexist
without
derogating
one
from
the
other.
As
a
consequence,
the
Nodet
and
the
Dry
Fertilizer
Spreader
designed
function
of
hauling
meets
the
common
element
definition
of
a
wagon
and/or
a
trailer
and,
in
fact,
the
implements
are
used
as
trailers
to
haul
product.
Conclusion
This
Court
concludes
the
Bandwagon,
the
Concord,
the
Dry
Fertilizer
Spreader
and
the
Nodet
are
wagons
and/or
trailers
as
found
within
Class
10
of
Schedule
II
of
the
Regulations.
Decision
The
appeal
is
allowed
and
the
assessment
is
referred
back
to
the
Minister
for
reconsideration
and
reassessment
on
the
basis
that
the
Caddywagon,
the
Bandwagon,
the
Concord,
the
Dry
Fertilizer
Spreader
and
the
Nodet
are
wagons
and/or
trailers
as
found
within
Class
10
of
Schedule
II
of
the
Regulations
and
that
the
Blue
Jet
Cultivator
is
an
implement
as
found
within
Class
8
of
Schedule
II
of
the
Regulations.
The
Appellant
is
entitled
to
its
costs.
Appeal
was
allowed.
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