DUMOULIN,
J.:—Clear-cut
and
uncomplicated,
the
facts
giving
rise
to
the
moot
question
of
law
at
issue
are
set
out
in
the
parties’
“Agreement
as
to
Facts’’
filed
of
record
on
June
20
last.
The
suppliant
company
is
described
in
its
petition
of
right
dated
March
22,
1967
as
incorporated
under
the
laws
of
the
province
of
Ontario,
and
as
constituted
under
the
Canada
Corporations
Act
in
the
agreed
statement
of
facts
produced
some
27
months
later.
It
admittedly
is
a
Canadian
firm
with
its
head
office
in
Toronto,
carrying
on
the
business
of
selling,
leasing
and
servicing
Caterpillar
’
’
heavy
construction
machinery
in
the
province
of
Ontario.
For
the
better
furtherance
of
its
industrial
pursuits,
Crothers
occasionally
employed
an
executive
aircraft
that
it
owned
and
used
to
bring
customers
to
the
various
job
sites
where
Caterpillar
equipment
was
set
at
work.
Prior
to
the
material
date
of
January
19,
1960,
the
suppliant
had
possessed,
successively,
two
such
promotional
planes
of
which
it
eventually
disposed
and
was
then
in
need
of
a
third
one.
On
January
19,
1960,
as
above
indicated,
Crothers
Limited
and
Timmins
Aviation
Limited
of
Montreal,
a
distributor
for
Grumman
Aircraft
Engineering
Corporation
of
Bethpage,
New
York,
U.S.A.,
entered
into
a
‘‘Final
Purchase
Agreement”
(exhibit
2)
with
respect
to
the
purchase
of
a
Grumman
“Gulfstream”
twin-engine
transport
aircraft,
Model
No.
G-159,
for
a
price
of
$820,000.
U.S.
funds
(cf.
exhibit
1).
However,
it
so
happened
that
the
afore-mentioned
Gulfstream
plane,
according
to
paragraph
5
of
the
agreed
statement,
‘‘
could
not,
on
delivery
pursuant
to
the
purchase
contracts’’
(exhibits
1
and
2)
‘‘be
used
for
the
transportation
of
Crothers’
executives
or
customers.
Crothers
therefore
entered
into
a
further
agreement
with
Timmins,
at
the
time
of
the
Final
Purchase
Agreement’’
(January
19,
1960)
‘‘whereby
Timmins
undertook
to
install
an
executive
interior.
electronic
and
radio
equipment
for
the
price
of
$197,601
(Canadian
funds)’’.
This
additional
undertaking
appears
minutely
detailed
in
exhibits
5
and
6.
Paragraph
6
of
the
agreed
statement
of
facts
next
states
that
:
On
or
about
February
12,
1960,
pursuant
to
the
Final
Purchase
Agreement,
Exhibit
2;
the
Gulfstream
was
flown
from
Grumman’s
plant
at
Bethpage,
New
York,
to
Montreal
where
Timmins
took
possession
of
it
.
I
now
intersect
this
article
6
by
reason
of
what,
in
my
opinion,
seems
a
most
significant
statement
to
which
I,
accordingly,
attach
a
correlative
degree
of
importance;
it
reads
thus:
.
.
.
For
the
purpose
of
making
the
Ferry
Flight
from
Bethpage,
New
York,
to
Timmins’.
plant
at
Montreal,
Grumman
loaned
to
Timmins
certain
instruments
and
equipment
temporarily
installed
in
the
Gulfstream
which
are
referred
to
as
a
“Flyaway
Package”.
The
instrument
and
equipment
which
make
up
the
Flyaway
Package
remained
the
property
of
Grumman
at
all
times,
and
they
were
removed
from
the
Gulfstream
and
returned
to
Grumman
after
the
aircraft
had
been
flown
to
Montreal.
The
Flyaway
Package
consisted
of:
Magnetic
Compass
Turn
and
Bank
indicator
Air
speed
indicator
Clock
Rate
of
Climb
indicator
Sensitive
altimeter
Compass
Gyro
Horizon
Transceiver
Omni
Receiver
ADF
Type
R20A
Marker
Receiver
VHF
Antenna
Omni
Antenna
37J-3
Marker
Antenna
37X-2
Flux
Gate
Valve
Compensator
Such
were
the
17
implements
comprised
in
this
Flyaway
Package.
While
the
Timmins
Aviation
engineers,
designers
and
craftsmen
were
at
work
on
this
unfinished
plane,
the
price
stipulated
of
$197,601
underwent
a
rather
slight
increase
to
$205,582
necessitated
by
38
amendments
to
the
original
quotation
and
specifications
outlined
in
exhibit
6.
After
completion
of
the
work
at
the
Timmins
shops
in
Montreal,
the
aircraft
was
returned
to
Bethpage,
New
York,
to
have
its
exterior
painted;
on
June
27,
1960,
Crothers
Limited
took
possession
of
the
now
finished
plane
and,
on
that
same
day,
the
Minister
of
Transport
‘‘granted
a
certificate
of
airworthiness
in
respect
thereto’’
(para.
9
of
the
agreed
statement
of
facts).
The
aggregate
amount
of
taxes
claimed
from
the
suppliant
is
itemized
and
adversely
commented
upon
in
paragraphs
6,
7
and
9
of
the
petition,
hereunder
reproduced
verbatim
:
6.
Sales
tax
in
the
amount
of
$76,676.17
has
been
paid
on
the
value
of
the
aircraft
at
the
time
it
was
imported
into
Canada.
In
addition
sales
tax
in
the
amount
of
$9,045.62
was
paid
on
the
materials
used
in
the
installation
contract.
However,
as
at
October
29,
1965,
the
Company
had
not
paid
sales
tax
on
the
portion
of
the
sale
price
represented
by
the
commission
of
$12,500
paid
to
Timmins
nor
on
the
contract
value
(exclusive
of
taxable
materials)
of
its
agreement
with
Timmins
for
interior
furnishings
and
electronic
equipment
installation.
7.
By
letter
of
October
29,
1965,
the
Department
of
National
Revenue,
Customs
and
Excise,
claimed
from
the
Company
sales
tax
in
the
amount
of
$14,943.43
and
penalties
of
$6,176.62.
These
sums
were
paid
by
Crothers
Limited
on
November
30,
1965,
and
now,
the
suppliant,
by
its
petition
(para.
9)
:
.
.
.
admits
its
liability
to
tax
of
$1,375
on
the
$12,500
commission
paid
to
Timmins
and
to
penalties
thereon
but
claims
that
it
is
not
liable
for
the
$13,568.43
balance
of
tax
assessed
by
the
Department
and
paid
by
the
Company
nor
to
any
penalties
in
respect
of
that
amount.
I
thought
it
useful
to
quote
these
three
paragraphs
of
the
petition
for
a
fuller
review
of
the
case
although
the
litigants
narrowed
it
down
considerably
by
an
Agreement
as
to
Issue,
dated
June
25,
1969,
stating
that—
.
.
.
the
question
to
be
determined
in
this
action
is
whether,
within
the
meaning
of
section
30(1)(a)
of
the
Excise
Tax
Act,
goods
were
“produced
or
manufactured
in
Canada”
by
Timmins
Aviation
Limited
through
its
operations
with
respect
to
the
aircraft
referred
to
in
the
Petition
of
Right.
In
the
agreement’s
own
terms,
the
alternative
replies
are
that:
If,
by
the
said
operations,
Timmins
Aviation
Limited
did
not
produce
or
manufacture
goods
in
Canada,
then
the
parties
agree
that
there
should
be
judgment
in
favour
of
the
Suppliant
in
the
amount
of
$19,176.31
with
costs
to
the
Suppliant
.
.
.
Conversely,
continues
the
agreement
:
If,
by
the
said
operations,
Timmins
Aviation
Limited
did
produce
or
manufacture
goods
in
Canada,
then
the
parties
agree
that
the
Petition
of
Right
should
be
dismissed
with
costs
to
the
Respondent
.
.
.
In
answer
to
the
petition
of
right,
the
respondent
urges
in
law
a
general
denial
of
any
cause
of
action
against
Her
Majesty
predicated
on
the
ensuing
averment:
1.
(b)
the
Suppliant
owned,
held
and
claimed
a
proprietary
right
to
an
executive
aircraft
being
manufactured
or
produced
for
or
on
behalf
of
the
Suppliant
by
Timmins
Aviation
Limited
for
the
use
of
the
Suppliant
and
not
for
sale,
and
upon
the
manufacture
or
production
of
the
said
executive
aircraft,
the
Suppliant
became
liable
to
consumption
or
sales
tax
imposed
by
the
Excise
Tax
Act
and
to
old
age
security
tax
imposed
by
the
Old
Age
Security
Act.
The
pertinent
statutory
legislation
assented
to
by
the
parties,
Section
30(1)
(a)
of
the
Excise
Tax
Act
(R.S.C.
1952,
¢.
100)
enact
as
follows:
30.
(1)
There
shall
be
imposed,
levied
and
collected
a
consumption
or
sales
tax
of
eight
per
cent
(plus
a
three
per
cent
Old
Age
Security
tax)
on
the
sale
price
of
all
goods
(a)
produced
or
manufactured
in
Canada.
To
this
should
be
conjoined
the
Act’s
own
definition
of
the
expressions
‘‘manufacturer
or
producer”?
in
Section
2(1)
and
its
subsections
(aa)
and
(ii)
2.
(1)
In
this
Act
(aa)
“manufacturer
or
producer”
includes
(ii)
any
person,
firm
or
corporation
that
owns,
holds,
claims,
or
uses
any
patent,
proprietary,
sales
or
other
right
to
goods
being
manufactured,
whether
by
them,
in
their
name,
or
for
or
on
their
behalf
by
others,
whether
such
person,
firm
or
corporation
sells,
distributes,
consigns
or
otherwise
disposes
of
the
goods
or
not.
Of
the
two
witnesses
heard,
the
first,
Joseph
Anckner,
is
Grumman’s
Aireraft’s
project
engineer,
a
situation
he
has
had
for
the
last
twenty
years.
Anckner
testifies
that
the
plane
in
question,
of
the
‘‘Gulfstream’’
class,
was
manufactured
by
his
company
in
the
summer
of
1959
and
‘‘exclusively
intended
for
passenger
transportation
and
not
at
all
for
cargo.
Its
maximum
carrying
capacity
was
19
people’’.
He
adds
that:
“the
plane
is
structurally
complete
and
fit
to
fly,
less
interior
decoration
and
furnishings
and,
also,
with
only
a
primary
greenish
preservative
paint
on
its
outside.
It
is
in
such
condition
that
airplanes
leave
the
Grumman
plant
for
delivery
to
customers.
All
the
instruments
listed
in
Appendix
F
of
document
(exhibit)
7
(mentioned
supra
under
the
caption
of
Flyaway
Package)
were
installed.
by
Grumman
Aircraft
previously
to
the
delivery
of
the
Gulfstream
plane
to
Timmins
Aviation,
but
merely
on
a
temporary
basis
as
explained
in
paragraph
6
of
the
Agreement
as
to
Facts’’.
I,
then,
questioned
Mr.
Anckner
about
the
technical
importance
of
the
instruments
thus
loaned
for
the
flight
from
Bethpage
to
Montreal.
The
answer
obtained
was,
textually,
that
‘without
such
instruments,
flying
a
plane
would
be
very
hazardous’’.
From
this
admission
would
seemingly
flow
the
unescapable
assumption
that
a
plane
devoid
of
those
implements,
the
lack
of
which
jeopardizes
its
normal
flying
security,
could
hardly
be
considered
as
completely
“produced”
or
fully
‘‘manufactured”’.
Only
after
the
proper
fitting
of
each
and
every
safety
device
is
an
aircraft
truly
produced
and
deserving
of
an
official
airworthiness
certificate.
The
other
witness,
Alexander
J.
Spencer,
presently
is,
but
was
not
at
the
material
times,
chief
inspector
of
Atlantic
Aviation
of
Canada,
successor
to
Timmins
Aviation
Company.
The
specification
given
in
document
or
exhibit
6,
concerning
the
completion
work
of
interior
furnishing
done
by
Timmins
Aviation,
are
known
to
him.
‘‘The
structural
condition
of
the
plane
was
strengthened
by
Timmins,
although
it
would
have
been
strong
enough
as
set
up
by
Grumman
Engineering’’,
says
Spencer,
who
enters
upon
a
lengthy
description
of
those
“interior
finishing’’
jobs
performed
at
the
Montreal
plant
and
listed
in
exhibit
6.
Most
fixtures
thus
installed,
according
to
the
witness,
“are
bought
from
various.
producers
and
not
fabricated
by
Timmins’’
who,
nevertheless,
‘‘connected
the
electrical
appliances,
adjusted
sheets
of
aluminum
lining
cut
and
prepared
by
their
own
mechanics,
installed
the
aluminum
bulkhead
mentioned
on
page
5
of
exhibit
6
(
paragraph
3-2)
to
separate
the
hydraulic
and
galley
compartments’’.
Also
fabricated
and
set
up
by
the
Montreal
firm
were
some
hinged
doors,
a
wardrobe
compartment,
three
sliding
drawers,
a
utility
cabinet
housing
an
A.M./F.M.
tuner,
other
bulkheads,
thus
described
respectively
on
pages
8
(para.
4-
1)
and
15
(para.
5-1)
of
exhibit
6,
part
I:
A
bulkhead
shall
be
installed
at
the
forward
end
of
the
cabin
area
to
separate
the
cabin
and
companionway
compartments
and
a
second
bulkhead
will
be
installed
at
the
aft
end
of
the
cabin
for
cabin/lavatory
separation
.
.
.
Then
:
Existing
rear
bulkhead
in
the
lavatory
section
shall
be
extended
to
the
full
width
of
the
fuselage,
and
a
door
shall
be
installed
in
this
section.
Door
and
bulkhead
construction
shall
be
of
aluminum
honeycomb.
sandwich
construction
.
..
Further
evidence
in
this
vein
led
Mr.
Spencer
to
acknowledge,
at
least,
that
‘‘the
value
of
all
materials
‘fabricated
or
produced’
by
Timmins
Aviation
amounted
to
about
20%
of
those
obtained
from
outside
furnishers’’
To
this
should
be
coupled.
since
literal
proof
conveys
a
more
compelling
influence,
a
paragraph
of
exhibit
11,
a
letter
dated
May
16,
1960,
written
on
behalf
of
Timmins
Aviation
Limited,
signed
by
the
company’s
general
manager,
Victor
R.
Bennett,
and
addressed
to
the
“Deputy
Minister
of
National
Revenue
(Customs
and
Excise),
attention
:
J.
J.
A.
Senecal,
Esq.,
Director,
Port
Administration’’.
I
quote
most
of
the
fourth
paragraph,
on
page
62
of
a
binder
containing
exhibits
1
to
15
inclusive
:
The
aircraft
(i.
e.
the
Gulfstream
purchased
by
Crothers
Limited)
is
delivered
in
an
entirely
unfinished
and
bare
condition,
without
any
interior
installations
whatever,
and
with
only
sufficient
radio
equipment
to
permit
the
ferry
flight
from
the
manufacturer’s
plant.
This
equipment
is
subsequently
returned
to
the
manufacturer
as
being
his
property.
Accordingly,
prior
to
the
aircraft
being
given
a
Certificate
of
Airworthiness
by
the
Department
of
Transport,
approximately
$190,000
(extended,
subsequently
quently
to
$205,582)
of
labour
and
materials
are
applied
to
the
aircraft
in
Canada.
(Italics
not
in
text.)
The
respondent
called
no
witnesses,
limiting
its
evidence
to
reading:
into
the
record
questions
and
answers
1
to
7,
72
to
91
and
131
to
135
inclusively,
of
one
Allan
W.
Alderson’s
examination
on
discovery.
An
officer
of
the
suppliant
company,
Mr.
Alderson
was
thus
examined
at
Toronto,
on
August
29,
1967,
in
keeping
with
Rule
293.
of
the
Exchequer
Court.
The
only
part
effectively
suitable
to
the
object
of
our
research
is
derived
from
questions
and
answers
151
to
135
hereunder
reproduced.
131.
Q.
When
they
put
in
the
bulkheads
do
you
know
what
they
did?
Were
these
prefabricated
completely
and
just
installed
or
did
they
(Timmins
Aviation)
have
to
assemble
them?
To
What
extent
did
they
have
to
make
them
on
the
scene?
A.
I
don’t
know
to
what
extent
Timmins
had
‘to
go
to
create
these,
132.
Q.
Your
company
does
not
have
any
information?
A.
There
may
be
somebody
with
knowledge
of
the
Timmins
operation
that
would
know
whether
they
fabricated
or
bought
readymade
sections
for
installing.
It
seems
logical
they
would
do
the
fabrication
there.
I
interrupt
to
note
that
Mr.
Spencer’s
evidence
and
the
specification
book,
exhibit
6,
did
conclusively
establish
the
fabrication
of
these
bulkheads
and
of
several
other
fixtures
by
the
Timmins
company.
133.
Q.
And
similarly
the
galley,
your
company
has
not
any
information
as
to
whether
it
was
installed
or
to
what
extent
the
pipes
were
screwed
together
on
the
scene
or
.
.
.
A.
No.
We
understood
this
was
Timmins
business
to
carry
out
and
put
it
together—manufacturing.
134.
Q.
The
aircraft
as
delivered
by
Grumman
at
the
premises
at
Timmins
could
not
be
used
for
transportation
of
your
executives
or
customers?
A.
No.
It
would
not
be
known
as
an
executive
aircraft
at
this
stage.
135.
Q.
It
could
not
be
used
for
the
purposes
which
you
had
in
mind
and
for
which
you
have
subsequently
used
the
aircraft.
A.
No.
Suppliant’s
learned
counsel,
commenting
on
the
verbal
and
written
evidence,
submitted
that
the
work
done
by
Timmins
Aviation
did
not
amount
to
a
manufacture
or
production
of
goods
in
Canada
as
visualized
by
Sections
30(1)
(a)
and
31(1)
(d)
of
the
Excise
Tax
Act.
Nothing
in
the
nature
of
“manufacture
or
production’’
attaches
to
the
several
jobs
made
in
the
plane
at
the
Timmins
shops.
In
Mr.
Mogan’s
view
‘‘this
plane
always
was,
as
intended,
an
executive
plane’’.
Grumman
manufactured
or
produced
the
aircraft
itself
but
left
to
Timmins
and
their
client,
Crothers
Limited,
the
care
of
finishing
and
furnishing
the
car’s
interior,
according
to
the
purchaser’s
taste.
This
contention
is
summed
up
by
the
learned
counsel
in
the
triple
enunciation
that:
1.
Timmins
Aviation
acted
as
interior
decorators
and,
in
this
capacity,
took
certain
necessary
materials
and
fitted
them
in
the
plane
so
as
to
make
it
attractive
and
suitable
to
its
purpose
of
‘‘executive
transportation”.
2.
Timmins
purchased
and
installed
‘‘avionic
instruments.
3.
It
also
had
to
fabricate
certain
furnishing
items,
such
as
partitions,
shelves,
drawers,
one
or
two
tables,
a
window
ledge,
an
A.M./F.M.
tuner
and
tapedeck.
Such
deductions,
however,
“that
Timmins’
participation
did
not
amount
to
manufacture
or
production’’
and,
more
particularly,
‘‘that
this
plane
always
was,
as
intended,
an
executive
plane’’,
seem
categorically
refuted
by
Timmins’
chief
inspector,
Alexander
J.
Spencer,
whose
testimony
was
all
the
more
convincing
when
he
valued
the
material
“fabricated
or
produced’’
by
Timmins
Aviation
‘‘at
20%
of
that
bought
elsewhere
for
furnishing
the
plane’s
interior’’.
A
reference
to.
exhibit
11,
supra,
that,
“The
aircraft
is
delivered
in
an
entirely
unfinished
and
bare
condition,
without
any
interior
installations
whatever,
and
with
only
sufficient
radio
equipment
to
permit
the
ferry
flight
from
the
manufacturer’s
plant’’,
disposes
of
the
other
proposition.
;
;
.
.
,
In
law,
it
is
my
humble
opinion
that
Section
2(1)
(aa),
above
cited,
defining
‘
‘manufacturer
or
producer’’,
and
the
clear
and
precise
wording
of
the
‘parties’
agreement
as
to;issue
are
nowise
affected
by
Sections
30(1)
(a)
(i)
and
31(1)
(d)
of
the
Act.
My
preceding
remarks
are,
I
trust,
in
line
with
the
plea
delivered
by
respondent’s
learned
counsel,
Mr.
Munro,
Q.C.,
who
estimated
the
cost
of
implements
produced
by
Timmins,
over
a
time
period
of
some
four
months,
at
approximately
one-fourth
of
the
plane’s
total
cost.
His
concluding
point
was
that
Timmins
did
more
than
interior
decoration;
they
were
converting
a
plane
that
was
not
usable
at
all
into
a
perfectly
usable
one’’,
a
justified
paraphrase
of
the
suppliant’s
Mr.
Alderson’s
two
last
answers,
numbers
134
and
135,
of
his
examination
on
discovery.
Due
to
the
fact
that
unambiguous
evidence,
oral
and
literal,
if
not
even
admissions,
of
‘‘manufacture
or
production”
in
Canada
by
Timmins
Aviation
Limited
are
of
record
herein,
and
comply
both
with
the:
statutory
requirements
relative
thereto,
and
the
agreement
as
to
issue,
it
appears
purportless
to
review
the
authorities
invoked
by
the
litigants;
those
precedents,
of
valuable
assistance
in
more
complex
cases,
are
of
slight
avail
where,
practically,
no
complexity
exists.
The
conclusion
should
be
that
this
executive
aircraft
had
two
indispensable
producers:
Grumman
and
Timmins,
such
as
house
building,
for
instance,
needs
several
co-producers
:
masons,
bricklayers,
carpenters,
plumbers,
roofers.
The
Excise
Tax
Act
makes
no
mention
of
proportionate
contribution
to
the
achievement
of
entirety,
nor
does
the
agreement
as
to
issue.
For
the
reasons
above,
the
suppliant’s
petition
of
right
is
dismissed
with
costs
accruing
to
the
respondent.
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