Ordinary Meaning

In rejecting a submission based on the harshness of s. 34.1 in the taxpayer's circumstances, Woods J noted that the allegedly harsh effect reversed in the following year – and in any event "it is well established that this Court cannot grant relief on grounds only that the result is harsh: Lans v The Queen, 2011 FCA 290."

Ryer JA added (at FCA para. 3, quoting Chaya, 2004 327 at para. 4): "The Court must take the statute as it finds it."

The GST credit note rule in s. 232 provided that where a registrant received a credit note for a taxable purchase made by it, any GST included in that credit note would be added to its net tax liability for the reporting period in which it received the credit note to the extent that it had claimed an input tax credit for the related purchase in its return for that or a preceding reporting period. The legislative drafter missed the point (subsequently addressed in a retroactive amendment to s. 225(3.1)) that the related ITCs potentially could be claimed in a return for a reporting period following that in which a credit note was received, so that such ITCs were not be recaptured under s. 232.

D'Auray J. in the Tax Court confirmed this legislative gap, so that the registrant received full ITCs for the GST on its original purchases notwithstanding that it subsequently received credit notes for $2.3M of those claims.

In affirming this decision, Pelletier JA stated (at para. 9):

There may be cases where precisely-worded provisions or their interaction creates an advantage or a windfall… . But we do not interpret taxation provisions in a tendentious or result-oriented way to enhance the federal treasury… . Instead, absent words allowing us to address situations of abuse or windfall, where the provisions are precisely-worded, clear and unambiguous, they must be given their plain effect.

Before rejecting a literal interpretation of ITA s. 146(9) advanced by the Crown, Sharlow JA stated (at para. 59):

[A] literal interpretation of a statute cannot be accepted without further examination. In interpreting any statutory provision, even one that appears to be clear on its face, it is necessary to consider its context and purpose by reading the provisions of the statute 'as a harmonious whole' (Canada Trustco....at para.10).

Before finding (at para. 33) that the language used in the definition in s. 149.1(1) of a public foundation indicated that "Parliament has precisely and unequivocably evidenced its intent that public foundations must have more than one trustee," Dawson JA stated (at para. 27):

The words, if clear, will dominate; if not, they yield to an interpretation that best meets the overriding purpose of the statute. See Celgene Corp. v. Canada...2011 SCC 1, [2011] 1 S.C.R. 3 at paragraph 21.

She then went on to refer to a discussion paper of the Department of Finance before concluding that this interpretation accorded with the legislative purpose. ("[T]he requirement that there be more than one arm's length trustee provides greater assurance that a public foundation will not be used for tax avoidance purposes" (para. 42).)

The Minister contended that s. 112(3) was intended to prevent surplus-stripping, and should be interpreted expansively so as to achieve that effect in the present case. The Court dismissed this argument because it would contradict the clear wording of s. 112(3)(b). Evans J.A. stated (at para. 61):

In my opinion, what the Crown urges as the correct interpretation of subsection 112(3) is, because of the specificity of its text, more properly characterized as a proposed amendment.

Before going on to find that interest income earned by a status Indian from a deposit with an on-reserve caisse populaire was exempt under s. 87 of the Indian Act as personal property situated on the reserve, Cromwell J stated (para.14):

Courts should interpret the phrase "on a reserve" having due regard to the "substance and the plain and ordinary meaning of the language used rather than to forensic dialectics."

Although the legislative intent for s. 162(2.1) was to have a non-resident corporation pay an alternative penalty when it had no liability for income tax (para. 28), "those charged with implementing the legislative plan failed in their task" (para. 38). Nöel, J.A. stated (at para. 32):

[W]hile a contextual and purposive analysis is useful in identifying amongst the meanings which a word (or phrase) can have the one that best reflects Parliamentary intent, it cannot be used to give the legislative language a meaning which it cannot bear ...

Before finding that the taxpayer was not required to establish that he had a reasonable expectation of profit ("REOP") with respect to four rental condominium units held by him, the Court stated (at p. 6979) that:

"The REOP test has been applied independently of provisions of the Act to second-guess bona fide commercial decisions of the taxpayer and therefore runs afoul of the principle that courts should avoid judicial rule-making in tax law."

The legislative history of the definition of term preferred share in s. 248(1) indicated that the provision applied to a specific and sophisticated segment of taxpayers, with the result that it was appropriate that the phrase "guarantee, security or similar indemnity or covenant" be interpreted in accordance with its more technical meaning derived from the laws that applied to commerce in general and public business companies in particular, rather than its ordinary dictionary meaning.

Malone J.A. also stated (at p. 6881):

"... as indicated in Bon-Secours, once ambiguity becomes an issue, the legislative provision should be given a strict or liberal interpretation depending on the purpose underlying the provision. That purpose must be identified in light of the context of the statute, its objective and the apparent legislative intent. Hence it is necessary to canvas the purpose and intent underlying the definition of 'term preferred share'."

Major J. indicated (at p. 6473) that in providing an incentive for equipment that was used in Canada primarily in the manufacturing or processing of goods "for sale or lease", "Parliament has chosen to use language that imports relatively fine private law distinctions", and that "the technical nature of the Act does not lend itself to broadening the principle of plain meaning to embrace popular meaning.

After reviewing diversified references provided by counsel to the appellant on the use of the words "nation-wide" on the internet, Létourneau J.A. stated (at p. 6528):

"These references are obviously not determinative of the issue before us, but they help to understand the common and usual meaning generally ascribed to these words."

After concluding that property held as an adventure in the nature of trade qualified as "inventory", and after noting that such property would qualify as inventory for accounting purposes, Major J. stated (at p. 5557):

"... the Court should be cautious to adopt an interpretation which is clearly inconsistent with the commonly accepted usage of a technical term particularly where an interpretation consistent with common usage is more natural on a plain reading of the definition."

MacKay J. found that the phrase "motion picture films" in Article XIIIC of the 1942 Canada-U.S. Income Tax Convention did not include made-for-television movies or other television productions in light of evidence that this was how the phrase "motion-picture-film" was interpreted in the industry.

In finding that the taxpayers are entitled to a deduction under s. 20(14)(b) because they complied with the expressed conditions of the provision, Iacobucci J. stated (p. 6321):

"Where the words of the section are not ambiguous, it is not for this Court to find that the appellants should be disentitled to a deduction because they do not deserve a 'windfall', as the respondent contends. In the absence of a situation of ambiguity, such that the Court must look to the results of a transaction to assist in ascertaining the intent of Parliament, a normative assessment of the consequences of the application of a given provision is within the ambit of the legislature, not the Courts."

Given that the phrase "about to" in s. 232(3.1) was not obscure or ambiguous, there was no justification for departing from its grammatical and ordinary sense in order to give effect to an allegedly differing scheme of the Act.

After noting that the statement in the Sussex Peerage case (that "if the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense") could "no longer be considered as a satisfactory statement of the law" (p. 6132), MacGuigan J.A. found that the word "cable" should be considered to be an "open-textured" term which therefore could include devices which were not contemplated at the time of the enactment of the relevant provision, i.e., fibre optic cables.

Collier J. found that the word "objected" in the transitional provisions respecting s. 225.1 should be interpreted in its ordinary and grammatical sense rather than in its technical sense, and took into account the purpose of s. 225.1, being the protection of taxpayer's rights.

After quoting extracts from Hansard, in which the purpose of the monetary limit in s. 31(1) was discussed, Mahoney, J.A. stated:

"The judiciary must interpret what Parliament has said, which is not necessarily what it may have intended to say."

"First, while (the context apart) one would expect payment to be construed in its ordinary sense, it is a well recognized legal concept. Accordingly I am sceptical that, in a revenue statute of all places, one would prefer a construction which rejects the lawyer's accurate use of the word and prefers a layman's inaccurate use of the word - particularly as VAT is a tax on which those in doubt will be likely to seek advice from the professions rather than in the saloon bar." (p. 5100)

Urie, J.A. indicated that since the word "pipeline" is a word in fairly common usage, it should be construed in its popular sense, and that:

"I would have thought that ... construing it in its popular sense would mean that sense 'which people conversant with the subject matter with which the statute is dealing [in this case those utilizing the service of the pipeline for the transmission of, gas, oil, water or solids] would attribute to it' not the popular sense derived from the perception of the man in the street not conversant with either the user industries or pipelines."

"It would be incorrect, in my view, for courts of law to create prohibitions which do not exist in the statute. There is nothing in the Act to prevent a resident from carrying over non-capital losses incurred when he was a non-resident taxpayer having elected during his non-resident years to be treated as a resident under the terms of subsection 216(1)."

"I am unable to ascertain anything in the context or purpose of the statute or the circumstances of use which would justify an interpretation different from that resulting from a literal interpretation."

The court accepted the Crown's submission "that only if the context supports the contention can a technical meaning be given a word in a statute in preference to its ordinary and grammatical meaning." However, the word "minus", when used in the context of a provision which in essence was an algebraic formula, had its technical algebraic meaning.

The word "directly" was given its grammatical and ordinary meaning since neither the Excise Tax Act nor industry practice attributed to it a special meaning.

It was accepted that in determining what constitutes a charity for purposes of the Act, regard should be had to the legal, rather than the popular, meaning of "charity".

"[I]n a taxing statute where the technical meaning of a word is in conflict with the common ordinary meaning of that word, then it is the latter meaning which should be applied by the court." It was further stated that the activities of the taxpayer would be considered by the general public to constitute "farming."

"Since 'settlement' and 'trusts' are legal terms, which are also used by business men or laymen in a business or practical sense, I think that the question whether a particular set of facts amounts to a settlement should be approached by asking what a person, with knowledge of the legal context of the word under established doctrine and applying this knowledge in a practical and common-sense manner to the facts under examination, would conclude."

It was found that the meaning of the word "investments" should be founded "on the meaning of the word for the man engaged in trade or business rather than for the man in the street" (p. 268).