T-1920-76
The Queen (Plaintiff)
v.
Eastern Provincial Airways (1963) Limited
(Defendant)
Trial Division, Cattanach J.—Ottawa, February 8
and 22, 1978.
Excise — Federal sales tax — Remission of tax — Com
mercial aircraft purchase — Four aircraft of fleet of five
devoted exclusively to domestic service and one aircraft to a
preponderance of international service — Disagreement as to
figures to be substituted for words in denominator of formula
for calculating remission of sales tax — Proper method for
calculating remission of sales tax — Aircraft (Combined
Services) Remission Order, SOR/70-87, ss. 2, 3.
Plaintiff seeks to recover from defendant the sales tax pay
able on the purchase price of an aircraft. By virtue of Aircraft
(Combined International and Domestic Service) Remission
Order, defendant is entitled to a remission of sales tax payable
by it. Of defendant's five aircraft, four were devoted exclusively
to domestic service, and one to a preponderance of its interna
tional service. The issue is the amount of remission of sales tax
payable by it. The formula to compute the remission is:
Available International
Ton Miles of Fleet x Sales Tax = Allowable
Available Ton Miles of Calculation Remission
Fleet
The parties disagree as to the figures that should replace the
words "Available Ton Miles of Fleet" in the denominator.
Held, the action is allowed. The adjective "combined" as
used in the words of the Remission Order reading "all ...
aircraft that ... are used in combined international and domes
tic service" modifies and governs both the words "international
service" and "domestic service", the words "international" and
"domestic" being conjoined by the conjunction "and". The
combination contemplated by the Remission Order is a full
combination of services. The verbal denominator is the "total
available ton miles flown by the fleet". "Available ton miles
means the revenue miles ... multiplied by the payload capacity
in tons" and "revenue miles" means miles flown which produce
revenue. There is no differentiation whatsoever in the verbal
denominator "total available ton miles flown by the fleet"
between international revenue miles and domestic revenue
miles. The total available ton miles is the addition of the ton
miles flown on domestic service and international service. Since
the combined services encompass both defendant's international
and domestic service, it does not matter that four aircraft were
flown exclusively on domestic service because they contributed
to the combined service. Both plaintiff's translation of the
verbal denominator into figures and plaintiff's calculation of
the remission allowable to defendant are correct.
ACTION.
COUNSEL:
E. R. Sojonky and J. P. Malette for plaintiff.
J. M. Coyne, Q.C. and K. L. W. Boland for
defendant.
SOLICITORS:
Deputy Attorney General of Canada for
plaintiff.
Herridge, Tolmie, Ottawa, for defendant.
The following are the reasons for judgment
rendered in English by
CATTANACH J.: By her statement of claim the
plaintiff seeks to recover from the defendant the
sales tax payable (less an appropriate remission)
on the purchase of a Boeing 737 aircraft, Canadi-
an Registration CF-EPU, in October 1973 at a
price of $5,362,248 U.S. funds or $5,331,683.19
Canadian funds on which the sales tax, based on
the sale price, is $639,801.98 in accordance with
section 27 of the Excise Tax Act, R.S.C. 1970, c.
E-13 which is 9% of the purchase price increased
by a further 3% by virtue of section 24 of the Old
Age Security Act, R.S.C. 1970, c. O-6 so that the
percentage rate is 12%.
There is no dispute between the parties that the
purchase of this particular aircraft by the defend
ant brings the transaction precisely within the levy
imposed by the Excise Tax Act and that the sales
tax exigible thereunder is correctly computed at
$639,801.98.
By virtue of Aircraft (Combined International
and Domestic Service) Remission Order, SOR/70-
87 as amended by SOR/71-50, the defendant is
entitled to a remission of the sales tax payable by
it.
The issue between the parties is the amount of
the remission, more particularly the proper method
of the calculation thereof.
The plaintiff by the formula applied by her
calculates the allowable remission to be
$13,469.35.
In the relief sought in her statement of claim the
plaintiff claims payment of the sum of $587,-
769.63 plus the amount of the penalty imposed by
section 50(4) of the Excise Tax Act which is
two-thirds of one per cent of the amount in default
for each month or fraction of a month during
which the default continues. Section 50(4) is cast
in mandatory language.
In arriving at the sum of $587,769.63 which the
plaintiff claims is payable by the defendant she
does so by beginning with the amount of sales tax
payable by the defendant which the parties agree
to be $639,801.98.
From the sum of $639,801.98 the plaintiff
deducts the sum of $13,469.35 which she has
calculated to be the remission allowable to the
defendant which leaves a difference of $626,-
332.63.
From that difference of $626,332.63 the plain
tiff then deducts the sum of $38,563 which the
defendant has paid to the plaintiff and which sum
the defendant has calculated the sales tax to be
payable after having deducted the remission which
the defendant has calculated to be $601,238.98
resulting in the sum of $38,563 paid by the defend
ant. The difference between $626,332.63 and
$38,563 is $587,769.63 and that is the sum that
the plaintiff seeks to recover from the defendant.
On its part the defendant accepts the calculation
of the sales tax to be $639,801.98 but the defend
ant calculates the allowable remission to it to be
$601,238.98 which leaves the difference of
$38,563 which the defendant has paid to the
plaintiff.
The defendant so alleges in its statement of
defence and accordingly seeks the dismissal of the
plaintiff's statement of claim including the penalty
because if there is no default in payment of the
sales tax then the penalty must also fall.
Thus, as stated at the outset, the issue between
the parties is the amount of the remission properly
allowable to the defendant.
The plaintiff and the defendant adopted a dif
ferent formula to calculate the remission to be
allowed and reached widely divergent results. By
the defendant's method of calculation the remis
sion is $601,238.98 whereas by the plaintiff's
method of calculation the remission is $13,469.35.
Which of the two rival formulae is the correct
one must be dictated by the language of the
Remission Order as applied to the facts as agreed
between the parties.
Prior to trial the parties agreed upon a state
ment of facts which reads:
AGREED STATEMENT OF FACTS
1. The Defendant, Eastern Provincial Airways (1963) Limited
is a company incorporated under the laws of the Province of
Newfoundland, and has its head office in the Town of Gander,
in the Province of Newfoundland.
2. The Defendant has imported into Canada five Boeing 737
aircraft on the following dates:
i) Canadian Registration number CF-EPL, November 27,
1969
ii) Canadian Registration number CF-EPR, December 11,
1969
iii) Canadian Registration number CF-EPO, July 18, 1970
iv) Canadian Registration number CF-EPP, March 19, 1973
v) Canadian Registration number CF-EPU, October 29,
1973
3. Eastern Provincial Airways (1963) Limited purchased
CF-EPU for $5,362,248.00 U.S. funds ($5,331,683.19 Canadi-
an).
4. Sales tax is payable on the sale price of CF-EPU pursuant to
section 27 of the Excise Tax Act R.S.C. 1970 c. E-13, as
amended in section 24 of the Old Age Security Act R.S.C.
1970, c. O-6, as amended. The amount of sales tax payable is
$639,801.98. This amount of sales tax is not payable if the
provisions of the aircraft (Combined. Services) Remission Order
(P.C. 1970-356 as amended by P.C. 1971-142) apply.
5. If the provisions of the . Aircraft (Combined Services)
Remission Order apply the amount of sales tax payable is
$38,563.00 and this amount has been paid by the Defendant.
6. During the year 1973 the only aircraft owned or leased by
the Defendant having a gross allowable weight for take-off, as
prescribed by the Canadian Transport Commission of not less
than 64,500 pounds were CF-EPL, CF-EPR, CF-EPO,
CF-EPP and CF-EPU.
7. The payload capacity of a Boeing 737 aircraft when used on
international service is 16 1 / 2 tons. The payload capacity of a
Boeing 737 aircraft when used on domestic service is 11 tons.
8. The Defendant during 1973 was the holder of various
licences from the Canadian Transport Commission to provide
air service to the public including licences to provide scheduled
air service between points in Canada and a licence to provide
international air charter service.
9. The revenue miles, domestic and international miles being
distinguished, flown in 1973 by the five Boeing 737 aircraft
described in paragraph 2 herein is as follows:
DOMESTIC INTERNATIONAL
EPO 1,004,880
EPL 1,014,939
EPR 970,140
EPP 81,553
EPU 2,827 44,076
3,074,339 44,076
The pertinent provisions of the Remission Order
are subsections (1) and (2) of section 3 which
read:
3. (1) Subject to this Part and subsection 15(3), remission is
hereby granted to an importer of that portion, determined in
accordance with subsection (2), of the sales tax payable under
the Excise Tax Act and the Old Age Security Act, in respect of
(a) qualifying aircraft, and
(b) engines designed to propel qualifying aircraft
that are imported by him on or after January 1, 1970, for use in
combined international and domestic service.
(2) The portion of the sales tax referred to in subsection (1)
is a percentage of the sales tax equal to the international usage
percentage of the fleet of the importer during the year of
importation.
In section 2 of the Remission Order, which is
the interpretation section, the following pertinent
definitions appear:
[1] "available ton miles" means the revenue miles flown by an
aircraft multiplied by the payload capacity in tons of that
aircraft;
[2] "eligible carrier" means a common air carrier that is
incorporated under the laws of Canada or a province and
licensed by the Canadian Transport Commission to provide
international service to the public;
[3] "fleet" means, except in Part III, all qualifying aircraft that
are owned or leased by an eligible carrier and are used in
combined international and domestic service;
[4] "international flight" means any flight other than a flight
originating and terminating in Canada;
[5] "international usage percentage" means the percentage that
the available ton miles flown by a fleet on international flights
is of the total available ton miles flown by the fleet during a
year;
[6] "qualifying aircraft" means an aircraft whose gross allow
able weight for take-off as prescribed by the Canadian Trans
port Commission is not less than 64,500 pounds; [and]
[7] "revenue miles" means miles flown by an aircraft in respect
of which consideration is received for the carriage of passengers
or cargo by the carrier operating the aircraft; .. .
By section 3(1) of the Order remission is grant
ed to an importer of that portion, the portion to be
determined in accordance with subsection (2), of
the sales tax in respect of qualifying aircraft
imported after January 1, 1970 for use in com
bined international and domestic service.
CF-EPU is the aircraft with respect to which
remission is claimed and is a "qualifying aircraft"
within the foregoing definition and was imported
after January 1, 1970.
So too is the defendant an "eligible carrier"
within the definition of such a carrier.
By virtue of subsection (2) of section 3 of the
Remission Order the portion of the sales tax to be
remitted under subsection (1) is "a percentage of
the sales tax equal to the international usage per
centage of the fleet of the importer during the year
of importation". In the present instance the year is
1973.
Therefore the fraction to be used to determine
the portion of the sales tax to be remitted is the
"international usage percentage".
"International usage percentage" is defined as
"the percentage that the available ton miles flown
by a fleet on international flights is of the total
available ton miles flown by the fleet during a
year". Here again the year is 1973.
"Available ton miles" is defined as recited above
and so too is "international flight".
In paragraph 7 of the agreed statement of facts
it is agreed that the payload capacity of a Boeing
737 when used on international service is 16 1 / 2 tons
and the payload capacity of that type of aircraft
when used on domestic service is 11 tons. That
information is essential to calculate the "available
ton miles".
So too is it essential to know the "revenue
miles" flown and that information appears in para
graph 9 of the agreed statement of facts.
The defendant owned and operated five "quali-
fying aircraft", that is an aircraft whose gross
allowable weight for take-off is not less than
64,500 pounds, all five of which are Boeing 737's.
Four of those aircraft were used exclusively by
the defendant for domestic revenue flight in 1973
and only CF-EPU was used by the defendant on
international flights.
The revenue miles, domestic and international
miles being distinguished, flown in 1973 by all five
Boeing 737 aircraft are tabulated in paragraph 9
of the agreed statement of facts.
CF-EPU is the only aircraft which flew interna
tional flights. It flew 44,076 international revenue
miles. It also flew 2,827 domestic revenue miles.
As said before, the four remaining aircraft flew
only domestic revenue miles and the mileage so
flown by those four aircraft together with the
2,827 domestic miles flown by CF-EPU total
3,074,339 in 1973.
I now revert to the fraction to be utilized to
determine the percentage as prescribed by section
3(2) of the Remission Order to be remitted.
The word "remission", in common parlance,
means the giving up partially or wholly of a debt,
tax, penalty or the like. Obviously, therefore, if
more than the tax, in this instance, is forgiven it is
not a remission but may be a remission only to the
extent of the whole of the tax and any amount
above that whole is not a remission but must be a
subsidy.
By section 3(2) of the Remission Order it is only
a "portion" of the sales tax that may be remitted.
While I do not have to decide the question in
this action it may well be that the "whole" of the
tax cannot be remitted because only a "portion"
can be and "portion" means a part of a whole and
not the whole.
For these reasons the fraction prescribed by
section 3 of the Remission Order must be, of
course, a vulgar fraction, that is one with a numer
ator above a horizontal line and a denominator
below the line and the vulgar fraction must be a
proper fraction, that is one in which the numerator
is less than the denominator. The numerator
cannot be greater than the denominator because
that would be a compound fraction greater than
the whole nor can the numerator be equal to the
denominator because that would be a whole.
It is patent that the closer the proper fraction
approaches the whole the greater will be the remis
sion and conversely the farther removed the proper
fraction is from the whole the lesser will be the
remission.
The fraction, expressed in words rather than
numerals, as prescribed by section 3 of the Remis
sion Order, is:
Available International Ton Miles of Fleet
Available Ton Miles of Fleet
and the formula to compute the remission is:
Available International
Ton Miles of Fleet x Sales Tax = Allowable
Available Ton Miles of Calculation Remission
Fleet
The parties agree, that as expressed in words,
this is the correct formula. However the difficulty
ensues when figures are to be substituted for
words.
Both parties agree upon the figures to be sub
stituted for the numerator and both parties agree
upon the figure to be substituted for the multipli
cand, that is the "Sales Tax Calculation". •
It is only when it comes to the denominator, that
is the "Available Ton Miles of Fleet", that the
parties disagree as to the numerals which should
replace the words.
This disagreement can best be illustrated by
translating the words of the rival formulae, which
is only as to the denominator, into the actual
figures.
The plaintiff's formula is as follows:
44,076 X 16y2 X $639,801.98 = $13,469.35
(44,076 X 16 1 / 2 ) + (3,074,339 X 11)
The numeral, 44,076, is the international miles
flown to be multiplied by 16 1 / 2 , the agreed payload
capacity in tons for international flights.
The multiplicand is $639,801.98 which is the
Sales Tax Calculation agreed upon by the parties.
As its denominator to arrive at the Total Ton
Miles of the Fleet the plaintiff takes the 44,076
international miles flown, multiplies that by 16 1 / 2
tons and adds to that result the result of 3,074,339
domestic revenue miles flown by the fleet multi
plied by 11 tons, the domestic payload capacity.
The total of these two results the plaintiff takes as
its denominator.
This formula when worked out to its ultimate
conclusion results in the sum of $13,469.35 as the
allowable remission.
The defendant's formula is substantially the
same except for the denominator and the ultimate
calculation of the remission allowable.
The defendant's numerical formula is as follows:
44,076 X 161 / 4
(44,076 X 16y 2 ) + (2,827 X 11) X $639,801.98 = $601,238.98
For its denominator the defendant takes the
international miles flown by CF-EPU multiplied
by the international payload capacity in tons and
the domestic miles flown by CF-EPU multiplied
by the domestic payload capacity in tons. It adds
the results of these two multiplication exercises
together to get its denominator.
The formula so arrived at when all calculations
dictated thereby are completed results in an allow
able remission of $601,238.98.
In translating the words of the denominator,
which I take from the definition as "the total
available ton miles flown by a fleet during a year"
and "available ton miles" is defined as the revenue
miles flown by an aircraft multiplied by its pay
load capacity in tons, into figures the plaintiff has
taken the total of the domestic ton miles flown by
all five qualifying aircraft operated by the defend
ant and the international ton miles flown by
CF-EPU which is the only aircraft of the five
which logged any international miles in 1973. The
plaintiff excludes no revenue miles.
On its part the defendant in reaching the
denominator it uses disregards the domestic ton
miles flown by four of the defendant's aircraft and
utilizes only the domestic ton miles and the inter
national ton miles flown by aircraft CF-EPU.
In justification for doing so the defendant relies
on the use of the words in the definition of "fleet"
in the Remission Order reading "all qualifying
aircraft that .. . are used in combined internation
al and domestic service".
Words of somewhat like import are used in
section 3(1) of the Remission Order with respect
to remission granted in respect of qualifying air
craft imported "for use in combined international
and domestic service" the difference being be
tween the words "are used" in the first quotation
and "for use" in the second quotation.
It was the contention of the counsel for the
defendant that only CF-EPU was used for both
international and domestic flights and accordingly
it is only the international and domestic revenue
ton miles flown by CF-EPU that are susceptible of
combination into the total available ton miles
flown by the fleet in 1973.
The greater preponderance of the miles flown by
CF-EPU was on international flights and only a
very small proportion of the total mileage flown by
it was flown on domestic flights.
If CF-EPU had flown no domestic miles then
the logical extension of the defendant's contention
is that there would be no remission with respect to
CF-EPU because it would have flown international
miles exclusively and there could be no combina
tion with domestic miles unless that combination
was with domestic miles flown exclusively by other
qualifying aircraft in the fleet which is, in sub
stance, the contention of the plaintiff.
These rival contentions raise in my mind that
when two constructions of a statute are possible
due to some slight inexactitude in language then
the construction to be adopted is that which will
carry the object of the statute into effect rather
than an alternate construction which would defeat
that object. In such circumstance in order to
understand words as used in a statute it becomes
material to inquire what object the statute had in
view to accomplish.
Put another way the intention of the legislature
must depend to a great extent upon the particular
object of the statute that has to be construed so far
as that object can be garnered from the language
employed.
The title of a statute, just as a preamble, may be
looked at in order to remove any ambiguity in the
words of a statute and to ascertain its object.
Here the full title of the Remission Order is
Aircraft (Combined International and Domestic
Service) Remission Order and the short title is the
Aircraft (Combined Services) Order.
The question is what is to constitute the
combination.
Counsel for the defendant directed my attention
to section 4 of the National Transportation Act,
R.S.C. 1970, c. N-17, which makes that Act appli
cable to transport by air to which the Aeronautics
Act, R.S.C. 1970, c. A-3, applies. By section 21 of
the National Transportation Act the functions of
the Commission are outlined. Section 14 of the
Aeronautics Act provides for the making of regu
lations establishing the classification and form of
licences and the terms to be prescribed by licences.
By section 16 licences are granted to operate "a
commercial air service" and section 17 precludes
the operation of "a commercial air service" with
out a valid licence.
The classes of licences to operate "a commercial
air service" are outlined in section 3 of the Air
Carrier Regulations, SOR/72-145, made under
the authority conferred in section 14 of the
Aeronautics Act.
Classes 1 to 7 are what might be called domestic
services because they all relate to "a commercial
air service ... operated wholly within Canada".
Class 8 and classes 9-2 to 9-5 are what might be
termed international air services because they
govern "a commercial air service" that is operated
between a point in Canada and a point in any
other country.
Counsel's purpose was to demonstrate that
nowhere has there been a service referred to as a
"combined international and domestic service"
and that since those words do not relate, nor do
they profess to relate, to some particular subject of
art or science nor are they used as technical words,
they accordingly must be given their popular
meaning.
I accept the proposition so advanced that the
words "combined international and domestic ser
vice" are not technical words and cannot be given
a technical meaning and that they are not words
relating to an art or science and therefore must
have ascribed to them their popular meaning.
While I am quite aware that dictionaries are not
to be taken as authoritative exponents of the
meaning of words used in a statute it is a well-
known rule of courts of law that when words are to
be taken in their ordinary sense resort may be had
to dictionaries for instruction. I have made free
and frequent use of those works.
I therefore repeat the defendant's contention
that only CF-EPU was used for both international
and domestic service and accordingly only the
international and domestic revenue miles flown
CF-EPU are susceptible of being combined into
the total available ton miles flown by the defend
ant's fleet in 1973. That is the ordinary meaning
he ascribes to the words "used in combined inter
national and domestic service" and only CF-EPU
so qualifies. Taken a step further he must mean
that aircraft of the fleet that are used exclusively
for domestic service cannot qualify as having been
used in combined domestic and international ser
vice nor can aircraft of the fleet that are used
exclusively for international service. Only those
aircraft of the fleet that are used for both interna
tional and domestic service can be taken into
account when computing the "total available ton
miles flown by the fleet during a year".
Similarly carrying the defendant's contention a
still further step it would also follow that if a
carrier devoted some of his "qualifying aircraft",
as defined in the Order, exclusively to internation
al flights and the other qualifying aircraft exclu
sively to domestic flights then there would be no
remission of sales tax on any of the aircraft, the
defendant's contention being, as I appreciate it to
be, that in order to be eligible for remission of
sales tax an aircraft must have flown both domes
tic miles and international miles in the year of its
purchase. The basis of that contention is drawn
from the words used in the definition of a fleet to
be "aircraft that ... are used in combined interna
tional and domestic service".
As I appreciate the plaintiff's contrary conten
tion it is that it is wholly immaterial that some
aircraft of the carrier's fleet are flown exclusively
on international service and the balance of the
fleet is flown on domestic service because, so long
as the aircraft of the fleet are so used, that results
in a "combined international and domestic ser
vice" and, of course, that use by an aircraft on
domestic service only or international service only
is use by the aircraft so flown on the combined
service.
Counsel for the plaintiff raised the proposition
that a "fleet" cannot be comprised of a single
aircraft. In common parlance a fleet means a
number of aircraft forming a unit.
"Fleet" is defined in section 2 of the Remission
Order as meaning all qualifying aircraft (and that
includes all five Boeing 737's) owned by an eligible
carrier (and that is a common air carrier incorpo
rated under the laws of Canada or a province that
is licensed to provide international service to the
public as the defendant is) and then follow the
crucial words "that ... are used in combined
international and domestic service".
Incidentally if a "fleet" cannot mean a single
aircraft then the result would be that a carrier who
owned but a single aircraft as his fleet used in
combined international and domestic service, that
carrier would not be eligible for a remission of
sales tax on that single aircraft but a carrier who
owned two or more aircraft so used would be
entitled to a remission of sales tax on all such
aircraft and that, in my opinion, would constitute a
manifest injustice contrary to the intention of the
Remission Order which is to grant a remission of a
portion of the sales tax exacted of the carrier on
importation of a qualifying aircraft having regard
to the subject matter of the Remission Order and
the object it seeks to accomplish.
The golden rule of interpretation is that the
ordinary sense of the words used in a statute must
be adhered to unless that would lead to an absurdi
ty or manifest injustice in which case the words
may be modified so as to avoid that absurdity or
manifest injustice but no farther.
In my opinion I am not obliged to resort to the
golden rule of interpretation set forth above for the
reasons which follow.
The key to the dispute between the parties lies in
the proper determination of the content of the
denominator of the fraction by which the allow
able remission of the sales tax is calculated. That
content is the total available miles flown by the
fleet in the year 1973. The solution to the proper
content advanced by the defendant is that the
proper meaning to be ascribed to the words "all
qualifying aircraft that ... are used in combined
international and domestic service" is that a par
ticular aircraft must be used on both international
and domestic service and that is the combination.
Paragraph 8 of the agreed statement of facts
reads:
The Defendant during 1973 was the holder of various licences
from the Canadian Transport Commission to provide air ser
vice to the public including licences to provide scheduled air
service between points in Canada and a licence to provide
international air charter service.
It is abundantly clear that it is the common air
carrier that is licensed to provide commercial air
services under the Air Carrier Regulations.
Those classifications with respect to a commer
cial air service which is operated wholly within
Canada fall within the meaning of the words
"domestic service" as used in the Remission Order
and that classification which authorizes the provi
sion of an international air charter service falls
within the meaning of the words "international
service" as used in the Remission Order.
Thus it follows that the defendant is licensed to
fly both a domestic air service and an international
air service.
It is the carrier who is licensed to do so and the
licence does not apply to the aircraft used to
provide such services so long as a certificate of
airworthiness has been issued by the Department
of Transport as to the aircraft and the aircraft
used fall within the definition of "qualifying air
craft" in the Remission Order as all five Boeing
737 aircraft owned by the defendant in 1973 did.
Within those limitations it is in the discretion of
the carrier to select which aircraft shall be used to
provide either domestic service, international ser
vice or both.
The defendant is licensed to provide both
domestic and international services with the five
aircraft owned by it and it is the defendant's
privilege to select what aircraft it shall use to
provide which service or both no doubt dictated by
the many exigencies which inevitably arise in oper
ating a commercial air service.
In my opinion it is immaterial if the defendant
chose to devote four of its aircraft exclusively to
domestic service and one aircraft, CF-EPU, to a
preponderance of its international service and a
minimal to its domestic service.
As I appreciate the matter the commercial air
service which the defendant is licensed to carry on
by reason of the variety of licences which the
defendant has been granted results in a conglomer
ate commercial air service consisting of, no doubt,
more than one classification of domestic service
and an international service all under the aegis of
a commercial air service. That is the whole service
that the defendant provides and within that whole
service there is included a domestic service and an
international service.
The adjective "combined" as used in the words
of the Remission Order reading "all . .. aircraft
that ... are used in combined international and
domestic service" modifies and governs both the
words "international service" and "domestic ser
vice" the words "international" and "domestic"
being conjoined by a conjunction "and".
That which is "combined" results in something
that is a "combination".
Thus the combination of two classifications of a
commercial air service results in a commercial air
service consisting of a whole.
The dictionary meaning of "combination" is the
"action combining one or more separate things" as
well as "a group of things combined into a whole".
The two things which have been combined by
the defendant are a domestic air service and an
international air service and the resultant whole is
a commercial air service even though the whole of
the commercial air service provided by the defend
ant to the public consists of the domestic air
service and an international air service.
This conclusion, which is simply that the combi
nation contemplated by the Remission Order is a
combination of services, is confirmed by the full
title of the Order Aircraft (Combined Internation
al and Domestic Service) Remission Order and the
short title Aircraft (Combined Services) Order.
The fraction by which the remission of sales tax
is to be calculated must be taken from section 3(2)
of the Remission Order which is a "percentage of
the sales tax equal to the international usage per
centage of the fleet".
"International usage percentage" is "the per
centage that the available ton miles flown by a
fleet on international flights is of the total avail
able ton miles flown by the fleet during a year".
Thus the verbal denominator is the "total avail
able ton miles flown by the fleet".
" `Available ton miles' means the revenue miles
... multiplied by the payload capacity in tons ...".
"Revenue miles" means miles flown which pro
duce revenue.
There is no differentiation whatsoever in the
verbal denominator "total available ton miles
flown by the fleet" between international revenue
miles and domestic revenue miles.
Because of the conclusion I have reached for the
reasons given above that the commercial air ser
vice provided by the defendant consists of a combi
nation of a domestic service and an international
service it follows that the total available ton miles
is the addition of the ton miles flown on domestic
service and international service.
Since the combined services encompass both the
international service and domestic service provided
by the defendant it matters not that four aircraft
were flown exclusively on domestic service because
in doing so they contributed to the combined ser
vice and so too did CF-EPU. All five aircraft were
flown on the combined service.
Accordingly it follows that, in my opinion, the
translation of the verbal denominator into figures
as was done by the plaintiff is the correct one and
that the remission allowable to the defendant as
calculated by her is also correct.
Therefore the plaintiff is entitled to recover
from the defendant the sum of $587,769.63 to
gether with the penalty prescribed by section 50(4)
of the Excise Tax Act to the date of judgment
herein and the costs of this action to be taxed.
In my view the language of section 50(4) of the
Excise Tax Act makes the imposition of a penalty
of two-thirds of one per cent on the amount in
default for each month or fraction of a month
during which the default continues obligatory.
By virtue of section 5 of the Remission Order
which provides that the unremitted sales tax may
be deferred until the last day of February of the
year following the importation of the aircraft
which was October 1973 I take it that the penalty
would begin to run on March 1, 1974 and in my
opinion should continue to the date of judgment
herein. The rate of interest per annum will then be
that applicable on a judgment which is less than
the interest rate per annum which constitutes the
penalty.
While I would have preferred to express the
penalty in a specific sum I have not had the benefit
of representations by counsel as to the amount of
the penalty for which reason I have given judg
ment in the terms I have indicated in the third
paragraph immediately above.
If counsel for the parties cannot agree on the
amount of the penalty the matter may be spoken
to.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.