Date: 19980717
Docket: T-698-97
BETWEEN:
DOUBLE N EARTH MOVERS LTD.
Plaintiff
- and -
HER MAJESTY THE QUEEN
Defendant
REASONS FOR JUDGMENT
CAMPBELL J.
[1] What is the proper interpretation of the phrase "restoration of strip-mined land to a usable condition" in the definition of "mining" in s.69(1) of the Excise Tax Act ? Regarding this question, which is central to this action, Double N Earth Movers Ltd. argues that its gravel extraction activities fall within the phrase, and, accordingly, it is entitled to a fuel tax rebate.1
A. The provisions of s.69 of the Excise Tax Act
[2] To arrive at the proper interpretation of the phrase under consideration, it is necessary to consider, together, all ten subsections of s.69. Accordingly, they are as follows:
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"in bulk", in respect of a sale of gasoline or diesel fuel, means |
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(a) in a quantity of five hundred litres or more, where the gasoline or diesel fuel is delivered to the purchaser at a retail outlet of the vendor, and |
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(b) in any quantity, in any other case; |
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"logging" means the felling, limbing, bucking and marking of trees, construction of logging roads, off-highway transportation of logs to a mill-pond or mill yard, log salvaging and reforestation, but does not include any production activity on logs after transportation to a mill-pond or mill yard; |
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(a) a base or precious metal deposit, |
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(c) a mineral deposit in respect of which |
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(i) the Minister of Natural Resources has certified that the principal mineral extracted is an industrial mineral contained in a non-bedded deposit, |
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(ii) the principal mineral extracted is sylvite, halite or gypsum, or |
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(iii) the principal mineral extracted is silica that is extracted from sandstone or quartzite; |
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"mining" means the extracting of minerals from a mineral resource, the processing of ore, other than iron ore, from a mineral resource to the prime metal stage or its equivalent, the processing of iron ore from a mineral resource to the pellet stage or its equivalent and the restoration of strip-mined land to a usable condition, but does not include activities related to the exploration for or development of a mineral resource; |
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"qualified", in respect of a farmer, fisherman, hunter, trapper oo other person, means a farmer, fisherman, hunter, trapper or person who holds a sales tax bulk permit issued under regulations made pursuant to subsection (10); |
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"registered vendor" means a person who is registered under regulations made pursuant to subsection (10). |
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(2) Fuel tax rebate to vendor. Where gasoline or diesel fuel has been sold by a licensed manufacturer or licensed wholesaler to |
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(a) [Repealed, R.S.C. 1985, c. 42 (2nd Supp.), s. 9] |
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(b) a qualified fisherman for commercial fishing, |
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(c) a qualified hunter for commercial hunting, |
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(d) a qualified trapper for commercial trapping, |
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(e) a qualified person for use in logging, or |
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(f) a qualified person for use in mining, |
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for the sole use of the purchaser and not for resale and the taxes imposed by Parts III and VI are payable in respect of the sale, the manufacturer or wholesaler may, in such circumstances and on such terms and conditions as the Minister may prescribe, deduct, within two years after the sale, a fuel tax rebate in an amount calculated in accordance with subsections (8) and (8.01) from the amount of any payment of any tax, penalty, interest or other sum that the manufacturer or wholesaler is liable or is about to become liable to make under those Parts or under this Part in respect of taxes under those Parts. |
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(2.1) Fuel tax rebate to vendor selling to farmer. Where gasoline or diesel fuel has been sold by a licensed manufacturer or licensed wholesaler to a qualified farmer for farming purposes, for the sole use of the qualified farmer and not for resale and the tax imposed by Parts III and VI is payable in respect of the sale, the manufacturer or wholesaler may, in such circumstances and on such terms and conditions as the Minister may prescribe, deduct, within two years after the sale, a fuel tax rebate in an amount calculated in accordance with subsections (8.1) and (8.2) from the amount of any payment of any tax, penalty, interest or other sum that the manufacturer or wholesaler is liable or is about to become liable to make under those Parts or under this Part in respect of tax under those Parts. |
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(3) Condition. No deduction shall be made by a licensed manufacturer or licensed wholesaler under subsection (2) or (2.1) unless the manufacturer or wholesaler has reduced the amount charged for the gasoline or diesel fuel to the purchaser by an amount equal to the amount of the deduction and the amount of the reduction is shown separately on an invoice for the sale given to the purchaser by the manufacturer or wholesaler. |
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(4) Fuel tax rebate to registered vendor. Where gasoline or diesel fuel has been sold in bulk by a registered vendor to |
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(a) [Repealed, R.S.C. 1985, c. 42 (2nd Supp.), s. 9] |
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(b) a qualified fisherman for commercial fishing, |
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(c) a qualified hunter for commercial hunting, |
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(d) a qualified trapper for commercial trapping, |
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(e) a qualified person for use in logging, or |
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(f) a qualified person for use in mining, |
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for the sole use of the purchaser and not for resale and the taxes imposed by Parts III and VI have been paid or are payable in respect of the gasoline or fuel, a fuel tax rebate in an amount calculated in accordance with subsections (8) and (8.01) shall, subject to this Part, be paid to that registered vendor if he applies therefor within two years after he sold the gasoline or fuel. |
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(4.1) Fuel tax rebate to registered vendor selling to farmer. Where gasoline or diesel fuel has been sold in bulk by a registered vendor to a qualified farmer for farming purposes, for the sole use of the qualified farmer and not for resale and the tax imposed by Parts III and VI has been paid or is payable in respect of the gasoline or fuel, a fuel tax rebate in an amount calculated in accordance with subsections (8.1) and (8.2) shall, subject to this Part, be paid to that registered vendor if he applies therefor within two years after the sale of the gasoline or fuel. |
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(5) Condition. No fuel tax rebate shall be paid to a registered vendor under subsection (4) or (4.1) unless the registered vendor has reduced the amount charged for the gasoline or diesel fuel to the purchaser by an amount equal to the amount of the fuel tax rebate applied for and the amount of the reduction is shown separately on an invoice for the sale given to the purchaser by the registered vendor. |
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(6) Fuel tax rebate to purchaser or importer. Where gasoline or diesel fuel has been sold to or imported by |
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(a) [Repealed, R.S.C. 1985, c. 42 (2nd Supp.), s. 9] |
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(b) a fisherman for commercial fishing, |
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(c) a hunter for commercial hunting, |
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(d) a trapper for commercial trapping, |
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(e) a person for use in logging, or |
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(f) a person for use in mining, |
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for the sole use of the purchaser or importer and not for resale and the taxes imposed by Parts III and VI have been paid or are payable in respect of the gasoline or fuel and, in the case of a sale, the amount charged therefor has not been reduced in accordance with subsection (3) or (5), a fuel tax rebate in an amount calculated in accordance with subsections (8) and (8.01) shall, subject to this Part, be paid to that purchaser or importer if he applies therefor within two years after he purchased or imported the gasoline or fuel. |
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(6.1) Fuel tax rebate to farmer. Where gasoline or diesel fuel has been sold to or imported by a farmer for farming purposes, for the sole use of the farmer for farming purposes and not for resale and the tax imposed by Parts III and VI has been paid or is payable in respect of the gasoline or fuel and, in the case of a sale, the amount charged therefor has not been reduced in accordance with subsection (3) or (5), a fuel tax rebate in an amount calculated in accordance with subsections (8.1) and (8.2) shall, subject to this Part, be paid to that farmer if he applies therefor within two years after the purchase or importation of the gasoline or fuel. |
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(7) Limitation. Subsections (2), (2.1), (4), (4.1), (6) and (6.1) do not apply in respect of gasoline or diesel fuel |
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(a) that is to be used to propel a vehicle on a public highway; |
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(b) that is to be used other than for a commercial purpose; or |
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(c) that is sold or imported |
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(i) on or after January 1, 1990, in respect of the tax imposed by Part III, or |
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(ii) on or after January 1, 1991, in respect of the tax imposed by Part VI. |
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(8) Amount of fuel tax rebate: Part VI. For the purposes of subsections (2), (4) and (6), the amount of the fuel tax rebate in respect of the tax imposed by Part VI shall be calculated at such rate, not exceeding five cents, per litre of gasoline or diesel fuel sold or imported as the Governor in Council may, on the recommendation of the Minister of Finance, prescribe by order or, if no rate is so prescribed, at the rate of three cents per litre of gasoline or diesel fuel sold or imported. |
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(8.01) Amount of fuel tax rebate: Part III. For the purposes of subsections (2), (4) and (6), the amount of the fuel tax rebate in respect of the tax imposed by Part III shall be calculated |
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(a) in the case of gasoline, at the rate of |
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(i) one cent per litre, where the gasoline was sold or imported on or after January 1, 1988 and before April 1, 1988, and |
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(ii) two cents per litre, where the gasoline was sold or imported on or after April 1, 1988 and before January 1, 1990; and |
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(b) in the case of diesel fuel, at the rate of one cent per litre, where the diesel fuel was sold or imported on or after January 1, 1988 and before January 1, 1990. |
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(8.1) Farmers' rate: Part VI. For the purposes of subsections (2.1), (4.1) and (6.1), the amount of the fuel tax rebate in respect of the tax imposed by Part VI shall be calculated at such rate, not exceeding five cents, per litre of gasoline or diesel fuel sold or imported as the Governor in Council may, on the recommendation of the Minister of Finance, prescribe by order or, if no rate is so prescribed, at the rate of three and one-half cents per litre of gasoline or diesel fuel sold or imported. |
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(8.2) Farmers' rate: Part III. For the purposes of subsections (2.1), (4.1) and (6.1), the amount of the fuel tax rebate in respect of the tax imposed by Part III shall be calculated |
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(a) in the case of gasoline, at the rate of |
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(i) three cents per litre, where the gasoline was sold or imported on or after January 1, 1987 and before January 1, 1988, |
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(ii) four cents per litre, where the gasoline was sold or imported on or after January 1, 1988 and before April 1, 1988, and |
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(iii) five cents per litre, where the gasoline was sold or imported on or after April 1, 1988 and before January 1, 1990; and |
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(b) in the case of diesel fuel, at the rate of |
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(i) three cents per litre, where the diesel fuel was sold or imported on or after January 1, 1987 and before January 1, 1988, and |
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(ii) four cents per litre, where the diesel fuel was sold or imported on or after January 1, 1988 and before January 1, 1990. |
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(9) Diversion. Where the amount charged for gasoline or diesel fuel to purchaser is reduced in accordance with subsection (3) or (5) or a payment is made under subsection (6) or (6.1) to a purchaser or importer of gasoline or diesel fuel and that person sells the gasoline or fuel or uses it for a purpose for which the reduction or payment could not, at the time of the purchase or importation, have been made, the amount of the reduction or payment shall be deemed to be a tax under this Act payable by that person, |
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(a) where that person sells the gasoline or fuel, at the time of delivery thereof to the purchaser from him; and |
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(b) where that person uses the gasoline or fuel, at the time of the use. |
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(10) Regulations. The Governor in Council may make regulations |
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(a) authorizing the issue of sales tax bulk permits to farmers, fishermen, hunters, trappers or other persons who use gasoline or diesel fuel for a purpose described in subsection (2) or (2.1) and prescribing the terms and conditions of the permits; |
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(b) prescribing the records to be maintained and returns to be filed by farmers, fishermen, hunters, trappers or other persons holding sales tax bulk permits; |
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(c) prescribing the times at which returns referred to in paragraph (b) are to be filed; (d)authorizing the cancellation of any sales tax bulk permit where any term or condition of that permit is not complied with or where any provision of this Act or the regulations applicable to the person holding the permit is not complied with; and |
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(e) providing for a system of registration by the Minister of persons who regularly sell in bulk gasoline or diesel fuel to qualified farmers, qualified fishermen, qualified hunters, qualified trappers or qualified persons engaged in logging or mining, including, without limiting the generality of the foregoing, |
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(i) the form and manner of applying for, and the procedure for granting, registration, |
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(ii) the terms and conditions on which registration may be granted, and |
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(iii) the authorization of the Minister to cancel any registration where any term or condition of the registration is not complied with or where any provision of this Act or the regulations applicable to the registered vendor is not complied with. |
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B. History of proceedings
[3] The precise provisions of s.69 which are of interest to Double N are s.69(6)(f), whereby Double N potentially qualifies for a fuel tax rebate as a purchaser of diesel fuel for use in mining, and s.69(8.01) which sets the amount of a rebate. Gaining the rebate, however, depends on proving that the diesel fuel consumed was used in "mining" as defined.
[4] Believing that it did qualify, on November 17, 1988, Double N applied for a rebate. This request was denied by the Deputy Minister of National Revenue on August 14, 1990. However, in response to a Notice of Objection to this decision, on September 10, 1993, the Minister of National Revenue allowed the objection in part on the basis that a small portion of Double N"s activities qualify for the rebate. On February 21, 1995, Double N appealed this decision to the Canadian International Trade Tribunal (CITT) which on December 19, 1996, dismissed Double N"s claim. As a result, pursuant to s.81.28 of the Act , this appeal was brought by way of an action.
[5] At the opening of this appeal by trial de novo, it was agreed between the parties that the decision under consideration is that of the Minister of National Revenue, not the decision of the CITT. It was also agreed that the Minister"s determination is presumed to be correct, and thus, the onus is on Double N to prove it is not.
C. Double N"s Activities
[6] Double N operates an earthmoving construction company engaged in the stripping and replacing of soils for owner/operators of gravel pits in the greater Edmonton area. The owner/operators use surface-mining techniques to extract the gravel from open pits which are in effect strip-mines. The gravel then undergoes processing which involves crushing, screening, washing, and stockpiling to produce marketable aggregates.
[7] With respect to the following general description of Double N"s stripping and replacing activities, these terms are relevant:
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Topsoil - uppermost layer of organic rich soil. |
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Root zone - upper subsoil lying just below the topsoil. In cases where the end land use is agriculture, better reclamation will be achieved if this upper subsoil layer is separately salvaged and replaced. |
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Clay (overburden) - mineral soil or glacial till lying directly above the gravel deposit and below the root zone. |
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Stripping - operation of loading and carrying the overlying three layers of overburden away from the gravel deposit. |
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Strip-mining - the mining of gravel by surface-mining methods. |
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Strip-mined land - the gravel pit condition after gravel has been removed using surface-mining techniques.2
[8] The gravel pits stripped by Double N in the Fort Saskatchewan, Onoway, and Villeneuve areas are mature gravel pits that have been a source of aggregates for decades. In this area the common pre-mined land formation consists of the bedded gravel deposit, overlying topsoil, root zone and clay overburden. Double N"s mining procedure is called progressive reclamation whereby topsoil, root zone, and overburden is salvaged from an extraction area and moved directly to adjacent reclamation sites. All three layers of soil material are stripped and handled separately from each other so that they can be replaced in the same sequence in order to reclaim the strip-mined land. In this process topsoil stripped from an extraction area is placed onto an adjacent prepared strip-mined area that has already received a layer of root zone and overburden.
[9] A mature pit undergoes several excavations or cuts over time and will have within its boundaries fully reclaimed strip-mined areas as well as mined-out areas undergoing various stages of restoration; that is, one area will be partially reclaimed with a layer of clay overburden, and another area will be partially reclaimed with both a layer of root zone and clay overburden.
[10] Soil material stripped from the initial excavation area is stockpiled so that the mixing of topsoil and clay overburden does not occur. This initial excavation material typically remains undisturbed until it is used for final site reclamation. Gravel pit operations are designed so that the excavations crawl forward in a pattern taking into consideration progressive reclamation and the efficiency obtained from using stockpiled materials from the initial cut to restore the final cut.3
[11] Double N"s claim is based on the fact that its diesel powered equipment consumed fuel performing the following restoration activities at several locations throughout the pit being mined:
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Stripping the uppermost layer of organic topsoil with motor scrapers which carried and placed the topsoil directly onto a strip-mined area that had previously received a layer of root zone and overburden; |
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Stripping the root zone subsoil with motor scrapers which carried and placed the root zone onto a strip-mined area that had previously received a layer of clay overburden; |
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Stripping the clay overburden with motor scrapers which carried and placed the overburden onto the floor of a previously mined-out area. 4 |
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[12] In this process, Double N stripped and placed soil materials using Caterpillar Model 631 self-propelled motor scrapers with a heaped capacity of 3l cubic yards, supported by dozers and graders. The motor scrapers essentially act like a scoop. A bowl hangs down from the frame and is tilted forward to permit its cutting edge to scrape off a thin layer of soil materials. As the scraper moves forward, the bowl fills. When it is full, it is tilted up and an apron is dropped down over the open end to close the bowl. To discharge the soil materials, the bowl is tilted down and an ejector pushes the material out spreading the soil in a thin layer while the scraper moves forward.5
D. The Minister"s Decision
[13] By definition, "mining" in s.69(1) concerns activity respecting "a mineral resource". In the decision under appeal, however, even though gravel is a non-mineral resource, the Minister found that the restoration of land strip-mined for gravel is considered "mining" for the purposes of the fuel tax rebate. For this finding to be lawful, the Minister must be taken to concede that, in the definition of "mining" in s.69(1), the phrase "the restoration of strip-mined land to a usable condition" is to be read exclusive of the other provisions of the definition.
[14] The Minister concluded, however, that certain activities of Double N are not "restoration" as that term is used within the definitions of "mining" found in s.69(1) essentially because they are part of the "development" of the gravel resource. Thus, regarding Double N"s claim for rebate, the Minister:
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" denied fuel used in the stripping and stockpiling of topsoil at off-site borrow pits; |
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" allowed fuel used in the gathering and carrying of topsoil from the off-site borrow pit stockpiles and its placement onto the mined-out area; |
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" denied fuel used in the gathering and carrying of topsoil, root zone and clay overburden at gravel pits up to a "minimum dump point"; |
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" allowed a fuel tax rebate on fuel consumed beyond the "minimum dump point" at gravel pits on the basis that replacing overburden or topsoil onto areas which had been used as off-site gravel pits is eligible for the fuel tax rebate. 6 |
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[15] The concept of the "minimum dump point" (MDP) is the creation of the Minister and is a term used to describe the point beyond which stripped material must be moved in order to allow sufficient room for mining practices to be conducted.
[16] Attached to the Notice of Decision that the Minister sent to Double N advising of the decision are four pages of handwritten notes which allows me to draw the conclusion that a great deal of time and effort went into the creation of a strategy to evaluate the part of Double N"s activities which could be classified as development as opposed to restoration. But, even though the Minister"s approach is principled, is it based on a proper interpretation of the word "restoration" in s.69(1)?
E. Guides to Interpretation
[17] To assist in answering this question, the following extracts from Driedger on the Construction of Statutes 7 outline well understood statutory interpretation guidelines which are relevant in this case:
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Summary of the ordinary meaning rule: the basic propositions. As understood and applied by modern courts the ordinary meaning rule consists of the following propositions. |
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(1) It is presumed that the ordinary meaning of a legislative text is the intended or most appropriate meaning. In the absence of a reason to reject it, the ordinary meaning prevails. |
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(2) Even where the ordinary meaning of a legislative text appears to be clear, the courts must consider the purpose and scheme of the legislation, and the consequences of adopting this meaning. They must take into account all relevant indicators of legislative meaning. |
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(3) In light of these additional considerations, the court may adopt an interpretation in which the ordinary meaning is modified or rejected. That interpretation, however, must be plausible; that is, it must be one the words are reasonably capable of bearing.8 |
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Ordinary meaning defined. The "ordinary meaning" of a text is the meaning that is understood by a competent user of language upon reading the words in their immediate context. The immediate context of words in a statute generally consists of the section or subsection in which the words appear. In some cases it might include more - a series of related provisions perhaps. However, it does not include the statute as a whole, but only as much as is needed for the reader to form a sensible impression of what is being said. |
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As defined here, the ordinary meaning is not the post-interpretive meaning, the meaning that is accepted after adjusting for all relevant considerations. It is the first impression meaning gleaned by a competent reader based on the information that is immediately to hand. This understanding reflects the actual experience of readers, who normally do not read the whole of a text before forming an impression of the meaning of the individual sentences that comprise it.9 |
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ORDINARY VERSUS TECHNICAL MEANING |
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Technical terms. Technical or scientific terms have no common or popular meaning; their only meaning derives from their specialized use by a distinct portion of the community. when technical or scientific terms are used in legislation, then, they are necessarily given their technical or scientific meaning.10 |
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Presumption in favour of ordinary, non-technical meaning. Where words are ambiguous in the sense that they could bear either a technical or a non-technical meaning in the context in which they appear, the courts presume that the ordinary, non-technical meaning was intended.11 ... |
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Presumption applies to all statutes. The presumption in favour of the ordinary, non-technical meaning of words is applicable to all legislation, including legislation dealing with technical or scientific matters.12 ... |
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Qualification. The presumption in favour of the ordinary, non-technical meaning of words is subject to an important qualification. This is explained by Lord Esher in Unwin v. Hanson: |
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If the Act is directed to dealing with matters affecting everybody generally, the words used have the meaning attached to them in the common and ordinary use of language. If the Act is one passed with reference to a particular trade, business, or transaction, and words are used which everybody conversant with that trade, business, or transaction, knows and understands to have a particular meaning in it, then the words are to be construed as having that particular meaning, though it may differ from the common or ordinary meaning of the words.13 |
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Similar language was used in a passage endorsed by the Federal Court of Appeal in Olympia Floor and Wall Tile Co. v. Deputy M.N.R. for Customs and Excise: |
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I subscribe to the principle that the common meaning of a word must be used in the interpretation of Statutes with the exception that [where] a word [is] generally used in the "trade" and understood to have a consistent meaning within that industry or trade, then that interpretation placed on that word must be used. |
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Relying on this qualification or exception, courts have adopted a technical meaning of the word "sex" in regulations under British Columbia's Horse Racing Act, the words "ophthalmic dispensing" in Ontario's Ophthalmic Dispensers Act, the words "subcutaneous tissues of the human foot" in Ontario's Chiropody Act, the word "earthenware" in a tariff item under the Customs Tariff Act, the word "concentrators" in Ontario's Assessment Act, and the word "pipeline" in the Income Tax Regulations.14 |
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... The key consideration in determining whether words should have their ordinary or their technical meaning is not so much the subject dealt with as the understanding of the audience that has been targeted by the legislature. As Lord Diplock said in Black-Clawson International Ltd. v. Papierwerke Waldhof-Aschaffenburg A.G., |
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... the court must give effect to what the words of the statute would be reasonably understood to mean by those whose conduct it regulates. |
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... In other words, when interpreting any legislation, regardless of the subject dealt with, the courts must ask themselves what persons conversant with this subject would understand by the legislature's words. Where it established that a technical meaning would be understood, that meaning is accepted; otherwise, the court prefers the ordinary or popular meaning of the words.15 |
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Proof of technical meaning. Whether a term has a technical meaning and what that meaning is are both questions of fact. If either of these facts is indisputable, it may be judicially noticed by the court; otherwise it must be proven in the ordinary way, through the testimony of expert witnesses. |
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To establish the technical meaning of terms, reliance may be placed on dictionaries, encyclopedias, textbooks, publications of regulatory authorities and the like. These materials may be introduced through expert witnesses or brought to the attention of the court by counsel.16 |
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[18] A potentially confusing use of the word "popular" arises in the authorities quoted. The confusion is eliminated, however, if the focus remains on determining which audience is being addressed in a particular piece of legislation. If it is a trade audience, the meaning "popular" to that audience should be accepted. If it is addressed to the general public, then the ordinary meaning should be used. That is, for the general public audience, the word "popular" is synonymous with "ordinary", whereas in the trade audience, the word "popular" is synonymous with "technical".
[19] Therefore, the primary objective is to determine the audience that is being addressed in a particular piece of legislation. If it is addressed to a trade audience, members of the trade audience are the persons who should be consulted on the meaning to be given to specific terms in the legislation.
[20] In meeting this objective, in Olympia Floor and Wall Tile Company v. Deputy Minister National Revenue for Customs & Excise17 Ryan J.A. said this:
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I recognize, of course, that the term "earthenware tiles" is not "technical or scientific" in the sense that the word "tetracycline" is. But Mr. Martin is nonetheless right in saying that if the term "earthenware tiles" carries a recognized trade meaning, it must be read in that sense. I have no doubt that a legislature could specify that, even though a term has a special meaning in a trade with which a statute deals, it must nevertheless be read in another sense; and if that can be done expressly, it can certainly be done by implication. But I do not read Item 28415-1, whether alone or in context, as being intended to require giving to "earthenware tiles" a non-trade meaning where, as here, a trade meaning is proved. The evidence in this case is overwhelming that in the trade "earthenware tiles" is a term used, in reference to ceramic floor and wall tiles, to mean tiles that are not vitreous or semi-vitreous. |
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[21] Similarly, Urie, J.A. in Nova, An Alberta Corporation v. Minister of National Revenue18 provides the following direction:
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In relation to the arguments advanced in this case, the question becomes what is the grammatical and ordinary meaning of the word "pipeline" and, as well, to whom and what should a Court turn to ascertain the grammatical and ordinary meaning of words or terms in a statute? |
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... The interpretation problem here is not strictly one, in my view, which requires a determination of whether a word used in a statute is used in its ordinary sense or in its strictly technical sense, as was required, for example, in the Canterra Energy case, supra. It is more fundamental. It is a word in fairly common usage, employed here in a Schedule to a regulation of a statute which is applicable to all corporations which may be entitled to claim capital cost allowance on various of its assets. The Income Tax Act itself applies to all taxpayers earning taxable income. Class 1 in Schedule B certainly does not relate solely to the natural gas industry. It relates also to electrical generating equipment, oil pipeline and distributing equipment for water and heat. Clause (b) relates to pipelines without reference to what is transmitted through them be it gas, oil, water, steam or solids. I would have thought that in 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 services of the pipeline for the transmission of gas, oil, water, steam or solids] would attribute to it" [See Footnote 5], not the popular sense derived from the perception of the man in the street not conversant with either the user industries or pipelines. Even if it were, I find it difficult to conceive that such a man would view a compressor station or metering facilities as part of a pipeline in its most fundamental sense. |
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F. Approaches to interpretation
1. The Minister"s approach
[22] Counsel for the Defendant agrees that the Minister"s approach to interpretation in this case was according to the ordinary meaning of the words used in the definition of "mining" in s.69(1), and in particular, the ordinary meaning of the term "restoration". That is, the Minister viewed the process of mining as a linear process involving a number of sequential steps. Accordingly, the Minister proceeded on the basis that distinct break points can be identified between development, processing, and restoration activities.
[23] Within this approach, Double N"s activities were considered to consist of three distinct steps as follows:
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a. Removing the overburden covering the gravel to be extracted; |
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b. Carrying the overburden a sufficient distance away that it was out of the way of the gravel extraction process; |
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c. Placing the overburden back over land from which the gravel had been extracted.19 |
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[24] On the basis of this approach, the Defendant submits that the steps of removing and hauling away the overburden to the MDP are not part of the restoration of strip-mined land, but are part of the development and operation of the gravel extraction process, and therefore, only the last step is clearly "restoration of strip-mined land to a usable condition". As an outcome of this analysis, the Defendant argues that under s.69 a rebate is payable, and indeed was paid, in respect of fuel tax paid on fuel consumed to perform the last step, but not in respect of fuel tax paid on fuel consumed to perform the first two steps.
2. Double N"s approach
[25] Counsel of Double N relies on expert evidence to argue that the interpretation of "restoration" should be according to the technical meaning that term has developed within the professional and legal context of Double N"s operations. To prove this regime, and its impact on operations like that of Double N, oral and written evidence was produced to the CITT which, by agreement, is evidence before me in this appeal.
[26] Double N conducts its operations within a stringent regulatory regime established by Alberta legislation which requires reclaiming mined lands. The primary witness in this respect is Mr. Len Knapik, a senior mining and oil and gas industry consultant with extensive experience in the reclamation of land in Alberta. In the hearing before the CITT, Mr. Knapik was qualified as an expert in the restoration of strip mined land.
[27] In direct examination, Mr. Knapik clarified that each of the terms "restoration", "reclamation" and "rehabilitation" describe different intensity of activities: "restoration" is the return of the land and all its components back to exactly the way it was before it was disturbed, reclamation is the return of the land to a land use capability, and rehabilitation is the return of the land to some planned condition. However, during the hearing before the CITT, counsel for the Defendant agreed that, for the purposes of the federal fuel tax rebate, these terms should be considered as synonymous, and all express the intended condition of lands within the phase "restoration of strip-mined land to a usable condition" in s.69(1). The same agreement applies in this appeal.
[28] Mr. Knapik testified that under the Alberta Land Surface Conservation and Reclamation Act20 and its regulations, the required standard is "reclamation". With respect to meeting this standard , in direct examination, he testified as follows:
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Q. Mr. Knapik, in the province of Alberta, is there a legal regime in place regarding the restoration of gravel pits or the reclamation of gravel pits? |
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A. Yes. The Land Surface Conservation Reclamation Act in the early seventies specified that gravel pits had to be reclaimed and that you had to submit development and reclamation plans which had to be approved before you could operate. That was replaced in 1993 with the legal legislation. |
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Q. What is the final standard that you have to achieve under that legislation in terms of the land quality? |
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A. It is equivalent land capability. |
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Q. Without getting into too much detail, can you just briefly explain to the Tribunal what you would find in one of these reclamation plans that the government requires. |
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A. There will be an inventory of the soils, both the topsoil thickness and volumes and where it is in the landscape, the subsoil, the root zone thickness and volumes. There will be an inventory of the remainder of the overburden from there down to the gravel done by drilling. |
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Testing for things like high salt content or high sodium levels which are a potential problem in the reclaimed landscape. |
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Then there is a plan that says how that material will be removed and how the new landscape and the new soil profile will be built, how the drainage will be put in place, the form of the land surface shape, as well as the vegetation management if it is not going straight back to agriculture. |
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Q. Would these plans deal with the management of the overburden layers as you find them? |
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A. Yes. That is one of the requirements. |
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Q. Generally speaking, what would the plan have to specify with respect to the overburden layers? |
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A. You have to selectively handle the topsoil, your root zone and the balance of your overburden and replace them in the appropriate order in the new landscape. |
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Q. When you prepare these plans, is there any particular method of reclamation that is favoured by the government? |
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A. They want to keep the operation as small and as tight as possible and reclaim as soon as possible so the concept of progressive reclamation, you stay up as close behind your active operation as you can so the land is put back to useful production as early as possible. |
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Q. Can you briefly just explain what would amount to progressive reclamation in a gravel pit context. |
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A. Generally it is putting the overburden back into the mined out pit and building your final land shape. At that point you get your drainage patterns for surface water drainage. |
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You then cap the overburden with your root zone material, which is 30 to 50 centimetres plus or minus, and put the topsoil back on top of that. |
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You have to be getting proper compaction and not mixing the materials as you are excavating or not mixing as you are replacing. |
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Q. What would the attitude of Alberta Environment be if the operator was to just scoop out the overburden altogether and mix the three zones up and deal with it that way? Would that be acceptable? |
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A. No. That wouldn"t get you an operating licence and it wouldn"t let you keep operating if you tried to do it. |
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Q. And if the operator were simply to take the overburden and simply throw it in the hole here in the middle of the pit, would that be acceptable? |
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A. Well, you have to selectively handle the topsoil, the root zone and the balance of the material. You can"t handle it all together. When you replace your material, you are building your final landscape so you have to know where your grades are, you have to be above the water table, you have to get your final surface drainage. You can"t just dump it. |
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Q. Mr. Knapik, in this sort of schematic for a mature pit where you are doing progressive reclamation, in your view, when does the reclamation process start? |
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A. We always say that the reclamation process starts with the first planning of the pit and when you are preparing your DNR [Development and Reclamation] application. In terms of the actual mining, removing the dirt, it starts with picking up the topsoil. |
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Q. So the minute you take off the green layer there. |
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A. You are salvaging a valuable resource. Yes. |
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Q. Does the government require that you salvage that topsoil? |
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[29] The Alberta Surface Conservation and Reclamation Act provides for the creation of a Council which has the responsibility of ensuring that the objectives of the legislation are achieved. Under this mandate, the Council has the responsibility to ensure that gravel pit operations are performed in a manner that conserves land resources and returns disturbed land to an equivalent land capability.22 As evidence in support of its approach, Double N produced a letter dated November 19, 1990, signed by Mr. J.M. King, Chairman of the Council, in which the following statements are made respecting reclamation activities associated with sand, gravel, and clay pits:
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Reclamation is required and includes separate salvage and where appropriate, storage of all topsoil, overburden and reject materials, replacement of all overburden material following excavation, site contouring, replacement of topsoil, rock picking where appropriate and stabilization of the land surface with a self sustaining vegetative cover. |
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In addition, reclamation to equivalent capability may require the salvage of subsoil materials separately from what is generally referred to as "overburden" by the industry. |
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The Department promotes "progressive" or "sequential" reclamation whenever possible....In conclusion, the Department considers salvage and replacement of topsoil, subsoil and overburden as an integral part of reclamation .23 |
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[Emphasis added]
G. Analysis
[30] Mr. Knapik"s expert evidence as above quoted is uncontradicted. Indeed, it is clearly supported by the evidence of Mr. King just quoted. Accordingly, I give Mr. Knapik"s evidence substantial weight.
[31] Should the technical definition of "reclamation" as provided by Mr. Knapik be accepted as the proper interpretation of "restoration" in s.69? Double N argues that Parliament must be taken to know the technical aspects of "mining", and, accordingly, the terms used in s.69 are responsive to and inclusive of that knowledge. When the provisions of s.69 are considered in detail, I have no doubt about the truth of this argument. In my opinion, s.69 conforms to the qualification expressed by Lord Esher in Unwin v. Hanson as quoted above.
[32] Section 69 is clearly passed with reference to trade conducted within particular segments of the resource industrial sector of the Canadian economy. It is addressed to various distributors of gasoline or diesel fuel: licenced manufacturers, licenced wholesalers, and registered vendors. With reference to a sale of gasoline or diesel fuel by these distributors to special "qualified" consumers who are engaged in fishing, hunting, trapping, logging and mining, a tax rebate is payable to the licenced manufacturer, licenced wholesaler, or registered vendor.
[33] In addition, with respect to persons engaged in one of the listed activities, but who are not considered "qualified" under s.69, a fuel tax rebate is payable to them when they purchase or import gasoline or diesel fuel for use in a listed activity. Therefore, s.69 is of interest to a select and limited group of economic entities.
[34] In addition to the specific nature of who is licenced, registered or qualified or unqualified, the definition provisions of s.69 assume specialized knowledge on the part of those the section affects. For example, those engaged in logging are assumed to know the definition of "felling", "limbering", "bucking", "mill-pond", mill yard", and "log salvaging". Accordingly, in the definition of logging, "reforestation" can also be assumed to require technical understanding to properly interpret the nature and scope of the activity named. In my opinion, the same can be said about the term "mining" which assumes technical knowledge to understand terms such as "prime metal stage" and "pellet stage".
[35] Given the fact that s.69 affects a select and limited group of economic entities, and given the frequent use of technical trade terms throughout the section, I find that s.69 is directed to the specialized trade audience concerned with the activities listed therein. On this basis, I find that the presumption in favour of giving the ordinary meaning to terms used in the section is rebutted.
[36] Therefore, the question becomes: what would persons conversant with "mining" understand by the term "restoration"? Regarding who is conversant, Lord Esher specifies "everybody conversant". I find, however, that while s.69 is federal legislation, the conversant persons whose opinions have weight on the meaning of terms in s.69 respecting a specific activity are those persons with precise expert knowledge of the legal and practical context in which that activity takes place. Mr. Knapik and his opinions certainly meet this test for Double N"s activities in Alberta.
[37] Accordingly, as defined in the evidence of Mr. Knapik as above quoted, I find in this case that "restoration" begins with the picking up of topsoil.
[38] The Defendant"s main argument towards nullifying the effect of this finding is grounded in an apparent conflict arising from the fact that "restoration", as defined, is also "development" in that restoration activity also develops a gravel pit by providing access to the gravel lying beneath the topsoil and overburden. I give no weight to this argument because of the way in which the term "restoration" is to be considered.
[39] As set out above, the Minister must be taken to concede that, in the definition of "mining" in s.69(1), the phrase "the restoration of strip-mined land to a usable condition" is to be read exclusive of the other provisions of the definition. As a result of this concession, at the opening of this appeal, counsel for the Defendant stated that his argument respecting Double N"s activity would not depend on the exclusions of "exploration" or "development" listed in the definition of "mining" in s.69(1), but would relate only to whether Double N"s activity falls within the definition of "restoration". Since I have found that it does, there is no conflict to consider.
G. Relief
[40] For the above reasons, pursuant to s.81.31(1) of the Act, I allow Double N"s appeal, dismiss the Defendant"s counterclaim, and grant Double N"s request for the following relief:
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a) a declaration that the activities of Double N which are the subject of this appeal constitute "restoration of strip-mined land to a usable condition"; |
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b) a declaration that Double N is entitled to a federal fuel tax rebate with respect to these "restoration" activities; |
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c) an order that the Defendant, as represented by the Minister of National Revenue, recalculate the fuel tax rebate due to Double N in accordance with these reasons and relief granted, and forthwith pay to Double N any unpaid rebate; |
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1 The Excise Tax Act R.S.C. 1985, c.E-15 is referred to in these reasons as "the Act", and Double N Earth Movers Ltd. is referred to as "Double N".
2 Plaintiff"s Brief, p.1.
3 Adapted from Plaintiff"s Brief, p.2.
4 Plaintiff"s Brief, p.4.
5 Ibid.
6 Ibid. p.5.
7 R. Sullivan, Driedger on the Construction of Statutes, 3rd ed. (Toronto: Butterworths, 1994).
8 Ibid. at 7.
9 Ibid. at 8-9.
10 Ibid. at 16.
11 Ibid. at 17.
12 Ibid. at 19.
13 Ibid. at 19-20.
14 Ibid. at 20.
15 Ibid. at 21.
16 Ibid. at 22.
17 1983, 49 N.R. 66 at pp. 77-78.
18 1988, 87 N.R. 101 at pp. 108-109.
19 Brief of Her Majesty The Queen, pp. 7-8.
20 Revised Statutes of Alberta 1980, Chapter L-3
21 Canadian International Trade Tribunal, Transcript of Hearing, March 4, 1996, pp. 94-100.
22 Guidelines for Land Conservation and Reclamation in Alberta, Plaintiff"s Book of Supporting Documents, Tab 7.
23 Plaintiff"s Book of Supporting Documents, Tab 3.