British Columbia Ferry Corp. v. Canada

British Columbia Ferry Corp. v. Canada Court (s) Database Federal Court of Appeal Decisions Date 2001-05-10 Neutral citation 2001 FCA 146 File numbers A-172-00 Notes Reported Decision Decision Content Federal Court Reports British Columbia Ferry Corp. v. M.N.R. (C.A.) [2001] 4 F.C. 3 Date: 20010510 Docket: A-172-00 Neutral citation: 2001 FCA 146 C O R A M: STRAYER J.A. LINDEN J.A. SEXTON J.A. B E T W E E N: BRITISH COLUMBIA FERRY CORPORATION and CHEVRON CANADA LIMITED Appellants -- and -- HER MAJESTY THE QUEEN IN RIGHT OF CANADA REPRESENTED BY THE MINISTER OF NATIONAL REVENUE AND THE SAID MINISTER OF FINANCE Respondent Docket: A-173-00 B E T W E E N: SHELL CANADA PRODUCTS LIMITED Appellant -- and -- HER MAJESTY THE QUEEN IN RIGHT OF CANADA REPRESENTED BY THE MINISTER OF NATIONAL REVENUE AND THE SAID MINISTER OF FINANCE Respondent Docket: A-174-00 B E T W E E N: BRITISH COLUMBIA FERRY CORPORATION, CHEVRON CANADA LIMITED, IMPERIAL OIL LIMITED and SHELL CANADA PRODUCTS LIMITED Appellants -- and -- HER MAJESTY THE QUEEN IN RIGHT OF CANADA REPRESENTED BY THE MINISTER OF NATIONAL REVENUE AND THE SAID MINISTER OF FINANCE Respondent Docket: A-175-00 B E T W E E N: IMPERIAL OIL LIMITED Appellant -- and -- HER MAJESTY THE QUEEN IN RIGHT OF CANADA REPRESENTED BY THE MINISTER OF NATIONAL REVENUE AND THE SAID MINISTER OF FINANCE Respondent Heard at Vancouver, British Columbia on Thursday, March 15, 2001 JUDGMENT delivered at Ottawa, Ontario, on Thursday, May 10, 2001 REASONS FOR JUDGMENT BY: STRAYER J.A. CONCURRED IN BY: LINDEN J.A. SEXTON J.A. Date: 20010510 Docket: A-172-00 Neutral citation: 2001 FCA 146 C O R A M: STRAYER J.A. LINDEN J.A. SEXTON J.A. B E T W E E N: BRITISH COLUMBIA FERRY CORPORATION and CHEVRON CANADA LIMITED Appellants -- and -- HER MAJESTY THE QUEEN IN RIGHT OF CANADA REPRESENTED BY THE MINISTER OF NATIONAL REVENUE AND THE SAID MINISTER OF FINANCE Respondent Docket: A-173-00 B E T W E E N: SHELL CANADA PRODUCTS LIMITED Appellant -- and -- HER MAJESTY THE QUEEN IN RIGHT OF CANADA REPRESENTED BY THE MINISTER OF NATIONAL REVENUE AND THE SAID MINISTER OF FINANCE Respondent Docket: A-174-00 B E T W E E N: BRITISH COLUMBIA FERRY CORPORATION, CHEVRON CANADA LIMITED, IMPERIAL OIL LIMITED and SHELL CANADA PRODUCTS LIMITED Appellants -- and -- HER MAJESTY THE QUEEN IN RIGHT OF CANADA REPRESENTED BY THE MINISTER OF NATIONAL REVENUE AND THE SAID MINISTER OF FINANCE Respondent Docket: A-175-00 B E T W E E N: IMPERIAL OIL LIMITED Appellant -- and -- HER MAJESTY THE QUEEN IN RIGHT OF CANADA REPRESENTED BY THE MINISTER OF NATIONAL REVENUE AND THE SAID MINISTER OF FINANCE Respondent REASONS FOR JUDGMENT STRAYER J.A. Introduction [1] These are appeals from four judgments of the Trial Division dismissing claims brought by the plaintiffs for the recovery of excise taxes paid on diesel fuel used in the operation of the ships of British Columbia Ferry Corporation ("the Ferry Corporation"). They raise issues as to whether such fuel was exempted from those taxes and if so whether the appellants are entitled to recover such amounts as were paid. Facts [2] The appellant fuel companies were the suppliers of diesel fuel to the Ferry Corporation. They paid the taxes to the federal government and passed them on to the Ferry Corporation. The law would have permitted them to claim a refund of such taxes as were paid on fuel sold by them for use as "ships' stores" (exempt from tax) and any refunds obtained would then be passed on to the Ferry Corporation. In these cases the suppliers apparently have no other interest in the matter, as the ultimate taxpayer was the Ferry Corporation. [3] The taxes themselves were made payable under subsection 23(1) of the Excise Tax Act, (RSC 1985, c. E-15) although similar taxes would have been payable under section 17 of the Customs Act (SC 1986, c. 1) were the fuel imported. It is agreed that the taxes in question here were paid under the Excise Tax Act. It appears to me, from the agreed statement of facts and the various statements of claim, that the taxes in dispute were paid no earlier than September 1, 1990 nor after July 31, 1996 and it is to the law applicable during that period of time that we must have regard. [4] Subsections 68.17(1) and 70(1) of the Excise Tax Act provide for the tax to be paid back by way of refund or "drawback" to the supplier or ultimate purchaser of goods supplied as "ships' stores". Subsection 59(3.2) of that Act is critical in defining the authority of the Governor in Council to make regulations defining "ships' stores". That subsection provides as follows: 59.(3.2) The Governor in Council may make regulations designating, for the purposes of sections 68.17 and 70, certain classes of goods as ships' stores for use on board a conveyance within such class of conveyances as may be prescribed in the regulations and limiting the quantity of such goods that may be so used. . . . 59.(3.2) Le gouverneur en conseil peut, par règlement, désigner, pour l'application des articles 68.17 et 70, certaines catégories de marchandises comme des approvisionnements de navires devant servir à bord d'un moyen de transport d'une catégorie désignée par règlement et limiter la quantité des marchandises. . . . The Customs Act has similar provisions, and a regulation-making power to designate certain classes of goods as "ships' stores" is provided in virtually identical terms in paragraph 164(1)(c) of that Act. [5] It is the applicability and validity of the regulations defining "ships' stores" purportedly adopted under these statutory provisions, as such designations apply to the operations of the plaintiff Ferry Corporation, which are in issue here. [6] It is common ground that the vessels of the Ferry Corporation operate between ports on the British Columbia mainland and other ports within British Columbia, mainly on Vancouver Island or the Queen Charlotte Islands. None of the vessels operate to the west of Vancouver Island or of the Queen Charlotte Islands, nor do they travel to any U.S. port. Their operations are conducted only in salt water. The Ferry Corporation is owned by the Government of British Columbia and its fares are set by order of that Government. It is agreed by the parties that the Ferry Corporation was operating in a deficit position during the period in question. (Agreed statement of facts para. 9. Appeal Book p. 89). [7] In October, 1994 the Ferry Corporation learned of a 1993 Order in Council dealing with ships' stores, which apparently led it to question the validity of past regulations. It asked its suppliers of diesel fuel to submit applications for refunds and drawbacks under the Excise Tax Act in respect of taxes paid during the period September 1, 1990 to July 31, 1996. (For particulars see appeal book pages 92-3). Such applications were made on the basis that the diesel fuel in question was within the definition of "ships' stores" in the regulations made under the Excise Tax Act and therefore was exempted from tax. [8] Upon the refusal of the respondents to refund these taxes, the appellants brought four actions in the Trial Division of the Federal Court. Three of these actions (T-2051-96, T-1359-97, T-1361-91) sought various declarations as to the meaning and validity of the regulations and brought appeals from the determination by the Minister of National Revenue refusing to decide in favour of the appellants in response to their notices of objection to the original refusal of a drawback. (There is a right of appeal in such circumstances to the Federal Court Trial Division). The fourth action, T-452-97 asked for similar declarations but also sought a declaration and a judgment for repayment of the taxes based on unjust enrichment. [9] These actions were dismissed by the Trial Division on the basis that the regulations excluded the diesel fuel in question from the definition of "ships' stores" and they were thus not exempted from taxation. Further it was held that the regulations were valid and that there was no basis for setting aside the Minister's determination. Further it was held that any claim to recovery for unjust enrichment was precluded by the Excise Tax Act which provides a "complete statutory code" for the recovery of money paid as excise taxes. The trial judge held that even if there were a right of recovery for unjust enrichment, it would not apply in this case since the taxes were lawfully collected. He made no findings as to the application of limitation periods in the Excise Tax Act to the facts of these cases. Nor was that argued before us on appeal, and I make no findings in that respect. [10] The appellants appeal from those decisions. Issues [11] It appears that the following issues require determination. 1. Is the diesel fuel in question prima facie within the definition of "ships' stores" in the regulations? 2. If not, is it invalidly excluded from the definition? 3. If invalidly excluded, what remedy can the Court give in respect of these regulations? 4. If the appellants were wrongly excluded from the exemption, can they recover the tax collected by a claim for unjust enrichment? Analysis 1. Was the fuel prima facie exempted by the regulations? [12] I have come to the conclusion that by the terms of the successive regulations, the fuel used on the Ferry Corporation's vessels, given the routes they plied, was not exempt from taxation under the Excise Tax Act. [13] Considering the period of taxation in question, one can start with the Ships Stores Regulations of 1986 (SOR/86-878) which were made jointly under the authority of the Excise Tax Act and the Customs Act. (It is necessary to start with the 1986 regulations because it is argued by the appellants that those regulations, whatever they meant, were not lawfully amended until 1993 and therefore might have applied during part of the taxation period in question). The 1986 regulations included as "ships stores" (that is, goods exempted from tax under those Acts), fuel used on "an inland waters ship". The same regulations defined an "inland waters ship" as a ship engaged in trade between ports on the inland waters of Canada . . . . These regulations themselves did not contain any special definition of "inland waters" or "inland waters of Canada". The appellants argue that as the ferry routes were within Canada's inland waters, as defined by common law or international law, their ships' stores were entitled to the exemption. However I accept the respondent's contention that there was an operative definition which excluded these ferries. As noted, the regulations were made under authority conferred by the Customs Act and the Excise Tax Act. Section 16 of the Interpretation Act (RSC 1985, c. I-221) provides: 16. Where an enactment confers power to make regulations, expressions used in the regulations have the same respective meanings as in the enactment conferring the power. R.S., c. I-23, s.15. 16. Les termes figurant dans les règlements d'application d'un texte ont le même sens que dans celui-ci. S.R., ch. I-23, art. 15. Thus the words used in the 1986 regulations would be deemed to have the same meaning as in the Customs Act, one of the Acts under which they were made. In section 2 of that Act the words "inland waters" were defined as follows: "inland waters" means all the rivers, lakes and other fresh waters in Canada and includes the St. Lawrence River as far seaward as the straight lines drawn (a) from Cap-des-Rosiers to the westernmost point of Anticosti Island, and (b) from Anticosti Island to the north shore of the St. Lawrence River along the meridian of longitude sixty-three degrees west. « eaux internes » L'ensemble des fleuves, rivières, lacs et autres plans d'eau douce du Canada, y compris la partie du Saint-Laurent délimitée, vers la mer, par les lignes droites joignant : a) Cap-des-Rosiers à la pointe extrême ouest de l'île d'Anticosti; b) l'île d'Anticosti à la rive nord du Saint-Laurent suivant le méridien de soixante-trois degrés de longitude ouest. I believe that for Customs Act purposes then, the regulations, when they refer to "inland waters" of Canada, must be referring to the "inland waters" as defined in the Customs Act, which are obviously the "inland waters of Canada". Even though the regulations were also made under the Excise Tax Act which contained no such definition of "inland waters", subsection 15(2) of the Interpretation Act (Ibid) provides as follows: 15.(2) Where an enactment contains an interpretation section or provision, it shall be read and construed (b) as being applicable to all other enactments relating to the same subject-matter unless a contrary intention appears. R.S., c. I-23, s. 14. 15. (2) Les dispositions définitoires ou interprétatives d'un texte : b) s'appliquent, sauf indication contraire, aux autres textes portant sur un domaine identique. S.R., ch. I-23, art. 14. Obviously the common subject-matter here was ships' stores dealt with in both the Excise Tax Act and the Customs Act and the definition of "inland waters" in the Customs Act, which would be determinative of the meaning of those words in the Ships Stores Regulations made under that Act, would equally be determinative of the same words used in the same regulations for Excise Tax Act purposes. [14] It is apparent from that definition of "inland waters" that, while those regulations were in place, vessels travelling in salt water within Canada (with the possible exception of the lower St. Lawrence River for some distance above Anticosti Island) or not on a river or lake, would not be exempted from diesel fuel tax under the Excise Tax Act. [15] These regulations were, however, purportedly amended in 1988 (S.O.R./88-425). While fuel used on a "inland waters ship" continued to be considered as ships' stores, the definition of "inland waters ship" was changed, being defined as a ship engaged in trade on an inland voyage, as defined in section 2 of the Canada Shipping Act . . . . Navire faisant le commerce pendant un voyage en eaux intérieures au sens de l'article 2 de la Loi sur la marine marchande du Canada . . . . The concept of "inland voyage" added a new and convoluted complexity to the definition of "ships stores" as the Canada Shipping Act defines an "inland voyage" as . . . a voyage, not being a minor waters voyage, on the inland waters of Canada together with such part of any lake or river forming part of the inland waters of Canada as lies within the United States or on Lake Michigan. . . . (Emphasis added). À l'exclusion d'un voyage en eaux secondaires, voyage effectué dans les eaux internes du Canada et dans toute partie d'un lac, d'un fleuve ou d'une rivière faisant corps avec les eaux internes du Canada située dans les États-Unis, ou effectué sur le lac Michigan. . . . (C'est moi qui souligne). The first impression is that of a broad exemption for ships engaged on voyages within Canada, with a small exception for a "minor waters voyage". Thus "inland waters of Canada" are defined as: "inland waters of Canada" means all the rivers, lakes and other navigable fresh waters within Canada, and includes the St. Lawrence River as far seaward as a straight line drawn (a) from Cap des Rosiers to West Point Anticosti Island, and (b) from Anticosti Island to the north shore of the St. Lawrence River along the meridian of longitude sixty-three degrees west. . . . « eaux internes du Canada » La totalité des fleuves, rivières, lacs et autres eaux douces navigables, à l'intérieur du Canada, y compris le fleuve Saint-Laurent aussi loin vers la mer qu'une ligne droite tirée : a) de Cap-des-Rosiers à la Pointe occidentale de l'île d'Anticosti; b) de l'île d'Anticosti à la rive nord du fleuve Saint-Laurent le long du méridien de longitude soixante-trois degrés ouest. . . . However from this generality there is subtracted voyages on the "minor waters of Canada" which is, surprisingly, a large concept indeed, being defined as: "minor waters of Canada" means all inland waters of Canada other than Lakes Ontario, Erie, Huron, including Georgian Bay, and Superior and the St. Lawrence River east of a line drawn from Father Point to Point Orient, and includes all bays, inlets and harbours of or on those lakes and Georgian Bay and such sheltered waters on the sea-coasts of Canada as the Minister may specify. (Emphasis added) « eaux secondaires du Canada » Toutes les eaux internes du Canada, autres que celles des lacs Ontario, Érié, Huron -- y compris la baie Géorgienne -- et Supérieur, et celles du fleuve Saint-Laurent à l'est d'une ligne tirée de Pointe-au-Père à Pointe Orient. Sont inclus dans la présente définition toutes les baies et anses et tous les havres desdits lacs et de la baie Géorgienne, de même que les eaux abritées du littoral du Canada que peut spécifier le ministre. (C'est moi qui souligne) In other words, most of Canada's internal waters are deemed to be "minor" and voyages thereon are not exempt. The only major waters, it seems, are those portions of the four Great Lakes which lie partly within Ontario, together with the lower St. Lawrence River in the area of Matane, Cap-des-Rosiers, Sept-Îles and Baie Comeau, in the province of Québec, where voyages were made exempt from taxation. [16] Again I think it is clear that the regulations, with their incorporated statutory definitions, clearly excluded from tax exemption as "ships stores" the fuel consumed by the Ferry Corporation on the routes it travelled. Just as with the 1986 Regulations, those routes are not on fresh water nor on any lake or river, hence they are not on "inland waters of Canada" as defined by the Canada Shipping Act. [17] The appellants argue that the 1988 regulations were invalid because they were not published for comment prior to them being adopted, as the Customs Act required with respect to regulations made under it. However, the Excise Tax Act had no such requirement and, whatever the effect of a failure to pre-publish may be, I cannot see how it would affect the validity of the regulations for the purposes of the Excise Tax which, the parties agree, is the Act relevant to the taxation in question here. Further, I do not think that it makes much difference to the case of the appellants in this respect, because if the 1988 regulations did not validly amend the 1986 regulations, they were already equally excluded from the exemption under the 1986 regulations for the reasons I have given. [18] It remains only to note that in 1993 amendments identical to the 1988 amendments were adopted, (S.O.R./93-153) apparently in response to doubts expressed as to the validity of the 1988 regulations. In this case there was prior publication and, assuming they are not intrinsically flawed because of their content, it is not disputed that they are valid as to form. While counsel for the appellants drew our attention to various statements by officials as to the reasons for the adoption of the 1993 regulations, and asked us to interpret them in the light of these extrinsic aids, their meaning is quite clear from the language of the regulations. It would be inappropriate to substitute for that clear language the stated intentions of officials which are not, in any event, very clear. 2.If this fuel is not exempted by the Regulations, are they invalid as ultra vires the Governor in Council? [19] Counsel for the appellants attacked the intrinsic validity of the regulations because they discriminate between operators of vessels on peripheral waters of Canada in favour of vessels engaged on the waters of central Canada. In support of this contention he said that prior to the adoption of the 1993 regulations, ship operators such as the Ferry Corporation were not consulted. It was suggested that only central Canadian shippers were consulted. While this may be the case, it does not of itself affect the legal validity of the regulations. [20] While he put his case in part on the basis that the regulations are "discriminatory" on a geographical basis and are therefore invalid, the authorities he relied on to attack delegated legislation as "discriminatory" were mainly drawn from municipal law. It appears to me that his argument is essentially that the regulations were not authorized by the relevant legislation and thus were ultra vires the Governor in Council. While accepting that it would be open to Parliament to impose such taxation in a discriminatory way on one part of the country as opposed to the other (barring any constitutional limitations such as in section 15 of the Canadian Charter of Rights and Freedoms) and that Parliament could authorize the Governor in Council similarly to discriminate, the appellants argue that Parliament has not done so in this case. [21] There is certainly precedent for the courts examining an Order in Council or other delegated legislation made under the authority of a statute, to see whether it conforms with the purposes of the statute and the scope of the authority given by Parliament for the making of the delegated legislation. (See e.g. Alaska Trainship Corporation v. Pacific Pilotage [1981] 1 S.C.R. 261; Canada v. St. Lawrence Cruise Lines Inc. [1997] 3 F.C. 899 (C.A.) and Thorne's Hardware Limited et al v. Her Majesty the Queen and National Harbours Board [1983] 1 S.C.R. 106). [22] One must therefore examine the authority granted by Parliament to the Governor in Council for the making of the Ships Stores Regulations. That authority, as quoted above, is, for excise tax purposes, found in subsection 59(3.2) of that Act which, for convenience I will quote again. 59.(3.2) The Governor in Council may make regulations designating, for the purposes of sections 68.17 and 70, certain classes of goods as ships' stores for use on board a conveyance within such class of conveyances as may be prescribed in the regulations and limiting the quantity of such goods that may be so used. . . . 59.(3.2) Le gouverneur en conseil peut, par règlement, désigner, pour l'application des articles 68.17 et 70, certaines catégories de marchandises comme des approvisionnements de navires devant servir à bord d'un moyen de transport d'une catégorie désignée par règlement et limiter la quantité des marchandises. . . . I accept that we should try to ascertain a purpose in this regulation-making power which could be determinative of the validity of the regulations. For example in Alaska Trainship Corporation v. Pacific Pilotage (supra para. 20), the governing Act stated that the purpose of a Pilotage Authority was to "administer in the interests of safety". The Supreme Court held that Parliament intended, in granting the Pilotage Authority power to make regulations, to thereby advance the safety of shipping. The Authority adopted a regulation which required the use of pilots on all larger vessels except for ships registered in Canada. The Court concluded that this was not referable to safety but had probably been adopted for protectionist economic reasons and was therefore invalid. [23] We do not have a similar purpose clause in the Excise Tax Act to assist us and we must instead try to determine what Parliament meant by giving the Governor in Council power to designate classes of goods as ships' stores "for use on board a conveyance within such class of conveyances as may be prescribed in the regulations". The appellants argue that while conveyances using "ships stores" may be classified by physical features which distinguish them, or perhaps by other inherent characteristics, they cannot be classified for purposes of the Act in terms of the geographic area which they traverse. To do this is to discriminate fiscally between one part of the country and another. [24] There is nothing in the language of the section authorizing the designation of ships' stores to suggest that Parliament intended the Governor in Council to be able to distinguish between ships which happen to travel in one part of the country compared to those which travel in another. Nor am I persuaded that there is any such underlying rationale implicit in the section. The only rationale for the regulations offered by counsel for the respondent was based on a comment made by the Minister of Customs and Excise in Parliament in 1926, who explained that the exemption for ships' stores was intended "to encourage vessels to fit out in Canadian ports". Counsel suggested that this meant that where ships had an alternative to fitting out in Canadian ports (e.g. taking on supplies of fuel in another country) then the intention was to create a tax exemption on fuel they purchased in Canada to induce them to buy their fuel here rather than in a foreign port. Nowhere is this indicated in the Act itself, whose main purpose appears to be the raising of revenue. Assuming, however, as the respondents have invited us to do, that the rationale is based on economic protectionism through taxation, a concept not unfamiliar in taxation statutes, the regulations still do not appear to conform to that rationale. [25] The 1986 regulations, as has been seen, exempted all ships travelling on fresh water bodies, as well as on the St. Lawrence River down to a line drawn from Cap-des-Rosiers to Anticosti Island thence to the north shore (obviously embracing some salt water). It did not exempt ships travelling in any other of the internal waters of Canada being salt water. I am unable to understand how this distinction furthers the purpose of encouraging vessels "to fit out in Canadian ports". Why should vessels plying the waters of Georgian Bay, for example, have an exemption when they have no obvious opportunity to "fit out" in any foreign port? Or why should ferries travelling in the Strait of Georgia, being part of British Columbia (see Re: Ownership of the Bed of the Strait of Georgia [1984] 1 S.C.R. 388) not be exempted, when in fact it would be possible for them to load fuel at a U.S. source adjacent to British Columbia? A ship plying the waters of Lake Ontario which might make a diversion to fuel in the United States would be exempted, but a B.C. ferry based at Tsawwassen, within three kilometres of U.S. territory, would not get an exemption designed to encourage it to buy its fuel in Canada. A voyage from Sarnia to Toronto would involve a ship engaged in trade on the "inland waters" of Canada as defined in the Customs Act for the purposes of the 1986 regulations (and its fuel would be exempt), but a vessel travelling from Tsawwassen to Sidney on Vancouver Island would not be on a voyage on "inland waters" as so defined and its fuel would not be exempt. Or compare the situation under the 1986 regulations of the B.C. ferry to that of a vessel travelling from Montreal to Québec. Unlike the B.C. ferry, the Québec vessel travelling between Montreal and Québec would have had no possibility of fuelling in the United States but it would have been exempt from tax. [26] I therefore conclude that the 1986 regulations cannot be seen as serving the only rationale offered for them, namely the encouragement of purchasing ships' supplies in Canada. [27] The 1988 regulations demonstrate even less relationship to the alleged rationale of protecting Canadian suppliers over foreign suppliers. It will be recalled that by the 1988 regulations, reenacted in 1993, no ships travelling on internal waters of Canada, whether fresh or salt, are exempted from the tax except those travelling on Lakes Ontario, Erie, Huron (including Georgian Bay) and Superior, together with the lower St. Lawrence River between a line drawn from Father Point to Point Orient and a line drawn from Cap-des-Rosiers to West Point Anticosti Island and onward to the north shore, as well as on any "sheltered waters on the sea-coast of Canada" as the Minister may specify. (The Court was not advised as to what waters, if any, had been so specified, but it was common ground that none relevant to the appellants had been specified). Again there are many anomalies which belie the rationale advanced for these regulations. One must wonder, for example, why voyages on Georgian Bay are exempt but those on Lake Winnipeg or Great Slave Lake are not? If possible access to U.S. fuelling is the criterion for granting an exemption, why are Great Lakes vessels exempted while those travelling on the St. Lawrence River where one bank is U.S. territory are not? Why should a voyage from Hamilton to Niagara on the Lake be exempt, but a voyage from Québec to Tadoussac would not? Why are vessels traversing coastal inland waters of Canada near to the United States, where there might be an opportunity for refuelling in the U.S., not exempted while those travelling on Lake Ontario are exempted? Why should a ferry trip from Toronto to Toronto Island be exempt, but one from Vancouver to Vancouver Island should not? Why is the area of the lower St. Lawrence between Father Point and Cap-des-Rosiers, in the area of Matane, Sept-Îles and Baie Comeau, exempted where there are no alternatives to refuelling in Canada? What logic informed these choices made in 1988? [28] If we accept that the rationale for Parliament authorizing the making of such regulations was to support some form of protectionism for Canadian suppliers as opposed to foreign suppliers, then these regulations are not designed to serve that purpose. At best they appear designed to give a fiscal preference to certain areas of the country compared to certain other areas. I am unable to see how this can be justified under subsection 59(3.2) as making distinctions between "classes of conveyances". The conveyances in question, ships, are not classified by these regulations as such. Indeed the same ship, such as vessels using the St. Lawrence seaway, could at various stages in the same voyage be exempted or not exempted from the tax. Thus even if the respondents are wrong in asserting the rationale for the regulations to be that suggested in a 1926 debate in Parliament, the distinctions made by the regulations based on the area of voyages taken cannot be supported by the bare language of the section which only allows the Governor in Council to designate certain "classes of goods . . . for use on board a conveyance within such class of conveyances as may be prescribed". [29] For these reasons I must conclude that the regulations in excluding the plaintiffs from an exemption were invalid throughout the period in question. 3. If the Regulations are invalid in whole or in part, what remedy can the Court give in respect of these Regulations? [30] The problem the Court is faced with is: if the scheme of the designation of "ships' stores" was unauthorized in that it distinguished between those which are entitled to the exemption and those which are not on a basis unrelated to the purpose of the grant of regulation-making power, what should be the consequence? Should the Ships' Stores Regulations from 1986 onward be considered entirely invalid in respect of their designation of exempted ships so as to deny their benefits to all ship operators? Should the Court revise the regulations to give the appellants relief, by striking out the invalid parts or by reading in language that would extend the exemption to them? Should the regulations be severed so as to preserve their benefits for those previously entitled? Or should the Court simply declare that this is not a valid exercise of the regulation-making power? [31] Unfortunately counsel have provided the Court with only limited assistance on the matter of remedies. The appellants ask that we strike out all other limitations on the meaning of "inland waters" from association with the definition in section 2 of the Ships Stores Regulations that an "inland waters ship" means a ship engaged in trade between ports on the inland waters of Canada I take it that, on this approach, "inland waters" would remain undefined except under common law or international law, both of which would treat the Strait of Georgia as inland waters and thus give the appellants an exemption. Counsel for the respondents, on the other hand, argues that this would lead to an absurd result where every ship travelling in Canada would be exempted from fuel tax. He contends instead that if the Court finds the present distribution between the exempt and the non-exempt ships to be unauthorized, then the whole of the Regulations should be struck down. As will be seen, neither of these solutions is very satisfactory. [32] In determining first whether the whole of the regulations should be struck down because of their invalid effect on the appellants, the Court can, I believe, derive some guidance from the jurisprudence developed by the Supreme Court of Canada in respect of legislative provisions rendered invalid by the Constitution Act, 1867, and by the Canadian Charter of Rights and Freedoms. It has already been recognized by this Court in Alaska Trainship Corporation et al v. Pacific Pilotage Authority this Court ([1982] F.C. 54 at 79-82) and by the Supreme Court of Canada on appeal ([1981] 1 S.C.R. 261 at 277-8) that tests of severability developed in pre-Charter cases involving the constitutional invalidity of portions of statutes could apply to regulations containing provisions not authorized by the enabling statute. There appear to be two main options. Either the Court can sever and annul the impugned portion where it can be determined that that portion was intended by the legislator to be cumulative, not dependent on other provisions, and was "enacted distributively and not with the intention that either all or none should come into force" (statement by Rand J. in Reference as to the validity of section 5(a) of the Dairy Industry Act [1949] S.C.R. 1 at 53-54). Or the Court can refuse to sever where it considers that after finding a certain portion to be invalid [W]hat remains is so inextricably bound up with the part declared invalid that what remains cannot independently survive . . . . (Viscount Simon in Attorney General for Alberta v. Attorney General for Canada (1947) A.C. 503 at 518). In the Alaska Trainship case involving regulations made by the Pacific Pilotage Authority under the Pilotage Act, 1971, this Court applied the latter characterization holding the whole of an exempting regulation to be invalid. However Laskin C.J., writing for the Supreme Court on appeal, applied the former characterization, found the impugned portion to be invalid and severable, and allowed the remainder of the regulation to apply. In that case the net effect was for the ship in question to gain an immunity from compulsory pilotage requirements because, by the Court striking out a few words which had excluded the ship from the exemption, the remainder of the section became applicable to it and it would thus enjoy the exemption. It is important to note that the court's goal in both sets of reasons was to determine what the intent of the law-maker (there the Pilotage Authority) would have been if it had contemplated the possibility that some of the regulations might be invalid. [33] In the present case I believe that I should apply the "cumulative" approach adopted by Chief Justice Laskin in the Alaska Trainship case. While it is always difficult to gauge the intention of the legislator -- here the Governor in Council -- and to decide whether its members would have adopted the taxation exemptions in respect of ships' stores of other operators if they had known they could not distinguish in this way between the beneficiaries of their largesse and those denied that largesse, I believe it is reasonable to assume that they would have done so. That is, it appears to me that in both 1986 and 1988 the Governor in Council intended to give the benefits to those they did choose and that such largesse was not dependent on denying those benefits to others. It does not appear to me that the denial of benefits to some and the grant of it to others were "inextricably bound" together. It might be otherwise if for example the vessels were operating in the same area and benefits were given to a selected few to give them a competitive advantage in the same market. That is not the scheme here, where, by definition, ships enjoying the tax exemption and those not enjoying it operate in geographically distinct areas and there seems to be no schematic connection between the fiscal advantages conferred on some and the disadvantages applied to others. [34] In fact I do not understand any of the statements of claim filed in these cases to seek a declaration of invalidity of all the exemptions as ships' stores of diesel fuel used on "inland waters ships" except in the context of declaring invalid all purported amendments to the 1986 regulations. (But those regulations if never amended would still exempt many of the same ships). What the statements of claim do appear to call for, inter alia, is severance and invalidation of the definitions which exclude the appellants' ships from treatment as "inland waters ships". [35] While I am for these reasons prepared to declare invalid their exclusion of the appellants on the basis adopted by the Ships Stores Regulations, from the potential benefits of those Regulations, the question remains as to whether the Court can rewrite the regulations so as to grant retroactively a tax exemption to them. [36] The problem is that basically the appellants are obliged to pay excise tax on their diesel fuel used as "ships stores" by virtue of subsection 23(1) of the Excise Tax Act. That obligation remains. To be able to claim an exemption or right of refund or drawback for taxes paid in the past, they must be able to point to some exempting provision in the Ships Stores Regulations made under subsection 59(3.2) of that Act applicable to them. If this Court were to do as the appellants request, namely to treat the whole incorporation in the Ships Stores Regulations of the Canada Shipping Act definitions of "inland voyage" as invalid, this would, if it achieved the appellants' purpose, equally exempt all vessels engaged on what the common law or international law would regard as an "inland voyage", that is a voyage on Canada's inland waters. [37] We are thus faced with a situation now familiar in Charter litigation in the area of social benefits; namely, that we have a legislative scheme which is "under-inclusive" in conferring its benefits. The criteria for judicial remedies in respect of under-inclusive legislation were analysed at length in H.M. v. Schachter et al ([1992] 2 S.C.R. 679) and these criteria have been applied since. (See e.g. Vriend v. Alberta [1998] 1 S.C.R. 493; M. v. H. [1999] 2 S.C.R. 3). In my view, with at least one exception, the criteria articulated there should also be applied in this non-constitutional area of ultra vires delegated legislation. In both cases the lawmaker has ignored either Charter or statutory limits on its authority in the distinctions it makes between those who are entitled to benefits and those who are not. In both cases if a court finds the denial of benefits to some to be unauthorized, to give that disadvantaged group an equivalent benefit it must either "read out" (i.e. sever) offending barriers or "read in" certain provisions which will remedy that provision. In Schachter, the Supreme Court laid down criteria for reading out or reading in and those criteria were mainly designed to give effect to the presumed will of the lawmaker. It seems to me that similar principles should apply to reading in, in the case of offending regulations. There is however at least one distinction between criteria applied to correct any violation of the Charter and criteria applied to correct unauthorized delegated legislation. In the Charter context, as stated in Schachter, there is an extra factor militating in favour of reading in, in order to "protect the purposes of the Charter". For example, as the Charter dictates equal benefits under the law a court should, in balancing various factors in favour and against reading in, give some weight to the importance of directly bringing about, through judicial remedy, the immediate extension of equal benefits to those wrongfully deprived. In a case of delegated legislation such as the present regulations, however, there is no particular principle of equality mandated by the governing law, the Excise Tax Act, nor does the evidence establish that we have a class of needy appellants, isolated from the mainstream and historically disadvantaged. [38] The criteria which the Supreme Court laid down in Schachter for deciding when it is appropriate for a court to revise laws through striking out, or reading in, include: fidelity, as much as possible, to the scheme enacted by the law maker; if reading in or reading out is to be attempted by excising words which exclude the aggrieved group, would this so change the nature of the scheme to be inappropriate; is the group to which benefits are to be extended larger than the group originally granted those benefits (this is relevant to whether it can be assumed that the legislature could ever have contemplated a scheme including those now sought to be included); and if the exclusion from benefits of a certain class has been of long standing it may more readily be assumed that the lawmaker has deliberately adopted and continued such a policy which should not be lightly overturned by the Court. These factors all assist the Court in determining whether it can, by excision or deemed additions, eliminate the discrimination in a reasonably precise manner while credibly implementing what would have been the intention of the lawmaker had it been aware that the exclusion it adopted would be found invalid. [39] In the present case I have concluded above that the distinctions which the Governor in Council did make in the Ships Stores Regulations could not be justified on the basis of the apparent purpose of the legislation authorizing those regulations. But I believe it is beyond the role of this Court in effect to devise a valid scheme for exempting "ships stores" through selective excisions or additions to the Ships Stores Regulations, or to the statutory definitions of "inland waters" or "inland voyage" or "minor waters of Canada" incorporated by reference in the regulations. I believe that a meaningful pursuit of the stated purpose of the tax exemption would require an extensive knowledge of the shipping industry. For example, we have no evidence before us as to the relative costs to the treasury of the scheme as it now exists and the scheme which the appellants would have us endorse, namely one of exemption of all vessels travelling in the inland waters of Canada (the definition of "inland waters" apparently being a matter left to common law and international law). [40] In short, there is no practical way in which the Court can, through selective nullification of the regulations and their adopted definitions, or by reading in some simple exemptions, design a scheme which we could confidently pronounce as accurately implementing the intention of the Excise Tax Act in its conferral of the regulation-making power in subsection 59(3.2), nor which we could hold out as implementing an intention which the Governor in Council would have had, had it known the discrimination against the appellants to be invalid. We therefore cannot give the appellants a retroactive entitlement to claim refunds or drawbacks under the existing Ships Stores Regulations. Nor, for reasons which have been given, is it appropriate to strike down the regulations as of 1986 or 1988, because we are unable to say that the Governor in Council would not have intended to benefit the ship operators who were and are benefited under the regulations, had it known that it could not validly exclude everybody else from benefits. [41] In the circumstances, for the same rationale as prevailed in Schachter, the best solution would appear to be a delayed declaration of the invalidity of the Ships Stores Regulations. This will enable the Governor in Council to devise a scheme which is legally defensible given the terms of its regulation-making authority under the Excise Tax Act. It will prevent the indefinite continuation of a discriminatory scheme for which the respondent has provided no rationale explanation supported by the facts of the Canadian shipping industry. As the Governor in Council should be able to take corrective action much more quickly than Parliament I would set the effective date of a declaration of invalidity of the Ships Stores Regulations at October 1, 2001. 4. If the Regulations should have been retroactively invalidated could the appellants recover for unjust enrichment? [42] In case this matter should go farther I would also hold that, even if the Ships Stores Regulations were found to be invalid during part or all of the period during which the appellants paid the tax on diesel fuel and later sought refunds or drawbacks, they cannot claim recovery of these funds on the basis of restitution through the unjust enrichment of the respondents. Section 71 of the Excise Tax Act provides as follows: 71. Except as provided in this or any other Act of Parliament, no person has a right of action against Her Majesty for the recovery of any moneys paid to Her Majesty that are taken into account by Her Majesty as taxes, penalties, interest or other sums under this Act. 71. Sauf cas prévu à la présente loi ou dans toute autre loi fédérale, nul n'a le droit d'intenter une action contre Sa Majesté pour le recouvrement de sommes payées à Sa Majesté, dont elle a tenu compte à titre de taxes, de pénalités, d'intérêts ou d'autres sommes en vertu de la présente loi. In my view this section is sufficiently comprehensive to preclude any such common law or equitable remedy. It is apparent that the sums involved here were "taken into account by Her Majesty as taxes. . .". What is at issue is a possible refund of taxes. This is not a case where the taxation would have been constitutionally invalid and where a bar to recovery might be attacked as unconstitutional. It is common ground that Parliament could constitutionally have authorized a geographically-based exclusion from exemption from a tax which is of itself unquestionably valid. [43] I believe the jurisprudence of this Court supports that position. In Consumers Glass Co. Ltd. v. Canada ((1989) 107 N.R. 156) it was held that where taxes are lawfully collected even if by mistake of law the taxpayer was limited to the remedies, including the limitation periods, provided by the Customs Act. There could be no recovery for unjust enrichment because initially there was a legal obligation to pay. By implication the Court held that the statutory scheme for recovery had replaced any common law (or, presumably, equitable) remedies. This case was followed by the Trial Division in Michelin Tires (Canada) Ltd. v. H.M. (November 26, 1998, T-871-93; confirmed on other grounds A-775-98, May 7, 2001 (F.C.A.)). Very recently this Court in Federated Cooperatives Limited v. H.M. (February 15, 2001, A-594-99) held that a claim for recovery of taxes paid under a mistake is not a claim for an equitable remedy such as for restitution for unjust enrichment. The Court expressly declined to decide whether, prior to the amendment of the Excise Tax Act in 1985 and in 1986, the provisions restricting the refund of overpaid tax constituted a complete code so as to preclude non-statutory claims for the repayment of taxes paid in error. Nevertheless it applied normal limitation restrictions to such actions. For present purposes, it is significant that the Court in Federated Corporatives did not find in that action, as pleaded, the necessary allegations for equitable relief based on a constructive trust. There is no such pleading in the present case either. [44] I am reinforced in my conclusion by what Reed J. said in the Michelin case where she pointed out that finality in tax matters, after the lapse of a reasonable period for reassessments initiated by either taxpayer or government, is for the benefit of both. (Cited supra para. 43, at para 12 of that judgment). Disposition [45] The appeals should therefore be allowed in part, with a declaration effective October 1, 2001 that the Ships Stores Regulations are invalid because for the reasons herein they are not within the authority granted to the Governor in Council by subsection 59(3.2) of the Excise Tax Act to designate "certain classes of goods as ships' stores for use on board a conveyance within such class of conveyances as may be prescribed in the regulations . . . .". The appellants should be entitled to one set of costs in the four appeals. J.A. I agree A.M. Linden I agree J. Edgar Sexton J.A.