Teck Corporation v. Minister of Finance

Teck Corporation v. Minister of Finance Collection Decisions of the Court of Appeal Date 1999-09-09 Docket numbers C31290 Judges Goudge, Stephen Thomas; Borins, Stephen; MacPherson, James C. Subject Civil Decision Content DATE: 19990909 DOCKET: C31290 COURT OF APPEAL FOR ONTARIO GOUDGE, BORINS AND MacPHERSON JJ.A. BETWEEN: ) ) TECK CORPORATION ) Warren J. A. Mitchell, Q.C. ) for the appellant Plaintiff ) (Appellant) ) ) - and - ) Chia-yi Chua, ) for the respondent THE MINISTER OF FINANCE ) ) Defendant ) (Respondent) ) ) Heard: August 10, 1999 ) On appeal from the decision of Mr. Justice A. Rosenberg dated December 17, 1998 GOUDGE J.A.: [1] Pursuant to Rule 22 of the Rules of Civil Procedure, Teck Corporation brought a motion on an agreed statement of facts seeking an answer to the following question: "Can Teck claim the [tax] exemption afforded to a 'major expansion of an existing mine' if the mine is not in operation for the five calendar years preceding the year of the expansion?" [2] On December 17, 1998, Rosenberg J. answered this question in the negative on the basis of his interpretation of the relevant provisions of the Mining Tax Act, R.S.O. 1990, c. M.15 (the "Act") and the regulation made thereunder, Regulation 769 R.R.O. 1990 (the "Regulation"). [3] Teck appealed, arguing first that the Act gave it this exemption and, second, that there were no technical defects in its filing that could deny Teck the exemption. [4] At the conclusion of Teck's argument, the court indicated that it agreed with the statutory interpretation of Rosenberg J., that the appeal must therefore be dismissed with costs, and as a consequence, the court need not address the technical defects said by the Minister of Finance to deprive Teck of the exemption it asserts. The court also indicated that it would issue reasons for its decision. These are those reasons. [5] The provisions of the Act and the Regulation that are relevant to this matter are as follows: Section 1(1) of the Act: "mine" means any opening in the ground, any working of the ground and any tailings source from or by which any mineral substance is taken, and comprises the mining claim, mining location and the whole parcel of land in which any such tailings source does or did exist or such workings are or have been carried on in Ontario; 3(6) If the operator so elects, the operator's profit for the taxation year shall not include the operator's profit, if any, as determined under subsection (b), earned during that portion of the exempt period that falls within the taxation year, (a) from a new mine that has come into existence after the 20th day of May, 1987; or (b) from a major expansion of an existing mine that has occurred after the 20th day of May 1987, in which the operator has an interest, upon the filing of a declaration in the prescribed form with the operator's return under subsection 7(1) for the first taxation year in which a portion of the exempt period occurs. 3(9) In subsection (6), (8) and (11), "exempt period" means, in respect of a new mine that has come into existence or a major expansion of an existing mine that has occurred, the thirty six month period commencing with the month during which the new mine or the major expansion came into production in reasonable commercial quantities. 3(10) For the purpose of subsection (9), a new mine or a major expansion of an existing mine shall be deemed to have come into production in reasonable commercial quantities, (a) in the case of a new mine, on the first day of the month when the operator thereof first becomes entitled to receive proceeds from the output of the mine; and (b) in the case of a major expansion of an existing mine, on the first day that the rate of production of mineral substances from the expanded mine exceeded by at least 30 per cent the average daily rate of production of mineral substances from the mine during each of the five calendar years ending immediately before the calendar year in which the first outlay was made to expand the mine. Subsection 7(2) of Regulation 769: For the purposes of subsection 3(6) of the Act, a major expansion of an existing mine shall be considered to occur after the 20th day of May, 1987 where, (a) as a result of an investment in an existing mine, the daily rate of production of mineral substances from the mine exceeds by at least 30 per cent the average daily rate of production of the mine during each of the five calendar years ending immediately before the calendar year in which the first outlay was made to expand the mine; [6] The facts germane to this matter are these. [7] The claim for exemption was made by Teck as the operator of the Williams mine situated on a property in Northern Ontario. The plan of development for the mine was settled on in 1984. However, ore production did not commence until October 1985. Hence, the parties agreed that prior to 1985 the property was not a mine for the purposes of the Act. [8] In July of 1987 the first expenditures were made to significantly expand the mine. The first day on which production from the mine, including the expansion, exceeded by 30 per cent the average daily rate of production from the mine for each of the years 1985, 1986, and 1987 occurred in September 1988. [9] Teck first claimed an exemption for the major expansion of an existing mine in its return under the Act for 1988. Teck defined the "average daily rate of production" of the mine during each of the five calendar years ending immediately before the calendar year in which the first outlay was made to expand the mine as follows: 1982 0 1983 0 1984 0 1985 2,208 tonnes per day 1986 3,369 tonnes per day [10] The Minister disallowed Teck's claim for exemption on the basis that Teck could not undertake a major expansion of an existing mine within the meaning of the Act unless the mine had been in production for the five calendar years preceding the commencement of the expansion. Following this disallowance, the case was stated to Rosenberg J. ANALYSIS [11] Given this context, what is the appropriate interpretation to be given to the relevant provisions of the Act and the Regulation? As Professor Sullivan states in Driedger on the Construction of Statutes, 3rd ed., at p. 131: An appropriate interpretation is one that can be justified in terms of (a) its plausibility, that is, its compliance with the legislative text; (b) its efficacy, that is, its promotion of the legislative purpose; and (c) its acceptability, that is, the outcome is reasonable and just. [12] I turn first to the ordinary meaning of the legislative text because, as Professor Sullivan says at p. 7 of her book, it is presumed that this is the most appropriate meaning and in the absence of a reason to reject it, the ordinary meaning prevails. [13] The critical pre-condition for the exemption is set out in s. 3(10)(b) of the Act and repeated almost precisely in s. 7(2) of the Regulation: a major expansion of an existing mine occurs once the daily rate of production from the mine "exceeds by at least 30 per cent the average daily rate of production from the mine during each of the five calendar years ending immediately before the calendar year in which the first outlay was made to expand the mine". [14] The first outlay to expand the Williams mine was made in 1987. Teck argues that by 1988 the daily production from the mine, including the expansion, exceeded by at least 30 per cent the relevant numbers for each of the five years preceding 1987, namely 0, 0, 0, 2,208 tonnes per day, and 3,369 tonnes per day. [15] The Minister argues that the exemption requires the mine to be operating in each of the five relevant years, because only then can the required comparison be made with the average daily rate of production during each of those five years. [16] In my view, the ordinary meaning of the legislation sustains the Minister's position. The legislation conditions the exemption on a comparison between the daily production post-expansion and the average daily rate of production for each of the five years preceding the first outlay for the expansion. For there to be an average daily rate of production from a mine for each of those five years, there must be a mine in existence in each of those years. Only an existing mine can have a daily rate of production which can be averaged. In this case, it is acknowledged that there was no mine in existence for three of those five years, namely 1982, 1983 and 1984. The exemption was therefore unavailable. [17] The position of Teck would, I think, necessitate rather different legislative language, such as language that required the expanded production to exceed the production during "any" of the prior five years. Such language would not indicate a legislative intention that the mine be in existence in each of the five relevant years. This is not, however, the wording of this Act and this Regulation. [18] Moreover, it does no violence to the legislative purpose to interpret this legislation as requiring that the major expansion exemption be available to a mine only if it has been in operation for the five years preceding the year of expansion. This legislation is designed to encourage new mines and major expansions of existing mines, but also to raise tax revenue. A mine in the position of the Williams mine receives an exemption in its first three years of operation as a new mine. It must then pay taxes for two years before it can then commence a major expansion which will entitle it to a further three-year exemption. This outcome is true to the legislative purpose. [19] In summary, the statutory interpretation given by Rosenberg J. reflects the ordinary meaning of the Act and the Regulation. It is consistent with the legislative purpose and achieves a reasonable and balanced outcome. In my view, it is the correct interpretation. [20] The major expansion exemption is, therefore, not available to the appellant. The appeal must be dismissed with costs. RELEASED: September 9, 1999 “S. Goudge J.A.” “I agree S. Borins J.A.” “I agree J.C. MacPherson J.A.”