M.F.F. Equities Limited v. The Queen

PIGEON J.:-In 1963 and 1964 appellant, then known as Monarch Fine Foods Limited, was manufacturing margarine. By its petition of right it seeks to recover the sum of $355,412.48 paid under protest for sales tax in respect of the sale of this product between April 7, 1963 and February 8, 1964. The claim for exemption is based on the contention that because a substantial proportion, varying between 48 per cent and 90 per cent, of the oil used as the 1 [19691 C.T.C. 29, 69, D.T.C. 5039.

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main component in the manufacture of this butter substitute was herring oil, it is to be considered as an edible M.F.F. product of fish within the meaning of the following item of ELmTES Schedule III of the Excise Tax Act under the heading "Foodstuffs":

THE QUEEN Fish and edible products thereof;

Pigeon J. Cattanach J. dismissed the petition saying:

In my view, in order to determine whether a particular product falls within an expression such as "Fish and edible products thereof;" resort must be had to the common understanding of such words when used in relation to articles of commerce. The question here is, therefore, whether, in the ordinary use of words, margarine may be fairly regarded as falling within the words, "Fish and edible products thereof;" or more specifically, applying such a test: is margarine a product of fish? I do not think that, in common parlance, the words "product of fish" can be considered as comprehending margarine, even though it contains fish oil as one of its principal ingredients. Margarine is itself a well known article of commerce and is neither marketed, purchased, nor thought of by the consumer as a product of fish.

It seems to me that the fish from which oil has been extracted and which is used in the manufacture of margarine, which is by no means the sole ingredient of the end product, has become so obscured by the processes to which it and the oil thereof has been subjected and by the oil being intermingled with substantial amounts of other ingredients from other sources, the whole of which is again the subject of an extensive manufacturing process, that the resultant margarine cannot be considered as a product of fish, even though the fish oil content may make the margarine a fish oil margarine and the labels thereon disclose the fish oil content.

Counsel for the appellant pointed out that before reaching the above stated conclusion, the trial judge had made a finding "that any margarine 40 per cent or over of the total oil content of which is fish oil is referred to in the trade as a fish or marine oil margarine". It must be noted however that this designation does not appear to be used in connection with retail sales. Fish or marine oil margarine is not sold to consumers as a fish product and is almost invariably sold with dairy products in the same way as vegetable oil margarine. A trade designation in such limited use cannot be considered as of substantial weight in ascertaining the proper description of the goods for the purposes with which we are concerned.

Reference was made to the decision of this Court in Townsend v. Northern Crown Bank-. In that case, the (1914), 49 S.C.R. 394, 20 D.L.R. 77.

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question was whether sawn lumber was a "product of the forest" within the meaning of s. 88 of the Bank Act. Duff J. (as he then was) said (at p. 398):

In my view, the trial judge applying this test was fully justified in reaching the conclusion that according to the common understanding margarine was not a product of fish, even when in specialized trading circles a particular kind was known as fish oil margarine.

Furthermore, although in some cases fish oil was the main raw material, in other cases and for a very substantial quantity it was only approximately one half the main raw material, it being mixed with an equal or nearly equal quantity of vegetable oil. Also, it was shown that all the fish oil used was treated to remove any odour or colour identifying it with fish so that, for the consumer, the product would be undistinguishable from margarine made from vegetable oil only. Finally, the refined, bleached and deodorized oil was hydrogenated, a process altering its chemical nature to such extent that, as Dr. Sims said, it was "no longer a fish oil, but a derivative of fish oil".

It was contended that this amendment of the statute could be considered in construing the former text on the same basis as this Court did consider an amendment of a zoning by-law in construing its original provisions in Wilson v. Jones'. I must point out that the two situations are