Therm-O-Comfort Co. Ltd. v. Canada
T-1361-94
Tremblay-Lamer J.
31/7/98
22 pp.
Appeal from Canadian International Trade Tribunal decision-Plaintiff manufacturing Fibramulch, cellulose insulation, by grinding down newsprint, adding green dye-Acting as medium for growing grass-Once sold, combined with grass seed, wetting agent, placed in lieu of sod on sides of hills, other difficult areas where seed and fertilizer cannot be incorporated into soil using conventional farming equipment-Minister of National Revenue assessed plaintiff for unpaid tax with respect to sales of Fibramulch-Excise Tax Act, s. 51(1) exempting from taxation all goods sold, imported mentioned in Schedule III-(1) Whether Fibramulch qualifying for exemption from tax as fertilizer, pest control product or peat moss-(i) Although no definition of "fertilizer" in Excise Tax Act, Fertilizers Act defining "fertilizer" as any substance or mixture containing nitrogen, phosphorous, potassium manufactured, sold or represented for use as plant nutrient-Fibramulch containing small quantities of those nutrients-Product not qualifying as fertilizer because containing some residual nutrient-Purpose of fertilizer to provide nutrition-If no minimum amount required, any plant material, straw, sawdust fertilizers-All fertilizers subject to labelling requirements in Fertilizer Regulations-Fibramulch labels not meeting these requirements-Not manufactured, sold, represented as fertilizer-Not meeting second part of definition of fertilizer-(ii) Plaintiff contending Fibramulch preparation for pest control purposes because concealing grass seeds from birds, preventing growth of weeds-Not pest control product because never intended for use for that purpose-That incidentally hiding, camouflaging seed from birds not sufficient for it to qualify as pest control preparation-S. 19 requiring preparation be used in agriculture or horticulture-No evidence Fibramulch used in agriculture-"Horticulture" defined as cultivation of gardens including growing of flowers, fruit, vegetables-Growing grass on hillsides, roadsides, not included in horticulture-Although occasionally nuisances in context of agriculture, birds not pests-(iii) Fibramulch meeting neither dictionary nor fertilizer evaluator's definition of "peat moss"-Neither containing any vegetable matter nor interchangeable with peat moss-Not qualifying as peat moss-(2) Whether property in cellulose insulation passed on to purchasers after July 1, 1985 thereby rendering goods subject to tax-By virtue of s. 50(1)(a)(i), sales tax imposed on price of goods manufactured in Canada only payable by manufacturer when goods delivered to purchaser or when property in goods passes, whichever coming first-Sales tax on insulation effective July 1, 1985-Delivery to customers taking place after that date-Ontario Sale of Goods Act governing transfer of property of goods subject of contract-Contract for sale of insulation bags sale of unascertained goods-S. 17 stipulating property in goods not passing to buyer until some act performed ascertaining which goods to be delivered to buyer-Good ascertained when more particularly identifiable after contract made-Sale of Goods Act otherwise letting parties determine specific moment at which want transfer of property of goods to occur-Plaintiff loading insulation bags in trailers immediately after manufactured-Tally sheet affixed to trailer indicating number of bags loaded-Once customer placed order, invoice number indicated on tally sheet-Contents of trailer could be assigned either entirely to one customer or to more than one customer-Invoices indicating all materials, equipment remaining property of Therm-O-Comfort Co. Ltd. until paid in full-President of Therm-O-Comfort recognizing invoice constituted contract between parties, aware of presence of impugned clause-Wording of contract establishing date of transfer of ownership-Invoices still outstanding July 1, 1987-Goods subject to sales tax-Appeal dismissed-Excise Tax Act, R.S.C., 1985, c. E-15, ss. 50(1) (as am. by R.S.C., 1985 (2nd Supp.), c. 42, s. 4), 51(1), Sch. III, Part IV, ss. 9, 18, 19-Fertilizers Act, R.S.C., 1985, c. F-10, s. 2 "fertilizer"-Fertilizers Regulations, C.R.C., c. 666, s. 16 (as am. by SOR/85-558, s. 8; 91-441, s. 3)-Sale of Goods Act, R.S.O. 1990, c. S.1, ss. 17, 18, 19.