THE CHIEF JUSTICE :—The contract in this case was a contract for building the superstructure of a bridge and the erection of it and the securing of it; and the contract price was an entire price for the entire job. It was not, in the ordinary sense of the words, a contract, I think, for the sale of the superstructure or for the sale of the members of the superstructure. The production, however, of the members of the superstructure for the purpose of fulfilling the contract would bring the case within section 87(d) (Special War Revenue Act, R.S.C. 1927, ¢ 179 and amendments).
In The King v. Fraser Companies, [1931] S.C.R. 490, four judges of this Court (Newcombe, Rinfret, Lamont and Smith JJ.) expressed the view touching the application of section 87(d) to the facts of that case which, I think, applies here. In the judgment of those learned judges, delivered by Smith J., it is said (p. 493) :
* * * it is not unusual for a manufacturer engaged in the production and manufacture of lumber for sale to engage at the same time in the business of a building contractor. He manufactures his lumber for sale, and, as a general rule, would not manufacture any specific lumber for use in connection with his building contracts, but would simply take lumber for these purposes from the general stock manufactured for sale, and might thus, under the view taken in the court below, escape taxation on all lumber thus diverted from the general stock manufactured for sale.
I am of the opinion that, construing the provisions of the Act as a whole, the respondent is liable for taxes on the lumber consumed by him, as claimed.
This passage in the reasons of my brother Smith was not part of the ratio decidendi but it was the considered opinion of the four judges who constituted the majority of the Court. They said that, if a building contractor is also a manufacturer of building material, lumber or brick for example, and uses, for the purpose of executing a building contract, brick or lumber produced by himself, that is a case within section 87(d) and the transaction is, by force of that section, deemed to be a sale and he is chargeable accordingly. In the present case the members of the bridge produced were produced specially for the purposes of the contract.
I have fully considered the able argument addressed to us by Mr. Forsyth and my conclusion is that, when sections 86 and 87 are read together, this transaction falls within the category of cases described by section 87(d), and that the view expressed by my brother Smith in Fraser’s case, [1931] S.C.R. 490, is the view which ought to govern us in the disposition of this appeal. I think, in this respect, the practice of the Department is right.
Then comes the question, the real question I think on the appeal, whether in such circumstances section 105 applies. Section 105 is in these words :
105. A refund of the amount of taxes paid under Parts X, XI, XII and XIII of this Act may be granted to a manufacturer, producer, wholesaler, jobber or other dealer on goods sold to His Majesty in the right of the Government of any province of Canada, if the said goods are purchased by His Majesty, for any purpose other than purposes of resale or of any railway, commission, board or public utility which is operated by or under the authority of the Legislature or the Lieutenant-Governor in Council of the province.
The question to be decided is not without difficulty. I have come to the conclusion that "‘goods’’ are "‘sold’’ within the meaning of this section when there is a sale that is such solely by foree of the statutory declaration that it shall be deemed to be a sale for the purposes of the statute. Section 105 is part of the statute and transactions within the declaration are, therefore, deemed to be sales for the purposes of the section. A transaction within section 87(2), for example, would, if the other conditions were fulfilled, be a sale within section 105.
Mr. Vareoe’s argument is that here, while the transaction (the production of the goods in question for the use of the producer in fulfilling this contract) is deemed to be a sale by force of the statute, the goods produced are not "‘sold’’ to the provincial government. This argument has force and I have given it attentive consideration. The "‘use’’ of these goods for the purposes of the respondents in fulfilling the contract involves a translation of the property in them to the provincial government by force of the contract under which the entire consideration for the whole work is payable by the provincial government to the respondents.
Our duty, as Lord Hailsham said in Dominion Press v. Minister of Customs, [1928] A.C. 340 at 342, is to ascertain whether the goods are " " sold ‘ to the provincial government within the meaning of those words as employed in the statute. I think, in view of the fact mentioned, that the ‘‘transaction’’ involves translation of the property in the goods to the provincial government, the proper view, when the provisions of sections 86 and 87 are taken into account as a whole, is that it falls within section 105. The appeal should be dismissed with costs.
Appeal dismissed with costs.