Smith J rejected the Crown position that such interchange financial services supplied by RBC to the non-resident merchant acquirer (found at para. 87 to be the recipient) were not zero-rated under Sched. VI, Pt. IX, s. 1 by virtue of the exclusion in para. 1(a) thereof for a “service [that] relates to (a) a debt that arises from … (ii) the lending of money that is primarily for use in Canada”. He noted that, in contrast to para. (g) of the financial service definition, which referred to “the making of any advance, the granting of any credit or the lending of money”, the carve-out in subpara. 1(a)(ii) referred only to the “lending of money”. Before going on to find that RBC was not lending money to the foreign bank but, rather, advancing credit, so that the exclusion in s. 1(a) did not apply, he stated (at para. 76):
[T]he phrase “relate to” should be narrowly construed as a broad interpretation of the carve-outs would defeat the policy objectives. See Ike Enterprises Inc. v. The Queen, 2017 TCC 59 (paras. 48-49). This is consistent with the conclusion reached in National Bank Life Insurance Company v. The Queen, 2005 TCC 425, where Lamarre J. (as she then was) found that when Parliament makes a rule and lists certain exceptions, the latter must be regarded as exhaustive and so strictly construed. She recognized the principle that exceptions should not be extended and if there was any doubt, the general rule should be favoured over the exception (paras. 38-40).