In order to divert to itself the increase in the price of oil that occurred after 1973, the Legislature of Saskatchewan enacted a "mineral income tax" approximately equal to 100% of the difference between the price received at the well-head and the price formerly received by the producers. Virtually all the oil produced in Saskatchewan was exported to other parts of Canada or the United States.
After rejecting a submission that this "royaty surcharge" was a "royatlty" (whose customary meaning was "a share of the production obtained by the lessee" (p. 561), Martland J. found (p. 564) that "the tax under consideration is essentially an export tax imposed upon oil production" and therefore was in substance an indirect tax which was beyond the competence of the Saskatchewan Legislature.