Rookie Blue Two Inc. v. Her Majesty the Queen, 2015 ONSC 1618

By F.L. Myers, J.
Ontario Superior Court
Mar 14, 2015


B E T W E E N:








- and -




Larry Nevsky,

for the Appellant



 Andrea Jackett,

for the Respondent



HEARD: March 10, 2015

F.L. Myers J.


From there to here, from here to there,
 funny things are everywhere![1]


[1]               This case requires the court to determine the meaning of the word “from” as used in s.92(5.3)(d) of the Taxation Act, 2007, S.O. 2007, c.11, Schedule A.  The section has never been subject to judicial consideration.  There are no references to the section in Hansard or budget commentary preceding its enactment.  When you have to quote Dr. Suess for a pithy opening, you know the legal cupboard is bare.

[2]               For the reasons that follow, the appeal is allowed.

The Issue

[3]               By agreed statement of facts, the parties acknowledge that the appellant produced the television series entitled “Rookie Blue”.  The appeal pertains to the second season of the production involving 13 episodes.  The appellant is a “Qualifying Corporation” entitling it to the benefit of the Ontario Production Services Tax Credit under section 92 of the statute.  The sole issue in the appeal is whether the Minister was entitled to refuse to allow the appellant to include expenditures incurred by the appellant for writing services in the calculation of expenses eligible for the tax credit.

[4]               Clause 92(5.3)(d) of the statute allows a qualifying corporation to include in the calculus of its tax credit application the costs for services, “for the stages of production of the production, from the final script stage to the end of the post-production stage”.  The Minister found that the only expenditures for which the credit can be claimed are those which are incurred after the final script stage of the production.  The Minister found that the writing services claimed by the appellant did not relate to services provided after the final script stage and therefore were ineligible under the statute.  The appellant says that the phrase “from the final script stage” includes costs incurred during that stage and that the Minister erred in interpreting the word “from” to mean “after”.

The Relevant Facts

[5]               The agreed statement of facts describes the process involved in writing a television series.  First, the producer hires writers.  The writers develop a plan.  Initial scripts are developed for each episode  - first as a short story line, then as a broader outline, and then as a first draft script.  The first draft is a whole script for an episode that is circulated to the producers and to the broadcaster.  The final step in the script writing process is the preparation of the second draft script for the episode.  This is known as the “white draft” in the trade.  It will be circulated to all the heads of departments in production.  The white draft is used to cast performers, find locations for production, obtain clearances for names or products, and develop props, set decoration, and artwork.  The white draft is usually completed within a week of the commencement of filming of the episode to which it relates.

[6]               Paragraph 12 of the agreed statement of facts provides as follows:

While additional changes to the script (such as name changes, reordering or deletion of scenes) continued throughout the shooting process, the Second Draft Script represented the basic plan that was implemented.

[7]               Counsel for the Minister argues that, factually, television episodes are produced in three broad stages: preproduction, principal photography, and postproduction.  The Minister argues that script writing falls strictly within the preproduction phase and is part of the development exercise rather than production.  Counsel argued that the producer cannot film the episode until the script is in place.

[8]               As a matter of fact however, it appears that the Minister’s effort to neatly pigeonhole script writing into “development” and “preproduction” does not fit with the agreed statement of facts.  Rather, based on the facts recited above, it appears that the early stages of script writing do indeed occur in preproduction.  However, the last or final stage, i.e. the second draft script or the white draft, is integrally involved with production.  Production steps flow from the final draft.  Moreover, as production gets underway, the real world imposes limitations on the writers’ intentions, requiring that the final script change.  It is rewritten, revised and amended throughout the shooting process.  Therefore, as a matter of fact, rather than one of statutory interpretation, it appears that a distinction can be drawn between preliminary writing services, which may form part of a television show development process, and final stage script writing, which is more closely associated with the production process.  As will be discussed below, these factual findings are very significant in the context of the statute as fairly interpreted.

The Parties’ Positions

[9]               As noted above, the court is interpreting the phrase: “for the stages of production of the production, from the final script stage to the end of the post-production stage”.

[10]           The Minister argues that the phrase “from the final script stage” means “after the final script stage”.  In that way, only production and postproduction costs are eligible for the tax credit.  The appellant, by contrast, argues that the phrase “from the final script stage” includes the entire final script stage within the period for which costs incurred are eligible for the tax credit.

[11]           The difference in the parties’ positions depends upon the meaning given to the word “from”.  In expressing the opening period for eligibility as being the time “from the final script stage” does the word “from” include or exclude the final script stage itself?

[12]           What little case law the parties were able to find on the meaning of the word “from” is not terribly helpful.  In Dauphinais v. Canada (Minister of National Revenue-M.N.R.), [1992] T.C.J. No. 416, Lamarre Proulx T,C.J. quoted from Halsbury’s Laws of England (Butterworths, 4th ed.) Vol. 45, §1127, as follows:

Days included or excluded.  When a period of time running from a given day or event to another day or event is prescribed by law or fixed by contract, and the question arises whether the computation is to be made inclusively or exclusively of the first-mentioned or of the last-mentioned day, regard must be had to the context and to the purpose for which the computation has to be made.  Where there is room for doubt, the enactment or instrument ought to be construed so as to effectuate and not to defeat the intention of Parliament or of the parties, as the case may be.  Expressions such as “from such a day” or “until such a day” are equivocal, since they do not make it clear whether the inclusion or the exclusion of the day named may be intended.  As a general rule, however, the effect of defining a period in such a manner as to exclude the first day and to include the last day.

[13]            The recognition of the equivocal nature of the word “from” is at the heart of the issue in this case.  The common law position, cited in Halsburyabove, has been codified and slightly modified in the Legislation Act, 2006S.0. 2006, c. 21, Schedule F.  Subsections 89(4) and (5) of that statute provide as follows:

(4)        A period of time described as beginning or ending on, at or with a specified day includes that day.

(5)        A period of time described as beginning before or after a specified day excludes that day.

[14]           Therefore, in Ontario, a reference to a beginning date will include that day while a reference to a beginning “after” the specified date, will exclude that day.  While each of the parties tried to fit these words into their arguments, it is not clear to me that these definitions help at all.  There is no specific date provided in the legislation as a beginning or an ending or a before or an after.  Rather, the legislation speaks of a “stage”.  It is a process or a range of dates.  This simply begs the question of whether the reference to “from the final script stage” means “from the beginning of the stage or process” or “after the end of the stage or process”. 

Statutory interpretation

[15]           The parties agree that the modern rule of statutory interpretation in the tax context requires that the words of statute be read in their entire context and in their grammatical and ordinary sense, harmoniously with the scheme of the act, the object of the act, and the intention of the Legislature.  SeeStubart Investments Ltd. v. The Queen1984 CanLII 20 (SCC), [1984] 1 S.C.R. 536, 578 as cited in Placer Dome Canada Ltd. v. Ontario (Minister of Finance)2006 SCC 20 (CanLII) at para. 21.  To that end, the parties invited the court to assess the meaning of the words used in this taxing statute based on their text, their context and the legislative purpose.  See Canada Trustco Mortgage Co. v Canada., 2005 SCC 54 (CanLII) at para 10.

(i)                 Text

[16]           The appellant argued that if a business is open “from Monday to Friday” it is open both Monday and Friday.  When we read “from A to Z”, we do not start at “B”.  That is, “from” can be inclusive.  While that is obviously true, it does not assist with determining the sense in which it is used in this statute.  This is perhaps why the Supreme Court of Canada has recognized that the ordinary meaning of a word can play a lesser role in the determination of the meaning of an enactment that is not clear and unambiguous.  See Canada Trustco, supra.

(ii)               Context

[17]           Clause 92(5.3)(e), the clause that follows immediately after the one under consideration, provides for the recognition for the tax credit calculus of certain costs “paid…in the year or within 60 days after the end of the year…”.  Similarly, clause 37(3)(2) of the same statute, that deals with a different credit, provides a deeming “…after the last taxation year of its subsidiary corporation”.   That is, when the Legislature wishes to clearly exclude a cut-off, in this same statute, it uses the word “after” which has a clearly defined statutory meaning in the Legislation Act, 2006 as discussed above.

[18]           By contrast, subsection 103.4(1) of the statute defines the term “base taxation year” as follows:

(a)   for any month from July to December, the taxation year that ended on December 31 of the preceding taxation year, or

(b)   for any month from January to June, the taxation year that ended on December 31 of the second preceding taxation year.

[19]           This is an example of the word “from” being used in this same statute to be inclusive of the first and last dates mentioned.  The appellant argues that within the context of this statute, therefore, the Legislature uses “after” to denote exclusion of a prior period and “from” to denote an inclusion of the prior period.

[20]           While this does seem a plausible, technical, legal analysis, it also seems to put much stock on legislative intention based on words that likely received little or no attention from anyone once put to paper by legislative counsel.   Although Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 (CanLII) is a case concerning contract interpretation rather than statutory interpretation, Justice Rothstein’s reference at para. 47 to the aim for a “practical, common-sense approach not dominated by technical rules of construction” has much to commend it in the statutory interpretation context as well in my view.

(iii)            Legislative Purpose

[21]           Both parties agree that the purpose of the tax credit is to provide incentive to producers to spend production money in Ontario.  Preproduction development costs are not included.[2]  It is not the court’s role to comment on the wisdom or propriety of the legislative choice made.  Rather, the court is trying to ascertain the meaning of the words used in the statute with reference to the purpose of the enactment.

[22]           In assessing how to interpret whether certain orders were permissible under Companies’ Creditors Arrangement Act, 1933, S.C. 1932?33, c. 36, inCentury Services Inc. v. Canada (Attorney General)2010 SCC 60 (CanLII), Deschamps J., for the majority of the Supreme Court of Canada wrote,

Appropriateness under the CCAA is assessed by inquiring whether the order sought advances the policy objectives underlying the CCAA.  The question is whether the order will usefully further efforts to achieve the remedial purpose of the CCAA— avoiding the social and economic losses resulting from liquidation of an insolvent company. 

[23]           In assessing a question of statutory interpretation from the purposive perspective, in my view, the court should likewise consider whether the interpretation proposed would facilitate or, by contrast, hinder, the legislative purpose of the enactment.  In this case, accepting the Minister’s submission that the statutory purpose is to benefit and encourage production and exclude preproduction or development, the use of the phrase “from the final script stage” not only adumbrates, but elucidates the meaning of the statute.

[24]           As discussed above, script writing for a television series is itself a process.  The term “final script stage” is not a term of art in the industry.  However, the use of that term has a plain meaning in the context of the facts.  That is, it is pointing to the final or last part of the script writing process, which is identified above as the second draft script or white draft stage.  As I found above on the facts, that part of the script writing process is part of the production stage of the television episode.  Earlier stages of writing that are part of the development or preproduction stages are clearly excluded from the tax credit calculation.  In considering the legislative purpose or intention to facilitate Ontario production of television shows however, it plainly promotes the statutory purpose to allow producers to include in their cost base for the tax credit, the portion of the writing costs that is incurred at, with, or as part of other production costs.  If the Legislature had wished to exclude all writing costs from the tax credit, it could have done so by simple words.  It either could have added a subsection to say so expressly, or it could have just changed the word “from” to “after” – a word it used in the very next subsection.  Why would the Legislature use the phrase “final script stage” except to sub-divide script writing into preproduction and production stages?  If it did not find that a relevant distinction for the purposes of the tax credit, why refer to script writing at all in clause 92(5.3)(d)?

[25]           Looked at the other way, would exclusion of the white draft final script stage from the tax credit hinder the legislative purpose?  If the purpose is to support and encourage production costs, then it is indeed contrary to the legislative purpose to exclude costs that are associated with or part of production.  Viewed in light of the statutory purpose, the contextual use of “from” rather than “after” takes on a more deliberate or purposeful hue.  The word “from” must be inclusive in this case in order to catch the expenses that the Legislature intended to fit into this tax credit.



Summary and Result

[26]           I note that the Minister of National Revenue acts as delegate for the provincial Minister of Finance in accordance with a memorandum of understanding between them.  Counsel for the Department of Justice appeared on this matter and advised that while no objection is taken to the title of proceeding, properly, the respondent should be styled as the Minister of Finance, Ontario.

[27]           Neither counsel expressed a position on the nature of the court’s appellate jurisdiction or whether any deference may be owed to the Minister of National Revenue concerning his determination of the original notice of reassessment issued March 23, 2012 and confirmation of the reassessment by the Minister on July 19, 2013.  I have assumed that the court has the right to make findings of fact based on the agreed facts put before it by the parties and that issues of law are subject to a standard of correctness.  To the extent that the facts as found are part of my rationale for conclusions of law, then there may be elements of mixed fact and law in the interpretations that I reached.  Neither party argued for deference in matters of facts or mixed questions of fact and law in the court’s interpretation process. 

[28]           Accordingly, I find that the Minister erred in excluding from the calculation under clause 92(5.3)(d) of the statute, costs related to the final script stage which the parties agree are the costs referred to in paragraphs 10(c)(iii), 11, and 12 of the agreed statement of facts. 

[29]           The Minister’s reassessment is therefore set aside and the matter is referred back to the Minister for reassessment in accordance with these reasons.

[30]           The parties agreed that neither sought costs against the other.

[31]           Finally, I wish to express my appreciation to counsel for both parties.  The matter was one of first impression with little assistance available from case law, texts, or legislative history.  Counsel argued with ingenuity, skill, and drew upon the best traditions of common law lawyers to argue from first principles to assist the court grapple with the problem before it.



                                                                                                              F.L. Myers, J.                      

DATE:   March 11, 2015