Issue: Whether certain equipment at Cavendish Farms’ potato processing plant qualifies for preferential tax treatment as “machinery and equipment” under Alberta tax law or is taxable as “buildings and structures.”
Key Facts
- Cavendish Farms processes raw potatoes into frozen French fries at its plant in Lethbridge, Alberta.
- The City of Lethbridge assessed certain equipment as “buildings and structures,” subject to municipal taxes.
- Disputed equipment: Unloading Equipment, Waste Augers, Packaging Equipment, and the Automated Storage and Retrieval System (ASRS).
- Preferential tax treatment applies to machinery and equipment integral to manufacturing or processing.
Judicial Review Focus
- The CARB found the Packaging Equipment and ASRS did not qualify as machinery and equipment.
- Cavendish challenged this finding, arguing an overly narrow interpretation of relevant statutes.
Decision
- CARB’s Decision Upheld: The Court ruled that the CARB’s conclusions were reasonable:
- Packaging Equipment: Considered logistical and not involved in the transformation process, thus not machinery and equipment.
- ASRS: Classified as storage equipment, not integral to processing, and associated with quality control rather than transformation.
- Both were deemed fixtures attached to the structure, making them taxable.
Legal Principles Applied
- Reasonableness Standard: Following Vavilov (2019 SCC 65), the Court deferred to CARB’s expertise and chain of reasoning.
- Statutory Interpretation: Applied a purposive approach to define “processing” and assess the scope of “machinery and equipment” under the Municipal Government Act (MGA) and related regulations.
- Fixture Test: Evaluated attachment and intention under the common law test for fixtures.
Conclusion
- The application for judicial review was dismissed. The Packaging Equipment and ASRS remain taxable as structures.
- No specific monetary award or damages were granted in the judgment.
