REASONS
FOR JUDGMENT
Lyons J.
[1]
The appellant, Alexander College Corp., operates
a private, for-profit, college that is a corporation offering courses of study to
students for fees (the “Fees”).[1]
[2]
The Minister of National Revenue determined that
the appellant was not a “university” and reassessed the appellant for GST/HST
on the Fees paid by students for courses in the associate of arts degree
(“Associate Degree”) program for the reporting period July 1, 2010 to September
30, 2010.
[3]
The issue is whether the appellant constitutes a
“university” as defined in subsection
123(1) of the Excise Tax Act (the “ETA”).[2] The appeal involves the
interplay between the ETA, the University Act (British Columbia), RSBC 1996, c. 468 (“UA”) and the Degree Authorization Act (British Columbia), SBC 2002, c. 24 (“DAA”).
[4]
The appellant contended that the Associate
Degree, defined as a “degree” under the DAA is a degree-granting
institution which is recognized by British Columbia provincial
legislation, by universities and colleges within that province, by
post-secondary institutions within and outside Canada, and by federal
departments or programs. As such, it meets the definition of a “university”
under subsection 123(1) of the ETA. Therefore, as a university, the Fees
paid for courses (supplied) are exempt from GST/HST under section 7 of Part III
of Schedule V of the ETA (“section 7”)
[5]
The respondent takes the position that as a
private college granting an Associate Degree, the appellant fails to meet the
conditions of a university in that the term “degree” in subsection 123(1) of
the ETA equates to a baccalaureate degree or higher to qualify as a
university. By describing itself as a “university”, the appellant is trying to
bootstrap itself into Section 7 so that its supplies will be exempt from
GST/HST. Finding that a private college is a university will lead to absurd and
illogical consequences.
I.
Facts
[6]
The appellant, formerly Vancouver Central
College (the “VCC”), is a private, for profit corporation with its main campus
in Burnaby, British Columbia, and a satellite campus on West Hastings, in Vancouver.
Sometime after June 2006, VCC changed its name to the appellant. It has 16
instructors and according to its mission statement, it helps newcomers prepare
for citizenship through education, prepares students for marketable work skills
and lays a foundation for further study.[3]
[7]
Dr. Marvin Westrom has a Ph.D. (Education) and
has been the President of the appellant since 2003. He testified that in British Columbia, the provincial government,
via the Degree Quality Assessment Board (the “Board”), supervises the quality
of educational services and the articulation of courses provided by all
universities and colleges especially for private colleges.
[8]
Whether public or private, a university, college
or institute is required to undergo a quality assessment process and meet the
standards established by the Board when applying for a new degree not
previously granted. Panels report to the Board and the Board makes
recommendations to the British Columbia Ministry of Advanced Education (“MAE”).
For existing programs, private colleges and private universities are supervised
on a regular basis by government, whereas the four public universities, as
later defined, self-monitor.[4]
[9]
Dr. Westrom had prepared the proposal and application
for consent to obtain the Associate Degree and described the process. The first
review confirmed the appellant’s ability to offer the facilities, financing and
the Associate Degree. The second was the program review conducted by the Board
which acknowledged the Associate Degree; it outlined directions and looked at
certain details.[5]
The Board then made recommendations to the MAE.
[10]
In June 2006, VCC received “… a three-year approval
of the proposal with the condition that articulation be arranged within two
years.”[6]
The MAE consent, pursuant to subsection 3(1) of the DAA, authorized the
appellant to provide an associate of arts degree program and grant or confer the
two-year Associate Degree to students on completion of certain academic (normalized
and specialized) courses. Universities in the United States and colleges in
Canada offer a two-year degree using the nomenclature Associate Degree.
[11]
Authorization was renewed for the Associate
Degree by the MAE for five additional years. It indicated that “The Degree
Quality Assessment Board reviewed the proposal at its meeting on June 8, 2009,
and found that it met the organization and degree program criteria for private
and out-of-province public institutions.”[7]
[12]
He explained that the appellant’s business depends
on its students’ ability to transfer their credits to public universities such
as the University of British Columbia, University of
Victoria and Simon Fraser University; thus, the appellant ensures that its
courses qualify. The University of British Columbia is the fourth major
university in British Columbia (collectively the “four universities”). He
characterized the relationship with the four universities as close but
subservient.
[13]
The authorization from the MAE resulted in the
appellant becoming a member of the British Columbia Council on Admissions and
Transfer which facilitated the processing of the articulation agreements within
the two-year deadline. The appellant developed 47
courses, in conformity with requirements defined by that Council for the
Associate Degree. The University of Victoria and Simon Fraser University
provisionally accepted the appellant as an institution for the purpose of
course articulation associated with the Associate Degree program and many were
articulated with the four universities. In September 2007, the appellant held
classes. The Application for Renewal indicates that the Associate Degree is
accepted for transfer credit at some British Columbia colleges and universities.[8]
[14]
Following two years of study, students may choose
to transfer the credits from the Associate Degree to another college or ladder towards
a four-year baccalaureate degree at one of the four universities. Students
check the course equivalencies by consulting the BC Transfer Guide.[9] He stated that many students
transferred the credits, some did not.
[15]
Respondent counsel read-in excerpts of questions
and answers from the transcript of the examination for discovery of the
appellant’s nominee as follows:
178 Q And
then there’s the Degree Authorization Act which is what the college - -
college’s authority was granted under - -
A That’s
right.
176
Q - - to provide associate
degrees?
177
A Right.
180 Q And
then - - you would agree that that act - - I don’t know how familiar you are
with it, but in that act, it says that a person can’t directly or indirectly
refer to itself as a university unless it’s authorized - -
A That’s
right.
181
Q - - specifically to do so?
A That’s right.
182 Q And
the college has never been authorized to do that; is - -
A We are not authorized, and - - and nor would
we be authorized. If we applied to DQAB, they wouldn’t - -
172 Q And
there’s a similar question I have with respect to - - well, if you turn to page
6 of the glossary. It’s in the top right-hand corner. It will say “page 6 of
6.”
A Oh.
173 Q And it says there for - - for the definition of
“university” it says:
“In BC a post-secondary institution that offers a range of degrees
(bachelors, masters and doctorates), post-degree certificates and diplomas and
is normally involved in research in addition to teaching.”
So, I mean, this
is different in the sense that - - because the college doesn’t consider itself
to be a university other than for the purposes of the Excise Tax Act?
A That’s
right.
174 Q Okay.
And that’s - -
A The thing is, the university - - the term
“university” is defined - - just as “degree” is defined differently in different
places, so is the term “university.” British Columbia has a fairly specific
meaning, which - - basically being a university implies that research is done
at that institution.
175 Q And
your understanding, and just to confirm this, there’s the University Act, right
- -
A Right.
178
Q - - that governs
universities like - -
179
A Right.
177 Q -
- like UVic, UBC? Yes?
A Yes, that’s right.
A. Admissibility of Printouts
[16]
At trial, I reserved on a ruling as to whether
the appellant could introduce into evidence printouts of official websites of
the Government of Canada (the “Printouts” and “Canada”).[10]
[17]
The appellant indicated that the Printouts were
merely to corroborate Dr. Westrom’s testimony concerning his understanding
of the appellant’s admission policy for the off-campus work permit program vis-à-vis Canada’s representations to the world
through its official website.
[18]
The respondent objected to the admissibility of
the Printouts on the following bases:
•
These were not specifically addressed to anyone;
•
While the Printouts bore Canada’s logo, they did
not bear the actual internet address from which they were obtained;
•
It is unclear when the websites were cached;
•
These were not introduced by a Canada official
who could testify that they were produced by the government. However, the
relevant employee would not have to be the individual who actually uploaded the
websites;
•
The cases of Thorpe v Honda Canada, Inc.,
2010 SKQB 39 [Thorpe] and ITV Technologies, Inc v WIC
Television Ltd., 2005 FCA 96, 251 DLR (4th) 208, aff’g 2003 FC
1056, 239 FTR 203 [ITV Technologies], are distinguishable. Thorpe
dealt with affidavit evidence and internet occurrences of complaints made
against Honda Canada, Inc. ITV Technologies dealt with internet
occurrences of the word “ITV”; and
•
The appellant is seeking to introduce the Printouts
for the truth of contents.
[19]
The Supreme Court of Canada adopted the
principled approach in R v Khan, [1990] 2 SCR 531, in which
hearsay evidence can be admitted where it is both reliable and necessary.[11] Reliability refers to the circumstantial indicia of trustworthiness
arising from the context in which the evidence was created. Necessity refers to
where the evidence is reasonably necessary to prove a fact in issue.[12]
[20]
I find that the Printouts are admissible for the
purpose of confirming Dr. Westrom’s testimony, as represented by the
appellant, as they contain sufficient badges of reliability to warrant
admissibility and present the document in the necessary way. It is key that the
documents originate from an official website of a well-known organization with
a stake in presenting correct information to the world that is relied on. The
respondent conceded that the documents bore the Canada logo albeit it lacked
the internet address.
[21]
In ITV Technologies, a distinction was
made between the reliability of content from official and unofficial websites
as follows:
16. With regard to the reliability of the
Internet, I accept that in general, official web sites, which are developed and
maintained by the organization itself, will provide more reliable information
than unofficial web sites, which contain information about the organization but
which are maintained by private persons or businesses.
17. In my opinion, official web sites of well-known
organisations can provide reliable information that would be admissible as
evidence, the same way the Court can rely on Carswell or C.C.C. for the
publication of Court decisions without asking for a certified copy of what is
published by the editor. For example, it is evident that the official web site
of the Supreme Court of Canada will provide an accurate version of the
decisions of the Court.
18. As for unofficial web sites, I accept Mr.
Carroll's opinion that the reliability of the information obtained from an
unofficial web site will depend on various factors which include careful
assessment of its sources, independent corroboration, consideration as to
whether it might have been modified from what was originally available and
assessment of the objectivity of the person placing the information on-line.
When these factors cannot be ascertained, little or no weight should be given
to the information obtained from an unofficial web site.
[22]
The Federal Court admitted printouts from online
dictionaries and library searches to show that the letters “ITV” were capable
of different meanings at different time periods, but did not admit the
printouts for the truth of their contents. The Federal Court of Appeal affirmed
the Federal Court’s decision without taking a position on the admissibility of
the internet evidence.
[23]
The Court in Thorpe endorsed the court’s
approach in ITV Technologies in deciding that comments made by anonymous
users of an unofficial public message board were not admissible. Other cases have
followed the approaches to distinguish the reliability of content taken from
unofficial versus official websites and generally assess the reliability of
internet documents.[13]
[24]
Printouts (of bond rates) from the Bank of
Canada’s official website were admitted for the truth of their contents in Awan
v Cumberland Health Authority, 2009 NSSC 295, 283 NSR (2d) 107, as evidence
to assist with calculating pre‑judgment interest. In Krawczyk v Canada
(Minister of National Revenue – MNR), 2011 TCC 506, [2011] TCJ No. 414
(QL), Webb J. (as he then was) admitted a printout from the website for Human
Resources and Skills Development Canada, which indicated wages for different jobs
during a specific period.
[25]
The respondent argued that it would not be
necessary for the appellant to call a Canada official to testify that the
website was produced or uploaded by that individual but it would be necessary
to call a witness from Citizenship and Immigration Canada because the appellant
seeks to identify the Printouts and discuss the programs, which necessarily means
that the appellant seeks to introduce the Printouts for the truth of their
contents rather than merely to verify Dr. Westrom’s testimony.[14]
[26]
Dr. Westrom’s testimony confirmed that the
Printouts capture the participation in the programs. In this case, I find that
there are sufficient badges of reliability (the Canada logo, purportedly
originates from an official site containing information that Canada represents
to the world in a systematic and controlled fashion) present to warrant a
conclusion that the Printouts were uploaded by Canada.
[27]
In Thorpe, the court provided the
following additional guidance on the circumstances that may inform a decision
on reliability:
21. The internet is an abundant source of information. Some of the
information available is impeccably accurate, while other information is pure
garbage. It does not make sense, on the one hand, to conclude that any and all
information pulled from the world-wide web is inherently unreliable and ought
to be given zero weight; on the other hand, it makes equally little sense to
open the door to admitting into court absolutely anything placed on the
internet by anybody.
22. The approach taken by the Federal Court Trial Division has
logical appeal. Even though the appellate court declined to endorse the
analysis and conclusion, I agree with the essence of the ruling: internet
information may be admissible in court proceedings depending upon a variety of
circumstances relating to reliability which include, but are not limited to:
* whether the information comes from an official website
from a well known organization;
* whether the information is
capable of being verified;
* whether the source is disclosed so that the objectivity
of the person or organization posting the material can be assessed.
…
24. If the
internet-based evidence tendered does not contain sufficient badges of
reliability, it ought be rejected as worthless and, hence, inadmissible.
[28]
The Printouts were available to the respondent
during the discovery process and capable of verification. Admittedly it is unclear
when the websites were cached, however, Dr. Westrom’s confirmation that the
Printouts were properly printed and absent substantive concerns from the
respondent, this suffices and alleviates the concern. I find that the Printouts
are reliable and also meet the requirement of necessity as it is an expedient
way of presenting the information. I conclude, on balance, that the Printouts
contain sufficient badges of reliability that the websites represent reliable
evidence for admissibility of the Printouts for the purpose of confirming Dr.
Westrom’s testimony.
[29]
Dr. Westrom stated that the appellant is
recognized by Citizenship and Immigration Canada under the Off-Campus Work Permit
Program, Post‑Graduation Work Permit Program and participates in these
programs. For example, the Off-Campus program is available to international
students who are expected to be enrolled at a post-secondary institution or
qualifying program that leads to a degree at an eligible privately-funded
institution. It is also recognized by the Department of Foreign Affairs and
International Trade for the purpose of “Imagine Education au/in Canada” brand.
[30]
The parties agreed on a Partial Agreed Statement
of Facts as follows:
The parties agree
that:
The appellant
1. The
appellant is a private, for-profit corporation.
2. The
appellant does not receive government funding.
3. During the period in issue, the appellant operated from
two locations: its main campus at 300-4680 Kingsway, Burnaby, BC; and a
satellite campus at 602 West Hastings, Vancouver, BC.
The fees
4. During the period in issue,
the appellant collected:
a) tuition fees in the amount of $1,244,029.52
(“Tuition Fees”);
b) student association fees in the amount of
$7,710.10 (“Association Fees”); and
c) application fees in the amount of $44,900
(“Application Fees”, collectively, the “Fees”).
5. The
appellant did not charge or collect GST/HST on the Fees.
The assessment
6. During
the period in issue, the appellant:
a) was
a GST/HST registrant;
b) filed
GST/HST returns on a quarterly basis; and
c) was required to charge and collect
GST/HST at the standard rate of 12% on taxable supplies.
7. On October 28, 2010, the appellant filed a
GST/HST return for the period in issue and reported:
a) sales
and other revenue of $1,381,032.20,
b) GST/HST
collectible of $7,935.29,
c) input
tax credits of $68,847.27, and
d) a
refund of net tax in the amount of $60,911.98.
8. For the period in issue, the appellant did not collect
and did not report GST/HST collectible on the Fees.
9. By notice of reassessment
dated July 4, 2011 (the “Reassessment”), the Minister of National Revenue
assessed the appellant for a net GST/HST adjustment for the period on the basis
that the appellant was not a "university" as defined in subsection
123(1) of the Excise Tax Act.
10. By the Reassessment, the Minister of National Revenue:
a) increased GST/HST collectible by $138,935.31;
and
b) disallowed $652.85 of the $68,847.27 of
claimed input tax credits.
11. By way of notice dated September 3, 2011, and received by
the Minister of National Revenue on September 8, 2011, the appellant objected
to the Reassessment.
12. The Minister of National Revenue confirmed the
Reassessment by notice dated July 5, 2012 on the basis that the appellant did
not qualify as a “university” as defined in subsection 123(1) of the Excise Tax
Act.
Input tax
credits
13. Of the $68,847.27 input tax credits (“ITCs”) claimed by
the appellant for the period in issue, $50,217.14 were in respect of
renovations made to its campus on West Hastings Street in Vancouver
(“Renovations”).
14. Of those ITCs of $50,217.14, the Minister denied ITCs of
$652.85, such that $49,564.29 of the total ITCs allowed by the Reassessment
(being $68,194.42) relate to the Renovations.
15. The Renovations were made to property used by the
appellant in the course of supplying its educational services.
16. The parties agree that:
a) if the appellant is not a “university” as
defined in subsection 123(1) of the Excise Tax Act, the ITCs allowed by the
Reassessment are properly allowable (for greater certainty, this results in
allowable ITCs for the period of $68,847.27); and
b) if the appellant is a “university” as
defined in subsection 123(1) of the Excise Tax Act, the $49,564 of ITCs allowed
in respect of the Renovations should be disallowed (for greater certainty, this
reduces allowance ITCs for the period to $18,630.42).
II. Legislation
A. Excise Tax Act
[31]
Subsection 123(1) of the ETA defines the
term “university” as follows:
123.(1) Definitions – In section 121, this Part and
Schedule V to X,
“university” means a recognized degree-granting institution or an
organization that operates a college affiliated with, or a research body of,
such an institution;
[32]
The preamble to subsection 123(1) refers to
Schedule V (Exempt Supplies). Part III of Schedule V pertains to Educational
Services.[15]
Under section 7 of Part III, supplies are exempt if
made by a school authority, a public college or a university. Sections 7 and 7.1 of Part III of Schedule V
read as follows:
7.[Degree-granting
programs] – A supply made by a school authority, public college or university
of a service of instructing individuals in, or administering examinations in
respect of, courses for which credit may be obtained toward a diploma or
degree.
7.1 A
supply of a service or membership the consideration for which is required to be
paid by the recipient of a supply included in section 7 because the recipient
receives the supply included in section 7.
…
B. University Act (British Columbia)
[33]
The UA governs the four
universities and special purpose, teaching universities (“special purpose
universities”) in that province. Section 1 and subsections 3(1) and (1.1) reads:
1. In this Act:
“university” means
(a) each of the universities named in
section 3(1), and
(b) a special purpose, teaching
university;
“special purpose, teaching university”
means a university referred to in section 3(1.1) and designated by the
Lieutenant Governor in Council under section 71(3)(a).
…
3.(1) The following corporations continue to be universities in
British Columbia:
(a) The University of British
Columbia;
(b) University of Victoria;
(c) Simon Fraser University;
(d) University of Northern British
Columbia.
3.(1.1) An institution that is designated
as a special purpose, teaching university by the Lieutenant Governor in Council
under section 71(3)(a) is continued as a university in British Columbia.
[34]
Subsection 67(1)
prohibits the use of the term “university” by a person not authorized under the
UA to use that term. That and subsections (2), (3) and (10) of the UA
read:
67(1) A person in British Columbia other than a university must
not use or be known by the name of a university.
(2) A person must not in British Columbia hold itself out or be
known as a university, or grant degrees in its own name except in accordance
with powers granted under this Act.
(3) An institution under the College and Institute Act may
grant the degrees it is entitled to grant under that Act.
…
(10) Despite subsection (2), a person to
whom consent under the Degree Authorization Act is given to grant or
confer a degree may grant the degree in its own name in accordance with the
consent.
C. Degree Authorization Act (British
Columbia)
[35]
The DAA regulates the ability to grant
degrees by certain entities and defines “degree” in section 1. Subsection 2(1)
provides that the DAA does not apply to the four universities and the
special purpose universities.
[36]
Section 1 defines “degree” and subsection 2(1)
specifies that the DAA does not apply to the four universities, nor the
special purpose universities. These provisions and subsections 3(2), 4(1) and
(2) plus paragraphs 3(1)(a), (b) and (c) read as follows:
1
In this Act:
…
“degree” means
recognition or implied recognition of academic achievement that
(a) is specified
in writing to be an associate, baccalaureate, masters, doctoral or similar
degree, and
(b) is not
a degree in theology;
…
2(1) This
Act does not apply in relation to
…
(e) Simon Fraser
University,
…
(g) the University of
British Columbia,
(h) the University of
Northern British Columbia,
(i) the University of
Victoria, or
(j) a special purpose,
teaching university as defined in the University Act.
…
3(1) A person
must not directly or indirectly do the following things unless the person is
authorized to do so by the minister under section 4:
(a) grant or confer a degree:
(b) provide a program leading to a degree to be
conferred by a person inside or outside British Columbia;
(c) advertise a program offered in British Columbia leading to a
degree to be conferred by a person inside or outside British Columbia;
…
(2) A person must
not directly or indirectly make use of the word “university” or any derivation
or abbreviation of the word “university” to indicate that an educational
program is available, from or through the person, unless the person is
authorized to do so by the minister under section 4 or by an Act.
…
4(1) The minister
may give an applicant consent to do things described in section 3(1) or (2) if
the minister is satisfied that the applicant has undergone a quality assessment
process and been found to meet the criteria established under subsection (2) of
this section.
(2) The minister
must establish and publish the criteria that will apply for the purposes of
giving or refusing consent, or attaching terms and conditions to consent, under
this section.
…
III.
Analysis
[37]
The approach to statutory interpretation was
formulated by the Supreme Court of Canada in Canada Trustco Mortgage Co. v
Canada, 2005 SCC 54, [2005] 2 S.C.R. 601[Canada Trustco] as follows:
It has been long established as a matter of statutory
interpretation that “the words of an Act are to 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 Parliament”: see 65302 British
Columbia Ltd. v. Canada, [1999] 3 S.C.R. 804, at para. 50. The
interpretation of a statutory provision must be made according to a textual,
contextual and purposive analysis to find a meaning that is harmonious with the
Act as a whole. When the words of a provision are precise and unequivocal,
the ordinary meaning of the words play a dominant role in the interpretive
process. On the other hand, where the words can support more than one
reasonable meaning the ordinary meaning of the words plays a lesser role. The
relative effects of ordinary meaning, context and purpose on the interpretive
process may vary, but in all cases the court must seek to read the provisions of
an Act as a harmonious whole.
(Emphasis added)
[38]
The term “university” is defined in subsection
123(1) of the ETA to mean a recognized degree-granting institution or
organization that operates a college affiliated with, or a research body of,
such an institution.
[39]
The appellant argued that the term “university” should
be read in the ordinary way and interpreted broadly to exempt from GST,
institutions granting degrees, affiliated institutions and research bodies as
it uses “means” language. According to the appellant, the text points to specific
criteria that qualifies an institution as such. That is, if it is recognized as
a “degree-granting institution”, it is a “university” within the meaning of subsection
123(1) of the ETA.
[40]
The appellant argued that whilst it is
irrelevant to this appeal that it is not designated as a “university” under the
UA, it is relevant that it was authorized to grant an Associate Degree (defined
as a “degree”) under the DAA, which means under provincial law it is “recognized” as a degree‑granting institution, therefore a “university”
under the ETA for GST purposes.
[41]
It referred to the ordinary meaning of the term
“recognize” in the Canadian Oxford Dictionary, 2d ed, sub verbo “recognize”.
The word “recognize” is defined as:
recognize … 1 identify (a person or
thing) as already known; known again. 2 discover the nature of,
esp. by some distinctive feature (you can recognize a cardinal by its red
colour; I can always recognize a phony). 3 (foll. by that)
realize or admit. 4 acknowledge the existence, validity, character, or
claims of. 5 show appreciation of; reward. 6 (foll. by as,
for) treat or acknowledge. 7 (of a chairperson etc.) allow (a
person) to speak in a debate, etc. 8 grant diplomatic recognition to (a
country). …
[42]
In Black’s Law Dictionary, 10th ed, sub
verbo “recognition”, the word “recognition” is defined as:
recognition, n.
(16c) 1. Confirmation that an act done by
another person was authorized. …
[43]
Furthermore, its degree-granting status is also
recognized by post‑secondary institutions within
the BC Transfer System and beyond British Columbia for the transfer of credits
from the appellant to other institutions and by federal government programs.[16]
[44]
The Canada Revenue Agency’s importation, from
its GST/HST Policy Statement P-220 Domestic Entities That Qualify as a
“university” in the ETA (“CRA Policy”), that a degree-granting
institution is one that grants degrees at least at the baccalaureate or higher
level to qualify as a university for the purposes of the definition in
subsection 123(1) departs from the ordinary meaning of the definition.[17]
[45]
Accordingly, the Fees paid for courses of study
resulting in the granting of an Associate Degree, are exempt as a university
from GST/HST under section 7 of the ETA because it is a recognized
degree-granting institution, therefore a “university”, within the meaning of
subsection 123(1).
[46]
In response, the respondent submitted that the
appellant is a private, for‑profit college, not an institution. It does
not meet the requirements of the definition of “university” because the
definition is exhaustive, displacing the plain and ordinary meaning found in
dictionaries and degree, under the definition, equates to a baccalaureate or
higher level degree consistent with the jurisprudence and reflected in the CRA
Policy.
[47]
According to the respondent, in order for the
appellant to qualify as a university, as defined, a college (which it is) must
be an organization that operates a college (which it does) affiliated with such
institution. The point the respondent makes is that the degree-granting
institution must be something other than a college. The consequence of
accepting the appellant’s construction of the definition is that it leads to
illogical and absurd consequences plus renders parts of the legislation
redundant. That is, the distinction made by Parliament between an institution
and college within the text of subsection 123(1) is not only affected, but in a
broader legislative context.
[48]
The debate between the parties centres on the distinctions
drawn in the legislation and the emphasis that each had placed on various components
within the definition of “university” in the ETA. From a textual
analysis, it is clear that regard must be had to the
context and purpose of the provision. As noted in Canada Trustco, where
the words of a statute are imprecise or support more than one reasonable meaning,
the ordinary meaning of the words play a lesser role and regard must be had to
the context and purpose of the statute so as to read the provisions of an act
as a harmonious whole.
[49]
The appellant urged the Court to accept that the
right answer is that Parliament defined “university” in
subsection 123(1) of the ETA to mean a recognized degree‑granting
institution and the appellant meets the requirements of the definition for GST
purposes. It also said that the term “university” is not
co‑extensive with the regulation of granting of degrees, such that the definition of “university” chosen by Parliament under the ETA:
a) does not adopt the provincial criteria, the UA, for
the use of the term “university” because the ETA is more expansive as it
includes affiliated colleges and research bodies; and
b) adopts the provincial criteria, the DAA, for
the granting of degrees.
[50]
The appellant says that the DAA prevails as
education is a matter of provincial competence and because it defines the
Associate Degree as a “degree”, the appellant is recognized as a degree-granting
institution under provincial legislation and recognized in the educational
community, within and outside the province of British Columbia, as well as by federal
government programs. As a recognized degree-granting institution, it qualifies,
as a “university”, to be exempted from GST/HST under section 7.
[51]
While I accept that the definition of
“university” under the UA is narrower than the definition under the ETA,
I do not accept the appellant’s suggestion that Parliament has chosen to adopt
one provincial statute (DAA) and not the other (UA). Nor do I
accept the appellant’s approach in construing the legislation as detailed
below.
[52]
Clearly, the definition of “university” under
the ETA is more expansive as it also includes “a college affiliated
with” “such an institution” or “a research body of” “such an institution”. Breaking
down the components of the definition, Parliament intended:
a)
a recognized degree-granting institution,
or
b) an organization that operates a college affiliated with such an institution,
or
c)
a research body of such an institution.
(emphasis
added)
[53]
This highlights the distinction that Parliament
has drawn between three distinct entities that could qualify under the umbrella
of “university” under subsection 123(1) for the requirements of the definition to
be satisfied. It is clear that a college, here the appellant, is different than
an institution in this context. Thus, under b), a college needs to be
“affiliated” with “such an institution” (that is degree
granting) in order to qualify as a university so there must be a nexus
as between a college and “such an institution”. Under a), there only need be
a degree-granting institution. The respondent demonstrated the point that if
the definition of university, that is under a), was interpreted as including a
college, the definition would read as follows: a university would include a
college or an organization that operates a college affiliated. That is
illogical and not what Parliament intended; I will return to this later.
[54]
Looking at the wider context, the definition of
“university”, as defined in subsection 123(1) of the ETA, is relevant to
several other provisions in the ETA that exempt educational services
from GST/HST. The exemptions, which the appellant is claiming as a university,
are found in sections 7 and 7.1 of Part III of Schedule V relating to a supply
by a university of educational instruction and examination in a course for
which credit can be obtained toward a degree and supplies of ancillary services
and memberships, respectively, provided by a university because it is providing
exempt educational services which are exempt supplies.
[55]
To qualify under section 7, Parliament drew
other distinctions enabling a public college or a school authority, as defined
in subsection 123(1), to claim exemptions similar to a university.[18] These illustrations serve to
highlight the importance of the distinctions contemplated by Parliament within the statutory regime.
[56]
The Federal Court of Appeal in Klassen v The Queen, 2007 FCA 339,
2007 DTC 5612(FCA) [Klassen] involved the consideration of sections
118.5 and 118.6 of the Income Tax Act and the eligibility of a student
to claim education and tuition credits while attending a “university outside of
Canada”. In looking at the first two components of the term “university, college,
or educational institution”, it determined that when Parliament makes such
distinctions, the court was to give effect to such distinctions and stated:
19. … It seems clear that Parliament, in extending the benefit of
the credits in those two instances, drew a distinction between a “university”
on the one hand, and the other education institutions referred to in that
phrase, on the other.
[57]
Dr. Westrom confirmed it is a private, for
profit, college and had not received government funding; it is clearly not a
public college referred to in section 7. Dr. Westrom also agreed it was not a
vocational institute and was not taking the position that it is a college
affiliated with a university.[19]
[58]
With that context, I turn to whether the
appellant constitutes a university under subsection 123(1). I find that the
appellant is a college, not an institution in this context. One difficulty with
the appellant’s position is that it disregards and/or conflates distinctions in
the ETA statutory regime. Generally, the thrust of its position is that
albeit it is a privately-funded college, it claims to be a university even
though it cannot refer to itself as a university under either the UA or
the DAA, and if it is determined that it is a university under the ETA,
it will be eligible to receive the same treatment as defined entities, such as
a public college on the strength of its (associate) degree-granting ability
under the DAA.
[59]
Another difficulty is that it has placed undue emphasis
on the “degree‑granting” aspect as opposed to the “institution” component;
the latter features prominently in the definition. It did so by using the term
“recognized” in conjunction with the term “degree”.
Reverting back to the breakdown at paragraph 53 of these reasons, “institution”
applies in a), as a standalone. However, in b) and c), “such
an institution” works in tandem with either a “a college affiliated” or
a “research body” in order to qualify as a university.
[60]
The interpretation
that the emphasis is more appropriately placed on institution is consistent
with the French version of the phrase “a recognized degree-granting
institution” which states as follows:
« universitй » Institution
reconnue qui dйcerne des diplфmes
Translated, the French version
means “a recognized institution which grants degrees”.
[61]
Using the term recognized to place emphasis on
the institution rather than the degree, is borne out by the French text which
makes it clear that it is the institution which must be recognized rather than
the degree.
[62]
I note that there was some evidence that some
universities, some only provisionally, and some colleges recognized the appellant
within and outside of British Columbia. The Printouts relating to the federal
programs include the appellant’s name on lists and provide generic descriptors
of the programs and the appellant’s ability to grant a degree all of which were
produced as confirmation of Dr. Westrom’s testimony as to its
participation in those programs and acceptance by the federal government. However,
the MAE consented to the granting of degrees for only specified periods of time
and, according to Dr. Westrom’s testimony, the appellant was subject to ongoing
monitoring unlike the universities under the UA who were left to
self-monitor. I am not satisfied that this is adequate as recognition as an
institution as contemplated in the legislation.
[63]
The appellant’s interpretation is that Parliament
chose not to adopt the provincial criteria (the specific universities referred
to under the UA) is a misconstruction of the legislation. I disagree. In
my view, the specific universities under the UA would be embodied in a)
of the breakdown, at paragraph 53 of these reasons, as the degree-granting
institutions contemplated in subsection 123(1). As well, the ETA
definition would capture the remainder of the definition in the ETA to
encompass “a college affiliated” or a “research body” aligned with “such an institution”
fulfilling Parliament’s intent in formulating the exhaustive definition.
[64]
Turning to the granting of degrees, the
term “degree” is not defined in the UA but is defined under the DAA
which governs the authorization by certain entities to grant degrees provided ministerial
consent has been obtained from the MAE. However, subsection 2(1) of the DAA provides
that this legislation does not apply to the four universities nor the special
purpose universities under the UA. I further note that under section 2 of the UA, “Each university has in its
own right the name and the power to grant degrees established in accordance
with this Act.” I had understood the appellant to suggest that the DAA
governed the various educational entities, including the specified universities
under the UA, however, clearly the DAA and UA derive the
power to grant degrees under separate legislation evidencing a distinction
drawn under provincial legislation. While an entity may
be authorized to grant an Associate Degree, defined as “degree”
under section 1 of the DAA, such entity is not authorized to call itself
a “university” under the DAA nor the UA.
[65]
An Associate Degree was
the highest degree that the appellant could grant which could be used for laddering towards a baccalaureate degree.
Dr. Westrom admitted in cross-examination that an Associate Degree is not
equivalent to a baccalaureate degree and that 60 credits are needed for the
former and 120 credits for the latter. If a student wishes to pursue a
baccalaureate, then he or she would need to attend a university such as Simon
Fraser University, as the appellant cannot grant a baccalaureate degree.
[66]
In my opinion, the term “degree” in subsection
123(1) of the ETA does not encompass an Associate Degree.[20] The Federal Court of Appeal in Klassen stated:
20. … In giving
effect to the distinction drawn by Parliament, the most salient feature which
distinguishes a “university” is the type of degree which a university grants
and in particular the baccalaureate degree, which is the threshold requirement
imposed by universities for the pursuit of graduate studies. I can think of no
other reliable or objectively ascertainable criteria on which the distinction
drawn by Parliament could rest.
21. I therefore
conclude that the expression “university outside Canada” refers to an
educational institution which confers degrees usually granted by universities,
that is a doctorate degree, a master degree or at minimum degrees at the
baccalaureate level or its equivalent. The degree granted by MSU‑Bottineau
in this case (i.e. the “associate degree”) attests to the successful completion
of a two year undergraduate program. As this is the highest degree which MSU‑Bottineau
can confer, it does not qualify as a “university outside Canada”. …
[67]
Associate Chief Justice Rossiter, as he
then was, similarly held in Zailo v Her Majesty the Queen, 2014 TCC 60,
2014 DTC 1087, that “degree” as
used in paragraph 118.5(1)(b) of the Income Tax Act does not
include an associate degree. Rossiter A.C.J. stated as follows:
8. … Parliament obviously
distinguished between universities and colleges or other post-secondary
educational institutions. The distinguishing factor is that universities offer
bachelor’s degrees and higher while the others do not. If associate’s degrees
are accepted in the definition of “degree”, then universities and other
post-secondary institutions are no longer distinguishable and the legislative
scheme becomes incoherent.
9. The Federal Court of
Appeal’s decision in Klassen strongly suggests that an associate’s degree
is not eligible for a tuition credit. I find this to be a reasonable conclusion
in law, especially in light of the incoherent nature that the legislation would
become if associate’s degrees were accepted in the definition of “degree”, in
light of subparagraphs … of the ITA.
(Emphasis added)
[68]
Accordingly, I
find that an Associate Degree is insuffice and that a “degree” for the purposes of subsection
123(1) of the ETA must equate to a baccalaureate degree or higher.
[69]
The appellant
argued that it is not relevant to this appeal that it is not a “university” and
referenced the prohibition, in section 67 of the UA, precluding it from
referring to itself as a university unless authorized. There is a similar
prohibition in the DAA. Dr. Westrom admitted
that the appellant is not - and has never been - authorized to refer to itself
as a university and the read-ins from discovery show it would never obtain such
authorization from the Board. It seems to me that the fact that the appellant
has not sought, nor received, nor
will ever receive a designation as a university under subsection 3(1) or as a
special purpose, teaching university under subsection 3(1.1) and paragraph
71(3)(a) of the UA nor has received consent to call itself a “university” under section 4 of the DAA is a factor
that undermines the appellant’s position that it is recognized as an
institution by the provincial government.
[70]
Even if I were to accept the literal
interpretation advanced by the appellant, I agree with the respondent that
construing the legislation in this manner results in absurdities leading to
illogical consequences rendering the phrase “organization that operates a
college affiliated with” a university redundant
if a degree-granting institution is interpreted as a “college” in subsection 123(1).
Also, incorporating and construing the word “college” in the definition of
“university” makes the definition of “public college” redundant in section 7.
[71]
In Rizzo & Rizzo Shoes Ltd. Re,
[1998] 1 S.C.R. 27 (SCC) at para. 27, Iacobucci J. stated that:
27. … It is a well-established principle of statutory interpretation
that the legislature does not intend to produce absurd consequences. According
to Côté, supra, an interpretation can be considered absurd if it leads to
ridiculous or frivolous consequences, if it is extremely unreasonable or
inequitable, if it is illogical or incoherent, or if it is incompatible with
other provisions or with the object of legislative enactment (at pp. 378-80).
Sullivan echoes these comments noting that a label of absurdity can be attached
to interpretations which defeat the purpose of a statute or render some aspect
of it pointless or futile (Sullivan, Construction of Statutes, supra, at p.
88).[21]
[72]
The following example
provided by the respondent illustrates the conundrum. That is, a private
college would be a university but a public college would not be, or a public
college could also argue that it is also a university. If a public college were
to successfully bring itself within the definition of “university”, it would then be entitled to a public
service body rebate as a university at a university rebate rate. Other examples
were provided in written submissions.[22]
[73]
Parliament’s intention is that in order for a
college to fall within the definition of “university”, it must be “an
organization that operates a college affiliated with a university”. To
interpret “a degree-granting institution” as a “college” makes the phrase
“organization that operates a college affiliated with …” redundant. A
redundancy would also occur in section 7, which makes a distinction between a
“university” and a “public college”. As noted by the respondent, this
illustrates it is contrary to the presumption against tautology.
[74]
Parliament’s legislated definition of
“university” in subsection 123(1) of the ETA makes a distinction between
an institution and a college. I find that the appellant in this context is a
college, not an institution.
[75]
The answer to the
question is: the appellant is not a recognized degree‑granting
institution, therefore it is not a university, under subsection 123(1) nor is
it a “university” under the
laws of the Province of British Columbia and it is not entitled to the
exemption under section 7, of Part III, Schedule V of the ETA.
[76]
Based on the foregoing
reasons, I find and conclude that appellant does not qualify as a “university”.
Since I have concluded that the appellant is not
a “university” as defined in subsection 123(1) of the ETA during the reporting
period of July 1, 2010 to September 30, 2010, the input tax credits allowed by
the reassessment are properly allowable in the amount of $68,847.27 for the
relevant period.
[77]
The appeal is
dismissed.
[78]
The parties are to make written
submissions as to costs within 30 days of these Reasons.
Signed at Ottawa, Canada,
this 2nd day of October 2015.
“K. Lyons”
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