Dussault,
T.C.C.J.:—These
appeals
were
heard
on
common
evidence.
For
each
of
the
appellants,
they
concern
assessments
for
the
1981
and
1982
taxation
years.
By
these
reassessments
the
Minister
of
National
Revenue
("the
Minister")
disallowed
the
deduction
by
each
of
the
appellants
of
soft
costs
on
a
condominium
located
in
the
Les
Jardins
de
I'Archipel
complex
on
lie
des
Soeurs,
Verdun,
Quebec.
Additionally,
as
regards
the
appellant
Jean-Claude
Fortin,
the
Minister
also
disallowed
deduction
of
maintenance
and
repair
costs
and
the
capital
cost
allowance
now
referred
to
as
"deduction
for
depreciation"
for
the
1982
taxation
year.
The
expenses
claimed
by
each
of
the
appellants
and
disallowed
by
the
Minister
break
down
as
follows:
1981
|
Jean-Claude
|
René
Loran
|
Jacques
Laurin
|
|
Fortin
|
|
—
soft
costs
|
$5,000
|
$10,284
|
$6,128
|
(total
loss
claimed)
|
($5,000)
|
($10,284)
|
($6,128)
|
1982
|
|
—
soft
costs
|
$9,114.27
|
$18,744
|
$11,173
|
—
capital
cost
allowance
|
1,206.75
|
—
|
|
—
maintenance
and
repairs
|
$22.68
|
—
|
|
(total
loss
claimed)
|
($10,343.70)
|
($18,744)
|
($11,173)
|
The
facts
on
which
the
Minister
relied
in
arriving
at
the
reassessments
of
Jean-Claude
Fortin
are
stated
in
paragraphs
4(a)
to
(n)
of
the
reply
to
the
notice
of
appeal.
These
subparagraphs
read:
(a)
the
corporations
108254
Canada
Inc.,
Investissements
Bilco
Ltée
and
Jardins
de
I'Archipel
Ltée
formed
a
company
known
by
the
trade
name
“Les
Jardins
de
I'Archipel"
to
construct
a
multiple
unit
residential
building
(Class
31);
(b)
the
total
cost
of
the
Les
Jardins
de
I'Archipel
project
was
about
$30
million
for
the
construction
of
a
fifteen-storey
building,
including
201
condominium-type
apartments;
(c)
construction
work
apparently
began
on
or
about
May
4,
1981
and
December
17,
1982
was
certified
as
the
date
on
which
work
ended;
(d)
apart
from
deposits
received
from
customers
interested
in
purchasing
an
apartment
and
to
be
applied
against
the
selling
price
of
the
apartments,
all
financing
for
the
project
was
provided
by
Jardins
de
I'Archipel
Ltée,
which
negotiated
a
mortgage
contract
with
the
Société
générale
de
France
and
made
repayments;
(e)
all
construction
costs,
including
the
incidental,
indirect
and
initial
expenses
commonly
referred
to
as
"soft
costs",
were
incurred
and
paid
for
by
and
on
behalf
of
Les
Jardins
del’Archipel
Ltée
and/or
Les
Jardins
de
I'Archipel
(the
company);
(f)
there
is
no
written
agreement
mentioning
the
existence
of
a
limited
partnership
between
the
appellant
and
Jardins
de
I'Archipel
Ltée
or
Jardins
de
l’Archipel
(the
company),
and
no
agreement
by
which
the
appellant
gave
a
mandate
to
Jardins
de
I'Archipel
Ltée
or
Jardins
de
I'Archipel
(the
company)
as
a
building
contractor;
(g)
on
or
about
March
2,
1981
the
appellant
submitted
an
offer
to
purchase
apartment
No.
703
together
with
Mr.
Tibor
Bogri,
and
the
said
offer
was
accepted
by
Jardins
de
I'Archipel
Ltée;
(h)
the
purchase
offer
contains
no
ambiguity
as
to
the
intent
and
undertakings
of
each
of
the
parties,
in
light,
among
other
things,
of
the
following
clauses
appearing
in
that
purchase
offer:
Clause
17
17.
The
purchaser
shall
not
be
entitled
to
occupy
the
apartment
before
the
date
on
which
the
deed
of
sale
is
executed
or
the
date
on
which
the
apartment
is
regarded
as
substantially
completed.
Clause
19
19.
The
purchaser
shall
not
be
entitled
to
sell,
assign
or
transfer
his
rights
in
this
offer
or
his
acceptance
without
the
prior
written
consent
of
the
seller,
which
consent
the
seller
shall
not
unreasonably
withhold.
The
parties
further
acknowledge
that
neither
this
offer
nor
its
acceptance
may
be
registered
at
length
or
by
abstract
against
the
property,
subject
to
invalidity
of
such
registration
and
damages.
Possession
and
ownership
title
in
the
property
shall
not
be
transferred
to
the
purchaser
until
the
time
of
the
deed
of
sale.
22.
If
accepted,
this
offer
constitutes
the
full
and
final
agreement
between
the
parties.
No
other
representation
or
warranty
is
made
by
the
seller,
expressly
or
by
implication,
except
those
contained
herein.
Any
other
interpretation,
any
elevations,
plans
and/or
other
documents
provided
or
shown
previously
to
the
purchaser
shall
not
form
part
of
this
offer.
(i)
in
submitting
his
1981
and
1982
tax
return
[sic]
the
appellant
claimed
a
deduction
for
apartment
No.
703,
Jardins
de
I'Archipel,
as
his
share
of
an
alleged
rental
loss
of
$5,000
in
1981
and
$10,343.70
in
1982,
broken
down
as
follows:
|
1981
|
1982
|
soft
costs
|
$5,000
|
$9,114.27
|
capital
cost
allowance
|
|
1,206.75
|
maintenance
and
repairs
|
|
22.68
|
Total
loss
claimed
|
($5,000)
|
($10,343.70)
|
(j)
the
appellant
did
not
show
that
the
soft
costs
were
an
outlay
or
expense
made
or
incurred
by
the
appellant
to
earn
income
from
a
business
or
property;
(k)
the
appellant
did
not
acquire
ownership
of
his
apartment
before
March
1,
1983;
(l)
before
March
1,
1983
the
appellant
had
no
legal
obligation
and
paid
or
incurred
no
outlays
or
expenses
as
owner,
such
as
real
estate
taxes,
mortgage
interest,
condominium
fire
insurance
fees,
electricity
and
other
such
expenses;
(m)
as
he
was
not
owner
of
his
apartment
before
March
1,
1983
the
appellant
(who
purchased
the
apartment
on
March
1,
1983
to
obtain
rental
income)
could
not
deduct
the
capital
cost
allowance
in
1982;
(n)
the
appellant
consequently
was
not
entitled
to
deduct
soft
costs,
maintenance
expenses
and
capital
cost
allowance
for
1981
and
1982
in
respect
of
an
apartment
in
the
Jardins
de
I'Archipel
building.
[Translation.]
It
may
be
noted
that
the
purchase
offer
was
dated
February
13,
1981
and
the
deed
of
sale
signed
on
March
7,
1983.
The
appellants
René
Loran
and
Jacques
Laurin
signed
identical
purchase
offers
in
March
1981
and
the
deeds
of
sale
for
their
respective
condominiums
were
also
concluded
before
a
notary
in
March
1983.
The
soft
costs
claimed
for
1981
and
1982
by
each
of
them
and
disallowed
by
the
Minister
were
mentioned
above.
The
remaining
facts
on
which
the
Minister
relied
in
each
of
the
cases
are
similar.
The
appellants’
position
was
that
they
became
owners
as
soon
as
the
purchase
offer
was
accepted.
They
alleged
that
this
was
the
intent
of
the
parties
despite
the
wording
of
the
purchase
offer
and
in
particular
that
of
clause
19,
since
they
had
to
make
several
instalment
payments
or
investments
before
the
deed
of
sale
was
signed.
The
appellant
Jean-Claude
Fortin
added,
when
filing
a
cost
"adjustment"
document
(Exhibit
A-1),
that
he
had
to
pay
interest
expenses,
his
share
of
electricity
and
heating
costs,
real
estate
and
school
taxes,
fire
and
liability
insurance
for
a
period
of
122
days
preceding
the
signature
of
the
deed
of
sale.
Surveying
costs
of
$300
had
to
be
added
to
these
"adjustments",
making
a
grand
total
of
$5,895.70.
The
document
referred
to
clauses
9
and
20
of
the
purchase
offer
specifying
an
"adjustment"
for
these
items
from
an
"adjustment"
date
45
days
before
the
scheduled
date
of
occupation.
No
connection
was
made
between
the
payment
of
these
expenses
in
1983
and
the
deductions
claimed
in
1981
and
1982
for
soft
costs.
The
appellants
added
that
they
invested
in
reliance
on
the
promoter's
representations,
indicating
that
they
could
deduct
soft
costs
in
1981
and
1982
pursuant
to
government
policy
offering
a
tax
shelter
to
investors
in
multiple
unit
residential
buildings
("MURBs").
They
maintained
that
everything
done
to
certify
their
respective
condominiums
as
Class
31
buildings
and
establish
the
soft
costs
was
duly
completed
before
1983.
However,
it
should
be
noted
that
the
documents
entered
in
evidence
provide
no
particulars
as
to
the
composition
of
soft
costs
for
1981
and
1982.
A
document
originating
with
a
firm
referred
to
as
Le
Groupe
Hanscomb
Inc.
(Exhibit
A-5)
indicates
only
the
total
of
soft
costs
and
their
breakdown
by
square
foot
of
living
space.
No
further
explanation
was
provided
by
the
appellants.
In
support
of
the
argument
that
the
transfer
of
ownership
took
place
at
the
time
the
purchase
offer
was
accepted,
the
appellant
Jacques
Laurin
submitted
that
he
in
fact
signed
a
lease
with
a
tenant
as
of
March
1,
1983,
though
the
deed
of
sale
for
the
condominium
he
had
purchased
was
not
signed
until
March
2,
1983.
The
respondent's
position
is
straightforward.
Each
of
the
appellants
did
not
become
owner
until
March
1983,
at
the
time
the
deed
of
sale
was
signed
before
a
notary.
In
his
submission,
the
purchase
offer
and
the
deed
of
sale
contained
no
ambiguity
as
to
the
time
ownership
was
to
be
transferred.
Accordingly,
he
submitted
that
art.
1234
of
the
Civil
Code
of
Lower
Canada
must
be
applied
and
there
should
therefore
be
no
question
of
contradicting
a
valid
written
instrument
by
testimonial
evidence
of
a
different
intent.
To
determine
the
time
ownership
was
transferred,
he
relied
on
a
decision
of
Chief
Judge
Couture
of
this
Court
in
Tertulliani
v.
M.N.R.,
[1988]
2
C.T.C.
2068,
88
D.T.C.
1447,
in
which
the
facts
were
similar
to
those
of
the
instant
case.
He
further
submitted
that
there
was
no
evidence
the
seller
acted
as
the
appellants’
mandatary
and
so
incurred
soft
costs
on
their
behalf.
Finally,
he
considered
that
there
was
also
no
evidence
that
the
appellants
concluded
a
contract
for
services
with
the
seller.
In
this
regard,
counsel
for
the
respondent
distinguished
the
facts
of
the
instant
appeals
from
those
of
Schuler
v.
M.N.R.,
[1990]
1
C.T.C.
2264,
90
D.T.C.
1078
(T.C.C.),
in
which
Chief
Judge
Couture
also
rendered
the
decision,
this
time
in
favour
of
the
appellants
who
after
purchasing
a
lot
had
instructed
the
seller
to
build
buildings
on
it.
In
Tertulliani,
supra,
Chief
Judge
Couture
analysed
the
situation
of
an
appellant
who
had
signed
a
purchase
offer
similar
to
that
signed
by
each
of
the
appellants
in
the
instant
case,
and
which
moreover
contained
a
clause
identical
to
clause
19
mentioned
above
regarding
the
time
of
possession
and
the
time
transfer
of
the
propriety
title
took
place.
At
page
2070
(D.T.C.
1448-49)
of
his
decision,
he
said:
The
appellant
admitted
that
all
he
had
paid
for
his
unit
was
the
purchase
price
referred
to
in
the
sales
contract
of
October
1,
1982
in
accordance
with
the
provisions
in
the
offer
to
purchase
of
February
1981.
It
should
be
noted
that
the
price
of
the
unit
referred
to
in
the
offer
to
purchase
of
$96,000
was
subsequently
reduced
to
$91,500
under
the
sales
contract,
due
to
changes
made
to
the
building.
The
appellant
also
admitted
that
he
never
directly
paid
any
of
the
suppliers
of
materials
or
any
other
amounts
paid
for
the
construction
of
the
building.
He
claimed
that,
by
virtue
of
the
offer
to
purchase,
he
was
legally
bound
to
the
vendor
and
that
the
offer
constituted
in
away
a
conveyance
of
the
property
rights
in
his
unit.
In
fact,
he
added,
the
signing
of
the
sales
contract
on
October
1,
1982
was
simply
a
formality
and
added
nothing,
from
a
legal
point
of
view,
to
the
offer
to
purchase.
The
appellants'
submission
as
to
the
legal
effect
of
the
two
documents
in
question,
being
the
offer
to
purchase
and
the
sales
contract,
is
fundamentally
wrong.
An
offer
to
purchase
is
not
a
conveyance
of
property,
any
more
than
the
simple
promise
of
sale
provided
in
article
1476
of
the
Civil
Code
of
the
Province
of
Québec.
Moreover,
the
provisions
contained
in
the
offer
to
purchase
are
specific
as
to
the
obligations
they
entail
and
as
to
the
acquisition
by
the
appellant
of
proprietary
title
to
the
unit.
Without
elaborating
on
these
provisions,
I
would
refer
to
clause
16
of
the
offer
to
purchase
and
I
quote:
.
.
.Possession
of
and
proprietary
title
to
the
property
shall
be
transferred
to
the
purchaser
only
upon
execution
of
the
sales
contract.
This
means
that
the
appellant
became
the
owner
of
his
unit
only
after
the
soft
costs
had
been
paid
or
became
payable
by
the
vendor.
The
appellant
also
argued
that
the
Court
should
take
into
account
the
fact
that
he
had
been
told
by
the
vendor
that
he
would
be
entitled
to
deduct
the
soft
costs
and
that
it
seemed
to
him
that
such
information
was
consistent
with
the
government's
policy
of
encouraging
investments
in
the
construction
industry.
Whether
or
not
the
proposition
is
well-founded,
it
cannot
stand
up
against
a
precisely
worded
enactment.
The
evidence
showed
beyond
a
shadow
of
doubt
that
the
soft
costs
claimed
by
the
appellant
were
in
fact
incurred
by
the
vendor
and,
furthermore,
before
the
appellant
became
the
owner
of
his
unit.
These
costs
were
an
integral
part
of
the
construction
costs
of
the
building
and
were
therefore
proportionally
reflected
in
the
selling
price
of
each
unit.
[Translation;
emphasis
added.]
I
can
only
subscribe
to
these
observations,
which
completely
answer
the
arguments
raised
by
the
appellants
in
the
instant
case.
In
accordance
with
clause
19
of
the
purchase
offer
and
in
view
of
the
date
on
which
the
deed
of
sale
was
signed,
they
did
not
become
owners
of
their
respective
condominiums
until
March
1983.
The
expenses
claimed
by
each
person
as
soft
costs
in
1981
and
1982
are
therefore
not
deductible.
The
appellant
Jean-Claude
Fortin
also
cannot
deduct
the
maintenance
and
repair
costs
and
capital
cost
allowance
he
claimed
in
1982.
I
do
not
have
to
rule
on
the
deductibility
of
interest
and
other
expenses
paid
in
1983.
I
would
simply
add
that
if
someone
such
as
a
promoter
or
seller
wishes
to
enable
investors
to
benefit
from
an
otherwise
authorized
deduction,
he
must
design
the
transaction
and
draft
the
legal
documents
so
that
this
result
be
achieved.
Mere
intent
does
not
suffice.
In
this
connection
we
may
recall
the
observations
of
Dickson,
C.J.
of
the
Supreme
Court
of
Canada
in
Bronfman
Trust
v.
The
Queen,
[1987]
1
S.C.R.
32,
[1987]
1
C.T.C.
117,
87
D.T.C.
5059,
at
pages
54-55
(C.T.C.
129,
D.T.C.
5067-68):
It
was
submitted
—
and
the
Crown
generously
conceded
—
that
the
Trust
would
have
obtained
an
interest
deduction
if
it
had
sold
assets
to
make
the
capital
allocation
and
borrowed
to
replace
them.
Accordingly,
it
is
argued,
the
Trust
ought
not
to
be
precluded
from
an
interest
deduction
merely
because
it
achieved
the
same
effect
without
the
formalities
of
a
sale
and
repurchase
of
assets.
/t
would
be
a
sufficient
answer
to
this
submission
to
point
to
the
principle
that
the
courts
must
deal
with
what
the
taxpayer
actually
did,
and
not
what
he
might
have
done:
Matheson
v.
The
Queen,
[1974]
C.T.C.
186,
74
D.T.C.
6176
(F.C.T.D.),
per
Mahoney,
J.
at
page
189
(D.T.C.
6179).
[Emphasis
added.]
Similarly,
in
Friedberg
v.
Canada,
[1992]
1
C.T.C.
1,
92
D.T.C.
6031,
referred
to
by
counsel
for
the
respondent,
Linden,
J.A.
of
the
Federal
Court
of
Appeal,
speaking
for
the
Court,
said
the
following
at
pages
2-3
(D.T.C.
6032):
In
tax
law,
form
matters.
A
mere
subjective
intention,
here
as
elsewhere
in
the
tax
field,
is
not
by
itself
sufficient
to
alter
the
characterization
of
a
transaction
for
tax
purposes.
If
a
taxpayer
arranges
his
affairs
in
certain
formal
ways,
enormous
tax
advantages
can
be
obtained,
even
though
the
main
reason
for
these
arrangements
may
be
to
save
tax
(see
Canada
v.
Irving
Oil
Ltd.,
[1991]
1
C.T.C.
350,
91
D.T.C.
5106,
per
Mahoney
J.A.).
If
a
taxpayer
fails
to
take
the
correct
formal
steps,
however,
tax
may
have
to
be
paid.
If
this
were
not
so,
Revenue
Canada
and
the
courts
would
be
engaged
in
endless
exercises
to
determine
the
true
intentions
behind
certain
transactions.
Taxpayers
and
the
Crown
would
seek
to
restructure
dealings
after
the
fact
so
as
to
take
advantage
of
the
tax
law
or
to
make
taxpayers
pay
tax
that
they
might
otherwise
not
have
to
pay.
While
evidence
of
intention
may
be
used
by
the
courts
on
occasion
to
clarify
dealings,
it
is
rarely
determinative.
In
sum,
evidence
of
subjective
intention
cannot
be
used
to
"correct"
documents
which
clearly
point
in
a
particular
direction.
[Emphasis
added.]
For
these
reasons,
the
appeals
are
dismissed.
Appeals
dismissed.