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Citation: 2004TCC809
Date: 20041214
Docket: 2001-3710(GST)G
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BETWEEN:
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MOUSSA REZA ALAVIAN ESMAT ROBOBY,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent,
2001-3776(IT)G
AND BETWEEN:
ESMAT ROBOBY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
2001-3777(IT)G
AND BETWEEN:
MOUSSA REZA ALAVIAN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
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Motions heard on December 9, 2004 at Vancouver,
British Columbia
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By: The Honourable Justice D.W. Beaubier
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Appearances:
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Counsel for the Appellant:
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Steven M. Cook
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Counsel for the Respondent:
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David Jacyk
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ORDER AND REASONS FOR ORDER
[1] These three motions by the
Respondent to amend its pleadings were heard at Vancouver,
British Columbia on December 9, 2004. They are to add portions,
as italicised, to plead before the Court, as follows:
2001-3710(GST)G, to paragraphs 15, 18 and 20:
15. The issues are
(a) whether the
Appellants are liable for GST as builders deemed to have made a
supply of a residential complex pursuant to s.191 of the
Excise Tax Act, R.S.C. 1985, c. E-15, as amended (the
"Act");
(b) whether
penalties were properly assessed in accordance with section 280
of the Act;
(c)
alternatively, whether the Appellants are liable for GST which
they failed to remit with respect to the purchase of the lot on
which the 1616 Parkway residence was built.
...
18. He further submits
that the Appellants are not excepted by s. 191(5), as 1616
Parkway was not used primarily as a place of residence and was
used primarily for the purpose of carrying on a business or an
adventure in the nature of trade, or that the Appellant had at
least an operating motive to sell 1616 Parkway.
19. He further submits
that the Appellants were properly assessed with penalties in
accordance with section 280 of the Act.
20. Alternatively,
should the Court find that s. 191 of the Act does not
apply to impose a GST liability, the Appellants are nevertheless
liable for the GST which they failed to remit with respect to the
purchase of the lot on which the 1616 Parkway residence was
built.
2001-3776(IT)G, to paragraphs 17 and 18:
D.
GROUNDS RELIED ON AND RELIEF SOUGHT
17. He respectfully
submits that the profit from the sale of property at 1616 Parkway
was income earned in the course of carrying on a business or
adventure in the nature of trade in the 1996 taxation year in
that the Appellant had at least an operating motive to sell when
she acquired 1616 Parkway.
18. In the alternative
to paragraph 21, he submits that the listing of 1616 Parkway
constituted a clear and unequivocal positive act implementing a
change of intention. This changed the character of the property
from a capital asset to a trading asset such that the profit from
the sale of property at 1616 Parkway was income earned in the
course of carrying on a business or adventure in the nature of
trade in the 1996 taxation year.
...
2001-3777(IT)G to paragraphs 20 and 21:
D.
GROUNDS RELIED ON AND RELIEF SOUGHT
20. He respectfully
submits that the profit from the sale of property at 1616 Parkway
was income earned in the course of carrying on a business or
adventure in the nature of trade in the 1996 taxation year, in
that the Appellant had at least an operating motive to sell when
he acquired 1616 Parkway.
21. In the alternative
to paragraph 21, he submits that the listing of 1616 Parkway
constituted a clear and unequivocal positive act implementing a
change of intention. This changed the character of the property
from a capital asset to a trading asset such that the profit from
the sale of property at 1616 Parkway was income earned in the
course of carrying on a business or adventure in the nature of
trade in the 1996 taxation year.
and to the beginning of paragraph 17 which is not opposed, and
the introductions to the assumptions of the other Replies which
were not opposed either. However the proposed addition of a
reference to subsection 45(1) in paragraph 19 of 2001-3777(IT)G
and paragraph 16 of 2001-3776(IT)G is opposed.
[2] Respecting these motions:
1. They are essentially
matters of law. There are no additional assumptions of fact.
2. At the hearing of the
motions, the appeals had not been set down for hearing, the
motions were dated November and there was no element of
surprise.
3. The amendments, if
granted, may require additional examination for discovery
respecting, inter alia, values at different dates.
[3] In paragraphs [15] to [17]
inclusive of Smith Kline Beecham Animal Health Inc. v. The
Queen, 2000 DTC 1526, Bonner, J. stated:
[15] Furthermore, nothing said
in Continental Bank suggests that subsection 152(4) has a
bearing on the amendment which the Respondent seeks. Subsection
152(4) restricts the right of the Minister to "...
reassess or make additional assessments, or assess tax, interest
or penalties ...". The amendment now in question would
not effect a reassessment of tax. Rather it is an attempt to
defend the existing assessment of tax by asserting that, on the
facts already pleaded, liability is imposed by a provision of the
Act other than that relied on by the assessor.
[16] It is long-settled law that
the validity of an assessment depends on the application of the
statute to the facts and not on the assessor's analysis. It
is, I believe, unlikely that it was the intention of the Court in
Continental Bank (supra) to overrule decisions such
as Minden (supra) and Riendeau
(supra) without referring to them. Accordingly, I
am of the opinion that nothing said in Continental Bank
can apply to prevent the Minister from relying on section 245 in
the present case.
[17] In any event, I disagree
with the Appellant's argument which essentially asserts that
subsection 152(9) of the Act is inapplicable because the
Minister is attempting by amendment to change the basis of
assessment at a time when it is too late to do so by reason of
subsection 152(4). When subsection 152(4) is read in the new
statutory context which includes subsection 152(9) it is evident
that it cannot be said that the legislature intended that the
advancing of arguments in support of an existing assessment can
constitute the exercise of the power to reassess. Section 152
differentiates between assessment and reassessment on the one
hand and the appeal process on the other. What the Respondent
seeks is an amendment to the Reply which will permit him to do
precisely what the plain language of subsection 152(9) permits,
namely, advance an alternative argument in support of the Part
XIII assessment. He seeks to argue in the alternative that the
existing assessment of tax is supported by provisions of the
Act other than those relied upon by the assessor and this
he is entitled to do.
[4] The proposed amendments are
generally similar in concept to those dealt with by Bonner, J..
What they raise is either a different time of the formation of an
intention based on an examination for discovery or a secondary
intention based upon the facts assumed. These proposed
possibilities would have been in the minds of the Appellants
and/or their Counsel throughout the assessments and appeals
processes. On this basis the Court grants these motions to amend
by the Respondent.
[5] The parties are both granted the
right to conduct further examinations for discovery respecting
the matters arising from these amendments, the said discoveries
to occur on or before March 31, 2005 and any undertakings arising
therefrom to be complied with within 30 days after the said
examinations for discovery.
[6] The hearing of these appeals is
directed to occur over a period of two days at the Tax Court of
Canada, 701 West Georgia Street, 6th floor, Vancouver, British
Columbia, commencing at 9:30 a.m. on May 30, 2005.
[7] Costs are in the cause.
Signed at Saskatoon, Saskatchewan this 14th day of December,
2004.
Beaubier, J.
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