Docket: A-231-13
Citation: 2014 FCA 127
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CORAM:
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NOËL J.A.
MAINVILLE J.A.
SCOTT J.A.
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BETWEEN:
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ÉRIC ST-DENIS
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Appellant
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and
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HER MAJESTY THE QUEEN
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Respondent
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REASONS FOR JUDGMENT
NOËL J.A.
[1]
By judgment of the Tax Court of Canada dated
June 6, 2013, the Chief Justice of the Tax Court of Canada (the TCC judge)
dismissed the appeal filed by Éric St-Denis (the appellant) against an
assessment made on March 12, 2008, pursuant to section 325 of
Part IX of the Excise Tax Act, R.S.C. 1985, c. E-15 (the
ETA), in the amount of $55,754.10.
[2]
The purpose of section 325 of the ETA is to
facilitate the collection of unpaid taxes by making the transferee in a
transfer of property between related persons liable, up to the amount of the
unpaid tax, for the tax debt of the transferor where the transfer takes place
for a consideration less than the fair market value of the property in question.
[3]
In this case, the assessment is based on the
transfer of an immovable property located at 396 Ellice Street, in
Salaberry-de-Valleyfield, on January 22, 2008, by Ms. Cousineau, the
appellant’s mother, to the appellant in consideration of $1. On that date,
Ms. Cousineau owed the tax authorities $170,364.97.
[4]
In support of his appeal, the appellant
presented a series of legal arguments regarding the retroactive effect of the
correction of a contractual error under the Civil Code of Québec, but in
the end, the appeal turns solely on the question of credibility. Indeed,
despite the testimony given, the TCC judge found, with reasons in support, that
the deed of correction signed on April 22, 2008, was intended to correct
an error that had not been made.
[5]
The appellant’s position rests on his assertion
that the deed of assignment dated January 22, 2008, on which the
assessment is based, did not give rise to a transfer of property. This argument
is based in turn on the alleged fact that the sale of 396 Ellice Street to
Ms. Cousineau on December 14, 2007, was the result of an error, which
was purportedly recognized by a notarial act signed on April 22, 2008. By
that act, the parties recognized that it was the appellant, not his mother, who
became the owner of 396 Ellice Street pursuant to the transaction dated
December 14, 2007. The TCC judge nonetheless concluded, with reasons in
support, that the existence of an error regarding the identity of the purchaser
had not been proved.
[6]
For one thing, after noting that the notary had
read the deed of sale signed on December 14, 2007, in accordance with
accepted professional practice, in the presence of the vendor, the appellant,
his mother and his father, the TCC judge refused to believe that none of these
individuals, despite being fully aware of the identities of the parties to the
transaction to which they were witnesses, had noticed such a flagrant error.
[7]
For another, the TCC judge found that the
appellant’s mother acted as the owner of 396 Ellice Street after she
purchased it. Among other things, she received the rent for December 2007
and January 2008, and no evidence was filed to show that it was handed
over to the appellant. The appellant tried to play down this fact by saying
that he included this rent in his 2008 tax return, but as the TCC judge
explained, this was a suspicious act, since the appellant did it after being
assessed under section 325 of the ETA.
[8]
Furthermore, in a letter to the Revenu Québec collections
officer dated March 6, 2008, counsel for the appellant wrote that his client
had been the owner of 396 Ellice Street [translation]
“since January 22, 2008” (Reasons at para. 35), thereby
acknowledging that it was not the appellant, but his mother, who had been the
owner before that date.
[9]
Finally, the TCC judge pointed out that there
was no mention in the deed of assignment signed on January 22, 2008, of a
previous error. The existence of an error was mentioned for the first time in
the deed of correction drawn up three months later, after the assessment had
been received.
[10]
This is the evidence that led the TCC judge to
conclude at paragraph 37 of his reasons that the identity of the purchaser
indicated in the deed of sale was not erroneous.
[11]
The issue of whether or not an error regarding
the identity of the purchaser was made is a question of fact, such that the
finding made by the TCC judge cannot be revisited, absent a palpable and
overriding error. No serious challenge was mounted against any of the grounds
relied upon by the TCC judge to support his finding.
[12]
Counsel for the appellant emphasized the fact
that the TCC judge had failed to consider the promise to purchase that named
his client as the purchaser. It is true that the appellant is named as the
purchaser of one of the immovable properties that was sold at the same time as 396 Ellice Street, but the identity of the prospective purchaser of 396 Ellice
Street was not clearly established by the documentary evidence filed.
[13]
In the same vein, counsel put forward an
economic argument according to which his client, having purchased one of the
other immovable properties sold at the same time, must logically have become the
owner of 396 Ellice Street.
[14]
As the TCC judge stated at paragraph 30 of
his reasons, this argument would have been convincing if the appellant had
shown that he had provided the funds and/or the necessary financing for these
purchases. However, there is no evidence whatsoever in this regard.
[15]
It must therefore be concluded that no palpable
and overriding error has been proved.
[16]
I think it would be useful to add that the
recent decision of the Supreme Court in Quebec (Agence du revenu) v.
Services Environnementaux AES inc., 2013 SCC 65, [2013] 3 S.C.R. 838 (AES),
in no way supports the appellant’s argument, since in the two cases underlying
that judgment, the existence of an error was proved (AES at paras. 51
and 53).
[17]
In light of the conclusion that I have reached,
there is no need to consider the issue addressed by the TCC judge as to whether
the appellant should have proceeded by improbation rather than by deed of
correction.
[18]
I would dismiss the appeal with costs.
“Marc Noël”
“I agree.
Robert M.
Mainville, J.A.”
“I agree.
A.F. Scott, J.A.”
Certified true
translation
Erich Klein
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