Docket: A-386-15
Citation:
2016 FCA 138
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CORAM:
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NOËL C.J.
DAWSON J.A.
TRUDEL J.A.
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BETWEEN:
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ELIZABETH
HARDTKE
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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 OF THE COURT
(Delivered from the Bench at Ottawa, Ontario, on May 4, 2016)
NOËL C.J.
[1]
This is an appeal brought by Elizabeth Hardtke
(the appellant) from a decision of the Tax Court of Canada (2015 TCC 135)
wherein V. Miller J. (the Tax Court judge) dismissed the appellant's appeal
from an assessment in the amount of $249,999 issued against her pursuant to
section 160 of the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1 (the
Act). Section 160 is appended to these reasons.
[2]
The assessment was issued further to the
transfer of the matrimonial home to the appellant by her spouse, Mr. Dieter
Hardtke. At the time of the transfer, Mr. Hardtke had substantial unpaid
liabilities under the Act, far exceeding the assessed amount.
[3]
The deed of sale and related affidavit sworn by
the appellant indicated that the consideration given by the appellant for the
matrimonial home consisted of $1 in cash and the assumption of the $65,000
mortgage on the property. At the time of the transfer, the home had a fair
market value of $315,000. The assessed amount represents the difference between
the fair market value and the consideration paid as attested to in the deed of
sale.
[4]
The appellant’s position at trial was that she
provided consideration in excess of the fair market value of the matrimonial
home by reason of her unregistered equitable interest in a resulting or
constructive trust in the home which she claims to have relinquished at the
time of the transfer.
[5]
The Tax Court judge rejected this contention on
the ground that the evidence adduced by the appellant did not establish that
there was forbearance of any such right (reasons, paras. 55, 56). She went on
to hold that in any event she did not have the jurisdiction to declare the
existence of a constructive trust, and that even if she did, the evidence would
not have allowed her to grant this remedy (reasons, paras. 57-59).
[6]
In support of her appeal, the appellant challenges
each of these findings insisting that “a lower evidentiary
standard” (memorandum of the appellant, paras. 66-67) would have allowed
the Tax Court judge to conclude that the existence of a constructive trust had
been established (Ibidem, paras. 67-73).
[7]
It suffices to say in this regard that the
question whether the evidence establishes the existence of a constructive trust
is one of fact which must be established on a balance of probabilities (Hickman
Motors Ltd. v. Canada, [1997] S.C.R. 336 at para. 92), and that no error of
a palpable and overriding nature has been demonstrated with regard to the Tax
Court judge’s conclusion that the evidence fell short of establishing the
existence of a constructive trust (reasons, paras. 58 and 60).
[8]
The appellant further argues that section 160
requires that the transferor of the property be shown to have an intent to
avoid the payment of taxes. She claims that Mr. Hardtke had no such intent.
Without suggesting that intent is relevant, we note that this argument was not
raised at trial so that Mr. Hardtke was not called upon to testify and the issue
pertaining to his state of mind at the time of the transfer was not explored.
In our view, it would be prejudicial to the Crown to allow this argument to be
raised for the first time on appeal.
[9]
The appeal will accordingly be dismissed with
costs.
“Marc Noël”
Annex
Relevant Legislative Provisions
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Income Tax
Act, R.S.C. 1985 (5th Supp.), c. 1, as
amended
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Loi de
l’impôt sur le revenu, L.R.C. 1985 (5e supp.), c. 1, telle que modifiée
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Tax liability
re property transferred not at arm’s length
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Transfert de
biens entre personnes ayant un lien de dépendance
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160 (1) Where a person has, on or after May 1, 1951, transferred
property, either directly or indirectly, by means of a trust or by any other
means whatever, to
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160 (1) Lorsqu’une personne a, depuis le 1er
mai 1951, transféré des biens, directement ou indirectement, au moyen d’une
fiducie ou de toute autre façon à l’une des personnes suivantes :
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(a) the
person’s spouse or common-law partner or a person who has since become the
person’s spouse or common- law partner,
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a) son époux ou conjoint de fait ou une
personne devenue depuis son époux ou conjoint de fait;
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(b) a
person who was under 18 years of age, or
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b) une personne qui était âgée de moins de
18 ans;
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(c) a
person with whom the person was not dealing at arm’s length,
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c) une personne avec laquelle elle avait un
lien de dépendance,
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the following
rules apply:
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les règles
suivantes s’appliquent :
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(d) the
transferee and transferor are jointly and severally, or solidarily, liable to
pay a part of the transferor’s tax under this Part for each taxation year
equal to the amount by which the tax for the year is greater than it would
have been if it were not for the operation of sections 74.1 to 75.1 of this
Act and section 74 of the Income Tax Act, chapter 148 of the Revised
Statutes of Canada, 1952, in respect of any income from, or gain from the
disposition of, the property so transferred or property substituted for it,
and
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d) le bénéficiaire et l’auteur du transfert
sont solidairement responsables du paiement d’une partie de l’impôt de
l’auteur du transfert en vertu de la présente partie pour chaque année
d’imposition égale à l’excédent de l’impôt pour l’année sur ce que cet impôt
aurait été sans l’application des articles 74.1 à 75.1 de la présente loi et
de l’article 74 de la Loi de l’impôt sur le revenu, chapitre 148 des
Statuts revisés du Canada de 1952, à l’égard de tout revenu tiré des biens
ainsi transférés ou des biens y substitués ou à l’égard de tout gain tiré de
la disposition de tels biens;
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(e) the
transferee and transferor are jointly and severally, or solidarily, liable to
pay under this Act an amount equal to the lesser of
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e) le bénéficiaire et l’auteur du transfert
sont solidairement responsables du paiement en vertu de la présente loi d’un
montant égal au moins élevé des montants suivants :
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(i) the amount,
if any, by which the fair market value of the property at the time it was
transferred exceeds the fair market value at that time of the consideration
given for the property, and
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(i) l’excédent
éventuel de la juste valeur marchande des biens au moment du transfert sur la
juste valeur marchande à ce moment de la contrepartie donnée pour le bien,
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(ii) the total of
all amounts each of which is an amount that the transferor is liable to pay
under this Act (including, for greater certainty, an amount that the
transferor is liable to pay under this section, regardless of whether the
Minister has made an assessment under subsection (2) for
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(ii) le total des
montants représentant chacun un montant que l’auteur du transfert doit payer
en vertu de la présente loi (notamment un montant ayant ou non fait l’objet
d’une cotisation en application du paragraphe (2) qu’il doit payer en vertu
du présent article) au cours de l’année d’imposition où les biens ont été
transférés ou d’une année d’imposition antérieure ou pour une de ces années.
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but nothing in
this subsection limits the liability of the transferor under any other
provision of this Act or of the transferee for the interest that the
transferee is liable to pay under this Act on an assessment in respect of the
amount that the transferee is liable to pay because of this subsection.
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Toutefois, le
présent paragraphe n’a pas pour effet de limiter la responsabilité de
l’auteur du transfert en vertu de quelque autre disposition de la présente
loi ni celle du bénéficiaire du transfert quant aux intérêts dont il est
redevable en vertu de la présente loi sur une cotisation établie à l’égard du
montant qu’il doit payer par l’effet du présent paragraphe.
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