REASONS FOR JUDGMENT
Smith J.
[1]
Eleni Diktakis, the appellant in this case, is
appealing a decision of the Minister of the Canada Revenue Agency (the
“Minister”) on August 12, 2015 denying her the goods and services tax (the
“GST”) rebate following the purchase of a new residence located at 355 MathieuDaCosta
Street, apartment 353 in Québec.
[2]
The appellant maintains that, following the
purchase date, the property in question was occupied by her stepmother and her
half-sister, both being her relations for the purposes of
subsections 254(2)(b) and (g) of the Excise Tax Act
(the “ETA”).
[3]
However, the Minister maintains that the
appellant is not entitled to the GST rebate for new housing within the meaning
of the above-mentioned provisions of the ETA.
Facts
[4]
According to the appellant, she and her father,
Constantin Diktakis, signed a purchase and sale agreement, for the purchase of
a condominium identified as apartment 353 at 355 MathieuDaCosta Street in
Québec. In particular, the contract specified that apartment 353 is located “in
building 315335 and 355” on MathieuDaCosta Street.
[5]
Constantin Diktakis put down a deposit when the
purchase and sale agreement was signed and, on August 6, 2013, a second
deposit.
[6]
The possession date, also described as “the
building delivery date” was supposed to be on or about August 5, 2013 and,
according to the purchase and sale agreement, the buyers had to pay the
municipal and school taxes as well as common expenses starting on this date.
[7]
The appellant explained that she never intended
to inhabit the premises and never lived there. She confirmed that she had not
advanced any funds for the purchase of the building and that she had not paid
any fees, taxes or mortgage payments from the purchase date until now, and that
it was her father, Constantin Diktakis, who paid these fees and expenses.
[8]
The appellant also said her father had purchased
the building with the intention that she could eventually live there. This is
why the title of the condominium was registered in her name as the sole owner,
when the notarized deed of sale was signed on September 13, 2013.
[9]
I now turn to the second component of the
appellant’s evidence. According to her testimony, her mother and father were
separated about eight years before the date of the hearing, around 2008.
[10]
Subsequently, her father had an intimate
relationship with Érika Lachance, a Beauceville resident, and two children were
born from this relationship, NR in June 2011 and D in September 2014.
[11]
The appellant describes these two children as
being her half-sister and half-brother. Birth certificates were filed as
evidence that they were in fact the children of her father, Constantin
Diktakis.
[12]
The appellant maintains that Érika Lachance,
whom she described as her stepmother, moved into the new apartment with NR
after the transaction was completed. It should be noted that only NR was born
when the transaction was completed. D was born only in September of the
following year.
[13]
On cross-examination, the appellant admitted the
following facts:
−
That her father and Érika Lachance are not
married;
−
That her father and Érika Lachance slept in
separate bedrooms and that, according to her, they are not common-law partners;
−
That her father lived in another apartment in
the same complex located at 315 MathieuDaCosta Street;
−
She recognized Hydro-Québec invoices for the
property in question for three periods from August 5, 2013, to January 15,
2014, all in the name of MarcAndré Lachance whom the appellant identified as
Érika Lachance’s father.
−
She also acknowledged that the notarized deed of
sale contained a declaration that she was going to occupy the property as her
habitual residence, although she said she had not read the deed correctly and
did not remember whether it had been brought to her attention.
[14]
The Minister agrees that neither the appellant
nor Constantin Diktakis occupied the premises and claims that an individual by
the name of MarcAndré Lachance and his wife, i.e. Érika Lachance’s parents,
moved into the premises after the possession date.
[15]
As indicated above, the Minister filed in
evidence HydroQuébec invoices in the name of “MarcAndré Lachance” for 355
MathieuDaCosta Street, apartment 353, Québec, for three periods from August
5, 2013 to January 15, 2014.
[16]
Fouzia Tabouch, who identified herself as a
Canada Revenue Agency (the “CRA”) tax audit technician, testified next.
[17]
I note from her testimony that there was an
investigation because the appellant’s address as declared in her income tax
return was not consistent with the address of the new housing unit and the
address on the GST rebate application.
[18]
Anais Pelletier, the CRA objection officer, also
testified. She produced screenshots of their database.
[19]
In light of these documents, it appears that in
2012 and 2013, Constantin Diktakis resided in apartment 103 of 315
Mathieu-Da-Costa Street and that in 2014, he resided in the same complex, but
in apartment 502.
[20]
These documents also suggest that in 2012 and
2013, Érika Lachance was living in Beauceville, located about 90 km from Québec,
and that in 2014 and 2015, she was living in the new housing unit in question.
The
appellant’s legal arguments
[21]
She maintains that she is entitled to the GST
rebate because her relatives, her stepmother, her half-sister and eventually,
her half-brother, moved into the new housing unit in question and thus meet the
criteria set out in subsection 254(2)(g) of the ETA. According to
her, they were the first occupants.
[22]
More specifically, the appellant claims that she
is related to NR within the meaning of subsection 126(1) of the ETA, which
refers us to subsections 251(2) to (6) of the Income Tax Act (the
“ITA”).
[23]
Paragraph 251(2)(a) of the ITA
stipulates that “related persons” are “individuals connected by blood
relationship” and paragraph 251(6)(a) specifies that persons are
connected by blood relationship if, for example, “one is the brother or sister
of the other.” Therefore, according to the appellant, because she and NR have
the same father, Constantin Diktatis, they are half-sisters and are therefore connected
by blood relationship.
[24]
To conclude, the appellant argues that the new
residence was purchased by her father, Constantin Diktakis, as an investment
for her, his daughter, and who in the meanwhile wanted to provide housing for
Érika Lachance and the children born from this relationship.
The
Minister’s legal arguments
[25]
The Minister maintains that since Constantin
Diktakis and Érika Lachance were not married or common-law partners, Érika
Lachance cannot be a person related to or a relation of the appellant.
[26]
In other words, Érika Lachance is not really the
appellant’s stepmother.
[27]
Secondly, the Minister maintains that the
concepts of “individuals connected by blood relationship” and brother and
sister must be interpreted in their traditional sense of persons who have the
same parents. From this standpoint, NR would therefore not be a relation of the
appellant.
Analysis
and conclusions
[28]
Because the appellant admits that she never
occupied the premises and never intended to, the first issue is who occupied the
property after the possession date. The issue is whether this person(s) was “a
relation” who met the criteria listed in paragraphs 254(2)(b) and (g)
of the ETA?
[29]
I will start with the second question. Is it
necessary to determine whether Érika Lachance was related to the appellant?
[30]
Because she was not married to Constantin
Diktakis and they did not have a conjugal relationship, I find that she could
not be the appellant’s stepmother and that they therefore were not related. I
therefore find that Érika Lachance was not “a relation” of the appellant within
the meaning of the ETA.
[31]
Secondly, was NR “a relation” of the appellant?
[32]
I note that only NR was born when the
transaction was completed.
[33]
If I had to rule on this issue, I would have
preferred the modern definition of brother and sister, which includes the
concept of half-brother and half-sister.
[34]
Although none of the parties referred to a
dictionary definition, it appears to be accepted that the definition of brother
and sister includes half-sisters and half-brothers born of a common parent.
This principle was recognized by this Court in Huntley v. Minister of
National Revenue, 2010 TCC 625, at paragraph 17.
[35]
That being said, even if I find that NR is the
appellant’s half-sister within the meaning of paragraph 251(6)(a)
of the ITA, it remains that the practical application of this finding is
problematic in the context of subsection 254(2) of the ETA and in
particular subparagraph (g), which requires relocation and physical
occupation.
[36]
Does the ETA stipulate that a “relation” within
the meaning of this provision can be a minor, in fact a very young child,
because NR was only two years old at the time? I turn to the provisions of the Civil
Code of Québec (the “C.C.Q.”), which, incidentally, were not pleaded.
[37]
In reviewing Section 157, I find that a
young child cannot have the power of discernment to enter into contracts alone.
However, Section 158, provides that “a minor is represented by his tutor
for the exercise of his civil rights” and that “an act that may be performed by
a minor alone may also be validly performed by his representative.”
[38]
In conclusion on this matter, I am of the view
that NR is the appellant’s half-sister and therefore her relation within the
meaning of the ETA; and her representative, for the purposes of the provision
of the C.C.Q. cited above, was Érika Lachance.
[39]
This means that the act that NR had to perform
in order to meet the requirements of paragraph 254(2)(g) of the
ETA, i.e. moving into the new housing unit in question, could only be performed
in practice by her mother.
[40]
It remains to be determined whether NR and Érika
Lachance were the first occupants. The answer to this question is more
problematic.
[41]
According to Revenue Canada records, Érika
Lachance was a Beauceville resident in 2013, the year the residence was
purchased, and she only indicated this address as her residence in 2014.
[42]
It is clear that the only probative evidence
before the Court as to the person who occupied the premises after the
possession date, is the HydroQuébec invoice for services, which started on
August 5, 2013. The name on these invoices is MarcAndré Lachance, Érika
Lachance’s father.
[43]
I will add that there are still two other
important considerations.
[44]
First, I note that the appellant’s testimony was
not corroborated and that the only people who could have testified in her
favour, Constantin Diktakis, Érika Lachance or MarcAndré Lachance, were
absent. The Court must draw a negative inference from their absence.
[45]
Second, Section 2819 of the C.C.Q. provides
that to be authentic, a notarial act makes proof against all persons of the
juridical act which it sets forth.
[46]
However, in the deed of sale in question, the
appellant’s address is indicated as the property in question. In addition,
there is a declaration that she was to acquire the building “to use it as her
usual residence, when taking possession on the delivery date.”
[47]
The builder relied on this representation. When
the transaction was completed, the appellant received a credit for her part of
the GST that was refundable and ceded the right to the rebate to the builder.
[48]
The appellant now claims that she was not one
who was to occupy the premises but a relation. However, the deed of sale does
not provide for this option. At the very least, the statement should have been
amended to indicate a relation.
[49]
In the end, the appellant had the burden of
proof and needed to refute the Minister’s contentions. In my opinion, she did
not succeed.
[50]
Consequently, and based on the above reasons,
the appeal must be dismissed.
Signed at Ottawa, Canada, this 17th day of November, 2016.
“Guy Smith”
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