British Columbia v. GFL Environmental Inc., 2024 BCCA 379

The taxpayer (GFL), for a monthly charge, provided portable toilets, cleaned them and disposed of the waste. The director under the Provincial Sales Tax Act (B.C.) assessed on the basis that the full consideration was taxable (under s. 13(1)) as consideration for the lease of tangible personal property or (under s. 18(1)) as consideration for a “related service,” defined in s. 1(1) as a “service provided to tangible personal property”. The chambers judge had concluded that although the contracts with the customers did not allocate the consideration (and GFL in fact had failed to charge any PST), it was appropriate to “unbundle” the consideration, and found in light of evidence as to inter alia the relative costs and time spent of providing its services, that 80% of the consideration should be allocated to GFL’s non-taxable waster-removal services, and 20% to the lease of the portable toilets and the services provided “to” the toilets of removing the waste.

After agreeing that the portion of the fees applicable to the waste disposal services of GFL were not part of the consideration paid for the use of the toilets, Skolrood JA also agreed that the evidence – including that 95% of the GFL labour went to disposal operations and required the use of specialized trucks – indicated that the waste disposal services was not a service to the toilets. The 80/20 allocation made by the judge was also consistent with the evidence.

The taxpayer (GFL), for a monthly charge, provided portable toilets, cleaned them and disposed of the waste. The director under the Provincial Sales Tax Act (B.C.) assessed on the basis that the full consideration was taxable (under s. 13(1)) as consideration for the lease of tangible personal property or (under s. 18(1)) as consideration for a “related service,” defined in s. 1(1) as a “service provided to tangible personal property”. The chambers judge had concluded that although the contracts with the customers did not allocate the consideration (and GFL in fact had failed to charge any PST), it was appropriate to “unbundle” the consideration, and found in light of evidence as to inter alia the relative costs and time spent of providing its services, that 80% of the consideration should be allocated to GFL’s non-taxable waste-removal services, and 20% to the lease of the portable toilets and the services provided “to” the toilets of removing the waste.

Skolrood JA found no reversible error in these findings.

The taxpayer (GFL), for a monthly charge, provided portable toilets, cleaned them and disposed of the waste. Skolrood JA found that there were no reversible errors in the findings of the chamber judge that it was appropriate to “unbundle” the single consideration that GFL charged on a monthly basis to its customers for BC PST purposes: 80% to the non-taxable waste disposal service; and 20% to the taxable lease of the toilets and to the cleaning services provided “to” the toilets.

Before so concluding, Skolrood JA referred to the finding of the chambers judge that a lengthy list of pleaded assumptions of the director and Minister, including that the contracts and invoices provided for one monthly charge, had been admitted by the appeals officer on cross examination to have been inferences drawn from her review of the audit files and that there was no evidence that the director or Minister had actually made such assumptions. In confirming this finding that the making of the assumptions had not been proven, and should be struck, Skolrood JA stated (at para. 41):

[D]irect evidence from the initial decision-maker, in this case the director, and the minister (or their delegate), is not necessarily required to establish what assumptions were made in support of their respective decisions. However … assumptions pleaded must be the assumptions actually made … . It follows that there must be sufficient evidence in the record to permit the court to determine that issue.

Turning to whether the chambers judge erred in rejecting certain assumptions as improperly involving issues of mixed fact and law or statements of law, Skolrood JA stated that some of the assumptions were not to be struck as they were “not mere conclusory statements devoid of any factual underpinnings” but, rather, made “accurate statements of fact about the relevant contracts and invoices and signal[led] to the taxpayer that, based on those facts, the Crown consider[ed] the total contract price payable for rental of a Unit as the taxable amount (para. 57); whereas, to the contrary, other assumptions were found by him to be “wholly conclusory and lack any factual basis to support the conclusions offered” (para. 59). He further stated (at para. 60):

I endorse the principle … in Preston that tax assumptions containing statements of mixed fact and law will not be invalidated simply on that basis if the factual underpinnings are clearly stated, there is no dispute about the legal principles and no prejudice results.