Citation: 2007TCC312
Date: 20070604
Docket: 2006-3712(IT)I
BETWEEN:
JONATHAN S. ANDREWS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Webb J.
[1] The Appellant claimed
capital cost allowance in his 2003 and 2004 taxation years in relation to
a motor vehicle that had been purchased in 2002. The vehicle that was purchased
was a 2002 Volkswagen Golf. The Appellant, at the time of the purchase, was 19
years of age and if the vehicle would have been acquired in his name, the cost
of the insurance would have been prohibitive. The Appellant's mother financed
the purchase of the vehicle and she arranged for the insurance coverage on the
vehicle. The Appellant’s mother acquired the legal title to the vehicle because
she had financed the purchase of the vehicle and she was concerned about
providing the funds for the purchase of the vehicle and then registering the
vehicle in his name without any security on the vehicle as the Appellant was 19
years of age at the time the vehicle was acquired.
[2] The arrangement
between the Appellant and his mother was that he would repay her at the rate of
$500 per month. The payments commenced in August of 2002. There were some
months when the Appellant was short of cash and was unable to pay the full
amount of $500 but he paid what he could afford and in other months he would
pay an additional amount to try to cover the shortfall. The fact that the
Appellant’s mother was prepared in some months to accept less than the agreed
upon sum of $500 does not make it any less of a loan. If the Appellant was
financially unable to make a full payment, he would at least pay some amount
and thereby acknowledge the debt. Eventually the title to the vehicle was
conveyed by the Appellant's mother to the Appellant when she was satisfied that
he had made sufficient payments on the loan so she could justify transferring
the title to him.
[3] It was clear from the
evidence that the vehicle that was acquired was acquired as the Appellant's
vehicle. He had possession of the vehicle throughout the period in time. The
vehicle was a standard and the Appellant's mother stated that she had never
learned to drive a standard and therefore never drove the vehicle and as well
she did not have any keys to the vehicle.
[4] The Appellant was
responsible for any repairs to the vehicle and for insuring that the vehicle
was inspected each and every year.
[5] The position of the
Respondent was that the vehicle was acquired by the Appellant's mother and that
the Appellant never acquired the vehicle. However, as noted in the case of M.N.R.
v. Wardean Drilling Limited, Ex. Ct. of Canada, [1969] Ex. C.R. 166,
Cattanach J. stated as follows:
In my opinion the proper test as to when
property is acquired must relate to the title to the property in question or to
the normal incidents of title, either actual or constructive, such as
possession, use and risk.
...
As I have indicated above, it is my
opinion that a purchaser has acquired assets of a class in schedule B when
title has passed, assuming that the assets exist at that time, or when the
purchaser has all the incidents of title, such as possession, use and risk,
although legal title may remain in the vendor as security for the purchase
price as is the commercial practice under conditional sales agreements.
[6] The above passages
were quoted by the Federal Court of Appeal in the case of R. v. Construction
Bérou Inc. Justice Létourneau of the Federal Court of Appeal added the following
comments:
In other words, there was an acquisition
of property within the meaning of paragraph 13(21)(b) of the Act
when the person obtaining it held either legal ownership or beneficial
ownership.
[7] In this case I find
that the Appellant had acquired beneficial ownership of the automobile when the
vehicle was acquired as his mother had simply financed the purchase and held
title as security for this debt. The Appellant acknowledged the debt by making
regular payments to his mother. The fact that the registration of the motor
vehicle in question at the Registry of Motor Vehicles was in the Appellant's
mother's name is not determinative of the issue as that registration is simply
for the purpose of that statute. It should also be noted that the Nova Scotia
Supreme Court, Trial Division in cases dealing with the definition of “owner”
in the Motor Vehicle Act (Nova Scotia), have found that the person
registered as the “owner” is not always the “owner” (Greene et al. v. Everett
and Smith Ltd. (1978), 29 N.S.R. (2d) 139; Hardiman and Hardiman v. MacKichan
(1982), 51 N.S.R. (2d) 27, and Lundrigan Group Ltd. v. Hale
Holdings Limited (1986), 71 N.S.R. (2d) 413).
[8] As a result the
Appellant is entitled to deduct in computing his income for 2003 and 2004 the
capital cost allowance amounts that were claimed in relation to the motor vehicle.
[9] The Appellant, in his
Notice of Appeal, did not ask for costs in this matter. Noël J.A. of the
Federal Court of Appeal in Canada (Attorney General) v. Pascal, 2005 F.C.A. 31,
made the following comments:
After reviewing the record, I note that the
notice of motion which led to the dismissal of the appeal did not claim costs.
It is only in documentation submitted in support of the motion that the phrase
[TRANSLATION] "with costs" is found. Under rule 359(b), the
relief sought must be set out in the notice of motion. A party which fails to
set out the relief sought in its notice of motion should not be surprised when
it is not granted.
[10] That case dealt with
the Federal Court Rules and not the Tax Court of Canada Rules
(Informal Procedure) ("Rules") which govern this
appeal.
[11] Paragraph 4 of the Rules
provides as follows:
An appeal referred to in section 3 shall
be made in writing and set out, in general terms, the reasons for the appeal
and the relevant facts. An appeal may be brought by a notice in the form set
out in Schedule 4, but no special form of pleadings is required.
[12] Paragraph
10 of the Rules provides as follows in relation to costs:
10. (1) Costs on an appeal shall be at
the discretion of the judge by whom the appeal is disposed of in the
circumstances set out in subsection 18.26(1) of the Act which reads as follows:
"18.26 (1) Where an appeal
referred to in section 18 is allowed, the Court
(a) shall
reimburse to the appellant the filing fee paid by the appellant under paragraph 18.15(3)(b);
and
(b) where
the judgment reduces the aggregate of all amounts in issue or the amount of
interest in issue, or increases the amount of loss in issue, as the case may
be, by more than one-half, may award costs to the appellant in accordance with
the rules of Court."
[13] In my opinion, since
paragraph 4 of the Rules does not provide that the Appellant is required
to set out the relief sought in his Notice of Appeal and since the award of
costs is within the discretion of the judge hearing the case, costs may be
awarded in an informal procedure matter even though the Appellant has not
requested costs.
[14] The Federal Court of
Appeal in Finch v. The Queen, 2003 DTC 5501, [2003] 4 C.T.C. 172 stated
that:
In our view, it was incumbent upon the
Tax Court judge to give the parties an opportunity to be heard on the issue of
costs before making the award.
[15] The award of costs in that case was a
significant lump sum award of $25,000 in costs. In my opinion, the above
comments of the Federal Court of Appeal are to be read in the context of that
case and therefore if costs are to be determined in accordance with the Rules,
there is no need to hear from the parties before such costs are awarded as
the amounts that can be recovered as costs are set out in the Rules.
[16] The
Appellant's appeals are allowed, with costs to be determined in accordance with
the Rules.
Signed at Halifax, Nova Scotia, this 4th day of June 2007.
"Wyman W. Webb"
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