Sun Life Trust Co. v. The Queen, docket 96-1356-GST-I (Informal Procedure)

Date: 19980605

Docket: 96-1356-GST-I

BETWEEN:

SUN LIFE TRUST CO.,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Lamarre, J.T.C.C.

[1] This appeal, heard under the informal procedure, is from an assessment under Part IX of the Excise Tax Act (“Act”), the notice of which, dated January 1, 1994, bears number 05B2717 and covers the period from January 1, 1991 to December 31, 1991. In so assessing the appellant, the Minister of National Revenue (“Minister”) denied an input tax credit (“ITC”) of $106,750 that, pursuant to subsection 183(7) of the Act, was claimed for that period in relation to the seizure or repossession of the real commercial property known as 2040 Lawrence Avenue, Scarborough, Ontario (the "real property"). The Minister relied upon the following assumptions of fact:

(a) the Appellant was registered for purposes of Part IX of the Act;

(b) the Appellant and Keseph Investments Inc. were the mortgagees of the real estate property;

(c) the Appellant held an undivided 83.14% interest and Keseph Investments Inc. held an undivided 14.86% interest in the said mortgage;

(d) the Appellant and Keseph Investments Inc. pursued an active management function from and after the attornment served in November, 1990;

(e) the Appellant seized or repossessed the real property before January 1, 1991 or after March 27, 1991, specifically on May 31, 1991, the day on which an Agreement of Purchase and Sale was entered into with Tack Man Hsu.

[2] The respondent submits that for the appellant to be entitled to an ITC pursuant to subsection 183(7) as amended by S.C. 1993, c. 27, subsection 47(3) (applicable to seizures or repossessions occurring after March 27, 1991), it must have seized or repossessed personal property, not real property.

[3] It is the respondent's position that if the real property was not seized or repossessed in the window period from January 1, 1991 (under subsection 183(1) of the Act) to March 27, 1991, then subsection 183(7) as amended is not applicable. The result for the appellant is thus that it is not entitled to any ITC in relation to the real property.

[4] It is the appellant's position that the real property was seized between January 1, 1991 and March 27, 1991, and that it is consequently entitled to an ITC with respect to that real property.

[5] Section 183 sets out rules for the application of GST to property seized or repossessed by a creditor after March 27, 1991. The relevant subsections of section 183 as amended by S.C. 1993, c. 27, subsections 47(1), 47(2) and 47(3), read as follows:

183.(1)Where at any time after 1990 property of a person is, for the purpose of satisfying in whole or in part a debt or obligation owing by the person to another person (in this section referred to as the "creditor"), seized or repossessed by the creditor under a right or power exercisable by the creditor (other than a right or power that the creditor has under, or because of being a party to, a lease, licence or similar arrangement by which the person acquired the property),

(a) for the purposes of this Part, the person shall be deemed to have made, and the creditor shall be deemed to have received, at that time, a supply by way of sale of the property;

(b) for the purposes of this Part (other than sections 193 and 257), that supply shall be deemed to have been made for no consideration;

(c) where the supply referred to in paragraph (a) is a taxable supply of real property, for the purposes of sections 193 and 257, the tax payable in respect of the supply shall be deemed to be equal to tax calculated on the fair market value of the property at that time; and

(d) where the supply referred to in paragraph (a) is a supply of real property included in section 9 of Part I of Schedule V, in section 1 of Part V.1 of that Schedule or in section 25 of Part VI of that Schedule, for the purposes of sections 193 and 257, the supply is deemed to be a taxable supply and the tax payable in respect of the supply is deemed to be equal to tax calculated on the fair market value of the property at that time.

183.(7) For the purposes of this Part, where a creditor who has seized or repossessed personal property from a person in circumstances in which subsection (1) applies makes at any time a particular taxable supply of the property by way of sale (other than a supply deemed under this Part to have been made), the creditor was not deemed under subsection (5), (6) or (8) to have received a supply of the property at an earlier time and no tax would have been payable by the creditor had the creditor purchased the property from the person in Canada at the time it was seized or repossessed, except where

(a) the particular supply is made outside Canada or is a zero-rated supply, and

(b) the property was seized or repossessed by the creditor before 1994 or was, at the time of the seizure or repossession, specified tangible personal property having a fair market value in excess of the prescribed amount in respect of the property,

the creditor shall be deemed

(c) to have received a supply of the property immediately before that time for consideration equal to the consideration for the particular supply, and ...

[6] Subsection 183(7) formerly read:

183(7) Sale of property - For the purposes of this Part, where a creditor who has seized or repossessed property from a person in circumstances in which subsection (1) applies makes at any time a particular taxable supply of the property by way of sale (other than a supply deemed, under any provision of this Part other than section 177, to have been made), the creditor was not deemed under subsection (4), (5), (6) or (8) to have made or received a supply of the property at an earlier time and the creditor provides evidence satisfactory to the Minister that the person has not received and is not entitled to claim an input tax credit or a rebate in respect of the property, the creditor shall be deemed

(a) to have received a supply of the property immediately before that time for consideration equal to the consideration for the particular supply; and

(b) to have paid, immediately before that time, tax in respect of the supply deemed under paragraph (a) to have been received equal to the amount determined by the formula

A - B

where

A is tax calculated on that consideration, and

B is the total of all amounts each of which is an input tax credit or a rebate under this Part that the creditor was entitled to claim in respect of the property or an improvement thereto. [Emphasis added.]

[7] The basic rule is that the seizure or repossession of property from a person is deemed to be a supply for no consideration provided it is carried out under an exercisable right or power in order to satisfy a debt or other obligation of the person. There is no tax on the repossession or seizure and the creditor becomes the owner of the property.

[8] Since March 27, 1991, a person from whom real property is seized or repossessed will be eligible for an ITC or rebate. This removes any tax embedded in the cost of the property to the debtor at the time of the seizure. Where the seizure occurs after 1990 and before March 28, 1991, the notional ITC may be available to the creditor if he can demonstrate to the Minister that the debtor had not received and was not entitled to claim an ITC or rebate in respect of the property.

[9] Former subsection 183(7) deals with the treatment of any property, including real prope rty, that was seized between January 1, 1991 and March 27, 1991, inclusive, and later supplied by way of taxable sale (see Policy Statement P-156, Improvements and Subsection 183(7), Goods and Services Tax Reporter, November 1997 release). The appellant relies on that former subsection to claim an ITC in respect of the real property in question in the present appeal.

[10] Since the application of the provisions of section 183 depends upon whether or not there has been seizure or repossession, it is important to determine what constitutes seizure or repossession and when it occurs. The issue in the present appeal has to do specifically with this point.

[11] According to Policy Statement P-102, Seizures and Repossessions (Goods and Services Tax Reporter, March 1998 release), for the purposes of section 183, seizure and repossession occur in the following circumstances:

Seizure or repossession has occurred at that point in the execution process when the creditor, who has lawful authority to deprive the debtor of control of the property and sufficient lawful authority over the property to transfer rights in the property to a third party, has taken sufficient actions to exercise control over such property, whether real or personal, thereby depriving the debtor of such control.

[12] The following definitions are taken from Black’s Law Dictionary:

Repossession.To take back - as when a seller repossesses or takes back an item if the buyer misses an installment payment. To recover goods sold on credit or in installments when the buyer fails to pay for them. The conditions for repossession are entirely statutory and due process standards must be met as to notice, manner, etc.

Term is commonly understood as act of resuming possession of property when purchaser fails to keep up payments on it. Greer v. Zurich Ins. Co., Mo., 441 S.W.2d 15, 27. The act or process by which goods are recovered by a seller or finance company on the buyer's failure to pay.

Seize. To put in possession, invest with fee simple, be seized of or in, be legal possessor of, or be holder in fee simple. Hanley v. Stewart, 155 Pa.Super. 535, 39 A.2d 323, 326. To "seize" means to take possession of forcibly, to grasp, to snatch or to put in possession. State v. Dees, Fla.App., 280 So.2d 51, 52.

Seizure. The act of taking possession of property, e.g., for a violation of law or by virtue of an execution. Term implies a taking or removal of something from the possession, actual or constructive, of another person or persons.

[13] The following definitions are found in the Oxford English Dictionary, second edition:

repossess. 1. To regain or recover possession of (a place, etc.); to reoccupy. Also spec., to regain possession of or seize (goods being bought by hire-purchase) when a purchaser defaults on his payments.

repossession. 1. Recovery; renewed possession. Also spec., the recovery of goods being bought by hire-purchase when a purchaser defaults on his payments; legal proceedings to effect this.

seize. I. To put in possession.

1. Law. a. To put (a person) in legal possession of a feudal holding; to invest or endow with property; to establish in a holding or an office or dignity.

b. ... to be the legal possessor of.

II. To take possession.

5. b. To take possession of (goods) in pursuance of a judicial order.

Facts

[14] The Charge/Mortgage Agreement between Shun Wo Enterprises Ltd. (the Chargor) and Keseph Investments Inc. and Counsel Trust (with whom the appellant amalgamated on January 1, 1991) (the Chargee), entered into on April 19, 1989, secured a principal sum of $1,850,000. The relevant sections of this Agreement (Exhibit A-1, Tab 1) are the following:

(10) ADDITIONAL PROVISIONS

2. UPON default in payment of principal or interest under this Charge ..., the Chargee may enter into and take possession of the land hereby charged free from all manner of former conveyances, mortgages, charges or encumbrances without the let, suit, hindrance, interruption or denial of the Chargor or persons whatsoever.

17. APPOINTMENT OF RECEIVER

(i) At any time after the security hereby constituted becomes enforceable, or the monies hereby shall have become payable, the Chargee may from time to time appoint by writing a Receiver of the lands, with or without Bond, and may from time to time remove the Receiver and appoint another in his stead, and any such Receiver appointed hereunder shall have the following powers:

(a) To take possession of the charged lands and to collect and get in the same and for such purpose to enter into and upon any lands, buildings and premises wheresoever and whatsoever and for such purpose to do any act and take any proceedings in the name of the Chargor or otherwise as he shall deem necessary;

(b) To carry on or concur in carrying on the business of the Chargor, and to employ and discharge agents, workmen, accountants and others upon such terms and with such salaries, wages or remuneration as he shall think proper, and to repair and keep in repair the charged lands and to do all necessary acts and things for the carrying on of the business of the Chargor and the protection of the said charged lands of the Chargor;

(c) To sell or lease or concur in selling or leasing any or all of the charged lands, or any part thereof, and to carry any such sale or lease into effect by conveying in the name of or on behalf of the Chargor or otherwise; ...

[15] On the same date, the Chargor gave to the Chargee as collateral security for the payment of the charge debt a General Assignment of its rights to all rents and leases affecting the charged premises. Sections 7 and 10 of this Assignment (Exhibit A-1, Tab 2) provides as follows:

7. Until enforcement under the Charge, and the Assignee [the Chargee] serves notice thereof to the Assignor [the Chargor] by personal service ("Notice"), the Assignor shall be entitled to receive the Rents and shall not be liable to account therefor to the Assignee; provided, however, after such Notice the Assignee shall be entitled to collect all Rents falling due subsequent to the date of service of the Notice.

After service of the Notice, the Assignee shall be entitled to enter into possession of the Charged Premises and collect the Rents and revenues thereof, distrain in the name of the Assignee for the same and appoint its agents to manage the Charged Premises and to pay such agents reasonable charges for their services and charge the same to the account of the Assignor; and any agents so appointed by the Assignee shall have the authority and power:

(a) to make any Lease or Leases of the Charged Premises or any part thereof at such Rent and on such terms as the Assignee in its discretion may consider proper and to cancel or surrender existing Leases, to alter or amend the terms of existing Leases, to renew existing Leases, or to make concessions to lessees as the Assignee in its discretion may consider proper;

(b) to manage generally the Charged Premises to the same extent as the Assignor could do; and

(i) to collect the Rents and revenues and have good and sufficient receipts and discharges therefor, and in their discretion, distrain in the name of the Assignor for such Rents and revenues;

(ii) to pay all insurance premiums, taxes, necessary repairs, renovations and upkeep, carrying charges, Rent or lease commissions, salary of any janitor or caretaker, cost of heating and any and all payments due on the Charge to the Assignee;

(iii) to accumulate the Rents and revenues in such agent's hands in a reasonable amount to make provision for maturing payments of interest and principal on the Charge, and for the payment of taxes, insurance, heating, repairs, renovations and upkeep, costs and expenses of collection of Rents and revenues and other expenses or carrying charges connected with the Charged Premises;

(c) where any discretionary powers hereunder are vested in the Assignee or its agents, the same may be exercised by any officer, investment manager or manager of the Assignee or its appointed agents, as the case may be.

10. Upon repayment of the Charge, the Rents and Leases shall be deemed to be reassigned to the Assignor and the Assignor shall be entitled, at the Assignor's expense, to a release and/or reassignment of the Assignment in registrable form, and discharge of any Financing Statements relating thereto filed pursuant to the provisions of the Personal Security Act (Ontario).

[16] A Notice of Sale under the mortgage was sent to the mortgagor (the Chargor) by the mortgagees (the Chargees) on November 28, 1990 upon default of payment. According to that document (Exhibit A-1, Tab 3) and according to the testimony of Mr. Joseph W. McGrath, who has been acting as a commercial mortgage specialist for the appellant since May 1991, the mortgagor was in default on the first day of November 1990. The Notice of Sale also stated:

And unless the said sums are paid on or before the 8th day of January, 1991, we shall sell the property covered by the said mortgage under the provisions contained in it.

[17] Notices of Attornment were sent by the mortgagees (the Chargees) to different tenants on November 27, 1990 pursuant to the General Assignment of Rents and Leases given by the mortgagor (the Chargor). According to a report sent to Keseph Investments Inc. and the appellant by Garfinkle Biderman, their solicitors, on August 19, 1991 (Exhibit A-1, Tab 9), substantial efforts were subsequently made to collect as much of the rental arrears from the tenants as could possibly be obtained prior to the closing date for the sale (July 1991). This included making a claim for payment of a proportionate share of property taxes and operating expenses and maintenance costs. An attempt was made to collect the rental due for the months of December 1990 and January through July 1991, inclusive. In fact, property taxes for 1990 and 1991 were paid by Garfinkle Biderman for the appellant on July 19, 1991. The aforementioned report also points out that site inspections had revealed that the parking area and much of the building structures were in a deteriorating state. The report states:

... However, notwithstanding the contractual obligations of the tenants, due to what appeared to be the Mortgagor's non-performance of ongoing maintenance responsibilities, certain tenants simply refused to pay rentals; some unilaterally deducted from time to time amounts which they claimed were necessarily incurred as emergency repairs required, etc. ...

[18] In a statutory declaration signed in December 1993 (Exhibit A-1, Tab 11), Mr. Gary Blustein, a solicitor practising with the firm of Garfinkle Biderman, who wrote the report mentioned above, indicates that he first got involved in this case when he received instructions from the mortgagees to commence power of sale proceedings with respect to the real property after the default on the mortgage and proceed through the attornment of rental process and through power of sale proceedings and ongoing administrative and management assistance measures pertaining to the property from and after the date of the attornment. Mr. Blustein also mentions in his declaration that it was particularly evident that the mortgagor had abandoned the property, and that during the attornment process he was involved in extensive and substantial negotiations with tenants and their solicitors concerning their disputes regarding ineffective or non-existent maintenance functions and concerning operating expense and property tax escalation recaptures. Mr. Blustein, again acting on behalf of the mortgagees, settled the terms of a new lease with one tenant in March 1991. Mr. Blustein concludes by stating that “it was clear under the particular circumstances of this transaction that as the mortgagor had abandoned the mortgaged premises active management function was diligently pursued by the mortgagees from and after the attornment served in November, 1990 until the sale of the property was ultimately completed”(paragraph 10 of the statutory declaration).

[19] Mr. McGrath testified first that it was very unusual to issue a set of instructions to a solicitor asking him to serve a Notice of Attornment and Power of Sale and to deal with the tenants. However, he recognized that, from the letters filed in evidence, Mr. Blustein certainly was an active participant in dealing with the tenants, collecting rents from them and forwarding such rents to the mortgagees. He agreed that the mortgagees in fact played a fairly active role in the management of the property. However he did not corroborate that this active role started at the time the Notices of Attornment were served on the tenants, as suggested by Mr. Blustein in his statutory declaration. He indicated rather that he never saw any letter of instruction that might have been sent to Mr. Blustein. Mr. McGrath, however, was not working for the appellant at that time.

[20] Furthermore, in a letter sent to Keseph Investments Inc. on January 9, 1991, Mr. Blustein indicated that he had had discussions with the solicitor for the mortgagor on January 4, 1991, and that he was then advised that there was hope the mortgagor would be in a position to reinstate the mortgage shortly but that there was no guarantee of this. In the same letter, he indicated as well that he would appreciate receiving copies of the leases in Keseph Investments Inc.’s possession so that he could “continue attempting to police the situation until receipt of further instructions from [Keseph] or [the appellant]”.

[21] The real property was listed for sale on February 21, 1991, after the expiration of the redemption period set out in the Notice of Sale.

[22] From the evidence, it seems that Mr. Blustein had started sending letters to the tenants for the purpose of collecting GST on rental payments around January 21, 1991. He was at the same time reporting to the mortgagees. In one letter sent to Counsel Trust Company (now the appellant) on January 21, 1991 (Exhibit A-1 Tab 6) , Mr. Blustein indicated that he had enclosed cheques received from one tenant on January 17, 1991 for the months of January and February 1991 after a number of calls had been made to that particular tenant. He indicated in that letter the following:

Since receipt of our instructions to remit Notices of Attornment in this matter, Counsel [the appellant] has really become a mortgagee in possession. It has become difficult for us to administer the rental situation with respect to this plaza owing to the fact that we do not have in our possession copies of the executed Leases so that we can ascertain whether the amounts tendered are sufficient or not. Moreover, rental owing with respect to the post January 1st, 1991, is clearly subject to G.S.T. No rental cheques received post January 1st, 1991, have had the G.S.T. added.

Appellant's and Respondent's position

[23] Counsel for the appellant argues that the seizure occurred in the window period between January 1, 1991 and March 28, 1991. More particularly, he submits that the seizure took place on January 8, 1991, the expiry date of the Notice of Exercising the Power of Sale served on the mortgagor on November 28, 1990, since the expiry of the Notices under the power of sale vested the appellant with authority to deal with the property.

[24] Counsel for the respondent contends that the real property in question was seized by the appellant on May 31, 1991, the day on which an Agreement of Purchase and Sale was entered into with Tack Man Hsu. He argues in the alternative that effective control of the property was first taken by the appellant in November 1990, when Notices of Attornment of Rents were served by the appellant on the tenants of the real property. In either case, the seizure would have occurred outside the window period and the appellant would not be entitled to an ITC under subsection 183(7) of the Act.

[25] In rebuttal, counsel for the appellant argued that if I do not accept his position that the seizure occurred at the date of expiry of the Notice of Power of Sale, then I should accept the alternative argument of counsel for the respondent, i.e., that the seizure occurred when the Notices of Attornment were served.

Analysis

[26] In the event that a mortgagor defaults on the payment of either or both principal and interest or is in breach of any other covenant, the mortgagee has the prima facie right to possession of the property as an interim measure in the collection of the account, whether by foreclosure or judicial sale or by the exercise of a private or statutory power of sale. Alternatively, the mortgagee may appoint a receiver and manager by instrument if provided for in the mortgage. This is known as a mortgagee in possession and is a remedy in itself to recover the debt. (See Frank Bennett, Bennett on Power of Sale, 4th ed., [Carswell, Scarborough, Ontario, 1997], at pp. 1, 2, 141).

[27] A mortgagee takes possession when he deprives the mortgagor of the control and management of the mortgaged property (Falconbridge, Law of Mortgages, 4th ed., 1977 at p. 643).

[28] In the present case, the Charge/Mortgage Agreement specifically provides that upon default of payment of principal or interest, the Chargee (the mortgagee) may enter into and take possession or may appoint by writing a receiver to take possession of the charged property. It follows that the mortgagee’s right of possession arises immediately on default although it has no obligation to exercise such right. The mortgagee, then, may be in possession when it is in direct receipt of rents and profits, either by virtue of the attornment of rents or under an express assignment. The issue then turns on whether the mortgagor has been deprived of control over the property.

[29] If the mortgagee assumes control over and manages the property, the mortgagee can be said to have taken possession. What control and management mean will vary according to the circumstances of the mortgage property. As was decided in the case of Joseph v. Newman (1927), 31 O.W.N. 400 at p. 427, simply collecting the rents does not by itself mean the mortgagee is deemed to be in possession, but appointing a receiver will undoubtedly deprive the mortgagor of control. However, if the mortgagee takes an assignment of rentals, as has been done in the present case, then, upon the mortgagor’s default, the mortgagee may collect the rents without invoking a receivership (See Bennett on Power of Sale, supra, at p.142).

[30] The relevant principles on this issue are summarized in Marriott and Dunn’s Practice in Mortgage Actions in Ontario (Carswell 1982), at pp. 122-23, as follows:

Generally a mortgagee goes into possession by entering into actual occupation of, or by obtaining the receipt of the rents of the mortgaged premises: Lord Trimleston v. Hamill (1810), 1 Ball & B. 377; Fisher and Lightwood, Law of Mortgages, 7th ed., p. 720. However where the mortgagee was in receipt of the rents under a direction given by the mortgagor to the tenant, it was held that the mortgagee was not a mortgagee in possession; it must be shown that the rents have been received by him as mortgagee: Thomson v. Stikeman (1913), 29 O.L.R. 146 at 159, affirmed 30 O.L.R. 123 (C.A.); Joseph v. Newman (1927), 31 O.W.N. 400, affirmed at 429 (C.A.). In the last analysis the question depends upon whether the mortgagee has taken out of the mortgagor's hands the control and management of the mortgaged premises, and must be determined having regard to the peculiar circumstances of each case: Lord Advocate v. Lord Lovat (1880), 5 App. Cas. 273 at 288; Falconbridge, Law of Mortgages, 4th ed., p. 626. It has been stated another way: that a mortgagee becomes a mortgagee in possession only when he asserts his rights as mortgagee: Gaskell v. Gosling, [1896] 1 Q.B. 669 at 691 (C.A.).

[31] In the case of National Trust Co. v. Carleton Condominium Corp. No 489, [1993] O.J. No. 2062, the Ontario Court of Justice - General Division had to determine whether the applicant was a mortgagee in possession within t he meaning of the Condominium Act and so undertook an analysis of the law with respect to what constitutes a mortgagee in possession. That Court concluded as follows:

The applicant relied in particular on the case of Beckstead v. Ball et al., [1961] O.R. 127 (H.C.) where the Court reviewed the applicable principles and emphasized the fact that there must be some exercise of control beyond the mere receipt of monies before a mortgagee will be found to be a mortgagee in possession. The mortgagee must receive the rents in such a way that it can be said that he has intercepted the power of the mortgagor to manage the property. In Beckstead, the rent was paid to the mortgagee by reason of an agreement to that effect between the owner and the tenant. In all other respects, the relationship between the landlord and the tenant remained unaffected. In these circumstances, the Court held that the mortgagee was not a mortgagee in possession since the rents were being collected by the mortgagee as agent for the owner. A like conclusion was reached in the case of First City Developments Ltd. v. Central Mortgage and Housing Corporation (1981) 21 R.P.R. 251 (N.S.C.A.).

...

In this case, unlike the cases stated above, it is quite clear that National took it upon itself to collect rents not as agent for the owner, but as mortgagee of the property. After National sent the above notice, it entered into negotiations with the Carleton Condominium Corporation No. 489 with respect to the actual collection of rents and took control of the matter thereby intercepting the owner's right to manage its property. National commenced collecting rents not simply as agent for the owner but as mortgagee in the assertion of its rights against the defaulting mortgagor. In my view this is sufficient to constitute National Trust Company a mortgagee in possession within the meaning of the Condominium Act and as such it is responsible to pay the common expenses prior to applying the monies in payment of the owner's debt.

[32] In the present case, the evidence put before me leads me to conclude that the appellant took it upon itself, right from the moment the Notices of Attornment were served, to collect rents not as agent for the mortgagor but as mortgagee of the real property. From all the documentation filed I conclude without hesitation that the appellant had intercepted the power of the mortgagor to manage the property as early as November 27, 1990. I find that the testimony of Mr. McGrath, who was not involved at the time the mortgagor defaulted is not sufficient to refute the statutory declaration filed by Mr. Blustein. Indeed, I am satisfied that the firm of Garfinkle Biderman was appointed by the mortgagees to take control of and manage the charged property to the exclusion of the mortgagor and therefore took effective control of the real property in question. In these particular circumstances, the appellant accordingly became a mortgagee in possession on November 27, 1990.

[33] Based on the definitions of seizure and repossession set out above, I conclude that the real property was seized or repossessed at the time the appellant became a mortgagee in possession, namely on November 27, 1990, and not on January 8, 1991, the expiry date of the Notice of Exercising the Power of Sale, as contended by the appellant.

[34] The appeal is consequently dismissed on the basis that the real property was seized or repossessed under a right or power exercisable by the appellant on November 27, 1990 (the day on which the Notices of Attornment were served on the tenants), that is, before the window period during which the seizure or repossession of real property was covered by subsection 183(7) of the Act. The appellant is therefore not entitled to receive any ITC in respect of the real property.

Signed at Ottawa, Canada, this 5th day of June 1998.

"Lucie Lamarre"

J.T.C.C.