Citation: 2012 TCC 148
Date: 20120529
Docket: 2011-778(GST)I
BETWEEN:
CLAUDE MERCURE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Tardif J.
[1]
This is an appeal from
a decision refusing an application for rebate on the grounds that it was filed
after the time limit set out in subsection 256(3) of the Excise Tax Act
(the Act), which reads as follows:
256
(3) A rebate under this section in respect of a residential complex shall
not be paid to an individual unless the individual files an application for the
rebate on or before:
(a) the day (in this
subsection referred to as the "due date")
that is two years after the earliest of
(i) the
day that is two years after the day on which the complex is first occupied as
described in subparagraph (2)(d)(i),
(ii) the
day on which ownership is transferred as described in subparagraph (2)(d)(ii), and
(iii) the
day on which construction or substantial renovation of the complex is
substantially completed; or
(b) any day after the due
date that the Minister may allow.
[2]
To explain her
decision, the respondent assumed the following facts:
[Translation]
(a) The appellant received a building permit from the City of Lévis
on November 9, 2005, for a term of one year and did not subsequently apply
for an extension of the said permit;
(b) The appellant’s spouse notified the respondent of her change of
address on December 1, 2005;
(c) The appellant proceeded with his change of address on his
driver’s licence on February 20, 2006;
(d) The appellant notified the respondent of his change of address
on March 27, 2006;
(e) The appellant acknowledged that he moved into the building in
April 2006;
(f) The appellant’s spouse proceeded with her change of address on her driver’s licence
on May 8, 2006;
(g) On or around October 25, 2006, the building located at 258 rue
des Mésanges in Saint-Nicolas was entered on the municipal roll;
(h) The appellant received a municipal tax adjustment for the completed
house, entered on the roll, for the period from October 25, 2006, to December
31, 2006;
(i) The invoices submitted by the appellant were checked during the
verification carried out by the respondent;
(j) The respondent noted that the cost of the work from the start
of construction to December 31, 2006, was $182,572.24;
(k) The respondent noted that the cost of the work in 2007, for the
purchase of exterior stones, mouldings and ceramics, was $2,389.50;
(l) The respondent noted that the cost of the work in 2008, for
the purchase of paint, sod and exterior membranes, was $2,463.20;
(m) The respondent noted that the cost of the work in 2009, for the
purchase of paint and lighting fixtures, was $191.60;
(n) Consequently, the work performed after 2006 was minimal and
the house was substantially completed in December 2006.
[3]
In support of his case
– and he had the burden of proof – the appellant first admitted that all the
facts assumed to be true were correct. He explained the difficulties he had
experienced before the filing of his claim.
[4]
This was a
self-construction project; he and his spouse were the contractors and performed
some of the work themselves. Their planning for their project was disrupted when
they received a very good offer for the condo they were living in. After accepting
the offer and since they did not have any children, they decided to live in their
home under construction, even though the premises were practically
uninhabitable. Then another unexpected event occurred: a child was on the way.
[5]
With a baby on the way,
they had to give priority to some work that would make the premises less dusty
and healthier for the baby over other work that may have helped them live there
more normally. Aware that the work could not proceed according to the initial
planning, the appellant took a number of measures vis-à-vis the authorities to
prevent his application from being disqualified because of exceeded time limits.
[6]
The only issue is
whether the appellant’s claim is admissible or not. In other words, was the
application for rebate filed within the specified time period?
[7]
According to the
relevant provisions, the commencement of the rebate time period is based on the
state of the premises, and read as follows:
256
(2) Where
(a) a particular
individual constructs or substantially renovates, or engages another person to
construct or substantially renovate for the particular individual, a residential
complex that is a single unit residential complex or a residential condominium
unit for use as the primary place of residence of the particular individual or
a relation of the particular individual;
(b) the fair market value
of the complex, at the time the construction or substantial renovation thereof
is substantially completed, is less than $450,000;
(c) the particular individual has
paid tax in respect of the supply by way of sale to the individual of the land
that forms part of the complex or an interest therein or in respect of the
supply to, or importation by, in individual of any improvement thereto or, in
the case of a mobile home or floating home, of the complex (the total of which
tax under subsection 165(1) and sections 212 and 218 is referred to in this
subsection as the "total tax paid by the particular
individual"),
(d) either
(i) the first individual to occupy
the complex after the construction or substantial renovation is begun is the
particular individual or a relation of the particular individual, or
(ii) the particular individual
makes an exempt supply by way of sale of the complex and ownership of the
complex is transferred to the recipient before the complex is occupied by an
individual as a place of residence or lodging.
the Minister shall, subject to
subsection (3), pay a rebate to the particular individual …
[8]
The purpose and
objectives of these provisions are numerous, and include fostering access to
ownership, job creation, support for young families, and so on.
[9]
In the light of these
objectives, the provisions must have some flexibility, particularly in the case
of a self-build construction project where the interested persons are
particularly concerned about costs. They embark on the undertaking in order to
save, which often leads to delays in filing their application for rebate; they
want to recover as much as possible, which is completely legitimate.
[10]
However, it is also
normal for time limits to be set, failing which the program would become
completely unmanageable. In this case, the appellant provided explanations that
were specific and endearing.
[11]
In a self-built construction
project, the owners, in this case the appellant and his partner, are generally
more flexible, and more tolerant and accepting of the relatively difficult living
conditions. Managing how the project progresses, often by performing the usually
very costly finishing work themselves, the interested persons are more open to
the constraints created by unfinished work.
[12]
To be admissible, the application
for rebate is clearly subject to requirements and time limits. The main
difficulty is identifying "D" day. The references and criteria provided to pinpoint
"D" day are not as clear as those for the date of an
accident, the date of a fire, the date of a document, and so on. The time limit
is determined and applied in accordance with subsection 256(3) of the Act.
[13]
This situation gives
rise to some subjectivity in the assessment since the calculation is based on the
state of the premises, which cannot be determined in absolute terms. Thus, over
time, the notion of 90% completed has been introduced; this measurement is not
absolute from the point of view that a claim can be admissible on a specific
day and not the next day.
[14]
To pinpoint the date
from which the time period should be calculated, we refer to an assessment in
the context of a reasonable person. Yet, even for a reasonable person, it is
not easy to draw the line and determine precisely what "substantially completed" means. In a self-construction project, the
interested persons often assign the rough work to third parties and do the
finishing work, usually longer and more expensive, themselves.
[15]
In this case, the appellant
clearly explained the developments in his very well organized case. He
submitted a case of irreproachable quality. The explanations about the date of
certain invoices taken into account by the respondent are plausible and very
credible.
[16]
Beyond the explanations
provided, the appellant made admissions, the scope of which is determinative of
the appeal. To illustrate the situation, I think it is useful to provide the
following excerpt of the appellant’s testimony:
[translation]
TESTIMONY OF CLAUDE MERCURE (duly sworn):
HIS HONOUR: Mr. Mercure, following your objection and
your notice of appeal, in particular, there was what’s called a "reply to the notice of appeal".
MR.
MERCURE: Correct.
HIS HONOUR: In the reply to the notice of appeal, the
Department described the facts or chronology of the facts on which it based
itself to ultimately render the decision with which you disagree. If you’ll
allow me, we’ll go through these facts and you’ll tell me whether you admit
that the alleged facts are true, don’t know or deny them. That will enable us
to identify more quickly what is specifically at issue.
MR. MERCURE: Perfect.
HIS HONOUR: OK?
MR. MERCURE: Hmm.
HIS HONOUR: So the paragraph on page 3:
"In
denying the application for rebate, the Department based itself on the
following conclusions and assumptions of fact..." --
As read.
MR. MERCURE: I’ll just get out my document..
HIS HONOUR: Yes. Do you have a pencil or a pen?
MR. MERCURE: Yes, of course.
HIS HONOUR: At this point, you can perhaps take notes
at the same time so as to...
MR. MERCURE: Yes, well, I had already taken---
HIS HONOUR: OK
MR. MERCURE: ---a few, but go ahead.
HIS HONOUR: Paragraph (a), and you say "I admit it", "I don’t know" or "I deny it".
MR. MERCURE: I admit it.
HIS HONOUR: (b)?
MR. MERCURE: In fact, if you want to save time, I admit
all of them.
HIS HONOUR: Yes, but...
MR. MERCURE: Very well, my spouse, yes, I admit it.
HIS HONOUR: (c)?
MR. MERCURE: I admit it too.
HIS HONOUR: (d)?
MR. MERCURE: I admit it.
HIS HONOUR: (e)?
MR. MERCURE: I admit it.
HIS HONOUR: (f)?
MR. MERCURE: I admit it. g), I admit it.
HIS HONOUR: (h)?
MR. MERCURE: I admit it too.
HIS HONOUR: (i)?
MR. MERCURE: I admit it.
HIS HONOUR: (j)?
MR. MERCURE: I admit it.
HIS HONOUR: (k)?
MR. MERCURE: I admit it.
HIS HONOUR: (l)?
MR. MERCURE: I admit it.
HIS HONOUR: (m)?
MR. MERCURE: I admit it.
HIS HONOUR: And finally (n)?
MR. MERCURE: I admit it too.
HIS HONOUR: And the controversy: do you understand what
is primarily in dispute?
MR. MERCURE: Yes.
HIS HONOUR: I’m listening.
MR. MERCURE: Well...
HIS HONOUR: I’ll tell you right away... I’ll explain
very briefly how the proceedings are conducted. When someone decides to appeal,
that person assumes what we call, in legal jargon, the "burden
of proof".
MR. MERCURE: Yes.
HIS HONOUR: That means that it’s your responsibility
to assume the burden of proof and show that your claims are well founded.
Following your testimony, the opposing party can cross-examine you. If the
opposing party decides to hear witnesses, you’ll have the same right to
cross-examine them.
[17]
The appellant is
someone who grasps matters quickly and thoroughly. He is very organized and
articulate. He was also very well prepared. In the light of that, I cannot set
aside his admissions, which are very clear.
[18]
The objective of the appellant’s
appeal is, effectively, that the Court should set aside the provisions of the
Act.
[19]
Certainly these
provisions leave room for interpretation so that the fateful day from which the
time limit is calculated can vary. In this case, the appellant made an admission
that left no room for ambiguity or interpretation. That admission clearly
pinpoints the date from which the time limit is calculated.
[20]
The jurisdiction of the
Court has limits; these limits are that it must comply with the provisions of
the Act. Only Parliament can amend the Act. The appellant himself identified,
through his admissions, the date from which the time limit was calculated.
[21]
Consequently, the
appeal must be dismissed since the claim was filed after the expiry of the time
limit specified by the Act.
Signed at Ottawa,
Canada, this 29th day of May 2012.
"Alain Tardif"
Translation certified true
on this 9th day of January 2013
François Brunet, Revisor
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