Citation: 2009 TCC 482
Date: 20090929
Docket: 2008-4074(GST)I
BETWEEN:
MORGAN EASTMAN and ANN CAVRAK,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1] The appellants, Morgan Eastman and Ann Cavrak, appeal
with respect to an assessment issued to them under the Excise Tax Act.
The assessment denied the appellants’ application for a rebate of a portion of
the goods and services tax (GST) that was paid in connection with the purchase
of a condominium.
[2] The rebate, which is equal to one percent of the
purchase price of the condominium, is a transitional measure that was
introduced in connection with the reduction of the GST from seven percent to
six percent on July 1, 2006.
[3] In order to be entitled to the rebate, ownership and
possession of the property must be transferred on or after July 1, 2006. The
relevant provision, s. 256.3(1), provides:
256.3 (1) If a particular person,
other than a cooperative housing corporation,
(a) pursuant to an agreement of purchase and sale,
evidenced in writing, entered into on or before May 2, 2006, is the recipient
of a taxable supply by way of sale from another person of a residential complex
in respect of which ownership and possession under the agreement are
transferred to the particular person on or after July 1, 2006,
(b) has paid all of the tax under subsection 165(1) in
respect of the supply calculated at the rate of 7%, and
(c) is not entitled to claim an input tax credit or a
rebate, other than a rebate under this subsection, in respect of the tax
referred to in paragraph (b),
the Minister shall, subject to
subsection (7), pay a rebate to the particular person equal to 1% of the value
of the consideration for the supply.
[Emphasis added.]
[4] The circumstances of this appeal involve a condominium
that the appellants agreed to purchase before the building had been constructed.
[5] Owners were given possession as units were completed.
Some owners, including the appellants, moved in before July 1, 2006, and others
moved in after. The Minister denied the rebate to the appellants on the ground
that possession was not transferred on or after July 1, 2006 as required by the
above provision.
[6] The appellants submit that it would be unfair to apply
the possession requirement strictly because it has uneven application to owners
in their condominium building. Some of the owners took possession after July 1,
2006 and were granted the rebate. The appellants suggest that, since the
move-in dates were set by the builder, the possession requirement has an unfair
application to the owners. They also suggest that some of the owners may have
been granted rebates even though they took possession prior to July 1, 2006 and
should not have qualified.
[7] Counsel for the respondent does not dispute that the possession
requirement in s. 256.3(1) is unfair. He also does not dispute that the Canada
Revenue Agency may have granted rebates to owners who were not entitled.
[8] Counsel submits, however, that the Court cannot grant
relief on this basis. Reference was made to the decision of the Federal Court
of Appeal in Chaya v. The Queen, 2004 FCA 327, 2004 DTC 6676, at
paragraph 4:
4 The
applicant says that the law is unfair and he asks the Court to make an exception
for him. However the Court does not have that power. The Court must take the
statute as it finds it. It is not open to the Court to make exceptions to
statutory provisions on the grounds of fairness or equity. If the applicant
considers the law unfair, his remedy is with Parliament, not with the Court.
[9] I agree with the respondent on this point. It is clear
that relief cannot be granted on grounds of fairness when the legislation is
clear. Unfortunately for the appellants, the legislation is clear that
possession of the condominium must have occurred on or after July 1, 2006.
[10] Before concluding, I would mention that the parties
referred to another appeal that was pending in this Court that could be relevant.
In Reynolds and Pei v. The Queen, the
facts involve two taxpayers who had purchased a condominium in the same
building as the appellants. In circumstances that were similar to this appeal,
the taxpayers argued that possession was not transferred until after July 1,
2006 even though they began occupying the condominium on March 28, 2006.
[11] I indicated to the appellants that if the appeal in Reynolds
and Pei were allowed, I would consider giving them an opportunity to
provide evidence regarding the date of possession.
[12] The decision has now been released: 2009 TCC 470. Justice
Paris has dismissed the appeal on the basis that possession was transferred
when the taxpayers commenced to occupy the condominium on March 28, 2006. In
light of this decision, there is no need to reopen the hearing of this appeal.
[13] The appeal will be dismissed. Each party shall bear
their own costs.
Signed at Ottawa, Canada this 29th
day of September 2009.
“J. M. Woods”
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