Standhaft (J.) v. Canada, [1994] 2 CTC 2131, [1994] DTC 1543

Bonner, J.T.C.C.:—These are appeals from assessments under the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") for the 1987 taxation year. The assessments were made on the basis that no part of the real property at 2451 Bloor Street, West, Toronto was, between 1982 and 1987, the principal residence of either the appellant Josef Standhaft or the late David Burgess.

The issue is one of fact. The principal residence exemption will apply if the case fits within the definition of “principal residence" in paragraph 54(g) of the Act. So far as is relevant paragraph 54(g) reads:

“principal residence” of a taxpayer for a taxation year means a housing unit. . .owned, whether jointly with another person or otherwise, in the year by the taxpayer, if the housing unit was. . .

(i) ordinarily inhabited in the year by the taxpayer. . .or. . . .

The only point in dispute between the parties is whether a housing unit forming part of the Bloor Street property was ever ordinarily inhabited by Standhaft or Burgess.

Many of the background facts were admitted in the pleadings. Burgess and Standhaft were residents of Toronto. Prior to his death in August 1991 Burgess was a teacher employed by the North York Board of Education. Standhaft carried on the business of making draperies and similar goods for the interior design trade under the firm name "Artisan Drapery". In 1982 Standhaft and Burgess purchased the property at 2451 Bloor Street West. [1] They sold it in 1987.

The Bloor Street property was located in a commercial area. At the time of purchase it was rented to tenants who used the premises for commercial purposes. Following the purchase, renovations were made to make part of the building suitable for use for purposes of Standhaft’s business. The rest of it was renovated to create a housing unit which, according to the testimony of Standhaft, became his only residence and one of several residences ordinarily inhabited by Burgess. According to Standhaft, during the 1982 to 1987 period, Burgess had, in succession, three residences other than the Bloor Street property namely;

(a) an apartment located at the corner of York Mills Road and Leslie occupied until November 1983;

(b) an apartment on Jarvis Street in Toronto occupied from November 1983 until some time in 1986; and finally

(c) a condominium apartment at the corner of Bay and Davenport in Toronto occupied from 1986 until the time of Burgess’ death.

Burgess and Standhaft were partners in a longstanding stable homosexual relationship. It was Standhaft's testimony that although he was openly homosexual, Burgess was not. Burgess, Standhaft said, concealed his homosexuality because he feared that it might be viewed unfavourably by his employer, the North York Board of Education. Thus, it was said, Burgess maintained the York Mills, Jarvis and Bay Street apartments for the sake of appearances in order to conceal the fact that he and Standhaft were living together. This explanation of the reason for maintaining living quarters in addition to the alleged residence on Bloor Street was first offered at the examination for discovery in the appeals, a circumstance which tends to cast some doubt on it.

The explanation given for maintaining the York Mills, Jarvis and Bay Street apartments is unpersuasive in all the circumstances. It hardly seems likely that Bloor Street was the real residence of the couple and that the other apartments served largely to conceal reality. The evidence suggested that the relationship between Burgess and Standhaft must have been quite apparent to anyone who cared to look. Standhaft admitted that he lived with Burgess in the York Mills apartment, albeit for a short time, in the mid-seventies. He used the York Mills apartment address for his driver's licence from 1976 to 1979. He stated that Burgess entertained colleagues from his school at the York Mills apartment and that he stayed on after the departure of the guests and spent the night. Colleagues of Burgess were included among the guests entertained at the Jarvis Street apartment. Standhaft admitted as well that he and Burgess went to the theatre and concerts together. In short they openly pursued their social life as a couple.

Both Burgess and Standhaft were named as tenants in the lease of the Jarvis Street apartment. Standhaft said that this was done only because the landlord was not satisfied with the strength of Mr. Burgess’ covenant. On the other hand Standhaft admitted that both he and Burgess kept at least some clothes in the Jarvis Street apartment. The lease of that apartment provided for parking spots not only for Burgess' car but also for Standhaft's car. Finally Standhaft admitted moving into the Bay Street apartment after the Bloor Street property was sold. It seems improbable that the York Mills, Jarvis and Bay Street apartments were maintained simply to create an illusion that Burgess did not live with the person who was his open and unconcealed constant companion.

There is virtually no independent evidence to support Standhaft's assertion that he and Burgess in fact lived in the Bloor Street premises. Not one friend or acquaintance was called to testify that he visited Standhaft and Burgess and observed them living together on Bloor Street. No photograph was produced showing the interior of the Bloor Street property. If as alleged the two ordinarily resided in the Bloor Street property and conducted their social life there, it is surprising that no photographs were available. Furthermore the evidence suggested that the Bloor Street property must have been rather uninviting as a residence particularly when compared with the other available living quarters. Mr. Standhaft said that he had to keep his collection of watercolours at the Jarvis Street apartment because the basement at Bloor Street in which the bedroom and sitting room were said to be located was too damp. It may be noted as well that the renovations to the Bloor Street building which resulted in the creation of the housing unit are said to have extended over a period of 18 months. It is hard to imagine that the two chose to live in those conditions at Bloor Street when more attractive alternatives were available. The 1983 enumeration report of the City of Toronto listed Burgess and Standhaft as owners of the Bloor Street property but as persons who resided elsewhere. All of the occupancy costs of the Bloor Street property were charged for income tax purposes to Standhaft's business. Mr. Standhaft's descriptions of the Bloor Street housing unit varied from time to time. At the hearing he indicated that part of it was in the basement and part on the main floor. In a June 1990 letter to Revenue Canada he said that it was “located in the bottom floor" of the building. It is surprising that he was incapable of consistently describing the housing unit which he says he inhabited for five years. In my view the evidence falls far short of establishing on the balance of probabilities that the Bloor Street property or any part of it was ordinarily inhabited by either Burgess or Standhaft during the years in question. The appeals fail and will be dismissed with costs.

Appeals dismissed.