Date: 19990324
Docket: 98-1822-GST-I
BETWEEN:
SHARON WALDRON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for judgment
Sarchuk, J.T.C.C.
[1] The Appellant applied for a goods and services tax (GST) new housing rebate on January 12, 1998 in the amount of $2,700.97. The Minister of National Revenue (Minister) disallowed the said rebate and this appeal followed. The Appellant was represented by her husband, Michael Waldron.
[2] At the commencement of the trial, the parties filed with the Court the following statement of agreed facts:
1. Sharon Waldron bought the house and property located as 721 Mill Road North in Boissevain, Manitoba in 1994;
2. Sharon Waldron is married to Michael Waldron and at all material times hereto he was the person who had personal knowledge of the purchase of the home, the substantial renovations that were carried out, and the subsequent application for the GST rebate;
3. Minor renovations to the house began in 1995 and then renovations began in earnest in the summer of 1995;
4. Michael and Sharon Waldron ("the Appellants") also owned 529 Broadway Street, also in the town of Boissevain, Manitoba at the same time that they owned 721 Mill Road North. The latter house was not suitable for occupation and the Appellants continued to reside in the house located at 529 Broadway Street until it was sold with a possession date of September 2, 1995.
5. Because of the sale of 529 Broadway Street, the Appellants moved into 721 Mill Road North effective September 2, 1995.
6. Some of the major renovations had been completed at the time they moved into the house and these renovations included the following:
a) the kitchen was basically finished;
b) the floors had been sanded and finished;
c) the exterior walls had been gutted and insulation and new drywall had been installed;
d) the electrical system and the plumbing system had been completely replaced;
7. Despite many renovations having been completed by possession date, a number of major renovations had not been completed:
a) the roof was leaking badly and had to be completely reshingled;
b 33 windows in the house were replaced before winter set in;
c) over the next 2 years the interior doors were installed and all moldings were put on;
d) basement walls were erected and finished;
e) the front porch was falling down and it was only repaired in the summer of 1998;
f) the garage is still not rebuilt;
8. The Appellant became aware that there was a GST rebate available for existing homes that had undergone a substantial renovation in addition to the rebate that was available for new home construction;
9. In January of 1995 the Appellant contacted Linda Saunderson, an official with the GST department in Brandon, Manitoba;
10. Linda Saunderson advised the Appellant that he should wait to make sure that all renovations were completed because the rebate applied to everything including even landscaping;
11. Linda Saunderson also advised the Appellant that he had 2 years from the date of substantial completion to apply for the rebate;
12. On April 24, 1996 Michael Waldron again telephoned Linda Saunderson specifically to confirm the time limit for filing the application for the rebate. He was advised at that time that the time limit was 2 years from the date of substantial completion.
13. The Appellant intended to delay making the application until the front porch was completely repaired and the garage was built, but in the latter part of 1997 the decision was made to go ahead and file the application for the rebate;
14. The application for a rebate was signed by the Appellant, Sharon Waldron on January 1, 1998 for an amount of $2,700,97;
15. The application has been denied on the basis that the application was not filed within 2 years of occupancy of 721 Mill Road North;
16. It is an agreed Statement of Fact that Linda Saunderson made the representation to the Appellants on 2 separate occasions that the time limit for filing the application for the rebate was 2 years from the date of substantial completion and at no time did she advise the Appellants that the deadline was the earlier of 2 years from the date of substantial completion or the date of occupancy of the home.
[3] The relevant provisions of the Excise Tax Act (the Act) are found in subsection 256(3). At the time of the application, it read 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 within two years after the earliest of
(a) the day that is two years after the day the complex is first occupied as described in subparagraph (2)(d)(i),
(a.1) the day ownership is transferred as described in subparagraph (2)(d)(ii); and
(b) the day construction or substantial renovation of the complex is substantially completed.
However, it should be noted that the above section was amended by S.C. 1997, c.10, s. 66(3), and is applicable to any rebate in respect of a residential complex for which an application is filed with the Minister on or after April 23, 1996 except where:
(a) the residential complex was, at any time after the construction or substantial renovation thereof began and before that day, occupied as a place of residence or lodging;
(b) the construction or substantial renovation of the residential complex was substantially completed before that day; or
(c) the applicant, before that day, transferred ownership of the residential complex to a recipient of a supply by way of sale of the complex.
If one of the above three exceptions is met, then the former provisions will apply. It reads as follows:
256(3) A Rebate shall not be paid under subsection (2) in respect of a residential complex to an individual unless the individual files an application for the Rebate within two years after the earlier of
(a) the day the complex is first occupied as described in subparagraph 2(d)(i) or ownership is transferred as described in subparagraph 2(d)(ii), and
(b) the day construction or substantial renovation of the complex is substantially completed.
In light of the facts admitted, the former provisions apply.
[4] The Minister has taken the position that since the application was not filed within the prescribed period under subsection 256(3) of the Act, the Appellant's application was properly disallowed. More specifically, he says that the Appellant does not qualify for the rebate because the two-year time limit has elapsed since, as admitted, she moved into the uncompleted house in September 1995.
[5] The Appellant's position is that the Minister is estopped from changing his position and is bound by the representation of fact made by one of Revenue Canada's employees. That representation is described in paragraph 16 of the agreed facts as follows:
16. ... that Linda Saunderson made the representation to the Appellants on 2 separate occasions that the time limit for filing the application for the rebate was 2 years from the date of substantial completion and at no time did she advise the Appellants that the deadline was the earlier of 2 years from the date of substantial completion or the date of occupancy of the home. (Emphasis added)
[6] With respect to estoppel, the Supreme Court of Canada in Canadian Superior Oil Ltd. v. Paddon-Hughes Development Co. Ltd.[1] adopted the following legal principles:
The essential factors giving rise to an estoppel are I think:
1. A representation or conduct amounting to a representation intended to induce a course of conduct on the part of the person to whom the representation is made.
2. An act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation is made.
3. Detriment to such person as a consequence of the act or omission.[2]
[7] The issue of estoppel has been considered in a number of cases and the principle which generally can be taken therefrom is that no representation involving an interpretation of law by a servant or officer of the Crown can bind it. The rationale for that position was admirably set out by Bowman T.C.C.J. in Goldstein v. The Queen:[3]
It is sometimes said that estoppel does not lie against the Crown. The statement is not accurate and seems to stem from a misapplication of the term estoppel. The principle of estoppel binds the Crown, as do other principles of law. Estoppel in pais, as it applies to Crown, involves representations of fact made by officials of the Crown and relied and acted on by the subject to his or her detriment. The doctrine has no application where a particular interpretation of a statute has been communicated to a subject by an official of the government, relied upon by that subject to his or her detriment and then withdrawn or changed by the government. In such a case a taxpayer sometimes seeks to invoke the doctrine of estoppel. It is inappropriate to do so not because such representations give rise to an estoppel that does not bind the Crown, but rather, because no estoppel can arise where such representations are not in accordance with the law. Although estoppel is now a principle of substantive law it had its origins in the law of evidence and as such relates to representations of fact. It has no role to play where questions of interpretation of the law are involved, because estoppels cannot override the law.
[8] From the foregoing, it is evident that estoppel may apply if an officer of the Crown made a representation of fact which was relied and acted upon by this Appellant to her detriment.[4] The question in this appeal is whether the information given by Ms. Saunderson to the Appellant's husband was a representation of fact or of law.
[9] The representation made by the Crown officer, Linda Saunderson, was with respect to the provisions of subsection 256(3) of the Act, as it then read, which was not entirely accurate but which was relied on by the Appellant to her detriment. More specifically, the representation reflects her failure to stipulate that the statutory provision required an applicant for the rebate to file her application within two years of the day the residence was first occupied or ownership was transferred as described in subparagraph 2(d)(ii) of the Act. This, in my view, falls into the category of interpretation of law and thus estoppel does not arise.
[10] I am also constrained to note that the parties agreed to proceed on the basis of agreed facts. Unfortunately, that stark recitation fails to provide the Court with the context which those representations were made which might have been of assistance. I make this comment because, as was observed by Bowman T.C.C.J. in Wong v. M.N.R.,[5] oral representations by officials of the Tax Department are unreliable. They are often based on inadequate disclosure of the facts or an imperfect articulation of the question.
[11] Since the statutory requirement supporting a claim for a rebate has not been met, the claim must be disallowed. The appeal is dismissed.
Signed at Ottawa, Canada, this 24th day of March, 1999.
"A.A. Sarchuk"
J.T.C.C.