Date: 20010608
Docket: 2000-3722-GST-I
BETWEEN:
ERIC KOLOTYLUK,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
AND
Docket: 2000-3723-GST-I
BETWEEN:
DEENA M. SZOSTAK,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Margeson, J.T.C.C.
[1] The facts in this case are not in dispute.
[2] At the commencement of the trial the parties agreed upon the Statement of Facts as set out in the Reply to the Notice of Appeal ("Reply") with some additional facts. The parties also agreed upon the admission of certain exhibits. Exhibit R-1 being "Strata Plan LMS 2429"; Exhibit R-2, a plan under the Land Title Act, document Form A registered October 1, 1998; and Exhibit R-3, "State of Title Certificate" with respect to the property in issue.
[3] All of the facts set out in the Reply were admitted with the exception of paragraphs 10(f) and (g). The parties agreed to additional facts as referred to by counsel for the Appellant, as follows: On January 1st, 1989 the Fraser River Harbour Commission as lessor leased by way of a lease certain parcels or tracts of foreshore lands and lands covered by water within the boundaries of the Fraser River Harbour Commission to a Mr. Daniel Wittenberg. Mr. Wittenberg acquired possession of the lands for the purpose of constructing a residential complex on it in the course of a commercial activity.
[4] Mr. Wittenberg subdivided a small portion of the foreshore lands, comprising part of the lands into strata lots with each strata lot having a dimension of approximately one foot by two-and-a-half feet, by the deposit of Strata Plan LMS 2429 in the New Westminster Land Title office. In accordance with provisions of the B.C. Condominium Act ("Condominium Act") and the Land Title Act the Registrar of Land Title Office issued to Mr. Wittenberg, as a registered holder in fee simple, certificates of title to each of the strata lots created by the strata plan. By the deposit of the strata plan, Mr. Wittenberg assigned the lease to the strata corporation - or a strata corporation which allows the owners of each strata lot to have exclusive use of a portion of the water lot as delineated by the float home moorage areas constructed by Mr. Wittenberg.
[5] In essence, this produced a land lot and a lot that is land covered by water of the Fraser River. By an Agreement of Purchase and Sale dated October 1st, 1998, Mr. Wittenberg, with the consent of the commission, sold to Mr. Eric Kolotyluk and Ms. Deena Szostak, the Appellants, for the consideration of $195,000, strata lot 9 of the strata plan. The acquisition of the strata lot gives the purchasers, or the Appellants, the exclusive use of a floating home slip or float home moorage.
[6] Mr. Wittenberg treated the sale of the strata lot as a taxable supply. He required the purchasers to pay, and he collected from them, pursuant to section 221.1 of the Excise Tax Act, ("Act"), Goods and Services Tax ("GST") in the amount of $13,650.
[7] On December 23, 1998, the Appellants filed General Applications for Rebate of GST ("Applications") with the Minister of National Revenue ("Minister"), claiming a rebate in the amount of $13,650 in respect of GST paid in error.
[8] By Notices of Assessment numbered 990130152129P0003 and 990130152129P0002 dated September 7, 1999, the Minister denied the rebates as the supply of the property was taxable and the GST was correctly applied, pursuant to the Act.
[9] Notices of Objection were filed on October 19, 1999. By Notices of Decision dated March 31, 2000, the Minister confirmed the assessments and on August 25, 2000, the Appellants filed applications to extend the time to file Notices of Appeal. On November 3, 2000, Orders extending the time to file Notices of Appeal were issued and Notices of Appeal were filed at the Tax Court of Canada on the same date.
Argument on behalf of the Appellants
[10] Section 13.2, Part I Schedule V of the Act exempts from GST the following:
A supply, made to a person who is the owner, lessee or person in occupation or possession of a floating home, of a right to use mooring facilities or a wharf for a period of at least one month in connection with the use and enjoyment of the home as a place of residence for individuals.
In essence, the argument is that the supply of the property or service by the condominium corporation which was received by the owner or lessee of a residential condominium unit, at the time the supply is made, is GST exempt.
[11] Counsel referred to section 13 of the Act, which states as follows:
A supply made by a condominium corporation to the owner or lessee of a residential condominium unit in the condominium complex managed by the condominium corporation of property or a service relating to the occupancy or use of the unit.
Counsel argued that a conscious decision was made to differentiate between section 13 "owner or lessee", and section 13.2 "person who is the owner, lessee...". Further, that if a different result had been intended by its drafters, section 13.2 could have been drafted to read, "A supply, made to a person who at the time of the supply is the owner, lessee, or person in occupation or possession of a floating home."
[12] However, it is argued that those additional words are not incorporated into section 13.2 of Part I of Schedule V of the Act. Therefore, there is reason to infer that Parliament intended that:
(1) the person to whom the supply is being made under section 13.2 need not be the owner, lessee, etcetera of a floating home at the time that supply is made; and
(2) if a person acquires the right to use moorage facilities prior to acquiring ownership in or the right to lease, occupy or possess a floating home in connection with the use and enjoyment of the home as a place of residence for individuals, then the acquisition of the right to use moorage facilities would not be subject to GST so long as that person then acquires ownership in or the right to lease, occupy, or possess the floating home in connection with the use and enjoyment of the home as a place of residence for individuals.
[13] Therefore, the Appellants' argument is that their purchase of the strata lot qualifies as an exempt supply under section 13.2 and that GST was therefore collected in error.
[14] Counsel for the Appellants rejected what he considers to be the Respondent's position, that section 13.2 requires that the purchaser of float home moorage must already own the floating home to be eligible for the GST exemption. He considers that position to be patently unreasonable because moorage facilities for floating homes are scarce. There are very few developments located on waterfront property which incorporate these facilities. Developments which accommodate floating homes must be located in areas of waterfront protected from the normal wave patterns of open waters. A small number of homes are moored on the protected inland side of Granville Island. The remainder are found in a handful of developments located along the banks of the Fraser River.
[15] Because of its scarcity, when an interested party, clients, find float home moorage for sale it is reasonable for them to purchase the moorage prior to taking steps to acquire a floating home. Without moorage the owner of a floating home runs the significant risk of being unable to find a location at which to moor the home. Like land-based homes, floating homes can cost hundreds of thousands of dollars to build or buy, and like land-based homes, it would be highly imprudent to invest in a home without first securing a site for it. For floating homes, that site can only be found in the form of moorage.
[16] In essence, counsel is arguing that it would be inconceivable that Parliament would have intended that a purchaser of residential-float home moorage would incur the enormous risk of obtaining a float home prior to obtaining moorage simply to qualify for a GST exemption on the acquisition of the moorage.
[17] In the case at bar the Appellants acted logically. They found float home moorage at an attractive site. They purchased the strata lot. They then took steps to obtain rights in a floating home. This was the most reasonable manner in which to establish their floating home. For these actions, they should not be punished with the denial of the GST exemption by the Respondent's interpretation of section 13.2.
[18] Further, counsel argued that one would be hard pressed to imagine that Parliament intended to reward with the GST exemption only the relatively few purchasers of float home moorage privileged enough to already own a floating home, or the gamblers prepared to build a home prior to obtaining the necessary moorage. There appears to be no policy reason for which Parliament might grant these groups the GST exemption, but deny it to the person who buys moorage without first acquiring a home. Such a differentiation would have no basis in reason. Section 13.2 must be interpreted liberally.
[19] Counsel referred to the case of John Tasko v. The Queen, [1997] G.S.T.C. 5 where Judge Bowman addressed the issue whether a person who builds a condominium unit should be denied the GST housing rebate because such a unit did not fall within the ordinary meaning of a "single unit residential complex" indicating that the exclusion was both inadvertent and inconsistent with the context of a new housing rebate and that there was no reason for denying it to a person who builds a condominium unit and yet granting it in all other circumstances. By applying section 15 of the Interpretation Act, the definition of "single unit residential complex" could be ignored.
[20] Counsel also referred to an excerpt taken by Judge Bowman from City of Victoria v. Bishop of Vancouver, [1921] 2 A.C. 384, in support of his proposition that the rule has always been that if the words of an act are open to two interpretations, then they are not clear; and if one interpretation leads to an absurdity, and the other does not, the Court will conclude that the legislature did not intend to lead to an absurdity, and will adopt the other interpretation.
[21] In the case before the Court today, counsel argued that if section 13.2 is applied in the manner suggested by the Respondent an absurdity results, in that, a class of float home moorage purchasers who did not previously own a float home are denied the GST rebate for no reason.
[22] Again, referring to Judge Bowman's discussion of the "teleological approach" in the interpretation of statutes, this approach requires the identification of the telos at which the statute is aimed. In the case at bar, the telos is to give a rebate to individuals who purchase a right to use moorage facilities or a wharf for the use of maintaining a floating home as a place of residence for individuals, just as the Appellants did, the "functional", as opposed to the "purely mechanical" approach. This approach requires a consideration of the scheme as a whole, taking into account the intent of the legislation, its object and spirit and what it actually accomplishes. The third approach is the "words-in-total-context" approach.
[23] In the case before the Court today, this approach would reject the narrow focus which the Respondent urges. In the context of the Act as a whole, specifically when comparing the words of sections 13 and 13.2, the Appellants should be entitled to the rebate.
[24] Counsel referred to the case of Stubart Investments Ltd. v. The Queen, [1984] 1 S.C.R. 536, in support of his position that the object and spirit of the legislation in this case is to give an exemption to individuals who purchase a right to use mooring facilities or a wharf for the use of maintaining a floating home as a residence for individuals.
[25] Additionally, counsel referred to the issue of clarity and argued that any ambiguity in the GST provisions of the Act, which are anything but clear, should be resolved in favour of the taxpayer.
[26] In essence, the ambiguity in the case at bar arises in the use of different terms for those who receive different supplies in sections 13 and 13.2. Different terms necessarily imply different meanings.
[27] Lastly, the scheme of the legislation must be considered. To counsel's mind, the overall scheme of section 13.2 is to grant an exemption to persons who purchase float home moorage where they will keep a floating home as a residence for individuals. By these rules the applicant should be entitled to the GST exemption.
[28] In Tasko, supra, Judge Bowman (as he then was) went on to say:
Section 15 of the Interpretation Act directs us, in forceful and unequivocal terms, not to apply interpretation sections mechanically. I regard the words "as being applicable only if a contrary intention does not appear". (emphasis added)
[29] This counsel's position is that the granting of an exemption in all other circumstances with no other apparent reasons for denying it to a person who purchased float home moorage prior to obtaining rights in a floating home, appears to indicate a statutory context from which contrary intention may be inferred.
[30] Counsel went on to point out excerpts from the case of Stubart Investments Ltd., supra, with respect to the rules of statutory interpretation whereby any ambiguities in the charging provisions of a tax statute are to be resolved in favour of the taxpayer. The rule requires that the words of an act be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the act to determine the object of the act and the intention of Parliament.
[31] Counsel also referred to the case of Johns-Manville Canada v. The Queen, [1985] 2 S.C.R. 46, at page 61 where the Court, when referring to the case of Regent Oil Co. v. Strick, [1966] A.C. 295, at page 313 said:
So it is not surprising that no one test or principle or rule of thumb is paramount. The question is ultimately a question of law for the court, but it is a question which must be answered in the light of all the circumstances which it is reasonable to take into account, and the weight which must be given to a particular circumstance in a particular case must depend rather on common sense than on strict application of any single legal principle.
(Emphasis added)
[32] In conclusion, counsel took the position that the difference in the drafting of sections 13 and 13.2 would imply contrary intentions by the drafters. The view which conforms more closely to the object, spirit and scheme of section 13.2, would be that which would allow for the person to be either a present or future owner or lessee of a floating home so long as he or she were to use the moorage as a place of residence for individuals, to be entitled to the GST exemption upon the acquisition of the moorage rights.
[33] Counsel submitted that the appeal should be allowed with costs.
Argument on behalf of the Respondent
[34] Counsel for the Respondent characterized the Appellants' position as limiting this case to one issue alone and that was the question of timing in determining whether or not section 13.2 applied regardless of whether the Appellants were owners, lessees or in possession of a floating home at the time that the right was purchased. However, the Reply was not limited to that issue and, in the Respondent's submission, there are two issues: First, can the sale of the strata lot to the purchasers in this case be characterized merely as the supply of a right to use mooring facilities or a wharf within the meaning of section 13.2? Second, if so, then does section 13.2 apply to the supply of a right to use mooring facilities or a wharf to a purchaser who is not the owner, lessee or person in occupation or possession of a floating home at the time the supply is made? The Respondent's position was that the answers to both of these questions is no.
[35] He then commenced discussion of the various provisions of the Act which must be satisfied in order for his interpretation to be accepted including supply, taxable supply and commercial activity. However, counsel for the Appellants did not contest these preliminary matters and put the issue merely as the transaction not being taxable because it was an exempt supply.
[36] Counsel for the Appellants argued that there were a number of supplies made here, only one of which was the right to moor. He quoted section 136 which states as follows:
For the purposes of this part, a supply by way of lease, license or similar arrangement of the use or right to use real property or tangible personal property shall be deemed to be a supply of real property or tangible personal property as the case may be.
[37] Under this definition of real property are included a wide range of rights to use real property.
[38] He then turned his attention to the first issue as to whether or not the purchase of the lot can be properly characterized as a mere supply of a right to use mooring facilities or a wharf.
[39] He referred to the Condominium Act, Revised Statutes Chap. 64 to describe what interests were transferred to the Appellants when they obtained the strata lot. Section 2 of the Condominium Act states:
Land may be subdivided into strata lots by the deposit of a strata plan, and the strata lots so created, or any one or more of them, may, subject to this Act, devolve or be disposed of in the same manner and form as any land the title to which is registered in a land title office.
[40] A certified copy of the Strata Plan LMS 2429, Exhibit R-1, was deposited in accordance with the Act. There is no dispute that the Appellants purchased a strata lot created by this plan, namely the lot shown as lot 9 on the plan. Thus, under section 2, this lot may be disposed of in the same manner and form as any other land, including a disposition in fee simple.
[41] Further, Exhibit R-3 was a certified copy of the State of Title Certificate for lot 9. It states that the two Appellants in these cases are the registered owners as joint tenants in fee simple of lot 9. A land transfer document, which is also in evidence, is to the same effect, that there was a transfer in fee simple.
[42] One of the things that the Appellants bought in this transaction is fee simple title to lot 9 in the strata as joint tenants.
[43] Under the definition of "owner" in the Condominium Act, the Appellants were the owners of lot 9 at the strata lot.
[44] Section 13 of the Condominium Act, in particular section 13(2) states that:
The owners of the strata lots included in a strata plan and their successors, on deposit of the strata plan in a land title office, constitute and are members of a corporation under the name "The Owners, Strata Plan No. ..." (the registration number of the strata plan).
Therefore, the Appellants, as owners of strata lot 9, have purchased, along with their strata lot, memberships in the strata corporation. As provided throughout the Condominium Act, this gives the Appellants various rights regarding the business of the strata corporation, including voting rights and the like.
[45] Subsection 12(1) of the Condominium Act provides as follows:
The common property, common facilities and other assets of the strata corporation must be held by the owners as tenants in common in shares proportional to the unit entitlement of their strata lots.
[46] According to Strata Plan LMS 2429, Exhibit R-1, the strata plan shows a map of the property of the strata. This is not water. The water lot is located somewhere near the property. This is the actual fee simple land that was owned by the strata corporation. The entire triangle is common property. Counsel opined that that is where the garage and parking lot were located and possibly other improvements although there was no evidence on that point. However, the Appellants, by virtue of subsection 12(1) of the Condominium Act have bought interests in the entire fee simple property owned by the strata corporation.
[47] The evidence further shows that the Appellants purchased exclusive rights to use a parking stall on the strata property and exclusive rights to use a garage located on the strata property. Further, it was agreed that the Appellants purchased the exclusive right to use a section of the water lot leased by the strata corporation in the Fraser River although no evidence was introduced as to the exact nature of what the Appellants were entitled to use on this lot, whether it was merely the right to moor their home on that lot, or whether they had exclusive use and possession of the entire lot.
[48] In summary, therefore, the Respondent submitted that the Appellants purchased the following bundle of rights under the contract of purchase and sale in this case: fee simple to strata lot 9; a membership in the strata corporation; an interest in the common property of the strata; the right to use one parking stall; the exclusive right to use a garage in the limited common property areas of the strata; and the exclusive right to use an area of land under water leased by the strata corporation.
[49] Counsel then proceeded to a consideration of the principles of the interpretation of Statutes and pointed out that he could not find any authorities specifically addressing subsection 13.2. He referred to the case of Corporation Notre-Dame de Bon-Secours v. Québec, [1995] 1 C.T.C. 241 at page 250, where Justice Gonthier stated:
In light of this passage there is no longer any doubt that the interpretation of tax legislation should be subject to the ordinary rules of construction. At page 87 of his text Construction of Statutes (2nd ed. 1983), Driedger fittingly summarizes the basic principles: "...the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act and the intention of Parliament". The first consideration should therefore be to determine the purpose of the legislation, whether as a whole or a expressed in a particular provision. The following passage from Vivien Morgan's article "Stubart: What the Courts Did Next" (1987), 35 Can. Tax J. 155, at pages 169-70, adequately summarizes my conclusion:
There has been one distinct change [after Stubart], however, in the resolution of ambiguities. In the past, resort was often made to the maxims that an ambiguity in a taxing provision is resolved in the taxpayer's favour and that an ambiguity in an exempting provision is resolved in the Crown's favour. Now an ambiguity is usually resolved openly by reference to legislative intent.
[Emphasis added.]
The teleological approach makes it clear that in tax matters it is no longer possible to reduce the rules of interpretation to presumptions in favour of or against the taxpayer or to well-defined categories known to require a liberal, strict or literal interpretation. I refer to the passage from Dickson C.J., supra, when he says that the effort to determine the purpose of the legislation does not mean that a specific provision loses all its strictures. In other words, it is the teleological interpretation that will be the means of identifying the purpose underlying a specific legislative provision and the Act as a whole; and it is the purpose in question which will dictate in each case whether a strict or a liberal interpretation is appropriate or whether it is the tax department or the taxpayer which will be favoured.
[50] At page 251, Justice Gonthier summarizes his conclusions on the statutory interpretation by saying:
The rules formulated in the preceding pages, some of which were relied on recently in Symes v. Canada, [1993] 4 S.C.R. 695, [1994] 1 CTC 40, 94 DTC 6001, may be summarized as follows:
The interpretation of tax legislation should follow the ordinary rules of interpretation;
A legislative provision should be given a strict or liberal interpretation depending on the purpose underlying it, and that purpose must be identified in light of the context of the statute, its objective and the legislative intent; this is the teleological approach;
The teleological approach will favour the taxpayer or the tax department depending solely on the legislative provision in question, and not on the existence of predetermined presumptions;
Substance should be given precedence over form to the extent that this is consistent with the wording and objective of the statute;
Only a reasonable doubt, not resolved by the ordinary rules of interpretation, will be settled by recourse to the residual presumption in favour of the taxpayer.
[51] Counsel then turned to consideration of subsection 13.2. By his interpretation of this section, what is contained in the exemption essentially is a supply of a right to use mooring facilities or a wharf. Purchase of the strata lot here included much more than that. It included fee simple title to the lot, a membership in the strata corporation, an interest in the common property and the right to use certain portions of a limited common property exclusively. None of these rights constitute a mere right to use a mooring facility or a wharf. Furthermore, there was no evidence as to the exact nature of the rights in the leasehold interest of the water lot. There is no evidence that the right supplied to the Appellants is simply the right to moor a floating home there.
[52] The Respondent submitted that without further evidence of the nature of the Appellants' rights of the use of that lot, the Court should not find that it consists merely of the right to moor the floating home. If anything, the evidence indicates that the Appellants are entitled to exclusive use and enjoyment of the lot, and all the common-law rights that come with such an exclusive use and enjoyment, such as rights to quiet possession and so forth.
[53] Counsel then turned to the context of section 13.2. It was his position that the placement of section 13.2 within Part I of Schedule V reinforces the Respondent's position that the section does not apply to exempt the supply of the real property in issue. Section 13.2 is part of a group of sections in the schedule which goes from section 13 to section 13.4. These sections provide exemptions for certain types of supplies, such as fees paid to the strata corporation for the upkeep of the property. Section 13.1 provides a similar exemption for fees paid by persons living in a co-op, section 13.3 exempts the right to use a washing machine or clothes dryer located in a common area of the residential complex, and section 13.4 exempts the use of a laundry facility and to exempt any charge that they would need to pay in order to use those facilities.
[54] All of these sections relate to various services provided to people who live in a multi-dwelling complex such as a condominium, or a co-op and which are normally paid for with a monthly service fee. It is no accident that section 13.2 falls in the middle of these sections. The intent of section 13.2, as revealed by its context in the legislation, is to exempt from GST, GST moorage fees in the nature of a monthly service charge paid, for example, by a strata lot owner to the strata corporation in exchange for the right to moor and the various expenses that are required to maintain the docking facilities. The intention was not to exempt the supply of an entire strata lot and all the accompanying rights simply because the strata involves a place to moor a floating home.
[55] Further, if the Appellant had bought a floating home along with the strata lot, it is obvious that they would have purchased more than a mere right to moor the floating home, and there is no way that the entire purchase of the lot could have fallen under section 13.2. Here it so happens that they have purchased everything but the floating home.
[56] It was not the intention of Parliament to exempt the purchase of the entire lot from GST simply because the Appellants chose to purchase a floating home elsewhere and bring it on to the lot.
[57] Therefore, on the first issue, the purchase of the entire strata lot cannot be characterized as a mere supply of a right to moor a floating home and so the supply is not exempt under section 13.2 of Part I of Schedule V.
[58] In any event, if the Court should find that "supply" can be characterized as a supply of a right to moor a floating home, then the Respondent submits that section 13.2 does not apply because at the time the Appellants purchased the strata lot they did not have a floating home.
[59] The plain language of the section and the verb tense used indicates that in order to fall under this exemption, supply of the right to moor must be made to a person who is, at the time when the supply is made, the owner, lessee or person in possession of a floating home. In this case it is admitted that the Appellants did not own, lease, and were not in possession of a floating home at the time of the transfer of title and therefore the supply of the right does not fall under section 13.2.
[60] In the event that the Court should find that the supply was exempt, the amount refundable to each Appellant should be one-half of the GST initially paid on the lot.
[61] This position was not disputed by counsel for the Appellants.
[62] The appeals should be dismissed.
Analysis and Decision
[63] As indicated in the summary of the Agreed Statement of Facts in this matter there is really no dispute as to the facts. Other facts were settled by the introduction of the various exhibits and no real issue was taken as to what those exhibits stood for. Counsel for the Appellants made little reference to these documents but counsel for the Respondent rightly pointed out that his interpretation of what the documents establish was not contested by counsel for the Appellants.
[64] The position of counsel for the Appellants was that based on the reading of section 13.2 it is reasonable to infer the legislature intended that: (1) the person to whom the supply is being made under section 13.2 need not be the owner, lessee etc. of a floating home at the time the supply is made; and (2) if a person acquires the right to use moorage facilities prior to acquiring ownership in or the right to lease, occupy or possess a floating home in connection with the use and enjoyment of the home, as a place of residence for individuals, then the acquisition of the right to use moorage facilities would not be subject to GST so long as that person then acquires ownership in or the right to lease, occupy or possess the floating home in connection with the use and enjoyment of the home as a place of residence for individuals.
[65] Counsel for the Respondent has taken the position that what the Appellants are really arguing is a question of timing whereas the Respondent's position was that there are really two issues involved in this case. Firstly, can the sale of the strata lot to the purchasers in this case be characterized merely as a supply of a right to use mooring facilities or a wharf within the meaning of section 13.2 and; secondly, if so, then does section 13.2 apply to a supply of a right to use mooring facilities or wharf to a purchaser who is not the owner, lessee or person in occupation or possession of a floating home at the time the supply is made. The Respondent's position was that the answer to both these questions was no.
[66] It is interesting to note that counsel for the Appellants, in his argument contained at page 12 of the transcript, appears to be referring to the taxable portion as only the acquisition of the right to use the moorage facilities, which is what the section talks about, and not the cost of whatever else the Appellants may have purchased. This may have been a freudian slip only but in any event it was addressed by counsel for the Respondent in his argument.
[67] It would appear to the Court that what the Appellants are really arguing is that a reasonable interpretation of section 13.2 entitles the Appellants to be exempt not only for the value of the right to use moorage facilities but to be exempt for all of the value of all of the rights that the Appellants purchased even though the right to use the moorage facilities was purchased before the Appellants purchased the remaining rights which have been referred to.
[68] In order for the Appellants to be successful on this basis they must satisfy the Court on a balance of probabilities that section 13.2 exempts not only the cost of obtaining the moorage facilities but that a reasonable interpretation of the section also should mean that when the Appellants obtained the subsequent propriety rights, the value of such rights would also be exempt under section 13.2 on the basis that they had acquired the moorage facilities rights originally as practical and reasonable purchasers who did not want to go to the expense of purchasing a floating home first, as it may turn out that they would not be able to gain the moorage facilities and therefore their investment would be wasted.
[69] This Court concludes that simply put the issues boil down to the following:
(1) What did the Appellants purchase? (2) When did the Appellants make the purchases? (3) What is the significance of the timing of the purchases? (4) Can the provisions of section 13.2 be reasonably interpreted to allow a person who is the purchaser of the right to use moorage facilities or a wharf enable such a purchaser to avoid paying GST on the costs of other rights or propriety interests that he may acquire, even at a different time on the basis of fairness? It was argued that there appears to be no policy reason for which Parliament might grant an exemption to one group but deny it to another because he or she acquired the moorage facilities first. It was argued that such a differentiation would have no basis in reason.
[70] Towards the end of his argument, counsel for the Respondent made a significant point, that if the Appellants in this case had bought a floating home along with the strata lot, it is obvious that they would have purchased more than the mere right to moor their floating home, and there is no way that the entire purchase of the lot could have fallen under section 13.2. In the Respondent's submission, it was not the intention of Parliament to exempt the purchase of the entire lot from GST simply because the Appellants chose to purchase a floating home elsewhere and bring it on to the lot.
[71] Both parties canvassed the applicable law on statutory interpretation. After considering all of those cases and the arguments made by both counsel, it is the Court's position that it must make every effort to determine the purpose of the legislation. It must use the teleological interpretation to identify the purpose underlying the legislative provisions in the Act as a whole and it is such purpose that will dictate in each case whether a strict or liberal interpretation is appropriate, or whether it is the tax department or the taxpayer which will be favoured. Thus, the Court should follow the ordinary rules of interpretation. The Court must find the purpose underlying the specific provision in light of the context of the statute, its objective and the legislative intent. This is what is meant by the teleological approach. There are no pre-determined presumptions in favour of or against either party. It is only when a reasonable doubt is not resolved by the ordinary rules of interpretation where recourse will be given to a residual presumption in favour of the taxpayer.
[72] In the case at bar the Court can find no ambiguity in section 13.2. It appears to be clear that the intention of this section was to provide an exemption from GST "of a right to use moorage facilities or wharf for a period of at least one month in connection with the use and enjoyment of the home as a place of residence for individuals". This section clearly talks about use of the moorage facilities and not a floating home or other rights which the taxpayer might purchase in conjunction with the use of the moorage facilities. Further, it would appear clear from this section that the supply that is talked about is a supply that is made to a person who is the owner, lessee or person in occupation or possession of a floating home.
[73] There can be no doubt that in the case at bar the Appellants were not such persons at the time they purchased the right to use moorage facilities. Consequently, with respect to the second question posed by counsel for the Respondent, the Court agrees with the Respondent's interpretation and concludes that section 13.2 does not apply to a supply of a right to use moorage facilities or a wharf to a purchaser who is not the owner, lessee or person in occupation or in possession of a floating home at the time the supply was made. No matter how liberal an interpretation the Court gives to the section it cannot conclude that the Appellants here were purchasers, were the owners, lessees or persons in occupation or possession of a floating home at the time the supply was made.
[74] The Court agrees with counsel for the Respondent that the activities of the Appellants included more than a simple purchase of a plot of land. One has to determine what interest was transferred to the Appellants, bearing in mind the evidence presented in the documents submitted into evidence including the Condominium Act, the Strata Plan MLS 2429 and the State of Title Certificate for lot 9.
[75] As argued by counsel for the Respondent, the Court is satisfied that the Appellants acquired fee simple title to lot 9 in the strata as joint tenants. Further, the documents indicate that the Appellants, as owners of strata lot 9, purchased, along with their strata lot, memberships in the strata corporation. Under the Condominium Act this gave the Appellants various rights regarding the business of the strata corporation, including voting rights and the like. Further, under the provisions of section 12(1) of the Condominium Act:
The common property, common facilities and other assets of the strata corporation must be held by the owners as tenants in common in shares proportional to the unit entitlement of their strata lots.
[76] Further, under the Strata Plan MLS 2429, Exhibit R-1, the Court can only conclude that the Appellants acquired actual fee simple land that was owned by the strata corporation. This was not the water lot which was located somewhere near the property. In light of the fact that there was no other evidence that the Appellants had acquired anything less, the Court has to conclude that on the basis of section 12(1) of the Condominium Act the Appellants acquired an interest in the entire fee simple property owned by the strata corporation.
[77] Further, evidence showed that the Appellants purchased the exclusive rights to use a parking stall on the strata property and exclusive rights to use a garage located on the strata property. They also purchased exclusive rights to use a section of a water lot leased by the strata corporation in the Fraser River. Again there was no evidence submitted as to the exact nature of what the Appellants were entitled to use on this lot or any limitations thereon and it may have been merely the right to moore their home on that lot or they may have had something more.
[78] As characterized by counsel for the Respondent, it would appear clear that the Appellants purchased the following rights under the contract of purchase and sale in this case: fee simple to strata lot 9; a membership in the strata corporation; an interest in the common property of the strata; the right to use one parking stall; and the exclusive use to the garage in the limited common property areas of the strata and an exclusive right to use an area of land underwater leased by the strata corporation.
[79] Counsel for the Appellants argued that a conscious decision was made to differentiate between section 13 "owner" or "lessee" and subsection 13.2 "person who is the owner, lessee or person in occupation or possession of a floating home". On that basis he argued that if the legislators had wanted to create a different result than that proposed by the Appellants, subsection 13.2 could have been drafted to read: "supply made to a person who at the time the supply was made is the owner, lessee or person in occupation or possession of a floating home". The Court has great difficulty in concluding that that would have made any difference or that it could possibly have had the effect proposed by the Appellants.
[80] Counsel for the Respondent referred to the context of section 13.2. It was his submission that the placement of section 13.2 within Part I of Schedule V reinforces his position that the section does not apply to exempt the supply of real property in issue. This section was part of a group of sections which provides specific exemptions and might exempt monthly fees paid to the strata corporation for the upkeep of the property. Section 13.1 provides a similar exemption for fees paid by persons living in a co-op. Again counsel pointed out that all these sections relate to various services provided to people who live in multi-dwelling complexes such as a condominium complex or a co-op which are normally paid for with the monthly service fee. These submissions are not without merit.
[81] Section 13.2 falls in the middle of these sections and is intended to exempt from GST, GST moorage fees in the nature of a monthly service charge paid by the strata lot owners to the strata corporation in exchange for the right to moor and the various expenses that are required to maintain the docking facilities. The intention was not to exempt the supply of an entire strata lot and all the accompanying rights simply because a strata lot involves a place to moor a floating home.
[82] Further, although it is not essential for the decision in this case, the Court is satisfied that if the Appellants in this case had bought a floating home along with the strata lot, they would have purchased more than the mere right to moor the floating home and the provisions of section 13.2 would not have acted to exempt the entire purchase rights from the application of GST.
[83] As argued by counsel for the Respondent, it was not the intention of Parliament to exempt the purchase of the entire lot from GST simply because the Appellants chose to purchase a floating home elsewhere and bring it on to the lot.
[84] In regard to the first issue as proposed by counsel for the Respondent, the Court agrees that the purchase of the entire strata lot cannot be characterized as the mere supply of a right to moor a floating home and consequently the supply in this case is not exempt under section 13.2 of Part I, Schedule V. Further, on issue two, the Court is satisfied that section 13.2 does not apply because at the time the Appellants purchased the strata lot they did not have a floating home.
[85] Insofar as the Court is concerned the language of the section is plain and unambiguous and the verb tense which is used in the section leads no doubt as to when it is to apply. In this case, it is clear that at the time when the supply was made the Appellants did not own, lease, and were not in possession of a floating home at the time of the transfer title and therefore the supply of the right does not fall under section 13.2.
[86] It may not be a very good analogy but what the Appellants are seeking in this particular case would be tantamount to a purchaser buying a new motor vehicle and having no trade-in for it, then sometime later coming back to the dealership, trading-in another motor vehicle and asking that the value of this motor vehicle be deducted from the value of the new motor vehicle so that his tax would be less. It is clear to the Court that the time about which the legislation is speaking is the present tense. It does not apply to subsequent acquisitions. Such an interpretation does not lead to an absurd result as contemplated by Judge Bowman in Tasko, supra.
[87] The appeal is dismissed and the Minister's assessment is confirmed.
Signed at Ottawa, Canada, this 8th day of June 2001.
"T.E. Margeson"
J.T.C.C.
COURT FILE NO.: 2000-3722(GST)I
2000-3723(GST)I
STYLE OF CAUSE: Deena Szostak and Eric Kolotyluk
and Her Majesty the Queen
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: April 11, 2001
REASONS FOR JUDGMENT BY: the Honourable Judge T.E. Margeson
DATE OF JUDGMENT: June 8, 2001
APPEARANCES:
Counsel for the Appellants: Quentin J. Adrian
Counsel for the Respondent: Jason Leslie
COUNSEL OF RECORD:
For the Appellants:
Name: Adrian & Co.
Firm: Barristers & Solicitors
5660 Yew Street
Vancouver, B.C. V6M 3Y3
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-3722(GST)I
BETWEEN:
ERIC KOLOTYLUK,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on common evidence with the appeal of Deena M. Szostak (2000-3723(GST)I) on April 11, 2001, at Vancouver, British Columbia, by
the Honourable Judge T.E. Margeson
Appearances
Counsel for the Appellant: Quentin J. Adrian
Counsel for the Respondent: Jason Leslie
JUDGMENT
The appeal from the assessment made under Part IX of the Excise Tax Act, notice of which is dated September 7, 1999 and bears number 990130152129P0003, is dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 8th day of June 2001.
|
"T.E. Margeson" |
J.T.C.C.
2000-3723(GST)I
BETWEEN:
DEENA SZOSTAK,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on common evidence with the appeal of Eric Kolotyluk (2000-3722(GST)I) on April 11, 2001, at Vancouver, British Columbia, by
the Honourable Judge T.E. Margeson
Appearances
Counsel for the Appellant: Quentin J. Adrian
Counsel for the Respondent: Jason Leslie
JUDGMENT
The appeal from the assessment made under Part IX of the Excise Tax Act, notice of which is dated September 7, 1999 and bears number 990130152129P0002, is dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 8th day of June 2001.
|
"T.E. Margeson" |
J.T.C.C.
.