[OFFICIAL ENGLISH TRANSLATION]
Date: 20011116
Docket: 2000-1315(GST)I
BETWEEN:
FLORENT COUSINEAU,
YANNICK COUSINEAU,
AMÉDÉE PELLETIER,
JACQUES ST-LAURENT
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
For the Appellants: Gilles Caron
Yannick Cousineau
Counsel for the Respondent: Robert Poupart
REASONS FOR JUDGMENT
(Delivered orally from the Bench
on October 19, 2001, at Québec, Quebec,
and revised on November 16, 2001)
P.R. Dussault, J.T.C.C.
[1] The evidence as a whole permits me to conclude that the appellants have shown, on a balance of probabilities, that the building that is the subject of the dispute, did not undergo a substantial renovation according to the definition in subsection 123(1) of the Excise Tax Act (the "Act"). I believe that it is important to read this definition:
"Substantial renovation" of a residential complex means the renovation or alteration of a building to such an extent that all or substantially all of the building that existed immediately before the renovation or alteration was begun, other than the foundation, external walls, interior supporting walls, floors, roof and staircases, has been removed or replaced where, after completion of the renovation or alteration, the building is, or forms part of, a residential complex;
(Emphasis added.)
[2] It seems clear to me that much of the work was for items that must be excluded. Next, with respect to the other items, it must be ascertained whether the building was renovated or altered to such an extent that all or substantially all of the building that existed immediately before the work was begun has been removed or replaced. On the basis of the evidence before me today, I think that there is no way for me to reach such a conclusion since the courts have almost consistently interpreted the phrase "all or substantially all" to mean 90 per cent or more.
[3] There are, to be sure, a few decisions here and there holding that this is not an absolute percentage. I myself do not consider it an absolute figure. However, 90 per cent is what is generally understood. The evidence before me does not permit me assert that this percentage is even close to being reached.
[4] To begin with, I would say that the funding obtained is in relation to the costs, which proved to be $231,600, compared with the initial estimates, i.e., $369,400; yet there is an enormous difference at that level. I must, however, consider this item and I am referring here to Exhibit A-5.
[5] I also have details regarding the work, with photographs. For example, documents A-2 and A-3, in addition to the testimony of Yannick Cousineau, indicate that many items were conserved: inter alia, plumbing, electricity, hardwood floors, pressed tin ceilings and some walls. I have details about what was done in each apartment. I also have Yannick Cousineau's testimony, which is, moreover, largely borne out by Mr. Roy's testimony. The affidavit submitted by Mr. Roy (Exhibit A-9) states the following, inter alia:
[TRANSLATION]
The front part of the building was in good condition. It was the back part, which was an annex to the main building, that was damaged and not worth rebuilding. We observed at that time that the stamped tin ceilings were in good condition, the hardwood floors quite acceptable and that at least 50% of the plumbing fixtures were functional. The windows in some places left something to be desired. The roofing was in good condition, except for the part in the rear that had been damaged by the fire and smashed in by the fire fighters.
[6] I will pass over his evaluation, which is his evaluation of the work that was required. He continues as follows:
[TRANSLATION]
Having revisited the property in the last few days, I observed - that the electrical room had been moved, - the rear annex that was damaged by the fire had been demolished, - the pressed tin ceilings had been conserved, - the hardwood floors had been sanded and revarnished, - the masonry walls (stone and brick) had been cleaned. - In fact, over 60% of the surface of the apartments had not been altered. About 75% of the windows had been changed. The windows changed were the most exposed. - The balconies had been redone, - the outside stairways changed and the railings had been made higher to bring them up to code. - In place of the rear annex, enclosed stairwells had been built along with storage areas. - The roofing had just been redone. It was still good at the time.
[7] It will be noted that there is much reference to stairs here. These are items, as we know, that should not be taken into account. Mr. Cousineau's evaluation, according to his documents, indicates that the average percentage of renovation was almost 48%, in fact, nearly 49 per cent, going apartment by apartment. In this respect, I may also refer to the testimony of Mr. Caron, the electrician, the testimony of Mr. Labbé, the plumber and, lastly, to the testimony of Mr. Cloutier of the City of Québec, who visited the building on a number of occasions, before, during and after the renovations. Mr. Cloutier was unable to put forward a figure that went beyond two-thirds, or 65 to 66 per cent, in terms of the percentage of renovation. This is a person, as I said, who visited the building on a number of occasions.
[8] Therefore, I believe that there is no evidence that would bring me closer to 85 per cent or 90 per cent, which is the generally applied standard.
[9] As for the value of the building, this is a very indirect item for determining the percentage of renovation. I observed this at the outset. I do not say that it is not a relevant item, but I do say that it is one that is very indirect and that it is the work that was done that necessarily constitutes the most important item. The documents before me and the testimony, I repeat, do not permit me to conclude that 90 per cent or more of the building was the subject of renovations within the meaning of subsection 123(1) of the Act, excluding all the other items, that is.
[10] Obviously, since there is no architect's report, which would have been more specific, a report by an architect who had verified what work had been carried out, I must base myself on the documents before me and the testimony describing what was really done.
[11] I cannot put an exact figure on the percentage of work performed. However, I have no determinative element that could tell me whether that work was 90 per cent or more and, as I said earlier, it could even be close to this percentage.
[12] In view of the foregoing, the appeal is allowed and the assessment is vacated.
Signed at Ottawa, Canada, this 16th day of November 2001.
|
"Pierre Dussault" |
J.T.C.C.