http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/142798/index.do
Crooks v. The Queen (March 2, 2016 – 2016 TCC 52, Hershfield J.).
Précis: In 2010 Ms. Crooks signed an agreement of purchase and sale to buy a residential property for her own use. The transaction closed in 2012 at which time her credit rating had declined and she was told she need a co-owner on title in order to obtain mortgage financing. A friend of hers, Ms. Richards, agreed to go on title and was shown as a 1% owner on the deed and mortgage. CRA assessed Ms. Crooks to deny her the GST New Housing Rebate because Ms. Richards was not a “particular individual” with respect to Ms. Cooks, i.e, was not a family member who would reside in the residence.
The Tax Court held that as a matter of policy adding Ms. Richards as a fractional owner simply to obtain mortgage financing did not disentitle Ms. Crooks to the New Housing Rebate.
Decision: The Tax Court held that Ms. Richards did not factually have any title to the property:
[44] Turning back to the present case, it is abundantly clear to me that the ultimate liability to the builder (regardless of which agreement we consider) was borne only by the Appellant. Ms. Richard’s only liability was to the Credit Union. That was the intent of the parties (the Appellant, Ms. Richards and the Credit Union). As noted above, no evidence was presented to me regarding the builder’s intent. On the evidence, I am satisfied that the Appellant would relieve Ms. Richards of any liability for going on title to satisfy the demands of the Credit Union. The Appellant accepted ultimate liability for payment to the builder in the unlikely event the builder was able to make a case against Ms. Richards. The Appellant was bound to repay Ms. Richards for any such costs incurred. In the same way that Bondfield was not found to be a recipient, despite the fact that the new subcontractor could sue Bondfield rather than the old subcontractor for payment, I find that Ms. Richards is not a recipient and therefore not captured by paragraph 262(3)(a).
[45] While, in my findings under the previous heading, I made it clear that the amended agreement was not sufficient to support a finding that Ms. Richards had any liability to the builder, the test in my view need not be that rigid. I agree with the reasoning of Justice Campbell that it would be sufficient to only find that Ms. Richards was not ultimately liable to pay any consideration to the builder.
[46] In more general terms, I am satisfied that a party to a contract of purchase and sale whose sole intent and purpose throughout the entire series of transactions is to help the original purchaser obtain financing and who ultimately has no liability to the builder is not a “recipient” and not a “particular individual” under subsection 262(3) or paragraph 254(2)(a). This conclusion only helps ensure that the purpose behind the rebate provision is given life. There is no mischief here that needs to be addressed. The Appellant is exactly the kind of party who was intended to benefit from the subsection 254(2) rebate.
As a policy matter the Court held that Ms. Crooks should be entitled to the Rebate:
[51] While that case speaks of difficulties in interpreting statutory language, the sentiment applies where there are difficulties in making factual findings. The benefit of any doubt must be given to ensure the conferring of intended benefits.
[52] There is no possible policy reason to come to a different conclusion. That adding a person to title to meet the requirements of a mortgagee should not result in the loss of the rebate can be demonstrated by considering what the result would be if Ms Richards were added sequentially to title by the Appellant immediately after title was registered solely in the Appellant’s name. In that case, the rebate would not be disallowed as there would be but one buyer – one particular individual. The foregoing findings that hold that Ms. Richards is not a particular individual do little more than assure the same result – a result consistent with the objects of the Act.
[53] Thus, in my view, the facts of this case allow for a result that ensures the attainment of the objects of the legislation.
[Footnote omitted]
Thus the appeal was allowed. There was no order as to costs since this was an informal procedure appeal.