Federal Court of Appeal Decisions

Date: 20160209

Docket: A-115-15

Citation: 2016 FCA 45

Heard at Toronto, Ontario, on February 9, 2016.

Judgment delivered from the Bench at Toronto, Ontario, on February 9, 2016.

Date: 20160209

Docket: A-115-15

Citation: 2016 FCA 45

REASONS FOR JUDGMENT OF THE COURT

(Delivered from the Bench at Toronto, Ontario, on February 9, 2016).

RYER J.A.

[1]               This is an appeal by Mr. Dmitri Sherman (the “Taxpayer”) from a decision of Justice David Graham of the Tax Court of Canada (the “Judge”), dated February 9, 2015, in Tax Court Docket 2014-2081(GST)I. The Judge dismissed the Taxpayer’s appeal from an assessment, dated April 12, 2013 (the “Assessment”), made by the Minister of National Revenue (the “Minister”) under the Excise Tax Act, R.S.C. 1985 (the “Act”), c. E-15, disallowing the Taxpayer’s claim for a rebate of goods and services tax pursuant to subsection 254(2) (the “New Housing Rebate”) in respect of the purchase by the Taxpayer of a property located at 24 Thomas Cook Avenue in Vaughan, Ontario (the “Property”). In these reasons, unless otherwise indicated, all statutory references are to the corresponding provisions of the Act.

[2]               Subsection 254(2) contains a number of requirements that must be met before an individual will be entitled to the New Housing Rebate. In this appeal, only the requirements in paragraphs 254(2)(b) and (g) are in issue. Those provisions read as follows:

[3]               In the reply to the Taxpayer’s notice of appeal from the Assessment, the Minister assumed that the Taxpayer did not intend to reside in the Property and did not occupy the Property.

[4]               In his reasons, the Judge determined that the key issue was the requirement in paragraph 254(2)(b). He determined that the Taxpayer failed to demolish the Minister’s assumption that the Taxpayer did not have the intention to occupy the Property as his primary place of residence, and that this failure was a sufficient reason to dismiss the appeal from the Assessment. In reaching this conclusion, the Judge found that the evidence of the Taxpayer and his cousin lacked credibility and did not satisfy him that the Taxpayer had the requisite intention to occupy the Property, as required by paragraph 254(2)(b).

[5]               In support of this conclusion, the Judge made a number of findings including that:

a)      the Taxpayer gave inconsistent explanations with respect to his occupancy of the Property;

b)      the Taxpayer provided the Canada Revenue Agency with inconsistent moving expense invoices without a plausible explanation of their differences;

c)      the Taxpayer implausibly urged the Judge to believe that he occupied the Property but did not consume any water during a significant portion of the period of such occupancy; and

d)     the Taxpayer’s evidence that he sold the Property because he was not able to live alone, for medical reasons, was belied by his purchase of another residential property, before the date of that sale, in respect of which he also claimed the New Housing Rebate.

[6]               In appellate review of a decision of the Tax Court of Canada, the standard of review of questions of law is correctness. Questions of fact and mixed fact and law, in respect of which there is no readily extricable question of law, are reviewed on the standard of palpable and overriding error (Housen v. Nikolaisen, 2002 SCC 33 at paragraphs 8, 10, 36, [2002] 2 S.C.R. 235).

[7]               In this appeal, the Taxpayer takes issue with the Judge’s factual findings referred to above and offers explanations as to why it would have been open to the Judge to make different findings. In effect, we are urged to reweigh the evidence that was before the Judge and to reach conclusions more favourable to the Taxpayer. This we cannot do. In our view, there was ample evidence before the Judge that supports his conclusions. Moreover, this Court owes considerable deference to a trial judge who makes credibility findings based upon the evidence and demeanor of the witnesses who testify before him or her.

[8]               Counsel for the Taxpayer asserts that the Judge erred in making his credibility findings by failing to consider the state of the Taxpayer’s mental health. The Judge’s reasons clearly indicate that he was aware of the Taxpayer’s assertions with respect to his mental health and memory issues. In that regard, the Judge observed that the Taxpayer testified that his medication was not properly balanced until 2014. In our view, there was no evidence before the Judge that ought to have led him to conclude that the Taxpayer was unable to meaningfully participate in the appeal before the Judge by virtue of his mental condition or concerns with respect to his memory. In addition, pursuant to the order of Justice Webb, dated July 15, 2015, the Taxpayer’s motion for leave to introduce new medical evidence on this appeal was denied.

[9]               It is important to recall that the testimony of the Taxpayer that the Judge found lacking in consistency and credibility was given by the Taxpayer on February 4, 2015. The evidence of the Taxpayer’s cousin recounted his recollections of the Taxpayer’s condition during the years 2010 to 2013, a period considerably earlier than the date that the Judge assessed the Taxpayer’s credibility (Appeal Book at page 153). Indeed, the Taxpayer’s own evidence appears to indicate that he had been “okay” since 2014 (Appeal Book at page 150 and 151). Thus, the Taxpayer’s medical issues in the years 2010 to 2013 were not shown to have had any bearing upon the issue of the Judge’s assessment of the Taxpayer’s credibility when he gave evidence on February 4, 2015.

[10]           In conclusion, we are of the view that the Judge made no palpable and overriding error when he found that the evidence presented to him was not sufficient to demolish the Minister’s assumption that the Taxpayer did not have the intention to occupy the Property as his primary place of residence and, in addition, that the Taxpayer did not occupy the Property. Additionally, the Judge was correct in his conclusion that the Taxpayer’s failure to meet the requirements of either of paragraphs 254(2)(b) and (g), was a sufficient reason to uphold the Assessment. Accordingly, the appeal will be dismissed with costs.

"C. Michael Ryer"

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

(APPEAL FROM A JUDGMENT FROM THE HONOURABLE MR. JUSTICE DAVID GRAHAM OF THE TAX COURT OF CANADA DATED FEBRUARY 9, 2015, (DOCKET NUMBER: 2014-2081(GST)I))

APPEARANCES:

SOLICITORS OF RECORD: