Date: 19980210
Docket: 96-4833-GST-I
BETWEEN:
TECHNOGOLD IMPORTS INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Bowman, J.T.C.C.
[1] This is an appeal from an assessment made pursuant to the provisions of the Excise Tax Act, by which the Minister of National Revenue refused to allow the appellant an input tax credit amounting to $965.27 on the purchase of a Honda car. The principal reason given for the refusal was that the appellant was not the owner of the car.
[2] It is clear that the appellant paid the price of the car. The appellant's president, Abraham Benlezrah, testified and entered in evidence two cheques from the appellant which indicated that the money to purchase the car was withdrawn from the appellant's and not Mr. Benlezrah’s bank account.
[3] Mr. Benlezrah was the appellant's president and the owner of half of the company's shares. His brother-in-law, Prosper Trojman, owned the other half of the shares. It appears that Mr. Benlezrah is now the owner of all the shares.
[4] The car was registered in Mr. Benlezrah's name. He had it registered in his name on the assumption that he was in fact the company. Since he was the person who would be driving the car, he thought it should be registered in his name on the registration certificate. Additionally, the insurance on the car was in his name, that is, he and not the company was the insured under the insurance policy.
[5] Further, the car was not mentioned either in the company's balance sheet or in the appendix "Deduction for Depreciation" which was part of the company's tax return. In the "Vehicle Purchase Agreement" it was Mr. Benlezrah who was named as the purchaser.
[6] In light of all these documents, can I conclude that the appellant was the real owner of the car as it paid the price for it?
[7] Under the provisions of the Act, the "beneficial owner" is the person who is entitled to claim an input tax credit.
[8] I am not persuaded that a person is owner simply because he pays the purchase price of a good.
[9] There are two judgments of the Supreme Court of Canada which have dealt with the question as to who is the owner of a car for the purposes of the Highway Traffic Act. In Honan v. Gerhold et al., [1975] 2 S.C.R. 866, Spence J. said at 872-3:
With every respect for the learned justice on appeal, I am not so persuaded. What had moved Chester Doman was to protect the vehicle from seizure in execution of the judgment held by his wife. That end could not be accomplished unless he transferred the automobile. He, therefore, did transfer the automobile. The transfer gave Gerhold the legal title and it was intended to have that exact effect. The form of application for register of the transfer does, in my view, contain words which show that there has been a conveyance. Such a form appears in Ex. 19 and it should be noted that the form is signed both by the transferor and the transferee and it contains the words: "I hereby give notice of the change of ownership of the vehicle described hereon and make application for transfer of the permit". Of course, under the circumstances, the late Chester Doman continued to have the exclusive possession of the automobile and have it under his dominion and control. That was part of the transaction. In fact exclusive dominion and control was present in both Haberl v. Richardson and Hayduk v. Pidoborozny. Despite this, however, Gerhold did manifest his ownership in several important actions. Firstly, he placed the vehicle under his insurance policy, and so certified to the insurance company that the vehicle was his. Secondly, he applied for the registration, in the first place in 1966 and again in 1968 and 1969, and he took great objection to Doman having done so in Gerhold's name in the year 1967. Finally, and in my view most important, he disposed of the wrecked car and took the proceeds for his own use with evidently no intention of accounting to the estate of the late Chester Doman. This latter action could only be consistent with an assertion of his ownership of the vehicle.
[10] In Hayduk v. Pidoborozny, [1972] S.C.R. 879, Ritchie J. said at 885-6:
There is a logical reason why the registered owner should be treated as "owner" within the meaning of the Act because the very purpose of the registration is to give notice to all users of the highway of the identity of an individual to whom they may look as owner in the event of an accident. In the present case, however, the contention that the father was the owner within the meaning of s. 130 does not rest upon registration alone. Here the father was the purchaser of the motor vehicle in conformity with the terms of a conditional sales contract which he had signed and the son had not. It is true that the son made all the payments under this contract from his own resources, but the contract was obtained on the credit of the father and the payments thereunder were not fully discharged until after the accident had occurred. With all respect to the members of the Appellate Division, I agree with the learned trial judge that a valid sale of this motor vehicle had been made to the defendant Peter Pidoborozny (the father) and that he was the owner at common law notwithstanding the fact that his son had made the payments under the conditional sales contract and had had exclusive possession of the vehicle from the date of its purchase.
[11] I recognize that these two cases interpreted the word "owner" within the meaning of the provincial legislation and that other things may have to be considered in deciding the meaning of the words "acquire", "supply" or "import". Nonetheless, those words convey the idea of a right of ownership.
[12] In M.N.R. v. Wardean Drilling Ltd., 69 DTC 5194, Cattanach J. said at 5197:
In my opinion the proper test as to when property is acquired must relate to the title to the property in question or to the normal incidents of title, either actual or constructive, such as possession, use and risk.
[13] Also, in the Nouveau Petit Robert dictionary, the following definition is found of the word "acquérir" (to acquire):
[TRANSLATION]
Become owner of (property, right) by purchase, exchange, inheritance.
[14] In the circumstances of the instant case I am persuaded that the true owner of the car was Mr. Benlezrah, not the company.
[15] The appeal is accordingly dismissed.
Signed at Ottawa, Canada, February 10, 1998.
"D. G. H. Bowman"
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 19th day of March 1998.
Mario Lagacé, Revisor