2015 QCCQ 1140, 2015 QCCQ 1140

Amak Composites & Reinforced Composites inc. c. Condo Cle d'or inc. 2015 QCCQ 1140 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-32-134872-128 DATE: January 29, 2015 ______________________________________________________________________ PRESIDED BY THE HONOURABLE DAVID L. CAMERON, J.C.Q. ______________________________________________________________________ AMAK COMPOSITES & REINFORCED COMPOSITES INC. 24, Avenue St-Louis Beaconsfield, Qc H9W 4X5 Plaintiff v.

CONDO CLE D’OR INC. 4331, rue Séguin Laval, Qc H7R 6G2 Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The Plaintiff, Amak Composites & Reinforced Composites Inc., (AMAK) a corporation, the business of which is operated by its shareholder and president, Alphonse Beshay, sues Condo Clé d’Or Inc., a condominium developer, to recover the difference between the GST and QST paid at the time of the sale by AMAK and the sale price as computed in the preliminary contract.

The difference between the amount of tax payable and the amount mentioned in the preliminary contract was in excess of $ 11,000, but the Plaintiff reduced this amount to $ 7,000 to avail himself of the procedure of the Small Claims Division. [ 2 ] The preliminary contract was for the sale of a residential condominium unit, in a project to be built, for occupation on or about October 1, 2011. The contract was entered in to on July 5, 2011. [ 3 ] The total before taxes of the contract price was $ 221,445.

Grossed up with taxes and then, subtracting the reimbursement known as “Remboursement pour habitations neuves de la TPS et de la TVQ”, the final price of the contract was $ 241,053. It would have been over $ 11,000 more expensive to purchase the condominium if this reimbursement did not apply. [ 4 ] As the things turned out, Mr Beshay had no intention of occupying the residential unit as a principal residence.

Rather, it was his intention that his corporation AMAK would carry out the activities of a business office at that address. [ 5 ] After he had signed the preliminary contract and attempted to transfer the company’s head office to that address, he was informed by city authorities (P-7) that no permit would be issued: the use of this property must be residential.

He learned this after he had already paid his down payment. [ 6 ] He eventually sold the condominium unit, which he could not use in this matter, and he asserts that he suffered a loss of $ 31,000. [ 7 ] At first, he had refused to complete the sale, but he was put in default (P-2) on October 21, 2011. Upon receiving the letter of demand, he capitulated, and completed the sale, signing the required deeds with the notary, on November 3, 2011.

[ 8 ] On November 25, AMAK wrote to the notary and to Condo Clé d’Or, alleging that the company had signed the Deed of sale under pressure, because of the threat of loosing the down payment of $ 48,210.60. He asserts as well that the company would have never signed the preliminary contract if it had been aware that the effective final price with taxes would be as high as $ 254,004.39. [ 9 ] He also put Condo Clé d’Or Inc. in default, on May 21, 2012, stating that because the City of Pointe-Claire is refusing to issue a permit to operate his commerce, in a residential zone, and for another unrelated reason.

He claimed cancellation of the Deed of sale, and requested negotiation. These letters were met with the refusal, and as mentioned above, the sale proceeded. ISSUE [ 10 ] The Court must determine whether the Defendant is at fault, in connection with the Plaintiff’s failure to obtain the tax reimbursement, and whether the Plaintiff would have been entitled not to proceed with the sale and to receive the return of his reimbursement.

ANALYSIS [ 11 ] The Plaintiff testifies that, when he met with the Defendant to negotiate the preliminary contract, he was told that he would be allowed to transfer the head-office of the company, as he planed. [ 12 ] As the document shows, he signed a contract supposing that he would receive a reimbursement. The document clearly indicates, however, that the reimbursements were calculated “si applicable voir clause générale 37”. [ 13 ] In reading clause 37, it becomes clear why the Plaintiff did not receive the reimbursement. That clause reads as follows: 37.

Aux fins de l’admissibilité aux remboursement de TPS et de TVQ pour habitations neuves, le promettant-acheteur déclare et assure acquérir l’immeuble pour son propre compte ou pour l’un de ses proches au sens de la

Loi sur la taxe d’accise et de la

Loi sur la taxe de vente du Québec, ledit immeuble devant servir de résidence principale. Le promettant-acheteur s’engage en outre à signer chez le notaire instrumentant tout formulaire requis aux termes des lois précitées. S’il y a lieu, le promettant-acheteur s’engage également à assumer tout ajustement de TPS-TVQ et de leur remboursement pouvant découler de modifications au contrat préliminaire après sa signature. Le prix du contrat sera modifié en conséquence dans une

annexe signée par les deux parties. [ 14 ] Essentially, the clause states that the purchaser declares that he has acquired the immoveable for his own purposes or for that of a related party, to serve as a principal residence, that he promises to sign with the instrumenting notary, any forms required under the fiscal laws, and that he will assume any adjustment of the TPS-TVQ, resulting from a modification to the preliminary contract. [ 15 ] The documents indicate that the vendor is selling on the presumption that the purchaser will use the property as a principal residence, as he so declares. [ 16 ] Given the documents, the Plaintiff would have a strong onus of proving that there was nevertheless either a stipulation between the parties that the corporation would be entitled to this tax benefit, or, at the very least, a clear understanding on the part of the vendor that the purchaser expected to receive this reimbursement, and that this was a principal reason for his decision to acquire the property. [ 17 ] In the absence of any written communication to this effect, the Plaintiff’s case depends upon both the admissibility and the probative value of his own testimony.

In the Court’s view, the testimony is insufficient to establish either of these two facts. [ 18 ] What’s more, when became time to notarise the Deed of sale, the declaration of the parties, concerning the goods and services tax, included the phrase: “The vendor declares that he is a contractor and that the said immoveable property is for residential use […]”.

Consequently, the responsibility regarding GST and QST is assumed by the purchaser. [ 19 ] There is no indication that the Plaintiff purchased under protest or that it otherwise indicated that it was not assuming the risk associated with the conformity of the sale with the fiscal law permitting, in the case of a residential use only, to obtain a GST – QST reimbursement. [ 20 ] Given that the reimbursement was only permitted in cases where the property was used as a principal residence, it is difficult to understand how the Plaintiff could have expected the Defendant to reasonably know that he was not intending to use the property as a residence, but to nevertheless, be entitled to this reimbursement. [ 21 ] In the Court’s view, the Plaintiff has not established the vendor’s liability to this tax exposure. [ 22 ] Given the Defendant’s absence, there will be no award as to costs.

BY THESE REASONS, THE COURT: DISMISSES the Plaintiff’s action; THE WHOLE , without costs.

__________________________________ DAVID L. CAMERON, J.C.Q. Date of hearing: October 6, 2014