Kerry Hutchinson Petitioner v. Her Majesty The Queen in Right of British Columbia, 2003 BCSC 503

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Hutchinson v. Her Majesty The Queen in Right of British Columbia , 2003 BCSC 503 Date: 20030402 Docket: L023096 Registry: Vancouver Between: Kerry Hutchinson Petitioner And Her Majesty The Queen in Right of British Columbia Respondent Before: The Honourable Mr. Justice Harvey (In Chambers) Reasons for Judgment Counsel for the Petitioner: I. Worland Counsel for the Respondent: H.

Gordon Date and Place of Hearing: March 19, 2003 Vancouver, B.C. [ 1 ] The petitioner appeals under the Property Transfer Tax Act , R.S.B.C. 1996, c. 378 from the decision of the Minister of Provincial Revenue (the “Minister”) dated July 10, 2002, affirming the assessment of property transfer tax in respect of the transfer to the petitioner of a one-half interest in the property 4728 Drummond Drive in Vancouver, British Columbia. [ 2 ] Paragraph 14(3) (

b) of the Property Transfer Tax Act provides an exemption from property transfer tax in limited circumstances. That paragraph provides, in relevant part:

(3) If a taxable transaction entitles the transferee, on compliance with the Land Title Act, to registration in a land title office, that transferee is exempt from the payment of tax if the taxable transaction is a transfer within any of the following descriptions: … (

b) a transfer from a transferor… to a transferee who is a related individual, if the land transferred has been the principal residence of either the transferor for a continuous period of at least 6 months immediately before the date of transfer or of the transferee for that period; Subsection 1(1) of the Property Transfer Tax Act provides that in that Act, “related individual” means… a person’s spouse”. Subsection 14(1) provides, in part, that in

section 14: "related individual" means a related individual who is a citizen or a permanent resident of Canada ; [ 3 ] The narrow issue for determination is whether at the time of the taxable transaction, the petitioner was a permanent resident of Canada and, as such, had entitlement to an exemption from payment of the said tax. [ 4 ] The facts upon which the petition is based are conveniently set out in the petition and are as follows: 1. The petitioner, Kerry Hutchinson is an individual residing at 4728 Drummond Drive, Vancouver, British Columbia. 2.

At all material times, the petitioner has been married to Miljenko Horvat. The petitioner and Mr. Horvat have two children. 3. The petitioner is a citizen of the United States . Mr. Horvat is a citizen of Croatia . Their children were born in the United States and are citizens of that country.

4. In August 2000, the petitioner and Mr. Horvat sold their home in Bedford, New York and purchased a home ("the House") civically known as 4728 Drummond Drive, Vancouver, British Columbia, and legally known as: P.I.D. 010-866-841, Lot 21 Block 4 District Lot 140 Plan 6583, for the purchase price of $3,7000,000. On August 25, 2000, a Form A Transfer transferring title to the House to the petitioner and Mr. Horvat, as joint tenants, was filed in the Land Title Office and accepted for registration under no. BP202354. At the time of filing the transfer, the petitioner and Mr.

Horvat paid property transfer tax of $72,000. 5. The land on which the House is situated is a parcel of approximately 0.27 ha in area, and has situated on it a single family home and a separate garage. The family moved into the House on August 25, 2000 and has, at all times since, usually resided in and used the House as their home. During that time, no other persons have lived at the House. 6. At or about the same time, the petitioner and Mr.

Horvat took other steps associated with establishing residency in Vancouver, including enrolling the children in local schools, opening accounts at a local bank and with service and utility providers, changing their mailing address and obtaining health coverage with British Columbia's Medical Services Plan. By taking these and other steps, the petitioner and Mr. Horvat established themselves as permanent residents of Canada in or about September 2000 and they have continued to be permanent residents of Canada since then. 7. On May 31, 2001, the petitioner and Mr.

Horvat signed a Form A Transfer transferring the House to the petitioner. The Form A Transfer was registered in the Land Title Office on June 1, 2001 and was accepted for registration under no. BR132592. The effect of the registration was to transfer a one-half interest in the House from Mr. Horvat to the petitioner, thus making the petitioner the sole owner of the House. 8. At the time of filing the Form A Transfer, the petitioner filed a Special Property Transfer Tax Return claiming an exemption from property transfer tax in respect of the transfer under paragraph 14(3) (

b) of the Property Transfer Tax Act , R.S.B.C. 1996, c. 378 . 9. On July 4, 2001, the Minister of Provincial Revenue issued a Notice of Assessment assessing the petitioner to property transfer tax in the amount of $31,210 in respect of the transfer of the House to the petitioner. The Notice of Assessment includes the following notations: "Exemption Code 5 denied" and "… Eligible claimants must be Canadian citizens or landed immigrants at the date of registration of the property in the land title office ." 10.

On August 15, 2001, the petitioner's solicitor sent a Notice of Objection to the Ministry of Finance and Corporation Relations objecting to the assessment on the ground that the Property Transfer Tax Act does not require that a transferee be a landed immigrant to be eligible for the exemption claimed by her, but rather merely requires that the transferee be a permanent resident of Canada according to the ordinary meaning of that expression, which the petitioner was at the relevant time. 11.

By a letter dated July 10, 2002, the Minister of Provincial Revenue ("the Minister") informed the petitioner's solicitor that he had considered the petitioner's Objection and was affirming the Notice of Assessment. 12. In explaining his decision, the Minister expressed his opinion that the petitioner was neither a citizen nor a permanent resident of Canada , saying: "In this regard, I believe that the words permanent resident of Canada refer to a person who has legal status as a permanent resident of Canada .

This restricts the exemption to citizens or those who have been granted landed status under the Immigration Act ( Canada ). I note that this requirement is described in both the guide to the tax return and in the tax return itself." [ 5 ] There are additional facts which in my view bear upon this issue. [ 6 ] Mr.

Horvat, an experienced and successful businessman, entered Canada to pursue a new business opportunity, including the development of proprietary software to deliver the products offered by the business. [ 7 ] The decision to locate in Vancouver was made for a number of reasons, chiefly from a business perspective and from a lifestyle perspective. Vancouver was the choice of both of the petitioner and Mr. Horvat. [ 8 ] There was a time factor with regard to the matter, which led Mr. Horvat to obtain advice as to how he could best affect his business and lifestyle perspective.

As a result of advice received at that time, he did not apply immediately for landed immigrant status because he understood that a temporary visa would be issued more quickly. Mr. Horvat instructed his solicitor to apply for landed immigrant status and at the same time applied for and obtained an Employment Authorization. The said Authorization was obtained on November 4, 2000 and is stated to be valid to September 5, 2003. This document states thereon, "wife and children will follow at a later date". The petitioner and Mr.

Horvat applied for landed immigrant standing in September 2002, and it is my understanding they will qualify under one or more categories. [ 9 ] I was led to understand Mr. Horvat’s new business has turned out to be successful, employing some 30 employees on a full- time basis. [ 10 ] In relation to the position of the petitioner, Mr. Horvat's employment authorization did not in itself entitle her to obtain employment or to work in Canada .

In the summer of 2001, she applied for and received an Authorization permitting her to obtain employment in Canada under a program that provides for the issuance of work permits to spouses of highly skilled workers who have themselves been issued work permits. Since that time, she has been employed at HSBC Bank of Canada as a relationship manager for middle market companies.

[ 11 ] It will be apparent from what I have described above the petitioner and Mr. Horvat are husband and wife, living as such in a conventional marriage in the matrimonial home with their children. [ 12 ] The position of the respondent is, in substantial part, that the meaning to be given to the words "permanent resident" means a person who has the status of a landed immigrant under the provisions of the Immigration Act, R.S.C. 1985, c. I-12 - a technical meaning given to those words for the purposes of that Act.

The respondent submitted that even if it does not have the specific meaning of “landed immigrant”, it at least means a person who is entitled to remain in Canada indefinitely. [ 13 ] The position of the respondent is that even in what counsel described as "ordinary parlance", at best the petitioner's status is "tenuous".

In this perspective, I understand counsel's position to be that at best, the petitioner’s status was conditional upon the existence of the work permit she obtained and therefore she cannot be considered to be a permanent resident in the sense of being a landed immigrant or in the sense of being here indefinitely. [ 14 ] Briefly, counsel for the petitioner submits where the words “permanent resident” are used without reference to the Immigration Act , they have an ordinary meaning that is independent of that Act.

The words should not be construed as meaning only persons who are permanent residents for the purposes of the Immigration Act . There is no good policy justification for giving the words that meaning. The expression "permanent resident" is not defined in the Property Transfer Tax Act , or in the

Interpretation Act of this Province. The words should be construed in their ordinary sense in the tax context, and the petitioner should not be disentitled to the exemption she has claimed. [ 15 ] I find myself in agreement with the petitioner’s submission. [ 16 ] As set out by the Supreme Court of Canada in Friesen v. Canada , 1995 CanLII 62 (SCC) , [1995] 3 S.C.R. 103 , “it is a basic principle of statutory

interpretation that the court should not accept an

interpretation which requires the insertion of extra wording where there is another

interpretation that does not require any extra wording”. Ordinary meaning is rooted in the particular context in which a word or expression appears. In my view, in the context of the Property Transfer Tax Act the words under consideration should be read in their grammatical and ordinary sense, and without the insertion of the words, "within the meaning of the Immigration Act ".

I am here dealing with the tax context, and not the immigration context. [ 17 ] Further, it is clear from a number of other provincial statutes that a person can be a permanent resident of Canada for the purposes of provincial legislation without having been granted landed immigrant status under the Immigration Act .

The petitioner has provided me with examples from 22 federal statutes where the definition of resident referred expressly to the definition from the Immigration Act , usually using the words “as defined in subsection 2(1) of the Immigration Act ” or “within the meaning of subsection 2(1) of the Immigration Act ”. As mentioned, there is no such reference made in the Property Transfer Tax Act . [ 18 ] Similarly, where the Legislative Assembly of British Columbia intends to refer to persons who are permanent residents under the Immigration Act , it says so expressly.

Conversely, in other provincial legislation, the Legislative Assembly uses the words “permanent resident” in their grammatical and ordinary sense, without regard to the special meaning they have for the purpose of the Immigration Act . [ 19 ] I am satisfied that the

interpretation of the words “permanent resident” should not be given the technical meaning they have as a defined term for the limited purpose of the Immigration Act . The Property Transfer Tax Act is tax legislation and the words permanent resident should be construed in their ordinary sense in that context and not the immigration context. [ 20 ] Residence is a well defined concept in common law and is frequently relevant to the determination of a person’s tax liability.

The concepts of permanent or temporary residence, as well as ordinary residence and residence on the basis of sojourning, all depend on an assessment of the nature and duration of a person’s residence in or connection to Canada. [ 21 ] I am in agreement with the petitioner’s submission that the words permanent resident should be read as asking whether a person resides in Canada with the intent to do so permanently or indefinitely, as opposed to temporarily or transiently. [ 22 ] In the circumstances of this matter, it is my view the petitioner and her spouse followed and continue to follow a course in their various actions of involvement and attachment to the community from which it is reasonable to infer they at all material times were living in British Columbia as permanent residents and with the intention of continuing to do so indefinitely.

Upon consideration of the affidavit evidence of the petitioner and Mr. Horvat, in my view it is the only reasonable conclusion which can be drawn from the evidence. Conclusion: [ 23 ] The assessment under consideration was made and affirmed on the basis that the words "permanent resident" in subsection 14(1) of the Property Transfer Tax Act contemplates only persons who are permanent residents for the purpose of the Immigration Act . For the reasons above, I do not accept this

interpretation. I find the petitioner was a permanent resident of Canada on June 1, 2001 according to that term’s ordinary meaning. Accordingly, I would allow the appeal granting the exemption from the Property Transfer Tax imposed. [ 24 ] The petitioner is entitled to costs. “R.B. Harvey, J.” The Honourable Mr. Justice R.B. Harvey