GERALD BALLARD Appellant v. HER MAJESTY THE QUEEN, 2011 FCA 82
Opinion
Federal Court of Appeal Cour d'appel fédérale Date: 20110303 Dockets: A-117-10 A-118-10 A-119-10 A-120-10 A-121-10 A-122-10 Citation: 2011 FCA 82 CORAM: EVANS J.A. DAWSON J.A. LAYDEN-STEVENSON J.A. Docket: A-117-10 BETWEEN: GERALD BALLARD Appellant and HER MAJESTY THE QUEEN Respondent Docket: A-118-10 BETWEEN: IRIS HIEBERT Appellant and HER MAJESTY THE QUEEN Respondent
Docket: A-119-10 BETWEEN: TITAN CONSTRUCTION CONTRACTORS LTD. Appellant and HER MAJESTY THE QUEEN Respondent Docket: A-120-10 BETWEEN: MONICA NEVILLE Appellant and HER MAJESTY THE QUEEN Respondent Docket: A-121-10 BETWEEN: RICHARD COLEMAN Appellant and HER MAJESTY THE QUEEN Respondent Docket: A-122-10 BETWEEN: DAVID W. HARDER Appellant and HER MAJESTY THE QUEEN Respondent Heard at Vancouver, British Columbia , on March 1, 2011. Judgment delivered at Vancouver, British Columbia , on March 3, 2011.
Federal Court of Appeal Cour d'appel fédérale REASONS FOR JUDGMENT BY: EVANS J.A. CONCURRED IN BY: DAWSON J.A. LAYDEN-STEVENSON J.A. Date: 20110303 Dockets: A-117-10 A-118-10 A-119-10 A-120-10 A-121-10 A-122-10 Citation: 2011 FCA 82 CORAM: EVANS J.A. DAWSON J.A. LAYDEN-STEVENSON J.A. Docket: A-117-10 BETWEEN: GERALD BALLARD Appellant and HER MAJESTY THE QUEEN Respondent Docket: A-118-10 BETWEEN: IRIS HIEBERT Appellant
and HER MAJESTY THE QUEEN Respondent Docket: A-119-10 BETWEEN: TITAN CONSTRUCTION CONTRACTORS LTD. Appellant and HER MAJESTY THE QUEEN Respondent Docket: A-120-10 BETWEEN: MONICA NEVILLE Appellant and HER MAJESTY THE QUEEN Respondent Docket: A-121-10 BETWEEN: RICHARD COLEMAN Appellant and HER MAJESTY THE QUEEN Respondent Docket: A-122-10 BETWEEN: DAVID W. HARDER Appellant and
HER MAJESTY THE QUEEN Respondent REASONS FOR JUDGMENT EVANS J.A. [1] These are consolidated appeals from a decision of the Tax Court of Canada (2010 TCC 109), in which Justice CampbellMiller (Judge) dismissed the Appellants appeals from their reassessments for their 2002 taxation year. These reasons apply to all theappeals and a copy will be inserted in each file. [2] The Judge held that the Appellants were not entitled to claim as charitable tax credits money which they had donated to acharitable organization, the National Foundation for Christian Leadership (NFCL).
The donations had been solicited by their children or,in the case of Mr Ballard, a grandchild, who were enrolled as students at Trinity Western University (TWU). I use quotation marksaround the words gifts, donations and donors, instead of the adjectives actual or purported. [3] Under the program administered by NFCL, nearly all students who solicited donations received bursaries for the expensesrelated to their education at TWU or at other Christian post-secondary institutions in an amount equal to approximately 80% of the lesserof students eligible expenses and the funds that they had solicited.
Some students were awarded scholarships equal to 100% of the lesserof their eligible expenses and the donations to NFCL that they had solicited.
The value of a students bursary or scholarship could notexceed the amount of the solicited donations. [4] Although a donation could not be earmarked by a donor for a particular student, the Judge found on the basis of NFCLspamphlets that the Appellants either knew or ought to have known that, if they made a donation to NFCL, their children and grandchildwould receive a bursary or scholarship that would defray the expenses of their education at TWU. [5] The Judge held that a gift is a gratuitous transfer of property owned by the donor in return for which no benefit flows to thedonor: The Queen v.
Friedberg, (FCA), 92 DTC 6031, 6032 (F.C.A.). He applied a multi-factor test to determinewhether the strength of the link between any benefit to the Appellants and their donations was sufficiently strong to disqualify theirdonations from being gifts for the purpose of subsections 110.1(1) and 118.1(3) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.)(Act). He concluded that it was.
The Minister had allowed charitable gift tax credits for the relatively modest general, unsoliciteddonations made to NFCL by some of the Appellants. [6] Counsel for the Appellants agreed that the Judge had correctly selected and formulated the legal definition of a gift for thispurpose, but had erred in applying it to the facts.
In the absence of a readily extricable question of law, this Court may only interfere withthe Judges application of the law to the facts (a question of mixed fact and law) if satisfied that the Judge committed a palpable andoverriding error: Housen v.Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. [7] Counsel advanced three principal arguments in support of the appeals. [8] First, since the Appellants were not found to be legally obliged to pay for their childrens post-secondary education, theyreceived no benefit from the donation. I do not agree.
I see no reason in principle why benefit in this context should be so narrowlyconceived. Nothing in the case law requires it. [9] On the basis of the evidence before him, the Judge found as a fact, and the Appellants have not challenged it, that theAppellants either regarded it as their parental or grandparental responsibility to pay for their childrens or grandsons Christian post-secondary education, or did in fact financially support them.
He concluded that the Appellants received a material benefit to the extentthat their donations to NFCL effectively relieved them from paying the educational expenses at TWU of their children and grandson. [10] It is irrelevant in this context that the students also benefited by receiving bursaries and scholarships from TWU as a result ofthe donations to NFCL that they had solicited, and that the awards were taxable as income of the students.
[ 11 ] Second, counsel argued that the Judge made a palpable and overriding error when he found as a fact (at para. 51) that there was no uncertainty that the Appellants children and grandson would receive an 80% bursary, although there was, he concluded, some uncertainty about their receipt of a 100% scholarship. [ 12 ] Counsel for the Appellants pointed out that, in fact, 5-10% of students who solicited funds from donors either did not receive a bursary or had to repay it to NFCL because they failed to meet the eligibility criteria prescribed by NFCL.
For example, some students did not enrol at TWU or another Christian post-secondary education, some did not take a full course load, while others did not maintain the requisite grade point average. About one third of the students who solicited funds did not receive a 100% scholarship.
When students failed to qualify for or to retain a bursary, the donations that they had solicited were not returned by NFCL to donors. [ 13 ] While not entirely accurate, the Judges statement that there was no uncertainty with regard to the students receipt of a bursary does not, in our opinion, constitute a palpable and overriding error that vitiates the Judges ultimate conclusion. For one thing, he found on the facts before him that the Appellants knew that the students met the grade point average and course load requirements to qualify for bursaries, and none had had to repay their bursary to NFC.
Hence, there was no uncertainty in fact about their receipt of a bursary. [ 14 ] Further, it is clear from the Judges discussion of the scholarships (at para. 52) that he did not regard the existence of an element of uncertainty as necessarily sufficient to find, for the purpose of determining the strength of the link between a benefit to the Appellants and their donations, that the Appellants had no expectation or anticipation of benefit from their donation.
It was, he said, a question of degree, a matter of balancing the factors. A priori, the same must apply to the much smaller possibility that a student who solicited a donation to NFCL would not receive or retain a bursary. [ 15 ] Third, the Judge did not deal with the funds donated to NFCL by the Appellants that were solicited by students other than their children or grandson.
Thus, Mr Coleman caused the Appellant Titan Construction Contractors Ltd. (Titan) to donate $2,500 solicited by Carla Ohman, the daughter of his cousin, while the other Appellants, except Ms Neville, donated smaller amounts to NFCL solicited by students who were family friends. [ 16 ] Since the Minister allowed a charitable deduction with respect to the donation solicited from Titan by Ms Ohman, because reassessment was statute-barred, it is not necessary for us to say more about it. [ 17 ] It would have been preferable for the Judge to have dealt expressly with the donations solicited by family friends.
However, despite the absence of a finding of fact by the Judge, we are satisfied that, with the possible exception of a $25 donation by Ms Hiebert solicited by Cheryl Doerksen, the donors of money to NFCL solicited by family friends received a benefit from them. [ 18 ] It appears from the Judges statement of the facts that the family friends donations were reciprocal, in the sense that a donation by the parent of student A solicited by student B was matched by a donation by the parent of student B solicited by student A .
This enabled the students to enhance their chances of receiving a scholarship by increasing the number of donors from whom they had solicited funds. [ 19 ] In addition, counsel also questioned the propriety of the Judges holding that, if the donations by Titan that had been solicited by Mr Colemans son were not charitable gifts, Titans donation was a taxable benefit to Mr Coleman by virtue of subsection 246(1) of the Act . Counsel had conceded this point in the Tax Court. Titan Holdings Ltd. is the sole shareholder of Titan, and Mr Coleman owns 51% of Titan Holdings shares.
He is a director of both companies, and president of Titan. [ 20 ] Before this Court, counsel for the Appellants made two arguments that are particular to Titan. First, he said, Titan could not be said to have received any benefit from its donation to NFCL. I disagree. By virtue of his shareholdings and positions in the corporations, Mr Coleman could direct Titan to make the payment to NFCL. Titan thereby, in effect, stepped into his shoes by relieving him from paying his sons educational expenses.
In my view, this suffices to ascribe a benefit to Titan from its donation. [ 21 ] Second, counsel said that, if Titans donation were not found to be a gift to NFCL, it would be treated as a taxable benefit to Mr Coleman under subsection 246(1) . This, he said, would lead to double taxation, because the bursary awarded to Mr Colemans son was taxable in his hands. [ 22 ] For reasons already given, I do not agree with the argument that the Appellants cannot be said to have received a benefit from
their donations to NFCL because the student-recipients benefited from the bursaries and were liable to pay income tax on them, depending on their other income. [ 23 ] Moreover, in view of counsels concession in the Tax Court, it is not open to him to now argue that the application of subsection 246(1) warrants treating Mr Coleman differently from the other Appellants merely because he chose to make his donation through a corporation that he controlled. [ 24 ] To conclude, the Appellants have not demonstrated that the Judge committed any palpable and overriding error on a question of either fact or mixed fact and law.
For all the reasons given above, the appeals will be dismissed with costs. John M. Evans J.A. I agree Eleanor R. Dawson J.A. I agree Carolyn Layden-Stevenson J.A. FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-117-10 STYLE OF CAUSE: GERALD BALLARD v. HER MAJESTY THE QUEEN PLACE OF HEARING: Vancouver, British Columbia DATE OF HEARING: March 1, 2011
REASONS FOR JUDGMENT BY: EVANS J.A. CONCURRED IN BY: DAWSON J.A. LAYDEN-STEVENSON J.A. DATED: March 3, 2011 APPEARANCES : Blake Bromley Kim Hansen FOR THE APPELLANT Lynn Burch Raj Grewal FOR THE RESPONDENT SOLICITORS OF RECORD : Benefic Lawyers Vancouver , British Columbia Kim Hansen Law Corporation North Vancouver, British Columbia FOR THE APPELLANT Myles J. Kirvan Deputy Attorney General of Canada FOR THE RESPONDENT FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-118-10 STYLE OF CAUSE: IRIS HIEBERT v. HER MAJESTY THE QUEEN
PLACE OF HEARING: Vancouver , British Columbia DATE OF HEARING: March 1, 2011 REASONS FOR JUDGMENT BY: EVANS J.A. CONCURRED IN BY: DAWSON J.A. LAYDEN-STEVENSON J.A. DATED: March 3, 2011 APPEARANCES : Blake Bromley Kim Hansen FOR THE APPELLANT Lynn Burch Raj Grewal FOR THE RESPONDENT SOLICITORS OF RECORD : Benefic Lawyers Vancouver, British Columbia Kim Hansen Law Corporation North Vancouver , British Columbia FOR THE APPELLANT Myles J. Kirvan Deputy Attorney General of Canada FOR THE RESPONDENT FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-119-10 STYLE OF CAUSE: TITAN CONSTRUCTION CONTRACTORS LTD. v. HER MAJESTY THE QUEEN PLACE OF HEARING: Vancouver, British Columbia DATE OF HEARING: March 1, 2011 REASONS FOR JUDGMENT BY: EVANS J.A. CONCURRED IN BY: DAWSON J.A. LAYDEN-STEVENSON J.A. DATED: March 3, 2011 APPEARANCES : Blake Bromley Kim Hansen FOR THE APPELLANT Lynn Burch Raj Grewal FOR THE RESPONDENT SOLICITORS OF RECORD : Benefic Lawyers Vancouver , British Columbia Kim Hansen Law Corporation North Vancouver, British Columbia FOR THE APPELLANT Myles J. Kirvan Deputy Attorney General of Canada FOR THE RESPONDENT FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-120-10 STYLE OF CAUSE: MONICA NEVILLE v. HER MAJESTY THE QUEEN PLACE OF HEARING: Vancouver , British Columbia DATE OF HEARING: March 1, 2011 REASONS FOR JUDGMENT BY: EVANS J.A. CONCURRED IN BY: DAWSON J.A. LAYDEN-STEVENSON J.A. DATED: March 3, 2011 APPEARANCES : Blake Bromley Kim Hansen FOR THE APPELLANT Lynn Burch Raj Grewal FOR THE RESPONDENT SOLICITORS OF RECORD :
Benefic Lawyers Vancouver, British Columbia Kim Hansen Law Corporation North Vancouver , British Columbia FOR THE APPELLANT Myles J. Kirvan Deputy Attorney General of Canada FOR THE RESPONDENT FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-121-10 STYLE OF CAUSE: RICHARD COLEMAN v. HER MAJESTY THE QUEEN PLACE OF HEARING: Vancouver, British Columbia DATE OF HEARING: March 1, 2011 REASONS FOR JUDGMENT BY: EVANS J.A. CONCURRED IN BY: DAWSON J.A. LAYDEN-STEVENSON J.A. DATED: March 3, 2011 APPEARANCES : Blake Bromley Kim Hansen FOR THE APPELLANT
Lynn Burch Raj Grewal FOR THE RESPONDENT SOLICITORS OF RECORD : Benefic Lawyers Vancouver , British Columbia Kim Hansen Law Corporation North Vancouver, British Columbia FOR THE APPELLANT Myles J. Kirvan Deputy Attorney General of Canada FOR THE RESPONDENT FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-122-10 STYLE OF CAUSE: DAVID W. HARDER v. HER MAJESTY THE QUEEN PLACE OF HEARING: Vancouver , British Columbia DATE OF HEARING: March 1, 2011 REASONS FOR JUDGMENT BY: EVANS J.A. CONCURRED IN BY: DAWSON J.A. LAYDEN-STEVENSON J.A. DATED: March 3, 2011
APPEARANCES : Blake Bromley Kim Hansen FOR THE APPELLANT Lynn Burch Raj Grewal FOR THE RESPONDENT SOLICITORS OF RECORD : Benefic Lawyers Vancouver, British Columbia Kim Hansen Law Corporation North Vancouver , British Columbia FOR THE APPELLANT Myles J. Kirvan Deputy Attorney General of Canada FOR THE RESPONDENT
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