This recent case in respect of the New Residential Rental Property Rebate is an interesting one for two reasons:

1. Justice Bocock accepted a letter from a third party as evidence that the intention test was met despite the lessor only initially giving a six month lease to the lessee.

2. Justice Bocock dismantled the CRA/DoJ argument that the “particular time” was only after the transfer of ownership was made to the landlord.

The first was surprising to me because while the legislation allows for lesser lease periods that add up to a reasonable expectation of an occupation of at least one year, the explanation didn’t cross the chasm of intention for why the first lease was only 6 months. Perhaps this was explained in examination or cross examination but it’s not immediately obvious to me that this was asked and answered. The courts have consistently communicated that evidence of intention is not subjective but objective through outward actions. The outward action here was to offer a shorter lease. The reason for that needed to be explained in the decision. For illustration sake, even if the lessee had a long history in the city it doesn’t mean that she stayed long term in any one place of residence. Did the lessee request a shorter term lease and for what reason? Did the lessor offer a shorter term lease and for what reason? Leases are 1 year by default, so the reason for the shorter lease is surely relevant to meeting the intention test.

The second reason for why this case is interesting in that the CRA/DoJ argued that the “particular time” was only after the title transfer. This seems like a bizarre interpretation given that condos are often available for occupation far before close with the builder occurs. The legislators would have been aware of that and would have defined the particular time as being after close if that is what they intended. The “particular time” must be when it can first be occupied unless the legislators specify otherwise.

I don’t feel confident that the decision was correct in the matter of the intention test but that may simply be because the decision doesn’t refer to any inquiry regarding the reason why the first lease was only 6 months. As a former GST/HST Rulings officer, that would have been a central factor in how I would have ruled. No doubt that a lease can be for shorter periods than a year, we all knew that, but there must be a logical reason for that choice when the default lease is a year.

As far as dismantling the CRA/DoJ argument that the “particular time” was only after close, I’m very confident that the decision was correct.