The appellant (“MC”) entered into 10 agreements each entitled “Joint Venture Agreement” (JVA) with corporations with which it did not deal at arm’s length (“Owners”) in which it agreed to provide property management services respecting one or more rental properties of each Owner. The JVAs gave MC the right to negotiate leases and permit occupancy, which it did, and provided that most significant decisions were to be made unanimously by a “Joint Venture Management Committee (JVMC)” comprised of a representative of each of MC and the Owner. MC was entitled to a percentage of the gross revenues that it collected. The Minister assessed on the basis that there was no joint venture between MC and the owners, so that its share of the gross revenues was subject to GST/HST.
After repeating the Williston indicia of a joint venture (quoted in Westcan), Russell J rejected the Crown’s submissions that each of the four italicized tests below were not satisfied:
"A joint property interest in the subject matter of the venture"
…“[P]roperty” [in s. 123(1)] … “includes a right of interest of any kind”. This language would cover MC’s contractual right, pursuant to the JVAs, to lease the subject Properties in its own name. Accordingly, MC and the Owners do have joint property interests in the aforesaid subject matter of the JVs. … (para. 27)
"A right of mutual control or management of the enterprise"
… MC (and each pertinent Owner) has a representative on each JV’s JVMC, and … decisions can only be made “by mutual agreement”… . MC has no say, other than a right to notice, as to any sale of any of the Properties … [but] [a]ny Property sales simply would be outside the purview of “the enterprise of each alleged JC”. (para. 28)
"Expectation of profit, or the presence of 'adventure' as it is sometimes called"
…There is no evidence that MC’s intention … was other than to make a profit though management of the leases of the Properties, in a JV context. …There was no guarantee of profit, and MC did have its share of expenses … to recoup. Income earned annually, less applicable expenses, would be on income account not capital account. (para. 29)
"A right to participate in the profits"
[T]he JVAs in each instance gave MC and the relevant Owner(s) the right to take percentages of the GROI [gross revenue] as specifically agreed and assigned by each JVA. MC and the relevant Owner(s) were separately responsible each for their own expenses. If the Respondent is saying that MC had no ability to share profit from sale of any of the Properties, the answer is that any sale of a Property simply was beyond the scope of the JVs as asserted in this case … . (para. 31)