The appellant build a 78-unit residential building meant for students at a local Cégep, whose school year ran from August to June. Although the appellant intended to enter into one-year leases, construction delays meant that the initial leases, which commenced on August 1, ran for only 11 months, except for leases with a 12 month term, with the 12th month offered at half the normal monthly rate. The Appellant already owned an adjoining 26-residential unit builidng where the renewal rate was about 90%. The self-supply by the appellant under s. 191(3), which was the time when the reasonable expectation test under s. (a)(iii) was to be applied, also apparently occurred on or shortly before August 1. In 2010, the appellant renewed with 11-month leases.
The Minister denied the s. 256.2 rebate for 42 of the 78 units in the new building on the basis that they wre not continuously occupied for 12 months, as required under s. (a)(ii)(B) of the qualifying residential unit definition.
Tardif J stated (at para. 29):
[T]he right of the appellant to the rebate is determined on the basis of the expected use of the unit. Therefore the test is satisfied if the appellant reasonably expects at the “particular time” that the usage will be as contemplated by clause (B).
He noted (at para. 57) that the Minister's approach instead "relied primiarily on the situation which prevailed upon the expiration of the first round of leases and on the circumstances that led to the second year of leasing."
In finding (at para. 59) that, in light inter alia of the prior experience with the smaller building that, at the particular time:
[T]he appellant’s initial intention, which was reasonable and based on a number of rational, reasonable, even probable, premises was to have all the residential units occupied for minimum periods of one year.