The appellant took possession in December 2004 of a newly-constructed condo unit and closed its acquistion on March 1, 2005 (when condominium registration was also received). Due to a change in plans, he did not move into the unit and leased it to CIBC World Markets ("CIBC") for a lease term of 11 months ending on December 28, 2005. CIBC was bound to provide housing for one of its employees while she was on a long-term assignment in Toronto from Montreal. CIBC initially planned to lease the unit for several years, but declined to renew the 11-month lease because of cutbacks. The appellant then lesed the unit to a second tenant, who occupied the premise form January 3, 2006 to June 24, 2007. The taxpayer claimed his s. 256.2 rebate sometime in the first year, which CRA denied (aparently based on its stated requirement in RC4231, based on s. (a)(iii) of the "qualifying residential unit" definition, that "the first use of the unit will or can reasonably be expected to be ...the primary place of residence of an indiviual who will occupy the unit continuously for a period of at least one year.")
Webb J (as he then was) found that the property was a "qualifying residential unit," whose "applicable clause" (para. 7) in this case was s. (a)(iii)(B). In particular:
- the reference to "individuals" in s. (a)(iii)(B) includes a single individual, so it did not matter that there was only one tenant during the relevant period (para. 11);
- in the situation, for example, where "two individuals occupy the unit – one for a year and the other for six months – ...on the basis that the plural includes the singular, the unit will qualify...by applying the test to the one individual who does occupy the unit for the whole year" (para. 12)
- "if there is only one occupant of a unit, in order for the unit to qualify based on the actual use test, the unit will have to be occupied by the same individual for a full period of one year (or the shorter period of time contemplated by this clause [((B)])" (para. 20)
- the phrase "place of residence of individuals" in s. (a)(iii)(B) does not entail a requirement that the individuals be party to the lease, so it did not matter that the CIBC was the lessor (para. 19);
- the plural reference to "individuals" was intended to adress situations of simultaneous rather than successive ocupation - for example, under the second interpretation "If the first occupant uses the unit for twenty years, the unit would not be used by a second individual for at least a year until twenty-one years after the unit is first occupied" (para. 21), whereas there is a two-year time limitation under s. 256.2(7) for applying for the rebate (para. 26)
- "at a the particular time" in s. (a)(iii) refers to the time that the unit is acquired (in this case, March 1, 2005) (para. 29);
- at that time, the appellant reasonably expected that the tenant's occupancy would continue for several years under a lease renewal (para. 31); and
- "no unit will be able to satisfy the actual use test at the relevant time...unless the actual use is a very short period of time" (para. 24) so that, generally, as was the case here, only the expected rather than acual use test should be applied (para. 32).