The members of the Appellant (which was a non-share Delaware corporation resident in Canada) included Canadian and U.S.-resident individuals who had been sold “Resort Points,” which could be periodically applied under a booking system to obtain access to particular resort condo units ("Vacation Homes") beneficially owned by the Appellant in Canada, the U.S. and Mexico. The Appellant paid various expenses respecting the Vacation Home operations which it recovered through “Annual Resort Fees” charged to its members. D’Arcy J found that the Annual Resort Fees were consideration for a service rather than intangible personal property, stating (paras. 237-8):
The Appellant does not provide any rights in consideration of the Annual Resort Fee. … What it supplies is the agreement to use the Annual Resort Fees to fund its operations. … This…is the supply of something other than property.
In rejecting the Appellant’s submission that it “made, in consideration of the Annual Resort Fee, separate single supplies of services in respect of each Vacation Home,” he stated (at para. 259):
It made a single supply by agreeing to use the Annual Resort Fee to fund its operations…with the consideration being based upon the Appellant’s total estimated costs. The Appellant could only continue to operate the Intrawest Program if it incurred all of the costs…; it could not cherry-pick certain costs.
Although "'in relation to'...should be given a wide scope" (para. 265), he found (at para. 265) that in order for there to be “a supply…of a service in relation to real property” under s. 142(1)(d) or 142(2)(d):
The service must be performed directly on the real property or relate directly to the real property. This would include services such as repairs to the real property, maintenance of the real property, architectural services relating to a specific building or legal services performed in respect of the sale or rental of the real property.
After noting (at para. 213) that where a service relates both to real property inside and outside Canada, ss. 142(1)(d) and 142(2)(d) “deem two mutually exclusive events to occur” i.e., that supply occurs inside and outside Canada, and (at para. 272) that “the supply of the Annual Services relates in part to real property in Canada and real property outside of Canada,” and finding (at para. 288) that “the GST Act…contemplates a single supply which is either subject to tax on the whole consideration paid for the supply or not subject to tax at all,” he found (at para. 318) that this inconsistency should be resolved on the basis that:
[P]aragraphs 142(1)(d) and 142(2)(d)…only apply if the single supply of a service relates solely to real property. The paragraphs do not apply if only a portion of the single supply of the service relates to real property. In such a situation, the supply is subject to the general deeming rules set out in paragraphs 142(1)(g) and 142(2)(g).
On this basis (paras. 321-2):
Paragraph 142(1)(g) deems the supply to be made in Canada since the Appellant performed the Annual Services partially in Canada.
Therefore the GST applied to all of the Annual Resort Fee paid by the Members... .
The CRA administrative position, which was "to allocate the Annual Resort Fee between taxable supplies made in Canada and taxable supplies made outside of Canada, basing the allocation on the ratio of total resort points issued in respect of properties located in Canada to the total resort points issued in respect of all properties" (para. 198), did not comply with the Act (para. 323). However, his judgment could not increase the tax assessed (para. 323).