April 2015
PFD | Municipal

The consensual cancellation of a deed of sale constitutes a transfer and therefore subject to transfer duties

By Joanne Côté Lawyer

In his ruling in 9191-3004 Québec inc. v. Ville de Repentigny (2014 QCCS 6147) on December 16, 2014, the Hon. Clément Trudel of the Superior Court of Québec stated that transfer duties were applicable upon the sale of a property as well as upon the consensual cancellation of a sale.

On June 7, 2012, a deed of sale was concluded for the sale of a property located in the city of Repentigny for the price of $268 465.68. The city subsequently sought $4 660.68 in transfer duties on the transaction.

Then on August 30, 2012, a private agreement operated a bilateral cancellation of the deed of sale. Under this contract, the parties consensually annulled the sale transaction of June 7th, 2012. For this second transfer, the city sought $4 917.21 in transfer duties. In total, $9 456.07 was to be paid in transfer duties for both transactions.

The parties implicated in the deed of sale and cancellation agreement disputed the transfer duties, claiming that the sale was deemed to have never taken place and that the cancellation entailed the annulment of the transfer duties required under the original deed of sale.

Justice Trudel concluded that the consensual cancellation of a deed of transfer has no retroactive force and, in fact, constitutes a new transfer. Therefore, the court determined that, under the law, two consecutive transactions had taken place: the first upon the sale on June 7, 2012, and the second upon the bilateral cancellation of the sale on August 30, 2012. Under these circumstances, the plaintiff was ordered to pay the total amount of the transfer duties sought by the city of Repentigny: $9 456.07 $ plus penalties and interests.