# Federal (Canada) Court of Appeal Decisions re: Club Intrawest vs Canada (Her Majesty the Queen)



## WBP (Jul 18, 2017)

http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/232795/index.do

Not one communication, to date, from Embarc to their members regarding this decision.


----------



## cd5 (Jul 18, 2017)

The Volunteer Coordinating Committee for the Club Intrawest Owners Group (CIOG) has issued a press release to all major Canadian news outlets today concerning this decision. A copy of the release
is found below.

Also, our VCC Team Leader, Patrick Cormier (a lawyer) has published his interpretation of what this means to Embarc members and where our actions will be directed in the future. Read the blog *here*

*Club Intrawest (Embarc)Timeshare
Must Pay Millions in GST Back Taxes
Following Recent Federal Court of Appeal Decision*​
VANCOUVER – JULY 18, 2017  On July 11, 2017, In a decision that will likely affect all timeshares and owners of timeshares with properties located in Canada, the Federal Court of Appeal set aside the Tax Court of Canada’s decision in the case of Club Intrawest v. Canada. In doing so, the Court of Appeal substituted its own decision to refer GST assessments back to Canada Revenue Agency for reassessment of GST just for services supplied in Canada in relation to vacation homes situated in Canada.  Federal Appeal Court Judges Nadon, Gauthier and Dawson agreed with the Tax Court’s finding that a principal-agent relationship does not exist between the club and its 22,000 members. This decision also confirms that members of Club Intrawest (now re-branded Embarc by Diamond Resorts International (DRI)) do not hold beneficial ownership in the real estate and equipment in vacation home resorts and do not control the Club.  The Court found that members merely own a right of occupancy in exchange for their resort points. This contradicts sales presentations, financial and marketing materials by Intrawest Corporation (“Intrawest”) and now DRI, to the effect that members have beneficial ownership of vacation homes and control the Club through election of the Board of Directors, responsible for managing the Club’s operations.  The ruling will require the club to pay reassessed GST back-taxes for tax years 2002-2007. The GST/HST tax liability for tax years 2008-2016 is unknown at this time.  All timeshare owners with vacation homes in Canada may be impacted by this decision and may also see themselves assessed for back taxes on the supply of services in Canada related to vacation homes situated in Canada.

“Based on a detailed survey answered by more than 400 members, I expect that the majority of our members will be shocked and disappointed that the court found that members have no beneficial ownership in the vacation homes.  About 79% of them remember being told by Intrawest and DRI sales representatives they would own a real estate interest in the resort properties. About 91% of members also remember they were explicitly told that members controlled the Club and that resort properties were vested in a trust for the benefit of members. The Federal Court of Appeal now tells us that no evidence was produced that ownership of these homes has been vested in a trust for the benefit of members”, says Patrick Cormier, Volunteers Team Leader of the Club Intrawest Owners Group (Embarc), (CIOG) a grassroots movement of over 3400 members.  “However, it seems clear that the Intrawest/DRI-dominated Board of Directors anticipated the GST liability all along since it began accumulating a C$14 million reserve from members’ resort fees under a 2011 Board resolution without informing members until the CIOG raised the GST issue with the Board in 2016”.

Club Intrawest was established by Intrawest Corporation in 1993 as a stand-alone not-for-profit Delaware corporation, but with Intrawest in a controlling position. Intrawest ensured they had control of the Club in several ways, including by granting themselves (as “Declarant” member) a 15 times voting power advantage over individual members guaranteeing Intrawest and now DRI, ongoing and complete control over all aspects of the Club.  In addition, Intrawest and now DRI voted in their own employees on the Club’s Board of Directors to maintain a controlling majority on the Board, hired themselves as manager and pay themselves a guaranteed 10 to 15 per cent management fee on all financial transactions.  Club Intrawest (Embarc) members have no control of the club or effective means for recourse, even though members, other than DRI, own 95 per cent of the timeshare points.

About the Club Intrawest Owners Group (Embarc), (CIOG)

The CIOG is a grassroots movement of over 3400 members who are banding together seeking fairness and transparency in their Club’s operation for all 22,000 members.  The CIOG is disputing and challenging unfair actions of Intrawest Corporation, Diamond Resorts International and their domination of the Club’s Board of Directors and Management Company. The CIOG came together as a volunteer group in December 2015, following Intrawest’s announcement of the sale (without member input) of Club Intrawest’s management to DRI. Following the sale, DRI rebranded the club to Embarc and fully controls the not-for-profit timeshare.  For more about the group, visit *www.citheownersgroup.org*.

Judgment of Federal Court of Appeal:  see link

*http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/232795/index.do*


----------



## DanZale2000 (Jul 31, 2017)

A summary of the Court's ruling is posted here: 

http://www.stikeman.com/cps/rde/xchg/se-en/hs.xsl/20172.htm


Two interesting findings in this case are:

1) There is no principle-agent relationship between club members/owners and the vacation. The Courts concluded that Club Intrawest (the membership association) was not acting as an agent on behalf of its members, because the agent's actions were not controlled by the principles. If other courts follow this ruling, any developer controlled board could be challenged. 

2) "owners" in pure point timeshare plans (where the real estate is held in a trust) may not actually own anything. "We also understand that many timeshare members assume that they have a direct beneficial ownership interest in their vacation homes - a belief that now appears unfounded, at least with respect to the [Club] Intrawest Program."


----------



## TSPam (Aug 5, 2017)

WJS said:


> http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/232795/index.do
> 
> Not one communication, to date, from Embarc to their members regarding this decision.


I got an e-mail. They said that they had been putting aside money and so there should be no impact.

Pam


----------



## WBP (Aug 5, 2017)

TSPam said:


> I got an e-mail. They said that they had been putting aside money and so there should be no impact.
> 
> Pam



Putting money aside........your money (Embarc fails to mention how much of the member's money (dues) they have paid out/appropriated to staff time/salaries, travel, consultants, accounting, and legal fees in defending this GST issue. I suspect that if this number is ever made known to the members, that you will be flabbergasted).

If my memory is right, the email from Embarc to their members, followed, many days after the Federal Court of Appeals rendered their decision (and after my post, above).

But, in the event you are "satisfied" by Embarc's statement, that they have been putting money aside, might I suggest that you go to the Club Intrawest Owners Group website, read as much as you can, and join their Facebook page, as there is much more to the Federal Court of Appeals decisions, not the least of which are the many questions that arise, related to the fiduciary responsibility of the Board and management company of Club Intrawest, and the court's decision about the real estate vs non-real estate holdings of the members.


----------



## cd5 (Aug 5, 2017)

TSPam said:


> I got an e-mail. They said that they had been putting aside money and so there should be no impact.
> 
> Pam



Pam, there is more to the story than that. They finally sent a "reassuring" letter several weeks after the ruling occurred - with no facts or actual explanations. Have you been to the Club Intrawest Owners Group website to read about why all members should be concerned? Are you a member of the Facebook group? www.facebook.com/groups/clubintrawestowners
The GST information from members (as opposed to the developer)  to members
can be found here: www.citheownersgroup.org/gst-pressrelease look at the links at the bottom of the press release (it is also just above in the second post). Why should we be concerned? Because although this case has been before the courts for YEARS, the board did not communicate ANY information about it to members preferring to collect extra fees without communicating that or justifying it to members.


----------

