Robert Grant, K.C. and Sam Ward

In HRM v Rank Incorporated, 2026 NSSC 217, Justice John Keith of the Supreme Court of Nova Scotia determined that Deed Transfer Tax was not payable on a purchase of shares and limited partner units by the Respondent, Rank Incorporated (“Rank”).

The “Mic Mac Mall”, as most residents of Halifax, Nova Scotia know, is a large shopping centre located in Dartmouth, Nova Scotia. Title to the Mic Mac Mall’s lands and buildings is held by 4239474 Canada Inc. as general partner for the Mic Mac Mall Limited Partnership.

In September 2021, Rank purchased all of the shares in 4239474 Canada Inc., and at the same time, purchased all of the limited partner units in Mic Mac Mall Limited Partnership. The Applicant, the Halifax Regional Municipality (“HRM”), demanded that Rank pay Deed Transfer Tax on this transaction, claiming that this transaction resulted in Rank acquiring “beneficial ownership” of the Mic Mac Mall lands. HRM also said that Deed Transfer Tax was payable on transfers of beneficial ownership.

Rank refused to pay Deed Transfer Tax on the basis that there was no deed and no transfer of any interest in land, either legal or beneficial.

HRM initiated an application in the Supreme Court of Nova Scotia, seeking a declaration that Rank was required to pay Deed Transfer Tax on its acquisition of shares and limited partner units. Justice Keith of the Nova Scotia Supreme Court said that the central issue was:

Whether the deed transfer tax provisions of the [Municipal Government Act] allow HRM to demand that tax be paid on a transfer of corporate shares or partnership units where the corporation or partnership involved holds title to real property.

The Court dismissed HRM’s application. Justice Keith agreed with Rank that:

• there was no “deed”, so Deed Transfer Tax was not payable; and
• there was no transfer of any beneficial interest in the Mic Mac Mall property to Rank, either through Rank’s acquisition of shares or through its acquisition of limited partner units.

On this first point, Justice Keith held that based on the deed transfer tax provisions of the Municipal Government Act, a deed must expressly transfer property, for a sale price. He rejected HRM’s expansive interpretation of what might or might not be considered a deed, which HRM said would encompass those instruments by which Rank acquired the shares of 4239474 Canada Inc. and the limited partner units of the Mic Mac Mall Limited Partnership. Justice Keith said that this “open-ended definition of ‘deed’ is far too broad for the statutory language to bear; it essentially amounts to a discretion to declare anything to be a deed if HRM characterizes it as transferring an interest in land”.

Justice Keith was prepared to dismiss HRM’s application on the basis that there was no transfer by deed, but went on to hold that he also would have been prepared to dismiss the application on the basis that:

1. A controlling transfer of corporate shares does not result in a change in “beneficial ownership” of corporate property for the purposes of levying deed transfer tax; and
2. A transfer of partnership units does not result in a limited partner taking beneficial ownership for the purpose of levying deed transfer tax.

On the first point, Justice Keith rejected the notion that a company is the beneficial owner of the assets of its own subsidiary. He held that absent explicit statutory language, a court cannot disregard the principle of separate corporate personhood in an attempt to impose tax liability.

On the second point, Justice Keith reviewed extensive prior case law in which courts had held that limited partners do not have any beneficial interest in the real property owned by the limited partnership to which they belong (that property being held by the general partner on behalf of the partnership). HRM argued that Rank had lost its limited liability protection as a limited partner by engaging in control of the partnership’s business. Justice Keith found that he did not have sufficient evidence before him to make that determination, but regardless, even if a limited partner loses its statutory protection from liability as a limited partner, that does not constitute a deemed transfer of the real property of the partnership to the limited partner.

Key Takeaways

• In order for deed transfer tax to be payable in Nova Scotia, there must have been a transfer of property by a “deed”, being an instrument that expressly transfers real property for a sale price.
• Deed transfer tax is not payable in Nova Scotia upon a purchase and sale of either shares or limited partnership units, as those transactions (in and of themselves) do not involve a transfer of real property.

While Justice Keith limited his findings that neither transfers of shares nor limited partnership units involve transfers of beneficial ownership in corporate/partnership assets to the deed transfer tax context, this decision also provides strong support for the well-established principles that:

• A corporate shareholder has no beneficial interest in the property of the corporation in which they hold shares; and
• A limited partner has no beneficial interest in the property of the limited partnership in which they hold units.