I believe your application is returned as incomplete. You can get your application fee back too. So you don't need to answer yes for refused. (Even it is refused, you don't need to worry because the reason is nothing serious. My wife's visitor visa was refused while waiting for PR visa. She got the PR visa just fine.)
https://www.cic.gc.ca/english/helpcentre/answer.asp?qnum=1220&top=4
I have explained to the officer via Web Form and luckily my application is reopened.