ABBOTT,
J.
(all
concur)
:—This
is
an
appeal
from
a
judgment
of
Dumoulin,
J.
of
the
Exchequer
Court
allowing
the
respondent’s
appeal
from
an
assessment
made
on
March
15,
1962
with
respect
to
the
1956
taxation
year
of
the
respondent,
whereby
a
sum
of
$251,166.59
was
added
to
the
respondent’s
income.
The
said
sum
of
$251,166.59
consists,
for
the
most
part,
of
profit
alleged
to
have
been
made
by
the
respondent
on
the
disposition
of
land
(including
land
acquired
by
the
Crown)
and
is
made
up
as
follows:
Casual
McCauley
Realties
(See
T-4
1956)
|
|
casual
|
$
|
4,500.00
|
|
Land
profits—507
Parish
of
St.
Laurent
125,100.36
|
|
‘‘
|
‘‘
|
507
Parish
of
St.
Laurent
109,406.55
|
|
|
368
Parish
of
St.
Laurent
|
3,847.70
|
|
‘‘
|
‘‘
|
25-27
Pointe-Claire
|
8,311.98
|
251,166.59
|
The
respondent
operates
a
jewelry
business
in
Montreal
under
the
name
"‘American
Watch
Company
of
Canada’’.
In
addition
to
this
business,
he
was
engaged
in
extensive
real
estate
dealings
in
1954
and
for
some
time
prior
thereto,
and
in
March
1952
had
purchased
lot
507
in
the
Parish
of
St.
Laurent.
Respondent
carried
out
his
business
accounting
on
the
accrual
basis
and
was
operating
on
this
basis
in
1954,
1955
and
subsequent
years.
His
fiscal
year,
accepted
by
the
Department
of
National
Revenue,
for
the
years
in
question,
ended
on
January
31
of
each
year,
so
that
his
taxation
year
1954
ended
January
31,
1954,
his
taxation
year
1955
January
31,
1955,
and
his
taxation
year
1956
January
31,
1956.
The
chronological
order
of
events
with
respect.
to
the
land
expropriated
by
the
Crown
and
a
contiguous
parcel
sold
to
the
Crown
under
threat
of
expropriation,
is
as
follows:
January
7,
1954—A
notice
of
expropriation
dated
December
28,
1953,
covering
part
of
Lot
507
was
deposited
at
the
Montreal
Registry
Office.
January
15,
1954—An
expropriation
notice
was
served
on
respondent.
This
notice
specified
that
the
expropriation
was
made
pursuant
to
the
Expropriation
Act
and
that
title
"‘vests
in
Her
Majesty
the
Queen
in
the
Right
of
Canada
as
from
the
date
of
deposit
of
record
in
the
Office
of
the
Registrar
of
Deeds
of
a
plan
and
description
of
the
said
lands.’’
July
13,
1954—A
formal
offer
of
settlement
in
the
amount
of
$318,
776
was
made
to
respondent
with
respect
to
the
expropriated
parcel
and
"‘that
part
of
Lot
507
severed
by
reason
of
the
expropriation’’,
and
covered
also
all
damages
arising
from
the
expropriation.
July
14,
1954—Respondent
accepted
in
writing
the
offer
of
settlement
contained
in
the
letter
of
July
15.
May
13,
1955—Respondent
received
payment
in
accordance
with
the
settlement.
In
the
court
below,
respondent
argued
that
the
monies
received
from
the
disposal
of
the
lands
in
question
were
not
taxable,
but
this
is
no
longer
in
issue.
Alternatively,
he
argued
that,
if
they
were
taxable,
assessment
should
not
have
been
made
for
the
year
1956,
because:
(a)
With
respect
to
the
part
expropriated,
the
amount
attributable
under
this
portion
was
taxable
at
the
moment
of
the
transfer
of
title,
which
took
place
on
January
7,
1954,
in
the
taxpayer’s
1954
taxation
year.
(b)
Alternatively,
that
compensation
for
all
the
land
taken
should,
at
the
latest,
be
taxable
at
the
time
the
amount
was
clearly
established,
which
was
in
July,
1954,
during
the
taxpayer’s
1955
taxation
years.
The
amount
of
the
payment
received
by
respondent
in
May
1955,
was
assessed
as
taxable
in
his
1956
taxation
year.
At
the
hearing
before
us
counsel
for
the
Crown
agreed
that
if
it
should
have
been
assessed
in
an
earlier
year,
it
was
immaterial
for
the
purpose
of
this
appeal
whether
that
year
was
1954
or
1955.
The
principal
issue
to
be
determined
on
this
appeal
is
whether
respondent’s
profit
of
$234,506,51
with
respect
to
lot
507,
was
taxable
income
in
his
taxation
year
ending
January
31,
1956.
The
answer
to
this
question
depends
primarily
upon
the
effect
of
the
two
letters
of
July
13,
1954
and
July
14,
1954
above
referred
to,
and
1
quote
them
in
full.
«
Your
file
No.
Our
file
No.
Q-1003-71-1
Canada
DEPARTMENT
OF
TRANSPORT
Room
222,
131
St.
James
St.
West
MONTREAL,
July
13,
1954.
REGISTERED
Mr.
Ben
Lechter,
1470
Peel
Street,
MONTREAL.
Dear
Sir:
Pursuant
to
the
expropriation
of
January
7th
1954
affecting
part
of
lot
507
in
the
Parish
of
St.
Laurent,
we
are
now
authorized
to
make
you
a
formal
offer
of
settlement
in
the
amount
of
$318,776.
in
full
compensation
for
the
area
expropriated,
that
part
of
lot
507
severed
by
reason
of
the
expropriation
and
all
damages
arising
from
the
said
expropriation.
The
foregoing
is
all
without
prejudice
to
the
rights
of
the
Crown.
Would
you
kindly
advise
us
as
soon
as
possible
of
your
decision
with
respect
to
this
offer.
Yours
truly,
(signed)
J.
P.
Adam
J.
P.
Adam
PL
:jdb
District
Land
Agent
”’
"
Ben
II.
LECHTER
Montreal,
July
14th,
1954
Registered
Department
of
Transport,
Lands
Branch,
Room
222,
151
St.
James
St.
West,
Montreal.
Re:
Your
file
No.
Q-1003-71-1
Att’n
:
Mr.
J.
P.
Adam
Dear
Sirs:-
In
reply
to
your
letter
of
the
13th
instant,
I
wish
to
notify
you
that
I
accept
your
formal
offer
of
settlement
in
the
amount
of
Three
Hundred
and
eighteen
thousand
seven
hundred
and
seventy-six
dollars
($318,776.)
in
full
compensation
for
all
damages
arising
out
of
the
expropriation
of
January
7th,
1954
affecting
part
of
my
property
bearing
lot
No.
507
Parish
of
St.
Laurent.
In
view
of
the
expropriation
having
been
filed
six
months
ago,
I
would
appreciate
payment
within
the
next
sixty
days.
Very
truly
yours,
(signed)
Ben
H.
Lechter’’
On
February
11,
1955
payment
to
respondent
of
the
sum
of
$318,776
above
referred
to,
was
authorized
by
a
Treasury
Board
Minute,
and
the
amount
appears
to
have
been
actually
paid
in
May
1955,
when
notarial
deeds
of
sale
and
release
were
executed.
Appellant’s
contention
is
that
no
taking
of
land
and
no
agreement
of
sale
is
valid
until
the
approval
of
Treasury
Board
has
been
obtained
—
in
this
case
February
11,
1955
—
and
that
in
consequence
the
amount
in
question
only
became
an
account
receivable
by
respondent
on
that
date.
Mr.
J.
P.
Adam,
who
signed
the
letter
of
July
13,
1954,
was
District
Land
Agent
of
the
Department
of
Transport
at
Montreal.
There
is
no
suggestion
that
he
was
acting
in
bad
faith
or
that
he
was
not
authorized
by
his
Departmental
superiors
to
write
the
letter
which
he
did.
By
his
letter
of
July
14,
1954
respondent
accepted
the
offer
contained
in
the
letter
of
July
13,
and
he
was
bound
by
that
acceptance.
In
fact,
settlement
was
eventually
made
in
the
precise
amount
specified
in
the
two
letters
and
Adam
himself
signed
the
notarial
deeds
of
sale
and
release
acting
under
a
power
of
attorney
from
the
then
Minister
of
Transport.
Appropriate
Treasury
Board
authority
was
necessary
to
make
the
payment
agreed
upon
and
this
was
forthcoming
in
due
course.
Assuming
that
ratification
of
the
authority
of
Adam
to
make
the
settlement
was
required,
such
ratification
was
afforded
by
the
Treasury
Board
Minute
of
February
11,
1955
and,
in
accordance
with
the
ordinary
rules
of
mandate,
it
had
retroactive
effect
to
July
13,
1954
—
See
Mignault,
Droit
Civil
Canadien,
Vol.
8
at
p.
58.
It
follows
that
respondent,
operating
on
an
accrual
basis,
was
bound
to
treat
the
profit
of
$234,506.51
on
the
disposition
of
part
of
lot
507,
as
having
been
earned
prior
to
January
31,
1955,
and
that
it
was
not
taxable
income
in
his
taxation
year
ending
January
31,
1956.
One
minor
point
remains.
The
Minister’s
assessment
of
March
15,
1962,
in
addition
to
the
two
items
relating
to
lot
507,
included
as
income
of
respondent
three
amounts
of
$4,500,
$3,847.70
and
$8,311.98
relating
to
other
properties.
No
evidence
was
adduced
at
the
trial
with
respect
to
these
three
items,
and
they
are
not
dealt
with
in
the
judgment
below
but
the
assessment
was
vacated
in
toto.
Counsel
for
respondent
agreed
that
in
the
circumstances
these
three
items
should
not
have
been
disallowed,
and
that
to
this
extent
the
appeal
should
succeed.
The
appeal
is
therefore
allowed
in
part,
the
Judgment
below
varied
and
the
assessment
appealed
from
referred
back
to
the
Minister
for
reconsideration
and
re-assessment
on
the
basis
that
the
sums
of
$125,100.36
and
$109,406.55,
being
the
profit
realized
by
respondent
as
a
result
of
the
sale
and
expropriation
of
a
part
of
lot
507
in
the
Parish
of
St.
Laurent,
did
not
constitute
income
in
the
hands
of
respondent
for
his
taxation
year
1956,
The
respondent
is
entitled
to
his
costs
in
this
Court.