Cornforth v. The Queen, 82 DTC 6058, [1982] CTC 45 (FCTD)

Cattanach, J:—These are appeals by the plaintiff from assessments to income tax made by the Minister of National Revenue dated May 12, 1978 for the plaintiff’s taxation years 1971 to 1976.

The employees of the Department of National Revenue (the Department’s only lawful name) reviewed the plaintiff’s income tax returns and the plaintiff’s financial records, which records were found to be inadequate for taxation purposes in that the income reported in each of the years in question was not properly supported.

Accordingly the plaintiff was subjected to an audit which resulted in net worth assessments to rectify an income discrepancy over the taxation years now under review to the extent of $193,173.07 plus levies for a total of penalties in excess of $11,000.

The plaintiff accepts the amounts of his recomputed income as accurate. Neither does he contest the penalties.

The contention on behalf of the plaintiff is that throughout the years in question he was actively engaged in the practice of physiotherapy in partnership with his wife.

The sole issue in these six appeals is whether the plaintiff has discharged the onus cast upon him of demolishing the assumptions made by the Minister upon which he concluded that no partnership existed between the plaintiff and his wife in the conduct of the physiotherapy business from which it would follow that the income therefrom was properly that of the plaintiff to the exclusion of his wife and that, accordingly, he was properly taxed thereon.

Of course the plaintiff’s position was that his wife was an equal partner. Her contribution in time and effort to the affairs of the business was equal and that her entitlement to the profit from the business was likewise equal.

The result of this would be that only half of the income upon which the plaintiff was assessed would be properly assessable in his hands. The other half would be properly assessed in the hands of his wife.

That follows from the elementary principle of partnership.

The plaintiff is a highly qualified physiotherapist by his formal education finished in England, his dedication and experience.

He began practice of his profession (which for convenience I refer to as a business) in Montreal, P.Q., first by attendance to the afflictions of the players of the Montreal Canadiens, a hockey team of renown and the Montreal Alouettes, a football team also of renown.

He conducted his physiotherapy business in and from his home on Somerled Avenue in Montreal, title to which was in his name but if my recollection of the evidence is correct his mother might also have been on the title as she shared the home with the plaintiff.

In 1964 the plaintiff married Joyce Marie Wilson. Mrs Cornforth graduated from the Faculty of Medicine of McGill University as a physiotherapist. She had done her pre-graduate internship at the Royal Victoria Hospital in Montreal and she interrupted her post-graduate internship to go on her honeymoon. She completed the month remaining in her internship upon her return. She is fully qualified and licensed to practise physiotherapy in the Province of Quebec.

I do not know over what period the plaintiff’s courtship of his wife extended but there is no question that they considered and made sensible plans for their future life together.

Mrs Cornforth had the option of continuing as a physiotherapist at the Royal Vic but she chose to assist her husband in that capacity. The practice continued to be conducted at the home on Somerled Ave.

In 1969 the practice was moved to King Edward Avenue, also in Montreal. I do not know if the house was built to specifications or was remodelled to serve the practice but the business was carried on in the basement. There was a reception and office area and three treatment rooms.

There were four children of the marriage: (1) a son born November 11, 1965; (2) a daughter born in January, 1967; (3) a son born in July, 1969, and

(4) a son born in November, 1972.

In 1969 there would be three children, one aged 4, the second 3 and the third a babe.

In 1972 their ages would be 6, 5, 3 and 2 months.

In 1976 their ages would be 10, 9, 7 and 4.

Thus from 1965 to 1969 there would be three infant children.

In 1972 two were of kindergarten age and two were infant children.

In 1976 there would be three school-age children and one pre-school.

Throughout these periods Mrs Cornforth had live-in help, baby sitters and day help.

There was an intercommunication system from the nursery to the treatment rooms in the basement.

Thus Mrs Cornforth had some free time to devote to assisting her husband in the physiotherapy business and at the same time keeping her youngest child under constant supervision.

She estimated her time so available to be three days a week. That time is to the exclusion of discussions between them of the treatment of patients, reading on advances in the field, the preparation of schedules of exercises to be prescribed to particular patients all of which was done after the evening meal, the dishes being washed and the children (those of very tender years) being put to bed.

While the plaintiff did not abandon his dedication to sports and the athletes participating therein the practice was conducted at the premises. The plaintiff gave up his association with professional teams and pursued his interest in sporting activities by making his skills available to amateur teams (in the true sense of that adjective) as a community benefit.

In describing the conduct of the business both the plaintiff and Mrs Cornforth testified that 95% of the patients attending for treatment were treated by whichever one of them was free at the moment. The other 5% were those on a continuing program which was conducted by one or other responsible for the initiation of a particular program for a particular patient.

Because of the disparity in the time available it followed logically that a greater portion of the physiotherapeutic treatment was done by the plaintiff.

In addition to giving assistance to her husband in the treatment of patients Mrs Cornforth also assumed the responsibility for the office administration and the banking arrangements. She deposited the receipts, paid the bills, made the appointments for patients, billed the patients and maintained the office records and filing system. She also assumed responsibility for the order and purchase of office supplies and minor equipment necessary for the practice and its maintenance and repair. The purchase or replacement of major equipment was decided upon after discussion between Mrs Cornforth and her husband.

There were two bank accounts, one in the name of the plaintiff and one in the name of Mrs Cornforth. There does not appear to have been any system or rule as to which account cheques would be drawn to pay business bills or in which account funds would be deposited. That was at the discretion of Mrs Cornforth. Neither account was a joint account. I formed the distinct impression that the greater number of bills, both business and household, were paid from the plaintiff's account. Mrs Cornforth would write the cheque and he would sign it. At the same time Mrs Cornforth had no compunction about writing cheques on her own account to pay either business bills or household accounts when it was more convenient to do so. A frequent instance of such convenience was when the plaintiff was not available to sign a cheque on his bank account.

Later from 1975 to 1978 a secretary-receptionist was engaged to assist Mrs Cornforth in the office administration. She continued to treat patients two to three days a week on a regular basis at times most convenient to her. Mrs Cornforth continued to pay the accounts by cheque most of which cheques were signed by the plaintiff and she continued to do the banking arrangements.

That Mrs Cornforth gave to her husband the utmost assistance, and invaluable help and advice in the conduct of the business cannot be denied nor does the Minister attempt to do so. What the Minister does contend is that no partnership existed between them.

Martin Luther has said that there is a no more ideal estate, relationship, communion, company and yes, a partnership, than a good marriage. The exact source of the remarks eluded me and accordingly so too do the exact words of the quotation. To the best of my recollection as I have set them forth the sense is accurate and I have taken the liberty of inserting the words “and yes a partnership”. Those words were not used by Martin Luther in the context in which I have inserted them but they fit in admirably.

Marriage is that relationship between man and woman in which the independence is equal, the dependence mutual and the obligations reciprocal.

That Mr and Mrs Cornforth enjoy a good marriage is abundantly evident.

That they approached their marriage with the concept of equal independence, mutai dependence and reciprocal obligations has been made equally Clear.

At the outset they had implicit trust in each other and that trust continued and has been warranted throughout their marriage. I am equally certain that the relationship will continue until death in accordance with their marriage vow.

Consideration was given at the time the couple decided to marry of entering into an antenuptial contract. Both were resident and domiciled in the Province of Quebec and contemplated the continuance of so residing. In the Province of Quebec the régime of legal community of property prevails.

The underlying theory and basic concepts of the law of community of property between a husband and his wife has been lucidly set forth by Taschereau, J (as he then was in Sura (F) v MNR, [1962] SCR 65 [1962] CTC 1; 62 DTC 1005).

He explained that under the régime of community of property the real idea of the community is that the consorts are the co-owners of the property of the community but that co-ownership is subject to a particular set of rules. Although the wife is a co-owner she does not have all the rights which ownership normally confers. Her right is stagnant, nearly sterile because it is unproductive during the existence of the community. It is only on the dissolution of that community that the wife is vested with her full rights of ownership.

The husband is the sole administrator of the community and has very broad powers. He collects the income from the community property. He alone can dispose of this income, he alone has the unrestricted enjoyment of it, and nothing can leave the common fund unless it results from the expression of his wish. He receives the income on his own account and not as agent or fiduciary for the benefit of his wife.

Thus it was decided in the Sura case that since the wife withdraws no benefit derived from the community property, no income tax can be claimed from her. The husband is liable therefor.

Taschereau, CJC., further explained the nature of the community of property. He said:

La communauté est une sorte de société de biens répartis en trois masses.

which freely translates somewhat as follows:

The community is a kind of partnership of property divided into three portions.

The first portion consists of community property specially earmarked for the interests of the household.

The second is the husband’s own real property which he owned before the marriage or which he inherited during marriage. The customary dower of the wife and children attaches to this property.

The third portion of the community consists of the immovable property belonging to the wife of which she was the owner before marriage or which she acquires as an inheritance during the existence of the community.

The income from the community goes to increase the community.

The community property which is the co-property of the spouses must normally be divided on the dissolution of the marriage by death, divorce or as a consequence of a judgment ordering separation by contract. What she receives does not come to her as the patrimony of her husband. She takes the part that was hers since the marriage.

Mrs Cornforth was well aware of these fundamental attributes of the régime. It was her concept that marriage was a union of the mutual interests of she and the plaintiff. She had implicit trust in her husband and was quite content to let him assume the titular role of the lord and master of the community secure in the knowledge that the plaintiff would administer the fruits of their joint efforts for the best benefit of them both and their children.

Mrs Cornforth in her testimony whole-heartedly endorsed how Taschereau, J characterized this regime when he said at 68:

Ce régime est caractérisé par l’union étroite d’intérêts qu’il établit entre les époux. Il est fondé sur la nature même du mariage, et fait présumer entre les époux la convention de mettre en commun leur mobilier, leurs revenus, les fruits de leurs épargnes et de leur commune collaboration.

Accordingly she and the plaintiff concluded that a marriage contract was wholly unnecessary for them. Thus there was no written antenuptial agreement.

When counsel for the plaintiff introduced oral evidence to establish the existence of a partnership in accordance with an unwritten agreement between the plaintiff and Mrs Cornforth it was promptly met with the objection by counsel for the defendant that the existence of an oral contract in a Civil matter is precluded by Article 1233 of the Quebec Civil Code. A partnership between professionals recognized as such in Quebec is a civil matter. Physiotherapists so qualify.

I exercised my discretion and allowed that oral testimony to be admitted having expressed the view that to do otherwise would result in a manifest absurdity. The Parliament of Canada has legislative authority over direct and indirect taxation pursuant to which it has enacted the Income Tax Act applicable to all persons liable to tax regardless of the province in which they may reside or in which liability is litigated. if the law of evidence in one province would preclude an unwritten contract being proven by oral testimony, as is the basis of the objection being made, and the law of evidence in another province permits such oral evidence to be given that would result in an incongruity.

Parliament has foreseen that incongruity and has provided the remedy to correct that mischief in subsection 53(2) of the Federal Court Act (RSC 1970, c 10 (2nd Supp)) which reads:

(2) Evidence that would not otherwise be admissible shall be admissible, in the discretion of the Court and subject to any rule that may relate to the matter, if it would be admissible in a similar matter in a superior court of a province in accordance with the law in force in any province, notwithstanding that it is not admissible by virtue of section 37 of the Canada Evidence Act.

Testimony to prove an oral contract such as a partnership sought here to be so proven would be admissible in the common law provinces and, in my view, discretion was properly exercised admitting that evidence as was done.

Reverting to the régime of community property there is but one exception brought about by the Quebec Legislature in 1931 that was allowed to a woman under that régime and that is that she may administer without restrictions the property which is the product of her own personal work.

That being so there would be no impediment to Mrs Cornforth entering into a partnership with her husband to carry on a practice of physiotherapy being qualified as she is to do so.

The Quebec Civil Code does not contain a definition of partnership but five of the essentials are found in Articles 1830 and 1831.

Article 1830 reads:

It is essential to the contract of partnership that it should be for the common profit of the partners, each of whom must contribute to its property, credit, skill, or industry.

First, there must be a contract of partnership. That is implicit in the article.

Second, there must be a carrying on of a business in common.

Third, there must be some common profit or gain to be derived from the business so carried on. There must be a community of interest in the benefits accruing from the joint activity of the partners without which community of interest there can be no partnership. The sharing of the profits of a business is not of itself absolute and conclusive proof of an existing partnership, there may be other relationships with that result, but it is prima facie evidence.

Fourth, each partner must contribute something to the common enterprise whether it be “property, credit, skill or industry”.

Fifth, by virtue of Article 1831 participation in the profits of a partnership carries with it an obligation to contribute to the losses. An agreement to preclude a partner from participation in the profits is null and void and an agreement exempting a partner from liability of the partnership is null only as to third parties but not amongst the partners.

Partnership is the relationship which subsists between parties carrying on business in common with a view to profit. That relationship results from contract. The fundamental rule to be observed in determining the existence of a partnership is that regard must be paid to the true contract and the intention of the parties as appearing from all the facts of the case.The contract may be evidenced by express words or by conduct from which partnership may be inferred. Joint ownership or ownership in common is not enough. The question as to whether partnership exists can only be decided on the whole of the evidence, the conduct of the parties, the mode in which they dealt with each other and the mode in which each has, with the knowledge of the other, dealt with other people.

There are many relationships which may be contrasted with the relationship which gives rise to partnership but which are not partnerships, one or more of the essential ingredients of a partnership being lacking. Ownership in common or joint ownership does not give rise to partnership. The relationship of master and servant, in modern terminology that of employer and employee, where compensation of the employee is a share of the profits does not create a partnership. Neither does the relationship of husband and wife create a partnership in the legal sense no matter how aptly that relationship may be described as a partnership in the colloquial meaning of that word. These are but examples and are not all inclusive by far.

As I have said previously there is no impediment to a husband and wife superimposing upon their marriage relationship the further relationship of partnership, but whether there is a partnership in the technical legal sense in fact must be determined by the real intentions of the parties.

In the answer to that question lies the determination of the issue here to be resolved.

During the course of the investigation and audit of the plaintiff’s financial affairs with a view to an accurate assessment to income tax the plaintiff wrote a letter to the assessor dated November 17, 1977 (Exhibit D-1) requesting a meeting with the assessor, “to explore the possibility of partnership with my wife, as she has been an unpaid employee”. That language is equivocal. It is susceptible of meaning that his wife was an unpaid employee and not a partner. It is possible that advice would be sought as to the tax implications if a partnership was created between them or it is possible that it was intended to initiate an investigation as to whether such a partnership did exist in the past between them from the time of their marriage in which event the plaintiff’s wife would have been an unpaid partner rather than an “unpaid employee”.

Assuming that the partnership did exist (which I have not as yet decided) then by virtue of subsection 74(5) of the Income Tax Act where a husband and wife are partners in a business the Minister, in his discretion, may deem the income of one spouse from the business in a taxation year to be the income of the other.

Subsection 74(5) has been repealed by SC 1980-81 applicable with reference to fiscal periods ending after December 11, 1979 but is therefore applicable to the taxation years here under review.

This the Minister did not do although he was authorized by the Statute to declare something to be what it is not. The reason for not exercising that discretion is obvious. The Minister concluded that in fact no partnership existed from which it followed that there was no necessity to resort to that discretion.

However, with respect to the implementation of the discretion given the Minister by subsection 74(5) the Deputy Minister of the Department of National Revenue had issued Interpretation Bulletin IT-231. The Deputy Minis- ter does not have the power to legislate upon the subject matter but this bulletin was not reprehensible in this respect. It is merely a direction to assessors in the Department to the effect that the discretion would not be exercised under subsection 74(5) when the wife (or other spouse as the case may be) has devoted substantial time and effort to the conduct of the business of the partnership. This is but one possible indicia of the existence of a partnership. The assessor considered the substantial contribution of time and effort by Mrs Cornforth to the conduct of the business but concluded that such was not sufficient in the light of other circumstances to establish the existence of a partnership accepting that it might justify an impediment to the exercise of the discretion under subsection 74(5) if a partnership in fact existed.

Mrs Cornforth has testified that she was adept at organizing her time and that I believe. She raised her family of four and at the same time she was able to devote two to three days a week to the practice of physiotherapy. That does not include her additional work outside of normal business working hours. That, in my view, was a substantial contribution of skill and industry and satisfies the fourth element of an essential to the existence of a partnership required by Article 1830 but that element standing alone is not conclusive of the existence of a partnership. It is but one essential element of a contract of partnership which if lacking vitiates the existence of a partnership but if present is not conclusive because it may be explainable by and be an attribute of a relationship other than that of partnership.

In addition to the actual treatment of patients Mrs Cornforth performed certain of the administrative and financial arrangements of the business.

While she was proficient in other respects she was not an accountant or bookkeeper and had neither instruction nor experience in those fields.

This is clear from Exhibit D-1 previously mentioned in which the plaintiff wrote to the assessor:

. . . the financial aspect of my practice was greatly neglected. I did not have an experienced accountant to advise me nor to keep a system of books. Your investigation was, for me, a revelation and an education. Hopefully, with your work and my accountant’s advice, my financial affairs will be completely straightened out and henceforth be systematically dealt with.

It should not be overlooked that this was written in the singular first personal pronoun not the plural.

Mrs Cornforth deposited the receipts of the practice not in a partnership account but partly in the plaintiff’s account and partly her own. This was with the consent and approval of the plaintiff. That would be equally consistent with the regime of community of property as with the distribution of the receipts of a partnership. It is difficult to ascertain whether this could be a participation in profits because the profits cannot be ascertained until the costs of earning receipts is known. That might be done at a subsequent time but there was no evidence that this was ever done or that there was any rationalization by way of set-off or otherwise.

Mrs Cornforth took such financial records as she had and placed them at the disposal of an accountant at a bank at which she dealt.

That accountant prepared the income tax returns of the plaintiff for the taxation years in question.

In these returns the plaintiff reported the income from the business as his personal income. The response to a specific question in the income tax form if a partnership existed was answered in the negative.

In all returns following upon his marriage the plaintiff consistently claimed his wife as a dependant. On only one return was there income of Mrs Cornforth deducted for the maximum deduction for a wife and that was made for a return on investment in a mortgage on real property. Perhaps the investment was made from the product of personal work by Mrs Cornforth or from the proceeds of the community property with the concurrence of the plaintiff as the case may have been.

In all income tax returns the plaintiff claimed deductions for the children as dependants.

Mrs Cornforth never filed an income tax return. That might have been because she had never received taxable income in any taxation year.

That would appear to be incongruous. On the premises that a partnership existed between the plaintiff and his wife, that the plaintiff received taxable income therefrom and that the profits of the partnership were shared (as appears mandatory under Article 1831) it would follow that all income was that of the plaintiff and no partnership existed provided always that the income when divided in whatever proportion may have been agreed upon did not give rise to sufficient income in the hands of Mrs Cornforth to attract tax. That latter assumption appears to be a highly unlikely one.

Counsel for Her Majesty contended that this was a classic case of estoppel by representation and accordinly the plaintiff having represented that no partnership existed, is now estopped from contending the contrary.

I do not agree. While the plaintiff did represent that no partnership existed between himself and his spouse in the income tax returns for the years in question the Minister did not act on those representations. That the Minister should do so is essential to the application of the doctrine of estoppel.

During the course of the investigation and audit of the plaintiffs and prior to the assessments by the Minister of the plaintiff to income tax it was represented by the plaintiff that such a partnership did in fact exist.

The Minister therefore was not induced by the prior representations to assess the plaintiff as he did but rather by the circumstance that he did not accept the subsequent representation that the partnership did in fact exist and assessed the plaintiff accordingly.

Thus this is not the classic example of estoppel by representation and the plaintiff is not estopped from contending that such a partnership did, in fact, exist.

On the other hand there is no impediment to the Minister introducing that evidence and contending that the logical inference therefrom is contrary to the plaintiff having formed the intention to enter into a contract of partnership with his wife.

The mode in which the plaintiff has, with the knowledge of Mrs Cornforth, dealt with the patients is conduct material to their intention. The practice has been carried on under the name “Robert E Cornforth, MSF” since its inception well before the plaintiff's marriage. The plaintiff’s name is followed by the word “Physiotherapist” on all stationery and has not been changed. The telephone listing is similar. It was represented that the stationery was not changed as an economy measure and that the listing in the telephone directory similar in form is not material and is not “advertising” because the patients came on reference from their medical advisers and other patients.

I have always considered the concept of a “sole partner”, although common parlance among commercial men, as both inept and misleading. If there is a sole partner there can be no partnership. The more conventional practice is to use in the partnership name the names of the members. Another expedient to indicate a plurality of members would be to adopt a style such as: “Cornforth & Co” or “Cornforth and Associates”.

The registration requirement of different jurisdictions differs widely. There is no apparent uniformity but the object sought to be achieved is to give publicity to the fact that a partnership has been formed under a partnership name, the names of the partners and the business to be engaged in, all of which is contained in a register open to public inspection.

Failure to register gives rise to certain disabilities and penalties provided by the applicable Statute but no such Statute makes registration a condition of the relationship of partnership.

However inept and misleading it may be there does not appear to be any legal impediment to a partnership adopting as its name the personal name of an individual who is a partner, if that person runs the business on behalf of himself and others. The others may fit the common appellation of “sleeping partners”.

Evidence would be admissible to show who in fact constituted the partnership at any particular time and subject those partners not referred to in the name specifically or in particular to liability as partners.

This circumstance therefore is not conclusive one way or the other but is merely one of many instances of conduct of the parties which may be considered as part of the whole of the evidence as to whether partnership exists.

It is also an essential of partnership that one partner may bind the others. There is evidence that Mrs Cornforth ordered equipment necessary for carrying on the business as well as office supplies. That circumstance standing alone is not conclusive of partnership in that it is also consistent with the relationship of principal and agent.

As many partnerships often exist without any written agreement the absence of direct documentary evidence of any agreement for a partnership is not necessarily fatal nor entitled to overwhelming weight but where no written agreement is forthcoming the parties are faced with the difficulty of establishing the existence of a partnership by reliance upon oral evidence of their conduct susceptible of establishing the relationship of partnership to the exclusion of any other relationship consistent with that same conduct.

A written agreement and compliance with a Statute requiring registration of partnership and businesses being carried on under firm names would obviate that difficulty.

These considerations may have led to the following passage in Underhill’s Principles of the Law of Partnership, 7th ed. at 37:

But whatever latitude the law may allow no business-like person would be content with a mere verbal arrangement the onus of proving which would lie on him.

There is no doubt that the plaintiff and Mrs Cornforth were neophytes in the world of business and business administration. Their paramount objective was to devote themselves to the practice of physiotherapy, their consuming interest, and the relief of their patients’ afflictions. Their fault, if such is a fault, was in not seeking competent accounting and legal advice to forestall the inevitable confrontation with Her Majesty’s tax collectors which all persons who earn income face.

After that confrontation arose the plaintiff and his wife have now taken remedial action. They have incorporated a joint stock company in which each holds an equal number of shares.

This evidence is properly admissible being a subsequent act to bring into existence a relationship which may not have previously existed. This is merely one more fact in the whole of the facts to which regard may be had in ascertaining the true contract and intention on which the determination of the existence of a partnership depends.

As may be expected the one side would contend that a new relationship is thereby created which had not existed before while the other side, with equal logic, can contend that this is nothing more than the formal constitution of a relationship which had previously existed informally but realistically. This latter contention is available because, if a contract of partnership existed, it is such a contract that is not required to be entered into with any particular formalities, without any official act such as registration or without any written agreement whatsoever no matter that wisdom directs to the contrary.

In Lindley on Partnership, 14th ed. (Scamell and Banks) it is stated at 64:

There is no reason why a married woman should not enter into partnership with her husband although as in the case of other potentially contractual obligations, the court will be less ready to infer a partnership where the parties are husband and wife.

The authors cite as authority for that statement Parrington v Parrington, [1951] WN 534. It was argued before Pearce, J that the transaction in issue, a post nuptial settlement, was a purely business transaction signed as partners and not as spouses. Pearce, J did not agree. The parties had been conducting a hotel as husband and wife, not as mere business partners. That arrangement was altered because as spouses they were unable to continue living together. In the resulting transaction under which they made the rearrangement they did not lose their capacity as spouses. It was in essence a husband and wife transaction. The transaction dealt predominantly with their relationship as spouses rather than as business partners.

There is no doubt that Mrs Cornforth, by reason of her qualifications as a physiotherapist and by her deliberate choice prior to her marriage to the plaintiff, contributed to the operation and success of the practice and that she worked as long hours as her other matrimonial obligations permitted. The explanation of her contribution is not to be found in the relationship of partnership but in the relationship of husband and wife.

The consistent theme throughout these reasons has been that partnership is a contractual relationship and an agreement, express or implied, is the source of that relationship.

I am not satisfied on a consideration of all of the evidence that it was the intention of the plaintiff and his wife to enter into a partnership in the legal sense but on the contrary the natural and preponderant inference from the evidence is that no such intention was present in their minds.

They entered into their marriage with the concept of mutual dependence and reciprocal obligations paramount in their minds and, as I have previously said, the unstinting efforts and devotion of all Mrs Cornforth’s available time to the success of the business is better explainable by the relationship of husband and wife rather than as crass business partners.

Thus I would conclude that no partnership contract was entered into by them and consequently no partnership relationship followed.

That being so I do not accept that the prime requisite to a partnership relationship was present.

Neither do I accept that other elements necessary to establish a partnership are present.

Articles 1830 and 1831 of the Quebec Civil Code make it clear that it is essential to the object of a contract of partnership not only the acquisition of profit but also the division of those profits in some proportion in one way or another.

There were two bank accounts one in the name of the plaintiff and the other in the name of Mrs Cornforth. Neither was a joint account. There was no evidence from whence these funds came which Mrs Cornforth deposited in one or other of the accounts nor the character of those funds.

Thus it is impossible to conclude that there has been a distribution of partnership funds from which it follows that that element of a partnership relation is lacking.

The cumulative effect of the many matters to which reference has been made in the foregoing reasons leads to the conclusion that it cannot be said that the Minister was not warranted in assessing the plaintiff as he did.

Accordingly the appeals from the assessments to income tax for the plaintiff’s 1971 to 1976 taxation years are dismissed but, in all the circumstances, with costs to Her Majesty if She demands.