JUDSON,
J.
(all
concur)
:—The
appellant,
together
with
an
associate,
both
of
whom
were
experienced
operators
in
the
field
of
real
estate,
bought
vacant
land
in
1952,
incorporated
two
companies
to
hold
the
land
in
two
parcels,
built
on
one
parcel
a
store
in
the
year
1953
and
sold
the
store
shortly
before
completion
to
Dominion
Stores.
The
other
parcel
they
sold
at
about
the
same
time
to
a
single
purchaser.
The
mode
of
sale
in
each
case
was
by
way
of
shares,
the
appellant
and
his
associate
being
equal
shareholders
in
the
two
companies.
The
appellant
claims
that
he
made
a
capital
gain.
The
Minister
of
National
Revenue
assessed
the
profit
as
income.
The
judgment
of
the
Exchequer
Court
was
that
the
profit
was
income.
This
is
a
bald
outline
of
the
problem
involved
in
complicated
dealings.
But
notwithstanding
the
complexity
of
the
dealings,
I
think
that
both
the
issue
and
the
result
are
plain
and
I
would
affirm
the
judgment
of
the
Exchequer
Court
on
the
ground
that
the
appellant
made
a
business
profit.
The
appellant
between
1937
and
1950
worked
in
the
mortgage
department
of
a
large
insurance
company
and
there
acquired
some
experience
in
real
estate
development
and
financing.
He
became
associated
with
one
Grisenthwaite
and
at
the
time
of
the
trial
was
secretary
of
Grisenthwaite
Investments
Limited,
which
had
been
incorporated
in
1950
with
the
appellant
owning
49
per
cent
of
the
issued
shares
and
Grisenthwaite
owning
51
per
cent.
That
company
was
in
the
business
of
construction
and
sale
of
commercial
and
industrial
buildings.
It
had
constructed
and
sold
buildings
to
International
Business
Machines
Limited
and
Singer
Sewing
Machines
Limited.
At
the
date
of
the
trial
it
owned
six
buildings
and
one
shopping
centre.
It
also
owned
a
number
of
subsidiary
companies,
one
of
them
in
the
business.
of
building
houses
and
apartment
buildings,
three
in
the
business
of
dealing
in
real
estate,
two
limited
dividend
housing
companies,
one
in
the
heavy
construction
business
and
lastly,
one
which
owned
a
shopping
centre.
In
1952,
an
official
of
Dominion
Stores
in
charge
of
real
estate,
one
Foster,
approached
the
appellant
to
seek
his
assistance
in
locating
and
developing
a
Dominion
Store
in
the
Aldershot
area
near
the
City
of
Hamilton.
Originally
it
was
intended
that
this
official,
together
with
the
appellant
and
one
other
person,
would
be
members
of
a
syndicate
of
three
to
be
formed
for
the
purpose,
but
before
any
lands
were
purchased,
this
third
person
dropped
out.
The
appellant,
who
was
dissatisfied
with
his
minority
position
in
the
Grisenthwaite
companies,
then
made
a
deal
with
Grisenthwaite
that
his
project
would,
as
between
the
two
of
them,
be
done
on
a
50-50
basis
and
not
within
Grisenthwaite
Investments
Limited.
The
appellant,
on
behalf
of
Foster,
Grisenthwaite
and
himself,
then
acquired
through
a
nominee
four
contiguous
parcels
of
land
totalling
132
acres
for
a
total
purchase
price
of
$205,000.00.
Upon
the
completion
of
the
purchase
of
the
land,
Foster
held
a
50
per
cent
interest
and
Grisenthwaite
and
the
appellant
each
had
a
25
per
cent
interest.
The
land
purchase
was
completed
in
the
year
1952,
but
in
the
spring
of
1953,
Foster
withdrew
as
a
participant.
His
investment
at
that
point
was
$60,000.
He
left
this
in
as
an
interest-free
loan
to
the
appellant
and
Grisenthwaite.
Before
the
acquisition
of
these
lands,
a
town
planning
expert
had
given
an
opinion
that
a
shopping
centre
would
not
be
economically
feasible
without
an
adjoining
apartment
dwelling
project.
For
this
reason,
the
lands
which
had
been
acquired
were
divided
between
two
companies.
36.17
acres
were
transferred
to
Aldershot
Investments
Limited
in
June
of
1953.
The
remaining
lands
were
transferred
to
Aldershot
Realty
Limited
in
March
of
1954.
It
was
on
the
36.17
acres
held
by
Aldershot
Investments
that
the
Dominion
Store
was
built.
The
appellant
and
Grisen-
thwaite
were
equal
shareholders
in
each
of
these
companies.
In
March
of
1953
Aldershot
Investments
Limited
sought
a
building
permit
for
the
erection
of
a
supermarket.
The
Township
of
Hast
Flamboro
refused
this
building
permit.
There
were
mandamus
proceedings
which
were
settled
in
June
of
1953
by
the
issue
of
a
building
permit
for
a
supermarket
but
it
was
apparent
by
this
time
that
zoning
regulations
would
prevent
apartment
building
on
the
lands
which
had
been
conveyed
to
Aldershot
Realty
Limited.
Barclay
Construction
Company
Limited,
a
subsidiary
of
Grisenthwaite
Investments
Limited,
undertook
the
construction
of
the
supermarket.
In
the
fall
of
1953
a
competitor
of
Dominion
Stores
approached
the
appellant
with
a
view
to
acquiring
a
site
on
the
lands
owned
by
Aldershot
Investments
Limited.
Dominion
Stores
objected
and
offered
to
buy
out
Aldershot
Investments
Limited
either
by
purchase
of
assets
or
shares.
The
transaction
was
completed
by
a
sale
of
the
shares
of
Aldershot
Investments
Limited
on
April
14,
1954.
The
appellant
realized
a
profit
of
$140,198.38.
This
is
one
of
the
items
in
dispute.
The
appellant
in
his
evidence
stated
that
it
was
his
intention
in
acquiring
the
lands
and
that
it
was
also
the
intention
of
Aidershot
Investments
Limited,
to
develop
the
lands
acquired
by
that
company
as
a
shopping
centre
and
to
hold
them
as
a
long-term
investment.
However,
it
should
be
noted
that
the
town
planning
expert
had
told
them
that
a
shopping
centre
would
not
be
economically
feasible
without
the
nearby
apartment
development.
This
advice
had
been
given
in
1952
and
the
dispute
with
the
township
knocked
out
any
possibility
of
any
such
development.
The
adjoining
lands
were
zoned
for
single
residence
dwellings.
In
August
of
1952
the
appellant,
in
a
letter
to
Dominion
Stores,
had
mentioned
two
possibilities,
rental
of
the
proposed
store
to
Dominion
Stores
Limited
or,
in
the
alternative,
an
outright
sale.
In
October
of
1952,
in
correspondence
with
Dominion
Stores,
the
appellant
was
saying
that
he
and
his
associate
would
like
to
build
the
building
on
their
own
account
and
lease
it
to
Dominion
Stores
for
at
25-
or
30-year
lease.
The
fact
is,
however,
that
this
one
store
was
built
by
the
two
associates
operating
through
a
construction
company,
which
was
a
subsidiary
of
Grisenthwaite
Investments,
and
sold
to
Dominion
Stores.
This
is
all
that
happened.
The
agreement
of
sale
was
made
in
April
of
1954
when
the
store
was
about
80
per
cent
completed.
Dominion
Stores
agreed
to
buy
all
the
shares
of
the
appellant
and
Grisenthwaite
for
$360,000
cash,
subject
to
the
condition
that
the
liabilities
of
Aldershot
Investments
should
not
exceed
$350,000,
which
sum
included
$297,000
payable
to
the
contractor,
Barclay
Construction
Company,
which
up
to
that
date
had
been
paid
nothing.
The
agreement
was
carried
out
and
the
purchase
price
divided
equally
between
the
appellant
and
Grisenthwaite.
The
appellant’s
profit
on
the
sale
of
these
shares
was
$140,198.38,
which
the
Minister,
in
making
his
re-assessment,
added
to
the
appellant’s
reported
income.
Cameron,
J.,
accepted
the
evidence
of
the
appellant
that
when
the
two
associates
acquired
the
property,
they
did
intend
to
attempt
to
develop
the
property
for
rental
purposes.
He
calls
this
their
dominant
intention
and
he
says
that
he
is
far
from
satisfied
that
it
was
their
sole
intention
at
any
time.
He
also
finds
that
they
intended
to
sell
at
least
part
of
the
property
if
they
were
unsuccessful
in
developing
it
as
they
planned.
His
conclusion
is
contained
in
the
following
extract
from
his
reasons
:
4
‘
In
my
view,
the
whole
scheme
was
of
a
speculative
nature
in
which
the
promoters
envisaged
the
possibility
that
if
they
could
not
complete
their
plans
to
build
and
retain
as
investments
a
shopping
centre
and
apartments,
a
profitable
sale
would
be
made
as
soon
as
it
could
be
arranged.
’
’
In
spite
of
the
Judge’s
emphasis
on
primary
and
secondary
intention,
when
applied
to
the
facts
of
this
case
it
amounts
to
no
more
than
this.
He
was
saying
that
two
active
and
skilled
real
estate
promotors
made
a
profit
in
the
ordinary
course
of
their
business,
and
this
they
obviously
did.
They
were
carrying
on
a
business;
they
intended
to
make
a
profit,
and
if
they
could
not
make
it
one
way,
then
they
made
it
another
way.
The
same
observations
apply
to
the
sale
of
the
shares
of
Aidershot
Realty
Limited.
The
contract
for
the
sale
of
these
shares
was
made
in
April
of
1954
and
completed
in
1955.
On
this
transaction
the
appellant
made
a
profit
of
$23,498.88.
This
was
added
by
the
Minister
to
his
1954
income.
The
profit
on
this
sale,
however,
was
realized
in
1955
and
should
have
been
assessed
in
that
year.
This
is
the
only
change
made
by
Cameron,
J.
in
the
re-assessment
and
there
is
no
cross-appeal
on
this
point:
i
Some
point
was
made
of
the
fact
that
the
appellant
did
not
in
one
case
sell
a
store
and
in
the
other
case
vacant
land
but
shares
in
two
companies.
I
agree
with
Cameron,
J.
that
this
was
merely
an
alternative
method
that
they
chose
to
adopt
in
putting
through
their
real
estate
transactions.
The
fact
that
they
incorporated
companies
to
hold
the
real
estate
makes
no
difference.
Associated
London
Properties,
Ltd.
v.
Henriksen
(H.M.
Inspector
of
Taxes)
(1942-45),
26
T.C.
46.
I
would
dismiss
the
appeal
with
costs.
Judgment
accordingly.