MARTLAND,
J.:—This
is
an
appeal
from
a
judgment
of
Cameron,
J.,
who
dismissed
the
appellant’s
appeal
from
a
decision
of
the
Tax
Appeal
Board,
which
had
affirmed
the
re-assessment
of
the
appellant
for
the
taxation
year
1953.
The
facts
are
outlined
in
the
judgment
of
my
brother
Cartwright
and
I
will
not
repeat
them
here
in
full.
There
are,
however,
two
matters
which
should
be
mentioned.
The
first
is
that
the
shares
of
Brunswick
Mining
and
Smelting
Company
Limited
(hereinafter
referred
to
as
Brunswick”)
were
purchased
by
the
appellant
directly
from
Brunswick,
being
a
part
of
an
initial
issue
of
shares
by
Brunswick
to
finance
additional
drilling
and
exploration
work
and
for
some
underground
development.
The
nature
of
Brunswick’s
enterprise
is
described
by
Cameron,
J.,
as
follows
:
‘“The
Brunswick
assets,
according
to
the
evidence,
consisted
of
a
number
of
mining
claims
in
New
Brunswick.
The
area
had
been
previously
explored
and
found
to
be
unprofitable.
But
in
1952,
when
iron
ore
was
scarce,
geologists
went
into
the
area
and
found
indications
of
certain
minerals.
Geophysical
surveys
followed
and
they
indicated
the
possibility
of
very
substantial
deposits
of
lead,
tin,
sulphur
and
zinc.
The
company
then
decided
to
issue
500,000
shares
of
stock
at
$10
per
share
to
raise
funds
for
its
exploitation,
development,
and
the
construction
of
a
mill.”
The
other
matter
is
that
the
purchase
and
sale
of
the
Brunswick
shares
was
not
authorized
by
the
Memorandum
of
Association
of
the
appellant,
or
by
the
statutory
powers
conferred
upon
it
by
Section
19
of
The
Companies
Act,
R.S.A.
1955,
ce.
53.
There
can,
therefore,
be
no
suggestion
that
in
purchasing
and
selling
the
shares
in
question
the
appellant
was
engaged
in
a
business
which
it
had
been
created
to
carry
on.
The
purchase
and
sale
of
the
shares
was
outside
the
scope
of
its
business
activities
and
consequently
nothing
can
turn
on
the
fact
that
the
appellant
is
a
limited
company
as
contrasted
with
an
individual.
The
relevant
provisions
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148,
as
amended,
are
the
following:
“3.
The
income
of
a
taxpayer
for
a
taxation
year
for
the
purposes
of
this
Part
is
his
income
for
the
year
from
all
sources
inside
or
outside
Canada
and,
without
restricting
the
generality
of
the
foregoing,
includes
income
for
the
year
from
all
(a)
businesses,
(b)
property,
and
(c)
offices
and
employments.
4.
Subject
to
the
other
provisions
of
this
Part,
income
for
a
taxation
year
from
a
business
or
property
is
the
profit
therefrom
for
the
year.
139.
(1)
In
this
Act,
(e)
‘business’
includes
a
profession,
calling,
trade,
manufacture
or
undertaking
of
any
kind
whatsoever
and
includes
an
adventure
or
concern
in
the
nature
of
trade
but
does
not
include
an
office
or
employment
;’’
The
issue
in
this
appeal
is
as
to
whether
an
isolated
purchase
of
shares
from
the
treasury
of
a
corporation
and
subsequent
sale
thereof
at
a
profit,
not
being
a
part
of
the
business
carried
on
by
the
purchaser
of
the
shares,
or
in
any
way
related
to
it,
constitutes
an
adventure
in
the
nature
of
trade
so
as
to
render
such
profit
liable
to
income
tax.
The
only
evidence
given
in
the
Court
below
was
that
submitted
by
the
appellant.
There
are
no
findings
as
to
credibility.
The
decision
is
based
upon
that
evidence
and
upon
inferences
drawn
therefrom.
Cameron,
J.,
held
that
there
was
an
adventure
in
the
nature
of
trade
and
the
basis
of
his
decision
is
stated
as
follows
:
“On
the
facts
in
evidence
and
drawing
what
I
consider
to
be
the
proper
inferences
therefrom,
I
have
reached
the
conclusion
that
the
purchase
in
question
was
not
an
investment,
but
a
purely
speculative
purchase,
and
was
entered
into
with
the
intention
of
disposing
of
the
stock
at
a
profit
as
soon
as
there
was
a
reasonable
opportunity
of
so
doing.
It
was
therefore
an
adventure
or
concern
in
the
nature
of
trade.”
The
reasons
leading
to
his
conclusion
that
the
purchase
was
not
an
investment
are
:
1.
The
fact
that
the
appellant
borrowed
the
funds
necessary
to
effect
the
purchase
of
the
shares;
2.
The
inference
that
the
nature
of
Brunswick
indicated
that
its
shares
were
speculative
in
value
and
that
dividends
could
not
be
expected
for
some
years.
With
respect,
I
would
not
think
that
the
question
of
whether
securities
are
purchased
with
the
purchaser’s
own
funds,
or
with
money
borrowed
by
him,
is
a
significant
factor
in
determining
whether
their
purchase
and
subsequent
sale
is
or
is
not
an
investment.
Similarly,
the
fact
that
there
was
no
immediate
likelihood
of
dividends
being
paid
on
the
shares
should
not
have
much
significance,
for
there
are
many
corporate
ventures,
financed
by
the
sale
of
shares
to
the
public,
in
which
immediate
payment
of
dividends
may
not
be
anticipated,
and
yet
the
purchase
of
the
treasury
shares
of
a
company
embarking
on
a
new
enterprise
is
a
well
recognized
method
of
making
an
investment.
However,
assuming
that
the
conclusion
was
correct
that
this
purchase
was
speculative
in
that
it
was
made,
not
with
the
intention
of
holding
the
securities
indefinitely,
with
a
view
to
dividends,
but
made
with
the
intention
of
disposing
of
the
shares
at
a
profit
as
soon
as
reasonably
possible,
does
this,
in
itself,
lead
to
the
conclusion
that
it
was
an
adventure
in
the
nature
of
trade?
It
is
difficult
to
conceive
of
any
case,
in
which
securities
are
purchased,
in
which
the
purchaser
does
not
have
at
least
some
intention
of
disposing
of
them
if
their
value
appreciates
to
the
point
where
their
sale
appears
to
be
financially
desirable.
If
this
is
so,
then
any
purchase
and
sale
of
securities
must
constitute
an
adventure
in
the
nature
of
trade,
unless
it
is
attempted
to
ascertain
whether
the
primary
intention
at
the
time
of
purchase
is
to
retain
the
security
or
to
sell
it.
This,
however,
leads
to
the
difficulty
mentioned
by
my
brother
Cartwright
that
the
question
of
taxability
is
to
be
determined
by
seeking
to
ascertain
the
primary
subjective
intention
of
the
purchaser
at
the
time
of
purchase.
I
cannot
agree
that
the
question
as
to
whether
or
not
an
isolated
transaction
in
securities
is
to
constitute
an
adventure
in
the
nature
of
trade
can
be
determined
solely
upon
that
basis.
In
my
opinion,
a
person
who
puts
money
into
a
business
enterprise
by
the
purchase
of
the
shares
of
a
company
on
an
isolated
occasion,
and
not
as
a
part
of
his
regular
business,
cannot
be
said
to
have
engaged
in
an
adventure
in
the
nature
of
trade
merely
because
the
purchase
was
speculative
in
that,
at
that
time,
he
did
not
intend
to
hold
the
shares
indefinitely,
but
intended,
if
possible,
to
sell
them
at
a
profit
as
soon
as
he
reasonably
could.
I
think
that
there
must
be
clearer
indications
of
‘‘trade’’
than
this
before
it
can
be
said
that
there
has
been
an
adventure
in
the
nature
of
trade.
As
Scott,
L.J.,
said,
when
delivering
the
judgment
of
the
Court
of
Appeal
in
Barry
v.
Cordy,
[1946]
2
All
E.R.
396
at
400:
1
‘That
a
single
transaction
may
fall
within
Case
1
is
clear;
but,
to
bring
it
within,
the
transaction
must
bear
clear
indicia
of
i
trade’;
e.g.,
Martin
v.
Lowry
(1925),
11
T.C.
297—the
single
purchase
of
a
vast
quantity
of
linen
for
re-sale;
or
Rutledge
v.
Commissioners
of
Inland
Revenue
(1929),
14
T.C.
495,
where
there
was
a
single
purchase
of
paper.
Unless
ex
facie
the
single
transaction
is
obviously
commercial,
the
profit
from
it
is
more
likely
to
be
an
accretion
of
capital
and
not
a
yield
of
income.”
The
history
of
the
phrase
‘‘adventure
or
concern
in
the
nature
of
trade’’
was
considered
by
the
learned
President
of
the
Exchequer
Court
in
M.N.R.
v.
Taylor,
[1956]
C.T.C.
189
at
198,
where
he
said:
“The
expression
‘adventure
or
concern
in
the
nature
of
trade’
appeared
for
the
first
time
in
a
Canadian
income
tax
Act
in
Section
127(1)
(e)
of
the
1948
Act.
It
was,
no
doubt,
taken
from
the
Income
Tax
Act,
1918
of
the
United
Kingdom.
In
that
Act
under
Case
I
of
Schedule
D
tax
was
chargeable
in
respect
of
any
trade
.
.
.
and
Section
237
defined
trade
as
including
‘every
trade,
manufacture,
adventure
or
concern
in
the
nature
of
trade’.
Prior
to
its
inclusion
in
the
definition
of
trade
by
Section
237
of
the
Income
Tax
Act,
1918,
the
expression
appeared
in
the
Income
Tax
Act
of
1842.
In
that
Act
provision
was
made
in
the
First
Case
under
Schedule
D
for
the
charging
of
duties
in
respect
of
any
‘Trade,
Manufacture,
Adventure,
or
Concern
in
the
nature
of
Trade,
.
.
.’.
Indeed,
the
expression
goes
back
to
the
Act
of
1803.”
In
that
case
Thorson,
P.,
reviewed
a
number
of
the
leading
English
and
Scottish
cases
which
had
dealt
with
the
meaning
of
the
expression
and,
from
those
decisions,
he
formulated
certain
general
propositions,
some
negative
and
some
positive,
applicable
in
determining
whether
or
not
a
particular
transaction
did
or
did
not
constitute
an
adventure
in
the
nature
of
trade.
These
are
set
out
in
the
judgment
of
my
brother
Cartwright.
The
positive
tests
to
which
he
refers
as
being
derived
from
the
decided
cases
as
indicative
of
an
adventure
in
the
nature
of
trade
are:
(1)
Whether
the
person
dealt
with
the
property
purchased
by
him
in
the
same
way
as
a
dealer
would
ordinarily
do
and
(2)
whether
the
nature
and
quantity
of
the
subject-matter
of
the
transaction
may
exclude
the
possibility
that
its
sale
was
the
realization
of
an
investment,
or
otherwise
of
a
capital
nature,
or
that
it
could
have
been
disposed
of
otherwise
than
as
a
trade
transaction.
I
will
deal
first
with
the
second
of
these
tests,
which,
if
applied
to
the
circumstances
of
the
present
case,
would
not,
in
my
opinion,
indicate
that
there
had
been
an
adventure
in
the
nature
of
trade.
The
nature
of
the
property
in
question
here
is
shares
issued
from
the
treasury
of
a
corporation
and
we
have
not
been
referred
to
any
reported
case
in
which
profit
from
one
isolated
purchase
and
sale
of
shares,
by
a
person
not
engaged
in
the
business
of
trading
in
securities,
has
been
claimed
to
be
taxable.
Cases
in
which
the
nature
and
quantity
of
the
property
purchased
and
sold
have
indicated
an
adventure
in
the
nature
of
trade
include
C.I.R.
v.
Livingston
(1926),
11
T.C.
538
(a
cargo
vessel)
;
Rutledge
v.
C.I.R.
(1929),
14
T.C.
490
(a
large
quantity
of
toilet
paper)
;
Lindsey
v.
C.I.R.
(1932),
18
T.C.
43,
and
C.I.R.
v.
Fraser
(1942),
24
T.C.
498
(a
large
quantity
of
whisky)
;
Edwards
v.
Bairstow,
[1956]
A.C.
14
(a
complete
spinning
plant)
and
Regal
Heights
Limited
v.
M.N.R.,
[1960]
S.C.R.
902;
[1960]
C.T.C.
384
(40
acres
of
vacant
city
land).
Corporate
shares
are
in
a
different
position
because
they
constitute
something
the
purchase
of
which
is,
in
itself,
an
investment.
They
are
not,
in
themselves,
articles
of
commerce,
but
represent
an
interest
in
a
corporation
which
is
itself
created
for
the
purpose
of
doing
business.
Their
acquisition
is
a
well
recognized
method
of
investing
capital
in
a
business
enterprise.
This
point
is
made
by
Lord
Normand
in
C.I.R.
v.
Fraser
(supra)
at
page
502:
‘
There
was
much
discussion
as
to
the
criterion
which
the
Court
should
apply.
I
doubt
if
it
would
be
possible
to
formulate
a
single
criterion.
I
said
in
a
case
which
we
decided
only
yesterday
that
one
important
factor
may
be
the
person
who
enters
into
the
transaction
.
.
.
It
is
in
general
more
easy
to
hold
that
a
single
transaction
entered
into
by
an
individual
in
the
line
of
his
own
trade
(although
not
part
and
parcel
of
his
ordinary
business)
is
an
adventure
in
the
nature
of
trade
than
to
hold
that
a
transaction
entered
into
by
‘an
individual
outside
the
line
of
his
own
trade
or
occupation
is
an
adventure
in
the
nature
of
trade.
But
what
is
a
good
deal
more
important
is
the
nature
of
the
transaction
with
reference
to
the
commodity
dealt
in.
The
individual
who
enters
into
a
purchase
of
an
article
or
commodity
may
have
in
view
the
resale
of
it
at
a
profit,
and
yet
it
may
be
that
that
is
not
the
only
purpose
for
which
he
purchased
the
article
or
the
commodity,
nor
the
only
purpose
to
which
he
might
turn
it
if
favourable
opportunity
of
sale
does
not
occur.
In
some
cases
the
purchase
of
a
picture
has
been
given
as
an
illustration.
An
amateur
may
purchase
a
picture
with
a
view
to
its
resale
at
a
profit,
and
yet
he
may
recognize
at
the
time
or
afterwards
that
the
possession
of
the
picture
will
give
him
aesthetic
enjoyment
if
he
is
unable
ultimately,
or
at
his
chosen
time,
to
realise
it
at
a
profit.
A
man
may
purchase
stocks
and
shares
with
a
view
to
selling
them
at
an
early
date
at
a
profit,
but,
if
he
does
so,
he
is
purchasing
something
which
is
itself
an
investment,
a
potential
source
of
revenue
to
him
while
he
holds
it.’’
Similarly,
Viscount
Simonds,
in
his
judgment
in
Edwards
v.
Bairstow,
[1956]
A.C.
14
at
29,
when
considering
the
suggested
characteristics
of
an
adventure
in
the
nature
of
trade,
said:
“I
find
‘activities
which
led
to
the
maturing
of
the
asset
to
be
sold’
and
the
search
for
opportunities
for
its
sale,
and,
conspicuously,
I
find
that
the
nature
of
the
asset
lent
itself
to
commercial
transactions.
And
by
that
I
mean,
what
I
think
Rowlatt,
J.,
meant
in
Leeming
v.
Jones,
[1930]
1
K.B.
279,
that
a
complete
spinning
plant
is
an
asset
which,
unlike
stocks
or
shares,
by
itself
produces
no
income
and,
unlike
a
picture,
does
not
serve
to
adorn
the
drawing
room
of
its
owner.
It
is
a
commercial
asset
and
nothing
else.”
Furthermore,
the
quantity
of
‘shares
purchased
by
the
appellant
in
the
present
case
would
not,
in
my
opinion,
be
indicative
of
an
adventure
in
the
nature
of
trade,
as
it
constituted
only
4,000:
out
of
a
total
issue
of
500,000
shares.
The
first
of
the
two
tests
mentioned
was
stated
by
Lord
Clyde
in
C.I.R.
v.
Livingston
(supra)
and
is
commented
upon
by
Row-
latt,
J.,
in
Leeming
v.
Jones,
[1930]
1
K.B.
279
at
283:
“I
venture
to
refer,
with
respect,
to
what
the
Lord
President,
Lord
Clyde,
said
in
Inland
Revenue
Commissioners
v.
Livingston,
11
Tax
Cas.
538
at
542.
He
is
dealing
with
this
very
point,
and
he
says:
'I
think
the
test,
which
must
be
used
to
determine
whether
a
venture
such
as
we
are
now
considering
is,
or
is
not,
‘‘in
the
nature
of
trade’’,
is
whether
the
operations
involved
in
it
are
of
the
same
kind,
and
carried
on
in
the
same
way,
as
those
which
are
characteristic
of
ordinary
trading
in
the
line
of
business
in
which
the
venture
was
made.
’
That
covers
all
the
cases.
In
the
Cape
Brandy
Syndicate
case,
[1921]
2
K.B.
403,
what
the
appellants
had
was
in
the
ordinary
line
of
business
as
brandy
importers,
and
so
on;
what
they
had
in
Martin
v.
Lowry,
[1927]
A.C.
312,
was
what
is
done
in
the
ordinary
case
of
merchants
buying
a
thing,
advertising
it
and
so
on
;
and
what
was
done
in
Livingston’s
case,
11
Tax
Cas.
542,
was
in
the
ordinary
course
of
the
business
of
ship
dealers
and
repairers,
and
so
on.
’
’
Were
the
operations
involved
in
the
present
case
of
the
same
kind
and
carried
on
in
the
same
way
as
those
which
are
characteristic
of
ordinary
trading
in
the
line
of
business
in
which
the
venture
was
made
?
The
only
operations
of
the
appellant
in
the
present
case
were
the
purchase
of
4,000
treasury
shares
directly
from
Brunswick
and
their
subsequent
sale,
presumably
through
brokers.
This
is
not
the
sort
of
trading
which
would
be
carried
on
ordinarily
by
those
engaged
in
the
business
of
trading
in
securities.
The
appellant’s
purchase
was
not
an
underwriting,
nor
was
it
a
participation
in
an
underwriting
syndicate
with
respect
to
an
issue
of
securities
for
the
purpose
of
effecting
their
sale
to
the
public,
and
did
not
have
the
characteristics
of
that
kind
of
a
venture.
What
the
appellant
did
was
to
acquire
a
capital
interest
in
a
new
corporate
business
venture,
in
a
manner
which
has
the
characteristics
of
the
making
of
an
investment,
and
subsequently
to
dispose,
by
sale,
of
that
interest.
But
it
may
be
contended
that
persons
may
make
a
business
merely
of
the
buying
and
selling
of
securities,
without
being
traders
in
securities
in
the
ordinary
sense,
and
that
the
transactions
involved
in
that
kind
of
business
are
similar,
except
in
number,
to
that
which
occurred
here.
It
has,
however,
been
pointed
out
in
the
well
known
case
of
Californian
Copper
Syndicate
v.
Harris
(1904),
5
T.C.
159
at
165,
that,
where
the
realization
of
securities
is
involved,
the
taxability
of
enhanced
values
depends
on
whether
such
realization
was
an
act
done
in
the
carrying
on
of
a
business.
In
that
case
the
Commissioners
had
held
that
the
transaction
there
in
question
was
an
adventure
or
concern
in
the
nature
of
trade.
The
judgments
on
appeal
make
no
reference
to
that
point,
but
are
based
on
the
ground
that
the
turning
of
the
investment
to
account
in
that
case
was
not
merely
incidental,
but
was
the
essential
feature
of
the
appellant’s
business.
The
passage
in
question
reads
as
follows:
“It
is
quite
a
well
settled
principle
in
dealing
with
questions
of
assessment
of
Income
Tax,
that
where
the
owner
of
an
ordinary
investment
chooses
to
realise
it,
and
obtains
a
greater
price
for
it
than
he
originally
acquired
it
at,
the
enhanced
price
is
not
profit
in
the
sense
of
Schedule
D
of
the
Income
Tax
Act
of
1842
assessable
to
Income
Tax.
But
it
is
equally
well
established
that
enhanced
values
obtained
from
realisation
or
conversion
of
securities
may
be
so
assessable,
where
what
is
done
is
not
merely
a
realisation
or
change
of
investment,
but
an
act
done
in
what
is
truly
the
carrying
on,
or
carrying
out,
of
a
business.
The
simplest
case
is
that
of
a
person
or
association
of
persons
buying
and
selling
lands
or
securities
speculatively,
in
order
to
make
gain,
dealing
in
such
investments
as
a
business,
and
thereby
seeking
to
make
profits.
There
are
many
companies
which
in
their
very
inception
are
formed
for
such
a
purpose,
and
in
these
cases
it
is
not
doubtful
that,
where
they
make
a
gain
by
a
realisation,
the
gain
they
make
is
liable
to
be
assessed
for
Income
Tax.”
In
my
opinion,
the
transaction
in
question
here
does
not
fall
within
either
of
the
positive
tests
which
the
authorities
have
suggested
should
be
applied.
The
only
test
which
was
applied
in
the
present
case
was
whether
the
appellant
entered
into
the
transaction
with
the
intention
of
disposing
of
the
shares
at
a
profit
so
soon
as
there
was
a
reasonable
opportunity
of
so
doing.
Is
that
a
sufficient
test
for
determining
whether
or
not
this
transaction
constitutes
an
adventure
in
the
nature
of
trade?
I
do
not
think
that,
standing
alone,
it
is
sufficient.
I
agree
with
the
views
expressed
on
this
very
point
by
Rowlatt,
J.,
in
Leeming
v.
Jones
(supra)
at
page
284.
That
case
Involved
the
question
of
the
taxability
of
profits
derived
from
purchase
and
sale
of
two
rubber
estates
in
the
Malay
Peninsula.
The
Commissioners
initially
found
that
there
was
a
concern
in
the
nature
of
trade
because
the
property
in
question
was
acquired
with
the
sole
object
of
disposing
of
it
at
a
profit.
Rowlatt,
J.,
sent
the
case
back
to
the
Commissioners
and
states
his
reasons
as
follows:
“I
think
it
is
quite
clear
that
what
the
Commissioners
have
to
find
is
whether
there
is
here
a
concern
in
the
nature
of
trade.
Now,
what
they
have
found
they
say
in
these
words
(I
am
reading
it
in
short):
That
the
property
was
acquired
with
the
sole
object
of
turning
it
over
again
at
a
profit,
and
without
any
intention
of
holding
the
property
as
an
investment.
That
describes
what
a
man
does
if
he
buys
a
picture
that
he
sees
going
cheap
at
Christie’s,
because
he
knows
that
in
a
month
he
will
sell
it
again
at
Christie’s.
That
is
not
carrying
on
a
trade.
Those
words
will
not
do
as
a
finding
of
carrying
on
a
trade
or
anything
else.
What
the
Commissioners
must
do
is
to
say,
one
way
or
the
other,
was
this—I
will
not
say
carrying
on
a
trade,
but
was
it
a
speculation
or
a
venture
in
the
nature
of
trade?
I
do
not
indicate
which
way
it
ought
to
be,
but
I
commend
the
Commissioners
to
consider
what
took
place
in
the
nature
of
organizing
the
speculation,
maturing
the
property,
and
disposing
of
the
property,
and
when
they
have
considered
all
that,
to
say
whether
they
think
it
was
an
adventure
in
the
nature
of
trade
or
not.
’
’
The
case
was
returned
to
the
Commissioners,
who
then
found
as
a
fact
that
there
had
not
been
a
concern
in
the
nature
of
trade.
Ultimately
it
reached
the
House
of
Lords,
[1930]
A.C.
415,
where
the
main
issue
was
as
to
whether
the
profits
were
taxable
under
Case
VI
of
Schedule
D
of
the
Income
Tax
Act,
1918.
There
is,
however,
a
general
statement
of
principle
by
Lord
Buckmaster,
at
page
420,
which
aptly
applies
to
the
present
case,
when
he
Says:
“.
.
.
an
accretion
to
capital
does
not
become
income
merely
because
the
original
capital
was
invested
in
the
hope
and
expectation
that
it
would
rise
in
value;
if
it
does
so
rise,
its
realization
does
not
make
it
income.
’
’
In
my
opinion,
therefore,
the
appeal
should
be
allowed,
with
costs
here
and
in
the
Court
below,
and
the
matter
should
be
referred
to
the
respondent
with
the
direction
that
he
deduct
from
the
income
of
the
appellant,
for
the
taxation
year
1953,
the
sum
of
$26,897.50.
CARTWRIGHT,
J.:—This
is
an
appeal
from
a
judgment
of
Cameron,
J.,
dismissing
an
appeal
from
a
decision
of
the
Tax
Appeal
Board
whereby
the
re-assessment
of
the
appellant
for
the
taxation
year
ending
December
31,
1953,
was
affirmed.
The
relevant
facts
are
fully
set
out
in
the
reasons
of
Cameron,
J.,
and
a
brief
summary
will
be
sufficient
to
make
plain
the
question
which
arises
for
decision.
The
appellant
was
incorporated
on
October
25,
1947,
under
The
Companies
Act
of
the
Province
of
Alberta
as
a
limited
company.
The
original
purpose
of
its
promoters
was
to
erect
a
mill
for
the
dehydration
of
alfalfa,
but
this
was
abandoned
by
August,
1948.
The
appellant
remained
inactive
until
the
autumn
of
1952
when
it
purchased
an
office
building
in
Calgary;
it
spent
a
substantial
amount
on
alterations
and,
towards
the
end
of
1955,
sold
the
building
for
a
sum
equal
to
the
total
amount
which
it
had
spent
on
it.
Early
in
1953
the
directors
of
the
appellant
received
a
favourable
report
on
the
shares
of
the
Brunswick
Mining
and
Smelting
Corporation
Limited,
hereinafter
referred
to
as
‘‘Brunswick’’,
and
on
or
about
February
23,
1953,
the
appellant
purchased
4,000
treasury
shares
of
that
company
at
$10
per
share,
the
total
purchase
price
being
$40,000.
Between
March
10
and
March
13,
1953,
the
appellant
sold
2,400
of
these
shares
for
a
total
of
$38,513.50
and
in
June,
1953,
it
sold
the
remaining
1,600
shares
for
a
sum
in
excess
of
$28,000.
It
is
common
ground
that
the
appellant
realized
a
total
profit
of
$26,897.50
from
the
purchase
and
sale
of
these
4,000
shares.
With
the
exception
of
certain
debentures
purchased
in
1955
after
the
sale
of
the
building
referred
to
above
the
appellant
had
no
dealings
in
securities
other
than
the
purchase
and
sale
of
the
4,000
shares
of
Brunswick.
There
is
no
dispute
as
to
any
of
the
facts
set
out
above.
At
the
trial
before
Cameron,
J.,
the
only
witness
examined
was
Mr.
Cheshire,
the
president
of
the
appellant.
The
effect
of
his
evidence
was
that
the
appellant
purchased
the
Brunswick
shares
because
it
“felt
that
this
was
an
excellent
opportunity
to
invest
money
in
a
company
which
appeared
to
have
an
excellent
chance
for
growth
and
development
into
a
large
mining
operation”,
that
the
sales
in
March
were
prompted
by
the
fact
that
the
bank
was
pressing
the
appellant
for
repayment
of
a
loan
and
those
in
June
by
the
decision
reached
by
the
directors
of
the
appellant
at
an
informal
meeting
that
the
price
of
the
shares
had
risen
to
such
a
point
that,
having
regard
to
the
aggregate
value
of
Brunswick’s
known
assets,
it
ceased
to
be
in
accordance
with
sound
judgment
to
continue
to
hold
them
as
an
investment.
There
is,
I
think,
an
implication
in
the
evidence
of
this
witness
that
the
shares
were
purchased
as
a
long
term
investment
rather
than
as
a
speculation
looking
to
a
quick
turnover
but
there
is
no
express
statement
to
that
effect.
Cameron,
J.,
made
the
following
finding
of
fact:
“On
the
facts
in
evidence
and
drawing
what
I
consider
to
be
the
proper
inferences
therefrom,
I
have
reached
the
conclusion
that
the
purchase
in
question
was
not
an
investment,
but
a
purely
speculative
purchase,
and
was
entered
into
with
the
intention
of
disposing
of
the
stock
at
a
profit
as
soon
as
there
was
a
reasonable
opportunity
of
so
doing.’’
The
considerations
which
brought
Cameron,
J.,
to
this
conclusion
were,
(i)
that
the
appellant
at
the
time
of
purchasing
the
Brunswick
shares
had
no
funds
of
its
own
available
for
investment
and
used
borrowed
funds
to
pay
for
them,
(ii)
that
the
nature
of
the
Brunswick
undertaking
was
such
that
its
shares
were
of
speculative
value,
(iii)
that
even
if
Brunswick’s
operations
proved
successful
its
shares
could
not
be
expected
to
yield
any
dividends
for
a
considerable
time,
and
(iv)
that
the
shares
were
held
by
the
appellant
only
for
the
short
time
mentioned
above.
After
considering
the
whole
record,
in
the
light
of
the
full
and
able
argument
of
counsel,
I
find
myself
unable
to
say
that
the
finding
of
fact
made
by
Cameron,
J.,
was
not
justified
by
the
evidence,
and
in
my
opinion
it
should
not
be
disturbed.
There
are
difficulties
in
ascertaining
the
intention
of
a
corporation
in
entering
into
a
transaction.
In
C.I.R.
v.
Fisher’s
Executors,
[1926]
A.C.
395,
Lord
Sumner
said:
‘‘In
any
case
desires
and
intentions
are
things
of
which
a
company
is
incapable.
These
are
the
mental
operations
of
its
shareholders
and
officers.
The
only
intention
that
the
company
has
is
such
as
is
expressed
in
or
necessarily
follows
from
its
proceedings.
It
is
hardly
a
paradox
to
say
that
the
form
of
a
company’s
resolutions
and
instruments
is
their
substance.’’
On
the
other
hand
in
Regal
Heights
Ltd.
v.
M.N.R.,
[1960]
S.C.R.
902;
[1960]
C.T.C.
384,
Judson,
J.,
who
gave
the
judgment
of
the
majority
of
the
Court
held
that
the
intentions
of
the
appellant
company
were
throughout
its
existence
identical
with
those
of
its
promoters
who
later
became
its
directors.
In
the
case
at
bar
there
is
no
record
of
any
resolution
of
the
board
of
directors
of
the
appellant
or
indeed
of
any
formal
pro-
ceeding
to
assist
the
Court
in
ascertaining
its
intention.
The
decisions
in
relation
to
the
sale
of
the
Brunswick
shares
appear
to
have
been
made
at
‘‘informal
meetings’’
of
the
directors.
Mr.
Cheshire’s
evidence
regarding
the
appellant’s
intention
was,
as
has
been
pointed
out
above,
somewhat
indefinite
and
it
was
proper
for
the
learned
trial
judge
to
draw
an
inference
as
to
what
that
intention
was
from
the
surrounding
circumstances.
Having
concluded
that
we
should
accept
the
finding
of
fact
made
by
Cameron,
J.,
and
quoted
above,
the
point
which
arises
for
decision
may
be
briefly
stated
as
follows.
The
appellant,
which
was
not
at
any
time
engaged
in
the
business
of
trading
in
securities,
made
an
isolated
speculative
purchase
of
a
block
of
shares,
not
with
the
intention
of
retaining
them
as
an
investment
which
would
sooner
or
later
yield
an
income
by
way
of
dividends
but
in
the
expectation
and
with
the
intention
of
disposing
of
the
shares
in
the
near
future
at
an
increased
price
;
this
expectation
was
realized
as
to
part
of
the
shares
in
less
than
a
month
and
as
to
the
balance
within
four
months.
The
question
is
whether
the
resulting
profit
constitutes
taxable
income
or
a
non-taxable
capital
gain.
The
applicable
sections
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148,
as
amended,
are
Sections
3,
4
and
139(1)
(e)
which
read
as
follows:
“3.
The
income
of
a
taxpayer
for
a
taxation
year
for
the
purposes
of
this
Part
is
his
income
for
the
year
from
all
sources
inside
or
outside
Canada
and,
without
restricting
the
generality
of
the
foregoing,
includes
income
for
the
year
from
all
(a)
businesses,
(b)
property,
and
(c)
offices
and
employments.
4.
Subject
to
the
other
provisions
of
this
Part,
income
for
a
taxation
year
from
a
business
or
property
is
the
profit
therefrom
for
the
year.
139.
(1)
In
this
Act,
(e)
‘business
includes
a
profession,
calling,
trade,
manufacture
or
undertaking
of
any
kind
whatsoever
and
includes
an
adventure
or
concern
in
the
nature
of
trade
but
does
not
include
an
office
or
employment.’’
Cameron,
J.,
was
of
opinion
that
the
purchase
and
sale
of
the
Brunswick
shares
was
an
adventure
or
concern
in
the
nature
of
trade.
The
respondent
supports
this
view
while
the
appellant
contends
that
what
occurred
was
simply
the
realization
at
an
enhanced
price
of
a
capital
asset
or
investment
and
did
not
constitute
an
adventure
or
concern
in
the
nature
of
trade.
In
M.N.R.
v.
Taylor,
[1956]
C.T.C.
189,
the
learned
President
of
the
Exchequer
Court
points
out
that
while
the
phrase
adventure
or
concern
in
the
nature
of
trade’’
first
appeared
in
a
Canadian
Income
Tax
Act
in
Section
127(1)
(e)
of
the
1948
Act
it
has
been
found
in
the
Income
Tax
Acts
of
the
United
Kingdom
since
the
Act
of
1842
and
indeed
goes
back
to
the
Act
of
1803.
He
then
proceeds
to
a
careful
examination
of
the
leading
cases
dealing
with
the
meaning
of
the
phrase
decided
up
to
the
time
of
his
decision
and
arrives
inductively
at
certain
general
propositions
to
guide
the
Court
in
dealing
with
a
particular
case;
these
are
accurately
summarized
in
the
head
note
to
the
report
as
follows:
‘
On
the
negative
side:
(i)
The
singleness
or
isolation
of
a
transaction
cannot
be
a
test
of
whether
it
was
an
adventure
in
the
nature
of
trade;
it
is
the
nature
of
the
transaction,
not
its
singleness
or
isolation
that
is
to
be
determined.
(ii)
It
is
not
essential
to
a
transaction
being
an
adventure
in
the
nature
of
trade
that
an
organization
be
set
up
to
carry
it
into
effect.
(iii)
The
fact
that
a
transaction
is
totally
different
in
nature
from
any
of
the
other
activities
of
the
taxpayer
and
that
he
has
never
entered
upon
a
transaction
of
that
kind
before
or
since
does
not,
of
itself,
take
it
out
of
the
category
of
being
an
adventure
in
the
nature
of
trade.
(iv)
The
intention
to
sell
the
purchased
property
at
a
profit
is
not
of
itself
a
test
of
whether
the
profit
is
subject
to
tax
for
the
intention
to
make
a
profit
may
be
just
as
much
the
purpose
of
an
investment
transaction
as
of
a
trading
one.
The
considerations
prompting
the
transaction
may
be
of
such
a
business
nature
as
to
invest
it
with
the
character
of
an
adventure
in
the
nature
of
trade
even
without
any
intention
of
making
a
profit
on
the
sale
of
the
purchased
commodity.
On
the
positive
side
:
(i)
If
a
person
deals
with
the
commodity
purchased
by
him
in
the
same
way
as
a
dealer
in
it
would
ordinarily
do
such
a
dealing
is
a
trading
adventure.
(ii)
The
nature
and
quantity
of
the
subject
matter
of
the
transaction
may
exclude
the
possibility
that
its
sale
was
the
realization
of
an
investment
or
otherwise
of
a
capital
nature
or
that
it
could
have
been
disposed
of
otherwise
than
as
a
trade
transaction.’’
The
learned
President
while
formulating
these
guides
as
helpful
recognizes
(vide
page
214
of
the
report)
‘‘that
the
question
whether
a
particular
transaction
is
an
adventure
in
the
nature
of
trade
depends
on
its
character
and
surrounding
circumstances
and
no
single
criterion
can
be
formulated’’.
In
McIntosh
v.
M.N.R.,
[1958]
S.C.R.
119;
[1958]
C.T.C.
18,
Kerwin,
C.J.,
delivering
the
judgment
of
the
Court
said
at
page
121
[[1958]
C.T.C.
20]
:
‘.
.
.
It
is
impossible
to
lay
down
a
test
that
will
meet
the
multifarious
circumstances
that
may
arise
in
all
fields
of
human
endeavour
.
.
.
it
is
a
question
of
fact
in
each
case.”
In
the
case
at
bar
it
appears
to
me
that
on
the
view
which
he
took
of
the
facts
Cameron,
J.,
was
right
in
holding
that
the
transaction
in
question
was
an
adventure
in
the
nature
of
trade
and
that
consequently
the
profit
arising
from
it
was
taxable.
Among
the
meanings
of
the
word
‘‘adventure’’
given
in
the
Shorter
Oxford
Dictionary
are
‘‘a
pecuniary
venture’’
and
‘‘a
speculation’’;
“venture”
in
turn
is
given
the
meaning,
‘‘a
commercial
enterprise
in
which
there
is
considerable
risk
of
loss
as
well
as
chance
of
gain’’.
That
the
transaction
was
an
adventure
does
not
seem
to
me
to
admit
of
doubt.
Equally,
I
think,
it
was
‘‘in
the
nature
of
trade’’.
In
Edwards
v.
Bairstow,
[1956]
A.C.
14,
Lord
Radcliffe
said,
at
page
38
:
“Dealing
is,
I
think,
essentially
a
trading
adventure,
and
the
respondents’
operations
were
nothing
but
a
deal
or
deals
in
plant
and
machinery.”
In
the
case
at
bar
the
appellant’s
transaction
was
a
deal
in
mining
shares.
There
is
nothing
in
the
reasons
of
Cameron,
J.,
or
in
what
I
have
said
above
to
throw
the
slightest
doubt
on
the
applicability
to
the
Income
Tax
Act
in
this
country
of
the
principle
stated
by
the
Lord
Justice
Clerk,
in
Califorman
Copper
Syndicate
Ltd.
v.
Harris
(1904),
5
T.C.
159
at
page
165:
“It
is
quite
a
well
settled
principle
in
dealing
with
questions
of
assessment
of
Income
Tax,
that
where
the
owner
of
an
ordinary
investment
chooses
to
realize
it,
and
obtains
a
greater
price
for
it
than
he
originally
acquired
it
at,
the
enhanced
price
is
not
profit
in
the
sense
of
Schedule
D
of
the
Income
Tax
Act
of
1842
assessable
to
Income
Tax.”
On
the
facts
as
found
by
Cameron,
J.,
in
the
case
at
bar,
the
profit
realized
was
not
the
enhancement
in
price
of
an
ordinary
investment
but
rather
‘‘a
gain
made
in
an
operation
of
business
in
carrying
out
a
scheme
for
profit-making’’.
To
hold
otherwise
would
appear
to
me
to
be
contrary
to
the
reasoning
of
the
majority
in
the
Regal
Heights
case
(supra).
I
have
arrived
at
this
conclusion
with
some
hesitation.
It
appears
to
me
to
involve
the
result
that
in
cases
of
this
nature
the
answer
to
the
question
whether
a
profit
is
or
is
not
taxable
depends
on
the
purely
subjective
test
as
to
the
intention
of
the
taxpayer
when
he
acquired
the
shares
which
have
subsequently
been
sold
at
a
profit.
If,
for
example,
in
the
case
at
bar
it
had
been
found
as
a
fact
that
the
intention
of
the
appellant
when
it
acquired
the
shares
was
to
hold
them
as
an
investment
looking
forward
to
the
time
when
Brunswick
would
pay
dividends
the
circumstance
that
a
few
weeks
later
it
sold
the
shares
at
a
profit
would
not
have
rendered
that
profit
subject
to
tax.
In
Bawlf
Grain
Co.
v.
Ross
(1917),
55
S.C.R.
232
at
page
255,
Duff,
J.,
as
he
then
was,
pointed
out
that
the
law
does
not
as
a
rule
‘‘take
note
of
subjective
events
in
the
stream
of
consciousness
save
in
relation
to
or
as
manifested
by
some
external
word
or
deed’’.
It
seems
strange
that
the
question
whether
a
certain
profit
is
subject
to
tax
should
depend
on
the
intention
with
which
the
taxpayer
entered
into
the
transaction
from
which
it
resulted,
but
the
words
of
Bowen,
L.J.,
in
Edgington
v.
Fitzmaurice
(1885),
29
Ch.
D.
459
at
483,
have
often
been
quoted
with
approval
:
“.
.
.
the
state
of
a
man’s
mind
is
as
much
a
fact
as
the
state
of
his
digestion.
It
is
true
that
it
is
very
difficult
to
prove
what
the
state
of
a
man’s
mind
at
a
particular
time
is,
but
if
it
can
be
ascertained
it
is
as
much
a
fact
as
anything
else.’’
The
other
cause
of
my
hesitation
is
that
while
the
expression
‘‘adventure
or
concern
in
the
nature
of
trade”
has
been
in
the
Acts
in
the
United
Kingdom
for
a
century
and
a
half
and
in
the
Act
in
this
country
for
thirteen
years
counsel
have
not
referred
to
any
reported
case
in
which
the
profit
arising
from
one
isolated
purchase
and
sale
of
shares
by
a
taxpayer
not
engaged
in
the
business
of
trading
in
securities
has
been
claimed
to
be
taxable.
However
this
is
perhaps
not
the
type
of
problem
in
the
solution
of
which
the
maxim
omnis
innovatio
plus
novitate
perturbât
quant
utilitate
prodest
is
of
assistance.
I
would
dismiss
the
appeal
with
costs.
Appeal
allowed.