CORAM: STONE J.A.
HER MAJESTY THE QUEEN
- and -
ROBERT E. ZELINSKI, KEN A.
WHENT and NICHOLAS J. PUSTINA
Heard at Toronto, Ontario, Monday & Tuesday, November 15 and 16, 1999.
Judgment rendered at Ottawa, Ontario, on Friday, December 10, 1999.
REASONS FOR JUDGMENT BY: SEXTON J.A.
CONCURRED IN BY: STONE J.A.
CORAM: STONE J.A.
HER MAJESTY THE QUEEN
- and -
ROBERT E. ZELINSKI, KEN A.
WHENT and NICHOLAS J. PUSTINA
REASONS FOR JUDGMENT
 When the Government of Canada introduced the Cultural Property Export and Import Act to Parliament, it announced that "various tax incentives to encourage gifts and the sale of national treasures to appropriate custodial institutions"1 would be required "in order to encourage the movement of national treasures into those institutions best able to preserve them."2 The Government explained that the tax incentives "are central to the operation of the whole scheme."3 Three lawyers enthusiastically embraced the message. They donated approximately 215 paintings of a famous native artist, Norval Morrisseau, to public art galleries in Ontario. These donations meant that this truly Canadian art would be preserved and be accessible for average Canadians. It also meant that the lawyers would reap large tax savings. Although they had only paid $129,350 for the paintings, they had them appraised for almost $1 million. The lawyers deducted the larger amount from their professional income. The Canadian Government disagreed.
 The Minister of National Revenue (the "Minister") reassessed the taxpayers" returns. At trial, he argued that they were not exempt from any gain they might have made on the deemed disposition of the paintings, since an exemption contained in the Income Tax Act (the "Act") applied only to capital gains, and since the proceeds they were deemed to have received constituted business income. The Minister"s theory was that the taxpayers were engaged in an adventure in the nature of trade. The Minister also objected to the $992,000 fair market value for which tax receipts were issued, saying that the fair market value of the paintings was simply $129,350: the actual cost that the taxpayers had paid for the paintings. Alternatively, at trial, the Minister argued that the fair market value of the paintings was only $255,155, a far lower assessment of the fair market value of the paintings than the taxpayers had claimed. Accordingly, the Minister required the taxpayers to pay additional amounts of tax, and imposed interest on those amounts as of the date on which the taxpayers were required to file their tax returns.
| Broadly speaking, these appeals raise three issues: |
| 1. Whether the taxpayers were engaged in an adventure in the nature of trade; |
| 2. What was the fair market value of the artwork; and |
| 3. Whether the Minister is permitted to assess interest on tax as of the date on which a taxpayer is required to file his or her tax return, or whether the Minister is only permitted to assess interest as of the date of reassessment of a taxpayer"s return. |
| Norval Morrisseau is a prominent Canadian artist who lived in Thunder Bay. Until 1981, he sold his artwork largely through an exclusive arrangement with a private gallery in Toronto called the Pollock Gallery. It continued to sell Mr. Morrisseau"s art until it declared bankruptcy in 1983. |
| The Tax Court judge explained that in 1984, Mr. Morrisseau developed "an undisciplined lifestyle" and had "a serious problem with alcohol."4 Since the Pollock Gallery had declared bankruptcy, Mr. Morrisseau no longer exclusively sold his artwork to one dealer. Instead, as the Tax Court judge explained, his new works were "peddled on the streets of Thunder Bay and possibly other places."5 Mr. Zelinksi testified that even one grocery store in Thunder Bay sold Morrisseau paintings.6 |
| In March 1984, the taxpayers began to purchase Mr. Morrisseau"s paintings. Over the course of two years, they purchased approximately 215 paintings, for which they paid $129,350. Each painting was certified by the Canadian Cultural Property Export Review Board in accordance with paragraph 23(3)(b) and (c) of the Cultural Property Export and Import Act , as required by subparagraph 39(1)(a)(i.1) of the Act. The taxpayers also asked an organization called the Professional Art Dealers Association of Canada Inc. ("PADAC") to provide appraisals of the fair market value of the paintings. PADAC concluded that the fair market value of the paintings was $992,900. |
 With their certifications and appraisals in hand, the taxpayers began to donate the Morrisseau paintings to various public galleries and museums that met the statutory criteria established by subparagraph 39(1)(a)(i.1)(B) of the Act. In return for their donations, the galleries and museums issued tax receipts to the taxpayers pursuant to the former paragraph 110(1)(b.1) of the Act for amounts equal to the fair market value established by PADAC. The taxpayers sought a deduction from their professional income using those tax receipts. In their tax returns, the taxpayers claimed exemptions for any capital gains they might be deemed to have received as a result of their donations to the galleries and museums by reason of paragraph 69(1)(b) of the Act. The exemption, outlined at subparagraph 39(1)(a)(i.1) of the Act, excludes from a taxpayer"s capital gains any gains that result from the disposition of Canadian Cultural Property to prescribed public institutions.
 In his reassessment, the Minister raised two primary concerns with the taxpayers" returns. First, he argued that the taxpayers could not avail themselves of the exemption outlined at subparagraph 39(1)(a)(i.1) of the Act, since the taxpayers" purchases constituted an adventure in the nature of trade. Accordingly, any deemed proceeds of disposition that occurred as a result of the taxpayers" donations to the galleries and museums were on account of income, not capital. Since the exemption outlined at subparagraph 39(1)(a)(i.1) of the Act applies only to a taxpayer"s capital gains, it could not apply to the taxpayers" deemed proceeds on account of income.
 Second, the Minister disputed the tax receipts issued by the galleries and museums to the taxpayers for the fair market value of the paintings. The Minister argued that the fair market value of the paintings was not $992,900, as PADAC had established. Rather, the fair market market value of the paintings at the time they were donated to the galleries and museums was simply the cost the taxpayers had paid for them, or $129,350. Alternatively, at trial, the Minister provided expert evidence to demonstrate that the fair market value of the paintings was merely $255,155.
 The taxpayers appealed the Minister"s reassessment to the Tax Court of Canada.
|RELEVANT STATUTORY PROVISIONS |
Income Tax Act
39 (1) For the purposes of this Act,
(a) a taxpayer's capital gain for a taxation year from the disposition of any property is his gain for the year determined under this subdivision [...] from the disposition of any property of the taxpayer other than [...]
(i.1) an object that the Canadian Cultural Property Export Review Board has determined meets all criteria set out in paragraphs 23(3)(b) and (c) of the Cultural Property Export and Import Act and that has been disposed of, [...]
(B) in any other case, at any time, to an institution or public authority in Canada that was at the time of the disposition designated under subsection 26(2) of that Act either generally or for a purposes related to that object, [...]
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Loi de l"impôt sur le revenu
39(1) Aux fins de la présente loi,
(a) un gain en capital d"un contribuable, tiré, pour une année d"imposition, de la disposition d"un bien quelconque, désigné le gain, déterminé conformément aux dispositions de la présente sous-section [...] de la disposition d"un bien lui appartenant, autre [...]
(i.1) qu"un objet dont la conformité aux critères énoncés aux alinéas 23(3)(b) et (c) de la Loi sur l"exportation et l"importation de biens culturels a été établie par la Commission canadienne d"examen des exportations de biens culturels et qui a été aliéné [...]
(B) dans tout autre cas, à n"importe quel date, au profit d"un établissement, ou d"une administration, sis au Canada et alors désigné, conformément au paragraphe 26(2) de cette loi, à des fins générales ou liées à cet objet, [...]
69 (1) Except as expressly otherwise provided in this Act, [...]
(b) where a taxpayer has disposed of anything
(i) to a person with whom he was not dealing at arm's length for no proceeds or for proceeds less than the fair market value thereof at the time he so disposed of it, or
(ii) to any person by way of gift inter vivos,
he shall be deemed to have received proceeds of disposition therefor equal to that fair market value; [...]
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69 (1) Sauf dispositions contraires expresses contenues dans la présente loi, [...]
(b) lorsqu"un contribuable a disposé d"un bien en faveur
(i) d"une personne avec laquelle il avait un lien de dépendance sans contrepartie ou moyennant une contrepartie inférieure à la juste valeur marchande de ce bien à la date de la disposition, ou
(ii) d"une personne au moyen d"une donation entre vifs,
il est réputé avoir reçu par suite de la disposition une contrepartie égale à cette juste valeur marchande; [...]
110 (1) For the purpose of computing the taxable income of a taxpayer for a taxation year, there may be deducted such of the following amounts as are applicable: [...]
(b.1) the aggregate of gifts of objects that the Canadian Cultural Property Export Review Board has determined meet all of the criteria set out in paragraphs 23(3)(b) and (c) of the Cultural Property Export and Import Act, which gifts were not deducted under paragraph (a) or (b) and were made by the taxpayer in the year (and in the 5 immediately preceding taxation years, to the extent of the amount thereof that was not deducted under this Act in computing the taxable income of the taxpayer for any preceding taxation year) to institutions or public authorities in Canada that were, at the time the gifts were made, designated under subsection 26(2) of that Act either generally or for a purpose related to those objects, not exceeding the amount remaining, if any, when the amounts deducted for the year under paragraphs (a) and (b) are deducted from the income of the taxpayer for the year, if payment of the amounts given is proven by filing receipts with the Minister that contain prescribed information;
| || |
110(1) Pour le calcul du revenu imposable d"un contribuable pour une année d"imposition, il peut être déduit celles des sommes suivantes qui sont appropriées: [...]
(b.1) le total des dons d"objets qui, selon la Commission canadienne d"examen des exportations de biens culturels, satisfont aux critères prévus aux aliénas 23(3)(b) et (c) de la Loi sur l"exportation et l"importation de biens culturels, dont le montant n"a pas été déduit en vertu de l"aliéna (a) ou (b) et que le contribuable a faits dans l"année (et dans les cinq années d"imposition précédentes, dans la mesure où le montant de ces dons n"a pas été déduit en vertu de la présente loi dans le calcul de son revenu imposable pour une année d"imposition antérieure), à des établissements ou organismes publics au Canada qui étaient alors désignés, en vertu du paragraphe 26(2) de cette loi, à des fins générales ou à une fin liée à ces objets, jusqu"à concurrence du restant éventuel après que les montants déduits pour l"année en vertu des aliénas (a) et (b) ont été déduits du revenu du contribuable pour l"année, à condition que le versement de ces dons soit prouvé par la production auprès du ministre de reçus où figurent les renseignements prescrits;
152 (8) An assessment shall, subject to being varied or vacated on an objection or appeal under this Part and subject to re-assessment, be deemed to be valid and binding notwithstanding any error, defect or omission therein or in any proceeding under this Act relating thereto.
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152 (8) Sous réserve de modifications qui peuvent y être apportées ou d"annulation qui peut être prononcée lors d"une opposition ou d"un appel fait en vertu de la présente Partie et sous réserve d"une nouvelle cotisation, une cotisation est réputée être valide et exécutoire nonobstant toute erreur, vice de forme ou omission dans cette cotisation ou dans toute procédure s"y rattachant en vertu de la présente loi.
| The Tax Court judge analyzed the parties" submissions under the three broad headings outlined in the introduction to this judgment. |
 First, he concluded that the taxpayers" purchases did not constitute an adventure in the nature of trade.
 Next, he analyzed the parties" submissions on the fair market value of the Morrisseau paintings. He concluded that he did "not accept any of the opinions with respect to fair market value" offered by the parties" experts, and relied on Bibby Estate v. The Queen7 for the proposition that where a Court "does not find the evidence of any expert completely satisfying or conclusive," it may "form its own opinion of valuation, provided this is always based on the careful consideration of all the conflicting evidence."8 The Tax Court judge eventually concluded that the fair market value of the Morrisseau paintings was $660,000.
 Finally, the Tax Court judge rejected the taxpayers" claim that subsection 161(1) of the Act precludes the Minister from assessing interest on taxes prior to the date on which the Minister issues a reassessment. He held that subsection 152(3) establishes that a liability for tax exists "from the date when the income tax return was due to be filed for that particular taxation year,"9 and that consequently, the Minister is able to assess interest on taxes as of the date on which a taxpayer is required to file a tax return.
 The Minister now appeals the Tax Court judge."s determination that the taxpayers were not engaged in an adventure in the nature of trade. The taxpayers have cross-appealed both the Tax Court judge"s determination of the fair market value of the paintings, as well as his conclusion that the taxpayers were required to pay interest on taxes owing as of the date their returns were required to be filed.
 Parenthetically, the Court was informed by counsel for Mr. Pustina and by the Minister that both the Minister"s appeal against Mr. Pustina and Mr. Pustina"s cross-appeal against the Minister were to be discontinued pursuant to the Federal Court Rules, 1998 , and that no costs should be awarded against either party in either the appeal or the cross-appeal in Docket A-743-96. After this appeal was heard, counsel for Mr. Pustina and the Minster filed a notice to discontinue the appeal and cross-appeal.
|1. Were the taxpayers engaged in an adventure in the nature of trade? |
| 2. What was the fair market value of the Morrisseau artwork? |
| 3. Does subsection 161(1) of the Act permit the Minister to assess interest on tax as of the date on which a taxpayer is required to file his or her tax return, or does it only permit the Minister to assess interest as of the date on which the Minister reassesses a taxpayer"s return? |
ADVENTURE IN THE NATURE OF TRADE
|The Taxpayers"Bargain Purchases |
 In this appeal, the Minister argued that the Tax Court judge incorrectly determined that the taxpayers did not engage in an adventure in the nature of trade. The Minister argued that to determine whether a taxpayer"s purchase constitutes an adventure in the nature of trade, a Court must examine a taxpayer"s intention at the time of acquisition, not at the time of disposition. The Minister submits that the Tax Court judge"s findings of fact are inconsistent with this need to focus on a taxpayer"s intention at the time of acquisition.
 To analyze this submission, the Tax Court judge"s findings of fact must be reviewed in some depth. All of the Tax Court judge"s findings of fact were made with the observation that the taxpayers" evidence was "credible without qualification."10
 First, he found that when the taxpayers began to purchase the Morrisseau paintings, they did not initially know of the tax advantages offered by subparagraph 110(1)(b.1) and subparagraph 39(1)(a)(i.1) of the Act. They simply "looked upon their first few acquisitions as simply a bargain " like buying a loonie for a dime."11 This finding of fact was supported by Mr. Zelinski"s testimony, where he testified that he "was being motivated to buy [the] paintings because they were bargains,"12 and by Mr. Whent, where he testified that the taxpayers bought the paintings because they were "a good deal."13 Ultimately, the Tax Court judge concluded that, "apart from their natural desire to acquire bargains,"14 the taxpayers "had no specific motive or intention with respect to their early acquisitions"15 and that "there were unlimited possibilities open to the [taxpayers] concerning the ultimate use of their early purchases."16 However, once the taxpayers learned of the tax advantages potentially available to them, "subsequent acquisitions were for the purpose of donation."17 At that point, donations to the galleries and museums were prompted by two principal intentions: first, to reduce their taxes by virtue of paragraph 110(1)(b.1) and to avoid tax on any deemed gains by virtue of subparagraph 39(1)(a)(i.1) of the Act, and second, to permit Mr. Morrisseau"s paintings to "be seen by a wide cross-section of Canadians."18
| On appeal, the Minister submitted that since the taxpayers "knew the paintings were bargains, their operating motivation at the outset was to turn to account, in one way or another, the difference between the cost of acquisition and what they believe to be the fair market value of the paintings." I disagree. There is insufficient evidence to demonstrate that the taxpayers purchased the paintings with an intention to sell. The Tax Court judge found that the taxpayers had no specific intention when they made their early acquisition of paintings. I also agree with the Tax Court judge that the mere intention to purchase property on the basis that it is a bargain is not sufficient to establish that a taxpayer is engaged in an adventure in the nature of trade. It is neutral and entirely natural for taxpayers, whether engaged in an adventure in the nature of trade or not, to purchase things merely because they are bargains. Indeed, paragraph 12 of Revenue Canada"s Interpretation Bulletin IT-459 confirms this approach:A taxpayer's intention to sell at a gain is not sufficient, by itself, to establish that the taxpayer was involved in an adventure or concern in the nature of trade. That intention is almost invariably present even when a true investment has been acquired if circumstances should arise that would make it financially more beneficial to sell the investment than to continue to hold it. [...] |
 The Minister also submitted that the taxpayers" ostensible intention to engage in an adventure in the nature of trade when they made their first few purchases without knowing of the potential tax advantages available to them could somehow colour their subsequent purchases made with the specific intention of donating the paintings. The Minister conceded that this argument depended on the Court accepting the proposition that the taxpayers" various purchases of paintings constituted one single transaction.
 Since I have already concluded that the taxpayers" intention to obtain a "bargain" is insufficient to constitute an intention to engage in an adventure in the nature of trade, it follows that their first few purchases cannot somehow colour subsequent purchases made with the knowledge of the tax advantages and with the intention to donate the paintings.
 In any event, I do not accept that the taxpayers purchased the Morrisseau paintings as one single transaction. The Tax Court judge"s findings of fact specifically state that once the taxpayers learned of the tax advantages potentially available to them, "subsequent acquisitions were for the purpose of donation." Mr. Zelinski also testified that he "became aware of the cultural property donation [...] very early in the spring of 1984, if not in the month of March, 1984." By the end of March, 1984, the taxpayers had only purchased eight of their 215 paintings. In fact, the taxpayers purchased the Morrisseau artwork in 27 different batches. Furthermore, the taxpayer refused to buy all the Morrisseau art offered to them, instead deciding on an individual basis whether to buy paintings.
 Cumulatively, this evidence demonstrates that the taxpayers engaged in a series of transactions, and did not simply engage in one transaction. Therefore, even if I were to accept that the taxpayers" intention to purchase their first few paintings as a "bargain" could constitute an adventure in the nature of trade, which I do not, the vast majority of the taxpayers" purchases were made with a view to donating them.
|The Taxpayers"Donation Purchases |
 That said, can property that is purchased solely for the purpose of donation constitute an adventure in the nature of trade? In my view, it cannot.
 In Friesen v. The Queen,19 Major J. concluded that "[t]he first requirement for an adventure in the nature of trade is that it involve a "scheme for profit-making"."20 The taxpayer must have a "legitimate intention of gaining a profit from the transaction."21 Later in his judgment, he added that "[s]chemes entered into with the intention of creating a business loss would not qualify as adventures in the nature of trade and would be tantamount to a sham."22 In my view, the paintings purchased by the taxpayers that were purchased with an intention to donate cannot be considered to be purchased with a legitimate intention of gaining a profit. In that sense, the taxpayers" purchases were like schemes entered into with an intention of creating a business loss, which Major J. concluded could not qualify as an adventure in the nature of trade.
| Similarly, in Loewen v. The Queen,23 Hugessen J.A. held that "tax considerations" and "an anticipated tax advantage" cannot "properly be determinative of whether or not any given transaction is a trading operation."24 He added that "[w]hile the saving of taxes is clearly an important consideration in the conduct of any modern business, I do not think it can properly be said that a transaction whose sole purpose is to reduce the tax otherwise payable by a taxpayer is, for that reason alone, an adventure in the nature of trade."25 In the same vein, Hugessen J.A. held in Moloney v. The Queen26 that the taxpayer"s reduction of tax "cannot by itself be a taxpayer"s business for the purpose of the Income Tax Act."27 He added:To put the matter another way, for an activity to qualify as a "business" the expenses of which are deductible under paragraph 18(1)(a), it must not only be one engaged in by the taxpayer with a reasonable expectation of profit, but that profit must be anticipated to flow from the activity itself rather than exclusively from the provisions of the taxing statute.28 |
 I would also add that the taxpayers" donations are entirely consistent with the joint operation of the Act and of the Cultural Property Export and Import Act , and that to forbid the deductions sought by the taxpayers in the circumstances of this appeal would effectively frustrate those objectives. In Art Gallery of Ontario v. Canadian Cultural Property Export Review Board,29 Rothstein J. addressed the objective that Parliament sought to fulfill when it provided the incentives it did:
| The purpose of this legislation [i.e. the Cultural Property Export and Import Act] is to provide a mechanism to preserve the national heritage of Canada through a combination of export controls, preferential rights of purchase for designated cultural institutions and income tax incentives for those who donate Canadian cultural property to such designated institutions. |
| The basic scheme of the [Cultural Property Export and Import Act] and its companion provisions in the Income Tax Act is to combine an incentive " preferential tax treatment on the gift or sale of Canadian cultural property to designated institutions, with certain restrictions on the export of Canadian cultural property [...]30 |
The Taxpayers"Secondary Intention
 In his reasons for judgment, the Tax Court judge stated that "if the [taxpayers] had sold the Morrisseau Art at the same times and in the same five batches and at the same values as the five actual donations to public galleries, those hypothetical sales would have been adventures in the nature of trade"31 on the basis of the secondary intention concept developed in Racine et al. v. M.N.R.32 and De Salaberry Realties Ltd. v. The Queen.33
 During oral argument, the Minister submitted alternatively that the taxpayers purchased the Morrisseau paintings with a secondary intention to engage in an adventure in the nature of trade. In part, he supported his submissions on the basis of the following portion of the cross-examination of Mr. Zelinski:Q. Now, sir, when you participated in this venture " when you got into it as an investment and you were thinking about the potential appreciation and you were thinking about this built-in gain, isn"t it true that the only way that the built-in gain or potential appreciation could be realized or crystallized would be by way of a potential sale of the paintings?
| Q. So you were saying to yourself, "Eventually, this could be sold for a gain," correct? |
| In Racine, Noël J. held: It is not, in fact, sufficient to find merely that if a purchaser had stopped to think at the moment of the purchase, he would be obliged to admit that if at the conclusion of the purchase an attractive offer were made to him he would resell it, for every person buying [...] a painting for his house [...] would be obliged to admit, if this person were honest and if the transaction were not based exclusively on a sentimental attachment, that if he were offered a sufficiently high price a moment after the purchase, he would resell.34 |
 Noël J. added that a "secondary intention" to resell so as to constitute an adventure in the nature of trade only exists where the purchaser has in his or her mind, "at the moment of the purchase, the possibility of reselling as an operating motivation for the acquisition."35 Such an operating motivation cannot exist merely because a taxpayer considers that eventually, something could be sold for a gain. More is needed.
 Moreover, a taxpayer"s secondary intention acquires importance only where a taxpayer"s primary intention is frustrated or proves impracticable. In Principles of Canadian Income Tax Law,36 Peter Hogg and Joanne Magee note that a secondary intention becomes material where "the primary purpose proves impracticable."37 In an article entitled "Adventure or Concern in the Nature of Trade,"38 Robert Beam and Stanley Laiken explain that "[t]he concept of secondary intention was developed by the courts to deal with situations in which there was evidence that a primary intention to hold an asset as a capital investment [...] was frustrated [...]."39 Similarly, in an article entitled "Capital Versus Income,"40 D. Bernard Morris notes that secondary intention is examined "in the event that the primary intent is frustrated."41 And finally, paragraph 5 of Revenue Canada"s Interpretation Bulletin IT-218R also confirms that a secondary intention applies only where "the main or primary intention is thwarted."
 In the circumstances of this appeal, the taxpayers" primary intention was not thwarted: they purchased their paintings either with no specific intention, or with the intention to donate them. Since they carried out that primary intention, any secondary intention they might have had is immaterial to whether they were engaged in an adventure in the nature of trade.
 Finally, a secondary intention to resell at a profit only acquires importance where a taxpayer follows through on that intention. Again, the authors of Principles of Canadian Income Tax Law explain that a "transaction will be held to be on account of income rather than capital [...] if the secondary intention is carried out."42 Paragraph 5 of IT-218R also states that "if this secondary intention is carried out any gain realized on the sale usually will be taxed as business income." Since the taxpayers did not carry out any purported secondary intention they might have had, those intentions cannot transform their de facto decision to not follow through on that secondary intention so as to make it appear as if they did do so.
FAIR MARKET VALUE OF THE PAINTINGS
| At trial, six witnesses testified to the fair market value of the Morrisseau artwork. Four of those witnesses were qualified as experts. One of the taxpayers" experts valued the Morrisseau artwork at $1,104,795. The original PADAC appraisal submitted by the taxpayers to the galleries and museums to which the paintings were eventually donated claimed that the fair market value of the artwork was $992,900. By contrast, the Minister"s experts valued the Morrisseau art at $255,155. |
 As previously mentioned, the Tax Court judge did not accept any of the experts" conclusions. He then quoted the following passage from Bibby Estate v. The Queen, and concluded that the fair market value of the artwork was $660,000:While it has frequently been held that a Court should not, after considering all the expert and other evidence merely adopt a figure somewhere between the figure sought by the contending parties, it has also been held that the Court may, when it does not find the evidence of any expert completely satisfying or conclusive, nor any comparable especially apt, form its own opinion of valuation, provided this is always based on the careful consideration of all the conflicting evidence. The figure so arrived at need not be that suggested by any expert or contended for by the parties.43
 Counsel for the taxpayers agreed that the Tax Court judge was entitled to form his own opinion of valuation in accordance with Bibby Estate.
| In my view, the Tax Court judge"s determination of valuation was reasonable. Bibby Estate is consistent with Urie J.A."s judgment in Connor v. The Queen,44 where the Court held:It is trite to say that the Trial Judge is the trier of fact and he is thus entitled to accept or reject, in whole or in part, any of the evidence adduced before him. In this case he accepted some of the evidence but he rejected in all cases the methods, at least in part, whereby the experts arrived at their valuations. He was entitled to do so and unless it can be said that thereafter he proceeded on a wrong principle or that he made a palpable error in reaching his own conclusions as to value, we ought not to interfere with this findings. We have not been persuaded by the arguments of counsel that he proceeded on a wrong principle or made any such error. Certainly he appears to have adopted parts of the methods used by the witnesses in making their calculations but in using only parts and not the whole of their respective methods we do not believe that he erred in law. Certainly, without the advantage of having seen and heard the witnesses, we are not in the position to say that he wrongly rejected the evidence of any one [...] nor could we [...] substitute our view of value for his. |
 In this case, the Tax Court judge considered each expert"s appraisal methods, and concluded that no one method was satisfying. He then arrived at his own opinion of valuation based on the careful consideration of all the conflicting evidence. In so doing, I do not think that he proceeded on a wrong principle or made a palpable error. Accordingly, the taxpayers" cross-appeal of the Tax Court judge"s determination of the fair market value of the paintings should be dismissed.
| For convenience, I have reproduced the text of subsection 161(1) of the Act below: |
161 (1) Where at any time after the day on or before which a taxpayer is required to pay the remainder of his tax payable under this Part for a taxation year,
(a) the amount of his tax payable for the year under this Part exceeds
(b) the aggregate of all amounts each of which is an amount paid at or before that time on account of his tax payable and applied as at that time by the Minister against the taxpayer"s liability for an amount payable under this Part for the year,
|the person liable to pay the tax shall pay to the Receiver General interest at the prescribed rate on the excess computed for the period during which that excess is outstanding. [emphasis added] || || |
161 (1) Lorsque, à une date quelconque postérieure à la date où le contribuable était, au plus tard, tenu en vertu de la présente partie de produire sa déclaration de revenu pour une année d"imposition,
(a) le montant de l"impôt payable par le contribuable pour l"année en vertu de la présente partie est supérieur
(b) au total des montants dont chacun représente un montant payé au plus tard à cette date quelconque au titre de son impôt payable et imputé à compter de cette date quelconque par le ministre sur le montant dont le contribuable est redevable en vertu de la présente partie pour l"année,
la personne redevable de l"impôt doit verser au receveur général des intérêts sur l"excédent, calculés au taux prescrit pour la période pendant laquelle cet excédent est impayé. [nos italiques]
 The taxpayers submit that since the Minister reassessed the taxpayers" returns in 1988, subsection 161(1) of the Act only entitles the Minister to assess interest from the date of that reassessment. Prior to that re-assessment, the taxpayers were issued an assessment. The taxpayers submit that since subsection 158(8) states, inter alia , that an assessment is "deemed to be valid and binding," no tax amount can be said to be "outstanding" until the reassessment was made. In other words, subsection 161(1) of the Act is limited by subsection 158(8).
 In R. v. McKinlay Transport,45 Wilson J. concluded that the Canadian tax system "is a self-reporting and self-assessing one which depends upon the honesty and integrity of the taxpayers for its success."46 To accept the argument that subsection 161(1) of the Act only permits the Minister to impose interest on taxes as of the date of the Minister"s reassessment would encourage taxpayers to underestimate taxes that the Act requires them to pay, while those dishonest taxpayers would rest content with the knowledge that the Minister could only impose interest on taxes owing as of the date of a later reassessment by the Minister.
 The taxpayers" arguments are also inconsistent with the plain language of subsection 161(1) of the Act, which permits the Minister to impose interest for the period during which excess taxes are "outstanding." "Outstanding" is broadly defined in the third edition of The Shorter Oxford Dictionary as "that stands over; that remains undetermined, unsettled, or unpaid." Simply put, taxes that a taxpayer underestimates from his or her tax return are unpaid and are therefore outstanding, regardless of the date on which the Minister reassesses the taxpayer.
 Accordingly, I would dismiss the taxpayers" cross-appeal on the interest issue.
 To summarize, I would dismiss the Minister"s appeal on the issue of the deductibility of the donations from taxable income and the related issue of whether the taxpayers were permitted to take advantage of subparagraph 39(1)(a)(i.1) of the Act. I would also dismiss the taxpayers" cross-appeal on both the valuation issue and on the interest issue. As previously mentioned, counsel for both the Minister and for Mr. Pustina agreed to discontinue both the appeal and the cross-appeal in Docket A-743-96 without any cost consequences. I concur. In view of the divided success in the appeal and the cross-appeal, the respondents should have one-half of their costs.
"J. EDGAR SEXTON"
Julius A. Isaac
1 House of Commons Debates (7 February 1975) at 3025.
3 Ibid. at 3027.
4 See Whent v. Canada, 96 DTC 1594 (T.C.C.) at 1603.
5 Whent, supra at 1607.
6 Excerpt of Evidence of Robert E. Zelinski, Day 1, p. 109, l. 5-11.
7 83 DTC 5148 (F.C.T.D.).
8 Whent, supra at 1611.
9 Ibid. at 1614.
10 Ibid at 1600.
11 Ibid at 1597.
12 Ibid. at 1600.
13 Ibid. at 1601.
16 Ibid. at 1602.
17 Ibid. at 1598.
19 95 DTC 5551 (S.C.C.)
20 Ibid. at 5554.
22 Ibid. at 5563.
23 94 DTC 6265 (F.C.A.)
24 Ibid. at 6269.
26 92 DTC 6570 (F.C.A.)
27 Ibid. at 6570.
29  3 F.C. 691 (T.D.)
30 Ibid. at 696.
31 Whent, supra at 1602.
32 65 DTC 5098 (Ex. Ct.)
33 76 DTC 6408 (F.C.A.)
34 Racine, supra at 5103.
35 Ibid. [emphasis added]
36 (Scarborough, Ont.: Carswell, 1997)
37 Ibid. at 332.
38 (1996), 44 Can. Tax J. n. 3 888.
39 Ibid. at 891.
40 (1992) CR 26:1.
41 Ibid. at 15.
42 Supra at 332.
43 Bibby Estate, supra at 5157.
44 79 DTC 5256 (F.C.A.)
45  1 S.C.R. 627.
46 Ibid. at 636.