Grant, DJ:—This is an appeal from the judgment of the Tax Review Board dated December 17, 1979, whereby it dismissed the plaintiff’s appeal from the reassessment of his income tax returns for his 1975 taxation year except for the increase it allowed in the disposal costs of the subject property and referred the same back to the Minister for reconsideration and reassessment accordingly.
The sole issue herein arose from the gain the plaintiff had made in his sale of real estate acquired by him in the year 1971 at a price of $10,000 and sold by him in the year 1975 at of $45,000. In his income tax returns for such year the plaintiff had shown such land as having a value $45,000 on December 31, 971 while the Minister had valued the same at the sum of $22,000. In this result the Minister had assessed the capital gain at $23,000 and the portion thereof to be carried into income at $11,500. The Minister had determined the disposal costs of the property at $1,530. Before the Board, Counsel for the appellant contended that the proper figure therefore was $2,530. At that time counsel for the defendant conceded such submission and requested the Board to refer such adjustment back to the Minister for reassessment so that the sole issue in contention there as here was the value of the property on December 31, 1979.
The property was obtained by the plaintiff under deed dated April 20,1971 and consisted of the west half of Lot 13, Concession 18 of the Township of Zone in the County of Kent and part of the west half of Lot 14 in the same concession containing in all about 105 acres. The conveyance was to the plaintiff and his wife Ilona Neder as joint tenants and not as tenants in common. In his testimony before the Board Neder testified that such property had been listed at $20,000 but the fact was it had only been listed at $12,000 by the previous owner. During 1971 the plaintiff erected a pre-cut cottage on the premises at a cost of $5,918.76. Besides this amount which he paid for building material he had to dig a foundation and put in posts for support. It consists of an 840 square foot frame building without hydro or water. Pictures thereof are shown at page A of exhibit 10. The land except 30 acres thereof is covered with scrub evergreen trees which are too large for Christmas trees. As to the balance of the property 15 acres thereof may have been cropped at one time but it was very poor farming land. The plaintiff did not attempt to crop it in any way while he owned it. Counsel for the plaintiff referred to it as a hobby farm but it was not entitled to such a nomen-clature as it was never used for any purpose by the plaintiff except as a week-end retreat. It was not adjacent to any body of water and could not qualify as a summer cottage.
The plaintiff attempted to prove the value of the farm on December 31, 1971 by relating an alleged offer to purchase at $45,000 in September of 1971. He said that in 1971 a real estate agent by the name of Alexander Bodon had dropped into his office to ascertain if he had any property for sale. This was the only time he had engaged Bodon to sell any property for him. No rate of commission was arranged nor the length of the listing which was put at $50,000. He said later that Bodon brought him an offer written in hand for $48,000 but he refused it because there was only $10,000 to be paid down and the balance in mortgage. He said he didn’t know the name of the offeror and never read over the offer, when he sold the property in March of 1975 he took a mortgage back for $30,000 and $15,000 cash. He did not call an appraiser to value the land and offered no other evidence as to its value.
To substantiate his proof of such offer he called the agent, Alex Bodon, who said the plaintiff told him he wanted to sell the property. He went to see the premises and took a listing from the plaintiff at $50,000 and put a for sale sign on the land. He said he took out a prospective purchaser to see the farm and was offered $48,000 by him with $10,000 down and a mortgage for the balance. He drew up an offer in writing and the alleged offeror signed it and gave him a cheque for $500. Nedar refused the offer as he wanted all cash. Bodon said he then tore up the offer and the cheque.
He couldn’t give the man’s name nor had he made any entry in any of his books of account of the alleged offer nor receipt of the cheque. He said he had put an advertisement in the London Free Press but did not produce a copy thereof nor an account therefore.
I give little credence to the evidence of the plaintiff and Bodon in respect of such offer to purchase. Even if such testimony were accepted there would be no means of ascertaining if the offeror had any knowledge as to the value of such property.
In Youngberg v Municipality of Metropolitan Toronto, 1 LCR 282; Moore, CCJ at 286 stated:
It has been said of offers to purchase that they “are always open to suspicion, easy of fabrication and generally unsatisfactory and probably in most cases should be rejected entirely”. Federal District Com’m v Leaby et al, [1940] Ex CR 115.
Offers received by an expropriated owner may in certain cases be taken into consideration to arrive at market value but evidence of such offers must be such that there is no question the offers were made and that not only the terms and conditions are known but also all the circumstances indicating whether or not they are serious.
Pratte, J in The Queen v Beland et al, 2 LCR 355.
The defendant called as a witness Patrick J Fleming who is an experienced appraiser who has been with the Department of National Revenue for 13 years. In his report before the Board he had used the direct sales comparison approach. He also inspected the property personally and made his own valuation. He also used information provided in a data bank of sales prepared by the Department of Veteran’s Affairs and Revenue Canada to locate sales of similar properties at approximately the same time. He inspected and analyzed 12 comparable sales but finally selected four from this group as being the most appropriate indicators of the market value of the subject property as of December 31, 1971. He adjusted these four sales and came to the conclusion that at such date the market value of such property was $150 per acre or a total for the land of $15,750. The plaintiff had only paid approximately $95 per acre therefore when he purchased it in April of the same year. Such appraiser was fair with the Appellant because there was no other evidence of such an increase in the value of such land in that area at that time. At this appeal he filed a more extended report (Exhibit 10). Therein he further used the sale of the subject land to the plaintiff in April of 1971 as a guide and regarded it as the most appropriate proof of value. He accepted the plaintiff’s figures of cost for the building at $5,969.73 to put his total valuation at $22,000.
I have no hesitation in accepting the testimony of this witness as I thought he was a most knowledgeable and credible valuator. I therefore accept his valuation.
Although the property was registered in the joint names of the plaintiff and his wife, the plaintiff in making his objections to the Minister, in respect of the capital gain never raised the point that his wife was a half owner and that therefore he should be charged only with one half of the amount to be carried into income. Although the deed described the parties as holding the property as joint tenants it was quite possible that the plaintiff could have held the equitable ownership of the whole interest in the property. The matter was first raised in this appeal. The defendant readily agreed that the capital gain should be so divided. It follows, as was said at the opening of this appeal, that the sole issue herein was the value of the property at December 31, 1971.
Therefore, the judgment of the Tax Review Board is confirmed that the Minister’s reassessment of the plaintiff’s income tax returns for the year 1975 should be referred back to him for consideration and reassessment by allowing the disposal costs of the property at $2,530 rather than $1,530 and also that only one half of the taxable capital gain on the disposition of the 105 acre farm being part of Lots 13 and 14 in Concession 8 of Zone Township should be included in the plaintiff’s taxable income.
In all other respects the appeal is dismissed.
The plaintiff has contended at all times that he had made no capital gain. It follows that he was unsuccessful in the only issue requiring the consideration of this Court. Therefore the plaintiff should pay the costs of the defendant in this appeal.