Pratte,
J.:—The
only
issue
on
these
appeals
is
whether
the
payment
of
a
sum
of
$65,000
to
a
partnership
named
Grovedale
Realty
Co.
(Grovedale)
gave
rise
to
a
Capital
gain
in
a
like
amount.
A
company
named
Administration
Guipar
Inc.
(Guipar)
had
apparently
agreed
to
purchase
an
immovable
property
owned
by
Grovedale.
It
had
also
been
agreed
that
if
the
purchaser
failed
to
sign
the
deed
of
sale
on
or
before
April
18,
1977,
the
agreement
would
be
cancelled
and
a
sum
of
$65,000,
which
had
been
deposited
with
a
trust
company
by
the
purchaser,
would
be
forfeited
to
the
vendor
“as
partial
liquidated
damages".
The
purchaser
failed
to
sign
the
deed
of
sale.
As
a
consequence,
the
sum
of
$65,000
was
paid
to
Grovedale.
It
is
the
receipt
of
that
sum
which,
according
to
the
judgment
under
attack,
gave
rise
to
a
capital
gain.
The
respondent
contends
(a)
that
following
Guipar's
failure
to
sign
the
deed
of
sale,
Grovedale
acquired
a
right
to
receive
the
sum
of
$65,000;
(b)
that
when
Grovedale
received
payment
of
that
sum,
it
made
a
disposition
of
property
within
the
meaning
of
clause
54(c)(ii)(B)
of
the
Income
Tax
Act;
(c)
that,
as
a
consequence,
pursuant
to
subsection
40(1),
the
receipt
of
the
sum
of
$65,000
gave
rise
to
a
capital
gain
equal
to
the
amount
by
which
the
proceeds
of
that
disposition
($65,000)
exceeded
the
adjusted
cost
base
of
the
right
disposed
of
by
Grovedale;
(d)
that,
finally,
the
cost
of
the
property
or
right
disposed
of
by
Grovedale
was
“Nil”
and,
as
a
consequence,
the
full
amount
of
$65,000
received
by
Grovedale
constituted
a
capital
gain.
In
order
to
decide
this
case,
it
is
not
necessary
to
determine
whether
all
those
contentions
are
well
founded
since,
even
it
is
assumed,
for
purposes
of
discussion,
that
Grovedale
disposed
of
property
within
the
meaning
of
clause
54(c)(ii)(B)
when
it
received
the
payment
of
$65,000,
the
record
does
not
allow
us
to
say
that
the
adjusted
cost
base
of
the
property
disposed
of
by
Grovedale
was
less
than
$65,000.
The
amount
of
$65,000
was
ostensibly
paid
in
partial
satisfaction
of
Grovedale's
right
to
claim
damages
from
Guipar.
Counsel
for
the
respondent
agreed
that
the
cost
of
that
right
to
Grovedale
was
the
value
of
the
loss
suffered
by
Grovedale
as
a
result
of
the
cancellation
of
the
sale.
He
said,
however,
that
Grovedale,
according
to
the
record,
had
suffered
no
such
loss
and,
consequently,
had
incurred
no
costs
to
acquire
the
property
disposed
of.
That
contention
is
ill-founded.
It
is
common
ground
that
the
Minister
had,
in
this
case,
the
burden
of
establishing
the
correctness
of
the
assessments
since
he
was
trying
to
support
them
on
grounds
that
were
different
from
those
on
which
they
were
based.
The
record,
as
we
read
it,
contains
no
evidence
showing
that
the
sum
of
$65,000
was
something
other
than
damage
paid
to
compensate
Grovedale
of
a
loss
really
suffered
by
it.
It
follows
that
the
cost
of
the
property
disposed
of
by
Grovedale
has
not
been
shown
to
be
less
than
the
$65,000
it
received.
For
these
reasons,
the
appeals
will
be
allowed,
the
judgments
of
the
Trial
Division
will
be
set
aside,
the
reassessments
will
be
vacated
and
referred
back
to
the
Minister
for
reassessment
on
the
basis
that
the
share
of
each
appellant
in
the
sum
of
$65,000
received
by
Grovedale
from
Guipar
does
not
constitute
a
capital
gain.
The
appellants
shall
be
entitled
to
their
costs
in
this
Court
as
well
as
in
the
Trial
Division.
Appeals
allowed.
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