Hamlyn,
T.CJ.:—The
appellant
appeals
a
reassessment
of
income
tax
for
his
1986
taxation
year.
From
the
pleadings
the
parties
admit
that
the
appellant
claimed
a
business
loss
of
$131,670
in
his
1986
tax
return
and
that
subsequently
a
schedule
calculating
the
amount
of
the
business
loss
was
filed
at
the
request
of
Revenue
Canada
that
revised
the
business
loss
claimed
to
$143,330.
This
sum
was
40
per
cent
of
the
net
loss
($358,324)
arising
from
a
Co-ownership
agreement
made
between
the
appellant
and
R.C.
Pruefer
Co.
Ltd.
(Pruefer)
dated
February
1,
1986.
Pruefer
was
the
owner
of
parcels
of
land
that
included
the
City
of
Windsor
Parking
Lot
No.
7.
On
this
lot
Pruefer
and
the
appellant
constructed
a
parking
garage.
This
garage
was
originally
constructed
to
the
third
level;
at
present
it
is
completed
to
the
sixth
level
ana
is
designed
to
eventually
reach
ten
levels.
By
virtue
of
the
agreement,
the
appellant
acquired
a
40
per
cent
interest
in
the
project
as
a
tenant
in
common
and
as
a
consequence
became
directly
involved
in
the
development
and
construction
of
the
parking
garage.
The
business
loss
as
claimed
was
originally
described
as
"management
fees"
and
included,
inter
alia,
development
costs,
administrative
construction
costs,
permits,
interest
expenses
and
fees
all
incurred
prior
to
the
completion
of
the
parking
garage.
The
parking
garage
is
part
of
a
development
project
that
included
the
construction
of
a
hotel
and
commercial
podium.
The
hotel
and
the
commercial
podium
are
adjacent
to
one
another
and
have
pedestrian
routes
connecting
them.
An
aerial
bridge
over
a
street
provides
pedestrian
linkage
between
the
parking
garage
and
the
other
buildings.
By
notice
of
reassessment
dated
October
19,
1989,
the
respondent
disallowed
the
loss
claimed.
The
appellant
filed
a
notice
of
objection
on
January
9,
1990.
The
respondent
sent
to
the
appellant
a
notification
of
confirmation
by
the
Minister
wherein
the
respondent
confirmed
the
reassessment
and
stated
“The
City
Centre
Parking
Garage
was
not
a
building
described
in
subsection
18(3.5)
or
18(3.6)
of
the
Act
and,
accordingly,
in
computing
your
income
for
the
taxation
year
no
deduction
may
be
made
in
respect
of
any
outlay
or
expense
made
or
incurred
that
may
reasonably
be
regarded
as
a
cost
attributable
to
the
period
of
the
construction
of
the
building
under
the
provisions
of
subsection
18(3.1)
of
the
Act".
The
present
appeal
follows
from
the
Minister's
confirmation.
Issue
The
issue
before
the
Court
is
whether
the
appellant
is
entitled
to
deduct
the
costs
relating
to
the
construction
of
the
parking
garage
from
income
or
must
the
costs
of
construction
be
capitalized
and
added
to
the
cost
of
the
parking
garage.
Facts
The
subject
parking
garage
is
in
downtown
Windsor,
Ontario
on
redevelopment
lands
formerly
owned
by
the
City
of
Windsor
and
subsequently
acquired
and
developed
by
Pruefer.
The
factual
and
legal
documentation
chronology
is
as
follows:
The
Council
of
the
City
of
Windsor
adopted
a
resolution
on
November
5,
1979,
to
permit
Pruefer
to
acquire
and
develop
City
of
Windsor
lands
in
the
downtown
core.
These
lands
included
the
subject
property.
On
March
11,
1980,
the
City
of
Windsor
passed
a
bylaw
authorizing
the
execution
of
an
agreement
with
Pruefer
for
the
development
of
the
"lands".
Exhibit
A-3
is
herein
reproduced
showing
the
“lands”.
In
April
1980,
the
agreement
between
the
City
of
Windsor
and
Pruefer
was
executed
and
was
to
take
effect
as
of
February
26,
1980.
The
agreement
provided,
inter
alia,
for
the
development
of
certain
lands
including
the
construction
of
a
21-storey
hotel,
an
office
building,
an
apartment
building
and
a
commercial
podium.
The
hotel
was
to
be
completed
within
three
years
and
thirty
days
next
following
the
target
date
and
the
developer
was
to
"Complete
simultaneously
with
the
completion
of
the
hotel
three
(3)
floors
of
the
parking
structure
on
Parking
Lot
No.
7
and
to
deliver
to
Windsor
one
hundred
and
thirty-one
(131)
spaces
therein”.
Also
clause
7.02
provided:
"Whenever
and
to
the
extent
that
the
Developer
should
be
unable
to
commence
or
substantially
complete
construction
.
.
.
as
a
result
of
causes
beyond
his
reasonable
control
(financial
inability
or
incapacity
excepted)
.
.
.
then
the
time
for
fulfilment
of
such
obligation
shall
be
extended
.
.
.”.
A
land
transfer
deed
between
the
City
of
Windsor
and
Pruefer
was
completed
August
6,
1980,
wherein
all
the
lands
were
conveyed
to
Pruefer.
An
application
to
build
the
foundation
for
the
Hilton
hotel
(the
first
building
constructed
on
the
"lands")
was
issued
January
21,
1981.
Excavation
commenced
thereafter.
By
agreement
dated
August
27,
1981,
Hilton
International
Co.
and
Pruefer
agreed
to
build,
as
a
joint
venture,
the
hotel.
Several
amending
agreements
were
signed
between
the
City
of
Windsor
and
Pruefer—March
24,
1982;
December
1,
1982;
May
1,
1983;
November
4,
1985;
April
28,
1986;
July
21,
1986
and
August
28,
1987.
The
latter
amending
agreements
extended
time
limit
completion
dates.
The
agreement
of
November
4,
1985,
specifically
referred
to
"Pruefer
has
defaulted
.
.
.
to
complete
3
floors
of
Parking
Structure
on
Parking
Lot
No.
7
simultaneously
with
the
completion
of
the
hotel";
that
agreement
and
each
agreement
thereafter
extended
time
because
of
the
non
completion.
The
building
permit
for
the
superstructure
of
the
Hilton
hotel
was
issued
on
March
10,
1983.
The
building
permit
to
construct
the
foundations
for
the
City
Centre
parking
garage
was
issued
July
16,
1985.
The
co-ownership
agreement
between
Pruefer
and
the
appellant
wherein
the
appellant
acquired
a
“40%
interest
in
the
garage
as
a
tenant-in-common
with
Pruefer"
was
executed
on
February
1,
1986.
The
application
to
build
a
five-storey
parking
garage
was
dated
April
9,
1986.
Significant
Dates
The
construction
of
the
first
building,
the
Hilton
hotel,
was
commenced
in
January
1981
and
was
substantially
completed
in
November
1983.
Thereafter,
Pruefer
eventually
conveyed
away
its
interest
in
the
Hilton
hotel.
The
construction
of
the
parking
garage
commenced
on
or
about
July
16,
1985.
On
or
about
October
16,
1986,
the
parking
garage
opened.
The
Viva
Voce
Evidence
William
Docherty,
the
president
of
Pruefer,
was
the
chief
witness
for
the
appellant.
He
outlined
in
elaborate
detail
the
complex
fact
development
and
consequent
negotiations
that
took
place
with
Pruefer's
proposal
to
develop
the
City
of
Windsor
land
assembly
in
downtown
Windsor.
The
essence
of
Mr.
Docherty's
evidence
is
that
the
redevelopment
was
dealt
with
by
both
the
City
of
Windsor
and
his
company
as
one
project,
that
the
lands
were
treated
as
one
site,
that
parking
was
a
necessary
ingredient
to
his
proposal
and
if
he
had
not
provided
parking
including
eventually
300
parking
places
for
the
City
of
Windsor,
his
company
would
not
have
concluded
the
agreement
with
the
City
of
Windsor.
He
also
stated
parking
was
essential
for
the
Hilton
hotel.
Without
parking,
he
said,
there
would
not
be
a
hotel.
He
suggested
that
if
Pruefer
had
not
lived
up
to
the
agreement
between
itself
and
the
City
of
Windsor
including
the
completion
dates,
it
was
subject
to
penalties,
possible
forfeiture
of
all
accomplishments
and
foreclosure
of
the
lands.
His
evidence
further
emphasized
the
progress
at
times
was
slow
but
it
never
stopped
and
the
several
delays
in
completion
were
always
documented
and
resolved.
He
further
explained
factors
beyond
his
control
slowed
progress
including
the
economic
downturn
of
the
early
eighties,
the
political
environment
as
he
found
it
in
relation
to
certain
approved
loan
applications
and
local
journalistic
opposition
to
his
parking
garage
plans
that
frustrated
his
financing
proposals.
In
summary,
on
this
point
the
witness
emphasized
interest
rates,
the
energy
crunch
and
the
loss
of
jobs
in
the
automobile
industry
made
the
task
more
difficult.
He
also
described
in
precise
detail
his
view
of
the
project
as
being
one
property
all
connected
and
that
the
parking
garage
was
an
integral
part
of
the
hotel
notwithstanding
the
garage
was
across
the
street
and
connected
to
the
hotel
by
way
of
pedestrian
passageways
through
another
hotel
and
a
commercial
podium,
as
well
as
a
pedestrian
bridge
over
the
street.
Throughout
his
testimony
the
witness
maintained
that
the
parking
garage
was
not
a
building
but
a
structure,
that
the
project
was
not
on
several
sites
but
one
site,
that
the
progress
delays
were
all
explainable
and
that
virtually
the
parking
garage
and
the
Hilton
hotel
were
one
integrated
unit.
The
second
witness
was
the
retired
former
City
Solicitor
for
the
City
of
Windsor.
His
evidence
was
related
to
the
events
preceding
and
up
to
the
concluding
agreement
between
the
City
of
Windsor
and
Pruefer
as
well
as
certain
specific
events
after
the
agreement.
He
maintained,
as
did
the
witness
Docherty,
the
project
was
one
project,
one
redevelopment
scheme
and
was
the
largest
scheme
of
this
nature
undertaken
by
the
City
of
Windsor.
He
confirmed
some
of
the
difficulties
encountered
by
Pruefer
and
he
further
confirmed
that
the
City
of
Windsor
did
not
consider
that
the
progress
was
such
that
the
agreement
should
be
declared
in
default
so
as
to
invoke
penalty
or
forfeiture
clauses.
The
third
witness
for
the
appellant
was
a
Chartered
Accountant
and
the
former
Commissioner
of
Finance
for
the
City
of
Windsor;
he
was
involved
with
several
of
the
negotiations
and
confirmed
in
large
measure
the
evidence
of
Mr.
Docherty
in
relation
to
these
negotiations;
he
also
described
the
economic
downturn
as
observed
by
his
department
in
the
early
eighties,
as
well
he
described
the
economic
base
of
the
City
of
Windsor
and
how
the
economic
cycles
were
reflected
in
the
automobile
industry
cycles
(the
automobile
industry
being
a
mainstay
of
the
Windsor
industrial
base).
The
fourth
witness
was
the
Chartered
Accountant
who
had
the
responsibility
for
the
financial
statements
for
the
parking
garage.
He
described
the
two
methods
of
determining
the
costs
before
the
Court.
The
first
method
(the
one
utilized
by
the
taxpayer
in
his
return)
was
that
of
percentage
completion.
The
second
method
was
that
of
determining
the
actual
cost
by
way
of
a
record
audit
and
record
reconstruction.
His
conclusion
was
that
the
actual
attempt
by
himself
to
reconstruct
the
record
from
the
records
of
Pruefer
showed
amounts
in
excess
of
that
which
was
claimed
by
the
taxpayer
in
his
return
as
amended.
He
also
advised
that
his
review
of
accounting
procedures
that
the
percentage
completion
method
was
the
most
accurate
way
of
accounting
for
construction
costs
[sic].
The
last
witness
was
the
appellant,
a
lawyer
in
private
practice.
He
outlined
his
relationship
with
Pruefer,
his
involvement
with
Mr.
Docherty
and
his
understanding
of
the
documents
filed
before
the
Court
that
he
was
either
a
party
to
or
the
author.
He
also
described
the
ownership
structure
of
the
parking
garage,
that
is,
a
trust
relationship
between
the
numbered
company
that
was
the
registered
owner
of
the
parking
garage
and
himself
as
a
40
per
cent
beneficial
owner.
The
Appellant's
Position
The
appellant's
first
position
is
that
the
parking
garage
is
not
a
“building”
as
the
term
is
defined
in
subsection
18(3.1)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
and
accordingly
the
construction
costs
restrictions
are
not
applicable.
Also
the
appellant
argues,
if,
however,
the
Court
finds
the
parking
garage
is
a
building
within
the
meaning
of
subsection
18(3.1)
then
the
grandfather
provisions
of
subsections
18(3.5)
and
18(3.6)
apply
and
the
appellant
is
entitled
to
deduct
the
business
loss.
Lastly,
in
the
further
alternative,
if
the
Court
should
conclude
that
subsection
18(3.5)
applies
then
the
Court
should
find
from
the
evidence
the
parking
garage
is
an
adjunct
to
and
forms
an
integral
part
of
the
Hilton
hotel
and
should
not
be
considered
a
separate
building
for
the
purpose
of
the
statutory
provision.
The
Respondent's
Position
The
parking
garage
is
a
building.
The
costs
of
the
construction
of
the
parking
garage
are
required
to
be
included
in
the
capital
cost
of
the
parking
garage
(subsection
18(3.1)).
The
Hilton
hotel
and
the
parking
garage
are
not
one
building
nor
should
they
be
deemed
to
be
one.
The
parking
garage
is
not
on
the
same
site
nor
is
it
on
a
contiguous
site
to
the
Hilton
hotel,
and
there
was
undue
delay
in
constructing
the
parking
garage.
The
amount
claimed
represents
the
costs
of
construction
which
must
be
capitalized
and
added
to
the
cost
of
the
garage
as
required
by
paragraph
18(3.1)(b)
of
the
Act.
The
Scheme
of
Subsections
18(3.1),
16(3.5)
and
18(3.6)
Subsection
18(3.1)
of
the
Act
provides
that
certain
outlays
or
expenses
attributable
to
the
period
of
the
construction,
renovation
or
alteration
of
a
building
must
be
added
to
the
cost
of
the
building
and/or
the
related
land
rather
than
deducted
on
a
current
basis.
However,
certain
grandfather
subsections
(subsections
18(3.5)
through
(3.7))
provide
for
transitional
provisions
with
respect
to
undertakings
which
were
under
construction
or
in
the
planning
stage
to
a
prescribed
extent
before
November
12,
1981.
Legislation
At
the
relevant
time,
subsections
18(3.1),
18(3.5)
and
18(3.6)
provided:
(3.1)
Notwithstanding
any
other
provision
of
this
Act,
in
computing
a
taxpayer's
income
for
a
taxation
year,
(a)
no
deduction
shall
be
made
in
respect
of
any
outlay
or
expense
made
or
incurred
by
the
taxpayer,
other
than
an
amount
deductible
by
virtue
of
para-
graph
20(1)(a)
or
(aa)
or
section
37
or
37.1,
that
may
reasonably
be
regarded
as
a
cost
attributable
to
the
period
of
the
construction,
renovation
or
alteration
of
a
building
and
relating
to
the
construction,
renovation
or
alteration
or
a
cost
attributable
to
that
period
and
relating
to
the
ownership
during
that
period,
of
land
(i)
that
is
subjacent
to
the
building,
or
(ii)
that
(A)
is
immediately
contiguous
to
the
land
subjacent
to
the
building,
(B)
is
used,
or
is
intended
to
be
used,
for
a
parking
area,
driveway,
yard,
garden
or
any
other
similar
use,
and
(C)
is
necessary
for
the
use
or
intended
use
of
the
building;
and
(b)
the
amount
of
such
outlay
or
expense
shall
be
included
in
computing
the
cost
or
the
capital
cost
to
the
taxpayer
of
the
land
or
building,
as
the
case
may
be.
(3.5)
Subsection
(3.1)
does
not
apply
in
respect
of
an
outlay
or
expense
in
respect
of
a
building
or
the
land
described
in
clause
(3.1)(a)(i)(A)
or
(B),
(a)
where
the
construction,
renovation
or
alteration
of
the
building
was
in
progress
on
November
12,
1981,
(b)
where
the
installation
of
the
footings
or
other
base
support
of
the
building
commenced
after
November
12,
1981
and
before
1982,
(c)
if,
in
the
case
of
a
new
building
being
constructed
in
Canada
or
an
existing
building
being
renovated
or
altered
in
Canada,
arrangements
evidenced
in
writing,
for
such
construction,
renovation
or
alteration
were
substantially
advanced
before
November
13,
1981
and
the
installation
of
footings
or
other
base
support
for
the
new
building
or
the
renovation
or
alteration
of
the
existing
building,
as
the
case
may
be,
commenced
before
June
1,
1982,
or
(d)
if,
in
the
case
of
a
new
building
being
constructed
in
Canada,
the
taxpayer
was
obligated
to
construct
the
building
under
the
terms
of
an
agreement
in
writing
entered
into
before
November
13,
1981
and
arrangements,
evidenced
in
writing,
respecting
the
construction
of
the
building
were
substantially
advanced
before
June
1,
1982
and
the
installation
of
footings
or
other
base
support
therefor
commenced
before
1983,
and
the
construction,
renovation
or
alteration,
as
the
case
may
be,
of
the
building
proceeds
after
1983
without
undue
delay
(having
regard
to
acts
of
God,
labour
disputes,
fire,
accidents
or
unusual
delay
by
common
carriers
or
suppliers
of
materials
or
equipment).
(3.6)
For
the
purposes
of
subsection
(3.5)
where
more
than
one
building
is
being
constructed
under
any
of
the
circumstances
described
in
that
subsection
on
one
site
or
on
immediately
contiguous
sites,
no
undue
delay
shall
be
regarded
as
occurring
in
the
construction
of
any
such
building
if
construction
of
at
least
one
such
building
proceeds
after
1982
without
undue
delay
and
continuous
construction
of
all
other
such
buildings
proceeds
after
1983
without
undue
delay.
[Emphasis
added.]
Analysis
Real
Estate
Construction
Costs
The
deductibility
of
real
estate
construction
costs
in
the
computation
of
income
for
tax
purposes
is
governed
by
the
Act.
A
taxpayer's
income
for
a
taxation
year
from
business
or
property
is
his
profit
therefrom
(subsection
9(1)).
Paragraph
18(1)(a)
provides
in
computing
the
income
of
a
taxpayer
from
a
business
or
property
no
deduction
shall
be
made
in
respect
of
an
outlay
or
expense
except
to
the
extent
that
it
was
made
or
incurred
for
the
purpose
of
gaining
or
producing
income.
Paragraph
18(1)(b)
provides
in
computing
the
income
of
a
taxpayer
from
a
business
or
property
no
deduction
shall
be
made
in
respect
of
an
outlay,
loss
or
replacement
of
capital,
a
payment
on
account
of
capital
or
an
allowance
in
respect
of
depreciation,
obsolescence
or
depletion
except
as
permitted
by
this
part.
In
Canada
Starch
Co.
v.
M.N.R.,
[1968]
C.T.C.
466;
68
D.T.C.
5320,
at
472
(D.T.C.
5323)
Jackett,
P.
commented
on
the:
.
.
.
distinction
between
expenditure
and
outgoings
on
revenue
account
and
capital
account.
.
.
(a)
on
the
one
hand,
an
expenditure
for
the
acquisition
or
creation
of
a
business
entity,
structure
or
organization,
for
the
earning
of
profit,
or
for
an
addition
to
such
an
entity,
structure
or
organization,
is
an
expenditure
on
account
of
capital,
and
(b)
on
the
other
hand,
an
expenditure
in
the
process
of
operation
of
a
profitmaking
entity,
structure
or
organization
is
an
expenditure
on
revenue
account.
The
purpose
of
the
construction
of
the
parking
garage
was
to
provide
premises
to
operate
the
business
of
parking
cars
for
profit.
The
amount
described
by
the
taxpayer
as
a
business
loss
was
originally
characterized
as
"management
fees".
At
the
hearing
of
this
appeal
the
business
loss
was
further
detailed
and
described.
This
description
included
development
costs,
inter
alia,
administrative
construction
costs,
permits,
fees
and
other
related
expenses
incurred
prior
to
the
completion
of
but
leading
to
the
creation
of
the
parking
garage.
The
expenditures
related
therefore
to
the
creation
of
the
parking
garage
and
as
such
were
costs
of
construction.
The
costs
so
detailed
are
not
deductible
in
the
computation
of
income
unless
they
are
permitted
by
way
of
a
specific
provision
of
the
Act.
Subsections
18(3.5)
and
18(3.6)
provide
under
certain
limited
circumstances
involving
time,
space
and
accomplishments
that
certain
outlays
or
expenses
may
be
deducted
in
the
computation
of
income
in
respect
of
costs
related
to
the
construction
of
a
building
or
ownership
of
land.
Thus
it
is
necessary
to
examine
key
elements
of
these
subsections
in
the
light
of
the
facts
of
this
case.
Is
the
Parking
Garage
a
"Building"?
The
parking
garage
is
a
free
standing
independent
structure
located
across
the
street
and
a
short
distance
from
the
Hilton
hotel.
At
present
the
structure
has
five
and
one-half
storeys
and
has
a
foundation
that
will
allow
the
garage
to
be
ten
storeys
in
height.
The
garage
has
parapet
walls,
is
not
heated,
is
partially
open
to
the
elements
and
at
present
does
not
have
a
roof
on
its
top
floor.
The
garage
is
serviced
by
an
elevator
and
stairs.
The
garage
provides
several
hundred
parking
spaces
for
cars
and
is
used
continually
for
this
purpose.
Black's
Law
Dictionary
6th
edition
(1990)
page
194
defines
a
building
as
a
“Structure
designed
for
habitation,
shelter,
storage,
trade,
manufacture,
religion,
business,
education
and
the
like.
A
structure
or
edifice
enclosing
a
space
Within
its
walls,
and
usually,
but
not
necessarily,
covered
with
a
roof."
The
Oxford
English
Dictionary
2nd
edition
(1989),
vol.
Il
(BBC-
Chalypsography),
page
631
defines
a
building
as
that
which
is
built;
a
structure
or
an
edifice.
In
McKenzie
v.
Ferguson,
[1923]
3
W.W.R.
1089,
the
Manitoba
Court
of
Appeal
found
the
word
building
has
been
defined
as,
in
law,
anything
by
art,
ana
fixed
upon
or
in
the
soil,
composed
of
different
pieces
connected
together
and
designed
for
permanent
use
in
which
it
is
so
fixed.
It
is
clear
the
garage
is
a
structure
designed,
built
and
used
on
the
land
for
the
carrying
on
of
the
business
of
parking
of
cars,
that
is,
the
storage
of
cars.
It
is
a
permanent
structure
and
is
considerable
in
size.
It
is
self-contained
and
functions
independently
of
any
other
structure.
In
my
view,
the
appellant's
parking
garage
is
a
“building”
within
the
provisions
of
subsections
18(3.1),
18(3.5)
and
18(3.6).
Is
the
Parking
Garage
Part
of
the
Hilton
Hotel
Building?
Is
the
parking
garage
part
of
the
hotel
building
i.e.,
part
of
the
supporting
structures
of
the
Hilton
hotel,
such
that
"building
within
the
relevant
subsections
includes
the
parking
garage
as
part
of
the
Hilton
hotel
building?
The
appellant
asks
the
Court
to
consider
the
parking
garage
as
a
part
of
the
Hilton
hotel
in
that
the
appellant
submits
it
is
a
supporting
structure.
The
appellant
relies
on
Nova,
an
Alberta
Corporation
v.
The
Queen,
[1988]
2
C.T.C.
167;
88
D.T.C.
6386,
wherein
the
Court
concluded
that
in
the
natural
Bas
industry
certain
pipes
and
valves
were
not
considered
pipeline
but
were
in
fact
considered
an
integral
part
of
the
compressor
stations
(this
categorization
was
for
the
purpose
of
determining
the
asset
class
for
the
purpose
of
determining
the
appropriate
capital
cost
allowance).
The
parking
garage
is
a
building;
the
Hilton
hotel
is
a
building.
The
two
buildings
are
not
physically
connected.
Each
business
has
a
separate
economic
life.
The
parking
garage
has
its
own
sources
of
income
including
patrons
of
the
Hilton
hotel,
patrons
of
other
hotels
and
downtown
facilities
as
well
as
the
public
in
general.
The
businesses
are
dependent
to
some
degree
on
one
another
but
there
is
nothing
here
to
lead
to
the
conclusion
that
buildings
are
to
be
categorized
as
one.
The
parking
garage
building
stands
alone.
It
is
not
an
integral
part
of
the
Hilton
hotel
building.
Are
the
Parking
Garage
and
the
Hilton
Hotel
on
one
"Site"?
The
City
of
Windsor
in
terms
of
land
assembly
treated
the
lands
as
one
for
the
purposes
of
urban
downtown
redevelopment.
Pruefer
treated
the
land
assembly
as
one
for
the
purposes
of
a
redevelopment
proposal.
The
agreement
was
that
both
the
City
of
Windsor
and
Pruefer
treated
the
lands
as
one
site
with
several
aspects
to
it.
The
lands
were
conveyed
by
the
City
of
Windsor
to
Pruefer
in
one
deed.
The
development
agreement
is
part
of
the
title
documents
and
the
terms
therein
continue
with
the
title.
Pruefer
in
terms
of
construction
treated
the
project
on
the
basis
of
one
building
at
a
time.
Black's
Law
Dictionary
(ibid)
defines
"site"
as
a
“plot
of
ground
suitable
or
set
apart
for
some
specific
use.
A
seat
or
ground
plot.
The
term
does
not
of
itself
necessarily
mean
a
place
or
tract
of
land
fixed
by
definite
boundaries".
However,
the
parking
garage
and
the
Hilton
hotel
are
separated
by
a
street.
As
a
consequence,
the
parking
garage
and
the
Hilton
hotel
are
not
on
one
plot
of
ground.
They
are
on
distinct
plots
as
such,
the
parking
garage
and
the
Hilton
notel
are
not
the
same
site.
Immediately
Contiguous
In
Flanagan
v.
M.N.R.,
[1989]
2
C.T.C.
2395;
89
D.T.C.
615,
Rip,
T.C.J.
in
a
decision
involving
a
principal
residence
exemption
claim
on
a
sale
of
fend
found
that
the
two
properties
in
question
were
separated
by
a
roadway
and
were
not
touching.
Underground
piping
under
the
road
and
serving
as
a
connection
between
the
two
properties
did
not
make
the
properties
contiguous.
In
the
subsection
under
consideration
"immediately"
precedes
"contiguous".
A
dictionary
review
leads
to
a
conclusion
"immediate"
means
without
an
intervening
agent
in
space
.
While
the
pedestrian
passage
between
the
Hilton
hotel
fends
and
the
parking
garage
fends
is
by
way
of
an
aerial
bridge,
the
lands,
however,
are
not
“immediately
contiguous”,
in
that
there
is
a
street
between.
Undue
Delay
The
appellant's
argument
to
the
Court
was
that
there
was
no
undue
delay
because
notwithstanding
the
lengthy
period
of
construction
(it
is
noted
the
project
has
yet
to
be
totally
completed)
Pruefer
and
the
City
of
Windsor
were
always
able
to
extend
through
negotiation
the
time
limitation
terms.
At
no
time
did
the
City
of
Windsor
invoke
the
default
provisions
of
the
agreement.
As
such,
the
appellant
concludes
as
between
himself
and
the
Minister
of
National
Revenue
there
was
no
undue
delay.
The
appellant
argues
that
the
extensions
granted
were
always
as
a
result
of
matters
beyond
Pruefer's
control.
The
developer
maintained
he
was
always
aware
of
the
political
climate
of
the
agreement
and
from
time
to
time
made
concessions
in
order
to
obtain
extensions.
The
developer
further
maintained
the
project
never
totally
stopped.
Also,
the
developer's
evidence
that
this
was
the
largest
project
undertaken
of
this
nature
in
Windsor,
and
as
such,
justified
time
extension
considerations.
The
legislation
requires
that
the
construction
must
not
be
put
off
or
postponed
more
than
necessary.
In
The
Concadoro,
[1916]
2
A.C.
199,
the
Privy
Council
looked
at
the
expression
"force
majeure"
and
whether
"force
majeure”
was
available
to
"an
enemy
merchant
ship"
seeking
an
unconditional
pass
under
article
1
of
the
Hague
Convention
No.
VI.
of
1907.
At
page
202
Lord
Parmoor
found:
.
.
.
it
was
argued
that
the
inability
of
the
master
to
procure
the
necessary
funds
for
his
voyage
brought
the
Concadoro
under
art.
2,
and
that
she
was
unable
to
leave
the
enemy
port
within
the
days
of
grace
"par
suite
de
circonstances
de
force
majeure."
In
their
Lordships'
opinion,
this
contention
cannot
be
maintained.
The
"force
majeure"
contemplated
in
the
article
is
one
which
renders
the
vessel
unable
to
leave
the
port,
and
cannot
be
construed
to
include
the
circumstance
that
the
master
has
not
been
provided
by
the
others
with
sufficient
financial
resources
to
continue
his
voyage.
[Emphasis
added.]
It
is
clear,
in
this
case
from
the
evidence,
there
were
financial
reversals,
economic
downturns,
loss
of
backers
(one
withdrew
from
the
hotel
project)
and
difficult
publicity
including
opponents
to
the
development
and
opponents
to
the
parking
garage.
It
is
further
clear
the
parking
garage
was
not
commenced
until
after
the
completion
of
the
hotel
and
the
garage
was
not
ready
for
occupancy
until
three
years
after
the
opening
of
the
Hilton
hotel.
The
legislative
intent
is
clear
that
projects
relying
on
the
transitional
provisions
must
proceed
without
excessive
delays.
The
parking
garage
did
not
proceed
with
due
dispatch
as
a
result
of
funding
delays
and
as
well,
the
choice
of
the
developer
as
to
how
the
development
was
to
be
carried
out
in
relation
to
the
parking
garage.
Funding
difficulties
as
a
result
of
underfunding,
economic
downturns
and
a
loss
of
backers
as
well
as
adverse
publicity
should
be
anticipated
factors
in
the
development
industry.
The
delays
encountered
in
terms
of
the
parking
garage
should
have
been
foreseen
by
Pruefer
and
the
late
start
was
clearly
in
the
control
of
Pruefer.
According
to
subsection
18(3.6)
for
the
construction
costs
to
be
deductible
the
parking
garage
should
have
proceeded
after
1983
without
undue
delay.
The
parking
garage
was
not
started
until
1985
and
three
floors
were
completed
for
occupancy
in
1986.
The
parking
garage
on
Parking
Lot
No.
7
did
not
proceed
without
undue
delay.
In
other
words
there
was
undue
delay
in
the
construction
of
the
parking
garage.
Conclusion
The
land
on
which
the
parking
garage
is
built
is
used
for
the
purpose
of
parking.
The
parking
garage
has
several
clients
including
the
Hilton
hotel.
The
parking
garage
is
a
building.
Therefore,
certain
costs
attributable
to
the
period
of
construction
must
be
added
to
the
cost
of
the
garage
rather
than
be
deducted
on
a
current
basis
unless
the
transitional
provisions
apply.
In
relation
to
the
transitional
provisions,
the
parking
garage
construction
was
not
in
progress
on
November
12,
1981,
nor
were
the
footings
or
other
base
support
of
the
parking
garage
commenced
after
November
12,
1981,
and
before
1982.
There
were
some
arrangements
evidenced
in
writing
in
relation
to
the
parking
garage
before
November
13,
1981,
but
the
installation
of
the
footings
or
other
base
support
was
not
commenced
before
June
1,
1982.
It
does
appear
that
the
taxpayer
was
obligated
by
agreement
to
construct
the
parking
garage
and
this
obligation
existed
before
November
13,
1981.
There
was
some
evidence
of
arrangements
being
advanced
before
June
1,
1982,
but
the
installation
of
footings
or
base
support
of
the
parking
garage
(being
an
independent
building
and
not
part
of
the
Hilton
hotel)
was
not
advanced
before
1983.
The
construction
of
the
parking
garage
did
not
proceed
without
undue
delay
after
1983.
The
parking
garage
was
constructed
on
one
site.
The
Hilton
hotel
was
constructed
on
another
site.
The
parking
garage
was
not
constructed
on
lands
immediately
contiguous
to
the
Hilton
hotel
lands.
Between
the
construction
of
the
Hilton
hotel
and
the
parking
garage
there
was
undue
delay
in
the
construction
proceeding
to
the
construction
of
the
parking
garage.
This
undue
delay
occurred
after
1983.
The
conclusion
is
that
therefore
transitional
provisions
do
not
assist
this
taxpayer.
The
amount
claimed
by
the
taxpayer
represents
the
costs
of
construction
and
must
be
added
to
the
cost
of
the
garage
as
required
by
paragraph
18(3.1)(b)
of
the
Act.
Decision
The
appeal
is
therefore
dismissed.
Appeal
dismissed.
Email this Content