Martin, J.:—This is an appeal from the June 18, 1984 decision of the Tax Court of Canada affirming the assessments of the Minister of National Revenue for the plaintiff's taxation years from 1977 to 1981 inclusive.
The plaintiff has, since 1972 to the hearing of this matter, carried on farming operations in Saskatchewan. During the period from 1975 to 1981 he was a licensed real estate commercial salesman and for several years during that six-year period he also carried on the business of buying and selling real estate for a profit. He says that he duly reported the gains made on sales in his real estate business as income and was assessed at full income tax rates on them.
At the beginning of the hearing counsel for both sides agreed that I would only have to consider the following three questions:
1. Whether the August 30, 1977 sale by the plaintiff of the house and ten acres of land to one Gordon Hiron for the sum of $30,000 was exempt from taxation by reason of paragraph 40(2)(b) of the Income Tax Act as being the sale of his principal residence?
2. Whether the sale of approximately 600 acres of land by the plaintiff to one Arlen Avery for the sum of $365,000 was a "disposition" of lands which occurred in 1980 or 1981?
3. Whether the plaintiff's purchases and sales of farm properties between 1974 and 1981 were of such a nature that the defendant could properly conclude the plaintiff was in the business of trading in farm properties and that the gains made on the sales of the properties were profits from that business?
Should I find for the plaintiff by concluding, with respect to the first question, that the sale was a sale of his principal residence, I must go on to consider whether the ten acres could properly be included as a part of the land forming his principal residence.
This land and its buildings were purchased by the plaintiff in March of 1976. The land is about six miles from his father's farm and about seven miles from the city of Moose Jaw and forms a portion of two quarter sections (320 acres) described as the "Duke" land. The plaintiff says that he bought the land with the intention of farming it and living in the rather small house which was on the land. He moved into the house in April of 1976 and from that base he carried out his 1976 farming operations.
During the summer of 1976, while living in the house on the Duke land, he discussed, with the woman to whom he became engaged in December of 1976 and married in February of 1977, the possibility of their making a home together at that location. His bride to be was emphatically not interested. She had a good job with the Saskatchewan Liquor Board and did not relish the thought of having to commute to work especially in the winter when the weather conditions could, on occasion, make it difficult or impossible for her to get from the farm to her place of employment.
The plaintiff accepted this decision and at the end of the 1976 growing season he moved out of the house and into Moose Jaw having lived in the house from April to October of 1976. Because his wife to be and then his wife was not interested in living on the Duke land the plaintiff had to abandon his original intention to live there. The house and the immediately adjacent land became excess land which he sold in the summer of 1977 for $30,000.
Paragraph 54(g) defines the principal residence of a taxpayer as a housing unit ordinarily inhabited in the year by the taxpayer. In this respect I am satisfied that the plaintiff “ordinarily inhabited” the house on the Duke land during a sufficiently long period of time during 1976 that he could properly claim it as his principal residence. The Department of National Revenue Interpretation Bulletin IT-120R, issued on December 6, 1976, recognizes the fact that “ordinarily inhabited” can be satisfied by a short period of actual residence:
Where the taxpayer claiming the principal residence status has occupied the residence for only a short period of time during a taxation year (such as a seasonal residence occupied during a taxpayer's vacation or a house which was sold early or bought late in a taxation year), it is the Department's view that the taxpayer “ordinarily inhabited” that residence in the year, provided that the principal reason for owning the property was not for the purpose of gaining or producing income therefrom.
[Emphasis added. I]
I accept the plaintiff's evidence that the principal reason for owning the property was for carrying out a farming operation and was not for the purpose of gaining or producing income from it. The original intention or principal intention was, with respect to the house, frustrated when the plaintiff’s wife refused to live there. This is not a case of a brief visit or series of visits to the house by the plaintiff (Ennist v. M.N.R.,  2 C.T.C. 2398 at 2403; 85 D.T.C. 669 at 673). In this case there was continuity of occupation or habitation over a substantial period of the year so as to permit the plaintiff to claim the house as his principal residence.
The evidence is not as clear with respect to the necessity of having ten acres of land to form a part of the principal residence. The plaintiff says he understood that it was a legal requirement that there be a minimum of ten acres associated with the house in order to subdivide the land or sever it from its original quarter section. There was, however, no evidence of any municipal by-law or provincial regulation to that effect and thus the question cannot be resolved in accordance with the decision of this Court in The Queen v. Yates,  C.T.C. 105; 83 D.T.C. 5158. The plaintiff also described an area of uncultivable land containing about three acres immediately surrounding the house on which was located the well, some outbuildings, shade trees and a little grass. Bearing in mind that this is farm land and, for the most part, sales are in minimum areas of 160 acres and that, because there are no municipal water and services, additional land is essential to the proper enjoyment of the residence, I have concluded that the plaintiff has discharged the obligation on him under subparagraph 54(g)(v) and has established three acres were necessary for the use and enjoyment of the Duke farmhouse and should be included as part of the plaintiff's principal residence.
My conclusion leaves outstanding the amount, if any, of the capital gain on the farmhouse and three acres of land forming the plaintiff's principal residence in respect of the period between October 1976, when he vacated it, and August 1977, when it was sold. Also outstanding is the amount of the capital gain to be attributed to the seven-acre portion which did not form a part of the plaintiff's principal residence. These two outstanding items are relatively minor in comparison to the other matters which must be addressed in this appeal and should, in my view, be able to be settled between the parties. If they cannot resolve these two matters by agreement then the parties' counsel will have leave to address me further.
The second question is with respect to the year in which a "disposition" of lands occurred. It is common ground that if the disposition of these lands occurred in 1981 rather than in 1980 then the defendant's assessment for 1980 will have to be vacated and no tax can be assessed for 1981 because the defendant has issued a “nil” assessment for that year.
The sales and cost of sales of the nine transactions involved in this portion of the defendant's assessment of the plaintiff's alleged net profits from his 1980 real estate operations are set out in schedule "D" to the defendant's amended defence in the following form to which I have added the numbers from 1 to 9 for ease of reference:
Calculation of Business Income for the year 1980
|1.||Dec 23/80||SE16-16-27W2||$ 95,000.00|
|2.||Dec 23/80||SW 16-16-27W2||95,000.00|
|3.||Dec 23/80||NW 11-16-27W2||100,000.00|
|4.||Dec 23/80||6 of Sec 11-16-27W2||75,000.00|
|5.||Dec 29/80||4 of Sec 11-16-27W2||78,000.00||$443,000.00|
|Cost of Sales|
|6.||Jun 29/79||SE 16-16-27W2||$ 62,500.00|
|7.||Jun 29/79||SW 16-16-27W2||62,500.00|
|8.||Mar 23/79||NW 11-16-27W2||85,000.00|
|9.||Mar 23/79||All of SW||85,000.00||$295,000.00|
|1980 Net Profit from Real Estate Operations||$148,000.00|
At the beginning of the hearing counsel informed me they had reached agreement that sale #5, being a 40-acre portion of the southwest quarter of lot 11 (cost of sales #9) for $78,000 to one Rick Tilson, assessed as having taken place on December 29, 1980 had in fact taken place in 1981 and that the defendant was withdrawing the assessment in respect of that transaction.
While there appears to remain for consideration the four sales numbered 1 to 4 and cost of sales numbered 6 to 9, sale #4 being the 120 acre remaining portion of the southwest quarter of lot 11 (cost of sales #9) there is in fact only one transaction and that is the sale to Avery for $365,000 of those lands identified as sales numbered 1 to 4 assumed as having taken place on December 23, 1980. That sale was completed by a Brock R. Graik, a solicitor from Moose Jaw, who acted for both the plaintiff as vendor and one Arlen Avery as purchaser. Graik was presented with an "Offer to Purchase” form (Exhibit P-5) which had been made by Avery and accepted by the plaintiff on November 1,1980. Under the terms of this document the purchaser had paid $1 by way of deposit at the time of making the offer on November 1, 1980 and had agreed to pay the balance of $364,999 on or before the 2nd day of January 1981. Clause 4 of the agreement provided for vacant possession in the following terms:
4. This transaction of purchase and sale shall be completed and closed on or before the 2nd day of Jan 1987 (herein referred to as the date of "completion" or "possession date") on which date the Purchaser shall have POSSESSION, vacant or subject to the following tenancy, namely: (if none, state "NONE") None
Avery had arranged with the Royal Bank of Canada for the financing to purchase the property but in order to satisfy the bank's requirements he had to produce title in his name prior to the closing date. With this in mind Graik had the plaintiff execute a transfer of the property on December 23 which he registered in the Land Titles Office at Moose Jaw on December 29, 1980 and in respect of which certificates of title showing that Avery was the new owner of the lands were issued on the same date.
Armed with these certificates of title Graik should have been able to obtain the funds necessary to close the sale on January 2,1981 in accordance with the agreement made by the parties. It appears that the superiors of the local branch manager overruled him and insisted on a mortgage of the property from Avery before they would authorize the release of funds. Graik attended to this on behalf of Avery. The mortgage was executed by Avery on January 15 and registered on January 16. On January 19, Graik received Avery's funds from the bank and applied them to the completion of the purchase of the plaintiff's properties.
The defendant claims that the December 23, 1980 transfer, or in the alternative the December 29, 1980 certificate of title evidencing the transfer, is proof sufficient to show that the plaintiff had sold or disposed of the property in 1980. I do not agree with this submission.
Although the Act does not define when a sale of a property occurs section 54 does define “disposition” and the "proceeds of disposition" in the following terms:
54 (c) “disposition” of any property, except as otherwise expressly provided, includes
(i) any transaction or event entitling a taxpayer to proceeds of diposition of property, . . .
but, for greater certainty, does not include . . .
(v) any transfer of property by virtue of which there is a change in the legal ownership of the property without any change in the beneficial ownership thereof, ...
54 (h) "proceeds of disposition” of property includes,
(i) the sale price of property that has been sold, ... .
In this matter the December documentation operated to transfer legal ownership in the property from the plaintiff to Avery but it did not transfer beneficial ownership. Between the December transfer and the January 2 closing date Avery held bare legal title. He held the property as trustee only, for himself if he paid the balance of the purchase price on January 2, 1981 and for the plaintiff if he did not. If he failed to pay the purchase price on January 2, 1981, as required by the terms of the accepted offer to purchase, he would be bound to reconvey the legal title to the plaintiff.
It was the clear intention of the parties to the sale that beneficial ownership was to pass on the January 2, 1981 closing. On the date Avery was to pay the purchase price and until then he would have no right to the possession of the property or the enjoyment of any revenues which the property might generate. Until that date it was intended by the parties the plaintiff would not be entitled to the sale price because the property would not be sold until the price had been paid. There would, therefore, be nothing by way of the proceeds of disposition which the plaintiff could take into account for income tax purposes until at least January 2, 1981.
In fact Avery was not in a position to close the sale on January 2, 1981 but, due to difficulties which occurred with the financing, could only complete the sale on January 19, 1981. I do not have to consider whether the delay, to which the plaintiff consented, had the effect of delaying the sale or disposition of the property even beyond January 2, 1981 because I am satisfied that the disposition of the property for the purposes of this action did not occur prior to January 2, 1981. That being the case, as already indicated, the defendant's assessments for 1980 will have to be vacated.
The answer to the third and final question relating to the plaintiff's extensive dealings in farm properties requires, as counsel for the plaintiff submitted, a consideration, not of the overall multitude of purchases and sales but of each transaction, and a determination of the intention of the plaintiff at the time he acquired each of the properties.
I take the principle applicable to the facts to be as set out by Jackett, P. in Richthofen v. M.N.R.,  C.T.C. 544 at 546-8; 68 D.T.C. 5346 at 5347-8. In that case, as in the one at bar, the plaintiff was carrying on both a farming business and a real estate commission and trading business. In 1960 he had bought some land for $10,000 and sold it in 1962 for $30,000 the difference being assessed as income. The evidence was that the plaintiff had been in the practice of buying and selling farm land for a profit and the Tax Appeal Board, which confirmed the Minister’s assessment, concluded that, as the appellant was in a business of trading in farm properties and as the profit in issue was the result of turning to account of real estate acquired it followed that the profit was a profit from that business.
Jackett, P. described the principles applicable to the case in the following terms:
... if the property in question was acquired by the appellant with a view to resale at a profit, or if it was acquired with a view to using it in the farming business or re-sale at a profit as circumstances might make most expedient, then, in my view, when it was re-sold a little over a year after it was acquired, the sale must be regarded as having taken place in the course of the appellant's real estate activities and the resultant profit must be regarded as a profit from a business. If, on the other hand, at the time when the appellant acquired the property, the only purpose he had in mind for it was to incorporate it in his farming business, and if he did make it a part of the property on which he carried on his farming business, its subsequent sale would be a sale of a capital asset of that business even though it occurred within a very short time after acquisition.
Putting the matter another way, where a person carries on business as a trader in real estate and some other business at the same time, if he buys a parcel of land for re-sale at a profit and does so re-sell it, the resulting profit is a profit from his trading business even though he found a use for the land in his other business during the period that he owned it; but, on the other hand, a profit that he makes upon the sale of land acquired for the sole purpose of being used, and that has in fact been used, as part of the capital assets of the other business is not, as such, a profit from his business as a trader in real estate, and the length of the period between purchase and sale of a parcel of land by such a person is not relevant except in so far as it is some indication as to whether the land was inventory of the trading business or a Capital asset of the other business.
I must, therefore, decide whether the balance of probability on the evidence in this case is that the only purpose that motivated the appellant to acquire the property in question was to incorporate it in his farming business and that he did in fact make it a part of the property on which he carried on his farming business before he sold it.
and went on to conclude:
The question is whether he did, in fact, decide that it would make a good addition to his farming business at a price of $10,000 and did, in fact, acquire it for that purpose. I am satisfied, from his evidence, that that is the sole purpose that motivated him to acquire the land and that, for over a year, it was a part of the lands that he used in his farming business. I am also satisfied that the very high price that he was ultimately offered for it convinced him that it was wise to dispose of it and carry on his farming business without it.
The fact that, as in this case, there have been many turnovers of properties which have been held for short periods of time is not conclusive that the taxpayer has been carrying on the business of a real estate trader. This is well illustrated in Reich Hotels Ltd. v. M.N.R.,  C.T.C. 2334; 82 D.T.C. 1297, where J.B. Goetz, then a member of the Tax Review Board, found that a plaintiff company, which had bought and sold five hotels over a period of seven years, was not engaged in an adventure or concern in the nature of trade. Goetz's findings were, in part, as follows:
At first the sequence and frequency of purchases and sales of hotels would seem to support the Crown's proposition that the acquisition of the hotels was a speculation with the possibility of turning them to account for profit and was the major motivating factor and that the appellant was really engaged in an adventure or concern in the nature of trade. Mr. Reich has now developed over the years, an expertise in the management of hotels, and now is the owner and manager of a hotel worth at least $2,000,000. This certainly is a progression upwards in the improving of his total business operations of operating hotels to produce income. To me, the appellant's whole course of conduct is consistent with its desire to acquire properties to improve and move its business upwards and to acquire a larger total investment in the hotel business. See The Queen v. Grant Ky/lo,  C.T.C. 409; 76 D.T.C. 6235.
I do not consider these purchases and sale of the various hotels, albeit in a relatively short period of time, as being motivated with the view of speculation and turning the acquisition of the hotels to account for profit. [. . .] The appellant's whole course of conduct is more consistent with that which is maintained by the appellant, namely, to acquire capital assets to produce income in the ordinary course of the operation of its hotel business.
In both cases the credibility of the plaintiff was a determining factor. In the Richthofen case Jackett, P. observed that the plaintiff was thoroughly tested on cross-examination, that no effort was spared in putting him to the defence of his story but that at the end of the day its main outlines were not shaken. In the latter case Goetz observed that Mr. Reich, the plaintiff's witness, was not shaken in any way in cross-examination and that he accepted his evidence as the reasons for the purchases and sales of the different hotels.
In this matter, after observing the plaintiff both in direct and cross- examination, I found him to be a very credible witness. The explanations which he gave for purchasing the several properties were reasonable as were his explanations for their sale. His use of the properties as farm lands while he held them was entirely consistent with his occupation as a bona fide full- time grain farmer who purchases the properties with the intention of farming them. His subsequent disposition of the farm properties was likewise consistent with his original and continued long-term plan to acquire two to three sections of land for the purposes of conducting a farming operation. In short I found the plaintiff to be a credible witness and I have accepted the overall truth of his evidence.
Both the plaintiff's father and grandfather were prairie grain farmers in Saskatchewan. As a boy the plaintiff, like most farm children, was pressed into service as he was growing up. By the time he was 20 years of age in 1972 he had quit his first year of university and returned home to go farming with his father. That was the first year that the plaintiff had his own permit book and was thus able to sell grain to the Wheat Board on his own account.
He had second thoughts about leaving university and went back for two more years, until the spring of 1974, when he decided against continuing and decided to become a full-time farmer. Being a full-time grain farmer in Saskatchewan involves full-time work of 10-12 hours per day during the season from April to October. It is not unusual therefore to find farmers with secondary jobs during the five-month winter season from November to April.
Having made his decision to become a full-time grain farmer the plaintiff purchased his first piece of land, a quarter section adjacent to his father’s property. He bought this land in July of 1974 from his grandmother for $24,000. He also leased from his grandmother a second quarter diagonally opposite the purchase land so that, between them, he and his father had five quarter sections contiguous to each other (Exhibit P-1). He bought the land with the intention of farming it and in fact did farm it until 1979 when he transferred the land and paid $45,000 to his father in exchange for two quarters of land.
At the time he purchased and leased the two quarter sections from his grandmother in 1974 those sections combined with his father’s sections made a compact farming unit ideally suited to the plaintiff's farming capacity. He had no equipment while his father had equipment enough to farm more land than he held. The plaintiff and his father had an agreement that if the son would contribute his labour to assist his father in his farming operation, the plaintiff could use his father’s equipment in his operation and would likewise be assisted by the father. In effect father and son jointly farmed their properties. There was nothing in the evidence to indicate to me that the plaintiff had any intention other than to farm the land when he acquired it from his grandmother.
The following year, in March of 1975, the plaintiff acquired two additional quarter sections about six miles south of the land purchased from his grandmother. These properties were purchased for $70,000 and are described as the Duke land. The purchase of this property was in furtherance of the plaintiff's overall plan to eventually farm a larger total area. At the time his father was farming a total of about two and a half sections and the plaintiff's plan was eventually to farm an area of about the same size.
I accept the plaintiff's evidence that it was his intention, when he acquired the Duke land, to farm it and live in the farmhouse. For the reasons already given he sold the farmhouse and ten acres of the land in 1977 but he kept the remainder of the property and farmed it until 1981 when he sold it to his brothers for $200,000, which amount was put towards the purchase of five adjoining quarter sections of land about nine miles to the east. I can find no evidence of any interest on the part of the plaintiff at the time he acquired the Duke land to do anything other than to operate it as a farm. Not only is this borne out by the fact that he did farm it every year that he had it until he sold it to his brothers in 1981 but the $5,000 cost of draining a portion of the property in 1976 to improve its productivity is consistent with the intention of keeping and farming it.
The next acquisition marked a change in the plaintiff's pattern of farming operations. This occurred in March of 1978. At the time, five adjacent quarter sections of prime farming land, three of which are called the Eves land and two of which are called the Gamble land, came up for sale. The asking price of the property was $70,000 for each quarter section of the Eves land and $75,000 for each quarter section for the Gamble land. The plaintiff decided to go in partnership with Arlen Avery to purchase the property. All five quarter sections were acquired by the plaintiff and Avery in March of 1978. The plaintiff said, and I accept his evidence, that these lands were acquired with the intention that they would be used for farming operations and were not acquired with a view to selling them for a profit.
In fact the plaintiff farmed the properties during the 1978 season in the usual way, i.e. by using his father's equipment and contributing his labour to his father's farming operations. Avery, however, although he took no active part in the farming operations, took his share of the proceeds of the operations. After the 1978 season the plaintiff's father became dissatisfied with the sharing arrangement he had had with his son for the previous five seasons. Apparently what had been a satisfactory arrangement between father and son in this respect, and one which was probably very much weighted in favour of the plaintiff, was not to be extended to a stranger and particularly to a stranger who did not contribute anything in regard to the operations.
The plaintiff's father let his son know that their long-standing equipmentsharing arrangement would not be continued to the partnership. The plaintiff says, and I accept his evidence, that it was this change which made him decide to sell the Eves and Gamble properties which he and Avery had acquired the previous year.
Thus it was that in the spring of 1979 the plaintiff's five quarter sections comprising the Eves and Gamble lands were sold to one Dutchak for $300,000 and the plaintiff transferred to his father the land he had purchased from his grandmother in 1975. In return for the land purchased from his grandmother the plaintiff's father sold his son two quarter sections about a mile from the "home" farm. He allowed his son $80,000 for the grandmother's quarter section and charged his $125,000 for the two quarter sections, making a net payment of $45,000 due from the son to the father on the exchange.
In addition to these two quarter sections acquired from his father, the son applied the proceeds of the sale of the partnership property to acquire two quarter sections of land south of and adjacent to the home farm. This land is called the Mews land and was acquired in March of 1979 in time for that year’s farming season. At that point the plaintiff owned three pieces of land comprising two quarter sections each, the Duke land purchased in 1976, the land purchased from his father in 1979 and the Mews land also purchased in 1979. The latter two parcels of land, although close to the home farm, were separated from each other by a mile and from the Duke land by about six miles (Exhibit P-1). As a result of these 1979 land transactions the plaintiff had gotten himself out of the partnership with Avery, had moved his farming operation closer to the home farm, and was in a position to return to the favourable equipment-sharing arrangement he had with his father.
He farmed this land, 950 acres in all, for the 1979 and 1980 seasons. He says, and I accept his evidence, that the lands were bought with the intention of farming them and not with the intention of re-selling them at a profit. In support of this intention the plaintiff points to a drainage project he undertook on the lands acquired from his father. In the fall of 1979 he spent almost $20,000 on a deep tile drainage project the full benefits from which would not be realized for five years.
Even though his intention was to farm the acreage he had accumulated by 1979, and he did so for the 1979 and 1980 seasons, that plan came to an end in the fall of 1980. At the time Dutchak called the plaintiff to tell him that he was moving to Alberta and that he would have to sell the Eves and Gamble lands which he had purchased from the plaintiff and Avery two years previously. Dutchak's holdings comprised four of the five quarter sections of those lands originally purchased by the plaintiff and Avery. At the time the fifth quarter section of the original five was owned by one Nikolic who had built a house on the property and who had also decided to sell.
The plaintiff, who had already farmed the land for one season, knew that this area was one of the most productive in the region. The five quarter sections were adjacent to each other and would make for more economical use of equipment and the Nikolic house was far more suitable to his family needs than the house in which they were currently living. He saw the acquisition of that property as a major step in realizing his objective of a compact 2- to 3-section farm and decided, if at all possible, he would acquire it.
He arranged to purchase Dutchak's four quarter sections for $433,000 and Nikolic’s quarter section for $175,000. Although the agreement to purchase these properties was made in mid-October of 1980 the sales were not due to be completed until mid or late January of 1981. The delay was to give the plaintiff time to complete the disposition of his own lands so as to enable him to raise the funds to purchase the Eves and Gamble lands now owned by Dutchak and Nikolic.
As already detailed in my consideration of the second question he then arranged the sale to Avery, effective January 2, 1981 for $365,000, of the two quarter sections he had purchased from his father and the two quarter sections comprising the Mews land, except 40 acres and a building from one of the Mews' quarter sections. He arranged to sell this building and 40 acres to one Tilson for $78,000 effective January 15,1981. Finally he made arrangements to sell the Duke land, acquired back in 1976, to his brothers for $200,000 effective April 1981.
The net result of these transactions was that his overall land holdings had been reduced by about a quarter section but that the five sections which he now owned and intended to farm would be more productive than the six quarter sections he had sold. Not only would the new land be more productive but, because of its configuration, it would be more economical to farm. Finally he had also provided a suitable house for himself, his wife and children at the farm site itself. At the trial I I had no reason to doubt the plaintiff's evidence that his intention in acquiring that property was to farm it and that he had no intention of acquiring it to speculate on its future value and to realize a profit on it. I have no hesitation in concluding now that his expressed intention was in fact his intention. That the plaintiff expected to be farming the land he had just acquired in the 1981 season is borne out as well by the fact that almost immediately after he took possession of it in January of 1981, at a cost of some $4,000, he spread 17.5 metric tonnes of nitrogen fertilizer on the land.
The plaintiff continued with his plan to expand his farming property in March of 1981 by negotiating for the purchase of three quarter sections adjacent to his newly acquired property. Agreement was reached on a price of $425,000 but before the plaintiff had the opportunity to obtain the necessary financing the proposed vendor sold the property to a Mr. Kerr Chow who immediately re-sold it to Brian Farms Limited for about $1,050 per acre or about $500,000.
The final chapter in this lengthy tale is that a short while after Chow had sold his land to Brian Farms Limited, the plaintiff was contacted and asked if he would sell. He said he would sell at the same price, i.e. $1,050 an acre or $800,000 which did not include the house on one of the Eves' quarter sections. In May of 1981 he sold the five quarter sections, less the house, for $800,000 to Brian Farms Limited with the intention that he would re-establish himself on new lands.
The same year, out of the proceeds of the sale to Brian Farms Limited, he purchased, in partnership with Avery, 1,280 acres of land in Montana and, in his own name, 320 acres of land in the Moose Jaw area. Revenue Canada was duly notified in the plaintiff's 1981 tax return that the farm land sold had been replaced by the land purchased in the United States and by two quarter sections in the Moose Jaw area. Counsel for the Crown took the view that the notification with respect to the Moose Jaw land was somehow inoperative because it did not accompany the plaintiff's 1981 return at the time of filing it. This was explained as an oversight on the part of the accountant who prepared the return. The plaintiff noticed the omission to include the Moose Jaw replacement purchase when he received a copy of the tax return from the accountant. He immediately notified the accountant of the omission. This was acknowledged by the accountant who filed an amended schedule showing the correction. In this respect I am satisfied that the amended schedule filed under cover of the accountant's letter dated May 31, 1981 is sufficient notification to Revenue Canada of the facts contained in it (Exhibit P-13).
Although I need not concern myself with it, it is interesting to note that in furtherance of his stated intentions with respect to his farming operations the plaintiff is still a full-time bona fide farmer. He now owns two sections of land and rents another 1,500 acres which he farms himself.
As I said at the beginning of this narrative relating to the acquisition and disposition of farm lands by the plaintiff from 1974 to 1981 the plaintiff was a credible witness. Even though there were many different acquisitions of property he has satisfied me that in each case his sole motivation in acquiring it was to add to his farming lands. In each case the lands acquired were in fact farmed, some of them for years. That being the case I am equally satisfied that the sales of the farm lands which took place were sales of capital assets of his farming business. Exhibit P-24, showing as it does a consistent increase in the size of the plaintiff's farm holdings from 1974 to 1981, tends to confirm his evidence to the effect that his overall intention in purchasing and selling farm lands was to increase the size of his holdings.
The plaintiff has admitted that he was a real estate salesman and that he purchased some lands for speculation. In my view his occupation as a real estate salesman which lasted for the winter seasons from 1976 to 1980 was a part-time winter occupation which did not diminish in any way the full-time and bona fide character of his occupation as a farmer. His evidence was that grain farmers have little to do during the winter season and that by obtaining a real estate broker's license and selling real estate he would supplement his income selling real estate during the winter seasons. I fail to see how that in any way could cause him to be less than a full-time farmer. One has only to glance at the plaintiff's income tax returns to compare the income from farming and the real estate commissions to confirm that by far the plaintiff's major operation was farming (Exhibit P-14).
As well I can see no reason why the plaintiff could not be a speculator or trader in real estate and also be a farmer who acquires real estate with the sole intention of employing it in his farming operations. It is true that he runs the risk of an up-hill fight in having to convince a court that the two operations are separate and that his intention in acquiring farm land is completely different from his intention in acquiring land for re-sale particularly where the farm lands are acquired and re-sold several time. Although that is quite a risk to take, the plaintiff has satisfied me that he did keep his farming operations separate and apart from his real estate trading. Like Mr. Richthofen he has satisfied me that he acquired the several farm lands which he did to be used in his farming business and that the last sale was made because of the very high price that he was offered for the lands which convinced him that it was wise to sell them and to use the proceeds to replace them with other farm lands. And, like Mr. Reich and his hotel properties, the plaintiff has satisfied me that his whole course of conduct in the acquisition and disposition of the farm lands has been consistent with his expressed intention to acquire farm properties to improve and move his farming business upwards and to acquire a larger total investment in the farming business.
The plaintiff's appeal will be allowed to the extent indicated in these reasons. Counsel for the plaintiff will prepare a draft judgment, which he will submit to counsel for the defendant for approval as to form, and will then submit the same to me for my consideration. The plaintiff will have his costs throughout.