KERWIN,
J.:—This
appeal
raises
only
questions
of
fact,
including,
of
course,
the
proper
inferences
to
be
drawn
from
established
circumstances.
For
the
reasons
given
by
my
brother
Rand,
I
am
of
opinion
that
the
trial
judge
came
to
the
right
conclusion,
and
the
appeal
should
therefore
be.
dismissed
with
costs.
Le
RAND,
J.
(concurred
in
by
Locke
and
Fauteux,
JJ.)
:—The
appeal
raises
the
question
whether
a
profit
arising
in
the
year
1946
on
a
certain
stock
transaction
is
liable
to
assessment
under
Section
2(1)
(f)
of
The
Excess
Profits
Tax
Act,
1940.
The
appellant,
which
I
shall
call
‘‘the
company’’,
was
incorporated
in
1930
to
carry
on
the
business
of
a
dealer
in
securities
in
the
broadest
sense
of
the
expression,
and
until
1938
engaged
in
operations
as
a
member
of
an
investment
dealers’
association.
In
1938,
as
a
result
of
the
depressed
state
of
business,
the
company
found
itself
with
a
portfolio
of
securities,
including
a
group
in
which
it
held
a
part
interest
only,
amounting
in
cost
price
to
approximately
$1,000,000.00,
which
were
then
held
by
banks
for
advances
slightly
less
than
that
sum.
Being
unable
to
meet
certain
requirements
of
the
association,
the
shareholders,
including
Gairdner
who
was
the
dominant
figure
behind
all
three
companies
to
be
mentioned,
decided
to
incorporate
a
new
company,
Gairdner
&
Company
Limited,
which
I
shall
call
‘‘the
new
company’’,
to
which
the
company
sold
its
physical
equipment.
records
and
good
will,
for
shares
in
the
new
company.
The
securities
and
the
liabilities
against
them
remained
with
the
company,
but
the
new
company
might
elect
to
carry
out
any
or
all
of
the
contracts
or
uncompleted
transactions.
Between
April,
1938,
and
June,
1944,
the
company
engaged
in
trading
transactions
in
stocks
and
bonds
in
the
course
of
which
a
substantial
number
of
its
original
holdings
were
liquidated.
In
the
latter
month
it
sold
to
another
company
controlled
by
Gairdner
and
members
of
his
family,
Trafalgar
Securities
Limited,
which
then
held
all
the
common
shares
of
the
company,
securities
to
the
amount
of
$152,000.00.
At
the
end
of
1944
the
company’s
portfolio
represented
a
cost
value
of
$126,000.00
and
a
market
value
of
$143,200.00.
No
sales
were
made
in
1945.
Between
April
30,
1938,
and
December
31,
1946.
roughly
124
purchases
and
200
sales
took
place.
In
these
latter,
of
eight
purchases
amounting
to
32,920
shares.
17,180
were
resold
on
the
same
day,
2,475
within
one
month.
0,000
within
two
months,
5,000
within
three
months,
1,000
within
four
months
and
2,265
within
eighteen
months.
Of
nine
purchases
made
after
1946
amounting
to
22,260
shares,
2,000
were
resold
on
the
same
day,
1,000
in
one
month,
2,500
in
two
months,
3,500
in
six
months,
2,000
within
one
year,
9.260
within
two
years
and
2,000
within
three
years.
These
complementary
transactions
in
buying
and
selling
on
their
face
bear
the
imprint
of
a
course
of
action
pursued
with
a
view
to
making
a
profit
through
their
ultimate
result;
and
so
far
as
the
company.’s
business
included
the
disposal
of
securities
held
on
April
30,
1938,
with
resulting
purchases,
it
was
by
way
of
completing
the
business
admittedly
carried
on
by
the
company
as
a
dealer
before
1938.
But
the
contention
is
that
all
these
transactions
represent
mere
changes
of
investments.
strictly
so-called,
as
distinguished
from
the
marchandising
of
securities,
and
that
the
profit
or
loss
were
chargeable
to
capital.
It
is
unnecessary
to
dwell
at
any
length
on
this
contention.
Investments,
in
the
sense
urged,
look
primarily
to
the
maintenance
of
an
annual
return
in
dividends
or
interest.
Substitutions
in
the
securities
take
place,
but
they
are
designed
to
further
that
primary
purpose
and
are
subsidiary
to
it.
On
the
facts
before
us,
there
cannot,
in
my
opinion,
be
any
real
doubt
that
there
was
no
such
dominant
purpose
here.
It
is
then
urged
that
the
particular
purchase
of
Dominion
Malting
stock
in
1944
was
an
exceptional
transaction,
designed
to
obtain
a
working
control
of
that
company
in
order
to
enable
Gairdner
to
introduce
his
sons
to
industrial
management.
I
will
assume
that
he
had
such
an
object
in
mind,
but
it
was
only
one
of
the
least
two
purposes,
the
other
of
which
was
rna^e
evident,
i.e.,
that
if
at
any
time
a
sufficiently
favourable
opportunity
to
sell
arose
it
would
be
seized
upon.
Ordinarily,
a
business
is
a
scheme
involving
a
series
of
transactions
of
one
or
more
modes
of
dealings,
more
or
less
repetitive,
for
making
a
profit
from
the
total
activities.
There
could
be
a
business
of
taking
over.
by
means
of
stock
control,
run
down
industries,
building
them
up,
and
disposing
of
them;
and
that
pattern
of
action
can
be
included
in
a
group
of
cognate
transactions
operating
in
any
form.
Cameron,
J.,
came
to
the
conclusion
that
this
particular
transaction
was
part
and
parcel
of
the
general
trading
operations
of
the
company
conducted
from
1938
to
the
end
of
1946
and
I
agree
with
him.
The
mere
fact
that
membership
in
the
dealers’
association
had
ceased
in
1938
is
quite
irrelevant;
membership
was
subject
to
certain
conditions
in
relation
to
the
company’s
financial
structure,
but
its
loss
did
not
affect
the
company’s
right
independently
to
deal
as
it
pleased
in
security
transactions.
I
would,
therefore,
dismiss
the
appeal
with
costs.
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