Walsh, J:—This is an appeal against the assessment by plaintiff for taxes in its 1974 taxation year resulting from the sale of property purchased in 1968 in what was then the Municipality of Lucerne in the Province of Quebec for $150,000 and the sale of the same property in 1973 for a price of $1,306,776.30, which profit the Minister assessed as income from a business and plaintiff claims should be treated as capital gain. William Morse Lawson who together with his wife controls the plaintiff entered into a promise of sale agreement with Thomas Graham Mayburry the owner at the time of the property, consisting of some 300 acres with three houses and a substantial barn thereon on July 19, 1968 for a price of $150,000, payable in the amount of $2,000 at the signing of the agreement, $46,000, subject to adjustment, upon signature of the deed of sale and $102,000 within 15 years from the date of the deed of sale with interest at 6% per annum payable semi- annually. The terms of the agreement were very favourable to the purchaser, both with respect to the price paid and the conditions, the rate of interest of 6% being 2% or 3% less than the current rate at the time, as Mr Lawson testified. The purchaser also had the right to pay any part of the balance at any time without notice or penalty. There was also a clause that the purchaser would be relieved of the vendor’s privilege on any 1-acre parcel of land upon payment of the sum of $500 to be applied in reduction of the principal, and a clause that the purchaser could arrange for a subdivision plan to be prepared for approval by the competent authority but that this should not be done until the proposed subdivision had been approved by the vendor which approval however would not be required when the balance of price had been reduced below $50,000. The agreement also foresaw incorporation of a company by the purchaser “in which he shall retain a controlling interest’’ and that the agreement could be assigned to it and that the company would undertake to be personally bound to the vendor for the performance of the purchaser’s obligation, and subject to this the purchaser would then be relieved from personal liability for the balance of the purchase price. One unusual clause was inserted for the benefit of the vendor which provided that he could retain and occupy a portion of the land and farm buildings not under lease, until April 30, 1971, subject to six months’ notice to vacate, and that the vendor would pay the municipal and school taxes on the entire property until termination of his rights of occupation. He could also on six months’ notice surrender his rights of occupation. Thereafter he would not be responsible for these taxes. His obligation for taxes was also to the extent of the assessment and rate in effect on January 1, 1968, and if they were increased thereafter then the purchaser would pay such increase.
Dr Lawson testified as to the background of this deal. He and his parents had always lived in Lucerne in the area of the property, which he knew well, and had in fact played on it as a boy with the son of Mr Mayburry, who was a good friend of his. He had of course known Mr Mayburry for many years and was very attached to the property. He was engaged to be married at the time and his fiancée also thought it would be nice to eventually live on a farm. She particularly admired an old house on the property nearly 150 years old, as she is interested in old buildings and collects antiques. He was a university student at the time and after their marriage he and his wife lived in Kitchener where he was at the university for 4 years studying and doing part- time teaching. They then moved to Toronto where he completed his work on his doctorate in economics so were away from Ottawa for nearly 7 years rather than the 3 years which he had planned. He is now professor at Carleton University.
Captain Mayburry the owner of the property was elderly and seriously ill with emphysema. He did not live on the property but lived nearby and he stabled horses in the barn on a commercial basis as he had been doing for many years, which apparently he wished to continue doing as long as possible. Two of the houses on the property were rented for rentals below the market rate to friends or former employees, and Mr Lawson testified that he undertook not to disturb this arrangement. On this basis, and largely because of their friendship the property which was in a rural farming area at the time, and in fact still is, was sold to him for $150,000, being two-thirds of the municipal evaluation, this being the price suggested by Captain Mayburry. Lawson testified that he had not required insertion of the subdivision clause nor the provision for releasing 1-acre parcels on payment of $500 on account of capital. These clauses were however in a draft agreement which had been submitted to Captain Mayburry by a notary acting for Lawson, SO while it may be, as he testified, that he did not himself think of or require these clauses, his legal representative did, and they were of course beneficial in the event that he would wish to subdivide and sell the property in small parcels, even though he had no intention of doing so at the time of purchase.
Philippe Foran, QC who acted for Captain Mayburry and prepared the promise of sale agreement testified that he has practised law and lived in the area for many years. He corroborated that in 1968 property in the vicinity was largely devoted to farming. He had prepared several wills for Captain Mayburry who was well to do and was conscious of the succession duty dangers of holding a large tract of land the valuation of which might be debatable. He stated that to his personal knowledge there was very little market for property in the area at the time. He himself owned 135 acres near the subject property and had been trying from 1950 to sell it but only received a suitable offer in 1971. He stated that the partial release of security clause for 1- acre parcels is a common clause usually found in deeds of sale and that the clause requiring approval by his client of the subdivision was to protect him against what might be a poor subdivision plan which would diminish the value of the property in the event that it should revert to the vendor in the event of default by the purchaser. While he conceded that such clauses make a property more attractive to potential developers he stated that these clauses were not something put in specifically to accommodate the purchaser. He also prepared the deed of sale from Captain Mayburry to Dr Lawson on October 28, 1968.
Dr Lawson was still a student at the time and did not have sufficient money to make the down-payment himself. He was able to interest a number of relatives and friends of his family however in putting up varying sums of money and concluded that the best way to accomplish this was through a joint stock company, so even while he was negotiating with Captain Mayburry he contemplated the incorporation of plaintiff. Delays were encountered and letters patent were only obtained on June 30, 1969. Meanwhile as indicated, he had completed the purchase from Captain Mayburry on October 28, 1968. The parties who were going to invest in shares of the company paid in their sums in advance to a trust account which he kept until the company was incorporated and the shares could be issued. It was not until May 4, 1970 that he sold the property to the company the price being indi- cated as “for good and valid consideration’’ in addition to which the $102,000 balance was personally assumed by the company. It was also declared in the deed that the transferor had acted in the deed of sale from Captain Mayburry as trustee for the transferees and relieved him of any further responsibility arising from it.
The shareholders of the company and the percentages of common stock held by them are as follows:
William M Lawson 48% Christopher Brand, described as being a friend 8.7% Clare Kroeger whose husband is a builder; they are friends of
William M Lawson’s father 8.7% William J Lawson, the father, a Brigadier General, lawyer and
former JAG 8.7%
Simon S Reisman a friend of William M Lawson’s father, and a former
Deputy Minister of Trade and Commerce | 8.7% |
Rose Ludman, mother of Clare Kroeger | 4.35% |
Heather Lawson wife of William M Lawson | 2.4% |
(which together with his 48% gave them control) | |
John Bull an investment dealer and old friend | 3.3% |
John H Lawson brother of William M Lawson | 1.4% |
F Juliette Lawson wife of John H Lawson | 1.4% |
Janet Platz sister of William M Lawson | 1.4% |
Brian Crammond a friend and stockbroker in Toronto | 2.8% |
Initially Douglas H Fullerton had undertaken to be a shareholder but when he was appointed Chairman of the National Capital Commission he felt it would be inappropriate so his shares were-allotted to another.
William Lawson in testifying explained that he and his wife in order to gain control had not had to put up 50% of the $48,000 down-payment involved for the property, as the other shareholders were required to take out preferred shares of $100 par value in proportion to their purchases of the $1 par value common shares, but he was permitted to subscribe to sufficient common shares to give him the control, as the vendor Captain Mayburry had insisted, without purchasing a proportionate number of preferred shares. The number of preferred shares held by the various shareholders does not concern us here, but William M Lawson put up a total of $8,775 for 275 common and 85 preferred shares and his wife put up $1,814 for 14 common and 18 preferred shares.
While William M Lawson could not be described as a speculator or dealer in real estate in 1968 nor for that matter at the time of the sale in 1973, being at the time of the purchase a graduate student and now a professor, neither can he be considered as having no knowledge in the field. He himself testified he had from early days saved his money and invested it in opportunities he heard about. In 1963 he had participated with his father and the Kroegers to the extent of a minority interest of 10% in a real estate deal carried out by a company Richelieu Properties Inc which had owned two properties one of which was subdivided into ten lots and sold. In 1966 Mr Kroeger told him about an opportunity to buy a 1 /2-acre property on McConnell Road and he invested $1,800 for a one-half interest in it. He had known Mr Kroeger since he was 10 years old. In both cases he was merely an investor, the deal with the subject property being the first time he had acted as a principal. Certainly his other business associates in this deal included a number of highly experienced businessmen and investors. His father, Clare Kroeger, and Simon Reisman had in 1968 participated in various real estate transactions involving buying and selling property.
Recently William M Lawson, together with his wife, has acquired a 15% interest in Montmorency Ferme a property 2 miles west of Aylmer, but this has little relevancy to his intentions in 1968, or more precisely the intentions of plaintiff company which he controlled, after it acquired the property from him on May 4, 1970. He insisted that he had intended to hold the property as a hedge against inflation and said that in his view, provided an asset is going up in value, it does not have to be realized to constitute such a hedge. He was well aware at the time of the purchase that the income from rental of the two houses on it would be insufficient to cover expenses so that additional moneys would have to be furnished by the company in the initial years and at least as long as Captain Mayburry was operating the stable operation on the property which he said could be profitable. Forty horses were boarded and at the time Captain Mayburry was doing this at a very low rate whereas nowadays operators of stables in the area are charging $120 a month which would yield a profit of $30 to $40 a month or some $1,200 a month on this operation. He said that if he were living on the property he could hire a helper and supervise this. He would in this event expect to draw some salary or compensation himself from the company. Although he was forced to be away from Ottawa while completing his graduate studies he was confident that he could obtain a teaching position here and hence ..live in the area, which is what eventually happened. The property was zoned as agricultural at the time and as he never contemplated any development of it no attempts were made to have the zoning changed. The property was never offered for sale. It was eventually sold as a result of an unsolicited offer, several reasons motivating him to accept it. His return to Ottawa had been delayed longer than he had expected and he did not want to impose on his associates for the administration and collecting of rents and so forth. The municipal value of the property had been increased to a half million dollars and the taxes had gone up astronomically from about $1,800 to $8,000 and there was some indication that they might reach $20,000. This made the holding of the property a burden.
The financial statements for the company show that for the year ending May 31, 1970, the income was only $3,851.53 consisting of $2,375 rental and $1,476.53 from sale of timber. Expenses were $10,041.29 of which $9,180 was for mortgage interest, leaving a net loss of $6,189.76 which was capitalized. Similarly for the year ending May 31, 1971, the net loss was $6,111, for the year ending May 31, 1972, $6,761.67, and for the year ending May 31, 1973, $5,692. Comparatively little had been spent on the maintenance of the properties during the period except for some $3,000 for repairs.
Mrs Lawson who testified stated that she was working in Montreal prior to her marriage and had a little money of her own which she invested in the property on her future husband’s advice. She was not even thinking of the sale of the property as she would have liked to have lived on it and had some idea that she could perhaps open a restaurant in the old house and also sell antiques there, as she has some knowledge of dealings in antiques. Her sister-in-law was interested in the potential restaurant and there was even some discussion of turning the barn into a discotheque. Her father had been involved in real estate but she herself had never bought any shares in any real estate company.
While one can fully sympathize with the lifestyle she and her husband desired to create for themselves, her proposal for developing businesses on the property seems to be somewhat unrealistic as they would require the investment of considerable additional capital.
While Mr and Mrs Lawson might well have a right to create a rural lifestyle for themselves, renovating and living in the large house and possibly deriving sufficient revenue from the stable and the rental of the other houses, and even perhaps from some small business enterprise they might carry on on the property so as to cover their expenses and yield some modest income, I am satisfied that the other investors, however friendly and well disposed they may have been towards William M Lawson and his wife did not put their money into the property with a view to enabling him to acquire this lifestyle, when he could not afford to buy the property himself, nor for their minority share in whatever small income the operation of their property might yield. While he had legal control of the company I am satisfied that his relations with his associates were such that he would not have wished to exercise it ruthlessly for his own personal advantage and to their financial detriment. In short the only. way in which the investment could be profitable or would have in any way been interesting to the other investors was because of the opportunity of making a substantial profit therefrom resulting from the very favourable terms on which the property was purchased, and relying on the passage of time until, as a result of eventual development in the area, however Slow it might be, the property would increase in value, when they could turn their investment to account as was eventually done. A letter from a real estate agent Lucien Pitre who also testified, although not as an expert witness, was produced dated May 5, 1977, indicating that as a result of a study of comparable sales between 1961 and 1963 of which he had knowledge, the prices varied between $751 and $906 an acre and that between the time of those transactions and the date subject property was acquired the land prices had increased substantially. Even the municipal assessment for the property was at $786 an acre. Therefore the price of $500 an acre was far below the market value.
In 1972 Zellers Limited took a 120-day option to buy a portion of the property consisting of some 23 acres at $6,500 an acre but the option was not taken up. If this had gone through the entire balance of the capital owing could have been repaid leaving plaintiff with some 2/0 acres free and clear of any indebtedness.
Certain letters were admitted by agreement into the record, one from Brigadier General W J Lawson who stated that he acted as proxy for his son William M Lawson during the period the latter was in Waterloo and Toronto between 1968 and 1975—lie indicates that during the five years the property was held none of the parties involved contemplated nor sought a change in zoning and that the property was employed for agricultural purposes and taxed on that basis. When the municipality attempted to apply a higher non-agricultural tax steps were taken to have this revised. No change in status or usage of the land was sought as it was a long-term investment. A letter from Immeubles Michel Realties Inc states that they acted solely as agent for the eventual purchasers Costain Estates Limited and at no time did any of the investors in Program Properties Limited indicate that the lands or premises were for sale. A letter from James J Duff the company’s auditor dated August 4, 1976 states that at the time he prepared the initial financial statements of Program Properties Limited he assumed “without instruction’’ that the land owned by the company was for resale and only in 1973 did he realize that it was not for sale but rather to be held as a long-term investment. This presumably is to explain the entry on the balance sheet as of May 31, 1970, showing “land for sale—cost $150,000.00”. As a result of the sale of the property to Costain (Quebec) Ltée—Costain Quebec Limited on September 24, 1973 for $1,306,776.30 of which $200,000 was paid in cash a dividend was paid on November 19, 1973 of $50 a share on the common shares. On: March 25, 1974 a further dividend of $49 a share was paid on the common shares and on June 18, 1974 a dividend of $39 per share was paid on the common shares, on December 1, 1974 a dividend of $40 per share was paid on the common shares and $7 per share on the preferred shares and on May 31, 1976 a dividend of $22 per share was paid on the common shares and a 7% dividend for two years from June 1, 1974 to May 31, 1976 on the preferred shares. On October 16, 1973 a cumulative dividend of $28 per share had been paid on the preferred shares. The shareholders have thus all been able to realize substantial profit on their investment which will continue until the balance of $1,160,776.30 becomes payable on September 1, 1984 with interest meanwhile at the rate of 9% per annum payable semi-annually commencing March 1, 1974.
The intent of this closely held company can only be determined by examining the intent of the shareholders of it and in particular the principal and controlling shareholder. The intent must be determined as of the date of purchase (Warnford Court (Canada) Ltd v MNR, [1964] CTC 173; 64 DTC 5103). As Cattanach J stated in MNR v Lawee,*[1972] CTC 359 at 370; 72 DTC 6342 at 6350:
Declarations of intention by persons assessed to income tax will not secure immunity therefrom. A professed intention cannot be considered as determining what it is that the concrete acts amount to. It is only part of the evidence. Statements made as to what the respondents’ intention was at the time of acquisition of the land must be considered along with all the objective facts.
Similar statements have been made in innumerable other tax cases.
I do not believe on the evidence before me that this is even a case where the doctrine of secondary intention need be invoked. Plaintiff’s principals never had any serious intention of developing the property nor did they realistically anticipate obtaining any substantial income from the use of same during the period of its ownership by the company. There was no question of frustrated intention therefore, resulting from an expropriation, change in municipal by-law, inability of the principals to continue to manage the property or otherwise such as was found in the cases of Clemow Realty Ltd v The Queen, [1976] CTC 129; 76 DTC 6094; R v Stanfold Investment Corporation, [1974] CTC 19; 74 DTC 6035; Bead Realties Ltd v MNR, [1971] CTC 774; 71 DTC 5453; or Point Pleasant Investments Limited v MNR, [1968] Tax ABC 1227; 69 DTC 23, all of which were discussed in the Clemow Realty case (supra). While there was some evidence that taxes were going up rapidly as the value of the property increased and hence it was becoming more and more costly to hold it, this did not amount to the frustration of the investors’ original intention with respect to the property, nor oblige them to sell when they did, as the company could no doubt have obtained by borrowing or as a result of further investments by the shareholders whatever additional funds were required to enable it to continue to hold the property. On the contrary the rising municipal evaluation and consequent increase in taxes was a confirmation of what was undoubtedly realized at the time the purchase was made that the property would almost certainly go up in value, and when the sale was made in 1973 this was done because it seemed a propitious time to sell, taking various negative indications as to future developments into account. I do not consider it to be a secondary intention therefore but rather the primary intention of the parties at the time the property was acquired that at some future propitious time either the whole property or at least substantial parts of it would be sold at a profit. The ready acceptance by plaintiff of what appeared io be a good offer by Zellers Limited for an option on a relatively small portion of it merely tends to confirm this.
The real question is not however whether the property was purchased with the intent of eventually reselling it at a profit, as I believe it was, but whether such profit results from the realization of an investment or from an adventure in the nature of trade, and it is this question which gives some difficulty. In the case of Irrigation Industries Limited v MNR, [1962] S.C.R. 346; [1962] CTC 215; 62 DTC 1131, the company had purchased shares in another company, this purchase not being part of the business ordinarily carried on by the company which was not a dealer in securities and made a substantial profit on their resale. In rendering the majority judgment of the Court Martland, J stated at page 351 [219, 1133]:
... In my opinion, a person who puts money into a business enterprise by the purchase of the shares of a company on an isolated occasion, and not as a part of his regular business, cannot be said to have engaged in an adventure in the nature of trade merely because the purchase was speculative in that, at that time, he did not intend to hold the shares indefinitely, but intended, if possible, to sell them at a profit as soon as he reasonably could.
The learned Justice makes reference at page 356 [224, 1135] to a statement of principle by Lord Buckmaster in Leeming v Jones, [1930] AC 415 at 420, in which it is stated:
... an accretion to capital does not become income merely because the original capital was invested in the hope and expectation that it would rise in value; if it does so rise, its realization does not make it income.
This was carried further and applied to land by Kearney, J in the case of MNR v Valclair Investment Company Limited, [1964] CTC 22; 64 DTC 5014, and the companion case MNR v Cosmos Inc, [1964] CTC 34; 64 DTC 5020, in which the learned Justice compared the purchase of land for future sale for profit to the purchase of growth stocks paying no dividend, saying that the holding of it was not an undertaking or adventure in the nature of trade, and finding that the speculation and risk was negligible as land was capable of producing an annual income even though the land in question was not being used productively. At page 31 [5019] he stated:
In the present instance the purchaser anticipated that it. would be some years before development would take place in the locality of the property and its financial position was such that it could easily afford to bide its time.
The purchase of land is one of the oldest types of long-term investment, and, since diversification of investments was one of the Company’s main objects insofar as the facts are concerned; in my opinion practically the only risk that it ran was the duration of such waiting period. I am of the opinion that the elements of speculation and risk were negligible in the transaction in issue and did not amount to nor can it be regarded as an undertaking or an adventure in the nature of trade within the meaning of the Act.
At page 29 [5018] he stated:
Shares sometimes called growth stocks which, at the date of their purchase, are not on a dividend-paying basis, often form part of an investment company’s portfolio and are considered, for tax purposes, as investments, since they are susceptible not only of capital growth but also of producing income. I think the same can be said of the purchase of the instant property.
Counsel for the appellant contended that because the taxpayer was concerned with the gain to be derived from the long-term prospect of selling the property rather than the meagre return which it yielded, the money expended in acquiring it was not an investment.
I do not think that the amount of return is important; it may vary with the circumstances. Thus, a vacant property in the centre of the city, when used for automobile parking space, sometimes commands high rentals. True, the return was a very modest sum; nevertheless, I think the: farmland in issue falls well within the definition previously described.
Further reference might also be made to the case of Lawee (supra) in which Cattanach, J found that two wives who had acquired farmland adjacent to properties acquired by their husbands and being subdivided by them although the subdivision plan was not approved, and who had given a 2-year option to a developer who was building on adjacent land, which option was not exercised, were not taxable as an adventure in the nature of trade when 3 years later, or 9 years after they had purchased the property, they sold the land to a development company controlled by their children for a substantial profit. Cattanach, J stated at page 367 [6348]:
In Commissioners of Inland Revenue v Fraser (1940-42), 24 TC 498, the whisky case, the Lord President (Normand) said that it is generally more easy to find that a single transaction amounts to an adventure in the nature of trade when entered into by a person in the line of that person’s ordinary trade than one outside that line of trade. From this he went on to indicate that two factors were important, (1) the person concerned and (2) the subject matter of the transaction in determining whether a transaction is an adventure in the nature of trade.
The Lord President continued at page 502 to say:
“. . . The individual who enters into a purchase of an article or commodity may have in view the resale of it at a profit, and yet it may be that that is not the only purpose for which he purchased the article or the commodity, nor the only purpose to which he might turn it if favourable r. opportunity of sale does not occur. In some of the cases the purchase of a picture has been given as an illustration. An amateur may purchase a picture with a view to its resale at a profit, and yet he may recognise at the time or afterwards that the possession of the picture will give him aesthetic enjoyment if he is unable ultimately, or at his chosen time, to realise it at a profit. A man may purchase land with a view to realising it at a profit, but it also may yield him an income while he continues to hold it. If he continues to hold it, there may be also a certain pride of possession. But the purchaser of a large quantity of a commodity like whisky, greatly in excess of what could be used by himself, his family and friends, a commodity. which yields no pride of possession, which cannot be turned to account except, by a process of realisation, I can scarcely consider to be other than an adventurer in a transaction in the nature of a trade; ...”
From the initial language of the extract above quoted, it is readily apparent the fact that a person intends from the first to make a profit does not determine the question whether a particular transaction is an adventure in the nature of trade rather than an investment. It is inherent in every investment that the subject matter thereof will be sold and it is characteristic of a “good” investment that the subject matter will be sold at an enhanced value.
At page 368 [6349] he states:
The principle in Leeming v Jones (1928-31), 15 TC 333, was summed up by Lawrence, LJ who said at page 354:
‘. . . It seems to me that in the case of an isolated transaction of purchase and resale of property there is really no middle course open. It is either an adventure in the nature of trade, or else it is simply a case of sale and resale of property . . .”
I would add parenthetically that it is either an adventure or concern in the nature of trade or an investment and if it is the latter then any profit realized is not taxable income but a capital gain. The foregoing statement of Lord Justice Lawrence received the specific approval of Lord Buckmaster on appeal to the House of Lords.
In concluding that this was not an adventure in the nature of trade however he points out at page 372 [6352] that the sale of the land in question was respondents’ only sale, that they had not put all their money into real estate but only a small portion thereof with the balance in securities, that they had other resources available, and that the purchase price of the properties had been paid by them in cash or mostly in cash with the balance payable at an early date which is not the conduct of a speculator. I believe that for these reasons the Lawee case can perhaps be distinguished on its facts from the present, and the same applies to the Irrigation Industries case where the company was formed to carry on an entirely different business, the purchase and sale of shares of another company being merely an isolated transaction outside the course of its regular business. The same applies to some extent to the Valclair Investment and Cosmos cases in that the transaction in real estate was an isolated one outside the company’s regular business and in fact the only such transaction into which it had entered in its 20 years in business. The Clemow Realty case (Supra) was decided in favour of the taxpayer, but this was done on the basis that the intention of the company when it purchased the property was development of it and that it had no secondary intention of selling. When the primary intention was frustrated as the result of rezoning which made the remaining land too shallow and irregular in shape to erect the type of buildings the company desired the company was forced to sell the property and the profit was found to be capital gain.
In the present case the plaintiff had no other business than the ownership of the subject property and it was in fact incorporated in order to acquire such ownership. The sale, while it was an isolated transaction, was not outside the normal course of the company’s business, but in fact involved the disposal of the company’s only asset. Although the sale was unsolicited, the company was not obliged to sell at that time although it was propitious to do so in view of developments. The facts therefore closely resemble those in the case of Birmount Holdings Ltd v The Queen, [1977] CTC 34; 77 DTC 5031, in which Sweet, DJ clearly did not believe the evidence of the principal witness as to his intention at the time of purchase. The Lawee case (supra) was discussed and also the case of Tara Exploration & Development Company Limited v MNR, [1970] CTC 557; 70 DTC 6370. Sweet, DJ distinguished same on the basis that that company had made a profit by acquiring and later selling shares in another company, using funds which had been raised for the purpose of exploring for minerals in Southern Ireland but which work had not yet started. As in the Irrigation Industries Limited case therefore the acquisition and sale of these shares was not a normal part of the company’s business. The learned Deputy Justice states at page 46 [5039]:
Here, the situation is quite different. This is not a situation where the realty was acquired with funds awaiting use in connection with some other business of the company. Here, the plaintiff had no business other than business associated with the realty. Neither is it the case of a company, having surplus funds acquired in the conduct of its business, seeking an investment for those funds in a field other than that in which the company usually operated. Here, the evidence does not disclose any asset of the plaintiff except the realty out of which the assessment arose and possibly some increment from it. The funds with which the realty was acquired were not generated by the business of the plaintiff. They were supplied by Mr Mentzelopoulos and were so supplied only for the purchase of the realty.
and again:
In my opinion, it is not open to a person to have a corporation controlled by him acquire only one parcel of land, and no other asset, have that corporation perform no function other than something associated with that land, and then, that land having been sold by the corporation in one piece, claim that the corporation having had only one purchase and sale, is entitled to a tax advantage merely because there was a single transaction. I do not think that the cases wherein a single transaction has been held not to be carrying on business are necessarily in conflict with that view.
The learned judge also distinguished the Irrigation Industries and Valclair Investment cases as I have done.
I therefore conclude that plaintiff in the purchase and sale of the subject property was engaged in a business venture in connection therewith and that gains resulting from the sale are not capital gains but income from business and that the appeal against the assessment by the Minister of the profits made as a result of this must therefore be dismissed with costs.