LASKIN,
J.
(all
concur)
:—This
tax
appeal
by
the
corporate
appellant
is
a
chapter,
probably
the
last
chapter,
in
the
saga
of
its
Bellevue
property
in
the
City
of
Halifax
which
was
expropriated
by
the
Province
of
Nova
Scotia
on
August
4,
1955.
Earlier
proceedings
touching
the
expropriation
and
the
apportionment
of
the
expropriation
compensation
are
detailed
in
the
judgment
of
the
Nova
Scotia
Supreme
Court
in
banco
in
Vaughan
Construction
Co.
Ltd.
v.
Halifax
(1958),
12
D.L.R.
(2d)
159,
and
in
the
judgment
of
this
Court
in
Halifax
v.
Vaughan
Construction
Co.
Ltd.,
[1961]
S.C.R.
715,
allowing
an
appeal
from
the
Supreme
Court
of
Nova
Scotia
in
banco,
(1960),
25
D.L.R.
(2d)
26.
The
present
appeal
concerns
primarily
the
taxability
of
the
profit
realized
as
a
result
of
the
expropriation
and,
subsidiarily
(if
the
profit
is
taxable
income),
the
proper
taxation
year
or
years
to
which
any
assessment
to
tax
should
be
attributed.
A
third
point
was
raised
by
the
appellant
by
alleging
improper
exclusion
by
Thurlow,
J.
of
certain
portions
of
the
examination
for
the
discovery
of
Bernard
J.
Vaughan,
the
president
of
the
appellant,
which
it
sought
to
have
read
into
the
record
as
being
integral
to
other
portions
which
counsel
for
the
Minister
was
putting
in
as
evidence
on
his
behalf.
The
submissions
on
this
point
were
to
the
effect
that
the
excluded
portions
were
necessary
to
a
fair
appraisal
of
the
discovery
evidence
and
illumined
the
position
of
the
appellant
that
the
property
was
being
held
as
an
investment.
This
Court
was
of
the
opinion
at
the
hearing
of
this
appeal
that
these
contentions
were
without
merit
since
no
basis
was
established
upon
which
this
Court
should
review
the
discretion
of
the
trial
judge.
Accordingly,
I
need
say
no
more
on
this
matter.
Thurlow,
J.
held,
contrary
to
the
view
taken
by
the
Tax
Appeal
Board,
that
the
profit
realized
from
the
forced
disposal
of
the
Bellevue
property
was
profit
from
a
business
within
Section
139(1)
(e)
of
the
Income
Tax
Act.
He
also
held
that
the
Minister
had
properly
re-assessed
the
appellant
for
the
taxation
year
1957
by
adding
$2,980.50
to
its
income
for
that
year.
I
agree
with
both
of
these
conclusions
for
the
reasons
that
follow.
The
appellant,
incorporated
in
1943
with
broad
powers
embracing
dealing
in
land,
was
wholly
owned
by
its
president,
Bernard
J.
Vaughan.
It
acquired
the
Bellevue
property,
consisting
of
2.19
acres,
through
an
agreement
of
October
30,
1954
with
Maritime
Telegraph
and
Telephone
Company
Limited
under
which
the
latter
paid
the
appellant
$33,000
and
also
received
in
exchange
the
appellant’s
Howe
Street
property
consisting
of
12.3
acres
which
the
appellant
had
acquired
in
1953.
There
was
a
re-assessment
of
the
appellant’s
income
for
1954
in
respect
of
the
profit
on
the
Howe
Street
property,
and
no
appeal
was
taken
to
this
Court
from
the
conclusions
of
both
the
Tax
Appeal
Board
and
of
Thurlow,
J.
adverse
to
the
appellant.
The
Bellevue
property
had
been
purchased
by
Maritime
from
the
City
of
Halifax,
and
the
transaction
involved
certain
affirmative
building
covenants
by
Maritime
in
favour
of
the
City,
with
an
obligation
to
reconvey
in
default
of
building,
and,
additionally,
a
covenant
not
to
convey
or
lease
the
property
prior
to
the
completion
of
the
contemplated
buildings
without
the
consent
of
the
City.
This
consent
had
to
be
obtained,
of
course,
to
enable
the
appellant
to
acquire
the
property;
and
the
City
made
it
a
condition
of
giving
its
consent
that
the
appellant
enter
into
a
deed
of
covenants
similar
to
those
which
had
been
given
by
Maritime.
There
was
one
important
difference
between
the
range
of
covenants
as
between
the
City
and
Maritime
and
as
between
the
City
and
the
appellant.
The
requirement
of
the
City’s
consent
to
a
transfer
or
a
lease
of
the
land
was
not
included
in
the
deed
of
covenants
given
by
the
appellant
to
the
City.
Any
argument
that
a
transfer
of
the
Bellevue
property
by
the
appellant
was
beyond
its
power
is
untenable,
and
especially
so
when
the
covenants
were
by
the
appellant,
“its
successors
and
assigns’’.
Whether
a
transferee
would
be
bound
by
the
covenants
need
not
be
considered
here
in
view
of
the
fact
that
it
had
previously
been
determined
by
this
Court
in
its
judgment
reported
in
[1961]
S.C.R.
715,
that
as
between
the
appellant
and
the
City
the
latter
was
entitled
to
share
in
the
expropriation
compensation.
It
is
hence
sufficient
to
say
that
the
land
was
marketable,
even
if
cwm
onere.
In
support
of
the
contention
that
the
land,
having
regard
to
the
affirmative
building
covenants,
was
bought
as
an
investment,
it
was
submitted
that
(1)
the
appellant
had
not
traded
in
land
from
1947
until
the
transactions
for
the
Howe
Street
and
Bellevue
properties;
(2)
the
expropriation
as
a
compulsory
acquisition
by
the
Province
could
not
be
considered
a
disposal;
(3)
the
appellant
had
a
continuing
intention
to
construct
buildings
for
revenue
on
the
property
and
the
expropriation
frustrated
this
intention;
(4)
the
Province
made
its
expropriation
intention
known
within
five
months
after
the
appellant
acquired
the
Bellevue
property
so
that
there
was
no
such
lapse
of
time
to
support
an
inference
that
the
land
was
being
held
for
a
favourable
sale;
(5)
the
appellant
had,
in
fact,
commenced
demolition
of
structures
already
on
the
property
(before
becoming
aware
of
possible
expropriation)
in
order
to
prepare
it
for
the
construction
of
new
buildings;
and
(6)
it
rejected
certain
overtures
made
to
it
by
others
for
purchase
of
the
property.
In
fine,
it
was
contended
that
Thurlow,
J.,
unlike
the
Tax
Appeal
Board,
failed
to
give
sufficient
weight
to
the
conjunction
of
the
foregoing
factors
with
the
affirmative
obligation
to
build,
or,
failing
that,
to
reconvey
the
property
to
the
City.
The
unchallenged
starting
point
on
the
main
issue
in
this
appeal
is
that
Vaughan,
as
Thurlow,
J.
found,
was
a
trader
in
real
estate;
and
the
interposition
of
the
appellant,
as
title-holder
of
the
Bellevue
property,
could
not
subtract
from
this
feature
of
the
situation.
The
Bellevue
property
was
in
a
choice
commercial
area,
and
although
it
was
not
formally
acquired
until
October
30,
1954
the
basis
of
ultimate
acquisition
was
laid
down
in
the
early
part
of
August
1954
in
a
letter
from
Maritime
to
the
appellant.
In
the
deed
of
covenants
between
the
appellant
and
the
City,
bearing
the
same
date
as
the
exchange
agreement
with
Maritime,
the
appellant
undertook
(1)
to
construct
a
building
or
buildings
on
the
property
of
the
‘‘first
class’’
type
under
the
Halifax
City
Charter;
(2)
to
commence
the
construction
as
soon
as
practical
after
effective
execution
of
the
deed
of
covenants;
and
(3)
to
submit
to
the
City,
prior
to
actual
construction,
the
general
plans
of
any
proposed
building
and
a
plan
of
its
location
on
the
property.
Notwithstanding
these
undertakings,
the
appellant
made
no
move
to
subdivide
the
property,
did
not
develop
any
building
plans,
did
not
employ
any
architect
or
seek
out
a
builder
or
contractor,
did
not
seek
out
any
prospective
occupant
for
a
building
on
the
property,
and
did
not
try
to
arrange
any
financing
of
possible
buildings,
its
own
assets
being
inadequate.
Some
one
or
more
of
such
steps
would
have
been
more
consonant
with
an
avowed
investment
purpose
than
the
mere
assertion
thereof;
and
the
five-month
period
which
elapsed
before
expropriation
loomed
was
ample
time
within
which
to
give
some
objective
indication
of
the
alleged
purpose.
Moreover,
the
evidence
before
Thurlow,
J.
did
not
show
the
firm
resolve,
as
alleged
in
argument,
to
hold
the
property
as
a
source
of
income.
I
refer
to
the
Case
on
Appeal,
at
pp.
107
and
108,
where
Vaughan
affirmed
that
subdivision
would
hinder
the
sale
of
the
land;
that
the
purpose
of
acquisition
was
as
a
kind
of
speculation
;
that
what
he
had
in
mind
as
development
was
the
sale
of
lots
and
possible
development
of
part
of
the
property
by
the
appellant;
and
that
in
view
of
the
developments
in
the
area,
it
would
not
take
long
to
dispose
of
the
property
in
lots.
In
view
of
the
foregoing,
and
having
regard
to
the
onus
on
the
appellant,
there
is
no
ground,
despite
some
assertions
of
investment
intention
by
Vaughan,
upon
which
to
impugn
the
conclusion
of
taxability
reached
by
Thurlow,
J.
It
is
perhaps
superfluous
to
add
that
the
taxability
of
a
gain
is
not
affected
merely
because
the
gain
arises
upon
a
forced
taking
of
land.
The
subsidiary
point
respecting
the
proper
taxation
year
or
years
arises
in
the
following
way.
Judge
Pottier,
before
whom
the
claim
for
compensation
came,
in
a
decision
dated
November
28,
1956,
fixed
the
total
compensation
at
$280,000
plus
interest
at
five
per
cent
from
June
18,
1956,
the
date
of
possession,
and
he
also
made
a
five
per
cent
allowance
for
compulsory
taking.
However,
he
(to
use
his
own
words)
‘‘refrained
from
indicating
in
this
decision
to
whom
the
compensation
is
payable
’
’
;
adding
that
‘‘I
will
hear
the
parties
on
this
point
before
any
order
is
signed”.
After
such
a
hearing,
the
judge
handed
down
a
decision
on
April
1,
1957
in
which
he
referred
to
a
pending
action
of
the
City
with
respect
to
the
Bellevue
property
(it
concerned
the
City’s
claim
to
an
interest
under
the
deed
of
covenants
and
a
consequent
right
to
share
in
the
compensation),
and
went
on
to
say
that
there
could
be
no
question
of
the
appellant’s
right
to
$87,520
and
that
he
would
sign
an
order
for
payment
of
that
amount
with
proportionate
interest
and
payment
for
compulsory
taking.
The
balance
of
the
compensation
was
left
to
future
decision.
Accordingly,
an
order
was
made
on
June
4,
1957
for
payment
of
the
sums
indicated
to
the
appellant,
and
its
books
for
1957
showed
receipt
from
the
Province
of
the
sum
of
$96,415.27,
paid
in
pursuance
of
the
order.
As
a
result
of
subsequent
judicial
proceedings,
the
determination
of
the
City’s
share,
if
any,
of
the
compensation
was
remitted
to
Judge
Pottier.
Neither
in
his
consideration
of
the
matter,
nor
in
appeals
therefrom
culminating
in
the
judgment
of
this
Court,
already
referred
to,
was
the
overall
sum
of
$280,000
disturbed
nor
was
there
any
question
of
the
appellant’s
right
to
at
least
$87,520
and
interest.
The
Province
did
not
appeal
from
the
order
of
June
4,
1957
;
and
in
the
final
apportionment
by
this
Court
of
the
compensation,
as
between
the
appellant
and
the
City,
the
only
variations
from
the
final
decision
made
in
that
connection
by
Judge
Pottier
on
April
27,
1959,
were
to
award
the
City
$96,240
rather
than
$50,000
allowed
by
Judge
Pottier,
and
to
strike
out
the
allowance
for
compulsory
taking.
Arithmetically,
this
Court
protected
the
interim
award
of
$87,520
to
the
appellant
as
representing
the
equivalent
of
the
land
transferred
to
Maritime
in
exchange
for
the
Bellevue
property;
and
it
was
half
of
the
balance
of
the
total
compensation
of
$280,000
that
was
awarded
to
the
City.
The
appellant
ordered
its
financial
affairs
on
an
accrual
basis,
and
its
argument
in
sum
was
that
whatever
be
the
proper
year
to
assess
to
tax
the
gain
reflected
in
the
receipt
of
$96,415.27
(be
it
1955,
when
the
expropriation
occurred,
or
1956,
when
the
total
compensation
was
assessed,
or
1961,
when
the
final
apportionment
was
made
by
this
Court,
or
1962,
when
the
order
of
this
Court
was
entered),
it
was
not
1957.
The
significance
of
the
matter
lies
in
the
fact
that
the
Minister,
in
addition
to
re-assessing
for
the
1957
taxation
year,
re-assessed
for
the
1961
taxation
year
by
adding
as
income
the
sum
of
$86,140
as
being
the
balance
of
the
profit
realized
on
the
expropriation.
Both
of
the
re-assessments
were
made
after
the
judgment
of
this
Court
on
the
apportionment
of
the
compensation
was
settled
and
entered.
Applying
the
principle
of
M.N.R.
v.
Benaby
Realties
Ltd.,
[1968]
S.C.R.
12;
[1967]
C.T.C.
418,
to
the
different
facts
in
the
present
case,
I
am
of
the
opinion
that
no
amount
of
the
compensation
became
receivable
until
the
order
of
Judge
Pottier
of
June
4,
1957.
What
was
then
directed
to
be
paid
(and
which
was
in
fact
paid
in
that
year)
was,
so
far
as
it
represented
in
any
portion
thereof
a
gain
arising
out
of
the
appellant’s
business,
properly
assessable
to
tax
in
1957.
Since
the
sum
in
question
remained
undisturbed
in
the
final
disposition
by
this
Court
in
1961,
I
need
not
be
concerned
with
a
situation
where
there
was
such
a
variation
as
to
reduce
what
had
been
ordered
to
be
paid
in
1957.
The
1961
re-assessment
is
not
before
this
Court,
and
I
say
nothing
about
it.
I
would
dismiss
the
appeal
with
costs.