The corporation, whose sole activity was to acquire mortgages of sub-prime mortgagees, and which at the beginning of the taxation year in question held 14 mortgages totalling $104,637, was found to derive its net interest income as income from a business and from an active business. It, along with various other companies, was administered by specialists in the field of lending money on mortgages, the loans required careful investigation and negotiation of the terms, some refinancing activity occurred, the company operated with borrowed funds through a line of credit from a bank and the lending or purchasing of mortgages was the business for which it was formed.
The Court of Appeal, before going on to affirm the finding that the taxpayer's business was "active", stated (at p. 6157):
"The contrast in section 3(a) of the Act between 'business' and 'property' as sources of income makes it clear, I think, that a line must be drawn, for the purposes of the Act, between mere investment in property (including mortgages) for the acquisition of income from that property and an activity or activities that constitute "an adventure or concern in the nature of trade' or a 'trade' in the sense of those expressions in section 248."
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