THORSON,
P.:—This
is
an
appeal
from
the
decision
of
the
Income
Tax
Appeal
Board
((1953),
9
Tax
A.B.C.
358),
dated
December
16,
1953,
allowing
the
respondent’s
appeal
against
his
income
tax
assessment
for
1949,
which
included
in
his
taxable
income
the
amount
of
the
profit
made
by
him
on
the
purchase
and
sale
of
1,500
tons
of
lead
in
that
year.
The
issue
in
the
appeal
is
whether
such
profit
was
income
from
“an
adventure
or
concern
in
the
nature
of
trade”
and,
therefore,
income
from
a
‘‘business’’
within
the
meaning
of
Section
3
of
the
Income
Tax
Act,
8.C.,
1948,
c.
52,
as
defined
by
Section
127(1)
(e),
or,
alternatively,
whether
it
was
income
from
an
office
or
employment
within
the
meaning
of
Section
5.
Section
3
provides
:
“3.
The
income
of
a
taxpayer
for
a
taxation
year
for
the
purposes
of
this
Part
is
his
income
for
the
year
from
all
sources
inside
or
outside
Canada
and,
without
restricting
the
generality
of
the
foregoing,
includes
income
for
the
year
from
all
(a)
businesses,
(b)
property,
and
(c)
offices
and
employments.”
Section
127(1)
(e)
defines
‘‘business’’
as
follows:
“127.
(1)
In
this
Act,
(e)
‘business’
includes
a
profession,
calling,
trade,
manufacture
or
undertaking
of
any
kind
whatsoever
and
includes
an
adventure
or
concern
in
the
nature
of
trade
but
does
not
include
an
office
or
employment
;
’
’
And
Section
5
provides
in
part
:
“5.
Income
for
taxation
year
from
an
office
or
employment
is
the
salary,
wages
and
other
remuneration,
including
gratuities,
received
by
the
taxpayer
in
the
year
plus
(a)
the
value
of
benefits
()
received
or
enjoyed
by
him
in
the
year
in
respect
of,
in
the
course
of
or
by
virtue
of
the
office
or
the
employment,
.”
The
case
is
of
considerable
importance
by
reason
of
the
fact
that
it
is
the
first
one
in
which
the
meaning
of
the
term
“adventure
or
concern
in
the
nature
of
trade’’
falls
to
be
considered
by
this
Court.
While
the
bare
facts
are
not
in
dispute
it
is
desirable
to
set
out
the
circumstances
under
which
the
respondent
purchased
and
sold
the
lead
in
question
and
to
review
as
precisely
as
possible
the
considerations
that
prompted
the
transaction
so
that
its
true
nature
may
be
determined.
I
shall
first
summarize
the
evidence
bearing
on
the
circumstances
under
which
the
respondent
entered
into
the
transaction
and
its
immediate
result.
The
respondent
is
the
president
and
general
manager
of
The
Canada
Metal
Company
Limited,
hereinafter
called
the
Company.
He
has
been
associated
with
it
for
over
45
years
and
has
been
its
general
manager
for
18.
The
Company
has
its
head
office
at
Toronto
but
has
branches
or
subsidiaries
in
other
Canadian
cities
including
Montreal.
Its
business
is
the
fabrication
of
various
products
of
non-ferrous
metals
including
lead.
It
is
not
in
the
business
of
buying
and
selling
such
metals,
its
income
coming
from
the
sale
of
its
fabricated
products,
but
it
does
on
occasion
let
customers,
such
as
plumbers,
have
small
quantities
of
lead
as
a
matter
of
accommodation
to
them.
The
Company
is
a
wholly
owned
subsidiary
of
the
National
Lead
Company
of
New
York,
hereinafter
called
the
parent
company,
a
New
Jersey
corporation
with
its
head
office
at
New
York,
and
its
business
policy
is
strictly
controlled
by
the
parent
company.
For
example,
it
was
restricted
in
its
purchases
of
raw
metals
to
a
30-day
supply
always
on
hand
with
the
understanding
that
as
they
were
used
in
the
fabrication
of
its
products
equivalent
amounts
should
be
purchased
to
replace
them.
In
this
ease
we
are
concerned
only
with
lead.
The
Company
purchased
all
its
lead
requirements
from
Consolidated
Mining
and
Smelter
Company
Limited,
hereinafter
called
the
Canadian
supplier,
the
only
producer
of
lead
in
Canada.
During
the
war
years
the
Company
had
been
under
a
quota
of
between
1,400
and
1,500
tons
of
lead
per
month,
fixed
by
the
Metals
Control
Board
at
Ottawa,
but
after
its
controls
were
relaxed
the
Canadian
supplier
continued
to
set
a
quota
for
the
Company
and
other
Canadian
concerns
similar
to
it.
It
would
have
been
possible
to
buy
lead
from
foreign
producers
but
this
would
have
involved
the
payment
of
duty
and
immediate
delivery
could
not
be
obtained.
The
Company
lost
considerable
export
business
through
not
being
able
to
obtain
the
necessary
lead
from
the
Canadian
supplier.
Before
it
could
accept
an
order
involving
export
of
its
products
it
had
to
ascertain
from
the
Canadian
supplier
whether
the
necessary
lead
would
be
supplied
to
it.
Evidence
was
given
of
a
specific
difficulty
which
the
Company
had
experienced
in
connection
with
an
export
order
which
it
had
accepted
on
the
assurance
that
it
would
get
the
necessary
lead
from
the
Canadian
supplier
and
a
loss
which
it
had
sustained
through
the
failure
of
the
Canadian
supplier
to
deliver
it.
Further
reference
to
this
difficulty
and
its
effect
on
the
respondent
will
be
made
later.
There
is
another
set
of
facts
to
which
reference
should
be
made.
The
duty
on
imported
lead
varied
from
34
cent
per
pound
from
Commonwealth
countries
to
1
cent
from
foreign
ones
but
if
lead
was
imported
and
the
importer
exported
the
product
fabricated
from
it
he
was
entitled
to
a
99
per
cent
drawback
of
the
duty
paid.
The
price
which
the
Company
had
to
pay
for
lead
was
fixed
by
the
Canadian
supplier
and
was
based
on
the
London
market,
and
later
the
New
York
one,
with
the
result
that
it
could
not
compete
in
the
American
market
unless
it
got
a
benefit
equal
to
the
drawback
to
which
it
would
have
been
entitled
if
it
had
imported
the
lead,
and
the
Canadian
supplier
did
not
give
the
Company
any
such
benefit
in
the
price
charged
to
it.
In
1949
there
were
important
developments.
Lead
prices,
which
had
risen
to
as
high
as
2054
cents
per
pound
from
a
previous
low
of
5
cents,
broke
sharply
to
as
low
as
1184
cents.
Lead
from
foreign
countries
was
available
for
the
first
time
at
these
prices.
Coupled
with
these
facts
was
the
fact
that
the
Company
was
still
held
to
a
short
supply
by
the
Canadian
supplier
and
no
allowance
was
made
to
it
for
a
benefit
by
way
of
a
reduction
in
price
equal
to
the
drawback
to
which
it
would
have
been
entitled
if
it
had
imported
foreign
lead
for
the
purpose
of
its
export
trade,
Under
these
circumstances,
the
respondent
went
to
New
York
in
the
latter
part
of
May,
1949,
and
consulted
Mr.
W.
P.
Carrol,
the
vice-president
of
the
parent
Company.
He
requested
permission
to
the
Company
to
import
foreign
lead.
This
meant
buying
it
for
future
delivery
in
about
three
months.
It
was
contrary
to
the
policy
which
the
parent
Company
had
set
for
the
Company
to
allow
it
to
deal
in
futures
and
permission
to
the
Company
to
import
the
lead
for
future
delivery
was
refused.
The
respondent
then
asked
Mr.
Carrol
whether
it
would
be
in
order
if
he
purchased
the
lead
himself
and
was
told
to
go
ahead.
The
risk
of
importing
lead
for
future
delivery
was
contrary
to
the
business
policy
set
for
the
Company
but
if
the
respondent
wished
to
assume
the
risk
himself
it
was
‘‘all
right’’.
The
respondent
felt
that
he
could
get
the
foreign
lead
and
could
not
get
adequate
supplies
in
Canada
and
had
the
idea
that
the
Company
needed
the
lead
and
decided
to
buy
it
himself,
sell
it
to
the
Company
and
assume
personally
whatever
risk
was
involved
in
the
transaction.
Mr.
Carrol
then
introduced
him
to
Phillip
Brothers,
a
firm
of
brokers
in
New
York,
and
he
arranged
with
them
to
buy
1,500
tons
of
virgin
lead
at
1114
cents
per
pound.
He
had
no
means
for
handling
such
a
transaction
himself
and
arranged
with
Phillip
Brothers
that
the
purchase
should
be
made
for
him
by
International
Iron
and
Metal
Company
of
Hamilton,
which
he
used
as
his
broker.
These
arrangements
were
made
in
June
some
time
before
June
20,
1949.
When
he
had
made
the
arrangments
for
the
purchase
of
the
foreign
lead
he
made
arrangements
with
the
Company’s
purchasing
department
for
its
sale
to
the
Company
on
its
arrival
at
the
market
price
of
lead
on
the
date
of
its
arrival.
The
sale
to
the
Company
was
also
through
International
Iron
and
Metal
Company.
Phillip
Brothers
bought
the
lead
from
Jugoslavia
and
on
August
17,
1949,
Theodore
B.
Smith
Co.
Inc.,
a
firm
of
customs
brokers
in
New
York,
sent
International
Iron
and
Metal
Company
two
invoices
for
the
lead,
one
for
500
tons
to
go
to
the
Company
at
Montreal
and
one
for
1,000
tons
to
go
to
it
at
Toronto,
the
two
invoices
amounting
to
a
total
of
$350,238.86,
with
the
information
that
the
lead
was
expected
to
arrive
in
New
York
on
August
23,
1949,
per
S.S.
Gorica.
On
August
24,
1949,
the
Company
paid
International
Iron
and
Metal
Company
the
sum
of
$350,000
and
on
September
22,
1949,
the
further
sum
of
$11,330.53.
The
respondent
did
not
himself
put
up
any
money
for
the
purchase
of
the
lead.
The
lead
was
sold
to
the
Company
for
1514
cents
per
pound,
which
meant
14%
to
the
respondent
after
the
payment
of
a
commission
of
$5
per
ton
to
International
Iron
and
Metal
Company,
and
the
respondent
made
a
profit
on
the
transaction
of
$83,712.24.
In
assessing
the
respondent
for
1949
the
Minister
added
this
amount
to
the
amount
of
taxable
income
reported
by
him
in
his
return.
The
respondent
received
all
this
profit
in
1949
except
the
sum
of
$13,613.44
which
he
did
not
receive
until
June
23,
1950.
Consequently,
if
the
respondent
is
assessable
for
the
profit
made
on
the
transaction
the
amount
which
should
be
added
to
the
amount
of
taxable
income
reported
by
him
is
$70,098.80
instead
of
$83,712.24.
In
addition
to
this
profit
the
Company
reaped
a
benefit
of
approximately
$30,000
by
way
of
drawback
of
duty
on
the
export
of
the
products
fabricated
from
the
foreign
lead
purchased
by
it
and
the
respondent
received
a
benefit
from
this
indirectly
in
that
his
remuneration
from
the
Company
was
by
way
of
salary
and
a
percentage
of
profits.
This
outline
of
the
circumstances
under
which
the
respondent
purchased
and
sold
the
lead
is
based
largely
on
his
evidence
on
his
examination
in
chief
but
it
does
not
tell
the
whole
story.
The
considerations
that
led
him
to
the
transaction
were
fully
brought
out
in
the
competent
cross-examination
to
which
he
was
subjected
by
Mr.
Eaton
of
counsel
for
the
appellant.
It
is
essential
to
a
proper
determination
of
the
true
nature
of
the
transaction
that
these
considerations
should
be
reviewed
as
precisely
as
possible.
It
is
clear
that
the
respondent
purchased
the
lead
with
the
intention
of
selling
it
to
the
Company.
He
did
not
intend
to
do
anything
else
with
it.
Certainly,
he
did
not
intend
to
sell
it
to
anyone
else.
Indeed,
he
said
specifically
on
his
cross-examination
that
he
purchased
it
for
the
Company.
He
did
not,
of
course,
mean
that
he
did
so
as
an
agent
of
the
Company.
What
he
meant
was
that
he
had
the
Company’s
business
in
mind
and
purchased
it
for
its
benefit.
His
purpose,
as
he
put
it,
was
to
alleviate
the
short
supply
of
lead
to
which
it
had
been
held
by
the
Canadian
supplier
and
so
enable
it
to
fulfil
the
business
that
was
available
to
it.
It
was
also
part
of
his
purpose
to
enable
it
to
get
the
benefit
of
the
drawback
of
duty
to
which
it
would
be
entitled
on
the
export
of
the
products
fabricated
from
the
imported
lead
and
so
enable
it
to
compete
in
the
export
field.
It
is
also
clear
that
he
saw
the
opportunity
of
accomplishing
these
purposes
when
lead
prices
broke
in
1949
and
it
became
possible
for
the
first
time
to
import
lead
from
foreign
countries
at
the
same
price
as
that
charged
to
the
Company
by
the
Canadian
supplier.
And
there
is
no
doubt
that
he
was
spurred
to
the
transaction
by
his
special
experience
with
the
Canadian
supplier.
I
outline
the
facts
of
this
experience
according
to
his
version
of
them.
In
about
1947
the
Company
had
an
order
for
lead
products
from
abroad
which
required
2,000
tons
of
lead
for
their
fabrication.
The
Company
could
not
accept
this
order
without
first
arranging
for
the
supply
of
the
necessary
lead
from
the
Canadian
supplier.
The
respondent
then
arranged
orally
with
an
officer
of
the
Canadian
supplier
for
its
supply
at
a
premium
of
$40
per
ton
over
the
price
normally
charged
to
the
Company.
The
customer
for
the
products
was
willing
to
pay
this
premium
and
the
order
for
them
was
accepted.
Then,
for
reasons
that
were
not
fully
explained,
the
Canadian
supplier
delivered
only
500
tons
out
of
the
2,000
tons
promised
and
declined
to
deliver
the
balance
which,
as
the
respondent
put
it,
left
the
Company
1,500
tons
short.
On
his
examination
for
discovery,
confirmed
on
his
cross-examination,
he
admitted
that
it
was
this
shortage
that
prompted
his
transaction.
There
is
no
doubt
that
it
still
bothered
him
and
that
it
was
an
impelling
factor.
While
the
respondent
had
caused
litigation
to
be
instituted
against
the
Canadian
supplier
and
it
was
settled
out
of
court,
the
Company
had
suffered
a
loss
on
the
transaction
and
the
experience
rankled
in
his
mind.
He
said
that
he
did
not
do
himself
any
good
in
having
the
Company
make
a
deal
with
the
Canadian
supplier
on
which
it
had
reneged
because
the
arrangements
which
he
had
made
orally
had
not
been
confirmed
and
he
had
been
criticized
for
not
having
had
them
reduced
to
writing.
And
he
said
that
he
tried
to
make
up
for
his
mistake
in
relying
upon
a
verbal
arrangement
by
buying
the
foreign
lead
and
supplying
the
Company
with
it.
There
is
support
for
this
statement
in
the
fact
that
his
purchase
and
sale
of
lead
was
in
the
amount
of
1,500
tons,
the
exact
amount
by
which
the
Canadian
supplier
had
fallen
short
of
the
promise
to
deliver
made
orally
by
one
of
its
officers.
It
is
also
clear
that,
apart
from
this
experience,
the
respondent
was
resentful
against
the
Canadian
supplier
for
two
other
reasons.
One
was
that
it
exported
lead
abroad
and
kept
the
Company
and
other
concerns
like
it
in
short
supply,
and
the
other,
a
related
one,
that
it
based
its
prices
for
lead
on
foreign
prices
including
duty
without
giving
the
Company
and
others
the
benefit
of
a
reduction
in
price
equal
to
the
drawback
to
which
it
and
they
would
have
been
entitled
if
they
had
imported
foreign
lead
for
their
export
business,
thus
preventing
them
from
being
able
to
compete
in
foreign
markets.
When
he
went
to
New
York
to
see
Mr.
Carrol
it
was
for
the
purpose
of
discussing
with
him
the
Canadian
supplier
situation
and
trying
to
find
a
solution
of
the
Company’s
difficulty
with
it.
He
pointed
out
that
the
difficulty
could
be
overcome
by
importing
foreign
lead
in
view
of
the
fact
that
lead
prices
had
broken
and
it
was
now
possible
for
the
first
time
to
purchase
foreign
lead
at
a
price
equal
to
that
charged
by
the
Canadian
supplier.
It
was
only
when
permission
to
the
Company
to
import
the
lead
was
refused
because
of
the
parent
Company’s
fixed
policy
that
it
should
not
deal
in
futures
that
he
decided
to
import
the
lead
himself
and
sell
it
to
the
Company
at
the
market
price
prevailing
on
its
arrival.
There
were
several
considerations
that
impelled
him
to
this
decision.
On
his
direct
examination
he
stated
in
reply
to
his
counsel’s
question
of
why
he
entered
into
the
transaction
that
he
had
done
so
solely
to
relieve
a
shortage
of
the
Company
in
trying
to
obtain
lead
supplies.
But
this
is
not
a
fully
correct
statement.
In
the
break
in
lead
prices
that
had
occurred
he
saw,
not
only
an
immediate
advantage
to
the
Company,
but
also
great
possibilities
for
its
future
business.
It
was
the
first
opportunity
that
anyone
in
Canada
had
to
bring
in
foreign
lead
to
alleviate
the
shortage
from
which
everybody
in
the
lead
business
was
suffering
but
they
did
not
see
fit
to
gamble
on
that
because
they
felt
that
the
market
would
go
lower
but
he
felt
that
if
he
could
obtain
business
for
the
Company
he
would
be
willing
to
take
a
chance
in
the
situation
that
existed
for
the
first
time
since
1939
that
it
was
possible
to
import
foreign
lead.
Thus,
while
he
emphasized
on
his
direct
examination
that
his
purpose
was
to
alleviate
the
shortage
in
lead
supply
from
which
the
Company
had
suffered
he
had
a
further
and
larger
purpose.
He
felt
that
he
had
to
do
something
to
overcome
the
Company’s
difficulty
with
the
Canadian
supplier
that
would
help
it
in
the
future.
As
he
put
it,
he
figured
that
probably
the
shock
of
somebody
importing
foreign
lead
would
bring
the
Canadian
supplier
to
its
senses
and
a
better
realization
of
the
need
of
fair
treatment
to
the
Company.
The
alleviation
of
the
Company’s
immediate
shortage
was
only
part
of
his
plan.
He
was
looking
to
the
future
success
of
the
Company
not
only
for
its
sake
but
also
for
the
resultant
benefit
to
himself.
What
was
running
through
his
mind
is
indicated
by
a
characteristic
statement
on
his
cross-examination
:
‘
I
felt
that
I
would
wind
up
things—what
J
was
looking
to,
I
mean,
is
the
success
of
the
company—how
long
are
we
going
to
continue
on
having
to
be
dictated
to
by
a
producer
in
this
country
who
had
plenty
of
supplies
that
they
would
sell
outside
of
Canada
and
not
supply
to
the
people
in
the
country—that
is
the
basis
of
the
whole
thing,
I
mean
probably
it
is
not
exactly
as
I
put
it
but
from
the
point
of
view
of
the
future
of
this
business,
it
is
not
today
or
tomorrow—it
is
in
a
few
years
to
come—and
the
growth
of
this
country
here
after
years
of
building
up
and
one
thing
and
another.
The
benefit
that
would
be
derived
by
me
probably
personally—by
putting
up
a
fight
with
Consolidated
Mining
and
Smelting
Company
and
showing
that
I
did
not
have
to
depend
on
them
entirely,
would
bring
about
something—just
as
has
happened.”
What
he
meant
by
the
last
part
of
this
statement
is
that
the
shortage
in
lead
supply
to
which
the
Canadian
supplier
had
held
the
Company
has
since
been
eased
and
the
Canadian
supplier
in
its
price
to
the
Company
now
gives
it
a
benefit
equal
to
the
drawback
of
duty
to
which
it
would
be
entitled
if
it
imported
the
lead
for
its
exported
fabricated
products.
Thus,
the
respond-
\
ent’s
venture
has
“paid
off’’
not
only
for
the
Company
but
for
the
respondent
as
well.
It
was
argued
that
the
respondent
did
not
enter
into
the
transaction
with
the
intention
of
making
a
profit
for
himself
on
the
sale
of
the
lead
to
the
Company.
But,
even
if
that
be
conceded,
it
is
manifest
that
he
had
a
profit
making
intention,
if
not
immediately,
then
certainly
for
the
future,
both
for
the
Company
and
for
himself.
While
he
said
that
he
could
not
tell
whether
he
would
make
a
profit
or
a
loss
on
the
transaction
it
is
a
fair
inference
from
the
evidence
as
a
whole
that
he
did
not
consider
that
the
risk
of
loss
was
substantial.
While
he
stated
on
his
examination
in
chief
that
he
did
not
keep
track
of
lead
prices
from
day
to
day
the
break
in
lead
prices
in
1949
made
a
great
impression
on
him.
In
a
letter
to
the
Department
of
National
Revenue,
dated
November
5,
1951,
he
stated
that
the
decline
in
lead
prices
within
three
months
had
been
from
2034
cents
per
pound
to
1134
cents
and
that
never
during
his
experience
in
the
business
had
any
price
decline
been
so
severe.
That
he
did
not,
under
these
circumstances,
consider
the
risk
of
loss
substantial
is
shown
by
his
admission
on
his
cross-examination
that
he
thought
that
after
such
a
break
as
had
occurred
the
market
usually
steadied
down.
But
even
if
the
risk
of
loss
had
been
great
the
respondent
would
have
taken
it.
In
his
mind,
the
business
advantages
that
would
accrue
to
the
Company
from
the
achievement
of
his
objectives
and
the
benefit
of
such
success
to
himself,
since
his
remuneration
was
based
on
salary
plus
a
percentage
of
profit,
far
outweighed
any
risk
of
loss
to
himself
from
the
transaction.
On
his
cross-
examination
he
stated
that
even
if
the
transaction
had
cost
him
$60,000
it
would
have
been
worth
it
to
him.
Indeed,
it
has
worked
out
well
in
his
returns
from
the
Company
in
its
recognition
of
his
40
years
of
work
for
it
in
an
increase
of
salary
with
its
resultant
benefit
in
pension
rights
on
his
retirement.
That
the
respondent
was
well
pleased
with
the
result
of
his
venture
is
shown
by
his
statement,
on
his
cross-examination,
that
if
a
similar
situation
arose
again
and
he
could
not
get
approval
of
action
on
the
part
of
the
Company
he
would
repeat
his
transaction.
As
already
stated,
the
prime
issue
in
this
appeal
is
whether
the
respondent’s
purchase
and
sale
of
1,500
tons
of
lead
was
an
adventure
or
concern
in
the
nature
of
trade.
If
it
was,
his
profit
from
it
was
taxable
income
from
a
business
within
the
meaning
of
Section
3
of
The
1948
Income
Tax
Act
as
defined
by
Section
127(1)
(e).
The
expression
‘‘adventure
or
concern
in
the
nature
of
trade’’
appeared
for
the
first
time
in
a
Canadian
income
tax
act
in
Section
127
(1)
(e)
of
the
1948
Act.
It
was,
no
doubt,
taken
from
the
Income
Tax
Act,
1918
of
the
United
Kingdom.
In
that
Act
under
Case
I
of
Schedule
D
tax
was
chargeable
in
respect
of
any
trade
.
.
.
and
Section
237
defined
trade
as
including
41
every
trade,
manufacture,
adventure
or
concern
in
the
nature
of
trade’’.
Prior
to
its
inclusion
in
the
definition
of
trade
by
Section
237
of
the
Income
Tax
Act,
1918,
the
expression
appeared
in
the
Income
Tax
Act
of
1842.
In
that
Act
provision
was
made
in
the
First
Case
under
Schedule
D
for
the
charging
of
duties
in
respect
of
any
“Trade,
Manufacture,
Adventure,
or
Concern
in
the
nature
of
Trade,
”
Indeed,
the
expression
goes
back
to
the
Act
of
1803.
It
is,
I
think,
plain
from
the
wording
of
the
Canadian
Act,
quite
apart
from
any
judicial
decisions,
that
the
terms
“trade”
and
‘‘adventure
or
concern
in
the
nature
of
trade’’
are
not
synonymous
expressions
and
it
follows
that
the
profit
from
a
transaction
may
be
income
from
a
business
within
the
meaning
of
Section
3
of
the
Act,
by
reason
of
the
definition
of
business
in
Section
127(1)
(e),
even
although
the
transaction
did
not
constitute
a
trade,
provided
that
it
was
an
adventure
or
concern
in
the
nature
of
trade.
In
view
of
the
dearth
of
Canadian
decisions
on
what
constitutes
an
adventure
or
concern
in
the
nature
of
trade
resort
may
be
had
to
Scottish
and
English
decisions
on
the
corresponding
United
Kingdom
enactment,
but
in
applying
them
it
is
important
to
keep
in
mind
that
in
the
United
Kingdom
the
jurisdiction
of
the
courts
in
appeals
against
the
findings
of
the
Commissioners
is
limited
to
questions
of
law.
Strangely
enough,
the
meaning
of
the
expression
‘‘adventure
in
the
nature
of
trade’’,
although
it
had
been
in
the
United
Kingdom
Act
from
as
early
as
1803,
was
not
discussed
in
any
ease
to
which
my
attention
has
been
directed
prior
to
the
decision
of
the
Scottish
Court
of
Session
in
C.I.R.
v.
Livingston
et
al.
(1926),
11
T.C.
538,
to
which
I
shall
refer
later,
although
there
is
a
reference
to
it
in
Californian
Copper
Syndicate
Limited
v.
Harris
(1904),
5
T.C.
159
at
165
in
the
finding
of
the
Commissioners
that
the
property
in
question
in
the
case
purchased
by
the
Company
was
acquired
with
the
object
of
being
resold,
and
that
by
the
purchase
and
resales
of
their
property
the
Company
carried
on
an
adventure
or
concern
in
the
nature
of
trade
in
the
meaning
of
the
First
Case
of
Schedule
D
of
the
Income
Tax
Act,
1842.
The
first
definition
of
‘‘trade’’
in
the
United
Kingdom
eases
is
that
of
Lord
Davey
in
Grainger
and
Son
v.
Gough
(1896),
3
R.T.C.
462
at
474.
There
he
said,
in
his
speech
in
the
House
of
Lords:
“Trade
in
its
largest
sense
is
the
business
of
selling,
with
a
view
to
profit,
goods
which
the
trader
has
either
manufactured
or
himself
purchased.’’
This
definition
is
only
partially
helpful.
It
indicates
that
‘‘trade’’
is
included
in
‘‘business’’
which
latter
term
is
of
wider
import
than
that
of
trade
in
that
it
embraces
any
gainful
activity,
but
it
does
not
define
the
term
‘‘trader’’.
An
advance
was
made
by
the
Lord
Justice
Clerk
(Macdonald)
of
the
Court
of
Exchequer
(Scotland)
in
the
famous
case
of
Californian
Copper
Syndicate
Limited
v.
Harris
(1904),
5
T.C.
199.
In
that
case
the
Company
had
been
formed
for
the
purpose,
inter
alia,
of
acquiring
and
reselling
mining
property
and
had
acquired
and
worked
several
mining
properties
in
California
and
then
sold
them
to
a
second
Company
receiving
payment
in
fully
paid
up
shares
of
the
latter
Company.
The
Company
was
assessed
in
respect
of
the
profit
made
on
the
transaction
and
appealed
against
the
assessment
so
made
but
the
Commissioners
held,
as
I
have
already
indicated,
that
the
Company
had
carried
on
an
adventure
or
concern
in
the
nature
of
trade
in
the
meaning
of
the
First
Case
of
Schedule
D
of
the
Income
Tax
Act
of
1842
and
that
the
profits
arising
from
the
transaction
whether
received
in
cash
or
shares
of
another
company
were
assessable
to
income
tax.
The
Court
of
Session
as
the
Court
of
Exchequer
in
Scotland
agreed
that
the
determination
of
the
Commissioners
was
right.
Its
decision
is
of
particular
importance
because
of
the
objective
test
which
the
Lord
Justice
Clerk
laid
down
for
determining
whether
the
gain
from
a
transaction
was
a
capital
one
or
income
subject
to
tax.
At
page
165,
he
said:
“
It
is
quite
a
well
settled
principle
in
dealing
with
questions
of
assessment
of
Income
Tax,
that
where
the
owner
of
an
ordinary
investment
chooses
to
realize
it,
and
obtains
a
greater
price
for
it
than
he
originally
acquired
it
at,
the
enhanced
price
is
not
profit
in
the
sense
of
Schedule
D
of
the
Income
Tax
Act
of
1842
assessable
to
Income
Tax.
But
it
is
equally
well
established
that
enhanced
values
obtained
from
realisation
or
conversion
of
securities
may
be
so
assessable,
where
what
is
done
is
not
merely
a
realisation
or
change
of
investment,
but
an
act
done
in
what
is
truly
the
carrying
on,
or
carrying
out,
of
a
business.
The
simplest
case
is
that
of
a
person
or
association
of
persons
buying
and
selling
lands
or
securities
speculatively,
in
order
to
make
gain,
dealing
in
such
investments
as
a
business,
and
therefore
seeking
to
make
profits.
There
are
many
companies
which
in
their
very
inception
are
formed
for
such
a
purpose,
and
in
these
cases
it
is
not
doubtful
that,
where
they
make
a
gain
by
a
realisation,
the
gain
they
make
is
liable
to
be
assessed
for
Income
Tax.’’
And
then
there
follows
the
famous
statement
of
the
test
to
be
applied
:
“What
is
the
line
which
separates
the
two
classes
of
cases
may
be
difficult
to
define,
and
each
case
must
be
considered
according
to
its
facts;
the
question
to
be
determined
being—
is
the
sum
of
gain
that
has
been
made
a
mere
enhancement
of
value
by
realising
a
security,
or
is
it
a
gain
made
in
an
operation
of
business
in
carrying
out
a
scheme
for
profitmaking
“.?
’
The
Lord
Justice
Clerk
then
proceeded
to
a
review
of
the
evidence
and
said,
at
page
166
:
“I
feel
compelled
to
hold
that
this
Company
was
in
its
inception
a
Company
endeavouring
to
make
a
profit
by
a
trade
or
business,
and
that
the
profitable
sale
of
its
property
was
not
truly
a
substitution
of
one
form
of
investment
for
another.
It
is
manifest
that
it
never
did
intend
to
work
this
mineral
field
with
the
capital
at
its
disposal.
Such
a
thing
was
quite
impossible.
Its
purpose
was
to
exploit
the
field,
and
obtain
gain
inducing
others
to
take
it
up
on
such
terms
as
would
bring
substantial
gain
to
themselves.
This
was
that
the
turning
of
investment
to
account
was
not
to
be
merely
incidental
but
was,
as
the
Lord
President
put
it
in
the
case
of
the
Scottish
Investment
Company,
the
essential
feature
of
the
business,
speculation
being
among
the
appointed
means
of
the
Company’s
gains.’’
And
concluded
that
in
these
circumstances
the
finding
of
the
Commissioners
was
right.
Lord
Young
and
Lord
Trayner
agreed.
The
test
laid
down
by
the
Lord
Justice
Clerk
in
the
Californian
Copper
Syndicate
case
(supra)
has
been
approved
in
a
great
many
cases:
vide,
for
example,
by
Lord
Dunedin,
speaking
for
the
Judicial
Committee
of
the
Privy
Council,
in
Commissioner
of
Taxes
v.
Melbourne
Trust,
Limited,
[1914]
A.C.
1001
at
1010;
by
Lord
Buckmaster
in
the
House
of
Lords
in
Ducker
v.
Rees
Roturbo
Development
Syndicate,
Limited
and
C.I.R.
v.
Rees
Roturbo
Development
Syndicate,
Limited,
[1928]
A.C.
132
at
140
;
by
Duff,
J.,
as
he
then
was,
speaking
for
the
Supreme
Court
of
Canada,
in
Anderson
Logging
Co.
v.
The
King,
[1925]
8.C.R.
45
at
48;
[1917-27]
C.T.C.
198,
which
was
confirmed
by
the
Judicial
Committee
of
the
Privy
Council,
[1926]
A.C.
140,
and,
more
recently,
by
this
Court
and
the
Supreme
Court
of
Canada,
per
Kerwin,
J.,
as
he
then
was,
in
Atlantic
Sugar
Refineries
Limited
v.
M.N.R.,
[1948]
Ex.
C.R.
622;
[1948]
C.T.C.
326;
[1949]
S.C.R.
706;
[1949]
C.T.C.
196.
The
decision
is
subject
to
certain
comments.
In
the
first
place,
I
think
it
is
clear
that
when
the
Lord
Justice
Clerk
used
the
expression
‘‘scheme
of
profit-making’’
he
did
not
imply
that
the
word
"scheme”
meant
a
multiplicity
of
transactions.
There
could
be
a
scheme
of
profit-making
even
if
there
were
only
one
transaction.
The
difficulty
involved
in
the
term
‘‘scheme
of
profitmaking”
came
before
the
Court
inferentially,
if
not
directly,
in
T.
Beynon
and
Co.,
Limited
v.
Ogg
(1918),
7
T.C.
215.
There
a
company
carrying
on
business
as
coal
merchants,
ship
and
insurance
brokers
and
as
sole
selling
agents
for
various
colliery
companies,
in
which
latter
capacity
it
purchased
waggons
for
its
clients,
made
a
purchase
of
waggons
on
its
own
account
as
a
speculation
and
subsequently
sold
them
at
a
profit.
It
contended
that
since
the
transaction
was
an
isolated
one
the
profit
was
in
the
nature
of
a
capital
profit
on
the
sale
of
an
investment
and
should
be
excluded
in
computing
its
liability
to
income
tax.
It
was
held,
however,
that
it
was
made
in
the
operation
of
the
company’s
business
and
properly
included
in
the
computation
of
its
profits
therefrom.
Sankey,
J.,
put
the
matter
thus,
at
page
132:
“The
only
question
one
has
to
determine
is
which
side
the
line
this
transaction
falls
on.
Is
it
.
.
.
in
the
nature
of
capital
profit
on
the
sale
of
an
investment?
Or
is
it
.
.
.
a
profit
made
in
the
operation
of
the
Appellant
Company’s
business
???
As
I
see
it,
the
test
thus
put
is
to
the
same
effect
and
essentially
the
same
as
that
laid
down
by
the
Lord
Justice
Clerk
in
the
Californian
Copper
Syndicate
case
(supra).
Certainly,
it
was
so
regarded
by
Duff,
J.,
as
he
then
was,
in
the
Anderson
Logging
Co.
case
(supra).
The
case
is
also
of
importance
for
the
stress
which
the
Lord
Justice
Clerk
put
on
the
element
of
speculation
as
a
determining
factor
in
the
decision
that
the
transaction
was
not
the
realization
of
an
investment
and
its
transfer
into
another
form
but
the
gaining
of
profit
by
the
sale
of
the
property
and
thus
a
transaction
that
was
characteristic
of
what
a
trader
would
do.
This
stress
on
the
speculative
element
is
of
particular
importance
when
it
is
coupled
with
the
finding
that
the
sale
of
a
property,
which
by
itself
is
productive
of
income
and
might
be
regarded
as
an
investment,
can
be
a
trade
in
the
property
rather
than
a
realization
of
an
investment.
Finally,
I
must
confess
that
I
find
it
strange
that
although
the
Commissioners
had
denied
the
Company’s
appeal
against
its
assessment
on
the
ground
that
the
profits
made
by
it
were
from
a
transaction
of
purchase
and
sale
that
was
an
adventure
or
concern
in
the
nature
of
trade
and
the
court
was
unanimous
in
the
opinion
that
they
were
right
in
their
finding,
there
is
not
a
word
in
the
judgments
bearing
on
what
is
an
adventure
or
concern
in
the
nature
of
trade
as
distinct
from
what
is
a
trade.
But
it
is
obvious,
it
seems
to
me,
that
if
the
Court
considered
the
transaction
in
question
a
trading
transaction,
as
it
clearly
did,
it
must,
a
fortiori,
be
considered
as
an
adventure
or
concern
in
the
nature
of
trade,
as
the
Commissioners
had
found
it
to
be.
I
now
come
to
the
decision
in
C.J.R.
v.
Livingston
et
al.
(1926),
11
T.C.
538,
in
which
an
attempt
was
made
to
define
the
expression
‘‘adventure
in
the
nature
of
trade’’.
There
the
facts
were
that
three
persons,
a
ship
repairer,
a
blacksmith
and
a
fish
salesmen’s
employee
purchased
as
a
joint
venture
a
cargo
vessel
with
a
view
to
converting
it
into
a
steam-drifter
and
selling
it.
They
were
not
connected
in
business
and
had
never
previously
bought
a
ship.
Extensive
repairs
and
alterations
to
the
ship
were
carried
out
by
the
orders
of
the
purchasers
of
the
ship,
two
of
them
being
employed
on
it
in
their
ordinary
capacity
and
at
the
ordinary
trade
rates,
and
on
December
31,
1924,
the
owners
sold
the
vessel
at
a
profit.
They
were
assessed
to
income
tax
on
the
profit
so
made
and
appealed
to
the
Commissioners
who
allowed
the
appeal
on
the
ground
that
the
profit
realized
in
the
transaction
in
question
was
not
made
in
the
operation
of
business
ordinarily
carried
on
by
the
purchasers.
Thereupon
the
Crown
appealed
to
the
Court
of
Session
as
the
Court
of
Exchequer
in
Scotland
and
it
unanimously
reversed
the
decision
of
the
Commissioners
and
held
the
owners
of
the
ship
assessable
to
income
tax
on
the
profit
made
by
them.
While
all
the
judges
agreed
that
the
finding
of
the
Commissioners
should
be
reversed
the
case
loses
much
of
the
value
that
it
might
otherwise
have
by
reason
of
the
divergence
in
the
four
reasons
for
judgment.
In
my
opinion,
the
Lord
President
(Clyde)
made
the
most
useful
contribution
to
the
jurisprudence.
At
page
042,
he
said
:
“I
think
the
profits
of
an
isolated
venture,
such
as
that
in
which
the
Respondents
engaged,
may
be
taxable
under
Schedule
D
provided
the
venture
is
‘in
the
nature
of
trade’.
I
say,
‘may
be’,
because
in
my
view
regard
must
be
had
to
the
character
and
circumstances
of
the
particular
venture.
If
the
venture
was
one
consisting
simply
in
an
isolated
purchase
of
some
article
against
an
expected
rise
in
price
and
a
subsequent
sale
of
it
it
might
be
impossible
to
say
that
the
venture
was
‘in
the
nature
of
trade’;
because
the
only
trade
in
the
nature
of
which
it
could
participate
would
be
the
trade
of
a
dealer
in
such
articles,
and
a
single
transaction
falls
as
far
short
of
constituting
a
dealer’s
trade,
as
the
appearance
of
a
single
swallow
does
of
making
a
summer.
The
trade
of
a
dealer
necessarily
consists
of
a
course
of
dealing,
either
actually
engaged
in
or
at
any
rate
contemplated
and
intended
to
con-
tinue.
But
this
principle
is
difficult
to
apply
to
ventures
of
a
more
complex
character
such
as
that
with
which
the
present
case
is
concerned.’’
And
then
Lord
Clyde
put
the
test
of
whether
a
venture
was
in
the
nature
of
trade
as
follows
:
“I
think
the
test,
which
must
be
used
to
determine
whether
a
venture
such
as
we
are
now
considering
is,
or
is
not,
‘in
the
nature
of
trade
’,
is
whether
the
operations
involved
in
it
are
of
-v
the
same
kind,
and
carried
on
in
the
same
way,
as
those
which
are
characteristic
of
ordinary
trading
in
the
line
of
business
in
which
the
venture
was
made.
If
they
are,
I
do
not
see
why
the
venture
should
not
be
regarded
as
‘in
the
nature
of
trade’,
merely
because
it
was
a
single
venture
which
took
only
three
months
to
complete.”
And
he
went
on
to
say
that
the
operations
were
the
same
as
those
which
characterized
the
trade
of
converting
and
refitting
secondhand
articles
for
sale
and
that
the
transaction
was
‘‘in
the
nature
of
trade’’.
Lord
Sands
took
a
different
view.
In
his
view
it
was
the
operation
done
on
the
ship
that
made
the
transaction
a
trading
one.
At
page
543
he
said
:
“But
I
am
disposed
to
think
that
it
would
introduce
the
element
of
carrying
on
a
trade
if
the
purchaser
were,
by
himself
or
his
own
employees
or
by
a
contractor,
to
carry
through
a
manufacturing
process
which
changed
the
character
of
the
article.’’
In
Lord
Blackburn’s
opinion
the
case
turned
on
the
fact
that
two
of
the
three
purchasers
worked
on
the
ship
themselves
and
were
thus
exercising
their
own
trades.
A
great
step
towards
clarification
of
the
meaning
of
the
expression
under
review
was
taken
by
the
Court
of
Session
in
Rutledge
v.
C.I.R.
(1929),
14
T.C.
490.
There
the
appellant,
who
was
a
money
lender
and
also
interested
in
a
cinema
company
and
other
businesses,
being
in
Berlin
on
business
connected
with
the
cinema
company,
purchased
very
cheaply
a
large
quantity
of
toilet
paper
from
a
bankrupt
German
firm
and
within
a
short
time
after
his
return
to
London
sold
the
whole
consignment
to
one
person
at
a
considerable
profit.
On
being
assessed
on
this
profit
he
appealed
to
the
Commissioners
who
found
that
the
profit
made
was
liable
to
assessment
as
being
profit
in
the
nature
of
trade
and
the
Court
unanimously
dismissed
the
appeal
from
their
finding.
The
judgment
of
the
Lord
President
(Clyde)
is
illuminating.
After
stating
that
the
question
in
the
case
was
whether
the
profits
were
or
were
not
profits
of
an
“
adventure
.
.
.
in
the
nature
of
trade’’
within
the
meaning
of
Section
237
of
the
Income
Tax
Act,
1918,
and
expressing
the
opinion
that
the
transaction
was
certainly
an
adventure
went
on
to
say,
at
page
496:
“The
question
remains
whether
the
adventure
was
one
‘in
the
nature
of
trade’.
The
appellant’s
contention
is
that
it
could
not
be
such,
because
it
is
essential
to
the
idea
of
trade
that
there
should
be
a
continuous
series
of
trading
operations;
and
an
observation
made
in
the
course
of
my
opinion
in
Inland
Revenue
v.
Livingston,
1927,
S.C.
251,
at
p.
255,
was
founded
on,
according
to
which
‘a
single
transaction
falls
as
far
short
of
constituting
a
dealer’s
trade,
as
the
appearance
of
a
single
swallow
does
of
making
a
summer.
The
trade
of
a
dealer
necessarily
consists
of
a
course
of
dealing,
either
actually
engaged
in
or
at
any
rate
contemplated
and
intended
to
continue.’
But
the
question
here
is
not
whether
the
appellant’s
isolated
speculation
in
toilet
paper
was
a
trade,
but
whether
it
was
an
‘adventure
.
.
.
in
the
nature
of
trade’;
and
in
the
opinion
referred
to
I
said
that,
in
my
opinion,
‘the
profits
of
an
isolated
venture
.
.
.
may
be
taxable
under
Schedule
D
provided
the
venture
is
‘in
the
nature
of
trade’.’
I
see
no
reason
to
alter
that
opinion.
It
is
no
doubt
true
that
the
question
whether
a
particular
adventure
is
‘in
the
nature
of
trade’
or
not
must
depend
on
its
character
and
circumstances,
but
if—as
in
the
present
case—the
purchase
is
made
for
no
other
purpose
except
that
of
re-sale
at
a
profit,
there
seems
little
difficulty
in
arriving
at
the
conclusion
that
the
deal
was
‘in
the
nature
of
trade’,
though
it
may
be
wholly
insufficient
to
constitute
by
itself
a
trade.’’
Then
the
Lord
President
put
his
conclusion
clearly,
at
page
497:
“It
seems
to
me
to
be
quite
plain
(1)
that
the
Appellant,
in
buying
the
large
stock
of
toilet
paper,
entered
upon
a
commercial
adventure
or
speculation;
(2)
that
this
adventure
or
speculation
was
carried
through
in
exactly
the
same
way
as
any
regular
trader
or
dealer
would
carry
through
any
of
the
adventures
or
speculations
in
which
it
is
his
regular
business
to
engage;
and
therefore
(3)
that
the
purchase
and
re-sale
of
the
toilet
paper
was
an
‘adventure
.
.
.
in
the
nature
of
trade’
within
the
meaning
of
the
Income
Tax
Act,
1918.”
Lord
Sands
agreed
but
put
his
opinion
somewhat
differently,
stressing
the
nature
and
size
of
the
subject
matter.
At
page
497,
he
said
:
“The
nature
and
quantity
of
the
subject
dealt
with
exclude
the
suggestion
that
it
could
have
been
disposed
of
otherwise
than
as
a
trade
transaction.
Neither
the
purchaser
nor
any
purchaser
from
him
was
likely
to
require
such
a
quantity
for
his
private
use.
Accordingly,
it
appears
to
me
quite
a
reasonable
view
for
the
Commissioners
to
have
taken
that
this
transaction
was
in
the
nature
of
trade.
From
beginning
to
end
the
intention
was
simply
to
buy
and
to
re-sell
.
.
.
I
do
not
think
that
we
can
regard
what
was
done
here
as
other
than
an
‘adventure
.
.
.
in
the
nature
of
trade’
within
the
meaning
of
the
Act.’’
Lord
Blackburn
and
Lord
Morison
concurred.
And
in
The
Balgowme
Land
Trust,
Ltd.
v.
C.I.R.
(1929),
14
T.C.
684
at
691,
Lord
President
Clyde,
speaking
of
the
definition
of
trade
in
Section
237
of
the
Income
Tax
Act,
1918,
said:
“that
definition
makes
it
plain
that
even
the
profit
of
an
isolated
transaction—if
it
constitutes
an
adventure
in
the
nature
of
trade—may
be
brought
within
Case
I
of
Schedule
D
of
the
Income
Tax
Act
.
.
.
A
single
plunge
may
be
enough
provided
it
is
shown
to
the
satisfaction
of
the
Court
that
the
plunge
is
made
in
the
waters
of
trade;
..
.”?
The
next
case
in
order
of
time
was
Leeming
v.
Jones,
[1930],
1
K.B.
299;
[1930]
A.C.
415,
but
I
shall
defer
comment
on
it
until
later.
The
Rutledge
case
(supra)
was
followed
in
Lindsay
et
al.
v.
C.I.R.
(1932),
18
T.C.
43,
and
later
in
C.I.R.
v.
Fraser
(1942),
24
T.C.
498.
There
the
respondent,
a
woodcutter,
bought
through
an
agent
for
resale
a
large
quantity
of
whisky
which
he
sold
at
a
large
profit.
The
purchases
and
sales
were
made
in
three
lots.
This
was
his
only
dealing
in
whisky.
He
had
no
special
knowledge
of
the
whisky
trade
and
did
not
take
delivery
of
the
whisky
or
have
it
blended
or
advertised.
The
purchase
and
the
sales
were
made
through
an
agent.
On
being
assessed
in
respect
of
the
profit
on
the
transaction
he
appealed
to
the
Commissioners
who
found
that
an
adventure
in
the
nature
of
trade
had
not
been
carried
on,
that
merely
an
investment
had
been
made
and
realized
and
that
it
was
not
assessable
to
income
tax.
Their
finding
was
unanimously
reversed
by
the
Court
of
Session.
The
judgment
of
the
Lord
President
(Normand)
is
clear
cut.
In
the
first
place,
he
clearly
realized
the
distinction
between
a
trade
and
an
adventure
in
the
nature
of
trade.
At
page
502,
he
said:
“we
must
remind
ourselves
that
we
are
not
to
decide
whether
the
Respondent
was
carrying
on
a
trade,
but
whether
the
transaction
was
an
adventure
in
the
nature
of
trade
.
.
.
It
would
be
extremely
difficult
to
hold
that
a
single
transaction
amounted
to
a
trade
but
it
may
be
much
less
difficult
to
hold
that
a
single
transaction
is
an
adventure
in
the
nature
of
trade.”
Lord
Normand
then
went
on
to
discuss
what
criterion
the
Court
should
apply
in
determining
whether
a
transaction
was
an
adventure
in
the
nature
of
trade
and
whether
the
transaction
under
review
was
an
adventure
in
the
nature
of
trade.
I
quote
his
opinion,
at
page
502:
i1
There
was
much
discussion
as
to
the
criterion
which
the
Court
should
apply.
I
doubt
if
it
would
be
possible
to
formulate
a
single
criterion.
I
said
in
a
case
which
we
decided
only
yesterday
that
one
important
factor
may
be
the
person
who
enters
into
the
transaction
.
.
.
It
is
in
general
more
easy
to
hold
that
a
single
transaction
entered
into
by
an
individual
in
the
line
of
his
own
trade
(although
not
part
and
parcel
of
his
ordinary
business)
is
an
adventure
in
the
nature
of
trade
than
to
hold
that
a
transaction
entered
into
by
an
individual
outside
the
line
of
his
own
trade
or
occupation
is
an
adventure
in
the
nature
of
trade.
But
what
is
a
good
deal
more
important
is
the
nature
of
the
transaction
with
reference
to
the
commodity
dealt
in.
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
opportunity
of
sale
does
not
occur.
In
some
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
recognize
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
stocks
and
shares
with
a
view
to
selling
them
at
an
early
date
at
a
profit,
but,
if
he
does
so,
he
is
purchasing
something
which
is
itself
an
investment,
a
potential
source
of
revenue
to
him
while
he
holds
it.
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;
and
I
can
find
no
single
fact
among
those
stated
by
the
Commissioners
which
in
any
way
traverses
that
view.
In
my
opinion
the
fact
that
the
transaction
was
not
in
the
way
of
the
business
(whatever
it
was)
of
the
Respondent
in
no
way
alters
the
character
which
almost
necessarily
belongs
to
a
transaction
like
this.
Most
important
of
all,
the
actual
dealings
of
the
Respondent
with
the
whisky
were
exactly
of
the
kind
that
take
place
in
ordinary
trade.’’
I
stress
Lord
Normand’s
opinion
in
the
last
sentence
of
his
cited
remarks.
Lord
Normand
then
cited
with
approval
the
statement
of
the
Lord
Justice
Clerk
in
the
Californian
Copper
Syndicate
case
(supra)
and
made
the
significant
remark,
at
page
503:
“Now,
if
that
is
true
of
lands
it
is
a
fortiori
true
of
the
purchase
and
sale
of
a
commodity
like
whisky
in
bond
which,
in
the
hands
of
a
purchaser,
has
no
meaning
except
as
an
incursion
into
the
sphere
of
trading
for
profit.”
And
Lord
Normand
was
unable
to
distinguish
the
case
from
the
Rutledge
case
(supra).
Lord
Moncrieff,
in
his
reasons
for
judgment,
went
even
further.
At
page
505,
he
said
:
“When
a
man
deals
with
a
trading
commodity
such
as
whisky
in
bulk
in
bond,
which
he
has
acquired
merely
for
the
purpose
of
resale
and
proceeds
to
sell,
and
there
are
no
further
material
circumstances
in
the
case,
he
engages
in
my
view
in
trade,
and
in
trade
only,
and
not
in
the
investment
of
capital
funds.
’
’
I
next
refer
to
certain
expressions
of
opinion
in
Commissioners
of
Inland
Revenue
v.
Reinhold
(1953),
34
T.C.
389.
There
Lord
Carmont
said,
at
page
392:
“Certain
transaction
show
inherently
that
they
are
not
investments
but
incursions
into
the
realm
of
trade
or
adventures
of
that
nature.
In
my
opinion,
it
is
because
of
the
character
of
such
transactions
that
it
can
be
said
with
additional
definiteness
that
certain
profits
are
income
from
trade
and
not
capital
accretion
of
an
investment,
the
purchase
and
sale
of,
for
instance,
whisky,
as
in
Fraser’s
case,
[1942]
S.C.
493,
was
a
trading
venture
and
so
too
in
regard
to
toilet
paper:
Rutledge,
[1929]
S.C.
379.
This
means
that,
although
in
certain
cases
it
is
important
to
know
whether
a
venture
is
isolated
or
not,
that
information
is
superfluous
in
many
cases
where
the
commodity
itself
stamps
the
transaction
as
a
trading
venture,
and
the
profits
and
gains
are
plainly
income
liable
to
tax.”
Finally,
there
is
the
important
decision
of
the
House
of
Lords
in
Edwards
v.
Bairstow,
[1955]
3
All
E.R.
48.
In
that
case
it
was
sought
to
charge
the
respondents
with
income
tax
on
the
profit
arising
from
the
purchase
and
sale
of
certain
spinning
plant
acquired
and
sold
during
the
period
1946-1948,
but
the
Commissioners
discharged
the
assessments
on
the
determination
that
the
transaction
from
which
the
profit
arose
was
not
an
adventure
in
the
nature
of
trade.
Wynn
Parry,
J.,
and
the
Court
of
Appeal
upheld
the
finding
of
the
Commissioners
on
the
ground
that
the
determination
was
purely
a
question
of
fact
and
that
it
was
not
open
to
the
court
to
interfere
with
it.
But
the
House
of
Lords
unanimously
reversed
the
decision
and
held
that
the
transaction
was
an
adventure
in
the
nature
of
trade.
I
need
not
consider
the
discussion
whether
the
determination
of
the
Commissioners
was
a
question
of
fact
or
a
question
of
law
or
a
question
of
mixed
law
and
fact.
That
question
is
of
the
utmost
importance
under
the
United
Kingdom
system
but
in
Canada
there
is
no
similar
limitation
of
jurisdiction
and
our
Court
is
not
concerned
with
it.
Lord
Radcliffe
said,
at
page
58
:
“The
profit
from
the
set
of
operations
that
comprised
the
purchase
and
sales
of
the
spinning
plant
was
the
profit
of
an
adventure
in
the
nature
of
trade.
What
other
word
is
apt
to
describe
the
operations?
Here
are
two
gentlemen
who
put
their
money
or
the
money
of
one
of
them
into
buying
a
lot
of
machines.
They
have
no
intention
of
using
it
as
machinery,
so
they
do
not
buy
it
to
hold
as
an
income-producing
asset.
They
do
not
buy
it
to
consume
or
for
the
pleasure
of
enjoyment.
On
the
contrary,
they
have
no
intention
of
holding
their
purchase
at
all.
They
are
planning
to
sell
the
machinery
even
before
they
have
bought
it.
And,
in
due
course,
they
do
sell
it,
in
five
separate
lots,
as
events
turned
out.
And,
as
they
hoped
and
expected,
they
make
a
net
profit
on
the
deal,
after
charging
all
expenses
such
as
repairs
and
replacements,
commissions,
wages,
travelling
and
entertainment
and
incidentals,
which
do,
in
fact,
represent
the
cost
of
organizing
the
venture
and
carrying
it
through.
This
seems
to
me,
inescapably,
a
commercial
deal
in
secondhand
plant.
’
’
Later,
he
said,
at
page
58
:
‘“There
remains
the
fact
which
was
avowedly
the
original
ground
of
the
commissioners’
decision—‘this
was
an
isolated
ease’.
But,
as
we
know,
that
circumstance
does
not
prevent
a
transaction
which
bears
the
badge
of
trade
from
being
in
truth
an
adventure
in
the
nature
of
trade.
The
true
question
in
such
cases
is
whether
the
operations
constitute
an
adventure
of
that
kind,
not
whether
they
by
themselves,
or
they
in
conjunction
with
other
operations,
constitute
the
operator
a
person
who
carries
on
a
trade.
Dealing
is,
I
think,
essentially
a
trading
adventure,
and
the
respondents’
operations
were
nothing
but
a
deal
or
deals
in
plant
and
machinery.’’
The
cases
establish
that
the
inclusion
of
the
term
‘‘adventure
or
concern
in
the
nature
of
trade’’
in
the
definition
of
‘‘trade’’
in
the
United
Kingdom
Act
substantially
enlarged
the
ambit
of
the
kind
of
transactions
the
profits
from
which
were
subject
to
income
tax.
In
my
opinion,
the
inclusion
of
the
term
in
the
definition
of
“business”
in
the
Canadian
Act,
quite
apart
from
any
judicial
decisions,
has
had
a
similar
effect
in
Canada.
I
am
also
of
the
view
that
it
is
not
possible
to
determine
the
limits
of
the
ambit
of
the
term
or
lay
down
any
single
criterion
for
deciding
whether
a
particular
transaction
was
an
adventure
of
trade
for
the
answer
in
each
case
must
depend
on
the
facts
and
surrounding
circumstances
of
the
case.
But
while
that
is
so
it
is
possible
to
state
with
certainty
some
propositions
of
a
negative
nature.
;“
./
The
first
of
these
is
that
the
singleness
or
isolation
of
a
transaction
cannot
be
a
test
of
whether
it
was
an
adventure
in
the
nature
of
trade.
In
Atlantic
Sugar
Refineries
Limited
v.
M.N.R.,
[1948]
Ex.
C.R.
622
at
681;
[1948]
C.T.C.
326
at
333,1
expressed
the
opinion
that
the
fact
that
a
transaction
was
an
isolated
one
did
not
exclude
it
from
the
category
of
trading
or
business
transactions
of
such
a
nature
as
to
attract
tax
to
the
profit
therefrom
and
cited
several
decisions
in
support
of
my
statement.
The
decision
in
that
case
was
affirmed
by
the
Supreme
Court
of
Canada,
[1949]
S.C.R.
706;
[1949]
C.T.C.
196,
and
has
been
followed
in
other
cases:
vide,
for
example,
Honeyman
v.
M.N.R.,
[1955]
Ex.
C.R.
200
at
208;
[1955]
C.T.C.
151
at
158.
This
does
not
mean
that
the
isolation
or
singleness
of
a
transaction
has
no
bearing
on
whether
it
was
a
business
or
trading
transaction.
On
the
contrary,
it
might
be
a
very
important
factor.
But
‘‘trade’’
is
not
the
same
thing
as
‘‘an
adventure
in
the
nature
of
trade’’
and
a
transaction
might
well
be
the
latter
without
being
the
former
or
constituting
its
maker
a
‘‘trader’’.
And
whatever
merit
the
singleness
or
isolation
of
a
transaction
may
have
in
determining
whether
it
was
a
trading
or
business
transaction
it
has
no
place
at
all
in
determining
whether
it
was
an
adventure
in
the
nature
of
trade.
The
very
word
‘‘adventure’’
implies
a
single
or
isolated
transaction
and
it
is
erroneous
to
set
up
its
singleness
or
isolation
as
an
indication
that
it
was
not
an
adventure
in
the
nature
of
trade.
Lord
Simonds
put
the
matter
explicitly
in
Edwards
v.
Bairstow
(supra)
when
he
said,
at
page
54:
“The
determination
that
a
transaction
was
not
an
adventure
in
the
nature
of
trade
because
it
was
an
isolated
transaction
was
clearly
wrong
in
law.’’
In
my
opinion,
it
may
now
be
taken
as
established
that
the
fact
that
a
person
has
entered
into
only
one
transaction
of
the
kind
under
consideration
has
no
bearing
on
the
question
whether
it
was
an
adventure
in
the
nature
of
trade.
It
is
the
nature
of
the
transaction,
not
its
singleness
or
isolation,
that
is
to
be
determined.
Nor
is
it
essential
to
a
transaction
being
an
adventure
in
the
nature
of
trade
that
an
organization
be
set
up
to
carry
it
into
effect.
The
contention
that
this
is
necessary
arose
from
the
finding
of
the
Commission
in
Martin
v.
Lowry,
[1927]
A.C.
312,
which
the
House
of
Lords
did
not
disturb,
but
it
is
plain
from
the
decisions
in
such
cases
as
Rutledge
v.
C.I.R.
(supra)
and
Lindsay
et
al.
v.
C.I.R.
(supra)
that
a
transaction
can
be
an
adventure
in
^
the
nature
of
trade
even
although
no
organization
has
been
set
up
to
carry
it
into
effect.
And
the
two
last
mentioned
cases
are
authority
for
saying
that
a
transaction
may
be
an
adventure
in
the
nature
of
trade
even
although
nothing
was
done
to
the
subject
matter
of
the
trans-
action
to
make
it
saleable,
as
in
C.I.R.
v.
Livingston
et
al.
(supra).
Likewise,
the
fact
that
a
transaction
is
totally
different
in
nature
from
any
of
the
other
activities
of
the
taxpayer
and
that
he
has
never
entered
upon
a
transaction
of
that
kind
before
or
since
does
not,
of
itself,
take
it
out
of
the
category
of
being
an
adventure
in
the
nature
of
trade.
What
has
to
be
determined
is
the
true
nature
of
the
transaction
and
if
it
is
in
the
nature
of
trade,
the
profits
from
it
are
subject
to
tax
even
if
it
is
wholly
unconnected
with
any
of
the
ordinary
activities
of
the
person
who
entered
upon
it
and
he
has
never
entered
upon
such
a
transaction
before
or
since.
And
a
transaction
may
be
an
adventure
in
the
nature
of
trade
although
the
person
entering
upon
it
did
so
without
any
intention
to
sell
its
subject
matter
at
a
profit.
The
intention
to
sell
the
purchased
property
at
a
profit
is
not
of
itself
a
test
of
whether
the
profit
is
subject
to
tax
for
the
intention
to
make
a
profit
may
be
just
as
much
the
purpose
of
an
investment
transaction
as
of
a
trading
one.
Such
intention
may
well
be
an
important
factor
in
determining
that
a
transaction
was
an
adventure
in
the
nature
of
trade
but
its
presence
is
not
an
essential
prerequisite
to
such
a
determination
and
its
absence
does
not
negative
the
idea
of
an
adventure
in
the
nature
of
trade.
The
considerations
prompting
the
transaction
may
be
of
such
a
business
nature
as
to
invest
it
with
the
character
of
an
adventure
in
the
nature
of
trade
even
without
any
intention
of
making
a
profit
on
the
sale
of
the
purchased
commodity.
And
the
taxpayer’s
declaration
that
he
entered
upon
the
transaction
without
any
intention
of
making
a
profit
on
the
sale
of
the
purchased
property
should
be
scrutinized
with
care.
It
is
what
he
did
that
must
be
considered
and
his
declaration
that
he
did
not
intend
to
make
a
profit
may
be
overborne
by
other
considerations
of
a
business
or
trading
nature
motivating
the
transaction.
Consequently,
the
respondent
in
the
present
case
cannot
escape
liability
merely
by
showing
that
his
transaction
was
a
single
or
isolated
one,
that
it
was
not
necessary
to
set
up
any
organization
or
perform
any
operation
on
its
subject
matter
to
carry
it
into
effect,
that
it
was
different
from
and
unconnected
with
his
ordinary
activities
and
he
had
never
entered
into
such
a
transaction
before
or
since
and
that
he
purchased
the
lead
without
any
intention
of
making
a
profit
on
its
sale
to
the
Company.
Nor
is
there
any
comfort
for
the
respondent
in
the
decision
in
Leeming
v.
Jones,
[1930]
1
K.B.
279;
[1980]
A.C.
415,
on
which
counsel
for
the
respondent
strongly
relied.
The
facts
in
that
case
were
that
L.
joined
with
three
other
persons
in
obtaining
an
option
to
purchase
a
rubber
estate
in
the
Malay
Peninsula.
It
was
not
large
enough
for
re-sale
to
a
public
company
to
be
formed
to
work
it,
and
a
further
option
to
purchase
an
additional
estate
was
acquired.
Ultimately,
the
two
estates
were
sold
to
a
company
at
a
profit
in
which
L.
shared.
He
was
assessed
to
income
tax
on
the
amount
of
this
profit
and
appealed
to
the
Commissioners
who
found
that
he
acquired
an
interest
in
the
property
with
the
sole
object
of
turning
it
over
at
a
profit
and
that
he
did
not
have
any
intention
of
holding
it
as
an
investment
and
they
confirmed
the
assessment.
L.
appealed
from
this
decision
and
Rowlatt,
J.,
sent
the
case
back
to
the
Commissioners
for
a
finding
whether
the
transaction
was
an
adventure
in
the
nature
of
trade.
They
then
found
that
it
was
not
‘‘a
concern
in
the
nature
of
trade’’.
The
case
then
came
back
to
Rowlatt,
J.,
who
allowed
the
appeal
from
the
Commissioners’
confirmation
of
the
assessment.
From
this
decision
the
Crown
appealed
to
the
Court
of
Appeal
which
un-
animously
dismissed
its
appeal
and
a
further
appeal
to
the
House
of
Lords
was
also
unanimously
dismissed.
I
have
read
the
reasons
for
judgment
in
the
Court
of
Appeal
and
in
the
House
of
Lords
with
care
and
can
fairly
say
that
the
case
did
not
decide
what
constitutes
or
does
not
constitute
an
adventure
or
concern
in
the
nature
of
trade
and
did
not
purport
to
do
so.
Both
the
Court
of
Appeal
and
the
House
of
Lords
accepted
the
finding
of
the
Commissioners
that
the
transaction
in
question
was
not*a
concern
in
the
nature
of
trade.
That
being
so,
the
only
issue
before
them
was
whether
L’s
profit,
not
being
a
profit
from
a
concern
in
the
nature
of
trade
and,
therefore,
not
taxable
under
Case
I
of
Schedule
D
of
the
Income
Tax
Act,
1918,
could
be
taxable
as
a
profit
under
Case
VI
of
Schedule
D
and
they
held
that
it
could
not.
If
it
was
not
an
adventure
or
concern
in
the
nature
of
trade,
as
found
by
the
Commissioners,
the
profit
from
it
was
not
taxable.
There
was
no
middle
course.
As
Lawrence,
L.J.,
put
it
in
the
Court
of
Appeal,
at
page
301
:
“I
have
the
greatest
difficulty
in
seeing
how
an
isolated
transaction
of
this
kind,
if
it
be
not
an
adventure
in
the
nature
of
trade,
can
be
a
transaction
ejusdem
generis
with
such
an
adventure
and
therefore
fall
within
Case
VI.
All
the
elements
which
would
go
to
make
such
a
transaction
an
adventure
in
the
nature
of
trade,
in
my
opinion,
would
be
required
to
make
it
a
transaction
ejusdem
generis
with
such
an
adventure.
It
seems
to
me
that
in
the
case
of
an
isolated
transaction
of
purchase
and
re-sale
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
re-sale
of
property.
If
in
such
a
transaction
as
we
have
here
the
idea
of
an
adventure
in
the
nature
of
trade
is
negatived,
I
find
it
difficult
to
visualize
any
source
of
income,
to
to
appreciate
how
such
a
transaction
can
properly
be
said
to
have
been
entered
into
for
the
purpose
of
providing
income
or
revenue.”
This
is
plainly
not
a
statement
that
an
isolated
transaction
of
purchase
and
re-sale
of
property
is
not
an
adventure
in
the
nature
of
trade.
It
was
made
with
an
acceptance
of
the
Commissioners’
finding
that
it
was
not
such
an
adventure
and
without
any
attempt
to
assess
the
facts
of
the
transaction
independently.
The
idea
of
an
adventure
in
the
nature
of
trade
having
thus
been
negatived
by
the
Commissioners,
there
was
no
other
source
of
taxable
profit.
The
case
affords
a
striking
illustration
of
the
care
that
must
be
taken
in
applying
an
English
income
tax
decision
to
a
Canadian
case.
There
the
Court
was
faced
with
the
compli-
cation
resulting
from
the
fact
that
it
was
bound
by
the
finding
of
fact
made
by
the
Commissioners,
a
complication
that
does
not
exist
in
Canada.
If
the
facts
in
that
case
had
come
before
a
Canadian
Court
it
would
have
been
open
to
it
to
find
that
they
did
constitute
an
adventure
in
the
nature
of
trade.
In
view
of
this
feature
of
the
case
the
decision
in
Leeming
v.
Jones,
whatever
its
value
in
the
United
Kingdom
particularly
in
the
light
of
the
decision
in
Edwards
v.
Bairstow
(supra),
is
of
little,
if
any,
value
in
Canada.
Certainly,
it
is
of
no
value
to
the
respondent.
In
addition
to
the
negative
propositions
established
by
the
cases
they
also
lay
down
positive
guides.
There
is,
in
the
first
place,
the
general
rule
that
the
question
whether
a
particular
transaction
is
an
adventure
in
the
nature
of
trade
depends
on
its
character
and
surrounding
circumstances
and
no
single
criterion
can
be
formulated.
But
there
are
some
specific
guides.
One
of
these
is
that
if
the
transaction
is
of
the
same
kind
and
carried
on
in
the
same
way
as
a
transaction
of
an
ordinary
trader
or
dealer
in
property
of
the
same
kind
as
the
subject
matter
of
the
transaction
it
may
fairly
be
called
an
adventure
in
the
nature
of
trade.
The
decisions
of
the
Lord
President
in
the
Livingston
case
(supra)
and
the
Rutledge
case
(supra)
support
this
view.
Put
more
simply,
it
may
be
said
that
if
a
person
deals
with
the
commodity
purchased
by
him
in
the
same
way
as
a
dealer
in
it
would
ordinarily
do
such
a
dealing
is
a
trading
adventure:
vide
Lord
Radcliffe’s
reasons
for
judgment
in
Edwards
v.
Bairstow
{supra).
And
there
is
the
further
established
rule
that
the
nature
and
quantity
of
the
subject
matter
of
the
transaction
may
be
such
as
to
exclude
the
possibility
that
its
sale
was
the
realization
of
an
investment
or
otherwise
of
a
capital
nature
or
that
it
could
have
been
disposed
of
otherwise
than
as
a
trade
transaction
:
vide
the
reasons
for
judgment
of
Lord
Sands
in
the
Rutledge
case
(supra).
And
there
is
the
statement
of
Lord
Carmont
in
the
Reinhold
case
(supra)
that
there
are
cases
‘
4
where
the
commodity
itself
stamps
the
transaction
as
a
trading
venture.’’
In
my
opinion,
the
principles
laid
down
in
the
Rutledge
case
(supra),
the
Fraser
case
(supra)
and
the
Edwards
v.
Bairstow
case
(supra)
are
applicable
to
the
present
case
and
I
have
no
hesitation
in
holding
that
the
respondent’s
purchase
and
sale
of
1,500
tons
of
lead
was
an
adventure
in
the
nature
of
trade.
I
do
not
see
how
it
could
possibly
have
been
anything
else.
His
transaction
was
certainly
an
adventure,
a
bold
and
imaginative
one
and
highly
successful,
both
for
the
Company
and
for
himself,
and
the
only
question
is
whether
it
was
in
the
nature
of
trade.
If
the
alternatives
are
whether
it
was
of
a
capital
nature
or
in
the
nature
of
trade
I
am
unable
to
see
how
there
can
be
any
doubt
of
which
it
was.
The
nature
and
quantity
of
its
subject
matter,
namely,
1,500
tons
of
lead
requiring
22
carloads
to
carry
it,
excluded
any
possibility
that
it
was
of
an
investment
nature
involving
the
realization
of
a
security
or
resulted
in
a
fortuitous
accretion
of
capital
or
was
otherwise
of
a
capital
nature.
It
is
plain
that
the
respondent
had
no
considerations
of
a
capital
nature
in
mind.
The
nature
and
quantity
of
the
subject
matter
of
the
transaction
were
such
as
to
exclude
the
possibility
that
it
was
other
than
a
transaction
of
a
trading
nature.
The
respondent
could
not
do
anything
with
the
lead
except
sell
it
and
he
bought
it
solely
for
the
purpose
of
selling
it
to
the
Company.
In
my
judgment,
the
words
of
Lord
Carmont
in
the
Rheinhold
case
(supra)
that
‘‘the
commodity
itself
stamps
the
transaction
as
a
trading
transaction’’
apply
with
singular
force
to
the
respondent’s
transaction.
Moreover,
he
dealt
with
the
lead
in
exactly
the
same
manner
as
any
dealer
in
imported
lead
would
have
done.
He
bought
it
from
abroad
and
sold
it
to
a
user
of
lead
in
Canada,
namely,
the
Company.
If
it
had
bought
the
lead
it
would
have
been
subject
to
tax
on
the
profit
made
by
it
on
the
sale
of
its
products
fabricated
from
the
lead
so
bought.
The
respondent
merely
did
what
the
Company
would
have
done
if
his
judgment
in
the
matter
had
prevailed.
But
since
the
Company
was
not
permitted
by
the
parent
company
to
deal
in
the
lead
the
respondent
dealt
in
it
himself
and
did
so
exactly
in
the
same
manner
as
a
trader
or
dealer
in
imported
lead
would
have
done.
This
brings
his
transaction
within
the
decisions
of
the
Lord
President
in
the
Livingston
and
Fraser
cases
(supra).
It
was
a
dealing
in
lead
and,
as
such,
it
was,
in
the
words
of
Lord
Radcliffe
in
Edwards
v.
Barstow
(supra),
essentially
a
trading
adventure.
It
is
of
no
avail
to
the
respondent
that
when
he
purchased
the
lead
he
did
so
without
any
intention
of
selling
it
to
the
Company
at
a
profit.
He
did
not
pretend
that
his
purchase
was
for
an
investment
purpose.
All
his
reasons
were
business
reasons
of
a
trading
nature.
His
adventure
was
a
speculative
one.
When
lead
prices
broke
others
in
the
industry
were
unwilling
to
gamble
but
he
did
not
hesitate.
He
saw
advantages
of
a
business
nature
in
the
transaction
and
these
outweighed
with
him
the
risk
of
loss
which
he
undertook.
He
calculated
that
the
advantages
outweighed
the
risk
and
he
deliberately
assumed
it.
He
was
justified
in
his
speculative
venture.
The
Company
got
the
benefit
of
a
substantial
drawback
of
approximately
$30,000.
The
respondent
was
rehabilitated
with
the
Company
and
in
his
own
self
esteem.
He
made
up
for
his
remissness
in
making
a
bad
deal
causing
a
substantial
loss
to
the
Company
through
relying
on
a
verbal
agreement
with
the
Canadian
supplier.
And
he
succeeded
,
iff-****
getting
better
supply
terms
from
the
Canadian
supplier.
As
for
himself
his
venture
brought
him
the
personal
satisfac
*of
victory
as
well
as
an
increase
in
salary
and
pension
rights.
These
possible
advantages
were
all
contemplated
by
him.
The
evidence
indicates
that
he
entered
into
the
transaction
for
a
variety
of
purposes
but
they
were
all
of
a
business
nature
and
many
of
them
were
similar
to
those
that
would
have
motivated
a
trader.
His
transaction
was
a
dealing
in
lead
and
nothing
else.
I
am,
therefore,
of
the
opinion
that
the
respondent’s
transaction
was
an
adventure
in
the
nature
of
trade
within
the
meaning
of
Section
127(1)
(e)
of
The
1948
Income
Tax
Act,
and
that
his
profit
from
it
was
profit
from
a
business
within
the
meaning
of
Section
3
of
the
Act
and
that
the
Minister
was
right
in
including
it
in
the
assessment.
In
view
of
this
finding
it
is
unnecessary
to
consider
the
alternative
contention
put
forward
by
counsel
for
the
Crown
that
the
respondent’s
profit
came
from
an
office
or
employment.
The
result
is
that
the
appeal
from
the
decision
of
the
Income
Tax
Appeal
Board
must
be
allowed
and
the
Minister’s
assessment
restored
except,
as
already
stated,
that
the
amount
of
profit
to
be
assessed
should
be
$70,098.80
instead
of
$83,712.24.
And
the
appellant
is
entitled
to
costs.
Judgment
accordingly.
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