Balmoral Investments Ltd. v. The Queen, 97 DTC 802, [1997] 1 CTC 2372 (TCC)

O’Connor J.T.C.C.: - These appeals were heard at Vancouver, British Columbia on September 19, 1996.

Testimony was given on behalf of the Appellant by Dominic Petraroia, its vice-president and general manager, and by Diane Mombourquette, a chartered accountant retained by the Appellant. Testimony on behalf of the Minister of National Revenue (“Minister”) was given by Brian Lee Buchanan, a Revenue Canada auditor and appeals officer. Exhibit A-l containing 14 tabs was produced by consent of both counsel. Tabs 13 and 14 of Exhibit A-l, as well as Exhibit A-2, also produced, were prepared by Ms. Mombourquette.

Issue

The issue is whether, in the Appellant’s taxation years ended August 31, 1990 and August 31, 1991, (a) certain interest earned by the Appellant on term deposits and (b) net interest on a balance of price owing pursuant to an Agreement for Sale of one of the Appellant’s hotels, constituted active business income or income from a source which is property.

Facts

1. The Appellant is a Canadian controlled private corporation incorporated in 1967 pursuant to the laws of British Columbia. It was in the business of owning and operating hotels in the Province of British Columbia.

2. Its shareholders and their respective percentages were Dominic Petraroia, the vice-president and general manager 25%, Dominic’s mother 35%, Dominic’s father 35% and Dominic’s sister 15%.

3. The Appellant was incorporated originally for the purposes of acquiring the Balmoral Hotel in Nanaimo, British Columbia. It did so in 1967.

4. The Appellant’s next hotel acquisition was in May of 1986 when it purchased the Coach House Inn, a 90 room hotel in North Vancouver (“Coach House”).

5. In the fall of 1989 the Appellant, although not anxious to sell, received an offer to purchase the Coach House from an arm’s length purchaser for $6.25 million. The purchaser was to pay $2 million cash and arrange financing from the Toronto Dominion Bank (“T.D.”) for $4.25 million.

6. At the time of the offer, T.D. already held a first mortgage of approximately $2.8 million on the Coach House (“T.D. Mortgage”) and indicated to the Appellant that it would charge a penalty of $100,000 if the mortgage was to be paid prior to its due date of May 5, 1992.

7. The Appellant therefore made a counter offer to the purchaser for $6.35 million with $2 million payable on closing and the balance of $4.35 million to be carried under an Agreement for Sale. It was also understood that the purchaser would eventually obtain its own financing and the T.D. Mortgage would be retired by the Appellant including the prepayment penalty. The purchaser did not assume the T.D. Mortgage.

8. The Agreement for Sale, was finalized and registered November 30, 1989. The balance owing thereunder of $4.35 million was due May 5, 1992, the same date that the T.D. Mortgage was due. However the purchaser had the right to prepay.

9, In anticipation of and after the sale of the Coach House the Appellant wished to acquire one or more other hotels. The Appellant’s accountant had explained that would be wise because the replacement property provisions of the Income Tax Act (“Act”) would defer recognition of the capital gain and recapture of capital cost allowance on the sale of the Coach House. Dominic Petraroia explained further that he wanted to continue running hotels, that, in effect, it was in his blood since an early age, having actually been raised in the Balmoral Hotel.

10. The Appellant examined several properties and finally purchased, for $3.6 million, the Craigflower Motel in Victoria, British Columbia with possession for June, 1990. The Appellant also purchased, for $3.1 million, the Waddling Dog Inn in Victoria, British Columbia in May, 1991.

11. Of the $2 million Coach House proceeds the Appellant (a) applied $1,210,333 towards the purchase price of the Craigflower Motel; (b) paid to Dominic Petraroia his shareholder loan to the extent of $257,600; and (c) applied $645,000 as the downpayment to acquire the Waddling Dog Inn. These amounts total more than $2 million. The excess came from other funds of the Appellant. This is shown at Tab 13 of Exhibit A-l.

12. In 1992, the purchaser of the Coach House was unable to arrange third party financing and the Appellant agreed to an extension of the Agreement for Sale for six months upon payment by the purchaser of $750,000 thereby reducing the amount owing under the Agreement for Sale to $3.6 million. The Appellant used the $750,000 to retire part of the financing on the Waddling Dog Inn.

13. In December of 1992, the purchaser of the Coach House defaulted on the Agreement for Sale. The purchaser wanted a further extension but this was refused by Dominic Petraroia as, in his words, “The Appellant was not in the banking business.” Consequently the Appellant subsequently foreclosed on the Agreement for Sale and reacquired the Coach House.

14. In its taxation year ended August 31, 1990, the Appellant earned the following net interest income from the Agreement for Sale and from funds realized from the sale of the Coach House and invested in term deposits having maturity dates not exceeding 90 days:

Amount/Item

$63,025.00: term interest on investment of Coach House sales proceeds $43,300.00: term interest on investment of Coach House sales proceeds $20,546.00: term interest on investment of Coach House sales proceeds

$96,659.00: net interest income on Agreement for Sale, i.e. grossinterest received of $420,003.00 less interest expense of Appellant on the T.D. Mortgage of $323,344.00

$223,530.00: Net interest income

15. In its taxation year ended August 31, 1991 the Appellant earned net interest income from the Agreement for Sale as follows:

Amount/Item

$552,652.00: interest on Agreement for Sale

($334,088.00): interest expense of Appellant on the T.D. Mortgage $218,564.00: net interest income

16. Ms. Mombourquette prepared and submitted to the Court certain statements at Tab 13 of Exhibit A-1. The first statement establishes, inter alia, the facts set forth above in paragraph 11.

The second statement at Tab 13 demonstrates, excluding the interest on the term deposits and under the Agreement for Sale and the interest paid by the Appellant on the T.D. Mortgage, that commencing in April 1990 and continuing to August 31, 1991, the bank balance for the Appellant was (with minor exceptions) in a negative position.

17. Another statement, prepared by Ms. Mombourquette at Tab 14, shows total cash of the Appellant from all operations. I reads:

“Balmoral Investments Ltd.
Comparison of Bank Account Balances
1990-1991
			(1)		(2)	(3)		(4)	1+2+3+4
	Coach House		Adjusted	Balmoral		Waddling Dog		Creigflower	Total
Month		340162	340162(	339521X2)		1022-689		4222873	Cash
								4222873
Month		340162	340162(1)	339520(2)		1022-689
1229
Jan		$4,839.61	42,011.86		104,206.00				146,217.88
Jan		54,839.61	42.011.86		104,206.00
cb		45,002.69	19,347.19		111,269.98				130,637.17
Feb		45,002.69	19.347.19		Il 1489.98
Mar		46,436.57	7,95332		111,09830				119,051.62
Apr		47,140.22	(4,170.78)		87,556.10				$3,385.32
Apr		47.14042	(4,170.78)		87,556.10
May		14,829.85	(49,308.90)		53,871.70				4,562.80
May		14,829.15	(49308.90)		53,871.70
Jun		20,407.66	(56,558.84)		69,695.45			82,204.58	95,341.19
Jun		20.407.66	(56.558.84)		69.695.45			82404.58
Jul		24,873.57	(64.920. 8)		37,948.32			51.662.92	24,691.06
Jul		24,873.57	(64,920.18)		37.94832			51,662.92
		21.808.02	(67.985.73)		66,937.07			147,850.60	146.801.94
Aug		21,808.02	(67,985.73)		66,937.07			147,850.60
129.1
		21,633.26	(80.987.74)		64,587.81			163,447.75	147,047.82
Sep		21,633.26	(80.987.74)		64387.81			163,447.75
0::		31,264.61	(84. 83.64)		84,032.59			198,355.00	198,203.95
Oct		31,264.61	(84,183.64)		84.03239			198,355.00
Nov		32,785.86	(95,489.64)		108,10539			183,245.75
Nov		32.785.86	(95.489.64)		108,105.39			183,245.75	195,861.50
Du:		42.0 0.1	(99,092.64)		129,796.69			160,896.53	191,60038
Dec		42,010.11	(99,092.64)		129,796.69			160,896.53
Jan		48,10936	(105.820.64)		152.478.03			165,434.04	212,091.43
Feb		57.336.61	(109,420.64)		158.577.67			169,907.64	219,064.67
Feb		$7,336.61	(109,420.64)		15837747			169,907.64
		19,380.61	(113,020.64)		61,624.37			154,573.84	103,177.57
Mar		19380.61	(113.020.64)		61,62437			154373.84
		48.847.64	(143,564.11)		75,621.74			126,703.74	$8,761.37
Apr		48.847.64	(143,564.11)		75,621.74			126,703.74
May		48,592.60	(203,829.65)		16,192.13	19,995.50		70,290.52
									(97,351.50)
		10,636.60	(207,429.65)		136,658.63	46,108.63		48,283 .86	23,621.47
								48483.86
Jun		10,636.60	(207,42945)		136,65843	46,108.63
			1.029.65)		13,340.67	58,702.74		58,342.95	19,356.71
Jul		67,047.10	(211,029.65)		113340.67	$8,702.74		$8,342.95
		29,091.10	(214,629.65)		115.411.81	(3) 344,228.82		116,663.64	361,674.62
Aug		29,091.10	(214.629.65)		115,41141	(3)344.228.82		116,663.64
(1) This column represents the balances in the Coach House account adjusted to remove the interest received under
the] agreement for sale and the interest paid on the mortgage.
(2) The bank statements were not located for this account in 1990 therefore the reconciled balance as record										the
G/L was used.
(3) From this amount, a 300,000 ayment was made on the Waddling Dog on September 1, 1991”
18.	Exhibit A-2 expresses the interest income earned on the Agreement for Sale and the term
deposits as a percentage of gross income. It reads:
“Total Income from Operations
				1989		1990			199)
				1989		1990
Baimora!			8-1 149,610			8-1	3,370		11-3 79,300
Balmoral			8-1 149,610			8-1	3370
Coach House			8—2	16,535		8-2 63,540			11-4 (1,331)
Coach House			8-2	16335		8-2 63340
Craigflower						8-3 99,481			11-5 (30,109)
Waddling Dog									116 6.552)
				166,145					41,308
Income from Operations							166391
				100%			63%			16%
				100%			63%
interest Income						8-2 420,003		11-4 552,652
Interest Expense						8-2 (323.344)		11-4 334.088)
Interest Expense						8-2 (323344)
							96.659		218.564
							37%			84%
							37%
						263.050			232,872"
Total Income				166,145
[Note the references to 8-1 to 8-3 and 11-3 to 11-6 are references to the respective page numbers
of the financial statements of the Appellant at Tabs 8 and 11 of Exhibit A-1]

19. Mr. Petraroia testified that the hotel business fell off in October of each year and that reserves were needed heading into the off-season estimated by him at $300,000. He always wanted a “cushion” of this amount but especially heading into the “off’ season when ongoing revenues fell.

Submissions of the Appellant

Counsel for the Appellant submits that one must examine the whole picture of the continued hotel operations by the Appellant. One should not take a snapshot of a particular period and simply look at the sale of the Coach House and the investments representing the sale proceeds and interest earned thereon. He concedes that the Appellant was not in the business of buying and selling hotels but was in the business of running hotels and that the moneys owing under the Agreement for Sale and the term deposits (both collectively hereinafter referred to as “monies”) were earmarked to purchase hotels. In order to run hotels you have to acquire them and since the moneys were earmarked for acquisition, therefore they were not held as investments but rather were used and relied on in business operations. Counsel pointed to Tabs 13 and 14 of Exhibit A-l and submitted that the business necessarily relied on the interest earned on the moneys. Counsel referred to various authorities.

Submissions of the Respondent

Counsel for the Respondent submits that one cannot simply look at the interest on the monies as being necessary in the business but rather one must actually find that the moneys themselves are used in or pertain to the running of the business; that the business must be dependant on the moneys. The business is running hotels and this does not extend to the purchase and sale of hotels. Counsel also referred to various authorities.

Law

The most relevant provisions of the Act are 125(7)(a) (active business income carried on by a corporation), 125(7)(c) (income from an active business), and 129(4.1) (income from a loss from a source which is property), which read as follows:

125(7) Definitions. In this section,

(a) “Active business”. - “active business carried on by a corporation” means any business carried on by the corporation other than a specified investment business or a personal services business and includes an adventure or concern in the nature of trade;

(c) “Income of the corporation...”. — “income of the corporation for the year from an active business” means the total of ...

(i) the income of the corporation for the year from an active business carried on by it including any income for the year pertaining to or incident to that business, other than income for the year from a source in Canada that is a property (within the meaning assigned by subsection 129(4.1)), and

(ii) the amount, if any, included under subsection 12(10.2) in computing the income of the corporation for the year;

129(4.1) “Income” or “loss”

For the purposes of paragraph (4)(a) and subsection (6), “income” or “loss” of a corporation for a year from a source in Canada that is a property includes the income or loss from a specified investment business carried on by it in Canada other than income or loss from a source outside Canada but does not include income or loss

(a) from any other business,

(b) from any property that is incident to or pertains to an active business carried on by it, or

(c) from any property used or held principally for the purpose of gaining

or producing income from an active business carried on by it.

Analysis

A succinct review of the case law is to be found in the Federal Court Trial Division decision in Irving Garber Sales Canada Ltd. v. Minister of National Revenue, [1992] 2 C.T.C. 261, (sub nom. R. v. Irving Garber Sales Canada) 92 D.T.C. 6498. At pages 269-72 (D.T.C. 6504) and following the Court stated as follows:

Case Law:

A review of available jurisprudence makes it fairly clear that there are no firm lines delineating business income from investment income. As Madam Justice Wilson said in Canadian Marconi v. R., [1986] 2 C.T.C. 465, 1986 D.T.C. 6526, at page 6530, “the distinction between the two is a difficult one to make but it is one which the Act compels us to make”.

Her Ladyship also stated at page 6528 that “The courts have adopted the difficult task ... by applying certain set criteria or indicia of trading activity and, in the case of a corporate taxpayer, by applying a presumption in favour of the characterization of its income as income from a business”. She affirmed that the characterization must be made from an examination of a taxpayer’s “whole course of conduct incurred in the light of surrounding circumstances”. In particular, Madam Justice Wilson, at page 6529, listed the fields of enquiry in that respect by an examination of the number of transactions, their volume, their frequency, the turnover of the investments and the nature of the investments themselves.

I should venture to suggest that these fields of enquiry are only helpful in the light of the particular issue facing the Supreme Court in the Canadian Marconi Company case. That issue was whether the taxpayer was or was not in the investment business which would naturally make of any income earned therefrom business income and not income from property. The taxpayer had investment powers under its corporate charter, a senior officer spent twenty percent of his time managing the investment portfolio, there were as many as twelve employees involved in its administration and transactions were reviewed on a weekly basis to decide on the business strategy for the following week. It was therefore reasonable for the Supreme Court to conclude that all that activity was a business activity constituting any income earned as business income.

Somewhat closer to home as far as more relevant curial pronouncements are concerned is the case of Ensite Ltd. v. R., [1986] 2 S.C.R. 509, [1986] 2 C.T.C. 459, 86 D.T.C. 6521, decided by the Supreme Court of Canada concurrently with the Court’s judgment in the Canadian Marconi case. At page 6525 of her reasons for judgment reported in 86 D.T.C. 6521, Madam Justice Wilson states:

The Legislative scheme was thus to draw a distinction between active business income which would fall under subsections 125 and 125.1 and other sources of income which would fall under susbsection 129. However, it was clearly arguable that income from property which was immersed in the trading activity of the corporation could qualify as active business income. The aforementioned amendment which added the words “other than a property used or held by the corporation in the year in the course of carrying on a business” in parentheses after the words “that is a property” removed this argument and preserved the distinction between active business income and other sources of income. The rebuttable presumption that corporate income is income from a business (see: Canadian Marconi Co. v. R., released concurrently herewith is of no application here as it would tend to collapse the distinction between active business income and other sources of income which Parliament clearly intended to preserve in its amendment of subsection 129(4) of the Act.

The issue before the Supreme Court in the Ensite case was not whether the taxpayer was in the investment business but whether certain income earning deposits were property that was employed or risked in the taxpayer’s business “to such an extent that the income from it could be characterized as active business income”. At page 6525, the Court went on to say:

But “risked” means more than a remote risk. A business purpose for the use of the property is not enough. The threshold of the test is met when the withdrawal of the property would have a decidedly destabilizing effect on the corporate operations themselves....

This would distinguish the investment of profits from trade in order to achieve some collateral purpose such as the replacement of a capital asset on long term...from an investment made in order to fulfil a mandatory condition precedent to trade… Only in the latter case would the withdrawal of the property from that use significantly affect the operation of the business. The same can be said for a condition that is not mandatory but is nevertheless vitally associated with that trade such as the need to meet certain recurring claims from that trade.

These observations by the Supreme Court are drawn of course from a number of decided cases where the appropriate tests had to be in sync with the facts in each case....

On the particular facts facing the Supreme Court of Canada in the Ensite Limited case, it could conclude, at page 6525-26, that:

The test is not whether the taxpayer was forced to use a particular property to do business; the test is whether the property was used to fulfil a requirement which had to be met in order to do business. Such property is then truly employed and risked in the business. Here the property was used to fulfil a mandatory condition precedent to trade; it is not collateral, but is employed and risked in the business of the taxpayer in the most intimate way. It is property used or held in the business.

In Atlas Industries Ltd. v. Minister of National Revenue, 86 D.T.C. 1756, the shoe was on the other foot. It was a matter of the taxpayer claiming that the income from certain short-term deposits constituted investment income while the Crown took the position that such income was income from a business. The issue revolved around the meaning of the terms “is incident to or pertains to an active business” as these terms are found in paragraph 129(4.1)(b) of the Act.

In that case, Christie A.C.J.T.C. reviewed at length a series of cases which had accumulated until that time and to some of which I have previously referred. The Associate Chief Judge, with respect to 1980-81-82 taxation years faced squarely the application of the terms in paragraph 129(4.1 )(b) in relation to a taxpayer engaged in the sheet metal fabrication and roofing business. Surplus funds generated by the taxpayer were in short-term deposits and these funds according to the taxpayer were held on the basis that the taxpayer never required more than $100,000 on hand for operating purposes. The money in the taxpayer’s current account plus its receivables were regarded as sufficient and the term deposits were in fact never used in operations nor involved in meeting future capital requirements.

At page 1764, The Associate Chief Judge said this:

The key question to be addressed is this: were the debts pertaining to the short-term deposits incident to or did they pertain to the appellant’s businesses of fabricating sheet metal and roofing? If the answer is yes the appeal fails. If the converse is correct it succeeds

I am informed that there are no decided cases regarding paragraph 129(4.1 )(b) and I have found none. Nor am I aware of judicial authority that is analogically helpful.

The starting point I think must be that where a corporation is carrying on an active business and it has income from a source in Canada that is a property, that property is not necessarily to be regarded as being incident to or pertaining to the business. If that was intended, presumably Parliament would have said so.

Giving the words “incident to or pertains to an active business” their grammatical and ordinary sense, and bearing in mind their context, there must I think be a financial relationship of dependence of some substance between the property and the active business before the exclusion in paragraph 129(4.1)(b) comes into play. The operations of the business ought to have some reliance on the property in the sense that recourse is had to it regularly or from time to time or that it exists as a back-up asset to be called on in support of those operations when the need arises. This I regard to be the basic approach to paragraph 129(4. l)(b). Whether incomeproducing property has crossed the dividing line into the paragraph will depend on the facts of each case. I am satisfied that the facts under consideration do not place the relevant property within it. The relationship between the debts created by the term deposits and the appellant’s businesses was tangential at best. The debts were never resorted to in aid of the appellant’s businesses nor was there any real expectation that they would be. The fundamental purpose of these term deposits was unrelated to sustaining the appellant’s businesses, but it was to direct the profits therefrom into the hands of the shareholders, primarily by way of bonuses.

In a more recent case, McCutcheon Farms Ltd. v. R., 91 D.T.C. 5047, Strayer, J. of this Court was seized with a corporate taxpayer engaged in grain farming operations as well as in producing and in selling certified seed and selling fertilizers and chemicals supplied by the Cargill Company and Cominco. The taxpayer had considerable surplus funds which it invested in negotiable paper with Cargill, with the Saskatchewan Wheat Pool and with its banker. Over the taxation years 1981-1982-1983, the income earned from these funds represented fifteen to twenty percent of the gross income of the taxpayer and over fifty percent of the net income before taxes.

The taxpayer had taken the position that these funds were necessary to pay expenses. They were also necessary, it was said, to provide for replacement of expensive farm machinery and to permit the acquisition of additional lands.

On the facts, Strayer J. found that these funds had not in fact been used for the alleged purposes, with the exception of one transaction of a relatively minor nature which had occurred prior to the taxation years in question. At page 5051, he adopted the words of Christie A.C.J.T.C., in the Atlas Industries case (supra) that the relationship between the surplus funds and the taxpayer’s business “was tangential at best”. He also relied on the observation of Wilson, J. in the Ensite case, (supra), where she stated that the business purpose for the use of property is not enough and where she regarded that profits held by a business in order to achieve some collateral purpose such as replacement of a capital asset in the long run as not being “employed or risked in the business” and therefore not “property used or held...in the course of carrying on a business”.

It is made abundantly clear from the foregoing review of cases on the subject that the determination of whether income is income from property or business income is essentially one of fact in which regard must be had to all surrounding circumstances. It can truly be said that in that field precedent is an unruly horse.

It can also be said that in providing for a preferential tax treatment for business income in section 125, Parliament imposed a somewhat more artificial or legalistic distinction between the kinds of income which a business may earn. The more traditional doctrine that all income earned by a business is business income might give rise to the rebuttable presumption expressed by Wilson, J. in the Canadian Marconi case, (supra), but it seems to me that what a Court must determine is whether such income is from a business and not by a business.

Another relevant decision is Ben Barbary Co. Ltd. v. Minister of National Revenue, [1989] 1 C.T.C. 2364, 89 D.T.C. 242 (T.C.C.), where Mogan J.T.C.C., in circumstances different, in certain respects, from this

case, held that:

The fact that a corporation, carrying on an active business and holding certain property (i.e. investments) unrelated to the business, uses the income from the property in connection with the operation of the active business does not mean that the property is “incident to or pertains to” the active business.

Are the facts in this appeal such that the criteria established in the leading cases have been met?

After considering all the evidence, including the financial statements at Tabs 8 and 11, the analyses at Tabs 13 and 14 of Exhibit A-l and Exhibit A-2, I am of the opinion that on the facts of this case there was not that sufficient degree of dependance by the active business (running hotels) on the moneys. The Appellant may have needed the moneys to acquire other hotels but this, in my opinion does not in itself make those moneys incident to or pertaining to the active business of the company. The company’s active business was running hotels, not the purchase and sale of hotels. The moneys were not called upon to run the business. As stated by Wilson J. in R. v. Ensite Ltd., [1986] 2 S.C.R. 509, (sub nom. Ensite Ltd. v. R.) [1986] 2 C.T.C. 459, 86 D.T.C. 6521 and endorsed by Strayer in McCutcheon Farms Ltd. v. Minister of National Revenue, [1991] 1 C.T.C. 50, (sub nom. McCutcheon Farms Ltd. v. R.) 91 D.T.C. 5047 (F.C.T.D.):

But “risked” means more than a remote risk. A business purpose for the use of the property is not enough. The threshold of the test is met when the withdrawal of the property would ’’have a decidedly destabilizing effect on the corporate operations themselves....

This would distinguish the investment of profits from trade in order to achieve some collateral purpose such as the replacement of a capital asset on long term...from an investment made in order to fulfil a mandatory condition precedent to trade.... Only in the latter case would the withdrawal of the property from that use significantly affect the operation of the business.

This conclusion would apply a fortiori to an investment of the proceeds of sale of a capital asset.

Tab 14 of Exhibit A-l establishes there was always cash in the bank balances. There is only one instance of a negative balance and that results from not including the interest on the moneys. Similarly the negative balances shown on pages 2 and 3 of Tab 13 and in the second column of Tab 14 result from not including the interest on the moneys.

The financial statements establish that the Appellant was in a relatively healthy position in the years ended August 31, 1989, 1990 and 1991. I believe these statements demonstrate that the monies themselves, as opposed to the interest earned thereon, were not needed in the business.

In McCutcheon, supra, the Federal Court considered high proportions of interest income in relation to overall income important in concluding that the deposits there in question were not business income. The interest in these appeals represented 37% of gross income in 1990 and 84% in 1991.

The moneys represented an investment of capital and a large portion of the moneys were eventually applied to purchase further capital assets. The Appellant may have wanted to continue running hotels however the principal motivation to acquire the Craigflower Hotel and the Waddling Dog Inn appears to have been to take advantage of the favorable tax consequences resulting from the replacement property provisions of the Act.

Admittedly the interest on the moneys was, to an extent, used to pay the expenses of running hotels. In my opinion however that is not sufficient. Although the facts were different in Ben Barbary, supra, I believe the principle enunciated by Mogan J. applies in this case. The tests of dependance and “risked in the business” established in the jurisprudence have to be met.

The Appellant may have wanted a cushion, as do most businesses, but that alone does not establish the degree of dependance required.

For all of the above reasons, the appeals are dismissed with costs.

Appeal dismissed.