Walsh,
J:—This
is
an
appeal
of
the
income
tax
reassessment
of
the
late
Edward
R
Bibby
for
the
taxation
years
1978
and
1979
whereby
the
Minister
of
National
Revenue
included
the
sum
of
$23,331
as
a
taxable
capital
gain
in
respect
of
the
disposition
of
certain
property
in
Cambridge,
Ontario.
Plaintiff
is
the
executrix
of
the
estate
of
the
late
Edward
R
Bibby.
Prior
to
valuation
date,
December
31,
1971,
he
had
acquired
certain
lands
and
premises
legally
described
as
part
of
Lots
2,
3
and
4,
Concession
10,
Township
of
North
Dumfries
and
part
of
Lot
3,
Concession
9,
Township
of
North
Dumfries
all
in
the
County
of
Waterloo
consisting
of
approximately
170
acres.
In
a
transaction
which
closed
on
March
31,
1978,
he
conveyed
the
subject
lands
to
an
arm’s
length
purchaser
for
a
consideration
of
$1,883,618
or
approximately
$11,000
per
acre.
The
late
Mr
Bibby
had
obtained
a
written
real
estate
appraisal
report
of
the
subject
lands
dated
April
26,
1978,
establishing
their
value
as
at
valuation
date
December
31,
1971,
as
$527,000
or
$3,100
per
acre.
In
completing
his
income
return
for
the
1978
taxation
year
the
late
Edward
R
Bibby
included
a
taxable
capital
gain
realized
upon
the
sale
of
subject
lands
in
the
amount
of
$109,750
and
established
a
reserve
of
$1,101,382
under
the
provisions
of
subparagraph
40(1
)(a)(iii)
of
the
Income
Tax
Act
as
it
then
was.
In
his
1979
taxation
year,
having
received
no
principal
payments
under
the
mortgage
aforesaid,
his
income
was
calculated
without
including
any
taxable
capital
gain,
the
reserve
remaining
unchanged.
By
notice
dated
June
18,
1981,
the
Minister
of
National
Revenue
reassessed
the
late
Mr
Bibby
in
respect
of
the
1978
taxation
years
utilizing
an
adjusted
cost
base
of
the
subject
lands
of
$231,000
or
$1,360
per
acre
thereby
increasing
the
capital
gain
by
$296,000
after
establishing
a
revised
reserve
of
$1,350,720.
The
1979
taxation
year
return
was
also
reassessed
to
reflect
an
interest
charge
based
on
the
revised
1978
assessment.
Re-assessed
tax
in
the
amount
of
$15,358.94
was
paid
on
July
24,
1981
by
plaintiff
as
executrix
of
the
estate
of
the
late
Edward
R
Bibby
and
on
September
14,
1981,
a
notice
of
objection
was
made
to
the
reassessment.
On
February
22,
1982,
the
assessment
was
reconfirmed
leading
to
the
present
appeal.
Plaintiff
contends
that
the
Minister
calculated
the
adjusted
cost
base
on
the
basis
of
several
comparable
sales
occurring
during
1969
which
did
not
accurately
affect
the
valuation
date
value
as
of
December
31,
1971,
and
furthermore
that
for
a
nearby
comparable
property
the
Minister
of
National
Revenue
in
April
1980
accepted
a
Valuation
Day
value
in
the
amount
of
$2,500
per
acre.
The
only
issue
between
the
parties
therefore
is
the
valuation
of
subject
property
as
of
December
31,
1971
and
in
this
respect
it
closely
resembles
the
valuation
of
real
estate
for
expropriation
purposes.
There
is
one
difference
however.
When
a
property
is
expropriated,
especially
if
it
is
part
of
a
much
larger
area
expropriated
at
the
same
time,
this
will
affect
the
values
of
nearby
comparable
properties,
whether
favourably
or
unfavourably,
so
that
sales
subsequent
to
knowledge
acquired
of
the
expropriation
do
not
normally
give
a
good
indication
of
the
value
to
be
attributed
to
the
subject
property
at
the
date
that
the
expropriation
was
announced.
In
the
present
case
there
is
no
reason
why
subsequent
sales
close
to
valuation
date
of
similar
properties
to
subject
property
cannot
be
used
as
comparables
provided
that
no
new
information
had
become
public
knowledge
in
the
interval
which
would
affect
the
potential
of
the
subject
property
for
development.
One
must
look
at
what
was
general
public
knowledge
as
of
December
31,
1971,
of
municipal,
regional
and
provincial
plans
for
development
of
the
area
in
which
the
subject
property
is
located,
and
determine
that
nothing
further
was
added
to
that
general
public
knowledge
in
the
interval
between
that
date
and
the
date
of
the
comparables
to
be
used
and
that
there
is
no
other
factor
such
as
rapid
escalation
of
inflation
or
changes
in
interest
rates
which
would
make
the
use
of
such
a
comparable
inapplicable.
All
comparables
to
be
used,
whether
before
or
subsequent
to
the
set
date
must
of
course
be
adjusted
for
such
factors
as
time,
location,
suitability
for
development
and
so
forth
in
conformity
with
good
valuation
practice.
It
is
not
unusual
for
experts
to
disagree
to
a
substantial
extent
on
real
estate
valuations
but
normally
they
would
at
least
use
some
of
the
same
comparables,
although
perhaps
attributing
different
significance
to
them.
The
present
valuation
is
somewhat
extraordinary
however
in
that
neither
evaluator
used
any
of
the
comparables
referred
to
by
the
other,
with
each
explaining
during
cross-examination
why
he
had
not
done
so,
and
certain
deeds
were
produced
during
cross-examination
of
other
sales
which
neither
expert
had
used,
with
the
witness
being
cross-examined
attempting
to
explain
why
he
had
not
used
it.
Plaintiff’s
expert
Colin
C
MacDonald
is
a
highly
qualified
real
estate
appraiser
and
consultant
and
member
in
good
standing
of
the
Appraisal
Institute
of
Canada.
He
has
a
Bachelor
of
Science
in
Agriculture
degree
from
the
University
of
Toronto,
Ontario
Agricultural
College
and
certificates
from
the
Canadian
Property
Managers’
Association
and
Ontario
Mortgage
Brokers
Association.
From
1950
to
1960
he
was
Regional
Construction
Supervisor
under
the
Veterans’
Land
Act,
has
been
President
of
Cardinal
Homes
Limited
since
1965
and
an
independent
mortgage
broker
and
appraiser
since
1960,
being
a
lecturer
at
the
Appraisal
Institute
of
Canada
courses
at
Guelph
and
Kitchener
since
1958.
In
his
report
he
states
that
his
assumption
is
that
the
highest
and
best
use
is
for
residential
development.
The
official
plan
was
not
established
for
the
North
Dumfries
Township
as
of
December
31,
1971,
but
it
was
a
well
known
fact
that
annexation
by
the
City
of
Cambridge
was
planned
and
this
would
be
known
to
an
informed
purchaser
and
informed
vendor.
Part
of
North
Dumfries
Township
was
incorporated
into
the
City
of
Cambridge
in
1973,
some
two
years
later
and
the
subject
property
was
included
in
the
part
of
the
Township
which
was
so
incorporated.
He
states
that
while
there
is
a
flood
plain
towards
the
north
of
the
area
the
portion
in
which
the
subject
land
lies
has
been
modified
and
apart
from
the
woods
associated
with
Moffatt
Creek
the
area
is
well
drained
with
no
dramatic
topographic
features.
The
land
is
not
good
for
agriculture.
Paved
Highway
No
8
runs
through
Kitchener
to
the
northwest,
Preston
and
Galt
which
is
nearby,
but
not
adjacent
to
subject
property,
and
on
to
Hamilton
and
is
an
important
highway.
The
southwest
portion
of
subject
property
borders
on
it
and
paved
Highway
43
intersects
with
Highway
8
at
that
point
before
turning
south
where
it
is
known
as
the
Branchton
Road.
Immediately
to
the
south
of
Highway
8
and
west
of
the
subject
property
there
has
been
some
development
with
sixty
dwellings
having
been
built
at
the
time.
In
his
view
an
upward
trend
was
evident
in
1971
for
property
sales,
including
Hespeler
to
the
north
of
Galt
and
Preston
to
the
west,
but
most
of
the
activity
was
to
the
south
of
Galt
near
subject
property.
The
witness
selected
six
comparables
the
first
being
a
sale
in
May
1972
of
an
area
of
140.37
acres
for
$945,000
in
Concession
10
three
lots
to
the
west
of
the
westerly
portion
of
subject
property.
It
was
within
the
limits
of
the
City
of
Galt,
fronting
on
Highway
43
(Myer’s
Road)
formerly
referred
to.
The
witness
testified
that
the
price
works
out
to
$6,732
an
acre.
Comparable
2
is
in
Concession
12
two
concessions
to
the
north
of
subject
property
and
outside
the
limits
of
the
City
of
Galt
but
immediately
adjacent
to
it,
fronting
on
two
roads
leading
to
the
City.
It
comprised
an
area
of
80
acres
which
sold
in
November
1972
for
$525,000
or
$6,562
an
acre.
Comparable
3
is
some
distance
to
the
north,
north
of
the
City
of
Hespeler,
and
sold
in
April
1973
for
$557,694.50
for
101.399
acres
or
$5,500
an
acre.
The
witness
testified
that
he
does
not
consider
it
as
desirable
as
the
subject
property.
Comparable
4
is
also
to
the
north
of
Galt
in
Hespeler,
53,24
acres
having
been
sold
for
$319.440
in
April
1973
or
$6,000
an
acre.
Comparable
5
is
in
Concession
9
six
lots
to
the
west
of
subject
property
and
south
of
Myer’s
Road
on
which
it
fronts,
the
other
side
of
the
road
being
the
City
of
Gait’s
boundary.
It
comprised
an
area
of
35.78
acres
and
sold
in
February
1972
for
$178,900
or
$4,975
an
acre.
Comparable
6
is
in
Concession
10
two
lots
to
the
west
of
subject
property
and
south
of
Highway
8
with
the
corner
of
the
property
touching
that
highway.
It
had
an
area
of
48.912
acres
and
sold
in
September
1974
(it
should
be
noted
that
this
is
nearly
three
years
after
the
valuation
date
we
are
dealing
with)
for
$400,000
or
$8,171
an
acre.
It
should
be
noted
that
none
of
the
comparables
selected
by
Mr
MacDonald
deal
with
sales
which
took
place
prior
to
December
31,
1971.
He
then
selects
three
of
them
Nos
1,
3
and
6
and
states,
after
making
adjustments
for
differences
in
time,
location,
topography,
size,
and
adaptability,
that
he
has
considered
the
anticipated
development
date
of
the
respective
parcels,
based
on
the
availability
of
services
and
demand,
and
applied
a
discount
factor
to
indicate
the
value
of
the
subject
property
in
relation
to
its
development
potential
as
of
December
31,
1971.
He
applied
these
factors
to
the
sale
prices,
arriving
at
a
valuation
of
subject
property
of
$3,128,
$2,998
and
$3,169
respectively.
He
also
takes
note
of
the
agreement
of
sale
of
the
subject
property
dated
September
1977
for
$11,000
an
acre
and
applies
a
discount
factor
to
it
arriving
at
a
valuation
of
$3,291
per
acre
which
he
says
confirms
his
estimated
value
of
$3,100
per
acre
derived
from
the
comparables
he
has
selected.
His
explanation
as
to
how
he
arrived
at
the
discount
factors
he
had
used
was
vague
to
say
the
least.
He
had
made
an
earlier
appraisal
of
the
subject
property
as
of
April
9,
1974,
and
arrived
at
a
valuation
of
18,500
per
acre
which
does
not
concern
us
here.
Some
of
the
comparables
used
are
different.
What
is
of
interest
however
is
that
in
that
report
he
made
the
usual
adjustment
chart
prepared
by
experts
making
adjustments
of
the
selling
price
of
the
comparables
for
size,
for
time,
for
financing
motivation,
for
topography,
and
location,
but
failed
to
do
so
in
connection
with
the
present
report.
While
an
expert
is
entitled
to
form
his
opinion,
if
it
is
to
be
helpful
to
the
Court
he
has
to
explain
the
basis
of
it,
and
the
discount
factors
he
used
in
relating
the
value
of
his
comparables
1,
3
and
6
to
subject
property
were
not
explained
in
his
report
nor
justified
in
his
evidence.
Sale
3
is
in
an
entirely
different
area
to
the
north
of
Hespeler,
and
while
there
is
some
jurisprudence
to
the
effect
that
comparables
need
not
always
be
selected
from
the
immediate
area,
it
is
always
speculative
to
suggest
that
a
comparable
in
an
entirely
different
area
and
adjacent
to
a
different
municipality
has
similar
possibilities
for
development
to
the
property
being
evaluated.
In
reply
to
a
question
from
the
Court
he
said
that
he
had
prepared
no
adjustment
chart
in
the
present
case
as
he
considered
that
his
other
adjustments
were
affected
by
his
time
adjustment
so
he
included
them
in
it,
merely
concluding
that
the
subject
property
might
be
ripe
for
development
10
years
after
1971,
while
the
others
would
be
ready
somewhat
sooner.
When
questioned
as
to
why
he
had
not
considered
a
sale
from
Wilmer
to
DaCunha
on
July
11,
1973,
of
part
of
Lot
2
Concession
9
and
part
of
Lot
2
Concession
10
immediately
to
the
south
of
the
easterly
portion
of
subject
property
for
which
the
price
worked
out
to
$1,000
an
acre,
he
said
that
services
to
it
would
have
to
go
through
the
subject
property
or
go
beyond
the
subject
property
and
up
to
the
property
in
question
on
Highway
8.
He
directed
attention
to
his
Sale
5
which
had
been
sold
before
this
for
$4,975
an
acre
without
even
having
frontage
on
Highway
8
but
would
nevertheless
get
services
earlier
being
immediately
south
of
the
residential
development
in
Galt.
When
questioned
about
Sale
No
6
which
he
had
used
as
a
comparable
on
the
basis
of
a
sale
in
September
1974
for
$8,191
an
acre
he
stated
that
he
was
unaware
that
there
had
been
an
earlier
sale
of
the
said
property
from
Catherine
Louise
Foster
to
Oteva
Investments
Limited
and
Geniss
Limited
on
April
12,
1973,
for
about
$4,327
an
acre.
He
stated
that
had
he
known
this
he
might
have
used
a
different
factor
in
adjusting
the
price,
using
the
factor
of
.4604
which
he
had
used
for
his
No
1
comparable
which
he
estimated
being
nine
years
from
development
instead
of
the
factor
of
.3875
which
he
had
used
for
Comparable
6
which
he
estimated
to
be
10
years
from
development.
It
was
pointed
out
to
him
however
that
if
he
had
taken
the
earlier
sale
as
a
basis
of
comparison
it
would
not
have
been
a
year
closer
to
development
but
a
year
further
than
his
Comparable
6
so
a
lower
factor
would
be
used
rather
than
a
higher
one.
He
then
worked
out
figures
based
on
the
April
1973
price
of
$4,327
an
acre
and
an
eleven
year
estimated
period
for
development
arriving
at
a
value
of
$1,773,
substantially
less
than
his
valuation
of
$3,100
for
subject
property.
The
witness
stated
that
in
his
view
for
a
developer
a
larger
area
property
of
say
178
acres
is
worth
more
per
acre
than
a
smaller
parcel
of
48
acres
as
a
larger
development
can
be
laid
out
on
it.
Defendant’s
expert
A
B
Tonin
has
considerably
less
experience
and
qualifications
than
Mr
MacDonald.
He
has
only
been
a
member
of
the
Appraisal
Institute
of
Canada
since
1976,
although
he
has
been
doing
appraisals
for
the
Department
of
National
Revenue
since
June
1973.
Before
that
he
was
with
a
realty
firm,
The
Niagara
Finance
and
Realty
Company
for
18
years,
being
the
Branch
Manager
eventually.
The
work
was
largely
the
granting
of
mortgages
and
in
effect
what
he
was
doing
was
approving
appraisals
made
by
others
in
his
employ.
He
has
testified
on
five
occasions
before
the
Tax
Review
Board
but
the
Department
of
National
Revenue
has
been
his
only
client
in
connection
with
appraisals.
He
has
never
lived
in
the
Kitchener-Galt
area
and
now
resides
in
Guelph.
Actually
he
was
one
of
Mr
Macdonald’s
students
in
appraisal
courses.
It
is
seldom
a
useful
exercise
however
to
compare
the
relative
qualifications
of
appraisers
and
in
the
present
instance
I
find
his
report
to
be
more
detailed
and
helpful
than
that
of
Mr
MacDonald.
It
was
suggested
in
cross-examination
that
since
he
is
in
the
employ
of
the
Department
of
National
Revenue
he
canhot
be
considered
to
be
a
neutral
witness
but
I
do
not
believe
that
his
report
should
be
rejected
for
that
reason.
The
Court
must
decide
on
the
facts
set
out
in
the
various
reports
on
conflicting
experts
and
determine
which
appear
to
be
more
reasonable
and
justifiable.
While
it
might
have
been
helpful
to
have
his
report
corroborated,
if
that
were
possible,
by
an
entirely
neutral
evaluator
I
do
not
believe
that
there
is
any
requirement
that
the
Department
of
National
Revenue
must
do
so
and
it
would
involve
considerable
additional
expense
if
this
had
to
be
done
in
each
case
where
there
is
a
dispute
as
to
valuation.
The
Department
employs
qualified
appraisers
and
evaluators
and
quite
properly
relies
on
their
judgment
and
if
a
dispute
goes
to
Court
one
would
expect
the
valuation
to
be
supported
by
the
appraiser
who
made
it
as
in
the
present
case.
He
agrees
that
the
highest
and
best
use
of
subject
property
is
as
a
speculative
holding.
There
are
about
115
acres
of
sandy
loam
soil
of
which
about
85
acres
are
workable
with
the
remaining
30
being
bush,
the
rest
of
the
land
being
scrub
bush
or
swamp.
The
property
has
about
1,350
feet
of
highway
frontage.
He
confirms
that
the
Regional
Municipality
of
Waterloo
was
established
by
a
Bill
receiving
Royal
Assent
on
June
30,
1972,
to
take
effect
January
1,
1973.
This
incorporated
Preston,
Hespeler,
Galt
and
parts
of
North
Dumfries
and
Waterloo
Townships
into
the
City
which
is
now
known
as
Cambridge.
He
states
that
although
this
information
was
unknown
as
at
the
valuation
date
it
was
generally
believed
that
part
of
east
part
of
North
Dum-
fries
in
which
subject
property
is
located
would
be
annexed
by
the
City
of
Galt
in
the
foreseeable
future.
An
official
plan
passed
on
June
29,
1971,
expected
to
serve
the
Township
as
a
guide
until
1990
zoned
the
subject
property
as
rural
and
hazard.
He
states
however
that
the
subject
property,
located
in
the
outer
fringe
of
the
City
of
Galt,
had
annexation
potential
as
at
the
valuation
date
but
that
that
development
would
be
in
the
distant
future
as
there
was
a
considerable
amount
of
vacant
land
with
comparative
advantage
between
the
subject
property
and
existing
development
within
the
City
of
Galt.
The
population
of
Galt
was
28,746
in
1961,
34,580
in
1966,
and
39,736
in
1971,
indicating
a
10-year
average
annual
growth
of
3.8%.
He
does
not
consider
that
these
figures
indicate
any
undue
pressure
for
development
lands
or
confirm
development
of
subject
property
within
the
immediate
future
so
that
development
potential
might
well
be
some
20
years
or
more
in
the
future.
For
his
comparables
he
selects
five
properties,
all
different,
as
has
been
noted,
from
those
selected
by
Mr
MacDonald,
two
of
them
having
been
sold
twice.
His
comparable
No
1
with
an
area
of
38.8
acres
was
sold
in
June
1969
for
$60,000
or
a
price
of
$1,548
per
acre.
He
makes
a
time
adjustment
and
location
adjustment
bringing
the
adjusted
price
to
$1,335
per
acre.
This
property
was
in
the
same
concession
as
subject
property,
Concession
10,
two
lots
to
the
west
and
had
a
somewhat
larger
frontage
on
Highway
8
and
a
partial
frontage
on
Highway
97
which
runs
parallel
to
Road
No
3
at
the
northern
boundary
of
Concession
10
and
intersects
Highway
8.
It
is
immediately
adjacent
to
the
City
of
Galt
boundary
and
therefore
is
a
superior
location
than
subject
property
although
it
is
substantially
smaller
in
size.
His
second
comparable
was
sold
twice
in
a
30-month
period.
It
consisted
of
48.7
acres
and
is
located
between
the
lot
represented
by
Sale
No
1
and
the
subject
property,
its
southeast
corner
touching
the
northwest
corner
of
the
westerly
portion
of
subject
property.
Its
only
frontage
on
Highway
8
is
at
its
southwest
corner.
It
was
sold
for
$65,000
or
$1,334
an
acre
in
March
1970.
One
of
the
co-owners
sold
his
one
third
share
to
the
other
co-owners
in
October
1972
for
$24,500
or
$1,509
per
acre.
He
considers
that
it
has
a
10%
better
location
despite
having
less
highway
frontage
than
subject
property,
being
closer
to
development.
There
seems
to
be
little
if
any
significance
in
the
slight
increase
in
price
per
acre
between
March
1970
and
October
1972.
His
third
comparable
was
also
sold
twice.
It
contained
49
acres
and
is
in
Concession
10
immediately
adjacent
to
subject
property
to
the
east.
Part
of
it
adjoins
the
eastern
portion
of
subject
property.
It
has
a
slight
frontage
on
what
is
called
Ripplewood
Road
which
appears
to
join
Highway
8.
It
was
first
sold
in
February
1971
for
$36,000
or
$735
an
acre
and
was
resold
in
November
1972
for
$42,000
or
$857
an
acre.
In
comparing
it
with
the
subject
property
however
he
adds
50%
for
its
inferior
location,
his
adjusted
figures
being
$1,158
and
$1,268
respectively
for
the
two
sales.
His
comparable
No
4
fronts
on
Road
43
(Myer’s
Road)
two
lots
west
of
where
it
joins
Highway
8
and
is
just
outside
the
southeast
corner
of
the
City
of
Galt.
It
contained
108.1
acres
and
was
sold
in
December
1969
for
$86,480
or
$1,600
an
acre.
After
making
time
and
location
adjustments,
the
latter
being
an
adjustment
of
25%
for
its
superior
location,
being
closer
to
Galt,
his
adjusted
figure
is
$1,320
an
acre.
Finally
his
Comparable
5
is
in
Concession
9
immediately
south
of
the
western
portion
of
subject
property
and
south
of
Myer’s
Road
which
it
does
not
touch.
It
has
frontage
on
Road
43
however
which
it
will
be
remembered
made
a
right
angle
turn
to
proceed
south
from
Highway
8,
this
portion
being
known
as
the
Branchton
road.
It
contains
79.3
acres
and
was
sold
in
January
1972
for
$85,000
or
$1,071
an
acre.
His
location
adjustment
is
20%
as
this
is
an
inferior
location
to
subject
property.
After
the
adjustment
he
gives
a
valuation
of
$1,285
an
acre.
Adjustments
for
location,
and
topography
always
are
judgment
decisions,
but
at
least
in
this
report
they
are
fully
documented
and
explained.
He
stated
that
he
did
not
include
the
Wilmer
to
DaCunha
sale
on
July
11,
1973,
in
his
report
although
the
property
is
immediately
south
of
the
eastern
portion
of
subject
property
as
he
felt
it
was
too
far
past
the
valuation
date
to
include.
The
same
applied
to
the
sale
from
Foster
to
Oteva
Investments
Limited
and
Geniss
of
parts
of
Lots
4
and
5
in
Concession
10
of
48.912
acres
in
April
1973
for
$211,648
or
$4,327
an
acre.
This
was
the
sale
which
plaintiff’s
expert
had
omitted
but
had
included
the
property
as
his
sale
No
6
on
the
basis
of
a
sale
in
September
1974
for
$8,171
an
acre.
The
witness
indicated
that
the
rapid
escalation
in
price
from
April
1973
to
September
1974
for
the
identical
property
indicates
the
dangers
in
relying
on
comparables
too
long
after
the
date
for
which
evaluation
is
sought.
When
asked
to
comment
on
Mr
MacDonald’s
comparables
he
said
that
since
Sale
No
1
is
mostly
within
the
City
of
Galt
and
zoned
for
residential
development
with
services
nearby
it
could
be
expected
to
develop
much
sooner
than
subject
property
so
he
had
not
selected
it
as
a
valid
comparable.
He
had
also
omitted
Mr
MacDonald’s
Sale
no
3
north
of
Hespeler,
first
because
it
took
place
in
1973,
too
far
removed
in
time
from
the
valuation
date
for
subject
property
to
be
a
good
comparable,
and
also
because
the
supply
of
development
land
is
somewhat
different
in
the
Hespeler
area
than
east
of
the
City
of
Galt
boundaries.
The
major
highway
401
running
north
of
the
Galt
boundaries
separates
this
area
from
Galt
and
in
his
view
the
potential
for
development
is
south
of
that
highway.
Although
Mr
MacDonald
did
not
use
Sales
2
and
5
in
making
his
adjustments
the
witness
comments
that
Sale
2
being
immediately
east
of
the
City
of
Galt
boundary
with
services
nearby
had
greater
potential
for
earlier
development,
and
that
the
same
factors
affect
Sale
5.
He
believes
that
his
Sale
4
does
not
represent
a
valid
comparable
for
the
same
reason
as
Sale
3,
being
north
of
Highway
401.
In
cross-examination
he
was
shown
photographs
of
some
of
his
comparables
indicating
that
most
of
them
appear
to
be
inferior
in
topography
or
in
the
roads
leading
to
them
from
highways.
When
cross-examined
as
to
the
Wilmer-DaCunha
sale
he
stated
that
he
had
spoken
to
the
vendor
but
was
not
aware
of
the
special
conditions
as
to
occupancy
by
the
vendor
who
could
remain
until
November
1973
and
had
until
June
1974
to
move
his
effects,
and
that
he
could
retain
two
acres
for
his
own
use;
otherwise
the
purchaser
would
pay
$3,000
for
these
two
acres.
Also
there
is
a
power
line
along
the
east
boundary
of
the
property
which
would
render
it
less
desirable
than
subject
property.
Another
witness
Mark
L
Dorfman
was
called
as
an
expert
witness
by
plaintiff
with
respect
to
town
and
regional
planning
so
as
to
indicate
what
information
vendors
and
purchasers
might
have
have
been
expected
to
have
with
respect
to
development
potential
for
the
property
as
of
December
31,
1971.
He
graduated
from
the
University
of
Toronto
in
1969
with
a
Master
of
Science
degree
in
Urban
and
Regional
Planning
and
is
particularly
familiar
with
the
area
having
been
Director
of
Development
for
the
Regional
Municipality
of
Waterloo
from
1973
to
1980
and
Director
of
Planning
for
Transportation
for
that
region
in
1980
and
1981.
Between
1967
and
1973,
the
period
with
which
we
are
concerned,
he
was
senior
planner
for
the
Metropolitan
Toronto
Planning
Board.
He
has
served
as
National
President
of
the
Canadian
Institute
of
Planners
and
a
member
of
the
Executive
of
the
Commonwealth
Association
of
Planners
and
has
taught
at
the
School
of
Urban
and
Regional
Planning,
University
of
Waterloo
since
1975.
He
saw
the
two
MacDonald
appraisal
reports
and
one
of
Alan
L
Smith,
which
plaintiff
did
not
use
in
evidence,
also
the
Department
of
National
Revenue’s
table
of
comparable
sales.
As
a
town
planner
his
opinion
as
to
valuation
of
the
property
was
objected
to
and
the
objection
was
sustained
so
any
material
in
his
report
dealing
with
valuations
must
be
disregarded
although
his
comments
as
to
the
physical
features
of
the
properties
are
admissible.
He
states
that
subject
property
has
a
frontage
of
1,814.19
feet
on
the
north
side
of
Provincial
Highway
No
8
and
is
located
3,500
feet
east
and
5,800
feet
southeast
of
the
municipal
boundary
of
the
City
of
Galt,
being
situated
at
Little’s
Corners
which
consists
of
a
settlement
of
residential
units
at
the
intersection
of
Highway
8,
Myer’s
Road,
and
Branchton
Road
and
had
65
single
family
residential
units
with
a
potential
for
additional
units
on
vacant
lots.
Except
for
8
lots
the
remainder
had
been
developed
by
registered
subdivision
plans.
In
addition
along
Myer’s
Road
and
Highway
8
from
the
subject
property
to
the
limits
of
the
City
of
Galt
there
were
an
additional
56
single
family
residential
units.
Strip
residential
development
along
the
south
side
of
Highway
97
north
of
the
subject
property
consisted
of
35
single
family
residential
units.
There
was
a
major
shopping
centre
and
other
highway
commercial
uses
to
the
northwest
of
subject
property
and
a
public
school
at
Little’s
Corners.
The
Galt
and
Suburban
Official
Plan
was
adopted
on
June
16,
1958,
and
is
still
applicable
to
the
Township
of
North
Dumfries,
the
subject
property
not
being
included
in
the
land
use
designation
of
the
official
plan,
but
to
the
immediate
west
of
the
subject
property
the
lands
are
designated
for
residential
use.
On
June
14,
1971
the
North
Dumfries
Official
Plan
was
adopted
and
submitted
to
the
Minister
of
Municipal
Affairs.
was
extensively
modified
by
the
Minister
and
was
eventually
approved
in
1973
after
the
boundaries
of
the
Township
were
changed.
The
land
use
plan
designated
the
subject
property
as
rural
but
to
the
west,
northwest
and
southwest
of
the
subject
property
the
lands
are
designated
as
future
urban
development.
Along
the
westerly
boundary
of
the
subject
property
the
Township
designated
a
controlled
access
road
forming
part
of
the
side
road
system
serving
the
City
of
Galt.
The
Township
of
North
Dumfries’
Zoning
Bylaw
1289
as
amended
was
approved
by
the
Ontario
Municipal
Board
on
August
1,
1961,
subject
property
being
zoned
as
agricultural.
This
zone
requires
for
a
single
family
residence
a
lot
of
15,000
square
feet
of
area
and
100
feet
of
road
frontage.
Lands
on
the
southwest
side
of
Highway
8
north
and
south
of
Myer’s
Road
are
zoned
as
general
residential.
The
City
Planning
Department
of
the
City
of
Galt
in
April
1971
published
its
study
for
the
southeast
including
the
area
of
the
Township
defined
by
Myer’s
Road
and
Highway
8,
being
a
proposal
in
anticipation
of
annexation
of
these
lands
to
the
City
and
in
preparation
of
an
Official
Plan
for
Galt.
This
study
suggested
that
apartments
be
developed
along
the
southwest
side
of
Highway
8
directly
across
from
the
subject
property,
the
remainder
of
the
area
being
designated
predominantly
for
single
families
and
semi-detached
residential
units.
The
study
was
discussed
at
two
public
meetings
and
reported
in
the
local
newspapers.
In
August
1970
the
Waterloo
County
Area
Planning
Board
published
Report
No
6
entitled
“Alternatives
for
Growth”
and
there
were
public
meetings
to
discuss
various
land
use
patterns
in
Waterloo
County
and
the
southern
part
of
Wellington
County.
Future
controlled
access
roads
were
shown
along
the
westerly
boundary
of
subject
property
to
link
Highway
401
with
a
proposed
Highway
8
bypass.
The
Planning
Board
published
its
final
“Strat
egy
For
Growth”
in
June
1970
recommending
the
long
term
use
of
the
subject
land
to
be
general
urban,
with
a
future
controlled
access
road
now
located
through
the
subject
property
to
the
east.
This
part
of
Mr
Dorfman’s
report
concludes
that
in
1971
it
was
evident
that
urban
development
existed
or
was
planned
in
the
immediate
areas
to
the
north,
west,
and
south
of
subject
property
which
was
however
not
included,
but
that,
with
the
zoning
bylaw
provisions
of
the
day
and
the
fact
that
there
was
no
Official
plan
designation
governing
these
lands
it
was
possible
that
development
of
the
subject
property
could
take
place.
A
subdivision
plan
for
a
large
lot
residential
development
with
internal
public
roads
would
be
considered
by
the
Township
of
North
Dumfries
and
the
Ontario
Department
of
Municipal
Affairs
with
lot
sizes
being
a
minimum
of
15,000
square
feet.
This
would
be
compatible
with
existing
developments
in
Little’s
Corners
and
with
the
adjacent
planned
development
and
would
be
served
with
privately
operated
sewage
treatment
and
water
supply
systems,
which
is
also
consistent
with
adjacent
areas.
In
March
1970,
the
Ontario
Department
of
Highways
revealed
to
the
public
a
proposal
for
a
new
highway
by-passing
Galt
and
Preston
which
would
intersect
with
Highway
8
south
of
the
subject
property
and
on
May
7,
1970,
by
Order-in-Council
this
Highway
8
Bypass
was
designated
as
a
King’s
Highway.
The
intersection
if
the
new
highway
with
the
existing
Highway
8
would
be
approximately
1,670
feet
southeast
of
the
subject
property.
This
part
of
the
report
concludes
that
the
subject
property
is
well
served
by
a
provincial
highway,
two
county
roads,
and,
with
the
proposal
for
the
Highway
8
bypass
with
an
interchange
south
of
the
subject
property
and
an
arterial
road
along
the
westerly
boundary,
provides
the
potential
for
improved
accessibility
from
all
directions.
In
1971
subject
property
was
located
within
the
Township
of
North
Dumfries
but
on
January
1,
1973
it
became
part
of
the
new
City
of
Cambridge.
Public
discussions
concerning
restructuring
of
Municipal
Government
started
as
early
as
1966
and
a
report
of
Doctor
Fyfe,
Commission
chairman
was
presented
to
the
public
in
February
of
1970
recommending
that
the
county
be
reorganized
into
two
large
cities
including
an
enlarged
City
of
Galt
which
would
include
the
subject
property.
The
report
refers
to
the
need
for
enlargement
of
the
City
of
Galt
in
order
“to
provide
room
for
development
for
at
least
10
years”
and
also
that
it
would
“have
assurance
of
elbow
room
for
growth”.
The
Fyfe
report
projected
relatively
high
growth
of
43%
from
1971
to
1981
(the
Tonin
report
had
shown
a
10-year
average
growth
rate
of
3.8%
from
1961
to
1971,
so
the
Fyfe
report
did
not
appear
to
be
overly
optimistic).
In
March
1971
the
Minister
of
Municipal
Affairs
proposed
a
Provincial
Government
policy
for
a
two-tiered
region
with
the
City
of
Galt
expanded
to
take
in
all
of
the
subject
property
and
a
large
portion
of
the
North
Dumfries
Township
and
this
proposal
was
discussed
in
public.
Finally
a
Government
Bill
of
June
1972
provided
for
an
expanded
city
to
include
all
of
the
subject
property
and
define
the
municipal
boundary
in
part
as
the
limit
of
the
designated
Highway
8
bypass.
The
Dorfman
report
concludes
that
it
was
evident
that
in
1971
a
land
owner
would
be
aware
that
the
subject
property
would
be
included
within
the
City
of
Galt
which
would
lead
to
an
improved
level
of
services
to
the
property
with
the
expectation
that
municipal
water
and
sewer
facilities
would
be
planned
for
this
part
of
the
City.
In
cross-examination
the
witness
pointed
out
some
of
the
defects
of
some
of
the
properties
used
by
Mr
Tonin
as
comparables,
illustrating
his
points
by
photographs
which
he
had
taken.
Comparable
2
for
example
has
an
existing
farm
entrance
but
it
is
necessary
to
cross
Moffatt
Creek
to
get
to
the
prop
erty
and
a
bridge
would
have
to
be
constructed
across
it
for
it
to
be
used
for
residential
purposes.
Comparable
3
has
a
gravel
and
tar
road
access
from
Highway
8
but
it
is
a
dead
end
road
and
there
is
a
hydro
line
120
feet
wide
to
the
west
of
the
property.
The
projected
new
highway
No
8
cuts
across
the
southwest
corner
of
Comparable
No
4
and
Comparable
No
5
would
be
bisected
by
the
highway,
only
the
area
to
the
north
being
suitable
for
development.
Plaintiff
called
two
non-expert
witnesses
one
being
Douglas
Witmer
a
mechanical
contractor
who
has
worked
for
21
years
in
the
Galt
area
and
is
a
member
and
Director
of
the
Galt-Preston-Hespeler
Home
Builders
Development
Limited
which
is
comprised
of
local
builders
and
suppliers.
In
the
late
1960s
the
need
to
develop
residential
lots
was
foreseen
and
the
company
was
formed
in
1969
with
30
shareholders.
It
began
buying
land
in
1971
in
the
southeast
section
of
Galt
known
as
the
Moffatt
Creek
area
which
is
where
the
subject
property
is
located.
City
planners
had
indicated
that
this
was
the
general
area
which
they
wished
to
develop.
It
had
ready
access
to
the
industrial
basin
north
of
the
subject
property
east
of
the
city.
The
first
property
bought
was
in
March
1972
being
Mr
MacDonald’s
No
1
comparable
and
the
next
was
in
April
1973
which
was
Mr
MacDonald’s
No
6
comparable
and
which
was
resold
in
September
1974
for
nearly
double
the
price
paid.
Other
properties
to
which
he
referred
which
were
bought
in
1976
and
1979
are
too
remote
from
the
valuation
date
in
the
present
case
to
be
taken
into
consideration.
Frank
Janesek
a
retired
real
estate
broker
now
residing
in
Kitchener
testified.
In
association
with
a
Mr
Fielder
and
a
Mr
Byer,
Oteva
Investments
being
a
Byer
company
and
Geniss
Limited
a
Fielder
company,
they
bought
what
is
Mr
Tonin’s
comparable
No
2
close
to
the
No
8
Highway
in
December
1970
for
$1,334
an
acre
and
he
sold
his
one-third
share
to
his
two
associates
on
October
10,
1972,
at
$1,512
an
acre.
His
evidence
was
somewhat
confused
between
this
property
and
another
property
with
respect
to
which
Mr
Tonin
had
visited
him
to
inquire
why
he
had
sold
below
the
market
price,
and
he
had
explained
that
that
was
because
he
needed
money
at
the
time.
As
is
not
unusual
in
cases
where
the
evaluation
of
real
estate
at
a
given
period
of
time
is
in
issue
the
evidence
is
confusing
and
quite
contradictory
and
it
is
difficult
to
reconcile
Mr
MacDonald’s
comparables
leading
to
his
conclusion
of
a
valuation
of
$3,100
per
acre
for
subject
property
with
Mr
Tonin’s
entirely
different
comparables
leading
to
his
valuation
conclusion
of
$231,000
or
$1,350
an
acre.
Plaintiff
points
out
that
three
of
Mr
Tonin’s
comparables,
namely
Nos
1,
2
and
4
were
sales
at
dates
before
the
Department
of
Highway’s
plan
of
the
bypass
was
known
in
May
1970,
and
in
the
case
of
Comparables
1
and
4
before
the
Fyfe
report
in
February
1970
and
hence
not
as
much
was
known
by
the
public
of
the
development
potential
of
the
property
aS
was
subsequently
known.
On
the
other
hand
Mr
MacDonald
only
relies
on
sales
subsequent
to
December
31,
1971,
two
of
which
are
in
entirely
different
areas
to
the
north
of
Hespeler
or
between
Hespeler
and
Highway
401,
and
all
his
comparables
are
either
within
the
city
limits
of
Galt
or
immediately
adjacent
thereto
and
hence
would
be
expected
to
demand
a
higher
price
than
subject
property
which,
although
well
located,
was
further
away
from
potential
development.
Even
Mr
Witmer
and
his
associates
who
were
acquiring
land
for
development
did
not
make
their
first
purchase
until
March
1972
and
the
property
in
question,
Mr
MacDonald’s
No
1
comparable
was
right
within
the
City
of
Galt
limits
on
the
Myer’s
Road,
and
the
next
acquisition
a
year
later
in
April
1973
was
the
lot
adjacent
to
this
although
just
outside
the
city
limits.
It
was
a
corner
lot
fronting
on
Highway
8.
The
fact
that
the
subject
property
and
adjacent
properties
still
have
not
been
developed
in
1983
cannot
be
taken
into
consideration
as
this
would
be
bringing
hindsight
into
the
evaluation
and
it
is
necessary
to
look
at
what
would
be
in
the
mind
of
a
well
informed
vendor
and
a
well
informed
purchaser
as
of
December
31,
1971.
The
subject
property
is
better
in
topography
and
location
and
more
adapted
to
development
for
residential
purposes
than
many
of
the
nearby
properties
some
of
which
were
used
as
comparables.
It
was
apparent
in
1971
that
the
City
of
Galt
was
growing
at
a
steady
pace
and
that
eventually
residential
development
would
take
place
to
the
east
and
southeast
of
it,
and
some
development
had
already
occurred
at
the
intersection
of
Myer’s
Road
and
Highway
8.
Nothing
is
ever
too
definite
with
respect
to
municipal,
regional
and
provincial
plans
which
are
constantly
being
modified
and
altered
by
further
studies,
and
in
fact
the
subject
property
was
not
eventually
included
in
the
City
of
Galt,
although
Doctor
Fyfe
had
made
this
recommendation
in
his
report
in
February
1970
and
the
Minister
of
Municipal
Affairs
in
March
1971
had
also
recommended
the
expansion
of
the
City
of
Galt
to
take
in
all
of
the
subject
property
and
a
large
portion
of
North
Dumfries
Township.
The
potential
for
development
was
therefore
present
and
known,
but
no
one
could
foresee
when
this
development
would
reach
subject
property
and
whether
it
would
take
10
or
20
years
to
reach
it.
It
has
been
held
in
expropriation
cases
that
when
a
potential
for
development
is
nearly
20
years
distant
it
is
too
remote
to
take
into
consideration
so
as
to
add
any
substantial
amount
to
the
value
of
subject
property.
A
developer
may
well
be
willing
to
invest
his
money
and
wait
patiently
for
10
years
but
is
less
likely
to
wait
for
20.
It
would
require
a
speculative
developer
willing
to
wait
for
a
considerable
length
of
time
and
overcome
many
obstacles
to
become
purchaser
of
the
property
in
1971.
Nevertheless
some
value
must
be
attributed
to
this
potential,
and
although
it
is
too
remote
to
be
used
as
a
comparable
the
fact
that
the
subject
property
sold
for
$11,000
an
acre
in
1977,
when
it
would
only
be
some
six
years
closer
to
potential
development,
gives
some
indication
of
a
fairly
rapidly
escalating
trend
of
prices.
While
it
has
frequently
been
held
that
a
Court
should
not,
after
considering
all
the
expert
and
other
evidence
merely
adopt
a
figure
somewhere
between
the
figure
sought
by
the
contending
parties,
it
has
also
been
held
that
the
Court
may,
when
it
does
not
find
the
evidence
of
any
expert
completely
satisfying
or
conclusive,
nor
any
comparable
especially
apt,
form
its
own
opinion
of
valuation,
provided
this
is
always
based
on
the
careful
consideration
of
all
the
conflicting
evidence.
The
figure
so
arrived
at
need
not
be
that
suggested
by
any
expert
or
contended
for
by
the
parties.
Taking
all
this
into
consideration
I
have
reached
the
conclusion
that
a
valuation
of
$2,500
an
acre
for
the
subject
property
as
of
valuation
date
December
31,
1971
would
be
fair
and
equitable
and
the
matter
will
be
referred
back
to
the
Minister
for
reassessment
of
plaintiff's
capital
gain
on
the
resale
of
the
property
on
the
basis
of
this
figure.
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