Mahoney,
J.:—The
learned
trial
judge
misstated
the
test
of
secondary
intention
propounded
in
Racine
et
al.
v.
M.N.R.,
[1965]
C.T.C.
150;
65
D.T.C.
5098,
when
he
asked
himself
"did
Mr.
Bean
have
in
his
mind
the
thought
that
he
might
sell
at
a
profit?"
Secondary
intention
requires
not
only
the
thought
of
sale
at
a
profit
but
that
the
prospect
of
such
a
sale
be
an
operating
motivation
in
the
acquisition
of
the
capital
property.
That
misstatement
of
the
test
taken
with
his
failure
to
find
facts
that
brought
the
transaction
within
the
test,
that
is
his
failure
to
find
that
the
prospect
of
the
resale
of
Crystal
Manor
at
a
profit
had,
in
fact,
been
an
operating
motivation
in
its
acquisition,
leads
us
to
conclude
that
the
learned
trial
judge
erred
in
law
in
finding
that
the
disposition
of
Crystal
Manor
resulted
in
a
trading
profit.
The
appeal
will
be
allowed
with
costs
here
and
in
the
Trial
Division.
The
appellant's
1971
income
tax
return
will
be
referred
back
to
the
Minister
of
National
Revenue
for
reassessment
on
the
basis
that
the
gain
on
the
sale
of
Crystal
Manor
was
a
gain
on
capital
account.
Appeal
allowed.
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