The plaintiff constructed or acquired for renovation seven rent-producing properties over the period 1973 to 1976, disposed of one property in its 1978 taxation year and the others in its 1980 taxation year. It also sold an undeveloped property in its 1977 taxation year, within one year of the property's acquisition, due to a change of plans.
It was found that the intention of the plaintiff to hold the properties as long term investments was evidenced by the length of the leases that were obtained and the high quality of the buildings' construction. The decision to accept an offer to purchase the bulk of the properties in the 1980 taxation year was a response to the announcement by the government of plans to construct a major office building complex in the area, which would have an adverse effect on the taxpayer's rental properties. Cullen J also stated (at p. 6562):
...it is necessary to look at the fact that in no instance were any of the properties ever offered for sale and the two offers which were accepted...were unsolicited.
All the gains were capital gains.