Walsh,
J:—These
six
actions
were
by
order
pursuant
to
Rule
1716
joined
for
simultaneous
hearing
on
common
proof.
The
only
issue
is
one
of
fact
namely
the
appropriate
division
of
the
purchase
price
of
property
situated
at
5110
to
5830
Second
Avenue,
Rosemount,
Montreal,
with
the
buildings
thereon
known
as
The
Deauville
Apartments
between
the
amount
attributable
to
the
buildings
and
contents
and
that
attributable
to
the
land.
The
property
in
question
was
sold
by
deed
of
sale
dated
January
28,1969
by
Messrs
Peter
S
Wise,
Myer
Pollock,
Sam
Sokoloff
and
Louis
Burnstein,
the
owners,
to
Messrs
Georges
E
Lemay
and
Claude
Leclerc
for
a
price
of
$650,000
of
which
$350,000
was
attributed
to
the
depreciable
assets.
Because
of
the
income
tax
consequences
it
was
desirable
for
the
vendors
to
establish
the
amount
attributable
to
buildings
and
contents
at
as
low
a
figure
as
possible
to
avoid
taxation
on
recaptured
capital
cost
allowance,
while
similarly
it
was
in
the
interest
of
the
purchasers
to
attribute
as
high
a
value
as
possible
to
the
depreciable
assets
to
be
used
as
a
tax
base
for
capital
cost
allowance
claims
by
them
in
the
years
following
the
purchase.
These
are
not
cases
in
which
the
Minister
made
conflicting
assessments,
having
assessed
the
value
of
the
buildings
and
contents
for
capital
cost
allowance
purposes
at
$429,000
in
the
assessments
of
all
the
parties,
whereas
the
vendors
used
the
figure
of
$350,000
agreed
to
in
the
deed
of
Sale
and
the
purchasers
used
a
different
figure
of
$450,000.
There
is
therefore
a
conflict
between
all
the
parties
although
the
figure
used
by
the
Minister
is
substantially
closer
to
that
of
the
purchasers
than
the
figure
used
by
the
vendors
and
shown
in
the
deed
of
sale.
By
decision
of
the
Tax
Review
Board
on
December
10,
1976,
the
appeal
of
the
purchasers
Doctor
Claude
Leclerc
and
Georges
E
Lemay
was
maintained
and
the
assessments
were
referred
back
to
the
Minister
of
National
Revenue
for
a
new
assessment
based
on
attributing
a
value
of
$450,000
to
the
buildings
and
contents.
In
the
present
proceedings
the
Crown
appeals
from
this
decision
and
Similarly
the
four
vendors,
Messrs
Burnstein,
Sokoloff,
Pollock
and
Wise,
also
appeal
contending
that
the
evaluation
of
$350,000
for
the
buildings
adopted
in
the
deed
of
sale
and
used
in
their
respective
tax
returns
should
be
accepted
and
the
reassessments
dismissed.
In
making
the
reassessments
the
Minister
relies
on
paragraphs
11(1)(a)
and
20(6)(g)
of
the
Act
in
effect
at
the
relevant
time,
being
the
former
Income
Tax
Act
(RSC
1952,
c
148
as
amended)
which
read
as
follows:
11.(1)
Notwithstanding
paragraphs
(a),
(b)
and
(h)
of
subsection
(1)
of
section
12,
the
following
amounts
may
be
deducted
in
computing
the
income
of
a
taxpayer
for
a
taxation
year:
(a)
such
part
of
the
capital
cost
to
the
taxpayer
of
property,
or
such
amount
in
respect
of
the
capital
cost
to
the
taxpayer
of
property,
if
any,
as
is
allowed
by
regulation.
20.(6)
For
the
purpose
of
this
section
and
regulations
made
under
paragraph
(a)
of
subsection
(1)
of
section
11,
the
following
rules
apply:
(g)
where
an
amount
can
reasonably
be
regarded
as
being
in
part
the
consideration
for
dispostion
of
depreciable
property
of
a
taxpayer
of
a
prescribed
class
and
as
being
in
part
consideration
for
something
else,
the
part
of
the
amount
that
can
reasonably
be
regarded
as
being
the
consideration
for
such
disposition
Shall
be
deemed
to
be
the
proceeds
of
disposition
of
depreciable
property
of
that
class
irrespective
of
the
form
or
legal
effect
of
the
contract
or
agreement;
and
the
person
to
whom
the
depreciable
property
was
disposed
of
shall
be
deemed
to
have
acquired
the
property
at
a
capital
cost
to
him
equal
to
the
same
part
of
that
amount.
and
on
Regulation
1100.
It
was
conceded
that
the
Minister
is
not
bound
by
the
distribution
of
the
purchase
price
of
$650,000
between
land
and
depreciable
assets
agreed
to
by
the
vendors
and
the
purchasers
in
the
deed
of
sale
but
is
free
to
make
his
own
assessments
of
the
value
of
the
depreciable
property*.
While
this
case
was
argued
on
the
basis
of
the
issue
being
the
portion
of
the
purchase
price
attributable
to
the
buildings
and
contents
consisting
of
stoves
and
refrigerators,
which
also
come
under
the
classification
of
depreciable
property,
although
at
a
different
rate
of
depreciation
nothing
turns
on
this
distinction
since
once
the
total
figure
for
depreciable
property
has
been
established
there
is
no
issue
before
the
Court
as
to
distribution
of
same
between
the
buildings
and
the
said
equipment.
During
the
course
of
the
hearing
counsel
for
vendors
objected
to
the
introduction
by
purchasers
of
any
evidence
tending
to
alter
the
figures
agreed
to
by
them
in
the
deed
of
sale,
a
valid
written
document.
This
raises
an
interesting
legal
question
as
to
admissibility
of
proof
and
in
litigation
between
vendors
and
purchasers
such
evidence
would
certainly
be
inadmissible.
In
the
present
proceedings
however
although
vendors
and
purchasers
are
in
an
adversary
position
there
is
no
litigation
between
them
the
actions
in
each
case
being
between
them
and
the
Crown.
Since
it
is
conceded
that
the
Crown
is
in
no
way
bound
by
the
figures
in
the
deed
counsel
for
the
Crown
joined
with
counsel
for
the
purchasers
in
contending
that
evidence
attempting
to
establish
how
their
figure
of
$450,000
was
arrived
at
would
have
to
be
admitted
as
the
Crown
would
be
introducing
evidence
attempting
to
establish
the
figure
of
$429,000
and
it
would
be
manifestly
unfair
not
to
permit
purchasers
in
the
actions
between
them
and
the
Crown
to
introduce
any
evidence
in
rebuttal
of
this.
Although
the
introduction
of
such
evidence
is
prejudicial
to
vendors’
contention
that
the
figures
used
in
the
deed
should
be
adopted
it
is
difficult
to
see
how
they
can
validly
object
to
the
introduction
of
such
evidence
in
the
actions
between
the
purchasers
and
the
Crown,
and
since
all
actions
are
to
be
heard
and
adjudicated
on
common
proof
such
evidence
of
necessity
must
be
taken
into
consideration
in
support
of
the
Crown’s
assessments
in
the
actions
between
the
vendors
and
the
Crown.
While
a
substantial
portion
of
the
evidence
was
made
under
reserve
of
these
objections
I
have
concluded
that
the
evidence
heard
is
admissible
in
the
somewhat
unusual
circumstances
of
the
present
joined
proceedings.
I
had
occasion
to
comment
on
the
question
of
admissibility
of
proof
to
contradict
the
contents
of
a
valid
written
agreement
in
the
case
of
MNR
v
Robert
P
Ouellette
and
John
E
Brett,
[1971]
CTC
121;
71
DTC
5094.
The
objection
was
based
on
Article
1234
of
the
Quebec
Civil
Code
which
reads:
1234.
Testimony
cannot
in
any
case,
be
received
to
contradict
or
vary
the
terms
of
a
valid
written
instrument.
The
commentators
and
jurisprudence
on
this
issue
were
discussed
at
pp
134
and
135
[5103]
and
I
concluded
as
follows:
It
must
be
remembered
that
in
the
present
appeals,
although
they
were
argued
as
if
Brett
and
Ouellette
on
the
one
hand,
and
Blauer
on
the
other
were
adversaries,
in
actual
fact
it
is
the
Minister
of
National
Revenue
who
is
the
appellant
and,
as
such,
the
adversary
in
the
cases
of
Ouellette
and
Brett,
and
the
respondent
and
adversary
in
the
case
of
Blauer.
To
hold
that
the
Minister
is
bound
by
the
terms
of
an
agreement
entered
into
between
Brett
and
Ouellette
on
the
one
hand
and
Blauer
on
the
other,
and
cannot
introduce
evidence
to
show
that
use
of
the
term
“goodwill”
in
the
agreement
did
not
represent
the
true
consideration
for
which
the
payment
was
made
could
open
the
door
for
all
sorts
of
agreements
to
be
drawn
up
in
avoidance
of
taxation,
though
I
do
not
suggest
that
this
was
deliberately
done
in
the
present
case,
and
to
hold
further
that
this
is
a
situation
which
only
applies
in
the
Province
of
Quebec
because
of
the
existence
of
Article
1234
in
the
Quebec
Civil
Code
is
a
proposition
which
I
cannot
entertain.
While
Article
1234
of
the
Quebec
Civil
Code
would
have
its
full
application
in
any
litigation
between
Brett
and
Ouellette
on
the
one
hand,
and
Blauer
on
the
other,
arising
out
of
the
interpretation
of
the
dissolution
agreement,
it
can
have
no
application
in
the
present
proceedings
between
the
three
parties
respectively
and
the
Minister
of
National
Revenue
and
I
therefore
hold
the
verbal
evidence
introduced
in
an
attempt
to
interpret
the
agreement
to
be
admissible.
This
as
in
line
with
the
finding
of
Noel,
J
in
Herb
Payne
Transport
Limited
v
MNR,
[1964]
Ex
CR
1;
[1963]
CTC
116;
63
DTC
1075,
in
which
in
commenting
on
the
proper
meaning
to
be
given
to
the
word
“reasonably”
in
paragraph
20(6)(g)
(supra)
he
stated
at
8
[122,
1078]:
The
above
rule
appears
to
be
mandatory
and
would
apply
to
any
case
where
a
disposal
of
depreciable
property
occurs.
It
also,
in
my
opinion,
would
have
the
effect
of
permitting
evidence
with
respect
to
the
reasonableness
of
the
consideration
for
such
depreciated
property
to
be
adduced
notwithstanding
the
ordinary
rules
of
evidence
which,
as
suggested
by
counsel
for
the
respondent,
might
apply
here
to
prevent
contradiction
by
oral
evidence
of
the
terms
of
a
written
document.
While
it
is
true
that
as
counsel
for
vendors
points
out
he
also
stated
at
8
[122,
1078]:
There
is
also
no
question
that
if
the
purchaser
and
vendor
acting
at
arm’s
length,
reach
a
mutual
decision
as
to
apportionment
of
price
against
various
assets
which
appear
to
be
reasonable
under
the
circumstances,
they
should
be
accepted
by
the
taxation
authority
as
accurate
and
they
should
be
binding
on
both
parties.
but
again
this
depends
on
whether
the
apportionment
appears
to
be
reasonable
or
not.
This
decision
was
referred
to
with
approval
by
Thurlow,
J
as
he
then
was
in
the
case
of
Klondike
Helicopters
Limited
v
MNR,
[1966]
Ex
CR
251;
[1965]
CTC
427;
65
DTC
5253,
where
he
stated
at
254
[429,
5254]:
In
applying
this
rule
the
matter
for
determination
is
not
simply
one
of
interpreting
the
contract
or
agreement
or
of
giving
effect
to
its
provisions.
Rather,
when
the
rule
applies
the
problem
is
to
decide,
having
regard
to
all
the
circumstances
of
the
transaction,
what
part
of
an
amount
representing
the
consideration
for
disposition
of
depreciable
assets
of
a
prescribed
classs
and
for
something
else
can
reasonably
be
regarded
as
having
been
the
consideration
for
the
disposition
of
the
assets
of
the
prescribed
class
and
for
the
purposes
of
the
rule
the
amount
so
determined
is
to
be
regarded
as
the
proceeds
of
disposition
of
such
assets
regardless
of
the
form
or
legal
effect
of
the
contract
or
agreement.
As
pointed
out
by
Noel,
J
in
Herb
Payne
Transport
Limited
v
MNR,
in
determining
this
question
evidence
will
be
admissible
which
would
be
excluded
if
the
contract
or
agreement
alone
governed
the
rights
of
the
taxpayer
and
the
Minister
as
parties
to
the
proceeding.
The
making
of
a
contract
or
agreement
in
the
form
in
which
it
exists
is,
however,
one
of
the
circumstances
to
be
taken
into
account
in
the
overall
enquiry
and
if
the
contract
purports
to
determine
what
amount
is
being
paid
for
the
depreciable
property
and
is
not
a
mere
sham
or
subterfuge
its
weight
may
well
be
decisive.
This
latter
case
in
its
turn
was
commented
on
by
Smith,
DJ
in
the
recent
case
of
Her
Majesty
The
Queen
v
Sam
Shok,
Ben
Luff
man,
Benjamin
Stone
and
Waldorf
Hotel
(1958)
Co
Ltd,
[1975]
CTC
162;
75
DTC
5109
in
which
he
Stated
at
171
[5116]:
Here
it
is
noted
that
in
the
Klondike
case
Thurlow,
J
did
not
say
the
weight
of
what
is
said
in
the
agreement,
concerning
depreciable
property,
must
be
decisive,
but
only
that
it
may
well
be
decisive.
He
also
stated
that
it
was
one
of
the
circumstances
to
be
considered.
In
commenting
on
the
decision
of
J
O
Weldon,
QC
in
the
Tax
Review
Board
case
of
Boh
un,
Bohun
and
Reynolds
Construction
Limited
v
MNR,
[1972]
CTC
2325;
72
DTC
1268
in
which
the
judgment
stated
at
2332
[1273]:
It
is
my
opinion
that
paragraph
20(6)(g)
is
not
in
the
Act
for
the
purpose
of
authorizing
the
Minister
to
change
the
breakdown
of
a
purchase
price
in
an
agreement
unless
such
an
agreement
is
a
sham
or
subterfuge.
he
states
at
172
[5117]:
In
my
view,
if
this
statement
is
intended
to
mean
that
in
no
circumstances
can
the
Minister
change
the
breakdown
of
a
purchase
price
unless
he
proves
that
the
breakdown
is
a
sham
or
subterfuge,
it
is
much
too
broad.
The
circumstances
must
be
taken
into
account
and
may
lead
to
a
different
conclusion.
Perhaps
the
best
expression
of
the
principle
involved
is
found
in
the
case
of
Canadian
Propane
Gas
&
Oil
Limited
v
MNR,
[1972]
CTC
566;
73
DTC
5019
in
which
Cattanach,
J
stated
at
577
[5028]:
I
should
think
that
“reasonable”
as
used
in
the
context
of
paragraph
20(6)(g)
does
not
mean
from
the
subjective
point
of
view
of
the
Minister
alone
or
the
appellant
alone,
but
rather
from
the
point
of
view
of
an
objective
observer
with
a
knowledge
of
all
the
pertinent
facts.
It
is
true
that
he
found
that
there
had
been
no
hard
bargaining
between
the
parties
with
respect
to
the
allocation
of
the
purchase
price,
stating
at
579
[5029]:
For
the
foregoing
reasons
I
have
concluded
that
the
apportionment
between
depreciable
property
and
something
else
was
in
effect
unilaterally
done
by
the
appellant
and
that
there
was
in
reality
no
genuine
negotiated
apportionment
as
a
result
of
bargaining
between
the
parties
to
the
agreement
from
which
it
follows
that
the
allocations
in
the
agreements
are
not
decisive
of
what
is
reasonable.
Here
again
this
judgment
is
not
authority
for
the
proposition
for
which
vendors
contend
that
if
there
has
been
hard
bargaining
the
result
arrived
at
must
be
decisive.
It
is
indeed
only
an
element
of
proof
to
which
considerable
weight
must
be
given
but
is
in
no
way
binding
on
the
Minister
in
his
determination
of
what
is
“reasonable”.
I
have
cited
the
above
extracts
at
some
length
not
only
in
connection
with
the
question
of
admissibility
on
which
in
my
view
there
can
be
no
doubt,
but
also
with
respect
to
the
effect
of
an
allocation
made
in
a
valid
written
instrument
after
negotiations
at
arm’s
length
between
the
vendors
and
purchasers
with
nothing
to
indicate
that
the
apportionment
reached
was
a
sham
or
a
subterfuge.
As
vendors’
counsel
contends
that
is
the
situation
in
the
present
case
even
though
purchasers
later,
as
he
contends
in
bad
faith,
departed
from
figures
reached,
claiming
a
larger
sum
as
the
tax
base
for
calculation
of
capital
cost
allowance
of
the
depreciable
assets.
I
believe
that
the
proper
conclusion
to
be
reached
is
that
while
the
terms
of
the
written
agreement
must
be
given
considerable
weight
the
Minister
is
certainly
not
bound
to
accept
allocation
as
being
reasonable
and
that
appropriate
weight
must
be
given
to
other
evidence
in
determining
from
an
independent
point
of
view
what
was
in
fact
a
reasonable
allocation.
The
property
is
a
block
consisted
of
six
subdivision
lots
and
part
of
another
with
five
three
storey
apartment
buildings
erected
thereon
four
of
which
contained
24
apartment
units
and
a
fifth
30
or
a
total
of
126
apartments.
While
the
apartment
buildings
fronted
on
Second
Avenue
in
Rosemount
in
the
City
of
Montreal
which
was
zoned
as
residential
and
limited
to
the
construction
of
this
type
of
building
one
end
of
the
property
had
a
93
foot
frontage
on
Masson
Street
which
is
zoned
for
commercial
use.
The
apartments
are
what
are
known
as
cold
water
apartments,
having
no
central
heating
and
the
total
rental
revenue
for
the
126
units
in
the
year
1969,
the
year
for
which
the
reassessments
were
made,
was
$113,000,
or
approximately
$75
per
month
per
unit.
Rosemount
is
a
working
class
area
of
the
city,
and
the
western
portion
of
same
where
the
subject
property
is
located,
was
at
the
time
almost
completely
developed
with
low
class
rental
housing
of
small
apartment
buildings
such
as
the
present,
quadruplexes
or
row
housing,
with
a
few
commercial
streets
for
small
stores
and
businesses.
The
apartment
buildings
in
question
had
been
built
in
the
early
1950’s
and
had
not
been
well
maintained,
but
were
structurally
sound.
Mr
Lemay
who
has
been
an
architect
since
1954
visited
the
premises
and
entered
five
or
six
of
the
apartments
before
making
the
offer
on
behalf
of
himself
and
his
associate.
The
offer
made
on
December
11,
1968
through
a
real
estate
agent
Raoul
Gauthier
was
for
a
price
of
$650,000
which
was
not
broken
down
between
land,
buildings
or
contents.
On
December
13,
1968,
the
vendors
accepted
the
offer
but
made
a
breakdown
in
price
in
the
amount
of
$315,000
for
land
and
$335,000
for
buildings
including
equipment.
Beside
the
typed
figure
there
is
a
correction
in
ink
initialled
by
Mr
Wise
who
signed
the
offer
on
behalf
of
the
vendors,
changing
the
breakdown
to
$300,000
for
the
land
and
$350,000
for
the
buildings
and
equipment.
This
offer
was
accepted
by
Messrs
Leclerc
and
Lemay.
During
the
course
of
his
evidence
Mr
Wise
testified
that
since
the
counter
offer
was
his
the
changes
were
initialled
by
him
but
evidently
the
purchasers
neglected
to
initial
them.
During
the
course
of
his
evidence
Mr
Wise
testified
that
he
had
originally
believed
that
the
purchase
price
should
be
split
equally
between
land,
buildings
and
contents
with
$325,000
attributable
to
each.
During
the
course
of
negotiations
(presumably
with
the
real
estate
agent)
he
submitted
the
counter-offer
showing
the
evaluation
of
the
buildings
and
contents,
which
is
what
is
in
issue
at
$335,000.
The
increase
to
$350,000
was
requested
by
the
purchaser.
Mr
Lemay
during
the
course
of
his
testimony
stated
that
he
was
not
really
interested
in
the
division
of
the
price
of
$650,00
although
he
admitted
that
he
and
his
associate
had
consulted
their
lawyer,
accountant
and
notary
none
of
whom
seemed
concerned
about
this
division,
according
to
him,
before
making
the
offer.
He
stated
he
does
not
recall
any
negotiations
increasing
the
sum
attributable
to
the
buildings
and
contents
by
$15,000
though
he
conceded
that
this
was
to
the
purchasers’
advantage.
He
was
categoric
however
in
Stating
that
he
did
not
consider
the
figure
shown
in
the
deed
as
binding
him
and
his
associate
with
regard
to
its
fiscal
consequences,
contending
that
this
was
of
no
concern
to
the
vendor.
He
went
so
far
as
to
say
that
he
would
not
have
bought
the
property
at
all
had
he
not
felt
that
the
figure
of
$450,000
could
be
used
as
a
base
for
calculation
of
capital
cost
allowance.
I
find
this
attitude
difficult
to
condone
and
to
say
the
least
it
casts
considerable
doubt
on
his
credibility
as
a
witness.
He
is
not
inexperienced
in
real
estate
matters
and
was
prudent
enough
to
consult
his
lawyer
and
accountant
before
purchasing
and
cannot
have
been
unaware
of
the
advantages
of
placing
as
high
a
figure
as
possible
on
the
building
and
contents
so
as
to
increase
the
amount
of
the
capital
cost
allowance
deductions
which
could
be
made
from
income
for
taxation
purposes.
He
may
not
have
negotiated
directly
with
the
vendors
to
increase
the
valuation
of
the
building
and
contents
in
the
vendor’s
counter-offer
from
$335,000
to
$350,000
but
if
he
did
not
do
so
personally
certainly
his
agent
must
have
requested
the
increase
acting
on
his
instructions
or
at
least
with
his
approval,
asthevendors,
also
extremely
experienced
people
in
real
estate
transaction
and
the
taxation
consequences
thereof,
would
certainly
not
have
initiated
the
increase
which
in
actual
fact
resulted
in
a
small
amount
of
recaptured
capital
cost
allowance
for
them
since
their
undepreciated
capital
cost
of
buildings
and
contents
at
the
time
of
disposition
was
$343,470.
When
vendors
and
purchasers
show
a
valuation
for
depreciable
assets
in
a
deed
and
then
both
use
this
figure
in
their
tax
return
the
Minister
may
or
may
not
disallow
it.
While
he
would
still
have
the
right
to
do
so
it
is
unlikely
that
he
would
intervene
to
change
such
a
negotiated
figure
unless
it
is
clearly
unreasonable.
This
is
the
conclusion
of
the
jurisprudence
to
which
I
have
referred.
However
when
one
or
other
of
the
parties
uses
a
different
figure
for
his
tax
returns
it
immediately
puts
the
Minister
on
notice
and
he
clearly
cannot
properly
accept
the
use
of
one
figure
by
the
vendor
and
a
different
one
by
the
purchaser
for
the
same
assets
and
must
disallow
one
or
both
of
them
and
issue
reassessments
accordingly.
In
the
present
case
the
vendors
in
good
faith
used
the
figure
shown
in
the
deed.
The
same
cannot
be
said
for
Mr
Lemay
who
not
only
increased
the
figure
by
$100,000
but
insisted
that
it
had
been
his
intention
to
do
so
all
along.
If
the
sale
had
been
for
$1
and
other
considerations,
there
might
be
some
excuse
for
purchasers
placing
their
own
valuation
on
the
buildings
and
contents
so
purchased,
but
having
agreed
to
a
negotiated
figure,
upon
which
vendors
had
every
right
to
rely
in
their
own
tax
returns,
purchasers
by
refusing
to
use
it
placed
the
Minister
in
a
position
where
he
had
no
choice
but
to
have
an
independent
assessment
made,
as
a
result
of
which
not
only
the
purchasers
were
assessed
but
also
the
vendors.
Mr
Lemay
testified
that
he
attributed
$450,000
to
the
buildings
and
contents
on
the
basis
of
taking
the
municipal
valuation
of
approximately
$180,000
for
the
land
and
attributing
the
rest
to
the
depreciable
assets.
He
also
stated
that
the
buildings
were
insured
for
$514,500
and
produced
a
copy
of
the
insurance
policy
to
corroborate
this.
I
do
not
attribute
too
much
significance
to
the
insured
value
of
the
buildings
however
as
no
doubt
their
replacement
cost
would
be
substantially
higher
than
their
market
value,
and
especially
in
property
of
this
sort
it
would
be
important
to
keep
it
fully
insured.
Except
for
this
he
submitted
no
expert
or
other
evidence
in
support
of
the
$450,000
evaluation.
Aside
from
the
fact
that
his
evidence
would
understandably
be
of
a
self-serving
nature,
the
fact
that
he
is
the
author
of
two
figures,
that
of
$350,000
shown
in
the
deed
and
that
of
$450,000
shown
in
his
tax
return,
makes
it
apparent
that
very
little
weight
can
be
attributed
to
his
evidence
as
the
valuation
of
the
buildings
and
contents.
He
did
testify
that
the
buildings
were
fundamentally
in
sound
condition
with
no
foundation
or
wall
cracks
and
that
he
considered
that
they
would
have
a
life
of
about
50
years.
On
behalf
of
the
vendors
the
proof
is
not
much
more
satisfactory.
They
at
least
used
the
figure
shown
in
the
deed
of
sale.
They
failed
to
submit
any
very
useful
evidence
as
to
the
appropriateness
of
this
figure
however.
Mr
Peter
Wise,
CA
one
of
the
co-owners
testified
that
they
bought
the
buildings
in
1958
and
that
they
were
rapidly
deteriorating.
They
had
a
manager
to
administer
them,
but
he
found
that
they
were
beginning
to
look
neglected
like
army
barracks,
with
broken
windows
and
other
defects.
The
administrator
only
did
repairs
that
were
absolutely
necessary
postponing
others
so
as
to
show
a
cash
flow.
His
own
personal
contribution
to
the
investment
was
$45,000
and
in
the
six
years
prior
to
1965
he
had
only
withdrawn
some
$4,800,
certainly
a
very
poor
return
on
his
investment.
This
evidence
as
to
his
drawings
is
misleading
however
as
the
financial
statement
of
the
Deauville
Apartments
indicate
his
share
of
net
earnings
for
the
year
ending
December
31,
1967
would
have
been
$5,280.44
and
for
1968
$7,256.
In
1967
$8,329.08
was
spent
on
maintenance
and
repairs,
$10,900
on
painting
the
hallways
and
exterior
painting
and
$3,607.47
on
emergency
sewer
repairs
and
in
1968
$8,959.23
was
spent
on
maintenance
and
repairs.
He
testified
that
he
considered
that
to
make
proper
repairs
to
all
the
apartment
buildings
would
require
about
$100,000.
He
testified
also
that
before
selling
the
vendors
had
commissioned
a
valuation
from
Westmount
Realties.
Unfortunately
Harold
Besser
the
evaluator,
a
real
estate
agent
with
30
years
experience
in
commmercial
and
industrial
property
who
made
the
report
was
not
called
as
an
expert
witness.
It
was
brought
out
in
cross-
examination
that
he
is
a
brother-in-law
of
Mr
Wise
but
I
do
not
think
his
credibility
is
in
issue.
Since
he
was
not
testifying
as
an
expert,
however,
when
he
produced
his
report
and
therefore
could
not
be
cross-examined
the
evaluation
in
the
report
of
$319,530
as
the
depreciated
value
of
the
buildings
and
equipment
and
$291.090
as
the
valuation
of
the
land
or
a
total
of
$610,620
is
of
little
evidential
value.
Production
of
the
report
was
permitted
only
to
corroborate
the
evidence
of
Mr
Wise
that
they
had
a
valuation
not
dissimilar
to
the
values
they
used
in
the
deed
of
sale,
which
he
testified
was
based
on
the
figures
they
had
obtained
from
this
report
increased
in
proportion
to
the
increase
of
the
sale
price
to
$650,000
over
the
valuation
of
$610,620.
Mr
Wise
also
testified
that
four
of
the
buildings
were
mortgaged
by
a
CMHC
loan
at
the
low
interest
of
4
/4%
with
a
separate
mortgage
on
the
corner
property
zones
as
commercial.
Although
the
mortgage
rate
was
attractive
CMHC
refused
to
divide
the
mortgage
between
the
various
properties
which
would
have
made
them
easier
to
sell
as
they
could
have
sold
them
separately.
They
were
therefore
forced
to
sell
the
property
in
one
block.
The
Crown
oddly
enough
introduced
no
evidence
to
establish
how
the
Minister’s
assessment
allocating
$221,000
to
the
land
and
$429,000
to
the
depreciable
assets
was
arrived
at,
the
assessor
not
being
called
as
a
witness.
However
the
Crown
did
call
as
an
expert
Claude
Bois
a
duly
qualified
appraiser
whose
qualifications
were
admitted
by
the
opposing
parties
and
whose
affidavit
and
report
were
taken
as
read.
He
establised
the
value
of
$195,000
for
the
land
and
$455,000
for
the
buildings.
While
his
report
was
very
complete
and
detailed
and
his
approach
to
the
valuation
was
probably
the
best
if
not
the
only
method
which
could
be
used
under
the
circumstances
his
conclusions
did
not
stand
up
well
under
cross-
examination
since
the
assumptions
which
he
necessarily
had
to
make
to
reach
his
conclusions
were
such
that
even
a
slight
alteration
in
them
would
result
in
a
vastly
different
end
result
in
the
distribution
of
the
purchase
price
between
land
and
depreciable
assets.
He
was
forced
to
use
a
capitalized
revenue
approach
since,
unlike
evaluations
for
expropriation
purposes
in
which
comparable
sales,
if
they
can
be
found,
after
making
proper
adjustments,
give
the
best
indication
of
market
value,
this
could
not
be
done
as
such
sales
for
the
most
part
indicate
only
the
price
paid
for
the
land
and
buildings
with
no
breakdown
of
the
purchase
price
between
the
two.
Similarly
when
he
made
his
report
in
October
1979
it
would
have
been
difficult
for
him
to
have
evaluated
the
replacement
cost
of
the
buildings
as
of
1969
less
depreciation
to
that
date.
He
was
therefore
forced
to
rely
on
the
less
accurate
capitalization
of
revenue
approach
which
involved
reaching
a
valuation
of
the
land
alone,
determining
the
potential
net
revenue
for
the
entire
property
including
land
and
buildings,
deducting
from
this
the
revenue
which
he
attributes
to
the
land
alone
based
on
his
evaluation
of
it
and
the
rate
of
interest
which
he
selects,
and
then
capitalize
the
resulting
figure
at
the
said
rate
of
interest
plus
a
further
rate
for
depreciation.
His
conclusion
resulted
in
the
valuation
of
the
land
at
$194,000
and
of
the
buildings
at
$445,400
or
a
total
of
$639,400
and
on
the
basis
of
this
ratio
he
attributes
30%
of
the
sale
price
of
$650,000
to
the
land
and
70%
to
the
buildings
to
arrive
at
his
conclusion.
It
is
evident
that
the
conclusion
to
be
accurate
depends
on
the
accurate
evaluation
of
the
land
alone,
and
of
the
rate
of
interest
selected
for
capitalization
and
depreciation.
In
preparation
for
his
report
he
examined
all
sales
in
the
area
of
vacant
property
from
1963
to
1971.
He
evaluated
the
commercially
zoned
property
separately
from
the
property
zoned
for
residential
purposes
and
in
the
case
of
the
former
bases
his
evaluation
on
the
frontage
rather
than
the
area.
The
three
sales
he
selects
as
most
comparable
netted
the
prices
of
$608.70,
$773.20
and
$688.07
a
foot
for
frontage
on
Masson
Street
or
an
average
of
$690
a
foot
which
he
applies
to
the
93
foot
frontage
on
that
street
of
subject
property
given
this
portion
of
it
a
value
of
$64,170.
He
states
that
in
this
area
of
Rosemount
most
of
the
properties
are
old
with
few
demolitions
and
little
vacant
land
and
that
the
market
was
stable
and
did
not
change
greatly
from
year
to
year
at
that
time.
With
respect
to
the
residential
property
on
Second
Avenue
he
selects
four
comparables
one
being
a
sale
of
a
property
of
an
area
of
13,930
square
feet
at
$2.90
a
square
foot,
one
of
18,000
square
feet
at
$2.53
per
square
foot,
one
of
24,000
square
feet
at
$2.33
per
square
foot,
and
on
of
60,900
square
feet
at
$1.80
per
square
foot.
From
this
he
concludes
that
the
larger
area
of
vacant
lot
the
lower
the
value
per
square
foot,
which
he
attributes
to
the
fact
that
most
of
the
building
was
done
on
lost
of
less
than
5,000
square
feet
as
appears
from
other
sales
on
his
list
which
were
at
higher
prices.
He
then
draws
an
exponential
curve
based
on
these
four
sales
to
show
that
for
the
subject
residential
property
which
had
an
area
of
86,480
square
feet
the
potential
price
would
be
$1.41
per
square
foot.
He
takes
into
consideration
the
price
of
$1.80
per
square
foot
paid
for
a
property
adjacent
to
but
containing
25,580
square
feet
less
than
the
subject
property,
and
his
theoretical
figure
of
$1.41
per
square
foot
and
establishes
the
value
of
subject
property
at
$1.50
per
square
foot
which
gives
him
a
value
of
$129,720
for
the
86,480
square
feet.
Adding
this
to
the
$64,170
evaluation
for
the
commercial
property
gives
him
a
total
of
$193,893
which
he
rounds
out
to
$194,000
as
the
land
value
of
such
property.
In
cross-examination
it
was
pointed
out
that
unfortunately
all
four
of
the
sales
which
he
uses
as
comparables
were
sales
by
the
City
of
Montreal
by
auction.
It
was
contended
by
vendors,
and
I
believe
not
without
justification,
that
land
sales
by
auction
by
a
public
authority
tend
to
result
in
lower
prices
than
private
sales
between
willing
and
informed
vendors
and
purchasers.
The
witness
Bois
admitted
this
to
be
so
and
this
was
also
corroborated
in
principle
by
an
expert
witness
called
in
rebuttal
by
vendors
whose
experience
in
this
area
however
is
limited
to
text
book
knowledge.
It
was
argued
however
that
in
an
area
such
as
this
where
vacant
land
is
relatively
scarce,
and
hence
presumably
more
valuable
to
the
potential
purchaser
the
sales
by
auction
might
not
necessarily
result
in
lower
prices.
Vendors
also
contended
that
if
vacant
land
is
relatively
scarce,
as
admitted,
it
should
not
follow
that
a
larger
area
of
vacant
land
would
result
in
a
lower
price
per
square
foot,
since
even
admitting
that
it
would
only
require
10,000
to
12,000
square
feet
to
construct
buildings
such
as
those
involved
in
the
present
proceedings,
this
should
not
necessarily
deter
a
purchaser
from
acquiring
a
larger
area
which
could
be
subdivided
and
on
which
five
or
six
buildings
similar
to
subject
buildings,
which
are
apparently
the
typical
construction
in
the
area,
could
be
built.
While
I
do
not
necessarily
conclude
that
the
valuation
of
the
land
arrived
at
by
the
witness
by
his
theoretical
approach,
using
an
exponential
curve
and
based
on
assumption
that
the
larger
the
area
the
lower
the
price
per
Square
foot
is
necessarily
wrong,
especially
since
it
is
Supported
by
the
municipal
assessment
which
gives
a
comparable,
though
somewhat
lower
value
for
the
land,
there
is
at
least
some
doubt
as
to
its
accuracy.
Even
more
serious
is
the
interest
rate
chosen
for
capitalization
purposes,
and
the
figures
used
by
the
witness
in
his
theoretical
calculation
of
net
revenue,
in
which
he
established
the
effective
revenue
allowing
for
vacancies
and
bad
debts
at
$100,206
and
expenses
at
a
theoretical
figure
of
42%,
which
he
stated
is
normal,
amounting
to
$42,086
resulting
in
net
revenue
of
$58,120.
The
actual
financial
statements
for
the
property
for
the
1967
and
1968
taxation
years
show
expenses
at
$79,710.27
before
depreciation
for
1967
and
$65,267.01
before
depreciation
for
1968
resulting
in
net
revenue
before
depreciation
for
two
years
in
question
of
$26,402.22
and
$36,280.02.
The
witness
did
not
have
these
figures
before
him
when
he
made
his
theoretical
estimate,
but
obviously
their
use
would
have
made
a
tremendous
difference
in
the
result.
The
witness
capitalized
his
figures
at
an
interest
rate
of
7%
on
the
basis
of
the
rate
on
federal
bonds
as
of
January
1969
being
7.16%.
Taking
the
chronological
age
of
the
buildings
as
16
years
and
their
normal
economic
life
as
50
years,
resulting
in
a
remaining
life
of
34
years,
he
divided
100
by
this
to
reach
his
figure
of
3%
for
depreciation.
Adding
this
to
the
7%
interest
he
uses
a
10%
capitalization
figure
for
the
net
revenue
of
$44,540
he
attributes
to
the
buildings
to
reach
their
value
of
$445,400.
Considerable
discussion
took
place
as
to
whether
the
interest
figures
chosen
were
realistic
for
an
investor
in
real
estate.
The
vendors
called
an
expert
witness
in
rebuttal,
Eric
Solomon
who
has
been
a
real
estate
broker
and
consultant
since
June
1966
and
has
been
buying
and
selling
invest-
ment
property
for
clients
since
1971.
He
has
a
Master
of
Business
Administration
degree
from
Syracuse
University
with
a
major
in
real
estate
and
has
been
associated
with
30
to
40
purchases
for
clients
and
about
8
developments
personally.
He
admitted
however
that
he
has
no
professional
qualifications
as
an
evaluator,
and
that
he
has
only
had
one
experience
in
the
purchase
of
a
residential
block,
some
10
years
ago.
While
he
can
in
no
way
be
considered
as
an
expert
therefore
with
respect
to
the
evaluation
of
Subject
property,
he
has
a
substantial
theoretical
knowledge
of
rates
of
return
normally
sought
or
obtained
on
real
estate
investments
which
he
states,
as
might
be
expected,
depend
on
many
factors,
including
the
degree
of
risk,
the
type
of
real
estate,
the
condition
of
the
property,
the
quality
of
the
tenants,
repairs
required,
and
so
forth.
While
he
agreed
that
there
is
no
such
thing
as
a
normal
rate
of
return
he
stated
that
in
his
view
rates
of
return
on
investments
in
real
estate
should
be
higher
than
that
from
government
bonds
in
view
of
the
inherent
risks
involved.
Low
rental
flats
with
multi
tenant
occupancy
normally
involve
a
high
degree
of
mobility
of
the
tenants
and
more
risk
than
would
be
involved
in
an
investment
in
a
high
class
industrial
property
with
a
single
substantial
tenant.
An
investor
would
normally
require
a
higher
rate
of
return,
which
he
would
expect
to
be
at
least
5%
more,
over
and
above
the
capital
cost
allowance.
In
cross-examination
he
conceded
that
professional
investors
with
other
income
such
as
the
present
purchasers
might
purchase
property
at
a
lower
return
in
order
to
benefit
from
the
capital
cost
allowance.
Despite
Mr
Lemay’s
contention
that
he
and
his
associate
would
not
have
purchased
at
all
had
they
been
limited
to
calculating
capital
cost
allowance
on
a
$350,000
base
it
seems
improbable
that
he
and
his
associate
would
have
bought
the
property
for
the
primary
purpose
of
benefiting
from
the
additional
capital
cost
allowance
shared
between
them
equally
on
a
base
higher
by
only
$100,000,
unless
they
also
expected
to
get
a
reasonable
return
from
their
investment
in
the
property.
It
seems
doubtful
therefore
whether
a
return
of
10%,
which
includes
only
3%
depreciation
can
be
considered
as
a
reasonable
return
by
a
well
informed
investor
in
real
estate
of
this
nature,
taking
into
consideration
all
the
problems
involved
in
ownership
and
management
of
it.
A
difference
of
only
1%
or
2%
in
the
interest
rate
for
capitalization
purposes
makes
a
dramatic
difference
in
the
resulting
evaluation
of
the
buildings.
Vendors’
counsel
in
argument
submitted
some
very
significant
calculations
on
this
basis.
Taking
the
actual
1967
net
revenue
of
$26,402.22
and
adding
the
interest
on
mortgages
in
that
year
of
$21,775.55
amounts
to
a
total
of
$48,177.77,
and
similarly
for
1968
the
net
revenue
of
$36,280.02
and
the
interest
on
mortgages
of
$20,977.55
form
a
total
of
$57,257.57.
Averaging
these
two
figures
gives
a
figure
of
$52,717.67
as
the
average
annual
revenue
net
of
all
expenses
except
interest
on
mortgages.
(This
compares
with
Mr
Bois’
theoretical
figure
of
$58,120).
Taking
Mr
Bois’
valuation
of
$194,000
for
the
land,
his
interest
allowance
of
7%
on
it
results
in
a
deduction
of
$13,580
which
would
leave
$39,137.67
attributable
to
the
buildings.
Accepting
his
7%
figure
plus
3%
for
depreciation
and
capitalizing
this
figure
at
10%
would
give
a
valuation
for
the
buildings
$391,376.70.
Making
the
same
calculation
at
11
%
gives
a
valuation
of
$338,160.63
and
at
12%
of
$293,813.91.
If
4%
were
allowed
for
depreciation
resulting
in
a
capitalization
rate
of
11%
the
resulting
value
for
the
buildings
would
be
$355,797
and
at
a
rate
of
12%
the
value
would
be
$309,980.58.
It
is
evident
that
using
an
interest
rate
of
only
1%
higher
than
that
of
the
Crown’s
own
expert
and
even
accepting
his
figures
for
the
value
of
the
land,
brings
the
capitalized
value
of
the
buildings
to
approximately
the
same
as
or
slightly
less
than
the
$350,000
shown
in
the
deed
of
sale.
Another
similarly
prepared
table
using
the
vendors’
value
of
$300,000
for
the
land
with
capitalization
of
7%
plus
3%
depreciation
or
a
total
rate
of
10%
would
give
a
value
of
only
$317,716.70
for
the
buildings
and
at
11%
$261,069.72
for
the
buildings.
At
a
4%
rate
of
depreciation
the
corresponding
values
would
be
$288,342.45
and
$239,313.91
for
the
buildings.
In
conclusion
with
respect
to
Mr
Bois’
proof,
and
without
in
any
way
questioning
his
expertise
or
his
approach
to
evaluation,
the
use
of
the
theoretical
considerations
involved
in
the
valuation
of
the
vacant
land,
together
with
the
substantial
doubt
cast
on
the
rate
of
interest
he
used
for
capitalization
of
the
net
income
attributable
for
the
buildings,
and
the
fact
that
the
most
recent
revenue
statements
for
the
buildings,
which
were
not
available
to
Mr
Bois,
indicate
substantially
lower
net
revenue
than
that
estimated
by
his
allowance
of
42%
for
expenses,
combine
to
cast
so
much
doubt
on
the
resulting
valuation
which
he
attributes
to
the
buildings
as
to
make
this
evidence
very
inconclusive.
We
are
left
with
one
other
item
of
evidence
and
it
may
well
be
the
most
significant
of
all.
The
vendors
had
appealed
to
the
board
of
revision
of
the
city
of
Montreal
from
the
tax
assessments
for
the
property
for
1967-68
and
1968-69
tax
years
and
the
purchasers
continued
these
appeals.
While
frequently
there
is
no
very
close
relationship
between
municipal
assessments
and
market
price,
in
the
present
case
the
total
assessments
were
higher
than
the
sale
price
of
the
property.
The
valuations
are
significant
especially
since,
in
municipal
assessments
there
is
a
breakdown
between
land
and
building
values.
The
members
of
the
board
of
revision
are
of
necessity
familiar
with
properties
in
different
areas
of
the
city
and
have
considerable
expertise
in
establishing
values.
A
summary
of
the
hearing
before
them
on
January
5,1971
and
the
resulting
decision
was
filed
in
evidence
and
it
is
apparent
that
the
valuation
was
gone
into
very
thoroughly
and
that
this
evidence
must
be
considered
as
that
of
a
neutral
party
with
respect
to
the
present
litigants.
The
city
expert
testifying
before
them,
after
putting
aside
the
revenue
attributable
to
the
land,
taxes
and
interest
as
Mr
Bois
did,
established
the
revenue
attributable
to
the
buildings
and
then
capitalized
this
revenue
at
a
rate
of
11.95%
including
taxes,
interest
or
yield
and
depreciation.
It
is
not
necessary
for
our
purposes
here
to
go
into
the
details
of
evidence
submitted
but
it
appears
that
the
replacement
values
of
the
buildings
was
taken
into
consideration
less
depreciation
and
additional
depreciation
for
their
state
of
repairs
and
a
calculation
was
also
made
based
on
the
capitalized
value
and
economic
return.
Calculations
were
made
for
each
of
the
five
properties
in
question
for
each
of
the
two
years
and
the
resulting
decision
in
which
for
purposes
of
simplicity
I
have
added
the
separate
figures
for
each
of
the
properties
to
make
a
total
were
as
follows:
1967-
1968
|
|
Land
|
$157,750
|
Buildings
|
504,250
|
TOTAL
|
$662,000
|
1968-
69
|
|
Land
|
$180,300
|
Buildings
|
488,200
|
TOTAL
|
$668,500
|
In
the
year
1969-70
after
proceeding
on
the
same
basis
the
board
reached
the
conclusion
that
the
land
values
remained
the
same
at
$180,300
but
that
the
buildings
were
now
worth
$560,200
or
a
total
assessment
of
$740,500.
While
it
is
true
that
most
of
the
evidence
submitted
before
the
board
of
revision
related
to
the
valuation
of
the
buildings,
with
there
being
little
dispute
as
to
the
valuation
of
the
land,
the
assessment
by
the
decision
of
the
value
of
the
buildings
exceeds
the
values
claimed
by
purchasers
as
a
cost
base
and
substantially
exceeds
the
values
used
by
the
Minister
in
his
assessments
of
both
vendors
and
purchasers.
The
use
of
municipal
assessments
in
distributing
evaluation
of
a
property
between
land
and
buildings
was
approved
by
Addy,
J
in
the
case
of
Crown
Trust
Company
in
its
capacity
as
Trustee
of
the
Suburban
Realty
Trust
and
Her
Majesty
The
Queen,
[1977]
CTC
320;
77
DTC
5173,
in
which
he
Stated
at
323
[5174]:
No
other
expert
real
estate
valuation
evidence
whatsoever
was
offered
and
the
Court
is
left
only
with
the
valuations
for
municipal
assessment
purposes.
The
Court
is
permitted
to
use
municipal
assessments
in
arriving
at
a
valuation
of
property.
(See
Turnbull
Real
Estate
Company
v
The
King;
Corkey
et
al
v
The
King;
De
Burry
et
al
v
The
King,
[1903]
33
SCR
677.)
and
again
on
the
same
page:
In
view
of
there
being
no
evidence
to
the
contrary,
I
find
that,
on
the
balance
of
probabilities,
the
proportion
which
the
municipal
valuation
of
the
land
for
the
year
1969-70
bears
to
that
of
the
whole
is
the
correct
one.
The
municipal
valuation
or
assessment
for
taxation
year
1969-70
of
$217,050
for
the
lands
and
$1,313,500
for
the
buildings,
establishes
a
proportion
of
14.18%
of
the
value
as
being
attributable
to
the
lands.
While
in
the
present
case
it
cannot
be
said
that
there
is
no
evidence
to
the
contrary
or
that
no
expert
valuation
evidence
was
introduced
it
is
nevertheless
evident
that
considerable
weight
can
and
should
be
given
to
the
municipal
assessments
established
on
appeal
by
the
board
of
revisions.
In
the
Supreme
Court
case
of
the
Turnbull
Real
Estate
Company
v
The
King,
[1903]
33
SCR
677
at
678
the
Court
dismissed
the
appeal
stating:
..
.
the
Exchequer
Court
Judge
looked
at
the
assessed
valuation
of
the
lands
as
shewn
upon
the
municipal
assessment
rolls,
not
as
a
determining
consideration,
but
as
affording
some
assistance
in
arriving
at
a
fair
valuation
of
the
property
taken.
The
burden
of
proof
is
always
on
the
taxpayer
seeking
to
set
aside
an
assessment
by
the
Minister.
See
for
example
the
case
of
Noralta
Hotel
Limited
v
MNR,
[1954]
CTC
167;
54
DTC
1079,
in
which
Thorson,
P
stated
at
168-9
[1080]:
The
assessments
carry
a
statutory
presumption
of
their
validity
and
stand
until
they
have
been
shown
to
be
erroneous
either
in
fact
or
in
law.
To
succeed
in
the
appeal
from
them
the
appellant
must
prove
that
the
finding
of
the
Minister
that
the
capital
cost
of
the
depreciable
property
in
question
was
$35,000
was
erroneous.
If
it
fails
to
discharge
the
onus
of
proof
that
the
law
casts
on
it
its
appeal
must
be
dismissed.
In
the
Waldorf
Hotel
case
(supra)
Smith,
J
stated
at
174
[5118]:
In
the
present
case
the
defendants
have
produced
no
evidence
to
prove
the
Minister’s
assessment
wrong,
other
than
the
agreement
to
purchase,
with
its
valuation
table
allocating
the
entire
purchase
price
to
land,
building,
contents
and
equipment,
ie
items
of
tangible
property.
As
indicated
earlier,
in
my
opinion
that
is
not
a
case
in
which
the
valuations
in
the
agreement
must
be
accepted
as
binding.
Judgment
might
be
given
for
the
plaintiff
on
these
facts
alone.
see
also
the
statement
of
Cattanach,
J
in
the
Canadian
Propane
Gas
&
Oil
case
(supra)
at
580
[5029]
where
he
said:
The
onus
of
demolishing
the
Minister’s
assumptions
falls
on
the
appellant
and,
in
my
view,
for
the
reasons
expressed,
the
appellant
has
failed
to
discharge
that
onus.
Accordingly
it
cannot
be
said
that
the
assumptions
of
the
Minister
in
assessing
the
appellant
as
he
did
were
not
warranted.
An
examination
of
the
evidence
which
I
have
summarized
above
indicates
that
the
four
appellants,
Peter
S
Wise,
Myer
Pollock,
Louis
Burn-
stein
and
Sam
Sokoloff
have
completely
failed
to
discharge
the
burden
of
proving
that
the
Minister’s
assessment
of
$429,000
as
the
value
of
the
depreciable
assets
was
not
reasonable
pursuant
to
paragraph
20(6)(g)
of
the
Act.
If
anything
the
weight
of
the
evidence,
unsatisfactory
as
it
is,
would
indicate
that
perhaps
a
higher
figure
might
have
been
reached
by
the
Minister.
Subsection
100(5)
of
the
Act
reads
as
follows:
The
court
may
dispose
of
the
appeal
by
(a)
dismissing
it;
(b)
allowing
it;
or
(c)
allowing
it
and
(i)
vacating
the
assessment,
(il)
varying
the
assessment,
ii)
restoring
the
assessment,
or
(iv)
referring
the
assessment
back
to
the
Minister
for
reconsideration
and
reassessment.
and
the
appeals
of
the
four
appellants
named
must
be
disposed
of
by
simply
dismissing
them
with
costs.
It
would
appear
that
it
is
only
if
an
appeal
is
allowed
that
the
assessment
may
be
varied
or
referred
back
to
the
Minister
for
reconsideration
and
reassessment
and
this
would
certainly
not
include
an
increase
in
the
assessment
in
the
case
of
these
appeals
by
taxpayers.
With
respect
to
the
appeals
by
the
Crown
in
the
cases
of
Doctor
Claude
Leclerc
and
Georges
E
Lemay
from
the
decision
of
the
Tax
Review
Board
accepting
their
figure
of
$450,000
for
depreciable
assets
rather
than
the
Crown’s
figure
of
$429,000
the
situation
is
somewhat
different.
I
do
not
believe
that
the
fact
that
the
Crown
is
the
appellant
alters
the
burden
of
proof
on
the
said
two
respondents
to
submit
evidence
to
dispute
the
reasonableness
of
the
Minister’s
assessments.
The
proceedings
in
this
court
is
a
trial
de
novo.
Although
the
appeals
of
the
vendors
and
purchasers
were
joined
to
be
decided
on
the
same
evidence
it
would
not
appear
reasonable
to
force
the
Crown’s
valuation
of
$429,000
on
the
said
purchasers
merely
because
the
vendors
have
failed
to
discharge
the
burden
of
establishing
that
it
was
not
reasonable,
and
the
decision
in
their
appeals
could
not
result
in
a
higher
figure
being
used
by
the
Minister
in
determining
their
reassessments
as
a
result
of
increased
recaptured
capital
cost
allowance.
On
the
other
hand
it
is
evident
that
one
figure
cannot
be
applied
to
the
vendors
and
another
to
the
purchasers.
Fortunately
on
the
evidence
I
do
not
believe
that
this
problem
arises.
As
I
have
already
said
although
the
figure
of
the
Crown’s
own
expert,
who
was
the
only
expert
called
as
to
evaluation,
concluded
at
a
figure
of
$455,000
for
the
buildings
the
exact
accuracy
of
this
figure
is
cast
in
considerable
doubt
by
the
assumptions
on
which
it
had
to
be
based.
While
the
decision
of
the
city
board
of
revision
evaluated
the
buildings
at
a
total
of
$488,200
for
the
1968-69
taxation
year
it
is
apparant
that
very
little
consideration
was
given
in
the
evidence
before
it
to
the
valuation
of
the
land
as
such
which
was
left
unchanged
from
the
figure
given
in
the
assessments
which
were
under
appeal.
According
to
the
evidence
of
Mr
Lemay
the
figure
used
by
the
purchasers
of
$450,000
was
obtained
by
merely
deducting
the
assessed
value
of
the
land
from
the
purchase
price
of
$650,000,
although
this
would
actually
seem
to
have
justified
attributing
a
somewhat
higher
value
than
$450,000.
This
evidence
adds
nothing
therefore
to
that
obtained
by
examining
the
municipal
assessment.
Moreover
as
I
have
indicated
his
evidence
is
gravely
tainted
by
his
acceptance
in
the
revised
offer
and
in
the
deed
of
sale
of
a
valuation
of
$350,000
for
the
depreciable
assets.
At
best
therefore
his
evidence
can
be
said
to
indicate
two
different
figures,
one
agreed
to
after
negotiation
in
a
valid
written
instrument,
and
a
much
higher
one
more
or
less
picked
out
of
the
air.
Naturally
the
said
purchasers
were
more
than
happy
to
accept
the
evidence
introduced
by
the
Crown,
and
to
adopt
it
in
support
of
their
contestation
of
the
Minister’s
assessment.
It
is
evident
that
valuations
of
this
sort
can
never
be
completely
exact
and
the
difference
between
the
Crown’s
figure
of
$429,000
and
that
sought
by
the
purchasers
of
$450,000
is
not
great.
I
conclude
therefore
that
the
purchasers
Messrs
Leclerc
and
Lemay
have
not
discharged
the
burden
of
proof
of
establishing
that
the
Crown’s
assessment
of
$429,000
is
not
reasonable.
At
trial
counsel
for
the
Minister
stated
that
the
tax
in
controversy
did
not
exceed
$2,500
for
either
of
the
said
two
respondents.
Accordingly,
the
provisions
of
subsection
101(2)
of
the
Act
which
reads
as
follows:
Where,
on
an
appeal
by
the
Minister,
other
than
by
way
of
cross-appeal,
from
a
decision
of
the
Tax
Review
Board,
the
amount
of
tax
that
is
in
controversy
does
not
exceed
$2,500,
the
court,
in
delivering
judgment
disposing
of
the
appeal,
shall
order
the
Minister
to
pay
all
reasonable
and
proper
costs
of
the
taxpayer
in
connection
therewith.
Shall
be
applied
and
the
Minister
will
be
required
to
pay
all
reasonable
and
proper
costs
of
the
said
taxpayers.
As
all
the
actions
were
joined
for
hearing
on
common
evidence
only
one
set
of
costs
shall
be
allowed
to
the
Crown
on
the
dismissal
of
the
appeals
of
Messrs
Wise,
Pollock,
Burnstein
and
Sokoloff
and
one
set
of
costs
allowed
to
Dr
Claude
Leclerc
and
Mr
Lemay
in
connection
with
the
successful
appeals
by
the
Crown
in
their
cases.