Bridges Brothers Ltd. v. The Queen, 89 DTC 5255, [1989] 1 CTC 445 (FCTD)

Martin, J.:—The plaintiff, Bridges Brothers Ltd., appeals the Valuation Day value of $100 per acre assigned by the defendant to some 2,422 acres of its property situated near Mount Pleasant, Charlotte County, New Brunswick. The property which was, for a short time in the 1980s, the site of a molybdenum tungsten mine was sold by the plaintiff to Billiton Canada Ltd., the company which brought the mine into production, on August 22, 1980 for $900 per acre plus the leaseback of 500 acres of the land for 50 years at an annual rental of $1 per year to be used by the plaintiff solely for the cultivation of blueberries, plus the timber rights on the land for a period of five years from the date of the sale. At issue in this matter is simply the determination of the fair market value of the property as of December 31, 1971.

The property is composed of five separate parcels of land quite close to each other and ranging in size from 100 acres to 400 acres except the largest parcel which contains 1,472 acres. It had been acquired by the Bridges family in 1943 and 1948 for about $10 an acre with a view to using it for the commercial cultivation of blueberries. In fact from 1943 until 1971 the land was never used for that or any other purpose, and from 1971 until the time it was sold only a small sample plot of about five or ten acres was used for blueberry production. In other words from 1943 until 1980, while the land was owned by the Bridges family and its company, it was not used for any purpose except possibly for cutting a small quantity of pulp-wood.

In 1971 the property was primarily woodland or forest land. The witnesses' estimates of the cordage per acre varied but the most common figure used was 20 cords per acre. The property was not near enough to any major highway or community to have its value affected by those conditions. The only unusual condition which might affect its value in 1971 was its proximity to the site where there had been mining exploration activity since 1954. Mr. Cole Bridges, the Vice-President of the plaintiff, was of the opinion that the land was the best blueberry producing land in the world but admits that, between 1943 and 1980, there was never any attempt made by his family or company to convert the land into blueberry producing land.

A considerable part of the hearing was taken up with evidence introduced on behalf of the plaintiff which tended to show that, by December 31, 1971, the establishment of a mine was a certainty and that some special or additional value should be attributed to the plaintiff's land as land which, it was claimed, would have to be acquired by the owner of the mineral rights in the area in order to carry on this “certain” mining operation. Indeed some of the witnesses spoke of the multiple or factor by which the otherwise fair market value of the plaintiff's land would have to be multiplied because it would have to be acquired by a mining company.

Experts in the form of mineral geologists, economic geologists and mining engineers all gave as their opinion that by December 31,1971 they were absolutely certain a producing mine would be established at the Mount Pleasant site.

Specifically Dr. Arie Ruitenberg (Ruitenberg), a mineral deposit geologist who was the provincial geologist responsible for mapping and evaluating mineral potential in the southern half of New Brunswick starting in 1967, said that by 1964 both tin and tungsten ore deposits were indicated at Mount Pleasant and that by 1971 he was 100 per cent sure there would be a mine in that area.

Mr. Irwin S. Parrish (Parrish), an economic geologist specializing in the economic feasibility of mining operations, actively worked on the site from 1969 until at least 1974. He was employed by the Sullivan Group of Montreal who had, in 1969, acquired the mineral rights from the original Mount Pleasant Mines Ltd., the first mining company on the site. He was satisfied, by August of 1971, that the then existing conditions would warrant a decision on the part of the owners to establish a tungsten molybdenum mining operation at the site and recommended to them that they do so. He noted that when Billiton, in 1980-81, did put a mine into production it did so with apparently the same tonnage and grade of ore the existence of which Parrish had established in 1971. In 1971 it was Parrish's view that there was a potential profit of $400,000,000 to be made from the deposit. He too was 100 per cent sure that there would be a mine at Mount Pleasant sooner or later and, he felt, more likely sooner.

Mr. Gilles Carrière (Carrière), an expert mining engineer, was Chief Geologist and later Director of Exploration with the Sullivan Group from 1962 to 1976 and, although working out of Montreal, he was the man to whom Parrish reported and who had formal responsibility for the Mount Pleasant operation. Carrière referred to the same high grade deposit of tungsten and molybdenum which had been isolated by August of 1971 and to Parrish's recommendation and concluded that he was 100 per cent convinced a mine would some day be established at the site of this ore body.

Notwithstanding Parrish's recommendation in August of 1971 he was instructed, in late 1971 or early 1972, to cease all work on the tungsten, molybdenum and bismuth deposits and instead to investigate the deep tin zone in the northern area of Mount Pleasant, a job which took about a year to complete. Parrish says he was informed by the owners that no decision on development would be taken until this investigation was completed. Furthermore, by the end of 1971, Parrish agreed that the site of the tailings pond for the purpose of the development had not yet been selected and the method of mining the ore body had not yet been determined. He also said that the method selected would affect the size of the tailings pond area required.

Carrière explained that the failure or refusal of the owners to accept Parrish's recommendation to develop the mine was in part as a result of the death of the owner of the company in 1968. Carrière saw that man as the director who was apparently less conservative than the others and who would, had he been alive, have accepted Parrish's recommendation. Carrière also attributed the decision not to proceed in 1971 to the fact that there had not yet been a decision made on the extractive process to be used. He said the company's metallurgist was trying to convince the directors that a floatation process would be preferable to the more normal gravity process. Eventually, said Carrière, the company decided to adopt the floatation process but it was very complicated and took a long time to develop.

Carrière also allowed that while the company had no long-term debt and a working capital of $10,000,000 he suspected that the President and Vice- President of the company did not want to take any chances with the capital.

Carrière said that the Sullivan Group directors were aware they would have to borrow money to put Mount Pleasant into production and that the Chase Manhattan Bank would advance the money for that purpose. He acknowledged that in order to borrow the money the banks would require consultants’ reports. He said it was after 1971 that Sullivan retained a number of consultants to prepare reports for the bankers and that, in spite of paying fees in excess of one million dollars to large consulting firms from San Francisco, they had not finished their reports by the time he left the Sullivan Group in 1976.

Another witness on behalf of the plaintiff, Mr. Keith D. Phinney (Phinney), a consulting engineer in industrial waste management, said that in May of 1975, at the request of the Sullivan Group, he submitted a report on the location, but not the design, of the tailings pond.

All of this evidence indicates to me that in 1971 the owners of the mineral rights were nowhere near to making a decision on the establishment of a mining operation at Mount Pleasant. No decision to establish a mine had been made by December 31, 1971 and in my view no decision could at that time be said to be imminent. By December 31, 1971 vital decisions on the extractive process and method of mining had not yet been made. Financing was likely but would depend upon feasibility reports from the consultants which had not been completed. Not only had Sullivan refused to accept Parrish's recommendation with respect to the development of the tungsten molybdenum deposits but directed that he discontinue all work on those deposits and instead undertake a year-long investigation into tin deposits.

Carrière's opinion that in 1971 he was 100 per cent convinced there would be a mine in the Mount Pleasant area some day was as accurately optimistic as anyone could be. Whether the establishment of a mine would occur in the three year minimum period suggested by Parrish or in 30 years or 300 years could not have been predicted or anticipated with any reasonable degree of accuracy in December of 1971. That decision would depend upon all of the conditions, including supply, demand, prices and costs, which might be relevant to the decision at the time the question would be addressed.

Parrish seemed to suggest that because he was in a position to recommend and did recommend that production be undertaken in 1971, the valuation of the plaintiff's property should be made on the basis that a decision had been made to go into production. Mr. Harrison Goodwin, the plaintiff’s appraiser, said that he relied heavily on Parrish's evidence and had come to the conclusion that a mine development was a certainty in 1971. He added that he made no discount for the fact that in 1971 no production decision had been made but that he had assumed the plaintiff's land would have been required for the mine at that time.

The fact which cannot be ignored is that by December 31,1971 no decision to go into production had been made and no matter how confident Parrish was that the decision should have been made in 1971 it was not made then and the plaintiff's property should not be valued as if it had been.

The significance of the decision having been made or not made by December 31, 1971 is that the so-called multiple or factor by which the otherwise fair market value of land must be multiplied to arrive at the fair market value which a mining company, as opposed to all other potential purchasers, would pay for the property, has no application until the mining company has made the decision to develop or establish a producing mine at the affected site. This might even be enlarged by allowing for the multiple, if one in fact exists, if the decision to go into production is imminent and could reasonably be expected to be in the affirmative.

In this matter, however, the decision had not been made, it was not imminent and, in my view, it would have been impossible, in December of 1971, to make any reasonably accurate prediction of what the decision would be because many of the major conditions which would affect the decision were not known and could not be predicted.

It is true that some factors like the reserves and grade of ore might remain the same but the all important price could vary widely in a short period. In this respect I note that during the period from 1970 to 1972 the unit price for tungsten varied from $54.90 to $52.20 and that from 1978 to 1980, when the decision was made to go into production, the unit price varied from $ 144 to $ 145. I note further that when Billiton decided to close down the operation in the 1980s, after having already invested some $60,000,000 in establishing the mine, the unit price had fallen to about $75.

Although we do not have any direct evidence from the directors of the Sullivan Group as to why they were not prepared to accept Parrish's August 1971 recommendation to proceed with the establishment of a mine, the unit prices referred to at the dates indicated tend to indicate that the relatively low unit prices for tungsten in the 1971 period may well have been a factor in their refusal.

Assuming the accuracy of the theory that the otherwise fair market value of land should be multiplied by two to five times when a mining company requires it for mining operations, this theory has no application to the present matter because, as of December 31, 1971, the plaintiff's property was not required for the establishment of any mining operation nor could any one say with any degree of accuracy when, in the future, it might be required.

That is not to say that the value of the plaintiff’s property was unaffected by the mining exploration activities which had taken place on and near the plaintiff's lands since 1954. No doubt that activity would add some value to what was otherwise backwoods forest land. A prudent owner might, as the plaintiff did, hold it on speculation that all or a portion of it might some day be required for the establishment of a mining operation but until the owners of the mineral rights decided that a mine would be established its highest and best use would, in my view, be for speculative purposes as land in the vicinity of a possible mining site all, or portions of which, might some day be required for the development of a mine.

Accordingly when one comes to consider the December 31, 1971 fair market value of the plaintiff's property the value should be determined, not on the basis of the amount which a mining company would pay for the property because it required the property as the site for the establishment of a mine, but rather on the basis of what a prospective purchaser would pay to acquire the property for the purpose of holding it for an indefinite period in the future against the possibility that it might some day be required by a mining company as the site for the establishment of a mine.

The resulting difference in values is well illustrated by the facts in this case for when, in 1969, the mining company required land for mining exploration purposes it acquired three parcels of land in the Mount Pleasant area for $100 per acre and less. On the other hand when the mining company required land for the establishment of a mining site in 1980 it paid $900+ per acre for, for all practical purposes, the same lands. It seems apparent from this and other examples, to which I will refer later in these reasons, that the presence of mining exploration activities will increase the value of lands adjacent to that activity but only marginally and that there will be no dramatic rise in the value of lands adjacent to a prospective mining site until there has been or is just about to be a decision to establish a mine and that the land, which is the subject of a valuation, is required for that purpose.

Both experts called by the plaintiff to give their evidence with respect to the value of its lands at the Mount Pleasant area were of the view that the plaintiff's lands in December of 1971 had a higher value than that for which they were sold in 1980. These opinions were of no assistance to me in determining a fair market value for the plaintiff's land as of December 31, 1971.

The plaintiff's first expert witness with respect to the value of its Mount Pleasant lands was Dr. Arnold L. McAllister (McAllister). He was offered as an economic geologist who, because of the proximity of the property to what eventually became a large mining operation, could give evidence of the value which would attach to it on that account. In the same capacity he was offered as an expert on the value of gravel deposits on the property and the requirements of those deposits in the process of developing a mine. Finally, he was tendered as an expert entitled to give opinion evidence as to the value of wood on the land and, as well, the residual value of the land on December 31,1971.

In his report McAllister arrived at three valuations for the property: $900, $710 and $1,100 per acre. The $900 per acre valuation is the price at which the property was sold in 1980. McAllister multiplied the estimated metal reserves in the Mount Pleasant mining area by the metal prices in 1971 and 1980 to arrive at gross values for the mining property. The values range from $481,000,000 to $1.06 billion in 1971 and from $2.43 billion to $2.76 billion in 1980.

These figures, he observed, gave some measure of the magnitude of the expected operation and of the expectations of adjacent land owners. He then concluded:

In the absence of any reasonable conflicting data, there is no reason to believe that Bridges should have considered their land less valuable in 1971 than they did in 1980. There is no reason to reduce the 1980 value for 1971 appraisal. Therefore, the 1971 value should be $900.00 per acre plus the value of any material, either forest products, sand or gravel, removed between 1971 and 1980.

That is indeed a curious and novel method by which the witness arrived at his $900 per acre valuation. I need only say that I attach no weight to his conclusion. Firstly, what a vendor considers his land to be worth is not a reliable indication of its fair market value and, secondly, the circumstances surrounding the mining operations were quite different in 1971 than they were in 1980. In 1971 there had been no decision to proceed with the development of a mine while, in 1980, when the plaintiff's property was purchased, the decision to proceed with the mining operation had already been made.

The method used by McAllister to arrive at the $710 per acre valuation is even stranger. He assumed a steady increase in the value of the property from 1954 to 1980. At the 1980 end of the scale the value was fixed at the actual sale price of $900 per acre and the 1954 value was set at $306 per acre. By drawing a straight line on a time and value graph the resultant value on December 31,1971 was $710 per acre.

Apart from the weaknesses in principle to which this method is susceptible, McAllister has incorporated a serious factual error into the calculation when he assigned a 1954 value of $306 per acre to the plaintiff's property. That figure was reached by taking an actual sale of 100 acres of the plaintiff's property at the mining site in 1969. The 100-acre lot sold at that time for $10,000 or $100 per acre. The amount of that sale was discounted back to 1954 at seven per cent to give a 1954 value of the 1969 sale of $3,265. To this figure was added discounted rental payments from 1954 to 1969 of a 25-acre portion of the 100-acre area sold in 1969 to give a total 1954 discounted value of the 100-acre area of $30,589 or $306 per acre. Although an attempt was made elsewhere in the plaintiff's evidence to suggest that the rental payments should be considered as a capital payment for the land, McAllister made no such attempt in his report.

The net result of his calculations is to assign a 1954 value of $30,589 to the sale of a 100-acre block of land which was sold in 1969 for $10,000. Once again I attach no weight to this conclusion.

By his third, and preferred method, McAllister arrived at a value of $1,100 per acre. He felt that the value assigned by this method should be higher because, in the other valuations, he had not assigned additional values for agricultural and residential use. The $1,100 per acre value was reached by valuing the land alone and adding to that value the value of the timber on the land, the value of a portion of the gravel on the land, which would likely be used in the development of a mining operation, and a premium of four times the land value because the land was being purchased by a mining company for the development of a mining operation.

The actual arithmetic is as follows:

3) A value of $1073-$1098.00 per acre was calculated by assigning specific values to the non-conflicting land uses indicated above. These are summarized as follows:

	$ acre
Forest land, 2422 acres	$50-75.00
Forest cover (pulp, stud, lumber, firewood)	200.00
Gravel and sand-Niles Brook outwash $468.00
-Hatch Brook Material 165.00	633.00
Industrial use premium	190.00
	$1073-$1098
	Say $1100.00

The witness’ opinion in this respect is of no assistance to me and I attach no weight to it. His gravel figure of $633 per acre and his industrial use premium of $190 per acre both presuppose that in 1971 the imminent establishment of a mine was then a certainty. It is true that several of the witnesses were certain that there would be a mining operation there at some time in the future but in 1971 no decision had been made by the owners of the mining rights to develop them then or at any time in the foreseeable future. It was therefore incorrect to value the property as if the decision to proceed with the establishment of a mine had been made.

McAllister's opinion with respect to the 1971 value of the land as bare land worth $50 to $75 per acre and $200 per acre for forest cover is equally unimpressive. His credentials for forming such an opinion are based on the fact that his wife owns a wood lot, which he operates as a hobby, and that he is a director of a company which, over the previous four and a half years, had acquired considerable holdings in forest land.

When put to him by counsel for the defendant, the witness admitted he could not provide a single example of a sale of a wood lot in 1971 for an amount between $250 and $275 per acre because he was not acquainted with any sales of wood lots during that period.

His reasoning and conclusion that in 1971 bare land had a value of between $50 and $75 per acre is contained in the following paragraph of his report:

“Land” in 1987 is generally valued in the range of $100 to $125.00 per acre. Given the nature of the soils, moderately rolling topography and accessibility, the 2422 acres probably have a value within this range, thus a basic value of $50 to $75 an acre in 1971 is not an unreasonable assessment.

I do not find that bare unsupported conclusion of any assistance in assigning a 1971 value for the plaintiff's land, nor do I find helpful his opinion that in 1971 the plaintiff could have obtained $200 per acre for the wood on its land.

In his report McAllister says that in the absence of quantitative information on the forest cover as of 1971 he assigned an arbitrary value of $200 per acre to the forest component by assuming an average yield of 20 cords per acre. In his evidence he elaborated on the $10 per cord required to make up $200 per acre.

As nearly as I can determine he decided on the strength of a report by one Fellows that in 1971 the stumpage rate for pulp-wood was $6.18 per cord. To this he added $2 a cord profit which he assumed the owner would make if he cut his own pulp-wood and another $2 per cord because he thought that an owner would sell more profitable wood such as saw logs rather than all pulp-wood.

This brought the effective value of pulp-wood on the land to $10 per cord. He agreed that the stumpage paid for hardwood would be less than the stumpage paid for pulp-wood, possibly $2 as opposed to $6.18, and that the greater portion of wood on the plaintiff's land was hardwood. He himself had no knowledge of the stumpage rates relied upon but relied upon a Mr. Fellows, who did a report for the government, and a Dr. Runyan, a forest economist with Environment Canada.

In my view the witness was out of his depth in valuing the bare land and the wood on the land. The one solid piece of evidence he had was, at the time he wrote the report in November of 1987, the company of which he was a director was getting $19.97 per cord for pulp-wood. It is unclear from his evidence if that was a royalty or a sale price for the wood or what expenses were involved in order to get the $19.97 per cord. The witness did say that in 1987 the cost of harvesting pulp-wood was $25 per cord. Just how this $25 per cord relates to the $19.97 per cord is not clear from the evidence.

Given that Runyan reported the costs of harvesting pulp-wood in 1971 were $26.41 and the average price by the mills for pulp-wood in 1971 was $21.84, and the fact that the witness claims to have relied upon Runyan for his conclusion that the wood would have a net value of $10 per cord on the land, the witness’ evidence is not credible.

As the witness' report says he assigned an arbitrary value of $200 per acre for the forest component of the land, I suspect that the $10 per cord was a part of that arbitrary assignment and that the confusing evidence which the witness gave at trial was only an attempt to justify the $10 per cord figure originally, arbitrarily assigned. The evidence was both confusing and unconvincing and I assign no weight to the witness' opinion in this respect.

If I appear to be unduly harsh on McAllister in my observations with respect to his report I hasten to say that my remarks should not be taken to reflect in any way upon his expertise and his undoubted integrity in his chosen field. It is in his capacity as valuator of real estate that he is weak and his report, in that respect, is of no assistance to me.

The plaintiff's second expert witness with respect to the valuation of its property was a Mr. W. Harrison Goodwin (Goodwin) who is an accredited appraiser from Moncton, New Brunswick. I have made a careful review of his appraisal report and have found the essentials of the report to be unreliable. For all of its maps, coloured pictures and pleasant prose the report, as an appraisal document, is of no assistance to me in determining the fair market value of the plaintiff's property as of December 31, 1971.

Goodwin arrived at a base 1971 value of $3,029,000 for the plaintiff's land by assigning a value of $50 per acre to the bare land and $200 per acre to the forest cover which total he multiplied by five because he assumed the land was required for the purpose of establishing a mining site as of December 31, 1971.

His calculations were based on information obtained from the plaintiff, McAllister and a report which had been prepared for the province of New Brunswick. He was told by one of the plaintiff's employees that in 1971 the plaintiff had earned $186,000 in taxable revenue from woodcutting which he took to be net after costs but before taxes. During that year he said the plaintiff harvested 525 acres of woodland having an average rate of 30 cords per acre to yield a net return of $ 11.75 per cord for the 15,750 cords which were cut. He said that the average 1971 rate paid by the mills on Crown allocated lands was $5 to $7 per cord and for private lands $4 to $5 a cord more.

He thus invited the conclusion that in 1971 the net amount per cord which a private woodlot owner would get for his wood ranged from a low of $9 to a high of $12 and that in fact the plaintiff had earned a net amount of $11.75 per cord in harvesting some 15,750 cords of wood in that year. Given that information, the advice he obtained from Dr. McAllister, who indicated to him that $10 per cord was a fair net rate or stumpage for pulp-wood in 1971, and his reliance on a report by Mr. K.L. Runyan of the Maritime Forest Research Centre entitled Fair Market Prices for Pulp-wood in New Brunswick Goodwin said: “I had no hesitation in arriving at—using $10 as being a fairly safe estimate.” (Transcript, page 451.)

He then obtained a report from Woodlot Services (1978) Ltd. which indicated an average cordage of 20 per acre on the plaintiff's 2,423 acres of land in 1971. His next step was simply multiplying the cords per acre by the 1971 $10 royalty, profit or stumpage rate per cord to give a woodlot value exclusive of the land of $200 per acre.

In addition to the value of the wood, of course, there must also be taken into consideration the residual value of the bare land. Goodwin gave three examples of sales of woodlands which occurred in 1970 and 1971, each for about $50 per acre, and concluded that a fair value for bare land would be about $50 per acre and for land plus the wood $250 per acre.

While his report indicated that the three comparable sales were of woodlands he qualified that in his evidence. The first sale which occurred in 1970 was cleared land, the second sale was not a comparable sale at all because, according to Goodwin, the purchaser had acquired the land for sentimental reasons, and the third sale did in fact contain some wood on the property but not much.

In any event, given the 1971 value of the plaintiff's woodlands of $250 per acre, he assumed that a mining company wanting the property would pay a premium for it of three to five times that value and concluded that in 1971 the fair market value of the plaintiffs property was five times the $250 per acre value or $1,250 per acre for a total of $3,029,000. This, he concluded, was the fair market value for the same property which had been sold by the plaintiff in 1980 for $2,180,000.

Goodwin was not content to leave that somewhat surprising conclusion rest but added that, in addition to the $1,250 per acre value which he had assigned to the property, there should be added an amount equal to five times the value which he placed on the property for its potential as a blueberry producing property.

In this respect, by the most convoluted projections, discounting, present worthing and adjustments, he posited the creation of a blueberry producing business on the property to take place over a 10-year period which would, by 1980, give the property a 1971 value of $1,330 per acre. This figure he reduced by assuming that development would commence on one quarter of the total acreage at the beginning of the first year and the other three quarters in three subsequent, consecutive, yearly intervals. With appropriate discounting and present worthing he concluded by that method the property had a 1971 market value of $561.52 per acre.

Because there had already been included in the blueberry calculations the $50 per acre bare land value and the $200 per acre wood valuation he allowed, quite properly, that the amount which I should add to the $1,250 per acre figure should be five times some portion of the $561.52 per acre valuation less $250 or $311.52.

In his evidence he said that he was unable to pinpoint the precise portion of the $311.52 which should be multiplied by five and added to the $1,250 per acre value already assigned because there were some questionable variables in his calculations, particularly those relating to discount rates. In his view the range was between $50 and $250 or, when multiplied by five, between $250 and $1,250.

Accordingly, as I understand Goodwin's evidence, it was his final opinion that the value of the plaintiff's property as of December 31,1971 was somewhere between $1,500 and $2,500 per acre. Put another way the witness' opinion was that the 1971 fair market value of the plaintiff's property was somewhere between $3,634,500 and $6,057,500. Given that the property was sold in 1980 for a little over $2,000,000, Goodwin's opinion that some nine years earlier it had a mean market value of more than twice that amount is incredible.

When I suggested to counsel for the plaintiff, in the course of his argument, that I found Goodwin's conclusion to be somewhat troublesome counsel was inclined to agree that a $6,000,000 valuation was not realistic. He suggested that I had misunderstood Goodwin's evidence and that what Goodwin intended to offer by his valuation of the plaintiff’s lands as blueberry lands was a second or alternative valuation in the range between $300 and $500 per acre to which the multiple of five should be applied.

This, of course, leads to precisely the same conclusion i.e. a December 31, 1971 value of between $1,500 and $2,500 per acre for a total value between $3,634,500 and $6,057,500.

I do not intend to set out Goodwin's report assumption by assumption and conclusion by conclusion and explain why I reject or accept each. It will be sufficient to point to major errors in his report to show that it is so flawed no reliance can be placed upon it.

In this respect one of his most basic assumptions is that the 1971 net value of the wood on the plaintiff's land was $200 per acre. His report says that figure was obtained by the $186,000 table income which the plaintiff received in 1971 from woodcutting. This figure, given to him by someone from the plaintiff's company, was never verified but taken by Goodwin as a fact. In fact the plaintiff's records show that this figure was a gross income figure and that in the 1970 year in which the plaintiff had that gross revenue it reported a net loss on its joint woodcutting and blueberry operations. It is not clear how Goodwin arrived at the 525 acres at 30 cords per acre for a total cordage of 15,750 but Mr. Cole Bridges, the Vice-President of the company, said that during the year referred to by Goodwin the plaintiff harvested only 6,656 cords of wood. The $11.75 per cord figure thus developed and rounded to $10 per cord is without foundation and of no value.

In his evidence Goodwin tried to remedy this defect by claiming he reached the $10 per cord figure by relying upon information received from Dr. McAllister and from an article by K.L. Runyan who, incidently, was also one of the authorities upon whom McAllister relied.

The witness specifically pointed to the last pages of the appendix in the Runyan article in which the prices paid for pulp-wood in 1971 were given at $23.50 delivered to the mill at Edmunston and $21.84 on average in the province, When counsel for the Crown pointed out to him that the same author had given the 1971 costs of delivering wood to the mills at $26.41 the witness' astonishing reply was:

Well, the general thrust of that whole paper was really what the prices should be that I . . . That's why . . . I didn't pay very much attention to most of the other indications in that paper.

(Transcript, page 463.)

I can find no rational basis in the evidence to warrant the basic and essential conclusion of Goodwin that the wood on the plaintiff’s land had a 1971 value of $10 per cord. I have already rejected McAllister's conclusion to the same effect. Goodwin's reliance on McAllister's non-existent expertise, who in turn relied upon Runyan, is of no assistance to him and his conclusion is, accordingly, of no value to me.

The second and only other major error I will deal with is Goodwin's view that the otherwise 1971 fair market value should be multiplied by five because of the proximity of the land to a potential mine.

To support his conclusion he relies upon a letter from Mr. Parrish, one of the witnesses at the trial, and three examples or cases given in his report. On the strength of this information it was his view that, whatever the normal fair market value the property might have in 1971 comprising the total of its bare land value, its wood value and its blueberry production potential, that total value should be multiplied by a factor of five on account of its potential use in conjunction with mining operations.

I do not arrive at that conclusion from reviewing the letter and cases referred to by the witness. Even if he had established that a mining company would be prepared to pay the five-fold premium under certain circumstances I cannot find in this matter that there existed in December of 1971 the circumstances which would give rise to such a decision on the part of a mining company.

The letter from Parrish says that:

Mining companies would prefer to properly buy and own surface rights than approach the government and seek expropriation. To avoid expropriation and to secure the surface rights with as little rancour as possible, a mining company may pay a premium of up to five times the then prevailing price for such rights. Mind that the company will try to spend as little as possible, but would not find a premium of two to three times prevailing price prohibitive.

That Parrish was not really setting this up as a convention, which Goodwin claimed it was, is made clear by the first sentence in the following paragraph: "The foregoing is drawn from my own experience and is not set forth as a dictum.”

In his first example Goodwin points to the purchase of 2,461 acres of land for the establishment of the Belledune Smelter in New Brunswick. In this case he says a total acreage was purchased in 1963 from 47 individuals for a total purchase price of $312,690 or $127 per acre. Goodwin isolates four vendors who he says sold 583 acres to the company for $150,000 or $258 per acre which he says is approximately 5.16 times the going rate for similar property in the area.

What is not clear to me is why Goodwin would choose these four vendors and ignore the 43 others who apparently sold their property on average for $86 per acre or about 1.6 times the so-called market value at the time.

The covering letter from a Mr. John T. Gorman of O.E.S. Consultants Ltd. upon which Goodwin relied for the information about the Belledune Smelter site is not nearly as definite as Goodwin would indicate in his report. In that letter Mr. Gorman says that the acreage involved in the four sales referred to by Goodwin was 676 and not 583 acres. He also indicates that possibly 200 acres were purchased at another time and that some unquantified area north of the highway had not been purchased and probably should come off the areas noted. Finally he notes that: ”. . . no exact sales are noted since the actual sale price would not show the real value as a form of royalty was paid to the vendor."

It is far from clear from that example that a mining company would pay five times the fair market value of a property for its mining purposes. What is clear, to me, however is that at the time the properties were acquired in 1963 the decision to establish a mining operation had already been made. In such circumstances I have no doubt that vacant woodland properties which would have to be acquired would gain something in value over and above their value as vacant woodland properties but that results from the fact of the decision having been made to establish the mining operation.

The second example is that of a Mr. Bretton who in 1973 acquired 252 acres of what appears to be cut over woodland for $6,000 or $23.80 per acre. In 1979 he sold it to Shell Natural Resources for $50,000 plus the right to stumpage for five years which Goodwin estimated as being worth another $12,000.

Goodwin quotes Bretton as saying that in his view the most he could have gotten for the land in the absence of the mine would have been $12,000 and concluded that, because he got $62,000, Shell Natural Resources had paid 5.16 times the ordinary market value for the land.

What is missing from this equation, and it is essential if the example is to be worthy of any consideration, is whether Shell Natural Resources had made the decision to proceed with whatever development it was contemplating. Without that information the information is of no value for it cannot be compared to the matter at hand where it has been established that no decision had been taken to bring the mine into production by December 31, 1971.

The third example used by Goodwin to illustrate that a mining company would pay three to five times the fair market value for land is the sale of the plaintiff's land to Billiton Canada Ltd. in 1984 for $900 per acre. Goodwin says that the plaintiff wanted $2,000 per acre but was forced, under the threat of expropriation, to sell for the lower amount. He seems to imply, by reason of those facts, that the 1980 fair market value of the land, taking into account its proximity to a potential mining operation, should be between $900 and $2,000 per acre. He then cites two sales of mostly cleared land in 1978 and 1981 for $285 and $378 per acre respectively. He says that the minimal value for the blueberry potential of those sales was $300 per acre and that therefore the indicated multiple ranges from 3.33 to 5, i.e. from $1,000 per acre as the actual rate and $1,500 as the most likely overall rate had the negotiations between the parties been able to proceed unhindered.

What an owner asks for his property is of little value in determining its fair market value. This is particularly true in the case of the plaintiff whose representative at the trial, Mr. Cole V. Bridges, amply demonstrated that he is a hard and crafty bargainer when it comes to buying and selling land. He also convinced me that the threat of an expropriation would not have the slightest effect on his decision to sell the property at a given price. An expropriation, in any event, would only ensure, as best any legislation can ensure, that he would get the fair market value for his land. True, there might be a delay in payment but that is generally compensated for in an interest payment in any event.

This third example simply indicates to me that when the decision was made to go ahead with the development of the mine and to acquire the plaintiff's property to carry out that development the plaintiff's property acquired an additional value because of its intended use as a part of the mining development. I agree that the payment of $900 per acre for the plaintiff’s land (or $1,000 per acre as Goodwin calculates it) represents a premium over the value of the land as unused vacant woodland but in my view the major part of the added or premium value did not arise until the decision had been taken to go ahead with the mining operation. Until that decision was taken, or shortly before it was taken, there was no reasonable certainty when the mining operation would be established. Whether the premium was one, two or five times the otherwise accepted fair market value of the property as vacant woodlands in 1980 is irrelevant. What is relevant is that in 1971 no decision to establish a mine at the Mount Pleasant site had been made and it cannot be said at that time that the plaintiff's property would be required for the purposes of a mining operation.

The weakness in this witness' effort to apply a multiple of five to what would otherwise be the fair market value for the land required by a mining company is that he must first establish that those responsible for deciding on the establishment of a mine have decided there will be a mine and that the plaintiff's property will be required for it. This witness and others were at pains to show there was a huge deposit of several sorts of ore which, given appropriate circumstances, would be mined. They did establish, in my view, that if the sort of mine they contemplated were in fact established a good portion of the plaintiff's property would be required for its operation.

What they could not establish was that within the short term or foreseeable future viewed from December 31, 1971 a mine would be operating at Mount Pleasant. The evidence of the millions of tons of ore multiplied by the price per pound of the ore so as to arrive at a worth of hundreds of millions if not billions of dollars means nothing if the cost of extraction exceeds the market value of the ore extracted.

In this respect the evidence is that the group which had to make the decision to proceed with the establishment of a mine did not do so for a number of reasons some of which are speculative. Goodwin speculated that the Sullivan Group which controlled the mining rights in 1971 was not a world class operator and was not financially capable of putting a mine into operation. This conclusion is flatly contradicted by Gilles Carrière who said that there were a number of reasons why the group did not proceed but money was not one of them. He said the group had $10,000,000 in capital and would require another $20,000,000. He said that Chase Manhattan Bank would advance that money but the directors of the Sullivan Group were not prepared to proceed because they were not sure about the direction the company would be taking following the death of its founder and chief risk taker in 1968. As well they had still not determined whether the process for the extraction of the mineral from the ore would be a gravity or floatation process and, finally, they did not have, in 1971, the reports of the consultants which would have to be completed before they could get the financing. In fact Carrière said that these reports had still not been completed in 1976 when he left the company.

In other words not only had the group which controlled the mining rights in 1971 not made the decision to establish a mining operation at Mount Pleasant but it was not then and was still not in 1976 in a position to make that decision because in 1976 the documentation required for the necessary financing had not been completed.

Goodwin emphasizes in his report that there was nothing different in the 1980 circumstances when the decision was made to establish a mining operation and the consequent decision to acquire the plaintiff's property than the circumstances which existed in 1971 and thus, presumably, he asks me to assign a value to the plaintiff's property as if the decision to establish a mining operation had in fact been made in 1971.

This is to ignore completely the reality of the circumstances in 1971 and how they were completely different from those of 1980. Without going through each of those circumstances it is sufficient to say that those in 1971 did not permit a decision to be made to develop or not to develop a mining operation at Mount Pleasant. In 1980 the circumstances had changed sufficiently from those in 1971 that a decision to bring a mine into operation in the area could be and was made. Not the least of the changed circumstances was that the price of tungsten in 1971 varied between $5.43 and $6.97 per pound while in 1980 the price had gone up to $13.90. Similarly, in 1971, the price of molybdenum was quoted at $1.67 while in 1980 it had gone up to $9.26.

I do not know and the evidence does not disclose that those changed circumstances gave rise to the decision to go ahead with the mining operation but it is fair to say, in my view, that the rise in the price of those two metals very probably influenced the decision.

The defendant's appraiser, Mr. William W. Aronec (Aronec), took the approach that not all of the plaintiff's lands were necessary or desirable in order to put the mine into production. He determined that of the total of 2,422 acres only 725 had a potential of being required for mine related purposes and that the remaining 1,697 acres had a potential of being required for mining exploration purposes.

He was in agreement with the plaintiff's appraisers' principle that a mining company, when it acquires land, will usually pay a premium for the property over its basic value or value which is not influenced by its proximity to mining or prospective mining activities.

The appraiser then established four groups of properties with a view to determining the premium which would be paid by a mining company over its base price or value. These four groups with adjusted market values were as follows:

The appraiser concluded that the ratio of 2.33 occurring between Groups 3 and 4 should be applied to the value of $80 per acre determined with respect to the properties included in Group 1 to give a fair market value of $186.40 per acre for that portion of the plaintiff's property which in his opinion would be required for the purposes of a mine development site.

However, because in December of 1971 no decision had been made to go into production, the appraiser concluded that the earliest that the plaintiff's property could be required for mining development use would be from three to five years in the future. He therefore discounted the value of $186.40 as if it had been paid in 1974. He applied a three year nine per cent discount rate to give a 1971 present worth of $143.93 per acre which he rounded to $145 per acre.

In the result he found that the fair market value of the plaintiff's property as of December 31,1971 was $241,000 made up as follows:

In my view the defendant's appraiser has not been consistent in his approach in applying the 2.33 multiple to the Group 1 valuation of $80 per acre. The multiple was obtained by taking the ratio of the price paid for property required for mining development use to the price paid for property not influenced by the establishment of a mine. However the ratio was applied to the price paid for properties which had already been influenced by the mining exploration activities to the extent, according to Aronec, of doubling the base price of $40. In other words, to be consistent in his method, Aronec should have applied the multiple to the properties in Group 2, which properties corresponded to the properties in Group 4 which were the properties in the groups that did not have their values influenced by any mining activities.

Applying the multiple in that way the value to be assigned to that portion of the plaintiff’ properties required for development purposes would give a value of $40 per acre multiplied by 2.33 or $93.20 per acre for 725 acres for a total of $67,570.

Using the same present worthing factor of .772183 the December 31,1971 fair market value of the plaintiff's lands required for mining development purposes would be $71.96 per acre or $52,176.40 for the 725 acres.

If I am correct in my application of Aronec's method it follows that the fair market value of land required for mining exploration use would be higher than lands required for mining development use which all parties agree cannot be the case.

I can see that in certain given circumstances the method used by the defendant's appraiser might be useful if properly applied. However when the properties used as comparables are not in the same area, when the properties compared do not have comparable wood cover or farm land qualities, and when the sales take place more than ten years from the date fixed for determining the fair market value of the plaintiff's property, I find that there is little value in the exercise.

Moreover, even before the ratio could be determined in the Sussex area in 1983, adjustments in actual sale prices were made, almost 100 per cent in one case and in another case in which the appraiser had made a 66 per cent adjustment he admitted that it should not have been made at all. I realize that the exercise was to obtain a ratio rather than to use the comparables to fix the fair market value but the same weaknesses apply. The farther removed in location and time the comparables are from the plaintiff's property the less value they have for determining its fair market value. Put another way, the more adjustments which have to be made to make the comparable really comparable to the plaintiff's property the less value it has as a comparable. In this case the Sussex sales had too many adjustments and were too far removed in time and location to be of value in assisting me to reach a conclusion as to the fair market value of the plaintiff's property as of December 31, 1971.

My view in this respect is strengthened considerably by the evidence in reply called by the plaintiff. Through a Mr. Hunt (Hunt), a solicitor who had dealt extensively in real estate since 1972 in the Sussex area and who negotiated the purchase of lands required by the Potash Company of America for its mining operations in 1978 and 1979, the plaintiff established that the multiple based on farm land at $200 per acre varied from 2.5 to 6. What Hunt's evidence did indicate to me was that there did not appear to be any consistent basis for comparing prices paid by mining companies for proper- ties in New Brunswick. In Aronec's example a potash company in 1976 was paying between $300 and $350 per acre for lands which, uninfluenced by mining activities in the area, would otherwise sell for about $150 per acre. On the other hand, in Hunt's example, in 1978 and 1979 a potash company was paying between $520 and $1,232 per acre for properties which, uninfluenced by mining activities, would otherwise sell for around $200 per acre. For the purpose of this latter observation I have ignored a sale of two acres for $3,000 referred to by Mr. Hunt because of the size of the land.

Finally I place little reliance on either Aronec's or Hunt's multiples because the circumstances existing in December of 1971 with respect to the plaintiff's property were, in one very significant particular, different from either of the potash companies' circumstances. In both potash companies' cases the prices paid by the companies for the land required for their mining operations were paid for land which was acquired after the company had made the decision that a mining operation would be established. No such decision had been made in December of 1971 in the case of the Mount Pleasant ore body and, according to the evidence, no such decision was imminent at that time.

The error in claiming that a multiple of the base value of the land should be applied in determining the fair market value of the plaintiff's land as of December 31, 1971 is that it presumes that a decision to go into production has been made or at least can reasonably be anticipated just about to be made. Because I am not persuaded by any of the evidence that those who had the responsibility and authority to make that decision were anywhere near to doing so in December of 1971 I have concluded it is wrong to assign a value to the plaintiff's property as if that decision had been made.

In addition to the appraisal reports of Goodwin, McAllister and Aronec, evidence as to the value of the plaintiff's land was given by David Gordon Stilwell (Stilwell), an appraiser with Revenue Canada, Donald Ware (Ware), a chartered accountant with the plaintiff's auditors, and Cole Bridges (Bridges), the Vice-President of the plaintiff company.

Stilwell had prepared an appraisal report which was presented to the Tax Court. In that report he ignored the fact that minerals were present in the subsurface area of the plaintiff's land. He concluded that the value of the plaintiff’s land was not at all influenced by any mining exploration activity and valued the plaintiff’s land, as of December 31, 1971, as woodland only at $50 per acre for a total value of $121,000.

He gave little weight to the March 31,1969 sale of the plaintiff's 100-acre piece of property to Mount Pleasant Mines Ltd. for $10,000 because he considered it a mining related sale and not a woodland sale. In his report prepared for the Tax Court hearing he mentioned but ignored the 1969 38.5 acre sale of the Kinney property for $3,000 and the 1969 449 acre sale of the Armstrong property for $13,000. Both these properties were in the immediate area of the plaintiffs property which is the subject of this action and were acquired by Mount Pleasant Mines Ltd. fairly close in time to the relevant date of December 31, 1971. Stilwell said he ignored these two sales in his appraisal because he considered them, like the 1969 sale of the plaintiffs property, to be mining related sales which, in his view in 1986, should not influence a woodland valuation.

Since completing his report and giving evidence at the Tax Court hearing he now says that he made a mistake in valuing all of the plaintiff's land as woodland unaffected by mining activities which were taking place at the time. In his view 500 acres of the 2,422 should be valued as being influenced by mining activities and having a potential for mine related uses, and the balance of 1922 acres should properly remain valued as woodland. He picked the 500-acre figure more or less arbitrarily as a compromise between the figures of 350 acres and 1000 acres of the plaintiff’s land which the other witnesses had said would be necessary for mining purposes.

He then applied the 1969 Bridges and Kinney sales of $100 per acre and $77 per acre adjusted to December 31,1971 to arrive at a valuation of $117 per acre for the 500-acre portion of the plaintiff's land and reaffirmed his $50 per acre valuation for the remainder to arrive at a revised value for the claimant's land of

Stilwell says he did not use the 1969 Armstrong sale of 449 acres to Mount Pleasant Mines Ltd. for $29 per acre as a comparable because he was satisfied that Armstrong did not bargain hard enough with the mining company at the time of the sale and had in fact sold it below market value, even for woodland.

Although Stilwell's opinion was somewhat late in coming it has in its favour the fact that he did address the three sales of properties nearest in time and location to the plaintiff's property. These are the same sales as those in Group 1 of Aronec's report upon which Aronec concluded that the plaintiff's land had a value of $80 per acre to which he applied a multiple of 2.33 and a discount factor of .772183 to arrive at a December 31,1971 figure of $145 per acre for the 725 acres required for future mining use and $80 per acre for the 1,697 acres required for future mining exploration use.

In my view the 1969 sales of those three particular parcels of land in the immediate vicinity of the plaintiff's land are, in the circumstances of this case, the best indicators of the value to be assigned to the plaintiff's land as of December 31, 1971. I will return to examine these sales in more detail because there have been several discrepancies in the amounts for which the various witnesses say or argue they were sold. Before I do so however I should deal with the evidence of Donald Ware and Cole Bridges with respect to their opinions as to the value of the plaintiff's property as of December 31, 1971.

Ware's evidence was offered, not so much for his opinion of the value of the plaintiff's property on valuation day, but to explain how the value of $700 per acre as of December 31,1971 got into the company's financial statements. He said the figure of $700 per acre was given to him by the plaintiff. He knew the property had been sold on October 1, 1980 for $900 per acre. In order to test the value of $700 per acre as of December 31, 1971 he discounted the $900 figure by three per cent per year to yield a figure of $710 per acre for 1971 which he observed is very close to the figure given to him by the plaintiff. He used the three per cent figure because, according to this witness, land values in Charlotte County on average had probably not increased by more than three per cent a year since 1971.

There are so many weaknesses to Ware's method of arriving at a December 31,1971 valuation that it hardly seems necessary to deal with it at all. Its uselessness is immediately apparent, however, if one assumes the accuracy of the three per cent annual rise in values of property in Charlotte County and applies the three per cent to the March 31, 1969 sale at $100 per acre. Using this method he would arrive at a December 31,1971 valuation of about $105 per acre for the plaintiff's land.

Cole Bridges applied much the same method to arrive at a 1971 valuation. He says that about one half of the 2,422 acres was purchased in 1943 and the other half in 1949 for an average date of purchase of 1946 at an average price of $10 per acre. When the property was sold in 1980 for $900 per acre there had been a gain of $890 over a 34-year period or $26.18 per year. By December 31, 1971 the property had been held, on average, for 26 years. Bridges then applied the $26.18 average annual gain to arrive at a total gain of $680.68 as of December 31, 1971. To that he added the original $10 cost for a 1971 value of $690.68 which he rounded to $700 per acre, which is the figure he had given to Ware.

This method for determining the market value of a property has the merit of mathematical simplicity but that, in my view, is its only merit. It attributes to the early period immediately after the property was purchased incredibly high rates of growth, 2,600 per cent in the first ten years, when there is not the slightest evidence that any facts existed during that period which could have given rise to such an increase in value.

Contrariwise it attributes to the period following the decision to develop the property as a producing mine a relatively minor growth when it was the development decision itself which gave the property the largest increase in its value.

Simply stated, Bridges’ and Ware's methods are not realistic in the circumstances of this case and are of no assistance whatsoever in determining the market value of the plaintiff’s property as of valuation day.

Finally two witnesses, David Waugh (Waugh), the Superintendent of Engineering with Dennison Potacan Mines, and Reginald Hunt (Hunt), a solicitor practising at Sussex, New Brunswick, were called by the plaintiff in reply, the first to correct certain errors in Aronec's report relating to the Group 3 properties and the other to give evidence with respect to the purchase of properties purchased by another potash mining company in the Sussex area.

It will be recalled that Aronec used the example of Dennison Potacan to establish a factor or multiple of 2.33 of the base property value which a mining company would pay for property once it had determined that it would carry on mining operations and that the property would be required for that operation. However as that determination had not been made in the present case as of valuation day I have already determined that it is incorrect to value the plaintiff's property as though it had been made. Thus, because I have not accepted this portion of Aronec's method for determining the value of the plaintiff's property it is of no consequence that there were some minor errors in the examples or comparables which he used to develop the method. What I do take out of the joint evidence of Aronec and Waugh is that between 1979 and 1984 when a mining company required property in the Sussex area for mining production purposes it paid between $200 and $350 per acre for that property.

Hunt's evidence was used to establish a multiple or factor using the same method as Aronec used. In this case the factor, not surprisingly, turned out to be on average considerably higher. Assuming Hunt's evidence that, before it was influenced by mining activities in that part of Sussex County where the Potash Company of America located in 1977-78, land of the type which it acquired for the purposes of developing a mine sold for $200 an acre and after the Potash Company's decision to develop a mine it sold for between $750 and $1,600 per acre, the multiple varied from 3.35 to 8.

Aronec's evidence is that the Potash Company experience was not used because lands in that area, being on the Trans-Canada Highway and being in a more built up area, could not usefully be compared to the plaintiff's lands which were in a more isolated area. He preferred to use the Dennison Potacan experience with the price paid for lands in that area because he said these were closer in nature to the plaintiff's lands.

What the evidence of Waugh and Hunt does illustrate, in my view, is the unreliability of using the sales to either potash company to derive a value for the plaintiff's land. In the case of the potash sales I note that the earlier sales in 1977 and 1978 to the Potash Company of America ranged from $784 to $1,666 per acre while the later sales between 1979 and 1984 to Dennison Potacan ranged from $200 to $350 per acre. It seems clear that there must be circumstances between the two areas which are significantly different to give rise to these significantly different prices and the significantly different derived multiples.

Just as I have rejected the use of the multiples suggested in Aronec's report I also, for the same reasons, decline to use the multiple or the multiple method which can be derived from Hunt's evidence. In my view it has no application to the present matter because, unlike either of the potash examples, as of December 31,1971 no decision had been made to establish a mining operation on or near the lands owned by the plaintiff.

In summary what I have to assist me from the appraisers is roughly the following:

Stilwell:

500 acres at $117 per acre	$	58,500
1922 acres at $50 per acre	$	96,100
for a total of 2,422 acres at $63.83 per acre	$ 154,600
Aronec:
725 acres at $145 per acre	$ 105,125
1,697.19 acres at $80 per acre	$ 135,775
for a total of 2,422.19 acres at $99.46 per acre	$ 240,900
rounded to 2,422.19 acres at $99.50 per acre	$ 241,000
Goodwin:
between 2,422.19 acres at $1,500 per acre	$3,633,285
and 2,422.19 acres at $2,500 per acre	$6,055,000
McAllister:
2,422.19 acres at $1,100 per acre	$2,664,409

It is somewhat disconcerting when the values assigned to the plaintiff's land by the experts who are called to assist me in making a determination vary to such an extent. I note that the lowest value assigned by the plaintiff's experts is more than ten times the highest value assigned by the defendant's experts. I also note that, if I consider the evidence of the professional accredited appraisers only, the differences range from a low of 15 times to a high of 39 times.

What is remarkable about the evidence of the plaintiff's witnesses is that they both placed a 1971 value on the property in excess of the amount for which it was sold in 1980. Bridges’ evidence, which was apparently accepted by the plaintiff's experts, was that it was not sold at market value but that it was a forced sale under the threat from a New Brunswick Cabinet Minister of taking such steps by way of refusing permits that the plaintiff's considerable operations in New Brunswick would be shut down. Bridges says he had no choice but to sell under these circumstances and adds that had free market conditions been allowed to operate he probably would have been able to get between $1,400 and $1,600 per acre for the property.

I do not accept Bridges' evidence in this respect. One only has to observe him for a short time to realize he is not a person to be bothered by threats. When, as Bridges claimed, the Minister threatened to expropriate his company's property Bridges said that he paid no attention to the threat because he knew it would take too long. On the other hand when he felt his business had been injured by the New Brunswick Government "Spruce Budworm Spraying Program" he had no hesitation in suing the province and, when a construction company trespassed on his land, he had no hesitation in taking them to court. Bridges, in my view, is also a shrewd dealer in real estate. He was able to acquire the property in the 1940s for around $10 per acre and for a number of properties which could not be purchased leases were carefully drafted so as to put the plaintiff in the position of being able to acquire them in later years at a small fraction of what Bridges claimed would be their actual value at the time of acquisition.

When, in 1969, Mount Pleasant Mines purchased the three separate pieces of property already referred to, the maximum price paid per acre was the price paid for the plaintiff's property . . . a tribute to Bridges' shrewdness. In 1980 the plaintiff was able to negotiate a price of $900+ per acre for the whole 2,422 acres of land. If any credence is given to the evidence that only about one third of this land was required by the mining company and the balance should be valued as forest lands only, it would raise the $900 per acre price paid for the land required to a level well in excess of any of the prices paid by the potash mining companies from 1978 to 1984. This again Is a tribute to the plaintiff's bargaining powers.

I simply do not believe Bridges when he says he sold the property at a reduced price because he felt threatened by the cabinet minister or because he felt he was being blackmailed over the loss of his sport fishing license. In my view his evidence in this respect is just another stratagem in his business affairs to increase his company's profits by reducing the taxes associated with the capital gains on the sale of the properties in question. By claiming the sale was not a free market sale and apparently convincing his experts to that effect he was able to extract from them reports which valued the property in 1971 in excess of the price for which he sold it in 1980. If those reports could convince a Court to the same effect then, of course, there would be no income tax payable on the 1980 sale.

In my view Bridges' evidence that he sold at less than he would otherwise sell because of threats made by a Minister of the New Brunswick Government is nothing but a fabrication concocted solely for the purpose of reducing or eliminating taxes associated with that sale.

Counsel for the defendant called Mr. John W. Bird, the Minister of Natural Resources for New Brunswick from 1978 to 1982, who was the person alleged by Bridges to have improperly threatened him and his company with a view to forcing the plaintiff to sell its property to Billiton for a lesser amount than its fair market value. Mr. Bird was an impressive, convincing and forthright witness. He categorically denied bringing any pressure on Bridges by any of the means alleged to force him to sell at a reduced price. He denied that he had read the “riot act" to Bridges. He could not recall if the matter of a possible expropriation had been discussed but says it was unlikely he would have given much consideration to the possibility because an amendment to the province's Mining Act would have to have been made before the province could have expropriated the property.

Far from the Minister threatening Bridges it was Bridges who, by raising the possibility that his company might not be able to come to terms on the sale of the property to Billiton unless the Minister was prepared to resolve in Bridges’ favour some problems not connected with the sale, was doing the threatening. In my view Bird, in his dealings with Bridges, acted with the outmost propriety and, in the circumstances, with admirable restraint and I have no difficulty in accepting the truth of his evidence.

Throughout the plaintiff's case a great deal of emphasis was placed on the fact that the lands were potential blueberry producing lands and should therefore be valued at some higher amount than woodlands, forest lands or recreation lands. The fact of the matter is that the lands in question had been held by the Bridges family or its family company for a period of more than 30 years and had not been used for blueberry production in all of that period.

In the early years, during the 1940s, the explanation given for the failure to develop the lands as blueberry producing lands was that the company did not have the financial ability to do so. When in later years, during the 1950s, the plaintiff did have the resources to put the lands into production and failed to do so the explanation given was that the mining people had moved into the area and that the plaintiff did not want to devote a lot of effort to the development of the lands as blueberry producing lands only to find that they would be required for mining purposes or, alternatively, the use of a portion of the lands for mining purposes would render the use of any of the remaining lands for the production of blueberries impossible.

These explanations are not convincing. If, as Bridges and his experts maintain, there would have been a net return of $200 per acre for the forest cover of the lands in 1971, and in 1971 there was a market for all the wood which the company could deliver, then the company's failure to take advantage of that fact, particularly when it had a bad blueberry year in 1970, is inexplicable.

Similarly, if Bridges really believed Goodwin's projections for the profits to be made by putting the lands into blueberry production, and Bridges’ evidence was that Goodwin’s projections were conservative and represented the worst case scenario, there was no credible reason offered by Bridges as to why he did not take the steps necessary to put the lands into production. The fact that they might, in such an event, subsequently be expropriated for or purchased by mining interests would be reflected in a higher price which would have to be paid for the property because of its higher value as blueberry producing property. The fact that no steps were taken by the plaintiff to put the lands into production or to harvest the wood prior to December 31, 1971 confirms, for me, that Bridges’ and Goodwin's opinions on the potential profitability of these operations are without foundation in fact. In my view the plaintiff considered and discarded the idea of a wood or blueberry operation on the lands in question as being of questionable profitability and elected instead to hold the lands in the hope that they would be required for mining purposes. As it transpired this was another shrewd decision for without incurring the risks of either business operation the plaintiff obtained, in 1980, what was unquestionably a good price for the property.

As well, Bridges’ claim that the two uses, mining and blueberry production, are inconsistent and that therefore there would be no point in putting the land into blueberry production which would have to be discontinued once mining operations began, is questionable. The plaintiff's submission in this respect is completely inconsistent with his reservation out of the 1980 sale of 500 acres to be used exclusively for the commercial cultivation of blueberries. That reservation, however, is consistent with an attempt to buttress an otherwise weak claim that some additional or special value should be placed on the land because of its potential capacity for blueberry production. As I recall the evidence the plaintiff never did make any use of that right to the 500 acres of land which it sold to Billiton.

As I have indicated I see no basis for assigning any special value to the plaintiff's land on account of its potential for blueberry production. Even if I did feel that some value ought to be assigned to the property on that account I would not be able to do so because there has been no credible evidence presented to me which would allow me to make a determination to that effect.

In the circumstances of this case the best method for determining the fair market value of the plaintiff’s land is by using as comparable sales the three sales to Mount Pleasant Mines Ltd. which occurred in March, April and June of 1969. These sales occurred quite close in time to Valuation Day. They were sales of properties where the consideration paid reflected the influence of mining activities and all three were in the same location as the properties which are the subject of this action. I refer of course to the sales by the plaintiff, Kinney, and Armstrong to Mount Pleasant Mines Ltd. of 100 acres, 38.5 acres and 449 acres respectively.

There is no real dispute that the sale by the plaintiff of the 100 acres of land was for the sum of $10,000 or $100 per acre. Bridges argued that the consideration was actually $55,000 or $550 per acre. Apparently the plaintiff had leased 25 acres of land to the mining interests for a period of 15 years for $3,000 per year. Bridges says his father insisted that the $45,000 paid in rent be considered a part of the purchase price of the 100-acre piece of land sold in 1969. There is, of course, no rational basis for assigning the amount of previously paid rent to the subsequent purchase price of a property to artificially inflate the amount actually paid for it. Even Goodwin balked at this ploy and said he did not agree with the application of $45,000 previously paid rent to the 1969 one hundred acre sale.

It is interesting to note that in Aronec's report this sale, described as sale no. 1, is indicated as being for $7,000 or $70 an acre rather than the $10 ,00 claimed by Bridges. Aronec said that of the $10,000 paid, $3,000 was for a year's rent and the balance of $7,000 was on account of the purchase of the land. Exhibit P-13 which is the certificate of valuation filed by Brunswick Tin Mines Ltd. when it acquired the property from Mount Pleasant Mines Ltd. some three months later tends to confirm this because it states that the consideration paid on that sale was $7,000.

It is common ground that the Armstrong sale of 449 acres which took place on April 30, 1969 was for $13,000 (Exhibits P-50 and P-11). The certificate of valuation (Exhibit P-14) filed on registration of the deed from Mount Pleasant Mines Ltd. to Brunswick Tin Mines Ltd. two months later stated that it had been sold for $13,000 i.e. the same price Mount Pleasant Mines Ltd. had paid to Armstrong. This also tends to confirm Aronec's evidence that the sale price for the plaintiff's 100 acres was in fact $7,000 and not $10,000.

Finally, there is the sale of the Kinney property which took place on June 20, 1969. This was a sale of 38.5 acres, the consideration for which is given by Aronec as $3,000 or $77.92 per acre. Again, the certificate of valuation filed on the transfer of the property from Mount Pleasant Mines Ltd. to Brunswick Tin Mines Ltd. on July 9,1969 indicates that it was transferred for $3,000. In support of this fact there is also the evidence of Stilwell who confirmed with one of the Kinneys who had taken part in the negotiations for the sale of the property to Mount Pleasant Mines Ltd. that it had been sold for $3,000.

On the strength of Exhibits P-50 and P-11 Bridges argued that the Kinney sale was for $40,000 or about $1,000 per acre. In both exhibits the relevant mining interests indicated that the Bridges and Kinney properties comprising 138.75 acres of land, together with buildings and equipment on the lands, were being acquired for $50,000. Because, argued Bridges, the plaintiff had received $10,000 for its 100 acres it had to be concluded that Kinney had received $40,000.

Bridges says there was some old broken down buildings and run down equipment on the plaintiff's land but nothing on the Kinney property and thus suggested that the full $40,000 must had [sic] been paid for the 38.5 acres of land sold by the Kinneys. In the face of the certificate of valuation for $3,000, Stilwell’s confirmation from one of the parties involved in the negotiations that the consideration was $3,000, and the high degree of improbability that Mount Pleasant Mines Ltd. would, in the space of three months, pay ten or more times the price for the Kinney property than it had paid for Bridges’ land, I have concluded that the preponderance of evidence supports a finding that $3,000 was the amount paid by Mount Pleasant Mines Ltd. to Kinney for the 38.5 acres of land.

I have not received any satisfactory explanation of how the balance of $37,000 of the $50,000 was made up but I note that in Exhibits P-50 and P-51 the reference with respect to the plaintiff's and Kinney's properties included buildings and equipment while no such reference was made in those Exhibits with respect to the Armstrong property. Notwithstanding Bridges' observation about broken down buildings and run down equipment I suspect it would not take very much in the way of mining equipment to have a value of $37,000 and that in all likelihood the $37,000 paid was attributable to the acquisition of either the buildings or the equipment or both.

In summary, then, of the three sales made in 1969 we have:

3. Armstrong 449 acres for $13,000 or $28.95 per acre.

Notwithstanding the certificate of valuation I am prepared to give the plaintiff the benefit of the doubt and find that the consideration paid for the acquisition of its 100 acres was $10,000 and not $7,000. Bridges was emphatic that this was not so and, I must confess, in this respect unlike many other parts of his evidence, he was convincing.

In addition to the $10,000 the plaintiff retained the right to cut wood from the land for a period of five years. Bridges claims, notwithstanding that the expert evidence tendered on his company's behalf indicated the plaintiff's land contained 20 cords of wood per acre, the land contained 50 cords per acre and suggested there be added to the purchase price paid an additional amount attributable to the wood. It is difficult to place a value on the right to cut wood for in the cutting and selling a person may just as easily lose as make money. Indeed, the evidence in this case is that around that period wood contractors' costs were in excess of their income from wood operations.

Once again, however, I am prepared to give the plaintiff the benefit of the doubt and to assign an arbitrary additional amount of $20 per acre for the retention by the plaintiff of the right to harvest the wood from the 100 acres of land which it sold to Mount Pleasant Mines so that the effective consideration paid by the mining company to the plaintiff for the 100 acres of land on March 31, 1969 was $120 per acre.

In calculating present worth and in discounting Aronec used a 9 per cent figure and Goodwin a 7.5 per cent figure. I will arbitrarily select the average or an 8.25 per cent figure for the period from March 31, 1969 to December 31, 1971 to arrive at a December 31,1971 fair market value of

This value represents the value which I would assign to lands in the area of the plaintiff's lands as of December 31, 1971 which were required or potentially required for mining exploration purposes. The value does not include any premium or multiple which might be applied to lands which were, in 1971, required for the establishment of a mining operation because at that time no decision had been made by the persons who had the authority and the ability to make such a decision that they would establish a producing mine in the area.

As no decision had been taken the theory, method or multiples suggested by Aronec and the plaintiff's witnesses do not apply to the circumstances of this case. These multiples were developed from the experience of two potash companies in New Brunswick where lands were acquired by the companies after they had determined that mining operations would be established in the areas concerned. In this matter, as already noted, not only had no decision been made by December 31, 1971 but no decision was imminent. It is true that those responsible for advising those with the authority to make the decision were enthusiastically in favour of the establishment of a mining operation but that cannot be characterized as a decision by those in authority to establish a mining operation.

Not only had those in authority to make that decision not made it by December 31, 1971 but in September of 1971 they had directed their field personnel to discontinue all work on the molybdenum, tungsten and bismuth deposits and instead to investigate the potentiality of the deep tin deposits in the northern zone. It seems clear from this evidence that those having the authority to decide on establishing a mining operation at the Mount Pleasant site had not, by December 31,1971, made that decision but had, shortly before that date, discarded, for the then immediate future, the possibility of establishing a molybdenum, tungsten, bismuth operation until such time as it could assess the possibility of establishing a tin mining operation. It was, in short, from the owners' point of view, anything but a certainty on December 31, 1971 that any mining operation would ever be established in this area. That would, of necessity, depend upon market conditions at the time the owners addressed the question of whether or not to proceed. To the extent that that question may have been addressed on or before December 31,1971 the decision had been not to proceed.

Under these circumstances I can see no reason why there should be added, on December 31, 1971, any extra value to the plaintiff's property beyond the premium added for its potential use for mining exploration purposes. In this respect I am satisfied on the evidence which existed on December 31, 1971 that the entire acreage owned by the plaintiff could reasonably be considered potentially useful for mining exploration purposes and that the entire acreage should, accordingly, be valued at $140 per acre for a total valuation of 2,422.19 acres or $339,106.60 rounded to $340,000, and I direct that the matter be referred back to the Minister for reassessment of the plaintiff's capital gain on the sale of its property on the basis of this figure.

Although I have relied upon the three 1969 sales to establish what I consider to be the fair market value for the plaintiff's property in December of 1971 I have in fact rejected the Armstrong sale as a useful comparable and have relied primarily on the sale of the plaintiff's property. Appraisers for both parties to this action agreed that the Armstrong sale at $28.95 per acre was not a representative sale for any comparison. On the other hand the Kinney sale at $77.92 per acre was not that far removed in price from the $100 per acre sale by the plaintiff and assisted me in establishing a price range in 1969. In relying upon the plaintiff's sale at $100 per acre with the additional allowance for wood cover I have simply given the plaintiff the benefit of the doubt that the amount of its sale, although higher per acre than that of Kinney’s, was more representative of the fair market value at that time.

Because I have found the fair market value of the plaintiff's property to be in excess of that determined by the Minister it can be said that the plaintiff has been successful and should be entitled to its costs. In my view this is not a case where costs should be awarded to the plaintiff because it was unsuccessful in the overall thrust of its case.

All of the evidence with respect to the probability of a mine being established was lead with a view to having the otherwise fair market value of the plaintiff’s land quintupled in value. The plaintiff was not successful in convincing me that any multiple should be applied in this case.

While a great deal of time was spent on the evidence of McAllister and Goodwin, with respect to the value of the plaintiff's property, their reports and evidence were of no assistance to me in arriving at what I considered to be a fair market value as of December 31, 1971.

Having failed in its major premises this is not a case where the plaintiff should recover the costs of unsuccessfully attempting to establish its case. There will, accordingly, be no order as to costs.

Appeal allowed in part.