Mahoney,
J:—This
action
was
tried
on
common
evidence
with
a
like
action
against
the
defendant’s
wife,
May
Yates,
Court
file
no
T-4484-81.
The
evidence
consisted
entirely
of
the
transcript
of
the
Tax
Review
Board
hearing,
which
included
a
partial
agreed
statement
of
facts.
The
only
issue
for
determination
is
whether
the
disposition
in
issue
resulted
in
a
taxable
capital
gain.
The
amount
of
the
gain
is,
if
necesary,
to
be
subject
of
further
proceedings.
The
defendants
acquired
a
ten
acre
parcel
of
vacant
land
near
Guelph
on
which,
in
1964,
they
built
their
home.
Ten
acres
was
the
minimum
residential
parcel
then
permitted
by
the
zoning.
The
zoning
bylaw
was
subsequently
amended
to
require
a
25
acre
minimum.
The
defendants
continued
to
reside
there
as
legal
non-conforming
users.
When
they
bought,
the
defendants
did
not
want
ten
acres;
they
wanted
only
enough
land
for
their
residence
but
had
to
buy
at
least
ten
acres.
They
did
not
use
more
than
an
acre
for
residential
purposes.
The
balance
was
rented
to
a
neighboring
farmer
who
grew
crops
on
it.
In
1978,
the
defendants
sold
9.3
acres
to
the
City
of
Guelph
under
threat
of
expropriation.
The
9.3
acres
did
not
include
the
residence.
The
defendants
continued
to
reside
on
the
remaining
0.7
acre
plus
an
adjacent
0.225
acre
transferred
to
them
by
the
City
as
part
of
the
consideration
for
the
9.3
acres.
The
issue
is
whether
the
disposition
of
the
9.3
acres
was
a
disposition
of
a
principal
residence.
It
was
not
argued
that,
by
its
very
nature,
a
principal
residence
cannot
be
subject
of
a
partial
disposition.
If
the
disposition
of
the
9.3
acres
was
a
disposition
of
a
principal
residence,
the
capital
gain
thereon
is
exempted
from
tax
by
paragraph
40(2)(b)
of
the
Income
Tax
Act.
The
definition
of
“principal
residence”
by
paragraph
54(g)
is
both
lengthy
and
complex.
It
is
desirable
to
recite
only
the
material
part.
the
“principal
residence”
of
a
taxpayer
for
a
taxation
year
shall
be
deemed
to
include
.
.
.
the
land
subjacent
to
the
housing
unit
and
such
portion
of
any
immediately
contiguous
land
as
may
reasonably
be
regarded
as
contributing
to
the
tax-payer’s
use
and
enjoyment
of
the
housing
unit
as
a
residence,
except
that
where
the
total
area
of
the
subjacent
land
and
of
that
portion
exceeds
one
acre,
the
excess
shall
be
deemed
not
to
have
contributed
to
the
individual’s
use
and
enjoyment
of
the
housing
unit
as
a
residence
unless
the
taxpayer
establishes
that
it
was
necessary
to
such
use
and
enjoyment;
I
take
the
word
“individual’s”
to
be
synonymous
with
the
“taxpayer’s”;
perhaps
the
draftsman
wearied
of
the
tedious
repetition
of
“taxpayer”
and
variations
thereof
as
he
approached
the
end
of
a
sentence
of
over
400
words.
In
my
opinion,
the
critical
time
is
the
moment
before
disposition.
It
is
possible
that
a
subjective
test,
involving
the
actual
contribution
of
the
immediately
contiguous
land
to
the
taxpayer’s
use
and
enjoyment
of
the
unit
as
a
residence,
may
be
admissible.
Perhaps
such
factors
as
are
commonly
taken
into
account
in
applying
subsection
24(6)
of
the
Expropriation
Act,
RSC
1970
(1st
Supp),
c
16,
could
be
relevant
in
apropriate
circumstances.
However,
whether
or
not
a
subjective
test
is
properly
to
be
applied,
an
objective
test
surely
is
and
if,
in
its
application,
it
is
found
that
the
taxpayer
has
discharged
the
onus
on
him,
it
is
unnecessary
to
consider
the
subjective.
The
defendants
could
not
legally
have
occupied
their
housing
unit
as
a
residence
on
less
than
ten
acres.
It
follows
that
the
entire
ten
acres,
subjacent
and
contiguous,
not
only
“may
reasonably”
be
regarded
as
contributing
to
their
use
and
enjoyment
of
their
housing
unit
as
a
residence;
it
must
be
so
regarded.
It
also
follows
that
the
portion
in
excess
of
one
acre
was
necessary
to
that
use
and
enjoyment.
The
disposition
in
issue
was
a
disposition
of
a
principal
residence.
The
assessments
will
be
referred
back
to
the
Minister
for
reassessment
on
that
basis.
The
amount
of
tax
in
issue
brings
subsection
178(2)
into
play
in
the
matter
of
costs.
Except
for
disbursements
there
will
be
a
single
set
of
costs
for
both
actions.
A
copy
of
these
reasons
will
be
filed
in,
and
form
part
of
the
record
of,
action
no
T-4484-81.
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