Campbell
J.—:
In
1992
Mr.
Phillips
argued
that
his
income
tax
reassessment
for
the
years
1982
to
1985
was
wrong
because
it
disallowed
farm
loss
deductions,
and
I
think
it
is
fair
to
say,
he
lost
his
argument
by
a
very
slim
margin.
That
case
proceeded
before
Judge
R.D.
Bell
of
the
Tax
Court,
and
it
is
from
Judge
Bell’s
decision
that
Mr.
Phillips
appeals
before
me.
In
the
appeal,
Mr.
Phillips
was
unrepresented
by
counsel,
but
did
a
very
effective
job.
Both
he
and
Mr.
Wheeler,
who
appeared
on
behalf
of
the
defendant,
argued
well
within
a
cooperative
approach
to
examining
the
issues
of
the
case.
It
was
agreed
that
the
facts
as
found
by
Judge
Bell
would
apply
to
the
appeal
with
any
elaborating
evidence
that
Mr.
Phillips
wished
to
add.
It
was
further
agreed
that,
even
though
this
is
an
appeal
by
way
of
trial
de
novo,
the
primary
issue
in
the
appeal
is
whether
Judge
Bell
erred
in
ruling
against
Mr.
Phillips
as
he
did,
in
view
of
the
number
of
important
findings
he
made
in
Mr.
Phillips’
favour.
A.
The
facts
as
found
by
Judge
Bell
The
facts
as
Judge
Bell
found
them,
quoted
directly
from
his
judgment,
are
as
follows:
These
appeals
are
in
respect
of
the
1982,
1983,
1984
and
1985
taxation
years
from
reassessments
under
subsection
31(1)
of
the
Income
Tax
Act
(“Act”).
The
reassessments
were
made
on
the
basis
that
the
Appellant’s
chief
source
of
income
was
neither
farming
nor
a
combination
of
farming
and
some
other
source
of
income
and
his
loss
in
respect
of
each
of
the
taxation
years
in
question
was
limited
to
$5,000.
Although
the
Respondent’s
Reply
to
the
Notice
of
Appeal
pleaded
that,
in
the
alternative,
there
was
no
reasonable
expectation
of
profit
from
the
farming
operation,
at
the
hearing
Respondent’s
Counsel
admitted
that
there
was
a
reasonable
expectation
of
profit.
The
Appellant,
who
is
now
52
years
of
age,
was
born
one
mile
from
the
farm
on
which
he
conducted
the
farming
operations
that
are
the
subject
matter
of
these
appeals.
His
parents
bought
the
Appellant’s
grandfather’s
farm
in
1943
and
moved
from
a
farm
they
had
rented
from
1938
to
1943
to
the
newly
purchased
property.
Prior
to
1938
the
Appellant’s
father
had
farmed
with
his
grandfather
during
the
depression.
The
Appellant
lived
on
a
farm
and
took
part
in
his
father’s
farming
operations
during
the
first
18
years
of
his
life.
He
then
went
to
Queen’s
University
for
a
while,
worked
for
two
years
with
the
Ontario
Department
of
Agriculture
and
then
returned
to
University,
graduating
with
a
Bachelor
of
Commerce
degree
in
1966.
He
stated
that
he
would
come
home
on
weekends
and
work
on
the
farm
and
that
he
would,
although
working
for
the
Department
of
Agriculture
in
the
summertime,
also
go
home
on
weekends
to
help
on
the
farm.
After
University
the
Appellant
was
employed
as
a
teacher
in
Toronto.
He
completed
his
teaching
certification
and
took
accounting
specialist
and
marketing
specialist
courses
and
then
received
his
Master
of
Education
in
1972.
Prior
to
that
he
taught
in
Etobicoke,
Port
Credit
and
Arthur.
The
Appellant
testified
that
his
father
had
a
second
heart
attack
in
1967
and
had
to
sell
his
holstein
herd,
that
he
continued
to
live
on
the
farm
and
that
he
and
his
father
had
always
talked
about
him
taking
over
the
farm.
His
evidence
was
that
when
he
was
teaching
in
the
Toronto
region
from
1966
to
1973
inclusive
he
would
often
go
home
on
weekends
and
assist
with
haying
and
combining.
He
stated
that
prior
to
deciding
to
commence
a
sheep
business
he
analysed
the
other
types
of
farming
and
decided
that
the
dairy
industry
was
in
upheaval,
that
the
hog
industry
and
beef
industry
were
always
into
cycles
and
were
affected
by
quotas.
He
dismissed
the
“feather
trade”
and
started
researching
sheep
and
discovered
that
it
was
the
only
meat
not
produced
sufficiently
in
Canada
to
meet
domestic
needs.
The
Appellant
stated
further
that
in
the
late
sixties
he
read
about
sheep
and
that
he
attended
the
first
ram
sale
which
was
held
At
Maple,
Ontario,
Maple-
Newmarket
being
where
the
Ontario
sheep
specialists
are
located
and
Maple
being
the
experimental
farm
for
the
Ontario
Government.
He
also
would
go
to
the
Royal
winter
show
and
the
Canadian
National
Exhibition
in
the
summer
and
stated
that
when
he
was
at
Arthur
he
joined
the
Wellington
County
Sheep
Club.
The
Appellant
married
in
1973
and
moved
to
Campbellford
to
take
a
teaching
position
there.
He
stated
that
he
had
a
house
in
Toronto
which
he
was
unable
to
sell
when
he
moved
and
also
that
he
had
a
house
in
Orangeville.
In
1977,
he
bought
a
portion
of
the
farm
which
his
father
and
grandfather
had
rented
for
five
years
as
aforesaid.
Such
farm
consisted
of
106
acres,
about
60
acres
of
which
was
“work
land”
with
the
balance
being
trees
and
bush.
The
Appellant
stated
that
on
the
land
was
a
barn,
a
hog
barn
with
both
an
upper
and
lower
deck,
a
drive
shed
and
a
house.
The
Appellant
then
pursued
his
stated
goal
of
getting
his
information
together.
He
contacted
the
sheep
specialist
at
Newmarket,
spent
a
lot
of
time
with
him
and
decided
that
he
would
purchase
a
flock
of
sheep
and
build
from
there
because
he
would
have
a
more
stable
supply,
hoping
eventually
to
sell
breeding
stock.
He
stated
at
this
time
that
the
sheep
industry
was
working
on
the
breeding
cycle
idea
referred
to
as
out-of-
season
breeding.
His
plan
was
to
breed
for
out-of-season
breeding,
for
higher
lambing
rates
and
for
good
mothering
which
he
stated
to
be
the
three
characteristics
one
would
seek
in
breeding
stock.
He
stated
that
he
“did
quite
well”
with
out-of-season
breeding
because
he
was
able
to
produce
lambs
for
Christmas
and
lambs
for
Easter
celebrations,
this
seasonal
supply
producing
a
much
higher
price.
In
1979
the
Appellant
purchased
another
40
acres
of
“work
land”
and
he
obtained
95
acres
of
his
father’s
land.
Of
the
total
of
241
acres
owned
by
him,
165
acres
were
pasture.
He
then,
in
1979,
purchased
150
bred
[sic]
ewes
which
were
shipped
from
Western
Ontario.
He
stated
that
he
financed
the
purchase
of
the
farm
acreage
by
selling
his
house
in
Orangeville
and
the
house
in
Toronto
and
gave
a
mortgage
for
$30,000
to
the
vendors
from
whom
he
had
purchased
the
initial
106
acres.
He
then
sold
his
house
in
Campbellford
and
with
those
proceeds
and
his
floating
operating
loan
was
able
to
pay
for
the
additional
land.
The
Appellant’s
stated
plan
for
the
beginning
years
was
to
receive
income
for
what
he
culled
because
he
wanted
to
develop
the
above
three
characteristics
in
his
sheep
flock.
His
plan
was
to
cull
his
flock
and
have
his
sheep
“breeding
true”
for
those
characteristics
and
ultimately
to
own
300
to
400
sheep.
He
stated
that
his
buildings
could
handle
400
sheep.
The
Appellant
stated
that
although
he
would
be
penalized
for
taking
early
retirement
from
teaching
he
planned
to
retire
early
at
the
age
of
55.
He
also
testified
that
having
commenced
a
farming
operation
he
no
longer
pursued
a
higher
position
in
his
teaching
career
such
as
Vice-Principal,
Director
of
Education
or
Superintendent
of
schools,
et
cetera.
He
stated
that
“I
did
get
my
Co-op
-
specialist”,
a
new
Ontario
program
by
taking
same
“in
the
evenings
and
at
different
times”.
He
then
stated
that
he
hoped
to
have
his
flock
in
the
400
range
within
five
or
six
years.
The
Appellant
described
the
culling
operation
by
stating
that
ewes
that
did
not
meet
the
standards
of
his
three
objectives
would
be
sold,
that
he
would
keep
the
ewe
lambs
and
mothers
that
met
his
standards
and
bring
in
other
breeding
stock.
He
explained
that
even
lambs
and
ewes
that
are
kept
may
not
necessarily
breed
true.
The
Appellant
subscribed
to
the
Wool
Growers,
the
Ontario
sheep
publication,
and
also
had
access
to
The
Shepherd,
an
American
publication,
through
the
local
library.
That
library
also
brought
books
in
for
him
about
sheep
and
sheep
management.
He
also
belonged
to
the
Northumberland
Sheep
Club
and
was
a
member
of
the
Record
of
Performance
Program
sponsored
by
the
Ministry
of
Agriculture
and
Food,
that
he
knew
the
two
agricultural
representatives
and
that
he
would
receive
their
publications.
With
respect
to
time,
he
stated
that
he
would
rise
about
4:30
a.m.
and
would
be
out
working
from
5:00
a.m.
to
7:30
a.m.
and
that
he
would
be
on
the
road
to
school
at
8:00
a.m.
He
also
stated
that
when
he
returned
home
from
school
he
would,
on
average,
spend
two
of
three
hours
every
evening
checking
the
flock,
re-feeding,
et
cetera,
and
that
at
lambing
time
he
would
devote
much
more
of
his
time
to
the
operation
and
during
planting
and
harvesting
time
he
would
often
work
very
late.
Appellant’s
Counsel
introduced
a
copy
of
the
school
year
calendar
for
1984-1985
showing
the
total
number
of
days
in
school
as
195
days.
The
Appellant
testified
that
this
was
typical
of
the
time
spent
at
school
for
the
period
during
which
he
was
farming,
it
being
fixed
by
statute.
He
stated
that
quite
often
he
would
take
his
noon
hour
and
go
to
the
Co-op
to
buy
supplies
or
would
go
to
the
veterinarian’s
office.
His
Counsel
also
introduced
as
an
exhibit
a
1986
calendar
showing
that
in
that
year
he
spent
1,998
and
one
half
hours
farming
and
1,755
hours
at
school.
The
Appellant
testified
that
trips
to
the
store
or
to
the
veterinarian
while
he
was
at
school
were
not
included
in
his
computation
of
time
devoted
to
the
farming
operation,
the
effect
being
that
some
of
the
school
time
included
some
farm
time.
He
also
testified
that
his
bridge
financing
carried
interest
rates
as
high
as
24
1/2
per
cent,
that
he
put
cash
from
the
farming
operation
and
his
teaching
income
into
the
venture
and
beyond
that
would
have
to
increase
his
operating
loan.
He
stated
that
initially
his
weaning
rate
was
too
low,
that
in
the
first
year
he
culled
115
ewes
and
that
his
flock
contracted
a
disease
known
as
chlamydia
which
caused
spontaneous
abortions
or
weak
lambs
which
did
not
survive.
He
said
that
this
disaster
appeared
in
the
fall
of
1983,
that
in
December
of
that
year
he
went
out
one
morning
and
discovered
20
dead
fetuses
and
that
in
the
next
year
although
the
ewes
were
carrying
their
lambs
to
term,
such
lambs
were
weak
and
would
not
survive.
As
a
result
he
stated
that
he
did
not
buy
any
fresh
breeders
because
if
they
do
not
have
resistance
to
this
disease
they
are
very
susceptible
to
infection.
As
a
result
of
this,
in
the
Appellant’s
words,
at
that
juncture,
“Everything
had
to
go
on
hold”.
He
stated
that
it
was
not
until
1986
that
he
was
able
to
commence
expanding
his
flock
again.
He
testified
that
at
that
time
the
Red
Meat
Program
had
changed
its
focus
and
that
grants
for
buildings
were
available.
With
respect
to
field
work
the
Appellant
stated
that
the
land
needed
improvement,
that
over
the
years
he
used
corn
rotation
and
planting
of
oats,
that
he
had
very
high
custom
operator
costs
and
very
little
revenue
because
of
the
corn
market.
He
himself
did
all
the
field
work
with
respect
to
haying.
He
would
have
the
land
custom
ploughed
and
disced.
The
Appellant
stated
that
in
1986
he
had
plans
for
erecting
a
building
in
1988
which
would
have
the
capacity
for
500
sheep.
He
stated
that
by
the
end
of
1987,
with
respect
to
his
breeding
operation,
he
was
pleased
with
the
ewes
he
had
kept
and
that
the
ones
he
had
purchased
were
“coming
along”.
On
February
13,
1988
the
Appellant
had
the
misfortune
of
suffering
an
extensive
heart
attack
resulting
in
a
quadruple
bypass
on
October
5,
1988.
One
week
after
his
surgery
his
wife
advised
him
that
she
wanted
a
divorce
and
he
decided
to
sell
his
equipment
and
sheep.
The
sheep
were
sold
at
the
first
available
sale
in
1989
with
a
majority
of
his
equipment.
He
retained
the
tractor
and
the
bailer
and
some
other
minor
assets
but
in
1990
sold
everything.
Tax
returns
of
the
Appellant
for
the
1982,
1983,
1984
and
1985
taxation
years
were
entered
as
exhibits.
Also,
Appellant’s
Counsel
entered
as
exhibits
financial
statement
of
farm
operations
for
1988
and
also
for
1989.
The
Appellant
gave
evidence
to
the
effect
that
he
was
too
old
for
further
educational
upgrades
but
he
stated
that
he
was
approached
a
couple
of
times
to
see
if
he
was
interested
in
applying
for
the
Vice-Principalship
and
that
he
turned
those
opportunities
down
because
he
was
farming.
He
then
described
in
more
detail
the
assistance
received
from
the
RMP
(Red
Meat
Program).
The
Ontario
Government
brought
in
a
local
field
man
who
was
available
for
counselling
and
also
a
weigh
man
who
did
the
weighing
and
assisted
in
providing
more
accurate
records
and
computer
printouts
of
the
flock.
He
stated
that
this
helped
him
in
record
keeping
and
knowing
how
to
cull.
The
objective
of
this
assistance
was
to
be
able
to
produce
the
records
of
performance
to
potential
buyers
of
breeding
stock
thereby
facilitating
the
ability
to
sell
same.
Such
records
were
also
used
for
culling.
He
then
stated
that
at
the
outset
of
his
operation
all
of
his
sheep
were
“grades”
as
opposed
to
purebreds.
He
said
that
at
the
end
about
30
per
cent
of
his
flock
was
purebred,
the
sale
price
of
which
was
substantially
higher
than
that
of
grade
sheep.
He
said
that
his
lambing
rate
had
improved
from
the
time
of
commencing
operations
and
that
his
weaning
had
also
improved.
The
Appellant
was
pleased
with
the
turn
around
in
his
operation
and
stated
that
things
were
“really
ready
to
start
taking
off
when
’88
happened”.
He
also
qualified
for
the
Ontario
Government
renovation
program
and
the
grant
for
the
Red
Meat
Program.
He
had
no
animals
other
that
sheep
on
the
farm
and
had
no
poultry.
On
cross-examination,
Respondent’s
Counsel
substantially
focused
upon
the
fact
that
the
number
of
ewes
had
not
increased
over
the
years
in
question
and
sought
to
establish
that
the
Appellant
had
no
plan
for
expansion
to
reach
his
goal.
He
entered
as
exhibits
copies
of
the
Appellant’s
income
tax
return
for
taxation
years
1986
to
1989.
He
also
established
through
his
examination
that
the
Appellant
did
not
claim
capital
cost
allowance
in
the
years
in
question.
The
Appellant
reviewed
the
difficulties
he
had
with
respect
to
the
disease,
interest
rates
and
general
economic
climate
and
that
he
was
replacing
common
sheep
with
purebreds.
He
stated
with
respect
to
the
1987
year
...that
the
flock
was
starting
to
shape
up
again
after
those
previous
years
and
things
were
working
out
well...and
I
had
the
land
which
was
finally
coming
around....
He
stated
that
his
need
to
make
substantial
payments
for
custom
work
had
disappeared,
that
his
hay
was
coming
along
very
well
and
that
his
feed
bills
were
down.
In
response
to
a
question
from
Respondent’s
Counsel
to
the
effect
that
the
farm
operation
was
to
help
finance
the
buildings
and
the
land
that
he
had
purchased,
being
the
family
land
or
part
thereof,
the
Appellant
said
that
on
the
contrary
he
would
have
been
far
better
off
to
have
stayed
in
town
and
bought
a
brand
new
place
or
bought
a
different
farm
and
waited
for
his
father
to
die
because
he
was
going
to
inherit
land
in
any
event.
Respondent’s
Counsel
then
produced
Mr.
Thomas
John
Chambers
as
a
witness.
He
was
a
graduate
in
agriculture
from
the
University
of
Toronto,
was
a
sheep
raiser,
at
one
time
had
been
employed
with
Ralston
Purina
in
evaluating
the
credit
of
various
people
and
had
worked
as
an
adviser
for
the
Ministry
of
Agriculture
and
Food
on
their
Red
Meat
Program.
He
stated
that
he
had
spent
probably
a
third
of
his
time
working
at
the
viability
of
farm
operations.
He
had
visited
the
Appellant’s
operation
in
1987
in
respect
of
the
Appellant’s
application
for
a
grant
of
$5,000
for
capital
facilities.
He
stated
that
the
Appellant’s
operation
fit
“quite
well”
and
he
had
at
that
time
in
the
vicinity
of
100
sheep
and
the
operation
looked
good.
He
testified
that
the
Appellant’s
operation
qualified
for
the
grants
under
the
Red
Meat
Program.
The
Appellant’s
teaching
income,
gross
farming
expenses,
farm
losses
and
farm
profit
for
the
years
1982
through
1989
follows:
|
TEACHING
GROSS
FARM
FARM
|
FARM
|
FARM
|
|
INÇOMg,,,.
|
INCOME
|
EXPENSES
LOSSES
|
PROFIT
|
1982
|
43,584
|
10,100
|
19,735
|
9,635
|
|
1983
|
43,856
|
12,484
|
24,531
|
12,048
|
|
1984
|
44,596
|
10,200
|
22,000
|
11,800
|
|
1985
|
49,676
|
10,531
|
21,498
|
10,966
|
|
1986
|
53,332
|
10,239
|
19,155
|
8,916
|
|
1987
|
53,018
|
11,423
|
17,360
|
5,931
|
|
1988
|
54,904
|
12,691
|
14,779
|
2,087
|
|
1989
|
57,363
|
|
290
|
B.
Judge
Bell’s
analysis
Based
on
the
facts
as
he
found
them,
Judge
Bell
provided
the
following
analysis:
I
turn
to
the
decision
of
Mr.
Justice
Dickson
(as
he
then
was)
in
the
Moldowan
case
with
respect
both
to
the
three
classes
of
farmers
that
in
his
view
were
envisaged
by
the
Income
Tax
Act
and
the
distinguishing
features
of
“chief
source”
of
income.
Those
three
classes
set
forth
at
page
5216
are
as
follows:
1.
a
taxpayer,
for
whom
farming
may
reasonably
be
expected
to
provide
the
bulk
of
income
or
the
centre
of
work
routine.
Such
a
taxpayer,
who
looks
to
farming
for
his
livelihood,
is
free
of
the
limitation
of
subsection
13(1)
in
those
years
in
which
he
sustains
a
farming
loss.
2.
the
taxpayer
who
does
not
look
to
farming,
or
to
farming
and
some
subordinate
source
of
income,
for
his
livelihood
but
carried
on
farming
as
a
sideline
business.
Such
a
taxpayer
is
entitled
to
the
deductions
spelled
out
in
subsection
13(1)
in
respect
of
farming
losses.
3.
the
taxpayer
who
does
not
look
to
farming
or
to
farming
and
some
subordinate
source
of
income,
for
his
livelihood
and
who
carried
on
some
farming
activities
as
a
hobby.
The
losses
sustained
by
such
a
taxpayer
on
his
non-business
farming
are
not
deductible
in
any
amount.
The
learned
Justice
said
further,
The
distinguishing
features
of
“chief
source”
are
the
taxpayer’s
reasonable
expectation
of
income
from
his
various
revenue
sources
and
his
ordinary
mode
and
habit
of
work.
These
may
be
tested
by
considering,
inter
alia
in
relation
to
a
source
of
income,
the
time
spent,
the
capital
committed,
the
profitability
both
actual
and
potential.
A
change
in
the
taxpayer’s
mode
and
habit
of
work
or
reasonable
expectations
may
signify
a
change
in
the
chief
source,
but
that
is
a
question
of
fact
in
the
circumstances.
Counsel
for
the
Respondent
has
admitted
that
the
Appellant
had,
during
the
years
in
question,
a
reasonable
expectation
of
profit
thereby
excluding
him
from
class
(3).
Accordingly,
this
Court
must
determine
whether
the
Appellant
falls
within
class
(1)
or
class
(2)
set
out
above.
With
respect
to
class
(1),
having
regard
to
the
Appellant’s
full-time
teaching
job
and
the
amount
of
income
produced
therefrom,
I
find
that
his
chief
source
of
income
for
the
taxation
years
in
question
was
not
farming.
The
question
then
becomes
whether
his
chief
source
of
income
was
a
combination
of
farming
and
some
other
source
of
income.
Mr.
Justice
Dickson,
at
page
5216
of
the
Moldowan
decision,
stated
that
The
reference
in
subsection
13(1)
to
a
taxpayer
whose
source
of
income
is
a
combination
of
farming
and
some
other
source
of
income
is
a
reference
to
class
(1).
It
contemplates
a
man
whose
major
preoccupation
is
farming,
but
it
recognizes
that
such
a
man
may
have
other
pecuniary
interests
as
well,
such
as
income
from
investments,
or
income
from
a
sideline
employment....
“Sideline”
is
defined
in
The
Shorter
Oxford
English
Dictionary
to
mean,
“An
auxiliary
line
of
goods,
trade,
or
occupation.
Something
subsidiary
to
the
main
subject....”
and
is
defined
in
The
Concise
Oxford
Dictionary
Thumb
Index
Edition
to
mean,
work
etc.
done
in
addition
to
one’s
main
activity.
Having
regard
to
the
evidence
of
the
taxpayer
with
respect
to
the
fact
that
(i)
he
desired
to
return
to
a
farming
life,
(ii)
he
purchased
farm
land
in
the
area
where
he
had
grown
up,
(iii)
he
devoted
substantially
more
time
to
his
farming
operation
than
he
did
to
teaching
(albeit
the
evidence
in
this
regard
was
with
respect
to
1986,
subsequent
to
the
years
under
appeal),
(iv)
he
decided
not
to
pursue
advancement
in
the
teaching
profession,
(v)
he
committed,
having
reference
to
his
resources,
substantial
capital
to
the
farming
endeavour,
(vi)
his
decision
and
actions
effected
a
change
in
his
mode
and
habit
of
work,
(vii)
he
established
sheep
raising
goals
and
pursued
those
goals
in
spite
of
the
interruption
from
disease
and
high
interest
rates,
and
(viii)
the
direction
in
which
the
economics
of
the
farming
operation
pointed,
I
am
satisfied
that
for
this
Appellant
farming
not
only
may
reasonably
have
been
expected
to
provide
the
centre
of
work
routine
but
may
already
have
done
SO.
However,
having
regard
to
the
fact
that
he
devoted
the
full
time
required
to
his
teaching
profession
and
to
the
fact
that
the
amount
of
income
received
therefrom
was
four
(4)
to
five
(5)
times
his
gross
farm
income
in
six
(6)
of
the
seven
(7)
years
(including
the
years
under
appeal)
shown
in
the
table
above,
I
cannot
conclude
that
his
teaching
was
a
“sideline
employment”.
Further,
I
cannot
conclude,
on
the
basis
of
these
income
figures,
that
the
Appellant
looked
to
farming
for
his
livelihood
as
required
under
the
first
test.
In
my
opinion,
the
Appellant
cannot
fall
within
class
(1)
for
the
taxation
years
in
question.
Therefore,
applying
the
principles
of
the
Moldowan
case,
the
Appellant’s
chief
source
of
income
was
not,
for
the
taxation
years
under
appeal,
a
combination
of
farming
and
some
other
source
of
income.
Accordingly,
these
appeals
are
dismissed.
[Emphasis
added.]
C.
My
analysis
So,
as
can
be
seen
in
the
end,
even
though
Judge
Bell
found
favourably
for
Mr.
Phillips
on
the
many
important
factors
to
be
considered,
he
placed
extraordinary
weight
on
the
comparison
of
the
dollar
value
of
the
incomes
between
Mr.
Phillips’
teaching
and
his
farming
efforts.
Mr.
Phillips
has
argued
that
in
the
face
of
all
the
findings
in
his
favour,
it
was
an
error
to
do
so.
There
is
no
dispute
in
the
case
that
Dickson
J.’s
decision
in
Moldowan
is
the
authority
on
the
topic
of
farm
losses.
Indeed
it
is
the
only
authority
referred
to
by
Judge
Bell
even
though,
as
I
understand
it,
a
number
of
case
authorities
were
produced
in
arguments
presented
by
Mr.
Phillips.
In
this
appeal,
between
Mr.
Phillips
and
the
defendant,
I
have
been
referred
to
some
19
decisions
on
farm
losses
which
go
both
ways.
As
Mr.
Phillips
put
it
in
his
argument
“Seven
for
—
Twelve
against”
his
position.
The
cases
show
that
the
law
on
the
subject
of
farm
losses
is
very
clear
thanks
to
Moldowan.
But
each
case
that
has
applied
Justice
Dickson’s
reasoning
has
added
little
to
it
and,
therefore,
the
differences
in
outcome
have
been
essentially
fact-driven.
That
is,
the
analysis
in
each
case
is
an
exercise
of
comparing
the
factors
set
forth
in
Moldowan,
assigning
weight
to
them
depending
on
the
whole
of
the
evidence,
and
rendering
a
decision
accordingly.
It
is
pretty
obvious
that
in
this
type
of
situation
no
precedent
is
binding
because
no
two
facts
situations
are
the
same.
The
argument
before
me,
however,
centred
on
one
precedent
which
Mr.
Wheeler
argued
to
be
very
persuasive
as
being
“on
all
fours”
with
Mr.
Phillips’
case.
Wilson
dealt
with
a
teacher
who:
grew
up
on
a
farm
and
always
intended
to
be
a
farmer;
taught
as
a
source
of
income
to
finance
the
farm;
spent
more
hours
farming
than
teaching;
taught
between
8:30
a.m.
and
5:00
p.m.
when
school
was
in
session;
did
all
the
farm
work;
and
was
an
active
community
member.
In
deciding
Wilson
,
Mr.
Justice
Dubé
made
the
following
findings
which
Mr.
Wheeler
has
cited
are
all
similar
to
those
applying
to
Mr.
Phillips:
The
jurisprudence
in
the
matter
has
provided
six
criteria
which
I
find
to
be
of
assistance
in
the
instant
case:
1-
The
actual
income
from
farming
and
other
sources.
2-
The
time
spent
on
each
occupation.
3-
The
capital
committed.
4-
The
reasonable
expectations
of
a
farming
profit.
5-
The
change
in
occupational
direction.
6-
The
ordinary
mode
and
habit
of
work.
1.
As
we
are
dealing
with
the
chief
source
of
income,
the
first
criteria,
but
not
the
only
one,
has
to
be
a
comparison
between
the
taxpayer’s
farm
income
and
his
income
from
other
sources.
On
that
score,
the
chief
source
of
the
plaintiffs
income
is
clearly
his
teaching
profession.
In
fact.
during
the
whole
period
canvassed,
the
taxpayer
has
always
claimed
farm
losses,
except
for
the
year
1993,
and
even
for
that
year
the
employment
income
was
greater
than
the
farm
income.
2.
As
to
the
time
spent
on
each
occupation,
obviously
the
plaintiff
spent
more
time
on
the
farm
as
he
lives
there.
However,
except
for
weekends
and
holidays,
his
prime
time
is
spent
at
school
as
a
full-time
teacher.
3.
As
to
capital
committed,
none
was
required
for
his
employment
as
a
teacher
and
that
criteria
does
not
provide
much
assistance.
The
situation
would
be
different
in
the
case
of
a
businessman
running
another
business
along
with
a
farm
in
which
case
a
comparison
could
be
made
between
the
capital
invested
in
the
farm
business
and
the
other
businesses.
4.
In
the
area
of
reasonable
expectations
of
farming
profit,
there
were
certainly
high
hopes
present
in
the
plaintiffs
mind
and
profit
may
become
a
reality
once
he
retires
and
becomes
a
full-time
farmer.
But
mere
intention
is
not
sufficient.
During
the
18
years
canvassed,
such
expectations
remained
illusory
as
farm
losses
remained
consistent
except
for
the
year
1993.
5.
Neither
can
it
be
said
that
in
his
case
there
was
a
change
in
occupational
direction
at
any
time
during
the
period.
He
started
as
a
full-time
teacher
and
still
is
a
full-time
teacher.
The
situation
would
most
certainly
be
different
if
at
any
stage
he
had
become
a
full-time
farmer
and
merely
a
part-time
teacher.
6.
Finally,
as
to
the
plaintiffs
ordinary
mode
and
habit
of
work,
although
he
lives
on
the
farm,
his
daily
schedule,
except
for
weekends
and
holidays,
is
centered
around
his
teaching
profession.
He
has
to
drive
to
school,
arriving
there
at
8:30
am.
and
returning
home
at
5:00
p.m.
That
is
a
fixed
schedule
which
takes
up
his
daily
quality
time.
His
work
on
the
farm
has
to
be
adjusted
accordingly.
Consequently,
I
must
find
that
during
the
relevant
taxation
years,
the
plaintiffs
chief
source
of
income
was
not
farming
in
combination
with
something
else
but
teaching
and
possibly
something
else.
As
might
be
expected,
Mr.
Phillips
has
successfully
shown
enough
differences
between
Wilson
and
his
case
that
Wilson
becomes
only
an
interesting
and
not
binding
authority.
In
particular,
Justice
Dubé’s
fourth
finding
that
Mr.
Wilson’s
“expectations
remained
illusory”
is
very
different
from
the
situation
which
applies
for
Mr.
Phillips.
As
found
by
Judge
Bell,
“the
direction
in
which
the
economics
of
the
farming
operation
pointed”,
which
was
upwards,
clearly
distinguishes
the
two
fact
patterns.
In
addition,
while
the
fifth
factor,
“the
change
in
occupational
direction”,
was
absent
in
Mr.
Wilson’s
case,
it
as
present
in
Mr.
Phillips’.
Judge
Bell
concluded
that
“he
decided
not
to
pursue
advancement
in
the
teaching
profession”
which
is
a
finding
that
Mr.
Phillips’
work
energies
were
shifted
from
teaching
to
farming.
There
are
some
other
features
of
Justice
Dubé’s
reasoning
in
Wilson
which
I
think
I
should
comment
upon.
In
his
first
paragraph,
Justice
Dubé
states
that
“...the
first
criteria,
but
not
the
only
one,
has
to
be
a
comparison
between
the
taxpayer’s
farm
income
and
his
income
from
other
sources”.
This
effort
at
ranking
I
think
is
unsupported
by
Moldowan
and
Morrissey
which
suggest
that
all
factors
should
be
considered
and
weight
placed
upon
them
with
no
predetermination
as
to
which
factor
should
take
priority.
As
to
Justice
Dubé’s
second
criteria,
being
how
“prime
time
is
spent”,
Mr.
Phillips
argued
effectively
that
Justice
Dubé’s
impression
in
what
constitutes
“prime
time”
is
based
on
a
very
subjective
analysis.
Obviously,
for
Justice
Dubé,
a
person’s
prime
time
is
during
the
day.
As
Mr.
Phillips
pointed
out,
what
would
it
be
for
a
night
worker?
Indeed,
as
he
stated,
within
his
support
of
the
farm
most
of
his
work
was
done
at
night,
being
early
in
the
morning
starting
at
4:00
a.m.
and
after
the
close
of
school
at
5:00
p.m.
His
essential
point
was
that,
for
him,
this
was
his
prime
time
since
farming
was
his
primary
activity.
I
agree.
A
similar
comment
can
be
made
about
Justice
Dubé’s
sixth
point
in
that
he
considered
that
the
time
spent
during
school
hours
was
Mr.
Wilson’s
“daily
quality
time”.
Mr.
Phillips
effectively
argued
that
what
constitutes
“quality
time”
again
requires
a
subjective
analysis,
and
that
for
him,
the
evidence
shows
that
the
time
he
spent
farming
was
more
important
than
the
time
he
spent
in
school.
I
agree.
Because
of
the
differences
I
have
noted,
and
the
comments
I
have
made,
I
place
no
weight
on
Wilson
in
deciding
the
merit
of
Mr.
Phillips’
appeal.
As
addressed
above,
after
making
detailed
findings
of
fact,
Judge
Bell
made
some
critical
evaluations.
I
accept
those
numbered
(i)
to
(viii)
as
emphasized
in
the
quote
above,
and
also
accept
the
additional
statement
that
Judge
Bell
was
satisfied
that
farming
“may
reasonably
have
been
expected
to
provide
the
centre
of
work
routine
but
may
already
have
done
so”.
Each
of
these
factors
show
that
Judge
Bell
had
a
great
deal
of
sympathy
for
Mr.
Phillips’
argument
that
he
should
be
allowed
farm
loss
deductions
as
a
class
(1)
farmer.
However,
Judge
Bell’s
decision
went
against
Mr.
Phillips
on
an
evaluation
of
two
points
found
in
the
last
paragraph
of
his
judgment.
First,
he
placed
strong
weight
on
the
difference
of
income
between
Mr.
Phillips’
teaching
as
compared
to
his
farming
to
conclude
that
teaching
was
not
a
“sideline
employment”.
And
second,
he
said
that
on
the
basis
of
these
income
figures
he
could
not
find
that
Mr.
Phillips
looked
to
farming
for
his
livelihood
which
he
felt
was
a
requirement
under
Moldowan.
The
key
question
to
be
answered
in
assessing
whether
Judge
Bell
made
an
error
is
whether
Mr.
Phillips
was
a
farmer
who
had
a
sideline
job
as
a
teacher
or
whether
Mr.
Phillips
was
a
teacher
who
had
a
sideline
job
as
a
farmer.
The
differences
in
income
between
the
two
positions
and
the
fact
that
Mr.
Phillip’s
teaching
income
was
far
greater
than
his
farming
income,
are
only
factors
which
need
to
be
taken
into
consideration
with
all
the
others
of
the
case.
Clearly
Judge
Bell
felt
that
his
decision
should
be
driven
by
these
two
factors,
but
I
think
in
doing
so
he
made
an
error
in
not
considering
the
weight
of
the
whole
of
the
favourable
findings
which
he
made.
On
Judge
Bell’s
findings
of
fact,
with
which
I
completely
agree
having
read
his
decision
and
having
heard
Mr.
Phillips
give
evidence
on
appeal,
I
find
that
during
the
tax
years
under
consideration
the
centre
of
Mr.
Phillips’
psychological,
physical,
and
professional
activity
was
farming
not
teaching.
I
find,
therefore,
that
teaching
was
only
an
essential
support
for
Mr.
Phillips’
successful
farming
efforts,
and
that,
for
tax
purposes,
Mr.
Phillips
was
a
farmer
not
a
teacher.
Accordingly,
I
grant
this
appeal.
Appeal
granted.