This
appeal
also
requires
this
Court
to
determine
whether
the
respondent
is
entitled
to
include
the
sum
of
$87,570
as
recapture,
and
a
capital
gain
of
$635
in
the
appellants
income
for
his
fiscal
year
ending
December
31,
1979.
2.
Burden
of
proof
2.01
The
appellant
has
the
burden
of
establishing
that
the
respondent's
assessments
are
erroneous.
This
burden
of
proof
flows
from
a
number
of
judicial
decisions,
including
a
judgment
of
the
Supreme
Court
of
Canada
in
Johnston
v.
M.N.R.,
[1948]
S.C.R.
486,
[1948]
C.T.C.
195,
3
D.T.C.
1182.
2.02
In
that
judgment,
the
Court
held
that
the
facts
presumed
by
the
respondent
to
support
the
assessments
or
the
new
assessments
are
also
presumed
to
be
true
until
there
is
evidence
to
the
contrary.
In
the
case
in
issue,
the
facts
presumed
by
the
respondent
are
described
in
subparagraphs
(a)
to
(p)
of
paragraph
7
of
the
respondent's
reply
to
the
notice
of
appeal.
At
the
beginning
of
the
inquiry,
counsel
for
the
appellant
either
admitted
or
denied
these
facts.
That
paragraph
reads
as
follows:
7.
In
reassessing
the
appellant's
1979
to
1982
taxation
years,
the
Minister
of
National
Revenue
relied,
inter
alia,
on
the
following
facts:
(a)
on
June
9,
1984,
the
appellant
signed
a
T-2029
form
(waiver
of
4-year
time
limit)
respecting
his
1979
taxation
year;
[admitted]
(b)
until
December
31,
1979,
the
appellant
was
the
sole
[sic]
or
co-owner
of
the
buildings
referred
to
in
paragraph
8
of
the
notice
of
appeal
(as
if
recited
at
length);
[denied
as
drafted]
(c)
on
December
31,
1979,
the
appellant
sold
by
written
agreement
entered
into
before
a
notary,
the
buildings
in
dispute
and
all
his
rights
to
M.
Laberge
Inc.;
[denied]
(d)
the
deed
of
sale
stipulated
as
follows:
(i)
the
purchaser
(M.
Laberge
Inc.)
may
enjoy
and
dispose
of
the
buildings
sold
as
it
sees
fit
and
shall
have
possession
as
of
December
31,
1979;
(ii)
the
purchaser
undertakes
as
of
December
31,
1979
to
pay
the
taxes
and
assume
the
cost
of
insurance
for
the
buildings;
(iii)
the
purchaser
acquired
the
right
to
collect
rent
as
of
January
1,
1980;
(iv)
the
purchaser
pays
a
part
of
the
purchase
price
at
the
time
of
the
sale
which
is
not
subject
to
any
suspensive
condition;
[denied]
(e)
the
deed
of
sale
of
December
31,
1979
entered
into
with
M.
Laberge
Inc.
also
provided
that
the
purchaser
would
pay
the
balance
of
the
sale
price
on
February
1,
1980;
[admitted]
(f)
pursuant
to
the
agreement
of
December
31,
1979
with
M.
Laberge
Inc.,
the
appellant
relinquished
legal
ownership
and
also
beneficial
ownership;
[denied]
(g)
on
the
same
day,
M.
Laberge
Inc.
resold
the
same
buildings
to
Mr.
André
Hébert,
who
will
claim
the
capital
cost
allowance
for
his
1979
taxation
year;
[not
known]
(h)
the
"original"
purchaser,
M.
Laberge
Inc.,
failed
to
pay
the
balance
of
the
sale
price
on
February
1,
1980;
[admitted]
(i)
at
the
same
time
and/or
subsequently,
the
appellant
proceeded
to
collect
the
rent
and
paid
the
expenses
connected
with
the
buildings;
[admitted]
(j)
furthermore,
a
number
of
legal
proceedings
ensued,
but
at
no
time
was
the
appellant's
intention
to
sell
the
buildings
again
questioned;
[denied]
(k)
despite
the
number
of
legal
proceedings
that
followed,
the
appellant
never
sought
to
have
the
sale
nullified
on
the
basis
of
the
resolutive
condition
contained
in
the
deed
of
sale;
[denied]
(l)
the
appellant,
having
disposed
of
his
buildings
on
December
31,
1979,
may
not
deduct
the
capital
cost
allowance
for
1979;
[denied]
(m)
having
disposed
of
the
buildings,
the
appellant
must
include
in
his
income
a
sum
of
$87,570
as
recapture,
computed
as
follows:
|
COST
|
$292,500
|
|
UPCCA
|
$204,930
|
|
Recapture:
|
$
87,570
[denied]
|
(n)
in
addition,
the
appellant
realized
a
capital
gain
of
$6,750
(proceeds
of
disposition
$299,250—adjusted
cost
base
$292,500)
of
which
a
portion
only
(through
a
computation
of
reserves),
namely
$1,270,
or
a
taxable
capital
gain
of
$635,
is
taxable
in
1979;
[denied]
(o)
in
1980,
1981
and
1982,
the
appellant
may
not
deduct
the
rental
loss
(in
1980)
and
mortgage
interest
expenses
(in
1980,
1981
and
1982),
since
these
expenses
were
incurred
not
for
the
purpose
of
earning
income
but
for
the
purpose
of
protecting
a
debt;
[denied]
(p)
the
amounts
referred
to
in
subparagraph
(o)
constitute
advances
or
a
loan
to
the
purchaser
that
became
a
bad
debt
and
thus
deductible
in
1983
as
a
capital
loss,
as
a
result
of
a
judgment
rendered
on
July
21,
1983,
ordering
M.
Laberge
Inc.,
inter
alia,
to
pay
the
balance
of
the
mortgage
to
the
National
Bank
of
Canada
or
to
abandon
the
encumbered
building
within
15
days
of
the
judgment;
[denied]
[Translation.]
3.
Facts
3.01
The
appellant
sold
a
series
of
buildings
to
M.
Laberge
Inc.
on
December
31,
1979.
These
buildings
may
be
described
as
follows:
551-
553-555
Brassard
Blvd.
at
Chambly
(lot
104-12-8)
552-554-556
Brassard
Blvd.
at
Chambly
(lots
104-14-1
and
104-15-9)
560-562-564
Brassard
Blvd.
at
Chambly
(lot
104-15-8)
591-593-595
Brassard
Blvd.
at
Chambly
(lot
104-12-3)
3.02
The
deed
of
sale
at
the
origin
of
this
transaction
is
a
notarial
deed
(1-1(2)).
The
respondent
has
produced
a
certified
copy
of
this
deed
(Exhibit
1-3).
3.03
This
deed
of
sale
was
registered
in
the
index
to
immoveables
on
April
1,
1981.
The
registration
number
of
the
sale
is
574299.
3.04
On
December
31,
1979,
the
appellant
and
Mr.
Claude
Verreault
also
sold
to
M.
Laberge
Inc.
a
building
located
at
576-578-580
Brassard
Blvd.
at
Chambly
(lot
104-15-6).
This
sale
was
also
made
by
notarial
deed
(Exhibit
1-1(1)).
A
certified
copy
of
this
notarial
deed
has
been
produced
in
the
record
(Exhibit
1-3).
This
deed
of
sale,
which
was
registered
on
April
1,
1981,
bears
registration
number
574302.
3.05
In
June,
1981,
the
appellant
brought
an
action
against
M.
Laberge
Inc.
to
claim
the
balance
of
the
sale
price.
A
similar
action
was
brought
jointly
by
the
appellant
and
Claude
Verreault
in
connection
with
the
balance
of
the
sale
price
of
the
buildings
located
at
576-578-580
Brassard
Blvd.
at
Chambly
(Exhibit
1-2).
3.06
On
March
18,
1983,
the
Superior
Court
dismissed
the
actions
for
the
balance
of
the
sale
price
instituted
by
the
appellant
(Exhibit
A-4).
However,
on
June
9,
1988,
the
Court
of
Appeal
reversed
this
decision
(Exhibit
1-1(5)).
3.07
The
following
buildings
have
been
the
subject
of
judgments
allowing
the
giving
in
payment
actions
instituted
by
the
Caisse
populaire
de
St-Alphonse
d'Youville:
552-554-556
Brassard
Blvd.
at
Chambly
(104-15-9
and
104-14-1)
dated
November
24,
1982
(Exhibit
A-1(7));
560-562-564
Brassard
Blvd.
at
Chambly
(104-15-8)
dated
January
17,
1983
(Exhibit
A-1(8));
576-578-580
Brassard
Blvd.
at
Chambly
dated
March
17,
1983
(Exhibit
A-1(10)).
3.08
In
addition,
the
following
buildings
were
sold
at
a
judicial
sale
in
favour
of
the
National
Bank
of
Canada:
551-553-555
Brassard
Blvd.
at
Chambly
on
December
8,
1983
(Exhibit
A-1(6));
591-593-595
Brassard
Blvd,
at
Chambly
on
December
8,
1983
(Exhibit
A-l
(9)).
3.09
The
appellant
also
produced
in
the
record
two
judgments
of
the
Superior
Court
in
which
Mercure,
J.
nullified
the
deeds
of
sale
bearing
registration
numbers
574299
and
574302
(Exhibits
A-2
and
A-3).
These
decisions
were
rendered
shortly
before
the
present
case
was
heard,
namely
April
25,
1990.
3.10
The
respondent
produced
a
document
establishing
that
on
December
31,
1979,
M.
Laberge
Inc.
sold
the
following
buildings
to
André
Hébert
(Exhibit
1-1(3)):
551-553-555
Brassard
Blvd.
at
Chambly
(lot
104-12-8);
552-554-556
Brassard
Blvd.
at
Chambly
(lots
104-14-1
and
104-15-9);
560-562-564
Brassard
Blvd.
at
Chambly
(lot
104-15-8);
591-593-595
Brassard
Blvd.
at
Chambly
(lot
104-12-3);
576-578-580
Brassard
Blvd.
at
Chambly
(lot
104-15-6).
According
to
the
appellant,
André
Hébert,
himself
a
notary,
incorporated
M.
Laberge
Inc.
for
the
sole
purpose
of
fraudulently
purchasing
the
buildings
of
the
appellant
and
of
Claude
Verreault.
3.11
Claude
Verreault's
testimony
establishes
that
his
brother
Denis
received
a
mandate
from
M.
Laberge
Inc.
to
administer
all
the
buildings
purchased
by
this
company.
The
following
passages
from
pages
17,
18,
29,
30
and
31
of
the
text
of
his
testimony
provide
a
good
illustration
of
this
point:
A.
At
the
notary's
[André
Hébert's]
office,
it
was
agreed
that
we
would
administer
these
buildings.
I
made
the
payments
for
these
buildings,
the
insurance,
the
taxes;
I
collected
the
rents;
I
continued
to
do
what
I
was
doing
before.
Q.
Until
when
did
you
do
that?
A.
At
least
one
and
a
half
(1
I2)
years,
maybe
more.
Q.
With
regard
to
what
you
paid,
could
you
be
more
precise?
What
did
you
pay?
A.
The
regular
administration
of
a
building,
the
taxes,
maintenance,
repairs,
since
the
buildings
still
belonged
to
me,
we
were
still
there,
I
had
to
keep
them
up;
there
were
lots
of
tenants
in
them;
I
couldn't
leave
them
with
problems.
THE
COURT:
:
Who
collected
the
rent?
WITNESS:
The
administrator,
my
brother,
was
responsible
for
collecting
[the
rent]
and
making
the
mortgage
payments,
for
making
all
the
payments,
so
things
continued
as
they
always
had.
THE
COURT:
Then
according
to
you
it
was
the
vendor
who
continued?
WITNESS:
The
vendor,
yes,
the
vendors.
THE
COURT:
Who
continued
the
administration?
WITNESS:
The
full
administration.
(S.N.,
pages
17-18)
Q.
You
said
a
little
while
ago
that
the
notary
had
given
you
the
mandate
to
continue
administering
the
building.
When
you
speak
of
the
notary,
who
are
you
speaking
of
?
A.
André
Hébert,
but
he
didn't
give
me
the
mandate
to
administer.
The
administrator
remained
the
same.
Q.
You
are
retracting
the
statement
you
made
a
while
ago?
A.
Absolutely
not.
WITNESS:
My
brother
administered
the
buildings.
He
was
responsible
for
renting
them,
maintenance,
everything,
and
he
was
the
administrator
from
the
beginning.
THE
COURT:
What
is
your
brother’s
name?
WITNESS:
Denis
Verreault.
THE
COURT:
Well,
a
while
ago
I
had
the
same
reaction
as
Ms.
Jacquier.
When
you
said
administrator,
I
said
it
was
the
vendor
who
was
administering,
you
said
yes,
but
I
also
understand
that
that
meant
that
it
was
Denis
Verreault
who
administered
for
you?
WITNESS:
For
us.
THE
COURT:
And
that
it
was
he
who
continued
to
administer?
WITNESS:
That's
right,
there
were
no
changes.
THE
COURT:
There
were
no
changes?
WITNESS:
No.
THE
COURT:
Then,
once
again,
it
was
a
mandate
that
the
notary
entrusted
to
him,
to
continue
to
administer?
WITNESS:
He
agreed
to
it.
(S.N.,
pages
29-31)
[Translation.]
4.
The
law—case
law
and
doctrine—analysis
4.01
The
law
The
main
provisions
used
in
this
case
are
paragraph
13(21)(c),
subparagraph
54(c)(v)
and
subsection
248(3)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
5.
C.
1970-71-72,
c.
63)
(the
"Act").
These
provisions
will
be
cited
as
we
develop
our
analysis
of
this
case.
Articles
2082,
2083
and
2098
of
the
Civil
Code
also
have
a
certain
importance
in
this
case.
However,
it
is
not
necessary
to
reproduce
them,
given
the
generality
of
the
principles
that
will
be
drawn
from
them.
4.02
Case
law
and
doctrine
The
parties
have
referred
the
following
case
law
and
doctrine
to
the
Court:
1.
Malkin
v.
M.N.R.,
[1942]
Ex.
C.R.
113,
[1942]
C.T.C.
135,
2
D.T.C.
587;
2.
Alepin
v.
The
Queen,
[1979]
C.T.C.
360,
79
D.T.C.
5259;
3.
Adam
v.
M.N.R.,
[1985]
2
C.T.C.
2383,
85
D.T.C.
667;
4.
Mignault,
Pierre-Basile,
Droit
civil
canadien.
Vol.
9.
Wilson
Lafleur
(1916);
5.
Demers,
Claude,
Traite
de
droit
civil
du
Québec.
Vol.
14.
Wilson
Lafleur
(1950);
6.
Desjardins,
Yvan.
L'index
des
immeubles
est-il
fiable?”
(1983),
86
Revue
du
Notariat
55;
7.
Martineau,
Jean.
"Comparaison
et
efficacité
des
diverses
formes
de
documents
susceptibles
d"enregistrement"
(1979),
82
Revue
du
Notariat
31.
4.03
Analysis
4.03.1
The
solution
to
this
dispute
that
will
be
given
in
this
case
is
connected
with
the
date
on
which
the
buildings
sold
to
M.
Laberge
Inc.
were
subject
to
a
disposition
pursuant
to
paragraph
54(c)
of
the
Act.
The
special
nature
of
this
case
derives
in
large
part
from
the
meaning
that
this
Court
intends
to
give
the
concepts
of
“beneficial
ownership”
and
“legal
ownership”
in
the
context
of
a
sale
of
immoveables
that
takes
place
in
Quebec.
4.03.2
Paragraph
54(c)
and
subsection
248(3)
of
the
Act
are
of
major
importance
in
terms
of
the
legal
arguments
that
this
Court
intends
to
make
in
this
judgment.
It
will
therefore
be
useful
at
this
point
to
reproduce
the
French
and
English
versions
of
these
provisions,
in
order
to
better
grasp
the
arguments
of
the
parties
to
this
case.
54.
In
this
subdivision,
(c)
"disposition"
of
any
property,
except
as
expressly
otherwise
provided,
includes
(i)
any
transaction
or
event
entitling
a
taxpayer
to
proceeds
of
disposition
of
property,
but,
for
greater
certainty,
does
not
include
(v)
any
transfer
of
property
by
virtue
of
which
there
is
a
change
in
the
legal
ownership
of
the
property
without
any
change
in
the
beneficial
ownership
thereof,
other
than
a
transfer
to
a
trust
governed
by
(A)
a
registered
retirement
savings
plan,
(B)
a
deferred
profit
sharing
plan,
(C)
an
employees
profit
sharing
plan,
(D)
a
registered
home
ownership
savings
plan,
or
(E)
a
registered
retirement
income
fund
by
a
person
who
is,
immediately
after
the
transfer,
a
beneficiary
under
the
plan
or
fund,
or
a
transfer
by
any
such
trust
governed
by
a
plan
or
fund
to
a
beneficiary
thereunder,
248
(3)
In
Its
application
in
relation
to
the
Province
of
Quebec,
a
reference
in
this
Act
to
any
property
that
is
or
was
beneficially
owned
by
any
person
shall
be
read
as
including
a
reference
to
property
in
relation
to
which
any
person
has
or
had
the
full
ownership
whether
or
not
the
property
is
or
was
subject
to
a
servitude,
or
has
or
had
a
right
as
a
usufructuary,
a
lessee
in
an
emphyteutic
lease,
an
institute
in
a
substitution
or
a
beneficiary
in
a
trust;
and
a
reference
in
this
Act
to
the
beneficial
owner
of
any
property
shall
be
read
as
including
a
reference
to
a
person
who
has
or
had,
accordingly
as
the
context
requires,
such
ownership
as
a
right
in
relation
to
that
property.
54.
Dans
la
présente
sous-section,
(c)
“disposition
de
biens”
comprend,
sauf
dispositions
contraires
expresses,
(i)
toute
opération
ou
tout
événement
donnant
droit
au
contribuable
au
produit
de
la
disposition
de
biens,
mais,
pour
plus
de
précision,
ne
comprend
pas
(v)
tout
transfert
de
biens,
lorsqu'il
y
a
un
changement
dans
le
legal
ownership
du
bien
sans
changement
dans
le
beneficial
ownership
de
ce
bien,
autre
qu’un
transfert
à
une
fiducie
régie
par
(A)
un
régime
enregistré
d’épargne-retraite,
(B)
un
régime
de
participation
différée
aux
bénéfices,
(C)
un
régime
de
participation
aux
bénéfices
des
employés,
(D)
un
régime
enregistré
d'épargne
logement,
ou
(E)
un
fonds
enregistré
de
revenu
de
retraite
par
une
personne
qui
est,
immédiatement
après
le
transfert,
un
bénéficiaire
en
vertu
du
régime
ou
du
fonds,
ou
un
transfert
effectué
par
une
telle
fiducie
régie
par
un
régime
ou
un
fonds
à
un
bénéficiaire
en
vertu
de
ce
régime
ou
de
ce
fonds,
248.
(3)
Aux
fins
de
l'application
de
la
présente
loi
dans
la
province
de
Québec,
l'expresssion
"droit
de
jouissance"
à
l'égard
d’un
bien
signifie
le
droit
de
la
personne
qui
a
ou
avait
le
pleine
propriété
d’un
bien,
même
si
ce
bien
est
grevé
d'une
servitude,
le
droit
détenu
par
un
usufruitier,
un
preneur
dans
un
bail
emphytéotique,
un
grevé
dans
une
substitution
ou
un
bénéficiaire
dans
une
fiducie.
4.03.3
The
appellant's
position
is
that
in
1979,
1980,
1981
and
1982,
he
was
never
entitled
to
the
proceeds
of
disposition
of
the
sale
of
the
buildings
in
dispute.
This
first
branch
of
his
argument
is
based
for
the
most
part
on
the
decisions
rendered
in
1983
by
Deslauriers,
J.,
who
dismissed
the
actions
to
claim
the
balance
of
the
sale
price
instituted
by
the
appellant
(paragraph
3.06).
In
addition,
the
judgment
nullifying
the
initial
deed
of
sale
(paragraph
3.09)
would
retroactively
cancel
the
disputed
transaction
of
December
31,
1979.
Any
tax
consequences
arising
from
this
sale
should
accordingly
be
terminated
as
a
result
of
said
nullification.
Finally,
the
fact
that
the
sale
of
the
buildings
was
not
registered
until
April
1,
1981
would
prevent
the
Minister
of
National
Revenue
from
drawing
any
tax
consequences
whatsoever
from
the
sale
of
the
buildings
for
the
taxation
years
1979
and
1980
(paragraphs
3.03,
3.04).
The
second
branch
of
his
argument
is
to
the
effect
that
even
if
this
Court
were
of
the
opinion
that
the
appellant
was
entitled
to
the
proceeds
of
disposition
in
1979,
the
sale
of
the
buildings
never
involved
a
transfer
of
beneficial
ownership.
The
appellant
relies
mainly
on
subparagraph
7(i)
of
the
respondent's
reply
to
the
notice
of
appeal
to
support
this
part
of
his
argument.
The
appellant
would
behave
as
the
true
de
facto
owner
of
said
buildings
by
assuming
the
expenses
connected
with
the
administration
of
the
buildings
and
by
collecting
the
rent.
Accordingly,
the
beneficial
ownership
of
the
buildings
always
remained
in
the
appellant's
hands
during
the
years
in
issue.
Excerpts
from
pages
90,
91
and
92
of
the
oral
arguments
well
express
the
main
outlines
of
the
appellant's
position:
MR.
GEOFFRION:
Yes,
that's
it.
I
just
want
to
summarize
my
position.
MR.
GEOFFRION:
It
is
as
follows.
There
was
no
disposition
within
the
meaning
of
the
Income
Tax
Act,
for
two
reasons.
First,
the
right
to
the
predispositions
[sic]
was
not
claimable
because
of
Mr.
Justice
Ignace
Deslaurier's
judgment
.
.
.
and
also
because
of
the
judgments
of
Mr.
Justice
Mercure
of
April
25,
1989,
all
that
.
.
.
(S.N.,
pages
90-91).
Second,
there
is
still
not
a
disposition
within
the
meaning
of
the
Income
Tax
Act
because
there
was
no
transfer
of
beneficial
ownership
since
the
appellant
continued
to
collect
rent
and
continued
to
incur
expenses
in
relation
to
the
buildings
after
December
31,
1979,
for
the
years
’80,
'81
and
'82.
MR.
GEOFFRION:
If
there
was
a
disposition,
it
was
in
'83
or
later,
I
think
it’s
better
that
way.
It
was
in
'83
or
later
because,
well,
either
the
buildings
are
considered
as
effectively
disposed
of
in
'83
because
they
were
sold
at
a
judicial
sale
or
were
subject
to
givings
in
payment,
or
one
could
consider
that
the
appellant,
in
'88,
due
to
the
judgment
of
the
Court
of
Appeal,
was
entitled
to
the
balance
of
the
sale
price.
So
that
at
that
time
he
would
come
within
the
definition
of
disposition,
when
the
taxpayer
is
entitled
to
the
balance.
(S.N.,
pages
91-92).
[Translation.]
4.03.4
The
respondent
maintains
that
the
appellant
was
entitled
to
the
proceeds
of
disposition
of
the
sale
of
the
buildings.
The
notarial
deed
of
sale
itself
(Exhibits
1-1(1),
(2),
(I-3),
indeed,
stipulated
a
sale
price
to
be
paid
by
M.
Laberge
Inc.
It
would
therefore
be
difficult
to
argue
that
the
appellant
was
never
entitled
to
the
proceeds
of
disposition
following
the
sale
of
the
buildings.
Besides,
the
action
instituted
by
the
appellant
to
claim
the
balance
of
the
sale
price
(paragraph
3.05)
alone
would
constitute
a
tacit
admission
that
a
portion
of
the
sale
price
was
paid
by
M.
Laberge
Inc.,
since
a
balance
remained
due
to
the
appellant.
Finally,
the
respondent
maintains
that
a
clear
line
of
judicial
authority
removes
any
effect
from
the
decision
of
Mercure,
J.
of
the
Superior
Court
nullifying
the
deed
of
sale
(paragraph
3.09).
It
is
therefore
clear
that
the
appellant
was
entitled
to
the
proceeds
of
disposition
arising
from
the
deed
of
sale
of
December
31,
1979.
Second,
the
respondent
maintains
that
the
sale
in
issue
ensured
the
transfer
of
beneficial
ownership
of
the
buildings
to
M.
Laberge
Inc.
This
second
part
of
his
argument
is
based
mainly
on
an
interpretation
of
paragraph
54(c)
relying
on
subsection
248(3)
of
the
Act.
Such
an
interpretation
would
ensure
respect
for
the
special
nature
of
Quebec
property
law,
which
does
not
recognize
the
concepts
of
legal
ownership
and
beneficial
ownership.
The
following
passages
from
pages
96,
105
to
110,120
to
122,
131
and
139
to
142
of
the
stenographic
notes
provide
the
main
lines
of
the
respondent's
argument:
So,
it
can
be
seen
that
there
are
two
tests
to
be
met
for
there
to
be
a
disposition
and
the
tests
must
be
examined
in
this
order
.
.
.
.(page
96)
My
colleague
claims
that
in
'79,
there
were
no
proceeds
of
disposition.
Proceeds
of
disposition
are
defined
in
54,
in
section
54,
54(h).
I
didn't
put
54(h)
in
my
book
of
authorities.
54(h)(i):
"Proceeds
of
disposition
of
property
includes
(i)
the
sale
price
of
property
that
has
been
sold".
Well.
.
.
What
is
the
sale
price
of
the
buildings
that
were
sold?
It
is
necessary
to
refer
to
the
deeds
of
sale
of
December
31,‘79,
and
if
we
take
the
deed
of
sale
that
appears
under
tab
1
of
A-1,
excuse
me,
of
1-1,
on
page
6
of
the
deed:
"This
sale
is
agreed
upon
for
and
in
consideration
of
the
sum
of
$67,500,
as
a
down
payment
for
which
and
in
deduction
of
which
sum
the
vendor
.
.
."—that
is
to
say
Mr.
Larose—"acknowledges
having
received
this
day
from
the
purchaser
.
.
."—that
is
to
say
M.
Laberge
Inc.—".
.
.
the
sum
of
$2,500,
for
which
amount
receipt
is
duly
given.”
There
was
thus
in
fact
a
cash
payment.
In
their
testimony,
both
Mr.
Larose
and
Mr.
Verreault
confirmed
having
received
it.
(S.N.,
pages
106-107)
We
see
that
the
sale
price,
made
up
of
the
down
payment,
of
this
amount
plus
the
amounts
of
the
mortgage
payments
assumed
by
the
purchaser,
and
I
don’t
want
to
go
into
the
details
of
the
mortgages
in
favour
of
the
National
Bank
of
Canada
and
the
Caisse
Populaire
St-Alphonse
d’Youville,
and
a
balance
of
the
sale
price
remains.
.
.
that
is
to
say,
a
payment
to
be
received
on
February
1,1980
.
.
.
.
So,
if
I
may
go
over
this
again,
there
was
a
cash
payment
on
December
31,
’79
and
there
was
payment
to
be
received
in'80.
The
payment
to
be
received
in’80
was
not
paid
on
February
1,
’80,
which
gave
rise
to
the
actions
to
claim
the
balance
of
the
sale
price
that
are
part
of
the
record,
an
action
that
was
dismissed
in
Superior
Court.
This
is
the
document
that
my
colleague
submitted,
but
an
action
that
was
subsequently
allowed
by
the
Court
of
Appeal.
But
what
is
important
is
to
see
that
as
of
December
31,
1979,
for
the
purposes
of
subparagraph
54(c)(i),
Mr.
Larose
was
entitled
"to
proceeds
of
disposition.
He
even
received
a
part
of
them
on
December
31,
'79.
The
rest,
it’s
true,
he
didn't
receive
it,
but
in
such
a
case
the
law
provides,
the
Income
Tax
Act
provides
for
this
kind
of
situation.
In
particular,
it
provides
that
reserves
may
be
made
in
respect
of
capital
gains.
What
is
more,
the
Act
provides
that
one
can,
if
in
the
end
it
proves
impossible
to
obtain
the
balance
of
one's
sale
price,
it
provides
that
one
can
claim
a
bad
debt.
(S.N.,
pages
108-110)
My
colleague's
.
.
.
submission
is
that
there
was
a
Court
of
Appeal
judgment
in
‘88
and
that
this
judgment.
.
.
.
This
judgment
determined
that
there
was
possibly
a
disposition
in
'88
.
.
.
.
Except
that
it
should
not
be
forgotten
that
this
Court
of
Appeal
judgment
is
a
judgment
that
rules
on
an
action
to
claim
a
balance
of
the
sale
price.
It
is
nothing
more
than
an
action
to
claim
a
balance
of
sale
price.
But
a
balance
of
sale
price
doesn't
mean
that
an
amount
hasn't
already
been
paid.
(S.N.,
pages
105-106)
So,
the
action
to
nullify.
In
fact,
as
my
colleague
explained,
it
is
not
really
an
action
to
nullify
.
.
.
.
(S.N.,
page
120)
“It
is
an
action
for
a
declaration
to
nullify
a
deed
of
sale.”
It
is
nevertheless
the
case
that,
as
you
have
been
in
a
position
to
observe,
it
is
very
recently,
almost
ten
years
after
the
sale
of
December
31,‘79,
three
years
after
his
notice
of
appeal
and
the
reply
of
the
Minister
to
the
notice
of
appeal,
that
Mr.
Larose
took
this
rather
peculiar
action
to
have
the
sales
of
December
31
declared
null.
He
himself
told
us
that
this
action
was
taken
for
tax
purposes.
It
was
Mr.
Larose's
testimony
that
told
us
so.
But
can
this
kind
of
action
be
taken
for
tax
purposes?
He
is
free
to
take
it,
only
it
has
no
effect
from
a
tax
point
of
view.
And
it
has
no
effect
because
it
is
well
established
in
the
case
law
that
one
may
not
after
the
fact,
by
a
new
act
and
by
a
judgment,
change
the
tax
consequences
of
something
done
previously
and
for
this
I
refer
the
Court
to
the
case.
(S.N.,
pages
121-22)
So
let
us
proceed
to
the
second
test,
since
we
have
seen
that
54(c)(i)
was
met,
that
there
was
a
transaction
in‘79
giving
rise
to
proceeds
of
disposition.
That
is
.
.
.
.
The
evidence
has
clearly
established
that.
Now
let
us
look
at
the
second
test,
54(c).
.
.
.
(S.N.,
page
131)
The
Act
stipulates
that
a
transfer
of
property
is
not
a
disposition
if
the
only
change
made
is
in
the
legal
ownership
and
the
beneficial
ownership
remains
with
the
same
person.
But
there
are
two
reasons
why
this
subparagraph
does
not
apply
in
the
case
in
hand.
The
first
reason
is
that
this
subparagraph,
as
my
colleague
has
pointed
out,
calls
upon
common
law
notions
that
are
not
part
of
the
civil
law
and
of
the
civil
law
that
applies
to
the
contract
in
issue.
I
will
come
back
to
this.
The
second
reason
is
that
even
if
one
assumes
that
this
subparagraph
applies
to
Quebec,
the
purpose
of
the
Act
is
not
that
imagined
by
my
colleague
and
Mr.
Larose's
situation
is
not
among
those
contemplated
by
the
Act
(S.N.,
pages
139-
140)
“It
is
perhaps
appropriate
to
point
out
that
the
system
of
law
in
the
Province
of
Quebec
does
not
include
the
common
law
idea
recognizing
beneficial
ownership
in
one
person
and
legal
title
in
another.
In
Quebec
the
two
are
invariably
united
in
a
single
person.
Ownership
is
undivided.”
Fine
.
.
.
.
"A
usufruct,
substitution,
trust,
emphyteusis,
mortgage
or
lien
confers
[sic]
more
or
less
extensive
rights
but
never
transmits
ownership."
.
.
.
.
(S.N.,
page
141).
With
regard
to
the
Income
Tax
Act,
the
legislator
was
in
fact
perfectly
aware
that
these
notions
of
beneficial
ownership
and
legal
ownership
were
not
used
in
the
Province
of
Quebec.
The
two
provisions
are
laboured
in
their
drafting.
They
are
a
bit
clumsy
and
they
well
illustrate
the
difficulty
of
rendering
into
French
and
into
civil
law
the
term
“
beneficial
ownership",
but
it
is
necessary
to
give
effect
to
this
provision
and
it
can
be
seen
that
for
the
purposes
of
applying
the
Act
in
the
Province
of
Quebec,
the
term
"droit
de
jouissance"
was
used
because
it
was
not
known
how
to
translate
beneficial
ownership"—it
doesn't
exist!
So
it
was
called
"droit
de
jouissance”
in
relation
to
property
means,
and
that
is
what
is
important:
"property
in
relation
to
which
any
person
has
or
had
the
full
ownership"
.
.
.
.
(S.N.,
page
142)
[Translation.]
4.03.5
A
reading
of
paragraph
54(c)
of
the
Act
clearly
establishes
that
two
tests
must
be
met
in
order
to
give
rise
to
a
disposition
in
this
case.
On
the
one
hand,
the
appellant
must
have
been
entitled
to
proceeds
of
disposition
of
the
buildings
sold.
On
the
other
hand,
the
circumstances
surrounding
the
sale
must
show
that
there
was
a
transfer
of
the
“legal
ownership"
and
of
the
“beneficial
ownership”
of
the
buildings
sold.
The
two
aspects
of
this
provision
will
be
examined
in
succession
by
the
Court.
4.03.6
Was
the
appellant
entitled
to
the
proceeds
of
disposition
of
the
sale
of
the
buildings?
So,
at
what
date
may
the
appellant
claim
to
have
been
entitled
to
the
proceeds
of
disposition
of
the
sale
of
the
buildings?
The
appellant
argues
that
he
was
not,
during
the
taxation
years
in
issue,
entitled
to
the
proceeds
of
disposition
of
the
buildings
sold.
In
support
of
his
position,
the
appellant
submitted
to
this
Court
three
arguments,
which
may
be
summarized
as
follows:
1.
The
judgments
dismissing
the
appellant's
entitlement
to
claim
the
balance
of
the
price
of
the
sale
that
occurred
on
December
31,
1979
(paragraph
3.06)
establish
that
the
appellant
could
not
claim
any
entitlement
to
the
proceeds
of
disposition
for
the
taxation
years
in
issue.
2.
The
nullification
of
the
sale
(paragraph
3.09)
would
retroactively
do
away
with
the
tax
consequences
flowing
from
the
transaction
that
occurred
on
December
31,
1979.
3.
The
transaction
that
occurred
on
December
31,
1979
cannot
have
an
effect
vis-a-vis
the
respondent
as
of
this
date,
since
it
was
only
registered
on
April
1,
1981
(paragraphs
3.03,
3.04).
The
Minister
of
National
Revenue,
as
a
third
party
to
the
transaction,
may
not
therefore
draw
any
tax
consequence
from
this
deed
of
sale
for
the
years
1979
and
1980.
4.03.7
This
Court
is
of
the
opinion
that
these
three
submissions
are
not
well-
founded.
4.03.7(1)
Firstly,
this
Court
considers
the
respondent's
intervention
with
respect
to
the
appellant's
first
submission
(paragraph
4.03.4)
entirely
proper.
It
should
be
realized
that
the
judgments
of
the
Superior
Court
(Exhibit
A-4)
and
of
the
Court
of
Appeal
(Exhibit
1-1(5))
relate
to
actions
to
claim
the
balance
of
the
sale
price.
The
fact
of
instituting
such
an
action
necessarily
implies
the
presence
of
a
right
to
receive
the
proceeds
of
disposition
of
the
sale
of
the
buildings,
namely
the
sale
price
of
the
buildings.
A
mere
reference
to
the
relevant
deeds
of
sale
(Exhibits
1-1(1)
and
(2))
establishes
beyond
doubt
the
relevance
of
this
statement.
In
fact,
the
purchaser
paid
a
sum
of
money,
assumed
for
and
on
behalf
of
the
vendor
the
various
mortgages
encumbering
the
buildings
sold,
and
undertook
to
pay
the
balance
of
the
sale
price
before
February
1,
1980
so
as
to
be
able
to
enjoy
and
dispose
of
the
buildings
in
issue.
This
Court
considers
that
the
mere
voluntary
receipt
of
the
down
payments
made,
as
well
as
the
assumption
of
the
various
mortgages
by
M.
Laberge
Inc.,
constitute
a
tacit
acknowledgment
of
the
appellant's
entitlement
to
receive
the
proceeds
of
disposition
of
the
sale
in
1979.
Accordingly,
the
first
argument
of
counsel
for
the
appellant
cannot
be
allowed.
*
4.03.7(2)
The
judgment
nullifying
the
sale
rendered
by
Mercure,
J.
in
April
1990
certainly
cannot
affect
the
rights
that
the
respondent
acquired
as
a
result
of
the
sale
of
the
buildings
in
1979.
Relatively
large
sums
were
payable
to
the
respondent
as
a
result
of
this
transaction.
In
addition,
the
evidence
established
that
the
main
object
of
that
legal
proceeding
was
to
enable
the
appellant
to
be
discharged
of
his
debts
to
the
Minister
of
National
Revenue.
This
Court
is
of
the
opinion
that
such
a
situation
is
directly
dealt
with
in
the
case
law
as
reflected
in
such
judgments
as
Malkin
(paragraph
4.02(1)),
Alepin
(paragraph
4.02(2))
and
Adam
(paragraph
4.02(3)).
In
these
cases,
the
courts
have
held
that
any
attempt
to
retroactively
change
the
nature
of
certain
payments
in
order
to
benefit
from
a
more
advantageous
tax
treatment
could
not
affect
the
Minister
of
National
Revenue.
This
is
why
such
a
principle
applies
a
fortiori
when
a
taxpayer
attempts
to
annul
a
transaction
retroactively
in
order
to
eliminate
the
tax
consequences
to
which
it
gives
rise.
This
excerpt
from
page
5262
of
Alepin
(paragraph
4.02(2))
is
highly
relevant
to
the
case
before
us.
It
reads
as
follows:
A
contract
subject
to
a
resolutive
condition
acquires
full
legal
force
from
the
moment
it
is
executed
and,
until
the
event
contemplated
by
the
said
condition
occurs,
it
continues
to
have
full
force
and
effect.
When
payment
was
received
in
1970,
a
part
of
this
payment
covered
the
interest
due
under
the
contract
and
was
immediately
taxable,
and
this
legal
situation
could
not
subsequently
be
modified
or
extinguished
by
the
effect
of
a
subsequent
annulment
of
the
contract
itself.
The
occurrence
of
the
resolutive
condition
to
which
a
contract
is
subject
may
well
extinguish
the
obligations
arising
from
the
contract
but
it
can
affect
third
parties
who
have
meanwhile
acquired
rights
on
the
basis
of
the
contract
only
to
the
extent
that
these
rights
themselves
accrued
conditionally.
[Translation.]
4.03.7(3)
Finally,
the
late
registration
of
the
sale
of
the
buildings
(paragraphs
3.03
and
3.04)
can
in
no
way
be
prejudicial
to
the
respondent.
Articles
2082
et
seq.
of
the
Civil
Code
set
out
the
formalities
of
registration
of
real
rights.
The
main
principles
that
can
be
drawn
from
a
study
of
these
provisions
establish
beyond
doubt
that
the
object
of
these
formalities
of
registration
is
to
ensure
a
certain
security
in
the
area
of
immoveable
transactions.
The
registration
of
real
rights
attaching
to
a
given
immoveable
enables
purchasers
of
this
immoveable
to
assert
their
ownership
rights
against
third
parties.
The
formalities
of
registration
also
provide
a
certain
protection
to
third
parties
wishing
to
purchase
an
immoveable.
In
this
way
third
parties
are
able
to
ensure
that
the
immoveable
offered
for
sale
has
not
already
been
sold
to
another
person.
The
registration
of
the
sale
of
an
immoveable
thus
makes
it
possible
to
protect
the
purchaser
and
third
parties
interested
in
entering
into
a
transaction
in
order
to
acquire
the
said
immoveable.
Thus,
the
object
of
these
provisions
is
to
protect
the
purchaser
and
third
parties.
The
following
excerpt
from
page
189
of
volume
9
of
Mignault's
work
entitled
Droit
civil
canadien
clearly
establishes
the
intent
of
the
legislator
in
respect
of
the
provisions
of
Title
Eighteenth
of
the
Civil
Code:
The
object
of
this
title
is
the
protection
of
third
parties.
It
is
true
that
contracts
have
effect
only
between
the
contracting
parties
and
cannot
affect
third
parties
(Art.
1023).
However,
when
one
of
these
parties
proposes
a
contract
to
a
third
party,
for
example
the
sale
of
an
immoveable,
it
is
in
the
third
party's
interest
to
have
knowledge
of
the
agreements
under
which
the
vendor's
ownership
may
have
been
modified
or
diminished,
since
the
vendor
cannot
transfer
to
him
more
rights
than
he
himself
possesses.
It
is
therefore
necessary
that
all
contracts
that
modify,
diminish
or
affect
the
right
of
ownership
in
respect
of
immoveables
be
known
to
all,
and
the
means
by
which
they
are
made
known
is
the
method
of
publicizing
that
we
call
the
registration
of
real
rights.
[Translation.]
The
additional
doctrine
consulted
expresses
essentially
the
same
principles.
However,
the
impact
of
the
formalities
of
registration
may
certainly
not
prevent
a
third
party
from
claiming
certain
rights
in
respect
of
an
immoveable
transaction
not
registered
in
the
index
of
immoveables.
The
production
of
the
notarial
deed
of
sale
in
itself
establishes
that
the
appellants
buildings
were
sold
to
M.
Laberge
Inc.
on
December
31,
1979.
To
the
extent
that
this
Court
considers
that
we
are
dealing
with
a
disposition
pursuant
to
paragraph
54(c)
of
the
Act,
said
sale
would
give
rise
to
not
insignificant
tax
consequences
in
favour
of
the
respondent.
It
would
be
legally
unjustifiable
to
subscribe
to
the
appellants
position.
Indeed,
this
Court
would
find
itself
denying
the
reality
of
a
transaction
for
reasons
having
more
to
do
with
the
form
rather
than
the
substance
of
the
law.
We
would,
accordingly,
find
ourselves
denying
the
principal
object
that
the
legislator
is
attempting
to
promote,
namely
the
protection
of
third
parties,
thus
leaving
free
recourse
to
more
or
less
honest
strategies
designed
to
voluntarily
delay
the
registration
of
real
property
rights.
This
argument
must
therefore
be
dismissed.
4.03.8
Did
the
transaction
entered
into
give
rise
to
a
transfer
of
beneficial
ownership
of
the
buildings?
The
second
phase
of
our
analysis
consists
in
determining
if
the
appellant
relinquished
the
beneficial
ownership
of
the
buildings
sold
on
December
31,
1979.
The
requirement
for
such
a
transfer
of
beneficial
ownership
is
set
out
in
subparagraph
54(c)(v)
of
the
Act
(paragraph
4.03.2),
which
defines
the
concept
of
disposition
that
makes
it
possible
to
assert
the
existence
of
a
capital
gain.
4.03.9
It
should
be
pointed
out
that
paragraph
13(21)(c)
also
defines
the
term
"disposition"
for
the
purpose
of
applying
the
capital
cost
allowance
and
for
computing
the
amount
to
be
recaptured.
This
definition
does
not
refer
directly
to
the
limitation
contained
in
subparagraph
54(c)(v)
of
the
Act
(paragraph
4.03.2).
Should
it
be
necessary
that
a
sale
of
buildings
ensure
a
transfer
of
the
beneficial
ownership
therein
to
the
purchaser
so
that
the
provisions
respecting
claimable
depreciation
or
the
recapture
payable
to
the
respondent
may
be
applied?
This
Court
does
not
believe
it
is
necessary
to
answer
this
question,
since,
as
will
be
established
below,
the
sale
realized
by
the
appellant
also
gave
rise
to
a
transfer
of
beneficial
ownership
of
the
buildings
as
of
December
31,
1979.
Nevertheless,
it
should
be
noted
that
section
4
of
Interpretation
Bulletin
IT-170R
answers
this
question
in
the
affirmative.
It
reads
as
follows:
4.
Subparagraph
54(c)(v)
makes
it
clear
for
the
purposes
of
subdivision
c
of
Division
8
of
Part
I
that
the
Act
is
interested
only
in
dispositions
that
involve
a
change
of
beneficial
ownership
(unless
the
contrary
is
expressly
stated).
This
is
also
the
Department's
view
in
respect
of
dispositions
of
depreciable
property
described
in
paragraph
13(21)(c)
and
the
sale
of
trading
assets
under
paragraph
12(l)(b).
A
transaction
that
can
be
described
as
a
"sale"
is
therefore
disregarded
for
purposes
of
this
bulletin
if
there
is
no
concurrent
change
in
beneficial
ownership.
Such
transactions
will
usually
involve
a
"purchaser"
who
can
be
described
as
an
agent,
nominee,
trustee
or
prête-nom
corporation
of
a“
"vendor"
who
basically
retains
the
right
to
deal
with
the
property
as
though
it
were
his
own.
(See
Ruling
TR-22
for
an
example.)
Such
conclusions
would
also
deprive
of
any
relevance
a
determination
of
the
extent
of
the
rights
transferred
by
the
appellant
by
means
of
the
sale
of
December
31,
1979.
4.03.10
Thus,
the
concepts
of
“legal
ownership"
and
“
beneficial
ownership",
need
it
be
recalled,
are
not
germane
to
the
property
rights
regime
contained
in
the
Civil
Code.
The
legislator
thus
had
to
define
these
concepts
so
that
paragraph
54(c)
of
the
Act
(paragraph
4.03.2)
could
be
properly
applied
in
the
province
of
Quebec.
It
is
therefore
at
first
glance
surprising
that
only
the
term
"beneficial
ownership"
was
defined
in
subsection
248(3)
of
the
Act
(paragraph
4.03.2).
Nevertheless,
an
analysis
of
this
provision
is
very
revealing
regarding
the
interpretation
to
be
given
to
subparagraph
54(c)(v)
of
the
Act
(paragraph
4.03.2).
In
this
respect,
the
English
version
of
subsection
248(3)
(paragraph
4.03.2)
clearly
establishes
that
the
concept
of
“
beneficial
ownership”
is
closely
bound
up
with
the
abusus
held
in
respect
of
a
property,
which
is
to
say
the
right
to
dispose
of
the
property
as
the
holder
sees
fit.
The
predominance
of
this
attribute
of
ownership
in
terms
of
the
definition
of
beneficial
ownership
is
evident.
A
property
is
deemed
to
be
beneficially
owned
when
one
person
assesses
the
three
attributes
of
the
ownership
of
property
(usus,
fructus,
abusus)
or
when
a
property
is
subject
to
a
usufruct,
an
emphyteutic
lease
or
a
servitude.
In
other
words,
the
owner
who
possesses
the
three
attributes
of
ownership
(full
owner),
the
bare
owner
in
cases
of
the
creation
of
a
usufruct
or
emphyteutic
lease,
and
the
owner
who
agrees
to
encumber
his
property
with
a
servitude
are
deemed
to
be
the
holders
of
the
beneficial
ownership
of
the
property
in
question.
4.03.11
In
the
case
at
hand,
it
is
clear
that
the
abusis
in
respect
of
the
buildings
sold
was
transferred
to
M.
Laberge
Inc.
on
December
31,1979.
A
mere
reading
of
the
introductory
clause
on
page
8
of
the
deed
of
sale
(Exhibit
1-1(2))
clearly
supports
this
affirmation:
8.
Possession
and
conditions
By
and
under
this
deed,
the
purchaser
may
enjoy
and
dispose
of
as
he
sees
fit
what
has
hereinabove
been
sold
and
shall
have
possession
from
this
day
forward,
subject
to
and
upon
the
following
conditions,
which
he
undertakes
and
covenants
to
observe,
namely:
1.
To
pay
the
cost
hereof,
and
of
copies
and
registration;
2.
To
pay
from
this
day
forward
all
municipal
and
school
taxes
and
all
other
taxation
whatsoever,
both
general
and
special,
that
may
affect
the
said
property,
including
those
the
payment
of
which
extends
over
a
number
of
years;
3.
To
take
the
property
as
it
is
in
its
current
condition,
declaring
having
seen
it
and
found
it
to
his
complete
satisfaction;
4.
Not
to
require
of
the
vendor
other
copies
of
titles
than
those
in
the
possession
of
the
first
mortgagee,
named
hereinafter,
or
any
other
certificate
of
search;
5.
To
comply
with
the
leases
currently
in
force,
collecting
the
rent,
however,
from
the
first
of
January
nineteen
hundred
and
eighty
(1980),
the
vendor
subrogating
the
purchaser
to
all
his
rights
in
the
said
leases.
[Translation.]
In
addition,
the
sale
of
the
same
buildings
by
M.
Laberge
Inc.
to
the
notary
André
Hébert
(paragraph
3.10)
can
only
confirm
more
clearly
the
reality
of
such
a
transfer.
4.03.12
Thus,
the
evidence
establishes
that
the
sale
of
the
appellant's
buildings
gave
rise
to
a
transfer
of
the
beneficial
ownership
of
the
buildings
in
favour
of
M.
Laberge
Inc.
4.03.13
It
is
therefore
legally
of
little
significance
whether
the
appellant
did
or
did
not
assume
the
expenses
inherent
in
the
administration
of
the
buildings
in
issue
for
a
certain
period
of
time.
4.03.14
Considering
the
existence
of
a
right
of
the
appellant
to
the
proceeds
of
disposition
of
the
sale
of
his
buildings
on
December
31,
1979,
Considering
the
transfer
of
beneficial
ownership
of
the
appellant's
buildings
in
favour
of
M.
Laberge
Inc.
on
December
31,
1979,
This
Court
is
of
the
opinion
that
there
was
a
disposition
of
the
appellant's
buildings
as
of
December
31,
1979.
5.
Conclusion
The
appeal
instituted
by
the
appellant
must
be
dismissed.
Appeal
dismissed.
Amendment
to
reasons
for
judgment
Whereas
on
October
21
1991,
the
Court
forwarded
to
parties
concerned
a
judgment
dated
October
17
1991;
Whereas
on
page
4
of
the
reasons
for
judgment
subparagraph
(n)
should
have
read
as
follows:
(n)
in
addition,
the
appellant
realized
a
capital
gain
of
$6,750
(proceeds
of
disposition
$299,250)—adjusted
cost
base
$292,500)
of
which
a
portion
only
(through
a
computation
of
reserves),
namely
$1,270,
or
a
taxable
capital
gain
of
$635,
is
taxable
in
1979;
[denied]
Whereas
on
page
5
of
the
reasons
for
judgment
paragraph
3.09
should
have
read
as
follows:
The
appellant
also
produced
in
the
record
two
judgments
of
the
Superior
Court
in
which
Mercure,
J.
nullified
the
deeds
of
sale
bearing
registration
numbers
574299
and
574302
(Exhibits
A-2
and
A-3).
These
decisions
were
rendered
shortly
before
the
present
case
was
heard.
Whereas
on
page
11
of
the
reasons
for
judgment
the
second
paragraph
of
the
quotation
should
have
read
as
follows:
Mr.
Geoffrion:
It
is
as
follows.
There
was
no
disposition
within
the
meaning
of
the
Income
Tax
Act,
for
two
reasons.
First,
there
was
no
transfer
of
the
Legal
Ownership
through
the
deed
of
the
sale
which
.
.
.
would
have
been
registered
only
on
April
1
'81
.
.
.
I
would
even
say
further,
the
right
to
the
proceeds
of
disposition
was
not
claimable
because
of
Mr.
Justice
Ignace
Deslaurier's
judgment
.
.
.
and
also
because
of
the
judgments
of
Mr.
Justice
Mercure
of
April
25
1989,
all
that.
.
.
.
(S.N.,
pages
90-91)
Whereas
on
page
13
of
the
reasons
for
judgment
the
last
paragraph
should
have
read
as
follows:
It
is
perhaps
appropriate
to
point
out
that
the
system
of
law
in
the
province
of
Québec
does
not
include
the
common
law
idea
recognizing
beneficial
ownership
in
one
person
and
legal
title
in
another.
In
Québec
the
two
are
invariably
united
in
a
single
person.
Ownership
is
undivided.”
Fine
.
.
.
."A
usufruct,
substitution,
trust,
emphyteusis,
mortgage
or
lien
confers
[sic]
more
or
less
extensive
rights
but
never
transmits
ownership
.
.
.
.”
(S.N.,
page
141)
The
Court
hereby
amends
the
reasons
for
judgment.
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