Christie,
A.C.J.T.C.:—These
appeals
were
heard
together.
In
addition
to
the
appellants
Robert
and
Lawrence
Minshull,
these
individuals
were
also
involved
in
the
events
leading
to
this
litigation:
the
late
Marion
Minshull,
former
wife
of
Robert,
and
their
child,
Raymond,
who
is
the
brother
of
the
appellant,
Lawrence.
I
shall
deal
with
each
appeal
in
the
order
that
the
evidence
was
placed
before
the
court.
Appeal
of
R
&
L
Investments
Ltd.
These
are
the
matters
in
dispute
regarding
R
&
L
Investments
Ltd.
(R&
L").
First
arbitrary
assessments
of
tax
dated
January
16,
1987,
made
under
subsection
152(7)
of
the
Income
Tax
Act
(‘the
Act")
of
$69,895.16
for
1984
and
$71,649.77
for
1985.
The
$69,895.16
is
composed
of
federal
tax
$47,177.48,
late
filing
penalty
$11,363.49
and
interest
$11,354.19.
The
breakdown
of
the
$71,649.77
relates
to
the
same
items
and
the
amounts
are
$52,474.73,
$9,840.76
and
$9,334.28.
Subsection
152(7)
provides:
152.(7)
The
Minister
is
not
bound
by
a
return
or
information
supplied
by
or
on
behalf
of
a
taxpayer
and,
in
making
an
assessment,
may,
notwithstanding
a
return
or
information
so
supplied
or
if
no
return
has
been
filed,
assess
the
tax
payable
under
this
Part.
Second
an
assessment
dated
January
16,
1987,
of
$19,008.66
under
subsection
160(2)
of
the
Act
in
respect
of
the
transfer
for
$502,573
of
real
estate
located
in
Saskatoon,
being
Lots"
B"
and"C",
Block
520
(‘the
apartment
building”),
from
Bridge
City
Properties
Ltd.
(”
Bridge
City")
to
R
&
L
on
February
29,
1984.
It
is
the
position
of
the
respondent
that
at
this
date
the
fair
market
value
of
the
apartment
was
$550,000
(a
difference
of
$47,427)
and
when
R
&
L
was
assessed
under
subsection
160(2)
Bridge
City
was
liable
to
pay
$19,008.66
under
the
Act
in
respect
of
its
1981,
1982
and
1983
taxation
years.
The
allocation
of
the
$19,008.66
to
taxation
years
is
1981
—
$6,892.08,
1982
—
$6,400.37
and
1983
—
$5,716.21.
Paragraphs
160(1)(c)
and
(e)
provide:
160.(1)
Where
a
person
has,
on
or
after
the
1st
day
of
May,
1951,
transferred
property,
either
directly
or
indirectly,
by
means
of
a
trust
or
by
any
other
means
whatever,
to
(c)
a
person
with
whom
he
was
not
dealing
at
arm's
length,
the
following
rules
apply:
(e)
the
transferee
and
transferor
are
jointly
and
severally
liable
to
pay
under
this
Act
an
amount
equal
to
the
lesser
of
(i)
the
amount,
if
any,
by
which
the
fair
market
value
of
the
property
at
the
time
it
was
transferred
exceeds
the
fair
market
value
at
that
time
of
the
consideration
given
for
the
property,
and
(ii)
the
aggregate
of
all
amounts
each
of
which
is
an
amount
that
the
transferor
is
liable
to
pay
under
this
Act
in
or
in
respect
of
the
taxation
year
in
which
the
property
was
transferred
or
any
preceding
taxation
year,
but
nothing
in
this
subsection
shall
be
deemed
to
limit
the
liability
of
the
transferor
under
any
other
provision
of
this
Act.
“Property”
is
defined
under
subsection
248(1)
in
these
terms:
“Property”
means
property
of
any
kind
whatever
whether
real
or
personal
or
corporeal
or
incorporeal
and,
without
restricting
the
generality
of
the
foregoing,
includes
(a)
a
right
of
any
kind
whatever,
a
share
or
a
chose
in
action,
(b)
unless
a
contrary
intention
is
evident,
money,
(c)
a
timber
resource
property,
and
(d)
the
work
in
progress
of
a
business
that
is
a
profession.
Subsection
160(2)
provides:
160.(2)
The
Minister
may
at
any
time
assess
a
transferee
in
respect
of
any
amount
payable
by
virtue
of
this
section
and
the
provisions
of
this
Division
are
applicable
mutatis
mutandis
in
respect
of
an
assessment
made
under
this
section
as
though
it
had
been
made
under
section
152.
Paragraph
251(1)(a),
paragraph
251(2)(a),
subparagraphs
251
(2)
(b)(i),
(ii)
and
(iii)
and
251(2)(c)(i)
and
(iii),
subsection
251(3),
paragraphs
251(4)(a),
251(6)(a)
and
(b)
provide:
251.(1)
For
the
purposes
of
this
Act,
(a)
related
persons
shall
be
deemed
not
to
deal
with
each
other
at
arm's
length.
251.(2)
For
the
purpose
of
this
Act"
related
persons”,
or
persons
related
to
each
other,
are
(a)
individuals
connected
by
blood
relationship,
marriage
or
adoption;
(b)
a
corporation
and
(i)
a
person
who
controls
the
corporation,
if
it
is
controlled
by
one
person,
(ii)
a
person
who
is
a
member
of
a
related
group
that
controls
the
corporation,
or
(iii)
any
person
related
to
a
person
described
by
subparagraph
(i)
or
(ii);
(c)
any
two
corporations
(i)
if
they
are
controlled
by
the
same
person
or
group
of
persons,
(iii)
if
one
of
the
corporations
is
controlled
by
one
person
and
that
person
is
related
to
any
member
of
a
related
group
that
controls
the
other
corporation.
251.(3)
Where
two
corporations
are
related
to
the
same
corporation
within
the
meaning
of
subsection
(2),
they
shall,
for
the
purposes
of
subsections
(1)
and
(2),
be
deemed
to
be
related
to
each
other.
251.(4)
In
this
Act,
(a)"related
group"
means
a
group
of
persons
each
member
of
which
is
related
to
every
other
member
of
the
group.
251.(6)
For
the
purposes
of
this
Act,
other
than
clause
109(1)(b)(ii)(C),
(a)
persons
are
connected
by
blood
relationship
if
one
is
the
child
or
other
descendant
of
the
other
or
one
is
the
brother
or
sister
of
the
other;
(b)
persons
are
connected
by
marriage
if
one
is
married
to
the
other
or
to
a
person
who
is
so
connected
by
blood
relationship
to
the
other.
Mr.
Lawrence
Stanbury,
an
official
employed
by
Revenue
Canada,
testified
about
the
arbitrary
assessments.
No
returns
of
income
had
been
filed
for
1984
and
1985
and
these
assessments
followed.
When
the
witness
received
the
file
arbitrary
assessments
had
been
made
respecting
R
&
L’s
1982
and
1983
taxation
years.
The
assessments
under
appeal
are
based
on
numerous
deposits
made
to
an
account
of
R
&
L
with
a
branch
of
the
Bank
of
Nova
Scotia
in
Saskatoon.
Some
of
the
deposits
are
identified
as
rental
income
and
30
per
cent
was
allowed
for
expenses
in
this
regard.
No
effective
challenge
was
made
to
these
arbitrary
assessments
by
way
of
cross-examination
or
otherwise
so
they
must
stand.
The
amount
involved
in
the
arbitrary
assessment
for
1983
as
of
January
16,
1987,
was
$1,117.47
consisting
of
$726.98
federal
tax,
$140
penalty
and
$250.49
in
interest.
The
amount
for
the
1982
assessment
is
not
in
evidence.
With
respect
to
the
assessment
under
subsection
160(2)
relating
to
the
transfer
of
the
apartment
building
from
Bridge
City
to
R
&
L
and
other
assessments
under
that
subsection
that
will
be
dealt
with
in
due
course,
a
document
was
placed
in
evidence
by
the
respondent
(Exhibit
R-1)
entitled
"Minshull—Related
Persons"
to
assist
with
the
matter
of
“dealing
at
arm's
length”.
It
indicates
the
shareholdings
in
Marion
Minshull
Enterprises
Ltd.
("MME
Ltd.");
R
&
L;
Sunset
Bay
Resort
Inc.
("Sunset
Bay”);
Bridge
City
and
S.W.H.
Holdings
Corp.
(
Holdings").
Only
two
objections
were
raised
regarding
that
evidence.
The
first
was
with
respect
to
the
statement
that
Lawrence
Minshull
was
a
shareholder
and
director
of
MME
Ltd.
This
was
said
to
be
incorrect.
Counsel
for
the
respondent
conceded
this
point.
Second,
the
document
alleged
a
certain
distribution
of
shares
in
R
&
L
in
1983,
but
this
was
disputed
by
Robert
Minshull
who
contended
that
the
distribution
was:
himself—4,
Marion
Minshull—1,
MME
Ltd.—1,
Raymond
Minshull—497
and
Lawrence
Minshull—497.
Counsel
for
the
respondent
answered
by
saying
that
he
was
prepared
to
accept
Mr.
Robert
Minshull's
position
about
this
because,
in
any
event,
it
did
not
operate
to
the
detriment
of
the
respondent's
contentions
about
related
persons.
The
conclusion
to
be
drawn
from
the
evidence
is
that
when,
on
February
29,
1984,
Bridge
City
transferred
the
apartment
building
to
R
&
L
they
were
related
persons
because
each
was
controlled
by
the
same
group
of
persons
which
is
one
of
the
tests
in
subparagraph
251(2)(c)(i).
The
controlling
group
consisted
of
MME
Ltd.,
Lawrence
and
Raymond
Minshull.
It
follows
from
paragraph
251(1)(a)
that
R
&
L
and
Bridge
City
were
not
dealing
at
arm's
length
within
the
meaning
of
paragraph
160(1)(c)
at
the
time
of
the
transfer.
R
&
L
contended
at
trial
that
the
fair
market
value
of
the
apartment
building
when
it
was
transferred
was
$502,573
and
not
the
$550,000
value
assumed
by
the
respondent.
The
evidence
in
this
regard
was
simply
views
expressed
by
Robert
Minshull,
and
he
was
not
persuasive.
Expert
opinion
evidence
was
not
relied
on
by
R
&
L.
In
cross-examining
Robert
Minshull,
counsel
for
the
respondent
placed
in
evidence
a
debenture
dated
September
30,
1980,
between
Bridge
city
and
the
Royal
Bank
regarding
a
revolving
line
of
credit
of
$250,000.
Included
as
security
for
all
money
due
under
the
debenture
is
a
mortgage
in
favour
of
the
bank
in
respect
of
the
apartment
building.
Attached
to
the
debenture
is
the
affidavit
of
Robert
Minshull
sworn
September
30,
1980.
It
is
entitled
“In
The
Matter
Of
The
Corporation
Securities
Registration
Act
Of
The
Province
Of
Saskatchewan”
Paragraph
3
reads:
3.
That
the
land
set
out
and
described
in
the
said
Debenture
annexed,
that
is
to
say,
Lots
B
&
C,
Block
520,
Plan
65-S-20267,
together
with
all
buildings
and
improvements
thereon,
is
in
my
opinion,
of
the
value
of
($800,000)
Eight
Hundred
Thousand
Dollars
and
no
more.
The
witness
said
$800,000
was
an
exaggeration
and
that:
“
Valuations
have
a
very
funny
way
of
changing
for
the
purpose
of
their
being
used,
I'll
admit
that."
A
second
debenture
between
the
same
parties
dated
May
21,
1981,
is
also
in
evidence.
This
debenture
was
entered
into
in
consideration
of
the
bank
mak-
ing
or
continuing
to
make
advances
to
Bridge
City
or
otherwise
giving
credit
or
affording
banking
facilities
to
it.
Included
as
security
for
the
payment
of
up
to
$2,000,000
and
interest
is
a
mortgage
on
the
apartment
building
in
favour
of
the
bank.
Attached
to
the
debenture
is
the
affidavit
of
Robert
Minshull
sworn
May
22,
1981.
It
also
refers
to
the
Corporation
Securities
Registration
Act
of
Saskatchewan
and
paragraph
4
4
states
that
the
apartment
building
is
of
the
value
of
$900,000.
He
said
that
$900,000
was
the
value
for
the
purposes
of
the
debenture,
but
was
not
the
value
for
the
purpose
of
a
sale.
He
added
that
it
was
common
business
practice
to
exaggerate
the
value
of
properties
pertaining
to
debentures.
As
will
be
seen,
further
evidence
in
the
same
vein
about
affidavits
sworn
by
Robert
Minshull
was
forthcoming
at
the
trial.
The
evidence
that
when
the
apartment
building
was
transferred
from
Bridge
City
to
R
&
L
the
former
was
liable
to
pay
$19,008.66
under
the
Act
is
undisputed.
This
coupled
with
the
direct
transfer
of
the
property
from
Bridge
City
to
R
&
L,
with
whom
it
was
not
dealing
at
arm's
length,
and
the
failure
to
cast
doubt
on
the
respondent's
assumption
about
fair
market
value
makes
R
&
L
liable
to
pay
the
$19,008.66
under
the
Act.
It
follows
that
the
assessment
under
subsection
160(2)
cannot
be
interfered
with.
Appeal
of
S.W.H.
Holdings
Corp.
The
appeal
by
Holdings
arises
out
of
an
assessment
under
subsection
160(2)
dated
April
28,
1987,
in
the
amounts
of
$19,200
and
$22,455.
The
$19,200
relates
to
real
estate
in
Saskatoon
at
509
Avenue
S
South
(“509
South")
and
the
$22,455
relates
to
1328
Avenue
H
North,
Saskatoon
('1328
North").
As
the
notice
of
assessment
indicates
these
amounts
include
liability
under
both
the
federal
Income
Tax
Act
and
Income
Tax
Act
of
Saskatchewan.
There
is
no
evidence
about
how
much
of
the
$41,655
relates
to
the
federal
legislation
and
what
is
attributable
to
the
provincial
legislation.
But,
in
any
event,
this
court
has
jurisdiction
only
in
respect
of
the
federal
Income
Tax
Act:
Andrew
Paving
&
Engineering
Ltd.
and
Meld
Development
Ltd.
v.
M.N.R.,
[1984]
C.T.C.
2164;
84
D.T.C.
1157
at
2169
(D.T.C.
1161).
The
relevant
evidence
regarding
509
South
is
that
on
April
18,
1985,
Lawrence
Minshull,
as
nominee
for
Holdings,
made
an
offer
to
Montreal
Trust
Company
of
Canada
to
purchase
509
South
for
$18,200.
Montreal
Trust
signed
the
document
as
agent.
It
was
acting
for
an
executor
of
an
estate.
By
counteroffer
the
price
was
raised
to
$19,200.
This
was
accepted
and
the
purchase
price
was
paid
by
two
cheques
one
dated
April
19,
1985,
for
$18,200
and
the
other
dated
April
20,
1985,
for
$1,000.
Both
cheques
were
payable
to
Montreal
Trust
and
issued
by
R
&
L.
The
registered
owners
of
509
South
were
Freda
Levitt,
Executrix
of
the
Estate
of
Irving
Levitt
and
Jack
Milavsky.
He
signed
the
instrument
of
transfer
on
May
28,
1985,
and
she
signed
the
next
day.
The
operative
clause
reads:
Do
Hereby
in
consideration
of
the
sum
of
Nineteen
Thousand
Two
Hundred
($19,200)
Dollars
paid
to
us
by
S.W.H.
Holdings
Corp.
the
receipt
of
which
sum
we
hereby
acknowledge,
transfer
to
S.W.H.
Holdings
Corp.
of
Box
522,
Saskatoon,
Saskatchewan
all
our
estate
and
interest
in
the
said
piece
of
land.
On
June
12,
1985,
Robert
Minshull
swore
an
affidavit
of
value
and
true
consideration
in
respect
of
this
transaction
in
which
he
stated:
1.
That
the
within
piece
of
land,
together
with
all
buildings
and
other
improvements
thereon
is
in
my
opinion
of
the
value
of
$28,900.00.
2.
That
the
true
consideration
for
the
within
transfer
is
$28,900.00.
When
the
$19,200
was
paid
to
Montreal
Trust
in
April
1985
all
of
the
shares
of
Holdings
were
held
by
Robert
and
Lawrence
Minshull,
all
of
the
shares
of
R
&
L
were
held
by
Lawrence,
Raymond
and
Marion
Minshull
and
all
of
the
shares
of
Bridge
City
were
held
by
Robert
Minshull.
Under
subparagraph
251(2)(c)(iii)
any
two
corporations
are
related
if
one
of
the
corporations
is
controlled
by
one
person
and
that
person
is
related
to
any
member
of
a
related
group
that
controls
the
other
corporation.
As
Robert
Minshull
was
the
sole
shareholder
of
Bridge
City
in
April
1985
it
was
related
to
both
Holdings
and
R
&
L
because
of
the
marriage
and
blood
relationship
that
existed
among
Robert
Minshull
and
the
related
groups
that
controlled
Holdings
and
R
&
L.
Further
subsection
251(3)
provides
that
where
two
corporations
are
related
to
the
same
corporation
they
are
deemed
to
be
related
to
each
other.
Consequently
R
&
L
and
Holdings
were
related
persons
and
are
deemed
not
to
have
dealt
with
each
other
at
arm's
length.
On
June
19,
1985,
Lawrence
Minshull
made
an
offer
to
Montreal
Trust
to
purchase
1328
North
for
$18,700.
Again
Montreal
Trust
signed
as
agent.
By
counter-offer
the
price
was
raised
to
$22,200.
A
deposit
of
$3,000
was
required
and
the
balance
was
payable
on
or
before
July
10,
1985.
On
June
27,1985
R
&
L
issued
a
cheque
payable
to
Montreal
Trust
for
$3,000.
A
copy
of
the
cheque
for
the
balance
is
not
in
evidence,
but
Robert
Minshull
confirmed
that
it
was
paid
by
R
&
L.
The
balance
after
adjustments
was
$19,455
making
the
total
purchase
price
$22,455.
On
July
11,
1985,
Robert
Minshull
acknowledged
receipt
of
the
transfer
of
1328
North
to
Holdings.
In
assessing
Holdings
the
respondent
assumed
that
R
&
L
paid
the
$19,455
to
Montreal
Trust
on
or
about
July
11,
1985.
This
was
not
rebutted.
The
transfer
had
been
signed
on
July
2,
1985,
by
the
owners
of
the
property,
Phyllis
and
Ernie
Ternofsky.
It
stated
that
they:
Do
hereby
in
consideration
of
the
sum
of
One
($1.00)
Dollar
and
other
good
and
valuable
consideration,
paid
to
us
by
S.W.H.
Holdings
Corp.,
of
Saskatoon,
in
the
Province
of
Saskatchewan,
the
receipt
of
which
sum
we
hereby
acknowledge,
transfer
to
S.W.H.
Holdings
Corp.,
of
Saskatoon,
in
the
Province
of
Saskatchewan,
whose
postal
address
is:
P.O.
Box
522,
Saskatoon,
Saskatchewan,
all
our
estate
and
interest
in
the
said
piece
of
land.
A
certificate
of
title
certifying
Holdings
as
the
owner
was
issued
on
July
11,
1985.
Robert
Minshull
swore
an
affidavit
of
value
and
consideration
in
respect
of
this
transaction
on
July
11,1985.
It
stated:
1.
That
the
parcel
of
land
described
in
the
within
Transfer
together
with
all
buildings
and
other
improvements
thereon
is
in
my
opinion
of
the
value
of
Twenty-
Nine
Thousand
and
Six
Hundred
($29,600.00)
Dollars
and
no
more.
2.
That
the
true
consideration
for
the
within
Transfer
is
$29,600.
Holdings
transferred
1328
North
to
Allan
B.
Wolfe
on
August
18,
1988,
for
$21,000.
For
the
reasons
given
in
respect
of
the
payment
by
R
&
L
of
the
$19,200
to
Montreal
Trust
regarding
509
South,
R
&
L
and
Holdings
were
not
dealing
at
arm's
length
when
the
$22,455
was
paid
by
R
&
L
to
Montreal
Trust
regarding
1328
North.
It
was
established
by
evidence
tendered
by
the
respondent
that
when
Holdings
was
assessed
under
subsection
160(2)
on
April
28,
1987,
R
&
L
was
liable
to
pay
a
total
of
$146,183
under
the
Act
in
respect
of
its
1983,
1984
and
1985
taxation
years.
The
fundamental
object
of
subsection
160(1)
is
to
prevent
the
frustration
of
the
collection
of
tax,
interest
and
penalties
owing
under
the
Act
by,
among
other
things,
the
transfer
directly
or
indirectly
by
any
means
whatever
of
the
assets
of
a
debtor
corporation
to
another
corporation
with
which
it
is
not
dealing
at
arm's
length.
All
of
the
evidence
points
to
the
conclusion
that
in
April
and
July
1985
R
&
L
divested
itself
of
$41,655
with
the
object
of
having
title
to
509
South
and
1328
North
vested
in
Holdings
under
circumstances
whereby
Holdings
would
not
incur
the
expense
of
the
purchase
price
of
the
properties.
I
regard
this
as
a
transfer
of
property
from
A
&
L
to
Holdings
in
a
non-arm's
length
transaction
within
the
meaning
of
subsection
160(1).
In
Fas
ken
Estate
v.
M.N.R.,
[1949]
1
D.L.R.
810;
[1948]
C.T.C.
265;
49
D.T.C.
491,
Thorson,
P.
said
at
279
(D.T.C.
497):
In
Gathercole
v.
Smith
(1880-81)
17
Ch.D.
1
at
7,
James
L.J.
spoke
of
the
word
"transfer"
as"
one
of
the
widest
terms
that
can
be
used,"
and
Lush
L.J.
said,
at
page
9:
The
word
"transferable,"
I
agree
with
Lord
Justice
James,
is
a
word
of
the
widest
import
and
includes
every
means
by
which
the
property
may
be
passed
from
one
person
to
another.
The
word
"transfer"
is
not
a
term
of
art
and
has
not
a
technical
meaning.
It
is
not
necessary
to
a
transfer
of
property
from
a
husband
to
his
wife
that
it
should
be
made
in
any
particular
form
or
that
it
should
be
made
directly.
All
that
is
required
is
that
the
husband
should
so
deal
with
the
property
as
to
divest
himself
of
it
and
vest
it
in
his
wife,
that
is
to
say,
pass
the
property
from
himself
to
her.
The
means
by
which
he
accomplishes
this
result,
whether
direct
or
circuitous,
may
properly
be
called
a
transfer.
Appeal
of
Sunset
Bay
Resort
Inc.
The
Sunset
Bay
appeal
is
from
an
assessment
dated
April
28,
1987,
under
subsection
160(2)
of
the
Act
in
respect
of
the
transfer
of
$15,000,
$15,000
and
$11,900
from
R
&
L
to
Sunset
Bay.
Robert
and
Lawrence
Minshull
both
denied
that
such
a
transfer
occurred.
The
evidence
is
that
Robert
Minshull
authorized
the
Saskatoon
branch
of
Midland
Doherty
Ltd.
to
issue
three
cheques
in
his
favour
in
the
amounts
of
$15,000,
$15,000
and
$11,900.
The
cheques
were
issued
on
June
30,
1986,
and
the
$41,900
was
charged
to
the
account
of
R
&
L.
One
of
the
cheques
for
$15,000
and
the
cheque
for
$11,900
was
cashed
by
Robert
Minshull
at
the
main
branch
of
the
Royal
Bank
in
Prince
Albert
on
August
27,
1986.
He
said
that
he
gave
the
money
plus
$8,100
or
a
total
of
$35,000
to
a
friend
and
former
business
associate,
Gus
Labardis,
who
lived
in
Calgary
and
who
was
in
financial
difficulty.
He
could
not
remember
where
or
on
what
date
the
money
was
turned
over.
This
exchange
took
place
in
this
regard:
His
Honour:
You
say
you
can't
remember
where
you
gave
it
to
him?
A.
I’m
not
sure
where
we
met
on
it.
His
Honour:
You
don't
hand
$15,000
across
in
cash
very
often,
do
you?
A.
In
my
life,
Your
Honour,
I
have,
yes.
To
carry
$100,000
or
$200,000
of
that
has
never
meant
anything
to
me.
The
other
cheque
for
$15,000
was
cashed
later
on—the
date
was
not
specified—but
he
could
not
recall
what
he
did
with
the
money.
Robert
Minshull
was
confronted
with
an
affidavit
sworn
by
him
on
February
25,
1987.
It
was
prepared
for
use
and
used
in
litigation
at
Saskatoon
before
the
Court
of
Queen's
Bench
for
Saskatchewan.
The
parties
were
R
&
L
and
the
Minister
of
National
Revenue.
These
proceedings
involved
allegations
by
the
Minister
that
the
collection
of
amounts
assessed
against
R
&
L
would
be
in
jeopardy
by
delay.
Paragraphs
1,
2
and
4
of
the
affidavit
read:
1.
That
at
all
material
times
to
the
transactions
described
herein,
until
February
29,
1984,
I
was
the
secretary
for
R
&
L
Investments
Ltd.,
the
Applicant
in
these
proceedings
and,
as
such,
have
personal
knowledge
of
the
matters
hereinafter
deposed
to
by
me
except
where
same
are
stated
to
be
based
on
information
and
belief
and
where
so
stated
verily
believe
the
same
to
be
true.
2.
That
I
have
read
the
Affidavits
of
Conrad
Mitzel,
Barry
McKenzie
and
Stewart
Cochrane
all
sworn
and
filed
herein
and
that
I
deny
the
Minister
would
be
jeopardized
with
respect
to
the
collection
of
the
assessments
that
have
been
issued
against
the
Applicant.
4.
That
R
&
L
Investments
Ltd.,
did
issue
three
cheques
to
me
in
the
amount
of
$15,000,
$15,000
and
$11,900,
respectively.
These
cheques
were
made
pursuant
to
a
loan
agreement
between
R
&
L
Investments
Ltd.,
and
Sunset
Bay
Resort,
Inc.,
a
company
operating
a
resort
in
Emma
Lake,
Saskatchewan.
Robert
Minshull
readily
admitted
to
making
these
statements
under
oath
and
said
that
paragraph
4
was
not
true.
He
alleged
that
he
made
the
false
statement
on
the
advice
of
his
counsel.
Paragraph
5
of
the
Sunset
Bay
notice
of
appeal
in
these
proceedings,
which
is
dated
February
8,
1988,
and
prepared
by
a
different
law
firm,
reads:
5.
At
all
material
times,
the
appellant
owned
and
operated
a
project
at
Emma
Lake,
Saskatchewan.
The
appellant
entered
into
a
loan
agreement
with
R
&
L
Investments
Ltd.
whereby
R
&
L
Investments
Ltd.
advanced
the
appellant
money.
Robert
Minshull
said
that
it
was
Lawrence
Minshull
who
instructed
the
solicitor
in
this
regard
although
he
admitted
to
being
present
when
the
instructions
were
given,
that
he
discussed
the
notice
of
appeal
with
the
solicitor
who
prepared
it
and
had
read
it
over.
On
August
27,
1986,
which
is
the
same
day
Robert
Minshull
cashed
the
cheques
for
$15,000
and
$11,900
at
the
Royal
Bank
in
Prince
Albert,
he
deposited
135
one
hundred
dollar
bills,
or
$13,500,
to
the
account
of
Sunset
Bay
at
the
Bank
of
Montreal
there.
At
that
time
he
was
not
a
shareholder,
director
or
officer
of
that
corporation
and
said
he
had
nothing
to
do
with
it.
When
asked
if
this
was
his
relationship
to
the
corporation
why
he
had
deposited
the
$13,500
to
its
credit,
he
replied:
“1
really
don’t
know
what
the
actual
reason
of
that
was
at
that
date."
Lawrence
Minshull
testified
that
paragraph
5
of
the
notice
of
appeal
was
not
his
interpretation
of
the
events.
He
said
there
was
no
loan
made
by
R
&
L
to
Sunset
Bay.
He
also
said
that
this
was
made
known
to
the
solicitor
who
prepared
the
notice
of
appeal
but
the
solicitor
disagreed.
When
asked
to
explain
the
deposit
of
$13,500
in
cash
by
Robert
Minshull
to
Sunset
Bay's
account,
Lawrence
said
his
maternal
grandmother
had
given
the
money
to
Robert
Minshull
in
trust
for
him
and
his
brother,
Raymond.
Shortly
thereafter
he
altered
this
to
say:
"That
(the
$13,500)
was
given
to
us
to
give
to
Bob
while
he
was
up
there
so
it
could
be
put
into
Sunset
Bay
to
keep
operating
and
to
pay
expenses."
This
exchange
between
Lawrence
Minshull
and
counsel
for
the
respondent
followed:
"Q.
So
if
the
money
was
given
to
you,
why
did
you
have
to
give
it
to
Bob
to
put
it
back
into
your
own
bank
account?
A.
Because
Bob
was
up
there
straightening
things
out
while
I
was
wrapping
up
all
of
my
construction
and
loose
ends
down
here
so
I
could
spend
full
time
up
there.”
Included
in
the
assumptions
made
by
the
respondent
when
he
assessed
Sunset
Bay
are
these:
R
&
L
transferred
$41,900
to
Sunset
Bay
in
1986
for
no
consideration;
that
these
funds
were
not
used
for
any
business
purpose
of
Sunset
Bay
and
they
have
not
been
repaid.
On
weighing
all
of
the
evidence
I
can
only
conclude
that
Sunset
Bay
has
failed
to
establish
on
a
balance
of
probabilities
that
these
assumptions
are
erroneous.
The
basic
reason
for
this
failure
is
that
the
evidence
of
Robert
Minshull
throughout
is
seriously
lacking
in
credibility
and,
albeit
to
a
lesser
extent,
so
is
the
evidence
of
Lawrence
Minshull.
At
the
time
of
the
transfer
Raymond
and
Lawrence
Minshull
held
6,400
of
the
7,223
shares
of
Sunset
Bay
and
they
also
held
999
of
the
1,000
shares
of
R
&
L.
These
companies
were
therefore
related
by
operation
of
subparagraph
251
(2)(c)(i)
and
it
follows
that
when
R
&
L
transferred
the
funds
to
Sunset
Bay
these
corporations
were
not
dealing
at
arm's
length.
Further,
as
already
indicated
with
respect
to
the
appeal
by
Holdings,
when
Sunset
Bay
was
assessed
on
April
28,
1987,
R
&
L
was
liable
to
pay
a
total
of
$146,183
under
the
Act
in
respect
of
its
1983,
1984
and
1985
taxation
years.
All
of
these
things
combine
to
make
Sunset
Bay
liable
under
subsection
160(1)
of
the
Act.
This
appeal
cannot
succeed.
Appeal
of
Lawrence
Minshull
The
first
issue
is
the
assessment
against
him
on
April
28,
1987,
under
subsection
160(2)
of
the
Act
regarding
the
acquisition
of
909
Avenue
I
South,
Saskatoon
(909
South”)
owned
by
Saskatoon
Credit
Union
Ltd.
for
$5,800.
The
essence
of
his
position
is
that
he
acquired
the
property
for
R
&
L
which
intended
to
build
on
it.
He
offered
this
explanation
of
why
the
title
for
the
property
was
put
in
his
name:
"The
reason
that
my
name
is
on
the
title
for
that
land
is
two
reasons.
One,
the
insurance
on
the
vacant
land
to
make
sure
that
the
liability
was
covered
if
anybody
fell
in
or
hurt
themselves,
okay.
And
two,
you
could
not
mortgage
vacant
land
with
the
Saskatoon
Credit
Union,
They
wanted
a
human
body
at
that
time.
And
that
was
the
only
reason
why
it
was
purchased
through
me
and
the
title
was
still
left
in
my
name."
A
plan
to
construct
a
duplex
at
909
South
was
abandoned
when
it
could
not
be
financed.
The
respondent
established
that
on
April
29,
1985,
an
offer
was
made
in
writing
by
"Lawrence
Minshull
or
Nominee"
to
purchase
909
South
from
Saskatoon
Credit
Union
Ltd.
for
$5,800.
The
selling
broker
was
Murdock
&
Maber
Agencies
Ltd.
and
it
issued
a
receipt
for
$5,800
to
R
&
L.
A
statement
of
the
current
account
of
R
&
L
with
Scotia
Bank,
Saskatoon,
shows
that
on
April
30,
1985,
it
was
debited
for
$5,800
in
respect
of
a
cheque
for
that
amount.
On
June
6,
1985,
Saskatoon
Credit
Union
Ltd.
executed
a
transfer
of
909
South.
The
operative
clause
reads:
Hereby
in
consideration
of
the
sum
of
One
($1.00)
Dollar
and
other
good
and
valuable
consideration
dollars
paid
to
it
by
Lawrence
Robert
Minshull
of
Saskatoon,
in
the
Province
of
Saskatchewan,
the
receipt
of
which
sum
is
hereby
acknowledged,
Transfers
To
Lawrence
Robert
Minshull
of
Saskatoon,
in
the
Province
of
Saskatchewan,
whose
mailing
address
is:
P.O.
Box
522,
Saskatoon,
Saskatchewan,
57K
3L6,
all
its
estate
and
interest
in
the
said
piece
of
land.
On
June
18,
1985,
Robert
Minshull
swore
an
affidavit
of
value
and
consideration
in
respect
of
this
transaction
in
which
he
said:
1.
That
the
within
piece
of
land,
together
with
all
buildings
and
other
improvements
thereon
in
my
opinion
of
the
value
of
Eighteen
Thousand,
Nine
Hundred
($18,900)
dollars
and
no
more.
2.
That
the
true
consideration
for
the
foregoing
Transfer
is
($18,900)
Eighteen
Thousand,
Nine
Hundred
Dollars.
On
April
20,
1989,
a
certificate
of
title
was
issued
certifying
that
Lawrence
Minshull
is
the
owner
of
909
South.
On
September
29,
1988,
M3
Holdings
Ltd.,
a
builder,
offered
to
purchase
909
South
from
Lawrence
Minshull
for
$7,000
There
was
a
deposit
of
$1,000.
Again
the
broker
was
Murdock
&
Maber
Agencies
Ltd.
A
cheque
for
$1,000
payable
to
Lawrence
Minshull
was
issued
by
this
broker
on
April
25,
1989,
and
it
bears
this
note
on
its
face:
“
Forfeited
deposit
on
909
Ave
I
South.”
This
$1,000
was
deposited
to
the
credit
of
the
personal
account
of
Lawrence
Minshull
at
St.
Mary's
Savings
and
Credit
Union
Ltd.
He
said
he
was
not
aware
of
the
existence
of
the
$1,000
cheque
and
did
not
know
how
this
amount
came
to
be
deposited
to
the
credit
of
his
personal
account
with
St.
Mary's.
Mr.
Robert
Minshull
said
that
he
secured
the
cheque
for
$1,000
and
deposited
it
to
the
credit
of
the
account
at
St.
Mary's.
He
said
he
knew
his
son
had
a
loan
with
this
credit
union.
What
was
said
in
the
appeal
of
Holdings
that
led
to
the
conclusion
that
there
had
been
a
transfer
of
property
to
it
from
R
&
L
within
the
meaning
of
subsection
160(1)
of
the
Act
also
applies
to
this
appeal.
The
result
is
that
there
was
a
transfer
of
property
from
R
&
L
to
Lawrence
Minshull
to
which
that
subsection
applies.
At
the
time
of
the
transfer
Lawrence
and
Raymond
Minshull
held
999
of
the
1,000
issued
shares
of
R
&
L.
Under
subparagraph
251
(2)(b)(ii)
"
related
persons"
are
a
corporation
and
a
person
who
is
a
member
of
a
related
group
that
controls
the
corporation.
Under
subsection
251(4)
“‘
related
group'
means
a
group
of
persons
each
member
of
which
is
related
to
every
other
member
of
the
group.”
It
follows
that
at
the
time
of
the
transfer
from
R
&
L
to
Lawrence
Minshull
they
were
related
persons
and
are
deemed
not
to
have
dealt
with
each
other
at
arm's
length.
Once
again
the
underlying
liability
of
R
&
L
comes
into
play.
I
am
referring
to
its
liability
under
the
Act
for
$146,183
in
respect
of
its
1983
to
1985
taxation
years
when
Lawrence
Minshull
was
assessed
under
subsection
160(2)
on
April
28,1987.
Because
of
the
transfer
of
the
property,
its
being
deemed
not
to
have
been
made
when
the
parties
were
dealing
at
arm's
length
and
the
underlying
liability,
there
is
no
basis
for
interfering
with
this
assessment.
The
second
issue
in
the
appeal
of
Lawrence
Minshull
is
the
validity
of
an
assessment
dated
January
16,
1987,
under
subsection
160(2)
of
the
Act
regarding
the
transfer
on
December
12,
1983,
of
$12,882.80
from
Bridge
City
to
R
&
L
Maintenance,
a
proprietorship
operated
by
him.
The
third
issue
pertains
to
the
transfer
on
February
17,
1984,
of
$13,140
from
Bridge
City
to
the
Proprietorship.
This
is
also
included
in
the
assessment
of
January
16,
1987.
Lawrence
Minshull
testified
that
the
$12,882.80
was
received
by
him
for
work
he
did
as
an
employee
of
Bridge
City
in
1983.
His
return
of
income
for
1983
was
placed
in
evidence
and
it
shows
total
earnings
of
$15,000
from
employment
income
and
the
return
includes
a
T-4
slip
issued
by
Bridge
City
in
that
amount
with
deductions
of
$237.60
for
CPP
and
$1,500
for
Income
tax
($15,000
—
[$237.60
+
$1,500]
=
$13,262.40).
Lawrence
Minshull
is
described
as
the
employee
on
that
T-4
slip.
He
said
a
lot
of
the
work
was
done
at
the
Canada
Building
and
described
it
as
”.
.
.
elevator
maintenance,
lights,
plumbing
repair,
concrete
work,
renovations
that
had
to
be
done,
painting,
etc."
He
added:
"A
lot
of
the
time
I
worked
seven
days
a
week,
16-18
hours
a
day,
in
order
to
get
the
work
accomplished."
A
copy
of
a
cheque
dated
December
1983
(the
day
of
issue
has
been
stamped
over)
issued
by
Bridge
City
payable
to
R
&
L
Maintenance
and
signed
by
Robert
Minshull
for
$12,882.80
is
in
evidence.
This
was
deposited
on
December
12,
1983,
to
the
credit
of
the
account
of
R
&
L
Maintenance
at
the
Saskatoon
Credit
Union.
This
was
treated
by
Lawrence
Minshull
as
a
personal
account
and
he
said
that
this
is
how
he
was
paid
as
an
employee
of
Bridge
City
in
1983.
As
for
the
$13,140
he
said
it
was
money
that
Bridge
City
received
for
work
done
in
repairing
flood
damage
at
the
home
in
Saskatoon
of
Mark
and
Natalie
Gibson.
The
original
contractors
on
this
job
had
been
Ryan
&
Galloway
Construction,
but
the
work
was
taken
over
from
them.
The
job
was
completed
in
August
1983,
but
not
paid
for
until
February
1984.
The
final
bill
was
$15,290,
but
this
was
reduced
to
$13,140
after
negotiations
with
the
insurance
company.
These
documents
were
placed
in
evidence
by
Lawrence
Minshull.
An
estimate
[was]
addressed
to
Mark
Gibson,
3246
Milton
Street,
Saskatoon,
dated
July
25,
1983.
The
total
estimate
is
$12,675.24.
This
document
does
not
indicate
who
is
giving
the
estimate,
but
the
oral
evidence
is
that
it
was
Bridge
City.
Second
a
three
page
undated
invoice
issued
to
Mark
Gibson
by
Bridge
City
Construction
for
a
total
of
$15,298.55.
Bridge
City
Properties
Ltd.
carried
out
construction
work
using
the
name
Bridge
City
Construction.
Third,
a
letter
dated
September
30,
1983,
to
Mark
and
Natalie
Gibson
from
R.
Shindelka
&
Associates
Ltd.,
General
Insurance
Adjusters.
It
reads
in
part:
Re:
Sewer
backup—June
24,
1983
Federation
Insurance
Company
of
Canada
Policy
No:
5236978
Pursuant
to
the
above
and
further
to
our
previous
discussions.
We
are
attaching
typed
copies
of
Schedules
of
Loss
under
headings
as
follows:
1)
Building;
2)
Contents
—
Replaced;
and
3)
Contents
—
Repaired
and
Actual
Cash
Value
Items.
Dealing
first
with
the
building,
you
will
recall
we
had
secured
a
guaranteed
estimate
from
Ryan
&
Galloway
Construction
in
the
amount
of
$11,500
which
included
stripping
of
all
of
the
basement
plus
disinfecting,
power-washing
etc.
Similarly,
you
yourself
received
an
estimate
from
Bridge
City
Construction
amounting
to
$12,675.24.
Although
this
estimate
of
Bridge
City
is
considerably
higher
than
the
Ryan
&
Galloway
estimate
and
did
not
in
fact
include
stripping,
we
have
decided
to,
in
the
sake
of
fairness,
use
this
estimate
as
a
base
price
for
proposed
settlement
of
the
building
loss.
It
will
be
noted
that
Ryan
&
Galloway
did
miss
out
furnace
repairs
but
it
seems
that
this
would
be
about
the
only
thing
that
was
missed
in
their
guaranteed
price.
Therefore,
using
Bridge
City’s
estimate
of
$12,675.24
as
a
base,
and
since
this
estimate
did
not
include
stripping,
which
the
guaranteed
estimate
of
$11,500
did,
then
the
cost
of
stripping,
disinfecting,
etc.
would
have
to
be
deducted
therefore.
This
amounts
to
$1,860.
In
connection
with
this
matter,
we
are
enclosing
photocopies
of
the
guaranteed
estimate
of
Ryan
&
Galloway.
Secondly,
a
copy
of
their
account
for
$1,860
as
above;
and
thirdly
a
copy
of
Bridge
City
Construction’s
estimate
of
$12,675.24,
if
you
do
not
have
a
copy
of
this.
Additionally,
we
are
enclosing
a
copy
of
the
final
account
of
Bridge
City
Construction
of
$15,289.55.
This
final
account
is
being
rejected,
and
not
being
considered
in
any
way
in
settlement
of
the
building
portion
of
this
loss.
The
payment
of
the
building
portion
of
the
loss,
you
will
note
on
the
Proof
of
Loss,
is
payable
to
yourselves
and
The
Royal
Bank
of
Canada
(Jointly).
Fourth
are
two
documents
from
Ryan
&
Galloway
addressed
to
“Gibson,
3246
Milton”,
the
first
is
an
estimate
dated
July
12,
1983,
for
a
total
of
$11,500
and
the
second
is
an
invoice
dated
September
25,
1983,
for
$1,860.
On
January
23,
1984,
Federation
Insurance
Company
of
Canada
issued
a
cheque
to
Bridge
City
Construction
for
$13,140.
In
a
box
on
the
cheque
entitled
"name
of
insured”
there
is
the
names
"Gibson
Mark
and
Natalie”.
This
cheque
was
turned
over
to
Lawrence
Minshull
by
the
Gibsons
and
he
gave
it
to
Robert
Minshull
who
deposited
it
to
the
credit
of
Bridge
City.
A
cheque
in
that
amount
was
then
issued
to
R
&
L
Maintenance
by
Bridge
City
and
it
was
then
credited
to
the
account
of
R
&
L
Maintenance
at
Saskatoon
Credit
Union
by
Robert
Minshull
on
February
17,
1984.
Lawrence
Minshull
said
the
$13,140"is
all
in
lieu
of
working
wages."
Mark
Gibson
was
called
by
the
respondent
and
testified
briefly.
He
said
Ryan
&
Galloway
were
unsatisfactory
and
when
he
decided
to
terminate
the
contract
with
them
he
sought
out
Lawrence
Minshull
to
complete
the
work
and
Bridge
City
was
given
the
contract.
My
conclusion
on
a
balance
of
probability
is
that
the
$12,882.80
that
was
transferred
by
Bridge
City
to
R
&
L
Maintenance
in
December
1983
is
reflected
in
what
Lawrence
Minshull
reported
as
employment
income
from
that
company
in
1983.
Although
the
cheque
was
made
payable
to
R
&
L
Maintenance
it
was
known
by
all
concerned
that
such
a
cheque
was
in
substance
a
cheque
payable
to
Lawrence
Minshull
personally.
Also
I
do
not
place
a
great
deal
of
weight
on
the
fact
that
the
figures
in
the
T-4
of
$15,000
total
earnings
and
deductions
of
$237.60
for
CPP
and
$1,500
for
income
tax
are
not
in
balance
with
the
$12,882.80.
The
discrepancy
is
$379.60
and
Lawrence
Minshull
said
that
while
unemployment
insurance
was
deducted
from
his
employment
income,
it
was
not
included
in
the
T-4.
As
there
appears
to
have
been
full
consideration
for
the
$12,882.80,
subsection
160(1)
cannot
apply.
This
aspect
of
Lawrence
Minshull's
appeal
therefore
succeeds.
On
the
other
hand
I
am
not
satisfied
that
the
$13,140
was
paid
to
Lawrence
Minshull
for
work
done
by
him
as
an
employee
of
Bridge
City.
The
evidence
shows
that
the
contract
with
the
Gibsons
was
between
them
and
Bridge
City.
The
insurance
company
paid
the
$13,140
to
Bridge
City
Construction,
which
was
payment
to
Bridge
City,
and
the
money
was
deposited
to
that
company's
account.
The
$13,140
was
not
included
in
Lawrence
Minshull's
return
of
income
for
1983
although
this
return
was
said
to
deal
with
his
employment
income
for
that
year.
In
February
1984
Lawrence
and
Raymond
Minshull
were
related
by
blood
relationship
and
together
they
were
a
related
group
as
defined
under
paragraph
251(4)(a).
This
related
group
controlled
R
&
L
and
the
three
were
related
persons
because
under
subparagraph
251
(2)(b)(ii)
related
persons
are
a
corporation
and
a
person
who
is
a
member
of
a
related
group
that
controls
the
corporation.
As
R
&
L,
Lawrence
and
Raymond
Minshull
were
each
related
to
each
other
they
also
constituted
a
related
group.
In
February
1984
this
related
group
controlled
Bridge
City
and
again
by
operation
of
subparagraph
251(2)(b)(ii)
Lawrence
Minshull
and
Bridge
City
were
related
persons
who
are
deemed
not
to
have
been
dealing
at
arm's
length
when
the
$13,140
was
transferred
to
him.
Also
when
he
was
assessed
under
subsection
160(2)
on
January
16,
1987,
Bridge
City
was,
as
observed
with
respect
to
the
appeal
of
R
&
L,
liable
to
pay
$19,008.66
under
the
Act.
This
aspect
of
Lawrence
Minshull’s
appeal
fails.
The
fourth
and
last
matter
in
the
appeal
of
Lawrence
Minshull
is
in
respect
of
an
assessment
made
on
January
16,
1987,
regarding
and
alleged
transfer
of
$39,000
on
June
7,
1984,
from
MME
Ltd.
to
him.
As
with
other
issues
in
these
appeals
the
evidence
is
somewhat
murky
and
confusing
but
this
appears
clear,
particularly
from
documentary
evidence.
Robert
Minshull
instructed
Midland
Doherty
Ltd.
to
issue
two
cheques
in
favour
of
Lawrence
Minshull,
one
for
$53,000
to
be
debited
to
Robert's
personal
account
and
the
other
for
$39,000
to
be
debited
to
the
account
of
MME
Ltd.
On
June
7,
1984,
Midland
Doherty
Ltd.
issued
a
cheque
for
$39,000
in
favour
of
Lawrence
Minshull.
On
the
same
date
the
Royal
Bank
issued
two
purchaser's
receipts
for
US
dollar
drafts,
one
in
favour
of
Robert
Minshull
for
$22,000
US
and
the
other
in
favour
of
Lawrence
Minshull
for
$50,000
US.
Robert
Minshull’s
receipt
states
on
its
face
that
it
is"re
Lawrence
Minshull".
On
July
6,
1984,
the
$72,000
US
was
credited
to
the
account
of
R
&
L
with
Midland
Doherty
Ltd.
and
was
subsequently
used
for
the
purposes
of
that
company.
There
is
no
evidence
that
the
$39,000
was
returned
to
MME
Ltd.
Lawrence
Minshull
said
he
knew
nothing
of
the
$39,000
cheque
in
his
favour
About
the
time
the
cheque
was
issued
he,
Robert
Minshull,
Raymond
Minshull
and
a
friend,
Mark
Strunk,
went
by
automobile
to
Doylestown,
Pennsylvania,
to
look
at
a
restaurant
that
was
for
sale,
the
name
of
which
now
escapes
him.
He
heard
of
the
restaurant
through
Claudia
Johnston,
whom
he
had
met
in
Hawaii.
She
had
a
friend
in
the
real
estate
business
who
sent
the
information
to
him.
The
restaurant
was
being
sold
under
court
order.
The
Minshulls
did
not
buy
it.
Lawrence
Minshull
knew
there
was
a
draft
of
$50,000
US
in
his
favour,
but
he
did
not
know
where
the
funds
came
from
and
although
he
said
the
money
was
deposited
with
Midland
Doherty
Ltd.,
he
said
he
had
no
idea
to
whose
account.
Robert
Minshull
also
testified
regarding
this
assessment,
but
his
testimony
is
of
no
assistance
to
the
appellant.
No
explanation
was
given
by
him
regarding
why
the
$39,000
cheque
was
issued
to
the
order
of
Lawrence
Minshull
or
why
it
was
necessary
to
split
the
two
US
money
drafts
that
were
issued
in
the
manner
indicated.
On
June
7,
1984,
Robert
and
Marion
Minshull
each
held
50
per
cent
of
the
shares
of
MME
Ltd.
The
corporation
and
the
individuals
were
related
persons
because
under
subparagraph
251(2)(b)(ii)
a
corporation
and
a
person
who
is
a
member
of
a
related
group
that
controls
the
corporation
are
related
persons.
Subparagraph
251(2)(b)(iii)
provides
that
any
person
who
is
related
to
a
person
who
is
a
member
of
a
related
group
that
controls
a
corporation
is
also
related
to
that
corporation.
It
follows
that
MME
Ltd.
and
Lawrence
Minshull
were
related
persons
and
they
did
not
deal
at
arm's
length.
When
Lawrence
Minshull
was
assessed
under
subsection
160(2)
on
January
16,
1987,
MME
Ltd.
was
liable
to
pay
$234,987.56
under
the
Act
in
respect
of
its
1980,
1981
and
1982
taxation
years.
The
$234,987.56
allocates
to
taxation
years
thus:
1980—$65,233.79,
1981—
$80,009.09
and
1982—$89,744.68.
In
reassessing
under
subsection
160(2)
the
respondent
made
these
assumptions.
First
that
$39,000
was
transferred
from
MME
Ltd.
to
Lawrence
Minshull.
Second
that
there
was
no
consideration
for
the
transfer
and
the
money
was
not
repaid.
Third
that
at
the
time
of
the
transfer
MME
Ltd.
and
Lawrence
Minshull
were
related
persons
and,
fourth
that
MME
Ltd.
was
liable
under
the
Act
as
indicated.
The
evidence
placed
before
the
court
does
not
at
all
satisfy
me
that
these
assumptions
are
in
error.
It
follows
that
this
aspect
of
Lawrence
Minshull’s
[appeal]
cannot
succeed.
Appeal
of
Robert
Minshull
This
brings
us
to
the
final
appeal
which
is
that
of
Robert
Minshull.
There
are
seven
items
in
respect
of
which
this
appellant
was
assessed
under
subsection
160(2)
of
the
Act.
The
first
item
involves
$51,765
paid
to
Saskatoon
Coin
and
Stamp
Centre
Ltd.
for
the
purchase
of
a
rare
coin
described
as
a
1916
c.
Sovereign.
The
invoice
is
dated
March
31,
1983,
and,
while
it
is
addressed
to
Midland
Doherty,
the
coin
was
delivered
to
Robert
Minshull.
The
$51,765
was
charged
to
the
account
of
MME
Ltd.
with
Midland
Doherty.
The
second
item
was
in
respect
of
$40,500
paid
to
Saskatoon
Coin
and
Stamp
Centre
Ltd.
for
the
purchase
of
a
second
1916
c.
Sovereign.
The
invoice
is
dated
December
19,
1983,
and
is
addressed
to
Bob
Minshull.
The
$40,500
was
paid
by
cheque
issued
on
the
same
date
by
Midland
Doherty
and
the
amount
was
again
charged
to
the
account
of
MME
Ltd.
The
notice
of
assessment
in
respect
of
both
matters
is
dated
January
16,
1987,
and
as
was
stated
regarding
the
appeal
of
Lawrence
Minshull,
MME
Ltd.
was
on
that
date
liable
to
pay
$234,987.56
under
the
Act
in
respect
of
its
1980,
1981
and
1982
taxation
years.
Also
on
or
about
March
31,
1983,
and
December
19,
1983,
MME
Ltd.
and
Robert
Minshull
were
related
persons
as
described
in
subparagraph
251
(2)(b)(ii)
of
the
Act.
The
evidence
given
in
chief
by
Robert
Minshull
with
respect
to
the
$51,765
consisted
simply
of
this:
Okay,
then,
I
don’t
deny
that
there
was
a
cheque
issued
or
anything
else.
I
maintain
that
over
the
course
of
the
time,
although
the
coins
have,
the
majority
of
times,
been
in
my
possession,
they've
always
not
been
available
for
me
to
dispose
of
them
or
have
my
hands
on
them.
The
coins
were
bought
and
I
don't
deny
it
but
I
do
deny
the
fact
that
they
were
not
a
business
expense.
The
onus
of
establishing
on
a
balance
of
probability
that
the
assessment
regarding
the
$51,765
is
in
error
is
with
Robert
Minshull.
The
kind
of
evidence
just
cited
does
not
even
begin
to
meet
that
burden.
It
fails
to
cast
any
doubt
about
the
validity
of
the
basis
on
which
the
assessment
rests.
The
evidence
respecting
the
$40,500
is
just
as
terse
and
cryptic.
It
is
also
of
no
assistance
to
the
appellant.
Notwithstanding
the
insufficiency
of
the
evidence
put
forward
by
the
appellant,
counsel
for
the
respondent
did
in
the
course
of
cross-examination
go
into
more
detail
regarding
the
transactions
involving
the
1916
c.
Sovereigns,
but
the
purpose
and
the
effect
of
the
cross-examination
was
to
underscore
the
validity
of
the
assessments.
In
view
of
the
appellant's
failure,
however,
to
discharge
the
evidentiary
burden
resting
on
him
it
is
unnecessary
to
refer
in
any
detail
to
what
transpired
in
cross-examination.
The
appeal
as
it
relates
to
the
$51,765
and
the
$40,500
fails.
The
third
item
relates
to
£11,150
paid
for
the
purchase
of
another
1916
c.
Sovereign.
This
purchase
was
from
Spink
&
Son
Ltd.,
London,
England.
The
invoice
is
dated
March
7,
1986,
and
addressed
to
the
appellant
at
Saskatoon.
Payment
was
made
on
March
11,
1986,
by
cheque
issued
by
Midland
Doherty
which
was
debited
to
the
account
of
R
&
L.
The
cheque
was
in
Canadian
funds
in
the
amount
of
$22,713
which
at
that
time
reflected
the
amount
of
£11,150.
The
remaining
four
items
relate
to
cheques
issued
by
Midland
Doherty
in
favour
of
Robert
Minshull
and
debited
to
the
account
of
R
&
L.
The
dates
and
amounts
of
these
cheques
are:
May
5,
1986—$32,000,
and
June
30,
1986—
$15,000,
$11,900
and
$15,000.
The
date
of
the
notice
of
assessment
with
respect
to
the
last-mentioned
five
items
is
January
16,
1987,
and
R
&
L
was
on
that
date
liable
under
the
Act
for
$142,662
in
respect
of
its
1983,
1984
and
1985
taxation
years.
Further
on
March
11,
May
5
and
June
30,
1986,
R
&
L
was
controlled
by
the
related
group
of
Lawrence
and
Raymond
Minshull.
Under
subparagraph
251(2)(b)(ii)
these
individuals
and
R
&
L
were
related
persons.
As
Robert
Minshull
was
at
that
time
related
to
Lawrence
and
Raymond
he
was
also
related
to
R
&
L
by
operation
of
subparagraph
251(2)(b)(iii)
of
the
Act.
The
overall
quality
of
the
evidence
in
chief
of
the
appellant
in
regard
to
these
matters
is
no
better
than
that
given
in
relation
to
the
items
of
the
$51,765
and
$40,500.
For
example,
with
respect
to
the
$32,000
Robert
Minshull
said:
A.
I
don't
really
recall
how
that
32,000
was
arrived
at,
but
I
did
take
money
out
of
the
accounts,
I
did
use
money
for
buying
coins,
I
did
pay
business
expenses
at
the
time.
His
Honour:
So
is
that
all
you
have
to
say
about
the
32,000?
Mr.
R.
Minshull:
Yes,
Your
Honour.
The
appellant's
appeal
with
respect
to
these
five
transactions
cannot
succeed.
To
sum
up
the
appeals
of
R
&
L
Holdings,
Sunset
Bay
and
Robert
Minshull
are
dismissed.
The
appeal
of
Lawrence
Minshull
is
allowed
and
the
assessment
dated
January
16,
1987,
and
numbered
574435
issued
pursuant
to
the
provisions
of
subsection
160(2)
of
the
Act
in
respect
of
the
transfer
from
Bridge
City
on
or
about
December
12,
1983,
is
vacated.
Lawrence
Minshull
is
not
entitled
to
any
other
relief
in
respect
of
that
assessment
or
in
respect
of
the
other
assessments
against
him
under
subsection
160(2)
of
the
Act.
There
will
be
no
order
respecting
costs.
Appeal
of
Lawrence
Minshull
allowed
in
part;
appeals
of
Sunset
Bay,
R
&
L
Holdings
and
Robert
Minshull
dismissed.
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