Bowman
J.T.C.C.:
—
This
appeal
is
from
an
assessment
for
the
appellant’s
1989
taxation
year.
The
issue
is
whether
a
gain
realized
by
her
on
the
sale
of
a
property
owned
by
her
at
142
Mary
Street
in
Thorold
South,
Ontario,
is
on
revenue
or
capital
account.
The
property,
a
house
in
an
industrial
area
of
Thorold,
was
bought
on
April
10,
1989.
The
house
was
in
run-down
condition.
Indeed
it
was
described
as
a
“dump”
or
a
“pigpen”
by
the
real
estate
agent,
Mr.
Carpino.
Mrs.
Risi,
who
was
24
at
the
time,
inspected
it
with
her
husband
at
night,
with
a
flashlight.
The
inspection
seems
to
have
been
somewhat
cursory.
Mrs.
Risi
testified
that
she
bought
it
as
an
investment
to
supplement
her
income
as
she
had
been
involved
in
an
automobile
accident
and
needed
another
source
of
income.
Her
husband
was
evidently
a
handyman
and
they
fixed
it
up.
To
judge
by
the
before
and
after
photographs
he
seems
to
have
done
a
good
job.
The
property
cost
$22,000
and
a
further
$4,577.83
was
spent
in
improving
the
property.
Mrs.
Risi
stated
that
she
bought
the
property
to
rent
it.
I
accept
that
that
may
have
been
one
of
her
intentions.
She
did
not
find
a
tenant
although
she
did
have
discussions
with
one
Anthony
Rinaldi
about
renting
it
for
$350
per
month
but
nothing
materialized.
The
property
was
listed
for
sale
on
April
17,
1989
for
$54,900
while
it
was
still
in
the
process
of
renovation.
The
listing
described
the
work
that
was
being
done
and
the
home
was
described
as
an
“excellent
starter
home”.
As
a
result
of
the
listing
an
offer
came
in
on
April
24,
1989
at
$51,500
and
was
signed
back
at
$54,500.
The
price
was
accepted
by
the
purchaser
and
a
profit
of
$24,457.97
was
realized.
The
appellant
treated
the
gain
as
being
on
capital
account
and
the
Minister
treated
it
as
the
profit
from
a
business
or
an
adventure
in
the
nature
of
trade.
Mrs.
Risi
stated
that
she
had
no
intention
of
selling
the
property
and
the
listing
was
simply
a
means
of
facilitating
the
listing
of
it
for
rental
because
no
form
was
available.
The
form
had
boxes
that
could
be
ticked
as
“sale”
or
“lease”
or
“both”.
Only
“sale”
was
marked.
The
fact
nonetheless
remains
that
the
property
was
bought,
fixed
up,
listed
for
sale
and
sold
in
about
one
month.
I
accept
that
the
appellant
had
at
least
as
one
intention
the
rental
of
the
property,
and
that
she
was
surprised
when
an
offer
of
$51,500
came
in.
I
do
not
however
think
that
it
is
possible
to
exclude
the
existence
of
a
secondary
intent,
as
described
in
Racine
v.
Minister
of
National
Revenue,
[1965]
C.T.C.
150,
65
D.T.C.
5098.
The
cursory
examination
of
the
property
before
it
was
purchased,
the
speed
with
which
it
was
listed
and
the
alacrity
with
which
the
offer
was
signed
back
lead
me
to
the
conclusion
that
the
elements
which
impelled
Jackett
P.
to
find
that
a
short
holding
of
the
property
in
Warnford
Court
(Canada)
Ltd.
v.
Minister
of
National
Revenue,
[1964]
C.T.C.
175,
64
D.T.C.
5103,
was
not
determinative
of
a
trading
intent,
do
not
exist
here.
In
that
case
Jackett
P.,
as
he
then
was,
said
at
pages
175-76
(D.T.C.
5103-04):
On
the
other
hand,
there
is
the
fact
that
the
sale
had
hardly
been
completed
when
there
was
a
quick
re-sale
resulting
in
a
substantial
profit.
Unexplained,
that
quick
re-sale
and
profit
might
give
rise
to
an
inference
that
the
acquisition
and
re-sale
was
a
venture
in
the
nature
of
trade
within
the
meaning
of
those
words
as
used
in
the
definition
of
“business”
in
the
Income
Tax
Act.
The
re-sale,
however,
has
been
explained
by
the
evidence
of
Mr.
Sebba,
which
I
accept,
that
the
increasing
amounts
of
the
offers
made
to
the
appellant
by
the
person
who
purchased
from
the
appellant,
which
offers
were
completely
unexpected,
became
too
great
for
him
to
resist.
I
further
accept
his
evidence
that
possibility
of
re-sale
was
not
one
of
the
possibilities
contemplated
by
the
appellant
at
the
time
that
the
appellant
entered
into
the
agreement
for
acquisition
of
the
property.
It
could
not
have
escaped
the
attention
of
someone
as
obviously
intelligent
as
the
appellant
that
the
real
value
lay
in
the
land
and,
in
a
rising
market,
a
resale
at
a
profit
was
a
real
possibility.
I
think
it
was
one
of
the
motivating
factors
that
impelled
the
purchase.
A
taxpayer’s
stated
intention,
while
important,
is
only
one
factor
that
must
be
taken
into
account.
As
Rouleau
J.
observed
in
Happy
Valley
Farms
Ltd.
v.
Minister
of
National
Revenue,
[1986]
2
C.T.C.
259,
(sub
nom.
Happy
Valley
Farms
Ltd.
v.
R.),
86
D.T.C.
6421,
and
the
Federal
Court
of
Appeal
in
First
Investors
Corp.
Ltd.
v.
R.,
[1987]
1
C.T.C.
285,
87
D.T.C.
5176;
leave
to
appeal
to
S.C.C.
refused
(sub
nom.
First
Investors
Corp.
v.
Minister
of
National
Revenue)
79
N.R.
395n,
79
N.R.
396n,
many
other
considerations
are
relevant.
Unlike
Warnford
we
have
here
the
fact
that
the
property
was
fixed
up,
listed
and
sold
within
one
month.
I
am
not
unmindful
of
the
fact
that
Mrs.
Risi
subsequently
bought
a
rental
property
which
she
still
owns.
That
property
appears
to
have
the
earmarks
of
a
capital
investment.
I
do
not
think
that
the
same
can
be
said
of
the
property
involved
in
this
case.
The
appeal
is
therefore
dismissed.
Appeal
dismissed.
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