Brulé,
J.T.C.C.:—The
appellant
has
instituted
an
appeal
from
the
determination
of
the
Minister
of
National
Revenue
("Minister")
of
November
8,
1990
confirming
the
notice
of
assessment
of
January
24,
1990,
which
reads
as
follows:
The
liability
under
subsection
160(1)
of
the
Income
Tax
Act
in
the
amount
of
$16,198.14,
in
respect
of
a
transfer
on
or
about
August
26,
1987,
from
Mr.
Donald
Ayoub
to
Mrs.
Lucy
Ayoub
of
property
located
at
436,
438
and
440
305th
Avenue
Saint-Hippolyte.
A
reassessment
made
in
1983
raised
the
sum
in
question
to
$23,470.60.
Facts
By
a
notarized
deed
of
sale
dated
August
26,
1987,
duly
registered
on
August
31,
1987
at
the
Terrebonne
registration
division,
the
appellant
acquired
a
property
from
Mr.
Donald
Ayoub.
As
a
result
of
the
sale,
which
took
place
on
August
26,
1987,
the
appellant
became
the
sole
owner
of
the
property.
At
the
time
of
the
sale,
Mr.
Donald
Ayoub
owed
an
amount
which
he
was
required
to
pay
under
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
in
respect
of
taxation
years
prior
to
the
sale
of
the
property.
Thus,
on
January
24,
1990,
Mr.
Donald
Ayoub
owed
$16,198.14
in
taxes,
penalties
and
interest
in
respect
of
the
taxation
years
1984
to
1986
inclusive.
At
the
time
of
the
sale,
Mr.
Donald
Ayoub
was
the
appellant's
brother-in-law.
At
the
time
of
the
sale,
the
appellant
and
Mr.
Donald
Ayoub
were
not
dealing
at
arm's
length,
the
appellant
being
a
person
connected
by
marriage
to
Mr.
Gordon
Ayoub
within
the
meaning
of
subsections
251(1),
251(2)
and
251(6)
of
the
Act.
The
appellant
paid
$100,000
to
acquire
the
property.
Basis
of
controversy
The
parties
agreed
that
the
controversy
turned
on
the
following
issue:
Whether
the
sale
of
August
26,
1987,
through
which
the
appellant
acquired
the
property
from
Mr.
Donald
Ayoub,
was
transacted
at
the
fair
market
value
of
the
property
at
the
time
of
its
sale.
[Translation.]
Appellant’s
argument
Counsel
for
the
appellant
told
the
Court
that
the
vendor,
Donald
Ayoub,
could
sell
the
property
in
issue
at
the
price
he
wanted.
Municipal
assessments
pertaining
to
this
property
were
filed
in
order
to
justify
the
sale
at
the
price
of
$100,000.
The
appellant’s
husband,
who
was
also
the
vendor's
brother,
indicated
that
he
had
taken
part
in
the
negotiations
leading
up
to
the
sale.
According
to
him,
in
addition
to
payment
of
the
selling
price,
the
vendor
obtained
a
ten-year
lease,
without
rent.
Under
the
terms
of
this
lease,
the
vendor
was
to
manage
the
property,
which
included
three
houses
and
a
plot
of
land.
In
addition,
Donald
Ayoub
was
to
make
certain
repairs.
It
appeared
from
the
latter’s
testimony
that
the
value
of
the
maintenance
work,
including
that
performed
during
the
summer
and
winter,
could
be
set
at
approximately
$3,000
per
year.
The
vendor,
it
was
said,
was
bankrupt;
he
owed
his
brother,
Gordon
Ayoub,
some
$24,000
on
a
mortgage,
which
sum
was
to
be
paid
out
of
the
selling
price
[sic].
Counsel
emphasized
that
there
was
nothing
unusual
about
the
sale
and
transfer
and
that
the
appeal
should
be
allowed.
Respondent's
argument
A
valid
assessment,
based
on
a
comparison
with
similar
properties
sold
in
the
area
in
question,
was
submitted
to
the
Court.
Counsel
also
pointed
out
that
the
lease
granted
to
the
vendor
by
the
appellant
bore
a
date
which
fell
in
August
1987,
but
that
the
form
used
became
available
only
after
December
17,
1987;
hence,
it
appears
that
the
transaction
was
not
entirely
regular.
Furthermore,
counsel
argued,
the
appellant
did
not
file
a
valid
assessment
of
the
property,
but
relied
solely
on
the
figures
of
the
municipal
assessor,
who
acknowledged
that
they
might
not
reflect
the
value
on
the
date
of
the
sale.
In
spite
of
that,
the
selling
price
was
less
than
the
figures
presented.
Lastly,
counsel
for
the
respondent
indicated
to
the
Court
that
the
appellant's
failure
to
testify
at
the
hearing
had
to
be
taken
into
consideration.
Analysis
I
intend
to
keep
my
observations
brief.
First
of
all,
the
only
valid
assessment
submitted
to
the
Court
was
that
of
the
respondent's
witness,
and
that
assessment
was
not
seriously
challenged.
The
first
notice
of
appeal
filed
in
the
instant
case
did
not
take
into
account
the
provisions
of
section
251
of
the
Act
because
it
was
believed
that
the
sale
was
one
between
parties
dealing
at
arm's
length.
The
instant
appeal
constitutes
an
attempt
to
justify
what
happened.
I
believe
that
the
vendor
Donald
Ayoub,
who
was
bankrupt
—
he
owed
his
brother
(the
appellant’s
husband)
the
sum
of
$24,000
—
was
anxious
to
sell
the
property
at
the
price
of
$100,000
and,
like
the
appellant,
entirely
disregarded
the
provisions
of
section
160
of
the
Act.
In
view
of
the
fact
that
it
was
impossible
for
the
vendor
to
pay
the
tax
assessed
on
the
value
of
$275,000
determined
by
the
Court,
it
was
appropriate
to
tax
the
appellant.
Consequently,
the
appeal
is
dismissed
with
costs
awarded
to
the
Minister.
Appeal
dismissed.
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