Hamlyn,
T.C.C.J.:—The
appeal
of
Araz
Developments
Inc.
("Araz
Developments")
is
in
relation
to
a
sale
of
a
property
situated
on
Lawrence
Avenue
in
the
City
of
Toronto
(the
"Lawrence
property").
The
appeal
of
the
other
four
appellants
is
in
relation
to
a
sale
of
a
property
situated
in
the
Town
of
Whitchurch-Stouffville
(north
of
the
City
of
Toronto)
(the
"Stouffville
property").
The
five
appeals
turn
on
whether
the
gains
realized
from
the
respective
sales
ought
to
have
been
treated
on
income
or
capital
account.
Upon
consent,
these
appeals
were
heard
together.
Jurisprudence
The
profit-motive
by
itself
is
not
sufficient
to
distinguish
between
business
income
and
capital
gains
since
both
traders
and
investors
are
in
search
of
profit.
In
this
regard,
Thorson,
J.
in
M.N.R.
v.
Taylor,
[1956]
C.T.C.
189,
56
D.T.C.
1125
(Ex.
Ct.)
at
pages
211-12
(D.T.C.
1137),
made
the
following
comments:
The
intention
to
sell
the
purchased
property
at
a
profit
is
not
of
itself
a
test
of
whether
the
profit
is
subject
to
tax
for
the
intention
to
make
a
profit
may
be
just
as
much
the
purpose
of
an
investment
transaction
as
of
a
trading
one.
This
principle
follows
from
the
reasoning
in
Californian
Copper
Syndicate
Ltd.
v.
Harris
(1904),
5
T.C.
159
at
pages
165-66
(Scot.
Ex.
Ct.
2nd
Div.):
It
is
quite
a
well
settled
principle
.
.
.
that
where
the
owner
of
an
ordinary
investment
chooses
to
realise
it,
and
obtains
a
greater
price
for
it
than
he
originally
acquired
it
at,
the
enhanced
price
is
not
profit.
.
.
assessable
to
income
tax.
But
it
is
equally
well
established
that
enhanced
values
obtained
from
realisation
or
conversion
of
securities
may
be
so
assessable,
where
what
is
done
is
not
merely
a
realisation
or
change
of
investment,
but
an
act
done
in
what
is
truly
the
carrying
on,
or
carrying
out,
of
a
business.
Further,
it
was
held
in
M.N.R.
v.
Foreign
Power
Securities
Corp.,
[1967]
S.C.R.
295,
[1967]
C.T.C.
116,
67
D.T.C.
5084,
that
the
determination
of
this
issue
rests,
in
part,
upon
the
taxpayer's
intention
when
acquiring
the
property.
Moreover,
in
appeals
of
this
nature
it
is
necessary
to
weigh
the
stated
intention
of
the
appellants
against
the
conduct
of
the
appellants
in
relation
to
the
property
in
question.
Mogan,
J.
in
Bell
v.
M.N.R.,
[1989]
1
C.T.C.
2272,
89
D.T.C.
165
(T.C.C.)
at
pages
2279-80
(D.T.C.
170),
found:
When
the
issue
is
capital
gain
or
income
as
in
these
appeals,
the
appellants
are
required
to
testify
and
make
a
number
of
self-serving
statements
as
to
their
intention
at
a
particular
time.
In
order
for
the
appellants
to
succeed,
such
statements
must
be
supported
by
objective
evidence.
[Emphasis
added.]
In
terms
of
the
evidence,
no
single
factor
is
conclusively
determinative
of
the
issue
and
the
surrounding
circumstances
must
be
considered,
M.N.R.
v.
Taylor,
supra,
at
page
214
(D.T.C.
1139).
In
addition
to
the
primary
intention,
one
must
look
at
whether
the
taxpayer
had,
at
the
time
of
acquiring
the
property,
a
secondary
intention
in
the
event
that
the
primary
intention
could
not
be
carried
out.
The
meaning
and
application
of
"secondary
intention”
was
succinctly
described
in
Racine
v.
M.N.R.,
[1965]
C.T.C.
150,
65
D.T.C.
5098
(Ex.
Ct.)
at
page
159
(D.T.C.
5103):
To
give
to
a
transaction
which
involves
the
acquisition
of
capital
the
double
character
of
also
being
at
the
same
time
an
adventure
in
the
nature
of
trade,
the
purchaser
must
have
in
his
mind,
at
the
moment
of
the
purchase,
the
possibility
of
reselling
as
an
operating
motivation
for
the
acquisition;
that
is
to
say
that
he
must
have
had
in
mind
that
upon
a
certain
type
of
circumstances
arising
he
had
hopes
of
being
able
to
resell
it
at
a
profit
instead
of
using
the
thing
purchased
for
purposes
of
capital.
Generally
speaking,
a
decision
that
such
a
motivation
exists
will
have
to
be
based
on
inferences
flowing
from
circumstances
surrounding
the
transaction
rather
than
on
direct
evidence
of
what
the
purchaser
had
in
mind.
Therefore,
a
taxpayer
has
a
secondary
intention
to
trade
if
the
possibility
of
an
early
resale
at
a
profit
is
a
motivating
consideration
at
the
time
the
taxpayer
makes
the
decision
to
acquire
the
particular
property.
The
decisive
time
in
the
determination
of
whether
there
was
a
secondary
intention
is
when
the
taxpayer
enters
into
a
binding
agreement
to
purchase
the
property
(Dickson
v.
The
Queen,
[1977]
C.T.C.
64,
77
D.T.C.
5061
(F.C.A.)).
Araz
Developments
Inc.
The
gain
in
question
was
realized
in
the
appellant's
1988
taxation
year
on
the
disposition
of
real
property
consisting
of
a
four
storey
building
and
land
described
as
Thomson
Court,
Civic
No.
2680
Lawrence
Avenue
East,
Scarborough,
in
the
Province
of
Ontario.
The
Lawrence
property
was
originally
acquired
as
vacant
land
in
1983
by
Uniboy
Canada
Ltd.
("Uniboy"),
a
corporation
owned
jointly
by
Ara
Boyajian
and
his
brother,
Sayouh
Boyajian.
In
1985,
Uniboy
divided
its
properties
between
the
appellant
(which
is
a
corporation
owned
by
Ara
Boyajian)
and
Sebian
Developments
Ltd.
("Sebian
Developments")
(a
corporation
owned
by
Sayouh
Boyajian).
As
a
result,
the
Lawrence
property
(which
was
still
vacant
land)
was
transferred
to
the
appellant
on
July
1,
1985.
The
appellant's
evidence
showed
that
the
transfer
of
the
Lawrence
property
from
Uniboy
to
the
appellant
was
effected
at
the
fair
market
value
of
the
property
on
July
1,1985
and
Uniboy
treated
the
resulting
gain
as
being
on
capital
account.
The
appellant
immediately
commenced
construction
of
a
four
storey
mixed
commercial
and
residential
building
on
the
Lawrence
property.
Construction
of
the
building
was
completed
in
June
of
1986.
The
construction
of
the
building
cost
approximately
$2,100,000.
At
that
time
the
Lawrence
property
was
substantially
leased.
The
Lawrence
property
was
subsequently
sold
on
July
28,
1987
and
the
appellant
realized
a
gain
of
$2,711,990
on
the
sale,
of
which
$406,300
was
reported
as
taxable
gain
in
the
1988
taxation
year
after
taking
a
reserve
of
$1,343,288.
The
Minister
has
reassessed
the
appellant
by
treating
the
proceeds
of
the
sale
of
the
Lawrence
property
as
being
on
income
account
and
including
the
amount
of
$697,058
in
the
appellant's
income
for
1988,
after
permitting
a
reserve
of
$2,014,932.
The
result
of
the
Minister's
reassessment
has
been
to
increase
the
taxable
income
of
the
appellant
in
its
1988
taxation
year
by
the
amount
of
$202,471.
Significant
evidence
It
was
submitted
by
the
evidence
of
a
real
estate
agent,
Mr.
Chyung,
that
in
March
of
1987,
the
appellant,
through
Mr.
Chyung,
was
approached
by
a
group
of
individuals
and
received
from
them
an
unsolicited
offer
to
purchase
the
building
for
$5,850,000.
The
group
consisted
of
a
number
of
doctors
and
dentists
who
sought
to
use
the
Lawrence
property
as
a
medical
centre.
The
appellant
found
the
offer
to
be
very
favourable
and
the
price
offered
was
well
in
excess
of
the
appellant's
assessment
of
market
value
of
the
Lawrence
property.
The
offer
was
accepted
by
the
appellant.
Mr.
Ara
Boyajian
was,
during
the
relevant
period
of
time,
the
sole
shareholder
and
operating
mind
behind
the
appellant,
Araz
Developments.
As
indicated,
the
property
was
originally
acquired
by
Uniboy
and
eventually
transferred
to
the
appellant
company.
Uniboy
originally
acquired
an
interest
in
the
property
pursuant
to
a
conditional
offer;
the
condition
relating
to
the
attainment
of
planning
proposals
of
Uniboy.
The
Uniboy
proposal
was
to
convert
the
existing
zoning
from
residential
to
commercial
and
to
build
a
commercial
building.
The
municipality
exacted
a
compromise
to
its
existing
zoning
requirements
to
which
Uniboy
agreed,
and
then
the
purchase
was
completed.
The
zoning
compromise
ended
with
the
proposed
building
being
zoned
for
40
per
cent
residential
and
the
balance
commercial.
At
this
point,
the
property
was
conveyed
to
the
appellant
as
part
of
the
dissolution
of
Uniboy.
Mr.
Ara
Boyajian
further
stated
that
the
intention,
in
relation
to
this
property
when
acquired,
was
to
build
a
commercial
building
and
hold
it
as
an
income
producing
property.
However,
in
order
to
obtain
the
zoning
change
it
was
necessary
to
put
in
the
residential
component.
Even
with
this
change
Mr.
Ara
Boyajian
maintained
the
proposal
was
the
same,
namely
to
hold
the
property,
build
the
building
and
earn
an
income
from
the
rental
yields.
He
further
asserted
that
in
1985,
the
building
was
built
using
the
best
materials
and
developed
in
an
aesthetically
pleasing
manner
to
the
point
that
it
won
a
design
award.
Mr.
Ara
Boyajian
also
acted
as
the
appellant's
leasing
agent.
Mr.
Boyajian
primarily
used
his
own
funds
for
the
construction.
Eventually
these
funds
were
recouped
by
way
of
an
institutional
mortgage.
The
financial
records
indicate
that
the
building
at
65
per
cent
occupancy
rate
carried
itself
and
had
a
positive
net
income.
Moreover,
the
appellant's
projections
indicated
that
at
100
per
cent
occupancy
rate,
the
building
would
yield
substantial
net
income.
Mr.
Boyajian’s
evidence
further
indicated
that
when
the
appellant
received
Mr.
Chyung's
clients’
unsolicited
offer
at
a
price
much
higher
than
the
anticipated
market
value
of
the
building,
the
building
was
not
on
the
market,
however,
when
Mr.
Chyung
presented
the
proposal
on
the
same
day,
a
listing
agreement
was
signed
with
Mr
Chyune.
At
the
time
of
the
offer,
Mr.
Boyajian
said
the
real
estate
market
that
prevailed
in
Toronto
was
in
a
frenzy.
He
also
indicated
that
while
the
asset
was
conceived,
designed
and
built
to
be
held,
he
nonetheless
decided
to
accept
the
offer
because
of
its
magnitude.
Mr.
Ara
Boyajian
also
stated
that
the
Lawrence
property
was
his
first
experience
with
a
residential
leasehold
market
and
that
after
a
short
period,
he
found
he
did
not
like
this
market;
he
encountered
several
landlord
and
tenant
problems
including
some
illegal
activities
engaged
in
by
the
residential
tenants
including
assaults
and
drug
dealing.
The
property
transaction
history
of
Mr.
Ara
Boyajian,
Araz
Developments
and
Uniboy
was
examined
in
detail.
It
would
appear
that
each
transaction
was
approached
differently
at
the
acquisition
stage
and
at
the
development
stage.
Each
property
served
a
different
specified
purpose.
Some
properties
were
acquired,
developed
and
sold;
others
were
acquired,
developed
and
held
for
their
potential
yield
and
others
were
acquired
and
held
pending
zoning
and
development
proposals.
On
two
occasions,
property
dispositions
were
declared
as
sales
on
account
of
income.
The
operating
mind
behind
the
appellant,
as
indicated,
was
and
is
Mr.
Ara
Boyajian.
Mr.
Boyajian
is
not
an
unsophisticated
person
in
matters
of
business.
He
is
well
educated
and
conducts
all
his
business
activities
with
precision,
care
and
caution.
He
is
not
given
to
business
proposals
without
first
calculating
the
factors
involved
and
seeks
from
his
real
estate
endeavours
to
pursue
these
matters
with
the
minimum
of
risk.
He
finances
most
of
his
projects
from
his
own
funds.
He
stated
at
length
that
his
long-term
property
investment
policy
was
motivated
by
his
originating
background
wherein
both
he
and
his
family
were
stateless
persons
without
any
permanent
status.
He
also
declared
that
to
his
family
their
residence
in
Canada
and
their
attainment
of
citizenship
were
important
factors
and
that
land
holding
is
tied
to
their
cultural
and
family
values
as
well
as
to
their
historical
status
problems.
Araz
Developments
Inc.
analysis
Several
factors
must
be
examined
in
relation
te
the
stated
intention
of
the
taxpayer
at
the
time
of
acquisition
of
the
property
including
the
corporate
structure
and
activities
of
the
appellant,
the
asset
in
question
and
how
the
appellant
dealt
with
it,
the
ability
of
the
appellant
to
finance
the
undertaking,
the
property
transaction
history
of
the
appellant,
the
market
conditions
and
how
the
appellant
dealt
in
the
marketplace.
It
was
established
in
Indépendant
Gaz
Service
Inc.
v.
The
Queen,
[1988]
1
C.T.C.
309,
88
D.T.C.
6230
(F.C.T.D.)
at
page
310
(D.T.C.
6231),
that
if
the
appellant
is
a
corporation,
the
relevant
intent
to
be
determined
is
that
of
the
controlling
shareholder.
In
this
case,
the
operating
mind
behind
the
appellant
company
is
Mr.
Ara
Boyajian.
The
analysis
of
the
intention
is
therefore
the
intention
Mr.
Ara
Boyajian
had
at
the
time
of
the
acquisition.
It
is
true
that
the
business
of
the
appellant
company
is
that
of
land
developing.
It
was
shown
through
the
evidence
that
the
appellant
acquired
property,
developed
property,
held
some
property
and
sold
some
property.
It
is
an
established
principle
in
law
that
a
person
in
the
real
estate
developing
business
is
not
precluded
from
making
an
investment
in
a
building”
(No.
13
v.
M.N.R.
(1950),
Tax
A.B.C.
397,51
D.T.C.
116
at
page
402
(D.T.C.
120)).
Thus
the
facts
must
be
examined
closely.
At
trial,
the
appellant,
through
Mr.
Ara
Boyajian,
gave
evidence
that
from
the
time
of
acquisition,
he
intended
to
keep
it
as
an
investment
quite
apart
from
his
business
of
buying
land,
constructing
buildings
and
selling
the
development.
Mr.
Ara
Boyajian
established
that
the
Lawrence
property
was
his
"gem"
and
that
he
wanted
to
keep
it
as
an
investment;
he
constructed
the
building
using
the
best
materials
and
developed
the
project
in
such
an
aesthetically
pleasing
manner
that
it
ultimately
won
a
design
award.
As
previously
found,
Mr.
Ara
Boyajian
is
a
very
sophisticated
businessman
whose
business
ventures
are
well-thought-out
and
planned
with
precise
care.
These
elements
were
present
in
the
Lawrence
property.
There
was
evidence
that
the
property
in
question
yielded
a
good
return.
The
property,
at
a
65
per
cent
occupancy
rate,
was
carrying
itself
and
had
a
positive
net
income.
Projections
indicated
that
at
100
per
cent
occupancy
rate,
the
building
would
yield
a
substantial
income.
The
reasons
given
by
Mr.
Ara
Boyajian
for
finally
disposing
of
the
property
were
the
appellant
received
an
unsolicited
offer
at
a
price
higher
than
the
estimated
market
value
and
that
Mr.
Ara
Boyajian
developed
a
distaste
for
the
residential
tenancy
business.
The
appellant's
position
as
a
consequence
was
that
it
could
not
turn
the
offer
down.
Mr.
Boyajian’s
position
was
corroborated
by
the
evidence
of
the
real
estate
agent,
Mr.
Ron
Chyung.
He
testified
that
the
property
was
only
listed
when
the
appellant
received
the
offer
from
the
group
of
professionals.
As
indicated
by
the
Exchequer
Court
in
Racine
v.
M.N.R.,
supra,
at
page
159
(D.T.C.
5103),
the
Court
cannot
infer
that
there
is
a
secondary
intention
to
engage
in
trading
through
the
fact
that
the
property
was
sold
greatly
in
excess
of
its
fair
market
value:
.
.
.
the
fact
alone
that
a
person
buying
a
property
with
the
aim
of
using
it
as
capital
could
be
induced
to
resell
it
if
a
sufficiently
high
price
were
offered
to
him,
is
not
sufficient
to
change
an
acquisition
of
capital
into
an
adventure
in
the
nature
of
trade.
The
actions
of
Mr.
Ara
Boyajian
throughout,
including
his
prior
property
transactions
indicated
he
(through
the
respective
companies
including
Araz
Developments)
dealt
with
each
property
separately
in
terms
of
inception,
planning,
use
and
in
some
cases
disposition.
In
relation
to
the
Lawrence
property,
the
concept
was
to
buy
only
after
zoning
approval,
develop
in
a
precise
manner,
construct
the
building
with
the
best
materials,
finance
through
the
extensive
use
of
personal
funds
and
hold
the
property
for
its
actual
and
potential
yield.
There
is
no
proof
of
a
secondary
intention
at
the
time
of
the
acquisition
to
resell
the
property.
This
is
supported
by
the
fact
that
the
appellant
was
very
successful
in
developing
and
holding
the
property
and
receiving
the
return
of
the
yielded
positive
net
income.
The
actions
and
conduct
of
the
appellant
are
in
harmony
with
the
appellant's
stated
investment
purpose.
As
a
result,
the
profit
realized
is
on
account
of
capital
and
not
on
account
of
income.
Decision
The
appeal
in
relation
to
the
Lawrence
property
for
Araz
Developments
Inc.
is
allowed
and
referred
back
to
the
Minister
of
National
Revenue
for
reconsideration
and
reassessment
on
the
basis
that
the
sale
of
the
Lawrence
property
was
a
sale
on
capital
account.
The
appellant
is
entitled
to
its
costs.
Ara
Boyajian
et
al.
The
gain
in
question
was
realized
in
the
appellants’
1988
taxation
year
on
the
disposition
of
a
parcel
of
land
consisting
of
82.39
acres
located
in
the
Town
of
Whitchurch-Stouffville,
in
the
Province
of
Ontario.
The
Stouffville
property
was
acquired
in
1988
by
the
appellants
Ara
Boyajian
and
his
wife
Calabrina
E.
Boyajian,
Sayouh
Boyajian
and
his
wife
Armine
Boyajian,
in
equal
shares
as
tenants
in
common.
The
Stouffville
property
was
sold
for
an
amount
of
$7,630,000.
The
selling
price
of
the
property
in
question
in
the
opinion
of
the
appellants
was
well
in
excess
of
what
the
appellants
thought
the
property
was
worth.
The
Minister
by
reassessment
has
included
in
computing
each
of
the
appellants'
income
for
the
1988
taxation
year
an
amount
as
follows:
Proceeds
|
$7,630,000
|
Cost
of
Sale
|
(6,000,000)
|
Selling
Expenses
|
($124,000)
|
Gain
on
Sale
|
$1,505,206
|
Less:
Reserve
|
(109,602)
|
Total
Gain
in
Year
|
$1,395,604
|
[Each]
Appellant's
Share
(25
per
cent)
|
$
348,900
|
Previously
Included
in
Income
as
|
|
Taxable
Capital
Gain
|
232,600
|
Additional
Income
Assessed
|
$116,300
|
In
1988,
a
74.5
acre
parcel
of
land
adjacent
to
the
subject
property
was
acquired
by
Araz
Developments
(owned
by
Ara
Boyajian)
and
Sebian
Developments
(owned
by
Sayouh
Boyajian),
in
equal
shares
as
tenants
in
common
and
this
property
is
still
held
in
the
same
ownership.
Both
Araz
Developments
and
Sebian
Developments
have
for
some
time
attempted
to
have
the
property
rezoned
to
industrial
so
that
they
may
develop
an
industrial
park.
All
four
appellants
testified
as
to
the
acquisition
and
disposition
of
the
Stouffville
property.
The
appellants
stated
that
their
intention
was
to
acquire
this
agriculturally
zoned
property
and
hold
it
for
a
long
period
of
time.
They
expected
through
the
years
to
have
the
property
rezoned
to
industrial,
develop
the
property
and
operate
the
industrial
property
as
leasehold
property.
They
further
stated
that
the
property
was
acquired
as
an
income
producing
investment
for
the
benefit
of
their
six
children.
There
was
some
documentary
evidence,
however
brief,
to
support
this
evidence.
The
subject
property
was
sold
after
32
days
of
holding.
The
appellants
received
an
unsolicited
offer
in
excess
of
what
they
felt
was
the
market
value.
After
some
discussion,
the
other
three
appellants
followed
the
views
of
Mr.
Ara
Boyajian
and
decided
to
sell
the
property.
In
relation
to
the
property
holding
of
the
Stouffville
property,
the
appellants
stated
the
same
cultural
views
and
family
values
presented
as
part
of
the
Araz
Developments
case.
Ara
Boyajian
et
al.
analysis
The
factors
that
must
be
considered
in
relation
to
the
stated
intention
of
the
appellants
at
acquisition
include
the
type
of
acquisition,
the
feasibility
of
the
project,
the
financing,
the
length
of
time
the
property
was
held,
the
historical
pattern
of
property
dealing,
the
determination
of
the
operative
mind(s)
in
the
decision-making
process,
the
degree
of
sophistication
of
the
appellants
in
terms
of
property
transactions
and
the
amelioration
of
the
property.
In
relation
to
the
Stouffville
property,
there
is
some
evidence
that
the
appellants
acquired
it
with
the
intent
of
holding
it
as
an
income
producing
investment
for
the
benefit
of
their
six
children.
The
financing
was
to
be
their
own.
However,
there
was
no
evidence
that
the
property
could
yield
any
income
to
its
owners
without
considerable
time,
effort
and
investment.
Moreover,
no
detailed
business
plan
or
critical
path
was
developed
in
relation
to
this
purchase.
It
was
established
in
Leonard
Reeves
Inc.
v.
M.N.R.,
[1985]
2
C.T.C.
2054,
85
D.T.C.
419
at
page
2058
(D.T.C.
421)
(T.C.C.),
referring
to
M.N.R.
v.
Lane,
[1964]
C.T.C.
81,
64
D.T.C.
5049
(Ex.
Ct.),
at
page
91
(D.T.C.
5051)
that:
If
the
appellant
entered
into
a
partnership
or
a
syndicate
or
some
other
arrangement
with
others
for
the
purpose
of
dealing
in
land
and
played
a
passive
role
leaving
it
to
another
to
be
the
active
or
dominant
member,
that
member's
intentions
are
attributable
to
the
appellant.
In
this
case,
the
dominant
member
was
Mr.
Ara
Boyajian
(I
conclude
from
all
the
evidence
that
he
was
the
directing
mind
and
will
of
the
ownership
of
the
Stouffville
property).
As
previously
concluded,
Mr.
Ara
Boyajian
is
a
sophisticated
businessman
fully
aware
of
the
business
of
property
acquisition,
development
and
disposition.
Although
Calabrina,
Sayouh
and
Armine
Boyajian
were
reluctant
to
sell
the
property,
they
ultimately
agreed
with
Mr.
Ara
Boya-
jian's
decision
to
dispose
of
the
property.
In
light
of
the
facts
surrounding
the
acquisition
of
the
property,
and
the
actions
of
the
parties,
I
conclude
Mr.
Ara
Boyajian
did
have
an
operating
motivation
to
sell
the
property
if
the
opportunity
arose.
The
finding
of
such
motivation
is
reinforced
by
the
fact
that
Mr.
Ara
Boyajian
had
already
sold
another
property
(the
Lawrence
property)
at
a
considerable
profit
seven
months
before
the
Stouffville
property
was
purchased.
I
can
only
conclude
Mr.
Ara
Boyajian
was
aware
that
the
property
could
probably
be
sold
at
a
profit
if
the
real
estate
market
continued
as
structured
and
the
parties
so
chose.
The
frenzied
market
situation
existing
in
Toronto
at
the
time
of
the
Lawrence
property
sale
continued
on
to
the
sale
of
the
Stouffville
property.
The
short
length
of
time
(32
days)
for
which
the
appellants
held
the
property
also
points
to
the
supporting
conclusion
there
was
a
secondary
intention
to
sell
the
property
if
the
price
was
right.
The
appellants
referred
to
T.K.
Sales
Ltd.
v.
M.N.R.,
[1973]
C.T.C.
340,
73
D.T.C.
5284
(F.C.T.D.),
to
advance
their
argument
that
even
where
a
taxpayer
is
in
the
real
estate
trade,
a
gain
on
sale
of
a
property
may
be
treated
as
capital
where
the
property
was
acquired
for
the
purpose
of
producing
income
if
the
primary
intention
is
frustrated
and
a
sufficiently
good
offer
is
received.
They
claim
that
under
such
circumstances,
the
short
period
of
time
that
elapsed
between
the
purchase
and
sale
of
the
property
is
irrelevant.
This
case
is
distinguished.
In
7.K.
Sales
Ltd.,
supra,
the
appellant
could
not
carry
out
his
primary
intention
due
to
the
illness
of
his
wife,
whereas
in
this
case
there
is
no
evidence
that
the
primary
intention
was
frustrated.
I
would
therefore
conclude,
notwithstanding
the
stated
intention,
there
is
strong
evidence
of
a
secondary
intention
which
was
an
operating
motivation
to
sell
the
property
if
the
circumstances
warrant
it.
The
gain
resulting
from
the
sale
of
the
Stouffville
property
is
consequently
on
income
account.
Decision
The
appeals
of
the
appellants
Ara
Boyajian,
Calabrina
E.
Boyajian,
Sayouh
Boyajian
and
Armine
Boyajian
in
relation
to
the
disposition
of
the
Stouffville
property
are
on
account
of
income
and
the
appeals
are
therefore
dismissed.
These
appeals
having
been
heard
on
common
evidence,
only
one
counsel
fee
for
the
respondent
is
allowed
for
the
said
appeals.
Appeal
allowed
in
part.