Bohdan Barabash and Wolodymyr Barabash v. Minister of National Revenue, [1993] 2 CTC 3080, 93 DTC 1436

Margeson, T.C.C.J. (orally):— The matters before me today for decision are those of Bohdan Barabash v. M.N.R., 90-2071 and Wolodymyr Barabash v. M.N.R., 90-2995. It was agreed at the outset that the evidence given would apply to both cases. The appellant Wolodymyr Barabash was not present. It was agreed by counsel for the Minister and the appellant that that was not neces- sary, that the evidence was similar and the evidence would apply to both cases, and consequently the decision will reflect that.

The respondent reassessed the taxation liability of the appellants for the year 1986, revised the adjusted cost base of the QCTV Ltd., (hereinafter referred to as QCTV) shares to $1.75 per share, and also allowed a deduction of $1,600 for outlays and expenses arising from legal fees in respect of the matter. This was objected to and the respondent further assessed the appellants and gave notice dated July 24th, 1990 to allow capital loss carryback from 1988 to 1986, but to confirm the reassessment on the basis of an adjusted cost base of $1.75 per QCTV share. The appellants appealed therefrom.

The real issue agreed to by the appellant and respondent at the outset of the trial was whether or not the adjusted cost base as allowed by the Minister was the proper one or was it some other figure. The figures in question were $1.75, $3.50 or $5.50. The $1.75 was the adjusted cost base to the estate according to the Minister's calculation. The $3.50 was the amount that the appellants alleged were paid for the shares. The $5.50 is a combination of the $3.50 and the $1.75, which the appellants referred to as an additional cost of the shares. Therefore they argue that real cost, with respect to the appellants’ shares were $5.50.

One of the appellants, Mr. Bohdan Barabash, gave evidence. He introduced a number of documents by agreement. Volumes 1 and 2, which were volumes of documents prepared by the respondent. It is important to note that all of these documents were admitted into Court by agreement without limitation, and I made it specifically clear when they were admitted that there were no limitations upon the admission of those documents, and the documents then are deemed to be correct, not only tendered for the purposes of establishing that the documents are written, but also for the purposes of the truth of what was in the documents and any reasonable conclusions and inferences that might be drawn from the documents themselves.

Bohdan Barabash indicated that he was a student and he indicated that the subject matter of the appeal was with respect to the acquisition of QCTV shares. He indicated his father was one of the original founders of this company and its purpose in life was to provide cable service in the Edmonton area and possibly other places. Harry Barabash, one of the founders and the person who was entitled to the founders' shares, died intestate. As a result, the appellant and his brother and other members of the family, including the widow, who is the stepmother of the appellants, were entitled to a share of the estate.

The evidence also indicated that there was a public trustee involved in the distribution of the estate because an infant daughter of the deceased was entitled to a share of the estate and consequently the public trustee had to get involved on her part.

Evidence was given that in 1978 one of the other founders decided to sell his shares and the restrictions on the transfer of shares in QCTV required that they be offered to the other co-founders first. Shaw Cable was attempting to purchase some of the shares and a bidding war developed.

An offer apparently of $7.50 was once received per share, plus 25 cents as a brokerage fee. That would be $7.75 a share, and then an agreement was entered into later on that led to the purchase of some of the shares in 1978.

Some of the other founders' shares, apart from the ones involved here, were purchased, according to this witness. Financing was taken through the Toronto-Dominion Bank. Shares were offered as collateral to the bank for moneys loaned for the purchase of the shares. In any event, on July 30, the loans were approved and the shares other than those in question here were purchased and the share certificates were given in 1978 to the Toronto- Dominion Bank.

Exhibit A-2 was entered by agreement, and Exhibit A-2 is basically a piece of paper purportedly signed by Elvira Barabash, the administratrix of the estate of Hryhorij Barabash. It is dated August 1, 1985, although the evidence leads me to conclude that it might have been dated otherwise or it might have been signed otherwise.

The August date is typewritten in and the day of the month is in ink. The signature Elvira Barabash”, according to her evidence, is similar to her signature but she could not remember ever having signed it. No expert evidence was given to compare the signatures. The appellants’ solicitor invites me to make the comparison and to conclude that it is the same signature. All I can say is that it looks like Elvira Barabash's signature and I attach nothing more to it than that, and she herself could say nothing more than that, that it looked like her signature. That in itself is a bit strange, since she could recognize her signature on other documents but she couldn't recognize this one. I think her answer was probably more motivated by the fact she couldn't remember the document more than she couldn't remember the signature or the circumstances surrounding it or how she got it. But anyway, it was admitted into evidence and it speaks for itself for what it is worth.

The appellants’ position was that it was tendered in evidence merely to show the mind-set of the appellant on August 1, 1985, that he intended to purchase these shares and that he intended to pay $3.50, or at least he was going to pay $3.50 a share for them, although his evidence later on tended to show that he might not pay that much or he might have to pay more. So it's a strange document in that sense, but that was his evidence.

In early 1985 it became apparent that there was going to be a hostile takeover bid and it turned out that the founders' group had only a little over 40 per cent of the shares, and they wanted to get control at approximately 51 per cent. It did appear that some of the founders were not of the same mind as others and that they might be prepared to sell their shares to a hostile takeover group, and that would result in the founders' group having less than 40 per cent. They wanted to purchase other shares in order to increase their holdings to 51 per cent.

The witness, Mr. Barabash, was involved. He was also an officer, as I understand it, of the company at the time and was deeply involved in the company. He said he intended to acquire the estate's shares to allow him to use them at that time and his brother had the same mind-set. They wanted to increase their shareholdings in the company.

He indicated, although it's not of particular significance, that in the fall of 1985 the founders' agreement was coming to an end, he got a new agreement, they flushed out some of those people who were contrary to their interests. By January of 1986 a meeting was held and they had managed to corner or acquire 50 per cent of the shares.

After that meeting Shaw Cable offered to purchase the shares for $28 per share. Then another company offered to purchase them, then a third offer came in as well and then a fourth interested party made an offer. Ultimately the Videotron offer of $31 per share was the most attractive, this was $31 per share to all shareholders for all shares, and not just to the controlling group. That was a very attractive offer for them and they entered into an agreement in March.

Exhibit A-2 was again referred to. The figure of $3.50 a share was not paid then according to the witness. It was paid on August 15, 1986. It was not paid on August 1 when this agreement was entered into. Share certificates were not issued, he said, they were not delivered to them. The Toronto-Dominion Bank had share certificates, blocks of share certificates in the administratrix's name.

He was asked if there was a meeting prior to the execution of Exhibit A-2. He said himself and his brother had discussed basically obtaining these shares and he had discussed it with the administratrix, that he wanted to acquire the shares. He said he made his interest known, he made their interest known. He said the principal concern he had was the price and they were concerned that they get enough for the estate to pay the tax.

He said they determined that the maximum value at the date of death for the shares was $3.50 per share. That would be the maximum tax exposure, based on the market value of the shares at the time of the death. That would be the maximum amount that they would have to pay into the estate to cover possible tax liability. They talked to their accountant and presumably to their lawyers, and they came up with this figure.

He was asked specifically about the factual situation surrounding the execution of Exhibit A-2, and he said he called the administratrix to meet with her and to talk to her about how he was going to proceed, how they should proceed. He said he didn't know if he took the document to the bank, that is Exhibit A-2. He was not sure about that, but he said he told the bank that he would need $3.50 per share, and indeed subsequent evidence disclosed that he had some discussions with the bank and the bank documentation certainly seemed to disclose that he had discussions with them about the $3.50 per share. That was between him and the bank and it had nothing to do with the administratrix and nothing to do with the lawyer for the QCTV or the lawyer for the estate.

He said, though, that he and the administratrix talked. He showed the document to her, he explained it to her. He was asked why the $3.50 was there, and explained to her why $3.50 was there and that was the best price, that was the reasonable market value of the shares, and he said she agreed to sign it. He said he gave her a dollar consideration, he just thought he had to leave something so he left a dollar consideration on the table. He said the sister was in the other room. He said he never got the shares from the estate.

Ultimately the administratrix signed the document of transfer to Videotron, and that's obvious from the evidence, that the shares never went into these appellants or anybody else except Videotron. When they actually purchased them they came from the estate. He said he indicated to her that there might be a problem as a result of Exhibit A-2.

He thought, he explained that this could be a problem in April or May of 1986. The transfer document was signed August 13, 1986, but as early as April or May he said he indicated that this might be a problem. The transfer of shares had to be approved by the CRTC and ultimately that was received, apparently, on August 26 of 1986.

He was asked why he did not receive the share certificates and he said there were different problems. They talked about the V-Day valuation, had discussions with Revenue Canada and other people, they hadn't decided on what the value was at the date of death and things of that nature.

Then he talked about the August 13 agreement, and he said that this agreement was to ensure that the estate had funds to pay the taxes and that they made it clear that they were to get paid immediately upon the receipt of the moneys from Videotron for the shares.

He said the accountant had some concern that the shares remain in the estate and that each beneficiary might not get the maximum capital gains deduction. He said, we always used the word purchase and sale. At least that's what was in the appellant's mind, that he would be buying and the estate was selling to them. But the agreement does not use the word purchase”. He was referred to that. Indeed the agreement does not refer to that. But he said that's what was in his mind at all times.

He was asked why he made the payment to the estate and he said it was a payment to get the shares, "I did not think I was getting it back”, that is the money that he paid to the estate. He said the estate needed the money for taxes and interest. "We paid the amount to the estate based upon the best possible guess as to the valuation of the shares at death." That would be the maximum exposure.

No note was taken from the estate to him and no loan agreement was entered into with the estate except the document at Tab 2. That's the trust agreement which I just referred to. He said he expected that the entire amount would disappear and not be paid back or be used up, that's the amount that he paid in. But yet, as the evidence disclosed, the entire amount was not used up and he did indeed get some of the funds back.

He said in February 1989, in February he received a letter from Revenue Canada that they had concluded that $1.75 was the adjusted cost base for the shares at the date of death. He said he had no knowledge of the value.

He said by 1990 he had no information as to what was in the estate, did not know what it was composed of. He reviewed the agreement of August 13, and he said he found out that he might be able to get some money back under the agreement and he caused a letter to be sent by his solicitor, and as a result of that they got some of the money back. Obviously this was money which the estate did not need in order to meet its liabilities, because by that time obviously the $1.75 value had been struck by Revenue Canada and they knew what their exposure would be.

It’s interesting to note, though, all the money was not paid back and all the money has not been paid back to this date, and the solicitor for the estate indicated that obviously the funds were treated as estate funds at that point in time and that the estate was entitled to use those funds to pay out expenses of the estate, including legal fees, accounting fees, etcetera. He was asked if there was any amount owed to him by the estate. He said he didn't know. He said he had very little expectation.

It is clear that there are moneys that are coming back. The evidence of the estate lawyer was to the effect there would be some money coming back and his evidence was that he apparently had so advised the appellant at some time, not too long ago, that there was a pending distribution because they required the tax clearance certificate.

The appellant said he paid $64,330 in and he got $32,165 back plus interest. As far as he is concerned, he is still owed the balance.

In cross-examination, he was referred to the August 13 agreement and was asked what the purpose of it was. He said they wanted to get the shares matter tied up. They understood that taxes were not paid. That was their concern, plus they wanted to take advantage of the capital gains deduction.

The agreement, he said, dealt with a number of matters, distribution by the estate and payments into the estate by each beneficiary. They authorized the administratrix to sell the shares, although I don't think they needed to authorize the administratrix to sell the shares because she was entitled to do so anyway.

The payment was made so that they could dispose of the shares. He said he knew he had a beneficial interest in the shares as an heir and he did in fact use his beneficial interest as collateral.

He was asked, what changed after he signed the agreement, and since the administratrix still held the shares to be sold as a bare trustee. He said he had to pay the money, that is the money that he paid into the estate. He said he knew that he would share in any proceeds that were to come from the sale. He said after the agreement was signed the estate had the money. When the shares were sold and the money was distributed he said he received 2/9 of the purchase price and also has a right to share in the proceeds, whatever other proceeds there will be. Again he referred to the money that he got back and he did not get the full amount back that he had put in.

He referred to the letter of credit application. Later on in the afternoon he brought the documents in with respect to the Toronto-Dominion Bank, and he indicated that there was a reference in the documents to the 18,380 shares and part of the purpose of the loan was to gain the money to pay for the shares at the rate of $3.50 per share. He said the credit arrangements that he was referring to were made before Exhibit A-2 was signed on the 1st of August or thereabouts of 1985.

The hostile bid apparently by Shaw Cable started somewhere in 1985, and the actions took place over a period of time. He said he discussed matters with Mr. Rowand as the estate lawyer and as the QCTV lawyer. He said he was the lawyer when Exhibit A-2 was signed, that is the document signed by the administratrix. He said in the summer of 1985 he was involved in QCTV but he didn't know if he was discussing the estate with the solicitor at that time. Apparently before Mr. Rowand it was a person by the name of Mr. Boyd.

The appellant said he had no lawyer himself for his interest in the estate at this time. He said he didn't need one, but later on he did.

I don't know exactly what the situation was, but there did seem to be a dispute of some nature, and the administratrix when she was on the stand yesterday did not seem to know much about it, but how anybody could go through a possible court action and possibly up to the Court of Appeal and not understand that there was something going on, even at this late date, it is difficult for me to understand.

She did not seem to be nervous, but nonetheless that was her evidence. It did not seem to be a significant thing at all, but when she was asked about what the relationships were like between her and the witness, I think that would be the first thing that she'd bring out, but she didn’t. She said, “I don't know if there was a court dispute". She was asked if there was serious litigation, even up to the Court of Appeal about who should be the administratrix and her evidence was she didn't really think there was much of a problem there and she was the administratrix and that was it. She said she obtained Mr. Wilson’s advice, but she does not remember going to the Court of Appeal.

It was suggested to her that there was difficulty between her and the other heirs, her being administratrix, from the very beginning and Mr. Barabash said no more than normal. He said he did not hate her. He said they accommodated each other, is the way he put it. He was asked if there were questions about the accounts, etcetera, and he said yes and there were some questions that had all parties concerned.

He said in 1985 he had discussions about the share purchase but he doesn't know who it was with. He didn't get counsel to act in buying the shares, he was acting for himself. He was asked if he attended at the lawyer's office to formalize the purchase and he said there were attempts and discussions. He said he doesn't know when they started, they were going on in 1986.

He did have discussions with the accountants and the lawyers and the administratrix prior to taking Exhibit A-2 being signed. He said he can't give specifics about the discussions with anybody that led to the signing of Exhibit A-2. He said he can’t say when Mr. Rowand came to be acting as a lawyer for the estate, but it's obvious it was in late August or early September before he even got contacted about it and he himself said he didn't become the lawyer until the late spring or early summer of 1986.

He said in the late spring or early summer of 1986 he talked to Mr. Lakusta but he doesn't know where the $3.50 figure came from, but it was raised as the fair value. He said it was in 1986 that Mr. Lakusta correlated the value of $3.50 as a maximum tax exposure.

He was asked if the document, Exhibit A-2, was actually executed on August 1 and he said it was around that time. He said it was a work day, he said he telephoned first, he had been going over to the house frequently.

Why would you go to her house under those circumstances, he was asked? He said time was of the essence. Why go on Sunday and not to a solicitor's office, he said it never crossed his mind. She was the administratrix, he felt he had the right to see her, he needed to see her. Whoever the lawyer was, he said, she had a lawyer to give her advice. He didn't know whether she executed any other documents without legal advice or not.

With respect to the circumstances surrounding the execution of the document, he said it took place in the sun room. They talked generally beforehand and they went into the sun room, and he explained the document to her and she agreed to sign and she did so.

It was suggested to him that she did not know what it was. He said he explained it to her, that she signed it, and he denied that she did not sign it. He didn't know whether he gave Exhibit A-2 to the bank. He said it was Mr. Rowand who advised the final arrangements with respect to the sale of the shares, sale of the block to Videotron. He said he accepted his advice, as the others did and they proceeded.

He said he kept Exhibit A-2 in his possession. He did not give it to Mr. Rowand, at that time anyway. He said he didn't think he needed to. He presumed Mr. Rowand was aware of the other agreement. That would be Exhibit A-2. He was asked, what was the net result, even if you did get it signed on August 1? You didn't do anything about it. You didn't put it into effect, you didn't take any steps to act upon it or to require anybody else to act upon it until the Videotron sale or offer came up.

He said that he had no voting right to the shares before Exhibit A-2 was signed, and that was one of the reasons why he wanted it in place. After Exhibit A-2 was signed, I understand his evidence to be, that that gave him more right to the shares. He said Exhibit A-2 was an agreement to sell, and he said if adjustments had to be made later on it could be worked out later on, if that meant a higher price or a lower price. He did say that he felt that Exhibit A-2 was an agreement for the purchase of the shares.

He said he thought the administratrix would take the document to a lawyer, and he did not act further on it. He didn't do anything to enforce what he felt was his right at that time to be able to vote the shares. He said when he was leaving he put a dollar on the table and "I felt I had bought them". He is obviously referring to Exhibit A-2.

It was suggested to him that Mr. Rowand was not the lawyer at the time and that the price referred to of $3.50 was not determined at that time, and nothing was done to show that he had bought the shares for $3.50 each. He took that as a suggestion to him that he had this Exhibit A-2 signed by somebody else and that it wasn't what it purported to be. He categorically denied that. He said no. He said Mr. Rowand had at least been directed to act, but that doesn't appear to be correct. I conclude from the evidence that he was wrong on that, that Mr. Rowand had not been, by his own evidence, by no stretch of the imagination had he been directed to act by that time. Mr. Rowand felt that there wasn't a conflict for him to act even though he had been the solicitor for QCTV. After discussing it with his principals, he decided that he was not in a conflict situation.

He was referred to a date stamp on the document Exhibit A-2 and it was explained by him that he had it when he was in Halifax and he sent it to his lawyer for safekeeping and his secretary had opened the mail by mistake and had stamped it. Mr. Makuch was his lawyer at the time, and his lawyer had a photocopy of it. He said on April 5, 1991 he gave a copy of it to Mr. Makuch and others. However, 1989 was the first time that he gave a copy to Mr. Rowand.

He was referred to Tab 9 of the Exhibit booklet and that was the estate financial statements, and these documents are noteworthy, in that in the liabilities and corporate section they refer to loans from W. Barabash, B. Barabash and C. Barabash. Two of those are the appellants here, and they refer to the amounts in question, $64,330, and it is interesting to note also that there is allocated interest referred to in the financial statements. He said he is not an accountant and he does not know why that was referred to that way. It wasn't done by him.

He said no T3s were issued for the $64,330 or interest on it. He said the amounts that he received were small and therefore he always knew what they were for.

He said he made the payment but he was unaware of how they were going to treat it for tax purposes or accountant's purposes, it wasn't his business. He did say that when he received the payment for the shares, the $31 or more, when they ultimately sold to Videotron, he reported capital gains.

He also introduced Exhibits A-3, A-4, A-5 and A-6.

In cross-examination he was referred to the cover sheet and he was asked if anything else was attached to it, and he said yes, there was one other thing, and it was to a document setting out how the money was to be spent and what payments were to be made from the loan. He said he didn't know where the bank got the information they put on some of the documents. At that point the appellant tendered the exhibits and closed.

The respondent called evidence. David Rowand was a solicitor for the estate, a barrister and solicitor of the Supreme Court of Alberta. He is practising mostly in the commercial/corporate field. He was involved in QCTV.

As of 1972, as a member of the firm Mr. Koziak turned it over to him. He became the corporate solicitor. It's now called Videotron. He was a director from 1986 until mid-1992.

He said he was familiar with the Harry Barabash estate. He was contacted by Mrs. Barabash in 1985 after the board meeting. It would be late August or early September. She wanted to talk about him becoming the solicitor. He said he wanted to think about it.

He talked about it to his partner later on and there wasn't any conflict according to what everybody felt, so he was retained in the middle of September of 1985, and that would have been when this discussion came up. He said Mrs. Barabash told Field Owen that there would be a change of solicitor. He said it took quite a bit of time for it to happen, and it would have been May or June of 1986 when all the documents were in place to make him the solicitor.

With respect to the condition of the estate, he said there was a small amount of cash, $25,000 to $30,000. There were the shares of QCTV held by the administratrix. There were basically no liabilities except the contingent tax liability. There were some problems with that. He said they didn't know exactly what the value was going to be, that the V-Day value was not agreed upon and there was some confusion, as I indicated as to the value of the shares at the date of death.

He said there had been a number of negotiations as to what the real value was or what the proper value would be of the shares and there was a question of the pre-existing shares.

He said there had been an initial disposition, that is a disposition of assets from the estate or the value of assets from the estate before he became involved in it, and he said there had been some litigation with respect to who was to be the administratrix or administrator.

He talked about the various actions that were taken, the bids that were made on the shares and he had discussed the reaction of the directors to possible bids. In any event, the negotiations ultimately led to an agreement between the 14 founding shareholders group and Videotron to buy the shares, and that's the agreement that we already referred that was executed on August 13, 1986.

Throughout 1984 and 1985 he said there had been some trading. Shaw apparently had managed to get ten per cent of the shares. The company knew that Shaw was serious about making a run for the shares, and also there was a group in Toronto which was friendly to the founders group.

The Chief Executive Officer was concerned about Ken Briggs and George Field exercising options. The founders group did not like the Shaw Cable offer. Mr. Polanski would not sell, they were going to look for a better deal. That came about in the form of an offer from Videotron. They had what they call a lock-up agreement, 14 shareholders of QCTV and Videotron, for 51 per cent of the shares, and it was dependent upon CRTC approving this, and once it was approved then there would be a public takeover document indicating the takeover bid. In July of 1986 CRTC approved it. On August 26 of 1986 or August 27, the deal closed.

The estate was a party to the agreement, he said, and the administratrix and the two appellants also. He said the estate accountant was consulted about the tax liability. It was determined that the tax liability was $3.50, that amount was correlated. He said they didn't have a clearance certificate, therefore he recommended to the shareholders that they pay in $3.50 per share to the estate. Pay in” was the term he used, to cover tax liability, and he referred to Tab 32.

He said they drafted the trust documents and they were executed, Tab 41, Declaration of Trust; and 42, the agreement of August 13, 1986. He was asked if consideration was given to proceeding with the estate distribution without the clearance certificate. He said he told the administratrix that funds for the tax should be deposited before the shares were put up for sale because she was personally liable. That was one of the considerations.

He said they had discussions with the Toronto-Dominion Bank as a basis for the loans. He referred to Tab 44, 45 and 46, which were the letters and the documents with respect to the funds being received. He said there was some confusion that the beneficiaries were purchasing shares. That was the real nature of the writings with the Toronto-Dominion Bank, as far as he was concerned, but somebody in the Toronto-Dominion Bank had the understanding that the heirs were purchasing the shares and that they were going to sell them to Videotron.

He said, we made it clear that the estate had to sell the shares. The funds went into the general account, that is the trust account for the estate. He said on August 27, 1986 the sale took place, the funds went to the estate and to the Toronto-Dominion Bank to cover some loans that were there.

Funds that were received by the estate were held in the trust account until we got the tax assessed and paid in 1989 or 1990 and then they distributed one- half of the remaining amount to the beneficiaries. He said that the amounts that were paid to or allocated to or given to the estate from the various beneficiaries were shown as advances to the estate.

Once the shares were sold Revenue Canada and the founders agreed to the V-Day valuation of the founders' shares. The estate started looking at the estate tax liability, valuation of the shares at the date of death. He said that was resolved in July of 1988. He said some people were confused with respect to the $3.50 figure because it was considered that might be the fair market value. It was the same as the loan amount, but the two had nothing to do with each other, just happened to be a coincidence. It was agreed that the value to the estate was $1.75 and there has been no activity apparently since the distribution took place.

He was asked if in the summer of 1985 he discussed QCTV shares with Bob Barabash. He said possibly, he said he didn't know if he attended at his office or not. He did, though, say that Mr. Barabash was bullish on the QCTV share purchase. He had no discussion with him about the estate shares before he became solicitor to the estate, and that of course would have been the next year, in 1986. He said no, there was discussion as to whether or not Mr. Barabash could buy the shares from the estate and it was pointed out that they needed the block. In other words, that the estate had to sell the shares. He said no reference was had to a previous agreement, that is Exhibit A-2. He said in 1989 or 1990 he first became aware of the document. The accountant had sent it to him, and he had no knowledge of it before that. He said he sent it to Mrs. Barabash and she did not recall it.

He said it was not possible that he had accepted a retainer or agreed to act as solicitor for the estate by August 1, 1985, which is the date referred to in Exhibit A-2.

In the spring of 1986 he said, following the lock-up agreement, discussions had taken place and they had to do with due diligence with respect to the closing. We had to satisfy ourselves what the value of the shares was, what the estate owed.

He was asked whether or not there were discussions about the estate shares. He said, it's not possible to have anyone else sell the shares but the estate, and they didn't want to do it without the clearance certificate. He said there were no discussions about proceeding other than by putting the money into the estate to facilitate the sale of the shares and the distribution of the proceeds. He said they wanted it done right after the sale, and by that they meant the beneficiaries wanted to have the distribution of the proceeds take place immediately after the sale or as soon afterwards as they could. He said the Toronto-Dominion held the shares as collateral to the loans made to the beneficiaries to purchase John Lukenia’s shares.

In cross-examination he said with respect to the August 13,1986 document he drafted it. He used the term "remit" and not" loan". He said he understood that it was the same thing, but there's no doubt that in his mind he considered that that was a loan or advance to the estate from the beneficiaries to enable the estate to meet any commitments that it had with respect to tax liability, accountant's liabilities and lawyer's bills and so on, and that's why the money came in, and there's no doubt in his mind that it wasn't a sale, it wasn't proceeds of a sale of shares. He said he understood that it was to be thought of as a loan.

He was referred to the financial statements in Tab 2 and why hadn't the administratrix made her deposit, and he said that this was done in 1991 or 1992. He said that funds were held in a trust account, the same as all other funds in the estate. There was no earmarking of these particular amounts that were transferred over to the estate by the beneficiaries. They just remained a part of the general trust account for the estate. He said accounting fees and legal fees were paid out of those funds.

There are funds in the estate today. It has not been wound up yet. There are problems existing that may have to be determined by a court, such as proper costs and presumably administratrix's commission, lawyers’ bills, accountants’ bills and they have already had an accountant's bill of $48,000 or thereabouts and that was reduced down to $24,000 or something of that nature. There are still some problems with the estate, but they are getting to the point where it may be wound up.

He was referred to Tab 26, a letter from the firm, signed by himself, and it was directed to Mrs. Elvira Barabash, and he was asked why he used the word "purchase", and he said that was their word. What he was doing was responding to other correspondence where the people from the Toronto-Dominion Bank and others had used the word "purchase". That wasn't his word. He said it was his view that it could not be done. In other words, that the sale could not take place to the beneficiaries and then be sold to Videotron.

He said the beneficiaries apparently had had some discussions before he was appointed as lawyer. He said they had meetings of the beneficiaries and Tom Lakusta, the estate lawyer, public trustee, all after Mr. Rowand took over as the solicitor of the estate. In the summer of 1985, he referred to the date late August or September, he was contacted and Mr. Boyd had been the solicitor before that.

Beginning in February of 1986 he said he took over, he was not acting as solicitor until then. Not by August 1, 1985 in any event. It was not the appellant who talked to me about the change, he said. That was Mr. Barabash, the appellant.

Mrs. Barabash confirmed some of what the lawyer had said. She said by the summer of 1985 she had contacted Mr. Rowand. Mr. Boyd was the lawyer before that. Beginning in February of 1986 he took over, he was not acting as solicitor then. Not by August 1, 1985. There wasn't much doubt in her mind about that.

She said that it was not the appellant who talked to her about the change of solicitors. She was doing some work for the University of Alberta which involved law projects, and when she found out that there might be a conflict of interest, that it wasn't really ethical, she thought, for them to treat her the way they did, one fellow left that had been handling the estate, it had been about six months and they hadn't even told her. She called up one day and found out that he had retired or wasn't there any longer. She didn't think that was right so she made up her mind that she was going to get another lawyer.

She did say that Mr. Barabash came to her office. He needed some shares as collateral for the bank. She said her lawyer recommended against it. She could not recall the meeting with him in the summer of 1985. That's when the agreement was allegedly signed.

She was referred to the agreement, Exhibit A-2. She said, it looked like her signature but she could not recall signing it, she said she would not have signed it without her lawyer's advice. That would have been Field & Field, apparently. Definitely not, she said. Further, she said it wasn't David Rowand who was the lawyer at that time. It was pointed out that it was with respect to a purchase and she said she could not recall any discussion about a purchase. The amount was the amount suggested to be left in the trust fund for the fees, the legal, the accounting, the tax liability. That was her position. She said that didn't come up until 1986.

She said she didn't remember doing any business with Mr. Barabash in her house. It’s possible, she said, that he came to her house for a visit. She could not remember a meeting with him in the sun room, that Mr. Barabash suggested where Exhibit A-2 was signed. She said the meeting in the sun room did not take place until 1987. That meeting could not have taken place, she said. It was not in 1985, the sun room was not built. She said they had to move out of the house for some time in 1985, then they moved back in later on.

She was asked what the money was paid for, the money that was put in by the beneficiaries, and she said that it was paid into a trust fund because she was liable for all the expenses, and that this was the amount the accountants had come up with, as the largest exposure that they might be responsible for. So it was calculated that each person would pay in per share $3.50.

She said she did not pay the money in at the time, that’s the time it was calculated, because she said she had an interest in the estate and she was administratrix and she would be personally responsible so she didn't think she had to do it. But it changed, and later on she did put the money in and subsequent to that there was a distribution, a part distribution of the estate. She said she never ever felt that they were selling shares to Mr. Barabash or that there was any consideration of them selling the shares to Videotron, that it was the estate.

In cross-examination, she was asked about the difference of opinion about who was to be the administratrix and she said she didn't recall that. There was some discussion about the accountants. She was asked about talking to Mr. Bohdan Barabash, and she said she talked to him at various times, she can't recall more than four times that he was at her house. She said he had apparently moved into the house at one time after the father’s death, after her husband's death.

She said he was on the board since 1983 and 1984 and they met at board meetings. She confirmed that her telephone call to Field & Field was April, May, June, 1985. She said she did not discuss the matter of change of solicitor with anyone. She knew Mr. Rowand since 1971, according to her evidence. She went to three or four founders' meetings per year, she attended all of them. She said that Bohdan Barabash had asked her about shares. This was before 1985, though, she said. He told her that he had a failure of his business due to his partner, but she said this was at her office at the University. That's where she said that meeting took place.

She was referred to document number 1 and document number 2, and she said she recognized them and that was her signature on those documents. With respect to Exhibit A-2, she said she had no recollection of signing it, she said it looked like her signature but she never signs anything "To whom it may concern". That was her evidence.

She did say she was the administratrix of the estate of Harry Barabash, who was her husband who died on March 25 of 1976. He had no will. Mr. Boyd became the estate lawyer. She said they had no record of the number of shares and so on that he had. They had to look around, they tried to gather up the information. She needed to sell the property. She got valuations. Within two years apparently they sold some property. Although it's been going on since 1976, the estate has not been concluded yet.

She said she applied for administration. The audit of the estate was roughly two and a half million. She was involved before her husband’s death in his business affairs, she was familiar with them. They made common decisions, particularly with respect to the QCTV shares, the art gallery and the photo business. She said she went to meetings between the public trustee and her lawyer and other lawyers and the estate. She said it was very difficult at times with the sons. She said there was a great deal of misunderstanding or it was greed. She said they questioned the allocation and ownership of the paintings, amongst other things.

She said the QCTV shares were not sold quickly. The founders' shares were part of an agreement that came into question in 1986. She referred to the hostile takeover bid, Shaw Cable and so on, and had referred to several agreements that they signed. That was basically the evidence.

In argument, the appellant says that he paid the amount in 1986 for the asset, that would be the shares from the estate. He said there was no expectation by him that he was going to get this money back. He did not consider it at any time to be a loan or a payment that he was entitled to get back. He said it was the cost of the shares to him.

He thought he was purchasing the shares and he referred to the fact that all you've got to do to corroborate that is look at the discussions he had with the bank and the documents that were sent to the bank, discussions with Mr. Rowand. This was his mind-set. It was not a loan, it was a payment to purchase the shares. He said Mr. Rowand himself corroborates that because he said he was an aggressive buyer. Look at the application of credit, he says, July 25, 1985, it sets out that he was borrowing the money to purchase the shares amongst other things.

The document of August 1, 1985, he says, was meant to support his position in his mind-set that he was purchasing the shares. That's all it’s offered for. It is not offered as an agreement of purchase and sale. Indeed, even by any vague stretch of the imagination I wouldn't consider it to be that, and indeed I don't consider it to be binding on anybody. But anyway, he says he is not putting it forward as such. He is putting it forward merely to show his mind-set that he intended to buy the shares. Now, that is not, I must say, the impression I got from the appellant when he was on the stand. That the agreement or Exhibit A-2 was nothing more than that. But anyway, that's the argument that was made today.

It seemed to me when the appellant was giving evidence that that was quite an important document to him and that it set out the true situation as to what the consideration was to be, that time was of the essence to him and that he wanted the agreement in place, and it seemed to me that he was putting it forward as an agreement of purchase and sale, or at least indicative of what the final terms were going to be. The appellant in argument today said that it was only put forward for the purposes of establishing his mind-set.

He says this is supported by the other documents such as the approval of the bank. Referring to the signature, he says that all I've got to do is look at the other signatures of Elvira Barabash and this is similar to them.

I have the evidence before me that she says she can't remember signing it. I have his evidence that he said she signed it, and I have the evidence that it looks similar. She doesn't remember signing it and I have no question that she doesn't remember signing it. It does seem to be contrary to what a person of her experience in business and so on would do, but nonetheless, that's the evidence and I have to look at it all.

The appellants’ solicitor argues that Mr. Rowand indicated that the funds were not separate, that is the trust funds were all part of the general account, and these moneys paid into the account were used just like any other moneys. They were used to pay off expenses for lawyers and accounts, and that the fund is still there, there are some of the funds still there that have not been distributed yet. He says this payment to the estate was nota loan.

He refers to the document of August 13, 1986. The thrust, he says, was tax liability to the estate. There's no mention of the word loan". The appellant did not expect to get the money back, so it can’t be a loan. He refers to the various definitions of “loan” in various dictionaries. I'm not too concerned about those exact definitions of loan, but I think what was put in here could possibly be considered to be a loan, but it need not actually fit within the definition of a loan to be something that's of little value to the appellant in this case, as far as I'm concerned.

If it was other than a payment of the purchase price, then he's got some explaining to do. The fact that he did not expect to get it back is one thing, that's been said. He says that for a long time Revenue Canada took the position that the valuation was $3.50 and only some time later was there a valuation determined to be $1.75.

He refers to Tab 9, the balance sheet and says that that balance sheet was prepared by the accountants and it says at the bottom, there's a note that it’s for income tax purposes, but again, as I pointed out to him, it seems to me that the document speaks for itself. It's a financial statement that was prepared on behalf of the estate and it refers to loans and it’s not conclusive in itself, but it's some evidence which I must weigh and consider. I don't think it's any answer to it, though, to say that it was just for income tax purposes, because for income tax purposes it would seem to me that would be very important, significant that you'd make sure you categorize it properly.

I consider the cases that were referred to, and just because there's a financial statement there referring to it as a loan doesn't necessarily mean that it was a loan, and how somebody characterizes something for the purposes of the financial statement doesn't necessarily mean that's the way it’s going to be interpreted for income tax purposes. I accept that argument.

He says the accountant shows it as a loan, but the agreement refers to a remittance. This is not reflective of a loan, he says, this is not indicative of the fact that Mr. Barabash and the other beneficiaries were making a loan to the estate. It was basically provided for income tax purposes. He said this statement is inconsistent with the agreement, that is the balance sheet. Referring to it as a loan is inconsistent with the agreement of August 13, which he argues today is basically the agreement for the sale of the shares.

He did refer to the cases, Tab 6 Cockshutt Farm Equipment of Canada Ltd. v. M.N.R. (1966), 41 Tax A.B.C. 386, 66 D.T.C. 544 (T.A.B.), which is in support of his argument that the entry itself is not indicative of its proper designation, doesn't determine the nature of the receipt.

At Tab 2, he referred to definitions of “loan”, and Tab 3 as to what a "loan" means. It must be meant to be returned. Here it was not meant to be returned, it wasn't a loan. It's an adjustment which, for his purposes, he says, is an increase in the adjusted cost base or alternatively it was an outlay or expense with respect to the disposition under paragraph 40(1)(a) of the Income Tax Act and that the proper calculation would be $1.75 plus $3.50.

At Tab 4 he referred to The Queen v. Stirling, [1985] 1 C.T.C. 275, 85 D.T.C. 5199 (F.C.A.) and differentiates the case at bar. He says here we're dealing with the cost to the individual, what was the cost to the individual, the appellants here at the time that the shares were acquired. That's all we're interested in, and the cost to the appellant can mean different things. The respondent has indicated in his summary that they're not really arguing what cost means. There is no question in their mind what cost means, and he's prepared to admit for purposes of argument that cost includes a number of different elements, and not just necessarily the amount you paid for the share. But the appellant argues that they acquired the beneficial interest in the shares at the time of the execution of document on August 13 when he paid the money into the estate.

He refers further to Tab 5, the case of Bodrug Estate v. Canada, [1990] 2 C.T.C. 324, 90 D.T.C. 6521 (F.C.T.D.); aff'd [1991] 2 C.T.C. 347, 91 D.T.C. 5621 (F.C.A.) at page 332 (D.T.C. 6526). He says in that case, as here, the price paid was what was paid to get the asset. That was his cost, he says. That's his cost, $1.75 plus $3.50. That's what he paid to get the asset when the shares were acquired.

At Tab 6 he refers to the Cockshutt case, supra, at page 398 (D.T.C. 551), actual costs when acquired. Tab 7, Gaynor v. M.N.R., [1987] 1 C.T.C. 2359, 87 D.T.C. 279 (T.C.C.); aff'd [1988] 2 C.T.C. 163, 88 D.T.C. 6394 (F.C.T.D.); aff'd [1991] 1 C.T.C. 470 (F.C.A.) at page 2364 (D.T.C. 283), he said there is no difference between the cost of depreciable property and non-depreciable property, and that's not in issue here.

He talks about outlay or expense and refers to cases shown at Tab 8, Samson Estate v. M.N.R., [1990] 1 C.T.C. 2223, 90 D.T.C. 1150 (T.C.C.) at page 2230 (D.T.C. 1155), and that the amounts were incurred to obtain the beneficial ownership of the shares of the estate. Here, as in that particular case, the purpose was to gain them so that they could dispose of them to Videotron and therefore that was a proper outlay which should be taken into account in determining adjusted cost base of the shares to the beneficiary.

He refers to Tab 9, The Queen v. Demers, [1986] 2 C.T.C. 321, 86 D.T.C. 6411 (F.C.A.), outlay or expense for disposition of shares. He says he's got a bit of a problem in his argument, saying that it wasn't a loan, in that he expected to get some money back, he did get some money back, he took legal action to get his money back. Again, added to that, of course, compounding that is the fact that the appellant himself gave evidence that he thought that after the letter of August 1 was signed, there might be some adjustment to the price.

But in any event, the appellant here says he has to explain why would he be entitled to get the money back if it wasn't a loan. He considers it to be a requisite expense or a recovered expense or analogous thereto, and it would be taken into income at some time when it was recovered.

It may have to be considered at some point in time for income tax purposes, but he said it was analogous to a recovered expense. He says it may have consequences, again as I've indicated, but that is a separate issue which is not to be considered by this Court.

He says the proper calculation is $1.75 plus the $3.50. That should be the adjusted cost base for the shares when acquired by the appellant and he should be able to use that figure in calculating what his capital gain is and the Minister is wrong in having assessed it as he did.

The respondent for his part says in assessing the appellants they've had some problem in knowing really what the appellants’ position is, although in essence the issue always before the Court is whether the Minister was correct in making the assessment that he did, and as long as there's enough evidence there to establish an argument, the real issue is was the Minister correct.

The respondent says even if you accept the fact that there was a sale, that you cannot add the $1.75 to it. That's not an extra expense or additional expense. That's under another section. You're not dealing with that in this particular case. It's not a matter of taking $3.50 and adding it to $1.75 and coming up with $5.50.

He says that the application of section 107 of the Act is inescapable and that the proper valuation is $1.75 and that was no additional cost of the transaction. He says we have to look at the evidence as it’s set out and that indeed if you look at the facts as set out in the reply to notice of appeal, they've all been accepted, without limitation, except the provisions of paragraph 4(i), and that's really the guts of this matter, as to whether or not that allegation is correct.

The Minister’s position is that the contribution by the appellant to the estate did not result in increasing the cost of acquiring the shares and did not increase the appellants’ adjusted cost base. That's the whole issue. The estate, he says, reported the contribution as a loan to it from him and not as a sale of assets. That's the way the estate looked at it, he says, and that's evidence that it was not a payment for sale of assets. That is the only thing that the appellant objects to, he says, in the reply and all the rest of the facts are admitted.

He discussed the different words that are used, like the word "remit" and the word "sell" and "sale" and so on, and he said there's some contradiction in the documents, there's some difference in word use, and indeed the evidence of the lawyer for the estate was to that effect. But, he says, when you get down to it the real issue is whether there was a cost of acquiring the shares, was there a loan, was this situation as set out in paragraph (i). There was no increase in the cost of acquiring the shares. He says the appellant must show that the payment was a cost to them and he refers to Exhibit A-2.

He said it was used by the appellant to show that there was a sale at that point in time, and he says when the appellant today talks about the document of August 13 that was signed as being the time when the share transfer took place, that’s different than what he said before. But in any event, we have to deal with it. He says Exhibit A-2 was not offered just for limited purposes, it could not be just considered for the limited purpose of showing the appellant's mind-set, but rather that it was meant to be an indication that he had an agreement of purchase and sale for the shares at that time at that price, the August 13 agreement.

He said the evidence of Mr. Barabash has to be looked at in totality. He said he gave evidence specifically as to what he did and how he got it signed, that's referring to when he went to the house of Mrs. Elvira Barabash, and he says it couldn't have happened that way. His evidence is suspect, he said, can't just be put down to being hazy as suggested and the apparent difference in argument can’t be put down to being hazy. He said his evidence is suspect on that point or on any point as a result of that. He says his version is not as acceptable or believable or as consistent as that of Mrs. Elvira Barabash, and he says you have to ask yourself the question, what was intended by the document of August 13.

He says we have the admissions to the reply, we have the trust declaration of August 13 to look at, we have the evidence of Mr. Rowand to consider.

Referring to Tab 44, which was the letter Mr. Rowand wrote to the Toronto- Dominion Bank, he says that he was merely trying to explain to the Toronto- Dominion Bank that this was a distribution, this was not a sale. He again says it falls squarely within the provisions of subsection 107(2), it's a distribution. He says under 107(2)(b), the only way there could be any difference in the adjusted cost base, is if you apply 107(2)(b).

Paragraph 107(2)(b) reads:

(b) the taxpayer shall be deemed to have acquired the property at a cost equal to the aggregate of its cost amount to the trust immediately before that time and the amount, if any, by which

(i) the adjusted cost base to him of the capital interest or part thereof, as the case may be, immediately before that time as determined for the purposes of paragraph (1)(b) exceeds

(ii) the cost amount to him of the capital interest or part thereof, as the case may be, immediately before that time;

The respondent says there was no more adjustment to the cost base, there was nothing else to add on to it. There should be no increase in the $1.75 if there was no sale, they can’t change it. He says, if there was a sale, then we don't even consider section 107 of the Act, because section 107 applies only where there's a distribution of the estate and if there was a sale then section 107 has no applicability and we must refer to many other sections.

He says if there was a sale, even if there was a sale, they do not get the $1.75 to be added onto the $3.50. He says there's no argument as to what cost is. If there was a sale, he says, there's no change anyway because if you look at the calculations that even if it was a sale, the beneficiaries obtained their shares at $1.75 based on the $32,165. That is the reduced amount. That is one-half of the amount that they paid in because they got one-half of it back. He says there was no cost to them. They're really dealing with themselves, there was no price paid by them, there was no actual, factual payment out. They have been taxed appropriately and the appeal should be dismissed.

The appellant for his part in rebuttal says that he disagrees with the respondent regarding the submission on Exhibit A-2 and that the divergence relates to memory and not to his attempt to say anything which is improper. It was directed to show the appellant’s mind-set and it was so done so that he could claim any costs that he paid out to purchase the shares.

He says the position today is basically the same as it was in the pleadings. Credibility is not really in issue here, he says. There was nothing to prevent you from combining subsection 107(2) and other sections to determine the adjusted cost base. Who says you can't combine different sections. He says there's a deemed cost of $1.75 to the estate and the actual outlay was $3.50 and therefore he's entitled to the adjusted cost base of $5.50. That's the position of the parties.

With respect to the issue that was raised as to credibility, credibility is often an issue and credibility in this case is in issue because I have to determine whether or not the appellants were intending to enter into an agreement of purchase and sale of the shares of the estate at the time they now allege that they were, and that is at the time of the execution of the trust document.

I do say that the general evidence would tend to lead me to conclude that Exhibit A-2 would have to have been offered, and was indeed offered, and relied upon by the appellant’s to show that there was a binding agreement by him to purchase the shares from the estate and by the estate to sell him the shares as of August 1, 1985 for the sum of $3.50 per share. Today the argument is that the agreement is really the agreement of August 13, that is the trust agreement and that is a difference, I think, as far as position is concerned.

Nonetheless, there is definitely a conflict of evidence here. There's a conflict of evidence between the evidence of the appellant and the evidence of the lawyer that gave evidence before me. There can be no doubt about that. There is a conflict in evidence between the evidence of the appellant who gave evidence and the evidence from Elvira Barabash. There’s a conflict in the general thrust of the evidence of the appellant and the financial statements which were given.

I accept the fact that financial statements don't necessarily mean exactly what they say, but there is a conflict there. There is a conflict between the documents put forward by the appellant as being in support of his position that it was a sale, and the documents which I have referred to as indicating that the moneys that were paid into the estate were not by way of sale.

I have to look at that, and I must say where the evidence of any of the witnesses or the documents themselves is in conflict with the evidence of Mr. Barabash, I accept the other evidence rather than his own on that. I do find that the evidence of the other witnesses is indeed more reliable and is indeed more likely to be correct than the evidence that he gave in those respects. Credibility is to be considered, but it's not the whole matter here. The whole matter is whether or not what took place here would affect the adjusted cost base that the Minister has given in his reassessment to these shares of the estate when the distribution or sale took place. To answer that I must first of all categorize what the transaction was.

Now, I find without any question at all that Exhibit A-2 does not amount to a binding agreement by the administratrix if she signed it at all, and I’m not satisfied that the evidence is sufficient that she did sign it. She said she doesn't recognize the signature, she can't say that it’s hers or not. I'm not satisfied as to who signed it, or certainly at least I’m not satisfied that she signed it. But secondly, even if I gave the benefit of the doubt to the appellant in that regard and said that I accepted as a fact that it was signed by her, it's not a binding agreement that would entitle the appellant, as far as I'm concerned, to require the estate to sell him the shares in accordance with the wording that's set out in Exhibit A-2. On top of that I find that if it were binding upon the administratrix, they did nothing about it. They didn't act on this agreement, if it was that. It’s not an agreement anyway, but they didn't act on this document.

The clear evidence is that they didn't act upon anything which could be considered to be an agreement of purchase and sale as far as I'm concerned, because the evidence makes it quite clear that no transaction or transfer of shares took place with respect to the beneficiaries. No transfer took place from the estate to the beneficiaries at any time, and indeed any transfer of shares from the estate to the beneficiaries would have been completely contrary to the agreement that was entered into with Videotron and the whole thing would have gone down the tubes according to the lawyer for the estate.

Any sale which was contemplated would not have received the favourable advice of the lawyer, and indeed he said he advised against it. I am satisfied that where the term “sale” is referred to in the letter that the lawyer wrote to the Toronto-Dominion Bank that all he was doing there was referring to what somebody else’s understanding was of what was taking place.

I'm satisfied that there was some question as to whether or not a sale was taking place between the estate and the various beneficiaries, some question in the beneficiaries’ mind, but I'm satisfied in the end result there was no contemplation whatsoever by the estate at any time that they were going to sell the shares, to the beneficiaries, and I'm satisfied there were no actions at any time taken by them which would signify that they had indeed sold the shares.

I'm satisfied they did not indeed at any time sell the shares to the beneficiaries, and that the only sale that took place was a sale that came about as a result of the execution of the document on August 13, the declaration of trust, and that that sale was to Videotron from the estate and that's the only way it could have taken place. On that basis then I'm satisfied that there was no sale.

I'm satisfied also that the adjusted cost base as determined by the Minister was the correct one. That it was $1.75 as the Minister has indicated, and I'm satisfied that since there was not an acquiring of the shares by the appellants in question there was no increase in the adjusted cost base for them because they didn't acquire the shares. I'm satisfied that there was indeed no increase in the appellants’ adjusted cost base.

I'm satisfied that the appellant has not established his argument that there was an outlay or expense with respect to the acquisition of the shares under provisions of paragraph 40(1)(a), so that the adjusted cost base would be anything other than the $1.75 which the Minister determined.

I am further satisfied, that there was not a sale of these shares to the appellants. I'm satisfied on the evidence that the transfer of moneys was a loan or at least it was a remittance to the estate from the various beneficiaries solely for the purposes of allowing the estate to sell the shares and indeed in order to cover the maximum possible exposure that the estate was expected to have as a result of valuation placed upon the shares by the Minister.

In order for the appellant to be unsuccessful here, I do not have to find that the transfer was a loan. It's not necessary that I find it, but if I were required to find that I would find that it was a loan. It's certainly more of a loan than it was of anything else. At least it was a transfer of assets other than as a payment for shares which were purchased, and consequently the appellant has not satisfied me that he bought the shares and that he paid that amount of money for the shares. Secondly I'm satisfied that if he paid that amount of money for the shares the adjusted cost base would have been the same in any event. I do not have to find that, because I found there wasn't a transfer of shares, it was not a sale of shares. There was a transfer of those funds to the estate from the beneficiaries in order to conclude a sale with Videotron and I'm satisfied that was the only sale of shares that ever took place.

Consequently then, as I said, there is no adjustment to be made so as to increase the appellants’ adjusted cost base from that which the Minister had decided. There is no expense or outlay as envisaged by paragraph 40(1)(a), so that the appellant would be entitled to an adjustment to the cost base as determined by the Minister.

Consequently, as a result of the above findings, I find that the Minister was correct in making the assessments that he did. The assessments will be confirmed and the appeals will be dismissed.

Appeals dismissed.