McGillis,
J.:—The
plaintiff
Harry
Wagman
appeals
by
way
of
trial
de
novo
from
a
decision
of
the
Tax
Court
of
Canada
dismissing
his
appeal
from
an
assessment
made
by
the
Minister
of
National
Revenue
in
the
1979
taxation
year.
In
the
assessment,
the
Minister
determined
that
a
finder's
fee
of
$100,000
was
income
earned
by
Mr.
Wagman
in
his
personal
capacity
rather
than
income
earned
by
his
company
E.
Wagman
&
Co.
The
sole
issue
on
this
appeal
is
whether
the
income
in
question
was
earned
by
Mr.Wagman
personally.
Facts
At
the
trial
de
novo,
Mr.
Wagman
and
his
son
Charles
Wagman,
a
lawyer,
testified
and
several
documents
were
admitted
into
evidence.
No
witnesses
were
called
by
counsel
for
the
Attorney
General
of
Canada
on
behalf
of
the
defendant.
I
have
reviewed
the
viva
voce
and
documentary
evidence
carefully
and
the
following
are
the
facts
as
I
find
them.
In
1946,
Mr.
Wagman
incorporated
the
company
E.
Wagman
&
Co.
("the
company)
and
carried
on
a
wool
business
in
a
factory
in
downtown
Toronto.
The
company
owned
the
factory,
the
land
on
which
it
was
situated
and
eventually
some
vacant
land
and
older
homes
in
the
same
area.
The
vacant
land
was
used
as
a
parking
lot
and
the
homes
provided
the
company
with
a
small
source
of
rental
income.
The
company
purchased
further
lands
in
the
area
as
they
became
available.
In
1969,
the
company
sold
the
factory
and
the
land
on
which
it
was
situated
and
ceased
to
operate
its
wool
business.
After
the
sale
of
the
factory,
Mr.
Wagman
established
his
office
in
his
home
and
conducted
the
business
of
the
company
from
that
location.
The
company
used
the
home
address
for
all
of
its
business
dealings.
However,
Mr.
Wagman
did
not
obtain
new
letterhead
or
business
cards
for
the
company
because
he
did
not
have
much
need
for
such
items
and
did
not
want
to
spend
the
money.
During
this
period,
the
company
continued
to
operate
a
parking
lot
and
to
rent
homes
located
on
some
of
its
lands.
At
a
point
in
time
after
the
sale
of
the
factory,
the
company
entered
into
a
partnership
to
develop
and
build
a
medical
hotel
on
a
piece
of
property
which
it
owned
in
the
area.
However,
these
plans
were
abandoned
because
of
the
enactment
by
the
City
of
Toronto
of
a
by-law
restricting
development
in
the
downtown
core
to
a
height
of
45
feet.
Although
development
was
effectively
frozen
in
the
downtown
area,
Mr.
Wagman
nevertheless
looked
for
purchasers
in
an
attempt
to
sell
the
lands
of
the
company.
He
also
attended
many
City
Hall
meetings
concerning
the
height
by-law
and
lobbied
aldermen
and
the
Mayor
for
an
exemption
from
it.
This
was
a
difficult
period
for
the
company
financially
and
it
amassed
significant
losses.
After
the
repeal
of
the
height
by-law,
Mr.
Wagman
negotiated
the
sale
of
the
lands,
but
the
deal
did
not
close
because
the
purchaser
lacked
funds.
In
1976
and
1977,
Mr.
Wagman
continued
his
efforts
to
sell
the
lands
and
ultimately
negotiated
a
joint
venture
development
agreement
with
two
other
companies.
After
this
agreement
was
made,
an
agent
approached
Mr.
Wagman
with
an
offer
to
purchase
the
lands.
Although
Mr.
Wagman
refused
the
offer,
his
joint
venture
partners
accepted
it
and
the
lands
were
sold.
The
company
still
retained
some
lands
in
the
area
which
it
operated
as
parking
lots.
Since
the
efforts
of
Mr.
Wagman
had
generated
several
prospects
for
the
sale
of
the
company
lands,
he
decided
in
late
1977
or
early
1978
to
see
if
he
could
assist
in
selling
the
DWS
land
which
was
another
piece
of
vacant
land
in
the
area.
He
and
his
son
Charles
Wagman
met
with
the
president
of
DWS
Canada
Holdings
Ltd.
(DWS).
During
this
meeting,
Mr.
Wagman
explained
his
extensive
knowledge
of
the
area
and
the
contacts
he
had
made
over
the
years
through
his
work
on
behalf
of
the
company
with
developers,
municipal
politicians
and
prospective
purchasers.
The
president
of
DWS
referred
Mr.
Wagman
to
the
real
estate
broker
Canmort
Realty
Ltd.
(Canmort)
which
had
been
given
the
listing
to
sell
the
property.
Mr.
Wagman
then
met
with
the
general
manager
of
Canmort
and
made
an
agreement
that
he
would
be
paid
one
half
of
any
commission
earned
by
Canmort
if
he
introduced
a
purchaser,
sold
the
property
and
closed
the
deal
within
a
specified
period
of
time.
This
agreement
was
confirmed
in
a
letter
from
Canmort
addressed
to
Mr.
Wagman
in
his
personal
capacity
at
his
home
address.
Mr.
Wagman
acknowledged
receipt
of
the
Canmort
correspondence
in
a
letter
with
his
name
and
address
typed
at
the
top
of
the
page
and
his
name
typed
in
the
signature
block.
A
subsequent
letter
extending
the
date
of
the
agreement
was
sent
to
Mr.
Wagman
personally.
In
this
exchange
of
correspondence,
no
reference
was
made
to
the
company.
However,
the
company
and
residential
addresses
were
the
same.
Mr.
Wagman
began
working
to
sell
the
DWS
land
and,
in
doing
so,
spoke
to
several
people
with
whom
he
had
negotiated
or
discussed
the
previous
sale
of
the
company
lands.
He
introduced
one
of
these
prospective
purchasers,
David
Feldman,
to
Canmort
and
the
DWS
property
was
sold.
Correspondence
from
the
general
manager
of
Canmort
to
the
vice
president
of
DWS
referred
to
Mr.
Feldman
in
his
personal
rather
than
his
corporate
capacity,
although
Mr.
Feldman
clearly
dealt
with
Canmort
as
an
officer
of
a
corporation.
In
one
letter,
Mr.
Feldman
was
described
as
being
the
client
of
Canmort.
Following
the
sale
of
the
DWS
land,
Canmort
delayed
paying
Mr.
Wagman
the
money
owing
to
him
on
the
basis
that
there
were
concerns
about
splitting
a
commission.
To
eliminate
any
potential
problems,
the
general
manager
of
Canmort
asked
Mr.
Wagman
for
an
invoice
for
his
consulting
services.
Charles
Wagman
prepared
the
invoice
at
the
request
of
his
father
and
the
signature
block
read"E.
Wagman
&
Co.
Ltd.
per:
".
Mr.
Wagman
delivered
the
invoice
to
Canmort
and
received
a
cheque
payable
to
him
personally
in
the
amount
of
$100,000.
Since
the
cheque
was
payable
to
Mr.
Wagman
personally,
he
endorsed
it
for
deposit
to
the
credit
of
the
company.
Given
the
delay
in
payment,
Mr.
Wagman
did
not
want
to
ask
that
a
replacement
cheque
be
issued
in
the
name
of
the
company.
Rather,
he
chose
simply
to
endorse
it,
as
this
was
something
which
he
had
done
in
his
past
business
dealings
on
behalf
of
the
company.
Mr.
Wagman
gave
the
endorsed
cheque
to
Charles
Wagman
who
deposited
it
in
the
trust
account
of
his
law
firm
to
the
credit
of
the
company.
Mr.
Wagman
did
not
bank
the
cheque
himself,
as
his
son
drove
a
car
and
it
was
easier
for
him
to
deal
with
it.
In
1979,
the
company
declared
the
amount
of
$100,000
received
as
a
fee
for
the
sale
of
the
DWS
land
as
income.
The
Minister
of
National
Revenue
subsequently
assessed
Mr.
Wagman
for
the
1979
taxation
year
and
included
in
his
personal
income
the
amount
of
$100,000.
From
its
inception
in
1946,
the
company
business
was
conducted
solely
and
exclusively
by
Mr.
Wagman
who
has
always
held
two
thirds
of
the
shares
of
the
company.
The
remaining
shares
were
held
by
Mrs.
Wagman,
except
for
one
share
which
was
in
the
name
of
a
relative.
Recently,
that
one
share
has
been
held
by
Charles
Wagman
who
also
became
a
director
of
the
company.
None
of
these
individuals
except
for
Mr.
Wagman
has
ever
participated
in
any
manner
in
the
business
of
the
company.
Mr.
Wagman
was
the
sole
controlling
mind
of
the
company
and
all
of
his
business
dealings
over
the
years
were
done
on
behalf
of
the
company.
Indeed,
during
his
evidence,
Mr.
Wagman
referred
to
himself
and
the
company
virtually
interchangeably.
The
directors
of
the
company
did
not
make
resolutions
to
authorize
the
conduct
of
business
on
behalf
of
the
company,
except
on
one
occasion
when
a
resolution
was
required
because
of
the
joint
venture
agreement.
Throughout
the
years,
Mr.
Wagman
received
income
only
from
the
company
and
his
old
age
pension.
On
his
personal
income
tax
returns,
the
company
was
always
shown
as
his
employer.
At
the
time
of
the
trial,
Mr.
Wagman
was
eighty
one
years
of
age.
He
testified
in
a
straightforward,
direct
fashion
and
was
in
all
respects
a
very
credible
witness.
His
evidence
that
he
negotiated
the
sale
of
the
DWS
land
on
behalf
of
the
company
was
neither
materially
discredited
in
cross-examination
nor
challenged
by
any
evidence
called
by
the
defendant.
Although
the
documentary
evidence
pertaining
to
the
transaction,
save
and
except
for
the
invoice,
arguably
supports
the
inference
that
Mr.
Wagman
acted
in
the
sale
of
the
DWS
land
on
his
own
behalf
and
not
on
behalf
of
the
company,
it
cannot
be
viewed
in
isolation.
Furthermore,
some
caution
must
be
exercised
in
considering
the
weight
to
be
attached
to
the
correspondence
from
Canmort
since
its
general
manager
frequently
referred
to
individuals
in
their
personal
as
opposed
to
their
corporate
capacity.
Similarly,
the
issuance
of
the
cheque
by
Canmort
to
Mr.
Wagman
in
his
personal
capacity
was
consistent
with
the
manner
in
which
the
general
manager
referred
to
Mr.
Wagman
and
ignored
the
fact
that
the
invoice
for
services
was
from
the
company.
As
such,
the
cheque
ought
not
to
be
given
undue
weight
when
considered
in
light
of
the
evidence
as
a
whole.
Accordingly,
I
have
considered
the
evidence
in
its
totality
and,
in
view
of
my
positive
assessment
of
the
credibility
of
Mr.
Wagman,
I
specifically
find
as
a
fact
that
Mr.
Wagman
acted
on
behalf
of
the
company
in
all
of
his
dealings
pertaining
to
the
sale
of
the
DWS
land.
Furthermore,
his
course
of
conduct
in
this
transaction
was
consistent
with
the
manner
in
which
he
conducted
business
on
behalf
of
his
company
for
many
years.
Issue
Whether
the
$100,000
fee
was
income
earned
by
Mr.
Wagman
personally
or
on
behalf
of
the
company.
Analysis
A
determination
of
the
issue
in
this
case
depends
entirely
on
the
factual
findings.
Since
I
have
found
as
a
fact
that
Mr.
Wagman
earned
the
income
on
behalf
of
the
company,
it
follows
that
the
income
was
properly
declared
by
the
company
in
the
1979
taxation
year.
Decision
The
appeal
is
allowed
with
costs.
Appeal
allowed.
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