Tremblay,
T.C.C.J.:—
1.
Points
at
issue
In
this
appeal,
there
are
five
(5)
possible
points
at
issue.
1.1
The
first
point
is
whether
for
the
year
1985
a
5.22
acre
piece
of
land
located
in
Victoria,
British
Columbia,
may
reasonably
be
regarded
as
contributing
to
Flavia
and
Richard
E.
Gook
Sr.'s
use
and
enjoyment
of
the
housing
unit
as
a
residence
pursuant
to
the
provision
54(g)(v)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act").
This
property
was
acquired
by
the
Gooks
in
1964
and
sold
in
February
1985
to
Flarichco
Estates
Ltd.
(hereinafter
called
Flarichco".
Flavia
and
Richard
E.
Gook
Sr.
are
the
shareholders
of
Flarichco.
In
1964,
the
area
of
the
property
was
5.7
acres;
however,
following
a
subdivision
of
the
land
in
1977,
only
5.22
acres
remained
at
the
time
of
the
sale
in
1985.
The
respondent
contends
that
/2
hectare
may
reasonably
be
regarded
as
contributing
to
the
taxpayer's
use
and
enjoyment
of
the
housing
unit
as
a
residence”.
Therefore,
he
concludes
that
the
balance
area
is
subject
to
the
Capital
gain.
The
appellants
contend
that
the
total
profit
of
the
transaction
is
exempt
from
taxation
because
the
total
area
is
part
of
the
principal
residence.
If
the
appellants’
contention
is
well-founded,
there
is
no
other
point
at
issue.
1.2
But
if
the
respondent's
contention
is
correct,
i.e.
that
4.22
acres
are
subject
to
the
capital
gain,
the
second
point
at
issue
is
whether
the
fair
market
value
of
the
property
on
December
31,
1971
is
$532,000,
that
is
to
say,
$126,000
per
acre,
according
to
the
appellants
or
$88,600
per
acre
according
to
the
respondent.
1.3
The
third
point
at
issue
is
whether
the
fair
market
value
of
the
subject
property
in
February,
1985
is
$990,000
according
to
the
appellants
or
$738,000
according
to
the
respondent.
1.4
The
fourth
point
at
issue
is
a
consequence
of
the
third
one.
Indeed,
as
the
appellant
company,
following
the
purchase
of
the
subject
property
for
$990,000
as
it
contends,
sold
many
subdivided
pieces
of
land,
the
cost
price
was
higher
and
therefore
the
profit
lower
than
if
the
cost
price
had
been
$738,000,
as
the
respondent
contends.
1.5
The
fifth
point
at
issue
is
raised
by
the
two
individual
appellants
for
the
taxation
year
1986.
The
respondent
has
added
$140,000
($70,000
for
each
one)
to
their
income
as
a
result
of
an
appropriation
of
property
located
at
4197
Thorne-
hill
Crescent,
Victoria.
2.
Burden
of
proof
2.01
The
burden
of
proof
is
on
the
appellants
to
show
that
the
respondent's
reassessments
are
incorrect.
This
burden
of
proof
results
particularly
from
several
judicial
decisions,
including
the
judgment
delivered
by
the
Supreme
Court
of
Canada
in
Johnston
v.
M.N.R.,
[1948]
S.C.R.
486,
[1948]
C.T.C.
195,
3
D.T.C.
1182.
2.02
In
the
same
judgment,
the
Court
decided
that
the
assumed
facts
on
which
the
respondent
based
his
reassessments
were
also
deemed
to
be
correct.
In
the
present
case,
the
assumed
facts
are
described
in
paragraph
12
of
the
reply
to
the
notice
of
appeal.
At
the
beginning
of
the
trial,
the
appellants
admitted,
ignored
or
denied
the
facts
alleged
in
the
said
paragraph
12
as
follows:
12.
In
so
assessing
the
appellants
for
the
1985
and
1986
taxation
years
the
respondent
relied
upon,
inter
alia
the
following
assumptions:
a)
the
facts
as
set
out
in
preceding
paragraphs
to
this
Reply
to
Notice
of
Appeal;
[ignored]
b)
in
1964
the
appellant
and
her
spouse
purchased
property
located
in
the
municipality
of
Saanich
referred
to
as
the
Shelbourne
property
which
consisted
of,
inter
alia,
5.7
acres
of
land
plus
a
residence
and
other
outbuildings
for
approximately
$50,000;
[admitted]
c)
at
the
time
of
purchase
in
1964
the
aforesaid
5.7
acres
was
included
in
Zone
"F"
as
indicated
in
Zoning
Bylaw
No.
1983
adopted
November
19,
1962.
The
subdivision
Bylaw
No.
1449
at
that
time
indicated
that
the
minimum
lot
size
for
area
"F"
where
sewers
were
not
available
was
8400
square
feet;
[denied]
d)
as
at
December
31,
1971
the
aforesaid
property
was
located
in
zoning
area
"A"
under
bylaw
No.
3232
“Zoning
Bylaw
1971"
which
was
primarily
single
family
dwelling;
the
subdivision
map
for
subdivision
Bylaw
No.
3231
in
1971
amended
to
January
1,
1972
showed
that
the
property
was
located
in
subdivision
area
"A"
to
allow
a
minimum
lot
area
of
6000
square
feet
with
a
minimum
width
of
60
feet
although
under
special
circumstances
the
approving
officer
could
permit
a
reduction
of
this
minimum
area
to
5000
square
feet
and
a
minimum
width
of
50
feet;
[denied]
e)
under
Zoning
Bylaw
No.
3366
“April
1972”
the
subject
property
zoning
was
changed
to
Rural
A-2
which
was
a
primarily
agricultural
zone
with
a
minimum
lot
size
of
9.9
acres
and
the
surrounding
area
from
the
subject
property
was
rezoned
to
RS-2
which
permitted
detached
housing;
[denied]
f)
for
a
couple
of
years
prior
to
1972
a
33
lot
subdivision
had
been
in
place
which
subdivision
was
adjacent
to
the
north
boundary
of
the
subject
property
along
Shelbourne
Street
and
Thornehill
Crescent
in
the
Municipality
of
Saanich;
[denied]
g)
on
or
before
1977
the
appellant
and
her
spouse
subdivided
off
two
smaller
lots
from
the
aforesaid
5.7
acres
at
the
east
boundary
of
the
property
thereby
reducing
the
aforesaid
parcel
to
5.22
acres;
[denied]
h)
on
or
about
November
28,
1984
a
British
Columbia
Company
called
Flaricho
[sic]
Estates
Ltd.
was
incorporated
of
which
the
appellant
and
her
spouse
were
the
controlling
shareholders
and
officers;
[admitted]
i)
on
or
about
February
25,
1985
the
appellant
and
her
spouse
rolled
over
the
aforesaid
Shelbourne
property
to
their
company
Flaricho
[sic]
Estates
Ltd.
at
the
elected
fair
market
value
amount
of
$990,000;
[admitted]
j)
as
at
February
25,
1985
the
subject
property
was
fully
serviced
and
was
boxed
in
by
subdivisions
or
detached
single
family
dwellings;
[denied]
k)
prior
to
February
25,
1985
subdivision
plans
and
an
Application
for
a
zoning
change
with
respect
to
the
Shelbourne
property
had
been
forwarded
to
the
Municipality
of
Saanich;
[denied]
l)
on
or
about
March
4,
1985
rezoning
from
Rural
A-2
zoning
with
a
minimum
lot
size
of
9.9
acres
to
a
minimum
lot
size
of
6,028
square
feet
was
granted
by
adoption
of
“Amendment
Bylaw
No.5423,
1985"
which
rezoning
applied
to
a
3.2
acre
westerly
portion
of
the
aforesaid
land;
[admitted]
m)
the
remaining
portion
of
the
subject
land
was
granted
rezoning
from
Rural
A-2
to
RS-6
single
family
dwelling
on
or
about
June
3,
1985
under
“Amendment
Bylaw
No.
5469,
1985”;
both
of
the
aforesaid
amendments
were
to
Zoning
Bylaw
1984
No.
5225;
[admitted]
n)
Flaricho
[sic]
Estates
Ltd.
subdivided
the
aforesaid
property
into
lots
and
proceeded
to
sell
same;
[admitted]
o)
the
appellant
and
her
spouse
paid
$300
rent
to
Flaricho
[sic]
Estates
Ltd.
for
their
house
situate
[sic]
on
the
subject
property
until
October
26,
1986
when
Flaricho
[sic]
Estates
Ltd.
sold
the
appellants
residence
plus
the
lot
on
which
it
was
located
back
to
the
appellant
and
her
spouse
for
$140,000;
[admitted]
p)
at
any
material
times
the
respondent
was
not
aware
of
flooding
problems
on
the
aforesaid
property;
[denied]
q)
at
all
material
times
most
of
the
surrounding
parcels
of
land
were
subdivided
in
the
1960s
and
were
on
septic
tank
including
houses
on
small
lots
along
Shel-
bourne
Street;
[denied]
r)
the
total
area
of
the
land
subjacent
to
the
appellant's
housing
unit
which
exceeded
‘2
hectare
(4.22
acres)
did
not
contribute
to
the
appellant's
use
and
enjoyment
of
the
housing
unit
as
a
residence
and
the
appellant
has
failed
to
establish
that
the
excess
property
aforesaid
was
necessary
to
her
use
and
enjoyment
of
the
housing
unit
as
a
residence;
[denied]
s)
the
disposition
of
the
aforesaid
Shelbourne
Street
property
on
or
about
February
25,
1985
by
the
appellant
and
her
spouse
resulted
in
a
taxable
capital
gain
on
the
land
in
excess
of
one
acre;
[denied]
t)
the
fair
market
value
of
the
aforesaid
property
at
the
time
of
disposition
on
February
25,
1985
was
$738,000;
$658,000
attributable
to
5.22
acres
of
land
and
$80,600
to
buildings
such
that
a
value
of
4.22
acres
as
at
February
25,
1985
was
$532,000
(that
is
to
say
$126,000
per
acre);
[denied
and
later
admitted
during
the
trial]
u)
the
fair
market
value
of
4.22
acres
of
the
aforesaid
Shelbourne
Street
property
as
at
December
31,
1971
was
$88,600;
[denied
and
later
admitted
during
the
trial]
v)
at
all
material
times
there
were
no
statutory
restrictions
preventing
the
subdivision
of
the
aforesaid
Shelbourne
Street
property
to
less
than
one
acre
either
at
the
time
of
purchase
in
1964
or
at
the
time
of
disposition
in
1985.”
[denied]
3.
Determinant
admissions
3.01
In
the
course
of
the
trial,
the
appellant
admitted
the
facts
in
subparagraphs
12(t)
and
(u]
of
the
reply
to
the
notice
of
appeal
(above)
(2.02)
concerning
the
fair
market
value
of
the
subject
property
on
December
31,
1971
and
on
February
25,
1985
as
alleged
by
the
respondent.
3.02
Following
these
admissions,
the
appeal
of
Flarichco
Estates
Ltd.
for
1985
and
1986
must
be
dismissed
and
the
second,
the
third
and
the
fourth
points
at
issue
are
settled
(1.2,
1.3,
1.4).
3.03
Moreover,
concerning
the
$70,000
for
appropriation
of
property,
counsel
for
the
respondent
informed
the
Court
that
in
response
to
the
notice
of
objection,
the
respondent
reassessed
on
April
23,
1990
the
Gook’s
1986
taxation
year
and
deducted
from
their
income
the
$70,000
included
as
an
appropriation
of
property
located
at
4197
Thornehill
Crescent.
Therefore,
the
fifth
point
at
issue
(1.5)
does
no
longer
exist,
having
already
been
allowed
by
reassessment.
The
appeals
of
Mr.
and
Mrs.
Gook
concerning
this
year
1986
are
dismissed.
3.04
The
only
remaining
point
at
issue
is
the
first
one
(1.1).
4.
Facts
Concerning
the
remaining
point
at
issue,
the
following
facts
were
adduced:
4.01
The
property
known
as
4177
Shelbourne
Street—the
subject
property—
was
created
in
1947
as
a
five-acre
parcel
(Plan:
Exhibit
A-2).
4.02
In
1960
this
parcel
was
increased
in
size
to
a
5.7
acre
parcel
by
virtue
of
plan
No.
13957
(Exhibit
A-3).
4.03
At
the
time
of
purchase
of
the
subject
property
in
1964
by
the
individual
appellants,
it
was
subject
to
By-law
No.
1449
(Exhibit
A-8)
of
the
Municipality
of
Saanich
in
which
it
was
located.
This
by-law,
in
subsections
29(3)
and
(4),
indicated
that
the
minimum
lot
size
be
as
it
follows:
(3)
In
such
districts
the
minimum
area
and
widths
of
parcels
being
created
by
subdivision
shall
be
as
follows:
|
Area
|
Width
|
|
(a)
Sewer
District
|
6,000
sq.
ft.
|
60
ft.
|
|
(b)
Queenswood
and
Ten
Mile
Point
|
0.5
acres
|
—
|
|
(c)
Areas
liable
to
flood
|
5.0
acres
|
—
|
(4)
In
the
remainder
of
the
Municipality
the
minimum
lot
size
shall
be
8,400
sq.
ft.
and
the
minimum
width
70'0".
The
Approving
Officer
may
require
larger
lots
if
necessitated
by
other
sections
of
this
By-law.
The
subject
property
is
not
located
in
any
of
the
three
designated
areas
of
the
plan
(Exhibit
A-9)
in
connection
with
By-law
No.
1449
and
described
above
in
subsection
29(3).
Section
56
of
the
by-law
reads
as
follows:
56.
Where
the
whole
or
any
portion
of
the
lands
being
subdivided
are
wet
or
are
subject
to
intermittent
or
periodic
flooding,
approval
of
the
proposed
subdivision
may
be
withheld
until
appropriate
steps
are
taken,
to
the
satisfaction
of
the
Municipal
Engineer
to
drain
the
land
or
otherwise
to
remedy
such
wet
or
flooding
conditions.
4.04
The
following
witnesses,
Mr.
A.
Lamb,
Mr.
M.
H.
Brubaker,
Mr.
Flanders,
who
have
lived
near
the
subject
property,
testified
to
the
effect
that
before
and
after
1964
flooding
problems
existed
with
subject
property.
Five
photographs
(Exhibit
A-6)
taken
in
1959,
1962
and
1977
show
water
in
the
street
and
on
the
subject
property.
Mr.
Gook
Sr.
and
Mr.
Gook
Jr.
are
positive
about
the
existence
of
springs,
ground
water
issuing
from
parts
of
the
upper
portion
of
the
subject
property.
On
June
18,
1965,
Mr.
Gook
Sr.
received
a
letter
from
the
Corporation
of
the
District
of
Saanich
concerning
the
installation
of
a
54”
drain
near
the
subject
property
(Exhibit
A-5).
4.05
In
April,
1972,
the
subject
property
zoning
was
changed
to
Rural
(zoning
By-law
No.
3366)
which
was
an
agricultural
zone
with
minimum
lot
size
of
9.9
acres.
The
evidence
was
introduced
by
the
appellant
through
Mr.
Loney,
the
Approving
Officer
of
the
District
of
Saanich.
In
cross-examination,
he
pointed
out
that
the
particular
zoning
placed
on
Mr.
Gook's
property
was
what
he
referred
to
as
a
zonin
trick
or
zoning
tactic
in
1972,
not
to
prevent
subdivision
into
residential
lots,
but
only
to
ensure
that
proper
subdivision
plans
were
presented.
If
there
were
flooding
problems,
they
would
have
to
be
included
in
the
plans.
Mr.
Loney
indicated
that
the
property
was
not
necessarily
agricultural
at
all
and,
once
again,
it
was
only
to
ensure
that
proper
subdivision
plans
were
presented.
4.06
At
all
material
times,
that
is,
from
August,
1964
until
February,
1985,
the
residences
located
on
the
subject
property
were
serviced
by
septic
tank
ground
disposal
systems
so
that
the
upper
portion
of
the
subject
property
was
covered
by
a
significant
number
of
large
oak
trees
(Exhibit
A-4
and
direct
evidence
by
expert
witnesses
A.B.
Reedy
and
R.E.
Gook
Jr.
and
witness
Lamb).
4.07
Mr.
Gook
Sr.
testified
that
he
suffered
severe
back
problems
and
that
horseback
riding
was
the
therapy
necessary
to
keep
him
mobile.
A
letter
from
Dr
D.A.
Holley
(Exhibit
A-10)
and
a
letter
from
Mr.
Pippa
Hodge,
MCSP,
BSC
Re
HAB,
BHSAI,
of
the
National
Hippotherapy
Development
(Exhibit
A-11)
confirm
in
substance
that
horseback
riding
can
be
very
beneficial
for
some
types
of
low
back
pain.
Dr
Holley’s
letter
reads
as
follows:
May
23,
1988
Mr.
Richard
Gook
Gravelle
Ferry
Road
Quesnel,
B.C.
Dear
Mr.
Gook,
In
reply
to
your
query
as
to
the
relationship
of
horseback
riding
to
back
symptoms,
and
the
beneficial
effect
of
regular
daily
riding
on
chronic
back
pain,
I
am
able
to
say
that
in
my
experience,
horseback
riding
is
frequently
of
benefit
to
the
sufferer
of
chronic
back
pain.
I
can
think
back
and
recall
a
sizeable
number
of
patients
and
personal
acquaintances,
including
myself,
who
reported
that
while
they
rode
horseback
regularly,
they
were
relatively
free
from
back
pain.
This
of
course,
does
not
hold
for
acute
back
problems
nor
does
it
pertain
to
all
kinds
of
back
pain
problems.
The
basis
for
the
benefit
from
this
mode
of
therapy
is
that
riding
provides
back
conditioning
exercise
to
the
para-vertebral
muscles
of
the
lumbar
region
which
in
turn
provides
increased
support
to
the
area
and
consequently
relieves
the
symptoms.
We
hope
this
brief
summary
will
be
of
assistance
to
you.
Yours
sincerely,
D.A.
Holley,
M.D.
4.08
The
taxpayer's
first
daughter
was
born
with
a
club-foot
and
in
her
teens
was
not
able
to
engage
in
normal
youthful
activities
but
found
that
horseback
riding
gave
her
the
physical
and
mental
exhilaration
necessary
to
youthful
development.
4.09
The
taxpayer's
second
daughter
suffered
from
chronic
asthma
and
as
a
result
was
unable
to
take
part
in
normal
games
and
exercises.
Here
again
she
found
it
necessary
to
ride
horseback
and
thus
engage
in
an
outdoor
activity
necessary
to
the
health
and
happiness
of
an
otherwise
active
young
person.
4.10
In
January,
1977,
Mr.
Gook
Sr.
took
the
appropriate
steps
with
the
Corporation
of
the
District
of
Saanich
(Exhibit
A-15)
to
transfer
to
his
son
and
his
daughter,
who
had
recently
married,
a
piece
of
land
each
(Plan
No.
30836—
Exhibit
R-6).
These
lots
are
less
than
/2
hectare.
4.11
In
1983
and
1984,
the
subject
property
being
surrounded
by
subdivision
(Exhibit
R-21),
it
was
decided
by
the
appellants
and
their
children
to
request
a
change
of
zoning.
On
November
26,
1984,
Mr.
Gook
Sr.
wrote
to
the
Planning
Department
of
the
District
of
Saanich
asking
for
the
subdivision
of
the
subject
property.
The
letter
(Exhibit
A-17)
reads
as
follows:
Dear
Sirs:
Re:
4177
Shelbourne
Lot
B
Plan
13957
The
area
around
my
farm
is
now
completely
subdivided
and
the
pressure
of
people
and
children
over
my
fences
is
becoming
intolerable.
These
recent
subdivisions
have
created
engineering
problems
(to
continue
roads
and
services)
through
my
property.
In
order
to
resolve
the
engineering
requirements
of
putting
in
sewer
service,
underground
power
and
cablevision
to
the
existing
houses
we
would
like
to
have
your
approval
for
the
overall
subdivision
of
the
property
in
keeping
with
the
lay
out
shown
on
the
accompanying
sketch
plan.
The
actual
subdivision
may
be
some
time
in
the
future.
For
the
present
we
are
requesting
approval
of
the
tentative
plan
area
shown
outlined
RED
to
create
some
8
lots
fronting
on
Shelbourne
Street.
4.12
Related
to
Exhibit
A-17
is
Exhibit
R-9,
which
is
the
application.
Two
tentative
subdivision
plans
are
dated
November
26,
1984,
(Exhibit
R-12)
and
February
21,
1985
(Exhibit
R-12).
In
his
testimony,
Mr.
Gook
Sr.
pointed
out
the
location
where
the
storm
drains
were,
the
sewage
and
the
water.
Services
were
required
in
three
areas,
i.e.,
Shelbourne
Street,
Thornehill
Crescent
and
Barkdale.
In
Exhibit
R-12,
one
can
see
that
the
subject
property
is
divided
into
18
lots.
In
the
plan
(Exhibit
R-16),
it
appears
that
in
1986,
there
were
30
lots
including
the
principal
residence.
On
March
5,
1985,
the
appellant
was
informed
by
the
appropriate
municipal
authority
that
the
rezoning
of
the
subject
property
was
adopted
by
By-law
No.
5423,
from
A-2
zoning
to
RS-6
single
family
dwelling
(560
square
meters).
4.13
Flarichco
was
incorporated
on
November
28,
1984,
the
main
business
activity
being
land
development,
management,
services.
The
subject
property
was
sold
to
Flarichco
on
February
15,
1985.
Mr.
Gook
Sr.
admitted
that
Flarichco
was
formed
with
the
sole
intent
of
making
a
vehicle
for
the
family
to
benefit
from
a
situation
in
which
they
themselves
"were
actually
the
victim".
"A
prudent
person",
he
said”
is
one
who
is
obliged
to
conduct
his
affairs
so
that
the
end
result
would
be
of
the
greatest
value
to
himself
and
his
family
surely.”
4.14
Pursuant
to
Mr.
Burnet,
appraiser
for
the
respondent,
there
was
no
real
impediment
to
subdivision
in
1985.
He
valuated
the
property
on
the
basis
that
its
highest
and
best
use
was
as
a
subdivision,
even
in
1971.
4.15
In
cross-examination,
Mr.
Gook
Sr.,
who
has
been
in
the
construction
and
land
development
business
since
1949,
testified
that
when
he
valuated
the
property
in
1985
to
take
it
into
the
company
at
$990,000,
it
was
a
30-lot
subdivision
(2.02:
12(i)).
4.16
During
the
year
1984
and
until
August,
1985,
the
two-bedroom
bungalow
located
on
the
subject
property
was
rented
for
$400
a
month.
However,
Mr.
Gook
Sr.
said
this
bungalow
was
"essentially
used
as
an
overflow
house
for
children"
and
was
rented
when
vacant.
It
was
not
rented
on
a
steady
basis.
5.
Law—cases
at
law—analysis
5.01
Law
The
main
provision
of
the
Income
Tax
Act
involved
in
the
present
case
is
paragraph
54(g)
which
reads
as
follows:
54.
Definitions.—In
this
subdivision,
(g)
"Principal
44
principal
residence"
of
a
taxpayer
for
a
taxation
year
means
a
housing
unit,
a
leasehold
interest
therein,
or
a
share
of
the
capital
stock
of
a
co-operative
housing
corporation,
owned,
whether
jointly
with
another
person
or
otherwise,
in
the
year
by
the
taxpayer,
if
the
housing
unit
was,
or
if
the
share
was
acquired
for
the
sole
purpose
of
acquiring
the
right
to
inhabit
a
housing
unit
owned
by
the
corporation
that
was,
(v)
for
the
purpose
of
this
paragraph
the
principal
residence
of
a
taxpayer
for
a
taxation
year
shall
be
deemed
to
include,
except
where
the
property
consists
of
a
share
of
the
capital
stock
of
a
co-operative
housing
corporation,
the
land
subjacent
to
the
housing
unit
and
such
portion
of
any
immediately
contiguous
land
as
may
reasonably
be
regarded
as
contributing
to
the
taxpayer’s
use
and
enjoyment
of
the
housing
unit
as
a
residence,
except
that
where
the
total
area
of
the
subjacent
land
and
of
that
portion
exceeds
/2
hectare,
the
excess
shall
be
deemed
not
to
have
contributed
to
the
individual's
use
andenjoyment
of
the
housing
unit
as
a
residence
unless
the
taxpayer
establishes
that
it
was
necessary
to
such
use
and
enjoyment,
and
5.02
Cases
at
law
The
cases
at
law
referred
to
by
the
parties
are
as
follows:
1.
Augart
v.
M.N.R.,
[1989]
1
C.T.C.
2353,
89
D.T.C.
263
(T.C.C.);
2.
Johnstone
v.
The
Queen,
[1988]
1
C.T.C.
48,
88
D.T.C.
6032
(F.C.T.D.);
3.
The
Queen
v.
Joyner,
[1988]
2
C.T.C.
280,
88
D.T.C.
6459
(F.C.T.D.);
4.
The
Queen
v.
Mitosinka,
[1978]
C.T.C.
664,
78
D.T.C.
6432
(F.C.T.D.);
5.
Rode
et
al.
v.
M.N.R.,
[1985]
1
C.T.C.
2324,
85
D.T.C.
272
(T.C.C.);
6.
Watson
et
al.
v.
M.N.R.,
[1985]
1
C.T.C.
2276,
85
D.T.C.
270
(T.C.C.);
7.
The
Queen
v.
Yates
et
al.,
[1986]
2
C.T.C.
46,
86
D.T.C.
6296
(F.C.A.);
8.
Shekel
v.
M.N.R.,
[1972]
C.T.C.
210,
72
D.T.C.
6178
(F.C.T.D.);
9.
The
Queen
v.
Fries,
[1989]
1
C.T.C.
471,
89
D.T.C.
5240
(F.C.A.);
10.
Ahluwalia
et
al.
v.
M.N.R.,
[1987]
2
C.T.C.
2300,
87
D.T.C.
592
(T.C.C.);
11.
O'Reilly
&
Bélanger
Ltd.
v.
M.N.R.,
[1917-27]
C.T.C.
332;
1
D.T.C.
121;
12.
Borneo
Airways
Ltd.
v.
Commissioner
of
Internal
Revenue,
[1969]
T.R.
569;
13.
Michael
v.
M.N.R.,
[1985]
2
C.T.C.
2122,
85
D.T.C.
455
(T.C.C.);
14.
Fevang
Farms
Ltd.
v.
M.N.R.,
[1986]
1
C.T.C.
2086,
86
D.T.C.
1041
(T.C.C.);
15.
Haslam
et
al.
v.
The
Queen,
[1988]
1
C.T.C.
153,
88
D.T.C.
6081
(F.C.T.D.);
16.
The
Queen
v.
National
System
of
Baking
of
Alberta
Ltd.,
[1978]
C.T.C.
30,
78
D.T.C.
6018
(F.C.T.D.);
17.
Wiens
et
al.
v.
M.N.R.,
[1984]
C.T.C.
2821,
84
D.T.C.
1646
(T.C.C.);
18.
Wolfond
Estate
v.
M.N.R.,
[1985]
1
C.T.C.
2175,
85
D.T.C.
174
(T.C.C.).
5.03
Analysis
5.03.1
Critical
time:
time
of
acquisition
or
time
of
disposition
of
the
property?
In
Yates
et
al.
(5.02(7)),
Joyner
(5.02(3))
and
Rode
et
al.
(5.02(5)),
it
was
decided
that
it
is
the
time
of
disposition
of
the
property
which
is
significant
for
the
purposes
of
ascertaining
whether
or
not
land
in
excess
of
one
acre
should
be
deemed
to
be
part
of
a
taxpayer's
principal
residence.
5.03.2
The
zoning
By-law
No.
3366
issued
in
1972
is
the
last
one
before
rezoning
By-law
No.
5423
on
March
5,
1985
from
A-2
to
RS-6
(4.12).
However,
the
preponderance
of
the
evidence
concerning
the
rural
zoning
A-2
is
to
the
effect
that
it
was
a
zoning
tactic,
not
to
prevent
subdivision
into
residential
lots
but
only
to
ensure
that
the
proper
subdivision
plans
be
presented
(4.05).
This
differs
from
the
Yates
et
al.
case
(5.02(7))
in
which,
under
threat
of
expropriation,
9.3
acres
were
sold.
Mr.
Yates
and
his
wife
could
not
legally
have
occupied
their
housing
unit
as
a
residence
on
less
than
ten
acres.
It
also
differs
from
the
Augart
case
(5.02(1)).
In
that
case,
the
municipal
by-law
required
all
single
detached
dwellings
affected
to
have
a
minimum
site
area
of
80
acres.
The
by-law
was
to
protect
land
from
premature
subdivision
and
development
in
small
parcels.
5.03.3
Moreover,
in
1977
two
lots
of
the
subject
property
were
transferred
by
Mr.
and
Mrs.
Gook
to
two
of
their
children
(4.10)
with
the
authorization
of
the
Corporation
of
the
District
of
Saanich.
Does
this
not
confirm
the
testimony
of
Mr.
Loney
that
the
zoning
By-law
No.
3366
was
not
to
prevent
subdivision
into
residential
lots?
5.03.4
Finally
Mr.
Gook
Sr.
admitted
that
in
1985,
he
valuated
the
subject
property
to
take
it
into
the
company
at
$990,000,
it
was
a
30-lot
subdivision
(4.15).
Applying
the
principle
that
it
is
the
time
of
the
disposition
of
the
property
which
is
significant
for
the
purposes
of
ascertaining
whether
or
not
land
in
excess
of
one
acre
should
be
deemed
to
be
part
of
the
taxpayer’s
principal
residence,
Mr.
Gook
Sr.'s
admission
confirms
that
the
reassessment
is
objectively
correct.
5.03.5
Concerning
the
subjective
reasons
(4.07,
4.08,
4.09),
no
medical
doctor
testified
to
confirm
the
appellant's
affirmation.
In
his
letter,
Dr.
Holley
pointed
out
that
horseback
riding
therapy
is
not
an
effective
treatment
for
acute
back
problems
or
all
kinds
of
back
pain
problems.
It
provides
exercise
to
strengthen
back
muscles.
In
my
opinion,
the
same
thing
could
be
said
for
any
type
of
appropriate
exercise.
Moreover,
there
is
no
evidence
that
in
February,
1985
at
the
time
of
the
disposition,
such
subjective
reasons
still
existed.
6.
Conclusion
For
the
above-mentioned
reasons,
the
appeals
are
dismissed.
Appeals
dismissed.
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