Dussault,
T.C.J.
[Translation]:
—
Issue
The
appellant
disputes
a
reassessment
issued
by
the
respondent
on
May
19,
1988,
concerning
its
1984
taxation
year.
In
that
assessment,
the
respondent
increased
the
taxable
capital
gain
made
by
the
appellant
from
the
disposition
on
March
27,
1984,
of
a
lot
located
on
the
southwest
corner
of
St-Martin
Boulevard
and
Des
Laurentides
Boulevard
in
Laval,
Quebec,
by
$277,500
to
set
it
at
$540,000.
The
respondent
computed
a
capital
gain
of
$1,080,000.
on
the
basis
of
proceeds
of
disposition
of
$1,500,000
in
1984
and
by
assuming
a
fair
market
value
of
$420,000
on
Valuation
Day
("V-Day"),
that
is,
on
December
31,
1971.
The
appellant
disputes
the
assessment
and
submits
that
the
lot's
fair
market
value
on
V-Day
was
$975,000,
which
implies
a
capital
gain
of
$525,000
and
a
taxable
capital
gain
of
$262,500.
Thus,
the
only
point
at
issue
concerns
the
lot's
fair
market
value
on
V-Day.
Evidence
The
only
witnesses
heard
at
the
hearing
were
two
expert
witnesses,
who
also
filed
their
respective
appraisal
reports,
one
in
favour
of
the
appellant
and
the
other
in
favour
of
the
respondent.
We
will
begin
by
mentioning
that
the
appellant's
expert
appraises
the
lot
as
of
V-Day
at
$977,000
while
the
respondent's
expert
appraises
it
at
$258,000.
The
assessment
was
based
on
a
value
of
$420,000.
The
Appellant's
Expert
The
appellant's
expert
is
Gaétan
Paquin,
a
chartered
appraiser
whose
qualifications
are
described
in
his
report
dated
April
15,
1991
(Exhibit
A-1,
p.
23),
and
who
has
been
working
as
an
appraiser,
and
more
specifically
on
the
territory
of
the
city
of
Laval,
since
1966.
He
described
the
lot
whose
value
is
in
dispute
as
follows
on
pages
6
and
7
of
his
report
(Exhibit
A-1):
[Translation]
The
property
concerned
in
the
present
study
is
a
vacant
piece
of
land
that
is
more
fully
described
in
a
deed
of
sale
between
Seminc
Inc.
and
Edifice
G.L.
Inc.,
which
sale
took
place
on
August
27,
1984.
It
consists
of
lots
329-59-3,
329-59-P-2,
329-58-9,329-58-P-8,
329-58-10,
328-58-11,
329-58-3,
329-58-5,
329-58-6,
329-58-7,
329-58-12
and
329-P-58,
which
are
more
fully
described
in
a
location
certificate
prepared
by
Jean
Ladriére,
a
land
surveyor,
on
December
13,
1983,
and
revised
on
March
27,
1984.
In
summary,
it
is
the
piece
of
land
that
surrounds
the
land
occupied
by
the
building
with
the
street
address
1
Place
Laval,
which
was
built
in
1966.
On
valuation
day,
that
building
was
the
only
large
office
building
on
the
territory
of
the
city
of
Laval.
The
appraised
land
has
a
frontage
of
174.02
feet
on
St-Martin
Boulevard,
563.30
feet
on
Des
Laurentides
Boulevard
and
801.78
feet
on
De
Grenoble
Street,
and
is
295,043
square
feet,
or
27,409.53
square
metres,
in
area,
as
is
more
fully
described
in
a
location
certificate
prepared
by
Jean
Ladriére,
a
land
surveyor,
on
December
13,
1983,
and
revised
on
March
27,
1984,
which
is
attached
to
this
report.
It
should
be
noted
that
there
are
now
four
other
5-6
floor
buildings
on
the
appraised
land,
which
were
built
on
the
following
dates:
|
1
Place
Laval
:
|
1971
(extension)
|
|
2
Place
Laval
:
|
1978
|
|
3
Place
Laval
South:
|
1972
|
|
3
Place
Laval
North
:
|
1974
|
|
4
Place
Laval
:
|
1986
|
He
explained
that
De
Grenoble
Street,
which
borders
the
lot
to
the
west,
did
not
exist
at
the
time
in
question.
Moreover,
he
described
the
zoning
of
the
lot
as
follows
on
pages
8
and
9
of
the
report:
[Translation]
The
property
in
question
is
located
in
the
C.D.
zone
of
the
city
of
Laval's
zoning
master
plan
L-2000,
which
was
adopted
on
August
3,
1970,
and
amended
on
December
23,
1971,
by
the
by-law
L-2000-18.
The
C.D.
zone
is
governed
by
ss.
110-16
of
the
by-law,
which
can
be
summarized
as
follows:
Section
110-Purpose—To
create
neighbourhood
centres
by
grouping
together
all
activities
consistent
with
such
a
function.
Section
111—Authorized
Uses—The
following
are
authorized
in
this
zone:
(a)
"residential"
use
7
in
accordance
with
an
I.U.S.
index
that
may
vary
from
6.0
to
7.0;
(b)
mixed
“residential-commercial”
use
in
accordance
with
the
information
in
section
99
of
the
present
by-law;
(c)
"commercial"
use
1;
(d)
“commercial”
use
2;
(e)
"public"
and
"semi-public"
use
1;
(f)
additional
uses
(section
16);
(g)
domestic
uses
(section
16).
Section
112-Land
Use
Standards
(a)
Front,
side
and
back
yards,
and
space
between
buildings:
no
minimum
dimension
can
be
required.
(b)
Parking:
in
the
C.D.
zones,
standards
related
to
parking
for
the
various
uses
may
be
reduced
by
25
percent
(by-law
L-2000-18,
in
force
on
1971/12/23).
(c)
Building
height
(by-law
L-2001-18,
in
force
on
1971/12/23).
By-law
L-2000
Sections
113,
114,
115,
116—These
various
sections
refer
to
the
regulation
of
signs,
hedges
and
fences,
electricity
and
telephone
cables
and
certain
features
for
"residential"
use
7.
Although
the
reference
in
the
report
to
paragraph
112(c)
on
the
land
use
standards
regarding
building
height
mentions
no
restriction,
it
was
established
at
the
hearing
that
paragraph
112(c)
provides
for
a
[Translation]
"minimum
height
of
five
(5)
floors
or
an
equivalent
height”
(Exhibit
A-22).
With
the
help
of
maps
(Exhibits
A-2,
A-3,
A-4
and
A-20),
Mr.
Paquin
began
by
resenting
the
urban
developments
that
took
place
and
were
proposed
in
the
late
1960s
and
early
1970s
following
the
1966
amalgamation
of
Laval’s
14.
municipalities,
and
more
specifically
the
adoption
of
the
zoning
master
plan
L-2000
on
August
3,
1970,
and
development
plan
L-2001-18
on
December
23,
1971.
He
recalled
Laval's
dynamism
and
significant
expansion
during
that
period
and
the
desire
to
turn
the
intersection
of
Des
Laurentides
Boulevard
and
St-Martin
Boulevard
into
a
major
centre
of
attraction
in
a
neighbourhood
that
was
already
important
even
though
it
had
been
decided
to
establish
the
centretown
farther
to
the
west
near
the
Autoroute
des
Laurentides.
Mr.
Paquin
then
stopped
to
establish
the
optimum
use
of
the
lot,
which
he
considered
to
be
[Translation]
"naturally
destined
for
a
major
commercial
use"
(Exhibit
A-1,
p.
12).
The
witness
explained
that
analytical
hypothesis
not
only
by
the
site's
exceptional
quality
but
also
by
what
he
described
as
the
desire
of
the
lot's
owner,
Seminc
Inc.
("Seminc"),
and
the
owners
of
1
Place
Laval
(already
built)
to
take
advantage
of
the
site
by
building
commercial
office
buildings.
According
to
the
witness,
it
must
be
understood
that
1
Place
Laval
is
owned
by
the
company
Édifice
G.L.
Inc.
and
the
persons
mainly
concerned
in
Édifice
G.L.
Inc.
are
the
engineers
Gendron
and
Lefebvre
of
the
firm
of
the
same
name,
which
has
its
offices
at
1
Place
Laval.
Those
same
individuals
are
the
persons
mainly
concerned
in
Seminc,
and
it
was
from
them
that
Seminc
purchased
the
lot
in
1967,
as
is
shown
by
Exhibit
A-5.
According
to
Exhibit
A-7,
Seminc
assigned
certain
parts
of
its
lot
to
Édifice
G.L.
Inc.
on
February
16,
1971,
by
means
of
an
emphyteutic
lease
for
a
term
of
30
years
for
the
construction
and
operation
of
buildings
with
a
minimum
value
of
$1,000,000.00,
and
a
new
building
was
supposed
to
be
built
every
two
years.
The
contract
also
contained
an
option
on
other
parts
of
the
lot.
That
first
lease,
which
was
amended
on
August
28,
1972
(Exhibit
A-8),
and
all
the
following
leases
with
their
amendments
(Exhibits
A-9
to
A-19),
whose
main
characteristics
are
summarized
in
Exhibit
A-6,
establish
that
Seminc
assigns
to
Édifice
G.L.
Inc.,
by
means
of
an
emphyteutic
lease
for
a
term
of
66
years,
the
portions
of
its
lot
needed
for
Édifice
G.L.
Inc.
to
build
and
operate
new
buildings,
while
the
remaining
portions
are
reserved
for
parking
spaces
and
are
only
covered
by
ordinary
leases
for
a
term
of
five
(5)
years.
The
two
types
of
leases
are
amended
as
and
when
needed
for
the
parcels
of
lots
for
the
purpose
of
building
new
buildings.
After
maintaining
that
all
those
contracts
were
between
related
persons,
Mr.
Paquin
said
that
he
had
taken
them
into
account
in
establishing
the
optimum
use
of
the
lot
as
the
construction
of
office
buildings
"of
a
minimum
of
five
(5)
floors"
on
the
basis
of
what
was
foreseeable
from
the
beginning
and,
moreover,
with
what
later
materialized
with
some
modifications;
he
did
not
take
them
into
account
to
establish
the
lot's
value
on
the
basis
of
its
profitability
in
terms
of
the
leases
entered
into
between
the
parties,
however.
The
approach
Mr.
Paquin
adopted
for
the
appraisal
was
essentially
based
on
a
summary
of
15
transactions
that
took
place
between
1967
and
December
31,
1971,
except
for
one
that
was
retained
for
comparison
purposes
regarding
market
growth
(Exhibit
A-1,
p.
14).
Mr.
Paquin
also
recognized
that
he
should
make
certain
corrective
calculations
in
omparing
them
with
the
lot
belonging
to
Seminc.
Among
the
factors
to
be
considered,
his
report
mentions
[Translation]
“the
transaction
date,
the
location
of
the
pieces
of
land
vis-a-vis
the
subject,
their
shapes
and
dimensions,
and
other
special
features
regarding
certain
of
those
sales
(Exhibit
A-1.
p.
14).
After
that,
the
testimony
of
Mr.
Paquin
essentially
repeated
the
analysis
contained
in
pages
14
to
17
of
his
report.
Mr.
Paquin
began
by
establishing
the
monthly
rise
in
prices
of
lots
bought
and
resold
in
the
late
1960s
and
early
1970s,
that
is,
between
January
1969
and
September
1971
(sales
1
and
2)
and
between
June
1967
and
December
1970
(sales
14
and
13).
The
average
monthly
rise
is
established
at
1.4
per
cent
in
the
case
of
sales
1
and
2
and
at
1.63
per
cent
in
the
case
of
sales
14
and
13.
Mr.
Paquin
concludes
that
there
was
an
average
rise
of
1.6
per
cent
per
month,
which
he
considered
more
realistic
over
the
period
in
question
when
Laval
was
experiencing
accelerated
growth.
The
rise
of
1.6
per
cent
per
month
was
then
applied
to
establish
an
adjusted
value
per
square
foot
for
the
15
transactions
in
question.
Mr.
Paquin
thus
concludes
that
there
was
a
value
of
$2.75
per
square
foot,
although
in
doing
so
he
only
considers
sales
7
and
10,
which
concern
lots
in
an
interior
situation
on
either
St-Martin
Boulevard
or
Des
Laurentides
Boulevard
rather
than
on
a
corner.
Considering
only
sales
5
and
6,
he
then
establishes
the
corner
value
at
50
per
cent
to
reach
a
value
of
$5
per
square
foot
for
the
part
of
the
lot
fronting
on
St-Martin
Boulevard
and
$4
per
square
foot
for
the
part
fronting
on
Des
Laurentides
Boulevard.
Avalue
of
$2
per
square
foot
was
attributed
to
the
remainder.
He
ignored
sales
8
and
9,
which
represented
purchases
by
the
Ford
Motor
Co.
for
an
average
price
of
$0.83
per
square
foot
in
June
1968,
even
though
he
admitted
that
it
is
the
[Translation]
“only
land
really
comparable
to
the
subject"
(Exhibit
A-1,
p.
16)
since
it
is
located
directly
opposite
Seminc's
lot
on
the
northwest
corner
of
St-Martin
Boulevard
and
Des
Laurentides
Boulevard.
He
explained
this
as
follows
(Exhibit
A-1,
pages
16
and
17):
[Translation]
It
is
extremely
hard
to
base
a
conclusion
as
to
the
value
on
December
31,
1971,
on
this
transaction,
mainly
because
after
1968
there
were
the
expropriation
of
St-
Martin
Boulevard
“eastbound”
from
Des
Laurentides
Boulevard,
the
widening
of
St-Martin
Boulevard
in
front
of
the
subject
properties
(expropriation
of
July
1970)
and
even
the
construction
of
the
commercial
complex
on
the
land
purchased
by
the
Ford
Motor
Co.
The
extension
of
St-Martin
Boulevard
east
of
Des
Laurentides
Boulevard
confirmed
the
importance
of
the
intersection
of
St-Martin
Boulevard
and
Des
Laurentides
Boulevard,
and
the
large-scale
commercial
development
in
this
area
bore
witness
to
the
commercial
use.
Regarding
sale
9,
Mr.
Paquin
also
explained
that
the
price
paid
of
$3.49
per
square
foot
essentially
represented
a
combined
value
of
the
lot.
Insisting
that
the
lot
to
be
appraised
has
a
value
much
higher
than
that
of
all
the
surrounding
lots
because
it
is
closely
related
to
the
Place
Laval
complex
as
a
result
of
the
emphyteutic
leases,
Mr.
Paquin
consequently
attributed
a
corner
value
to
it
and
then
estimated
the
depth
required
for
the
maximal
development
of
the
lot
to
be
250
feet
in
the
light
of
the
size
of
the
building
already
built
at
1
Place
Laval,
which
is
located
on
the
corner;
he
acknowledged
that
this
depth
was
greater
than
that
in
the
transactions
he
had
analyzed,
however.
His
conclusions
in
that
respect
read
as
follows
(Exhibit
A-1,
p.
18):
[Translation]
I
am
of
the
opinion
that
the
land
in
question
has
a
value
of
$5.00
per
square
foot
fronting
on
St-Martin
Boulevard
for
a
land
of
174
feet
of
frontage
by
250
feet
in
depth,
that
is,
of
43,500
square
feet.
The
land
fronting
on
Des
Laurentides
Boulevard,
with
an
average
depth
of
250
feet,
has
a
value
of
$4.00
per
square
foot,
and
the
remainder
of
the
land
has
a
value
of
$2.00
per
square
foot.
It
should
be
recalled
that
the
remainder
of
the
land
is
an
integral
part
of
the
development
of
this
territory
since
the
buildings
built
during
the
1970s
use
a
depth
of
250
feet
almost
in
full
and
the
remainder
of
the
land
has
been
used
since
the
construction
of
the
first
building
in
1966
for
parking,
which
is
vital
to
the
smooth
operation
of
the
buildings
that
were
built.
The
mathematical
operation
for
the
figures
set
out
above
gives
us
the
following
table:
|
St-Martin
Boulevard:
|
43,500
sq.ft.
<x
$5.00
=
$217,500.00
|
|
Des
Laurentides
Boulevard:
|
128,325
sq.ft.
x
$4.00
=
$513,300.00
|
|
remainder
of
the
land:
|
123,218
sq.ft.
x
$2.00
=
$246,436.00
|
|
TOTAL:
$977,236.00
|
Taking
the
entire
analysis
into
consideration
to
determine
the
valuein
this
matter,
I
am
of
the
opinion
that
its
aggregate
market
value
as
of
December
31,
1971,
in
round
numbers
is
$977,000.00.
Value
of
the
land:
$977,000.00
As
has
already
been
noted,
a
single
emphyteutic
lease
had
been
registered
in
relation
to
the
lot
at
that
time.
Finally,
Mr.
Paquin
stressed
several
times
in
his
testimony
that
the
rise
in
lot
prices
in
Laval
in
the
late
1960s,
in
the
early
1970s
and
afterwards
was
extremely
variable
in
the
light
of
the
accelerated
expansion
and
development
and
that
variations
during
the
period
in
question
could
be
between
8
per
cent
and
25
per
cent
per
year
depending
on
the
area
being
considered.
According
to
him,
this
is
demonstrated
by
the
significant
variations
noted
in
the
transactions
he
had
analyzed.
Furthermore,
he
considers
the
adopted
rise
of
20
per
cent
per
year
between
1967
and
1971
in
the
area
neighbouring
Seminc's
lot
to
be
reasonable.
The
Respondent's
Expert
The
respondent's
expert
is
Clément
Brochu,
a
chartered
appraiser
working
for
Revenue
Canada,
Taxation,
Real
Estate
Appraisal
Section.
The
main
information
on
the
appraised
lot
and
his
conclusion
are
summarized
as
follows
in
his
report
dated
April
1,1990
(Exhibit
1-3,
p.4):
[Translation]
Main
Information
and
Conclusion
—
Municipal
assessment
of
the
subject,
1971:
$73,110.00
—
Sale
of
the
“subject”
lot
in
1966:
$82,000.00
—
Sale
of
the
“subject”
lot
in
1967:
$93,000.00
—
Ten
sales
of
large
properties
were
used
for
purposes
of
comparison
with
the
"subject".
Sale
#4
has
by
far
the
highest
price
per
square
foot
of
the
10
sales:
$1.21
per
square
foot
|
Sale
#4
|
Subject
|
|
Area
|
309,217
sq.ft.
|
295,038
sq.ft.
|
|
Date
of
sale
|
December
1972
|
|
|
Location
|
Opposite
the
subject
|
|
|
Including
corner
of
boulevards
|
Yes
|
No
|
|
•Total
frontage
on
the
2
boulevards
|
1,145
feet
|
808
feet
|
|
Price
per
square
foot
|
$1.21
|
|
|
—
Value
estimated
by
2
different
approaches
|
|
1st
approach—
Comparison
with
10
sales
of
large
properties
$225,000.00
($0.76
per
square
foot)
2nd
approach—Subject
appraised
in
2
parts
(a)
value
of
the
front
part
(small
areas)
(b)
value
of
the
remainder
Total:
$258,000.00
($0.87
per
square
foot)
Conclusion:
$258,000.00
After
he
too
had
reported
on
the
development
of
the
Montreal
area,
and
more
specifically
of
the
city
of
Laval,
in
1971,
Mr.
Brochu,
turning
to
the
characteristics
of
the
neighbouring
area,
mentioned
that
at
the
time
in
question
the
construction
density
around
St-Martin
Boulevard
was
very
low,
there
was
a
huge
quarry
in
the
immediate
vicinity
to
the
east,
and
there
was
[Translation]
“a
huge
lot
being
used
to
store
used
car
parts"
on
each
side
of
Des
Laurentides
Boulevard
to
the
south
of
the
vacant
lot
to
be
appraised.
He
also
mentioned
the
several-floor
office
building
(1
Place
Laval)
that
had
already
been
built
on
the
adjacent
lot
on
the
southwest
corner
of
St-Martin
Boulevard
and
Des
Laurentides
Boulevard
(Exhibit
1-3,
pages
7
and
8).
Referring
to
the
lot's
commercial
CD
zoning,
to
the
small
number
of
buildings
on
St-Martin
Boulevard,
to
the
low
demand
for
commercial
lot
in
the
area
and,
finally,
to
the
fact
that
the
lot
does
not
include
the
corner
already
occupied
by
the
office
building
that
was
built
before
1971
(1
Place
Laval),
Mr.
Brochu
reached
the
following
conclusion
concerning
the
lot’s
optimum
use
(Exhibit
1-3,
page
14):
[Translation]
In
conclusion
Considering
(1)
the
"subject's"
location
at
the
centre
of
the
island
(2)
the
low
population
distributed
over
an
extremely
vast
territory
(3)
the
low
construction
density
in
the
area
(4)
that
the
best
part
of
the
site
(street
corner)
has
already
been
built
on,
the
optimum
use
of
the
part
of
the
subject
fronting
on
St-Martin
and
Des
Laurentides
Boulevards
is
the
construction
of
small
neighbourhood
businesses.
As
for
the
rear
part,
considering
the
context
of
1971,
the
lot
should
remain
"vacant"
until
Laval's
growth
is
favourable
to
its
use.
When
counsel
for
the
appellant
asked
him
to
comment
on
that
conclusion
during
his
cross-examination,
Mr.
Brochu
was
forced
to
admit
that
the
CD
zoning
only
permitted
buildings
with
a
minimum
height
of
five
(5)
floors
or
an
equivalent
height
to
be
built,
and
he
therefore
found
himself
forced
to
amend
his
conclusion
that
the
optimum
use
was
the
construction
of
"small
neighbourhood
businesses".
His
new
conclusion
regarding
the
optimum
use
is
now
based
on
the
construction
of
buildings
of
a
minimum
height
of
five
(5)
floors
or
an
equivalent
height
insofar,
he
says,
as
there
was
a
demand
for
such
buildings
at
the
time.
However,
he
says
that
such
a
demand
did
not
exist
at
the
time,
although
the
future
has
shown
that
it
did
develop
later.
The
appraisal
technique
then
employed
by
Mr.
Brochu
was
essentially
parity
based
on
the
substitution
principle.
Thus,
he
employed
two
approaches,
as
he
began
by
performing
an
analysis
of
and
comparison
with
sales
of
large
properties
and
then
carried
out
a
two-part
analysis
of
market
value:
that
of
the
front
part
fronting
on
either
St-Martin
Boulevard
or
Des
Laurentides
Boulevard,
and
then
that
of
the
back
part,
or
remainder.
In
the
approach
based
on
the
analysis
of
sales
of
large
properties,
he
compared
sales
#1
and
#2
of
the
report,
that
is
those
of
the
“subject”
lot
in
1966
and
1967,
respectively,
at
$0.24
and
$0.27
per
square
foot,
with
eight
(8)
other
sales
of
large
properties.
He
placed
particular
emphasis
on
sales
#3
and
#4
affecting
the
lot
located
directly
opposite
the
“subject”
lot,
that
is,
on
the
northwest
corner
of
St-Martin
Boulevard
and
Des
Laurentides
Boulevard.
Sale
#3
took
place
in
June
1968
at
a
price
of
$0.61
per
square
foot
while
sale
#4
took
place
in
December
1972
at
a
price
of
$1.21
per
square
foot.
In
the
end,
he
adopted
sale
#4
as
being
the
most
comparable
to
the
“subject”
since
it
concerned
a
slightly
larger
lot
directly
opposite
the
"subject"
that
also
fronts
on
both
boulevards.
Thus,
at
$1.21
per
square
foot,
the
value
of
the
“subject”
lot
was
set
at
$375,000.
Mr
Brochu
then
made
three
adjustments:
minus
10
per
cent
because
the
lot
does
not
include
the
street
corner
with
the
highest
visibility
from
the
commercial
point
of
view;
minus
10
per
cent
due
to
the
date
of
sale
#4,
that
is,
December
1972;
and,
lastly,
minus
20
per
cent
for
the
difference
of
frontage
on
the
two
boulevards
between
the
sale
#4
lot
(1,145
feet)
and
the
“subject”
lot
(808
feet).
The
result
of
the
adjustments
gave
a
fair
market
value
of
$225,000,
or
$0.76
per
square
foot.
The
second
approach
he
employed
was
the
two-part
analysis
of
market
value:
that
of
the
front
part
fronting
on
St-Martin
Boulevard
and
on
Des
Laurentides
Boulevard
followed
by
that
of
the
remainder.
The
front
part
was
appraised
with
the
help
of
indexes
related
to
some
30
sales
of
small
lots
that
took
place
between
1967
and
1972.
After
adopting
an
average
depth
of
138
feet
for
such
lots
and
the
subject
lot's
total
frontage
of
808
feet
on
the
two
boulevards,
Mr.
Brochu
reached
the
conclusion
of
a
value
of
$1.69
per
square
foot
for
a
total
area
of
111,504
square
feet.
In
this
way,
he
established
the
total
value
of
the
front
part
at
$188,441.00
(Exhibit
1-3,
pages
24
and
25).
His
appraisal
of
the
back
part
or
remainder
is
essentially
based
on
an
estimate
of
the
value
of
the
remainder
of
the
sale
#4
lot,
that
is,
the
lot
opposite
the
"subject".
He
adjusted
the
1972
sale
price
of
that
lot
by
minus
20
per
cent
to
take
account
of
the
date
of
the
sale
(minus
10
per
cent)
and
of
the
fact
that
the
"subject"
lot
does
not
include
the
street
corner
of
the
two
boulevards
(minus
10
per
cent).
Using
the
same
depth
of
138
feet,
he
then
established
the
value
of
the
front
part
of
the
lot
and
subtracted
it
from
the
adjusted
price
in
order
to
establish
the
value
per
square
foot
of
the
remainder.
He
then
applied
the
result
of
$0.38
to
the
area
of
the
back
part
of
the
"subject"
lot
to
establish
its
value
at
$69,743.
Since
he
had
set
the
value
of
the
front
part
at
$188,441.
Mr.
Brochu's
conclusion
as
to
the
total
value
was
$258,184,
which
he
rounded
off
to
$258,000.
Since
he
was
to
retain
the
highest
value
of
the
two
approaches,
Mr.
Brochu
finally
established
the
lot’s
value
at
$258,000.
During
his
testimony,
Mr.
Brochu
also
said
that
he
had
not
taken
the
emphyteutic
leases
into
consideration
because
the
one
in
existence
on
December
31,
1971,
had
characteristics
of
a
transaction
between
obviously
related
persons.
Similarly,
he
said
that
he
has
ignored
certain
transactions
regarded
as
departing
from
the
trends,
including
sale
M-6
(sale
5
of
Mr.
Paquin's
report,
Exhibit
A-1,
page
19)
by
Place
Renaud
Ltée
to
Scott's
Restaurants
(Quebec)
on
July
22,1969,
and
sale
M-5
(sale
6
of
Mr.
Paquin's
report,
Exhibit
A-1,
page
19)
on
the
same
day
concerning
Place
Renaud
Ltée's
purchase
of
only
a
part
of
the
lot
that
was
immediately
resold
to
Scott's
Restaurants
(Quebec)
in
sale
M-6
(sale
5
of
Mr.
Paquin's
report,
Exhibit
A-1,
page
19).
According
to
him,
the
very
high
price
paid
for
that
corner
site
can
be
explained
by
the
fact
that
the
choice
of
a
site
is
very
important
for
the
establishment
of
a
franchise
restaurant
like
villa
du
Poulet
(Scott's
Restaurants
(Quebec)
and
that
it
is
recognized
that
the
price
paid
for
a
lot
bought
for
that
purpose
is
as
a
result
usually
much
higher.
According
to
him,
such
a
price
was
not
seen
again
until
much
later
in
sales
that
took
place
between
1978
and
1982,
which
are
reported
in
his
report
(Exhibit
1-3,
page
33).
Analysis
Both
counsel
maintained
that
the
appraisal
of
the
adverse
party's
expert
had
to
be
dismissed
for
various
reasons.
Both
of
the
reports,
along
with
the
testimony,
contain
useful
and
significant
information
but
also
have
striking
weaknesses.
Mr.
Paquin's
appraisal
was
in
large
part
based
on
Place
Renaud
Ltée’s
sale
to
Scott's
Restaurants
(Quebec)
in
July
1969,
which
Mr.
Brochu
has
rejected
as
being
a
complete
departure
from
the
trends,
while
Mr.
Brochu's
appraisal
was
in
large
part
based
on
the
Ford
Motor
Co.'s
sale
of
the
lot
opposite
Seminc's
lot
to
Belcourt
Construction
in
December
1972,
which
Mr.
Paquin
did
not
even
analyze.
It
would
be
hard
to
find
more
distant
poles.
I
feel
that
it
is
important
at
this
point
to
recall
the
words
of
Couture,
C.J.T.C.
in
Taylor
Estate
v.
M.N.R.,
[1990]
2
C.T.C.
2304;
90
D.T.C.
1777,
in
which
he
said
the
following
at
pages
2305,
2306
(D.T.C.
1778-79):
[Translation]
It
is
agreed
that
valuation
is
not
a
science,
that
is,
a
discipline
governed
by
rigid
and
dogmatic
principles,
but
rather
an
art
the
activities
of
which
involve
formulating
an
opinion
as
to
the
commercial
value
of
a
property,
which
is
expressed
as
its
fair
market
value
of
whatever
kind
on
a
date
determined
by
either
an
established
or
a
notional
free
market.
Authors
specializing
in
this
discipline
have
proposed
certain
methods
that
may
be
applied
in
such
determinations
and
factors
that
should
be
taken
into
consideration
in
producing
a
valuation.
However,
these
authors
do
not
suggest
or
propose
absolute
principles
that
must
be
followed
and
accepted
blindly.
Each
valuation
must
be
prepared
in
light
of
factors
and
characteristics
unique
to
the
property
being
valued.
If
a
method
or
criteria
suggested
by
the
authors
appears
to
produce
results
in
a
particular
situation
that
do
not
seem
in
accordance
with
economic
reality,
it
is
necessary
to
seek
and
apply
those
that
will
produce
acceptable
results
in
the
circumstances.
On
the
other
hand,
the
valuation
of
shares
in
a
private
company,
especially
in
the
case
of
a
deemed
disposition,
the
task
involved
is
much
more
complex
since
it
is
necessary
to
determine
a
notional
value
for
the
shares
since
normally
there
is
no
market
for
such
shares.
In
some
areas,
such
as
real
estate,
the
procedure
of
finding
a
parity
between
the
property
that
is
being
valued
and
the
value
of
similar
properties
sold
previously
normally
gives
realistic
results.
However,
the
application
of
this
method
requires
that
the
economic,
political
or
other
conditions
existing
at
the
time
of
the
sale
of
the
properties
used
for
comparison
purposes
be
similar
to
those
existing
when
the
subject
property
is
valued.
In
this
case,
the
two
experts
obviously
have
diametrically
opposed
visions
of
the
"conditions"
prevailing
in
Laval
at
the
end
of
1971
for
the
purpose
of
establishing
their
comparisons.
The
lot
of
which
Seminc
disposed
of
the
largest
part
on
March
27,
1984,
for
$1,500,000
had
been
purchased
from
Marc
Gendron
and
Claude
Lefebvre
on
August
1,
1967,
for
$93,000,
or
$0.27
per
square
foot.
It
should
be
mentioned
here
that
the
1984
sale
concerned
an
area
of
295,043
square
feet
whereas
the
1967
purchase
concerned
an
area
of
347,126
square
feet.
Marc
Gendron
and
Gaétan
Lefebvre
had
purchased
that
lot
with
the
same
area
on
March
24,
1966,
for
$82,000
or
$0.24
per
square
foot.
It
should
also
be
mentioned
that
in
1971
the
same
lot
had
an
area
of
317,257
square
feet
and
a
value
of
$73,110
for
municipal
purposes
(Exhibit
1-3,
p.
12).
According
to
the
appellant's
expert,
the
lot
had
a
value
of
$977,000
or
$3.31
per
square
foot,
on
V-Day,
while
the
respondent's
expert
has
set
that
value
at
$258,000.00,
or
$0.875
per
square
foot
on
the
same
date.
The
reassessment
of
May
18,
1988,
was
based
on
a
value
of
$420,000,
or
$1.425
per
square
foot,
on
V-Day.
The
appraisal
by
the
appellant’s
expert
was
based
on
a
summary
of
15
sales
of
small
lots
between
1967
and
1971,
and
he
only
used
the
sale
with
the
highest
price
of
$3.52
per
square
foot
(sale
5),
which
he
adjusted
to
$5.10
per
square
foot
because
of
the
date,
as
a
basis
for
his
subsequent
calculations.
Applying
an
average
price
increase
of
20
per
cent
to
that
one
sale,
the
result
of
which
is
to
be
applied
to
Seminc's
lot,
means
that
the
value
of
that
lot
would
have
risen
from
$93,000
in
August
1967
to
$977,000
in
December
1971,
which
is
a
rise
of
1,051
per
cent
in
the
space
of
four
and
a
half
years,
or
an
annual
increase
of
more
than
200
per
cent.
If
the
1984
sale
price
is
taken
into
account,
the
value
of
the
lot
would
only
have
risen
by
four
per
cent
a
year
from
1972
to
1984.
Such
results
for
a
single
lot
are
inexplicable
and,
moreover,
could
not
be
explained
when
it
was
shown
that
the
city
of
Laval
had
continued
its
expansion
and
development
not
only
in
the
late
1960s
but
also
throughout
the
1970s
and
19805.
Furthermore,
the
fact
that
he
mainly
used
data
based
on
the
sale
of
a
small
piece
of
lot
located
on
a
corner
and
that
he
attributed
full
corner
value
to
Seminc's
lot,
which
is
not
located
on
a
corner,
obviously
distorted
the
results.
Although
Mr.
Paquin
said
that
the
lot
was
part
of
a
whole
destined
to
be
developed
for
the
construction
of
office
buildings
and
that
it
was
then
necessary
to
take
into
account
the
building
that
had
already
been
built
on
the
corner
of
Des
Laurentides
Boulevard
and
St-Martin
Boulevard,
which
belonged
to
a
related
company,
I
feel
that
to
attribute
full
corner
value
to
Seminc's
lot
is
to
recognize
a
value
for
the
owner
and
related
persons
and
does
not
necessarily
reflect
fair
market
value
in
the
eyes
of
a
potential
purchaser
in
a
free
market.
Moreover,
Mr.
Paquin
admitted
that
it
was
very
hard
to
disregard
that
information
and
use
it
in
a
retrospective
manner
since
Édifices
G.L.
Inc.
had
in
fact
built
office
buildings
after
1971
on
parcels
of
Seminc's
lot
granted
by
emphyteutic
lease
as
and
when
needed.
He
has
not
given
satisfactory
justification
for
rejecting
several
sales
of
large
lots,
such
as
sale
8
of
the
lot
across
the
street,
and
certain
sales
of
small
lots,
such
as
sales
1
and
12,
along
with
sale
4
of
a
corner
lot
across
the
street
from
the
one
used
for
comparison
purposes
(sale
5).
The
fact
that
Mr.
Paquin
did
not
use
sale
#4
from
Mr.
Brochu's
report
concerning
the
lot
opposite
Seminc's
lot,
which
the
Ford
Motor
Co.
resold
to
Belcourt
Construction
in
December
1972,
to
check
his
conclusions
alsoappears
to
be
a
major
flaw.
His
explanations
regarding
the
circumstances
of
that
resale
were
unconvincing
and
consisted
in
part
of
hearsay
evidence.
That
lot
was
in
fact
the
same
size,
was
located
on
the
corner
and
was
zoned
CA.
Contrary
to
the
CD
zoning
applicable
to
Seminc's
lot,
CA
zoning
did
not
require
construction
to
a
height
of
five
(5)
floors
or
an
equivalent
height,
and
that
was
not
necessarily
a
disadvantage;
at
least
it
has
not
been
shown
to
have
been
a
disadvantage
at
that
time.
Furthermore,
sale
5
from
Mr.
Paquin’s
report,
which
he
used
as
the
most
comparable,
concerned
a
lot
that
was
also
zoned
CA
rather
than
CD.
Similarly,
Mr.
Paquin’s
report
completely
ignored
several
sales
after
1971
that
Mr.
Brochu
analyzed
in
his
report
to
check
and
confirm
his
conclusions.
Thus,
sales
M16
and
M21
from
Mr.
Brochu's
report
concerning
small
lots
adjacent
to
Seminc's
lot
on
the
west
side
of
St-Martin
Boulevard,
which
were
also
zoned
CD,
indicated
prices
per
square
foot
of
$3.87
and
$4.09,
respectively,
in
1978
and
1980,
as
compared
with
the
value
of
$3.31
established
by
Mr.
Raquin
for
Seminc's
lot
in
1971.
As
for
Mr.
Brochu's
report,
it
should
first
be
mentioned
that
the
assessment
was
not
based
on
it
and
that
it
is
useful
more
because
it
was
itself
based
on
two
different
approaches
employing
much
more
data
than
Mr.
Raquin's
report.
Mr.
Brochu's
initial
premise
that
the
optimum
use
of
the
part
of
Seminc's
lot
fronting
on
St-Martin
and
Des
Laurentides
Boulevards
was
the
“construction
of
small
neighbourhood
businesses"
is
wrong
in
the
light
of
a
CD
zone's
specific
restriction
concerning
the
minimum
height
of
buildings.
Using
that
premise
to
establish
the
depth
required
for
construction
for
that
purpose
distorts
the
calculations
and
conclusions
in
part
when
we
try
to
apply
data
from
sales
said
to
be
"comparable".
In
spite
of
that
deficiency,
Mr.
Brochu's
report
gives
a
much
more
complete
picture
of
how
prices
evolved
during
the
period
from
1967
to
1971,
and
even
later.
In
my
opinion,
the
Ford
Motor
Co.'s
sale
to
Belcourt
Construction
of
the
lot
directly
opposite
Seminc's
lot
in
December
1972
represents
a
more
realistic
view
of
prices
at
the
time
in
question
than
does
sale
5
by
Place
Renaud
Ltée
to
Scott
Restaurants
(Québec)
on
July
22,
1969,
on
which
Mr.
Paquin’s
report
is
based
in
large
part.
On
the
other
hand,
the
downward
adjustments
of
40
per
cent
made
by
Mr.
Brochu
to
establish
the
fair
market
value
of
Seminc's
lot
at
the
end
of
1971
might
seem
to
be
somewhat
excessive.
In
my
opinion,
Mr.
Paquin’s
report
and
testimony
lead
to
unrealistic
conclusions
when
compared
with
the
much
more
complete
data
found
in
Mr.
Brochu's
report.
In
the
light
of
those
data,
and
even
accepting
an
average
annual
price
increase
of
20
per
cent,
as
was
submitted
by
Mr.
Paquin
himself,
I
find
that
the
appellant
has
failed
to
demonstrate
on
the
balance
of
probabilities
that
the
fair
market
value
of
its
lot
on
December
31,
1971,
was
higher
than
the
value—$420,000—adopted
by
the
respondent
as
the
basis
for
its
assessment.
That
value
appears
to
me
to
be
high,
but
the
most
realistic,
as
it
reflects
an
average
annual
price
increase
of
approximately
20
per
cent
when
applied
to
the
various
transactions
involving
the
lot
since
Mr.
Gendron
and
Mr.
Lefebvre
purchased
it
in
1966.
It
might
seem
high,
as
it
is
18
per
cent
higher
than
the
price
of
the
Ford
Motor
Co.'s
sale
to
Belcourt
Construction
the
following
year
without
the
adjustments
made
by
Mr.
Brochu.
It
is
true
that
the
lot
sold
by
the
Ford
Motor
Co.
was
zoned
CA
rather
than
CD
like
Seminc's
lot.
However,
setting
aside
the
downward
adjustments
of
40
per
cent
made
by
Mr.
Brochu
to
take
the
date
of
the
sale,
the
lack
of
a
corner
value
and
the
difference
in
area
into
account,
more
than
compensates,
in
my
opinion,
for
the
additional
value
CD
zoning
could
involve
if
such
zoning
did
in
fact
involve
more
advantages
than
disadvantages
for
a
potential
buyer
in
the
context
of
afree
market
transaction
at
the
end
of
1971.
Moreover,
the
appellant's
expert
himself
selected
as
the
most
comparable
sale
that
of
a
lot
also
zoned
CA.
For
these
reasons,
the
appeal
is
dismissed.
Appeal
dismissed
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