Goetz,
T.C.J.:
—This
is
an
appeal
relating
to
a
reassessment
with
respect
to
the
appellant's
1982
taxation
year.
The
issue
is
what
constituted
the
"principal
residence"
of
the
appellant
under
paragraph
54(g)
of
the
Income
Tax
Act
("the
Act")
in
respect
of
"Lot
77,
Section
31,
Nanaimo
District,
Gabriola
Island,
Plan
22062"
(hereinafter
referred
to
as
"Lot
77").
Evidence
was
given
on
behalf
of
the
appellant
by
Vincent
Fourt,
the
appellant's
husband.
Mr.
Fourt
is
a
retired
banker
now
operating
a
campsite
in
the
Okanagan
Valley.
He
and
the
appellant
purchased
Lot
76
(adjacent
to
Lot
77)
in
1972
for
$4,000.
Title
was
issued
to
them
jointly
on
June
4,1975
with
a
declared
value
of
$25,000.
On
the
same
day
title
to
Lot
77
was
issued
to
them
with
a
declared
value
of
$10,000.
A
portion
Plan
22061,
filed
as
Exhibit
A-1,
shows
Lots
76
and
77
adjacent
to
one
another.
The
appellant
and
Mr.
Fourt
used
Lot
76
as
a
camping
site
and
after
building
a
home
on
the
lot
moved
in
as
their
permanent
residence
in
1976.
The
dimensions
of
each
of
Lots
76
and
77
were
approximately
100
feet
by
215
feet.
Each
lot
had
a
drop
in
elevation
at
the
rear
portions,
making
that
part
unusable.
Exhibit
A-2,
a
rough
sketch
prepared
by
Mr.
Fourt,
shows
the
structures
on
both
lots.
Lot
77
was
used
for
a
storage
shed
and
an
incinerator.
A
certificate
of
judgment
had
been
registered
against
Lots
76
and
77
in
June
1980
for
$28,000.
In
September
1980
Mr.
Fourt
transferred
to
the
appellant
his
one-half
interest
in
Lots
76
and
77
with
a
declared
value
of
$90,000
for
Lot
76
and
$25,000
for
Lot
77.
The
transfer,
he
says,
resulted
from
certain
financial
dealings
he
had
in
relation
to
the
purchase
of
a
business
in
Victoria
where
the
Fourts
moved
to
establish
residence
in
1982.
In
January
1982
a
mortgage
in
the
amount
of
$95,000
was
taken
out
and
was
secured
by
Lot
76.
This
enabled
the
Fourts
to
clear
the
title
of
Lot
77
which
the
appellant
then
sold
for
$70,000
in
February
1982.
Lot
76
was
rented
and
is
still
being
rented.
Lot
77
was
never
rented.
In
1982
the
Fourts
had
both
lots
appraised
as
being
worth
$210,000
and
$160,000
of
that
amount
was
allocated
to
Lot
76.
The
capital
gain
from
the
sale
of
Lot
77
was
never
reported
by
the
appellant
in
her
1982
tax
return
on
her
assumption
that
Lot
77
constituted
a
part
of
her
principal
residence.
The
pertinent
portion
of
paragraph
54(g)
reads
as
follows:
54.
In
this
subdivision,
(g)
“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
cooperative
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,
.
.
.
and
for
the
purposes
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
/z
hectare,
the
excess
shall
be
deemed
not
to
have
contributed
to
the
individual’s
use
and
enjoyment
of
the
housing
unit
as
a
residence
unless
the
taxpayer
establishes
that
it
was
necessary
to
such
use
and
enjoyment;
The
Court
must
observe
objectively
the
series
of
events
from
the
time
of
acquisition
of
Lot
77
to
the
time
of
sale.
Lots
76
and
77
were
part
of
a
subdivision
plan
on
Gabriola
Island,
British
Columbia.
On
a
perusal
of
Exhibit
A-1
(the
Plan)
it
can
be
seen
there
are
many
like
lots
and
all
were
self-
sufficient
and
individually
taxed.
The
appellant's
residence
was
built
well
back
on
Lot
76
with
ample
clearance
on
both
sides
of
the
residence.
Lot
77
was
only
used
for
a
storage
shed
and
incinerator
and
perhaps,
at
times,
for
parking.
Immediately
adjacent
to
Lot
76
was
a
reserved
right-of-way
fully
treed
and
unused.
Most
of
the
jurisprudence
analyzing
the
interpretation
of
paragraph
54(g)
seems
to
be
confined
to
the
determination
of
the
reasonable
use,
enjoyment
and
need
of
immediately
contiguous
land
in
acre
or
hectare
units.
However,
M
the
case
of
Glen
K.
Johnstone
v.
The
Queen,
[1988]
1
C.T.C.
48;
88
D.T.C.
6032,
Muldoon,
J.
dealt
with
a
situation
where:
.
.
.
the
taxpayer
purchased
a
"huge"
home
on
the
waterfront.
Almost
immediately,
the
taxpayer
applied
to
subdivide
the
property
and
overcame
many
obstacles
to
realize
this
goal.
Eventually,
the
house
was
torn
down
and
a
horizontal
strata-title
duplex
was
constructed
on
the
property.
The
taxpayer
and
his
wife
moved
into
one
of
the
units
and
sold
the
other
at
a
profit.
The
taxpayer
reported
this
amount
as
a
gain
on
the
disposition
of
a
principal
residence.
The
Minister
included
the
amount
in
the
taxpayer's
income
and
the
taxpayer
appealed
to
the
Federal
Court-Trial
Division.
The
learned
Judge
dismissed
the
appeal
saying
at
pages
59-60
(D.T.C.
6040-41):
.
.
.
He
did
not
transfer
his
principal
residence,
or
any
part
of
it,
to
Mrs.
Trethewey
because
strata
lot
1
together
with
the
relevant
interest
in
the
common
property
was
not
then,
and
never
had
been,
any
part
of
the
plaintiff's
principal
residence.
In
the
case
before
me
there
are
two
distinctive
and
identifiable
legal
entities,
namely,
Lot
76
and
Lot
77.
From
the
appellant's
subjective
viewpoint,
certainly
the
use
and
enjoyment
by
her
of
the
space
afforded
by
the
adjacent
Lot
77
is
a
matter
to
be
considered.
But
was
it
necessary
to
the
use
and
enjoyment
of
her
home
on
Lot
76?
Christie,
A.C.J.T.C.
in
Eric
Rode
and
Elizabeth
Rode
v.
M.N.R.,
[1985]
1
C.T.C.
2324;
85
D.T.C.
272,
says
at
page
2326
(D.T.C.
274):
.
.
.
Even
if
an
appellant
establishes
beyond
controversy
that
what
exceeds
one
acre
did
in
fact
make
an
important
contribution
to
his
use
and
enjoyment
of
the
housing
unit
as
a
residence,
this
does
not
assist
him
because
the
fact
has
been
nullified
by
the
legislation
unless
he
proves
necessity.
Therefore
what
an
appellant
must
do
in
order
to
establish
that
his
principal
residence
exceeds
one
acre
is
to
prove
that
the
excess
was
“necessary”
to
the
use
and
enjoyment
of
the
housing
unit
as
a
residence.
I
believe
that
in
its
context
this
requirement
dictates
that
a
stringent
test
shall
be
applied
in
determining
the
acreage
of
a
principal
residence.
I
am
also
of
the
opinion
that
what
constitutes
a
principal
residence
is
to
be
decided
throughout
by
objective,
not
subjective,
testing.
To
determine
a
lis
respecting
the
boundaries
of
a
principal
residence
on
the
basis
of
evidence
which
is
purely
the
mental
perception
of
one
of
the
parties
to
the
controversy
would
strike
me
as
raising
a
serious
question
of
justness
although
I
appreciate
that
the
words
"contribute
to
the
taxpayer's
enjoyment”
in
paragraph
54(g)
tend
to
draw
one
towards
applying
a
subjective
test
in
this
regard.
.
.
.
Among
the
interpretations
assigned
to
the
word
"necessary"
in
the
Oxford
English
Dictionary
is:
"Indispensable,
requisite,
essential,
needful;
that
cannot
be
done
without”.
From
this
selection
I
believe
that
the
phrase
“that
cannot
be
done
without"
best
epitomizes
what
a
taxpayer
must
meet
in
order
to
establish
that
his
principal
residence
can
properly
be
regarded
as
greater
than
one
acre.
To
my
mind,
the
proper
approach
to
the
determination
of
these
appeals
is
to
objectively
consider
all
of
the
relevant
circumstances
adduced
in
evidence
which
were
in
existence
immediately
prior
to
the
disposition
of
the
property
and
in
the
light
of
that
answer
this
question:
Have
the
appellants
established
on
a
balance
of
probabilities
that
without
the
area
of
land
which
they
contend
constitutes
the
subjacent
and
immediately
contiguous
land
component
of
their
housing
unit
they
could
not
practicably
have
used
and
enjoyed
the
unit
as
residence?
From
the
outset
the
appellant
really
dealt
with
Lot
77
for
what
it
was
—
a
legal
entity.
For
instance,
the
title
thereto
was
encumbered
by
a
registered
judgment
in
1980
which
was
subsequently
removed
with
the
proceeds
of
a
mortgage
placed
on
Lot
76.
The
facilities
placed
on
Lot
77
could
have
as
easily
been
located
on
the
"home
lot"
Lot
76.
The
sale
of
the
adjoining
Lot
77
did
not
affect
the
appellant's
use
and
enjoyment
of
Lot
76
where
her
residence
was
located.
Though
the
use
of
the
space
provided
by
Lot
77
may
have
been
convenient
and
enjoyable
it
was
not
necessary
to
the
appellant's
"use
and
enjoyment
of
the
housing
unit
as
a
residence”
within
the
meaning
of
paragraph
54(g).
The
appeal
is
dismissed.
Appeal
dismissed.
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