Christie,
A.C.J.T.C.:—This
appeal
pertains
to
the
appellant’s
1980
taxation
year.
The
issue
is
whether
the
gain
on
the
sale
of
an
undivided
one-eighth
interest
which
he
had
in
a
33-acre
parcel
of
land
in
the
southwest
portion
of
the
city
of
Prince
Albert
(“the
property”)
is
a
capital
gain
or
business
income.
The
appellant
was
born
and
raised
on
a
farm
located
at
McMahon,
Saskatchewan.
He
ceased
being
involved
in
farming
when
17
years
of
age
and,
by
his
own
admission,
he
has
not
personally
operated
a
farming
business
since.
He
is
a
civil
engineer
employed
by
the
Government
of
Saskatchewan.
He
graduated
from
the
University
of
Saskatchewan
in
1965.
After
graduating
he
took
up
residence
in
Prince
Albert.
He
commenced
employment
as
an
assistant
district
engineer
for
the
Department
of
Rural
Development.
One
and
one-half
years
later
he
was
promoted
to
District
Engineer
and
has
continued
as
such.
On
February
23,
1979
he
entered
into
an
agreement
to
purchase
the
one-
eighth
interest
in
the
property
from
Mr.
Fred
Trach
for
$13,000
cash.
Clause
6
of
the
agreement
provides:
6.
It
is
agreed
between
the
parties
that
since
the
Vendor
retains
the
seven-eighths
share
of
the
property,
that
the
Vendor
may
decide
when
the
property
should
be
sold
and
the
Purchaser
must
also
sell
his
share
on
the
same
terms
and
at
the
same
price
based
upon
equity
shares
as
the
Vendor
wishes
to
sell.
On
March
7,1979
the
appellant
registered
a
notice
of
a
caveat
dated
March
2,
1979
regarding
his
one-eighth
interest
which
is
endorsed
on
the
certificate
of
title.
The
history
of
the
acquisition
and
disposal
of
the
property
is
set
out
in
the
reasons
for
judgment
of
concurrent
date
in
Fred
E.
Trach
v.
M.N.R.,
[1987]
1
C.T.C.
2127.
The
appellant
and
Trach
had
been
friends
for
a
number
of
years
prior
to
February
23,
1979
and
had
been
involved
together
in
the
acquisition
of
15
acres
of
real
estate
in
Prince
Albert
in
June
of
1978
for
$151,500.
The
appellant
testified
that
prior
to
Trach’s
purchasing
the
property
they
had
entered
into
an
agreement
that
after
the
purchase
was
done
Trach
would
sell
the
appellant
a
one-eighth
interest
in
it.
As
the
reasons
in
Trach
v.
M.N.R.
show,
I
have
concluded
that
when
Trach
purchased
the
property
his
motivating
intention
was
to
sell
it
along
with
125
contiguous
acres
to
a
developer
for
urban
development
as
soon
as
he
received
what
he
regarded
to
be
a
financially
satisfactory
offer.
This
intention
was
realized
by
agreements
dated
June
19,
1980
and
September
8,
1980.
Brown’s
allotment
of
the
sale
price
of
the
property
was
$36,900
after
deducting
his
share
of
the
real
estate
commission.
The
evidence
of
the
appellant
establishes
that
he
regarded
himself
to
be,
and
he
was
in
fact,
subservient
to
Trach
in
their
relationship
regarding
the
property.
The
first
knowledge
that
the
appellant
had
of
the
intended
sale
to
the
Edmonton
investors
was
after
Trach
had
opened
negotiations
with
them.
This
notice
was
received
“shortly”
before
the
sale.
This
exchange
took
place
while
the
appellant
was
testifying:
Well,
witness,
I
take
it
you
were
subservient
to
his
(Trach's)
will
in
relation
to
how
that
land
would
be
dealt
with.
If
he
wanted
to
dispose
of
it
it’s
quite
clear
that
you
didn't
have
much
choice
except
to
go
along.
A.
Yes.
He
added
with
reference
to
Trach:
He's
a
large
operator,
I’m
not
going
to
interfere
with
a
large
operator
with
my
minor
holding
in
this
deal.
This
oral
testimony
is
corroborated
by
clause
6
of
the
agreement
of
February
23,
1979
already
cited.
Trach
was
dominant
and
his
intentions
and
decisions
governed.
The
foregoing
is
sufficient
to
dispose
of
this
matter
in
favour
of
the
respondent
because
in
these
circumstances
Trach's
intention
in
acquiring
the
33
acres
is
attributable
to
the
appellant:
Leonard
Reeves
Incorporated
v.
M.N.R.,
[1985]
2
C.T.C.
2054
at
2058;
85
D.T.C.
419
at
421.
Having
disposed
of
this
appeal
on
this
point
I
wish
to
guard
against
any
inference
that
apart
from
it
any
different
conclusion
might
have
been
arrived
at
on
the
evidence.
This
is
not
so.
It
was
not
the
appellant’s
intention
to
invest
$13,000
in
the
business
of
farming.
For
example,
he
and
Trach
never
had
even
an
elementary
discussion
regarding
the
basis
on
which
there
would
be
a
realization
on
the
investment
out
of
farming.
The
appeal
is
dismissed.
Appeal
dismissed.
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