Abi Jack Conn v. Minister of National Revenue, [1986] 2 CTC 2247, 86 DTC 1682

Brulé, T.C.J.:—This appeal arises from a claim made by the appellant in his 1979 taxation year wherein he deducted the sum of $52,250 as being the true fair market value of a collection of United States three-dollar bills which he donated to the University of Calgary, Nickle Arts Museum (“the Museum"). This donation was made pursuant to the provisions of the Canadian Cultural Property Export and Import Act and the terms and criteria set out in paragraph 110(1)(b.1) of the Income Tax Act. The Minister only al- lowed the sum of $10,000 as the value of the donation and hence this appeal.

The principles surrounding this section of the Income Tax Act and the provisions of the Canadian Cultural Property Export and Import Act have already been discussed in the case of Lionel Conn v. M.N.R. which was heard in conjunction with this present case. Consequently it is not necessary for me to review any of the details of those statutory provisions.

On November 30, 1979 the appellant donated to the Nickle Arts Museum a collection of 181 three-dollar U.S. bills and he received the appropriate receipt and claimed a deduction in his 1979 income tax return.

In support of the granting of the receipt there was an opinion given by one Grover C. Criswell of Florida as to the value of the donation being some $52,500. It is the quantum of this donation that the Minister took exception to and reassessed the appellant.

I do not intend to review all the evidence presented either on behalf of the appellant or by the Minister. It is sufficient to say that the appellant called as its witness the same Mr. Criswell that had given the original estimate. There is no doubt that he is considered an expert in the field of numismatics and both witnesses for the respondent acknowledged this fact.

In his evidence Mr. Criswell indicated that he did not do any research as to the pieces in the collection but rather he had a photographic listing of the 181 notes and it was from this that he made his very quick appraisal. Mr. Criswell did not remember whether or not Mr. Orton from the Museum had suggested the figure of $50,000 or not and I quote his statement from the transcript at pages 86 and 87 in support of this as follows:

Q. When you valued them in 1979, would you explain, please?

A. I wasn’t asked to do a big, long, detailed explanation. As I remember, Cal Orton sent me a photograph listing and said “what do you think these things are worth, is $50,000.00 a ballpark figure?”, or something like that, you know, and I glanced at the list, I wasn’t asked to do any completed detailed work. I glanced at the list and said yes, that is, and that’s the basis that I wrote it on, that it would be a ballpark figure, the figure of $52,000.00 in Canadian at that time.

Q. So do I understand your evidence correctly that Mr. Orton suggested to you that $50,000.00 to $52,000.00 figure?

A. No, I don’t think that he did. I don’t know that he put anything — that he specifically wrote me anything like that, I think he called and said we need an appraisal on something, or there’s a listing of notes, or I’m going to send you a listing of notes, we don’t want any long detailed appraisal, you know, we don’t want to pay anything, will you write — give us an appraisal on this. I think that that’s the way it came about.

The two witnesses for the respondent, Messrs. Charlton and Carroll, both produced appraisal reports and both valued the donation at a much lower figure, one at $10,000 and the other at $6,000. Neither of these individuals had extensive experience in the matter of United States three-dollar bills although each had some dealings in the past with such currency. Generally they kept up to date with what was happening in the field of numismatics.

One of the witnesses for the respondent, in the course of his research, had sent a letter to Mr. Criswell asking for his opinion as to the value of the collection, not realizing that it was this gentleman who originally had placed the value of $52,500 for the Museum.

Mr. Criswell obviously did not realize at first that this was the same collection upon which he had placed a value of $52,500 and offered Mr. Charl- ton to purchase the notes for the price of $18,000, that amount being United States currency. This figure based on the conversion rate as of that date namely May 16, 1984, would place the value in terms of Canadian dollars at $23,738.15. In placing the original value on the collection Mr. Criswell said under cross-examination that he would attribute a factor of two or three times as much as the value of the individual items because it was a collection. If this multiple factor were eliminated one would come close to the figure which Mr. Criswell actually offered for the notes believing them to be for sale.

Without going into any detail, I do not believe Mr. Criswell made a very thorough appraisal for the purposes of the donation when he placed the figure of $52,500 upon it, nor do I feel that the individuals for the respondent were able to pinpoint accurately the value of certain of the notes even though they attempted to do so. This was because of their rarity. As a result I believe their appraisals were low. Dealing with the matter pointed out above that Mr. Criswell believed there should be a multiple factor attached to the donation to arrive at the ultimate value it was shown in evidence that a small premium was placed on the collection by Mr. Charlton but Mr. Carroll did not agree with this. At page 187 of the transcript when asked questions and Mr. Carroll’s answers were as follows:

Q. Now, in terms of value, you’ve heard evidence that there is sometimes value to be assigned to a group of notes, in addition to the total — the whole being more than the sum of its parts, in terms of the value for the collection being added to the value of the pieces. In your experience in both again acting as chief curator for the Bank of Canada, and doing the purchasing as well as in the researching the knowledge about numismatic circles, would you agree or disagree with that statement?

A. There may be isolated instances where that applies, but largely it’s a myth.

Q. Why do you say that?

A. Well, I have built up in 17 years, well, with the Bank of Canada, the largest paper money collection in Canada so far. I don’t suppose there’s anybody who has bought more collections than I have. I have never paid more than the total value of the individual pieces because it was a collection. I’ve never been asked to.

As a matter of fact, when you’re making a large purchase, you’re more apt to be able to get a discount from a dealer, than have him tack on a premium, because you’re a good customer.

Q. Can you give the Court any specific examples of the purchase of a collection which you have made, for which no collection premium was paid?

A. I never paid a premium for a collection in any field, buying Canadian paper money, U.S. paper money, foreign paper money. Of the collections I bought I never paid any premium, because it was a so-called “collection”, and there were times that I made large purchases that I was given a discount of perhaps ten per cent because it was a large purchase. No one has ever asked me to pay a premium because it was a so-called collection.

Based on this evidence and the reasons I gave in the Lionel Conn case I do not place any significance to the addition of a premium on the donation.

Of greatest significance in this case is the unsolicited offer that came from Mr. Criswell even though he did not know that the subject matter was not for sale. In the case of Matador Co-operative Farm Association Limited v. M.N.R., [1984] C.T.C. 2046 at 5050; 84 D.T.C. 1038 at 1041 the Court said:

In valuation the best criterion is an offer to purchase the subject property from independent and interested persons. This criterion has priority on a direct sales comparison approach when the sales concern properties other than the subject property.

Further in the case of Friedman et al. v. M.N.R., [1978] C.T.C. 2809 at 2816; 78 D.T.C. 1599 the Court said at 1604:

. . . The fact that the offer was not accepted and that the sale did not go through does not, in my opinion, mean that it cannot represent the fair market value . . .

For these reasons and the various discussions of valuations that were set out in the Lionel Conn case I reach the conclusion that the value of the donation of the three dollar bills by Abi Jack Conn in 1979, to be, in terms of Canadian dollars, the sum of $23,738.15. This matter will be referred back to the Minister for reconsideration and reassessment on the basis that this was the value of the donation in 1979. There will be no costs awarded in the matter.

Appeal allowed in part.