Christie,
A.C.J.T.C.:—This
appeal
stems
from
a
reassessment
of
income
tax
in
relation
to
the
appellant’s
1981
taxation
year.
The
question
is
whether
$40,811
received
by
it
from
the
“Sardis
Consortium"
("the
Consortium")
was
income
from
a
partnership
as
contended
by
the
respondent
or
from
a
joint
venture
as
alleged
by
the
appellant.
The
answer
will
determine
the
amount
in
respect
of
which
the
appellant
may
properly
claim
the
small
business
deduction.
The
president
of
the
appellant,
Mr.
James
F.
Butchart,
said
that
the
Consortium
came
into
existence
to
develop
for
residential
purposes
a
parcel
of
land
about
27
acres
in
size
near
Sardis,
British
Columbia.
He
then
identified
five
documents
in
this
order,
each
of
which
was
prepared
by
Davies,
Baker
&
Company,
Barristers
&
Solicitors
of
Chilliwack.
First,
a
mortgage
made
June
20,
1975,
between
the
appellant,
Day-Jour
Developments
Ltd.,
Fred
J.
Green
Agency
Limited,
JWF
Developments
Ltd.,
William
Joseph
Worrall
and
Western
Shopping
Centres
Ltd.
collectively
called
"the
Mortgagor"
and
William
John
Robinson
(who
sold
the
land
to
the
Mortgagor)
called
"the
Mortgagee"
and
Dennis
William
Henry
Dayton,
James
Frederick
Butchart,
Lloyd
Walter
Green,
Frederick
Edward
Tunbridge,
William
Allan
Tunbridge
and
Robert
Osler
Booth
called
"the
Guarantor."
The
land
subject
to
the
mortgage
was
the
27
acres
more
or
less
previously
mentioned
and
it
was
allocated
in
this
way:
the
appellant,
Worrall
and
three
of
the
other
corporations
each
had
an
undivided
15/100ths
interest,
while
Western
Shopping
Centres
Ltd.
had
an
undivided
25/100ths
interest.
The
amount
secured
was
$420,000
with
interest
at
10
per
cent
per
annum
calculated
from
July
7,
1975.
The
$420,000
was
to
be
paid
by
July
7,
1978.
The
mortgage
stated
that
the
Mortgagor
intended
to
divide
the
property
into
not
less
than
120
lots
which
the
Mortgagee
agreed
would
be
released
from
the
mortgage
from
time
to
time
by
payments
of
stipulated
amounts.
The
undertaking
of
the
Guarantor
to
pay
the
money
secured
was
unqualified.
Second
is
a
"Real
Estate
Prospectus
of
the
Sardis
Consortium."
It
is
dated
August
7,
1975,
and
is
signed
by
officers
of
the
appellant,
the
other
corporations
already
named
and
Worrall.
It
recites
that
it
has
been
filed
with
and
accepted
by
the
Superintendent
of
Insurance
for
British
Columbia
in
accordance
with
section
51
of
the
Real
Estate
Act
of
British
Columbia.*
Under
the
heading
"Description
of
Promoters"
these
words
appear:
“The
Sardis
Consortium
is
a
joint
venture
of
the
following
corporations
and
individuals."
Under
the
heading
"General
Nature
of
Business
of
Promoters"
this
is
said:
“The
lots
covered
by
this
Prospectus
represent
Phase
1
of
the
subdivision
of
the
said
property
which
is
to
be
known
as
the
‘Mount
View
Subdivision'”.
Under
"Auditor”
this
appears:
"The
promoters
do
not
have
an
auditor
for
the
joint
venture
and
none
of
the
promoters
have
their
own
auditors.”
This
phase
related
to
9
residential
lots.
Third
is
another
prospectus
dated
August
11,
1976.
It
is
the
same
as
the
prospectus
dated
August
7,
1975,
except
that
it
related
to
Phase
II
of
the
Mount
View
Subdivision
and
involved
37
residential
lots
and
a
park
consisting
of
1.9
acres.
The
fourth
is
a
Memorandum
of
Agreement
made
December
8,
1976
("the
Agreement”).
The
parties
are
the
appellant
plus
the
corporations
and
individual
already
identified.
The
second
recital
reads:
AND
WHEREAS
the
parties
hereto
desire
to
define
and
record
by
this
Agreement
as
between
themselves
their
respective
interests
and
obligations
in
connection
with
their
partnership
in
respect
to
the
Mountview
Subdivision.
Under
the
heading
"Formation
of
Partnership,”
clause
1
reads:
The
parties
hereto
acknowledge
that
they
are
partners
in
a
partnership
(hereinafter
called
'The
Partnership”)
under
the
firm
name
and
style
of
“SARDIS
CONSORTIUM”
for
the
purposes
and
scope
set
forth
herein.
The
parties
hereto
are
sometimes
hereinafter
referred
to
collectively
as
"the
partners”
and
individually
as
"partner”.
This
is
followed
by
49
clauses.
All
except
three
make
reference
to
partner,
partners
or
partnership
or
some
combination
thereof.
On
its
face
it
is
a
partnership
agreement
in
the
fullest
sense
of
that
phrase.
There
is
no
reference
to
joint
venture
in
the
Agreement.
Among
other
things
it
sets
out
the
percentage
interest
of
each
partner
in
the
partnership
which
is
the
same
as
indicated
in
the
mortgage;
provides
that
the
business
of
the
partnership
is
limited
to
the
acquisition,
development
and
sale
of
the
Mount
View
Subdivision,
but
that
this
can
be
extended
by
written
agreement
of
the
majority
of
the
partners
holding
an
interest
of
not
less
than
75
per
cent
in
the
partnership;
establishes
a
management
committee
consisting
of
directors
of
three
corporate
members
of
the
Consortium,
namely,
J.
F.
Butchart,
chairman,
W.
A.
Tunbridge,
secretary,
and
D.
W.
H.
Dayton,
vice-chairman;
sets
out
in
detail
the
terms
of
reference
for
the
management
committee,
which
includes
keeping
books
of
account
for
the
partnership
and
maintaining
all
funds
of
the
partnership
held
by
it
in
a
partnership
account
in
a
designated
bank;
states
that
the
partnership,
the
management
committee
or
any
partner
shall
not
do
anything
to
implement
"major
decisions,”
which
are
described
and
are
comprehensive
in
nature
and
include
the
acquisition
of
land
and
the
financing
of
the
partnership,
without
approval
of
a
majority
of
the
partners
holding
at
least
a
75
per
cent
interest
in
the
partnership;
provides
that:
"At
the
end
of
each
calendar
quarter
or
earlier
at
the
request
of
any
of
the
partners,
the
partners
shall
determine
reasonable
cash
requirements
of
the
partnership
to
service
its
debt
and
other
obligations”;
states
that:
"The
partners
agree
that
the
profits
and
losses
computed
in
accordance
with
generally
accepted
accounting
principles
applied
consistently
from
year
to
year
shall
be
shared
between
the
partners
in
accordance
with
their
respective
interests
in
the
partnership”;
specifies
the
priorities
in
which
“distributable
funds”
shall
be
distributed,
the
last
of
which
recites:
"Fourthly,
the
balance,
if
any,
of
the
distributable
funds
remaining
after
the
distributions
made
pursuant
to
the
foregoing
subparagraphs
of
this
paragraph
shall
be
distributed
to
the
partners
in
accordance
with
their
respective
partnership
interests”;
and
it
spells
out
the
manner
in
which
the
partnership
shall
be
“terminated
and
liquidated.”
Fifth
is
yet
another
prospectus
dated
January
25,
1978.
It
is
also
the
same
as
the
prospectuses
of
August
7,
1975,
and
August
11,
1976,
except
that
it
related
to
Phase
IV
of
the
Mount
View
Subdivision
and
involved
22
residential
lots.
Butchart
went
on
to
say
that
the
Consortium
never
went
beyond
the
development
and
sale
of
the
Mount
View
Subdivision;
that
the
terms
of
the
Agreement
were
adhered
to;
and
that
the
development
and
sale
of
the
subdivision
was
finalized
in
1981
after
five
developmental
stages
and
the
sale
of
7
acres
in
a
block.
He
added
that,
notwithstanding
the
language
of
the
Agreement,
it
was
always
intended
that
the
undertaking
regarding
Mount
View
be
a
joint
venture,
not
a
partnership
and
that
the
solicitor
who
prepared
the
agreement
was
so
instructed.
He
testified
that
the
latter
took
the
position
that
“it
did
not
make
any
difference”
and
that
it
would
be
easier
for
him
to
draw
an
agreement
as
a
partnership
agreement.
Butchart
and
the
other
members
of
the
management
committee
acquiesced
and
this,
of
course,
was
the
document
executed
by
or
on
behalf
of
all
members
of
the
Consortium.
When
asked
in
cross-examination
why,
when
the
Agreement
was
entered
into,
he
thought
there
was
a
practical
difference
whether
it
pertained
to
a
partnership
or
a
joint
venture,
Butchart
replied
that
at
that
time
he
did
not
believe
there
was
any
real
difference
and
furthermore
he
had
never
found
anyone
who
could
really
explain
the
difference.
Later
he
said
that
he
was
first
aware
of
the
significance
of
the
difference
after
the
respondent
reassessed.
The
appellant’s
income
tax
return
for
the
period
May
1,
1980
to
April
30,
1981,
was
signed
by
Butchart.
Included
in
the
return
is
a
balance
sheet
prepared
by
a
certified
general
accountant
which
reads
at
its
commencement:
“Sardis
Consortium
(A
Partnership)
Balance
Sheet
as
at
December
31,
1980,
and
1979.”
Butchart
attributed
the
words
“a
partnership”
in
parenthesis
to
the
existence
of
the
Agreement.
In
addition
there
is
a
document
bearing
the
heading:
“Sardis
Consortium.
Statement
of
Partners’
Capital,
December
31,
1980.”
Also
included
in
the
return
were
financial
statements
as
of
April
30,
1981,
pertaining
to
the
appellant
prepared
by
a
firm
of
chartered
accountants.
The
balance
sheet
refers
to
the
Sardis
Consortium
as
a
joint
venture
as
does
a
note
relating
thereto.
On
the
other
hand
a
Statement
of
Income
and
Retained
Earnings
refers
to
income
from
the
Sardis
Consortium
as
partnership
income.
The
final
item
of
evidence
adduced
is
that
on
December
1,
1976,
Tunbridge,
secretary
of
the
management
committee,
sent
a
“Notice
to
all
Partners
of
this
Joint
Venture.”
This
follows:
“There
will
be
a
general
meeting
of
the
partners
of
Sardis
Consortium
on
Monday
evening
December
6th,
1976.”
The
purpose
of
the
meeting
is
then
explained.
This
is
what
precipitates
the
partnership
versus
joint
venture
controversy
Section
125
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(“the
Act”)
as
enacted
by
Statutes
of
Canada,
1970-71-72,
c.
63,
s.
1,
provided
for
the
small
business
deduction.
It
prescribed
a
lower
than
the
normal
corporate
rate
of
tax
in
respect
of
income
within
specified
limits
from
an
active
business
carried
on
in
Canada
by
a
Canadian-controlled
private
corporation
as
defined
by
paragraph
125(6)(a).
Up
to
December
11,
1979,
a
corporation
of
the
kind
just
mentioned
was
regarded
as
entitled
to
engage
in
a
business
as
a
member
of
a
partnership
with
each
corporate
partner
qualifying
for
the
reduced
tax
rate
on
its
share
of
the
total
partnership
income
up
to
the
maximum
annual
limits
allowable
in
respect
of
the
business
if
the
corporate
partners
were
not
associated
within
the
meaning
attributed
to
"associated
corporation”
under
section
256.
One
business
could
therefore
provide
for
multiple
unshared
claims
to
the
allowable
small
business
deduction
by
the
corporate
partners,
whereas
if
the
same
business
had
been
carried
on
by
a
single
corporation
it
was
limited
to
one
such
benefit
in
a
taxation
year.
The
maximum
amount
of
business
income
regarding
which
the
small
business
deduction
could
be
claimed
in
a
taxation
year
as
of
December
11,
1979,
was
$150,000
and
the
rate
of
deduction
was
21
per
cent.
After
December
11
the
rate
and
the
maximum
amount
were
the
same
and
continued
to
be
during
the
period
relevant
to
this
appeal,
but
by
Statutes
of
Canada
1980-81-82-83,
c.
48,
s.
70,
section
125
was
amended,
applicable
to
fiscal
periods
of
partnerships
commencing
after
December
11,
1979,
to
provide
that
the
corporate
partners
could
no
longer
do
what
has
been
described
regarding
the
small
business
deduction.
The
amendments
limited
the
income
of
corporate
partners
in
a
partnership
that
qualified
for
the
small
business
deduction
to
that
expressed
by
the
formula:
corporate
partners
share
of
partnership
income
+
income
of
the
partnership
x
$150,000.
This
is
to
say
that
the
corporate
partners
were
required
to
share
the
benefit
of
one
annual
small
business
deduction
so
that
each
partner's
partnership
income
for
a
taxation
year
that
qualified
for
the
reduced
rate
was
confined
to
that
proportion
of
the
$150,000
that
its
partnership
income
bore
to
the
income
of
the
partnership.
The
amendments
also
prescribed
rules
applicable
where
a
corporation
is
a
member
of
a
"group
of
connected
partnerships,”
in
relation
to
income
therefrom
qualifying
for
the
lower
corporate
rate,
but
this
appeal
is
not
concerned
with
an
arrangement
of
that
kind.
If
the
appellant
is
correct
in
its
contention
that
the
undertaking
by
the
Consortium
regarding
the
Mount
View
Subdivision
was
not
carried
out
as
a
partnership
but
as
a
joint
venture,
the
consequence
is
that
it
is
not
subject
to
the
1981
amendments
referred
to
in
respect
of
the
taxation
year
under
review.
Partnership
and
joint
venture
have
often
been
treated
as
synonymous,
a
joint
venture
being
regarded
as
simply
a
partnership
established
to
fulfil
a
particular
business
undertaking
within
a
limited
time.
The
primary
source
of
the
development
of
joint
venture
as
a
modern
legal
concept
distinct
from
partnership
is
American.
It
is
not
defined
in
Strouds
Judicial
Dictionary,
4th
(1971)
edition;
Jowitt’s
Dictionary
of
English
Law,
2nd
(1977)
edition;
Words
and
Phrases
Legally
Defined,
2nd
(1960)
edition:
Words
and
Phrases
Judicially
Defined
1943
edition
or
in
Words
&
Phrases,
Legal
Maxims,
Canada
2nd
(1963)
edition.
On
the
other
hand
the
import
of
the
words
is
described
at
length
in
Words
and
Phrases,
permanent
(U.S.)
edition,
vol.
23
at
pages
227
et
seq.
in
conjunction
with
reference
to
numerous
judicial
authorities,
the
first
of
which
is
that:
"A
"joint
venture'
is
a
"joint
adventure’,
Myers
v.
Lilliard,
215
Ark.
355."
In
M.N.R.
v.
Taylor,
[1956]
C.T.C.
189;
56
D.T.C.
1125,
Thorson
P.
said
at
210
(D.T.C.
1137):
""The
very
word
"adventure'
implies
a
single
or
isolated
transaction.”
In
John
A.
Yogis's
Canadian
Law
Dictionary,
this
appears
at
page
116:
Joint
Venture
A
business
undertaking
by
two
or
more
parties
in
which
profits,
losses
and
control
are
shared.
Though
the
term
is
often
considered
synonymous
with
partnership,
a
joint
venture
may
connote
an
enterprise
of
a
more
limited
scope
and
duration,
though
there
is
the
same
sort
of
mutual
liability.
Subsection
1(1)
of
the
Partnership
Act
1890,
53
and
54
Vict,
c.
5
(U.K.)
provides:
Partnership
is
the
relation
which
subsists
between
persons
carrying
on
business
in
common
with
a
view
to
profit.
In
Lindley
on
Partnership
(1984)
15th
ed.
this
is
said
under
the
heading
“Rules
for
Ascertaining
the
Existence
of
a
Partnership”
at
page
72
et
seq.
It
underscores
that
the
determination
of
the
question
whether
the
relationship
between
or
among
persons
is
that
of
a
partnership
can
be
difficult.
The
legislature
having,
in
section
1
of
the
Partnership
Act
1890
provided
a
statutory
definition
of
partnership,
that
definition,
taken
in
connection
with
the
other
sections
of
the
Act,
must
be
the
ultimate
test
applicable
to
the
determination
of
the
question
whether
in
any
particular
case
a
partnership
does
or
does
not
exist.
Partnership
Act
1890,
section
2
Section
2
of
the
Act
contains
several
very
important
rules
on
this
subject
and
is
as
follows:
2.
In
determining
whether
a
partnership
does
or
does
not
exist,
regard
shall
be
had
to
the
following
rules:
(1)
Joint
tenancy,
tenancy
in
common,
joint
property,
common
property,
or
part
ownership
does
not
of
itself
create
a
partnership
as
to
anything
so
held
or
owned,
whether
the
tenants
or
owners
do
or
do
not
share
any
profits
made
by
the
use
thereof.
(2)
The
sharing
of
gross
returns
does
not
of
itself
create
a
partnership,
whether
the
persons
sharing
such
returns
have
or
have
not
a
joint
or
common
right
or
interest
in
any
property
from
which
or
from
the
use
of
which
the
returns
are
derived.
(3)
The
receipt
by
a
person
of
a
share
of
the
profits
of
a
business
is
prima
facie
evidence
that
he
is
a
partner
in
the
business
but
the
receipt
of
such
a
share,
or
of
a
payment
contingent
on
or
varying
with
the
profits
of
a
business,
does
not
of
itself
make
him
a
partner
in
the
business;
and
in
particular
—
(a)
The
receipt
by
a
person
of
a
debt
or
other
liquidated
amount
by
instalments
or
otherwise
out
of
the
accruing
profits
of
a
business
does
not
of
itself
make
him
a
partner
in
the
business
or
liable
as
such:
(b)
A
contract
for
the
remuneration
of
a
servant
or
agent
of
a
person
engaged
in
a
business
by
a
share
of
the
profits
of
the
business
does
not
of
itself
make
the
servant
or
agent
a
partner
in
the
business
or
liable
as
such:
(c)
A
person
being
the
widow
or
child
of
a
deceased
partner
and
receiving
by
way
of
annuity
a
portion
of
the
profits
made
in
the
business
in
which
the
deceased
person
was
a
partner,
is
not
by
reason
only
of
such
receipt
a
partner
in
the
business
or
liable
as
such:
(d)
The
advance
of
money
by
way
of
a
loan
to
a
person
engaged
or
about
to
engage
in
any
business
on
a
contract
with
that
person
that
the
lender
shall
receive
a
rate
of
interest
varying
with
the
profits,
or
shall
receive
a
share
of
the
profits
arising
from
carrying
on
the
business,
does
not
of
itself
make
the
lender
a
partner
with
the
person
or
persons
carrying
on
the
business
or
liable
as
such.
Provided
that
the
contract
is
in
writing,
and
signed
by
or
on
behalf
of
all
the
parties
thereto:
(e)
A
person
receiving
by
way
of
annuity
or
otherwise
a
portion
of
the
profits
of
a
business
in
consideration
of
the
sale
by
him
of
the
goodwill
of
the
business
is
not
by
reason
only
of
such
receipt
a
partner
in
the
business
or
liable
as
such.
All
facts
to
be
considered
These
rules
are,
with
the
exception
of
the
rule
that
the
receipt
by
a
person
of
a
share
of
the
profits
of
a
business
is
prima
facie
evidence
that
he
is
a
partner
therein,
expressed
in
a
negative
form
and
only
state
the
weight
which
is
to
be
attached
to
the
facts
mentioned
in
this
section,
when
such
facts
stand
alone.
These
facts,
when
taken
in
connection
with
the
other
facts
of
the
case,
may
be
of
the
greatest
importance,
but
when
there
are
other
facts
to
be
considered
this
section
will
not
be
of
much
assistance.
As
will
appear
more
clearly
hereafter,
the
main
rule
to
be
observed
in
determining
the
existence
of
a
partnership,
a
rule
which
has
been
recognised
ever
since
the
case
of
Cox
v.
Hickman
(1860),
8
H.L.C.
268,
is
that
regard
must
be
paid
to
the
true
contract
and
intention
of
the
parties
as
appearing
from
the
whole
facts
of
the
case.
Although
this
principle
is
not
expressed
in
the
Act
it
is
still
law.
Thus,
if
upon
a
consideration
of
all
the
surrounding
circumstances,
the
particular
contract
exhibits
all
the
indications
of
a
partnership
save
for
the
fact
that
the
parties
thereto
are
described
otherwise
than
as
partners,
e.g.
as
joint
venturers,
then
a
partnership
will
almost
inevitably
be
held
to
exist.
Non-partnership
situation
In
considering
whether
a
partnership
does
or
does
not
exist
in
any
given
situation,
there
should
be
no
automatic
assumption
that
the
participants
in
a
joint
venture
did
not
intend
each
to
carry
on
their
own
separate
business.
Such
a
situation
is
by
no
means
unknown,
e.g.
where
underwriters
assume
a
fractional
proportion
of
an
insurance
liability
under
the
terms
of
a
single
policy,
although
much
may
depend
upon
the
precise
terms
in
which
the
policy
is
framed.
Clearly
the
arrangements
between
the
individual
participants
would
have
to
be
scrutinised
with
care
before
their
precise
intentions
were
ascertained.
Words
not
conclusive
The
agreement
must,
however,
be
construed
as
a
whole
and
the
mere
fact
that
the
parties
described
themselves
as
partners
is
not
conclusive,
nor
does
the
use
of
the
word
“syndicate”
automatically
imply
the
existence
of
a
partnership.
On
the
other
hand,
there
may
be
cases
in
which
persons
agree
to
share
profits
and
losses
and
at
the
same
time
declare
that
they
are
not
to
be
partners.
The
question
then
arises,
what
do
they
really
mean?
If
they
have
in
fact
stipulated
for
all
the
rights
of
partners,
an
agreement
that
they
shall
not
be
partners
is
a
useless
protest
against
the
consequences
of
their
real
agreement.
But
a
clause
negativing
a
partnership
may
throw
light
on
other
clauses,
and
rebut
inferences,
which
might
be
drawn
from
them
alone.
It
is
clear,
therefore,
that
such
a
clause
may
well
be
useful
where
the
position
as
disclosed
by
the
other
clauses
in
the
agreement
is
not
clear
one
way
or
the
other.
In
Adam
v.
Newbigging
(1888),
13
App.
Cas.,
308
at
315,
Lord
Halsbury
stated
the
position
as
follows:
If
a
partnership
in
fact
exists,
a
community
of
interest
in
the
adventure
being
carried
on
in
fact,
no
concealment
of
name,
no
verbal
equivalent
for
the
ordinary
phrases
of
profit
or
loss,
no
indirect
expedient
for
enforcing
control
over
the
adventure
will
prevent
the
substance
and
reality
of
the
transaction
being
adjudged
to
be
a
partnership;
and
I
think
I
should
add,
as
applicable
to
this
case,
that
the
separation
of
different
stipulations
of
one
arrangement
into
different
deeds
will
not
alter
the
real
arrangement,
whatever
in
fact
that
arrangement
is
proved
to
be,
and
no
“phrasing
of
it”
by
dexterous
draftsmen,
to
quote
one
of
the
letters,
will
avail
to
avert
the
legal
consequences
of
the
contract.
In
Weiner
v.
Harris,
[1910]
1
K.B.
285
at
290,
Cozens-Hardy
M.R.
was
more
forceful:
Two
parties
enter
into
a
transaction
and
say
“It
is
hereby
declared
there
is
no
partnership
between
us.”
The
court
pays
no
regard
to
that.
The
court
looks
at
the
transaction
and
says
“‘Is
this,
in
point
of
law,
really
a
partnership?”
It
is
not
in
the
least
conclusive
that
the
parties
have
used
a
term
or
language
intended
to
indicate
that
the
transaction
is
not
that
which
in
law
it
is.
In
practical
life
such
questions
do
not
arise
in
any
abstract
form.
Some
definite
dispute
has
to
be
determined,
e.g.
liability
to
creditors
or
the
right
of
one
party
to
the
agreement
to
some
particular
thing
or
to
some
particular
relief
as
to
which
the
agreement
itself
is
the
true
guide.
If
the
agreement
is
not
in
writing
the
intention
of
the
parties
must
be
ascertained
from
their
words
and
conduct.
If
the
agreement
is
in
writing,
its
true
construction
must
be
determined;
but,
as
will
be
more
fully
shown
in
a
subsequent
chapter,
even
a
written
contract
may
be
departed
from
and
modified
by
a
new
verbal
agreement
between
all
the
partners
proved
by
conduct
inconsistent
with
the
written
document?"
In
Northern
Sales
(1963)
Ltd.
v.
M.N.R.,
[1973]
C.T.C.
239;
73
D.T.C.
5200,
Mr.
Justice
Collier
said
at
5204:
On
the
issue
as
to
whether
or
not
there
was
a
partnership
within
the
meaning
of
the
Income
Tax
Act,
I
am
of
the
opinion
there
was.
Partnership
is
not
defined
in
the
Income
Tax
Act,
but
the
general
principles
as
to
whether
or
not
a
partnership
exists
in
a
given
situation
have
been
laid
down
in
the
common
law
and
by
statute.
Most
of
the
partnership
Acts
of
the
provinces
have
been
modelled
on
the
English
Partnership
Act
of
1890.
It
is
pointed
out
in
Lindley
on
Partnership
(13th
Ed.
1971)
that
prior
to
the
Act
of
1890
the
law
of
partnership
was
the
result
of
judge-made
law
(page
3)
and
the
Act
of
1890
introduced
no
great
change
in
the
law,
with
one
exception,
which
is
not
relevant
to
this
case
(page
4).
Partnership
is
the
relation
which
subsists
between
persons
carrying
on
a
business
in
common
with
a
view
of
profit.
That
definition
is
in
most
of
the
provincial
partnership
Acts
and
merely
states
the
former
common
law.
The
legislation
applicable
to
this
appeal
is
the
Partnership
Act,
R.S.B.C.
1960,
c.
277.
Subsection
3(1)
and
paragraphs
4(a),
(b)
and
(c)
are
identical
to
subsection
1(1)
and
subsections
2(1),
(2)
and
(3)
of
the
Partnership
Act
1890.
There
is
a
thorough
analysis
of
Canadian
origin
of
the
differentiation
between
a
partnership
and
a
joint
venture
in
“The
Distinction
Between
Joint
Ventures
and
Partnerships”
by
James
G.
McKee,
Canadian
Current
Tax,
Vol.
1,
No.
17,
May
1985,
commencing
at
page
C89.
This
review
includes
reference
to
the
most
helpful
of
the
rather
sparse
Canadian
jurisprudence
which
has
to
date
sought
to
identify
the
distinguishing
characteristics
between
joint
venture
and
partnership.
This
is
said
at
pages
C92-C97:
In
Central
Mortgage
&
Housing
Corp.
v.
Graham,
(1973)
43
D.L.R.
686,
the
Central
Mortgage
and
Housing
Corp,
promoted
a
housing
subdivision
and
provided
the
mortgage
funds
to
the
co-defendant,
Bras
D’Or
Construction
Ltd.,
for
the
construction
of
the
houses
in
the
subdivision.
The
plaintiff,
Graham,
sought
to
establish
that
CMHC
and
Bras
D’Or
Construction
Ltd.
were
jointly
liable
for
damages
arising
from
defects
in
the
construction
in
the
house
Graham
purchased
in
the
subdivision.
The
court
found
that
such
a
joint
liability
existed
and
based
this
joint
liability
upon
the
finding
of
the
existence
of
a
joint
venture.
The
court
quoted
the
definitions
of
and
characteristics
of
a
joint
venture
from
several
authorities.
The
court
stated:
The
concept
of
joint
venture
has
been
clearly
recognized
by
the
American
courts.
In
fact
it
has
been
stated
that
it
is
the
product
of
American
jurisprudence.
As
the
concept
is
based
on
contract
it
can
hardly
be
described
as
foreign
to
the
common
law.
While
it
has
been
characterized
as
akin
to
partnership,
the
courts
have
distinguished
it
from
that
relationship.
In
finding
that
the
relationship
between
the
relevant
parties
constituted
a
joint
venture,
the
court
stated:
In
my
view,
there
was
a
contribution
by
both
parties
of
money,
property,
skill
and
knowledge
to
a
common
undertaking.
There
was
a
joint
property
interest
in
the
subject-matter
even
though
evidenced
only
in
the
mortgages.
The
parties
had
a
mutual
control
and
management
of
the
enterprises
during
the
construction
of
the
houses
and
in
the
sales.
The
arrangement
was
limited
to
this
project.
There
is
no
doubt
that
Bras
D’Or
intended
a
profit
from
the
project.
While
there
was
[not]
a
mutual
sharing
of
the
profits,
Central
Mortgage
clearly
had
a
financial
interest
at
stake
and
was
vitally
concerned
with
the
successful
completion
of
the
venture
.
.
.
Based
on
the
evidence,
the
arrangement
between
Central
Mortgage
and
Bras
D’Or
can
be
characterized
as
a
joint
venture.
To
the
extent
that
Bras
D’Or
in
carrying
on
the
venture
incurred
liabilities
then
both
parties
were
bound.
In
Nova
Scotia
Drydock
Ltd.
v.
Rijn-Schelde-Verolme
Machinfabrieken
En
Scheepswerven
n.v.,
(1982),
56
N.S.R.
(2d)
1,
the
plaintiff
had
perceived
the
need
for
a
ship
repair
facility
in
Halifax
and
had
induced
the
defendant,
a
Dutch
ship
repair
company,
to
assist
in
planning
and
promoting
the
project
with
a
view
to
joint
investment
in
it.
This
project
never
came
to
fruition
after
four
years
of
lobbying
and
promotion.
However
the
defendant
became
a
partner
in
another
project
which
was
developed
around
existing
shipbuilding
facilities.
The
plaintiff
sought
to
recover
expenses
it
had
incurred
with
respect
to
the
aborted
project.
The
court
found
that
the
plaintiff
was
entitled
to
recover
those
expenses
from
the
defendant.
The
basis
for
this
decision
was
that
a
joint
venture
existed
between
the
plaintiff
and
defendant
and
a
fiduciary
relationship
arose
out
of
this
relationship.
The
court
found
that
the
defendant
had
breached
this
fiduciary
relationship
and
had
been
unjustly
enriched
thereby.
The
court
appeared
to
adopt
and
apply
some
of
the
authorities
referred
to
in
the
court
in
the
Graham
case.
The
court
stated:
The
case
of
Central
Mortgage
&
Housing
Corp.
v.
Graham
et
al.,
43
D.L.R.
(3d)
686,
is
a
decision
of
Jones,
J.,
(as
he
then
was)
in
which
he
sets
forth
the
law
on
joint
venture.
At
p.
704,
referring
to
Vol.
1
of
Barrett
and
Seago,
Partners
and
Partnerships,
Law
and
Taxation
(1956),
at
p.
65,
he
quotes:
Joint
adventures
may
be
defined
as
an
association
of
two
or
more
individuals,
corporations
or
partnerships
or
some
combination
of
these,
for
the
purpose
of
carrying
on
a
business
venture.
.
.
.
Joint
adventures
are
quite
common
in
building
and
construction
work.
A
useful
and
practical
result
can
thus
be
obtained
in
that
the
task
might
well
prove
too
large
for
a
single
firm,
corporation
or
group
of
individuals.
Moreover,
a
combination
of
equipment
is
required
together
with
a
pooling
of
skilled
and
experienced
personnel
making
this
form
of
organization
an
attractive
one.
Speaking
in
broad
general
terms,
much
of
the
law
of
partnership
is
applicable
to
joint
venturers.
Another
definition
stresses
the
fact
that
the
joint
adventure
is
almost
invariably
concerned
with
a
single
undertaking
that
does
not
continuously
require
the
attention
of
every
participant.
Referring
to
Volume
2
of
Williston
on
Contracts
(3rd
ed.
1959),
at
pp.
544-545,
reference
is
made
to
the
type
of
projects
for
which
a
joint
venture
is
convenient,
namely,
large
scale
construction
projects,
such
as
power
dams,
canals
and
seaways.
I
find
that
a
major
ship
repair
facility
was
certainly
something
that
could
be
anticipated
to
be
put
together
by
two
companies
as
a
joint
venture.
Further,
at
pp.
563-565
of
Williston,
found
on
p.
706
Jones
J.,
quotes:
Besides
the
requirement
that
a
joint
venture
must
have
a
contractual
basis,
the
courts
have
laid
down
certain
additional
requisites
deemed
essential
for
the
existence
of
a
joint
venture.
Although
its
existence
depends
on
the
facts
and
circumstances
of
each
particular
case,
and
while
no
definite
rules
have
been
promulgated
which
will
apply
generally
to
all
situations,
the
decisions
are
in
substantial
agreement
that
the
following
factors
must
be
present:
(a)
A
contribution
by
the
parties
of
money,
property,
effort,
knowledge,
skill
and
other
asset
to
a
common
undertaking;
(b)
A
joint
property
interest
in
the
subject
matter
of
the
venture;
(c)
A
right
of
mutual
control
or
management
of
the
enterprise;
(d)
Expectation
of
profit,
or
the
presence
of
“adventure”,
as
it
is
sometimes
called;
(e)
A
right
to
participate
in
the
profits;
(f)
Most
usually,
limitation
of
the
objective
to
a
single
undertaking
or
ad
hoc
enterprise.
All
these
factors
exist
in
the
project
worked
on
by
the
parties
over
the
period
from
1974
to
1978.
It
was
a
joint
venture,
namely,
the
construction
of
a
major
ship
repair
facility.
The
case
of
Canadian
Pacific
Ltd.
v.
Telesat
Canada,
(1982),
133
D.L.R.
(3d)
321,
considered
a
complex
business
arrangement
which
was
found
to
fall
short
of
a
partnership.
Although
the
facts
involved
in
this
case
are
quite
complex,
they
warrant
a
description
in
some
detail
in
that
they
give
some
guidance
as
to
how
far
one
can
go
in
establishing
a
business
arrangement
which
has
many
of
the
indicia
of
a
partnership
without
constituting
a
partnership
in
the
strict
legal
sense
of
the
word.
Telesat
Canada
is
a
statutory
corporation
created
by
the
Telesat
Canada
Act
(the
"Telesat
Act").
The
Telesat
Act
expressly
gave
Telesat
Canada
the
powers
conferred
on
corporations
by
the
Canada
Corporations
Act
with
certain
specific
exceptions.
The
court
held
that
the
Telesat
Act
expressly
took
away
from
Telesat
Canada
the
power
given
in
the
Canada
Corporations
Act
to
enter
into
a
partnership
and
did
not
expressly
give
it
back
and
therefore
Telesat
Canada
was
not
empowered
to
enter
into
a
partnership.
The
main
issue
in
the
case
then
was
whether
an
agreement
entered
into
between
Telesat
Canada
and
the
nine
other
major
providers
of
telephone
services
in
Canada
and
the
surrounding
facts
established
a
partnership.
The
agreement
in
question
(the
“TCTS
Agreement”)
provided
that
for
the
purpose
of
the
TCTS
Agreement
and
its
performance
the
parties
thereto
would
be
collectively
known
as
“Trans-Canada
Telephone
System”
(“TCTS”).
The
TCTS
Agreement,
inter
alia,
added
Telesat
Canada,
which
owned
and
operated
a
satellite
telecommunications
system,
to
the
Trans-Canada
Telephone
System
which
had
existed
since
1931
pursuant
to
written
agreements
between
the
principal
telephone
companies
providing
tele-communication
services
in
the
provinces
of
Canada.
The
TCTS
Agreement
provided
for
a
Board
of
Management
(the
“Board’’)
consisting
of
one
representative
of
each
of
the
parties
to
the
TCTS
Agreement.
Any
matter
coming
before
the
Board
required
unanimous
approval
before
adoption.
The
Board
was
empowered,
inter
alia
to:
(a)
Appoint
a
President
of
TCTS
who
was
to
be
Chairman
of
the
Board.
(b)
Establish
the
terms
and
conditions
under
which
Trans-Canada
Services
would
be
offered
and
operated
and
to
establish
the
rates
to
be
applied
to
the
furnishing
of
such
services.
(c)
Determine
the
basis
of
settlements
and
the
apportionment
of
revenues
accruing
from
the
services
provided
by
TCTS.
(d)
Establish
an
administrative
staff
together
with
any
other
organizational
structure
required
for
the
transaction
of
the
business
of
TCTS
and
to
appoint
officers
and
personnel
deemed
necessary
for
this
purpose
and
prescribe
their
duties
and
fix
their
remuneration.
There
were
approximately
390
employees
on
the
TCTS
staff,
all
of
whom
(apart
from
the
President)
came
from
the
companies
who
were
members
of
TCTS.
The
salaries
of
TCTS
personnel
were
paid
by
the
supplying
company,
but
the
part
of
such
salaries
that
was
attributable
to
TCTS
business
was
included
in
the
company’s
expenses
which
were
used
in
determining
the
amount
of
TCTS
revenues
distributable
to
such
company.
Each
company
also
supplied
personnel
to
the
staff
headquarters
of
TCTS
and
their
salaries
were
apportioned
between
the
members
of
TCTS
as
expenses
assumed
by
all.
(e)
Authorize
and
approve
expenditures
on
behalf
of
the
parties
to
the
TCTS
Agreement
for
such
services
and
material
necessary
for
the
functioning
of
TCTS
(such
as
administrative
staff,
facility
rentals,
advertising,
auditors,
engineering
and
technical
services)
and
to
apportion
such
expenditures
to
the
parties
to
the
TCTS
agreement.
(f)
Authorize
the
president
and
other
officers
to
approve
monetary
transactions
(g)
Establish
a
clearing
house
to
carry
out
the
required
finançai
transactions.
The
TCTS
Agreement
provided
that
each
member
of
the
TCTS
was
to
collect
charges
payable
by
its
customers
for
services
provided
and
maintain
records
with
respect
to
activities
attributed
to
services
rendered
pursuant
to
the
terms
of
the
TCTS
Agreement.
Each
party
to
the
TCTS
Agreement
was
to
“declare”
its
relevant
revenues
(that
is,
from
TCTS
services)
and
operating
expenses
for
the
purposes
of
a
complex
revenue
settlement
plan.
Generally,
this
revenue
settlement
plan
was
an
attempt
to
provide
a
means
of
compensating
each
member
of
an
integrated
telecommunications
system
on
a
fair
basis
for
the
amount
of
work
and
equipment
they
provided
in
handling
a
totality
of
the
calls
in
light
of
the
fact
that
a
particular
call
may
not
be
able
to
be
traced
through
its
exact
route
through
the
system.
The
total
declared
revenue
was
then
applied
first
to
the
“assigned
expenses”
of
the
parties
to
the
TCTS
agreement.
These
“assigned
expenses”
are,
generally,
identifiable
costs
of
the
parties.
Any
surplus
of
the
declared
revenues
was
then
distributed
among
the
parties
to
the
TCTS
Agreement,
excluding
Telesat
Canada,
to
compensate
them
for
their
unidentifiable
costs
of
the
use
of
their
systems.
The
“assigned
expenses”
of
Telesat
Canada,
for
the
purposes
of
the
settlement
process,
included
a
minimum
after
tax
rate
of
return
on
that
portion
of
its
common
equity
reasonably
allocable
to
the
provision
of
services
by
TCTS
and
certain
other
specified
services.
If
there
was
insufficient
declared
revenue
to
satisfy
the
assigned
expenses
of
all
parties,
including
Telesat
Canada,
their
recoverable
assigned
expenses
were
scaled
down
proportionately.
In
the
event
that
Telesat
Canada’s
revenues,
less
its
operating
expenses,
for
the
purposes
of
the
settlement
process,
exceeded
its
minimum
rate
of
return
on
common
equity,
the
excess
would
be
shared
as
to
50%
by
Telesat
Canada
and
as
to
50%
by
the
other
parties
to
the
TCTS
Agreement.
Telesat
Canada’s
revenues
were
generated
through
charges
to
users
of
their
system.
The
court
quoted
a
Mr.
Thompson’s
description
of
such
charges:
.
.
.
our
bill
is
inflexible,
our
bill
is
directly
the
result
of
our
tariffs,
so
that
we
bill
our
revenues
to
TCTS
for
their
use
just
as
we
bill
any
other
user,
CP
or
whomever,
under
the
tariffs.
Pursuant
to
the
TCTS
Agreement,
Telesat
Canada
retained
rights
separately
from
the
agreement
to
carry
on
experimental
and
consulting
services,
other
specialized
space
activities
not
related
to
TCTS
services
and
services
contracted
by
Telesat
Canada
to
customers
prior
to
January
1,
1977.
The
revenues
from
these
services
were
excluded
from
the
revenues
of
Telesat
Canada
for
the
purposes
of
the
settlement
process.
The
plants
of
each
party
to
the
TCTS
Agreement
remained
the
property
of
such
party
and
each
party
paid
all
taxes
and
assessments
with
respect
to
their
own
facilities.
However,
the
TCTS
Agreement
provided
that,
subject
to
Telesat
Canada’s
separate
rights,
the
overall
systems
design
and
capital
costs
of
satellites
were
subject
to
the
approval
of
all
TCTS
members,
that
earth
stations
of
Telesat
Canada
were
to
be
located
at
sites
designated
by
the
other
members
of
TCTS
and
acceptable
to
Telesat
and
that
Telesat
could
not
build,
own
or
operate
any
terrestrial
transmission
facilities
in
any
of
the
other
TCTS
members’
operating
territories.
The
TCTS
Agreement
was
to
remain
in
force
from
year
to
year
until
cancelled
by
written
notice
to
be
given
by
any
party
to
all
the
other
parties.
The
trial
judge
stated
:
In
this
case,
the
agreement
contains
provisions
normally
found
in
partnership
agreements,
including
among
others,
the
purpose
of
the
undertaking,
the
nature
of
the
business,
the
name
of
the
business,
the
date
of
commencement,
dissolution
provisions,
administration
of
the
business,
contributions
to
capital,
expenses
and
distributions
of
profits,
and
participation
of
the
parties
in
the
undertaking.
I
therefore
find
that
TCTS
is,
in
fact,
a
partnership.
The
Court
of
Appeal
disagreed
with
the
trial
judge.
The
court
stated:
It
is
obvious
that
Parliament
in
granting
extensive
powers
to
the
respondent
contemplated
that
there
could
be
arrangements
for
the
sharing
of
profits,
union
of
interests,
co-operation,
joint
adventure
and
reciprocal
concession
under
para.
16(1)(b.1)
of
the
Canada
Corporations
Act
short
of
partnership.
The
respondent
was
free
to
resort
to
any
of
these
other
types
of
arrangements
for
the
purpose
of
carrying
out
its
objects
which
include
the
establishment
of
satellite
telecommunication
systems
providing
on
a
commercial
basis
telecommunication
services
between
locations
in
Canada
(emphasis
added
in
original
text).
.
.
.
aS
already
noted,
in
the
preamble
to
the
connecting
agreement
the
parties
expressed
their
desire
to
connect
their
respective
systems
and
jointly
furnish
telecommunications
service.
For
the
purpose
of
co-ordinating
their
practices
and
facilitating
operations
a
board
of
management
was
set
up
consisting
of
one
representative
from
each
of
the
parties.
As
noted
by
the
trial
Judge,
any
matter
coming
before
this
board
had
to
have
the
unanimous
agreement
before
adoption.
In
other
words,
each
party,
including
the
respondent,
had
the
power
of
veto.
The
trial
Judge
minimizes
this
power
in
the
respondent
but,
in
my
view,
it
is
one
of
the
factors
which
supports
the
conclusion
that
this
agreement
does
not
create
a
partnership
and
does
not
constitute
an
abandonment
of
ultimate
control
by
the
respondent
to
the
consortium.
.
.
.
it
can
be
seen
that
under
the
contract
arrangements
as
described
by
Mr.
Thompson
where
the
respondent’s
bill
is
inflexible,
the
respondent
billed
TCTS
just
as
it
bills
any
other
user.
Such
arrangements
seem
to
be
a
far
cry
from
the
sharing
of
profits
in
the
ordinary
sense,
as
partners.
It
was
argued
that
the
provisions
of
the
agreement
.
.
.
established
that
the
respondent
and
the
telephone
companies
were
sharing
profits
and
losses
in
the
business
they
were
operating
together
and
this
created
a
partnership.
.
.
.
From
the
evidence,
it
appears
that
the
satellite
system
owned
by
the
respondent
was
designed
and
operated
by
the
respondent’s
engineers
and
maintenance
people.
Control
over
these
men
was
not
delegated
to
TCTS.
On
a
review
of
the
evidence,
documentary
and
oral,
I
am
not
persuaded
that
there
was
a
delegation
of
ultimate
authority
as
strenuously
argued
by
counsel
for
the
appellant,
nor
was
there
an
abandonment
of
final
control
over
its
operation
by
the
respondent
to
the
group
so
as
to
establish
the
relationship
among
them
clearly
to
be
one
of
partnership.
.
.
.
Each
party
to
the
agreement
owned
and
continues
to
own
and
operate
its
plant
and
equipment
for
its
own
profit.
The
agreement
does
not
create
a
business,
the
profits
from
which
are
shared
by
the
parties.
Rather
it
provides
for
the
inter-provincial
connection
of
the
parties’
individual
telecommunications
signals,
with
a
complicated
method
of
revenue
settlement,
whereby
certain
revenues
received
from
the
operation
of
the
system
are
attributed
to
each.
There
is
no
community
of
capital
and
there
is
a
well-defined
separation
of
interests
and
ownership.
There
is
no
partnership
business
as
such.
There
is
further
the
requirement
of
unanimity
for
every
decision
taken
that
affects
the
group.
It
is
not
until
the
revenues
received
under
the
agreement
are
consolidated
with
the
company’s
intra-provincial
revenues
that
any
determination
of
net
profit
to
that
company
can
be
made.
Such
determination
is
individual
and
excludes
the
respondent.
Further,
s.
19(e)
of
the
memorandum
of
agreement
provides
only
for
a
downward
scaling
of
assigned
expenses
of
the
members.
In
the
case
of
the
respondent,
assigned
expenses
by
definition
includes
a
return
on
equity
which
in
turn
contemplates
that
while
this
return
may
be
reduced
it
cannot
be
eliminated.
If
the
scale
down
is
great
enough
so
that
the
party’s
assigned
expenses
are
not
recovered
in
total,
any
deficiency
is
its
loss
and
is
borne
by
it
and
it
does
not
share
in
the
losses
borne
by
the
other
members.
This
method
of
providing
for
losses
is
not
the
hallmark
of
a
partnership
as
found
by
the
trial
Judge
and
rather
than
helping
to
persuade
one
that
the
unusual
arrangements
between
the
parties
was
a
partnership,
it
supports
the
contrary
conclusion
that
the
arrangement
was
within
the
wide
powers
given
to
the
respondent.
.
.
.
As
was
the
trial
Judge,
I
am
of
the
view
that
the
relationship
is
much
more
complicated
than
a
simple
debtor-creditor
relationship
and
falls,
as
I
have
said,
in
some
of
its
aspects
within
several
of
the
enumerated
powers
given
to
the
respondent
although
falling
far
short
of
a
full
partnership
in
a
business
for
a
profit.
It
is
really
not
material
to
the
case
whether
the
parties
shared
profits
as
the
respondent
was
entitled
to
enter
into
arrangements
to
do
so
under
its
governing
statute.
However,
on
the
evidence,
I
am
inclined
to
the
view
that
the
formula
did
not
provide
for
the
“sharing
of
profits”
from
a
business
in
the
conventional
partnership
sense
but
rather
each
party
was
receiving,
as
equitably
as
could
be
calculated
on
the
basis
of
experience,
the
return
on
its
investment
for
its
particular
part
in
the
transmission
of
telecommunications.
The
author
sums
up
at
pages
C98-C99:
In
summary,
it
is
suggested
that
to
establish
that
a
joint
venture
exists
which
is
not
a
partnership
the
agreement
providing
for
the
joint
venture
should
provide
for
a
well-defined
separation
of
the
interests
in
and
ownership
of
the
property
subject
to
the
joint
venture
among
the
joint
venturers.
The
agreement
should
not
fetter,
to
the
extent
practically
possible,
the
ability
of
a
joint
venturer
to
dispose
of
his
own
property
(although
such
disposition
may
be
subject
to
a
right
of
first
refusal
vested
in
the
other
joint
venturers).
If
the
agreement
vests
powers
in
a
management
committee,
the
decisions
of
such
a
committee
affecting
the
joint
venturers’
control
of
their
own
property
should
be
subject
to
a
unanimous
vote
of
the
members
of
the
committee
which
should
include
a
representative
of
each
joint
venturer.
The
agreement
should
not
provide
for
a
calculation
of
profit
or
loss
at
the
partnership
level
and
a
distribution
of
such
profit
or
loss
to
the
parties,
but
should
provide
for
the
allocation
of
gross
revenues
and
expenses
to
each
of
the
joint
venturers.
The
joint
venture
agreement
should
state
that
the
parties
thereto
do
not
intend
to
form
a
partnership.
There
appear
to
be
three
distinctive
requirements
for
the
finding
of
a
joint
venture
which
are
not
also
necessary
requirements
for
the
finding
of
a
partnership:
(1)
a
joint
property
interest
in
the
subject
matter
of
the
venture;
(2)
a
right
of
mutual
control
and
management
of
the
enterprise;
and
(3)
most
usually,
a
limitation
of
the
objective
to
a
single
undertaking
or
a
limited
number
of
undertakings
(it
is
recognized
that
the
question
of
what
constitutes
a
single
undertaking
will
be
susceptible
to
widely
differing
interpretations).
Although
it
is
suggested
that
those
three
requirements
are
distinct
requirements
necessary
for
the
establishment
of
a
joint
venture
which
need
not
be
necessary
for
the
finding
of
a
partnership,
these
elements
may
still
exist
in
a
partnership.
I
do
not
regard
the
mortgage
dated
June
20,
1975,
as
doing
anything
more
than
establishing
that
the
corporations
and
the
individual
described
as
"the
mortgagor”
each
had
an
interest
in
the
property
described
therein
in
the
proportions
indicated.
This
is
just
as
consistent
with
partnership
as
with
joint
venture.
The
equivocal
use
of
"partnership”
and
"joint
venture”
in
the
financial
statements
included
in
the
appellant’s
1981
tax
return
are
not
of
any
assistance
in
this
matter.
They
are
comments
by
persons
who
were
not
members
of
the
Consortium
and
they
cancel
each
other.
As
I
see
it,
the
answer
to
this
question
determines
the
issue
in
this
appeal:
Do
the
three
prospectuses
combined
with
Butchart’s
oral
testimony
overcome
the
very
cogent
evidence
of
partnership
flowing
from
the
Agreement?
In
my
view
the
answer
must
be
no.
Even
assuming
that
the
two
prospectuses
dated
prior
to
the
Agreement
were
accepted
as
evidence
of
the
existence
of
a
joint
venture
at
that
time,
this
would
be
set
aside
by
the
Agreement
made
subsequently.
Butchart's
testimony
is
ineffectual.
It
is
in
substance
that
he
instructed
the
solicitor
who
prepared
the
Agreement
that
it
was
to
reflect
the
existence
of
a
joint
venture.
The
solicitor
insisted
on
a
partnership
agreement
and
Butchart
and
the
other
two
members
of
the
management
committee
went
along
when
told
it
would
not
make
any
difference.
The
value
of
this
testimony
is
very
questionable
especially
when
it
is
considered
along
with
Butchart’s
evidence
that
he
did
not
appreciate
the
significance
of
the
difference
between
joint
venture
and
partnership
until
the
respondent
reassessed.
Although
the
matter
in
respect
of
which
the
solicitor
stated
that:
"It
did
not
make
any
difference"
was
not
identified
by
Butchart,
if
it
related
to
what
is
in
issue
in
this
appeal
the
advice
was
correct
when
given
in
November
or
December
of
1976,
which
was
a
considerable
time
before
the
1981
amendments.
I
also
observe
that
no
evidence
was
led
to
show
that
the
members
of
the
Consortium,
other
than
the
appellant,
believed
their
relationship
was
not
intended
to
be
a
partnership.
In
the
face
of
the
Agreement
the
wording
of
the
prospectus
issued
after
it
is
of
insignificant,
if
any,
weight.
The
notice
sent
by
Tunbridge
of
the
meeting
to
be
held
on
December
6,
1976,
is
also
insignificant.
It
is
unclear.
If
it
points
to
anything,
it
is
to
partnership.
In
short
the
appellant
has,
on
the
whole
of
the
evidence
adduced,
failed
to
establish
joint
venture
rather
than
partnership
and
I
note
in
particular
with
reference
to
the
alleged
joint
venture:
1.
While
the
Consortium
did
in
fact
limit
itself
to
the
development
of
the
Mount
View
Subdivision,
this
was
not
fixed
under
the
Agreement.
The
Consortium
was
at
liberty
to
pursue
other
commercial
undertakings
with
the
written
agreement
of
a
majority
of
the
partners
holding
an
interest
of
not
less
than
75
per
cent
in
the
partnership.
2.
The
members
of
the
Consortium
did
not
have
an
unfettered
right
to
dispose
of
their
interest
in
the
Mount
View
Subdivision.
If
a
member
wished
to
do
so
the
other
members
had
a
right
of
first
refusal
and
while
this
would
not
of
itself
militate
against
the
notion
of
joint
venture,
it
was
coupled
with
these
additional
conditions.
If
the
other
members
did
not
exercise
their
right
of
first
refusal
or
did
so
only
in
part,
the
member
seeking
disposition
was
required
within
a
limited
time
to
sell
his
interest
or
the
remainder
thereof
to
a
"responsible
person"
who
was
"consented
to
in
writing
by
a
majority
of
the
other
partners."
The
sale
price
could
not
be
less
or
the
terms
more
favourable
than
those
offered
to
the
other
members
of
the
Consortium.
The
consent
referred
to
was
not
to
be
unreasonably
withheld.
3.
All
"major
decisions,"
the
nature
of
which
are
described
in
the
Agreement
and
were
of
considerable
scope,
required
approval
in
writing
of
75
per
cent
of
the
partnership.
This
included
major
decisions
made
by
the
management
committee.
There
was
no
right
of
mutual
control
and
management
of
the
enterprise
by
the
members
of
the
Consortium.
4.
There
is
nothing
in
the
wording
of
the
Agreement
manifesting
the
intention
that
it
pertained
to
some
entity
other
than
a
partnership.
On
the
contrary,
the
whole
tenor
of
the
language
employed
points
directly
to
partnership.
In
its
return
of
income
for
its
1981
taxation
year
the
appellant
reported
receiving
$40,811
as
its
share
(15
per
cent)
of
Consortium
income
of
$272,073.
It
claimed
the
small
business
deduction
in
respect
of
the
$40,811.
In
reassessing
the
respondent
applied
the
previously
mentioned
formula
and
reduced
the
$40,811
accordingly,
i.e.
x
150,000
22,500
272,073
I
find
no
error
in
this
reassessment.
The
appeal
is
dismissed.
Appeal
dismissed.
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