Bonner,
TCJ
[ORALLY]:—The
appellant
appeals
from
assessments
of
income
tax
for
the
1977,
1979
and
1980
taxation
years.
The
assessments
were
made
on
the
basis
that
subsection
15(2)
of
the
Income
Tax
Act
required
the
inclusion
in
the
appellant’s
income
of
certain
loans
received
by
him
from
Stirzaker
Realty
Ltd
(hereinafter
referred
to
as
“the
company’’).
On
appeal
one
issue
only
was
raised,
namely,
whether
subparagraph
15(2)(a)(i)
of
the
Act
had
application.
Thus,
there
are
two
questions
to
be
decided:
(a)
was
the
lending
of
money
part
of
the
ordinary
business
of
the
company,
and
(b)
were
the
loans
made
in
the
ordinary
course
of
the
business
of
the
company.
On
the
evidence
it
is
clear
that
the
first
question
must
be
answered
in
the
affirmative.
Harry
Stirzaker,
president
and
principal
shareholder
of
the
company,
testified
that
the
company
carried
on
the
business
of
a
real
estate
agent,
among
other
activities.
To
facilitate
sales
it
loaned
money
on
the
security
of
mortgages.
He
said
too
that
it
advertised
for
and
occasionally
purchased
mortgages.*
The
money-lending
transactions
of
the
company
were
relatively
substantial
in
number,
at
least
prior
to
1976
when
the
company
sold
the
real
estate
arm
of
its
business.
It
does
not
appear
that
the
transactions
involved
the
investment
of
surplus
capital.
Mr
Stirzaker
mentioned
that
the
company
borrowed
from
the
Royal
Bank
the
money
which
it
loaned
out
on
mortgages.
The
company
does
not
appear
to
have
had
any
elaborate
collection
facilities.
The
mortgagors
made
their
payments
to
the
company’s
bank.
In
summary,
having
regard
to
the
number
of
transactions,
the
holding
out
of
willingness
to
lend,
the
use
of
borrowed
money
and
the
system,
albeit
simple,
for
the
collection
of
payments,
I
have
concluded
that
the
company
loaned
money
as
part
of
its
ordinary
business.
I
turn
now
to
the
second
question.
The
onus
was
on
the
appellant
to
establish
on
the
balance
of
probabilities
that
the
assumption
of
fact
pleaded
in
paragraph
7(d)
of
the
reply
to
the
notice
of
appeal
was
incorrect.
The
evidence
did
not
show
that
the
decision
by
the
company
to
make
the
loans
now
in
question
was
based
on
the
application
of
the
same
standards
and
considerations
as
were
applied
in
the
case
of
applications
for
loans
made
by
persons
who
dealt
with
Mr
Stirzaker
at
arm’s
length.
The
evidence
was,
in
fact,
almost
silent
on
that
point.
It
was
equally
silent
on
the
question
whether
rates
of
interest
and
repayment
terms
on
loans
to
the
appellant
were
the
company’s
ordinary
rates
and
terms
or
not.
It
is
not
sufficient
to
show
that
the
company
took
mortgages
from
the
appellant
as
it
had
in
other
cases.
Some
further
evidence
is
necessary
to
establish
the
ordinary
course.
I
therefore
cannot
find
that
the
subparagraph
15(2)(a)(i)
exception
applies.
The
appeals
will
therefore
be
dismissed.
Appeals
dismissed.
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