D
E
Taylor:—These
appeals,
heard
in
Ottawa,
Ontario,
on
May
31,
June
1
and
2,
1983,
are
against
income
tax
assessments
for
the
years
1973,
1974,
1975
and
1976.
There
are
two
parcels
of
real
estate
involved,
one
a
farm
property
(in
the
“Barrhaven”
area
near
Ottawa),
out
of
which
arises
the
issue
for
1973;
and
the
other
property
on
Merivale
Road,
also
near
Ottawa,
on
which
the
appellant
resided
and
conducted
business.
The
general
format
of
the
appellant’s
situation
may
be
extracted
from
the
notices
of
appeal:
(For
the
1973
taxation
year)
At
all
relevant
times
the
Appellant
farmed
and
resided
in
Nepean,
Ontario.
Prior
to
1973,
the
Appellant
owned
certain
farm
property
in,
inter
alia,
the
southern
part
of
Nepean,
known
as
Barrhaven;
this
property
consisted
of
approximately
101
acres
legally
described
as
the
South
half
of
Lot
19,
concession
3,
Rideau
Front,
Township
of
Nepean.
For
purposes
of
this
appeal
the
property
was
made
up
of
two
parcels,
one
parcel
being
the
easterly
portion
(hereinafter
sometimes
referred
to
as
“Easterly
land”),
consisting
of
50.51
acres,
and
another
parcel
being
the
westerly
portion
(hereinafter
sometimes
referred
to
as
“Westerly
land”),
consisting
of
51.083
acres.
By
Agreement
dated
February
7,
1972,
the
Appellant
granted
an
option
to
Sheldon
Wiseman
in
trust
to
purchase
the
Easterly
land;
the
transaction
was
closed
on
January
5,
1973
for
$195,000.00.
Pursuant
to
Agreements
dated
August
16,
1973
and
October
4,
1973,
the
Appellant
sold
the
westerly
land
on
November
30,
1973
for
$453,528.00.
In
filing
his
income
tax
return
for
1973,
the
Appellant
reported
his
income
on
the
basis
that
the
value
as
of
December
31,
1971,
being
Valuation
Day,
of
the
properties
sold
by
him
in
1973
was
as
follows:
Easterly
land
$202,040,
or
$4,000
per
acre
Westerly
land
=
$428,332,
or
$8,385
per
acre.
By
Notice
of
Reassessment
dated
November
1,1976,
the
Respondent
reassessed
the
Appellant
on
the
basis
that
the
values
as
at
December
31,
1971
of
both
the
Easterly
lands
and
Westerly
lands
were
$406,00.00.
By
Notice
of
Reassessment
dated
May
29,
1981,
the
Respondent
revised
the
Valuation
Day
value
of
the
Barrhaven
properties
to
$397,000.00.
(For
the
1974,
1975
and
1976
taxation
years)
At
all
relevant
times
the
Appellant
and
his
family
resided
on
property
bearing
civic
number
1476
Merivale
Road
in
Nepean.
In
1974,
the
Appellant
and
his
wife,
the
owners
of
the
property,
sold
the
property
to
Jarlaw
Investments
Ltd
for
$810,000.00.
When
the
Appellant
and
his
wife
purchased
the
property
in
about
1949
(it
consisted
of
27
acres),
the
area
where
the
property
is
located
was
essentially
rural
without
the
urban
services.
Save
and
except
for
the
part
of
the
property
having
frontage
on
Merivale
Road
in
Nepean,
the
property
was
used
by
the
Appellant
.
.
.
for
a
housing
unit,
a
play
area
for
his
children
and
as
a
garden
for
his
wife
and
himself,
and
as
a
right
of
way.
The
Respondent
has
acknowledged
the
right
of
way
to
be
part
of
the
principal
residence.
The
Appellant
carried
on
the
business
of
selling
gasoline
and
related
products
in
the
area
(having
frontage
on
Merivale
Road).
The
Appellant
continued
to
operate
the
gasoline
business
on
the
said
property
until
1976.
In
1976
the
Appellant
sold
the
gasoline
business
for
$50,000.00.
In
filing
his
income
tax
return
for
1976,
he
reported
the
$50,000.00
on
account
of
goodwill.
It
was
contended
by
the
appellant
that:
(Re
“Barrhaven”)
At
all
relevant
times,
including
December
31,
1971,
the
Westerly
portion
of
the
land
sold
in
1973
had
a
greater
value
than
the
Easterly
portion.
Prior
to
Valuation
Day,
it
was
common
knowledge
that
the
lands
would
be
within
a
designated
major
growth
area.
Prior
to
1972
developers
and
knowledgeable
people
in
the
edevelopment
field
had
commenced
assembling
lands
in
the
area,
and
as
a
result
of
this
activity
prices
for
land
in
Barrhaven
increased
substantially.
In
making
the
reassessment,
Revenue
Canada
erred
in
placing
too
low
a
value
on
the
lands
as
at
Valuation
Day.
The
fair
market
value
on
Valuation
Day
of
the
Easterly
portion
was
not
less
than
$3,900.00
per
acre
(being
$196,989.00),
and
of
the
Westerly
portion,
not
less
than
$5,700.00
per
acre
(being
$291,173.00),
for
an
aggregate
value
at
Valuation
Day
of
not
less
than
$488,000.00.
(Re
“Merivale)
The
Appellant
submits
that
.
.
.
when
he
and
his
wife
purchased
the
property
bearing
civic
number
1480
Merivale
Road
in
1949,
all
the
area
of
the
property
was
acquired
for
use
and
enjoyment
by
them
and
their
family
for
a
residence,
—
at
the
time
of
acquisition
of
the
said
property,
the
area
where
the
property
was
located
was
rural,
and
residential
properties
in
that
area
exceeded
one
acre,
—
the
area
(remaining
in
1974)
was
necessary
to
the
use
and
enjoyment
of
the
Appellant
and
his
family
as
his
principal
residence.
In
respect
of
1975,
no
amount
of
reserve
ought
to
be
added
to
the
Appellant’s
income
in
respect
of
a
sale
of
property
in
1974
since
he
incurred
no
gain
on
sale
of
property
in
1974.
In
1976,
the
Appellant
sold
his
gasoline
business
for
$50,000.00,
and
subject
to
subsection
21(1)
of
the
Income
Tax
Application
Rules,
1971,
the
sum
of
$50,000.00
ought
to
be
included
in
computing
the
Appellant’s
income
from
a
business
in
accordance
with
section
14
of
the
Income
Tax
Act.
In
reply,
the
Minister
took
the
position
that:
(For
“Barrhaven”)
the
fair
market
value
of
the
101.5
acres
of
farmland
to
the
Appellant
as
at
December
31,
1971,
V-Day,
was
not
greater
than
$3,907.86
per
acre
or
$397,00
.
.
.
and
relied,
inter
alia,
upon
subsection
40(1)
of
the
Income
Tax
Act,
SC
1970-
71-72,
c
63
as
amended
and
subsection
26(3)
of
the
Income
Tax
Application
rules,
1971.
(For
“Merivale”)
the
Appellant
.
..
and
his
wife
owned
property
having
an
area
of
approximately
112,075
square
feet
which
was
known
for
municipal
purposes
as
1476
Merivale
Road;
—
62,438
square
feet
of
the
.
.
.
property
comprised
the
principal
residence
of
the
Appellant
and
his
wife.
—
in
1976
the
Appellant
disposed
of
an
option
to
lease
the
gas
bar
situated
on
the
(Merivale)
parcel
of
land
for
a
consideration
of
$50,000.00.
and
relied,
inter
alia,
upon
sections
3,
40(1),
40(2)(b)
and
54(g)
of
the
Income
Tax
Act,
SC
1970-71-72,
c
63
as
amended
and
sections
24
and
26
of
the
Income
Tax
Application
Rules,
1971.
Dealing
first
with
the
question
of
the
$50,000
described
by
the
appellant
as
goodwill,
the
agreement
(Exhibit
A-11-1)
by
virtue
of
which
the
appellant
received
this
$50,000
at
issue
was
filed
with
the
Board.
It
is
not
as
clear
as
it
might
be
in
certain
respects,
particularly
the
final
phrase
of
the
last
sentence
in
clause
“H”
therein,
which
reads:
(H)
At
the
end
of
the
period
of
occupation
of
Area
2
by
the
vendors,
the
purchaser
agrees
to
offer
to
Donald
Fraser
a
lease
for
the
(or
D
H
Fraser)
continuation
of
the
gas
bar
operation
presently
being
carried
on
at
Area
2.
The
offer
to
lease
shall
be
for
a
ten
(10)
year
term
on
the
purchaser’s
standard
form
of
lease
at
a
rate
similar
to
the
rate
charged
by
the
purchaser
to
other
commercial
tenants
in
that
area
and
shall
contain
a
clause
to
the
effect
that
the
purchaser
wil
not
allow
or
permit
any
other
gas
bar
or
gas
business
competitive
to
the
tenant’s
business
to
be
operated
on
Merivale
Road
frontage
owned
or
controlled
by
it.
The
lease
shall
contain
a
clause
permitting
the
purchaser
at
any
time
during
the
currency
of
the
lease
to
designate
any
other
area
fronting
on
Merivale
Road
from
which
the
gas
bar
business
is
to
be
operated
by
the
tenant
and
the
tenant
agrees
to
relocate
at
the
new
area
providing
that
there
is
to
be
continuity
in
the
operation
of
the
said
business
upon
relocation.
It
is
understood
and
agreed
that
it
shall
be
the
responsibility
of
the
purchaser
to
erect
the
required
new
structure
in
a
style
and
design
of
its
choice
at
its
own
cost
and
expense
with
the
tenant
supplying
any
special
equipment
required
for
the
operation
of
the
business.
In
the
event
of
any
such
relocation,
the
revised
rent
payable
by
the
tenants
will
be
at
a
comparable
rate
to
that
charged
by
the
purchaser
to
its
other
commercial
leaseholders
in
the
area.
In
the
event
that
Donald
J
Fraser
and/or
Donald
Hugh
Fraser
do
not
wish
to
accept
the
lease
as
herein
outlined,
then
the
purchaser
agrees
that
it
will
pay
Donald
Fraser
or
Donald
Hugh
Fraser
an
additional
amount
of
$50,000.00,
the
said
payment
to
be
made
within
thirty
(30)
days
of
non-acceptance
of
lease
by
Fraser.
The
said
principal
sum
of
$50,000.00
shall
be
added
to
the
principal
amount
of
the
mortgage
and
secured
thereby
and
upon
Fraser’s
non-acceptance
of
the
lease
or,
alternatively,
acceptance
of
the
said
lease
a
credit
shall
be
given
under
the
mortgage
for
the
said
sum
of
$50,000.00
and
no
interest
is
to
be
charged
on
the
said
sum
of
money.
(Italics
mine)
In
addition,
clause
“J”
of
the
same
agreement
reads:
(J)
Area
1
is
to
include
the
residence
and
right-of-way
and
approximately
18,338
square
feet
garden
area
as
shown
on
sketch
attached
hereto.
Area
2
includes
the
business
buildings
fronting
on
Merivale
Road
and
gas
bar.
It
was
the
contention
of
counsel
for
the
respondent
that
clause
“J”
above
referred
only
to
clause
“H”
above.
In
my
view,
however,
clause
“J”
refers
to
the
main
body
of
the
agreement
(not
quoted
above),
and
in
particular
to
the
sentence:
It
is
understood
and
agreed
that
the
purchase
price,
of
this
transaction
is
based
on
a
price
of
$6.20
per
sq
ft
for
land
in
area
No
2
and
the
balance
of
the
purchase
price
is
based
on
an
approximate
price
of
$7.60
per
sq
ft
which
includes
lands
in
area
No
1.
As
I
see
it,
therefore
the
$810,000
was
for
all
the
physical
assets
involved
—
land
and
buildings
(including
the
gas
pumps).
In
layman’s
terms
(to
what-
ever
degree
it
is
possible
to
make
such
an
affiliation
with
Exhibit
A-11-1),
the
proposition
regarding
the
gas
bar
was
that
Mr
Fraser
could
operate
it
rent
free
for
two
years,
and
thereafter
for
a
further
10
years
at
a
rental
rate
—
which
might
be
described
as
a
two-year
lease
with
a
ten-year
renewal
clause.
If
the
$50,000
at
issue
refers
to
the
disposal
of
any
asset,
it
certainly
was
an
intangible
asset.
The
Minister’s
basic
position
was
that
it
was
a
“taxable
capital
gain
with
respect
to
the
disposition
by
the
appellant
of
an
option
to
lease
back
the
gas
bar
.
.
The
converse
was
the
proposition
of
the
appellant:
In
1976,
the
Appellant
sold
his
gasoline
business
for
$50,000.00,
and
subject
to
subsection
21(1)
of
the
Income
Tax
Application
Rules,
1971,
the
sum
of
$50,000.00
ought
to
be
included
in
computing
the
Appellant’s
income
from
a
business
in
accordance
with
section
14
of
the
Income
Tax
Act.
As
I
interpret
those
words
of
the
appellant,
the
$50,000
did
not
come
from
the
disposition
of
a
property
which
was
a
right
—
a
lease
-,
but
rather
arose
from
the
payment
for
the
goodwill
of
the
business
which
existed
even
at
the
time
the
land
was
sold
in
1974.
Counsel
for
the
appellant
carefully
pointed
out
that
there
is
no
reference
at
all
in
Exhibit
“A”
to
an
“option”.
However,
in
my
view,
whether
it
was
an
“option”
or
a
“right”
is
not
material
to
this
decision.
There
may
indeed
be
some
difference,
but
the
proposition
put
to
the
Board
by
the
appellant
is
(to
quote)
“the
$50,000
was
received
by
him
as
goodwill
on
the
sale
of
a
business”.
I
can
only
interpret
paragraph
“H”
of
Exhibit
A-11-1
(supra)
to
mean
that
Mr
Fraser
was
not
prepared
to
include
the
immediately
available
profits
from
the
gas
bar,
of
which
he
felt
he
was
assured,
in
the
$810,000
sale
price.
It
is
also
possible
that
the
purchaser
of
the
property
was
very
anxious
to
have
Mr
Fraser
himself
continue
to
operate
the
gas
bar
for
the
immediate
future.
It
appears
to
me
that
rather
than
the
simplified
interpretation
placed
on
the
transaction
by
the
respondent
(that
in
1976
Mr
Fraser
sold
his
option
to
lease
for
$50,000),
Mr
Fraser
had
two
avenues
open
to
him
at
the
end
of
the
two-year
period:
to
receive
a
new
10-year
lease
and
continue
to
operate
the
gas
bar
for
profit;
ot
to
receive
$50,000
and
vacate
the
premises,
leaving
the
operation
of
the
gas
bar
to
the
purchaser.
His
profit
from
the
gas
bar
in
1974
had
been
$10,351,
in
1975
it
turned
out
to
be
$9,216,
and
for
the
10
months
to
October
31,
1976
(the
end
of
the
two-year
lease),
the
profit
was
$6,793.
As
I
see
it,
the
two
choices
available
to
the
appellant
two
years
after
the
1974
sale
of
the
land
and
buildings
for
$810,000,
were
unrelated
to
that
sale.
His
choice
of
the
$50,000
does
not
provide
a
basis
for
describing
the
transaction
as
producing
“proceeds
of
dis-position”,
as
argued
by
the
Minister.
I
am
of
the
opinion
that
in
1974,
the
purchasers
might
have
paid
Mr
Fraser
$50,000
(or
perhaps
more)
for
the
immediate
right
to
operate
the
gas
bar
themselves,
and
that
they
knew
they
would
be
quite
satisfied
to
do
so
by
1976
—
which
indeed,
is
what
happened.
It
seems
to
me
that
the
purchaser
intended
to
continue
the
operation
of
the
gas
bar
at
that
location
in
some
way,
and
indeed
in
1983,
some
nine
(9)
years
after
the
1974
sale,
the
evidence
is
that
a
gas
bar
is
still
operating
there.
Goodwill
(or
that
intangible
asset
termed
“goodwill”
for
income
tax
purposes)
may
arise
out
of
the
examination
of
several
elements
in
a
business
—
lease,
location,
licence,
stability
of
staff,
assurance
of
supply
or
market,
etc.
This
is
not
an
exhaustive
list,
but
merely
to
indicate
that
it
can
be
seen
that
the
evidence
of
“super
profits”,
allegedly
a
prerequisite
for
the
existence
of
goodwill,
may
sometimes
be
traced
back
to
one
or
more
particularly
propitious
circumstances
or
conditions
which
positively
impinge
on
the
opera
tion.
In
this
case,
the
Minister
is
stating,
in
effect,
that
there
was
no
“goodwill”
in
the
business
—
only
the
right
to
a
lease
for
the
business
premises.
There
was
no
evidence
presented
that
any
Government
permits
or
licences
associated
with
the
gas
bar
business
were
particularly
difficult
to
obtain,
or
that
their
existence,
transfer
or
renewal
was
a
major
consideration
to
either
party
in
1974
or
1976.
Conversely,
thee
was
no
evidence
that
the
appellant
had
the
right
to
transfer
or
sell
the
10-year
lease
renewal
to
anyone
—
in
fact,
the
agreement
would
tend
to
preclude
such
a
development.
I
retain
certain
reservations
about
the
aptness
of
the
term
“goodwill”
given
to
this
transaction
by
counsel
for
the
appellant,
and
this
decision
does
not
pretend
to
put
any
particular
interpretation
on
section
14
of
the
Act
for
that
purpose.
Nevertheless,
the
position
taken
by
the
appellant
that
the
$50,000
was
for
a
recognized
continuing
value
associated
with
the
business
operation,
as
opposed
to
the
sale
of
a
“right”,
comes
closer
to
fitting
the
conditions
outlined
as
I
see
them.
That
part
of
the
appeal
will
be
allowed.
With
regard
to
the
“principal
residence”
question,
it
would
seem
to
me
that
the
Minister’s
basic
argument
is
that,
since
in
the
Minister’s
interpretation
of
paragraph
54(g)
of
the
Act
31,178
square
feet
of
access
road,
described
as
a
right
of
way
has
already
been
added
to
the
31,206
square
feet
immediately
surrounding
the
house,
making
a
total
of
some
62,384
sq
ft
(about
1.5
acres),
now
it
is
up
to
Mr
Fraser
to
show
that
the
alleged
“garden
and
playground”
area
of
some
further
18,338
sq
ft
was
“necessary
to
the
use
and
enjoyment”
of
the
taxpayer.
Also,
the
Minister’s
argument
continues
that
since
the
above
18,338
sq
ft
is
not
“contiguous”
to
the
31,206
sq
ft
immediately
surrounding
the
house
(since
it
was
allegedly
separated
by
the
right
of
way),
it
cannot
possibly
be
considered
as
qualifying
as
“immediately
contiguous
land”.
The
words
of
the
Act
(paragraph
54(g)
),
particularly
relevant
to
this
question
are:
“principal
residence”.
.
.
means
a
housing
unit
.
.
.
and
“principal
residence”..
.
shall
be
deemed
to
include
.
.
.
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
one
acre,
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;
It
may
be
necessry
at
some
future
time
to
consider
the
meaning
of
“subjacent”,
but
that
does
not
appear
in
this
problem.
Whether
subjacent
is
indeed
the
land,
and
only
that
land,
upon
which
the
housing
unit
is
constructed,
or
whether
it
is
a
certain
portion
directly
around
the
housing
unit,
the
sketches
provided
to
the
Board
would
indicate
that,
for
this
appellant,
the
Minister
has
already
provided
in
the
assessment
for
a
land
area
around
the
housing
unit
greater
than
the
housing
unit
itself.
I
would
add,
however,
that
the
words
‘that
portion”
in
the
term
“the
total
area
of
the
subjacent
land
and
of
that
portion
exceeds
one
acre
.
.
[Emphasis
mine]
[above]
do
refer
to
the
earlier
expression
“immediately
contiguous
land”.
Also,
I
would
emphasize
that
the
Act
is
perfectly
clear
—
the
principal
residence
is
the
housing
unit
—
and
only
the
housing
unit
—
anything
beyond
that
is
apparently
a
concession
to
practicality
and
reasonableness.
With
regard
to
contiguity,
the
Minister
has
set
up
this
separation
of
the
“principal
residence”
and
the
“garden
and
play
area”.
In
other
words,
the
Minister,
not
the
taxpayer,
has
technically
divided
the
total
area
treated
by
the
taxpayer
as
“principal
residence”
into
three
parcels
of
property
—
the
housing
unit,
the
right
of
way,
and
the
garden
and
play
area.
Thereby
the
Minister
established
the
right
of
way
as
an
imaginary
line
of
demarcation.
In
my
view,
the
“garden
and
play
area”
is
just
as
“immediately
contiguous”
to
the
housing
unit
as
is
the
“right
of
way”,
simply
because
the
Minister
has
made
the
“housing
unit”
and
“the
right
of
way”
as
one
—
not
two
—
parcels
of
property,
by
agreeing
that
together
they
form
the
principal
residence,
at
least
and
even
though
in
total
the
two
parcels
represent
more
than
one
acre.
The
right
of
way
is
certainly
not
“subjacent”
to
the
housing
unit.
I
must
conclude
that
the
Minister
is
in
agreement
that
“access”
must
be
provided
to
the
housing
unit
in
order
that
it
fill
the
function
of
a
residence
even
if,
according
a
taxpayer
this
“access”
(in
this
case
the
right
of
way)
produces
a
total
area
in
excess
of
the
one
acre
general
limitation
provided
in
the
relevant
section
of
the
Act.
The
access
is
clearly
“necessary
to
such
use
.
.(of
the
housing
unit
as
a
residence).
I
do
make
the
distinction
here
between
“use”
and
“enjoyment”,
as
they
appear
in
the
section.
So,
it
is
not
the
contiguity
or
lack
of
it
that
affects
the
point
at
issue
here,
it
comes
down
to
whether
the
area
of
the
additional
18,338
square
feet
described
as
the
“garden
and
play
area”
fits
into
the
term
“necessary
to
such
use
and
enjoyment”
(of
the
housing
unit
as
a
residence).
I
can
think
of
no
rational
argument
(comparable
to
that
of
“access”)
which
would
substantiate
its
necessity
to
the
“use”
of
the
housing
unit
as
a
residence.
I
consider
“necessary”
in
this
context
to
be
virtually
synonymous
with
“vital”
or
“essential”.
Certainly
the
family
could
reside
in
the
house
without
even
setting
foot
on
the
garden
and
play
area.
One
then
must
look
at
the
total
term
“necessary”
to
such
use
and
enjoyment
(underlining
mine).
The
term
is
not
“use
or
enjoyment”
and,
accordingly,
is
aptly
described
in
Betty
Madsen
v
MNR,
[1980]
CTC
3022;
81
DTC
1,
at
3024
and
2
respectively:
For
an
Appellant
to
succeed
in
a
case
such
as
this
he
must
show
that
the
land
exceeding
one
acre
was
necessary
not
only
to
his
use,
but
also
to
his
enjoyment
of
the
housing
unit
as
a
residence.
That
the
“garden
and
play
area”
contibuted
(it
might
be
argued,
was
necessary
to
the
way
of
life
of
this
appellant)
on
a
personal
basis,
could
well
be
accepted.
But
that
is
vastly
different
from
its
necessity
to
the
“use
and
enjoyment”
of
the
housing
unit
as
a
residence.
I
would
suggest
it
could
be
difficult
(but
perhaps
not
impossible)
to
assert
that
this
area
even
made
a
contribution
to
the
use
and
enjoyment
of
the
housing
unit
as
a
residence.
I
reach
the
conclusion
that,
unfortunately
for
him,
this
appellant
had
used
up
more
than
the
alloted
general
one-acre
area
for
the
housing
unit
as
a
residence
when
the
necessary
access
thereto
was
included,
and
that
no
“necessity”
for
the
garden
and
play
area
has
been
demonstrated.
I
note,
merely
for
the
record,
that
the
“access”
allowed
by
the
Minister
was
in
fact
a
66-foot
wide
road
allowance
—
generous
—
perhaps
over-generous
—
as
a
private
right
of
way
to
the
housing
unit
by
any
reasonable
standard.
I
have
given
very
serious
consideration
to
the
fact
that
this
parcel
of
less
than
two
acres
claimed
by
the
appellant
as
his
“principal
residence”
was
the
remaining
portion
of
the
total
original
27-acre
farm,
used
for
many
years
by
the
taxpayer
in
his
mind
for
exactly
the
purpose
attributed
to
it
in
1974
—
no
matter
whether
called
residence,
right
of
way,
or
garden
and
play
area.
In
the
years
he
had
lived
there
and
raised
eight
(8)
children,
the
surrounding
24
or
25
acres
had
been
sold
off
and
developed
into
a
busy
commercial
area
on
all
sides
of
his
home.
By
1974
his
family
was
restricted
to
this
remaining
odd-shaped
piece
of
property
(in
the
sense
that
it
had
continuously
contracted
from
some
original
27
acres
of
farm
land).
Further,
he
could
hardly
be
expected
to
regard
this
remaining
non-commercial
property
as
anything
other
than
his
principal
residence
—
he
had
no
other
residence.
A
look
at
the
property
sketch
provided
to
the
Board
would
indicate
that,
for
him,
it
served
only
that
purpose.
There
was
no
indication
at
the
hearing
that
it
served
any
purpose
for
the
gas
bar,
the
only
other
property
of
the
appellant
adjacent
to
it.
But
for
this
appellant
to
bring
himself
within
the
strict
limits
of
the
exception
provision
“necessary
to
such
use
and
enjoyment”,
it
is
important
to
perceive
of
the
excess
area
in
dispute
as
indispensable
in
its
direct
relationship
to
the
residential
properties
of
the
housing
unit,
not
merely
in
its
utility
and
value
to
the
inhabitants
thereof.
That
part
of
the
appeal
will
be
dimissed.
Turning
to
the
other
point
at
issue
—
the
V-day
value
of
the
50-acre
parcel
of
land
in
“Barrhaven”
sold
in
1973
—
the
Board
notes
the
diligence
and
competence
of
the
several
witnesses
presented
by
the
appellant:
Mr
Fraser
himself;
Mr
Robert
Pickerd
(formerly
with
a
construction
firm,
Costain
(Eng)
but
now
Municipal
Manager
of
the
City
of
Nepean);
and
Mr
W
T
Leathern
(Commissioner
of
Planning
of
the
City
of
Nepean);
and
a
highly
qualified
land
appraiser,
Mr
Gaëtan
Roy.
In
addition,
I
would
note
the
excellent
work
and
report
of
the
Minister’s
appraiser,
Mr
Bernard
P
Murphy.
I
should
like
to
make
reference
to
the
case
of
Goodwin
v
MNR,
[1982]
CTC
2675;
82
DTC
1679,
in
which
matter
the
Board
saw
no
requirement
to
review
the
appraisal
report
prepared
by
the
Minister
of
National
Revenue
since
no
appraisal
information
or
substantive
evidence
had
been
presented
by
the
appellant
which
could
cast
serious
doubt
on
the
assessment
at
issue.
That
was
not
the
situation
in
the
instant
appeals
—
at
the
completion
of
the
evidence
for
this
appellant,
there
was
certainly
a
question
regarding
the
assessment,
and
the
Minister
needed
to
respond.
The
testimony
and
evidence
on
both
sides
zeroed
in
on
two
assertions
made
in
the
relevant
notices
of
appeal:
At
all
relevant
times,
including
December
31,
1971,
the
Westerly
portion
of
the
land
sold
in
1973
had
a
greater
value
than
the
Easterly
portion,
and
this
was
clearly
confirmed
by
the
prices
paid
for
each
portion.
Prior
to
Valuation
Day,
it
was
common
knowledge
that
the
lands
would
be
within
a
designated
major
growth
area.
Prior
to
1972
developers
and
knowledgeable
people
in
the
development
field
had
commenced
assembling
lands
in
the
area,
and
as
a
result
of
this
activity
prices
for
land
in
Barrhaven
increased
substantially.
I
am
satisfied
from
the
testimony
of
Messrs
Fraser,
Pickerd
and
Leathern
that,
as
at
V-Day,
there
was
unmistakable
indications
that
the
property
in
the
general
Barrhaven
area,
although
still
zoned
agricultural,
would
in
fact
be
developed
as
residential
property
in
the
short
term.
There
was
already
a
subdivision
there
(Old
Barrhaven);
the
sanitary
sewer
had
been
extended
to
a
point
where
connection
with
Mr
Fraser’s
100-acre
farm
was
reasonable
and
practical;
there
had
been
substantial
blocks
of
the
Barrhaven
property,
both
surrounding
and
including
some
of
Mr
Fraser’s,
for
which
purchase
options
had
been
taken
by
several
different
land
developers
—
at
prices
greatly
in
excess
of
agricultural
land
values;
and
there
had
been
at
least
two
separate
municipal
studies
leding
up
to
approval
of
zoning
and
development
designation
of
certain
areas
in
the
National
Capital
Region,
particularly
in
the
Township
(now
City)
of
Nepean.
Skipping
over
some
of
the
other
testimony
for
the
moment,
the
Board
has
serious
reservations
about
the
opinions
expressed
by
Mr
Murphy
in
the
following
quotations
from
his
report:
(Underlining
mine)
Page
2
While
the
area
was
the
subject
of
extensive
speculation
as
to
a
possible
change
of
zoning
to
allow
for
residential
subsdivisions
in
the
area,
it
must
be
emphasized
that
as
of
Valuation
Day
(December
31,
1971)
said
probability
was
still
very
uncertain
and
remote
and
the
existing
zoning
was
in
fact
exclusively
for
agricultural
uses.
Page
17
Project
Planning
carried
out
its
study
during
late
1969
and
part
of
1970.
Project
Planning’s
study
recommendations
were
rejected
by
Nepean
Planning
Department
and
Township
Council
as
unsuitable
for
Nepean’s
needs
and
this
study
did
not
form
the
Master
Plan.
Consequently,
that
part
of
the
study
concerning
the
Bar-
rhaven
area
simply
added
some
speculation
as
to
the
possible
growth
of
this
area
some
time
in
the
distant
future.
Page
23
.
.
.
nothing
could
be
taken
for
granted
and
approval
of
a
zoning
change
from
agricultural
to
development
use
as
of
December
31,
1971
was
still
a
long
way
down
the
road.
.
.
.
further
area
development
became
more
remote
with
the
creation
of
Regional
Government
in
1969
.
.
.
speculation
was
just
that
as
there
was
really
no
sure
indication
..
.
On
the
other
hand,
I
am
strongly
impressed
with
the
opinion
Mr
Murphy
expressed
regarding
his
comparables
9,
10
and
11
which
is
to
be
found
on
page
35
of
his
report
as
follows:
SALES
ANALYSIS
SALES
No
9,
10,
11
These
three
vendors,
as
earlier
outlined
in
this
report,
(see
Value
History)
had
previously
optioned
part
of
their
respective
holdings
for
sale
November
23,
1969
at
acreage
prices
of
$3,500.00
to
$3,650.00.
Said
options
eventually
lapsed
as
of
September
30,
1970.
All
three
vendors
were
therefore
very
well
aware
of
the
Barrhaven
area
market
buying
activity
or
lack
of
same
by
potential
developers
and
the
maximum
acreage
prices
said
developers
were
likely
to
pay
given
the
uncertainty
of
zoning
change
from
Agricultural
to
Subdivision
use
as
well
as
servicing
difficulties.
Consequently,
when
said
vendors
freely
agreed
to
sell
land,
which
is
located
immediatley
south
of
Old
Barrhaven,
at
acreage
prices
of
$3,750.00
and
$3,900.00
per
acre
some
one
and
a
half
months
after
V-Day,
and
the
purchaser
exercised
his
option
to
buy
said
land
eight
months
later,
these
acreage
prices
must
be
considered
to
represent
the
upper
limits
of
Barrhaven
area
values
as
of
V-Day
(December
31,
1971).
It
is
my
conclusion,
after
reviewing
Mr
Murphy’s
report
and
listening
to
his
testimony,
that
his
V-Day
valuation
of
$3,900
per
acre
for
the
subject
lands
is
based
almost
exclusively
on
the
optioning
in
February
1972
of
the
easterly
adjacent
50
acres,
also
owned
by
the
appellant,
at
approximately
$3,900
per
acre,
i
note
Mr
Murphy-s
expressed
opinion
(p
42):
Consequently,
there
is
no
basis
in
fact
for
a
developer
to
have
considered
those
lands
located
at
or
west
of
the
fault
as
being
superior
lands
for
subdivision
purposes
than
those
lands
located
east
of
the
known
rock
ridge.
Turning
then
to
the
appellant’s
appraisal
report
prepared
by
Mr
Roy,
we
find
as
his
conclusion:
Based
on
the
information
contained
in
this
report
and
on
my
general
experience
as
an
appraiser,
it
is
my
Opinion
that
the
Market
Value
as
defined
herein
of
this
property
as
of
December
31st,
1971
for
the
first
parcel
measuring
50.51
acres
sold
under
the
option
in
February
1972
was
$3,900.00
per
acre
and
that
the
adjusted
Market
Value
of
the
second
parcel
measuring
51.083
acres
sold
in
1973,
was
$5,700.00
per
acre
for
a
total
Market
Value
as
of
December
31st,
1971
.
.
.
Mr
Roy
and
Mr
Murphy
obviously
agree
(if
for
somewhat
different
reasons)
that
the
property
sold
first
by
Mr
Fraser
(the
easterly
50
acres)
was
sold
at
a
proper
price
—
approximately
$3,900
per
acre
—
and
since
the
option
took
place
in
February
1972,
that
was
its
V-day
value.
That
leaves
a
slight
problem,
since
the
position
taken
by
counsel
for
the
appellant
at
the
hearing,
and
particularly
in
argument,
was
that
indeed
the
first
sale
was
made
by
Mr
Fraser
at
too
low
a
price,
since
Mr
Fraser
was
not
nearly
as
knowledgeable
and
informed
about
the
potential
and
prospects
for
the
land
or
about
the
land
assembly
going
on
by
the
developers,
as
were
the
devel-
opers
(purchasers)
themselves.
Accordingly,
by
several
different
mathematical
formulae
—
forward
averaging
allowing
for
inflation;
backward
averaging
allowing
for
inflation;
and
relating
the
sales
to
earlier
options
—
a
value
of
between
$5,500
and
$6,000
per
acre
for
all
the
land
in
the
general
Barrhaven
area
adjacent
to
and
including
the
subject
lands
could
be
calculated
by
counsel.
Mr
Roy’s
determination
of
$5,700
per
acre
is
based
on
somewhat
the
same
logic
—
the
average
price
a
developer
would
be
willing
to
pay
for
the
land
assembly
he
had
in
mind
considering
all
the
factors
at
play
on
V-day.
As
for
Mr
Fraser’s
alleged
lack
of
knowledge
and
his
innocence
of
real
estate
conditions,
I
do
not
accept
that
proposition.
I
would
be
willing
to
suggest
that
by
February
1972,
Mr
Fraser
was
as
knowledgeable
about
the
value
of
his
land
(probably
more
so)
than
was
any
developer
in
the
area.
The
easterly
portion
of
his
land
was
probably
the
more
valuable
for
the
development
due
to
its
proximity
to
the
sanitary
sewer.
In
addition,
whatever
plans
he
might
have
had
for
the
westerly
50
acres,
it
was
evident
to
him
by
1972
(some
10
years
after
the
start
of
“Old
Barrhaven”)
that
its
value
for
development
purposes
would
remain
questionable
until
some
adjacent
property
had
been
sold
and
the
development
results
of
that
sale
assessed.
He
already
had
the
experience
of
losing
out
on
the
potential
for
some
$4,100
per
acre
(from
a
previous
Costain
option)
on
the
easterly
portion
of
the
land,
and
a
price
of
some
$3,900
per
acre
probably
sounded
about
right.
I
woud
also
note
that
some
254
acres
of
agricultural
land
(the
Nesbitt
property)
directly
across
from
Mr
Fraser’s
land,
with
general
similarities
to
the
subject
property,
were
under
option
as
at
December
31,
1971
—
and
the
evidence
at
the
hearing
showed
it
was
optioned
by
the
same
purchaser
who
eventually
acquired
the
subject
property.
That
Nesbitt
option
was
for
some
$3,925
per
acre,
but
the
option
was
allowed
to
expire
on
August
8,
1972.
There
was
an
indication
at
the
hearing
on
behalf
of
the
appellant
that
Mr
Fraser
was
aware
of
(indeed
influenced
by)
this
allegedly
low
option
price
in
selling
his
first
50-acre
parcel
of
land.
I
am
not
impressed
with
assertions
made
on
behalf
of
the
appellant
that
this
254-acre
parcel
was
of
vastly
inferior
quality
for
development
purposes
when
compared
to
the
subject
property.
It
is
my
view
that
had
the
prospective
purchaser
regarded
$3,900
per
acre
as
much
too
low
a
price
for
Mr
Fraser’s
first
50-acre
sale,
he
would
have
regarded
$3,925
per
acre
for
the
Nesbitt
property
as
a
very
good
bargain,
and
exercised
the
option,
not
let
it
expire.
The
Nesbitt
property
did
sell
in
December
1973
for
an
average
of
some
$7,000
per
acre,
even
though
it
included
some
land
allegedly
not
highly
suitable
for
residential
development.
It
is
possible
that
the
purchaser
of
the
easterly
portion
of
Mr
Fraser’s
land
might
have
paid
more
than
$3,900
per
acre
for
that
portion
to
get
the
land
assembly
started
—
which
is
the
hypothesis
of
counsel
for
the
appellant
—
and
suggested
by
the
“averaging”
method
used
by
Mr
Roy.
But
that
is
only
a
matter
of
speculation.
Mr
Fraser
might
not
have
been
quite
as
well
informed
on
all
aspects
of
the
development
possibilities
of
the
area
and
sold
a
little
too
cheaply
(although
I
doubt
that),
but
I
am
quite
sure
he
would
have
known
whether
the
easterly
50
acres
was
worth
an
amount
per
acre
closer
to
$3,900
than
to
$5,700
on
V-day.
There
is
therefore
no
reason
to
doubt
the
separate
conclusions
reached
by
the
two
valuators
—
the
easterly
50
acres
was
worth
$3,900
per
acre
on
V-day.
Whether
Mr
Fraser
would
or
would
not
have
given
an
option
for
the
entire
100
acres
for
$3,900
per
acre
in
February
1972,
and
whether
Minto
would
or
would
not
have
purchased
all
the
land
at
that
price
are
both
open
to
speculation.
The
Board
has
no
information
that
such
an
eventuality
was
ever
considered,
and
so
that
becomes
irrelevant
to
this
decision.
That
leaves
only
the
question
of
any
positive
distinctions
or
differences
which
could
substantially
increase
or
a
developer
the
V-day
value
of
the
westerly
50
acres
of
the
farm
beyond
the
$3,900
per
acre
attributed
to
the
easterly
50-acre
parcel.
In
my
view
there
are
no
such
distinctions
and
indeed,
if
any
can
be
found
in
the
evidence,
they
would
militate
to
reduce,
not
to
increase
the
$3,900
amount
above.
The
westerly
portion
was
further
from
the
services
and
had
certain
physical
disabilities,
as
well
as
being
bisected
by
a
road.
I
find
no
reason
to
attribute
to
the
subject
lands
a
valuation
greater
than
that
accorded
by
the
Minister
in
the
assessments.
The
appeals
are
allowed
in
part
and
the
matter
referred
back
to
the
respondent
for
reconsideration
and
reassessment
in
order
that
the
amount
of
$50,000,
received
by
the
appellant
in
1976
from
the
gas
bar
operation,
be
regarded
as
on
account
of
goodwill.
In
all
other
respects
the
appeals
are
dismissed.
Appeal
allowed
in
part.
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