John
B
Goetz:—This
is
an
appeal
with
respect
to
the
1976
taxation
year
of
the
appellant.
It
was
agreed
at
the
outset
of
the
hearing
that
the
appeal
of
Archie
Gian-
nunzio
(81-919)
and
the
appeal
of
Anne
Colavincenzo
(81-940)
be
heard
on
common
evidence
with
the
appeal
of
Maria
Greatti.
Maria
Greatti
is
the
daughter
and
executrix
of
the
estate
of
Domenico
Colavincenzo
who
died
on
September
3,
1972.
In
her
declaration
under
the
Succession
Duty
Act
(Ontario)
Maria
Greatti
valued
the
real
estate
owned
by
the
late
Domenico
Colavincenzo
at
$147,350.
Most
of
this
land
was
registered
in
the
name
of
Archie
Giannunzio
and
Domenico
Colavincenzo,
each
having
an
undivided
one-half
interest.
The
land
was
mostly
acquired
in
the
1960s
with
the
purpose
of
developing,
building
and
selling
houses.
In
1964
Domenico
Colavincenzo
and
Archie
Giannunzio
acquired
34
subdivided
lots
in
Plan
M70
Cochrane,
which
were
subsequently
disposed
of
in
14
separate
transactions
between
July
1965
and
August
1972.
Maria
Greatti
was
aware
that
her
father
worked
with
Giannunzio
in
connection
with
real
estate
but
she
was
not
too
familiar
with
the
precise
way
they
purchased
and
sold
real
estate.
On
her
father’s
death
the
estate
lawyer
advised
her
to
hold
the
land,
that
was
held
in
joint
names
of
Colavincenzo
and
Giannunzio,
in
smaller
pieces.
It
is
the
dealing
with
the
estate’s
interest
in
the
land
existing
as
of
the
date
of
death
of
Domenico
Colavincenzo
which
is
in
issue
in
this
appeal.
Mrs
Greatti,
to
paraphrase
her
words,
stated:
“Giannunzio
advised
me
when
to
sell
and
I
acted,
and
I
would
still
act
on
his
advice
because
he
was
knowledgeable
of
real
estate”.
There
was
never
any
discussion
between
Giannunzio
and
Greatti
of
selling
either
party’s
interest
one
to
the
other.
The
parcels
of
land
in
question
were
all
contiguous
and
adjacent
one
to
the
other
as
shown
in
Exhibit
A-6,
filed
by
the
appellant,
and
which
is
a
sketched
plan
of
the
land
prepared
by
Cooper
Appraisals
Limited.
Archie
Giannunzio
gave
evidence
that
he
was
a
bookkeeper
and
that
he
and
Domenico
Colavincenzo
worked
together
in
acquiring
land,
subdividing
it,
building
houses
and
selling
same.
Alternatively,
they
would
sell
subdivided
lots
without
any
structures
thereon
or
even
land
without
existing
services.
There
was
no
formal
partnership
agreement
between
Domenico
Colavincenzo
and
Archie
Giannunzio.
Colavincenzo
and
Giannunzio
had
subdivision
plans
prepared
but
unregistered
at
the
time
of
Domenico
Cola-
vincenzo’s
death
on
September
3,
1972.
The
Plan,
however,
which
is
shown
in
Exhibit
A-12,
was
registered
on
November
8,
1973,
and
this
covered
36
lots.
Giannunzio
stated
that
the
estate
could
do
nothing
without
his
participation
and,
of
course,
this
worked
both
ways.
Consequently,
Mrs
Greatti’s
statement
that
she
relied
entirely
upon
Mr
Giannunzio’s
expertise
seems
to
be
quite
on
point.
Giannunzio,
apparently,
handled
all
acquisitions
and
sales
transactions
with
the
approval
of
Mrs
Greatti
and
the
beneficiaries
of
Domenico
Colavincenzo’s
estate.
Giannunzio
discussed
the
land
holdings
owned
by
himself
and
the
deceased
Domenico
Colavincenzo,
the
buying
of
land
and
building
thereon
and
selling
same.
Issue
The
issue
before
me
is
to
determine
whether
the
dealings
with
the
real
estate
in
question
subsequent
to
the
death
of
Domenico
Colavincenzo
on
September
3,
1972
were
adventures
in
the
nature
of
trade
or
whether
the
land
was
inventory
or
capital
assets
of
the
estate.
In
reassessing
the
appellant,
the
respondent
assumed,
Inter
alia,
that:
8.
(i)
In
1973
the
new
partnership
sold
a
parcel
of
land
containing
approximately
5.4
acres,
known
as
Plan
M-337
(previously
parts
2
and
3
of
Plan
CR-161),
which
had
been
subdivided
into
36
building
lots,
for
$90,000.
(j)
In
1974
the
new
partnership
sold
a
parcel
of
land
containing
approximately
The
acquisition
of
35
Lots
on
Plan
M70C
purchased
from
the
Helmer
Estate
on
December
15,
1964,
were
sold
as
follows:
Archie
Giannunzio
&
Domenic
Colavincenzo
Transactions
relating
to
35
Lots
on
Plan
M70C
Purchase
from
Helmer
Estate
—
Dec.
15,
1964
|
Selling
|
|
|
Sales
of
various
lots
|
|
Price
|
Expenses
|
|
1.
Lot
#402
Mr
&
Mrs
Allan
Paananen
|
Oct.
7,
1966
|
1,150.00
|
143.75
|
|
2.
Lot
#339
Saviour
Attard
|
Aug.
1,
1969
|
1,800.00
|
|
|
3.
Lot
#314
Mr
&
Mrs
Leo
Paquette
|
(
Sept.
10,
1965
|
1,500.00
|
178.00
|
|
4
.
Lot
#315
Mr
&
Mrs
Leo
Paquette
|
(
|
|
|
5
.
Lot
#388
Anthony
J
Gareto
|
(
Mar.
16,
1967
|
1,500.00
|
|
|
6
.
Lot
#389
Anthony
J
Gareto
|
(
|
|
|
7.
Lot
#351
Erkki
J
Vilen
&
Selja
Vilen
|
(
June
20,
1967
|
2,400.00
|
265.00
|
|
8
.
Lot
#352
Erkki
J
Vilen
&
Selja
Vilen
|
(
|
|
|
9.
Lot
#353
Erkki
J
Vilen
&
Selja
Vilen
|
(
|
|
|
10
.
Lot
#381
Spillanaar
|
June
6,
1968
|
1,150.00
|
|
|
11.
Lot
#348
Martti
Luhtala
&
Sarnia
Luhtala
|
Aug.
7,
1969
|
1,500.00
|
|
|
12.
Lot
#396
Edward
&
Valerie
Netherton
|
May
6,
1969
|
1,600.00
|
|
|
13.
Lot
#346
Mario
Venneri
|
Aug.
21,
1969
|
1,900.00
|
|
|
14.
Lot
#347
Veli
Karjanmaa
|
June
1,
1969
|
1,800.00
|
46.75
|
|
15.
Lot
#395
Mr
&
Mrs
Hartmut
Giesenhaus
|
May
1,
1969
|
1,400.00
|
|
|
2
Lots
sold
to
Stojanoff
|
|
|
17
Lots
sold
to
John
Clark
Building
Enterprises
in
1970
for
$25,000.
|
|
Colavincenzo
and
Giannunzio
each
had
an
equal
interest
in
the
land
and
shared
in
the
profits
from
the
sales
thereof
equally.
This
was
the
manner
they
dealt
with
all
real
estate
transactions
and
it
is
obvious
then
that
though
they
had
no
formal
partnership
agreement,
they
were
dealing
one
with
the
other
as
true
and
loyal
partners.
I
find
that
the
dealings
in
real
estate
owned
jointly
by
Giannunzio
and
Domenic
Colavincenzo
till
the
death
of
Domenic
Colevincenzo
were
adventures
or
concern
in
the
nature
of
trade
and
the
profit
from
the
sale
of
acquired
land
was
income
from
a
business
dealing
in
real
estate.
Giannunzio’s
and
Colavincenzo’s
intentions
in
acquiring
land
were
for
the
development
and
resale
in
the
course
of
business
and
there
is
nothing
to
characterize
their
conduct
other
than
disposition
in
the
course
of
trading
assets.
What
type
of
real
estate
did
the
estate
acquire
on
the
death
of
Domenic
Colavincenzo?
Was
it
a
trading
asset
or
was
it
a
capital
asset?
Did
the
death
of
Domenic
Colavincenzo
convert
a
trading
asset
into
a
capital
asset?
I
feel
that
it
did
not.
The
estate
merely
assumed
a
trading
asset.
See
Sunrise
Park
Development
Limited
v
MNR,
[1981]
CTC
2863;
81
DTC
735.
Giannunzio
Suggested
that
they
had
encountered
great
difficulty
with
the
municipal
authorities
in
getting
approval
of
their
subdivision
plans.
It
is
interesting
to
note
that
they
ultimately
did
get
subdivision
plans
registered
subsequent
to
the
death
of
Domenic
Colavincenzo.
He
expressed
frustration
of
the
objectives
of
his
venture
with
Colavincenzo
on
Colavincenzo’s
death
and
as
a
result
the
character
of
their
business
had
changed
and
the
property
somehow
lost
its
character
as
a
trading
or
income
asset
and
had
taken
on
the
character
of
a
capital
investment.
Though
the
situation
changed
at
the
death
of
Domenic
Colavincenzo,
the
course
of
conduct
of
Giannunzio
with
the
acquiescence
and
approbation
of
the
appellant
Greatti
and
the
other
beneficiaries
did
not
change
the
manner
in
which
he
dealt
with
the
land
and
I
can
find
no
basis
for
holding
that
the
character
as
a
trading
or
income
asset
ever
changed.
I
find
that
Mrs
Greatti,
on
her
own
behalf,
and
on
behalf
of
her
mother,
Anne
Colavincenzo,
and
her
brother,
acted
as
a
silent
partner
to
Giannunzio
and
although
not
active
other
than
in
signing
of
documents
presented
to
her
by
Giannunzio,
she
left
all
the
handling
of
the
business
of
the
disposal
of
the
real
estate
assets
of
the
estate
to
Giannunzio.
In
the
dealings
as
between
Giannunzio
and
the
three
beneficiaries
of
the
estate,
the
beneficiaries
each
had
a
one-sixth
interest
and
Giannunzio
had
a
one-half
interest.
The
proceeds
of
sale
were
shared
in
that
manner.
It
was
on
the
direction
of
the
estate’s
solicitor
that
the
land
be
sold
piece
by
piece
which
was
in
fact
the
continuation
of
the
modus
operendi
of
Giannunzio
and
Colavincenzo
since
1964.
The
trading
operation
carried
on
after
the
death
of
Domenic
Colavincenzo
in
the
same
manner
as
it
was
conducted
prior
to
his
death.
I
find
that
the
appellants
were
acting
in
concert
and
were
continuing
the
relationship
with
the
partnership
between
Colavincenzo
and
Giannunzio.
The
beneficiaries
stood
by
and
let
Giannunzio
actively
deal
with
the
real
estate
on
their
behalf.
In
William
J
McKinley
v
MNR,
[1971]
CTC
574;
71
DTC
5320,
Walsh,
J
refers
to
the
decision
in
MNR
v
Clifton
H
Lane,
[1964]
CTC
81;
64
DTC
5049,
in
which
Noel,
J
states
as
follows
at
91
and
5054-5055
respectively:
It
would
appear
from
this
that
the
syndicate’s
non-active
members
were
quite
content
to
leave
the
handling
of
the
syndicate’s
activities
to
the
executive
committee
who
had
carte
blanche
to
handle
the
business
of
the
syndicate
as
they
thought
best
and
because
of
this
situation,
the
passive
members
here
would
be
in
no
different
position
than
that
of
the
active
members.
Indeed,
if
the
transactions
are
business
transactions,
any
profit
derived
therefrom
from
any
of
the
members
would
be
taxable.
see
also
Harold
Diamond,
Sarah
Diamond
and
Estelle
Diamond
v
MNR,
[1966]
CTC
670;
66
DTC
5434,
at
675-676
and
5438
respectively:
It
appears
clearly
from
the
above
that
the
Mclnnes
property
was
purchased
on
a
partnership
basis
by
Harold
Diamond,
Michael
Shnier
and
Sarah
Diamond,
with
the
latter
supplying
the
funds
and
all
eventually
dividing
equally
the
profit
realized
from
its
sale.
It
is
true
that
Sarah
Diamond
seems
to
have
played
a
passive
and
silent
role
in
this
matter
but
as
she
was
content
to
leave
the
handling
of
the
jointly
held
property
to
the
other
two
she
should
be
in
no
different
position
than
they
are.
If
the
true
nature
of
that
transaction
is
a
business
transaction,
any
profit
derived
therefrom
by
any
of
them
should
be
held
taxable
(compare
MNR
v
C
H
Lane,
[1964]
CTC
81
(64
DTC
5049)).
The
only
evidence
I
have
before
me
with
respect
to
the
fair
market
value
of
the
property
on
Valuation
Day
and
as
of
September
3,
1972,
is
that
contained
in
the
allegations
and
assumption
of
facts
in
the
respondent’s
reply
to
notice
of
appeal.
On
that
basis,
the
assessment
of
tax
by
the
Minister,
pursuant
to
the
provisions
of
paragraph
69(1
)(c),
would
apply.
I
find
that
upon
the
death
of
Domenic
Colavincenzo
a
new
partnership
arose
between
Giannunzio
and
the
three
beneficiaries
of
the
Estate
of
Domenic
Colavincenzo
with
Giannunzio
being
the
active
partner
and
the
other
three
being
passive
and
silent,
relying
upon
the
experience
and
knowledge
of
Giannunzio
in
dealing
with
real
estate
as
he
had
with
Domenic
Colavincenzo
up
to
September
3,
1972.
It
follows,
therefore,
that
the
dealing
with
real
estate
assets
subsequent
to
Domenic
Colavincenzo’s
death
was
the
carrying
on
of
the
business
of
dealing
in
real
estate
and
any
profits
derived
therefrom
would
be
income.
For
the
above
reasons,
the
appeal
is
dismissed.
Appeal
dismissed.
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