Denis Lafrenière v. Minister of National Revenue, [1982] CTC 2522, 82 DTC 1558

The Chairman [TRANSLATION]:—The appeal of Mr Denis Lafrenière is from tax assessments for the 1975, 1976 and 1977 taxation years.

The case:

2. In computing his income for the taxation years in question, the appellant reported capital gains from the disposition of certain real estate as follows:

taxation year	capital gain
1975	$ 9,204.50
1976	$18,363.96
1977	$17,919.13

3. In assessing the appellant for the taxation years in question, the Minister of National Revenue added the following sums to the appellant’s income:

	additional
taxation year	income
1975	$ 4,602.25
1976	$ 9,181.96
1977	$17,648.73

4. In a reassessment dated July 22, 1980 the Minister of National Revenue reduced the amount of additional income for the 1977 taxation year to $8,959.56.

It must be determined whether the properties sold during the years in issue were purchased, as was maintained by the appellant, as a long-term investment to earn rental income, or whether they were purchased to be resold for a profit at the first opportunity, as was suggested by the respondent.

During the years from 1969 to 1977 the appellant had purchased and resold several properties in Canada, seven of which are described in the notice of objection. Four of these seven properties were resold, according to the notice of objection, two or three years after they were purchased. The appellant filed as Exhibits A-1 and A-2 dated May 17, 1978 and April 1979 respectively, one-year leases for the properties at 86 Carruthers Street and at RR 6 — Highway 31 in the City of Ottawa. Three commercial leases relating to the renting of land in Gloucester in the Regional Municipality of Ottawa-Carleton, dated December 17, 1973, January 28, 1975, and January 17, 1979 respectively, were also filed as Exhibits A-3, A-4 and A-5. Exhibits A-3, A-4 and A-5 are commercial leases for property which is different in nature from the residential properties that are the subject of this appeal. The leases (Exhibits A-1 and A-2) were signed after the 1975-1976-1977 taxation period for properties that are not at issue in this case. These exhibits have no probative value with respect to the appellant’s intent concerning the purchase and sale of the properties that are the subject of this case. The Board cannot accept these documents as evidence that the leases relating to the properties sold, which the appellant stated had been destroyed, had existed and were also for a period of one year or longer.

Moreover, neither the duration of the leases nor the period of possession of the properties would in themselves be conclusive evidence of the appellant’s intent when he acquired these properties.

On the other hand, evidence was submitted that the property at 217-219 Marier Road, City of Vanier was purchased on March 13, 1970 (Exhibit I-1) and put up for sale on the appellant’s instructions by Pigeon-Roy Ltd on July 18, 1972 (Exhibit I-2). The property situated on Marier Road West was purchased on April 1, 1970 and put up for sale by Pigeon-Roy Ltd on May 5, 1972. In cross-examination the appellant admitted that he had conducted transactions involving other real estate that was not described in his notice of objection.

Furthermore, the evidence, which was not denied, showed that the appellant allegedly purchased several properties in the United States in 1976 and 1977. In 1976 the appellant purchased four houses and a 14-unit apartment building in Corpus Christi, Texas, United States. In 1977 he purchased eight dwellings at 615, Carancua Street, Corpus Christi, Texas, United States and a 65-unit apartment block, Cliff House, in Corpus Christi, Texas, United States.

During 1978 the appellant sold a condominium in his Cliff House property. In 1979 he vaguely remembers having sold two or possibly three apartments and in 1980 he sold three more condominiums in Corpus Christi.

In view of these transactions the appellant had to submit a tax return with respect to the income earned in the United States for the 1977, 1978 and 1979 taxation years; the card he used in this business read:

Mr Denis Lafreniere

Real Estate

Investment Consultant.

The Board’s decision in this case involves an appreciation of the facts. The Board cannot accept as conclusive the appellant’s statement that the successive purchases and sales of a large number of properties during the years in question were made as a long-term investment. It is necessary that the facts he proves and the evidence he adduces be such as to confirm the intent the appellant claims was his at the time each of these properties was purchased. The burden of adducing this evidence and of snowing that the Minister’s assessment was incorrect was on the applicant.

The holding in this case is not based on the business card used by the appellant in the United States reading “Real Estate Consultant”, or on the presumption that the appellant had no other employment. The holding is based on the fact that the appellant did not succeed in discharging the onus of proof and did not persuade the Board that all the purchases and sales of real estate that are in issue in this appeal were made exclusively for the purpose of making a long-term investment.

On the contrary, the very number, regularity and similarity, both in Canada and the United States, of the appellant’s real estate transactions indicate, in my opinion, that they were of a business nature. The Minister’s assessments are accordingly not incorrect and the appeal cannot be allowed.

The appeal is dismissed.

Appeal dismissed.