The
Chairman:—The
appeal
of
Susannah
Dalfen
is
from
assessment
in
respect
of
the
1974
taxation
year
by
which
the
Minister
added
and
additional
amount
of
$3,581.66
as
taxable
income
to
the
amount
of
$4,174
declared
by
the
appellant
as
a
taxable
capital
gain
realized
from
the
disposition
of
certain
real
estate
properties.
In
determining
whether
the
profits
realized
by
the
appellant
are
capital
in
nature
or
on
income
account,
the
Board
must
rely
on
the
evidence
placed
before
it
and
the
appellant
had
the
onus
of
proving
to
the
satisfaction
of
the
Board
that
the
assumptions
on
which
the
Minister
based
his
assessment
are
wrong.
Summary
of
Facts
The
appellant
described
herself
as
a
social
worker
who
in
1971
lived
in
Lucerne,
Quebec.
There
is
no
evidence
to
indicate
that
the
appellant
had
a
history
either
as
an
investor
or
a
trader
in
land
or
that
she
was
in
any
way
knowledgeable
in
real
estate.
Going
to
and
from
her
home
in
Lucerne,
she
regularly
went
by
a
land
development
project
on
which
houses
were
already
built,
from
which
she
deduced
the
potential
residential
growth
of
Lucerne.
The
evidence
is
that
she
became
involved
in
the
acquisition
of
the
property
through
a
relative,
Dr
E
I
Shapiro,
who
suggested
that
she
might
invest
her
savings
in
the
purchase
of
an
interest
in
a
land
syndicate
which
was
headed
by
Mr
Morris
Kertzer,
a
lawyer,
whom
the
appellant
knew
to
have
other
land
holdings.
Her
alleged
intention
was
to
make
a
long-term
investment
in
land
development
from
which
she
would
derive
income.
On
October
22,
1971,
by
memorandum
of
agreement,
the
“Pink
Road
Land
Syndicate”
was
formed
and
the
appellant
first
subscribed
for
one
unit
at
a
cost
of
$20,000
and
subsequently
reduced
the
purchase
to
$15,000
or
3/4
of
a
unit.
The
land
to
be
purchased
was
a
100-parcel
acre
zoned
for
single
family
residential
use
on
one-acre
lots
serviced
by
septic
tanks
and
wells.
The
memorandum
referred
to
the
proposed
revision
of
the
rezoning
of
the
land
to
a
higher
density
residential
use
of
the
land,
and
possible
sewage
treatment
and
collector
sewers.
(Exhibit
A-1)
The
subject
was
purchased
by
Mr
Morris
Kertzer
“In
Trust”
for
the
“Pink
Road
Land
Syndicate”
on
December
9,
1971.
(Exhibit
R-1)
On
August
31,
1973,
Mr
Kertzer
forwarded
to
holders
of
units
including
the
appellant
an
account
of
$1,500
to
be
paid
on
receipt
of
the
account
and
$1,312.50
on
October
15,
1973,
(Exhibit
A-2).
In
reviewing
the
accounts,
that
of
Sunderland,
Preston,
Simard
&
Associates
Ltd
and
that
of
Mr
Raymond
Berthiaume
(Maxi-Bec
Enterprises
Ltd)
stand
out
at
$7,500
and
$6,500
respectively.
A
preliminary
study
entitled
“Parc
Fleur
de
Lucerne’’,
allegedly
prepared
by
Sunderland,
Preston,
Simard
&
Associates
Ltd,
was
filed
as
Exhibit
A-4.
The
study
is
very
general
in
nature,
covering
a
far
greater
area
than
the
100
acres
subject
of
this
appeal
and
it
is
undated
and
unsigned.
The
plan
envisages
for
Lucerne
a
residential
population
of
30,000
in
the
general
Lucerne
area,
the
first
stage
of
which
was
to
take
place
from
1974
to
1979.
I
could
find
no
specific
plan
or
project
for
the
subject
100
acres,
nor
was
the
appellant
able
to
advise
the
Board
of
the
exact
nature
of
the
project
contemplated
for
the
subject
property.
It
is
of
interest
to
note
that
Mr
Sunderland
of
Sunderland,
Prestion
Simard
&
Associates
Ltd,
who
allegedly
prepared
the
study
(Exhibit
A-4)
was
also
the
town
planner
for
the
Township
of
Lucerne.
On
November
30,1973,
Mr
Kertzer
wrote
a
letter
to
the
appellant
in
which,
in
part,
he
states:
It
was
necessary
that
someone
do
the
coordinating
work
with
Mr
Sunderland
and
the
appropriate
municipal
and
regional
officials.
In
that
respect
it
was
always
the
intention
that
those
services
be
performed
by
the
late
Mr
Raymond
Berthiaume
through
his
company,
Maxi-Bec
Enterprises
Ltd
for
a
fee
of
$100
per
acre.
I
have
no
specific
recollection
of
mentioning
this
either
to
you
or
your
husband
but
I
hope
that
I
did
as
I
certainly
mentioned
it
to
everyone
else
in
the
group.
It
was
not
until
after
his
untimely
death
in
February
of
1973
that
I
realized
the
full
extent
of
the
work
he
had
been
performing
for
the
group.
I
am
amazed
at
the
number
of
phone
calls
and
attendances
required
to
coordinate
this
property
and
keep
the
planning
going
on
towards
the
completion.
It
was
extremely
essential
that
both
the
late
Mr
Berthiaume
and
Mr
Sunderland
perform
their
work
as
this
has
done
nothing
but
result
in
increasing
the
value
of
the
land.
I
appreciate
that
your
husband
was
not
criticizing
the
expenditures
but
I
wish
to
ensure
that
you
understand
that
time
alone
does
not
increase
the
value
of
the
land.
It
is
also
necessary
that
people
do
planning
and
servicing
work
thereon.
(Italics
mine)
For
your
general
information,
we
wish
to
advise
that
the
Estate
of
Raymond
Berthiaume
is
not
claiming
any
more
moneys
other
than
the
$6,500
previously
disbursed.
Mr
Sunderland
has
more
work
to
do
but
we
are
rapidly
approaching
the
point
where
this
group
cannot
take
the
next
step,
namely
the
decision
as
to
exactly
what
type
of
building
is
to
be
located
on
what
part
of
the
land.
It
is
for
this
reason
that
we
have
been
having
a
series
of
meetings
in
my
offices
(depending
on
who
was
available
at
what
particular
time)
to
discuss
the
sale
of
the
property.
The
consensus
was
that
we
should
aim
for
a
price
of
$500,000.
To
assist
in
reconciling
the
matter
the
writer
prepared
an
authorization.
Most
of
the
members
of
the
syndicate
have
signed
the
same.
The
writer
was
empowered
by
Max
and
Earl
Florence
to
sign
the
same
on
their
behalf.
Enclosed
you
will
find
a
copy
of
this
authorization
which
is
dated
October
25th,
1973.
If
you
concur,
please
advise
and
we
shall
send
you
an
original
copy
for
signature.
(Exhibit
A-5)
(Italics
mine)
On
February
1,
1974,
Mr
Kertzer
“In
Trust’’
sold
the
subject
for
property
for
$500,000.
(Exhibit
R-2)
On
February
4,1974
statement
number
2,
forwarded
after
the
date
of
sale,
shows
the
balance
available
for
distribution,
as
being
$17,433.53
per
unit.
Conclusions
The
appellant
at
the
time
of
acquisition
of
her
share
of
the
100
acres
knew
that
Mr
Kertzer,
the
principal
originator
of
“Pink
Road
Land
Syndicate,’’
also
had
interests
in
other
syndicates
representing
a
total
of
some
1,400
acres
of
land
in
Lucerne.
The
study
of
the
potential
development
of
the
Township
of
Lucerne
requested
by
Mr
Kertzer
covered
in
very
general
terms
the
entire
land
holdings
in
which
Mr
Kertzer
had
interest,
but
there
is
nothing
in
that
report
or
in
the
knowledge
of
the
appellant
as
to
what
was
to
be
the
form
the
alleged
project
for
the
100
acres
was
to
take:—single
residential
units,
duplexes,
townhouses
or
high
rise
apartments.
There
are
no
documents
or
plans
which
specified
what
was
to
be
constructed
on
the
100
acres
and
the
appellant
did
not
know
from
what
source
the
return
of
her
long-term
investment
could
be
realized.
The
subject
was
a
parcel
of
raw
land
zoned
residential^
but
the
use
of
the
land
was
limited
to
1
acre
lots
serviced
by
septic
tanks.
There
were
no
possible
revenues
from
the
land
as
it
stood
at
the
time
of
acquistion
and
although
there
were
carrying
charges
of
$10,000
per
year
and,
as
I
understand
it,
there
were
additional
costs
for
the
planning
of
a
possible
subdivision
and
the
servicing
of
the
land
which
was
presented
by
Mr
Berthiaume
to
the
Lucerne
town
council.
The
appellant
however
did
not
contribute
any
amount
other
than
the
$15,000
paid
for
her
3/4
unit
of
the
syndicate.
The
subject
property,
which
was
low-lying
land
in
a
sparsely
settled
area
of
Lucerne,
was
not
in
fact
subdivided
nor
was
it
provided
with
services.
An
offer
was
made
by
Mr
Noel
C
Beauchamp
for
the
purchase
of
the
100
acres
which
Mr
Kertzer
accepted
allegedly
without
the
knowledge
or
consent
of
the
appellant
who
was
then
residing
in
Toronto.
The
land
was
sold
at
a
considerable
profit
two
and
one
half
years
after
its
acquisition.
On
the
basis
of
the
evidence,
Mr
Kertzer
was
very
much
involved
in
real
estate
and
whatever
long-range
plans
he
may
have
had
for
the
1,400
acres
in
which
he
had
interests,
they
were
not
specific
enough
to
warrant
the
conclusion
that
he
had
at
the
time
of
acquisition
the
intention
of
developing
the
subject
100
acres
of
land.
The
appellant,
whose
declared
intention
in
acquiring
a
3/4
unit
in
the
project
was
to
derive
rental
income
from
developed
property,
was
under
cross-
examination
uncertain
as
to
whether
the
return
on
her
alleged
investment
would
take
the
form
of
rental
income
to
be
derived
from
some,
as
yet
undecided,
residential
construction
or
from
the
sale
of
serviced
land.
On
balance
of
probabilities
and
on
the
basis
of
the
evidence
adduced,
the
100
acres
were
not
acquired
by
the
syndicate
for
the
specific
purpose
of
developing
on
it
any
kind
of
residential
project
which
would
be
a
continuing
source
of
income
but
rather
to
benefit
from
the
rapidly
increasing
land
values
in
the
area
by
acquiring
the
100
acres
parcel
for
purposes
of
resale,
which
was
in
fact
done.
The
subject
was
sold
as
raw
land
2
Z?
years
after
acquisition
at
a
considerable
profit.
The
appellant,
who
had
by
then
moved
to
Toronto,
did
not
in
fact
contribute
any
further
monies
to
cover
the
cost
of
the
alleged
preliminary
planning
for
the
subdivision
or
servicing
of
the
land
which
would
appear
to
me
to
have
been
normal
in
the
circumstances
for
an
investor
who
was
interested
in
a
long-term
rent
producing
investment.
The
appellant’s
testimony,
her
actions
and
her
attitude,
did
not
support
her
declared
intention
of
having
acquired
a
share
of
the
land
for
purposes
of
a
long-term
investment.
On
the
contrary
the
evidence
and
particularly
the
content
of
Mr
Kertzer’s
letter
to
the
appellant
dated
November
30,
1973,
(cited
above),
indicates
that
the
appellant’s
real
interest
was
in
the
value
of
the
land.
The
appellant
did
not
succeed
in
establishing
to
the
satisfaction
of
the
Board
that
her
intention
in
acquiring
interest
in
the
“Pink
Road
Land
Syndicate”
was
for
the
purpose
of
investing
in
a
long-term
rental
producing
project.
On
the
basis
of
the
evidence,
I
conclude
that
the
appellant
purchased
a
3/4
unit
of
100
acres
of
land
held
by
Pink
Road
Syndicate
for
the
purpose
of
resale
at
a
profit
and
the
share
of
the
profit
realized
by
the
appellant
from
the
disposition
of
the
subject
land
by
the
said
syndicate
was
income
arising
from
an
adventure
in
the
nature
of
trade.
The
appeal
is
therefore
dismissed.
Appeal
dismissed.
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