Irvine Henry Graham v. Her Majesty the Queen, [1980] CTC 212, 80 DTC 6141

Maguire, DJ:—These proceedings, appealing from a judgment of the Tax Review Board dated October 26, 1976, are taken pursuant to subsections 172(1) and 175(3) of the Income Tax Act and section 48 and Schedule 1 of the Federal Court Act.

The plaintiff, acting on his own behalf, appeared without counsel. This gave rise to problems common to such a situation with the plaintiff through lack of knowledge of the difference between evidence and argument, and what is evidence, consistently submitting inadmissable observations and comment. Considerable leeway was granted to the plaintiff in this respect, which resulted in the saving to time, without prejudice to either party.

The issues involved are in respect to three items of income or expense incurred in obtaining income in all or some of the plaintiff’s 1970, 1971 and 1972 Income Tax returns, and Notice of Reassessment dated September 21, 1974, in respect to the 1970 and 1972 taxation years and a Notice of Reassessment dated March 3, 1976, in respect to the plaintiff’s 1971 taxation year.

I refer first to interest earned on Security Trust Certificate in the sum of $6,346.26, received April 18, 1972. Security Trust became bankrupt and the plaintiff received no interest on his investment in the years immediately prior to April, 1972. This payment was received from the Province of Alberta Treasury Board, together with repayment of the capital investment. The plaintiff requested that this income receipt be averaged over a three year period in which it should have been paid. Averaging was not granted, and on the appeal to it, the Tax Review Board, confirmed the departmental decision, in that such receipt did not come within the provisions of Subsection 39(1) of the Income Tax Application Rules for 1971. I must agree with this holding.

The next item which the plaintiff disputes, is in respect to certain utility charges for a month of December, which he paid in January following. The plaintiff being on a cash basis of accounting and returns, his request that this expense payment be computed in the month of December, not the following January, was refused. The plaintiff appears to think, that by this ruling he lost $300. This sum of course was allowed as an expense item, in the year it was paid. The decision of the Tax Review Board was correct.

The major issue here is relative to the disallowance of certain expenses allegedly incurred by the plaintiff in required repairs to houses and a block of apartments owned by him. The plaintiff had owned rental properties for many years. His management thereof must have been good because over the years, many of which were in a depression, with the problems of such a time, maintains that yearly he nevertheless showed a profit from said properties, duly reported in his Income Tax returns.

Proof submitted of required repairs and maintenance of these rented properties for the years 1970, 1971 and 1972 may roughly be placed in two classes, namely (a) bills for materials purchased or work performed issued by businesses or individual, or firms such as plumbers, all on bill forms setting forth the name of the firm or individual, and (b) bills covering casual labour employed by the plaintiff. The bulk of these set forth the plaintiff’s name, the name of the employee, a signature, presumably of the employee and a general statement of work, such as “painting, repairs and decorating’’, “for repair work, painting’’ or similar words in different order; plus the amount of the payment.

All disbursements coming within class (a) plus some small payments with receipts in class (b) including payments to two sons of the plaintiff were allowed as proper disbursements set off against revenue from the same source.

It is not contended that the plaintiff did not expend money in necessary repairs, decorating, etc, of the rental properties. It is however submitted, and was so held by the Tax Review Board, that the receipted bills, under all circumstances were not adequate to establish with reasonable certainty the amounts expended.

No evidence was given by any one of these many casual employees, confirming the payment to him. The address of any such employees appear in only a very few instances. The payments allegedly made were frequently substantial, from $200 to over $700. No cancelled cheques covering any such payment or payments were produced, the plaintiff stating that payments were almost always in cash. The plaintiff could not give particulars of actual work done, the hourly rate of pay, and time worked in respect to a number of bills on which he was questioned, and he in general indicated that he could not do so in respect to any.

The plaintiff in engaging this casual help, made some inquiry from prospective employees of his experience and ability, and maintains, I think rightly, that he was endeavouring to obtain reasonably competent help or reasonable cost.

There is no question but that the plaintiff did incur considerable expenses in necessary repairs, decorating, etc, of his many rental units. The issue is, had the plaintiff produced reasonable and satisfactory proof of these expenses, the proof of which falls upon him. The onus is on the plaintiff to establish error in the assessments made.

On full consideration of a'l factors in respect to the claimed expenses, I cannot find and hold that there is complete and full acceptable proof of reasonable and proper expenses in repairs, etc, of the plaintiff’s rental properties totalling the amounts disallowed on the reassessments for the years 1970, 1971 and 1972.

It was in no sense contended that the plaintiff has not incurred expense in employing these casual labourers. I am satisfied that considerable expense was incurred. There is no basis upon which I can make an accurate assessment of allowable expenses so incurred. I consider however, that recognizing all facts, I may, grant some of the relief asked for.

I therefore hold and direct that the total of labour expenses for such repairs, etc, disallowed for said years 1970,1971 and 1972 be reduced by the sum of $4,000.

A further issue is relative to what is called A & A Auto Transfer. Business losses for the years 1970, 1971 and 1972 were claimed in the respective sums $1,410.31, $1,656.38 and $1,497.36. The plaintiff had some time prior to 1970 operated this firm as a business, but in these three years had used the two trucks involved in connection with his rental properties only. The reassessment disallowed these claimed business losses, but allowed 50% of truck expenses against rental income. The plaintiff states the has maintained the business name anticipating that a son might wish to operate such a business on becoming old enough. No evidence was given showing error by the Minister in this reassessment.

In result the plaintiff’s claim against the reassessments imposed, as upheld by the Tax Review Board, is dismissed, save in respect to the credit of $4,000 above referred to.

Success being divided, I make no order for costs.