Delmer
E
Taylor:—These
are
appeals
against
income
tax
reassessments
for
the
year
1973
by
which
the
Minister
of
National
Revenue
increased
the
taxable
income
of
each
of
the
appellants
by
an
amount
of
$10,293.73
considered
by
him
to
represent
the
applicable
portion
of
the
profit
from
a
sale
of
certain
land
for
that
year.
The
appellants
did
not,
in
the
notices
of
appeal,
specify
sections
of
the
Income
Tax
Act
considered
relevant
by
them
but
the
respondent
relied,
inter
alia,
upon
section
3,
subsection
9(1),
paragraph
20(1)(n)
and
subsection
248(1)
of
the
Income
Tax
Act,
SC
1970-71-72,
c
63,
as
amended.
The
appeals
were
heard
on
common
evidence.
Facts
Arthur
E
Kruger
(hereinafter
referred
to
as
“Kruger”)
and
Elmer
D
Bassani
(hereinafter
referred
to
as
“Bassani”)
are
individuals,
and
Pantel
Holdings
Ltd
(hereinafter
referred
to
as
“Pantel”)
is
a
private
corporation,
all
resident
in
the
Province
of
Alberta.
Together
with
a
third
individual
Donn
Larson
(hereinafter
referred
to
as
“Larsen”)
and
a
second
corporation
London
Properties
Ltd
(hereinafter
referred
to
as
“London”),
they
each
acquired
by
agreement,
in
1968,
an
undivided
one-fifth
interest
in
a
29.5-acre
parcel
of
land
located
on
156th
Street,
just
outside
the
limits
of
the
City
of
Edmonton,
Alberta.
The
five
participants
will
be
hereinafter
referred
to
as
the
“group”,
to
be
distinguished
thereby
from
the
three
“appellants”
directly
concerned
with
this
hearing.
The
purchase
price
was
$50,000,
with
a
$20,000
downpayment
and
a
$30,000
mortgage
to
the
vendor
Shell
Canada
Ltd
(hereinafter
referred
to
as
“Shell”).
On
March
1,
1973
the
property
was
sold
for
$191,750,
with
$75,000
in
cash
and
a
mortgage
for
the
balance,
with
the
condition
that
the
existing
Shell
mortgage
be
discharged.
The
Minister
made
allowances
in
the
determination
of
the
1973
profits,
intended
to
comply
with
the
“reserve”
conditions
for
future
payments
under
paragraph
20(1
)(n)
of
the
Act,
and
added
one-
fifth
of
the
resultant
amount
applicable
to
the
year
1973
to
each
of
the
members
of
the
group
as
taxable
income.
It
is
a
matter
of
record
that
two
members
of
the
group,
Larsen
and
London,
did
not
appeal
from
the
ensuing
income
tax
reassessments.
Contentions
fhe
appellants
in
the
separate
notices
of
appeal
contended
as
follows:
The
appellant
[Kruger]
acquired
the
said
land
to
hold
it
as
an
investment
and
for
the
purpose
of
expanding
his
mechanical
contracting
business
and
locating
it
on
this
site.
The
appellant
[Bassani]
acquired
the
said
land
to
hold
it
as
an
investment
and
it
was
the
appellant’s
intention
to
use
his
portion
of
the
land
as
a
storage
area
for
Cliff's
Towing
Service
Ltd.
which
is
a
company
controlled
by
the
appellant.
The
appellant
[Pantel]
acquired
the
said
land
to
hold
it
as
an
investment
and
develop
it
for
commercial
warehousing
space.
The
respondent
asserted
in
the
Reply
to
the
Notices
of
Appeal
that:
(a)
at
the
time
of
its
acquisition
by
the
appellant
herein,
the
property
with
which
this
disputed
assessment
is
concerned
comprised
undeveloped
land
incapable
of
yielding
revenue;
(b)
the
property
did
not
yield
any
revenue
or
any
income
whatsoever
during
the
period
it
was
owned
by
the
appellant
and
his
partners;
(c)
no
attempt
was
made
by
the
appellant
or
his
partners
to
develop
the
property
and
no
effort
was
made
to
carry
out
the
stated
purposes
for
which
the
property
had
allegedly
been
acquired
and
no
written
agreement
with
respect
to
such
properties
or
with
respect
to
any
future
use
of
the
property
was
made,
drafted
or
signed
by
the
partners;
(d)
the
appellant
knew
that
at
least
some
of
his
partners
had
engaged
in
other
real
estate
transactions
or
were
connected
with
real
estate
interests;
(e)
on
the
basis
of
the
foregoing
the
respondent
concluded
that
the
property
had
not
in
fact
been
acquired
for
use
and
development
but
rather
with
a
speculative
intent
to
turn
the
same
to
account
for
profit
by
sale,
which
intent
was
carried
out.
Evidence
Mr
Steve
Pantelchuk,
president
of
Pantel,
gave
evidence
that
he
was
a
local
businessman
with
an
interest
in
several
companies;
that
the
company
involved
here
(Pantel)
was
in
the
restaurant
business.
but
associated
with
another
company
on
the
same
downtown
Edmonton
premises,
roasting
and
distributing
coffee;
that
together,
the
two
companies
used
a
rented
building
of
about
1,000
square
feet,
plus
a
parking
area;
that
at
the
time
there
were
two
employees
but
he
was
considering
expansion
and
had
already
purchased
a
much
larger
coffee
roaster
for
the
business;
that
he
considered
that
an
investment
in
some
6
acres
(1/5
of
total
of
29.5
acres)
amounting
to
about
250,000
Square
feet
was
only
good
planning
for
the
future;
that
both
Donn
Larsen
and
a
Mr
Check
who
controlled
London
Properties
were
known
to
him;
and
that
he
did
some
business
with
Larsen
who
was
also
a
restaurant
operator,
but
had
no
dealings
with
Check
who
was
in
the
real
estate
business.
In
1968
the
appellant
company
had
available
some
surplus
funds
and
Mr
Pantelchuk
considered
that
the
price
of
the
property
was
attractive,
with
his
portion
of
the
investment
(equal
to
the
others
in
the
group)
amounting
to
$4,000
down
and
$1,000
per
year
thereafter
for
principal
on
the
mortgage,
which
carried
an
interest
rate
of
7
/2%
per
annum.
He
was
therefore,
according
to
his
own
calculations,
buying
the
property
for
less
than
$2,000
per
acre,
and
he
gave
some
consideration
at
the
time
to
using
any
excess
of
his
portion
of
the
land
for
warehousing
or
other
industrial
or
commercial
development
for
outside
rental
purposes.
Mr
Pantelchuk
had
not
considered
the
proximity
of
the
Inland
Cement
Co
Ltd
(hereinafter
referred
to
as
“Inland”—and
which
will
be
discussed
later
in
this
decision)
to
be
a
problem
to
the
operation
of
his
business.
The
property
purchased
was
zoned
agricultural
and
light
industrial
and
there
had
been
recent
expansion
and
development
in
that
general
direction
from
the
City
of
Edmonton
proper.
Evidence
was
also
adduced
under
cross-examination
that
Pantelchuk
had
at
a
date
later
than
1968
purchased
for
some
$33,000
cash
another
property
in
northern
Alberta
for
use
in
the
camping
and
recreation
business.
He
also
agreed
with
counsel
for
the
respondent
that
the
group
had
made
no
effort
to
develop
or
improve
the
land
during
the
five
years
it
was
held.
In
support
of
the
appeals
this
appellant
submitted
the
following:
Exhibit
A-1
—
a
photograph
of
the
subject
property;
A-2
—
a
photograph
of
Inland
Cement
Co
property
adjoining
subject
property;
A-3
—
a
copy
of
a
report
by
the
Department
of
the
Environment,
Government
of
Alberta,
Division
of
Pollution
Control,
for
Check
Realty
Ltd
dated
May
6,
1971;
A-4
—
a
copy
of
an
agreement
between
Shell
Canada
Limited
and
Arthur
E
Kruger,
made
May
27,
1968;
A-5
—
a
copy
of
an
agreement
between
Art
E
Kruger,
Donn
Larsen
and
Elmer
Duane
Bassani,
Pantel
Holdings
Ltd
and
London
Properties
Ltd
of
the
First
Part,
and
North
American
Road
Ltd
of
the
Second
Part,
made
March
1,
1973.
Mr
Edwin
Kruger
testified
that
he
is
now
a
real
estate
broker,
but
in
1968
he
had
been
a
senior
officer
in
a
mechanical
contracting
business
located
on
146th
Street
in
Edmonton.
In
that
year
the
business
was
doing
very
well
and
there
were
indications
that
additional
space
would
be
required
in
the
future.
Kruger
considered
the
subject
property
very
suitable
compared
to
the
location
and
facilities
then
being
used
and
did
not
think
that
an
acquisition
of
some
6
acres
was
at
all
excessive.
After
1968,
circumstances
in
the
personal
and
business
life
of
this
appellant
changed
rather
dramatically,
and
he
liquidated
and
consolidated
his
interests,
withdrawing
at
the
same
time
from
this
particular
mechanical
contracting
firm.
It
was
the
requirement
for
funds,
combined
with
the
fact
that
he
was
no
longer
in
the
same
type
of
business,
that
motivated
Kruger
to
accept
the
offer
to
sell
the
property.
He
agreed
that
he
was
probably
most
active
and
most
interested
in
consummating
the
sale
in
1973.
However,
at
the
time
of
the
sale
by
the
group,
he
was
not
in
the
real
estate
field
personally.
A
page
from
a
business
magazine
was
submitted
as
supporting
evidence
and
indexed
as
Exhibit
A-6—“Dust
control
is
continuing
battle
for
Inland
Cement”.
In
this
connection,
the
appellant
recounted
that
the
dust
problem
which
was
associated
with
Inland
would
have
probably
prevented
the
use
of
the
property
for
his
original
purpose,
even
if
he
had
stayed
associated
with
the
mechanical
contracting
business.
Exhibit
A-6
served,
in
the
opinion
of
the
witness,
to
illustrate
that
Inland
had
maintained
its
efforts
to
reduce
or
eliminate
the
problem,
even
though
it
was
not
regarded
to
be
excessive
by
certain
experts,
as
shown
by
the
letter
indexed
as
Exhibit
A-3
which
is
reproduced
below:
DEPARTMENT
OF
THE
ENVIRONMENT
Government
of
Alberta
Division
of
Pollution
Control
303
Administration
Building,
Edmonton
6,
Alberta.
May
6,
1971
Check
Realty
Ltd,
603
Empire
Building,
Edmonton,
Alberta.
Attention:
Mr
J
L
Check
Dear
Sir:
Re:
Dustfall
on
property
located
in
the
area
of
156
Street
and
125
Avenue,
Edmonton.
As
requested
we
are
herewith
forwarding
the
results
of
the
dustfall
exposure
Station
which
was
set
up
on
the
subject
property
in
September
1970.
The
dustfall
levels
detected
were
as
follows:
October
1970
—
85.4
tons/sq.
mile/30
days
November
1970
—
11.5
tons/sq.
mile/30
days
December
1970
—
26.4
tons/sq.
mile/30
days
January
1971
—
13.9
tons/sq.
mile/30
days
February
1971
—
36.5
tons/sq.
mile/30
days
March
1971
—
16.5
tons/sq.
mile/30
days
With
the
exception
of
the
October
1970
level
the
dustfall
levels
were
within
the
“Ambient
Air
Quality
Standards”
for
the
Province
of
Alberta.
As
may
be
expected
the
dustfall
levels
usually
decrease
during
the
winter
months
with
increased
snow
cover.
The
dust
levels
monitored
from
November
to
March
can
therefore
be
attributed
directly
and
primarily
to
the
nearby
pollutant
source.
The
October
dustfall
levels
were
high
throughout
the
City
of
Edmonton
with
a
monthly
mean
of
49.1
tons/sq.
mile/30
days
for
all
stations.
During
relatively
dry
periods,
the
background
level
of
dust
raised
by
winds
and
specific
local
sources
such
as
nearby
gravel
roads
or
construction
must
be
taken
into
consideration.
We
would
further
like
to
add
that
Inland
Cement
Ltd.
has
been
quite
air
pollution
control
conscious
and
cooperative.
The
company
has
installed
and
is
operating
effective
dust
control
equipment.
Every
year
the
three
main
Stacks
at
the
plant
are
source
sampled
to
check
compliance
with
approval
limitations
and
provincial
emission
regulations.
On
the
basis
of
the
available
dustfall
levels
monitored
we
can
justify
nc
reason
to
require
stricter
emission
control
at
the
Inland
Cement
plant
unless
the
stack
survey
indicates
excessive
stack
emissions.
The
dustfall
monitor
station
will
be
continued
on
the
subject
property
and
the
results
made
available
to
you
upon
request.
Yours
very
truly,
(Sgd)
S
L
Dobko
S
L
Dobko,
P
Eng,
Head,
Air
Pollution
Control
Section
SLD:mac
Encl
Mr
Check
was
also
known
to
this
appellant
but
there
was
no
evidence
of
substantial
previous
business
dealings
between
them.
The
mechanical
contracting
firm
did
continue
with
and
complete
an
expansion,
but
obviously
in
another
location.
Mr
Elmer
Duane
Bassani
is
the
president
of
Cliff's
Towing
Service,
operating
in
1968
at
106th
Street,
Edmonton.
As
the
name
of
the
company
would
imply,
he
required
considerable
land
for
parking
and
storing
automobiles—on
occasions,
according
to
his
testimony,
as.
many
as
600
to
700
but
averaging
about
400
vehicles.
The
property,
both
as
far
as
size
and
location
were
involved,
appeared
to
suit
his
purposes
of
an
anticipated
expansion.
He
was
not
concerned
about
which
particular
“undivided
one-fifth”
he
would
eventually
obtain,
and
the
stipulation
in
the
sale
agreement
from
Shell
to
the
group
that
only
Shell
products
be
“stored,
sold
or
distributed
on
the
premises
until
1988”
would
not
have
caused
him
any
difficulty.
At
the
time
of
the
purchase
he
had
given
no
thought
to
any
possible
problem
resulting
from
the
proximity
of
Inland
and
the
question
of
dust
which
arose
from
it.
He
had,
however,
been
the
first
of
the
group
(and
that
was
in
1970)
to
recognize
there
would
certainly
be
a
problem
for
his
operation,
and
by
the
end
of
that
year
(1970)
he
was
quite
certain
he
could
not
utilize
the
property
for
his
original
purpose.
The
appellant
did
not
feel
pressed
to
sell
and
remained
content
to
agree
with
the
decision
of
the
group,
and
in
fact
the
group
did
reject
a
first
offer
to
dispose
of
the
property.
The
appellant
submitted
the
following
exhibits:
Exhibit
A-7
—
a
photograph
of
the
area
surrounding
the
subject
property;
A-8
—
a
second
photograph
of
the
area
surrounding
the
Subject
property;
A-9
—
a
copy
of
a
document
showing
title
to
subject
land,
registered
with
the
Land
Titles
Office
in
Edmonton,
July
3,
1968.
This
appellant
also
knew
Check,
and
the
evidence
indicates
business
dealings
had
occurred
on
previous
occasions
between
them.
He
also
Stated
that
Check
was
aware
he
(Bassani)
was
interested
in
relocating
his
towing
business,
and
was
looking
for
some
property.
Argument
Counsel
for
the
appellants
contended
“their
endeavours
include
other
interests,
and
the
isolated
purchase
and
holding
of
this
property
for
a
long
term
and
sale,
certainly
doesn’t
constitute
the
carrying
on
of
a
business
in
the
normal
sense
of
the
word’’.
In
support
of
this
he
asserted
that:
(a)
“None
of
the
appellants
was
involved
in
any
way
in
the
buying
and
selling
of
real
estate
at
any
of
the
material
times
.
.
.”
(b)
.
We
have
properties
held
for
almost
five
years.”
(c)
“The
frequency
or
number
of
similar
transactions
is
a
related
test.
.
.
.
Here
again,
none
of
the
appellants
has
been
involved
in
this
type
of
transaction,
and
again,
any
involvement
they
have
had
with
real
estate
has
been
real
estate
that
has
had
direct
use
in
relation
to
their
respective
businesses.”
(d)
“No
offers
were
solicited,
no
advertising
was
carried
out.
.
.
.
That
is,
they
don’t
do
any
of
the
things
that
you
would
have
expected
they
might
have
done
if
they
really
wanted
to
enhance
the
value
of
the
property,
or
make
it
more
attractive
for
resale.”
(e)
“Then
consider
the
factor,
what
was
the
reason
for
the
sale?
What
brought
about
the
sale,
and
that
is
again
of
some
significance,
were
the
appellants
simply
taking
the
best
opportunity
to
realize
a
profit
on
the
property
that
they
all
along,
in
the
eyes
of
the
Minister,
were
out
to
achieve?
I
suggest
that
that
is
not
supported
on
the
evidence.
.
.
.
it’s
clear
on
the
evidence
that
each
of
the
appellants
had
a
separate
and
distinct
reason
for
deciding
to
accept
the
offer.
They
had
initially
set
out
to
acquire
the
property
for
use
in
relation
to
their
respective
businesses.”
Counsel
dealt
with
the
dustfall
question
by
proposing
that
in
Edmonton,
at
the
time
of
year
the
purchase
was
made,
there
is
dust
everywhere,
and
therefore
the
additional
amount
produced
by
Inland
would
not
have
been
noticeable.
He
stated
that
one
would
assume
there
would
be
control
over
such
pollution
and
mentioned
that
the
appellants
were
all
busy
men
who
saw
it
“only
as
an
investment
they
could
afford,
and
wait
until
the
time
when
they
could
expand
their
businesses.”
This
was
illustrated
by
counsel
in
this
way:
So
that
we
have
a
situation
where
after
this
awareness
of
this
problem,
again
the
unsolicited
offer
appears
on
the
scene.
Perhaps
Mr
Kruger
is
in
circumstances
that
lead
him
to
be
perhaps
more
inclined
to
accept
the
offer
at
that
stage,
but
the
group
[italics
mine]
is
in
a
situation
where
they’re
all
questioning
the
usefulness
of
this
property
for
their
purposes
at
that
time,
and
they
decide
to
accept
the
offer
in
those
circumstances.
The
matter
of
secondary
intention
on
the
part
of
the
appellants
was
disposed
of
as
follows:
Fortunately,
the
courts
more
recently
have
limited
that
doctrine
to
the
point
where
it
perhaps
makes
more
sense
in
a
commercial
setting.
That
is,
the
courts
are
now
concerned
that
the
appellant
or
the
taxpayer,
in
order
for
this
doctrine
to
have
any
application,
must
have
had
as
an
operating
motive
at
the
time
of
the
purchase,
this
intention
to
sell
if
everything
went
wrong,
and
there
have
to
be
circumstances,
I
would
suggest,
that
would
indicate
that
there
was
this
secondary
intention
at
the
time
the
property
was
acquired.
With
regard
to
the
association
with
Check,
counsel
pointed
out:
There’s
no
strong
authority
that
I
am
aware
of
that
suggests
that
you’re
taxed
by
association
with
any
other
individual,
and
that
each
co-owner
of
the
property
cannot
be
viewed
separately
and
distinctly
from
his
other
co-owners.
Counsel
placed
considerable
emphasis
on
the
following
cases:
Roy
M
Power
v
Her
Majesty
the
Queen,
[1975]
CTC
580;
75
DTC
5388;
Progress
Management
Co
Ltd
v
Her
Majesty
the
Queen,
[1975]
CTC
244;
75
DTC
5174.
The
case
for
the
appellants
was
summarized:
In
the
final
analysis,
each
of
the
appellants
had
a
clear
and
demonstrable
intention
to
use
their
one-fifth
of
the
property
in
respect
of
their
businesses
which,
in
my
view,
characterized
that
property
as
a
capital
asset
in
their
hands.
They
held
it
for
five
years.
Their
intention
only
changed,
and
in
each
case
based
on
circumstances
that
were
not
contemplated
when
the
property
was
purchased,
and
that
on
this
basis,
it’s
my
submission
that
the
gains
derived
by
each
of
the
appellants
were
capital
in
nature.
Counsel
for
the
respondent
pointed
out
what
he
regarded
to
be
rather
significant
differences
between
the
cases
cited
by
counsel
for
the
appellants,
and
he
stressed
to
the
Board
the
role
of
Mr
Check
“around
whose
person
just
about
the
whole
thing
revolves
and
turns.
He
did
not
appeal,
he
didn’t
come
to
testify.’’
According
to
counsel,
the
evidence
did
not
support
a
conclusion
that
there
was
a
clear
development
intention
held
individually
by
the
three
appellants,
let
alone
a
common
intention
held
by
the
“group”.
There
was
no
indication
of
the
process
by
which
the
property
was
to
be
divided
into
fifths,
which
would
be
acceptable
and
satisfactory
to
all.
The
appellants
should
not
be
able
to
claim
frustration
of
any
of
their
intentions
(no
matter
how
vague)
based
on
the
dustfall
problem,
since
the
evidence
showed
it
was
within
acceptable
limits.
There
was
no
income
at
all
from
the
property
in
five
years,
and
the
argument
made
by
counsel
for
the
appellants
that
since
the
appellants
had
done
nothing
in
that
period
to
enhance
the
value
of
the
property
this
point
should
be
in
their
favour,
did
not
impress
him.
Included
in
the
cases
cited
to
the
Board
by
counsel
for
the
respondent
were
the
following:
Ralph
K
Farris
v
MNR,
[1970]
CTC
224;
70
DTC
6179;
Her
Majesty
the
Queen
v
Douglas
L
Anderson,
[1973]
CTC
606;
73
DTC
5444;
[1974]
CTC
838;
74
DTC
6645;
Morev
Investments
Limited
et
al
v
MNR,
[1972]
CTC
513;
72
DTC
6421;
[1973]
CTC
429;
73
DTC
5353;
Carribean
Properties
Limited
v
Her
Majesty
the
Queen,
[1974]
CTC
858;
74
DTC
6660;
Rokosh
Engineering
&
Construction
Ltd
v
Her
Majesty
the
Queen,
[1974]
CTC
536;
74
DTC
6375;
Robert
D
Tate
et
al
v
Her
Majesty
the
Queen,
[1974]
CTC
731;
74
DTC
6559.
Findings
One
of
the
documents
normally
required
by
the
Board
under
the
Income
Tax
Act
prior
to
hearing
an
appeal
is
the
notice
of
objection
of
an
appellant.
This
document
and
its
contents,
therefore,
although
for
review
and
determination
at
an
earlier
level
of
the
dispute
(within
the
offices
of
Revenue
Canada)
must
be
regarded
as
highly
significant.
The
Board
quotes
certain
critical
paragraphs
from
the
respective
notices
of
objection
of
the
appellants
(the
italics
have
been
added):
“PANTEL
HOLDINGS
LTD
owns
and
operates
a
retail
coffee
store
known
as
the
Java
Shop
located
on
100A
Street
and
Jasper
Avenue
in
Edmonton,
Alberta.
Edmonton
Tea
and
Coffee
Ltd
is
an
affiliated
company
which
is
in
the
wholesale
tea
and
coffee
distribution
business.
Pantel
Holdings
Ltd
acquired
the
above
mentioned
land
as
an
investment
with
the
view
that
the
property
would
eventually
be
developed
into
a
commercial
site
which
could
provide
warehousing
space
for
the
affiliated
company
Edmonton
Tea
and
Coffee
Ltd.
The
purchasing
group
planned
to
develop
a
commercial
structure
that
would
be
suitable
to
accommodate
all
the
members
of
the
group
as
each
member
was
involved
in
an
active
business
and
contemplatoed
the
use
of
this
site
for
future
expansion."
“Mr
Kruger’s
original
intention
in
purchasing
the
property
was
to
hold
it
as
an
investment
due
to
the
fact
that
at
the
time
of
the
purchase
the
price
was
reasonable
and
the
agreement
specified
very
good
terms
of
payment.
In
addition
Mr
Kruger
is
a
shareholder
in
a
company
in
the
mechanical
contracting
business
called
Jamison
&
Kruger
Co
Ltd.
The
company
was
contemplating
future
expansion
and
Mr
Kruger
acquired
the
said
property
with
the
possibility
of
later
transferring
it
to
his
company
should
the
need
arise.’’
“In
July
of
1968
myself
(BASSANI)
and
four
participants
purchased
29
acres
of
land
being
a
portion
of
15-53-25-W4th.
/t
was
our
intention
to
subdivide
this
parcel
into
five
equal
portions
so
that
each
participating
member
would
have
an
undivided
interest
in
approximately
6
acres
of
land.
It
was
my
intention
to
use
my
portion
of
the
land
as
a
storage
area
for
Cliffs
Towing
Service
Ltd
which
is
controlled
by
myself,
such
storage
space
being
required
for
the
business.
Because
of
the
possibility
of
pollution
and
environmental
damage
from
the
Inland
Cement
plant
located
adjacent,
when
an
unsolicited
offer
of
$191,750.00
(approximately
$6,600
per
acre)
was
received
for
the
entire
parcel,
it
was
accepted
on
March
1,
1973.
Since
that
time
the
subsequent
purchaser
has
had
offers
of
up
to
$20,000
per
acre
for
the
land.
.
.
.
Section
39
of
the
Income
Tax
Act
defines
a
capital
gain
as
being
a
gain
from
the
disposal
of
property.
Since
my
intention
was
to
use
my
share
of
the
land
in
question
as
property
in
my
business
and
I
did
not
acquire
my
share
of
the
land
on
speculation,
my
share
of
the
land
should
be
treated
as
property,
the
disposal
of
which
is
subject
to
capital
gains
treatment.”
It
is
an
extremely
difficult
task
on
the
basis
of
these
statements
to
reach
the
conclusion
that
at
the
time
of
filing
the
respective
notices
of
objection—the
latter
half
of
the
year
1975—there
was
a
clear
recollection
by
the
individual
appellants
of
a
common
purpose
for
the
property
acquisition
in
1968.
To
whatever
extent
there
was
any
form
of
common
ground
evident,
it
appears
to
exist
in
the
statements
of
Kruger
“to
hold
it
as
an
investment’’
and
Pantel
“acquired
.
.
.
as
an
investment’’.
As
quoted
in
the
early
part
of
this
decision,
in
the
respective
notices
of
appeal
filed
in
May
1976
the
appellants
all
“acquired
.
.
.
to
hold
as
an
investment
and
.
.
(italics
mine)
“develop
it
for
commercial
warehousing
space’’
(Pantel);
“for
the
purpose
of
expanding
his
mechanical
contracting
business,
and
locating
it
on
this
site’’
(Kruger);
“it
was
the
appellant’s
intention
to
use
his
portion
as
a
storage
area’
(Bassani).
All
of
the
latter
were
apparently
subsidiary
intentions.
This
hearing,
however,
was
presented
with
evidence
intended
to
support
as
the
major
motivation
of
each
of
the
appellants,
the
use
of
the
three
respective
parcels
of
a
one-fifth
interest
each,
as
the
site
for
relocation
of
the
then
existing
businesses.
One
might
be
justified
in
suggesting
that
there
had
been,
at
the
minimum,
some
metamorphosis
from
the
notices
of
objection
through
the
notices
of
appeal,
to
the
hearing
itself.
The
Board
notes
for
the
record
that
the
group
apparently
consisted
of
—a
private
limited
company
used
as
a
business
vehicle
for
a
licensed
real
estate
salesman
(London
for
Check);
—a
restaurant
operator
(Larsen);
—a
private
limited
company
operating
a
coffee
shop
in
the
same
premises
as
a
separate
but
related
private
limited
company
processing
and
distributing
coffee,
both
controlled
by
one
individual
(Pantel);
—a
senior
officer
and
major
shareholder
in
a
mechanical
contracting
firm
(Kruger);
—the
major
shareholder
in
a
private
limited
company
engaged
in
the
business
of
towing
and
storing
cars,
which
shareholder
also
had
several
other
business
interests
(Bassani).
There
is
nothing
to
support
an
opinion
that
the
respective
conceived
individual
developments
would
have
been
compatible
and,
indeed,
one
might
judge
that
there
might
have
been
considerable
business
incompatibility,
even
aside
from
the
alleged
external
interference
from
Inland.
The
Board
is
also
mindful
that
a
key
member
of
the
group
was
in
the
real
estate
field
and
that
he,
together
with
the
fifth
group
member,
did
not
appeal
their
similar
reassessments.
Although
these
peripheral
facts,
in
isolation,
might
not
be
completely
destructive
of
the
appellants’
cases,
they
must
be
regarded
as
impediments
for
them
to
overcome
in
the
conduct
of
their
appeals.
The
Board
notes
the
effort
and
dedication
of
counsel
in
bringing
forward
for
consideration
numerous
cases
both
of
the
Federal
Court
of
Appeal
and
of
this
Board
touching
on
the
matter
at
issue.
However,
the
Board
recognizes
the
validity
of
the
point
also
made
by
counsel
that
a
determination
in
income
tax
law
between
capital
or
income
account,
due
to
its
very
nature,
can
usually
only
be
made
as
a
result
of
a
serious
consideration
and
assessment
of
the
specific
related
facts
in
each
case,
and
that
earlier
decisions
serve
mainly
to
enlighten
the
particular
matter
at
issue,
and
provide
general
parameters
and
guidelines,
rather
than
to
give
inflexible
direction
based
on
some
similarity
on
facts
and
evidence.
The
Board
has
carefully
reviewed
the
cases
cited
by
counsel
with
that
thought
in
mind.
In
my
opinion,
to
determine
a
question
of
the
kind
posed
at
this
hearing,
particularly
dealing
with
the
purchase
and
sale
of
land
and
considered
against
the
background
just
described,
requires
the
following:
(a)
an
examination
of
the
appellants’
personal
and
business
circumstances
at
the
time
of
acquisition,
as
such
circumstances
conflicted
with,
or
complemented,
the
probable
fulfilment
of
their
stated
intention:
(b)
a
review
of
the
efforts
made
and
the
progress
demonstrated
toward
such
stated
intention
as
an
objective;
(c)
a
critical
consideration
of
the
reasons
advanced
for
the
eventual
abandonment
or
the
frustration
of
the
stated
intention.
To
the
degree
this
procedure
describes
a
rather
objective
test
of
the
evidence,
it
may
be
so
termed
but
I
am
unaware
of
any
other
approach
save
accepting,
without
such
scrutiny,
the
assertions
of
the
appellants,
leaving
the
case
open
to
a
completely
subjective
assessment,
and
risking
thereby
not
giving
due
attention
to
the
facts
and
evidence
the
appellants
have
brought
forward.
The
stated
intention
of
an
appellant
in
such
matters
may
be
regarded
as
that
which
he
holds
to
have
been
his
primary,
often
sole,
objective
at
the
critical
point
in
time,
eg
the
purchase
of
an
asset.
I
do
not
hold
that
such
a
purchaser
need
have
at
that
time
only
one
possible
objective—the
primary
one—
and
indeed
it
would
be
an
unusual
business
matter
which
did
not
contain
or
allow
for
some
flexibility
of
eventual
outcome.
It
should
be,
however,
the
responsibility
of
an
appellant
in
such
a
situation
to
adduce
evidence
based
on
the
above
criteria
which
reflects
favourably
upon
his
contention
as
the
predominant
one,
rather
than
as
subsidiary
or,
in
fact,
inconsequential.
Bearing
in
mind
the
retrospectivity
of
this
“review”
process,
it
is
inadequate
for
the
appellant
merely
to
establish
that
the
stated
intention
is
of
such
a
character
that
it
merely
could
have
or
should
have
occupied
the
central
role
in
the
initial
decisions
taken.
It
must
be
shown
to
have
conspicuously
done
so.
Using
this
framework
for
each
appellant,
the
available
factual
evidence
may
be
read
to
show:
Pantel
(a)
Probable
accomplishment
The
evidence
does
not
support
a
conclusion
that
either
the
coffee
shop,
or
the
coffee
roasting
and
distributing
business,
or
both,
re-
quired
vacant
land
of
anything
approaching
this
company’s
6
acres.
The
company
has
not
even
relocated
its
business
until
this
present
year.
Questions
regarding
the
suitability
of
the
location
itself
(outside
the
city
limits)
for
the
appellant’s
business
remain
unanswered.
The
1968
zoning
as
agricultural
or
light
industrial
adds
little
weight
to
the
view
that
it
would
have
been
the
ideal
area
for
such
relocation.
Mr
Pantelchuk’s
later
substantial
acquisition
of
a
recreational
business
site
indicates
that
he
was
investing
surplus
cash
which
was
available
at
that
time
in
Pantel.
No
market
surveys,
studies
or
data
were
presented
to
indicate
that
even
the
possible
objective
of
building
a
rental
warehouse
(or
industrial
building),
stated
to
be
at
least
a
secondary
objective,
was
feasible
or
practical.
The
participation
by
Pantel
in
the
acquisition
was
an
investment—but
only
tangentially
related
to
the
operating
business
of
the
company.
(b)
Progress
None.
(c)
Frustration
There
was
no
evidence
specifying
the
manner
in
which
the
Inland
dust
problem
would
have
affected
the
business
of
this
appellant—
if
relocated
to
the
new
site—particularly
when
the
pervasive
normal
dust
problem
at
certain
times
of
the
year
in
Edmonton,
as
described
in
the
evidence,
apparently
would
not
have
done
so.
Exhibit
A-3
(although
apparently
rejected
by
the
appellants)
does
not
indicate
the
cement
dust
problem
to
have
been
excessive
and
the
Board
was
not
made
aware
of
any
substantial
efforts
by
this
appellant
to
produce
more
precise
pollution
studies
or
reports
by
independent
consultants,
nor
did
the
company
examine
the
prospects
of
pollution
control
within
its
own
proposed
business
establishment
planned
for
the
site.
For
this
appellant,
there
is
little
evidence
that
relocation
of
its
business
to
the
new
site
was
seriously
considered
as
a
practical
alternative.
No
effort
was
made
to
bring
this
about
and
the
reasons
for
alleged
frustration
are
minimal.
The
acquisition
for
this
appellant
would
appear
to
have
been
an
investment,
and
to
a
major
if
not
exclusive
degree,
one
of
speculation.
Kruger
(a)
Probable
accomplishment
The
general
proximity
of
the
then
existing
mechanical
contracting
business
(136th
Street)
to
the
proposed
relocation
site
(146th
Street)
lends
some
credence
to
the
claim
of
this
appellant.
The
size
of
the
acquisition
(approximately
6
acres)
would
not
have
been
unreasonable
for
such
a
business.
However,
there
was
no
evidence
that
the
proposed
relocation
had
even
been
examined
and
approved
by
the
other
major
shareholder(s)
in
the
appellant’s
com
pany;
there
was
no
absolute
dedication
of
the
land
to
the
company’s
eventual
ownership;
and
he
was
not
the
controlling
shareholder
in
the
mechanical
contracting
business
and
therefore
could
not
even
guarantee
the
company’s
use
of
the
land.
The
interest
in
the
purchase
was
acquired
and
maintained
in
the
appellant’s
own
name
(in
fact
he
had
acted
as
agent
for
the
group
in
the
total
acquisition)
and
when
this
appellant
severed
relations
with
the
company,
he
retained
the
interest
as
a
personal
holding.
(b)
Progress
None.
(c)
Frustration
The
comments
made
earlier
for
Pantel,
dealing
with
pollution,
are
equally
applicable
for
this
appellant.
The
additional
reason
advanced
for
this
particular
appellant
not
proceeding—that
he
had
liquidated
and
consolidated
his
business
holdings—provides
only
limited
basis
for
consideration,
since
the
mechanical
contracting
company
could
have
assumed
his
equity
holding
in
the
property.
Bassani
(a)
Probable
accomplishment
The
business
requirements
of
this
appellant
were
such
that
the
location
and
the
amount
of
acreage
would
have
been
suitable,
and
in
fact
probably
ideal.
He
had
no
lack
of
funds
and
his
business
was
expanding.
Although
he
had
made
no
absolute
dedication
of
the
land
to
his
company’s
eventual
ownership,
he
was
the
controlling
shareholder
and
could
have
guaranteed
its
use.
The
appellant’s
notice
of
objection
is
the
only
one
of
the
three
giving
as
a
prime
reason
the
relocation
factor.
(b)
Progress
None—but
to
whatever
degree
relevant,
it
was
this
appellant
who,
while
he
was
horseback
riding
in
the
area,
first
noticed
the
amount
of
dust
which
he
considered
excessive.
Whether
this
visit
to
the
area
was
incidental
or
related
to
an
inspection
by
him
of
the
site
was
not
reviewed
in
detail,
but
his
immediate
subsequent
action
was
to
report
the
matter
to
his
partners.
The
recorded
attempt
to
assess
the
pollution
was
made
thereafter.
(c)
Frustration
This
appellant’s
evidence
is
that
the
cement
dust
would
have
been
an
environmental
condition
which
his
outside
auto
storage
business
could
not
afford.
The
question
remains
unanswered
whether
this
also
might
have
been
the
case
with
the
normal
dust,
and
why
ne
had
not
noticed
the
problem
on
his
examination
before
purchase,
but
there
is
no
question
that
after
the
realization
of
the
cement
dust
problem
he
ceased
all
plans,
however
vague
they
might
have
been,
to
relocate
to
the
site.
He
has
since
relocated
some
elements
of
his
towing
and
auto
storage
business
to
another
site.
General
There
is
no
basis
to
conclude
that
the
acquisition
of
the
property
by
the
group
was
anything
but
a
speculative
investment.
It
was
not
necessarily
one
which
held
the
certainty
of
profitable
return
and
at
least
some
of
the
partners
gave
thought
to
the
utilization
of
the
property.
To
conclude
that
on/y
speculation
existed
in
the
minds
of
all
five
participants,
with
the
intention
of
simply
holding
it
and
turning
it
over
at
a
gain,
would
strongly
infer
that
an
experienced
business
firm
such
as
Shell
(the
original
vendor)
was
unable
to
foresee
the
opportunity
for
greater
gain
apparently
completely
obvious
to
this
group.
This
is
a
conclusion
I
find
difficult
to
accept.
But
recognizing
it
as
an
investment—the
degree
to
which
it
could
or
would
provide
a
legitimate
basis
for
the
respective
business
operations
of
any
or
all
of
the
five
partners
is
a
matter
for
separate
determination
on
an
individual
basis.
Obviously
for
London
and
Larsen,
this
element
in
the
motivation
did
not
constitute
a
major
factor.
The
Board
accepts
that
for
the
three
appellants
such
a
possibility
existed—relocation
of
their
respective
operations—and
was
undoubtedly
given
some
consideration.
For
Pantel,
it
is
the
view
of
the
Board
that
the
evidence
does
not
support
the
contention
that
such
consideration
was
of
great
substance.
In
the
case
of
Kruger,
the
situation
is
less
clear
but
the
Board
finds
that
the
evidence
does
not
provide
sufficient
support
for
the
claim
of
this
appellant.
Bassani’s
business
situation,
declared
intentions,
and
conduct
were
of
such
a
character
as
to
lend
considerable
credibility
to
his
appeal.
Decision
Although
the
appeals
were
heard
on
common
evidence,
the
totality
of
the
evidence
does
not
reflect
equally
upon
the
individual
positions
put
forward
by
the
three
appellants.
The
decision
of
the
Board
is
that
the
appeal
of
Elmer
D
Bassani
should
be
allowed
and
his
share
treated
as
gain
on
capital
account;
and
that
the
appeals
of
Pantel
Holdings
Ltd
and
Arthur
E
Kruger
should
be
dismissed,
their
shares
of
the
gain
held
to
be
on
income
account.
The
matter
is
referred
back
to
the
respondent
for
reconsideration
and
reassessment
in
the
case
of
Elmer
D
Bassani.
Appeals
of
Kruger
and
Pantel
dismissed.
Appeal
of
Bassani
allowed.
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