Roland
St-Onge
(orally:
January
27,
1977):—The
appeal
of
Mr
John
Duby
came
before
me
on
January
27,
1977
at
the
City
of
Calgary,
Alberta
in
respect
of
his
1972
and
1973
taxation
years.
The
appellant,
prior
to
March
of
1970,
was
a
shareholder
of
Digital
Analysis
and
Technical
Assistance
Ltd,
heretofore
referred
to
as
DATA.
He
was
asked
by
a
group
of
companies,
Chiefton
Development
Co
Ltd
and
Chiefco
Enterprises
Ltd
to
sell
shares
and
shareholder’s
loans
of
DATA
which
Chiefton
Development
Co
Ltd
had
purchased
from
the
appellant
some
time
in
1969.
Mr
Duby
came
into
contact
with
one
Douglas
Mitchell,
and
by
agreement
dated
April
7,
1970
he
sold
to
Mr
Mitchell
100%
of
the
DATA
shares
for
the
following
consideration
(I
quote
from
the
reply
to
notice
of
appeal):
The
purchaser
agrees
to
pay
as
follows:
|
1)
Cash
payment
upon
execution
of
this
agreement
|
$30,000.00
|
|
2)
Cash
payment
30
days
hereafter
for
distribution
to
staff
|
5,000.00
|
|
3)
Cash
payment
August
1,
1970
|
15,000.00
|
|
TOTAL
|
$50,000.00
|
PURCHASER
further
agrees
to
issue
to
Duby
a
promissory
note
for
the
term
of
one
year
in
the
sum
of
$32,200.00
to
bear
interest
at
the
rate
of
9
/4%
per
annum.
IT
IS
agreed
that
Duby,
subject
to
approval
by
the
Board
of
Directors
of
Datamation
Centres
Ltd,
shall
at
his
option
have
the
right
to
convert
the
said
note
into
shares
of
Datamation
Centres
Ltd
in
the
ratio
of
40%
common
shares
and
60%
preferred
shares
at
such
price
per
share
as
shall
be
mutually
agreed.
PURCHASER
further
agrees
to
assume
the
note
payable
to
Chiefco
Enterprises
Ltd
bearing
interest
at
7%
per
annum
payable
on
or
about
April
3,
1971
with
an
option
to
renew
for
one
year
on
payment
of
the
interest
then
due.
|
TOTAL
Consideration
|
$160,000.00
|
3.
The
Appellant
received
a
cash
payment
upon
execution
of
the
agreement
in
the
amount
of
$30,000.00,
plus
a
further
$10,000.00,
making
a
total
payment
of
$40,000.00.
4.
Douglas
G
Mitchell
defaulted
on
the
note
in
the
amount
of
$32,200.00
and
in
the
further
payment
of
$10,000.00,
making
a
total
default
of
$42,200.00.
5.
This
default
was
settled
between
the
Appellant
and
Douglas
Mitchell
in
1971
on
the
basis
that
Mitchell
pay
the
Appellant
a
cash
payment
in
1971
of
$6,500.00
and
$1,000.00
cash
payments
for
each
of
the
succeeding
five
years.
6.
In
filing
his
returns
of
income
for
the
1972
and
1973
taxation
years,
the
Appellant
claimed
a
capital
loss
in
respect
of
this
indebtedness
in
the
amount
of
$40,000.00,
claiming
that
the
loss
arose
after
1972.
7.
In
so
assessing
the
Appellant,
the
Respondent
assumed
that
the
loss
was
incurred
by
the
Appellant
in
1971,
which
was
the
year
in
which
the
Appellant
settled
that
account
with
Douglas
G
Mitchell
thus
extinguishing
all
claims
with
respect
of
the
$42,200.00
except
for
the
$1,000.00
payments
for
each
of
the
succeeding
five
years.
In
filing
his
return
of
income
for
the
1972
and
1973
taxation
years,
the
appellant
claimed
a
capital
loss
in
respect
of
this
indebtedness
in
the
amount
of
$40,000,
claiming
that
the
loss
arose
after
1972.
The
Minister
reassessed
the
appellant
by
assuming
that
the
loss
was
incurred
by
the
latter
in
1971
which
was
the
year
in
which
the
appellant
had
settled
the
account
with
Douglas
G
Mitchell,
thus
extinguishing
all
claims
with
respect
to
the
$42,200
except
for
the
$1,000
payment
for
each
of
the
succeeding
five
years.
According
to
the
evidence
adduced
the
Board
is
of
the
opinion
that
the
loss
occurred
when
the
claim
was
settled
in
1970.
There
is
no
evidence
to
show
that
the
appellant
had
other
claims
against
either
Mr
Mitchell
or
any
other
people
which
have
been
mentioned
in
this
appeal.
As
a
matter
of
fact,
the
agreement
was
between
Messrs
Duby
and
Mitchell
and
there
was
no
other
party
involved.
As
to
the
possible
claim
that
the
appellant
could
have
against
the
trustee
of
the
bankruptcy,
there
is
no
evidence
to
show
that
the
appellant
sent
a
claim
in
due
time
to
the
bankruptcy
and,
consequently,
it
was
not
possible
for
him
to
take
any
action
against
the
trustee.
This
bankruptcy
occurred
in
1970
and
thus
there
was
no
hope
of
claiming
against
any
other
party
for
the
loss
which
occurred
in
1970.
For
these
reasons,
I
dismiss
the
appeal.
Appeal
dismissed.
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