Heald,
J:—These
three
cases
were
heard
together
on
common
evidence
by
the
consent
of
all
parties.
The
plaintiff,
as
represented
by
the
Minister
of
National
Revenue
issued
income
tax
assessments
against
all
three
defendants
who
are
brothers,
bringing
into
income
the
profits
realized
during
the
1968-69
taxation
years
from
the
sale
of
a
portion
of
the
property
received
by
the
defendants
from
the
City
of
Saskatoon
in
exchange
for
a
10.5
acre
parcel
of
land
purchased
by
said
defendants
in
1958,
said
original
parcel
being
situated
in
the
rural
municipality
of
Corman
Park
adjacent
to
the
then
boundaries
of
said
City
of
Saskatoon.
The
amount
of
profit
sought
to
be
added
by
the
Minister
to
the
income
of
the
defendants
for
the
years
in
question
totals
approximately
$142,000.
The
Tax
Review
Board
allowed
the
appeal
of
the
defendants
against
said
profits
being
included
in
their
income.
The
plaintiff,
in
these
actions,
is
appealing
said
decisions
of
the
Tax
Review
Board.
The
defendants
were
born
and
raised
on
a
farm
in
northern
Saskatchewan,
about
100
miles
north
of
Saskatoon.
Along
with
their
parents,
the
brothers
and
their
families
moved
to
Saskatoon
in
1946.
Initially
they
all
lived
together
in
a
house
at
518
Avenue
H
South
in
Saskatoon.
However,
by
1956
all
of
the
brothers
and
their
families
had
moved
into
accommodations
of
their
own,
leaving
only
the
parents
living
in
the
house
on
Avenue
H.
Presumably
the
Avenue
H
house
was
too
large
for
the
parents
alone,
thus
the
Avenue
H
house
was
sold
and
the
three
defendants
purchased
a
smaller
house
for
their
parents
in
1956
at
432
Avenue
D
South.
In
1949
the
three
brothers
opened
up
their
own
auto
body
shop
business
at
the
corner
of
Avenue
C
and
19th
Street
in
Saskatoon.
This
business
was
operated
as
a
partnership,
each
brother
being
an
equal
partner
engaged
full-time
in
said
business.
The
business
continued
at
the
same
location
until
1963
when
it
was
moved
to
a
new
location
at
the
corner
of
Circle
Drive
and
42nd
Street.
The
parents’
house
on
Avenue
D
was
only
one-half
a
block
from
the
defendants’
auto
body
shop.
Both
parents
were
76
years
old
when
they
moved
to
the
Avenue
D
house
in
1956.
The
brothers’
evidence
is
that
their
mother
particularly
seemed
to
miss
not
being
able
to
have
a
garden
at
the
Avenue
D
house.
They
said
that
she
had
been
an
enthusiastic
and
successful
gardener
on
the
farm
and
that
she
visited
the
auto
body
shop
almost
daily,
asking
one
or
the
other
of
the
brothers
to
take
her
back
to
the
farm
so
she
could
have
a
garden
again.
The
brothers
began
to
notice
a
change
in
their
mother’s
mental
condition
and,
in
1958,
her
doctor
suggested
that
the
brothers
find
a
place
for
her
on
a
farm
where
she
could
have
a
garden
once
more.
In
November
of
1958,
through
a
real
estate
agent,
who
was
a
friend
of
theirs,
the
brothers
purchased
a
parcel
of
land
containing
approximately
10.5
acres,
adjacent
to
the
City
of
Saskatoon,
in
the
rural
municipality
of
Cory
(now
known
as
Corman
Park).
Before
buying
said
parcel,
all
three
brothers
and
their
parents
inspected
the
property.
One
other
possible
farm
location
had
been
looked
at,
it
being
some
13
miles
north
of
the
City
and
being
an
entire
quarter
section
(160
acres).
Mike
Dobroskay,
in
testifying,
said
that
the
brothers
felt
this
land
was
too
far
from
the
city
for
their
parents
to
keep
in
touch
with
the
rest
of
the
family.
Originally
the
defendants
made
an
offer
of
$15,000
cash
for
subject
property.
Their
original
understanding,
when
making
said
offer,
based
on
a
representation
made
to
them,
was
that
subject
property
was
within
the
City
boundaries.
On
November
18,
1958
Mr
Prociuk,
the
defendants’
solicitor,
wrote
to
the
agents
handling
the
sale
pointing
out
that
the
property
was
not
in
fact
within
the
boundaries
of
the
City.
In
said
letter,
Mr
Prociuk
wrote
as
follows:
Mr
Dobroskay
advises
us
that
when
the
above
property
was
offered
him
for
sale,
it
was
represented
as
a
fact
that
the
said
property
was
within
the
boundaries
of
the
City
of
Saskatoon
and,
on
the
basis
of
that
representation,
Mr
Dobroskay
proceeded
to
make
arrangements
to
raise
the
necessary
money
for
the
purchase.
He
has
now
discovered
that
this
property
is
outside
the
city
limits
and
he
is
therefore
not
prepared
to
purchase
the
same.
The
brothers
testified
that
since
subject
property
was
not
in
the
city,
they
felt
it
was
not
worth
as
much.
Accordingly
a
new
offer
of
$13,000
was
submitted
which
the
vendor
accepted
and
the
defendants
purchased
subject
property.
The
defendants
borrowed
the
entire
purchase
price
of
$13,000
from
Credit
Foncier,
Regina,
a
mortgage
company
engaged
in
lending
money
on
real
property.
The
defendants
had
been
doing
business
with
Credit
Foncier
for
a
number
of
years,
that
company
having
an
existing
loan
and
mortgage
on
the
defendants’
auto
body
premises
on
Avenue
C.
Thus,
a
consolidated
loan
of
$18,000
was
arranged,
sufficient
to
cover
the
$13,000
purchase
price
of
the
farm
and
the
balance
on
the
old
Avenue
C
mortgage.
A
new
mortgage
was
taken
as
security
on
subject
property
and
on
the
Avenue
C
property.
The
vendors
remained
in
possession
of
subject
property
until
May
1,
1959
under
the
terms
of
the
sale
agreement.
There
was
on
the
property
a
number
of
old
buildings
including
a
7-room
house,
two
granaries,
a
chicken
house,
a
barn
and
a
small
shed.
There
was
also
a
well,
a
fence
and
power
and
telephone
installations.
Each
of
the
defendants
testified
that
their
main
purpose
in
acquiring
subject
property
was
to
provide
a
home
for
their
parents
where
they
could
live
in
a
semi-rural
setting
and
have
a
fairly
large
garden,
if
they
so
wished.
Mike
Dobroskay
said
additionally
that
they
also
intended
to
use
subject
property
as
a
storage
depot
for
the
salvage
acquired
in
their
auto
body
business.
He
also
said
that
they
hoped,
at
some
time
in
the
future,
to
erect
a
new
auto
body
shop
on
said
premises.
Meanwhile
the
mother’s
mental
condition
continued
to
deteriorate
as
a
result
of
which,
on
March
3,
1959,
she
became
hospitalized,
first
at
the
University
Hospital
in
Saskatoon
for
a
few
days,
and
then
at
the
Saskatchewan
Hospital
in
North
Battleford
for
3
months.
She
was
discharged
from
said
hospital
on
May
6,
1959
to
the
care
of
the
defendant
Alex
Dobroskay.
The
doctors
at
North
Battleford
found
that
she
had
a
marked
degree
of
memory
impairment,
considered
to
be
irreversible
due
to
arteriosclerosis.
Her
basic
need
and
treatment
was
considered
to
be
nursing
care.
On
discharge
from
hospital
she
was
cared
for
temporarily
by
Alex’s
wife,
then
she
spent
a
short
time
with
a
daughter
in
Ontario,
and
thereafter
until
1963
she
lived
with
and
was
cared
for
by
another
daughter
in
North
Dakota.
In
1963
she
had
a
stroke.
She
was
returned
to
hospital
in
Saskatoon
where
she
spent
several
months.
She
then
went
to
a
nursing
home
in
Saskatoon
where
she
remained
until
her
death
in
July
of
1964.
The
father,
meanwhile,
continued
to
live
by
himself
in
the
Avenue
D
house
until
1967
when
he
was
removed
to
a
nursing
home
where
he
remained
until
his
death
in
1973.
Meanwhile,
the
defendants
rented
subject
property
to
a
young
married
couple
who
lived
there
approximately
3
years.
The
defendants
raised
chickens
and
turkeys
and
a
small
amount
of
feed
on
said
property
as
well
as
having
a
garden
there.
The
defendants
also
stored
the
auto
body
salvage
acquired
In
their
business
on
subject
property.
The
tenants
only
paid
a
monthly
rental
of
$5
for
the
premises
but
also
looked
after
the
defendants’
livestock
and
garden
and
crops.
Said
tenants
moved
out
in
1962
when
the
buildings
were
demolished
at
the
request
of
the
City
fire
department
because
of
their
dilapidated
condition.
Subject
property
was
annexed
by
the
City
in
1959
and
in
the
spring
of
1962
the
City
commenced
a
survey
thereof.
Mike
Dobroskay
said
that
this
was
the
first
time
the
brothers
knew
of
the
City’s
plan
to
subdivide
their
property
into
lots.
He
said
that
they
then
instructed
their
solicitor,
Mr
Prociuk,
to
attempt
to
obtain
the
City’s
consent
to
the
erection
of
an
auto
body
shop
on
subject
property.
The
City’s
decision
was
that
no
auto
body
shop
could
be
erected
at
this
location,
that
this
was
going
to
be
a
residential
district
with
no
commercial
zoning
permitted.
Because
of
this
refusal
Mike
Dobroskay
said
that
the
defendants
looked
elsewhere
for
a
new
location
for
their
business,
culminating
in
August
of
1963
with
the
purchase
by
them
from
the
City
of
a
parcel
of
land
at
the
corner
of
Circle
Drive
and
42nd
Street
where
they
subsequently
erected
a
new
auto
body
shop
and
where
they
are
still
operating
their
business
at
the
present
time.
Meanwhile
the
City
proceeded
with
its
replotting
scheme
as
a
result
of
which
the
defendant
received,
in
1964,
some
52
lots
in
exchange
for
subject
property.
Said
lots
were
situated
in
approximately
the
same
location.
Thus
the
defendants
owned
lots
on
the
south-east
corner
of
Preston
Avenue
and
Louise
Street.
The
defendants
sold
lots
in
1966,
1967
and
in
1968
for
private
homes.
In
1968
they
sold
6
corner
lots
to
Texaco
Oil
for
$110,000
on
which
Texaco
erected
a
filling
station.
The
defendants
themselves
erected
two
24-suite
apartment
blocks
on
some
of
the
lots.
These
apartment
blocks
are
still
owned
and
operated
by
the
defendants.
At
present
there
are
only
two
lots
left
which
the
defendants
have
not
sold
or
utilized
over
the
years.
When
subject
property
was
purchased
in
late
1958,
there
were
large
housing
developments
in
the
course
of
construction
one-half
mile
north
and
one-half
mile
west
of
subject
property.
I
said
earlier
that
the
defendants
arranged
a
consolidated
loan
from
Credit
Foncier
late
in
1958
of
$18,000,
of
which
$13,000
was
used
to
purchase
subject
property.
On
December
8,
1958
Credit
Foncier
wrote
to
the
defendants
as
follows:
With
regard
to
the
Increase
of
the
mortgage
to
$18,000.00,
we
wish
to
advise
that
we
will
recommend
same
for
approval
on
the
understanding
that
we
place
a
blanket
mortgage
on
the
security—402
Avenue
“C”
South
and
the
10.5
acres
of
city
property
you
are
negotiating
to
buy.
We
will
require
payments
from
sale
of
lots
to
be
applied
to
the
mortgage
as
long
as
the
Company
requests
same,
with
partial
discharges
issued
as
portions
of
this
acreage
are
sold.
Release
of.
any
remaining
portion
would
be
issued
upon
request
of
the
borrower
and
providing
the
mortgage
is
then
reduced
to
a
figure
satisfactory
to
our
Company.
Then,
on
January
12,
1959,
Credit
Foncier
again
wrote
to
the
defendants
as
follows:
We
are
pleased
to
advise
that
your
application
for
$18,000.00
has
been
accepted
by
our
Head
Office
on
the
following
terms:
|
AMOUNT:
|
$18,000.00
|
|
RATE:
|
7
/4%
|
|
|
TERM:
|
5
yrs
from
February
1,
1959
|
|
REPAYMENTS:
|
$275.00
|
monthly
covering
principal
and
interest,
plus
|
|
1/12
annual
taxes.
|
|
1ST
PAYMENT
DUE:
|
On
the
first
of
the
month
immediately
following
date
|
|
of
disbursement
of
this
loan.
|
|
OPTIONS:
|
Proceeds
from
sale
of
lots
are
to
be
applied
to
mort-
|
|
gage
account
as
long
as
the
Company
requests
same.
|
|
Partial
discharge
to
be
issued
on
individual
50’
lots
of
Security
“B”
as
they
|
|
are
sold,
providing
the
proceeds
received
by
Credit
Foncier
from
the
sale
|
|
of
each
lot
is
not
less
than
$200.00.
|
We
are
concurrently
instructing
our
solicitors’
McEwen,
Hill
&
Company
to
prepare
the
necessary
mortgage
papers
and
these
will
be
forwarded
direct
to
you
for
completion.
On
January
27,
1959
all
three
defendants
executed
the
mortgage
referred
to
in
the
above
correspondence.
A
certified
copy
of
said
mortgage
was
received
in
evidence
as
Exhibit
26.
Said
mortgage
contains
the
following
special
clause:
It
is
understood,
and
the
first-named
Mortgagor
has
so
advised
the
Mortgagee,
that
the
pieces
or
parcels
of
land
secondly
and
thirdly
above
described
consist
of
vacant
lots
each
fifty
feet
in
width
and
it
is
agreed
that
as
each
of
such
lots
is
bona
fide
sold
by
the
said
first-named
Mortgagor,
the
Mortgagee
will
discharge
such
lot
from
this
Mortgage
if
and
provided
that
each
such
sale
is
for
cash
and
that
the
purchase
price
upon
request
of
the
Mortgagee
will
be
paid
to
the
Mortgagee
to
be
applied
on
account
of
the
said
principal
sum
and
interest
thereon,
such
payment
to
be
made
to
the
Mortgagee
before
the
Discharge
of
such
lot
is
executed
and
delivered
by
the
Mortgagee
and
if
and
provided
further
that
such
purchase
price
so
received
by
the
Mortgagee
is
not
less
than
$200.00
and
that
the
purchase
price
thereof
when
so
received
by
the
Mortgagee
shall
be
by
it
applied
on
account
of
the
monthly
payment
or
payments
then
last
accruing
due
hereunder.
The
“first-named
Mortgagor”
referred
to
above
is
the
defendant
Alex
Dobroskay.
Alex
Dobroskay,
in
his
evidence,
denied
making
representations
to
Credit
Foncier
that
subject
property
was
going
to
be
subdivided.
After
the
replotting
in
1964
the
defendants,
through
their
solicitor,
offered
to
sell
to
Pacific
Petroleums
Ltd
a
200
foot
square
parcel
of
land
at
the
corner
of
Preston
Avenue
and
Louise
Street
for
$40,000
(see
Exhibit
27—letter
from
Prociuk
to
Pacific
Petroleums
dated
September
30,
1964).
Also,
during
the
fall
months
of
1964,
the
defendants
applied
to
the
City
for
a
rezoning
of
11
lots
to
commercial
and
of
10
lots
to
highway
commercial.
The
stated
intention
to
the
City
at
that
time
was
for
erection
of
a
motel,
a
service
station
and
apartment
blocks.
Also,
in
the
fall
of
1964,
the
defendants
gave
an
option
to
purchase
a
portion
of
said
property
to
Bridge
City
Construction
which
option
was
not
exercised.
The
above
efforts
in
1964
to
rezone
were
unsuccessful.
Again
in
1965
the
defendants
applied
to
the
City
to
rezone
to
commercial
a
portion
of
subject
property
and
again
their
application
failed.
Finally,
after
further
applications,
6
lots
were
rezoned
to
highway
commercial
and
these
6
lots
were
sold
to
Texaco
Oil
for
$110,000.
This
transaction
was
handled
through
a
firm
of
real
estate
agents
to
whom
a
commission
was
paid.
Mr
Herbert
Wellman,
Direcior
of
Planning
and
Development
for
the
City
of
Saskatoon
testified
that
during
the
1950’s
it
was
the
policy
of
the
Saskatoon
Ciiy
Council
to
acquire
additional
land
on
the
outskirts
of
the
City
wherever
the
studies
of
the
Planning
Department
indicated
substantial
growth
potential.
Pursuant
to
this
policy,
the
City
purchased
a
great
deal
of
land
on
the
City’s
perimeter.
Mr
Wellman
expressed
the
opinion
that
Saskatoon
was
unique
in
Canada
because
of
the
extent
to
which
the
City
was
involved
as
a
major
land
developer.
He
also
said
that
the
City’s
policy
was
well
publicized
at
the
time,
that
many
public
announcements
and
news
stories
had
appeared
in
the
press,
both
locally
and
nationally.
In
the
area
immediately
surrounding
subject
property,
the
city
has
acquired
320
acres
immediately
to
the
west
across
Preston
Avenue
which
was
developed
in
1959,
1960
and
1961
as
a
primarily
residential
area.
He
said
that
the
City
began
to
acquire
this
property
in
1959
and
that
the
City’s
intention
to
acquire
would
have
been
well
known
to
the
public
a
year
or
so
earlier,
that
is,
in
1958.
The
City
acquired
the
remainder
of
the
half
section
containing
subject
property
(some
305
acres)
in
1958.
Likewise,
the
City
acquired
the
property
to
the
north
of
subject
property,
across
Louise
Street,
in
1959.
Mr
Wellman
also
recalled
one
conversation
with
the
defendant
Alex
Dobroskay
either
in
1961
or
1962
concerning
the
defendants’
anticipated
or
hoped
for
use
of
subject
property
for
commercial
purposes.
The
principles
to
be
applied
in
a
“trading
case”
such
as
this
were
succinctly
stated
by
Noël,
J
(now
Associate
Chief
Justice)
in
the
case
of
Racine
et
al
v
MNR,
[1965]
CTC
150;
65
DTC
5098,
where
he
said
[p
5103]:
To
give
to
a
transaction
which
involves
the
acquisition
of
capital
the
double
character
of
also
being
at
the
same
time
an
adventure
in
the
nature
of
trade,
the
purchaser
must
have
in
his
mind,
at
the
moment
of
the
purchase,
the
possibility
of
reselling
as
an
operating
motivation
for
the
acquisition;
that
is
to
say
he
must
have
had
in
mind
that
upon
a
certain
type
of
circumstance
arising
he
had
hopes
of
being
able
to
resell
it
at
a
profit
instead
of
using
the
thing
purchased
for
purposes
of
capital.
Generally
speaking,
a
decision
that
such
a
motivation
exists
will
have
to
be
based
on
inferences
flowing
from
circumstances
surrounding
the
transaction
rather
than
on
direct
evidence
of
what
the
purchaser
had
in
mind.
Another
accurate
and
concise
statement
of
the
governing
principles
is
the
statement
of
Chief
Justice
Jackett
in
Pine
Ridge
Property
Ltd
v
MNR,
[1973]
CTC
201,
as
follows:
Where
the
relevant
facts
as
at
the
time
of
purchase
are
considered
together
with
the
subsequent
events
and
the
affirmations
of
the
appellant’s
shareholders,
it
is
not
realistic
to
conclude
that
the
only
possibility
that
motivated
the
acquisition
was
the
ultimate
creation
and
retention
of
a
very
substantial
housing
development.
Having
regard
to
the
problems
and
delays
to
be
expected
by
the
appellant
before
it
could
hope
to
commence
the
concrete
steps
of
realization
of
such
a
project,
such
as
the
creation
of
detailed
plans,
the
arrangement
of
permanent
financing
and
the
negotiation
of
contracts
,and
having
regard
to
the
appellant’s
lack
of
financial
re-
sources
of
consequence,
one
cannot
escape
the
conclusion
that,
in
1964,
the
acquisition
was
a
speculation
in
which,
in
addition
to
the
hope
of
an
ultimate
permanent
source
of
income,
the
possibility
of
turning
the
property
to
account
for
profit
in
any
way
which
might
present
itself
as
convenient,
or
expedient,
including
resale
at
some
earlier
stage,
was
a
major
motivating
factor.
in
the
case
at
bar,
all
three
defendants
testified
at
the
trial
that
their
main
purpose
in
acquiring
subject
property
was
to
provide
a
home
for
their
parents.
Do
the
circumstances
surrounding
the
transaction
together
with
subsequent
events
corroborate
or
negate
the
intentions
of
the
defendants
as
expressed
by
them
at
the
trial
some
15
years
later?
First
of
all,
the
parents
of
these
defendants
were
some
78
years
old
at
the
time
subject
property
was
acquired.
The
brothers
knew
that
their
mother’s
health
had
deteriorated
to
some
extent.
I
doubt
that
it
is
realistic
to
infer
in
these
circumstances,
that
acquisition
of
a
home
for
their
parents
was
the
sole
motivation
at
time
of
acquisition.
Their
existing
home
on
Avenue
D
was
close
to
the
brothers’
business,
thus
making
it
possible
for
any
one
of
them
to
visit
their
parents
on
a
few
moments’
notice.
The
Avenue
D
house
was
in
the
centre
of
the
city,
half
a
block
from
shopping
facilities
and
possessed
all
the
city
amenities.
Subject
property
was
one-half
mile
away
from
the
nearest
development,
“out
in
the
country”
so
to
speak,
without
water
and
without
plumbing,
far
removed
from
shopping
services
and
with
doubtful
road
conditions,
particularly
in
the
wintertime.
Furthermore,
one
has
to
question
the
evidence
concerning
the
mother
suddenly
pressing
for
garden
space
when
no
one
testified
that
she
had
similarly
pressed
for
room
for
a
garden
during
the
10
years
she
lived
on
Avenue
H,
which
property
was
also
hampered
by
lack
of
space
for
a
garden.
Then,
some
significance
must
be
attached
to
the
size
of
the
property
acquired.
As
indicated
earlier,
Mike
Dobroskay
said
that
they
hoped,
at
some
time
in
the
future,
to
erect
a
new
auto
body
shop
on
subject
property.
Subject
property
was,
in
size,
far
in
excess
of
the
size
needed
by
them
in
the
foreseeable
future
for
the
operation
of
their
auto
body
shop
business.
For
14
years
the
business
was
operated
from
the
Avenue
C
premises,
being
a
filling
station
property,
200
feet
by
200
feet.
In
1963,
1.88
acres
was
acquired
at
Circle
Drive
and
42nd
Street
in
the
northern
part
of
Saskatoon
where
the
auto
body
shop
business
is
still
being
operated
and
there
was
no
evidence
that
the
size
of
that
property
was
inadequate
for
the
purposes
of
the
business.
There
was
no
evidence
of
very
much
of
a
search
for
a
house
with
room
for
a
garden.
They
seem
to
have
looked
at
only
one
other
property,
a
quarter
section
farm
13
miles
from
the
city.
Then,
too,
their
evidence
concerning
their
intention
to
perhaps
later
utilize
subject
property
for
their
business
is
not
persuasive.
At
time
of
purchase
the
property
was
a
farm.
There
was
no
evidence
of
any
zoning
inquiry
to
the
City
or
the
municipality
at
time
of
purchase.
Then,
there
is
the
evidence
concerning
the
two
offers
to
purchase
subject
property.
When
the
first
offer
to
purchase
of
$15,000
was
made,
the
defendants
were
under
the
impression
that
the
property
was
within
the
Saskatoon
City
boundaries.
When
they
discovered
that
the
property
was
outside
the
city
boundaries,
they
reduced
their
offer
by
$2,000
because
they
felt
the
property
was
not
worth
as
much.
If
their
intention
in
purchasing
was
to
buy
a
farm
and
a
home
for
their
parents,
I
fail
to
see
why
the
property
being
located
outside
the
city
limits
would
reduce
the
value.
If,
however,
the
object
of
purchase
was
to
resell,
after
subdivision,
then
it
would
be
of
greater
value
to
have
the
land
within
the
city
limits.
Perhaps
the
strongest
evidence
against
the
expressed
intentions
of
the
defendants
at
time
of
purchase
is
the
documentary
evidence
relating
to
the
loan
transaction
with
Credit
Foncier.
Credit
Foncier’s
letter
of
December
8,
1958
acknowledging
defendants’
loan
application
says:
“We
will
require
payments
from
sale
of
lots
to
be
applied
to
the
mortgage
.
.
.”
(italics
mine).
Again,
Credit
Foncier’s
letter
of
January
12,
1959
advising
the
defendants
that
the
loan
had
been
approved
says,
inter
alia:
“Proceeds
from
sale
of
lots
are
to
be
applied
to
mortgage
account.
.
.”
(italics
mine).
And
then,
the
mortgage
which
was
finally
signed
by
all
three
defendants
said
that
Credit
Foncier
had
been
advised
by
the
defendant
Alex
Dobroskay
that
subject
property
consisted
of
50
foot
lots.
The
mortgage
goes
on
to
provide
for
partial
discharges
covering
each
lot
as
each
lot
is
sold
provided
each
such
lot
is
sold
for
cash
and
provided
further
that
the
proceeds
of
sale
for
each
lot
are
applied
on
the
mortgage.
The
above
correspondence
and
mortgage
clearly
contemplate
the
subdivision
and
sale
of
lots
by
the
defendants.
In
their
evidence,
all
three
defendants
denied
making
any
representations
to
Credit
Foncier
considering
the
sale
of
lots
and
said
they
were
unable
to
explain
why
this
language
was
used
in
said
documents.
I
do
not
find
it
possible
to
believe
that
Credit
Foncier
would
have
employed
this
terminology
in
the
absence
of
representations
from
one
or
the
other
of
the
defendants,
on
behalf
of
all
three,
to
the
effect
that
the
intention,
at
time
of
purchase,
was
to
subdivide
and
resell.
No
representatives
of
Credit
Foncier
were
called
to
testify
to
explain
why
such
language
was
used,
even
though
two
representatives
from
the
Regina
office
of
that
company
were
present
in
Court
during
the
trial.
Thus,
the
Court
is
left
with
the
expressed
intentions
of
the
taxpayers,
stated
many
years
after
the
fact,
and
contradicted
by
contemporaneous
written
documents.
Thus,
apart
entirely
from
any
other
consideration,
I
have
the
view
that
these
defendants
cannot
succeed
in
these
appeals,
carrying
as
they
do
the
onus
of
disproving
the
validity
of
the
Minister’s
assessments.
Then
there
is
other
conduct
by
the
defendants
which
negates
their
intentions
as
expressed
in
their
testimony.
The
defendants,
according
to
the
evidence
of
Mike
Dobroskay,
had,
before
the
1964
replotting,
endeavoured
to
obtain
a
commercial
rezoning.
After
the
replotting,
their
efforts
to
rezone
accelerated
considerably.
A
matter
of
a
few
weeks
later,
they
optioned
the
corner
lots
to
Pacific
Petroleums
for
commercial
purposes,
they
gave
another
option
to
Bridge
City
Construction
for
commercial
purposes,
and
finally,
after
a
partial
rezoning
was
accomplished,
they
sold
a
portion
of
the
property
for
commercial
purposes.
it
seems
clear
to
me,
after
a
consideration
of
all
of
the
above
facts
and
circumstances,
that
the
defendants
had
in
their
mind
at
the
moment
of
purchase
the
possibility
of
reselling
as
an
operating
motivation
for
the
acquisition
of
subject
property.
in
my
view,
all
of
the
circumstances
surrounding
this
transaction
together
with
the
subsequent
conduct
of
the
defendants
negate
the
expressed
intentions
of
the
defendants
in
their
evidence
at
trial.
I
agree
with
the
view
expressed
by
Walsh,
J
in
R
K
Farris
v
MNR,
[1970]
CTC
224
at
240;
70
DTC
6179
at
6189,
where
he
said
that
not
too
much
dependance
should
be
placed
upon
the
expressed
intention
of
a
taxpayer
but
rather
his
apparent
intentions
should
be
examined
as
indicated
by
his
conduct
in
dealing
with
the
property.
in
summary,
I
have
concluded
that
the
objective
facts
and
circumstances
in
these
cases
clearly
indicate
a
trading
intention
on
the
part
of
the
defendants
at
the
time
of
acquisition
of
subject
property.
The
appeals
are
accordingly
allowed
with
costs
and
the
Minister’s
assessments
for
the
1968
and
1969
taxation
years
are
affirmed.
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