A
W
Prociuk
(orally):—In
this
appeal
of
Martin
R
Chess,
No.
72-429,
there
are
two
items
to
resolve:
(a)
whether
or
not
the
appellant
appropriated
the
sum
of
$9,603.70
from
Lougheed
Warehouse
and
Terminal
Ltd,
of
which
he
was
a
shareholder;
and
(b)
whether
or
not
a
benefit
in
the
sum
of
$29,794.84
was
conferred
on
the
appellant
by
the
said
Loughesd
Warehouse
and
Terminal
Ltd
in
the
sale
of
its
shopping
centre.
It
is
clear
from
the
evidence
that
while
the
appellant
in
his
Capacity
as
a
hired
manager
of
a
shopping
centre
received
a
cheque
of
$9,603.70
payable
to
the
company’s
account
as
rental
from
a
tenant
in
the
said
shopping
centre
on
or
about
September
6,
1966,
he
retained
it
in
his
possession
until
after
he
purchased
the
said
shopping
centre
on
December
30,
1966
from
Lougheed,
and
negotiated
the
said
cheque
on
or
about
January
27,
1967
to
his
own
benefit.
He
maintained
throughout
that
he
had
a
right
to
this
sum
of
money,
and
sought
to
base
his
argument
on
the
terms
of
the
agreement
for
sale,
dated
December
30,
1966,
filed
as
Exhibit
A-6,
and
Memorandum
of
Agreement
filed
as
Exhibit
A-5.
I
think,
and
so
hold,
that
this
cheque
was
not
and
could
not
have
been
contemplated
by
the
parties
in
the
two
exhibits
at
all;
he
took
into
possession
and
for
his
own
use
a
sum
of
money
belonging
to
a
company
of
which
he
was
a
shareholder.
Accordingly,
I
hold
that
he
appropriated
the
said
sum
of
$9,603.70
within
the
meaning
of
section
8
and
was
properly
taxable
thereon.
In
so
far
as
the
second
item
is
concerned,
this
has
given
me
some
difficulty.
This
sum
of
$29,794.84
represented
the
difference
in
price
Lougheed
paid
for
the
shopping
centre
in
July
1965
and
a
lesser
price
it
received
in
selling
it
to
the
appellant,
its
shareholder,
on
December
30,
1966.
The
respondent
takes
the
position
that
this
was
a
benefit
conferred
on
a
shareholder
within
the
meaning
of
section
8
of
the
Income
Tax
Act,
and
therefore
taxable.
Learned
counsel
for
the
Respondent
urged
me
to
hold
that
the
shopping
centre
was
worth
in
December
1966
at
least
as
much
as
it
was
worth
in
July
1965.
While
evidence
on
the
fair
market
value
of
the
said
shopping
centre
was
almost
minimal,
the
appellant’s
witness,
Bennett,
a
chartered
accountant,
and
a
director
of
Lougheed
company,
stated
in
cross-examination
that
they,
that
is,
the
shareholders
of
Lougheed,
did
not
feel
it
was
a
low
price.
The
appellant
in
his
evidence
stated
that
he
offered
to
sell
his
equity
to
the
other
shareholders
on
the
same
basis,
and
his
offer
was
not
taken
up.
In
the
end,
to
resolve
the
differences
that
existed
amongst
the
shareholders,
he
himself
bought
the
said
shopping
centre.
I
feel
that
in
the
absence
of
any
appraisal
of
value
in
support,
it
would
be
dangerous
and
ill-founded
for
me
to
hold
arbitrarily
that
the
said
shopping
centre
had
not
decreased
in
value
in
the
18-month
period,
in
direct
contradiction
of
the
evidence,
scanty
as
it
is,
before
me.
Accordingly,
I
find
that
there
was
no
benefit
conferred
on
the
appellant
in
the
transaction
and
the
appellant
ought
not
to
be
taxed
on
the
said
sum
of
$29,794.84.
The
appeal,
accordingly,
is
allowed
in
part
in
accordance
with
my
findings
and
the
matter
referred
back
to
the
respondent
for
reassessment.
Appeal
allowed
in
part.
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