Minister of National Revenue v. Jacobus Braat, [1969] CTC 294, 69 DTC 5219

WALSH, J.:—This is an appeal by the Minister of National Revenue from a decision of the Tax Appeal Board dated May 2, 1968, amending the assessments of the taxpayer for the 1963 and 1964 taxation years, both dated October 19, 1966, by deleting therefrom the sums of $10,350 and $10,200 respectively which had been added back to taxpayer’s declared income for the said years and referring the assessments back to the Minister to be varied as indicated.

Paragraph 3 of respondent’s reply to the Notice of Appeal in the present proceedings was amended at the hearing by consent so as to substitute the figure of $800 for the figure of $1,300 erroneously appearing in the second line thereof.

The respondent testified as did his sons John, Peter and Fritz and his daughter Anna Braat Kwot. During the course of respondent’s evidence he filed as exhibits a banking form of the Bank of Montreal at Lethbridge, Alberta, indicating that he and his sons John Marinas (hereinafter referred to as John), Marinas John (hereinafter referred to as Marinas), and Peter Braat were carrying on business under the name of Jacob (Braat and Sons) any one of them being authorized to sign for banking purposes, this document being dated May 3, 1957, a group of bank statements for Jacob Braat and Sons covering the period from December 31, 1962 to December 23, 1964, a group of bank deposit slips in the name of Jacob Braat and Sons bearing dates in 1963 and 1964, a group of invoices of Canadian Sugar Factories Limited and others made out in the name of Jacob Braat and Sons, a copy of respondent’s T-1 General Income Tax Return and accompanying statements for 1961, and a statement prepared by the Department of National Revenue covering the period from 1956 to 1964 allegedly based on the taxpayer’s returns for the period prior to 1959, and the returns on file for the period from 1960 to 1964, showing the wages claimed on these returns for each of the seven sons and one daughter of respondent for each of the years in question, as well as the net income of respondent for these years.

The proof revealed that the respondent came to Canada in 1953 with his family from The Netherlands and bought a farm in Barnwell near Lethbridge in 1954 consisting of one-quarter section. By 1957 the first year which is in question the children were aged as follows: John 27, Marinas 26, Peter 25, Jacob 20, Cornelius and Fritz (twins) 18, Anna 15 and Gerard 13.

The farm in Barnwell was not large enough to provide work or sustenance for the entire family and at this time some of them had to hire themselves out for farm labour elsewhere but they all desired to eventually have farms of their own. Accordingly they began looking for a farm which could be bought with a low down-payment and paid for over a period of years from the produce of it and in 1957 a farm of about 620 acres was bought from Harold George Houlton, by Jacobus Braat (the respondent), Piet Braat (hereinafter referred to as Peter), Marinas Braat and John Braat, payable $5,000 cash with 6334 tons of sugar beets to be delivered, commencing in the year 1957 at the rate of not less than 704 tons per annum, the final payment to be completed before December 31, 1966, at which time if the sugar beet deliveries had not fully been made the balance would be computed at $15 per ton and payable forthwith. The contract provided for an additional $5,000 to be paid for machinery and equipment of the farm, plus an additional 666 tons of sugar beets to be paid by delivering 134 tons a year for each of the years from 1957 to 1961 inclusive. The agreement further provided that title to the property would not pass to the purchaser until the entire purchase price had been paid. Respondent explained that the reason only the three eldest boys were made parties to this deed was that they were of age at that time, the other children still being minors. He had previously had a bank account at the Bank of Montreal in Taber near the Barnwell property and he and his said three sons now opened an account at the Bank of Montreal in Lethbridge, the banking form indicating the existence of the partnership between them under the name of Jacob Braat and Sons. At this time John stayed on the Barnwell farm and the rest of the family moved to Lethbridge to the new and larger farm. All sums received for the sale of sugar beets, cattle and other farm products were deposited in the partnership account in Lethbridge and expenses paid out of it. While most of the deposit slips were signed by him some of those exhibited were signed by Marinas and others by John, all bearing the heading Jacob Braat and Sons and the bank statements were of course made out in this name. He paid no regular wages to his children as all the farm produce was needed to make the payments on account of the purchase price of the property. Although the value of sugar beets fluctuated from year to year and payment was made in terms of tons of sugar beets he estimates that a total of $128,000 was paid for the farm and equipment over the nine-year period. Meanwhile all the family lived off the farm and he provided the various sons and daughter with pocket money as required.

In 1961 the older sons began getting a start on their own. Four payments had now been made on the farm and he wanted to transfer half of it amounting to about 320 acres to John and Marinas. The vendor Houlton refused to change the agreement so John and Marinas although now operating separate farms remained liable with the others for the sugar beet deliveries until the final payment was made and the property title was transferred to them in 1966.

Meanwhile in 1959 the farm in Barnwell had been sold and respondent had bought one nearer Lethbridge in his own name. There was a mortgage of $10,000 on it and it was purchased for $21,000. In 1964 he transferred this to his son Jacob who assumed the mortgage, the equity in the property therefore being about $11,000. In 1962 a farm was purchased for $28,000 for Peter who obtained a farm credit loan on it for $18,000 and a $10,000 down-payment was made on his behalf from the Braat and Sons account. Fritz married in December 1964 and Cornelius in 1965 and as there was a double house on the balance of the property bought from Houlton this was transferred to them jointly at the end of 1966. A mortgage of $36,000 was raised on this property which respondent estimates was worth about $55,000 at the time so the joint equity received by Fritz and Cornelius was about $19,000. They assumed payment of the mortgage to the mortgage creditor and the $36,000 received was used in part to pay Gerard the sum of $6,000 as he had left the farm to get employment at the end of 1963 so was no longer interested in getting property as his share, and to pay the daughter Anna $8,000. The remaining $22,000 was kept by the respondent who had retired from active farming in 1964 and who now owned no land, as it had all been distributed. He said that income tax returns were made out for the whole family by his son Peter with the help of someone in Taber from 1957 on and that he signed promissory notes in favour of the various children for the sums which their services were worth each year. These notes were turned back to him to keep among the other family papers. While cash wages were not paid to the children except for nominal amounts for personal expenses it was always understood by all that these sums were being saved for payments on the land so that eventually each would own a farm of his own or the cash equivalent as in the case of Anna and Gerard. As the various younger children came of age no new banking form was signed with the bank but the joint funds continued to be administered by the original parties to the account.

Respondent admitted that he had not filed his income tax returns as partnership returns and that this question had not been raised in his original notes of objection to the assessment which had been based on the principle that the value of the children’s services would be shown as wages and in theory they would loan the money back to their father to be applied on the purchase price of the farm and that he had executed promissory notes as security for this. He insisted however that it had been understood all along by all members of the family that they would all eventually receive shares commensurate with the length and value of services they had rendered, with the younger ones getting a little less as they had not worked so long at the time of the final distribution in 1966. The whole family talked over the amounts and everyone was satisfied.

The son John testified that although he had occupied the farm at Barnwell for two or three years after the purchase of the farm at Lethbridge all proceeds of both the farms were pooled together. When he and Marinas got married in 1961 each received a quarter section but as these quarter sections were part of the property in process of being purchased at Lethbridge the whole family still used the same farm machinery and he and Marinas continued to make the payments for their quarter sections until the final payments in 1966 when the title was transferred to them.

The son Peter confirmed that they had all agreed to keep the family together including the younger brothers and sisters and that the only reason they were not in the original purchase agreement was because they were too young. It was he who did the bookkeeping and prepared the income tax return with the advice of a real estate firm in Taber who helped with the farm accounts. He would take all the farm documents to them. They suggested the use of promissory notes as evidence of the amounts payable to the various children which were shown as wage expenses. It was understood that when their father stopped farming the whole family would then get their share. He and his brothers and sisters all paid personal income tax on the amount attributed to them in their father’s returns. When questioned as to the difference between the $10,000 made as a down-payment on the farm for him eventually from the partnership account and the $13,000 standing to his credit as wages in the statement prepared by the Minister he stated that the discrepancy was made up by seed and operating expenses which he was given to carry him through the first year before his farm became productive. He explained also that his brother Jacob was in Holland for two years which was why he is not shown as having been credited wtih any wages for 1960 or 1962. The promissory notes were prepared at the same time as the income tax returns for the whole family and while they would be shown to the various members of the family as evidence of the share they were entitled to for the year in question they would then be returned and kept with all the family papers. As soon as each member of the family was old enough to have a substantial sum attributed to him he was no longer claimed by his father as a depend- ant. As an example of this respondent’s 1961 income tax return was filed in which only Anna and Gerard who were credited with $450 each were shown as dependants but Cornelius, Fritz and Jacob who were credited with $900 each were not.

Fritz Braat testified that he was only 18 when the property was purchased from Houlton but it was always understood that he was to go into the partnership ’ ’ with his father and brothers. Actually in 1964 when his father retired he and Cornelius took over the other half of the farm which had been bought from Houlton jointly although for the first two years that they operated it they still had to pay the vendor the beet tonnage to complete payment of the purchase price. In due course they borrowed $36,000 on their property, the proceeds of which were paid to respondent to settle with the other children who were receiving their share in cash and to pay for his share. He and his brother also got some of the machinery when they acquired the farm which accounts for the difference between the approximately $10,000 equity which each of them would have in the property they acquired and the approximately $15,500 shown as due to each of them in the wage account.

Anna Braat, now Kwot, testified that it was understood all along that she would eventually get her fair share of the family assets and that the amount of $8,000 which she received was what she expected. The balance of the farm had just been transferred to her two brothers when she got married and her father then gave her the money. She did the family cooking and housework over the years and paid personal income tax as did her brothers on the amounts shown as having been paid to her. As in the case of her brothers the promissory notes she received were returned to her father the respondent.

In order to decide this case it is necessary to determine what was the legal effect of the verbal or implied agreement between respondent and his sons and daughter. There can be no doubt as to the intent of it which was that the whole family should work together as a unit, use the proceeds of their joint efforts to buy land and eventually distribute same whether in the form of land or an equivalent cash consideration for the eventual establishment of each of the members of the family on an independent basis. Certainly the scheme was not one devised to avoid taxation.

The various sons and the daughter filed personal income tax returns each year and paid taxes on the amounts they were shown on respondent’s return as having received even though these amounts had not actually been paid to them. Although the final payment for the farm purchased from Houlton only became due at the end of 1966 and the final adjustment cheque was actually paid on January 6, 1967, by letter dated July 5, 1966, the purchasers indicated that they had assigned their interest to the remaining part of the property owned by them to Fritz and Cornelius in an undivided half-share and requested a transfer of title accordingly. By letter dated October 31, 1966, the vendor was advised of the earlier assignment of interest in other parts of the said property to Marinas and John respectively and they requested that transfers be made accordingly. Clearly the manner of operation and the ultimate distribution of the assets in 1966 was not motivated in any way by the notices of re-assessment dated October 19, 1966, and up to the date of receipt of those notices for the 1963 and 1964 taxation years respondent had no reason to believe that the accounting methods adopted were no longer acceptable to the Minister. Payments of sums varying between $1,500 and $2,500 per annum to each of John, Marinas, and Peter for the years 1957 to 1960 had been shown on respondent’s returns and Peter was shown as receiving $2,000 in 1961 and $3,000 in 1962 and Fritz and Cornelius were each showing as receiving $3,000 in 1962 and none of these returns had been questioned by the Minister. Even in the years 1963 and 1964 under dispute the sum of $4,000 paid to Jacob in each of these years was not disputed in the re-assessment. The Minister does not claim that the amounts attributed to the sons or daughter in any given year are excessive but merely that they cannot be claimed as a deduction in the year 1963 insofar as Fritz, Cornelius, Gerard and Anna are concerned and in 1964 for Fritz, Cornelius and Anna save to the extent that the sums attributed to them in those years were actually paid in cash during the course of the said years. What we have to decide is whether despite his undoubted good faith respondent so conducted his affairs during the years in question and specifically the years 1963 and 1964 in which the assessments are in dispute as to attract additional taxation which could readily have been avoided.

In his appeal before the Tax Appeal Board respondent based his argument on the fact that the promissory notes issued to the children for the years in question constituted payment of the wage debt owed to them and that the children then in effect lent the money back to him to be eventually applied in satisfaction of the agreement of sale. Since this argument was not raised by respondent in the present appeal, it is not necessary to deal with it.

In its Reasons for Judgment the Tax Appeal Board concluded that respondent did not owe any money to the sons or daughter in the 1963 or 1964 taxation years as they did not work for him, but were working for themselves and relying on him to take the responsibility after handing some money to them for their personal needs, for seeing to it that their legal obligations were duly met and satisfied as they fell due, so that in due course they could set themselves up on farms of their own. The judgment considered the promissory notes to be merely a simple type of acknowledgment recording the facts of the arrangement. It decided that the role of the respondent was that of a disbursing agent or trustee acting on behalf of each of his children.

In the appeal to this Court respondent relies wholly on the claim that a partnership existed between respondent and his children and that the sums claimed as expenses for wages earned by them in the returns, actually represented their several partnership interests in the farm. He claims he acted as disbursing agent or trustee for the partnership and that he was responsible to the children for their respective shares, which were evidenced by the promissory notes. He asks for a re-assessment for the years in question on the basis that the amounts disallowed were not wages but respective partnership interests in Jacob Braat and Sons. It is clear that this change of ground is based on the decision of the Tax Appeal Board which respondent now seeks to have upheld.

At the hearing counsel for the appellant objected to respondent’s argument based on the existence of an implied trust stating that this question was not raised in respondent’s reply to the Notice of Appeal. He referred to Rules 88 and 93 of the Exchequer Court Rules dealing with pleadings generally. Respondent’s counsel argued that the judgment of the Tax Appeal Board has been made part of the record and he could therefore certainly argue the validity of the reasoning on which it was based. He also referred to Section 100(4) of the Income Tax Act which reads:

Any fact or statutory provision not set out in the notice of appeal or reply may be pleaded or referred to in such manner and upon such terms as the Court may direct.

He further argued that paragraph 5 (a) of the Reply to Notice of Appeal reads:

5. (a) In further reply to paragraph 5, the Respondent states that he acted as disbursing agent or Trustee for this partnership and that he was to be responsible to his children for their respective shares in the said partnership.

It is not correct therefore to say that this was not pleaded and the argument on this point made under reserve of the objection of appellant’s counsel is permitted.

As stated the Tax Appeal Board found that the respondent was merely a disbursing agent or trustee acting on behalf of several of his children and that all 10 members of the Braat family worked together as a family unit under his guidance and direction in what respondent in his reply to Notice of Appeal describes as ‘‘the partnership under the name of Jacobes Braat & Sons formed by respondent and the children in order to operate the family farm.’’

Appellant’s counsel argued that there could not be a trust citing the case of C.I.R. v. Allan, 9 T.C. 234, where certain shares were held in respondent’s name with the indication that he was holding them in trust for his wife and daughter, but due to unavoidable delays the trust deed was not completed and while awaiting the completion of it the shares remained in his name, though he attributed dividends to the trust, it was held that this income was taxable as part of his income. At p. 247 Moore, L.J. stated :

If the matter rested there I am of opinion at no time during the period in question could the beneficiaries, Mrs. Allan or her daughter, have compelled Mr. Allan to carry out his intention. I cite Milroy v. Lord as establishing the proposition that where the gift is intended to take effect by transfer, the Court will not hold the intended transfer to operate as a declaration of trust. Here, apparently pending transfer the testator retained the scrip in his own possession while naturally the stock remained in his own name. and again at p. 248 quoting from the same judgment,

If it is intended to take effect by transfer the Court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be made effectual by being converted into a perfect trust.

I agree with this contention that essential elements to consider the arrangement as a trust agreement are lacking, the word ‘‘trustee’’ being loosely used in the judgment of the Tax Appeal Board and respondent’s reply to Notice of Appeal.

The essential question to my mind is whether it can be said that there was an implied parntership between respondent and his sons and daughter, and specifically between him and the sons Cornelius, Fritz, Gerard and daughter Anna with whom the appeal is concerned.

The Alberta Partnership Act, R.S.A. 1942, c. 244, defines partnership as ‘‘The relationship that subsists between persons carrying on a business in common with a view to profit’’. Busi- ness is defined as including ‘‘every trade, occupation and profession”. Section 4 of the Act sets out certain rules to be considered in determining whether a partnership does or does not exist, among them the following:

(a) Joint tenancy, tenancy in common, joint property, common property, or part ownership shall not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof;

(b) The sharing of gross returns shall not of itself create a partnership, whether the persons sharing the returns have or have not a joint or common right or interest in any property from which or from the use of which the returns are derived;

(c) . . .

(ii) a contract for the remuneration of a servant or agent of a person engaged in a business by a share of the profits of the business shall not of itself make the servant or agent a partner in the business or liable as such;

Section 21 dealing with relations of partners to one another reads as follows:

21. The mutual rights and duties of parties, whether ascertained by agreement or defined by this Act may be varied by the consent of all the partners, and such consent may be either expressed or inferred from a course of dealing.

Section 22 reads in part as follows:

. . . the legal or registered estate or interest in any land that belongs to the partnership shall devolve according to the nature and tenure thereof, and the general rules of law thereto applicable, but in trust, so far as necessary, for the persons beneficially interested in the land under this section.

Among the authorities cited was the section on partnership in 16 C.E.D. where it is stated at p. 134:

While an agreement, express or implied, between the parties to carry on business together is essential to the existence of a partnership, it is not necessary that the parties should have intended to create the partnership relationship if by their conduct they have in fact created it.

At p. 136 it is stated:

The question whether there was a partnership must be determined by the real intention of the parties as evidenced by their conduct; and in ascertaining their real relationship the Court will not take any one circumstance and say that it by itself raises a presumption for or against a partnership and then ask whether there is anything to rebut that presumption, but will take into consideration everything that is available, formal contracts, corresponding and the evidence of witnesses, and ascertain therefrom if possible what the true relationship was.

And again at p. 139 :

A partnership may be formed by an oral agreement, which may be evidenced by the dealings of the parties with each other, even though it is one formed to deal in land . . .

The Ontario case of Evans v. Honsinger (1908), 11 O.W.R. 861 at 865, affirmed 12 O.W.R. 678, is cited to the effect that ‘‘ when a partnership business is entered into, though by parol, lands acquired by the partnership for partnership purposes become assets of the firm, and the Statute of Frauds has no application : . . . the mere fact that the property in question was purchased by one partner in his own name is immaterial, if it is paid for out of the partnership moneys’’.

At page 141 of 16 C.E.D. it is stated:

One who contributes services but no capital, and one who contributes capital but renders no services, may be partners in a firm. In general, a partner does contribute something, either skill or property, but that is not necessarily so, and one may be a partner in fact without contributing anything.

This statement is based on the judgment of W. v. M.N.R., [1952] Ex. C.R. 416; [1952] C.T.C. 209.

Turning to the jurisprudence we have in favour of respondent’s contentions a Tax Appeal Board case of Holod v. M.N.R., 19 Tax A.B.C. 314, where on facts substantially similar to our present case evidence was submitted at the hearing to prove the existence of a partnership between a farmer and his two sons though there was no written agreement. The judgment found that the three individuals were carrying on the business in common with a view of profit. Against this however was another Tax Appeal Board judgment of Spady v. M.N.R., 5 Tax A.B.C. 123, in which a farmer and his children worked together for the common support of the family and payment of debts owed by him. The judgment found that a mutual arrangement by members of the family to assist in support of the family and operation of the farm does not constitute a partnership. It must be pointed out however that at the time the purported arrangement was made some of the children were very young, being only 11, 10 and 9. This judgment further states that a close family spirit does not make a partnership. In the case of Ralph Ferracuti v. M.N.R., 25 Tax A.B.C. 53, the Tax Appeal Board found that there was not only the lack of documentary evidence to show that a partnership existed but it also appeared to have been alleged as an afterthought and in an attempt to allocate the income after it had been earned. This judgment stated at page 474 Ip. 56] :

It is the duty of all those engaged in business in Canada to acquaint themselves with the taxation laws applicable to their business venture.

In an English case of C.I.R. v. Williamson, 14 T.C. 335, the facts were similar to the present case. The taxpayer and his sons had for several years leased and worked a farm jointly without any deed or partnership. The taxpayer supplied the capital and conducted all the buying and selling and controlled the bank account which was in his name and made no regular payments to his sons but supplied them on. request with money needed, for their requirements. No record was kept of these or the financial results of the working of the farm but it was claimed that there was a partnership at will to be terminated in which case an accounting between the parties would be demanded. It was held that the facts did not justify the inference that a partnership had existed.

In the case of Huzevka v. M.N.R., 35 Tax A.B.C. 254, a Tax Appeal Board case, there was no written partnership agreement and the only evidence of the existence of it was a single receipt in 1957 made out to M. Huzevka & Son, together with the evidence of three payments which the appellant (the son who was regularly employed as laboratory technician) had made out of his own funds for the benefit of the farm. Although the partnership had allegedly existed since 1953 it was shown for the first time on the tax return of the appellant filed in 1962 claiming deduction for a loss in 1960. It was held that the evidence was not enough to find that a partnership had been created as, since the appellant was living on the farm with his father it was only natural that he should assist when required but this was only a common family relationship. It would appear that this Judgment was influenced by the fact that the appellant had full-time employment elsewhere and also that the first time the existence of the partnership was disclosed was when he wished to deduct a loss on the operations of the farm on his income tax return.

In the Supreme Court case of Robert Porter & Sons Ltd. v. J. H. Armstrong and William Washbrough Foster, [1926] S.C.R. 328, Duff, J: stated:

Partnership, it is needless to say, does not arise from ownership in common, or from joint ownership. Partnership arises from contract, evidenced either by expressed declaration or by conduct signifying the same thing. It is not sufficient there should be community of interest; there must be contract . . .

An American case cited in Macdonald’s Canadian Income Tax at p. 674, being the case of Commissioner v. Culbertson (1949), 337 U.S. 733, held “The fact that transfers to members of the family group may be mere camouflage does not mean that they invariably are. The donee of property may well be a true partner. Whether he is free to and does enjoy the fruits of a partnership is strongly indicative of the reality of his participation in the enterprise. ’ ’

It appears from the evidence submitted that the three older sons, John, Marinas and Peter were partners with the respondent in the operation of the farms. The principal land purchase

—that purchased from Houlton—was made by them jointly and the bank form opening an account in the name of Jacob Braat and Sons permitted any one of them to sign for this account and the evidence shows that at least two of them did so on occasion. The question we have to decide is whether Jacob Jr., (though no objection is taken to the amounts shown as payments to him in the 1963 and 1964 returns for some unexplained reason), Fritz, Cornelius, Gerard and Anna were also partners although their interest in the partnership was never disclosed to the bank or to any third persons except to the extent that respondent’s tax returns showed payments to Fritz and Cornelius of the same amount as he paid Peter in 1962, apparently without objection by the Minister.

Evidently all the members of the family considered the younger brothers and sister would eventually, as they got old enough to fully participate, acquire the same rights as the three older brothers by virtue of the purchase agreement. Neither respondent himself nor the three sons and daughter who testified showed the slightest hesitation in saying they were all in it equally including the daughter who although she did not actually work on the farm cooked for her father and brothers thereby being deemed to have contributed an equal amount of personal effort. Apparently to all of them it was as unthinkable that any distinction would be made between the three older brothers who were signatories of the purchase agreement and the five younger children who did not sign merely because they were not of age at the time, as it would have been unthinkable for any one of them to have attempted to discount the promissory notes issued by respondent each year as an indication of the interest which they were entitled to in the joint enterprise.

Are we entitled to infer therefore that the five younger children were also members of the partnership although the banking form was never changed so as to provide any documentary evidence of this? From the authorities cited it is clear that an implied agreement to carry on business together can create a partnership and a partnership relationship can be inferred by a course of conduct. It is not necessary that it be a formal contract and the evidence of witnesses is admissible. Neither is it necessary that the partners should share in the proceeds of the enterprise on a percentage basis nor that they should all share equally, and their shares could presumably vary from year to year provided that they all agree on the distribution. While it is even possible to be a partner without contributing anything, in the present case it is clear that all the members of the family contributed their labour and personal efforts. On the other hand it has been held that a mere mutual arrangement by members of a family to assist in the support of the family and operation of a farm does not constitute a partnership. It is apparent that there is a narrow dividing line and the decision in each case must necessarily depend on the particular facts peculiar to it.

While it was nowhere, in so many words, so worked out, I find that what the respondent and his children did from 1957 on was carry on the farming business in common, on terms that the respondent would be the managing partner, that all the proceeds of the farming operation would be used to pay off the capital debts of the partnership insofar as they were not needed for maintenance of the family and that the assets of the partnership would be in due course divided among them on terms to be mutually arranged as representing their respective contributions in labour and otherwise. I find that this partnership includes the younger children notwithstanding that they were not included in the deed for the farm bought in 1957 or in the partnership bank account. I find that, while many aspects of the partnership were left in an undefined way that would not have been acceptable if it were not for their mutual trust arising out of their family relationship, the arrangement was nevertheless a legally binding arrangement under which they carried on the business in common and not merely a family arrangement under which children worked for their father in his business.

Without in any way holding that in all cases where a farmer and adult members of his family operate a farm together for their mutual profit and benefit a partnership must necessarily be considered as exsiting, I nevertheless believe from the facts of this case, and applying the dictum of Duff J. (supra), it ean be inferred from the conduct of the parties and their evidence that there was an implied contract or agreement in the nature of a partnership.

The assessor for the Minister of National Revenue can certainly not be blamed for not having concluded that a partnership existed between the parties when respondent’s tax returns showed the amounts attributed to the various children as wages and he even maintained this position in his appeal before the Tax Appeal Board. It is certainly not the duty nor even the right of the assessor to so amend the taxpayer’s return as to assess it in the manner most advantageous for the taxpayer. The authority conferred on the Court, however, by Section 100(5) of the Income Tax Act, justifies a judgment referring the assessment back to the Minister for re-consideration and re-assessment on the basis of the existence of a partnership between the respondent and his sons and daughter and I so direct.

The costs of this appeal following taxation will be against the appellant.