A W Prociuk (orally: September 20, 1974):
1 The appellant was the original owner of Lots 30 and 31, in Block 42, District Lot 541, in the City of Vancouver, in the Province of British Columbia, on which was located the appellant's business premises, being a 2-storey brick structure with full basement, known by civic address as 651–655 Granville Street. The building is more particularly described on page 8 of Exhibit R-1, and on pages 13, 14 and 15 of Exhibit A-10, each being an appraisal report. There would appear to be substantial agreement in the said appraisal reports as to the condition and appearance of the building.
2 The City of Vancouver commenced expropriation proceedings to obtain title to the entire Block 42 for redevelopment purposes in 1968. Many problems arose, and much litigation and negotiation took place, before the City finally obtained title to the real estate in this area.
3 On October 9, 1969 the City of Vancouver offered an interim payment of $432,500 to the appellant in return for a registrable transfer to the aforementioned real property, leaving it open to the appellant to arbitrate, negotiate and settle the remainder of the claim, which was finally settled in July of this year (1974) (see Exhibits A-2, A-3, A-4, A-5, A-6, A-7, A-8 and A-9).
4 The issue here is what part, if any, of the said interim payment is allocable to the building alone. The respondent in reassessing the income of the appellant for the taxation year 1969, allocated $124,283 to the building. It is agreed by the parties hereto that the undepreciated capital cost of the building on January 1, 1969, was $86,000. The appellant treated this amount as a terminal loss on the ground that no part of the interim payment was made in respect of the building but the respondent, by reason of his allocation as stated earlier, disallowed the terminal loss claimed. The appellant argued that the building was worthless, and that, since the City was not interested in the building, the interim price was paid for land alone. The building was demolished in due course by the developer.
5 It is inconceivable that the appellant, in negotiating for the value of its real estate, including improvements, would consider the value of the building as nil. It had effected substantial renovations only six years earlier at a cost of approximately $70,000.
6 Having reviewed the evidence as carefully as I could, including the exhibits, and having considered the particular circumstances of this case, I am of the opinion that the respondent's allocation to the building of the sum stated earlier is too high. In my view, the building had a value of $86,000 and I hold that this is the amount that ought to be allocated to the building.
7 The reassessment is confirmed in so far as it pertains to the disallowance of part of the fee paid for the appraisal report (Exhibit A-10) on the ground that $1,765 thereof related to appraisal of the land.
8 In the result, the appeal is allowed in part, and the matter is referred back to the respondent for reassessment on the basis that the portion of the interim payment allocable to the building is $86,000. In all other respects, the appeal is dismissed.
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