KEARNEY,
J.:—This
is
an
appeal
by
the
Minister
from
a
decision
of
the
Tax
Appeal
Board
(28
Tax
A.B.C.
248)
dated
January
9,
1962,
which
maintained
to
the
extent
hereinafter
mentioned
appeals
taken
by
the
respondent
concerning
the
income
tax
reassessments
levied
upon
her
for
the
taxation
years
1954,
1955
and
1956.
By
notices
of
re-assessment
dated
March
12,
1959,
the
Minister
added
to
the
previously
declared
income
of
the
respondent
amounts
of
$4,467.61,
$282.36
and
$27,934.35
for
the
aforesaid
taxation
years
respectively,
on
the
ground
that
they
constituted
income
realized
by
the
respondent
as
a
member
of
a
partnership
engaged
in
business
within
the
meaning
of
Sections
3,
4
and
139(1)
(e)
of
the
Income
Tax
Act.
The
respondent
appealed
the
re-assessments
to
the
Board,
which
dismissed
them
in
respect
of
the
years
1954
and
1955
because
they
represented
profits
arising
out
of
sales
of
certain
lots
(seven
in
1954
and
two
in
1955)
which
were
realized
before
the
partnership
(Pointe-aux-Trembles
Development
Reg’d.)
of
which
the
respondent
was
a
member,
had
been
dissolved
and
at
a
time
when
she
was
still
struggling
to
realize
the
purposes
for
which
it
had
been
formed.
The
respondent’s
appeal
in
regard
to
1956
was
maintained
because
the
Board
held
that
the
pofit
which
the
respondent
realized
in
that
year
on
a
bulk
sale
of
the
remainder
of
her
property
to
Coté
&
Lavigueur
Construction
Ltée,
had
occurred
after
the
partnership
had
been
dissolved
and
that
it
did
not
constitute
income
from
a
business
but
was
in
the
nature
of
a
capital
gain
and
therefore
not
taxable.
No
appeal
was
taken
by
the
respondent
in
respect
of
the
reassessments
from
that
part
of
the
Judgment
of
the
Board
which
dismissed
her
appeal
concerning
the
years
1954
and
1955,
and
it
follows
that
the
present
appeal
relates
to
the
taxation
year
1956
alone.
Although
the
amount
of
the
1956
profit
was
contested
before
the
Board,
it
is
no
longer
in
issue
because
counsel
for
the
parties,
at
the
opening
of
this
case,
stated
they
had
agreed
that
the
figure
of
$27,934.35,
as
claimed,
should
be
reduced,
in
round
figures,
to
$18,000.
Counsel
also
declared
that
they
had
no
additional
evidence
to
offer
and
that
the
proof
contained
in
the
record
transmitted
by
the
Board
in
accordance
with
Section
39(4)
of
the
Act,
including
a
transcript
of
the
evidence,
would
make
up
the
case
before
this
Court,
and
it
might
be
said
that
only
in
a
technical
sense
did
the
present
appeal
constitute
a
trial
de
novo.
The
instant
issue
reduces
itself
to
the
not
unfamiliar
one
of
whether
the
profit
of
$18,000
realized
by
the
respondent
on
the
sale
on
May
15,
1956
of
certain
lots
to
Côté
&
Lavigueur
Construction
Ltée
is,
as
claimed
by
the
appellant,
taxable
income
from
a
business
within
the
meaning
of
the
relevant
sections
of
the
Act
or
a
capital
accretion
arising
from
a
non-commercial
transaction
as
submitted
by
the
respondent.
As
appears
by
the
transmitted
record,
the
proof
consists
of
the
testimony
given
by
the
respondent
and
Henri
Lavigueur,
an
officer
of
Côté
&
Lavigueur
Construction
Ltée,
together
with
the
documentary
evidence,
including
a
copy
of
a
judgment
of
the
Superior
Court
for
the
Province
of
Quebec,
which
I
will
have
occasion
to
refer
to
later.
There
is
no
dispute
as
to
the
facts,
which
are
substantially
set
out
in
the
decision
of
the
Board.
It
is
well
established,
however,
that
in
endeavouring
to
resolve
an
issue
such
as
arises
herein
each
case
must
be
judged
on
its
own
facts
and
circumstances,
and
I
propose,
before
dealing
with
the
submission
of
counsel,
to
examine
the
relevant
events
as
I
see
them.
Early
in
1954,
the
respondent,
who
owned
and
operated
a
rooming
house
for
tourists,
was
approached
by
one
J.
A.
Vézina,
a
civil
engineer,
who
represented
to
her
that
he
had
an
immediate
opportunity
to
put
to
use
the
wide
experience
which
he
had
acquired
in
the
construction
of
residential
property,
on
the
sale
of
which
he
had
been
accustomed
to
make
a
profit
of
$1,500
to
$1,800
per
house;
that
he
was
able
to
procure
the
necessary
finances
to
meet
the
cost
of
construction;
that
he
knew
of
some
desirable
building
lots
which
were
for
sale;
and
that
he
was
anxious
to
become
associated
on
a
50-50
basis
with
somebody
who
had
the
wherewithal
to
buy
the
above-mentioned
land
upon
which
it
should
be
feasible
to
construct
about
twenty
houses
per
annum.
Mr.
Vézina
brought
her
to
see
the
property,
which
consisted
of
nearly
six
hundred
thousand
square
feet
of
unsubdivided
vacant
land
located
in
the
Parish
of
Pointe-aux-Trembles
on
the
island
of
Montreal,
the
sale
price
of
which
amounted
to
$31,000.
The
respondent
was
favourably
impressed
by
the
aforesaid
proposal.
She
had
$5,000
to
$6,000
in
liquid
funds
and
on
making
enquiries
she
ascertained
that
by
giving
a
mortgage
on
her
rooming
house
as
collateral
security
she
would
be
able
to
procure
a
bank-loan
of
$25,000,
repayable
by
instalments
together
with
interest.
Subsequently,
on
April
19,
1954,
she
entered
into
a
partnership
agreement
with
the
aforesaid
Vézina,
which
agreement
was
filed
as
Exhibit
A-l
and
reproduced
verbatim
in
the
decision
of
the
Board.
It
was
a
loosely
drawn
agreement
but
particulars
which
were
lacking
in
it
are
to
be
found
in
other
exihibits,
particularly
Exhibits
3
and
5,
and
also
in
the
transcript
of
the
testimony
and
in
a
copy
of
the
already
mentioned
judgment
of
the
Superior
Court
for
the
district
of
Montreal.
As
a
result
of
the
above-mentioned
clarification
in
respect
of
Exhibit
A-1
it
is
not
disputed
and
it
can
be
said
with
justification
that
the
respondent’s
sole
obligation
to
the
partnership
was
first
to
acquire
for
$31,000
cash
the
lands
described
in
Exhibit
A-1
hereinafter
referred
to
as
‘‘the
property”
and
to
conditionally
transfer
to
the
partnership
the
aforesaid
property,
in
whole
or
in
part,
for
$33,000,
by
progressively
selling
to
it
a
few
lots
at
a
time
at
cost
and
when
J.
A.
Vézina
had
carried
out
his
obligations
under
the
above-mentioned
agreement.
It
is
equally
clear
that
Mr.
Vézina
was
to
manage
the
undertaking
first
by
causing
the
property
to
be
subdivided,
then
procuring
necessary
credit
and
finances,
including
a
builder’s
loan,
by
way
of
mortgage,
from
Central
Mortgage
and
Housing
Corporation
to
carry
out
the
construction
and
subsequent
sale
of
bungalow-type
houses
as
erected
on
the
lots
thus
transferred.
I
might
here
note
that,
while
the
agreement
states
that
the
respondent
was
to
purchase
the
property
for
$31,000
and
sell
it
to
the
partnership
for
$33,000,
the
difference
of
$2,000
was
not
profit
but
was
intended
to
cover
the
interest
charges
which
the
respondent
would
have
to
pay
on
her
bank-loan
during
the
contemplated
progressive
sale
period.
On
May
19,
1954,
the
respondent
purchased
the
property
as
agreed,
which
consisted
of
572,453
sq.
ft.
of
vacant
unsubdivided
land.
See
Exhibit
1-3
which
also
containes
particulars
of
sales
of
lots
subsequently
made
by
the
respondent
and
which
was
filed
by
consent
of
counsel
to
serve
as
evidence
thereof
in
lieu
of
filing
copies
of
notarial
deeds.
Soon
after
J.
A.
Vézina
informed
the
respondent
that
he
was
having
difficulties
in
procuring
the
necessary
finances
to
commence
construction
and
he
suggested
to
her
that
it
would
assist
him
greatly
if
she
would
transfer
into
his
name
a
couple
of
lots.
She
reminded
him
that
she
was
in
no
way
obliged
under
their
agreement
to
do
so,
nevertheless
she
would
make
him
a
present
of
them.
Later
he
informed
her
that
he
was
still
unable
to
procure
the
required
financing
but
that
he
was
confident
that
a
Mr.
Gaston
KR.
Miquelon
would
provide
the
necessary
finances
to
build
two
houses
if
he
were
given
a
one-third
interest
in
the
existing
partnership,
and
he
requested
the
respondent
to
consent,
like
himself,
to
reduce
their
existing
interest
in
the
partnership
from
one-half
to
one-third
each.
He
also
suggested
that
if
she
would
admit
Mr.
Miquelon
into
the
partnership
he
would
agree
that,
instead
of
her
transferring
two
lots
to
him
for
nothing,
as
she
had
previously
agreed,
he
would
be
willing
to
pay
$1,200
for
them,
on
the
understanding
that
she
would
contribute
the
equivalent
of
$400
and
Mr.
Miquelon
and
himself
would
each
pay
her
a
like
amount.
On
the
above
representation,
the
respondent
again
gave
her
consent,
and
on
June
22,
1954,
she
signed
a
deed
transferring
an
undivided
half-interest
in
lots
36,
37,
38
and
39
of
part
of
original
lot
148
to
Mr.
Vézina,
in
which
the
sale
price
is
stated
to
be
$1,200
(Ex.
1-3).
A
few
days
later,
she
received
a
promissory
note
for
$800,
signed
by
Mr.
Vézina
and
dated
June
25,
1954
(Ex.
A-2).
On
July
8,
1954,
the
two
partners
signed
and
registered
a
declaration
under
the
Partnership
Declaration
Act
of
Quebee
in
the
office
of
the
Prothonotary
of
the
Superior
Court
for
the
district
of
Montreal,
in
which
they
certified
that
they
desired
to
carry
on
business
under
the
name
and
style
of
‘‘Pointe-aux-
Trembles
Development
Reg’d.’’
for
the
purpose
of
the
construction,
sale
and
exchange
of
immovables,
with
a
place
of
business
located
in
Montreal
(Ex.
A-4).
At
some
undetermined
date
(presumably
after
the
registration
of
Exhibit
A-4),
Notary
Jean
R.
Miquelon
prepared
a
new
3-
member
deed
of
partnership
in
which
the
respondent
and
J.
A.
Vézina
were
both
said
to
be
doing
business
under
the
firm
name
and
style
of
‘‘Pointe-aux-Trembles
Development
Reg’d.”
and
are
described
as
party
of
the
first
part
and
Gaston
R.
Miquelon
as
party
of
the
second
part
(Ex.
A-3).
It
is
worth
noting
that
the
opening
paragraphs
of
the
deed
contain
the
following
declarations
:
“The
said
partnership
(Pointe-aux-Trembles
Development
Reg’d.)
was
formed
to
exploit
lands
situated
in
Pointe-aux-
Trembles
and
the
construction
of
houses
thereon.
The
said
land
was
the
property
of
dame
Corinne
Roy
and
would
be
transferred
by
her
in
whole
or
in
part
to
the
Pointe-
aux-Trembles
Development
Reg’d.
The
said
property
would
be
subdivided
in
whole
or
in
part
so
that
lots
could
be
sold
individually
with
a
house
erected
on
each
of
the
said
lots.’’
It
goes
on
to
sa
:
“These
declarations
having
been
made,
the
parties
agree
as
follows
:
The
party
of
the
second
part
undertakes
to
finance
the
construction
of
two
bungalow-type
houses
which
will
be
constructed
entirely
by
the
Party
of
the
First
Part.’’
It
is
useless
to
set
out
the
remaining
clauses
of
the
deed,
because,
although
both
J.
A.
Vézina
and
the
respondent
signed
the
agreement,
Gaston
R.
Miquelon
declined
to
do
so
because
he
entertained
doubts
as
to
whether
the
respondent,
on
account
of
her
marital
status,
was
legally
entitled
to
sign
the
deed.
It
transpired
that
at
no
time
did
Mr.
Miquelon
sign
the
new
partnership
agreement,
neither
did
Mr.
Vézina
ever
honour
his
note
and
the
undivided
half
of
four
lots
remained
registered
in
his
name.
During
the
next
few
months
Mr.
ézina
continued
his
efforts
to
obtain
from
various
sources,
including
Central
Mortgage
and
Housing
Corporation,
The
Canadian
Bank
of
Commerce
and
The
Prudential
Life
Insurance
Company,
loans
for
construction
purposes
but
due
to
his
poor
credit
rating
he
was
unsuccessful.
Next,
in
the
expectation
or
hope
that
the
respondent
would
use
the
proceeds
to
finance
house
construction
he
sought:
purchasers
for
some
of
the
respondent’s
lots
and
including
the
sale
to
Mr.
Vézina
she
sold
seven
lots
in
the
last
half
of
1954
for
$7,925,
resulting
in
taxable
profits
of
$4,467.61
(Ex.
1-3).
Mr.
Vézina
was
unable
to
persuade
the
respondent
to
use
for
house
construction
the
proceeds
from
the
above-mentioned
sales.
She
reminded
him
of
his
own
obligations
in
this
regard
and
informed
him
that
she
intended
to
apply
them
against
interest
and
capital
on
her
bank-
loan.
Mr.
Vézina
then
adopted
a
new
attitude
and
commenced
to
blame
the
respondent
for
his
inability
to
secure
a
mortgage
on
the
four
half-lots
which
would
have
enabled
him
to
proceed
with
house
construction.
On
March
25,
1955,
he
instituted
an
action
in
the
Superior
Court
for
the
district
of
Montreal,
province
of
Quebec,
in
which
he
claimed
that
the
respondent
had
failed
to
fulfil
her
obligations
under
the
partnership
Exhibit
A-1
and
sought
a
dissolution
of
the
partnership,
an
order
requiring
her
to
make
a
rendition
of
accounts
and
à
condemnation
in
damages
against
her
for
$25,000.
Notwithstanding
the
above-mentioned
proceedings,
the
respondent
came
to
some
sort
of
understanding
with
Mr.
Vézina
about
the
liquidation
of
outstanding
debts,
more
particularly
an
architect’s
bill
for
$900
which
he
had
failed
to
pay.
He
found
one
purchaser
who
bought
a
lot
for
$900
on
September
15
and
a
second
purchaser
who
on
November
25,
1955
bought
another
for
$950
(Ex.
I-8).
The
profits
realized
on
these
sales
were
sufficient
to
pay
off
the
debts
and
leave
a
surplus
of
$282.36
as
claimed
in
the
appellant’s
re-assessment
for
1955.
The
two
above-mentioned
transactions
of
September
and
November
1955
were
the
last
in
which
Mr.
Vézina
had
been
instrumental
in
finding
a
purchaser
and
thereafter
the
partners
ceased
to
have
any
dealings
with
each
other
and
the
partnership’s
activities
came
to
an
end.
The
proof
also
shows
that
the
respondent
had
no
contact
with
the
purchasers
of
the
lots
which
she
sold
in
1954
and
1955
and
the
only
time
she
met
them
was
when
she
signed
the
deeds
of
sale
at
the
notary’s
office.
In
respect
of
the
Vézina
action,
as
appears
by
copy
of
a
judgment
rendered
on
October
30,
1961
by
the
Honourable
Mr.
Justice
C.
A.
Sylvestre
(Ex.
A-5),
in
her
defence
to
the
said
action
and
by
a
cross-demand
the
respondent,
apart
from
denying
the
aforesaid
allegations,
pleaded,
inter
alia,
that
she
was
induced
to
enter
into
partnership
with
the
said
Vézina
by
his
false
representations
respecting
his
financial
status
and
qualifications
and
but
for
the
aforesaid
deception
she
would
never
have
entered
into
the
said
partnership;
that
the
said
Vézina
had
failed
to
fulfil
his
obligations
under
the
said
partnership
agreement
and
she
asked
for
annulment
of
Exhibit
A-1
as
well
as
of
the
previously
mentioned
deed
of
sale
of
half
interest
in
four
lots
for
$1,200
(Ex.
I-3).
The
learned
trial
judge
found
that
Vézina’s
aforesaid
claim
was
entirely
unfounded
in
fact
and
that
the
respondent’s
defence
was
well
founded.
He
dismissed
the
Vézina
action
and
declared
the
partnership
agreement
Exhibit
A-1
null
and
void.
As
to
the
résiliation
of
the
sale
to
Vézina
referred
to
in
Exhibit
1-3,
the
learned
judge
found
the
he
could
not
annul
it
because
the
widow
of
the
late
J.
A.
Vézina
had
not
been
made
a
party
to
the
action,
but
he
reserved
the
respondent’s
rights
in
respect
thereof.
The
only
sale
effected
in
1956
occurred
on
May
25,
when
madame
Thibeault
sold
to
Coté
&
Lavigueur
Construction
Ltée
practically
all
the
remainder
of
the
property,
amounting
to
426,781
sq.
ft.,
for
a
reported
price
of
$55,000,
and,
on
the
profit,
was
originally
re-assessed
by
the
Minister
at
$27,394.35
(Ex.
I-8—Annex
2),
but,
as
previously
stated,
it
was
reduced
to
approximately
$18,000
by
agreement
between
counsel
for
the
parties.
I
might
here
add
that
the
aforesaid
deduction
of
about
$9,000
came
about
because,
as
appears
by
Exhibits
1-1
and
A-6
and
the
evidence
of
Henri
Lavigueur,
in
lieu
of
receiving
$55,000
in
cash
the
respondent
received
$10,000
cash
and
450
preferred
shares
of
the
par
value
of
$100
each
of
Coté
&
Lavigueur
Construction
Ltée,
which—the
parties
agreed—had
a
market
value
of
$80
per
share.
The
issue
concerning
the
validity
of
Exhibit
A-1
was
pending
before
the
Court
and
the
evidence
shows
that
the
respondent,
during
the
six
months
preceding
the
bulk
sale,
made
no
attempt,
personally
or
through
real
estate
agents
or
otherwise,
to
sell
all
or
any
part
of
the
property.
According
to
the
evidence
of
the
respondent,
she
was
informed
by
Notary
Roy
that
the
said
company
was
willing
to
take
all
the
remainder
of
the
property
off
her
hands
and
advised
her
to
sell
it.
Henri
Lavigueur,
an
officer
of
Côté
&
Lavigueur
Construction
Ltée,
testified
that
his
company,
for
a
long
time,
had
been
looking
for
a
suitable
land
on
which
to
build
and
that
the
instant
property
was
found
as
a
result
of
his
company’s
efforts.
The
question
to
be
resolved
is
whether
in
the
light
of
the
foregoing
facts
and
circumstances
it
can
be
said
that
the
profit
of
$18,000
made
by
the
respondent
in
respect
of
the
bulk
sale
in
1956
can
properly
be
termed
‘‘
profit
from
a
business’’,
as
claimed
by
the
appellant,
or
was
of
a
capital
nature
realized
at
a
time
when
the
respondent
had
ceased
to
carry
on
business.
Counsel
for
the
appellant
submitted
that
the
evidence
clearly
indicates
that
the
respondent
launched
into
the
world
of
commerce
in
partnership
with
J.
A.
Vézina.
With
this
statement
I
wholly
agree.
The
certificate
of
registration
Exhibit
A-4,
which
the
respondent
signed,
certifies
that
such
is
the
case
and
I
do
not
think
it
matters
that
she
took
no
part
in
the
management
of
the
partnership
and
that
her
only
obligation
to
it
was
to
transfer
all
or
a
portion
of
the
property
which
she
had
acquired
if,
as
and
when
her
partner
carried
out
his
part
of
the
bargain.
It
may
be
said
that
her
position
in
the
partnership
amounted
to
little
if
anything
more
than
a
silent
partner,
but
as
indicated
by
counsel
for
the
appellant,
J.
A.
Vézina
was
actively
managing
the
business
with
the
knowledge
and
consent
of
the
respondent
and
under
the
rules
of
partnership
of
the
Civil
Code
of
Quebec
she
is
presumed
to
have
given
him
a
mandate
for
the
management
of
the
business
and
his
acts
are
binding
on
her.
The
relevant
portion
of
Art.
1851
C.C.
provides:
1851.
If
there
be
no
stipulation
as
to
the
managing
of
the
business
of
the
partnership
the
following
rules
apply
:
1.
the
partners
are
presumed
to
have
mutually
given
to
each
other
a
mandate
for
the
management,
and
whatever
is
done
by
one
of
them
binds
the
others
;
saving
the
right
of
the
latter,
together
or
separately,
to
object
to
any
act
before
it
is
concluded
;
Counsel
for
the
appellant,
in
support
of
his
submission
that
the
$18,000
in
issue
constituted
taxable
income
relied
particularly
on
the
following
cases:
Regal
Heights
Ltd.
v.
M.N.R.,
[1960]
S.C.R.
902,
[1960]
C.T.C.
384;
Glen
J.
Day
v.
M.N.R.,
[1958]
Ex.
C.R.
44,
[1958]
C.T.C.
33;
McIntosh
v.
M.N.R.,
[1958]
S.C.R.
119,
[1958]
C.T.C.
18.
i
The
Regal
Heights
case
concerned
an
incorporated
company
which
acquired
property
for
the
purpose
of
establishing
upon
it
a
regional
shopping
centre.
Its
promoters
and
directors
were
experienced
businessmen
who,
before
effecting
the
purchase,
were
aware
that
their
scheme,
in
order
to
be
successful,
apart
from
financing,
which
would
run
into
several
millions
of
dollars,
was
dependent
on
the
procurement
of
a
lease
from
a
major
departmental
store
and
concerning
which
they
had
no
previous
assurance.
The
Court
held
that
it
was
reasonable
to
assume
that
the
promoters
and
directors
of
the
venture,
with
their
knowledge
and
experience,
would
not
neglect
to
weigh
and
consider
alternative
uses,
including
resale
of
the
property
in
an
undeveloped
state,
should
their
original
intention
fail
to
materialize,
and
I
believe
it
was
but
natural
under
the
circumstances
that
in
the
above
case
little
or
no
weight
was
given
to
any
contrary
declaration
made
on
the
part
of
the
said
promoters
and
directors.
=:
In
the
instant
case,
in
my
opinion,
the
respondent
believed,
not
without
justification,
that
Mr.
Vézina,
a
professional
man,
was
telling
the
truth
when
he
informed
her
of
the
status
which
he
possessed
and
the
profits
which
he
had
realized
in
the
house
construction
business.
She
herself
had
succeeded
in
borrowing
$25,000
from
a
bank
and
undoubtedly
considered
that
he
would
easily
be
able
to
raise
$8,000
or
$9,
000,
which
was
the
cost
of
building
single
bungalows.
In
dealing
with
intent,
credibility
I
consider
plays
an
important
role.
À
perusal
of
the
transcript
clearly
shows
that
the
Board
was
of
the
opinion
that
the
respondent
was
a
forthright
person
worthy
of
belief,
and
when
she
stated
under
oath
that
on
joining
the
partnership
she
had
no
notion
of
selling
vacant
lots
as
sueh
at
a
profit
she
was
speaking
the
truth.
I
am
of
opinion
that
if
the
respondent
had
known,
as
subsequent
events
proved
(see
Superior
Court
judgment
Ex.
A-
5),
that
Mr.
Vézina
had
a
poor
credit
rating
and
that
his
testimony
did
not
merit
credence,
she
would
never
have
entered
into
the
partnership.
It.
should
also
be
emphasized
that
the
respondent,
in
acquiring
the
property,
intended
to
sell
it
to
the
partnership
at
cost.
Far
from
entertaining
a
purpose,
will
or
design,
within
the
usual
meaning
attributed
to
“intent”,
to
sell
vacant
lands,
the
‘respondent
did
everything
she
could
to
prevent
such
an
occurrence.
In
order
to
make
good
her
partner’s
deficiency
in
carrying
out
his
obligations
and
to
assist
him
in
doing
so,
she
placed
a
one-half
undivided
interest
in
four
lots
in
his
name,
and,
when
‘this
proved
insufficient
or
unavailing,
agreed
to
admit
a
new
partner
and
reduce
her
interest
in
the
partnership
from
one-half
to
one-third,
so
that
the
original
purpose
of
selling
built-up
units,
instead
of
vacant
lots,
might
be
accomplished.
3,
Apart
from
any
question
of
intent,
a
further
issue
of
primary
importance
must
be
borne
in
mind,
namely,
‘‘Did
the
claim
of
$18,000
constitute
income
from
a
business
which
in
turn
depends
upon
not
only
what
the
respondent
actually
did
in
the
taxation
year
1956
but
upon
the
manner
in
which
she
carried
it
out?”.
Stated
a
little
differently,
this
reduces
itself
to
a
determination
of
whether
the
respondent
had
ceased
to
carry
on
business
prior
to
January
1,
1956,
and,
if
so,
did
she,
in
effecting
the
sale
to
Coté
&
Lavigueur
Construction
Ltée,
on
May
15,
1956,
do
so
in
such
a
manner
as
to
constitute
carrying
on
a
business.
At
no
time
could
the
instant
property,
as
it
existed
in
1956,
be
regarded
as
stock-in-trade
or
inventory
in
the
hands
of
the
partnership,
because
the
partnership
had
nothing
more
than
a
conditional
right
to
acquire
it,
which
was
contingent
on
Mr.
Vézina
fulfilling
obligations,
which
he
failed
to
do.
Moreover,
during
the
taxation
year
1956
with
which
we
are
concerned
the
implementation
of
the
aforesaid
obligations
were
no
longer
susceptible
of
being
performed
because,
prior
to
January
1,
1956,
the
partnership
had
been
dissolved
by
common
consent
when
Mr.
Vézina
instituted
proceedings
seeking
inter
alia
a
dissolution
in
which
the
respondent
concurred,
and
the
partnership
agreement
(Ex.
A-1)
was
also
declared
null
and
void
by
the
judgment
of
the
Superior
Court
supra.
The
McIntosh
case
is
closer
to
the
case
at
bar
inasmuch
as,
like
the
respondent,
McIntosh,
who
had
no
experience
in
the
business
of
house
construction,
was
asked
to
enter
into
a
partnership
on
a
50-50
basis
with
a
person
named
Laidlaw,
for
the
purpose
of
constructing
houses
on
the
property
and,
later,
selling
them
and
sharing
the
profits.
Unlike
the
present
case,
however,
it
was
Laidlaw
who
had
experience
in
building
and
who
bought
the
whole
property
consisting
of
165
lots,
whereupon,
after
some
hesitation,
McIntosh
acquired
a
one-third
interest
in
the
partnership
by
purchasing
55
lots
from
his
partner
and
obtained
a
promise
of
sale
by
paying
$2,500
on
account
of
the
purchase
price
and
became
entitled
to
receive
his
title
deed
on
paying
the
balance
to
$1,872.
The
partners
were
to
be
associated
in
a
house-building
scheme
but
differences
arose
(the
nature
of
which
is
not
disclosed),
but
it
would
appear
that
McIntosh
did
not
want
to
enter
the
construction
business
and
Laidlaw
did
because
Laidlaw
offered
to
refund
the
$2,500
which
his
partner
had
paid
on
account
and
cancel
the
purchase.
McIntosh
refused
the
offer
and
took
an
action,
for
specific
performance,
in
the
Supreme
Court
of
Ontario,
which
was
ultimately
settled
out
of
Court.
McIntosh
paid
the
balance
of
the
purchase
price
and
took
title
to
55
lots,
while
Laidlaw
kept
the
remaining
115
lots
and
the
partners
then
went
their
respective
ways.
McIntosh,
apparently,
did
what
he
preferred
to
do
and
what
he
intended
to
do
if
it
could
be
done,
namely,
sell
his
vacant
lots,
which
he
did
in
part,
and
was
taxed
on
$12,000,
representing
his
profits
on
the
transaction.
The
Court
found
that
no
new
situation
arose
insofar
as
McIntosh
was
concerned
when
he
modified
his
original
reluctant
intention
of
sharing
in
a
construction
program
and
decided
to
sell
vacant
lots
instead.
The
McIntosh
case
is
also
distinguishable
because
he
owned
a
vested
interest
in
the
property
belonging
to
the
partnership,
as
he
had
already
paid
$2,500
on
account
and
was
able
and
willing
to
pay
the
balance
of
$1,800,
while
in
the
instant
case
at
no
time
did
the
Pointe-aux-Trembles
Development
Reg’d.
have
anything
but
a
right
which
was
conditioned
on
J.
A.
Vézina
fulfilling
certain
obligations,
which
he
failed
to
do.
The
evidence
in
the
Day
case
is
briefly
to
the
effect
that
in
June
1950
he
purchased
a
block
of
land
consisting
of
125
acres
for
$105,000
with
the
idea
of
turning
it
into
a
subdivision
and
then
selling
it
all
in
lots,
but
in
May
1951
he
gave
up
this
idea
because
the
cost
of
carrying
it
out
was
greater
than
he
anticipated.
In
November
1951
he
sold
the
property
en
bloc
for
$205,000
and
was
assessed
on
the
resulting
profits
which
he
realized
in
the
taxation
years
1952,
1953
and
1954.
The
offer
of
$205,000
for
the
whole
property
was
promptly
accepted
by
Mr.
Day
and
he
paid
the
broker
who
brought
it
to
him
a
commission
of
$10,000,
whereupon
the
new
purchaser
took
over
the
plans
previously
prepared
by
Mr.
Day
and,
with
modifications,
had
them
accepted
by
the
Planning
Board
and
proceeded
to
effectively
complete
the
subdivision.
In
the
above-mentioned
case
no
partnership
existed.
Mr.
Day
alone
managed
and
controlled
the
property
and,
before
his
alleged
abandonment
of
his
original
plan
in
May
1951,
he
had
gone
about
the
business
of
subdividing
in
the
same
manner
as
those
ordinarily
engaged
in
the
real
estate
business
would
do,
by
causing
a
subdivision
plan
to
be
prepared
and
which
he
succeeded
in
obtaining
offers
for
lots
or
group
of
lots,
which
he
refused,
as
apparently
they
were
not
sufficiently
attractive.
There
was
no
finding
in
the
Day
case
that
at
any
given
moment
the
taxpayer
ceased
to
be
engaged
in
the
real
estate
business.
The
evidence
afforded
little
or
no
scope
to
establish
the
existence
of
a
split
personality
such
as
arose
in
the
instant
case,
wherein
the.
respondent,
in
her
quality
as
member
of
a
partnership,
was
engaged
in
business
but
ceased
to
be
so
engaged
when
Mr.
Vézina’s
activities
terminated
and
the
partnership
was
dissolved
and
the
agreement
on
which
it
was
based
was
declared
by
Court
decree
to
be
null
and
void.
The
efforts
made
by
a
woman
who
lacked
business
experience
to
carry
out
her
original
intention
is
in
contrast
to
the
‘
‘
do
little
or
nothing
’
’
attitude
of
the
taxpayer
in
the
Day
ease,
wherein
he
had
more
skill,
ability
and
freedom
than
the
respondent
to
dispose
of
his
property
in
a
manner
which
best
suited
his
purpose.
That
a
taxpayer
should
be
engaged
in
business
in
one
taxation
year
and
cease
to
be
so
engaged
in
the
next,
in
my
opinion,
is
by
no
means
an
extraordinary
occurrence.
Indeed,
in
face
of
the
reverses
prior
to
1956
which
beset
the
respondent
’s
efforts
to
develop
the
property,
it
would
be
rather
surprising
if
she
did
not
desire
to
completely
withdraw
from
business
activities.
At
no
time
after
the
Pratte
sale
of
November
25,
1955
did
the
respondent
or
Mr.
Vézina
offer
any
part
of
the
residue
for
sale,
nor
seek
to
sell
it
through
real
estate
agents,
and
insofar
as
the
bulk
sale
which
occurred
on
May
15,
1956,
as
appears
by
her
own
evidence
and
that
of
Mr.
Henri
Lavigueur
supra,
the
respondent,
figuratively,
did
not
raise
a
finger
to
bring
about
the
aforesaid
sale.
Counsel
for
the
appellant
stressed
points
of
similarity
between
the
case
at
bar
and
the
three
cases
upon
which
he
relied
and
recalled—not
without
justification—that
the
extended
meaning
of
“business”
as
defined
in
Section
139(1)
(e)
of
the
Act
is
couched
in
terms
so
broad
as
to
embrace
‘‘an
undertaking
of
any
kind
whatsoever
and
includes
an
adventure
or
concern
in
the
nature
of
trade”.
Although
it
may
be
said
that
the
case
at
bar
bears
a
resemblance
in
several
aspects
to
the
aforesaid
authorities
which
upheld
the
re-assessments
made
by
the
Minister,
nevertheless,
as
observed
by
counsel
for
respondent,
on
closer
examination
of
the
facts
some
striking
differences
appear
which
I
think
afford
sufficient
grounds
for
holding
that
the
sum
in
issue
falls
on
the
non-
taxable
side
of
the
dividing
line.
In
my
opinion,
in
the
light
of
the
exceptional
circumstances
disclosed
in
this
case
the
weight
of
evidence
adduced
on
behalf
of
the
respondent
is
such
as
to
reasonably
establish
that
the
respondent
had
ceased
to
be
engaged
in
business,
within
the
meaning
of
the
Act,
six
months
prior
to
May
15,
1956,
when
she
effected
the
sale
of
the
property
in
issue,
and
that
the
said
profit
had
the
attributes
of
a
capital
accretion
and
did
not
constitute
income
from
a
business.
For
the
above
reasons,
I
consider
that
the
appeal
should
be
dismissed
with
costs.
Judgment
accordingly.
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