H. Richard Whittall v. Minister of National Revenue, [1964] CTC 440, 64 DTC 5279

GIBSON, J.:—This is an appeal from the re-assessments by the Minister of National Revenue in respect of the income of the appellant for the taxation years 1952, 1953 and 1954, whereby the taxable income was assessed respectively at $71,823.85, $17,820.94 and $45,763.69.

At all material times, the appellant was the vice-president and a director of Norman R. Whittall Ltd., a company incorporated under the laws of British Columbia and carrying on the business of brokers, investment dealers and underwriters at 424 Burrard St., in the City of Vancouver, B.C.; and prior to 1952, the appellant was engaged as a fully-time executive of Ross Whittall Ltd.

The appellant had a 1214% interest in the firm of Ross Whit- tall Ltd. since 1947 and later acquired a 20% interest at a cost of $25,000 to $30,000.

The explanations given by the respondent for these re-assess- ments for the relevant years were as follows:

As will be noted from the above, during the year 1952 the appellant was assessed for further taxable income on the net proceeds of the sale of St. John’s Trust Syndicate units and on the sale of Yankee Princess Oils Co. Ltd. shares; and for the year 1953, he was assessed in respect of the proceeds of the sale of shares of Inland Natural Gas Co. Ltd., and of Canadian Collieries (Dunsmuir) Ltd.; in respect of the year 1954, he was assessed in respect of further sales of the shares of Inland Natural Gas Co. Ltd., and of Canadian Collieries (Dunsmuir) Ltd.

The development of these interests and their acquisition are more particularly set out in the reasons for Judgment in the case of Norman R. Whittall v. M.N.R., [1964] C.T.C. 417, and need not be repeated here.

There is one substantial difference in the instant case, however, namely, in the fiduciary capacities in which the appellant was in relation to the various companies and their shareholders at the material times.

The appellant was a director and officer only of the St. John Oil and Gas Co. Ltd., of Yankee Princess Ltd. and of Ross Whittall Limited. Ross Whittall Limited was the fiscal agent of Yankee Princess Ltd. and did the underwriting for it and also for Inland Natural Gas Co. Ltd. and St. John Oil & Gas Co. Ltd. (In respect of the latter company, the evidence was that it was really an exchange of shares and an accommodation granted by Ross Whittall Limited in the hope that there would be underwriting in the future given it by St. John Oil & Gas Co. Ltd.)

For the reasons given in the case of N orman R. Whittall v. M.N.R. (supra), the general finding that these transactions were trading operations as part of the business is applicable in this case, and also because of the particular fiduciary relationship of the appellant with certain of these companies and their shareholders in his capacity as director thereof, I find that these transactions in these securities did not constitute ‘‘ordinary’’ investments, and therefore, I am of opinion that the profits realized from the sales of the securities more particularly set out in the re-assessment notices for 1952, 1953 and 1954 were profits from a business within the meaning of Section 3 of the Income Tax Act, and that the Minister as 8 ht. in including it in the assessment. , ;

These appeals are, therefore, dismissed with costs.