THURLOW,
J.:—These
are
appeals
from
judgments
of
the
Tax
Appeal
Board
(25
Tax
A.B.C.
415,
417),
dismissing
appeals
by
the
appellants
from
assessments
of
income
tax
for
the
years
1956
and
1957.
As
the
same
problem
is
involved
in
both
cases,
the
appeals
were
heard
together.
The
question
for
determination
is
whether
a
profit
realized
on
the
sale
of
certain
real
estate
which
I
shall
refer
to
as
the
Buffel
property
was
income
for
the
purposes
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148,
or
a
capital
gain.
The
appellant
Donald
Quon
is
a
chemical
engineer
and
a
professor
at
the
University
of
Alberta.
The
appellant
Lee
K.
Yuen
is
a
restaurateur.
Both
appellants
live
in
Edmonton,
and
prior
to
the
events
to
be
related
neither
of
them
had
engaged
in
dealing
in
real
property
or
been
involved
in
any
speculative
venture
in
real
estate.
Yuen
had
been
brought
up
in
Calgary,
where
his
father
operated
a
market
garden,
and
he
had
assisted
his
father
and
was
familiar
with
that
kind
of
operation.
He
was
acquainted
with
one
Leong
Jung,
who
had
operated
a
market
garden
in
Edmonton
for
many
years
prior
to
1942,
then
sold
out
and
gone
to
China
for
several
years
and
subsequently
returned
to
Edmonton,
where
he
worked
for
Yuen
as
a
dishwasher.
In
1953
or
1954,
Yuen
began
looking
for
a
suitable
parcel
of
land
to
establish
a
market
garden,
the
plan
being
to
acquire
the
land
and
have
Jung
operate
the
garden
initially
in
a
small
way
on
a
share
basis
and
later
to
build
and
operate
greenhouses.
With
these
plans
in
mind
Yuen
made
a
number
of
inquiries
and
looked
at
different
parcels
of
land.
It
was
desirable
to
establish
the
operation
as
near
to
the
market
as
possible
but
though
there
were
market
gardens
within
the
city
of
Edmonton,
he
soon
found
that
it
would
not
be
possible
or
practicable
to
obtain
land
for
the
purpose
within
the
city
limits.
He
contemplated
the
possibility
that
the
operation
might
not
succeed
or
might
turn
out
to
be
impractical
and,
with
that
in
mind,
was
looking
for
a
piece
of
land
which,
while
suitable
for
a
market
garden,
would
also
be
one
from
which,
if
necessary,
he
could
recover
his
investment.
He
also
arranged
for
Dr.
Quon,
the
latter’s
brother,
Harry
Quon,
and
Norman
Kwong,
a
professional
football
player,
to
take
shares
in
the
enterprise.
Ultimately,
in
July,
1955,
the
four
through
a
real
estate
agent
purchased
from
one
Buffel
for
$18,500,
40
acres
of
his
farm
outside,
but
adjacent
to,
the
southwestern
boundary
of
the
city
of
Edmonton.
This
land
appeared
to
be
suitable
for
their
purpose,
and
at
the
time
it
was
well
beyond
the
limits
of
urban
development.
In
fact,
it
is
still
half
a
mile
beyond
the
nearest
area
of
urban
development
and
beyond
a
natural
obstacle,
as
well
as
a
University
farm,
both
of
which
would
ordinarily
be
regarded
as
likely
to
retard
urban
expansion
in
that
direction.
The
evidence
satisfies
me
that
the
area
was
one
in
which
speculators
were
not
interested
at
that
time,
though
very
shortly
afterwards,
and
probably
as
a
result
of
the
holding
of
public
hearings
by
a
Royal
Commission
enquiring
into
the
problems
of
metropolitan
development
of
the
cities
of
Edmonton
and
Calgary,
it
became
an
area
in
which
land
speculators
were
very
much
interested.
I
am
also
satisfied
that,
at
the
time
of
the
purchase,
the
four
had
no
purpose
in
mind
for
the
property
other
than
to
establish
a
market
garden
and
that
it
was
their
intention
to
go
ahead
with
that
plan
the
next
year.
To
start
this
scheme
would
entail
no
very
large
expenditure
or
risk
but
would
involve
drilling
a
well
at
a
cost
of
about
$600
and
acquiring
a
truck
and
some
gardening
equipment
in
addition
to
supplies
to
be
used
in
the
operation.
In
December,
1955,
however,
Norman
Kwong
was
asked
by
a
real
estate
agent
if
he
would
be
willing
to
sell
the
land
at
$2,000
per
acre,
and
soon
afterwards,
on
hearing
that
Buffel
had
sold
the
remainder
of
his
farm
for
$760
per
acre,
the
four
came
to
the
conclusion
that
the
yield
to
be
expected
from
market
gardening
would
not
be
commensurate
with
the
value
of
the
land
and
decided
to
postpone
commencement
of
their
scheme.
They
were
not
committed
to
Jung
to
use
this
particular
piece
of
land
for
the
purpose,
and
it
is
not
surprising
that,
on
hearing
of
the
increased
value,
they
would
be
reluctant
to
go
ahead
and
make
any
such
commitment.
Yuen
continued
his
search
for
a
suitable
piece
of
land
for
several
years
but
ultimately
gave
it
up,
as
Jung
was
getting
on
in
years
and
his
son,
who
had
been
brought
from
China
to
help
him,
was
no
longer
likely
to
be
available.
During
1956,
the
four
received
a
number
of
enquiries
about
the
land
but
made
no
attempt
to
sell
it.
They
arranged
to
have
a
crop
grown
on
it
by
Buffel
so
that
the
land
would
not
deteriorate
but
apparently
did
nothing
else
with
it.
In
October
1956
Harry
Quon
died,
and
in
the
following
December
the
surviving
members
of
the
group
accepted
an
offer
of
$80,000
for
the
land
and
sold
it.
In
making
the
assessments
under
appeal
the
Minister
treated
the
profit
realized
on
the
sale
as
income
and
the
question
for
determination
in
these
appeals
is
whether
he
was
right
in
so
doing.
By
Section
3
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148,
the
income
of
a
taxpayer
for
the
purposes
of
Part
I
of
the
Act
is
declared
to
be
his
income
from
all
sources
inside
and
outside
Canada
and
to
include
income
for
the
year
from
inter
alia
all
businesses.
By
Section
4
income
from
a
business
is
declared
to
be,
subject
to
the
other
provisions
of
Part
I,
the
profit
therefrom
for
the
year
and
by
Section
139(1)
(e)
business
is
defined
as
including
a
profession,
calling,
trade,
manufacture
or
undertaking
of
any
kind
whatsoever
and
as
including
an
adventure
or
concern
in
the
nature
of
trade
but
not
an
office
or
employment.
The
Minister’s
case
for
including
the
profit
realized
on
the
sale
of
the
land
in
question
in
the
computation
of
the
appellants’
income
is
that
the
purchase
and
sale
of
the
land
constituted
a
business
within
the
meaning
of
the
statutory
definition
and
that
the
profit
realized
on
the
sale
of
the
land
was
income
from
such
business.
The
test
for
resolving
such
an
issue
is
that
stated
in
Californian
Copper
Syndicate
(Limited
and
Reduced)
v.
Harris,
5
T.C.
159,
where
after
explaining
the
distinction
between
a
gain
which
is
assessable
to
tax
as
income
from
a
trade
and
a
gain
which
is
not
assessable
the
Lord
Justice
Clerk
said
at
page
166
:
“What
is
the
line
which
separates
the
two
classes
of
cases
may
be
difficult
to
define,
and
each
case
must
be
considered
according
to
its
facts;
the
question
to
be
determined
being—Is
the
sum
of
gain
that
has
been
made
a
mere
enhancement
of
value
by
realizing
a
security,
or
is
it
a
gain
made
in
an
operation
of
business
in
carrying
out
a
scheme
for
profit-making?”
At
the
trial
of
the
appeals,
no
question
was
raised
as
to
the
credibility
of
either
appellant,
and
their
evidence,
along
with
that
of
Norman
Kwong,
satisfies
me
that
this
land
was
purchased
for
the
particular
purpose
indicated
and
not
in
pursuance
of
a
scheme
for
making
profit
by
selling
it.
On
the
facts
related,
I
do
not
think
it
could
fairly
be
said
that
when
buying
the
property
the
four
were
engaged
in
a
business
of
trading
in
real
estate
within
the
ordinary
meaning
of
the
word
‘‘business’’,
nor
do
I
think
the
purchase
should
be
regarded
as
having
been
made
in
the
course
of
carrying
on
a
calling,
trade
or
undertaking
of
any
kind
or
a
venture
or
concern
in
the
nature
of
trade
within
the
meaning
of
‘‘business’’
as
extended
by
the
statutory
definition.
It
was,
however,
submitted
that
the
purpose
for
which
the
land
was
acquired
changed
after
the
purchase
had
been
made,
that
the
sale
was
made
at
a
time
when
the
appellants
were
actively
trading
in
land,
and
that
it
should,
therefore,
be
regarded
as
a
sale
made
in
the
course
of
such
trading
and
the
profit
therefrom
treated
as
having
arisen
from
such
trading.
In
order
to
deal
with
this
submission,
it
is
necessary
to
relate
the
further
facts
brought
out
in
the
evidence
upon
which
the
contention
was
based.
In
1954
the
appellants
with
two
other
associates
had
purchased
certain
premises
in
Edmonton
known
as
the
Radio
Supply
Building
for
$55,000
paying
$25,000
down
and
financing
the
balance
on
a
mortgage.
This
property
was
leased
to
a
tenant
for
a
term
of
which
some
414
years
remained
unexpired
and
the
rental
was
sufficient
to
make
the
mortgage
payments
and
afford
a
reasonable
return
on
their
investment.
The
group
held
the
property
until
the
lease
expired
in
1958,
endeavoured
to
get
the
tenant
to
renew
it,
held
it
for
some
months
thereafter
while
searching
for
a
tenant
or
purchaser
and
ultimately
sold
it
late
in
1958
for
$75,000.
It
was
not
suggested
that
the
purchase
of
this
property
was
anything
but
an
investment.
In
the
summer
of
1956
the
appellant
Quon
was
invited
to
participate
with
several
others
in
the
purchase
of
a
parcel
of
vacant
land
on
the
outskirts
of
the
city
of
Edmonton
some
214
miles
from
the
Buffel
property.
Quon
arranged
to
have
the
appellant
Yuen
participate
as
well
and
in
all
eight
persons
including
the
appellants
and
Harry
Quon
made
the
purchase
at
$52,000,
the
share
of
each
of
the
appellants
being
10
per
cent
while
that
of
the
person
who
had
promoted
the
scheme
was
35
per
cent.
By
this
time
it
had
become
known
that
values
of
land
on
the
outskirts
of
the
city
were
increasing
rapidly
and
the
appellants
readily
conceded
that
this
property
was
bought
as
a
speculation
with
a
view
to
making
profit
by
re-selling
it.
The
property
was
held
by
the
syndicate
until
1959
when
it
was
sold
for
$189,000.
Late
in
1956
or
early
in
1957
the
appellants
with
five
others
also
participated
in
the
purchase
of
two
lots
in
Edmonton
known
as
the
Barry-Reid
property
upon
which
they
hoped
to
erect
a
building
to
be
leased.
Plans
for
the
building
were
drawn
up
but
the
syndicate
had
difficulty
in
raising
the
money
to
build
it
and
the
property
was
later
sold
at
a
small
profit.
In
the
meantime
it
had
been
used
as
a
parking
lot
and
part
of
it
had
been
let
to
a
seed
merchant.
In
December,
1956,
or
January,
1957,
after
receiving
the
offer
of
$2,000
per
acre
for
the
Buffel
property
but
before
it
was
accepted,
the
appellant
Quon
learned
that
a
farm
known
as
the
Eastland
property
consisting
of
31
acres
situate
immediately
west
of
the
Buffel
farm
was
for
sale
at
$1,000
per
acre
and
shortly
after
the
sale
of
the
land
here
in
question,
he
and
nine
others
including
the
appellant
Yuen
proceeded
to
buy
the
Eastland
property
at
that
price
as
a
speculation
looking
for
re-sale.
They
had
not
however
disposed
of
it
up
to
the
time
of
the
trial
of
these
appeals.
The
appellant
Quon
also
subsequently
participated
with
others
in
the
purchase
of
what
was
referred
to
as
the
Berraby
(?)
property
about
which
no
further
details
were
given
in
evidence
but
which
was
also
a
speculation
looking
to
re-sale.
It
is
I
think
apparent
from
the
foregoing
that
from
the
time
of
the
purchase
of
the
McEachern
property
in
the
summer
of
1956,
though
not
before,
both
of
the
appellants
were
engaged
in
a
venture
or
ventures
in
trading
in
real
estate.
Indeed
though
Dr.
Quon
thought
it
questionable
whether
the
transactions
with
respect
to
the
Barry-Reid
property
were
in
the
same
category
neither
of
the
appellants
had
any
hesitation
in
conceding
that
in
purchasing
and
selling
the
McEachern
property
and
in
purchasing
the
Eastland
property
they
were
trading
in
land.
In
my
opinion
however
it
does
not
follow
from
the
fact
that
prior
to
the
sale
of
the
Buffel
property
the
appellants
had
been
involved
with
different
associates
in
the
purchase
of
the
McEachern
and
Barry-Reid
properties
in
the
course
of
one
or
more
ventures
in
trading
in
real
estate
and
the
fact
that
shortly
after
the
sale
along
with
other
associates
they
were
involved
in
another
such
venture
and
that
Dr.
Quon
was
engaged
in
still
another
later
on
that
the
profits
realized
on
the
sale
of
the
Buffel
property
must
or
should
be
regarded
as
profit
from
a
business
as
defined
in
the
statute.
The
evidence
which
I
have
mentioned
and
which
was
neither
contradicted
nor
challenged
indicates
that
the
appellants
were
neither
engaged
in
trading
nor
in
a
venture
in
the
nature
of
trade
when
in
1955
they
bought
to
Buffel
property
for
the
purposes
of
a
market
gardening
operation.
Nor
were
they
engaged
in
trading
or
in
any
venture
in
the
nature
of
trade
when
they
learned
of
the
sale
by
Buffel
of
the
remainder
of
his
farm
at
$750
per
acre
or
when
in
December,
1955
Norman
Kwong
was
asked
if
he
would
be
willing
to
sell
the
land
at
$2,000
per
acre.
Accordingly
as
I
view
the
matter
it
is
only
if,
because
of
events
which
occurred
afterwards,
the
subsequent
sale
which
they
made
of
the
property
should
somehow
be
regarded
as
a
trading
transaction
and
the
profit
in
question
somehow
regarded
as
having
arisen
therefrom
that
the
profit
can
be
said
to
be
profit
from
a
business
within
the
meaning
of
the
statutory
definition.
Situations
can
of
course
arise
wherein
a
profit
realized
on
a
sale
of
property
will
be
a
trading
profit
notwithstanding
the
fact
that
the
property
has
been
acquired
otherwise
than
in
the
course
of
a
trading
transaction.
Thus
Croom-Johnson,
J.,
said
in
Cooksey
and
Bibbey
v.
Rednall,
30
T.C.
514,
at
page
519
:
“I
have
no
doubt
that
if
there
had
been
evidence
here
that
at
some
time
after
the
original
purchases
of
a
lot
of
this
property
these
two
gentlemen
together
had
gone
in
for
a
system
ot
land
development
with
regard
to
that
or
part
of
it,
it
would
have
been
open
to
the
Commissioners
to
find
that
they
had
turned
what
had
been
an
investment
into
the
subject-matter
of
a
trading
in
land.
It
does
not
follow
necessarily
that
they
would
so
find,
because
it
may
be
that
the
Commissioners
would
come
to
the
conclusion
that
the
partnership
had
not
traded
but
was
merely
realising
a
capital
asset.
Everything
must
depend
on
the
exact
circumstances.”
In
the
present
case,
however,
I
do
not
think
that
anything
that
occurred
had
the
effect
of
turning
the
property
into
the
subject
matter
of
a
trading
in
land.
Having
learned
that
the
property
was
more
valuable
than
they
had
realized
when
they
bought
it
and
having
decided
that
it
would
be
impractical
to
proceed
with
the
plan
to
operate
a
market
garden
on
it,
the
owners
simply
held
the
property,
hoping
no
doubt
that
it
would
increase
still
further
in
value
and
without
making
any
final
decision
as
to
what
they
would
do
about
it,
but
at
the
same
time
without
putting
it
on
the
market
or
offering
it
for
sale,
untii
the
day
came
when
one
of
the
four
owners
died
and
thereafter
because
of
the
high
price
that
had
been
suggested
and
to
some
extent
also
because
of
the
fact
that
it
would
be
necessary
to
wind
up
the
affairs
of
the
deceased
member
of
the
syndicate,
they
decided
to
sell
and
accepted
an
offer
of
$80,000
for
it.
In
these
circumstances,
I
see
nothing
to
characterize
their
action
in
selling
the
property
as
a
trading
in
land
and
I
am
satisfied
that
the
profit
in
question
did
not
arise
from
any
such
trading
or
from
a
venture
in
the
nature
of
trade
but
simply
represents
an
enhancement
of
value
on
realization
of
a
capital
investment.
The
profit
was
therefore
not
income
within
the
meaning
of
the
statute
and
should
not
have
been
included
in
the
computation
of
the
appellants’
income
for
income
tax
purposes.
The
appeals
will
therefore
be
allowed
with
costs
and
the
assessments
varied
accordingly.
Judgment
accordingly.
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