Dacen v. The Queen, 89 DTC 5297, [1989] 2 CTC 44 (FCTD)

Muldoon, J.:—The plaintiff appeals from the decision of the Tax Review Board rendered on September 6, 1979, [1979] C.T.C. 2868, whereby his appeal from reassessment of income tax for the 1973 taxation year was dismissed. He is, and was at all material times, a chartered accountant who was a partner in the firm of Laventhol, Krekstein, Horwath and Horwath (hereinafter: LKH & H) before November 2, 1972.

The plaintiff engaged counsel for his case before the Tax Review Board (hereinafter: TRB), but on November 27, 1987, he and his lawyers parted ways and he thereafter appeared throughout this litigation in person, without counsel.

Exhibit 1 is the written agreement whereby the plaintiff terminated his partnership in and with LKH & H dated December 11, 1972, but made effective the previous November 2, 1972. Written in letter form and signed by two other continuing partners and, some 18 days later, by the plaintiff, the agreement is expressed in final terms. Here are some selected passages to that effect:

1. The assignments and adjustments hereinafter referred to shall be effective November 2nd, 1972 and effective November 3rd, 1972 you shall cease to be a partner of Laventhol Krekstein Horwath & Horwath and of course you will not hold yourself as a partner thereafter.

2. The remaining partners shall continue the partnership under the same firm name and we may, if we so desire announce that you are no longer associated with this firm unless within ten days of the date of this letter you announce that you are joining another firm.

3. You shall be entitled to remove from our premises all client files, documents, books and records with respect to those clients described in Schedule “A” hereof and you are not entitled to remove any other client files, documents, books and records from our premises.

6. Furniture and fixtures brought into the partnership by you and described in Schedule "B" to this letter shall be forthwith removed by you from our premises at your expense. The purchase price of such furniture and fixtures is at an agreed figure of $700.00. This amount represents a reduction in your equity account with our firm.

7. Your capital or equity account is increased by the amount of $500.00 in consideration of the good will which you have contributed to the firm prior to the adjustment date. This sum of $500.00 is considered to be a capital item and is not paid to you as income.

8. Your equity account is reduced by the sum of $8,467.00, representing your share of accounts receivable in your prior partnership known as Davis and Dacen, which sum has not been collected by the undersigned. You will assume the existing liability of Laventhol Krekstein Horwath and Horwath to your prior firm in amount of $2,975.50 and you do indemnify us with respect to same. The amount of $2,975.50 shall be treated as an increase in your equity account.

9. Your equity in Laventhol Krekstein Horwath and Horwath after accounting for the items mentioned in paragraphs 6, 7 and 8 and after taking into account your share of income and drawings from the undersigned as indicated in Schedule "C" attached amounts to $40,763.00 as at the adjustment date. The sum of $40,763.00 constitutes the final accounting between us as at the adjustment date.

10. You agree to pay to us upon demand by us any drawings or payments made to you or on your personal behalf or on behalf of any clients listed in Schedule "A" and which are not shown on Schedule "C" but which are subsequently determined.

11. All work in progress and accounts receivable described in Schedule "D" hereof and owned by Laventhol Krekstein Horwath and Horwath is hereby assigned to you without recourse, and is calculated in the following manner, namely:

Aggregate work in progress and
accounts receivable in accordance
with Schedule "D"	$ 57,435.00
Less agreed overall discount
applicable to the above	$	8,572.00
Agreed value of work in
progress and accounts
receivable	$ 48,863.00

12. The sum of $40,763.00 (as calculated in clause 9) owing by our firm to you is set off against your said liability to us in amount of $48,863.00 (calculated in clause 11) and the net amount owing by you to us is accordingly $8,100.00 evidenced by your promissory note to be executed by you and delivered herewith (copy enclosed) payable as follows:

(a) on July 3rd, 1973, the sum of $4,000.00

(b) on November 2nd, 1973, the sum of $4,100.00

14. Except with respect to those items specifically referred to in this agreement, you have no further interest in the continuing partnership of Laventhol Krekstein Horwath and Horwath, its firm name and assets, nor shall you be responsible for its liabilities and we hereby agree to indemnify you and save you harmless from any and all claims which may be made against you with respect to such liabilities excepting that you shall remain responsible for any acts or omissions for professional negligence not covered by our professional liability insurance coverage.

17. This letter shall be binding upon us, our heirs, executors and administrators and permitted or proper successors and assigns.

[signed by Dacen and by two partners on behalf of LKH & H]

The plaintiff formulated his 1972 and 1973 income tax returns, as he said, in accordance with the applicable provisions of the above-noted termination agreement, Exhibit 1. Some time later, (probably in or about April, 1975 according to the second page of Exhibit 4), the Minister of National Revenue reassessed the plaintiff's income tax liability for those two years. The plaintiff appeals herein only in regard to the reassessment for his 1973 taxation year.

Exhibit 2 is the impugned 1973 notice of reassessment. It announces that this is the explanation for the changes made by the Minister or his staff:

According to the defendant's pleadings, especially paragraphs 4, 8 and 10(a) thereof, the Minister relied upon an unaudited statement of income of LKH & H for the period January 29, 1972 to January 5, 1973. A photocopy of it is Exhibit 3. It is a remarkable basis for the reassessment in issue not only for being utterly unaudited, but also because it must have been formulated sometime after January 5, 1973 and therefore, it was formulated long after the plaintiff terminated his partnership and so, it was formulated entirely without his input or other participation. It is far from charging the plaintiff's erstwhile partners of acting despicably, or even negligently, merely to observe that such unilateral, after-thought formulation is a potential paradigm for conflict of interest. The last page of Exhibit 3 purports to be the remaining partners' unaudited “allocation of partnership income for income tax purposes" for the above cited period from January 29,1972 to January 5, 1973. It purports to allocate “taxable income, January 5,1973" to the plaintiff in the amount of $52,487. The same allocation appears on page 5 of Exhibit 7: $52,487. That is the very sum which is stated in the Minister’s reassessment notice, Exhibit 2, as "Income from LKH & H".

The Minister, according to paragraph 11 of the statement of defence, relies inter alia upon subsection 96(1.1) of the Income Tax Act, S.C. 1970-71-72, c. 63 as amended (hereinafter: the Act), and section 23 of the Income Tax Application Rules (hereinafter: the ITAR). Of subsection 96(1.1), the learned Tax Review Board member whose decision generated this appeal, acknowledged ([1979] C.T.C. at page 2870): "the wording of the subsection is, to say the least, complex . . .". Amen. Here is that truly complex wording:

96. (1.1) For the purposes of subsection (1) and sections 101 and 103,

(a) where the principal activity of a partnership is carrying on a business in Canada and the members thereof have entered into an agreement to allocate a share of the income or loss of the partnership from any source or from sources in a particular place, as the case may be, to any taxpayer who at any time ceased to be a member of

(i) the partnership, or

(ii) a partnership that at any time has ceased to exist or would, but for subsection 98(1), have ceased to exist, and either

(A) the members thereof, or

(B) the members of another partnership in which, immediately after that time, any of the members referred to in clause (A) became members

have agreed to make such an allocation

or to his spouse, estate or heirs or to any person referred to in subsection (1.3), that taxpayer, his spouse, estate or heirs, or that person, as the case may be, shall be deemed to be a member of the partnership; and

(b) all amounts each of which is an amount equal to the share of the income or loss referred to in this subsection allocated to a taxpayer from a partnership in respect of a particular fiscal period of the partnership shall, notwithstanding any other provision of this Act, be included in computing his income for the taxation year in which that fiscal period of the partnership ends.

When one then contemplates that subsection 96(2) provides that all provisions of the Act's subdivision which includes these sections, are to “be read and construed as if each of the assumptions in paragraphs (1)(a) to (g) were made", and when one then contemplates section 101 (not applicable here) and section 103 which relates to agreements to share income so as to reduce or postpone tax, and to share income in unreasonable proportions, one wonders if the drafters fully understood these complex provisions, and one becomes relatively certain that the majority of Members of Parliament and Senators who participated in the enactment of these provisions did not understand that to which they were assenting. Moreover, these provisions are not even the most difficult which the Act promulgates.

Complexity rendered mind-boggling is what section 23 of the ITAR evinces. Although the defendant pleaded it, fortunately both sides had the good sense not to refer to it in evidence or in argument.

This case involves a dispute about accounting principles and techniques, that is: the correct characterization of sums which, having been allocated to the plaintiff as income, are to be taxed as such. No doubt accountancy, indeed chartered accountancy, is practised by more people in Canada than are biochemistry or nuclear physics, but no matter the numbers, each field exacts and evinces the expertise inherent in the subject matter. The Court is not inherently expert in any subject except law, and cannot arrogate to itself expertise in accounting any more than biochemistry or nuclear physics or, for that matter, land appraisal, orthopaedics, aeronautics, ballistics or psychiatry. Here the Court specifically requested the parties to elucidate as simply as possible the principles and techniques for which each contends in avoidance of accounting "jargon". No doubt each did the best of which she or he was capable in the written arguments submitted after trial. The Court therefore, in this adversarial process, will utilize only what the parties have submitted, all concerned, including the Court, having perused the evidence with great care.

Certain matters were quickly cleared up by the defendant's counsel on cross-examination of the plaintiff as shown at pp. 46 and 47 of the transcript:

MS. TURNER CROSS-EXAMINES MR. DACEN:

Q. Thank you, my Lord. Mr. Dacen, if I could direct your attention to a document which you have introduced as Exhibit 2 which is your reassessment statement for the 1973 taxation year?

A. Yes, I have it here.

Q. Now can you advise whether or not you are continuing to dispute the sum of $11,333.92 which is brought into income on that statement?

A. No, I am not disputing that.

Q. Now with respect to your income from LKH & H of $52,487, do I understand that you concede that the sum of $38,652 would be properly includable in income for your 1973 taxation year?

A. Yes, I do.

Q. So what we are talking about here is the difference between the 38,652 and the full figure of 52,487 which appears on this statement?

A. Yes.

The precise difference is $13,835, spoken of and grossly rounded up at trial as that "difference of $14,000.”

The reason for which the Minister included the difference of $13,835 in the plaintiff's 1973 income is, upon thorough review of all the testimony and other evidence, and the argument of counsel, that LKH & H said it was so in their statement (Exhibit 7, page 5) for a period ending two months after the plaintiff ceased to be a partner in LKH & H. Here is what the plaintiff, himself, had to say on this issue when cross-examined by the defendant's counsel (transcript p. 57):

Q. Yes, Now would you agree, Mr. Dacen, that one possible explanation for the distinction between the $38,000 figure and the $52,000 figure in those statements would be that your income for the year was calculated by adding in an amount for your work in progress but that there was no deduction at year end for your closing work in progress because at that time you were no longer a member of the firm and you had taken your work in progress out of the firm?

A. I have nothing to confirm or deny that item, no.

Q. As an accountant would you concede that that is a possible explanation for the change in the figures?

A. It could be a possible, at least in part, I don't know.

MS. TURNER: Thank you, my lord, that concludes my examination of Mr. Dacen.

Questioned by the Court (commencing at page 59 of the transcript) the plaintiff testified:

MR. DACEN: No, but it could be that my ex-partners deviated from the terms of

that agreement by preparing documents inconsistent with it.

THE COURT: Behind your back, as it were.

MR. DACEN: Well, I don't want to use those terms but there were 50 some odd

partners and you can’t please everybody all the time. I don't know. It was a large firm, we were a small office by comparison. Therefore to me that was the gospel was that agreement for all purposes and I had, there was no right for anybody to deviate from it.

Ronald Dallas Middleton testified at the defendant's behest. He was a signatory to the agreement (Exhibit 1) on behalf of LKH & H, but as he testified, he was not responsible for determining the amount of the plaintiff's income, $38,652, shown on page 1 of 2 of Schedule "C" to Exhibit 1, and on the pages 2 respectively of Exhibits 3 and 7 which are the statement of partners' equity in LKH & H, January 29,1972 to February 5, 1973. The firm’s Toronto office produced that sum and the plaintiff admits that it should be taken into his income for 1973. The defendant presses to have the sum of $52,487 taken into his income as LKH & H state in their allocation for income tax purposes as shown in p. 5 of Exhibits 3 and 7.

On examination by the defendant's counsel, Mr. Middleton testified:

Q. Now, would Mr. Dacen have had closing work in progress for this fiscal period?

A. No, to the extent that be had left as a partner on November 3rd, 1972 so the firm would not have allocated any closing work in progress to him.

(Transcript: pp. 77 and 78)

He further testified:

Q. Were you of the impression that people in Toronto were in some way dumping extra income on Mr. Dacen to the firm’s advantage?

A. I don't believe that would be the case. I have no personal knowledge of that.

Q. Given the possible explanation that was put to Mr.Dacen this morning that the 52,000 represents his net income plus opening work in progress with whatever adjustments and without a deduction for closing work in progress, does that make sense to you as an explanation for the increase from 38 to 52?

A. I would certainly consider it to be probably the reason for that calculation coming to that number. As I say, I don't have the specific calculation. I can understand the theory that says that you have accounting income plus you have only work in progress, your share, but you don't have any closing work in progress because you have left the firm by that date and I don't think that is an unusual situation when a partner leaves the firm his taxable income allocated may be higher than his accounting income allocated.

MS. TURNER: Thank you, Mr. Middleton, those are all my questions.

THE COURT: I just have one question before you start, Mr.Dacen. You said it is

not unusual if there is no work in progress shown at the end of the year if one leaves during the year. Was it not the practice of Laventhol, Krekstein, Horwath & Horwath perhaps to make an allocation or an apportionment of work in progress for a part of the year worked?

A. The allocation of work in progress is either added to income or deducted from income at a specific moment in time.

THE COURT: Right.

A. And the allocation of the closing work in progress would be to the remaining partners at that date, on the date that it is allocated.

THE COURT: So that, well, that is just to cover the period in question but if a

partner were not working with the firm, were not a partner for the whole of the period there would be no apportionment of work in progress for that share of that time of the year, part of the year when he was there?

A. No, my lord, because the work in progress is determined at the opening date, determined at the opening date of the year and as well determined at the closing date.

THE COURT: But is that etched in stone? Is there no way of apportioning it for

part year?

A. I think that you will find that this is general practice that a partner who leaves the firm during the year has no closing work in progress. He does have opening work in progress.

The reverse is what I am saying generally becomes true when a partner leaves. His taxable income all of a sudden becomes higher than his accounting income because of adding opening work in progress and having no closing work in progress so what I submit is you get the benefit at inception but you pay for it later.

(Transcript: pp. 79 to 82)

On cross-examination by the plaintiff Mr. Middleton testified:

Q. If the incomes were to be different, would it be reasonable to assume that the agreement should have mentioned that?

A. I think one could argue both sides of that question, Mr. Dacen. One could say yes it could be and I believe one could say no on the basis that I previously answered the question by saying that I think this agreement was an agreement whereby using generally accepted accounting principles we determine what the share of income was, what the equity was, what the work in progress was that we were selling to you, et cetera.

Q. Yes.

A. So my answer is on that basis that I don’t think using generally accepted accounting principles this would necessarily refer to tax numbers because tax numbers are completely different from generally accepted accounting purposes, as you appreciate.

Q. Yet being accountants and having more than average working knowledge of income tax and accounting.

A. Yes.

Q. —would it not be normal to point out that difference should there, in fact, be one?

A. I am not sure, Mr. Dacen, whether it would be normal or it would be expected to be understood. I know it is not a very good answer but I am not—

Q. But it would not be surprising to see a clause in there to that effect should the incomes be contemplated to be different?

A. I would just reiterate that the intention of this agreement from my perspective as being a party to it—

Q. Yes.

A. —was never intended to be an agreement for “income tax purposes."

(Transcript: pp. 83, 84 & 85)

Referring to the individual allocations of income between partners, the plaintiff questioned Mr. Middleton as follows:

Q. Now tell me Mr. Middleton, could this allocation be anything different than it is?

A. I would have to say yes.

Q. Yes.

A. I said yes and I said yes because as I indicated previously I was not a party to making this specific calculation on a per partner basis, okay.

Q. Yes.

A. I can certainly understand the theory in the overall arriving from accounting income to taxable income. I can understand why your number would be higher than accounting income because of having opening work in progress, but I cannot specifically say to you whether or not the 52,487 is a correct number. I did not make that calculation, it was done in Toronto and I don't have those records and I was never a party to those records.

A. As I said, I do not have that calculation difference. That calculation was done in the Toronto office. I assume it was done using the same principles which are evident here.

Q. Yes.

A. Which is start with accounting income at opening work in progress.

Q. Yes.

A. Which you would have had a share of, deduct closing work in progress which you would not have had a share of.

(Transcript: pp. 90, 91 & 92)

The onus lies on the plaintiff to overcome the Minister's assumptions upon which the reassessment is founded. The plaintiff has done that. Not only are the documents prepared after February 3, 1973, (Exhibits 3 and 7) purporting to show an allocation of $52,487 not established to be reliable, but neither are the inferences and assumptions which the Minister draws from them reliable or credible. In fact the Minister purports to establish the plaintiff's taxable income and hence his tax liability upon that unreliable ipse dixit of the plaintiff's erstwhile partners and, an unaudited ipse dixit at that. One might wonder why the Court would prefer an audited statement from chartered accountants who are, themselves, auditors. The plain and obvious reason resides in the strong possibility of self-service and conflict of interest. The plaintiff testified (transcript: p. 59) that he did not like to use terms such as “behind his back”, but that diffidence does not prevent the Court from insisting that justice be manifestly seen to be done, and such documents simply excite reasonable suspicion.

Nor is the Court alone in this particular case in taking such a view of the matter. Commenting on the Tax Review Board's decision in this very case of Stephen Dacen (above cited) Mr. Justice Rouleau of this Court is reported in Laferrière v. The Queen & al., [1985] 2 C.T.C. 190 at 204 as noting:

La jurisprudence citée par les parties mérite un commentaire. Dans l'arrêt S/an v. M.N.R., [1981] C.T.C. 2880; 81 D.T.C. 794, selon la Commission de révision de l'impôt, il y avait une entente du type prévu à l'article 96(1.1) LIR. De plus, c'était tous les associés, et non seulement quelques-uns, qui ont acheté la part de l'associé quittant. Dans la mesure où il a été décidé qu'il peut y avoir une entente prévue à l'article 96(1.1), sans le consentement de l'associé quittant, je pense que l'arrêt est mal fondé. Il s'en suit que je considère que l'arrêt Dacen v M.N.R., [1979] C.T.C. 2868; 79 D.T.C. 733 est également mal fondé. Il est inconcevable que la Loi de l'impôt sur le revenu permette aux associés qui demeurent dans la société de minimiser leurs propres impôts tout en maximisant l'imposition de quelqu'un qui a quitté la société.

Unlike the usual run of obiter, the foregoing is specific to this case and therefore it carries weighty persuasiveness. It is said that the Laferrière decision is, in any event, subject to appeal as no. A-725-85. Yes, but just barely. The last document filed was the respondent's written submission on February 7, 1987 and since then no application has been made to fix a hearing date.

In Delesalle v. The Queen, [1986] 1 C.T.C. 58; 85 D.T.C. 5613, Mr. Justice McNair of this Court considered both the Laferrière and the S/an decisions, and he is reported, at page 68, as expressing the following interpretation of subsection 96(1.1) of the Income Tax Act:

In my opinion the plain and grammatical meaning of the words of section 96(1.1) of the Act are meant to apply to the situation where the members of a partnership have agreed to allocate a share of the income or loss of the partnership to a taxpayer who has ceased to be a member of the partnership but who is nevertheless deemed to be a continuing member thereof solely for the purpose of the allocation of such income or loss as initially agreed by all the partners. The wording of clause 96(1.1)(a)(ii)(B) is not intended to permit the continuing partners to change the original agreement for the allocation of a share of the income or loss of the partnership to the retiring partner but rather is meant to cover the continuation of another partnership from the predecessor firm whereby the current members thereof can accede to the agreement for allocation so long as one or more of them were members of the former partnership.

Where there is an allocation agreement in the foregoing context, the retiring partner to whom the income or loss is allocated pursuant to such agreement is deemed to be a member of the partnership but only for the limited purposes adumbrated by the opening words of section 96(1.1), that is, the flow through provisions of section 96(1), the allocation of a share of the gain from the disposition of farm land, and the anti-avoidance provisions of section 103.

In my opinion, the construction of section 96(1.1) contended for by the defendant Cohos involves an artificial straining of the plain and ordinary meaning of the words of the section to obtain a patently unreasonable result for which there is no warrant whatever. Consequently, I reject it.

Appeals were launched against Mr. Justice McNair’s decision in those parallel cases of Delesalle and Cohos, but the appeals have been discontinued.

This Court has no hesitation in adopting and ratifying the opinions expressed in the above cited decisions of Messrs. Justices Rouleau and McNair respectively.

There is some strange-sounding accounting in the testimony of Mr. Middleton regarding the plaintiff's non-eligibility for attribution of closing work in progress. It seems clear that a partner who would have left the firm on that date chosen by it for allocating closing work in progress, January 5, 1973, would have lucked into the very same attribution—thereby reducing taxable income—as was accorded to the remaining partners. Such a lucky partner might have been Mr. Dacen, had he chosen that date for termination of his relationship, or had the partners of LKH & H chosen November 3, 1972 to be the date for closing out their statement. The plaintiff, according to the Minister and Mr. Middleton, is just unfortunate in that, so no attribution of closing work in progress is made in his favour. The notion that all of the talented chartered accountants in LKH & H just could not, or would not, determine the plaintiff's closing work in progress as of the date of his departure—November 3,1972—is too pathetic for extended consideration. The Court rejects it.

So the Minister's assumptions founded on the wilfully or negligently selfserving statement of LKH & H are in tatters. They are rejected because the Court finds that on credibility and objective evidence the plaintiff has discharged the onus. The Court finds that the impugned allocations in Exhibits 3 and 7 are not agreements in contemplation of section 96 of the Act so as to bind the plaintiff. His income for taxation purposes does not include the amount of $52,487 which the Minister attributed to "Income from LKH & H" in the impugned notice of reassessment, Exhibit 2. That item always ought to have been $13,835 less than shown. It ought to be $38,652.

One of the defendant's lines of argument seemed only to sow confusion. The defendant's counsel in written argument (para. 15) proclaimed reliance "upon the decision of Mr. Justice Walsh (of this Court) in The Queen v. Metropolitan Properties Company, [1985] 1 C.T.C. 169; 85 D.T.C. 5128 (. . . currently under appeal). In that decision, Mr. Justice Walsh concludes, at page 180 (D.T.C. 5137):

1. Generally Accepted Accounting Principles (GAAP) should normally be applied for taxation purposes also, as representing a true picture of a corporation's profit or loss for a given year.

The appeal referred to by counsel has been subsequently discontinued. So be it, although mutatis mutandis since LKH & H was not a corporation, but rather an aggregation of individual partners. Nevertheless it was the defendant's witness as counsel emphasized in written argument, paragraph 9(c)

who testified, as recorded above at transcript: p. 84, to the contrary, saying that such accounting principles would not apply here "to tax numbers because tax numbers are completely different from generally accepted accounting purposes as" he suggested, the plaintiff appreciated. Why so? Surely such principles must exact that the departing partner's work in progress be accounted for at the date of his departure, instead of inflicting him with a burden of unreceived taxable income just because his departure did not occur exactly coincidentally with the end of some more or less arbitrarily chosen accounting period, as Mr. Middleton blithely asserted.

It is plain and obvious either that generally accepted accounting principles are woefully deficient, or the defendant's argument, depending as it does on the ethics and/or competence of LKH & H, is woefully deficient. In either case the plaintiff is not to be excessively reassessed by the Minister. The decision of the Tax Review Board affirming, as it does, the Minister’s faulty reassessment is to be set aside. The impugned reassessment should be vacated and the matter referred back to the Minister to reassess on the basis that only $38,652 of the item "Add: Income LKH & H—$52,487" is the proper sum to be shown in the explanation on page 2 of the notice of reassessment exemplified as Exhibit 2 herein. The difference of $13,835 was included against law, evidence and the weight of evidence as determined at trial.

The plaintiff also made a claim that he had been taxed twice on the sum of $7,344 He said that tax was levied and paid on that sum in 1972 and again in 1973. This claim relates to income on which the plaintiff was taxed while a partner in the MacGillivray firm which he joined after departing from LKH &

H. The Court declined to allow the plaintiff to amend his statement of claim at trial in order to articulate this claim and it is not apparent that the claim is articulated sufficiently in the unamended statement of claim filed herein on January 8, 1980.

Out of an abundance of caution, counsel for the defendant sought and the Court agreed to permit the calling to testify of Harold George Moffat, himself a chartered accountant, and an appeals officer employed by the Department of National Revenue. Here it may be appropriate to note that although the three witnesses who testified herein are chartered accountants, none testified in the capacity and under the manner, form or rubric of an "expert witness". The plaintiff cross-examined Mr. Moffat quite skilfully but did not succeed in eliciting testimony, nor in persuading the Court, to the effect that he had really suffered double taxation on the sum of $7,344 or at all, once his present reassessment is regulated. The plaintiff moreover did not articulate such a claim so as to be clearly perceived in his statement of claim. Such claim is dismissed.

It would seem that success is divided and that no costs should be awarded in favour of either party. The appearance is deceptive. The plaintiff did not report the sum of $38,652 which he admits to now, on his 1972 or 1973 income tax returns. He has delayed in prosecuting this action, causing the defendant twice to move to strike out his claim for want of prosecution, at some expense to his fellow taxpayers. The defendant therefore is awarded 80 per cent of taxable costs which the plaintiff shall be liable to pay forthwith after the Minister shall effect the reassessment of the plaintiff's 1973 tax liability in compliance with these reasons.

Pursuant to Rule 337(2)(b), the defendant's counsel or solicitors may prepare a draft of an appropriate form of judgment to implement the Court's reasons herein, for all of which above stated and prospective services costs may be taxed and allowed at the aforementioned rate. The defendant's solicitors ought to provide a copy of such draft to the plaintiff for his comments and, if possible, his approval as to form and content. The plaintiff's negative comments, if any, but only as to form and content of the draft judgment, may be transmitted by either party to the Court. If, as in past, the plaintiff delays unduly to approve or, with reasons, to disapprove the draft judgment, the defendant shall be at liberty to submit it to the Court, despite the plaintiff's lack of response, three weeks after the day on which he is ascertained to have received a copy for his approval or disapproval.

Appeal allowed in part.