Date: 20000615
Docket: A-821-97
CORAM: ISAAC, J.A.
ROBERTSON, J.A.
SHARLOW, J.A.
BETWEEN:
KENNETH MALCOLM EDWARDS
GRACE EDWARDS
CINNAMON LODGE LTD.
Appellants
- and -
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Vancouver, B.C.
on June 15, 2000)
SHARLOW, J.A.
[1] This is an appeal from a decision of the Tax Court dismissing the appeals of Mrs. Grace Edwards with respect to 1991 and 1992, Mr. Kenneth Malcolm Edwards with respect to 1992, 1993 and 1994, and Cinnamon Lodge Ltd. with respect to 1994. We are all of the view that this appeal must be dismissed.
[2] There were two main issues before the Tax Court Judge. One related to the deductibility of business losses claimed by Mrs. Edwards and Mr. Edwards with respect to the Cinnamon Lodge, which they had hoped to operate as a personal care facility. The Tax Court Judge concluded that the claimed losses were not deductible because there was no reasonable expectation of profit from the use of that property. Counsel for the Appellants stressed that there was evidence of Mrs. Edwards" expertise as a provider of personal care services and also evidence that Mrs. Edwards had a sincere belief that the Cinnamon Lodge could be operated at a profit. However, the evidence fell considerably short of establishing an objective basis for that belief. We are not persuaded that there is any basis in law for interfering with the conclusion of the Tax Court Judge that there was no reasonable expectation of profit with respect to the Cinnamon Lodge. It follows that the appeals of Mrs. Edwards and Mr. Edwards relating to the Cinnamon Lodge losses must fail.
[3] There was some controversy at trial as to which of the Appellants was the beneficial owner of the Cinnamon Lodge property during the years under appeal. As we have concluded that the Cinnamon Lodge losses claimed by Mr. and Mrs. Edwards were properly denied, we need not comment on whether the evidence before the Tax Court Judge was sufficient to determine who the beneficial owner of that property was.
[4] The other issue was whether certain logging income should have been included in computing the income of Cinnamon Lodge Ltd., as it was reported, or in the income of Mr. Edwards. Mr. Edwards testified that he believed that his sole proprietorship had been transferred to Cinnamon Lodge Ltd. before the income was earned, and the accountant Mr. Schneider also shared that belief. However, the Tax Court Judge noted the paucity of documentary evidence that such a transfer had occurred, and he concluded that it had not occurred. In our view, it was open to him, on the basis of the evidence adduced at trial, to reach that conclusion. It follows that the appeals of Mr. Edwards and Cinnamon Lodge Ltd. with respect to the logging income must also fail.
(Sgd") "K. Sharlow"
J.A.
June 15, 2000
Vancouver, British Columbia
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
STYLE OF CAUSE: Kenneth Malcolm Edwards et al
v.
HMQ
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: June 15, 2000
REASONS FOR JUDGMENT OF THE COURT BY SHARLOW, J.A.
| CONCURRED IN BY: ISAAC, J.A., ROBERTSON, J.A. |
APPEARANCES:
| Mr. John Drayton FOR THE APPELLANTS |
| Ms. Linda Bell FOR THE RESPONDENT |
SOLICITORS OF RECORD:
Drayton Law Firm
| Kamloops, BC FOR THE APPELLANTS |
Morris Rosenberg
Deputy Attorney
| General of Canada FOR THE RESPONDENT |
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