Morris v. Canada, 2004 FCA 132

Date: 20040330

Docket: A-285-03

Citation: 2004 FCA 132

CORAM:        STRAYER J.A.

NOËL J.A.

SEXTON J.A.

BETWEEN:

                                                              BRUCE MORRIS

                                                                                                                                            Applicant

                                                                           and

                                                    HER MAJESTY THE QUEEN

                                                                                                                                        Respondent

                                 Heard at Vancouver, British Columbia, on March 29, 2004.

                        Judgment delivered at Vancouver, British Columbia on March 30, 2004.

REASONS FOR JUDGMENT BY:                                                                                    NOËL J.A.

CONCURRED IN BY:                                                                             STRAYER, SEXTON JJ.A.

Date: 20040330

Docket: A-285-03

Citation: 2004 FCA 132

CORAM:        STRAYER J.A.

NOËL J.A.

SEXTON J.A.

BETWEEN:

                                                              BRUCE MORRIS

                                                                                                                                            Applicant

                                                                           and

                                                    HER MAJESTY THE QUEEN

                                                                                                                                        Respondent

                                                    REASONS FOR JUDGMENT

NOËL J.A.

[1]                This is an application for judicial review of a decision by Judge Bowie of the Tax Court of Canada, upholding the assessments issued with respect to the applicant's 1996, 1997 and 1998 taxation years.

[2]                At issue is whether the applicant's endeavours as a fishing guide constitute a source of income under the Income Tax Act having regard to the approach set out by the Supreme Court in

Stewart v. Canada, 2002, S.C.C. 46. The Tax Court Judge held that they did not, thereby denying, the applicant the deductions of losses for the three years in issue computed as follows:

         1996                           1997                             1998

Gross Revenue             $0                               $ 300.00                       $ 770.00

Expenses                      $7,090.00                   $12,921.58                   $13,997.00

Loss                            $7,090.00                   $12,621.58                   $13,227.00

[3]                This is the second time that this matter comes before this Court. The applicant was first denied his losses by a decision rendered July 12, 2001, by the Tax Court of Canada (Morris v. R., [2001] 4 C.T.C. 2114). In that case, O'Connor J.T.C.C. dismissed the appeal against the aforesaid reassessments on the basis that the applicant had no reasonable expectation of profit.

[4]                This Court set aside the decision of O'Connor J.T.C.C. and ordered that the applicant's appeal be reheard with instructions that the approach set out by the Supreme Court in the Stewart decision (supra) which had been rendered in the interim be followed (Morris v. The Queen 2003 D.T.C. 5236). In reaching this decision, the Court stated:

[12] According to Stewart (at para.50), in order to determine if a source of income exists a court should first ask: 'is the activity of the taxpayer undertaken in pursuit of profit, or is it a personal endeavour?' The factors listed in Moldowan provide objective criteria for answering this question. Thus, even though the taxpayer has a personal interest in the activity, if 'the venture is undertaken in a sufficiently commercial manner, the venture will be considered a source of income for the purposes of the Act ': Stewart at para. 52. The Court went on to say (at para. 54) that to establish an intention on the part of the taxpayer to pursue an activity for profit, rather than personal interest, requires the taxpayer to establish that his or her predominant intention is to make a profit and that the activity has been carried on in accordance with objective standards of businesslike behaviour.

[13] The Judge in the case before us did not ask himself this question.

[5]                Judge Bowie has now answered this question. He has held both that the applicant's predominant intention was the pursuit of fishing for his personal enjoyment and that his activities were not carried out in a business-like fashion (Reasons, paragraph 17). The applicant takes issue with these findings but I am unable to say that they were not open to Bowie J.T.C.C. on the record before him.

[6]                The applicant also raised a fairness issue. He argued that he was unable to call the auditor as a witness because he left the courtroom in the middle of the hearing and suggests that Bowie J. was somehow at fault in not addressing this situation.

[7]                I note in this respect that the auditor was not under subpoena and a review of the transcript reveals that the respondent conceded before Bowie J. the facts which the applicant wanted to establish by calling the auditor (transcript, respondent's record, vol. 1, pages 80 to 85). This would explain why the applicant did not seek an adjournment to subpoena the auditor.

[8]                I would dismiss the application for judicial review with costs in favour of the respondent.

                                                                              (Sgd.) "Marc Noël"

                                                                                                      J.A.

"I agree"                                                               (Sgd.) "B.L. Strayer"

                                                                                                      J.A.

"I agree"                                                          (Sgd.) "J. Edgar Sexton"

                                                                                                      J.A.

                          FEDERAL COURT OF APPEAL

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                  A-285-03

                                   Application for Judicial Review of a decision of the Tax Court dated May 6, 2003 in file no. 2000-4846(IT)I

STYLE OF CAUSE: Bruce Morris v. Her Majesty The Queen

PLACE OF HEARING:                                 Vancouver, BC

DATE OF HEARING:                                   March 29, 2004

REASONS FOR JUDGMENT:                    Noël J.A.

CONCURRED IN BY:                                  Strayer, Sexton JJ.A.    

DATED:                     March 30, 2004             

APPEARANCES:

SOLICITOR OF RECORD: