Bonner,
J.T.C.C.
(orally):—1
will
deal
first
with
the
technical
matters.
There
was
no
assessment
of
tax
for
the
1986
taxation
year.
Rather
the
appellant
was
notified
that
no
tax
was
payable
and
in
accordance
with
the
principle
laid
down
by
the
Federal
Court
of
Appeal
in
The
Queen
v.
Garry
Bowl
Ltd.,
[1974]
C.T.C.
457,
74
D.T.C.
6401,
the
appeal
for
the
assessment
for
that
year
will
be
dismissed.
Secondly
the
appellant
has
confirmed
that
he
seeks
no
relief
in
respect
of
the
1987
taxation
year.
The
appeal
from
the
assessment
for
that
year
will
therefore
be
dismissed.
The
appeals
from
the
assessments
for
the
1984
and
1985
taxation
years
raise
the
question
whether
the
appellant
was
entitled
to
deductions
in
respect
of
a
non-
capital
loss
carried
back
from
1986
and
in
particular
whether
he
sustained
a
loss
in
respect
of
a
payment
of
approximately
$86,000
made
by
Bastion
Development
Corporation
as
an
inducement
to
enter
a
lease.
The
appellant's
position
was
that
the
$86,000
payment
made
by
Bastion
belonged
to
him
because
Bastion
agreed
to
pay
that
sum
to
induce
him
to
cause
his
company
Ravens
Court
Enterprises
Ltd.
(subsequently
renamed
Dexter's
Road
House
Restaurants
Ltd.)
to
enter
into
the
lease.
His
thesis
was
that
he
advanced
that
money
to
the
company,
and
subsequently
lost
the
money
when
the
company
went
bankrupt.
In
support
of
that
position
the
appellant
relied
on
his
own
testimony
and
on
the
evidence
of
Hugh
Tangye,
Bastion’s
president.
Mr.
Tangye
testified
that
the
facts
recited
in
Exhibit
A-3
were
correct.
The
second
and
third
paragraphs
of
Exhibit
A-3;
a
letter
from
Bastion
to
Revenue
reads
as
follows:
We
wish
to
confirm
that
we
did
indeed
offer
the
amount
$86,864
to
Dexter
Road
House
Restaurant
Ltd.
on
behalf
of
the
shareholder.
This
amount
was
paid
as
an
inducement
to
the
shareholders
of
Dexter
to
enter
into
a
lease
dated
May
22,
1985.
It
was
to
be
used
entirely
for
leasehold’s
improvement
to
the
leased
premises.
In
giving
this
evidence
Mr.
Tangye
was
expressing
a
conclusion
and
not
relating
his
personal
observations.
In
answer
to
the
appellant’s
question:
"On
whose
behalf
was
the
payment
made;
who
did
you
induce
to
sign
the
lease?”
Mr.
Tangye's
response
was:
“I
suppose
yourself".
It
seems
unlikely
to
me
that
Bastion
when
dealing
with
the
appellant
qua
representative
of
Dexter
would
agree
to
induce
him
to
act
by
making
a
payment
to
him
in
his
personal
capacity.
That
would
be
dishonest.
Furthermore,
the
appellant's
version
of
the
events
is
in
conflict
with
Exhibit
R-8,
the
offer
to
lease.
It
will
be
observed
that
the
offer
was
contained
in
a
letter
addressed
not
to
the
appellant
but
rather
to
the
company,
Dexter's
Road
House
Restaurants
Ltd.
That
letter
was
sent
not
to
the
attention
of
the
appellant
but
rather
to
the
attention
of
his
brother,
a
circumstance
which
weakens
the
theory
of
a
personal
inducement
to
the
appellant.
The
last
paragraph
of
the
letter
states
and
I
quote:
A
leasehold
inducement
of
ten
dollars
per
square
foot
will
be
contributed
to
the
tenant
for
work
in
place
for
tenant
improvement
to
the
premises,
this
money
will
be
paid
upon
completion
of
the
tenant’s
work.
It
was
pursuant
to
that
paragraph
that
the
$86,000
sum
was
paid.
That
language
in
my
view
is
quite
inconsistent
with
the
assertion
that
there
was
an
agreement
that
the
money
to
be
paid
to
the
tenant
was
intended
to
be
or
become
the
property
of
the
appellant
as
the
tenant's
shareholder
or
representative.
The
evidence
of
the
letter
is
contemporaneous
with
events
and
therefore
of
much
more
force
than
the
contrived
theory
now
advanced
by
the
appellant.
Accordingly
I
have
concluded
that
the
$86,000
was
never
the
appellants
money
and
that
it
could
not
therefore
have
been
advanced
by
him
to
Dexter,
giving
rise
to
the
receivable
in
respect
to
which
the
loss
was
later
incurred.
The
appeal
from
the
assessments
then
for
the
1984
and
1985
taxation
years
will
be
dismissed.
Appeal
dismissed.
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