Christie,
A.C.J.T.C.:—
This
appeal
relates
to
the
appellant's
1981
taxation
year.
In
computing
her
taxable
income
for
that
year
she
seeks
to
deduct
a
non-capital
loss
of
$13,784
carried
forward
from
1980.
She
relies
on
paragraph
111(1)(a)
of
the
Income
Tax
Act.
"Non-capital
loss”
is
defined
in
paragraph
111(8)(b)
of
the
Act.
Where
the
onus
of
proof
lies
in
cases
of
this
kind
is
clear.
It
is
for
the
appellant
to
show
that
the
reassessment
is
in
error.
This
can
be
established
on
a
preponderance
of
probabilities.
Where
the
onus
lies
has
been
settled
by
numerous
authorities
binding
on
this
Court.
It
is
sufficient
to
refer
to
two
judgments
of
the
Supreme
Court
of
Canada
in
this
regard:
Anderson
Logging
Co.
v.
The
King,
[1925]
S.C.R.
45;
[1917-27]
C.T.C.
198,
and
Johnston
v.
M.N.R.,
[1948]
S.C.R.
486;
[1948]
C.T.C.
195.
In
addition,
where
it
is
alleged,
as
it
is
in
this
case,
that
a
business
partnership
existed
between
a
husband
and
his
wife
these
passages
from
Estate
of
John
Sedelnick
v.
M.N.R.,
[1986]
2
C.T.C.
2102;
86
D.T.C.
1563,
are
germane:
What
is
generally
regarded
as
relevant
in
determining
the
existence
of
a
partnership
is
discussed
in
a
recent
decision
of
this
Court:
Woodlin
Developments
Ltd.
v.
M.N.R.,
[1986]
1
C.T.C.
2188
at
2192-95;
86
D.T.C.
1116
at
1120-21.
All
that
is
said
there
need
not
be
repeated,
but
emphasis
is
placed
on
this
extract
from
Lindley
on
Partnership
15th
(1984)
edition:
.
.
.
the
main
rule
to
be
observed
in
determining
the
existence
of
a
partnership,
a
rule
which
has
been
recognised
ever
since
the
case
of
Cox
v.
Hickman
(1860)
8
H.C.L.
268,
is
that
regard
must
be
paid
to
the
true
contract
and
intention
of
the
parties
as
appearing
from
the
whole
facts
of
the
case.
Unlike
Woodlin
the
case
at
hand
has
this
feature.
It
is
alleged
by
the
appellant
and
denied
by
the
respondent
that
a
business
partnership
existed
between
a
husband
and
his
wife.
At
common
law
a
wife
did
not
have
the
capacity
to
contract
because
marriage
created
a
condition
whereby,
in
the
eyes
of
that
law,
they
were
one
person
and
for
contractual
purposes
that
person
was
the
husband.
Consequently,
except
regarding
contracts
for
necessaries,
a
wife
could
not
enter
into
a
legal
relationship
binding
either
on
her
husband
or
herself.
This
has
been
swept
aside
by
legislation
such
as
section
9
of
the
Married
Persons'
Property
Act,
R.S.S.
1978,
c.
M-6
which
reads:
9.
Every
married
woman
shall
be
capable
of
entering
into
and
rendering
herself
liable
on
contract
as
if
she
were
a
feme
sole.
While
the
sine
qua
non
of
a
partnership
is
the
existence
of
a
contract,
it
need
not
be
in
writing
but
can
be
established
by
parol.
Nevertheless
when
the
basic
assumption
relied
on
in
reassessing
under
the
Income
Tax
Act
is
that
an
alleged
partnership
did
not
exist
between
spouses
thereby
placing
the
onus
on
the
appellant
to
establish
on
the
preponderance
of
the
evidence
that
it
did
exist
one
should,
in
my
opinion,
be
guided
by
these
considerations.
Where
there
is
no
evidence
of
the
existence
of
an
express
partnership
agreement
between
husband
and
wife
then
in
the
absence
of
some
special
reason,
which
I
cannot
at
the
moment
foresee,
the
existence
of
such
a
partnership
should
not
be
inferred
from
the
conduct
of
the
parties
if
that
conduct
is
equally
consistent
with
conduct
arising
out
of
the
community
of
interests
created
by
the
marriage.
This
can
embrace
many
activities
which
are
purely
commercial
in
nature.
I
think
these
authorities
can
be
usefully
mentioned:
Cornforth
v.
The
Queen,
[1982]
C.T.C.
45;
82
D.T.C.
6058;
Bedard
v.
M.N.R.,
[1984]
C.T.C.
2239;
84
D.T.C.
1204;
Law
of
Partnership,
3rd
(1983)
ed.
by
Charles
D.
Drake
and
The
Law
of
Partnership,
4th
(1981)
ed.
P.F.P.
Higgins
and
K.L.
Fletcher.
In
Cornforth
Mr.
Justice
Cattanach
said
at
55
(D.T.C.
6056-66):
If
a
contract
of
partnership
existed,
it
is
such
a
contract
that
is
not
required
to
be
entered
into
with
any
particular
formalities,
without
any
official
act
such
as
registration
or
without
any
written
agreement
whatsoever
no
matter
that
wisdom
directs
to
the
contrary.
In
Lindley
on
Partnership,
14th
Ed.
(Scamell
and
Banks)
it
is
stated
at
page
64:
There
is
no
reason
why
a
married
woman
should
not
enter
into
partnership
with
her
husband
although
as
in
the
case
of
other
potentially
contractual
obligations,
the
court
will
be
less
ready
to
infer
a
partnership
where
the
parties
are
husband
and
wife.
In
Bédard
St-Onge,
T.C.J.
said
at
2241
(D.T.C.
1206):
Because
of
the
special
status
that
exists
between
a
husband
and
wife,
it
is
very
difficult
to
prove
for
past
years
that
a
partnership
existed
between
them
for
the
operation
of
a
particular
business,
unless
there
is
a
document
to
that
effect.
There
is
no
document
to
prove
the
existence
of
a
partnership
in
the
present
case.
The
appellant
simply
paid
money
into
a
joint
(bank)
account.
Drake
said
at
76:
Clearly,
husband
and
wife
may
enter
into
a
valid
partnership
agreement,
but
in
view
of
the
reluctance
of
the
Courts
to
presume
that
spouses
living
together
in
amity
intend
their
discussions
concerning
money
matters
to
have
legal
effect,
it
is
doubly
important
that
their
wishes
should
be
unequivocally
set
forth
in
a
partnership
deed.
Higgins
and
Fletcher
said
at
34:
In
spite
of
the
present
contractual
freedom
of
married
women,
the
courts
are
adverse
to
drawing
an
implication
of
partnership
from
the
course
of
mutual
dealings
between
husband
and
wife,
where
there
is
no
express
agreement
between
them
to
enter
into
a
partnership.
Certainly,
in
cases
where
the
sole
evidence
of
partnership
is
of
mutual
dealing
with
each
others
property,
and
a
common
sharing
of
the
profits
derived
from
that
property,
the
courts
incline
to
treat
the
matter,
not
as
a
partnership,
but
as
a
normal
incident
flowing
from
the
ordinary
family
relationship
of
husband
and
wife.
The
appellant
says
that
a
partnership
existed
between
herself
and
her
former
husband,
Robert
William
Lance
Vaughan,
from
July
1977
to
September
1981
and
the
$13,784
that
she
seeks
to
deduct
are
losses
from
the
business
of
this
partnership.
The
business
is
said
to
have
been
carried
on
under
the
name
of
“Stagecoach”.
There
is
also
evidence
that
it
was
carried
on
under
the
style
"Vaughan
Coach
Services".
It
revolved
around
a
luxurious
1970
Daimler
autobus
that
was
used
for
short
distance
trips
and
as
a
mobile
dressing
room
by
musicians
and
actors.
The
alleged
partnership
agreement
was
never
reduced
to
writing
and
the
appellant
seeks
to
establish
its
existence
by
inference
from
her
conduct
and
that
of
her
husband.
Inter
alia,
she
points
to
such
things
as
her
having
been
party
with
her
husband
to
the
arrangements
made
with
the
Royal
Bank
to
finance
the
purchase
of
the
autobus,
which
included
mortgaging
13
Laurier
Ave.,
Toronto,
a
residence
that
was
owned
by
the
appellant
and
her
husband
as
joint
tenants;
the
preparation
and
arranging
for
the
distribution
of
promotional
matter
such
as
brochures
and
cards;
cleaning
the
autobus
and
restocking
it
with
suitable
food
and
keeping
books
of
accounts.
Copies
of
statements
of
account
are
in
evidence
for
the
period
ending
January
26,
1979
with
the
Royal
Bank
in
the
names
of
the
appellant
and
her
husband
that
record
loan
payments
commencing
in
1977.
In
my
view
these
things
can
all
be
regarded
as
equally
consistent
with
conduct
arising
out
of
the
community
of
interests
created
by
the
marriage.
The
appellant
also
relied
on
the
incorporation
of
Lance
Vaughan
&
Associates
Limited
on
September
29,1977
under
the
Business
Corporations
Act
of
Ontario
as
evidence
of
the
intention
of
the
appellant
and
her
husband
being
in
business
together.
She
stated
that
she
and
her
husband
were
both
to
have
been
officers
and
directors
of
the
corporation
and
that
the
incorporating
solicitor
was
instructed
accordingly.
True
copies
of
18
pages
of
documents,
being
the
product
of
a
search
of
the
records
of
the
Ministry
of
Consumer
and
Commercial
Relations
of
Ontario,
were
placed
in
evidence
by
counsel
for
the
respondent.
They
show
that
the
corporation
was
dissolved
as
of
May
10,
1982,
and
there
is
no
reference
in
any
of
the
documents
to
the
appellant.
There
is
simply
nothing
in
evidence
to
establish
that
she
was
at
any
time
an
officer
or
director
of
Lance
Vaughan
&
Associates
Limited
during
its
existence.
The
documents
do
show
that
her
husband
was
both
an
officer
and
director.
The
appellant
was
asked
if
any
shares
in
the
corporation
had
been
issued
to
her
and
she
replied
no.
If
anything,
these
last
mentioned
facts
point
away
from
the
intention
on
the
part
of
the
husband
to
enter
into
a
contract
of
partnership
with
the
appellant.
In
this
regard
reference
is
also
made
to
such
things
as
the
registration
of
the
autobus
in
the
name
of
the
husband
only;
that
in
an
answer
and
counter-petition
dated
September
7,
1978
to
the
appellant's
petition
for
divorce,
her
husband
said
he
was
the
sole
owner
of
the
vehicle
and
he
rented
it
to
entertainers
and
that
the
appellant
made
efforts
to
interfere
with
his
business
relationships;
that
in
his
personal
income
tax
returns
for
the
years
1977,
1978
and
1979
the
husband
reported
all
of
the
income
and
losses
from
the
business
as
his
and
in
his
returns
for
1977
and
1978
financial
statements
that
are
in
evidence
(Exhibits
R-5
and
R-6)
were
included
that
describe
the
husband
as
the
proprietor
of
the
business.
On
the
whole
of
the
evidence
I
can
only
conclude
that
the
appellant
has
failed
to
establish
the
actuality
of
the
alleged
business
partnership
between
herself
and
her
husband.
Proving
this
being
essential
to
the
success
of
the
appeal,
it
follows
that
it
must
be
dismissed.
Appeal
dismissed.
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