The Estate of Sarah Isabell Raper v. Minister of National Revenue, [1986] 2 CTC 2052, 86 DTC 1513

Tremblay, T.C.J.:—This case was heard on August 27, 1985 at the City of Victoria, British Columbia.

1. The Point at Issue

The point is whether the Estate of Sarah Isabell Raper is correct in the computation of its income in the 1982 taxation year to include $35,000 as taxable capital gain on the deemed disposition of the 2.46 hectare property including the house in consequence of the death of Mrs. Sarah Isabell Raper. The appellant contends that the whole property must be considered as the enjoyment of the housing unit as principal residence of the deceased. The exemption provided by paragraph 40(2)(b) of the Act applies.

The respondent considers the taxable capital gain to be $202,800.

2. The Burden of Proof

2.01 The bruden of proof is on the appellant to show that the respondent's assessment is incorrect. This burden of proof results particularly from several judicial decisions, including the judgment delivered by the Supreme Court of Canada in Johnston v. M.N.R., [1948] S.C.R. 486; [1948] C.T.C. 195; 3 D.T.C. 1182.

2.02 In the same judgment, the Court decided that the assumed facts on which the respondent based his assessment or reassessment are also deemed to be correct. In the present case, the assumed facts are described in the reply to notice of appeal as follows:

5. In so reassessing the Appellant, the Respondent assumed, inter alia, that:

(a) 2.46 hectares of land was owned by Sarah Isabell Raper (deceased) as set out in the Notice of Appeal;

(b) 2.46 hectares of land is equivalent to 6.09 acres of land;

(c) land in excess of 1 acre, amounting to 5.09 acres of land, was not necessary for the use and enjoyment of the housing unit as a residence and was not part of the principal residence;

(d) on a deemed disposition of the property, taxable capital gains with respect

to the 5.09 acres of land were properly included in the Appellant’s income;

(e) on December 31, 1971, the 5.09 acres of land had a fair market value of not more than $41,000;

(f) on December 4, 1982, the date of the deemed disposition of the land, the 5.09 acres of land had a fair market value of not less than $446,600;

(g) the Appellant’s taxable capital gain from the deemed disposition of the

5.09 acres of land were determined by the Respondent to be $202,800;

(h) as the Appellant had already declared a taxable capital gain of $35,000 from the deemed disposition of the property, taxable capital gains of $167,800 were properly included in the Appellant’s income calculated as follows:

Taxable capital gains	$202,800
Amount declared by Appellant	35,000
Amount included in Appellant’s income	$167,800

3. The Facts

3.01 The following facts alleged by the appellant in the notice of appeal were admitted by the respondent:

1. At all material times, Sarah Isabell Raper (the “Deceased”) was a retired farmer and resided in Victoria, British Columbia.

2. The Deceased died on December 4, 1982.

3. The estate of the [sic] Sarah Isabell Raper (Deceased) (the “Appellant”) is an estate, the sole executrix of which is Edna Alice Rix.

4. At all material times, the Deceased was the registered and beneficial owner of certain lands and premises, having a total area of approximately 2.46 hectares, together with the improvements thereon, which lands and premises are more particularly known and described as:

(Municipality of Saanich)

Lot 3, Section 56, Victoria District, Composite Plan 2661

(the “Property”).

3.02 Mr. Edward Albert Raper, 63 years old, testified that:

(a) He was the son of the deceased. He was beneficiary of her will. He was born and grew up on the subject property.

(b) The said property was purchased by his parents in 1918. The area was then 50 acres. It was a dairy farm from 1920 until 1961. Then the major part of the property was sold, leaving 6.9 acres. His father died in 1966.

(c) In 1920, the next-door neighbours were a quarter of a mile on one side and one mile on the other side. There was no store within two miles of the farm. The latter was about four to five miles from the then built- up City of Victoria.

(d) Once a year the family went to Victoria on the 24th of May for the parade.

(e) In the 1930s most of the properties in the area were from 5 to 10 acres. All of the owners had gardens, cows, pigs and chickens.

(f) In 1966, at the death of their father, the five children (two boys and three girls) were between 38 and 48 years old.

(g) After the death of the father, Mrs. Raper, his mother, continued her old lifestyle;

Well, she took the land, and she would walk on this land, and check her animals, and she had a dislike for broom, and she pulled broom all the time. Every time she took a walk around the farm she would pull broom, and check the fences. (TS p 11)

She also continued to grow her own vegetable garden, to keep animals and to do canning (TS p 12). She continued this way of life until she had a stroke in 1977 at the age of 88. She died in 1982 at the age of 94.

(h) From 1977 to 1982, despite the fact that she was in the hospital and later in a nursing home, she never let her house be rented out. “It was strictly that she was going to come home to just continue life. . . . [Her view was that] she was going to return to the farm.” (TS p 14)

That was her domaine, and that was — real estate people would come to the door and ask her if the place was for sale and she says, all you have to do, Mister, is just look into the obituaries, and when you see I am dead, that is when the place will be sold.

Up until then she should just tell them to stand in the line-up and she says, I think you’re about 21 or 22. (TS pp 14 and 15)

She absolutely had no interest in selling the property, nor in subdividing it.

(i) The dwelling of the property was built in 1885. It was a “very quaint, old-fashioned English type house. The front of the house was 130 feet from the Cedar Hill Road”. Moreover, there was a shed, a chicken house, a garage and a barn on the piece of land. After the death of his father, his mother continued to use all of them for storage of hay, animals and feed. The house was demolished in 1983. “. .. pretty near all of the stuff that was in the house went to Saanich Artifacts” (TS p 19).

(j) The house was adapted to using the land around it.

3.03 In cross-examination, Mr. E. A. Raper confirmed substantially his former testimony.

(a) In 1978, before her stroke, his mother owned two to four cows.

(b) On the property there was a pantry in the house and there was another outside the house but adjoining the house, in the wood shed. It was a cool room.

(c) “Q. How was the property necessary for your mother to use the house as a residence?

A. She had fruit trees, she had raspberries, loganberries, blackberries, a vegetable garden, plum trees, and you have to have — to be substantial, you have to have feed for your animals, both summer and winter. Spring and summer they were always pastured. Winter they had to be fed hay.

Well, it was made on the farm, on the property, and it was just — I done that, because I had all the equipment. I operated a farm just out in Keats, and I had the equipment, and I done it for her.” (TS p 25)

3.04 In re-direct examination, Mr. Raper answered as follows to the questions of the counsel for the appellant.

Q. My friend asked how the property, the six acres was necessary for the use and enjoyment of the house. Could your mother, in terms of her lifestyle, and the kind of house that she had, could she have got by with an ordinary city lot, or an acre, or something like that?

A. It wasn’t a question of that. She just wouldn't move from her house. She had cataracts too. She couldn’t see very well, but she knew every corner in that house just by feeling. We offered to build her a house on the corner and sell the rest of it. No way, there was just no way. She just wouldn’t hear no tell of it.

Q. She was not prepared to change her lifestyle?

A. Absolutely not, for anybody.

Q. Her lifestyle required an acreage parcel?

A. Yes. That was what she had, and that is what she — she quite likely could have got along with a little lot very easily. But, this is what she had, and that was her farm life. That was her existence. (TS pp 25 and 26).

3.05 During his testimony six photographs of the house and property were filed as Exhibits A-1 and A-3 and a photograph of the pantry house was filed as Exhibit A-4.

3.06 Mrs. Edna Alice Rix in direct examination testified that:

(a) She is the executrix of the Estate of Sarah Isabell Raper and beneficiary under her will.

(b) She was a daughter of the deceased. She was two years old when their parents moved on the subject property. Her mother was born in 1888 and her father in 1887, both in England. They moved from England in 1915 and on the subject property in 1918.

(c) The style of life in the 1930’s was the rural life. "Several people around us had little farm holdings, peddled milk in town” (TS p 30). Her parents gained their livelihood from a dairy farm operation: vegetables, hay crops, corn field, silo, etc.

(d) After the death of Mr. Raper in 1966, Mrs. Raper still owned two cows. Her lifestyle did not change. The neighborhood however was crowding in and the city was coming out. The subject property was a kind of oasis in the surrounding city by the late 1970's.

(e) Her mother never considered selling or subdividing the six acres. The subject property was sold after her death in 1983. On April 27, 1983 as executrix of the estate, she signed an interim agreement (Exhibit A-5) showing a sale price of $630,000 which was completed the next month (Exhibit Book A-2, Item 4). It was sold to Polaris Construction Co. Ltd. Nobody in the family had interest in that company; they did not know it.

(f) After her stroke, her mother went to the hospital but she returned home for two years. She had a day-care help. She was 90 when she went into the rest home.

(g) The subject property was basically oriented towards a farm: a dairy, a barn, a tool shed, an implement shed and a chicken house. Her mother continued to use those outbuildings.

3.07 In cross-examination, Mrs. Rix testified that:

(a) About in 1970, the shopping centre called University Heights was built across the street in front of the subject property. Sometimes her mother shopped in the shopping centre.

(b) The barn was not located at the limit of the six acres. There were fields behind.

3.08 The main relevant and undisputed facts concerning the subject property are the following. The area is 6.09 acres or 2.46 hectares. The residence is located about 130 feet from Cedar Hill Road. Built around 1900, its fair market value in 1971 was about $5,000, the whole based on a replacement value of $15 per square foot depreciated 75 percent. In 1971 the subject property had a dual zoning. The area fronting Cedar Hill road to a depth of approximately 153 feet was zoned Residential District B-1, about 1.5 acres. The remaining 5.4 acres was zoned A-1 Rural. It was required that the appellant own at least 5.2 acres of land. The latter could not be severed.

3.09 Pursuant to the witness of the appellant, Mr. David R. Coell, a retired appraiser and presently a real estate consultant, the fair market value of the bare land in 1971 was as follows:

This was based on four comparables. The appellant considers the fair market value at the time of the disposition in December 1982 as being $630,000, the actual price sold in May 1983 (Exhibit A-5).

3.10 Pursuant to the appraiser of the respondent, Mr. R. W. Richardson, the fair market value of the bare land on December 1971, based on four comparables, was $51,500. The fair market value of the bare land in December 1982, also based on four comparables, was $548,000 (Exhibit R-2).

According to Mr. Richardson’s report, the zoning in 1982 was RS-6 for the front 120 ft. and the balance was still zoned A-1 (Rural). However, he said in his testimony that maybe around 1977 the property was put into agricultural land reserve. After 1979, but before the death of Mrs. Raper, the property was taken out of the reserve. This was according to a discussion that Mr. Richardson had with employees of the Municipality of Saanich. However, Mr. Richardson contends that the highest and best use in December 1982 was as residential subdivision.

4. Law — Cases at Law — Analysis

4.01 Law

The main provisions of the Income Tax Act (the Act) involved in this case are paragraphs 40(2)(b), 54(g) and subsection 70(5). They read as follows:

40. (2) Notwithstanding subsection (1),

(b) where the taxpayer is an individual, his gain for a taxation year from the disposition of a property that was his principal residence at any time after the date, (in this section referred to as the “acquisition date” that is the later of December 31, 1971 and the day on which he last acquired or reacquired it, as the case may be, is his gain therefrom for the year otherwise determined minus that proportion thereof that

(i) one plus the number of taxation years ending after the acquisition date for which the property was his principal residence and during which he was resident in Canada,

is of

(ii) the number of taxation years ending after the acquisition date during which he owned the property whether jointly with another person or otherwise;

54. . . .

(g) “principal residence of a taxpayer for a taxation year means a housing unit, a leasehold interest therein, or a share of the capital stock of a cooperative housing corporation, owned, whether jointly with another person or otherwise, in the year by the taxpayer, if the housing unit was, or if the share was acquired for the sole purpose of acquiring the right to inhabit a housing unit owned by the corporation that was,

(iv) by virtue of subparagraph (ii), if by virtue of that subparagraph the property would, but for this subparagraph, have been his principal residence for 4 or more previous taxation years,

and for the purposes of this paragraph the “principal residence of a taxpayer for a taxation year shall be deemed to include, except where the property consists of a share of the capital stock of a co-operative housing corporation, the land subjacent to the housing unit and such portion of any immediately contiguous land as may reasonably be regarded as contributing to the taxpayer’s use and enjoyment of the housing unit as a residence, except that where the total area of the subjacent land and of that portion exceeds /2 hectare, the excess shall be deemed not to have contributed to the individual’s use and enjoyment of the housing unit as a residence unless the taxpayer establishes that it was necessary to such use and enjoyment;

70. ...

(5) Where in a taxation year a taxpayer has died, the following rules apply:

(a) the taxpayer shall be deemed to have disposed, immediately before his death, of each property owned by him at that time that was a capital property of the taxpayer (other than depreciable property of a prescribed class) and to have received proceeds of disposition therefor equal to the fair market value of the property at that time;

4.02 Cases at Law and Doctrine

The following cases at law were referred to the Court by counsel for the parties:

A. Cases at Law

1. Betty Madsen v. M.N.R., [1980] C.T.C. 3022; 81 D.T.C. 1 (T.R.B.);

2. The Queen v. William Yates, [1983] C.T.C. 105; 83 D.T.C. 5158 (F.C.T.D.); presently under appeal to the Federal Court;

3. Donald Fraser v. M.N.R., [1983] C.T.C. 2522; 83 D.T.C. 448 (T.R.B.);

4. Carl Rudeloff v. M.N.R., [1984] C.T.C. 2674; 84 D.T.C. 1548 (T.C.C.);

5. Sidney K. Watson and Thelma Watson v. M.N.R., [1985] 1 C.T.C. 2276; 85 D.T.C. 270 (T.C.C.);

6. Eric Rode and Elizabeth Rode v. M.N.R., [1985] 1 C.T.C. 2324; 85 D.T.C. 272 (T.C.C.);

7. Robert E. James and Hazel M. James v. M.N.R., [1985] 2 C.T.C. 2001; 85 D.T.C. 290 (T.C.C.);

8. Beatrice N. Cox and Robert J. Cox v. M.N.R., [1985] 1 C.T.C. 2392; 85 D.T.C. 320 (T.C.C.);

9. The Queen v. Gerencer, [1980] 1 S.C.R. 403, 18 L.C.R. 1;

10. Municipality of Metropolitan Toronto v. Loblaw Grocerterias Co. Ltd., 1 L.C.R. 118, 21 D.L.R. (3d) 551;

11. Stan Michael v. M.N.R., [1985] 2 C.T.C. 2122; 85 D.T.C. 455.

B. Doctrine

12. Scace, Arthur R.A. and Douglas Ewens, The Income Tax Law of Canada, Fifth Edition (Carswell: Toronto, 1983), pp 147-149.

4.03 Analysis

4.03.1 There are two possible issues in this appeal. The first one is whether the whole property is a principal residence. If the conclusion is in the affirmative, there is no more issue. On the contrary, if the conclusion of this point is in the negative then the second issue concerns the appraisal of the part of the property which is not part of the principal residence and which is subject to the capital gain tax.

A — Whole Property: Principal Residence

The preponderance of the appellant’s evidence is to the effect that from 1971 to 1977, when Mrs. Isabell Raper had her stroke, the latter continued the same way of life as the one she had since 1961 when they had sold the major part of the property and had ceased the dairy farming activities. This way of life being the rural life was to grow her own vegetable garden, to keep few animals and to do canning. After her stroke, despite the fact that she spent most of the time at the hospital and at a rest home rather than her property (four of six years), Mrs. Raper always refused to sell or subdivide the property. Her intention was to live on her property and thence not to sell it until her death (paras 3.02, 3.03, 3.04, 3.06 and 3.07).

4.03.2 Counsel for the parties referred to numerous cases at law. However, the facts in the Rode case are very similar to the instant one because the appellants had similar lifestyles.

In the headnote, the facts are quoted as follows in [1985] 1 C.T.C. 2324:

In issue was the amount of acreage the taxpayers, husband and wife, could claim as part of their “principal residence” as defined by paragraph 54(g) of the Act. The taxpayers contended that the entire property of 9.3 acres, which they had disposed of in 1977, composed their principal residence; the Minister had assessed on the basis that only one acre was included in principal residence and that the balance of acreage was subject to capital gain. So far as possible, the taxpayers had practised self-sufficiency in the production of their food. They raised or grew as much of it as possible, and their activities included the keeping of beehives and production of honey. Much of their acreage was devoted to clover and corn, and there was some evidence before the Court, that such was necessary to support beekeeping. The taxpayers contended that every part of their property was required to maintain their lifestyle.

Associate Chief Judge Christie dismissed the appeal on the fact that although the taxpayers' lifestyles made use of more than one acre of land, it did not mean that they could not have used and enjoyed the residence without the surrounding land.

It is appropriate to refer to the reasoning of Christie, A.C.J.T.C. at pages 2326-27 in the Canada Tax Cases and at pages 273-75 in the Dominion Tax Cases:

Paragraph 54(g) of the Act defines “principal residence” of a taxpayer for a taxation year. It includes the stipulation that the geographical limits up to one acre (now /2 hectare) of a principal residence is the land subjacent to the housing unit and such portion of any immediately continguous land as may reasonably be regarded as contributing to the taxpayer’s use and enjoyment of the housing unit as a residence. This means that the area encompassed by a principal residence is a variable depending upon the pertinent circumstances. I am also of the view that the test to be applied in determining what that area is, is flexible having particular regard to the underlined words if the taxpayer is not contending that the subjacent and immediately contiguous land comprising his principal residence exceeds one acre. In such cases significant weight should be attached in favour of an appellant to credible evidence that can be sensibly regarded as making the kind of contribution described. If, on the other hand, the appellant is contending that the parameters of his principal residence exceed one acre, he is faced with a significantly altered and more difficult task. In these circumstances the law provides that the excess shall be deemed not to have contributed to the appellant’s use and enjoyment of the housing unit as a residence unless he establishes that it was necessary to such use and enjoyment. The emphasized words are key. The word “deemed” in paragraph 54(g) has this consequence. Even if an appellant establishes beyond controversy that what exceeds one acre did in fact make an important contribution to his use and enjoyment of the housing unit as a residence, this does not assist him because the fact has been nullified by the legislation unless he proves necessity. Therefore what an appellant must do in order to establish that his principal residence exceeds one acre is to prove that the excess was “necessary” to the use and enjoyment of the housing unit as a residence. I believe that in its context this requirement dictates that a stringent test shall be applied in determining the acreage of a principal residence. I am also of the opinion that what constitutes a principal residence is to be decided throughout by objective, not subjective, testing. To determine a list respecting the boundaries of a principal residence on the basis of evidence which is purely the mental perception of one of the parties to the controversy would strike me as raising a serious question of justness although I appreciate that the words “contribute to the taxpayer’s enjoyment” in paragraph 54(g) tend to draw one towards applying a subjective test in this regard.

Parliament has placed two things together contraposed. First, provision for the determination of variable dimensions of land which may constitute the principal residence of taxpayers in respect of which they can succeed in what they contend is the correct dimension by meeting the application of a flexible test. This applies to an area which has fixed lines of demarcation which must not exceed one acre. Second, provision for the determination of variable dimensions of land which may constitute the principal residence of taxpayers which are in excess of one acre and which have no fixed outer limits. I believe that in this regard it was the intention of Parliament that crossing the demarcation lines of one acre and the process of expansion beyond them shall be a formidable task. This is the effect of the injection of the word “necessary” in determining dimensions in excess of one acre. Among the interpretations assigned to the word “necessary” in the Oxford English Dictionary is: “indispensable, requisite, essential, needful; that cannot be done without”. From this selection I believe that the phrase “that cannot be done without” best epitomizes what a taxpayer must meet in order to establish that his principal residence can properly be regarded as greater than one acre. To my mind, the proper approach to the determination of these appeals is to objectively consider all of the relevant circumstances adduced in evidence which were in existence immediately prior to the disposition of the property and in the light of that answer this question: have the appellants established on a balance of probabilities that without the area of land for which they contend constituting the subjacent and immediately contiguous land component of their housing unit they could not practicably have used and enjoyed the unit as a residence? I say “immediately prior to the disposition” because “the critical time is the moment before disposition”: The Queen v. Yates, [1983] C.T.C. 105 at 106; 83 D.T.C. 5158 at 5159. Decided cases signify that legal attributes attaching to land may or may not determine the magnitude of the land component of a principal residence. This is illustrated by reference to Yates (supra) and Watson et al v. M.N.R., [1985] 1 C.T.C. 2276. In Yates the taxpayers had purchased ten acres of vacant land on which they built a residence. This was the minimum residential area permitted under applicable zoning laws. The effect of these laws as described by Mahoney, J. at 106 (D.T.C. 5159) was that: “The Defendants could not legally have occupied their housing unit as a residence on less than ten acres”. [Emphasis added.] His Lordship went on to say:

It follows that the entire ten acres, subjacent and contiguous, not only “may reasonably” be regarded as contributing to their use and enjoyment of their housing unit as a residence; it must be so regarded. It also follows that the portion in excess of one acre was necessary to that use and enjoyment.

In Watson, Bonner, T.C.J. said:

Mr. Watson stated that both when the property was acquired and when it was expropriated it could not be severed. He referred, I assume, to the prohibition contained in subsection 29(2) of the Planning Act, R.S.O. 1970, c. 349. The argument seemed to be that in order to use the house and in particular to have access to it the whole parcel was necessary because it was not possible to convey the house and a strip of land required for the driveway without, at the same time, conveying the rest of the parcel. In my view the definition of “principal residence” contained in paragraph 54(g) is such that considerations as to what can lawfully and effectively be conveyed are irrelevant. The amount of land which contributes to the use and enjoyment of a housing unit is not, by paragraph 54(g) of the Income Tax Act, made to depend on what can lawfully be bought and sold.

4.03.3 In the instant case, the Court arrives at the same conclusion: that the lifestyle of the deceased is not sufficient to prove that the excess of one-half hectare was necessary for the use and enjoyment of the housing unit.

However, there is something in this case which did not exist in the Rode case. It is the requirement that the appellant had to own at least 5.2 acres of land.

4.03.4 It is necessary to underline that the area /2 hectare” provided in that portion following subparagraph (iv) of paragraph (g) of section 54 (quoted above) is applicable with respect to dispositions occurring after 1981. Before 1982, the area was one acre. It was amended by S.C. 1980-81- 82-83, c. 140, s. 23(4). In paragraph 5 of the reply to notice of appeal (quoted above in par. 2.02), counsel for the respondent did not consider this change of the Income Tax Act. In fact, /2 hectare is equal to 1.24 acres. In this case, the entire area of the property being 6.09 acres, the remainder is 4.85 acres.

The zoning point was the basis of the decision of Mr. Justice Mahoney in the Yates case referred to by both counsel for the parties and quoted by Christie, A.C.J.T.C. in the Rode case (par. 4.03.2). Despite the decision of Bonner, T.C.J. in the Watson case, also quoted in the Rode case (par. 4.03.2) I concur with Mr. Justice Mahoney's decision in the Yates case to which I am bound in any case.

4.03.5 Pursuant to the adduced evidence, from 1971 to 1980 the property could not be severed (pars. 3.08 and 3.10). If Mrs. Raper had died before 1980, the entire land would have been considered as necessary to the use and enjoyment of the housing, because of the Yates decision, to which once again the Court is bound. By saying this, the Court assumes that the one-half hectare rule (1.24 acres) applies to the part of land located between the house and Cedar Hill Road.

4.03.6 A point is brought up regarding whether the exemption provided in paragraph 40(2)(b) quoted above (the proportion that number of years plus one, while the property was the principal residence, is of the number of years of ownership of the property) could apply in this case: 1971 to 1979 inclusively (eight years) plus one. Therefore an exemption of nine tenths of the capital gain would apply.

It is true that the time of disposition is an important time for demonstrating the necessity to the use and enjoyment of the housing unit. In this case it was in December 1982. However, is it the only time?

The designation of principal residence status being made for each year of ownership, it seems equitable that the critical time for demonstrating necessity would be also on a yearly basis.

The provisions 40(2)(b) and 54(g) are exemption provisions. The strict interpretation of an exemption provision requires that the wording of such a provision clearly state the exemption. Is it so in paragraphs 40(2)(b) and 54(g)?

The definition of principal residence in paragraph 54(g) includes the element of necessity to the use and enjoyment of the housing unit. The words “principal residence” are used in paragraph 40(2)(b). Its definition in paragraph 54(g) applies to paragraph 40(2)(b). Indeed paragraph 54(g) starts by saying “In this subdivision . . . principal residence . . . means . . . ”. The said subdivision is subdivision (c) of Division B of Part I and covers sections 28 to 55.

Therefore “principal residence" in paragraph 40(2)(b) being taken in its entire meaning, including the necessity to use and enjoyment of the housing unit in computing the exemption, is not only equitable but, in my opinion, is clearly provided in the wording of the said provision. The critical time for demonstrating necessity would be also on a yearly basis.

4.03.7 The fair market value of the property in 1971 and 1982, as contended by the respondent's appraiser, is maintained by the Court. On the one hand, the appellant’s witness, Mr. D.R. Coell, despite his knowledge and experience in valuation, presently is no longer of an appraiser association. On the other hand, the figures contended by both parties are nearly similar (pars. 3.09 and 3.10). The computation of the exemption provided in paragraph 40(2)(b), as explained above, must apply to the respondent's appraiser figures.

5. Conclusion

The appeal is allowed in part and the matter referred back to the respondent for reassessment in accordance with the above reasons for judgment. Party and party costs are allowed.

Appeal allowed in part.