Brulé,
T.C.J.:—
Issue
This
is
an
appeal
from
an
assessment
of
income
tax
for
the
1979
and
1980
taxation
years.
The
sole
issue
is
the
value,
on
December
31,
1971,
of
a
parcel
of
real
property
near
Grande
Prairie,
Alberta,
sold
during
1979
by
the
appellant.
The
Minister
in
assessing
tax
and
in
particular
in
computing
the
taxable
capital
gain
realized
on
the
sale
of
the
property,
proceeded
on
the
basis
that
the
value
of
the
property
at
V-Day
was
$15,700.
The
appellant
filed
his
income
tax
return
on
the
basis
that
the
value
on
V-Day
was
$200,000.
These
figures
were
exclusive
of
the
appellant’s
principal
residence
on
the
property.
Facts
The
subject
property,
consisting
of
approximately
160
acres,
is
located
three
and
one-half
miles
south
of
Grande
Prairie.
It
is
located
in
an
area
of
sand
dunes
and
forests
and
contains
approximately
10
acres
of
pasture,
a
five-acre
farm
site,
with
the
remaining
areas
being
trees,
valley
land
and
swamps.
The
sandy
soils
limit
the
agricultural
use
of
the
property.
The
appellant
used
the
property
as
a
recreational
facility.
He
purchased
some
equipment,
developed
trails
and
stabled
horses
which
he
rented
for
riding.
He
had
rental
cabins
on
the
property
and
for
his
residence
had
put
a
double
wide
mobile
home
on
the
property.
The
appellant
acquired
the
property
in
1960.
The
property
was
sold
in
1979
for
total
proceeds
of
$480,000
and
the
Minister
subsequently
reassessed
on
the
basis
that
$31,270.18
applied
to
the
principal
residence
and
the
land
subjacent
thereto,
and
that
the
sum
of
$448,729.82
represented
a
capital
gain
less
a
V-Day
value
and
outlays
and
expenses
for
a
total
of
$16,586.36,
for
a
net
capital
gain
of
$432,143.46.
The
Minister
allowed
the
appellant
reserves
upon
the
disposition
of
the
property
in
the
amounts
of
$216,071.73
and
$172,857.38
respectively
in
his
1979
and
1980
taxation
years.
Appellant’s
Position
Counsel
for
the
appellant
presented
evidence
by
way
of
the
appellant
himself,
the
purchaser
of
the
property
who
was
a
real
estate
broker
and
developer,
and
two
appraisal
experts.
The
appellant
did
not
have
anything
to
say
as
to
the
property's
value.
he
simply
stated
his
involvement
with
the
ranch,
which
was
for
the
greater
part
of
his
ownership
a
part-time
endeavour.
The
developer
and
ultimate
purchaser
of
the
property,
a
Mr.
Swanston,
was
quite
familiar
with
the
property
having
been
in
the
real
estate
business
in
the
area
since
1962.
He
developed
a
property,
approximately
the
same
distance
from
Grande
Prairie
as
the
subject
property,
in
1969,
having
purchased
the
160
acres
involved
for
$6,000
or
$37.50
per
acre.
He
told
the
Court
that
this
area
was
not
as
desirable
as
the
appellant’s
property.
In
1974
or
1975
when
Mr.
Swanston
casually
approached
the
appellant
as
to
selling
his
property
he
was
told
it
was
not
for
sale.
On
reflection
he
indicated
to
the
Court
that
he
would
have
been
prepared
to
pay
$1,000
per
acre
in
1971.
The
first
expert
appraiser
was
a
Mr.
Grose,
from
Grande
Prairie,
who
used
a
direct
sales
comparison
approach.
In
so
doing
he
indicated
that
there
were
few
sales
of
properties
during
the
relevant
time
period
that
compared
favourably
to
the
subject
property.
He
discarded
many
because
of
the
differences
in
soil,
tree-cover
and
terrain.
Mr.
Grose's
report
contained
an
analysis
of
five
properties
he
cited
as
being
comparable
and
from
these
he
chose
two,
each
of
which
had
a
per-acre
sale
price
of
$438.
To
this
base
figure
he
made
two
upward
adjustments,
one
of
75
per
cent
for
the
property's
location
relative
to
urban
influence
and
another
of
30
per
cent
for
road
access.
The
overall
result
was
that
he
arrived
at
a
value
of
$898
per
acre
or
$143,680
for
the
160-acre
parcel.
He
then
rounded
this
out
to
$143,500,
added
another
$65,000
for
improvements
of
a
non-land
nature
by
the
cost
approach
to
value,
giving
a
final
reconciled
valuation
of
$208,500
to
the
property.
The
other
accredited
appraiser
was
a
Mr.
Hurlburt
of
Edmonton.
He
approached
the
valuation
task
on
the
basis
that
the
highest
and
best
use
of
the
property
at
the
relevant
time
was
for
country
residential
purposes.
In
arriving
at
a
conclusion
Mr.
Hurlburt
discarded
the
comparable
sales
approach
saying
that
there
were
no
sales
available
of
properties
similar
to
the
subject
property
in
any
proximity
of
time
to
the
effective
Valuation
Day
of
December
31,
1971.
He
then
proceeded
to
employ
a
development
approach
to
value
the
property.
His
conclusion
was
that
the
value
for
the
land
would
be
$134,000
and
as
he
said:
.
.
given
the
uncertainties
of
the
foregoing
methodology'"
the
value
was
reduced
to
$130,000.
In
addition
the
improvements
of
a
non-land
nature
were
shown
at
$37,000
for
a
total
V-Day
valuation
of
$167,000.
Minister’s
Position
Counsel
for
the
Minister
introduced
as
a
witness
a
Mr.
Jerrard
who
has
been
employed
by
Proctor
and
Gamble
since
1971.
Prior
to
that
time
he
was
the
Industrial
Co-ordinator
for
the
Chamber
of
Commerce
in
Grande
Prairie.
The
witness
was
involved
with
the
purchase
of
property
by
Proctor
and
Gamble
for
a
$100
million
pulp
mill
South
and
east
of
Grande
Prairie.
A
part
of
the
property
purchased
for
this
plant
was
the
subject
of
discussion
both
by
Mr.
Grose
for
the
appellant
and
by
a
Mr.
Lee
for
the
Minister.
Some
of
the
property
required
was
purchased
from
government
agencies
and
some
from
private
individuals.
It
was
a
special
purpose
purchase
and
therefore
consideration
had
to
be
given
to
the
prices
paid
for
the
various
properties.
The
prices
of
the
acquired
properties
also
rose
before
the
purchase
by
Proctor
and
Gamble,
when
it
was
known
publicly
who
was
the
prospective
buyer.
The
expert
appraiser
produced
by
the
Minister
was
Mr.
Lee
of
Edmonton.
His
report
contained
regional
and
neighbourhood
data,
a
description
and
condition
of
the
subject
property,
and
an
opinion
as
to
the
highest
and
best
use
of
the
property
which
in
1971
he
said,
was
as
a
ranch.
Mr.
Lee
then
went
on
to
value
the
property
using
the
comparative
sales
method.
He
set
out
nine
sales,
seven
of
which
took
place
within
one
year
of
the
appraisal
date.
In
all
cases
he
employed
a
time
adjustment
to
arrive
at
V-Day
values.
The
sales
indicated
a
value
range
of
$66
to
$106
per
acre.
He
settled
on
a
value
of
$80
per
acre
for
the
subject
property
thus
producing
a
V-Day
value
for
the
land
of
$12,800.
He
also
valued
the
improvements
thereon
at
$21,600
for
a
total
of
$34,400.
Analysis
In
considering
the
evidence
presented
to
the
Court
I
do
not
find
it
very
difficult
to
eliminate
the
development
approach
used
by
Mr.
Hurlburt.
It
is
well
established
that
in
valuation
this
approach
should
only
be
used
when
there
is
an
absence
of
actual
sales.
While
in
this
case
the
actual
sales
may
well
be
distinguished
I
believe
they
were
of
more
use
than
the
reasoning
employed
by
Mr.
Hurlburt.
First
of
all
he
mentioned
that
the
property
was
ripe
for
development
with
the
owner
having
been
subject
to
considerable
pressure
to
sell
the
ranch
land
for
that
purpose.
This
is
directly
in
contradiction
to
the
evidence
given
by
the
appellant
who
told
the
Court
that
he
had
not
considered
a
sale
before
1977.
Also
Mr.
Hurlburt
said
that
in
relation
to
the
Pine
Valley
subdivision,
prices
per
lot
had
increased
to
about
$4,000,
while
Mr.
Swanston
the
Developer
of
Pine
Valley
told
the
Court
that
prices
per
lot
in
that
year
were
only
$3,000
for
a
subdivided
lot
after
development
costs.
Both
Mr.
Grose
and
Mr.
Lee
envisaged
that
development
was
not
imminent
in
the
area
and
as
Mr.
Grose
set
out:
.
as
at
December
31,
1971,
the
subject
lands
and
improvements
had
an
estimated
highest
and
best
use
of
their
existing
guest
ranch
facility
with
a
foreshadowing
country
residential
subdivision
potential.
As
development
was
not
within
the
immediate
future
of
1971
it
is
not
proper
to
use
this
method
and
especially
on
a
formula
basis
which
had
the
development
commencing
in
January
1971,
instead
of
1972.
As
a
result
I
disregard
this
valuation
evidence.
The
disparity
between
the
two
appraisers
using
the
comparative
sales
approach
is
irreconcilable.
Mr.
Grose
used
two
properties
which
both
Mr.
Lee
and
Mr.
Jerrard
testified
were
for
special
purposes
and
had
large
gravel
deposits
which
were
being
sold.
In
addition
he
increased
his
valuation
price
by
105
per
cent
because
of
location
and
land
access.
I
find
no
justification
for
this
in
view
of
the
evidence
of
others.
On
the
other
hand
Mr.
Lee
tended
to
ignore
some
of
the
advantages
that
the
subject
property
may
have
had
over
the
comparables
used,
such
as
its
unique
character,
beauty,
surrounded
by
crown
land,
preserved
in
its
natural
state
and
likely
ideal
for
future
country
estate
development,
but
these
were
in
the
future
and
not
at
V-Day.
I
place
no
relevance
to
Mr.
Swanston's
statement
that
he
would
have
paid
$1,000
per
acre
for
the
property
in
1971.
This
was
said
without
an
offer
being
made
and
in
hindsight,
perhaps
in
relation
to
what
he
did
pay
in
1979.
Also
to
pay
that
price
in
1971
for
the
land,
incur
development
costs
and
then
market
the
property
would
have
necessitated
a
sales
price
not
at
all
consistent
with
other
developments
in
the
surrounding
area
at
that
time.
Mr.
Grose
relied
on
two
comparative
sales
both
dealing
with
special
purchases
at
prices
which
in
the
circumstances
did
not
reflect
a
time
comparison
and
I
feel
these
must
be
disregarded
in
the
final
analysis.
No
reference
was
made
by
the
appellant
as
to
the
value
of
the
residence.
the
Minister
in
his
reply
clearly
spelled
out
that
of
the
$480,000
sale
price
of
the
property
he
was
prepared
to
allow
the
amount
of
$31,270.18
as
its
V-Day
value.
The
onus
is
on
the
appellant
to
refute
this
assumption
by
the
Minister
(as
was
held
in
the
Supreme
Court
of
Canada
in
Johnston
v.
M.N.R.,
[1948]
C.T.C.
195;
3
D.T.C.
1182)
and
he
has
failed
to
do
this.
Similarly
by
his
expert
and
other
evidence
he
has
failed
to
show
that
the
respondent's
reassessment
is
incorrect,
reasons
for
which
are
set
out
above.
The
result
then,
is
that
the
reassessment
by
the
Minister
stands
and
this
appeal
is
dismissed.
Appeal
dismissed.
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