William E. Richards v. Minister of National Revenue, [1986] 1 CTC 2601, 86 DTC 1475

Bonner, T.C.J. [ORALLY]:—The sole issue in this appeal is whether the respondent erred in assessing tax on the basis that the V-Day value of a 295.53 acre parcel of land sold by the appellant during the 1976 taxation year was $89,000, or approximately $300 per acre.

It was the appellant’s contention that the value was $1,048 per acre. The land in question is located in the Bragg Creek area, due west of the southerly extremity of Calgary. It is zoned for agricultural use. The appellant purchased part of the land in 1964 for $112 per acre and the rest of it in 1965 for $155 per acre. The whole was sold in 1976 for $1,500 per acre.

The appellant gave evidence at the hearing of the appeal. He described the property as recreational. He stated that it was partially cleared to create a park-like environment. Access to the property from Calgary was, he said, very good. All but 2.5 miles of the route to the property was paved road. There was a dam on the property which created a six-acre lake which was stocked with fish. The easterly area of the property, the appellant said, was higher than the rest and offered a panoramic view of the Rocky Mountains.

The appellant contended that the property is unique and that it is therefore not easy to make comparisons with other parcels. What the appellant called the peculiar difficulty in evaluating the property was, he said, due mainly to the mountain view, the dam and lake and the availability of an accessible site with an excellent view. That site was ultimately used by the person who purchased from the appellant for the erection of a home. The appellant contended further that particularly because the property was unique the V-Day value should be calculated on the basis that the increase in value between the date of purchase and the date of sale took place at an even rate.

At this point I will make two observations in respect to the appellant’s contentions. First, every parcel of land is in some way unique. While I have no doubt that the appellant’s land possessed the features to which he referred I reject the proposition that such features, whether singly or in combination, are so overwhelming that the sales comparison or market data approach cannot produce a reliable market value figure. Secondly, although the rate of increase in the value of land may conceivably be constant over a period of time the question of whether the rate was or was not constant over any given period of time is a question of fact. The only evidence before me on the question of the rate of increase is that of Mr. Schmitt who said that the value of agricultural real estate dropped from 1966 to 1971 and rose sharply thereafter, as shown on the graph attached to his report. He said further that the value of recreational land in agricultural areas remained constant over the period between 1966 and 1971. The use of the sale price in arriving at the value of land at a point in time several years prior to the sale is not logically justified, in my view, in the absence of evidence as to the changes, if any, in the market which have taken place in the interim.

In this regard reference might be made to the decision of the Supreme Court of Canada in Roberts and Bagwell v. The Queen, [1957] S.C.R. 28 where it is stated at 36-37:

In my view, evidence of a sale after the enactment can, in the absence of special circumstances, be relevant to the value prior to the enactment. The sale must be shown to be as free in all respects from extraneous factors such as prior sales and made within such time as the evidence shows prices not to have changed materially from those before the critical date. In other words, the mere circumstance of the sale being before or after a particular date cannot nullify the relevance of subsequent sales while the general market conditions have remained the same. The rule should allow the Court to admit evidence of such sales as it finds, in place, time and circumstances, to be logically probative of the fact to be found.

Mr. Schmitt, whose qualifications to give opinion evidence on matters of land value were admitted, appraised the property and concluded that V- Day value was $89,000. His report, Exhibit R-2, speaks for itself and I need not summarize it at this time. Two aspects of his evidence should, however, be noted.

First, his demeanour and responses, particularly during cross-examination, led me to conclude that he viewed his role, to some extent at least, as that of an advocate for his Minister's cause. It is the duty of an expert witness to give his honest opinion, period. When he assumes the mantle of an advocate the value of his testimony is severely decreased.

Secondly, Mr. Schmitt was confused as to the location on the ground of the easterly boundary of the land. When he made his inspection he assumed that it was situated some distance to the west of its actual location. However, Mr. Schmitt did apply the per acre rate which he arrived at on the market data basis to the proper acreage figure. The effect of that error is difficult, indeed almost impossible, to quantify. Because the land rises to the east the result of the confusion would seem to be that Mr. Schmitt did not place sufficient emphasis on the quality of the view.

The deficiencies in Mr. Schmitt's evidence might, had the appellant himself called expert evidence as to value, have had a bearing on the relative weight to be given to the divergent conclusions of the two experts. However, standing alone those deficiencies do not point to some specific higher rate per acre.

On the available evidence I am not satisfied that Mr. Schmitt's result was incorrect. He found only three comparables which sold at a higher price per acre, namely, Comparable Number 5 which sold in February 1971 at $350 per acre for 80 acres. That parcel was substantially smaller than the subject and I accept the evidence that smaller parcels of recreational land generally fetch higher unit values.

Next, there was Comparable Number 9 which Mr. Schmitt described as having an excellent mountain view. It, however, was ten miles closer to Calgary and was therefore slightly superior.

Finally, Comparable Number 8 which Mr. Schmitt described as having a spectacular view of valley and mountains sold in July of 1971 for only $9.22 per acre more than the value which Mr. Schmitt attributed to the appellant's land. The difference is insignificant.

On the preponderance of evidence I can find no basis for concluding that the value used by the respondent on assessment was incorrect. The appeal will therefore be dismissed.

Appeal dismissed.