Goetz,
TCJ:—The
appeals
of
C
Valery
Construction
Ltd
and
LS
Ross
Enterprises
Ltd
were
heard
on
common
evidence.
The
appeal
of
C
Valery
Construction
Ltd
(hereinafter
known
as
“‘C
Valery”)
relates
to
its
1976
taxation
year.
The
appeal
of
LS
Ross
Enterprises
Ltd
(hereinafter
known
as
“LS
Ross”),
relates
to
its
1977
taxation
year.
Issue
The
determination
of
the
effective
date
of
a
certain
sale
made
by
the
appellants
with
respect
to
a
property
known
as
the
Valross
Subdivision.
Facts
C
Valery
Construction
Ltd
and
LS
Ross
Enterprises
Ltd
entered
into
a
partnership
whereby
they
each
own
50
per
cent
of
what
is
known
as
the
Valross
Subdivision.
On
September
30,
1976,
the
partnership
transferred
21
lots
of
the
Valross
Subdivision
to
C
Valeri
in
trust,
who
entered
into
an
agreement
of
purchase
and
sale
with
T
Valeri
Construction
Ltd
on
behalf
of
“C
Valery”
and
“LS
Ross”.
It
should
be
noted
that
C
Valery’s
name
is
misspelled
in
some
of
the
documentation.
T
Valeri
was
the
son
of
Clemente
Valery.
Among
other
provisions
in
this
agreement,
it
was
set
out
that
the
closing
date
of
the
transaction
would
be
November
30,
1976.
On
November
3,
1976,
the
partnership
executed
a
transfer
of
the
Valross
property
to
T
Valeri
Construction
Ltd
and
on
the
same
date
T
Valeri
Construction
Ltd
acknowledged
that
the
covenants
and
terms
of
the
agreement
of
“purchase
and
sale”
should
not
merge
on
the
deliverance
of
the
conveyance.
Meanwhile
T
Valeri
Construction
Ltd
was
able
to
arrange
with
its
bank
to
get
a
loan
of
$60,000
as
the
down
payment
and
the
mortgage
for
$570,000
for
the
balance
effective
as
of
November
30,
1976.
There
was
a
further
document
entered
into
by
the
partners
whereby
it
was
directed
through
C
Valery
in
trust,
to
T
Valeri
Construction
Ltd
to
make
the
balance
due
on
closing
of
the
sale
on
November
30,
1976.
Clemente
Valery
was
president
of
C
Valery
Construction
Ltd.
The
transfer
of
the
property
to
T
Valeri
Construction
Ltd
was
delivered
to
the
company
on
November
30,
1976,
and
the
mortgage
referred
to
was
delivered
to
the
appellants
on
the
same
day.
It
was
T
Valeri
Construction
Ltd’s
intention
to
construct
homes
on
lots
of
the
subdivision,
sell
them
and,
as
they
did
so,
to
pay
on
account
of
their
mortgage.
This
company
was
approached
by
the
appellants
suggesting
postponing
the
clos-
ing
date
to
January
1977,
to
which
T
Valeri
Construction
Ltd
agreed.
All
documents
were
held
in
escrow
in
the
office
of
Lewis
Ross
who
was
the
president
of
LS
Ross
Enterprises
Ltd.
LS
Ross,
being
a
lawyer,
had
his
own
law
firm
and
acted
for
the
appellants.
T
Valeri
relied
upon
the
advice
of
his
father
who
was
being
instructed
by
Lewis
Ross
in
his
capacity
as
a
lawyer.
A
statement
of
adjustments
was
effected
as
of
November
30,
1976
but
the
vendor
paid
land
taxes
to
the
end
of
December
1976.
Findings
The
fiscal
year
of
C
Valery
Construction
Ltd
ended
on
December
31,
1976
whereas
the
fiscal
year
of
the
appellant
LS
Ross
Enterprises
Ltd
ended
on
September
30,
1977.
The
effective
date
of
the
sale
was
the
same
as
the
closing
date.
T
Valeri
Construction
Ltd
knew
that
it
was
unable
to
do
any
construction
work
until
March
of
1977.
Consequently
it
went
along
with
the
request
of
the
vendors
to
delay
registration
of
the
transfer
and
mortgage
until
January
1977.
Unfortunately,
the
agreement
between
parties
to
extend
the
closing
date
to
January
1977
was
not
reduced
to
writing,
which
is
rather
surprising
considering
the
fact
that
Lewis
Ross
stated
in
evidence
that
he
was
an
experienced
commercial
lawyer.
It
might
also
be
pointed
out
that
Lewis
Ross
was
the
president
and
sole
owner
of
LS
Ross
Enterprises
Ltd.
I
can
only
conclude
from
this
that
he
was
extremely
familiar
in
dealing
with
this
type
of
land
transaction.
The
purpose
of
the
vendors
in
delaying
the
registration
of
the
transfer
and
mortgage
to
January
was
for
tax
purposes
and,
of
course,
there
is
nothing
wrong
in
this.
Counsel
for
the
respondent
relied
basically
on
two
facts:
that
the
agreement
of
purchase
and
sale
disclosed
the
closing
date
of
November
30,
1976
and
that
there
was
nothing
in
writing
to
indicate
an
extension
of
time
within
which
to
register
the
transfer
and
mortgage.
Counsel
for
the
appellant,
on
the
other
hand,
argued
quite
forcibly
that
the
conduct
of
the
parties
corroborated
and
substantiated
their
oral
agreement.
The
alleged
oral
agreement
between
the
parties
was
to
delay
registration
to
January
1977,
even
though
the
purchaser
T
Valeri
Construction
Ltd
had
to
pay
interest
of
approximately
$5,000
between
November
30
and
the
actual
date
of
registration
on
January
4,
1977.
He
would
have
had
to
pay
interest
in
any
event.
Registration
was
effected
on
that
date
when
T
Valeri
Construction
Ltd
turned
over
to
Lewis
Ross’
law
firm
(Ross
and
Vasan)
the
land
transfer
tax
and
other
expenses
relating
to
the
registration
of
the
transfer
and
the
mortgage.
Counsel
for
the
respondent
placed
great
emphasis
on
the
fact
that
T
Valeri
Construction
Ltd
was
willing
to
pay
the
$5,000
in
interest
to
the
date
of
registration
but
I
see
nothing
significant
about
this
because
his
agreement
with
his
mortgagee
was
to
the
effect
that
the
mortgage
would
be
paid
as
he
sold
the
various
lots
in
1977.
This
was
impossible
for
him
to
do
because
he
could
not
start
construction
until
March
of
1977.
The
figures
in
the
statement
of
adjustments
remained
the
same
as
they
related
to
vendor
and
purchaser.
There
was
no
need
to
execute
or
to
draw
a
new
statement
of
adjustments
in
January
1977.
The
$60,000
down
payment
was
in
Ross
and
Vasan
trust
account
where
it
remained
until
the
transfer
was
registered.
There
was
no
need
for
T
Valeri
Construction
Ltd
to
take
possession
of
the
property
until
they
could
work
on
it.
The
close
relationship
between
Lewis
Ross,
Clemente
Valery
and
T
Valeri,
son
of
Clemente
Valery
to
my
mind
is
a
partial
explanation
for
the
lack
of
documentation
dating
to
the
extension
of
time
within
which
to
register
to
the
transferred
mortgage.
These
three
gentlemen
all
gave
evidence
and
I
found
them
credible
witnesses
and
not
shaken
in
cross-examination.
I
find
that
although
there
was
no
documentation
of
the
extension
of
time,
the
acts,
deeds
and
words
of
these
three
companies
substantiate
the
agreement
of
extension
of
time
within
which
the
registration
was
to
be
effected
on
January
4,
1977,
being
really
the
final
effective
and
closing
date
of
the
transaction.
There
was
no
need
to
file
a
caveat
or
any
other
document
warning
third
parties
in
light
of
the
trust
that
existed
between
the
three
men,
C
Valery,
Lewis
Ross
and
T
Valeri,
in
that
I
accept
their
evidence
in
toto.
I
therefore
allow
the
appeals.
Appeals
allowed.
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