Bonner,
TCJ:—The
appellant
appeals
from
an
assessment
of
income
tax
for
his
1977
taxation
year.
At
the
outset
there
were
two
issues.
The
first
was
what
was
the
V-Day
value
of
thirty-seven
shares
of
Metron
Proving
Services
Ltd.
During
the
hearing
the
parties
reached
agreement
and
consented
to
judgment
on
the
basis
that
the
value
of
the
shares
at
V-Day
was
$835
each.
The
second
issue
was
whether
the
appellant
sustained
a
capital
loss
of
$25,000
in
1977
in
respect
of
a
loan
of
money
in
that
amount
made
in
1969
to
one
John
Fitzpatrick.
This
turned
on
one
question
only,
the
value
of
the
note
or
receivable
on
V-Day.
Early
in
1969,
after
meeting
Fitzpatrick
for
the
first
time,
the
appellant
loaned
him
$10,000.
Forty-six
days
later
Fitzpatrick
repaid
the
principal
together
with
interest
in
the
amount
of
$3,000.
In
March
of
1969,
immediately
following
the
repayment,
the
appellant*
loaned
a
further
$25,000
to
Fitzpatrick.
Ninety
days
later
the
note
went
into
default
and
there
followed
a
series
of
broken
promises
to
pay
in
a
week
or
ten
days.
It
appears
that
the
appellant
was
one
of
a
number
of
people
defrauded
by
Fitzpatrick.
The
appellant
testified
that
six
months
after
the
loan
was
made
he
discovered
that
Fitzpatrick
had
borrowed
money
from
a
number
of
other
people,
all
of
whom
were
having
trouble
collecting.
In
March
of
1972
the
appellant
and
a
number
of
other
creditors
sued
Fitzpatrick
in
an
attempt
to
collect.
Eventually
in
1977
Fitzpatrick
was
convicted
of
fraud.
The
appellant’s
counsel
argued
that
it
was
not
until
1972
that
it
became
abundantly
clear
to
the
appellant
and
others
that
legal
action
would
be
necessary
to
collect.
He
argued
further
that
although
an
indebtedness
of
$47,500
two
and
one-half
years
overdue
may
be
of
questionable
value,
the
appellant
claimed
a
deduction
only
in
respect
of
the
$25,000
in
fact
advanced.
As
I
see
it,
long
before
December
31,
1971,
the
note
lost
all
market
value.
On
that
day
the
note
was
two
and
one-half
years
in
default.
A
prudent
buyer
would
not
have
failed
to
make
very
careful
enquiries
in
such
circumstances.
He
might
not
have
been
able
to
discover
all
the
facts.
He
would,
however,
undoubtedly
have
discovered
sufficient
facts
to
lead
him
to
the
conclusion
that
it
would
be
foolish
to
spend
even
a
dollar
to
buy
the
note.
The
appeal
therefore
fails
on
this
issue.
In
the
result
the
appeal
will
be
allowed
and
the
assessment
referred
back
to
the
respondent
for
reconsideration
and
reassessment
on
the
basis
that
the
value
on
V-Day
of
the
appellant’s
shares
of
Metron
Proving
Services
Ltd
was
$835
each.
The
appellant
is
entitled
to
no
further
relief.
Appeal
allowed
in
part.
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