Bonner,
TCJ
[ORALLY]:—The
appellant
appeals
from
assessments
of
income
tax
for
the
1977,
1978
and
1979
taxation
years.
On
assessment
the
Minister
disallowed
deductions
of
the
losses
sustained
by
the
appellant
in
his
horse
racing
and
raising
activities.
All
of
the
operations
were
carried
on
by
the
appellant
in
concert
with
Dr
B
M
Chandler.
In
the
case
of
one
horse
a
third
person
was
involved
with
the
other
two.
It
was
the
Minister’s
position
that
the
relationships
between
the
appellant
and
the
two
others
and
between
the
appellant
and
Dr
Chandler
were
not
partnerships
and
that
the
activity
carried
on
was
not
a
business
but,
rather,
was
a
hobby.
Generally
speaking,
much
of
the
testimony
given
at
the
hearing
as
to
the
activities
of
the
appellant
and
Dr
Chandler
was
summarized
in
Exhibit
A-5.
It
is
unnecessary
to
repeat
it
at
this
time.
I
say
“generally
speaking”
because
I
cannot
conclude
on
the
evidence
that
the
activities
in
question
were,
as
asserted
by
the
appellant,
carried
on
with
any
reasonable
expectation
of
profit
or
with
profit
as
the
ultimate
objective
as
would
be
the
case
if
the
operation
were
a
business.
The
financial
results
summarized
in
Schedule
II
to
the
reply
to
notice
of
appeal,
the
accuracy
of
which
Schedule
is
admitted,
show
consistent
losses.
Expenses
have
risen
from
approximately
$8,700
in
1977
to
$15,500
in
1981.
Revenues
during
the
period
have
ranged
from
nil
to
a
high
of
$4,600.
The
1982
financial
results
and
projected
current
financial
results
were
not
given,
but
I
infer
from
the
tenor
of
the
evidence
that
further
losses
have
been
sustained.
I
can
see
no
business
reason
for
carrying
on
in
the
face
of
such
discouraging
results
in
the
absence
of
some
clearly
demonstrated
basis
for
belief
in
a
brighter
future.
No
such
basis
was
shown
to
exist.
It
was
said,
for
example,
that
had
one
of
the
horses
turned
out
as
well
as
its
full
brother
a
sale
price
of
$15,000
could
have
been
realized
during
the
year
in
question.
It
was
not
shown
that
any
of
the
disappointments
referred
to
in
the
evidence
resulted
from
events
which
were
not
normal
risks
of
the
activities
undertaken
by
the
Appellant
and
Dr
Chandler.
It
was
not
shown
that
the
appellant
and
Dr
Chandler
were
in
a
position
to
improve
future
performance
in
the
area
of
risk
management.
The
persistence
of
the
appellant
and
Dr
Chandler
in
carrying
on
in
the
face
of
past
losses
which
show
every
prospect
of
repeating
themselves
points,
in
my
view,
to
a
conclusion
that
from
the
outset
the
activity
in
question
was
a
hobby.
It
may
very
well
be,
as
suggested
by
Dr
Ling,
that
throughout
the
years
in
question
and
up
to
the
present
time
there
have
been
improvements
in
the
economic
climate
in
the
Maritime
provinces
so
far
as
horsemen
are
concerned.
Increases
in
purses
and
the
new
stakes
programs
may
very
well
improve
the
lot
of
those
who
race
horses
and
those
who
breed,
train
and
sell
the
animals.
However,
it
was
not
shown
that
the
appellant
was
in
a
position
to
derive
sufficient
benefit
from
such
improvements
as
to
enable
him
to
predict
an
end
to
the
losses.
Subjective
optimism,
however
sincere,
is
no
substitute
for
a
reasonable
expectation
of
profit,
that
being
an
objective
test.
Finally,
I
will
observe
that
the
decision
of
the
Tax
Review
Board
in
Norma
G
Hall
and
Stirling
C
Lane
v
MNR,
[1983]
CTC
2003;
83
DTC
8,
was,
just
as
the
present
case,
a
case
which
turned
on
its
own
facts.
That
decision
established
no
principle
of
law
which
has
application
in
the
present
case.
For
the
foregoing
reasons
the
appeals
will
be
dismissed.
Appeal
dismissed.
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