Beaubier
J.T.C.C.
(orally):
—
This
matter
was
heard
at
Kelowna,
British
Columbia
on
March
28,
1996,
pursuant
to
the
Informal
Procedure.
The
Appellant
was
the
only
witness.
The
Appellant
was
assessed
for
his
1991
and
1992
taxation
years
on
the
basis
that
he
received
income
from
sales
of
three
properties
in
Kelowna,
British
Columbia,
namely
362
McTavish
Crescent:
$13,112.00
(“McTavish”)
1869
Dallas
Road:
$20,104.00
(“Dallas”)
1840
Crossglen
Court:
$15,284.00
(“Crossglen”)
Each
of
these
properties
will
be
referred
to
by
the
street
name
hereafter.
The
Appellant
admits
that
Dallas
was
on
account
of
income
but
says
that
his
girlfriend,
who
later
became
his
wife,
Michelle
Deleurme,
earned
one-half
of
that
income.
He
appealed
all
of
the
assessments
and
claimed
a
principal
residence
in
respect
of
McTavish
and
Crossglen.
He
purchased
all
the
lots
in
his
name,
built
houses
on
them
and
sold
them.
The
Appellant
is
about
30
years
old.
As
soon
as
he
left
school,
he
began
working
for
Canada
Safeway
in
Kelowna
and
then
in
Vancouver
for
a
total
of
about
nine
years.
When
he
was
25,
Canada
Safeway
bought
him
out
and
he
returned
to
Kelowna
and
began
working
for
his
father
in
the
concrete
business.
He
used
$5,000
of
his
buy-out
money
as
the
down
payment
on
McTavish.
His
mother
guaranteed
his
mortgage
on
the
first
two
properties
that
he
built,
McTavish
and
Dallas.
The
Appellant
and
Michelle
lived
together
in
Vancouver.
They
did
not
live
together
in
Kelowna
until
they
married.
The
Appellant
lived
with
his
parents
in
Kelowna
except
when
he
lived
in
the
properties
described.
The
chronology
of
the
properties
is
straightforward:
Purchased
Lot
/
List
for
Purchase
/
Sale
/
Possession
/
Agreement
McTavish
I
Aug
23/90
/
Feb
4/911
Mar
24/911
Apr
26/91
Dallas
/
Mar
26/91
/
May
14/91
/
Jun
1/911
Jul
12/91
Crossglen
I
Jun
1991
/
Aug
24/911
Feb
2/921
Apr
29/92
The
Appellant
moved
his
bed
and
clothes
into
McTavish
before
he
sold
it.
He
also
moved
into
Dallas
before
he
sold
it.
On
August
10,
1991,
he
married
Michelle.
They
moved
into
Crossglen
in
November
1991.
In
about
June
1992,
the
Appellant
and
Michelle
separated.
They
entered
into
a
mediation
agreement
in
December
1992.
Assets
were
divided
in
June
1993.
They
still
are
not
divorced.
The
Minister’s
assumptions
respecting
McTavish
were
confirmed
by
the
evidence,
excepting
in
respect
to
subparagraphs
(k),
(1)
and
(m),
which
are
the
subject
matter
of
the
litigation
and
which
will
be
discussed.
They
are
in
paragraph
8,
which
reads:
In
reassessing
the
Appellant,
with
respect
to
the
McTavish
Property,
the
Minister
made
the
following
assumptions
of
fact:
(a)
the
Appellant
made
an
offer,
which
was
accepted,
to
purchase
the
McTavish
Property
on
24
March
1990;
(b)
the
Appellant
completed
the
purchase
of
the
McTavish
Property
in
August
1990
for
a
total
cost
of
$36,735.00;
(c)
in
November
1990
the
Appellant
obtained
a
commitment
from
the
Kelowna
District
Credit
Union
(‘KDCU’)
for
a
mortgage
of
$96,000.00,
the
terms
of
which
are
set
out
as
follows:
i.
KDCU
retained
$31,000.00
to
cover
the
cost
of
the
lot;
ii.
$65,000.00
of
the
mortgage
was
available
for
progressive
draws;
iii.
the
first
payment
was
due
on
1
May
1991;
iv.
the
term
of
the
mortgage
was
six
months
with
the
balance
due
on
1
October
1991;
(d)
the
Appellant’s
mother
co-signed
the
mortgage;
(e)
construction
of
a
residence
commenced
in
December
1990;
(f)
the
McTavish
Property
was
listed
for
sale
on
4
February
1991;
(g)
an
offer,
which
the
Appellant
accepted,
was
made
on
the
McTavish
Property
on
24
March
1991
;
(h)
the
sale
price
was
$128,000.00;
(i)
the
completion
date
for
the
sale
was
29
April
1991;
(j)
the
GST
required
to
be
paid,
under
the
provisions
of
section
165
of
the
Excise
Tax
Act,
on
new
previously
unoccupied
houses
was
paid
by
the
purchaser
of
the
McTavish
Property;
(k)
throughout
the
period
the
Appellant
held
the
McTavish
Property
he
resided
with
his
parents;
(l)
the
McTavish
Property
was
not
at
any
material
time
the
principal
residence
of
the
Appellant;
(m)
at
the
time
of
the
purchase
of
the
McTavish
Property
the
Appellant
intended
to
sell
the
McTavish
Property
for
a
profit;
(n)
the
Appellant
did
not
incur
any
expense
in
relation
to
the
McTavish
property
greater
than
the
amount
allowed
by
the
Minister;
(o)
apart
from
the
exception
noted
in
(d)
above
the
Appellant
was
the
only
participant
in
the
McTavish
Property.
The
Minister’s
amended
assumptions
respecting
the
Crossglen
property
were,
with
minor
modifications,
established
except
with
respect
to
subparagraphs
(h)
and
(1).
They
read:
In
so
reassessing
the
Appellant,
with
respect
to
the
Crossglen
Property,
the
Minister
made
the
following
assumptions
of
fact:
(a)
in
June
1991
the
Appellant
made
an
offer,
which
was
accepted,
of
$44,700.00
on
proposed
lot
25
of
proposed
subdivision
of
lot
13
and
14
(the
Crossglen
Property);
(b)
on
24
June
1991
the
Appellant
obtained
a
permit
for
a
single
family
dwelling
on
the
property;
(c)
adjustment,
possession
and
completion
date
were
all
15
July
1991
with
the
total
cost
to
the
Appellant
being
$50,028.30;
(d)
the
Appellant
obtained
a
mortgage
for
$20,000.00
of
the
purchase
price;
(e)
from
10
August
1991
to
1
November
1991]
the
Appellant
lived
with
his
spouse
in
rented
accommodation;
(f)
on
25
August
1991,
before
construction
had
commenced,
the
Appellant
listed
the
Crossglen
Property
for
sale;
(g)
on
1
November
1991
the
Appellant
and
his
spouse
moved
into
the
Crossglen
Property;
(h)
the
listing
agreement
expired
on
30
November
1991
but
the
Appellant
still
intended
to
sell
the
property;
(i)
on
2
February
1992
the
Appellant
again
listed
the
Crossglen
Property
for
sale
at
an
asking
price
was
$169,800.00;
(j)
the
Appellant
sold
the
Crossglen
Property,
for
$169,800.00;
(k)
the
sale
was
completed
on
29
April
1992;
(l)
at
the
time
of
the
purchase
of
the
Crossglen
Property
the
Appellant
intended
to
sell
the
Crossglen
Property
for
a
profit;
(m)
the
Appellant
did
not
incur
any
expense
in
relation
to
the
Crossglen
Property
greater
than
the
amount
allowed
by
the
Minister.
The
Appellant
registered
himself
under
the
GST
and
received
credits
for
both
McTavish
and
Dallas.
He
did
not
do
this
for
Crossglen.
The
Appellant
put
$5,000
of
his
own
money
into
McTavish.
The
rest
was
borrowed.
Each
property
thereafter
absorbed
the
proceeds
of
the
preceding
property.
In
respect
to
the
question
of
whether
Dallas
was
a
sale
of
property
owned
by
the
Appellant
and
his
then
fiancé
Michelle,
the
Court
notes
that
no
evidence
was
led
that
there
was
any
agreement
in
writing
between
them
respecting
Dallas.
All
of
the
documents
filed
respecting
Dallas,
except
for
the
receipt
for
the
purchase
of
the
building
permit,
are
in
the
Appellant’s
name.
The
receipt
is
in
Michelle’s
name.
The
Appellant’s
mother
would
not
co-sign
for
any
name
but
her
own
child’s.
She
co-signed
for
Dallas.
The
Appellant
lived
at
his
parents’
home
while
he
built
Dallas
and
used
their
address,
not
Michelle’s.
The
Appellant’s
dealings
with
GST
in
respect
to
Dallas
were
in
his
own
name.
In
view
of
all
of
the
foregoing
and
especially
because
the
title
was
in
the
Appellant’s
name
and
because
no
matrimonial
breakup
documents
describing
Dallas
as
a
business
venture
of
Michelle
and
the
Appellant
exist,
the
Court
finds
that
Dallas
was
an
adventure
of
the
Appellant
only.
The
appeal
on
this
point
is
dismissed.
In
Happy
Valley
Farms
Ltd.
v.
Minister
of
National
Revenue
(sub
nom.
Happy
Valley
Farms
Ltd.
v.
The
Queen),
(sub
nom.
Happy
Valley
Farms
Ltd.
v.
R.),
[1986]
2
C.T.C.
259,
86
D.T.C.
6421
(F.C.T.D.)
at
page
263
(D.T.C.
6423-24),
Rouleau,
J.
listed
the
essential
criteria
for
determining
if
a
real
estate
transaction
was
a
business
venture.
Applying
them
to
the
McTavish
and
Crossglen
transactions,
the
Court
finds:
1.
Nature
of
Property
Sold.
In
both
cases
the
Appellant
bought
a
lot
and
built
a
house
on
it.
He
says
he
moved
from
McTavish
and
from
Crossglen
due
to
water
problems.
He
is
still
paying
on
a
judgment
because
of
that
respecting
Crossglen.
His
mother
did
not
co-sign
Crossglen
and
he
and
Michelle
lived
in
it
from
November
1991
until
it
was
sold
in
April
1992.
2.
Length
of
Period
of
Ownership.
McTavish
was
owned
for
eight
months;
Crossglen
for
about
ten
months.
Both
were
listed
within
about
three
months
after
the
lot
was
purchased.
3.
Frequency
and
Number
of
Other
Similar
Transactions.
McTavish
and
Dallas
were
very
similar;
Crossglen
varied
slightly.
4.
Work
Expended
and
Effort
to
Market.
The
Appellant
built
all
the
homes
and
his
name
is
on
almost
all
the
papers.
His
mother’s
name
appears
far
more
frequently
than
Michelle’s
on
the
transactions.
All
of
the
properties
were
listed
for
sale
by
him
shortly
after
purchase.
5.
Circumstances
Responsible
for
Sale.
Water
was
a
factor
in
each
of
McTavish
and
Crossglen.
However,
it
was
common
and
repetitive
as
a
factor
throughout
the
area.
From
some
documents,
it
appears
that
the
Appellant
did
not
dig
his
drainage
tiles
deep
enough
to
use
gravity.
There
was
no
sudden
unforeseen
or
unforeseeable
occurrence
triggering
a
sale
on
either
property.
The
water
seepage
should
have
been
evident
during
construction
or
should
have
been
a
known
factor
in
the
area.
6.
Motive.
The
Appellant
did
not
have
a
large
income.
Michelle’s
income
was
very
small.
Practically
speaking,
he
could
not
afford
to
operate
a
house
and
pay
the
mortgage
payments
he
was
obliged
to
pay.
This
factor
plus
the
rapid
listings
and
turnovers
indicate,
along
with
the
other
evidence
and
factors,
that
the
Appellant’s
motive
in
each
case
was
to
buy,
build
and
sell.
The
Court
finds
in
particular
respecting
Crossglen
that
it
is
obvious
that
he
had
enough
money
and
experience
then
that
his
mother’s
covenant
was
not
necessary.
He
also
had
bought
and
sold
enough
that
he
by
then
would
have
recognized
that
the
better
way
to
go
respecting
GST
on
Crossglen
was
other
than
as
a
builder
in
order
to
qualify
as
a
principal
residence.
The
Court
finds
this
especially
in
the
light
of
the
August
listing
at
a
price
that
the
Appellant
eventually
sold
the
property
for.
Therefore,
both
transactions
were
sales
for
the
purpose
of
gaining
a
profit,
and
it
was
the
intention
of
the
Appellant
from
the
beginning
to
do
that.
The
appeal
is
dismissed
in
its
entirety.
Appeal
dismissed.