O’Connor
T.C.J.:
With
respect
to
the
mortgage
interest
claimed
by
the
appellant
for
the
years
1988,
1989
and
1990,
the
Minister
has
disallowed
a
portion
thereof,
in
essence
saying
that
the
interest
should
only
have
been
calculated
on
that
portion
of
the
$50,000
after
deducting
an
amount
of
approximately
$24,000,
which
the
lender
owed
to
the
appellant
on
an
interest-free
promissory
note.
The
appellant
contests
this
position,
stating
in
evidence
that
the
said
$24,000
had
been
repaid.
The
respondent
points
to
the
lack
of
a
paper
trail
proving
this.
I
have
found
that
the
appellant’s
testimony
is
credible,
and
I
accept
same.
Consequently
the
full
amounts
of
the
interest
claimed
by
the
appellant
in
those
years
is
allowed.
The
1991
assessment
is
a
nil
assessment
and
cannot
be
the
subject
of
an
appeal
before
this
Court.
Nor
can
I
accept
the
appellant’s
relatively
ingenious
position
that
the
1991
should
year
be
looked
at
because
a
decision
on
it
might
have
affected
his
terminal
loss
realized
on
the
sale
of
the
property
in
February
of
1991.
Consequently,
the
appeal
with
respect
to
the
1991
year
is
dismissed.
As
to
1993,
the
Minister
was
correct
in
denying
the
appellant
the
equivalent-to-married
exemption
because
he
had
been
allowed
a
deduction
for
maintenance.
The
provisions
of
paragraph
118(l)(b)
and
118.5
of
the
Income
Tax
Act
are
applicable.
As
to
the
expenses
claimed
with
respect
to
the
Bruyere
property,
subsequent
to
its
sale
in
February
of
1991,
in
my
opinion
the
Minister
was
correct
in
disallowing
same
because
the
source
of
potential
income
-
namely
the
property
-
for
which
the
monies
had
been
borrowed,
ceased
to
exist
and
was
not
replaced
by
any
income
producing
property,
as
was
the
set
of
circumstances
in
Tennant.
As
to
penalties,
as
mentioned,
I
accept
the
credibility
of
the
appellant’s
testimony.
His
records
were
far
from
perfect,
but
explanations
were
given
as
to
the
lack
of
certain
papers.
In
my
opinion,
however,
he
was
in
good
faith.
And
on
balance,
I
accept
that
the
respondent
has
not
discharged
the
burden
of
proof
and
no
penalties
are
to
be
imposed.
As
to
Charter
arguments
of
the
appellant,
considering
that
the
notice
required
by
Section
57
of
the
Federal
Court
Act
was
not
given
to
the
various
Attorney
Generals,
the
Charter
argument
cannot
be
heard
before
this
Court.
Consequently,
to
the
above
extent,
the
appeals
are
allowed
and
the
matter
is
referred
back
to
the
Minister
for
re-assessment.
I
thank
you
both
for
covering
an
extremely
complicated
situation
in
one
morning.
Appeals
allowed
in
part.
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