McArthur T.C.J.:
The Appellant appeals the Minister of National Revenue’s assessment dated November 3, 1994 wherein she was assessed $70,456.97 pursuant to section 160 of the Income Tax Act (the “Act"). Subsection 160(1) of the Act provides in effect that where a husband transfers property to his spouse, both husband and wife are liable to pay outstanding taxes, he may have owed at the time of the transfer. The spouse to whom the property is transferred is liable in an amount equal to the equity or net value of the property conveyed, providing no consideration was paid.
Subparagraph 160( 1 )(e)(i) of the Act reads as follows:
(i) the amount, if any, by which the fair market value of the property at the time it was transferred exceeds the fair market value at that time of the consideration given for the property, and...
In 1984, Peter Papatheodorakos transferred a property (Bressani Street) to the Appellant having a net value of $70,000 — when he was liable to pay $205,391 to Revenue Canada for the 1977 to 1982 taxation years.
The Appellant entered Canada from Greece in 1965 where she worked as a seamstress and fur worker, an occupation she continues to the present day. In 1969, she moved to Montreal and married Peter Papatheodorakos. A key part of the Appellant’s testimony was that her father loaned her $10,000 in cash in the winter of 1973 to purchase a house. This evidence was confirmed by her husband and her brother-in-law, who both testified that they were present after dinner one evening, when the Appellant told her father she was looking for a house and he left the table and came back and gave her $10,000 — in cash to be repaid without interest when she was in a position to do so. Her father died in June 1974. In February 1975 — a three unit property on Bressani Street, in Ville St-Laurent, was purchased for $40,500 and registered in her husband’s name. The Appellant submits that the property was purchased using the $10,000 cash, advanced to her by her father two years earlier, together with $3,500 of her own separate savings and a $27,000 mortgage to the Hellenic Trust — all documentation was in the name of her husband. She submits he was a prête-nom for her. She explained that her husband required the collateral to use in the commencement of a restaurant. He opened his own restaurant about two years after the purchase of Bressani Street.
In 1982, the Appellant and her husband purchased their residence in Dorion and title was registered in their joint names. She stated this was a Greek custom.
About November of 1983, Revenue Quebec carried out a search and seizure of the husband’s restaurant because of unpaid taxes. The Appellant testified that her husband’s restaurant was doing poorly in February 1984 and to protect her Bressani Street property from possible creditors she had him transfer it to her reflecting a consideration of $40,500. She assumed the principal balance of $9,542.03 due on the mortgage.
In October 1984, she granted a $35,000 mortgage on the property to Angeliki Stratopoulou. She stated the net proceeds of the mortgage were used for repairs though income tax records indicated an expenditure of only $800 for roof repairs. Tax records further revealed that all income and ex- penses for the property were reported by her husband alone.
In September 1985, she sold the property for $80,000 and stated that she received little or no money after payment of the debt, presumably that of her husband.
The Appellant filed in evidence a note written by her brother-in-law, Nick Kargakos, in Greek, the translation of which is as follows:
(translation of a manuscript written in Greek)
Maria Papatheodorakou agrees with her husband Petros Papatheodorakos that Maria has money of her own and from her father Maria and Petros agreed to buy a house with Maria’s money which will be Maria’s. With the agreement that it will be in the name of Petros but when Maria wishes she may withdraw the name of Petros from the immovable and that he will never be owner of the immovable it will be the property of Maria and Petros agrees to all of this may it be done legally with a lawyer or a notary.
| At Montreal 8 January 1975 |
| Signa/((ture)) | Signat((ture)) of Witness |
| ((signature illegible)) | ((signature illegible)) |
| Signa((ture)) | NICK KARGAKOS |
| M. Papatheodorakou | |
The existence of this note was not revealed until after the Minister’s assessment of the Appellant in 1994. She stated that she kept the note in a safety deposit box. All other relevant documentation has been lost or discarded.
Peter Papatheodorakos declared bankruptcy in 1988. The major creditor was the Quebec Department of Revenue $504,389. The Revenue Canada assessment is dated November 6, 1989.
The issue boils down to determining whether the Appellant was the ac- tual equitable owner of Bressani Street from the time of the purchase in 1975 to the date of its transfer to her in 1984 by her husband Peter.
The Appellant has to establish on a balance of probability that on Febru- ary 7, 1984 her husband Peter did not have an interest in the Bressani Street property. She has failed to do so. There are too many inconsistencies, im- probable occurrences and coincidences to accept the Appellant’s position. Some of these include the following:
1) It is possible but improbable that two years before the property was purchased the Appellant asked her father for money during supper in front of a dinner guest and he returns with $10,000 in cash as a loan.
2) If he did advance the cash, as a loan, it is improbable that he would not have asked for a written receipt of some nature.
3) It is difficult to understand why she waited two years to purchase the property.
4) The January 8, 1975 note raises questions. Why was the note not written by the Appellant or Peter? Why did she keep it until 1994 or 1995 while not retaining other documentation? Why does the date appear to have been written with a different pen than what was used for the remainder of the document?
5) Peter claimed the rental income or losses for Bressani Street over the years.
6) The Appellant did not appear, from her tax returns during the relevant years, to have sufficient income to support the property. Her annual income between 1975 and 1980 does not appear to have exceeded $3,500.
7) The transfer to the Appellant was made three months after Revenue Quebec commenced action against Peter for tax arrears.
8) Peter plead guilty to criminal charges for tax evasion in 1986 and was fined in excess of $100,000. The taxes and fine were never paid and Peter was sentenced to perform community services.
9) The deed from Peter to the Appellant showed a consideration of $40,500, which was the original purchase price.
After weighing all of the evidence, the Appellant has not discharged her burden of proof.
Counsel for the Appellant referred the Court to Linke v. R. (1994), 94 D.T.C. 1549 (T.C.C.). The facts in Linke are somewhat similar to the present but for a significant difference. In Linke , the Appellant was the sole registered owner of a former property four years prior to the property in question and the Court was satisfied that the Appellant’s separate funds were invested in the relevant property. I am not satisfied that Maria Goranitou purchased the Bressani Street property with her own funds and I note that Judge Christie in Linke stated that the case was “close to the line”.
There was no contradictory evidence as to the value of $80,000 as estimated by the Respondent. There was little or no evidence as to expenses or encumbrances to reduce the value of the property below the amount of $70,456.97 as claimed by the Minister.
For these reasons, the appeal is dismissed, with costs, to the Respondent.
Appeal dismissed.
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