Tardif
T.C.J.:
This
is
an
appeal
from
an
assessment
based
on
subsections
152(8)
and
251(1)
and
section
160
of
the
version
of
the
Income
Tax
Act
(“the
Act’),
R.S.C.
1985,
c.
1
(5th
Supp.),
that
applies
to
this
case.
The
issue
is
whether
or
not
the
appellant
and
Jacques
Lafond
were
dealing
with
each
other
at
arm’s
length
when
an
immovable
property
was
sold
on
May
27,
1993.
If
they
were
not,
the
Court
will
have
to
determine
what
the
fair
market
value
of
the
property
was
at
that
time.
Although
no
admissions
were
made
in
respect
of
the
facts
set
out
in
the
Reply
to
the
Notice
of
Appeal,
I
consider
it
helpful
to
reproduce
those
facts.
[TRANSLATION]
4.
In
making
the
reassessment
for
$80,000
under
section
160
of
the
Income
Tax
Act,
the
Minister
of
National
Revenue
relied
inter
alia
on
the
following
facts:
(a)
On
or
about
May
27,
1993,
Jacques
Lafond
sold
the
appellant
an
immovable
property
(land
and
a
building)
at
200
Rue
St-
Georges
in
Trois-Rivières
for
$125,000,
of
which
$100,000
was
paid
in
cash.
(b)
The
property
was
valued
at
$242,600
for
municipal
taxation
purposes,
and
its
fair
market
value
on
May
27,
1993,
was
at
least
$205,000.
(C)
The
value
of
$242,600
entered
on
the
municipal
roll
produced
in
November
1994
for
1995
was
not
contested
by
the
appellant.
(d)
At
the
time
of
the
sale,
Jacques
Lafond
was
indebted
to
the
Minister
of
National
Revenue
for
his
1993
and
preceding
taxation
years.
(e)
In
a
written
mortgage
application
made
to
the
Caisse
Populaire
de
Notre-Dame-de-Trois-Rivières
(“the
credit
union”),
the
appellant
described
himself
as
the
co-owner,
along
with
Jacques
Lafond,
of
the
Les
Ailes
Piquantes
Buffalo
restaurant
in
Cap-
de-la-Madeleine.
(f)
At
the
time
he
applied
for
the
mortgage,
the
appellant
was
only
marginally
solvent.
He
had
reported
income
of
$10,640
in
1990,
$6,800
in
1991
and
$3,964
in
1992
in
his
annual
tax
returns.
The
credit
union
was
not
provided
with
an
appraisal
of
the
property.
(g)
Les
Ailes
Piquantes
Buffalo
was
the
firm
name
used
in
the
district
of
Trois-Rivières
by
2868-8521
Québec
Inc.,
a
corporation
established
by
Jacques
Lafond.
Its
directors
were
Jean
Lafond,
Sophie
Lafond
and
Estelle
Simon,
who
were,
respectively,
Jacques
Lafond’s
son,
daughter
and
de
facto
spouse.
(h)
At
the
time
the
above
firm
name
was
registered
and
when
assets
were
purchased
for
the
purpose
of
operating
a
restaurant
in
Trois-Rivières
in
January
1992,
Jean
Lafond
was
the
president
of
the
said
company.
(i)
On
his
1992
T-1,
the
appellant
stated
that
he
was
an
employee
of
Les
Ailes
Piquantes
Buffalo.
(j)
On
November
30,
1992,
the
appellant
and
Jacques
Lafond
applied
jointly
to
the
credit
union
for
a
$25,000
loan
to
open
a
new
restaurant
in
Cap-de-la-Madeleine.
Jean
Lafond
gave
$19,000
in
savings
as
security
and
the
appellant
stood
surety.
(k)
A
second
loan
for
$30,000
that
incorporated
the
first
loan
and
that
was
for
the
operation
of
the
Les
Ailes
Piquantes
Buffalo
restaurant
in
Cap-de-la-Madeleine
was
made
by
the
same
credit
union
to
2868-6772
Québec
Inc.
on
July
26,
1993.
The
appellant
and
Jacques
Lafond
both
stood
surety
for
that
loan.
(l)
The
credit
union
agreed
to
loan
money
to
the
appellant
basically
because
Jacques
Lafond
agreed
to
stand
surety.
(m)
2868-6772
Québec
Inc.
had
been
incorporated
on
November
8,
1991,
with
the
appellant
as
a
shareholder
and
director.
The
other
directors
were
Jean
Lafond,
Sophie
Lafond
and
Estelle
Simon.
(n)
On
December
31,
1989,
Jacques
Lafond’s
assets
had
a
net
value
of
$273,000,
but
he
claimed
that
in
1993
he
had
to
liquidate
those
assets
to
support
himself
and
that
he
had
only
a
part-time
job
at
Les
Ailes
Piquantes
Buffalo.
(0)
During
the
period
prior
to
its
sale,
the
property
was
not
listed
with
any
real
estate
broker
and
no
advertising
was
done
even
though
the
vendor
could
thereby
have
informed
and
interested
a
greater
number
of
potential
purchasers
and
thus
obtained
the
best
possible
price.
(p)
At
the
time
of
the
sale,
Jacques
Lafond
owed
more
than
$133,039.28
in
income
tax
for
1986
to
1989.
Notices
of
assessment
to
that
effect
were
issued
on
November
4,
1992,
and
no
notice
of
objection
was
served
by
Jacques
Lafond.
(q)
At
the
time
the
sale
of
the
property
in
question
was
being
negotiated
and
closed,
the
appellant
and
Jacques
Lafond
were
not
dealing
with
each
other
at
arm’s
length,
and
the
agreed
price
of
$125,000
was
at
least
$80,000
lower
than
the
fair
market
value
of
the
property.
(r)
During
the
discussions
prior
to
the
notice
of
assessment
being
issued,
the
appellant
refused
to
allow
the
Department
of
National
Revenue
official
responsible
for
making
an
appraisal
of
the
building
to
go
inside.
Jacques
Lafond
testified
at
length.
Although
it
was
he
who
initiated
the
transaction,
he
did
not
provide
much
of
an
explanation
of
the
reasons
for
the
sale.
He
basically
indicated
that
the
property
involved
in
the
transaction
to
which
this
case
relates
had
been
bequeathed
to
him
by
his
mother.
When
he
inherited
the
two-storey
building
in
1988,
one
of
the
two
premises
was
rented.
The
second
premises
were
then
rented
to
the
same
tenant,
who
later
sublet
them
until
the
lease
ended
in
March
1993.
At
the
time
of
the
transaction
in
May
1993,
both
premises
were
vacant,
although
one
of
them
had
only
been
vacant
since
March
of
that
year.
According
to
Mr.
Lafond,
the
last
occupant
of
the
building
left
it
in
an
appalling
state,
a
point
to
which
I
will
return
below.
Mr.
Lafond
said
that
the
sale
price
of
the
property
was
$125,000
because
of
the
very
substantial
damage;
the
municipal
assessment
was
much
higher
at
$200,000.
Mr.
Lafond
explained
that
the
principal
tenant
had
always
paid
him;
he
therefore
did
not
see
fit
to
visit
the
premises
before
signing
a
release
stating
that
he
was
satisfied
with
their
condition
at
the
end
of
the
lease.
Mr.
Lafond
also
said
that
he
was
very
familiar
with
the
construction
industry;
he
had
himself
rebuilt
the
building
after
a
fire
in
the
late
1970s.
He
maintained
that
the
inconveniences
and
problems
associated
with
renting
the
property
were
what
made
him
decide
to
sell
it.
Since
the
property’s
sale
price
is
one
of
the
fundamental
aspects
of
this
case,
it
would
have
been
interesting
and
above
all
relevant
to
hear
an
explanation
of
why
the
property
was
not
repaired
and
why
no
attempt
was
made
to
find
other
tenants;
these
are
two
points
that
could
have
had
a
major
impact
on
the
property’s
market
value,
since
a
commercial
property
in
which
the
premises
are
occupied
does
not
have
the
same
value
as
an
unoccupied
property.
The
property
could
have
been
fixed
up
to
make
it
more
attractive
to
potential
purchasers
and
tenants;
or,
assuming
that
the
cost
was
prohibitive
—
which
could
not
be
shown
since
no
estimate
was
prepared
—
an
effort
could
have
been
made
to
find
one
or
more
tenants
who
would
have
taken
it
upon
themselves
to
fit
out
and/or
repair
the
premises
to
suit
their
needs.
Nothing
of
the
sort
was
done;
Mr.
Lafond
simply
maintained
that
he
told
his
own
network
of
acquaintances
that
he
wanted
to
sell
his
property,
ad-
ding
that
word
of
mouth
was
the
quickest,
most
effective
and
most
economical
way
to
sell
property
in
Trois-Rivières.
As
regards
the
price,
he
indicated
that
he
had
asked
for
what
it
was
worth,
no
more
and
no
less.
The
evidence
showed
that
he
did
not
have
the
property
appraised
by
experts
or
consult
real
estate
brokers
to
find
out
its
value.
He
determined
the
price
based
essentially
on
his
own
knowledge
of
the
market
and
on
the
fact
that
the
property
was
unoccupied
and,
so
he
said,
in
an
appalling
state.
According
to
Mr.
Lafond,
absolutely
everything
had
to
be
redone;
he
testified
that
the
walls,
ceilings,
stairs
and
partitions
had
to
be
rebuilt
and
that
the
electricity,
the
plumbing
and
the
heating
system
were
so
damaged
that
they
had
to
be
completely
overhauled.
The
cost
of
the
repairs
would
have
been
several
tens
of
thousands
of
dollars.
Given
the
magnitude
of
the
damage
described,
which
will
be
commented
on
below,
the
Court
said
that
it
was
sceptical
about
the
explanation
given
to
justify
doing
absolutely
nothing
to
obtain
compensation
from
the
tenants
for
the
restoration
of
the
premises.
Mr.
Lafond
said
that
he
trusted
the
principal
tenant
completely
and
therefore
blindly
signed
a
release
preventing
him
from
bringing
court
proceedings
to
claim
compensation
for
the
damage;
yet
the
premises
were
occupied
by
a
subtenant
at
the
end
of
the
lease,
which
should
have
raised
some
concerns.
Moreover,
given
the
scope
and
significance
of
the
damage
described,
it
would
have
behooved
Mr.
Lafond
not
to
throw
in
the
towel
so
easily.
I
see
no
point
in
going
any
further
on
this
issue,
since
the
evidence
as
a
whole
is
illuminating,
enabling
one
to
better
understand
certain
conduct.
Those
are
the
various
factors
on
the
basis
of
which
Mr.
Lafond
set
the
price
of
his
property
at
$125,000.
How
did
he
go
about
finding
one
or
more
interested
persons?
He
did
absolutely
nothing
except
tell
those
around
him
that
he
intended
to
sell
so
that
the
grapevine
could
do
its
work.
He
did
not
hire
a
real
estate
agent
or
broker;
he
did
not
pay
for
any
advertising
or
put
up
a
sign
indicating
that
his
property
was
for
sale.
The
appellant
purchased
the
property
for
$125,000.
Why
did
he
purchase
it?
In
his
testimony,
he
explained
in
a
vague
and
ambiguous
way
that
he
did
so
for
speculative
purposes.
He
said
that
he
knew
the
owner
of
the
McDonald’s
restaurant
franchises
in
the
Trois-Rivières
area
and
hoped
to
resell
the
property
to
him
for
the
purpose
of
setting
up
a
restaurant.
Although
the
surface
area
of
the
land
was
not
sufficient
to
carry
out
such
a
plan,
the
appellant
took
no
steps
to
present
the
promoter
of
the
project
with
an
attractive
proposal.
Indeed,
the
Court
doubts
that
the
appellant
even
offered
his
property.
The
appellant
was
not
very
explicit
about
his
project,
which
no
doubt
never
got
beyond
the
imagination
stage.
Since
the
appellant
was
not
very
well
off
and
his
income
was
very
modest,
it
was
totally
unreasonable
and
unrealistic
for
him
to
venture
into
a
project
that
was
so
poorly
defined
and
that
for
all
practical
purposes
had
no
chance
of
success.
What
is
more,
the
appellant
was
unaware
of
something
that,
in
the
circumstances,
was
very
important:
the
area
of
the
lot.
The
property
was
moreover
a
substantial
asset,
to
say
the
least,
for
someone
whose
income
was
so
small.
Despite
that
reality
and
the
fact
that
he
had
to
make
large
monthly
payments,
he
as
good
as
did
not
visit
the
property
before
purchasing
it.
He
did
not
try
to
negotiate
a
lower
price;
he
accepted
the
state
of
the
premises
and
the
price
asked
by
the
vendor
unconditionally.
After
the
purchase,
he
did
not
begin
any
work
or
take
any
concrete
steps
to
minimize
the
cost
of
the
obligations
he
had
to
meet.
He
did
absolutely
nothing
to
try
to
rent
the
property,
if
only
for
an
amount
that
would
have
enabled
him
to
make
his
mortgage
payments.
Despite
all
these
facts,
the
appellant
had
no
fallback
plan
in
case
he
was
unable
to
sell
his
property
for
the
purpose
of
setting
up
a
restaurant.
Why
did
he
agree
to
pay
$125,000
to
purchase
the
property?
He
never
really
explained
this.
Despite
the
uncertainty
of
his
goal,
his
rather
unrealistic
plans,
the
totally
appalling
state
the
property
was
obviously
in
(according
to
him),
his
limited
ability
to
pay,
his
low
income
and
his
lack
of
cash,
he
did
not
turn
to
a
consultant
to
determine
the
real
extent
of
the
damage,
the
condition
of
the
property
and
its
actual
relative
value.
He
agreed
to
pay
what
was,
in
view
of
his
ability
to
pay,
a
substantial
amount,
and
he
did
so
without
negotiating
or
seriously
visiting
the
property
to
find
out
how
severe
the
damage
was.
The
account
of
the
circumstances
surrounding
the
sale
and
purchase
of
the
property,
as
given
by
the
parties
to
the
transaction,
is
totally
illogical,
and
there
is
absolutely
nothing
reasonable
or
rational
about
it
in
terms
of
the
realities
of
a
commercial
transaction
between
two
serious
individuals.
The
striking
difference
between
the
municipal
assessment
and
the
sale
price
aroused
some
suspicion;
it
therefore
became
essential
—
even
though
a
municipal
assessment
is
not
a
primary
reference
but
is
basically
just
an
interesting
indication
—
to
expand
on
why
it
was
appropriate
to
set
the
consideration
at
$125,000.
The
appellant
and
his
vendor
justified
the
low
value
by
pointing
to
the
major
depreciation
at
the
time
of
the
purchase
and
the
significant
damage
to
the
building;
in
addition,
neither
of
the
premises
was
rented.
These
are
certainly
real,
objective
facts
that
had
a
direct
impact
on
the
market
value
of
the
property.
However,
each
component
of
the
alleged
loss
in
value
had
to
be
analyzed
thoroughly
to
assess
its
relevance
and
its
real
impact
on
the
property’s
value.
Damage
A
significant
portion
of
the
evidence
was
devoted
to
the
issue
of
damage
and
the
depreciation
of
the
property.
The
bailiff,
Stéphane
Carpentier,
visited
the
property
and
testified
on
this
point;
in
support
of
his
testimony,
he
filed
a
series
of
photographs
showing
the
premises.
The
parties’
respective
experts
reached
very
different
conclusions:
there
is
a
substantial
difference
of
$83,500
between
the
two
appraisals.
That
difference
is
especially
large
considering
the
value
of
the
property.
As
regards
the
importance
attached
to
the
damage,
the
Court
reviewed
the
photographs
taken
by
the
bailiff,
Mr.
Carpentier,
very
carefully.
They
clearly
show
that
the
damage
affected
mainly
the
furniture
and
movable
effects.
The
damage
to
the
movable
property
that
had
become
immovable
by
destination
was
minor
and
had
little
or
no
impact
on
the
value
of
the
property.
The
photographs
taken
by
the
bailiff
do
not
show
any
serious
damage
to
the
property
such
as
that
described
by
Mr.
Lafond
and
the
appellant.
That
assessment
is
moreover
confirmed
by
the
description
of
the
damage
for
which
compensation
was
claimed
by
Pub
Place
du
Marché
Inc.,
the
principal
tenant
of
the
property
at
issue,
from
Alain
Brindle,
Gaétan
Brindle
and
Bar
Le
Garage
Enr.,
the
subtenants
of
part
of
the
premises.
The
damage
was
described
in
an
action
brought
in
the
Court
of
Quebec,
district
of
Trois-Rivières
(file
no.
400-02-000480937).
Paragraphs
4
and
5
of
the
statement
of
claim
were
worded
as
follows:
[TRANSLATION]
4.
On
April
2,
1993,
the
plaintiff
had
this
situation
recorded
by
a
bailiff,
whose
report
is
filed
in
support
hereof
as
Exhibit
P-2;
5.
The
cost
of
repossessing
the
rented
premises,
replacing
or
repairing
the
missing
or
damaged
property
and
repairing
the
damage
caused
to
the
rented
premises
totals
$9,869.91
and
can
be
broken
down
as
follows:
|
A.
|
COST
OF
REPOSSESSING
THE
RENTED
PREMISES
|
|
|
cost
of
reprogramming
the
alarm
system
|
$
|
66.77
|
|
cost
of
locksmith
|
|
60.00
|
|
SUBTOTAL
|
$
126.77
|
|
B.
|
COST
OF
REPLACING
MISSING
PROPERTY
|
|
|
round
arborite
table
|
$
|
60.00
|
|
nine
(9)
electronic
plugs
|
|
150.00
|
|
boiler,
dryer
and
toilet
seat
|
|
257.12
|
|
one
(1)
5-lb.
fire
extinguisher
|
|
40.50
|
|
stools
(4),
chairs
(3),
ceiling
lights
(2),
refrig
|
|
|
erator
(repairs),
compressor
(repairs),
ice
ma-
|
|
|
chine
(repairs)
|
$2,833.87
|
|
SUBTOTAL
|
$3,342.29
|
|
C.
|
COST
OF
REPAIRING
(REPLACING)
DAMAGED
PROPERTY
|
|
FISHER
amplifier
|
$
|
12.87
|
|
ZENITH
26"
television
|
|
228.00
|
|
ZENITH
26"
television
|
|
106.00
|
|
QUASAR
20"
television
|
|
150.00
|
|
two
(2)
cable
TV
converters
|
|
418.00
|
|
blinds
|
|
236.77
|
|
acoustic
tiles
|
|
193.63
|
|
mahogany
table
|
|
200.00
|
|
mahogany
standing
bar
|
|
175.00
|
|
SUBTOTAL
|
$1.720.27
|
|
D.
|
DAMAGE
TO
THE
RENTED
PREMISES
|
|
|
dance
floor
|
$
876.54
|
|
sliding
door
and
mirror
|
3,538.83
|
|
SUBTOTAL
|
$4,415.37
|
|
E.
|
MISCELLANEOUS
EXPENSES
|
|
|
bailiff’s
report
|
$
185.00
|
|
valuation
costs
|
|
44.51
|
|
cost
of
photocopies
(colour
photographs)
|
|
35.70
|
|
SUBTOTAL
|
$
265.21
|
The
bailiff
acknowledged
that
the
description
of
the
damage
in
the
action
corresponded
with
what
he
himself
had
stated
in
his
report.
Since
Pub
Place
du
Marché
Inc.
was
liable
to
the
owner,
Mr.
Lafond,
for
all
the
damage
caused
to
the
rented
premises,
it
would
have
been
surprising,
to
say
the
least,
if
it
had
not
claimed
compensation
from
the
subtenants
(the
Brindles)
for
all
the
damage
caused
to
those
premises.
Moreover,
the
specific
mandate
given
to
the
bailiff
related
to
all
the
breakage
and
damage
caused
while
the
premises
were
occupied;
he
was
therefore
instructed
to
thoroughly
examine
the
premises
and
to
make
a
detailed,
exhaustive
list
of
everything
that
was
in
need
of
repair.
In
such
a
context,
if
damage
of
the
kind
described
by
the
vendor
and
the
purchaser
had
been
real
and
so
serious,
there
is
no
doubt
that
it
would
have
been
described
fully
and
in
detail.
I
therefore
conclude
that
the
damage
to
and
deterioration
of
the
property
were
not
as
serious
as
the
appellant
claimed;
moreover,
I
am
satisfied
that
the
repairs
did
not
require
outlays
as
substantial
as
those
referred
to.
However,
the
photographs
do
show
that
the
premises
in
the
building
were
neither
appealing
nor
inviting.
Mr.
Lafond
and
Mr.
Descormiers
both
said
that
they
had
the
skills
and
talent
to
fix
up
buildings.
In
light
of
that,
it
is
quite
surprising
that
they
did
not
undertake
to
thoroughly
clean
the
property
and
do
certain
repairs
in
order
to
make
it
rentable
again;
they
would
have
thus
increased
the
value
of
their
asset
during
the
time
they
owned
it.
To
lease
commercial
premises,
I
believe
that
it
is
helpful,
indeed
necessary,
that
the
premises
be
fitted
out
so
that
they
seem
pleasant
and
promising
to
anyone
who
might
be
interested.
So
why
were
the
premises
not
fixed
up?
There
was
evidence
that
was
an
attempt
to
show
that
the
cost
would
have
been
prohibitive.
In
this
regard,
the
evidence
is
totally
unconvincing,
especially
given
the
complete
absence
of
an
independent
estimate.
Moreover,
for
the
reasons
set
out
above,
the
evidence
from
the
bailiff’s
report
supplemented
by
the
photographs
he
took
shows
the
opposite.
Why
was
the
necessary
work
not
done?
The
evidence
does
not
really
provide
any
answer
to
that
question,
which
itself
raises
yet
more
questions.
The
vendor,
and
subsequently
the
appellant
as
the
purchaser,
owned
a
property
that
appeared
depreciated.
In
spite
of
that
circumstance,
which
was
liable
to
drive
away
any
tenant
or
potential
purchaser,
they
took
absolutely
no
action
to
improve
the
condition
of
the
property.
The
appearance
of
a
property
and
whether
or
not
its
premises
are
occupied
have
a
direct
impact
on
its
value.
In
view
of
this,
why
did
neither
Mr.
Lafond
nor
the
appellant
take
steps
to
improve
the
condition
of
the
premises
or
interest
potential
tenants?
Neither
of
them
did
anything
at
all
to
find
tenants;
the
available
premises
were
not
advertised
in
any
way.
The
appellant
even
asserted
that
he
did
not
know
when,
how
and
why
the
municipality
had
cut
off
the
water.
He
said
that
he
learned
of
this
from
someone
who
wanted
to
store
some
goods.
Is
it
possible
that
he
could
have
been
so
indifferent
and
casual
about
a
piece
of
property
that
represented,
to
say
the
least,
a
significant
part
of
his
assets
and
that
also
required
him
to
make
monthly
payments
so
substantial
that
all
of
his
income
was
insufficient
to
meet
that
obligation?
Such
an
attitude
totally
discredits
the
explanations
given
by
the
appellant.
The
property
was
left
in
a
state
of
total
neglect
even
though
the
transaction
called
for
monthly
payments
of
more
than
$900
and
the
appellant
still
owed
a
$25,000
balance
on
the
sale
price.
I
will
digress
here
to
consider
the
$25,000
balance
of
the
sale
price.
There
was
no
evidence
to
show
whether
that
amount
was
repaid
either
in
part
or
in
full.
The
nature
and
size
of
the
amounts
paid
could
not
be
precisely
determined.
Reference
was
made
to
litigation
resulting
from
problems
with
water
leaking
through
the
roof,
but
the
evidence
on
this
was
incomplete
and
did
not
show
whether
the
problems
led
to
a
reduction
in
the
price.
If
the
appellant
had
shown
that
he
had
a
concrete,
serious,
plausible
and
realistic
plan,
with
a
reasonable
time
frame,
that
was
based
essentially
on
the
area
of
the
lot
and
that
had
some
chance
of
success,
it
would
have
been
more
understandable
that
he
acted
as
he
did.
This
is
all
the
more
important
given
that
his
income
was
not
sufficient
for
him
to
be
able
to
pay
the
balance
of
the
sale
price
and
make
monthly
payments
as
high
as
$900
potentially
over
a
number
of
years.
Apart
from
these
decisive
and
significant
facts
concerning
the
appellant’s
total
lack
of
interest
in
the
property,
why
did
he
not
challenge
the
amount
of
the
municipal
assessment
in
order
to
at
least
reduce
the
taxes,
which
were
very
high
in
relation
to
his
ability
to
pay?
A
reduction
in
the
municipal
assessment
would
not
have
been
at
all
detrimental
to
his
plan
and
would
have
had
the
advantage
of
reducing
the
taxes.
Once
again,
the
evidence
did
not
provide
a
plausible
explanation.
The
only
explanation
of
the
facts
and
circumstances
surrounding
the
transaction
is
that
the
appellant
was
basically
doing
what
the
vendor
wanted.
He
had
nothing
to
fear
or
lose
in
the
venture.
He
had
not
paid
anything
in
cash
and
the
bank
loan
was
guaranteed
by
the
vendor.
What
interest,
benefit
or
profit
could
the
appellant
hope
for
from
the
transaction?
This
is
so
vague
that
the
more
plausible
conclusion
is
that
his
purpose
was
no
doubt
basically
to
help
Mr.
Lafond,
who
was
his
friend,
if
not
an
attentive,
highly
co-operative
partner
who
had
hired
him
at
certain
points
and
stood
surety
for
him
a
few
times.
The
evidence
amply
demonstrated
that
the
appellant
was
under
Mr.
Lafond’s
influence
and
had
benefited
from
his
kindness
and
help
a
few
times.
The
weight
of
the
evidence
is
that
Mr.
Descormiers
and
Mr.
Lafond
had
a
special
business
relationship.
They
were
definitely
not
dealing
with
each
other
as
strangers
or
at
arm’s
length.
They
did
business
together
and
worked
in
the
same
field
of
economic
activity,
namely
the
restaurant
business.
Although
the
anonymity
of
numbered
companies
was
used
to
confuse
the
nature
of
the
business
relationship
between
Mr.
Lafond
and
the
appellant,
the
fact
that
Mr.
Lafond
acted
as
the
appellant’s
surety
had
the
effect
of
nullifying
the
efforts
made
to
hide
the
nature
of
their
relationship.
The
vendor
and
the
purchaser
were
not
only
friends
but
also
partners
in
their
everyday
business
activities.
They
had
known
each
other
a
very
long
time
and
had
shared
the
same
interests
in
certain
business
dealings.
The
evidence
also
showed
that
the
appellant
had
worked
for
Mr.
Lafond.
Jean-Jacques
Lafond
and
the
appellant
did
try
to
downplay
their
work
relationship,
going
so
far
as
to
deliberately
hide
certain
inescapable
realities,
such
as
the
fact
that
they
were
parties
to
the
same
transaction.
Using
the
anonymity
of
numbered
companies
as
an
excuse,
the
appellant
tried
to
claim
that
he
was
unaware
of
Jean-Jacques
Lafond’s
interest
in
certain
transactions.
The
evidence
also
revealed
another
fact
that
totally
discredits
the
position
taken
by
Mr.
Lafond
and
the
appellant.
Why
did
the
credit
union,
within
the
space
of
a
few
hours,
agree
to
loan
$100,000
without
visiting
the
property
and
without
any
personal
security
from
the
purchaser
and
knowing
that
the
principal
borrower
definitely
did
not
have
the
financial
ability
to
make
the
monthly
payments
required
by
the
loan?
Moreover,
the
manager
of
the
credit
union
pointed
out
that
the
file
referred
to
several
dozen
calls
made
to
obtain
the
monthly
payments.
The
vast
majority
of
those
calls
were
made
to
the
vendor,
Mr.
Lafond,
and
not
the
purchaser.
According
to
the
manager
of
the
credit
union,
Jean-Jacques
Lafond
made
most
of
the
payments
on
the
loan
granted
to
the
appellant.
why
did
Mr.
Lafond
not
claim
the
payments
he
had
made
from
the
appellant?
Why
did
he
not
bring
proceedings
to
repossess
the
property?
No
evidence
was
adduced
on
these
questions,
which
are
nevertheless
important
ones.
Three
criteria
are
used
to
determine
whether
the
parties
to
a
transaction
are
dealing
with
each
other
at
arm’s
length:
(a)
whether
there
is
a
common
mind
that
directs
the
bargaining
for
both
parties
to
the
transaction;
(b)
whether
the
parties
to
the
transaction
are
acting
in
concert
without
separate
interests;
and
(c)
whether
there
is
de
facto
(real)
control.
The
weight
of
the
evidence
clearly
showed
that
Mr.
Lafond
had
so
much
influence
over
the
appellant
that
he
alone
directed
the
bargaining
prior
to
the
transaction;
the
vendor
and
the
purchaser
acted
in
concert
in
the
sole
interest
of
Mr.
Lafond,
who
had
obviously
always
been
in
control
of
the
situation.
The
evidence
further
showed
that
the
appellant
was
more
of
an
agent
than
a
real
contracting
party
with
respect
to
the
transaction
in
May
1993.
For
all
these
reasons,
it
is
my
view
that
the
appellant
did
have
a
de
facto
non-arm’s-length
relationship
with
the
vendor,
Mr.
Lafond,
with
respect
to
the
transaction
in
May
1993.
That
being
the
case,
the
consideration
given
for
the
transaction
should
be
looked
at.
Did
it
correspond
to
fair
market
value?
Did
the
appellant
pay
the
actual
value
of
the
property?
What
was
the
actual
value
of
the
property
at
the
time
of
the
transaction?
The
way
in
which
the
fair
market
value
of
property
should
be
determined
has
always
given
rise
to
much
discussion
and
many
theories.
The
treatise
entitled
Droit
public
et
administratif
en
droit
fiscal,
published
by
Yvon
Blais
Inc.,
sheds
some
interesting
light
on
this
subject
at
page
71:
[TRANSLATION]
Fair
market
value
This
term
is
not
defined
in
either
the
Act
or
the
Regulations.
The
determination
of
market
value
is
basically
a
question
of
fact
and
opinion
within
the
purview
of
appraisal
experts.
However,
fair
market
value
must
be
proved
to
the
satisfaction
of
the
courts
if
the
department
and
the
taxpayer
are
unable
to
agree.
It
is
generally
felt
that
the
concept
must
be
assessed
objectively
on
the
basis
of
a
normal
transaction
to
which
the
parties
have
given
their
free
and
informed
consent,
regardless
of
any
special
ties
between
them
that
would
be
likely
to
create
a
“nonarm’s-length
relationship”.
For
the
purpose
of
the
determination
of
the
actual
value
of
the
property
involved
in
the
transaction,
the
Court
was
presented
with
two
appraisals
prepared
by
experts.
Appellant’s
Expert
The
appellant’s
expert,
Louis-Georges
Baril,
visited
the
property
at
the
appellant’s
request;
he
prepared
his
appraisal
using
the
usual
methods,
stressing
that
the
only
true
appraisal
method
is
the
“comparables”
method.
He
therefore
made
a
list
of
three
comparables,
which
he
then
adjusted
and
weighted
so
that
they
could
serve
as
references.
He
explained
all
of
his
work
and
described
the
approach
he
took
to
reach
the
conclusion
he
reached.
He
determined
that
the
value
of
the
property
at
the
time
of
the
transaction
was
$115,000.
Respondent’s
Expert
The
respondent
used
the
services
of
an
appraisal
expert,
Alain
Lortie.
Since
Mr.
Lortie
had
not
been
employed
by
Revenue
Canada
for
very
long
and
since
major
alterations
had
been
made
to
the
property
at
issue,
he
had
to
consider
certain
facts
of
which
he
had
no
personal
knowledge;
he
referred
to
a
series
of
photographs
showing
the
premises
at
specific
points
in
time.
However,
he
stated
that
he
put
a
great
deal
of
time
into
preparing
his
appraisal.
He
went
to
Trois-Rivières
several
times,
met
with
people
who
had
knowledge
of
the
premises
and
thoroughly
analyzed
a
number
of
transactions.
The
photographic
component
of
the
appraisal
was
strongly
objected
to
by
the
appellant,
who
argued
that
such
photographs
were
inadmissible
since
the
expert
did
not
take
them
and
was
not
aware
of
all
the
circumstances
in
which
they
were
taken;
the
appellant
was
consequently
deprived
of
the
opportunity
to
examine
or
cross-examine
the
person
who
took
them.
Having
reserved
my
ruling
on
the
objection,
I
am
now
disposing
of
it
as
follows.
As
an
expert,
the
respondent’s
appraiser
had
a
great
deal
of
latitude
in
carrying
out
the
analysis,
research
and
assessment
enabling
him
to
determine
the
actual
value
of
the
property
in
May
1993.
However,
he
did
not
have
so
much
freedom
that
part
of
his
work
could
be
based
on
photographs
in
respect
of
which
he
was
not
absolutely
certain
when
and
in
what
context
they
were
taken.
He
could
not
use
photographs
without
knowing
the
photographer’s
name
and
address,
the
date
the
photographs
were
taken
and
the
context
and
circumstances
in
which
they
were
taken
so
that
all
of
this
could
be
made
available
to
the
appellant
and
his
expert.
Accordingly,
I
order
that
the
copies
of
the
said
photographs
be
removed
from
the
appraisal
and
that
everything
based
thereon
also
be
removed.
Mr.
Lortie
also
explained
the
approach
he
took
in
conducting
his
assessment.
It
was
clear
from
his
testimony
that
he
had
devoted
a
great
deal
of
time
and
energy
to
that
assessment.
He
also
listed
many
more
transactions
relating
specifically
to
the
value
of
the
land.
He
ruled
out
the
comparable
method
for
commercial
properties,
arguing
that
such
comparables
were
not
valid;
there
were
too
many
differences
to
consider
them
relevant
and
valid
comparables.
He
therefore
limited
his
review
of
comparables
to
two
aspects:
the
land
and
the
rental
value
of
premises
located
in
the
same
area
as
the
property
at
issue
in
this
case.
He
concluded
that
the
value
was
$198,500,
which
was
an
average
of
the
$200,000
obtained
by
appraising
the
property
using
the
cost
approach
and
the
$197,000
obtained
using
the
income
approach.
Analysis
Appraisal
is,
of
course,
an
art
requiring
considerable
knowledge,
extensive
experience
and
above
all
an
ability
to
strike
a
balance
between
the
objective
and
the
subjective.
Most
of
the
time,
experts
reach
conclusions
that
basically
support
the
position
of
the
person
for
whom
they
are
working,
which
is
why
the
courts
try
to
render
the
parties’
appraisals
objective
on
the
basis
of
various
facts
brought
out
by
the
evidence.
The
appraisal
by
the
respondent’s
expert
is
more
detailed,
more
thorough
and
most
of
all
more
plausible.
Indeed,
the
appellant’s
expert
acknowledged
that
the
comparable
method
of
determining
actual
value
has
its
limitations
and
imperfections
in
that
it
is
totally
impossible
to
find
comparables
that
are
absolutely
identical.
Comparables
are
useful
as
a
guide
or
indication
but
they
are
not
an
infallible
method
possessing
scientific
rigour.
While
the
comparables
method
may
be
considered
ideal,
it
must
be
understood
that
the
comparables
are
always
subjective
and
imperfect
in
terms
of
both
quantity
and
quality.
In
the
case
at
bar,
given
the
comments
made
on
the
quality
of
the
available
comparables,
it
is
my
view
that
the
scarcity
of
comparables
as
well
as
their
lack
of
similarity
made
the
method
so
imperfect
that
it
must
be
rejected.
To
begin
with,
the
work
done
by
Mr.
Lortie
is
obviously
more
complete,
more
detailed,
more
thorough
and
thus
more
valid.
This
was
clear
from
the
testimony
of
the
two
experts,
who
did
not
do
the
same
amount
of
work
to
reach
their
respective
conclusions.
The
appellant’s
expert
spent
one
or
two
days
on
the
appraisal;
he
used
data
from
his
own
all-purpose
catalogue
and
took
other
data
for
granted
without
checking
them.
The
respondent’s
expert
obviously
reviewed
and
analyzed
more
data
and
also
took
the
trouble
to
render
the
available
data
objective.
As
very
often
happens
in
such
cases,
the
work
done
by
Louis-Georges
Baril
seems
to
have
been
guided
and
shaped
somewhat
by
the
appellant’s
concerns;
I
noted
certain
flaws
that
discredit
the
quality
of
the
work
of
the
appellant’s
expert.
I
am
referring,
inter
alia,
to
the
following
aspects.
Income
approach
Mr.
Baril
assigned
totally
arbitrary
values
to
the
rental
premises
in
the
building:
|
Ground
floor
|
1,500/month
|
$6.56
sq.ft.
$18,000
|
|
Upstairs
|
900/month
|
$4.00
sq.ft.
$10,000
|
Those
amounts
seem
to
be
based,
to
all
appearances
at
least,
on
the
rent
set
in
the
various
leases
for
the
premises.
In
this
regard,
I
consider
it
useful
to
point
out
that
the
consideration
for
the
upstairs
premises
was
$3.84
a
square
foot
at
the
end
of
the
lease
in
December
1990.
The
rent
for
the
ground
floor
was
somewhere
between
$5.00
and
$8.59
a
square
foot.
To
obtain
a
valid
indication,
the
rental
value
of
the
equipment,
which
was
included
in
the
rent
for
the
ground
floor
premises,
would
have
had
to
be
subtracted.
Besides
this
shortcoming
of
assigning
an
arbitrary
value
to
the
rents
even
though
high-quality
data
were
available,
Mr.
Baril,
in
his
calculations,
entered
a
figure
of
$5,000
under
the
heading
“MAINTENANCE
AND
REPLACEMENT
RESERVES”.
Such
an
amount
is
entirely
unreasonable
and
unrealistic,
since
all
tenants
of
immovable
properties
must
maintain
the
premises
they
are
renting.
The
only
acceptable
reserve
is
an
amount
to
make
up
for
depreciation
or
aging,
which
amount
would
be
very
far
from
the
20
percent
assigned
by
the
appellant’s
expert.
Those
two
major
shortcomings
have
the
effect
of
discrediting
the
conclusion
reached
using
the
income
approach,
through
which
Mr.
Baril
determined
the
value
to
be
$115,000.
Direct
comparison
approach
The
expert
argued
that
this
approach
is
the
most
credible,
the
most
reliable
and
the
most
appropriate.
However,
he
acknowledged
that
there
is
a
great
deal
of
arbitrariness
in
the
choice
of
comparables.
He
also
admitted
that
the
probative
force
of
this
approach
depends
on
the
quality
of
the
comparables.
The
three
comparables
selected
were
properties
that
were
86,
67
and
63
years
old.
Two
of
the
three
had
three
floors
and
the
third
was
described
as
having
one
and
two
floors.
The
transactions
involving
them
occurred
on
March
30,
1994,
April
28,
1994,
and
July
20,
1995,
respectively.
I
do
not
think
that
these
comparables
are
objectively
acceptable,
since
the
differences
are
such
that
the
necessary
adjustments
were
likely
to
compromise
the
quality
of
this
approach.
These
three
comparables
were,
beyond
a
shadow
of
a
doubt,
chosen
because
of
their
very
low
sale
prices.
It
is
equally
worth
noting
that
Mr.
Baril
admitted
that
he
did
not
review
the
contracts
of
sale
for
each
of
the
transactions
so
as
to
be
sure
that
there
were
no
special
facts
or
conditions.
Cost
approach
Based
on
the
cost
approach,
the
expert
concluded
that
the
property
was
worth
$133,500.
That
conclusion
is
totally
unreasonable,
since
it
underestimates
the
value
of
the
land
and,
above
all,
attributes
to
the
building
depreciation
of
75
percent,
or
$229,592;
this
is
totally
inconsistent
with
the
description
on
page
5
of
his
appraisal,
where
it
is
stated
that
the
apparent
age
corresponds
to
the
actual
age
of
24
years.
I
do
not
think
that
a
24-year-old
building
has
to
be
depreciated
by
75
percent.
Even
if
the
opposite
were
true,
the
evidence
was
incomplete
as
regards
data
justifying
such
a
loss
of
value.
Respondent’s
appraisal
Although
I
have
already
found
that
the
respondent’s
appraisal
was
done
more
carefully,
I
believe
it
is
necessary
to
avoid
making
the
mistake
of
drawing
hasty
conclusions
based
only
on
the
fact
that
that
appraisal
is
more
voluminous
and
incorporates
a
number
of
documents
and
references.
As
regards
the
depreciated
replacement
cost
method,
it
is
my
view
that
the
approach
taken
by
Alain
Lortie
is
a
more
reasonable
reflection
of
reality;
not
having
noted
anything
that
might
compromise
the
quality
of
that
approach,
I
therefore
accept
his
conclusion
that
the
value
of
the
property
based
on
the
replacement
cost
approach
was
$200,000.
As
regards
the
income
approach,
although
presented
and
dressed
up
better
by
the
respondent’s
expert,
its
use
has
one
major
shortcoming.
Mr.
Lortie
analyzed
a
number
of
comparables
and
reviewed
the
leases
on
the
property,
which
does
him
credit.
However,
I
feel
that
he
attached
too
much
importance
to
the
listed
comparables
in
comparison
with
the
actual
leases,
which
provided
genuine
objective
data
whose
quality
was
indisputable.
Those
data
were
real
data
which
were
highly
relevant,
since
they
represented
rent
actually
paid
by
and
to
people
dealing
with
each
other
at
arm’s
length.
It
should
therefore
have
been
noted
that
the
amount
of
the
rent
was
set
without
any
constraints
whatsoever
and
was
guided
essentially
by
the
quality
of
the
premises
in
terms
of
their
area,
their
condition
and
especially
their
location.
However,
it
is
to
the
credit
of
the
respondent’s
expert
that
he
did
review
and
analyze
those
data.
Where
the
Court
disagrees
with
Mr.
Lortie
is
as
regards
the
value
per
square
foot
assigned
to
the
two
rental
premises.
Mr.
Lortie
assessed
the
potential
of
the
two
premises
as
follows:
|
2,600
sq.ft.
x
$9.00
|
=
|
$23,490
|
|
2,610
sq.ft.
x
$5.00
|
=
|
$13,050
|
|
Grand
total
|
|
$36,540
|
The
expert
provided
the
following
explanation
of
the
calculations
he
did
to
arrive
at
those
unit
costs:
[TRANSLATION]
The
ground
floor
of
the
property
under
review
was
not
leased
at
the
time
of
the
transaction.
Considering
its
potential
and
its
location
in
comparison
with
other
premises,
it
is
our
opinion
that
a
unit
rent
of
$9.00
a
square
foot
should
be
assigned
to
it.
This
is
the
minimum
rent
observed
on
the
market.
The
services
provided
out
of
that
rent
would
be
property
taxes,
structural
maintenance
...
and
management.
The
upstairs
premises
were
also
vacant
at
the
time
of
the
transaction.
The
last
lease
entered
into
indicated
that
the
rent
was
$6.07
a
square
foot.
The
rents
we
found
for
upstairs
premises
show
that
there
is
a
great
deal
of
variation
because
of
different
features,
such
as
floor
area
and
services
provided.
By
matching
up
leases
for
the
same
building
(6
and
9),
we
find
that
the
upstairs
rent
corresponds
to
about
60
percent
of
the
ground
floor
rent
($14.49
vs.
$8.51).
By
applying
that
standard
to
the
property
under
review,
based
on
the
$9.00
rent,
we
obtain
a
rent
of
$5.40
a
square
foot,
which
we
will
round
off
to
$5.00
for
the
purposes
of
this
appraisal.
Again,
this
is
a
minimum
rate
in
relation
to
the
market.
However,
the
lease
for
the
upstairs
premises,
which
ended
on
December
31,
1990,
provided
for
a
unit
cost
of
$3.84
a
square
foot
at
the
end
of
the
lease.
The
increases
between
year
I
and
year
5
of
the
lease
were
on
average
$0.15
a
square
foot.
By
extrapolating,
we
arrive
at
a
cost
of
about
$4.30
a
square
foot
for
1993.
The
figures
for
the
ground
floor
rent
are
more
contemporaneous,
since
the
lease
ended
in
March
1993,
a
few
months
before
the
transaction
in
question.
The
principal
tenant
sublet
the
premises
for
which
it
was
responsible
for
a
consideration
much
higher
than
that
set
out
in
the
original
lease.
The
expert
first
determined
the
unit
rate
under
the
lease
for
years
4
and
5
and
arrived
at
a
rent
of
$14,088
or
$5.40
a
square
foot
and
$14,352
or
$5.50
a
square
foot
for
the
last
two
years
involved.
He
completed
his
analysis
with
the
appraisal
based
on
the
sublease
and
arrived
at
a
unit
rate
of
$22,430
($8.59
a
square
foot).
He
increased
that
price
to
$9.00
a
square
foot.
However,
I
do
not
think
that
the
$8.59
figure,
much
less
that
of
$9.00,
is
reliable;
the
fact
that
the
consideration
set
out
in
the
lease
included
all
the
equipment
left
there
by
the
subtenant
distorts
the
conclusion
reached.
How
should
the
actual
value
of
the
rent
for
the
ground
floor
premises
be
determined?
I
do
not
think
that
that
value
could
be
determined
through
the
comparables
used
by
the
respondent;
comparables
relating
to
rent
are
much
less
reliable
than
those
relating
to
transfers
of
ownership.
Moreover,
the
components
of
rent
are
generally
more
numerous
and
more
specific
than
those
that
enter
into
the
determination
of
the
price
of
immovable
property.
The
quality
of
the
premises,
accessibility,
location,
surface
area,
scarcity,
custom,
convenient
parking,
etc.,
are
all
factors
that
determine
the
value
of
rent,
which
is
why
it
is
important
that
experts
use
actual
leases
for
the
property
whenever
possible.
In
this
regard,
I
believe
it
is
worth
citing
a
passage
from
the
judgment
of
the
Honourable
Judge
Pierre
Dussault
of
this
Court
in
Immeubles
Chai
Inc.
c.
R.,
96-1172(IT)G
(July
20,
1998),
[reported
(
1998),
[1999]
2
C.T.C.
2454
(T.C.C.)]
where
he
stated
the
following
at
page
12:
[42]
There
is
no
ambiguity
as
to
the
actual
rental
negotiated
and
paid
for
the
first
two
premises.
Since
this
was
rental
agreed
upon
between
parties
dealing
with
each
other
at
arm’s
length,
and
in
the
absence
of
evidence
that
there
was
anything
artificial
or
unusual
about
the
leases
concluded,
in
my
opinion
this
rental
should
be
the
basis
for
an
appraisal
using
the
capitalized
income
approach.
(On
this
point
reference
may
be
made
to
Jean-Guy
Desjardins,
Traité
de
l'évaluation
foncière,
Montréal,
Wilson
&
Lafleur,
1992,
p.
281,
No.
9.4.2.1.)
In
the
circumstances,
it
seems
clear
to
me
that
actual
income
is
a
better
yardstick
for
determining
the
value
of
the
appellant’s
property
than
a
theoretical
potential
income
based
on
approximations
derived
from
an
average
or
median
income,
using
allegedly
comparable
data
which
often
prove
however
to
be
questionable,
as
is
the
case
here.
In
view
of
the
amounts
paid
by
the
tenants
to
occupy
the
premises
in
the
property
at
issue,
it
is
my
opinion
that
the
respondent’s
expert
overvalued
the
reference
amounts,
which
he
determined
to
be
$5.00
and
$9.00
a
square
foot.
Moreover,
the
method
used
to
arrive
at
those
estimates
is
questionable.
Given
the
objective
information
provided
by
the
actual
leases,
I
think
that
$4.25
and
$7.65
a
square
foot
would
have
been
more
realistic
and
especially
more
consonant
with
reality.
I
have
also
noted
that
the
experts
anticipated
very
different
rates
of
return
on
investment.
The
appellant
based
his
calculations
on
an
anticipated
return
of
8
percent,
while
the
respondent
used
a
rate
of
12
percent.
The
reasonable
rate
is
probably
somewhere
between
the
two,
and
I
set
it
at
10
percent.
I
have
therefore
redone
the
calculations
in
the
light
of
these
new
data
and
using
all
the
other
factors
and
information
used
by
the
respondent’s
expert;
the
result
is
$176,500
according
to
the
income
approach,
which
strikes
me
as
realistic.
Accepting
the
approach
that
the
appraisal
amount
in
the
case
of
immovable
property
is
to
be
obtained
by
averaging
the
results
from
the
usable
methods,
I
set
the
value
of
the
property
at
$188,000,
calculated
as
follows:
|
Value
determined
using
replacement
cost
|
|
$200,000
|
|
Plus
-
Value
from
income
approach
|
|
$176,500
|
|
Total
|
=
|
$376,500
|
|
Divided
by
50%
|
=
|
$188,250
|
|
Rounded
off
to
|
=
|
$188,000
|
This
is
a
realistic
appraisal
that
is
also
consistent
with
a
statement
made
a
few
times
by
the
appellant’s
expert
himself,
namely
that
financial
institutions
generally
lend
60
percent
of
the
value
of
a
commercial
property.
Moreover,
Mr.
Baril
used
that
same
percentage
in
his
calculations
to
determine
the
value
using
the
income
approach.
In
this
regard,
I
consider
it
important
to
point
out
that
the
credit
union
granted
a
$100,000
mortgage
on
the
property
in
question.
The
Court
therefore
finds
that
Jacques
Lafond
was
not
dealing
at
arm’s
length
with
the
appellant,
Jean-Yves
Descormiers,
at
the
time
of
the
transaction
of
May
27,
1993,
relating
to
the
property
at
200
Rue
St-Georges
in
Trois-Rivières;
the
Court
also
sets
the
market
value
of
the
said
property
at
$188,000
at
the
time
of
its
transfer
on
May
27,
1993.
As
a
result
of
the
foregoing,
the
appeal
is
allowed
and
the
assessment
is
referred
back
to
the
Minister
of
National
Revenue
for
reconsideration
and
reassessment
on
the
basis
that
Jean-Yves
Descormiers
and
Jacques
Lafond
were
not
dealing
with
each
other
at
arm’s
length
when
the
property
worth
$188,000
was
sold.
Since
the
decision
has
only
a
minor
impact
on
the
validity
of
the
assessment,
which
is
being
upheld
in
large
part,
the
Court
awards
costs
to
the
respondent.
Appeal
allowed
in
part.
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