Joseph Angotti v. Her Majesty the Queen, [1977] CTC 461, 77 DTC 5319

Grant, DJ:—This is an appeal from the notice of confirmation by The Honourable Minister of Revenue dated April 2, 1976 confirming a reassessment of the plaintiff's income tax returns for the year 1973. At the conclusion of the evidence and argument on June 28, 1977, I gave reasons for judgment dismissing the appeal with costs. Due to some misunderstanding the court reporter had left the courtroom prior to my giving such reasons and so, unknown to me, was not present to take down the same. When I noticed this on the completion of delivering such reasons, I promised counsel that I would deliver written reasons if either party requested the same. I asked counsel that, in such event, they might give to me such notes as they had made of my oral reasons so that written reasons would be substantially the same. They have now followed such suggestion and their notes have been of help in refreshing my memory.

The plaintiff is a hairdresser living in the City of Niagara Falls. On November 22, 1967 he purchased a property known as 3866 Main Street in such city for a price of $20,500. It consisted of 4 lots having a total width of 120 feet by a depth of 365 feet. On the property was an old house in a bad state of repair which had not been occupied for a period of two years. It was situated in a commercial area adjacent to a poolroom and hotel and not suitable for a desirable residence. The real estate agent who made such sale for the vendor was one Don Parkinson. The plaintiff sold such property on July 12, 1973 for a total of $49,500, payable on closing in October of the same year.

In filing his income tax returns for such year, the plaintiff treated the profit made from such venture as capital gain. The Minister has reassessed such amount as income. The sole question at issue is the intention of the taxpayer at the time of acquisition of such property by him. At trial he stated that he acquired the property as a home for himself and wife and also as an investment. In cross-examination he stated his first intention was to renovate the house as a home and use the remainder of the property to develop. On his examination for discovery he stated that his only intention at time of such purchase was to live in the premises. He had repaired the building to some extent and rented it at $100 a month in the spring of 1968. Later in his discovery he said that after the house was rented he formed the intention to develop the property.

I am quite convinced that the plaintiff never intended to retain any part of such premises as his home when he purchased the same or at any other time. In contemplation of his marriage, he and his parents had built a home in the year 1966 in a residential portion of the city at a cost of $35,000. He had paid one-half the cost and his parents the other. He was married on September 30, 1967 and he and his wife, with his parents, have occupied the same ever since. If the plaintiff had any intention of using the property acquired by him a month later as a home, one would have expected he would have his wife look at it, but he did not do so and never took any steps to renovate it as a home for himself and his wife. This property was put in the joint names of his wife and himself.

On June 22, 1968 the plaintiff listed such 4 lots and house thereon for sale with Parkinson at a price of $45,000. The terms of such listing was to January 1, 1969. It contained the provision that the vendor would have the right to develop the property during the term of the listing but that any such development would alter such listing price. This listing agreement is entirely inconsistent with the plaintiff’s declared intention of having acquired the property as a home. Later, he had plans prepared for the erection of an apartment, house and secured a building permit for the erection of the same, but never proceeded with such construction.

On August 17, 1970 he entered into a written partnership agreement with one Erminio Elia (Exhibit 6) whereby provision was made for the partners to erect an apartment building on two of such vacant lots. Such construction was never commenced. He stated that the old house would probably have been torn down if the apartment had been built.

The plaintiff has been involved in several land deals. In 1967 he sold his interest in a motel which he had acquired some 3 years before. In 1973 he purchased 38 acres of vacant farm land which he later sold. In the same year he bought another 4 acres of vacant farm land. It is not providing him with any income. In 1974 or 1975 he purchased another 20-acre vacant farm property which he now has rented. He stated if anyone came with enough money he would sell it. In 1973 or 1974 in partnership with someone he bought a 40-acre farm property. There is no income from it. He stated he had an idea of developing a trailer camp thereon.

These various purchases by the plaintiff are more consistent with an intention on his part to sell at a profit when the appropriate opportunity arises than to retain the same as an investment. If the plaintiff’s evidence was correct he could have had the same substantiated by his wife who held the subject property jointly with him or by the partners who had purchased some of the other properties with him.

The irresistible inference from all the facts is that the plaintiff purchased the subject property with the sole purpose of awaiting an increase in value and then reselling at a profit. I find that the activating motivation at the time of purchase was to buy and resell at a profit when the opportunity arose.

The action should be dismissed with costs.