A
W
Prociuk:—The
appellant,
His
Honour
Judge
Walter
H
Nelson,
of
Prince
Albert,
Saskatchewan,
appeals
from
the
respondent’s
reassessment
of
his
income
for
the
taxation
year
1973
wherein
$3,000
of
the
total
capital
loss
the
appellant
originally
sought
to
carry
forward
from
1972
was
disallowed.
The
$3,000
loss
had
allegedly
resulted
from
the
sale
of
six
vacant
lots
on
March
1,
1972.
On
May
30,
1974
the
appellant
filed
with
the
District
Taxation
Office
at
Saskatoon
an
amended
Statement
of
Capital
Dispositions
for
1972,
claiming
a
capital
loss
of
$6,000
in
respect
of
the
said
transaction,
which
apparently
was
not
considered
by
the
respondent
at
all.
The
Notice
of
Reassessment
is
dated
November
29,
1974.
In
his
Notice
of
Objection,
as
well
as
in
the
Notice
of
Appeal,
the
appellant
claimed
that
the
amount
of
capital
loss
ought
to
be
$6,000.
The
central
issue
is:
what
was
the
fair
market
value
of
the
lots
on
Valuation
Day,
December
31,
1971?
The
facts
are
brief
and
essentially
not
in
dispute.
The
appellant,
aged
72,
testified
on
his
own
behalf.
He
has
lived
in
Prince
Albert,
Saskatchewan
since
1911,
and
practised
law
there
till
some
16
years
ago
when
he
was
appointed
to
the
Bench
as
the
resident
District
Court
Judge.
In
the
late
fifties
he
purchased
a
rectangular
parcel
of
vacant
land
approximately
344
feet
by
270
feet,
now
comprising
Lots
1
to
12
inclusive,
in
Block
51,
Plan
67PA01433
(see
Exhibit
R-2).
This
parcel
was
previously
zoned
for
agricultural
purposes
and
the
appellant
cultivated
the
land
and
grew
potatoes
thereon
with
varying
degrees
of
success.
In
1967
the
appellant
subdivided
the
said
parcel
into
12
lots,
Lots
1
to
6
inclusive
being
the
northern
portion
and
Lots
6
to
12
the
southern
portion,
with
a
10-foot
lane
running
east
and
west
between
them
and
a
20-foot
lane
at
the
eastern
boundary.
The
eastern
portion
of
Block
51
was
purchased
sometime
in
1966
by
the
Church
of
the
Latter
Day
Saints.
There
is
presently
a
church
building
thereon.
In
1967
the
City,
of
Prince
Albert
extended
sewer
and
water
mains
on
29th
Street
East
being
contiguous
to
the
northern
boundaries
of
Lots
1
to
6,
as
well
as
on
4th
Avenue
East
contiguous
to
the
western
boundaries
of
Lots
6
and
7.
in
1969
the
appellant
was
approached
by
Balman
Ltd,
a
construction
firm,
with
an
offer
to
purchase
Lots
1
to
6
which
he
sold
to
the
said
firm
for
$12,000
or
$2,000
per
lot.
The
appellant
states
that
he
valued
all
his
12
lots
at
that
time
at
$2,000
each.
As
to
the
remaining
Lots
7
to
12,
he
states
that
in
the
intervening
period
he
received
numerous
inquiries
as
to
price
and
possible
sale
but
no
firm
offer
till
late
in
February
of
1972,
when
he
was
approached
by
Pulp
City
Realty
Ltd
of
Prince
Albert
with
an
offer
of
$9,000
cash
for
the
six
lots,
which
he
accepted,
and
the
transaction
was
closed
on
March
1,
1972.
It
appears
that
the
solicitor
for
this
firm
had
also
served
on
the
City
Council
and
was
knowledgeable
as
to
what
was
shortly
to
take
place,
that
is
to
say:
(1)
sewer
and
water
mains
were
to
be
extended
on
30th
Street
contiguous
to
the
southern
boundaries
of
Lots
7
to
12;
and
(2)
these
lots
were
to
be
rezoned
to
R1
(residential).
It
further
appears,
according
to
the
testimony
of
the
appellant,
which
I
accept,
that
this
information
could
have
been
available
to
him
had
he
inquired,
but
he
did
not
do
so
because
of
his
very
painful
state
of
health
at
the
time.
The
lots
and
other
adjacent
properties
were
rezoned
to
R1
(see
Exhibit
A-2)
in
the
summer
of
1972,
and
water
and
sewer
mains
were
put
in.
The
lots
were
resold
shortly
thereafter
by
Pulp
City
Realty
Ltd,
for
approximately
$2,700
each,
as
building
sites.
As
stated
earlier,
the
appellant
filed
his
1972
income
tax
return
and
initially
valued
the
said
six
lots
at
$2,000
each
as
of
December
31,
1971
and
thereby
claimed
a
capital
loss
of
$3,000.
When
he
checked
and
discovered
what
the
lots
resold
for,
he
sought
to
amend
this
Statement
of
Capital
Dispositions
in
1972
to
place
a
total
value
on
the
said
lots
in
the
amount
of
$15,000
as
at
Valuation
Day
instead
of
the
$12,000
which
had
been
used
as
the
adjusted
cost
base
in
his
original
Statement
of
Capital
Dispositions
for
that
year.
The
appellant’s
health,
since
the
late
sixties,
was
failing,
and
he
was
experiencing
great
pain
in
his
hips.
In
the
fall
of
1971
he
underwent
orthopaedic
surgery
on
his
right
hip
at
a
hospital
in
Victoria,
British
Columbia.
The
surgery
was
successful
but
a
similar
operation
was
necessary
for
his
left
hip,
which
was
getting
more
painful
than
before.
On
or
about
February
15,
1972
the
appellant
wrote
to
his
surgeon
in
Victoria,
British
Columbia.
He
received
a
reply
dated
March
1,
1972,
which
he
filed
as
Exhibit
A-3.
His
surgery
on
the
left
hip
was
scheduled
for
April
17,
1972.
It
will
be
noted
that
it
was
during
this
period
of
pain,
suffering
and
anxiety
that
the
appellant
sold
his
six
lots
for
$9,000.
When
asked
why
he
sold
them
for
that
price,
he
replied:
‘‘Because
I
didn’t
know
that
water
and
sewer
were
going
through.
If
I
had,
I
would
have
held
on.
I
had
an
operation
a
few
months
previously—I
was
ill
at
this
time.”
He
went
on
to
point
out
that,
had
it
not
been
for
his
state
of
health
at
the
material
time,
there
was
no
reason
why
he
couldn’t
have
sold
the
said
lots
for
the
same
price
as
the
purchaser
asked
and
received
on
resale.
The
respondent
called
Mr
J
M
Warren
to
testify
as
to
the
fair
market
value
of
the
subject
property
on
Valuation
Day.
Mr
Warren
has
been
a
real
estate
appraiser
with
Revenue
Canada
for
2
Z>
years.
He
inspected
the
property
on
March
16,
1974
and
prepared
his
report,
filed
as
Exhibit
R-1,
on
January
16,
1976
for
the
purposes
of
this
appeal,
based
on
his
notes
made
at
the
time
of
inspection.
He
used
the
“market
approach”
to
value,
and
concluded
that
the
fair
market
value
as
of
December
31,
1971
would
be
$9,000.
Paragraph
9
of
his
report
reads
as
follows:
9.
MARKET
APPROACH
TO
VALUE
in
the
appraisal
of
vacant
land
the
market
approach
is
the
best
indicator
of
property
value.
This
approach
involves
locating
other
comparable
vacant
land
sales
and
relating
them
to
the
subject
property
to
Indicate
its
value.
Several
sales
of
property
of
similar
zoning
located
on
the
southeast
and
southwest
perimeter
of
the
city
were
located.
These
sales
occurred
in
1971
and
1972
and
when
adjusted
to
the
subject
for
motive,
location,
size
and
other
influences
indicated
a
value
range
from
20.8
cents
to
24
cents
per
square
foot.
This
indicated
a
value
range
from
$8,693.00
to
$10,000.00
for
the
subject
property.
After
reviewing
the
available
market
data
in
the
City
of
Prince
Albert,
discussing
lot
values
with
city
officials
and
realtors,
inspecting
the
subject
property
and
its
location
in
respect
to
city
development
it
is
my
conclusion
that
the
fair
market
value
as
of
December
31,
1971
would
be
$9,000.00,
equivalent
to
the
actual
sale
price
in
March
1972.
Further
investigation
of
sales
subsequent
to
the
early
spring
of
1972
indicates
a
more
active
residential
demand
and
a
strenthening
(sic)
of
prices
for
land
available
for
immediate
development.
For
this
reason
and
due
to
the
change
in
zoning
the
subject
property
was
developed
and
resold
at
a
profit
in
the
latter
part
of
1972.
The
available
sales
data
obtained
in
the
area
and
the
adjustments
to
the
subject
are
included
on
a
schedule
in
the
addendum.
Judge
Nelson
cross-examined
Mr
Warren
briefly,
and
the
transcript
reads
in
part
as
follows:
Q.
All
right.
Now,
show
me
please
on
the
map—I
don't
know
what
it
is—yes,
this
one
A-1.
Would
you
show
me
there
any
property
of
the
ones
you
have
referred
to
in
your
evidence,
and
which
has
sewer
and
water,
all
the
way
on
both
sides
of
the
property.
A.
None
of
them
do.
Q.
No,
none
of
them
do.
Isn’t
that
of
importance
when
you
are
about
to
buy?
A.
Yes.
Q.
All
right.
And,
wouldn’t
that
increase
the
value?
A.
If
there
was
servicing
on
both
sides
of
them?
Q.
Yes.
A.
Certainly.
Q.
When
I
say
servicing,
I
am
referring
now
to
the
lots
in
question
here.
(Indicating).
There
was
servicing
in
front
of
the
lots
north
all
the
way—I
mean
sewer
and
water
was
in?
A.
In
front
of
which
lots?
Q.
In
front
of
the
6
lots
north.
Right?
A.
Six
lots
in
the
block
that
you
owned?
Q.
Yes.
Where
is
the
block?
There?
A.
Yes.
There
was
servicing
on
29th
treet.
Q.
All
right.
There
was
servicing
all
along
the
block,
and
there
was
service
all
the
way
down
on
the
west
side
of
those
lots.
A.
That’s
right.
Q.
Now,
may
I
ask
you
this
question?
Could
you
show
me
anywhere
a
similar
situation
where
there
are
six
lots
with
the
services
as
close,
and
built
up
as
close,
with
all
modern
houses?
A.
Well
today,
all
lots
facing
31st
Street
owned
by
the
City
have
the
same
situation.
Q.
I
am
talking
about
evaluation
day.
A.
OK.
Now,
I
can’t.
Q.
If
a
person
wanted
to
buy
a
lot
which
wasn’t
serviced,
and
he
knew
that
It
would
be
serviced
that
summer
when
he
bought
it,
how
much
would
that
Increase
the
value
of
the
lot
if
it
weren’t
going
to
be
serviced
maybe
for
two
or
three
years,
and
he
knew
they
were
going
to
be
serviced,
and
they
both
knew,
the
seller
and
the
purchaser?
A.
Well,
the
difference
is
pretty
well
demonstrated
here,
what
the
difference
is.
One
lot
that
has
service
sold
for
$3,000.00
and
the
other—well
you
know—represent
46¢
a
square
foot
and
the
other
was
selling
for
20¢—well,
the
price
has
probably
doubled.
Q.
So
that
the
fact
the
services
are
not
in
but
they
know
they
are
coming
in
would
make
that
difference,
wouldn’t
it?
A.
If
you
were
sure
they
were
going
to
be.
Q.
Yes,
if
you
were
sure.
Thank
you.
The
sale
of
Lots
1
to
6
inclusive
in
the
same
block
in
1969
at
$2,000
each
and
the
fact
that
he
valued
the
remaining
lots
at
the
same
price
at
that
time
is
a
strong
factor
in
favour
of
the
appellant.
It
was
common
knowledge
that
sewer
and
water
services
were
to
be
extended
beyond
the
subject
property
in
1972.
However,
the
appellant
did
not
have
this
information
for
the
reasons
I
have
stated
earlier.
Mr
Warren
did
not
have
this
information
at
the
time
of
his
inspection,
and
ii
is
obvious
that
this
special
feature
was
not
taken
into
account
by
him.
Taking
all
the
evidence
into
consideration,
I
cannot
conclude
that
the
fair
market
value
on
Valuation
Day
was
the
sum
of
$15,000,
which
was
approximately
the
amount
the
appellant’s
purchaser
received
on
resale
at
a
date
subsequent
to
March
1,
1972,
because
the
state
of
the
real
estate
market
in
all
areas
in
Prince
Albert
accelerated
and
prices
escalated
considerably
thereafter.
However,
the
evidence
does
establish
that
the
fair
market
value
of
the
said
lots
was
at
least
$12,000
on
Valuation
Day,
and
I
set
same
at
that
sum.
Accordingly,
the
appeal
is
allowed
in
part
and
the
matter
is
referred
back
to
the
respondent
for
reassessment
on
the
basis
that
the
appellant
is
entitled
to
claim
a
capital
loss
in
the
sum
of
$3,000
in
respect
of
this
particular
transaction.
Appeal
allowed
in
part.
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