WALSH, J.:—This action came on for hearing before me in Calgary at the same time as the case of William W. Siebens v. M.N.R. (p. 557) and the same evidence was made applicable to both cases. Having this day given my reasons for judgment and rendered judgment in that case, which judgment dismissed the appeal on the principal issue but maintained it in part on an alternative issue, holding that credit should have been given to appellant against the sale price of his portion of the shares of the company, for his portion of the book value of the assets of the company sold indirectly by the means of the sale of such shares, as shown on the balance sheet of the company as at January 31, 1965 on which said sale was based, it is unnecessary to repeat my reasons for arriving at this judgment.
However, the present appellant did raise an additional argument available to him which was not available to William W. Siebens, the appellant in the other action, and which could conceivably affect the result on the principal issue, which argument I will now deal with. The present appellant was no longer employed by the company at the time the sale took place, his employment having been terminated as of December 31, 1964, took no part in the discussions leading to the sale of the shares and, in fact, could not be communicated with until the agreement had been completed on the assumption that he would not object but with provision made in the sale agreement for the sale of the assets in any event for the same price in the event that he should refuse to sell his shares together with the other shareholders. He was thus in the position of what may be described as an innocent bystander, although subsequently on February 16, 1965 he did agree to sell his shares (held for him by Tam Holdings Ltd.). This question seems to have been dealt with, however, in at least three previous decisions. In the case of M.N.R. v. Clifton H. Lane, [1964] C.T.C. 81, Noël, J., as he then was, stated at page 91 :
It would appear from this that the syndicate’s non-active members were quite content to leave the handling of the syndicate’s activities to the executive committee who had carte blanche to handle the business of the syndicate as they thought best and because of this situation, the passive members here would be in no different position than that of the active members. Indeed, if the transactions are business transactions, any profit derived therefrom from any of the members would be taxable.
In the case of Nicholas DeToro v. M.N.R., [1965] C.T.C. 321, which dealt with a situation where the appellant who had building experience and undertook the detailed supervision of the acquisition of the building site, the erection of a building and subsequent to its completion the management and operation thereof, and one Stanley W. Carr, who merely supplied the necessary funds from his personal resources and arranged mortgage financing but was otherwise inactive, were both held taxable on disposal of the property, although Cattanach, J. stated at page 323 :
. . . However, because of the possible implication of Carr entering into competition with clients of the firm of financial agents by whom he was employed, it was arranged that he should otherwise be inactive in the matter and that the appellant should assume the active and dominant role in all negotiations.
In the case of Normac Investments Ltd. v. M.N.R., [1969] C.T.C. 468, one partner sold a building against the wishes of the other partner, the appellant in the case, but Kerr, J. nevertheless held that appellant was taxable on the profit as an adventure in the nature of trade. I believe that the principles set out in the foregoing cases should apply and that no distinction can be made between William Siebens and William McKinley with respect to their taxability on the profit arising from the sale of their shares. I therefore render the same judgment in this case as in that of William W. Siebens (p. 557), dismissing the appeal on the principal issue but referring the re-assessment back to the Minister for further re-assessment so as to credit against the amount received by appellant from the sale of his shares, his- portion of the book value of the inventory of petroleum and natural gas leases and other rights so -sold less the credits already allowed.
Appellant having been partially succéssful although losing on the principal issue shall have cne-third of his costs.
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