Bonner T.C.J.:
1 The appellants appeal from assessments of income tax for the 1990, 1991 and 1992 taxation years. The appellants are father and daughter. Prior to the years under appeal Henry Sokolowski invested money in mortgages. The investments were made in the names of Henry Sokolowski and/or Elwira Sokolowska. The investments were made through Coulter Financial Corporation (“Coulter”). A corporation named Kiminco Acceptance Co. Ltd. (“Kiminco”) which was affiliated with Coulter appears to have held and administered mortgages on behalf of investors. Coulter and Kiminco became bankrupt and mortgages held and administered on behalf of investors such as the appellants were placed in the hands of a receiver, Peat Marwick, whose duty it was to administer and realize on the mortgages for the benefit of the investors. During the years in issue Peat Marwick made payments representing interest and refunds of capital invested and it levied charges for work done as receiver. The Minister of National Revenue (“Minister”) made the assessments under appeal on the basis that each appellant held a 50 per cent beneficial interest in those mortgages and that in consequence interest income and carrying charges were to be equally apportioned.
2 The appeals came on for hearing in August of 1995. In September of 1995 judgments were pronounced allowing the appeals in part. The judgments came before the Federal Court of Appeal for review under section 28 of the Federal Court Act. The Court of Appeal allowed the applications and stated in its reasons that this Court had erred in law in not making a finding as to the respective shares of beneficial ownership in the mortgages attributable to each of the two taxpayers and in not directing reassessment of their respective shares of carrying charges and capital gains accordingly. This Court was directed to reconsider the matter on the existing record and any further relevant evidence which the parties might adduce and to determine the amount of the respective shares of beneficial ownership in the mortgages attributable to the two appellants in respect of the three taxation years.
3 A second hearing in this Court took place on November 15, 1996 to enable the parties to adduce further evidence and to make further submissions. Maria Sokolowska who is mother of Elwira and wife of Henry Sokolowski represented the appellants at both hearings. Maria Sokolowska testified on both occasions. An official of Revenue Canada who testified at the first hearing was the only other witness called. Henry Sokoloswki was unable to testify due to illness. There was no suggestion that Elwira Sokolowska was for any reason whatever unable to give evidence. Maria Sokolowska was invited to call her daughter to testify but declined to do so.
4 Maria Sokolowska testified that the mortgage investments held in the names of the two appellants belonged to Henry Sokolowski alone. She stated that it was he who invested the money and that he used his own savings for that purpose. She described Elwira Sokolowska as a “theoretical partner”. According to Maria Sokolowska the purpose of holding the investments in the names of one appellant and/or the other was to enable Elwira Sokolowska to have full powers to deal with the investments if Henry Sokolowski was outside the city or otherwise unavailable. She indicated that cheques made payable to Henry Sokolowski and/or Elwira Sokolowska could be and were cashed on Elwira's signature alone. Maria Sokolowska gave evidence as to various sources of funds which she said enabled her husband to make the investments. He earned slightly over $120,000.00 from work as a commissionaire during the period 1980 to 1988. As well he received benefits from the Workers' Compensation Board of Ontario as a result of accidents in 1950 and 1964, payments of Old Age Security and the Canada Pension Plan and the sum of $120,000.00 from the sale of a house. The evidence does support a conclusion that Henry Sokolowski's lifetime earnings were sufficient to enable him to make the investments in question without any contribution from his daughter. Nevertheless, as noted by Strayer J.A. in the reasons for judgment of the Court of Appeal on the section 28 application, it is incumbent on “...the taxpayers to prove that the beneficial ownership (and not just the source of investment funds) was divided in some way other than the equal division assumed by the Minister...”.
5 A conclusion that Henry Sokolowski was sole beneficial owner of the investments taken in the names of himself and/or his daughter must rest on a finding that he did not intend to make a gift to his daughter of a share of the investments. The evidence does not support such a finding. Firstly there is the presumption of advancement[FN1: <p>Presumption abolished from husband to wife but not from father to child.</p>] . Where a father puts a property jointly in the names of himself and of a son or daughter there is a presumption that he intended to benefit the son or daughter by the creation of a joint interest. That presumption may be rebutted by evidence that no gift was intended. Maria Sokolowska seemed to attach great importance to the use of the words “and/or” in the description of the two appellants on the face of the investment documents. She suggested that there was no limit or constraint on the choice of which of the two was to get how much and asserted that “the decision belongs to Henry”. Elwira Sokolowska, in her view, could have received 100 per cent, 50 per cent, or nothing. Maria Sokolowska's view was partially correct. It was open to Henry Sokoloswki to decide whether to make a gift to his daughter. However, obviously, a donor who has made a completed gift is no longer in a position to withdraw it.
6 It is, of course, conceivable that the names of father and daughter were used to enable the daughter to deal with the father's investments when it was not convenient for him to do so in person. In that case Henry Sokolowski would at all times have remained sole beneficial owner. There is however nothing other than the testimony of Maria Sokolowska to indicate that such was the nature of the arrangement, to rebut the presumption of gift and to discharge the onus of establishing that the Minister was wrong in concluding that beneficial ownership was equally divided. The Minister's position is supported by evidence that the appellants had claimed business investment losses in a prior year on the basis that each owned a half interest in the mortgages. I find that Maria Sokolowska's testimony was insufficient to discharge the onus. She seems to have been of the view that the use of the term “and/or” entitled the appellants to decide from time to time for each investment exactly what portion of each carrying charge, return of capital or capital loss would be claimed or reported by the one or the other. In my earlier reasons for judgment I stated that Maria Sokolowska “...appears to have given her evidence on the premise that taxation rests, not on the application of the law to the pertinent facts, but rather on the basis that income is to be reported and tax is to be imposed on the basis of figures chosen by the taxpayer, whether those figures had any relation to reality or not”. My impression that such was her view is even stronger now that it was before. I reject her evidence as unreliable. I observe as well that the failure of Elwira Sokolowska to testify is detrimental to the appellants' case[FN2: <p><em>Levesque v. Comeau</em>(1970), 16 D.L.R. (3d) 425 (S.C.C.)</p>] . The appeals therefore fail except to the extent of concessions made by the Respondent which will be incorporated in the formal judgments.
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