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The point put forward by counsel for the appellant that the expense should be allowed to this taxpayer but denied to others (such as doctors or dentists) did not impress counsel and he considered its admission practically fatal to the appellant’s case. ...

There is no evidence that the prime purpose for its purchase was that alleged by the appellant, nor even that it could be considered a rental asset of any substance. ...

The appellant maintains that the cost of renting an apartment and the added burden of proving meals two days a week ought to be considered personal or living expenses. 2. ...

Tax was to be considered, but it was not the consideration when this company was formed. ... It is the part that was not reinsured that the respondent considered as not having been shifted. ... If the corporate veil was lifted, Humber would be considered as the same company as the appellant, and the part of the risk not reinsured by Humber would be considered as not shifted by the insured (the appellant) to the insurance company (Humber). ...

The evidence considered by each counsel to be significant was summarized in argument, and certain selected parts are dealt with in the argument portion of this decision in more detail. Argument Counsel for the appellant presented a summary of his argument with regard to the two points being considered: (Re: Independent Contractor) 1. ... Ltd., BCTV or CBC, must be considered by itself to determine whether the services are performed as an employee or as an independent contractor. ...

For the fiscal period of the Clinic ending in 1965, the Minister, basing his estimate on the gasoline consumption of Dr Yates’s “professional” car for the twelve months in question, estimated that the car had been driven a total of 11,300 miles, a figure which Dr Yates said he considered to be fairly reasonable. ... This, the doctor said, was completely unreasonable as, like every doctor, he makes numerous calls which are considered necessary but for which no office record is kept if it is not necessary to do so in order to arrive at the fee to be charged. ... The English case of Pook v Owen, [1967] 2 All ER 579, was considered to have arisen under the same statutory provisions as Ricketts v Colquhoun (supra), and was therefore considered to be inapplicable in the Cumming case (supra) and I therefore find it equally inapplicable herein. ...

The points covered by counsel in argument and considered by the Board to be critical may be summarized as follows: For the appellants: It is true that we have here a situation where Mr Danzo is an experienced developer... ... The last reasons which the appellants considered to have been a compelling factor in selling the property were personal and financial problems affecting Mr Walsh at that time. The financing of the project on the basis of the evidence was never seriously considered or discussed and Mr Walsh, who was not an active member of the new partnership, could easily have been replaced, had it been the partnership’s firm and sole intention of proceeding with the construction and operation of the medical-dental building. ...

In assessing the appellant for the taxation years at issue, the respondent replied, inter alia, on the following presumptions of fact: (a) in the years at issue, the appellant carried on a business of building single family houses for resale; (b) the company Les Habitations Emerillon (Canada) Ltee was incorporated to build a block of apartments for the purpose of deriving property income therefrom; (c) during the period at issue, the appellant held 33 / of the ordinary shares of the capital stock of Les Habitations Emerillon (Canada) Ltée; (d) in order to enable Les Habitations Emerillon (Canada) Ltee to acquire the working capital needed to build the building mentioned in subparagraph (b) of this paragraph, the appellant during the taxation years at issue loaned the latter the following sums: 1975 $71,847.00 1976 $45,394.00 (e) during the taxation years at issue, the appellant was a minority shareholder in Les Placements France Pierre Inc; (f) during the taxation year 1976, the appellant loaned Les Placements France Pierre Inc the sum of $12,400.00; (g) the appellant concluded that most of the advances made to Les Habitations Emerillon (Canada) Ltée were irrecoverable and, in computing its taxable income for the taxation year 1975, claimed a deduction of $33,500.00, half the capital loss of $67,000.00, which was the total amount of the advances considered by the appellant to be irrecoverable; (h) in computing its income for the taxation years 1974 and 1975, the appellant included the total amount of $5,847.45 as interest receivable on the advances mentioned above; (i) in computing its income for the taxation year 1976, the appellant claimed a deduction of $45,660.00 as bad debts, namely: — Bad debts $62,641.00 Less — Recovery of bad debts Sub-total $22,828.00 Plus $39,813.00 — Bad debs resulting from interest on advances $ 5,847.00 — Bad debts claimed Total $45,660.00 (j) the appellant did not prove that the debts claimed were bad debts in the taxation years at issue; (k) in the taxation years 1976, 1977 and 1978, Les Habitations Emerillon (Canada) Ltée repaid the following amounts to the appellant: 1976 $22,828.00 1977 $ 1,198.00 1978 $20,126.00 (l) the total debts which were allegedly bad in the taxation years 1975 and 1976 were not included in computing the appellant’s income for the said years or any earlier year; (m) the debts of appellant which were allegedly bad in the taxation years 1975 and 1976 do not result from loans made by the appellant in the ordinary course of the appellant’s business; (n) the appellant’s ordinary business did not consist wholly or even partly in the lending of money; (o) the advances mentioned in subparagraphs (f) and (g) of paragraph 5 of this reply to the notice of appeal, made by the appellant during the years at issue, do not constitute an expense incurred for the purpose of earning income from its business. 3. ... They referred to that case: Having considered Freud and Steer and other cases, including Minister of National Revenue v Algoma Central Railway, [1968] S.C.R. 447 (68 DTC 5096), Farmers Mutual Petroleums Limited v Minister of National Revenue, [1968] S.C.R. 59 (67 DTC 5277), as well as British Columbia Electric Railway Company v Minister of National Revenue, [1958] S.C.R. 133 (58 DTC 1022), Kerr, J. concluded: “In my opinion the appellants outlays were on account of capital, within the meaning of Section 12(1)(b) and the claimed deductions are prohibited. ... In my opinion, the outlays are of the character of payments on account of capital and are not of the kind of expenditures that the Statute contemplated to be allowed as deductions under the language “made or incurred by the taxpayer for the purpose of gaining or producing income from property or a business of the taxpayer”, in Section 12(1)(a), or under the language “business losses sustained... in the course of the carrying on of a business”, in Section 32(5)(d).” 4.03.8 The Board believes that it has no choice but to conclude that the appellant’s losses resulting from the loans made to Emerillon in 1975 and 1976 should be considered capital losses, even though the evidence showed that loans of over $200,000 (para 3.02(b)) were made to persons other than Emerillon. ...

The Dealer is and will continue at all times to be an independent hardware merchant and is not to be considered in any way subject to control by the Company. 11. ... It had been the considered opinion of the management of the appellant, and supported by Mr Gutman, that the promissory notes and/or preference shares were valueless, in view of the known poor financial condition of Link. ... In effect, the amounts in question (if they could be considered “income” at all) were only “contingent income”. ...

They must be considered...’ and it goes on to state that which is recognized by the Board as the proper test, and he says, “That absence was temporary even though, strictly speaking, indeterminate in length. ... In the first part of my argument I suggest that clearly the facts when considered are such that Mr Erickson is ordinarily resident in Canada. ... There is considerable doubt on the basis of the only evidence availabale to the Board (Exhibit A-1) that this appellant would indeed be considered a “resident” of Ireland, but that determination would not in itself affect the outcome of this matter before the Board. ...