The Chief Justice (judgment delivered from the Bench, per curiam):— In these two appeals the question is whether the Trial Division erred in upholding assessments, under Part I of the Income Tax Act, of profits made from the purchase and sale of land.
There was one purchase of a parcel of land by two persons jointly. The appeal, as I understand it, is based upon the view that, in respect of each of those persons, the sole reason for the purchase was to have an undivided part of that land available as a site for a business, and that its resale, after it became clear that the land would not be required by either of them for that purpose, was therefore a sale of a capital asset.
I adopt the statement of facts as set out in the learned trial judge’s reasons for judgment as fairly representing the facts as established by the evidence in all significant respects.* [1]
I also agree with the reasoning whereby the learned trial judge reached his result.
In my view, the problem raised by the appeals is one in respect of which the applicable principles were aptly stated by Noel, J (as he then was) in Racine, Demers et Nolin v MNR'.'f [2]
To give to a transaction which involves the acquisition of capital the double character of also being at the same time an adventure in the nature of trade, the purchaser must have in his mind, at the moment of the purchase, the possibility of reselling as an operating motivation for the acquisition; that is to say that he must have had in mind that upon a certain type of circumstances arising he had hopes of being able to resell it at a profit instead of using the thing purchased for purposes of capital. Generally speaking, a decision that such a motivation exists will have to be based on inferences flowing from circumstances surrounding the transaction rather than on direct evidence of what the purchaser had in mind.
In this case, the learned trial judge, after making a finding that “one of the motivations of Revzen and Burnstein in acquiring the land was to have a hedge against the possibility that the land would be needed in the event that the existing scrap metal and foundry sites would cease to be available to them’’, went on to find that “there was also another motivation inducing Revzen and Burnstein to acquire the land, namely, their feeling that they could sell it at a profit if they would not need it for their businesses”. In my opinion there was evidence on which this finding could be made and no reason has been shown why it should be disturbed.* [3]
I am of opinion that the appeal should be dismissed with costs.
*l realize that he wrongly referred to one of the persons involved as a director of the company from whom the land was originally bought but, in view of the closely held character of the company, this would not seem to be significant.
+65 DTC 5098 at 5103; for the language actually used by the Associate Chief Justice, see [1965] 2 Ex CR 338 at 349; [1965] CTC 150 at 159:
Pour donner à une transaction qui comporte l’acquisition d’un capital le double caractère d’être aussi en même temps une initiative d’une nature commerciale, l’acquéreur doit avoir, au moment de l’acquisition, dans son esprit, la possibilité de revendre comme motif qui le pousse à faire cette acquisition; c’est-à-dire qu’il doit avoir dans son esprit l’idée que si cer taines circonstances surviennent il a des espoirs de pouvoir la revendre à
Leaving aside a personal, sentimental or other special reason, none of which exist here, a businessman does not leave over $35,000 in an unproduc tive asset on which he has to pay taxes, for five years, unless he has an expectation of profit on an ultimate resale.