Catianach, J:—This is an appeal by the appellant from its assessment to income tax by the Minister of National Revenue for its 1969 taxation year.
In assessing the appellant as he did the Minister increased the appellant’s income by an amount of $821,843.06 being the gain received on the sale of 93 acres of land situated in the Town of Burlington, Ontario, known as the Peart farm, and after deduction of a. reserve pursuant to paragraph 85B(1)(d) of the Income Tax Act, levied tax accordingly on the basis that the profit realized by the appellant was income from a business as the meaning of that word is extended by paragraph 139(1)(e) of the Income Tax Act to include an adventure or concern in the nature of trade.
The appellant is a joint stock company incorporated pursuant to the laws of the Province of Ontario with a private status by letters patent dated July 6, 1964 under the corporate name of Hamarstad Limited. The word “Hamarstad” used in the corporate name is an acronym formed from the initial syllables of the words Hamilton Area Stadium. The objects of incorporation were to purchase, lease, construct or otherwise acquire, manage and improve lands and buildings including structures for sporting events and to sell, mortgage or otherwise dispose of the same.
The fact that a particular transaction falls within the objects contemplated by the letters patent is merely a prima facie indication that a profit so derived is a profit derived from the business of the company. The question to be determined is not what the company might have been authorized to do, but what in fact it did and whether what it did was a business of the company.
The City of Hamilton has always been an avid “football town” since the inception of the game. Its citizens were fans of the team based in the city. Throughout the years the teams in Hamilton were well known as rugged competitors and enjoyed success because of the consistent outstanding quality of their players, coaches and management and the support of the fans contributed to that success. The city looked upon itself as the cradle of Canadian football, a belief which is disputed by other equally avid football towns.
The team which first came into prominence in Hamilton was known as the Tigers. The Tigers competed in the Interprovincial Rugby Union, known as the Big Four, which league, as the name implies, consisted of four teams the other three being the Ottawa Rough Riders, the Toronto Argonauts and the Montreal Alouettes but the Montreal team had played under other names.
During the years 1941 to 1945 the activities of the league were suspended due to the Second World War.
Another league known as the Ontario Rugby Football Union (referred to as the ORFU) continued to operate during those years. A team was formed in Hamilton under the name of the Wild Cats and became a member of that league.
In 1946 the Tigers appealed to the Big Four for a form of gate equalization and took the stand if some method of gate equalization was not forthcoming the Tigers would withdraw from the league. The Tigers did not get it and made good the threat to withdraw. The Tigers were replaced in the Big Four by the Wild Cats, the team that had been formed during the war and had played in the ORFU. The Tigers went to the ORFU.
By this time football had become truly professional. The players were being paid. substantial salaries and the salaries so paid were increasing each year. It followed that, in competing for players and patronage, both teams in Hamilton were in financial difficulties.
Accordingly a group of executives of the larger corporations in Hamilton decided it would be advantageous if the teams were to amalgamate and in January 1950 approached Mr Ralph Cooper to undertake the task. Mr Cooper accepted and successfully accomplished this task.
Both clubs turned over all their equipment. The contracts of all players on both clubs were frozen until a single club was organized for the 1950 season. The board of directors of the amalgamated club was composed of three directors of the Tigers, three directors of the Wild Cats, two independent citizens of Hamilton and Mr Cooper, making a board of nine. The directors rotated.
Also in 1950 a corporation without share capital was incorporated pursuant to the laws of the Province of Ontario under the name of the Hamilton Tiger Cat Football Club, Inc for purposes to be carried out without pecuniary gain to the members.
The franchise under which the Wild Cats had played in the Big Four was owned by four individuals in Hamilton, H G Hilton, president of the Steel Company of Canada, now deceased, F A Sherman, president of Dominion Foundaries and Steel, also deceased, Sam Manson, a former football. great, and C C Lawson. These four persons agreed that, so long as the Tiger Cats fielded a team and were financially sound, they would allow the club to use their franchise for the City of Hamilton.
The Club hired an outstanding American coach and general manager, Carl Voyles, and had a successful season in 1950. Mr Voyles brought with him as player and assistant coach, Mr Ralph Sazio, who had played under Mr Voyles in the US and in whom Mr Voyles had great confidence.
The league eventually became the Canadian Football League, known as the CFL, divided into an Eastern and Western conference, comprised of nine teams, four in the Eastern conference and five in the Western conference.
In 1960 the two clubs in the Eastern conference in the area with lesser populations to draw from, that is Hamilton and Ottawa, were pressing for a larger share of the gate receipts of the two other clubs, Toronto and Montreal, in the more densely populated areas and with consequent greater attendance. This was essential to enable the clubs in Hamilton and Ottawa to remain competitive. The clubs in the two larger populated areas recognized the wisdom of maintaining the four teams at equal strength but as a condition of granting the Hamilton and Ottawa clubs a greater share of the gate, insisted that the franchises under which the Ottawa and Hamilton clubs operated should be transferred to companies with share capital. If my recollection of the evidence is correct it was a requirement embodied in the Constitution of the Eastern conference of the Canadian Football League, that the franchises must be held by limited companies.
It follows that the Hamilton and Ottawa clubs had no choice but to operate through companies with share capital.
Accordingly by letters patent dated January 31, 1961 Hamilton Tiger Cat Football Club Limited was incorporated pursuant to the laws of the Province of Ontario with share capital to operate a professional football team. There were twelve directors and shareholders, namely Jacob Gill Gaudaur, Ralph William Cooper, Halliwell Soule, William Charles Schwenger, Charles Graigmyle Lawson, Hugh Gerald Hilton, Gordon Walter Lawson, Frank Du Moulin Bliss, Joseph Ross Fischer, Francis Mallach Gibson, Leonard Percy Back and James Sylverton Rogers.
Hereinfater I shall sometimes refer to the Hamilton. Tiger Cat Football Club Limited as the “Football Club” or as the “Club”.
These persons are the same persons who were members and directors of Hamilton Tiger Cat Football Club, Inc, the corporation without share capital.
In the meantime the holders of the franchise in the Canadian Football League had become H G Hilton, C C Lawson, Judge Schwenger and Ralph Cooper.
It became necessary for the newly incorporated club to acquire the franchise from the holders thereof.
The holders engaged an accountant to put a valuation on the Club based on the assets, earnings and money in the treasury. The valuation was $170,000. There was $220,000 in the treasury. Two trusts were set up, one an athletic trust to receive the $220,000 and a football trust to receive an amount of $50,000. A debenture was given for the balance of $120,000. The interest from the larger fund is used to further amateur athletics generally and from the lesser fund to foster junior football in the Hamilton area.
The incorporation of a private joint stock company to operate the Tiger Cats raised a storm of protest.
The citizens of Hamilton looked upon the Tiger Cats as being in the same category as the Mountain and the Market. The Tiger Cats were considered as a public trust belonging to every inhabitant of Hamilton.
Not only did this action inspire popular protest, but it also inspired political protest. The municipal politicians took the position that the team had been a community enterprise and should be continued to be owned by the community.
The transfer of the franchise was publicly opposed by several members of the City Council.
In the fall of 1961 Victor Copps who was campaigning for election as Mayor of Hamilton was particularly vehement in his objection. He was elected Mayor on December 15, 1960. Mr Copps obtained an interlocutory injunction restraining the completion of the sale of the football team.
A Committee for the Continuation of Public Ownership of the Hamilton Football Club was formed. Many members of the City Council were on this committee. The committee conducted a vigorous campaign.
The directors of the private company were looked upon as thieves. While it is not incumbent upon me to decide the matter it does not appear from the evidence before me that the football team was ever owned by the community. More accurately it would appear to have been adopted by the community as its own. It had been operated by a non-profit corporation. The protest was against the team being operated by a joint stock company the shares of which were owned by individuals, who were the same individuals as had been the members of the corporation without share capital. Further the franchise had always been held by four private individuals.
The storm of protest evoked bespeaks the success of the policy of the members of the corporation without share apital in presenting and selling the Tiger Cats to the populace as “community enterprise”.
There is no doubt that the transfer of ownership to a limited company was extremely unpopular and resulted in a climate of extreme antagonism against that company and its directors and shareholders.
While the witnesses described the antagonism with exactitude they did so in restrained form. I could not escape the conclusion that the antagonism was much more vehement and bitter than was described in moderate terms. I also formed the distinct impression that the antagonism was directed particularly at Mr Gaudaur.
Mr Gaudaur was the general manager of the Football Club, as well as a shareholder and director. He was looked upon as the author and motivator of the changed status of the ownership of the Football Club and as such drew the wrath of the opposition to the change.
The Tiger Cats, at all relevant times, played their home games in the Hamilton Civic Stadium which is owned by the Board of Parks Management of the City of Hamilton. The members of the Parks Board are not elected officials but are appointed by the City Council. The Football Club paid a rental fee for the use of the stadium pursuant to agreements between the Club and the Parks Board.
The political antagonism directed at the new owner of the Football Club was reflected, quite naturally, in the rental negotiations between the Club and the Parks Board which is appointed by the City Council and it will be recalled that the Mayor before his election had obtained an injunction to prohibit the sale to the limited company.
In 1960 the corporation without share capital had negotiated a rental agreement with the Parks Board which had been reduced to writing in draft form. This agreement provided for (1) a rental of 15% of gate receipts after deduction of municipal, provincial and federal taxes, (2) the Club was to pay the electric bill for floodlighting and
(3) the agreement was to be for twenty years subject to the rent being reviewed every five years.
The principal advantage of this draft agreement was that it provided security of tenure for twenty years.
When the joint stock company took over as owner of the football team the Parks Board was not willing to sign this agreement.
The Club was forced to negotiate its rental agreement with the Parks Board each year.
Each year negotiations were long and protracted and conducted in a spirit of acrimony. So protracted were the negotiations that the Football Club never knew with certainty if it would have a field on which to play its home games.
Beginning with the 1961 season the Parks Board made monetary demands which in the opinion of the general manager of the Football Club, Mr Gaudaur, were so oppressive as would result in the end of football in Hamilton if accepted. In addition to 15% of the gate receipts and the cost of lighting for night games the Parks Board also demanded a gurantee of $94,000 for gate receipts plus 15% of radio and television rights. No other club in the CFL was required to give any revenue received by from radio rights and in the Eastern Conference the revenue from television rights was distributed equally among the four clubs. The constitution of the Conference prohibited any of the clubs assigning any revenue from the television rights to any person.
The Tiger Cat Club prepared a well documented submission to the effect that the previously existing rental arrangement, which had been in effect for some years, was the most onerous from the Football Club’s standpoint and the most beneficial from the stadium ownership viewpoint of all nine clubs in the league.
It was pointed out that the Club must be allowed to be competitive in the league or both the stadium and the Club would suffer in the ultimate result.
The Parks Board responded by requesting to examine the Club’s financial statements and budget and it was at this time that the Parks Board proposed a one-year contract.
The Club acceded to the production of its financial statements and budget and also prepared a study of the financial aspects of the proposed agreement as well as detailed cost benefit analysis which clearly demonstrated that contrary to the Park Board’s claim that it was subsidizing the Football Club the Parks Board was benefited by over $100,000 from its revenue exacted from the Football Club.
The opinion of the management of the Football Club was that the Parks Board was actuated by vindictive political motives and was, in reality, killing the goose that laid the golden egg.
A new agreement was eventually entered into on June 30, 1961 on terms far less onerous than first demanded but there was a slight increase in rental over that in the 1960 draft agreement which was to be for 20 years and the 1961 agreement was only for one year.
In 1962 the same routine was repeated. This time the demand by the Parks Board was for a minimum guarantee of $73,000. The Parks Board indicated that they must get something from the Club and as illustrative of the annoyance inflicted upon the Club the Board demanded to retain the right to the commission on the collection of the Ontario hospital tax although the cost and the work of collecting that tax fell on the Club. This picayune demand was conceded by the Club.
All annual rental agreements for 1961 and subsequent years were concluded each year on substantially the same terms but when each negotiation time came up the Parks Board consistently made onerous demands on the Club followed by protracted and acrimonious negotiation. It was a great annoyance to the Club not to be able to complete their rental arrangements until well into the year and to be constantly faced with the uncertainty as to whether the Club would have a park to play its home games in.
The demands for a minimum guarantee persisted. The guarantee demanded in 1969 was for $62,000 or alternatively a voice in the management of the Tiger Cat Football Club.
Simultaneously with the difficulties the Club was experiencing in its rental negotiations with the Parks Board it was experiencing difficulties with the seating capacity in the stadium itself. The Club was faced with increased operational costs and had need of additional revenue to remain competitive. That revenue could only come from increased ticket sales.
In 1959 the capacity of the Hamilton Civic Stadium had been increased to 25,000 by rebuilding the south side stand. Even with this increased capacity the major drawback of the stadium was that only 12,000 seats were between the goal lines the least number of any of the stadia used by the other eight clubs in the league except Regina.
In the years 1957 to 1967 the Hamilton Tiger Cats were in the Grey Cup finals eight times. The Grey Cup is emblematic of the professional football championship. It is the final game in each year and is played by the teams winning the Eastern and Western Canadian Conference of the league.
In the early years the Western teams were weaker and dominated by the Eastern teams. In those years the Grey Cup game was no contest. It was not until 1935 that the Western teams began to reach a level of equal ability. In that year the Winnipeg Blue Bombers defeated the Hamilton Tigers in a stunning upset. In 1948 the Calgary Stampeders met the Ottawa Rough Riders in the Grey Cup game in Toronto. The enthusiasm of the Calgary supporters was phenomenal. They followed their team to Toronto in great numbers, all in cowboy dress complete with cow ponies. There was square-dancing in the streets and pancakes served from chuckwagons. Those fans made the Grey Cup a national spectacle. In retrospect it was poetic justice that the Calgary team by two instances of good luck defeated a superior Ottawa team.
The Hamilton Tiger Cats defeated the British Columbia Lions in 1963 to win the Grey Cup in that year. In that year the attendance at the Hamilton home games was, on the average, in excess of 25,000, the maximum seating capacity. The excess was obviously standing room.
In 1964 in anticipation of the demand for seats the Club offered to put up temporary bleachers, planks on tubular construction in front of the south stand at its own expense, deducting a rental of 15% on the revenue from those seats until the cost was recouped at which time the seats would be given to the Parks Board. This proposal was turned down by the Board on the ground of lack of crowd control.
Later the Parks Board countered the Club’s proposal with a proposal of its own to erect some 1,800 to 2,000 temporary seats at its expense but demanded a rental of 25% of the revenue. After negotiation the seats were erected and the rental exacted was 15%. This is ilustrative of the ill-feeling that subsisted and the Parks Board’s insistence in getting as much as it could from the Football Club, much to the annoyance of the latter.
Mr Gaudaur, the capable general manager of the Football Club, prepared a projection based upon the successful Grey Cup years, when the additional revenue to the Club from that source was $100,000, which demonstrated that the expense line would cross the revenue line in 1965. This projection simply meant that without increased revenue which could only come from increased ticket sales the Club would operate at a loss and that would be the end of professional football in Hamilton. Mr Gaudaur’s projection was based on Grey Cup years. In those years returns are greater. Hamilton could have no assurance that the team would be in the Grey Cup [each] year. Therefore Mr Gaudaur’s projection was optimistic.
In 1967 the suggestion was made to the Parks Board that the seating capacity of the Civic Stadium should be increased by rebuilding the north stand, as. had been done in 1959 with the south stand. This would result in an additional 3,000 seats between the goal lines at an estimated cost of $750,000. In Mr Gaudaur’s opinion this was, at best, a temporary measure.
The Parks Board replied by letter stating that such an expansion would not be considered by the Parks Board at public expense, but that it would consider any further suggestions to be made by the Club. In my view this letter was an absolute refusal by the Parks Board to undertake expansion and clearly demonstrated that the Parks Board was completely unsympathetic to the needs of the Club for a larger seating capacity.
The Football Club commissioned its auditors to prepare a feasibility report upon the construction of a new stadium. This report was submitted to the Club on March 26, 1964 and has been referred to as the “Skinner Report” taking its name from the member of the firm who prepared it.
The highlights of that report were (1) the levelling out of attendance at the maximum seating capacity of the present stadium was depriving the Club of revenue, (2) projection that sometime between 1975 and 1980 the Club would need a 50,000 seat stadium the construction of which could be done in phases and (3) that it was apparent that a stadium of that capacity would be a good investment in the long run.
The Hamilton Civic Stadium is located in an area known as Scott Park and in that area there was also located property which was to be dedicated as the site of Canadian Football Hall of Fame to be operated by a civic committee. This area provided parking for the persons attending the football games. The Parks Board sold the land. The officers of the Football Club felt that the loss of parking would affect attendance detrimentally even if seating capacity of the stadium was increased.
Therefore the background was that the Football Club needed to increase its revenue through increased revenue to survive. It was faced with antagonism from the civic authorities through the instrumentality of the Parks Board which adversely affected negotiations for the rental of the stadium and any prospect of increased seating capacity. The last straw was the action of the Parks Board in eliminating parking facilities.
Against this background at a meeting of the directors of the Football Club held on June 28, 1963 Mr Gaudaur recommended that the Club look for a property within a radius of 10 miles of the City of Hamilton with a view to building a stadium thereon and to consider plans and the cost of doing so. A committee was established consisting of Mr Gaudaur, Mr Cooper, Mr Gibson, Mr Skinner, the author of the subsequent Skinner Report, a real estate agent and such other persons as might be added.
At this point I should mention that the directors of the Football Club gave evidence. They were successful businessmen in the community some of whom had been former football players, but like all football devotees their overwhelming desire is to see the game continue and improve. It was their unanimous opinion that Mr Gaudaur was one of their most competent and successful general managers. Being directors and engrossed in their own affairs they left the day to day management in the hands of the general manager but they did bring their undoubted ability to bear on major matters of policy. Naturally they relied heavily on the advice of their general manager and were influenced by him. When they brought their own independent judgment to bear on the general manager’s recommendations for a particular course of action and the supporting reasons therefor they gave him whole-hearted support if they agreed with those reasons.
The directors were convinced that it was not economically feasible to continue in the Civic Stadium indefinitely and positive steps should be taken to build a stadium the first step being to acquire a site.
It was agreed that the Club could operate in the Civic Stadium for approximately five years. Accordingly it was not the intention of the Club to begin construction immediately but only upon the expiry of that period when a new stadium would become an inevitable necessity.
The committee, as established and later augmented, undertook its search for a suitable property. They looked at many sites which were rejected because they were not suitable for a football stadium.
In January 1964 the property committee recommended the Peart farm as the best site for a football stadium. This decision was not made lightly but only after a most exhaustive search and a consideration of many factors all directed to the suitability of the site for a football stadium.
A helicopter owned by Mr Schwenger was used to survey the areas.
The Peart farm offered the most advantages for the purposes of a football stadium.
First the farm was 90 acres in size which was adequate for a Stadium leaving ample parking space.
The location was right. It was close to the centre of the City of Hamilton. It was between Hamilton and Toronto where there was denser population than on the other side of Hamilton or to the north. It was easily accessible from major highways. It was a short distance from a cloverleaf at the Queen Elizabeth Highway and the Guelph line. Further it would be easily accessible from a cloverleaf on an extension of Highway 403 which was to be built. The site would be located between two major highways with cloverleaves from both of them. It was an excellent location for fans coming from Niagara Falls, St Catharines, the Welland area, Brantford and Guelph as well as Burlington within the boundaries of which the farm was located and Burlington furnished 25% of the Hamilton Tiger Cat football fans. It was the hub of the area.
The land was level. Mr Schwenger, who is an engineer, made a study of the land and concluded that it was the most susceptible of easy drainage of all possible sites and that all services were available.
The only disadvantage was that, while the land was being used as a farm, it was zoned residential. In order for a stadium to be built on the site it would have to be zoned commercial. The directors did not anticipate any difficulty in accomplishing this re-zoning because the land was being used as a farm. The land had not been built up resi- dentially to the east or west. On the south border was the Town of Burlington’s industrial park. To the north was a hydro line. Further the land was situated between two major highways so that the land was eminently more suitable for industrial rather than for residential purposes. The Town of Burlington did not have an official plan covering this particular area so there was no ostensible impediment to re-zoning.
At the meeting of the directors of the Hamilton Football Club held on May 8, 1964 the decision was made to make an offer to purchase the Peart property. The decision was made that the offer should be made by the directors and shareholders in their individual capacities and not as directors and shareholders of the Hamilton Football Club.
The offer was made by F J L Evans, QC, who was the solicitor for the Club, in trust for a company to be incorporated. The offer was accepted by the vendor. Some 60 days later the appellant herein was incorporated on July 6, 1964. The shareholders and directors of the appellant are the same twelve persons who were directors and shareholders of the Hamilton Tiger Cat Football Club, Limited whose names have been set forth above except that the shares in the appellant were held by a company owned by Mr Gaudaur, rather than in his own name and the same thing prevailed with Mr Cooper’s contribution. Mr Schwenger took shares in the name of his wife.
The purchase price for the property was $151,731 or approximately $1,600 an acre of which $71,731 was paid on closing and a first mortgage was given as security for the balance of $80,000 payable in annual instalments of principal and interest in the amount of $5,000. The $71,731 down payment was forthcoming from the payment for the shares in the capital stock of the appellant subscribed for by the twelve shareholders in the Hamilton Tiger Cat Football Club Limited in the approximate proportion of their shareholdings in the Football Club with adjustments depending on the resources of the individuals.
The purchase was completed by the appellant on or about October 15, 1964.
lt was the decision of the directors of the Football Club that the purchase of the Peart farm should be shrouded in absolute secrecy. The reasons for this secrecy can be summarized: (1) there would be bad publicity with increased antagonism towards the Club, (2) that bad publicity would affect ticket sales, the lifeblood of the Club, (3) the knowledge that the Football Club intended to move within a few years would render rental negotiations with the Parks Board even more difficult and intolerable, and (4) it might make a rezoning more difficult in that no difficulty was anticipated in an application for rezoning merely for industrial purposes but the advent of a stadium might precipitate objection from persons resident in the area.
This secrecy was strictly maintained from October 1964 until April 1966. Casual inquiries about re-zoning were made and the fact that the Football Club had acquired property in Burlington leaked out. The directors of the Club therefore concluded that the shares in the appellant need not continue to be held by them and the shares were transferred to the Football Club at cost and without gain to the directors so that the appellant became a wholly owned subsidiary of the Football Club.
From the foregoing facts it follows that the appellant had been inextricably connected with the Football Club since its incorporation, first as the shareholders of the appellant were shareholders of the Club and after April 1966 the appellant was the wholly owned subsidiary of the Club.
On January 16, 1968 Mr Gaudaur became the commissioner of the CFL and was succeeded as general manager of the Hamilton Tiger Cats by Mr Ralph Sazio, who had been the coach of the team formerly. As part of this change-over Mr Sazio purchased the shares in the Football Club held by Mr Gaudaur from him. It was during these negotiations that Mr Sazio learned that the Club was the owner of the Peart farm.
On accepting his new responsibilities Mr Sazio reviewed the files and observed the negotiations with the Parks Board for increased seating capacity and rental agreements, the latter being begun in March of each year. He noted that the negotiations had been carried on in friction. He had been in Hamilton since 1950 in the different capacity as player, assistant coach and head coach and knew of the opposition of the populace and of many prominent persons in Hamilton to the operation of the Football Club by a limited company.
Mr Sazio attended the first meeting of the Parks Board and forthwith established a good rapport. He began by attending alone, not flanked by lawyers, accountants and other members of his board of 574
directors. He knew many members of the City Council and had in fact supported and actively worked in Mr Copp’s campaign. He made> it known that he was aware of the prior friction but stated that this was now a “new ball game”, that he had paid a substantial amount to buy Mr Gaudaur’s shares and suggested that the previous acrimony shou d not be carried on but that negotiations be conducted on a reasonable basis for the ultimate good of the Football Club, the Parks Board and the City.
This approach bore fruit. The 1968 rental agreement was completed speedily on the same terms as for the 1967 year which were as Mr Sazio pointed out still the highest in the league.
The climate of antagonism was dissipating, first by Mr Sazio’s conciliatory approach. Then the Parks Board had been subjected to open criticism in the press and radio about the deplorable field conditions, a veritable quagmire on rainy days, the inadequate lighting for night games, the very bad conditions of existing rest rooms, the inadequacy in the ’number thereof, and the disgraceful dressing-rooms for visiting teams.
When he was taxed with these conditions Mr Gaudaur correctly transferred the blame to where it lay, that is with the Parks Board. The Parks Board had become concerned of the open criticism of themselves.
There was a great wave of enthusiasm for the Hamilton Tiger Cats in 1967. This was Centennial Year. Appropriately the Grey Cup was played in Ottawa that year. The Tiger Cats overcame a strong Ottawa team and entered the Grey Cup against Regina Roughriders, the Western representative, and won, much to the pride of the citizens of Hamilton.
As mentioned previously the Calgary team had made the Grey Cup a national event in 1948. The benefits to the host city from an influx of visitors became much sought after from that year forward.
Hamilton applied for the Grey Cup game in 1960 but was turned down because of poor field conditions and inadequate seating capacity.
The Mayor of Hamilton, Mr Copps, and the Deputy Mayor, Mr McDonald, were anxious, as a matter of civic pride and incidental benefits, to host the Grey Cup in 1972 to coincide with the opening of the Canadian Football Hall of Fame. The CFL was willing to award the Grey Cup game to: Hamilton conditional upon the seating capacity being increased and the installation of artificial turf.
Mr Sazio skilfully exploited those favourable conditions to the limit. In this he was abetted by the enthusiasm and efforts of Mr Jack McDonald. Mr McDonald was a member of City Council at that time. He became chairman of the Grey Cup festivities in Hamilton in 1972 and for his outstanding performance he was named Hamilton’s citizen of the year in 1972.
Mr Sazio obtained from Mr McDonald, Mr Copps and Mr Pelech (formerly a bitter opponent) the assurance that the football stadium would be rebuilt to provide a capacity of 35,000.
Mr Sazio was in complete agreement with the necessity to get more better seats; otherwise the future of football in Hamilton was doomed. It required an attendance of 22,000 a game to break even. The Club had 11,000 season ticket holders because there were only 12,000 seats between the goal lines. He was confident that the Club could sell season tickets for all seats between the goal lines.
Mr Sazio received this verbal assurance of substantial expansion of the stadium in 1968 upon which he was prepared to place reliance.
In the fall of 1968 notice of a debenture issue by the City to finance the expansion was published. Some fifteen residents in the immediate area of the stadium opposed the debenture issue because they feared that they would lose their homes to parking facilities. The matter went to the Ontario Municipal Board which ordered a referendum. The referendum was held in the spring of 1970 and the proposal to expand the stadium received an overwhelming majority.
Mr Sazio’s confidence was not misplaced because the stadium was built in time for the 1972 Grey Cup with a capacity of 35,000. Mr Gaudaur had projected the necessary seating capacity at 40,000. The expanded stadium approximated that projection.
The solution to the seating problem was evident in 1968 and a longterm lease was entered into between the Parks Board and the Club.
Mr Sazio was opposed to building a stadium outside of the City. He explained that the whole theory of locating stadiums had changed. In the late 1950’s the prevalent theory was that a stadium should be built on the outskirts so there would be thousands of parking spaces. This theory changed so that the present concept is to have the stadium in the centre of the city. This has been demonstrated by the location of new stadia in major cities. Mr Sazio’s view was predicated upon two factors, (1) the business community wanted the facilities in the city and (2) transportation did not present a problem. When the stadium is on the outskirts the fans can bypass the city completely. When the stadium is in centre town the local businessmen profit and arrangements had been made by the Club for parking in shopping centres with public bus transportation from there. Whenever possible games are scheduled for days when the shopping centres are closed. Further the City of Hamilton had cooperated by making access streets one-way.
Mr Sazio investigated the prospect of rezoning the area of the Peart farm from residential to commercial and concluded that it would be difficult to effect this change at this time.
When the construction of a stadium was considered by the board of directors of the Football Club in 1964 the cost thereof based upon $50 a seat for 40,000 seats was $2 million dollars. In 1968 the rule of thumb estimate of $50 a seat no longer prevailed but the cost per seat had doubled so that the cost of building a 40,000 stadium in Burling- ton would be $4 million dollars or more. Mr Sazio did not think that an outlay of that amount was economically viable.
For these reasons Mr Sazio recommended to the board of directors that the Peart farm be sold. The directors were convinced by those reasons and accordingly accepted an unsolicited offer to purchase the property on August 14, 1968 at a price of $11,000 an acre. The cost to the Club in 1964 had been approximately $1,600 an acre.
The question to be decided is whether the gain realized by the appellant herein upon the sale of the Peart farm is income from an adventure or concern in the nature of trade, as contended by the Minister, in which event that gain is taxable.
In order to so hold it must be found as a fact that, at the time the appellant purchased the Peart farm, it did not do so for the exclusive purpose of erecting a stadium thereon but that the appellant also had in mind at the time of purchase the possibility of resale in the event that it should become expedient not to build a stadium on the site.
The onus of establishing the contrary to have been the case falls on the appellant.
In the circumstances peculiar to this particular case it is, in my view, important to bear in mind that the time as of which the appellant’s intention is significant is the time when the Peart farm was acquired. I emphasize this because the appellant is a joint stock company and its intention is coincident with that of its directors and officers.
At the time of the purchase of the property in 1964 Mr Gaudaur was the general manager, and a director and shareholder of the Football Club. When the property was sold in 1968 Mr Gaudaur no longer held those positions but had been succeeded by Mr Sazio. Otherwise the composition of the board of directors remained constant.
The capabilities of both Mr Gaudaur and Mr Sazio as general managers were held in high esteem by the other members of the board. The general manager had the responsibility for the operation of the Football Club and the other directors placed great reliance on those officers’ recommendations. Therefore each in his turn was the dominant member of the board. In so saying I do not mean to imply that the other directors were mere automatons blindly endorsing the general manager’s recommendations. On the contrary they were not. They were successful and outstanding businessmen whose talents and energies were devoted principally to the conduct of their own businesses but who were also willing to make their abilities available to the Football Club. Naturally the general manager who devoted his entire time to the Football Club had more intimate and detailed knowledge of its affairs. The directors brought their business experience to bear upon the recommendations of the general manager. When, in their judgment, they were convinced that the recommendations of the general manager were based upon cogent reasons then they gave full support thereto.
Taking cognizance of these circumstances it follows that the intention of the appellant and its board of directors on the purchase of the Peart farm in 1964 coincided with the intention of Mr Gaudaur and I repeat that this is the critical time at which the intention of the appellant must be determined.
On the sale of the property in 1968 for the reasons expressed the intentions of the appellant and its board of directors was the same as that of Mr Sazio. The circumstances which prevailed on the sale of the property differed materially from those prevailing on its purchase. The intention on the sale of the land is not material except to the extent that the circumstances prevailing at the time of the sale may have been foreseen at the time of the purchase and influenced the intention of the appellant at that earlier time.
The question of fact as to what the appellant’s purpose was in acquiring the Peart farm must be decided after considering all the evidence.
Ex post facto statements made by a taxpayer as to intention at the time of acquisition must be looked at critically and are only part of the evidence. Such statements must be considered along with the objective facts.
When the taxpayer is an individual the self-serving nature of such statements stands out. However when the taxpayer is a joint stock company with a board of directors consisting of a large number of strong-willed businessmen, as was the case of the appellant, then the impact of the self-serving nature of the statement is lessened.
In the present case Mr Gaudaur, Mr Cooper, Mr Fischer, Mr Soule and Mr Schwenger categorically swore that the Peart property was purchased for the exclusive purpose of building a stadium on the site and that the possibility of sale at a profit was not considered by any of them nor was it discussed.
There are a number of positive objective indicia that the appellant’s exclusive intention, at the time of the acquisition of the Peart farm was to use the property as a site on which to build a stadium.
There is no question that following the transfer of the CFL franchise to the limited joint stock company incorporated on January 31, 1961 there was a climate of extreme antagonism towards the Club by some of the elected representatives on the City Council and that antagonism was perpetuated in the officers appointed by that body to the Parks Board.
Rental negotiations for the stadium were protracted and difficult resulting in extreme frustration on the part of the Club.
lt is true that annual rental agreements were made eventually in each year which did not differ substantially from those in effect in former years but petty concessions were exacted by the Parks Board and these agreements were reached only after long and bitter bargaining.
To management and officers of the Football Club this atmosphere and the uncertainty of concluding a lease of the stadium became unendurable.
Added to this uncooperative and antagonistic attitude of the Board there was no question whatsoever that the Football Club had need of a greater seating capacity otherwise the operation of the Football Club could not be continued successfully. Again after considerable negotiation also conducted in difficult circumstances minor concessions were made to the Football Club by the Parks Board in respect of a temporary increase in seating but the Parks Board refused to undertake any major renovation of the stadium as was requested by the Football Club to provide an increase in permanent seating capacity between the goal lines.
These two factors prompted Mr Gaudaur to conclude that there was no solution to the need of the Football Club for greater seating other than for the Club to build a suitable stadium itself.
Mr Gaudaur persuaded the directors and shareholders of the Football Club. of the wisdom of his conclusion supported by well documented and logical reasons.
Accordingly a property committee was established to search for a Suitable site in the immediate environs of the City of Hamilton. This the committee did so search and reported its efforts at regular intervals to the board of directors.
It is significant that the committee considered a number of different sites. The paramount considerations always present to the committee in its search were the suitability of the site for a stadium.
These considerations determined the ultimate selection of the Peart farm in 1964 in preference to any other site. It was adequate in size. The location was the most advantageous. It was sufficiently close to Hamilton. It was in the hub of all surrounding communities. There was ready access from two major highways. It was in the Town of Burlington which, while a separate municipality, adjoins the City of Hamilton and the Football Club wished to continue to identify with Hamilton. All necessary services were available to the property. The land was level and drainage could be installed at the minimum expense.
For these reasons it was the conclusion of the property committee and the directors that the property was ideal as the site of a stadium.
At this particular time there was a recession in residential development in the Town of Burlington. The land was adjacent to an industrial park and there was no residential development in the area.
The Pearts, who were the vendors of the land, had operated it as a fruit farm for years. They were now elderly and wished to retire. The farm had been on the market for several years. Throughout that time energetic efforts by an aggressive real estate agent had failed to find a buyer.
Therefore the land was not in a speculative area.
The facts that the paramount considerations leading to the purchase of the land were the factors eminently suitable to the construction of a stadium thereon and that the land was not in a speculative area supports the statements of all the directors that the purpose in purchasing the land was to construct a stadium thereon to the exclusion of turning the land to account by resale.
For the reasons given by the directors of the Club which I have outlined above and one of which was, it might make negotiations with the Parks Board more difficult, the directors decided to cloak the purchase of the site with absolute secrecy. In negotiations with the Parks Board the directors did not use the possession of an alternative stadium site as a lever to pry from that body more favourable rental terms or temporary seating. The failure to do so points to the sincerity of their intention to carry through the plan to build the stadium.
Lord President Normand in CIR v Fraser (1940-42), 24 TC 498, indicated that an important indicium in determining whether a simple transaction amounts to trading is when the transaction is in the line of the ordinary trade of the person engaged in the transaction.
The objects for which the appellant was incorporated include the authority to buy and sell land. However as I pointed out at the outset the critical question to be answered is not what the company was authorized to do but what it did and does what it did amount to carrying on a business.
The intention of a company is derived from that of its officers and directors.
None of the directors and shareholders were traders in land.
The appellant did not act in the manner in which a speculator in land acts. A speculator in land looks for quick turnovers. Frequently the land is purchased with money borrowed at a high rate of interest with the consequent compulsion to realize forthwith and pass on to other purchases. A speculator usually puts up only the minimum amount of money that will ensure control of the land.
In the present case the purchase price was $151,731 with a mortgage back to the vendor in the amount of $80,000 so that the down payment was $71,731 approximately half of the total purchase price. The funds for the cash payment came from the subscription price paid by the shareholders of the Hamilton Tiger Cat Football Club, Limited for shares in the appellant.
The appellant company was interposed to preserve the cloak of secrecy concerning the purchase of the land which secrecy was considered essential by the directors. When the reasons for that secrecy no longer prevailed in 1966 the directors and shareholders of the appellant transferred their shares to the Hamilton Tiger Cat Football Club, Limited at cost. Obviously the shareholders and directors did not seek to reap a profit from the transaction assuming that they saw the possibility of profit at that time. They were not vendor promoters. such action by the directors and shareholders is not consistent with them being traders.
Until the decision of the Club to remain in the Civic Stadium and to abandon the plan to build a stadium, for the reasons given by Mr Sazio, which are set forth above, unsolicited offers for the purchase of the land were received and emphatically rejected. The land was never listed for sale. One persistent real estate agent who had negotiated the purchase of the land by the Football Club and therefore knew of its contemplated use as a stadium site was told emphatically that the land was not purchased for speculation but for a specific reason which he well knew, that that purpose still remained and that the land was not for sale at any price.
These positive indicia favourable to the appellant’s position may be summarized as follows:
1. the site was selected because it was the most advantageous one for the construction of a stadium;
2. the land was not in a rapidly developing and speculative area;
3. the directors and shareholders of the appellant had no experience or history of trading in real estate;
4. the directors and shareholders did not act in this transaction as traders in real estate customarily act;
5. the possession of a stadium site was not used as a lever to pry concessions from the Parks Board; and
6. unsolicited offers to purchase the land were refused.
Added to these indicia each director of the appellant was called as a witness, except one director confined to hospital. Each director swore that his intention and motivation in voting in favour of the purchase of the land by the appellant and advancing money by way of subscription to shares in the appellant to enable the appellant to do so, was for the sole purpose of building a stadium. Each director also swore that he individually never considered the prospect of resale of the property and that such a possibility was never discussed by him with any other directors.
The directors who testified before me impressed me as gentlemen of integrity whose sworn testimony cannot be lightly disregarded.
An examination of the relevant minutes of the meetings of the board of directors confirms the intention in and motivation for the purchase of the land was that sworn to by the directors.
There are two indicia of trade which stated starkly are adverse to the appellant’s position were it not for circumstances which prevailed and negative that adversity.
First, no detailed architectural and construction plans for the stadium were ever prepared at the request of the appellant. General design and phase plans were developed and affixed to the feasibility report prepared by Mr Skinner. When such detailed plans would be required two of the shareholders and directors of the Football Club, Mr Cooper and Mr Schwenger, had at their command outstanding facilities for their preparation. Mr Cooper is the largest and most successful building contractor in the Hamilton area. His company had built most of the major buildings there. Mr Schwenger is a professional engineer specializing in construction. His company had built the extension of the south stand of the Hamilton Civic Stadium in 1959. The plans used therefor were made available to the appellant for whatever use could be made of them. Both Mr Cooper and Mr Schwenger had agreed to place their professional staff at the disposal of the appellant.
Secondly, no steps were taken by the appellant to obtain financing to build the stadium. Mr. Cooper and Mr Schwenger as members of the Board undertook to arrange for the necessary financing when the need arose. Their credit ratings were substantial and no difficulty was foreseeable in this respect.
On the other hand counsel for the Minister advanced three indicia in support of the Minister’s contention that at the time of the acquisition of the land by the appellant that it also had as one of its possible purposes the subsequent disposition. of the land at a profit. If that should be the case then the resultant profit is taxable.
The first such circumstance so relied upon by the Minister is that at the time of the acquisition of the land by the appellant the land was zoned residential, although used for agricultural purposes, and that at no time while the appellant I held the land did it initiate steps to change the existing residential zoning to commercial zoning so as to permit the construction of a stadium on the site.
The second circumstance was that from the date of the acquisition of the land by the appellant the Football Club continued its negotiations with the Parks Board for rental of the Civic Stadium and continued to press for additional temporary seating and continued in its protestations that the permanent seating between the goal lines was totally inadequate and should be increased by a major reconstruction programme. In the meantime the land purchased by the Football Club remained vacant from the date of purchase until the date of sale.
A third circumstance was that the offer to purchase the land had attached to it a plan of sub-division and contained a provision for partial discharge of the first mortgage to be taken back by the vendor. The implication to be drawn from this circumstance is that the purchaser had in contemplation the subdivision and development of the site; otherwise the insertion of the provision for partial discharge would not be necessary.
In my. opinion it is incumbent upon the appellant to satisfactorily explain these circumstances.
The offer to purchase was prepared by a real estate agent and was approved by the solicitor for the appellant. The Peart family was personally well known to the real estate agent and he had acted on their behalf as vendors. The Pearts reached their decision to sell their farm with great reluctance. It had been their home for years and farming was their way of life but that way of life was becoming more difficult for them as they advanced in years. The farm was listed with the real estate agent for about five years prior to 1964 but despite his efforts he was unable to find a purchaser. To facilitate the sale the real estate agent had the land zoned from agricultural to residential. There had been one prospective purchaser acceptable to. the Pearts. The real estate agent had prepared an offer to purchase from this prospective buyer who may have been a developer. A provision for partial discharge of a mortgage back to the vendor was contained in the offer and a plan was attached thereto. The Pearts discussed this offer to purchase with their solicitor and eventually accepted the offer. This sale was never consummated.
When the appellant decided to buy the Peart farm the negotiations for its purchase were conducted with the Pearts by this same real estate agent. The agent knew the Pearts. He knew of their attachment to the farm. He knew of their reluctance to sell, but he also knew that they had accepted a former offer prepared by him after consultation with their solicitor. Therefore he deliberately drafted the offer to purchase by the appellant in the identical form as the previous offer with plan attached and containing a provision for partial discharge. He felt because an offer in this form had been accepted previously that to present to the Pearts an offer materially different from the previous one might invite their enquiries as to the reasons for the change, precipitate prolonged investigation. on the Pearts’ part and trigger their reluctance to sell into a refusal to accept the offer. The real estate agent explained this reasoning to the solicitor for the appellant. At that time the appellant’s moving interest was to buy the property and since the provision in question had no material bearing on that interest no objection was raised or taken on the appellant’s behalf to the form of the offer. Therefore the offer was made in the form proposed by the real estate agent.
The real estate agent’s testimony in this respect was not challenged on cross-examination and I do not see any valid reason why I should not accept this evidence.
The second factor put forward on behalf of the Minister was that the land was zoned residential but no positive steps were taken by the appellant to change that zoning to permit of the building of a stadium.
There was no intention to begin construction of a stadium immediately upon the acquisition of the land in 1964 but only to do so within four to five years from that date. There are good grounds for accepting that premise.
Mr Gaudaur had made a projection into the future which was to the effect that the Football Club could operate in the Civic Stadium with the seating capacity there available for a period of five years. He made this recommendation to the board of directors and it was accepted by the board. Every member of the board testified to like effect. However even accepting that premise as I do that does not explain the failure to initiate steps for re-zoning the land forthwith.
The real estate agent who acted on behalf of the appellant in purchasing the land was aware that the erection of a stadium on the site was in contemplation. He had undertaken to preserve the appellant’s desire for secrecy. He assured the officers and directors of the appellant that there would be no difficulty in having the land zoned commercial. Presumably being a real estate agent he would be knowledgeable in matters of zoning and he had been instrumental in having the land zoned residential. But being a real estate agent it would be reasonable to look at his assurance askance because of the agent’s anxiety to obtain a commission.
The directors brought their own independent judgment to bear on the likelihood of re-zoning when application should be made therefor. The location of the land gave good ground for the expectation the land would be re-zoned. There was an industrial park on the south border. To the north there was a high-tension hydro power line. To the east there were some factories. Only to the west was there a possibility of residential development but none had taken place. Added to these obvious disadvantages to residential development was the still greater disadvantage that the farm was between two major highways.
Mr Gaudaur, as general manager of the Football Club, was aware of the necessity of keeping operating costs to a minimum. The annual payment of principal and interest on the outstanding mortgage balance was approximately $5,000. To partially meet this expense the farm was leased to a fruit farmer with a provision for termination of the lease. Any deficiency was made up by loans to the appellant from the Football Club. There were several appeals by the appellant against increased municipal assessments. These appeals were successful and the land continued to be assessed at the lower rate applicable to agricultural land. If the land were re-zoned as commercial it followed that the taxes would increase with a corresponding increase in the cost of holding the land which the appellant was anxious to avoid.
lf applications were made to rezone the land that would remove the secrecy of the fact that the Football Club owned land in the area. The directors of the Football Club deemed it expedient to preserve this fact a secret so long as the Football Club played in Hamilton Civic Stadium to avoid accentuating the difficulty the Club was experiencing in negotiating with the Parks Board and any adverse effect on ticket sales.
Furthermore, five members of the board of directors of the Football Club were residents of Burlington. Twenty-five per cent of the season ticket holders were resident in Burlington. While the directors were anxious to preserve the traditional association of the Tiger Cats with the City of Hamilton and would continue to play under the name of the Hamilton Tiger Cats, nevertheless extensive favourable publicity by way of national television and radio broadcasts would accrue to the Town of Burlington from the Tiger Cats playing in a stadium built in the Town.
In 1966 the need for secrecy no longer prevailed. The knowledge that the Football team owned land in Burlington was suspected. It was in that year that the shareholders in the appellant transferred their shares to the Football Club at cost.
It was not until 1967 that the possibility arose that re-zoning of the farm might not be forthcoming on application.
In that year the Industrial Commissioner of the Town of Burlington suggested a trade of the Peart farm for another parcel of land. The reason put forward by the Industrial Commissioner for the proposed trade was that the land offered in trade would be easier to re-zone.
Mr Gaudaur did not share that view. Immediately across the street from the land offered in trade, houses were being erected. There was no similar construction in the vicinity of the Peart farm. Further the land offered in trade was not as suitable as a site of a stadium as the Peart farm.
The directors of the Football Club still held their opinion that there would be no difficulty in having the Peart farm re-zoned because the reasons upon which their opinion was based were still applicable with equal force.
Bearing in mind that it was not until 1969 that erection of the stadium was contemplated it would not be until 1968 that application for re-zoning would be made in the ordinary sequence of events.
In 1968 there was a change in general managers. Those managers held different views as to the centre of the city or its outskirts being preferable for the location of a stadium. In 1968 circumstances had changed materially. The Parks Board was willing to undertake extensive renovation of the Civic Stadium to provide for a seating capacity of 35,000 persons. The seating capacity of the proposed stadium was to be 40,000, a scant 5,000 more.
The cost of construction had doubled between 1964 and 1968.
Because it was no longer economically feasible to construct a stadium at the increased cost and because arrangement for the use of an expanded Civic Stadium was virtually a certainty there was no need to keep the Peart property and much less a need to apply for the re-zoning of that property.
The third circumstance which is obligatory for the appellant to explain is that after the acquisition of the Peart Farm the Football Club continued its negotiations with the Parks Board for increased seating capacity.
The efforts made by the Football Club between 1959 and 1967 were directed to persuading the Parks Board to increase the temporary seating in the Civic Stadium to meet the courrent revenue needs of the Club. The request for an increase in seating by the installation of temporary seats was merely a stop-gap and was never accepted as a long-term solution.
In 1967 there was a change of emphasis in the negotiations of the Club with the Parks Board. In the year 1967 the Football Club received its first intimation that difficulty might be encountered in having the Peart farm rezoned as commercial. This intimation came from the Industrial Commissioner who suggested a trade of the Peart farm for another property, considered less desirable by the directors of the Football Club, because it would be easier to have the property offered in trade re-zoned.
The. directors of the Club did not agree but an approach was made to the Parks Board to have the north stand enlarged and that approach was rejected by the Parks Board.
As I have stated before the material time at which the intention of the appellant in purchasing the Peart farm must be determined is the time of acquisition.
To begin each director of the appellant testified that the Peart farm was purchased for the exclusive purpose of building a stadium on the site and that the possibility of turning the land to account by resale was not contemplated.
"These consistent declarations of intent must be considered critically in the light of other evidence to ascertain if that other evidence supports the avowed intent.
The decision of the appellant to purchase the land for the purpose of building a stadium must be tested against the reasonableness of that decision at that time. If that decision was so unreasonable as to be incapable of fruition the inference is that the professed intention could not have been seriously entertained but that the appellant also had in mind at the time of acquisition the intention of turning the land to account by resale.
In the present appeal the land was sold some four years after its acquisition but the decision to sell was dictated by changed circumstances. The antagonism of the Parks Board to the Football Club had ended. The Parks Board gave the Football Club a commitment to expand the Civic Stadium. Because of residential development rezoning of the Peart farm as commercial had become more difficult. The cost of construction had doubled.
Until the time Mr Gaudaur left the Football Club as general manager to become commissioner of the CFL in 1968 he was adamant in his belief that the Football Club would be obliged to build its own stadium. Until that time the other directors agreed with him.
His successor as general manager, Mr Sazio, because of the changed circumstances in 1968, held a different view and he was successful, because of the cogent reasons on which his view was based, in converting the directors to his view.
In my view I must assess the reasonableness of the decision of the directors to purchase the land at the time that decision was made. In the light of the evidence there is no doubt that the decision to do so was based on sound and cogent reasons. Having so concluded it follows next to ascertain if at the time of the acquisition of the land in 1964 it was reasonable not to foresee the changed circumstances which came about in 1968 to render the plan to build a stadium on the site acquired no longer feasible. If it was unreasonable not to foresee the change in circumstances which did occur then the failure to do so might well reflect on the cogency of the reasons which dictated the purchase of the land in 1964.
In my view the decision of the directors to purchase the land was based on a sound business appraisal of the situation. For the reasons expressed above the directors had no valid cause to expect that the attitude of the Parks Board would change and that it would be willing to expand the seating capacity of the Civic Stadium. Neither was there cause for the directors to anticipate that the necessary re-zoning would not be forthcoming on application being made therefor.
With the benefit of hindsight it has occurred to me that it might have been wise for the directors to have commenced the building of the stadium forthwith upon the acquisition of the site. However it was the decision of the appellant’s board that to do so was not necessary for some four or five years because the facilities at the Civic Stadium were adequate until the expiry of that period. In addition to that fact there were sound and valid reasons for the decision to defer construction and accordingly that decision was not unreasonable in the light of the circumstances at the time the decision was made.
After having given careful attention to all the evidence and for the reasons I have expressed, I am satisfied that the appellant acquired the Peart farm for the purpose of erecting a stadium thereon to the exclusion of any purpose of disposition at a profit. Accordingly it follows that the appellant has discharged the onus cast upon it to establish that the assumptions of the Minister in assessing the appellant as he did were not warranted.
The appeal is, therefore, allowed with costs.