A J Frost:—These are income tax appeals from assessments in respect of the above-named appellants’ 1963 and 1964 taxation years. It was agreed that they should be heard together on common evidence.
The appellants were born in the Middle East where they received their early education. They came to Canada with their families in 1954 and have remained here ever since. Members of. their families had long been associated with the retail automobile business in various Middle East countries, United States and Canada.' Initially, Alfred and Ezra Lawee, the father of Mayer Lawee, invested $200,000 in land and buildings in :Ville St Laurent, Quebec, where Barnabe Motors Limited carried on their operations under a lease rental agreement. Shortly after this acquisition of land and buildings the Lawees purchased a 50% interest in the share capital of Barnabe Motors Limited and from that time carried on an active automobile dealership business with a General Motors franchise. Appellant Alfred Lawee worked from 1954 on a full-time basis with Barnabe Motors Limited, and appellant Mayer Lawee acquired a 25% interest in that company when he was old enough to enter the business. ,
The evidence adduced before the Board revealed that the appellants were directly and indirectly involved in. numerous real estate transactions. The construction placed on these transactions by the parties differ considerably. Counsel for the appellants. contended that all real estate transactions, actual or intended, bore some relationship to the business of the appellants, while counsel for the respondent contended that the appellants are men active in business and in private real estate companies and “not completely ignorant of the real estate world”. Leaving the. above interpretations and details of appellants’ business records aside and confining myself to the specific transactions which gave rise to the profit, the taxability of which is now in dispute, I want to emphasize that in this case, as in so many others, a particular holding could be either a speculation or an investment irrespective of the course of conduct.
The purchase by the appellants of property known as part of Lot 302 in the locality of Dollard-des-Ormeaux (hereinafter referred to as
“farm 302”) was acquired,’ according:to evidence adduced by the appellants, for the purpose of a used-car lot for Barnabe Motors Limited. In my opinion, this can be viewed in isolation. The question is whether this acquisition was in the nature of an investment.
Farm 302 was undeveloped land in an area served by a country road on the outskirts of Montreal in a sparsely populated area. The appellants purchased, partly for: cash, an undivided interest in this property on May 31, 1962, and sold it 13 days later on June 13, 1962, without reservation. This short span of time however does not accurately reflect the tenure when one takes into account the fact that negotiations leading to acquisition covered a period of 15 months. The parcel was much larger than was required for normal expansion purposes although it may well be that, if the alleged plans had developed, only the frontage part of the land would have been attractive for business purposes. The appellants pleaded that the municipality re-zoned the area and that, as a direct consequence, they were unable to carry out their original intentions and as a result were obliged to sell. However, the onus of showing that their plans changed as a “direct consequence” of the re-zoning was not discharged by the appellants as no satisfactory evidence was adduced to show that within the period of tenure the outlook had so drastically altered. It seems rather strange to the Board that a car dealer would want to commence business on a large piece of vacant farm land in a relatively. uninhabited area to sell used cars with no immediate prospect of income return on his equity in the land. This factor plus quick turnover, vague plans, lack of control, leverage, vacant land and over-acquisition, all tend to refute the investment concept. In my opinion we have here a clear-cut case of land speculation.
Appeal dismissed.