A W Prociuk (orally):—In this appeal of Martin R Chess, No. 72-429, there are two items to resolve: (a) whether or not the appellant appropriated the sum of $9,603.70 from Lougheed Warehouse and Terminal Ltd, of which he was a shareholder; and (b) whether or not a benefit in the sum of $29,794.84 was conferred on the appellant by the said Loughesd Warehouse and Terminal Ltd in the sale of its shopping centre. It is clear from the evidence that while the appellant in his Capacity as a hired manager of a shopping centre received a cheque of $9,603.70 payable to the company’s account as rental from a tenant in the said shopping centre on or about September 6, 1966, he retained it in his possession until after he purchased the said shopping centre on December 30, 1966 from Lougheed, and negotiated the said cheque on or about January 27, 1967 to his own benefit. He maintained throughout that he had a right to this sum of money, and sought to base his argument on the terms of the agreement for sale, dated December 30, 1966, filed as Exhibit A-6, and Memorandum of Agreement filed as Exhibit A-5. I think, and so hold, that this cheque was not and could not have been contemplated by the parties in the two exhibits at all; he took into possession and for his own use a sum of money belonging to a company of which he was a shareholder. Accordingly, I hold that he appropriated the said sum of $9,603.70 within the meaning of section 8 and was properly taxable thereon.
In so far as the second item is concerned, this has given me some difficulty. This sum of $29,794.84 represented the difference in price Lougheed paid for the shopping centre in July 1965 and a lesser price it received in selling it to the appellant, its shareholder, on December 30, 1966. The respondent takes the position that this was a benefit conferred on a shareholder within the meaning of section 8 of the Income Tax Act, and therefore taxable. Learned counsel for the Respondent urged me to hold that the shopping centre was worth in December 1966 at least as much as it was worth in July 1965. While evidence on the fair market value of the said shopping centre was almost minimal, the appellant’s witness, Bennett, a chartered accountant, and a director of Lougheed company, stated in cross-examination that they, that is, the shareholders of Lougheed, did not feel it was a low price. The appellant in his evidence stated that he offered to sell his equity to the other shareholders on the same basis, and his offer was not taken up. In the end, to resolve the differences that existed amongst the shareholders, he himself bought the said shopping centre. I feel that in the absence of any appraisal of value in support, it would be dangerous and ill-founded for me to hold arbitrarily that the said shopping centre had not decreased in value in the 18-month period, in direct contradiction of the evidence, scanty as it is, before me. Accordingly, I find that there was no benefit conferred on the appellant in the transaction and the appellant ought not to be taxed on the said sum of $29,794.84.
The appeal, accordingly, is allowed in part in accordance with my findings and the matter referred back to the respondent for reassessment.
Appeal allowed in part.