A W Prociuk (orally):—1 will now give my decision in the Sinanan case, as well as the cases of Rasmussen, Reynolds, Fearman and Debicki.
The appellant, a medical doctor and resident of Vancouver, British Columbia, in conjunction with several other Vancouver residents, formed a syndicate in the spring of 1967 to purchase real estate in the said city and to construct an apartment building thereon. The percentage interest of each participant depended upon the amount of contribution to the project. The apartment block, known as the Admiral Nelson, was constructed in the first part of 1968 and sold in August of that year when nearly completed at a profit amounting to approximately 100 per cent of each respective contribution. The respondent, by Notice of Reassessment dated July 26, 1972, added the appellant’s net gain on the sale of the Admiral Nelson to the 1968 income on the ground that this was an adventure in the nature of trade, and assessed accordingly. From this assessment the appellant appeals.
At the commencement of this hearing the parties agreed that evidence adduced in this appeal would apply to the appeals of Harry D Reynolds, Frederick W Fearman, Raoul Rasmussen and Anthony Debicki, some of the other members of the said syndicate. At least two other members prosecuted their appeals separately during the present sittings.
The appellant’s evidence is that on the advice of his accountants he joined the syndicate primarily to minimize the tax burden through the instrumentality of capital cost allowance on the buildings to be erected. Other members would appear to have had this motive as well. The composition of the syndicate included members of the legal and medical professions, an architect, an engineer, businessmen in lumber and other enterprises, as well as two high-salaried teachers.
When the building was nearing completion a very attractive offer was received, and eventually accepted after some considerable disagreement as to the advisability of the sale.
The appellant, and the four other appellants. named in my opening remarks, held 45 per cent of the interest, and he stated that they were unable to muster any more to their side to prevent the sale. They then agreed, under protest, to sell. The appellant, in answer to my questions, stated that no actual count of noses occurred to determine what position the other respective members took, but he and his said group assumed that they were all in favour of the sale. It will be noted that another 5.1 per cent would have effectively blocked the sale. I am satisfied that had there been a genuine effort to resist the sale, the appellant, who himself controlled approximately 21 per cent, could have, with little difficulty recruited support to his cause at least an additional 12.66 per cent held by two other members, each of whom, under oath, in support of their respective appeals, stated that they vigorously opposed the sale, but were outnumbered.
if I am to believe that this was in the nature of a long-term investment, it is strange indeed that this syndicate, with all-round expertise, had not reduced whatever understanding they had into writing, with the usual buy-sell provisions, and other very important provisions such as relating to shares of deceased members of the syndicate and so on, the project being worth well over $1,000,000. An offer which within a year yields 100 per cent return is indeed difficult to resist in the absence of built-in enforceable provisions.
Viewing the evidence as a whole, I have come to the conclusion that the profit motive, and not a long-term investment of these young men, was the overriding factor, and accordingly this was an adventure in the nature of trade. The appeal is dismissed.
Similarly, in the appeals of Reynolds, Fearman, Rasmussen and Debicki, for reasons stated in the Sinanan appeal, their appeals are dismissed as well.
Appeals dismissed.