Roland St-Onge:—This appeal, heard at Victoria, British Columbia on November 5, 1971 by the Tax Appeal Board as it was then constituted, concerns the 1967 taxation year.
In 1965 the appellant, a practising lawyer in Nanaimo, BC, together with two other persons, purchased an apartment building consisting of five rental units known as Glenayr Apartments Limited in the Departure Bay area adjacent to the City of Nanaimo. After approximately two years of ownership they sold the property in 1968 for $600,000.
The appellant contended that the property was purchased for investment purposes and, consequently, his portion of the gain of $5,850.45, an amount of $1,950.15, was a fortuitous non-taxable capital gain.
At the hearing, the evidence disclosed that prior to and after the transaction under review the appellant entered into all kinds of real estate transactions — buying income-producing properties as well as raw lands for subdivision purposes, either alone or in association with a firm of real estate agents.
Mr Maclsaac testified that, although he had purchased and sold properties during his 23 years of practice as a lawyer, he had never taken any income from these transactions as he was keeping it for the time when he would retire, and he contended that he should not be taxed on these profits. He stated that when he purchased properties with his associates, Jim Goodwin, an accountant, and Bill Ney, a real estate dealer carrying on a real estate business under the name of Nanaimo Realty Limited, he relied entirely on them. After explaining all the transactions which he had entered into alone, he testified as follows:
Q. These were things that you bought yourself as opposed to buying with Messrs Goodwin and Ney? A. Yes.
Q. And these several other apartments, Nob Hill Apartments and Millstream Manor, these are both properties held with Messrs Goodwin and Ney? A. Yes.
Q. Still held? A. Yes.
Q. Have you other investments, let us say other properties that you hold with them? A. I am not sure but I think that there has been an acquisition of another apartment building, but I am not sure though.
Q. Yes, it was the building that you all acquired following the saie of Glen- ayr. A. Yes.
Q. And the Nob Hill Apartments and Millstream, again were they acquired by Messrs Ney and Goodwin including you as a participant, acquired by them as a result of their own decisions? A. Yes. They had done everything, of course, you know, they had run the whole thing satisfactorily, and it gave me something to put in my Income Tax Return every year.
Q. You leave it to them? A. Completely.
Q. If Messrs Ney and/or Goodwin were to wish to decide today to buy an apartment would they phone you and ask you if you wanted a part of it? A. Oh, I think so now because the bloom is off the rose.
Q. Well, would they have looking back say to 1965? A. I don’t know. Goodwin is such a good friend of mine that he figures that he is sort of like my father, that if he buys something he is looking after my interest, and he really believes this, and I believe that if he made a bad deal he would be prepared to be bawled out about it by me, but he is not worrying, he has no legal power of attorney, but he did it; he just brings around the papers for me to Sign.
Q. Looking back to 1965, 1966, 1967, you had confidence in the judgment of Mr Goodwin to buy something and if you thought it should not be kept, well, that was fine with him. A. Yes.
Q. There was no discussion about the sale of land there, you didn’t go out and say, “Look, we are having problems, or financial resources are not satisfactory”, or anything like that? A. Could have been, but I don’t remember. You see, he and Ney are running the real estate business, and of course I believe that they consider this from their standpoint a taxable thing because they are in business, but certainly I don’t go into it.
Q. I understand that neither of them contested the fact of going in . . . A. No, they feel that this is their line of work.
Q. They are real estate businessmen and traders, so that is their line of work. A. They are quite satisfied that they are taxable.
Q. Your thought is that your destiny should not be classified with them? A. That is right, and they also think so.
There is no need to give the details of each transaction in which the appellant was involved either alone or in. association with others because their nature and number are sufficient to brand him as a trader in real estate. In addition, the short length of time he held the property under review as well as his association with real estate agents for the realization of profit are more than enough to rule that his portion of the gain is not a capital gain but a taxable income in accordance with sections 3 and 4 and paragraph (e) of subsection (1) of section 139 of the Income Tax Act.
For the above reasons the appeal is dismissed.
Appeal dismissed.