SHEPPARD, D.J.:—The issue is whether the profit derived from property in the Van Bow District in the City of Prince George, and expropriated by the School Board of Prince George, is taxable income as the Minister contends or is not taxable as income as the respondent company contends. That issue is defined in Californian Copper Syndicate v. Harris (1904), 13 T.C. 159 at 165 as follows:
Is the sum of gain that has been made a mere enhancement of value by realizing a security or is it a gain made in an operation of business in carrying out a scheme for profit making?
and approved in 7’. Campbell v. M.N.R., [1953] 1 S.C.R. 3; [1952] C.T.C. 334, per Locke, J. at page 5 [337], and in Tougas v. M.N.R., [1955] Ex. C.R. 124; [1955] C.T.C. 66, per Cameron, J. at page 128 [69]. The respondent company contends that the profit was not realized in the carrying on of a business and was a capital gain, whereas the Minister contends that the profit was derived from carrying on of a business within Section 139(1) (e) of the Income Tax Act, as defined by M.N.R. v. J. À. Taylor, [1956-60] Ex. C.R. 3; [1956] C.T.C. 189.
The facts follow.
The property consisted of lots vested initially in the Crown in the right of the Province; an Order in Council of November 13, 1963 (Exhibit .A3) provided for a conveyance to the City of Prince George ‘‘for the development of a multiple dwelling housing project’’. After that conveyance had been made to the City of Prince George, the City advertised in the Prince George newspaper (Exhibit Al) on January 28 and February 3, 1964 an auction sale of the property consisting in area of about 4.37 acres, to be held on February 6, 1964 subject to an upset price of $15,000, with a right to the purchaser to acquire streets and lanes at the same price, and subject to conditions 1 to 6 inclusive, which stipulated that the City would provide only municipal services and the property was sold ‘‘for the purpose of a multiple dwelling housing project’’, that a building permit was to be obtained. within six months, and the completion to be within two years, with a right to the City to foreclose and repossess for. default.
Four persons, consisting of Buchanan, Benson, Flynn and Lloyd, held a meeting two days before the auction sale. After the meeting, lasting two hours according to Benson, the four decided that Buchanan would bid at the auction for the four and that he would pay the upset price of $15,000 and if needed, bid up to $25,000. All four attended the auction. The property was bid in for the four at $15,000 and the purchase signed by Buchanan but Pine Ridge Property Ltd. (the respondent company) was designated as grantee for the conveyance (Exhibit A4). That company was incorporated (Exhibit R6) with power to ‘ ‘ purchase, lease, construct,—and assist in improving lands— and to sell, mortgage or otherwise dispose of the same’’ and each of the four held 25% of the shares in the company. Benson stated the property was worth $60,000 (Exhibit R8, p. 10). Buchanan was engaged in the real estate business in Prince George and his experience covered all phases of that business, including the purchase of land for the construction of multiple dwelling housing projects with the units to be occupied by tenants (Examination for Discovery of Buchanan, Questions 2 to 112).
In 1963 to 1968, Buchanan was employed by the B.C. Land and Agency Company and thereafter was in the real estate business with Benson under the name of Buchanan Benson Company Ltd. (Examination for Discovery of Buchanan, Questions 34 and 35).
Buchanan stated that he had had discussions with Bond, the manager of Central Mortgage and Housing Corporation in Prince George, for. a loan on the property (Exhibit A22, p. 47,
Q. 203 to 207) but that was denied by Bond who stated that his company had refused to lend in the Van Bow area and that in any event the loan to a speculator company to build on property to be occupied by a tenant would be in the lowest category of security. .
In April or May of. 1964, the company had an architect in Prince George prepare a sketch for a multiple dwelling housing project of about 140 suites (TAB pp. TP 21 and 22, Exhibit A6) and this sketch would require the closing of some streets and lanes (TAB p. 23). The company was not formed with any money to construct the multiple dwelling housing project and the company intended to borrow from Central Mortgage and Housing Corporation (TAB pp. 41 and 55) which did most of the lending in Prince George (TAB p. 56). Buchanan stated that he had discussed the matter with Bond, the manager of Central Mortgage and Housing Corporation (Tab p. 57) and that Bond had assured him that there was no difficulty about the loan. The company would require a loan of about $10,500 per unit (TAB, p. 58). Bond, however, denies ever meeting Buchanan to discuss or that he, Bond, had promised a loan in the Van Bow area; that the company, Central Mortgage and Housing Corporation, would not lend in the Van Bow area and also lending to a speculative builder for occupation by tenants would be highly objectionable. In considering the builders equity for the purpose of making a loan, Central Mortgage and Housing Corporation considered three appraisals:
1. Cost of construction.
2. Capitalized cost; that would be a capitalization of the rents, less the interest on the mortgages and cost of construction that is the capitalized value.
3. The owner’s estimated cost; that is they would allow the owner owning land an allowance of approximately $1,000 per unit and would make a loan of 90% of the lowest of these three figures. Generally, the lowest was the capitalized cost.
Mr. Bond had no recollection of promising to consider any loan for the respondent company, or any loan in the Van Bow area.
On February 5,1965, Parker, a town planner, made his report to the City of Prince George (Exhibit A48), as he had been employed to consider an urban renewal under the National Housing Act, under which Canada would pay 50% of the cost and the Province and the City would share the remaining 50%. Regarding the Van Bow area, the report stated at page 45:
The Van Bow area was deliberately reserved for urban development action to the extent that Central Mortgage and Housing Corporation loans were withheld from the area until very recently. at page 46 :
(h) The area was low lying and had a low standard of municipal services.
at page 47 :
Mortgage companies have been reluctant to lend for multiple dwelling development in the area, due to its backwash nature. It is yet to be seen whether private developers can successfully finance, build, rent and operate rental housing in this area. It is very doubtful whether the total area will ameliorate to even average neighbourhood standards for Prince George, without the assistance of some public planning and action. Much can be done to improve the road pattern.
It is anticipated that the Van Bow area despite the attempts of private developers to introduce rental housing into the area, will not be substantially improved without some public action.
It is recommended that if private developers are unable to develop substantial rental housing on land that has been acquired recently from the city and the province, that the area be treated as a redevelopment area.
at page 48 :
It would be socially and economically wrong to ignore the opportunity to create in the Van Bow area, a much higher density and therefore higher yield of housing of rental type since it enjoys as an area, so many advantages for this type of housing and it is so obviously going to remain a depressed area without some public action.
If privately sponsored rental housing does not vastly improve the conditions of the area in the next year or two, application should be made to the Central Mortgage and Housing Corporation to establish a publicly sponsored redevelopment scheme under the National Housing Act.
The report was paid for by Central Mortgage and Housing Corporation to 75% or $9,000 and by the City to 25% or $3,000.
Under letter of October 5, 1965 (Exhibit R9), the City wrote to the Montreal Trust, and a copy to Central Mortgage and Housing Corporation, for a meeting with the City. However, that led to nothing.
On April 5, 1966 (Exhibit R7 ), part of the property held by the respondent company was expropriated for a school site by the School Board under Section 174 of the Public Schools Act, R.S.B.C. 1960, c. 319. The Board offered $16,000. Letter of July 7, 1966 (Exhibit R3), from the City to Wascan Appraisers Ltd., stated that the respondent company had not applied for closure of any roads or lanes and in paragraph 3 ‘ not performed in any way, shape or form in accordance with the conditions of sale agreement’’; the respondent company had paid the purchase price of $15,000.
Under letter of January 6, 1966 (Exhibit A9), from Thomson, City Manager, to Jones, the Work Superintendent of the City of Prince George, Thomson stated that the respondent company remained in the Van Bow area and that the City was unable to impress upon the company that it should release mortgage funds for multiple dwelling in the area. The respondent company and the School Board were not able to agree upon the value of the property expropriated (Exhibits A13 and A14, A24 and A25) and the respondent company employed L. P. Benoit, an engineer, to compile the cost of servicing the Van Bow area and that cost of servicing was computed at $33,618 (Exhibit Rl). The respondent company paid Penny & Keenleyside Appraisals Ltd. $541.15 (Exhibit A25). Under memo of May 16, 1966 in the handwriting of the hand of the respondent company’s solicitor, one Wilson, states that the respondent company does not want to sell (Exhibit A26). Subsequently, Wilson offered the School Board the property at $96,000 (Exhibit A27). This appears to depart from the instructions contained in the memorandum (Exhibit A26), however, Wilson continued to act for the respondent company and appeared for it on the expropriation proceedings.
On August 3 and 4, 1966, expropriation proceedings (Exhibit A12) were held to fix the value of the land expropriated and on September 22, 1966, the arbitrators awarded $104,658 (Exhibit A17).
By notice of motion of November 21, 1966 (Exhibit A18) the School Board appealed from the award and on November 28, 1966 the appeal was dismissed. In the letter of January 17, 1967 (Exhibit A19) from the respondent company’s agents to the School Board agents, states the payment due to the company with interest and costs was $109,542.72 and stated “we confirm your advice to the writer that you are holding in trust the Deed which was sent to you by Mr. J. Galt Wilson’’.
After the expropriation, the respondent company held in the Van Bow area three scattered parcels and these were consolidated by exchange with the City of Prince George, as indicated in the following letters:
Letter of August 11, 1969 (Exhibit A29)
Letter of December 10, 1969 (Exhibit A30) Letter of December 16, 1969 (Exhibit A31) Letter of December 18, 1969 (Exhibit A32) Letter of December 24, 1969 (Exhibit A33) Plan ‘‘A’’ (Exhibit A34)
Plan “B” (Exhibit A35)
Letter of July 16, 1970 (Exhibit A36)—enclosed Plan of the
Replot.
On February 8, 1971, Buchanan Benson Company Ltd. wrote to Trelle A. Morrow:
I would like to approach the banks and trust companies before too long to see what financing might be available for this year.
The respondent company then offered the compensation awarded for the site expropriated but that was refused as the site expropriated included lands other than those acquired from the respondent company, particularly the lanes and streets, and also the company wished certain costs and the result was the parties were not in agreement and nothing came of this. (Letters of April 23, 1971 (Exhibit A38), May 6, 1971 (Exhibit A39) and May 7, 1971 (Exhibit A40).)
By letter of July 27, 1971 (Exhibit A45), T. A. Morrow wrote the respondent company enclosing the layout of a multiple dwelling housing project, for the consolidated area and pointed out that the masonry bearing would cost $12,800 per unit and structural steel frame $20,600 per unit. The project would cost on the average $15,000 per unit.
In the meantime, the respondent company went into voluntary liquidation and the profits from the sale of the Van Bow property were distributed to the shareholders of the company. By order of August 27, 1971 (Exhibit A47), Verchere, J. ordered that the winding-up be stayed, the directors to resume office and the company to resume and continue business. The company thereupon applied to the Canada Permanent Mortgage Corporation for a loan in the amount of $318,510 to build upon the consolidated property (Exhibit A43), for which loan Central Mortgage and Housing Corporation guaranteed (Exhibit A44) for an additional 2%. The respondent company was assessed by the Minister in the amount of the profit as income tax and from that assessment appealed to the Tax Appeal Board and succeeded on the appeal.
From the decision of the Tax Appeal Board (reported [1970] Tax A.B.C. 449) the Minister has now appealed to this Court.
The issue turns upon the question of fact, whether or not the respondent company acquired the lands in the Van Bow area for one of the purposes of reselling at a profit as the Minister contends, or on the other hand, and as the respondent company contends, solely for the purpose of development of a multiple dwelling housing project and a return by way of rental. The respondent company contends that the sole purpose of purchasing the lands was to construct a multiple dwelling housing project and to receive therefrom the rentals which would be collected by the respondent company’s real estate agent; thereby presenting a perpetual return to the real estate company for collecting such rentals; that that purpose was the sole. purpose.
The onus is on the respondent company, as taxpayer, to establish that the assessment was in. error: Rk. W. S. Johnston v. M.N.R., [1948] S.C.R. 486; [1948] C.T.C. 195, Rand, J. at 489 [202] ;. Mulholland v: M.N.R., [1952] Ex. C.R. 233, Cameron, J. at 238; Tougas v. M.N.R. (supra), Cameron, J. at page 128. The proper time to consider the intention is at the time that the property was acquired.
In Racine, Demers and Nolin v. M.N. k., 65 DTC 5098, Noël, J. at page 9103 stated :
In examining this question whether the appellants had, at the time of the purchase, what has sometimes been called a “secondary intention” of reselling the commercial enterprise if circumstances made that desirable, it is important to consider what this idea involves. It is not, in fact, sufficient to find merely that if a purchaser had stopped to think at the moment of the purchase, he would be obliged to admit that if at the conclusion of the purchase an attractive offer were made to him he would resell it, for every person buying a house for his family, a painting for his house, machinery for his business or a building for his factory would be obliged to admit, if this person were honest and if the transaction were not based exclusively on a sentimental attachment, that if he were offered a sufficiently high price a moment after the purchase, he would resell. Thus, it appears that the fact alone that a person buying a property with the aim of using it as capital could be induced to resell it if a sufficiently high price were offered to him, is not sufficient to change an acquisition of capital into an adventure in the nature of trade. In fact, this is not what must be understood by a “secondary intention” if one wants to utilize this term.
To give to a transaction which involves the acquisition of capital the double character of also being at the same time an adventure in the nature of trade, the purchaser must have in his mind, at the moment of the purchase, the possibility of reselling as an operating motivation for the acquisition; that is to say that he must have had in mind that upon a certain type of circumstances arising he had hopes of being able to resell it at a profit instead of using the thing purchased for purposes of capital. Generally speaking, a decision that such a motivation exists will have to be based on inferences flowing from circumstances surrounding the transaction rather than on direct evidence of what the purchaser had in mind.
The respondent company has not established that its sole intention at the time of the auction w as to construct a multiple dwelling housing project, but on the contrary the evidence does establish that before the auction the buyers did consider, as a secondary intention; the possibility of selling at a profit.
The sole intention of the buyers, being the construction of a multiple dwelling housing project, was excluded as follows:
1. It would be important for the buyer of the lands at the time of the auction to know the number of permits which the construction would include because it was intended to borrow sufficient moneys to construct at the cost. of $10,000 or $10,500 per unit (TAB p. 28). The respondent company, as borrower, would want to know that it had sufficient funds to complete such construction which would require knowledge of the number of units, or Buchanan and Benson, for the purpose of collecting the rentals, would want to know the number of units on which they would share a percentage of the rentals. Similarly, the mortgage company would want to know the number of units contemplated so that the mortgage company would know whether or not it was prepared to make the amount of such advance. Buchanan, who bid at the auction and purchased the property, never did know the number of units but that number varied in his evidence, from time to time, from 100 to 120 units (Exhibit A22, p. 25), approximately 130 units (Exhibit A22, p. 33), 149 units (Exhibit A12, the Density Diagram), 120 units (Exhibit A8, Contour Map), that Buchanan contemplated living on the rentals from 115 units (Exhibit A26, memo May 6, 1966). Benson testified that there would be 75 to 100 units. The other two, who are members of the respondent company, gave no evidence. It seems impossible that either the four buyers or the respondent company could have intended to borrow at the date of the auction as they did not know how much would be needed for the construction; that would depend necessarily on the number of units.
2. The only meeting of the four who intended buying was two days before the auction, and then for a period of two hours according to Benson’s evidence. There was, therefore, no time in which to prepare plans or to determine the number of units in the construction.
3. Plans were later produced, but they were first produced at the expropriation proceedings for the purpose of fixing the price of the lands in the Van Bow area (Exhibit A22, pp. 5 to 23).
4. There could have been no time before the auction or at any time to determine if sufficient money could be borrowed to make the construction of the multiple dwelling housing project. The mortgagor would have to know the amount which he sought to borrow which would require knowledge of the number of units and the cost per unit and would also require to have submitted to the mortgagee the specifications for the construction, such as were produced for the consolidation (Exhibit A45).
5. There was no discussion between Buchanan and any official of the Central Mortgage and Housing Corporation as to the amount which would be required for construction. The evidence of Bond is accepted that at the time of the auction, on Febru- ary 6, 1964, that Central Mortgage and Housing Corporation would not lend on the lands in the Van Bow area and in any event Central Mortgage and Housing Corporation did not regard a loan to the respondent company for the purpose of renting to be a good security. Parker’s report (Exhibit A48) corroborates Bond in stating that the mortgagees would not lend upon the Van Bow area. No formal application for a loan from Central Mortgage and Housing Corporation to the respondent company was put in evidence. Thomson’s letter (Exhibit A9) stated that no application for construction had been made by the respondent company as late as the date of that letter, which was January 6, 1966.
There is further evidence that there was the intention to resell the lots at a profit. Benson, who had a quarter interest, stated that the value of the lots was $60,000 (Exhibit R8, p. 10), and Buchanan was authorized to bid up to $25,000. Therefore, the value must have been considered. In the letter of January 17, 1967 (Exhibit A19), Sutton, Braidwood and Company, as agents for the respondent company, stipulated that the transfer then delivered to Cummings and Company, as solicitors for the School Trustees, would be used only against payment of the stated amount, that indicated a willingness to sell by delivery of transfer against payment of the sum stipulated. By implication the conveyance then conditionally delivered, might be used if the purchase price were paid: that was a sale and confirms the view that resale at a profit was agreed upon as one of the purposes of buying. When the School Trustees had paid the amount of the purchase price, the respondent company went into voluntary liquidation which would require the consent of the majority of the shareholders and there was paid out to the shareholders their respective shares of the profits realized from the sale of the land. Further, the liquidator appointed under the voluntary liquidation could only sell at the price to be obtained on the market the three parcels which remained to the respondent company in the Van Bow area. The order of Verchere, J. (Exhibit A47) did restore the company, but under the circumstances of the expropriation, the restoring of the company would permit the company to borrow only on the consolidated parcel then held by the company. There is no evidence that the company did use the purchase price paid for the lots expropriated as a basis for purchasing other property on which to be constructed a multiple dwelling housing project. It therefore follows that the evidence is rather consistent with purchasing with a view to sale at an appropriate price and that the profit was made on the operation of a business. Californian Copper Syndicate v. Harris (supra) ; Campbell v. M.N.R. (supra); Tougas v. M.N.R. {supra). The profits were realized under a business within Section 139(1) (e) of the Income Tax Act (M.N.R. v. J. A. Taylor (supra)) and within Sections 3 and 4 of the Income Tax Act, as the company had the assistance of Buchanan and Benson who were real estate agents familiar with purchasing, building and the rental of units in multiple dwelling housing projects.
The respondent company also contends that as its fiscal year ended on September 30, 1966, therefore the amount of profit was not settled until the motion by way of appeal was dismissed, that is on November 28, 1966, by order of Verchere, J. (Exhibit A18). On the contrary the award of the arbitrator determines the amount of compensation to be paid for the land and improvements expropriated, Section 174(4) of the Public Schools Act, R.S.B.C. 1960, c. 319, and the award is title to the land, Section 174(14).
In Lechter v. M.N.R., [1964] C.T.C. 510, Dumoulin, J. stated at page 516 :
The relevant taxation year must coincide with that during which a debt or an obligation to pay, legally enforceable, originated between respondent and appellant. . . .
The respondent appears to confuse two completely different components of all transactions: the creation of a debt receivable and a payment ultimately received.
and in the Supreme Court of Canada ([1966] C.T.C. 434) Abbott, J. stated (at 438) :
It follows, that respondent, operating on an accrual basis, was bound to treat the profit of $234,506.51 on the disposition of part of lot 507, as having been earned prior to January 31, 1955, and that it was not taxable income in his taxation year ending January 31, 1956.
In the case at bar, the notice of expropriation and the finding of the arbitrators on September 22, 1966 (Exhibit A17) created the liability and was properly assessed to income in the year 1966, under Section 85B(1) (b).
Benaby Realties Limited v. M.N.R., [1965] C.T.C. 273, is distinguishable on the facts as there the property was bought as an investment and the secondary intention was found against. Noël, J. at pages 278 and 279 stated:
The sole issue, as far as these profits are concerned, is whether the lands in question were acquired for the purpose of resale at a profit. The only evidence adduced by the appellant with reference to that question is the evidence of the person who was presi- dent of the appellant at the time of the trial and who, according to his own evidence, had no personal knowledge of what was in the mind of those who were guiding the fortunes of the company at the time that the land was purchased. The relevant part of his evidence reads as follows (p. 97 of transcript) : . . .
In my opinion, this evidence is not sufficient to rebut the obvious inference from all the circumstances that at least one of the motivating reasons for the appellant to acquire the vacant land in question was its hope and expectation that it would be able to dispose of it at a profit.
If that was one of the motivating reasons, profits made upon subsequent disposition of the property are taxable in accordance with Regal Heights Ltd. v. M.N.R., [1960] S.C.R. 902; [1960] C.T.C. 384. It also follows, as decided in Byron B. Kennedy v. M.N.R., [1952] Ex. C.R. 258; [1952] C.T.C. 59, that a profit real- ized upon the expropriation of properties so acquired is taxable. (An appeal to the Supreme Court of Canada from this decision was dismissed without reasons. Cf. viii of [1953] 1 S.C.R.) . . .
Having regard to the principle laid down by the House of Lords in C.I.R. v. Newcastle Breweries Limited (1925), 12 T.C. 927, and Section 85B(l)(b) of the Income Tax Act which sets down that for taxpayers keeping accounts on an accrual basis (which is the case of the present appellant) every amount receivable in respect of property sold or services rendered in the course of the business in the year must be included in computing their income, I am of opinion that, if the issue that the assessment had been made in the wrong year had been properly raised, the appellant would be entitled to succeed with regard thereto.
In Ben Lechter v. M.N.R., [1964] C.T.C. 510, my brother Dumoulin rendered a decision to the effect that a profit from an expropriation under the Expropriation Act (R.S.C. 1952, c. 106) for a taxpayer who is on an accrual basis is taxable in the year in which the expropriation took place and not in the year in which the compensation was received on the basis that “the relevant taxation year must coincide with that during which a debt or an obligation to pay legally enforceable originated between respondent and appellant” as a result of Section 9 of the Expropriation Act whereby the land covered by the notice of expropriation is expressly vested in Her Majesty from the day a plan and description are deposited on record in the Registration office and the expropriated party, because of such deposit and in view of Section 23 of the Expropriation Act, loses the ownership of the land so expropriated which passes to the Crown, and is then left with a claim to whatever compensation money is agreed upon or is adjudged.
and in the Supreme Court of Canada ([1967] C.T.C. 418) Judson, J. (at 421) stated:
My opinion is that the Canadian Income Tax Act required that profits be taken into account or assessed in the year in which the amount is ascertained.
In Vaughan Construction Company Limited v. M.N.R., [1968] C.T.C. 165, Thurlow, J. at page 171 stated:
Finally the property was dealt with by the appellant company in the same way that a speculative dealer in land might be expected to deal with it; acquiring it, holding it for a comparatively short time, during which it served no purpose in the appellant company’s hands, until an interested party came along and then making it the subject of a profitable trade for a substantial sum in cash and another valuable and readily saleable piece of property.
Both of the positive guides enunciated by the former President of this Court in Taylor v. M.N.R., [1956-60] Ex. C.R. 3; [1956] C.T.C. 189, which were cited with approval by the Supreme Court of Canada in Irrigation Industries Limited v. M.N.R., [1962] S.C.R. 346; [1962] C.T.C. 215, thus indicate that the transaction from which the profit here in question arose was an adventure in the nature of trade in addition to which the intention of Mr. Vaughan in acquiring an interest in the property and of his company in acquiring the property itself serve to confirm this conclusion.
The appeal in respect of the 1954 re-assessment accordingly fails.
and at page 172 stated:
I turn now to the contention that in any event profit from the Bellevue property was not realized in the appellant company’s 1957 taxation year. In the appellant company’s reply this point was based on the contention that the year in which the profit must be taken to have been realized was the year in which the expropriation occurred, that is to say, 1955, but in argument the point was based on the contention that the compensation to be paid to the appellant company, whose financial statements were compiled on an accrual basis, was not ascertained in the 1957 year since the company’s entitlement to compensation for the property was not finally determined until 1961 when the judgment of the Supreme Court of Canada was rendered. The contention was based on the judgment of that Court in M.N.R. v. Benaby Realties Limited, [1967] C.T.C. 418, which was rendered after the filing of the appellant company’s reply.
In the Supreme Court of Canada ([1970] C.T.C. 350) Laskin, J. (at 3855) stated:
The appellant ordered its financial affairs on an accrual basis, and its argument in sum was that whatever be the proper year to assess to tax the gain reflected in the receipt of $96,415.27 (be it 1955, when the expropriation occurred, or 1956, when the total compensation was assessed, or 1961, when the final apportionment was made by this Court, or 1962, when the order of this Court was entered), it was not 1957. The significance of the matter lies in the fact that the Minister, in addition to re-assessing for the 1957 taxation year, re-assessed for the 1961 taxation year by adding as income the sum of $86,140 as being the balance of the profit realized on the expropriation. Both of the re-assessments were made after the judgment of this Court on the apportionment of the compensation was settled and entered.
Applying the principle of M.N.R. v. Benaby Realties Ltd., [1968] S.C.R. 12; [1967] C.T.C. 418, to the different facts in the present case, I am of the opinion that no amount of the compensation became receivable until the order of Judge Pottier of June 4, 1957. What was then directed to be paid (and which was in fact paid in that year) was, so far as it represented in any portion thereof a gain arising out of the appellant’s business, properly assessable to tax in 1957. Since the sum in question remained undisturbed in the final disposition by this Court in 1961, I need not be concerned with a situation where there was such a variation as to reduce what had been ordered to be paid in 1957. The 1961 re-assessment is not before this Court, and I say nothing about it.
I would dismiss the appeal with costs.
In the Vaughan Construction case (supra) Judge Pottier (referred to by Laskin, J. at page 355) was the arbitrator and the appeals from his judgment were unsuccessful. In the present case, the finding of the arbitrators was on September 22, 1966 (Exhibit A17) and within the taxation year of the respondent company. The unsuccessful appeal to Verchere, J. does not extend the date when the moneys are receivable.
The following cases depend upon their particular facts and therefore are distinguishable on the facts. There is no departure from the common principle. Normac Investments Ltd. v. M.N.R., [1969] C.T.C. 468; [1970] C.T.C. 325 (Can. 8.C.); Bestpipe Limited v. M.N.R., [1970] C.T.C. 310; Balstone Farms Ltd. v. M.N.R., [1966] C.T.C. 738; M.N.R. v. Valclair Investment Company Limited, [1964] C.T.C. 22.
It therefore follows that the profit was realized :
(a) through purchase with intention to resell at a profit; and
(b) through the employment of Buchanan Benson Company Ltd., real estate agents; and
(c) the expropriation which was, in effect, a sale of the property.
The profit was receivable in the course of the business within Section 85B(l)(b) during the year 1966. Therefore the assessment by the Minister should be restored.
The respondent company has also contended that there should be a reserve set up under Section 85B(l)(d). Subsection (d) does not apply in that the property sold was land and no part of the purchase price was made receivable after the end of the taxation year, that is after September 30, 1966, by reason that the amount was payable at the time of the award of the arbitrators, namely, on September 22, 1966 (Exhibit A17).
It therefore follows:
(a) that the profit was properly assessed as income of the respondent company in the year 1966; and
(b) that the assessment of the Minister is within the statute.
The appeal of the Minister is therefore allowed with costs payable by the respondent company throughout.