WALSH, J.:—Appellant appeals from a notice of re-assessment with respect to income for its 1962 taxation year dated June 19, 1967 whereby tax in the amount of $10,404.64 was levied on it arising out of profits on the sale of property owned by it on Industrial Avenue in the City of Ottawa. Appellant was incorporated by Ontario letters patent dated December 2, 1959 and in January 1960 it acquired the property on Industrial Avenue comprising Lots 13 to 17 for $42,000, which property had previously been acquired in trust for it prior to its incorporation by one of its shareholders. The shareholders were members of the Addleman and Betcherman families who had long enjoyed an intimate and friendly business association, each family holding 50 % of the shares. Funds to acquire the property were provided by the shareholders and by the assumption of a mortgage.
Appellant claims that the site was acquired with the sole intention of renting same to industrial concerns for whom they would erect buildings in accordance with the requirements of the tenants. Between the period from 1959 until December 1962 attempts were made by the officers and directors to locate tenants for the building or buildings to be erected and offers were received from various industrial concerns and negotiations entered into regarding the type of building required, the terms of lease, the amount of rent payable, and other pertinent matters, but no such arrangement was ever successfully concluded. Finally, appellant received an unsolicited offer to purchase the property for $110,000 from International Harvester Company of Canada Limited and this was discussed at an informal meeting of the board of directors and, in spite of the opposition from some of them, the offer was accepted, in view of appellant’s inability to lease the property in accordance with its intentions, and considering the mounting costs of maintaining it with no immediate prospect of leasing and the fact that the member of the group who had been attempting to promote the development of the property was obliged to move to Toronto, and by deed dated November 28, 1962 the property was sold. By notice of re-assessment dated July 11, 1966 respondent added to appellant’s income the sum of $59,988.22 computed as profit on the sale of the land. Notice of objection to this was taken on August 11, 1966 and by the notice of re-assessment dated June 19, 1967 from which the present appeal is taken, respondent confirmed the 1966 re-assessment for the purpose of effecting technical adjustments, which adjustments are irrelevant to the present appeal.
Appellant denies that it has at any time carried on the business of dealing in real estate and claims that respondent erred in concluding that the appellant, either for itself or through the policies of its officers, directors or shareholders, intended at the time of the acquisition of the said property to resell same at a profit, maintaining that the said property was acquired as a capital asset and at no time did it acquire the characteristics of inventory so that the eventual sale thereof by virtue of appellant’s inability to deal with same in accordance with its original, unchanged intention was a transaction on capital account and not subject to taxation under the provisions of Sections 3, 4 and 139(1) (e) of the Income Tax Act.
tespondent for his part contends that the appellant acquired the said land for the purpose of dealing with, trading in or otherwise turning it to account and that the purchase of the land and its subsequent sale to International Harvester Company of Canada Limited constituted an adventure in the nature of trade within the meaning of Section 139(1) (e) of the Income Tax Act and that the profit realized by the appellant on the sale of the land was income from a business of the appellant within the meaning of Sections 3 and 4 of the Act.
The evidence discloses that the Betcherman and Addleman families had had business connections for some time. Alex Betcherman controls Betcherman Iron and Metal Company in Ottawa and also an associated company, McKay Smelters, which operated in Ottawa at the time of the purchase of the property in question and which manufactures copper alloys, supplying raw materials to the former company with whom it at that time shared office space. Another connected company was Ingot Metals in Toronto. Harry and Abraham Addleman are in the steel business under the name of Beechwood Steel Company which also did business with McKay Smelters, and Alex Betcherman is associated with them in Bond Brass Limited and at one time the Betcherman family had had an interest in the Beechwood Steel Company. The Betchermans have never traded in real estate although the family has had some real estate investments. One of these is the Capital Apartments Limited which commenced business about 1940, one-third of the stock being owned by Alex Betcherman, one-third by his brother A. D. Betcherman, and one-third by the estate of Myer Betcherman, the father of Dr. Irving Betcherman, a metallurgist, who was the principal witness and the active member of the group in the dealings relating to the subject property. Capital Apartments has owned and operated an apartment building in Ottawa for 30 years. The family group also formerly had a property consisting of a warehouse on Sussex Drive on which they had built and leased to Gamble Robertson Limited until it was expropriated in connection with one of the access roads for the new MacDonald-Cartier bridge. The Addleman family, for its part, had been traders in real estate as well as owners of real estate for investment purposes, although their real estate dealings were by no means their principal business. They own property on Beechwood Avenue, east of the St. Patrick Street bridge, in connection with the Beechwood Steel Company business, part of which has been rented for apartments and stores since 1955. They also own some commercial properties in Pembroke, one of which has been held for 35 years and one for 10 to 12 years, both of which are leased to various tenants. In 1955 a company they owned, McArthur Realties, had bought a property on the Conroy Road, part of which consisted of a gravel pit and part of which they hoped to eventually develop. The sold gravel from the pit to the Dibblee Construction Company and others who extracted same on a royalty basis at so much a ton. This property was eventually expropriated by the National Capital Commission and a claim was made for income tax on the profits arising out of the expropriation which claim was, however, settled out of court on the basis that the profits attributable to the portion which had been operated as a gravel pit were capital gains but that the tax would be paid on the profits arising out of the sale of the other portion of the property which they had hoped to eventually develop. Through McArthur Realties, they had also bought in 1957 100 acres of raw, unsubdivided land at the corner of Greenbank Road and Knoxdale Avenue in Ottawa which had no commercial development or services at the time so that the development of same appeared to be a long term proposition. They had plans made by a town planner for the subdivision of this property known as the Brooks Farm Property for which they had paid $52,500. Part of it was sold to Ontario Hydro as the result of an expropriation for $61,625 in 1963, another part in the same year to the Separate School Trustees of Nepean Township for $24,000 and a third portion to the Church Extension Committee of the United Church of Canada for $14,640 and the balance of the property was finally sold in January 1965 for $575,000 although they gave the purchaser a mortgage on a $525,000 balance for 15 years at only 414%. In any event, McArthur Realties paid tax on the proceeds of these sales even though the first three sales had been made pursuant to the plan for development of the property. There was also another property bought in Eastview in 1955 for $10,000 with some buildings on it which were rented to an auto body repair shop, which property was sold in 1959 for $20,000. It was not always the same brothers who were in these dealings and none of them were real estate dealers, two of them being in the steel business, one being in the fur business in Pembroke now retired, and another being a doctor in Montreal.
At the time the Industrial Avenue property was purchased it already appeared likely that the Union Station might be built in the area. It had become a very desirable area for industrial development, having railroad sidings and good road connections. There were already five or six industrial buildings of the warehouse type on the street, mostly built on leasing arrangements including the M. Loeb & Company warehouse across the road from their property and one built by Pure Spring Beverages, which it had leased to another company. The Betchermans had had some slight experience in such arrangements as a result of the Gamble Robertson property, and the group as a whole felt that this was a good type of investment. It was Harry Addleman who learned that the property was for sale and A. D. Betcherman then got Dr. Irving Betcherman to look at it. The purchase price called for a $14,000 down payment with a balance of $28,000 on the mortgage and the Betcherman family portion of the down payment amounting to $7,000 was advanced by its company Capital Apartments Limited. As there were several members of each family involved they felt it would have been cumbersome to operate as a partnership so they decided to incorporate. The appellant company was then formed and took over the property from Harry Addleman in whose name it had been bought in trust. It was their hope to build five different plants, one on each lot but their plans were flexible enough that if a potential lessee wanted a larger building they could build it on two or three or all five of the lots if necessary. The rental to be charged would be based on the value of the raw land plus the cost of the buildings and a net net lease would be entered into with the lessee paying all taxes, insurance and other charges. They were aware that their rental rates would have to be competitive with those prevailing in the area but felt that, nevertheless, this could be a successful type of investment and that it was something they could manage themselves with Dr. Irving Betcherman being the active negotiator. They therefore rejected the offer of F. H. Toller Ltd., real estate agent, who had handled the purchase of the property by Harry Addleman from Massey-Ferguson, and who had solicited the exclusive right to develop the property for them and dispose of same on a lease
basis or on a sale on completion of construction for a commission of 7 7% of the total cost of the land and buildings.
Both the Betcherman and Addleman families had very good lines of credit with their bankers so there would be no problem with the temporary financing of a building on the property which could subsequently be mortgaged on a long-term basis when a tenant was found. Both families had considerable contacts in business circles and rather than formally advertise the property as being available for construction of a building to suit the requirements of a tenant and lease same to it on a long-term lease, they felt that word-of-mouth would make this sufficiently known and that it was common knowledge in real estate circles that the property was available for this purpose. They merely invested in one small signboard, 4’ x 8’, costing $40 which they had installed on the property in November 1960, a year after the property had been acquired, to indicate that the site was available for building for rental purposes. They did enter into communications, however, with various prospective tenants, including Mussens Canada Limited, Montreal Ottawa Express, Nesbitt Orange and, through an indirect contact, with McCormicks Biscuits. The proposal to Montreal Ottawa Express proceeded to the stage where they had their architect, Morris Wolfson, draw a sketch for a transport building 120’ x 85’ for one of the lots, dated March 30, 1960 but no agreement was concluded. In 1961 they. made a proposal to Nesbitt Orange which had advanced sufficiently that they had Mr. Wolfson draw a sketch plan for a bottling plant 120’ x 60’ dated April 27, 1961. This deal also fell through and in the summer of 1961 they negotiated with Mussens Canada Limited and by letter dated September 1, 1961 offered to construct a building to comply with its plans and specifications for a net rental of $500 a month for a 20 year lease, all expenses to be paid by the lessee. The negotiations went on for some months but Mussens eventually located in Hull. In June 1962 there were some negotiations with Laidlaws who had seen their sign on the property but Laidlaws eventually bought land for themselves immediately to the west of the subject property. McCormicks Buiscuits eventually rented property on the other side of Ottawa on Scott Street. Appellant also tried to interest
M. Loeb & Company, offering to build an additional warehouse for them in the event that the one they had built across the road proved insufficient for their needs.
The witnesses testified that at no time during this period did anyone attempt to buy the property from appellant and it never offered it for sale. The architect, Mr. Wolfson, was not paid for the plans although he had spent about 35 hours on each according to his evidence and they were sufficiently detailed to enable cost estimates to be made. He did not expect payment as he had done former work for the family and anticipated future work when and if the buildings were built. He had been given sufficient details as to the requirements of the potential lessees before he prepared the plans to satisfy him that there must have been discussions in some depth between appellant and them prior to this. While the plans, which were filed as exhibits, show considerable detail, he stated that they were not sufficient to enable construction to be commenced, but merely to give an indication to a potential tenant of the nature of the building they could expect.
While appellant held the property it derived no income from it and paid the taxes and other experses by advances made to the company from the shareholders by way of interest-free loans. Eventually the National Capital Commission advised McKay Smelters that the spur line serving it would be removed in 1961 or 1962. McKay Smelters opposed this application before the Board of Transport Commissioners but was unsuccessful and it was at that time that they decided that it would be impossible to carry this business on successfully in Ottawa without this and that they would therefore expand their associated company, Ingot Metals in Toronto, and close the Ottawa operation. Dr. Irving Betcherman, who managed it, then moved to Toronto. As already indicated, it was ne who had handled all the negotiations for financing and attempting to lease the Industrial Avenue property, his uncles being elderly and semi-retired and away for considerable periods in the winter. Apparently, the Addlemans were prepared to leave everything to him and the Betcherman family preferred it this way. On August 31, 1962, the Fitzsimmons Realty Company submitted an offer to appellant on behalf of an undisclosed purchaser to buy the property for $110,000 including the condition that the vendors would pay their commission, and that the purchaser would have a thirty day option so that test drillings could be made on the soil. The property had never been listed for sale before this or even for rental with any real estate agent. Alexander Fitzsimmons testified that he knew Harry Addleman and that he was aware that he and his associates were interested in a lease-back. He had acted for the purchaser, International Harvester, who had just sold its building on Carling Avenue and was looking for a smaller plant, and he thought of this property. When he approached Addleman about the sale he asked him to try to interest the proposed purchaser in a leasing arrangement but they were not interested, so he then submitted the purchase offer subject to the results of soil tests to be taken.
It was Dr. Irving Betcherman who persuaded the other shareholders to accept the offer, in view of his move to Toronto, although other reasons given by the witness included the fact that all their attempts to construct buildings for long-term rental on the property had been unavailing and that meanwhile it was producing no revenue and taxes and carrying charges on the investment were mounting up.
After the sale the company made interest-free loans to its shareholders in the amount of $45,000 approved at a meeting on January 21, 1963 but at a meeting on November 18, 1964 it was decided to demand repayment of these loans to avoid taxation problems which would otherwise arise. The money still remains invested in the trust account of the company at the bank and no attempt has been made to acquire other property or assets.
The first two objects clauses in appellant’s letters patent read as follows :
(a) TO acquire by purchase, lease, exchange or otherwise and to own, operate, maintain, rent and lease lands and premises or
any part or parts thereof;
(b) TO purchase or otherwise acquire for the purpose of investment only real estate and personal property and rights of all kinds and in particular options, contracts, business concerns and undertakings and to improve, alter and manage the said lands and buildings and business concerns and undertakings and, in the event
of the sale thereof, to take and hold mortgages for the unpaid balance of any purchase money, and to sell, mortgage or otherwise
dispose of the said mortgages;
As has been held, however, the objects clauses set out in the letters patent are of little significance and it is the actual conduct of the corporation which is relevant for taxation purposes. In the case of Regal Heights Ltd. v. M.N.R., [1960] S.C.R. 902; [1960] C.T.C. 384, Mr. Justice Judson stated at page 907 [390] :
Throughout the existence of the appellant company, its interest and intentions were identical with those of the promoters of this scheme. One of the objects stated in the memorandum of association of the company was
“To construct and operate apartment houses, blocks, shopping centres and to otherwise carry on any business which may be conveniently carried on in a shopping centre.”
Nothing turns upon such a statement in such a document. The question to be determined is not what business or trade the company might have carried on but rather what business, if any,
it did in fact engage in.
That case, on which respondent primarily relies, dealt with the doctrine of secondary intent. This was well set out in the judgment of Judson, J. where he stated at pages 905-906 [388-89] :
There is no doubt that the primary aim of the partners in the acquisition of these properties, and the learned trial judge so found, was the establishment of a shopping centre but he also found that their intention was to sell at a profit if they were unable to carry out their primary aim. It is the second finding which the appellant attacks as a basis for the taxation of the profit as income. The Minister, on the other hand, submits that this finding is just as strong and valid as the first finding and that the promoters had this secondary intention from the beginning.
It can perhaps be distinguished from the present case, however, in that it was essential to the development of the shopping centre that a lease be obtained from a large department store. While the company did have some sketches made of a promotional nature and entered into discussions with four department stores, although the evidence indicated that there was only one which might possibly be interested, Judson, J. found that the venture was entirely speculative and that if it failed the property was a valuable property in any event. While the facts in the present case closely resemble this, the appellant was not dependent on concluding a lease with any one particular lessee or type of lessee but was in an entirely flexible position and able to make such an arrangement with any one of a considerable number of industrial or business firms who might be locating in Ottawa or changing their location. Neither was there any problem with respect to the financing of the project nor any counter proposal by appellant itself to sell same as in the case of Bel-Conn Ltd. v.
M.N.R., [1969] C.T.C. 1, which was also based on the doctrine of secondary intention. Neither can this case be brought within the finding in Edgeley Farms Limited v. M.N.R., [1968] C.T.C. 240, in which Jackett, P., as he then was, stated at page 241:
Clearly, as I have said, the land was acquired because it was a good “buy”. Its potential value was obvious. What the appellant would do with it was not decided at the time of acquisition. The incorporators were well to do and could afford to bide their time. What the appellant would do with the land would depend on what opportunities presented themselves. I have no doubt that, if the guiding mind of the appellant were to have frankly answered questions at the time of acquisition, he would have agreed that the appellant might itself, at an appropriate time, erect on the land buildings suitable for the developing neighbourhood, with a view to renting them or selling them: he would also have agreed that, if the right opportunity or opportunities arose, the appellant might sell some or all of the property, and he would also have agreed that really attractive bare land leasing proposal would receive careful consideration by the appellant. In other words, the land was not dedicated at the time of acquisition to any particular use. It might end up as stock-in-trade of a trading business or as the subject of a venture in the nature of trade. It might end up as the site for an income-producing building. It might end up as revenue-producing bare land.
In those circumstances, had the acquisition merely been followed by the 1962 sale, I should have had no doubt that the resultant profit was a profit from a business within the extended meaning of that word as used in the Income Tax Act. In effect, the appellant would have dedicated the land, or at least that part of it that it sold, to the carrying on of a trading business or a venture in the nature of trade.
His finding that the disposal of the property by a 25-year lease with an option to purchase, which was soon after executed in part by the lessee, resulting in a profit to the lessors, constituted a capital gain was reversed in the Supreme Court ( [1969] S.C.K. 603; [1969] C.T.C. 313) which judgment quoted the above extract, but reversed the finding solely on the ground that when the company gave the lessee an option to buy, its earlier indecision was resolved and this was not a bare land leasing proposal but the method adopted by the company in putting through its real estate transaction so that the company was really selling its lands in the course of the operation of a business for profit.
In the present case there was no indecision on the part of the eroup controlling the appellant as to the purpose for which the property was acquired, and nothing to contradict their evidence that this was for the construction of a building or buildings on it to the specifications of a potential tenant or tenants to whom these buildings would then be rented on long-term leases so as to produce income. The promoters were in a financial position to readily arrange the necessary financing and their course of conduct was in no way inconsistent with their intentions as expressed in their evidence and set out in the objects clauses of the company. They did not have to pay for the plans they had made because of the nature of their relationship with their architect but these plans were not merely promotional sketches such as one sometimes sees in connection with a community or housing development but were sketches that were specifically drawn to suit the express needs of two potential tenants. The fact that they did not advertise in the newspapers that they had property available on which they would construct buildings to suit the requirements of the tenant, nor did they place large billboards on the property, is not, in my view, of great significance. The fact that they had such property available was known in real estate circles in the city and direct contact was made with a number of industrial firms who might be interested. A potential tenant for a project of this sort is not apt to be found merely because he has seen an advertisement in a newspaper or noticed a sign on the property when he is driving by. The sort of tenants appellant was seeking would be more apt to retain an agent to seek suitable property for them as the eventual purchaser, International Harvester Company, did, although as it turned out in this case it was interested in buying and not in leasing arrangements. It is also significant that at no time did appellant offer the property for sale. The eventual sale was made as the result of an unsolicited offer, and then only, according to the evidence of the agent Fitzsimmons, after he had been asked to endeavour to see whether his at that time unnamed client would not consider a leasing arrangement rather than an outright purchase of the property.
It has been held in a number of cases that the mere fact that a property is acquired for ne purpose of selling it at a profit (even if this were so, which the evidence does not disclose in the present case) does not of itself make the profit from such sale taxable as an adventure in the nature of trade if nothing has been done to advance or foster the sale of it. In two cases closely resembling the present, namely, M.N.R. v. Valclair Investment Co. Ltd., [1964] C.T.C. 22, and M.N.R. v. Cosmos Inc., [1964] C.T.C. 34, where an investment company had bought farm land from which it received minimal revenue from a tenant, admittedly with the view of seeking capital gain and had then sold as a result of an unsolicited offer, Kearney, J. held that land was different from a mere commodity which can become the object of trade, as it is capable of producing an annual yield even though it has not actually been used productively. He compared the purchase of it for future sale at a profit with the purchase of growth stocks paying no dividends but being capable of doing so, and considered that the holding of it was not an undertaking or adventure and that it lacked the badges of trade, the speculation or risk being negligible. He relied on the Supreme Court case of Irrigation Industries Ltd. v. M.N.R., [1962] S.C.R. 346; [1962] C.T.C. 215, in which Martland, J. in rendering the majority judgment, discussed the positive tests set out in the well known judgment of Thorson, P., as he then was, in M.N.R. v. James A. Taylor, [1956] C.T.C. 189, namely,
1. whether the person dealt with the property purchased by him in the same way as a dealer would ordinarily do; and
2. whether the nature and quantity of the subject matter of the transaction may exclude the possibility that its sale was the realization of an investment or otherwise of a capital nature or that it could have been disposed of otherwise than as a trade transaction.
He concluded that neither test was applicable in the Irrigation Industries case (supra) in which the appellant, acting entirely outside the nature of its regular business, purchased stock in another company which it sold soon thereafter at a substantial profit. In the present case it appears that appellant did not deal with the property the way a dealer seeking the sale of same would have done, nor does the nature of the transaction exclude the possibility that the sale of the property was a realization of an investment. This was certainly not the only way in which the property could have been disposed of or used. Justice Martland states at pages 355-56 [223-24] :
The only test which was applied in the present case was whether the appellant entered into the transaction with the intention of disposing of the shares at a profit so soon as there was a reasonable opportunity of so doing. Is that a sufficient test for determining whether or not this transaction constitutes an adventure in the nature of trade? I do not think that, standing alone, it is sufficient. I agree with the views expressed on this very point by Rowlatt, J. in Leeming v. Jones (supra) at page 284. That case involved the question of the taxability of profits derived from purchase and sale of two rubber estates in the Malay Peninsula. The Commissioners initially found that there was a concern in the nature of trade because the property in question was acquired with the sole object of disposing of it at a profit. Rowlatt, J. sent the case back to the Commissioners and states his reasons as follows:
“I think it is quite clear that what the Commissioners have to find is whether there is here a concern in the nature of trade. Now, what they have found they say in these words (I am reading it in short) : That the property was acquired with the sole object of turning it over again at a profit, and without any intention of holding the property as an investment. That describes what a man does if he buys a picture that he sees going cheap at Christie’s, because he knows that in a month he will sell it again at Christie’s. That is not carrying on a trade. Those words will not do as a finding of carrying on a trade or anything else. What the Commissioners must do is to say, one way or the other, was this—I will not say carrying on a trade, but was it a speculation or a venture in the nature of trade? I do not indicate which way it ought to be, but I commend the Commissioners to consider what took place in the nature of organizing the speculation, maturing the property, and disposing of the property, and when they have considered all that, to say whether they think it was an adventure in the nature of trade or not.”
The case was returned to the Commissioners, who then found as a fact that there had not been a concern in the nature of trade. Ultimately it reached the House of Lords, [1930] A.C. 415, where the main issue was as to whether the profits were taxable under Case VI of Schedule D of the Income Tax Act, 1918. There is, however, a general statement of principle by Lord Buckmaster, at page 420, which aptly applies to the present case, when he says:
. . . an accretion to capital does not become income merely because the original capital was invested in the hope and expectation that it would rise in value; if it does so rise, its realization does not make it income.”
In the same judgment, Martland, J. stated at page 350 [219] :
It is difficult to conceive cf any case, in which securities are purchased, in which the purchaser does not have at least some intention of disposing of them if their value appreciates to the point where their sale appears to be financially desirable.
It is true that this case deait with the purchase and sale of securities but I see no reason why the same principle should not be extended, as was done by Kearney, J. in the Valclair and Cosmos cases (supra), to land or other assets capable of producing income whether, in fact, they had done so to any substantial extent or not by the time of the sale.
A similar finding was made by Noel, J., as he then was, in the ease of Paul Racine, Amédée Demers and François Nolin v. M.N.R., [1965] C.T.C. 150; [1965] DTC 5098, in which the three appellants purchased the assets of a bankrupt company, forming a new company to acquire most of them but retaining the real estate in their personal names and, after operating and improving the business for a few months, sold both the real estate and the shares in the new company at a profit. The judgment held that these were capital gains from the realization of an investment and that the transaction was essentially the purchase of a business and its subsequent resale at a profit. In commenting on the doctrine of secondary intention, the judgment states at page 5103 of the DTC report:
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.
The present case also resembles the cases of Elgin Cooper Realties Ltd. v. M.N.R., [1969] C.T.C. 426, and Point Pleasant Investments Limited v. M.N.R., [1968] Tax A.B.C. 1227, in that appellant was able to give a reasonable and credible explanation for the eventual sale of the property at a profit which tends to negate the contention that it had this as a secondary intention at the time of acquisition. In the Elgin Cooper case (supra) the controlling shareholder had been active for many years in real estate, sometimes as developer and sometimes as an investor, and in this respect he resembled the members of the Addleman family, although not the Betcherman family who were always investors. He built an apartment building between 1958 and 1960 intending it as an investment but encountered difficulties and faults during the construction which caused him to lose confidence in it so he sold it in 1961 at a substantial profit, which was held not to be taxable as an adventure in the nature of trade as the developer’s original intention had been altered. In the Tax Appeal Board judgment in the Point Pleasant case (supra) three persons, a contractor, a lawyer and a businessman, had purchased property in downtown Halifax which they conveyed to the appellant company formed for this purpose to construct buildings for lease thereon in multiple housing units. As a result of amendments made to the zoning regulations, the value of the buildings to be built on the land was increased and part of the land was restricted to single family houses so the sort of development they had proposed had become impracticable. They also encountered a lack of prospective tenants and financing problems and rising taxes and finally the illness of one of the principals, and the contractor disposed of his share. As a result of all this an unsolicited offer for the sale of the property at a substantial profit was eventually accepted. It was held that this was profit arising from the realization of an investment as there was no alternative intention to sell the land at a profit at the time that it was acquired. This judgment seems to be very much in point in the present case. Appellant’s original intention was by no means an unrealistic one or one which at the time seemed incapable of being carried to fruition but although there had been no change in the zoning by-law making it impossible in the present case, it had nevertheless, after three years’ effort, been unsuccessful in obtaining a suitable tenant. Meanwhile, it had lost interest on the $42,000 it had invested in the property for three years, and had had to pay all the taxes during this period, and finally Dr. Irving Betcherman, who was the member of the group on whom they all relied to carry out their development plans, was moved to Toronto as a result of events beyond his control. While he could perhaps have continued to carry out the project by correspondence or telephone from there, it was certainly less convenient when he was no longer stationed in Ottawa. Finally, an entirely unsolicited offer was received which would result in a very substantial profit in a period of not much over three years, which offer was too good to refuse. This is exactly the sort of offer referred to in the Judgment of Noel, J. in Racine, Demers and Nolan (supra) and the judgment of Martland, J. in the Irrigation Industries case (supra). I therefore do not find that the acceptance of this offer and sale of the property at a profit converts what started out as an investment in real estate into an adventure in the nature of trade so as to make appellant taxable on these profits. The appeal is therefore maintained with costs and the notice of re-assessment dated June 19, 1967 for appellant’s 1962 taxation year is referred back to the Minister to delete therefrom the sum included therein as profit on the sale of the land in question.