Gibson, J.:—On the application of the appellants, consented to by the respondent, all three appeals were heard together and the evidence adduced applied to all three where respectively relevant.
The appeals concern the taxation years 1958 to 1960 and the issue involved is whether the profit arising from the sale in 1959 of a parcel of real estate on Eglinton Avenue in the Township of Scarboro in Metropolitan Toronto is or is not income within the meaning of the Income Tax Act.
At the time of this sale, the appellant, Hough, owned 58 per cent of this property, the appellant, Westmoreland, 22 per cent and the appellant, Stockelbach, 20 per cent.
According to the evidence, this property was acquired and subsequently sold under the following circumstances:
In 1955 the appellant, Stockelbach, was operating a car business on the property Block “A” (see Ex, 2) on Eglinton Ave: nue, East, Metropolitan Toronto leased from Hydro Electric Power Commission. On it was a small building built for him by the appellant, Hough, on which he owed $830. 54. Business was bad for Stockelbach and he suggested to. Hough that the latter, in payment for his indebtedness, take over the 30- day lease of Block ‘‘A’’ and an option to purchase Block “B” (see Ex. A-2) adjoining from Hydro Electric Power Commission. This was assented to ‘by Hough, who caused Block “B” to be purchased at $3,200. Title was taken in the name of the appellant Westmoreland; and subsequently a trust agreement was executed evidencing the ownership of these properties in the proportions above mentioned.
The property was leased to Mr. C. E. Carter Sr., for use by Brimley Motors Limited (operated by Carter’ 5 sons) for a net yearly rental of about $5,000.
In 1958, through the appellant Stockelbach s offices, Block “C” (see Ex. A-2) adjoining, was purchased from the Canadian National Railways for $4,000.
Brimley Motors Limited got into business difficulties, and abandoned any business use of the property in the early part of 1958; although Carter continued to pay the rent for which he was liable, but he asked to be relieved of this liability.
Then, after consideration of what was sensible to do, an effort was made to rent the property, but no tenant was found, and in late 1958 the property was sold to Biff Burger Limited for $45,000, payable by $8,000 in cash and the balance by way of mortgage payable over several years.
Biff Burger Limited finally paid off the mortgage. But by the time of this appeal, it had abandoned the property as. uneconomic for their business purposes, and the buildings were in a dilapidated condition, and it was trying to dispose of this property.
Block ‘‘C’’ was acquired after word was received that Metropolitan Toronto was proposing to expropriate 100 feet in depth along the frontage of this property thereby making’ the balance of it difficult to use for any business purpose ‘because. of zoning regulations. A
At the time of the sale of the property to Biff Burger Limited, L the appellants were of the view that the property’s main value was its Eglinton Avenue frontage, but that in view of the expropriation probability, the prospects of renting the property so as to make a satisfactory income from it was seriously lessened. In this their view was confirmed by what has happened to the property since then, in the ownership of Biff Burger Limited.
The evidence also discloses that the appellant, Hough, originally was a farmer who farmed in the Township of Scarboro in the County of York, nearby the subject property, and then for a period shortly before 1952 was in the wholesale agricultural implement business.
Then in 1952 through at least two companies which he wholly owned, he acquired land, built various industrial and commercial buildings, and rented the same. At the time of the hearing he owned, through his companies or personally, some 80 buildings and had about 200 tenants in them. During all the period he had sold a few of the properties which he had built for commercial and industrial rental purposes, but in the main such sales were restricted to sales to tenants after the properties had been built upon.
A consideration of the whole of the evidence leads firstly to these general conclusions:
1. That the appellant Hough, personally and through his companies, was in the business of acquiring lands and building industrial and commercial buildings on such lands and renting such properties.
2. That the appellant Westmoreland was a secretary for the appellant Hough and for his companies. That was her occupation during all the material times.
8. That the appellant Stockelbach was in the business of a car salesman and latterly a salesman in an automotive parts company during all the material times.
Such a consideration of the evidence, secondly, leads also to these specific conclusions in relation to the acquisition and subsequent sale of this property on Eglinton Avenue, Metropolitan Toronto, Viz.:
1. That none of the appellants, individually or jointly, were in the business of buying and selling land or improved land generally.
2. That the acquisition and subsequent sale of the subject land in this action was not a ‘‘business’’ in itself within the meaning of the Income Tax Act as judicially interpreted.
3. That this transaction was not ‘‘an adventure or concern in the nature of trade” so that the profit arising there- from would be income within the meaning of Sections 3, 4 and 139(1) (e) of the Income Tax Act also as judicially interpreted.
Instead and in the result, therefore, in my opinoin, each of the appellants was in the position of an owner of an "ordinary” investment choosing to realize it ; and as a consequence the profit arising from the sale in 1959 of it was not income within the meaning of the Income Tax Act.
The appeals are allowed with costs.