Sheridan J. permitted the taxpayer's rental losses from the studio apartment she had purchased in a condominium near a ski resort. Her personal use of the apartment in any given year never exceeded 10% of the days she had it available, and she otherwise left it to a management team in order to collect business income. While the taxpayer's business judgment was questionable in the circumstances (having failed to predict the increasing competition for rental units in the area and the extent of the expenses involved in the business of renting), it was not for the Minister to second-guess the taxpayer's business judgment.
On the question of whether there was a reasonable expectation of profit, Sheridan J. noted that the taxpayer in the present case ought to be held to a lesser standard than the taxpayer in Stewart. Mr. Stewart was an experienced businessman who had held senior positions in the Toronto Transit Commission, while the present taxpayer was a registered nurse who had previously rented out her house's basement suite for a few years. Moreover, as the units in the building all had a third-party manager, the operation "did not lend itself to the same level of active involvement that Mr. Stewart enjoyed in his business venture. It is against this factual backdrop that the Appellant's conduct in the face of losses must be considered" (para. 14). It was reasonable for the taxpayer to rely on management's assurances that the situation would improve.