McNair,
J.:
—This
is
an
appeal
by
the
plaintiff
from
the
Minister
of
National
Revenue's
reassessment
for
the
1983
taxation
year
whereby
the
sum
of
$2,969,422,
being
the
plaintiff's
share
of
the
proceeds
of
disposition
of
a
property
it
owned
in
part,
was
treated
as
income.
The
plaintiff
contends
that
the
profit
was
a
capital
gain.
The
facts
are
relatively
straightforward
and
undisputed.
The
plaintiff
company,
Homes
Development
Ltd.
("Homes
Development"),
was
incorporated
in
1946.
Mr.
John
(Jack)
Thomas
Bunston
("J.T.
Bunston"),
who
was
the
only
witness
to
give
evidence
at
trial,
became
its
owner
sometime
in
1965.
The
company's
principal
business
was
that
of
constructing
and
renting
buildings.
In
1966,
J.T.
Bunston
was
approached
by
his
father,
C.M.
Bunston,
his
brother,
Ken
Bunston,
and
a
gentleman
by
the
name
of
Murray
Elias,
Sr.
as
to
whether
he
might
be
interested
in
participating
in
the
purchase
of
a
parcel
of
real
property.
The
property,
known
as
the
"Cameron
Farm",
was
located
partially
in
the
Village
of
Woodbridge
and
partially
in
the
Township
of
Vaughan
in
the
Regional
Municipality
of
York,
north
of
Toronto.
J.T.
Bunston
agreed
to
purchase
a
25
per
cent
interest
in
the
venture.
A
deed
of
conveyance
was
executed
on
February
2,
1967,
showing
the
plaintiff
company
as
the
registered
owner.
The
purchase
price
of
the
Cameron
Farm
was
$315,285,
comprising
a
cash
payment
of
$151,758
with
the
balance
secured
by
a
mortgage.
Actually,
four
owners
participated
in
the
purchase
of
this
property:
the
plaintiff,
Homes
Development
Ltd.;
Adanac
Realty
Ltd.
("Adanac"),
a
corporation
owned
by
Ken
Bunston;
C.M.
Bunston
Realty
Ltd.
("C.M.
Bunston"),
also
owned
by
Ken
Bunston;
and
Melia
Developments
Ltd.
("Melia"),
controlled
by
Murray
Elias,
Sr.
Each
of
these
owners
held
a
25
per
cent
interest
in
the
property,
as
evidenced
by
a
simple
partnership
agreement
executed
on
December
7,
1967,
which
reads:
This
Agreement
made
as
of
the
2nd
day
of
December,
1966.
Re:
Cameron
Farms,
Woodbridge
The
Parties
hereto
agree
that
notwithstanding
that
the
premises
are
registered
in
the
name
of
Homes
Development
Ltd.
the
undersigned
are
equal
partners
as
to
profit,
losses,
expenses
and
liability
and
agree
to
indemnify
and
save
harmless
each
other
in
all
respects.
At
the
time
of
its
acquisition
by
the
partnership,
the
Cameron
Farm
was
being
operated
as
a
farm.
The
land
itself,
consisting
of
approximately
107
acres,
was
used
as
pasture,
while
the
farmhouse,
divided
into
three
suites,
was
rented
to
third
parties.
The
partnership
received
income
from
the
rental
of
both
the
pasture
and
the
farmhouse.
At
the
time,
the
property
was
municipally
zoned
as
agricultural-rural.
J.T.
Bunston
testified
that
the
Village
of
Woodbridge
was
not
served
at
the
time
by
a
municipal
trunk
sewer
and
that
there
had
been
very
little
development
in
the
area
in
the
late
1960s.
From
the
date
of
purchase
until
the
late
1970s,
the
partnership
did
little
or
nothing
with
the
Cameron
Farm.
J.T.
Bunston
testified
that
during
that
period
his
brother,
Ken
Bunston,
drew
up
numerous
proposals
for
development
of
the
site
and
a
number
of
draft
subdivision
plans
were
presented
to
the
Town
of
Vaughan.
Only
one
of
these
proposals
was
tendered
in
evidence.
According
to
Jack
Bunston,
the
others
were
unavailable
because
of
a
serious
falling
out
between
the
Bunston
brothers.
Sometime
in
or
about
the
year
1975,
Murray
Elias,
Sr.
divested
himself
of
his
interest
in
the
Cameron
Farm,
and
his
sons,
Paul
Elias
and
Murray
Elias,
Jr.
("the
Elias
brothers"),
acquired
their
father's
partnership
share.
It
was
about
this
time
that
relations
between
J.T.
Bunston
and
Ken
Bunston
began
to
sour,
deteriorating
by
the
early
1980s
to
such
an
extent
that
the
companies
controlled
by
Ken
Bunston
commenced
litigation
against
Homes
Development
and
J.T.
Bunston
in
the
Supreme
Court
of
Ontario.
In
late
1978
the
Elias
brothers
notified
the
plaintiff
they
wished
to
divest
themselves
of
their
interest
in
the
Cameron
Farm,
eventually
threatening
a
"forced
sale”
of
the
property.
Efforts
were
undertaken
by
the
plaintiff
to
acquire
the
brothers’
partnership
interest,
which
fell
through
because
of
its
inability
to
arrange
the
necessary
financing.
By
this
time,
the
Town
of
Vaughan
Planning
Department
had
prepared
preliminary
drawings
for
the
extension
of
sewerage
facilities
to
the
Cameron
Farm,
and
the
partnership
had
received
and
rejected
a
number
of
unsolicited
offers
to
purchase
the
property.
On
June
20,
1972,
a
draft
subdivision
plan,
showing
the
property
as
a
residential
development,
was
presented
to
the
Vaughan
Planning
Committee.
According
to
the
committee's
report,
the
plan
would
contain
"some
1,400
persons
in
single
family
and
in
semi-detached
residences".
The
committee
recommended
the
continuance
of
processing
of
the
proposed
subdivision
plan,
but
with
the
caution
that
no
plan
could
be
finally
implemented
until
after
completion
of
certain
developmental
phases
contemplated
in
connection
with
the
Woodbridge
Community
Plan.
The
draft
subdivision
plan
designated
the
plaintiff,
Homes
Development
Ltd.,
as
owner
of
the
property
and
was
signed
by
its
president,
J.T.
Bunston.
In
the
late
1970s,
the
partnership
retained
a
commercial
developer
and
lawyer,
Mr.
Elvio
DelZotto,
to
act
as
its
representative
in
matters
pertaining
to
the
processing
of
the
subdivision
plan,
which
culminated
in
its
final
approval
by
the
Vaughan
Planning
Committee
on
or
about
June
25,
1981.
According
to
J.T.
Bunston,
he
objected
on
behalf
of
the
company
to
the
proposed
scheme
of
residential
development
shown
on
the
subdivision
plan,
and
endeavoured
to
have
the
plan
changed
to
show
more
rental
income
properties.
However,
the
plaintiff
was
unable
to
convince
the
other
members
of
the
partnership
that
the
subdivision
plan,
as
finally
approved,
was
unsatisfactory.
In
late
1981
the
plaintiff
was
approached
by
a
Mr.
Harry
Wertheim,
on
behalf
of
Leitch
Transport
Ltd.,
to
purchase
the
Cameron
Farm
for
the
price
of
$11,880,000.
The
property
was
sold
on
April
29,
1982,
yielding
a
net
sale
price
of
$11,877,688.
The
plaintiff's
share
of
these
proceeds
at
25
per
cent
amounted
to
$2,969,422.
In
its
income
tax
return
for
the
1983
taxation
year,
the
plaintiff
reported
its
share
of
the
proceeds
of
disposition
as
a
gain
from
the
disposition
of
a
capital
asset.
In
making
his
reassessment,
the
Minister
treated
the
profits
as
income.
In
its
defence
to
the
plaintiff's
statement
of
claim,
the
defendant
pleaded
that
the
Minister's
reassessment
was
based
on
the
assumption
that
"the
Cameron
Farm
was
purchased
and
held
by
the
owners
with
the
intention
of
trading
and
turning
the
property
to
account
at
a
profit
by
developing
the
land
for
resale
at
a
profit”.
The
defendant
further
pleaded
that
the
plaintiff's
gain
on
such
disposition
was
income
from
an
adventure
in
the
nature
of
trade
or
from
a
business
within
the
meaning
of
sections
3,
4,
9
and
248
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act").
Counsel
for
the
plaintiff
submitted
that
under
any
of
the
established
tests
for
distinguishing
income
from
capital
gain
the
plaintiff
succeeds
in
proving
the
basis
of
the
Minister's
reassessment
was
erroneous.
First,
he
argued
that
at
the
time
of
acquisition
of
the
Cameron
Farm
the
plaintiff
intended
to
develop
the
property
with
a
view
to
deriving
rental
income
from
it
in
the
future.
He
supports
this
contention
by
characterizing
the
general
nature
of
the
plaintiff's
business
as
being
that
of
erecting
and
holding
buildings
for
rental
purposes.
He
further
submitted
that
the
plaintiff
never
had
a
secondary
intention
to
sell
the
property,
pointing
in
this
regard
to
the
numerous
unsolicited
offers
for
purchase
of
the
property
during
the
1970s,
which
the
partnership
had
rejected.
Second,
plaintiff's
counsel
argued
that
the
length
of
time
a
property
is
held
may
well
be
a
factor
in
determining
the
nature
of
the
profits
realized
on
its
ultimate
sale,
citing
the
decision
of
the
Federal
Court
of
Appeal
in
Reicher
v.
The
Queen,
[1975]
C.T.C.
659;
76
D.T.C.
6001.
The
Cameron
Farm
having
been
held
by
the
partnership
for
some
15
years,
it
was
his
submission
that
the
same
analogy
applied
to
support
the
conclusion
that
the
gain
from
the
property
was
on
capital
account.
Plaintiff's
counsel
further
submitted
that
the
facts
of
the
present
case
were
virtually
identical
to
those
in
The
Queen
v.
Borinsky,
[1977]
C.T.C.
570;
77
D.T.C.
5389
(F.C.T.D.),
where
a
taxpayer
who
had
purchased
a
farm
near
the
outskirts
of
Toronto
and
held
it
for
approximately
14
years
without
taking
steps
to
develop
the
site
prior
to
sale
was
nevertheless
found
not
to
have
had
a
secondary
intention
of
reselling.
Counsel
also
stressed
the
point
that
during
most
of
the
time
the
Cameron
Farm
was
actually
used
as
an
investment
for
the
purpose
of
yielding
rental
income
to
the
partnership
from
the
pasture
and
the
farmhouse,
which
was
another
relevant
factor
to
be
considered
according
to
the
authority
of
M.N.R.
v.
Valclair
Investment
Co.
Ltd.,
[1964]
C.T.C.
22;
64
D.T.C.
5014
(Ex.
Ct.).
Finally,
plaintiff's
counsel
submitted
that
it
would
be
wrong
to
ascribe
any
commercial
animus
manifested
by
the
majority
members
of
the
partnership
to
the
plaintiff,
who
clearly
wanted
to
hold
the
property
as
a
long-term
rental
investment.
Counsel
for
the
defendant
did
not
press
the
argument
that
the
plaintiff
acquired
and
held
the
Cameron
Farm
with
the
intention
of
trading
and
turning
the
property
to
account
at
a
profit
by
developing
the
land
for
resale.
If
I
apprehend
his
position
correctly,
it
is
simply
that
the
plaintiff,
during
the
years
preceding
the
sale
of
the
property,
abdicated
any
responsibility
for
active
participation
in
the
development
plans
of
the
partnership
and
left
such
matters
entirely
in
the
hands
of
Ken
Bunston,
and
possibly
Murray
Elias
or
the
latter's
sons.
He
stressed
the
evidentiary
significance
of
the
subdivision
application
in
June
1972
to
the
local
municipality
for
approval
of
a
proposed
residential
subdivision
of
the
subject
property,
and
argued
that
this
was
clearly
indicative
of
the
partnership's
ongoing
intent
to
promote
a
residential
development
for
purposes
of
resale.
He
also
stressed
the
fact
that
Mr.
J.T.
Bunston
signed
the
subdivision
plan
which,
in
his
submission,
constituted
a
clear
admission
of
active
participation
in
the
commercial
development
plans
of
the
partnership
group
as
a
whole.
Even
assuming
this
were
not
so,
defendant's
counsel
submitted
that
any
contrary
intention
on
the
part
of
the
plaintiff
was
subsumed
by
that
of
the
dominant
faction
in
the
partnership
group,
which
succeeded
in
carrying
the
day.
Counsel
relied
heavily
upon
Mohawk
Horning
Ltd.
v.
The
Queen,
[1986]
2
C.T.C.
89;
86
D.T.C.
6297
(F.C.A.)
and
Sardo
v.
The
Queen,
[1988]
2
C.T.C.
290;
88
D.T.C.
6464
(F.C.T.D.)
to
support
his
proposition
that
the
intention
of
the
partnership
group
overrode
that
of
the
individual
plaintiff,
whereby
the
latter's
share
of
the
sale
proceeds
was
properly
determined
to
be
on
income
account.
The
general
principles
to
be
applied
in
distinguishing
capital
gains
from
income
from
business
were
aptly
summarized
by
Urie,
J.
in
Mohawk
Horning,
supra,
at
page
96
(D.T.C.
6302-303):
First,
whether
an
acquisition
of
a
capital
asset
by
a
taxpayer
is
on
capital
account
or
on
income
account
depends
on
the
intention
of
the
taxpayer
with
regard
to
the
use
of
the
asset
present
in
the
mind
of
the
taxpayer
at
the
time
of
acquisition.
Second,
the
issue
of
what
that
intention
was,
is
resolved
by
the
fact
finder
weighing
all
of
the
admissible
evidence
relevant
to
that
issue.
Third,
only
a
clear
and
unequivocal
positive
act
implementing
a
change
of
intention
will
suffice
to
change
the
character
of
the
intention
from
a
trading
asset
to
a
capital
asset.
In
the
present
case,
however,
it
is
not
only
the
intention
of
the
plaintiff
taxpayer
which
is
relevant.
The
plaintiff
acquired
and
held
the
Cameron
Farm
in
partnership
with
three
other
corporations.
I
hardly
think
it
can
be
said
that
the
plaintiff
was
merely
a
passive
member
of
the
partnership.
The
fact
remains
that
it
is
not
just
the
intention
of
the
plaintiff,
but
that
of
the
partnership
as
a
whole,
which
is
determinative
of
an
intention
of
reselling
property
at
a
profit,
whether
immediately
or
at
some
time
in
the
future.
In
the
Mohawk
Horning
case,
Mr.
Justice
Urie
had
to
determine
whether
a
change
of
intention
on
the
part
of
the
most
active
member
of
a
consortium
could
be
considered
in
the
determination
of
the
taxability
of
his
profits
from
the
sale
of
a
residential
and
commercial
property,
or
whether
it
was
the
intention
of
the
consortium
as
a
whole
which
prevailed.
The
learned
judge
concluded
that
the
latter
was
the
correct
approach,
stating
the
following
rationale
therefor
at
page
98
(D.T.C.
6304):
.
.
.
where
there
are
active
participants
and
passive
ones
involved
in
a
transaction,
the
position
of
the
passive
ones
will
be
no
different
from
that
of
the
active
ones.
Noël,
J.
(as
he
then
was)
in
M.N.R.
v.
Lane,
[1964]
C.T.C.
81
at
91;
64
D.T.C.
5049
at
5054-55,
had
this
to
say
about
the
responsibilities
of
passive
partners:
It
would
appear
from
this
that
the
syndicate's
non-active
members
were
quite
content
to
leave
the
handling
of
the
syndicate's
activities
to
the
executive
committee
who
had
carte
blanche
to
handle
the
business
of
the
syndicate
as
they
thought
best
and
because
of
this
situation,
the
passive
members
here
would
be
in
no
different
position
than
that
of
the
active
members.
Indeed,
if
the
transactions
are
business
transactions,
any
profit
derived
therefrom
from
any
of
the
members
would
be
taxable.
A
fortiori,
when
all
are
to
greater
or
lesser
degrees
active,
(as
here)
the
most
active
participant's
intention
(in
this
case
Schneider's)
must
be
enveloped
by
that
of
the
consortium
as
a
whole,
even
if,
alone,
his
purpose
would
have
been
different.
What
was
the
intention
of
the
partnership
as
a
whole
at
the
time
of
its
acquisition
of
the
Cameron
Farm
in
1967?
The
only
witness
to
testify
in
the
matter
was
J.T.
Bunston.
Generally
speaking,
he
favourably
impressed
me
as
a
witness
and
I
accept
his
evidence
that
in
1966
he
planned
to
hold
the
Cameron
Farm
for
eventual
rental
development.
Nor
have
I
any
reason
to
doubt
his
testimony
that
he
understood
the
interests
of
the
other
participants
in
the
venture
to
be
essentially
the
same
as
his
own;
that
is,
to
hold
the
farm
until
it
could
be
rezoned
at
some
future
date
to
permit
the
erection
of
rental
buildings.
I
also
find
on
the
evidence
that
the
partnership
group
as
a
whole
had
not
formed
any
secondary
intention
at
that
time
of
reselling
the
property
at
a
profit.
Nothing
happened
with
the
property
for
the
next
five
years
or
so
because,
as
Mr.
Bunston
explained
it,
"[t]here
was
no
municipal
trunk
sewer
that
ran
up
to
Woodbridge
at
that
time".
While
this
may
have
been
Mr.
Bunston's
perception
of
the
overall
partnership
objective,
the
evidence
shows
that
his
brother,
Ken
Bunston,
and
presumably
the
other
members
of
the
partnership,
began
making
plans
in
the
early
1970s
to
subdivide
the
property.
The
most
direct
evidence
of
the
partnership's
dealings
with
the
property
is
the
aforementioned
subdivision
plan
submitted
to
the
municipality
in
June
of
1972,
which
seemingly
received
the
blessing
of
the
partnership
as
a
whole
right
up
until
the
time
of
its
approval
on
June
25,
1981.
On
examination-in-chief,
J.T.
Bunston
endeavoured
to
portray
his
signature
on
the
plan
as
being
something
in
the
nature
of
an
"addendum".
He
reiterated
that
the
only
development
in
which
he
was
interested
for
the
Cameron
Farm
was
a
shopping
plaza
site
in
the
midst
of
a
conglomerate
of
row
housing
or
low-rise
apartments.
When
further
questioned
as
to
how
his
signature
came
to
be
on
the
draft
subdivision
plan,
he
gave
the
explanation
that
he
had
signed
a
sepia
or
transparency
of
the
plan,
the
details
of
which
were
largely
left
in
blank.
He
was
cross-examined
not
only
on
this,
but
also
with
respect
to
the
certificate
appearing
at
the
foot
of
the
plaintiff's
application
for
approval
of
the
subdivision
plan,
which
read
as
follows:
Certificate
(to
be
signed
by
Owner,
if
Agent
has
been
appointed).
As
of
the
date
of
this
application,
I
am
the
Registered
Owner
of
the
lands
described
in
this
application,
and
I
have
examined
the
contents
of
this
application
and
hereby
certify
that
the
information
submitted
with
the
application
is
correct
insofar
as
I
have
knowledge
of
these
facts,
and
I
concur
with
the
submission
of
this
application
by:
C.M.
Bunston
Realty
Limited
of
3339
Bloor
Street
West,
Toronto
18.
whom
I
have
appointed
as
my
Agent.
Homes
Development
Limited
Date
March
15th,
1972
Signed
[Signed]
J.T.
Bunston
(Signature
of
Owner)
The
following
telling
evidence
was
elicited
during
the
course
of
Mr.
Bunston's
cross-examination
:
Q.
.
.
.
And
I
assume
you're
again
saying
you
never
read
that
[the
certificate]
before
you
signed
that?
A.
I
may
have
signed
this
prior
to
the
plan
eventually
coming
out.
Q.
Now,
you've
already
told
us
that
you
have
absolutely
no
knowledge
of
what
the
contents
of
the
plan
were.
Is
that
right?
A.
Well,
I'll
put
it
to
you
this
way,
that
it
was
not
my
intention
to
develop
the
plan.
It
was
completely
residential.
Q.
Yes,
I
know.
You've
told
us
that.
But
what
I’m
asking
you
is:
Did
you
have
knowledge
of
what
was
in
this
application
which
you
signed?
A.
As
I've
stated
before,
there
were
so
many
things
that
Mr.
Ken
Bunston
did.
I
should
be
able
to
remember
back
to
‘72,
but
.
.
.
Q.
So,
it
appears
then
that
you
were
quite
content
to
sign
these
documents
and
allow
your
brother
to
submit
them
on
behalf
of
the
partnership
and,
in
fact,
on
behalf
of
Homes
Development.
Is
that
correct?
A.
It
would
indicate
that,
although
it
may
have
been
signed
prior
to
the
interior
of
the
plan
being
designed.
Q.
But
it
certainly
appeared
that
you
were
prepared
to
give
your
brother
"carte
blanche”
in
terms
of
carrying
on
the
developing
of
the
project.
Would
that
be
fair?
A.
Well,
in
1972,
it
was
my
understanding
that
he
was
in
agreement
with
me
to
develop
this
property,
if
it
was
developed,
in
a
manner
that
was
compatible
with
my
views.
A
letter
of
October
10,
1984
from
the
plaintiff's
accountants,
Roston,
Rein-
harz,
Bratt,
Fremeth,
addressed
to
the
field
auditor
of
Revenue
Canada
Taxation,
Phil
H.
Charny,
stated,
among
other
things,
as
follows:
1)
Property
was
acquired
by
Homes
Development
Ltd.
with
partners
to
develop
a
residential
and
commercial
community.
Numerous
plans
were
drawn
up
and
submitted
to
the
proper
authorities
for
zoning
approval.
2)
Nature
of
the
asset
really
changed
from
an
inventory
item
to
a
capital
one
due
to
the
fact
that
the
partners
couldn't
get
along
and
that
Homes
Development
Ltd.
was
prevented
from
developing
the
property
and
really
was
left
with
no
other
alternative
but
to
sell.
The
question
to
which
I
must
now
address
myself
is
whether,
in
the
period
between
the
acquisition
of
the
Cameron
Farm
and
its
sale,
the
intention
of
the
partnership
with
respect
to
the
property
changed.
To
adopt
the
words
of
Heald,
J.
in
Edmund
Peachey
Ltd.
v.
The
Queen,
[1979]
C.T.C.
51;
79
D.T.C.
5064
(F.C.A.),
and
referred
to
by
Urie,
J.
in
Mohawk
Horning,
was
there
a
clear
and
unequivocal
positive
act
on
the
part
of
the
partnership
as
a
whole
to
henceforth
treat
the
subject
property
as
a
trading
asset
destined
for
eventual
residential
development
and
piecemeal
sale,
rather
than
to
continue
treating
it
as
a
capital
asset
for
investment
purposes?
In
my
view,
the
weight
of
evidence
is
amply
demonstrative
of
the
fact
that
there
was,
which
leaves
the
plaintiff
in
the
position
of
"being
odd
man
out",
so
to
speak.
The
remaining
question,
it
seems
to
me,
is
whether
this
change
of
intention
on
the
part
of
the
three
corporate
partners,
Adanac,
C.M.
Bunston
and
Melia,
as
represented
by
their
respective
principals,
Ken
Bunston
and
the
Elias
brothers,
can
be
said
to
constitute
a
change
of
intention
by
the
partnership
as
a
whole.
As
previously
indicated,
I
do
not
regard
the
plaintiff
as
a
totally
passive
member
of
this
partnership,
although
he
may
have
been
somewhat
careless
and
less
than
alert
with
respect
to
negotiations
undertaken
with
the
municipality
for
approval
of
the
Cameron
Farm
subdivision.
In
any
event,
I
accept
J.T.
Bunston's
testimony
that
he
had
no
real
cause
to
trouble
himself
over
any
differing
viewpoints
with
respect
to
ongoing
subdivision
developments
until
1979,
when
the
development
potentiality
of
the
property
became
an
actuality
because
of
the
extension
of
sewage
facilities
to
the
immediate
area.
By
then,
the
relationship
between
himself
and
his
brother,
Ken
Bunston,
and
the
remaining
members
of
the
partnership
consortium
had
deteriorated
to
the
point
of
impasse.
Once
this
position
of
deadlock
was
reached,
the
plaintiff
could
have
brought
about
a
dissolution
of
the
partnership
either
by
a
simple
notice
to
that
effect
or
by
bringing
an
action
for
dissolution,
based
on
the
just
and
equitable
principle.
Instead,
he
chose
to
let
matters
drift
along,
other
than
engaging
his
own
solicitor
and
notifying
Mr.
DelZotto
that
he
no
longer
represented
the
plaintiff.
Essentially,
the
argument
put
forward
by
plaintiff's
counsel
comes
down
to
this:
it
is
not
sufficient
to
impute
the
intention
of
the
majority
of
the
partnership
consortium
to
the
plaintiff
in
the
sense
of
overriding
the
latter's
firm
and
constant
intention
of
treating
the
subject
property
as
a
capital
investment.
Defendant's
counsel
countered
with
the
proposition
that
it
was
the
majority
intention
of
the
partnership
group
which
prevailed
in
carrying
the
day,
and
that
intention
was
directed
toward
achieving
a
residential
development
of
the
property
which
resulted
in
its
being
taxed
on
a
income
basis
rather
than
a
capital
basis.
lvamy,
Underhill's
Law
of
Partnership,
Tith
ed.
(London,
Butterworths,
1981),
states
at
pages
41-42:
Subject
to
any
agreement
express
or
implied
between
the
partners,
any
difference
arising
as
to
ordinary
matters
connected
with
the
partnership
business
may
be
decided
by
a
majority
of
the
partners,
but
no
change
may
be
made
in
the
nature
of
the
partnership
business
without
the
consent
of
all
existing
partners.
See
also
35
Halsbury's
Laws
of
England,
4th
ed.,
paragraph
98;
and
R.S.O.
1980,
c.
370,
subsections
24(8)
and
35(f).
Sardo
v.
The
Queen,
supra,
Was
an
appeal
from
a
decision
of
the
Tax
Court
of
Canada
dismissing
the
plaintiff's
appeal
against
his
assessment
of
land
sale
proceeds
as
profit
rather
than
capital
gain.
The
case
turned
on
the
point
of
the
dominant
intention
of
a
partnership
syndicate
formed
for
the
purchase
and
development
of
a
farm
property.
Collier,
J.
affirmed
the
reasoning
of
Christie,
A.C.J.T.C.,
and
adopted
the
following
quote
from
his
reasons,
at
page
292
(D.T.C.
6465-66):
.
.
.
if
a
person
other
than
the
appellants
was
dominant
and
authoritative
regarding
the
intention
motivating
the
acquisition
of
the
property,
that
intention
is
attributable
to
the
appellants
even
though
their
intentions
may
not
have
been
in
harmony.
In
the
Mohawk
Horning
case,
supra,
Mr.
Justice
Urie,
while
refusing
to
draw
any
distinction
between
active
and
passive
participants
in
the
partnership
consortium
in
question,
made
the
following
significant
statement
at
page
98
(D.T.C.
6304):
.
.
.
the
question
then
becomes
whether
a
change
of
intention
by
one
member
of
a
consortium
.
.
.
can
be
given
effect
to
in
the
determination
of
the
taxability
of
his
profits
or
is
it
the
intention
of
the
consortium
as
a
whole
which
must
prevail
in
such
a
determination.
I
am
of
the
opinion
that
it
is
the
intention
of
the
consortium
as
a
whole
that
must
subsume
that
of
the
individuals.
[Emphasis
added.]
In
my
view,
that
principle
is
in
complete
accord
with
the
point
urged
by
defendant's
counsel
and
concludes
the
case
against
the
plaintiff.
Consequently,
I
am
impelled
to
conclude
that
the
plaintiff
has
failed
to
prove
that
the
Minister's
assessment
was
erroneous.
In
the
result,
the
plaintiff's
action
is
dismissed
with
costs.
Action
dismissed.
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