Federal Court of Appeal Decisions

     A-313-94

CORAM:      HUGESSEN J.A.

     STRAYER J.A.

     DESJARDINS J.A.

B E T W E E N:

     HANS HARTWIG

     Appellant

     " and "

     HER MAJESTY THE QUEEN

     Respondent

HEARD at Vancouver, British Columbia, on Thursday, February 27, 1997

JUDGMENT delivered at Ottawa, Ontario, on Tuesday, March 18, 1997

REASONS FOR JUDGMENT BY:      STRAYER J.A.

CONCURRED IN BY:      HUGESSEN J.A.

     DESJARDINS J.A.

     A-313-94

CORAM:      HUGESSEN J.A.

     STRAYER J.A.

     DESJARDINS J.A.

B E T W E E N:

     HANS HARTWIG

     Appellant

     " and "

     HER MAJESTY THE QUEEN

     Respondent

     REASONS FOR JUDGMENT

STRAYER J.A.

     This is an appeal from a decision of the Tax Court of Canada dated May 27, 1994 in which that Court upheld the Minister's reassessment of the appellant's taxable income for taxation years 1984 and 1986, treating a portion of the costs of the main ranch house at the K-2 Ranch, owned by the appellant's company Diversified Holdings Ltd., as benefits conferred by that company on the appellant as shareholder. The costs so attributed included 25% of the operating costs of the ranch and a percentage (using current interest rates) of the capital costs of the main ranch house in 1984 and 1986.

     This appeal was heard together with the Crown's appeal in H.M. the Queen v. Diversified Holdings Ltd. (A-309-94) which will be the subject of separate reasons.

     After hearing counsel for the appellant we concluded that she had not demonstrated any reversible error on the part of the learned Tax Court judge and we therefore found it unnecessary to call on the respondent on the subject of this appeal. While the Tax Court judge does not elaborate on the legal principles which he applied in this connection, it appears to us that as a matter of law he was entitled to treat the main ranch house, in the years in question, as being developed and held for personal use of the taxpayer. Further the Tax Court judge was entitled to accept the assumptions upon which the Minister had assessed the percentages of operating costs and capital costs attributable as a shareholder benefit to the income of the appellant, the judge noting that the appellant's evidence was "unsatisfactory" in respect of the apportionment of operating costs. He found on the evidence that the amounts assessed by the Minister were reasonable and had not been "upset" by the appellant's evidence. While the appellant brought to our attention contradictory evidence, it is not possible for us to say that the Tax Court judge erred in his assessment of the weight or relevance of all the evidence.

     The appeal should therefore be dismissed with costs.

    

                                 J.A.

I agree

James K. Hugessen J.A.

I agree

Alice Desjardins J.A.