Tax Court of Canada Judgments

Date: 19990901

Docket: 96-4026-GST-G

BETWEEN:

TRANSPORT TOUCHETTE INC.,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Garon, A.C.J.T.C.C.

[1] This is an appeal from an assessment of goods and services tax ("GST") the notice of which, dated January 29, 1996, covers the period from October 1, 1991 to September 30, 1995.

[2] The appellant and Compagnie Syldave Inc. ("Syldave"), were engaged in the general transportation of goods. The appellant's operations were concentrated more in Quebec, whereas Syldave mainly did business in Ontario.

[3] All the appellant's shares were held by Entreprises Playkid ("Playkid"). Dave Cahill owned 75 percent of the shares of Playkid and Mr. Cahill's spouse, Sylvie Robiboux, held 25 percent. Ms. Robiboux was Syldave's sole shareholder.

[4] At the hearing, the argument concerned only a single issue: whether the appellant was required to collect the goods and services tax in respect of Syldave's use during the period under consideration of trailers belonging to the appellant. The appellant no longer disputed the other issues stated in the Notice of Appeal. The assessment must therefore be confirmed in respect of those issues. The amount of the goods and services tax in issue in the instant appeal was thus reduced to $36,050.

[5] The Court was informed that the appellant and the Deputy Minister of Revenue of Quebec were parties to a dispute concerning a Quebec Sales Tax (QST) assessment which raised essentially the same issue. That dispute was decided in Revenu Québec's favour in a judgment dated October 13, 1998 by Michel H. Duchesne J. of the Court of Quebec. An appeal of that decision is currently before the Quebec Court of Appeal.

[6] Counsel for the respondent stated that the operations involving the appellant's trailer rentals to Syldave have no goods and services tax consequences in that, even if the appellant were required to collect the tax from Syldave, the latter would have been entitled to an input tax credit for the same amount. However, as regards the QST, counsel for the respondent argued that there were tax consequences since there was no input tax rebate at the relevant time. Counsel for the appellant seemed to me to be in complete agreement with counsel for the respondent as to the tax consequences of the aforementioned operations as those consequences are described in this paragraph.

[7] François Blondin, the appellant's accountant, and Dave Cahill, the majority shareholder of the corporation that controls the appellant, testified for the appellant. Nicole Gendron, a Revenu Québec auditor, was called as a witness for the respondent.

[8] François Blondin, a chartered accountant from Granby, stated that he had been the appellant's accountant for a number of years.

[9] Mr. Blondin said that, in his capacity as the appellant's accountant, he made the adjusting entries in the appellant's books on a monthly basis. He was also the auditor of the appellant, for which he also prepared the GST and QST returns.

[10] In the financial statements, certain amounts are reported under the heading [TRANSLATION] "Trailer Rentals". The Minister of National Revenue's assessment of the appellant concerns those amounts. Mr. Blondin testified that he used the term "trailer rentals" to represent more accurately [TRANSLATION] ". . . the reality, which was that the trailers were often used equally by Transport Syldave and Transport Touchette, and I [Mr. Blondin] in fact thought that using the term "trailer rentals" represented part of the reality, which was that some of Touchette's trailers had been used by Transport Syldave, among others". According to Mr. Blondin, [TRANSLATION] ". . . the term "trailer rentals" was a representation . . . in fact a simple way, if you will, of representing a series of expenses which were covered, if you will, by Transport Touchette and which applied to more than one business. And we are talking here, in fact, about Transport Syldave."

[11] Mr. Blondin also stated that no invoices had been prepared for the operations referred to as "trailer rentals". When examined on the question of whether there had been any "trailer rentals", Mr. Blondin answered, [TRANSLATION] "The trailers were used." Mr. Blondin described the legal framework in which the trailers were used [TRANSLATION] ". . . as an exchange of services".

[12] Mr. Blondin also explained that the "trailer rentals" amounts in the appellant's financial statements declined from year to year because [TRANSLATION] "Syldave was developing its infrastructure" and thus had less need for the appellant's trailers. He stated that, when he decided to use the expression "trailer rentals", he had not thought that a trailer rental might give rise to a taxable supply. In response to a question on this subject by counsel for the appellant, Mr. Blondin made the following comment:

[TRANSLATION]

A. When we did that, I admit this did not enter my mind over the years because it was always in the context of a transportation company, and, as regards the GST and the QST, at the time there were in fact no taxes applicable to transportation subcontracts.

[Court transcript, page 61, lines 6 to 11.]

[13] According to Mr. Blondin, the term "trailer rentals" included other types of expenses. Mr. Blondin stated in his testimony that [TRANSLATION] "Syldave originally had no facilities, if you will, be they computers or physical premises. In fact, Syldave used Transport Touchette's premises"; the appellant and Syldave used [TRANSLATION] "the same telephones" and [TRANSLATION] "the same docks".

[14] Mr. Blondin admitted that a number of classes of expenses had already been allocated between the appellant and Syldave under other items, as appears from the financial statements. This was the case with expenses for fuel, insurance, maintenance and repairs with respect to the trailers, in addition to administrative expenses and office employees' salaries. On this question of the allocation of common expenses between the appellant and Syldave, I think it worthwhile to cite a portion of Mr. Blondin's testimony:

[TRANSLATION]

Q. You explained the certain reality by saying that the trailer rentals included other expenses. Expenses were allocated between the companies. And they conducted the exercise together in order to determine which expenses had not been shared between the companies.

So, you note, for example, that insurance was already allocated. You mentioned fuel . . .

A. Cargo insurance.

Q. . . . you spoke at the time about fuel.

A. Yes.

Q. Again referring to tab 6 in Transport Touchette, Your Honour, at page 12, fuel, there appears $167,748.

A. Transport Touchette.

Q. And at tab 7 in Syldave, again at page 11, you also have fuel – $190,507.

A. Uh-huh.

Q. There was already an allocation between the two.

A. . . .

Q. If I turn to maintenance and repairs . . .

THE COURT:

Q. You answered . . . for the purposes of the transcript, you must . . . it's recorded; you answered yes.

A. Yes, yes.

[Court transcript, page 76, line 16, to page 77, line 23.]

. . .

Q. Maintenance and repairs – tires: is that the same thing? If we do the same exercise, $179,806 for Touchette.

A. For Touchette.

Q. And you have maintenance and repairs – $80,520 for Transport Syldave. So there has already been an allocation.

A. Which can be clearly identified.

Q. Clearly.

A. Yes.

Q. You spoke about the telephones . . .

A. Yes.

Q. . . . and the office that might be, that Touchette might pay the larger portion.

A. That's correct.

Q. Okay. Referring to Transport Touchette, Your Honour, at page 13 and the following page at tab 6.

A. Yes.

Q. Under the item "administrative expenses", you have telephones.

A. For $41,000.

Q. $41,000. In Syldave, you also have an allocation of telephone costs.

A. But the allocation is much smaller.

Q. O.K.

A. Because we're talking about $3,600 here.

Q. Three thousand . . .

A. Three thousand . . .

Q. $3,779.

A. $3,779. Of course, simply stated, if you will, all the telephone calls are in Transport Touchette.

Q. Uh-huh.

[Court transcript, page 78, line 10 to page 79, line 23.]

. . .

Q. Referring to salaries . . . the last item we discussed was office salaries and you also referred to them this morning when you said that Transport Touchette might pay a large portion of administration, eh? Is that what you said?

A. Yes.

Q. Referring to office salaries, still on page 13 of tab 6, Your Honour, Transport Touchette.

THE COURT: Yes.

ANDRÉ LARIVIÈRE:

Q. Office salaries, you have $27,595.

A. That's correct, yes.

Q. If I go to Syldave, office salaries, you have $65,490; there is more in Syldave than in Touchette.

A. Yes, that's correct.

Q. The allocation has been made there.

A. A portion because . . . in fact, well . . . yes.

Q. So you remember when I examined you, after going through this entire exercise, I asked you the question and I now put it to you again: What else might there be besides trailer rentals, in the item . . .

THE COURT: Concerning the allocation of expenses.

ANDRÉ LARIVIÈRE:

Q. Right. What else might there be? We're going through the exercise and you have already apportioned all the other expenses. What remains apart from trailer rentals?

A. Of course, if you look, there is definitely a portion . . . there could be a portion of maintenance, in fact a somewhat bigger portion in Transport Touchette than in Transport Syldave.

Q. Uh-huh.

A. In fact, there is probably a portion of gas, in the same way, if everything that has been identified as already allocated, there is certainly a somewhat larger portion allocated to Transport Touchette because it could not be identified and that was in fact used by Transport Syldave. A portion.

[Court transcript, page 80, line 12 to page 82, line 6.]

. . .

Q. What do you know about the use of the trailers? Were they actually used? That's what I'd like to know: were the trailers actually used or is there an error in the financial statements? To simplify the question, did Syldave use Touchette's trailers?

A. Yes.

Q. Yes it did or yes you understand the question?

A. Yes.

Q. O.K.

A. Yes first that I understand your question. In my mind, I'm inclined to say that there was a portion of trailer use.

Q. Yes.

A. That's why I represented it as trailer rentals.

[Court transcript, page 82, line 9 to page 83, line 2.]

[15] With respect to the "trailer rentals" item in the financial statements, Mr. Blondin also reiterated that it was he [TRANSLATION] "who presented it in that form". He testified that it was a way [TRANSLATION] "to balance revenue and expenses between the two companies". According to Mr. Blondin, Mr. Cahill and Ms. Robidoux had examined the financial statements each year, discussed this item with him and did not object to the use of the expression "trailer rentals".

[16] Mr. Blondin said that [TRANSLATION] "the financial statements were prepared from information provided by the appellant". This information provided by the appellant was in the form of [TRANSLATION] "sales journals, purchase journals, the general ledger which is produced with the basic information". Isabelle Borduas had previously done the appellant's internal accounting, but Mr. Blondin did not remember whether she had in fact performed this task for each of the fiscal years in issue. The financial statements were approved by the appellant's board of directors. Mr. Blondin confirmed that there were no obvious or significant errors in the financial statements and that they reflected the reality. As for Syldave, its financial statements were unaudited; Mr. Blondin prepared only the review engagement reports.

[17] Mr. Blondin also asserted that the two corporations' accounts were kept separately and that each corporation had its own expenses, customers and billing. Of the $178,192 figure attributed in the financial statements to "trailer rentals", an amount of [TRANSLATION] "roughly $3,192" represented trailer rentals to another entity, Location Brassard. It is the number representing the difference between these two amounts that is at issue in this case.

[18] To the question of whether there had been any trailer rentals, Mr. Blondin gave the following answer:

[TRANSLATION]

A. I would be inclined to say yes, but that was an item which, in my mind, encompassed more than just trailer rentals. It was one way of allocating a set of expenses, as mentioned earlier, under one heading.

[Court transcript, page 114, lines 20 to 24.]

[19] I now come to Dave Cahill's testimony.

[20] According to Mr. Cahill, the appellant owned 10 tractors and 17 trailers[1] in 1992, whereas Syldave had five tractors and seven trailers in the same year. In 1993, the appellant still had 17 trailers and Syldave nine, and the number of trailers remained the same for both corporations in 1994. A list of the trailers and trucks that Syldave owned in 1992 was filed in evidence for the appellant. With respect to 1994, a list of trucks, automobiles and trailers owned by Syldave was also produced. However, these lists do not indicate the dates on which the trailers were purchased.

[21] Mr. Cahill testified that the appellant's and Syldave's accounting [TRANSLATION] "is supposed to be kept separate, but it is together". He confirmed that Mr. Blondin remitted the taxes, and declared that he did not know enough to be able [TRANSLATION] "to really discuss" the financial statements. He said he had noticed the "trailer rentals" item for the first time when the Revenu Québec auditor went to the appellant's offices.

[22] Mr. Cahill stated that [TRANSLATION] "there were never any trailer rentals". The two corporations [TRANSLATION] "worked together" and "subcontracted to each other". He described how things worked between the appellant and Syldave as follows:

[TRANSLATION]

. . . Touchette picked up merchandise or . . . for Syldave, then it was taken back for Touchette or Syldave to the dock; we have one dock in Granby and another here in Montréal. The Syldave truck then came back and it was loaded and left again for Ontario.

[Court transcript, page 137, lines 18 to 23.]

Mr. Cahill testified that Syldave had not claimed the input tax credit because there were no "trailer rentals", but rather [TRANSLATION] "transportation subcontracts".

[23] In cross-examination, Mr. Cahill insisted a number of times that, despite what was reported in the financial statements, the appellant did not rent trucks, but rather [TRANSLATION] "entered into transportation subcontracts". According to him, a subcontract could include [TRANSLATION] "the tractor, the trailer, the driver and so on". The services of the drivers and other employees used by the appellant and Syldave were provided and paid for by Playkid, as may be seen from the financial statements, and Playkid collected the tax on these rentals. Even though Mr. Cahill was informed at the time of the audit that Syldave could claim the input tax credit, he decided that the appellant would not bill Syldave.

[24] Nicole Gendron was an auditor with Revenu Québec. In reviewing the appellant's file, she noted the "trailer rentals" item in the financial statements and confirmed the accuracy of this information by referring to the appellant's books of account. She also checked with the Société de l'assurance automobile du Québec (SAAQ), which informed her that Syldave had owned two trailers at the start of 1992 and nine in December 1994. The data compiled by the SAAQ on this matter of the number of trailers were adduced in evidence. Those data show that the appellant had [TRANSLATION] "many more trailers" than Syldave during the years in issue.

[25] In addition, Ms. Gendron provided Mr. Blondin, Ms. Robidoux and the appellant's former lawyer, Robert Jodoin, with explanations concerning the assessment. She also noted that the penalty assessed against the appellant had been reduced and that Syldave could claim the input tax credit.

[26] In cross-examination, Ms. Gendron admitted that, during her audit, she did not find any invoices establishing that there had been trailer rentals. She also admitted that the only evidence of trailer rentals was contained in the financial statements and the adjusting entries which were made once a year. However, she deduced that there might have been trailer rentals since the appellant had reported income of that nature in its financial statements and because it had many more trailers than Syldave.

Analysis

[27] The point at issue here is whether Syldave used the appellant's trailers under a lease agreement between the appellant and Syldave, as the respondent claims, or whether it did so in the context of a subcontracting arrangement between the appellant and Syldave.

[28] First of all, it is not in dispute that Syldave used trailers owned by the appellant during the period under review.

[29] Paragraph 8 of the Reply to the Notice of Appeal states that the Minister of National Revenue [TRANSLATION] "relied on the conclusions and assumptions of fact" set out in subparagraphs (a) to (h) of that paragraph. Apart from subparagraph (a) of paragraph 8 of the Reply to the Notice of Appeal, which states that [TRANSLATION] "the appellant is a registrant for the purposes of the Excise Tax Act", subparagraphs (h) and (i) of that paragraph are the only relevant subparagraphs for the purposes of the instant case. Those subparagraphs read as follows:

[TRANSLATION]

. . .

(h) For the period in issue, the appellant received the following trailer rental income on which no tax was collected:

	JUNE 1994	JUNE 1993	JUNE 1992
	$80,000.00	$175,000.00	$260,000.00
GST DETERMINED (7%)	$ 5,600.00	$ 12,250.00	$ 18,200.00

(i) The said trailer rentals were between the appellant and Compagnie Syldave Inc., which are not closely related.

[30] It should be noted at the outset that the financial statements of the appellant and Syldave for certain fiscal years in the period in issue expressly indicate that the appellant received rental income in the amounts shown and that Syldave incurred rental expenses in the same amounts during the same fiscal years. A review of the appellant's income statements for the fiscal years ended June 30, 1992, 1993 and 1994 shows that the second item of each of those statements is entitled "Trailer Rentals". As to Syldave's unaudited financial statements, I note that the income statements for the fiscal years ended June 30, 1992 and June 30, 1993 each contain an item entitled [TRANSLATION] "Cost of Contracts (Schedule A)" and, in Schedule A, the first item under the heading "Cost of Contracts" is "Trailer Rentals". The same item, "Cost of Contracts (Schedule A)", appears for Syldave's fiscal year ended June 30, 1994. However, the terminology used in the third item in that schedule is different, as it reads [TRANSLATION] "Trailer Rentals and Subcontracts". The aforementioned financial statements were approved by the boards of directors of the appellant and Syldave.

[31] With respect to the appellant's financial statements discussed above and the "trailer rentals" items appearing therein, the Court was informed at the start of the hearing that the respondent objected to any testimony being produced by the appellant to contradict the aforementioned items. In support of this position, the respondent referred to article 2863 of the Civil Code of Quebec[2] (CCQ), which provides as follows:

The parties to a juridical act set forth in a writing may not contradict or vary the terms of the writing by testimony unless there is a commencement of proof.

[32] In support of its objection, the respondent argued in particular that the items in question are not the result of a clerical error and that they are found in financial statements audited by a chartered accountant and approved by the appellant's board of directors.

[33] In my view, there is clearly no basis for this objection.

[34] In his well-known work, Précis de la preuve, 4th edition, Wilson & Lafleur Ltée, at pages 340 ff., Léo Ducharme correctly describes the state of the law regarding the scope of article 2863 C.C.Q., as follows.:

[TRANSLATION]

1044. Article 2863 C.C.Q. clarifies a condition underlying the rule contained in article 1234 of the C.C.L.C., namely that it is only the terms of writings setting forth a juridical act that may not be contradicted or varied by testimony. This condition may be explained by the reason for the prohibition as such. The law presumes that, if the parties to a juridical act have, of their own free will in order to satisfy an obligation which the law imposes on them, expressed their wishes in a writing, it may be assumed that that writing is a faithful reflection of those wishes, hence the prohibition against them from contradicting that writing through witnesses.

1045. For this reason, even in the present state of the law, only private written instruments are governed by article 1234 C.C.L.C. This article does not apply, in particular, to domestic records and papers, pleadings, ordinary advertising flyers and returns of income made under taxing statutes. Thus it has been found that article 1234 C.C.L.C. does not prevent a taxpayer from proving through witnesses income greater than that reported in his return of income. Similarly it has been held that article 1234 C.C.L.C. does not apply to the minutes of a meeting of a board of directors or of a shareholders' meeting, and this is true even in respect of those who signed the minutes as president and secretary-treasurer. In another case, a business was permitted to resort to testimony to show that, contrary to what was indicated by the entries in its records, its employees had received the minimum wage for their services.

[Footnotes omitted.]

[35] This question of the scope of article 1234 C.C.L.C., which is the counterpart of article 2863 of the new Code, was decided by Dumoulin J. of the Exchequer Court of Canada in M.N.R. v. Thibault, 62 DTC 1114, who writes in part as follows at page 1118:

. . . The appellant invokes article 1234 in opposition to all oral evidence. This article forbids the use of oral evidence to contradict or alter the terms of a validly executed instrument. It seems elementary to recall that this restrictive text applies only as between the parties to the instrument and does not at all apply to third parties for whom this instrument falls into the category of "res inter alios acta".

. . .

Consequently, if it is correct to hold that the appellant is a third party as concerns this deed, he cannot place himself into the position of the signatories, to claim the rights of inadmissibility which the latter could have done. I do not feel, therefore, that the admissibility of the oral evidence is restricted at all in this case.

[36] In his judgment in M.N.R. v. Ouellette and Brett, 71 DTC 5094, Walsh J. relies in particular on the decision in Thibault, supra, and states the following general proposition which he deduces from the case law, at page 5103:

The jurisprudence is very clear that it is not what parties call a payment in a contract which determines the nature of it but the real character of the transaction.

[37] More recently, in Tanguay v. The Queen, 97 DTC 947, my colleague Judge Dussault succinctly stated the law respecting the application of article 1234 C.C.L.C. as follows at page 950:

. . . I will simply take the liberty of adding that the prohibition enacted by article 1234 of the Civil Code of Lower Canada against testimony for the purpose of contradicting the terms of a valid written instrument does not apply in tax matters.

[Footnote omitted.]

[38] On the question of the scope of article 1234 C.C.L.C., I would also like to refer to the very interesting comments by Maurice Régnier and Gérard Coulombe in an article published in the Revue du Barreau, volume 31, number 4, September 1971, at page 474, where the authors state in part the following:

[TRANSLATION]

We would point out before closing that this restoring of the balance between the taxpayer and the Minister of National Revenue comes just at the right time. Recent tax decisions demonstrate a certain refusal to be restricted by the terms of contracts and seek instead the real and true character of the transactions between the parties. In view of this trend, it goes without saying that a technical and narrow construction of article 1234 is hardly satisfying and even tends to grant tax authorities an undeniable advantage. Indeed, it gives those authorities the upper hand in all circumstances: either they rely on the terms of the writing where doing so is in their interest or, in the opposite case, they prove through witnesses that the writing does not reflect the actual juridical situation.

It may be good that this is so because holding the tax authorities to the strict provisions of article 1234, as the court notes in Ouellette, is tantamount to rewarding taxpayers' endless efforts to avoid paying their taxes. It would be easy for them to disguise the reality, and to do so entirely legally, through a series of transactions the entire scope of which could not be grasped except by disregarding the writings and confining oneself to the actual financial consequences.

However, the balance can be maintained only if taxpayers enjoy the same rights. How many times, for personal reasons and without regard to the tax consequences, or even as a result of errors or inaccuracies in preparing a writing, has that writing turned out not to be a faithful reflection of what the parties actually intended to agree upon? It was therefore fundamentally important that the new case law trend confer in evidentiary matters the same benefits on the taxpayer as on the Minister of Revenue, something which necessarily required a more flexible interpretation of article 1234 of the Civil Code.

These comments apply equally to article 2863 of the new Civil Code.

[39] In light of the case law cited above and the comments of the aforementioned authors, it seems to me that article 2863 C.C.Q. unquestionably does not prevent a taxpayer from using testimonial evidence against tax authorities to contradict the terms of a writing setting forth a juridical act even if there has not been a commencement of proof.

[40] It therefore follows that testimonial evidence may be admitted in this case to contradict the financial statements (and the adjusting entries), hereinafter called financial statements, if they constitute a juridical act.

[41] Furthermore, I am of the opinion that the financial statements of a legal or natural person do not constitute juridical acts on the ground that they do not have the effect of producing juridical consequences. These financial statements neither create rights nor generate obligations. Paragraph 1045 cited above from Mr. Ducharme's Précis de la preuve appears to confirm this approach.

[42] Based on the above remarks, the respondent's objection to the evidence on the basis of article 2863 C.C.Q. must be rejected.

[43] It follows that the weight of the entries in the appellant's financial statements respecting the trailer rentals must be assessed in relation to the whole of the testimony on this question.

[44] In the instant case, it has been established that these items in the financial statements were entered by the appellant's chartered accountant, who made the adjusting entries once a month and was responsible for preparing the financial statements of the appellant and Syldave. That accountant was thus quite familiar with the appellant's operations since he had devoted the equivalent of two working days each month for a number of years to reviewing the operations of the appellant and Syldave.

[45] The accountant Mr. Blondin did not say that these "trailer rentals" items in the appellant's financial statements in particular were the result of an error. Nor can we ignore the fact that they appear three times in the appellant's financial statements for three separate fiscal years. The same item is also entered in certain financial statements of Syldave. It should also be noted that these audited financial statements of the appellant are documents intended for use by the public, in particular financial institutions.

[46] Furthermore, Mr. Cahill stated that there had never been trailer rentals. He testified that the appellant and Syldave "subcontracted to each other". However, Mr. Cahill filed no exhibits establishing that there had been any subcontracting of work, including the use of trailers. I did not find his testimony very convincing. In particular, despite the explanations he gave, I have trouble believing that Mr. Cahill had not seen the "trailer rentals" entries in the financial statements of the appellant and Syldave before those entries were pointed out to him by the Revenu Québec auditor.

[47] All the possible elements of a subcontract, that is, fuel, insurance, maintenance and repairs, administrative expenses and drivers' salaries, were already included under various items in the financial statements or, in other words, were allocated between the appellant and Syldave. It therefore follows that the amounts Syldave paid to the appellant related mainly, if not exclusively, to the use of trailers. No other service was provided under these so-called subcontracts. On this point, I note near the end of the passage from Mr. Blondin's testimony cited in paragraph 14 of these reasons, that Mr. Blondin appeared to admit that the trailer rentals amounts reported in the financial statements related almost exclusively to the use of trailers. Consequently, there could not have been any subcontracting between the appellant and Syldave involving the use of the trailers in question.

[48] The evidence does not even establish whether it was the appellant or Syldave that performed the "subcontracts" to which the various "trailer rentals" entries appearing in the financial statements of the appellant and Syldave refer.

[49] The weight of the evidence leads me to conclude that, in the instant case, the payments which Syldave made to the appellant represent the consideration paid for the use of property. This state of affairs corresponds precisely to the definition of lease appearing in article 1851 C.C.Q., which reads as follows:

Lease is a contract by which a person, the lessor, undertakes to provide another person, the lessee, in return for a rent, with the enjoyment of a movable or immovable property for a certain time.

The term of a lease is fixed or indeterminate.

[50] The corresponding provision in the former Code (article 1600) is to the same effect.

[51] In any event, it was not contended for the appellant that another type of contract besides a lease could apply here if I were to find that the use of the appellant's trailers by Syldave was not governed by subcontracts.

[52] In my view, the appellant did not show on a balance of probabilities that the income in question was not income from the rental of trailers. The burden was on the appellant to do so.

[53] For these reasons, the appeal is dismissed, with costs, and the assessment by the Minister of National Revenue is confirmed.

Signed at Ottawa, Canada, this 1st day of September 1999.

"Alban Garon"

A.C.J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]

Translation certified true on this 30th day of June 2000.

Erich Klein, Revisor

---