Tax Court of Canada Judgments

Date: 20001129

Docket: 98-9306-IT-G

BETWEEN:

RUDOLF LANGHAMMER,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Rip, J.T.C.C.

[1]            This is an appeal by Rudolf Langhammer from income tax assessments for 1993, 1994 and 1995 in which the Minister of National Revenue ("Minister") disallowed the appellant a non-capital loss in 1993 and did not permit the appellant to carry forward the purported non-capital losses to 1994 and 1995. The Minister reassessed the appellant for 1993 on the basis the losses he incurred were capital losses (and not business losses) and recognized allowable capital losses to be carried forward to 1994 and 1995.

[2]            Mr. Langhammer immigrated to Canada in 1951 from Germany. He eventually went back to Germany but soon returned to Canada to farm. The appellant purchased two farms which he later sold and then moved to Burlington, Ontario. He did not like urban living and then acquired and moved to another farm near Owen Sound.

[3]            In 1983 Mr. Langhammer started to lend money on the security of second mortgages. The mortgages were for terms of two to three years, and sometimes less. He was introduced to this activity by a Mr. Morton, previously manager of a trust company that had been Mr. Langhammer's tenant. Mr. Morton had left the trust company to work as a mortgage broker and asked Mr. Langhammer if he had money to invest.

[4]            Mr. Langhammer also built a fourplex in 1983 with money borrowed on the security of his farm.

[5]            Much of the money he invested was in second mortgages, Mr. Langhammer said, and a good part was money he borrowed from friends in Europe. It appears he also mortgaged his property to secure some of these loans. Since interest rates in Canada were higher than in Europe, Mr. Langhammer was able to borrow funds from Europeans at 9 per cent or 9½ per cent and lend out at 15 per cent. He borrowed $158,000 from a friend in Vienna on the security of his farm. Later Mr. Langhammer borrowed $35,000 and then $40,000 from a German friend. All the loans were repaid by Mr. Langhammer.

[6]                 Mr. Langhammer also borrowed funds from Victoria and Gray Trust.

[7]            Loans were made by Mr. Langhammer to persons who were refused loans by traditional institutional lenders such as banks and who were prepared to pay a higher rate of interest for a shorter term loan.

[8]            During the years in appeal, the appellant received income from the fourplex and a rooming house, old age pension and a pension of $40.00 a month from McMaster University.

[9]            Mr. Langhammer made only one loan in 1983 (to a Mr. Goodfellow) since he required money to build the fourplex. He then made three loans in 1986, one to Chapman in the amount of $63,000, another to Henderson for $105,000 and a third to Kuknen for $32,000. These three loans were referred to him by a real estate agent.

[10]          In 1988, Mr. Langhammer made three loans, one of $19,500 and another of $5,000 to his son-in-law and a third loan of $36,000 to Bartt Construction to construct a building. The Bartt loan was secured by a mortgage on the building property.

[11]          One loan was made in 1989, to a Mr. Gray for $25,000 with interest at 18 per cent per annum. Mr. Gray was referred to Mr. Langhammer by Mr. Morton.

[12]          In 1991 Mr. Langhammer made five loans: one to a Mr. Lane for $30,000,[1] at 15 per cent. Mr. Lane's loan was secured by a third party. (A Mr. Lemke, also a borrower of funds from Mr. Langhammer, recommended Mr. Lane to the appellant). Mr. Lane's loan was a "building loan". Mr. Langhammer also made two loans to a Mr. Lemke, one for $20,500 at 15 per cent plus a $3,000 bonus and the other for $27,000 at an interest rate of 15 per cent and a $3,000 bonus. Both Lemke mortgages were referred to as "building mortgages" that were paid off within three months. A fourth loan was made to a Mr. Kocher for $18,000 with interest at 13 per cent and a fifth loan was made to a Mr. Lee in the amount of $10,000 with interest at 16 per cent plus a bonus of $1,000.

[13]          Three loans were made in 1992: to one Auld for $5,000 with interest at 13 per cent and a $500 bonus, to Jackson for $15,000 at 15 per cent interest and a bonus of $1,500 and to Wrigley for $40,000 with interest at 15 per cent plus a bonus of $3,000.

[14]          In 1989 Mr. Langhammer invested $100,000 in a condominium building development in Owen Sound, Ontario, called Harbour House, at the suggestion of one Russell Howell, a real estate agent. Mr. Langhammer also purchased a condominium unit in Harbour House, which he subsequently sold at a small profit. [There is no evidence how Mr. Langhammer treated the profit, whether on income or capital account.] The appellant purchased four bonds in Harbour House, each in a denomination of $25,000. The bonds had an interest rate of 8 per cent and the right to participate in 75 per cent of the profits of the development. The bonds were secured by a Trust Agreement and a subordinate mortgage on the condominium property.

[15]          At the same time Mr. Langhammer invested money with Mrs. Langhammer in guaranteed investment certificates. He does not pretend this class of investment is part of a moneylending business.

[16]          Mr. Morton referred Messrs. Gray, Kocher, Lee, Auld, Jackson and Wrigley to Mr. Langhammer. A Mr. Byers, a realtor, recommended Messrs. Goodfellow, Chapman, Henderson and Kuknen.

[17]          Mr. Lane could not sell the property that secured the appellant's loan. The prior mortgagee foreclosed on the property and the appellant was able to obtain only $1,040 of the $30,000 he loaned to Mr. Lane. The guarantor became bankrupt in 1993 and Mr. Lane made an assignment of bankruptcy in 1994.

[18]          No interest was ever paid on the Harbour House bonds and in 1993, Confederation Trust Company exercised a power of sale with respect to the property, with the result that the bonds became worthless.

[19]                 According to the reply to notice of appeal the appellant deducted the amount of $144,423 as a business loss in computing his income in 1993 and reported an amount of $9,835 as business income in 1994.[2]

[20]          In reassessing the appellant for the 1993 taxation year, by notice of reassessment dated April 24, 1997, the Minister disallowed the deduction of the business loss claimed in the amount of $144,423. The Minister assessed income from property in the amount of $5,265 and allowed deductions of $10,435 on account of interest expense, $4,170 on account of legal and accounting fees and $18,821 on account of an allowable business investment loss. The Minister also recognized allowable capital losses of $56,178 and of $24,750 available for application to the other years. In computing income for 1994 and 1995, the appellant appears to have deducted non-capital losses carried forward of $34,274 and $29,108 respectively, with respect to the purported non-capital loss in 1993. None of the appellant's income tax returns for any of the years before me was produced in evidence. The notice of appeal makes no reference to the quantum of any loss; the only material facts relied on by the appellant in his notice of appeal are: "Clients records show his occupation to be a Money Lender, and the forgivable loan was forgiven at the end of term."(sic) Further reassessments in 1998 for 1993, 1994 and 1995 did not affect any aspect of the assessments before me.

[21]          Mr. Langhammer acknowledged he did not advertise for borrowers. He said people in the small community in which he lived knew he loaned money to people who could not get a bank loan. Mr. Morton, for example, once approached Mr. Langhammer to lend money, knew Mr. Langhammer had an interest in doing so. Mr. Byers also was aware of Mr. Langhammer's moneylending activity. Mr. Langhammer, himself, never sought out borrowers.

[22]          Mr. Langhammer never "screened" any potential borrower. He relied on the mortgage broker or realtor who recommended him to the borrower. However, once someone recommended a potential borrower to him, he did look at the properties that would secure the loans before he agreed to any loans. The appellant kept no general ledger but he did have available a sheet of paper for each mortgage, stating the due date of interest and when the interest was paid.

[23]          After Mr. Langhammer lost money in 1993, he became depressed and his financial situation became dire, he said. He testified that at the time of trial he is still prescribed tranquilizers and anti-depressant drugs. Any money he had in 1994 and 1995 was invested in guaranteed investment certificates. At the end of 1995 he had no outstanding mortgages. At time of trial he was investing in first mortgages "almost exclusively".

[24]                 Apparently some of the mortgages, the Lane mortgages in particular, indicate that Mrs. Langhammer is the mortgagee. Mr. Langhammer explained "we practically own everything jointly...". Mr. Langhammer was the source of the funding of all of the loans. The respondent did not raise the issue as to whether Mr. Lane was entitled to only 50 per cent of the loss or had to report only 50 per cent of the income. I consider Mr. Langhammer as the mortgagee.

[25]          Mr. David Broomer, C.A. met Mr. Langhammer in March 1993 when the latter asked him to prepare his 1992 tax returns. Mr. Broomer knew of Mr. Langhammer because some of his building clients had borrowed money from him. Mr. Broomer did not prepare any of Mr. Langhammer's tax returns for taxation years prior to 1992. In assessing, the Minister had assumed that for 1987 to 1992 taxation years, inclusive, Mr. Langhammer reported his interest income as such and did not report the carrying on of a moneylending business.

[26]          Mr. Langhammer had no losses before 1992, according to Mr. Broomer.

[27]                 Appellant's counsel queried Mr. Broomer for the reason Mr. Langhammer claimed the losses as business losses. Mr. Broomer said he listened to the appellant describe his activities, saw that he borrowed money to advance to others at higher interest rates, that Mr. Langhammer took security in the form of second mortgages and concluded from this information that Mr. Langhammer was in the moneylending business. Moreover, Mr. Broomer testified, the appellant sought not only a high rate of interest for his loans, but in many cases, sought a bonus as well. The fact that Mr. Langhammer included the bonus in interest (or in income) suggests that he was a moneylender. Some people, Mr. Broomer volunteered, claim such bonuses as capital gains.

[28]          As far as the investment in the Harbour House bonds is concerned, Mr. Broomer was of the view the investment was a venture in the nature of trade since there were "wheeler-dealers in Harbour House ... and all the people in Harbour House were local people..."

[29]          Mr. Broomer also declared that many lenders in Toronto, including banks "wouldn't lead north of Highway 9", adding that people living "north of Highway 9" who wish to borrow money are "left to their own devices". In the community where Mr. Langhammer resided, Mr. Broomer suggested, a prospective borrower frequently has to look to non-traditional lenders and Mr. Langhammer was one of these lenders.

[30]          I was not impressed with Mr. Broomer's testimony, much of it opinion evidence. He was not qualified as an expert witness to give opinion evidence. I do not accept his view that Mr. Langhammer was a moneylender or that the appellant's acquisition of the Harbour House bonds was a venture in the nature of trade or that people living "north of Highway 9" had to look to non-traditional moneylenders from which to borrow money. My findings are independent of Mr. Broomer's evidence to which I gave little, if any weight.

[31]                 Paragraph 20(1)(p) of the Income Tax Act ("Act") provides, inter alia, for the deduction of losses incurred due to the uncollectibility of loans which arose in the ordinary conduct of a taxpayer's business, which included the lending of money. Thus, the deductibility of losses arising from uncollectible loans hinges on such loans having been made in the ordinary course of a moneylending business.

[32]                 Respondent's counsel suggested that it is difficult to distinguish between the appellant and any other pensioner who invests in mortgages and guaranteed investment certificates. The infrequency of transactions indicate that the appellant invested his money rather than carrying on the business of a moneylender.

[33]          In the appeals at bar, the appellant made loans for the purpose of earning interest income. Generally, interest income that is received on investments is considered to constitute income from property rather than income from a business.[3]

However, there are exceptions to this general principle. The distinction between income from a business and income from property was considered in Canadian Marconi Company v. The Queen,[4] where Wilson J. stated, at page 6528:

The distinction between income from a business and income from property is a difficult one to draw but it is one which the Act compels us to make. There are two reasons for the difficulty. First, the terms "business" and "property" are broadly and loosely defined in s. 248(1) of the Income Tax Act. As a consequence the definitions on a fair reading can be construed in such a way as to overlap. Second, persons or corporations generally engaged in trading-type activity often use property as a means of earning income. On first reflection this sort of income could realistically be considered either business income or property income. The observation of Thurlow J. (as he then was) in Wertman v. Minister of National Revenue, 64 DTC 5158 (Ex. Ct.) at p. 5167, that cases are "readily conceivable where particular income may be accurately described as income from property and just as accurately regarded as income from a business" is frequently apposite. The courts have handled the difficult task of deciding whether a particular receipt is business income or property income by applying certain set criteria or indicia of trading activity and, in the case of a corporate taxpayer, by applying a presumption in favour of the characterization of its income as income from a business.

[34]          Mr. Langhammer did not use a corporation to make the loans in question. Thus, the rebuttable presumption that income earned by a corporation is presumed to be income from a business is not relevant in this appeal. With regards to the criteria or indicia that are relevant in discerning whether a given stream of income is income from property or income from a business, Wilson J. wrote in Marconi, at pages 6529-30:

It is trite law that the characterization of income as income from a business or income from property must be made from an examination of the taxpayer's whole course of conduct viewed in the light of surrounding circumstances: see Cragg v. Minister of National Revenue, [1952] Ex. C.R. 40, [52 DTC 1004], per Thorson P. at p. 46. In following this method courts have examined the number of transactions, their volume, their frequency, the turnover of the investments and the nature of the investments themselves.

[35]          Wilson J. appears to imply that a "level of activity" test distinguishes income from property or from that of a business. Mr. Langhammer did more than earn interest income from merely owning investments. He earned interest as a result of the activity carried on by him to earn such income. For example, he actively sought funds from European sources, whose interest cost was lower than in Canada. By borrowing at a low cost and lending at a higher rate of interest, the appellant was conducting himself in the same manner as would a commercial moneylender. Moreover, similar to a commercial lender, he would typically take security on loans granted in the form of second mortgages. As my colleague Judge Bowman stated in Kaye v. The Queen,[5] in asking whether a "business" exists, one would also consider "whether the person claiming to be in business has gone about it in an orderly, businesslike way and in the way that a business person would normally be expected to do". In this case, the appellant has arguably acted in such fashion. With regards to the "level-of-activity" criteria affirmed in Marconi (number of transactions, frequency, turnover, nature of the investments), they must be viewed after examining the appellant's "whole course of conduct viewed in the light of surrounding circumstances". Given the appellant's course of conduct and the surrounding circumstance such as the appellant's available financial resources, 17 lending transactions totalling $571,000 between 1983 and 1992 could be viewed as significant enough to construe the appellant's lending activities as constituting a business.

[36]          There are, of course, factors that may indicate a lack of business indicia, including: a lack of advertising; lack of actively seeking out new clients; lack of an accounting system; and a lack of "screening" new borrowers. But these factors must be weighed against factors indicating active conduct on the part of the appellant in his lending activities.

[37]          In Orban v. MNR,[6] Mr. R.S.W. Fordham considered the issue of whether a taxpayer carried on a moneylending business, and in doing so reviewed the leading British cases on the issue. In what is an often cited passage, he stated, at pages 149-50:

If the appellant is to succeed, it must be established that he qualifies as a professional money-lender. The determination of this point has afforded me some difficulty and resort has been had to reported cases on the subject. In Litchfield v. Dreyfus, (1906) 1 K.B. 584, at p. 589, Farwell, J., said:

But not every man who lends money at interest carries on the business of money-lending. Speaking generally, a man who carries on a money-lending business is one who is ready and willing to lend to all and sundry, provided that they are from his point of view eligible . . . it is a question of fact in each case.

He found that the plaintiff in that case, a long-established art dealer, was not a money-lender also. Referring to that case later, Walton, J., said in Newton v. Pyke, (1908) T.L.R. 127, at p. 128:

Whether a man was carrying on business as a money-lender must be, as was pointed out in Litchfield v. Dreyfus, a question of fact in each case. It seems impossible to lay down any definition or description which would be of much assistance, but I feel that it is not enough merely to shew that a man has on several occasions lent money at remunerative rates of interest; there must be a certain degree of system and continuity about the transactions.

In Nash v. Layton, (1911) 2 Ch. 71, at p. 82, Buckley, L.J., said:

Whether a man is a money-lender or not is an investigation whether he has done such a succession of acts as that upon the facts proved by establishing that those acts were done the Court arrives at the conclusion as matter of law that he falls within the definition of a money-lender . . .

It is true that in all three cases the effect of the British Money-lenders Act, 1900 was under consideration, but in each of them the court concerned had, in addition, to deal with the subject of money-lending generally.

[38]          In the appeal at bar, the appellant typically lent money for terms of three years or shorter. Furthermore, the appellant kept track of interest payment due dates and outstanding balances in such manner that by 1995, only three years after his last loans were made, he had no more loans outstanding. There was a "continuity or system" in the appellant's lending activities until that time.

[39]          In Jackson v. M.N.R.,[7] my colleague Judge Sarchuk stated, at page 149:

The presence or absence of any single factor referred to does not by itself establish whether that the appellant was not carrying on the business of money-lending. It is the cumulative effect of this evidence that leads the Court to that conclusion . . .

[40]          The decision in M.R.T. Investments Ltd. v. The Queen, E.S.G. Holdings Ltd. v. The Queen, and Rockmore Investments Ltd. v. The Queen[8] is of some assistance in determining Mr. Langhammer's appeals. Each of the appellants was a corporation engaged in lending money. The three cases were heard together on common evidence in the Federal Court, Trial Division. The issue was whether the taxpayer corporations were carrying on an "active business" in Canada during their 1972 taxation year and thus entitled to the small business deduction under subsection 125(1) of the Act as it then read. The three corporations were engaged in lending money on a comparatively small scale, such that at the end of December 31, 1972: M.R.T. held 14 mortgages involving $104,636, and earned interest and other income for the year totaling $12,471; Rockmore held three mortgages involving $11,084, and earned interest and other income for the year totaling $4,609; and E.S.G. held 10 mortgages involving $106,577, and earned $12,204 of interest income for the 1972 taxation year. Moreover, each company had a very small staff, did not undertake any advertising, and made most of their loans through independent agents who earned commissions from the borrowers. Despite the small scale of operations, Walsh J. allowed the appeals of M.R.T. and Rockmore, and dismissed E.S.G.'s appeal on different grounds. He stated at page 5239: "... there is little doubt that these companies were all actively carrying on business in the year 1972." In his reasoning, Walsh J. considered that each of the taxpayers were making loans to high-risk borrowers, investigated potential borrowers carefully, and negotiated extensively over terms, indicating that an active business of moneylending was being carried on in each instance. Also, Walsh J. weighed heavily the fact that the taxpayers were corporations that were incorporated specifically for the purposes of engaging in moneylending activities.

[41]          At the Federal Court of Appeal, Chief Justice Jackett affirmed the decision of the Trial Division. He added the following with respect to what constitutes a "business":

In considering whether there is an ‘active business' for the purposes of Part I, the first step is to decide whether there is a ‘business' within the meaning of that word. Section 248 provides that that word, when used in the Income Tax Act, includes ‘a profession, calling, trade, manufacture or undertaking of any kind whatever' and includes ‘an adventure or concern in the nature of trade' but does not include ‘an office or employment'. Furthermore, the contrast in section 3(a) of the Act between ‘business' and ‘property' as sources of income makes it clear, I think, that a line must be drawn, for the purposes of the Act, between mere investment in property (including mortgages) for the acquisition of income from that property and an activity or activities that constitute ‘an adventure or concern in the nature of trade' or a ‘trade' in the sense of those expressions in section 248 (supra). Apart from these provisions, I know of no special considerations to be taken into account from a legal point of view in deciding whether an activity or situation constitutes the carrying on of a business for the purposes of Part I of the Income Tax Act. Subject thereto, as I understand it, each problem that arises as to whether a business is or was being carried on must be solved as a question of fact having regard to the circumstances of the particular case.

[42]          These decisions support the appellant's position that he carried on a moneylending business. All three corporations operated on a very small scale, with Rockmore, for example, holding only three loans in 1972. Despite this, and despite the fact that none of the taxpayers undertook any advertising, the Courts held that not only were the taxpayers engaged in a business of lending money, they were engaged in an active business of lending money. At bar I need only to consider whether Mr. Langhammer was engaged in a business, a threshold lower than that of whether he may be engaged in an active business. I do not believe that simply because the appellant is not a corporation, his moneylending activity ought not be considered a business.

[43]          In Singh v. The Queen,[9] Judge Bonner considered whether the taxpayer was in the business of lending money for purposes of paragraph 20(1)(p). In Singh, the taxpayer was a professional engineer working as a project manager through corporations controlled by him and employing him. Over the course of six years, the taxpayer had only made four loans. Also, for purposes of his moneylending activities, the taxpayer had not printed business cards or letterhead nor used a separate business telephone line. At page 2033, Judge Bonner stated:

In Morflot Freightliners Limited v. The Queen,[10] at 5185, Strayer, J. (as he then was) noted that ‘... in cases of this nature ... one must try to characterize a situation from a practical business point of view...'. As I see it, when the facts are viewed in this manner it is clear that the appellant in making the loans entered into the business of lending money. He evaluated the lending opportunities and considered both the potential gain for himself and the ability of the borrowers to repay. He obtained security when possible. The loans appear to have been made at ordinary commercial rates of interest. The loans though few in number, were not remarkable for any feature which distinguished them from the operations of an ordinary commercial money-lender. The 1992 and 1993 loans were not investments of the appellant's own capital. Rather, they were made with money borrowed at an interest cost expected to be lower than the interest earned. In short, the appellant expected to earn money on the spread between the two rates and thus to mimic the operations of other commercial lenders. Neither the fact that the operation eventually failed nor the fact that it was short-lived can support a conclusion that the operation was not an ordinary commercial venture. The use of borrowed money to make the last three loans negates any suggestion that the loans were simple investments of accumulated capital.

[44]          As in Singh, the appellant borrowed money at an interest cost expected to be lower than the interest earned, and expected to earn money on the spread between the two rates, and thus mimicked the operations of other commercial lenders. He obtained security and made loans at ordinary commercial rates of interest. However, unlike the taxpayer in Singh, the appellant did not "screen" potential borrowers. On the other hand, as in Singh, the loans made by the appellant were not remarkable for any feature that distinguished them from those made by a commercial moneylender.

[45]          I therefore find that the loan to Mr. Lane was made by the appellant in the course of a moneylending business. The loss was a risk of the business. Mr. Langhammer conducted his affairs in an orderly way. He found no need to advertise. Why should he incur needless expense if persons know him and of his willingness to lend money? The factors indicating a moneylending business far outweigh the factors that suggest otherwise.

[46]          The respondent's position concerning the Harbour House bonds is that the bonds were capital property to the appellant. The respondent did not suggest that even if one acknowledges the appellant carried on the business of a moneylender when he loaned money on the security of mortgages, his purchase of the Harbour House bonds was an investment, having little, if anything, to do with the moneylending business. I am therefore reluctant to consider this possibility.

[47]          I do note, however, that the term "lending asset" in subparagraph 20(1)(p)(ii) is defined by subsection 248(1) of the Act means a bond. Also, in Muttart Industries Ltd. v. M.N.R.,[11] my former colleague Judge Taylor, notwithstanding that he dismissed the appeal, recognized that under certain circumstances a debenture could be part of a portfolio held by a person carrying on the business of lending money; debentures, bonds and term deposits are loans.

[48]          I therefore consider that Mr. Langhammer purchased the bonds in the course of carrying on the business of lending money within the meaning of paragraph 20(1)(p) of the Act.

[49]                 Mr. Langhammer acquired the Harbour House bonds in 1989 and loaned $30,000 to Mr. Lane in 1991 in the course of his moneylending business. The respondent states that the issue to be decided is whether the appellant carried on the business of a moneylender in 1993, 1994 and 1995 and, if so, whether the losses with respect to the Lane mortgage and the Harbour House bonds were incurred in the course of carrying on that business. That is not the issue. The issue is (a) whether, when he made the loan to Mr. Lane in 1991, Mr. Langhammer made the loan in the course of carrying on the moneylending business, and, (b) whether in 1993, he still carried on the moneylending business.

[50]                 Paragraph 20(1)(p) of the Act permits a taxpayer whose ordinary business includes the lending of money to deduct, in computing his or her income for the year from the business, amounts (of loans) established by the taxpayer to have become uncollectable in the year. It is paragraph 111(1)(a) of the Act that permits a taxpayer to deduct non-capital losses for the seven taxation years immediately preceding and the three taxation years immediately following a taxation year. Mr. Langhammer suffered his non-capital loss in 1993. He would be permitted to carry forward any non-capital loss suffered in 1993 to 1994 and 1995 by virtue of paragraph 111(1)(a) whether or not he was in the moneylending business in 1994 or 1995.

[51]          The appeals are allowed with costs and the appellant will be allowed a non-capital loss in 1993 of $128,960. Any unused non-capital loss will be carried forward to 1994 and 1995. If I have erred in determining the amount of the loss in 1993 (see footnote 2), the parties should so advise me within 30 days of the date of these reasons and I will consider the representations. If I do not receive any representations I shall issue formal judgment that the non-capital loss was $128,960. Since the appellant's notice of appeal was not in the form required by section 48 of the Tax Court of Canada Rules (General Procedure) and did not relate the material facts relied on, refer to the statutory provisions relied on, nor set forth the reasons he intended to rely on, among other things, and, as a result, caused some problems at trial, his costs shall be reduced by $250.00.

Signed at Ottawa, Canada this 29^th day of November 2000.

"Gerald J. Rip"

J.T.C.C.

---