Hall,
J
(all
concur):—The
issue
in
this
appeal
is
whether
the
appellant
company
is
controlled
within
the
meaning
of
paragraph
39(4)(b)
of
the
Income
Tax
Act,
RSC
1952,
c
148,
by
the
same
group
of
persons
as
control
Burland
Realty
and
Equipment
Limited
(hereinafter
called
“Burland”).
Gibson,
J
in
the
Exchequer
Court
held
that
they
did
and
dismissed
the
appellant’s
appeals
in
respect
of
the
assessments
made
for
the
years
1961,
1962,
1963
and
1964.
The
case
before
Gibson,
J
was
tried
on
agreed
facts
and
turned
mainly
on
the
interpretation
to
be
given
to
an
agreement
dated
May
23,
1957
between
four
holding
companies,
Franklatt
Investments
Limited,
Georgelatt
Investments
Limited,
Molatt
Investments
Limited
and
Rulev
Investments
Limited
(referred
to
hereafter
as
“Franklatt”,
“Georgelatt”,
“Molatt”
and
“Rulev”)
and
four
individuals,
Frank
Goldblatt,
George
Goldblatt,
Morley
Goldblatt
and
Reuben
Levy.
The
voting
shares
of
Burland
were
held
by
Marvin
E
Goldblatt,
Cecil
Levy,
Malcolm
Goldblatt,
Lawrence
(Larry)
Goldblatt,
Morton
Levy,
Robert
Levy,
Labol
Levy,
Abby
M
Goldblatt
and
Deborah
Moses
and
by
one
Sorie
Rosenblatt,
a
daughter
of
Frank
Goldblatt
who
is
excluded
from
the
group
alleged
to
control
Burland
because
she
is
not
a
shareholder
of
Franklatt
or
Molatt.
Her
exclusion
is
not
material
in
the
issue
to
be
determined
in
this
appeal.
Burland
was
controlled
by
the
other
nine
above-named
who
were
the
children
of
the
aforementioned
Frank
Goldblatt,
George
Goldblatt,
Morley
Goldblatt
and
Reuben
Levy
(hereinafter
called
“the
four
fathers”).
The
three
Goldblatts
were
brothers,
Reuben
Levy
is
Frank
Goldblatt’s
brother-in-law.
The
children
referred
to
in
the
preceding
paragraph,
through
their
control
of
the
four
holding
companies,
Franklatt,
Georgelatt,
Molatt
and
Rulev,
were
the
registered
owners
of
469,996
of
the
500,000
issued
common
shares
of
the
appellant.
Four
of
the
remaining
shares
of
the
appellant
were
registered
in
the
names
of
the
four
fathers.
The
remaining
30,000
shares
were
owned
by
Ruth
Levy
Bader,
widow
of
Sidney
Levy
who
died
May
17,
1960.
Sidney
Levy’s
shares
passed
to
Ruth
Levy
on
his
death.
The
agreement
of
May
23,
1957
was
entered
into
between
the
four
fathers
and
the
four
holding
companies
previously
named.
It
contained
inter
alia
the
following
clauses:
3.
The
Board
of
Directors
of
each
of
the
Corporations
shall
be
composed
of
four
(4)
Directors,
respectively,
and
so
long
as
this
Agreement
or
any
of
its
extensions
or
renewals
shall
be
in
full
force
and
effect,
Franklatt,
Georgelatt,
Molatt
and
Rulev
shall
each
have
the
respective
rights
to
designate
one
(1)
Director
only
to
the
Board
of
Directors
of
each
of
the
said
Corporations;
provided
however
that
no
person
shall
be
so
designated
as
a
Director
of
any
of
the
said
Corporations
unless
he
has
been
an
employee
or
officer
for
at
least
three
(3)
years
of
any
of
the
Corporations.
4.
It
is
hereby
understood
and
agreed
that
so
long
as
the
Parties
of
the
fifth,
sixth,
seventh
and
eighth
parts
live
they
will,
at
their
individual
and
respective
options,
be
designated
and
elected
as
Directors
of
the
said
Corporations,
or
such
one
or
more
of
them
as
they
shall
respectively
desire.
5.
The
written
consent,
or
affirmative
vote
of
a
majority
of
the
Directors
elected
as
aforeprovided
shall,
so
long
as
this
Agreement
or
any
of
its
extensions
or
renewals
be
in
full
force
and
effect,
be
necessary
for
effecting
or
validating
any
act
of
the
said
Corporations,
or
any
of
them.
6.
The
Parties
hereto
agree
to
execute
and
deliver
any
papers,
documents
and
instruments,
causing
such
meetings
to
be
held,
resolutions
to
be
passed
and
by-laws
enacted,
exercise
their
votes
and
influence,
and
do
and
perform
and
cause
to
be
done
and
perform
such
further
and
other
acts
and
things
as
may
be
necessary,
practicable
or
desirable
in
order
to
give
full
effect
to
this
Agreement
and
every
part
thereof.
7.
If
at
any
time
during
the
term
of
this
Agreement
the
Parties
hereto
shall
deem
it
necessary
to
make
any
alterations,
amendments,
or
change
in
this
Agreement,
or
any
clause
thereof,
for
the
more
advantageous
or
satisfactory
management
of
the
business
of
the
Corporations
and
it
shall
be
lawful
and
proper
for
them
to
do
so
by
the
consent
in
writing
of
Franklatt,
Georgelatt,
Molatt
and
Rulev.
8.
The
party
of
the
fifth
part
hereby
acknowledges
that
all
shares
held
by
him
in
the
said
Corporations
are
held
by
him
on
behalf
of
and
for
Franklatt,
which
owns
the
whole
beneficial
interest
thereof.
9.
The
Party
of
the
sixth
part
hereby
acknowledges
that
all
shares
held
by
him
in
the
said
Corporations
are
held
by
him
on
behalf
of
and
for
Georgelatt
which
owns
the
whole
beneficial
interest
thereof.
10.
The
Party
of
the
seventh
part
hereby
acknowledges
that
all
shares
held
by
him
in
the
said
Corporations
are
held
by
him
on
behalf
of
and
for
Molatt
which
owns
the
whole
beneficial
interest
thereof.
11.
The
Party
of
the
eighth
part
hereby
acknowledges
that
all
shares
held
by
him
in
the
said
Corporations
are
held
by
him
on
behalf
of
and
for
Rulev
which
owns
the
whole
beneficial
interest
thereof.
Gibson,
J
dismissed
the
appeals
of
the
appellant,
holding
that
the
four
fathers
did
not
have
de
jure
control
of
appellant
in
the
taxation
years
1961
to
1964
inclusive
and
upheld
the
contention
of
the
Minister
that
appellant
was
a
company
controlled
by
the
same
group
of
persons
as
controlled
Burland.
I
agree
with
the
trial
judge.
The
meaning
of
“control”
in
paragraph
39(4)(b)
which
reads:
39.
(4)
For
the
purpose
of
this
section,
one
corporation
is
associated
with
another
in
a
taxation
year
if,
at
any
time
in
the
year,
(b)
both
of
the
corporations
were
controlled
by
the
same
person
or
group
of
persons,
means
the
right
of
control
that
is
vested
in
the
owners
of
such
a
number
of
shares
in
a
corporation
so
as
to
give
them
the
majority
of
the
voting
power
in
the
corporation:
MNR
v
Dworkin
Furs
(Pembroke)
Ltd,
[1967]
SCR
223
at
227;
[1967]
CTC
50
at
53;
67
DTC
5035,
and
Vina-
Rug
(Canada)
Limited
v
MNR,
[1968]
SCR
193
at
197;
[1968]
CTC
1;
68
DTC
5021.
I
would
accordingly
dismiss
the
appeal
with
costs.