DUMOULIN,
J.:—The
Minister
of
National
Revenue
is
appealing
a
decision
of
the
Tax
Appeal
Board,
dated
September
24,
1964
(36
Tax
A.B.C.
324
at
330),
allowing
the
respondent’s
appeal
from
the
assessments
of
December
12,
1962,
wherein
taxes
in
the
amounts
of
$5,235.99
for
the
year
1960,
and
$7,408.18
for
1961
were
assessed.
During
those
two
material
years,
the
respondent,
Randol
H.
Gault,
carried
on,
in
Montreal,
an
insurance
broker’s
business
under
the
firm
name
and
style
of
Percy
R.
Gault
Reg'd.
On
March
21,
1960,
Randol
H.
Gault
acquired
from
the
Toronto
General
Trusts
Corporation
the
insurance
business
of
his
lifelong
friend,
the
late
Herbert
J.
Bulley,
also
of
the
City
of
Montreal,
as
appears
from
a
photostat
of
the
Sales
Agreement
produced
in
this
Court,
exhibit
A-1
of
appellant,
and
annexed
to
the
Tax
Appeal
Board
file.
This
transaction
implemented
an
option
extended
to
the
respondent
by
a
clause,
the
eighth
one,
of
the
deceased
testator’s
will,
hereunder
reproduced
in
its
pertinent
provision
:
“I
direct
my
Executors
and
Trustees,
in
disposing
of
my
insurance
business,
that
preference
be
given
to
my
friend,
Randall
H.
Gault,
in
view
of
my
long
and
friendly
association
with
him.”
The
terms
and
considerations
according
to
which
Randol
Gault
availed
himself
of
this
proffered
transfer
of
the
late
Mr.
Bulley’s
office
affairs
and
goodwill
are
set
out
in
the
deed,
exhibit
A-l,
wherein
the
executors
of
the
deceased
are
called
"‘the
Vendors’’
and
the
respondent
assumes
the
quality
of
"‘the
Purchaser’’.
The
undergoing
citations
are
taken
from
exhibit
A-l,
entitled
"‘Memorandum
of
Agreement
Entered
into
at
the
City
and
District
of
Montreal
as
of
the
21st
day
of
March,
1960’’:
"‘Now,
THEREFORE,
It
Is
Agreed
BETWEEN
THE
Parties:
1.
THat
the
Vendors
hereby
sell
and
transfer
to
the
Purchaser,
with
warranty
as
to
their
own
acts
and
deeds
only,
all
the
goodwill
of
the
Insurance
business
of
the
late
Herbert
J.
Bulley,
together
with
all
existing
records
such
as
Expiry
Lists,
Agent’s
copies
of
policies
and
endorsements,
prior
correspondence
concerning
insured
property,
information
concerning
previous
custom
of
payment
by
clients,
etc.,
which
are
pertinent
to
the
continuation
of
the
said
business
after
the
20th
of
March,
1960;
2.
THAT
in
consideration
of
the
said
sale
and
transfer
the
Purchaser
hereby
undertakes
to
pay
to
the
Vendors:
(a)
50%
of
all
commissions
paid
on
policies
issued
or
renewed
for
any
clients
of
the
late
Herbert
J.
Bulley
for
an
annual
term
and
with
an
effective
date
of
issue
or
renewal
as
at
any
time
during
the
period
from
March
21st,
1960
to
March
20th,
1963
inclusive
;
(b)
50%
of
all
commissions
paid
on
policies
issued
or
renewed
for
any
clients
of
the
late
Herbert
J.
Bulley
for
a
three-year
term
and
with
an
effective
date
of
issue
or
renewal
as
at
any
time
during
the
period
from
March
21st
1960
to
March
20th,
1963
inclusive;
(c)
50%
of
all
commissions
paid
on
any
policies
increased
or
new
policies
issued
for
any
clients
of
the
late
Herbert
J.
Bulley
whether
for
an
annual
term
of
a
three-
year
term
with
effective
date
of
issue
or
renewal
as
at
any
time
during
the
period
from
March
21st,
1960
to
March
20th,
1963
inclusive
;
(d)
From
the
payments
as
set
forth
in
sub-paragraphs
a,
b
and
c
hereof
there
shall
be
deducted
50%
of
any
return
commissions
on
any
policies
issued
or
renewed
for
any
clients
of
the
late
Herbert
J.
Bulley
with
effective
date
of
issue
or
renewal
as
at
any
time
during
the
period
from
March
21st,
1960
to
March
20th,
1963
inclusive,
and
subsequently
cancelled
or
otherwise
reduced
in
premium
during
the
said
period
;
(e)
From
the
payments
as
set
forth
in
sub-paragraphs
a,
b
and
c
hereof
there
shall
also
be
deducted
the
full
return
commission
charged
to
the
Purchaser
on
any
policies
issued
or
renewed
for
any
clients
of
the
late
Herbert
J.
Bulley
with
effective
date
of
issue
or
renewal
as
at
any
time
prior
to
the
21st
March,
1960,
and
subsequently
cancelled
or
otherwise
reduced
in
premium
during
the
immediate
policy
term.
3.
...
4.
.
.
.
5.
THar
at
the
time
of
making
payment
following
the
end
of
each
quarter
or
four-month
period,
as
the
case
may
be,
the
Purchaser
shall
furnish
the
Vendors
with
a
statement
of
all
relevant
transactions
during
such
quarter
or
period
certified
correct
by
the
Purchaser
;
6.
That
the
Vendors
or
their
authorized
representatives
shall
have
the
right
to
check
the
books
and
records
of
the
Purchaser
at
all
reasonable
times
for
purposes
of
verification
of
statements
and
figures
;’’
The
Minister
disallowed
the
deduction
of
the
stipulated
payments
made
by
the
respondent
as
evidencing
"‘the
purchase
of
a
capital
asset,
i.e.,
an
insurance
business’’,
in
derogation
to
Section
12(1)
(b)
of
the
Income
Tax
Act.
On
the
other
hand,
the
respondent
contends
that
the
commission
paid
to
the
estate
did
not,
at
any
time,
become
part
of
Randol
Gault’s
income
for
the
reasons
given
in
paragraphs
10
and
11
of
the
Reply
to
the
Notice
of
Appeal.
Those
paragraphs
read
thus
:
"1
0.
The
commissions
paid
over
to
the
Estate
by
the
Respondent
were
not
part
of
the
purchase
price
of
the
insurance
brokerage
business
of
the
late
Herbert
J.
Bulley
but
represented
the
interest
retained
by
the
Estate
in
the
receipts
of
the
insurance
brokerage
business
of
the
late
Herbert
J.
Bulley
continued
by
the
Respondent,
the
whole
as
indicated
by
Exhibit
A-l.
11.
The
said
commissions
received
by
the
Estate
being
payments
dependent
upon
use
of
or
production
from
the
business
of
the
late
Herbert
J.
Bulley
constituted
income
to
it
under
the
provisions
of
section
6(1)
(j)
of
the
Income
Tax
Act
and
cannot
be
income
of
the
respondent
at
the
same
time
when
by
agreement
the
said
commissions
belonged
to
the
Estate
and
not
the
Respondent.”
The
argument
derived
from
Section
6(1)
(j)
will
be
looked
at
further
down,
since
I
attach
greater
significance
to
the
plea
that
the
true
nature
and
meaning
of
the
consideration
for
the
so-called
"‘sale
and
transfer
was
the
undertaking
to
divide
for
a
period
of
three
years
the
commissions
paid
on
certain
policies
issued
to
clients
of
the
late
Herbert
J.
Bulley”.
In
spite
of
certain
expressions
used,
a
terminology
spontaneously
flowing
from
the
pen
of
laymen
with
no
pretence
at
technical
accuracy,
and
more
intent
on
recording
the
material
conditions
of
a
deal
than
its
exact
legal
identity,
the
question
remains
whether
or
not
we
have
here
a
sale
and
purchase
of
a
capital
asset.
It
could
hardly
be
maintained
that
Randol
H.
Gault
did,
essentially,
subscribe
and
agree
to
anything,
beyond
an
undertaking
to
collect,
during
a
triennial
period,
March
21,
1960,
to
March
20,
1963,
the
commissions
"
issued
or
renewed
for
any
clients
of
the
late
Herbert
J.
Bulley
for
an
annual
.
.
.
or,
for
a
three-year
term’’.
As
his
reward
for
this
care,
Gault
was
allotted
one
half
(50%)
of
all
renewal
premiums
received
through
his
medium.
To
his
obligation
of
remitting
the
other
half
to
Bulley
‘s
executors
at
the
end
of
each
quarter
or
fourmonth
period
is
joined
the
production
of
a
‘statement
of
all
relevant
transactions’’.
Provisions
are
written
into
the
covenant
(para.
2,
sub-paras.
(d)
and
(e))
for
the
proper
reimbursement
of
the
respondent
in
cases
of
reduced
or
cancelled
policies
during
the
life
of
the
agreement.
Each
and
every
obligation
assumed
by
the
respondent
may
be
duly
fulfilled
without
any
personal
disbursement
on
his
part,
a
feature
irreconcilable
with
the
accepted
notion
of
sale.
This
Memorandum
of
Agreement,
even
though
it
may
be
repetitious
to
say
so,
does
not
extend
beyond
the
scope
of
a
mere
agency
for
the
purpose
of
collecting,
as
and
when
they
fall
due,
the
renewal
premiums
pertaining
to
insurance
policies
originally
sold
to
his
erstwhile
clients
by
the
now
deceased
Herbert
J.
Bulley.
The
Memorandum
of
Agreement
foresees
no
fixed
price
whatever
for
the
acquittal
of
which
Randol
Gault
might
be
responsible,
an
omission
inconsistent
with
the
contract
of
sale
as
defined
in
the
first
paragraph
of
Article
1472
of
the
Civil
Code,
hereafter
cited
:
"1472.
Sale
is
a
contract
by
which
one
party
gives
a
thing
to
the
other
for
a
price
in
money
(italics
added)
which
the
latter
obliges
himself
to
pay.”
Sale,
in
the
common
law,
is
also
based,
generally,
upon
the
factor
of
a
specified
pecuniary
consideration,
in
proof
whereof
we
read,
in
Black
s
Law
Dictionary,
4th
ed.,
1951,
p.
1503,
that:
"Sale,
is
a
contract
between
two
parties,
called,
respectively,
the
‘seller’
(or
vendor)
and
the
‘buyer’
(or
purchaser),
by
which
the
former,
in
consideration
of
the
payment
or
promise
of
payment
of
a
certain
price
in
money,
transfers
to
the
latter
the
title
and
the
possession
of
property.”
It
could
be
held
that
all
halved
commissions
forwarded
by
the
respondent
to
the
executors
of
the
Bulley
estate,
in
the
strict
sense
of
the
law,
were
not
‘‘payments’’
but
‘‘remittances’’
of
amounts
collected
in
their
stead.
Gault’s
responsibility
was
exactly
co-extensive
to
the
amounts
received
by
him
and
had
he,
peradventure,
during
some
period
of
time,
not
collected
anything,
he
would
then
owe
nothing.
Moreover,
one
does
not
readily
perceive
the
reason
for
the
arbitrary
differentiation
between
the
respondent’s
own
share
of
the
premiums
and
that
which
he
hands
over
to
the
estate.
The
commissions
retained
by
Randol
Gault,
the
collecting
agent,
are,
indisputably,
income.
Then,
why
should
equivalent
sums,
of
similar
origin,
remitted
to
the
executors
be,
at
the
one
time,
capital
instalments
as
regards
the
respondent,
and
income
the
moment
they
reach
the
estate?
A
second
submission
of
the
respondent
raised
the
possible
applicability
of
Section
6(1)
(j),
worded
as
follows:
“6.
(1)
Without
restricting
the
generality
of
section
3,
there
shall
be
included
in
computing
the
income
of
a
taxpayer
for
a
taxation
year
(j)
amounts
received
by
the
taxpayer
in
the
year
that
were
dependent
upon
use
of
or
production
from
property
whether
or
not
they
were
instalments
of
the
sale
price
of
the
property,
.
.
.”?
Section
139(1),
paragraph
(ag)
has
this
definition
of
"‘Prop-
erty’’:
(ag)
‘Property’
means
property
of
any
kind
whatsoever
whether
real
or
personal
or
corporeal
or
incorporeal
and,
without
restricting
the
generality
of
the
foregoing,
includes
a
right
of
any
kind
whatsoever,
a
share
or
a
chose
in
action;”
It
consequently
follows,
in
the
language
of
Section
6(1)
(j),
that
‘‘amounts
received
by
the
taxpayer’’,
including
Gault
and
the
Bulley
estate,
‘‘were
dependent
upon
use
of
or
production
from
property’’,
to
wit:
the
entire
office
records
of
the
deceased,
and
must,
therefore,
‘‘be
included
in
computing
the
income
of
both.
I
might
note
that
paragraph
11
of
the
Reply
to
the
Notice
of
Appeal,
propounding
this
argument,
elicited
no
written
rebuttal
from
the
appellant.
Of
the
two
precedents
urged
on
the
Minister’s
behalf,
that
of
Irvin
Charles
Schacter
v.
M.N.R.,
[1962]
C.T.C.
487
at
440,
albeit
evincing
quite
a
few
analogies,
is
nonetheless
distinguishable
in
that
the
70%
percentage
of
the
regular
annual
fees
of
a
retiring
chartered
accountant,
selling
his
professional
“goodwill”
to
Schacter,
was
definitely
consolidated
and
set
at
a
fixed
price
of
$17,153.50.
This
amount
was
paid
by
Schacter
to
the
vendor,
cash,
‘‘at
the
time
of
the
execution
of
the
indenture’’.
The
‘‘purchaser’’,
then,
did
not
attend
to
the
periodical
perception
of
fees
owing
to
the
‘‘vendor’’,
but
acquitted,
instanter,
a
price
of
$17,153.50,
from
his
personal
funds,
for
the
payment
of
which
he,
otherwise,
might
have
been
sued,
even
though
the
deal
had
eventually
proved
a
losing
one.
In
conclusion,
I
would
agree
with
this
finding
of
the
learned
member
of
the
Tax
Appeal
Board,
Mr.
Maurice
Boisvert,
Q.C.,
writing:
‘‘I
am
satisfied
that
the
dominant
consideration
in
the
memorandum
of
agreement
.
.
.
was
that
of
an
agency
based
upon
the
division
of
revenue
rather
than
one
of
sale.’’
For
Tue
Reasons
Above,
the
appeal
is
dismissed,
with
all
taxable
costs
in
favour
of
the
respondent.