Cattanach, J:—The two appeals indicated in the above styles of cause came before the Court contemporaneously pursuant to an order dated June 23, 1970 given by the President of the Exchequer Court of Canada, now the Chief Justice of the Federal Court of Canada, whereby it was ordered that both appeals be tried together on common evidence.
The first appeal is that of the executors of the estate of A M Collings Henderson from the duty assessed by notice dated July 3, 1953 under section 23 of the Dominion Succession Duty Act, RSC 1952, c 89. Broadly speaking the issue in this appeal is the determination of the value for duty of shares in two mining companies and the situs and value of share warrants held by the deceased at the time of his death.
The second appeal is that of the Bank of New York from an assessment dated March 28, 1966 against the bank personally in its capacity as executor of the estate under section 49 of the Dominion Succession Duty Act (supra) in respect of unpaid duties that had been assessed against the estate. At this time the bank is no longer an executor of the estate having resigned in 1963 and which resignation was accepted by the Surrogate Court of the appropriate jurisdiction.
Again broadly speaking, the issues in the second appeal are threefold, (1) the validity of the assessment as such, (2) the legal liability of the Bank of New York to pay the amount so assessed or any amount, and
(3) the amount of the unpaid duties assessed, which in turn is dependent on the value of the shares held by the deceased at the time of his death the determination of which is the issue in the first appal.
Counsel for the respondent were the same in both appeals but the appellants in the first appeal and the appellant in the second appeal were represented by different counsel.
The appeals were not consolidated nor was it requested that they should be.
It was agreed among counsel that the outcome of the estate evaluation in the appeal of the executors and the resultant determination of the amount of succession duty payable in Canada will be accepted as determinative of that same issue in the appeal of the Bank of New York with respect to its personal liability.
With respect to the issues of the validity of the assessment and the liability of the Bank of New York to pay the amount assessed or any amount, counsel for the bank intimated that he would call evidence, which he subsequently did.
It was therefore proposed that the hearing of evidence and argument in the appeal of the Bank of New York on the matters other than the determination of the value of the shares and share warrants for estate tax purposes, which was the sole issue in the appeal of the executors, should be deferred until the conclusion of the appeal of the executors.
I acceded to that proposal because, in my view, it was in accordance with the order of the Chief Justice dated June 30, 1970 and the spirit thereof. The issue common to both appeals was the determination of the value of the shares and share warrants held by the deceased at the time of his death for estate tax purposes. Counsel for the Bank of New York agreed that the determination of that issue in the appeal of the executors would be accepted as a determination of that issue in the appeal of the bank. In respects other than that issue common to both appeals, the interests of the respective appellants were not coincidental but were separate and readily susceptible of segregation. Accordingly the appeals were heard and conducted on that basis and it follows that these reasons will be given in the same manner.
Therefore I turn first to the appeal of the executors.
Prior to trial the parties by their counsel agreed upon the following Statement of Facts:
1. Collings Henderson (Henderson) died on February 2nd, 1957.
2. Henderson at the date of his death owned 471,984 and 6/8ths shares of Campbell Chibougamau Mines Limited (“Campbell Chibougamau”) and 56,234 warrants to purchase Campbell Chibougamau shares at $4.00 per share.
3. The Minister of National Revenue on August 2nd, 1959, assessed duty against the Henderson Estate in the sum of $1,703,250.88 and in doing so placed a value of $8.00 per share on the shares of Campbell Chibougamau and valued the share purchase warrants at $4.00 per warrant.
4. Henderson also owned 288,384 shares of Chibougamau Mining and Smelting Company (‘‘Chibougamau Mining”), which the Minister valued at $2.65 per share in assessing the Henderson Estate. It has been agreed for the purposes of trial that the value of the Chibougamau Mining shares be adjusted in relation to their listed market price as at February 2nd, 1957, in the same proportion as the value of the Campbell Chibougamau shares is adjusted, if at all.
5. Campbell Chibougamau is a public company incorporated under the laws of Quebec on March 10th, 1950. Initially the stock traded over the counter and eventually in 1952 it was listed and traded on the Toronto Stock Exchange, the Canadian Stock Exchange (then known as the Montreal Curb Market), and the American Stock Exchange. On February 1st, 1957, which was a Friday, Campbell Chibougamau closed at $10% ths on the Toronto Stock Exchange.
6. On February 2nd, 1957, there were 3,029,985 issued, allotted and outstanding shares of Campbell Chibougamau.
7. Campbell Chibougamau was incorporated for the purpose of acquiring exploring and developing mining claims in the Chibougamau area of northern Quebec. For the first few years Campbell Chibougamau was engaged in exploration on such claims and in the period 1952-1955 development work followed the discovery of the Merrill Island Mine, production commencing on May 29, 1955. The history of the activities of Campbell Chibougamau and its financial affairs are reported in a series of annual and semi-annual reports commencing with a report for the year ended May 31st, 1953.
8. During his life Henderson was the Chairman of the Board of Campbell Chibougamau from its incorporation and had responsibility for arranging financing for the company. Henderson maintained his office in New York and it was from New York that most of the financing of the company was arranged.
9. Shortly after the incorporation of Campbell Chibougamau an agreement was entered into among E O D Campbell and others including a nominee of Henderson providing an arrangement whereby certain optioned shares of Campbell Chibougamau would be taken down under the agreement through the syndicate thereby organized. Of the initial 3,000,000 issued shares all, except 360,375 which went to Consolidated Chibougamau Gold Fields Limited in exchange for mining claims, were taken down through the syndicate. Some of these shares were then sold to the public at the times and prices stipulated by Henderson who under the syndicate agreement controlled the sale of all the shares. The syndicate agreement is dated April 25th, 1950.
10. Under the agreement, the syndicate became entitled to take down shares under option as follows:
400,000 shares @ 600 per share
1,800,000 shares @ $1.00 per share
439,000 shares @ no cost after the initial 400,000 shares were taken down.
11. The syndicate, at the direction of Henderson, took down all the shares under option prior to April 1953. All of these shares were ‘taken down either by brokerage houses pursuant to Henderson’s. direction, or by E O D Campbell. Subsequently, the shares were either held in margin accounts under syndicate control, or transferred into accounts of individuals who were part of the syndicate agreement. Mr Henderson at all times controlled the sale by the syndicate to the public of all shares so taken down.
12. In. 1953, Henderson commenced litigation against E O D Campbell for the purpose of enforcing the provision of the syndicate agreement relating to sale of syndicate shares. E O D Campbell was. selling such shares without Henderson’s authorization. The litigation was eventually settled in March 1955 on the basis that Henderson took over E O D '- Campbell’s Stock.
13. Henderson himself retained shares of Campbell Chibougamau as: part of the syndicate and from 1955 until his death the number of shares. of Campbell. Chibougamau he personally owned remained about constant. Although Henderson’s personal holdings of Campbell Chibougamau. remained more. or less constant, he bought and sold shares of Campbell in the market up to the time of his death. From available stock broking records some of his buying and selling is indicated below:
|1951 41,700 @ $1.70 - $2.50||155,400 @ $ 2.05 - $ 2.70|
|1952 58,900 @ $2.00 - $2.95||49,750 @ $ 2.20 - $ 3.25|
|1953 76,500 @ $2.20 - $4.00||191,065 @ $ 2.28 - $ 4.60|
|1954 12,600 @ $2.00 - $3.75||3,900 @ $ 2.75 - $ 2.80|
|1955 14,400 @ $7.25 -. $9.00|
|1956 —||16,100 @ $18.00 -,$28.00 /s|
14. It appears from the records of the three above-mentioned, stock. exchanges that the trading of Campbell Chibougamau shares during the years 1955-1958 was as follows:
1955 --_ 2,214,200 1956 — 2,803,667
highest grade ore (2.95%). In succeeding years the grade of ore milled was lower (ie 2.38% in 1957 and 2.07% in 1958).
17. Prior to 1957, Campbell Chibougamau discovered and owned three ore bodies known as the Main. Mine (Merrill Island Group), Cedar Bay Mine and Koko Creek Mine. Of these three the largest ore body was the Main Mine and it is from this mine that ore was mined prior to 1958.
18. In February 1956, Newlund Mines (Can. Co.) held 45 claims as part of a group of 437 claims in the Chibougamau area. The 45 claims were assigned under an option to New York and Honduras Rosario Mining Co and they in turn commenced exploration on the 45 claims. Chibougamau Mining had 50 neighbouring claims on which they were carrying out geophysical and magnetometer surveys. Yorcan Explorations Limited was incorporated on April 30th, 1956. Ownership of Yorcan was approximately 50% by Chibougamau Mining, 25% by New York and Honduras Rosario Mining Company and the remainder by Newlund and other interests. New York and Honduras Rosario Mining Company is an American company with long experience in the mining industry. The principal purpose of Yorcan was to explore the 95 claims previously mentioned. In the winter of 1956, Yorcan drilled approximately 25 holes on Lake Chibougamau, none of which were subsequently found to contribute to the Henderson ore body. Also in 1956, Campbell Chibougamau was carrying on surface exploration and diamond drilling in an area adjacent to the Yorcan holdings. This area was known as the “K” group and consisted of 2,006 acres held by Chibougamau Venture Ltd. At this time it was worked under the exclusive control of Campbell Chibougamau and was later acquired by Campbell Chibougamau. During 1956, Campbell Chibougamau drilled fifteen holes, three of which gave favourable indications that further drilling was warranted in the area of the three holes. The holes and the dates of completion were as follows:
K-8 completed April 7th, 1956 K-11 completed April 12th, 1956 K-12 completed April 20th, 1956
Annexed hereto and marked as Exhibit “B” is a table listing the results of the drill holes. Also annexed hereto and marked as Exhibit “C” is a copy of a map indicating all the drilling which was done in discovering the Henderson Mine.
19. As a result of the above favourable indications arising on the border of Yorcan and Campbell Chibougamau property, a joint exploration program was carried on in the winter of 1957. Prior to the death of A M Collings Henderson on February 2nd, 1957, the following holes had been drilled to completion and were. among the holes which contributed to the discovery and deliniation of the Henderson ore body. The holes and dates of completion are as follows:
T-23 completed January 12th, 1957 T-24 completed January 12th, 1957 T-27 completed January 21st, 1957 T-26 completed January 25th, 1957 T-33 completed January 27th, 1957 T-32 completed January 28th, 1957
(See Exhibit “B”)
20. In the Semi-Annual Report for the period ended December 31st, 1956, the president of Campbell Chibougamau, in a letter to the shareholders dated February 15th, 1957, discusses the drilling program that was being carried on in conjunction with Yorcan under the heading “Activities in the Chibougamau Area”. The stated indications from the drilling done as of that date, was that “underground development is warranted”. No mention is made of probable ore reserves and the letter also indicates that some of the ore body was still unexplored. The following holes were mentioned in the letter:
T-33 completed January 27th, 1957 T-37 completed February 7th, 1957 T-38 completed February 18th, 1957 T-39 completed February 14th, 1957 T-45 completed February 9th, 1957 T-46 completed February 16th, 1957 T-47 completed February 13th, 1957
(See Exhibit "B”)
The last six of the above holes were all completed after Mr Henderson’s death on February 2nd, 1957. The following holes which were completed shortly after Mr Henderson’s death also contributed to the ore body:
T-34 completed February 3rd, 1957 T-35 completed February 3rd, 1957 T-36 completed February 6th, 1957
Drilling continued over the whole of the winter of 1957 and many more holes were drilled which also contributed to the Henderson ore body's discovery.
21. In the Annual Report of Campbell Chibougamau for the year ended June 30th, 1957, the chief geologist, Dr S E Malouf, gave a report dated June 30th, 1957, which indicated the probable ore reserves in the Henderson ore body. An independent consulting geologist, Dr J' E Gill, studied the ore body and recommended that it be integrated as a unit. On July 22nd, 1957, Campbell Chibougamau entered into an agreement with Yorcan to purchase all the assets of Yorcan, in return for 506,667 shares of Campbell Chibougamau. The price of the Campbell stock at that time was $9.00 per “share. The agreement was ratified by the stockholders of Campbell Chibougamau on October 30th, 1957, when the price per share was $5.50.
22. The following is a table of the sales of shares of Campbell Chibougamau made by the executors from the Henderson Estate after Henderson’s death and the prices received therefor which are within the range that such shares
|traded at the time of sale. ‘||,|
|1957||20,845||$ 95,915.90 :. $4.60|
|1960||108,760 6/8||s 657,563.62||$6.08|
|1981||i- 42,814||$ 328,929.88||$7.68|
23. The parties have agreed that the share purchase warrants owned by Henderson at the date of his death were in the form of a certificate which has been agreed upon. It is also agreed that the certificates were physically located in the State of New York at the date of Mr Henderson's death.
In paragraph 4 of the Agreed Statement of Facts the parties agreed that the value of shares held by the deceased in Chibougamau Mining should be adjusted in relation to their listed market price as at February 2, 1957, the date of the death of Henderson, in the same proportion as the value of the Campbell Chibougamau shares is adjusted, if the value of these shares should be adjusted, This agreement has the effect of narrowing the issues between the parties to (1) the value of the shares of Campbell Chibougamau as at the date of Henderson’s death for estate tax purposes, rather than evaluation of shares in the two mining companies, and (2) the situs and value of share purchase warrants in Campbell Chibougamau.
Under the Dominion Succession Duty Act it is the statutory duty of the Minister to assess the succession duty payable under the Act (section 23) which is payable with respect to the succession of all property situated in Canada (section 6) and by virtue of subsection 6(2) shares in the capital stock of a corporation incorporated in Canada are deemed to be property situated in Canada. This manner of determining the situs of shares is confirmed in the Schedule to the Canada-United States of America Tax Convention Act, as amended. There is no issue between the parties as to the situs of the shares but only with respect to the situs of the share purchase warrants.
The succession duty, so to be assessed, is on the “aggregate net value” of the property of the deceased as at the date of his death.
In paragraph 2(a) of the Dominion Succession Duty Act “aggregate net value” is defined as follows:
2. In this Act,
(a) “aggregate net value” means the fair market value as at the date of death, of all the property of the deceased, wherever situated, together with the fair market value, as at the said date, of all such other property wherever situated, mentioned and described in section 3, as deemed to be included in a succession or successions, as the case may be, from the deceased as predecessor, after the debts, encumbrances and other allowances are deducted therefrom as authorized by subsection (9) or section 7 and by section 8:
Subsection 34(1) of the Act provides:
34. (1) Subject to the provisions of this Act, the fair market value of the property included in any succession for the purpose of duty shall be ascertained by the Minister in such manner and by such means as he thinks fit, and, if he authorizes a person to inspect any property and report to him the value thereof for the purposes of this Act, the person having the custody or possession of that property shall permit the person so authorized to inspect it at such reasonable times as the Minister thinks necessary.
This is what the Minister did. He placed a value of $8 per share on the shares of Campbell Chibougamau as at February 2, 1957. It is quite obvious how he arrived at the amount of $8 per share. February 2, 1957 was a Saturday and the stock exchanges were closed on that day. The closing price of Campbell Chibougamau on the Toronto Stock Exchange on Friday, February 1, 1957 was $10.78 [sic] per share. The deceased held 471,984 6/8 shares out of 3,029,985 issued shares which is a very large holding. No prudent shareholder would place the whole of such a large holding on the market at one time. To do so would result in an inevitable depression of the market. It is only reasonable to suppose that, if the shares were to be disposed of, they would have been fed into the market gradually as the market was capable of absorbing them without undue disturbance. To do otherwise would be to require the shares to be sold at a sacrifice or dumping value. On the other hand to dispose of the shares to best advantage requires time. The Minister allowed a discount from $10.78 to $8 per share or approximately 26% by some rule of thumb to offset that inconvenience, delay and uncertainty in realizing upon the shares. This is the amount that the Minister ascertained to be the “fair market value” per share.
This the appellants dispute. On their behalf two expert witnesses were called one of whom expressed the opinion that the “fair market value” per share at February 2, 1957 was $3.27 and the other that it was between $2.25 to $2.75.
Accordingly the first issue in the appeal of the executors is the determination of the fair market value of 471,984 6/8 shares of Campbell Chibougamau as at February 2, 1957.
The statute does not define the expression “fair market value”, but the expression has been defined in many different ways depending generally on the subject matter which the person seeking to define it had in mind. I do not think it necessary to attempt an exact definition of the expression as used in the statute other than to say that the words must be construed in accordance with the common understanding of them. That common understanding I take to mean the highest price an asset might reasonably be expected to bring if sold by the owner in the normal method applicable to the asset in question in the ordinary course of business in a market not exposed to any undue stresses and composed of willing buyers and sellers dealing at arm’s length and under no compulsion to buy or sell. I would add that the foregoing understanding as I have expressed it in a general way includes what I conceive to be the essential element which is an open and unrestricted market in which the price is hammered out between willing and informed buyers and sellers on the anvil of supply and demand. These definitions are equally applicable to “fair market value” and “market value” and it is doubtful if the use of the word “fair” adds anything to the words “market value”.
In my opinion the discussion of the meaning of the expression by Mr Justice Mignault in delivering the unanimous judgment of the Supreme Court of Canada in Untermyer Estate v Attorney-General for British Columbia,  S.C.R. 84, is a most useful guide to the meaning of the words “fair market value” as used in the. Dominion Succession Duty Act as applicable to shares listed on a stock exchange. He said at page 91:
We were favoured by counsel with several suggested definitions of the words “fair market value.” The dominant word here is evidently “value,” in determining which the price that can be secured on the market—if there be a market for the property (and there Is a market for shares listed on the stock exchange)—is the best guide. It may, perhaps, be open to question whether the expression “fair” adds anything to the meaning of the words “market value,” except possibly to this extent that the market price must have some consistency and not be the effect of a transient boom or a sudden panic on the market. The value with which we are concerned here is the value at Untermyer’s death, that is to say, the then value of every advantage which his property possessed, for these advantages, as they stood, would naturally have an effect on the market price. Many factors undoubtedly Influence the market price of shares in financial or commercial companies, not the least potent of which is what may be called the investment value created by the fact—or the prospect as it then exists—of large returns by way of dividends, and the likelihood of their continuance or Increase, or again by the feeling of security induced by the financial strength or the prudent management of a company. The sum of all these advantages controls the market price, which, If It be not spasmodic or ephemeral, is the best test of the fair market value of property of this description.
I therefore think that the market price, In a case like that under consideration, where It is shown to have been consistent, determines the fair market value of the shares, I do not lose sight. of the fact that mining operations are often of a speculative character, that there is always a danger of depletion, and that a time will sooner or later arrive when no more minerals will be available, unless other properties are secured to keep up the supply. But all these elements have an effect on the price of the shares on the stock exchange, and no doubt they were fully considered by the purchasers of the stock at the then prevailing prices.
In commenting upon the first paragraph of the passage quoted above I said in Dobleco Limited v MNR,  Ex CR 348 at 365;  CTC 143 at 157; 63 DTC 1063 at 1071:
In the quoted passage Mignault, J treats the market price not as the fair market value, but as the best evidence of fair market value. The price at which the shares were selling on the stock market might be regarded as prima facle evidence of the fair market value, although not necessarily conclusive If rebutted by satisfactory evidence to the contrary.
As I understood the argument by counsel for the appellants, he accepted the basic premise in the Untermyer case (supra) as I have stated it above but sought to establish by the evidence adduced by him that the price at which the shares of Campbell Chibougamau traded on the stock exchange on February 2, 1957 was not the best guide to “fair market value” for three reasons, (1) that the prices of the shares on the stock exchange were going through a period of a “transient boom” which is typical of the shares of a mining company in the first year of its production, (2) that the market was not in possession of accurate and reliable information respecting the ore reserves, and (3) that there was some evidence from which it could be inferred that the deceased was supporting or manipulating the market.
It is a cardinal rule of legal interpretation of a statute that, if it be possible, effect must be given to every word used therein. I have said that the definitions and comments on the expressions “market value” and “fair market value” are synonymous and for that reason it seemed doubtful if any great significance should be attached to the introduction of the word “fair” but not to do so offends against the canon of construction that I have just mentioned.
Help can be obtained from the remarks of Mignault, J in the Untermyer case (supra) which I have quoted above but portions of which I shall repeat for emphasis:
. . . It may, perhaps, be open to question whether the expression “fair” adds anything to the meaning of the words “market value,” except possibly to this extent that the market price must have some consistency and not be the effect of a transient boom or a sudden panic on the market. . . .
Later he said:
The sum of all these advantages controls the market price, which, If it be not spasmodic or ephemeral, is the best test of the fair market value . . .
Still later he said:
I therefore think that the market price, In a case like that under consideration, where It is shown to have been consistent, determines the fair market value of the shares....
The recurrent thought in these extracts is that the market price must have the element of consistency which precludes the existence of a transient boom or sudden panic and that the market price should be realistic rather than “ephemeral’’. If the undue stresses contemplated by Mignault, J are present then those influences will result in a volatile rather than a consistent market and accordingly I would conclude that a market price subject to such influences cannot be considered as the “fair” market value, which it would be otherwise, and that this is the significance attributed by Mr Justice Mignault in the use of the word “fair” before the words “market value”.
That being so it remains to be considered if the market price of the shares in the present appeal is within the exception contemplated by Mr Justice Mignault for any one of the three reasons outlined by counsel for the appellants or a combination thereof.
I propose to consider those reasons in the reverse order to that in which they were submitted by counsel.
The third reason is that the deceased exercised control over the market.
From the Agreed Statement of Facts it is evident from the syndicate agreement that the deceased and the syndicate of which he was the dominant member had an option on 2,600,000-odd shares of an authorized capital stock of 3,000,000 shares. The remaining free floating shares were exchanged for mining claims some of which developed into the main mine of the company. Under this agreement the deceased had control over the sale of shares initially. In addition he controlled the take down of 80% of the shares and Campbell 20%. As the result of the settlement of a law suit between them the deceased assumed the option of Campbell. By April 1953 all shares had been taken down and at the date of his death the deceased personally owned and exercised a form of control over 1,500,000 shares out of the total 3,000,000 outstanding shares.
It is also clear that during the years 1955 and 1956 the deceased was buying and selling shares on the market while his ownership of shares in the company remained constant. The evidence of the extent of the buying and selling by the deceased is neither conclusive nor satisfactory.
The inference sought to be drawn from the foregoing is that the deceased supported a declining market by buying and assisting a rising market by buying and selling. However this is. only an inference and is not supported by evidence. Similarly there is a suggestion of “wash trading” by the deceased but again there is no evidence of that fact.
In my view what these facts do establish is that the deceased as promoter of the company owned and controlled over 50% of the shares in the company and he controlled the management and therefore was in the position to and had the opportunity of controlling the market. The evidence establishes nothing more than that.
In Lawson v MNR,  1 Ex CR 64;  CTC 245; 64 DTC 5147, an issue to be resolved was the determination of a closing inventory consisting of shares in a mining company at the lower of cost to the taxpayer or the fair market value in accordance with subsection 14(2) of the Income Tax Act. The appellant attempted to show that the market value of shares was less than the cost to the appellant. This contention was based on the hypothesis that, if what was being bought and sold on the market has an intrinsic value less than the price at which it is being bought and sold, the market value is the intrinsic value and not the amount that is being paid in the market. ‘7
In rejecting the appeal on this ground I said at page 67 [247, 5149]:
. . « I am of the view that market value is the amount being paid by those who buy and sell at arm’s length in the open market and that no evidence was introduced to establish that the prices listed in the Toronto Stock Exchange did not fairly represent that price. Evidence that members of the general public were being incited to buy the shares of this company in an operation of gambling at prices far in excess of any sensible valuation, by the appellant’s carefully planned programme of direct and indirect publicity and market operations, does not make the amounts paid by them any less the market price of the shares that they were buying.
It will be noted that the expression used in subsection 14(2) of the Income Tax Act is “fair market value” which is the identical expression used in the Dominion Succession Duty Act. While the same words used in different statutes may receive different constructions that is predicated upon the self-same set of words being used with reference to a different set of circumstances, different subject matter and different legislative object. The Income Tax Act and the Dominion Succession Duty Act are not strictly statutes in pari materia yet they both have the ultimate objective of imposing a tax based upon the fair market value of an asset. Therefore, in this instance, I can see no logical reason for ascribing other than a uniform meaning to the words “fair market value” as used in the Dominion Succession Duty Act and as used in subsection 14(2) of the Income Tax Act and that is, as I have said before, the common understanding of those words.
In the extract quoted from the Lawson v MNR case (Supra) the words “market value” were used in a sense synonymous with the words “fair market value”. In the Lawson case there was evidence of market manipulation. it was held in that case that these circumstances of which ‘there was evidence did not detract from the price of the shares as listed in the exchange being the market value of the shares.
Assuming that there had been conclusive evidence of market manipulation by the deceased in the present instance, which I have found that there was not, then upon the reasoning adopted in the Lawson case, this does not make the fair market value other than the price at which the shares were being traded on the exchange. ‘
The second reason advanced as to why the price at which the shares were being traded on the exchange as at the date of the death of the deceased was that accurate and reliable information as to the ore reserves of the company was not available to the persons who constituted the market. This argument is based upon the proposition that for the stock market to reflect the fair market value there must be a fair market and that for the market to be fair there should be ready access to the information that is essential to the determination of the worth of the company.
In 1956 a well known firm of brokers issued a circular dated March 21,1956 in which It was stated that the proved reserves in wholly owned and leased ore bodies of the Merrill Island group totalled some 18 million tons of ore averaging 2.9 to 3.2% copper with additional values in gold and silver. It was also indicated that the tonnage below the 1,150 foot level might be as large.
The financial statements of the company for the years 1955 and 1956 do not make any reference to figures for ore reserves. All that was said about the ore reserves in the 1956 annual report was that they were very gratifying.
Subsequent to the issue of that report queries came to the company from shareholders as to the actual ore reserves. Accordingly the company circulated a letter reproducing excerpts from the chairman’s address to the annual meeting reading as follows:
Questions will be asked regarding ore reserves, I shall anticipate them now, confining the estimate ore reserves only to tonnage proven and to those Indicated as a result of diamond drilling and cross cutting. The sum total of Campbell's holdings in Chibougamau at the main shaft Cedar Bay and Kokko Creek thus far considered proven and indicated as outlined below is 9,940,000 tons averaging 2.22 per cent copper, and .056 gold, based on present mill tonnage. This indicates in excess of 15 years of reserves.
In the 1957 annual report these estimates of ore reserves were reduced to between 5 and 5 /z million tons with not so high a grade. This downward revised estimate of the ore reserves came out just after the death of Mr Henderson. This revised estimate of reserves was based upon a report of the chief geologist for the company. An expert geologist called on behalf of the appellants expressed the view that the method of calculation of ore reserves used by the company in its 1957 report was optimistic. It was also pointed out that the conjectured future profit of $3.02 per share was overly optimistic and was never realized. One of the principal reasons for the failure to realize that estimated profit was a pronounced fall in copper prices.
On the other hand the broker’s letters above referred to and others written at the same time were written well before the material date of February 2, 1957, the date of Mr Henderson’s death. At that time potential investors had available to them cards issued by the Financial Post which gave a proper factual estimate of the company.
It is difficult, if not impossible, to assess the influence that the inaccuracies in the estimates of ore reserves and the optimistic forecasts of the company’s future earnings may have had on the market price. In assessing the market price there are many factors present in the mind of an investor and many imponderables. Mining companies do not restrict themselves to one particular ore body that they have discovered. They recognize that a mine as a wasting asset and that it will be depleted. Accordingly they are constantly searching for other sources of supply. This is the essence of good management in a mining company.
During this period there was a substantial volume of sales at a reasonably constant level. Those who sold were undoubtedly satisfied with the market price they received and those who bought undoubtedly thought that they had made a good buy. This is the function of the market which cannot be ignored.
The suggestion is that the estimate of the ore reserves, which in 1957 had been made at between 5 and 5% million tons was overly optimistic as was the projection of future earnings. There were reserves in that neighbourhood. There was no suggestion that Mr Henderson was guilty of outright fraud. At the most he was guilty of excessive puffing.
That being so the buyers and sellers who constitute the market are free to put their own valuation on the shares and in so doing they place their own valuation on the sum total of all advantages over disadvantages and their evaluation constitutes the fair market value.
It has been established that, while Mr Henderson may have bought and sold shares, his holding in the company remained constant. He was the person possessed of the most extensive information about the company’s ore reserves and future prospects and with that knowledge he did not see fit to get out but rather continued to hold his shares.
What I am obliged to assess is the fair market value and not the correct or absolutely right market value.
I accept that the estimate of the ore reserves in the letter of the broker dated March 21, 1956 was grossly exaggerated but it was reduced to a more realistic figure in 1957 which may have been inaccurate.
However it has not been established to my satisfaction that the optimistic estimate of ore reserves had a direct impact in the market to the exclusion of other factors present to the minds of traders.
The third and final reason advanced by the appellants in support of their position that the market price on the stock exchange is not the best guide to the fair market value is that the company at that time was in a period of transient boom.
This reason is predicated upon the statement of Mr Justice Mignault in the Untermyer case (supra) when he said:
... It may, perhaps, be open to question whether the expression “fair” adds anything to the meaning of the words “market value,” except possibly to this extent that the market price must have some consistency and not be the effect of a transient boom or a sudden panic on the market. . . .
If the shares in the company are subject to a transient boom then the market lacks the element of consistency which is a condition to the market price being the best evidence of fair market value.
The appellants therefore seek to rebut the presumption that the market price of shares traded on the exchange is not the best evidence of fair market value by bringing themselves within the exception contemplated by Mignault, J that the presumption does not apply when the shares are subject to the effect of a transient boom.
In Johnson’s Asbestos Corp v MNR,  Ex CR 212;  CTC 165; 65 DTC 5089, Jackett, P considered the meaning of the phases or activities of mining preceding the delivery of ore to the pit head. They are fourfold, (1) prospecting, (2) exploration, (3) development, and (4) extraction or production. He then found the meaning of those words in the jargon of mining engineers to be,
(1) “prospecting”—the initial stage of locating the site of a possible mining operation;
(2) “exploration”—in general terms, is the operation of testing for the existence and extent of an ore body and includes prospecting;
(3) “development” of a mine, in general terms, means to uncover the body or area which is to be the subject matter of the extraction process; development is the preparation of the deposit or mining site for actual mining;
(4) the meaning of “production” or “extraction” in general terms is the removal of the ore to the pit head.
lt is my understanding that in addition to extracting ore the company also operated a refining mill.
Mr Mars, an expert witness called on behalf of the appellants, accepted the foregoing stages but combined the prospecting and exploratory stages as one. He stated in paragraph 20 of his affidavit filed under Rule 482, as follows:
From my experience In analysing mining stocks, I have observed that they tend to follow a pattern which involves several phases.
At this point I might interject to point out that the phases contemplated by the witness are the phases outlined by Jackett, CJ as the phases of a mining operation on which phases this witness superimposes the pattern of prices in the stock market.
Typically in the first phase, one expects during the exploratory stage leading up to the proving of a copper ore body, considerable stock market activity of a speculative nature.
Again I would interject to point out that during the prospecting and exploration stages leading to the discovery of its main mine the shares of Campbell Chibougamau were not listed and accordingly there is no evidence of the market price at that time.
In the second phase, during development and construction, the stock market tends to be more stable.
During this stage the evidence indicates that the shares of the company from 1951 to the beginning of 1955 were reasonably stable at about $4 per share.
Thirdly, as production commences, the price will often rise to reflect early operational results which may be significantly better than those which can be sustained on a permanent basis. This phase is a transient boom, (italics are mine) the magnitude of which will vary depending upon other factors such as the trend of metal prices. Eventually the stock market can be sustained on a permanent basis and will then be more likely to reflect the fair market value of the stock in question. I have studied a graph of the market prices of the shares of Campbell Chibougamau from the establishment of a market for such shares in 1951 and In my opinion at the date Of Mr Henderson’s death the stock market was still within the third phase of transient boom. In my view, the rise of copper prices during 1955 and early 1956, together with the initial profits of the Company which could not be sustained, contributed to this phase in the case of the shares of Campbell Chibougamau.
The main mine of the company came into production on May 29, 1955.
Exhibit “A” to the Agreed Statement of Facts is a graph of the monthly high and low prices on the Toronto Stock Exchange for the shares of Campbell Chibougamau from March 31, 1952, the date of the first listing, until December 1958. This graph indicates that the shares followed the pattern described by this witness.
From March 31, 1956 until January 1955, that is during the development stage, the market price of the shares was reasonably constant at about $4 per share or slightly below. In January 1955 the shares began a precipitous rise to a high of $29 per share in April 1956 and May 1956. In June 1955 when the mine came into production the shares were trading at about $12 per share. From a high of $29 in May 1956 the shares began to fall to about $12 per share in February 1957 with a period of recovery to $22 per share in September and October 1956. The price of the shares remained comparatively constant at about $12 per share from February 1, 1957 until June 1957 when they began a decline to about $7 per share. From September 1957 the price per share remained at about $6 per share but between September 1958 to November 1958 they traded at about $10 per share.
It was established that the market for copper is a very volatile one Subject to rapid fluctuations dependent upon the demand for this commodity. The time when the mine came into production in 1955 coincided with a. rise in copper prices. Added to this the profits for the company in its first year of production, that is the year ending June 30, 1956 was $2.29 per share. For the financial year ending June 30, 1957 the profit declined to 26 cents per share.
The substantial profit per share for the financial year ending June 30, 1956 was attributed to the fact that the ore milled was of high grade, some 633,000 ore milled tons at a grade of 2.95%. In the next year the grade of ore was 2.38%, then declining in successive years to 2.07% and 1.97%. In 1960 and 1961 the grade of ore rose due to the fact that a newly discovered ore body came into production.
lt is customary in the mining trade to high grade the ore in the first years of production.
In the June 30, 1956 year 13 months production was. brought into income for that year.
Furthermore profits were calculated on the basis of estimated sale prices rather than actual sales. This is not a reprehensible accounting practice but it does have the effect of driving profits down in subsequent years if the price of copper should decline.
Also the company had stockpiled some 128,000 tons of ore from the preproduction tax-exempt period to which no cost was attributed.
It was ‘therefore submitted that for these reasons the profits for.:the first year of production were inflated and that there are factors which would Increase the magnitude of the transient boom which Mr Mars concludes that the company was in on February 2, 1957, the date of Mr Henderson’s death.
The question which arises is whether the circumstances above described and what Mr Mars describes as a transient boom coincides with the meaning of the words “transient boom” used by Mr Justice Mignault in the Untermyer case (supra), the pertinent extract I repeat for convenience, which is “that the market price must have some consistency and not be the effect of a transient boom or sudden panic”.
I do not think that the words “transient boom” in the context in which they are used by Mr Mars are synonymous with these same words in the context of Mr Justice Mignault’s statement. In the latter context the words “transient boom” are used in association with the words “sudden panic” as being diametric opposites. In my view the adjective “transient” as used by Mr Justice Mignault must take its meaning from the use of the words “sudden panic” and that being so it must mean a sudden or unusual circumstance not normally contemplated and which will pass away quickly.
On the contrary the various stages through which a mining company passes, as were described by Mr Mars, are the usual stages through which it must pass from the very nature of things. Accordingly the prices for which shares of a mining company are traded on the market are the usual market fluctuations due to the economic factors through which a mining company must pass coupled with other factors which habitually affect the price at which shares in mining companies are traded.
There was extensive trading in the shares of Cambell Chibougamau both before and after the death of Mr Henderson. In 1955, 2,214,200 shares were traded, in 1956, 2,803,667, in 1957, 2,596,405, and in 1958, 3,529,733.
In November and December 1956 and January 1957, the three months prior to Mr Henderson’s death, some 600,000 shares were traded at prices averaging out to $13.78 per share and in the three months following his death, that is February, March and April 1957 500,000 shares were traded at prices averaging out to $11.45 per share. Over this six-month period there was an element of consistency present which, in my view, makes the market price the best guide to the fair market value.
In short, 1 am of the opinion that the appellants have not discharged the onus cast upon them to successfully rebut the presumption that such is the case for the reasons I have expressed.
In the circumstances of this particular appeal I therefore think that the market price, as at the death of Mr Henderson on February 2, 1957, determines the:fair market value of the shares in Campbell Chibougamau held by him at that date, that is $10.78 per share.
The Minister did not assess the fair market value of the shares at the Cambell Chibougamau recognized that a mining company possessed of only one ore body can expect that that ore body will be depleted and accordingly it was engaged actively in other explorations. There was a copper property in Mexico and current exploration of another ore body which became the Henderson mine and entered the production stage in 1960. Dr Buffam in making his estimate disregarded the Henderson ore body because in his opinion as a highly qualified geologist that ore body had not been sufficiently delineated as at the date of Mr Henderson’s death. However the results of diamond drilling, though not as extensive as Dr Buffam would have wished to make an accurate estimate of the ore body, were known shortly prior to Mr Henderson’s death and sufficient information was then available to justify an optimistic estimate of that discovery.
lf my recollection of Mr Mars’s evidence is correct he disregarded the Henderson ore body.
It appears to me that as at February 2, 1957 the company was concurrently in the production stage with respect to the main mine and in the exploration stage with respect to the Henderson ore body with the reaction in the market to those factors which Mr Mars described as - “‘considerable stock market activity of a speculative nature”, during the exploration stage.
I therefore conclude that the methods of estimating the fair market value of the shares adopted by the appellants are less appropriate than the method adopted by the Minister in assessing the appellant as
I am confirmed in this conclusion by other circumstances.
The first such circumstance which I have previously mentioned was that for the three months prior and subsequent to Mr Henderson’s death, a period of six months, there was a consistently large volume of trading at an average price of $12.62 per share.
There were two methods available to the executors to dispose of the shares, if they should conclude it was obligatory upon them to do so, first the shares could have been sold en bloc to another mining company or. secondly they could be disposed of on the market gradually so as not to have a depressive effect on the market.
The evidence of an executor was that attempts were made to sell the entire block of shares held by the deceased to other mining companies but that those attempts were unsuccessful. There was evidence to the effect that established mining companies are reluctant to purchase the properties of other established mining companies, their preference being to get in at an earlier stage. Added to this copper prices were declining. The significant factor is that the price asked by the executors of the deceased’s total holding was $8 per share. The price of $8 is exactly that at which the Minister assessed the shares and not the fair market value now put forward by the appellants within the range between $2.25 and $2.75 and $3.27.
On April 30, 1956 a company known as Yorcan Exploration Limited was incorporated to explore some 95 mining claims. Yorcan was 50% owned by Campbell Chibougamau and the remaining 50% by other interests. Because of favourable indications arising on the border of the properties of these two companies an arrangement was made for a programme of joint exploration carried out through the winter of 1957. On July 22, 1957 the company entered into an agreement with Yorcan to purchase the assets of Yorcan in exchange for some 500,000-odd shares of the company at a price of $9 per share. There is no evidence that this was not a bona fide arrangement from which it follows that $9 per share was a realistic price.
In paragraph 22 of the Agreed Statement of Facts it is disclosed that the executors disposed of 403,359 6/8 shares in Campbell Chibougamau in the years 1957 to 1961 inclusive at the respective average prices per share of $4.60, $6.33, $7.70, $6.08 and $7.68, an overall average of approximately $6.48 per share.
I fully appreciate that the fair market value must be assessed as at the date of the deceased’s death on February 2, 1957 and that at later dates different circumstances may well prevail. I have referred to the average prices at which the shares were actually disposed of at subsequent dates merely as a quick means of testing the estimates of the fair market value by the contending parties. The actual sale prices at subsequent dates are far in excess of the estimate of fair market value put forward by the appellants and are more approximate to the price of $8 per share which the Minister concluded to be the fair market value and assessed the estate accordingly.
Therefore I dismiss the. appellants’ appeal against the assessment respecting fair market value of the shares in Campbell Chibougamau as at February 2, 1957.
The other issue in the appeal of the executors against the assessment is with respect to 56,234 warrants to purchase an equal number of shares in Campbell Chibougamau at $4 per share which the Minister has assessed at a value of not less than $4 per warrant on the basis that such warrants had a situs in Canada. The appellants contend that the said warrants to purchase shares did not have a situs in Canada and accordingly should be excluded from assets subject to tax as situate in Canada and that in any event the warrants were worthless.
Obviously if the shares of Campbell Chibougamau could be purchased on the stock exchange at a price of $4 per share or less then the share purchase warrants would be valueless. On the other hand if the shares of the company were trading on the exchange at prices in excess of $4 per share then the value of the share warrants would be the difference between $4 and the higher price at which the shares were traded.
In view of the Minister’s assessment of the shares at a fair market value of not less than $8 per share, which assessment I have concluded should not be varied for the reasons I have given, it follows likewise that the Minister’s assessment of the share purchase warrants at a value of $4 per warrant as at February 2, 1957 should not be varied.
Accordingly there remains the sole issue of the situs of the share purchase warrants.
The share purchase warrants were in the possession of the deceased at the date of his death and were physically situated in the State of New York.
Paragraph 6(1)(b) of the Dominion Succession Duty Act provides as follows:
6. (1) Subject to the exemptions mentioned in section 7, there shall be assessed, levied and paid at the rates provided. for in the First Schedule duties upon or in respect of the following successions, that is to say,
(b) where the deceased was at the time of his death domiciled outside of Canada, upon or in respect of the succession to all property situated in Canada
Subsection (2) of section 6 provides:
6. (2) For the purposes of this Act, shares in the capital stock of a corporation Incorporated in Canada are deemed to be property situated In Canada.
Respecting the shares in Campbell Chibougamau by virtue of foregoing provisions they are situated in Canada but different considerations apply to the share purchase warrants.
There is a distinction between a share warrant and a share purchase warrant.
A company if authorized by its charter may issue share warrants which make the bearer of such warrant absolutely entitled to the shares in respect of which the share warrant is issued. What happens is that fully paid shares are issued by the company to a shareholder. However instead of the shareholder taking a share certificate as evidence of his title to the share he may exchange that certificate for a share warrant or he might be given a share warrant rather than a share certificate. The bearer of a share warrant is entitled upon surrender of the share warrant to be registered as a shareholder. The holder of a share warrant may be entitled to vote depending upon the conditions attaching to the share warrant.
The principal difference between a share certificate and a share warrant is that the transferee of a share certificate only perfects his title when the transfer is registered in the company’s share register. On the other hand the bona fide holder of a share warrant acquires a title free from equities immediately. Accordingly, a share warrant is a negotiable instrument which passes by delivery free from equities.
With respect. to share warrants, shares. have been issued by the company.
A share purchase warrant is a certificate which entitles: the bearer on surrender of the certificate, on, after or before dates specified, to purchase from the treasury of the company the number of shares stated in the warrant at the price therein provided.
The basic difference between a share warrant and a share purchase warrant is that in a share warrant share capital has actually been issued and funds acquired by the company, instead of a share certificate the holder gets a share warrant, whereas on a share purchase warrant no capital shares have been issued by the company. The bearer of a share purchase warrant is not a shareholder, rather he has the option to become a shareholder in that he may purchase the number of shares at the price as is specified in the option. On its part the company undertakes to hold in its treasury sufficient shares to discharge its obligations under the share purchase warrants outstanding.
The share purchase warrants-owned by the deceased at the date of his death were in the form agreed upon in paragraph 23 of the Agreed Statement of Facts. It is unquestionably a share purchase warrant as described above rather than a share warrant in that it entitles the bearer to purchase a specified number of shares of the par value of $1 each in Campbell Chibougamau for $4 per share, to be exercised by presentation of the share purchase warrant together with a certified cheque in payment of the subscription price to the company’s transfer agent at Montreal, PQ on or before December 1, 1960. It is specifically stated in the conditions attaching to the warrant that title to the warrant shall pass by delivery. The warrant is signed by the company by its president and is countersigned by the transfer agent.
There is no. indication in the attestation clause that the warrant was executed under the corporate seal. • ~-
There is no doubt in my mind that a share warrant, which is a document issued by a company instead of a share certificate, must be under the corporate seal and I would have expected that a share purchase warrant is also the type of document which should be executed under the corporate seal.
A document under seal is a specialty. and the general rule is that a specialty has the situs where it is physically situated. It is impossible to determine from the photocopy of the warrant appended to the Agreed Statement of Facts if the warrant was executed under the seal. lt has not been established in evidence that the share purchase warrants were so executed and accordingly I must decide the matter in the assumption that they were not so executed.
The situs of share purchase warrants is not dealt with in the Dominion Succession Duty Act, applicable in the present appeals, as is the situs of shares.
In Schedule B to an Act to amend the Canada-United States of America Tax Convention Act, 1943 and the Canada-United States of America Tax Convention Act, 1944, 14 Geo VI, c 27, the title and preamble to which indicates the object of the Convention to be “the avoidance of double taxation and the prevention of fiscal evasion in the case of estate taxes and succession duties”, it is provided in Article Il as follows:
Where a person dies a citizen of the United States of America or domiciled in the United States of America or Canada, the situs of any rights or interests, legal or equitable, in or over any of the following classes of property, which for the purposes of tax form or are deemed to form part of the estate of such person or pass or are deemed to pass on his death, shall, for the purposes of the imposition of tax and for the purposes of the credit to be allowed under Article V, be determined exclusively in accordance with the following rules, but in cases not within such rules the situs of such rights or interests shall be determined for these purposes in accordance with the laws in force in the other contracting State: . . .
Paragraph (f) of Article Il reads as follows:
(f) Shares, stock, bonds, debentures or debenture stock in a company (including any such property held by a nominee, whether the beneficial ownership is evidenced by scrip certificates or otherwise) shall be deemed to be situated at the place where the company is incorporated; ...
The argument on behalf of the appellants was, as I understood it, that because share purchase warrants are not mentioned in paragraph (f) it is not a case within the rules enumerated and, therefore, the situs of such warrants is to be determined in accordance with the law of Canada, the “other contracting State”. Following that premise it was then submitted that the situs of share purchase warrants is where they can be effectively dealt with and since title passes by delivery they can be effectively dealt with where they are physically located, that is, in the State of New York.
The rival contention on behalf of the Minister was, as I understood it, that under Article II of the Convention the situs of “any rights or interests, legal or equitable, in or over . . .” the class of property set forth in paragraph (f), that is, “shares”, shall be deemed to be situate at the place where the company was incorporated. It was the contention that the share purchase warrants constituted such a right in or over shares in the company.
I do not accept the construction of Article II advanced on behalf of the Minister. The share purchase warrants give the holder the right to have shares issued to him to the number specified in the warrant upon presentation of the warrant to the transfer agent together with payment of the subscription price on a date prior to December
The rule in Pellatt’s Case (1867), LR 2 Ch App 527, is that for shares to be issued there must be a subscription therefor and that offer is accepted by an allotment of shares and communication of that allotment to the subscriber. The right which the share purchase warrants in the present appeal bestow in the holders thereof is the right to subscribe for shares in accordance with the terms of the warrant whereas the company on its part warrants that such shares will be available from its authorized capital when application is made. However until subscription and allotment is made and communicated to the subscriber no shares come into existence. That being so the share purchase warrant does not confer rights on its holder in or. over shares but only the right to have shares issued. It is a right in itself and property in itself.
I think that the words “any rights or interests, legal or equitable, in or over . . ." in the initial language of Article II refers to rights or interests of a proprietary nature, either legal or equitable, with respect to the classes of property as are set forth subsequently in the: Article.
This is the construction and meaning to be ascribed to those words in the introductory portion of Article Il in view of the fact that the rules which follow are complete with respect to the categories and siius of property to the exclusion of reference elsewhere. The category of property is set forth with certainty and the situs of that class of property is set forth with equal certainty.
Paragraph (f) refers to “shares, stock, bonds, debentures or debenture stock in a company”. It does not include share warrants or share purchase warrants. (I might add parenthetically that this omission was corrected in subsequent legislation and also that “fair market” value of shares as comprising the aggregate net value of an estate was subsequently amended to be the price at which shares are traded on an exchange.)
Because paragraph (f) does not include share purchase warrants the situs of such warrants falls to be determined by the law of Canada.
That being so it was then contended on behalf of the Minister that the share purchase warrant is an option. For that option to be exercised certain acts must be done by the holder at the office of the company’s tranfer agent in Montreal, PQ. If the company did not perform its obligation to the bearer of the share purchase warrant, assuming that all conditions precedent were complied with, then the bearer is entitled to specific performance which would be enforced where the company is resident and domiciled, which is in the Province of Quebec. In effect it is contended that the share purchase warrant is a simple contract which has its situs in the country where it can be enforced which is the residence of the company.
With respect to the situs of shares the leading decision is that the situs of the share certificate is not the situs of the shares of which the certificate is evidence of the title but that the situs is the location of the tranfer register.
The Privy Council, in Brassard v Smith,  AC 371, said with respect to the situs of shares:
This is, in their Lordships’ opinion, the true test: Where can the shares be effectively dealt with? The answer in the case of these shares is In Nova Scotia only and that solves the question.
The shares in question in the Privy Council decision were shares in the Royal Bank of Canada whose head office was in the Province of Quebec and were part of the estate of a deceased who died intestate in Nova Scotia. The validity of a claim for duty for succession duties in Quebec depended upon the shares being actually situated in that province. The Bank Act provided that the bank might maintain a registry office in Nova Scotia at which shares of holders thereof within the province “shall be registered and at which, and not elsewhere, except as hereinafter provided, such shares may be validly transferred”. Pursuant to that authority the bank opened a registry. office in Nova Scotia.
However share certificates, share warrants and share purchase warrants are different things.
A share certificate is in no sense a contractual document and even though it is required to be issued under the corporate seal it is not a deed. The holder’s legal right depends not on the certificate but upon entry in the share register. A share certificate is not a negotiable instrument whereas a share warrant or a share purchase warrant is.
The basic characteristics of negotiable instruments are that instruments when payable to bearer or endorsed in blank are transferable from hand to hand so that the right to maintain an action upon the instrument passes by the delivery of the instrument only in addition to the rights bestowed on a holder for value.
Because a share warrant and a share purchase warrant passes the right to maintain an action thereon merely by delivery, these documents are negotiable instruments. (See Webb, Hale & Co v The Alexandria Water Company (Limited) (1905), 21 TLR 572.)
While it is a well settled doctrine that simple contract obligations of a debtor have a situs where the debtor resides, there is an exception to this rule in the case of negotiable instruments. This exception is based on the circumstance that the debt evidenced by an instrument transferable by delivering is capable of being reduced into possession of the instrument itself and that when such an instrument in the hands of bearer the bearer’s title to the debt due upon the instrument is assimilated to a chattel. (See Duff, J in Crosby v Prescott,  S.C.R. 446.) The rule with respect to the situs of negotiable instruments is where the instrument is physically situate.
in the present appeal the share purchase warrants, being physically situated in the State of New York, have their situs in that state even though the obligations under the document are to be performed by the company through its transfer agent in Quebec.
in Secretary of State of Canada and Custodian v Alien Property Custodian for the United States,  S.C.R. 169, the Supreme Court of Canada considered the question of the situs of shares of the Canadian Pacific Railway and. bearer share warrants of Imperial Oil Limited. The bearer share warrants were warrants declaring that the bearer is entitled to a specified number of shares in the capital stock of Imperial Oil Limited.
Mr Justice Duff (as he was then) said at page 195:
On the question of the situs of two other groups of securities, those of the Canadian Pacific Railway Company and of the Imperial Oil Limited, special points are made which are not without their weight. As to the Imperial Oil Limited, the provision quoted from the Supplementary Letters Patent makes It perfectly clear that the benefit of the obligation passes with the delivery of the instrument. The analogy of negotiable Instruments, strictly so called, Is pertinent, and Indeed, seems to be almost, If not quite, complete. Such Instruments have their situs where they are physically situated. There also is the situs of the obligation.
On the same page he dealt with the situs of the shares in the Canadian Pacific Railway. He said that the shares, for the purpose of determining the incidence of succession duty, had their situs at the branch office where they were registered and at which they could only be validly transferred. He followed Brassard v Smith (supra) and, in applying the principle there enumerated, he said at page 195:
... in the case of the Canadian Pacific Railway Company’s shares, the place for perfecting the legal title and thereby completing the disposition was New York. This also is not without its application to the Imperial Oil securities. The place of effective disposition was the place where the warrant was.
The warrants were physically situated in the State of New York and were described on page 174 as follows:
Bearer Share Warrants Issued by the Imperial Oil Company and transferable by delivery without anything further having to be done, either in Canada or the United States, to perfect title.
It is true that if the bearer of the share warrants wished to become a registered shareholder he was obliged to present the share warrant to the registry office to become registered as a shareholder and receive in exchange therefor share certificates, but that does not alter the fact that title to the share warrants passed upon delivery.
Mr Justice Lamont said at page 182:
. .« » The share warrants of the Imperial Oil Company, being payable to bearer, were property wherever they were physically situate, for they could be effectively dealt with there....
The characteristic common to the bearer share warrants of Imperial Oil Limited and the share purchase warrants which are the subject of the present appeal which make them analogous to “negotiable instruments, strictly so called’, is that the benefit of the obligations covered by both such documents passes with delivery of the documents.
The share purchase warrants issued by Campbell Chibougamau therefore have a situs where the instruments were physically situated which, in accordance with the Agreed Statement of Facts, is in the State of New York.
Accordingly I allow the appeal in this respect and refer the assessment back to the Minister in order that the warrants to purchase shares of Campbell Chibougamau held by the deceased shall be excluded from the assets of the estate situated in Canada and so not subject to tax under the Dominion Succession Duty Act.
In the result the appeal by the executors with respect to the issue of the determination of the value for duty of the shares held by the deceased, A M Collings Henderson, in Campbell Chibougamau Mines Limited as at the date of his death on February 2, 1957 is dismissed and in accordance with the agreement between the parties as set forth in paragraph 4 of the Agreed Statement of Facts, the appeal with respect to the issue of the determination of the value for duty of the shares held by the deceased, A M Collings Henderson, in Chibougamau Mining and Smelting Co, Inc, as at the date of his death on February 2, 1957 is also dismissed.
The appeal by the executors with respect to the inclusion of the warrants to purchase shares in Campbell Chibougamau Mines Limited held by the deceased at the date of his death as assets of the estate is allowed.
The Minister of National Revenue shall be entitled to his taxable costs attributable to the issue with respect to the determination of the value for duty of the shares held by the deceased in Campbell Chibougamau Mines Limited.
The executors as appellants shall be entitled to their taxable costs attributable to the issue with respect to the inclusion of the share purchase warrants in Campbell Chibougamau Mines Limited, on which issue they were successful, such costs to be set off against the costs recoverable by the Minister of National Revenue.
I now turn to the appeal of the Bank of New York from the assessment of the Minister dated March 28, 1966 against the bank personally in its capacity as an executor of the estate of the late A M Collings Henderson in respect of unpaid duties that had been assessed against the estate.
The relevant facts, with respect to which there is no dispute, are set forth in the statement of claim and may be summarized as follows:
A M Collings Henderson died resident and domiciled in the State of New York on February 2, 1957.
By his last will and testament made on January 13, 1950 he appointed his wife, Janet Beach, his attorney, business associate and friend Jack N Blinkoff and the Bank of New York, the appellant herein, the executors and trustees thereunder. All of the executors resided and were domiciled in New York.
The will was probated in the Surrogate Court of the County of New York on April 2, 1957. The probate was not resealed in any province of Canada, nor was there any ancillary grant of any nature in Canada.
In January 1958 the executors prepared and filed a form prescribed by the Dominion Succession Duty Act, RSC 1952, c 89, as amended by SC 1957, c 22, being a schedule of assets and declaring the assets of the estate to have an aggregate net value of $1,201,883.92 and the assets situate in Canada to have an aggregate value of approximately $737,000.
Among the assets disclosed in the schedule thereto the deceased at the time of his death was the owner of 471,984 6/8 shares of Campbell Chibougamau Mines Limited, 288,384 shares of Chibougamau Mining & Smelting Co Inc and warrants to purchase 56,234 shares of the par value of $1 each in Campbell Chibougamau Mines Limited at $4 per share.
The Minister fixed the fair market value of the shares in Campbell Chibougamau at $8 per share at the date of the death of the deceased for assessment purposes. The Minister fixed the fair market value of the shares in Chibougamau Mining & Smelting Co, Inc at $2.65 per share at the date of the death of the deceased for assessment pur- poses, and the Minister assessed the estate on the basis that the share purchase warrants had their situs in Canada and had a value of $4 for each share covered thereby.
lt will be recalled that the issue in the appeal of the executors was the determination of the value of the shares in Campbell Chibou- gamau and in Chibougamau Mining & Smelting Co, inc for duty purposes and the situs and value for duty of the share purchase warrants.
Certificates for 128,845 6/8 shares in Campbell Chibougamau were held in Canada in Canadian accounts as were certificates for 87,666 shares in Chibougamau Mining & Smelting Co, Inc.
Certificates for 87,350 shares in Campbell Chibougamau were held in Canada in Canadian accounts in New York and certificates for 142,857 shares in Chibougamau Mining & Smelting Co, Inc were similarly held.
Certificates for 255,789 shares in Campbell Chibougamau and certificates for 57,861 shares in Chibougamau Mining & Smelting Co, Inc were held in US accounts in New York.
The share purchase warrants were situated physically in New York State.
There is no question, as it was conceded readily by all parties, that the shares in Campbell Chibougamau and Chibougamau Mining & Smelting Co, Inc had their situs in Canada.
For the reasons I expressed in the appeal of the executors I concluded that the Minister’s determination of the fair market value of the shares of Campbell Chibougamau should not be disturbed. Because of the agreement between the parties expressed in paragraph 4 of the Agreed Statement of Facts neither should there be any adjustment of the Minister’s valuation of the shares in Chibougamau Mining & smelting Co, Inc.
I also concluded that the Minister’s valuation of the share purchase warrants for assessment purposes should not be varied but I did conclude that the situs of the share purchase warrants was in the State of New York and accordingly that those warrants should be excluded from assets subject to tax in Canada because they were not property situated in Canada.
While the question of the valuation of the shares in two mining companies and the value and situs of the share purchase warrants is an issue common to the appeal of the executors and the appeal of the Bank of New York, it was agreed among counsel that the determination of the assets subject to succession duty in Canada and the valuation thereof for succession duty purposes in the appeal of the executors would be accepted as determinative of that issue in the appeal of the Bank of New Nork.
Succession duty returns similar to the returns prepared and filed by the executors under the Dominion Succession Duty Act were also filed under The Succession Duty Act of Ontario and the Quebec Succession Duties Act.
By a notice of assessment dated August 2, 1969 the Minister considered the aggregate net value of the assets to the value of $3,771,008.03 to be Canadian assets and succession duties in the amount of $1,703,250.88 were claimed thereon.
The Province of Ontario adopted the share values fixed by the Minister and by an instrument dated April 11, 1960 advised the executors that Ontario duties were in the amount of $357,659.34.
in the notice of assessment dated March 28, 1966 and served on the Bank of New York it is indicated that an amount of $428,227.10 has been paid on account leaving a balance of duty in the amount of $1,275,023.78 payable in three annual instalments.
In paragraph 19 of the Statement of Claim it is alleged that duties in the amount of $212,448.10 have been paid to the Province of Ontario. in accordance with section 12 of the Dominion Succession Duty Act 50% of the duty payable to the Province of Ontario is deductible from the duty payable under the Dominion Succession Duty Aci.
in paragraph 13 of his statement of defence the Minister concedes and states that he is prepared to allow in computing the duty payable a deduction in the amount of one half of the duties paid to the Province of Ontario. However he denied the amount alleged to have been paid to Ontario thereby putting the amount in issue. Evidence was not adduced establishing that amount but in the prayer to his statement of defence the Minister asked that the appeal be allowed and the assessment referred back in order to allow a deduction of one half of the provincial duties paid to Ontario. It was my understanding that counsel would agree on the amount of the taxes so paid, which amount can be proven readily.
The Bank. of New York during the period it was an executor and trustee of the estate carried all cash and securities received in the course of the administration of the estate in a trust ledger. under the heading “Trust Account of the Estate of A M Collings Henderson”.
Under the will of the deceased the principal beneficiaries were Mr Henderson’s widow, Janet B Henderson, his son Bruce C C Henderson, and his daughter Antoinette E C Henderson. However there were other lesser bequests including an amount of $5,000 to Janet Beach Henderson, a bequest of the deceased’s wearing apparel to his brother and his other personal effects to his son. The wearing apparel and personal! effects were declared to have a value of $115 and were in the custody of Janet Henderson. The wearing apparel was delivered by her to the children of the deceased’s brother-who had predeceased him and the other personal effects were given by her to the deceased’s son. The Bank denies that the wearing apparel and other personal effects were at any time in its control, or subject to control or disposition by it.
After the deceased’s death his widow was without funds to meet her current living expenses. Accordingly on January 31, 1961 a cheque of the Bank of New York, termed an “official’’ cheque which ! understand to be a draft issued by the bank authorizing the payee to draw on the funds of the bank, was given to the widow in the amount of $5,000 in payment of the legacy to her in that amount under the deceased’s will.
The amount of this cheque was charged to the trust account entitled “Trust Account of the Estate of A M Collings Henderson”.
Save as aforesaid the beneficiaries under the will of the deceased derived no benefit thereunder during the period the bank was an
Subsequent to this payment of $5,000 by the bank to the widow on January 31, 1961 the bank became very anxious about its position. I understood its concern to be primarily what assets of the estate It should make available to the Department of National Revenue for payment of Canadian succession duties. The bank consulted an independent legal adviser and as a consequence of that advice it applied to the Surrogate Court of the County of New York for leave to resign as executor and trustee of the estate. That leave was granted by order dated December 19, 1963 and the probate issued to the bank was revoked as of that date. This order was not applicable to the other two executors and trustees who continued in that capacity.
On March 30, 1966 a document entitled “Succession Duties—Notice of Assessments” dated March 28, 1966 and addressed to the Bank of New York was received by the bank. This document was received in evidence as Exhibit I. It refers to the duties payable being in the amount of $1,703,250.88 and that $428,227.10 had been paid on account leaving a balance due in the amount of $1,275,023.78. The document bears this endorsement:
This assessment is for the tax payable by you pursuant to sec. 49 of the Dominion Succession Duty Act RSC 1952, c 89, since you delivered or transferred property of A M Collings Henderson, deceased, to Janet Beach Henderson, successor, without either first paying all of the duties assessed and levied under the Dominion Succession Duty Act, as evidenced by a Notice of Assessment. dated 6 Aug, 1959, which you were liable to pay in your representative capacity as an executor of the estate of A M Collings Henderson, deceased, or without furnishing security satisfactory to the Minister of National Revenue.
This endorsement refers to facts in the present appeal and closely parallels the language of section 49 of the Act which reads as follows:
49. Before delivering or transferring any property of the deceased or any interest in such property to any heir, legatee, donee or other successor, the executor shall first pay all the duties assessed and levied under the Act to the extent to which he Is liable in ‘his representative capacity or shall furnish security satisfactory to the Minister for the payment of such duties, and any executor who acts in contravention of this provision is personally liable for the duties, and in addition is liable to a penalty equivalent to double the amount of such duties.
It is quite apparent that the Minister seeks to render the Bank of New York personally liable for the balance of the unpaid duties but he does not invoke nor seek to recover a penalty equivalent to double the amount of such duties.
The bank disputes its liability first on the ground that the assessment as evidenced by Exhibit I is a nullity.
As I understood the contention of counsel for the bank it was that liability under section 49 of the Act is not the proper subject matter of assessment, that the technique of proceeding by way of assessment is inappropriate and is not in contemplation of the general scheme of the Act nor is there any statutory authority for such an assessment. Further he contended that assessment is an administrative or ministerial act and since liability under section 49 involves a judicial or quasi judicial process the assessment is invalid. He submitted that, since there might be a debt due, the proper remedy would be for the Minister to proceed by way of a suit for debt.
Secondly he contended that if the first submission was decided adversely to his client’s interest then the bank was not an executor within the meaning of and therefore not subject to the provisions of the Dominion Succession Duty Act. Basically ! understand this submission to be that judgment cannot be given against a foreign executor who has not taken out an ancillary grant of letters probate in Canada. Therefore if the bank is not an executor it cannot be liable in its representative capacity. If the acts of the bank constituted it an executor de son tort, which counsel for the bank denied being the case, it was then his contention that an executor de son tort has no representative capacity, but that an executor de son tort is only liable to the extent of the value of the assets which he administered in Canada.
In the event that it should be resolved that the Bank of New York was effectively assessed and that it was an executor the third contention on behalf of the appellant is that it is under no liability in its representative capacity because foreign executors cannot be required to send assets from the foreign jurisdiction to pay a tax imposed by the domestic jurisdiction.
As an ancillary point counsel for the bank contended that the tax under the Dominion Succession Duty Act is a tax on a succession and because the bank paid a legacy of $5,000 the executor should be required to pay duties assessed and levied on that succession to the exclusion of other successions. In this context it may be appropriate to point out that the plural is used in the title to Exhibit I, “Succession Duties Notice of Assessments”. If this is so he then points out that since $428,227.10 had been paid for duties and that the duty on a succession of $5,000 would be approximately $2,280 that the duty on this particular succession has been paid although he was frank to admit that no amount had been allocated to or identified as a payment of duty on this succession. He also cited this circumstance as a further example of a decision of a judicial nature being made and that the technique of assessment is inappropriate therefor.
The fourth ground advanced on behalf of the appellant was that assuming (1) the assessment was not a nullity, (2) the appeilant was an executor within the meaning of the Dominion Succession Duty Act and
(3) the appellant is liable to tax, then the assessment is for an excessive amount. The basis of this contention I understood to be that, at the time of the assessment the value of the assets had not been determined, that credit in respect of duties payable to the Province of Ontario has not been assessed and determined so that the calculation of the credit to which the appellant is entitled to is unknown for which reasons the liability of the Bank is unknown to the Minister until the liability of the estate has been determined and accordingly the assessment was premature. It was my recollection of the conclusion drawn from the foregoing by counsel for the appellant that the assessment should be struck out. This is contrary to the relief sought in paragraph 20(3) of the statement of claim. which is a declaration that the liability of the appellant is limited to (1) the amount transferred by the appellant to the beneficiaries to which I have referred immediately above, (2) that the balance of the duties owing by the estate should be reassessed in accordance with the determination of the value of the assets of the estate which were situated in Canada, which was the issue in the appeal of the executors, and (3) by deducting one half of the provincial duties paid by the estate from the duty otherwise payable which the Minister in paragraph 13 of his statement of defence readily concedes and is prepared to allow in respect of duties paid to the Provinces of Quebec and Ontario.
It was admitted that there are assets still in the hands of the executors available for payment of duties. I assume that admission to refer to assets in the hands of the continuing executors but it is not clear if those assets are physically situated in Canada although I assume them to be. They are 53,000 shares of Campbell Chibougamau, 31,661 shares of Chibougamau Mining and an amount slightly in excess of $30,000 held by the National Trust Company.
It is obvious that even with the exclusion of the share purchase warrants from the assets of the estate as not subject to tax in Canada, and the credit to be allowed for duties paid to the provinces, the proceeds from the assets available in Canada will not be sufficient to satisfy the unpaid balance of duties and that the Minister seeks to recover the deficiency from the bank under section 49 of the Act.
The first contention on behalf of the appellant is that the assessment dated March 28, 1966 made by the Minister is a nullity, in that assessment for duties under section 49 is not authorized by the Statute, and that the Minister in making the assessment was acting in. an administrative or ministerial capacity and as such could not make judicial or quasi judicial decisions.
If the assessment is a nullity, as contended by the appellant, it is void from the outset and the appellant would be entitled to the relief sought in paragraph 20(1) of its statement of claim, that is a declaration that the assessment is null and void.
The object of an assessment is the ascertainment of the amount of the aggregate net value of all the property of the deceased, wherever situated, passing on his death, from which is computed the duty payable, and the fixation of the liability therefor in accordance with the provisions of the statute.
Assuming that assessment is the proper method of fixing liability for duties payable under section 49 of the Act, then the appellant has the right of appeal under section 37 to establish that the amount of the duty is erroneous and that it is not liable therefor.
In fixing liability under section 49 the Minister, of necessity, must make certain assumptions. The first of these assumptions must be that the appellant is an executor, second that the executor transferred property of the deceased to an heir without first paying or providing for the payment of the duties for which the executor is liable in its representative capacity and thirdly the amount of the personal liability of the executor under section 49.
The position taken by the appellant is that the Minister is precluded from determining those conditions precedent to liability because each determination involves a decision of a judicial or quasi judicial nature and the function of the Minister is administrative.
The assessment by the Minister is an administrative act. There is an appeal provided for in the Statute from that administrative act. Before the Minister can perform the assessment process he is obliged to make the assumptions from which liability follows.
In my view the statute contemplates that the Minister shall do so and provides for an appeal against those assumptions not being in accordance with the statutory provisions.
I therefore conclude that if the Minister is required to make decisions of a judicial or quasi judicial nature as in the assessment process, the Statute requires that he shall do so and provides an appeal to correct any error which may have been made by the Minister with respect to the applicability of the provisions of the Act.
The: persons who are liable for the duty under the Act are set forth in section 13 which reads:
18. (1) Every successor is liable for the duty by this Act levied upon or in respect of the succession to him, and the duty in respect of any gift or disposition inter vivos to a successor is also payable by and may be re- n°Mi? L ." J executor of the property of the deceased, but such liability shall be in his capacity as executor only and for an amount not exceeding the value of the interest of the successor in the property administered by the executor.
(2) Subject to subsection (1), all the duties assessed and levied under this Act shall be payable by and may be recovered from the executor of the property of the deceased, but the liability of any executor under this subsection shall be a liability in his capacity as executor only and for an amount not exceeding the value of the property administered by him.
The successor is liable but the duty shall be payable by and is recoverable from the executor who is liable therefor in his capacity as executor and only to the extent of the property administered by him.
The successor is required to file a statement of assets with the Minister.
Section 23 then provides:
23, (1) After examination of the statement or statements so made and delivered the Minister shall assess the duty or duties payable under this Act and shall send notice of such assessment by registered mail to the executor and such notice shall be deemed to be notice of all persons liable for payment of the duties imposed by this Act.
(2) Where there is no executor liable or accountable for any duty or duties, notice of assessment shall be sent by registered mail to the successor.
This is the provision for assessment and notice thereof.
Under paragraph 59(2)(a) regulations may be made prescribing forms and the use thereof.
Such a regulation was made prescribing the use of form SD-7 as the notice of assessment under section 23 of the Act.
in assessing the appellant as he did the Minister utilized form SD-7 but supplemented the information with the following typewritten language, which I have quoted before but which i repeat for convenience:
This assessment is for the tax payable by you pursuant to sec. 49 of the Dominion Succession Duty Act RSC 1952, c. 89, since you delivered or transferred property of A. M. Collings Henderson, deceased, to Janet Beach Henderson, successor, without either first paying all of the duties assessed and levied under the Dominion Succession Duty Act, as evidenced by a Notice of Assessment dated 6 Aug., 1959, which you were liable to pay In your representative capacity as an executor of the estate of A. M. Collings Henderson, deceased, or without furnishing security satisfactory to the Minister of National Revenue.
There is no form of notice of assessment prescribed in the regulations for the notification of an assessment under section 49 of the Act.
Form SD-7 was utilized. There is no magic in the form. Because no form was provided in the regulations for an assessment under section 49 it does not follow that there is no right to assess. The substance of the assessment was endorsed upon the form.
section 24 provides:
24. Subject to the provisions of section 36 and notwithstanding any prior assessment, or if no assessment has been made, the executor and the other person or persons iable. for any duties payable under this Act continue to be liable for the said duties and to be assessed therefor and the Minister may at any time assess, re-assess, or make additional assessments upon any persons, and in respect of any property the subject-matter of a succession, for duties, interest and penalties.
The exception referred to in section 36 does not apply.
It is provided that “the executor and the other person or persons liable for any duties payable under this Act” shall continue to be liable for the duties. There is no reference to the executor being liable in a representative capacity only.
The section continues to provide that the Minister may at any time “assess, re-assess, or make additional assessments upon any persons ... for duties, interest and penalties”.
The word “persons” as used in the context is a broad and uninhibited use of that word. It is not restricted to the “successors”^ If the Legislature had so intended it could have said so as it does elsewhere in the Act. Therefore an executor is included in the word “persons”.
The question to be resolved is whether the “duties” for which an executor is personally liable, if the executor should contravene section 49, are “duties” coincident with the “duties” in section 24 for which the Minister may assess “any persons”.
For convenience I repeat section 49 which reads:
49. Before delivering or transferring any property of the deceased or any interest in such property to any heir, legatee, donee or other successor, the executor shall first pay all the duties assessed and levied under this Act to the extent to which he is liable in his representative capacity or shall furnish security satisfactory to the Minister for the payment of such duties, and any executor who acts in contravention of this provision is personally liable for the duties, and in addition is liable to a penalty equivalent to double the amount of such duties.
Section 49 is ranged under the heading, “Prohibitions and Penalties”. The heading indicates the general object of the provisions following and the heading may be referred to in order to determine the sense of
a section under that heading.
On behalf of the appellant it was contended that the imposition of a liability on an executor personally for the duties is a penalty and as such is not the proper subject of assessment but is recoverable by other
In the sense that the executor becomes personally liable for the duties the section is penalizing in result.
However one word in the heading under which 49 is ranged is “Prohibitions”. The executor is prohibited from transferring any property to an heir without first paying or providing security for the payment of the duties exigible. If the executor fails to do so then the executor becomes personally liable for the duty. This constitutes an additional source to which the Exchequer can look for payment. That being so the purport of the section is merely to render another person liable for the duty.
The executor is liable for the duties and in addition is liable to a “penalty” equivalent to double the amount of the duties. It is this double amount of the duties that is the penalty. The Minister has not sought to impose that penalty on the appellant. What the Minister is seeking is to exact the duties from the appellant.
In my view section 49 imposes a liability for the duties upon the executor when the circumstances contemplated by the section exist. That being so the Minister is entitled to assess the appellant accordingly pursuant to section 24 of the Act.
Because of the conclusion I have reached that it is a liability for duty imposed on the executor, I do not have to consider whether a penalty is the proper subject matter of assessment, but if it were incumbent upon me to do so it would appear to me that the language of several sections of the Act, such as sections 24, 57 and 58 contemplate an assessment being made “for duties, interest and penalties”.
Part VIII of the Act sets forth the remedies available to the Crown to recover duties.
Section 57 provides that “all duties, interest, penalties and costs assessed or imposed or ordered to be paid” under the provisions of the Act shall be deemed a debt due and recoverable as such, that is by suit for debt.
This ‘is a remedy for the Crown to obtain judgment and execution thereupon but it does not obviate the assessment process which is a condition precedent to the debt arising. ' .
Section 58 provides a further method of recovery. First there shall be determination of all duties, interest and penalties payable under the Act. This must be done by an assessment by the Minister.
Then all duties remaining unpaid after four months from the date of mailing of the “Notice of Assessments” may be certified by the Deputy Minister.
When the certificate is registered with the Exchequer Court it is the same as a judgment for the recovery of a debt and execution may be effected to the amount of the certification.
By subsection (3) of section 58 where such certificate is registered with respect of the liability of an executor, execution shall be against the property administered by the executor “unless he has been guilty of contravening section 49 in which case it may be executed against property owned by him personally”.
The exception in subsection 58(3) is to preserve the personal liability imposed on the executor under section 49.
I do not construe the words “guilty of contravening section 49” as meaning that there must have been a prosecution and conviction therefor but rather as meaning that the executor as a question of fact delivered property of the deceased to an heir without first paying the duty thereon for which he is liable or has provided security therefor.
While it is not an issue before me it has been suggested that it is grossly unfair that an executor may be required to pay duties and cannot recover those duties from the estate. If the statute so provides, that is an end to the matter, but in view of my conclusion that section 49 imposes on the executor a liability to pay the duty personally it is, nevertheless, a duty required to be paid by the executor and it would appear that by section 15 the executor is entitled to deduct or recover the duty so paid from the assets of the estate.
In the result I have concluded that the assessment made by the Minister is not a nullity and should not be declared null and void. The assessment is valid until demonstrated by the appellant to have been erroneous as to the amount of the assessment or the assumptions made by the Minister in assessing the appellant as he did.
The appellant in effect contends that the assumptions of the Minister were an error in that the appellant is not an executor within the meaning of that word as used in the Dominion Succession Duty Act and even if the appellant is an executor it is not liable in a representative capacity.
For the proposition that the appellant is not an executor within the meaning of that word as used in the statute, counsel for the appellant relied upon a statement of the Earl of Halsbury, LC in New York Breweries Company v Attorney General,  AC 62.
New York Breweries Company, the appellant, was a company incorporated in England with its head office in London. It carried on a brewing business in New York. Clausen a citizen of New York and domiciled there died having by his will appointed two persons in New York his executors. Probate of the will was granted in New York to these two men, but they took no probate or administration in England. Clausen was the registered holder of shares in the company and of debentures. The executors appointed in New York requested the company to transfer to them all of Clausen’s shares and debentures and to pay to them the interest and dividends due. The company, after notice to the Inland Revenue authorities and in order to test the question. paid to the executors the interest and dividends then payable In respect of Clausen’s shares and debentures and transferred in their books into the names of the executors two shares and a debenture then standing In Clausen’s name.
lt was held that the company had made itself an executor de son tort, that it had “taken possession of and administered” part of the testator’s estate and, under the applicable English legislation that it was liable to penalties and to deliver an account and pay such duty as would have been payable if probate had been obtained in England.
Lord Halsbury said at page 68:
. . . It is idle to suggest that in the Taxing. Acts, where they are dealing with English finance, the words “executor” or “administrator”, which terms we use popularly as applicable to a person who fills that character, to whatever country he belongs, are used in those statutes in any other sense than as meaning an English executor or an English administrator .. .
Later at page 71 Lord Halsbury said,
. . . Then, my Lords, the learned judge goes on: “They have simply done that which the common law of England gives them the right to do, namely, to pay an executor.” They have done nothing of the sort. The learned judge must forgive me for saying, when he says they have paid the executor, they have done no such thing. They have paid a person whom the learned judge calls an executor, but who is not an executor within the meaning of this Act; and when the learned judge says that they “have simply done that which the common law of England gives them the right to do, namely, to pay an executor without asking him for proof of his title by the production of the probate,” I am afraid he forgets for a moment that what was done here was done with the full knowledge that the person whom they paid, not only was not an executor, but had given distinct notice that he never Intended to become an executor within the meaning of the English law....
What Lord Halsbury has said is that the executors appointed under the law of New York were not executors within the meaning of the English statutes.
It may well be that Lord Halsbury’s remarks, being made with respect to English legislation, are not applicable to legislation enacted by the Parliament of Canada.
There is no legislation whereby an executor can be appointed under federal jurisdiction. Executors and administrators are appointed by grant of letters probate or letters of administration under legislation enacted by the provinces of Canada. That being so an executor would be a person so appointed but that might well also apply to a person who is validly appointed by a jurisdiction other than a province of Canada, and who purports to administer assets of a deceased situated in Canada under that authority without obtaining letters probate in a province of Canada where the assets are situated.
Because of the view ! take of the matter it is not necessary for me to resolve that question.
The word ‘‘executor” is defined in paragraph 2(f) of the Dominion Succession Duty Act as meaning
the executor or administrator of a deceased person, and includes an executor de son tort.
An executor de son tort is one who takes upon himself the office of executor by intrusion, not being so constituted by the deceased and in the absence of that constitution not being substituted by competent authority to act as administrator.
An act of intermeddling with a deceased’s assets makes a person an executor de son tort.
Here the appellant assumed control over all of the assets of the deceased, A M Collings Henderson, that were situated in Canada. The appellant completed the schedules of assets required to be filed with the Department of National Revenue and signed such forms as executor. lt directed and consented to the sale in Canada of some 600,000 shares in Campbell Chibougamau held by the deceased and which were situated in Canada. It engaged counsel in Canada to act on its behalf as executor in Canada.
In my opinion the appellant by its acts has constituted itself an executor de son tort of the deceased’s assets in Canada.
Because the definition of an executor in paragraph 2(f) of the Act includes an executor de son tort, it follows that the appellant is an executor within the meaning of that word as used in the statute.
The question which follows from that conclusion is whether an executor de son tort can be liable for duties in a representative capacity.
Counsel for the appellant contends that he cannot because he is not a representative but an interloper.
Under section 13 of the Act the successor is liable for the duty in respect of the succession to him. That duty shall be recoverable from the executor of the property of the deceased but such liability shall be in his capacity as executor only and not for an amount exceeding the value of the interest of the successor in the property administered by him.
It is trite law that a foreign executor cannot be sued in his official character in a jurisdiction in which he has not taken out letters probate or letters of administration but this is subject to the exception that when the foreign executor is found to be an executor de son tort he can be sued.
In Cook v Doods,  6 OLR 608, the defendant who had intermeddled with the assets of an estate, was held liable to a creditor of the deceased for the amount of that indebtedness to be paid out of the goods of the deceased, and failing such goods, out of the defendant’s goods.
Meredith, CJ said at pages 611 and 612:
It was long ago settled that a creditor, if he finds that some one has Intermeddled with the personal estate of his deceased debtor, is not bound to enquire whether that person is the lawful personal representative of the debtor, but may sue him as executor, naming him as executor generally, and on proof, if the executorship is denied, either of a grant of probate to the defendant or of his having intermeddled with the personal property of the deceased in such a way as to constitute him executor de son tort will be entitled to recover against the defendant as executor of the debtor; and if the defendant has not pleaded plena administravit, or, having pleaded it, has failed upon his plea, the judgment will be for the recovery of the debt and costs to be levied of the goods and chattels of the deceased in the hands of the defendant to be administered, and if he has not so much thereof in his hands to be administrated, then of his (the defendant’s) own goods and chattels.
It will be noted that the creditor was not bound to enquire if he was the lawful personal representative of the deceased. By that I presume is meant, that the defendant was named as executor in the deceased’s will and had taken out letters probate. All that was necessary was that the plaintiff sue the defendant as an executor generally. On proof that the defendant was an executor de son tort the plaintiff was entitled to recover from the defendant as executor.
The concept of executor de son tort is based upon estoppel so that one acting as an executor is faced with the consequences of so acting.
lt seems to me that the status to act as an executor flows from a person being named to that capacity in the will of the deceased. If the person so named obtains letters probate of the will he is confirmed in the capacity of executor and is generally immune from personal liability. He acts as executor and the very concept of an executor is that he acts as a representative.
If a person is named in a will as an executor and assumes the responsibility of so acting without first obtaining letters probate, I fail to follow how he cannot be said to be acting other than an executor but he is subject to personal liability in the administration of the estate. Having acted as an executor he has subjected himself to being treated as such and acts in that capacity as a representative of the deceased either rightly or wrongly.
The definition of executor in the Dominion Succession Duty Act includes an executor de son tort. Because an executor acts in a representative capacity and an executor de son tort is an executor, I fail to follow how an executor de son tort is not acting in a representative capacity and liable for succession duties in that capacity as he would have drawn that liability upon himself personally by intermeddling in the assets of the estate and thereby becoming an executor de son tort.
Having concluded that the appellant is an executor de son tort and that as an executor de son tort the appellant could and did act in a representative capacity it follows that under section 49 of the Act the appellant is personally liable for the payment of duties.
The question which follows from this conclusion is to what duties is the appellant personally liable.
Counsel for the appellant submitted that the appellant is liable only in respect of the duty payable upon the succession of the widow to the $5,000 legacy which was paid to her by the appellant and which would be in the approximate amount of $2,500. He further submitted that this approximate amount of $2,500 was included in the amount of $428,227.10 paid by the executor to the Department on account of the duties, although he is frank to admit that no part of the amount paid on account of duties was identified or allocated as being applicable to duty on this particular succession of the $5,000 legacy.
It is true that every successor is liable for the duty in respect of the particular succession to him, which presupposes a levy of duty on each succession, but under subsection 13(2) all duties assessed and levied under the Act are payable by and recoverable from the executor.
Under section 49 the executor is obligated, before transferring any property to an heir, to “pay all the duties assessed and levied under this Act”. If an executor does not fulfil that obligation then the executor “is personally liable for the duties” and to a penalty equivalent to double the amount of “such duties”.
The significant words are “all the duties”. In my view the meaning of the section is clear. The executor, by contravening the prohibition from transferring any property of the deceased under his administration to a successor without first having paid ail of the duties assessed and levied under the Act or furnished satisfactory security therefor, then draws upon himself personally the liability to pay “all the duties” and not only the duty on the amount of the particular succession which he has paid out.
Counsel for the appellant next contended, if the appellant is an executor and is liable for the duties in its representative capacity, which I have found to be the case in both circumstances, then the appellant is not liable for Canadian duties. He argued that because the appellant is a foreign executor, the Canadian taxes cannot be enforced against the executor in the foreign jurisdiction.
That premise is undisputable. In United States of America v Harden,  S.C.R. 366, Mr Justice Cartwright referred to the well established rules (i) that a foreign state is precluded from suing in this country for taxes due under the law of the foreign state and (ii) that in a foreign judgment there is no merger of the original cause of action, it remains a claim for foreign taxes.
The converse is equally so. The Canadian Government cannot go to the foreign jurisdiction and there sue a person found in that jurisdiction for taxes for which he has been declared to be liable in Canada.
From this premise counsel for the appellant argued that because the appellant is not “liable” for Canadian taxes in New York State it cannot be liable in this jurisdiction.
There is a fallacy in this logic. The appellant is not liable in the State of New York for Canadian taxes because a judgment therefor cannot be enforced there. That does not detract from the fact that the appellant can be liable for Canadian taxes in Canada and that liability can be enforced in Canada against assets in Canada.
This was clearly stated by the present Chief Justice of this Court in Hunt et al v The Queen,  1 Ex CR 101;  CTC 474; 66 DTC 5322, where he said at page 103 [476, 5323-4]:
The situation is that the Estate has been validly made subject to tax under and by virtue of Canadian law but a judgment for the tax is enforceable only in Canada as, of course, the Courts of another country will not lend their assistance to enforce payment of taxes owing to the Government of Canada. The Government of Canada can only enforce payment of this tax debt, therefore, if it can find property of the Estate subject to execution in Canada.
The Chief Justice then found that shares of the estate were situated in Quebec and were therefore validly seized under a writ of fieri facias issuing out of this Court.
This Court is not precluded from determining the liability to tax of a foreign executor simply because there may be no assets in Canada against which a judgment for the tax can be enforced.
In paragraph 20 of its statement of claim the appellant claims as follows:
20. The Appellant therefore claims
1) a declaration that the purported assessment is null and void;
2) in the alternative, a declaration that it is not liable to pay any amount under s 49 of The Dominion Succession Duty Act;
3) in the further alternative a declaration that the liability of the Appellant, if any, under s 49 of The Dominion Succession Duty Act is limited either
i) to the amount transferred by the Appellant in contravention thereof, or
ii) to the balance of the duties owing by the Estate which duties should be re-assessed after amending the value of the assets of the Estate situated in Canada and subject to tax under the Act by
a) reducing the fair market value of the shares of Campbell Chibou- gamau Mines Limited owned by the Estate from $8 per share to not more than $2.25 per share;
b) reducing the fair market value of the shares of Chibougamau Mining & Smelting Co Inc owned by the Estate from $2.65 per share to not more than 920 per share;
c) excluding the warrants to purchase shares of Campbell Chibougamau Mines Limited owned by the Estate from the assets situated in Canada subject to tax under the Act;
and by deducting one half the provincial duties paid by the Estate from the duty otherwise payable;
4) its costs of this Appeal.
For the reasons above expressed I decline the declaration that the assessment herein is null and void as prayed for in paragraph 20(1).
I also decline a declaration that the appellant is not liable to pay any amount under section 49 of the Dominion Succession Duty Act as prayed for in paragraph 20(2) and I also decline a declaration that the liability of the appellant under section 49 is limited to the amount of $5,000 transferred by the appellant to a beneficiary in contravention of section 49 as prayed for in paragraph 20(3)(i).
I shall not declare that the liability of the appellant shall be reduced by a reduction in the fair market value of the shares of Campbell Chibou- gamau Mines Limited and Chibougamau Mining & Smelting Co, Inc owned by the estate from the respective amounts of $8 per share and $2.65 per share as found by the Minister to have been the fair market value to lesser amounts, all as prayed for in paragraph 20(3)(ii)(a) and (b)-of the statement of claim.
I decline to do so because I have found in the appeal by the executors (as contrasted with the appeal of the Bank of New York) that the valuation by the Ministers should not be disturbed. It was agreed among the parties that the determination of this issue in the appeal of the executors would be accepted as determinative of this same issue on the appeal of the Bank of New York.
With respect to paragraph 20(3)(ii)(c) of the statement of claim I have found in the appeal of the executors that the situs of the warrants to purchase shares in Campbell Chibougamau Mines Limited do not have a situs in Canada and should be excluded from the computation of tax on assets of the estate situated in Canada.
Accordingly there shall be a declaration to that effect.
Further the appellant claims under paragraph 20(3) of its statement of claim that there shall be deducted from the duty otherwise payable one half of the duty paid to the Province of Ontario.
Paragraph 13 of the Minister’s statement of defence is as follows:
13. With reference to paragraph 19 of the Statement of Claim, the Respondent does not admit that $212,448.10 has been paid to the Province of Ontario, but concedes and is prepared to allow in computing the duty otherwise payable, an amount in respect of any duty paid to the Province of Quebec and to the Province of Ontario, calculated in accordance with the formula set forth in subsection (2) of section 12 of the Dominion Succession Duty Act.
WHEREFORE the Respondent prays:
(a) the appeal be allowed and the assessment referred back to the Respondent for the purpose of allowing as a deduction, one half of the provincial duties paid to either the Province of Ontario or the Province of Quebec;
(b) dismissing the appeal in every other respect with costs payable to the Respondent.
In assessing the appellant as he did the Minister did not allow a credit calculated in accordance with section 12 of the Dominion Succession Duty Act.
The appellant is entitled to the relief sought in paragraph 20(3) of its statement of claim.
This is admitted by the Minister but the amount of duty paid to the Province of Ontario is in dispute. No evidence was adduced in this respect. I should think that the amount so paid is readily ascertainable but it has been pointed out to me that, while the authorities of the Province of Ontario have accepted the valuation of the assets of the estate in Canada found by the Minister of National Revenue, the Province has not assessed the estate. If this is so then the duty payable by the estate has not been determined and accordingly the amount of the deduction is not ascertainable. Unless this amount can be agreed upon by the parties it may be that a reference should be directed to ascertain this amount.
The Minister, in his prayer for relief asks that the appeal be allowed and the assessment referred back to allow a deduction of one half of the Provincial duties paid, but that in all other respects the appeal should be dismissed with costs. The reason the Minister does this is for the obvious reason that if he asked that the appeal be dismissed he would be asking to deprive the appellant of relief to which he concedes it is entitled. Because the Minister has admitted the appellant’s right to relief in this respect it follows that the appellant is not entitled to its costs in this respect.
lt is my present view that because the appellant was successful only with respect to the issue as to the situs of the share purchase warrants it is entitled to its costs attributable to that issue only and that the Minister should be entitled to his costs with respect to all other issues upon which he has been successful. The issue of the situs of the share warrants was determined in the appeal of the executors, which by agreement was accepted as determinative of this issue in the appeal of the Bank of New York. Therefore there would be no costs attributable to this issue incurred at the trial.
In accordance with Rule 337 1 would direct that Counsel for the Minister shall prepare a draft of an appropriate judgment to implement the conclusions herein.
It counsel for the appellant is in agreement with the form of the draft judgment and that it conforms to my conclusions as expressed above then counsel for the Minister may move for judgment in writing under Rule 324 without the necessity of counsel appearing.
However if such consent is not forthcoming the matter may be spoken to.