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
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).
|
Bough£
|
Sold
|
|
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
|
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.
|
,
|
|
|
AVERAGE
|
|
YEAR
|
SHARES
|
TOTAL
|
|
PRICE
|
|
1957
|
20,845
|
$
95,915.90
|
|
$4.60
|
|
1958
|
123,000
|
$
779,173.18
|
0
|
$6.33
|
|
1959
|
107,940
|
$
831,895.44
|
|
$7.70
|
|
1960
|
108,760
6/8
|
s
657,563.62
|
|
$6.08
|
|
1981
|
i-
42,814
|
$
328,929.88
|
|
$7.68
|
|
403,359
6/8
|
$2,693,478.02
|
|
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,
[1929]
SCR
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,
[1963]
Ex
CR
348
at
365;
[1963]
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,
[1965]
1
Ex
CR
64;
[1964]
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,
[1966]
Ex
CR
212;
[1965]
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.
He
continues,
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
1,1960.
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,
[1925]
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,
[1923]
SCR
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,
[1931]
SCR
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
executor.
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
means.
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,
[1899]
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
aw.
.
.
.
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,
[1903]
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,
[1963]
SCR
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,
[1967]
1
Ex
CR
101;
[1966]
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.
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