Citation: 2011 TCC 290
HER MAJESTY THE QUEEN,
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
This is an appeal from
an assessment made following the settlement of an estate, the appellant having
acted as liquidator. The respondent formulated the issue as follows in
paragraph 15 of the Reply to the Notice of Appeal,
15. The only issue is whether the Minister correctly added to
the appellant's income for the 2007 taxation year the amount of $68,080.00 as
income from an office or employment.
The Minister relied on
the following assumptions of fact in making the assessment under appeal:
(a) Marcel Sauvé
appointed the appellant as one of the liquidators of his estate.
(b) Marcel Sauvé died on May 12, 2006.
(c) Article VIII of Marcel Sauvé's will
contains the following clauses:
As a token of my gratitude for the services my liquidators will be
called upon to render to my estate, whether in liquidating my estate as such or
in administering the whole or part of the property thereof, I bequeath
to Guy BOISVERT, my liquidator, as a
remunerative legacy, my property located at 472 Ste-Marie Street in Lanoraie,
Quebec, J0K 1E0, including, without exception or reservation, the land, the buildings
thereon as well as the furniture, the household effects and the contents of all
the buildings, in addition to the reimbursement of the expenses and travel
costs incurred in fulfilling his office. In the event that that property is no
longer part of my patrimony at the time of my death, however, I bequeath to
him, as a remunerative legacy, an amount of FIFTY THOUSAND DOLLARS ($50,000.00),
without interest, to be received once my estate is settled.
(d) Marcel Sauvé intended to bequeath his
property located at 472 Ste-Marie Street in Lanoraie, Quebec, J0K 1E0, in consideration
of services that the appellant would be called on to provide as liquidator of
(e) The appellant agreed to act as and did act
as liquidator of the late Marcel Sauvé's estate.
(f) On November 23, 2007, the late Marcel
Sauvé's estate transferred to the appellant the property located at 472 Ste-Marie Street in Lanoraie, Quebec, J0K
(g) In the declaration of transmission dated
November 23, 2007, the amount constituting the basis of the assessment of
transfer tax with respect to that property was $68,080.00.
(h) Accordingly, the Minister determined that
the value of that property at the time of transfer was $68,080.00.
In addition, the
parties agreed to submit a partial agreement on the facts, which reads as
The parties agree on the following facts for the sole purposes
of this appeal and without prejudice to their right to demonstrate, at the
hearing of this appeal, additional facts that are not incompatible with the
facts set out in this agreement:
1. Marcel Sauvé signed on September 3, 2004
his will, which provided for the appointment of the appellant and of Pierre
Choquette as liquidators of the estate;
Article VIII of the will provides for a
"remunerative legacy" for Guy Boisvert in the form of a property
located at 472 Ste-Marie Street in Lanoraie as well as remuneration
payable to the notary Richard Doucet for services to be rendered by him to the
Marcel Sauvé died on May 12, 2006,
The appellant agreed to be a liquidator of
Marcel Sauvé's estate,
On May 18, 2006, the appellant and Pierre
Choquette appointed Richard Doucet as "special agent" and conferred
on him the powers set out in the deed (hereinafter the "special agent
On May 18, 2006, a professional services
contract was concluded between the appellant, Pierre Choquette and Richard
Doucet, in which they mandated Richard Doucet to prepare the documents set out
in that contract (hereinafter "professional services deed"). Article
2 of the professional services deed sets out the expenses and fees to be paid
to the notary Richard Doucet for the execution of the mandate.
On July 6, 2006, the appellant sold the
deceased's 2003 Volkswagen Passat vehicle to Daniel Chevalier for $13,500.
On November 23, 2007, the property located at 472 Ste-Marie Street in Lanoraie was
transferred to the appellant through a declaration of transmission. The amount
constituting the basis of the assessment of transfer tax with respect to that
property was $68,080.
Under the special agent deed and professional
services deed, the notary Richard Doucet performed the following work, among
(a) will search with the Chambre des notaires du Québec and with the
Barreau du Québec
closing of the deceased's bank accounts
claims with life insurance companies
claim with the Régie des rentes du Québec
settling the deceased's debts
declaration of transmission for the immovable
situated at 472 Ste‑Marie Street in Lanoraie
obtaining a clearance certificate from the tax
distributing property to heirs.
For all of the services rendered, the notary
Richard Doucet billed an amount of $52,536.04 (including disbursements and taxes),
which was paid out of the estate property.
The deceased's tax returns were prepared by the
accountant Gilles Ducharme.
The only estate property the appellant disposed
of was the following:
The 2003 Volkswagen Passat
The residence located at 472 Ste-Marie Street in Lanoraie, through the
declaration of transmission dated November 23, 2007.
On June 23, 2008, the Canada Revenue Agency
issued an assessment for the appellant's 2007 taxation year, adding to his
income for that year an amount of $68,080 as income from an office or
The appellant objected to that assessment on
September 17, 2008.
On March 27, 2009, the Canada Revenue Agency confirmed
the assessment for the 2007 taxation year.
The only person who
testified was the appellant. He is a retired teacher. He stated that he and the
deceased testator had had a shared passion for all things military,
particularly the cadets program, and that that was how they had met in the mid 1970s.
Over the years, the
appellant became very good friends with the testator, whose spouse was Belgian.
The couple had had no children.
At one point, the
testator lived for long periods of time in Belgium with his spouse, who, in
turn, regularly came to Quebec in the summer.
The appellant invested
in the friendship by visiting regularly and rendering many services, but also
providing reliable, constant and enduring support to the testator to the point
where their relationship became very close and the testator confided in and
trusted the appellant. The testator told the appellant where he kept his will
and how he wanted his estate to be settled.
Moreover, on reading
the will, it becomes apparent that the testator trusted the appellant since he
conferred on him the responsibility of executing, for remuneration, his last
The appellant explained
in a vague and confused manner the work he had carried out in fulfilling the
responsibility he had expressly accepted. He spoke of a great deal of travel, of
the various tasks performed, of meetings with the notary or his assistants, of
the sale of the motor vehicle, of receiving and analyzing mail, of correspondence,
and of maintaining the property. He also arranged to have the testator's dog
euthanized. He produced an account with respect to the estate, according to
which he had travelled 10,620 kilometres, which proves that the appellant had
to carry out a certain amount of work in executing his mandate.
testimony, the appellant constantly minimized the amount of work he did,
stating several times that the notary had been given the mandate to settle
everything and that, indeed, the notary was clearly the principal executor of
evidence available established, however, that the appellant had accepted the office
and the responsibilities that came with it. Authentic deeds in certain cases
are proof of their contents. Furthermore, the appellant acknowledged his signature
making him the responsible, along with the notary, for the execution of the
notary's mandate. In hindsight, it is easy to say that the remuneration provided
for was excessive to the point where most of it should have been considered a
gift, value given for no consideration. However, it is just as easy to imagine
one or even several scenarios where the same remuneration would have been
rather modest considering the amount of work to be done. One has only to
imagine a case in which one or more heirs had challenged the validity of the
The Honourable Justice
Lucie Lamarre rendered a judgment in June 2008 in Jean-Claude Messier v. The
Queen, 2008 TCC 349,  1 C.T.C. 2557. It is true that that case was
heard under the informal procedure, but the Act is no different where the
informal procedure is involved.
As the judgment very
clearly sets out the statutory provisions that must be considered, I believe it
would be useful to reproduce them here since they are exactly the same
provisions as those that must be considered in this case:
does not appear to be contested that, if the amount is indeed remuneration for
the performance of the duties of their office as liquidators of the succession,
it is taxable in their hands. Indeed, in an old decision, the Supreme Court of
Canada held that the additional remuneration received by a legatee for the
performance of his duties as testamentary executor (the office called
"liquidator" in the new Civil Code of Québec ("Civil
Code") was taxable under the terms of the Income Tax Act
(ITA) (see MacKenzie Estate v. Canada,  S.C.R. 192).
 Such remuneration would be taxable under paragraph 3(a)
and section 5 of the ITA and under the definition of "office"
contained in section 248 of the ITA. Those provisions read as follows:
SECTION 3: Income for taxation year
The income of a taxpayer
for a taxation year for the purposes of this Part is the taxpayer’s income for
the year determined by the following rules:
the total of all amounts each of which is the taxpayer’s income for the
year (other than a taxable capital gain from the disposition of a
property) from a source inside or outside Canada, including, without
restricting the generality of the foregoing, the taxpayer’s income for the year
from each office, employment, business and property,
SECTION 5: Income from office or employment
(1) Subject to this Part, a taxpayer’s income
for a taxation year from an office or employment is the salary, wages and other
remuneration, including gratuities, received by the taxpayer in the year.
SECTION 248: Definitions
(1) In this Act,
. . .
"office" means the position of
an individual entitling the individual to a fixed or ascertainable
stipend or remuneration and includes a judicial office, the office
of a minister of the Crown, the office of a member of the Senate or
House of Commons of Canada, a member of a legislative assembly or
a member of a legislative or executive council and any other office,
the incumbent of which is elected by popular vote or is elected or
appointed in a representative capacity and also includes the position of a corporation
director, and "officer" means a person holding such an office;
 Under the Civil Code, the duties
of a liquidator do indeed constitute an office for which the liquidator may be
entitled to remuneration if he or she is already an heir and the testator
provides for remuneration. The applicable provisions of the Civil Code
are articles 783 et seq.:
II – LIQUIDATOR OF THE SUCCESSION
- DESIGNATION AND RESPONSIBILITIES OF THE LIQUIDATOR
783. Any person fully capable of exercising
his civil rights may hold the office of liquidator.
A legal person authorized by law to
administer the property of others may hold the office of liquidator.
784. No person is bound to accept the office
of liquidator of a succession unless he is the sole heir.
785. The office of liquidator devolves of
right to the heirs unless otherwise provided by a testamentary disposition; the
heirs, by majority vote, may designate the liquidator and provide the mode
of his replacement.
testator may designate one or several liquidators; he may also provide the mode
of their replacement.
A person designated by a testator to
liquidate the succession or execute his will has the quality of liquidator
whether he was designated as administrator of the succession, testamentary
executor or otherwise.
787. A person designated by a testator to
liquidate the succession or execute his will has the quality of liquidator
whether he was designated as administrator of the succession, testamentary
executor or otherwise.
If one of the liquidators is prevented
from acting, the others may perform alone acts of a conservatory nature and
acts requiring dispatch.
788. The court may, on the application of an
interested person, designate or replace a liquidator failing agreement
among the heirs or if it is impossible to appoint or replace the liquidator.
789. The liquidator is entitled to the
reimbursement of the expenses incurred in fulfilling his office.
He is entitled to remuneration if he is
not an heir; if he is an heir, he may be remunerated if the will so provides or
the heirs so agree.
If the remuneration was not fixed by the
testator, it is fixed by the heirs or, in case of disagreement among the
interested persons, by the court.
790. The liquidator is not bound to take out
insurance or to furnish other security guaranteeing the performance of his
obligations, unless the testator or the majority of the heirs demand it or the
court orders it on the application of any interested person who establishes the
need for such a measure.
If a liquidator required to furnish
security fails or refuses to do so, he forfeits his office, unless exempted by
791. Any interested person may apply to the
court for the replacement of a liquidator who is unable to assume his
responsibilities of office, who neglects his duties or who does not fulfil his
During the proceedings, the liquidator
continues to hold office unless the court decides to designate an acting
792. Where the liquidator is not designated,
delays to accept or decline the office or is to be replaced, any interested
person may apply to the court to have seals affixed, an inventory made, an acting
liquidator appointed or any other order rendered which is necessary to preserve
his rights. These measures benefit all the interested persons but create no
preference among them.
The costs of inventory and seals are
chargeable to the succession.
793. Acts performed by a person who, in good
faith, believed he was liquidator of the succession are valid and may be set up
against all persons.
 In the case at bar, the question that
arises is whether the amount of $15,000 that each of the Appellants received
constitutes remuneration for the performance of the duties of their office (a
remunerative legacy) or, rather, a particular legacy (a mere liberality)
in which case the amount received would not be taxable because it would not be
income from an office within the meaning of section 5 of the ITA.
 The best guidance in drawing this
distinction is the testator's intent, as expressed in the provision of the
will. Here is what one author has stated on the subject:
How does one distinguish between a
remunerative legacy and a mere liberality contained in a particular legacy? The
testator's intent, as expressed in the provision of the will, remains the best
guide, and it is only if the terms are worded carefully and precisely that this
intent can be understood clearly.56
56. M. Roy, "Chronique testamentaire – La
rémunération de l’exécuteur testamentaire" (1983) 5 R.P.F.S. 206-207.
 Another author writes:
Consequently, in interpreting the
provisions of the will as a whole, a certain amount of caution must be
exercised with respect to the compensation of testamentary executors. The
testator's intent is very important in this regard, and it is only through
careful drafting that this intent will emerge clearly from the terms used in a
will that provides for such remuneration.
For example, a specific legacy of $1,000
to an executor cannot be considered remuneration if the provisions of the will
as a whole do not appear to refer to the executor's office. Rather, one would
have to conclude that the legacy in question was merely a particular legacy
that stems from a truly gratuitous intent to give. The situation is
different if the will provides that the executor is entitled to a fee of $1,000
for work done as an executor. Even if the amount is not characterized as a fee,
the fact that the testator intended to condition the payment upon acceptance of
the office of executor would show that gratuitous intent was wholly lacking.
. . . . the provision of the will remains
the sole writing capable of distinguishing between a remunerative legacy and
mere liberality expressed in the form of a particular legacy . . .
In that case, the two
appellants were two of the 15 universal legatees of the estate of Raoul
Messier. The will also provided
for a whole series of particular legacies to the nieces and nephews by
marriage, and to various public institutions.
As far as the will and
its content are concerned, its provisions were similar to those in the present
Here, the appellant
maintains that the legacy is inadequately described as, in reality, it was not
a remunerative legacy but merely a particular legacy subject to some conditions
that were not very onerous.
The main argument in
support of his claims is the fact that the value of what was received by way of
the legacy, that is, the amount of the remuneration, is disproportionately
higher than the value of the work performed and services rendered. It was even suggested
that a reasonable consideration might have been around $15,000, whereas it was
determined to be almost $70,000.
argument is certainly interesting, but, on the one hand, it is definitely not
sufficient to allow the Court to find in his favour, and, on the other hand, it
implies that the Court should disregard or brush aside the content of several
clear and precise documents that are both relevant and significant with respect
to the appellant's argument.
Indeed, to begin with,
the will, an authentic deed prepared by a notary, sets out and states in a precise
and clear manner the nature and quality of the bequest to the appellant. Not
only did the appellant expressly agree to the terms and conditions of the
legacy, but he also actually performed the tasks and assumed the
responsibilities that were his and which resulted from the office he had accepted.
In hindsight, now that
his obligations have been fulfilled, it is easy to argue that the consideration
was substantially greater than the value of the services rendered. However, given
the significant assets, it is equally easy to imagine the numerous potential
problems that liquidating the estate could have involved.
The testator, in his
wisdom, being advised by a legal practitioner, set out and stated his wishes. His
ability to pay enabled him to express his gratitude through generosity.
It is not for the
appellant to question the will of the deceased or to cast doubt in particular on
the following documents:
the authentic will bearing
the Minister's number 13 663, signed before the notary Richard Doucet on
September 3, 2004;
the notarized estate
inventory bearing the Minister's number 14 619, signed by the appellant
before the notary Richard Doucet on October 16, 2006;
the declaration of
transmission signed by the appellant personally and as liquidator on November
the accounting in
services contract signed by the appellant on May 18, 2006.
As for the will, it has
the merit of being based essentially on documents prepared by a legal
practitioner with the knowledge and experience needed to express the testator's
Up to that point, the
appellant had had no input. However, on the opening of the succession, the
appellant could have renounced his legacy and thereby avoided all the consequences
inherent in that legacy. Instead, he clearly accepted it willingly and, as a
result, did all that was necessary to liquidate the estate and to be entitled
to the remuneration stipulated.
The two liquidators,
one of whom was the appellant, went through the many steps in the liquidation
process leading up to the settlement.
According to a letter
sent to the notary, everything proceeded normally and to the heirs'
The testator had high
regard and also a great deal of respect for the appellant and a colleague, who
acted as co-liquidators. The responsibility he asked them to take on was
significant and the context was special as well: the legatees were brothers,
sisters, nieces and nephews and the amount to be shared was substantial.
Given the estate assets,
which exceeded $2 million, the remunerative legacy was not unreasonable. It was
a reasonable consideration, especially if the testator had assumed that the
legacy would be taxable. Of course, this is conjecture, but I reiterate that
the will was prepared by a notary.
The characterization of
income is not based on its amount, but rather on its source: no formula or
recipe exists for determining the reasonableness of remuneration, which is very
often a function of an infinite number of particularities.
In this case, the size
of the estate to be settled, the estate's ability to pay, the testator's
generosity and the kind of relationship that existed between the appellant and
the deceased are all factors that reflect a reality that the appellant would
like to depict differently. The appellant's arguments are not very convincing;
they are rather feeble and have no legal basis, as they are founded essentially
on what he defines as reasonableness, a subjective concept interpreted by a
person strongly motivated by self-interest.
In addition, the words
used are not such as to create confusion. In a situation where a party dies after consulting a
specialist to help that party formulate the party’s last wishes with regard to
its assets, it is foolhardy for the appellant to hypothesize, especially since
his criticisms of the documents are essentially based on arguments whose basis
is rather weak and certainly not very convincing.
For these reasons, the
appeal is dismissed, with costs to the respondent.
Signed at Ottawa,
Canada, this 16th day of June 2011.
on this 31st day of August 2011.