Urie,
J.
(Mahoney,
J.
concurring):—The
sole
issue
in
this
appeal
from
a
judgment
of
the
Trial
Division
is
a
narrow
one.
That
issue
requires
the
Court
to
determine
whether
the
respondent
was
associated
with
Willmar
Window
Industries
Ltd.
(“Willmar’’)
in
its
1975,
1976
and
1977
taxation
years
within
the
meaning
of
paragraph
256(1)(e)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148,
as
amended
by
S.C.
1970-71-72,
c.
63,
s.
1,
(“the
Act”)
so
that
it
would
be
disentitled,
in
those
years,
to
the
small
business
deduction
provided
by
section
125
of
the
Act.
Briefly
stated,
the
facts,
which
have
been
agreed
upon,
are
these.
The
respondent,
which
was
incorporated
under
the
laws
of
Manitoba,
is
a
Canadian
controlled
private
corporation
for
the
purposes
of
the
Act.
It
is
a
corporate
partner
of
three
other
Manitoba
corporations
carrying
on
business
under
the
firm
name
and
style
of
C.
A.
DeFehr
&
Sons,
as
a
furniture
merchant.
The
shareholdings
in
the
respondent
were
at
all
material
times
as
follows:
|
William
Fast
|
100
shares
(20
per
cent)
|
|
Dr.
Bernhard
Fast
|
100
shares
(20
per
cent)
|
|
Cornelius
B.
Fast
|
100
shares
(20
per
cent)
|
|
Louise
Goosen
|
100
shares
(20
per
cent)
|
|
Cornelia
Dahl
|
100
shares
(20
per
cent)
|
|
Total
issued
shares
|
500
|
The
respondent
was
controlled
by
a
related
group
within
the
meaning
of
the
Act,
since
all
shareholders
are
brothers
and
sisters.
Willmar
is
also
a
Canadian
controlled
private
corporation
within
the
meaning
of
the
Act
and
was
also
incorporated
in
Manitoba.
At
all
material
times
all
of
its
issued
and
outstanding
common
shares
were
owned
as
follows:
|
William
Fast
|
150
shares
(50
per
cent)
|
|
Mrs.
William
Fast
|
150
shares
(50
per
cent)
|
|
Total
issued
shares
|
300
|
It,
too,
was
controlled
by
a
related
group,
its
two
shareholders
being
husband
and
wife.
The
respondent
and
Willmar
in
each
of
the
1975,
1976
and
1977
taxation
years
each
claimed
the
small
business
deduction
permitted
by
section
125
of
the
Act.
The
reassessments
which
were
the
subject
of
the
appeal
to
the
Trial
Division
disallowed
the
small
business
deduction
claimed
by
the
respondent
for
the
1975,
1976
and
1977
taxation
years
on
the
basis
that:
(a)
at
all
material
times
the
respondent
was
controlled
by
a
related
group,
(b)
at
all
material
times
Willmar
Ltd.
was
controlled
by
a
related
group,
(c)
each
of
the
members
of
one
of
the
related
groups
was
related
to
all
of
the
members
of
the
other
related
group,
(d)
either
of
the
related
groups
owned
directly
or
indirectly,
in
respect
of
each
corporation,
not
less
than
10
per
cent
of
the
issued
shares
of
any
class
of
the
capital
stock
thereof.
As
a
consequence,
according
to
the
Minister
of
National
Revenue
("the
Minister”),
the
respondent
was
associated
with
Willmar
within
the
meaning
of
paragraph
256(1)(e)
of
the
Act.
Therefore,
it
was
said
that
it
was
not
entitled
to
claim
the
small
business
deduction
permitted
by
section
125.
The
Tax
Review
Board
dismissed
the
respondent's
appeal
from
the
reassessments,
whereupon
it
appealed
to
the
Trial
Division.
The
appeal
was
allowed,
the
learned
trial
judge
having
held
that
the
respondent
and
Willmar
were
not
associated
corporations
within
the
meaning
of
the
Act
in
that
one
of
the
three
conditions
imposed
by
paragraph
256(1)(e)
of
the
Act
for
finding
an
association
was
not
fulfilled,
i.e.
the
condition
that
either
of
the
related
groups
own
directly
or
indirectly
in
respect
of
each
corporation,
not
less
than
10
per
cent
of
the
issued
shares
of
the
capital
stock
thereof,
of
any
class
was
not
met.
He,
therefore,
set
aside
the
reassessments
and
referred
them
back
to
the
Minister
for
reassessment
in
accordance
with
his
reasons.
It
is
from
that
judgment
that
this
appeal
is
brought.
Section
125
of
the
Act,
as
earlier
stated,
authorizes
a
Canadian
controlled
private
corporation
to
deduct
from
tax
otherwise
payable
certain
amounts
within
the
business
limits
prescribed
in
the
section
unless
the
corporation
is
associated
in
the
year
with
one
or
more
Canadian
controlled
private
corporations.
Section
256
determines
when
companies
are
associated
within
the
meaning
of
the
Act.
Paragraph
256(1
)(e)
reads
as
follows:
256.
(1)
Associated
corporations.
—
For
the
purposes
of
this
Act
one
corporation
is
associated
with
another
in
a
taxation
year
if
at
any
time
in
the
year,
(e)
each
of
the
corporations
was
controlled
by
a
related
group
and
each
of
the
members
of
one
of
the
related
groups
was
related
to
all
of
the
members
of
the
other
related
group,
and
either
of
the
related
groups
owned
directly
or
indirectly,
in
respect
of
each
corporation,
not
less
than
10%
of
the
issued
shares
of
any
class
of
the
capital
stock
thereof.
The
term
“related
group”
is
used
throughout
subsection
256(1)
and
is
defined
in
subsection
251(4)
to
mean
“.,.
.
a
group
of
persons
each
member
of
which
is
related
to
other
members
of
the
group,
.
..
It
can
be
seen
that
the
definition
recognizes
the
distinction
between
the
group
and
those
individuals
who
make
up
the
group,
i.e.
the
group
comprises
the
sum
of
its
members.
As
to
paragraph
256(1)(e),
it
can
readily
be
seen
that
for
the
respondent
to
be
found
to
be
associated
with
Willmar
three
conditions
would
have
to
have
been
fulfilled:
(1)
each
of
the
corporations
was
controlled
by
a
related
group;
(2)
each
of
the
members
of
one
of
the
related
groups
was
related
to
all
of
the
members
of
the
other
related
group;
and
(3)
either
of
the
related
groups
owned
directly
or
indirectly
in
respect
of
each
corporation,
not
less
than
10
per
cent
of
the
issued
shares
of
the
capital
stock
thereof
of
any
class.
It
is
not
disputed
that
the
first
two
conditions
of
association
were
met
in
this
case.
the
sole
issue
then
is
whether
or
not
the
third
condition
has
been
met.
The
trial
judge
correctly
stated:
“The
question
is
whether
either
related
group
owned,
in
respect
of
each
corporation,
not
less
than
10
per
cent
of
the
issued
shares
of
that
corporation”.
In
answering
the
question
in
the
negative
and
thus
finding
that
the
respondent
and
Willmar
were
not
associated,
he
said:
Mr.
William
Fast
owned
50%
of
Willmar
and
20%
of
the
plaintiff
corporation.
Mrs.
Fast
owned
50%
of
Willmar
and
nothing
at
all
of
the
plaintiff
corporation.
Then,
did
the
marital
group
consisting
of
Mr.
and
Mrs.
Fast
own
directly
or
indirectly
in
respect
of
the
plaintiff
corporation
not
less
than
10%
of
the
issued
shares
of
the
plaintiff
corporation.
Despite
the
highly
articulate
and
lucid
arguments
of
the
defendant's
counsel,
the
short
answer
to
that
question
is
“no”,
because
Mrs.
Fast
owned
none
of
the
shares
of
the
plaintiff
corporation
and,
since
a
group,
as
president
Jackett
held
in
Buckerfield's
Limited
et
al
v.
Minister
of
National
Revenue
64
D.T.C.
5301
at
5304,
means
“any
number
of
persons
from
two
to
infinity”,
it
follows
that
the
marital
group
of
two,
of
which
she
was
a
member
did
not
own
not
less
than
10%
of
the
issued
shares
of
the
plaintiff
corporation.
Her
husband,
a
member
of
that
exclusive
marital
group
owned,
in
his
own
right,
20%
of
the
shares
in
the
plaintiff
corporation,
but
since
those
shares
were
not
owned
jointly
or
in
common
or
in
any
other
species
of
partnership
with
Mrs.
Fast,
it
cannot
be
said
that
the
group
owned
them.
Only
one
of
the
members
of
the
group
owned
that
20%
and
one
human
individual
of
a
group
—
even
a
group
of
two
—
cannot
be
equated
with
the
whole
group.
In
my
opinion,
he
was
correct
in
so
finding
for
the
following
reasons.
First,
read
in
their
ordinary
and
grammatical
sense,
in
the
context
in
which
they
are
used,
the
words
are
neither
ambiguous
nor
imprecise.
In
fact
sections
251
and
256,
read
together,
provide
a
glossary
for
the
meaning
to
be
accorded
to
the
term
“related
group”
and
this
meaning
was
not
shown
to
be
at
variance
with
the
meaning
accorded
it
in
the
remainder
of
the
statute.
Given
the
complexity
of
the
Act,
it
is
difficult,
of
course,
to
state
categorically
that
in
the
context
of
the
whole
statute
the
meaning
attributable
to
it
in
the
context
of
section
256
is
consistent
with
its
use,
if
any,
in
the
remainder
of
the
statute.
But
given
the
obvious
object
for
which
section
125
was
enacted
which
appears
to
be
to
encourage
and
facilitate
the
growth
of
small
Canadian
controlled
corporate
business
enterprises
in
Canada
and
since
a
meaning
can
be
derived
from
the
immediate
context
of
the
term
in
the
section
defining
a
term
used
in
section
125,
which
is
not
inconsistent
with
the
purpose
for
which
that
section
was
enacted,
it
is
difficult
for
me
to
see
any
ambiguity
or
imprecision
in
the
term's
meaning.
The
term
“related
group”
is
used
four
times
in
paragraph
256(1
)(e).
There
can
be
no
doubt
that
in
the
first
three
instances,
it
is
referable
to
a
plurality
of
persons
making
up
the
group.
the
fourth
instance
in
which
it
is
used,
is
in
the
third
condition
of
association
imposed
by
clause
(e),
i.e.
in
the
phrase
“..
.
either
of
the
related
groups
.
.
.”
(emphasis
added).
In
its
context
“the”
can
only
relate
to
the
groups
referred
to
in
the
preceding
words
of
the
clause.
In
two
of
the
three
preceding
usages
the
members
of
the
group
are
distinguished
by
words
from
the
group
itself.
In
their
context,
then,
the
words
should
be
given
their
ordinary
meaning
which
clearly
distinguishes
a
group
as
an
entity
from
the
members
making
up
the
group.
Second,
support
is
found
for
this
interpretation
from
the
legislative
history
of
paragraph
256(1
)(e)
which
was
enacted
in
its
present
form
in
S.C.
1970-71-72,
c.
63,
and
became
effective
in
January
1972.
Its
predecessor
was
paragraph
39(4)(e)
of
the
Act.
It
read
as
follows:
39(4)
Idem.
For
the
purpose
of
this
section,
one
corporation
is
associated
with
another
in
a
taxation
year,
if
at
any
time
in
the
year,
(e)
each
of
the
corporations
was
controlled
by
a
related
group
and
each
of
the
members
of
one
of
the
related
groups
was
related
to
all
of
the
members
of
the
other
related
group,
and
one
of
the
members
of
one
of
the
related
groups
owned
directly
or
indirectly
one
or
more
shares
of
the
capital
stock
of
each
of
the
corporations.
[Emphasis
added.]
The
1972
amendment
made
two
important
changes
in
the
old
clause:
(1)
The
required
share
ownership
was
increased
from
"one
or
more
shares”
to
"not
less
than
10%
of
the
issued
shares
of
any
class
of
the
capital
stock”,
and,
for
the
purposes
of
this
appeal,
most
importantly,
(2)
The
words
"one
of
the
members
of
the
related
group
owned”
were
replaced
by
"either
of
the
related
groups
owned”.
It
must
be
accepted,
as
I
see
it,
that
Parliament
intended
to
make
the
change
in
the
wording
of
the
third
condition
in
the
paragraph
so
that
the
shareholdings
of
one
of
the
members
of
the
related
group
was
insufficient
to
fulfil
one
condition
of
association.
It
had
to
be
the
shareholding
of
the
group
itself
and,
of
course,
group
implies
more
than
one.
The
change
in
words
is
so
clear
and
unambiguous
and
the
words
contrast
so
sharply
in
form
and
concept
with
those
they
replaced,
that
I
have
difficulty
in
understanding
how
the
appellant’s
contention
can
be
taken
seriously.
If
the
intention
of
Parliament
had
been
to
change
only
the
percentage
of
shares
required
for
ownership,
as
urged
by
counsel
for
the
appellant,
it
simply
could
have
retained
the
words
“one
of
the
members”
from
the
former
provision.
It
did
not
do
so,
so
that
the
change
must
be
taken
to
have
been
for
the
purpose
of
providing
a
different
test
than
before.
Thirdly,
it
was
argued
that
a
"related
group”
is
not
a
legal
entity
and,
therefore,
it
could
not
"own”
shares.
Only
its
members
could
"own”
them.
Therefore,
it
was
said,
notwithstanding
the
use
of
the
term
“related
group”,
ownership
must
be
referable
to
its
members.
Since
William
Fast
was
a
member
of
both
groups
owning
directly
more
than
10
per
cent
of
each
corporation,
the
respondent
and
Willmar
were
associated
within
the
meaning
of
the
Act.
The
answer
to
that
submission
is,
as
I
see
it,
that
Parliament
must
be
taken
to
know
the
law
and
of
the
legal
concepts
of
ownership
notwithstanding
which,
in
clear
words,
it
chose
to
devolve
on
a
group
the
ability
to
"own”
shares
for
the
limited
purposes
of
the
Income
Tax
Act.
That
it
knew
of
the
difference
in
concepts
of
ownership
can
be
seen
in
both
paragraphs
(c)
and
(d)
of
subsection
256(1)*.
In
particular,
paragraph
(d)
refers
to
“that
person
or
that
group
of
persons
owned
.
.
.
shares
.
.
.”.
The
distinction
between
the
two
types
of
owners
is
unquestionably
shown
in
those
words.
They
are
indicative
of
Parliament
having
in
mind
that,
for
purposes
of
the
Act,
the
related
group,
as
a
non-legal
entity,
was
to
have
the
ability
to
own
shares
as
though
it
were
a
legal
entity.
In
my
view,
it
had
the
power
to
provide
the
group
with
such
an
ability,
just
as
it
has
the
power
to
deem
in
any
given
set
of
facts
that
a
certain
result
will
follow
although
without
such
a
deeming
provision
it
would
not.
Furthermore,
for
the
appellant’s
position
in
this
regard
to
prevail,
one
person
would
have
to
be
considered
a
“group".
That
this
is
not
the
meaning
to
be
given
the
word
is
found
in
the
case
of
Buckerfield's
Limited
et
al
v.
M.N.R.,
[1964]
C.T.C.
504
at
509;
64
D.T.C.
5301
at
D.T.C.
5303-4
where
Jackett,
P.
(as
he
then
was),
said:
.
.
.
The
word
“group"
in
its
ordinary
meaning,
as
I
understand
it,
can
refer
to
any
number
of
persons
from
two
to
infinity.
Since
Jackett,
P.
had
reference
to
the
word
“group"
in
the
phrase
“related
group"
in
subsection
39(4),
the
predecessor
to
subsection
256(1),
the
meaning
attributed
to
the
word
by
him
is
wholly
apposite
in
this
case.
William
Fast,
the
only
common
relative
in
each
group,
could
not
by
himself
be
a
“group".
For
all
of
the
foregoing
reasons,
I
am
of
the
opinion
that
the
trial
judge
did
not
err
in
finding
that
the
respondent
and
Willmar
were
not
associated
for
the
purpose
of
determining
the
right
of
the
respondent
to
the
Canadian
controlled
private
corporation
deduction
under
section
125
of
the
Act.
Accordingly,
I
would
dismiss
the
appeal
with
costs.
Marceau,
J.:—As
indicated
by
Mr.
Justice
Urie
in
the
opening
paragraph
of
his
reasons
for
judgment,
the
issue
raised
in
this
appeal
is
narrow
in
the
sense
that
it
is
to
be
determined
on
an
agreed
statement
of
very
simple
facts
and
involves
the
construction
of
an
apparently
straightforward
provision
of
the
Income
Tax
Act.
It
seems
to
me,
nevertheless,
that
it
is
an
issue
of
some
consequence
and
I
feel
obliged
to
explain,
with
respect,
my
disagreement
with
the
views
expressed
by
my
brother
in
regard
thereto.
The
provision
to
be
construed
is
that
contained
in
paragraph
(e)
of
subsection
256(1)
of
the
Income
Tax
Act
where
the
rules
relating
to
“associated
corporations”
are
set
out.
It
is
important
to
read
again
the
whole
subsection
so
as
to
have
clearly
in
mind
the
context,
and
I
reproduce
it
in
its
entirety:
SEC.
256.
Associated
corporations.
(1)
For
the
purposes
of
this
Act
one
corporation
is
associated
with
another
ina
taxation
year
if
at
any
time
in
the
year,
(a)
one
of
the
corporations
controlled
the
other,
(b)
both
of
the
corporations
were
controlled
by
the
same
person
or
group
of
persons,
(c)
each
of
the
corporations
was
controlled
by
one
person
and
the
person
who
controlled
one
of
the
corporations
was
related
to
the
person
who
controlled
the
other,
and
one
of
those
persons
owned
directly
or
indirectly,
in
respect
of
each
corporation,
not
less
than
10%
of
the
issued
shares
of
any
class
of
the
capital
stock
thereof,
(d)
one
of
the
corporations
was
controlled
by
one
person
and
that
person
was
related
to
each
member
of
a
group
of
persons
that
controlled
the
other
corporation,
and
that
person
or
that
group
of
persons
owned
directly
or
indirectly,
in
respect
of
each
corporation,
not
less
than
10%
of
the
issued
shares
of
any
class
of
the
capital
stock
thereof,
or
(e)
each
of
the
corporations
was
controlled
by
a
related
group
and
each
of
the
members
of
one
of
the
related
groups
was
related
to
all
of
the
members
of
the
other
related
group,
and
either
of
the
related
groups
owned
directly
or
indirectly,
in
respect
of
each
corporation,
not
less
than
10%
of
the
issued
shares
of
any
class
of
the
capital
stock
thereof.
This
notion
of
associated
corporations
was
introduced
by
Parliament,
it
will
be
remembered,
to
prevent
the
division
of
an
economic
enterprise
into
several
corporations
as
an
attempt
to
take
advantage
of
the
reduced
rate
of
tax
applicable
to
small
businesses.
Two
corporations
are
deemed
to
be
associated
with
one
another
—
and
not
both
entitled
to
the
small
business
deduction
authorized
by
section
125
of
the
Act
—
either
where
one
controls
the
other
or
they
are
both
under
common
control
(situations
referred
to
in
paragraphs
(a)
and
(b)
of
subsection
256(1)),
or
where
they
are
controlled
by
different
persons
or
groups
closely
related
to
each
other
and
there
exists
among
these
persons
or
groups
an
inter-ownership
of
shares
in
each
of
the
corporations
(situations
covered
by
paragraphs
(c),
(d)
and
(e)
of
subsection
256(1)).
It
is
an
“association”
which
depends
solely
on
the
fulfilment
of
statutory
conditions
and
exists
regardless
of
the
actual
relationship
between
the
two
businesses
carried
on
by
the
two
corporations;
but
it
is
nevertheless
an
association
based
on
reasonable
presumptions.
This
is
indeed
the
case
not
only
for
the
two
situations
described
in
paragraphs
(a)
and
(b)
but
likewise
for
the
three
others.
The
association
of
corporations
controlled
by
different
persons
or
groups
closely
related
is
in
line
with
the
provisions
of
section
251
of
the
Act
which
deem
persons
connected
by
blood
relationship
or
marriage
not
to
be
dealing
at
arm’s
length,
and
therefore
not
having
separate
economic
interests.
Mr.
Justice
Urie,
in
his
reasons,
reviews
in
detail
the
facts
of
the
case.
Repetition
is
unnecessary.
The
question
those
facts
raise
is
quite
straightforward
and
need
only
be
set
out
schematically.
The
question
is
whether
two
corporations,
at
the
time
when
all
the
issued
common
shares
of
one
were
equally
divided
between
a
husband
and
his
wife
and
all
the
issued
common
shares
of
the
other
equally
divided
between
the
husband
and
four
of
his
brothers
and
sisters,
were
associated
under
paragraph
256(1)(e).
Of
course,
the
first
two
conditions
required
for
the
application
of
the
provision
were
present:
both
corporations
were
controlled
by
related
groups
and
each
of
the
members
of
one
group
was
related
to
all
of
the
members
of
the
other
group.
It
is
the
third
one
which
causes
difficulty.
Can
it
be
said
that
“either
of
the
related
groups
owned
directly
or
indirectly,
in
respect
of
each
corporation,
not
less
than
10%
of
the
issued
shares
of
any
class
of
the
capital
stock
thereof"?
The
learned
trial
judge
expressed
the
view
that,
contrary
to
the
Minister's
contention,
it
could
not
be
said
that
this
third
condition
required
for
the
application
of
paragraph
256(1)(e)
was
met
since
the
husband
alone
was
a
shareholder
in
both
corporations.
His
reasoning,
which
is
totally
based
on
the
wording
of
the
Act
and
is
adopted
in
substance
by
Mr.
Justice
Urie,
is
essentially
the
following.
What
is
expressly
and
formally
required
by
the
text
is
that
either
of
the
related
groups
owns
shares
in
respect
of
each
corporation.
The
word
used
is
“group”
and,
in
its
grammatical
and
proper
sense,
the
word
group
refers
to
more
than
one
individual.
There
is,
of
course,
a
basic
rule
of
interpretation
which
requires
that
words
be
given
their
proper
sense
unless
the
context
strongly
requires
that
it
be
otherwise.
The
context
certainly
does
not
so
require
here,
but
if
more
positive
proof
of
that
were
needed
one
would
only
have
to
consider
that
the
word
“group"
appears
on
three
other
occasions
in
that
short
paragraph
and
always
undoubtedly
in
its
normal
meaning
referring
to
a
plurality
of
individuals:
it
is
inconceivable
that
the
fourth
time
the
word
would
have
a
different
meaning.
Besides,
when
the
law
was
changed
in
1972
to
increase,
from
one
share
to
10
per
cent
of
the
issued
shares,
the
minimum
of
inter-corporate
shareholding
required
to
establish
the
link
between
the
two
corporations,
the
words
“one
of
the
members
of
one
of
the
related
groups
owned”
were
replaced
by
the
words
“either
of
the
related
groups
owned":
such
a
change
is
so
telling
and
clear
that
it
is
simply
impossible
not
to
give
it
effect.
The
ownership
of
the
husband
alone
was
sufficient
before
the
amendment,
but
not
so
since.
Of
course,
the
main
propositions
advanced
in
this
reasoning
are
beyond
dispute.
No
one
would
ever
think
of
taking
issue
with
the
statement
that
a
group
is
more
than
one
person
and
that
the
husband
alone
cannot
constitute
a
group.
It
is
also
quite
obvious
that
there
is
absolutely
no
reason
to
think
that
Parliament
may
have
used
the
word
group
without
meaning
group.
If
I
am
not
persuaded
by
the
learned
trial
judge's
reasoning,
it
is
simply
because,
as
a
whole,
it
does
not
appear
to
me
to
address
the
issue.
The
problem
that
one
may
have,
in
reading
the
phrase
used
by
Parliament
in
defining
the
third
condition
required
for
the
application
of
paragraph
256(1)(e),
is
not
whether
the
word
“group”
therein
can
be
given
a
sense
other
than
its
grammatical
and
obvious
one:
it
clearly
cannot.
The
problem
is
rather
when,
in
the
mind
of
Parliament,
could
a
related
group
(formed
of
individual
shareholders
of
one
of
the
corporations
who,
between
them,
own
more
than
50
per
cent
of
the
shares
of
that
corporation)
be
said
to
own
shares
in
the
other
corporation.
And
this
is
so
for
a
very
compelling
reason.
Parliament,
which,
of
course,
must
be
taken
to
know
the
law,
was
quite
aware
that
none
of
the
two
related
groups
in
control
of
the
two
corporations
could,
as
a
group,
own
shares
in
a
strict
sense.
This
is
indeed
legally
impossible,
since
those
groups,
made
up
of
different
shareholders,
have
no
legal
personalities.
One
could
be
tempted
to
think
of
a
partnership
or
some
form
of
co-ownership,
but
neither
a
partnership,
which
is
merely
an
agreement
between
individuals
with
a
view
to
gain,
nor
a
co-ownership
of
any
kind
may
have
the
effect
of
setting
up
a
legal
entity
independent
of
the
partners
or
the
co-owners
and
capable
of
legally
owning
shares
by
itself.
(I
do
not
think
authority
is
needed
on
any
of
those
points
which
are
all
quite
basic
but,
in
any
event,
I
should
mention
an
interesting
discussion
thereof
in
an
article
“The
Nature
of
Corporate
Personality”
by
David
H.
Bonham
and
Daniel
A.
Soberman
appearing
in
Studies
in
Canadian
Company
Law
ed.
J.
S.
Ziegel
at
page
4
et
seq.;
as
to
the
legal
nature
of
partnership,
I
will
only
refer
to
Lindley
on
Partnership
(14th
edition)
pages
29-31).
When
Parliament
said
that
the
group
had
to
own
shares
in
each
of
the
two
corporations,
it
certainly
did
not
mean
that
the
group
as
a
group
had
to
own
in
the
legal
sense
which
would
have
been
absurd.
Parliament
necessarily
meant:
(a)
that
the
group
had
to
own
in
a
sense
other
than
the
strict
legal
sense,
and
(b)
that
that
special
so-called
ownership
attributed
to
the
group
would
come
as
a
result
of
(the
only
possibility)
personal
genuine
ownership
of
its
members.
The
only
problem
therefore
is,
as
I
put
it,
when,
in
the
mind
of
Parliament,
would
the
group,
through
personal
legal
ownership
of
its
members,
be
said
to
“own”
in
the
special
sense
in
which
this
word
“own”
is
necessarily
taken
when
used
in
reference
to
the
group.
Now,
addressing
the
real
problem,
it
seems
to
me
that
one
would
look
in
vain
in
the
wording
of
the
Act
for
an
indication
that,
for
Parliament,
before
the
group
could
be
seen
as
“owning”
shares,
all
of
its
members
or
a
certain
number
of
them
had
to
be
shareholders.
In
other
words,
if
there
is
no
question
of
the
group
becoming
owner
in
the
legal
sense,
why
would
it
be
easier
or
more
correct
to
consider
it
as
“owning”
when
all
of
its
members
are
shareholders
than
when
only
some
of
them
are
or
only
one
is.
A
simple
parallel
comes
to
mind:
when
one
says,
in
common
parlance,
that
a
family
owns
an
enterprise
or
that
a
family
has
or
owns
several
enterprises,
one
does
not
mean
that
each
and
every
member
of
that
family
has
or
owns
part
of
the
enterprise
or
part
of
each
of
the
several
enterprises.
In
my
respectful
opinion,
therefore,
the
wording
of
paragraph
265(1)(e)
does
not
lead
to
the
conclusion
that
a
requirement
for
its
application
is
that
all
of
the
members
of
either
related
group
be
shareholders
in
both
corporations.
And
I
suppose
it
goes
without
saying
that
such
a
requirement
is
certainly
not
one
that
could
be
read
into
the
provision
without
clear
words.
It
would
indeed
be
a
requirement
hardly
in
keeping
with
the
purpose
of
the
provision
which
is
clearly
designed
to
reach
corporate
structures
having
two
branches
controlled
by
related
shareholders
not
dealing
at
arm's
length,
as
soon
as
there
is
any
significant
cross-shareholding.
And
furthermore,
it
would
be
a
requirement
that
could
lead
to
quite
surprising
results.
For
example,
a
company
where
a
husband
holds
50
per
cent
of
the
shares,
his
wife
1
per
cent
and
a
stranger
49
per
cent
would
not
be
associated
with
another
company
where
the
husband
has
50
per
cent
of
the
shares,
his
son
1
per
cent
and
a
stranger
49
per
cent,
but
would,
by
way
of
contrast,
be
associated
with
a
company
in
which
the
husband
has
9
per
cent
of
the
shares,
his
wife
1
per
cent,
a
son
40
per
cent
and
a
stranger
the
balance.
Further
examples
of
such
inexplicable
results
could
easily
be
imagined
by
increasing
the
number
of
individuals
in
a
group:
in
fact
by
taking
care
to
leave
out
one
member
of
the
group
in
the
shareholding
of
each
corporation,
as
many
corporations
as
there
are
members
in
the
group
could
be
set
up.
Finally,
the
substitution
in
1972
of
the
words
"one
of
the
members
of
one
of
the
related
groups
owned
..
.”
by
the
words
“either
of
the
related
groups
owned
..
.”
cannot,
I
submit,
be
taken
as
indicative
of
a
change
of
policy
to
which
the
interpreter
would
have
to
give
effect.
The
change
was
merely
one
of
form
made
necessary
by
the
increase,
in
the
inter-corporate
shareholding
required,
from
one
share
to
10
per
cent
of
the
shares.
Obviously,
Parliament
did
not
mean
to
require
that
the
same
shareholder
be
owner
of
10
per
cent
of
the
shares
in
the
other
corporation;
the
10
per
cent
was
a
total
amongst
the
members,
so
the
text
could
not
be
left
as
it
was.
True,
it
was
not
absolutely
necessary
to
delete
words,
since
the
point
could
have
been
covered
simply
by
adding
words,
but
then
a
long
paraphrase
would
have
resulted
such
as:
"one
of
the
members
of
one
of
the
related
groups
owned
or
any
number
of
members
of
that
related
group
amongst
them
owned".
I
am
afraid
that,
like
the
drafters
of
the
Bill,
I
would
have
failed
to
anticipate
this
trial
and
would
have
suggested
the
short
solution
which
Parliament
retained.
In
my
respectful
opinion,
the
trial
judge
has
misread
this
paragraph
256(1
)(e)
and
I
would
have
quashed
his
decision.
Appeal
dismissed.
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