Kempo,
T.C.J.:—
This
appeal
was
in
respect
of
the
respondent's
reassessment
of
tax
for
the
appellant's
1982
taxation
year.
The
core
issue
to
be
determined
here
concerned
whether
the
“roll-over”
provisions
of
subsection
70(6)
of
the
Income
Tax
Act
(the
"ITA")
are
applicable
with
respect
to
three
out
of
a
total
of
nine
one-quarter
sections
of
land
transferred
to
the
deceased's
surviving
spouse,
Phyllis
May.
The
respondent
by
way
of
amended
reply
to
notice
of
appeal,
filed,
has
conceded
that
the
appeal
should
be
allowed
to
the
extent
that
six
one-quarter
sections
out
of
the
nine
had
been
transferred
to
her
by
virtue
of
subsection
70(6)
of
the
ITA
and
that
the
capital
gain
should
be
reduced
to
$160,488
from
$302,700
as
previously
assessed.
By
written
submissions
counsel
for
the
respondent
admits
that,
for
the
purposes
of
the
said
subsection,
the
three
one-quarter
sections
(the
"subject
lands")
were
transferred
to
Phyllis
May
as
a
consequence
of
the
death
of
her
husband.
However,
he
disputes
appellant-counsel's
assertion
that
it
was
an
asset
belonging
to
her
by
virtue
of
provincial
legislation
so
as
to
remove
it
from
the
consideration
of
the
ITA,
and
further
submits
that
it
had
not,
in
any
event,
vested
indefeasibly
in
her
as
required
by
subsection
70(6)
of
the
ITA.
No
viva
voce
evidence
was
called.
Counsel
have
submitted
the
case
by
way
of
a
written
agreed
statement
of
facts
(Exhibit
A-1),
the
filing
of
documents
(Exhibits
A-2
to
A-6
inclusive)
and
written
submissions.
The
statement
of
facts
reads
thusly:
STATEMENT
OF
FACTS
1.
WILBERT
A.
MAY
died
on
May
18,
1982
and
at
the
time
of
his
death
he
was
a
resident
of
the
Province
of
Saskatchewan.
2.
The
deceased
left
a
holographic
Will
as
his
Last
Will
and
Testament
which
named
Phyllis
May,
his
spouse;
Gerald
May
and
Keith
May,
his
brothers;
and
Joyce
Bowerman,
his
sister;
as
Executors.
3.
The
said
Will
was
probated
by
Order
of
the
Surrogate
Court
of
Saskatchewan
made
on
June
21,
1984
and
the
administration
of
all
of
the
deceased's
property
was
granted
to
the
four
named
Executors.
4.
Due
to
the
uncertainty
in
the
Will,
the
widow,
Phyllis
May,
commenced
an
action
in
the
Unified
Family
Court
on
the
19th
day
of
June,
A.D.,
1984
for
an
Order
pursuant
to
the
Matrimonial
Property
Act
S.S.
1979
c.
M-6.1
to
have
all
the
farm
assets
of
the
deceased
declared
to
be
matrimonial
property.
5.
On
April
9,
1986,
the
morning
of
the
trial
between
Phyllis
May
and
the
other
Executors
a
settlement
was
reached
and
the
terms
of
this
settlement
were
set
out
in
the
Agreement
dated
May
3,
1986
and
executed
by
the
respective
parties
on
June
3,
1986.
6.
On
April
9,
1986
an
Order
of
Mr.
Justice
J.S.
Gagné
was
dated
and
was
taken
out
on
December
11,
1986.
The
Order
pursuant
to
The
Matrimonial
Property
Act
gave
all
the
farm
assets
to
the
widow.
At
the
same
time,
the
said
Justice
handed
down
an
Order
pursuant
to
The
Surrogate
Court
Act
R.S.S.
1978
c.
S-66
whereby
he
declared
the
interest
of
Gerald
May,
Keith
May
and
Joyce
Bowerman
was
$256,000.00
and
the
remainder
belonged
to
Phyllis
May.
7.
The
Department
of
Revenue
assessed
the
1982
estate
return
of
Wilbert
A.
May
on
May
30,
1986
claiming
capital
gains
payable
on
75%
of
the
farm
land.
The
Department
has
since
revised
its
position
and
are
now
claiming
capital
gains
only
on
the
quarters
of
land
specified
in
the
said
Agreement.
8.
Phyllis
May
has
since
become
the
registered
owner
of
all
of
the
farm
land
formerly
owned
by
the
deceased.
Phyllis
May
and
the
deceased
farmed
the
land
prior
to
the
latter's
death
and
she
continued
to
operate
the
farm
during
the
ensuing
court
battle
and
well
past
the
date
of
the
assessment.
Both
orders
of
Justice
Gagné
referred
to
in
paragraph
6
of
the
statement
of
facts
were
given
in
the
causes
brought
by
Phyllis
Edith
May
as
applicant
and
Phyllis
May,
Keith
May,
Gerald
May
and
Joyce
Bowerman,
Executors
of
the
Estate
of
W.A.
(Bud)
May,
as
respondents.
Both
orders
issued
out
of
the
Saskatchewan
Unified
Family
Court,
both
were
signed
by
the
Deputy
Local
Registrar
and
both
were
"issued"
by
him
on
December
11,
1986.
They
read
as
follows:
BEFORE
THE
HONOURABLE
)
WEDNESDAY,
THE
9TH
DAY
OF
MR.
JUSTICE
J.S.
GAGNE
)
IN
CHAMBERS
)
APRIL,
A.D.
1986.
ORDER
IT
IS
HEREBY
ORDERED,
DIRECTED
AND
ADJUDGED
THAT:
1.
Pursuant
to
The
Surrogate
Court
Act,
R.S.S.
1978,
c.
S-66,
and
on
the
motion
made
by
Gerald
May,
Keith
May
and
Joyce
Bowerman,
this
court
does
determine
that
the
beneficial
interests
arising
under
the
Last
Will
and
Testament
of
W.A.
(Bud)
May
shall
be:
(a)
To
Gerald
May,
Joyce
Bowerman
and
Keith
May,
the
sum
of
Two
Hundred
and
Sixty-five
Thousand
($265,000.00)
Dollars,
in
equal
shares;
(b)
To
Phyllis
Edith
May,
all
of
the
remainder.
2.
Gerald
May,
Joyce
Bowerman
and
Keith
May
shall
be
and
they
are
hereby
removed
as
Executors
of
the
estate
without
claim
to
or
right
of
Executor's
fees.
3.
Passing
of
accounts
on
the
part
of
Phyllis
Edith
May
as
the
sole
remaining
Executor
be
and
is
hereby
dispensed
with.
ISSUED
AT
SASKATOON,
SASKATCHEWAN,
DECEMBER
11,
1986.
"Seal''
"C.
Jerome"
Deputy
Local
Registrar
BEFORE
THE
HONOURABLE
)
WEDNESDAY,
THE
9TH
DAY
OF
MR.
JUSTICE
J.S.
GAGNE
)
IN
CHAMBERS
)
APRIL,
A.D.
1966.
ORDER
IT
IS
HEREBY
ORDERED,
DIRECTED
AND
ADJUDGED
THAT:
1.
Pursuant
to
The
Matrimonial
Property
Act,
Stat.
Sask.
1979,
c.
M-6.1,
the
following
matrimonial
property
be
and
it
is
hereby
vested
in
the
Applicant,
Phyllis
Edith
May:
[hereafter
followed
the
legal
descriptions
of
all
nine
one-quarter
parcels
of
land
which
included
the
subject
three
one-quarter
parcels
in
dispute]
(b)
All
farm
machinery
owned
by
the
late
W.A.
(Bud)
May
as
at
the
date
of
his
death
and/or
the
estate
of
W.A.
(Bud)
May
and
including
machinery
described
in
Schedule
“A”
attached
hereto
and
forming
part
of
the
within
Order;
(c)
Buildings
situate
on
each
of
Parcels
1
inclusive
of
Parcel
6;
(d)
Inventories
of
grain
and
field
crops
on
hand
as
of
the
date
of
death
of
W.A.
(Bud)
May;
(e)
All
matrimonial
property
in
the
possession
of
Phyllis
Edith
May
as
at
the
date
of
death
of
W.A.
(Bud)
May.
2.
Willard
Page,
Yvonne
Moore
and
David
McQueen,
shall
be
served
with
a
copy
of
this
Order
on
its
issuance.
ISSUED
AT
SASKATOON,
SASKATCHEWAN,
DECEMBER
11,
1986.
"C.
Jerome”
Deputy
Local
Registrar
The
agreement
alluded
to
in
paragraph
5
of
the
agreed
statement
of
facts
was
marked
as
Exhibit
A-5.
Because
much
of
the
case
turns
on
this
agreement,
it
is
to
be
fully
reproduced:
THIS
AGREEMENT
made
the
3rd
day
of
June,
A.D.
1986.
BETWEEN
PHYLLIS
MAY
as
Grantor
AND
GERALD
MAY,
KEITH
MAY
and
JOYCE
BOWERMAN
as
Grantee
WHEREAS
the
parties
hereto
have
reached
a
settlement
and
agreed
to
a
consent
order
in
connection
with
Unified
Family
Court
Action
No.
517
of
1984,
Judicial
Centre
of
Saskatoon;
AND
WHEREAS
it
is
a
condition
of
obtaining
the
consents
of
Gerald
May,
Keith
May
and
Joyce
Bowerman
to
the
said
settlement
that
they
be
granted
certain
rights
with
respect
to
certain
lands,
which
said
lands
shall
be
ordered
to
vest
in
the
Grantor
as
part
of
this
said
settlement;
AND
WHEREAS
the
Grantor
has
agreed
in
consideration
of
the
settlement
reached,
to
convey
certain
rights
in
these
said
lands
to
the
Grantee;
NOW
THEREFORE
it
is
hereby
agreed
as
follows:
Right
of
First
Refusal
1.
The
Grantee
(which
expression
shall
include
any
one
of
or
combination
of
Gerald
May,
Keith
May
and
Joyce
Bowerman)
shall
have
an
irrevocable
right
of
first
refusal
with
respect
to
any
bona
fide
offer
to
purchase
certain
lands
hereinafter
described
or
any
portion
thereof,
which
offer
the
Grantor
is
prepared
to
accept,
these
certain
lands
being
legally
described
as
follows:
N
1/2
36-33-12-W3rd
NW
26-33-12-W3rd
(hereinafter
referred
to
as
the
said
lands).
2.
This
right
of
first
refusal
is
granted
to
the
Grantee
and
shall
be
irrevocable,
during
the
lifetime
of
the
Grantor.
3.
The
Grantee
shall
be
deemed
as
against
the
Grantor
to
have
an
interest
in
the
said
lands
and
shall
be
entitled
to
register
and
maintain
a
caveat
against
the
said
lands,
during
the
currency
of
this
agreement.
4.
Subject
to
paragraphs
6,
7,
8
and
9
hereof,
if,
during
the
term
of
this
agreement,
the
Grantor
shall
receive
a
bona
fide
offer
to
purchase
the
said
lands
or
any
portion
thereof
from
a
third
party,
which
offer
the
Grantor
is
ready,
willing
and
able
to
accept,
the
Grantor
agrees
to
communicate
every
such
offer
to
the
Grantee
forthwith
by
delivering
a
notice
in
writing
which
shall
fully
set
forth
such
offer
and
the
terms
thereof.
The
said
notice
shall
thereby
be
deemed
to
be
an
offer
by
the
Grantor
to
sell
the
said
lands
to
the
Grantee
free
and
clear
of
all
encumbrances
on
the
terms
set
out
in
the
said
notice
and
the
Grantee
shall
have
20
days
from
the
date
of
receipt
of
such
notice
to
accept
said
offer
to
sell.
5.
In
the
event
that
the
Grantee
does
not
accept
said
offer
to
sell
then
this
agreement
shall
no
longer
bind
the
parties
with
respect
to
such
portion
of
the
lands
as
is
covered
by
the
terms
of
the
said
offer
to
sell,
and
the
Grantee
shall
remove
his
caveat
from
such
portion
of
the
said
lands
as
was
covered
by
the
terms
of
the
said
offer
or
the
Grantor
may
lapse
the
said
caveat
from
such
portion
of
the
said
lands.
Right
of
First
Refusal
Convertible
into
Option
to
Purchase
6.
In
the
event
that
the
Grantor
receives
a
bona
fide
offer
to
purchase
from
a
third
party,
as
set
out
in
paragraph
4
hereof,
which
offer
the
Grantor
is
ready,
willing
and
able
to
accept,
and
the
Grantor
does
not
communicate
said
offer
to
the
Grantee
forthwith
prior
to
accepting
said
offer
or
in
the
event
that
the
Grantor
or
any
person
or
corporation
takes
any
proceedings
to
remove
the
caveat
of
the
Grantee
filed
to
protect
their
rights
hereunder,
then
this
agreement
shall
be
deemed
converted
into
a
binding
option
to
purchase
agreement
as
of
one
day
prior
to
the
day
on
which
the
Grantor
accepts
said
offer,
or
proceedings
are
commenced
to
remove
the
said
caveat,
and
on
the
following
terms,
which
terms
shall
only
bind
the
parties
in
such
event:
OPTION
TO
PURCHASE
(a)
In
consideration
of
the
settlement
arrangement
reached
in
connection
with
U.F.C.
No.
517
of
1984,
Judicial
Centre
of
Saskatoon,
Phyllis
May,
hereinafter
throughout
paragraph
6
referred
to
as
the
vendor
grants
to
Gerald
May,
Keith
May
and
Joyce
Bowerman
(or
any
one
of
or
combination
of
them)
hereinafter
throughout
paragraph
6
referred
to
as
the
purchaser
the
irrevocable
option
during
the
lifetime
of
the
Vendor
and
up
to
60
days
after
her
death
to
purchase
the
vendor's
property
known
as:
N
1/2
36-33-12-W3rd
NW
26-33-12-W3
rd
for
a
purchase
price
determinable
and
payable
as
follows:
(i)
the
purchase
price
shall
be
equal
to
the
fair
market
value
of
the
land
as
at
the
date
of
notification
of
the
exercise
of
this
option.
The
fair
market
value
of
the
land
shall
be
deemed
to
be
the
appraised
value
of
the
land
as
determined
by
an
appraisal,
to
be
completed
as
at
the
said
date
of
notification,
by
a
certified
appraiser
to
be
chosen
by
the
purchaser;
(ii)
the
purchase
price
shall
be
paid
as
follows:
(A)
$1,000.00
upon
notification
of
the
exercise
of
this
option;
(B)
the
balance
of
the
purchase
price
within
60
days
of
notification.
(iii)
in
the
event
that
paragraph
(a)(i)
shall
be
held
to
be
invalid
or
unenforceable
by
a
court
of
competent
jurisdiction
then
the
purchase
price
hereunder
shall
be
determined
by
arbitration
and
the
provisions
of
the
Saskatchewan
Arbitration
Act
shall
apply
and
the
closing
date
of
the
sale
in
such
case
shall
be
60
days
after
completion
of
arbitration
notwithstanding
paragraph
(e)(iii)
hereof
and
the
balance
of
the
purchase
price
shall
be
due
at
said
closing
date.
(b)
From
the
date
that
the
within
option
becomes
operative,
the
vendor
shall
not
further
encumber
the
property.
(c)
This
option
is
exercisable
by
notice
in
writing
delivered
or
mailed
postage
prepaid
or
telegraphed
prepaid
to
the
vendor.
(d)
In
the
event
that
the
terms
of
this
option
become
operative,
the
purchaser
may
assign
this
option
with
the
consent
of
the
vendor
in
writing
first
had
and
obtained
which
consent
shall
not
be
unreasonably
withheld.
(e)
Upon
this
option
being
exercised,
the
following
shall
be
the
terms
of
the
agreement
of
purchase
and
sale
of
the
property:
(i)
The
purchase
price
for
the
property
shall
be
paid
on
the
date
of
completion,
subject
to
the
usual
adjustments.
The
amount
of
the
deposit
shall
be
credited
to
the
purchase
price.
(ii)
The
purchase
price
shall
include
all
fixtures
attached
to
the
said
lands.
(iii)
The
sale
shall
be
completed
60
days
after
the
date
of
delivering
of
the
notice
given
in
connection
with
the
exercise
of
the
option,
unless
by
such
date
the
appraisal
required
by
paragraph
a(i)
hereof
shall
be
incomplete,
in
which
case
the
said
appraisal
shall
be
completed
at
the
earliest
reasonable
date
and
the
sale
shall
be
completed
60
days
thereafter.
(iv)
Vacant
possession
shall
be
given
on
the
date
of
completion.
(v)
The
title
of
the
property
shall
be
good
and
free
from
all
encumbrances
except
as
to
any
registered
restrictive
covenants
and
municipal
by-laws
or
other
governmental
enactments,
providing
such
are
complied
with.
(vi)
The
purchaser
is
not
to
call
for
the
production
of
any
title
deed,
survey
or
other
evidence
of
title,
except
as
may
be
in
the
possession
of
the
vendor.
(vii)
The
property
and
other
items
to
be
purchased
shall
remain
at
the
risk
of
the
vendor
pending
completion.
An
insurance
policy
or
policies
covering
the
property
will
be
maintained
in
good
standing
by
the
vendor
until
closing
with
a
face
value
of
not
less
than
the
fair
market
value
of
the
insurable
property
covered
by
the
terms
of
this
agreement
and
located
on
the
NE
36-33-12-W3rd.
The
vendor
shall
notify
the
purchaser
upon
request
of
the
particulars
of
the
insurance
on
the
property.
In
the
event
of
loss,
destruction
or
damage,
the
proceeds
of
the
insurance
shall
be
held
in
trust
for
the
parties
hereto
as
their
interest
may
appear.
In
the
event
of
substantial
damage
to
the
property,
the
purchaser
may
elect
to
accept
the
proceeds
of
the
insurance
and
complete
the
purchase,
or
to
cancel
this
agreement
and
receive
back
the
deposit.
(viii)
There
are
no
representations,
warranties,
collateral
agreements
or
conditions
relating
to
the
property
except
as
specified
herein.
(ix)
Documents
necessary
to
transfer
title
shall
be
prepared
by
the
purchaser's
solicitor.
The
purchaser
shall
be
responsible
for
all
Land
Titles
registration
charges.
(x)
Tender
of
documents
and/or
money
may
be
made
upon
the
Vendor
by
delivering
the
same
to
the
solicitor
for
the
Vendor
and
payment
of
money
may
be
made
by
solicitor's
trust
cheque
or
certified
cheque
or
bank
draft.
(xi)
Time
shall
be
of
the
essence
of
the
option
and
of
this
agreement.
Irrevocable
Assignment
7.
In
the
event
that
the
Grantor
accepts
a
bona
fide
offer
to
purchase
the
said
lands
from
a
third
party
without
first
offering
to
sell
the
said
lands
to
the
Grantee
as
hereinabove
set
out,
and
in
the
event
that
the
convertible
option
agreement
hereinabove
set
out
in
paragraph
6
should
be
declared
unenforceable
or
invalid
by
a
court
of
competent
jurisdiction
such
that
the
Grantee's
caveat
filed
to
protect
their
rights
under
this
agreement
would
be
held
not
to
protect
the
rights
of
the
Grantee
conferred
hereunder,
in
priority
to
the
interests
or
rights
of
the
third
party
offering
to
purchase
from
the
Grantor,
or
any
other
third
party,
then
it
is
agreed
that
the
Grantor
shall
be
deemed
trustee
of
the
proceeds
of
any
such
sale,
for
the
benefit
of
the
Grantee
hereunder,
and
the
Grantor
hereby
irrevocably
assigns
the
sale
proceeds
of
the
said
lands
herein
described
to
the
Grantee
hereunder,
and
it
is
agreed
that
this
assignment
shall
be
registered
in
the
P.P.S.A.
Registry
for
the
Province
of
Saskatchewan.
Covenant
to
Devise
Lands
to
Grantee
8.
If
this
agreement
is
still
in
force
at
the
date
of
the
death
of
the
Grantor,
then
the
Grantor
hereby
irrevocably
covenants
and
agrees
to
devise
the
lands
hereinabove
described
in
paragraph
1
to
the
Grantee,
in
equal
shares
per
stirpes,
according
to
the
terms
of
her
last
will
and
testament,
free
and
clear
of
all
encumbrances.
Sale
One
Day
Prior
to
Death
of
Grantor
9.
If
this
agreement
is
still
in
force
at
the
date
of
the
death
of
the
Grantor
and
the
Grantor
does
not
leave
a
last
will
and
testament
under
the
terms
of
which
the
said
lands
are
devised
to
the
Grantee
such
that
they
will
inherit
the
said
lands
free
and
clear
of
all
encumbrances,
then
it
is
agreed
that
the
land
shall
be
deemed
to
have
been
sold
to
the
Grantee
one
day
prior
to
the
death
of
the
Grantor
on
the
same
terms
as
are
set
out
above
to
apply
in
the
event
of
the
exercise
of
the
option
to
purchase
referred
to
in
paragraph
6
above,
save
and
except
that
the
purchase
price
for
the
said
lands
in
such
event
shall
be
$5.00
and
the
amount
to
be
paid
upon
notification
shall
be
$1.00.
10.
In
the
event
that
paragraph
9
hereof
shall
be
unenforceable
for
any
reason,
then
the
Grantee
may
elect
to
inherit
the
said
lands
through
the
estate
of
the
Grantor
under
the
provisions
of
paragraph
8
above,
notwithstanding
that
the
said
lands
may
not
be
inherited
free
and
clear
of
all
encumbrances.
11.
Notices
to
be
given
under
this
agreement
may
be
delivered
to
the
Grantor
at
the
following
address:
Stuart
Busse
Law
Office
P.O.
Box
669
Biggar,
Saskatchewan
SOK
0M0
or
such
other
address
as
the
Grantor
may
notify
the
Grantee
of
in
writing
from
time
to
time
during
the
currency
of
this
agreement.
12.
This
agreement
shall
bind
the
parties
hereto,
their
executors
and
assigns.
IN
WITNESS
WHEREOF
the
parties
hereto
have
hereunder
affixed
their
hand
and
seals
this
3rd
day
of
June,
A.D.
1986.
[Signatures
and
Affidavit
of
Execution
omitted]
Also
encompassed
in
the
above
was
a
document
dated
December
16,
1986
addressed
to
the
Registrar
of
the
Saskatoon
Land
Registration
District
giving
notice
of
a
claim
by
the
grantees
of
their
interest
in
the
subject
land.
The
Exhibit
A-5
Agreement
and
notice
was
received
and
registered
in
the
land
titles
office
on
December
17,
1986
as
number
86
S
51997
and
it
appeared
as
a
caveat
on
Phyllis
May's
title
to
the
subject
land.
Counsel
for
the
respondent
has
tendered
the
following
items
of
note
as
evidenced
by
the
exhibits:
I.
As
stated
in
the
preamble
to
the
Agreement
dated
May
3,
1986,
a
condition
of
obtaining
the
consents
of
Gerald
May,
Keith
May
and
Joyce
Bowerman
to
the
said
settlement
was
that
they
be
granted
certain
rights
with
respect
to
certain
lands.
The
Agreement
dated
May
30,
1986,
was
registered
as
a
caveat
against
the
land.
The
registration
of
the
caveat
predated
the
Court
Order
issued
on
December
11,
1986,
and
also
predated
the
transfer
of
the
lands
to
Phyllis
May.
ll.
The
preamble
of
the
Agreement
dated
May
3,
1986,
also
states
"which
lands
shall
be
ordered
to
vest
in
the
Grantor
(Phyllis
May)
as
part
of
this
said
settlement".
III.
The
Agreement
which
was
entered
into
by
Phyllis
May
granted
a
right
of
first
refusal
to
the
other
parties
to
the
Agreement,
which
right
was
convertible
into
an
option
to
purchase
if
certain
conditions
were
met.
In
certain
circumstances
it
was
also
convertible
into
an
assignment
of
proceeds
if
the
property
was
sold.
Finally,
it
provided
that,
should
the
property
not
be
sold,
Phyllis
May
would
devise
it
to
the
other
parties
to
the
Agreement.
If
Phyllis
May
failed
to
prepare
a
Will
the
Agreement
(Clause
9)
provides
that
the
property
shall
be
deemed
to
have
been
sold
to
the
other
parties
to
the
Agreement
one
day
prior
to
Phyllis
May's
death
for
the
sum
of
five
dollars.
($5.00).
In
his
written
reply,
counsel
for
the
appellant
did
not
take
issue
with
the
accuracy
of
the
additional
factual
allegations
set
out
in
item
I.
However
I
have
noted
from
the
documents
filed
in
the
cause
that
they
do
not
support
the
allegation
that
registration
of
the
Caveat
had
"predated"
the
court
order
dated
December
11,
1986.
Indeed,
according
to
Exhibit
A-5,
supra,
registration
of
the
caveat
was
effected
on
December
17,
1986
which
factually
postdated
the
order
given
on
April
9,
1986
and
issued
on
December
11,
1986.
Analysis
In
this
case,
and
for
the
reasons
hereinafter
mentioned,
it
is
not
necessary
for
me
to
determine
whether,
by
virtue
of
the
Saskatchewan
Matrimonial
Property
Act
(the
“MPA”),
Phyllis
May
had
an
ownership
interest
in
the
subject
lands
prior
to
her
husband's
death,
or
whether
clause
35(e)
of
the
MPA,
infra,
would
have
been
applicable
to
the
facts
and
thus
ultimately
determinative
of
the
issue.
As
to
the
former,
and
without
deciding,
it
seems
to
me
that
since
identification
of
matrimonial
property
and
its
net
value
is
to
be
determined
as
of
the
date
of
the
MPA
application
(clause
2(h)),
that
since
full
ownership
rights
respecting
property
are
unfettered
until
an
order
thereunder
is
made
(section
43),
and
that
since
the
vesting
of
any
property
follows
only
upon
the
making
of
an
order,
any
in
rem
right
to
or
ownership
of
property
in
specie
in
favour
of
the
non
legal-owning
spouse
would
not
arise
prior
to
any
order
being
made
to
that
effect.
However
I
am
not
prepared
to
decide
that
issue
inasmuch
as
the
effect
of
subsection
50(1)
of
the
MPA
was
not
raised
or
argued.
It
provides:
50
(1)
The
rule
of
law
applying
a
presumption
of
advancement
in
question
dealing
with
the
ownership
of
property
as
between
husband
and
wife
is
hereby
abolished,
and
in
its
place
the
rule
of
law
applying
a
presumption
of
a
resulting
trust
shall
be
applied
in
the
same
manner
as
if
they
were
not
married.
See
also
Donkin
v.
Bugoy,
[1985]
2
S.C.R.
85;
[1985]
6
W.W.R.
97
(S.C.C.)
as
to
the
obiter
observation
of
Estey,
J.
at
107
that
it
may
be
possible
that
this
provision
of
the
MPA,
when
taken
in
conjunction
with
the
ITA,
could
possibly
relieve
the
parties
from
any
immediate
fiscal
consequences
in
the
event
of
a
distribution
in
specie
of
the
matrimonial
assets.
As
to
the
latter,
and
again
without
deciding,
clause
35(e)
of
the
MPA
provides:
35.
Money
paid
or
property
transferred
to
a
surviving
spouse
under
a
matrimonial
property
order
is
deemed
never
to
have
been
part
of
the
estate
of
the
deceased
spouse
where
a
claim
is
made
against
the
estate
(e)
by
any
creditor
of
the
deceased
spouse
or
of
the
estate
except
where
the
court
directs
otherwise
in
the
matrimonial
property
order.
Counsel
for
the
appellant
submitted
that
by
virtue
of
the
reassessment
the
respondent
was
a
creditor
of
the
estate
and
that
this
provision
of
the
MPA
is
a
complete
answer
to
the
reassessment.
Counsel
for
the
respondent
retorted
that
the
MPA
order
given
by
Justice
Gagné
operated
as
that
exception
specified
in
clause
35(e).
In
my
view
the
whole
matter
turns
on
the
Orders
given
by
Justice
Gagné.
This
is
substantively
where
the
real
issue
lies
and
from
which
the
legal
determination
in
this
case
is
to
flow.
Paragraphs
8
and
9
of
respondent-counsel's
written
submissions
presented
the
following
positions
for
consideration:
8.
Rule
467
of
the
Queen’s
Bench
Rules
of
Saskatchewan
states
in
subsection
2
that:
Every
order,
if
and
when
drawn
up,
shall
be
dated
the
day
of
the
week,
month
and
year
on
which
the
same
was
made,
unless
the
Court
shall
otherwise
direct,
and
shall
take
effect
accordingly.
This
Rule
has
operation
with
respect
to
orders
issued
on
motions
and
applications
before
the
Court.
It
is
further
stated
in
Rule
337.
Where
any
judgment
is
pronounced
the
entry
of
judgment
shall
be
dated
as
of
the
day
on
which
such
judgment
is
pronounced,
unless
the
Court
shall
otherwise
order,
and
the
judgment
shall
take
effect
from
that
day.
Provided
that,
by
special
leave
of
the
Court,
a
judgment
may
be
ante-dated
or
post-dated.
Rule
338
In
all
other
cases
not
within
the
last
proceeding
Rule,
the
entry
of
judgment
shall
be
dated
as
of
the
day
on
which
the
requisite
documents
are
left
with
the
proper
officer
for
the
purpose
of
such
entry
and
the
judgment
shall
take
effect
from
that
date.
Section
4
of
the
Surrogate
Court
Rules
incorporate
the
Queen's
Bench
Rules
and
Section
1
of
the
Unified
Family
Court
Rules
also
indicates
that
the
Queen's
Bench
Rules
apply.
9.
It
is
respectfully
submitted
that
as
a
result
of
the
operation
of
the
above
Rules
of
the
Saskatchewan
Court
of
Queen's
Bench,
the
date
of
the
order
must
be
taken
to
be
December
11,
1986.
It
is
submitted
that,
although
the
matter
may
have
come
before
the
Honourable
Mr.
Justice
J.S.
Gagné
on
April
9th,
1986,
the
order
was
aenot
issued
until
such
time
as
indicated
on
the
order
being
the
date
of
December
Tith,
1986.
It
is
submitted
that
until
such
time
as
the
order
was
issued
the
property,
which
was
vested
in
Phyllis
Edith
May
as
a
result
thereof,
was
the
property
of
the
Estate.
With
the
greatest
respect,
I
disagree
with
the
conclusion
drawn
by
counsel
in
paragraph
9.
The
principle
has
been
succinctly
put
at
page
1025
of
R31C
Can.
Abr.
(2nd)
thusly:
6804.
The
principle
which
makes
the
order,
whenever
drawn
up
and
entered,
to
bear
date
on
the
day
when
it
is
pronounced
by
the
Court
conforms
with
the
whole
theory
of
judicial
procedure,
the
theory
is
that
the
cogent
and
binding
effect
of
the
order
begins
immediately
from
the
time
when
the
order
is
pronounced
by
the
lips
of
the
Judge,
and
if
that
could
be
done
physically
which
legally
is
supposed
to
be
done
every
order
would
be
completed
on
the
spot,
written
out
by
the
judicial
officer
and
in
curia
before
the
Court
rises,
and
delivered
to
the
parties.
Danielson
v.
Thordarson,
[1930]
3
W.W.R.
104,
.
.
.
(Man.
CA.).
6808.
A
judgment
is
an
effective
judgment
from
the
day
when
it
is
pronounced
by
the
Judge
in
Court.
Int.
Harvester
Co.
v.
McCurrach,
[1920]
1
W.W.R.
158,
.
.
.
(Alta.
S.C.).
See
also
the
authorities
cited
by
counsel
for
the
appellant:
Engel
and
Engel
v.
Lautner,
(1954)
11
W.W.R.
(N.S.)
485
(Sask.
C.A.);
Chestolowsky
v.
Chestolowsky,
[1973]
4
W.W.R.
681;
37
D.L.R.
(3d)
226
(Sask.
Q.B.);
In
re
MacDonald
Estate,
[1929]
1
W.W.R.
193,
801;
[1929]
2
D.L.R.
265,
271
(Sask.
C.A.).
As
it
has
been
agreed
here
that
all
parties
were
present
in
Court
when
the
orders
were
granted,
it
is
axiomatic
that
all
parties
had
actual
notice
of
the
orders
pronounced
on
April
9,1986.
The
conclusion
at
law
is
that
the
orders
pronounced
April
9,
1986
were
effective
as
at
the
day
and
time
of
pronouncement
and
not
at
the
later
time
when
they
were
"issued"
through
the
auspices
of
the
Deputy
Registrar
on
December
11,
1986.
These
orders
are
unconditional
and
unreserved,
and
are
not
expressed
to
be
on
or
by
the
consent
of
the
parties.
The
fact
that
conditional
consents
had
been
exchanged
between
the
parties
prior
to
the
orders
being
pronounced
does
not
transpose,
without
more,
otherwise
unconditional
orders
into
something
else.
The
orders
stand
at
face
value
until
they
have
been
effectively
set
aside
in
an
action
or
proceeding
directed
to
that
special
end.
Accordingly,
the
subject
property
in
fact
and
in
law
became
the
property
of
Phyllis
May
on
April
9,
1986
and
it
was
in
that
capacity
that
the
agreement,
Exhibit
A-5
supra,
was
actually
made.
Not
only
was
this
as
a
result
of
the
effective
date
of
the
orders,
it
also
accords
with
the
fact
that
the
parties
themselves
viewed
her
as
the
"Grantor"
of
the
rights
given
in
the
agreement
in
her
personal
capacity
and
not
as
representative
of
the
estate.
In
my
opinion
the
respondent
has
not
made
out
his
case
that
Phyllis
May
received
the
subject
property
by
virtue
of
the
agreement
rather
than
by
virtue
of
the
orders.
The
final
argument
rested
on
the
question
of
indefeasible
vesting.
As
already
noted
the
orders
were
unreserved.
The
vesting
was
not
by
virtue
of
the
agreement
but
rather
was
pursuant
to
these
orders
under
which
an
indefeasible
vesting
had
then
and
thereby
occurred.
I
will
deal
with
the
latter
part
of
the
respondent-counsel's
submission
that
because
(in
his
view)
the
orders
were
inherently
related
to
and
restricted
by
the
agreement,
the
rights
granted
in
the
agreement
were
capable
of
defeating
or
terminating
the
prima
facie
vested
interest
of
Phyllis
May.
The
granting
of
the
right
of
first
refusal
which
may
be
converted
into
an
option
to
purchase
on
breach
of
the
former
does
not,
in
my
opinion,
amount
to
a
divestiture
of
Phyllis
May's
interest
in
the
land
per
se.
Unfettered
legal
and
beneficial
ownership
permits
such
deals
to
be
made,
the
consideration
here
being
the
resolution
of
various
legal
battles.
That
the
forbearance
of
legal
action
is
good
and
sufficient
consideration
see:
Mac-
Ewan
v.
Toronto
Gen.
Trusts
Corpn.
[1917]
54
S.C.R.
381
at
391;
35
D.L.R.
435
and
Francis
v.
Allan,
[1918]
57
S.C.R.
373
at
382;
44
D.L.R.
501.
The
granting
of
an
assignment
of
the
sale
proceeds
purportedly
received
in
breach
of
the
agreement,
if
enforceable,
could
be
viewed
as
damages
for
breach
of
contract
and
not
as
an
essential
condition
or
act
amounting
to
an
outright
divestiture
of
ownership.
With
respect
to
the
“legacy”
clause,
it
could
amount
to
no
more
than
one
of
testamentary
intent
which,
by
its
very
nature,
is
revocable.
Therefore
I
fail
to
see
how
it
could
defeat
or
terminate
the
vested
interest
of
Phyllis
May.
Further,
that
the
grantees
had
been
given
the
right
of
option
to
purchase
the
moment
before
death
at
a
nominal
price
similarly
does
not
occasion
outright
divestiture
of
Phyllis
May's
legal
or
equitable
ownership
of
the
property.
In
my
opinion
it
is
more
akin
to
matters
concerning
contract,
inter
vivos
gifts
and
damages
for
breach
rather
than
matters
of
indefeasible
vesting.
The
cases
of
Parkes
Estate
v.
M.N.R.,
[1986]
1
C.T.C.
2262;
86
D.T.C.
1214
(T.C.C.)
and
Dontigny
Estate
v.
The
Queen,
[1974]
1
F.C.
418
at
423;
[1974]
C.T.C.
532
cited
in
support
by
counsel
for
the
respondent
are
just
too
dissimilar
on
their
facts
to
that
at
bar
to
be
helpful.
Finally
the
following
remarks
made
in
The
Estate
of
Stanley
Earl
Lewis
et
al
v.
M.N.R.,
[1989]
2
C.T.C.
2011
89
D.T.C.
291
(T.C.C.)
at
page
2022
(D.T.C.
298)
are
analogous
and
transposable
to
the
matter
at
hand:
There
is
authority
for
the
proposition
that
the
mere
imposition
of
a
trust
does
not
make
a
testamentary
gift
any
the
less
absolute
and
indefeasible
and
that
while
the
gift
itself
may
be
of
a
limited
interest,
such
as
a
trust,
if
its
receipt
by
the
donee
is
sure
then
it
would
qualify
as
absolute
and
indefeasible
for
exemption
purposes
under
the
Estate
Tax
Act;
viz,
Towle
Estate
v.
M.N.R.,
[1966]
C.T.C.
755;
67
D.T.C.
5003
(S.C.C.)
wherein
Ritchie
J.,
citing
in
support
Halley
Estate
v.
M.N.R.,
63
D.T.C.
1090
(Thurlow
J.)
affm’d
by
the
Supreme
Court
without
reasons
63
D.T.C.
1359,
said
at
page
767
(D.T.C.
5009):
In
the
present
case
the
fund
making
up
"the
balance
of
the
residue”
of
the
estate
was
made
the
subject
of
a
vested
indefeasible
gift
to
the
Association
and
although
the
gift
was
stamped
with
a
trust
it
did
not
contain
any
provision
which
might
result
in
it
being
divested
so
that
the
Association
might
never
receive
it.
It
was
an
indefeasible
gift
of
something
less
than
an
unlimited
interest
and
accordingly,
in
my
view,
it
was
"absolute
and
indefeasible"
within
the
meaning
of
the
section.
[Emphasis
is
mine]
Conclusion
The
appeal
for
the
appellant's
1982
taxation
year
is
allowed,
with
costs,
and
the
matter
referred
back
to
the
Minister
for
reconsideration
and
reassessment
on
the
basis
that
the
entire
nine
one-quarter
sections
of
land
are
deemed
to
have
been
disposed
of
for
proceeds
equal
to
their
adjusted
cost
base
pursuant
to
subsection
70(6)
of
the
ITA.
Appeal
allowed.
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