Kempo,
T.C.J.:—The
appeal
concerns
the
respondent's
reassessment
of
tax
for
the
appellant's
1982
taxation
year
by
which
relief
from
taxation
under
the
provisions
of
subsection
70(9)
of
the
Income
Tax
Act
(the
"Act")
respecting
the
deemed
disposition
of
farm
property
was
denied.
The
respondent
reassessed
the
appellant
on
the
basis
that
the
hereafter
described
farm
land
was
deemed
to
have
been
disposed
of
immediately
prior
to
the
death
of
the
deceased
at
amounts
determined
in
accordance
with
the
provisions
of
section
38
and
subsections
39(1),
40(1)
and
70(5)
of
the
Act.
The
taxable
capital
gain
so
determined
was
$66,000.
If
the
"rollover"
provisions
of
subsection
70(9)
are
applicable,
no
taxable
capital
gain
would
arise
in
1982.
Issue
The
central
issue
here
is
identified
by
both
counsel
in
paragraph
15
of
the
agreed
statement
of
facts
(infra)
which
is
extrapolated
here
for
convenience:
15.
The
only
issue
in
this
appeal
is
that
of
whether
on
the
facts
above
described
“it
can
be
shown,
within
the
period
ending
thirty-six
months
after
the
death
of
the
taxpayer
or,
written
application
therefor
has
been
made
to
the
Minister
by
the
taxpayer's
legal
representative
within
that
period,
within
such
longer
period
as
the
Minister
considers
reasonable
in
the
circumstances,
that
the
property
has
become
vested
indefeasibly
in
the
child
as
defined
by
sections
70(9)
and
(10)
of
the
Income
Tax
Act.
A
“rollover”
is
allowed
if
the
farm
property
vested
indefeasibly
in
the
testator's
child
within
36
months
after
the
testator's
death
and
the
fact
of
vesting
is
established
within
36
months
of
the
death
or,
upon
application
within
that
period,
within
such
longer
period
as
is
reasonable
in
the
particular
circumstances.
Essentially,
the
fiscal
time
period
relates
to
two
aspects
of
the
devolution
of
farm
property:
the
first
is
the
time
within
which
vesting
must
occur
and
the
second
is
the
time
within
which
it
must
be
established
that
vesting,
as
a
matter
of
fact,
has
occurred:
viz,
Winnifred
M.
Hillis
and
Irvin
Hillis
v.
The
Queen,
[1983]
C.T.C.
348;
83
D.T.C.
5365
(F.C.A.)
(“Hillis”).
Facts
The
hearing
of
the
appeal
proceeded
by
way
of
the
following
written
agreed
statement
of
facts
(the
"Facts"):
For
the
purposes
of
the
appeal
within
the
parties
agree
to
the
following
facts:
1.
On
June
23,
1980,
Stanley
Earl
Lewis,
the
estate
of
whom
is
the
Appellant
herein,
executed
his
last
Will
and
Testament
("Will"),
which
Will
was
drawn
and
executed
in
the
Province
of
Ontario.
Probate
of
such
Will
was
granted
by
the
Surrogate
Court
of
the
County
of
Middlesex
and
Province
of
Ontario
on
the
13th
day
of
December,
1982.
A
copy
of
the
Will
as
probated
is
attached
as
Exhibit
"A"
hereto.
2.
Stanley
Earl
Lewis
died
on
October
26,
1982.
3.
The
Will
provided
in
part
as
follows:
"I
DEVISE
AND
BEQUEATH
the
Real
and
Personal
Estate
of
which
I
may
die
possessed,
to
my
executor
in
trust
for
the
following
purposes:
(6)
To
give
my
wife
all
the
rents
and
profits
from
my
farm
on
Lot
8
and
part
of
Lot
9,
Concession
11,
Township
of
McGillivray,
until
my
grandson
Todd
Lewis
reaches
the
age
of
twenty
years;
(7)
To
convey
my
farm
on
Lot
8
and
part
of
Lot
9,
Concession
11,
Township
of
McGillivray,
to
my
grandsons
Terry
David
Lewis
and
Todd
Lewis
when
Todd
Lewis
reaches
the
age
of
twenty
years
on
the
condition
that
they
pay
the
sum
of
$1,000.00
to
their
sister
Bonnie.
(8)
To
convey
all
the
residue
of
my
estate
to
my
sons
Norman
Earl
Lewis
and
Allan
Morley
Lewis
in
equal
shares
per
stirpes.
4.
The
farm
referred
to
specifically
in
paragraphs
6
and
7
of
the
Will
is
real
property
situate
in
the
Township
of
McGillivray,
County
of
Middlesex
and
Province
of
Ontario.
5.
On
or
about
the
6th
day
of
April,
1983
Farm
Business
Consultants
on
behalf
of
the
Appellant
filed
a
terminal
personal
T-1
return
for
1982
for
the
1982
taxation
year
reporting
a
taxable
capital
gain
of
nil
with
respect
to
the
disposition
of
the
"property"
relying
on
Section
70(9)
of
the
Income
Tax
Act
("the
Act")
for
exemption
from
capital
gains.
6.
On
or
about
March
28,
1985,
Revenue
Canada
reassessed
the
appellant
under
Section
70(5)
of
the
Act
stating
inter
alia
that
Section
70(9)
of
the
Act
does
not
apply.
7.
On
April
17,
1985
the
appellant
filed
a
Notice
of
Objection
stating
that
Section
70(9)
should
apply.
8.
On
or
about
April
18,
1986,
Revenue
Canada
confirmed
its
Reassessment
referred
to
in
paragraph
6
hereof.
9.
On
or
about
June
2,
1986,
Farm
Business
Consultants
on
behalf
of
the
appellant
appealed
the
Reassessment
to
the
Tax
Court
of
Canada,
repeating
the
same
argument
used
in
the
Notice
of
Objection
referred
to
in
paragraph
7
hereof.
10.
On
or
about
October
17,
1986,
the
respondent
filed
its
Reply
to
the
Notice
of
Appeal.
11.
The
property
was,
immediately
before
the
death
of
Stanley
Earl
Lewis,
used
by
him,
his
spouse
or
his
children
in
the
business
of
farming.
Any
child
of
the
said
Stanley
Earl
Lewis
was
resident
in
Canada
immediately
before
the
death
of
Stanley
Earl
Lewis.
Terry
David
Lewis
and
Todd
Lewis
are
grandsons
of
Stanley
Earl
Lewis.
Norman
Earl
Lewis
and
Allan
Morley
Lewis
are
sons
of
Stanley
Earl
Lewis
and
all
four
of
such
persons
are
"a
child”
of
Stanley
Earl
Lewis
within
the
meaning
of
Section
70(10)
of
the
Act,
and
all
were
residents
of
Canada
immediately
before
the
death
of
Stanley
Earl
Lewis.
By
the
Notice
of
Reassessment,
as
aforesaid,
the
Respondent
included
a
taxable
capital
gain
of
$66,000.00
in
the
appellant’s
income
for
its
1982
taxation
year
arising
from
the
deemed
disposition
of
the
property.
12.
Todd
Lewis,
referred
to
in
paragraphs
6
and
7
of
the
Will,
was
born
on
June
17,1969
and
would
reach
the
age
of
20
years
on
June
17,
1989.
13.
After
being
advised
by
Revenue
Canada
that
new
legislation
would
allow
the
taxpayer
to
apply
for
a
longer
period
under
Section
70(9)
of
the
Act,
on
or
about
November
12,
1985
the
Executors
of
the
Appellant
applied
in
writing
to
the
Respondent
to
request
that
the
Minister
apply
subsection
70(9)
of
the
Act,
R.S.C.
1952,
c.
148,
as
amended
by
S.C.
1985,
c.
45,
ss.
33(15).
Such
application
was
never
disposed
of
by
the
Minister.
14.
The
personal
representative
has
not
registered
a
caution
against
the
property.
15.
The
only
issue
in
this
appeal
is
that
of
whether
on
the
facts
above
described
"it
can
be
shown,
within
the
period
ending
thirty-six
months
after
the
death
of
the
taxpayer
or,
written
application
therefor
has
been
made
to
the
Minister
by
the
taxpayer's
legal
representative
within
that
period,
within
such
longer
period
as
the
Minister
considers
reasonable
in
the
circumstances,
that
the
property
has
become
vested
indefeasibly
in
the
child
as
defined
by
Sections
70(9)
and
(10)
of
the
Income
Tax
Act.
The
will
itself
was
brief.
It
is
attached
to
the
agreed
facts
as
Exhibit
"A"
and
it
reads:
THIS
1S
THE
LAST
WILL
AND
TESTAMENT
of
me
STANLEY
EARL
LEWIS
of
the
Township
of
McGillivray,
in
the
County
of
Middlesex
and
Province
of
Ontario
made
this
23rd
day
of
June
in
the
year
of
1980.
I
HEREBY
REVOKE
all
former
Wills
or
other
Testamentary
dispositions
by
me
at
any
time
heretofore
made,
and
declare
this
only
to
be
and
contain
my
last
Will
and
Testament.
I
DIRECT
that
all
my
just
debts
and
funeral
and
Testamentary
expenses
be
paid
and
satisfied
by
my
Executors
hereinafter
named
as
soon
as
conveniently
may
be
after
my
decease.
I
DEVISE
AND
BEQUEATH
the
Real
and
Personal
Estate
of
which
I
may
die
possessed,
to
my
executor
in
trust
for
the
following
purposes:
(1)
To
pay
my
daughter,
Helen
Pauline
Thompson,
the
sum
of
Fifteen
Thousand
($15,000.00)
Dollars,
per
stirpes.
(2)
To
pay
my
son,
Donald
Robert
Lewis,
the
sum
of
Fifteen
Thousand
($15,000.00)
Dollars,
per
stirpes.
(3)
If
my
wife
survives
me
for
thirty
(30)
clear
days
I
direct
my
executors
to
deliver
to
her
as
her
absolute
property
all
articles
of
personal,
domestic
and
household
use
or
ornament
belonging
to
me
at
my
death,
including
consumable
stores
and
any
automobiles,
other
vehicles,
boats
and
all
accessories
thereto.
(4)
To
allow
my
wife
to
live
in
whatever
residence
I
may
be
using
as
a
personal
residence
on
my
death,
until
her
death
or
re-marriage.
(5)
To
pay
my
wife
the
sum
of
Five
Thousand
($5,000.00)
Dollars.
(6)
To
give
my
wife
all
the
rents
and
profits
from
my
farm
on
Lot
8
and
part
of
Lot
9,
Concession
11,
Township
of
McGillivray,
until
my
grandson
Todd
Lewis
reaches
the
age
of
twenty
years.
(7)
To
convey
my
farm
on
Lot
8
and
part
of
Lot
9,
Concession
11,
Township
of
McGillivray,
to
my
grandsons
Terry
David
Lewis
and
Todd
Lewis
when
Todd
Lewis
reaches
the
age
of
twenty
years
on
the
condition
that
they
pay
the
sum
of
$1,000.00
to
their
sister
Bonnie.
(8)
To
convey
all
the
residue
of
my
estate
to
my
sons
Norman
Earl
Lewis
and
Allan
Morley
Lewis
in
equal
shares
per
stirpes.
I
direct
my
executors
to
forgive
all
debts
owing
to
me
by
my
four
children.
Any
reference
in
this
my
Will
or
in
any
codicil
hereto
to
a
person
in
terms
of
a
relationship
to
another
person
determined
by
blood
or
marriage
shall
not
include
a
person
born
outside
marriage
nor
a
person
who
comes
within
the
description
traced
through
another
person
who
was
born
outside
marriage,
provided
that
any
person
who
has
been
legally
adopted
shall
be
regarded
as
having
been
born
in
lawful
wedlock
to
the
adopting
parent.
PROVIDED
that
if
any
child
of
mine
should
predecease
me
leaving
children
surviving
me
by
thirty
days,
then
those
children
shall
take
their
parents'
share
in
equal
shares
per
stirpes.
AND
I
nominate
and
appoint
my
sons
Norman
Earl
Lewis
and
Allan
Morley
Lewis
to
be
the
executors
of
this
my
Will
with
the
power
to
sell
and
convey
real
estate,
and
the
power
to
pay
any
infant's
share
to
the
parent
or
guardian
of
said
infant
for
the
benefit
of
the
infant
in
my
executor's
sole
discretion
and
the
receipt
of
the
parent
or
guardian
shall
be
sufficient
receipt
for
my
estate.
IN
WITNESS
whereof
I
have
hereunto
set
my
hand
the
day
and
year
first
above
written.
There
being
no
further
evidence
tendered,
counsel
for
the
appellant
informed
the
Court
that
the
amount
of
the
taxable
capital
gain
had
been
agreed
to
and
that
the
facts
had
been
drafted
so
as
to
ensure
all
other
basic
factual
matters
impacting
on
the
rollover
entitlement
has
been
satisfied.
Statutory
Provisions
The
material
parts
of
the
effective
fiscal
provisions
of
relevance
here
read:
70
(9)
Transfer
of
farm
property
to
child.
Where
any
land
in
Canada
.
.
.
of
a
taxpayer
to
which
paragraphs
5(a)
and
(c)
.
.
.
would
otherwise
apply
was,
immediately
before
his
death,
used
by
him,
his
spouse
or
any
of
his
children
in
the
business
of
farming
and
the
property
has,
on
or
after
the
death
of
the
taxpayer
and
as
a
consequence
thereof,
been
transferred
or
distributed
to
a
child
of
the
taxpayer
who
was
resident
in
Canada
immediately
before
the
death
of
the
taxpayer
and
it
can
be
shown,
within
the
period
ending
36
months
after
the
death
of
the
taxpayer
or,
where
written
application
therefor
has
been
made
to
the
Minister
by
the
taxpayer's
legal
representative
within
that
period,
within
such
longer
period
as
the
Minister
considers
reasonable
in
the
circumstances,
that
the
property
has
become
vested
indefeasibly
in
the
child
the
following
rules
apply
.
.
.
70
(10)
Definitions.
For
the
purposes
of
this
section
.
.
.
(a)
"child"
of
a
taxpayer
includes
(i)
a
child
of
his
child,
(ii)
a
child
of
his
child’s
child,
.
.
.
The
Ontario
statutory
provisions
raised
by
the
appellant
that
require
consideration
were
the
following:
Estates
Administration
Act,
R.S.O.
1980,
ch.
143:
2.
(1)
All
real
and
personal
property
that
is
vested
in
a
person
without
a
right
in
any
other
person
to
take
by
survivorship,
on
his
death,
whether
testate
or
intestate
and
notwithstanding
any
testamentary
disposition,
devolves
to
and
becomes
vested
in
his
personal
representative
from
time
to
time
as
trustee
for
the
persons
by
law
beneficially
entitled
thereto,
and,
subject
to
the
payment
of
his
debts
and
so
far
as
such
property
is
not
disposed
of
by
deed,
will,
contract
or
other
effectual
disposition,
it
shall
be
administered,
dealt
with
and
distributed
as
if
it
were
personal
property
not
so
disposed
of.
9.
(1)
Real
property
not
disposed
of,
conveyed
to,
divided
or
distributed
among
the
persons
beneficially
entitled
thereto
under
section
17
by
the
personal
representative
within
three
years
after
the
death
of
the
deceased
is,
subject
to
the
Land
Titles
Act
in
the
case
of
land
registered
under
that
Act
.
.
.
and
subject
as
hereinafter
provided,
at
the
expiration
of
that
period,
whether
probate
or
letters
of
administration
have
or
have
not
been
taken,
thenceforth
vested
in
the
persons
beneficially
entitled
thereto
under
the
will
or
upon
the
intestacy
or
their
assigns
without
any
conveyance
by
the
personal
representative,
unless
such
personal
representative,
if
any,
has
registered,
in
the
proper
land
registry
office,
a
caution
in
Form
1
under
his
hand,
and,
if
a
caution
is
so
registered,
the
real
property
mentioned
therein
does
not
so
vest
for
three
years
from
the
time
of
the
registration
of
the
caution
or
of
the
last
caution
if
more
than
one
was
registered.
Succession
Law
Reform
Act,
R.S.O.
1980,
ch.
488:
23.
Except
when
a
contrary
intention
appears
by
the
will,
property
or
an
interest
therein
that
is
comprised
or
intended
to
be
comprised
in
a
devise
or
bequest
that
fails
or
becomes
void
by
reason
of,
(a)
the
death
of
the
devisee
or
donee
in
the
lifetime
of
the
testator;
or
(b)
the
devise
or
bequest
being
disclaimed
or
being
contrary
to
law
or
otherwise
incapable
of
taking
effect,
is
included
in
the
residuary
devise
or
bequest,
if
any,
contained
in
the
will.
24.
Except
when
a
contrary
intention
appears
by
the
will,
where
a
testator
devises,
(a)
his
real
property;
the
devise
includes
the
leasehold
estates
of
the
testator
or
any
of
them
to
which
the
description
extends,
as
well
as
freehold
estates.
26.
Except
when
a
contrary
intention
appears
by
the
will,
where
real
property
is
devised
to
a
person
without
words
of
limitation,
the
devise
passes
the
fee
simple
or
the
whole
of
any
other
estate
or
interest
that
the
testator
had
power
to
dispose
of
by
will
in
the
real
property.
36.
(1)
The
manner
and
formalities
of
making
a
will,
and
its
essential
validity
and
effect,
so
far
as
it
relates
to
an
interest
in
land,
are
governed
by
the
internal
law
of
the
place
where
the
land
is
situated.
The
Appellant's
Position
1.
The
farm
property
vested
indefeasibly
in
the
testator's
grandchildren
within
the
requisite
time
periods
by
virtue
of
the
Will
itself:
the
only
aspect
of
the
matter
which
has,
by
the
Will,
been
postponed
beyond
the
36-month
time
period
is
possession
of
the
property:
Re
Traill
(1927),
32
O.W.N.
449
at
451.
Subsection
70(9)
of
the
fiscal
legislation
does
not
require
that
the
property
be
vested
indefeasibly
in
possession
in
the
child
for
rollover
purposes.
2.
While
no
distribution
or
transfer
of
the
farm
property
to
the
grandsons
has
taken
place
by
way
of
actual
conveyance
or
deed,
no
such
formality
is
required
for
fiscal
purposes
where
it
is
legally
as
of
right
and
is
inevitable:
viz,
Hillis,
supra,
per
Clement,
J.
at
5368-5370.
Alternatively,
and
in
any
event,
vesting
occurs
within
three
years
after
the
testator's
death
without
any
conveyance:
viz,
subsection
9(1)
of
the
Estates
Administration
Act,
supra,
which
operates
in
a
substantive
way.
3.
By
operation
of
subsection
9(1)
of
the
Estates
Administration
Act
the
farm
property
vested
in
the
persons
beneficially
entitled,
i.e.
the
testator's
grandsons
or
alternatively
and
at
the
very
least
in
the
testator's
two
sons
as
residuary
legatees
(all
of
whom
are
children
for
fiscal
purposes),
irrespective
of
whether
it
may
have
first
devolved
or
vested
in
the
personal
representatives
in
trust
by
common
law
or
by
statute
law
or
otherwise.
In
any
event,
the
farm
property
was
vested
in
the
grandsons
by
operation
of
the
will
itself
and
the
statutory
vesting
aspect
herein
is
a
fall-back
or
alternate
aspect
only.
4.
Unless
there
are
clear
and
unambiguous
words
in
the
will
to
the
contrary,
there
is
a
presumption
of
early
vesting
in
Ontario:
Re
Davis,
[1937]
O.W.N.
576;
Re
Barrow
(1980),
29
O.R.
374
(H.C.)
aff'd
(1983),
41
O.R.
(2d)
144
(C.A.);
Re
Oswell
(1982),
38
O.R.
(
2d)
71;
136
D.L.R.
(3d)
672
and
Re
Traill,
supra.
Transfer
and
delivery
of
the
legacy
may
be
postponed,
but
vesting
is
not:
viz,
Re
Barrow,
supra,
at
380.
5.
Re
Traill,
supra,
(see
the
third
question
at
page
451)
is
not
distinguishable
from
the
case
at
bar;
here
the
testator's
grandsons
had
an
indefeasibly
vested
interest
in
the
farm
property
under
the
will
which
was
transmissible
even
though
the
immediate
use,
enjoyment
or
possession
of
its
income
or
profits
was
postponed.
6.
Alternatively
and
ultimately,
in
a
bottom-line
sense,
the
farm
property
must
nonetheless
vest
in
a
child
of
the
testator
(be
it
the
grandsons
or
the
two
sons
of
the
testator)
either
under
the
provisions
of
the
will
or
by
operation
of
the
Estates
Administration
Act.
The
Respondent's
Position
1.
By
virtue
of
the
will,
vesting
of
the
farm
property
occurred
in
the
executors
who
were
to
hold
it
until
Todd
Lewis
attained
the
age
of
20
years
which
is
June
17,
1989.
There
are
no
words
in
the
will
supporting
an
immediate
gift
and
the
grandsons'
interest
was
only
contingent.
The
devise
was
to
the
executors
to
hold
the
farm
property
in
trust,
the
rents
and
profits
were
to
be
paid
to
the
widow
and
then
they
were
to
divest
themselves
of
the
property
when
Todd
reached
20
years
of
age.
The
support
for
this
interpretation
arises
from
the
words
"convey
to"
as
expressed
in
the
will.
The
words
in
the
will
indicate
a
clearly
expressed
intention
that
vesting
was
to
occur
in
the
executors
so
that
they
may
deal
with
the
property
as
directed
by
the
will
and
that
vesting
of
the
beneficial
interest
was
to
be
postponed
until
the
time
for
distribution.
2.
Subsection
9(1)
of
the
Estates
Administration
Act
does
not
supersede
the
terms
of
the
will,
and
there
is
no
conflict
in
any
event
because
the
property
was
transferred
and
distributed
to
the
executors
pursuant
to
the
will.
Subsection
9(1)
does
not
have
the
effect
of
statutorily
winding-up
trusts
or
life
interests
on
the
expiration
of
a
three-year
period.
This
statute
is
one
of
administration
only;
viz,
Hillis,
supra,
per
Clement,
J.
at
5370.
While
only
by
the
filing
of
a
caution
can
the
three-year
period
be
delayed,
the
provision
does
not
vest
the
interest
in
the
beneficiary
when
it
would
not
have
vested
under
the
provisions
of
the
will
itself.
3.
The
phrase
"vested
indefeasibly”
as
used
in
subsection
70(9)
of
the
fiscal
Act
means
vested
in
possession
and
not
simply
as
in
interest
or
transmissibility;
viz,
Re
Tegler,
[1929]
1
D.L.R.
445
at
446,
447
(Alta.
S.C.).
4.
The
subsection
70(9)
fiscal
provision
requires
that
there
be
a
transfer
or
distribution
to
the
child.
It
calls
for
more
than
a
vesting
of
an
interest,
there
must
be
a
vesting
in
possession
so
that
a
transfer
or
distribution
may
be
called
for
which
is
one
that
is
legally
inevitable.
The
widow's
prior
interest
precludes
a
vesting
in
possession
which,
as
a
principle
of
construction,
would
not
necessarily
preclude
a
vesting
of
the
grandsons'
interest,
whose
interest
may
be
(which
is
not
admitted)
a
remainderman's
interest,
there
being
no
gift-over
direction
in
the
will
itself.
A
remainderman
would
not
have
a
present
right
to
possession
because
of
the
interest
ahead
of
them
which
must
first
expire.
5.
However,
because
the
will
does
not
give
a
remainderman's
interest
to
the
grandsons,
there
is
no
interest
in
transmissibility
either.
6.
The
purpose
and
intent
behind
the
fiscal
rollover
provision
would
be
defeated
if
an
indefeasible
vesting
could
be
satisfied
by
the
mere
vesting
of
an
interest
in
a
child-remainderman
because
lengthy
periods
of
non-family
intervening
legatees
being
entitled
to
rents
and
profits
on
successive
fixed
time
periods
could
be
interjected
resulting
in
a
lengthy
and
unintended
postponement
or
deferral
of
tax
that
would
otherwise
be
payable
on
the
deemed
disposition
of
the
farm
property.
7.
The
payment
of
$1,000
to
Bonnie
was
a
condition
precedent
to
the
devise,
which
was
itself
conditional.
No
vesting
in
any
sense
could
occur
until
this
payment
was
made
and
it
does
not
matter
if
the
same
was
within
the
grandsons'
capacity
or
power;
viz,
The
Estate
of
Paul
Dontigny
v.
The
Queen,
[1974]
C.T.C.
532;
74
D.T.C.
6437
(F.C.A.).
Analysis
The
first
part
of
the
arguments
by
counsel
for
both
parties
centred
upon
whether,
under
the
words
used
in
the
testator's
will,
the
interest
of
Todd
Lewis
and
Terry
Lewis
("the
grandsons")
vested
indefeasibly
at
the
testator's
death.
In
my
opinion,
reading
the
provisions
of
the
will
as
a
whole
relevant
to
the
subject
devise
to
the
grandsons,
no
clear
intention
of
it
being
contingent
on
Todd
attaining
the
age
of
20
years
before
vesting
is
indicated.
In
Bickersteth
v.
Shanu,
[1936]
A.C.
290,
the
Judicial
Committee
saw
no
reason
to
doubt
that
the
established
rule
for
the
guidance
of
the
Court
in
construing
devises
of
real
estate
is
that
they
are
to
be
held
to
be
vested
unless
a
condition
precedent
to
the
vesting
is
expressed
with
reasonable
clearness.
This
principle
of
or
aid
to
the
construction
of
wills
appears
to
be
well
established
in
Ontario
jurisprudence
which
is
found
in
the
authorities
relied
upon
by
appellant's
counsel
as
cited
in
paragraph
4
of
his
position,
supra.
I
agree
with
appellant
counsel's
observation
of
the
similarities
that
this
case
has
to
those
of
Re
Traill,
supra.
In
that
case
it
was
put
thusly
at
page
451:
A
third
question
was,
whether
the
words
“on
his
becoming
of
age,”
applied
by
the
testator
to
these
legacies,
make
them
dependent
on
the
legatee
“becoming
of
age”
or
whether
they
vest
immediately
notwithstanding
such
words.
Standing
alone
they
could
not
be
read
as
meaning
only
“to
be
paid
to
him
on
coming
of
age,”
but
should
prevent
vesting
until
of
age.
No
one
can
give
anything
to
one
who
is
dead.
But
the
context
makes
it
plain
enough
that
the
testator
meant
the
coming
of
age
to
be
the
time
of
receiving
the
gift
which
was
given
when
the
will
took
effect—at
the
testator's
death.
Each
gift
begins
with
these
words:
“I
bequeath
also
the
following
sums
viz,”
which
words
are
followed
by
such
words
as
“May
Hamilton
one
thousand
dollars
their
only
son
one
thousand
dollars
on
his
becoming
of
age.
“Without
any
great
stretching
of
interpretation
in
favour
of
immediate
vesting,
may
it
not
be
considered
that
the
first
words
make
an
immediate
gift
and
that
the
subsequent
limiting
words
have
reference
to
the
time
when
the
legatee
shall
receive
the
gift?
At
bar,
the
words
of
gift
are
found
in
the
bequeath
to
trusts
part
of
the
will,
with
conveyance
thereof
to
take
place
as
stated
at
a
later
time.
The
farm
property
is
clearly
carved
out
of
or
separated
from
the
other
assets
of
the
estate,
and
the
widow's
prior
interest
(also
created
by
a
separate
and
distinct
bequest)
was
for
the
rents
and
profits
only,
in
a
fixed-term
tenancy,
with
no
ability
on
her
part
to
encroach
upon
or
to
diminish
the
underlying
capital
asset.
There
is
no
expressed
gift-over
in
contemplation
of
Todd's
death
before
he
attains
20
years
of
age,
and
accordingly
it
has
not
been
shown
by
the
terms
or
words
used
in
the
will
that
the
vested
interest
acquired
by
the
grandsons
at
the
testator's
death
was
intended
to
be
divested
upon
Todd's
demise
prior
to
the
conveyance
date.
In
this
situation
if
either
of
the
grandsons
died
before
Todd
reached
20
years
of
age
had
he
lived,
their
respective
interest
would
descend
to
their
respective
heirs-at-law.
In
Morris
and
Leach,
The
Rule
Against
Perpetuities,
2nd
ed.,
at
page
35
(footnote
references
omitted)
it
is
noted:
.
.
.
And
in
still
other
cases
it
may
prove
that
the
age
relates
merely
to
the
time
of
payment
and
does
not
postpone
the
vesting
of
the
interest.
In
such
cases,
if
the
beneficiary
dies
before
attaining
the
specified
age,
his
interest
passes
to
his
executor
or
administrator.
If
someone
else
is
entitled
to
the
income
before
the
beneficiary
attains
the
specified
age,
the
corpus
is
not
payable
to
the
executor
or
administrator
until
such
time
as
the
beneficiary
would
have
attained
the
age
had
he
lived;
otherwise,
it
is
payable
immediately
on
his
death.
In
Jarman,
A
Treatise
on
Wills,
8th
ed.
at
pages
1360
and
1361
(footnote
references
omitted)
it
is
said:
The
construction
which
reads
words
that
are
seemingly
creative
of
a
future
interest,
as
referring
merely
to
the
futurity
of
possession
occasioned
by
the
carving
out
of
a
prior
interest,
and
as
pointing
to
the
determination
of
that
interest,
and
not
as
designed
to
postpone
the
vesting,
has
obtained,
in
some
instances,
where
the
terms
in
which
the
posterior
gift
is
framed
import
contingency,
and
would,
unconnected
with
and
unexplained
by
the
prior
gift,
clearly
postpone
the
vesting.
Thus,
where
a
testator
devises
lands
to
trustees
until
A
shall
attain
the
age
of
twenty-one
years,
and
if
or
when
he
shall
attain
that
age,
then
to
him
in
fee,
this
is
construed
as
conferring
on
A
a
vested
estate
in
fee-simple,
subject
to
the
prior
chattel-interest
given
to
the
trustees,
and,
consequently,
on
A's
death,
under
the
prescribed
age,
the
property
descends
to
his
heir-at-law;
.
.
.
A
leading
authority
for
this
construction
is
Boraston's
Case
[see
infra]
which
was
as
follows:
A
testator
devised
land
to
A
and
B
for
eight
years,
and
after
the
said
term,
the
land
to
remain
to
his
executors,
for
the
performance
of
his
will,
till
such
time
as
H
should
accomplish
his
age
of
twenty-one
years;
and
when
the
said
H
should
come
to
his
age
of
twenty-one,
then
to
him,
his
heirs
and
assigns
for
ever.
H
died
under
twenty-one.
It
was
contended,
that
the
remainder
was
not
to
vest
in
him,
unless
he
attained
the
prescribed
age;
but
the
Court
held
it
to
be
vested
immediately,
the
case
being,
it
was
said,
nothing
else
in
effect
than
a
devise
to
the
executors,
till
H
attained
the
age
of
twenty-one,
remainder
to
H
in
fee;
and
that
the
adverbs
of
time,
when,
etc.,
do
not
make
any
thing
necessary
to
precede
the
settling
(i.e.,
the
vesting)
of
the
remainder,
but
merely
expressed
the
time
when
it
shall
take
effect
in
possession.
Theobald
on
Wills,
12th
ed.,
by
Marshall,
at
page
481
(footnote
references
omitted)
put
it
thusly:
Express
direction
as
to
vesting.
When
there
is
an
express
direction
as
to
the
time
of
vesting,
nothing
can
vest
before
the
appointed
time;
though
on
the
other
hand
the
question
of
vesting
is
not
affected
by
a
direction
merely
referring
to
the
time
of
possession.
A
devise
to
A
at
or
when
or
if
he
attain
twenty-one
will
be
vested:
(i)
Prior
devise
till
A
attain
twenty-one.
If
an
estate
is
given
prior
to
the
attainment
of
twenty-one
by
the
ultimate
devisee
to
some
third
person
either
for
the
benefit
of
the
devisee
himself,
or
for
the
benefit
of
some
other
persons
to
endure
during
the
minority.
[Boraston's
Case]
In
this
case
the
estate
given
to
the
devisee
on
attaining
twenty-one
is
in
fact
a
vested
interest
subject
to
a
term.
The
Rule
in
Boraston's
Case
(1587),
76
E.R.
664
is
described
as
a
rule
of
very
limited
application
by
Feeney,
The
Canadian
Law
of
Wills,
2d.
ed.,
Vol.
2
at
page
214
(footnote
references
deleted)
as
follows:
As
explained
in
a
leading
English
case,
Phipps
v.
Ackers,
[(1842)
8
E.R.
539]
the
rule
in
Boraston's
Case
applies
only
to
real
property
and
permits
a
remainder
subject
to
a
contingency
to
be
construed
as
vested
rather
than
contingent.
Under
the
rule,
a
devise
of
realty
to
A
"when"
he
shall
attain
a
given
age
(or
with
any
similar
expression
—"at"
or
"upon"
or
"from
and
after”
but
not,
it
seems,
"if"
—
referring
to
the
attainment
of
an
age)
which,
standing
alone,
would
import
a
contingency,
will
not
import
a
contingency
if
the
property
is
devised
to
B
until
A
attains
the
age.
Under
the
rule,
A
takes
an
immediate
vested
interest
that
is
not
defeated
in
the
event
of
his
death
under
the
specified
age.
The
gift
is
read
as
a
devise
to
B
for
a
term
of
years
with
the
reversion
to
A.
The
expression
of
futurity
is
interpreted
as
meaning
only
that
A's
estate
is
not
to
take
effect
in
possession
until
the
determination
of
the
intermediate
estate
in
B.
There
would
appear
to
be
a
clear
case
for
the
application
of
some
such
rule
where
the
intermediate
interest
is
given
to
B
to
be
applied
for
the
benefit
of
A
while
under
age.
The
rule
has
been
applied
where
the
intermediate
interest
is
given
wholly
to
B
while
A
remains
under
the
specified
age,
for
instance,
to
the
testator's
wife
B
until
A
attains
25.
However,
in
either
case
it
is
essential
that
the
prior
interest
be
limited
to
the
period
of
time
intervening
until
the
ultimate
devisee
attains
the
specified
age.
If
it
is
not
so
limited,
the
words
will
then
have
their
natural
effect
and
the
ultimate
devisee's
interest
will
be
contingent.
The
intention
of
the
testator
in
the
case
at
bar
is
reflected
in
the
words
of
his
will
that
the
farm
property
was
to
go
to
the
executors
in
trust
upon
payment
of
the
rents
and
profits
therefrom
to
his
widow
only
until
Todd
Lewis
reached
the
age
of
20
years
at
which
time
Todd
Lewis
and
Terry
Lewis
were
to
have
the
actual
conveyance
and
unfettered
possession.
Because
there
is
no
obvious
reason
to
distinguish
the
facts
of
this
case
from
that
of
the
Boraston
case,
the
conclusion
as
to
a
vesting
in
transmissibility
in
these
factual
circumstances
is
applicable
here.
Having
determined
that
the
gift
of
the
farm
property
was
in
the
devise
and
that
the
postponement
of
possession
of
conveyance
was
in
the
direction
to
pay,
the
comment
of
Clinton,
J.
Ford,
J.
at
page
703
in
the
case
of
In
re
Stedman
Estate,
[1948]
2
W.W.R.
687
(Alta.
S.C.)
is
equally
applicable
here:
According
to
my
view,
the
gift
in
In
re
Waines
Estate,
supra,
[[1947]
1
W.W.R.
880
(Alta.
C.A.)]
was
in
the
direction
to
pay,
but
here
there
is
a
gift
followed
by
a
direction
to
pay,
and
although
the
bequests
in
the
will
here
are
to
trustees
to
be
paid
or
given
to
the
granddaughter,
Phipps
v.
Ackers,
supra,
[(1842)
8
E.R.
539]
cited
for
another
purpose
is
also
authority
that
equity
in
such
a
case
ought
to
follow
the
law,
and
that
the
will
itself
is
an
equitable
transfer
of
the
property.
Dealing
with
appellant
counsel's
argument
that
subsection
9(2)
of
the
Estates
Administration
Act,
supra,
would
resolve
the
vesting
matter,
it
is
my
opinion
that
it
is
not
applicable
here.
The
opening
words
of
that
provision
encompass
real
property
"not
disposed
of".
However
here
there
has
been
a
disposition
of
the
farm
property
by
the
will
itself.
That
disposition
was
as
to
an
indefeasible
vesting
of
an
interest
in
fee
simple
to
the
grandsons,
the
disposition
being
one
in
civil
law
as
a
vested
legacy
debitum
in
presenti,
solvendum
in
futuro,
subject
only
to
a
fixed-term
tenancy
in
favour
of
the
widow.
Counsel
for
the
Minister
has
submitted
that
the
words
"vested
indefeasi-
bly”
as
used
in
subsection
70(9)
of
the
Act,
supra,
have
a
dual
meaning,
which
is
as
to
interest
and
possession,
and
that
Parliament
intended
the
latter
to
have
occurred
for
rollover
purposes
when
it
employed
that
phrase.
In
support,
counsel
pointed
to
the
statement
of
Ford
J.
in
the
case
of
Re
Tegler,
supra,
at
page
447
in
which
he
said:
There
is
no
express
direction
in
the
will
as
to
vesting
so
that
I
am
not
troubled
with
a
consideration
of
whether
the
word
"vest"
or
"vesting"
would
have
one
or
other
of
its
two
legal
meanings
of
vesting
in
interest
or
transmissibility
or
as
vesting
in
possession
or
indefeasibility.
With
due
respect
to
counsel,
I
believe
the
above
comment
may
have
been
taken
out
of
context.
It
arises
out
of
those
aids
to
construction
applied
by
the
civil
courts
in
attempting
to
determine
what
the
testator
meant
or
intended
when
he
or
she
had
used
words
and
expressions
in
the
will
with
respect
to
vesting.
Therefore
the
determination
of
the
intent
of
a
testator
by
reference
to
the
evolved
aids
or
rules
of
construction
in
the
context
of
a
will
is
not
reliably
adaptable
to
what
Parliament
may
have
intended
in
the
words
used
in
fiscal
legislation.
In
Theobald
on
Wills,
supra,
at
pages
487,
488
(footnote
references
omitted)
under
the
heading
Where
There
is
an
Express
Direction
as
to
the
Period
of
Vesting:
It
has
been
said
that
the
word
"vest",
being
derived
from
"vestire,"
naturally
refers
to
vesting
in
possession,
and
not
to
vesting
in
interest.
This
is,
however,
contrary
to
the
whole
current
of
English
authority,
according
to
which
the
word
"vest"
has
always
been
held
to
refer
prima
facie
to
vesting
in
interest
or
transmissibility,
and
not
vesting
in
possession
or
“indefeasibility.
Thus,
when
there
is
a
direction
that
the
gifts
are
to
be
vested
at
a
certain
period,
the
legatee
will
take
no
interest
till
then.
Where
the
interests
of
legatees
are
to
be
vested
at
twenty-one,
a
gift
over
upon
death
under
twenty-one,
or
upon
death
before
the
time
of
vesting,
will
not
affect
the
natural
meaning
of
the
word.
When
"vested"
means
"payable".
In
many
cases,
however,
"vested"
has
been
used
as
equivalent
to
indefeasible”
or
“payable”.
Thus,
if
the
shares
of
members
of
a
class
are
directed
to
be
vested
at
a
certain
time,
and
there
is
a
gift
over
to
the
other
members
of
the
class
of
the
shares
of
those
dying
before
that
time
without
issue;
vested
will
mean
payable.
If
vesting
indefeasibly
in
possession
as
well
as
in
interest
was
intended
by
Parliament
it
could
have
quite
easily
expressed
that
intent
in
clear
and
unambiguous
words.
Further,
I
am
unable
to
rule
out
the
conclusion
that
an
indefeasible
vesting
of
an
interest
in
real
property
given
under
a
will
is
sufficient
to
satisfy
Parliament’s
intent
in
subsection
70(9)
of
the
Act
given
the
terminology
"dévolus
irrévocablement"
used
in
the
French
text.
I
believe
this
phraseology
incorporates
the
aforesaid
classic
meaning
to
be
that
of
vested
indefeasi-
bly
in
interest
in
circumstances
where
that
vesting
is
not
defeasible
under
the
terms
of
the
will
by
any
other
person
having
a
right,
contingent
or
otherwise,
to
the
subject
farm
land.
This
is
especially
so
where
there
is
no
gift-over
provision
in
the
will.
The
French
language
phraseology
"dévolus
irrévocablement"
employed
in
subsection
70(9)
of
the
fiscal
Act
also
mitigates
against
the
position
taken
by
the
respondent's
counsel
with
respect
to
the
vesting
of
the
property
in
the
personal
representatives
who
in
turn
then
divest
themselves
at
the
time
the
legal
conveyance
is
required.
In
no
logical
way
can
the
said
French
language
phraseology
integrate
with
those
principles
and
rules
respecting
the
devolution
or
vesting
of
the
land
in
personal
representatives
for
administrative
purposes.
In
the
situation
of
a
trust
will,
which
is
the
case
here,
and
subject
to
due
administration,
the
personal
representatives
hold
the
farm
property
in
trust
for
those
beneficially
entitled
who
are
able
to
call
for
a
transfer
of
it
to
themselves
at
the
appropriate
time.
The
conveyance
by
the
personal
representatives
does
not
grant
any
interest
in
the
land
because
that
interest
has
already
been
granted
by
the
will
itself,
viz,
Re
Pollock
and
Wilkinson
(1979),
22
O.R.
663;
5
E.T.R.
124
(Ont.
H.C.)
and
Stedman
Estate,
supra.
Further,
there
are
no
enabling
words
in
the
will
by
which
the
personal
representatives
were
empowered
to
do
anything
which
would
or
could
diminish
the
grandsons'
vested
interest
in
the
farm
lands
or
cause
that
vested
interest
to
be
divested.
If
respondent's
counsel's
further
interpretative
argument
is
correct
concerning
the
coexistence
of
two
circumstances,
that
is
of
conveyance
(i.e.
transfer
or
distribution)
and
of
vesting
indefeasibly
(i.e.
in
possession),
then
no
fiscal
rollover
could
be
had
where
a
trust
will
for
infants
was
involved,
with
the
exception
perhaps
of
where
a
trust
is
terminable
under
the
principles
of
Saunders
v.
Vautier
(1841),
Cr.
&
Ph.
240,
41
E.R.
482
and
then
only
when
such
was
accomplishable
within
the
prescribed
fiscal
time
constraints
because
the
winding-up
of
a
trust
is
not
normally
regarded
as
an
administrative
act
or
function
qua
the
beneficiaries.
With
respect
to
the
trust
will
at
hand,
the
interpretative
attempt
to
tie
the
fiscal
requirements
involved
in
the
words
"has
been
transferred
or
distributed"
to
the
words
"vested
indefeasibly”
as
meaning
vested
in
possession
such
that
the
right
to
call
for
both
legal
and
equitable
title
is
required
would
go
far
beyond
what
subsection
70(9)
requires.
In
my
view
a
reasonable
postponement
of
the
time
(for
which
the
appellant
had
requested
of
the
respondent
in
a
timely
manner)
at
which
the
right
of
the
grandsons
to
call
for
legal
title,
which
here
is
inevitable,
is
contemplated
by
the
statute's
own
words.
The
postponement
sought
arises
solely
from
an
administrative
necessity
occasioned
by
the
trust
will
itself
which
does
not
involve
any
wait-
and-see
matters
involving
contingencies
concerning
any
future
vesting
of
interests.
As
I
have
decided
earlier,
there
are
no
such
contingencies
present
in
this
case.
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
indefeas-
ible
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.,
[1963]
Ex.
C.R.
372;
[1963]
C.T.C.
108;
63
D.T.C.
1090
(Thurlow,
J.)
aff'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.
Counsel
for
the
Minister
has
submitted
that
the
requirement
of
the
monetary
payment
to
Bonnie
Lewis
rendered
the
devise
of
the
farm
property
contingent
in
that
it
was
intended
to
be
a
condition
precedent
to
the
devise
itself.
No
authority
was
submitted
for
this
proposition.
Counsel
invoked
the
case
of
the
Dontigny
Estate,
supra,
in
which
the
testator
had
bequeathed
his
entire
estate
to
his
wife
but
the
bequest
of
the
real
property
was
conditional
upon
the
wife
remaining
a
widow
and
that
in
the
event
she
remarried
all
of
his
real
property
would
pass
to
his
children
or
grandchildren.
The
widow
claimed
the
right
to
deduct
the
value
of
the
realty
under
paragraph
7(1)(a)
of
the
Estate
Tax
Act
because
she
alleged
it
had
been
indefeasibly
vested
in
her
under
the
terms
of
the
will.
Her
appeal
for
that
exemption
from
estate
tax
failed.
I
do
not
find
the
Dontigny
Estate
situation
transposable
or
even
helpful
to
the
matter
at
bar.
The
only
remote
similarity
of
that
case
is
with
respect
to
the
heir's
ability
to
chose—that
is,
for
the
widow
to
marry
as
in
Dontigny
Estate
or
here,
for
the
grandsons
not
to
pay
the
$1,000
to
Bonnie.
However,
the
significant
distinguishing
factor
of
the
Dontigny
Estate
case
is
that
the
testator
had
expressly
specified
an
intention
that
divestiture
of
the
widow's
interest
in
the
realty
was
to
occur,
for
the
benefit
of
his
children,
if
the
widow
remarried.
That
is
not
at
all
the
case
in
the
subject
will.
There
being
no
specific
divestiture
to
be
found
in
the
will
itself,
expressly
or
by
implication,
it
is
reasonable
to
infer
from
a
contextual
reading
of
the
testator's
words
in
light
of
the
will
as
a
whole,
that
the
payment
of
the
bequest
to
Bonnie
was
intended
merely
as
a
condition
precedent
to
the
conveyance
of
the
legal
title
to
the
grandsons
and
that
it
was
not
intended
to
operate
as
a
condition
precedent
to
the
very
gift
itself
such
as
to
render
it
contingent
in
its
entirety,
either
ab
initio
or
at
the
date
of
distribution
or
transfer
of
the
legal
title
by
the
personal
representatives.
During
the
course
of
argument
both
counsel
referred
to
certain
parts
of
the
three
separate
reasons
for
decision
made
in
the
case
of
Hillis
v.
The
Queen,
supra.
As
that
case
did
not
involve
matters
of
a
trust
will,
but
rather
dealt
with
matters
of
intestacy,
disclaimers
and
the
effect
of
dependants'
relief
orders,
I
find
that
it
would
be
neither
helpful
to,
nor
enlightening
upon,
the
subject
issues
to
attempt
to
extrapolate
and
apply
certain
aspects
of
its
diverse
legal
analysis
to
the
core
issue
at
hand,
save
and
except
to
my
opening
reference
to
that
case
as
authority
for
the
overall
interpretative
approach
to
be
taken
to
subsection
70(9)
of
the
fiscal
Act
in
its
general
sense.
Conclusion
For
the
reasons
aforesaid,
the
appeal
for
the
appellants'
1982
taxation
year
is
to
be
allowed,
with
costs,
and
the
matter
referred
back
to
the
Minister
of
National
Revenue
for
reconsideration
and
reassessment
on
the
basis
that
Lot
8,
Part
of
Lot
9,
Concession
11,
McGillivray
Township,
County
of
Middlesex,
Ontario,
is
deemed
to
have
been
disposed
of
for
proceeds
equal
to
its
adjusted
cost
base
pursuant
to
subsection
70(9)
of
the
Act
and
that
therefore
the
amount
of
$66,000
included
in
income
for
the
said
1982
taxation
year
pursuant
to
subsection
70(5)
of
the
Act
is
to
be
deleted.
Appeal
allowed.
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