Supreme Court of Canada
Greenshields
et al. v. The Queen, [1958] S.C.R. 216
Date:
1958-03-12
Charles Glass Greenshields
And Chartered Trust Com Pany (Suppliants) Appellants;
and
Her Majesty The Queen Respondent.
1957: November 4, 5; 1958: March 12.
Present: Taschereau, Locke, Cartwright, Fauteux and Abbott
JJ. 1[1957] Que. Q.B. 63.
ON APPEAL FROM THE COURT OF QUEEN'S BENCH, APPEAL SIDE,
PROVINCE OF QUEBEC.
Succession duties—Bequest for life of net income of residue of
estate— Capital to be paid to tax-exempt institution upon death of life
beneficiary—Whether bequest to life beneficiary a dutiable transmission —Quebec
Succession Duties Act, 1943, c. 18, ss. 2,13, 19, 31, as amended by 13 Geo. VI,
c. 32.
A testatrix directed her executors and trustees to hold the
residue of her estate on trust to pay the total net income from it to two of
her friends for life, and on the death of the survivor to pay the whole capital
to an institution exempt from duties under s. 13 of the Quebec Succession Duties
Act. She further directed that all succession duties be paid out of the capital
of the residue, without the intervention of the beneficiaries.
Held (Locke J. dissenting): Succession duties, under s. 31 of
the Act, must be calculated as if the life beneficiaries had received the fund
as absolute owners. This was clearly an "attribution of the revenue from …
capital or from [a] trust fund" within the meaning of that section.
Per Locke J., dissenting: On a proper interpretation of s. 31
of the Act, that section does not apply where the transmission in remainder is
to a charity entitled to the benefit of the exemption provided by s. 13.
However, duty was payable upon the life interests in the revenue, as these were
transmissions within the ambit of the Act. A value for succession duty should,
therefore, be placed on the life interests pursuant to ss. 38 and 39 of the
Act.
APPEALS from two judgments of the Court of Queen's Bench,
Appeal Side, Province of Quebec,
reversing the judgment of Gibsone J. The suppliants-appellants claimed the
repayment of $84,183.91 paid under protest and Gibsone J. gave judgment for
$83,983.03. Appeals dismissed, Locke J. dissenting.
A. M. Watt, Q.C., and P.
M. Laing, for the suppliants, appellants.
Guy Hudon, Q.C., for
the respondent.
[Page 217]
Taschereau J.:—Tous les faits de cette cause ont été rapportés dans les raisons
écrites de certains de mes collègues, et il est en conséquence inutile de les
citer de nouveau. Je ne désire qu'ajouter quelques mots pour préciser davantage
ma pensée.
Je m'accorde avec mon collègue M. le Juge
Abbott sur l'interprétation qu'il faut donner aux arts. 13, 19 et 31 de la Loi
des droits sur les successions, 1943 (Que.), c. 18, et sur le point que
dans le présent cas, il ne s'agit pas d'usufruit, ni d'usage, ni de
substitution, mais bien d'attribution des revenus d'un capital ou d'une
fiducie. Il s'ensuit que le jugement majoritaire de cette Cour dans Guaranty
Trust Company of New York et al. v. The King,
ne peut nous guider dans la détermination du litige. Il s'agissait en
effet, dans cette cause, de l'application d'une loi différente de celle qui
existe maintenant.
De plus, si la loi concernant la fiducie (Loi
des Trusts) doit s'appliquer dans la présente cause comme on le prétend, ce
dont je doute fort, je suis convaincu que c'est bien celle, telle que comprise
dans la province de Québec et introduite ici par la législature, lorsqu'elle a
été ajoutée aux lois publiques en octobre 1879, et incorporée au Code Civil lors
de la refonte de 1888. La "Loi des Trusts" anglaise était jusqu'à
cette dernière date totalement étrangère au droit français de notre province,
et ce n'est que partiellement qu'on a adopté certaines de ses dispositions.
Comme le dit le Conseil Privé dans la cause de Laverdure v. Du Tremblay et
al.:
It may be useful to add that the English law relating to
trusts and trustees was only adopted to the limited extent involved in those
specific provisions and of any implications necessarily flowing from them. The
English system of Equity was clearly not introduced. In view of those sections,
however, there can be no reason for doubting that the true position of the
children, including Edouard Berthiaume, after the death
of the donor, was that they were beneficiaries under the deed of gift and under
the will, with personal rights against the fiduciary donees (donataires
fiduciaires) in the case of the deed, and the fiduciary legatee (légataire fiduciaire) in the case of the will.
(Les italiques sont miennes.)
Le Comité Judiciaire ne faisait que confirmer
ce qui avait été dit précédemment par M. le Juge Rinfret, rendant la décision
unanime de cette Cour dans Curran v. Davis, et
[Page 218]
par M. le Juge Mignault dans un article
remarquable intitulé "A propos de fiducie", publié dans la Revue du
Droit, vol. 12 (1933-34), p. 73.
Ayec cette notion de la fiducie telle qu'elle
existe dans la province de Québec, et non pas telle qu'on la trouve ailleurs,
comme en Angleterre ou dans les provinces de droit commun, il n'y a pas
d'obstacle à la détermination de cette cause, de la manière que l'a proposée la
Cour du banc de la reine1.
Evidemment, les appelants sont véritablement
des administrateurs fiduciaires des biens légués. Il exercent sur ces derniers
un droit de propriété limité par le texte de la loi et par la jurisprudence que
j'ai citée; il sont comptables aux légataires des revenus qui leur sont
attribués. Le temps venu, ils devront remettre le capital à "The School
for Crippled Children" qui est le légataire ultime, en déduisant cependant
le montant employé au paiement des droits, tel que l'a voulu la testatrice, et
comme d'ailleurs l'autorise l'art. 31 de la Loi des droits sur les
successions.
Pour ces raisons, ainsi que pour celles
données par mon collègue M. le Juge Abbott, je suis d'avis que les appels
doivent être rejetés avec dépens.
Locke J.
(dissenting):—The proceedings in this matter were commenced by petition
of right by the executors of the late Isabel Greenshields to recover certain
moneys paid under protest to the Crown under the provisions of the Quebec
Succession Duties Act, 1943, 7 Geo. VI, c. 18, as amended. The claim of the
suppliants was allowed in the Superior Court by Gibsone J. but that judgment
was set aside in the Court of Appeal
and the action dismissed.
By the will, all of the estate of the testator was
bequeathed to the executors upon certain trusts which included the following:
(c) To pay to my friends, Claire Johnston and Dorothy
Hamilton, wife of Dr. Griffin Hill or the survivor of them, during their
lifetime, the net income of the residue of my said Estate;
(d) Upon the death of the survivor of the said
Claire Johnston and or Dorothy Hamilton-Hill, to deliver the residue of my
Estate to the School for Crippled Children at Montreal;
[Page 219]
It was further directed that all succession and other
death duties should be paid out of the capital of the residue, without the
intervention of the beneficiaries.
The evidence discloses that the residue of the estate, after
providing for a legacy to Charles Glass Greenshields, one of the executors, was
$342,118 and upon this amount the Province required payment of succession
duties in the sum of $83,983.03, and the suppliants sought the return of this
amount or, alternatively, that amount less any amount payable as succession
duties upon the life interests.
Section 9 of the Quebec Succession Duties Act
specifies the rates of duty upon transmissions which vary where the property is
transmitted to the wife or to relations in blood or in law and where the
beneficiary is a stranger. In this case, the beneficiaries of the life
interests provided were strangers and the bequests attracted accordingly a
higher rate of duty.
Section 31 of the Act provides in part:
In the case of usufruct, use, substitution or attribution of
the revenue from any capital or from any trust fund, the amount of duties
payable shall be calculated as though the usufructuary, the person having the
right to use, the institute or the beneficiary of the revenue, received, as
absolute owner, the property subject to the usufruct, right of use,
substitution or trust, and the said duties may be paid from the capital.
While it is admitted that no succession duties were exigible
upon the gift of the residue to the School for Crippled Children by reason of
the provisions of s. 13 of the Act, the Crown, relying upon the above
provision, levied duty on the bequest of the life interests as if the
beneficiaries, Miss Johnston and Mrs. Hill, had received the corpus of the
residue of the estate. In the result, as the will directed, and s. 31
permitted, the executors to pay the duties levied out of the capital of the
residue, the value of the legacy to the charity declared exempt under the Act
has been reduced by the amount to which the duty thus exacted exceeded such duty
as would have been payable upon the life interests in question.
The following further sections of the Act are to be
considered. Section 2 reads:
All property, moveable or immoveable, the ownership,
usufruct or enjoyment whereof is transmitted owing to death, shall be liable to
duties, calculated upon the aggregate value of the property transmitted, at the
rates fixed in section 9.
[Page 220]
Section 4 defines property in a
manner which would include the life interests in question. Section 9 is the
charging section and the duty is imposed on the property transmitted.
Section 13, so far as applicable, reads:
… no duties shall be exigible on legacies, gifts and
subscriptions for religious, charitable or educational purposes.
Section 19 reads:
Life rents or other rents and endowments shall be
capitalized and valued at the amount required, on the date of the death, by a
life insurance company, to secure a rent or endowment of a like sum.
Articles 981a to 981n of the Civil Code and the
nature of the rights of cestuis-que-trust were considered by the
Judicial Committee in Laverdure v. Du Tremblay et
al.. From the date of the death of Mrs. Greenshields the
appellants, as trustees, were seized of the corpus of this estate in trust upon
the trusts declared by the will and were entitled to possession of it as
against the beneficiaries named in the will and, in that capacity, were liable
to account to the beneficiaries and to pay to those entitled to the life
interests the income from the residue in accordance with the terms of the will
and to transfer the residue to the School for Crippled Children on the death of
the survivor of those entitled to the life interests.
The property transmitted to Miss Johnston and to Mrs. Hill
was a life interest in the net income and it is upon such interests alone that
the duty was imposed by ss. 2 and 9. The property transmitted to the School for
Crippled Children was the right upon the death of the survivors of those beneficiaries
to a conveyance of the residue of the estate. The corpus of the estate, as it
was as of the death of the testator, was made subject to the payment of the
debts and funeral and testamentary expenses, in addition to such succession and
other death duties as might be payable upon the bequests to Charles Glass
Greenshields and to Miss Johnston and Mrs. Hill, to the fees and expenses of
the Chartered Trust Company and to the payment of such expenditures as might be
incurred for repairing, improving or rebuilding any property of the estate. The
amount of the residue would not, accordingly, be determined until the expiry of
the last of the life interests.
[Page 221]
In Guaranty Trust Company of New York et al. v. The King,
the facts were similar to those affecting the present matter. The net revenues
were given to three life beneficiaries and, on the extinction of these
interests, were to be, paid to charitable institutions, bequests to which were
entitled to exemption. The judgment of the majority of this Court delivered by
Rand J. held that the Province was not entitled to assess succession duties
upon the corpus of the estate, but merely upon the value of the life interests.
That case, however, was decided under the terms of the Quebec Succession
Duties Act as it appeared as c. 80 of the Revised Statutes of 1941. In that
statute, s. 13 (which was repealed and re-enacted by c. 18 of the statutes of
1943), so far as relevant, read:
In the case of transfer of property with usufruct or
substitution, the amount payable shall be calculated as if the usufructuary or
the institute received as absolute owner and the duties shall be paid only on
the actual capital of the property transmitted.
Rand J., in delivering the judgment which allowed the appeal
from the Court of Appeal of Quebec, said in part:
But here we have a life interest, not usufruct, in income
with the interest in the corpus exempt from tax. The beneficiary has no contact
with much less possession of the corpus and the duty of the trustee under
section 13 is to deduct the tax from property in his hands belonging to the
person liable for it. To deduct tax in respect of the property of the charity
would be in the face of the exemption.
Section 31 was again repealed and re-enacted by s. 8 of c.
32 of the statutes of 1949 and now reads as first above quoted. The words
"attribution of the revenue from any capital or from any trust fund"
appear to me to be sufficient to describe the bequest to the beneficiaries of
the life interest in the present matter and, if the section applies to a case
such as the present where the corpus of the estate, after the satisfaction of
the charges imposed upon it, is held upon terms such as exist in the present
matter, the position taken on behalf of the Crown would appear to be justified.
The taxing sections of the Quebec Succession Duties Act in
terms impose the duties upon the property transmitted at specified rates. There
was no transmission to Miss Johnston or Mrs. Hill of either the corpus or the
residue of the estate. The exemption given to legacies for charitable
[Page 222]
purposes is in the clearest terms and no duties were
exigible upon the bequest to the School for Crippled Children, payable either
at the time of death or at the time when, on the extinction of the life
interests, the trustees convey the corpus to them.
The status of the property held in trust by the executors
under the will in question must, of necessity, be considered in the present
matter, since it has been resorted to to pay the succession duties.
Article 981a reads:
All persons capable of disposing freely of their property
may convey property, moveable or immoveable, to trustees by gift or by will,
for the benefit of any persons in whose favor they can validly make gifts or
legacies.
Article 9816 reads in part:
Trustees, for the purposes of their trust, are seized as
depositaries and administrators for the benefit of the donees or legatees of
the property … conveyed to them in trust. …
Article 981d provides that trustees dissipating or
wasting the property of the trust, or refusing or neglecting to carry out the
provisions of the document creating the trust, or infringing their duties, may
be removed by the Superior Court.
By art. 981h it is declared that trustees are obliged
to execute the trust which they have accepted, unless they be authorized by a
judge of the Superior Court to renounce.
Article 981k declares the duty of the trustees to
exercise reasonable skill and care in administering the trust and art. 981l
provides that at the termination of the trust, they must render an account and
deliver all the properties in their hands to the persons entitled.
These are the same duties that are imposed upon trustees
under the laws of England.
Articles 981a to 981n were added to the Code
in 1888.
In Curran v. Davis,
Rinfret J. (as he then was), in delivering the judgment of the Court, said in
part:
Après la revue que nous venons de faire de la
jurisprudence et de la doctrine dans la province de Québec sur la matière de ce
litige, il est difficile de ne pas conclure que le chapitre de la fiducie dans
le code est vraiment d'inspiration anglaise.
[Page 223]
In Curran's case, Sir Mortimer Davis had executed a
trust deed conveying property to trustees in trust, inter alia, to pay
an annuity on the death of the said Davis to his adopted son. Before his death,
Davis assumed to revoke the trust in favour of the son who in the action,
following his father's death, asserted that the revocation was ineffective, the
trust deed having become effective upon the acceptance of the trust by the
named trustees. There was no evidence that the son had accepted the gift to him
and it was contended that, in these circumstances, the donor might validly
rescind the trust. This contention was rejected in this Court. While that was
the issue, the learned judge who delivered the judgment of the Court discussed
at some length the effect to be given to the article in question, saying that
he was of the opinion that art. 981a was the fundamental article and that it
contained all that was necessary to define a deed of trust. Speaking of the
position of the trustees, he said:
Les "trustees" n'en seront cependant pas
propriétaires, dans le sens absolu du mot. Les "trustees",
bien que seuls propriétaires apparents à l'égard des tiers, n'auront ni l'usus,
ni le functus [fructus?] ni l'abusus de la
"trust property".
And, speaking of the right of the beneficiary, said:
En conséquence, Philippe Meyer Davis n'a aucun
droit de propriété sur la "trust property". Il n'a que des droits
conservatoires; et l'on peut se demander s'il a le droit de suite, ce qu'il
n'est pas nécessaire de décider pour les fins de ce litige.
A second appeal of Curran v. Davis was heard at the same time and the
judgment follows at p. 307 of the report. Rinfret J. said that there was no
distinction, in the legal sense, between the cases and, speaking of the status
of the trust property conveyed to the trustees, said:
It follows that the trust property would, immediaetly upon
being received, become subject to all the terms and conditions of the trust,
which would at once be binding upon the trustees.
And again:
"As and when received" by the trustees, the trust
property became affected ipso facto by the terms and conditions of the
deed.
[Page 224]
The case of Laverdure v. Du
Tremblay was decided by the Judicial Committee four years later and
there is nothing in the judgment delivered by Lord Maugham conflicting with the
above-quoted passages from the judgment in the Curran cases, though
something of importance was added. After saying that the Civil Code of Quebec
had originally no article relating to trusts and that, generally speaking, the
French system does not recognize trusts, he said that their great convenience
was recognized in Quebec and arts. 981a to 981n were added to the
Code. Lord Maugham then said in part:
It may be useful to add that the English law relating to
trusts and trustees was only adopted to the limited extent involved in those
specific provisions and of any implications necessarily flowing from them.
The English system of Equity was clearly not introduced. In view of those
sections, however, there can be no reason for doubting that the true position
of the children, including Edouard Berthiaume, after
the death of the donor, was that they were beneficiaries under the deed of gift
and under the will, with personal rights against the fiduciary donees (donataires fiduciares) in the case of
the deed, and the fiduciary legatee (légataire fiduciaire)
in the case of the will.
(The italics are mine.)
That the English system of equity was clearly not introduced
into Quebec is a circumstance that has no bearing on the present question. The
English law as to trusts, to the extent described, was introduced, which is the
only matter with which we are concerned. The latter part of this quotation does
not purport to define or limit the rights which the beneficiaries might assert
for the protection of their interest or the status of the trust estate. The
words in italics are to be noted and are of importance.
The duties of the trustees are defined in the present case
by the will and by the terms of the article which I have quoted. As declared by
the article, the property is held by the trustees for the benefit of the cestuis-que-trust.
The legal title is vested in the trustees as well as the right to
possession but, from the time of the death of the testator, that estate was in
their hands impressed with a trust in favour, inter alia, of the School
for Crippled Children. To say this is but to paraphrase the language of Rinfret
J. in Curran's case.
[Page 225]
It is perfectly clear from the language of the article and
from what was said in Curran's case and in the judgment of the Judicial
Committee in Laverdure's case that the cestuis-que-trust were entitled, in respect of the property and
the revenues from the property held in trust for them, to assert the same
rights against the trustees for the protection of their respective interests as
might be had under the English law and which are described at p. 706 et seq. of Lewin on Trusts, 15th
ed. 1950.
It is with these considerations in mind that s. 31 of the Quebec
Succession Duties Act is to be interpreted.
Put bluntly, the argument for the Crown is that while the
transmission to the School for Crippled Children, which the will directs, is by
virtue of s. 13 exempt from succession duty, due to the interposition of the
life estate in the revenues, the corpus held by the trustees and impressed with
a trust in favour of the School may be resorted to to pay duties assessed
against Miss Johnston and Mrs. Hill.
This construction obviously ignores the right of exemption
which the charity is entitled to by law. It is true that the duty is not
assessed against it and it is only the property held in trust for it, art. 981b,
that is levied upon. But this is a distinction without a difference. It is
construing the statute in a manner which permits the Crown to do indirectly
what it cannot do directly. No statute should be so interpreted unless its
terms make it perfectly plain that no other reasonable construction can be
placed upon it.
The broad general rule for the construction of statutes is
that a section or enactment must be construed as a whole, each portion throwing
light, if need be, on the rest: Jennings v. Kelly. The law will not allow the
revocation or alteration of a statute by construction when the words may be
capable of proper operation without it. It cannot be assumed that Parliament
has given with one hand what it has taken away with another: Maxwell on The
Interpretation of Statutes, 10th ed. 1953, p. 160.
It is not, I think, without significance that when the Quebec
Succession Duties Act was repealed and re-enacted in 1943 and amended in
1949, while changes were made in the terms of s. 31, the absolute nature of the
exemption of
[Page 226]
legacies to charitable institutions such as the School for
Crippled Children was not changed.
In my opinion, the proper interpretation to be placed upon
s. 31 is that it applies to cases where the transmission of property such as a
life interest in the revenue and of the residue upon the extinction of the life
interest are all liable to duty under the charging sections. By reason of its
terms, where, as in the present case, the life interest is given to strangers, the
amount of the duty must be calculated at the higher rate imposed by s. 9(3) and
be payable upon each of the transmissions.
Where the transmission in remainder is entitled to the
benefit of the exemption provided by s. 13, s. 31 does not apply, in my opinion.
It has been said in argument that the language of s. 31 is
clear, but that is equally true of s. 13. Applied literally to a case such as
the present, they are inconsistent and irreconcilable. It is, however, not
merely the interpretation of the language of s. 31 that is to be considered but
the subject-matter to which it applies. The language of s. 13 is specific and
that of s. 31 general. In the case of conflict between an earlier and a later
statute, a repeal by implication is never to be favoured and is only effected
where the provisions of the later enactment are so inconsistent with, or
repugnant to, those of the earlier that the two cannot stand together. Unless
the two Acts are so plainly repugnant to each other that effect cannot be given
to both at the same time, a repeal cannot be implied. Special Acts are not
repealed by general Acts unless there be some express reference to the previous
legislation or a necessary inconsistency in the two Acts standing together
which prevents the maxim generalia specialibus non
derogant being applied: Broom's Legal
Maxims, 10th ed. 1939, p. 349: Maxwell, op. cit., p. 176. This principle is, in my opinion,
applicable in the present case. There is no difficulty in giving both sections
a reasonable and precise meaning without injustice either to the taxpayer or to
the Crown. The interpretation which I would give the Act complies, in my
opinion, with the rule stated in s. 41 of the Interpretation Act, R.S.Q.
1941, c. 1, which reads:
Every provision of a statute, whether such provision be
mandatory, prohibitive or penal, shall be deemed to have for its object the
remedying of some evil or the promotion of some good.
[Page 227]
Such statute shall receive such fair, large and liberal
construction as will ensure the attainment of its object and the carrying out
of its provisions, according to their true intent, meaning and spirit.
What, in my opinion, is the fallacy of the argument
addressed to us on behalf of the Crown may perhaps best be demonstrated by an
illustration. As pointed out by my brother Cartwright, if the will in question
directed that the estate be held in trust for any period of time for the
charity and, upon the expiration of that period, for those to whom the life
interest was given, if effect be given to the Crown's contention there would be
no duties payable under the Quebec Succession Duties Act by anyone,
since none would be payable upon the succession in favour of the charity. It is
a cardinal rule for the interpretation of all statutes that they should be so
construed, if possible, that they do not lead to an absurdity. In Grey v.
Pearson,
Lord Wensleydale said:
I have been long and deeply impressed with the wisdom of the
rule, now, I believe, universally adopted, at least in the Courts of Law in
Westminster Hall, that in construing wills and indeed statutes, and all written
instruments, the grammatical and ordinary sense of the words is to be adhered
to, unless that would lead to some absurdity, or some repugnance or
inconsistency with the rest of the instrument, in which case the grammatical
and ordinary sense of the words may be modified, so as to avoid that absurdity
and inconsistency, but no farther.
The cases on the matter are collected in the 10th edition of
Maxwell and the learned author, after repeating the above statement of Lord
Wensleydale, says (p. 6):
In repeating this canon in Abbott v. Middleton (1858)
7 H.L.C. 114, 115, Lord Wensleydale said: "This rule in substance is laid
down by Mr. Justice Burton in Warburton v. Loveland, 1 Huds. & Bro.
648, H.L. It had previously been described as 'a rule of common sense as strong
as can be,' by Lord Ellenborough, in Doe v. Jessep, 12 East 292. It is
stated (by Lord Cranworth, when Chancellor) as 'a cardinal rule,' from which,
if we depart, we launch into a sea of difficulties not easy to fathom; and as
the 'golden rule' when applied to Acts of Parliament, by Jervis C.J., in Mattison
v. Hart, 14 C.B. 385."
While this interpretation is urged upon us by counsel for
the Crown, and while to approve it would clearly be beneficial to the Province
in this matter, it would be obviously disastrous to the revenue in the future
since, by the simple expedient of making a bequest of an interest in the
revenue of an estate for a short period to a charity entitled to exemption
under the terms of s. 13 and leaving the remainder of the estate to other
persons such as Miss
[Page 228]
Johnston and Mrs. Hill, transmissions to whom would normally
be taxable under the Quebec Succession Duties Act, liability for any
such duty would be avoided entirely. That, of course, is a matter with which we
are not concerned. The statute, however, is to be expounded "according to
the intent of them that made it": Sussex Peerage Case, and I decline to believe that the
Legislature of Quebec intended by the language of s. 31 to deprive charitable
institutions of the immunity given to them by s. 13 or to permit transmissions
which would otherwise be liable to duty to be exempted by an expedient of the
nature above mentioned.
While the appellants contended that no duty was payable upon
the life interests in the revenue, that claim cannot be sustained. These
transmissions are clearly within the ambit of the taxing sections.
Gibsone J., who considered that the duty payable in respect
of these interests should be computed from year to year and paid by the trustees
when the amount of the annual revenue was determined, gave judgment for the
full amount of $83,983.03. Sections 38 and 39, however, contemplate that the
amount of the duty upon a transmission is to be calculated once and for all by
the collector forthwith following the death of the testator, which involves
placing a value on each transmission in order that the rate and the amount
payable may be determined under s. 9. I do not think that the evidence given by
the witnesses Gammell and Baldwin is sufficient to enable us to determine the
value for succession duty of the legacies of the life interests.
I would, therefore, set aside the judgment of the Court of
Appeal and at the trial and direct that the appellants recover judgment against
the Crown in the amount of $83,983.03, less the amount of duty payable upon the
bequests to Miss Johnston and Mrs. Hill, with leave to apply in the event that
the parties are unable to agree upon the proper amount of the latter
assessment. I would allow the appellants their costs in the Court of Appeal and
in this Court.
[Page 229]
Cartwright J.:—The
relevant facts and statutory provisions and the contentions of the parties are
set out in the reasons of other members of the Court.
The question before us may be summarized as follows: When a
deceased has bequeathed a fund to his executors in trust to pay the income
therefrom to A for life and on the death of A to transfer the capital of the
fund to B, what duties, if any, are exigible under the provisions of the Quebec
Succession Duties Act, hereinafter referred to as "the Act", when
A is a stranger in blood to the deceased and B is a charitable institution a
legacy for whose purposes falls within s. 13 of the Act?
I have reached the conclusion that the answer to this
question given by the unanimous judgment of the Court of Queen's Bench (Appeal
Side) is
correct.
The case stated appears to me to fall within the words of s.
31 of the Act, those which are relevant being as follows:
In the case of … attribution of the revenue from any … trust
fund, the amount of duties payable shall be calculated as though the …
beneficiary of the revenue, received, as absolute owner, the property subject
to the … trust, and the said duties may be paid from the capital.
If I have understood correctly the arguments of counsel and
the reasons of the other members of this Court and those of the learned
justices in the Courts below it has not been suggested in any of them that s.
31 would not govern this case if B instead of being a charitable institution
were an individual belonging to either of the classes defined in. s. 9(1) and
s. 9(2) of the Act.
For the appellants, however, it is contended that since B is
a charitable institution the application of s. 31 would result in the
nullification or virtual repeal of s. 13, that the two sections should, if
possible, be reconciled and that if reconciliation is impossible s. 13 should
be given effect under the rule expressed in the maxim generalia specialibus non derogant. But, assuming that the maxim is applicable,
it appears to me that, as between the two sections, s. 31 rather than s. 13 is
the special one. Sections 9(1), 9(2), 9(3) and 13 contemplate four classes, of
which the first three are liable to pay duties at different rates and the
fourth is free from duty. Into one of these classes will fall every legatee to
whom property is transmitted owing to death. If it
[Page 230]
were not for the terms of s. 31, where property is
transmitted in trust for two persons successively each would pay duties at a
specified rate or would be free from duty according to the rule for the class
of which he was a member ; but the Legislature has seen fit to make a special
rule for the case in which certain successive interests are given.
Prior to the enactment of s. 31, by 7 George VI, c. 18
(1943), the case with which we are concerned did not fall within the terms of
the second paragraph of s. 13 of R.S.Q. 1941, c. 80, which was the predecessor
of s. 31, and read as follows:
In the case of transfer of property with usufruct or
substitution, the amount payable shall be calculated as if the usufructuary or
the institute received as absolute owner and the duties shall be paid only on
the actual capital of the property transmitted.
It was so held by this Court in Guaranty Trust
Company of New York et al. v. The King. Dealing with dispositions
which fell within the second paragraph of s. 13, as then worded, Rand J. said:
Here the conception is the transfer of ownership "with
usufruct or substitution"; all interests are dealt with as a single whole,
and the implication is clear that the provision is special.
It is true that Rand J. was not discussing the
application of the maxim generalia specialibus non
derogant and that what was said as to the
meaning and effect of the provision of which he was speaking may be regarded as
obiter, as that provision was held inapplicable to the terms of the will
there before the Court, but I agree with the view expressed that the provision
is a special one.
I am unable to discern a satisfactory reason in principle
for holding that s. 31 applies where B is in a class liable to pay duty at a
rate higher or lower than that payable by A but does not apply where B is in a
class not liable to pay duty at all. It is argued that there is a fundamental
difference between holding that s. 31 is effective to change the rate which
would but for the section be payable by B to that payable by A where the former
is either greater or less than the latter and holding that the section is
effective where the former is zero; but this difference appears to me to be one
of degree rather than of kind.
It appears to me that wherever a fund is given to two
persons successively, whether by usufruct, use, substitution
[Page 231]
or (as in the case at bar) by attribution of revenue, the
Legislature has provided that, as it was put by Rand J. in the passage quoted
above, the successive interests given are to be dealt with as a single whole,
that the duty on that whole is to be calculated as though the beneficiary of
the revenue received the whole property as absolute owner, that is to say at
the rate, if any, applicable to the beneficiary of the revenue, regardless of
the rate, if any, that would otherwise have been applicable to the one who
takes in remainder, that the duty so calculated is payable out of the capital
of the property and that no other duty is exigible from the property or from
any of the persons successively entitled thereto. By this construction s. 13 is
not repealed or nullified, it has full effect except in cases in which the
successive interests embraced in s. 31 are given; in those special cases s. 13
supersedes or yields to the provisions of s. 9 according as the charitable
institution is or is not the first in order of those who take successively.
I find support for the view that this construction should be
adopted in the reasons of the majority in Guaranty Trust Company of New York
v. The King, supra, particularly at pp. 210, 211 and 212. In rejecting the
argument of the respondent in that case that s. 3 of the Act, as it then read,
should be construed so as to bring about a result similar to that at which I
have arrived in the case at bar, Rand J. contrasted the language of s. 3 with
that of the second paragraph of s. 13, and his reasons appear to me to imply
that had the case fallen within the words of that paragraph he would have
accepted the respondent's argument. I, of course, do not regard this as in any
way decisive of the present case, for I am not unmindful of the words of Lord
Halsbury in Quinn v. Leathern:
… a case is only an authority for what it actually decides.
I entirely deny that it can be quoted for a proposition that may seem to follow
logically from it.
It is argued that if s. 31 be construed in the manner I have
indicated above an absurdity results, in that if a testator bequeathed a fund
in trust directing that the income be paid to a charity for any length of time
and that the capital of the fund thereafter be paid to an individual, falling
within any of the classes defined in s. 9(1), (2) and (3), no duties whatever
would be payable on any part of
[Page 232]
the fund. I can see no escape from the conclusion that such
a result would follow. In the supposed case, which is the converse of that in
the present appeal, the duties pay able would be calculated as though the
charity received as absolute owner the property subject to the trust and, by
virtue of s. 13, no duties would be exigible. I have some difficulty in
supposing that the Legislature intended this result, but I am unable to regard
it as such a manifest absurdity as requires or permits the Court to refuse to
apply the literal and, I think, plain words of s. 31 and to read into the first
paragraph of that section some such words as "provided all those who take
successively are liable to pay duties". In dealing with such an argument,
as is pointed out in Maxwell on The Interpretation of Statutes, 10th ed. 1953,
p. 7, "the difficulty lies in deciding between words that are plain but
absurd, and words that are so absurd as not to be deemed plain".
In view of the differences of judicial opinion that exist in
the case at bar I have reached my conclusion with hesitation; but the
difficulties in construing the Act in the manner contended for by the
appellants seem to me to be even more formidable than those raised against the
construction I have adopted.
Before parting with the matter I wish to make two further
observations. First, I agree with all that is said in the reasons of my brother
Locke in stating the rules of construction by which the Court should be guided
in ascertaining the meaning of the statute here in question, although I have
the misfortune to differ from him as to the result which flows from the
application of those rules in this case. Second, I am unable to see that the
questions arising for decision in these appeals are affected by any differences
there may be between the law relating to trusts and trustees as it exists in Quebec
and as it exists in those Provinces which apply the law of England.
I would dismiss the appeals with costs.
Fauteux J.:—Pour les raisons données par mes collègues MM. les Juges Taschereau
et Abbott, je suis d'avis que les appels doivent être rejetés avec dépens.
[Page 233]
Abbott J.:—The
facts are set out in the reasons of Mr. Justice Hyde in the Court below and I need refer to them only
briefly. In their petition of right appellants claim the reimbursement with
interest of succession duties , in an amount of $84,183.91, paid under protest
by appellants in their quality of testamentary executors and trustees of the
late Mrs. Hugh Mackay. The testatrix died on January 20, 1952, domiciled in Quebec,
and under the terms of her will bequeathed all her property to the appellants
in trust for the execution of certain trusts, two of which were as follows:
(c) To pay to my friends, Claire Johnston and Dorothy
Hamilton, wife of Dr. Griffin Hill or the survivor of them, during their
lifetime, the net income of the residue of my said Estate;
(d) Upon the death of the survivor of the said Claire Johnston and or Dorothy Hamilton-Hill, to deliver the
residue of my Estate to the School for Crippled Children at Montreal;
It is conceded that the School for Crippled Children at
Montreal qualifies for exemption under s. 13 of the Quebec Succession Duties
Act, and claim for reimbursement of the duties paid is made by reason of
the assessment of the legacies of revenue to Miss Johnston and Mrs. Hill as
though these two ladies had been bequeathed the residue of the estate as
absolute owners.
Three questions arise on this appeal, all relating primarily
to the interpretation to be given to certain provisions of the Quebec
Succession Duties Act, 7 Geo. VI, c. 18, as amended. These questions are (
1 ) Are there any succession duties imposed under s. 2 of the Act with respect
to the bequest of revenue made to Miss Johnston and Mrs. Hill? (2) If there are
duties payable with respect to such bequest, upon what basis is the amount of
such duties to be calculated? and (3) By whom are such duties payable?
As to the first of these questions, the said bequest, in my
view, comes clearly within the terms of s. 2, which reads as follows:
2. All property, moveable or immoveable, the ownership,
usufruct or enjoyment whereof is transmitted owing to death, shall be liable to
duties, calculated upon the aggregate value of the property transmitted, at the
rates fixed in section 9.
Moreover, the question as to whether such a bequest is
subject to succession duties under the Act was settled in
[Page 234]
my opinion by the decision of this Court in Guaranty
Trust Company of New York et al. v. The King, in which a similar bequest of
revenue was in issue. The argument that the bequests to Miss Johnston and Mrs.
Hill were not subject to any duties was not pressed too strenuously by Mr.
Watt.
As to the second question, duties being payable under s. 2,
the amount falls to be determined under ss. 9 and 31. Section 9, which deals
with rates, is not in issue, and the relevant portion of s. 31 reads as
follows:
31. In the case of usufruct, use, substitution or
attribution of the revenue from any capital or from any trust fund, the amount
of duties payable shall be calculated as though the usufructuary, the person
having the right of use, the institute or the beneficiary of the revenue,
received, as absolute owner, the property subject to the usufruct, right of
use, substitution or trust, and the said duties may be paid from the capital.
Sections 2 and 31 read together provide (1) for duties
with respect to property transmitted subject to "usufruct, use,
substitution or attribution of revenue"; (2) that the duties payable shall
be calculated as though the usufructuary, the person having the right of use,
the institute or the beneficiary of the revenue, received, as absolute owner,
the property subject to such life or other similar interest; and (3) that
payment of the duties may be made out of such property. Section 42 provides for
a privilege upon the property of an estate to secure the payment of succession
duties.
In the Guaranty Trust case, supra, a majority
of this Court held that, on the facts, the bequest of revenue there in issue
came within the terms of what is now s. 19 of the Act for the purpose of fixing
the value of the bequest for succession duty purposes, and that finding was
conclusive so far as the question at issue in that appeal was concerned.
In 1943 however, subsequent to the death of the testator
whose estate was in issue in the Guaranty Trust case, the Quebec
Succession Duties Act, R.S.Q. 1941, c. 80, was revised and replaced by the
Act 7 Geo. VI, c. 18. In this new Act the second paragraph of s. 13 (considered
in the Guaranty Trust case) was amended inter alia by adding the
words "or attribution of income from any capital or from any trust
fund" to the words "usufruct, use and substitution" already
contained in the section, and it became s. 31 of
[Page 235]
the new Act. In my opinion this amendment is clear and
unambiguous and it has the effect of bringing a bequest of revenue (such as is
in issue here) squarely within the terms of s. 31, thus rendering the
provisions of s. 19 inapplicable.
If I am right in this view, the reasons of my brother Rand,
speaking for the majority in the Guaranty Trust case, are of little
assistance in determining the second question to which I have referred.
It was argued by Mr. Laing that if the Crown's contention as
to the interpretation to be given to s. 31 were to be accepted, the effect
would be implicitly to repeal, in part at any rate, the provisions of s. 13. I
cannot accept this contention. The two sections forming part of the same
statute must, of course, be read together, but I am unable to see any conflict
between them, however unfortunate the result may seem to be in certain cases.
It was also suggested during the course of the argument that had the income of
the residue been bequeathed to the charity even for one day and the capital to
an individual, no duties would have been payable by the latter and that this
could not have been intended by the Legislature. I am far from being satisfied
that such a result would follow (since in my view in such a case s. 31, which
is not the charging section, never comes into play) but even if it did, I can
see no reason for refusing to apply the plain words of s. 31.
The Act does not purport to determine the apportionment to
be made, if any, of the duties payable, between a person entitled to receive
revenues and a person ultimately entitled to receive capital. In the present
case the testatrix provided that all duties payable with respect to the
benefits conferred under her will, including those on a particular legacy to
her brother, were to be paid by her executors and trustees out of the mass of
her estate before any distribution of capital or revenue. Had she not done so,
this matter of apportionment, if any, might have had to be determined in
accordance with the general law as was the case in Lamarche v. Bleau, referred to in argument, but as to
this I do not find it necessary to express any opinion.
Since preparing these reasons I have had the advantage of
reading the notes of my brother Taschereau and I am in
[Page 236]
agreement with the views which he has expressed as to the
law concerning "trusts" in the Province of Quebec.
Appellants also appealed against the judgment of the Court
of Queen's Bench maintaining the Crown's appeal against that portion of the
judgment of the learned trial judge which reserved to the respondent the right
to collect duties from year to year upon the annual payments to Miss Johnston
and Mrs. Hill.
For the reasons which I have given, as well as for those
delivered by Mr. Justice Hyde in the Court below, with which I am in
substantial agreement, I would dismiss both appeals with costs.
Appeals dismissed with costs, Locke J. dissenting.
Attorneys for the suppliants, appellants: Foster,
Hannen, Watt, Leggat & Colby, Montreal.
Attorney for the respondent: G. Hudon, Quebec.
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