P.R.
Dussault
J.T.C.C.:—
Each
of
these
cases
involves
an
appeal
from
an
assessment
of
$70,000
by
the
Minister
of
National
Revenue
(“the
Minister”)
under
section
160
of
the
Income
Tax
Act
(“the
Act”).
The
parties
jointly
filed
a
factum
book
applicable
to
the
four
appeals
as
well
as
an
agreement
on
the
facts
with
respect
to
the
appeal
by
Benoît
Montreuil
Jr.
This
agreement
is
applicable
to
the
other
appeals,
the
subject
matter
of
which
is
identical.
The
agreement
reads
as
follows:
The
parties,
through
their
undersigned
solicitors,
admit
the
following
facts.
A.
THE
FACTS
1.
Until
his
departure
for
the
Cayman
Islands
in
1976,
Benoît
Montreuil
Sr.
was
a
resident
of
Canada.
2.
The
appellant
is
the
son
of
Benoît
Montreuil
Sr.
3.
In
1978,
when
Mr.
Benoît
Montreuil
Sr.
had
ceased
to
reside
in
Canada
and
owned
no
property
there,
the
respondent
issued
reassessments
for
the
1974,
1975
and
1976
taxation
years.
More
specifically,
the
1974
taxation
year
for
Benoît
Montreuil
Sr.
was
reassessed
on
February
27,
1978,
whereas
the
1975
and
1976
taxation
years
were
reassessed
on
August
25,
1978;
none
of
these
taxation
years,
i.e.
1974,
1975
and
1976,
were
the
subject
of
a
later
notice
of
objection.
4.
Except
for
the
collection
of
the
minimum
amounts
duly
applied
to
the
account,
Benoît
Montreuil
Sr.’s
tax
liability
in
tax
and
interest,
in
particular
for
the
1975
taxation
year,
continued
to
grow
and
reached
the
amount
of
$117,239.94
on
June
14,
1987,
the
date
of
his
death;
owing
to
a
failure
to
pay
the
full
amount,
the
late
Benoît
Montreuil
Sr.’s
tax
liability
continued
to
grow
after
June
14,
1987,
because
of
the
interest.
5.
On
June
14,
1987,
Benoît
Montreuil
Sr.
died
in
Miami;
at
the
time
of
his
death,
Mr.
Montreuil
was
a
resident
of
Grand
Cayman,
Cayman
Islands,
British
West
Indies
and
was
domiciled
there.
6.
On
or
about
January
14,
1988,
the
appellant
received
the
amount
of
$70,000
from
the
Estate
of
Benoît
Montreuil,
in
compliance
with
the
late
Mr.
Montreuil’s
will,
dated
August
21,
1986.
7.
The
fair
market
value
of
the
property
received
by
the
appellant
on
or
about
January
14,
1988
from
the
Estate
of
Benoît
Montreuil
was
equal
to
$70,000
and
no
consideration
was
granted
by
the
appellant.
8.
In
a
letter
dated
May
15,
1990,
Mr.
Jean
Potvin
of
the
law
firm
Heenan
Blaikie,
acting
as
the
solicitor
for
the
Estate
of
Benoît
Montreuil,
offered
the
respondent
the
amount
of
$117,239.94,
the
total
of
tax
and
interest
owing
on
the
date
of
the
death
of
Benoît
Montreuil
Sr.,
as
a
final
settlement
of
the
account.
9.
Even
though
the
offer
was
refused
by
the
respondent,
on
or
about
February
25,
1991,
the
Estate
of
M.
Benoît
Montreuil
Sr.,
through
his
solicitor,
Mr.
Potvin,
sent
the
Minister
of
National
Revenue
a
cheque
for
$117,239.94,
which
was
duly
cashed
and
applied
against
the
account
of
Benoît
Montreuil
Sr.
10.
Notwithstanding
this
payment
of
February
25,
1991,
the
late
Benoît
Montreuil
still
owed
the
amount
of
$65,534.54
for
the
1974,
1975
and
1976
taxation
years,
and
more
specifically
for
the
1975
year.
11.
On
March
27,
1991,
the
respondent
issued
a
notice
of
assessment
claiming
the
amount
of
$65,534.54
from
the
appellant.
12.
The
appellant
filed
an
opposition
to
the
respondent’s
assessment
within
the
specified
time
period.
13.
On
September
23,
1991,
the
respondent
confirmed
the
assessment
issued
on
March
27,
1991.
14.
On
February
12,
1993,
the
respondent
issued
a
new
assessment
increasing
the
amounts
claimed
from
the
appellant
to
$70,000.
B.
POINTS
AT
ISSUE
15.
The
points
at
issue
are
the
following:
(a)
did
the
payment
of
an
amount
of
$70,000
by
the
Estate
of
Benoît
Montreuil
to
the
appellant
constitute
a
transfer
of
property
within
the
meaning
of
section
160
of
the
Income
Tax
Act?
(b)
if
the
answer
to
(a)
is
yes,
did
the
payment
of
the
amount
of
$117,239.94
on
or
about
February
25,
1991
by
the
Estate
of
Benoît
Montreuil
constitute
full
and
final
payment
of
the
amounts
owing
on
this
date
by
the
late
Benoît
Montreuil
Sr.?
(c)
if
the
answer
to
(b)
is
no,
what
was
the
amount
for
which
the
appellant
could
be
held
jointly
and
severally
liable
of
paying
with
the
late
Benoît
Montreuil:
(i)
was
it
solely
the
amount
of
the
tax
liability
on
the
day
of
death,
i.e.
$117,239.94$
on
June
14,
1987,
in
which
case
the
amount
was
fully
paid
on
or
about
February
25,
1991;
(ii)
was
it
the
amount
of
the
tax
liability
on
January
14,
1988;
(iii)
was
it
the
amount
of
$65,534.34
on
the
day
of
the
assessment
plus
interest
until
complete
payment
was
effected.
[Translation.]
In
my
view,
question
15.(a)
could,
given
the
facts
admitted,
be
for-
mulated
as
follows:
Was
the
bequest
of
an
amount
of
$70,000
by
Benoît
Montreuil
Sr.
to
the
appellant,
or
the
payment
of
the
amount
of
$70,000
by
the
Estate
of
Benoît
Montreuil
Sr.
to
the
appellant,
a
transfer
of
property
within
the
meaning
of
section
160
of
the
Act?
Counsel
for
the
appellants
raised
four
reasons
for
attacking
the
validity
of
the
assessment
made
by
the
Minister
with
respect
to
each
of
them
under
section
160
of
the
Act.
These
reasons
may
be
summarized
in
the
following
statements:
—
section
160
does
not
apply
to
a
transfer
of
property
following
a
death,
for
only
transfers
inter
vivos
are
covered
by
this
provision;
—
the
payment
of
the
amount
of
$117,239.94
by
the
Estate
on
February
25,
1991
constituted
full
payment
of
the
tax
liability
of
Benoît
Montreuil
Sr.,
the
amount
of
the
liability
on
June
14,
1987,
the
date
of
his
death;
-
assuming
that
the
tax
liability
of
Benoît
Montreuil
Sr.
was
more
than
$117,239.94,
the
cashing
of
the
cheque
for
this
amount
in
1991
constituted
a
transaction
within
the
meaning
of
Article
1918
of
the
Civil
Code
of
Lower
Canada
(the
“Civil
Code”),
which
effectively
completely
extinguished
the
debt;
—
the
assessment
pursuant
to
section
160
is
not
valid
because
it
does
not
meet
the
standards
for
accuracy
required
in
the
Tax
Court
of
Canada
judgment
in
Leung
v.
Minister
of
National
Revenue,
[1991]
2
C.T.C.
2268,
91
D.T.C.
1020.
Needless
to
say,
counsel
for
the
respondent
disputed
each
of
the
points
raised.
The
will
of
Benoît
Montreuil
Sr.
is
relatively
complex
with
respect
to
the
disposition
of
his
property.
It
includes,
particularly,
the
following
clauses
which
pertain
to
the
instant
case:
1.1
DECLARE
that
I
die
domiciled
in
the
Cayman
Islands
and
that
I
desire
that
this
my
Will
will
be
construed
to
take
effect
according
to
the
Laws
of
the
Cayman
Islands
aforesaid.
3.
I
appoint
Lawrence
Chomyn,
of
Birchwood
Drive,
P.O.
Box
446,
George
Town,
Grand
Cayman
and
the
said
Therese
Roy
Montreuil
(hereinafter
together
called
“my
trustees”)
which
expression
where
the
context
so
admits
shall
include
the
survivor
or
survivors
of
them
or
other
trustees
or
trustee
hereof
of
the
time
being
to
be
the
executors
and
trustees
of
this
my
Will,
all
in
accordance
with
paragraph
“I”
of
the
Schedule
of
this
my
Will.
9.
I
GIVE
to
my
trustees
my
holding
of
gold
upon
trust
to
sell
the
same
when
the
price
thereof
reaches
$500
United
States
Dollars
per
troy
ounce
or
if
the
price
shall
not
reach
the
said
sum
of
$500
United
States
Dollars
per
troy
ounce
or
if
the
price
shall
not
reach
the
said
sum
of
$500
United
States
Dollars
per
troy
ounce
within
one
year
of
my
death
Upon
trust
to
sell
the
said
holding
as
soon
thereafter
as
my
trustees
shall
in
their
sole
discretion
and
without
being
liable
for
loss
think
fit
and
out
of
the
proceeds
of
sale
thereof
to
pay
the
following
pecuniary
legacies:
(a)
To
my
daughter
Nicole
Montreuil
of
200
James
Street,
Ottawa,
Ontario,
Canada
the
sum
of
Can.$70,000.
(b)
To
my
daughter
Claire
Montreuil
of
120
Fraser,
Apt.
12,
Québec,
Canada
the
sum
of
Can.$70,000.
(c)
To
my
son
Pierre
Montreuil
of
5348
Chabot,
Apt.
1,
Montréal,
Que.
Canada
the
sum
of
Can.$70,000.
(d)
To
my
son
Benoît
Montreuil
Jnr.
of
c/o
200
James
Street,
Ottawa,
Canada
the
sum
of
Can.$70,000.
Any
moneys
forming
part
of
the
proceeds
which
shall
not
be
used
to
pay
the
aforesaid
legacies
shall
accrue
to
and
form
part
of
my
said
residuary
fund.
On
the
date
of
death,
June
14,
1987,
subsection
160(1)
of
the
Act
read
as
follows:
160(1)
Where
a
person
has,
on
or
after
the
1st
of
May,
1951,
transferred
property,
either
directly
or
indirectly,
by
means
of
a
trust
or
by
any
other
means
whatever,
to
(a)
his
spouse
or
a
person
who
has
since
become
his
spouse,
(b)
a
person
who
was
under
18
years
of
age,
or
(c)
a
person
with
whom
he
was
not
dealing
at
arm’s
length,
the
following
rules
apply:
(d)
the
transferee
and
transferor
are
jointly
and
severally
liable
to
pay
a
part
of
the
transferor’s
tax
under
this
Part
for
each
taxation
year
equal
to
the
amount
by
which
the
tax
for
the
year
is
greater
that
it
would
have
been
if
it
were
not
for
the
operation
of
section
74,
75
or
75.1,
as
the
case
may
be,
in
respect
of
any
income
from,
or
gain
from
the
disposition
of,
the
property
so
transferred
or
property
substituted
therefor;
and
(e)
the
transferee
and
transferor
are
jointly
and
severally
liable
to
pay
under
this
Act
an
amount
equal
to
the
lesser
of
(i)
the
amount,
if
any,
by
which
the
fair
market
value
of
the
property
at
the
time
it
was
transferred
exceeds
the
fair
market
value
at
that
time
of
the
consideration
given
for
the
property,
and
(ii)
the
aggregate
of
all
amounts
each
of
which
is
an
amount
that
the
transferor
is
liable
to
pay
under
this
Act
in
respect
of
the
taxation
year
in
which
the
property
was
transferred
or
of
any
preceding
taxation
year.
but
nothing
in
this
subsection
shall
be
deemed
to
limit
the
liability
of
the
transferor
under
any
other
provision
of
this
Act.
The
first
point
discussed
by
counsel
for
the
appellants
raises
a
question
of
interpretation
on
the
scope
of
section
160
of
the
Act.
Counsel
maintained
that
this
provision
was
not
applicable
when
there
was
a
transfer
of
property
following
a
death,
such
a
transfer
not
constituting
a
transfer
of
property
within
the
meaning
normally
attributed
to
this
term
in
the
context
in
which
it
is
used.
To
this
end,
he
refers
first
to
the
decision
of
the
Supreme
Court
of
Canada
in
Stubart
Investments
Ltd.
v.
R.
(sub
nom.
Stubart
Investments
Ltd.
v.
The
Queen),
[1984]
1
S.C.R.
536,
[1984]
C.T.C.
294,
84
D.T.C.
6305,
in
which
Estey,
J.
relied
on
the
words
of
Professor
Dreidger
concerning
the
modern
rule
of
interpretation
which
the
latter
stated
as
follows:
Today,
there
is
only
one
principle
or
approach,
namely,
the
words
of
an
Act
are
to
be
read
in
their
entire
context
and
in
their
grammatical
and
ordinary
sense
harmoniously
with
the
scheme
of
the
Act,
the
object
of
the
Act,
and
the
intention
of
Parliament.
Relying
then
on
the
decision
of
the
Supreme
Court
in
Johns-Manville
Canada
Inc.
v.
R.
(sub
nom.
Johns-Manville
Canada
Inc.
v.
The
Queen),
[1985]
2
S.C.R.
46,
[1985]
2
C.T.C.
Ill,
85
D.T.C.
5373,
counsel
for
the
appellant
contended
that
where
two
interpretations
were
possible,
the
one
favourable
to
the
taxpayer
must
apply.
Referring
also
to
the
decision
of
the
same
Court
in
Assessment
Commissioner
of
Village
of
Stouffville
v.
Mennonite
Home
Assn.,
[1973]
S.C.R.
189,
31
D.L.R.
(3d)
237,
as
well
as
a
decision
of
the
Tax
Court
of
Canada
in
Boiselle
v.
Minister
of
National
Revenue,
[1989]
1
C.T.C.
2385,
89
D.T.C.
269
(eng.),
89
D.T.C.
(Fr.),
counsel
for
the
appellants
continued
by
stating
on
the
one
hand,
that
a
statute
must
clearly
establish
the
tax
for
a
person
to
be
liable
to
it
and,
on
the
other
hand,
that
a
non-application
provision
such
as
section
160
of
the
Act
must
be
given
a
strict
interpretation.
While
pointing
out
that
section
160
had
already
been
applied
in
many
situations,
counsel
for
the
appellants
noted
that
there
was
no
precedent
for
its
application
in
a
case
of
death.
Relying
on
several
decisions
in
which
the
aim
of
section
160
was
explained,
he
maintained
that
the
application
of
this
provision
implied,
on
the
part
of
the
taxpayer
transferring
his
property,
an
intentional
element
to
evade
his
tax
obligations.
He
nevertheless
admitted
that
this
was
an
inference
and
that
the
courts
had
not
clearly
ruled
on
this
requirement.
He
thus
contended
that
such
intention
could
not
exist
when
a
person
simply
disposed
of
his
property
upon
his
death.
According
to
him,
if
one
could
speak
of
an
intention
to
evade
tax
in
the
instant
case,
it
was
only
in
relation
to
the
fact
that
Benoît
Montreuil
Sr.
left
Canada
in
1976,
and
not
in
relation
to
the
fact
that
his
property
was
transferred
to
his
legatees
following
his
death.
Counsel
contended
that
in
this
sense,
there
was
not
in
the
instant
case
this
element
of
collusion
between
the
transferor
and
transferees
that
existed
in
several
of
the
circumstances
analyzed
by
the
courts
in
the
past.
Counsel
for
the
appellants
concluded
by
contending
that
section
160
implied
that
the
transfer
of
property
in
question
was
the
result
of
some
positive
act
by
the
taxpayer,
an
act
which
could
obviously
not
be
associated
with
his
death.
The
argument
originated
in
the
terms
used
particularly
in
Fasken
v.
Minister
of
National
Revenue,
[1948]
C.T.C.
265,
49
D.T.C.
491,
and
in
Dunkelman
v.
Minister
of
National
Revenue,
[1959]
C.T.C.
375,
59
D.T.C.
1242,
both
of
which
were
used
to
support
several
subsequent
decisions.
Thus
in
Fasken,
supra
the
expressions,
in
particular,
“should
so
deal”
and
“that
he
caused”
used
by
Judge
Thorson
of
the
Exchequer
Court
in
the
following
passages
on
page
279
(D.T.C.
497):
The
word
“transfer”
is
not
a
term
of
art
and
has
not
a
technical
meaning.
It
is
not
necessary
to
a
transfer
of
property
from
a
husband
to
his
wife
that
it
should
be
made
in
any
particular
form
or
that
it
should
be
made
directly.
All
that
is
required
is
that
the
husband
should
so
deal
with
the
property
as
to
divest
himself
of
it
and
vest
it
in
his
wife,
that
is
to
say,
pass
the
property
from
himself
to
her.
The
fact
that
he
brought
about
the
same
result
by
indirect
or
circuitous
means,
such
as
the
novation
referred
to
by
counsel
involving
the
intervention
of
trustees,
cannot
change
the
essential
character
of
the
fact
that
he
caused
property
which
had
previously
belonged
to
him
to
pass
to
his
wife.
Likewise,
in
Dunkelman,
supra,
the
expression
“shall
have
so
dealt”
was
used
by
Thurlow,
J.
of
the
Exchequer
Court
in
the
following
passage
on
page
380
(D.T.C.
1244):
The
expression
“has
transferred”
in
subsection
22(1)
has,
in
my
opinion,
a
similar
meaning.
All
that
is
necessary
is
that
the
taxpayer
shall
have
so
dealt
with
property
belonging
to
him
as
to
divest
himself
of
it
and
vest
it
in
a
person
under
19
years
of
age.
According
to
counsel
for
the
appellants,
one
cannot
contend
that
making
a
will
constitutes
a
positive
act
for
the
purpose
of
applying
section
160,
for
this
provision
would
then
be
applicable
in
case
of
death
only
if
there
were
a
testamentary
estate.
It
would
be
without
application
in
an
intestate
succession,
which
in
his
view
is
“nonsensical”.
Referring
then
to
the
author
Germain
Brière.
Counsel
for
the
appellants
continued
by
affirming
that
the
death
led
to
the
transfer
of
property
by
operation
of
law
and
not
as
the
result
of
a
positive
act
by
the
taxpayer.
He
then
concluded
that
section
160
was
in
no
way
intended
to
cover
this
type
of
situation
and
that
its
application
was
restricted
to
transfers
of
property
inter
vivos.
On
this
first
point,
counsel
for
the
respondent
contended
that
section
160
ought
not
to
be
considered
a
non-application
provision
in
relation
to
the
general
rules
of
law
since
even
the
Civil
Code
prescribes
in
the
first
paragraph
of
Article
880,
that
“The
debts
of
a
testator
must
in
all
cases
be
paid
in
preference
to
his
legacies”.
Relying
on
Article
756
of
the
Civil
Code,
which
states
that
“A
will
is
an
act
of
gift
in
contemplation
of
death
…”,
he
maintained
that
section
160
of
the
Act
applies
in
the
current
situation
just
as
if
the
donation
had
been
inter
vivos.
In
addition,
as
the
application
of
section
160
of
the
Act
in
cases
of
gifts
inter
vivos
was
sanctioned
in
Boiselle,
supra,
and
Furfaro-Siconolfi
v.
R.
(sub
nom.
Furfaro-Siconolfi
v.
The
Queen),
[1990]
1
C.T.C.
33,
89
D.T.C.
5519
(F.C.A.)
decisions
and
the
attribution
rules
deemed
applicable
in
a
case
of
a
trust
between
living
persons
in
Fasken,
supra,
counsel
for
the
respondent
contended
that
the
transfer
described
by
section
160
can
equally
well
result
from
a
gift
in
contemplation
of
death
or
a
testamentary
trust
as
from
a
gift
or
a
trust
inter
vivos.
He
argued
that
in
this
context
there
was
nothing
unusual
about
the
fact
that
Revenue
Canada
should
seek
to
obtain
payment
for
the
tax
liability
of
the
deceased
from
his
legatees
under
section
160
of
the
Act
in
the
instant
case
given
that,
contrary
to
most
cases,
it
was
impossible
in
this
instance
to
obtain
payment
directly
from
the
Estate.
Indeed,
the
Estate
originated
abroad,
and
the
property
was
located
outside
of
Canada.
According
to
counsel
for
the
respondent,
the
important
thing
for
section
160
to
be
applicable
is
that
a
person’s
assets
be
conveyed
from
his
Estate
to
that
of
another
person,
whether
the
transfer
is
made
directly
or
indirectly,
between
living
persons
or
upon
that
person’s
death.
He
added
that
in
the
instant
case,
there
was
even
a
concrete
act
by
the
person
making
the
transfer,
that
of
having
written
a
will,
which
provides
precisely
for
the
transfer
and
distribution
of
the
various
items
of
property
of
which
his
Estate
consists.
As
to
counsel
for
the
appellants’
argument
that
section
160
requires
intent
to
evade
taxation,
counsel
for
the
respondent
pointed
out
that
such
an
argument
was
expressly
rejected
by
Judge
Thorson
of
the
Exchequer
Court
in
1948
in
Fasken,
supra,
note
9,
pages
497-99,
and
that
this
decision
had
since
then
never
been
called
into
question.
Although
there
was
no
ambiguity
in
the
respondent’s
position
with
respect
to
the
application
of
section
160
in
the
case
of
a
transfer
of
property
following
death,
it
was
not
as
firm
with
respect
to
the
precise
date
upon
which
the
transfer
was
alleged
to
have
occurred
in
the
instant
case
in
view
of
the
different
interpretations
that
could
be
given
to
the
provisions
of
the
will
of
the
late
Benoît
Montreuil
Sr.
The
initial
position
of
the
Minister
as
stated
elsewhere
in
the
reply
to
the
notice
of
appeal
was
that
it
was
the
receipt
of
the
amount
of
$70,000
from
the
Estate
that
constituted
a
transfer
within
the
meaning
of
section
160
of
the
Act.
But
counsel
for
the
respondent
now
maintained
that
the
“pecuniary
legacies”
at
issue
in
article
9
of
the
will
were
probably
individual
legacies
taking
effect
at
the
instant
of
death
such
that
the
transfer
will
have
occurred
at
that
moment.
He
added
that
even
if
there
was
a
real
trust
and
a
legacy
to
this
trust
of
the
property
described
in
article
9
of
the
will
stipulating
that
an
amount
of
$70,000
was
to
be
given
to
each
of
the
appellants,
then
at
the
very
least,
the
appellants
will
have
acquired
at
the
moment
of
death
the
right
to
make
a
claim
with
respect
to
such
a
trust.
In
view
of
the
definition
of
the
word
“property”
in
subsection
248(1)
of
the
Act,
in
which
this
word
particularly
includes
“a
right
of
any
kind
whatever”,
it
was
reasonable,
according
to
counsel
for
the
respondent,
to
conclude
that
the
transfer
occurred
at
the
moment
of
death.
However,
he
noted
that
this
problem
had
no
effect
on
the
instant
case
since
the
quantum
of
the
liability
of
the
deceased
for
which
a
beneficiary
is
held
liable
does
not
change,
whether
one
considers
the
date
of
the
transfer
to
be
the
date
of
death,
i.e.
June
14,
1987,
or
the
date
that
the
$70,000
amount
was
received
from
the
Estate,
i.e.
January
14,
1988.
According
to
him,
the
wording
of
section
160
applicable
to
the
instant
case
did
not
establish
liability
as
a
function
of
“any
amount
that
the
transferor
was
so
liable
to
pay
...
on
the
day
of
the
transfer”
as
the
wording
applicable
to
transfers
read
prior
to
November
13,
1981,
but
with
respect
to
“the
aggregate
of
all
amounts
...
that
the
transferor
is
liable
to
pay
...
in
respect
of
the
taxation
year
in
which
the
property
was
transferred
or
of
any
other
preceding
taxation
year”.
According
to
counsel
for
the
respondent,
the
precise
date
of
the
transfer
was
of
no
importance
here
in
establishing
the
quantum
for
which
the
beneficiary
could
be
held
liable
since
the
aggregate
of
the
amounts
that
the
transferor
was
liable
to
pay
under
the
Act
was
for
a
taxation
year
that
preceded
the
year
of
the
transfer.
He
therefore
contended
that
the
situation
was
very
different
from
the
one
analyzed
in
Furfaro-Siconolfi,
supra
and
that
in
any
event,
the
liability
of
each
beneficiary
was
limited
to
the
amount
received,
which
was
lower
than
the
aggregate
amount
of
the
tax
liability.
It
appears
to
me
to
be
important
to
make
a
few
brief
remarks
concerning
the
matter
of
interpretation.
There
is
no
need
here
to
repeat
the
modern
interpretation
rule
for
acts
as
formulated
by
Dreidger,
supra,
and
accepted
by
the
Supreme
Court
of
Canada
in
Stubart,
supra.
However,
in
view
of
the
Johns-Manville,
supra,
judgment,
it
is
essential
to
recall
that
the
comments
of
Estey
J.
concerning
an
interpretation
favourable
to
the
taxpayer
had
to
do
with
interpreting
a
statutory
provision
that
did
not
have
the
desired
clarity
in
view
of
the
specific
features
of
the
case.
In
this
judgment,
Estey
J.
expressed
himself
as
follows
at
page
123
(D.T.C.
5382):
On
the
other
hand,
if
the
interpretation
of
a
taxation
statute
is
unclear,
and
one
reasonable
interpretation
leads
to
a
deduction
to
the
credit
of
the
taxpayer
and
the
other
leaves
the
taxpayer
with
no
relief
from
clearly
bona
fide
expenditures
in
the
course
of
his
business
activities,
the
general
rules
or
interpretation
of
taxing
statutes
would
direct
the
tribunal
to
the
former
interpretation.
That
is
the
situation
here,
in
my
view
of
these
statutory
provisions.
This
leads
me
to
consider
the
interpretation
itself
of
the
judgments
on
the
application
of
section
160
of
the
Act
which
counsel
for
the
appellants
appeared
to
wish
to
analyze
with
the
rigour
that
would
be
required
if
they
were
statutes.
This
is
an
approach
that
I
cannot
accept.
In
his
decision
in
B.P.
Australia
Ltd.
v.
Comr.
of
Taxation
of
the
Commonwealth
of
Australia,
[1966]
A.C.
224,
[1965]
2
All
E.R.
209,
Lord
Pearce,
in
a
different
context,
made
the
following
comments,
which
nevertheless
appear
to
me
to
be
appropriate
at
this
point
without
the
need
to
translate
them
at
page
265
(All
E.R.
218):
As
each
new
case
comes
to
be
argued
felicitous
phrases
from
earlier
judgments
are
used
in
argument
by
one
side
and
the
other.
But
those
phrases
are
not
the
deciding
factor,
nor
are
they
of
unlimited
application.
They
merely
crystallise
particular
factors
which
may
incline
the
scale
in
a
particular
case
after
a
balance
of
all
the
considerations
has
been
taken.
In
a
completely
different
context,
in
Hover
v.
Minister
of
National
Revenue,
[1993]
1
C.T.C.
2585,
93
D.T.C.
98,
Judge
Bowman
of
this
Court
preceded
his
analysis
of
a
number
of
citations
from
the
judgment
of
the
Supreme
Court
of
Canada
in
Moldowan
v.
R.
(sub
nom.
Moldowan
v.
The
Queen,
[1978]
1
S.C.R.
480,
[1977]
C.T.C.
310,
77
D.T.C.
5213,
with
the
following
warning:
the
words
of
the
court
are
not
to
be
parsed
and
analyzed
with
the
same
degree
of
particularity
as
one
would
employ
in
the
interpretation
of
a
statute.
In
the
light
of
these
remarks,
and
while
I
willingly
admit
that
the
general
purpose
of
section
160
is
to
prevent
a
taxpayer
from
evading
his
tax
obligations
by
transferring
his
property
to
his
relatives
as
was
noted
in
several
decisions,
I
believe
that
it
is
necessary
to
begin,
in
the
absence
of
specific
definitions,
by
giving
the
words
used
by
the
legislator
their
ordinary
grammatical
meaning
without
attempting
to
restrict
their
scope
to
the
more
common
situations
they
are
likely
to
cover
or
to
those
already
analyzed
in
previous
decisions.
One
must
therefore
avoid
inferring
from
judgments
made
within
specific
circumstances,
whose
evidence
was
submitted
for
the
opinion
of
the
Court,
special
conditions
or
elements
which
the
legislative
provision
itself
does
not
provide
for.
For
the
purposes
of
this
analysis,
the
relevant
part
of
section
160
of
the
Act
is
paragraph
160(l)(c),
which
reads
as
follows:
160(1)
Where
a
person
has,
on
or
after
the
1st
day
of
May,
1951,
transferred
property,
either
directly
or
indirectly,
by
means
of
a
trust
or
by
any
other
means
whatever,
to
(c)
a
person
with
whom
he
was
not
dealing
at
arm’s
length....
I
do
not
see
here,
or
anywhere
else
in
subsection
160(1),
any
expression
or
word
that
could
lead
one
to
believe
that
a
person
who
transfers
property
must
do
so
with
the
intention
or
goal
of
evading
his
tax
obligations.
As
was
pointed
out
by
counsel
for
the
respondent,
Judge
Thorson
of
the
Exchequer
Court,
in
his
judgment
in
Fasken,
supra,
categorically
refused
to
see
such
a
requirement
in
an
attribution
rule
worded
in
similar
terms:
Where
a
husband
transfers
property
to
his
wife,
or
vice
versa,
the
husband
or
the
wife,
as
the
case
may
be,
shall
nevertheless
be
liable
to
be
taxed
on
the
income
derived
from
such
property
or
from
property
substituted
therefor
as
if
such
transfer
had
not
been
made.
On
this
point,
he
concluded
his
analysis
of
the
provision
in
these
terms:
If
then
it
was
not
a
condition
of
liability
under
section
7
of
the
1926
Act
that
the
transfer
therein
referred
to
was
made
for
the
purpose
of
evading
taxation
there
can
be
no
such
condition
in
subsection
32(2)
of
the
1927
Revision.
Moreover,
quite
apart
from
any
statutory
provisions
relating
to
the
Revised
Statutes,
it
is
not
permissible,
where
the
words
in
a
taxing
Act
are
clear,
to
read
into
it
either
conditions
of
liability
thereunder
or
exemptions
therefrom
other
than
those
that
are
within
its
express
terms.
Full
effect
must
be
given
to
its
words
without
additions
or
subtractions.
In
my
opinion,
the
words
subsection
32(2)
of
the
1927
Revision
and
the
corresponding
part
of
its
predecessor,
section
7
of
the
1926
Act,
are
free
from
any
ambiguity
and
liability
thereunder
is
not
confined
to
cases
where
the
transfer
of
property
was
made
for
the
purpose
of
evading
taxation,
nor
does
the
fact
that
the
transfer
was
made
in
good
faith
or
for
valuable
consideration
place
it
outside
the
scope
of
the
sections.
The
very
wording
of
section
160
obliges
me
to
conclude
the
same
thing
for
the
same
reasons.
The
intent
to
avoid
tax
obligations
is
not
a
factor
that
is
required
by
this
provision.
The
argument
that
section
160
would
only
apply
if
there
were
collusion
between
the
transferor
and
the
transferee
makes
the
need
for
the
intentional
element
even
more
important.
Clearly
this
argument
cannot
be
accepted
insofar
as
the
intentional
element
is
not
accepted.
The
argument
of
counsel
for
the
appellants
that
subsection
160(1)
of
the
Act
cannot
apply
to
a
transfer
of
property
following
death
because
such
a
transfer
results
solely
by
the
operation
of
law,
without
the
requirement
for
any
positive
act
by
the
person
whose
property
is
transferred,
has
the
effect
of
considerably
restricting
the
scope
of
the
verb
“to
transfer”
and
of
the
word
“transfer”
and
is
contrary
to
all
jurisprudence
that
has
considered
the
matter.
Indeed,
in
the
absence
of
a
statutory
definition,
several
decisions
have
adopted
the
very
broad
sense
given
to
these
terms
in
current
dictionaries.
Thus
in
Fasken,
supra,
Judge
Thorson’s
analysis
went
as
follows
(see
note
9
at
page
279
(D.T.C.
497):
The
next
question
is
whether
there
was
a
transfer
of
such
property
from
David
Fasken
to
his
wife.
The
word
“transfer”
is
another
term
of
wide
meaning.
The
New
English
Dictionary
gives
this
meaning
of
it:
2.
Law.
To
convey
or
make
over
(title,
right
or
property)
by
deed
or
legal
process.
And
Webster’s
New
International
Dictionary,
Second
Edition,
says:
2.
To
make
over
the
possession
or
control
of,
to
make
transfer
of;
to
pass;
to
convey,
as
a
right,
from
one
person
to
another;
as,
title
to
land
is
transferred
by
deed.
In
Gathercole
v.
Smith
(1880-81),
17
Ch.
D.
1
at
page
7,
James
L.J.
spoke
of
the
word
“transfer”
as
“one
of
the
widest
terms
that
can
be
used,”
and
Lush
L.J.
said,
at
page
9:
The
word
“transferable,”
I
agree
with
Lord
Justice
James,
is
a
word
of
the
widest
import
and
includes
every
means
by
which
the
property
may
be
passed
from
one
person
to
another.
The
word
“transfer”
is
not
a
term
of
art
and
has
not
a
technical
meaning.
It
is
not
necessary
to
a
transfer
of
property
from
a
husband
to
his
wife
that
it
should
be
made
in
any
particular
form
or
that
it
should
be
made
directly.
All
that
is
required
is
that
the
husband
should
so
deal
with
the
property
as
to
divest
himself
of
it
and
vest
it
in
his
wife,
that
is
to
say,
pass
the
property
from
himself
to
her.
The
means
by
which
he
accomplishes
this
result,
whether
direct
or
circuitous,
may
properly
be
called
a
transfer.
More
recently,
in
Furfaro-Siconolfi,
supra,
Judge
Pinard
also
referred
to
standard
dictionaries
to
establish
the
meaning
of
the
word
“transfer”.
He
remarked
that
the
Larousse
(Trois
Volumes,
Édition
de
1966,
Tome
3)
defined
“transfert”
in
the
legal
context
as
a
synonym
of
“transmission”
(see
note
12,
page
36
(D.T.C.
5522).
This
meaning
is,
moreover,
consistent
with
the
definitions
given
in
legal
dictionaries
.
Some
works
go
so
far
as
to
define
it
as
any
conveyance,
whether
it
is
the
result
of
action
taken
by
the
parties
or
the
operation
of
law.
Thus
in
Black’s
Law
Dictionary,
Sixth
Edition,
St.
Paul
(Minn)
West
Publishing
Co.
1990,
page
1497,
the
meaning
of
the
verb
and
the
word
“transfer”
is
the
following:
Transfer,
v.
To
convey
or
remove
from
one
place,
person,
etc.,
to
another;
pass
or
hand
over
from
one
to
another;
specifically,
to
change
over
the
possession
or
control
of
(as,
to
transfer
a
title
to
land).
To
sell
or
give.
Chappell
v.
State,
216
Ind.
666,
25
N.E.2d
999,
1001.
Transfer,
n.
An
act
of
the
parties,
or
of
the
law,
by
which
the
title
to
property
is
conveyed
from
one
person
to
another.
The
sale
and
every
other
method,
direct
or
indirect,
of
disposing
of
or
parting
with
property
or
with
an
interest
therein,
or
with
the
possession
thereof,
or
of
fixing
a
lien
upon
property
or
upon
an
interest
therein,
absolutely
or
conditionally,
voluntarily
or
involuntarily,
by
or
without
judicial
proceedings,
as
a
conveyance,
sale,
payment,
pledge,
mortgage,
lien,
encumbrance,
gift,
security
or
otherwise.
The
word
is
one
of
general
meaning
and
may
include
the
act
of
giving
property
by
will.
Hayter
v.
Fern
Lake
Fishing
Club,
Tex.
Civ.
App.,
318
S.W.2d
912,
915.
The
assignment
or
conveyance
of
property,
including
an
instrument
or
document,
that
vests
in
the
transferee
such
rights
as
the
transferor
had
therein.
See
U.C.C.
3-201(1)
&
7-504(1).
Transfer
is
the
all-encompassing
term
used
by
the
Uniform
Commercial
Code
to
describe
the
act
which
passes
an
interest
in
an
instrument
to
another.
Scheid
v.
Shields,
269
Or.
236,
524
P.2d
1209,
1210.
Transfer
means
every
mode,
direct
or
indirect,
absolute
or
conditional,
voluntary
or
involuntary,
of
disposing
of
or
parting
with
property
or
with
an
interest
in
property,
including
retention
of
title
as
a
security
interest
and
foreclosure
of
the
debtor’s
equity
of
redemption.
Bankruptcy
Code
101.
See
Barter;
Constructive
transfer;
Exchange;
Gift;
Sale;
Will.
Likewise,
the
8th
edition
of
Osborn’s
Concise
Law
Dictionary
(London,
Sweet
&
Maxwell,
1993,
page
328),
gives
the
following
definition
of
“transfer”:
Transfer.
The
passage
of
a
right
from
one
person
to
another
(i)
by
virtue
of
an
act
done
by
the
transferor
with
that
intention,
as
in
the
case
of
a
conveyance
or
assignment
by
way
of
sale
or
gift,
etc.;
or
(ii)
by
operation
of
law,
as
in
the
case
of
forfeiture,
bankruptcy,
descent,
or
intestacy.
A
transfer
may
be
absolute
or
conditional,
by
way
of
security,
etc.
See
BLANK
TRANSFER;
STOCK
TRANSFERS.
In
his
decision
in
Boger
Estate
v.
R.
(sub
nom.
Boger
Estate
v.
The
Queen),
[1991]
2
C.T.C.
168,
91
D.T.C.
5506
(F.C.T.D.),
Associate
Chief
Justice
Jerome
of
the
Trial
Division
of
the
Federal
Court
had
to
analyze
the
meaning
of
the
terms
“transferred
or
distributed”
used
in
subsection
70(9)
of
the
Act,
which
considers
the
transfer
or
distribution
of
farm
property
to
a
child
upon
the
death
of
a
taxpayer.
After
referring
to
several
earlier
decisions
and
to
standard
dictionaries,
he
noted
the
following
with
respect
to
the
words
“transfer”
and
“distribution”:
The
dictionary
definitions
are
clearly
broad
enough
to
include
the
act
of
giving
property
under
a
will.
And
later,
he
concluded:
Here,
the
taxpayer’s
Will
appointed
the
plaintiff
executrix
and
trustee
and
left
all
his
property
to
the
plaintiff
in
trust
for
his
wife
and
children.
Therefore,
upon
his
death
the
legal
title
to
his
property
vested
in
the
trustee
to
assist
her
to
manage
and
administer
the
estate
and
the
equitable
or
beneficial
title
vested
in
the
beneficiaries.
The
taxpayer
had
in
this
way
divested
himself
of
ownership
in
his
property.
In
this
instance,
the
creation
of
a
valid
will
passing
the
taxpayer’s
property
to
his
spouse
and
children
is
a
sufficient
“transfer”
for
purposes
of
subsection
70(9).
It
is
true
that
the
verb
to
transfer
is
employed
in
the
active
form
in
subsection
160(1)
of
the
Act
whereas
it
is
employed
in
the
passive
form
in
several
other
provisions
of
the
Act,
particularly
section
70,
in
which
the
principal
rules
that
apply
upon
the
death
of
a
taxpayer
are
set
out.
In
this
regard,
reference
may
be
made
to
subsections
70(3),
(6),
(9),
(9.1),
(9.2),
(9.3)
and
(9.6),
in
which
the
term
“transferred”
is
used
together
with
“distributed”.
However,
in
view
of
the
preceding
analysis,
I
cannot
infer,
simply
on
the
basis
of
the
use
of
one
form
rather
than
another,
the
legislator’s
intent
to
restrict
the
meaning
of
the
verb
“transfer”
used
in
the
active
form
in
subsection
160(1)
to
that
of
a
transfer
by
an
action
inter
vivos.
Moreover,
my
view
is
that
paragraph
248(8)(a)
of
the
Act
clearly
indicates
that
the
term
“transfer”
and
the
other
terms
mentioned
in
this
provision
may
be
used
in
the
context
of
a
death,
because
they
are
precisely
considered
to
be
the
consequences
of
a
taxpayer’s
death
for
the
purposes
of
the
application
of
the
Act.
Indeed
this
provision
reads
as
follows:
248(8)(a)
a
transfer,
distribution
or
acquisition
of
property
under
or
as
a
consequence
of
the
terms
of
the
will
or
other
testamentary
instrument
of
a
taxpayer
or
his
spouse
or
as
a
consequence
of
the
law
governing
the
intestacy
of
the
taxpayer
or
his
spouse
shall
be
considered
to
be
a
transfer,
distribution
or
acquisition
of
the
property
as
a
consequence
of
the
death
of
the
taxpayer
or
the
taxpayer’s
spouse,
as
the
case
may
be.
In
addition,
the
definitions
noted
above
indicate
that
transferring
property
or
a
right
is
the
equivalent
of
distributing
it.
Such
distribution
is
always
from
a
person
who
is
the
owner
or
proprietor
to
another
who
becomes
the
beneficiary,
whether
by
an
act
between
the
parties
or
by
operation
of
law.
In
this
sense,
transferring
does
not
necessarily
imply
a
positive
act
by
the
transferor
and
neither
does
it
require
that
a
specific
action
be
performed
when
alive.
The
position
taken
by
counsel
for
the
appellants
to
the
effect
that
the
wording
of
subsection
160(1)
assumes
such
a
requirement
is
even
less
acceptable
given
that
in
the
instant
case
Benoît
Montreuil
Sr.
effectively
provided
for
the
transfer
of
his
property
when
alive
by
writing
a
will,
which
is
considered
a
deed
of
gift
of
his
property
in
contemplation
of
death
to
take
effect
after
his
death.
Lastly,
my
view
is
that
other
terms
used
together
with
the
verb
transfer
in
subsection
160(1)
of
the
Act
confirm
the
above
analysis.
In
this
connection,
let
us
first
recall
that
the
terms
“where
a
person
has...transferred
property”
used
in
subsection
160(1)
of
the
Act
are
qualified
by
the
expression
“directly
or
indirectly,
by
means
of
a
trust
or
by
any
other
means”.
Now
for
the
purposes
of
the
Act,
the
word
“trust”
is,
by
reference
to
subsection
248(1),
defined
in
subsection
104(1)
as
follows:
104(1)
In
this
Act,
a
reference
to
a
trust
or
estate
(in
this
subdivision
referred
to
as
a
“trust”)
shall
be
read
as
a
reference
to
the
trustee
or
the
executor,
administrator,
heir
or
other
legal
representative
having
ownership
or
control
of
the
trust
property.
My
first
comment
is
that
the
word
“trust”
is
at
first
glance
associated
with
the
word
“estate”
for
the
purposes
of
the
whole
Act
and
not
only
for
the
purposes
of
establishing
the
specific
taxation
system
that
is
applicable
according
to
the
class
to
which
they
belong
pursuant
to
the
provisions
of
subdivision
k
of
division
B
of
Part
I
of
the
Act.
My
second
comment
has
to
do
with
the
distinction
made
in
paragraphs
108(
1
)f)
and
118(
1
)i)
respectively
between
a
“non-testamentary
trust”
and
a
“testamentary
trust”,
a
distinction
which
applies
only
for
the
purposes
of
subdivision
k.
As
this
distinction
already
exists
in
the
Act,
I
feel
that
reference
could
have
been
made
to
it
in
section
160
if
the
intention
had
truly
been
to
make
this
provision
applicable
only
to
the
case
of
a
transfer
by
means
of
a
“non-
testamentary
trust”
or
inter
vivos
trust.
However,
as
the
legislator
did
not
deem
it
appropriate
to
do
so,
I
cannot
restrict
the
meaning
of
the
word
“trust”
for
the
purposes
of
the
application
of
section
160
solely
to
“non-
testamentary”
trusts.
In
my
view,
this
confirms
that
the
meaning
to
be
given
to
the
verb
“transfer”
may
not
be
restricted
to
the
act
of
doing
so
by
an
inter
vivos
deed.
On
the
first
point
raised,
my
conclusion
is
therefore
that
there
was
effectively
a
transfer
of
property
from
Benoît
Montreuil
Sr.
to
his
children,
the
appellants
in
the
instant
case,
pursuant
to
article
9
of
his
will
and
as
a
consequence
of
his
death.
The
next
question
to
be
asked
concerns
the
precise
moment
at
which
the
transfer
occurred.
Did
it
occur
at
the
moment
of
death
or
at
the
time
the
amount
of
$70,000
was
given
to
each
of
the
appellants?
In
my
view,
this
question
is
related
to
the
question
of
determining
whether
the
property
was
transferred
directly
to
the
legatees
designated
in
article
9
of
the
will,
which
would
have
been
the
case
had
it
been
a
normal
succession,
involving
instead
an
indirect
transfer
by
trustees,
if
one
considers
that
the
will
created
a
veritable
trust.
Let
us
recall
that
in
clause
1
of
his
will,
Benoît
Montreuil
Sr.
stated
that
he
was
domiciled
in
the
Cayman
Islands
and
that
he
wanted
his
will
to
be
interpreted
within
the
laws
of
that
country.
However,
as
the
applicable
law
of
that
country
was
not
substantiated
as
it
normally
should
have
been,
I
would
be
justified
in
finding
an
answer
to
these
questions
by
applying
the
lex
fori,
i.e.
the
Civil
Law
of
Quebec.
This
exercise
may
appear
unnecessary
in
view
of
the
wording
of
section
160.
Indeed,
whether
a
transfer
of
property
is
direct
or
indirect,
and
whether
or
not
it
is
effected
by
means
of
a
trust,
it
remains
a
transfer
covered
by
section
160.
On
the
other
hand,
in
view
of
the
very
wide
meaning
given
to
the
word
“property”
in
subsection
248(1)
of
the
Act
as
including
“a
right
of
any
kind
whatever”,
I
believe
that
we
can
reasonably
conclude,
no
matter
which
interpretation
may
be
adopted,
that
from
the
moment
of
death,
there
was
at
the
very
least
a
transfer
to
each
of
the
appellants
of
a
right
to
claim
an
amount
of
$70,000
in
cash
under
the
legacy
as
provided
in
article
9
of
the
will.
This
view
is
consistent
with
article
891
of
the
Civil
Code,
which
provides
the
following:
See
Purdom
v.
Pavey
&
Co.
(1896),
26
S.C.R.
412,
at
page
417;
Gray
v.
Kerslake,
[1958]
S.C.R.
3,
11
D.L.R.
(2d)
225,
at
page
240;
Reid
v.
Favor,
[1955]
S.C.
370
(Que.);
see
also
Giles
v.
Jacques
and
Primeau
v.
Giles
(1891),
M.L.R.
7
Q.B.
4562,
at
page
467.
Legatees
by
whatever
title,
are,
by
the
death
of
the
testator,
or
by
the
event
which
gives
effect
to
the
legacy,
seized
of
the
right
to
the
thing
bequeathed,
in
the
condition
in
which
it
then
is,
together
with
all
its
necessary
dependencies,
and
with
the
right
to
obtain
payment,
and
to
prosecute
all
claims
resulting
from
the
legacy,
without
being
obliged
to
obtain
legal
delivery.
The
author
Germain
Brière,
in
his
Precis
du
droit
des
successions,
(3rd
ed.
Montreal,
Éditions
Wilson
&
Lafleur
Ltée.
1993),
made
the
following
comments
concerning
the
application
of
this
article
for
a
specific
legacy
(ibid.,
at
pages
261-62,
paragraph
360):
If
a
specific
chattel
is
bequeathed,
the
legatee
becomes
the
owner
at
the
moment
of
death
and
may
take
possession
without
formality.
If
an
amount
of
money
is
bequeathed,
the
legatee
has
a
claim
against
the
heir
intestate
or
against
the
universal
legatee
or
the
legatee
by
general
title
as
applicable.
If
a
fungible
good
has
been
bequeathed,
the
legatee
at
first
acquires
no
more
than
a
claim
and
becomes
the
owner
only
when
the
good
has
been
determined
and
individualized;
he
will
therefore
have
a
claim
to
make
to
the
debtor
of
the
legacy.
Article
891
of
the
Civil
Code
of
Lower
Canada
allows
consideration
of
the
difference
between
the
property
right
of
the
legatee
of
a
specific
chattel
and
the
right
of
others
to
a
claim,
by
providing
that
the
legatee
is
seized
of
the
right
to
the
thing
bequeathed
and
of
the
right
to
obtain
payment.
[Translation.]
And
later
(at
page
335,
paragraph
488):
Where
a
specific
chattel
is
bequeathed,
the
legatee
becomes
the
owner
as
a
consequence
of
the
death
and
therefore
does
not
properly
speaking
need
to
claim
payment
of
his
legacy:
He
has
in
effect
an
action
in
rem
to
claim
the
property
bequeathed
if
it
is
in
the
possession
of
others.
When,
on
the
contrary,
the
legacy
is
a
fungible
good,
in
particular
an
amount
of
money,
the
legatee
is
in
a
situation
analogous
to
that
of
the
creditor
of
the
estate.
[Translation.]
According
to
this
interpretation,
the
legatee
by
particular
title
acquired
a
right
to
claim
and
a
right
to
obtain
payment
of
his
legacy
from
the
moment
of
death.
This
then
would
be
the
moment
at
which
the
transfer
occurred.
This
conclusion
is
consistent
with
the
preceding
analysis
in
which
“transfer”
was
deemed
to
be
a
synonym
of
“distribution”
and
not
the
delivery
of
the
property.
In
concluding
on
this
point,
let
us
recall
that
it
is
precisely
the
conclusion
that
was
reached
by
Judge
Pinard
of
the
Trial
Division
of
the
Federal
Court
in
his
judgment
in
Furfaro-Siconolfi,
supra,
for
a
gift
by
marriage
contract.
In
this
connection,
he
made
the
following
comments
at
pages
36-37
(D.T.C.
5522):
In
light
of
the
foregoing
definitions,
I
consider
that
the
transfer
of
property
contemplated
by
section
160
of
the
Act
is
a
simple
transfer
of
ownership,
without
it
being
necessary
for
the
recipient
to
have
possession
of
the
thing
or
object
the
ownership
of
which
is
thus
transferred.
In
a
precise
definition,
the
Income
Tax
Act
recognizes
that
“property”
includes
a
right
of
any
kind
whatever,
and
consequently
the
right
of
ownership
of
a
thing.
In
legal
terms,
it
is
established
that
transferring
the
right
of
ownership
of
a
thing,
as
for
example
in
a
Sale
or
gift,
does
not
necessarily
imply
immediate
surrender
of
that
thing.
Be
that
as
it
may,
whether
the
transfer
occurred
at
the
moment
of
death
or
seven
months
later
when
the
amount
of
$70,000
was
received
by
each
of
the
appellants,
does
not
change
here,
in
view
of
my
conclusion
on
the
second
point
raised,
the
quantum
of
liability
of
each
pursuant
to
section
160
of
the
Act.
The
second
point
raised
by
counsel
for
the
appellants
to
dispute
the
assessments
issued
pursuant
to
section
160
of
the
Act
concerned
the
precise
amount
of
the
tax
liability
of
Benoît
Montreuil
Sr.
As
it
is
admitted
that
the
tax
liability
totalled
$117,239.94
at
the
time
of
his
death
,
counsel
for
the
appellants
contended
that
the
payment
of
this
amount
by
the
Estate
in
February
1991
constituted
a
final
payment
of
all
amounts
owing
under
the
Act.
This
claim
was
disputed
by
counsel
for
the
respondent,
who,
particularly,
noted
that
there
is
no
legislative
provision
that
stops
the
accumulation
of
interest
on
liability
from
the
time
of
death.
I
believe
that,
in
this
instance,
it
is
necessary
to
distinguish
two
questions
that
are
fundamentally
different,
on
the
one
hand
the
quantum
of
a
deceased
person’s
tax
liability
and
on
the
other
hand,
the
maximum
amount
for
which
the
beneficiary
of
a
transfer
may
be
held
liable
under
paragraph
160(1)(e)
of
the
Act.
On
the
first
question,
let
us
begin
by
noting
that
subsection
161(1)
of
the
Act
clearly
establishes
that
any
unpaid
balance
of
tax
payable
for
a
taxation
year
bears
interest
at
the
prescribed
rate
until
it
is
paid
in
full.
The
tax
liability
of
Benoît
Montreuil
Sr.
therefore
continued
to
grow
after
his
death,
as
it
did
before
his
death,
because
of
interest.
The
calculation
of
such
interest
is
not
in
issue
here,
and
I
shall
not
consider
this
point.
We
also
note
that
the
February
1991
payment
did
nothing
but
partly
reduce
the
outstanding
balance.
The
debt
still
exists
and
will
continue
to
grow
until
paid
in
full.
The
Estate
is
primarily
liable
for
paying
it.
On
the
second
question,
we
need
at
the
outset
to
recall
that
on
the
date
of
death,
which
in
my
view
is
also
the
date
of
the
transfer
as
I
explained
above,
paragraph
160(l)(e)
of
the
Act
prescribed
that
the
transferee
and
transferor
are
jointly
and
severally
liable
to
pay
an
amount
equal
to
the
lesser
of
the
amounts
specified
in
subparagraphs
160(l)(e)(i)
and
(ii),
i.e.:
160(l)(e)(i)
the
amount,
if
any,
by
which
the
fair
market
value
of
the
property
at
the
time
it
was
transferred
exceeds
the
fair
market
value
at
that
time
of
the
consideration
given
for
the
property,
and
(ii)
the
aggregate
of
all
amounts
each
of
which
is
an
amount
that
the
transferor
is
liable
to
pay
under
this
Act
or
in
respect
of
the
taxation
year
in
which
the
property
was
transferred
or
any
preceding
taxation
year.
In
view
of
the
facts
admitted,
the
only
problem
here
concerns
the
interpretation
of
subparagraph
160(l)(e)(ii)
for
the
purpose
of
establishing
the
tax
liability
of
the
transferor
pursuant
to
this
provision
because
it
is
used
as
one
of
the
parameters
to
determine
the
quantum
of
the
transferee’s
liability.
The
problem
stems
here
from
the
fact
that
four
different
transferees
were
each
entitled
to
an
amount
of
$70,000
in
the
will
such
that
even
if
each
were
jointly
liable
with
the
transferor
or
his
estate
for
no
more
than
the
value
of
the
property
received,
the
payment
of
an
equivalent
amount
by
only
one
of
these
transferees
would
not
necessarily
extinguish
the
total
debt
so
that
each
of
the
other
transferees
would
also
be
held
liable
within
the
limits
set
by
paragraph
160(l)(e)
of
the
Act.
This
question
is
also
pertinent
to
establish
the
effect
of
the
payment
of
the
amount
of
$117,239.94
by
the
Estate
in
February
1991
pursuant
to
subsection
160(3)
of
the
Act.
Subsection
161(1)
of
the
Act
prescribes
that
interest
is
payable
on
any
excess
unpaid
tax
for
a
taxation
year
and
that
it
is
“computed
for
the
period
during
which
that
excess
is
outstanding”.
In
fact
interest
is
compounded
daily,
and
since
1987,
compounded
daily
pursuant
to
subsection
248(11)
of
the
Act.
The
rate
is
prescribed
by
Part
XLIII
of
the
Income
Tax
Regulations.
Interest
is
payable
as
provided
in
subsection
161(1)
for
as
long
as
the
tax
payable
for
a
“taxation
year”
remains
outstanding.
Hence
the
only
relationship
that
exists
between
the
interest
on
an
outstanding
tax
liability
and
a
“specified
taxation
year”
is
precisely
the
relationship
established
in
subsection
161(1)
of
the
Act
based
on
the
amount
of
tax
unpaid
for
this
taxation
year
and
“for
the
period
during
which”
the
amount
is
outstanding.
The
tax
is
the
principal
and
the
interest
is
the
accessory.
In
this
sense,
interest
that
compounds
until
full
payment
of
an
outstanding
taxation
amount
for
a
specified
“taxation
year”
prior
to
the
transfer
constitutes,
whatever
the
year
in
which
it
is
compounded,
an
amount
that
the
transferor
is
required
to
pay
under
the
Act
“in
respect
of”
this
preceding
taxation
year
according
to
the
wording
of
subparagraph
160(
1
)(e)(ii)
as
it
applied
prior
to
December
17,
1987,
or
“in
or
in
respect
of”
this
preceding
year
according
to
the
wording
that
has
applied
since
that
date.
Indeed,
the
Bordas
dictionary
defines
the
expression
“à
l’égard
de”
in
its
usual
and
modern
sense
as
meaning
“envers”
and
“en
ce
qui
concerne”.
Moreover,
the
Grand
Robert
de
la
langue
française^
gives
particularly
to
the
word
“pour”
the
meaning
of
“en
ce
qui
concerne”
and
“par
rapport
à”.
The
English
expression
used
in
subparagraph
160(l)(e)(ii)
“in
respect
of”
has
the
same
meaning
and
in
my
view
corroborates
the
interpretation
to
the
effect
that
these
expressions
cover
all
interest
compounded
on
an
outstanding
tax
liability
for
a
specified
preceding
taxation
year
at
the
time
of
the
transfer
or
for
the
taxation
year
during
which
the
transfer
occurred,
whether
these
are
compounded
before
or
after
the
year
of
the
transfer.
We
also
know
that
the
words
“in
respect
of’
have
a
very
wide
meaning,
as
recognized
by
the
Supreme
Court
of
Canada
in
Nowegijick
v.
R.
(sub
nom.
Nowegijick
v.
The
Queen),
[1983]
1
S.C.R.
29,
[1983]
C.T.C.
20,
83
D.T.C.
5041.
In
his
judgment
in
this
case,
Dickson
J.,
who
was
later
to
become
Chief
Justice,
analyzed
these
words
in
the
following
terms
at
C.T.C.
25
(D.T.C.
5045):
The
words
“in
respect
of”
are,
in
my
opinion,
words
of
the
widest
possible
scope.
They
import
such
meanings
as
“in
relation
to”,
“with
reference
to”
or
“in
connection
with”.
The
phrase
“in
respect
of”
is
probably
the
widest
of
any
expression
intended
to
convey
some
connection
between
two
related
subject
matters.
In
my
view,
this
is
enough
to
dispose
of
the
second
point.
The
question
of
determining
whether
an
amount
assessed
under
section
160
bears
interest
by
application
of
section
161
was
not
raised
as
such
and
is
not
directly
in
issue
here,
and
I
thus
need
not
rule
on
this
question.
The
third
point
raised
by
counsel
for
the
appellants
to
dispute
the
validity
of
the
assessment
was
based
on
the
claim
that
there
was
a
transaction
within
the
meaning
of
Article
1918
of
the
Civil
Code
through
the
payment
of
the
amount
of
$117,239.94
in
February
1991,
the
effect
of
which
was
to
completely
extinguish
the
debt
of
Benoît
Montreuil
Sr.’s
Estate.
This
contention
was
based
on
a
letter
from
Mr.
Jean
Potvin,
counsel,
who
was
representing
the
Estate
in
dealing
with
Revenue
Canada,
a
letter
that
accompanied
the
cheque
sent
in
payment.
The
wording
of
this
letter,
dated
February
25,
1991,
was
as
follows
:
Dear
Mr.
Lapointe,
Enclosed
is
a
cheque
made
out
to
the
Receiver
General
for
Canada
in
the
amount
of
$117,239.94
in
payment
of
the
outstanding
tax
and
interest
arrears
on
the
date
of
Mr.
Montreuil’s
death.
For
the
reasons
given
in
our
letter
of
May
15,
1990
to
Mr.
André
Tremblay
of
your
department,
we
do
not
believe
that
the
legatees’
liability
exceeds
the
attached
payment.
Yours
sincerely,
Jean
Potvin
[Translation.]
The
cheque
itself
had
no
particular
note
on
it,
nor
did
it
state
any
conditions
concerning
its
cashing.
In
a
previous
letter,
dated
May
15,
1990,
Mr.
Jean
Potvin,
after
stating
the
reasons
for
which
he
believed
that
the
amount
assessed
under
section
160
of
the
Act
was
not
subject
to
interest
within
the
meaning
of
section
161
of
the
Act,
concluded
as
follows:
As
I
was
explaining
to
you,
the
Estate
would
be
prepared
to
pay
the
amount
of
tax
and
interest
oustanding
on
the
date
of
Mr.
Montreuil’s
death
in
consideration
of
a
full
and
final
discharge.
[Translation.]
On
the
other
hand,
a
letter
from
Mr.
Marcel
Lapointe
of
the
Revenue
Canada
Collections
Section
dated
January
3,
1991
addressed
to
Mr.
Jean
Potvin
states
the
following:
Dear
Sir,
Further
to
our
various
discussions
concerning
the
possibility
of
a
settlement
in
this
matter
for
the
amount
of
$117,234.94,
we
must
inform
you
that
we
are
unable
to
accept
such
a
settlement.
We
ask
you
to
tell
the
heirs
and
the
Estate
of
Benoît
Montreuil
about
our
decision
within
15
days
of
receiving
this
letter.
If
we
do
not
receive
an
affirmative
response
concerning
the
full
settlement
of
the
debt
in
the
order
of
$178,240.50,
legal
action
will
immediately
be
taken
following
the
time
period
mentioned
in
this
letter
against
the
Estate
and
its
heirs,
based
on
the
Civil
Code
and
the
similar
Act
which
applies
to
Grand
Cayman
in
the
United
States.
We
are
available
for
any
possible
discussions
with
respect
to
the
complete
payment
of
our
debt.
Note
that
Mr.
André
Tremblay,
who
was
mentioned
in
your
correspondence
of
November
16,
is
no
longer
responsible
for
dealing
with
this
matter.
Yours
sincerely,
Marcel
Lapointe
For
Chief
Collections
Department
of
National
Revenue,
Taxation.
[Translation.]
The
response
of
the
Department
following
receipt
of
Mr.
Jean
Potvin’s
letter
of
February
25,
1991,
was
to
cash
the
cheque
and
assess
the
appellants
on
March
27,
1991
for
the
first
time.
Precedents
have
clearly
established
that
the
issue
of
determining
whether
a
creditor
has
accepted
a
condition
mentioned
on
a
cheque
to
the
effect
that
it
is
a
“final
settlement”
is
a
matter
of
fact
and
not
of
law.
Nevertheless,
such
a
condition
must
have
been
clearly
expressed
for
the
claim
to
be
made
afterwards
that
the
creditor
acquiesced
and
that
there
was
a
transaction
within
the
meaning
of
Article
1918
of
the
Civil
Code.
On
the
one
hand,
there
is
nothing
in
the
documents
submitted
that
would
enable
me
to
conclude
that
such
a
condition
had
even
been
set
by
Mr.
Jean
Potvin
for
the
cashing
of
the
cheque
sent
in
payment.
Neither
the
cheque
nor
his
letter
of
February
25,
1991
accompanying
it
refer
to
such
a
condition.
On
the
other
hand,
the
letter
of
January
3,
1991
from
Mr.
Lapointe
presents
no
ambiguity
with
respect
to
the
Department’s
position
and
his
refusal
to
accept
a
settlement
for
the
amount
of
$117,239.94.
The
cashing
of
the
cheque
for
this
amount
and
the
issuing
of
assessments
under
section
160
against
the
appellants
with
a
very
short
time
period
for
payment
confirms,
in
my
opinion,
the
refusal
to
settle
for
this
amount.
On
this
point,
therefore,
my
conclusion
is
that
the
facts
do
not
support
the
contention
of
counsel
for
the
appellants
that
there
was
a
transaction
within
the
meaning
of
Article
1918
of
the
Civil
Code.
The
final
point
raised
by
counsel
for
the
appellants
was
that
the
assessments
issued
pursuant
to
section
160
were
invalid
because
there
was
no
mention
of
the
details
of
Benoît
Montreuil
Sr.’s
fiscal
liability
in
respect
of
tax,
interest
and
penalties.
This
argument
is
based
on
the
Tax
Court
of
Canada
decision
in
the
Leung
case,
supra.
First,
the
assessment
notices
dated
March
27,
1991
were
replaced
by
reassessment
notices
dated
February
12,
1993.
Benoît
Montreuil
Sr.’s
tax
liability
for
the
taxation
years
1974,
1975
and
1976
was
established
by
means
of
reassessments,
the
notices
for
which
were
dated
February
27,
1978.
However,
reassessments
for
the
years
1975
and
1976
were
reflected
in
the
notices
dated
August
25,
1978.
These
assessments
were
never
opposed.
Of
the
documents
submitted,
it
would
appear
that
the
detailed
statements
were
established
on
several
occasions
and
brought
to
the
attention
of
the
Estate.
That
being
said,
I
am
of
the
view
that
the
assessments
disputed
in
the
instant
case
are
in
no
way
similar
to
the
assessment
that
was
appealed
in
the
Leung
case,
which
did
not
specify
the
amounts
owing
within
the
meaning
of
four
different
acts.
In
spite
of
this
omission,
Judge
Joyal
of
the
Trial
Division
of
the
Federal
Court
decided
that
the
assessment
was
not
for
all
that
invalid.
As
the
appeal
from
the
Federal
Court
of
Appeal
was
discontinued,
this
judgment
reversing
the
decision
of
the
Tax
Court
of
Canada
established
the
validity
of
a
notice
of
assessment
under
similar
circumstances,
which
is
not
in
any
event
the
case
in
the
instant
appeal.
For
these
reasons,
my
view
is
that
the
assessments
issued
under
section
160
are
valid.
The
appeals
are
dismissed
with
costs
awarded
to
the
respondent.
Appeals
dismissed.
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