Addy,
J.:—This
is
an
appeal
from
an
assessment
of
Estate
Tax
Act
SC
1958,
c
29,
in
respect
of
the
estate
of
the
above-named
deceased,
who
died
a
resident
of
and
domiciled
in
the
Province
of
Ontario,
in
May
1968.
She
was
a
married
woman
and
left
her
surviving,
her
husband
and
four
infant
children.
No
oral
evidence
was
adduced
at
trial.
The
case
was
heard
on
the
basis
of
admissions
in
the
pleadings,
a
written
partial
agreement
of
facts
filed
as
Exhibit
P-1
and
certain
documents
contained
in
an
exhibit
book
filed
as
Exhibit
P-2.
The
litigation
involves
an
assessment
for
the
year
1968
in
the
amount
of
$4,687,181.87
which
represented
the
value
at
the
time
of
the
decease
of
99,993
fully
paid
common
shares
in
a
limited
company.
The
defendant
assessed
the
full
amount
as
Class
C
property
under
the
Estate
Tax
Act
as
it
applied
as
of
the
date
of
death.
The
plaintiffs
contest
that
assessment
and
contend
that
the
value
of
the
shares
is
not
taxable
pursuant
to
that
Act.
On
September
21,
1961,
the
following
events
occurred:
1.
The
deceased
acquired
the
shares.
2.
She
then
entered
into
a
voting
trust
agreement
covering
the
shares.
3.
The
shares
were
deposited
with
the
trustees
under
the
voting
trust
agreement
and
the
deceased
received
from
them
voting
trust
certificates
in
return
for
the
shares.
4.
The
deceased
then
settled
the
sum
of
$10,000
on
the
National
Trust
Company
as
trustee
for
the
benefit
of
the
persons
named
in
the
trust
agreement.
5.
The
last-mentioned
trustee
then
purchased
from
the
deceased
the
voting
trust
certificates
at
the
price
of
10€
for
each
share
represented
by
the
certificates
for
a
total
of
$9,993.
Counsel
for
the
defendant
at
trial
conceded
that
the
Minister,
in
assessing
the
plaintiffs,
relied
entirely
and
exclusively
on
the
provisions
of
paragraph
3(1
)(j)
of
the
Estate
Tax
Act,
RSC
1970,
c
E-9,
and
that,
if
those
provisions
did
not
apply
to
the
case
at
Bar,
the
amount
in
issue
would
not
be
taxable
for
estate
tax
purposes.
Paragraph
3(1
)(j)
reads
as
follows:
3.
(1)
There
shall
be
included
in
computing
the
aggregate
net
value
of
the
property
passing
on
the
death
of
a
person
the
value
of
all
property,
wherever
situated,
passing
on
the
death
of
such
person,
including,
without
restricting
the
generality
of
the
foregoing,
(j)
any
annuity
or
other
interest
purchased
or
provided
by
the
deceased,
either
by
himself
alone
or
in
concert
or
by
arrangement
with
any
other
person,
to
the
extent
of
the
beneficial
interest
therein
arising
or
accruing
by
survivorship
or
otherwise
on
the
death
of
the
deceased;
It
was
agreed
by
both
parties
that
no
question
arose
as
to
any
“annuity”
mentioned
in
the
above
text
and
that,
if
the
plaintiffs
were
to
be
taxable
at
all,
it
would
have
to
be
on
the
basis
that
the
settlement
provided
for
in
the
trust
deed
would
consitute
an
“other
interest”
as
contemplated
by
that
section.
The
plaintiffs’
position
on
that
issue
is
that
a
trust
is
not
one
of
the
other
interests
envisaged
by
Parliament
when
that
expression
was
used
in
paragraph
3(1
)(j)
because
paragraphs
(c),
(d)
and
(e)
of
subsection
3(1)
are
sufficiently
broad
in
their
terms
to
embrace
all
settlements
and
contain
a
comprehensive
and
exhaustive
code
for
the
taxation
of
trusts
and
for
the
exemptions
granted
in
such
cases.
These
paragraphs
read
as
follows:
(From
SC
1958,
7
Eliz
Il,
c
29)
3.
(1)
There
shall
be
included
in
computing
the
aggregate
net
value
of
the
property
passing
on
the
death
of
a
person
the
value
of
all
property,
wherever
situated,
passing
on
the
death
of
such
person,
including,
without
restricting
the
generality
of
the
foregoing,
(c)
property
disposed
of
by
the
deceased
under
a
disposition
operating
or
purporting
to
operate
as
an
immediate
gift
inter
vivos,
whether
by
transfer,
delivery,
declaration
of
trust
or
otherwise,
made
within
three
years
prior
to
his
death;
(d)
property
disposed
of
by
the
deceased
under
a
disposition
whenever
made,
of
which
actual
and
bona
fide
possession
and
enjoyment
was
not,
at
least
three
years
prior
to
the
death
of
the
deceased,
(i)
assumed
by
the
person
to
whom
the
disposition
was
made
or
by
a
trustee
or
agent
for
that
person,
and
(ii)
thereafter
retained
to
the
entire
exclusion
of
the
deceased
and
to
the
entire
exclusion
of
any
benefit
to
him,
whether
by
contract
or
otherwise;
(From
1964-65,
13
Eliz.
II,
c.
8)
(e)
property
comprised
in
a
settlement
whenever
made,
whether
by
deed
or
any
other
instrument
not
taking
effect
as
a
will,
whereby
any
interest
in
or
income
from
such
property
for
life
or
any
other
period
determinable
by
reference
to
death
is
reserved
either
expressly
or
by
implication
to
the
deceased
as
settlor
or
whereby
the
deceased
has
reserved
to
himself
the
right,
by
the
exercise
of
any
power,
to
restore
to
himself
or
to
reclaim
the
absolute
interest
in
such
property;
Counsel
for
the
plaintiffs
relies
in
part
on
the
fact
that
“disposition”
is
defined
in
the
Act
in
subsection
62(1)
as
follows:
62.
(1)
In
this
Act,
“disposition”
includes
any
arrangement
or
ordering
in
the
nature
of
a
disposition,
whether
by
one
transaction
or
a
number
of
transactions
effected
for
the
purpose
or
in
any
other
manner
whatever;
He
further
asserts
that,
because
that
expression
is
used
in
paragraphs
(c)
and
(d)
above,
there
exists
in
subsection
3(1),
altogether
apart
from
paragraph
3(1
)(j)
a
complete
code
for
the
taxation
of
trusts.
I
find
nothing
in
the
above
clauses
relied
upon
by
the
plaintiffs,
that
would
suggest
that
they
are
exhaustive
of
tax
liability
arising
from
a
trust
nor
can
I
find
anything
in
paragraph
3(1
)(j)
which
would,
when
applied
to
trusts,
tend
to
contradict
or
nullify
any
of
the
provisions
of
those
clauses
or
any
other
part
of
the
Act.
Paragraph
(c)
relates
to
immediate
gifts
inter
vivos.
This
is
obviously
not
applicable
when
the
donees
are
not
determined
at
the
time
of
the
gift.
Paragraph
(d)
also
relates
to
situations
where
the
donee
or
beneficiary
of
a
trust
is
ascertained
and
in
existence
at
the
relevant
times
during
the
lifetime
of
the
donor
or
settlor.
Paragraph
(e)
deals
with
situations
where
there
is
a
reservation
of
some
right
or
interest
by
the
settlor
in
the
subject-matter
of
the
trust.
A
mere
reading
of
these
clauses
shows
that
they
are
not
exhaustive
of
trusts.
Furthermore,
the
fact
that
paragraph
3(1
)(j)
could
apply
to
trust
situations
not
covered
by
those
clauses
establishes
clearly
that
they
constitute
a
complete
and
comprehensive
code
regarding
the
taxation
of
trusts
under
the
Act.
In
order
to
understand
and
properly
interpret
any
one
section
in
an
Act,
it
must
be
read
and
considered
in
the
context
of
the
entire
statute.
There
exists
intricacies
and
subtle
differences
and
distinctions
in
the
wording
of
various
taxing
statutes
which
by
their
very
nature
are
always
fairly
complicated.
For
that
reason,
decisions
bearing
on
the
interpretation
based
on
comparisons
with
specific
words
or
expressions
used
in
other
taxing
statutes
and
especially
foreign
statutes,
if
employed
at
all,
must
be
used
with
considerable
caution
and
applied
with
great
circumspection,
unless
one
is
familiar
with
the
entire
scope
and
tenure
of
the
other
statute
used
as
a
comparison.
Our
courts
at
times
have
recommended
that
those
decisions
be
disregarded
entirely.
Jackett,
P,
as
he
then
was,
in
MNR
v
Estate
of
William
Theo
Shaw,
[1971]
CTC
15;
71
DTC
5041,
when
invited
to
consider
the
English
decisions
concerning
The
Finance
Act
of
1894
of
the
UK,
c
30,
in
relation
to
the
interpretation
of
paragraph
3(1
)(j)
of
our
Estate
Tax
Act,
refused
to
do
so.
He
stated
at
21
[5045]
of
the
report:
I
am
strengthened
in
my
decision
to
take
this
position
by
the
fact
that
an
intensive
study
of
decisions
concerning
such
other
provisions,
with
the
very
careful
and
thorough
assistance
of
experienced
counsel,
leaves
me
in
a
state
of
some
bewilderment
as
to
the
effect
of
the
provision
in
the
Finance
Act
of
1894
and
by
the
fact
that
the
Canadian
decisions
on
provincial
legislation
have
contented
themselves
with
applying
the
available
decisions
with
reference
to
the
Finance
Act
of
1894.
I
propose,
therefore,
to
consider
whether
section
3(1
)(j)
supports
the
inclusion
of
the
amounts
paid
under
the
accident
policies
on
the
basis
that
there
are
no
decisions
that
have
any
bearing
on
the
matter.
Refer
also
to
Attorney-General
for
Ontario
v
Perry,
[1934]
AC
477.)
On
the
other
hand,
when
the
beneficiaries
of
this
present
estate
were
before
the
Supreme
Court
of
Canada
on
an
appeal
from
a
previous
decision
concerning
Ontario
succession
duties
(as
a
result
of
another
trust
fund
created
in
1948)
Dickson,
J.,
in
delivering
reasons
on
behalf
of
the
majority
of
the
Supreme
Court
of
Canada,
stated
that
he
had
considered
English
authorities
and
that
they
were
apparently
of
some
help.
Reference
at
11
of
that
case
is
cited
as
Minister
of
Revenue
for
the
Province
of
Ontario
v
James
Scott
McCreath
et
al,
[1977]
1
SCR
2;
[1976]
CTC
178,
where
he
states:
There
are
no
Canadian
precedents
to
illuminate
s.1
(p)(viii).
Two
English
authorities
construing
tax
legislation
in
almost
identical
wording
may
afford
some
guidance.
In
the
case
of
Shalamit
Elfriede
Vaskevitch
v
MNR,
[1969]
1
Ex
CR
519;
[1969]
CTC
47;
69
DTC
5062,
my
brother
Cattanach,
J
did
consider
paragraph
2(1
)(d)
of
The
Finance
Act
of
1894
of
the
UK
and
paragraph
3(1
)(j)
of
our
Estate
Tax
Act
at
page
528
of
the
report
where
he
stated
therein:
Section
3(1
)(j)
of
the
Estate
Tax
Act
is
enacted
in
language
identical
to
that
used
in
section
2(1
)
(d)
of
the
Finance
Act
of
the
United
Kingdom.
Therefore
the
English
decisions
on
that
section
are
applicable
and
helpful.
Lord
Loreburn,
LC
said
in
Lethbridge
v
Attorney
General,
[1907]
AC
19
at
23,
that
the
general
purpose
of
the
section
is
“to
prevent
a
man
escaping
estate
duty
by
subtracting
from
his
means,
during
life,
money
or
money’s
worth
which
when
he
dies
are
to
reappear
in
the
form
of
a
beneficial
interest
accruing
or
arising
on
his
death.
I
agree
with
my
brother
Cattanach,
J:
I
feel
that
the
wording
of
paragraphs
2(1)(d)
of
The
Finance
Act
of
1894
of
UK
and
3(1
)(j)
under
consideration
are
absolutely
identical
(our
section
must
have
in
fact
been
taken
verbatim
from
that
Act)
and
like
him
I,
at
least,
find
some
comfort
in
the
above-quoted
words
of
Lord
Lorebum,
LC.
Similarly,
with
regard
to
that
same
paragraph
2(1
)(d)
of
The
Finance
Act
in
Parker
and
Others
v
Lord
Advocate,
[1960]
AC
608,
Lord
Jenkins
stated
at
632:
The
second
claim
in
In
re
Parkes’
Settlement
[1956]
1
WLR
397,
namely,
the
claim
to
duty
on
the
corpus
of
the
settled
property,
was
upheld
in
the
Court
of
Appeal.
In
my
own
judgment
I
summarised
my
reasons
for
that
view
in
terms
which
are
to
my
mind
so
closely
applicable
to
the
present
case
that
I
venture
to
repeat
them
here:
“As
regards
the
interest
of
each
of
the
four
children
in
the
capital
of
the
trust
fund,
I
think
the
judge
was
clearly
right
in
holding,
as
he
did,
that
section
2(1
)(d)
applied.
Before
the
death
of
the
settlor,
each
child
had
a
future
interest
in
the
capital
of
the
fund
contingent
on
him
or
her
surviving
the
settlor
and
uncertain
as
regards
its
amount,
which
depended
on
the
number
of
children
who
might
survive
him.
After
the
death
of
the
settlor,
each
child
had
an
absolutely
vested
interest
in
one-fourth
of
the
capital
of
the
trust
fund,
and
the
future
income
thereon.
I
find
it
impossible
consistently
with
the
ratio
decidendi
in
Adamson’s
case
[1933]
AC
257,
as
explained
by
Lord
Porter
in
D’Avigdor-Goldsmid
v
Inland
Revenue
Commissioners,
[1953]
AC
347,
to
hold
that
such
vested
interest
in
capital
was
not
a
beneficial
interest
accruing
or
arising
on
the
death
of
the
deceased
within
the
meaning
of
section
2(1
)(d).
It
is
further,
to
my
mind,
quite
plain
that,
in
arriving
at
the
extent
or
value
of
such
beneficial
interest,
no
deduction
can
be
made
in
respect
of
the
four
children’s
interests
pur
autre
vie
in
the
surplus
income
during
the
life
of
the
settlor,
for
these
interests
came
to
an
end
on
his
death.
Any
deduction
in
respect
of
their
interests
in
expectancy
is,
of
course,
precluded
by
section
28
of
the
Finance
Act,
1934.
Also
in
Adamson
and
Another
v
Attorney-General,
[1933]
AC
257,
Lord
Warrington
had
this
to
say
on
the
subject
at
277:
Before
his
death
each
child
had
a
beneficial
interest,
but
one
that
might
be
destroyed
either
by
an
exercise
of
the
power
of
appointment
or
by
the
death
of
the
child
in
the
lifetime
of
the
deceased;
on
his
death
without
exercising
his
power
the
beneficial
interest
of
each
child
became
absolute
and
indefeasible
The
value
of
this
beneficial
interest,
or
course,
exceeded
the
value
if
any
of
that
interest
to
which
the
child
was
entitled
previously
to
the
death
of
the
deceased,
and
to
the
extent
of
that
excess
such
beneficial
interest
is,
in
my
opinion,
to
be
deemed
to
be
property
passed
on
the
death
and
would
under
s.
1
be
charged
with
duty
accordingly,
Refer
also
to
Re
Young,
Payzant
v
Armstrong,
[1927]
2
DLR
549,
at
554.
Subsection
2(1)
of
the
Estate
Tax
Act
reads
as
follows:
2.
(1)
An
estate
tax
shall
be
paid
as
hereinafter
required
upon
the
aggregate
taxable
value
of
all
property
passing
on
the
death,
at
any
time
after
the
31st
day
of
December
1958,
of
every
person
domiciled
in
Canada
at
the
time
of
his
death.
Subsection
58(1)
of
the
Estate
Tax
Act
defines
“property
passing
on
the
death”
as
follows:
62.
(1)
In
this
Act,
“property
passing
on
the
death”
includes
property
passing
either
originally
or
by
way
of
substitutive
limitation,
either
certainly
or
contingently
and
either
immediately
on
the
death
or
after
an
interval
determinable
by
reference
to
the
death,
and
without
restricting
the
generality
of
the
foregoing,
includes
any
property
the
value
of
which
is
required
by
this
Act
to
be
included
in
computing
the
aggregate
net
value
of
the
property
passing
on
the
death;
[The
italics
are
mine]
I
find
that
on
a
fair
reading
of
the
Estate
Tax
Act
and
especially
section
3,
it
appears
that
not
only
did
Parliament
intend
to
tax
“all
property
passing
on
the
death”
as
provided
for
in
subsection
2(1)
and
as
that
term
is
commonly
understood,
ie,
all
property
or
all
interest
in
the
property
passing
from
the
donor
at
death,
but
also,
in
the
particular
conditions
specifically
provided
for
in
section
3
it
intended
to
reach
certain
property
and
any
interest
in
property
which
arises
as
a
result
of
the
death
of
the
person
whose
estate
is
being
taxed,
notwithstanding
the
fact
that,
previous
to
death,
that
person
has
divested
himself
or
herself
of
all
interest
in
the
property.
This
intention
of
Parliament
also
becomes
quite
evident
upon
reading
the
above-quoted
definition
of
“property
passing
on
the
death”
in
subsection
58(1
)
of
the
Act.
Parliament,
therefore,
intended
to
include
in
that
term
property
the
value
of
which
is
required
by
the
Act
to
be
included
in
computing
the
aggregate
net
value
and
subsection
3(1)
begins
with
those
very
words:
“There
shall
be
included
in
computing
the
aggregate
net
value
.
.
In
order
to
decide
whether
or
not
any
interest
arose
to
the
benefit
of
survivors
of
the
deceased,
as
a
result
of
her
death,
one
must
examine
the
Trust
Agreement.
It
contains
the
following
provisions
which
are
relevant
to
the
issues
before
me:
4.
The
Trustee
shall
hold
and
apply
the
trust
fund
upon
the
following
trusts:
(a)
during
the
lifetime
of
the
Settlor
to
pay
or
apply
the
whole
net
income
of
the
trust
fund
in
each
year
to
or
for
the
benefit
of
the
Settlor’s
children
and
other
issue
from
time
to
time
alive
or
some
one
or
more
of
the
said
persons
to
the
exclusion
of
the
other
or
others
as
the
Trustee
may
from
time
to
time
in
its
absolute
discretion
determine
and
if
paid
or
applied
to
or
for
the
benefit
of
more
than
one
of
them
to
pay
or
apply
the
same
in
such
proportions
as
the
Trustee
may
from
time
to
time
in
its
absolute
discretion
determine;
(b)
on
the
death
of
the
Settlor
if
she
shall
die
leaving
issue
her
surviving
to
hold
the
trust
fund
in
trust
for
the
issue
of
the
Settlor
who
shall
be
living
at
her
death
and
if
more
than
one
in
equal
shares
per
stirpes;
These
are
followed
by
clauses
providing
for
substitute
beneficiaries
should
there
be
a
total
failure
of
issue
on
the
death
of
the
settlor.
Paragraph
5
provides
for
the
ultimate
vesting
of
capital
and
for
a
fixed
vested
right
to
the
income
as
follows:
5.
If
any
person
should
become
entitled
to
any
portion
of
the
trust
fund
before
attaining
the
age
of
twenty-one
years
the
portion
of
such
person
shall
be
held
and
kept
invested
by
the
Trustee
and
the
income
and
capital
shall
be
used
for
the
benefit
of
such
person
until
he
or
she
attains
the
age
of
twenty-one
years.
It
is
important
to
note
here
also
that,
pursuant
to
paragraph
14,
even
the
final
vesting
of
capital
is
subject
to
a
specific
condition
that
the
beneficiaries
not
be
bankrupt
or
insolvent
at
the
time
or
have
made
a
specific
or
general
assignment
of
property
or
be
subject
to
attachment,
writ
of
execution,
etc,
in
which
even
the
capital
would
go
to
others.
The
usual
powers
are
then
granted
to
the
trustee
to
facilitate
administration
of
the
trust
property.
The
trust
deed
contains
no
other
clauses
affecting
or
limiting
any
right
to
income
or
capital
except
a
provision
in
paragraph
13
designed
to
protect
the
income
from
being
paid
or
payable
to
creditors
of
any
beneficiary
during
such
time
as
it
would
otherwise
be
payable
to
him
in
the
event
of
the
bankruptcy
or
insolvency
of
the
beneficiary
or
of
his
having
assigned
the
income.
I
therefore
find
that
the
following
would
result
from
the
provisions
of
the
trust
deed:
1.
During
the
lifetime
of
the
settlor
the
income
was
to
be
distributed
among
those
of
her
children
and
issue
as
the
trustee
might,
at
its
own
discretion,
decide,
without
any
individual
in
that
class
being
absolutely
entitled
to
receive
any
amount
whatsoever.
2.
Upon
the
death
of
the
settlor
and
subject
to
clauses
13
and
14
to
which
I
have
referred,
each
of
the
surviving
issue
acquired
on
a
per
stirpes
basis
a
vested
right
or
interest
in
a
fixed
portion
or
share
of
the
corpus
of
the
fund
which
was
to
be
paid
to
him
or
her
immediately
if
of
the
age
of
21
years
at
the
time
and,
if
not,
then
to
be
paid
to
him
or
her
upon
attaining
21
and,
in
the
meantime,
to
receive
the
income
from
that
share
of
the
fund
or
trust
property.
The
decrased,
on
execution
of
the
trust
deed
and
of
the
other
documents,
completely
divested
herself
of
any
legal
or
equitable
interest
in
the
trust
property.
The
mere
fact
that,
in
the
event
of
failure
of
issue
and
also
of
the
death
of
the
alternative
beneficiaries
mentioned
in
the
settlement,
she
would
acquire,
should
she
survive
them,
a
right
to
reappoint
new
beneficiaries,
does
not
constitute
a
right
or
interest
in
property.
It
was
held
in
The
National
Trust
Company
Limited
v
MNR,
[1946]
Ex
CR
650;
[1947]
CTC
201;
3
DTC
940,
that
even
the
possibility
that
the
trust
property
might
revert
to
the
settlor
does
not
constitute
an
interest
of
the
settlor
in
property.
On
execution
of
the
trust
deed,
the
divesting
was
immediate
and
complete,
but
the
ultimate
vesting
was
not:
it
was
suspended,
as
the
trustee
held
the
property
forming
the
subject
to
the
settlement
for
the
use
of
benefit
of
ultimate
beneficiaries
of
the
corpus
and
in
the
meantime,
during
the
settlor’s
life,
for
the
benefit
of
some
or
all
of
her
issue.
The
trustee
was
obviously
not
entitled
to
the
fruits
and
benefits
of
the
trust
nor
was
any
one
entitled
to
the
corpus
before
the
death
of
the
settlor.
Even
during
the
life
of
the
donor,
no
individual
beneficiary
had
any
vested
absolute
right
to
any
portion
of
the
income.
For
those
same
reasons
the
creation
of
the
settlement
in
1961
could
not
be
considered
as
a
completed
gift
inter
vivos.
There
obviously
exists
a
substantial
and
essential
difference
between
this
situation
and
that
where
possession
is
assumed
by
the
donee
or
donees
or
by
a
trustee
on
behalf
of
the
beneficiaries
specifically
identifiable
at
the
time
and
who
are
entitled
to
ultimately
receive
the
corpus
of
the
trust.
Although
the
deceased
had
divested
herself
of
all
right
in
the
trust
property
as
of
the
date
of
execution
and
delivery
of
the
trust
deed,
her
death
was
an
event
which
triggered,
established
or
brought
into
existence
an
absolute
and
indefeasible
right
(subject
to
paragraphs
13
and
14
to
which
I
have
referred)
to
both
income
and
capital
of
a
share
of
the
trust
fund
to
be
determined
at
that
time
on
a
per
stirpes
distribution
for
each
of
the
issue
of
the
settlor
alive
at
the
time.
This
interest
so
created
by
the
deed
of
settlement
was
an
interest
in
expectancy,
a
contingent
interest
in
the
corpus
of
the
fund
and
not
a
vested
interest
subject
to
be
divested
by
a
condition
subsequent.
As
stated
by
Halsbury,
Third
Edition,
Volume
39,
paragraph
1657
at
1122:
1657.
Contingency
in
description
of
donee
or
subject
matter
of
gift.
An
estate
or
interest
must
remain
contingent
until
there
is
a
person
having
all
the
qualifications
that
the
testator
requires
and
completely
answering
the
description
of
the
object
of
his
bounty
given
in
the
will.
This
type
of
interest,
in
my
view,
constitutes
an
interest
arising
or
accruing
by
survivorship
or
otherwise
on
the
death
of
the
deceased
such
as
contemplated
by
paragraph
3(1
)(j)
because
a
beneficial
interest
in
a
specific
share
of
the
corpus
arose
for
each
beneficiary
on
the
date
of
death
and
by
reason
of
that
occurrence.
See
D’Avigdor-Goldsmid
v
IRC,
[1953]
AC
347,
where
Viscount
Simon
stated
at
361:
The
crucial
question
in
the
case
is
whether
a
“beneficial
interest”
in
the
policy
arose
at
the
deceased’s
death.
The
appellant
contends
that
it
did
not,
and
if
he
is
right
the
Crown’s
claim
must
fail.
See
also
Parker
and
Others
v
Lord
Advocate,
supra,
where
Lord
Radcliff
at
619
stated:
It
may
be
correct
to
speak
of
that
interest
as
being
enlarged
by
the
death:
but
it
seems
to
me
that
what
is
important
for
the
purpose
of
section
2(1
)(d)
is
that
it
was
the
death
that
was
the
occasion
of
the
contingent
right
to
capital
becoming
absolute
and
displacing
the
previous
limited
right
which
had
come
to
an
end.
[The
italics
are
mine.]
I
therefore
conclude
that
there
was,
within
the
meaning
of
paragraph
3(1
)(j),
an
interest
provided
for
by
the
deceased
by
arrangement
with
the
trustee,
through
the
deed
of
settlement,
which
interest
arose
or
accrued
by
survivorship
to
the
issue
per
stirpes
of
the
deceased
who
were
alive
at
her
death.
The
plaintiffs
also
maintain
that
the
amount
in
issue
could
not
be
included
in
the
computation
of
the
aggregate
net
value
of
property
passing
on
death
by
reason
of
the
provisions
of
subsection
4(1)
of
the
Estate
Tax
Act
which
reads
as
follows:
4.
(1)
Notwithstanding
section
3,
there
shall
not
be
included
in
computing
the
aggregate
net
value
of
the
property
passing
on
the
death
of
a
person
the
value
of
any
such
property
acquired
pursuant
to
a
bona
fide
purchase
made
from
the
deceased
for
a
consideration
in
money
or
money’s
worth
paid
or
agreed
to
be
paid
to
the
deceased
for
his
own
use
or
benefit,
unless
such
purchase
was
made
otherwise
than
for
full
consideration
in
money
or
money’s
worth
paid
or
agreed
to
be
paid
as
hereinbefore
described,
in
which
case
there
shall
be
included
in
computing
the
aggregate
net
value
of
the
property
passing
on
the
death
of
the
deceased
in
respect
of
the
property
so
acquired
only
the
amount
by
which
the
value
of
the
property
so
acquired
computed
as
of
the
date
of
its
acquisition
exceeds
the
amount
of
the
consideration
actually
so
paid
or
agreed
to
be
paid.
[The
italics
are
mine.]
As
this
section
constitutes
an
exemption,
its
provisions
are
to
be
strictly
construed.
As
to
the
question
of
bona
fide
I
find
that
the
transactions
which
all
took
place
on
September
21,
1961
were
bona
fide
in
the
sense
that
they
did
not
constitute
shams
and
were
entered
into
without
fraud
or
collusion
nor
as
a
result
of
any
participation
in
wrongdoing.
Each
document
truly
represented
what
was
expressed
therein.
However,
the
sum
total
of
the
transactions,
the
documents
and
transfers
must
be
looked
at
in
order
to
determine
what
took
place
on
that
date.
It
then
becomes
abundantly
evident
that,
from
the
outset
and
before
any
transaction
took
place
or
any
document
was
signed,
all
of
the
parties
involved
knew
that
the
purpose
and
aim
was
to
settle
gratuitously
a
trust
of
shares
for
the
benefit
of
the
settlor’s
issue.
The
creation
of
a
voting
trust
to
permit
the
issue
of
voting
trust
certificates
which
then
would
form
the
trust
property
to
be
settled
by
means
of
another
trust
deed
were
but
the
means
by
which
the
settlor
would
create
the
settlement
and
would
provide
a
vehicle
by
means
of
which
ultimate
liability
for
estate
taxes
and
succession
duties
would
be
avoided.
All
of
these
objectives
were
perfectly
legal
and
legitimate,
but
the
parties
all
knew
that
the
deceased
would
be
purchasing
shares
from
her
own
resources
and
converting
them
into
voting
share
certificates
and
then
transferring
those
certificates
to
the
trustee
for
the
benefit
of
her
issue
without
any
true
consideration.
They
all
knew
also
that
she
was
not
to
derive
any
benefit
from
the
money
transferred
to
her
by
the
trustee
since
it
was
her
own
money,
which
would
be
handed
back
to
her.
No
ordinary
person
would
ever
consider
as
a
true
sale
or
as
“bona
fide
purchase
for
consideration
in
money
or
money’s
worth,”
a
transaction
by
which
an
asset
is
transferred
from
a
vendor
to
a
purchaser
and
the
moneys
used
to
purchase
the
asset
are
those
of
the
vendor
which
had
been
handed
over
to
the
purchaser
for
the
sole
purpose
of
having
them
handed
back
to
the
vendor.
The
obvious
intent
was
in
essence
to
effectuate
a
gift
and
no
true
purchase
for
money
or
money’s
worth
took
place
nor
was
a
sale
bona
fide
in
the
sense
of
being
a
real
sale.
One
must
look
at
the
essence
and
not
merely
at
the
form.
As
stated
by
Dickson,
J
in
MNR
v
McCreath,
supra,
at
22:
One
must
look
at
the
substance
of
the
matter
to
see
what
the
donor
parted
with
and
what
she
retained.
The
transfer
of
the
shares
of
Mount
Royal
Paving
&
Supplies
Limited
to
the
trustee
was,
in
my
opinion,
a
colourable
gift
and
not
a
bona
fide
disposition
of
the
type
which
s.5(1)
is
intended
to
exempt.
The
realities
of
the
situation
must
always
be
considered
(Refer
Frank
M
Covert,
WC,
John
S
Jodrey
et
al
v
Minister
of
Finance
for
the
Province
of
Nova
Scotia
et
al,
[1980]
CTC
437.)
on
the
issue
of
looking
at
the
essence
rather
than
the
machinery
of
the
transaction.
Judson,
J,
in
delivering
judgment
on
behalf
of
the
Supreme
Court
of
Canada
in
MNR
v
Mary
Ada
Cox
et
al,
[1971]
SCR
817;
[1971]
CTC
227;
71
DTC
5150,
stated
in
conclusion
at
820
[229,
5151]:
I
am
in
complete
agreement
with
the
Minister’s
contention
that
the
exchange
of
cheque
was
merely
the
machinery
used
to
effect
a
gift
of
the
policy
by
the
deceased
to
his
wife.
The
simultaneous
exchange
of
cheques
where
neither
would
be
honoured
due
to
insufficient
funds
were
it
not
for
the
offsetting
entry
of
the
other
cheque,
can
only
be
viewed
as
a
single
transaction.
In
substance,
the
deceased
transferred
to
his
wife
the
policy
of
life
assurance
plus
the
exact
amount
of
the
next
year’s
premium,
the
sum
of
$1,526.50,
being
the
difference
between
$6,076.50
and
$4,550.
The
deceased
received
no
consideration
for
this
transfer,
thereby
constituting
a
gift
of
the
policy
within
the
provisions
of
the
Real
Estate
Tax
Act,
the
face
value
of
which
was
properly
included
in
computing
the
aggregate
net
value
of
property
passing
on
death.
My
brother
Heald,
J,
sitting
at
that
time
in
the
Trial
Division,
applied
the
same
principle
in
Arthur
G
Roberts
et
al
v
MNR,
[1971]
FC
323;
[1971]
CTC
668;
71
DTC
5430
when
he
stated
at
337
[680,
5437]:
It
seems
to
be
well
settled
in
tax
cases
that
the
substance,
rather
than
the
form
be
regarded
and
also
that
the
intention
with
which
a
transaction
is
entered
into
is
an
important
matter
and
the
whole
sum
of
the
relevant
circumstances
must
be
taken
into
account.
(West
Hill
Redevelopment
Co
v
MNR,
[1969]
2
Ex
CR
441
at
455.)
There
also
exists
an
alternative
reason
for
not
applying
subsection
4(1).
I
shall
content
myself
with
merely
mentioning
it.
Previous
to
their
mother’s
death,
the
children
who
survived
her,
possessed
a
certain
interest
in
the
income
and
a
potential
interest
in
the
corpus.
The
additional
interest
which
sprang
up
or
arose
on
the
death
of
their
mother
was
created
by
the
trust
document
and
was
not
property
which
was
acquired
from
the
deceased
at
the
time
of
the
transfer
or
sale,
even
if
one
can
characterize
the
transactions
of
September
21,
1961
as
a
transfer
or
sale.
For
the
above
reasons,
I
am
of
the
view
that
the
facts
of
this
case
do
not
bring
it
under
the
protection
of
subsection
4(1)
nor
would
they
do
so
even
if
the
rule
of
strict
interpretation
against
the
taxpayer
were
not
applicable.
I
therefore
find
that
the
amount
in
issue
is
taxable
for
estate
tax
purposes.
The
action
will
be
dismissed
with
costs.
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