Walsh,
J:—This
is
an
appeal
by
plaintiff
against
a
judgment
of
the
Tax
Review
Board
dated
February
11,
1976,
maintaining
defendants’
appeal
against
an
assessment
for
estate
tax
with
respect
to
the
estate
of
the
late
John
Cyril
Hewitt
who
died
on
April
15,
1971
while
resident
of
and
domiciled
in
the
Province
of
Manitoba.
The
defendants
are
executors
and
trustees
of
the
estate
pursuant
to
his
last
will
and
testament
dated
December
23,
1969
and
codicil
dated
May
27,
1970,
and
were
confirmed
as
executors
and
trustees
by
grant
of
probate
dated
November
4,
1971,
issued
from
the
Surrogate
Court
of
the
Eastern
Judicial
District,
Province
of
Manitoba.
Clauses
5
and
6
of
the
will
are
the
principal
clauses
in
issue
and
read
respectively
as
follows:
(5)
I
DIRECT
that
in
addition
to
any
other
payments
required
to
be
made
to
my
wife
by
the
provisions
of
this
my
Will,
that
my
Trustees
shall
pay
to
my
wife
the
sum
of
SEVEN
HUNDRED
AND
FIFTY
DOLLARS
($750.00)
for
each
and
every
month
of
her
natural
life;
Provided
Always
that
such
monthly
installments
are
based
upon
the
purchasing
power
of
money
on
July
1st,
1969,
according
to
the
Index
to
The
Dominion
Bureau
of
Statistics;
in
the
event
such
purchasing
power
decreases
by
ten
per
cent
(10%)
or
more
from
the
value
thereof
as
at
July
1st,
1969,
then
and
in
such
event
I
AUTHORIZE
AND
DIRECT
my
Trustees
to
increase
said
monthly
installments
to
an
equivalent
purchasing
power
as
shewn
by
the
then
Index
in
comparison
with
the
Index
of
July
1st,
1969;
I
FURTHER
DIRECT
that
my
Trustees
shall
pay
to
my
wife
or
on
her
behalf
(as
the
case
may
be)
any
sum
or
sums
incurred
for
by
her
for
medical
or
hospital
expense
and
being
in
excess
of
those
sums
presently
provided
by
any
governmental
or
regulatory
authority
for
such
eventuality.
(6)
IF
in
any
year
the
net
income
derived
from
my
general
estate
shall
be
more
than
sufficient
to
provide
for
the
installments
and
payments
required
to
be
made
to
my
wife
then
I
DIRECT
that
my
Trustees
shall
pay
to
my
wife
such
amount
of
said
surplus
income
as
my
Trustees
in
their
absolute
discretion
are
of
opinion
can
be
made
after
having
regard—
Firstly,
to
maintaining
my
wife
with
a
standard
of
living
equal
to
that
which
she
enjoys
at
the
date
of
my
death;
Secondly,
to
expansion
of
any
business
beneficially
owned
or
controlled
by
my
estate
at
the
time
of
my
death,
and
Thirdly,
to
not
impairing
the
capital
structure
of
any
of
the
business
owned
or
controlled
by
my
estate
at
the
time
of
my
death.
The
defendants
in
filing
an
estate
tax
return
in
respect
of
John
Cyril
Hewitt
claimed
$1,793,215.05
as
a
deduction
from
the
aggregate
net
value
of
the
property
passing
on
his
death
which
said
deduction
was
disallowed
by
assessment
notice
dated
January
11,
1974,
which
however
allowed
as
a
deduction
the
amount
of
$225,000
said
to
be
the
value
as
prescribed
by
Estate
Tax
Regulations
of
the
annuity
provided
for
in
clause
5
of
the
will.
The
Minister
relied
inter
alia
on
paragraph
7(1
)(b)
of
the
Estate
Tax
Act,
RSC
1970,
c
E-9,
and
more
specifically
on
subparagraph
(i)(A)
which
reads
as
follows:
7.
(1)
For
the
purpose
of
computing
the
aggregate
taxable
value
of
the
property
passing
on
the
death
of
a
person,
there
may
be
deducted
from
the
aggregate
net
value
of
that
property
computed
in
accordance
with
Division
B
such
of
the
following
amounts
as
are
applicable:
(b)
the
value
of
any
gift
made
by
the
deceased
whether
during
his
lifetime
or
by
his
will
that
can,
within
six
months
after
the
death
of
the
deceased
or
such
longer
period
as
may
be
reasonable
in
the
circumstances,
be
established
to
be
absolute
and
indefeasible
and
that
was
made
by
him
by
the
creation
of
a
settlement
under
which
(i)
the
spouse
of
the
deceased
is
entitled
to
receive
(A)
all
of
the
income
of
the
settlement
that
arises
after
the
death
of
the
deceased
and
before
the
death
of
such
spouse,
.
.
.
Plaintiff
contends
that
if
the
spouse
of
the
deceased
has
received
since
his
death
all
of
the
annual
income
of
the
residue
of
the
estate
she
was
paid
such
income
not
because
of
a
right
she
had
to
it
under
the
will
but
rather
because
of
the
exercise
of
the
trustees’
discretion
in
her
favour.
Defendants
contend
thai
at
the
date
of
the
death
of
John
Cyril
Hewitt
no
business
was
owned
or
controlled
by
him
and
no
business
was
owned
or
controlled
by
his
estate
and
that
since
his
death
they
have
paid
to
the
widow
all
of
the
annual
income
of
the
estate
less
the
debts
and
specific
requests
referred
to
in
the
last
will
and
testament.
They
contend
that
the
spouse
is
entitled
to
receive
all
of
the
income
of
the
residue
and
that
as
a
result
the
value
of
the
said
residue
may
be
deducted
in
computing
the
aggregate
taxable
value
of
the
property
of
John
Cyril
Hewitt
passing
on
his
death
in
accordance
with
paragraph
7(1)(b)
of
the
Act,
and
that
moreover
the
trustees
had
no
discretion
to
pay
to
the
spouse
an
amount
less
than
all
of
the
income
arising
from
the
said
residue
or
general
estate
once
the
requirements
of
clauses
labelled
secondly
and
thirdly
of
paragraph
6
of
the
will
were
no
longer
effective
since
the
deceased
no
longer
had
any
business
beneficially
owned
or
controlled
by
him
at
the
time
of
his
death.
As
a
subsidiary
argument
in
the
event
that
they
do
not
succeed
on
the
principal
issue
defendants
claim
that
the
amount
of
$225,000
does
not
represent
the
value
of
the
annuity
provided
for
in
clause
5
of
the
will
in
that
insufficient
account
was
taken
in
computing
such
value
of
the
provisions
dealing
with
the
increase
of
monthly
instalments
based
on
the
decline
of
the
purchasing
power
of
the
sums
therein
provided.
It
was
agreed
that
this
second
argument
should
be
left
in
abeyance
since,
depending
on
the
outcome
of
defendant’s
principal
contestation,
it
may
not
be
necessary
to
deal
with
it,
and
if
it
becomes
necessary
the
parties
may
speak
to
it
at
a
later
date
as
the
determination
of
it
necessitates
making
some
difficult
computations.
It
was
stipulated
however
that
since
the
present
consumer
price
index
commenced
with
a
base
of
100
in
1971,
the
price
level
on
July
1,
1969,
the
date
provided
in
clause
5
of
the
will,
was
94.8
and
as
of
November
1977,
the
last
month
for
which
figures
are
available,
was
166.1.
This
represents
an
increase
of
175.2%
over
94.8%
or,
looked
at
another
way,
the
sum
of
$750
a
month
as
of
July
1,
1969
is
now
worth
$427.58.
In
order
to
maintain
in
November
1977
the
purchasing
power
of
$750
as
of
July
1,
1969,
a
monthly
payment
of
$1,315.60
would
now
be
required
and
this
is
still
rising,
introducing
a
speculative
element
into
the
calculation
of
the
evaluation
of
the
annuity
as
of
the
date
of
death
which
plaintiff
has
established
at
$225,000.
Plaintiff
conceded
that
clause
(i)(B)
of
paragraph
7(1)(b)
of
the
Act
which
reads
as
follows:
(i)
the
spouse
of
the
deceased
is
entitled
to
receive
(B)
periodic
payments
in
ascertained
amounts
or
limited
to
ascertained
maximum
amounts,
to
be
made
at
intervals
not
greater
than
twelve
months,
out
of
the
income
of
the
settlement
that
arises
after
the
death
of
the
deceased
and
before
the
death
of
such
spouse,
or,
if
that
income
is
completely
exhausted
by
those
payments,
out
of
the
income
and
capital
of
the
settlement,
.
.
.
would
apply
to
these
payments
and
that
this
would
not
exclude
the
application
of
clause
(A).
An
agreed
statement
of
facts
was
filed,
which
in
addition
to
the
facts
set
out
above
stated
that
prior
to
his
death
John
Cyril
Hewitt
was
president
and
sole
beneficial
shareholder
of
J
C
Hewitt
Ltd,
which
in
turn
beneficially
owned
all
of
the
1,999
issued
and
outstanding
common
shares
of
Burnaby
Venetian
Blinds
Ltd,
a
company
engaged
in
the
manufacture,
sale
and
installation
of
Venetian
blinds.
On
February
27,
1970,
J
C
Hewitt
Ltd
sold
to
Hunter
Douglas
Ltd
all
of
the
shares
owned
by
it
in
Burnaby
Venetian
Blinds
Ltd.
In
addition
at
all
material
times
J
C
Hewitt
Ltd
owned
all
of
the
issued
and
outstanding
shares
of
Beach
Attractions
Ltd
which
sold
its
amusement
park
business
in
1961
and
thereafter
continued
to
earn
income
from
investments.
This
evidence
was
expanded
on
by
the
testimony
of
John
Mace,
one
of
the
executors,
and
vice-president
of
Hunter
Douglas
Ltd.
He
stated
that
he
had
known
the
deceased
since
1947
when
he
worked
with
him
as
a
student
at
Winnipeg
Beach
where
the
late
Mr
Hewitt
Operated
an
amusement
park.
In
1955
he
became
manager
of
both
Burnaby
Venetian
Blinds
Ltd
and
Beach
Attractions
Ltd.
The
venetian
blind
company
operated
its
business
in
Montreal,
Toronto,
Winnipeg,
Regina,
Edmonton
and
Vancouver.
Beach
Attractions
Ltd
sold
its
amusement
park
in
1961.
The
company
was
not
wound
up
bui
all
its
assets
were
sold
and
it
carried
on
no
active
business
thereafter,
making
investments
only.
Prior
to
his
death
the
late
Mr
Hewitt
became
concerned
with
his
health
which
accounted
for
his
sale
of
Burnaby
Venetian
Blinds
Ltd.
J
C
Hewitt
Ltd
was
a
personal
corporation
which
owned
shares
of
both
Beach
Attractions
Ltd
and
Burnaby
Venetian
Blinds
Ltd,
the
family
residence,
and
an
investment
portfolio.
Some
properties
were
owned
by
Burnaby
Venetian
Blinds
Ltd.
To
his
personal
knowledge
therefore,
the
witness
stated,
there
had
been
no
business
activity
by
any
of
the
companies
or
by
the
deceased
following
the
sale
to
Hunter
Douglas
Ltd
prior
to
his
death.
Counsel
for
defendants
argued
that
the
clear
intention
of
the
deceased
if
we
look
at
the
provisions
cf
the
will
as
a
whole
and
do
not
limit
ourselves
to
clauses
5
and
6
was
to
provide
everything
for
his
wife
and
nothing
for
the
children
during
her
lifetime,
save
for
small
specific
legacies
provided
therein.
At
the
time
the
will
was
made
however
deceased
was
very
concerned
with
protecting
his
business
interests.
Clause
1
providing
for
payment
of
debts
ana
expenses
including
succession
duties
and
estate
tax
provides
that
these
shall
be
paid
out
of
assets
of
the
estate
other
than
stock
in
J
C
Hewitt
Ltd
which
shall
however
be
voted
to
ensure
that
sufficient
funds
are
provided
in
the
event
there
is
a
deficiency
in
the
capital
of
his
general
estate
to
pay
the
debts
and
expenses.
Clause
2
brings
the
insurance
policies
payable
to
his
wife
back
into
the
trust.
Clause
3
provides
that
the
stock
of
J
C
Hewitt
Ltd
shall
be
voted
by
the
trustees
to
provide
his
wife
with
the
usage
of
the
home
and
furnishings
unless
she
no
longer
desires
such
use.
He
directs
that
his
stock
in
J
C
Hewitt
Ltd
Shall
be
so
voted
as
to
pay
for
all
taxes,
repairs,
fuel
accounts,
power
accounts,
servants
and
other
charges
necessary
for
the
general
maintenance
of
the
property.
In
the
event
that
his
wife
relinquishes
same
then
the
trustees
are
directed
to
pay
her
the
sum
or
sums
as
may
be
necessary
to
ensure
that
she
shall
be
provided
with
living
facilities
and
amenities
comparable
to
those
which
she
relinquished.
Clause
4
gives
nominal
legacies
to
his
brother
and
sister.
Clause
8
provides
that
upon
the
death
of
his
wife
the
assets
of
the
estate
are
to
be
divided
between
his
three
children,
or
if
a
majority
of
them
so
direct
the
trustees
may
accumulate
the
income
from
these
liquid
assets
and
pay
it
in
annual
payments
to
the
said
children.
He
specifically
excludes
the
shares
of
the
capital
stock
of
Burnaby
Venetian
Blinds
Ltd
from
this
division
of
liquid
assets.
Provisions
are
made
in
clause
9
for
the
event
that
any
of
his
children
may
have
predeceased
him.
The
executors
are
given
the
widest
possible
discretion
with
respect
to
investment
and
sale
of
assets.
The
codicil
merely
adds
John
Alexander
Mace
as
an
executor
and
contains
a
standard
clause:
“In
all
other
respects,
I
CONFIRM
my
said
Last
Will
and
Testament.”
While
plaintiff’s
counsel
contended
that
as
this
codicil
was
made
after
the
sale
of
the
shares
of
Burnaby
Venetian
Blinds
Ltd,
deceased’s
only
active
business
to
Hunter
Douglas
Ltd
and
confirmed
his
last
will
and
testament,
making
no
changes
in
paragraph
6
thereof,
that
it
cannot
now
be
contended
that
clauses
“secondly”
and
“thirdly”
in
said
paragraph
have
no
effect.
I
am
of
the
view
however
that
the
clause
in
the
codicil
confirming
the
testator’s
last
will
and
testament
is
merely
a
clause
of
style
and
not
a
specific
indication
of
any
intention
on
his
part
to
reiterate
the
limitation
on
the
amount
of
income
which
his
trustees
are
directed
to
pay
to
his
wife,
when
the
need
for
such
limitation
no
longer
existed
following
the
said
sale
during
his
lifetime.
Defendant’s
counsel
contends
that
the
purpose
of
clause
6
was
not
to
limit
the
amount
of
income
to
be
payable
to
the
wife
over
and
above
the
amounts
provided
for
in
clause
5
once
the
businesses
had
been
sold,
but
that,
as
a
result
of
his
concern
over
the
continued
existence
and
success
of
his
businesses
at
the
time
he
made
the
will
to
require
the
trustees
to
balance
the
needs
of
the
wife
to
maintain
a
standard
of
living
equal
to
what
she
enjoyed
at
the
date
of
his
death
with
the
possible
need
for
expanding
any
of
his
businesses
and
not
impairing
their
capital
structure.
The
trustees
therefore
if
that
situation
arose
would
have
had
to
weigh
the
needs
of
the
wife
with
the
needs
of
the
businesses,
but
once,
as
a
result
of
the
disposal
of
the
active
business
interests
there
could
be
no
further
need
for
expansion
of
them
or
any
question
of
impairing
their
capital
structure
since
he
no
longer
owned
or
controlled
any
active
businesses
at
the
time
of
his
death,
then
the
first
clause
alone
would
apply
and
all
the
income
go
to
his
wife.
This
is
the
way
in
which
the
trustees
interpreted
the
will
and
have
carried
it
out.
Attention
was
also
called
to
the
fact
that
the
will
states
that
“my
trustees
shall
pay:to
my
wife”
thus
making
it
mandatory
and
not
discretionary,
unlike
clauses
frequently
found
in
wills
giving
trustees
discretion
to
use
capital
to
supplement
income
needs
of
the
beneficiary
if
they
deem
this
necessary.
In
determining
whether
estate
tax
is
payable,
it
is
the
situation
which
exists
at
the
date
of
death
which
must
be
looked
at
and
not
the
situation
at
the
date
of
the
making
of
the
will.
When
the
will
was
made
the
widow’s
rights
to
the
entire
income
were
not
indefeasible
in
the
sense
that
if
any
business
beneficially
owned
or
controlled
by
the
testator
and
still
owned
or
controlled
by
his
estate
at
the
date
of
his
death
needed
additional
income
for
expansion
this.
would
have
to
be
weighed
against
the
needs
of
maintaining
his
wife
with
a
standard
of
living
equal
to
that
which
she
enjoyed
at
the
date
of
the
death,
and
similarly
that
capital
structure
of
any
business
owned
or
controlled
by
his
estate
at
the
date
of
his
death
should
not
be
impaired
if
possible
in
order
to
so
maintain
this
standard.
If
this
situation
arose
the
trustees
would
have
to
weigh
the
needs
of
the
wife
against
the
needs
of
the
businesses,
and
hence
the
income
legacy
to
her
was
not
absolute
and
indefeasible
at
the
time
the
will
was
made.
Since
he
disposed
of
his
business
interests,
retaining
only
investments,
his
estate
neither
owned
nor
controlled
any
business
at
the
time
of
his
death
and
hence
clauses
designated
as
“secondly”
and
“thirdly”
in.
paragraph
6
of
the
will
were
inoperative,
so
that
the
income
legacy
to
the
wife
therefore
became
“absolute
and
indefeasible”
within
the
meaning
of
paragraph
7(1)(b)
at
the
date
of
death.
Plaintiff
contends
however
that,
even
in
this
event,
the
provisions
of
the
clause
designated
as
“firstly”
in
paragraph
6
limit
the
amount
of
income
to
be
paid
to
the
wife
to
that
required
to
maintain
her
with
a
standard
of
living
equal
to
that
which
she
enjoyed
at
the
date
of
the
testator’s
death.
This
argument
might
well
be
valid
if
it
could
be
concluded
that
this
was
intended
to
be
a
limitative
clause,
limiting
the
amounts
which
the
wife
should
be
paid
as
income
during
her
lifetime.
The
tenor
of
the
will
taken
as
a
whole
however
gives
no
indication
of
any
intent
on
the
part
of
the
testator
to
have
the
trustees
increase
the
capital
of
his
estate
for
the
benefit
of
his
children
or
grandchildren
by
paying
to
the
widow
only
such
amount
of
the
income
as
she
required
to
maintain
her
standard
of
living,
and
then
reinvesting
the
surplus
so
as
to
build
up
the
capital
of
the
estate.
In
this
respect
it
is
entirely
different
from
the
type
of
will
where
the
wife
is
given
a
certain
income
and
the
trustees
the
right
to
infringe
on
capital
if
necessary
for
her
needs,
the
intent
being
to
preserve
as
much
of
the
capital
as
possible
for
the
ultimate
beneficiary.
Such
a
will
requires
the
intervention
of
the
trustees
to
exercise
their
discretion
and
the
rights
of
the
wife
to
any
capital
in
such
a
will
are
certainly
not
absolute
or
indefeasible.
In
the
present
case
however
the
converse
seems
to
represent
the
intentions
of
the
testator.
If
he
had
continued
to
own
or
control
any
businesses
at
the
date
of
his
death
then
his
trustees
would
cer-
tainly
have
had
to
exercise
their
discretion
before
paying
the
full
amount
of
the
income
to
the
widow,
and
even
if
the
businesses
had
no
such
need
and
they
did
pay
all
the
income
to
her
it
would
nevertheless
be
correct
to
state
that
they
did
so
as
a
result
of
the
exercise
of
their
discretion
under
paragraph
6
of
the
will.
When
there
were
no
such
businesses
however
there
was
no
discretion
left
to
exercise.
While
it
might
have
been
desirable
that
clauses
“secondly”
and
“thirdly”
be
revoked
after
the
sale
of
his
businesses
and
this
could
easily
have
been
done
in
the
codicil,
I
do
not,
as
already
indicated,
find
that
the
failure
to
do
so
indicates
any
intention
on
the
testator’s
part
to
limit
the
amount
of
income
to
be
paid
to
his
widow.
The
failure
to
revoke
ineffective
clauses
cannot
give
them
an
effect
which
they
no
longer
have
and
it
is
as
of
the
date
of
death
that
estate
taxes
become
payable.
It
might
be
mentioned
in
passing,
although
the
decision
of
the
case
does
not
depend
on
it,
that
it
is
evident
that
a
monthly
payment
of
$750
even
if
escalated
according
to
the
cost
of
living
index,
together
with
the
provision
of
a
house
with
all
expenses
in
connection
with
it
paid
out
of
the
estate,
would
not
seem
to
be
sufficient
to
in
any
way
maintain
a
standard
of
living
equal
to
that
which
the
widow
enjoyed
prior
to
the
testator’s
death
when
it
is
considered
that
the
aggregate
net
value
of
the
property
passing
on
his
death
was
over
a
million
and
three-quarters
dollars,
which
even
on
a
very
conservative
basis
would
be
anticipated
to
yield
an
annual
income
of
not
less
than
$150,000.
The
jurisprudence
to
which
I
was
referred
is
of
little
help
as
the
facts
of
the
various
cases
were
substantially
different.
I
find
myself
in
complete
accord
with
the
very
lucid
judgment
of
A
W
Prociuk
of
the
Tax
Review
Board
that
defendants’
contentions
should
be
sustained.
Plaintiff’s
action
is
therefore
dismissed
with
costs.
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