Décary,
J
(delivered
orally
from
the
Bench
in
Montreal
on
April
30,
1976):—In
this
matter,
the
issue
is
to
determine
whether
the
Minister
of
National
Revenue
was
right
in
considering
that
the
market
value
of
shares
by
Walter
M
Lowney
Co
Limited,
hereinafter
called
Lowney,
transferred
on
April
3
and
19,
1968
by
the
appellant
to
his
sons,
had
a
fair
market
value
of
$68.22
a
share
rather
than
$24
a
share,
the
latter
value
being
the
one
quoted
on
the
Montreal
Stock
Exchange,
by
assuming
that
the
appellant
had
known,
as
of
April
3
and
19,
1968
that
the
shares
were
of
a
value
of
$68.22
because
he
was
aware
of
the
possible
event
that
the
shares
might
be
the
object
of
an
offer
to
purchase
at
a
price
higher
than
$24
a
share.
Respondent
has
taken
as
the
fair
market
value
the
amount
of
$68.22
a
share,
being
the
price
paid
by
Standard
Brands
Limited,
hereinafter
called
Standard,
in
its
offer
of
May
15,
1968
to
all
the
holders
of
Lowney
stock,
inasmuch
as
Standard
could
own
67%
of
the
issued
and
outstanding
shares
of
Lowney.
The
appellant
was
assessed
for
gift
tax
upon
the
difference
between
that
amount
of
$68.22
a
share
and
the
price
of
$24
a
share,
paid
or
payable
by
each
of
his
two
sons
for
a
total
number
of
14,500
shares
being
for
each
of
his
two
sons
one
lot
of
750
shares
transferred
on
April
3,
1968
and
one
lot
of
6,500
shares
transferred
on
April
19,
1968.
The
amount
of
tax
and
interest
amounts
to
$173,366.19.
I
find
it
useful
to
look
into
the
pattern
followed
by
appellant
in
connection
with
the
transfer
of
shares
to
his
two
sons.
In
the
year
1958,
Mr
Littler
decided
to
do
some
estate
planning
and,
to
that
effect,
from
then
on,
resorted,
year
after
year,
to
a
device
permitted
by
the
Gift
Tax
Provisions
of
the
Income
Tax
Act,
to
wit:
to
make
a
gift
to
each
of
his
two
sons,
equivalent
to
the
amount
exempted
from
tax
by
the
Act.
Since
1958,
only
once
was
the
amount
of
the
gift
in
money
to
each
of
his
sons
in
excess
of
the
amount
exempt
from
tax.
It
is
to
be
noted
that
it
was
established
in
evidence
that
the
money
given
by
appellant
to
each
of
his
sons
was
not
given
on
the
condition
that
the
sons
buy
shares
from
the
appellant;
it
was
also
established
by
the
evidence
of
the
two
sons
that
they
bought
shares
of
their
own
free
will,
for
the
very
natural
reason
that
the
Littler
family
had
always
been
associated
with
the
Lowney
company
since
its
founding
by
their
grandfather.
Due
to
the
process
used
for
planning
his
estate
Mr
Littler
was
leit
with
only
476
shares
out
of
208,000
issued
and
outstanding
shares,
after
the
transfers
of
April
3
and
19,
1968.
I
should
state
that
up
to
April
19,
1968,
the
immediate
family
of
the
appellant,
being
himself,
his
spouse,
his
two
sons,
his
grandchildren
and
his
father’s
estate,
were
holders
and
owners
of
40.3%
of
the
issued
and
outstanding
shares
of
the
company.
That
percentage,
per
se,
did
not
counter
upon
the
appellant
any
controlling
interest.
But
in
my
view,
one
cannot
disregard
the
fact
that
the
Ellson
group,
being
Mrs
Ellson,
sister
of
the
appellant,
and
Kellson
Inc
Co,
the
appellant’s
brother-in-law
Keeth
Ellson,
owned
together
14.3%
of
the
issued
and
outstanding
shares
of
Lowney.
To
analyze
the
situation
is
worthwhile.
Appellant
was
the
president
of
Lowney
and
his
immediate
family
had
40.3%
of
the
issued
and
outstanding
shares
of
the
company.
There
is
no
doubt
in
my
mind
that
the
Littler
group
was
not
dealing
at
arm’s
length
with
the
Elison
group
but
there
is
nothing
whatsoever
in
the
provisions
of
Part
IV
of
the
Income
Tax
Act,
as
of
April
19,
1968,
permitting
to
add
up
the
amount
of
shares
owned
by
the
Littler
group
to
the
ones
owned
by
the
Ellison
group
to
arrive
at
the
amount
of
54.6%
of
the
issued
and
outstanding
shares
and
to
say
that
the
appellant
had
a
statutory
tax-wise
control
of
Lowney.
There
is
no
evidence
establishing
that
any
proxy
had
been
given
by
the
Ellson
group
to
one
of
the
members
of
the
Littler
group,
thereby
giving
the
Littler
group
a
voting
control
of
the
company.
Even
if
it
had
been
so,
the
shares
that
are
the
subject
matter
of
the
assessment
were
not,
in
any
way,
carrying
a
voting
control.
They
were
only
a
transfer
between
members
of
the
same
group
so
the
voting
control
could
not
be
altered.
Another
important
group,
that
is,
the
McConnel
group,
consisting
of
McConnel
Investment
Trust,
the
J
W
McConnel
Foundation
Inc
and
Starlaw
Investments
Ltd,
held
14%
of
the
issued
and
outstanding
shares
of
the
company.
Finally,
the
public
held
31.4%
of
the
issued
and
outstanding
shares.
It
was
of
course
that
group
of
shares
that
was
subject
to
be
traded
on
the
Exchange.
I
should
stress
that
on
April
3
and
19,
1968,
the
Littler
group
could
vote
40.3%
of
the
shares
and
that
percentage,
unless
proxy
be
given
by
the
Ellson
group
or
the
McConnel
group
or
about
10%
of
the
public,
could
not
by
any
stretch
of
the
imagination
be
considered
as
having
a
controlling
voting
interest.
The
problem
this
Court
has
to
solve
has
to
be
looked
at
in
that
light
because
the
shares
transferred
from
appellant
to
his
sons
were
shares
belonging
to
a
minority
group
and
in
fact
amounted
to
nothing
but
a
transfer
of
shares
within
the
same
group,
affecting
in
no
way
whatsoever
the
total
amount
of
shares
of
the
group.
As
I
said
previously,
the
Gift
Tax
provisions
of
the
Income
Tax
Act
had
not,
as
of
April
19,
1968
been
amended,
as
amendments
became
effective
only
as
from
October
23,
1968.
It
is
quite
surprising
that
the
Minister
should
resort
to
the
price
paid
by
Standard
about
one
month
later
than
the
transfers
being
the
subject
matter
of
this
appeal.
It
seems
evident
that
the
Miniser
has
taken
for
firm
commitments,
that
is,
duties
binding
upon
Standard,
talks
that
in
fact
were
nothing
but
exploratory
or
conditional
to
the
possibility
of
an
eventual
sale.
I
do
not
believe
that
it
would
be
unreasonable
to
state
that
the
Minister,
in
establishing
such
an
assessment,
has
gone
much
further
than
using
hindsight
in
valuing
the
quoted
shares.
It
is
trite
law
that
hindsight
is
not
to
be
resorted
to
in
a
matter
as
the
present
one.
The
price
relied
upon
by
he
Minister
could
very
well
never
have
been
paid
if
the
offer
made
by
Standard
had
not
been
accepted
by
67%
of
the
shareholders
of
Lowney.
In
other
words,
the
Minister
has
taken
as
a
fact
what
was
an
eventuality
which
might
or
might
not
have
materialized.
Up
to
April
3
and
19,
1968,
which
are
two
crucial
dates
for
the
assessment
raised
by
the
Minister,
there
did
not
exist
any
sort
of
firm
commitment,
as
per
the
evidence
of
the
appellant.
The
only
fact
that
did
happen
prior
to
these
two
dates
was
the
one
that,
if
at
any
time
the
Littler
group
were
to
sell
their
shares,
they
were
to
let
Standard
know
about
it
and
give
them
a
preference
if
whatever
offer
Standard
would
make
was
of
an
amount
at
least
equivalent
to
any
other
offer.
That
was
a
gentlemen’s
agreement
sealed
by
a
handshake.
Another
factor
that
springs
from
the
evidence
is
that
a
company
like
Lowney,
whose
issued
and
outstanding
shares
are
only
in
the
amount
of
208,000
with
54%
of
these
held
by
two
groups
that
are
akin,
and
which
are
quoted
on
the
Montreal
Stock
Exchange,
cannot
and
were
not
in
fact,
in
any
way
an
active
stock
on
the
Exchange,
in
view
of
the
little
amount
of
stock
available.
Indeed,
40.3%
belong
to
the
Littler
group,
14.3%
to
the
Ellson
group
and
14%
to
the
McConnel
group,
leaving
31.4%
in
the
hands
of
the
public,
that
is,
out
of
208,000
shares,
a
total
of
65,312
shares
in
all.
A
stock
so
held
and
so
limited
in
quantity
cannot
be
compared
to
the
stock
of
huge
companies
having
millions
of
shares
issued
and
outstanding
and
quoted
on
the
Stock
Exchange.
Such
shares
cannot
be
sold
easily,
compared
to
the
shares
of
huge
corporations.
In
point
of
fact,
it
is
in
evidence
that
the
general
public
holding
shares
had
blocks
of
100
or
200
shares.
In
my
view,
a
person
having
or
able
to
have
a
voting
control
in
Lowney,
which
is
nothing
else
than
a
quasi
private
family
company,
does
not
in
any
way
carry
the
same
weight
as
a
person
holding
a
significant
number
of
shares
of
a
public
company,
even
if
that
holding
of
shares
is
far
less
than
a
50%
holding,
because
that
person,
by
way
of
proxies,
if
the
holdings
of
the
shares
are
widely
spread,
may
acquire
the
voting
control
of
a
company.
In
the
present
instance
I
do
not
believe
that
it
would
be
realistic
to
say
that
the
shares
are
widely
spread
when
68%
is
held
within
three
groups
as
it
is
well
known
that
each
closely
knit
group,
as
in
the
present
instance,
may
vote
as
a
group
compared
to
a
large
number
of
independent
holders.
I
said
previously
that
the
Minister
had
taken
as
a
firm
commitment
an
offer
by
Standard
dated
May
15,
1968
and
addressed
to
the
holders
of
the
shares
of
Lowney.
That
document,
produced
under
reserve
under
the
quote
D-1-12,
out
of
16
documents
so
produced
under
reserve,
is
the
only
one
retained,
all
the
others
being
rejected.
By
resorting
to
the
offer
by
Standard,
the
Minister
was
using
hindsight
but
even
so
has
forgotten
to
properly
gauge
the
legal
importance
of
the
document
offering
to
buy
the
shares
of
Lowney.
That
offer
needs
to
be
analyzed.
The
opening
paragraph
of
the
said
offer
by
Standard,
dated
May
15,
1968
reads
as
follows:
Standard
Brands
Limited
(herein
called
“Standard
Brands”)
hereby
offers
to
acquire
all
your
common
shares
of
the
capital
of
Walter
M
Lowney,
Limited
(herein
called
“Lowney”)
at
the
price
of
$68.22
(Canadian
currency)
per
share,
subject
to
the
terms
and
conditions
hereinafter
set
forth.
Right
then
and
there,
one
has
to
admit
that
the
offer
shall
contain
terms
and
conditions.
The
next
paragraph,
No
1,
reads
as
follows:
1.
Period
and
manner
of
Acceptance.
This
Offer
(herein
called
the
“Offer”)
may
be
accepted
by
you
at
any
time
within
four
months
after
the
date
of
the
maxing
of
the
Offer
(herein
called
the
“Offering
Time”)
by
completing
promptly
.
.
.
The
shareholders
of
Lowney
therefore
had
a
term
of
four
months
from
May
15,
1968
to
accept
the
offer
of
Standard.
The
next
paragraph,
No
2,
entitled
Special
Conditions,
reads
in
part
as
follows:
2.
Special
Conditions.
The
Offer
shall
not
become
binding
on
Standard
Brands
unless:
(a)
certificate(s)
representing
at
least
67%
of
the
common
shares
of
the
Capital
of
Lowney
outstanding
on
the
date
when
Standard
Brands
first
takes
up
any
common
shares
of
Lowney
hereunder
(which
date
or
the
date
of
expiration
of
the
Offering
Time,
whichever
may
first
occur,
Is
herein
called
the
“Closing
Date”)
are
deposited
during
the
Offering
Time
in
the
manner
herein
provided.
It
is
my
considered
opinion
that
the
wording
of
that
subparagraph
(a)
indicates
clearly
that
Standard
may
withdraw
its
offer
if
67%
of
the
shares
of
Lowney
cannot
be
purchased.
Therefore,
as
far
as
the
holders
of
shares
are
concerned,
the
sale
is
suspensive
and
the
offer
to
purchase
by
Standard
is
resolutory.
These
conditions
are
set
forth
at
subparagraph
(d)
of
paragraph
2:
(d)
Lowney
shall
be
the
owner,
registered
user
or
duly
authorized
user
of
all
trade-marks
under
which
its
products
appear
on
the
market,
including,
but
without
limiting
the
generality
of
the
foregoing,
the
following
US
and/or
Canadian
trade-marks,
“Cracker
Jack”,
“Campfire”,
“Angelus”,
“Figure
of
a
Sailor
Boy”,
“Checkers”,
“Oh
Henry”
and
“Lowney”
and
(iii)
there
shall
be
no
actions,
suits
or
proceedings
pending
or
to
the
knowledge
of
Lowney
threatened
against
or
affecting
Lowney,
at
law
or
in
equity
or
before
or
by
any
federal,
provincial,
state,
municipal
or
other
governmental
department,
commission,
board,
bureau,
agency
or
instrumentality,
domestic
or
foreign,
which
if
successful,
would
in
the
opinion
of
Standard
Brands
adversely
affect
to
a
substantial
extent
the
operations
or
earning
of
Lowney;
During
the
evidence
it
was
adduced
that
the
use
of
the
name
“O
Henry”
was
granted
to
Lowney
as
long
and
in
as
much
as
the
Littler
family
were
in
the
company.
There
was
a
problem
there
which,
the
Court
has
been
told,
has
been
ironed
out
after
the
sale,
otherwise
the
price
would
have
been
reduced
or
the
offer
not
exercised.
Further
conditions
are
provided
for
at
subparagraph
(e)
of
paragraph
2:
(e)
concurrently
with
Standard
Brands
taking
up
at
least
67%
of
the
common
shares
of
Lowney
hereunder:
(ii)
Standard
Brands
shall
be
furnished
with
such
opinions
of
its
solicitors
and
with
such
certificates,
affidavits,
warranties
or
statutory
declarations
of
officers
and/or
major
shareholders
of
Lowney
with
respect
to
the
above
conditions,
as
Standard
Brands
may
reasonably
think
necessary
establishing
that
the
above-mentioned
conditions
have
been
complied
with.
In
that
paragraph
we
again
do
face
a
condition:
the
approval
by
solicitors
of
Standard
as
to
the
fact
that
the
matters
referred
to
in
the
paragraph
are
all
in
order.
If
the
solicitors
are
to
find
that
they
are
not
in
order,
again
Standard
is
not
bound
to
purchase.
The
sale
could
not
be
perfected
before
such
approval.
The
provisions
of
the
last
subparagraph
of
paragraph
No
2
read
as
follows:
if
the
Special
Conditions
are
not
fulfilled
and
are
not
waived
by
Standard
Brands
during
the
Offering
Time
certificate(s)
for
all
common
shares
of
Lowney
delivered
by
you
to
the
Trust
Company
pursuant
to
the
Offer
shall
be
returned
as
soon
as
possible
by
insured
mail
to
each
shareholder
accepting
the
Offer
at
the
address
under
which
the
surrendered
common
shares
of
Lowney
are
registered
unless
instructions
have
been
given
in
the
letter
of
transmittal
to
deliver
otherwise.
These
provisions
show
what
the
results
are
if
the
conditions
as
to
the
purchasing
of
67%
of
the
shares
or
as
to
the
legal
standing
of
the
certificates
are
not
met:
the
Trust
company
shall
return
to
each
shareholder
its
certificate
or
certificates.
Paragraph
No
4
reads
as
follows:
4.
Right
of
Withdrawal.
Any
shares
deposited
pursuant
to
the
Offer
may
be
withdrawn
by
you
at
any
time
until
the
expiration
of
7
days
from
the
date
on
which
the
Offer
was
mailed.
That
paragraph
gives
the
owners
of
share
certificates
who
have
deposited
them
with
the
trust
company,
7
days
to
change
their
mind.
Consequently,
here
is
another
hurdle
faced
by
Standard,
before
obtaining
a
minimum
of
67%
of
this
stock.
There
is
also
a
reference
to
section
128
of
the
Canada
Corporations
Act,
RSC
1952,
c
53,
and
the
penultimate
paragraph
of
the
Offer
reads:
lf
the
requirements
of
Section
128
of
the
Canada
Corporations
Act
are
satisfied,
Standard
Brands
proposes
to
invoke
the
provisions
of
the
said
Section
to
acquire
the
remaining
common
shares
of
Lowney.
Section
128
of
the
Canada
Corporations
Act
reads:
128.
(1)
Where
any
contract
involving
the
transfer
of
shares
or
any
class
of
shares
in
a
company
(in
this
section
referred
to
as
“the
transferor
company”)
to
any
other
company
(in
this
section
referred
to
as
“the
transferee
company”)
has,
within
four
months
after
the
making
of
the
offer
in
that
on
behalf
of
the
transferee
company,
been
approved
of
the
holders
of
not
less
than
nine-tenths
of
the
shares
affected,
or
not
less
than
nine-
tenths
of
each
class
of
shares
affected,
if
more
than
one
class
of
shares
is
affected,
the
transferee
company
may,
at
any
time
within
two
months
after
the
expiration
of
the
said
four
months,
give
notice,
in
such
manner
as
may
be
prescribed
by
the
court
in
the
province
in
which
the
head
office
of
the
transferor
company
is
situate,
to
any
dissenting
shareholder
that
it
desires
to
acquire
his
shares,
and
where
such
notice
is
given
the
transferee
company
is,
unless
on
an
application
made
by
the
dissenting
shareholder
within
one
month
from
the
date
on
which
the
notice
was
given
the
court
thinks
fit
to
order
otherwise,
entitled
and
bound
to
acquire
those
shares
on
the
terms
which,
under
the
contract,
the
shares
of
the
approving
shareholders
are
to
be
transferred
to
the
transferee
company.
(2)
Where
a
notice
has
been
so
given
and
the
court
has
not
ordered
to
the
contrary,
the
transferee
company
shall,
on
the
expiration
of
one
month
from
the
date
on
which
the
notice
was
given,
or,
if
an
application
to
the
court
by
the
dissenting
shareholder
is
then
pending,
after
the
application
has
been
disposed
of,
transmit
a
copy
of
the
notice
to
the
transferor
company
and
pay
or
transfer
to
the
transferor
company
the
amount
or
other
consideration
representing
the
price
payable
by
the
transferee
company
for
the
shares
that
by
virtue
of
this
section
it
is
entitled
to
acquire,
and
the
transferor
company
shall
thereupon
register
the
transferee
company
as
the
holder
of
those
shares.
(3)
Any
sums
so
received
by
the
transteror
company
snali
e
Paid
into
a
separate
bank
account
in
a
chartered
bank
in
Canada
and
such
sums
and
any
other
consideration
so
received
shall
be
held
by
the
transferor
company
in
trust
for
the
several
persons
entitled
to
the
shares
in
respect
of
which
the
said
sums
or
other
consideration
were
respectively
received.
(4)
In
this
section
(a)
“contract”
includes
an
offer
of
exchange
and
any
plan
or
arrangement,
whether
contained
in
or
evidenced
by
one
or
more
documents,
whereby
or
pursuant
to
which
the
transferee
company
has
become
or
may
become
entitled
or
bound
absolutely
or
conditionally
to
acquire
ail
the
shares
in
the
transferor
company
of
any
one
or
more
classes
of
shareholders
who
accept
or
have
accepted
the
offer
or
who
assent
to
or
have
assented
to
the
plan
or
arrangement;
and
(b)
“dissenting
shareholder”
includes
a
shareholder
who
has
not
accepted
the
offer
or
assented
to
the
plan
or
arrangement
and
any
shareholder
who
has
failed
or
refused
to
transfer
his
shares
to
the
transferee
company
in
accordance
with
the
contract.
1934,
c
33,
s
124.
That
reference
to
section
128
of
the
Canada
Corporations
Act
and
the
provisions
of
the
section
disclose,
in
my
opinion,
that
Standard
wanted
Lowney
to
be
a
wholly-owned
subsidiary,
otherwise,
there
is
no
explanation
to
that
reference.
The
Chairman
of
Standard
so
stated
in
evidence.
In
my
view,
one
cannot
escape
from
the
conclusion
that
the
offer
from
Standard
is
a
conditional
one
being
a
suspensive
contract
for
the
holders
of
shares
wishing
to
sell
their
shares
and
a
resolutory
one
for
Standard
wishing
to
buy.
These
conditions
are
defined
in
the
Civil
Code
at
articles
1079,
1087
and
1088:
1079.
An
obligation
is
conditional
when
it
is
made
to
depend
upon
an
event
future
and
uncertain,
either
by
suspending
it
until
the
event
happens,
or
by
dissolving
it
accordingly
as
the
event
does
or
does
not
happen.
When
an
obligation
depends
upon
an
event
which
has
actually
happened,
but
is
unknown
to
the
parties,
it
is
not
conditional.
It
takes
effect
or
is
defeated
from
the
time
at
which
it
is
contracted.
1087.
When
the
obligation
has
been
contracted
under
a
suspensive
condition,
the
debtor
is
bound
to
deliver
the
thing
which
is
the
object
of
it,
upon
the
fulfillment
of
the
condition.
If
without
the
fault
of
the
debtor,
the
thing
has
altogether
perished
or
can
no
longer
be
delivered,
no
obligation
exists.
It
the
thing
be
deteriorated
without
the
fault
of
the
debtor,
the
creditor
must
receive
it,
in
the
state
which
it
is,
without
diminution
of
price.
If
the
thing
be
deteriorated
by
the
fault
of
the
debtor,
the
creditor
may
either
exact
the
thing
in
the
state
in
which
it
is,
or
demand
the
dissolution
of
the
contract,
with
damages
in
either
case.
1088.
A
resolutive
condition,
when
accomplished,
effects
of
right
the
dissolution
of
the
contract,
it
obliges
each
party
to
restore
what
he
has
received,
and
replaces
things
in
the
same
state
as
if
the
contract
had
not
existed;
subject
nevertheless
to
the
rules
established
in
the
last
preceding
article
with
respect
to
things
which
have
perished
or
been
deteriorated.
Such
an
offer
being
conditional,
it
could
have
very
well
never
been
exercised
and
on
that
account,
it
cannot
be
a
basis
to
establish
the
market
value
of
the
shares
acquired
by
the
two
sons
of
appellant
one
month
earlier
than
the
offer
by
Standard
to
all
the
shareholders,
and
five
months
before
the
offer
could
become
null.
Not
only
is
the
basis
of
the
assessment
a
conditional
offer
but
it
is
based
on
hindsight,
which
is
contrary
to
all
canons
of
valuation
especially
when
a
stock
is
quoted
on
the
Exchange.
In
my
view,
a
stock
quoted
on
the
Exchange,
be
it
active
or
not,
reflects
the
market
value
people
are
putting
on
the
shares
and
such
an
appreciation
is
far
more
realistic
than
the
resorting
to
hindsight
on
a
conditional
offer.
As
per
an
exhibit
filed
under
the
quote
P-1
one
notices
that
on
April
3
and
19,
1968
there
were
bids
of
23-24
but
no
ask
and
no
sales.
That
document,
originating
from
the
Montreal
Stock
Exchange
is
far
more
determinative
of
the
fair
market
value
than
a
conditional
offer
made
one
month
later
than
the
transfer
of
appellant.
Another
aspect
of
this
matter
may
be
studied:
assuming
the
conditional
offer
and
hindsight
were
proper,
which
I
cannot
admit,
was
there
on
the
part
of
appellant
any
intention
of
making
a
gift
to
his
two
sons?
In
the
assessment
the
Minister
has
determined
that
the
difference
between
the
$24
and
the
$68.22
was
such
as
to
constitute
a
gift
as
the
consideration
was
deemed
inadequate.
I
do
not
believe
that
a
citizen
is
making
a
gift
simply
because
there
is
a
difference
between
the
price
at
which
he
sells,
and
which
is
the
market
value
on
the
Exchange,
and
the
potential
but
somewhat
remote
value
to
a
party
for
whom
these
shares
may
be
worth
far
more,
for
many
reasons,
compared
to
the
value
for
one
who
would
be
content
to
a
passive
holding
of
the
shares.
The
question
of
inadequate
consideration
appears
to
have
always
been
considered
by
the
courts
as
applying
only
when
there
was
a
sham,
that
is,
when
a
gift,
for
instance,
was
disguised
to
appear
as
a
sale
through
the
device
of
a
token
consideration.
In
other
words,
the
gift
must
look
as
being
something
else
but
such
is
not
the
case
in
the
present
instance.
The
price
the
shares
were
sold
at
by
appellant
to
his
sons
was
slightly
higher
than
the
price
quoted
on
the
Exchange.
The
market
price
on
the
Exchange
is
the
value
people
believe
the
stock
is
worth.
The
shares
sold
in
April
by
appellant
to
his
sons
were
not
controlling
shares,
they
were
shares
of
such
a
number
that
they
could
have,
at
least
in
theory,
been
bought
on
the
open
market:
they
were
representing
about
one-fourth
of
the
number
of
shares
held
by
the
public.
There
is
nothing
in
the
Act,
as
it
then
stood,
permitting
one
to
link
these
shares
to
those
held
by
the
Littler
and
the
Ellson
groups.
When
one
month
later
a
third
party,
to
wit,
Standard,
makes
a
conditional
offer
to
purchase
the
shares
of
Lowney,
in
as
much
as
they
may
purchase
67%,
this
number
is
a
far
cry
from
the
number
of
shares
the
sons
acquired
in
April.
Furthermore,
the
shares
of
Lowney
were
worth
far
more
to
Standard
because
Standard
wished
to
acquire
not
only
the
voting
control
of
Lowney,
not
only
a
passive
holding,
but
a
going
concern
to
be
integrated
in
their
own
business
as
the
business
of
Lowney,
the
making
of
candy,
was
akin
to
the
one
of
Standard,
the
food
business.
The
evidence
of
Mr
Morrissette,
Chairman
of
the
Board
of
Standard,
leaves
no
possible
doubt
that
the
control
of
Lowney
is
worth,
per
share,
many
times
more
than
the
Exchange
value.
Standard
wanted
a
wholly-owned
subsidiary.
As
to
the
value,
in
such
an
instance,
the
evidence
of
Mr
Greenwood,
President
of
Kraft
Foods
(Canada)
Ltd,
is
to
the
same
effect.
I
cannot
see
how
the
price
paid
for
more
than
two-thirds
of
the
shares
of
a
company
can
be
used
as
a
basis
for
establishing
the
price
of
a
small
number
of
shares
that
have
as
value
the
Exchange
price.
The
Minister
has
acted
as
if
the
amendments
effective
October
23,
1968
were
already
in
force.
In
order
that
there
be
a
gift
tax
there
must
be
a
gift
and
before
there
be
a
gift,
there
must
be
an
intention
to
give.
It
was
clearly
stated
in
Court
by
the
appellant
that
he
did
not
have
any
intention
of
making
a
gift
and
consequently
the
essential
element
for
there
being
a
gift
is
lacking.
A
gift
is
defined
at
section
755
of
the
Civil
Code:
755.
Gift
inter
vivos
is
an
act
by
which
the
donor
divests
himself,
by
gratuitous
title,
of
the
ownership
of
a
thing,
in
favour
of
the
donee,
whose
acceptance
is
requisite
and
renders
the
contract
perfect.
This
acceptance
makes
it
irrevocable,
saving
the
case
provided
for
by
law,
or
a
valid
resolution
condition.
In
the
present
instance
the
transfer
of
shares
by
appellant
to
his
sons
was
not
made
by
gratuitous
title:
the
price
paid
by
the
sons
was
$0.50
over
the
Exchange
value.
The
sons
were
free
to
do
as
they
pleased
with
the
proceeds
of
the
gift
money.
They
chose
to
buy
shares,
to
pay
cash
for
some
of
them
and
to
be
indebted
for
the
balance,
at
a
price
$0.50
higher
than
the
one
quoted
on
the
Exchange.
There
was
no
inient
cn
the
part
of
appellant
to
give
anything
else
than
$18,000
in
cash
to
each
of
his
sons.
The
transfer
of
shares
quoted
on
the
Exchange
at
$23.50
for
a
price
of
$24
each
is
not
a
gift,
it
is
a
sale,
and
it
would
be
unreasonable
not
to
find
that
the
Exchange
price
does
not
represent
much
more
accurately
the
market
value
than
the
sale
of
at
least
67%
of
the
issued
and
outstanding
shares,
a
sale
that
may
or
may
not
materialize
as
it
depends
upon
conditions.
If
the
transfer
to
the
sons
had
betn
effected
at
a
ridiculously
low
price,
that
is,
far
below
the
market
value,
then
I
would
be
facing
the
case
of
a
disguised
sale
and
I
should
have
no
choice
but
to
find
that
the
Minister
had,
in
principle,
properly
assessed
to
gift
tax
the
difference
between
such
a
ridiculously
low
price
and
the
market
value.
Such
is
not
the
case
as
the
market
price
on
the
Exchange
has
been
used
to
determine
the
price
of
the
sale
of
the
shares
to
the
sons.
The
appeal
is
allowed
with
costs
against
respondent.
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