Roland
St-Onge:—This
is
an
appeal
from
an
estate
tax
assessment
dated
June
13,
1972
in
respect
of
the
estate
of
James
Anderson
McArthur
who
died
on
March
16,
1971,
at
Victoria,
BC,
leaving
a
last
will
and
testament
dated
March
7,
1967.
In
this
will
there
are
some
dispositions
in
respect
of
the
income
of
the
residue
of
his
estate
and
one
of
them
is
made
in
favour
of
his
surviving
spouse
in
connection
with
a
somewhat
similar
disposition
in
favour
of
the
testator’s
mother.
The
relevant
paragraph
of
the
will
dealing
with
these
matters
is
marked
B(1)(a),
(b)
and
(c),
and
reads
as
follows:
B.
(1)
Subject
to
the
foregoing
trusts
my
Trustees
shall
render
into
possession
all
the
assets
of
my
estate
and
shall
sell
and
realize
the
same
and
invest
the
proceeds
thereof,
hereafter
called
“my
Trust
Fund”,
in
securities
allowed
by
law
for
the
investment
of
funds
of
Canadian
Life
Insurance
Companies
and
shall
pay
out
the
net
income
from
my
Trust
Fund
in
the
manner
following,
that
is
to
say:
(a)
To
my
dear
Mother,
JEAN
SIMPSON
McARTHUR,
fifty
(50%)
per
cent
of
such
income,
or
the
sum
of
One
hundred
($100.00)
dollars
per
month,
whichever
amount
is
the
lesser,
such
money
to
be
paid
monthly
for
and
during
the
lifetime
of
my
said
mother
or
until
the
death
of
my
wife,
whichever
event
shall
first
happen,
and
I
DECLARE
that
it
is
my
intention
that
my
said
mother
shall
be
kept
in
adequate
comfort
for
the
remainder
of
her
life
and
that
if
by
reason
of
health
or
hospital,
doctors
or
other
expenses,
or
by
reason
of
the
increase
in
the
cost
of
living,
my
Trustees
shall
determine
that
additional
sums
of
money
should
be
paid
to
my
mother,
then
my
Trustees
shall
have
full
power
to
expend
from
that
part
of
my
Trust
Fund
which
produces
the
income
to
be
paid
to
my
mother
such
sums
of
capital
from
time
to
time
as
my
Trustees
may
determine
sufficient
for
the
purposes
aforesaid.
And
for
this
purpose
my
Trust
Fund
shall
be
deemed
to
be
divided
Into
two
equal
parts.
(b)
To
pay
to
my
said
wife
for
and
during
her
lifetime
the
remaining
income
from
my
Trust
Fund,
such
monies
to
be
paid
monthly.
My
Trustees
shall
also
have
full
power
to
resort
to
the
capital
of
my
Trust
Fund
to
provide
in
like
fashion
for
the
adequate
care
and
comfort
of
my
wife.
(c)
Upon
the
death
of
my
said
mother
the
whole
of
the
income
from
my
Trust
Fund
shall
be
paid
to
my
said
wife
for
and
during
her
lifetime
by
monthly
instalments
aforesaid
with
like
power
to
resort
to
the
capital
of
my
Trust
Fund
to
provide
for
the
adequate
comfort
of
my
wife
as
aforesaid.
According
to
this
paragraph,
the
appellant
contends
that
the
meaning
of
the
above
clauses
is
that
the
trust
fund,
ie
the
proceeds
of
conversion,
is
deemed
to
be
divided
into
two
halves
for
the
purpose
of
dealing
with
the
mother’s
and
wife’s
income,
and
that
each
half
is
earmarked
exclusively
for
one
or
the
other.
That
means
that
the
opening
lines
of
clause
B(1)(a)
are
to
be
read
as
giving
the
mother
the
income
of
50%
of
the
fund,
ie
the
income
of
the
half
earmarked
for
her,
and
do
not
give
50%
of
the
income
of
the
whole
fund,
as
the
words
literally
suggest.
If
that
is
the
situation,
the
wife
has
an
absolute
and
indefeasible
settlement
of
half
the
residue
in
her
favour,
the
income
of
which
she
is
entitled
to,
and
this
is
exempt
under
paragraph
7(1)(b)
of
the
Estate
Tax
Act.
Paragraph
7(1
)(b)
of
the
Estate
Tax
Act,
RSC
1970,
c
E-9,
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..
.
(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,
or
(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,
and
(ii)
no
person
except
such
spouse
may
receive
or
otherwise
obtain,
after
the
death
of
the
deceased
and
before
the
death
of
such
spouse,
any
of
the
capital
of
the
settlement
or
any
use
thereof,
or
any
of
the
income
of
the
settlement
to
which
such
spouse
is
entitled
or
any
use
thereof,
On
the
other
hand,
the
respondent
has
refuted
this
contention,
claiming
that
paragraph
7(1
)(b)
exempts
the
value
of
any
gift
to
a
spouse
absolute
within
the
section’s
terms
that
was
made
by
settlement
under
which
the
spouse
is
entitled,
inter
alia,
to
all
the
income
thereof
in
circumstances
where
no
other
person
can
obtain
any
of
the
capital
after
the
death
of
the
deceased
and
prior
to
the
death
of
the
spouse.
In
the
circumstances
here,
the
spouse
would,
so
long
as
the
trust
income
exceeded
$2,400
annually,
receive
more
than
half
the
income
of
the
trust
as
a
result
of
the
mother
being
entitled
to
a
maximum
of
$100
monthly.
Accordingly,
the
spouse
was
not,
as
contended
upon
the
estate’s
behalf,
entitled
to
the
income
from
one
half
the
trust
fund,
but
was
rather
entitled
to
all
but
$1,200
annually
of
the
trust
income
so
long
as
such
income
amounted
to
more
than
$2,400
annually.
Paragraph
B
of
the
deceased’s
will
contemplates
one
trust
fund
whereupon
the
appeal
must
fail
by
virtue
of
subparagraph
7(1
)(b)(ii)
of
the
Act
because
the
spouse
was
not
entitled
to
all
the
income
of
the
settlement
in
circumstances
where
no
other
person
could
receive
any
of
the
capital
of
the
settlement
or
any
use
thereof
after
the
death
of
the
deceased
and
before
the
death
of
the
spouse.
The
question
at
issue
is
whether
the
deceased
in
this
case
made
one
or
two
settlements
under
the
terms
of
his
last
will
as
quoted
hereinbefore.
Obviously
the
wording
of
the
will
is
in
that
respect
ambiguous
and
it
should
be
construed
in
the
ambit
of
paragraph
7(1
)(b)
of
the
Estate
Tax
Act.
In
the
circumstances
here
the
Board
must
consider
the
will
as
it
is
and
should
in
no
way
whatsoever
try
to
read
in
words
that
are
not
expressed.
In
establishing
an
express
trust
it
is
generally
assumed
that
there
are
three
requisites,
sometimes
called
the
“three
Certainties”
(Ontario
Digest
21
CED
p
363):
(1)
certainty
of
intention
to
create
a
trust;
(2)
certainty
of
subject-matter;
(3)
certainty
of
object.
It
is
obvious
that
these
three
requisites
do
not
exist
as
to
the
two
settlements
which
appellant
contended
were
created
in
the
said
will.
On
the
contrary,
there
is
a
clear
intention
to
create
only
one
trust
when
the
testator
says
‘‘My
Trustees
shall
pay
out
the
net
income
from
my
Trust
Fund
in
the
manner
following”,
and
he
gave
a
detailed
description
as
to
how
the
net
income
should
be
distributed
and
added
“And
for
this
purpose
my
Trust
Fund
shall
be
deemed
to
have
been
divided
into
two
equal
parts”,
which
means
that
there
was
only
one
trust
but
the
fund
was
deemed
to
be
divided
only
for
the
purpose
of
assisting
the
trustees
to
make
the
distribution
of
the
income.
Furthermore,
according
to
the
will,
the
spouse
was
entitled
to
all
but
$1,200
annually
of
the
trust
income
so
long
as
such
income
amounted
to
more
than
$2,400
annually.
Consequently,
the
spouse
was
not,
as
contended
by
the
appellant,
entitled
to
the
income
from
one
half
of
the
trust
fund.
When
dealing
with
the
question
of
exempting
provisions,
a
taxpayer
cannot
succeed
in
claiming
an
exemption
from
tax
unless
his
claim
comes
clearly
within
the
provisions
of
some
exempting
section.
Now,
according
to
subparagraph
(ii)
of
paragraph
7(1
)(b)
already
quoted
above,
it
is
obvious
that
the
income
bequeathed
to
the
widow
does
not
meet
the
requisites
of
the
exempting
provisions
of
the
Estate
Tax
Act.
Consequently
the
appeal
is
dismissed.
Appeal
dismissed.
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