Kerr,
J:—This
is
an
appeal
from
the
decision
of
the
Tax
Appeal
Board
pronounced
on
December
8,
1970,
dismissing
an
appeal
by
the
appellant
executors
of
the
estate
of
Philip
Atlee
Wisener
from
a
reassessment
under
the
Estate
Tax
Act
wherein
an
estate
tax
in
the
amount
of
$26,579.43
was
levied
in
respect
of
the
said
estate.
The
dispute
is
in
relation
to
an
amount
paid
under
a
policy
of
insurance
on
the
life
of
the
deceased,
Philip
Atlee
Wisener,
effected
by
his
employer
Wisener
and
Company
Limited,
which
the
Minister
included
in
computing
the
aggregate
net
value
of
property
passing
on
the
death
of
Mr
Wisener.
The
principal
issue
is
whether
the
amount
was
payable
under
a
policy
effected
on
the
life
of
the
deceased
“in
respect
of,
in
the
course
of
or
by
virtue
of
his
office
or
employment
as
an
employee
of
Wisener
and
Company
Limited”,
within
the
meaning
of
paragraph
3(1
)(k)
and
subsection
3(4b)
of
the
Estate
Tax
Act,
SC
1958,
c
29,
and
amendments
thereto,
the
relevant
portions
of
which
read
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,
(k)
any
superannuation,
pension
or
death
benefit
payable
or
granted
(i)
out
of
or
under
any
fund
or
plan
established
for
the
payment
of
Superannuation,
pension
or
death
benefits
to
recipients,
or
on
or
after
the
death
of
the
deceased
in
respect
of
such
death;
(4b)
For
the
purposes
of
paragraph
(k)
of
subsection
(1),
any
amount
payable
in
respect
of
the
death
of
a
person
under
a
policy
of
insurance
(other
than
a
policy
of
insurance
owned
as
described
in
paragraph
(m)
of
subsection
(1))*
under
which
any
life
insurance
was
effected
on
the
life
of
that
person
in
respect
of,
in
the
course
of
or
by
virtue
of
his
office
or
employment
or
former
office
or
employment
as
an
employee
of
any
employer,
except
any
part
of
that
amount
that
was
payable
under
the
policy
to
(b)
an
individual
or
corporation
other
than
(ii)
a
corporation
that
was
controlled,
whether
directly
or
indirectly
and
whether
through
holding
a
majority
of
the
shares
of
the
corporation
or
of
any
other
corporation
or
in
any
manner
whatever,
by
that
person,
by
one
or
more
individuals
described
in
subparagraph
(i),
by
that
person
and
such
one
or
more
individuals
or
by
any
other
person
on
his
or
their
behalf,
and
except
where
the
policy
was
assigned
to
that
person
and
was
not
at
any
time
thereafter
assigned
to
any
employer
described
in
paragraph
(a),
or
to
any
person
in
trust
or
otherwise
for
the
purpose
of
a
fund
or
plan
established
for
the
payment
of
superannuation,
pension
or
death
benefits
to
recipients,
shall
be
deemed
to
be
a
death
benefit
payable
in
respect
of
the
death
of
that
person
out
of
or
under
a
fund
or
plan
established
for
the
payment
of
death
benefits
to
recepients.*
The
parties
agreed
that
the
evidence
in
this
appeal
shall
consist
of
the
following:
(1)
Agreed
Statement
of
Facts
filed
before
the
Tax
Appeal
Board;
(2)
Exhibit
1
—
Manufacturers
Life
Insurance
Company
Policy
No
1478826
with
application
attached;
(3)
Exhibit
2
—
letter
Ronald
D
Smith
&
Co
Limited
to
Toronto
Stock
Exchange,
dated
January
27,
1959;
(4)
Exhibit
3
—
letter
P
A
Wisener
to
Bank
of
Nova
Scotia,
dated
January
30,
1959;
(5)
Exhibit
4
—
covenant
letter
P
A
Wisener
to
Bank
of
Nova
Scotia,
dated
January
30,
1959;
(6)
Exhibit
5
—
letter
P
A
Wisener
to
Bank
of
Nova
Scotia,
dated
December
19,
1958;
(7)
Evidence
J
T
DesBrisay
given
before
the
Tax
Appeal
Board;
together
with
portions
of
the
examination
for
discovery
of
J
T
DesBrisay
read
into
the
record
by
counsel
for
the
Minister.
The
Agreed
Statement
of
Facts
filed
before
the
Tax
Appeal
Board
is
as
follows:
1.
The
Minister
has
included
in
the
taxable
value
of
the
property
passing
on
the
death
of
the
deceased
the
sum
of
$38,160.97
being
the
net
amount
paid
by
the
Manufacturers
Life
Insurance
Company
to
Rosehill
Holdings
Limited
(“Rosehill”)
under
Policy
#1478826
insuring
the
life
of
the
deceased
and
owned
by
Rosehill.
The
said
policy
was
originally
issued
to
Wisener
&
Company
Limited
(‘‘Wisener
Limited’’)
in
June,
1958;
it
was
sold
by
that
company
to
the
deceased’s
widow
on
May
25th,
1961
and
subsequently
was
sold
by
her
to
Rosehill
on
January
17,
1967.
Exhibit
1
to
this
Statement
is
a
true
copy
of
the
policy
with
application
attached.
2.
The
Minister
has
taken
the
position
that
the
aforesaid
sum
is
an
amount
payable
in
respect
of
the
death
of
the
deceased
under
a
policy
of
insurance
effected
on
the
life
of
the
deceased
in
respect
of,
in
the
course
of
or
by
virtue
of
his
office
or
employment
as
an
employee
of
Wisener
Limited
and
therefore
to
be
included
in
the
taxable
value
of
property
passing
on
the
death
of
the
deceased
under
the
provisions
of
section
3(4b)
oh.
the
Estate
Tax
Act.
The
sole
issue
in
these
proceedings
is
whether
the
provisions
of
section
3(4b)
are
applicable.
3.
In
1958,
the
deceased
was
the
president
of
Wisener
Limited,
members
of
the
Investment
Dealers
Association
of
Canada
and
dealers
in
investment
securities,
and
also
of
Mackellar,
Wisener
Limited
(“Mackellar
Limited”)
stock
brokers
and
members
of
the
Toronto
Stock
Exchange
(these
companies
are
hereinafter
sometimes
together
called
“the
Wisener
Companies”).
The
deceased,
his
brother
C.
R.
Wisener
and
his
son
R.
A.
Wisener
(hereinafter
together
referred
to
as
“the
Wisener
Group”)
owned
the
majority
of
the
shares
in
both
companies.
4,
In
the
spring
of
1958,
the
deceased
opened
negotiations
with
the
shareholders
of
Ronald
D.
Smith
&
Company
Limited
(“Smith
Limited”)
also
members
of
the
Toronto
Stock
Exchange,
with
a
view
to
acquiring
the
business
of
that
company
for
the
account
of
the
Wisener
Companies.
Smith
Limited
specialized
in
the
handling
of
overseas
transactions
and
the
Wisener
Companies
had
important
contacts
in
England
and
desired
to
acquire
the
Smith
Limited
business
to
enhance
their
own
overseas
businesses.
The
negotiations
aforesaid
culminated
in
the
early
part
of
1959
when
the
Smith
Limited
business
was
taken
over
by
the
Wisener
Companies.
Exhibit
2
is
a
copy
of
a
letter
from
Smith
Ltd.
to
the
Toronto
Stock
Exchange
setting
out
the
result
of
the
transaction.
5.
At
the
outset
of
the
negotiations
aforesaid
it
was
recognized
by
the
Wisener
Group
that
if
the
Smith
Limited
business
were
acquired,
it
would
be
necessary
for
the
Wisener
Companies
to
increase
their
capital
by
reason
of
the
rules
of
the
Toronto
Stock
Exchange
and
the
Investment
Dealers
Association
of
Canada
which
require
member
companies
to
maintain
certain
ratios
of
capital
in
proportion
to
business
carried
on.
The
ratios
required
in
respect
of
the
carrying
on
of
an
overseas
business
were
substantially
more
onerous
than
in
the
case
of
firms
carrying
on
domestic
businesses
because
of
delayed
delivery
dates
and
the
delivery
practices
of
overseas
firms.
It
was
accordingly
necessary
for
the
Wisener
Companies
to
obtain
assurances
that
the
additional
capital
required
could
be
raised
before
proceeding
far
with
the
negotiations.
To
this
end,
the
Wisener
Group
undertook
to
lend
the
moneys
required
by
the
said
Wisener
Companies
on
the
security
of
long
term
notes.
6.
The
rules
of
the
Toronto
Stock
Exchange
and
of
the
Investment
Dealers
Association
of
Canada
prohibit
member
firms
from
raising
long
term
capital
from
other
than
shareholders
or
employees
of
the
member
firms
and
accordingly
the
shareholders
of
the
Wisener
Companies
were
the
only
source
of
long
term
capital
requirements
of
the
Companies.
7.
The
Wisener
Group
arranged
to
raise
the
capital
which
they
agreed
to
invest
in
the
Wisener
Companies
aforesaid
by
borrowing
the
same
from
the
Bank
of
Nova
Scotia
(“the
Bank”)
secured
by
a
pledge
of
the
long
term
notes
of
the
Wisener
Companies
as
aforesaid
and
the
assignment
by
the
Wisener
Companies
to
the
Bank
of
the
policies
of
insurance
on
the
lives
of
the
Group
to
be
maintained
by
the
Wisener
Companies.
Exhibits
3
&
4
to
this
Statement
are
letters
of
Jan.
30,
1959
from
the
deceased
to
the
Bank
applying
for
this
loan.*
8.
Insurance
was
effected
by
Wisener
Limited
on
the
lives
of
the
Wisener
Group
as
follows:
(i)
an
insurance
policy
in
the
face
amount
of
$50,000
on
the
life
of
the
deceased
was
taken
out
on
June
26,
1958
(being
the
insurance
in
question
in
this
proceeding);
(ii)
an
insurance
policy
in
the
face
amount
of
$60,000
on
the
life
of
Robert
A.
Wisener
was
taken
out
on
June
24,
1958;
(iii)
an
insurance
policy
in
the
face
amount
of
$60,000
on
the
life
of
Charles
R.
Wisener
was
taken
out
on
June
24,
1958;
The
aforesaid
insurance
was
effected
some
seven
months
before
the
final
completion
of
the
agreement
with
Smith
Limited
because
the
members
of
the
Wisener
Group
were
found
to
be
insurable
on
application
made
in
June,
1958
(soon
after
the
commencement
of
negotiations)
and
the
insurance
was
accordingly
then
taken
out.
9.
In
January
1959,
at
the
time
of
the
completion
of
the
transaction
with
Smith
Limited,
the
Wisener
Group
jointly
borrowed
the
sum
of
$230,000
from
the
Bank.
At
that
time
it
was
agreed
with
the
Bank
that
in
the
event
of
the
death
of
a
member
of
the
Wisener
Group
the
proceeds
of
life
insurance
held
by
the
Wisener
Companies
on
the
life
of
that
member
would
be
used
and
applied
to
enable
the
estate
of
that
deceased
member
to
repay
that
deceased
member’s
portion
of
the
said
joint
loan
to
the
Bank.
10.
The
sum
of
$230,000
borrowed
by
the
Wisener
Group
from
the
Bank
as
aforesaid
were
used
by
the
Wisener
Group
to
purchase
notes
of
the
Wisener
Companies
as
follows:
(i)
the
deceased
and
his
wife
purchased
notes
of
Wisener
Limited
in
the
principal
amount
of
$70,000
(ii)
the
deceased
and
his
wife
purchased
notes
of
Mackellar
Limited
in
the
principal
amount
of
$70,000
(iii)
C.
R.
Wisener
purchased
notes
of
Wisener
Limited
in
the
principal
amount
of
$30,000
(iv)
C.
R.
Wisener
purchased
notes
of
Mackellar
Limited
in
the
principal
amount
of
$20,000
(v)
R.
A.
Wisener
purchased
notes
of
Wisener
Limited
in
the
principal
amount
of
$20,000
(vi)
R.
A.
Wisener
purchased
notes
of
Mackellar
Limited
in
the
amount
of
$20,000
In
addition,
at
this
same
time,
C.
Barnaby
Benson,
a
resident
of
England
and
a
former
shareholder
of
Smith
Limited
who
at
the
time
of
the
transaction
became
a
shareholder
of
Mackellar
Limited,
purchased
notes
of
Mackellar
Limited
in
the
principal
amount
of
$50,000.
11.
Immediately
after
the
purchase
of
notes
as
aforesaid,
Wisener
Limited
applied
the
sum
of
$35,000
to
retire
preference
shares
of
that
Company
held
by
the
deceased
and
his
wife.
12.
Just
prior
to
the
advance
of
moneys
by
the
Bank
to
the
Wisener
Group
the
policies
of
insurance
described
in
paragraph
No.
8
above,
were
pledged
by
Wisener
Limited
to
the
Bank.
In
addition
Wisener
Limited
also
pledged
to
the
Bank
insurance
already
owned
by
it
on
the
life
of
the
deceased
in
the
face
amount
of
$30,000
(which
insurance
had
been
held
by
Wisener
Limited
to
enable
it
to
redeem
preference
shares
held
by
the
deceased
as
aforesaid
in
the
event
of
the
death
of
the
deceased).
The
insurance
so
pledged
was
in
addition
to
insurance
on
the
life
of
the
deceased
pledged
to
the
Bank
by
Mackellar
Limited.
Exhibit
5
to
this
Statement
is
a
copy
of
a
letter
from
the
deceased
to
the
Bank
dated
December
16,
1958.
14.
In
the
summer
of
the
year
1959
(some
months
after
completion
of
the
acquisition
of
the
business
of
Smith
Limited)
and
because
of
changes
in
the
capital
requirements
of
the
Toronto
Stock
Exchange,
Wisener
Limited
acquired
the
assets
of
Mackellar
Limited
and
changed
its
name
to
Wisener,
Mackellar
and
Company
Limited.
The
borrowings
of
the
two
companies
were
consolidated
and
new
notes
issued
by
Wisener,
Mackellar
and
Company
Limited
and
the
previous
notes
cancelled.
Immediately
thereafter
notes
of
Wisener,
Mackellar
and
Company
Limited
in
the
principal
amount
of
$40,000
held
by
the
deceased
were
sold
to
S.
R.
Mackellar
another
shareholder
of
the
Company;
and
the
policy
of
insurance
in
issue
in
this
proceeding
was,
on
May
25,
1961
sold
by
the
Company
to
the
deceased’s
widow
at
the
full
cash
surrender
value
thereof.
Subsequently,
the
deceased’s
widow
sold
the
policy
to
Rosehill
all
of
the
issued
shares
of
which
are
beneficially
owned
by
the
children
of
the
deceased.
The
application
by
Wisener
&
Company
Limited
for
the
policy
stated
that
its
relationship
to
the
life
to
be
insured
was
president
of
the
company
and
that
the
company’s
insurable
interest
in
the
life
was
stock
interest.
Letters
to
the
Bank
of
Nova
Scotia
referred
to
in
paragraph
7
of
the
Agreed
Statement
of
Facts,
applying
for
the
loan
of
$230,000
state,
inter
alia,
that
the
loan
will
be
secured
by
(a)
a
joint
note
of
P
A
Wisener
and
M
J
Wisener,
C
R
Wisener
and
R
A
Wisener;
(b)
the
pledge
of
the
notes
to
be
purchased;
(c)
the
pledge
of
certain
life
insurance
policies,
namely,
$292,000
on
the
life
of
P
A
Wisener,
$60,000
on
the
life
of
C
R
Wisener,
and
$60,000
on
the
life
of
R
A
Wisener,
and
include
also
the
following
paragraphs:
The
enlargement
of
the
two
businesses
and
the
borrowings
which
we
contemplate,
clearly
dictate
the
preservation
of
the
control
by
the
Wisener
group.
By
the
use
of
life
insurance
assigned
to
your
Bank
and
also
life
insurance
on
the
lives
of
the
borrowers
carried
by
the
two
firms,
the
debts
of
the
individuals
will
be
largely,
if
not
entirely,
eliminated
in
the
case
of
the
death
of
any
of
the
borrowers.
In
addition,
funds
will
be
provided
to
the
survivors
to
acquire
the
equity
held
by
the
individual
so
that
the
control
would
be
secured
for
the
protection
of
the
Bank.
It
is
proposed
to
pledge
through
a
joint
note
of
all
the
assets
of
the
Wisener
group.
As
part
of
this
program
all
current
indebtedness
to
your
Bank
will
be
discharged.
In
actual
practice
the
amount
for
which
each
participant
will
be
responsible
will
be
furnished
to
your
Bank
for
its
records.
This
becomes
necessary
for
the
individual
tax
returns,
as
the
notes
will
be
issued
in
the
name
of
the
individual
and
therefore
interest
will
accrue
to
each
individual.
This
procedure
is
further
dictated
so
that
the
amount
of
insurance
assigned
to
your
Bank
by
the
individuals
can
discharge
the
individual’s
indebtedness
in
case
of
death.
Under
these
circumstances
the
estate
of
the
deceased
would
only
be
obligated
to
pay
up
the
unpaid
portion
of
the
deceased
individual’s
liability
and
any
balance
received
through
insurance
would
be
paid
over
to
the
estate
of
the
deceased
and
the
estate
of
the
deceased
would
be
released
from
further
obligation.
Mr
J
T
DesBrisay,
whose
evidence
before
the
Tax
Appeal
Board
is
included
in
the
Agreed
Evidence
in
this
Court,
is
executor
of
the
estate
of
the
deceased
and
also
his
son-in-law,
and
he
is
a
solicitor
of
the
Supreme
Court
of
Ontario
and
a
partner
in
the
legal
firm
of
Cassels,
Brock,
in
Toronto.
He
testified
that
he
was
consulted
in
connection
with
the
deceased’s
negotiations
with
the
Smith
Company
and
was
familiar
with
the
arrangements
made
by
the
Wisener
Companies
to
obtain
the
necessary
capital.
He
said
that
the
arrangement
proposed
at
the
outset
of
the
negotiations
was
that
the
Wisener
Group
would
themselves
borrow
money
from
the
bank
and
in
turn
lend
it
to
the
Wisener
Companies,
secured
by
long-term
notes,
that
it
had
been
a
policy
of
the
companies
to
effect
insurance
on
the
lives
of
the
individuals
lending
the
money
so
that
in
the
event
of
the
death
of
any
of
the
individuals
there
would
be
additional
capital
from
the
proceeds
of
the
life
insurance
to
enable
the
companies
to
reduce
the
long-term
note;
and
that
in
this
instance
it
was
part
of
the
arrangement
that
the
Wisener
Group
arranged
financing
to
enable
them
to
buy
the
notes
of
the
companies
on
the
basis
that
the
companies
would
take
out
sufficient
insurance
and
pay
the
premiums
on
it
to
protect
their
estates
in
the
event
of
death;
that
the
insurance
was
effected
in
June
1958
and
was
held
by
the
Wisener
Companies
pending
the
completion
of
the
Smith
deal
and
in
December
of
that
year,
when
only
formalities
of
the
deal
were
still
to
be
completed,
the
several
policies,
including
the
policy
in
issue
in
this
case
and
$60,000
on
the
lives
of
each
of
the
other
members
of
the
Group,
plus
$30,000
which
had
been
taken
out
previously
in
1954
by
Wisener
&
Company,
were
lodged
with
the
bank
and
later
in
January
1959
were
formally
assigned
to
the
bank
to
stand
as
additional
security
for
the
moneys
borrowed
by
the
Wisener
Group
from
the
bank.
In
answer
to
a
question
whether
the
policy
was
taken
as
security
for
the
loan
given
to
the
Wisener
group
of
companies
by
the
Wisener
Group
or
whether
it
was
used
to
facilitate
the
Wisener
Group
borrowing
money
from
the
bank,
Mr
DesBrisay’s
answer
was
as
follows:
The
two
were
inseparable.
The
Wisener
Group
insisted
on
having
insurance
to
protect
their
advances
to
the
company,
so
that
in
the
event
of
their
death
there
would
be
money
to
pay
off
the
bank.
You
see,
they
borrowed
from
the
bank
on
demand
notes
of
$230,000.
Mr.
Wisener’s
portion
of
that
originally
was
$140,000.00.
In
the
event
of
his
death
the
bank
would
call
that
$140,000.00
and
otherwise
he
would
be
left
with
a
long-term
obligation
of
his
company
paying
him
that
$140,000.00
over
a
period
of
time.
and
he
further
stated
that
the
proposal
that
the
deceased
made
to
the
bank
was
“Lend
us
$230,000
and
we
will
secure
it
by
taking
notes
of
the
Wisener
Companies
and
taking
insurance
which
the
Wisener
Companies
will
take
out”.
He
also
said
that
the
deceased
was
59
or
60
years
of
age
when
the
policy
in
issue
was
taken
out,
he
was
concerned
about
his
insurability
and
applied
for
the
insurance
money
early
in
the
negotiations
because
it
was
the
means
by
which
financing
could
be
arranged,
and
the
policy
was
taken
out
when
he
was
found
to
be
insurable.
In
answer
to
the
question
why
in
May
1961
the
policy
was
sold
to
the
deceased’s
widow
(prior
to
his
death),
Mr
DesBrisay
said
that
the
amount
that
the
deceased
personally
owed
to
the
bank
as
his
portion
of
the
joint
note
had
been
reduced,
partly
by
the
sale
of
some
of
his
notes
to
Mackellar
and
in
part
by
the
regular
principal
payments
which
had
been
made
on
the
notes
for
a
couple
of
years,
so
the
insurance
was
no
longer
required
to
secure
the
money
he
owed
to
the
bank
and"
therefore
no
longer
required
to
secure
the
reduced
money
which
the
company
owed
him
and
as
a
result
there
was
no
further
justification
for
the
company
to
hold
the
policy
and
continue
to
pay
premiums
on
it.
Mr
DesBrisay
was
asked
on
Examination
for
Discovery
why
the
policy
of
insurance
was
not
cancelled
at
the
end
of
May
1961
when
it
had
served
its
purpose
with
the
bank
and
his
reply
was:
It
is
very
hard
for
me
to
speculate
as
to
that.
I
would
say
there
were
probably
a
number
of
reasons:
one,
I
don’t
know
if
Mr.
Wisener
ever
had
a
policy
of
insurance
that
he
ever
had
in
his
life
to
be
cancelled
because
he
always
felt
that
it
would
be
a
very
valuable
asset
to
have
in
the
event
of
further
borrowings
being
required
either
by
him
or
his
family.
Oh,
I
don’t
think
I
can
do
better
than
that.
He
believed
in
insurance.
lt
was
agreed
by
the
parties
that
at
all
relevant
times
the
deceased
was
an
employee
of
the
Wisener
Companies,
and
there
also
was
no
question
that
the
Wisener
group
controlled
the
Wisener
Companies,
that
Rosehill
is
a
company
owned
by
the
children
of
the
deceased,
and
that
when
the
policy
was
purchased
from
the
Wisener
company
by
the
deceased’s
widow
and
subsequently
purchased
by
Rosehill
these
our-
chasers
paid
the
full
cash
value
of
the
policy.
The
position
taken
on
behalf
of
the
Minister
is
that
the
scheme
of
the
Estate
Tax
Act
brings
into
the
net
worth
of
an
estate
policies
of
insurance
of
the
kind
here
in
issue
which,
in
this
particular
instance,
ended
up
in
the
hands
of
the
children
of
the
deceased;
that
the
policy
was
taken
out
by
the
Wisener
Company
not
merely
to
provide
security
to
the
bank
but
to
protect
and
benefit
the
estate
of
the
deceased
in
the
event
of
his
death,
and
that
it
was
effected
“in
respect
of,
in
the
course
of
or
by
virtue
of
his
office
or
employment”
as
an
employee
of
the
Wisener
Company,
within
the
meaning
of
subsection
3(4b)
of
the
Act;
also
that
the
words
“in
the
course
of”
refer
to
time
and
have
the
same
meaning
as
the
word
“during”.
Counsel
for
the
appellant
submitted
that
the
policy
was
taken
out
to
provide
a
method
to
satisfy
the
deceased’s
obligation
to
the
bank
in
the
event
of
his
death,
that
the
taking
out
of
the
policy
was
in
relation
to
his
position
as
a
lender
of
funds
to
the
company,
and
had
nothing
to
do
with
his
status
as
an
officer
or
employee
of
the
company;
that
the
policy
was
not
effected
“in
respect
of,
in
the
course
of
or
by
virtue
of”
his
office
or
employment;
and
that
those
words
as
used
in
the
Act
imply
a
direct
causal
connection
between
the
taking
out
of
a
policy
and
the
office
or
employment
of
the
insured
person
as
an
employee
of
the
company.
Counsel
for
the
appellants
cited
the
following
cases
in
support
of
his
argument:
Williams
v
MNR,
[1955]
Ex
CR
12;
[1955]
CTC
1;
55
DTC
1006;
Hochstrasser
v
Mayes,
[1959]
3
All
ER
817;
Goldman
v
MNR,
[1953]
1
SCR
211;
[1953]
CTC
95;
53
DTC
1096;
Attorney-General
v
Murray,
[1904]
1
KB
165.
The
words
“in
respect
of,
in
the
course
of
or
by
virtue
of”
an
office
or
employment
are
found
also
in
the
Income
Tax
Act
and
are
also
used
in
numerous
contexts
in
everyday
language;
they
are
not
precise
words.
In
some
dictionaries
the
words
“in
the
course
of”
are
a
synonym
of
“during”
or
“while”.
In
the
present
case
I
do
not
think
it
can
be
said
that
the
insurance
was
taken
out
“in
respect
of”
or
“by
virtue
of”
the
deceased’s
office
or
employment,
for
it
was
taken
out
predominantly
as
an
incident
or
step
in
the
method
adopted
to
raise
needed
funds
for
the
company
and
because
the
deceased
incurred
liability
to
the
bank
as
a
borrower
of
a
portion
of
the
funds
lent
to
the
company
in
that
connection.
The
statements
in
the
application
for
the
policy
as
to
his
relationship
as
president
and
as
to
the
company’s
insurable
interest
as
stock
interest
are
not
inconsistent
with
that
view.
It
seems
to
me
also
that
the
words
“in
the
course
of”
in
subsection
3(4b)
are
not
used
merely
in
the
sense
of
“during”
or
“while”,
and
I
think
that
where,
as
in
this
case,
the
policy
was
effected
because
the
deceased
was
lending
money
to
the
company
and
not
because
he
was
an
officer
or
employee,
the
subsection
does
not
apply
to
the
policy
in
question.
The
appeal
will
therefore
be
allowed,
with
costs,
and
the
assessment
will
be
referred
back
to
the
respondent
for
reassessment
on
the
basis
that
subsection
3(4b)
of
the
Estate
Tax
Act
does
not
apply
to
the
policy
in
question.
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