The
Chief
Justice
of
British
Columbia
(all
concur):—As
a
step
in
a
plan
to
effect
an
estate
“freeze”,
the
late
William
Mann
of
the
City
of
Vancouver
caused
the
incorporation
of
Mann
Investments
Limited.
The
objects
of
the
Company
were
to
invest
in
stocks
and
bonds,
debentures,
mortgages
and
similar
securities.
The
capital
of
the
Company
was
divided
into
990
Class
A
common
shares
and
10
Class
B
common
shares
with
a
nominal
par
value
of
one
dollar
each.
The
Class
A
and
Class
B
common
shares
ranked
pari
passu
in
all
respects,
except
only
the
class
B
shares
had
voting
privileges.
At
the
time
of
Mr
Mann’s
death
the
Class
A
shares
were
owned
equally
by
his
two
children
and
the
Class
B
shares
were
owned
by
Mr
Mann.
The
net
worth
of
the
Company
was
$149,562.03
which
represented
investments
in
stocks
and
bonds.
In
valuing
the
Class
B
shares
for
the
purposes
of
the
Succession
Duty
Act
of
British
Columbia,
the
executors
of
the
estate
apportioned
the
net
worth
on
the
basis
of
shareholdings.
As
the
10
Class
B
shares
represented
one
percent
of
the
net
worth,
the
sum
attributed
to
the
Class
B
shares
was
$1,495.62.
For
the
purpose
of
determining
the
dutiable
value
of
the
shares
it
is
common
ground
that
value
means
the
fair
market
value
of
the
shares.
By
letter
dated
June
9,
1970,
the
assessor
and
collector
of
probate
and
succession
duties
assessed
the
estate
on
the
basis
that
the
deceased
was
in
a
position
to
have
sold
his
voting
shares
to
a
third
party
purchaser,
who
would
have
been
entitled
to
a
salary
and/or
administration
fee
on
the
assets
under
his
control.
The
assessor
considered
that
a
4%
administration
fee
of
$5,960
would
not
be
unreasonable.
The
present
value
of
an
annual
withdrawal
of
$5,960
for
one
generation
of
20
years
would
be
$81,000
and
it
was
on
this
basis
that
the
estate
was
assessed.
It
may
be
noted
that
this
basis
of
assessment
is
not
based
on
fair
market
value.
An
appeal
from
this
assessment
was
taken
on
behalf
of
the
estate
of
Mr
Mann.
The
appeal
was
allowed,
and
on
order
by
Mr
Justice
Mcintyre
the
assessment
was
vacated
and
a
value
of
$1,495.62
was
substituted
therefor:
see
Re
Mann
Estate,
[1972]
5
WWR
23.
It
is
from
this
order
that
the
Minister
of
Finance
appeals
to
this
Court.
The
basis
of
the
appeal
is
that
the
trial
Judge
did
not
determine
the
fair
market
value
of
the
shares,
but
rather
determined
the
break-up
value.
A
review
of
the
proceedings
does
not
support
this
contention.
In
his
reasons
the
learned
trial
Judge
said:
Whatever
tests
are
applied,
however,
and
whatever
considerations
are
weighed
the
effort
of
the
valuer
must
be
directed
to
finding
that
fair
market
value
in
a
hypothetical
transaction
in
a
hypothetical
market.
Again,
he
also
said:
The
appellants
did
furnish
evidence
of
market
value..
Mr
Stanley,
in
his
efforts
to
find
a
hypothetical
purchaser,
concluded
that
one
could
not
be
found
and
did
not
exist.
He
was
unable
to
envisage
one
and
considered
that
these
shares,
then,
had
no
more
than
a
break-up
value.
I
reject
the
argument
by
the
respondent
that
Mr
Stanley
did
not
consider
the
market
test
in
his
approach.
He
was
merely
unable
to
find
upon
such
consideration
the
necessary
hypothetical
purchaser.
Mr
Patrick,
a
man
experienced
in
the
field,
said
that
from
his
experience,
the
market
value
of
shares
in
companies
of
this
kind
and
similar
kinds
tended
to
stabilize
at
break-up
value.
I
am
thus
afforded
some
evidential
support
for
the
break-up
value
concept
and
none,
in
my
view,
for
the
$81,000
figure
used
in
the
actual
assessment
and,
as
I
have
said,
I
have
rejected
Mr
Anson-Cartwright’s
estimate
of
$50,000.
This
finding
must
be
interpreted
in
the
context
of
the
evidence
that
was
before
the
trial
Judge.
So
interpreted,
in
my
opinion,
the
finding
means
that
the
market
value
in
this
case
is
the
equivalent
of
the
break-up
value.
Therefore,
I
conclude
that
the
learned
trial
Judge
did
not
misdirect
himself,
but
proceeded
upon
accepted
principles
and
arrived
at
fair
market
value.
Accordingly,
I
would
dismiss
the
appeal.
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