Maurice
Boisvert:—This
is
an
appeal
from
an
assessment
dated
October
11,
1970
wherein
a
tax
in
the
sum
of
$83,264.81
was
levied
under
the
Estate
Tax
Act
(SC
1958,
c
29
as
amended).
The
appeal
was
heard
at
Toronto,
Ontario
on
September
9,
1971
by
the
Tax
Appeal
Board
as
it
was
then
constituted.
The
question
to
be
decided
revolves
around
the
interpretation
of
the
meaning
of
paragraphs
7(1
)(a)
and
(b)
of
the
above-mentioned
Act
which
read
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:
(a)
the
value
of
any
property
passing
on
the
death
of
the
deceased
to
which
his
spouse
is
the
successor
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
vested
indefeasibly
in
his
spouse
for
the
benefit
of
such
spouse,
except
any
such
property
comprising
a
gift
made
by
the
creation
of
a
settlement
or
the
transfer
of
property
to
a
trustee
in
trust;
(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,
or
by
the
transfer
of
property
to
a
trust
that
at
the
time
of
the
transfer
was
a
settlement
to
which
subparagraphs
(i)
and
(ii)
apply,
the
creation
of
which
constituted
a
gift
inter
vivos
by
him
to
his
spouse
that
was
exempt
from
tax
under
Part
IV
of
the
Income
Tax
Act
by
virtue
of
paragraph
(e)
of
subsection
(1)
of
section
112
thereof;
The
facts
are
covered
by
an
agreed
statement
of
facts
which
reads
as
follows:
1.
Norman
Wright
Devitt
(hereinafter
referred
to
as
the
deceased)
died
on
or
about
the
15th
day
of
May,
1969.
2.
The
deceased
appointed
the
appellants
herein
to
be
the
executors
and
trustees
of
his
Will.
3.
The
Last
Will
and
Testament
of
the
deceased
provided,
inter
alia,
as
follows:
“I
GIVE,
DEVISE
AND
BEQUEATH
all
my
estate
of
every
nature
and
kind
whatsoever
unto
my
said
Trustees
upon
the
following
trusts:
1)
to
allow
my
said
wife,
MARGARET
OLIVE,
to
occupy
and
use
as
a
home
whatever
house
and
lands
I
may
own
and
be
using
as
a
home
at
the
time
of
my
death,
together
with
all
chattels
including
furniture,
equipment,
accessories,
consumable
stores,
and
articles
of
domestic
and
household
use
or
ornament
therein
or
used
in
connection
therewith,
until
she
re-marries
or
until
she
notifies
my
Trustees
that
she
desires
to
vacate
the
premises,
or
until
her
death,
whichever
event
first
occurs,
whereupon
the
said
house
and
lands
shall
be
sold
or
otherwise
dealt
with
and
distributed
by
my
Trustees
as
part
of
the
residue
of
my
estate
and
in
the
event
of
the
termination
of
her
occupancy
otherwise
than
by
her
death,
she
shall
have
the
privilege
of
taking,
within
one
month
after
such
event,
for
her
own
use
absolutely,
all
or
some
of
the
said
chattels,
any
chattels
not
so
taken
to
be
sold
or
otherwise
dealt
with
by
my
Trustees
as
part
of
the
residue
of
my
estate.
All
taxes,
insurance,
repairs
and
any
other
charges
or
amounts
necessary
for
the
general
upkeep
of
the
said
house,
lands
and
chattels
shall
be
paid
out
of
my
general
estate
during
the
occupancy
thereof
by
my
said
wife
under
this
paragraph,
and
my
Trustees
may
in
their
uncontrolled
discretion
make
such
payments
or
any
of
them
out
of
capital
or
income,
and
in
such
proportions
as
they
think
fit,
partly
out
of
capital
and
partly
out
of
income.
6)
If
my
said
wife
survives
me
for
a
period
of
thirty
days,
my
residuary
estate
shall
be
divided
and
distributed
as
follows:
a)
Fifty
per
cent
of
my
said
residuary
estate
shall
be
paid
to
my
said
wife
for
her
own
use
absolutely;..
4.
The
children
of
the
deceased
referred
to
in
his
Will
are
alive.
5.
The
wife
of
the
deceased,
the
said
Margaret
Olive
Devitt,
one
of
the
appellants
herein,
is
presently
alive,
and
at
all
times
material
to
this
appeal
has
occupied
and
used
as
a
home
the
house,
lands
and
furniture
referred
to
in
the
Will
of
the
deceased
as
hereinbefore
set
out
in
paragraph
3.
The
deceased,
Norman
Wright
Devitt,
passed
away
on
May
15,
1969
at
the
age
of
83.
He
was
separate
as
to
property
and
was
survived
by
Margaret
Olive
Devitt,
his
wife.
On
June
18,
1865
he
had
made
the
following
will:
THIS
IS
THE
LAST
WILL
AND
TESTAMENT
of
me,
NORMAN
WRIGHT
DEVITT,
of
the
City
of
Toronto,
in
the
County
of
York,
Manager.
I.
I
HEREBY
REVOKE
all
Wills
and
testamentary
dispositions
of
every
nature
or
kind
whatsoever
by
me
heretofore
made.
ll.
l
APPOINT
my
wife,
MARGARET
OLIVE,
and
LAURENCE
GEORGE
GOODENOUGH,
of
the
City
of
Toronto,
in
the
County
of
York,
Queen’s
Counsel,
to
be
the
Executors
and
Trustees
of
this
my
Will.
In
the
subsequent
clauses
of
this
my
Will,
the
expression
“my
Trustees”
(wherever
the
words
permit)
shall
mean
and
include
the
Executor
or
Executrix
or
Trustee
or
Trustees
for
the
time
being,
whether
original,
additional,
surviving
or
substituted.
Hl.
I
GIVE,
DEVISE
AND
BEQUEATH
all
my
estate
of
every
nature
and
kind
whatsoever
unto
my
said
Trustees
upon
the
following
trusts:
1.
To
allow
my
said
wife,
MARGARET
OLIVE,
to
occupy
and
use
as
a
home
whatever
house
and
lands
I
may
own
and
be
using
as
a
home
at
the
time
of
my
death,
together
with
all
chattels
including
furniture,
equipment,
accessories,
consumable
stores,
and
articles
of
domestic
and
household
use
or
ornament
therein
or
used
in
connection
therewith,
until
she
re-marries
or
until
she
notifies
my
Trustees
that
she
desires
to
vacate
the
premises,
or
unitl
her
death,
whichever
event
first
occurs,
whereupon
the
said
house
and
lands
shall
be
sold
or
otherwise
dealt
with
and
distributed
by
my
Trustees
as
part
of
the
residue
of
my
estate
and
in
the
event
of
the
termination
of
her
occupancy
otherwise
than
by
her
death,
she
shall
have
the
privilege
of
taking,
within
one
month
after
such
event,
for
her
own
use
absolutely,
all
or
some
of
the
said
chattels,
any
chattels
not
so
taken
to
be
sold
or
otherwise
dealt
with
by
my
Trustees
as
part
of
the
residue
of
my
estate.
All
taxes,
insurance,
repairs
and
any
other
charges
or
amounts
necessary
for
the
general
upkeep
of
the
said
house,
lands
and
chattels
shall
be
paid
out
of
my
general
estate
during
the
occupancy
thereof
by
my
said
wife
under
this
paragraph,
and
my
Trustees
may
in
their
uncontrolled
discretion
make
such
payments
or
any
of
them
out
of
capital
or
income
and,
in
such
proportions
as
they
think
fit,
partly
out
of
capital
and
partly
out
of
income.
2.
WITH
RESPECT
to
a
mortgage
dated
September
1,
1964,
registered
as
Number
57908
in
the
Registry
Office
for
the
District
of
Nipissing,
on
September
18,
1964,
between
Jean
I
Gunn,
Widow,
as
Mortgagor,
and
myself
as
Mortgagee,
for
the
principal
amount
of
$10,000.00
and
interest
as
therein
stipulated,
and
in
respect
of
which
no
payment
for
principal
or
interest
has
been
made,
to
take
no
steps
to
enforce
payment
of
the
said
principal
or
interest
or
of
any
instalments
thereof,
until
the
death
of
the
said
Jean
I
Gunn,
she
being
a
niece
of
mine,
and
upon
her
death,
to
then
call
in
and
collect,
by
court
proceedings,
if
necessary,
the
principal
and
interest
payable
under
the
said
mortgage,
provided
that
if
as
a
result
of
such
proceedings
or
otherwise
my
estate
becomes
entitled
to
and
has
received
the
proceeds
of
a
sale
(including
a
sale
after
foreclosure)
of
the
mortgaged
property
in
an
amount
which
is
in
excess
of
the
claim
of
my
estate
for
principal,
interest
and
costs
under
the
said
mortgage,
the
amount
of
such
excess
shall
be
paid
and
transferred
by
my
Trustees
to
the
daughter
of
the
said
Jean
I
Gunn,
and
otherwise
the
said
proceeds
shall
be
distributed
as
part
of
my
residuary
estate.
3.
Subject
to
the
provisions
of
the
preceding
paragraphs
1
and
2
to
use
their
discretion
in
the
realization
of
my
estate,
with
power
to
my
Trustees
to
sell,
call
in
and
convert
into
money
any
part
of
my
estate
not
consisting
of
money
at
such
time
or
times,
in
such
manner
and
upon
such
terms,
and
either
for
cash
or
credit
or
for
part
cash
and
part
credit
as
my
said
Trustees
may
in
their
uncontrolled
discretion.
decide
upon,
or
to
postpone
such
conversion
of
my
estate
or
any
part
or
parts
thereof
for
such
length
of
time
as
they
may
think
best,
and
I
hereby
declare
that
my
said
Trustees
may
retain
any
portion
of
my
estate
in
the
form
in
which
it
may
be
at
my
death
(notwithstanding
that
it
may
not
be
in
the
form
of
an
investment
in
which
trustees
are
authorized
to
invest
trust
funds,
and
whether
or
not
there
is
a
liability
attached
to
any
portion
of
my
estate)
for
such
length
of
time
as
my
Trustees
may
in
their
discretion
deem
advisable
and
my
Trustees
shall
not
be
held
responsible
for
any
loss
that
may
happen
to
my
estate
by
reason
of
their
so
doing.
4.
To
pay
out
of
the
capital
of
my
general
estate
my
just
debts,
funeral
and
testamentary
expenses
and
all
succession
duties,
inheritance,
estate
and
death
taxes,
whether
imposed
by
or
pursuant
to
the
law
of
this
or
any
province,
state,
country
or
jurisdiction
whatsoever,
that
may
be
payable
in
connection
with
any
insurance
on
my
life
or
any
gift
or
benefit
given
by
me
either
in
my
lifetime
or
by
survivorship
or
by
this
my
Will
or
any
codicil
thereto.
5.
To
pay
to
the
MEMORIAL
FUND
of
HIGH
PARK
UNITED
CHURCH
the
sum
of
FIVE
THOUSAND
DOLLARS
($5,000.00).
6.
If
my
said
wife
survives
me
for
a
period
of
thirty
days,
my
residuary
estate
shall
be
divided
and
distributed
as
follows:
(a)
Fifty
per
cent
of
my
said
residuary
estate
shall
be
paid
to
my
said
wife
for
her
own
use
absolutely;
(b)
The
balance
of
my
said
residuary
estate
shall
be
divided
into
as
many
equal
shares
as
there
are
daughters
of
mine
alive
at
the
time
of
my
death,
provided
that
if
any
daughter
of
mine
shall
be
then
deceased
but
Shall
have
left
a
child
or
children
then
alive,
such
daughter
shall
be
considered
as
being
alive
for
the
purposes
of
such
division
into
equal
shares;
(c)
Each
such
share
in
respect
of
any
deceased
daughter
shall
be
divided
into
as
many
equal
shares
as
there
are
children
of
hers
alive
at
the
time
of
my
death;
(d)
One
equal
share
determined
under
paragraph
(b)
shall
be
transferred
and
paid
to
each
daughter
alive
as
aforesaid;
(e)
One
equal
share
determined
under
paragraph
(c)
shall
be
transferred
and
paid
to
each
grandchild
who
shall
have
attained
the
age
of
twenty-one
years;
(f)
The
share,
including
income
therefrom,
of
any
grandchild
who
shall
not
have
attained
the
age
of
twenty-one
years;
PROVIDED
THAT
if
such
grandchild
should
die
before
attaining
the
age
of
twenty-one
years,
the
share
or
any
balance
thereof,
including
income,
shall
be
added
in
equal
portions
to
the
share
or
shares
of
his
brothers
and
sisters
who
survive
such
deceased
grandchild
and
be
dealt
with
as
part
thereof;
PROVIDED
FURTHER
that
if
no
such
brother
and
sister
survive
so
as
to
take
up
such
share
or
balance,
it
shall
be
paid
to
any
daughter
of
mine
who
survives
such
brothers
and
sisters;
7.
If
my
said
wife
should
predecease
me,
or
surviving
me
shall
die
within
a
period
of
thirty
days
following
my
decease,
then
the
whole
of
my
residuary
estate
shall
be
divided,
dealt
with
and
distributed
in
the
manner
set
forth
in
paragraphs
(b),
(c),
(d),
(e)
and
(f)
of
clause
6
of
this
Section
III.
8.
My
Trustees
shall
have
the
following
further
powers:
(a)
To
receive
and
hold
the
share
and
the
income
arising
therefrom
that
shall
not
for
the
time
being
have
become
transferable
to
any
person
or
persons
under
the
trusts
of
this
my
Will,
and
to
pay
such
income
and
(or)
share,
or
so
much
of
such
income
and
(or)
share
as
my
Trustees
in
their
absolute
discretion
shall
think
fit,
for
the
benefit,
maintenance
and
education
of
the
person
or
persons
presumptively
entitled
thereto;
(b)
To
invest
moneys
of
my
estate
in
any
investments
which
my
Trustees
shall
deem
reasonably
secure
and
likely
to
return
fair
annual
income,
but
not
of
a
speculative
character,
my
Trustees
not
being
limited
to
investments
in
which
Trustees
are
by
law
authorized
to
invest,
and
with
power
to
retain
investments
made
by
me
in
my
lifetime
as
long
as
my
Trustees
shall
think
proper,
and
to
re-invest
the
proceeds
of
the
same
or
any
part
thereof
in
similar
securities;
and
I
exonerate
my
Trustees
from
any
responsibility
for
loss
or
damage
which
may
be
occasioned
by
the
retention
of
investments
in
the
form
in
which
the
same
shall
be
at
the
time
of
my
death
or
by
reason
of
investments
made
by
my
Trustees
in
good
faith
in
securities
other
than
those
authorized
by
law;
(c)
To
appropriate
and
partition
any
real
and
personal
property
forming
part
of
my
residuary
estate
to
or
towards
the
share
of
any
person
or
persons
therein
under
the
trusts
hereinbefore
contained,
and
to
charge
any
share
with
such
sums
by
way
of
equality
or
partition
as
my
Trustees
may
think
fit
and
for
such
purposes
to
fix
the
value
of
any
real
or
personal
estate
so
appropriated
as
my
Trustees
shall
think
fit,
and
every
such
valuation,
appropriation
and
partition
shall
be
binding
upon
all
persons
interested
under
this
my
Will;
(d)
So
long
as
any
real
or
leasehold
property
forming
part
of
my
residuary
estate
shall
remain
unsold,
to
be
at
liberty
to
let
or
demise
the
same
from
month
to
month,
year
to
year
or
for
any
term
of
years,
and
subject
to
such
covenants
and
conditions
as
my
Trustees
shall
think
fit,
to
accept
surrenders
of
leases
and
tenancies,
to
expend
money
in
repairs
and
improvements,
and
generally
to
manage
the
property
and
to
exercise
al!
or
any
of
such
powers
and
discretions
without
any
order
of
the
Court
or
consent
of
any
person
claiming
under
this
my
Will;
and
further,
notwithstanding
the
trusts
hereinbefore
declared
by
this
my
Will
of
and
concerning
my
residuary
estate,
to
raise
out
of
the
capital
or
income
of
my
residuary
estate
any
sums
from
time
to
time
required
and
in
the
opinion
of
my
trustees
properly
raisable
thereout
for
the
exercise
of
any
of
the
powers
and
discretions
under
this
sub-clause;
(e)
to
make
any
payments
for
any
person
under
the
age
of
twenty-one
years
to
his
or
her
parent
or
guardian,
whose
receipt
shall
be
a
sufficient
discharge
to
my
Trustees;
9.
THE
PROVISIONS
herein
made
for
my
said
wife
are
intended
by
me
and
shall
be
accepted
by
her
in
lieu
of
dower.
The
above
will
was
probated
in
the
Surrogate
Court
of
the
County
of
York
on
August
19,
1969.
Mrs
Devitt
(the
testator’s
wife)
and
Laurence
George
Goodenough
were
appointed
executors
and
trustees.
On
or
about
August
7,
1969,
in
their
capacity
of
executors,
the
appellants
filed
an
estate
tax
return
with
the
Department
of
National
Revenue,
in
which
they
reported
the
aggregate
net
value
of
the
estate
as
being
in
the
amount
of
$673,167.79.
On
April
27,
1970
the
assessor
calculated
the
aggregate
total
value
of
the
estate
as
follows:
Declared
Total
Value
$673,167.79
Add:
Valuation
changes
per
form
ET85
attached
36,530.08
Revised
Total
Value
$709,697.87
Less:
General
Debts
as
filed
$
9,101.91
Add:
Accounting
Fees
prior
to
death
325.00
9.426.91
Revised
Aggregate
Net
Value
$700,270.96
Less
exempt
property
—
Section
7(1)
5,000.00
Revised
Net
Value
695,270.96
Less:
Exemption
for
Spouse
and
Children
Spouse
—
Section
7(1)(a)
as
per
schedule
214,611.72
Children
—
Section
7(1
)(c)
2
children
over
26
years
20,000.00
234,611.72
REVISED
AGGREGATE
TAXABLE
VALUE
$460,659.24
CALCULATION
OF
ESTATE
TAX
|
Estate
Sum
Calculation
—
Section
8(2)(a)(i)
|
|
$460,659.24
|
|
Estate
Sum
|
|
$460,659,24
|
|
Tax
on
Estate
Sum
|
|
$169,529.62
|
|
Gift
Sum
Calculation
—
Section
8(2)(b)
|
20,000.00
|
|
|
$20,000.00
|
|
|
Tax
on
Gift
Sum
|
|
nil
|
|
Estate
Tax
Before
Abatement
and
Credits
|
|
$169,529.62
|
|
Less:
Provincial
Tax
Abatement
|
$84,764.81
|
|
|
Foreign
Tax
Credit
|
|
84,764.81
|
|
ESTATE
TAX
ASSESSED
|
|
$
84,764.81
|
|
DISTRIBUTION
|
|
|
Aggregate
Net
Value
|
|
$695,270.96
|
|
Less:
PV
Succession
Duty
applicable
|
$55,967.83
|
|
|
Less:
Estate
Tax
|
84,764.82
|
140,732.64
|
|
$554,538.32
|
|
Widow
—
Insurances
|
$
5,599.64
|
|
|
Gift
inter
vivos
|
20,000.00
|
|
|
/2
Residue
|
189,012,11
$214,611.72
|
|
Gift
Inter
Vivos
—
Niece
|
|
6,000.00
|
|
Daughters
(2)
Gifts
inter
vivos
|
$
6,000.00
|
|
|
/2
Residue
|
189,012.10
|
195,012.10
|
|
Widow
and
Daughters
|
|
|
Real
Estate
and
Household
goods
|
|
138,914.50
|
|
$554,538.32
|
CALCULATION
OF
SUCCESSION
DUTY
DEDUCTIBLE
FROM
RESIDUE
Re
assets
payable
to
widow
not
exempt
under
Section
7(1
)(a)
or
7(1
)(b)
of
Estate
Tax
Act.
|
Gifts
Inter
Vivos
|
$
8,595.00
|
|
Interest
in
Income
|
127,993.09
|
|
$136,588.09
|
|
Tax
@
13.18%
|
$
18,002.31
|
|
Surtax
@
15%
thereon
|
2,700.35
|
|
20,702.66
|
|
Propn,
of
Section
7(2a)
exemption
applicable
|
|
|
20,702.66
x
4,743.35
|
|
|
36,699.66
|
1,541.73
|
|
$
19,160.93
|
|
Immediate
payment
|
$
1,205.73
|
|
Payable
by
instalments
(10
@
1759.52)
|
17,955.20
|
|
$
19,160.93
|
|
Present
Value
—
Immediate
payment
|
$
1,205.73
|
|
1,795.52
x
8.11090
|
14,563.28
|
|
$
15,769.01
|
|
Re
assets
payable
to
daughters
—
Immediate
payment
|
37,691.16
|
|
Re
assets
payable
to
niece
—
|
2,507.66
|
|
Total
deductible
residue
|
$
55,967.83
|
It
is
the
appellants’
contention
that
Mrs
Devitt
was
entitled
to
the
benefit
of
the
exemption
provided
for
in
paragraphs
7(1
)(a)
and
(b),
while
the
respondent
contends
that
she
has
no
right
to
such
exemption.
With
respect
to
the
debated
question,
the
respondent
stated
his
position
in
his
Reply
to
Notice
of
Appeal
which
alleged:
2.
In
assessing
the
Appellants,
the
Minister
acted
upon
the
following
assumptions:
(a)
Norman
Wright
Devitt
(hereinafter
referred
to
as
the
deceased)
died
on
or
about
the
15th
day
of
May,
1969;
(b)
the
deceased
appointed
the
Appellants
herein
to
be
the
executors
and
trustees
of
his
Will;
(c)
the
Last
Will
and
Testament
of
the
deceased
provided,
inter
alia,
as
follows:
See
Section
Ill,
1
and
6(a)
hereinbefore
reproduced
in
the
Will.)
(d)
the
house
as
aforesaid
was
not
vested
indefeasibly
in
the
deceased’s
spouse;
(e)
the
aforesaid
house
comprised
a
gift
made
by
the
creation
of
a
settlement;
(f)
the
aforesaid
house
was
transferred
to
the
Trustees
of
the
Will
of
the
deceased
in
trust.
3.
The
respondent
relies,
inter
alia,
upon
Sections
2(1),
3,
7(1
)(a)
and
7(1
)(b)
of
the
Estate
Tax
Act,
RSC
1958,
as
amended.
4.
The
Respondent
submits
as
follows:
(a)
the
house
as
aforesaid
could
not
become
immediately
vested
indefeasibly
in
the
deceased's
spouse
and
the
house
constituted
property
comprising
a
gift
made
by
the
creation
of
a
settlement
or
the
transfer
of
property
to
a
Trustee
in
trust,
within
the
meaning
of
Section
7(1)(a)
and
accordingly,
no
such
exemption
may
be
claimed
pursuant
to
the
provisions
of
7(1
)(a);
(b)
the
settlement
does
not
fulfil
the
requirements
of
Section
7(1)(b)
of
the
Estate
Tax
Act
in
that
the
settlement
was
not
absolute
and
indefeasible
in
the
deceased’s
spouse
and
other
persons
except
such
spouse
could
receive
or
obtain
after
the
death
of
the
deceased
and
before
the
death
of
said
spouse
of
the
capital
of
the
settlement.
The
appellants
submitted
the
following
in
their
Notice
of
Appeal:
3.
The
said
deceased
was
survived
by
his
said
wife,
and
two
daughters,
all
of
whom
are
now
living.
There
were
no
daughters
who
predeceased
him
leaving
a
child
or
children.
4.
Under
paragraph
6(a)
of
Section
III
of
the
said
Will
fifty
per
cent
(50%)
of
the
residuary
estate
is
given
to
the
deceased’s
wife.
The
sole
question
to
be
determined
is
whether,
under
paragraphs
7(1
)(a)
and
(b),
Mrs
Devitt
received
the
value
of
the
property
which
passed
on
the
death
of
her
husband
from
his
own
to
her
own.
Paragraphs
58(1
)(o)
and
(p)
say
as
follows:
58.
(1)
In
this
Act,
(o)
“property”
means
property
of
every
description
whatever,
whether
real
Or
personal,
movable
or
immovable,
or
corporeal
or
incorporeal,
and
without
restricting
the
generality
of
the
foregoing,
includes
any
estate
or
interest
in
any
such
property,
a
right
of
any
kind
whatever
and
a
chose
in
action;
(p)
“property
passing
on
the
death”
includes
property
passing
either
Originally
or
by
way
of
substitutive
limitation,
either
certainly
or
contingently
and
either
immediately
on
the
death
or
after
an
interval
determinable
by
reference
to
the
death,
and
without
restricting
the
generality
of
the
foregoing,
includes
any
property
the
value
of
which
is
required
by
this
Act
to
be
included
in
computing
the
aggregate
net
value
of
the
property
passing
on
the
death;
What
is
meant
by
“passing
on
the
death”
was
interpreted
by
Lord
Tomlin
in
A-G
v
Lloyd’s
Bank,
Limited,
[1935]
AC
382,
as
follows:
.
.
.
if
there
has
been
a
passing
of
property
on
the
death
there
must
have
been
a
passing
or
shifting
of
the
beneficial
interest
from
one
to
another.
In
A-G
v
Milne,
[1914]
AC
765,
Lord
Parker
said:
“Passing
on
the
death”
has
been
held
to
mean
some
actual
change
in
the
title
or
possession
of
the
property
as
a
whole
which
takes
place
at
the
death.
Now
looking
at
Mr
Devitt’s
will,
it
is
to
be
seen,
in
the
first
place,
that
Mrs
Devitt
had
received
the
right
to
occupy
and
use
a
house
which
was
the
home
of
the
spouses
at
the
death
of
the
de
cujus.
That
right
was
extended
to
her
for
her
lifetime
or
until
she
decided
otherwise,
which
did
not
take
place.
The
trustees
and
executors
could
not
deprive
her
of
that
right.
In
the
second
place,
Mrs
Devitt,
“in
the
event
of
the
termination
of
her
occupancy
otherwise
than
by
her
death”,
had
the
right
within
one
month
after
such
event,
of
taking,
for
her
own
use
absolutely,
“all
or
some
of
the
chattels”.
In
the
third
place,
the
de
cujus
expressed
his
will
by
the
following
words:
6.
If
my
said
wife
survives
me
for
a
period
of
thirty
days,
my
residuary
estate
shall
be
divided
and
distributed
as
follows:
(a)
Fifty
per
cent
of
my
said
residuary
estate
shall
be
paid
to
my
said
wife
for
her
own
use
absolutely;
(The
italics
are
mine.)
I
am
of
the
opinion
that
at
Mr
Devitt’s
death,
the
above
property
passed
from
Mr
Devitt
to
Mrs
Devitt
absolutely
and
in-
defeasibly,
through
the
trustees
who
were
appointed
by
the
testator
to
carry
out
the
directions
and
requests
in
his
will.
The
trustees
had
only
the
administration
of
the
estate
for
the
benefit
of
the
heirs.
They
had
no
power
to
make
defeasible
the
property
given
by
the
deceased
to
his
wife.
It
is
not
in
vain
that
the
testator,
twice
in
his
will,
used
the
word
absolutely.
Reference
is
had
to
the
appeal
of
James
J
Halley,
Executor
of
the
Estate
of
William
F
Halley
v
MNR,
[1963]
Ex
CR
372;
[1963]
CTC
108;
63
DTC
1090.
Thurlow,
J
had
to
deal
with
a
situation
similar
to
the
one
shown
in
the
instant
appeal
but
having
regard
to
a
gift
to
the
Roman
Catholic
Episcopal
Corporation
of
St
John’s.
The
section
involved
was
7(1
)(d)
of
the
Estate
Tax
Act,
then
in
force
in
1963,
that
is
to
say
before
the
new
paragraphs
7(1
)(a)
and
(b).
William
F
Halley
had
appointed
the
executor
of
the
estate
as
trustee.
In
that
appeal
the
Minister
considered
that
the
word
absolute
used
in
the
enactment
denoted
“certainty
that
the
gift
will
come
into
possession
and
that
as
so
used
the
word
means
both
vested
and
indefeasible”.
Thurlow,
J
cited
Lord
Cottenham,
LC
in
Lassence
v
Tierney
(1849),
1
Mac
&
G
551;
41
ER
1379.
At
page
561
Lord
Cottenham
said:
If
a
testator
leave
a
legacy
absolutely
as
regards
his
estate,
but
restricts
the
mode
of
the
legatee’s
enjoyment
of
it
to
secure
certain
objects
for
the
benefit
of
legatee
—
upon
failure
of
such
objects,
the
absolute
gift
prevails;
but
if
there
be
no
absolute
gift
as
between
the
legatee
and
the
estate,
but
particular
modes
of
enjoyment
are
prescribed,
and
those
modes
of
enjoyment
fail,
the
legacy
forms
parts
of
the
testator’s
estate,
as
not
having
in
such
event
been
given
away
from
it.
The
learned
Judge
also
cited
the
dictum
of
Lord
Davey
in
Hancock
v
Watson,
[1902]
AC
14.
At
pages
22
and
23
Lord
Davey
said:
The
appellants’
second
point
is
that
the
two-fifths
alloted
to
Susan
Drake
on
failure
of
the
gift
over
goes
to
the
next
of
kin
of
the
testator,
and
not
to
Susan’s
representatives
as
declared
by
the
Court
of
Appeal.
I
confess
to
some
surprise
at
hearing
this
point
treated
as
arguable.
For,
in
my
opinion,
it
is
settled
law
that
if
you
find
an
absolute
gift
to
a
legatee
in
the
first
instance,
and
trusts
are
engrafted
or
imposed
on
that
absolute
interest
which
fail,
either
from
lapse
or
invalidity
or
any
other
reason,
then
the
absolute
gift
takes
effect
so
far
as
the
trusts
have
failed
to
the
exclusion
of
the
residuary
legatee
or
next
of
kin
as
the
case
may
be.
Of
course,
as
Lord
Cottenham
pointed
out
in
Lassence
v
Tierney,
if
the
terms
of
the
gift
are
ambiguous,
you
may
seek
assistance
in
construing
it
—
in
saying
whether
it
is
expressed
as
an
absolute
gift
or
not
—
from
the
other
parts
of
the
will,
including
the
language
of
the
engrafted
trusts.
But
when
the
Court
has
once
determined
that
the
first
gift
is
in
terms
absolute,
then
if
it
is
a
share
of
residue
(as
in
the
present
case)
the
next
of
kin
are
excluded
in
any
event.
In
other
words,
as
between
herself
and
the
estate
there
is
a
complete
severance
and
disposition
of
her
share
so
as
to
exclude
an
intestacy,
though
as
between
her
and
the
parties
taking
under
the
engrafted
trusts
she
takes
for
life
only.
Thurlow,
J
also
referred
to
Adamson
v
Attorney-General,
[1933]
AC
257;
Browne
v
Moody,
[1936]
AC
635;
In
re
Williams;
Williams
v
Williams,
[1897]
2
Ch
12.
After
having
made
the
above
references,
the
learned
Judge
said
at
page
377
[113-14,
1092-3]
(Halley):
There
being
more
than
one
sense
in
which
the
word
is
commonly
used
the
problem
which
the
present
case
presents
is
to
determine
in
what
sense
the
word
was
used
in
Section
7(1)(d)
of
the
Estate
Tax
Act
and
this,
it
appears
to
me,
must
be
resolved
by
reference
to
the
context,
in
which
it
is
found.
At
the
outset
it
may
be
observed
that
the
context
is
not
that
of
a
deed
or
will
but
that
of
a
taxing
statute.
In
general
the
Act
exacts
a
tax
on
the
passing
of
property
on
death
and
is
so
worded
as
to
include
in
the
computation
of
the
value
of
such
property
for
the
purposes
of
the
statute
both
property
alienated
by
the
deceased
during
his
lifetime
by
certain
types
of
transactions
and
certain
notional
types
of
property
as
well
in
which
the
deceased
never
had
any
proprietary
right,
the
whole
without
reference
to
the
person
or
persons
who
become
beneficially
entitled
thereto.
But
while
the
value
of
all
such
property
is
initially
brought
into
the
computation,
the
tax
is
imposed
only
in
respect
of
the
amount
by
which
such
value
exceeds
certain
specified
amounts
which
by
Section
7
are
permitted
to
be
deducted,
most
of
which
amounts
are
also
prescribed
without
reference
to
the
person
or
persons
who
become
entitled
to
any
portion
of
the
property.
Only
in
respect
of
the
amounts
referred
to
in
Section
7(1)(d)
and
Section
7(1)(h)
does
the
identity
of
the
recipient
become
material.
Under
the
latter
paragraph
the
value
of
property
vesting
in
the
Crown
by
es-cheat
or
as
bona
vacantia
on
the
death
of
the
deceased
may
be
deducted
from
the
aggregate.
Under
the
former,
with
which
this
case
is
concerned,
the
value
of
property
given
to
a
charitable
organization
or
to
the
Crown
or
to
a
public
body
performing
a
function
of
government
may
also
be
deducted.
The
intention
of
this
provision
is
apparently
to
permit
the
deduction
of
the
value
of
what
is
given
to
the
particular
recipients
and
with
this
in
mind
it
seems
to
me
that
it
is
more
natural
to
interpret
the
word
“absolute”’
in
the
paragraph
from
the
point
of
view
of
the
recipient
than
from
the
point
of
view
of
the
deceased
and
as
referring
to
the
irrevocable
and
undefeatable
vesting
of
the
subject
matter
of
the
gift
in
the
recipient
rather
than
to
the
unlimited
extent
of
the
interest
given
to
the
recipient.
This
interpretation
is,
I
think,
also
supported
by
the
concluding
portion
of
the
paragraph
which
reduces
the
deduction
allowable
in
respect
of
such
a
gift
by
the
amount
of
any
tax
levies
which
may
be
imposed
on
it
or
which
may
become
payable
by
the
donee
on
accepting
it
and
to
this
extent
limits
the
allowable
deduction
to
the
net
value
of
the
gift
accruing
to
the
donee.
Moreover
while
I
can
see
no
reason
why
Parliament
should
have
intended
to
draw
a
distinction
between
a
gift
of
an
unlimited
interest
and
an
indefeasible
gift
for
a
lesser
interest
and
to
permit
deduction
of
the
value
in
the
one
case
but
not
in
the
other
it
is
not
difficult
to
understand
that
in
authorizing
the
deduction
of
the
value
of
a
gift
to
such
a
body
Parliament
would
be
concerned
to
ensure
that
the
deduction
should
not
be
permitted
when
because
of
the
provisions
attaching
to
the
gift,
the
body
referred
to
in
Section
7(1
)(d)
might
never
receive
it.
The
word
used
is
an
apt
one
to
make
such
a
distinction
and
secure
this
object.
I
am
accordingly
of
the
opinion
that
the
word
“absolute”
in
Section
7(1)(d)
should
be
interpreted
as
meaning
vested
and
indefeasible.
Applying
this
interpretation
to
the
facts
of
the
present
case,
it
is
I
think
plain
that
the
Roman
Catholic
Episcopal
Corporation,
St.
John’s,
did
not
become
indefeasibly
entitled
on
the
death
of
the
deceased
to
the
residue
given
to
it
by
paragraph
7
of
the
will
and
that
because
of
this
the
gift
cannot
be
established
to
have
been
“absolute”
within
the
meaning
of
Section
7(1)(d).
Having
in
mind
the
above
considerations
I
am
of
the
opinion
that
the
facts
admitted
for
the
purpose
of
the
present
appeal
allow
me
to
consider
that
the
shares
of
Mr
Devitt’s
estate
were
vested
absolutely
and
indefeasibly
in
Mrs
Devitt
and
therefore
the
value
under
paragraphs
7(1
)(a)
and
(b)
must
be
deducted
from
the
aggregate
net
value
of
the
estate.
Counsel
for
the
respondent
submitted
that
a
devise
in
a
will
for
lifetime
or
of
a
lesser
interest
to
the
spouse,
comprises
a
settlement
and
rested
his
submission
upon
paragraph
58(1)(q)
which
states
as
follows:
58.
(1)
In
this
Act,
(q)
“settlement”
includes
(i)
any
trust,
whether
expressed
in
writing
or
otherwise,
in
favour
of
any
persons,
and,
if
contained
in
a
deed
or
other
instrument
effected
the
settlement,
whether
or
not
such
deed
or
other
instrument
was
made
for
valuable
consideration
as
between
the
settlor
and
any
other
person,
and
(ii)
any
deed
or
other
instrument
under
or
by
virtue
of
which
a
usufruct
or
substitution
is
created
or
any
real
property
or
estate
or
interest.
therein
stands
limited
to
any
persons
by
way
of
succession;
I
disagree
with
the
respondent’s
submission
because
it
contradicts
paragraph
3(1
)(e)
which
says:
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,
(e)
property
comprised
in
a
settlement
whenever
made,
whether
by
deed
or
any
other
instrument
not
taking
effect
as
a
will,
.
.
.
(The
italics
are
mine.)
For
all
the
above
reasons,
the
appeal
is
allowed
and
the
assessment
is
referred
back
to
the
Minister
for
reconsideration
and
reassessment
based
upon
my
finding.
Appeal
allowed.
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