THORSON,
P.
:—This
is
an
appeal
against
the
appellant’s
income
tax
assessment
for
1951.
In
its
notice
of
appeal
the
appellant
stated
six
grounds
of
appeal
but
on
the
hearing
counsel
confined
himself
to
three
of
them.
A
claim
respecting
exploration
and
drilling
costs
was
abandoned
and
two
other
claims
were
left
in
abeyance,
one
relating
to
capital
cost
allowance
and
the
other
to
the
allowance
of
losses
in
the
five
years
immediately
preceding
1951
and
the
year
immediately
following
it.
These
were
not
disposed
of
and
remain
in
abeyance.
The
main
issue
in
the
appeal
is
whether
the
appellant
can
support
its
claim
for
a
depletion
allowance
in
respect
of
its
producing
wells.
It
was
contended
on
its
behalf
that
in
computing
its
income
for
1951
it
was
entitled
to
a
deduction
allowance
of
$1,091,703
under
Section
11(1)
(b)
of
the
Income
Tax
Act,
Statutes
of
Canada,
1948,
Chapter
52,
and
Section
1201
of
the
Income
Tax
Regulations
as
amended
by
Order-in-Council
P.C.
4443,
dated
August
29,
1951,
instead
of
the
deduction
of
$419,739.39
allowed
by
the
Minister.
The
issue
is
substantially
the
same
in
principle
as
that
which
I
dealt
with
in
Imperial
Oil
Limited
v.
M.N.R.,
[1959]
C.T.C.
29.
There
I
found
in
favour
of
the
appellant
in
that
case
but
my
judgment
was
reversed
by
the
Supreme
Court
of
Canada,
[1960]
S.C.R.
735;
[1960]
C.T.C.
275.
There
was
one
point
of
difference
between
the
claim
in
that
case
and
the
claim
in
this
one
in
that
here
the
appellant
is
not
an
integrated
company
like
Imperial
Oil
Limited
but
is
solely
a
producing
one
so
that
the
question
of
inventory
adjustment
which
arose
in
the
Imperial
Oil
Limited
case
does
not
arise.
But
in
view
of
the
decision
of
the
Supreme
Court
of
Canada
that
Imperial
Oil
Limited
was
not
entitled
to
include
its
inventory
adjustment
in
determining
the
base
for
the
computation
of
its
deductible
allowance,
this
difference
is
immaterial.
Otherwise
the
issues
in
the
two
cases,
apart
from
the
amounts
involved,
are
essentially
the
same
in
principle,
notwithstanding
the
appellant's
insistence
that
the
amended
Regulation
1201
to
which
I
have
referred
was
ultra
vires
in
that
it
was
beyond
the
authority
of
Section
11(1)
(b)
of
the
Act
and
that,
consequently,
the
appellant
was
entitled
to
have
its
deductible
allowance
based
on
its
profits
from
its
producing
wells
that
operated
at
a
profit
without
any
deduction
of
losses
from
its
producing
wells
that
operated
at
a
loss.
Under
the
circumstances,
no
useful
purpose
would
be
served
by
setting
out
the
facts
relating
to
this
issue
in
the
appeal
or
by
considering
the
arguments
of
counsel
for
and
against
the
appellant’s
contention
for
there
is,
in
my
opinion,
no
room
for
doubt
that
the
Supreme
Court
of
Canada
would
reject
it
if
the
matter
came
before
it
for
the
same
reasons
as
it
gave
for
rejecting
the
similar
contention
of
the
appellant
in
the
Imperial
Oil
Limited
case.
I
find,
therefore,
that
the
appellant’s
appeal
against
its
assessment
so
far
as
it
relates
to
the
amount
of
its
deductible
allowance
under
Section
11(1)
(b)
of
the
Act
and
Section
1201
of
the
Regulations
as
amended
must
be
dismissed.
I
now
come
to
the
appellant’s
claim
that
it
is
entitled
to
a
deduction
of
$650,939.35
as
the
amount
of
the
payments
made
by
it
in
1951
for
or
in
respect
of
rights,
licences
or
privileges
to
explore
for,
drill
for
or
take
petroleum
or
natural
gas.
The
claim
is
made
under
Section
53(1)
of
An
Act
to
amend
The
Income
Tax
Act
and
the
Income
War
Tax
Act,
Statutes
of
Canada,
1949,
Second
Session,
Chapter
25,
commonly
called
the
Income
Tax
Amendment
Act,
1949,
as
amended
by
Section
46
of
An
Act
to
amend
The
Income
Tax
Act,
Statutes
of
Canada,
1950,
Chapter
40.
The
section,
as
amended,
so
far
as
relevant,
reads
as
follows:
"53.
(1)
A
corporation
whose
principal
business
is
production,
refining
or
marketing
of
petroleum,
petroleum
products
or
natural
gas
or
exploring
or
drilling
for
petroleum
or
natural
vas
may
deduct
in
computing
its
income,
for
the
purposes
of
the
Income
Tax
Act,
the
lesser
of
(a)
the
aggregate
of
the
drilling
and
exploration
costs,
including
all
general
geological
and
geophysical
expenses,
incurred
by
it,
directly
or
indirectly,
on
or
in
respect
of
exploring
or
drilling
for
oil
and
natural
gas
in
Canada
(i)
during
the
taxation
year,
and
(ii)
during
previous
taxation
years,
to
the
extent
that
they
were
not
deductible
in
computing
income
for
a
previous
taxation
year,
or
(b)
of
that
aggregate
an
amount
equal
to
its
income
for
the
taxation
year
(i)
if
no
deduction
were
allowed
under
paragraph
(b)
of
subsection
one
of
section
eleven
of
the
said
Act,
and
(ii)
1£
no
deduction
were
allowed
under
this
subsection
;
minus
the
deduction
allowed
by
section
twenty-seven
of
the
said
Act.
(2A)
In
computing
a
deduction
under
subsection
(1)
.
.
.
no
amount
shall
be
included
in
respect
of
a
payment
for
or
in
respect
of
a
right,
licence
or
privilege
to
explore
for,
drill
for
or
take
petroleum
or
natural
gas
other
than
an
annual
payment
not
exceeding
$1.00
per
acre.’’
It
is
clear
that
subsection
(2A)
is
restrictive
of
subsection
(1).
It
is
also
clear
that
the
land
costs
for
which
the
appellant
made
the
payments
referred
to
are
within
the
ambit
of
the
term
"exploration
costs’’
in
subsection
(1).
It
was,
therefore,
submitted
by
counsel
for
the
appellant
that
the
amount
of
the
payments
made
by
it
would
have
been
deductible
under
subsection
(1)
were
it
not
for
subsection
(2A).
Consequently,
the
issue
is
whether,
in
view
of
the
restriction
enacted
by
subsection
(2A),
the
amount
of
the
appellant’s
payments
may
be
included
in
the
computation
of
the
deduction
allowed
by
subsection
(1).
It
is
essential,
therefore,
to
set
out
the
facts
relating
to
the
payments
so
that
it
may
be
determined
whether
they
may
be
included
in
the
computation
referred
to
or
are
barred
from
such
inclusion
by
subsection
(2A).
Evidence
of
the
payments
was
given
by
Mr.
D.
S.
Harvie,
the
appellant’s
general
manager.
Its
claim
was
summarized
in
an
acreage
schedule,
filed
as
Exhibit
47,
which
showed
the
various
types
of
its
rights,
licences
or
privileges,
the
acreage
in
respect
of
which
they
were
enjoyed
and
the
amounts
of
the
payments
made
in
respect
of
them
in
1951.
The
acreage
came
to
a
total
of
1,124,034
acres
and
it
was
submitted
on
the
appellant’s
behalf
that
if
this
figure
was
multiplied
by
$1
the
result
would
show
the
maximum
amount
of
the
deduction
to
which
it
was
entitled.
On
this
basis,
if
correct,
its
claim
to
a
deduction
of
$650,939.35
is
within
the
amount
permitted
by
subsection
(2A).
Mr.
Harvie
confirmed
the
figures
shown
in
Exhibit
47.
The
appellant
had
47,481
acres
under
Alberta
Crown
leases,
each
of
which
gave
it
the
right
to
drill
and
produce
petroleum
and
natural
gas
on
the
lands
covered
by
it
and
the
appellant
agreed
to
pay
a
rental
of
$1
per
acre
per
year
and
royalties.
There
were
three
ways
of
obtaining
a
Crown
lease,
one
by
direct
application
to
the
Crown,
another
by
purchase
at
a
Crown
auction
and
the
third
by
exercising
the
right
to
obtain
a
lease
conferred
by
a
Crown
reservation.
In
respect
of
its
Crown
leases
the
appellant
paid
$221,870.22
which
included
rental
payments
and
acquisition
or
bonus
costs,
the
latter
being
paid
only
once.
The
appellant
also
had
220,471
acres
under
leases
from
freeholders
which
gave
it
rights
similar
to
those
that
it
had
under
Crown
leases.
In
respect
of
the
acreage
covered
by
these
leases
the
appellant
paid
$308,029.86
which
included
acquisition
or
bonus
costs
in
addition
to
the
rentals
of
$1
per
acre
per
year.
The
costs
referred
to
were
paid
at
the
same
time
as
the
rentals
for
the
first
year
and
were
paid
only
once.
Exhibit
47
also
set
out
particulars
of
the
various
exploration
rights
enjoyed
by
the
appellant.
It
held
634,813
acres
under
Alberta
Crown
reservations.
A
Crown
reservation
gave
the
holder
the
right
to
undertake
geological
or
geophysical
examination
of
the
lands
covered
by
it,
to
drill
and
to
select
lands
for
petroleum
or
natural
gas
leases.
The
Crown
reservation
was
obtained
by
direct
application
to
the
Crown
or
at
a
public
auction.
In
respect
of
the
acreage
held
under
such
Crown
reservations
the
appellant
paid
$55,821.39
which
represented
the
application
fees
of
$250
payable
on
the
application,
acquisition
or
bonus
costs
and
payments
made
for
extension
of
the
reservation.
The
appellant
also
had
179,570
acres
under
Canadian
Crown
reservations
in
the
form
of
Indian
permits
covering
lands
in
Indian
Reserves.
These
gave
the
appellant
the
right
to
explore
and
drill
for
petroleum
and
natural
gas
and
the
right
to
select
50
per
cent
of
the
lands
covered
by
them
in
the
form
of
leases.
The
permits
were
obtained
by
direct
application
or
with
a
cash
bonus.
In
respect
of
the
acreage
covered
by
such
permits
the
appellant
paid
$43,678.90,
which
included
payments
of
10
cents
per
acre
for
a
six-month
period
which
was
renewable
and
cash
bonuses.
The
appellant
also
had
24,033
acres
under
Canadian
Pacific
Railway
reservations
which
gave
it
the
right
to
conduct
geological
and/or
geophysical
investigations
and
to
select
petroleum
and
natural
gas
leases.
The
permits
were
for
the
period
of
one
year,
which
was
renewable.
In
respect
of
the
acreage
held
under
these
reservations
the
appellant
paid
$4,272.98,
which
included
rental
payments
but
no
bonus.
Finally,
the
appellant
held
17,665
acres
under
agreements
with
a
group
of
companies
called
the
Calgary
and
Edmonton
Group
which
gave
it
the
right
to
select
petroleum
and
natural
gas
leases
on
its
undertaking
to
pay
$1
per
acre
and
do
seismic
work.
In
respect
of
this
acreage
the
appellant
paid
$17,275.
I
should
add,
that,
generally
speaking,
the
appellant
renewed
the
various
reservations
referred
to.
As
I
have
already
stated,
the
appellant
made
payments
amounting
to
a
total
of
$650,939.35
in
respect
of
its
gross
acreage
of
1,124,082
acres,
which
amount
included
fees
and
acquisition
or
bonus
costs
as
well
as
rentals.
In
assessing
the
appellant
the
Minister
allowed
the
deduction
of
anything
that
might
be
called
a
rental
payment
to
the
extent
of
$324,174.12,
but
disallowed
the
deduction
of
the
rest
of
the
amount
of
the
appellant’s
claim,
namely,
$326,765.23
on
the
ground
that
its
payments
other
than
those
for
rentals,
were
not
annual
payments
not
exceeding
$1
per
acre
within
the
meaning
of
subsection
(2A)
of
Section
53
and
must
not
be
included
in
the
computation
of
the
deduction
allowed
by
subsection
(1).
There
is,
as
already
stated,
no
doubt
that
if
subsection
(2A)
of
Section
53
had
not
been
enacted
the
appellant
would
have
been
entitled
to
deduct
the
full
amount
of
$650,939.35
claimed
by
it.
There
is
also
no
doubt
that
the
effect
of
subsection
(2A)
is
to
limit
the
ambit
of
the
deduction
that
would
otherwise
have
been
allowed
by
subsection
(1).
In
order
to
succeed
in
its
claim
the
appellant
must
show
that
its
payments
came
within
the
meaning
of
the
expression
‘‘an
annual
payment
not
exceeding
$1
per
acre’’
in
subsection
(2A).
To
do
so
they
must
have
been
‘‘annual
payments”
within
the
meaning
of
the
subsection
and,
if
they
were
such
annual
payments,
they
must
also
not
have
exceeded
$1
per
acre.
If
they
were
not
annual
payments
that
is
the
end
of
the
matter.
Counsel
for
the
appellant
contended,
in
effect,
that
the
term
“annual
payment”
in
subsection
(2A)
meant
‘‘a
payment
made
in
or
during
the
year’’
and
that,
accordingly,
the
payments
totalling
$650,939.35
were
annual
payments
within
the
meaning
of
the
subsection.
In
support
of
his
contention
he
relied
upon
a
statement
in
Consolidated
Textiles
Limited
v.
M.N.R.,
[1947]
Ex.
C.R.
77
;
[1947]
C.T.C.
63,
where
I
stated,
at
page
81
[
[1947]
C.T.C.
67],
with
reference
to
the
expression
‘‘the
annual
net
profit
or
gain
or
gratuity”
in
the
definition
of
income
by
Section
3
of
the
Income
War
Tax
Act:
“.
..
It
is
settled,
I
think,
that
the
word
‘annual’
as
applied
to
profit
or
gain
or
gratuity
does
not
mean
that
the
profit
or
gain
or
gratuity
must
necessarily
be
of
a
recurring
nature
from
year
to
year,
but
rather
that
it
is
the
profit
or
gain
or
gratuity
of
or
in
or
during
the
year
in
respect
of
which
the
assessment
is
made.”
and
counsel
urged
that
a
similar
meaning
should
be
given
to
the
term
‘‘annual’’
in
subsection
(2A)
of
Section
53.
This
amounts
to
a
submission
that
the
annual
payment
referred
to
in
the
subsection
means
a
payment
made
in
or
during
the
year
in
respect
of
which
the
assessment
was
made,
that
is
to
say,
a
payment
made
in
1951.
The
contention
thus
put
forward
must
be
rejected.
It
does
not
follow
from
the
fact
that
the
word
"‘annual’’
in
one
context,
such
as
that
discussed
in
the
Consolidated
Textiles
case
(supra),
has
a
particular
meaning
that
it
must
have
a
similar
meaning
in
a
different
context
such
as
that
under
discussion.
The
fact
that
the
word
"‘annual’’
may
have
a
particular
meaning
in
one
context
and
a
different
one
in
another
was
clearly
recognized
by
Lord
Maugham
of
the
House
of
Lords
in
Moss
Empires
Ltd.
v.
C.I.R.,
[1937]
A.C.
785.
There
the
question
under
consideration
was
whether
certain
sums
paid
under
an
agreement
were
annual
payments
within
the
language
of
Rule
21
of
the
General
Rules
of
the
Income
Tax
Act,
1918,
and
assessable
to
tax
thereunder.
Section
(1)
of
Rule
21
opened
with
the
following
words
:
"‘(1)
Upon
payment
of
any
interest
or
money,
annuity
or
other
annual
payment
charged
with
tax
under
schedule
D,
»
?
and
the
appellant
in
that
case
contended
that
the
payments
under
the
guarantee
were
not
annual
payments.
Its
contention
was
rejected.
In
the
course
of
his
speech
Lord
Maugham
said,
at
page
795
:
‘‘It
is,
I
think,
to
be
noted
that
we
are
not
concerned
here
with
the
case
of
annual
profits
or
gains
arising
from
a
trade,
as
to
which
the
decision
in
Martin
v.
Lowry,
[1927]
A.C.
812,
would
be
decisive,
to
show
that
in
that
context
annual’
means
‘in
any
one
year’.
In
r.
21
‘annual’
must
be
taken
to
have,
like
interest
on
money
or
an
annuity,
the
quality
of
being
recurrent
or
being
capable
of
recurrence.”’
In
my
opinion,
the
kind
of
annual
payment
contemplated
by
subsection
(2A)
of
Section
53
is
a
payment
that
has
the
quality
of
being
recurrent.
The
payments
made
by
the
appellant,
other
than
its
payments
of
rental,
the
deduction
of
which
has
been
allowed,
do
not
have
this
quality
of
recurrence.
The
fees,
acquisition
costs
and
bonus
payments
were
paid
only
once.
They
were
not
recurrent.
I
do
not
see
how
they
could
possibly
be
regarded
as
annual
payments
within
the
meaning
of
subsection
(2A)
and
I
find
that
they
were
not.
Moreover,
even
if
each
payment,
apart
from
the
payments
of
rental,
were
an
annual
payment
its
amount
would
have
to
be
limited
so
that
it
would
not
exceed
$1
per
acre
for
the
acreage
for
which
it
was
made.
The
contention
advanced
on
the
appellant’s
behalf
that
it
is
entitled
to
multiply
its
total
acreage
by
$1
and
deduct
any
sum
that
is
less
than
the
amount
of
such
multiplication
is
unwarranted.
No
payment
that
is
greater
than
$1
per
acre
for
the
acres
in
respect
of
which
it
was
made
may
be
included
in
the
computation
of
the
deduction
allowed
by
subsection
(1)
of
Section
53.
There
is
another
reason
for
rejecting
the
appellant’s
contention.
I
have
already
stated
that
if
subsection
(2A)
of
Section
53
had
not
been
enacted
the
appellant
would
have
been
entitled
to
deduct
the
full
amount
of
$650,939.35
claimed
by
it.
If
counsel’s
contention
were
accepted
the
result
would
be
the
same.
Counsel’s
construction
of
subsection
(2A),
namely,
that
the
word
‘annual”
means
‘‘in
or
during
the
year’’,
is,
in
effect,
tantamount
to
saying
that
it
is
meaningless.
Its
adoption
would
nullify
the
subsection.
Counsel’s
construction
of
it
is,
therefore,
plainly
unacceptable.
An
alternative
claim
put
forward
on
behalf
of
the
appellant
may
be
dealt
with
briefly.
It
was
submitted
that
if
its
claim,
as
particularized
in
Exhibit
47,
was
rejected,
the
Minister
should
have
allowed
the
deduction
of
certain
payments
made
by
it
at
$1
per
acre.
The
particulars
of
this
alternative
claim
were
set
out
in
an
acreage
schedule,
filed
as
Exhibit
53.
There
were
three
classes
of
freehold
leases
referred
to.
The
first
was
illustrated
by
a
lease
from
F.
Kilpatrick.
This
covered
1,120.41
acres
and
was
for
a
period
of
99
years,
the
consideration
for
it
being
$1,120.41.
It
gave
the
appellant
the
exclusive
right
and
privilege
to
prospect
and
drill
for
and
take,
remove
and
dispose
of
petroleum
and
natural
gas
on
the
lands
covered
by
it,
but
it
provided
that
if
drilling
was
not
commenced
by
March
1,
1952,
the
lease
should
terminate
unless
the
appellant
paid
$1
per
acre
which
was
to
operate
as
a
rental
and
confer
the
privilege
of
deferring
the
commencement
of
the
drilling
for
12
months.
There
were
three
other
leases
of
the
same
nature
covering
1,603.06
acres
for
which
the
appellant
paid
$1,603.06.
The
second
class
of
leases
was
illustrated
by
a
lease
from
F.
Doncaster.
This
was
for
5
years
and
covered
160.14
acres.
It
also
contained
a
proviso
similar
to
the
one
referred
to
in
the
Kilpatrick
lease.
The
consideration
for
it
was
$13,000
of
which
the
appellant’s
share
was
$6,500,
but
in
this
alternative
claim
it
claimed
only
$80.07,
being
$1
per
acre.
There
were
19
other
leases
of
the
same
kind
as
the
Doncaster
one
covering
a
total
of
8,608.45
acres
for
which
the
appellant
paid
$57,899.74
but
claimed
only
$8,608.45.
The
third
class
of
leases
was
illustrated.
by
a
lease
from
S.
Brittain.
This
was
for
a
period
of
10
years
and
covered
640
acres.
It
contained
a
provision
similar
to
the
one
referred
to
in
the
Kilpatrick
lease,
except
that
the
appellant
had
three
years
in
which
to
commence
drilling
instead
of
only
one.
The
appellant
paid
$1,920
for
this
lease
but
claimed
only
$640
for
1951.
There
was
one
other
lease
similar
to
the
Brittain
one
covering
638.41
acres
for
which
the
appellant
paid
$1,117.22
but
claimed
only
$638.41.
The
leases
of
the
kind
referred
to
were
commonly
called
"‘drill,
pay
or
quit
leases”.
In
addition
to
the
three
classes
of
leases
referred
to
in
Exhibit
993,
there
was
reference
to
exploration
rights.
These
were
illustrated
by
the
option
agreement
with
the
Calgary
and
Edmonton
Group
to
which
reference
was
made
in
Exhibit
47.
This
covered
14,023.05
acres.
It
contained
a
provision
that
the
option
should
remain
in
force
until
April
27,
1952,
but
might
be
renewed
prior
to
that
date
by
notification
of
intention
to
renew
and
payment
at
the
rate
of
$1
per
acre.
There
were
two
other
agreements
of
a
similar
nature
covering
2,080
acres.
The
three
agreements
covered
16,103.05
acres
and
the
appellant
claimed
a
deduction
of
$16,103.05
in
respect
of
them.
Altogether
the
appellant’s
alternative
claim
related
to
28,793.45
acres.
It
paid
$86,263.48
for
the
leases
and
rights
but
claimed
only
$28,793.45,
being
$1
per
acre.
The
Minister
disallowed
the
payments
referred
to
in
the
alternative
claim
on
the
ground
that
they
were
not
annual
payments
within
the
meaning
of
subsection
(2A)
of
Section
53.
In
my
opinion,
he
was
right
in
so
doing.
They
did
not
have
the
necessary
quality
of
being
recurrent.
Under
the
agreements
the
appellant
had
only
the
initial
payment
to
make,
and
any
further
payment
it
chose
to
make
was
by
reason
of
the
fact
that
it
had
not
commenced
drilling
within
the
specified
time
and
was
made
for
the
purpose
of
deferring
its
obligation
to
drill.
Thus
the
Minister
was
right
in
confining
the
appellant’s
right
of
deduction
as
he
did
and
this
attack
on
the
assessment
fails.
There
remains
the
appellant’s
complaint
that
the
amount
of
interest
charged
against
it
was
greater
than
the
law
imposed.
In
order
to
understand
the
complaint
it
is
necessary
to
consider
certain
sections
of
The
1948
Income
Tax
Act.
Section
41
provided
:
"41.
Every
person
required
by
section
40
to
file
a
return
of
income
shall
in
the
return
estimate
the
amount
of
tax
payable.’’
The
appellant
was,
of
course,
such
a
person.
Then
Section
50
provided
for
the
payment
of
interest.
Subsection
(1)
was
the
general
provision.
It
read
as
follows:
"
50.
(1)
Where
the
amount
paid
on
account
of
tax
payable
by
a
taxpayer
under
this
Part
for
a
taxation
year
before
the
expiration
of
the
time
allowed
for
filing
the
return
of
the
taxpayer
is
less
than
the
amount
of
tax
payable
for
the
year
under
this
Part,
the
person
liable
to
pay
the
tax
shall
pay
interest
on
the
difference
between
those
two
amounts
from
the
expiration
of
the
time
for
filing
the
return
of
income
to
the
day
of
payment
at
the
rate
of
6
per
cent
per
annum.”
But
subsection
(6)
provided
a
measure
of
relief
in
the
following
terms:
(6)
No
interest
under
this
section
upon
the
amount
by
which
the
unpaid
taxes
exceed
the
amount
estimated
under
section
41
is
payable
in
respect
of
the
period
beginning
12
months
after
the
day
fixed
by
this
Act
for
filing
the
return
of
the
taxpayer’s
income
upon
which
the
taxes
are
payable
or
12
months
after
the
return
was
actually
filed,
whichever
was
later,
and
ending
30
days
from
the
day
of
mailing
of
the
notice
of
the
original
assessment
for
the
taxation
year.”
Now
certain
dates
become
important.
On
June
30,
1952,
the
appellant
filed
its
income
tax
return
for
1951
reporting
no
tax
payable
by
it.
On
July
30,
1952,
the
Minister
sent
the
appellant
a
notice
of
assessment
showing
a
nil
balance
of
unpaid
tax
and
a
refund
of
$11,500.
On
December
13,
1956,
the
Minister
sent
the
appellant
a
notice
of
re-assessment
showing
$71,749.61
as
the
balance
of
its
unpaid
tax,
which
amount
included
$56,550.20
as
interest
on
the
unpaid
balance.
On
January
10,
1957,
the
appellant
paid
the
tax
as
assessed.
The
issue
relating
to
interest
arises
from
the
fact
that
subsection
(6)
of
Section
50,
which
had
become
Section
54
of
the
Income
Tax
Act,
R.S.C.
1952,
Chapter
148,
was
repealed
by
Section
11
of
An
Act
to
amend:
the
Income
Tax
Act,
Statutes
of
Canada,
1955,
Chapter
54,
as
follows:
"'ll.
Subsection
(6)
of
section
54
of
the
said
Act
is
repealed.”
the
amending
Act
being
assented
to
on
July
28,
1955.
The
amount
of
$56,550.20
charged
for
interest
was
made
up
of
$24,235.80
as
interest
for
the
period
from
July
1,
1952,
to
June
30,
1953,
and
$32,314.40
as
interest
for
the
period
from
July
28,
1955,
to
December
13.
1956.
It
is
only
the
latter
amount
that
is
in
dispute.
It
is
clear
that
if
subsection
(6)
had
not
been
repealed
the
appellant
would
not
have
been
liable
for
this
amount
for
its
interest-free
period
would
have
been
from
July
1,
1953,
to
January
10,
1957.
It
was
contended
on
its
behalf
that
it
continued
to
be
entitled
to
this
freedom
from
interest
notwithstanding
the
repeal
of
subsection
(6),
but
the
Minister
took
the
position
that
it
was
liable
for
interest
for
the
period
subsequent
to
July
28,
1955,
when
subsection
(6)
was
no
longer
in
force
and
freedom
from
interest
was
no
longer
permissible.
It
was
submitted
by
counsel
for
the
appellant
that
subsection
(6)
conferred
a
right
or
privilege
on
it
and
that,
in
the
absence
of
express
terms,
the
repeal
of
the
subsection
could
not
deprive
the
appellant
of
it.
The
submission
was
based
on
Section
19
of
the
Interpretation
Act,
R.S.C.
1952,
Chapter
158,
which
so
far
as
relevant,
provides
as
follows
:
"
"
19.
(1)
Where
any
Act
or
enactment
is
repealed,
or
where
any
regulation
is
revoked,
then,
unless
the
contrary
intention
appears,
such
repeal
or
revocation
does
not,
save
as
in
this
section
otherwise
provided,
(c)
affect
any
right,
privilege,
obligation
or
liability
acquired,
accrued,
accruing
or
incurred
under
the
Act,
enactment
or
regulation
so
repealed
or
revoked,
‘
‘
Counsel
argued
that
the
appellant
had
a
right
to
freedom
from
interest
for
the
period
specified
by
subsection
(6),
and
that
its
repeal
could
not
take
this
right
from
it.
It
was
urged
that
the
appellant,
having
received
notice
of
the
nil
assessment,
dated
July
30,
1952,
did
not
know
until
he
received
the
notice
of
re-assessment,
dated
December
13,
1956,
that
any
interest
was
due
and
that
it
had
the
right
to
assume
that
no
interest
would
be
charged
against
it
for
the
period
specified
in
the
subsection.
There
are
several
reasons
why
the
appellant’s
contention
cannot
be
accepted.
It
is
not
correct
to
say
that
it
did
not
know
until
December
13,
1956,
that
it
had
unpaid
taxes.
The
law
assumes
that
a
taxpayer
knows
what
his
taxable
income
is
and
the
appellant
did
not
have
to
await
the
re-assessment
to
know
that
the
income
reported
by
it
on
June
30,
1952,
was
incorrect.
And,
certainly,
it
is
assumed
to
have
known
that
on
July
28,
1955,
the
relieving
subsection
(6)
of
Section
50,
was
repealed,
leaving
subsection
(1)
in
full
force.
Consequently,
if
it
chose
to
defer
payment
of
taxes
that
it
ought
to
have
paid
until
January
10,
1957,
it
cannot
reasonably
complain
against
the
imposition
of
interest
from
July
28,
1955.
It
could
have
saved
itself
from
any
liability
for
such
interest
by
paying
the
taxes
owing
by
it,
under
protest
if
necessary,
at
any
time
prior
to
July
28,
1955,
for
it
had
plenty
of
time
to
do
so
before
Royal
Assent
to
the
repealing
Act
was
given.
In
my
opinion,
the
appellant
did
not
have
a
right
or
privilege
‘‘acquired,
accrued,
accruing
or
incurred
under
the
Act
.
.
.
repealed’’,
within
the
meaning
of
Section
19(1)(c)
of
the
Interpretation
Act,
of
such
a
nature
as
to
give
it
the
benefit
of
continued
freedom
from
interest
for
a
period
subsequent
to
the
date
of
the
repeal
of
the
relief-giving
subsection.
There
is
support
for
this
opinion
in
the
decision
of
the
Judicial
Committee
of
the
Privy
Council
in
Abbott
v.
Minister
of
Lands,
[1895]
A.C.
425,
an
appeal
from
an
order
of
the
Supreme
Court
of
New
South
Wales.
The
appellant
in
that
case
had
purchased
40
acres
of
Crown
land
under
Section
25
of
the
Crown
Lands
Alienation
Act,
1861
and
had
subsequently
become
a
conditional
purchaser
of
an
additional
200
acres.
Section
22
of
the
Act
provided
that
the
holders
in
fee
simple
of
lands
granted
by
the
Crown
in
areas
not
exceeding
280
acres
might
make
conditional
purchases
of
adjoining
lands
which
should
not
be
subject
to
the
condition
of
residence
applicable
to
conditional
purchases
in
other
cases.
In
1884
the
Crown
Lands
Alienation
Act,
1861,
was
repealed.
In
the
repealing
Act
there
was
no
counterpart
to
Section
22
of
the
repealed
Act
but
there
was
a
proviso
in
Section
2
as
follows:
‘Provided
that
notwithstanding
such
repeal—
(b)
All
rights
accrued
and
obligations
incurred
or
imposed
under
or
by
virtue
of
any
of
the
said
repealed
enactments
shall
subject
to
any
express
provisions
of
this
•
Act
in
relation
thereto
remain
unaffected
by
such
repeal.’’
In
1892,
the
appellant
applied
for
an
additional
conditional
purchase
of
150
acres
adjoining
his
holdings
and
for
a
conditional
lease
of
440
acres
in
virtue
of
his
additional
conditional
purchase.
The
local
land
board
disallowed
his
application
and
their
decision
was
affirmed
by
the
New
South
Wales
Courts.
There
were
several
questions
under
consideration
before
the
Judicial
Committee
but
I
shall
refer
only
to
one.
It
was
contended
on
the
appellant’s
behalf
that,
although
Section
22
of
the
1861
Act
was
repealed
and
there
was
no
corresponding
provision
in
the
1884
Act,
the
saving
proviso
in
Section
2
of
the
1884
Act
enabled
him
to
make
an
additional
conditional
purchase
as
if
Section
22
of
the
1861
Act
were
still
in
force.
The
appellant
argued
that
under
the
repealed
enactment
he
had
a
right
to
make
the
additional
conditional
purchase
and
that
this
was
a
‘‘right
accrued”
at
the
time
the
1884
Act
was
passed
and
that
notwithstanding
the
repeal
it
remained
‘
‘
unaffected
by
such
repeal”.
What
the
appellant
really
wanted
was
an
additional
conditional
purchase
that
was
free
from
the
condition
of
residence
as
if
Section
22
of
the
1861
were
still
in
force,
although
under
the
1884
Act
this
freedom
from
the
condition
of
residence
was
no
longer
in
effect
as
it
had
been.
The
appellant’s
contention
was
rejected.
It
was
held
that
the
substantial
effect
of
Section
22
of
the
1861
Act
was
held
that,
while
it
limited
the
fee-simple
holder
to
certain
conditional
purchases,
it
dispensed
with
the
condition
of
residence
on
the
lands
conditionally
purchased
so
that
the
only
right
that
could
be
said
to
have
been
conferred
was
that
the
fee-simple
holder
should
be
absolved
from
the
condition
of
residence
in
the
case
of
lands
conditionally
purchased.
Their
Lordships
held
that
this
was
not
a
“‘right
accrued””
within
the
meaning
of
the
saving
proviso
in
Section
2
of
the
1884
Act.
Similarly,
in
my
opinion,
it
ought
to
be
held
in
the
present
case
that
the
freedom
from
interest
granted
by
subsection
(6)
of
Section
50
was
not
a
right
or
privilege
“acquired,
accrued,
accruing
or
incurred’’
under
the
subsection
in
the
sense
that
it
continued
to
exist
after
the
subsection
was
repealed
and
freedom
from
interest
was
no
longer
permissible.
While
the
appellant
was
not
required
to
pay
interest
for
the
interest-free
period
as
long
as
subsection
(6)
was
in
effect,
this
privilege,
if
it
may
be
so
called,
disappeared
when
freedom
from
the
payment
of
interest
case
to
an
end
when
the
subsection
was
repealed
on
July
28,
1955.
Moreover,
after
subsection
(6)
was
repealed
subsection
(1)
was
in
full
force
without
any
limitation
or
relief
from
it
with
the
result
that
the
Minister
had
no
authority
to
absolve
the
appellant
from
the
payment
of
interest
for
any
period
subsequent
to
July
28,
1955.
Indeed,
counsel
for
the
Minister
submitted
that
he
had
acted
very
generously
because
the
appellant
was
probably
liable
for
interest
for
the
whole
period
during
which
it
had
not
paid
tax
on
the
amount
owing
by
it.
I
need
not
determine
this.
Certainly,
the
Minister
had
to
charge
the
appellant
with
interest
for
the
period
subsequent
to
July
28,
1955.
The
appellant
has,
therefore,
no
sound
ground
of
complaint
against
the
interest
charged
against
it.
It
follows
from
what
I
said
that
the
appeal
herein
on
the
three
grounds
referred
to
must
be
dismissed
with
costs.
Judgment
accordingly.
In
THE
MATTER
OF
THE
INCOME
Tax
Act
&
AMENDMENTS
THERETO
and
Turpentine
&
RosiN
Products
Corp.,
Ltd.
MINISTER
OF
NATIONAL
REVENUE,
Plaintiff,
and
TURPENTINE
&
ROSIN
PRODUCTS
CORP.,
LTD.,
Defendant,
and
CONSOLIDATED
INDUSTRIAL
CHEMICAL
CORP.,
LTD.,
Opposant.
Exchequer
Court
of
Canada
(Dumoulin,
J.),
December
16,
1961,
on
appeal
against
seizure
of
goods
by
the
Minister
of
National
Revenue.
Income
tax—Federal—Seizure
of
goods
in
execution
of
judgment—Whether
goods
properly
seized.
On
July
16,
1960
the
Minister
seized
goods
in
a
public
warehouse
in
Montreal
in
execution
of
a
judgment
debt.
The
opposant
contended
that
at
the
date
of
the
seizure
the
ownership
in
the
goods
was
vested
in
it.
HELD
:
(i)
That
each
and
every
deal
occurring
in
the
case
was
nothing
more
than
a
desperate
attempt
on
the
part
of
a
practically
insolvent
debtor
to
avoid
seizure
of
its
goods
at
the
creditors’
hands;
(ii)
That
each
and
every
transaction
alleged
was
fictitious,
simulated
and
devoid
of
legal
effect
and
the
goods
seized
never
ceased
to
be
the
property
of
the
defendant.
(iii)
That
the
opposition
be
dismissed.
Roger
Beauchemin,
Q.C.,
for
the
Plaintiff.
Raymond
A.
Cartwright,
for
the
Opposant.
DUMOULIN,
J.:—The
opposant
above
contests
the
legality
of
a
seizure
of
certain
goods
effected
in
Montreal,
Que.,
at
plaintiff’s
request
on
July
19,
1960,
in
execution
of
a
judgment,
dated
July
11,
of
that
year,
for
a
capital
sum
in
excess
of
$200,000.
This
opposition
invokes
ownership
rights
supposedly
vested
in
Consolidated
Industrial
Chemical,
to
the
merchandise
itemized
in
the
bailiff’s
procés-verbal,
a
document
of
record
herein.
In
the
second
paragraph
of
its
notes,
opposant
states
that
:
CA
.
.
it
is
the
sole
owner
of
the
seized
effects
having
purchased
same
from
Synchem
Limited
and
Allied
Chemical
of
Canada
Limited,
two
Canadian
corporations”.
No
further
mention
need
be
made
of
the
latter
company,
because
all
material
supposedly
purchased
from
it
was
expedited
to
Toronto
before
July
18,
and,
therefore,
is
not
included
amongst
the
wares
under
legal
custody.
To
the
aforesaid
opposition,
plaintiff
answers
thus:
“Opposant
claims
ownership
of
seized
effects
on
the
ground
that
it
purchased
the
same
from:
I.
Synehem
Limited.
In
respect
to
Synchem
Limited
it
was
abundantly
proved
by
the
testimony
of
Mr.
Booth,
the
President
of
Synchem,
that
his
company
had
no
intention
of
acquiring
the
ownership
of
the
goods
and
that
no
cause
or
consideration
existed
for
the
sale
(italics
throughout
are
mine).
We
are
dealing
here
with
the
following
situation
which
resolved
itself
to
these
concepts:
(1)
There
was
no
valid
contract
of
sale
between
Turpentine
and
Synchem.”
Even
at
this
preliminary
stage
of
my
notes,
I
feel
justified
to
say
that
the
facts
next
outlined
fully
vindicate
the
contestant
or
plaintiff’s
averment
just
mentioned.
Each
and
every
deal
occurring
in
this
case
was
nothing
more
than
a
desperate
attempt
on
the
part
of
a
practically
insolvent
debtor
to
avoid
seizure
of
its
goods
at
the
creditor’s
hands.
On
or
about
July
11,
1960,
as
previously
said,
Turpentine
&
Rosin
Products
Corporation
Ltd.,
incurred
a
judicial
burden
of
crushing
weight,
becoming
obligated
to
pay
some
$200,000
to
the
Government
of
Canada.
Turpentine
&
Rosin
Products,
for
all
purposes,
constitute
the
real
party,
the
impelling
diabolus
ex
machina,
in
this
affair;
the
registered
opposant,
Consolidated
Industrial
Chemical
Corp.,
serving
as
a
mere
préte-nom,
with
the
somewhat
inglorious
co-operation
of
Synchem
Limited,
an
Oakville,
Ontario,
firm
playing
the
part
of
go-between.
Regarding
the
financial
stress
undergone
by
the
defendant
company
during
the
material
time,
more
precisely
the
months
of
May,
June
and
July
1960,
one
Fraser
M.
Crowdis,
who,
apparently,
managed
both
Turpentine
&
Rosin
and
Consolidated
Industrial,
drawing
salaries
from
each,
in
eross-examination,
had
this
to
say
(cf.
Official
transcript,
page
72)
:
“.
.
.
The
Income
Tax
Department
had
caused
such
bad
publie.
relations
for
Turpentine
&
Rosin
Products
over
the
past
six
(6)
years
that
they
were
driving
them
to
bankruptcy.
They
were
putting
them
out,
of
business.’
Question
by
Mr.
Beaulieu,
for
the
contestant
:
“But,
they
are
still
in
business
you
said
this
morning
?
A.
That
is
right,
the
charter
is
still
there
but
they
are
not
in
business.
We
cannot
do
any
business.
We
lose
suppliers
because
of
the
Income
Tax
Department.
We
lose
customers
because
of
the
Income
Tax
Department.
Now
if
Turpentine
&
Rosin
Products,
if
they
received
this
assessment
in
May,
frankly
I
could
not
see
how
they
could
continue
on
in
business.’’
Additional
proof
of
the
defendant
company’s
precarious
straits
was
vouchsafed
by
its
own
auditor,
Mr.
Frank
Tancock,
who
testified
that
to
his
knowledge
an
income
tax
claim
remained
outstanding
against
Turpentine
&
Rosin,
in
1959,
and
could
be
traced
so
far
back
as
1950.
Mr.
Tancock
swears
he
“divulged
this
fact
to
the
shareholders
in
his
1959
certificate
of
audition’’.
As
brought
out
at
trial,
mainly
by
the
opposant’s
witnesses,
the
scheme
adopted,
with
the
expectation
of
secreting
away
most
of
the
defendant’s
stock
in
trade,
proceeded
along
these
lines:
(a)
On
May
9
and
10,
1960,
three
trucks,
property
of
E.
Lortie,
a
Montreal
cartage
contractor,
transported
approximately
80
drums
a
day
of
chemical
products
from
Turpentine
&
Rosin’s
sheds,
on
St.
Patrick
Street,
to
Alexander’s
public
warehouse
on
Windsor
Street.
Before
this
unusually
large
trans-shipment
began,
Fraser
M.
Crowdis,
of
both
Turpentine
and
Consolidated
Industrial,
had
phoned
the
warehouse
superintendent,
John
Waldheins,
that
‘‘some
goods
would
be
delivered
belonging
to
Synchem
and
that
he,
Crowdis,
would
impart
further
instructions
about
this
storage’’.
Shortly
afterwards,
Mr.
J.
G.
Penna,
a
partner
in
the
Alexander
company,
called
back
Crowdis,
for
whose
firm
Penna
had,
in
the
past,
done
‘‘a
little
business,
to
know
who
would
pay
the
storage
costs
of
the
merchandise
forwarded
by
Turpentine
&
Rosin
in
Synchem’s
name”.
Crowdis
replied
that
Consolidated
Industrial
Chemical
would
be
responsible;
they
were
billed
accordingly
and
paid
the
account.
Pursuant
to
these
directions,
John
Waldheins
then
erased
on
the
storage
tags
the
name
‘‘Synchem’’,
substituting
that
of
“Consolidated
Industrial’’.
(b)
Then,
as
a
second
step,
the
president
of
Synchem
Limited,
J.
R.
Booth,
was
contacted
in
April
or
early
May
1960,
by
a
Mr.
Somers,
also
an
employee
of
Turpentine
and
Consolidated
Industrial,
and
asked
to
facilitate,
in
his
firm’s
name,
a
feigned
purchase
from
Turpentine
of
certain
wares
and
their
fictitious
resale
to
Consolidated
Industrial
which
had
the
same
executive
officers.
Save
for
possibly
40
drums
of
gloss
oil
{vide
Exhibit
B,
2nd
sheet,
and
transcript
pages
262,
263
and
264),
Booth’s
evidence
positively
establishes
that
Synchem
never
was
expected
to
buy,
never
intended
to
do
so
and
never
did
buy
an
iota
of
the
articles
listed
on
the
several
invoices.
Booth
himself
(transcript,
page
284)
and
F.
M.
Crowdis
admit
that
these
deals
were
nothing
but
paper
transactions’’,
undertaken
for
the
sole
accommodation
of
Turpentine
&
Rosin
(transcript,
page
268).
No
delivery
of
goods
whatsoever
was
made
to
Synchem
nor
were
any
stored
to
its
knowledge
or
according
to
its
instructions
in
Alexander’s
Montreal
warehouse
(wide
transcript,
pages
285-286).
(ce)
A
third
move,
indicative
of
Synchem’s
illusive
participation,
consisted
in
its
obtaining
from
Consolidated
Industrial
Chemical,
the
instant
opposant,
certified
cheques
in
the
same
amount
as
those
it
subsequently
wrote
in
supposed
payment
of
those
stillborn
invoices.
(d)
Synchem
in
quick
succession
reimbursed
these
guarantee
cheques,
save
for
a
single
inconsequential
deduction
not
to
Consolidated
Industrial
but
to
Turpentine
&
Rosin
Products.
In
substantiation
of
this
system,
the
evidence
may
be
summarized
thus:
Exhibit
E
:
Three
invoices
from
Turpentine
to
Synchem,
May
20,
23
and
26,
1960,
totalling
$3,486.43.
Net
30
days.
Exhibit
F
:
A
sale
invoice
from
Synchem
to
Consolidated
Industrial,
June
15,
1960
for
the
wares
mentioned
in
Exhibit
E,
for
exactly
the
same
price
of
$3,486.43.
Exhibit
G:
Three
invoices
from
Turpentine
to
Synchem,
May
11,
1960,
in
the
total
of
$10,288.20.
Net
30
days.
Exhibit
I
:
Sale
invoice
from
Synchem
to
Consolidated,
June
4,
1960
of
the
goods
mentioned
in
Exhibit
G
and
for
the
same
price
of
$10,288.20.
Net
30
days.
Exhibit
J
:
Two
invoices
from
Turpentine
to
Synchem,
May
13,
17,
1960,
in
the
total
of
$5,708.
Exhibit
K:
Purchase
order
from
Consolidated
to
Synchem
for
the
goods
listed
in
Exhibit
J,
in
the
corresponding
amount
of
$5,708.
May
30,
1960,
marked:
wanted
as
soon
as
possible’’.
Exhibit
M
:
A
cheque
dated
June
16,
1960,
for
$19,482.63
from
Consolidated
Industrial
to
Synchem.
This
amount
totalizes
the
3
purchases
allegedly
made
by
Consolidated
Industrial
from
Synchem,
exemplified
in
Exhibits
E,
G
and
J.
Exhibit
R:
Is
a
cheque
dated
June
17,
1960
in
the
sum
of
$19,482.63,
having
Synchem
Ltd.,
as
drawer
and
Turpentine
&
Rosin
Products
Corp.
Ltd.,
as
payee.
A
complete
lack
of
the
customary
profit
incentive
is
also
manifest
in
these
jugglings.
A
final
and
I
presume
conclusive
proof
of
this
roundabout
circuit
of
trumped
up
purchases
and
sales,
plus
the
corresponding
cheques,
is
found
in
Exhibits
2,
4
and
Q:
Exhibit
2
is
an
invoice
sheet
dated
May
15,
1960
purporting
to
be
sales
from
Synchem
Ltd.,
to
Consolidated
Industrial
Chemical
in
the
amount
of
$19,843.54.
Terms:
net
30
days.
Exhibit
4
is
a
certified
cheque
dated
June
14,
1960,
drawn
on
the
Royal
Bank
of
Canada
by
Consolidated
Industrial
Chemical
for
$20,000,
payable
to
Synchem
Ltd.
Exhibit
Q
is
another
accepted
cheque
dated
June
15,
1960,
on
the
Toronto
Dominion
Bank,
Oakville,
Ont.,
Branch,
drawn
by
Synchem
Ltd.,
for
$19,843.54,
payable
to
Turpentine
&
Rosin
Products
Corp.,
Ltd.
The
difference
of
$156.46,
between
the
2
cheques,
Exhibits
4
and
Q,
as
argued
by
counsel
for
plaintiff,
and
properly
inferred
from
the
evidence,
most
likely
results
from
bank
charges
on
exchange
of
cheques
totalling
more
than
$42,000,
with
the
equally
plausible
inference
that
any
surplus
served
as
a
recognition
of
J.
R.
Booth’s
good
offices
in
the
matter.
For
the
sake
of
thoroughness,
I
might
add
that
an
auditor
of
the
Royal
Bank,
Montreal
Office,
Mr.
R.
P.
Arden,
filed
the
ledger
sheet
of
the
defendant
for
the
period
June
14
to
30,
1960,
figures
in
red
referring
to
overdrafts.
The
opening
date
shows
a
shortage
of
$27,037.87
but
a
surplus
of
$3,291.87
on
June
30.
July
entries
were
not
exhibited.
At
plaintiff’s
request
a
preceding
ledger
sheet,
Exhibit
S
had
been
produced,
covering
the
month
comprised
between
April
29
and
May
31,
1960.
Nothing
but
heavy
overdrafts
appear.
The
plaintiff,
in
his
amended
contestation
of
the
opposition,
“prays
that
any
contract,
arrangement,
invoice
or
deed
purporting
to
vest
the
ownership
or
possession
of
the
property
which
makes
the
object
of
the
opposition
be
annulled
and
set
aside
and
that
the
opposition
be
dismissed
with
costs”.
Prior
to
any
pronouncement
on
the
initial
part
of
this
dual
request,
I
would
quote
Article
1472
of
the
Quebec
Civil
Code
defining
a
legal
sale
with
its
essential
elements:
‘
Article
1472:
Sale
is
a
contract
by
which
one
party
gives
a
thing
to
the
other
for
a
price
in
money
which
the
latter
obliges
himself
to
pay
for
it.
It
is
perfected
by
the
consent
alone
of
the
parties,
although
the
thing
sold
be
not
then
delivered
...”
(italics
are
mine).
A
simple
reading
of
this
text
emphasizes
the
utter
absence
here
of
the
component
factors
of
a
true
sale.
Looking
initially
at
the
second
requirement:
consent
of
the
parties,
the
entire
record
reveals
that
the
mutual
consent
was
not,
actively,
to
buy
and
sell,
but,
negatively,
not
to
buy
and
not
to
sell,
in
furtherance
of
some
legerdemain
feat
with
the
‘‘ivory
ball’’
visibly
passing
to
and
fro
from
one
partaker
to
another.
Surely
it
would
be
an
idle
performance
to
pretend
annulling
that
which
never
legally
existed.
Dealing
now
with
the
first
element,
none
of
the
three
participants
ever
undertook
to
pay
or
expected
to
receive
a
price
for
these
simulated
dealings,
as
enhanced,
furthermore,
by
the
interplay
of
cheques.
Nor
do
I
attach
any
significance
to
a
supposed
purchase
by
Synchem
of
40
drums
of
gloss
oil.
The
most
that
can
be
said
on
this
topic,
if
exact,
is
that
it
has
the
appearance
of
an
afterthought.
Moreover,
and
such
omission
would
prove
a
fatal
defect,
Synchem
has
neglected
to
file
an
opposition
to
withdraw.
For
the
reasons
above,
this
Court
decrees
that
each
and
every
transaction
herein
alleged
was
fictitious,
simulated
and
devoid
of
legal
effect,
and
that,
therefore,
the
goods,
wares
or
merchandise
seized,
in
execution
of
plaintiff’s
judgment,
on
July
19,
1960,
at
Alexander’s
warehouse,
in
the
City
of
Montreal,
as
listed
and
described
in
the
report
or
procès-verbal
of
seizure,
never
ceased
to
be
the
property
of
the
defendant,
Turpentine
&
Rosin
Products
Corporation
Ltd.,
and,
consequently
were
properly
seized.
The
opposition
is
dismissed
with
costs
against
the
opposant.
Judgment
accordingly.