Joseph B. Dunkelman v. Minister of National Revenue, [1959] CTC 375, 59 DTC 1242

‘THURLOW, J.:—These are appeals against assessments of income tax for the years 1952, 1953, 1954, and 1955, the issue in each appeal being the liability of the appellant for tax in respect of an amount which the Minister, in making the assessment, added to the income declared by the appellant in his income tax return.

The amounts added by the Minister were not income of the appellant. They represent income for the years in question from a property which at the material times was held by the appellant and the Toronto General Trusts Corporation upon certain trusts, and the question to be determined in each case is whether or not in the circumstances the appellant is nevertheless liable to be taxed in respect of such income in view of Section 22(1) of The 1948 Income Tax Act, S. C. 1948, c. 52, now Section 22(1) of the Income Tax Act, R.S.C. 1952, c. 148.

That subsection, as applicable to the years 1952 and 1953, provided :

‘22. (1) Where a taxpayer has, since 1930, transferred property to a person who was under 19 years of age, either directly or indirectly, by means of a trust or by any other means whatsoever, the income for a taxation year from the property or from property substituted therefor shall be deemed to be income of the taxpayer and not of the transferee unless the transferee has before the end of the year attained the age of 19 years.”

In the subsection substituted therefor by S.C. 1954-55, e. 54, Section 4(1), applicable to 1954 and 1955, the words ‘‘during the lifetime of the taxpayer while he was resident in Canada’’ appear between the word ‘‘shall’’ and the words ‘‘be deemed’’.

“Property” was defined in Section 127(1)(af) of The 1948 Income Tax Act, now Section 139(1)(ag) of the Income Tax Act, as meaning :

“property of any kind whatsoever whether real or personal or corporeal or incorporeal and, without restricting the generality of the foregoing, includes a right of any kind whatsoever, a Share or a chose in action ; ’ ’

The property from which the income in question was derived was acquired in the following circumstances. In May, 1945, the appellant, being aware of an opportunity which he regarded as advantageous to others, but not to himself, to purchase a property at Belleville, Ontario, known as the Butterfield Block, arranged for the purchase of it my himself and the ‘Toronto General Trusts Corporation as trustees for the purpose of a trust which they jointly declared in a document dated May 16, 1945. The property was purchased from the Canadian Bank of Commerce, and it is admitted in the Minister’s replies that it was purchased by the appellant and the Toronto General Trusts Corporation as trustees. The deed was dated May 25, 1945 and appears to have been recorded on June 12, 1945. The whole of the moneys required to finance this purchase were provided by a loan which was made by the appellant to the trustees and secured by a mortgage of the property executed by the trustees in favour of the appellant on or about May 31, 1945. By the terms of the mortgage, the loan was to be repaid in five years, with interest at five per cent per annum payable half-yearly, as well after as before maturity. Both the interest and principal were subsequently paid by the trustees from rentals of the property and the mortgage was retired on May 29, 1952. Since then, income from the property has been accumulated in the hands of the trustees. No other assets have been included in the property subject to the trust.

The declaration of trust was as follows:

‘“WHEREAS arrangements have been made by Joseph Dunkelman for the purchase from the Canadian Bank of Commerce of the property in the City of Belleville in the Province of Ontario known as the ‘Butterfield Block’ located at the southwest corner of Bridge and Front Streets and being part of Lot Number 28 on the east side of Front Street and the south side of Bridge Street in the said City of Belleville for the price or sum of Sixteen Thousand Dollars ($16,000.00) as Trustee for the children of the said Joseph Dunkelman as hereinafter set out.

AND WHEREAS the said Joseph Dunkelman has arranged for the title to the said property to be taken in the name of the Toronto General Trusts Corporation and himself as Trustees.

AND WHEREAS the said Joseph Dunkelman intends to advance the said purchase price and to take back in his personal capacity a first mortgage against the said property for the amount of his advance with interest.

And WHEREAS it is expedient that the said Trustees should declare the trusts on which they hold the said property.

Now THEREFORE the said Trustees hereby declare that they hold the said property as Trustees for Richard Dunkelman, Peter Dunkelman and Donald Dunkelman, being the children of the said Joseph Dunkelman in equal shares until the youngest surviving child attains the age of twenty-one years when the said property shall be conveyed to the said children then alive absolutely as tenants-in-common or, if the property has in the meantime been sold, the proceeds of the said property shall either be re-invested for their benefit or be paid or transferred to the said children in equal shares as the Trustees may in their sole discretion deem advisable. No child of the said Joseph Dunkelman shall have an indefeasible vested interest in the said property, or, if sold, in the proceeds thereof until the youngest surviving child of the said Joseph Dunkelman shall attain the age of twenty-one years and if any child shall die before that date, leaving issue, the issue of such child shall have no interest in the said property or the proceeds thereof. In the event of the death of all of the said children before the youngest surviving child reaches the age of twenty-one years, then the said property or the proceeds thereof shall be transferred or paid to Jean Dunkelman, the wife of the said Joseph Dunkelman.

IN WITNESS WHEREOF the parties hereto have hereunto set their hands and seals this 16th day of May, 1945.

Throughout 1952, 1953, 1954, and 1955, both Peter Dunkelman and Donald Dunkelman were under 19 years of age, and neither had reached that age at the time of the hearing of the appeal. Richard Dunkelman had reached 22 years of age by November, 1957. He had, therefore, reached 19 years of age by November, 1954, though how much earlier he had reached that age does not appear. In particular, it does not appear that he had reached that age by December 31, 1953.

The problem turns on whether or not the income from the Butterfield Block, which the Minister assessed to the appellant, was income from property transferred or from property substituted for property transferred by the appellant to a person under 19 years of age, within the meaning of Section 22(1). It goes without saying that, if the rule set out in Section 22(1) applies, the appellant will be liable for tax on the income in question, regardless of how harsh or unjust the result may appear to be. But, as it is not within the purview of the general taxing provisions of the statute to tax one person in respect of the income of another, the subsection must, in my opinion, be regarded as an exception to the general rule, and while it must be given its full effect so far as it goes, it is to be strictly construed and not extended to anything beyond the scope of the natural meaning of the language used, regardless again of how much a particular case may seem to fall within its supposed spirit or intendment.

In David Fasken Estate v. M.N.R., [1948] Ex. C.R. 580; [1948] C.T.C. 265, the President of this Court, in discussing the meaning of “transfer” in Section 32(2) of the Income War Tax Act, said at p. 592: [[1948] C.T.C. p. 279]

“The word ‘transfer’ is not a term of art and has not a technical meaning. It is not necessary to a transfer of property from a husband to his wife that it should be made in any particular form or that it should be made directly. All that is required is that the husband should so deal with the property as to divest himself of it and vest it in his wife, that is to say, pass the property from himself to her. The means by which he accomplishes this result, whether direct or circuitous, may properly be called a transfer. The plain fact in the present case is that the property to which Mrs. Fasken ‘became entitled under the declaration of trust, namely, the right to receive a portion of the interest on the indebtedness, passed to her from her husband who had previously owned the whole of the indebtedness out of which the right to receive a speci- fied portion of the interest on it was carved. If David Fasken had conveyed this piece of property directly to his wife by a deed such a conveyance would clearly have been a transfer. The fact that he brought about the same result by indirect or circuitous means, such as the novation referred to by counsel involving the intervention of trustees, cannot change the essential character of the fact that he caused property which had previously belonged to him to pass to his wife. In my opinion, there was a transfer of property from David F'asken to his wife within the meaning of the Act.’’

And in St. Aubyn v. Attorney-General, [1952] A.C. 15, Lord Radeliffe put the matter in almost the same way when he said at p. 09:

“if the word transfer’ is taken in its primary sense, a person makes a transfer of property to another person if he does the act or executes the instrument which divests him of the property and at the same time vests it in that other person.”

The expression ‘‘has transferred’’ in Section 22(1) has, in my opinion, a similar meaning. All that is necessary is that the taxpayer shall have so dealt with property belonging to him as to divest himself of it and vest it in a person under 19 years of age. The means adopted in any particular case to transfer property are of no importance, as it seems clear that the intention of the subsection is to hold the transferor liable for tax on income from property transferred or on property substituted therefor, no matter what means may have been adopted to accomplish the transfer. Nor is the scope of the provision affected or qualified by expressions such as as if the transfer had not been made’’, which appeared in the corresponding section of the Income War Tax Act. Vide McLaughlin v. M.N.R., [1952] Ex. C.R. 225; [1952] C.T.C. 104. On the other hand, it is also clear that the subject matter of a transfer that is within the section must be property of the transferor, not that of some other person, and if the subsection is to apply, such property must have been vested by him in a person under 19 years of age.

The Minister’s contention in support of the assessments is that the appellant transferred money to the trustees by way of a loan, that the Butterfield Block was purchased with that money and is, therefore, property substituted for it within the meaning of the subsection, that the three children immediately became the owners of the property or of an interest in it which gave them the right to the income arising therefrom, and that, accord- ingly, for the purposes of the Income Tax Act, the income therefrom or from such interest is to be deemed income of the appellant. As an alternative, it was submitted that, viewing the substance of the transaction as a whole, the Butterfield Block itself was property transferred by the appellant to the trustees for the benefit of his children.

In my opinion, it cannot be said on the facts that the appellant ever was the owner of the Butterfield Block or that he transferred it to anyone. The fact is that at the outset the Butterfield Block belonged to the Canadian Bank of Commerce, and it is admitted that the property was purchased by the appellant and the Toronto General Trusts Corporation as trustees. The alternative submission, accordingly, fails.

The Minister’s other submission, that by making the loan the appellant transferred property to the trustees within the meaning of Section 22(1), presents a more difficult problem, but I have come to the conclusion that it, too, must be rejected. The expression ‘‘has transferred property” in Section 22(1) must be given its natural meaning. The problem is to determine how wide that natural meaning is in the context in which the expression is found, having due regard to the definition of property contained in the statute.

In St. Aubyn v. Attorney-General (supra), the House of Lords divided three to two on the interpretation to be put upon the words ‘‘where a person has made to a company to which this section applies a transfer of any property’’, which appeared in Section 46 of the Finance Act, 1940, the question before the house being whether a payment of money to such company for shares therein was a transfer of any property within the meaning of that section. Lord Radcliffe was clearly of the opinion that the payment was a transfer. He said at p. 57 :

“Lastly, there is the £100,000 which Lord St. Levan paid as his subscription for the preference shares. My Lords, I must say quite briefly that in my opinion, when he did this, he made a transfer of £100,000 to the company within the meaning of this statute. Certainly the company got £100,000 as part of their resources: first a cheque, then a credit with Messrs. Glyn, Mills & Co. Certainly Lord St. Levan by giving the cheque which led to the transfer of bank credit reduced his own credit by an equivalent amount. I have spoken of Lord St. Levan as having given a cheque for £100,000, for I assume that he must have. In any event he must have given some authority to the bankers to debit his account with £100,000 and to credit the company with a like amount, and that is, I think, sufficient for the purpose. Whatever form the authority took, it was a disposition made by him and it was an essential part of the transaction by which the company’s resources were augmented by this £100,000. I am bound to say that in that state of affairs Lord St. Levan seems to me plainly to have made a transfer of £100,000 to the company for the purposes of section 46 as interpreted by section 58(2).”’

Lord Tucker was more doubtful but reached the same opinion. He said at p. 60:

“As to the £100,000 paid for the preference shares, I agree that to refer to money paid by way of subscription for shares as a transfer of property to the company is an unusual use of words, none the less, not without some doubt, I have come to the conclusion that the words in their present context are wide enough to include payment in cash or by cheque. It must be remembered that the companies referred to are only those to which the section applies and that one of the commonest ways in which benefits of the kind enumerated in section 47 are obtained is as a result of payment of money. Furthermore, section 58(2) once again requires consideration and, although it does not elucidate the meaning of the word property, it would be odd if a sum of money which ‘comes to be included in the resources of the company’ is not property. Some support for this view is, I think, also to be obtained from section 51.”

The other three law Lords were of the contrary opinion. Lord Simonds, with whom Lord Oaksey concurred, said at p. 32:

‘ The first point arises on the subscription by Lord St. Levan for 100,000 preference shares. For these he paid cash according to the ordinary use of language. Did he then ‘transfer property’ to the company within the meaning of section 46? My Lords, I have no hesitation in saying that the payment of cash to a company upon a subscription for shares is not a transfer of property to the company. No one, lawyer, business man or man in the street, was ever heard to use such language to describe such an act and I decline to stretch the plain meaning of words in an Act of Parliament in order to comply with what is said to be its purpose. Lord Wensleydale’s familiar words (as Parke B. in In re Micklethwait, (1855) 11 Ex. 452, 456), which were cited by Lord Halsbury, L.C. in Tennant v. Smith, [1892] A.C. 150, 154, may again be

repeated: ‘It is a well-established rule, that the subject is not to be taxed without clear words for that purpose; and also, that every Act of Parliament must be read according to the natural construction of its words.’ Lord Halsbury adds that In a taxing Act it is impossible to assume any intention or governing purpose in the Acts to do more than take such tax as the statute imposes: it must be seen whether the tax is expressly imposed. This is true doctrine which I must bear in mind as I listen to the constant refrain of learned counsel for the Crown that this or that is Just the transaction at which his or that section is aimed. The question is not at what transaction the section is, according to some alleged general purpose, aimed but what transaction its language, according to its natural meaning, fairly and squarely hits. Applying this, the one and only proper test, I say that when Lord St. Levan paid for his shares he did not transfer property to the company.”

Lord Normand put this view thus at p. 48:

"The first point is whether Lord St. Levan, when he paid £100,000 for the preference shares in the company, made a transfer of property within the meaning of section 46. My opinion is that ‘transfer of property’ are not the usual words which would be naturally selected to describe a payment of money, though it cannot be denied that money is property or that payment is a transfer. I think that if it had been intended to strike at money payments the simple words necessary to make that intention clear would have been added.”

The opinions of Lord Simonds and Lord Normand were commented on and considered to be limited to the meaning of "transfer” in the particular section of the statute and, therefore, of no assistance in Thomas v. Marshall, [1953] 2 W.L.R. 944, where the appellant had deposited money in a Post Office Savings Bank to the credit of his children and the problem was whether or not this transfer was a settlement within the extended meaning of that term as defined in the statute there under consideration. The present problem is, however, much more similar in principle to that considered in St. Aubyn v. Attorney-General (supra), and the reasoning of the majority seems to me to point the way to the interpretation that should be put on the words ‘‘has transferred property’’ in Section 22(1). I do not think it can be denied that, by loaning money to the trustees, the appellant, in the technical sense, transferred money to them, even though he acquired in return a right to repayment of a like sum with interest and a mortgage on the Butterfield Block as security, or even though he has since then been repaid with interest. But, in my opinion, it requires an unusual and unnatural use of the words “has transferred property’’ to include the making of this loan. For who, having borrowed money and knowing he must repay it, would use such an expression to describe what the Jender has done? Or what lender thinks or speaks of having transferred his property, when what he has done is to lend it? Or again, what casual observer would say that the lender, by lending, ‘‘has transferred property’’? And, more particularly, who would so describe the lending where, as in this case, the transaction is such that the only purpose to which the money loaned could be turned was in acquiring a property to be immediately mortgaged to the lender ? I venture to think, in the terms used by Lord Simonds, that no one, be he lawyer, business man, or man in the street, uses such language to describe such an act. I also think that, if Parliament had intended to include a loan transaction such as the present one, the words necessary to make that intention clear would have been added, and it would not have been left to an expression which, in its usual and natural meaning, does not clearly include such a transaction. To apply the test used by Lord Simonds, I do not think this transaction was one which the language of the subsection, according to its natural meaning, “fairly” or “squarely” hits. I am, accordingly, of the opinion that the making of the loan in question was not a transaction within the meaning of the expression ‘has transferred property’’ and that Section 22(1) does not apply.

In reaching this conclusion, I have also considered the wide words “or by any other means whatsoever’’, but I think that they are directed to the means or procedure by which transfers may be accomplished, rather than to the scope of the expression ‘‘has transferred property’’ and that they do not expand that scope beyond the natural meaning of the expression.

It follows that the appeals must be allowed and the assessments referred back to the Minister to be revised accordingly. The appellant is entitled to his costs.

Judgment accordingly. THE ROYAL TRUST COMPANY, Executor or THE Estate of AMY KATHERINE McDONALD, Deceased, Appellant,

and

MINISTER OF NATIONAL REVENUE, Respondent.

Exchequer Court of Canada (Cameron, J.), October 14, 1959, on appeal from assessment of Minister 'of National Revenue.

Succession duties—Federal—Dominion Succession Duty Act, 1940-41, c. 41—Property in name of deceased—Whether held in trust for husband—Presumption of gift.

By her will, the deceased left all her property to the Royal Trust Company as trustee upon trust to convert the whole into money and to pay it to her husband in the event of his surviving her. She died on September 20, 1956, and then her husband died on December 12, 1957. Prior to his death the trustee filed a notice of appeal from the assessment of succession duties in respect of her death on the ground that the properties listed in the succession duty return for her estate were the absolute property of her husband and that the deceased had held the same in trust for him. The question for determination was whether the assets in question were held in trust for her husband or whether they were in fact the property of the deceased. The assets consisted of stocks, bonds, debentures, bank account and other properties all in the name of the deceased.

HELD:

(i) That there was a presumption in law that all the assets in question were either gifts to the deceased by her husband or represented profits, gains or accretions from such gifts; and

(ii) That the appeal be dismissed.

EDITORIAL NOTE: The question here is whether the property was in law and in fact held by the deceased in trust for her husband as alleged by the taxpayer or whether it was really the property of the deceased as claimed by the Crown. The Court devotes much of the judgment to a careful analysis of the evidence and concludes on the facts that even though all cf the property of the wife probably came from the husband one way or another,

. .. there is no evidence of the slightest significance regarding the circumstances under which any one of the transfers from the husband to wife took place, or which tends to show that the husband had any intention of retaining any beneficial interest therein. No one really professed to have any knowledge of any individual transfer or the circumstances surrounding it. The whole of the evidence led by the appellant was made in an effort to establish a course of dealing from which it might be possible to infer that the wife was the trustee for her husband. That type of evidence was considered and held to be inadmissible by Viscount Simonds in Shephard v. Cartwright, [1954] 3 All E.R. 649.”

This case turns entirely on its own facts which are fully set out in the judgment.

Ernest Watkins, for the Appellant.

Michael Bancroft and T. E. Jackson, for the Respondent.

CAMERON, J.:—This is an appeal by the Royal Trust Company, Executor of the estate of Amy Katherine McDonald, late of the city of Calgary, from an assessment made under the Dominion Succession Duty Act, R.S.C. 1952, c. 89, and dated April 30, 1957. Mrs. McDonald died testate on September 20, 1956, and by her last will and testament, dated August 14, 1947, appointed the Royal Trust Company as her ‘‘Trustee’’, and probate of the said will was duly granted to the appellant by the District Court of the District of Southern Alberta on January 11, 1957.

As required by the Act, the appellant prepared, and on January 4, 1957 filed in the Calgary office of the Department of National Revenue, the form SDI (Exhibit 44 A”), which included a statement of the assets of the deceased. That return showed assets having a gross value of $185,554.75. In assessing the appellant, the respondent increased the value of the assets by $5,675.75, allowed as debts the full amount claimed ($1,075), and levied a tax of $30,553.89 and interest.

By her will, Mrs. McDonald gave the whole of her property to the said Trustee upon trust, to convert the whole into money and, after payment of debts, estate, legacy and succession duties,

‘‘to hold my said estate Upon FURTHER TRUST to pay the same to my husband, Arthur Benedict McDonald”. The will contained further provisions for the disposal of her whole net estate to or for the benefit of her two children and their families, but as these provisions were applicable only 4 in the event of my husband’s predeceasing me’’, they need not be referred to in detail. As I have said, the husband survived the deceased, but died testate on December 12, 1957, probate of his last will and testament being granted to the appellant on July 8, 1958 (Exhibit 3). The assessment made upon the appellant in regard to Mrs. McDonald’s estate was based on the assumption that all the assets shown in the return (Exhibit 44 A”) were her property and that the husband was the sole beneficiary.

From the assessment so made, the appellant filed a Notice of Appeal dated May 8, 1957. The appeal was on the ground that all the assets listed in the succession duty return were the absolute property of her husband and that the deceased had held the same in trust for him. By his decision dated November 14, 1957, the respondent affirmed the assessment on the ground that the property held by the deceased was in fact property owned by her. Following a Notice of Dissatisfaction by the appellant, pleadings were delivered.

The burden is on the appellant to establish the existence of facts or law showing an error in relation to the taxation imposed. (See Johnston v. M.N.R., [1948] S.C.R. 486; [1948] C.T.C. 195, and Re Webster, [1949] O.W.N. 582.) The single question for determination is whether under the applicable law and on the facts disclosed in evidence, the assets shown in Exhibit “A” were held by the deceased in trust for her husband—as alleged by the appellant—or whether they were in fact the property of the deceased as claimed by the respondent.

The evidence is conclusive—in fact, it is now admitted—that all the assets shown in Exhibit ‘‘A’’ were in the name of Mrs. McDonald as sole owner at the time of her death. They consisted of stocks, bonds, debentures, bank accounts, traveler’s cheques, cash in the hands of certain solicitors, an insurance policy, motor car, personal effects, mortgages, agreements of sale, and a residence property. While these assets or documents of title were not produced, it is freely admitted that there was nothing therein to indicate that Mrs. McDonald was not the sole and absolute owner thereof or that they contained any suggestion that they were held in trust for the husband or that he had any interest whatever therein. It is further admitted that Mrs. McDonald never executed any declaration of trust in regard thereto, or any other document which might indicate that she held the assets in trust for or on behalf of her husband, or anyone else. I was not asked to give special consideration to individual assets, either on the law or facts, the contention of the appellant being that all of the assets were in fact the property of the husband.

The deceased was. fifty-seven years of age at the date of her death and her husband sixty-one years old. They were married in 1929, the deceased at that time being a waitress. I think that on the evidence I may reasonably assume that at her marriage, she had few, if any, possessions and that following her marriage she ceased to be employed and thereafter received no earned income from outside pursuits, and received nothing by way of legacies or bequests. Without reviewing the evidence as a whole, I think I can assume, on a reasonable interpretation thereof, that all the assets held by the deceased at the time of her death had been either (a) purchased with funds supplied by her husband and the title taken in her name; or (b) were replacements or substitutions for assets acquired as in (a) ; or (ec) represented income, profits or gains from assets acquired by the deceased as in either (a) or (b).

In these circumstances, and from the evidence later to be referred to, it is clear that there is a presumption in law that all the assets in Exhibit ‘‘A’’ were either gifts to Mrs. McDonald by her husband or represented profits, gains or accretions from such gifts. The principle is stated in ELalsb ury’s Laws of England, 2nd ed., Vol. 16, at p. 663:

“1057. Where a husband purchases property or makes an investment in his wife’s name, a gift to her is presumed in the absence of evidence of an intention to the contrary, and there is a similar presumption where the property is purchased or the investment made by the husband in their joint names, the wife in the latter case being entitled in the event of her surviving the husband. Where the purchase or investment is made by the husband in the joint names of husband and wife and third persons with regard to whom no presumption of gift arises, the third persons will presumably be trustees for the husband and wife and the survivor.

A gift is also presumed where money is deposited at a bank in the name of the wife, or shares or stock are transferred into her name, or where any such deposit or transfer is made in or into the joint names of both husband and wife, even if the wife is ignorant of such deposit or transfer, or where a mortgage or other security for money lent by the husband is taken in their joint names.”

In Lush on Husband and Wife, 4th ed., p. 145, that principle is stated to be a rebuttable presumption.

‘‘It will be seen that in every case there is only a presumption of a gift and this presumption may be rebutted by contrary evidence, the sole question being with what intention the transaction took place. And all the surrounding circumstances of the case should be taken into consideration to determine whether a gift or a resulting trust was intended.”

The principle so stated was applied in Shephard v. Cartwright, [1954] 3 All E.R. 649, a decision of the House of Lords in a case which had to do with gifts by a father to his children. In my view, the principle, generally speaking, is the same whether applied to gifts by a husband to his wife or by a father to his children (see White and Tudor’s Leading Cases in Equity, 9th ed., Vol. 2, p. 765). In that case Viscount Simonds, in a judgment which was concurred in by all the judges, stated at p. 651 ff.:

“I think it well then to pause in this year 1929 and to ask what was the result in law of equity of the registration, in the names of his children, of shares for which he supplied the cash, and I pause in order to examine the law, because it appears to me that the only two facts which are at this stage relied on to rebut the presumption of advancement, viz.: that the children were ignorant and that certificates were not given to them, are of negligible value. My Lords, I do not distinguish between the purchase of shares and the acquisition of shares on allotment, and I think that the law is clear that, on the one hand, where a man purchases shares and they are registered in the name of a stranger; there is a resulting trust in favour of the purchaser; on the other hand, if they are registered in the name of a child or one to whom the purchaser then stood in loco parentis, there is no such resulting trust but a presumption of advancement. Equally, it is clear that the presumption may be rebutted, but should not, as Lord Eldon said, give way to slight circumstances.

It must then be asked by what evidence can the presumption be rebutted, and it would, I think, be very unfortunate if any doubt were cast (as I think it has been by certain passages in the judgments under review) on the well settled law on this subject. It is, I think, correctly stated in substantially the same terms in every text-book that I have consulted and supported by authority extending over a long period of time. I will take, as an example, a passage from Snell’s Principles of Equity (22nd Edn.), p. 122, which is as follows:

‘The acts and declarations of the parties before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction, are admissible in evidence either for or against the party who did the act or made the declaration; subsequent acts and declarations are only admissible as evidence against the party who did or made them, and not in his favour.’

I do not think it necessary to review the numerous eases of high authority on which this statement is founded. It is possible to find in some earlier judgments reference to ‘subsequent’ events without the qualifications contained in the text-book statement: it may even be possible to wonder in some cases how, in the narration of facts, certain events were admitted to consideration. But the burden of authority in favour of the broad proposition as stated in the passage I have cited is overwhelming and should not be disturbed.’’

In White and Tudor, op. cit., at p. 772, it is further stated:

“Purchase in the name of a child etc. is, as we have seen, merely a circumstance of evidence of an intention to make a gift to the child, (etc.), and prima facie, therefore, it displaces the equitable presumption of a resulting trust. But such evidence may be strengthened or opposed by other evidence, for the object of the Court is to discover, upon a review of all the circumstances, the true explanation of the transaction.”

I turn now to an examination of the evidence adduced on behalf of the appellant. The evidence is clear on one point, namely, that Mr. McDonald at all relevant times was a bookmaker and gambler in Calgary, owning in whole or in part and operating a number of gambling clubs and, at some time, a taxicab business. There is no evidence, however, to support the allegation in the Statement of Claim that following his marriage he was drinking and gambling to excess and that, in order to reduce the temptation to dissipate his whole estate, it was agreed between his wife and himself that ‘‘all his assets should be legally registered in her name’’. The burden on the appellant to establish that there was a resulting trust in favour of the husband is made more difficult by the fact that both husband and wife died before the hearing of the appeal. The evidence introduced was mainly that of persons with whom the husband and wife had business and financial dealings in their lifetime in relation to the investments.

Mr. A. L. Barron, a barrister and solicitor practising in Calgary, stated that he acted professionally for both Mr. and Mrs. McDonald from about 1935 to 1947. In 1935 he acted for Mr. McDonald in the purchase of a taxicab business, the purchase money of about $4,000 being supplied in cash by Mr. McDonald. There is no evidence that this business was ever in the name of Mrs. McDonald; it seems to have been operated in connection with the gambling clubs. Mr. Barron suggests that Mrs. McDonald was her husband’s financial manager and looked after his financial affairs, but a close examination of his evidence does not lead to such a conclusion. He saw both of them frequently. He says that Mrs. McDonald consulted him about investments and mortgages, that she brought the money, presumably in cash or cheque, and that in the case of some stock purchases he bought them in his own name and turned them over to her, endorsed in blank as street certificates. The mortgages—and there were a large number of them—were always put in her name. While he could not at this late date recall any specific discussions with them, he says he felt that the money supplied was that of the husband and that probably he got instructions from the husband. If he did get such instructions, they must have been that all such investments should be in the wife’s name, for that was done. Mr. Barron said that in regard to a loan of $13,000 to one Bryant, he had discussions with them both, but later added that he could not recall any conversation with her regarding any of the investments. He received money to be put out on mortgages for both of them, but could not say to which party he remitted the mortgage collections. He said, also, that he had no recollection whatever regarding any of the investments in stocks and could not state who gave him the instructions regarding such investments.

In cross-examination, he admitted that in every instance the mortgages were taken in the name of Mrs. McDonald, that as a rule she brought him the money for investment in stocks and bonds and that all the investments were given to her. Again, he said that she always brought in the money for all investments and that all deeds, mortgages and investments were handed to her.

Mr. Barron produced no documentary evidence of any sort except Exhibit 4 which I shall refer to later. His recollections were vague and uncertain to a considerable extent, but it is quite clear that he was never asked to prepare any document between husband and wife which would indicate that Mrs. McDonald held the assets in trust for her husband. Neither does his evidence go so far as to suggest that either husband or wife ever stated to him directly or indirectly that the assets were not Mrs. McDonald’s sole property, or that Mr. McDonald retained any beneficial interest whatever in any of them. His evidence is wholly insufficient to set aside the presumption that the properties and investments with which he was concerned were the sole property of Mrs. McDonald, or were outright gifts from her husband.

I must now refer to the statutory declaration of Mr. McDonald tendered in evidence by Mr. Barron. It was dated in May 1947, the last year in which he represented husband and wife. Counsel for the respondent took the objection that it was inadmissible in that it was not a statement or declaration made in the course of duty. Mr. Barron stated that he was acting at the time for Mr. McDonald in connection with claims for unpaid income tax. I gather that it was necessary to show his net worth at that date and, accordingly, Mr. Barron prepared, and Mr. McDonald signed and declared the statement before him. Attached thereto is a list of mortgages bearing dates from early 1948 to late 1946, on which there was a balance owing of $33,680. Mr. Barron stated that all of these mortgages were in the name of Mrs. McDonald, but there is no evidence as to whether the other assets mentioned in the declaration were in the name of Mr. or Mrs. McDonald, other than that of Mr. Barron who stated that when he made purchases of stocks or bonds, they were invariably in the name of Mrs. McDonald.

The Statutory Declaration reads as follows:

“That my assets as of the 3lst day of December, A.D. 1946, consisted of the following:

House Property, 2407 - 5th Ave. N.E. $ 4,200.00 Automobile, Buick, bought in 1939 2,025.00 Property 520 - 1st Avenue W. 4,800.00 Stocks and Bonds :

10 shares Canadian Utilities $ 1,000.00 15 “ Northwest Utilities 1,500.00 140 “ Calgary Power Co. 14,840.00

500	‘**	Chesterville	1,000.00
Dominion of Canada Bonds			12,000.00
				$0,340.00.
Cash on hand, in safety deposit box and in Banks				25,000.00
Mortgages as per list				33,680.00
		Total	$100,045.00

That I have no other assets of any nature or kind.

THAT the said statement includes all of the assets of my wife as well as myself.

That no person holds any money or assets of any nature or kind in trust for me or for my benefit.

THAT I have no liabilities.

THAT, on the 31st day of December, A.D. 1939, I had assets amounting to not less than the sum of $100,000.00.’’

It will be noticed that while the declarant speaks of ‘‘my assets”, he adds that the inventory ‘‘includes all of the assets of my wife as well as myself’’, and ‘‘That no person holds any money or assets of any nature or kind in trust for me or for my benefit’’.

It may be assumed, I think, that the husband, in settling his income tax liability at that time, was fully aware that he was liable under the Income War Tax Act to pay tax on any income accruing to his wife from gifts made by him to her. That would account for the statement that the inventory included the assets of my wife as well as myself’’. The statutory declaration was prepared by Mr. Barron and no doubt Mr. McDonald had the benefit of his legal advice on the matter. It contains a clear admission that at that time Mrs. McDonald had assets of her own and, as I have said, Mr. Barron tells us that all the mortgages were in her name and it may be inferred from his evidence that some or all of the stocks and bonds were also in her name at the time.

Now it is not suggested that the declaration was made at the time when any of the assets referred to were transferred to Mrs. McDonald and it is particularly clear that all the mortgages at least antedated the statutory declaration. That being so, it follows from the principles stated in Snell’s Principles of Equity, and referred to by Viscount Simonds in the Shephard case (supra), that the declaration being subsequent to the date when the securities, etc., were placed in Mrs. McDonald’s name, is admissible as evidence against the declarant and not in his favour.

On this ground, I rule that the statutory declaration tendered as Exhibit 4 is admissible in so far as the statements therein are against the interest of the declarant. The statutory declaration, which is the only written statement by the husband, contains clear evidence that as of May 1947, his wife had assets and that she did not hold any of them in trust for him. If it be the ease that, having admitted parts of the declaration which are against Mr. McDonald’s interest, I should admit the whole of his statement, my finding would be that the mere reference to my assets’’ is wholly insufficient to establish that all the assets in the inventory were his property or that such as were in Mrs. McDonald’s name were held in trust for him.

Mr. E. R. Tavender, a barrister of Calgary, acted professionally for both Mr. and Mrs. McDonald from 1947 to the dates of their death. I do not find it necessary to set out all his evidence which was given with complete candour throughout. About the period 1951-1953, a large number of mortgages and agreements of sale were brought to him, all being in Mrs. McDonald’s name. From that time he looked after all mortgage transactions and on the husband’s instructions, all were taken in the wife’s name and all remittances were made to her. I gather from his evidence that when he wished to secure mort- gage monies, he would call Mr. McDonald who would decide whether the proposed loan should be taken up, but that invariably Mrs. McDonald brought in the necessary funds and in turn received all collections of principal and interest.

Two of Mr. Tavender’s statements are of particular interest. He said: “I never heard any statement from them as to the relationship between them or as to who owned them” (w., the securities). And in cross-examination, he said: ‘‘I know of nothing which suggested that she was other than the full legal owner of all the assets’’. It is quite clear, therefore, that nothing was said or done by Mr. McDonald in Mr. Tavender’s presence which would indicate in any way that McDonald had at any time been the owner of the funds put out on loan by Mrs. McDonald, or that he had any beneficial interest therein. In referring to the funds so brought in for investment, Mr. Taven- der said : ‘ They could have come from anywhere. ’ ’

As I recall his evidence, Mr. Tavender was concerned only with mortgages, deeds and agreements of sale. None of his evidence casts any light on the manner in which Mrs. McDonald came into possession of the other assets in Exhibit ‘‘A’’ (except the balance to her credit on his books), or, if they were gifts from her husband, the circumstances surrounding such gifts. I might add here that in opening his ledger account, Mr. Tavender first placed it in the name of Mrs. McDonald, then in the name of both husband and wife, and later—because he was dealing with funds brought in by her and with securities entirely in her name—in her name alone. I am quite unable to find that any of this evidence provides any indication that Mrs. McDonald held any of the assets in Exhibit ‘‘A’’ in trust for her husband. This is made abundantly clear in a letter from Mr. Tavender to the Director of Taxation regarding Mrs. McDonald’s estate, dated February 15, 1957, and written after Mrs. McDonald’s death (Exhibit 11). In it he states:

“The writer and Mr. MacEwing of The Royal Trust Company here discussed with your Mr. Perkins a few days ago the question of ownership of the assets shewn in the Succession Duty Return herein.

The writer has acted for both Mr. and Mrs. McDonald for many years and has looked after all Mortgage work and the collection of all moneys owing thereunder. We never paid any attention to the question of ownership of assets since this did not concern us.

Upon receiving instructions to apply for Probate of Mrs. McDonald’s Will we prepared and filed all necessary documents in the ordinary way and it was only recently that Mr. McDonald informed us that all his wife’s assets were in fact his own. We immediately made such inquiries as we thought necessary and notified you as to our instructions.’’

The statement of Mr. McDonald referred to above is, of course, wholly inadmissible in this case for the reasons which I have stated earlier.

Mr. W. J. King, a public accountant and a former assessor in the Department of National Revenue at Calgary, gave evidence for the appellant. He was consulted by Mr. McDonald apparently about April 1957 (after Mrs. McDonald had died) as to his 1956 income tax return, and was furnished with a copy of the 1955 return (Exhibit 6). He prepared the 1956 return (Exhibit 5) on instructions received from Mr. McDonald, and also in September 1958, after Mrs. McDonald’s death, prepared the return for 1957 (Exhibit 8). I am unable to find anything of significance in this evidence. In so far as the returns are based on any statement by Mr. McDonald to the witness that he personally owned the assets held in Mrs. McDonald’s name— they are inadmissible; in fact, however, Mr. King does not suggest that he received any such information. It is significant that in the T-3 Form attached to the return for 1956, the sum of $801.81 is said to be income paid or payable from his late wife’s estate and this by an added note is said to be “included in statement’’. If it be suggested that by his 1955 and 1956 returns, Mr. McDonald showed as his income not only that which he personally received, but that arising from assets in his wife’s name, that matter would be of no special significance in view of the liability he was under to pay tax on income from property transferred to his wife (see Section 21(1) of the Income Tax Act). In my view, none of the evidence of Mr. King is of assistance to the appellant.

Finally, there is the evidence of Albert W. McDonald, a stepson of the late Mrs. McDonald. He confirmed the fact that his father was a gambler and a bookmaker and that he had had but little education. His stepmother, he said, was somewhat better educated, being the daughter of a schoolteacher. It was she who was a housewife, banker and in charge of investments and all business matters. While he stated at one point that the father and stepmother discussed all investments together, he later said that there was only one discussion in his presence— the Bryant mortgage—which appears in Exhibit ‘‘A’’. The witness has not lived with his father since 1940.

Again, there is nothing in this evidence which throws any light on the circumstances surrounding any gifts made by the husband to his wife. A suggestion was made that due to the nature of the father’s business, he had no time to look after his investments, but such was not the case as is clearly shown by the evidence of both Mr. Barron and Mr. Tavender who were in contact with him on a good many occasions.

There is one other matter which I think is of some importance. Following Mrs. McDonald’s death, Mr. Tavender, who was acting as solicitor for the executor (the Royal Trust Company) had several interviews with Mr. McDonald regarding the particulars of the assets of her estate to be included in the succession duty return. Mr. Tavender had full knowledge of her assets which consisted of mortgages and interest in real property; the information as to the stocks and bonds and other assets was given by Mr. McDonald to the Royal Trust Company which in turn supplied it to Mr. Tavender. At that time, Mr. McDonald, it seems, was made fully aware of what assets were being included in the succession duty return, although perhaps not fully aware of the amount of tax which might be levied. He did not then suggest that he had any beneficial interest in any of them. The. return was filed on January 4, 1957. It was not until the end of that month that Mr. McDonald told Mr. Tavender that ‘‘his wife’s assets were in fact his own’’. There is a suggestion that: he had been so shocked by his wife’s sudden death that when the succession duty return was prepared, he did not fully realize the amount of tax involved.

It is submitted by the respondent on this matter that as Mr.. McDonald agreed that all the assets described in Exhibit “A” should be included in his wife’s estate, his later statement that the assets were his own was but an afterthought and made for the purpose of avoiding succession duty tax. In view of the conclusion which I have reached on the case as a whole, I find it unnecessary to consider what weight should be attached to: this matter which, if any, would be of assistance to the respondent only.

Keeping in mind the statement of Viscount Simonds in Shephard v. Cartwright (supra), that the presumption of advancement “may be rebutted but should not . . . give way to slight circumstances’’, my finding must be that even if it were found that all the assets in Exhibit ‘‘A’’ had their origin in Mr. McDonald or were the fruits thereof, there is no evidence of the slightest significance regarding the circumstances under which any one of the transfers from the husband to wife took place, or which tends to show that the husband had any intention of retaining any beneficial interest therein. No one really professed to have any knowledge of any individual transfer or the circumstances surrounding it. The whole of the evidence led by the appellant was made in an effort to establish a course of dealing from which it might be possible to infer that the wife was a trustee for the husband. That type of evidence was considered and held to be inadmissible by Viscount Simonds in the Shephard case (supra), where at p. 652 he said:

“Before, however, I ask whether evidence of any subsequent events is in this case admissible either because they formed part of the original transaction or because they were in the nature of admissions, I must shortly examine an argument which has been pressed on this appeal and appears to have carried particular weight with Romer, L.J. It is that an inference about the intention of the deceased at the time of the vesting of the relevant shares in the appellants can be drawn from his manner of dealing with other property which before or after the transaction in question he had transferred to one or other of his children. I cannot regard such evidence as admissible or, if admissible, as of any value. If the argument only means that such other transfers ought to be regarded as ‘part of the same transaction’ then it fails, because it is altogether too artificial so to regard them. Ii, on the other hand, the argument is intended to introduce a new category of admissible evidence, viz., acts which, though not part of the same transaction, yet indicate a course of dealing, I must reject it on the ground that it cannot be supported by reason or authority. This form of evidence was expressly rejected by Lord Eldon, L.C., in Murless v. Franklin (1 Swan. at p. 19), and I am not aware of any attempt having been again made to introduce it.’’

In my view, after a careful consideration of the evidence, the appellant has wholly failed to rebut the presumption that in placing assets in the name of his wife, Mr. McDonald intended that they were gifts made to her by way of advancement.

I have not overlooked the suggestion on the part of the appellant that no person would voluntarily divest himself of all his assets and run the risk of being left penniless (see Pahara v. Pahara, [1946] S.C.R. 89). In this case, there is no evidence to establish what part of his assets had been transferred by McDonald to his wife, but there is evidence which indicates that he had always owned an interest in the gambling clubs, taxicab business, and in McDonald Agencies, Ltd. Reference may be made to Walsh v. Walsh, [1948] 1 D.L.R. 630, and to Hyman v. Hyman, [1934] 4 D.L.R. 532.

Accordingly, and for the reasons which I have stated, the appeal will be dismissed and the assessment affirmed. The respondent is entitled to his costs after taxation.

Judgment accordingly.