Gibson,
J.:—This
is
an
appeal
from
a
decision
of
the
Tax
Appeal
Board
(37
Tax
A.B.C.
65)
dated
November
13,
1964
in
respect
of
the
estate
tax
assessment
dated
March
26,
1964
of
James
M.
McLean,
executor
under
the
will
of
Charles
Harold
Jaimet
of
the
City
of
Hamilton
in
the
County
of
Wentworth.
The
issue
in
this
appeal
is
the
determination
of
the
true
computation
of
the
aggregate
net
value
of
the
property
passing
on
the
death
of
this
deceased
in
so
far
as
such
property
relates
to
a
lease
of
premises
situate
at
65
Markland
Street,
Hamilton,
Ontario.
Among
the
facts
agreed
to
by
the
parties
are
the
following:
1.
At
his
death
the
deceased
was
a
tenant
of
the
said
premises
under
a
written
lease
made
in
pursuance
of
The
Short
Forms
of
Leases
Act
of
the
Province
of
Ontario,
which
provided
for
a
monthly
rental
of
$300
per
month
and
the
term
of
which
did
not
expire
until
January
31,.
1965.
2.
The
said
lease
constituted
property
passing
on
the
death
of
the
deceased.
3.
The
economic
rental
for
the
demised
premises
at
the
date
of
death
of
the
deceased
was
$200.
per
month.
4.
The
executor
of
the
estate
of
the
deceased:
would,
at
the
date
of
death
of
the
deceased,
have
been
obliged
to
pay
in
the
market
to
a
substantial
person
in
order
to
induce
him.
to
take
an
assignment
of
the
lease
(including
an
assumption
of
the
obligations
thereunder)
the
sum
of
$3,460.
5.
The
value;
at
the
date
of
death
of
the
deceased.
of
the
remainder
of
the
term
of
the
lease
was,
in
the
absence
of
any
obligation
to
pay
rent,
$4,340.
\
'
6.
At
the
date
of
death
of
the
deceased
all
rent
which
had
accrued
due
under
the
lease
up
to
November
30,
1962
had
been
paid
by
the
deceased.
The
appellant
submits
that
this
leasehold
interest
had
no
“value”
within
the
meaning
of
Section
58(1)
(s)
(ii)
of
the
Estate
Tax
Act
and
therefore
was
not
‘‘property’’
as
defined
in
Section
58(1)
(o)
of
the
Act
and
should
not
be
included
in
computing
aggregate
net
value
of
the
property
passing
on
the
death
of
this
deceased
under
Section
3
of
the
Act,
because
there
was
no
‘‘fair
market
value’’
of
this
leasehold
interest
in
that
‘‘the
economic
rental
for
the
demised
premises
at
the
date
of
the
death
of
the
deceased
was
$200
per
month
and
the
cost
of
collecting
this
economic
rental
of
$200
per
month
was
the
rent
payable
under
the
lease,
namely
$300
per
month”.
At
the
same
time,
the
appellant
submits
that
he
should
be
entitled
to
deduct
in
computing
such
aggregate
net
value
as
a
debt
of
the
deceased
the
sum
of
$7,800
being
the
rental
payable
of
$300
per
month
for
the
unexpired
term
of
this
lease.
Counsel
submits
that
the
respondent
in
making
his
final
assessment
:
(a)
added
the
sum
of
$4,340
to
the
aggregate
net
value
of
the
property
passing
on
the
death
of
the
deceased
being
the
value
at
the
date
of
death
of
the
deceased,
of
the
remainder
of
the
term
of
this
lease,
in
the
absence
of
any
obligation
to
pay
rent,
pursuant
to
the
provisions
of
Section
3
of
the
Estate
Tax
Act;
and
(b)
deducted
the
sum
of
$7,800
as
a
debt
of
the
deceased,
being
the
rental
payable
over
the
balance
of
the
term
remaining
of
this
lease
at
$300
pursuant
to
the
provisions
of
Section
5
of
the
Estate
Tax
Act;
(note
that
the
sum
of
$4,340
is
a
capitalized
figure,
whereas
the
sum
of
$7,800
is
not,
and
therefore
if
this
assessment
is
correct,
the
appellant
was
given
a
slightly
larger
deduction
than
he
is
legally
entitled
to),
and
that
the
respondent
could
also
have
legally
assessed
this
leasehold
interest
on
a
net
value
basis.
It
is
patent
that
such
an
item
of
property
as
a
leasehold
interest
for
a
number
of
purposes
may
have
(i)
no
market
value,
(ii)
a
plus
value,
or
(iii)
a
minus
value.
(See
Re
City
of
Toronto
and
McPhedran,
54
O.L.R.
87,
Middleton,
J.A.
at
p.
91
;
City
Parking
Ltd.
v.
City
of
Toronto,
19
D.L.R.
689;
[1961]
S.C.R.
336;
Chailies,
The
Law
of
Expropriation,
pages
158
et
seq.
;
In
re
Brand,
[1945]
Northern
Ireland
Law
Reports
1;
In
re
Will
of
Inglis
(1890),
8
N.Z.L.R.
28.)
For
the
purpose
of
the
Estate
Tax
Act,
S.C.
1958,
c.
29
as
amended,
a
leasehold
interest
as
an
item
of
property
has
no
market
value
when
a
tenant
is
paying
pursuant
to
his
lease
contract
the
full
rental
that
the
property
is
worth
(i.e.,
the
economic
rental
or
in
other
words
the
‘‘fair
market
value’’
within
the
meaning
of
Section
58(1)
(s)
(ii)
of
the
Estate
Tax
Act);
when
a
tenant
is
paying
less
than
the
economic
rental
his
leasehold
interest
as
an
item
of
property
has
a
plus
value;
and
when
a
tenant
is
paying
more
than
the
economic
rental
it
has
a
minus
value.
The
subject
lease
in
this
case
has
a
minus
value
as
an
item
of
property
for
estate
tax
purposes.
It
is
the
amount
of
the
burden
of
this
leasehold
on
this
estate
that
has
to
be
assessed
and
allowed
to
be
deducted
from
the
value
of
the
deceased’s
estate
before
determining
the
balance
on
which
the
estate
tax
is
payable.
This
can
be
done
in
two
ways,
namely
by
doing
it
the
way
the
Minister
has
done,
as
referred
to
above
in
these
reasons,
or
by
valuing
it
on
a
net
basis,
that
is
by
calculating
what
the
executor
of
this
estate
would
have
been
obliged
to
pay
in
this
market
to
a
substantial
person
in
order
to
induce
him
to
take
an
assignment
of
this
lease
including
an
assumption
of
the
obligations
thereunder.
Such
a
sum
the
parties
agree
in
this
case
would
be
$3,400.
By
either
method
the
same
result
is
obtained.
The
appeal
is
therefore
dismissed
with
costs.
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