Ritchie,
J.:—This
is
an
appeal
from
a
judgment
rendered
by
Mr.
Justice
Cattanach
in
the
Exchequer
Court
of
Canada
affirming
an
assessment
made
by
the
Minister
of
National
Revenue
under
the
Estate
Tax
Act,
S.C.
1958,
c.
29,
whereby
he
disallowed
a
claim
for
deduction
made
by
the
executor
of
the
estate
of
Dorothy
Elgin
Towle
deceased,
in
respect
of
a
gift
made
in
the
residuary
clause
of
her
will
to
‘‘the
Medical
Alumnae
Association
of
the
University
of
Toronto’’,
by
which
name
it
is
agreed
that
the
testator
intended
to
refer
to
the
‘‘Medical
Alumni
Association
of
the
University
of
Toronto’’
(hereinafter
called
the
44
Association”).
In
reaching
his
conclusion
the
Minister
made
the
express
finding
that:
44
.
.
.
the
Medical
Alumnae
Association
of
the
University
of
Toronto
is
not
a
charitable
organization
and
the
value
of
the
gift
made
to
it
by
the
late
Dorothy
Elgin
Towle
is
properly
disallowed
as
a
deduction
under
paragraph
(d)
of
subsection
(1)
of
Section
7
of
the
Act
for
the
purpose
of
computing
the
aggregate
taxable
value
of
the
property
passing
on
the
death
of
the
said
Dorothy
Elgin
Towle.”
The
late
Dorothy
Elgin
Towle,
who
was
a
physician
and
a
member
of
the
Association,
died
on
July
11,
1962,
having
first
made
her
last
will
and
testament,
probate
of
which
was
duly
granted
to
the
appellant,
the
executor
therein
named,
and
whereby
she
provided
for
the
disposition
of
the
balance
of
the
residue
of
her
estate
by
directing
her
trustee
:
4
To
pay
and
distribute
the
balance
of
the
residue
of
my
said
estate
to
the
Medical
Alumnae
Association
of
the
University
of
Toronto
to
establish
a
student
loan
fund
to
be
known
as
the
‘Robert
Elgin
Towle
Loan
Fund’
to
be
supervised
and
managed
by
the
said
Medical
Alumnae
Association
for
the
purpose
of
loaning
funds
to
women
medical
students
of
the
University
of
Toronto
who
are
in
need
of
financial
assistance
during
their
course
in
medicine
and
any
loan
made
under
such
fund
to
be
paid
after
graduation
without
interest
upon
such
terms
and
conditions
as
may
be
made
from
time
to
time
by
the
said
Medical
Alumnae
Association.’’
The
italics
are
my
own.
It
is
agreed
between
the
parties
that
the
trust
for
which
provision
is
made
in
this
paragraph
of
the
testator’s
will
is
a
44
trust
for
charitable
purposes’’
but
the
learned
trial
judge
took
the
view
that
it
had
not
been
established
that
the
gift
was
4
absolute
and
indefeasible’’
or
that
the
Association
was
‘‘an
organization
constituted
exclusively
for
charitable
purposes’’
within
the
meaning
of
Section
7(1)(d)
of
the
Act
which
reads
as
follows:
“7.
(1)
For
the
purpose
of
computing
the
aggregate
taxable
value
of
the
property
passing
on
the
death
of
a
person,
there
may
be
deducted
from
the
aggregate
net
value
of
that
property
.
.
.
such
of
the
following
amounts
as
are
applicable:
(d)
the
value
of
any
gift
made
by
the
deceased
whether
during
his
lifetime
or
by
his
will,
where
such
gift
can
be
established
to
have
been
absolute
and
indefeasible,
to
(i)
any
organization
in
Canada
that,
at
the
time
of
the
making
of
the
gift
and
of
the
death
of
the
deceased,
was
an
organization
constituted
exclusively
for
charitable
purposes,
all
or
substantially
all
of
the
resources
of
which,
if
any,
were
devoted
to
charitable
activities
carried
on
or
to
be
carried
on
by
it
or
to
the
making
of
gifts
to
other
such
organizations
in
Canada,
all
or
substantially
all
of
the
resources
of
which
were
so
devoted,
or
to
any
donee
described
in
subparagraph
(11),
and
no
part
of
the
resources
of
which
was
payable
to
or
otherwise
available
for
the
benefit
of
any
proprietor,
member
or
shareholder
thereof,
or
.
.
.”
The
Association
was
incorporated
pursuant
to
the
laws
of
the
Province
of
Ontario
by
Letters
Patent
dated
April
28,
1947,
for
the
following
purposes
and
objects:
(a)
TO
maintain
and
promote
the
interest
of
the
graduates
in
medicine
of
the
University
of
Toronto
in
their
Alma
Mater
;
(b)
TO
encourage
and
cultivate
good-fellowship
among
the
members
of
the
Association
;
(¢)
TO
promote
and
enlarge
the
usefulness
and
influence
of
the
Provincial
University
;
(d)
TO
consider
and
make
recommendations
on
matters
pertaining
to
the
welfare
of
the
Faculty
of
Medicine
of
the
University
of
Toronto;
(e)
Generally
to
promote
the
science
and
art
of
medicine;
(f)
TO
administer
and
invest
funds
received
from
life
members
of
the
Association
and
any
other
funds
and
bequests
of
which
the
Association
may
from
time
to
time
have
custody
and
to
apply
and
disburse
the
moneys
so
administered
in
accordance
with
the
provisions
and
conditions
relating
to
the
same;
and
(g)
TO
do
all
such
other
things
as
are
incidental
or
conducive
to
the
attainment
of
the
above
objects.
In
my
view
the
purposes
described
in
paragraphs
(c)
and
(e)
of
these
Letters
Patent
are
‘‘charitable
purposes’’.
In
the
course
of
the
judgment
in
the
House
of
Lords
in
Commissioners
for
Special
Purposes
of
Income
Tax
v.
Pemsel,
[1891]
A.C.
531
at
580,
Lord
McNaghten
observed
:
‘‘
That
according
to
the
law
of
England
a
technical
meaning
is
attached
to
the
word
‘charity’,
and
to
the
word
‘charitable’
in
such
expressions
as
‘charitable
uses’,
‘charitable
trusts’,
or
‘charitable
purposes’,
cannot,
I
think,
be
denied.’’
and
he
proceeded
at
page
583
to
define
that
meaning
in
the
following
terms:
“
‘Charity’
in
its
legal
sense
comprises
four
principal
divisions
:
trusts
for
the
relief
of
poverty
;
trusts
for
the
advancement
of
education;
trusts
for
the
advancement
of
religion
;
and
trusts
for
other
purposes
beneficial
to
the
community,
not
falling
under
any
of
the
preceding
heads.’’
This
definition
has
received
general
acceptance
in
this
country,
subject
to
the
consideration
that
in
order
to
qualify
as
“charitable”
the
purposes
must,
to
use
the
words
of
Lord
Wrenbury
in
Verge
v.
Summerville,
[1924]
A.C.
496
at
499,
be
“For
the
benefit
of
the
community
or
of
an
appreciably
important
class
of
the
community”.
See
also
In
re
Cox
Baker
v.
National
Trust
Company
et
al.,
[1953]
1
S.C.R.
94,
which
was
affirmed
in
the
Privy
Council
in
[1955]
A.C.
627.
In
light
of
this
definition
it
seems
to
me
that
an
organization
which
had
as
its
sole
object
‘‘the
promotion
and
enlargement
of
the
usefulness
and
influence
of
the
Provincial
University’’
would
be
‘‘an
organization
constituted
exclusively’’
for
the
charitable
purposes
of
‘‘the
advancement
of
education’’
and
this
view
is,
in
my
opinion,
borne
out
by
the
decision
of
the
Court
of
Appeal
in
England
in
Rex
v.
Special
Commissioners
of
Income
Tax;
University
College
of
North
Wales,
78
L.J.K.B.
576,
where
it
was
held
that
a
college
which
was
dependent
for
its
sources
of
income
on
voluntary
donations,
devises
and
bequests
and
a
government
grant
in
addition
to
the
fees
paid
by
pupils
was
a
charity
within
the
meaning
of
the
Income
Tax
Acts
of
1842
and
1853.
I
am
equally
satisfied
that
an
organization
which
had
as
its
sole
object
‘‘Generally
to
promote
the
science
and
art
of
medicine”
would
be
‘‘an
organization
constituted
exclusively
for
charitable
purposes’’.
The
purpose
described
in
paragraph
(e)
of
the
Letters
Patent
appears
to
me
to
come
within
the
language
used
by
Lord
Normand
in
Royal
College
of
Surgeons
of
England
v.
National
Provincial
Bank
Ltd.,
[1952]
A.C.
631,
where
the
House
of
Lords
was
required
to
decide
whether
a
gift
to
the
Royal
College
of
Surgeons
was
a
charitable
gift
so
as
to
avoid
the
application
of
the
rule
against
perpetuities
and
in
o
doing
considered
one
of
the
recitals
in
the
Royal
Charter
of
the
College
where
it
was
stated
:
“It
appears
to
be
us
that
the
establishment
of
a
College
of
Surgeons
will
be
expedient
for
the
due
promotion
and
encouragement
of
the
study
and
practice
of
the
said
art
and
science
’
of
surgery.
’
’
At
page
641
Lord
Normand
said
:
66
the
next
step
is
to
construe
that
recital.
The
words
the
study
and
practice
of
the
art
and
science’
of
surgery
do
not,
in
my
opinion,
mean
the
academic
study
and
professional
practice
of
the
arts
and
science
of
surgery
’
;
they
signify
rather
the
acquisition
of
knowledge
and
skill
in
surgery
both
by
abstract
study
and
by
the
exercise
of
the
art
in
the
dissecting
room
and
the
anatomy
theatre,
and
they
are
capable
of
covering
both
the
discovery
of
new
knowledge,
which
is
the
fruit
of
research,
and
the
learning
of
existing
knowledge
either
by
students
who
are
qualifying
or
by
qualified
surgeons
desirous
of
improving
their
knowledge
and
skill.
On
that
construction
the
professed
objects
of
the
college
all
fall
into
the
categories
of
the
advancement
of
science
or
of
the
advancement
of
education,
and
are
charitable.’’
It
is
perhaps
desirable
to
observe
that
when
the
purpose
described
in
paragraph
(e)
is
read
in
its
context,
it
is
apparent
that
it
relates
to
the
‘‘promotion
of
the
science
and
art
of
medicine”
through
the
medium
of
the
Faculty
of
Medicine
at
the
University
of
Toronto.
If
the
purposes
described
in
paragraphs
(c)
and
(e)
of
the
Letters
Patent
are
exclusively
charitable
as
I
think
they
are,
then
it
remains
to
be
determined
whether
the
other
objects
and
purposes
for
which
the
Association
was
incorporated
are
such
as
to
deprive
it
of
its
character
as
a
charity.
In
this
regard
I
subscribe
to
the
reasoning
of
Denning,
L.J.
in
British
Launder
er
s’
Research
Association
v.
Hendon
Rating
Authority,
[1949]
1
K.B.
462
at
467,
in
which
case
the
Court
of
Appeal
was
considering
whether
the
Association
with
which
it
was
concerned
was
“instituted
for
the
purposes
of
science,
literature
or
the
fine
arts
exclusively’’
within
the
meaning
of
Section
(1)
of
the
Scientific
Societies
Act,
1843
and
Denning,
L.J.
had
occasion
to
observe
:
science
exclusively’.
I
do
not
think
this
question
is
to
be
solved
by
looking
at
the
royal
charter
alone
and
construing
it
as
if
you
were
sitting
aloft
in
an
ivory
tower,
oblivious
of
the
purposes
which
the
institution
has
in
fact
pursued.
That
would
be
proper
enough
if
you
had
only
to
consider
the
purposes
for
which
the
society
was
originally
instituted.
But
that
is
not
the
test.
A
society
may
be
originally
instituted
for
certain
purposes
and
afterwards
adopt
other
purposes.
You
then
have
to
ask
yourself
this
question:
for
what
purpose
is
the
society
at
present
instituted
V
’
That
the
test
of
whether
an
organization
is
“constituted
exclusively
for
charitable
purposes’’
within
the
meaning
of
Section
7(1)
(d)
(i)
of
the
Estate
Tax
Act
is
one
which
must
be
applied
according
to
the
association’s
activities
‘‘at
the
time
of
the
making
of
the
gift
and
of
the
death
of
the
deceased’’,
is
clear
from
the
wording
of
the
section
itself,
and
this
is
further
borne
out
by
the
fact
that
in
order
to
be
entitled
to
the
deduction,
the
organization
is
required
to
be
one
‘‘all
or
substantially
all
of
the
resources
of
which,
if
any,
were
devoted
to
charitable
activities
carried
on
or
to
be
carried
on
by
it
or
to
the
making
of
gifts
to
other
such
organizations
in
Canada
.
.
.
”,
(The
italics
are,
of
course,
my
Own.)
The
evidence
concerning
the
activities
to
which
the
Association
was
devoted
at
the
relevant
time
is
summarized
by
the
learned
trial
judge
in
the
following
passage
of
his
reasons
for
judgment:
“It
is
sufficient
to
summarize
such
evidence
in
general
terms.
The
Association
had
a
small
salaried
staff
which
worked
in
premises
put
at
the
disposal
of
the
Association
by
the
University
of
Toronto
without
charge.
The
Association
held
its
annual
meeting
in
conjunction
with
an
annual
dinner.
The
staff
published
a
magazine
for
the
members
and
supplied
services
to
the
members
of
the
various
graduating
years
to
encourage
them
to
have
reunion
meetings.
The
staff
carried
on
the
usual
activities
designed
to
induce
members
to
pay
their
annual
fees
and
to
subscribe
to
the
funds
administered
by
the
Association.
It
was
manifest,
however,
that
by
far
the
greatest
part
of
the
Association’s
effort,
during
recent
years
in
any
event,
was
the
operation
of
scholarship,
bursary
and
loan
funds
for
medical
students
at
the
University
of
Toronto,
making
of
gifts
to
be
spent
by
the
Dean
of
the
Faculty
of
Medicine
and
the
President
of
the
University
to
be
expended
in
their
official
capacities
and
other
activities
designed
to
supplement
the
work
of
the
Faculty
of
Medicine
at
the
University
of
Toronto.
’
’
I
am
of
opinion
that
this
excerpt
from
the
learned
trial
judge’s
reasons
for
judgment
constitutes
a
finding,
with
which
I
agree,
that
by
far
the
greatest
part
of
the
Association’s
effort
during
recent
years
has
been
devoted
to
charitable
purposes.
Counsel
on
behalf
of
the
respondent
contended
that
the
‘
making
of
gifts
to
be
spent
by
the
Dean
of
the
Faculty
of
Medicine
and
the
President
of
the
University
to
be
expended
in
their
official
capacities’’
did
not
constitute
the
making
of
gifts
for
charitable
purposes
and
in
so
doing
he
referred
to
the
well-
known
case
of
Dunne
v.
Byrne,
[1912]
A.C.
407,
but
in
this
regard
I
take
the
principle
to
have
been
accurately
stated
by
Jenkins,
L.J.
in
In
re
Spensley’s
Wall
Trusts,
[1954]
1
All
E.R.
178
at
183
where
he
adopted
the
language
suggested
by
counsel
in
that
case
and,
after
referring
to
the
cases
summarized
in
In
re
Flinn,
[1948]
Ch.
241,
he
went
on
to
say:
“The
principle
deducible
from
those
authorities
was
thus
stated
by
counsel
:
‘
Where
there
is
a
gift
to
a
person
who
holds
an
office
the
duties
of
which
are
in
their
nature
wholly
charitable
and
the
gifts
is
made
to
him
in
his
official
name
and
by
virtue
of
his
office,
then,
if
the
purposes
are
not
expressed
in
the
gift
itself,
the
gift
is
assumed
to
be
for
the
charitable
purposes
inherent
in
the
office.’
”’
This
statement
of
principle
was
reiterated
by
Jenkins,
L.J.
in
Re
Rumball,
[1955]
3
All
E.R.
71
at
79.
The
same
question
was
dealt
with
in
this
Court
by
Judson,
J.
in
Blais
v.
Touchet,
[1963]
S.C.R.
358
where
there
was
a
gift
to
the
‘‘Bishop
of
Prince
Albert,
for
his
works,
but
for
such
of
the
works
as
would
aid
the
cause
of
the
French
Canadians
of
his
diocese’’.
After
having
referred
to
the
Judgment
of
Evershed
M.R.
in
In
re
Rumball,
supra,
Judson,
J.
went
on
to
say
:
“A
recent
author,
Keeton
in
The
Modern
Law
of
Charities
(1952)
p.
65,
has
commented
that
this
branch
of
the
law
of
charities
is
suffering
from
over-technicality.
I
join
with
others
who
have
said
that
they
do
not
wish
to
add
to
it.
I
therefore
follow
the
line
of
reasoning
in
In
re
Garrad,
[1907]
1
Chancery
382)
In
re
Flinn
and
In
re
Rumball
and
hold
that
this
particular
gift
to
the
bishop
is
charitable
by
virtue
of
his
office
and
that
the
testator
did
not
step
outside
the
charitable
field
in
imposing
the
limitation
to
work
among
French
Canadians.”
As
I
have
indicated,
I
regard
the
‘‘gifts
to
be
spent
by
the
Dean
.
.
.
and
the
President
of
the
University
to
be
expended
in
their
official
capacities”
as
charitable.
Having
found,
as
I
think
he
did,
that
by
far
the
greatest
part
of
the
Association’s
effort
was
charitable,
the
learned
trial
judge
went
on
to
say:
“However,
there
is
no
evidence
upon
which
I
can
make
a
finding
that
the
carrying
on
of
activities
such
as
those
referred
to
in
the
immediately
preceding
sentence
constitutes
the
exclusive
object
of
the
Association
and
that
the
other
activities
of
the
Association
are
merely
subsidiary
and
incidental
thereto.
While
such
activities
may
have
tended
to
overshadow,
at
times,
in
the
minds
of
the
officers
of
the
Association,
the
activities
that
were
designed,
for
example,
‘to
encourage
and
cultivate
good-fellowship
among
the
members
of
the
Association’,
these
latter
activities,
and
probably
others,
in
my
view,
never
ceased
to
have
their
place
as
principal
reasons
for
the
existence
of
the
Association.”
In
my
view
the
activities
of
the
Association
which
are
calculated
to
ensure
its
continued
existence
are
to
be
distinguished
from
the
purposes
for
which
it
exists.
If,
as
I
think
to
be
the
case,
the
objects
of
promoting
the
usefulness
and
influence
of
the
University
and
generally
promoting
the
science
and
art
of
medicine
are
exclusively
charitable
purposes,
then
it
seems
to
me
to
be
clear
that
the
means
by
which
these
purposes
are
to
be
promoted
constitute
an
essential
ingredient
of
the
purposes
themselves.
It
having
been
established
‘‘that
by
far
the
greatest
part
of
the
Association’s
effort”
was
devoted
to
charitable
purposes
“at
the
time
of
the
making
of
the
gift
and
the
time
of
the
death
of
the
deceased’’
it
remains
to
be
determined
whether
the
other
purposes
of
the
Association
can
be
said
to
be
‘‘an
end
in
themselves”
to
use
the
language
employed
by
Lord
Denning
in
the
British
Launder
er
s’
Research
Association
case.
In
this
regard
I
only
find
it
necessary
to
refer
to
the
objects
and
purposes
described
in
paragraphs
(a)
and
(b)
of
the
objects
clause
of
the
Letters
Patent
of
the
Association.
The
object
described
in
paragraph
(a),
i.e.
‘To
maintain
and
promote
the
interest
of
the
graduates
in
medicine
of
the
University
of
Toronto
in
their
Alma
Mater’’,
appears
to
me
to
be
one
which
is
singularly
ill
adapted
to
being
described
as
an
end
in
itself.
I
find
it
difficult
to
attach
any
reality
to
the
task
of
maintaining
and
promoting
the
interests
of
the
graduates
of
a
univer-
sity
in
their
alma
mater
unless
that
interest
is
being
maintained
and
promoted
for
some
purpose.
On
the
other
hand,
the
fulfilment
of
this
object
in
my
opinion
provides
an
obvious
means
to
promote
and
enlarge
‘‘the
usefulness
and
influence
of
the
Provincial
University’’.
I
think,
therefore,
that
the
object
described
in
paragraph
(a)
is
to
be
treated
as
being
“a
means
to
the
fulfilment”
of
the
purpose
described
in
paragraph
(c).
With
the
greatest
respect
for
those
who
may
hold
a
different
opinion,
I
also
have
the
very
greatest
difficulty
in
viewing
the
object
described
in
paragraph
(b),
i.e.,
“To
encourage
and
cultivate
good
fellowship
among
the
members
of
the
Association
’
’
as
being
an
end
in
itself.
It
is
true
that
many
associations
do
exist
for
the
purpose
of
good
fellowship
alone,
but
the
Medical
Alumni
Association
of
the
University
of
Toronto
is
composed
of
doctors
of
medicine
whose
common
bond
is
an
interest
in
their
profession
and
in
the
University
of
which
they
are
graduates,
and
as
by
far
the
greatest
part
of
its
effort
is
devoted
to
“activities
designed
to
supplement
the
work
of
the
Faculty
of
Medicine
at
the
University
of
Toronto”
it
appears
to
me
to
be
inappropriate
to
proceed
on
the
assumption
that
the
cultivation
of
good
fellowship
as
an
end
in
itself
has
any
place
in
the
structure
of
such
an
association.
The
Association
holds
an
annual
meeting
at
which
the
members
discuss
matters
of
common
professional
interest
and
during
that
meeting
an
annual
dinner
is
held
at
some
expense
to
the
Association.
It
is
this
annual
dinner
which
is
singled
out
by
counsel
for
the
respondent
as
being
emblematic
of
the
fact
that
the
cultivation
of
good
fellowship
for
its
own
sake
is
an
additional
purpose
of
the
Association
which
detracts
from
the
exclusively
charitable
character
of
the
purposes
to
which
it
is
devoting
the
greatest
part
of
its
effort.
In
my
view,
social
gatherings
of
the
members
are
in
no
way
inconsistent
with
the
exclusively
charitable
purposes
of
any
charitable
organizations;
I
think,
on
the
other
hand,
that
the
holding
of
dinners,
luncheons,
teas,
receptions
and
other
such
gatherings
are
important
‘‘means
to
the
fulfilment’’
of
the
purposes
of
such
organizations
and
I
am
accordingly
of
the
opinion
that
the
object
described
in
paragraph
(d)
of
the
Letters
Patent
does
not
constitute
an
end
in
itself
but
is
rather
to
be
regarded
as
a
means
of
furthering
the
purpose
to
which
the
Association’s
main
effort
is
devoted.
It
appears
to
me
that
the
annual
meeting,
the
annual
dinner
and
the
magazine
which
is
circulated
amongst
the
members
are
clearly
designed
as
means
of
keeping
the
Association
alive
and
that
in
this
sense,
they
indeed
‘‘have
their
place
as
principal
reasons
for
the
existence
of
the
Association;
but
under
the
circumstances
I
do
not
think
that
these
activities
can
be
regarded
as
anything
more
than
methods
of
achieving
the
charitable
ends
to
which
the
learned
trial
Judge
has
referred.
I
am
far
from
suggesting
that
all
university
alumni
associations
are
‘‘constituted
exclusively
for
charitable
purposes’’
but
I
think
when
the
objects
of
the
present
Association
are
considered
in
conjunction
with
the
purposes
to
which
it
has
been
found
to
have
been
devoting
the
greatest
part
of
its
effort,
that
it
is
one
to
which
the
provisions
of
Section
7(1)
(d)
(i)
do
apply.
I
am
of
opinion
also
that
after
having
paid
for
its
operational
and
promotional
expenses
‘‘all
or
substantially
all”
of
its
remaining
resources
‘‘were
devoted
to
charitable
activities
carried
on
or
to
be
carried
on
by
it
.
.
.
”’
The
learned
trial
Judge
was,
however,
also
of
opinion
that
the
deduction
for
which
provisions
is
made
in
Section
7
(1)
(d)
of
the
Act
could
not
be
allowed
in
respect
of
the
gift
here
in
question
because
it
was
in
his
opinion
not
established
‘‘to
have
been
absolute
and
indefeasible’’.
In
this
regard
the
learned
trial
judge
said,
in
part:
“Dealing
first
with
the
question
whether
the
direction
in
the
testatrix’s
will
to
pay
the
residue
of
her
estate
to
the
Medical
Alumni
Association
to
establish
a
student
loan
fund
for
the
purpose
of
loaning
funds
to
women
medical
students,
created
an
absolute
gift
to
the
Association
within
the
introductory
portion
of
paragraph
(d)
of
subsection
(1)
of
Section
7
of
the
Estate
Tax
Act.
I
am
relieved
of
the
necessity
of
deciding
the
character
of
the
monies
in
the
hands
of
the
Association
by
agreement
between
the
parties,
in
effect,
that
the
monies
are
received
by
the
Association
in
trust
for
charitable
purposes.
That
being
so,
I
am
of
the
opinion
that
there
was
no
‘gift’
to
the
Association
and
certainly
therefore
no
‘
absolute
’
gift
to
the
Association
within
the
meaning
of
paragraph
(d).
The
purpose
of
the
said
paragraph
(d)
is
to
provide
a
means
whereby
gifts
for
charitable
purposes
can
be
made
so
as
not
to
attract
estate
tax
but
Parliament
has
not
seen
fit,
in
the
Estate
Tax
Act,
to
provide
an
exemption
for
charitable
trusts.’’
In
support
of
this
proposition,
the
learned
trial
judge
refers
to
the
case
of
M.N.R.
v.
Trusts
and
Guarantee
Company,
Limited,
[1940]
A.C.
138
at
149;
[1938-39]
C.T.C.
371.
In
that
case
the
contention
that
the
donee
was
a
charitable
institution
was
found
to
be
“obviously
absurd’’
and
with
the
greatest
respect
this
factor
appears
to
me
to
distinguish
it
from
the
present
case.
In
my
respectful
opinion,
the
reasons
for
judgment
of
Thurlow,
J.
in
Halley
Estate
v.
M.N.R.,
[1963]
C.T.C.
108
which
were
endorsed
without
further
comment
by
this
Court
appear
to
me
to
be
entirely
relevant
to
the
present
case
and
I
adopt
them
as
explaining
the
true
meaning
of
the
word
‘‘absolute’’
as
used
in
Section
7(1)
(d).
Thurlow,
J.
there
said
of
the
provisions
of
Section
7
(1)
(d)
as
it
then
read:
“The
intention
of
this
provision
is
apparently
to
permit
the
deduction
of
the
value
of
what
is
given
to
the
particular
recipients
and
with
this
in
mind
it
seems
to
me
that
it
is
more
natural
to
interpret
the
word
‘absolute’
in
the
paragraph
from
the
point
of
view
of
the
recipient
than
from
the
point
of
view
of
the
deceased
and
as
referring
to
the
irrevocable
and
undefeatable
vesting
of
the
subject
matter
of
the
gift
in
the
recipient
rather
than
to
the
unlimited
extent
of
the
interest
given
to
the
recipient.
.
.
.
Moreover
while
I
can
see
no
reason
why
Parliament
should
have
intended
to
draw
a
distinction
between
a
gift
of
an
unlimited
interest
and
an
indefeasible
gift
for
a
lesser
interest
and
to
permit
deduction
of
the
value
in
the
one
case
but
not
in
the
other
it
is
not
difficult
to
understand
that
in
authorizing
the
deduction
of
the
value
of
a
gift
to
such
a
body
Parliament
would
be
concerned
to
ensure
that
the
deduction
should
not
be
permitted
when
because
of
the
provisions
attaching
to
the
gift,
the
body
referred
to
in
Section
7(1)
(d)
might
never
receive
it.
The
word
used
is
an
apt
one
to
make
such
a
distinction
and
secure
this
object.
I
am
accordingly
of
the
opinion
that
the
word
‘absolute’
in
Section
7(1)
(d)
should
be
interpreted
as
meaning
vested
and
indefeasible.”
In
the
present
case
the
fund
making
up
‘‘the
balance
of
the
residue’’
of
the
estate
was
made
the
subject
of
a
vested
indefeasible
gift
to
the
Association
and
although
the
gift
was
stamped
with
a
trust
it
did
not
contain
any
provision
which
might
result
in
it
being
divested
so
that
the
Association
might
never
receive
it.
It
was
an
indefeasible
gift
of
something
less
than
an
unlimited
interest
and
accordingly,
in
my
view,
it
was
‘‘absolute
and
indefeasible
’
’
within
the
meaning
of
the
section.
Counsel
for
the
Minister
of
National
Revenue
advanced
a
further
argument
in
support
of
his
contention
that
Section
7(l)(d)(i)
did
not
apply
to
this
Association
and
in
so
doing
referred
to
the
provisions
of
Section
115(1)
and
(5)
of
The
Corporations
Act,
R.S.O.
1960,
c.
71,
which
read
as
follows:
“115.
(1)
A
corporation
may
pass
by-laws
providing
that
upon
its
dissolution
and
after
the
payment
of
all
debts
and
liabilities
its
remaining
property
or
part
thereof
shall
be
distributed
or
disposed
of
to
charitable
organizations
or
to
organizations
whose
objects
are
beneficial
to
the
community.
(5)
In
the
absence
of
such
by-law
and
upon
the
dissolution
of
the
corporation
the
whole
of
its
remaining
property
shall
be
distributed
equally
among
the
members
or,
if
letters
patent,
supplementary
letters
patent
or
by-laws
so
provide,
among
the
members
of
a
class
or
classes
of
members.”
It
was
argued
that
as
no
such
by-law
had
been
passed
by
the
Association,
a
part,
of
its
resources
could
on
dissolution
become
available
for
the
benefit
of
a
member
thereof
and
that
it
was
therefore
not
an
organization
entitled
to
the
benefit
of
the
deduction
for
which
provision
is
made
in
Section
7(l)(d)(i).
The
fallacy
of
this
argument
appears
to
me
to
be
that
Part
III
of
The
Corporations
Act,
in
which
Section
115
appears,
applies
to
two
different
kinds
of
corporations.
This
is
apparent
from
the
provisions
of
Section
101
which
read
as
follows
:
“A
corporation
may
be
incorporated
to
which
Part
V
or
Part
VI
applies
or
that
has
objects
that
are
of
a
patriotic,
religious,
philanthropic,
charitable,
educational,
agricultural,
scientific,
artistic,
social,
professional,
fraternal,
sporting
or
athletic
nature
or
that
are
of
any
other
useful
nature.’’
(The
italics
are
my
own.)
In
the
case
of
corporations
other
than
Co-operative
Corporations
(Part
V)
and
Insurance
Corporations
(Part
VI)
the
members
are
expressly
excluded
from
participation
in
‘‘any
profits
or
other
accretions
to
the
corporation’’
by
Section
109(1)
which
reads:
‘““A
corporation,
except
a
corporation
to
which
Part
V
or
VI
applies,
shall
be
carried
on
without
the
purpose
of
gain
for
its
members
and
any
profits
or
other
accretions
to
the
corporation
shall
be
used
in
promoting
its
objects
and
the
letters
patent
shall
so
provide.’’
(The
italics
are
my
own.)
Such
a
provision
is
contained
in
the
Letters
Patent
of
the
Association
here
in
question.
It
seems
to
me
that
a
corporation
with
exclusively
charitable
objects,
the
Letters
Patent
of
which
expressly
provide
that
“any
profits
or
other
accretions
to
the
corporation
shall
be
used
in
promoting
its
objects’’,
cannot
be
one
to
which
the
provisions
of
Section
115
were
intended
to
apply.
On
the
dissolution
of
such
a
corporation
‘‘its
remaining
property’’
is
in
my
opinion,
under
the
terms
of
its
Letters
Patent,
required
to
be
used
in
promoting
objects
‘‘
beneficial
to
the
community’’
and
the
enactment
of
any
such
by-law
as
is
contemplated
by
Section
115
would
therefore
be
redundant.
For
all
these
reasons
I
would
allow
this
appeal
with
costs,
set
aside
the
assessment
of
the
Minister
of
National
Revenue
and
allow
the
claim
for
deduction
made
by
the
Executor
of
the
estate
of
Dorothy
Elgin
Towle
in
respect
of
the
gift
made
in
the
residuary
clause
of
her
will
to
‘‘the
Medical
Alumnae
Association
of
the
University
of
Toronto’’.
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