In Re Ross Estate, [1954] CTC 385

LEBEL, J.:—From the language of Section 32 of The Succession Duty Act, R.S.O. 1950, c. 378, particularly subsection (9) thereof, it would appear that these proceedings become a ‘‘cause’’ in this Court upon being set down or entered for trial, to be tried in the same manner as an action, although the person dissatisfied with the decision of the Treasurer is called the ‘‘appellant’’.

According to the statement of facts agreed upon by counsel, the late John Ross was injured on March 1, 1950, by a motor truck owned and operated by one Sam Yarmo. On April 19, 1950, he commenced action against Yarmo in this Court. Pleadings were exchanged and examinations for discovery had. On March 31, 1951, John Ross died but his death was in no way related to the injuries he received in the accident. The action was continued by his widow as the sole executrix of his estate, who is the appellant in these proceedings. The action was tried by Mr. Justice Schroeder and on June 12, 1951, judgment was given against Yarmo for $7,656.47 and costs. Yarmo appealed but his appeal was dismissed with costs. He was insured against public liability for $5,000.00 and his insurer paid that sum to the appellant together with the taxed costs of the trial and of the appeal. Later, after examining Yarmo as a judgment debtor, the appellant was successful in recovering a further sum of $2,000.00 in consideration of a full release from liability.

In the affidavit of value and relationship filed upon her application for letters probate, the appellant gave the Yarmo ‘‘claim’’ a nominal value of $1.00, which the Treasurer refused to accept. Following the dismissal of Yarmo’s appeal and the recovery by the appellant of the sums mentioned, the Treasurer assessed the “claim” at $6,266.90, that is to say, at the amount of the net proceeds recovered by the appellant from her judgment. In the agreed statement of facts and in the course of his argument Mr. Silk maintained that the Treasurer’s assessment was properly based upon the ‘‘eventual recovery’’. The appellant contends that an assessment upon that basis is invalid and in the alternative that the deceased’s cause of action had only a nominal value.

Regardless of the exact nature of these proceedings, I am prepared to accept Mr. Silk’s submission upon the authority of Re Webster Estate, [1949] O.W.N. 581, that the onus is upon the appellant ‘‘of showing affirmatively that the decision of the Minister is erroneous’’. I am satisfied, however, as Mr. Joy contends, that that onus has been satisfied as a matter of law.

Mr. Joy’s argument against the validity of the assessment is that the damages eventually recovered were not property passing on the death of the late Mr. Ross within the language of Section 5(a) of the Act, which reads:

“5. . . . on the death of any person whether he dies domiciled in Ontario or elsewhere,

(a) where any property situate in Ontario passes on his death, duty shall be levied on such property in accordance with the dutiable value thereof ;’’

(It is common ground that the words ‘‘dutiable value’’ in the subsection mean the value “at the date of death of the deceased” : see Section 1(g).) I think this contention is sound and that it is not affected by Section 37 of The Trustee Act, R.S.O. 1950,

e. 400, on which Mr. Silk relies.

Section 37 of The Trustee Act enables the personal representative of a deceased person to maintain an action ‘‘for all torts or injuries to the person or to the property of the deceased’’ except libel and slander, and provides that ‘‘the damages when recovered shall form part of the personal estate of the deceased”, but it does not follow that the damages when recovered are liable for succession duties. Such damages are not property ‘‘passing on the death of the deceased’’ in my opinion because they were not in existence at the material time. All that passed then was such right as the deceased had to recover damages—a legal chose in action—and I do not think it can be disputed that the property in the right to claim a thing is not the same as the property in the thing itself. For this reason Section 1(1) of The Succession Duty Act applies only to the right to claim damages, not to the damages themselves. It reads:

“(1) ‘passing on the death’ means passing either immediately on the death or after an interval, either certainly or contingently and either originally or by way of substitutive limitation ; ’ ’

“No proposition is better established than that a tax cannot be imposed unless by clear and unambiguous language.’’ Bay- brooke v. Attorney-General (1861), 9 H.L. Cas. 150. And The Succession Duty Act does not say that damages recovered upon a cause of action existing at the time of death should be deemed to be property passing at that time. Other kinds of property and interests in property are expressly said by the Act to be deemed to pass on the death of the deceased. See Section l(p). And the fact that the damages go to the deceased’s estate is immaterial. I am satisfied, therefore, that the Treasurer’s assessment has been made upon the wrong basis.

If these proceedings under Section 32 are in strictness by way of appeal I should allow the appeal and leave the Treasurer to make his assessment upon such other basis as he sees fit, for I am satisfied that the deceased’s cause of action at the time of his death, in the circumstances appearing in the record and mentioned in argument without objection, had more than a nominal value. It seems, however, from the language of Section 32 of The Succession Duty Act, as I have stated, that these proceedings are more in the nature of a trial than of an appeal, and for that reason I shall proceed upon such evidence as is before me to value the item in dispute as best I can.

Mr. Joy contends that there is no statutory sanction for assessing the value of any cause of action, much less such a cause of action as I am now concerned with, on the basis of ‘‘eventual recovery’’ and that in the absence of such sanction its value must be arrived at in the same manner as in the evaluation of any other property. I think again he is right. I am satisfied that experience has shown that nothing is so uncertain as the value of such an intangible as a cause of action for damages for personal injuries. I think the statement needs no elaboration but we should remember that, as in most popular sayings that have survived the years, there is a measure of truth in the one which tells us that nobody wants to buy a lawsuit.

However, uncertainty as to the value of property at a given time does not mean that the Court finds itself unable to estimate its value. It must cope with the difficulty as best it can. In so doing the Court is like the Judicial Committee of the Privy Council in Windsor Education Board v. Ford Motor Co. of Canada, Ltd., [1941] A.C. 453.

“within the realm of legal proof, which does not require certainty, but such a measure of probability derived from ascertained facts as to entitle the Judicial mind reasonably to infer the fact in issue.”

Speaking of the valuation of property difficult of assessment— in that case the shares of the capital stock of a company—Fitz- Gibbon, L.J., in Attorney-General v. Jameson (1905), 2 Ir. R. 218 said at p. 230 :

“The price was to be that which a purchaser would pay for the right ‘to stand in Henry Jameson’s shoes’, with good title to get into them and to remain in them, and to receive all the profits, subject to all the liabilities, of the position. The price was what the shares were worth to Henry Jameson at his death

—in other words, it was what a man of means would be willing to pay for the transmigration into himself of the property which passed from H. Jameson when he died.”

Assuming that the late Mr. Ross’ cause of action could have been legally assigned before he died, the question is—What would a mythical purchaser have paid on March 31, 1951, to stand in his shoes? Before agreeing to pay anything for this privilege, I think the ordinary purchaser, properly advised, would want satisfactory answers to several important questions. He would want to know, for instance, what had been the nature of Mr. Ross’ injuries; whether he had been permanently disabled; what were his out-of-pocket expenses, and so forth. He would also want information about the facts of the accident and he would be concerned to learn how those facts could be established without too much difficulty. He would also want to hear about the character and reputation of the witnesses on both sides. He would also wish to be shown how much it had cost to carry on the action until that time and approximately how much more he would be asked to expend. Above all, he would want to know the financial means of the other party to the suit and his own chances of collecting any judgment he might be fortunate enough to recover.

He would be told, no doubt, that Mr. Ross was a pedestrian when run down and that the law was that Yarmo had to prove that he himself had not been negligent. It would be impressed upon him also that if Yarmo was without means and was not insured, there was security up to $5,000.00 in the Unsatisfied Judgment Fund under The Highway Traffic Act for the payment of his judgment if he succeeded. On the other hand, he would be entitled to know that Mr. Ross’ action was being strenuously resisted upon the ground that he was the author of his own misfortune, that long delays in court proceedings might ensue, and that if in the end he had to have recourse against the Fund there would be further delay and expense.

In determining the question of value, I think the Court is entitled to look at the amount eventually recovered upon a judgment or in the settlement of a claim but only as a circumstance to be considered along with others, some of which I have mentioned. When everything is considered, I am impelled to conclude that a reasonable purchaser of Mr. Ross’ claim at the material time would not have been prepared to pay more than the equivalent of one-quarter of the maximum amount that might be recovered from the Unsatisfied Judgment Fund, viz. $1,250.00. At that time such purchaser would not know that Yarmo was insured or possessed any assets, and were it not for the existence of the Fund, I am satisfied that he would be unwilling to pay anything for the Yarmo “claim”. It is therefore valued for succession duty purposes at $1,250.00.

The appellant succeeds and she is entitled to be paid the costs of these proceedings.

Appeal allowed in part.