JUDSON,
J.:—The
first
question
is
whether
succession
duty
is
payable
on
a
residential
property.
The
Department
asserts
the
right
to
tax
it
as
a
dutiable
disposition
and
values
it
at
the
date
of
death
at
$43,000.
Mr.
and
Mrs.
Hommei
first
rented
the
property
from
a
friend,
Edythe
MacKay.
On
October
31,
1939,
Edythe
MacKay
granted
the
property
to
Grace
M.
Hommel
for
a
consideration
of
$3,000
cash
and
a
mortgage
back
for
$10,000.
The
name
of
the
husband,
Robert
H.
Hommel,
does
not
appear
on
the
face
of
the
transaction,
but
he
supplied
the
$3,000
cash
and
later
paid
off
the
mortgage.
There
is
no
evidence
that
there
was
any
agreement
in
writing
for
the
transfer
of
this
property
before
the
execution
of
the
deed.
The
probabilities
are
against
the
existence
of
such
an
agreement
in
view
of
the
relationship
between
grantor
and
grantee.
The
property
was
still
registered
in
the
wife’s
name
at
the
date
of
the
husband’s
death.
In
addition
to
the
original
purchaseprice
of
$13,000
the
husband,
between
1939
and
1948,
spent
about
$23,000
on
alterations
and
improvements.
The
husband
and
wife
lived
together
in
the
house.
The
case
for
the
Department
is
that
this
was
a
disposition
of
a
house
in
1939
by
a
husband
to
his
wife
and
that
the
wife,
being
a
resident
of
Ontario
at
the
date
of
death,
must
pay
duty
with
respect
to
this
disposition
under
Section
5(c)
of
The
Succession
Duty
Act,
R.S.O.
1950,
c.
378.
The
case
for
the
wife
is,
first,
that
the
subject-matter
of
the
disposition
was
$3,000,
or
that,
if
it
was
the
house,
the
disposition
was
made
more
than
five
years
before
the
death
and
is
exempt
under
Section
4(1)
(g)
of
the
Act.
I
cannot
see,
on
the
material
before
me,
that
the
husband
ever
had
any
property-interest
of
any
kind
in
this
house.
The
subjectmatter
of
the
disposition
was
$3,000
which
the
wife
used,
doubtless
on
her
husband’s
direction,
to
buy
a
house.
“Disposition”
is
defined
in
the
broadest
terms
by
Section
1(f)
of
the
Act.
It
is
a
transaction
of
some
kind
involving
a
transfer
of
property.
But
taxation
is
imposed,
not
on
the
transaction
or
the
result
of
the
transaction,
but
on
a
person
with
respect
to
the
propertyinterest
acquired
by
the
transaction
and
the
property-interest
is
to
be
valued
according
to
the
rules
set
out
in
Section
2
of
the
Act.
I
think
the
property-interest
was
$3,000.
The
case
was
also
fully
argued
in
the
alternative
on
the
basis
that
the
property
given
by
the
husband
to
the
wife
was
a
house.
Although
I
am
not
deciding
this
case
on
this
ground,
it
is
desirable
that
I
express
an
opinion
on
it.
At
the
date
of
death,
the
house
was
valued
at
$438,000.
The
widow
says
she
is
still
not
taxable
because
it
was
given
more
than
five
years
before
the
death.
The
Department
answers
that
she
is
not
entitled
to
this
exemption,
that
she
does
not
come
within
the
terms
of
Section
4(1)
(g)
because
she
did
not
have
possession
and
enjoyment
of
the
house,
the
subject-matter
of
the
gift,
to
the
entire
exclusion
of
her
husband,
or
of
any
benefit
to
him.
Section
4(1)
(g),
the
exempting
section,
reads:
‘‘any
disposition
to
any
person
made
more
than
five
years
before
the
date
of
death
of
the
deceased,
where
actual
and
bona
fide
enjoyment
and
possession
of
the
property
in
respect
of
which
the
disposition
is
made,
was
immediately
assumed
by
the
person
to
whom
the
disposition
is
made
and
thenceforward
retained
to
the
entire
exclusion
of
the
deceased
or
of
any
benefit
to
him
whether
voluntarily
or
by
contract
or
otherwise,
provided
that
this
clause
shall
not
apply
to
any
disposition
resulting
in
the
making
of
periodic
payments,
except
such
payments
made
more
than
five
years
before
the
date
of
death
of
the
deceased”.
This
section
has
a
history.
Something
like
it
first
appears
in
the
English
legislation
which
imposed
an
account
or
probate
duty.
This
legislation
was
the
Customs
and
Inland
Revenue
Act,
1881,
44
Vict.,
e.
12,
Section
38.
It
was
amended
by
1889,
e.
7,
Section
11,
and
was
incorporated
in
the
Finance
Act,
1894,
57
and
58
Vict.,
e.
30,
the
legislation
which
established
estate
duty
by
Section
2(1)
(c)
as
follows:
‘‘Property
passing
on
the
death
of
the
deceased
shall
be
deemed
to
include
the
property
following,
that
is
to
say
:—
(c)
Property
which
would
be
required
on
the
death
of
the
deceased
to
be
included
in
an
account
under
section
thirty-eight
of
the
Customs
and
Inland
Revenue
Act,
1881,
as
amended
by
section
eleven
of
the
Customs
and
Inland
Revenue
Act,
1889,
if
those
sections
were
herein
enacted
and
extended
to
real
property
as
well
as
personal
property
and
the
words
‘voluntary’
and
‘volun-
tarily’
and
a
reference
to
a
‘volunteer’
were
omitted
therefrom.’’
The
result
of
all
this
was
that
estate
duty
in
the
United
Kingdom
was
imposed
on
11
property
taken
under
any
gift
whenever
made,
of
which
property
bona
fide
possession
and
enjoyment
shall
not
have
been
assumed
by
the
donee
immediately
upon
the
gift,
and
thenceforward
retained,
to
the
entire
exclusion
of
the
donor,
or
of
any
benefit
to
him
by
contract
or
otherwise’’
(Section
38(2)
(a)
of
the
1881
Act
as
amended
by
Section
11(1)
of
the
1889
Act).
The
section
was
taken
into
the
Ontario
Succession
Duty
Act
in
this
form
and
it
remained
unamended
until
1914.
I
shall
deal
later
with
the
precise
form
of
the
amendment.
It
now
appears
with
the
1914
amendment
in
Section
4(1)
(g)
of
the
Ontario
Act
as
a
condition
to
the
establishment
of
a
claim
to
exemption
for
a
disposition
made
more
than
five
years
before
death.
The
very
problem
that
arises
here
has
been
considered
on
almost
the
same
facts,
apart
from
the
relationship
of
husband
and
wife,
under
the
Finance
Act
of
1894.
The
cases
are
Lord
Advocate
v.
M’Taggart
Stewart
et
al.
(1906),
8
F.
(Ct.
of
Sess.)
919,
and
Attorney-General
v.
Seccombe,
[1911]
2
K.B.
688.
The
first
case
involved
a
release
of
a
life-interest
by
a
mother
in
favour
of
a
daughter,
the
second
a
transfer
of
the
fee
from
an
uncle
to
a
nephew.
In
both
cases
the
donor
continued
to
live
in
the
property
after
the
gift,
as
he
had
done
before,
as
a
member
of
the
household,
not
as
a
matter
of
right
but
as
a
matter
of
hospitality
and
grace.
It
was
held
that
this
continued
residence
did
not
deprive
the
property
of
its
exemption
from
estate
duty.
The
reason
for
so
holding
is
that
the
‘‘exclusion’’
and
‘‘benefit’’
contemplated
by
the
section
meant
the
absence
of
any
legally
enforceable
right
with
respect
to
the
property
whether
it
arose
from
contract
or
otherwise.
There
was
exclusion
and
there
was
no
retained
benefit
if
the
donor
merely
continued
his
residence
as
a
member
of
the
family.
Hamilton,
J.,
in
the
Seccombe
case
went
further
and
held
that
the
words
‘‘or
otherwise’’
were
to
be
construed
as
ejusdem
generis
with
‘‘contract’’.
There
is
good
reasons
to
doubt
whether
this
was
a
case
for
the
application
of
the
ejusdem
generis
rule
(see
Dymond
9
s
Death
Duties,
11th
Ed.
1951,
p.
14),
but
so
far
as
I
know
the
case
has
never
been
doubted
for
the
proposition
for
which
it
really
stands,
namely,
that
exclusion
means
legal
exclusion
and
benefit
means
a
benefit
arising
from
a
right.
In
1914,
by
4
Geo.
V,
ce.
10,
Section
5,
the
Ontario
Act
was
amended
by
the
addition
of
the
words
‘‘whether
voluntary
or’’,
so
that
the
concluding
words
of
the
section
read
‘‘to
the
entire
exclusion
of
the
donor,
or
of
any
benefit
to
him
whether
voluntary
or
by
contract
or
otherwise’’.
Even
before
the
amendment
and
before
the
two
above-mentioned
cases
were
decided,
Re
Roach
(1905),
10
O.L.R.
208,
had
held
that
a
transfer
from
a
father
to
his
daughters
was
taxable
when
the
father
continued
his
residence
in
the
property
until
his
death.
The
reason
for
the
decision
is
that
this
donor
was
never
excluded
from
possession
or
enjoyment.
In
view
of
the
reasoning
of
the
M’Taggart
Stewart
and
Seccomb
e
cases,
I
seriously
doubt
the
correctness
of
this.
My
opinion
is
that
in
the
present
case
the
wife
always
had
bona
fide
possession
and
enjoyment
of
the
property
and
that
the
husband
was
excluded
from
all
beneficial
interest
and
that
his
occupancy
of
the
property
after
its
acquisition
is
attributable
not
to
any
benefit
conferred
upon
him
by
his
wife,
but
to
the
marriage
relationship—to
the
fact
that
husband
and
wife
are
entitled
to
each
other’s
society.
This
has
nothing
to
do
with
the
gift.
The
husband
had
no
legal
right
to
reside
in
the
house.
He
lived
there
because
he
was
married
to
the
woman
who
owned
it.
I
do
not
think
this
is
the
‘‘benefit’’
meant
by
the
section.
To
hold
otherwise
would
mean
that
a
wife
could
never
get
this
exemption
unless
she
and
her
husband
parted
company
when
the
gift
was
made.
I
am
not
prepared
to
go
as
far
as
the
submission
of
counsel
for
the
appellant,
to
the
effect
that
the
addition
of
the
word
‘‘voluntary’’
to
the
subsection
in
1914
made
no
difference,
and
that
benefit
must
still
be
some
legally
enforceable
right
or
property-interest
either
in
the
subjectmatter
of
the
gift
or
in
some
collateral
advantage.
What
I
am
saying
is
that
cohabitation
between
husband
and
wife
is
not
the
“benefit”
spoken
of
in
the
section.
These
proceedings
come
before
me
by
way
of
appeal
from
the
Treasurer’s
statement.
This
statement
is
prepared
on
the
basis
of
the
house
being
a
taxable
disposition.
At
the
hearing
the
Department
sought
to
amend
the
‘‘pleadings’’
by
alleging
that
the
husband
was
always
the
beneficial
owner
of
the
property.
There
are
no
pleadings
to
amend
in
proceedings
under
Section
32
of
the
Act.
The
documents
are
a
notice
of
appeal,
a
notice
of
the
Treasurer’s
decision,
a
notice
of
dissatisfaction
and
a
reply.
The
Department
surely
must
take
its
stand
in
the
Treasurer’s
statement,
which
is
really
an
assessment.
It
is
difficult
to
see
how
an
assessment
for
taxation
can
be
prepared
in
the
alternative.
The
position
taken
in
the
Treasurer’s
statement
is
that
the
house
was
a
gift.
I
heard
evidence,
taken
subject
to
objection,
which
was
intended
to
show
beneficial
ownership
in
the
husband.
The
evidence
was
to
the
effect
that
the
husband
paid
for
the
alterations
and
improvements
and
engaged
the
architects
and
contractors.
Even
if
the
house
had
been
transferred
originally
from
husband
to
wife,
this
evidence
would
not
rebut
a
presumption
of
advancement.
The
second
point
on
this
appeal
is
whether
the
proceeds
of
certain
insurance
policies,
which
were
settled
inter
vivos
on
the
wife
by
the
husband,
are
exempt
under
Section
4(1)
(i)
to
the
extent
of
$1,200
per
year
as
a
non-commutable
annuity.
Under
Section
4(1)
(i)
there
is
an
exemption
in
respect
of
‘‘any
non-
commutable
annuity,
income
or
periodic
payment
effected
in
any
manner
other
than
by
will
or
testamentary
instrument
and
paid
for
by
the
deceased
during
his
lifetime,
and
paid
to
or
enjoyed
by
the
wife
or
dependent
father
or
mother
or
any
dependent
brother,
sister
or
child
of
the
deceased
after
the
death
of
the
deceased,
to
the
extent
of
$1,200
per
annum
with
respect
to
any
one
person
and
to
the
extent
of
$2,400
per
annum
in
the
aggregate”.
The
terms
of
the
settlement
are
that
the
proceeds
of
the
policies
are
to
remain
on
deposit
with
the
insurance
company
on
interest
at
a
fixed
rate.
The
wife
is
entitled
to
receive
the
interest
and
in
addition
she
may
call
on
the
insurance
company
to
pay
her
sufficient
principal
to
make
up
$5,000
in
any
one
year.
This
right
to
withdraw
principal
is
non-cumulative.
The
wife
has
the
right,
on
reaching
the
age
of
65,
to
take
whatever
is
left
as
a
life
annuity
guaranteed
for
twenty
years.
There
are
no
Other
rights
of
commutation
or
alteration
given
to
the
wife
under
the
terms
of
the
settlement.
It
is
the
right
to
call
for
principal
to
bring
the
annual
payments
up
to
$5,000
per
year
that
attracts
the
attention
of
the
Department.
The
argument
is
that
with
this
privilege
given
to
the
wife,
it
is
no
longer
a
‘
‘
non-commutable
annuity,
income,
or
periodic
payment’’.
An
annuity
is
a
sum
of
money
payable
yearly
or
periodically
from
a
source
which
is
exclusively
or
primarily
personal
estate:
28
Halsbury’s
Laws
of
England,
2nd.
Ed.
1938,
p.
175,
s.
321.
The
interest,
without
the
power
to
encroach
on
principal,
would
clearly
be
entitled
to
the
exemption.
If
fixed
payments
of
blended
principal
and
interest
had
been
provided
for,
this
would
not
have
been
attacked.
Can
it
make
any
difference
that
the
amount
received
by
the
wife
may
fluctuate
within
certain
limits
according
to
her
request?
I
do
not
think
so.
The
language
of
the
exemption
is
broad;
so
is
the
legal
meaning
of
annuity.
I
think
the
settlement
is
within
the
terms
of
the
exemption
to
the
extent
of
$1,200
per
year.
The
appeal
is
allowed
on
both
grounds
with
costs.
Appeal
allowed.