Davis,
J.—On
the
27th
day
of
May,
1918,
Peter
Birtwistle,
of
the
city
of
London,
in
the
province
of
Ontario,
made
a
deed
of
settlement
of
certain
real
and
personal
properties
to
The
Trusts
&
Guarantee
Company,
Limited,
of
the
city
of
Toronto,
in
the
said
province,
as
trustee
upon
the
terms
and
conditions
therein
set
forth.
This
settlement
superseded
an
earlier
settlement
of
the
20th
of
October,
1916,
with
respect
to
a
sum
of
$100,000,
the
investments
of
which
were
covered,
together
with
additional
property,
by
the
settlement
of
the
27th
of
May,
1918.
The
Trust
Company
was
to
administer
and
manage
the
trust
subject
to
the
directions
and
control
of
the
settlor
during
his
lifetime
and
after
his
death
in
its
absolute
discretion
with
the
usual
powers
of
administration
and
management
of
the
trust
fund.
The
fund
was
to
be
held
and
accumulated
until
the
expiration
of
21
years
after
the
death
of
the
settlor,
at
which
date
the
trustee
was
to
pay
the
whole
of
the
then
fund
to
the
Municipal
Council
of
the
town
of
Colne
in
Lancashire,
England,
to
be
used
by
the
said
Council
for
the
benefit
of
the
aged
and
deserving
poor
of
the
said
town
of
Colne
in
such
manner
and
without
restriction
of
any
kind,
as
shall
be
deemed
prudent
to
the
said
Council.
The
exact
words
of
the
provision
are
as
follows
:
The
Trustees
shall
pay
the
whole
of
the
Investment
Account,
together
with
accumulations
thereon,
to
the
Municipal
Council
of
the
Town
of
Colne
in
Lancashire,
England,
at
the
end
of
the
period
of
twenty-one
years
after
the
death
of
the
Settlor,
to
be
used
by
the
said
Council
for
the
benefit
of
the
aged
and
deserving
poor
of
the
said
Town
of
Colne
in
such
manner
and
without
restriction
of
any
kind,
as
shall
be
deemed
prudent
to
the
said
Council,
save
and
except
and
the
Settlor
hereby
declares
it
to
be
his
wish
that
the
said
Council
should
insofar
as
possible
or
convenient,
leave
any
of
the
said
fund
which
is
not
required
for
immediate
distribution
to
be
held
by
the
Trustee
hereunder
and
invested
by
the
Trustee
under
an
arrangement
similar
to
that
comprised
in
this
indenture,
the
Settlor
believing
that
it
will
be
advantageous
for
the
Council
to
retain
this
colonial
investment
which
the
Settlor
considers
likely
to
return
a
better
rate
of
interest
than
can
be
readily
obtained
in
England.
Peter
Birtwistle
died
on
April
19th,
1927;
the
fund
with
accumulations
would
therefore
become
payable
to
the
Council
of
the
town
of
Colne
on
April
19th,
1948.
At
December
31st,
1936,
the
fund
amounted
to
$572,767.88
and
it
was
estimated
by
the
general
manager
of
the
Trust
Company
that
if
the
trust
were
continued
to
the
expiration
of
the
twenty-one
years
from
the
date
of
death,
the
fund
would
then
amount
to
approximately
one
million
dollars.
The
fund
has
been
earning
approximately
$25,000
a
year.
The
town
of
Colne
became
desirous
of
terminating
the
trust
and
receiving
immediate
payment
of
the
fund;
the
first
intimation
was
a
letter
from
the
town
clerk
to
the
trustee
of
the
5th
of
September,
1933.
Subsequently
the
question
was
raised
in
proceedings
taken
in
the
Supreme
Court
of
Ontario
for
approval
of
a
proposed
compromise
whereby
substantial
amounts
were
to
be
paid
over
to
the
town
of
Colne
at
that
time.
Rose,
C.J.,
refused
to
approve
the
proposed
agreement,
[1935]
O.R.
488.
The
Trust
Company
each
year
(1919
to
1934
inclusive)
reported
to
the
Dominion
Government
on
the
regular
form
required
to
be
filed
by
trustees,
executors,
administrators,
assignees,
receivers
and
persons
acting
in
a
fiduciary
capacity,
known
as
Form
T-3,
the
amount
of
the
income
received.
The
purpose
of
this
return
is
for
information
and
not
for
taxation
at
the
source.
The
amount
of
the
income
was
set
out
opposite
the
printed
words
‘‘
Income
accumulating
in
hands
of
Trustees”
and
by
way
of
information
there
were
written
in
under
the
printed
heading
‘‘Name
and
address
of
Beneficiary’’
on
the
form,
the
words
‘‘Income
accrues
to
the
Municipal
Council
of
Colne,
England,
for
the
benefit
of
aged
and
deserving
poor.’’
No
assessment
for
income
taxation
in
respect
of
the
accumulating
income
from
this
fund
was
made
by
the
Dominion
of
Canada
under
the
Income
War
Tax
Act,
1917,
and
amendments
(now
R.S.C.,
1927,
ch.
97)
during
any
of
the
years
1919
to
1934
inclusive
until
February
21st,
1936,
when
assessments
were
made
for
all
these
years
at
the
one
time.
To
the
normal
tax
were
added
surtaxes
and
interest
aggregating
$36,053.25.
Of
this
sum
$8,794.45
was
interest
alone.
It
is
rather
obvious
that
the
litigation
in
the
Ontario
courts
in
1935
attracted
the
taxing
officials
of
the
Dominion
to
endeavour
to
collect
an
income
tax
from
this
fund.
The
trust
company
denied
that
it
was
liable
to
pay
a
Dominion
income
tax
on
the
income
from
the
fund.
The
assessments
were
actually
made
against
‘‘The
Peter
Birtwistle
Trust’’
but
no
objection
was
taken
by
the
trust
company
to
this
error;
obviously
the
fund
itself
could
not
be
assessed.
Speaking
broadly
(apart
from
non-residents)
the
Dominion
income
tax
legislation
does
not
contemplate
taxation
at
its
source
but
imposes
the
tax
upon
the
persons
or
corporations
who
receive
the
income.
A
beneficiary
under
a
will,
for
instance,
receives
his
income
from
the
estate
intact;
he
is
directly
assessed
by
the
Dominion
upon
the
sum
which
he
receives.
The
executor
is
required
to
make
a
return
of
the
income
received
by
him
from
the
estate
and
to
state
the
names
and
addresses
of
the
beneficiaries
entitled
to
that
income.
But
there
is
a
section
in
the
/ncome
War
Tax
Act,
11
(2),
which
provides
that
where
income
is
accumulating
in
trust
for
the
benefit
of
unascertained
persons
or
persons
with
contingent
interests
that
income
shall
be
taxable
in
the
hands
of
the
trustee.
The
original
enactment
was
by
sec.
4
of
ch.
49
of
the
Statutes
of
Canada,
1920,
and
read
as
follows
:_
Income
accumulating
in
trust
for
the
benefit
of
unascertained
persons,
or
of
persons
with
contingent
interests
shall
be
taxable
in
the
hands
of
the
trustee
or
other
like
person
acting
in
a
fiduciary
capacity,
as
if
such
income
were
the
income
of
an
unmarried
person.
By
See.
16
of
the
1920
statute,
this
section
was
deemed
to
have
come
into
force
at
the
commencement
of
the
1917
taxation
period.
The
original
enactment
remained
in
force
until
1927
when
it
was
reproduced
verbatim
as
see.
11
(2)
of
the
Revised
Statutes
of
1927,
ch.
97.
The
section
remained
in
force
until
1934,
when
by
ch.
55,
see.
7,
of
the
Statutes
of
1934,
the
section
was
repealed
and
the
following
substituted
therefor
:
11.
(2)
Income
accumulating
in
trust
for
the
benefit
of
unascertained
persons,
or
of
persons
with
contingent
interests
shall
be
taxable
in
the
hands
of
the
trustee
or
other
like
person
acting
in
a
fiduciary
capacity,
as
if
such
income
were
the
income
of
a
person
other
than
a
corporation,
provided
that
he
shall
not
be
entitled
to
the
exemptions
provided
by
paragraphs
(c),
(d),
(e)
and
(i)
of
subsection
one
of
section
five
of
this
Act.
By
sec.
18
of
the
1934
statute
this
new
section
was
made
applicable
to
income
of
the
1933
taxation
period
and
to
all
subsequent
periods.
In
1936
by
ch.
38,
sec.
10,
of
the
Statutes
of
that
year
the
section
was
further
amended
but
without
any
bearing
on
the
question
at
issue
in
this
appeal.
Section
2
of
the
Income
War
Tax
Act
as
it
was
in
1936
contained
the
following
definitions
:
(h)
"Person"
includes
any
body
corporate
and
politic
and
any
association
or
other
body,
and
the
heirs,
executors,
administrators
and
curators
or
other
legal
representatives
of
such
person,
according
to
the
law
of
that
part
of
Canada
to
which
the
context
extends;
(k)
“taxpayer”
means
any
person
paying,
liable
to
pay,
or
believed
by
the
Minister
to
be
liable
to
pay,
any
tax
imposed
by
this
Act.
The
Colne
Corporation
Act,
1933
(being
Imperial
statute
23
and
24
George
V,
ch.
35)
by
see.
140
empowers
the
Corporation
of
Colne
to
accept,
hold
and
administer
any
gift
of
property,
whether
real
or
personal,
for
any
public
purpose
connected
with
the
borough.
It
may
be
convenient
to
mention
here
that
sec.
4
of
the
Income
War
Tax
Act,
so
far
as
relevant,
provides:
The
following
incomes
shall
not
be
liable
to
taxation
hereunder
:—
•
(e)
the
income
of
any
religious,
charitable,
agricultural
and
educational
institution,
board
of
trade
and
chamber
of
commerce.
It
was
contended
that
upon
a
proper
construction,
the
exemptions
of
subsection
(e)
must
be
confined
territorially
to
institutions
that
are
within
Canada,
but
it
is
not
necessary,
in
the
view
I
take
of
the
appeal,
to
put
a
construction
upon
the
subsection.
Section
11
(2),
which
is
a
charging
section,
contemplates
income
that
will
vest
in
and
ultimately
pass
to
persons
for
the
time
being
unascertainable,
such,
for
instance,
as
unborn
issue,
or
to
persons
whose
rights
are
for
the
time
being
merely
contingent
interests.
The
statute
is
dealing
generally
with
income
of
persons
or
corporations.
The
trust
fund
with
which
we
are
dealing
is
not
intended
to
pass,
either
capital
or
income,
to
any
particular
person
or
persons;
the
fund
was
created
for
a
purpose,
not
for
any
particular
person
or
persons.
The
purpose
was
that
the
fund
should
be
used
"‘for
the
benefit
of
the
aged
and
deserving
poor’’
of
the
town
of
Colne.
It
was
an
arrangement
or
undertaking
established
by
the
settlor
for
promoting
a
defined
public
or
social
object
without
reference
to
the
property
appropriated
for
the
purpose
becoming
vested
at
any
time
in
any
particular
person
or
persons.
Aged
and
deserving
poor
cannot
be
regarded
otherwise
than
as
a
class
in
the
community
;
to
regard
them
otherwise
is
to
destroy
the
character
of
what
is
obviously
a
charitable
trust.
No
particular
person
will
ever
acquire
a
right
to
demand
and
receive
the
beneficial
interest
in
the
income
from
the
fund,
or
in
any
part
thereof.
The
population
of
the
town
of
Colne
is
said
to
be
about
25,000
and
it
is
inconceivable
that
when
the
town
in
1948
receives
approximately
a
million
dollars
it
will
distribute
it,
or
any
substantial
part
of
it,
among
particular
persons
;
the
purpose
of
the
settlor
will
not
improbably
be
satisfied
by
the
erection
and
maintenance
of
a
hospital
or
a
home
or
some
such
institution
that
will
serve
the
needs
of
the
aged
and
deserving
poor
of
the
town.
If
I
understood
counsel
aright
during
the
argument,
that
was
the
sort
of
use
to
which
the
town
intended
to
put
the
money
when
it
sought
in
1935
to
obtain
from
the
Ontario
court
payment
over
to
it
of
the
fund,
or
substantial
portions
of
it.
The
particular
section
in
question,
sec.
11
(2),
was
considered
by
the
Privy
Council
in
Holden
v.
The
Minister
of
National
Revenue,
[1933]
A.C.
526;
(1933)
C.T.C.,
and
in
the
judgment
of
their
Lordships
delivered
by
Lord
Tomlin
the
section
was
said
to
be
a
true
charging
section
and
fixed
the
trustee
of
the
accumulating
income
with
liability
for
the
tax.
But
the
accumulating
income
in
that
case
would,
by
force
of
the
will
of
the
testator
there
in
question,
inevitably
become
payable
as
of
right
at
a
future
date
to
particular
persons
who
would
become
entitled
to
compel
payment
of
such
income
to
themselves.
The
point
in
issue
now
before
us
did
not
arise
for
consideration
in
that
case.
Under
the
trust
that
is
before
us’
the
income
is
not
being
accumulated
for
persons
presently
unascertainable
or
for
persons
wth
merely
contingent
interests
within
the
meaning
of
sec.
11
(2).
It
is
being
accumulated
for
a
purpose—and
the
purpose
is
to
make
provision
for
the
benefit
of
the
aged
and
deserving
poor
of
the
town
of
Colne.
It
is
not
suggested
that
the
accumulating
income
is
taxable
except
under
sec.
11
(2),
and
as
that
section
does
not
apply,
the
income
of
the
fund
in
the
hands
of
the
trust
company
was
never
taxable
under
the
statute.
The
appeal
should
be
allowed
and
the
judgment
appealed
from
and
the
assessments
in
question
set
aside,
with
costs
to
the
appellant
throughout.
KERWIN,
J.
(dissenting)—Under
the
agreement
of
May
27th,
1918,
between
the
settlor,
Peter
Birtwistle,
and
the
trustee,
The
Trusts
and
Guarantee
Company,
Limited,
the
distinction
between
the
borough
of
Colne
and
the
council
of
the
borough
is
not
maintained.
By
clause
2
(b)
the
trustee
is
to
pay
the
whole
of
the
investment
account
provided
for
by
the
agreement,
together
with
accumulations,
to
the
Municipal
Council
of
the
Town
of
Colne
at
the
end
of
the
period
of
twenty-one
years
after
the
death
of
the
settlor
to
be
used
by
the
said
Council
for
the
benefit
of
the
aged
and
deserving
poor
of
the
said
Town
of
Colne
in
such
manner
and
without
restriction
of
any
kind,
as
shall
be
deemed
prudent
to
the
said
Council.
On
the
other
hand,
under
the
latter
part
of
clause
(d)
of
paragraph
2,
the
Settlor
hereby
expressly
relinquishes
and
surrenders
to
the
Trustee
and
the
Municipality
of
Colne
all
the
said
income
in
excess
of
the
amount
thereof
necessary
to
cover
his
expenses
of
living.
and
under
clause
(g)
it
is
provided
that
:—
Upon
the
payment
over
to
the
Municipality
of
Colne
at
the
expiration
of
the
period
hereinafter
determined,
together
with
interest
at
the
rate
and
in
the
manner
guaranteed
hereunder,
the
securities
held
by
the
Trustee
in
respect
of
the
said
Investment
Account
shall
become
the
property
of
the
Trustee
freed
from
the
terms
of
the
trusts
hereby
created
in
reference
to
the
said
account
without
any
formal
assignment
or
release
from
the
Settlor
or
the
Council
of
the
Municipality
of
Colne.
I
have
mentioned
the
terminology
of
the
agreement
in
this
one
respect
in
order
to
draw
attention
to
what
appears
to
me
to
be
another
inexactitude.
Clause
3
of
the
agreement
provides:
The
Trustee
shall
render
to
the
Settlor
regular
statements
in
such
form
as
may
be
required
quarterly
during
the
life
of
the
Settlor
and
thereafter
on
similar
dates
to
the
beneficiaries
of
the
estate.
A
careful
reading
of
the
agreement
leaves
no
doubt
in
my
mind
that
there
is
but
one
trust
with
two
successive
trustees
and
that
the
real
beneficiaries
of
the
trust
are
the
aged
and
deserving
poor
of
Colne.
This
becomes
of
importance
in
considering
both
main
grounds
of
appeal.
The
first
is
whether
the
members
of
the
class
who
will
benefit
are
unascertained
persons
within
the
meaning
of
subsection
2
of
section
11
of
the
Income
War
Tax
Act:
Income
accumulating
in
trust
for
the
benefit
of
unascertained
persons,
or
of
persons
with
contingent
interests
shall
be
taxable
in
the
hands
of
the
trustee
or
other
like
person
acting
in
a
fiduciary
capacity,
as
if
such
income
were
the
income
of
a
person
other
than
a
corporation.
It
has
been
determined
in
Holden
v.
Minister
of
National
Revenue,
[1933]
A.C.
526;
(1933)
C.T.C.,
that
this
is
a
true
charging
section,
and
in
my
opinion
the
question
whether
such
members
are
unascertained
persons
within
the
ambit
of
that
provision
should
be
answered
in
the
affirmative.
Until
the
period
of
distribution
arrives
the
recipients
of
the
settlor’s
bounty
are
unascertainable.
The
second
ground
raised
by
the
appellant
is
that
the
income
is
income
of
a
charitable
institution
within
the
meaning
of
those
words
as
used
in
section
4
(e)
of
the
Act,
and
therefore
exempt
from
taxation.
What
has
already
been
said
disposes
of
the
suggestion
that
the
income
is
income
of
anyone
other
than
the
unascertainable
aged
and
deserving
poor
of
Colne
and
I
do
not
find
any
assistance
in
the
English
cases
referred
to,
which
deal
with
statutes
expressed
in
terms
totally
unlike
the
enactment
under
consideration.
It
has
also
been
urged
that
in
any
event
no
interest
is
payable
upon
the
tax
prior
to
the
date
of
assessment.
Commencing
with
the
year
1919,
the
trustee
furnished
annual
returns
under
the
Act,
and
under
the
heading
“Name
and
Address
of
Beneficiary”
inserted
‘‘Income
accrues
to
the
Municipal
Council
of
Colne,
England,
for
the
benefit
of
aged
and
deserving
poor.”
No
assessment
was
made
until
1936,—apparently
in
consequence
of
the
publicity
occasioned
by
the
report
of
a
decision
of
the
Supreme
Court
of
Ontario,
[1935]
O.R.
433,
given
on
an
application
made
by
the
trustee
for
approval
of
a
proposed
agreement
between
it
and
the
Mayor,
Aldermen
and
Burgesses
of
the
Borough
of
Colne.
The
assessment
was
then
made
for
the
years
1919
to
1934
inclusive
and
included
interest
at
the
statutory
rate
from
the
times
each
annual
tax
was
payable.
Interest
is
provided
for
by
sections
48,
49
and
54,
and
section
55
enacts
:—
Notwithstanding
any
prior
assessment,
or
if
no
assessment
has
been
made,
the
taxpayer
shall
continue
to
be
liable
for
any
tax
and
to
be
assessed
therefor
and
the
Minister
may
at
any
time
assess,
re-assess
or
make
additional
assessments
upon
any
person
for
tax,
interest
and
penalties.
It
is
suggested
that
in
applying
the
provisions
of
these
sections
a
difficulty
arises
by
virtue
of
section
66
:—
Subject
to
the
provisions
of
this
Act,
the
Exchequer
Court
shall
have
exclusive
jurisdiction
to
hear
and
determine
all
questions
that
may
arise
in
connection
with
any
assessment
made
under
this
Act
and
in
delivering
judgment
may
make
any
order
as
to
payment
of
any
tax,
interest
or
penalty
or
as
to
costs
as
to
the
said
Court
may
seem
right
and
proper.
It
is
contended
that
this
provision
leaves
it
to
the
Court’s
discretion
whether
interest
should
be
exacted
from
the
taxpayer.
The
suggested
difficulty
disappears,
however,
when
section
66
is
considered
in
conjunction
with
the
sections
dealing
with
the
rights
of
a
party
assessed
who
objects
to
the
amount
at
which
he
has
been
assessed
for
income
tax
or
who
considers
that
he
is
not
liable
to
taxation.
By
section
58
such
a
person
may
serve
a
notice
of
appeal
upon
the
Minister
of
National
Revenue
who
shall
then
"‘duly
consider
the
same
and
shall
affirm
or
amend
the
assessment
appealed
against
and
shall
notify
the
appellant
of
his
decision
by
registered
post’’
(section
59).
If
the
appellant
is
dissatisfied
with
the
Minister’s
decison,
he
may
notify
the
Minister
that
he
desires
his
appeal
to
be
set
down
for
trial,
and
furnish
a
statement
of
facts
(section
60).
The
Minister
is
to
reply
thereto
(section
62)
and
transmit
to
the
Exchequer
Court
certain
documents
and
the
matter
is
thereupon
deemed
to
be
an
action
in
that
Court
(section
63).
Section
65
provides
for
the
Court
permitting
any
fact
or
statutory
provision
not
set
out
in
the
notice
of
appeal
or
notice
of
dissatisfaction
to
be
pleaded
or
referred
to
and
empowers
the
Court
to
refer
the
matter
back
to
the
Minister
for
further
consideration.
Then
comes
section
66
already
quoted.
In
my
opinion,
this
section
is
merely
an
enactment
establishing
the
exclusive
jurisdiction
of
the
Exchequer
Court
to
deal
with
the
dispute.
The
power
of
the
Court
to
make
any
order
as
to
payment
“of
any
tax,
interest
or
penalty’’
is
similar
to
the
power
conferred
upon
the
Minister
by
section
55
to
‘‘
assess,
re-assess
or
make
additional
assessments
upon
any
person
for
tax,
interest
and
penalties.”
In
any
event
the
opening
words
of
section
66,
‘‘Subject
to
the
provisions
of
this
Act,’’
make
it
evident,
I
think,
that
the
Court
has
no
power
to
disregard
the
plain
provisions
of
the
Act
imposing
upon
the
taxpayer
a
liability
for
interest.
The
question
of
cost
stands
in
a
different
position
and
there
appears
to
be
nothing
in
the
Act
to
prevent
the
Court
withholding
costs
from
the
Minister
of
National
Revenue
when
successful,
and,
as
a
matter
of
fact,
that
is
what
was
done
by
the
President
of
the
Exchequer
Court
in
the
present
case.
I
would
dismiss
the
appeal
without
costs.
Hudson,
J.—The
charging
section
of
the
Income
War
Tax
Act
applicable
to
this
case,
if
any,
is
section
11
(2),
and
after
much
hesitation
I
have
come
to
the
conclusion
that
income
accumulated
in
the
trust
here
is
not
for
the
benefit
of
unascertained
persons
within
the
meaning
of
that
section.
I
think
that
the
persons
there
intended
are
persons
who
might
become
entitled
to
specific
portions
of
the
fund,
and
not
a
general
class
who
would
ultimately
get
the
benefits
of
the
fund
in
the
way
of
charitable
assistance.
For
this
reason
I
think
that
the
appeal
should
be
allowed
and
the
judgment
appealed
from
and
assessment
set
aside.
Appeal
allowed
with
costs.
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