O’Connor,
J.:
This
is
an
appeal
from
one
item
in
an
assessment
dated
17th
July,
1945,
made
under
the
Dominion
Succession
Duty
Act,
1940-41,
Statutes
of
Canada,
chap.
14,
as
amended.
The
item
in
dispute
consists
of
certain
securities
in
a
trust
fund
established
by
a
deed
of
settlement,
made
on
the
8th
of
December,
1930,
to
take
effect
on
the
1st
January,
1931,
between
Edward
Rogers
Wood
(referred
to
as
the
settlor)
and
Messrs.
Fisher
and
Hastie,
as
trustees
and
the
daughter
of
the
settlor,
Mildred
P.
S.
Fleming
(now
Gilchrist)
referred
to
as
the
donee.
The
deed
of
settlement
was
amended
by
an
agreement
dated
1st
February,
1937.
sa
The
Dominion
Act
was
assented
to
on
the
14th
June,
1941.
The
settlor
died
on
the
16th
June,
1941,
domiciled
in
the
Province
of
Ontario.
An
amendment
to
the
Dominion
Act
1942,
chap.
42
was
assented
to
on
the
1st
August,
1942,
and
the
provisions
of
the
amending
Act
were
made
to
apply
retrospectively
to
successions
derived
from
persons
dying
on
or
after
the
14th
June,
1941.
The
Dominion
Act
must,
therefore,
be
considered
in
the
form
in
which
it
stood
at
the
date
of
the
settlor’s
death,
namely
the
Dominion
Succession
Duty
Act
1941
as
amended
by
Act
of
1942.
The
deed
of
settlement
provided
in
part
:—
“WHEREAS
the
Settlor
is
desirous
of
making
provision
for
the
maintenance
and
benefit
of
his
daughter,
the
Beneficiary
herein
;
4
AND
WHEREAS
the
Settlor
being
the
absolute
owner
of
the
securities
specified
in
Schedule
44
A”
hereto
has
transferred
the
same
to
the
Trustees
to
hold
as
a
Trust
Fund
upon
the
Trusts
hereinafter
expressed
;
4
NOW
THIS
DEED
WITNESSETH
that
in
consideration
of
the
natural
love
and
affection
which
the
Settlor
has
for
his
said
Daughter,
the
Beneficiary
herein,
and
for
divers
good
causes
and
considerations,
the
Settlor
hereby
directs
and
has
agreed
and
declared
as
follows
:—
"1.
The
Trustees
shall
hold
the
securities
transferred
to
them
and
set
forth
in
Schedule
"‘A’’
hereto,
hereinafter
called
the
‘‘Trust
Fund’’,
on
trust
to
pay
the
annual
income
arising
therefrom
after
the
1st
day
of
January
1931
to
the
Beneficiary
in
quarterly
instalments
on
the
1st
days
of
January,
April,
July
and
October
in
each
year,
commencing
on
the
1st
day
of
April
1931,
for
and
during
the
lifetime
of
the
Settlor
and
upon
his
death
shall
transfer
the
securities
then
representing
the
Trust
Fund
and
the
accumulated
income
therefrom
to
the
Beneficiary
for
her
own
absolute
use
and
benefit
;
provided
that
in
the
event
of
the
Beneficiary
dying
in
the
lifetime
of
the
Settlor
the
Trustees
shall
transfer
such
securities
then
representing
the
Trust
Fund
and
the
accumulated
income
therefrom
to
the
Settlor
for
his
own
absolute
use
and
benefit.”
First
as
to
the
subject
matter
of
the
tax.
Rose,
C.J.,
H.C.,
in
Re
Flavelle
Estate
[1943]
O.R.,
167
at
p.
182
said:—
"‘In
Kerr
v.
Superintendent
of
Income
Tax
and
Attorney-
General
Alta.,
Kerwin,
J.,
with
whom
Taschereau
and
Gillanders
JJ.,
concurred,
has
drawn
attention
to
the
fact
that
Lord
Thankerton
‘s
statement
in
Provincial
Treasurer
of
Alberta
v.
Kerr,
that
the
identification
of
the
subject-matter
of
the
tax
is
naturally
to
be
found
in
the
charging
section
of
the
statute,
was
made
in
the
course
of
the
consideration
of
the
question
whether
the
tax
was
imposed
on
property
or
a
transmission.
The
fact
that
the
statement
was
made
in
that
connection
led
Kerwin
J.,
to
the
conclusion
that
it
aflorded
no
assistance
in
the
determination
of
the
question
with
which
the
Supreme
Court
of
Canada
had
to
deal,
but
it
is
to
my
mind
of
prime
importance
in
connection
with
the
point
under
discussion.
”’
Under
the
Dominion
Act,
however,
in
the
charging
provisions,
Part
ILI,
sec.
10
imposes
an
initial
duty
at
a
rate
dependent
on
"‘the
aggregate
net
value’’,
and
sec.
11
imposes
an
additional
duty
at
a
rate
dependent
on
‘‘the
dutiable
value
‘
‘
on
each
succession
described
in
see.
6.
Section
6
which
is
not
in
the
charging
provision
levies
duties
on
successions
:—
"‘6.
Subject
to
the
exemptions
mentioned
in
section
seven
of
this
Act,
there
shall
be
assessed,
levied
and
paid
at
the
rates
provided
for
in
the
First
Schedule
to
this
Act
duties
upon
or
in
respect
of
the
following
successions,
that
is
to
say,—
(a)
where
the
deceased
was
at
the
time
of
his
death
domiciled
in
a
province
of
Canada,
upon
or
in
respect
of
the
succession
to
all
real
or
immovable
property
situated
in
Canada,
and
all
personal
property
wheresoever
situated
;
(b)
where
the
deceased
was
at
the
time
of
his
death
domiciled
outside
of
Canada,
upon
or
in
respect
of
the
succession
to
all
property
situated
in
Canada.’’
"‘Succession’’
is
defined
under
the
Act
as:—
"2
(m).
"
Succession
‘
‘
means
every
past
or
future
disposition
of
property,
by
reason
whereof
any
person
has
or
shall
become
beneficially
entitled
to
any
property
or
the
income
thereof
upon
the
death
of
any
deceased
person,
either
immediately
or
after
any
interval,
either
certaintly
or
contingently,
and
either
originally
or
by
way
of
substitutive
limitation,
and
every
devolution
by
law
of
any
beneficial
interest
in
property,
or
the
income
thereof,
upon
the
death
of
any
such
deceased
person,
to
any
other
person
in
possession
or
expectancy,
and
also
includes
any
disposition
of
property
deemed
by
this
Act
to
be
included
in
a
succession.”’
The
effect
then
of
the
charging
provisions
6,
10
and
11
and
the
statutory
meaning
of
succession
is
that
duty
is
levied
upon
dispositions
of
property,
devolutions
of
property
and
dispositions
of
property
deemed
(by
sec.
3
(1)
)
to
be
included
in
a
succession.
While
2
(m),
which
defines
succession,
has
been
taken
from
section
II
of
the
English
Succession
Duties
Act,
1853,
dispositions
under
2
(m)
do
not,
as
they
do
under
sec.
IT
of
the
English
Succession
Duties
Act,
confer
successions,
i.e.,
property
chargeable
with
duty,
on
successors.
"‘Succession’’
under
2
(m)
is
not
‘‘property’’
to
which
any
person
has
or
shall
become
beneficially
entitled
upon
the
death
of
any
deceased
person
by
reason
of
any
past
or
future
disposition,
but
every
past
or
future
‘‘disposition
of
property”
by
reason
whereof
any
person
has
or
shall
become
beneficially
entitled
to
any
property,
and
fit
is
any
‘‘disposition
of
property”
and
not
‘‘property’’
that
is
deemed
under
section
3
(1)
to
be
included
in
a
succession.
Under
sec.
II
of
the
Finance
Act
of
1894
certain
“properties”
set
out
in
the
subsections
are
deemed
to
be
included
in
property
passing
on
the
death
of
the
deceased.
While
sec.
3
of
the
Dominion
Act
has
been
taken
in
part
from
this
section,
yet
under
sec.
3
of
a
succession
shall
be
deemed
to
include,
not
‘‘property’’
but
the
following
‘‘dispositions
of
property”.
Rose,
C.J.H.C.,
in
Re
Flavelle
Estate
(supra),
held
that
under
sec.
9
(c)
of
the
Succession
Duty
Act
of
Ontario,
R.S.O.,
1937,
chap.
26:—
“9
(c).
Every
disposition
of
any
property
(other
than
realty
situate
outside
Ontario)
made
within
Ontario
by
the
deceased
person
during
his
lifetime
on
or
after
July
1,
1892
;
‘
‘
the
subject
matter
of
the
taxation
imposed
was
the
disposition
and
not
the
property
or
the
disponee.
I
am
of
the
opinion
that
in
the
Dominion
Act,
the
subject
matter
of
the
tax
(applicable
in
this
case)
is
the
disposition
and
not
the
property.
Under
see.
10
an
initial
duty
is
levied
upon
each
succession
at
a
rate
determined
by
the
aggregate
net
value,
which,
as
defined
by
sec.
2
(a),
is
the
value
of—(a)
the
property
of
the
deceased,
and
the
value
of—(b)
all
property
described
in
sec.
3,
after
the
debts
and
allowances
are
deducted.
The
duty
is
then
levied
at
that
rate
upon
each
succession,
i.e.,
disposition
of
property.
But
no
provision
has
been
made
by
which
the
value
of
the
disposition
can
be
ascertained.
In
the
Ontario
Succession
Duty
Act,
1937,
referred
to
above,
it
was
provided
by
section
12
that
for
the
purposes
of
that
Act,
the
value
of
a
disposition
shall
be
the
fair
market
value
of
the
property
in
respect
of
which
such
a
disposition
is
made
.
.
.
While
no
similar
provision
is
contained
in
the
Dominion
Act,
in
my
opinion
it
can
reasonably
be
inferred
from
the
whole
Act,
and
particularly
from
the
definitions
of
"
"
aggregate
net
value’’
and
‘‘dutiable
value’’,
that
the
value
of
the
disposition
is
the
value,
at
the
date
of
the
death
of
the
settlor,
of
the
property
in
the
disposition.
Under
the
English
Succession
Duties
Act,
1853,
the
person
whose
death
gives
rise
to
the
liability
to
succession
duty
may
be
anyone
and
need
not
be,
and
often
in
fact
is
not,
the
predecessor:
7th
Ed.,
Hanson
Death
Duties,
p.
42.
Under
see.
2
(j)
of
the
Dominion
Act,
"‘predecessor’’
means
the
person
dying
after
the
date
of
the
coming
into
force
of
this
Act
from
whom
the
interest
of
a
successor
in
any
property
is
or
shall
be
derived.
Taxation
under
the
Dominion
Act
is,
therefore,
only
imposed
on
the
death
of
the
predecessor.
So
that
while
under
the
Succession
Duties
Act,
1853,
taxation
is
imposed
when
a
life
interest
or
something
equivalent
to
it,
terminates
and
the
remainder
interest
falls
into
possession,
that
is
not
the
case
under
the
Dominion
Act.
The
first
question
is
whether
or
not
the
disposition
of
property
in
this
case
falls
within
see.
2
(m).
The
Dominion
Act
is
clearly
limited
to
dispositions
of
two
kinds
of
property
and
two
kinds
only.
The
initial
duty
under
sec.
16
is
levied
at
the
rate
which
is
determined
by
the
“aggregate
net
value’’
which
in
turn
is
defined
as—
"2
(a).
‘‘
Aggregate
net
value’’
means
the
fair
market
value
as
at
the
date
of
death,
of
all
the
property
of
the
deceased,
wherever
situated,
together
with
the
fair
market
value,
as
at
the
said
date,
of
all
such
other
property
wherever
situated,
mentioned
and
described
in
section
three
of
this
Act,
as
deemed
to
be
included
in
a
succession
or
successions,
as
the
case
may
be,
from
the
deceased
as
predecessor,
after
the
debts,
incumbrances
and
other
alowances
are
deducted
therefrom
as
authorized
by
section
eight
of
this
Act.”
Aggregation
is
described
in
Wooley
on
Death
Duties
(5th
ed.),
p.
97
as
the
combining
together
of
all
classes
of
property,
which
become
liable
to
duty,
for
the
purpose
of
arriving
at
the
rate
of
duty
on
all
or
any
of
them.
From
such
aggregate
value
is
deducted
the
debts,
incumbrances
and
allowances
leaving
the
aggregate
net
value
defined
by
sec.
2
(a).
The
value
then
of
dispositions
and
devolutions
of
all
classes
of
property,
which
become
liable
to
duty,
under
the
Act
consists
of
the
fair
market
value,
as
at
the
date
of
death
of
:—
(a)
all
the
property
of
the
deceased
and
of
(b)
all
such
other
property
described
in
section
8.
Property
is
defined
by
:—
"2
(k).
"‘Property”
includes
property,
real
or
personal,
movable
or
immovable,
of
every
description,
and
every
estate
and
interest
therein
or
income
therefrom
capable
of
being
devised
or
bequeathed
by
will
or
of
passing
on
the
death,
and
any
right
or
benefit
mentioned
in
section
three
of
this
Act.”
Property
capable
of
being
devised
or
bequeathed
by
will
or
of
passing
on
death
is—(a)
property
which
the
deceased
owned
at
the
time
of
his
death.
And
any
right
or
benefit
under
sec.
3
is—
(b)
property
described
in
ee.
3.
So
that
property
of
the
deceased
in
2
(a)
"aggregate
net
value’’
is
property
which
the
deceased
owned
at
the
time
of
his
death.
The
Dominion
Act
is,
therefore,
limited
to
dispositions
of
two
kinds
of
property—
(a)
Property
which
the
deceased
owned
at
the
time
of
his
death.
(b)
Property
described
in
section
3.
As
sec.
3
deals
with
dispositions
of
the
property
described
in
that
section,
then
2
(m)
can
only
deal
with
dispositions
of
property
which
the
deceased
owned
at
the
time
of
his
death,
because
that
is
all
that
remains
for
it
to
deal
with.
The
settlor
in
1930
transferred
all
his
interest,
both
legal
and
equitable,
to
the
trustees
so
that
at
the
date
of
his
death
he
had
no
interest
of
any
kind
in
the
securities
in
the
trust
fund.
The
possibility
that
the
securities
might
revert
to
him
in
the
event
the
daughter
predeceased
him,
is
not
an
interest
in
property.
As
the
settlor
had
no
interest
in
the
securities
at
the
time
of
his
death,
and
as
the
operation
of
sec.
2
(m)
is
limited
to
dispositions
of
property
which
the
deceased
owned
at
the
time
of
his
death,
the
disposition
in
this
case
does
not,
in
my
opinion,
fall
within
sec.
2
(m).
Decisions
under
the
English
Succession
Duties
Act,
1853,
are
of
little
assistance
in
cases
under
the
Dominion
Act,
for
while
sec.
2
(m)
is
taken
from
part
of
sec.
II
of
the
Act
of
1853,
it
has
been
placed
in
an
entirely
different
context
and
in
my
opinion
is
limited
in
its
operation
to
dispositions
of
property
owned
by
the
deceased
at
the
time
of
his
death.
In
addition,
as
I
have
already
pointed
out,
taxation
under
the
Dominion
Act
is
only
imposed
on
the
death
of
the
predecessor,
while
this
is
not
the
case
under
the
Succession
Duties
Act,
1853.
Mr.
Pickup
contended
that
the
last
part
of
see.
3
(1)
(a)
was
ancillary
to
and
clarified
sec.
2
(m).
But
sec.
2
(m)
is
a
pure
succession
and
in
my
view
is
limited
to
disposition
of
property
which
the
deceased
owned
at
the
time
of
his
death.
See.
3
(1)
deals
with
dispositions
of
property
which
the
deceased
once
had
but
parted
with
in
one
of
the
ways
described
in
the
subsections
but
which,
for
the
purposes
of
the
Act,
are
deemed
to
be
included
in
a
succession.
Far
from
being
ancillary,
secs.
2
(m)
and
8
(1)
are
mutually
exclusive,
just
as
sees.
1
and
2
of
the
Finance
Act
of
1894
are
mutuualy
exclusive.
‘Under
the
Finance
Act
of
1894
see.
1
of
the
Act
sets
out
the
property
passing
on
death,
and
sec.
2
sets
out
property
deemed
to
be
included
in
property
passing
on
death.
In
Cowley
v.
Commissioners
of
Inland
Revenue
[1899]
A.C.,
198
at
p.
210.
Lord
MacNaughton
said
:—
Now
if
the
case
falls
within
section
1
it
cannot
also
come
within
section
2.
The
two
sections
are
mutually
exclusive.
.
In
my
opinion
the
disposition,
therefore,
cannot
be
within
both
sees.
2
(m)
and
3
(1).
The
next
question
to
be
determined
is
whether
this
disposition
falls
within
see.
3
(1).
-=
Counsel
for
the
Respondent
contends
that
the
case
is
also
within
the
second
part
of
sec.
3
(
1
)
(a)
:—
"‘3
(1).
A
^succession”
shall
be
deemed
to
include
the
following
dispositions
of
property
and
the
beneficiary
and
the
deceased
shall
be
deemed
to
be
the
"‘successor’’
and
"‘predeces-
sor’’
respectively
in
relation
to
such
property
:—
(a)
property
and
income
therefrom
voluntarily
transferred
by
grant,
bargain
or
gift,
or
by
any
form
or
manner
of
transfer
made
in
general
contemplation
of
the
death
of
the
grantor,
bargainor
or
donor,
and
with
or
without
regard
to
the
imminence
of
such
death,
or
made
or
intended
to
take
effect
in
possession
or
enjoyment
after
such
death
to
any
person
in
trust
or
otherwise,
or
the
effect
of
which
is
that
any
person
becomes
beneficially
entitled
in
possession
or
expectancy
to
such
property
or
income.’’
That
is,
that
it
is
property
voluntarily
transferred
by
grant,
bargain
or
gift
or
by
any
form
or
manner
of
transfer
.
.
..
made
or
intended
to
take
effect
in
possession
or
enjoyment
after
such
death
to
any
person
in
trust
or
otherwise
.
.
.
Counsel
did
not
contend
that
the
settlement
was
made
"‘in
contemplation
of
death’’,
and
it
is
clear
that
in
no
proper
sense
can
the
settlement
be
said
to
have
been
made
in
contemplation
of
death.
I
am
of
the
opinion
that
the
second
part
of
the
section
"‘or
made
or
intended
to
take
effect
in
possession
or
enjoyment
after
such
death
to
any
person
in
trust
or
otherwise’’
is
not
something
separate
and
apart
from
the
first
part
of
the
section,
and
the
words
in
the
subsection,
‘‘after
such
death’’
refer
quite
clearly
to
a
transfer
made
‘‘in
general.
contemplation
of
the
death
of
the
grantor,
bargainor
or
donor,
and
with
or
without
regard
to
the
imminence
of
such
death
.
.
.’’
See
judgment
of.
Beck,
J.
in
Cowan
v.
Attorney-General
[1925]
2
D.L.R.
647
at
p.
653.
The
settement
is
not,
in
my
opinion,
within
sec.
3
(1)
(a).
See.
3
(1)
does
not
include
property
in
which
the
deceased
or
any
other
person
had
an
interest
ceasing
on
the
death
of
the
deceased
to
the
extent
to
which
a
benefit
accrues
or
arises
by
the
cesser
of
interest
such
as
2
(1)
(b)
of
the
English
Finance
Act,
1894,
and
also
in
a
number
of
Provincial
Acts.
The
disposition
is
either
within
sec.
3
(1)
(d)
or
it
does
not
attract
taxation
at
all
because
it
is
not,
in
my
opinion,
within
any
of
the
other
subsections
of
sec.
3
(1).
The
appellant
contends
that
the
disposition
is,
in
any
event,
exempt
under
sec.
7
(1)
(g).
It
is
clear,
of
course,
that
if
the
disposition
attracts
taxation
under
section
3
(1)
(d)
it
would
not,
for
the
same
reasons,
be
exempt
under
section
7
(1)
(g).
Gifts
with
reservations
of
benefits
are
deemed
to
be
included
in
a
“
succession
‘
‘
under
:—
“3
(1).
A
‘succession’
shall
be
deemed
to
include
the
following
disposition
of
property
and
the
beneficiary
and
the
deceased
shall
be
deemed
to
be
‘successor’
and
‘predecessor’
respectively
in
relation
to
such
property
:—
(d)
property
taken
under
a
gift
whenever
made
of
which
actual
and
bona
fide
possession
and
enjoyment
shall
not
have
been
assumed
by
the
donee
or
by
a
trustee
for
the
donee
immediately
upon
the
gift
and
thenceforward
retained
to
the
entire
exclusion
of
the
donor
or
of
any
benefit
to
him,
whether
voluntary
or
by
contract
or
otherwise.”
The
exemption
section
is
:—
"7
(1).
From
the
dutiable
value
of
any
property
included
in
a
succession
the
following
exemptions
shall
be
deducted
and
no
duty
shall
be
leviable
in
respect
thereof
:—
(g)
in
respect
of
any
gift
made
by
the
deceased
prior
to
the
twenty-ninth
day
of
April,
one
thousand
nine
hundred
and
forty-one,
where
actual
and
bona
fide
possession
and
enjoyment
of
the
property,
the
subject
matter
of
the
gift,
has
been
assumed
by
the
donee
or
by
a
trustee
for
the
donee
immediately
upon
the
making
of
the
gift
and
thenceforward
retained
to
the
entire
exclusion
of
the
donor,
or
of
any
benefit
to
him,
whether
voluntary
or
by
contract
or
otherwise.
‘
‘
The
questions
to
be
determined
are
:—
(1)
Was
there
a
gift
within
the
meaning
of
sees.
7
(1)
(g)
and
3
(1)
(d)?
(2)
What
was
the
property
comprised
in
the
gift?
Was
it
the
securities
themselves
or
only
a
particular
kind
of
interest
in
the
securities
?
(3)
Had
bona
fide
possession
and
enjoyment
been
assumed
by
the
donee
or
by
a
trustee
for
the
donee
immediately
upon
the
gift?
(4)
Had
bona
fide
possession
and
enjoyment
been
thenceforward
retained
by
the
donee
or
by
a
trustee
for
the
•
donee
to
the
entire
exclusion
of
the
settlor
and
to
the
entire
exclusion
of
any
benefit
to
him,
whether
voluntary
or
by
contract
or
otherwise
?
These
same
questions
were
determined
in
Commissioner
for
Stamp
Duties
of
New
South
Wales
v.
Perpetual
Trustee
Co.
[1943]
A.C.
425,
hereinafter
referred
to
as
the
New
South
Wales
case,
and
which
is
directly
in
point.
In
that
case
the
facts
taken
from
the
headnote
were
:—
By
an
indenture
of
settlement
made
in
1917
between
the
settlor
and
five
trustees,
of
whom
the
settlor
himself
was
one,
it
was
declared
that
the
trustees
should
hold
certain
company
shares
transferred
by
the
settlor,
who
was
the
owner,
to
the
trustees
in
trust,
to
apply
during
the
minority
of
his
son,
the
whole
or
any
part
of
the
income
or
corpus
as
the
trustees
should
think
fit
for
the
maintenance,
advancement
or
benefit
of
the
son,
and
on
his
attaining
the
age
of
twenty-one
years,
to
transfer
to
him
as
his
absolute
property,
all
the
assets
and
property
whatsoever,
including
accumulations
of
income.
From
the
date
of
the
settlement,
the
settlor
never
exercised
any
voting
powers
‘in
respect
of
the
shares.
No
part
of
the
income
was
applied
towards
the
infant’s
maintenance,
any
balance
which
might
have
been
so
applied
being
accumulated
and
invested.
The
son
attained
the
age
of
twenty-one
years
in
1931,
when
the
assets
comprised
in
the
settlement
were
transferred
to
him.
A
claim
was
made
by
the
revenue
authorities
that
on
the
death
in
1921
of
the
settlor,
the
shares,
the
subject
of
the
settlement,
had
formed
part
of
the
settlor’s
dutiable
estate
by
virtue
of
s.
102,
ss.
2
(d)
of
the
New
South
Wales
Stamp
Duties
Act,
1920.
After
reviewing
the
opinions
expressed
in
the
Supreme
Court
and
in
the
High
Court
of
Australia
as
to
what
was
the
property
comprised
in
the
gift
and
whether
or
not
bona
fide
possession
and
enjoyment
was
assumed
by
the
donee
immediately
upon
the
gift,
the
judgment
delivered
by
Lord
Russell
of
Killowen
states,
page
439
:—
"
"
There
is
no
gift
of
corpus
to
the
son
except
in
the
direction
to
the
trustees
to
transfer
to
him
on
his
attaining
twenty-one.
What
have
then
(and
only
then)
to
be
transferred
are
described
as
"
"
all
the
property
and
assets
whatsoever
including
the
accumulations
of
income
and
all
investments
held
by
the
trustees”,
and
they
are
then
to
be
transferred
to
him
‘‘as
his
absolute
property’’.
Until
that
event
had
happened
they
were
not,
in
their
Lordships’
opinion,
his
absolute
property;
until
that
event
had
happened
he
had
only
a
contingent
interest.
He
was
only
to
be
absolutely
entitled
to
corpus
if
and
when
he
attained
his
age
of
twenty-one
years.
"‘For
the
reasons
hereinafter
appearing
their
Lordships
are
in
agreement
with
the
decision
of
the
High
Court
in
this
ease.
In
their
opinion
the
property
comprised
in
the
gift
was
the
equitable
interest
in
the
eight
hundred
and
fifty
shares,
which
was
given
by
the
settlor
to
his
son.
The
disposition
of
that
interest
was
effected
by
the
creation
of
a
trust,
1.e.,
by
transferring
the
legal
ownership
of
the
shares
to
trustees,
and
declaring
such
trusts
in
favour
of
the
son
as
were
co-extensive
with
the
gift
which
the
settlor
desired
to
give.
The
donee
was
the
recipient
of
the
gift
;
whether
the
son
alone
was
the
donee
(as
their
Lordships
think)
or
whether
the
son
and
the
body
of
trustees
together
constituted
the
donee,
seems
immaterial.
The
trustees
alone
were
not
the
donee.
They
were
in
no
sense
the
object
of
the
setter’s
bounty.
Did
the
donee
assume
bona
fide
possession
and
enjoyment
immediately
upon
the
gift?
The
linking
of
possession
with
enjoyment
as
a
composite
object
which
has
to
be
assumed
by
the
donee
indicates
that
the
possession
and
enjoyment
contemplated
is
beneficial
possession
and
enjoyment
by
the
object
of
the
donor’s
bounty.
This
question
therefore
must
be
answered
in
the
affirmative,
because
the
son
was
(through
the
medium
of
the
trustees)
immediately
put
in
such
bona
fide
beneficial
possession
and
enjoyment
of
the
property
comprised
in
the
gift
as
the
nature
of
the
gift
and
the
circumstances
permitted.’’
The
language
in
the
New
South
Wales
judgment
can
be
adopted
in
this
case
because
what
was
said
there
applies
with
equal
force
here.
There
is
no
gift
of
the
corpus,
except
in
the
direction
to
the
trustees
to
transfer
the
securities
to
the
donee
on
the
death
of
the
donor.
What
have
then
to
be
transferred
were
"‘the
securities
then
representing
the
trust
fund
and
the
accumulated
income
therefrom”,
and
they
are
then
to
be
transferred
to
her
"‘for
her
own
absolute
use
and
benefit”.
Until
that
event
had
happened
they
were
not
her
absolute
property.
Until
that
event
happened
her
beneficial
interest
was
conditional.
It
was
not
contingent
as
in
the
New
South
Wales
case.
There
was
no
condition
precedent
to
vesting,
but
if
she
died
before
the
death
of
the
settlor,
the
interest
would
be
taken
away.
The
condition
then
was
a
condition
subsequent
and
her
conditional
interest
was,
therefore,
vested
subject
to
be
divested.
There
was
a
gift
of
income
until
the
death
of
the
settlor
so
that
the
gift
of
the
corpus
does
not
stand
alone.
The
gift
amounts,
in
substance,
to
a
vested
interest
divided
into
two
portions
for
the
purpose
of
protracting,
not
the
vesting,
but
the
possession
only.
The
donee
was
given,
in
the
language
of
Lord
Russell
of
Killowen
in
Adamson
v.
Attorney-General
[1933]
A.C.,
257
at
p.
290,
an
immediately
vested
interest
but
her
interest
was
defeasible,
i.e.,
if
she
died
before
the
settlor.
"‘Gift''
is
not
defined
in
the
Dominion
Act,
the
Finance
Act
of
1894,
nor
in
the
New
Zealand
Death
Duties
Act
1921.
It
is
defined
in
the
New
South
Wales
Stamp
Duties
Act
1920.
A
settlor
who
declares
trusts
of
property
only
gives
a
beneficial
interest.
The
Dominion
Act
contemplates
a
gift
of
a
beneficial
interest
because
sec.
’7
(1)
(g)
and
sec.
3
(1)
(d)
expressly
provide
for
possession
and
enjoyment
of
a
gift
being
assumed
by
the
donee
or
by
a
trustee
for
the
donee.
The
corresponding
provisions
of
the
other
Acts
mentioned
do
not
contain
the
words
‘‘or
by
a
trustee
for
the
donee
‘
’.
Moreover
sec.
3
(1)
(c)
provides
for
a
gift
inter
vivos
9
"‘whether
by
way
of
transfer,
delivery,
declaration
of
trust
or
otherwise
.
.
.’’
In
this
case,
in
my
opinion,
there
was
a
gift
within
the
meaning
of
i
"gift”
in
see.
3
(1)
(d)
and
sec.
7
(1)
(g),
not
of
the
securities
in
the
trust
fund,
but
of
the
equitable
interest
in
the
securities,
and
that
beneficial
interest
was
vested
in
the
donee
from
the
inception
of
the
trust
and
the
gift
was
therefore
one
prior
to
the
29th
April,
1941.
The
donee
was
the
recipient
of
the
gift
and
bona
fide
possession
and
enjoyment
was
assumed
by
the
trustee
for
the
donee
immediately
upon
the
gift.
The
judgment
in
the
New-
South
Wales
case
held
that
the
resulting
trust
in
that
case
did
not
render
the
gift
one
in
which
possession
and
enjoyment
had
not
been
retained
to
the
entire
exclusion
of
the
donor
or
of
any
benefit
within
the
meaning
of
sec.
102,
subsec.
2
(d)
of
the
Stamp
Duties
Act
1920
New
South
Wales,
and
in
doing
so
expressly
affirmed
the
decision
in
the
Cochrane
case
[1905]
I.R.,
626;
[1906]
I.R.,
200,
in
which
it
was
held
that
an
express
provision
for
reversion
did
not
render
the
gift
one
in
which
the
donor
was
not
excluded
from
possession
and
enjoyment
or
of
any
benefit
within
the
meaning
of
Clause
(a)
of
the
Customs
and
Inland
Revenue
Act
1881;
sec.
38
(2)
as
amended
by
sec.
11
of
the
Customs
and
Inland
Revenue
Act
1899,
and
the
Finance
Act
1894—Clause
(c)
(2).
The
result
of
the
Judgment
in
the
Cochrane
case
is
stated
in
2nd.,
ed.,
13
Halsbury,
240
:—"
"
That
a
contingent
reversion,
reserved
to
the
donor
in
the
corpus
of
property
given
upon
trusts,
is
not
reserved
out
of
the
gift,
but
is
something
not
comprised
in
the
gift’’.
In
the
Adams:
case
[1932]
N.Z.L.R.,
741,
cited
in
the
argument
in
the
New
South
Wales
case,
Ostler,
J.,
held
that
as
the
provision
for
reversion
in
the
settlement
in
that
case
procured
no
further
result
than
would
follow
operation
of
law
on
the
exhaustion
of
the
objects
of
the
trust
that
it
did
not
render
the
gift
one
in
which
the
settlor
was
not
excluded
from
a
"‘benefit’’
by
contract
or
otherwise
within
the
meaning
of
sec.
5
(1)
(c)
of
the
New
Zealand
Death
Duties
Act
1921.
The
sections
of
these
three
acts
which
correspond
with
the
relevant
provisions
sec.
3
(1)
(d)
and
sec.
7
(1)
(g)
of
the
Dominion
Act
are
in
very
similar
words
and
there
is
no
difference
in
substance.
The
provisions
in
the
New
Zealand,
New
South
Wales
and
Dominion
Act
have
all
been
taken
from
the
Customs
and
Inland
Revenue
Act
as
amended.
There
is
no
doubt,
however,
that
the
majority
judgment
of
the
Supreme
Court
of
the
United
States
in
Helvering
v.
Hallock,
309
U.S.R.,
106,
which
overruled
its
own
judgment
in
the
St.
Louis
Trust
case,
296
U.S.R.,
39,
held
that
a
provision
for
reversion
rendered
the
transfer
incomplete
and
reserved
an
interest
in
the
gift
to
the
settlor
which
only
terminated
on
the
death
of
the
settlor.
The
majority
judgment
was
delivered
by
Mr.
Justice
Frank-
further.
In
his
reasons
for
judgment
the
following
is
of
interest
in
this
case
:—
"The
law
of
contingent
and
vested
remainders
is
full
of
casuistries
.
.
.
The
importation
of
these
distinctions
and
controversies
from
the
law
of
property
into
the
administration
of
the
estate
tax
precludes
a
fair
and
workable
tax
system.
Essentially
the
same
interests,
judged
from
the
point
of
view
of
wealth,
will
be
taxable
or
not,
depending
upon
elusive
and
subtle
casuistries
which
may
have
their
historic
justification
but
possess
no
relevance
for
tax
purposes.
These
unwitty
diversities
of
the
law
of
property
derive
from
mediaeval
concepts
as
to
the
necessity
of
a
continuous
seisin.
Distinctions
which
originated
under
a
feudal
economy
when
land
dominated
social
relations
are
peculiarly
irrelevant
in
the
application
of
tax
measures
now
so
largely
directed
toward
intangible
wealth.
‘
‘
I
am
of
the
opinion,
notwithstanding
the
judgment
in
Helvering
v.
Hallock
(supra)
that
a
contingent
reversion
is
not
reserved
out
of
the
gift,
but
is
something
not
comprised
in
the
gift,
and
that
the
provision
for
reversion
contained
in
this
settlement
did
not
render
the
gift
one
in
which
possession
and
enjoyment
have
not
been
assumed
and
retained
to
the
entire
exclusion
of
the
settlor
or
of
any
benefit
to
him
within
the
meaning
of
the
secs.
3
(1)
(d)
and
7
(1)
(g).
There
are
certain
provisions
in
this
settlement
which
must
be
considered
in
determining
the
answer
to
the
last
question,
viz.,
had
bona
fide
possession
and
enjoyment
been
thenceforward
retained
by
the
donee
or
by
a
trustee
for
the
donee
to
the
entire
exclusion
of
the
donor
or
of
any
benefit
to
him,
whether
voluntary
or
by
contract
or
otherwise?
The
deed
of
settlement
(1930)
with
the
amendments
under
the
agreement
(1937)
further
provided
:—
"
‘2.
The
Trustees
shall
have
power
to
hold
the
securities
set
forth
in
Schedule
"‘A’’
hereto
or
any
securities
substituted
therefor
as
hereinafter
provided,
notwithstanding
that
the
said
securities
may
not
be
securities
in
which
trustees
are
authorized
by
law
to
invest
trust
funds,
and
shall
from
time
to
time
upon
the
direction
in
writing
of
the
settlor.
‘
‘
(Amended
by
the
agreement
by
adding
after
the
word
‘‘Settlor’’
—"
4
and
National
Trust
Company,
Limited
and/or
any
Chartered
Bank
in
the
Dominion
of
Canada”.)
‘‘During
his
lifetime
sell,
call
in
and
convert
into
money
the
said
securities
or
any
part
thereof,
and
invest
the
moneys
thereby
produced
in
such
securities
or
investments
as
the
Settlor
may
from
time
to
time
direct
and
notwithstanding
that
the
said
securities
or
investments
may
not
be
securities
or
invesments
in
which
trustees
are
authorized
by
law
to
invest
trusts
funds,
and
shall
have
power
upon
the
direction
in
writing
of
the
Settlor
during
his
lifetime
to
accept
from
the
Settlor
in
substitution
in
part
or
in
toto
of
the
said
securities
set
forth
in
Schedule
"‘A’’
hereto
other
securities
in
respect
of
which
the
Settlor
shall
certify
in
writing
that
the
securities
so
substituted
are
of
a
value
at
least
equal
to
the
value
of
the
securities
for
which
the
same
are
to
be
substituted,
and
the
securities
so
substituted
together
with
the
securities
to
be
retained
by
the
Trustees
and
constituting
the
Trust
Fund
shall
yield
at
the
date
of
such
substitution
a
net
income
of
at
least
Twenty-four
Thousand
Dollars
($24,000)
per
annum
after
allowing
from
the
gross
income
from
such
securities
for
the
payment
of
all
taxes
payable
by
the
Beneficiary
in
respect
of
the
income
from
such
securities
which
may
be
assessed
or
levied
by
the
Dominion
of
Canada
or
Province
of
Ontario,
or
any
other
taxing
authority.
"‘The
Trustees
shall
be
entitled
to
accept
the
hereinbefore
referred
to
certificate
of
the
Settlor
as
the
conclusive
evidence
of
the
truth
of
any
statement
of
facts
therein
contained,
and
the
Trustees
shall
be
completely
protected
in
relying
and
acting
upon
any
such
certificate.”
(Amended
by
the
agreement
by
striking
out
this
paragraph
and
substituting
the
following
:—)
"‘The
Trustees
shall
be
entitled
to
accept
the
hereinbefore
referred
to
Certificates
of
the
Settlor
and
National
Trust
Company,
Limited,
or
any
Chartered
Bank
in
the
Dominion
of
Canada
as
conclusive
evidence
of
the
truth
of
any
statement
of
facts
therein
contained,
and
the
Trustees
shall
be
completely
protected
in
relying
and
acting
upon
any
such
Certificates.
"5.
The
Settlor
may
from
time
to
time
and
at
any
time
reduce
or
increase
the
number
of
Trustees
or
substitute
any
one
or
more
Trustees
for
either
or
both
of
the
Trustees
and
may
appoint
a
new
Trustee
or
Trustees
in
the
event
of
the
death,
absence,
refusal
or
incapacity
to
act
of
any
Trustee
or
in
case
any
Trustee
desires
to
be
released
or
is
discharged
by
the
Settlor
from
the
trusts
hereof.’’
(Under
the
amending
agreement
the
following
proviso
was
added
:—)
"Provided,
however,
and
it
is
expressly
understood
and
agreed
that
the
Settlor
shall
not
be
appointed
a
Trustee
hereunder.
“The
Trustees
shall
have
power
to
appoint
the
Settlor
or
any
person
named
by
him
as
their
attorney
in
their
names,
places
and
stead
to
vote
at
all
meetings
and
otherwise
to
act
as
their
proxy
or
representative
in
respect
of
all
shares,
bonds
and
other
securities
which
may
at
any
time
be
held
by
the
Trustees
under
the
terms
hereof,
with
all
the
powers
the
Trustees
could
exercise
if
personally
present.’’
(Under
the
amending
agreement
this
provision
was
struck
out
and
cancelled.
)
There
was
no
evidence
before
me
as
to
whether
or
not
the
trustees
had
ever
exercised
their
power
to
appoint
the
settlor
as
their
proxy,
nor
whether
the
settlor
had
as
their
proxy,
voted
in
respect
of
any
shares
or
securities
in
the
trust
fund.
In
any
event
this
power
to
the
trustees
was
cancelled
approximately
five
years
before
the
Dominion
Act
came
into
force,
because
by
the
amending
agreement,
dated
1st
February,
1937,
this
paragraph
was
struck
out
and
cancelled.
In
the
New
South
Wales
case
the
settlor
had
the
power
to
vote
the
shares
in
the
fund,
but
this
does
not
appear
to
have
affected
the
decision.
It
is
not
mentioned
in
the
judgment.
There
is
no
doubt
that
under
the
provision
(paragraph
2)
the
settlor
had
the
power
to
direct
the
investment
of
the
trust
fund.
The
Trustees
had
only
the
power
to
hold
the
securities,
and
66
shall
from
time
to
time
upon
the
direction
in
writing
of
the
settlor
during
his
lifetime,
sell
.
.
.
and
invest
the
money
thereby
produced
in
such
securities
or
investments
as
the
settlor
may
from
time
to
time
direct
.
.
.”
Because
of
the
expert
knowledge
in
securities
of
the
settlor,
the
fund
would
undoubtedly
benefit
as
a
result
of
his
directions
of
the,investments.
The
power
of
investment,
however,
would
not
prevent
the
settlor
from
being
regarded
as
excluded
from
any
benefit.
It
was
the
trustees,
however,
and
not
the
settlor
who
had
the
power
to
accept
substitutions
(Paragraph
2)
:
‘‘and
(the
trustees)
shall
have
power
upon
the
direction
in
writing
of
the
settlor
during
his
lifetime
to
accept
from
the
settlor
in
substitution
in
part
or
in
toto
of
the
said
securities
set
forth
in
Schedule
A
hereto,
other
securities
.
.
.”
Paragraph
7
provides
:—
The
Trustees
shall
as
regards
all
the
trusts,
powers
and
authorities
vested
in
them
herein
have
absolute
and
uncontrolled
discretion
as
to
the
exercise
thereof
whether
in
relation
to
the
manner
or
as
to
the
mode
of
and
time
for
the
exercise
thereof.’’
The
effect
of
these
two
sections
is
that
the
trustees
could,
in
their
absolute
and
uncontrolled
discretion,
exchange
the
first
securities
placed
in
the
fund,
for
securities
which
the
settlor
might
have,
provided
these
securities
fulfilled
the
requirements
set.
out
in
the
section.
The
result
of
this
provision
was
merely
to
release
the
trustees
from
any
liability
that
might
otherwise
arise.
The
evidence
as
to
the
substitutions
that
were
effected
showed
that
they
were
effected
not
for
the
benefit
of
the
settlor,
but,
on
the
contrary,
for
the
benefit
of
the
donee,
in
order
to
maintain
her
net
income
at
$24,000
per
year.
That
was
no
doubt
the
purpose
for
which
the
provision
was
intended.
When
the
companies,
whose
securities
were
held
in
the
trust
fund,
refunded
those
issues
at
lower
rates
of
interest,
the
settlor
would
either
have
to
put
additional
capital
into
the
fund
to
buy
more
securities
in
order
to
maintain
the
income,
or
if
he
had
securities
which
would
yield
a
higher
income,
the
trustees
could
exchange
securities
with
him.
the
When
the
T.
Eaton
Realty
Limited
refunded
its
bonds,
the
trustees
could
have
turned
in
the
bonds
in
the
old
issue,
bearing
interest
at
5%
for
bonds
in
the
new
issue,
bearing
interest
at
4%,
but
the
beneficiary
would
have
lost
the
difference
of
1%
in
the
income.
The
settlor
held
bonds
of
the
new
issue
and
the
trustees
exchanged
bonds
to
the
amount
of
$100,000
bearing
interest
at
5%,
for
bonds
in
the
amount
of
$125,000,
bearing
interest
at
4%,
which
the
settlor
had.
This
substitution
was
not
a
benefit
to
him
because
it
cost
the
settlor
$25,000.
This
was
done
to
maintain
the
income
of
the
beneficiary.
The
same
thing
is
true
in
the
first
substitution..
The
evidence
given
by
one
of
the
trustees
was
that
the
value
of
the
Dominion
of
Canada
bonds
was
obviously
more
than
the
value
of
the
shares
which
the
settlor
took
in
exchange.
In
addition
the
Dominion
of
Canada
bonds
were
tax
free,
so
that
the
net
income
of
the
beneficiary
would
be
increased.
In
Reinecke
v.
Northern
Trust
Company,
278
U.S.R.,
339,
the
Supreme
Court
of
the
United
States
dealt
with
the
power
of
a
settlor
to
supervise
and
direct
investments.
The
facts
as
set
out
in
the
headnote
at
page
340,
and
in
the
judgment
at
page
344
were
:—
"
The
settlor
in
that
case
reserved
to
himself
power
to
supervise
the
reinvestment
of
trust
funds;
the
power
to
require
the
trustee
to
execute
proxies
to
his
nominee
to
vote
shares
of
stock
held
by
the
trustee
;
to
control
all
leases
executed
by
the
trustee,
and
to
appoint
successor
trustees.
‘
‘
The
late
Chief
Justice
Stone,
then
Mr.
Justice
Stone,
in
delivering
the
opinion
of
the
Court
said
:—
"Nor
would
the
reserved
power
of
management
of
the
trust
save
to
decedent
any
control
over
the
economic
benefits
or
the
enjoyment
of
the
property.
He
would
equally
have
reserved
all
these
powers
and
others
had
he
made
himself
the
trustee,
but
the
transfer
would
not
for
that
reason
have
been
incomplete.”
In
the
New
South
Wales
case
before
the
Privy
Council,
counsel
advanced
the
argument,
page
432,
that
having
regard
to
the
relationship
of
the
parties
and
the
fact
that
the
settlor
was
one
of
the
trustees
and
the
settlement
gave
the
trustees
the
right
to
delegate
all
their
powers
to
one
of
the
trustees
(which
could
have
been
the
settlor),
the
settlor
would
have
a
very
distinct
say
in
how
the
trust
was
to
be
administered,
and
there
was
reason
for
it
to
be
administered,
and
administered
properly,
in
such
a
way
that
distinct
advantages
would
or
might
accrue
to
the
settlor.
This
argument
was
clearly
rejected
by
the
Board,
page
440,
and
the
judgment
goes
on
to
state
that
this
(that
the
settlor
received
no
benefit)
was
ultimately
conceded
by
the
appellant.
A
similar
contention
has
been
advanced
in
this
case.
That
is,
that
because
of
these
powers
and
the
relationship
of
the
parties,
the
fund
could
be
administered,
and
administered
properly,
in
such
a
way
that
benefits
could
or
would
accrue
to
the
settlor.
I
do
not
agree
with
this
contention,
because
I
do
not
think
that
it
is
possible
and
I
am
of
the
opinion
that
those
are
not
benefits
within
the
meaning
of
the
sections.
Counsel
for
the
respondent
also
contended
that
the
settlor
had
power
to
substitute
securities
and
that
this
then
placed
the
trustees
in
a
position
where
they
were
holding
the
securities
not
for
the
donee
alone
but
for
both
the
settlor
and
the
donee,
and
that,
therefore,
it
could
not
be
said
that
the
donee
assumed
and
retained
possession
and
enjoyment
to
the
entire
exclusion
of
the
donor.
This
is
not
the
construction
that
I
place
on
the
section
for
the
reasons
which
I
have
already
given,
and
as
the
settlor
had
no
power
to
substiue
securities,
the
trustees
held
the
securities
only
for
the
donee.
There
is
no
provision
in
the
Dominion
Act
which
would
prohibit
the
settlor
from
administering
the
fund
through
the
trustees
such
as
there
is
in
the
Quebec
Succession
Duty
Act,
R.S.Q.,
1925,
chap.
29
:—
(a)
Gift,
.
.
where
the
donor
has
not
reserved
to
himself,
in
whole
or
in
part,
the
control,
administration,
ownership
or
enjoyment
of
the
property
.
.
.”?
Nor
is
there
in
the
Dominion
Act
any
provision
which
prohibits
a
settlor
from
exercising
any
power
of
control
over
investment,
substitution,
etc.,
of
the
securities,
such
as
there
is
in
sec.
3
(2)
(f)
of
the
Nova
Scotia
Succession
Duty
Act
(supra)
:—
"‘3
(2)
(f).
Property
passing
under
any
settlement
whereby
the
settlor
is
authorized
to
exercise
any
power
of
control
over
alteration,
conversion,
investment,
purchase
or
sale,
substitution,
etc.
”
There
is
no
justification
for
reading
these
provisions
into
the
Dominion
Act.
In
my
opinion
these
provisions
in
the
settlement
did
not
give
the
settlor
possession
or
enjoyment
or
benefit
such
as
is
contemplated
by
these
secs.
7
(1)
(g)
and
3
(1)
(d),
and
the
question
must
be
answered
in
the
affirmative.
For
the
reasons
indicated,
I
am
of
the
opinion
that
there
was
a
gift
made
by
the
deceased
prior
to
the
29th
April,
1941,
and
that
actual
and
bona
fide
possession
and
enjoyment
of
the
property,
the
subject
matter
of
the
gift,
was
assumed
by
the
trustees
for
the
donee
immediately
upon
the
making
of
the
gift
and
thenceforward
retained
to
the
entire
excluusion
of
the
donor,
or
of
any
benefit
to
him,
whether
voluntary
or
by
contract
or
otherwise.
Therefore,
the
disposition
is
not
within
sec.
3
(1)
(d)
and
is,
in
any
event,
exempt
under
7
(1)
(g).
The
assessment
as
to
this
item
was
erroneously
made
and
the
appeal
must
be
allowed
with
costs.
Appeal
allowed.