KERWIN,
J.:—This
is
an
appeal
by
J.
R.
Moodie
Company
Limited
against
a
decision
of
the
Exchequer
Court
affirming
an
assessment
for
excess
profits
tax
for
the
year
1940
under
The
Excess
Profits
Tax
Act,
being
chapter
32
of
the
Statutes
of
Canada
of
1940
as
amended.
Under
section
3
of
that
Act,
there
was
to
be
assessed,
levied
and
paid
by
the
company
a
tax
of
seventy-five
percentum
of
its
"‘excess
profits’’.
That
expression
means
that
portion
of
the
company’s
profits
in
excess
of
the
"
4
standard
profits’’.
This
last
expression
means
the
average
yearly
profits
of
a
taxpayer
in
the
"‘standard
period”
in
carrying
on,
what
was
in
the
opinion
of
the
Minister
of
National
Revenue,
the
same
class
of
business
as
the
business
of
the
taxpayer
in
the
year
of
taxation,
or
the
standard
profits
ascertained
in
accordance
with
section
5
of
the
Act.
For
present
purposes,
"standard
period’’
means
the
period
comprising
the
calendar
years
1936
to
1939,
both
inclusive.
On
December
10th,
1940,
the
company
applied
for
determination
of
its
standard
profits
under
section
5
of
the
Act
as
it
then
stood,
on
the
ground
that
its
business
was
abnormally
depressed
during
the
standard
period.
After
the
filing
of
that
application,
the
Act
was
amended
by
chapter
15
of
the
Statutes
of
Canada
1940-41,
assented
to
June
14th,
1941,
and
the
relevant
amendments
were
made
applicable
to
the
profits
of
the
1940
taxation
period.
One
of
these
amendments
repealed
a
provision
whereby
the
Minister
might
adjust
the
standard
profits
by
reference
to
any
increase
or
decrease
in
depreciation
allowances
to
such
a
basis
that
during
the
standard
period
they
were
comparable
with
similar
allowances
during
the
taxation
period.
In
making
its
application,
the
company
had
shown
in
its
capital
employed
a
large
sum
for
depreciation.
The
basis
for
such
a
claim
having
thus
been
taken
away,
the
company
applied
under
subsection
3
of
section
5
as
enacted
in
1940-1941,
but
still
claimed
that
its
standard
profits
should
be
fixed
at
$45,000,
the
amount
put
forward
by
it
in
its
original
application.
Subsections
(1)
and
(3)
of
section
5
as
enacted
by
chapter
15
of
the
1940-1941
Statutes
are
as
follows:
"5.(1)
If
a
taxpayer
is
convinced
that
his
standard
profits
were
so
low
that
it
would
not
be
just
to
determine
his
liability
to
tax
under
this
Act
by
reference
thereto
because
the
business
is
either
of
a
class
which
during
the
standard
period
was
depressed
or
was
for
some
reason
peculiar
to
itself
abnormally
depressed
during
the
standard
period
when
compared
with
other
businesses
of
the
same
class
he
may,
subject
as
hereinafter
provided,
compute
his
standard
profits
at
such
greater
amount
as
he
thinks
just,
but
not
exceeding
an
amount
equal
to
interest
at
ten
per
centum
per
annum
on
the
amount
of
capital
employed
in
the
business
at
the
commencement
of
the
last
year
or
the
fiscal
period
of
the
taxpayer
in
the
standard
period
computed
in
accordance
with
the
First
Schedule
to
this
Act:
Provided
that
if
the
Minister
is
not
satisfied
that
the
business
of
the
taxpayer
was
depressed
or
that
the
standard
profits
as
computed
by
the
taxpayer
are
fair
and
reasonable
he
may
direct
that
the
standard
profits
be
ascertained
by
the
Board
of
Referees
and
the
Board
shall
thereupon,
in
its
sole
discretion,
ascertain
the
standard
profits
at
such
an
amount
as
the
Board
thinks
just,
being
however
an
amount
equal
to
the
average
yearly
profits
of
the
taxpayer
during
the
standard
period
or
to
interest
at
the
rate
of
not
less
than
five
nor
more
than
ten
per
centum
per
annum
on
the
amount
of
capital
employed
at
the
commencement
of
the
last
year
or
fiscal
period
of
the
taxpayer
in
the
standard
period
as
computed
by
the
Board
in
its
sole
discretion
in
accordance
with
the
First
Schedule
to
this
Act.
(3)
If
on
the
application
of
a
taxpayer
whose
business
either
was
depressed
during
the
standard
period
or
was
not
in
operation
prior
to
the
first
day
of
January,
one
thousand
nine
hundred
and
thirty-eight,
the
Minister
on
the
advice
of
the
Board
of
Referees
is
satisfied
that
because,
(a)
the
business
is
of
such
a
nature
that
capital
is
not
an
important
factor
in
the
earning
of
profits,
or
(b)
the
capital
has
become
abnormally
impaired
or
due
to
other
extraordinary
circumstances
is
abnormally
low
standard
profits
ascertained
by
reference
to
capital
employed
would
result
in
the
imposition
of
excessive
taxation
amounting
to
unjustifiable
hardship
or
extreme
discrimination
or
would
jeopardize
the
continuation
of
the
business
of
the
taxpayer
the
Minister
may
direct
that
the
standard
profits
be
ascertained
by
the
Board
of
Referees
and
the
Board
shall
in
its
sole
discretion
thereupon
ascertain
the
standard
profits
on
such
basis
as
the
Board
thinks
just
havine
regard
to
the
standard
profits
of
taxpayers
in
similar
circumstances
engaged
in
the
same
or
an
analogous
class
of
business.’’
On
December
22nd,
1941,
the
Commissioner
of
Income
Tax,
who
under
relevant
statutory
authority
had
by
appropriate
action
been
vested
with
the
powers
of
the
Minister,
referred
the
company’s
application
to
the
Board
of
Referees,
which
had
been
set
up
in
accordance
with
the
Act.
It
is
important
to
note
the
exact
terms
of
the
reference
:
“For
advice
as
to
whether
or
not
departure
from
capital
standard
is
justified
and
if
such
departure
is
justified
for
determination
of
standard
profits
under
Section
5(3).
If
not,
the
Board
is
requested
to
ascertain
standard
profits
under
Section
5(1).”
After
receiving
from
the
Board
a
copy
of
its
‘Instructions
to
Taxpayers
Compiling
Standard
Profits
Claims
on
Form
S.P.l”,
the
company’s
auditors
filed
a
supplementary
statement
of
particulars,
the
last
paragraph
of
which
reads
as
follows
:
“In
view
of
the
foregoing
the
Company
authorizes
us
to
maintain
its
claim
of
$45,000
as
standard
profit
under
the
Excess
Profits
Tax
Act
under
section
5(3)
(b)
of
the
Act.”
Pursuant
to
appointment,
the
company’s
secretary
and
accountant
appeared
before
the
Board.
These
gentlemen
had
the
opportunity
of
making
any
representations
or
argument
that
they
desired
but
the
only
discussion
between
them
and
the
members
of
the
Board
was
with
reference
to
the
capital
employed
by
the
company
at
January
1st,
1939.
The
company’s
representatives
agreed
to
the
amount
thereof
found
by
the
Board,
which
was
$3,450
less
than
the
company
claimed.
This
was
on
September
16th,
1942,
and
on
the
22nd
of
the
same
month,
the
Board
reported
to
the
Minister
as
follows:
"‘Re:
J.
R.
Moodie
Company
Limited,
HAMILTON,
Ontario.
The
Standard
Profits
Claim
of
the
above-mentioned
taxpayer
was
referred
to
the
Board
of
Referees
under
date
of
22nd
December,
1941,
in
accordance
with
the
provisions
of
The
Excess
Profits
Tax
Act,
1940,
as
amended.
The
Board
of
Referees
having
examined
the
claim
report
as
follows:
Under
the
provisions
of
subsection
one
of
section
five
of
The
Excess
Profits
Tax
Act,
1940,
as
amended
the
Board
of
Referees
(a)
Find
that
the
business
of
the
taxpayer
was
depressed
during
the
Standard
Period.
(b)
Compute
the
Capital
Employed
by
the
|
taxpayer
at
1st
January,
1939
at
|
$357,240.32
|
|
(c)
Ascertain
the
Standard
Profits
of
the
|
|
|
taxpayer
at
|
$
21,434.42
|
being
an
amount
equal
to
interest
at
6%
per
annum
on
the
Capital
Employed
as
above.’’
On
September
26th,
the
Board
forwarded
its
decision
to
the
Commissioner
of
Income
Tax,
who
subsequently
endorsed
his
approval
thereon.
A
Notice
of
Assessment
for
1940
followed,
which,
inter
alia,
levied
excess
profits
tax
upon
the
basis
of
the
standard
profits
found
by
the
Board
of
$21,434.32.
On
behalf
of
the
company
it
was
argued
that
the
Board
had
in
fact
never
considered
the
company’s
application
under
section
5(3)
and
had
never
given
a
negative
answer
to
the
Minister’s
request
for
advice
thereunder
as
to
whether
or
not
departure
from
capital
standard
was
justified.
I
can
come
to
no
other
conclusion
than
that,
irrespective
of
the
question
of
onus,
the
Board
did
not
overlook
the
specific
provisions
of
subsection
(5)
of
section
5
but,
on
the
contrary,
it
decided
in
the
negative
and,
therefore,
proceeded
to
comply
with
the
Act
"‘to
ascertain
standard
profits
under
section
5(1).”
This
is
made
quite
clear
by
(1)
the
company’s
amendment
to
its
application
to
the
Minister
after
the
new
statutory
provision
of
1940-41
;
(2)
the
inclusion
therein
of
a
specific
reference
to
section
5(3)
of
the
Act
as
amended;
(8)
the
specific
mention
of
the
same
subsection
in
the
orders
of
reference
to
the
Board;
and
(4)
the
statement
in
the
first
paragraph
of
the
Board’s
decision,
that
the
company’s
claim
was
referred
to
it
in
accordance
with
the
provisions
of
the
Act
as
amended.
To
hold
otherwise
would
be
to
conclude
that
the
Board
neglected
its
duty
and
the
plain
terms
of
the
order
of
reference.
I
cannot
read
the
provisions
of
subsection
(3)
of
section
5
as
requiring
that
the
Minister
should
first
receive
the
advice
of
the
Board
and
then
direct
that
the
standard
profits
be
ascertained
by
it.
Nor
do
I
think
that
the
Minister
is
bound
to
act
upon
any
advice
tendered
him
by
the
Board
under
the
first
part
of
that
subsection.
He
may
not
agree
with
it
but,
here,
he
did
so
as
is
evidenced
by
the
approval
of
the
Commissioner
of
Income
Tax
endorsed
upon
the
Board’s
report.
The
appeal
should
be
dismissed
with
costs.
Rand,
J.
:—This
appeal
is
against
an
assessment
of
excess
profits
for
the
year
1940,
and
the
point
of
dispute
is
the
fixing
of
the
amount
of
standard
profits.
In
its
income
return
of
December
10th,
1940,
the
company,
considering
that
its
business
was
abnormally
depressed
during
the
standard
period,
placed
its
standard
profits
at
$45,000,
being
10%
of
the
estimated
capital
employed
in
the
business
as
of
January
Ist,
1939.
At
the
same
time
it
applied
to
the
Minister
to
have
standard
profits
ascertained
by
the
Board
of
Referees
under
section
5
of
The
Excess
Profits
Tax
Act,
1940
on
the.
ground
mentioned.
On
June
14th,
1941,
section
5
was
repealed
and
a
new
section
substituted,
subsection
(3)
of
which
enabled
the
Minister,
in
the
case
of
a
taxpayer
whose
business
was
depressed
during
the
standard
period,
to
refer
to
the
Board
the
question
whether,
because,
“(a)
the
business
is
of
such
a
nature
that
capital
is
not
an
important
factor
in
the
earning
of
profits,
or
(b)
the
capital
has
become
abnormally
impaired
or
due
to
other
extraordinary
circumstances
is
abnormally
low
standard
profits
ascertained
by
reference
to
capital
employed
would
result
in
the
imposition
of
excessive
taxation
amounting
to
unjustifiable
hardship
or
extreme
discrimination
or
would
jeopardize
the
continuation
of
the
business
of
the
taxpayer
.
.
By
the
same
amending
Act,
paragraph
(b)
of
article
3
of
the
First
Schedule
was
enacted
which
required
a
deduction,
in
the
computation
of
capital
employed,
of
all
depreciation.
These
amendments
were
made
retroactive
to
the
original
enactment
of
the
statute.
On
August
1st,
1942,
section
5
was
again
repealed
and
re-enacted.
Subsection
(3),
unchanged
for
the
purposes
of
this
case,
was
likewise
made
applicable
to
the
assessment
for
the
year
1940.
On
November
4th,
1941,
the
company’s
auditors
addressed
a
communication
to
the
Income
Tax
authorities,
in
which
its
earlier
claim
for
$45,000
as
standard
profits
was
maintained
under
section
5(3)
(b).
This
was
renewed
in
a
further
communication
of
January
8th,
1942.
On
or
about
December
22nd,
1941,
the
Commissioner
of
Income
Tax,
acting
for
the
Minister,
referred
the
claim
to
the
Board
"for
advice
as
to
whether
or
not
departure
from
capital
standard
is
justified
and
if
such
departure
is
justified
for
determination
of
standard
profits
under
section
5(3).
If
not,
the
Board
is
requested
to
ascertain
standard
profits
under
section
5(1).”
On
September
16th,
1942,
the
Board
held
a
hearing
at
which
the
company
was
represented
by
its
auditor
and
its
secretary;
and
on
September
22nd,
1942,
the
following
report
was
submitted
:
‘“The
Standard
Profits
Claim
of
the
above-mentioned
taxpayer
was
referred
to
the
Board
of
Referees
under
date
of
22nd
December,
1941,
in
accordance
with
the
provisions
of
The
Excess
Profits
Tax
Act,
1940,
as
amended.
The
Board
of
Referees
having
examined
the
claim
report
as
follows:
Under
the
provisions
of
subsection
one
of
section
five
of
The
Excess
Profits
Tax
Act,
1940,
as
amended,
the
Board
of
Referees
(a)
Find
that
the
business
of
the
taxpayer
was
depressed
during
the
Standard
Period.
(b)
Compute
the
CAPITAL
EMPLOYED
by
|
the
taxpayer
at
1st
January,
1939
at
|
$357,240.32
|
|
(c)
Ascertain
the
STANDARD
PROFITS
of
|
|
|
the
taxpayer
at
|
$
21,434.42
|
being
an
amount
equal
to
interest
at
6%
per
annum
on
the
Capital
Employed
as
above.”
This
decision
was
approved
on
behalf
of
the
Minister.
The
company
appealed
to
the
Minister,
who
reaffirmed
the
assessment
;
notice
of
dissatisfaction
was
thereupon
given
and
the
controversy
brought
into
the
Exchequer
Court.
Mr.
Campbell’s
contention
is
that
the
procedure
followed
on
the
reference
to
the
Board
was
irregular
and
in
violation
of
the
express
language
of
subsection
(3).
In
his
construction
of
its
language,
a
reference
to
the
Board
is
for
advice
in
the
nature
not
only
of
opinion,
but
also
of
conclusions
or
findings
of
fact,
upon
all
of
which,
whether
the
recommendation
is
favourable
or
adverse,
the
Minister
is
to
exercise
his
judgment,
and
to
decide
whether
he
‘‘is
satisfied’’
that
on
the
grounds
mentioned
the
results
would
follow
which
the
legislation
is
designed
to
alleviate.
That
construction
depends
upon
the
precise
meaning
to
be
given
the
phrase
‘‘on
the
advice
of
the
Board’’.
The
Board
was
created
by
Order
in
Council
to
aid
the
Minister
in
carrying
out
his
duties
under
the
statute,
and
particularly
‘‘to
advise
and
aid
him’’
in
order
that
he
might
be
‘‘satisfied’’
that
the
conditions
mentioned
in
section
5
as
described
were
present.
The
word
‘‘advice’’
in
ordinary
parlance
means
primarily
the
expression
of
counsel
or
opinion,
favourable
or
unfavourable,
as
to
action,
but
it
may,
chiefly
in
commercial
usage,
signify
information
or
intelligence.
The
matters
upon
which
the
Minister
was
to
be
satisfied
here
were
whether
the
capital
had
become
abnormally
impaired
or
was
abnormally
low,
and
that
as
a
result
an
ascertainment
of
standard
profits
by
reference
to
capital
employed
would
impose
excessive
taxation
amounting
to
unjustifiable
hardship
or
extreme
discrimination
or
would
jeopardize
the
continuation
of
the
business
of
the
company.
Now,
these
are,
in
one
sense,
matters
of
fact,
but
they
also
involve
the
exercise
of
judgment
in
the
weight
and
significance
to
be
attributed
to
the
special
circumstances
and
conditions
of
the
business.
The
Minister
is
to
be
satisfied
‘‘on
the
advice
of
the
Board’’
and
unless
the
subsection
is
to
be
read
‘‘the
Board
.
.
.
is
satisfied
that,
etc.”,
there
must
be
matter
in
support
of
the
opinion
of
the
Board
from
which
the
Minister
may
satisfy
himself
accordingly.
The
advice
to
be
furnished
by
the
Board
would,
then,
ordinarily
contemplate
at
least
its
opinion
on
the
main
question
and
the
facts
or
reasons
upon
which
it
was
based.
But
the
controlling
question
is
whether
or
not
the
Minister
could
decide
that
he
was
so
satisfied
adversely
to
the
opinion
of
the
Board;
and
although
it
is
not
free
from
difficulty,
I
have
come
to
the
conclusion
that
he
could
not.
‘‘On
the
advice
of
the
Board’’
means,
I
think,
“with”
that
advice:
a
reeommenda-
tion
is
the
condition
of
affirmative
action
by
the
Minister;
if
the
opinion
of
the
Board
is
against
the
conclusion
required
by
the
subsection,
the
Minister
is
not
competent
to
give
the
direction
authorized.
On
the
other
hand,
the
Minister
may
not
be
satisfied
by
nor
is
he
bound
to
act
on
the
advice.
Neither
is
there
any
requirement
for
any
special
form
of
negative
advice:
if
the
opinion
of
the
Board
is
against
the
claim,
the
matter
would
end
there.
An
examination
of
the
reference
to
the
Board
shows
that
it
was
asked
to
decide
‘whether
or
not’’
departure
from
capital
was
justified.
If
the
opinion
should
be
negative,
the
Board
was
to
ascertain
standard
profits
under
section
5(1).
The
important
consideration
is
that
the
ascertainment
under
section
5(1)
was
to
be
the
mode
of
a
negative
answer
to
the
Minister:
and
that
was
the
answer
given.
Mr.
Campbell
contended
that
there
was
in
effect
an
abdication
of
function
by
the
Minister,
a
delegation
to
the
Board
of
what
the
subsection
required
to
be
performed
by
the
Minister
;
but
on
what
I
think
to
be
the
true
construction
of
the
language
of
the
subsection,
that
ground
of
objection
disappears.
It
was
argued
also
that
there
is
nothing
in
the
report
of
the
Board
to
indicate
that
it
considered
the
claim
under
subsection
(3)
;
but
it
would
be
to
ignore
the
express
language
of
the
reference
and
the
fact
that
the
application
was
specifically
made
under
the
subsection
to
draw
such
an
inference
;
it
would
in
fact
be
to
attribute
to
the
Board
either
a
deliberate
or
an
inexplicable
disregard
of
its
duty.
It
would
ignore
also
the
alternative
in
the
language
of
the
reference
and
the
obvious
appreciation
of
that
alternative
by
the
mode
in
which
the
Board
indicated
its
negative
finding.
I
would,
therefore,
dismiss
the
appeal
with
costs.
ESTEY,
J.:—The
appellant
under
date
of
December
10,
1940,
applied
on
Form
S.P.l
to
the
Minister
of
National
Revenue
for
a
reference
to
the
Board
of
Referees
to
determine
the
standard
profits
on
the
basis
that
the
business
of
the
taxpayer
was
abnormally
depressed
within
the
meaning
of
section
5(1)
of
the
Excess
Profits
Tax
Act,
1940,
c.
32.
In
the
particulars
supplied
with
S.P.l
the
following
was
included
:
"
"
In
view
of
the
heavy
losses
sustained
and
the
heavy
liabilities
thus
carried
the
Company
considers
that
the
standard
profit
fixed
at
$45,000.00
would
be
a
conservative
amount
to
allow
before
it
becomes
liable
to
the
tax
of
75%.’’
On
June
14,
1941,
the
Excess
Profits
Tax
Act
was
amended
by
repealing
section
4(1)
(d)
and
by
enacting
a
new
section
5
(S.
of
C.
1940-41,
c.
15,
secs.
5,
6
and
18)
and
made
retroactive
to
cover
the
1940
taxation
period.
The
repeal
of
section
4(l)(d)
in
effect
disallowed
the
inclusion
of
an
amount
of
$182,230.63
in
the
computation
of
the
appellant’s
capital
employed.
This
reduced
the
total
working
capital
to
a
point
that
the
standard
profits
fixed
at
$45,000
could
not
be
justified
on
the
basis
of
a
percentage
of
the
capital
employed..
The
new
section
5(3)
made
provision
for,
in
certain
cases,
a
computation
of
standard
profits
not
upon
a
basis
of
a
percentage
of
capital
but
as
the
Board
of
Referees
may
"‘in
its
sole
discretion
thereupon
ascertain’’
The
company,
as
a
consequence
of
these
statutory
changes,
made
a
further
submission
under
date
of
November
4;
1941,
addressing
the
same
to
the
inspector
of
income
tax
at
Hamilton,
Ontario,
and
which
concluded:
‘
"
In
view
of
the
foregoing
the
Company
authorises
11s
to
maintain
its
claim
of
$45,000.00
as
standard
profit
under
the
Excess
Profits
Tax
Act
under
Section
5(3)
(b)
of
the
Act.’’
Under
date
of
January
8,
1942,
a
supplementary
statement
of
particulars
was
supplied
to
the
department
in
which
the
foregoing
statement
asking
that
the
matter
be
dealt
with
under
section
5(3)
(b)
of
the
Act
was
repeated.
Section
5(3),
as
amended
in
1941
(1940-41
$.
of
C.,
c.
15)
reads
as
follows:
""5.
(3)
If
on
the
application
of
a
taxpayer
whose
business
either
was
depressed
during
the
standard
period
or
was
not
in
operation
prior
to
the
first
day
of
January,
one
thousand
nine
hundred
and
thirty-eight,
the
Minister
on
the
advice
of
the
Board
of
Referees
is
satisfied
that
because,
(a)
the
business
is
of
such
a
nature
that
capital
is
not
an
important
factor
in
the
earning
of
profits,
or
(b)
the
capital
has
become
abnormally
impaired
or
due
to
other
extraordinary
circumstances
is
abnormally
low
standard
profits
ascertained
by
reference
to
capital
employed
would
result
in
the
imposition
of
excessive
taxation
amounting
to
unjustifiable
hardship
or
extreme
discrimination
or
would
jeopardize
the
continuation
of
the
business
of
the
taxpayer
the
Minister
may
direct
that
the
standard
profits
be
ascertained
by
the
Board
of
Referees
and
the
Board
shall
in
its
sole
discretion
thereupon
ascertain
the
standard
profits
on
such
basis
as
the
Board
thinks
just
having
regard
to
the
standard
profits
of
taxpayers
in
similar
circumstances
engaged
in
the
same
or
an
analogous
class
of
business.”
The
Commissioner
referred
the
matter
to
the
Board
of
Referees
in
the
following
language:
‘Dear
Sir:
Pursuant
to
Section
5
of
the
Excess
Profits
Tax
Act,
1940,
reference
to
the
Board
of
Referees
is
hereby
made
For
advice
as
to
whether
or
not
departure
from
capital
standard
is
justified
and
if
such
departure
is
justified
for
determination
of
Standard
Profits
under
Section
5(3).
If
not,
the
Board
is
requested
to
ascertain
Standard
Profits
under
Section
5(1).
»
J
Subsequently
a
time
was
fixed
for
a
hearing
by
the
Board
at
which
the
appellant
was
represented
by
its
secretary
and
auditor.
The
Board
asked
them
to
agree
that
the
working
capital
was
$357,240.32,
and
as
it
differed
from
the
company’s
figures
by
less
than
$4,000,
they
agreed.
The
auditor
deposed:
‘‘We
did
not
know
how
they
were
going
to
deal
with
it,
and
they
did
not
tell
us;
we
thought,
from
the
interview,
that
we
would
get
a
reasonable
standard.’’
Apparently
nothing
was
said
either
with
regard
to
subsections
(1)
or
(3)
of
section
5
but
he
did
state
that
he
considered
that
all
the
relevant
facts
were
set
forth
in
the
documents
which
they
had
prepared
and
forwarded
to
the
Minister
and
it
is
not
suggested
that
they
were
not
all
placed
before
the
Board.
Under
date
of
September
22,
1942,
the
Board
made
its
reply
to
the
Minister
in
the
following
language:
"‘Re:
J.
R.
Moodie
Company
Limited,
Hamilton,
Ontario.
The
Standard
Profits
Claim
of
the
above-mentioned
taxpayer
was
referred
to
the
Board
of
Referees
under
the
date
of
22nd
December,
1941,
in
accordance
with
the
provisions
of
The
Excess
Profits
Tax
Act,
1940,
as
amended
:
The
Board
of
Referees
having
examined
the
claim
reports
as
follows:
Under
the
provisions
of
subsection
one
of
section
five
of
The
Excess
Profits
Tax
Act,
1940,
as
amended,
the
Board
of
Referees
(a)
Find
that
the
business
of
the
taxpayer
was
depressed
during
the
Standard
Period.
(b)
Compute
the
Capital
Employed
by
the
taxpayer
at
Ist
January,
1939,
at
$357,240.32
(c)
Ascertain
the
Standard
Profits
of
the
taxpayer
at
$
21,434.42
being
an
amount
equal
to
interest
at
6%
per
annum
on
the
Capital
Employed
as
above.’’
Under
date
of
September
29,
1942,
the
Commissioner
of
Income
Tax
advised
the
appellant
that
its
application
pursuant
to
section
5
of
the
Excess
Profits
Tax
Act,
1940,
had
been
considered
by
the
Board
of
Referees
and
that
its
decision,
a
copy
of
which
was
enclosed,
had
been
approved.
The
approval
referred
to
had
been
given
under
section
5(5)
of
the
Act.
It
would
appear
that
the
provisions
of
section
5(3)
have
in
all
relevant
particulars
been
complied
with
and
therefore
that
the
appellant’s
contention
to
the
contrary
cannot
be
maintained.
That
the
Minister
was
satisfied
within
the
meaning
of
that
subsection
that
the
appellant’s
business
was
depressed
during
the
standard
period
must
be
assumed,
otherwise
he
would
not
have
asked
the
Board
of
Referees
for
its
advice.
Parliament
in
section
5(3)
expresses
an
intention
that
when
the
application
is
referred
to
the
Board
it
should
consider
the
position
of
the
taxpayer
and
ascertain
if
"‘that
because’’
of
the
existence
of
the
circumstances
in
either
(a)
or
(b)
‘‘standard
profits
ascertained
by
reference
to
capital
employed
would
result
in
the
imposition
of
excessive
taxation
amounting
to
unjustifiable
hardship
.
.
.
.”
That
appears
to
be
the
duty
of
the
Board
and
if
it
advises
the
Minister
in
the
affirmative,
it
is
then
for
the
Minister
to
determine
whether
he
is
‘‘satisfied’’
that
the
advice
should
be
accepted
and
if
so,
then
to
direct
the
Board
‘‘in
the
exercise
of
its
sole
discretion”
to
ascertain
the
standard
profits.
The
Commissioner’s
letter
of
reference
was
a
specific
request
to
the
Board
of
Referees
to
consider
the
position
of
the
appellant
with
a
view
to
having
its
standard
profits
determined
under
section
5(3).
It
was
only
if
the
Board
decided
it
could
not
advise
the
Minister
that
the
appellant’s
position
was
such
as
to
bring
it
within
the
terms
of
that
subsection
that
it
should
proceed
to
the
ascertainment
of
the
standard
profits
under
section
5(1).
It
cannot
be
assumed
that
the
Board
disregarded
the
specific
request
of
the
reference
nor
that
it
failed
to
consider
the
possible
existence
of
the
factors
specified
in
section
5(3)
which
would
justify
its
advising
the
Minister
‘‘that
because”
of
the
presence
thereof
the
appellant
came
within
its
terms.
It
was
only
after
it
had
concluded
that
it
could
not
affirmatively
advise
the
Minister
under
section
5(3)
that
it
ascertained
the
standard
profits
under
section
5(1).
In
the
enactment
of
section
5(3)
Parliament
expresses
the
intention
that
the
advice
of
the
Board
shall
not
be
a
mere
expression
of
opinion
but
that
it
will
be
accompanied
by
such
a
review
or
report
of
the
facts,
dealing
particularly
with
the
existence
of
the
circumstances
mentioned
in
(a)
and
(b)
in
order
that
the
Minister
on
the
‘‘advice
of
the
Board’
‘
may
determine
whether
he
is
‘‘satisfied
that
because’’
of
the
existence
of
the
factors
in
(a)
or
(b)
that
the
ascertainment
of
the
“standard
profits
ascertained
by
reference
to
capital
employed
would
result
in
the
imposition
of
excessive
taxation
amounting
to
unjustifiable
hardship.’’
The
final
decision
‘‘on
the
advice
of
the
Board
of
Referees’’
must
be
made
by
the
Minister.
He
may
not
be
‘‘satisfied’’
and
reject
the
advice,
but
he
can
within
the
terms
of
the
subsection
only
be
satisfied
‘‘on
the
advice
.
.
.
that
because”
there
exists
either
(a)
or
(b).
If
the
Board
cannot
so
advise,
it
follows
the
Minister
cannot
be
satisfied
within
the
meaning
of
that
subsection.
I
can
find
no
requirement
in
the
statute
that
the
Board
must
submit
its
negative
advice
in
terms,
but
may
do
so
in
any
manner,
such
as
in
this
case,
from
which
its
decision
to
that
effect
is
clearly
indicated.
The
appellant
objects
to
the
computation
under
section
5(1)
on
the
ground
that
such
can
only
be
done
after
the
taxpayer
itself
has
computed
its
standard
profits.
The
appellant
had
computed
its
standard
profits
at
$45,000
and
maintained
the
correctness
thereof
throughout
these
proceedings.
That
$45,000
was
in
excess
of
the
maximum
of
‘‘ten
per
centum
per
annum
on
the
amount
of
capital
employed’’
under
section
5(1)
as
amended
in
1941,
or
that
it
was
computed
by
the
taxpayer
with
a
view
to
the
ascertainment
of
its
standard
profits
under
section
5(3),
does
not
deprive
the
Minister
of
his
jurisdiction
to
ascertain
the
standard
profits
under
section
5(1).
The
appellant
then
contends
that
its
application
having
specifically
asked
that
the
matter
be
considered
under
section
5(3)
that
the
Minister
should,
before
considering
the
computation
of
standard
profits
under
any
other
subsection,
have
referred
the
matter
back
to
the
appellant.
With
this
contention,
in
these
circumstances,
I
do
not
agree.
Throughout
the
correspondence
was
carried
on
in
a
manner
to
ascertain
the
relevant
facts
and
appellant
agrees
that
it
had
placed
all
of
its
submissions
before
the
Minister,
and
it
must
be
concluded,
particularly
in
the
absence
of
any
suggestion
to
the
contrary,
that
all
of
these
were
before
the
Board
of
Referees.
The
appellant
was
represented
at
the
hearing.
One
of
the
representatives
as
to
this
hearing
deposed
:
"‘Q.
Did
you
not
make
representations
orally
at
the
hearing,
stating
that
you
wished
consideration
to
be
given
under
s.s.
3
of
5?
"‘A.
No,
we
did
not,
as
we
thought
the
Board
would
be
dealing
with
it.
"Q.
Apart
from
your
§.P.1.
Claim
did
you
make
representations
orally
?
"‘A.
From
the
courteous
reception
we
received
we
did
not
think
it
right
to
ask
them
how
they
were
dealing
with
it.
‘
‘
The
duty
of
the
Minister
was
to
have
the
standard
profits
computed
under
the
appropriate
subsection
of
section
5.
The
appellant
quite
properly
asked
that
its
application
be
considered
under
section
5(3).
But
that
did
not
limit
or
restrict
the
Minister
in
the
performance
of
his
duty.
In
these
circumstances
it
would
be
expected
that
if
the
appellant
had
any
request
of
such
a
nature
that
it
would
have
made
it
known
in
the
course
of
the
correspondence,
its
written
submissions
or
before
the
Board.
Throughout
these
proceedings
the
Commissioner
of
Income
Tax
was
acting
under
an
authority
given
by
the
Minister
on
August
8,
1940,
by
virtue
of
section
75(2)
of
the
Income
War
Tax
Act
and
section
14
of
the
Excess
Profits
Tax
Act.
The
Minister
thereby
authorized
the
Commissioner
to
exercise
all
the
powers
of
the
Minister
under
the
said
Act.
The
appeal
should
be
dismissed
with
costs.
Appeal
dismissed.
THE
MONTREAL
TRUST
COMPANY,
et
al.,
es
quai.,
Suppliants,
and
HIS
MAJESTY
THE
KING,
Respondent.
Superior
Court
of
Quebec
(Tyndale,
Associate
C.J.),
February
20,
1950.
Quebec
Succession
Duties
Act,
R.S.Q.,
cap.
80,
as
enacted
by
7
Geo.
VI,
cap.
18—Petition
of
Right
by
suppliants
to
recover
$32,876.63
with
interest,
succession
duties
alleged
to
have
been
illegally
exacted
and
paid
under
duress
and
under
protest—Duties
assessed
on
five
gifts
made
more
than
five
years
prior
to
death
of
donor—Whether
deceased
reserved
to
himself
the
control
of
the
properties
donated
within
the
meaning
of
section
24
of
the
statute—Whether,
if
Petition
of
Right
granted,
the
claim
for
interest
on
the
amount
paid
under
protest
is
maintainable.
In
this
case,
the
suppliants
sought
recovery
from
the
Crown,
in
the
right
of
the
Province
of
Quebec,
of
the
sum
of
$32,876.63
with
interest,
on
the
ground
that
the
said
sum
was
paid
under
duress
and
under
protest
as
succession
duties
illegally
exacted
from
them
in
their
quality
of
executors
and
trustees
under
the
last
will
and
testament
of
the
late
Gordon
Walters
MacDougall,
deceased,
who
died
in
Montreal,
where
he
was
domiciled,
on
the
26th
July,
1947.
The
total
amount
of
the
succession
duties
paid
by
the
suppliants
was
$124,686.07,
of
which
the
sum
of
$32,876.63
(the
amount
claimed
in
the
present
proceedings)
represented
the
duties
exacted
by
the
Crown
with
respect
to
five
deeds
of
gift
inter
vivos
made
by
the
deceased
to
his
five
children.
All
the
gifts
were,
in
fact,
made
more
than
five
years
before
the
death
of
the
donor,
but
the
Crown
claimed
that
succession
duties
were
nevertheless
payable
as
the
deceased
had
reserved
to
himself
control
of
the
properties
during
his
lifetime.
The
executors,
on
the
other
hand,
claimed
that
the
gifts
were
absolute
and
that
no
control
whatsoever
had
been
reserved
by
the
deceased.
HELD:
(i)
That
the
Petition
of
Right
is
well
founded
in
so
far
as
the
principal
sum
of
$32,876.63
is
concerned
and
the
said
sum
together
with
the
costs
of
the
proceedings
should
be
paid
by
the
Province
to
the
suppliants.
(ii)
That
the
claim
for
interest
on
the
said
amount
cannot
be
allowed.
The
King
v.
Carroll
et
al.,
[1948]
S.C.R.
126.
(iii)
On
the
execution
of
the
deeds
of
gift
the
donor,
in
specific
terms,
“completely
and
irrevocably”
divested
himself
of
the
ownership
of
the
properties.
(iv)
The
donor
did
not
reserve
to
himself
in
whole
or
in
part
the
control
or
administration
of
the
properties
or
any
part
thereof.
(v)
There
is
no
provision
in
the
several
deeds
of
gift
similar
to
that
considered
in
Bourque
v.
The
King,
[1948]
C.T.C.
115,
[1947]
C.S.
348,
whereby
the
revenues
of
the
trust
property
were
to
be
paid
to
the
donor
and
his
wife
unless
and
until
certain
events
took
place.
Consequently
the
facts
and
law
applicable
to
the
present
case
are
distinguishable.
(vi)
The
only
contingency
in
which
the
donor
might
have
derived
any
benefit
from
the
property
would
have
been
the
case
of
the
pre-
decease
of
his
daughter
without
issue
and
without
leaving
any
relevant
testamentary
direction;
in
which
event
he
would
have
received
a
share
as
one
of
her
legal
heirs.
The
contingency
was
obviously
in
no
way
under
the
control
of
the
donor;
and,
in
fact,
the
beneficiary
(and
all
the
other
children
of
the
deceased)
survived
the
donor.
(vii)
The
expression
“has
reserved
to
himself"
in
section
24
of
the
Quebec
Act
must
be
taken
to
refer
to:
(a)
an
immediate
reservation;
or
(b)
some
future
event
which
is
certain
to
occur;
or
(c)
some
future
event
or
action
over
which
the
donor
has
at
least
some
degree
of
control.
(viii)
That
the
Petition
is
accordingly
allowed
to
the
extent
hereinbefore
mentioned.
EDITORIAL
NOTE:
This
is
another
in
the
series
of
cases
which
have
come
before
the
Courts
in
relation
to
the
dual
Question
as
to
when
a
gift
inter
vivos
can
be
said
to
have
been
made,
and
whether,
once
a
gift
has
been
made,
control
is
reserved
by
the
deceased
over
the
subject
matter
in
such
a
way
as
to
render
duty
exigible.
The
facts
in
the
present
case
clearly
indicate
that
the
deceased
completely
and
irrevocably
parted
with
at
least
four
of
the
properties
donated
more
than
five
years
prior
to
his
death.
Moreover,
there
was
no
provision
in
these
four
instruments
such
as
that
considered
in
National
Trust
Co.
Ltd.
v.
Minister
of
National
Revenue,
[1947]
C.T.C.
201,
whereby
the
capital
of
the
trust
funds
and
accumulations
of
interest
were
to
revert
to
the
donor
in
the
event
of
the
prior
death
of
the
beneficiary.
Accordingly
these
particular
four
gifts
seemingly
meet
the
tests
applied
in
Re
Hodson’s
Settlement,
Brookes
v.
Attorney-
General,
[1939]
Ch.
348,
on
the
question
as
to
whether
the
properties
passed
during
the
lifetime
of
the
deceased
or
at
his
death.
The
other
branch
of
the
case
presents
more
difficulty
and
concerns
the
question
as
to
whether
or
not
the
deceased
retained
control
over
the
properties,
the
subject
matter
of
the
gifts,
sufficient
to
render
duties
exigible
under
and
by
virtue
of
section
24
of
the
Act.
As
to
four
of
the
instruments
of
donation,
there
can
be
little
or
no
doubt
that
no
control
was
reserved,
and
the
Court
rightly
distinguished
the
circumstances
from
those
which
were
considered
in
Bourque
v.
The
King,
[1948]
C.T.C.
115,
[1947]
C.S.
348.
The
position
is
not
so
clear
with
respect
to
the
fifth
deed
embodied
in
the
Marriage
Contract
executed
on
10th
November,
1928.
It
might
perhaps
be
open
to
question
as
to
whether
the
clause
in
this
instrument
empowering
the
daughter
to
dispose
of
the
trust
property
by
will
and
not
by
deed
was
an
indirect
method
employed
by
the
deceased
to
control
the
disposal
of
the
property
through
his
daughter
acting
as
his
agent,
more
particularly
having
regard
to
the
term
in
the
trust
document
that
in
the
absence
of
any
testamentary
disposition
by
the
daughter
the
trust
property
shall
“revert
to
the
Donor
and
in
the
event
of
his
decease
shall
be
governed
by
the
provisions
of
his
Will”.
Article
818
of
the
Quebec
Civil
Code
quoted
in
the
judgment
of
the
Superior
Court
is
apparently
confined
to
outright
gifts,
and
does
not
seem
to
be
sufficiently
wide
in
terms
to
meet
cases,
such
as
the
present,
whereby
the
ultimate
disposal
of
the
capital
of
the
trust
property
is
held
up
pending
the
making
of
a
will
by
one
of
the
beneficiaries.
See
Attorney-General
v.
Adamson,
[1932]
2
K.B.
159
C.A.,
as
to
the
effect
of
a
power
of
appointment
retained
by
the
deceased
himself
upon
the
claim
of
the
Crown
for
succession
duty
in
circumstances
where,
although
the
trust
properties
passed
to
the
trustee
during
the
lifetime
of
the
deceased,
the
beneficial
interest
did
not
reach
the
beneficiaries
until
after
his
death.
Apart
from
this
phase
of
the
question,
and
assuming
that
the
Adamson
case
is
not
applicable
to
the
circumstances
in
the
present
case,
the
Superior
Court
would
seem
to
be
justified
in
regarding
the
possibility
of
the
trust
property
reverting
to
the
donor
or
to
his
estate
as
being
too
remote
in
character
to
render
duty
payable.
On
the
question
of
remoteness,
see
the
decision
of
the
House
of
Lords,
and
particularly
the
judgment
of
Lord
Wright,
in
the
Adamson
case,
reported
[1933]
A.C.
257.
The
reasons
given
in
the
judgment
for
the
disallowance
of
the
claim
for
interest
on
the
moneys
paid
are
apparently
well
founded
having
regard
to
the
decision
in
The
King
v.
Carroll
et
al.,
[1948]
S.
C.
R.
126.
W.
F.
Macklaier,
K.C.,
and
R.
F.
Clarkson,
for
Suppliants.
Gerard
Trudel,
K.C.,
for
Respondent.
Tyndale,
Assoc.
C.J.:—The
Court
has
examined
the
proceedings
and
the
documents
of
record
;
has
heard
the
arguments
of
Counsels;
and
has,
upon
the
whole,
deliberated.
I.
The
Suppliants
seek
recovery
from
the
Crown,
in
the
right
of
the
Province
of
Quebec,
of
the
sum
of
$32,876.63
with
interest,
on
the
ground
that
the
said
sum
was
paid
under
duress
and
under
protest
as
succession
duties
illegally
exacted
from
them
in
their
quality
of
Executors
and
Trustees
under
the
Last
Will
and
Testament
(Exhibit
8.1)
of
the
late
Gordon
Walters
MacDougall,
who
died
in
the
City
of
Montreal,
where
he
was
domiciled,
on
the
26th
July,
1947.
The
total
amount
of
the
succession
duties
paid
by
the
Suppliants
was
$124,686.07
and
it
is
admitted
that
of
that
amount
$32,876.63
represents
the
duties
exacted
by
the
Crown
with
respect
to
five
donations
inter
vivos
made
by
the
deceased
to
his
five
children
(Exhibits
8.2,
3,
4,
5
and
6).
The
question
before
the
Court
is,
therefore,
whether
or
not
the
property
covered
by
the
said
donations
is
or
is
not
subject
to
succession
duties.
The
revelant
statute
is,
of
course,
the
Quebec
Succession
Duties
Act,
R.S.Q.,
cap.
80,
as
enacted
by
7
Geo.
VI,
cap
18.
The
general
principle
governing
succession
duties
is
set
forth
in
section
2
of
the
Act,
which
reads
as
follows:
2.
All
property,
moveable
or
immoveable,
the
ownership,
usufruct
or
enjoyment
whereof
is
transmitted
owing
to
death,
shall
be
liable
to
duties,
calculated
upon
the
aggregate
value
of
the
property
transmitted,
at
the
rates
fixed
in
section
9.’’
Division
VI
of
the
Act,
comprising
sections
21-27,
is
entitled
"
Disposition
of
Property
assimilated
to
a
Transmission
owing
to
Death’’.
These
sections
deal,
inter
alia,
with
gifts
inter
vivos.
In
virtue
of
section
22,
such
gifts
are,
in
general,
not
subject
to
duties
if
they
have
been
made
more
than
five
years
before
the
death
of
the
donor.
All
the
gifts
now
under
consideration
were,
in
fact,
made
more
than
five
years
before
the
death
of
the
donor.
But
this
does
not
solve
the
problem,
because
the
contested
duties
were
exacted
in
virtue
of
section
24,
the
admittedly
relevant
portions
of
which
read
as
follows:
"24
(1).
For
the
purposes
of
this
act,
the
ownership,
usufruct
or
enjoyment
of
any
property
shall
be
deemed
to
be
transmitted
owing
to
death
whenever
the
gratuitous
disposition
has
taken
effect
more
than
five
years
before
the
death
of
the
person
who
has
made
it
and
whenever
such
person
has
reserved
to
himself,
in
whole
or
in
part,
the
control,
administration,
ownership
or
enjoyment
of
such
property
or
part
thereof,
until
his
death
or
until
a
period
comprised
in
the
five
years
previous
to
his
death.
(2)
This
section
shall
apply
also
whenever
the
person
making
the
disposition
has
reserved
to
himself,
in
whole
or
in
part,
the
control,
administration,
ownership
or
enjoyment
of
such
property
or
part
thereof,
until
his
death
or
until
a
period
comprised
in
the
five
years
previous
to
his
death,
in
each
of
the
following
cases
:
(a)
.
.
.
.
(b)
Whenever
the
reserve
is
made
or
the
control
is
exercised
by
a
deposit
of
titles,
securities,
sums
of
money
or
valuable
objects
in
a
safe
place
or
in
the
hands
of
an
intermediary
;
.
(c)
Whenever
the
control
or
administration
is
exercised
through
a
fiduciary
or
an
interposed
person;
.
.
.’’
II.
The
relevant
facts
are
covered
by
the
Exhibits
and
by
a
joint
"‘Admission
of
Facts’’
signed
by
the
Attorneys
of
the
Parties
on
the
10th
January,
1950.
The
documents
covering
the
donations
in
question
are
as
follows:
EXHIBIT
.2:
Marriage
Contract
executed
between
George
Buchanan
Foster
and
Barbara
Helen
MacDougall
(daughter
of
the
deceased)
before
H.
M.
Marler,
Notary,
on
the
10th
November,
1928,
in
which
the
deceased
intervened
and
made
a
donation
to
his
daughter
of
$25,000.00,
appointing
the
Montreal
Trust
Company
as
Trustee.
EXHIBIT
8.3:
Donation
in
Trust,
executed
before
Dakers
Cameron,
Notary,
on
the
loth
January,
1935,
whereby
the
deceased
gave
to
the
Montreal
Trust
Company
in
Trust
certain
securities
of
the
approximate
value
of
$25,000.00,
for
certain
purposes
set
out
in
detail,
including
the
payment
of
the
revenues
to
his
daughter
Elizabeth
Evelyn
MacDougall.
EXHIBIT
8.4:
Donation
in
Trust,
executed
before
Dakers
Cameron,
Notary,
on
the
16th
December,
1936,
and
similar
in
its
general
terms
to
Exhibit
8.3,
the
revenues
in
this
instance
to
be
paid
to
the
deceased’s
daughter
Josephine
Emma
MacDougall.
EXHIBIT
8.5:
Donation
in
Trust,
executed
before
Dakers
Cameron,
Notary,
on
the
22nd
December,
1938.
Here
again,
the
general
terms
were
similar
to
those
of
Exhibit
8.3;
the
recipient
of
the
revenues
in
this
instance
being
the
deceased’s
daughter
Diana
Marler
MacDougall.
EXHIBIT
.6:
Donation
in
Trust,
executed
before
Dakers
Cameron,
Notary,
on
the
29th
December,
1939—the
recipient
of
the
revenues
in
this
instance
being
the
deceased’s
son
Gordon
Heward
MacDougall.
In
general,
the
terms
resemble
those
of
Exhibits
3
-
5;
but
there
are
one
or
two
special
provisions
peculiar
to
this
deed.
III.
Admittedly,
so
far
as
the
question
in
issue
is
concerned,
the
three
Exhibits
8.3,
4
and
5
are
identical
in
terms.
The
deed
Exhibit
8.6
differs
from
the
three
mentioned
only
in
that
the
Trustee
is
directed
to
employ
part
of
the
revenues
of
the
Trust
Property
for
the
payment
of
the
premiums
of
certain
life
insurance
policies.
Counsel
for
Respondent
admits
that
this
particular
direction
has
no
bearing
on
the
question
in
issue;
so
that,
for
the
purposes
of
the
case,
the
four
Deeds,
Exhibits
S.3,
8.4,
8.5
and
8.6,
are
in
the
same
category.
It
will,
therefore,
be
convenient
to
analyse
Exhibit
8.3
and
consider
its
terms
in
the
light
of
the
applicable
provisions
of
the
Act.
(1)
In
this
Deed,
the
deceased
is
described
as
"Donor’’
and
the
Montreal
Trust
Company
as
"‘Trustee’’.
The
recipient
of
the
benefits
is
referred
to
as
the
"‘beneficiary’’
and
the
property
in
question
as
the
""Trust
Property’’.
(2)
The
first
clause
reads
as
follows:
"The
Donor
doth
by
these
presents
give
and
grant
by
way
of
donation
inter
vives
and
irrevocably
unto
the
Trustee,
thereof
accepting
IN
TRUST,
the
following
Securities
which
at
present
day
values
are
worth
approximately
Twenty-five
thousand
dollars,
namely
(3)
After
the
enumeration
of
the
securities,
it
is
stated
that
they
have
been
delivered,
at
the
execution
of
the
Deed,
to
the
Trustee
who
acknowledges
receipt
thereof.
(4)
Then
follows
a
lengthy
clause
opening
with
the
following
paragraph
:
“TO
HAVE
AND
TO
HOLD
the
said
securities
or
other
property
moveable
or
immoveable
acquired
in
replacement
thereof
or
representing
the
same
hereinafter
styled
the
‘Trust
Property’,
unto
the
said
Trustee
on
the
Trusts
and
for
the
purposes
following,
namely:
..
.’’
The
‘‘purposes’’
are
described
in
six
paragraphs
lettered
from
(a)
to
(f).
They
may
be
summarized
as
follows:
(a)
The
revenues
are
to
be
collected
by
the
Trustee
and
are
to
provide
the
expenses
of
administration
and
the
fees
of
the
Trustee.
(b)
The
net
annual
revenues
are
to
be
paid
to
‘‘the
beneficiary”
(the
Donor’s
daughter
Elizabeth
Evelyn
MacDougall)
during
her
lifetime.
(c)
At
and
after
the
beneficiary’s
death,
the
capital
is
to
be
paid
to
her
children
in
equal
shares,
any
child
of
the
beneficiary
who
may
have
predeceased
her
to
be
represented
by
such
child’s
children.
The
capital
is
to
be
paid
as
each
child
reaches
the
age
of
thirty
years,
the
income
being
paid
in
the
meantime
to
each
child.
(d)
Should
the
beneficiary
die
without
issue,
the
capital
is
to
be
paid
according
to
the
directions
in
her
Will;
or,
in
default
of
such
testamentary
directions,
to
her
legal
heirs.
(e)
The
Donation
is
made
for
support
and
maintenance
and
shall
be
exempt
from
seizure,
assignment
or
anticipation
so
long
as
the
Trust
Property
remains
in
the
hands
of
the
Trustee.
(f)
The
Trust
Property
shall
not
form
part
of
any
community
of
property.
(5)
Then
follows
a
lengthy
clause
entitled
‘‘Powers
of
the
Trustee’’,
which
powers
are
enumerated
in
paragraphs
(a)
to
(e).
It
is
unnecessary
to
discuss
them
in
detail.
It
is
sufficient
to
say
first:
that
they
include
very
wide
powers
of
borrowing,
leasing,
alienation,
compromise,
settlement,
investment,
reinvestment,
division,
partition,
valuation
and
the
like;
and
second:
that
there
is
nothing
in
the
clause
which
gives
any
power
of
direction
or
control
to
the
Donor.
(6)
The
last
clause
is
an
Intervention
by
the
beneficiary,
who
accepts
the
benefits
conferred
upon
her.
IV.
So
far
as
the
undersigned
is
aware,
the
only
judgment
referring
to
section
24
of
the
Act
in
question
is
that
of
P.
Demers,
J.,
in
Bourque
et
al.
v.
The
King,
[1948]
C.T.C.
115,
[1947]
S.C.
348,
which
was
cited
by
Counsel
for
the
Respondent.
In
that
case
a
Petition
of
Right
to
recover
the
succession
duties
paid
under
protest
on
a
donation
in
trust
was
rejected—because
the
Court
was
of
the
opinion
that
the
terms
of
the
deed
brought
the
gift
under
section
24.
Those
terms
included
the
provision
that
the
revenues
of
the
trust
property
were
to
be
paid
to
the
donor
and
his
wife
unless
and
until
certain
events
took
place.
Counsel
for
the
Suppliants
cited,
inter
alia,
the
case
of
Curran
et
al.
v.
Davis,
[1933]
S.C.R.
283.
There
was
no
question
in
that
case
of
succession
duties;
but
the
notes
of
the
present
Chief
Justice
of
Canada
(Rinfret,
J.,
as
he
then
was)
contain
a
lucid
and
helpful
commentary
on
articles
981(a)
to
981
(n)
of
the
Civil
Code,
which
are
found
under
the
caption
"
"
Of
Trusts
‘
‘
and
which
obviously
apply
to
all
the
Deeds
concerned
in
the
present
case.
The
undersigned
has
also
consulted
two
other
decisions
cited
by
Counsel
for
the
Suppliants:
Guaranty
Trust
Co.
of
New
York
et
al.
v.
The
King,
[1948]
C.T.C.
153,
[1948]
S.C.R.
183;
and
Minister
of
National
Revenue
v.
National
Trust
Co.
Ltd.,
[1948]
C.T.C.
339,
[1949]
S.C.R.
127.
V.
It
is
apparent
from
the
analysis
of
Exhibit
S.3,
that:
(1)
On
the
execution
of
the
Deed
the
Donor,
in
specific
terms,
“completely
and
irrevocably’’
divested
himself
of
the
ownership
of
the
securities.
(2)
The
Donor
did
not
reserve
to
himself,
in
whole
or
in
part,
the
control
or
administration
of
the
Trust
Property
or
any
part
thereof.
(3)
There
is
no
provision
comparable
to
the
one
mentioned
above
in
connection
with
the
Bourque
case.
(4)
The
only
contingency
in
which
the
Donor
might
have
derived
any
benefit
from
the
property
would
have
been
the
case
of
the
predecease
of
his
daughter
without
issue
and
without
leaving
any
relevant
testamentary
direction;
in
which
event
he
would
have
received
a
share
as
one
of
her
legal
heirs.
This
contingency
was
obviously
in
no
way
under
the
control
of
the
Donor;
and,
in
fact,
the
beneficiary
(and
all
the
other
children
of
the
deceased)
survived
the
Donor.
Can
it,
then,
be
said
that
because,
when
the
Deed
was
executed,
there
existed
the
remote
possibility
that
at
some
future
time
part
of
the
property
might
come
back
to
the
Donor
in
his
quality
as
legal
heir
of
his
daughter,
he
‘‘reserved
to
himself
in
whole
or
in
part,
the
.
.
.
ownership
or
enjoyment
of
such
property
or
part
thereof’’?
In
the
opinion
of
the
undersigned
the
answer
to
that
question
must
be
in
the
negative.
The
expression
‘‘has
reserved
to
himself”
must
surely
be
taken
to
refer
to:
(a)
an
immediate
reservation;
or
(b)
some
future
event
which
is
certain
to
occur;
or
(c)
some
future
event
or
action
over
which
the
Donor
has
at
least
some
degree
of
control.
Any
other
interpretation
would,
in
the
view
of
the
undersigned,
be
strained
and
unreasonable.
This
view
seems
to
be
supported
by
the
decision
of
the
Supreme
Court
of
Canada
in
the
National
Trust
case
above
cited.
The
undersigned
cannot
accept
the
contention
of
Counsel
for
the
Respondent
that
any
donation
in
trust
comes
under
section
24
of
the
Act
if
the
Trustee
is
appointed
by
the
Donor.
That
may
be
the
effect
of
section
27(a)
as
enacted
by
the
statute
13
Geo.
VI,
cap.
32;
but
by
its
terms,
that
section
does
not
apply
to
gifts
made
prior
to
2nd
February,
1949.
Therefore,
the
Court
comes
to
the
conclusions
that
the
gifts
in
Exhibits
8.3,
8.4,
8.5
and
8.6
are
exempt
from
succession
duties.
VI.
It
is
now
necessary
to
examine
the
terms
of
Exhibit
8.2,
which
is
In
certain
possibly
relevant
respects
different
from
the
others.
(1)
The
first
point
to
note
is
that
the
document
is
a
Marriage
Contract
(executed
on
the
10th
November,
1928)
between
the
Donor’s
minor
daughter
Barbara
Helen
MacDougall
and
George
Buchanan
Foster,
her
intended
husband;
who,
in
fact,
were
duly
married
under
the
régime
of
separation
as
to
property
therein
stipulated.
In
this
connection,
reference
may
be
made
to
article
818
C.C.,
which
reads
as
follows:
"
"
Fathers
and
mothers,
and
other
ascendants,
relations
in
general,
and
even
strangers,
may,
in
a
contract
of
marriage,
give
to
the
future
consorts
or
to
one
of
them,
or
to
the
children
to
be
born
of
their
marriage,
even
with
substitution,
the
whole
or
a
portion
of
their
present
property,
or
of
the
property
they
may
leave
at
their
death,
or
of
both
together.”
(2)
The
Donor,
intervening
in
the
Marriage
Contract,
"‘makes
a
gift
to
his
daughter
in
advancement
of
her
share
in
his
succession
and
to
any
child
or
children
who
may
be
born
of
her
the
future
wife
accepting
thereof
for
herself
and
them
of
the
sum
of
TWENTY-FIVE
THOUSAND
DOLLARS
which
he
promises
and
obliges
himself
forthwith
to
pay
to
the
Trustee
hereinafter
named
to
be
held
by
it
the
said
Trustee
and
its
successors
in
the
Trust
for
the
following
purposes:
The
payment
so
to
be
made
may
be
made
either
in
money
or
in
securities
the
securities
and
the
value
thereof
to
be
designated
by
the
said
Donor.
’
‘
It
is
admitted
by
the
parties
that
securities
to
the
amount
of
the
gift
were
actually
delivered
to
the
Trustee
partly
on
the
26th
and
partly
on
the
28th
December,
1928.
(3)
The
"purposes’’
are
enumerated
in
clauses
numbered
(1)
to
(3)
in
the
intervention.
They
may
be
summarized
as
follows:
(a)
The
Trustee
shall
pay
the
net
annual
income
to
the
Donor’s
daughter
during
her
lifetime.
(b)
If
the
daughter
dies
leaving
issue
surviving
her,
the
revenues
shall
be
paid
to
or
used
for
the
benefit
of
such
issue,
saving
certain
conditional
stipulations
in
favour
of
the
daughter’s
husband.
(c)
Subject
to
the
foregoing,
the
Trustee
shall
remain
in
possession
of
the
Trust
Property
in
Trust
for
all
the
surviving
children
of
the
Donor’s
daughter
who
attain
majority
or
marry
before
majority.
Such
children
shall,
at
majority
or
marriage,
become
vested
with
their
share
of
the
Trust
Property,
but
shall
not
(subject
to
discretionary
advances
by
the
Trustee)
receive
delivery
of
their
respective
shares
until
they
respectively
reach
the
age
of
25
years.
(d)
If
the
Donor’s
daughter
dies
without
issue
her
surviving
and
attaining
majority
or
marrying
before
majority,
the
Trust
Property
(subject
to
such
advances
as
may
have
been
made
as
above
mentioned),
may
be
disposed
of
by
the
daughter
in
her
Will
as
follows:
As
to
one-fourth
by
legacies
bequeathed
"‘to
such
persons,
charities
and
institutions
as
she
may
direct’’
and
as
to
the
remainder
to
any
of
the
Donor’s
descendants.
If
there
be
no
such
testamentary
disposition
by
the
daughter
or
to
the
extent
that
the
legacies
do
not
cover
the
Trust
Property,
then
the
Trust
Property
(or
the
remainder
thereof)
shall
‘‘revert
to
the
Donor
and
in
the
event
of
his
being
deceased
shall
be
governed
by
the
provisions
of
his
Will.’’
(4)
The
next
clause
enumerates
the
powers
of
the
Trustees,
none
of
which
is
relevant
to
the
question
in
issue.
(5)
By
the
next
clause,
the
Donor
appoints
the
Montreal
Trust
Company
as
Trustee
(which
Company
signs
the
Marriage
Contract
in
acceptance
of
the
Trust).
It
is
then
stipulated
that
the
Trustee
shall
always
be
a
trust
company
with
its
head
office
in
Montreal
and
‘‘any
vacancy
occurring
in
the
Trust
during
the
Donor’s
lifetime
shall
be
filled
by
him
and
after
his
death
shall
be
filled
by
a
Judge
of
the
Superior
Court
for
the
Province
of
Quebee
in
the
District
of
Montreal
on
the
advice
of
a
Family
Council
to
be
held
before
a
Notary.”
The
rest
of
the
intervention
is
irrelevant
so
far
as
the
present
case
is
concerned.
The
fact
that
the
Donation
in
Trust
was
made
in
a
Marriage
Contract
is
of
no
importance
to
the
question
in
issue.
It
is
true
that
gifts
made
in
marriage
contracts
were
at
one
time
exempt;
but
this
exemption
was
removed
by
the
statute
24
Geo.
V,
cap.
14
(1934).
It
is
also
true
that
the
gift
in
question
was
made
before
the
exemption
was
removed;
but
subsection
(4)
of
section
61
of
the
present
Act
states
that
section
24
thereof
shall
not
apply
to
gifts
made
prior
to
the
2nd
March,
1928,
which
can
only
mean
that
it
does
apply
to
gifts
made
after
that
date—as
was
the
gift
in
Exhibit
8.2.
The
other
differences
between
the
terms
of
Exhibit
8.2
and
those
of
the
four
other
exhibits
already
discussed
do
not
appear
to
the
undersigned
to
bring
Exhibit
8.2
within
the
provisions
of
section
24.
If
the
undersigned’s
opinion
as
to
the
connotation
of
the
expression
"‘has
reserved
to
himself’’
is
sound,
then
the
gift
made
by
the
Donor
in
Exhibit
8.2
is
also
exempt
from
succession
duties.
VII.
There
remains
to
be
discussed
the
question
of
the
interest
which
the
Suppliants
claim
on
the
sum
of
$32,876.63
from
the
21st
March,
1949—the
date
upon
which
the
said
sum
was
paid
under
protest.
Counsel
for
Respondent
contended
that,
irrespective
of
the
principle
that
the
Crown
is
not
in
any
event
bound
to
pay
interest,
no
interest
could
be
exacted
because
the
claim
is
made
under
article
1047
C.C.,
which
reads
as
follows
:
"He
who
receives
what
is
not
due
to
him,
through
error
of
law
or
of
fact,
is
bound
to
restore
it;
or
if
it
cannot
be
restored
in
kind,
to
give
the
value
of
it.
(If
the
person
receiving
be
in
good
faith,
he
is
not
obliged
to
restore
the
profits
of
the
thing
received.)
‘‘
The
Crown,
says
its
Counsel,
was
not
in
bad
faith
and
therefore
no
interest
is
payable.
To
this
Counsel
for
Suppliants
replies
that
the
amount
was
paid
not
‘‘through
error
of
law
or
of
fact’’
but
under
duress
and
under
protest.
The
documents
of
record
substantiate
that
such
was
the
case.
On
the
other
hand,
it
is
a
well
recognized
principle
that
there
can
be
no
recovery
of
interest
against
the
Crown
unless
the
statute
or
the
contract
in
question
specially
provides
for
it.
(See,
inter
alia,
The
King
v.
Carroll
et
al.,
[1948]
S.C.R.
126.)
There
is
no
such
provision
in
this
case.
Consequently,
the
Suppliants’
claim
for
interest
cannot
be
allowed.
In
view
of
the
foregoing:
THE
COURT:
WHEREAS
the
Suppliants
in
their
quality
as
Executors
and
Trustees
under
the
Last
Will
and
Testament
of
the
late
Gordon
Walters
MacDougall
claim
from
the
Respondent
the
sum
of
$32,876.63,
with
interest
from
the
31st
March,
1949,
and
costs
:
WHEREAS
the
claim
is
based
on
the
allegation
that
the
said
sum
was
illegally
exacted
as
succession
duties
with
respect
to
five
donations
inter
vivos
made
by
the
said
deceased
to
his
five
children
respectively
;
WHEREAS
the
claim
is
contested
on
the
ground
that
the
said
donations
fall
within
the
provisions
of
section
24
of
the
Quebec
Succession
Duties
Act,
as
enacted
by
7
Geo.
VI,
cap.
18
;
SEEING
the
said
section
24
and
sections
2
and
22
of
the
said
Act;
CONSIDERING
that
the
said
five
donations
were
made
more
than
five
years
before
the
date
of
the
death
of
the
said.
deceased
:
CONSIDERING
that,
under
what
the
undersigned
considers
to
be
the
proper
interpretation
of
the
said
section
24
and
the
terms
of
the
said
gifts,
the
Donor
did
not
‘‘reserve
to
himself,
in
whole
or
in
part,
the
control,
administration,
ownership
or
enjoyment’’
of
the
property
donated
or
part
thereof;
and
that,
accordingly,
the
said
gifts
are
not
subject
to
succession
duties;
SEEING
the
admission
of
the
Respondent
that
the
said
amount
of
$32,876.63
is
the
amount
which
should
be
recovered
if
the
said
gifts
are
not
subject
to
succession
duties;
CONSIDERING
that
the
claim
for
interest
on
the
said
amount
cannot
be
allowed
(The
King
v.
Carroll
et
al.,
[1948]
S.C.R.
126)
;
CONSIDERING
that
the
Petition
is
otherwise
well
founded
;
DOTH
MAINTAIN
the
Petition
of
Right,
save
as
to
the
interest
therein
claimed;
and
DOTH
ADJUDGE
that
His
Majesty’s
Government
of
the
Province
of
Quebec
pay
to
the
Suppliants
in
their
said
quality
the
said
sum
of
$32,876.63
and
the
costs
of
the
proceedings.
Email this Content