KELLOCK,
J.:—This
is
an
appeal
from
the
judgment
of
the
Exchequer
Court,
Cameron,
J.,
affirming
the
decision
of
the
Minister
on
an
appeal
against
an
assessment
for
succession
duties.
The
appellants
are
each
entitled
to
life
interests
in
the
residuary
estate
of
the
late
Mary
Catherine
Fisher,
deceased,
and
the
only
matter
in
dispute
between
the
parties
is
the
value
of
one
item
of
that
residue,
namely,
the
interest
of
the
said
estate
in
the
estate
of
the
late
Charles
Woodward,
deceased,
the
father
of
the
said
Mary
Catherine
Fisher.
By
his
will
and
codicil,
the
late
Charles
Woodward
bequeathed
to
a
sister
and
a
brother,
out
of
the
income
to
be
received
by
his
trustees
from
his
Vancouver
real
estate,
an
annuity
of
$200
per
month
each,
during
their
respective
lives
and,
subject
thereto,
he
directed
that
such
income
should
be
distributed
annually
between
three
persons,
of
whom
the
deceased
daughter
was
one,
during
a
period
ending
with
the
death
of
the
last
survivor
of
four
named
persons.
It
has
been
held
by
a
judgment
of
the
Supreme
Court
of
British
Columbia
that
the
interest
of
the
deceased
Mary
Catherine
Fisher
did
not
determine
with
her
death
but
continued
for
the
benefit
of
her
estate.
It
is
to
be
noted
that
the
late
Mary
Catherine
Fisher
died
on
the
28rd
of
October,
1943,
after
the
Succession
Duty
Act
came
into
force,
but
her
father,
the
late
Charles
Woodward,
died
prior
thereto,
his
estate,
therefore,
not
being
subject
to
the
provisions
of
the
statute.
In
valuing
the
interest
of
the
daughter
in
her
father’s
estate,
the
Minister
applied
the
provisions
of
section
34
of
the
Act,
as
he
did
also
in
valuing
the
respective
interests
of
the
appellants
in
the
estate
of
their
testatrix.
The
appellants
do
not
object
to
the
application
of
the
section
in
this
last-mentioned
respect,
but
they
contend
that
the
Minister
erred
in
applying
the
provisions
of
the
section
in
ascertaining
the
value
of
the
asset
here
in
question
as
part
of
the
residuary
estate
of
Mary
Catherine
Fisher.
The
appellants
say
that
s.
34
is
not,
but
that
the
provisions
of
s.
2(a)
and
(e)
and
s.
5(1)
are
applicable.
S.
34
is
as
follows
:
"The
value
of
every
annuity,
term
of
years,
life
estate,
income,
or
other
estate,
and
of
every
interest
in
expectancy
in
respect
of
the
succession
to
which
duty
is
payable
under
this
Act
shall
for
the
purposes
of
this
Act
be
determined
by
such
rule,
method
and
standard
of
mortality
and
of
value,
and
at
such
rate
of
interest
as
from
time
to
time
the
Minister
may
decide
(1940-41,
c.
14,
s.
34).”
The
important
words
for
present
purposes
are
the
words,
“in
respect
of
the
succession
to
which
duty
is
payable
under
this
Act.’’
The
only
successions
in
respect
of
which
duty
is
payable
under
the
Act
are
the
successions
of
the
appellants
to
the
estate
of
Mary
Catherine
Fisher.
The
section
in
its
clear
terms,
therefore,
has
no
application
to
anything
but
the
valuation
for
duty
purposes
of
the
interests
of
the
appellants
in
that
estate.
Paragraphs
(a)
and
(e)
of
s.
2
and
s.
5(1)
are
as
follows:
"‘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
allowances
are
deducted
therefrom
as
authorized
by
subsection
six
of
section
seven
and
by
section
eight
of
this
Act.’’
(‘
(e)
‘dutiable
value’
means,
in
the
case
of
the
death
of
a
person
domiciled
in
Canada,
the
fair
market
value,
as
at
the
date
of
death,
of
all
property
included
in
a
succession
to
a
successor
less
the
allowances
as
authorized
by
subsection
six
of
section
seven
and
by
section
eight
of
this
Act
and
less
the
value
of
real
property
situated
outside
of
Canada,
and
means,
in
the
case
of
the
death
of
a
person
domiciled
outside
of
Canada,
the
fair
market
value
of
property
situated
in
Canada
of
the
deceased
included
in
a
succession
to
a
successor
less
the
allowances
as
authorized
by
subsection
six
of
section
seven
and
by
sections
eight
and
nine
of
this
Act.
‘
‘
"‘5.(1)
Notwithstanding
that
the
value
of
the
property
included
in
a
succession
to
which
each
heir,
legatee,
substitute,
institute,
residuary
beneficiary,
or
other
successor
is
entitled,
cannot
in
any
case
be
determined
until
the
time
of
distribution,
nevertheless,
for
the
purposes
of
this
Act,
all
such
property
shall
be
valued
as
of
the
date
of
death,
and
such
successor
shall
be
deemed
to
benefit
as
if
such
property
less
the
allowances
as
authorized
by
section
eight
of
this
Act
were
immediately
distributed,
and
as
if
each
successor
benefited
accordingly.
‘
‘
In
my
opinion,
the
appellants
are
right
in
their
contention
that
the
value
of
the
asset
of
the
Fisher
estate
here
in
question
falls
to
be
determined
under
the
provisions
of
s.
2(a)
and
(e)
and
s.
5(1),
in
other
words,
at
the
fair
market
value
at
the
date
of
the
death
of
Mary
Catherine
Fisher
on
the
23rd
of
October,
1943.
Although
it
is
not
raised
by
the
pleadings,
Mr.
Sheppard
for
the
respondent
contends
that
s.
58(2)
is
applicable
independently
of
s.
34,
and
that
under
the
relevant
regulation
the
same
result
is
arrived
at
as
if
the
provisions
of
s.
34
applied.
S.
58(2),
so
far
as
material,
is
as
follows:
"The
Minister
may
make
any
regulations
deemed
necessary
for
carrying
this
Act
into
effect,
and
in
particular
may
make
regulations
:—
*****
(ec)
prescribing
what
rule,
method
and
standard
of
mortality
and
of
value,
and
what
rate
of
interest
shall
be
used
in
determining
the
value
of
annuities,
terms
of
years,
life
estates,
income,
and
interests
in
expectancy.’’
The
only
regulation
to
which
we
were
referred
is
regulation
19
which
reads
in
part
as
follows
:
‘19.(1)
The
value
of
every
annuity,
term
of
years,
life
estate,
income,
or
other
estate
and
of
every
interest
in
expectancy,
shall
be
determined,—
*****
(ii)
if
the
succession
depends
on
life
contingencies,
on
the
basis
of
interest
as
aforesaid,
together
with
the
standard
of
mortality
as
defined
in
Table
II
below,
»
»
In
my
opinion,
the
terms
of
this
regulation
are
thus
expressly
limited,
as
is
s.
34
itself,
to
the
valuation
of
the
interests
mentioned
which
are
included
in
the
succession,
the
duty
in
respect
of
which
is
being
determined.
Again,
both
a
basis
of
interest
and
a
standard
of
mortality
enter
into
the
computation
and
it
is
clear
from
Table
II
itself,
which
bears
the
heading,
"
1
Standard
of
mortality
prescribed
for
the
purposes
of
section
34’’,
that
the
basis
of
computation
prescribed
by
the
regulation
is
for
use
only
under
that
section.
Even
if
s.
58
could
stand
alone,
therefore,
no
regulation
has
been
passed
under
it
which
could
apply
to
the
valuation
of
the
item
here
in
question
as
part
of
the
residuary
estate
of
Mary
Catherine
Fisher.
Appellants
also
asked
in
their
statement
of
claim
that
the
court
should
determine
the
fair
market
value,
and
both
parties
led
evidence
on
the
point.
In
determining
the
fair
market
value
where
there
is
no
competitive
market
at
the
date
as
of
which
the
value
is
to
be
ascertained,
other
indicia
may
be
resorted
to,
as
pointed
out
by
Sir
Lyman
Duff,
J.,
in
Montreal
Island
Power
Co.
v.
Town
of
Laval
des
Rapides,
[1935]
S.C.R.
304
at
306.
The
learned
Chief
Justice
went
on
to
say:
“There
may
be
reasonable
prospects
of
the
return
of
a
market,
in
which
case
it
might
not
be
unreasonable
for
the
assessor
to
evaluate
the
present
worth
of
such
prospects
and
the
probability
of
an
investor
being
found
who
would
invest
his
money
in
the
strength
of
such
prospects;
and
there
may
be
other
relevant
circumstances
which
it
might
be
proper
to
take
into
account
as
evidence
of
its
actual
capital
value.’’
This
principle
was
applied
by
this
Court
for
succession
duty
purposes
in
Attorney
General
of
Alberta
v.
Royal
Trust
Company,
[1945]
S.C.R.
267.
The
subject
matter
of
that
case
was
the
value
of
land
and
buildings,
and
the
court
took
into
consideration
the
revenue-producing
qualities
of
the
property.
The
respondent
contends
that
the
item
here
in
question
is"‘a
bequest
of
$10,000
a
year’’,
that
is,
"‘a
bequest
of
one-third
of
the
annual
rental
of
$30,000’’.
The
appellants,
on
the
other
hand,
contend
that
their
testatrix
was
entitled
only
to
‘‘one-third
of
the
net
income’’
from
the
property
in
question;
that
the
gross
rental
was
subject
to
certain
charges
and
one
annuity
to
one
of
the
two
annuitants
who
survived
Mrs.
Fisher;
and
that
payment
of
the
rent
was
further
subject
to
certain
contingencies,
such
as,
for
example,
the
continued
solvency
of
the
tenant.
From
the
standpoint
of
the
outstanding
annuity
alone,
the
income
from
the
rent
was
obviously
subject
to
reduction
to
that
extent.
In
addition,
the
trustees
of
the
Woodward
estate
were
entitled
under
the
Trustee
Act
of
British
Columbia
to
compensation,
and
the
income
from
the
rents
would
be
subject
to
some
reduction
on
this
account.
It
is
further
pointed
out
that
the
lease
contains
the
usual
exception
of
reasonable
wear
and
tear
and
damage
by
fire
and
tempest
from
the
lessee’s
covenant
to
repair,
and
that
this
would
involve
some
expenditure
on
the
part
of
the
Woodward
estate
to
keep
the
building
intact.
The
witnesses
for
both
parties
agree
that
such
expense
together
with
the
expense
of
extra
insurance,
which
the
owners
as
a
matter
of
good
business
practice
should
carry,
would
total
approximately
$3,000
per
year.
It
cannot,
therefore,
be
said
that
there
was
"‘a
bequest
of
$10,000
per
year.’’
Further,
while
the
rent
is
collaterally
secured
by
two
mortgages
given
by
the
tenant
on
adjoining
property
owned
by
it,
and
while
the
lessee
covenanted
to
pay
rent,
taxes,
light,
gas
and
telephone
charges,
and
to
return
the
property
at
the
end
of
the
term
with
a
building
thereon
worth
not
less
than
$125,000
in
a
good
and
sufficient
state
of
repair,
and
to
keep
the
building
insured
for
$100,000,
one
cannot
disregard
entirely
the
possibility
of
insolvency
of
the
tenant
or
even
the
possibility
of
some
disaster
occurring
during
the
term
of
the
lease,
which
had
some
44
years
to
run
at
the
date
of
Mrs.
Fisher’s
death.
A
purchaser
would
no
doubt
make
some
allowance
for
such
eventualities.
Perhaps
the
two
most
outstanding
features
of
this
asset
are,
first,
the
uncertainty
of
the
term,
in
that
it
depends
upon
four
lives,
one
of
those
lives
being
that
of
a
person
at
the
date
of
Mrs.
Fisher’s
death
engaged
in
combat
service
in
the
Royal
Canadian
Air
Force.
The
other
important
consideration
is
that
the
asset
is
not
a
capital
asset
but
income,
and
therefore
subject
in
the
hands
of
a
purchaser
to
income
taxation.
The
appellants
called
two
experts
with
respect
to
value.
One,
William
Reeve,
said
that
the
asset
would
be
a
very
difficult
thing
to
sell
as
it
involved
considerations
of
a
highly
speculative
nature.
He
himself
had
had
no
actual
experience
in
selling
such
an
interest.
In
his
opinion,
the
fair
market
value
would
be
not
more
than
$67,230.
He
arrived
at
that
figure
by
taking
the
annual
net
income
as
$9,000
and
considering
that
any
purchaser
would
require
the
return
of
his
capital
in
not
more
than
twenty
years
and
would
expect
an
interest
rate
of
12%.
In
the
opinion
of
the
other
witness
called
by
the
appellants,
D.
S.
Mansell,
a
purchaser
might
have
been
found
in
October,
1943,
who
would
have
paid
$55,000.
He
pointed
out,
in
addition
to
the
factors
already
mentioned,
that
at
that
date
the
country
was
engaged
in
a
world
war.
His
figure
of
$55,000,
he
said,
was
on
the
basis
of
return
of
the
principal
within
131
years
with
interest
at
4%.
The
witness
called
for
the
respondent
made
a
valuation
of
$150,000
but
left
entirely
out
of
consideration
the
fact
that
the
subject
matter
of
sale
was
income
and
therefore
subject
in
the
hands
of
the
purchaser
to
income
tax.
For
this
reason
alone
I
think
his
evidence
is
to
be
disregarded.
On
all
the
evidence,
there
would
be
no
justification,
in
my
opinion,
for
putting
a
higher
value
upon
the
asset
in
question
than
the
figure
given
by
Mr.
Reeve,
namely,
$67,230,
on
the
basis
of
the
income
being
$9,000
per
year,
which
may
well
be
too
high.
It
was
suggested
by
Mr.
Boultbee,
the
respondent’s
witness,
that
the
element
of
uncertainty
as
to
the
duration
of
the
term
could
be
eliminated
by
the
purchase
of
life
insurance.
It
may
well
be
that
this
would
be
the
case,
but
the
premium
or
premiums
would
be
substantial
and
would
involve
an
increase
in
the
purchaser’s
outlay.
The
evidence
with
respect
to
this
aspect
of
the
matter
was
not
sufficiently
related
to
the
computation
of
value
to
permit
of
the
fixing
of
an
amount
greater
than
$67,230,
the
higher
of
the
two
figures
put
forward
by
the
appellants.
I
therefore
would
allow
the
appeal
and
reduce
the
valuation
to
the
figure
mentioned.
The
appellants
should
have
their
costs
here
and
below.
Appeal
allowed.
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