Pratte,
J:—This
appeal
is
concerned
with
the
right
of
respondent
to
deduct,
in
computing
its
income
for
the
taxation
years
1967
and
1968,
certain
amounts
in
respect
of
the
capital
cost
of
property
previously
owned
by
it
for
the
purpose
of
gaining
or
producing
income
when
such
property
has,
in
a
previous
year,
ceased
to
be
in
a
prescribed
class
and
no
other
property
was
in
such
class
as
at
the
end
of
both
taxation
years
in
question.
The
facts
which
are
not
in
dispute
can
be
briefly
stated
as
follows.
In
the
course
of
1964,
respondent
became
the
successor
in
title
of
the
Transportation
Building
Company,
Limited
(the
“Transportation
Company”)
with
respect
to
two
distinct
assets,
namely:
(a)
the
rights
of
the
Transportation
Company
as
lessee
of
a
piece
of
land
(the
“piece
of
land”)
situated
on
Notre-Dame
Street
in
the
City
of
Montreal,
under
the
terms
of
an
emphyteutic
lease
(the
“first
lease”)
made
on
June
2,
1910
by
Les
Ecclésiastiques
du
Séminaire
de
Montréal
as
lessor,
in
favour
of
the
Transportation
Company
as
lessee;
and
(b)
the
full
ownership
of
a
building
(the
“Transportation
Building”)
that
had
been
erected
on
the
piece
of
land.
It
is
no
longer
in
dispute
that
these
assets
were
acquired
by
respondent
“for
the
purpose
of
gaining
or
producing
income”
(Income
Tax
Regulations
1102(1)(c))
and
that
respondent
was
in
1964
entitled
to
claim
capital
cost
allowances
in
respect
of
both
assets,
the
Transportation
Building
to
be
classified
in
class
3
(“property
not
included
in
any
other
class
that
is
.
.
.
a
building
.
.
.”)
and
the
lessee
rights
under
the
first
lease
in
class
13
(“property
that
is
a
leasehold
interest
.
.
.”)
of
the
Income
Tax
Regulations
(R
v
Compagnie
Immobilière
BCN
Ltée,
[1973]
CTC
362;
73
DTC
5295).
In
January
of
1965,
the
situation
of
respondent
vis-a-vis
these
two
classes
of
assets
changed.
Respondent,
who
already
held
the
lessee’s
rights
under
the
first
lease,
then
acquired
the
lessor’s
rights
under
the
same
lease;
respondent
thereupon
became
the
full
owner
of
the
piece
of
land
which
it
previously
occupied
as
lessee
only.
Also,
immediately
after
such
acquisition,
respondent,
which
was
then
the
full
owner
of
both
the
piece
of
land
and
the
Transportation
Building,
conveyed
by
emphyteutic
lease
(the
“second
lease’’)
to
Société
Immobilière
Place
d’Armes
Limitée
(the
“Société”),
several
properties
including
the
piece
of
land
on
which
stood
the
Transportation
Building.
Under
this
second
lease,
the
Société
obligated
itself
to
demolish
the
Transportation
Building
and
to
build
for
the
use
of
respondent
a
new
office
building
in
accordance
with
plans
and
specifications
to
be
approved
by
it.
In
partial
fulfillment
of
this
contractual
obligation,
the
Transportation
Building
was
demolished
by
the
Société
before
the
end
of
respondent’s
1965
taxation
year.
Following
these
events,
respondent
had
no
property
left
in
classes
3
and
13
and
it
is
common
ground
that
none
was
acquired
by
respondent
during
the
taxation
years
1965,
1966,
1967
and
1968.
We
are
not
concerned
here
with
the
tax
situation
of
respondent
in
1965
and
1966
and
the
record
is
silent
in
that
regard.
The
dispute
concerns
the
years
1967
and
1968
for
which
respondent
claimed
depreciation
at
the
appropriate
annual
rate
in
respect
of
the
undepreciated
capital
cost
of
the
two
classes
of
assets
aforementioned.
Such
claim
was
denied
because
respondent
did
not
have
at
the
end
of
these
two
years,
any
property
in
these
classes.
Respondent
appealed
directly
to
the
Federal
Court,
Trial
Division,
against
the
assessment;
its
appeal
was
dismissed
(1975
FC
523).
In
his
reasons
for
judgment,
Addy,
J
expressed
the
view
at
528:
.
.
.
that
property
in
the
class
under
consideration
must
actually
exist
before
a
deduction
for
previously
acquired
property
of
that
class
may
be
claimed.
He
also
said
at
529
and
530
that
there
was
a
more
fundamental
reason
why
the
claim
of
respondent
could
not
be
entertained:
However,
what
is
more
important
is
the
fact
that
the
general
disposition
of
the
Act
in
so
far
as
deductions
are
concerned,
provides
that,
in
order
to
justify
a
deduction,
the
property
in
question
must
be
used
to
produce
income
and,
if
it
no
longer
exists,
it
clearly
cannot
produce
income
or
for
that
reason
justify
a
deduction.
The
principle
that
the
property
must
be
used
to
produce
income
becomes
clear
when
we
examine
the
text
of
section
20(6)(a)
and
(b)
of
the
Act,
which
reads
as
follows:
Therefore,
in
order
to
enable
a
deduction
to
be
made
pursuant
to
section
11
of
the
Act,
the
property
must
be
used
to
produce
income,
or
at
least,
if
it
does
not
produce
income,
it
must
be
held
for
the
purpose
of
producing
some.
In
concluding
his
reasons
he
expressed
himself
as
follows
at
530:
I
must
therefore
conclude
that,
by
demolishing
the
Transportation
Building
in
1965,
the
plaintiff
lost
all
right
to
future
deductions
based
on
the
original
purchase
price
of
that
building
under
section
11
of
the
Act,
since
no
other
property
of
that
class
existed,
and
for
the
same
reason
I
must
also
conclude
that,
in
view
of
the
confusion
of
the
rights
of
lessor
and
lessee
when
the
emphyteutic
lease
and
the
building
were
both
purchased,
the
plaintiff
also
lost
all
right
to
a
deduction
arising
from
the
said
lease.
On
appeal
to
the
Federal
Court
of
Appeal,
the
judgment
of
the
Trial
Division
was
set
aside
and
the
assessments
for
the
1967
and
1968
taxation
years
were:
referred
back
to
the
Minister
for
re-assessment
on
the
basis
that
(a)
Regulation
1100(2)
did
not
confer
on
the
appellant
any
right
to
a
deduction
for
the
1965
taxation
year;
and
(b)
it
is
not
necessary
for
property
to
be
in
existence
or
used
or
held
for
income
producing
purposes
for
its
capital
cost
to
be
included
in
the
computation
of
capital
cost
allowance
under
Regulation
1100(1),
(1976,
2
FC
at
437).
There
are
two
main
issues
in
this
appeal:
the
first
is
as
to
the
application
of
the
terminal
loss
provision
of
Regulation
1100(2)
of
the
Income
Tax
Regulations
to
the
circumstances
of
this
case;
the
second
is
as
to
the
right
of
respondent
to
claim
in
any
event
a
capital
cost
allowance
(other
than
a
terminal
loss)
when
there
is
no
property
in
the
relevant
class.
Regulation
1100(2)
reads
as
follows
in
both
official
languages:
(2)
Where,
in
a
taxation
year,
otherwise
than
on
death,
all
property
of
a
prescribed
class
that
had
not
previously
been
disposed
of
or
transferred
to
another
class
has
been
disposed
of
or
transferred
to
another
class
and
the
taxpayer
has
no
property
of
that
class
at
the
end
of
the
taxation
year,
the
taxpayer
is
hereby
allowed
a
deduction
for
the
year
equal
to
the
amount
remaining,
if
any,
after
deducting
the
amounts,
determined
under
sections
1107
and
1110
in
respect
of
the
class,
from
the
undepreciated
capital
cost
to
him
of
property
of
that
class
at
the
expiration
of
the
taxation
year.
(2)
Lorsque,
dans
une
année
d’imposition,
autrement
qu’au
décès,
tous
les
biens
d’une
catégorie
prescrite
qui
n’avaient
pas
auparavant
été
aliénés
ou
transportés
à
une
autre
catégorie
ont
été
aliénés
ou
transportés
à
une
autre
catégorie
et
que
le
contribuable
n’a
pas
de
biens
de
cette
catégorie
à
la
fin
de
l’année
d’imposition,
il
est
par
les
présentes
accordé
au
contribuable
une
déduction,
pour
l’année,
égale
au
montant
qui
reste,
s’il
en
est,
après
déduction
des
montants,
établis
en
vertu
des
articles
1107
et
1110
à
l’égard
de
la
catégorie
sur
le
coût
en
capital
non
déprécié,
pour
lui,
des
biens
de
cette
catégorie,
à
la
fin
de
l’année
d’imposition.
The
first
question
to
be
decided
is
as
to
whether
the
Transportation
Building
and
the
lessee’s
rights
under
the
first
lease
must,
because
of
the
circumstances
previously
outlined,
be
regarded
as
having
been
“disposed
of’’
or
“aliénés”
during
respondent’s
1965
taxation
year.
Appellant
argues
for
the
affirmative
and
submits
that
the
interpretation
of
this
provision
should
be
governed
by
that
of
the
expression
“disposed
of”
which
should
be
given
its
broadest
possible
meaning.
Respondent
favours
a
more
restrictive
interpretation;
it
supports
the
view
of
Jackett,
CJ
who,
speaking
for
the
Federal
Court
of
Appeal,
held
that
the
meaning
of
the
expression
“disposed
of”
in
the
Regulation
should
be
controlled
by
the
narrower
meaning
of
the
French
word
“aliénés”
used
in
the
French
version
of
the
same
Regulation;
he
said
at
436:
.
.
.
Regardless
of
whether
the
expression
“disposed
of”
would
have
been
given
some
other
sense
if
the
English
version
were
read
alone,
in
my
view,
when
the
two
versions
are
read
together,
“disposed
of”
must
be
read
in
the
sole
relevant
sense
that
that
expression
has
in
common
with
the
French
word
“aliénés”.
In
my
view,
this
sense
would
include
any
transfer,
by
way
of
sale,
gift
or
otherwise,
of
legal
title,
to
some
other
person
but
would
not
include
the
bringing
about
of
the
destruction
or
extinguishment
of
the
property.
In
support
of
the
judgment
of
the
Federal
Court
of
Appeal
that
the
expression
“disposed
of”
should
be
given
the
restrictive
meaning
of
“aliénés”,
respondent
has
referred
us
to
section
8
of
the
Official
Languages
Act
(RSC
1970,
c
0-2)
which
reads
in
part
as
follows:
8.(1)
In
construing
an
enactment,
both
its
versions
in
the
official
languages
are
equally
authentic.
(2)
In
applying
subsection
(1)
to
the
construction
of
an
enactment,
(b)
subject
to
paragraph
(c),
where
in
the
enactment
there
is
a
reference
to
a
concept,
matter
or
thing
the
reference
shall,
in
its
expression
in
each
version
of
the
enactment,
be
construed
as
a
reference
to
the
concept,
matter
or
thing
to
which
in
its
expression
in
both
versions
of
the
enactment
the
reference
is
apt;
I
do
not
believe
that
paragraph
8(2)(b)
of
the
Official
Languages
Act
is
of
much
assistance
to
respondent.
The
rule
therein
expressed
is
a
guide;
it
is
one
of
several
aids
to
be
used
in
the
construction
of
a
statute
so
as
to
arrive
at
the
meaning
which,
“according
to
the
true
spirit,
intent
and
meaning
of
an
enactment,
best
ensures
the
attainment
of
its
objects’’
(paragraph
8(2)(d)).
The
rule
of
paragraph
8(2)(b)
should
not
be
given
such
an
absolute
effect
that
it
would
necessarily
override
all
other
canons
of
construction.
In
my
view
therefore
the
narrower
meaning
of
one
of
the
two
versions
should
not
be
preferred
where
such
meaning
would
clearly
run
contrary
to
the
intent
of
the
Legislation
and
would
consequently
tend
to
defeat
rather
than
assist
the
attainment
of
its
objects.
One
of
the
most
important
rules
to
be
followed
in
the
interpretation
of
a
particular
provision
of
a
statute
was
expressed
as
follows
by
Lord
Herschell
in
Colquhoun
v
Brooks
(1889),
14
AC
493
at
506:
It
is
beyond
dispute,
too,
that
we
are
entitled
and
indeed
bound
when
construing
the
terms
of
any
provision
found
in
a
statute
to
consider
any
other
parts
of
the
Act
which
throw
light
upon
the
intention
of
the
legislature
and
which
may
serve
to
shew
that
the
particular
provision
ought
not
to
be
construed
as
it
would
be
if
considered
alone
and
apart
from
the
rest
of
the
Act.
And,
in
Canada
Sugar
Refining
Company,
Limited
v
The
Queen,
[1898]
AC
735,
Lord
Davey
said
at
741:
.
.
.
Every
clause
of
a
statute
should
be
construed
with
reference
to
the
context
and
the
other
clauses
of
the
Act,
so
as,
so
far
as
possible,
to
make
a
consistent
enactment
of
the
whole
statute
or
series
of
statutes
relating
to
the
subject-matter.
Clearly,
this
basic
rule
of
statutory
construction
is
still
in
effect;
it
has
not
been
repealed
by
the
enactment
of
section
8
of
the
Official
Languages
Act.
The
expressions
“disposed
of’’
or
“aliénés”
as
found
in
Regulation
1100(2)
should
therefore
not
be
interpreted
in
the
isolated
context
of
the
Regulation
itself
as
if
it
stood
alone
and
independently
from
the
statute
under
which
it
was
passed.
Its
true
meaning
should
rather
be
gathered
from
a
consideration
of
all
relevant
statutory
or
regulatory
provisions
under
which
the
scheme
of
capital
cost
allowances
was
established
and
regulated
and
of
which
the
terminal
loss
provisions
of
Regulation
1100(2)
are
but
a
part.
The
rules
respecting
the
operation
of
the
capital
cost
allowance
system
are
essentially
to
be
found
in
section
20
of
the
Act,
in
Regulations
1100
to
1205
and
also
in
Schedules
(B),
(C),
(D),
(E)
and
(H),
all
passed
under
the
authority
of
paragraphs
11(1)(a)
and
(b)
of
the
Act.
section
20
contains
a
number
of
substantive
rules
regarding
the
recapture
of
capital
cost
allowances
and
the
effects
on
the
operation
of
the
system
of
a
change
in
the
use
of
depreciable
property.
It
also
contains
an
interpretative
clause
that
is
expressed
to
have
effect
for
the
purposes
of
section
20
and
also
for
the
purposes
of
the
“regulations
made
under
paragraph
(a)
of
subsection
(1)
of
section
11”
which,
of
course,
include
Regulation
1100(2)
aforesaid.
In
all
but
two
of
the
definitions
in
subsection
20(5),
the
words
defined
therein
are
declared
to
“mean”
so
and
so;
these
are
true
definitions
and
therefore
restrictive.
There
are
two
exceptions
where
the
words
defined
are
declared
to
“include”
so
and
so;
these
exceptions
are
the
following:
Subsection
20(5)
(b)
“disposition
of
property”
includes
any
transaction
or
event
entitling
a
taxpayer
to
proceeds
of
disposition
of
property;
(c)
“proceeds
of
disposition”
of
property
include
(i)
the
sale
price
of
property
that
has
been
sold,
(ii)
compensation
for
property
damaged,
destroyed,
taken
or
injuriously
affected,
either
lawfully
or
unlawfully,
or
under
statutory
authority
or
otherwise,
(iii)
an
amount
payable
under
a
policy
of
insurance
in
respect
of
loss
or
destruction
of
property,
(iv)
an
amount
payable
under
a
policy
of
insurance
in
respect
of
damage
to
property
except
to
the
extent
that
the
amount
has,
within
a
reasonable
time
after
the
damage,
been
expended
on
repairing
the
damage,
and
(v)
an
amount
by
which
the
liability
of
a
taxpayer
to
a
mortgagee
is
reduced
as
a
result
of
foreclosure
of
his
interest
in
property
that
is
mortgaged
or
as
a
result
of
the
sale
of
that
property
under
a
provision
of
the
mortgage,
plus
any
amount
received
by
the
taxpayer
out
of
the
proceeds
of
such
sale;
In
the
context
of
subsection
20(5),
the
definitions
of
“disposition
of
property”
and
“proceeds
of
disposition”
cannot
be
said
to
be
exhaustive;
these
expressions
must
bear
both
their
normal
meaning
and
their
statutory
meaning;
it
would
be
wrong
to
restrict
the
former
because
of
the
latter.
The
expressions
“disposed
of”
or
“aliénés”
used
in
Regulation
1100(2)
are
nowhere
defined;
it
is
apparent,
however,
that
they
must
be
ascribed
the
meaning
which
conforms
with
that
of
their
companion
defined
expressions
“disposition
of
property”
and
“proceeds
of
disposition”.
The
expression
“disposed
of”
which
is
used
in
Regulation
1100(2)
is
also
used
in
a
number
of
provisions
in
section
20
of
the
Act:
see
subsections
20(1),
20(5c),
paragraphs
20(1)(b),
20(6)(a),
20(6)(d),
20(6)(e),
subparagraph
20(6)(f)(ii),
paragraphs
20(6)(g),
20(6)(i),
20(6)(j),
subsection
20(12),
subparagraph
20(12)(a)(ii),
paragraph
20(12)(b).
In
the
French
text
of
seven
of
these
provisions,
the
French
word
“disposé”
has
been
utilized
while
in
six,
the
word
“aliéné”
was
used.
The
word
“disposition”
is
also
frequently
found
in
section
20:
see
subsection
20(2),
subparagraph
20(2)(a)(i),
paragraph
20(5)(b),
subparagraphs
20(5)(e)(ii),
20(5)(e)(ii)(c),
paragraphs
20(6)(g),
20(6)(j)
and
20(12)(b);
in
all
but
the
last
two
provisions
where
the
word
“aliénation”
is
used,
“disposition”
is
used
in
French
where
“disposition”
appears
in
English;
in
the
definition
section,
“disposition
of
property”
is,
in
French,
“disposition
de
biens”.
In
most
cases,
“produit
d’une
disposition”
is
treated
as
the
equivalent
of
“proceeds
of
disposition”:
see
subsection
20(1),
paragraph
20(5)(c),
clause
20(5)(e)(ii)(A),
paragraph
20(6)(e),
subparagraph
20(6)(f)(ii)
and
paragraph
20(6)(g).
But,
in
a
few
cases,
the
expression
“produit
d’une
aliénation”
has
been
used:
see
paragraphs
20(5a)(b),
20(6)(i),
20(6)(g)
and
subsection
20(12).
A
detailed
examination
of
these
provisions
has
convinced
me
that
the
expressions
“disposition”,
“proceeds
of
disposition”
and
“disposed
of”
must,
throughout,
receive
the
same
meaning
respectively,
regardless
of
the
fact
that
in
a
limited
number
of
cases
the
French
text
taken
in
isolation
would
convey
a
more
restrictive
meaning.
Such
a
narrow
meaning
cannot
however
be
held
to
control
the
much
broader
meaning
of
the
English
expressions,
especially
when
it
is
apparent
that
such
was
not
the
intent,
quite
the
contrary.
It
will
be
sufficient
to
refer
to
two
examples:
Paragraph
20(5a)
deals
with
the
tax
treatment
of
the
proceeds
of
a
policy
of
insurance
payable
as
a
result
of
damage
caused
to
property
of
a
prescribed
class.
Such
proceeds
are
specifically
included
in
the
definition
“proceeds
of
disposition’,
“produit
d’une
disposition”,
given
in
paragraph
20(5)(c);
yet
when
making
reference
to
such
proceeds
in
paragraph
20(5a),
the
words
“produit
d’une
aliénation”
which
are
nowhere
defined
are
used
where
the
English
expression
is
“proceeds
of
disposition”.
Clearly,
the
words
“produit
d’une
aliénation”
are
inapt
and
mean
“produit
d’une
disposition”.
Subsection
20(12)
affords
another
indication
that
the
use
of
a
French
expression
of
a
narrower
meaning
should
not
be
allowed
here
to
restrict
the
sense
of
the
English
expression.
This
section
refers
to
the
tax
treatment
of
the
proceeds
of
the
sale
of
vessels
under
certain
circumstances.
It
provides
that
the
recapture
provision
of
subsection
20(1)
shall
not
in
certain
circumstances
apply
to
the
proceeds
of
the
sale.
Paragraph
20(12)(a)
reads
in
part:
“subsection
(1)
does
not
apply
to
the
proceeds
of
disposition
.
.
In
French,
the
same
paragraph
reads:
“(a)
le
paragraphe
(1)
ne
s’applique
pas
au
produit
de
l’aliénation
...”.
Subsection
20(1)
which
is
referred
to
in
subsection
20(12)
refers
to
proceeds
of
disposition
in
the
English
text
and
to
‘‘produit
de
la
disposition”
in
the
French
text;
in
other
words,
the
French
text
of
paragraph
20(12)(a)
uses
“produit
d’une
aliénation”
to
designate
what
is
described
in
subsection
(1)
of
section
20
as
“produit
d’une
disposition”.
Also,
in
the
same
subsection
20(12),
the
words
“aliéné”
and
“disposé”
are
both
used
when
the
English
expression
is
“disposed
of”
and
refers
to
the
same
transaction:
compare
the
opening
part
of
subsection
20(12)
with
subparagraph
20(12)(a)(ii).
I
come
to
the
conclusion
that
the
French
words
“produit
d’une
aliénation”
or
“aliéné”
that
are
sometimes
used
instead
of
“produit
d’une
disposition”
or
“disposé”
should
not
be
so
construed
as
to
restrict
the
meaning
of
the
English
expressions.
This
conclusion
is
also
applicable
to
the
words
“disposed
of”
as
used
in
Regulation
1100(2);
in
the
absence
of
some
clear
indication
to
the
contrary,
this
expression
must
be
given
the
same
meaning
in
the
Regulation
as
in
the
substantive
provision
of
the
Act
which
it
is
intended
to
supplement.
The
expression
“disposed
of”
in
Regulation
1100(2)
must
be
construed
as
if
there
was
in
the
French
“disposé”
as
in
numerous
provisions
of
section
20:
see
subsection
20(1),
paragraphs
20(1)(b),
20(6)(d),
20(6)(e),
subparagraph
20(6)(f)(ii)
and
paragraph
20(6)(g).
The
verb
“to
dispose’’
has
a
very
broad
meaning;
it
is
defined
as
follows
in
The
Oxford
English
Dictionary
(see
To
dispose
of):
b.
To
put
or
get
(anything)
off
one’s
hands;
to
put
away,
stow
away,
put
into
a
settled
state
or
position;
to
deal
with
(a
thing)
definitely;
to
get
rid
of;
to
get
done
with,
settle,
finish.
In
recent
use
sometimes
spec,
to
do
away
with,
“settle”,
or
demolish
(a
claim,
argument,
opponent,
etc.);
also
humorously,
to
make
away
with,
consume
(food).
The
substantive
definitions
of
“disposition
of
property”
and
“proceeds
of
disposition”
in
paragraphs
20(5)(b)
and
(c)
are
a
clear
indication
that
the
words
“disposed
of”
should
be
given
their
broadest
possible
meaning.
In
French,
the
verb
“disposer”
would
convey
the
same
idea
as
“to
dispose
off”.
In
discussing
the
jus
abutendi
which
is
one
of
the
three
main
attributes
of
the
right
of
ownership,
Mignault
(Droit
civil
canadien,
vol
2,
at
477)
wrote:
Le
jus
abutendi,
ou
droit
de
disposer,
est
le
droit
de
faire
de
la
chose
un
usage
définitif,
qui
ne
se
renouvellera
plus,
au
moins
pour
la
même
personne.
Disposer
de
sa
chose,
c’est
la
transformer,
la
consommer,
la
détruire,
ou
enfin
l’aliéner,
c’est-à-dire
la
transmettre
a
un
autre.
[Official
Translation:
The
jus
abutendi,
or
right
of
disposal,
is
the
right
to
make
some
final
use
of
the
thing,
which
will
not
be
repeated,
at
least
for
the
same
person.
Disposing
of
a
thing
means
transforming,
consuming,
destroying
or,
finally,
alienating
it,
that
is,
transferring
it
to
another
person.]
The
same
view
is
expressed
by
Mazeaud
(Leçons
de
droit
civil,
t2,
v2,
#1332
and
1333):
1332.
.
..
Parce
qu’il
est
absolu,
le
droit
de
propriété
est
un
droit
total:
le
propriétaire
a
tous
les
pouvoirs
sur
la
chose.
Cet
ensemble
de
pouvoirs
peut
se
décomposer
en
trois
attributs:
jus
ou
droit
de
se
servir
de
la
chose,
jus
fruendi
ou
droit
de
percessoir
les
revenus,
jus
abutendi
ou
droit
de
utendi
disposer
de
la
chose:
la
conserver,
la
donner,
la
vendre,
la
détruire,
l’abandonner.
1333.
Les
prérogatives
du
jus
abutendi.—Le
droit
de
disposer
comporte,
outre
le
droit
d’abandonner
la
chose
et
de
la
détruire,
deux
prérogatives
importantes:
le
droit
d’aliéner
la
chose
à
titre
gratuit
ou
onéreux,
le
droit
de
la
conserver
dans
son
patrimoine.
[Official
Translation:
1332.
.
.
.
Because
it
is
absolute,
the
right
of
ownership
is
a
total
right:
the
owner
has
complete
powers
over
the
thing.
This
collection
of
powers
may
be
broken
up
into
three
attributes:
the
jus
utendi,
or
right
to
make
use
of
the
thing,
the
jus
fruendi,
or
right
to
receive
income
produced
by
it,
and
the
jus
abutendi,
or
right
to
dispose
of
the
thing:
to
preserve,
give,
sell,
destroy
or
abandon
it.
1333.
Prerogatives
of
the
jus
abutendi.
The
right
of
disposal
includes,
besides
the
right
to
abandon
the
thing
and
the
right
to
destroy
it,
two
important
prerogatives:
the
right
to
alienate
the
thing
whether
gratuitously
or
for
consideration,
and
the
right
to
preserve
it
in
the
estate.]
The
question
now
to
be
answered
is
whether
it
can
properly
be
said
in
the
light
of
the
above
that
the
Transportation
Building
and
the
first
lease
were
“disposed
of”
in
1965.
The
Transportation
Building
which
was
in
the
full
ownership
of
respondent
was
conveyed
by
it
to
the
Société
in
January
1965
under
the
second
lease
and
it
was
immediately
demolished.
The
relevant
provisions
of
the
second
lease
were
as
follows:
1.
The
Lessor
hereby
conveys
with
legal
warranty
by
emphyteutic
lease
to
the
Lessee,
thereof
accepting,
free
and
clear
of
any
and
all
hypothecs,
mortgages,
liens,
privileges
and
encumbrances,
a
certain
piece
of
land
(hereinafter
called
“the
Premises”)
.
.
.
together
with
the
3
buildings
located
thereon
and
presently
known
as
the
Transportation
Building,
the
Banque
Canadienne
Nationale
Building
and
the
Royal
Insurance
Building;
3.
The
Lessee
shall
at
its
own
cost
and
expense,
commencing
on
the
first
day
of
May,
Nineteen
hundred
and
sixty-five
or
as
soon
thereafter
as
possible,
proceed
to
demolish
the
three
buildings
presently
erected
on
the
Premises,
the
Lessee
retaining
the
salvage
therefrom
as
compensation,
and
shall,
immediately
after
completion
of
such
demolition,
construct
on
the
Premises
a
new
building
of
about
32
stories
high
(“the
Building’’),
in
accordance
with
the
preliminary
sketches
and
outline
specifications
referred
to
in
Clause
6
hereof,
and
of
the
general
plans
and
specifications
to
be
approved
by
the
Lessor
under
said
Clause
6,
the
work
of
demolition
and
construction
to
proceed
with
due
diligence
and
the
Building
to
be
substantially
completed
and
ready
for
occupancy
not
later
than
the
first
day
of
May,
Nineteen
hundred
and
sixty-seven;
One
of
the
essential
features
of
an
emphyteutic
lease
is
the
obligation
for
the
lessee
to
make
certain
specific
improvements
to
the
property
that
is
the
subject-matter
of
the
lease.
Another
essential
ingredient
of
emphyteusis
is
the
reversion
of
the
property
to
the
lessor
at
the
end
of
the
lease.
The
absence
of
these
two
features
in
so
far
as
the
Transportation
Building
is
concerned
shows
that
the
emphyteusis
created
by
the
lease
did
not
include
the
Transportation
Building,
but
only
the
land
that
was
supporting
it.
While
the
Société,
as
lessee,
under
the
second
lease,
acquired
the
temporary
ownership
of
the
land,
it
acquired
the
full
ownership
of
the
building
which
it
undertook
to
demolish
so
as
to
make
room
for
the
new
building
to
be
erected
on
the
land
and
which
would
constitute
an
improvement
thereto.
The
right
of
ownership
in
the
building
that
was
conveyed
by
the
second
lease
was
therefore
quite
different
from
that
to
the
land
which
was
created
“for
a
time“
(art
567
CC).
In
my
view,
the
second
lease
did
not
have
the
effect
of
creating
a
leasehold
interest
in
the
Transportation
Building;
it
rather
transferred
to
the
Société
the
full
ownership
of
the
building
subject
to
the
obligation
to
proceed
with
the
demolition
and
the
construction
of
a
new
office
building.
Such
transfer
was
a
“disposition
of
property”;
such
building
was
therefore
“disposed
of”
within
the
meaning
of
Regulation
1100(2).
I
now
come
to
deal
with
the
rights
of
the
respondent
as
lessee
of
the
piece
of
land
under
the
first
lease.
These
rights
were
classified
as
a
leasehold
interest
in
Class
13
of
Schedule
B
to
the
Income
Tax
Regulations.
This
leasehold
interest
automatically
terminated
when
the
lease
under
which
it
was
created
came
to
an
end
upon
respondent
acquiring
the
lessor’s
rights
under
the
same
lease.
One
cannot
at
the
same
time
be
lessor
and
lessee
of
the
same
property.
The
narrow
point
is
whether
the
leasehold
interest
which
terminated
in
such
circumstances
should
be
regarded
as
having
been
“disposed
of”
for
the
purposes
of
Regulation
1100(2).
As
already
indicated,
the
verb
“to
dispose
of”,
in
its
first
meaning,
encompasses
the
idea
of
destruction;
one
of
the
meanings
of
the
verb
“to
destroy”
is
‘‘to
put
an
end
to,
to
do
away
with”
(Shorter
Oxford
English
Die-
tionary,
see
Destroy).
The
extinction
of
a
right
through
merger
is
but
one
method
of
“destroying”
that
right,
that
is
of
putting
an
end
to
its
existence.
In
Re
Leven,
[1954]
3
All
ER
81,
it
was
said
that
the
word
“disposition”
taken
by
itself
and
used
in
its
most
extended
meaning
was
“wide
enough
to
include
the
act
of
extinguishment”.
The
acquisition
by
respondent
of
the
lessor’s
rights
under
the
first
lease
brought
about
the
automatic
termination
of
the
leasehold
interest;
such
interest
was
extinguished,
it
was
destroyed.
In
my
view,
the
rights
of
respondent
under
the
first
lease
should
be
regarded
as
having
been
“disposed
of”
in
January
1965.
But,
it
was
argued
on
behalf
of
respondent
that
the
fact
that
both
the
Transportation
Building
and
the
lessee’s
rights
under
the
first
lease
might
have
been
disposed
of
in
1965
was
not
determinative
of
this
appeal.
It
was
submitted
that
Regulation
1100(2)
did
not,
so
long
as
respondent
did
not
take
advantage
of
it,
interfere
with
its
normal
right
to
claim
capital
cost
allowance
annually
at
the
appropriate
rate
as
if
the
property
had
continued
to
exist
in
the
relevant
prescribed
class.
Regulation
1100(2)
creates
a
right
in
favour
of
the
taxpayer;
the
deduction
of
a
terminal
loss
is
permissible;
it
is
allowed;
the
loss
“may
be
deducted
in
computing
the
income
of
(the)
taxpayer”
to
use
the
words
of
the
opening
paragraph
of
paragraph
11(1)(a)
which
is
the
statutory
basis
of
the
Regulation.
There
is
no
obligation
on
the
taxpayer
to
claim
the
deduction
provided
in
Regulation
1100(2),
but
the
fact
that
he
elects
not
to
claim
it
does
not
mean
that
the
deduction
is
not
permissible;
in
that
sense,
the
Regulation
may
be
said
to
be
permissive
rather
than
mandatory.
But,
it
does
not
follow
that
the
right
created
under
the
Regulation
may
be
exercised
outside
of
the
conditions
therein
prescribed
or
that
in
any
event,
the
mere
existence
of
that
right
is
without
effect
on
the
application
of
some
of
the
other
rules
respecting
capital
cost
allowance.
Firstly,
the
wording
of
the
Regulation
makes
it
clear
that
the
deduction
therein
provided
may
be
taken
only
in
the
year
in
which
the
property
was
“disposed
of”;
if
the
taxpayer
elects
not
to
claim
the
deduction
that
year,
he
cannot
claim
it
in
a
subsequent
year
because
it
is
not
allowed
to
be
taken
in
a
subsequent
year.
The
right
to
claim
a
terminal
loss
exists
in
respect
to
the
year
in
which
it
was
incurred;
the
right
is
forfeited
if
it
is
not
exercised
for
that
year
and
it
is
not
available
to
be
used
in
respect
of
a
subsequent
tax
year.
In
the
case
at
bar,
the
property
was
disposed
of
in
1965
and
respondent
did
not
claim
a
terminal
loss
for
that
year;
it
therefore
follows
that
it
cannot
claim
a
deduction
for
such
loss,
in
whole
or
in
part,
in
calculating
its
income
of
a
subsequent
year.
Secondly,
the
terminal
loss
provisions
of
Regulation
1100(2)
have
the
effect
of
extinguishing
the
taxpayer’s
right
to
normal
capital
cost
allowance
in
respect
of
the
property
disposed
of.
Such
allowance
is
calculated
on
the
basis
of
the
“undepreciated
capital
cost”
of
the
class
of
property
which
must
be
established
in
each
year
in
accordance
with
the
rules
contained
in
the
definition
of
paragraph
20(5)(e)
which
reads
in
part
as
follows:
Subsection
20(5)
(e)
“undepreciated
capital
cost”
to
a
taxpayer
of
depreciable
property
of
a
prescribed
class
as
of
any
time
means
the
capital
cost
to
the
taxpayer
of
depreciable
property
of
that
class
acquired
before
that
time
minus
the
aggregate
of
(i)
the
total
depreciation
allowed
to
the
taxpayer
for
property
of
that
class
before
that
time,
(ii)
The
first
item
to
be
deducted
from
the
capital
cost
of
a
class
of
property
is
“the
total
depreciation
allowed
to
the
taxpayer
for
property
of
that
class”.
The
terminal
loss
deduction
is
“allowed”
by
Regulation
1100(2),
whether
it
is
claimed
or
not.
The
fact
that
the
terminal
loss
may
not
have
been
claimed
does
not
mean
that
the
deduction
was
not
allowed,
ie
permissible.
The
situation
is
of
course
different
as
regards
most
other
deductions
because
the
language
used
in
the
Regulations
is
different.
For
instance,
Regulation
1100(1)(a)
reads
in
part
as
follows:
1100.(1)
Under
paragraph
(a)
of
subsection
(1)
of
section
11
of
the
Act,
there
is
hereby
allowed
to
a
taxpayer,
in
computing
his
income
from
a
business
or
property,
as
the
case
may
be,
deductions
for
each
taxation
year
equal
to
Rates
(a)
such
amounts
as
he
may
claim
in
respect
of
property
of
each
of
the
following
classes
in
Schedule
B
.
.
.
In
the
case
of
a
deduction
permitted
under
Regulation
1100(1)(a),
it
is
clear
that
the
deduction
that
is
not
claimed
by
the
taxpayer
cannot
be
said
to
be
allowed
for
the
purposes
of
the
calculation
of
the
undepreciated
capital
cost
since
the
deduction
is
expressed
to
be
allowed
only
to
the
extent
that
it
is
claimed.
I
am
therefore
of
the
view
that
in
calculating
the
undepreciated
capital
cost
of
depreciable
property
of
a
class,
the
amount
of
a
terminal
loss
that
the
taxpayer
was
permitted
but
failed
to
take
under
Regulation
1100(2)
must
be
considered
as
“depreciation
allowed”
for
the
purposes
of
the
calculation
of
the
undepreciated
capital
cost
of
such
property.
I
am
in
agreement
with
Jackett,
CJ
when
he
says
in
his
reasons
for
judgment
at
436:
It
follows
that,
as
the
whole
of
the
balance
remaining
in
the
undepreciated
capital
cost
account
for
the
particular
class
at
the
end
of
the
year
of
“disposition”
or
“aliénation”
is
deductible
in
computing
income
for
that
year,
no
amount
in
respect
of
the
capital
cost
of
property
of
that
class
acquired
before
that
time
will
remain
in
the
base
for
computation
of
the
capital
cost
allowance
deduction
for
property
of
that
class
for
a
subsequent
year.
(Compare
Regulation
1100(1)
with
paragraphs
20(5)(d)
and
(e)
of
the
Act.)
In
view
of
this
conclusion,
it
becomes
unnecessary
to
express
any
opinion
on
the
question
argued
before
us
and
dealt
with
in
the
judgments
of
the
Courts
below
as
to
whether
property
is
required
to
have
been
in
existence
in
a
class
at
the
end
of
a
taxation
year
in
order
for
the
taxpayer
to
have
the
right
to
claim
capital
cost
allowance
in
respect
of
such
class
of
property.
I
am
of
opinion
that
this
appeal
should
be
allowed,
the
judgment
of
the
Federal
Court
of
Appeal
set
aside
and
the
judgment
of
the
Federal
Court,
Trial
Division,
restored,
the
whole
with
costs
throughout.