Blackman v. The King, [1924] SCR 406

Supreme Court of Canada

Blackman v. The King, [1924] S.C.R. 406

Date: 1924-06-18

S. D. Blackman and Other (Pettioners) Appellants;

and

His Majesty The King (Respondent) Respondent.

1924: May 12; 1924: June 18.

Present: Idington, Duff, Mignault and Malouin JJ. and Maclean J. ad hoc.

ON APPEAL FROM THE COURT OF APPEAL FOR BRITISH COLUMBIA

Succession duty—Letters probate—Valuation—Bond—Petition by executors—Determination of real value of estate—Succession Duty Act, R.S.B.C. (1911) c. 217, ss. 21, 23, 24, 29, 31, 34, 40, 49.

[Page 407]

Although executors, when applying for ancillary letters patent in British 1924 Columbia, had placed a value on the estate in the province for the purpose of succession duty and, such valuation being accepted by the Crown, had given a bond to secure payment of the duty, they are not bound by such valuation and its acceptance by the Crown; but they have still the right afterwards to present a petition under section 43 of the Succession Duty Act to a judge of the Supreme Court of the province who has jurisdiction to determine what property of the estate is liable to duty and the amount due thereof.

Judgment of the Court of Appeal ([1924] 1 W.W.R. 161) reversed.

APPEAL from the decision of the Court of Appeal for British Columbia[1], reversing the judgment of Morrison J., and dismissing the appellants' petition under section 43 of the Succession Duty Act.

The appellants are the executors of one Edward Grunder who had in British Columbia a claim against E. F. Voigt and M. S. Voigt for money lent. In order to institute proceedings against the debtors, who were apparently insolvent, the appellants were obliged to obtain letters of ancillary probate of Grunder's will and to secure this probate some arrangement had to be made as to the succession duties. A long correspondence ensued between the solicitors of the appellants and different departments of the provincial government to whom it was represented that the Voigt claim, the only asset of the deceased in British Columbia, was of very doubtful value. Finally the appellants obtained ancillary letters of probate on filing an affidavit of value under section 21 of the Act, placing the value of the Voigt claim at $16,000 and also a bond, under sections 23 and 24, for the due payment to the Crown of any duty to which the property coming to the hands of the appellants might be found liable. The Voigt claim later on proved to be worthless, as a return of nulla bona was made on an execution against them. The appellants then presented a petition under section 43 of the Succession Duty Act addressed to a judge of the Supreme Court of British Columbia, setting forth all the facts of the case and asking for an order that no succession duties had become payable by them on the estate of the deceased.

Lafleur K.C. for the appellant.

Donaghy for the respondent.

[Page 408]

IDINGTON J.—The late Edward H. Grunder, domiciled at the time of his death (which took place on or about the 20th day of April, 1920) in the state of Pennsylvania, appointed the appellants herein executors of his last will and testment of which they obtained probate in said state.

In the 1915 and 1916 he had joined one Beck, also a resident of Pennsylvania, in lending $5,000 and $14,000 to Emil F. Voigt and Mary Agnes Voigt of the province of British Columbia, and to secure re-payment thereof and interest obtained a lien on some mining claims in that province.

In the course of doing so the appellants found it very difficult to satisfy the authorities there, for a long time, as to the nature of the security to be given under the Succession Duties Act.

The solicitors acting for said appellants found that it was very doubtful if anything could be realized out of either of the Voigts, or the security given on said mining claims, especially as Emil F. Voigt pretended to have a counterclaim against the testator.

All these features of the said indebtedness and alleged security were presented to the officers of the respondent in turn, but without anything satisfactory resulting until Mr. Mayers of the said solicitors' firm wrote the Prime Minister of British Columbia a long letter on the 29th August, 1921, on the subject in which he set forth the facts relative to said indebtedness, as follows:—

some years ago, an American citizen called E. H. Grunder, living at Warren in the state of Pennsylvania, lent to a citizen of this province, one E. F. Voigt, the sum of fourteen thousand dollars odd and took from him as security a charge on some thirteen mineral claims. Mr. Grunder has now died and his executors wish to try and recover for his beneficiaries some of the money lent to Mr. Voigt .Mr. Voigt refuses to pay, asserting that he has a counter-elaim exceeding the amount of the loan for moneys expended by him for the use of Mr. Grunder, and it has become necessary to commence an action on behalf of the executors with a view to enforcing the claim of the deceased. You will see, therefore, that there are three matters which have to be determined before it can be ascertained whether the executors will obtain any money at all: in the first place, they must succeed in procuring a judgment in their favour; secondly, they must be able to execute that judgment, either upon Voigt personally, or out of the mineral claims which were given as security. It is not at all certain that the executors will succeed at the trial; it is quite certain—so far as my information goes—that Voigt has no money and is

[Page 409]

execution-proof, and I do not know at all whether the mineral claims can be sold, although I think it very doubtful.

In order to prosecute the action, it is necessary for the executors to take out probate in this province, and it is with regard to the succession duties and probate duties that I am writing to you.

As it is impossible now to tell whether the executors will recover any money for the estate at all, it seemed to me and it seems to me that the only reasonable course to pursue with regard to the succession duties and the probate duties is to give a bond to the Crown for the payment of the succession duties upon so much as may eventually be recovered for the estate of the deceased.

That was followed by the story he had to relate as to treatment he had met with.

That letter the Prime Minister replied to promptly; and in courteous terms, expressing surprise and informing Mr. Mayers that he was taking the matter up with the Minister of Finance, which resulted in a letter being sent by an official in the Treasury Department as follows:—

Victoria.14th September, 1921.

Messrs Taylor, Mayers & Co.,

Barristers, etc.,

470 Granville St.,

Vancouver, B.C.

Dear Sirs,—In re Estate E. H. Grunder, Deceased, 499/21. With reference to your request for a bond to secure probate and succession duties herein, I am to-day in receipt of a memorandum from the Honourable the Minister of Finance, which reads as follows :

"In view of the fact that the question of value of the British Columbia property is a question for the court, it might be well for the department to accept a bond payable in twelve months for succession duty in this estate, but the probate duty must be paid in cash."

Yours very truly,

A. C. CAMPBELL.

That was followed by the giving of a bond by the appellants and the Canadian Surety Company professing to secure $16,000.

The condition of that bond was as follows:—

The condition of this obligation is such that if the above named Sidney D. Blackman of Warren, in the state of Pennsylvania, and Hyett Grunder, of the township of Pleasant, in Warren county, in the said state of Pennsylvania, executors of all the property of Edward H. Grunder, late of the township of Pleasant, in the county of Warren aforesaid, deceased, who died on or about the 20th day of April, 1920, do well and truly pay or cause to be paid to the Minister of Finance of the province of British Columbia for the time being, representing His Majesty the King in that behalf, any and all duty to which the property, estate and effects of the said Edward H. Grunder coming into the hands of the said Sidney D. Blackman and Hyatt Grunder may be found liable under the provisions of the " Succession Duties Act," within two years from the date of the

[Page 410]

death of the said Edward H. Grunder, or such further time' as may be given for payment thereof, under the provisions of the said Act, or such further time as they may be entitled to otherwise by law for payment thereof, then this obligation shall be void and of no effect, otherwise the same to remain in full force and virtue.

On receipt of that bond Mr. Campbell wrote the registrar that it had been received and was on file approved by the Minister of Finance and that it would therefore be in order for him to issue consent to letters probate and they were issued accordingly. The appellants proceeded with the action against the Voigts and got judgment but could realize nothing on it.

The execution was returned nulla bona. Attempts were made by the executors to sell the mining claims but they were equally fruitless and the lands so held as security were sold for taxes.

The appellants then presented a petition addressed to the Honourable the Chief Justice and the Justices of the Supreme Court of British Columbia, setting forth everything, apparently, that had transpired relative to the death of the testator, and his having made said will and named said appellants as executors, and who got anything thereunder, and of what the entire estate consisted, and a most complete history including the correspondence relative to the getting of ancillary letters of probate and the results flowing therefrom, of which my unusually lengthy quotations are but a mere trifling fraction, and all verified by the affidavit of the managing clerk in charge of the entire business in question.

That petition was heard by Mr. Justice Morrison and counsel for the respondent appeared in answer thereto, as well as in support of the petition, on the 16th of February, 1923, and on the 9th of March following he gave his judgment reciting the facts of the hearing and affidavits filed before him, and counsel having appeared and the postponement for judgment ends by declaring that no duties have become payable from the petitioners under the above-mentioned Act, meaning, as the style of cause shows, the Succession Duties Act.

From that judgment an appeal was taken to the Court of Appeal for British Columbia.

[Page 411]

That court, consisting of five justices, by a bare majority thereof, allowed the appeal and set aside the said judgment of Mr. Justice Morrison.

The learned Chief Justice and Mr. Justice Galliher each wrote reasons in support of said judgment so appealed against. Mr. Justice Eberts gave no reasons.

Mr. Justice Martin and Mr. Justice McPhillips each gave written reasons for their dissenting judgments. Each of them took the ground that under section 43 of the Succession Duties Act the judge hearing such a petition was a persona designata and hence no appeal would lie therefrom.

There is much to be said in favour of such a view—but, for reasons I am about to assign, that view is not the only one to rest upon in reversing the said appellate judgment.

Said section 43 reads as follows:—

Section 43: A judge of the Supreme Court shall also have jurisdiction, upon motion or petition, to determine what property is liable to duty under this Act, the amount thereof, and the time or times when the same is payable, and may himself or through any reference exercise any of the powers which by sections 29 to 31, both inclusive, of this Act are conferred upon any officer or person.

The learned Chief Justice, I most respectfully submit, erred on the basic facts herein in assuming that the amount of duty had been agreed upon.

He seems to have overlooked the facts I have set forth above ending in the giving of the bond conditioned expressly to cover the case of a non-agreement, and render the question subject to the result of future developments.

I fear he was misled by the ground taken in the notice of appeal which states the facts incorrectly, I submit.

He also, I respectfully submit, drew an erroneous inference from what was said by the Judicial Committee of the Privy Council in dealing with the case of the United States Fidelity & Guarantee Co. v. The King[2], where the expression used was:—

The powers of s. 43 were not invoked at any material time, if a resort to them was at any time open, as of right, to Quagliotti or the appellants.

This, I infer, had arisen in course of the argument before said court by reason of my own reference to section 43 when

[Page 412]

that case was before us and then, by reason of this court being equally divided, the said company's appeal to this court was dismissed.

I could not, on the remarkable facts of that case, overlook the omission of Quagliotti failing, for years, to invoke this section if, as pretended, a clear mistake had been made.

The view taken by myself and two others of this court, hearing that appeal, was ultimately upheld by the court above.

The result of the consideration I then gave to the Succession Duties Act appears in the report of that case[3].

I certainly came to the conclusion therein that .there were several means given the Crown to protect itself, even after the amount determined by the officers charged with the duties of fixing the amounts, to be considered and finally getting a bond therefor, before issuing the letters of administration or grant of probate. Surely that determination was never based on an agreement to be taken as final.

I then thought and still think, that there was, despite the assent of the Crown by its officers and the parties applying, nothing to be inferred therefrom as a final binding agreement, but prima facie an amount fixed unless and until the Crown found otherwise and resorted to the means given it to alter such amount, or the representatives of the estate found they had been mistaken and resorted to this section 43, which seems to me enacted for no other purpose. I certainly can find no other use for it.

And clearly on the facts of this case there is ample reason shown of the necessity for such a provision.

And I am at a loss to understand why the respondent representatives persist in refusing the relief.

I submit that the due sense of right demands it, especially in the case of foreigners far removed from the seat of the facts to be decided.

Counsel for respondent was confronted before us with the question of whether or not he would, if this court held appellants entitled under said sec. 43 to a hearing under it, desire the opportunity of having it sent back to present further evidence. He promptly declined, in such event of our so holding the chance of further inquiry.

[Page 413]

As to the question of persona designata, I may point out that the learned judge is given the power to appoint a referee, but no right of appeal is given as is given expressly by section 33 relative to another like inquiry provided by preceding sections.

I submit that there are several other features of the Act, as well as this instance I cite, which are in .conflict, I most respectfully submit, with the view expressed by Mr. Justice Galliher, that reading the whole Act it appears that the legislature could not have so intended.

I am afraid the Act was not all drafted by the same hand but amendments were made from time to time as the subject matter of succession duties developed and thus the Act grew by chance.

I am, from my point of view, not much concerned in maintaining the proposition, and make these remarks to indicate that if, as Mr. Justice Galliher infers, it was never the intention of the legislature, it, perhaps, should make its meaning clear.

I, for the several foregoing reasons, am of the opinion that this appeal should be allowed with costs here and in the Court of Appeal below, and the judgment of Mr. Justice Morrison be restored.

DUFF J:—The principal question raised by this appeal is one of not a little difficulty. The crucial point seems to be this: Is the procedure provided under sections 21 to 33 the exclusive procedure for determining the value of property for the purpose of calculating the amount of succession duty payable under the Act by the legal personal representatives before or after grant of probate or letters of administration? Normally, the duty payable is to be determined and paid before any such grant takes place. And even where the registrar is authorized by the Lieutenant-Governor in Council to accept a bond in lieu of present payment of duties presently due, the statute contemplates a determination of the amount of the duty, at least provisionally. This amount is ascertained in all cases by the Deputy Minister of Finance upon the basis of the facts disclosed by the affidavits of value and relationship, and a statement of this amount accompanies the consent to the issue of probate or

[Page 414]

letters of administration which is necessary before the probate or the letters of administration are issued by the registrar.

How is this provisional ascertainment to be reviewed? In what circumstances does it become final and conclusive? Disputes may obviously arise, either as to the inventory of property or the value ascribed to the property inventoried in the affidavits; and then, given the amount and value of the property, as to the scale upon which duty is to be calculated. Facts touching relationship and questions of law might quite conceivably come into controversy. Sections 29 et seq. provide a procedure by which the Minister, if dissatisfied with the inventory or with the estimate of value in the affidavits, may have the points in controversy referred to a commissioner, from whose decision there is a right of appeal to the Court of Appeal. Proceedings under section 29 cannot be initiated by the representatives of the estate. They are entitled to be heard, however, on the inquiry before the commissioner, and I see nothing in the Act that makes either the inventory or the estimate of value in the affidavits binding upon them or binding upon the commissioner. I am by no means satisfied that on such an inquiry it would not be open to the representatives of the estate to say that property had been included by mistake which did not belong to the estate, or that the valuations were excessive; and if that is so, it must be equally open to the representatives of the estate to appeal from the decision of the commissioner on any such contention advanced by them before him. But if this procedure is not set in motion by the Minister, what is the position? Some means must be available to the representatives of the estate for questioning the determination of the Deputy Minister of Finance as to the amount of the duty. Assuming, for the moment, the estate to be bound as to the enumeration of parcels and as to the values given in the affidavits, there still remains the possibility of dispute as to the sum which, on the given facts, the Crown is entitled to be paid in respect of duty. If a dispute arises, there must be some method by which the estate can invoke the jurisdiction of the courts. Section 44 makes it quite clear that the right to bring an action exists.

[Page 415]

Is there also a right of petition under section 43? After a good deal of fluctuation of opinion, I have reached the conclusion expressed by Mr. Justice Maclean in his judgment, which I have had an opportunity of considering; after, I may add, giving full weight to the contentions advanced by Mr. Donaghy in his able argument. There is nothing in the earlier provisions expressly excluding such a right. It appears to be quite clear that the Crown, instead of resorting to the procedure under sections 29 et seq., might bring an action; and the terms of section 43 seem to imply that resort might be had to that section as well. That section obviously confers jurisdiction to deal with questions of inventory and valuation. The more reasonable view would appear to be that in such circumstances proceedings under sees. 43 and 44 are likewise open to the representatives of the estate. On the whole, I think the better view is that there are alternative methods of procedure: reference to a commission; action; summary application under section 43. A decision in course of any one of such proceedings would, of course, be conclusive.

The learned judge of first instance had, therefore, jurisdiction under section 43. As to the substance of his decision, I can find no evidence of any agreement precluding the appellants from setting up the real facts ; nor have I any doubt that facts were adduced establishing a prima facie case that the debt and the security were both valueless at the time of the testator's death. This prima facie case was unanswered, and was therefore a sufficient basis for the judgment.

The appeal should be allowed and the judgment of Mr. Justice Morrison restored. The appellants are entitled to their costs throughout.

MIGNAULT J.—Questions as to the construction and effect of the British Columbia Succession Duty Act, chapter 217, R.S.B.C., 1911, have been of not infrequent occurrence, and at least two cases, before this one, have reached this court and eventually the Judicial Committee of the Privy Council. The problem which the present litigation presents is a rather difficult one.

[Page 416]

Edward Grander, the deceased, was a citizen of the state of Pennsylvania and resided there at the time of his death. He had in British Columbia a claim against Emil F. Voigt and Mary S. Voigt, to whom, a few years before his death, he had, jointly with one Edward Beck, lent $14,000 and $5,000, taking as security several mineral claims in British Columbia. This claim was disputed by the Voigts, and if it had any value whatever it could only be the value of the mineral claims. But it was very problematical whether anything could be realized out of this security, and eventually it proved to be worthless and the mineral claims were sold for unpaid taxes. The Voigts had no property, and a return of nulla bona was made on an execution against them.

After Grunder's death, the latter's executors, the appellants herein, instituted proceedings in the British Columbia courts against the Voigts who resisted payment. They could go on with their suit only by obtaining letters of ancillary probate of Grunder's will, and to secure this probate some arrangement had to be made as to succession duties. A long correspondence ensued between the solicitors of the appellants and different departments of the provincial government, and it was represented that this, the only asset of the deceased in British Columbia, was of very doubtful value, but in order to carry on the suit and attempt to realize something out of the security it was necessary to obtain probate of the will. Finally the appellants obtained ancillary letters of probate on filing an affidavit of value and relationship under section 21 of the Act, placing the value of the Voigt claim at $16,000, and also a bond, under sections 23 and 24, for $16,000 (by virtue of section 24, the bond should have been only for $1,600, ten per vent of the valuation) for the due payment to His Majesty of any duty to which the property coming to the hands of the appellant might be found liable. I think it was well understood at the time that, although the Voigt claim was valued at $16,000, efforts to collect it might prove unsuccessful, and that it might be ascertained, as in fact it was, that it was worthless.

The Act, as I read it, does not make the affidavit of value and relationship and the accompanying inventories

[Page 417]

conclusive as to the amount or value of the estate. Certainly it is not binding on the Government, which can appoint a commissioner to enquire into and report as to the property:: subject to duty and its value (sec. "29). There is an appeal to the Court of Appeal from the report of the Commissioner, which is open to " any person dissatisfied with the report" (sec. 23), but I cannot find anything in the Act making in terms the commissioner's report conclusive as to any interested party.

We next find a provision (sect. 34) giving authority to a judge of the Supreme Court to issue, on the application of the Minister of Finance, a summons directing the executor, administrator, heir or devisee of the property liable for duty to appear and show cause why the duty should not be paid forthwith or on a day to be fixed by the judge. This presupposes that the amount of the duty has been determined, for the section does not direct the judge to ascertain its quantum. There is a somewhat similar provision in section 40, empowering a judge to summon " on the application of any person interested" the persons interested in the property subject to the duty to appear before the court and show cause why the duty should not be paid.

All the sections above referred to are grouped under the caption " Procedure to enforce payment of duty." Sections 42 and following are preceded by the title " Additional remedies," and among them is section 43 under which Mr. Justice Morrison made the order which the Court of Appeal, on appeal by the Government, set aside. This section reads as follows:—

43. A judge of the Supreme Court shall also have jurisdiction, upon motion or petition, to determine what property is liable to duty under this Act, the amount thereof, and the time or times when the same is payable, and may himself or through any reference exercise any of the powers which by sections 29 to 31, both inclusive, of this Act are conferred upon any officer or person.

The reference to sections 29 to 31 is to the provisions of the Act concerning the appointment of a commissioner. It is not very clear whether it is meant, by this reference, that the judge may appoint a commissioner, as the Government only can do under section 29, or that he may exercise the powers which would be exercisable by the commissioner when appointed by the Government.

[Page 418]

But it would seem to me that, notwithstanding what i occurred in this case, the learned judge, upon a motion or petition of these appellants, had jurisdiction to determine what property of the Grunder estate was liable to duty under the Act, and the amount thereof. The learned judge, in his formal judgment, there are no reasons for judgment, declared

that no duties have become payable from the petitioners under the above-mentioned Act.

I think the learned judge had jurisdiction to make this declaration which could only be based upon the fact, which is established, that no property in British Columbia had come to the hands of the appellants.

The point relied on by the learned judges of the Court of Appeal was that these appellants were bound by their valuation and its acceptance by the Government, and that it was thus conclusively established that property of the value of $16,000 had come to the hands of the appellants. As I have said, there is nothing in the Act declaring that the affidavit of value and relationship and the inventories are conclusive against those filing them. It may be urged that they are an admission by the representatives of the estate of the property and its value which has come to the hands of these representatives, but does that mean that in case of a demonstrated mistake in making this admission, or of sufficient evidence that a claim such as the one in question was really valueless at. the time of the death of the deceased, the representatives of the estate are nevertheless precluded by their affidavit from alleging and proving the contrary? I would greatly hesitate before answering this question in the affirmative. I think, taking the affidavit with the bond which accompanies it, the governing condition is that the estate will pay to His Majesty

any duty to which the property coming to the hands of the said applicant or applicants may be found liable (sect. 24).

This leaves for subsequent determination, a determination such as made in this case, the question of what property came to the hands of the applicant for probate. And section 43 empowers the judge to determine what property is liable to duty under the Act and the amount thereof.

[Page 419]

Under all the circumstances I am of opinion that there was no agreement between the appellants and the Government to the effect that this claim was worth $16,000, or any amount. And I also think that it was open to the learned judge under section 43 to determine that no duties were payable by the appellants under the Act.

I would therefore allow the appeal with costs here and in the court below and restore the judgment of Mr. Justice Morrison.

MALOTJIN J.—For the reasons stated by Mr. Justice Idmgton, with which I concur, I would allow this appeal and restore the judgment of the trial judge, with costs.

MACLEAN J.—Edward H. Grunder, a citizen of the United States, died in 1920, and in his will named the appellants as his executors. In his lifetime Grunder, together with one Beck, loaned to one Voigt and his wife, residents of British Columbia, sums of money aggregating $19,000. The executors brought action against Voigt and his wife for the recovery of the said sum of $19,000 and, alternatively to foreclose the interest of the Voigts in certain mineral claims in British Columbia charged with the repayment of this sum of money. In order that the executors might prove their title on the trial, it was necessary that they obtain probate in British Columbia of the last will and testament of the deceased Grunder. The Succession Act requires payment of succession duties or security therefor before letters probate may issue. Thereupon the appellants' solicitor obtained leave to file a bond in lieu of payment of duties, and as required they filed the statutory affidavit and inventory, in which they described the asset in question as a claim against Voigt and his wife secured by an interest in fourteen mineral claims in the Similkameen District of the amount of $16,000.

The appellants ultimately recovered judgment against the Voigts, but a writ of execution issued against the goods and chattels of the judgment debtor was returned nulla bona. The mineral areas charged by the Voigts to secure payment of the loan proved valueless and were sold for non payment of taxes, and the appellants were still unable to realize upon the judgment.

[Page 420]

The appellants then proceeded by petition under s. 43 of the Succession Duty Act, praying for a declaration that no estate of the deceased in British Columbia came into the hands of the appellants and that no duties had become payable. After the hearing of the petition, an order was granted by Morrison, J. that no duties had become payable by the petitioners under the Succession Duty Act. On appeal to the Court of Appeal this order was set aside, and the present appeal is from the decision of the Court of Appeal of British Columbia.

Considerable correspondance was carried on between the appellants' solicitor and the respondent prior to the issue of the letters probate and the giving of the bond which perhaps should be referred to here. The first letter was addressed to the Deputy Attorney General, and it was pointed out that one Edward H. Grunder, living in Pennsylvania, U.S.A. had died, and that his executors wished to sue for the recovery of money loaned to a man named D. F. Voigt and his wife upon the security of some mineral claims in British Columbia. In this letter it was pointed out that the ultimate value of the security when foreclosed or sold was uncertain, and in the meanwhile the solicitor asked for leave to file a bond in lieu of the succession duties and also the probate duties. In another letter addressed to the Minister of Finance the appellants' solicitor wrote as follows:

Now it is quite doubtful whether Voigt has any money and equally doubtful whether the mineral claims have any value and it is therefore very difficult to fix any sum which should be paid for succession duties or probate duties.

This letter then proceeds to point out the probable difficulties in the executors recovering judgment, and that the future alone would determine whether they could realize anything out of Voigt's for the mineral claims. At a later date a departmental official wrote the solicitor, that, the Treasury did not wish through a bond to extort payment of duties from assets which possibly did not exist, but the solicitor encountered delays in obtaining a final acceptance of the bond for succession duties.

He thereupon took up correspondence with the Prime Minister of British Columbia and in his letter of August 21st, 1921, wrote as follows:

[Page 421]

As it is impossible now to tell whether the executors will recover any money for the estate at all, it seems to me that the only reasonable course to pursue with regard to the succession duties and the probate duties, is to give a bond to the Crown for the payment of succession duties, upon such money as may eventually be recovered of the estate of the deceased.

To this the Prime Minister replied deprecating the unnecessary volume of correspondence on such simple a matter and stated that the only question was whether the Minister of Finance had power to accept the bond in lieu of the payment of succession duties. The Minister of Finance then wrote an official of his department to accept a bond in respect of the succession duties. He said :

In view of the fact that the question of value of the British Columbia property is a question for the court, it might be well for the department to accept a bond payable in twelve months for succession duty in this estate.

A bond was subsequently accepted. The condition of the obligation in the bond was to well and truly pay or cause to be paid to the Minister of Finance of the province of British Columbia, for the time being representing His Majesty the King on that behalf, "any and all duty" to which the property, estate and effects of the said Edward H. Grunder, coming into the hands of the said Sydney Blackman and Hyett Grunder "may be found liable" under the provisions of the Succession Duties Act, within two years from the date of the death of the said Edward H. Grunder or such further time as being given, etc.

The Succession Duty Act contains no provision giving authority to refund where any duty shall have been paid on account of any succession tax, if it is afterwards discovered that such duty was not due, or was paid by mistake, or paid in respect of property which the successor was unable to recover, or where for any other reasons, a refund ought to be made. There is no statutory power to compound the duty payable, upon any terms, where the succession is of such a nature, or so disposed, or circumstanced as not to be fairly ascertainable, nor in case of doubt or dispute as to the valuation is there any direct provision for agreement between the parties, although this of course is implied.

In these circumstances the appellants petitioned the court for the declaration referred to, and their contention

[Page 422]

on this appeal is that the judge in the premises had jurisdiction. Section 43 reads:

A judge of the Supreme Court shall also have jurisdiction upon motion or petition to determine what property is liable to duty under this Act, the amount thereof and the time or times when the same is payable and may himself or through any reference exercise any of the powers which by sections 29 to 31, both inclusive, of this Act are conferred upon any officer or person.

The section is apparently wide enough in terms to cover the case, but the respondent claims it is not available to the appellants, and that the judge was without jurisdiction. If the section is not operative in these proceedings it must be because there was some previous decision binding upon the executors, or because there was an agreement between the parties which is conclusive.

There has been no binding decision because section 22 (1) is purely tentative, at least where a bond has been given. This section only authorizes the determining of the amount of succession duty for the purpose of making it possible to have letters of probate issue. The functions of the Deputy Minister of Finance are ministerial entirely, he simply makes a computation on the footing of the affidavit and inventory. The word " .estimate " would more appropriately express the latter document then " inventory" and in many succession acts that is the term used.

There is nothing in the Act which binds the Minister to accept as final, the assessment which the Deputy Minister of Finance made. The Minister only goes so far in the form of consent, form 5 of the Act, as to state that he considers, after a perusal of the affidavits, that there is a property subject to succession duty. He stated in this consent, the amount of succession duty " due," that is " due " for the purposes of the next subsection, which shows that the duty must be paid before the probate can be issued. If the Minister is not bound, then the executors should not be bound. The two subsections of section 22 must be read together, and I think it can be fairly said that the effect of them is to make the succession duty assessed by the Deputy Minister of Finance, only tentative.

It may be that the executor, having once paid the amount of this tentative assessment, could not obtain a refund, since the only provision for refund is in section 39, which

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authorizes a refund by the Minister when a refund has been made by legatees, etc. Possibly it did not occur to the draftsman of the statute that there might be a case where ? payment had actually been made by the executor, and ] where it subsequently turned out that there was no estate, and, therefore, no legacies had been paid and consequently there was no legatees from whom a refund could be asked. This state of affairs is apparently a casus omissus, although it might be held that, even in these circumstances, the executor would have the right outside the statute, to apply for refund by petition of right on the ground that the payment was only tentative.

Whether this is so or not in the case where payment has actually been made, the circumstances are quite different when security is furnished and accepted. It would seem as if the idea might be that the executor in making an actual payment must be sure of his ground and not expect a refund, but that the executor who did not know how an estate would eventually turn out might protect himself by declining to pay and by giving a bond. This bond, it should be noted, is not for the amount which has been determined by the Deputy Minister of Finance, but is in the penal sum of ten per cent of the property subject to duty, and the condition is that the obligor will pay, not the amount determined by the Deputy Minister of Finance, but will pay the amount of duty to which the property coming into his hands may be found liable, under the provisions of the Succession Duty Act.

It was urged upon us that there was an agreement between the parties to pay the duty on the footing of an inventory filed. I must say I am unable to discover anything in this case supporting such a view, and I am at a loss to determine why the suggestion is put forward. Every step discloses that there was no agreement such as suggested. Possibly if the executor had paid duty upon the basis of the inventory filed, that would have constituted an agreement that the amount he paid was the amount for which the property was liable, but the agreement in this case is not left to be worked out by implication from the statute, or by a nebulous presumption arising from the equivocal act of the parties, but it is nominated in the bond, and this

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bond is in the words of section 23 of the statute and of the form of bond prescribed in the schedule. The bond, the only positive agreement in existence in this connection, is to the effect that the amount payable is the amount found to be due, and the correspondence referred to clearly shews that it was intended that the bond should express the accommodation reached between the parties.

Section 43 is the only section which actually provides for a judicial determination of the amount of duty to which property is liable. It is significant that the word " liable " used in this section is only used in one other place, and that is in the provisions of section 23, which prescribes the form of the bond. Section 29 does authorize a judicial decision by a commissioner, but this is not as to the amount of duty for which the property is liable, but is only as to what property is subject to duty. Further than this, section 29 can only be invoked by the Minister as a sort of court of inquiry to test the correctness of the applicant's statement in the affidavit. The applicant cannot under this section take the initiative to avail himself of the good offices of the commissioner.

It would be an unthinkable proposition if the applicant as a preliminary to obtaining letters of probate was obliged to search the country over, to ascertain all the debts of the deceased, and in effect guarantee that the amount to be placed opposite the item " debts " at the foot of the inventory showed the precise amount of the deceased's liabilities. One of the primary objects of appointing executors or personal representatives is to have some person who may, by appropriate advertisement and other notice, discover in the course of time what the actual liabilities of the deceased are.

The effect of the respondent holding the executors liable for the amount of money which would be payable as succession duty on the basis of the necessarily tentative statement which he furnished as to debts would be to directly take from the executor the monies to which the province is not in any way entitled, because property subject to duty is as laid down in sec. 7 (et seq.) the net value of the property, and this net value is what the learned judge has determined upon this proceeding. The only

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other basis on which the province could possibly claim this money would be on the ground that the applicant having made this statement of assets and liabilities is now estopped from asserting that it was incorrect, but estoppel does not arise unless the person to whom the representation was made believes the representation and actually acts upon it to his detriment. There could be no suggestion here that the Crown which has taken the bond for the payment of the amount for which the property may be found liable has acted to its detriment. It must be remembered that at that time the Deputy Minister of Finance had actually determined the amount of the succession duty and therefore the use of the words " may be found liable" indicate clearly that it could not have been the amount which had then actually been determined, but that it was the amount which was to be the subject of some future finding or decision. The proper words to have used if the bond referred to the amount already determined by the Deputy Minister of Finance would have been "has been found liable." As I have already said, sec. 43 contains the only procedure which is open to the applicant to initiate for the purpose of having the amount of this liability determined, and the use of the word " liable " in ss. 23 and 43 and also in the bond itself is peculiarly significant.

It was pointed out by the respondent's counsel that a determination of the issues involved in the petition were not properly supported inasmuch as only affidavits were used. It was open to the judge, on the application of the respondent, to order the attendance for cross examination of any person making an affidavit.

I think the appeal should be allowed with costs.

Appeal allowed with costs.

Solicitors for the appellants: Stockton & Smith.

Solicitor for the respondent: D. Donaghy.