M
J
Bonner
[ORALLY]:—This
is
an
appeal
from
an
assessment
of
income
tax
for
the
1976
taxation
year.
Two
main
issues
arise:
(a)
was
a
quarter
section
of
land
referred
to
at
the
hearing
and
in
these
reasons
as
“the
red
quarter”
owned
by
Albert
Gilbert
immediately
before
his
death
or
was
it,
at
that
time,
owned
by
his
son;
and
(b)
(i)
is
the
trust
of
the
residue
created
by
the
Will
of
the
deceased
one
under
which
“.
..
no
person
except
the
spouse
may,
before
the
spouse’s
death,
receive
.
.
.
any
of
the
income
or
capital
..
.”
within
the
meaning
of
subparagraph
70(6)
(b)
(ii)
of
the
Income
Tax
Act,
and
(ii)
if
not,
is
the
resultant
tainting
of
the
trust
eradicated
by
the
execution
and
delivery
by
Bruce
Gilbert
of
the
disclaimer
of
his
rights
under
paragraph
7
of
the
Will?
Title
to
the
red
quarter
was
held
by
the
director
of
the
Veterans’
Land
Act
under
an
agreement
for
sale
with
Albert
Gilbert.
The
evidence
established
that
Albert
Gilbert
wanted
to
transfer
title
to
the
red
quarter
to
his
son,
Bruce.
To
that
end
the
deceased
consulted
his
solicitor,
Mr
Gregg.
Mr
Gregg
advised
Mr
Gilbert
that
it
would
be
impracticable
to
effect
the
transfer.
Albert
Gilbert
could
have
transferred
the
land
to
his
son
if
he
wanted
had
he
been
prepared
to
repay
the
VLA
loan,
but
the
benefits
under
the
VLA
contract
which
would
be
lost
by
him
in
the
event
of
premature
repayment
were
so
valuable
as
to
make
it
impractiable
to
carry
out
the
desire
to
pay
off
the
loan
and
effect
the
transfer
to
the
son.
Mr
Gilbert
therefore
did
not
proceed
to
effect
the
transfer.
The
evidence
shows
this
to
be
a
case
of
frustration
of
a
desire
to
transfer
and
nothing
more.
There
was
no
evidence
of
any
gift
or
equitable
title
to
the
land.
There
was
no
evidence
of
transfer
of
possession
of
the
land
to
the
son.
The
son
was
permitted
to
occupy
the
house
built
on
the
land
and
he
used
the
rest
of
the
red
quarter
for
purposes
of
the
ranching
business
which
he
and
the
deceased
carried
on,
but
the
evidence
to
this
effect
does
not
point
to
any
conclusion
that
such
occupation
by
the
son
as
there
was
was
the
result
of
a
gift.
The
occupation
was
referable
to
the
business
and
to
the
intended
future
gift.
Equally,
there
was
no
evidence
to
support
the
contention
that
there
was
an
oral
declaration
of
trust.
There
can
be
no
question
that
the
father’s
intention
was
that
the
land
go
to
his
son
some
day,
VLA
authorities
permitting,
but
the
intention
to
be
inferred
from
the
evidence
was
an
intention
to
get
the
land
into
the
hands
of
the
son
when
possible.
The
casual
reference
made
by
the
deceased
to
the
land,
that
every
relevant
person
knew
would
one
day
be
the
son’s,
as
“Bruce’s
quarter”
cannot
be
regarded
as
an
oral
declaration
of
trust.
Finally,
on
this
issue,
I
cannot
find
that
the
principle
in
Dillwyn
v
Llewelyn
applies.
In
that
case
the
expenditures
by
the
son
in
erecting
a
dwelling
on
land
promised
to
him
by
his
father
were
made
with
the
knowledge
and
approval
of
the
father
and
in
factual
circumstances
which
were
found
to
amount
to
a
virtual
contract
between
father
and
son.
Here,
Bruce
Gilbert
made
expenditures
on
the
playroom
and
on
landscaping,
but
he
did
not
assert
that
he
made
them
in
reliance
on
any
sort
of
unqualified
promise
made
by
his
father
to
convey
during
the
father’s
lifetime.
There
is
a
total
absence
of
evidence
that
the
deceased
did
anything
less
than
he
had
indicated
he
planned
to
do
when
he
left
the
entire
residue
of
his
estate
to
his
son
subject
only
to
the
life
interest
of
his
wife.
The
argument
made
by
counsel
for
the
appellant
with
respect
to
subparagraph
70(6)(b)(ii)
cannot
succeed.
Paragraph
7
of
the
Will
reads:
7.
NOTWITHSTANDING
anything
in
this
my
Will
contained,
I
expressly
authorize
my
Trustees
at
any
time,
and
from
time
to
time
during
the
life-time
of
my
wife
to
pay
to
or
apply
for
the
benefit
of
my
said
wife
or
son,
such
amount
or
amounts
out
of
the
capital
of
the
residue
of
my
estate
as
my
said
Trustees
in
their
uncontrolled
discretion
consider
advisable.
It
is
plain
that
under
that
provision
the
son,
Bruce,
was
permitted
to
receive
the
capital
of
the
trust
of
the
residue.
The
word
“may”
in
the
subparagraph
means,
in
my
view,
“is
permitted”.
In
this
regard
I
rely
on
section
28
of
the
Interpretation
Act
which
reads:
28.
In
every
enactment
“may”
is
to
be
construed
as
permissive.
I
turn
next
to
the
question
of
whether
the
disclaimer
by
Bruce
Gilbert
of
his
rights
or
benefits
under
paragraph
7
of
the
Will
assists
the
appellant.
Albert
Gilbert
died
on
March
11,
1976.
The
assessment
in
issue
was
made
on
January
24,
1980.
The
disclaimer
was
executed
and
delivered
at
the
end
of
February
1980.
Counsel
for
the
appellant
argued
that
the
disclaimer,
once
made,
operated
retrospectively
to
the
time
of
creation
of
the
interest
of
Bruce
Gilbert.
He
relied
on
Cossitt
v
MNR,
[1949]
CTC
187;
49
DTC
617.
The
trust,
as
we
have
seen,
was
tainted
because
it
permitted
Bruce
Gilbert
to
receive
capital
before
the
death
of
his
mother.
This
disclaimer
does
not
change
that
feature
of
the
trust.
While
it
is
true
that
a
donee
need
not
accept
a
gift,
as
was
reiterated
in
the
Cossitt
case,
that
principle
has
no
application
to
clause
7
of
the
Will.
The
trustees
did
not
exercise
their
discretion
to
make
any
payment
out
of
capital
to
the
son.
Had
they
done
so,
Bruce
Gilbert
could
have
refused
to
accept
that
gift.
What
Bruce
Gilbert
could
not
do,
by
disclaimer
or
otherwise,
was
to
change
the
terms
of
the
trust.
Reference
was
made
during
argument
to
those
words
of
subsection
70(6)
which
lie
between
the
end
of
subparagraph
(b)(ii)
and
the
commencement
of
paragraph
(c).
I
will
note
that
there
was
no
issue
as
to
the
time
of
vesting
the
property
in
the
trust.
For
the
foregoing
reasons
the
appeal
fails
on
both
issues
and
will
be
dismissed.
Appeal
dismissed.
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