Hart,
J:—Roy
A
Jodrey
died
on
August
12,
1973,
resident
and
domiciled
in
Nova
Scotia.
He
had
executed
his
will
on
August
13,
1963,
in
which
he
directed
his
executors
to
pay
all
just
debts,
funeral
and
testamentary
expenses,
and
all
estate
taxes,
succession
duties
and
inheritance
and
death
taxes
payable
in
respect
of
all
property
passing
or
deemed
to
pass
on
death
to
the
intent
and
purpose
that
all
bequests
by
the
Will
would
be
free
of
such
duties
and
taxes.
After
making
certain
bequests
he
directed
that
the
residue
of
his
estate
be
divided
among
his
grandchildren.
During
1971
the
Government
of
Canada
announced
that
it
would
be
withdrawing
from
the
estate
tax
field
by
the
end
of
that
year.
Early
in
1972
the
Province
of
Nova
Scotia
passed
a
Succession
Duty
Act,
which
was
deemed
to
come
into
force
on
January
1,
1972
and
imposed
succession
duties
on
all
property
in
the
province
of
deceased
persons,
as
well
as
property
outside
the
province
to
which
residents
of
the
province
became
successors.
The
relevant
sections
of
the
Nova
Scotia
Succession
Duty
Act,
SNS
1972,
c
17
are
as
follows:
8.
(1)
Subject
as
hereafter
otherwise
provided,
duty
shall
be
paid
on
all
property
of
a
deceased
that
is
situated,
at
the
time
of
the
death
of
the
deceased,
within
the
Province.
(2)
Subject
as
hereafter
otherwise
provided,
where
property
of
a
deceased
was
situated
outside
the
Province
at
the
time
of
the
death
of
a
deceased
and
the
successor
to
any
of
the
property
of
the
deceased
was
a
resident
at
the
time
of
the
death
of
the
deceased,
duty
shall
be
paid
by
the
successor
in
respect
of
that
property
to
which
he
is
the
successor.
2.
(5)
Where
a
corporation
which
is
not
resident
in
the
Province,
other
than
a
corporation
without
share
capital,
by
reason
of
the
death
of
a
deceased
acquires
or
becomes
beneficially
entitled
to
property
of
the
deceased,
(a)
the
corporation
shall
be
deemed
not
to
be
the
successor
of
the
property
except
to
the
extent
that
the
value
of
the
shares
of
the
shareholders
of
the
corporation
is
not
increased
in
value
by
the
corporation
acquiring
or
becoming
beneficially
entitled
to
the
property;
and
(b)
each
of
the
shareholders
of
the
corporation
shall
be
deemed
to
be
a
successor
of
property
of
the
deceased
to
the
extent
of
the
amount
by
which
the
value
of
his
shares
in
the
corporation
is
increased
by
the
corporation
acquiring
or
becoming
beneficially
entitled
to
the
property.
Mr
Jodrey
had
twelve
grandchildren,
all
of
whom
were
resident
within
the
province.
Under
the
new
Succession
Duty
Act
these
children
would
be
successors
to
his
residuary
estate
and
duties
would
become
payable
unless
his
affairs
could
be
rearranged
in
such
a
way
that
they
would
not
attract
tax
under
the
Act.
The
following
scheme
of
distribution
was
then
established.
While
Rock
Investments
Limited
(hereinafter
called
‘‘White
Rock”)
was
incorporated
in
the
Province
of
Alberta
on
September
17,
1972.
Two
common
shares
of
a
par
value
of
$1
each
were
issued
to
Mr
Jodrey.
One
common
share
was
registered
in
the
name
of
Percy
L
Herring,
a
resident
of
Alberta,
and
all
the
shares
were
physically
situate
in
Alberta.
The
shares
were
only
transferable
in
that
province,
where
the
head
office
of
the
company
was
located,
and
White
Rock
was
a
resident
Alberta
corporation.
The
only
activity
of
White
Rock
was
to
purchase
from
Mr
Jodrey
4,600
shares
of
R
A
Jodrey
Investments
Limited
for
$3,735,200
payable
by
promissory
note
issued
to
Mr
Jodrey.
On
July
3,
1973,
$105,800
was
paid
on
account
of
this
note.
The
promissory
note
was
situate
in
Alberta
on
the
date
of
death
of
the
deceased
and
was
payable
upon
presentation
at
the
registered
office
of
White
Rock
in
that
province.
On
September
13,
1972
JBH
Investments
Limited
was
incorporated
in
Alberta.
The
officers
and
directors
of
this
company
were
al!
residents
of
Alberta,
and
its
head
office
located
in
that
province.
Its
shares
could
only
be
transferred
in
Alberta
and
it
was
a
resident
Alberta
holding
company,
which
conducted
no
business
in
Nova
Scotia.
Twelve
hundred
common
shares
were
issued
of
a
par
value
of
$1
each,
and
100
of
these
shares
were
owned
by
each
of
the
grandchildren
of
the
deceased
who
were
residents
of
Nova
Scotia.
All
the
share
certificates
were
physically
located
in
Alberta.
JGC
Investments
Limited
was
incorporated
in
Alberta
on
September
13,
1972,
a
wholly
owned
subsidiary
of
JBH
Investments
Limited.
It
had
100
issued
common
shares,
all
of
which
were
beneficially
owned
by
JBH
Investments
Limited.
Its
directors
and
officers
and
head
office
were
all
located
in
Alberta
and
it
was
a
registered
Alberta
corporation.
On
October
5,
1972
Mr
Jodrey
executed
a
codicil
to
his
will.
The
codicil
revoked
the
bequest
of
the
residue
to
his
grandchildren
and
instead
left
“the
rest
and
residue
of
my
estate
I!
give
and
bequeath
to
JGC
Investments
Limited,
an
Alberta
company,
including
without
limitation
a
note
of
White
Rock
Investments
Limited’’.
After
Mr
Jodrey’s
death
his
executors
filed
a
succession
duty
return
under
the
provisions
of
the
Nova
Scotia
Succession
Duty
Act,
which
did
not
contain
any
reference
to
the
assets
of
the
deceased
located
in
the
Province
of
Alberta.
By
notice
of
assessment
duty
was
assessed
against
the
twelve
grandchildren
of
the
deceased
on
the
basis
that
the
twelve
grandchildren
were
resident
successors
to
the
rest
and
residue
of
the
deceased’s
estate
as
to
one-twelfth
each
under
clause
2(5)(b)
of
the
Act.
The
executors
filed
a
notice
of
objection
with
the
Minister
of
Finance
alleging
that
the
twelve
grandchildren
were
not
successors
within
the
meaning
of
the
Succession
Duty
Act
and
therefore
not
liable
to
pay
any
duty,
and
further
that
subsection
2(5)
of
the
Succession
Duty
Act
is
ultra
vires
the
powers
of
the
Nova
Scotia
Legislature.
The
Honourable
Minister
of
Finance
confirmed
the
assessment
as
having
been
made
in
accordance
with
the
provisions
of
the
Act,
and
the
executors
have
brought
this
appeal
to
this
Court
from
his
ruling.
The
parties
have
agreed
that
the
two
questions
to
be
submitted
for
the
opinion
of
the
Court
are:
(a)
whether
or
not
the
twelve
grandchildren
of
the
deceased
are
or
are
not
successors
to
the
residue
of
the
estate
of
the
deceased
within
the
meaning
of
subsection
2(5)
of
the
Act;
and
(b)
if
it
is
found
that
the
twelve
grandchildren
of
the
deceased
are
successors
to
the
residue
of
the
estate
of
the
deceased
within
the
meaning
of
subsection
2(5)
of
the
Act,
whether
or
not
subsection
2(5)
of
the
Act
is
ultra
vires
the
powers
of
the
Legislature
of
Nova
Scotia.
The
scheme
of
distribution
adopted
by
Mr
Jodrey
is
in
my
opinion
Similar
to
the
scheme
of
distribution
adopted
by
Colonel
J
C
MacKeen
about
the
same
time.
The
MacKeen
Estate
appeal
was
heard
immedi-
ately
before
this
appeal
and
it
was
agreed
that
the
arguments
presented
there
would
be
adopted
as
the
arguments
of
counsel
for
this
appeal.
In
that
factual
situation
the
deceased,
a
long
time
resident
of
Nova
Scotia,
left
assets
situate
in
Alberta
to
subsidiary
Alberta
corporations
wholly
owned
by
parent
Alberta
corporations
in
which
the
only
common
shares
had
been
issued
to
the
widow
and
daughters
of
the
deceased.
In
the
present
case,
the
deceased,
a
lifelong
resident
of
Nova
Scotia,
left
property
situate
in
Alberta
to
a
wholly
owned
Alberta
subsidiary
of
an
Alberta
parent
corporation
in
which
the
only
common
shareholders
were
the
twelve
grandchildren
of
the
deceased.
In
the
MacKeen
Estate
appeal
I
held
that
under
the
plain
meaning
of
the
Nova
Scotia
Succession
Duty
Act
the
gift
to
the
subsidiary
Alberta
company
was
in
fact
a
gift
which
meant
that
the
parent
Alberta
company
was
beneficially
entitled
to
property
of
the
deceased,
and
since
Nova
Scotia
residents
were
the
shareholders
of
the
parent
companies
involved
that
they
would
be
deemed
to
be
successors
to
the
property
of
the
deceased
under
the
Act.
I
further
held
that
subsection
2(5)
of
the
Nova
Scotia
Succession
Duty
Act
is
intra
vires
the
Province
of
Nova
Scotia
since
it
imposes
a
tax
directly
on
persons
resident
in
the
Province
rather
than
on
property
situate
outside.
The
legislation
established
a
means
by
which
the
value
of
the
succession
could
be
determined
in
the
hands
of
the
resident
successors
and
was
valid
to
the
extent
that
it
imposed
duties
on
shareholders
who
were
residents
of
Nova
Scotia
at
the
time
of
the
death.
The
answer
to
question
(a)
is
therefore
that
the
twelve
grandchildren
of
the
deceased
are
successors
to
the
property
of
the
deceased
to
the
extent
that
their
shares
in
JBH
Investments
Limited
were
increased
in
value
by
the
bequest
of
its
subsidiary
within
the
meaning
of
subsection
2(5)
of
the
Act.
The
answer
to
question
(b)
is
that
subsection
2(5)
of
the
Act
is
intra
vires
the
Legislature
of
Nova
Scotia
to
the
extent
that
it
imposes
succession
duties
on
shareholders
of
non-resident
corporations
who
are
themselves
resident
within
the
Province
and
which
corporations
have
become
beneficially
entitled
to
property
of
a
deceased.
This
appeal
will
therefore
be
dismissed
with
costs
to
be
taxed.
Since
it
was
agreed
that
the
two
appeals
should
be
argued
together
there
should
only
be
one
bill
of
costs
and
it
should
be
paid
in
equal
shares
by
the
two
estates
involved.
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