FRASER,
J.:—This
motion
is
brought
by
Canada
Permanent
Trust
Company
and
Beverley
Chodikoff,
executors
and
trustees
of
the
will
of
the
deceased,
Marvin
Edwin
Chodikoff.
For
convenience
I
will
refer
to
the
executors
and
trustees
as
the
trustees
and
to
the
late
Marvin
Chodikoff
as
the
deceased.
The
motion
is
brought
for
the
determination
and
declaration
of
the
rate
of
Ontario
succession
duty
to
be
applied
with
respect
to
certain
dispositions
made
by
the
deceased
during
his
lifetime.
The
respondent,
the
Minister
of
Revenue
of
the
Province
of
Ontario
submits
that
the
dispositions
are
dutiable
at
the
rate
fixed
by
Section
7(5)
of
The
Succession
Duty
Act,
R.S.O.
1960,
c.
386,
to
which
I
will
refer
as
the
Act,
as
amended
being
the
rate
applicable
to
dispositions
to
strangers.
The
trustees
submit
that
the
appropriate
rate
is
the
lower
rate
made
applicable
by
Section
7(1)
of
the
Act
to
dispositions
to
certain
specified
persons
closely
connected
to
the
deceased
by
blood
or
marriage.
The
deceased
died
testate
and
domiciled
in
Ontario
on
February
2,
1965.
Probate
was
granted
to
the
said
Beverley
Chodikoff,
the
widow
of
the
deceased,
and
to
Leon
Petegorsky,
father
of
the
said
Beverley
Chodikoff,
the
executors
named
in
the
will
of
the
deceased.
For
convenience
I
will
refer
to
Leon
Petegorsky
as
Petegorsky.
Petegorsky
died
May
31,
1966,
and
pursuant
to
the
provisions
for
that
purpose
contained
in
the
will,
double
probate
of
the
will
of
the
deceased
was
granted
August
16,
1966
to
the
said
Beverley
Chodikoff
and
the
Canada
Permanent
Trust
Co.
The
deceased
in
August
1959
incorporated
a
holding
company
in
the
name
of
Bemar
Investments
Limited
(to
whom
I
will
refer
as
Bemar).
It
was
a
private
company
and
was
taxed
under
the
Income
Tax
Act,
R.S.C.
1952,
c.
148,
as
a
personal
corporation.
It
had
two
classes
of
shares—class
‘‘A’’
and
class
“B”,
both
with
a
par
value
of
$10
per
share.
The
letters
patent
provide,
inter
alia,
that
on
any
dissolution
or
winding-up
of
the
company
or
any
division
of
its
capital
that,
after
payment
of
certain
dividends
set
out
in
the
letters
patent,
the
holders
of
the
class
“B
-
shares
will
receive
payment
with
respect
to
their
shares
at
par
and
that
the
balance
of
the
assets
will
be
divided
pro
rata
among
the
holders
of
the
‘‘A’’
shares.
Thus
the
entire
benefit
of
any
increase
in
assets
went
to
the
holders
of
the
class
“A”
shares.
For
present
purposes
there
is
no
need
to
set
out
the
various
other
privileges
and
rights
attached
to
each
class
of
shares.
By
indenture
of
trust
dated
December
15,
1959,
between
Petegorsky
as
settlor
and
one
Beament
as
sole
trustee,
Petegorsky
established
a
trust
to
which
I
will
refer
as
the
‘‘
Chodikoff
Trust’’,
for
the
benefit
of
the
said
Beverley
Chodikoff
and
of
the
issue
of
herself
and
the
deceased.
On
December
16,
1959
Beament,
as
trustee
of
the
Chodikoff
Trust,
subscribed
for
10
class
“A”
shares
of
Bemar
at
par
which
were
paid
for
and
issued.
as
fully
paid
and
non-assessable.
At
the
same
time
the
deceased
personally
subscribed
for
997
class
“B”
shares
at
par
and
also
paid
for
the
incorporators’
three
class
‘‘B’’
shares
and
accordingly
became
the
owner
of
1,000
class
“B”
shares
being
all
the
issued
class
“B”
shares
of
that
company.
By
deed
of
assignment
dated
January
27,
1960,
the
trusts
and
the
assets
of
the
Chodikoff
Trust
were
transferred
to
Toronto
General
Trust
Corporation,
the
predecessor
of
Canada
Trust
Co.,
as
successor
trustee
of
those
trusts.
From
December
16,
1959
to
February
2,
1965,
of
the
issued
shares
of
Bemar,
10
of
the
class
“A”
continued
to
be
registered
in
the
name
of
and
beneficially
owned
by
the
sole
trustee
of
Chodikoff
Trust
and
1,000
class
‘‘B’’
shares
continued
to
be
beneficially
owned
by
the
deceased
and
registered
in
his
own
name
or
in
that
of
his
nominees.
Prior
to
the
incorporation
of
Bemar
the
deceased
in
January
1956
had
caused
to
be
incorporated
a
corporation
named
Mark
Richmond
Real
Estate
Limited,
to
which
I
will
refer
as
Mark.
Mark
was
a
private
company
with
a
capitalization
of
300
preference
and
40
common
shares
all
of
a
par
value
of
$100
each.
Mark
purchased
and
developed
real
property
and
managed
it
as
a
commercial
rental
property.
In
the
lifetime
of
the
deceased
no
preference
shares
of
Mark
were
issued
and
up
to
June
29,
1960,
only
three
common
shares
had
been
issued
—
one
share
to
Beverley
Chodikoff,
one
share
to
the
deceased
and
one
share
to
a
nominee
of
the
deceased
for
qualifying
purposes
but
which
was
beneficially
owned
by
the
deceased.
On
June
29,
by
supplementary
letters
patent,
each
of
these
common
shares
was
divided
into
100
common
shares
with
a
par
value
of
$1
each,
leaving
the
said
Beverley
Chodikoff
the
owner
of
100
common
shares
and
the
deceased
the
beneficial
owner
of
200
common
shares
of
which
100
were
registered
in
the
name
of
his
nominee.
The
parties
filed
an
agreed
statement
of
facts
and
the
facts
set
out
above
have
been
taken
from
that
statement
of
facts
and
schedules
attached
thereto.
Paragraphs
12
to
15
of
that
statement
read
as
follows:
12.
On
the
19th
day
of
July,
1960,
the
Decedent:
(a)
sold
and
transferred
198
common
shares
of
Mark
to
Bemar
at
a
price
of
$1.00
per
share;
and
(b)
caused
Bemar
to
subscribe
for
500
common
shares
of
Mark
at
a
price
of
$1.00
per
share
and
caused
Mark
to
allot
and
issue
500
of
its
common
shares
out
of
its
treasury
to
Bemar
pursuant
to
such
subscription,
and
Bemar
paid
for
these
shares
accordingly.
13.
On
the
said
19th
day
of
July,
1960,
the
common
shares
of
Mark
had
a
fair
market
value
in
excess
of
$1.00
per
share
and
accordingly
the
above
described
transactions
on
that
date
constituted
dispositions
by
the
Decedent
under
the
provisions
of
the
said
Succession
Duty
Act
and
such
dispositions
have
a
total
value
for
the
purposes
of
the
said
Act
of
$119,358.00.
14.
No
succession
duty
statement
has
as
yet
been
served
by
the
Minister
of
Revenue
under
either
subsections
(1)
or
(2)
of
Section
34
of
the
said
Succession
Duty
Act,
but
the
Succession
Duty
Branch
has
supplied
to
the
solicitors
for
the
Applicants
a
Statement
of
Succession
Duty
dated
the
15th
day
of
April
1969,
and
an
amended
Statement
of
Succession
Duty
dated
the
30th
day
of
July,
1969,
copies
of
which
are
annexed
hereto
as
Schedule
“D”,
and
which
have
been
the
subject
of
protracted
negotiations
between
the
solicitors
for
the
Applicants
and
officials
of
the
Succession
Duty
Branch.
In
those
Succession
Duty
Statements,
the
dispositions
referred
to
in
paragraph
13
above
are
brought
into
tax
as
dispositions
to
Bemar
at
the
rates
prescribed
by
subsection
(5)
of
Section
7
of
the
said
Act
and
not
as
dispositions
to
the
beneficiaries
of
the
Marvin
Chodikoff
Number
One
Trust
at
the
rates
prescribed
by
subsection
(1)
of
the
said
Section
7.
In
the
course
of
the
argument
it
was
agreed
that
of
the
$119,358
valuation
put
on
the
dispositions
in
question
$33,858
was
referable
to
the
transfer
of
198
shares
of
Mark
from
the
deceased
to
Bemar
and
that
$85,500
was
referable
to
the
issue
of
500
treasury
shares
of
Mark
to
Bemar,
and
that
in
the
event
of
it
being
decided
by
me,
or
by
a
higher
Court,
that
a
different
rate
of
duty
was
applicable
to
each
of
these
two
dispositions
an
assessment
would
be
made
accordingly.
With
respect
to
the
198
shares
of
Mark
transferred
by
the
deceased
to
Bemar
the
question
is
whether
that
disposition
falls
under
Section
1(f)
(i)
as
one
by
which
the
deceased
passed
property
to
Bemar
or
whether
it
is
a
means
by
which
the
deceased
benefited
the
cestui
que
trust
of
the
Chodikoff
trust
and
therefore
falls
under
Section
1(f)
(ii).
The
Act
is
elaborate
and
complex,
partly
because
of
the
necessity
of
avoiding
the
imposing
of
any
tax
that
might
be
held
to
be
indirect
and
therefore
ultra
vires,
and
partly
to
ensure
that
the
taxes
intended
to
be
imposed
are
collected
notwithstanding
the
ingenuity
of
reluctant
taxpayers
and
their
professional
advisers.
It
is
fundamental
that
the
object
of
the
interpretation
is
to
determine
what
intention
is
conveyed
by
the
language
used
and
that
to
construe
any
particular
part
regard
must
be
had
to
the
Act
as
a
whole.
I
need
only
refer
to
Maxwell
on
Interpretation
of
Statutes,
llth
ed.,
pp.
1,
2,
18
and
19
and
cases
there
cited.
It
is
also
fundamental
that
taxing
Acts
are
strictly
construed
and
that
being
so
that
tax
must
be
imposed
by
clear
and
unambiguous
language.
In
case
of
doubt
the
construction
most
beneficial
to
the
subject
is
to
be
adopted:
see
Maxwell,
supra,
at
p.
278
et
seq,,
and
cases
there
cited.
Speaking
very
generally
the
Act
seems
intended
to
impose,
in
so
far
as
the
Province
has
power
to
do
so,
succession
duty
with
respect
to
all
transfers
of
material
benefits
passing
from
a
deceased
person
to
those
whom
he
seeks
to
benefit.
The
power
of
the
Province
may
depend
on
the
situs
of
the
property
or
the
domicile
of
the
deceased.
Accordingly,
under
some
sections
the
duty
is
levied
on
property
and
in
others
on
persons.
The
rate
of
duty
depends
on
the
size
of
the
estate,
the
relationship
of
the
beneficiary
to
the
deceased,
and
the
value
of
the
property
passing
to
or
the
benefit
conferred
on
the
beneficiary.
Again
speaking
generally,
what
the
respondent
seeks
is
to
apply
the
Act
so
that
where
a
disposition
has
been
made
directly
to
a
member
of
a
family
of
a
deceased
one
rate
of
duty
applies
but
where
a
benefit
of
equal
value
is
conferred
by
means
of
a
corporation
a
different
and
higher
rate
applies.
While
it.
is
within
the
competence
of
the
Legislature
to
so
provide,
having
regard
to
the
purpose
and
scheme
of
the
Act
as
a
whole
the
provision
in
question
should
not
be
construed
to
reach
such
a
result
unless
the
language
is
clear
and
compelling.
For
present
purposes
the
relevant
part
of
Section
6
is
clause
(c).
Under
it
the
duty
is
to
be
levied
on
the
person
to
whom
the
disposition
is
made.
From
the
wording
of
that
clause
and
also
of
the
other
parts
of
Section
6
it
is
apparent
that
those
clauses
of
Section
6
are
mutually
exclusive
and
that
it
is
intended
that
with
respect
to
one
matter
duty
will
be
levied
only
once
on
the
person
or
the
property
as
the
case
may
be.
A
literal
reading
of
Section
1(f)
(i)
could
bring
the
transfer
of
the
198
shares
of
Mark
to
Bemar
within
it.
However,
an
examination
of
that
clause
and
of
the
other
parts
of
Section
1(f)
lead
to
the
conclusion
that
a
distinction
must
be
drawn
between
the
means
used
and
the
end
intended
to
be
achieved.
Normally,
it
is
intended
that
some
natural
person
or
persons
will
be
benefited.
Its
various
clauses
seem
intended
to
catch
any
disposition
notwithstanding
the
use
of
corporations
or
trustees
as
instruments:
or
means.
Although
The
Interpretation
Act,
R.S.O.
1960,
e.
191,
s.
30,
paragraph
28,
provides
that
a
person
includes
a
corporation,
unless
the
context
otherwise
requires;
in
my
view,
in
the
instant
case,
the
context
does
otherwise
require.
The
whole
purpose
of
the
Act
is
to
tax
certain
types
of
successions
and
dispositions
which
are
made
for
the
benefit
of
natural
persons.
The
corporation
is
only
a
means
to
that
end
and
the
use
of
‘by
any
means”?
in
the
Act
is
intended
to
cover
such
arrangements.
I
am,
therefore,
of
the
opinion
that
in
the
sections
under
consideration
the
context
does
require.
that
person
not
include
a
corporation.
The
law
is
clear
that
a
corporation
is
a
separate
entity
:
Salomon
v.
Salomon
&
Co.,
[1897]
A.C.
22,
[1895-99]
All
E.R.
Rep.
33;
Macaura
v.
Northern
Assurance
Co.
Ltd.
et
al.,
[1925]
A.C.
619;
Guarantee
00.-
of
North
America
et
al.
v.
Aqua-Land
Exploration
Ltd.,
[1966]
S.C.R.
133,
54
D.L.R.
(2d)
229.
In
the
course
of
the
argument
there
was
some
discussion
about
“piercing
the
corporate
veil’’.
In
this
connection
counsel
for
the
trustees
placed
considerable
reliance
on
certain
dicta
of
Lord
Denning,
M.R.,
in
the
recent
case
of
Littlewoods
Mail
Order
Stores
Ltd.
v.
McGregor,
[1969]
3
All
E.R.
855
at
p.
860.
The
doctrine
laid
down
in
Salomon
v.
Salomon
&
Co.
Ltd.,
[supra]
has
to
be
watched
very
carefully.
It
has
often
been
supposed
to
cast
a
veil
over
the
personality
of
a
limited
company
through
which
the
courts
cannot
see.
But
that
is
not
true.
The
courts
can
and
often
do
draw
aside
the
veil.
They
can,
and
often
do,
pull
off
the
mask.
They
look
to
see
what
really
lies
behind.
The
legislature
has
shown
the
way
with
group
accounts
and
the
rest.
And
the
courts
should
follow
suit.
I
think
that
we
should
look
at
the
Fork
company
and
see
it
as
it
really
is—the
wholly-owned
subsidiary
of
the
taxpayers.
It
is
the
creature,
the
puppet,
of
the
taxpayers
in
point
of
fact;
and
it
should
be
so
regarded
in
point
of
law.
However,
the
other
members
of
the
Court
gave
separate
reasons
agreeing
in
the
result
but
did
not
specifically
adopt
the
words
quoted.
In
the
case
just
referred
to
and
in
0.1.13.
v.
Land
Securities
Investment
Trust,
Ltd.,
[1969]
2
All
E.R.
480,
which
it
followed,
the
question
before
the
Court
was
whether
certain
payments
were
properly
deductible
expenses
under
an
English
taxing
Act.
In
Tunstall
v.
Steigmann,
[1962]
2
All
E.R.
417,
the
Court
of
Appeal
held
that
a
person
who
had
incorporated
a
corporation
for
her
own
advantage
could
not
refuse
to
accept
the
consequential
legal
disadvantages.
In
my
view
the
trustees
cannot
disregard
the
corporate
entity
created
by
the
deceased
under
whom
they
claim
nor
can
they
require
anyone
else
to
do
so.
However,
I
am
also
of
the
opinion
that
this
is
of
little
moment
for
present
purposes
as
the
instant
case
falls
to
be
decided
by
determining
the
proper
construction
of
the
Act
and
its
application
to
the
facts.
In
the
case
at
bar
the
natural
persons
who
benefit
are
the
members
of
the
family
of
the
deceased
who
are
cestuis
que
trustent
of
the
Chodikoff
Trust.
They
are
the
persons
the
deceased
intended
to
benefit
and
I
am
of
opinion
that
they
are
benefited
and
that
Section
1(f)
(ii)
is
the
subclause
under
which
the
tax
must
be
levied.
Section
1(f)
(i)
is
inapplicable
as
no
property
passed
to
anyone
but
Bemar
and
Bemar
was
only
the
‘‘means’’.
The
issue
of
500
treasury
shares
of
Mark
to
Bemar
does
not
involve
any
passing
of
property
by
the
deceased
or
to
the
natural
persons
intended
to
benefit.
Even
had
I
been
prepared
to
hold
that
this
issue
of
shares
falls
under
Section
1(f)
(iiia)
[enacted
1962-63,
c.
135,
s.
1],
for
reasons
similar
to
those
already
stated
in
connection
with
transfers
of
the
198
shares,
I
would
have
found
it
necessary
to
hold
that
the
persons
to
whom
the
dispositions
were
made
were
the
cestuis
que
trustent
of
the
Chodikoff
Trust.
However,
although
as
to
this
I
have
some
doubt,
I
am
of
the
opinion
that
this
disposition
falls
under
Section
1(f)
(ii)
rather
than
under
Section
1(f)
(iiia)
and
that
the
latter
is
more
apt
to
catch
transactions
where
shares
are
issued
directly
to
the
person
intended
to
be
benefited
or
to
a
trustee
or
nominee
for
him.
For
present
purposes,
as
I
am
unwilling
to
accept
Bemar
as
the
taxable
beneficiary,
it
is
immaterial
whether
Section
1(f)
(ii)
or
Section
1(f)
(iiia)
is
the
appropriate
subclause.
In
either
case
the
rate
of
duty
applicable
is
the
same.
Where,
as
here,
the
wording
is
not
clear
it
is
also
permissible
to
look
at
the
result
which
will
follow
from
any
possible
construction
of
the
Act.
To
apply
Section
30,
paragraph
28
of
The
Interpretation
Act
in
this
case
as
asked
by
the
respondent
would
be
entirely
out
of
harmony
with
the
view
I
have
expressed
as
to
the
purpose
and
scheme
of
the
Act.
It
would
result
in
the
rate
of
duty
applicable
being
in
part
dependent
on
the
means
or
instrument
used
to
transfer
the
property
or
benefit
rather
than
on
the
relationship
of
the
beneficiary
to
the
deceased.
It
might
also
result
in
a
case
such
as
the
present
in
duty
being
levied
on
a
corporation
which
received
property
or
benefit
and
the
natural
person
who
was
the
intended
beneficiary
also
paying
duty
on
the
increased
value
of
the
shares.
That
is
only
one
of
a
number
of
anomalies
or
problems
which
would
result
if
effect
was
given
to
the
argument
of
the
respondent.
For
the
reasons
indicated
I
determine
and
declare
that
both
of
the
dispositions
in
question
are
taxable
at
the
rates
prescribed
by
subsection
(1)
of
Section
7
and
not
those
prescribed
by
subsection
(5)
of
that
section.
The
applicant
is
entitled
to
its
costs
after
taxation
thereof.
An
order
may
issue
accordingly.
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