Bains v. Minister of National Revenue, [1975] C.T.C. 2178, 75 D.T.C. 135

The Chairman (orally: April 9, 1975):

1 This is an appeal under the former Estate Tax Act by Swarn Kaur Bains and the Canada Trust Company, executors of the estate of Jogindar Singh Bains, who died on or about October 30, 1970.

2 Probate was granted in the Supreme Court of British Columbia to the aforementioned executors on January 27, 1971.

3 The appellants have appealed the Minister's assessment which, in effect, disallowed a deduction or exemption under paragraph 7(1)(b) of the Estate Tax Act as it existed at the date of death, on the grounds that the life interest of the widow was defeasible in that the will, in paragraph 4.F I believe it was, provided that the widow was to have the interest from the estate for her lifetime or until she remarried, whichever first occurred. The will also provided for payment of a specific bequest of $10,000 to the widow.

4 Subsequent to the testator's death the executors made an application to the Supreme Court of British Columbia under the Testator's Family Maintenance Act, RSBC 1960, c 378. An order was subsequently granted to the executors on September 8, 1972, increasing the specific bequest from $10,000 to $25,000 and removing the defeasible aspect of the life interest to the wife, and I quote from paragraph (b) of the order of the Honourable Mr Justice Wootton:

That the income of the capital and residue of the testator's estate be paid to the Petitioner, Swarn Kaur Bains, throughout her life until her death as if the proviso “or remarriage, whichever shall first occur” or words to that effect appearing in the said Will, in particular in clauses 4.F., G., and H. thereof had never been there.

5 There is no dispute as to the competence of the Supreme Court of British Columbia to make such an order.

6 The appellant takes two alternative positions: first, that the order should be read with the will and be read as of the date of death, thereby purifying the gift so that it is within the description of exempt payments to spouses under paragraph 7(1)(b) of the Estate Tax Act, now RSC 1970, c E-9; in the alternative, the appellants argue that, in any event, if the will and the order are to be read separately, then the gift of the life interest in the will became indefeasible “within a reasonable time” as set out in the wording of the said paragraph 7(1)(b).

7 The Minister, on the other hand, says in effect that the Court had jurisdiction to grant such an order but it did not have the jurisdiction to override or repeal or make ineffective the provisions of section 7 of the federal statute.

8 The learned counsel for the Minister points to paragraph 16 of the Testator's Family Maintenance Act, which refers to “duties” and clearly has reference only to provincial succession duties and argues that it makes no reference whatsoever to “estate tax” which is a completely different type of taxing statute.

9 It seems to me that, when one is interpreting documents or statutes, one should not interpret them in such a way that the result may lead to an absurdity.

10 It seems also that the provisions of the BC Testator's Family Maintenance Act gave the Court the right to change or alter the will for the benefit of the widow of the deceased, and that the Court did do so in this case.

11 To me it would make no sense to read the provisions of the provincial statute if one did not read them in the light of their application to the will as of the date of death, and that the order and the will should be read as one, in which case the result has to be an altered testamentary document and one which would meet the requirements of paragraph 7(1)(b) of the Estate Tax Act.

12 In my view the order is one which the Supreme Court of British Columbia was qualified to make on a nunc pro tunc basis, and that in fact is what it did.

13 I refer by analogy to the decision in Frank Howard v Her Majesty the Queen, [1974] C.T.C. 857, 74 D.T.C. 6607, a judgment of the Honourable Mr Justice Gibson of the Federal Court, wherein he was dealing with an alteration in the amount of alimony payments to be made by a husband to his wife, as recommended by the Registrar, as is the practice in this Province, and as confirmed by an order of the Court, and he says at page 858 [6607]:

It was within the power of the Supreme Court of British Columbia on October 22, 1973 to make a judgment nunc pro tunc.

In my opinion, the Court did so. The judgment of the Supreme Court of British Columbia dated October 22, 1973 confirming the Registrar's recommendation dated April 22, 1971 requiring the plaintiff to pay for support the sum of $270 per month commencing April 1, 1971, on a true construction, is a judgment nunc pro tunc.

14 In my view the same situation exists here. The order was made on a nunc pro tunc basis and should be read with the will as of the date of death of the deceased. And having come to that conclusion, I find that the life interest falls squarely within the exemption of paragraph 7(1)(b) of the Estate Tax Act as it was then in force, and the appeal will therefore be allowed.