Her Majesty the Queen v. Mead Johnson of Canada Ltd., [1966] CTC 201, 66 DTC 5175

JUDSON, J. (concurred in by Abbott, Martland, Spence, JJ.) :— The judgment of the Exchequer Court in this case decides that the product known as ‘‘Metrecal’’, whether in the form of powder, liquid, biscuit or soup, is not subject to sales tax. This was decided before the judgment of the same Court in the Pfizer case. There is obvious conflict between the two judgments. As far as the biscuit is concerned, I repeat what I said in the Pfizer case, that the biscuit containing Metrecal is not a ‘bakers’ biscuit” and as such, within the exemption of Schedule III.

It is unnecessary to repeat. what I said about the composition of the product in the Pfizer case. Metrecal is a similar and competing product. The Tariff Board on February 25, 1963, in proceedings instituted by Mead Johnson of Canada Ltd., the present respondent, declared that Metrecal in powder form was subject to sales tax.

These proceedings were taken under Section 57(1) of the Excise Tax Act, which reads:

“57. (1) Where any difference arises or where any doubt exists as to whether any or what rate of tax is payable on any article under this Act and there is no previous decision upon the question by any competent tribunal binding throughout Canada, the Tariff Board constituted by the Tariff Board Act may declare what amount of tax is payable thereon or that the article is exempt from tax under this Act.”

Section 57(8) makes a declaration by the Tariff Board final and conclusive subject to a right of appeal given by Section 58 on a question of law provided leave to appeal is granted by the Exchequer Court or a judge thereof. Leave to appeal was refused on May 1, 1963.

There can be no question that the Tariff Board was within its jurisdiction in making this declaration. The question of jurisdiction which arose in Goodyear Tire and Rubber Company of Canada Limited v. T. Eaton Co. Ltd., [1956] S.C.R. 610, does not arise here. By the terms of the Act the declaration of the Tariff. Board is final and conclusive.

However, the Judgment under appeal holds that Metreeal in all its forms is not subject to sales tax and that it is still open for a judge of the Exchequer Court in other proceedings to make a finding contrary to the finding of the Tariff Board. The judgment also holds that Metrecal is a foodstuff, that it is not a pharmaceutical and that even if it is a pharmaceutical, the fact that it is also a foodstuff exempts it from tax. The ratio is contained in the following paragraph of the reasons for judgment:

“In any event, however, irrespective of whether the various forms of ‘Metrecal’ are pharmaceuticals, the fact that they are also foodstuffs within Schedule III to the Excise Tax Act in my opinion exempts them from sales tax. It is my respectful opinion that, on a true interpretation of the Act, once it is found that an article is a foodstuff, then in order for it not to be exempt from taxation by reason of its being a pharmaceutical also there would have to be in Schedule III or elsewhere in the Act clear words denying the article exemption from sales tax by the employment of such words as other than a pharmaceutical’, as was done in the case of farm and forest products listed in Schedule III.”

In my opinion, the error in this ratio is that it is not enough that the product should be a foodstuff. Before it can be exempt, it must be found to be a foodstuff that comes within a specific definition in Schedule III. In biscuit form it is not a ‘‘ bakers’ biscuit’’. In powder form it is not a base or concentrate for making a food beverage. In liquid form it is not a drink prepared from milk or eggs. In soup form it is still “Metrecal”, not a soup. The case can therefore be decided on the same grounds as those delivered in this Court in the ease of Pfizer.

It is true that the Tariff Board when it held that ‘‘ Metrecal Powder’’ was subject to tax said that it was a pharmaceutical. I have already stated that I think that this finding was conclusive. But whether or not the case had ever been before the Tariff Board, the result would be the same. I think that ‘‘Metre- cal” in all its forms is not within Schedule ITT.

I would allow the appeal with costs both here and in the Exchequer Court. Judgment should be entered for the amount of taxes claimed and the penalties in accordance with Section 48(4) of the Act.

RITCHIE, J.:—I have had the privilege of reading the reasons for judgment of Judson, J. who has outlined the circumstances giving rise to this appeal and I agree with him that the refusal of the learned President of the Exchequer Court to grant leave to appeal to that Court in respect of the respondent’s claim for exemption for ‘‘Metrecal powder’’ is not reviewable in this Court in the present proceedings and that the declaration of the Tariff Board in this regard is to be treated as final and conclusive.

Mr. Justice Gibson, however, has determined in the judgment from which this appead is taken, that the respondent’s product Metrecal in the form of a soup, a biscuit and a liquid is exempt from sales tax under the provisions of Section 32 of and Schedule II! to the Excise Tax Act.

As I have indicated in the Pfizer case I do not think that the fact that these products may be ‘‘sold or represented for one or more of the purposes described in Section 2(1) (ec) of the Act necessarily excludes them from exemption from sales tax if they come within any of the classes of ‘‘ Foodstuffs’’ which are described in Schedule III to the Act.

It appears to me to be convenient to deal separately with the three forms in which the product is marketed :

1. Metrecal Soup:

The respondent claims that Metrecal tomato soup, split pea soup and clam chowder come within the exemption provided for “soups” by the terms of the schedule. In this regard it is to be noted that more than 95% of the constituents of each of these products consist of water, milk and its derivatives and tomato paste, split peas or clam meat and juice as the case may be. The remaining 5% or less of the product consists mainly of a mixture of vitamins, minerals and chemicals. Mr. LeRiche, whose evidence on behalf of the respondent in this regard was uncontradicted, having testified that ‘‘corn oil is derived from corn, 10% of corn is oil’’ and that butter fat is derived from milk, went on to describe the ingredients contained in the various Metrecal soups as follows:

“Milk solids, derived from milk. Corn oil, the same as we said before. Butterfat, the same. Salt is a food, a pure chemical substance. Iodized salt, salt with another chemical added. Jaleium caseinate, derived from milk. Vitamins, made synthetically, and minerals. Black pepper is a natural flavour. Tomato paste, derived from tomatoes. Peas, self-explanatory. Onion powder, derived from onions. Monosodium glutamate, a chemical substance which improves the flavour. Ham flavour, I don’t know. whether this is synthetic or not. Clam meat, minced, and potatoes, clam juice and water.”

The product is assembled and packaged by General Milk Products Limited who are manufacturers of milk products, evaporated milk and similar products, and who supply the skim milk and butter fat to go into the Metrecal soup, while the remaining materials are supplied by the respondent company.

In my view, if these products contained nothing but milk and milk products, tomatoes, split peas or clam chowder and water, they would undoubtedly be ‘‘soups’’ within the meaning of the exemption contained in Schedule: III and the question to be determined is whether they lose the character of a soup because certains vitamins, minerals and chemicals are added in accordance with the respondent’s directions. As I have indicated, I do not think that the fact that the ingredients supplied by the respondent may be beneficial in the treatment of ‘‘overweight’’ and that the product is ‘‘sold or represented’’ as having this quality, affects the matter, and, with the greatest respect for those who hold a different view, I am further of the opinion that a product which contains such a high percentage of ingredients normally found in ‘‘soups’’ does not cease to come within that category as specified in Schedule III to the Excise Tax Act by reason of the fact that a small quantity of other ingredients is added with a view to producing the effect of controlling obesity. I am therefore of opinion that Metrecal ‘‘soups’’ are one of the “Foodstuffs” classified as being exempt from sales tax under the provisions of Schedule ITI to the Excise Tax Act.

2. Metrecal Wafers:

The question of whether these so-called wafers are ‘‘bakers’ biscuits . . or similar articles’? within the meaning of Schedule IIT is almost identical with that which was considered in the Pfizer case.

These so-called wafers are baked in a baker’s oven, cooled and packaged by George Weston Limited who are described in the evidence as “‘. . . manufacturers of bakery goods generally . . . cookies, biscuits, breads, cakes”. The constituents of the wafer are described by Mr. LeRiche as follows:

“Soybean protein, sir, derives from the soybean, and this would be mainly the original product. Wheat flour is the original wheat, with a great deal of the bran removed. Sugar is a chemical substance derived from either sugar-beet or sugarcane. Calcium caseinate is a derivative from milk. Molasses is the end product or an end product in the manufacture of sugar. Corn oil is derived from corn; ten per cent of corn is oil. Coconut oil is self-explanatory. Yeast, this is derived from the brewing industry. Leithin is a chemical that is also a food substance. Cottonseed: flour is self-explanatory, and wheat bran also. Iodized salt is one of the chemical substances which are now being added to our food. Cinnamon is a spice. Ammonium bicarbonate is known as baking powder. Flavours, that is another self-explanatory item. Vitamins and minerals are original in foodstuffs, but now mainly synthetic.”

It appears to me that the respondent’s formula for the making of these wafers is in the nature of a recipe for the making of a biscuit which is alleged to be beneficial to those suffering from obesity. It is baked by a bakery company and I cannot see that its alleged quality as a weight reducer deprives it of its character as a ‘‘bakers’ biscuit”. Even if the chemicals, minerals and vitamins which form part of the recipe differentiate the Metrecal wafer from nearly all other ‘‘bakers’ biscuits” in my view it nevertheless remains a ‘‘bakers’ biscuit” or at least an article so similar thereto as to come within the phrase ‘‘similar articles”? as used in Schedule III of the Act.

3. Metrecal Liquid:

The respondent seeks exemption for this product on the ground that it comes under the category ‘‘ Drinks prepared from milk or eggs” for which an exemption is provided by Schedule III.

The formula for this product specifies the following milk products in the proportions noted :

I do not think that the words ‘‘ Drinks prepared from milk .. .” can be taken to mean “drink consisting exclusively of milk’’ and I take the view that the fact that something over 90% of this product is produced from milk is sufficient to bring it within the exemption. I do not think that addition of other ingredients, including flavouring, which have been supplied in accordance with the formula developed by the respondent, alters the essential quality of the drink as being one that was prepared from milk.

As I have indicated, I am of opinion, for the reasons stated by Judson, J. that it was not open to Gibson, J., nor is it open to this Court on the present appeal, to disturb the declaration made by the Tariff Board in respect to Metrecal “powder” and I would accordingly allow the appeal to the extent of setting aside the finding made by Gibson, J. that Metrecal “powder” is one of the foodstuffs listed in Sehedule III and direct that the judgment herein of the Exchequer Court be varied: accordingly. In all other respects I would dismiss this appeal.

In view of the fact that the respondent has been substantially successful it should have its costs of the appeal to this Court. MINISTER OF NATIONAL REVENUE, Appellant,

and

HELEN RYRIE BICKLE, JUDITH RYRIE WILDER, WILLIAM PRICE WILDER and CHARTERED TRUST COMPANY, EXECUTORS oF THE Estate oF EDWARD WILLIAM BICKLE, Respondents.

Supreme Court of Canada (Abbott, Judson, Ritchie, Hall, Spence, JJ.), April 26, 1966, on appeal from a judgment of the Exchequer Court, reported [1964] C.T.C. 208.

Estate tax—Federal—Estate Tax Act, S.C. 1958, c. 29—Section 7(1)(d)—Gift of residue to charitable organization, after deducting estate tax and succession duty—Amount of gift dependent on amount of tax and duty and amount of tax dependent on amount deductible for gift—Computation of deduction for gift.

In his will the testator provided that after payment of specific bequests, estate tax and succession duties, the residue of his estate was to be paid to a charitable organization within the meaning of Section 7(1) (d). The sole question in issue was how to compute the deduction allowed by Section 7(1) (d) when the amount deductible depended on the amount of estate tax payable and the latter, in turn, depended on the amount deductible. The Minister’s technique of computing the tax by 10 successive approximations was held by the Exchequer Court to be unsupportable in law.

HELD (reversing the judgment of the Exchequer Court) :

(i) That the Minister’s computation was correct and the successive calculations of the tax were required because of the provisions of Section 7(1) (d) which allow a deduction only for the actual value of the gift that ultimately finds its way to the charity (Judson, J., Abbott, Ritchie, Hall, J J., concurring) ;

(ii) That the will did not direct that the estate tax and succession duties be paid out of the property comprised in the gift nor were they payable by the charitable organization as a condition of the making of the gift, so that the appellants were not caught by the “minus” provision at the end of Section 7(1) (d) (Spence, J.; Judson, Abbott, Ritchie, Hall, JJ., dissenting) ;

(iii) That the Minister’s appeal be allowed (Judson, J., Abbott, Ritchie, Hall, JJ., concurring; Spence, J., dissenting in part).

CASES REFERRED TO:

Sudeley v. Attorney-General., [.1897] A.C. 11:

Barnardo v. Commissioners for Special Purposes of the Income

Tax Acts, [1921] 2 A.C. 1.

Ii. L. Kellock, Q.C., and G. W. Ainsley, for the Appellant.

John J. Robinette, Q.C., for the Respondents.

JUDSON, J. (concurred in by Abbott, Ritchie, Hall, JJ.) :—The question in issue in this appeal is how the Minister must compute the deduction allowed by Section 7(1) (d) of the Estate Tax Act for charitable gifts where there is a direction to pay duty out of the charitable gift.

The Estate Tax Act imposes a tax upon the aggregate taxable value of all property passing on the death of every person domiciled in Canada at the time of his death. Section 7(1) (d) of the Act, which provides for the deduction of charitable gifts in computing aggregate taxable value, is in the following ‘terms:

•*7.(1) For the purpose of computing the aggregate taxable value of the property passing on the death of a person, there may be deducted from the aggregate net value of. that property computed in accordance with Division B such of the following amounts as are applicable:

(d) the value of any gift made by the deceased whether during his lifetime or by his will, where such gift can be established to have been absolute, to

(i) any organization in Canada that, at the time of the making of the gift, was a charitable organization operated exclusively as such and not for the benefit, gain or profit of any proprietor, member or shareholder thereof, or

(ii) Her Majesty in right of Canada or a province, a Canadian municipality or a municipal or other public body in Canada performing a function of government,

minus such part of any estate, legacy, succession or inheritance duties or any combination of such duties (including any tax payable under this Part) as is, either by direction of or arrangement made or entered into by the deceased whether by his will or by contract or otherwise, or by the statute or law imposing such duties or relating to the administration of the estate of the deceased, payable out of the property comprised in such gift or payable by the donee as a condition of the making of such gift;”

The difficulty of the problem is that the value of the charitable gift is, by definition, the value of the gift minus duty where there is a direction to pay duty out of the charitable gift. One cannot ascertain the amount of the charitable gift without first knowing the estate tax payable, and, in turn, the amount of the estate tax payable depends upon the amount of the charitable gift.

It is necessary to set out in outline the structure of the will. Everything is given to trustees and the only trusts with which we are concerned in the decision of this appeal are these:

1. “To pay out of the capital of the residue of my estate my just debts, funeral and testamentary expenses and all estate, legacy, succession and inheritance taxes or duties, whether imposed by or pursuant to the law of any domestic or foreign jurisdiction whatsoever, that may be payable by any beneficiary of this my Will or any Codicil hereto in connection with the property passing (or deemed to pass by any governing law) on my death . . .”

2. To set aside a sum equal to 50 per cent of the estate, such sum to be ascertained after the deduction of debts only, and debts are not to include succession duty and estate duty.

(This trust was for the benefit of members of the family.)

3. To pay or transfer the residue of the estate to the E. W. Bickle Foundation.

The E. W. Bickle Foundation is admitted to be a charitable organization which qualifies under Section 7(1) (d). The parties agree :

(1) that the aggregate net value of the property passing on death was $5,242,459.21 ;

(2) that the value of the residue out of which the estate and succession duties were by the will directed to be paid was $2,261,847.64;

(3) that the amount payable for Ontario succession duty was $600,212.95.

The Minister contends that the estate tax payable is $1,132,- 922.35. The figure computed by the learned trial judge was $1,004,994.75. The Minister arrived at his figure as a result of ten successive calculations. Under the scheme of this Act you cannot determine the value of the charitable gift until you have determined the amount of duty. It should be possible to state the Minister’s proposition in such a way that an actuarial training is not needed to understand it. First of all, you have a charitable fund of determined amount which is not taxable but from which must be deducted the amount of estate duty. You first calculate the amount of the estate duty on the balance of the estate ignoring the charitable fund. This gives you the first figure that must be deducted from the charitable fund but it is not the final figure. This first calculation of duty must be transferred from the charitable fund to the taxable portion of the estate. This calculation was repeated ten times until the tenth calculation showed little or no difference from the ninth. ‘This then was the amount of estate duty which had to be deducted from the value of the charitable gift. This is the figure that the Minister contended for and, in my opinion, the mode of calculation is correct and the one required by the Act. The evidence also indicates that the same result may be obtained by the application of an elaborate algebraie formula.

The learned trial judge held that the assessment was wrong because it applied succession duty principles in the computation. With respect, I do not think that this criticism is well- founded. Where a will makes a gift to a beneficiary together with the succession duty on this gift, the beneficiary must pay succession duty not only on the gift but on the gift of duty. There is no analogy between this tax and estate tax, which is a single levy not on any succession but upon the value of the whole estate. The successive calculations of estate duty are required in this case because of the provisions of Section 7(1) (d), which allow as a deduction from aggregate net value of the estate only the actual value of the gift that ultimately finds its way to the charity.

The learned trial judge also found that only two calculations were required by Section 7(1) (d). First you calculate the tentative estate tax without reducing the exempt gift either by estate duty or succession duty. Then you calculate the estate tax once again after reducing the exempt gift by a combination of the estate tax first found and the admitted figure for succession duty. I think that there is no justification for stopping at the first stage, having regard to the provisions of Section 7(1) (d).

In this Court the submission was made for the first time that the charitable deduction was the full value of the charitable residue, namely, $2,261,847.64. The basis for this submission was that the clause in Section 7(1) (d) commencing with the word ‘‘minus’’ does not apply to this particular will because “no part of any estate, legacy, succession or inheritance duty or any combination of such duties is . . . payable out of the property comprised in such gift’’, or payable by the charity “as a condition of the making of such gift’’.

I have already set out a summary of the trusts contained in the will and it is argued that what the charity is entitled to receive is the residue of the residue after performance of the trusts, including the payment of taxes, and that it is only in this residue of residue that the charity has any property interest. Therefore, these duties are not payable out of ‘‘the property comprised in such gift’’ or ‘‘payable by the donee as a condition of the making of such a gift”.

I do not agree with these submissions. This will gives the charity the residue of the estate charged with the burden of the payment of the duty. It is not disputed that until the trusts under a will have been performed, a residuary beneficiary cannot put his hands on a specific piece of property and claim ownership with all the consequences of ownership. This is all that the cases of Sudeley v. Attorney-General, [1897] A.C. 11, and Barnardo v. Commissioners for Special Purposes of the Income Tax Acts, [1921] 2 A.C. 1, decide. In the first case foreign mortgages were comprised in a husband’s estate. This estate was not fully administered when the wife, a residuary beneficiary, died. Her executors unsuccessfully contended that because she would have been ultimately entitled to an interest in these foreign mortgages, that interest was not an English asset of her estate and subject to probate duty. In the Barnardo case, income, on which tax had been deducted at the source, was received by executors before the estate had been administered and the residue ascertained. The charity as the residuary beneficiary claimed a refund of the tax. It was held that until the residue had been ascertained, the charity had no property in this specific investment from which this income had been derived and that the claim for a refund failed.

These cases, in my opinion, afford no help to anyone in the application of Section 7(1) (d). The value of the charitable gift is established at $2,261,847.64. Admittedly, this is a residuary interest and the charity cannot claim ownership in specie of any particular piece of property comprised in the estate, before the estate has been administered. What was given to the charity was the residuary interest. The Act says that the Minister must value this interest and that the value of this interest for purposes of deduction from aggregate net value will be reduced by the amount of the duties. I think that the duties are payable out of the property comprised in the gift and are payable by the donee as a condition of the making of the gift.

I would allow the appeal with costs both here and in the Exchequer Court and direct that the assessment made by the Minister be. restored.

SPENCE, J.:—I have had the privilege of reading the reasons of my brother Judson and agree with his view that if Section 7(1)(d) of the Estate Tax Act, S.C. 1958, c. 59, as amended by S.C. 1960, c. 29, Section 4(1) and S.C. 1962-63, c. 5, Section 2(1), applies then the course adopted by the Tax Appeal Board is correct and, with respect, that adopted by Gibson, J. in the Exchequer Court is in error.

The Estate Tax Act provides:

“7. (1) For the purpose of computing the aggregate taxable value of the property passing on the death of a person, there may be deducted from the aggregate net value of that property computed in acocrdance with Division B such of the following amounts as are applicable:

(d) the value of any gift made by the deceased whether during his lifetime or by his will, where such gift can be established to have been absolute, to

(i) any organization in Canada that, at the time of the making of the gift and of the death of the deceased, was an organization constituted exclusively for charitable purposes, all or substantially all of the resources of which, if any, were devoted to charitable activities carried on or to be carried on by it or to the making of gifts to other such organizations in Canada, all or substantially all of the resources of which were so devoted, or to any donee described in subparagraph (11), and no part of the resources of which was payable to or otherwise available for the benefit of any proprietor, member or shareholder thereof, or

minus such part of any estate, legacy, succession or inheritance duties or any combination of such duties (including any tax payable under this Part) as is, either by direction of or arrangement made or entered into by the deceased whether by his will or by contract or otherwise, or by the statute or law imposing such duties or relating to the administration of the estate of the deceased, payable out of. the property comprised in such gift or payable by the donee as a condition of the making of such gift;’’

Therefore, the section permits, for the purpose of computing the aggregate taxable value of the property passing, deduction of the value of any gift made by the deceased to any organization constituted exclusively for charitable purposes. By the final paragraph of the subsection, such deduction is to be reduced by such part of any estate, legacy, succession or inheritance duties as is, whether by will or contract or otherwise, payable out of the property comprised in the gift, or payable by the donee as a condition of making such gift. It is agreed that the E. W. Bickle Foundation is a charitable organization under the provisions of Section 7(1) (d) of the statute and, therefore, the executors are entitled to the deduction permitted by Section 7(1) (d) thereof.

The problem is whether such deduction is to be reduced by the estate taxes because of the final words of the said Section 7(1). The gift in question is set out in para. III of the last will and testament of the testator as follows:

“III. I GIVE, DEVISE AND BEQUEATH the whole of iny property of every nature and kind and wheresoever situate including any property over which I may have any general power of appointment to my said Trustees upon the following trusts, namely:

a) To pay out of the capital of the residue of my estate my just debts, funeral and testamentary expenses and all estate, legacy, suecession and inheritance taxes or duties, whether imposed by or pursuant to the law of any domestic or foreign jurisdiction whatsoever, that may be payable by any beneficiary of this my Will or any Codicil hereto in connection with the property passing (or deemed to pass by any governing law) on my death or in connection with any insurance and/or annuities on my life or in connection with any insurance and/or annuities on my life or in connection with any gift or benefit given or provided by me either in my lifetime to or for any such beneficiary, or by survivorship,. or by this my Will or any Codicil thereto, or to or for the benefit of any beneficiary of any trust or settlement created by me during my lifetime, and whether such taxes and duties be payable in respect of estates or interests which fall into possession at my death or at any subsequent time; and I hereby authorize my Trustees to commute or prepay any such taxes or duties.

(e) To set aside a sum equal to fifty per centum (50% ) of my estate. For the purpose of determining the sum to be so set aside, my estate shall be deemed to comprise all property which by paragraph III of this my Will I give, devise and bequeath to my Trustees less any debts (but such debts shall not include any succession duties or estate taxes) owing by me at my death and the value to be placed on such property shall be the value thereof as fixed for the purposes of the Ontario Succession Duty Act or, if no such Act is in force at the time of my death, the value thereof as fixed for the purposes of The Canada Estate Tax Act. The sum so set aside shall be disposed of as follows:

(f) To pay or transfer the residue of my estate to E. W. Bickle Foundation.’’

In my view, the testator has directed first that there be paid out of his estate the debts and succession duties. Secondly, the testator has directed his executors to divide equally the whole estate less debts but not succession or other estate duties into two halves, and has dealt with the first half as set out in para.

(e) and directed the payment of the second half to the E. W. Bickle Foundation. The only gift, therefore, to the respondents is a gift after the payment of the debts and the payment of all succession, legacy, and estate duties. It is true that the duties are to be paid from ‘‘the second half”? of the residue as so decided but they are to be paid, by the provisions of para. IH(d) of the will before any amount is to be payable to either the beneficiary under para. 111(e) or the EK. W. Bickle Foundation under para. 111(f). Therefore, in my view, such ‘‘estate, legacy, succession or inheritance duties’’ were not directed by the will to be payable out of the property comprised in the gift to the foundation, nor were they payable by the foundation as a condition of the making of the gift to it.

I agree with the statement made by counsel for the respondent in‘his factum—‘‘ What the charity is entitled to receive is the residue of the residue after performance of all trusts including the payment of taxes; it is only in the residue of the residue that the charity has any property interest’’. In reaching this conclusion, T have not considered as particularly applicable either Sudeley v. Attorney-General, [1897] A.C. 11, or Barnardo v. Commissioners for Special Purposes of the Income Tax Acts, 11921] 2 A.C. 1. I have simply interpreted the words of Section 7(1) of the Estate Tax Act and of the testator’s last will in their ordinary grammatical sense. It might well have been the purpose of the legislator in the drafting of that section to have it apply to such a situation as exists under the will in question. If so, in my view, the legislator has not succeeded and it is not the duty of this Court to legislate. The executors are entitled to the benefit of the exemption and are not caught by the “minus” provision at the end of the subsection. I am, therefore, of the opinion that the order asked for by the respondent is the order which should be made by this Court.

I would dismiss the appellant’s appeal with costs but would set aside the assessment made by the Minister with a direction that the Minister should re-assess on the basis that the aggregate taxable value of the estate is $2,920,607.57, 1.e., at an amount obtained by deducting from the aggregate net value of the estate $9,242,455.21, only the aggregate net value of the gift to the charity of $2,261,847.64 and the basic survivor’s exemption allowed by Section 7(1) (a) of the Estate Tax Act.