ROBERTSON
C.J.O.:—Appeal
from
order
of
MeTague
J.
of
14th
December,
1938,
on
an
originating
motion
for
order
construing
and
interpreting
certain
parts
of
the
will
of
the
late
Sir
Albert
Edward
Kemp.
The
questions
arise
in
relation
to
clause
4
of
the
will.
The
testator,
by
clause
3
of
his
will,
had
provided
that
his
trustees,
during
the
lifetime
of
his
wife,
so
long
as
she
remained
his
widow,
and
so
long
as
she
desired
to
make
use
of
the
same
as
a
residence,
should
keep
up
his
residence
property,
known
as
Castle
Frank,
in
a
suitable
condition
for
that
purpose,
and
that
all
costs
and
charges
for
the
payment
of
taxes,
insurance,
repairs,
renewal
and
other
like
expenditures
for
the
proper
structural
upkeep
of
the
houses
and
buildings
should
be
paid
by
his
trustees,
and
he
directed
that
they
should
allow
his
wife,
during
her
lifetime
so
long
as
she
remained
his
widow,
to
occupy
Castle
Frank
as
her
home
and
residence
free
of
rent.
Clause
3
further
provided
that
while
his
wife
should
occupy
Castle
Frank
as
her
home
and
residence,
his
trustees
should
bear
the
expense
of
the
maintenance
and
management
thereof,
and
to
cover
such
cost,
the
testator
directed
his
trustees
to
pay
to
his
wife
$2,250.00
each
month
in
advance,
so
long
as
she
continued
to
reside
in
Castle
Frank
and
to
use
it
as
her
home.
He
further
provided
in
the
same
clause
that
if
his
wife
ceased
to
occupy
Castle
Frank
as
her
home,
his
trustees
should
raise
out
of
his
general
estate
the
sum
of
$75,000.00
to
enable
her,
if
she
so
desired,
to
purchase
or
build
or
otherwise
provide
a
suitable
home
for
herself.
He
declared
that
this
sum
of
$75,-
000.00
was
intended
to
be
an
absolute
gift
to
his
wife,
and
that
she
should
not
be
obliged,
unless
she
wished
to
do
so,
to
expend
that
sum
or
any
part
of
it
in
purchasing,
building
or
otherwise
acquiring
a
residence,
and
he
made
the
further
provision
that
upon
his
wife
ceasing
to
occupy
Castle
Frank
as
her
residence,
the
monthly
allowance
of
$2,250.00
for
the
upkeep
there
should
cease,
and
he
gave
her
in
lieu
thereof
a
monthly
allowance
of
$2,000.00
while
she
remained
his
widow.
Clause
4,
under
which
the
questions
now
to
be
considered
arise,
is
as
follows:
"4.
I
direct
that
the
above
provisions
in
favour
of
my
wife
shall
be
a
first
charge
upon
my
estate,
and
shall
be
provided
for
and
paid
by
my
trustees
in
priority
to
any
other
legacies
payable
under
my
said
will,
and
I
further
direct
that
any
succession
duties,
and
all
income
taxes
which
may
be
payable
in
respect
of
the
said
above
provisions
for
my
wife
shall
be
paid
out
of
my
estate
by
my
trustees.’’
Under
later
provisions
of
the
will
Lady
Kemp
is
in
receipt
of
other
substantial
income
from
the
estate.
She
had
also
in
the
lifetime
of
the
testator,
and
continues
to
have,
an
independent
income
of
her
own
from
other
sources.
For
the
purposes
of
The
Income
War
Tax
Act,
R.S.C.
1927,
ch.
97,
the
net
income
upon
which
the
tax
is
computed
is
ascertained
at
one
total
sum,
notwithstanding
that
it
may
be
derived
from
various
sourees.
The
income
tax
payable
is
arrived
at
by
the
application
to
the
whole
net
income,
of
rates
which
increase
on
a
graduated
scale
as
the
amount
of
the
net
income
increases.
One
effect,
therefore,
of
including
with
the
income
of
Lady
Kemp
from
other
sources,
further
taxable
income
under
the
provisions
of
clause
3
of
the
will,
is
to
increase
the
rate
at
which
the
higher
portion
of
her
income
is
taxed.
It
is
contended
on
her
behalf
that
the
intention
of
clause
4
of
the
will
is
that
that
portion
of
her
taxable
income
which
is
derived
under
the
provisions
of
clause
3
of
the
will
should
bear
the
highest
rate
of
taxation
applicable
to
any
part
of
her
income,
and
she
claims
that
upon
any
other
basis
she
is
not
entirely
relieved
from
the
payment
of
income
tax
in
respect
of
the
provisions
of
clause
3.
MeTague
J.
has
given
effect
to
the
contention
made
on
behalf
of
Lady
Kemp
and
has
directed
that
the
trustees
must
repay
to
Lady
Kemp
all
income
tax
levied
against
her
in
excess
of
the
income
tax
which
would
have
been
levied
against
her
if
she
were
in
eceipt-of
no
income
under
clause
3.
Substantially
the
same
question
that
arises
here
has
frequently
been
considered
in
England.
The
principle
that
appears
to
be
well
settled
there
is
that
in
such
circumstances
the
residue
of
the
estate
is
required
to
bear
only
such
proportion
of
the
total
tax
payable
by
the
beneficiary
in
respect
of
Income
as
the
portion
of
income
in
respect
of
which
the
beneficiary
is
entitled
to
be
relieved
bears
to
the
total
income
subject
to
the
tax.
Reference
may
be
made
to
Re
Bowring
;
Wimble
v.
Bowring,
34
T.L.R.
575,
[1918]
W.N.
265;
In
re
Doxat,
[1920]
W.N.
262;
Re
Pettit;
Le
Fevre
v.
Pettit,
[1922]
2
Ch.
765;
Re
Hulton;
Hulton
v.
Midland
Bank,
[1931]
1
Ch.
77.
The
same
principle
has
been
applied
in
an
American
case,
Read
v.
Sayles
(1927),
51
A.L.R.
451.
The
principle
of
these
decisions
is
recognized
by
MeTague
J.,
and
he
says
he
would
have
no
trouble
in
applying
it
if
the
bequest
were
in
the
form
of
a
simple
annuity.
He
considers,
however,
that
the
benefits
accruing
to
Lady
Kemp
under
clause
3
are
subject
to
an
obligation
on
her
part
to
reside
in
and
keep
up
Castle
Frank,
and
that
the
provisions
in
her
favour
are
not
direct
benefits
to
her
personally,
but
benefits
coupled
with
the
obligation
of
keeping
up
Castle
Frank.
He
held,
therefore,
that
it
was
the
testator’s
intention
that
there
should
be
no
additional
income
tax
burden
placed
upon
her
whatever,
and
made
an
order
in
the
terms
already
stated.
With
respect,
I
do
not
think
the
considerations
which
weighed
with
the
learned
Judge
in
holding
that
the
principle
of
the
English
cases
referred
to,
does
not
apply,
are
relevant.
The
fact
that
Lady
Kemp
may
have
obligations
imposed,
as
well
as
benefits
conferred,
upon
her
by
clause
3
of
the
will
may
be
a
very
good
argument
to
address
to
the
income
tax
authorities
in
support
of
a
claim
for
deduction
from
her
taxable
income,
but
I
am
unable
to
see
that
the
interpretation
of
clause
4
is
affected
thereby.
It
is
to
be
observed
that
clause
4
applies
equally
whether
Lady
Kemp
elects
to
reside
at
Castle
Frank
or
elects
to
accept
in
lieu
of
residing
there
$75,000.00
as
an
absolute
gift,
and
a
monthly
allowance
of
$2,000.00.
In
either
event
the
trustees
are
to
pay
out
of
the
estate
whatever
income
taxes
may
be
payable
in
respect
of
the
provisions
made
by
clause
3
in
favour
of
Lady
Kemp.
What
has
to
be
determined
is
the
method
of
arriving
at
the
income
taxes
payable
in
respect
of
these
provisions,
when
the
tax
is
levied
in
one
sum
in
respect
of
all
her
taxable
income.
Re
Bowring;
Wimble
v.
Bowring,
34
T.L.R.
575,
[1918]
W.N.
269,
18
the
earliest
of
the
cases
in
England
to
which
reference
has
been
made.
In
that
case
the
testator
gave
to
his
wife
during
her
life
an
annuity
of
£4,000
free
of
debt
and
of
income
tax,
supertax
and
any
other
tax
or
impost
of
that
nature,
to
the
intent
that
she
should
receive
the
sum
of
£4,000
net
per
annum.
Generally,
in
the
cases
in
England
somewhat
similar
language
directing
payment
free
of
income
tax
or
without
deduction
for
income
tax
is
to
be
found.
If
there
is
any
real
difference
in
meaning
between
such
a
direction
and
the
words
found
in
clause
4,
one
is
inclined
to
think
that
the
former
might
more
reasonably
be
deemed
to
express
an
intention
to
relieve
the
beneficiary
of
all
income
tax
burden
consequent
upon
the
gift
of
additional
income.
The
problem,
both
in
England
and
here,
arises
from
the
fact
that
taxes
are
assessed
and
levied
upon
the
total
net
income
of
the
taxpayer.
As
a
separate
levy
is
not
made
in
respect
of
the
several
component
parts
of
the
taxable
income,
no
distinguishable
part
of
Lady
Kemp
‘s
income
tax
is
computed
upon
her
income
under
clause
3
of
the
will.
That
part
of
her
income
tax
which
is
computed
at
the
highest
percentage
rate
is
no
more
payable
exclusively
in
respect
of
her
income
derived
under
clause
3
of
the
will
than
it
is
payable
exclusively
in
respect
of
the
income
from
other
sources.
Having
regard
to
the
way
in
which
income
tax
is
assessed
and
levied,
it
would
seem
that
the
principle
adopted
by
the
cases
in
England
to
which
reference
has
been
made,
that
is,
to
take
a
proportionate
part
of
every
dollar
of
the
tax
as
payable
in
respect
of
each
particular
part
of
the
income,
is
the
only
way
in
which
the
language
of
clause
4
can
be
applied.
If
the
testator
had
intended
to
go
further
and
to
relieve
Lady
Kemp,
not
only
from
income
tax
in
respect
of
the
provisions
of
clause
3,
but
also
from
any
increase
in
her
income
tax
generally
resulting
from
these
provisions,
it
would
have
been
a
simple
matter
to
Say
so.
The
second
question
arises
under
clause
4
of
the
will.
The
income
tax
paid
by
the
trustees
under
clause
4
of
the
will,
in
relief
of
Lady
Kemp,
is,
for
the
purposes
of
The
Income
War
Tax
Act,
additional
income
received
by
her,
in
respect
of
which
she
is
also
taxable.
Mr.
Justice
MeTague
has
held
that
this
further
tax
comes
within
clause
4
of
the
will
and
is
to
be
borne
by
the
trustees.
I
am
unable
to
see
anything
in
the
language
of
clause
4
that
applies
to
such
a
tax.
Clause
4
is
a
separate
provision
for
the
benefit
of
Lady
Kemp,
in
addition
to
clause
3
and
not
as
part
of
it.
I
think
it
is
impossible
to
read
the
words,
"‘all
income
taxes
which
may
be
payable
in
respect
of
the
said
above
provisions
for
my
wife
‘
as
including
an
additional
benefit
not
within
the
provisions
of
clause
3.
One
is
not
at
liberty
to
speculate
whether
the
testator
had
fully
in
mind,
or,
on
the
other
hand,
was
under
misapprehension
as
to
the
operation
of
The
Income
War
Tax
Act.
All
that
the
Court
can
do
is
to
take
the
language
of
the
testator
and
apply
it.
I
am,
therefore,
of
the
opinion
that
the
appeal
must
be
allowed
and
the
order
varied
as
herein
indicated,
in
respect
of
the
two
matters
argued
before
us.
Costs
of
all
parties
of
the
appeal
may
well
be
paid
out
of
the
estate,
the
costs
of
the
trustees
as
between
solicitor
and
client.
Middleton,
HENDERSON
and
GILLANDERS
J
J.
A.
agreed
with
ROBERTSON
C.J.O.
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