WALSH,
C.J.:—This
is
an
appeal
taken
under
s.
11
of
The
Death
Duties
Act,
1934,
by
the
administrator
of
the
estate
of
Gerald
Cockburn
Harvey,
late
of
St.
John’s,
deceased,
who
is
dissatisfied
with
the
value
of
the
estate
certified
by
the
assessor
for
payment
of
the
duties
imposed
by
the
Act.
Before
application
to
this
Court
for
Letters
of
Administration
was
made,
there
was
delivered
to
the
assessor
the
account
of
the
particulars
of
the
estate
required
by
s.
6
of
the
Act,
and
on
the
31st
of
October,
1947,
a
provisional
certificate
based
on
the
value
declared
by
the
applicant
was
issued.
On
the
20th
January,
1948,
Letters
of
Administration
were
granted
and
on
July
28,
1948,
the
assessor
issued
the
final
certificate
setting
the
value
considerably
above
that
declared
by
the
applicant
and
contained
in
the
provisional
certificate.
The
valuation
placed
by
the
applicant
on
many
of
the
items
of
the
estate
was
accepted
by
the
assessor
when
issuing
the
final
certificate.
A
substantial
increase
was
made,
however,
in
the
value
placed
by
the
applicant
on
common
and
preferred
shares
held
by
or
in
trust
for
the
deceased
at
the
time
of
his
death
in
A.
Harvey
&
Company,
Limited,
Harvey
Estates
Limited
and
Newfoundland
Furniture
and
Moulding
Company,
Limited,
and
the
value
of
these
shares
is
the
question
in
issue
between
the
administrator
and
the
assessor
in
this
appeal.
In
the
case
of
A.
Harvey
&
Company,
Limited
and
Harvey
Estates
Limited
the
Articles
of
Association
have
placed
restrictions
upon
the
transfer
of
shares.
While
there
is
no
prescription
as
to
persons
to
whom
shares
may
be
bequeathed,
there
is
provision
that
executors
and
administrators
shall
be
the
only
persons
recognized
by
the
company
as
having
any
title
to
shares
registered
in
the
name
of
any
member
and
that
a
person
becoming
entitled
to
shares
in
consequence
of
the
death
of
any
member
may
with
the
consent
of
the
directors,
which
they
shall
not
be
under
any
obligation
to
give,
be
registered
as
a
member
in
respect
of
such
shares,
or
may,
subject
to
the
regulations
as
to
transfers
contained
in
the
Articles,
transfer
such
shares.
The
directors
may
refuse
to
register
any
transfer
of
a
share
to
a
non-member
when
they
are
not
of
opinion
that
it
is
desirable
to
admit
such
person
to
membership.
Before
a
member
may
transfer
a
share
to
a
non-member,
he
is
required
to
give
a
transfer
notice
to
the
company
which
is
thereby
constituted
agent
of
the
proposing
transferor
to
sell
to
a
member
at
the
par
value,
which
in
the
case
of
each
of
the
shares
in
question
is
$100.
If
a
member
does
not
within
three
months
purchase
the
share,
the
member
holding
the
share
may
within
three
months
thereafter
sell
to
any
person
at
any
price
subject
to
the
clause
authorizing
the
directors
to
refuse
to
register
a
non-member.
The
text
of
the
relevant
Articles
is
set
forth
in
the
judgment
of
my
brother
Dunfield.
The
Articles
of
Newfoundland
Furniture
and
Moulding
Company,
Limited
place
no
similar
restrictions
upon
transfers,
but
registration
on
transmission
is
subject
to
the
assent
of
the
directors.
For
the
purpose
of
discussion
of
the
legal
questions
arising
in
this
case,
the
shares
held
by
the
deceased
in
A.
Harvey
&
Company
Limited,
which
I
shall
hereinafter
refer
to
as
"the
company,”
may
be
considered,
since
the
same
principles
apply
to
those
held
in
Harvey
Estates
Limited.
The
administrator,
in
appealing
to
this
Court
against
the
value
placed
by
the
assessor
on
the
shares,
has
done
so
on
the
basis
that
the
maximum
value
of
the
shares
for
death
duty
purposes
is
not
limited
to
their
par
value.
As
no
procedure
is
prescribed
by
the
Act
for
the
hearing
of
the
appeal,
each
party
before
the
hearing
and
on
request
of
the
Court
filed
a
memorandum
setting
forth
the
relevant
facts
together
with
his
contentions
and
the
grounds
therefor.
Paragraph
15
of
the
memorandum
of
the
administrator
is
as
follows:
"‘It
is
not
suggested,
in
cases
such
as
these,
that
par
or
any
other
price
prescribed
by
the
Articles
of
a
Company
is
necessarily
the
measure
of
the
value
for
death
duty
purposes,
but
it
is
well
established
that
restrictions
upon
transfer
are
a
material
and
depressing
factor
in
determining
the
value
of
unquoted
shares.’’
The
argument
of
counsel
for
the
administrator
at
the
conclusion
of
the
evidence
upon
the
hearing
proceeded
along
the
line,
with
respect
to
this
question,
that
the
proper
principle
to
be
applied
in
determining
the
value
of
these
shares
is
that
set
forth
in
the
decision
of
this
Court
in
In
re
Hugh
Baird,
deceased,
11
N.L.R.
239,
which
adopted
the
principle
laid
down
in
The
Attorney-General
v.
Jameson,
[1905]
2
IR.
218,
a
principle
confirmed
by
the
majority
decision
of
the
House
of
Lords
in
Commissioners
of
Internal
Revenue
v.
Crossman,
et
al.,
[1937]
A.C.
27.
This
was
also
the
position
taken
by
counsel
for
the
assessor
in
his
argument
and
it
was
made
quite
clear
that
there
was
no
dispute
about
this
question
and
that
the
value
of
these
restricted
shares
should
be
fixed
at
the
price
which
they
would
fetch
in
the
open
market
on
the
terms
that
the
purchaser
would
be
entitled
to
be
put
upon
the
register
as
holder
of
the
shares
and
hold
them
subject
to
the
provisions
of
the
Articles.
The
Court
was
asked
to
fix
the
value
of
the
shares
in
accordance
with
this
principle,
each
side,
of
course,
putting
forth
its
arguments
as
to
the
factors
which
should
be
taken
into
consideration
in
determining
the
price
which
the
shares
would
be
likely
to
fetch
at
such
a
supposed
sale.
My
learned
brother
judges
have
decided
that
the
par
value
is
the
maximum
value
of
certain
of
the
shares
in
view
of
the
restrictions
in
the
Articles
and
the
absence
from
the
Death
Duties
Act
of
a
provision
similar
to
s.
7(5)
of
the
Finance
Act,
1894,
of
the
United
Kingdom,
the
text
of
which
I
quote
later.
I
hold
a
different
opinion
and,
although
in
the
circumstances
which
I
have
mentioned
I
have
not
had
the
benefit
of
hearing
full
argument
by
counsel
upon
the
question,
I
shall
set
forth
the
grounds
on
which
my
opinion
is
based.
The
difficulties
of
the
position
will
be
appreciated
when
it
is
realized
that
the
questions
which
we
are
considering
have
not
been
raised
by
counsel.
The
relevant
provisions
of
the
Death
Duties
Act
are
quoted
in
the
judgment
of
my
brother
Dunfield
and
it
is
unnecessary
for
me
to
repeat
them
here
except
those
clauses
which
are
being
particularly
examined.
Section
2
imposes
taxes
or
duties,
s.
3
sets
forth
the
property
charged
and
the
Schedule
sets
forth
the
rates
with
reference
to
the
value
of
estates.
The
first
question
appears
to
be
the
meaning
of
the
word
"
"
estate
‘
‘
as
used
in
this
Act.
Section
1
of
the
Finance
Act,
1894
(U.K.)
imposes
a
duty
called
"‘Estate
duty”
upon
the
principal
value
of
all
property,
real
or
personal,
settled
or
not
settled,
which
passes
on
the
death
of
a
person.
Section
3
of
the
Death
Duties
Act
of
Newfoundland
is
in
part
as
follows
:
"For
the
purposes
of
this
Act
the
Estate
of
a
deceased
person
shall
include
:
(a)
All
property
in
this
Colony
of
whatsoever
description
belonging
to
that
person,
whether
moveable
or
immoveable,
and
any
interest
in
such
property
whether
expectant
or
contingent
held
by
him
at
his
death
;
‘
‘
In
clause
(a)
s.
3
of
the
Newfoundland
Act
nothing
is
said
about
the
passing
of
property
and
the
property
subject
to
the
duty
under
that
clause
is
the
property
belonging
to
the
deceased
person.
If
the
words
‘‘which
passes
on
the
death
of
such
a
person”
were
used
in
the
Death
Duties
Act
there
might
be
some
basis
on
which
to
argue
that
the
relevant
time
for
ascertaining
value
is
after
death
when
the
property
has
passed
to
the
legal
representatives.
The
estate
is
that
enjoyed
by
the
deceased
person
immediately
before
his
death,
not
something
which
arises
after
death,
and
expressions
having
a
precise
legal
meaning
used
in
a
statute
must
be
construed
in
accordance
with
that
meaning.
In
my
judgment
the
Death
Duties
Act
taxes
property
in
the
hands
of
the
deceased
person
at
his
death
and
the
question
is
what
value
did
that
property
possess
immediately
before
the
death.
Section
6
of
the
Act
requires
the
applicant
for
Letters
of
Probate
or
Administration
to
submit
an
account
to
the
Assessor
of
the
particulars
of
the
estate
for
or
in
respect
of
which
Letters
of
Probate
or
of
Administration
are
applied
for
and
s.
7
authorizes
the
assessor
to
cause
to
be
made
enquiries
in
respect
of
the
account
or
of
the
estate
in
respect
of
which
Letters
of
Probate
or
Administration
are
applied
for.
The
purpose
of
the
clause
at
the
end
of
s.
3
seems
to
be
to
supplement
the
clause
which
immediately
precedes
it
and
to
define
the
expression
‘‘estate
in
respect
of
which
Letters
of
Probate
or
of
Administration
are
applied
for
‘
‘
used
elsewhere
in
the
Act.
It
is
said
that,
by
reason
of
the
restriction
on
transfer
and
the
power
in
the
directors
to
refuse
registration
of
a
non-member,
the
shares
on
the
death
of
the
intestate
lost
part
of
the
value
which
they
had
when
in
his
hands
and
that
the
administrator
can
realize
on
them
not
more
than
their
par
value.
I
have
already
said
that
in
my
judgment
the
relevant
time
for
determining
value
is
immediately
prior
to
death.
It
is
the
property
belonging
to
the
deceased
which
is
specified
as
taxable
under
our
Act
and
not
the
property
as
it
is
in
the
hands
of
the
administrator.
In
any
event
it
was
the
same
shares
as
the
intestate
held,
possessing
the
same
incidents,
which
came
into
the
hands
of
the
administrator
with
their
nature
and
their
real
value
not
changed
in
the
least.
This
appears
to
be
the
view
taken
by
Lord
Ashbourne
in
The
Attorney-General
v.
Jameson,
[1905]
2
I.R.
218.
The
question
in
that
case
was
the
principal
value
under
The
Finance
Act,
1894,
of
shares
held
under
Articles
of
Association
which
had
restrictive
clauses
similar
to
those
in
the
company.
At
pp.
224-5
he
says:
"
"
The
course
taken
by
the
Crown
compels
us
to
consider
with
care
in
reference
to
these
750
shares
what
passed
on
the
death
of
Henry
Jameson.
The
only
possible
answer
that
can,
in
my
opinion,
be
given
is—the
entire
property
in
the
shares,
so
far
as
he
was
competent
to
dispose
of
them
at
the
time
of
his
death
.
.
.
Can
it
for
a
moment
be
suggested
that
the
shares
were
one
thing
in
the
hands
of
Henry
Jameson,
and
something
else
in
the
hands
of
his
executors?
Surely
there
must
be
the
same
subject-matter
before
and
after
death.’’
At
p.
228
of
the
report
Fitzgibbon,
L.J.,
said
in
the
same
case
:
"‘In
my
opinion
each
of
these
shares,
with
all
rights
and
liabilities,
and
all
advantages
and
disadvantages,
incident
to
its
ownership,
passed
on
Henry
Jameson’s
death
to
his
executors
as
one
indivisible
piece
of
property.
In
conveyancing
phraseology,
the
executors
took
each
share
"‘to
hold
in
as
full
and
ample
a
manner
as
the
same
was
held
by
Henry
Jameson
at
his
death’.
The
Finance
Act,
Section
2(1)
(a),
includes
in
property
passing,
‘property
of
which
the
deceased
was
at
the
time
of
his
death
competent
to
dispose.’
In
my
opinion
Henry
Jameson
was
competent
to
dispose
of
his
shares
and
of
all
his
interest
therein,
within
the
meaning
of
that
sub-section.
In
my
opinion,
on
his
death,
there
was
no
cesser
of
any
interest
in
them,
and
no
benefit
in
respect
of
them
accrued
or
arose
to
any
person,
by
any
title
or
from
any
source
other
than
the
passing
of
the
property
to
his
executors.
’
’
At
p.
230
he
says:
“The
price
was
what
the
shares
were
worth
to
Henry
Jameson
at
his
death—in
other
words,
it
was
what
a
man
of
means
would
be
willing
to
pay
for
the
transmigration
into
himself
of
the
property
which
passed
from
II.
Jameson
when
he
died.’’
At
p.
234
of
the
report
Walker,
L.J.,
says
in
the
same
case:
"‘It
is
clear
that
on
the
death
of
Henry
Jameson
all
the
interest
of
every
kind
which
he
had
in
the
750
shares
became
subject
to
the
liability
to
estate
duty.’’
At
this
point
he
notes
that
the
750
shares
had
been
registered
in
the
names
of
the
executors
and
states
that
it
seems
to
him
that
they
are
precluded
from
saying
that
all
the
interest
is
not
vested
in
them.
This
would
appear
to
have
been
stated
as
an
additional
ground
in
the
particular
case
for
the
general
statement
that
all
the
testator’s
interest
was
subject
to
estate
duty.
The
decisions
in
the
English
and
Irish
Courts
have
turned
upon
the
construction
to
be
placed
on
s.
7(5)
of
the
Finance
Act,
1894,
which
prescribes
the
method
by
which
principal
value
is
to
be
ascertained.
When
this
section
is
applied,
it
is,
as
stated
by
Lord
Blanesburgh
in
the
Crossman
case
which
I
have
already
cited,
quite
immaterial
to
whom
the
property
has
actually
passed,
whether
to
purchasers,
legatees,
or
in
the
case
of
pre-empted
shares,
other
members
of
the
company
issuing
them.
As
our
Death
Duties
Act
has
prescribed
no
method
for
ascertaining
the
value
of
an
estate,
speculation
has
arisen
in
this
Court
as
to
what
the
decision
in
England
and
Ireland
would,
in
the
absence
of
a
clause
defining
principal
value,
be
in
cases
in
which
legatees
or
next-of-kin
were
not
entitled
to
registration
or
registration
was
refused.
In
view
of
the
division
of
opinion
in
the
Courts
of
England
and
Ireland
on
the
application
of
s.
7(5)
of
the
United
Kingdom
Act,
a
division
of
opinion
in
this
Court
on
this
question
is
understandable.
Lord
Blanesburgh
in
the
Crossman
case
refers,
with
approval,
to
the
words
of
Fitzgibbon,
L.J.,
in
the
Jameson
case
where
he
states
that
each
of
the
750
shares
in
question
with
all
rights
and
liabilities
and
all
advantages
and
disadvantages
included
in
ownership
passed
to
the
executors
as
one
indivisible
piece
of
property
and
to
these
later
words
of
the
Lord
Justice
:
"‘The
basis
of
my
construction
of
the
Act
is
the
unity
and
indivisibility
of
Henry
Jameson’s
property
in
the
shares.
I
cannot
accept
any
procedure
or
accept
any
solution
of
the
question
in
dispute
which
splits
up
that
interest
for
any
purpose.”
Lord
Blanesburgh
says
‘‘I
venture
to
insist
upon
the
soundness
of
the
above
views
of
the
Lord
Justice
as
applied
to
the
shares
in
the
present
case.’’
It
is
important
to
note
that
the
shares
in
the
case
of
Sir
William
Paulin
consisted
of
1,000
shares
to
his
daughters
who
became
registered
holders
and
six
hundred
shares
which
became
registered
in
the
names
of
shareholders
who
had
acquired
them
under
the
pre-emptive
clause
for
an
amount
below
their
principal
value.
In
giving
his
reasons
he
rejects
the
contention
that
a
share
passed
in
two
parts,
namely
(a)
the
share
subject
to
the
right
of
pre-emption
as
property
and
(b)
the
right
of
pre-emption
itself
as
property
in
which
the
deceased
had
an
interest
ceasing
on
his
death
in
respect
of
which
a
benefit
accrued
or
arose
by
the
cesser
of
such
interest.
Having
decided
that
the
entire
property
of
deceased
in
the
shares
did
pass
on
his
death,
he
states
that
the
ascertainment
of
the
"‘principal
value’’
of
the
shares
becomes
simple.
Again,
at
p.
42,
Viscount
Hailsham
says:
"
"
But
the
purpose
of
s.
7,
subsec.
5
is
not
to
define
the
property
in
respect
of
which
estate
duty
is
to
be
levied
but
merely
to
afford
a
measure
of
ascertaining
its
value.
‘
‘
This
makes
it
clear
that
the
estate
duty
is
imposed
on
the
shares
as
held
by
and
passing
from
the
deceased
regardless
of
their
distribution.
This
should
be
sufficient
to
dispose
of
any
argument
that
when
shares
pass
to
non-members
on
the
death
of
a
shareholder
the
interest
of
other
members
under
the
Articles
become
fixed
and
all
that
is
taxable
is
the
amount
of
money
for
which
they
must
be
sold.
I
feel
that
I
should
consider
the
question
whether
there
is
a
contractual
obligation
to
sell
the
shares
at
par
and
whether
this
is
similar
to
deduction
of
a
debt
due
by
the
estate.
Section
7
of
the
Act
provides
that
the
assessor
shall
certify
the
value
of
the
estate
after
making
allowance
for
debts
incurred
during
the
lifetime
of
the
deceased,
and
due
and
payable
at
the
time
of
his
death
and
upon
such
certified
value
the
duties
specified
in
the
Schedule
shall
be
paid.
This
specific
provision
in
the
Act
cannot
form
any
basis
for
an
analogy
in
the
case
of
these
shares.
In
the
absence
of
the
statutory
provision
for
making
allowance
for
debts
payable
at
the
time
of
death,
the
duty
would
attach
to
the
gross
estate
and
it
is
to
be
noted
that
the
debts
which
may
be
deducted
are
such
only
as
are
due
and
payable
at
the
time
of
death
and
do
not
include
such
debts
as
may
become
due
and
payable
thereafter.
This
provision
itself
indicates
that
the
relevant
time
for
ascertaining
value
is
immediately
prior
to
death.
In
the
case
of
these
shares
there
is
no
contractual
obligation
to
sell
at
all
upon
death.
Sale
becomes
necessary
as
a
practical
matter
because
of
refusal
to
register
the
next-of-kin
who
are
not
shareholders.
It
should
be
noted
also
that
the
father
of
the
deceased
made
provision
for
legatees,
who
were
not
shareholders,
by
creation
of
a
trust
with
two
shareholders
as
the
trustees.
If
the
Articles
of
Association
provided
for
sale
in
the
event
of
the
death
of
a
shareholder
intestate,
the
contractual
obligation
would
be
one
forming
part
of
the
interest
or
property
of
the
deceased
in
the
share
itself
and
not
one
separate
from
or
collateral
to
that
share.
The
nature
of
shares,
with
or
without
restrictive
clauses
in
the
Articles
of
Association,
has
been
defined
in
many
cases.
There
is
a
clear
distinction
between
the
contractual
obligations
attached
to
restricted
shares
and
debts
due
and
payable
by
a
deceased
at
the
time
of
his
death
and
the
provisions
of
s.
7
cannot
be
extended
to
apply
to
this
case.
There
is
no
general
provisions
that
the
duties
are
payable
on
the
net
value
of
an
estate.
In
the
case
of
a
contract
by
a
property
owner
to
sell
to
another
for
a
fixed
price
after
the
owner’s
death,
it
seems
to
me
that
clause
3(a)
would
apply.
If
clause
3(a)
would
not
apply,
clause
3(d)
would
as
the
property
would
be
passing
under
a
disposition
intended
to
operate
after
death.
In
either
case
duty
would
be
payable
on
the
full
value
of
the
property
and
not
the
contract
price.
While
the
duty
under
the
Death
Duties
Act
is
imposed
upon
the
estate,
it
should
not
be
overlooked
that
‘‘estate’’
is
defined
to
include
the
property
blonging
to
the
deceased.
In
1914
the
first
Death
Duties
Act
was
passed
and
the
estate
of
deceased
persons
became
liable
to
payment
of
the
tax.
There
was,
in
that
Act,
no
definition
of
‘‘estate.’’
This
defect
was
remedied
in
1915,
and
the
definition
was
made
broad
enough
to
include
not
only
property
belonging
to
a
deceased
person
at
the
time
of
his
death
but
also
property
of
which
he
had
within
a
certain
period
disposed
and
property
for
the
disposal
of
which
he
had
arranged,
and
limited
interests
in
property
though
determinable
on
death.
In
s.
3(a)
the
word
‘‘property’’
is
used
in
its
wide
sense
and
covers
the
property
of
the
deceased
in
these
shares.
The
use
of
the
words
‘‘is
to
be
determined
on
the
death’’
in
s.
3(g)
would
seem
to
make
it
clear
that
the
property
is
to
be
viewed
as
it
exists
before
the
death
and
not
thereafter.
The
Newfoundland
Act
is
a
simple
one.
It
is
an
Estate
Duty
Act,
not
a
Succession
Duty
Act
or
an
Act
providing
for
legacy
or
inheritance
taxes.
It
charges
the
duty
upon
the
property
of
all
persons
who
die
after
a
certain
date
and
provides
for
payment
by
the
applicant
for
Letters
of
Probate
or
Administration,
as,
obviously,
the
dead
man
himself
cannot
make
the
payment.
It
does
not
take
into
consideration
at
all
the
ultimate
incidence
of
the
taxation
and
does
not
fix
liability
upon
any
beneficiary.
The
purpose
of
the
Act
is
plain
and
that
is
to
tax
the
property
of
deceased
persons;
the
language
of
the
Act
is
clear
and
unambiguous
in
imposing
the
tax.
The
Acts
of
other
countries
provide
in
certain
cases
for
distribution
of
the
burden
of
the
tax
and
the
Newfoundland
Act
does
not
do
so,
but
this
does
not
furnish
any
ground
on
which
this
Court
can
construe
the
Act
so
as
to
relieve
persons
who
may
be
prejudiced
by
the
application
of
its
clear
provisions.
The
nature
of
an
estate
duty
is
discussed
in
Winans
v.
Attorney-General,
79
L.J.K.B.
156.
At
p.
158
the
Lord
Chancellor
says:
‘
Legacy
and
succession
duties
fall
upon
the
benefits
received
by
survivors
on
their
accession
upon
the
death
of
a
deceased.
Estate
duty
falls
upon
the
property
passing
upon
the
death
of
the
deceased,
apart
from
its
destination.’’
In
this
country
death
duties
fall
upon
the
property
belonging
to
the
deceased,
in
so
far
as
that
property
is
covered
by
s.
3(a)
of
our
Act,
without
reference
to
the
questions
of
passing
or
destination.
The
position
under
s.
3(a)
of
the
Death
Duties
Act,
as
I
see
it,
is
that
the
deceased
through
his
executor
or
administrator
pays
to
the
state
the
duties
prescribed
upon
the
value
of
the
property
which
he
held
at
the
instant
of
his
death
after
deduction
of
the
debts
then
due
and
payable.
No
direction
or
lack
of
direction
by
the
deceased
can
affect
the
amount
of
the
tax
which
is
imposed.
The
effect
of
clause
(a)
cannot
be
modified
by
consideration
of
the
distribution
of
the
tax
any
more
than
can
the
effect
of
clause
(c)
or
clause
(g).
I
am
strengthened
in
my
view
that
the
property
forming
the
estate
as
it
is
held
by
the
deceased
is
the
subject-matter
of
the
duty,
rather
than
the
property
forming
the
estate
as
it
is
held
by
the
administrator,
by
consideration
of
the
practical
position
if
the
ultimate
disposition
were
considered.
It
seems
to
me
that
the
shares
forming
part
of
the
property
of
a
deceased
person
must
have
the
same
value
for
taxation
purposes
regardless
of
whether
they
come
by
will
into
the
hands
of
a
person
who
is
already
a
member
and
entitled
to
be
registered
or
upon
intestacy
to
one
of
the
next-of-kin
who
may
not
be
accepted
as
a
member.
If
the
position
were
otherwise
the
value
for
duty
purposes
could
not
be
ascertained
until
efforts
to
register
were
made,
and
shares
having
the
same
nature
and
intrinsic
value
would
pay
different
amounts
of
duty
as
they
passed
to
different
persons.
This
would
seem
to
be
contrary
to
the
purpose
and
intention
of
a
property
taxing
Act.
The
intestate
died
on
April
2,
1947,
leaving
as
his
next-of-kin
a
brother,
a
sister
and
three
children
of
a
deceased
brother.
The
surviving
brother
is
a
director
and
shareholder
of
the
company
and
no
question
as
to
his
right
to
registration
in
respect
of
one-
third
of
the
shares
has
arisen.
The
sister
and
the
nephews
of
the
intestate
are
not
members
of
the
company
and
reside
outside
of
Newfoundland.
It
may
be
observed
that
they,
with
the
intestate
and
his
surviving
brother,
were
beneficiaries
under
a
trust
created
by
the
father
of
the
intestate
and
that
their
interest
therein
has
been
increased
by
the
death
of
the
intestate.
The
subjectmatter
of
that
trust
included
shares
in
the
company.
On
February
9,
1948—almost
a
year
after
the
death
of
the
intestate—the
solicitors
for
the
administrator
wrote
to
the
company
to
enquire
whether
the
company
would
be
prepared
to
register
as
shareholders
those
of
the
next-of-kin
who
are
not
members
and
‘‘
who
will
be
entitled
to
a
proportion
of
the
shares
of
the
intestate
or
the
cash
equivalent.’’
On
February
13,
1948,
the
company
replied
that
the
company
was
not
prepared
to
register
as
shareholders
persons
who
were
not
already
shareholders
in
the
company
and
who
then
resided
outside
of
Newfoundland,
but
that
if
the
shares
of
these
next-of-kin
should
be
purchased
by
the
brother
of
the
intestate
the
directors
would
be
willing
to
have
him
duly
registered
as
holder
of
those
shares.
On
September
20,
1949,
the
administrator
sold
to
the
surviving
brother
of
the
intestate,
at
their
par
value,
not
only
the
proportion
of
the
shares
to
which
this
correspondence
related
but
also
the
shares
which
would
pass
to
him
if
distribution
of
the
shares
were
being
made.
The
administrator
states
that
this
became
necessary
in
the
course
of
his
administration
to
obtain
funds
to
discharge
liabilities
of
the
estate,
including
payment
in
respect
of
death
duties,
in
order
to
save
interest
payments.
If
there
was
sufficient
cash
in
the
estate
to
discharge
all
liabilities,
it
is
presumed
that,
as
these
shares
were
capable
of
division
in
specie,
one-third
of
them
would
be
registered
in
the
name
of
deceased’s
surviving
brother,
regardless
of
the
disposition
of
the
remaining
two-thirds.
I
must
say
that
I
see
no
distinction
between
direct
registration
in
his
name
and
registration
following
sale
to
him
of
one-third
of
these
shares
in
so
far
as
the
value
for
taxation
purposes
is
concerned.
I
do
not
consider
the
transaction
relevant
as
I
hold
the
view
that
all
the
common
shares
have
the
same
value
and
that
all
the
preferred
shares
have
the
same
value,
and
that
these
respective
value
are
not
in
any
way
affected
by
the
death
of
the
holder
or
by
any
dispositions
subsequent
to
his
death.
I
call
attention
to
it,
however,
as
it
seems
to
introduce
a
new
consideration
into
the
valuation
of
these
shares,
namely
whether
the
administrator
finds
it
necessary
to
sell
the
shares
to
meet
the
liabilities
of
the
estate,
and
these
shares
are
sold
at
par
value
to
a
registered
holder
who
would
become
entitled
to
them
on
distribution.
If
these
shares
are
to
be
valued
at
the
amount
realized
upon
the
sale,
then
I
should
presume
that
a
registered
shareholder,
who
is
a
sole
legatee
of
restricted
shares
in
the
company
comprising
the
whole
of
an
estate,
can
purchase
at
par
such
shares
from
the
executor
in
order
to
put
him
in
funds
to
meet
liabilities,
and
the
tax
would
be
payable
not
on
the
real
value
of
the
shares
but
on
the
amount
which
the
executor
realized.
It
is
only
necessary
to
state
this
proposition
to
show
that
argument
for
it
is
untenable.
It
appears,
however,
to
be
a
logical
conclusion
from
the
premise
that
estate
duty
is
payable
only
on
the
amount
which
the
administrator
can
realize
on
a
sale.
In
December,
1948,
the
capital
of
the
company
was
increased
and
there
was
a
distribution
of
accumulated
profits
by
issue
of
fifteen
common
shares
in
respect
of
each
common
share
already
held.
As
the
restrictive
clauses
of
the
Articles
of
Association
have
not
been
altered,
the
prescribed
price
of
each
of
these
shares
remains
at
one
hundred
dollars.
If
sale
had
been
deferred
for
a
few
months
the
prescriptive
price
would,
for
each
original
share
and
the
bonus
issue
in
respect
of
it,
be
sixteen
times
that
realized
by
the
administrator.
That
is
the
present
position
in
respect
of
the
common
shares
in
the
company
forming
part
of
the
trust
created
by
the
intestate’s
father
in
which
the
intestate
had
a
one-quarter
interest.
On
any
sale
of
his
interest
in
these
shares
a
larger
amount
would
now
be
realized
than
if
sale
had
taken
place
in
September,
1948.
This
will
further
show
how
illogical
the
practical
position
becomes
when
matters
subsequent
to
the
death
of
the
shareholder
are
taken
into
consideration
in
determining
the
value
of
these
restricted
shares
and
the
principle
of
realizable
value
is
adopted.
Thus
far
I
have
shown
that
after
the
death
of
the
holder
each
of
the
shares
is
the
same
indivisible
property
as
before
his
death
and
has
the
same
value
regardless
of
destination
or
events
subsequent
to
death,
and
indeed
that
under
the
provisions
of
the
Newfoundland
statute
their
value,
for
purposes
of
payment
of
death
duties,
is
that
which
they
had
in
the
hands
of
the
deceased
holder.
I
now
turn
to
the
question
of
the
method
of
ascertaining
their
value.
Section
7(5)
of
the
Finance
Act,
1894,
is
as
follows:
"
The
principal
value
of
any
property
shall
be
estimated
to
be
the
price
which,
in
the
opinion
of
the
Commissioners,
such
property
would
fetch
if
sold
in
the
open
market
at
the
time
of
the
death
of
the
deceased/‘
The
Newfoundland
Act
does
not
direct
how
the
value
of
property
is
to
be
ascertained.
There
are
many
measures
which
may
be
used.
Is
the
value
that
to
the
owner,
or
the
intrinsic
value,
or
the
value
on
sale
in
a
restricted
market
or
the
value
on
sale
in
an
open
market?
It
seems
to
me
that
a
rule
of
general
application
must
be
used
and
that
the
rule
set
forth
in
s.
7(5)
is
the
one
which
is
in
accord
with
the
practice
in
ascertaining
value
for
the
purpose
of
imposing
the
duty.
With
such
a
rule
any
particular
piece
of
property
can
have
but
one
value.
In
Attorney-General
v.
Jameson,
Holmes,
L.J.,
in
discussing
value
says
at
p.
239
of
the
report
which
I
have
cited
:
‘“Turning
to
the
7th
Section
of
the
Act,
I
find
therein
the
very
test
of
value
which
I
should
have
applied
in
its
absence.’’
He
then
quotes
the
words
of
s.
7(5)
of
the
Finance
Act,
1894.
In
a
case
in
this
Court
heard
in
1923,
In
re
Hugh
Baird
which
I
have
already
cited,
the
three
Judges
were
unanimous
in
adopting
this
principle
for
ascertaining
the
value
of
shares
which
were
subject
to
restrictions
similar
to
those
applying
in
the
present
case.
In
that
case
Sir
William
Horwood,
C.J.,
said
:
"‘It
is
obvious
that
the
Court
has
not
at
present
before
it
evidence
which
would
warrant
it
in
finally
determining
the
value
of
these
shares.
The
utmost
it
is
possible
for
us
to
do,
until
further
proof
is
given,
is
to
lay
down
a
basis
for
valuation.
In
The
Attorney-General
v.
Jameson
([1905]
2
Irish
Reports,
p.
218)
cited
herein
by
the
applicants
we
have
a
decision
of
a
Court
of
Appeal
interpreting
a
Finance
Act
in
a
case
where,
as
here,
the
Articles
of
Association
of
a
company
whose
shares
were
the
subject
of
valuation
placed
restrictions
upon
the
right
of
transfer
of
the
shares
of
a
deceased
member
in
favour
of
the
surviving
members
of
the
company.
The
decision
there
was
that
the
principal
value
of
such
shares
ought
to
be
estimated
at
the
price
which
they
would
fetch
if
sold
in
the
open
market
on
the
terms
that
the
purchaser
should
take
and
hold
them
subject
to
the
Articles
of
Association.
We
adopt
the
rule
in
Attorney-General
v.
Jameson
as
affording
a
method
of
appraisement
applicable
to
this
matter.’’
Johnson,
J.,
said:
"
"
As
to
the
1801
shares
of
the
estate
in
James
Baird
Ltd.
which
the
certificate
assesses
at
$360,200,
while
the
executors
set
them
at
$150
per
share,
further
evidence
of
competent
witnesses
is
essential
to
satisfactory
adjudication.
That
evidence
should
be
directed,
inter
alia,
to
the
factors
which
should
operate
in
the
mind
of
a
bidder
for
the
shares;
for
the
principles
laid
down
in
Re
Jameson,
[1905]
2
Irish
Reports
A.C.
must
be
imported
into
the
valuation
of
these
shares.
‘
‘
Kent,
J.,
said
:
“As
to
the
value
of
the
shares
the
rule
of
assessment
applied
in
the
Jameson
case,
[1905]
2
Irish
Reports
218,
ought
to
be
applied.
The
method
of
valuation
applied
by
the
Minister
does
not
give
the
value
directed
by
the
Act.
He
took
into
consideration
matters
that
are
irrelevant.
I
think
the
rule
in
Jameson
9
s
case
ought
to
be
applied.
The
market
value
is
what
is
required,
that
is,
the
price
which
these
shares
would
realize
as
upon
a
sale
in
the
open
market,
open
to
competition
and
subject
to
all
restrictions
and
advantages
comprised
in
the
Articles
of
As-
sociation.’’
This
is
a
decision
binding
on
this
Court
under
the
principle
of
law
known
as
stare
decisis
unless
overruled
expressly
by,
or
as
a
result
of,
a
decision
of
a
higher
court.
I
therefore
hold
on
this
question
that
the
value
of
all
the
shares
of
the
company
held
by
or
in
trust
for
Gerald
Cockburn
Harvey
is
to
be
estimated
as
the
price
which
these
shares
would
fetch
if
sold
in
the
open
market
at
the
time
of
the
death
of
the
deceased.
The
practical
position
is
that
an
actual
sale
in
the
open
market
is
most
unlikely,
and
the
principle
of
imaginary
sale
to
a
person
able
and
willing
to
buy,
who
will
become
the
registered
holder
of
the
shares
with
the
same
rights
and
subject
to
the
same
obligations
as
the
deceased,
has
to
be
adopted.
The
common
shares
have
been
valued
by
the
Administrator
at
$20
each
and
by
the
Assessor
at
$2,000
each.
It
appears
from
the
balance
sheets
of
the
Company
that
no
dividend
was
paid
on
preferred
shares
for
the
years
from
1931
to
1939
inclusive,
that
these
payments
were
resumed
in
1940,
that
all
arrears
were
paid
off
by
1943
and
that
these
dividends
have
since
been
paid
regularly.
In
1931
and
1932
the
value
of
investments
held
by
the
Company
depreciated
very
considerably
and
large
reserves
against
these
investments
were
set
aside.
As
a
result
the
capital
position
of
the
Company
became
impaired
and
trading
and
investment
profits,
together
with
investment
gains,
were
until
1938
applied
towards
its
restoration.
From
1938
the
balance
sheets
show
an
accumulation
of
undistributed
profits
which
did
not
until
1941
fully
replace
a
large
free
reserve
which
in
1931
was
transferred
to
Profit
and
Loss
account
as
part
of
the
reserve
against
investments.
In
1941,
however,
there
were
arrears
of
dividends
on
the
cumulative
preference
shares
for
the
years
1935
to
1941
both
inclusive.
No
dividend
on
common
shares
was
paid
during
the
period
from
1931
to
1944
both
inclusive,
but
in
1945
and
1946
dividends
of
10
per
cent
and
30
per
cent
respectively
were
paid.
The
undistributed
profits
had,
at
December
31st,
1946,
accumulated
to
over
$440,000
and
a
reserve
for
repairs
and
reconstruction
in
the
amount
of
$180,000
and
a
reserve
for
contingencies
in
the
amount
of
$50,000
had
been
created.
From
1931
to
1946
the
balance
sheets
show
a
capital
reserve
of
over
$200,000
created
by
the
sale
of
bakery
assets
in
1941.
At
the
end
of
1946
the
freehold
premises
(exclusive
of
freehold
land)
with
furniture
and
equipment
thereon
is
valued
at
slightly
over
$35,000
after
allowance
for
depreciation
reserve
of
over
$115,000.
As
I
point
out
later
in
the
case
of
Harvey
Estates
Limited,
the
actual
value
is
considerably
higher
than
the
book
value.
The
intestate
died
on
April
2nd,
1947,
and
no
reference
is
being
made
to
balance
sheets
after
December
31st,
1946.
On
behalf
of
the
administrator
it
was
submitted
at
the
hearing
that
the
factors
which
the
Court
should
take
into
consideration
in
determining
the
value
of
the
shares
were
the
extent
of
the
interest
of
the
deceased
(i.e.,
whether
or
not
he
had
a
controlling
interest),
the
earning
and
dividend
record
of
the
company
over
a
relatively
long
period,
any
restrictions
on
the
transfer
of
shares,
the
nature
of
the
business,
the
varying
economic
conditions
in
which
the
company
had
operated
and
would
probably
operate
in
the
future
and
the
probable
amount
of
future
dividends.
It
was
argued
that,
as
the
assets
were
the
property
of
the
company
and
not
of
the
shareholders,
the
deceased
had
no
right
to
any
part
of
them
and
that
the
value
of
his
shares
should
be
determined
without
reference
to
them.
On
behalf
of
the
Assessor
it
was
submitted
that
the
value
of
the
capital
assets
was
an
important
factor
in
determining
the
value
of
the
shares,
that
no
shareholder
had
a
majority
interest
and
that
each
shareholder
would
be
entitled
to
assume
that
the
other
shareholders
would
act
with
him
in
the
best
interests
of
the
shareholders
and
the
company.
The
whole
period
of
sixteen
years
begins
at
time
of
a
worldwide
economic
recession,
carries
through
a
period
of
depression
in
this
country
and
through
the
war
period
which
was
one
of
unprecedented
prosperity
which
had
not
ended
at
the
date
of
the
death
of
the
intestate.
Indeed
the
depression
in
this
country
was
so
severe
and
the
war
prosperity
so
great
that
a
true
picture
could
not
be
obtained
if
either
period
were
selected
to
form
the
basis
of
calculation
as
to
the
future
prospects
of
the
business
of
the
company.
The
whole
period,
although
longer
than
that
generally
taken,
should
be
taken
for
the
purpose
of
examination
in
this
case.
The
failure
of
the
company
to
pay
dividends
on
preferred
shares
during
the
period
1931
to
1939
was
due
to
the
setting
aside
of
investment
reserves
far
in
excess
of
the
actual
losses
sustained
on
the
sale
of
investments
over
the
whole
period.
The
trading
profits,
including
investment
income
of
the
company,
were
sufficient
to
pay
these
dividends
although
in
some
of
the
years
the
profits
were
not
sufficient
to
cover
the
amount
required
for
the
dividend.
Loss
on
investments
was
general
in
the
first
few
years
of
that
period
and
this
particular
kind
of
loss
is
one
on
which,
in
the
circumstances,
it
would
not
be
prudent
to
lay
too
much
emphasis
as
a
factor
in
assessing
the
prospects
of
the
company.
The
company,
however,
still
has
some
foreign
investments
and
the
possibility
of
a
drop
in
market
prices
should
be
kept
in
mind.
At
the
end
of
1946
the
company
held
large
blocks
of
shares
in
associated
companies.
Indeed
over
half
the
assets
of
the
company
were
held
in
such
shares
and
almost
onefifth
of
its
income
in
1946
came
from
dividends
on
these
shares.
The
prosperity
of
these
companies
is,
therefore,
an
important
consideration
in
fixing
the
value
of
these
shares.
The
company
owns
a
valuable
waterfront
premises
in
the
east
end
of
the
City
of
St.
John’s,
and
has
for
many
years
been
carrying
on
business.
During
the
relevant
period
its
principal
business
has
been
that
of
dock
owners,
coal
merchants,
ship’s
brokers,
commission
and
insurance
agents
and
stevedoring
contractors.
During
the
war
a
large
part
of
its
income
was
derived
from
bunkering
ships
at
this
busy
port.
At
the
date
of
the
death
of
Gerald
C.
Harvey
the
volume
of
coal
sales
was
dropping
but
this
was
being
partially
offset
by
increased
returns
from
stevedoring
and
handling
fish
cargoes.
There
was
uncertainty
as
to
what
further
steps
may
be
taken
by
United
Kingdom
to
conserve
dollars
and
there
was
the
possibility
that
savings
might
be
sought
by
having
bunkering
and
charter
parties
arranged
in
United
Kingdom.
Moreover,
oil
was
gradually
replacing
coal
as
fuel
not
only
for
ships
but
also
for
domestic
use
in
this
city.
It
was
obvious
that
the
volume
of
the
company’s
business
would
decline
considerably
below
its
war
level,
but
it
was
equally
apparent
that
the
waterside
premises
would
be
able
to
do
some
business
of
other
kinds.
There
was
also
uncertainty
as
to
the
future
constitutional
status
of
Newfoundland
and
the
effects
upon
waterfront
business
in
this
port,
if
Union
with
Canada
should
take
place.
All
these
factors
of
uncertainty
as
to
the
future
would
have
a
depressing
effect
upon
the
value
of
the
shares.
Uncertainty
as
to
the
future
also
affected
the
value
of
the
shares
of
associated
companies.
In
the
case
of
Browning-Harvey
Limited
the
return
of
products
of
the
United
Kingdom
to
the
small
local
market
was
beginning
to
show
its
effects
and
the
possibility
of
Union
with
Canada
introduced
an
element
of
great
uncertainty
as
to
the
effect
of
competition
from
the
mainland
upon
the
removal
of
customs
duties.
Then
there
is
the
depressing
factor
of
the
restrictions
on
the
transfer
of
the
shares
which
gives
them
a
definitely
lower
value
than
if
they
could
be
sold
freely
without
a
prescribed
price.
On
the
relevant
date
the
company
had
substantial
holdings
of
undistributed
profits
including
capital
profits
and
had
set
aside
substantial
reserves.
A
purchaser
of
these
shares
would
have
behind
them
ample
security
if
he
bought
them
at
a
price
considerably
above
their
par
value.
I
cannot
agree
that
the
common
shares
are
worth
the
amount
at
which
the
assessor
values
them.
Winding-up
was
not
in
contemplation
and
cannot
be
considered
as
probable
in
the
case
of
this
old
and
well-established
company.
On
the
other
hand,
I
cannot
agree
with
the
contention
of
the
administrator
that
on
the
basis
of
the
dividend
record
with
restrictions
on
transfer
the
shares
were
worth
only
$20
each.
The
company
had
made
sufficient
profits
to
pay
many
times
the
amount
of
dividends
actually
paid
and
it
would
be
anomalous
to
value
shares
at
a
high
figure
when
profits
have
been
distributed
as
dividends
and
at
a
low
figure
when
they
have
been
retained
and
are
available
for
the
benefits
of
future
holders
of
the
shares
as
security
or
to
increase
earnings
or
for
distribution
to
shareholders
in
some
manner,
as
the
company
may
decide.
The
issued
capital
was
$180,000
in
6
per
cent
cumulative
preference
shares
and
$36,000
in
common
shares
all
fully
paid
up.
This
is
but
a
small
portion
of
the
value
of
the
assets
or
indeed
of
the
amount
of
the
capital
and
other
profits
held
by
the
company.
After
deduction
of
the
amount
of
capital
represented
by
preference
shares,
the
security
behind
the
common
shares
is
considerable.
Taking
into
consideration
all
the
factors
which
I
have
mentioned
I
place
a
value
of
$500
on
each
of
the
common
shares.
The
assets
of
the
company
provide
more
than
adequate
security
for
this
amount
in
the
event
of
winding-up
and
the
future
prospects
warrant
an
assumption
of
ability
to
pay
annually
a
reasonable
dividend
on
a
higher
value.
I
have,
however,
taken
into
consideration
the
depressing
effect
of
the
restrictive
clauses
of
the
Articles
of
Association.
The
preference
shares
are
preferred
as
to
capital
and
dividend
and
are
properly
valued
by
the
assessor
at
$100
each.
The
property
of
the
deceased
at
the
date
of
his
death
included
common
and
preferred
shares
in
Harvey
Estates
Limited.
This
company
is
not
a
trading
company
but
holds
real
property
which
is
rented
mainly
to
Harvey
&
Company
Limited
and
to
some
other
companies
in
the
associated
group.
The
administrator
values
the
common
shares
at
$20
each,
the
assessor
at
$400
each.
The
balance
sheets
of
this
company
since
1931
have
been
submitted
to
the
Court
and
an
examination
of
them
has
shown
the
following
:
"‘(a)
The
issued
capital
of
this
company
consists
of
preference
shares
amounting
to
$126,000
and
common
shares
of
$24,000,
each
share
having
a
par
value
of
$100
and
being
fully
paid
up.
(b)
In
1932
the
company
owed
Harvey
&
Company
Limited
over
$166,000,
which
was
reduced
each
year
by
roughly
the
amount
of
depreciation
written
off
the
book
value
of
the
various
properties.
In
1938,
the
year
in
which
the
butterine
factory
was
sold,
it
was
sharply
reduced,
and
in
1940
it
was
retired
upon
sale
of
the
shares
which
appear
to
be
the
consideration
in
whole
or
in
part
for
the
sale
of
the
butterine
factory.
(c)
The
various
premises
held
by
the
company
apart
from
freehold
lands
have
been
entered
in
the
accounts
at
cost
and
have
been
largely
depreciated.
For
example
Stabb
‘s
premises
is
in
1946
fully
written
off,
but
the
company
is
receiving
rental
therefor
of
$1,000.
Again
Shea’s
premises,
which
originally
cost
over
$140,000,
is
depreciated
to
about
$29,500
in
1946,
and
the
company
in
that
year
received
a
rental
of
almost
$12,000
therefor.
(d)
The
balance
sheets
of
this
company
cannot
be
regarded
as
furnishing
a
reliable
guide
for
estimating
the
value
of
premises,
as
they
have
proceeded
(quite
properly
for
bookkeeping
purposes)
to
estimate
the
value
of
assets
on
the
basis
of
tost
less
depreciation.
They
have
not
taken
into
account
appreciation
in
value
over
a
long
period
of
years
as
economic
conditions
improved
and
particularly
since
the
beginning
of
the
war
when
the
value
of
premises
rose
quite
sharply.
(e)
Upon
sale
of
each
of
two
properties
at
different
times
there
was
a
capital
profit
in
an
amount
in
excess
of
the
book
value
of
the
asset
concerned.
In
the
case
of
the
butterine
factory,
shares
in
the
purchasing
company
were
taken
and,
upon
sale,
these
in
turn
realized
almost
100
per
cent
profit.
(f)
The
company
at
the
end
of
December,
1946,
held
valuable
properties
at
St.
John’s
which
on
any
sale
should
realize
far
more
than
their
book
value.
(¢)
Retirement
of
the
Harvey
&
Company
loan
saved
substantial
interest
payments
and
improved
the
position
of
this
company.
In
the
last
few
years
the
company
was
able
to
lend
money
to
other
companies
in
the
associated
group
and
the
Profit
and
Loss
Account
shows
receipt
of
interest
from
them.”
The
depressing
effect
of
the
restrictions
on
shares
applies
in
the
case
of
this
company
as
in
the
case
of
A.
Harvey
&
Company,
Limited.
This
company
is
not
a
trading
company,
however,
and
holds
properties
of
much
greater
value
than
shown
by
the
balance
sheets.
Even
on
the
basis
of
the
balance
sheets
there
are
ample
assets
on
a
winding-up
to
pay
off
the
holders
of
preference
shares
and
give
to
the
common
shareholders
many
times
the
par
value
of
their
shares.
The
net
earnings
of
this
company
are
not
high
and,
after
provision
for
dividends
on
preference
shares,
a
high
dividend
on
common
shares
is
not
possible.
The
case
of
this
company
is
quite
similar
to
that
of
McConnell’s
Trustees
v.
Commissioners
for
Inland
Revenue
(1927),
Scots
Law
Times
14.
The
value
of
the
assets
should
be
given
greater
weight
than
in
the
case
of
a
trading
company,
and
having
in
mind
the
restrictions
on
the
shares,
the
value
of
the
assets
and
the
settled
nature
of
the
business,
I
value
the
common
shares
at
$250
each
and
the
preference
shares
at
$100
each.
The
Newfoundland
Furniture
and
Moulding
Company
Limited
had,
at
the
date
of
death
of
Gerald
C.
Harvey,
an
authorized
and
issued
capital
of
$30,000
divided
into
300
common
shares
of
$100
each.
Until
1946
the
business
of
this
company
was
the
manufacture
and
sale
of
lumber
and
wood
products.
In
1946
this
company
opened
a
retail
hardware
store.
The
balance
sheets
show
losses
for
each
year
from
1931
to
1936
both
inclusive,
and
profits
in
each
year
thereafter.
No
dividends
have
been
paid
to
shareholders.
At
the
end
of
1946
there
was
an
amount
of
over
$20,000
to
the
credit
of
Profit
and
Loss.
For
the
last
nine
years
the
profits
would
have
been
sufficient
to
permit
the
company
to
pay
a
dividend
each
year,
and
in
most
years
a
substantial
one,
if
the
earlier
losses
had
not
been
incurred.
The
uncertainties
as
to
the
future
which
I
have
already
mentioned
apply
in
the
case
of
this
business,
and
I
consider
that
$75
each
would
be
a
fair
value
for
these
shares
for
which
no
prescribed
price
has
been
set,
although
registration
on
transmission
is
subject
to
the
consent
of
the
directors.
In
the
assets
of
the
estate
there
is
one
common
share
in
Browning-Harvey
Limited
which
the
administrator
values
at
$60
and
the
assessor
values
at
$100.
At
the
end
of
1946
this
company
held
a
substantial
balance
to
the
credit
of
Profit
and
Loss
Account
and
a
large
reserve
for
possible
decline
in
the
value
of
inventories
and
for
doubtful
debts
and
contingencies,
and
the
depreciated
value
of
the
assets
is
much
less
than
half
the
original
cost.
The
company
has
paid
reasonable
dividends,
but
the
prospects
for
its
future
are
uncertain
as
I
have
already
said.
In
the
circumstances
a
fair
value
for
this
share
would
be
$80.
Upon
application
of
the
values
which
I
have
set
forth
for
the
shares
in
the
four
companies,
the
value
of
the
estate
certified
by
the
assessor
is
varied
from
$425,611.04
to
$304,278.54.
As
each
of
the
parties
has
been
partially
successful,
there
will
be
no
order
as
to
costs.
DUNFIELD,
J.:—This
is
an
appeal
from
the
decision
of
the
Assessor
of
Taxes
in
respect
of
death
duty
sought
to
be
imposed
on
the
estate
of
the
late
Mr.
Gerald
Cockburn
Harvey,
of
St.
John’s,
company
director,
who
died
at
St.
John’s
on
the
2nd
day
of
April,
1947.
The
appeal
is
taken
under
the
provisions
of
s.
11
of
the
Death
Duties
Act,
No.
7
of
1934,
which
provides
that
the
Court
or
a
Judge
shall
‘‘hear
the
matter
summarily
and
confirm
or
vary”
the
value
found
by
the
assessor,
and
that
"the
judgment
of
the
Court
or
Judge
shall
be
final
as
to
such
value.’’
The
Act
does
not
provide
anything
in
the
way
of
procedure;
and
in
view
of
the
large
sum
of
money
involved,
and
in
view
of
the
wording
of
the
Act,
which
lacks
any
provision
for
appeal
from
one
judge,
we
have
thought
it
right
to
sit
with
a
Court
of
three
on
the
matter.
The
appeal
was
taken
before
this
country
became
a
province
of
Canada,
hence
the
question
of
any
change
in
the
law
since
that
date
does
not
seem
to
arise.
And
as
it
is
said
that
this
taxation
field
will
soon
be
transferred
to
the
Dominion,
we
may
never
have
to
use
this
Act
again.
The
estate
of
the
deceased
consisted
in
great
part
of
ordinary
and
preferred
shares
in
two
family
companies,
A.
Harvey
&
Co.
Ltd.
and
Harvey
Estates
Limited,
together
with
some
ordinary
shares
in
a
smaller
controlled
company
known
then
as
Newfoundland
Furniture
&
Moulding
Co.
Ltd.
(For
purposes
of
reference
I
note
that
since
the
death
of
the
late
G.
C.
Harvey
the
name
of
this
last
company
has
been
changed
to
Harvey
Lumber
and
Hardware
Limited).
The
question
is
as
to
the
valuation
of
ordinary
shares
in
these
private
companies.
A.
Harvey
&
Co.
Ltd.
and
Harvey
Estates
Ltd.
have
an
elaborate
series
of
restrictions
on
the
transfer
and
transmission
of
shares,
including
pre-emption
clauses.
These
are
referred
to
later
at
some
length.
The
older
and
smaller
furniture
and
moulding
company,
incorporated
at
some
time
before
The
Companies
Act,
1899,
was
reincorporated
under
that
Act
in
1900
with
a
very
short
and
simple
Memorandum
and
Articles
which
did
not
then
contain
any
restrictions
on
transfer
or
transmission
these
were
not
changed
until
August,
1945
(before
the
death
of
the
intestate)
when
a
single
Article
was
substituted
for
the
old
Article
3,
dealing
with
transfer
of
shares.
This
new
Article,
which
appears
to
deal
with
transmission
only,
reads
as
follows:
"‘3.
Any
person
becoming
entitled
to
shares
in
consequence
of
the
death
or
insolvency
of
any
member
or
holding
or
becoming
entitled
to
any
share
in
any
fiduciary
capacity
upon
producing
such
evidence
that
he
sustains
the
character
in
respect
of
which
he
proposes
to
act
under
this
clause
or
of
his
title
as
the
Directors
think
sufficient
may,
with
the
consent
of
the
Directors
(which
they
shall
not
be
under
any
obligation
to
give),
be
registered
as
a
member
in
respect
of
such
shares
or
may
subject
to
the
regulations
as
to
transfer
hereinbefore
contained
and
to
the
provisions
of
the
proviso
to
this
Article,
transfer
such
shares
Provided
that
notwithstanding
anything
contained
in
this
or
the
foregoing
Articles
any
shares
held
by
the
executors,
administrators
or
trustees
of
any
deceased
shareholder,
or
any
trustee
under
any
trust
or
by
any
fiduciary
may
with
the
consent
and
approval
of
the
Directors
first
had
and
obtained,
be
transferred
by
such
executors,
administrators,
trustees
or
fiduciary
to
any
person
or
persons
who
may
be
entitled
to
or
may
have
a
beneficial
interest
in
such
shares.
Any
such
executor,
administrator,
trustee
or
fiduciary
desiring
to
make
any
such
transfer
shall
apply
in
writing
to
the
Directors
for
their
prior
consent
and
approval
of
such
transfer
and
the
Directors
may
upon
considering
such
application
grant
or
refuse
in
their
absolute
discretion
such
consent
and
approval
;
and
they
shall
not
be
bound
to
give
any
reason
for
refusing
such
consent
and
approval
nor
to
specify
the
grounds
upon
which
such
refusal
is
made.
If
in
any
such
application
more
than
one
proposed
transfer
is
involved
the
Directors
may
in
their
discretion
and
as
they
may
think
fit,
accede
to
the
application
as
regards
one
or
more
transfers,
and
refuse
as
to
another
or
others.
A
Director
shall
not
be
disqualified
or
prevented
from
voting
on
any
such
application
by
reason
of
the
fact
that
he
is
also
the
applicant.’’
The
relevant
Sections
of
the
Articles
of
A.
Harvey
&
Co.
Ltd.
are
as
follows:
‘
‘
TRANSFER
OF
SHARES
"
"
(11)
A
share
may
be
transferred
by
a
member,
or
other
person
entitled
to
transfer,
to
any
member
selected
by
the
transferor,
but
save
as
aforesaid
no
shares
shall
be
transferred
to
a
person
who
is
not
a
member,
so
long
as
any
member
or
any
person
selected
by
the
Directors
as
one
who
it
is
desirable
in
the
interests
of
the
Company
to
admit
to
membership
is
willing
to
purchase
same
at
the
par
value.
"‘(12)
Except
where
the
transfer
is
made
pursuant
to
Clause
11
hereof,
the
person
proposing
to
transfer
any
share
or
shares
(hereinafter
called
the
proposing
transferor)
shall
give
notice
in
writing
(hereinafter
called
the
transfer
notice)
to
the
Company
that
he
desires
to
transfer
the
same
at
par
value.
Such
notice
shall
constitute
the
Company
his
Agent
for
the
sale
of
the
share
or
shares,
to
any
member
of
the
Company
or
person
selected
as
aforesaid,
at
par
value.
The
transfer
notice
shall
not
be
revocable
except
with
the
sanction
of
the
Directors.
"‘(13)
If
the
Company
shall,
within
the
space
of
three
months
after
being
served
with
such
notice,
find
a
member
or
person
selected
as
aforesaid,
willing
to
purchase
the
share
or
shares
as
offered
(hereinafter
called
the
purchasing
member)
and
shall
give
notice
thereof
to
the
proposing
transferor,
he
shall
be
bound,
upon
payment
of
the
par
value,
to
transfer
the
share
or
shares
to
the
purchasing
member.
"
(14)
If
at
any
time,
the
holder
or
holders
of
one-third
or
more
of
the
issued
shares
of
the
Company
shall
give
to
the
Secretary
of
the
Company
a
written
notice
that
they
desire
that
the
Company
be
dissolved,
then
within
twelve
months
after
the
receipt
of
such
notice,
the
necessary
steps
shall
be
taken
to
have
the
Company
wound
up,
and
the
Company
shall
be
wound
up
accordingly.
Provided
that
if,
within
said
time,
any
one
or
more
of
the
other
shareholders
shall
purchase
or
cause
to
be
purchased,
at
par
value,
all
the
shares
belonging
to
the
members
seeking
to
have
the
Company
wound
up
(which
shares
these
members
shall
be
bound
to
sell
at
par
value)
then
the
said
notice
to
the
Secretary
of
the
Company
shall
be
held
to
be
void
and
of
no
effect.
"‘(15)
If
in
any
case
the
proposing
transferor,
after
having
become
bound
as
aforesaid,
makes
default
in
transferring
the
shares,
the
Company
may
receive
the
purchase
money,
and
shall
thereupon
cause
the
name
of
the
purchasing
member
to
be
entered
in
the
register
as
the
holder
of
the
shares,
and
shall
hold
the
purchase
money
in
trust
for
the
proposing
transferor.
The
receipt
of
the
Company
for
the
purchase
money
shall
be
a
good
discharge
to
the
purchasing
member,
and
after
his
name
has
been
entered
in
the
register
in
purported
exercise
of
the
aforesaid
power,
the
validity
of
the
proceedings
shall
not
be
questioned
by
any
person.
‘(16)
If
the
Company
shall
not,
within
the
space
of
three
months
after
being
served
with
the
transfer
notice,
find
a
member
willing
to
purchase
the
shares,
and
give
notice
in
manner
aforesaid,
the
proposing
transferor
shall
at
any
time
within
three
calendar
months
afterwards
be
at
liberty,
subject
to
Clause
18
hereof,
to
sell
and
transfer
the
shares
(or
those
not
placed)
to
any
person
and
at
any
price.
(17)
The
Company
in
general
meeting
may
make
and
from
time
to
time
vary
rules
as
to
the
mode
in
which
any
shares
specified
in
any
transfer
notice
served
on
the
Company
pursuant
to
Clause
12
hereof
shall
be
offered
to
the
members
and
as
to
their
rights
in
regard
to
the
purchase
thereof
and
in
particular
may
give
any
member
or
class
of
member
preferential
right
to
purchase
the
same.
Until
otherwise
determined
every
such
share
shall
be
offered
in
the
first
place
to
the
Chairman
of
the
Board
of
Directors
and
any
not
accepted
by
him
shall
then
be
offered
to
the
other
members
of
the
Company
in
such
order
as
shall
be
determined
by
lots
drawn
in
regard
thereto,
and
the
lots
shall
be
drawn
in
such
manner
as
the
Directors
think
fit.
"
(18)
The
Directors
may
refuse
to
register
any
transfer
of
a
Share:
(a)
when
the
Company
has
a
lien
on
the
share;
or
(b)
when
the
Directors
are
not
of
opinion
that
it
is
desirable
to
admit
the
proposed
transferee
to
membership,
but
paragraph
(b)
of
this
Clause
shall
not
apply
where
the
proposed
transferee
is
already
a
member.
"‘(19)
The
instrument
of
transfer
of
any
shares
in
the
Company
shall
be
executed
both
by
the
transferor
and
the
transferee,
and
the
transferor
shall
be
deemed
to
remain
a
holder
of
such
share
until
the
name
of
the
transferee
is
entered
in
the
register
book
in
respect
thereof.
"‘(20)
Shares
in
the
Company
shall
be
transferred
in
the
following
form:
I,
A.B.
of
,
in
consideration
of
the
sum
of
do
hereby
transfer
to
the
said
C.D.
the
share
(or
shares)
numbered
standing
in
my
name
in
the
books
of
A.
Harvey
&
Company,
Limited,
to
hold
unto
the
said
C.D.,
his
executors,
administrators
and
assigns,
subject
to
the
several
conditions
on
which
I
held
the
same
at
the
time
of
the
execution
hereof
:
and
I,
the
said
C.D.,
do
hereby
agree
to
take
the
said
share
(or
shares)
subject
to
the
same
conditions.
As
witness
our
hands
the
day
of
il
(21)
Every
instrument
of
transfer
shall
be
left
at
the
office
for
registration,
accompanied
by
the
certificate
of
the
shares
to
be
transferred,
and
such
other
evidence
as
the
Company
may
require
to
prove
the
title
of
the
transferor,
or
his
right
to
transfer
the
shares.
"‘(
22)
The
transfer
books
shall
be
closed
during
the
fourteen
days
immediately
preceding
the
ordinary
general
meeting
in
each
year.
TRANSMISSION
OF
SHARES
(23)
The
executors
or
administrators
of
a
deceased
member
(not
being
one
of
several
joint
holders)
shall
be
the
only
persons
recognized
by
the
Company
as
having
any
title
to
the
shares
registered
in
the
name
of
such
member,
and
in
ease
of
the
death
of
any
or
more
of
the
joint
holders
of
any
registered
shares,
the
survivors
shall
be
the
only
persons
recognized
by
the
Company
as
having
any
title
to
or
interest
in
such
shares.
"
"
(24)
Any
persons
becoming
entitled
to
shares
in
consequence
of
the
death
or
insolvency
of
any
member,
upon
producing
such
evidence
that
he
sustains
the
character
in
respect
of
which
he
proposes
to
act
under
this
clause,
or
of
his
title,
as
the
Directors
think
sufficient
may
with
the
consent
of
the
Directors
(which
they
shall
not
be
under
any
obligation
to
give)
be
registered
as
a
member
in
respect
of
such
shares,
or
may,
subject
to
the
regulations
as
to
transfers
hereinbefore
contained,
transfer
such
shares.
COMPULSORY
RETIREMENT
"(25)
The
holders
for
the
time
being
of
four-fifths
of
the
issued
capital
may
at
any
time
serve
the
Company
with
a
requisition
to
enforce
the
transfer
of
any
particular
shares
not
held
by
the
requisitionists.
The
Company
shall
forthwith
give
to
the
holder
of
such
shares
notice
in
writing
of
the
requisition
(with
a
copy
of
this
clause
subjoined)
and
unless
within
fourteen
days
afterwards,
the
holder
shall
give
to
the
Company
a
transfer
notice
in
respect
of
his
shares
in
accordance
with
Clause
12
hereof,
he
shall
be
deemed,
at
the
expiration
of
that
period,
to
have
actually
given
such
notice
and
to
have
specified
therein
the
amount
of
capital
paid
upon
the
shares
as
the
sum
he
fixes
as
the
fair
value.
For
the
purposes
of
this
clause
any
person
entitled
under
the
transmission
Clauses
to
transfer
shall
be
deemed
the
holder
of
such
share.’’
The
Articles
of
Harvey
Estates
Limited,
though
varying
a
little
from
the
above
in
detail,
are
substantially
the
same
with
the
addition
of
two
Articles.
The
first
reads
thus:
"‘(15)
If
the
Company
shall
fail
to
find
a
purchaser
as
aforesaid
at
the
face
value
the
proposing
transferor
before
selling
at
a
lesser
value
to
a
non-member
shall
first
notify
in
writing
the
company
of
the
lowest
price
at
which
he
proposes
to
sell
and
if
any
member
of
the
company
fails
to
buy
at
the
said
lowest
price
within
thirty
days
from
said
last
notification,
the
proposing
transferor
may
sell
at
said
lowest
price
to
a
nonmember
within
the
said
three
months
referred
to
in
clause
14
hereof
and
subject
to
clause
17
hereof.’’
The
second
is
a
new
Article,
recently
added,
in
exactly
the
same
words
as
the
new
Article
of
Newfoundland
Furniture
and
Moulding
Co.
Ltd.
hereinbefore
quoted.
A.
Harvey
&
Co.,
Ltd.
is
a
company
trading
in
coal,
chartering
and
steamship
agency
and
the
bunkering
of
steamers,
and
Harvey’s
Estates
Ltd.
is
a
sort
of
holding
company
created
to
hold
much
of
the
real
estate
of
the
group
of
companies
with
which
the
deceased
was
associated.
Newfoundland
Furniture
&
Moulding
Co.,
Ltd.
is
a
minor
company
dealing
in
building
materials
and
hardware.
These
companies,
together
with
the
large
concerns
of
Harvey
&
Co.,
Ltd.
(shipping
agencies,
wholesale
provisions,
etc.)
and
Browning-Harvey
Ltd.
(baking,
confectionery,
etc.)
and
others,
are
owned
and
controlled,
apparently
on
an
equal
footing,
by
the
two
well-known
and
respected
families
of
Harvey
and
Outerbridge,
in
business
in
this
city
for
three-quarters
of
a
century.
The
management
in
recent
years,
since
the
deaths
of
former
seniors,
has
been
in
the
hands
of
Sir
Leonard
and
Mr.
Herbert
Outerbridge,
brothers,
on
the
one
hand,
and
Mr.
Reginald
C.
Harvey
and
the
deceased,
also
brothers,
on
the
other
hand,
and
all
the
shares,
with
the
exception
of
a
handful
of
shares
qualifying
for
directorship
registered
in
the
names
of
trusted
employees,
have
been
held,
personally
or
in
trust,
by
these
four.
Mr.
Gerald
C.
Harvey
died
unmarried
and
intestate;
and
his
next-of-kin
fall
into
three
groups,
viz.:
(a)
His
brother
Reginald
C.
Harvey;
(b)
His
sister
Mrs.
Edith
Feays-Keck;
(ce)
The
son
and
two
daughters
of
his
deceased
brother
Harold
C.
Harvey.
The
directors,
having
been
asked,
are
willing
to
register
Mr.
R.
C.
Harvey
as
a
shareholder,
but
not
the
others.
It
may
be
noted
that
groups
(b)
and
(ec)
do
not
reside
in
Newfoundland,
nor
have
they
done
so
for
many
years
in
the
case
of
the
sister,
nor
ever,
so
far
as
I
know,
in
the
case
of
group
(c).
Letters
of
Administration
were
granted
on
January
20,
1948,
to
John
T.
Walsh,
who
appears
to
be
a
trusted
employee
of
A.
Harvey
&
Co.,
Ltd.,
and
holds
the
rank
of
director
with
a
small
qualification
holding
of
shares.
The
main
company,
A.
Harvey
&
Co.
Ltd.,
is
shown,
by
accounts
placed
before
us,
to
have
done
poorly,
and
at
best
held
its
own
during
the
depression
years
from
1931
to
the
outbreak
of
the
late
war
;
even
its
Preference
shares
were
in
arrears.
From
1940,
however,
to
the
end
of
the
war
it
earned
large
profits,
owing
doubtless
to
war
conditions,
and
to
the
opportunity
of
bunkering
a
great
many
ships,
as
we
were
a
naval
port
and
port
of
refuge;
it
is
still
doing
fairly
well;
and
at
the
death
of
Mr.
Gerald
C.
Harvey
it
had
undivided
profits
and
reserves
of
many
times
its
capital.
The
assessor
claims
to
value
the
ordinary
shares
at
$2,000
each,
par
being
$100.
The
administrator
replies
that
he
is
bound
under
the
Articles
to
sell
the
shares
which
he
holds
as
such
to
existing
members
at
par
(which
he
has
since
in
fact
done)
and
that
par
is
all
they
are
worth
to
his
decedent’s
estate.
Harvey’s
Estates
Ltd.
is
not
a
trading
company;
but
the
assessor
claims
that
its
assets
are
such
as
to
warrant
a
price
of
$400
per
share,
though
its
dividend
record
might
not
do
so.
The
administrator
again
says
he
is
compelled
to
sell
at
par,
i.e.,
$100.
Newfoundland
Furniture
&
Moulding
Co.
Ltd.,
as
it
was
then
called,
is
a
minor
company.
In
this
case
no
question
of
pre-emp-
tion
of
shares
arises;
the
question
is
merely
what
would
be
a
fair
value
to
put
on
the
shares,
having
regard
to
the
accounts
of
the
company
and
the
restrictions
on
transmission.
The
Act
under
which
the
tax
is
imposed,
the
Death
Duties
Act
(No.
7
of
1934,
amended
by
No.
35
of
1934,
No.
9
of
1936,
No.
4
of
1940,
No.
4
of
1943
and
No.
18
of
1948)
is
a
simple
one
which
has
come
down
with
little
change
since
1915.
It
enacts
(No.
35
of
1934
carries
the
operative
section)
that
there
"shall
be
charged
and
paid
.
‘
‘
""
(2)
Upon
the
estates
of
all
persons
dying
on
or
after
the
1st
day
of
September,
1934,
the
duties
specified
in
the
Third
Schedule
hereto.’’
That
is
all
in
the
way
of
primary
taxing
words
except
what
we
can
find
in
the
Schedule
which
reads
:
°
Estates
certified
to
be
of
a
value:
of
$1,000
and
up
to
$2,500
shall
pay
1
per
cent.
of
$2,500
and
up
to
$5,000
shall
pay
2
per
cent.”
and
so
on,
up
a
rising
scale,
until
it
ends—
"Of
$2,000,000
and
over
shall
pay
25
per
cent.’’
Thus
our
question
is
simply:
What
is
the
‘‘value’’
of
the
“estate”
of
the
deceased
?
The
scale
has
since
been
greatly
increased
and
a
surtax
added,
but
this
does
not
affect
the
questions
of
principle.
Under
s.
3
the
‘‘Estate’’
is
to
be
deemed
to
inelude
the
following
:
“
(a)
All
property
in
this
Colony
of
whatsoever
description
belonging
to
that
person,
whether
moveable
or
immoveable,
and
any
interest
in
such
property
whether
expectant
or
contingent
held
by
him
at
his
death
;
“(b)
Any
such
property
given
by
or
passing
from
the
deceased
person
as
a
donatio
mortis
causa;
“(c)
Any
such
property
passing
under
any
disposition
made
by
the
deceased
person
and
purporting
to
operate
as
a
donatio
inter
vivos,
unless
the
disposition
was
made
at
least
two
years
before
his
death
;
“
(d)
Any
such
property
passing
under
any
disposition
or
by
reason
of
any
act
of
the
deceased
person
which
was
intended
to
operate
at
or
after
his
death,
or
has
the
effect
of
so
operating
;
“(e)
Any
such
property
which
by
any
act
or
disposition
of
the
deceased
person
was
so
transferred,
vested
or
arranged
that
his
ownership
or
beneficial
interest
therein
or
in
any
part
thereof,
passed
or
accrued
by
survivorship
upon
his
death
;
"‘(f)
Any
such
property
which
has
passed
to
any
one
within
one
year
prior
to
the
death
of
the
deceased
person
for
the
purpose
of
dividing
the
same
after
the
death
of
the
deceased
person
amongst
his
heirs
or
any
of
them
;
"(g)
Any
limited
interest
in
such
property,
whether
or
not
such
interest
was
or
is
to
be
determined
on
the
death
;
(h)
Any
property,
including
money
in
banks
or
other
institutions,
held
in
the
joint
names
of
the
deceased
and
one
or
more
persons,
and
payable
to
or
passing
to
the
survivor
or
survivors,
or
the
portion
of
such
joint
property
which
is
so
payable
or
which
passes
as
aforesaid””
And
the
section
concludes:
"‘And
for
the
purposes
of
this
Act
the
said
Estate
shall
be
held
to
be
the
Estate
in
respect
of
which
Letters
of
Probate
or
Administration
are
applied
for.”’
This
last
proviso
is
perhaps
a
little
ambiguous;
but
unless
we
alter
all
our
ideas
as
to
what
an
executor
or
administrator
can
control,
this
seems
to
me
to
imply
that
only
those
things
which
fall
into
his
hands
can
be
regarded
as
part
of
the
estate
;
and
there
is
no
machinery
or
provision
in
the
Act
to
enable
any
duty
to
be
levied
on
anything
which,
even
though
it
may
pass
as
a
result
of
the
death,
does
not
fall
into
his
hands
as
an
asset.
In
the
present
case
we
can
dismiss
immediately
paras.
(b),
(c),
(e),
(f)
and
(h)
(the
later
added
by
1936
No.
9)
as
obviously
irrelevant
to
the
present
case.
The
question
whether
paras.
(a),
(d)
or
(g)
affect
duty
on
the
restricted
shares
can
be
better
considered
after
the
general
discussion
of
principles.
But
apart
from
any
special
provisions
of
s.
3
above-mentioned,
what
is
the
meaning
of
the
word
"‘estate’’?
To
us,
whether
lawyer
or
layman,
in
this
Island,
it
means
only
one
of
two
things
(a)
If
the
deceased
is
long
since
dead,
the
totality
of
his
real
property,
if
that,
as
often
happens,
has
been
kept
together
identifiably,
we
speak,
geographically,
of
a
house
being
‘‘on
Smith’s
Estate’’
in
St.
John’s
he
having
been
dead
a
hundred
years,
perhaps,
and
(b)
If
the
deceased
is
recently
dead,
the
totality
of
what
he
leaves
behind
him;
his
real
and
personal
possessions,
his
choses
in
action,
indeed
all
his
substance.
The
estate
is
almost
personified;
money
is
said
to
be
owing
to
the
deceased
man’s
estate,
before
or
after
admnistration
has
been
granted.
The
word
"‘estate’’
in
its
English
real-property
or
technical
significance,
is
rarely,
if
ever,
used
even
in
legal
parlance.
And
land
is
by
statute
personalty
for
purposes
of
devolution
of
it
;
it
is
either
in
fee
simple
or
by
way
of
chattel
interest.
There
is
no
inheritance
or
estate
tail.
Unless
there
are
strong
words
to
force
us
to
the
contrary,
1.e.,
unless
anything
in
s.
3
governs,
we
must
prima
facie
hold
that
what
is
taxed
is
the
total
value
of
the
estate
as
it
existed
immediately
after
the
death,
or
perhaps
as
the
executor
or
administrator
can
realize
it
with
reasonable
promptitude,
when
we
take
the
values
to
relate
back.
Our
Legislature
in
1914
(First
Session,
c.
11)
took,
I
think
I
may
say
reluctantly,
its
first
step
in
the
raising
of
Death
Duties
as
a
war
revenue
measure.
It
did
not
attempt
to
initiate
the
close-meshed
and
wide-flung
net
of
the
English
Acts.
It
made
a
very
short
and
simple
Act
of
eight
sections
which
taxes
"‘the
estates
of
all
persons
dying
after’
‘
its
passing.
"‘Estate’’
was
not
defined,
but
by
implication
it
was
that
in
respect
of
which
Probate
or
Administration
is
applied
for.
The
Legislature
obviously
had
no
thought
of
the
position
which
arises
in
this
case,
the
same
position
which
the
English
Finance
Act
of
1894
had
overlooked.
I
feel
strongly
that
all
it
intended
to
do
was
to
take
a
modest
grab
out
of
what
a
deceased
left
behind
him.
It
put
in
the
next
year,
(1915,
c.
26)
a
few
elementary
precautions
against
deliberate
evasion
and
left
it
at
that.
The
precautions
referred
to
are
the
paragraphs
of
s.
3
already
quoted,
which
have
come
down
unaltered
to
the
present
except
for
the
addition
of
(h)
by
1936
ce.
9.
It
seems
to
me
quite
clear
that
the
Act
does
not
coerce
us,
as
would
the
English
1894
Finance
Act,
to
any
artificial
standard
of
value,
but
leaves
us
to
take
facts
as
we
find
them.
The
theory
of
the
Act
is
not
wholly
clear;
but
it
seems
to
me
to
be
governed
by
the
final
phrase
‘‘For
the
purposes
of
this
chapter
the
said
Estate
shall
be
held
to
be
the
estate
in
respect
of
which
Letters
of
Probate
or
Administration
are
applied
for.’’
That
leaves
us
with
the
question
of
‘‘value,’’
and
how
it
is
to
be
ascertained.
Much
argument
has
been
based
on
the
series
of
cases
in
Great
Britain
comprising:
The
Attorney-General
+.
Jameson,
[1904]
2
I.R.
644,
[1905]
2
I.R.
218;
Salvesen
f
s
Trustees
v.
Commissioners
of
Internal
Revenue
(1930),
Scots
Law
Times
387
and
Commissioners
of
Internal
Revenue
v.
Crossman
et
al.,
[1937]
A.C.
27,
House
of
Lords,
reported
as
of
the
Court
of
Appeal
in
[1935]
1
K.B.
26
and,
because
they
are
the
British
leading
cases
on
the
value
for
taxation
of
shares
restricted
as
to
transfer
and
transmission
and
because
they
involved
much
difference
of
judicial
opinion
and
because
the
Crown
rests
on
them,
and
because
contrast
with
them
seems
a
good
way
to
bring
out
the
difference
in
our
present
position,
it
seems
desirable
to
analyse
them.
All
three
cases
were
on
the
construction
of
the
(British)
Finance
Act
1894,
of
which
s.
7(5)
reads
in
part
as
follows:
"
‘
The
principal
value
of
any
property
shall
be
estimated
to
be
the
price
which,
in
the
opinion
of
the
Commissioners,
such
property
would
fetch
if
sold
in
the
open
market
at
the
time
of
the
death
of
the
deceased.’’
In
the
Jameson
case
the
Articles
of
Association
of
the
company
contained
(I
quote
the
headnote)
an
elaborate
series
of
provisions
relating
to
the
registration
of
holders
and
to
the
alienation
of
shares
in
the
company,
whereby
it
was
(inter
alia)
provided
that
any
member
proposing
to
transfer
a
share
should
serve
a
‘‘transfer
notice’’
upon
the
company
(who
were
not
bound
to
recognize
any
equitable
claim
in
a
share)
of
his
intention
to
transfer,
which
notice
constituted
the
company
his
agent
for
the
sale
of
the
share
to
any
member
at
the
"‘fair
value
thereof,”
the
latter
being
defined
as
a
sum
of
£100,
or
such
other
sum
as
should
from
time
to
time
be
fixed
as
the
"‘fair
value”
by
resolution
of
the
company
in
general
meeting.
No
share
could,
save
as
therein
provided,
be
transferred
to
a
non-member
so
long
as
any
member
was
willing
to
purchase
the
same
at
the
"‘fair
value,’’
the
directors
being
empowered
to
refuse
to
register
any
transfer
to
a
non-member
of
whom
they
did
not
approve,
such
transfer
being
void.
Upon
the
company,
within
twenty-eight
days
after
the
service
of
the
"‘transfer
notice,’’
finding
a
member
willing
to
purchase,
the
retiring
member
was
bound,
upon
payment
of
the
"‘fair
value,’’
to
transfer
the
share
to
the
purchasing
member,
in
default
of
which
the
company
might
receive
the
purchasemoney
and
enter
the
name
of
the
purchasing
member
in
the
register
as
the
holder
of
the
share.
In
the
event
of
the
company
not
finding
a
purchaser
within
the
twenty-eight
days
specified,
the
retiring
member
might,
within
three
months,
sell
and
transfer
the
share
to
any
person,
subject
to
the
approval
of
the
directors,
and
at
any
price.
It
was
also
provided
that
the
executors
or
administrators
of
a
deceased
member
should
be
the
only
persons
recognized
by
the
company
as
having
any
title
to
the
shares
registered
in
the
name
of
such
member,
and
that
any
person
becoming
entitled
to
a
share
in
consequence
of
the
death
of
any
member
might,
subject
to
the
regulations
contained
in
the
Articles,
transfer
such
share
to
himself
or
any
other
person;
the
executors
of
a
deceased
member
being
further
empowered,
subject
to
the
approval
of
the
directors,
to
transfer
the
share
of
such
member
to
his
son
or
brother,
or
to
any
son
or
brother
of
any
existing
member.
These
conditions
closely
resemble
those
in
the
present
Harvey
case.
The
defendants
argued
that
the
value
of
the
shares
in
the
market
could
not
be
more
than
the
"‘fair
value’
‘
of
£100
each
fixed
by
the
Articles,
because
a
purchaser,
looking
at
the
preemption
provisions
of
the
Articles,
would
not
be
safe
in
paying
more
than
£100.
If
he
were
foolish
enough
to
pay
more,
he
would
be
almost
certain
to
have
the
shares
(which
were
paying
at
least
20
per
cent
per
annum)
taken
from
him
and
given
to
some
member
of
the
company
for
£100,
and
he
would
lose
any
excess
he
had
paid
for
them.
He
would
not
have
any
right
to
get
on
to
the
register
himself.
The
Commissioners
of
Inland
Revenue
must
treat
these
shares
as
choses
in
action,
entitled
to
such
advantages
as
were
conferred
and
disadvantages
imposed
by
the
constitution
of
the
company.
The
Attorney-General
for
Ireland
on
the
other
hand
contended
that
by
reason
of
the
words
of
the
Act
there
must
be
a
suppositious
sale
at
which
all
the
world
might
bid,
and
after
which
any
purchaser
might
be
registered.
The
entire
value
of
the
shares,
he
said,
passed
on
death;
the
Articles
affected
only
the
distribution
of
that
value.
Section
22(1)
of
the
Act
defines
"
property
passing
on
death’
‘
as
including
property
passing
either
immediately
on
the
death
or
after
any
interval,
either
certainly
or
contingently.
These
shares,
he
said,
are
subject
to
three
contingencies,
(1)
that
an
existing
member
will
exercise
his
right
of
pre-emption;
(2)
that
no
member
will
exercise
that
right
and
that
the
share
will
be
sold
in
the
open
market
for
whatever
it
will
fetch
and
(3)
that
the
owner
may
be
able
by
the
exercise
of
his
right
of
pre-emption
to
buy
up
all
the
shares.
The
defendants,
he
said,
made
the
first
contingency
a
certainty
and
ignored
the
other
two.
(In
fact
in
this
case
the
brothers
John
and
George
Jameson
were
already
shareholders,
and
the
190
shares
bequeathed
by
the
testator
were
registered
in
their
names
as
trustees).
Kenny,
J.,
following
and
approving
the
doctrine
of
Farwell,
J.,
(as
he
then
was)
in
Borland’s
Trustees
v.
Steel
Bros.
&
Co.
Ltd.,
[1901]
1
Ch.
279
observes
first
that
the
shareholder
in
becoming
a
member
of
the
company
is
deemed
simultaneously
to
have
entered
into
a
contract
under
seal
to
conform
to
the
regulations
contained
in
the
Articles
of
Association.
(As
to
this
compare
s.
14
of
The
Newfoundland
Companies
Act,
e.
127
of
the
Consolidated
Statutes
of
1916.
This
section
corresponds
with
s.
16
of
the
English
Companies
Act
of
1862)
"Whatever
obligations
are.
contained
in
these
Articles,
.
.
.
are
inseparable
incidents
attached
to
his
rights,
and
the
idea
of
a
share
cannot,
in
my
judgment,
be
complete
without
their
inclusion.’’
This
was
the
view
taken
by
Farwell,
J.,
whose
language
was
adopted
by
Fitzgibbon,
L.J.,
in
Casey
v.
Bentley,
[1902]
2
I.R.
at
p.
393:
"
"
The
money
interest
and
the
contractual
obligations
form
one
whole
.
.
.
In
the
present
case
there
is
no
absolute
right,
estate
or
interest
conferred,
the
natural
incidents
of
which
are
subsequently
fettered.
The
thing
acquired
by
membership
in
the
company
is,
from
its
initial
stage,
a
restricted
and
fettered
thing.
It
never
had
attached
to
it
any
rights
of
free
alienation
which
were
sought
to
be
effected.’’
Kenny,
J.,
then
draws
attention
to
ss.
6
and
8(3)
of
the
1894
Act,
and
points
out
that
not
all
that
""
passed”
at
the
death,
but
only
that
which
the
testator
was
competent
to
dispose
of
at
his
death,
is
the
subject
of
estate
duty
under
the
Act;
and
he
observes
:
‘‘the
interest
of
the
deceased
in
the
company
was
one
in
which
from
its
very
creation
the
elements
of
free
and
uncontrolled
disposition
were
absent.
Compared
with
the
absolute
right
to
go
into
the
open
market
and
sell
to
any
outsider
and
for
the
best
price
property
that
was
subject
to
no
restrictions
present
or
future—this
interest
was
what
I
may
venture
to
call
a
dwarfed
and
stunted
thing.
But
it,
and
it
alone,
was
all
that
the
deceased
had
power
to
dispose
of
in
his
lifetime
and
which
his
executors
were
free
to
sell
and
transfer
after
his
death,
.
..
We
are
bound,
in
the
case
of
a
statute
imposing
a
tax
to
adopt
a
construction
favourable
to
the
subject,
unless
it
is
clear
that
he
comes
within
the
letter
of
the
law.
This
rule
is
forcibly
expressed
by
Lord
Cairns
in
Partington
v.
The
Attorney-General,
L.R.
4
H.L.
100
and
by
Lord
Blackburn
in
The
Oriental
Bank
Corporation
v.
Wright,
5
A.C.
842,
where
he
says
‘The
intention
to
charge
the
subject
must
be
shown
in
clear
and
unambiguous
language’
??.
And
he
holds
that
the
suppositious
sale
contemplated
by
the
Act
must
be
regarded
as
one
not
capable
of
being
made
to
any
member
of
the
public
unrestrictedly,
but
one
subject
to
the
preemption
clauses
of
the
Articles.
Boyd,
J.,
says
that
the
property
in
the
shares
held
by
the
testator
of
which
he
was
at
the
time
of
his
death
competent
to
dispose,
or
which
was
under
the
control
of
his
executors,
was
merely
the
property
he
had
in
the
shares
subject
to
the
restrictions
and
conditions
imposed
by
the
Articles
of
Association
;
and
that
is
all
on
which
his
executors
have
to
pay
duty.
He
agrees
in
all
things
with
Kenny,
J.,
Palles,
C.B.,
dissenting,
refers
to
s.
2(b)
of
the
Finance
Act,
which
taxes
"‘Property
in
which
the
deceased
or
any
other
person
had
an
interest
ceasing
on
the
death
of
the
deceased,
to
the
extent
to
which
a
benefit
accrues
or
arises
by
the
cesser
of
such
interest.’’
And
thus
he
thinks
that
the
residue
of
the
value
of
the
shares
over
and
above
the
pre-emption
price,
i.e.,
so
much
of
them
as
was
of
a
value
equivalent
to
the
right
of
pre-emption,
was
properly
within
s.
2(b)
and
thus
that
the
question
reduces
itself
to
one
of
valuation.
This
section
had
been
mentioned
in
argument;
but
as
to
property
passing
under
it,
the
executors
are
not
bound
to
pay,
as
appears
from
s.
8(4).
In
effect
he
seems
to
agree
with
the
analysis
of
the
nature
of
a
share
made
by
Kenny
and
Boyd,
JJ.,
but
to
include
for
the
purposes
of
the
supposed
sale
that
part
of
the
value
which
the
purchasing
member
would
get
on
a
compulsory
transfer.
But
he
argues
that
the
legal
title
to
the
shares
is
not
in
the
executors
until
they
can
get
themselves
registered
as
members;
and
the
right
of
the
executors
to
transfer
subject
to
this
obligation
of
compulsory
sale
is
the
only
right
or
interest
in
or
to
the
shares
of
their
testator
which,
under
the
Articles,
remains
to
them
and
this
is
plainly
not
the
full
equitable
interest
in
the
shares.
He
summarises
‘
‘
That
which
passed,
or
is
to
be
deemed
to
have
passed,
at
the
death,
is
the
entire
estate
in
the
shares;
that
which
is
the
subject
of
the
compulsory
sale
is
the
equitable
interest
therein,
subject
to
the
right
of
pre-emption.
The
difference
in
value
between
the
two
subject-matters
is
the
value
of
the
right
of
pre-emption.”
But,
he
says,
the
entire
equitable
interest
‘‘passed’’
at
the
death
of
the
deceased,
and
thus
is
taxable.
The
question
is
not
to
whom
property
passed,
but
what
is
to
be
deemed
to
have
passed.
He
holds
the
restrictive
conditions
of
the
Articles
to
be
collateral
to
the
share,
not
part
of
its
essence,
and
reserves
his
opinion
on
the
case
of
Borland’s
Trustees.
In
this
case
the
shares
were
left
to
executor-trustees
(themselves
entitled
to
be
registered,
apparently)
in
trust
for
several
children
of
the
testator
for
life,
and
then
over.
In
the
Irish
Court
of
Appeal
([1905]
2
I.R.
218)
Lord
Ashbourne,
C.,
endorsed
the
view
that
‘‘The
share
cannot
be
split
up
and
considered
apart
from
its
contractual
incidents.
The
Articles
are
part
and
parcel
of
the
share,
and
not
collateral
and
separable.”
Then
he
goes
on
to
say
that
the
Attorney-General,
who
seeks
to
brush
aside
the
Articles
and
to
vest
in
the
executors
a
property
which
Henry
Jameson
never
possessed,
would
ascribe
to
the
Finance
Act
1894
the
power
of
making
a
new
subject-matter
;
while
the
argument
of
the
defendants
gives
really
no
adequate
significance
to
the
words
of
the
Act
requiring
the
Commissioners
to
estimate
the
price
which
the
shares
would
fetch
in
the
open
market.
Each,
he
says,
goes
to
an
indefensible
extreme.
His
conclusion
is
that
the
commissioners
should
estimate
the
price
which
the
shares
would
fetch
if
sold
in
the
open
market
on
the
terms
that
the
purchaser
should
take
and
hold
them
subject
to
the
Articles
of
Association
;
observing
that
it
was
a
most
improbable
event
that
the
power
of
pre-emption
would
not
be
used.
Fitzgibbon,
L.J.,
says
that
Henry
Jameson
was
competent
to
dispose
of
his
shares
and
all
his
interest
therein;
on
his
death
there
was
no
cesser
of
any
interest
in
them,
and
no
benefit
in
respect
of
them
accrued
or
arose
to
any
person,
by
any
title
or
from
any
source
other
than
the
passing
of
the
property
to
his
executors.
He
bases
his
conclusion
on
the
unity
and
indivisibility
of
Henry
Jameson’s
property
in
the
shares,
rejecting
the
idea
of
Pâlies,
C.B.,
that
the
value
of
the
pre-emption
right
can
be
left
out
of
account.
The
right
of
pre-emption
is
a
depreciating
incident
;
but
the
right
of
Henry
Jameson
or
any
person
standing
in
his
shoes
to
pre-empt
iS
an
appreciating
incident.
He
agrees
that
it
cannot
be
assumed
that
the
purchaser
would
get
what
Henry
Jameson
never
had,
viz.,
Shares
freely
transferable.
Walker,
L.J.,
observes
that
the
executors
are
liable
for
duty
only
on
the
property
of
which
the
testator
was
competent
to
dispose;
and
since
the
whole
interest
in
the
shares
has
already
been
registered
in
the
executors,
they
are
precluded
from
saying
that
the
whole
interest
of
Henry
Jameson
is
not
vested
in
them.
He
endorses
the
view
that
the
shares
must
be
deemed
to
be
sold
in
a
hypothetical
open
market
but
taken
subject
to
the
Articles.
Holmes,
L.J.,
observes
significantly
that
it
is
unnecessary
for
him
to
consider
what
would
have
been
the
result
if
the
executors
had
been
strangers;
for
the
testator’s
two
brothers,
John
and
George
Jameson,
are
now
the
registered
holders
of
the
shares,
and
have
the
same
rights
in
respect
of
pre-emption
as
Henry
Jameson
had
while
he
was
alive.
He
agrees
that
the
true
position
requires
a
hypothetical
sale
in
the
open
market,
the
shares
to
be
taken
with
the
incidents
attached
by
the
Articles.
It
seems
to
me
to
be
clear
that
the
basis
of
the
judgments
in
the
case
as
a
whole
is
that
the
Act
compels
this
hypothetical
sale
in
the
open
market.
There
was
apparently
no
other
case
on
this
particular
subject
until
Salvesen’s
Trustees
v.
Commissioners
of
Inland
Revenue
(1930),
Scots
Law
Times
387,
before
Lord
Fleming.
The
restrictions
on
holding
and
transfer
of
shares
in
this
case
were
in
some
points
looser,
in
some
points
more
severe
than
in
the
Jameson
case,
but
in
general
tenor
there
was
no
substantial
distinction.
Lord
Fleming
observes
that
if
the
requirements
of
the
Articles
are
complied
with,
a
sale
in
the
open
market
in
a
reasonable
sense
appears
to
be
impossible.
He
goes
on:
"
"
The
Act
of
Parliament
requires,
however,
that
the
assumed
sale,
which
is
to
guide
the
Commissioners
in
estimating
the
value,
is
to
take
place
in
the
open
market.
Under
these
circumstances
I
think
that
there
is
no
escape
from
the
conclusion
that
any
restrictions
which
prevent
the
shares
from
being
sold
in
the
open
market
must
be
disregarded
so
far
as
the
assumed
sale
under
s.
7(5)
of
the
Act
of
1894
is
concerned.
But,
on
the
other
hand,
the
terms
of
that
subsection
do
not
require
or
authorize
the
Commissioners
to
disregard
such
restrictions
in
considering
the
nature
and
value
of
the
subject
which
the
hypothetical
buyer
acquires
at
the
assumed
sale.
Although
he
is
deemed
to
buy
in
an
open
and
unrestricted
market,
he
buys
a
share
which,
after
it
is
transferred
to
him,
is
subject
to
all
the
conditions
in
the
Articles
of
Association,
including
the
restrictions
on
the
right
of
transfer,
and
this
circumstance
may
affect
the
price
which
he
would
be
willing
to
offer.”
He
observes
also
that
a
very
drastic
article
enabling
the
buying
out
and
compulsory
retirement
of
a
member
holding
less
than
10
per
cent
of
the
shares
in
the
company
at
the
‘‘fair
value”
fixed
by
the
company’s
auditors
would
have
a
very
deprecatory
effect
at
the
sale.
This
legacy
included
more
than
10
per
cent
of
the
shares,
but
the
purchaser
might
be
debarred
from
splitting
up
his
holding.
It
is
interesting
for
our
present
purpose
to
note
that
in
considering
the
assessment
of
value
at
the
hypothetical
sale
Lord
Fleming
referred
to
four
heads,
viz.
(1)
the
history
of
the
whaling
industry,
which
was
the
business
of
the
company
(2)
the
history
of
the
company
from
its
inception
to
the
date
of
the
testator’s
death,
and
particularly
its
position
at
that
date
(3)
the
prospects
of
the
whaling
industry
generally
at
that
date,
and
of
this
company
in
particular
and
(4)
to
what
extent
the
restrictions
in
the
Articles
might
be
expected
to
depreciate
the
value
of
the
shares.
The
report
however
omits,
unfortunately,
details
of
his
discussion
under
these
heads.
It
does
not
appear
from
the
report
whether
the
shares
left
by
the
testator
passed
to
persons
entitled
to
be
registered
in
their
own
right
or
not.
The
effect
of
this
decision
seems
to
be
that
the
hypothetical
sale,
in
fact
impossible,
is
notionally
carried
out
because
the
Act
of
1894
compels
it.
We
then
turn
to
the
leading
case
of
Commissioners
of
Internal
Revenue
v.
Crossman,
Mann
et
al.,
[1937]
A.C.
26,
tried
in
the
House
of
Lords,
on
appeal
from
the
Court
of
Appeal,
[1935]
1
K.B.
26
(where
it
is
reported
as
In
re
Sir
Wm.
Thomas
Paulin
and
In
re
Percy
Crossman)
and
on
appeal
from
Finlay,
J.,
in
the
first
instance.
In
this
case
there
were
the
usual
variety
of
restrictive
clauses;
but
it
may
be
noted
that
the
fair
value
of
a
share
in
a
case
where
a
member
of
the
family
was
buying
was
to
include
a
full
proportion
of
reserves,
undivided
profits,
etc.,
etc.,
though
if
a
stranger
was
buying
the
price
was
to
be
par.
The
Articles
were
framed
very
much
with
a
view
to
keeping
control
in
the
male
lines
of
the
families
concerned,
over
25
years
of
age,
and
even
went
so
far
as
to
provide
for
appointments
by
will
of
shares
effective
on
the
appointee
‘s
attaining
the
age
of
25
and
for
the
disposition
of
the
interim
income
therefrom
to
other
members
of
the
family,
including
women
and
minors;
they
read
almost
more
like
a
family
settlement
than
a
business
contract.
Finlay,
J.,
in
the
first
instance
held
himself
bound
in
principle
by
the
Jameson
and
Salvesen
decisions.
In
the
Court
of
Appeal,
Lord
Hanworth,
M.R.,
quotes
s.
7(5)
of
the
Finance
Act,
1894
as
the
relevant
section,
and
draws
attention
to
the
word
"‘open’’
in
the
phrase
"‘open
market,’’
which
he
considers
to
indicate
that
there
must
not
be
any
restriction
on
the
persons
who
become
buyers
in
the
notional
sale
;
there
cannot
be
restrictions
to
a
special
class,
such
as
the
members
of
the
family,
nor
should
the
attraction
of
the
shares
to
a
special
class,
such
as
trust
companies,
be
given
undue
weight.
He
adopts
the
analysis
of
Farwell,
J.,
in
Borland’s
Trustees
v.
Steel
Bros.
&
Co.,
[1901]
1
Ch.
279
as
to
the
nature
of
a
share
in
a
company.
He
feels
that
the
judgment
of
the
Irish
Court
of
Appeal
in
the
Jameson
case
was
right.
He
does
not
agree
with
the
view
of
Palles,
C.B.,
that
the
restrictions
in
the
Articles
are
merely
collateral.
On
the
whole
he
feels
that
Finlay,
J.,
was
right;
but
the
other
two
members
of
the
Court
of
Appeal
differ
from
him.
Slesser,
L.J.,
quotes
s.
7(5)
again
as
his
basis;
and
observes
that
Farwell,
J.’s
interpretation
of
the
nature
of
a
share
in
a
company
is
now
held
beyond
question
in
Britain.
He
says
(at
p.
51)
:
"‘If
however
these
shares
are
to
be
regarded
as
containing
as
necessary
incidents
the
obligation,
if
they
are
to
be
sold,
of
their
being
offered
through
the
agency
of
the
company
to
other
holders
of
ordinary
shares
at
the
limited
price
of
something
over
£200,
I
cannot
see
how
the
purchaser
of
these
shares
in
the
open
market
can
be
deemed
to
be
upon
the
register
at
a
higher
price
without
doing
violence
to
such
necessary
elements
in
the
proprietary
value
of
the
share
itself.
This
was
the
view
which
commended
itself,
as
I
have
said,
to
the
majority
of
the
Court
of
the
King’s
Bench
Division
in
Ireland,
.
.
.
I
share
the
doubts
expressed
by
Kenny,
J.,
that
the
legislature
contemplated
such
a
metamorphosis
of
the
incidents
of
the
particular
property
by
the
use
of
the
words
‘if
sold
in
the
open
market'.''
He
is
unable
to
follow
the
logic
of
the
compromise,
as
he
calls
it,
whereby
the
purchaser
in
the
hypothetical
open
market
is
supposed
to
be
himself
freed
from
the
articles
yet
to
take
the
shares
subject
to
the
articles.
Romer,
L.J.,
in
his
turn
approves
the
analysis
of
the
nature
of
a
share
by
Farwell,
J.,
saying:
"
i
When
therefore
the
owner
of
a
share
dies,
what
passes
on
his
death
and
what
has
to
be
valued
for
the
purpose
of
estate
is
nothing
more
than
the
totality
of
his
rights
and
liabilities
as
they
exist
under
the
provisions
of
the
Companies
Act,
and
the
constitution
of
the
particular
company.
This
consideration
seems
to
me
to
be
at
the
very
root
of
the
matter
with
which
we
have
to
deal
in
this
case.
‘
‘
And
again,
"
"
If
on
the
other
hand,
as
I
think
is
the
case,
the
inability
to
confer
upon
such
a
purchaser
a
right
of
registration
is
a
part
of
the
essence
of
a
share,
its
value
must
be
ascertained
with
a
due
recognition
of
that
fact.
In
this
respect
a
share
in
no
way
differs
from
the
benefit
under
any
other
contract
which
passes
upon
death.”
He
concludes
that
he
cannot
agree
with
the
Irish
Court
of
Appeal,
and
that,
dealing
with
a
taxing
Act,
notwithstanding
the
lapse
of
time,
it
is
the
duty
of
the
present
Court
to
say
so
if
it
does
disagree.
We
then
turn
finally
to
the
House
of
Lords.
In
the
Court
of
Appeal
Romer
and
Slesser,
L.JJ.,
held
against
Lord
Hanworth,
M.R.
In
the
House
of
Lords
Viscount
Hailsham,
L.C.,
and
Lords
Blanesburgh
and
Roche
held
against
Lords
Russell
of
Killowen
and
Macmillan.
In
no
case
can
there
have
been
much
more
division
of
judicial
opinion.
Lord
Hailsham,
L.C.,
says
that
the
whole
controversy
turns
on
the
meaning
to
be
attached
to
s.
7(5).
What,
he
asks,
is
the
property
to
be
valued
?
He
rejects
the
argument
that
the
property
actually
passed
on
death,
but
that
on
the
death
there
came
into
effect
a
fresh
set
of
rights
determined
by
the
terms
of
the
Articles.
He
observes
that
in
Cowley
v.
Commissioners
of
Inland
Revenue,
[1899]
A.C.
198
Lord
Macnaghten
pointed
out
that
the
question
under
the
Act
is,
what
passes,
not,
what
was
the
interest
of
the
deceased.
He
considers
that
what
has
passed
in
this
case
is
the
shares
in
the
company.
To
value
the
shares
on
the
basis
that
the
restrictions
contained
in
the
Articles
are
to
be
ignored
would
be
to
value
something
which
the
deceased
never
possessed,
and
which
could
not
pass
at
his
death.
All
that
the
executors
could
in
fact
sell
in
the
open
market
at
the
time
of
the
death
was
the
right
to
receive
the
pre-emption
price.
But
the
property
which
passed
cannot
be
equated
with
the
right
so
saleable,
because
the
privileges
and
benefits
attached
to
the
share
are
just
as
much
elements
in
its
value
as
the
restrictive
factors.
The
hypothetical
sale
of
the
whole
share
must
be
carried
out,
notwithstanding
that
an
actual
sale
of
this
amount
take
place.
The
property
valued
is
determined
by
the
earlier
sections
;
s.
7
(5)
is
merely
a
statutory
direction
as
to
the
manner
in
which
the
value
is
to
be
ascertained.
Lord
Blanesburgh
says
that,
except
in
cases
under
s.
3
of
the
Finance
Act,
it
is
immaterial
to
whom
the
property
has
actually
passed,
whether
to
purchasers,
legatees,
or,
in
the
case
of
pre-empted
shares,
to
other
members
of
the
company
issuing
them.
The
question
is
not,
to
whom
has
the
property
passed;
it
is,
whether
it
has
passed
at
all.
If
it
has
passed,
then,
subject
to
a
case
covered
by
s.
3,
no
existing
contract
with
reference
to
the
property,
although
binding
on
the
deceased’s
estate,
has
any
influence
on
the
commissioners’
estimate
of
the
price
which
in
the
open
market
the
property
would
fetch.
The
deceased’s
entire
legal
and
equitable
property
in
the
shares
passed;
each
share
a
separate
entity,
an
indivisible
piece
of
property.
And
he
quotes
Fitzgibbon,
L.J.,
in
Jameson’s
case,
[1905]
2
I.R.
218,
228.
The
analytical
method
would
attribute
one
quality
to
shares
held
by
men,
another
to
those
held
by
women,
and
so
on
(view
of
the
discrimination
against
female
holders
in
the
Articles).
He
rejects
the
idea
of
Palles,
C.B.,
that
the
Articles
value
and
the
preemption
value
pass
separately.
The
commissioners
must
assume
that
the
whole
property
passes,
and
that
the
hypothetical
purchaser
can
be
registered.
And
the
right
of
pre-emption
does
not
withdraw
the
property
from
the
operation
of
s.
7(5).
In
brief,
the
shares
are
entities;
the
value
of
the
pre-emption
right,
""deemed
to
pass’’
under
s.
2
is
part
of
their
value
;
and
Article
34
does
not
prevent
the
notional
sale,
though
it
operates
to
reduce
the
price
which
will
be
obtained
on
such
sale.
Lord
Roche,
agreeing
with
the
Irish
Court
of
Appeal,
says
that
the
notional
sale
in
the
open
market
must
take
place,
because
of
the
Act,
and
it
is
necessary
to
assume
the
right
of
the
notional
purchaser
to
be
registered.
Much
more
passed
on
the
death
than
the
mere
obligation
to
transfer
shares
at
the
Articles
price.
Section
7(5)
provides
a
hypothetical
method
for
assessing
value,
and
must
be
made
to
fit
the
case.
Regard
cannot
be
had
to
the
particular
method
of
disposition
adopted
by
the
shareholder.
We
then
turn
to
the
two
dissenting
Lords.
Lord
Russell
of
Killowen
says
that
the
problem
is
not
to
ascertain
the
actual
value
of
the
shares,
or
their
true
value,
or
their
intrinsic
value,
or
their
value
in
some
particular
person’s
ownership.
The
value
to
be
ascertained
is
their
statutory
value;
the
"‘principal
value
ascertained
as
hereinafter
provided’’
of
the
property
passing
on
death,
by
means
of
s.
7(5).
No
difference
can
be
drawn
between
the
1,000
shares
appointed
to
Sir
Wm.
Paulin’s
daughters
and
the
600
shares
which
formed
part
of
his
residuary
estate.
The
yard-stick
is
the
same
for
all
;
the
suppositious
sale
in
open
market.
The
whole
process
is
hypothetical.
And
since
the
hypothetical
sale
takes
place
at
the
time
of
death;
the
hypothetical
vendor
must
be
either
the
dying
shareholder
or
his
legal
personal
representative.
If
the
shares
to
be
sold
at
the
hypothetical
sale
are
shares
free
from
the
right
of
pre-emption,
they
are
hypothetical
shares.
He
cannot
see
anything
in
s.
7(5)
to
justify
the
view
that
what
is
sold
may
be
anything
other
than
the
entire
bundle
of
rights
and
obligations
which
constitute
the
share.
The
requirement
that
property
be
sold
in
the
open
market
cannot
alter
the
nature
or
character
of
the
property
there
offered
for
sale.
The
words
4
‘open
market’’
postulate
freedom
of
access
to
the
market,
not
freedom
from
restrictions
attaching
to
the
subject-matter
of
the
sale.
He
quotes
Romer,
L.J.,
who
said
‘‘I
can
find
nothing
in
s.
7(5)
to
warrant
the
commissioners
in
estimating
the
value
of
property
passing
on
death
by
reference
to
the
price
that
would
be
paid
in
the
open
market
for
property
that
did
not
so
pass.’’
Lord
Macmillan
says
the
problem
is
one
of
applying
a
statutory
enactment
to
a
situation
which
was
manifestly
not
in
the
contemplation
of
the
Legislature
when
it
was
enacted.
If
it
is
conceived
that
the
shares
are
to
be
offered
in
the
open
market,
he
must
conceive
them
as
being
offered
to
the
purchaser
with
all
their
attributes,
and
if
these
include
conditions
which
restrict
either
the
rights
of
enjoyment
or
the
rights
of
alienation
of
the
holder,
then
the
sale
must
be
of
the
shares
so
restricted;
the
Finance
Act
confers
no
power
to
strip
the
shares
of
their
inherent
attributes.
These
conditions
in
restriction
would
immediately
display
their
efficacy
to
the
purchaser.
He
agrees
with
Lord
Russell’s
views.
Thus
the
difference
between
the
majority
of
the
House
and
the
minority
seems
to
turn
on
the
questions
of
what
"‘passed''
on
the
death,
and
what
happens
at
the
hypothetical
sale,
which
1s,
under
the
Finance
Act
of
1894,
the
sole
standard
of
value.
I
have
endeavoured
to
follow
through
and
reduce
to
a
précis
the
course
of
argument
and
decision
in
these
leading
cases
to
accentuate
the
differences
between
the
English
position
and
our
present
position,
and
to
demonstrate,
what
I
think
is
clear,
that
the
British
decisions
in
favour
of
the
taxing
authority
all
along
have
been
based
on
the
necessity
seen
by
the
deciding
judges
to
carry
out
the
hypothetical
sale
contemplated
by
s.
7(5)
with
the
assumptions
as
to
restrictions
contemplated
by
the
Jameson-
Salvesen-Crossman
doctrine,
if
I
may
so
compendiously
describe
it
;
a
process,
as
Lord
Roche
describes
it,
of
forcing
to
fit
the
facts
a
machinery
which
the
Legislature
had
constructed
for
another
purpose.
Can
it
be
supposed
that
the
majority
decisions
would
have
gone
as
they
did
in
the
absence
of
s.
7(5)
of
the
Finance
Act
of
1894?
I
cannot
believe
it.
But
in
our
case
we
have
no
such
section
as
7(5)
and
no
such
process
of
suppositious
sale.
Nor
does
our
Act
emphasize
the
question
of
‘‘passing.’’
Are
we
required
to
drag
these
things
in?
I
think
not.
There
are
two
lots
of
the
ordinary
shares
in
these
private
companies
to
be
considered;
those
which
were
actually
held
by
the
late
G.
C.
Harvey
and
some
which
are
held
by
trustees
under
trusts
set
up
by
the
father
of
the
deceased,
the
late
A.
J.
Harvey,
under
which
trusts
the
late
G.
C.
Harvey
was,
and
his
Estate
is,
a
beneficiary.
The
two
lots
must
be
dealt
with
separately,
as
in
one
case
there
is
a
sale
and
in
the
other
there
is
none.
The
administrator
sold
to
Mr.
R.
C.
Harvey
in
intending
pursuance
of
the
Articles
the
whole
of
the
shares
in
A.
Harvey
&
Co.
Ltd.
and
Harvey
Estates
Ltd.;
he
did
not
sell
two-thirds
and
transfer
in
specie
the
one-third
which
would
naturally
fall
to
Mr.
Harvey
in
distribution.
It
seems
clear
from
his
evidence
that,
failing
a
sale
of
the
whole,
he
had
not
enough
cash
assets
to
discharge
the
liabilities
of
the
Estate,
including
the
demands
of
the
Assessor
of
Taxes
and
a
considerable
overdrawn
account
of
the
deceased
in
A.
Harvey
&
Co.
Ltd.
If
he
had
had
adequate
cash
assets,
no
doubt
he
might
have
made
a
transfer
in
specie.
But
it
was
not
so,
and
in
fact
he
has
elected
to
sell,
and
sets
up
adequate
reasons.
Can
we
go
behind
the
fact
in
the
exercise
of
his
discretion
he
has
in
fact
sold
the
shares
to
Mr.
R.
C.
Harvey
at
par
after
first
offering
them
to
the
directorate,
where
apparently
he
found
no
other
takers?
This
is
not
an
application
in
the
matter
of
the
Estate
of
Gerald
C.
Harvey
asking
us
to
set
aside
any
act
of
the
administrator.
I
do
not
feel
that
we
can
do
so
in
this
proceeding.
Perhaps
also
he
did
something
which
in
his
opinion
would
reduce
death
duty
on
his
estate.
Unless
there
is
some
clear
law
to
prevent
him,
we
cannot
make
one;
on
the
contrary,
we
have
to
give
the
taxpayer
the
benefit
of
a
genuine
doubt.
Therefore
we
cannot
distinguish
in
value
to
the
Estate
between
the
shares
which
might
have
gone
to
Mr.
R.
C.
Harvey
by
devolution
and
those
which
fell
to
other
next
of
kin
whom
the
company
refuses
to
register.
Could
we
insist
that
any
of
the
next
of
kin
be
registered,
or
do
anything
against
the
company’s
refusing
to
register
them
or
against
the
Articles
price?
Certainly
not
in
this
proceeding.
As
to
whether
we
could
do
so
in
some
other
proceeding
I
need
not
decide;
but
it
is
quite
possible
that
we
could
not.
The
company
might
say
‘“We
want
only
male
transferees,
of
business
age,
resident
here
and
capable
of
being
useful
in
the
business;
perhaps
of
succeeding
the
present
directors.
And
as
to
any
sales
outside
it
is
in
the
interest
of
the
company
that
control
remain,
as
it
has
so
long
remained,
divided
equally
between
two
managing
families.
Therefore
it
is
in
the
interest
of
the
company
that
transferees,
other
than
Mr.
R.
C.
Harvey,
should
not
come
in,
and
our
objection
to
registering
is
bona
fide.
ff
On
the
strength
of
cases
like
Albert
Phillips
&
Albert
Phillips
Ltd.
v.
Manufacturers
Securities
Ltd.,
116
L.T.
290;
Sidebottom
v.
Kershaw
Leese
&
Co.,
[1920]
1
Ch.
154
and
Jn
re
Smith
&
Fawcett
Ltd.,
166
L.T.
Rep.
279
this
argument
might
well
be
put
up,
and
the
result
is
very
far
from
being
a
foregoing
conclusion.
The
tendency
is
to
refuse
to
interfere
with
bona
fide
action
by
the
directors.
There
is
then
the
question
:
what
is
the
value
to
G.
C.
Harvey’s
Estate
of
his
one-fourth
interest
in
the
A.
J.
Harvey
Trust,
and
Residue
of
Estate,
as
shown
in
the
inventory?
The
Residue
and
the
Trust
include
shares
in
all
the
companies
we
are
now
discussing,
held
by
trustees,
who
are
registered.
We
cannot
control
those
trustees
in
this
proceeding.
Probably
they
are
not
going
to
transfer;
nor
have
these
shares
as
such
passed
by
transmission
or
devolution
on
Mr.
G.
C.
Harvey’s
death.
If
the
trustees
have
to
break
up
their
holdings,
which
we
cannot
do
in
this
proceeding,
they
will
doubtless
dispose
of
them
to
other
members
at
the
Articles
price;
and
there
is
no
law
to
prevent
it.
But
as
it
is,
these
shares
remain
static;
the
trustees
at
G.
C.
Harvey’s
death
continue
to
enjoy
them
for
the
benefit
of
their
beneficiaries
exactly
as
they
did
before
the
death.
The
shares
continue
to
have
whatever
value
as
revenue-producing
properties
they
had
before.
Therefore
it
seems
to
me
that
they
must
be
assigned
a
value
on
some
factual
basis
other
than
the
Articles
sale
value,
although
they
are
subject
to
that
Articles
sale
value
if
they
come
to
be
transferred
at
any
time.
We
may
now
look
back
at
paragraphs
(a),
(d)
and
(g)
of
s.
3
of
the
Death
Duties
Act
No.
7
of
1934,
the
only
ones
which
can
possibly
help
the
Crown’s
argument.
As
to
(a),
"‘any
interest
in
property,
whether
expectant
or
contingent’’
must
refer
to
future
accretions,
not
existing
contingencies.
As
to
(d),
the
deceased
acquired,
or
took
from
an
ancestor,
shares
of
the
essence
of
whose
nature
it
was
that
certain
rights
were
not
to
survive
him.
We
cannot
call
this
essential
nature
of
the
shares
a
"‘dis-
position’’
by
him,
or
an
act
of
his.
The
paragraph
seems
to
be
meant
to
deal
with
ad
hoc
legal
arrangements.
As
to
(g),
I
cannot
see
how
the
interest
of
the
deceased
in
the
shares
can
be
called
a
limited
interest
to
be
determined
on
death.
His
interest
in
the
shares
was
complete,
not
limited.
He
owned
them
absolutely
;
that.
they
were
the
vehicles
of
certain
rights
and
not
of
others
was
of
their
very
nature,
not
his
doing.
These
paragraphs
do
not
help
the
Crown’s
argument.
I
feel
that
by
this
stage
we
are
sure
of
one
thing;
that
there
is
no
clear
and
unambiguous
taxing
law
to
be
found
to
fit
this
case.
In
its
absence
our
course
should
be
guided
by
what
was
said
by
Lord
Parker
in
Brunton
v.
Stamp
Duties
Commissioners,
[1913]
A.C.
143
"The
intention
to
impose
a
tax
or
duty
.
.
.
must
be
shown
by
clear
and
unambiguous
language,
and
cannot
be
inferred
from
ambiguous
words.’’
That
is
a
well-known
doctrine.
It
may
be
that
there
is
a
case
here
where
the
revenue
is
missing
something.
The
fact
is
that
we
are
dealing
with
a
situation
with
which
the
Legislature
has
not
coped
effectively,
and,
that
being
so,
so
much
the
worse
for
the
revenue.
It
may
be
noted
that
if
we
fell
in
with
the
claim
of
the
Assessor
in
this
matter
it
would
have
this
result
:
that
whereas
all
the
value
of
the
shares
save
the
par
price
passed
by
virtue
of
the
Articles
to
an
existing
member
of
the
company,
the
beneficiaries
of
the
Estate
as
such,
receiving
only
the
par
value
and
paying
duty
on
an
assumed
high
value
would
suffer
a
most
severe
blow.
If
the
statute
compelled
us,
it
could
not
be
helped
;
but
we
must
tend
to
view
askance
an
argument
which
would
produce
so
inequitable
a
result.
It
is
necessary,
I
think,
to
refer
to
the
sole
Canadian
case
cited,
and
to
the
sole
Newfoundland
case
reported.
The
New
Brunswick
Supreme
Court
in
Emerson
et
al.
v.
Provincial
Treasurer,
[1941]
2
D.L.R.
232,
seems
to
have
proceeded
on
the
basis
that
a
company
under
the
New
Brunswick
Act
(R.S.N.B.
1927
e.
88,
s.
90)
is
‘
‘not
a
matter
of
contract
like
an
English
company,
and,
second,
that
a
company
formed
under
our
Act
is
a
pure
creature
of
Statute’’
(Baxter,
C.J.,
at
p.
237).
For
this
Baxter,
C.J.,
quotes
Canada
National
Fire
Insce.
Co.
v.
Hutchings,
a
Manitoba
case
which
went
to
the
Privy
Council
;
the
Privy
Council
Report
is
to
be
found
in
39
D.L.R.
(1918),
at
p.
401.
In
that
ease
the
question
was
whether
a
company
had
power
to
make
a
by-law
restricting
or
empowering
its
directors
to
veto
the
transfer
of
its
shares.
Sir
Walter
Phillimore,
delivering
the
judgment
of
the
Board,
says,
at
p.
404,
‘‘In
the
argument
for
the
appellants
stress
was
laid
upon
the
line
of
English
decisions
upon
eases
of
this
nature
arising
under
the
Joint-Stock
Companies
Acts.
There
is
however
for
the
present
purpose
no
analogy
between
Companies
in
the
United
Kingdom,
which
are
formed
by
contract,
whether
it
be
under
deed
of
settlement
or
under
Memorandum
and
Articles
of
Association
to
which
the
Registrar
of
Companies
necessarily
assents
if
the
documents
are
regular
in
form,
and
Canadian
Companies
which
are
formed
under
the
Canadian
Companies
Act,
either
by
letters
patent
or
by
special
act.
A
nearer
resemblance
would
be
found
in
the
Companies
Clauses
Act
1845.’’
He
observes
that
the
companies
in
question
were
constituted
by
special
Acts
incorporating
Part
II
of
the
Companies
Act
1906
(c.
79
of
the
Dominion
Statutes)
and
quotes
ss.
182
to
146
of
the
general
Act
as
to
the
matters
in
respect
of
transfer
of
shares
on
which
the
Directors
may
make
by-laws.
Section
138
reads
as
follows:
“138.
The
Stock
of
the
Company
shall
be
personal
estate
and
shall
be
transferable
in
such
manner
only
and
subject
to
such
conditions
and
restrictions
as
are
prescribed
by
this
Part,
or
by
the
Special
Act,
or
the
by-laws
of
the
Company.’’
As
to
the
last
six
words,
which
I
have
italicized,
Sir
W.
Philli-
more
says
on
behalf
of
the
Board,
"This
provision
however
is
not
to
be
construed
as
empowering
the
company
to
make
restrictive
by-laws.
The
power
to
make
by-laws
is
in
s.
132
and
it
is
confined
in
this
matter
to
by-laws
regulating
.
.
.
the
transfer
of
stock.
Regulation
does
not
mean
restriction,
still
less
subjection
to
an
arbitrary
veto.”
He
refers
to
Re
Imperial
Starch
Co.,
10
O.L.R.
22,
at
p.
25
and
to
Re
Good
and
Jacob
Y.
Shantz,
Son
&
Co.,
23
O.L.R.
544.
Our
Newfoundland
Companies
Act
however
(c.
127
of
the
1916
Consolidated
Statutes)
is
based
on
the
English
Act
of
1862,
and
adopts
the
same
principles;
thus
the
Newfoundland
Companies
now
in
question
are
constituted
by
contract.
The
Emerson
case
is
decided,
in
the
last
paragraph
of
Baxter
C.J.’s
judgment,
on
the
point
that
the
transfer
of
the
shares
is
unrestricted
because
the
restriction
is
ultra
vires.
The
rest
of
the
judgment
therefore,
on
the
application
of
the
Jameson
principle,
is
obiter.
And
the
whole
case
is
on
a
succession
duty
on
a
legacy,
not
a
death
duty
on
an
estate.
What
passes
as
a
succession
to
shareholders
who
can
be
registered
is
not
necessarily
the
same
as
what
an
administrator
can
realize
as
part
of
the
estate.
In
any
case,
with
great
respect,
I
cannot
agree
with
Baxter,
C.J.,
that
the
British
decisions
culminating
in
the
Crossman
case
do
not
turn
on
s.
7(5)
of
the
Finance
Act.
I
feel
that
they
do.
Lord
Hailsham
himself
in
the
House
of
Lords,
[1937]
A.C.
at
p.
39,
says
expressly,
speaking
of
s.
7(5)
of
the
Finance
Act
1894,
‘
‘
It
is
upon
the
meaning
to
be
attached
to
this
subsection
that
the
whole
controversy
turns.’’
As
to
our
own
one
and
only
reported
case,
In
re
Hugh
Baird,
deceased,
11
Nfld.
Select
Reports
239,
tried
in
March,
1923,
our
predecessors,
Horwood,
C.J.,
and
Johnson
and
Kent,
JJ.,
say
that
the
principle
of
the
Jameson
ease
should
be
applied;
but
they
do
not
give
any
reasons
or
argument.
(They
all
make
the
point
that
undistributed
reserves
of
the
Company
form
no
part
of
the
estate
of
the
deceased
shareholder.)
The
judgments
are
very
scanty.
The
Salvesen
and
Crossman
cases
had
not
at
that
time
been
tried.
Reference
to
the
records
of
the
Court
indicates
that
no
question
of
the
sale
of
shares
at
Articles
price
arose
in
that
ease;
they
were
all
registered
in
the
names
of
the
executors.
Failing
reasons
why
the
Judges
held
the
Jameson
principle
to
apply,
for
the
purposes
of
valuation,
I
can
only
say
that
it
does
not
seem
to
me
to
do
so,
and
as
this
is
a
tax
case,
I
am
bound
to
say
so.
I
feel
that
valuation
should
have
been
on
a
factual,
not
an
artificial
basis.
Now
to
consider
the
actual
value
of
ordinary
shares
in
A.
Harvey
&
Co.
Ltd.
At
present
the
company
produces
good
revenue.
It
did
not
do
so
before
the
War.
It
may
not
do
so
a
few
years
hence,
when
the
War
boom
and
its
aftermath
are
over.
The
increasing
use
of
oil
is
working
against
coal
companies.
The
exchange
situation
is
working
against
the
bunkering
here
of
European
ships.
The
position
of
the
company,
like
that
of
other
local
concerns,
has
been
affected
by
Confederation
with
Canada
in
ways
the
full
import
of
which
may
not
became
clear
for
years.
A.
Harvey
&
Co.
Ltd.
holds
a
large
investment
in
the
bakery
industry
(Browning-Harvey
Ltd.),
which
may
for
the
same
reason
be
substantially
affected.
Canadian
National
Railway
competition
is
cutting
into
the
shipping
business
since
the
Union.
The
shares
have
probably
no
outside
selling
value.
The
restrictions
are
very
deprecatory
in
the
case
of
small
holdings.
Local
business
people
would
not
want
to
push
themselves
into
the
affairs
of
another
firm
;
indeed
if
the
interest
purchased
were
less
than
one-fifth,
the
purchaser
might
be
immediately
turned
out
again
under
Article
25.
Local
businesses
of
this
kind,
though
large,
are
very
personal
to
the
managers.
They
are
not
everybody’s
meat,
so
to
speak:
not
in
the
least
like
the
great
brewery
companies
dealt
with
in
our
cases
of
Jameson
and
Crossman
above
cited.
Nor
is
there
any
reason
to
expect
competition
within
the
Company
for
the
purchase
of
any
loose
shares;
it
is
obvious
that
they
would
be
peaceably
allocated
at
par
to
such
member
as
the
group
thought
fit,
to
preserve
the
family
balance.
I
cannot
see
a
real
market
value
in
these
shares;
and
we
are
not
compelled
to
suppose
an
open
market
sale.
That
leaves
us
only
the
considerations
of
income-producing
value
and
break-up
value.
There
is
no
reason
to
presuppose
a
break-up
or
a
distribution
of
reserves
;
rather
I
should
think
that
the
Company
would
hold
them
to
ensure
stability
for
a
number
of
years
in
the
poorer
times
which
may
be
coming.
It
has
in
fact
capitalized
a
large
part
of
them
since
the
death
of
the
intestate.
The
best
I
can
do
is
to
suppose
competition
among
those
clearly
entitled
to
be
registered
as
members,
who
are
alive
to
all
the
factors
in
the
Companies’
past
and
future.
On
this
basis
I
am
prepared
to
give
the
ordinary
shares
of
A.
Harvey
&
Co.
Ltd.
in
the
trust
and
residue
a
compromise
value
of
$500
each,
and
the
quarter
interest
in
the
trust
and
residue
should
be
valued
accordingly.
As
to
the
ordinary
shares
in
Harvey
Estates
Ltd.,
I
agree
with
the
learned
Chief
Justice,
and
for
his
reasons,
that
$250
each
is
a
fair
value
for
them.
Now
turning
to
the
shares
in
Newfoundland
Furniture
and
Moulding
Co.
Ltd.,
the
assessor
argues
as
follows
:
this
company
lost
up
to
the
end
of
1936,
then
gained
from
1936
to
1946,
so
that
at
the
end
of
1946
there
was
a
surplus
of
$20,000,
which
would
pay
about
4%
on
the
Company’s
capital
of
$30,000
over
that
period.
This,
as
he
truly
says,
would
make
the
shares
not
worth
par;
but
the
Company
has
net
assets
which
would
make
the
shares
worth
$176
each;
so
taking
in
this
break-up
value
he
compromises
by
setting
the
shares
at
par.
I
think
that
in
view
of
general
business
prospects
$75
is
enough.
If
the
shares
were
sold
outside,
which
is
very
unlikely
in
view
of
the
Special
Article,
there
would
not
be
a
rush
for
them,
as
only
a
businessman
would
want
them,
and
he
would
not
want
to
go
into
somebody
else's
business
as
a
minority
shareholder.
But
within
the
family
circle
I
think
the
shares
are
reasonably
worth
$75.
As
to
the
one
share
in
Browning-Harvey
Ltd.,
I
think
that
in
view
of
present
changing
business
conditions
$80
is
enough.
I
conclude
that
:
(a)
As
to
the
ordinary
shares
in
A.
Harvey
&
Co.
Ltd.
and
Harvey
Estates
Ltd.
sold
by
the
administrator,
we
must
accept
as
the
value
for
taxation
the
Articles
price
at
par.
(b)
As
to
the
like
shares
held
in
the
Trust
and
Residue
under
A.
J.
Harvey’s
will,
they
should
be
valued
at
$500
each
in
the
ease
of
A.
Harvey
&
Co.
Ltd.
and
$250
in
the
case
of
Harvey
Estates
Ltd.
(c)
As
to
the
shares
in
Newfoundland
Furniture
and
Moulding
Co.
Ltd.,
they
should
be
valued
at
$75
each.
(d)
The
one
share
in
Browning-Harvey
Ltd.
should
be
valued
at
$80.
And
the
tax
should
be
recalculated
accordingly.
On
the
basis
set
forth
above,
I
calculate
the
final
value
of
the
Estate
at
$274,278.54.
I
annex
a
sheet
showing
the
calculation.
As
to
costs,
each
party
having
succeeded
to
a
substantial
extent
in
his
contentions,
there
should
not
be
any
order
as
to
costs.
This
follows
in
form
the
Assessor’s
Letter
of
July
28th,
1948.
WINTER,
J.:—The
question
raised
by
this
appeal
is
a
difficult
and
rather
unusual
one.
It
concerns
incidents
attached
to
"restricted''
shares
in
private
companies.
Considering
the
number
and
variety
of
such
companies
both
in
England
and
here,
it
might
seem
surprising
that
the
special
point
of
law
involved
has
been
tested
and
decided
in
so
few
reported
cases;
but
I
think
there
is
a
simple
explanation.
That
it
should
occur
at
all
requires
the
coincidence
of
two
or
three
factors:
that
a
shareholder
should
die
at
a
time
when
the
"‘prescribed''
value
of
his
shares
according
to
the
Articles
of
the
particular
company
happens
to
be
substantially
less
than
their
real
value
to
him
just
before
his
death
;
and
that
his
shares
should
so
pass,
either
by
his
testamentary
disposition
or
by
operation
of
law,
as
to
raise
the
question,
what
is
the
proper
criterion
of
their
value,
or
the
value
of
some
of
them,
for
death
duty
purposes.
I
do
not
think
this
can
happen
very
often.
The
real
worth
of
shares
in
such
companies
must
fluctuate
a
good
deal,
but
I
believe
that
at
most
times
what
the
articles
dealing
with
the
transfer
and
transmission
of
shares
(and
these
are
nearly
always
of
a
more
or
less
stereotyped
pattern)
call
a
‘fair’
value,
or
otherwise
prescribe
as
the
price
at
which
they
must
be
offered,
differs
very
little
from
the
value
which
the
tax
assessor
would
seek
to
place
on
them.
However
that
may
be,
the
combination
of
circumstances
I
have
mentioned
certainly
existed
in
the
British
cases
quoted
to
us,
the
Jameson,
Salvesen
and
Crossman
cases
;
and
I
have
no
hesitation
in
saying
that
they
seem
to
exist
in
this
present
instance.
The
dispute
involves
chiefly
the
value
to
be
placed
upon
the
ordinary
shares
held
by
the
deceased
in
A.
Harvey
&
Co.
Ltd.
I
shall
largely
confine
my
remarks
to
them,
because
I
think
that
the
conclusions
I
reach
regarding
them
can
be
applied
mutatis
mutandis
to
his
other
holdings
and
interests.
Some
ten
years
ago
these
shares
plainly
were
not
worth
their
par
value
of
$100;
but
the
war
brought
such
a
volume
of
business
to
the
Company
that
by
1947,
when
Mr.
Harvey
died,
it
had
put
very
considerable
profits
to
reserve
and
had
begun
to
pay
substantial
dividends
on
its
shares.
I
have
no
doubt
whatever
that,
if
the
principles
established
by
the
English
cases
are
indeed
applicable
to
this
one,
the
value
of
the
deceased’s
shares,
on
a
proper
estimation,
would
be
considerably
in
excess
of
the
par
value.
The contents of this table are not yet imported to Tax Interpretations.
I
have
mentioned
the
difficulty
which
this
appeal
presents.
That
with
which
the
English
Courts
were
faced
is
apparent
from
the
reports
and
from
the
sharp
division
which
resulted
between
the
very
eminent
judges
by
whom
they
were
tried.
Ours
is
of
quite
a
different
nature.
It
consists
in
answering
correctly
the
simple
question,
are
the
English
Finance
Act
of
1894
and
the
Newfoundland
Death
Duties
Act
of
1934
sufficiently
similar
in
all
material
and
essential
respects
to
justify
this
Court
in
applying
to
this
case
the
same
principles
and
criteria
that
were
laid
down
in
the
English
authorities?
For,
of
course,
it
is
obvious
that
we
have
nothing
to
do
with
the
English
statute
as
such,
which
has
no
application
here.
After
a
careful
examination
of
the
two
statutes
and
of
a
large
number
of
cases
decided
under
the
English
one
which
seem
to
be
pertinent,
I
have
come
to
the
conclusion
that
the
answer
to
that
question
must
be
in
the
negative.
I
am
most
strongly
of
the
opinion
that
the
only
basis
upon
which
these
shares
can
be
valued
for
the
purpose
of
death
duties
is
the
actual
price
at
which
they
were
sold
and
the
amount
received
for
them
by
the
Administrator:
that
is
to
say,
$100
per
share.
I
think
it
best
to
state
my
view
at
once
and
to
give,
as
briefly
as
I
can,
the
reasons
which
compel
me
to
it.
At
the
very
outset
of
our
inquiry
we
find
a
striking
difference
in
the
language
used
by
the
statutes
respectively.
The
general
nature
and
scope
of
the
English
Act
is
shown
in
its
opening
words.
Section
1
reads
:
‘“In
the
case
of
every
person
dying
after
the
commencement
of
this
Part
of
this
Act
there
shall,
save
as
hereinafter
expressly
provided,
be
levied
and
paid,
upon
the
principal
value
ascertained
as
hereinafter
provided
of
all
property,
real
or
personal,
settled
or
not
settled,
which
passes
on
the
death
of
such
person
a
duty,
called
*
Estate
duty,’
at
the
graduated
rates
hereafter
mentioned
.
.
.”’
On
the
other
hand
the
governing
section
of
the
Newfoundland
Act
reads:
"‘2.
There
shall
be
charged
and
paid:
(2)
Upon
the
estates
of
all
persons
dying
on
or
after
the
1st
day
of
September,
1934,
the
duties
specified
.
.
.
.”.
And
section
3
contains
the
following
definition
:
"And
for
the
purposes
of
this
Act,
the
said
Estate
shall
be
held
to
be
the
Estate
in
respect
of
which
Letters
of
Probate
or
of
Administration
are
applied
for’’.
We
see
at
once
that
what
is
charged
with
the
duty
by
the
English
Act
is
‘‘property’’
of
some
sort;
by
the
Newfoundland
Act,
it
is
an
‘Estate’.
The
question
with
which
we
started
accordingly
takes
a
more
exact
form:
are
the
"property’’
and
the
"Estate’’
synonymous
for
the
purpose
at
least
of
this
appeal?
Are
the
things
they
cover
co-extensive
?
Again
seeking
an
answer,
let
us
first
examine
briefly
the
English
Act.
We
see
that
it
avoids
any
reference
to
property
in
or
belonging
to
any
person.
The
person
in
question
is
merely
the
one
whose
death
causes
the
property
to
pass,
or
change
hands.
Indeed,
the
corpus
taxed
may
even
include
property
in
which
the
deceased
never
had
any
interest.
Throughout
the
Act
attention
is
concentrated
less
upon
personal
interests
than
upon
the
property
or
corpus
in
respect
of
which
they
exist.
If
that
corpus
changes
hands,
the
duty
attaches.
This
is
not
to
say
that
the
English
Act
disregards
particular
interests
or
"property”
in
particular
persons.
Far
from
it.
All
I
say
here
is
that
it
disregards
them
at
the
beginning,
when
it
only
has
to
be
decided
whether
the
duty
is
chargeable
or
not.
Thereafter,
when
it
is
a
matter
of
the
incidence
of
the
duty
and
the
question
by
whom
the
burden
is
to
be
borne,
we
find
careful
provisions
in
that
regard.
For
it
is
recognized
that
very
often
some
property
or
interest
which
was
enjoyed
undivided,
as
it
were,
by
the
person
when
living
becomes
split
up
upon
his
death
and
goes
in
different
directions.
So
we
find
that
not
merely
the
executor
but
‘‘other
persons’’
may
become
chargeable.
In
certain
circumstances
the
duty
may
be
apportioned
between
them.
And
so
on.
The
Newfoundland
Act
presents
quite
a
different
picture.
To
understand
it
fully,
I
think
a
short
historical
survey
is
not
merely
helpful
but
necessary.
In
this
small
community
we
have
always
leaned
heavily
upon
the
mother
country
for
our
law.
Wherever
applicable,
and
insofar
as
it
has
not
been
modified
by
local
statutes,
its
common
law
applies.
And
in
the
matter
of
statutory
law
it
has
always
been
the
practice
here
for
our
legislatures
to
follow
closely
the
English
models
in
matters
of
a
wide
and
general
nature.
For
instance,
the
Newfoundland
Sale
of
Goods
Act,
Trustee
Act,
Companies
Act
and
Judicature
Act
are
copies,
mutatis
mutandis,
of
the
English
enactments.
Now,
death
duties
were
unknown
in
Newfoundland
before
1914,
when
they
were
first
introduced,
plainly
as
a
war
measure.
The
question
naturally
arises,
why
the
departure
in
this
case
from
the
English
model
which
I
have
quoted
above?
I
think
that
the
whole
crux
of
the
present
dispute
les
in
the
answer
to
that
question.
No
doubt
the
legislature
in
1914
might
have
again
followed
the
English
pattern
and
adopted
the
English
philosophy
of
death
duties
legislation.
But
it
must
be
remembered
that
the
English
law
of
property,
particularly
real
property,
and
the
whole
structure
of
property
ownership
are
far
more
involved,
various
and
complicated
than
in
Newfoundland.
Settlements,
for
example,
are
unknown
here;
and
there
are
several
forms
of
limited
interests
in
property
which
are
familiar
in
England
but
are
not
to
be
found
here.
I
think—in
fact,
I
feel
compelled
to
the
conclusion—that
the
Newfoundland
legislature
took
all
this
into
account
and
deliberately
simplified
its
own
legislation.
I
think
it
deliberately
narrowed
its
scope
as
compared
with
that
of
the
English
Act.
In
Newfoundland,
just
as
in
England
though
not
to
the
same
extent,
the
estate
owned
and
enjoyed
by
a
living
person
may
differ
from
that
which
is
vested
in
his
personal
representative
and
which
is
all
that
the
latter
has,
to
administer
and
distribute.
It
does
not
often,
however,
so
differ,
and
the
difference
can
be
substantial
in
only
a
very
few
cases.
I
think
that
the
legislature
purposely
ignored
it,
and
the
cases
in
which
it
might
arise;
that
it
may
well
have
thought
that
to
bring
them
in
as
well
was
not
worth
the
trouble.
For
plainly
if
in
some
instances
a
manifestly
inequitable
result
was
not
to
follow,
provisions
similar
to
those
in
the
English
Finance
Act
would
have
to
be
inserted,
elaborate
and
careful
provisions
hardly
justified
by
the
extra
return
they
might
bring
to
the
revenue.
There
are
no
such
provisions
in
the
Newfoundland
Act.
The
applicant
for
the
Letters
of
Probate
or
Administration
is
alone
mentioned
and
alone
charged
with
payment
of
the
duty.
There
is
no
right
of
apportionment.
No
property
of
the
deceased
can
be
followed,
as
it
were,
into
the
hands
of
any
third
person.
And
it
seems
plain
to
me
that
it
is
only
the
situation
that
arises,
the
rights
that
become
crystallized,
after
the
death,
that
are
contemplated,
not
the
exact
estate
which
the
deceased
had
and
enjoyed
immediately
before
it.
I
have
mentioned
the
inequitable
results
that
might
follow
if,
in
applying
the
Newfoundland
Act,
the
English
notion
of
“prop-
erty’’
were
to
govern
the
interpretation
of
the
word
‘‘estate.’’
It
might
well
happen
that
the
only
source
of
livelihood
of
a
person
was
the
income
derived
from
a
block
of
shares
in
a
private
company
regulated
by
articles
similar
to
those
of
A.
Harvey
&
Co.
Ltd.
If
such
shareholder
bequeathed
them
to
one
who
could
not
be
accepted
as
a
member
of
the
company,
they
would
have
to
be
sold,
presumably
at
the
"‘prescribed’’
price.
That
price
might
be
substantially
less
than
the
value
the
shares
possessed
to
the
testator.
Yet
they
would
be
valued
for
death
duty
at
the
higher
figure.
The
whole
burden
would
fall
upon
the
legatee,
since
no
one
else
could
be
made
to
contribute.
And
the
same
anomalous
result
follows
when
the
property
in
question
is
part
only
of
a
whole
and
the
excess
duty
can
be
met
out
of
other
assets.
To
appreciate
the
hardship
such
a
view
might
inflict
we
have
only
to
take
this
present
instance
and
accept
both
the
legal
position
contended
for
by
the
assessor
and
his
valuation
of
the
shares.
We
find
that
the
beneficiaries
are
chargeable
with
payment
of
a
duty
based
upon
a
value
twenty
times
the
amount
actually
paid
to
them.
And
this
seems
to
me
the
proper
place
for
an
observation
which
might
perhaps
be
made
from
several
points
of
view.
Where
the
meaning
of
a
statute
is
made
quite
clear
by
its
language,
that
meaning
must
be
given
effect
no
matter
what
the
result
may
be.
But
where
real
doubt
does
exist
as
to
what
was
meant
or
intended
by
the
legislature,
I
think
the
Court
may
properly,
and
in
some
cases
must,
lean
against
an
interpretation
that
would
work
a
plainly
unfair
result.
I
do
not
myself
think
that
there
is
any
room
for
doubt
here.
I
think
that
the
legislature
had
a
very
simple
idea
in
mind:
to
tax
the
beneficiaries
of
a
deceased
person,
that
1s,
his
legatees
or
next-of-kin
as
the
case
might
be,
upon
the
basis
of
the
value
of
all
benefits
received
by
them:
that
and
nothing
more.
It
did
not
have
it
in
mind
to
tax
anyone
else
or
any
property
or
any
property
or
interest
that
might
happen
to
go
elsewhere.
It
might
have
done
so,
as
in
England,
but
it
did
not.
To
put
it
in
a
nutshell,
in
England
estate
duty
is
a
mutation
duty
;
succession
and
legacy
duties
are
acquisition
duties.
In
this
country,
I
do
not
think
the
idea
of
pure
mutation
was
ever
entertained
at
all,
but
merely
that
of
taxing
what
is
acquired
by
others
after
the
death.
We
have
no
succession
duties
here
in
addition
to
death
duties.
I
think
they
were
meant
to
be
combined
in
one
duty,
which
in
the
English
view
would
be
considered
a
succession,
rather
than
an
estate,
duty.
I
appreciate
the
answer
that
might
be
made
to
this
reasoning.
It
might
be
argued
that,
conceding
what
I
have
said,
there
is
still
no
real
difference
between
the
two
Acts
for
our
present
purpose;
that
in
both
cases
the
shares
pass;
and
that
in
New-
foundland
the
administrator
must
include
them
in
the
inventory
attached
to
his
petition-
for
Letters
of
Administration.
That
is
of
course
true,
but
my
reply
is
that
they
are
included
only
because
the
title
to
the
shares
is
in
the
representative,
not
the
property.
And
it
is
the
property,
the
beneficial
interest,
that
matters
and
that
has
to
be
valued.
If
in
return
it
is
urged
that
on
a
strict
view
even
the
property
in
the
shares
is
in
the
administrator,
my
reply
again
is
that
that
property
is
held
subject
to
a
binding
obligation
to
perform
a
contract,
which
is
to
sell
the
shares
at
a
prearranged
price.
Debts
of
the
deceased
must
be
deducted
before
the
duty
is
assessed
and
I
can
see
no
difference
for
taxation
purposes
between
a
debt
and
such
an
obligation.
The
net
result
is
the
same.
And
contracts
of
this
sort
are
invariably
recognized,
unless
there
is
some
good
reason
to
question
their
bona
fides
(1
refer
briefly
to
that
topic
in
the
next
paragraph).
Suppose
A
agrees
with
B
that
on
A’s
death
some
property
of
A’s
is
to
be
sold
to
B
for
a
certain
price.
When
A
dies
his
executor
must
of
course
include
the
property
in
his
list
of
assets,
but
only
at
the
value
represented
by
the
purchase
price.
The
executor
is
not
vested
with
the
property
itself
but
with
a
chose
in
action,
the
right
to
demand
the
purchase
price.
The
purchaser
can
demand
the
property.
It
seems
to
me
that,
if
the
position
I
have
set
up
is
vulnerable
at
all,
it
can
only
be
attacked
from
some
other
direction
than
the
one
I
have
so
far
considered.
The
underlying
basis
of
the
transaction
in
the
shares
must
be
impugned
in
some
way
and,
if
not
set
aside
altogether
(something
which
very
rarely
happens),
at
least
disregarded
for
the
purpose
of
duty.
It
seems
to
me
that
this
can
be
done,
under
the
English
statute,
on
one
of
two
grounds
alone
:
that
the
transaction
was
a
gift
made
within
the
prescribed
period;
or
that
it
was
a
sale
for
a
consideration
less
than
the
full
and
true
value.
As
to
these,
the
idea
that
the
sale
to
Mr.
Reginald
Harvey
was
a
disguised
gift
can
be
dismissed
out
of
hand.
None
of
the
essential
elements
of
the
kind
of
gift
contemplated
by
both
Acts
is
present
here.
There
remains
the
other
class,
and
to
this
I
think
the
present
situation
clearly
belongs.
Accepting
the
figure
of
$500
as
the
true
value
of
the
ordinary
shares
of
A.
Harvey
&
Co.
Ltd.
in
1947,
we
find
that
they
realized
only
$100
each.
That
situation,
as
pointed
out
by
Lord
Blanes-
burgh
in
the
Crossman
case,
is
taken
care
of
by
s.
3
of
the
English
Act,
which
provides
that
in
such
a
case
the
purchase
price
paid
for
the
property
may
be
deducted
from
the
full
assessed
value.
But
the
money
realized
will
form
part
of
the
estate,
so
that
the
full
value
of
the
property
is
still
drawn
into
the
net,
though
split,
as
I
have
said
above,
in
two
parts.
Now
I
think
it
is
in
the
highest
degree
significant
and
important
that
there
is
no
similar
provision
in
the
Newfoundland
Act.
I
think
we
are
bound
as
a
Court
to
assume
that
the
legislature
must
have
had
in
contemplation
such
a
possible
situation
as
this,
just
as
it
clearly
did
have
genuine
gifts
in
contemplation;
that
it
did
not
purposely
aim
at
an
injustice
being
done;
and
that
it
did
not
provide
for
an
apportionment
of
the
duty
because
it
did
not
think
any
apportionment
necessary.
In
other
words,
it
must
be
presumed
to
have
taken
the
view
that
only
the
$100
per
share
formed
part
of
the
estate
and
that
the
extra
value
of
$400
which
happened
to
exist
at
the
time
lay
outside
it.
It
may
be
asked,
just
what
property
did
the
deceased
have
in
this
extra
value?
I
think
the
answer
is
simple.
It
was
a
peculiar
kind
of
property,
but
we
must
remember
that
it
arose
out
of
a
peculiar
kind
of
contract.
It
may
be
said
that
no
shareholder
in
such
a
company
has
full
ownership
of
his
shares.
As
long
as
he
retains
them,
he
may
enjoy
all
the
benefits
of
full
ownership.
In
a
few
eases,
when
the
articles
allow
it,
he
may
conceivably
pass
on
to
another
the
same
full
enjoyment.
In
the
present
instance,
for
example,
Mr.
Gerald
Harvey
might
have
left
all
his
shares,
or
some
of
them,
by
will
to
his
brother.
In
that
case
I
have
no
hesitation
in
saying
that
the
duty
must
be
assessed
on
the
full
value,
since
the
shares
pass
intact
and
the
legatee
enjoys
them
to
the
same
extent
that
the
deceased
did.
In
all
other
cases,
whether
the
shareholder
sells
them
while
still
living,
or
leaves
them
by
will,
or
permits
them
to
go
by
devolution,
to
an
‘‘outsider’’,
the
use
and
benefit
of
the
shares
are
at
once
exchanged
for
a
fixed
sum
of
money.
The
essence
of
the
arrangement
under
the
Articles
is
that
all
existing
members
of
the
company
have
an
interest
in
all
the
shares;
by
their
experience,
skill,
knowledge
or,
it
may
be,
merely
their
family
relationship,
they
are
entitled
to
that
interest.
While
a
member
retains
his
shares
the
interest
of
the
others
remains
in
abeyance,
much
like
the
floating
charge
of
a
debenture.
When
he
parts
with
them
to
any
‘‘outsider,’’
the
interest
of
the
others
settles
or
becomes
fixed.
This
is
recognized
by
some
companies
when
the
Articles
provide
that
the
transferred
shares
must
be
distributed
among,
or
offered
to,
the
remaining
shareholders
in
the
proportion
of
their
holdings.
I
do
not
think
that
this
argument
is
invalidated
or
affected
by
the
fact
that
the
shareholder
has
it
in
his
power
to
say
whether
any
share
shall
remain
in
the
narrow
class
of
“qualified”
persons
and
form
part
of
his
estate
upon
his
death.
Nor
do
I
think
that
the
sale
of
the
shares
in
all
other
cases
differs
in
principle
from
the
contract
of
sale
I
have
suggested
above
between
A
and
B
merely
because
the
actual
purchaser
and
the
actual
purchase
price
are
not
defined
in
the
contract
itself
and
must
be
determined
later.
What
matters
is,
not
what
the
sale
fetches
or
who
the
purchaser
is,
but
that
the
sale
has
to
be
made.
And
that
is
where
death
plays
such
a
large
part
in
the
matter,
as
indeed
it
must
in
every
country
where
duties
of
this
sort
are
levied.
While
the
shareholder
lives
he
is
his
own
master.
He
ean
enjoy
the
benefits
of
the
shares
as
long
as
he
likes;
while
he
does
so
they
are
not
restricted.
If,
however,
he
wishes
for
some
reason
to
sell
them
or
part
of
them,
he
must
accept
the
fact
that
only
a
certain
sum
can
be
realized.
If
he
does
sell,
he
does
so
voluntarily,
just
as
in
the
case
of
gifts,
open
or
disguised.
But
death,
which
no
one
ean
avoid,
brings
in
a
large
measure
of
compulsion.
A
man’s
first
duty
is
to
provide
for
his
nearest
and
dearest.
If
these
happen
to
be
members
of
the
company,
he
and
they
are
fortunate.
He
can
pass
the
shares
on
to
them
intact.
They
are
then
part
of
his
"‘estate.''
But,
if
they
are
not
members
(and
I
think
this
must
be
so
in
the
great
majority
of
cases),
and
if
we
identify
them
with
him,
he
and
they
must
accept
a
certain
loss.
The
shares
must
be
sold;
the
beneficiaries
receive
only
the
money;
any
surplus
value
they
may
have
does
not
descend
with
the
rest
of
the
estate.
To
sum
up
the
whole
matter,
it
is
clear—and
I
do
not
think
the
assessor
disputes
it—that
to
place
the
same
value
on
these
shares
for
duty
purposes
which
they
can
be
estimated
to
have
in
the
hands
of
one
who
does
not
have
to
sell
and
can
enjoy
their
benefits
for
an
indeterminate
time
would
be
to
tax
the
next-of-kin
upon
something
which
they
have
not
received,
and
to
leave
them
without
recourse
to
anyone
else
for
contribution.
To
produce
such
a
result
the
language
of
the
Act
must
be
clear
beyond
any
reasonable
question.
I
do
not
think
it
is
so
clear.
On
the
contrary,
as
I
have
said
above,
the
omission
of
any
right
of
apportionment
is
so
striking
that
I
feel
I
must
hold
that
the
opposite
intention
must
be
inferred.
The
only
pertinent
Newfoundland
case
cited
before
us
in
argument
is
I
n
re
the
Will
of
Hugh
Baird,
decided
in
1923.
There
the
Full
Bench
applied
the
principles
of
the
Jameson
case
to
the
valuation
of
Mr.
Baird’s
shares.
I
think
it
a
little
unfortunate
that
they
did
so
and
that
any
reference
whatever
was
made
to
the
Irish
case.
Since
1923
the
Salvesen
and
Crossman
cases
have
confirmed
the
judgment
in
the
Jameson
case
and
frequent
reference
was
made
to
all
three
cases
in
the
argument
before
us.
On
a
perfectly
strict
view,
these
British
cases,
being
concerned
with
the
interpretation
of
an
Imperial
Statute,
cannot
have
any
application
in
this
country
and
this
Court
cannot
be
bound
by
their
decisions
unless,
as
I
have
said
above,
our
own
Act
is
for
all
essential
purposes
identical
with
the
Imperial
one.
And
that
it
is
not
so
identical
is
manifest.
I
think
that
the
Baird
case
was
properly
decided
but
that
it
could
have
been
so
decided
without
regard
to
the
English
precedents
at
all,
or
as
if
there
had
been
no
such
precedents.
The
facts
were
quite
simple.
Mr.
Baird
held
shares
in
a
private
company,
with
the
familiar
restrictive
articles,
but
he
left
them
by
will
to
members
of
the
family
qualified
to
hold
them
and
to
take
his
place.
No
question
of
selling
them
arose.
The
sole
effect
of
his
death
was
a
change
in
the
name
of
the
registered
owners,
to
whom
the
shares
must
have
had
the
same
value
that
they
had
to
Mr.
Baird
himself.
The
so-called
Jameson
principle
seems
to
me
only
the
commonsense
principle
that
would
automatically
be
applied
to
such
a
case
and
one
needing
no
authority.
We
have
to
value
certain
property,
in
this
case
shares
in
a
company.
In
putting
a
money
value
on
any
article
or
property
we
mentally
picture
it
as
exchanged
for
money.
The
recognized
way
of
making
such
an
exchange
is
through
a
sale,
and
so
we
imagine
a
sale.
But
it
must
be
a
genuine
sale,
by
one
wishing
to
realize
as
much
as
possible
to
one
wishing
to
pay
as
little
as
possible.
I
am
sure
that
this
is
all
that
the
Imperial
Statute
contemplated
when
it
prescribed
a
hypothetical
"‘sale
in
the
open
market.
‘
‘
A
compulsory
sale
under
the
Articles
of
Association
at
what
is
virtually
a
fixed
price
is
to
my
mind
the
very
antithesis
of
an
"
open’
‘
sale.
That
is
quite
evidently
the
reasoning
behind
the
judgments
establishing
the
English
law
on
the
point.
It
follows
that
in
the
Baird
case
the
Court
might,
and
perhaps
should,
have
laid
down
a
formula
for
valuation
having
the
same
effect
as
that
contained
expressly
in
the
English
Finance
Act.
But
that
is
very
different
from
saying
that
the
Court
was
"bound’’
by
the
Jameson
judgment,
or
that
this
Court
is
consequently
also
bound
by
it.
If
the
Newfoundland
Court
in
1923
had
gone
to
the
length
of
applying
the
Jameson
ease
because
it
felt
bound
to
do
so,
I
should
unhesitatingly
say
here
that
this
Court
is
not
bound
by
the
Baird
decision,
which
would
be
so
manifestly
wrong.
As
it
is,
we
do
not
need
to
consider
the
‘‘stare
decisis
9f
principle
at
all.
The
facts
in
this
case
are
quite
different,
since
we
are
concerned
with
an
immediate
and
compulsory
sale
of
the
shares,
not
with
their
transmission
intact
and
unchanged.
There
remains
one
special
point
to
consider
which
was
raised
before
us
and
which
I
confess
I
find
some
difficulty
in
deciding.
It
was
urged
on
behalf
of
the
Crown
that,
even
if
the
shares
going
to
the
other
next-of-kin
are
correctly
valued
at
$100
each,
the
price
they
realized,
different
considerations
govern
those
going
to
Mr.
Reginald
Harvey,
who
was
entitled
to
be
registered
in
respect
of
them
as
an
existing
member
of
the
company.
This
is
of
course,
correct
as
far
as
it
goes
and
follows
as
a
necessary
consequence
of
all
that
I
have
said
above.
And,
if
Mr.
Harvey
had
in
fact
been
registered
as
the
owner
of
the
shares
by
mere
transmission,
I
would
agree
that
they
should
receive
the
higher
value.
But
in
fact
they
were
sold
along
with
the
others
in
order
to
meet
liabilities
of
the
estate
amounting
almost
to
the
full
amount
of
the
purchase
price.
I
do
not
see
what
else
the
administrator
could
have
done.
No
other
part
of
the
estate
could
readily
be
sold
and
the
liabilities,
including
the
death
duty,
had
to
be
met.
I
will
admit
that
this
sale
is
in
a
different
category
from
that
of
the
other
shares
and
that
it
was
made
under
a
necessity
arising
subsequently
to
the
operation
of
the
law
fixing
the
distribution
of
the
estate;
but,
while
I
have
some
doubt
on
the
point,
I
have
come
to
the
conclusion
that
this
does
not
make
any
difference.
We
have
to
take
the
facts
as
they
are,
and
the
fact
is
that
Mr.
Harvey’s
part
of
the
shares
was
sold
and
the
estate
received
only
$100
per
share
instead
of
$500
worth.
No
doubt
some
device
might
have
been
used
to
preserve
these
shares,
had
the
parties
wished
it
;
but
that
seems
to
me
their
concern
and
not
the
assessor
’s.
Provided
the
transaction
was
a
proper
one
and
made
bona
fide—and
of
this
there
cannot
be
any
doubt—I
think
we
must
recognize
it.
And
the
fact
that
Mr.
Reginald
Harvey
was
the
purchaser
must,
I
think,
be
regarded
as
a
mere
accident:
the
position
would
have
been
the
same,
for
our
present
purpose,
if
one
of
the
other
members
had
bought
the
shares.
Having
explained
my
view
of
the
matter—I
trust,
at
not
inordinate
length—I
feel
I
might
properly
add
a
few
words
of
comment
upon
the
opposite
view
expressed
in
the
judgment
of
the
Chief
Justice.
I
think
that
the
difference
between
us
is
crystallized
in
one
sentence
which
he
uses
on
p.
6
of
his
Judgment,
in
which
he
says,
"‘In
any
event
it
was
the
same
shares
as
the
intestate
held,
possessing
the
same
incidents,
which
came
into
the
hands
of
the
administrator
with
their
nature
and
their
real
value
not
changed
in
the
least.’’
I
regret
that
I
cannot
agree
that
the
nature
of
the
shares
was
unchanged
when
they
came
into
the
hands
of
the
administrator.
That
nature
and
value
of
course,
always
belonged
to
the
shares
themselves,
no
matter
who
might
hold
them;
and
that
is
why
under
the
English
Act
any
contract
or
other
incident
affecting
them
has
to
be
ignored,
since
under
that
Act
it
is
the
shares
themselves
that
constitute
the
‘‘property’’
charged
with
the
duty.
But
under
our
Act
it
is
the
intestate’s
^estate”
which
is
charged,
not
specifically
the
property
of
which
it
consists.
I
will
agree
that
we
must
look
at
the
estate
which
the
deceased
had
before
his
death,
as
well
as
that
which
he
left
behind,
but
I
also
insist
that
we
must
regard
it
from
start
to
finish.
It
is
plain
that
the
Chief
Justice
considers
that
he
must
ignore
the
situation
created
by
the
Articles
of
Association,
whereas
I
consider
that
effect
must
be
given
to
it.
The
Articles
amount
to
an
agreement
between
the
members
of
the
company.
If
we
imagine
them
translated
into
a
specific
agreement
between
Mr.
Gerald
Harvey
and
the
others,
we
have
to
make
it
one
of
the
terms
that
upon
his
death,
unless
he
bequeaths
the
shares
to
any
existing
member
or
one
who
will
in
fact
be
admitted
to
membership,
the
shares
must
be
sold.
The
administrator
is
bound
by
that
agreement,
so
that
it
follows
that
the
shares
do
not
have
the
same
nature
in
his
hands
that
they
had
in
those
of
the
deceased.
In
the
latter’s
case
the
matter
of
a
sale
was
a
latent
factor
and
possibly
remote;
in
that
of
the
administrator
it
became
immediate
and
compulsory.
If
the
view
which
the
Chief
Justice
holds
is
the
correct
one,
its
consequences
seem
to
me
far-reaching
and
rather
disturbing.
It
would
mean
that
interests
which
the
deceased
had
while
living
but
ceasing
on
his
death
must
also
be
included
in
his
estate.
That
is
of
course
the
case
in
England.
The
capital
value,
for
instance,
of
a
life
annuity
enjoyed
by
the
deceased
would
have
to
be
accounted
for.
That
is
property
which
clearly
‘‘passes’’
upon
his
death:
the
fund
out
of
which
the
annuity
was
paid
benefits
by
its
ceasing.
While
it
may
not
be
a
strictly
compelling
reason
for
interpreting
the
Newfoundland
Act
in
a
certain
way,
I
think
we
can
properly
take
note
of
the
fact
that
such
interests
have
never,
to
my
knowledge
at
least,
been
included
in
any
inventory
filed
since
1941,
and
I
know
of
no
ease
in
which
the
assessor
has
insisted
upon
their
inclusion.
And
even
in
this
country
life
interests
are
fairly
common.
Regarding
the
application
to
the
whole
estate
of
the
conclusions
to
which
I
have
come,
which
agree
with
those
reached
by
Sir
Brian
Dunfield,
I
need
only
say
that
I
concur
in
the
reasoning
and
estimates
so
fully
and
carefully
made
by
the
Chief
Justice.
In
the
last
analysis
the
valuation
of
shares
in
companies
such
as
these,
under
present
conditions
and
such
doubtful
prospects,
can
only
in
part
be
settled
by
reference
to
actual
facts
and
figures;
there
must
be
a
good
deal
of
room
left
for
conjecture
and
the
weighing
of
probabilities.
I
think
the
value
of
$500
a
very
fair
one
to
be
placed
on
the
ordinary
shares
of
A.
Harvey
&
Co.
Ltd.
and
$250
on
those
of
Harvey
Estates
Ltd.
That
is,
of
course,
the
value
to
be
placed
on
the
shares
themselves;
but
for
the
reasons
I
have
given
the
value
of
the
A.
Harvey
&
Co.
Ltd.
shares
for
purposes
of
duty
assessment
must
be
put
at
the
sale
price
of
$100.
I
wholly
concur
in
the
summary
appended
to
the
judgment
of
Dunfield,
J.,
which
puts
the
final
valuation
of
the
whole
estate
at
$274,278.54.
I
also
agree
that
under
the
circumstances,
and
in
view
of
the
final
result,
it
is
fair
that
the
parties
pay
their
own
costs.
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