The will of the deceased husband of the taxpayer, who had died in 1985, named her as the residuary legatee of all the estate property, including an investment portfolio that generated interest and dividend income. The administration of the estate was completed in 1987. Revenue Quebec assessed the taxpayer for her 1986 taxation year pursuant to the Quebec equivalents of ss. 104(6) and 104(24) on the basis that all the interest and dividend income of the estate in that year was payable to her, even though only a smaller portion thereof was in fact distributed to her.
Gonthier J first confirmed that the absence of a transfer or conveyance of the property to a trustee precluded a conclusion that the will had created a testamentary trust, and that the will simply created a testamentary succession.
In confirming that the assessment of the taxpayer was invalid, Gonthier J found that under the Civil Code of Lower Canada, a legatee was entitled to demand payment of what the testamentary executor owed her only once the executor's seisin had terminated, which did not occur until the estate administration was completed. Although the legatee was also the owner of the property on the testator's death, the executor's seisin prevailed over that of the legatee, so that even though the executor had only de facto possession, they were authorized to claim the movable property of the estate during the period of their seisin.
As the executor's seisin did not end until the administration of the estate was completed, the income accordingly was not payable to her during the 1986 taxation year.