de Grandpré, J (concurred in by Laskin, CJC, Judson, Pigeon and Beetz, JJ) [Translation]:—This appeal poses the following question: When spouses stipulate in their marriage contract that the community property shall belong to the survivor, is there a passing of property to the wife on the death of the husband, within the meaning of sections 2 and 3 of the Estate Tax Act, SC 1958, c 29?
The question arises in a simple context:
(a) by notarized deed dated July 4, 1911, in Belgium, a marriage contract was concluded between François Faure and Lucie Simon, by which they stated that they adopted the regime of community of acquests, in accordance with Articles 1498 and 1499 of the Belgian Code civil; the parties agree on the fact that the Quebec Civil Code is to the same effect;
(b) this marriage contract contained the following stipulation:
[Translation] The future spouses stipulate, as a marriage covenant, that the whole of the community shall belong, with full right of ownership, to the surviving spouse, whether or not there are children or descendants born of this marriage;
(c) Francois Faure died on August 5, 1966;
(d) in calculating the property passing on death, respondents, in their Capacity as executors, excluded the whole of the community of acquests.
Appellant contended that there was a passing within the meaning of the Act. In his assessment, he included in computing the value of property passing on the death of Francois Faure the latter’s share in the community of acquests. This assessment was set aside by the Tax Appeal Board, and this finding was concurred in by the Federal Court— Trial Division, [1973] FC 783; [1974] CTC 460; 73 DTC 5236, and Appeal Division, [1975] CTC 136; 75 DTC 5076.
For the purposes of answering the question put to the Court, I do not believe that it is necessary to analyse the nature of the community, reduced to its acquests, as the parties invited the Court to do. Were the spouses co-owners of this property during the existence of the community? Do we have here a type of partnership or an institution sui generis? These questions I will leave unanswered.
Whatever the nature of the community may be, on its dissolution by the death of the husband, giving rise to application of the above- mentioned stipulation in the marriage covenants, the widow became owner of all the property, retroactively to the date of the marriage. In Sura v MNR, [1962] SCR 65; [1962] CTC 1; 62 DTC 1005, speaking of the share of the community property going to the spouse in a case in which the exclusive right of the survivor was not at issue, Taschereau, J, as he then was, stated at page 71 [8, 1008]:
[Translation] . . . if the wife was not co-owner of the community property, she would have to pay succession duties on dissolution of the community, because there would then be a passing of property from her husband. However, this is not the case here, because there was no passing, but partition, in which she took the share coming to her, which had belonged to her since the marriage. What she received did not come from the estate of her husband.
In support of his views, Taschereau, J cited as authorities several authors, including Mignault, who stated, in volume 6 of his Droit Civil, page 337, that in the event of renunciation the interest is retroactively terminated, the other spouse being [Translation] ‘‘deemed to have always been the sole owner of the property which made up the community’’. To these authorities, I would add Troplong, Le Droit Civil Expliqué, 2nd edition, Du Contrat de mariage, volume Ill, page 679, No 2184:
[Translation] . . . by the retroactive effect of the occurrence of the condition of survival, the surviving spouse is deemed to have been the owner ab initio, from the time of the acquisitions. The predeceased, on the other hand, is deemed never to have had any interest; he passes nothing to his heirs.
I accept without hesitation the finding of the Sura decision, which dealt with the case of an ordinary community, as I said. This reasoning, applied to the whole of the property when the marriage covenants contain a complete stipulation in favour of the survivor, leads necessarily to the conclusion that there was here no “passing” giving rise to assessment, unless this word has been given a broader meaning by the legislator.
This is what appellant submitted to the Court, declining to rely in this Court on paragraph 3(1)(f); we therefore do not have to decide on it. He relies on sections 3 and 58, the relevant portions of which should now be cited:
3. (1) There shall be included in computing the aggregate net value of the property passing on the death of a person the value of all property, where- ever situated, passing on the death of such person, including, without restricting the generality of the foregoing,
(a) all property of which the deceased was, immediately prior to his death, competent to dispose;
(2) For the purposes of this section,
(a) a person shall be deemed to have been competent to dispose of any property if he had such an estate or interest therein or such general power as would, if he were sui juris, have enabled him to dispose of that property;
(e) notwithstanding anything in this section, the expression in paragraph (a) of subsection (1) “property of which the deceased was, immediately prior to his death, competent to dispose’’ does not include the share of the spouse of the deceased in any community of property that existed between the deceased and such spouse immediately prior to his death.
58. (1) In this Act,
(i) “general power’’ includes any power or authority enabling the donee or other holder thereof to appoint, appropriate or dispose of property as he sees fit, whether exercisable by instrument inter vivos or by will, or both, but does not include any power exercisable in a fiduciary capacity under a disposition not made by him, or exercisable as a mortgagee;
Appellant’s argument is that immediately before his death Francois Faure was competent to dispose of half of the community of acquests, and as a result the word “passing” must be more broadly interpreted, and that the fact that Francois Faure, under Article 1292 CC, was bound to obtain the consent of his wife with respect to certain dispositions is not an obstacle to such an interpretation. The reply to this argument is found in The Royal Trust Company (A H Wilson Estate) v MNR, [1968] SCR 505; [1968] CTC 224: 68 DTC 5158. Fauteux, J, as he then was, wrote, delivering the judgment of the Court (at p 513 [229, 5162]):
While, in a loose sense, it may be said that the husband is competent to dispose, in his lifetime, of community assets, under the general administrative power conferred on him by articles 1299 et seq of the Civil Code of the province of Quebec, he is not free, not competent to dispose of such assets in any sense contemplated by Sections 3(1)(a), 3(2)(a) and 58(1)(i) quoted above. The premise, on which rests the second branch of the dilemma propounded by appellants, is not valid. In my opinion, these provisions of Section 3(2)(e) do not support appellants’ interpretation of Section 3(1)(a).
I would dismiss the appeal with costs.