Leopold-Candler Investments Limited v. Minister of National Revenue, [1969] CTC 39, 69 DTC 5068

Noël, J.:—This is an appeal from a decision of the Tax Appeal Board (40 Tax A.B.C. 39) dismissing the appellant’s appeal from a re-assessment of the appellant’s liability for income tax under Part I of the Income Tax Act for the 1959 taxation year.

The only question in issue is whether a profit ($56,183.34) made by the appellant in 1958 from the sale of an option to purchase for $10,158,245.65 and lease back the Dominion Square Building in Montreal, P.Q., was non-taxable as a capital gain because an investment had been envisaged and its interest had been sold due to a disagreement among its associates, or was profit or income from an adventure in the nature of trade.

The appellant company, incorporated by Irwin Leopold, of Montreal, and three associates from Toronto (Simonds, Candler and Robbins) in August 1958, as a vehicle nominee (as is frequently done in real estate deals) to start the present transac- tions until such time as a decision could be taken as to final

interest and ownership, acquired an option to purchase the

Dominion Square Building from Messrs. Webb and Knapp, and

Delaware Montreal Leasing Corporation, on September 12, 1958.

The terms of the agreement whereby the appellant purchased

the above option provided for an immediate deposit of $200,000

to be followed some one hundred days later prior to January 2,

1959, the closing date, by an amount of approximately $4,250,000.

The $200,000 would be confiscated by the seller if this amount of

$4,250,000 was not paid on the closing date. The building was

subject to a first mortgage of approximately 6 million dollars

which, at the time of the purchase, had been reduced to $5,908,000.

This was a venture which, if all things went well, could represent

to the investors a return of some 11% on the equity monies

required to conclude this transaction and additional revenue

could be expected to accrue each year by virtue of the repayment

of the capital. portion of the mortgage. The transaction

provided also for a net lease back to the vendors Webb and

Knapp who undertook to operate the building, assume the expenses

of maintenance, insurance, real estate taxes, etc. thereby

allowing the purchasers to receive from the lessee sufficient funds

to repay the capital and interest portion of the mortgage together

with the expected 11% return of invested capital.

Leopold, who was the managing director of the appellant company,

stated that he did not have the $4,250,000 to finance the

complete acquisition of this property and, therefore, immediately

joined with his Toronto partners, Simonds, Candler and Robbins

and although each of them decided they were prepared to invest

a certain amount of money in the purchase of this option proceeded

also to seek other investors. A group from New York, Ira

J. Heckler, Howard Weingrove and Robert K. Lipton (operating

under the name of Robert K. Lipton Inc.) became interested, as

well as Joseph Hopmeyer and Jack Becker, from Montreal, and

Arthur Trott (operating under the name of Four Winds Apt.

Inc.) from Toronto, and at some time after the purchase of the

option, the following participants had deposited the amounts

listed opposite their names and held the percentage of interest therein inscribed.

The Toronto group was brought in as participants at the date of the option, the New York group, sometime later, as well as Joseph Hopmeyer and Jack Becker and Four Winds Apt. Inc.

The appellant, Leopold-Candler Investments Ltd., originally owned 1834% of the option but three days after the signature of the option document of September 12th, on September 15th, the appellant transferred 614% of its interest in the venture to one Arthur Trott who was operating under the firm name of Four Winds Apt. Inc. Leopold states that he sold the 64% interest to Trott because he felt that his original interest of 18%% with the deposit and the final monies needed at closing was stretching his financial resources too much. The appellant had prior to the signature of the option document, borrowed the amount of $37,500 (which covered the 1834% interest it originally held) from the bank and three days later, upon receiving Trott’s contribution of $12,500, reimbursed the bank in this amount. The appellant, therefore, together with the Toronto and American groups owned 75% of the option and Joseph Hop- meyer and Jack Becker, of Montreal, owned the remaining 25%. The appellant’s commitment with regard to the payment to be made on January 2, 1959, at the time of closing, on the basis of his holding of an interest of 12^% was still in an amount of $500,000.

Leopold states that around the beginning of November 1958, it was decided, as the closing was scheduled for January 2, 1959, that all the various principals should meet in order to set up a programme for the final financing required and at the same time

decide upon a number of general administration policies. Such

policies were required according to Leopold and Hopmeyer because

to the latter’s minority interest of 25% in the venture and

because one of the conditions he had set down to enter into the

transaction was that a contract be entered into with the other

principals in which, although he retained a minority equity

interest only, he would have an equal say with the other people

in the group in the manner in which the building would be administered

or operated.

The meeting was convened in Toronto and was attended by

Leopold, Hopmeyer and Becker from Montreal, Simonds and

Candler from Toronto and Lipton and Heckler, from New York.

Leopold says that there was an immediate clash of personalities

between Lipton and Hopmeyer, some very heated words ensued

and at the first meeting of the members of the group, there

seemed to be a complete breakdown between these two people.

Leopold had difficulty in putting his finger on what the differences

were between them and referred to Hopmeyer’s evidence

before the Tax Appeal Board whom [sic], he said, went into the

disagreement in detail. Hopmeyer at the time stated (p. 47) that

there were a lot of words that morning and described the meeting

as follows :

We were not fighting, there were no boxing gloves, but there were a lot of words. It wasn’t a pleasant atmosphere. I’ll be frank with you. I realized we had to deal with American people and others, and I sized it up and figured the best thing for me was to try to buy them all out. because I had serious intentions.

He then made up his mind that the best thing to do was to make

them an offer to buy them all out and he arranged for funds

with others in Montreal.

Hopmeyer then, together with Becker, purchased the interests

of the other associates including the appellant for the sum of

$400,000, reimbursed each one of them the amounts they had

contributed to the $200,000 deposit, thus expending an amount

of $150,000, and the amount of the profit realized was then distributed

amongst the associates as follows:

GROSS PROFIT

Percentage Amount

Interest

Ira J. Heckler	40	$160,000.00
Robert K. Lipton Inc.
(Howard Weingrove, N.Y.)	10	40,000.00
Wychwood Investments Corporation
Limited (Candler)	81,	33,333.33
Lyall Investment Corporation
Limited (Simonds)	814	33,333.33
Cleopatra Investments Ltd.	813	33,333.33
Joseph Hopmeyer (Jack Becker,
Montreal)	—	—
Leopold-Candler Investments Ltd.	17%	71,183.34
Four Winds Apt. Inc.
(Trott Arthur)	1%	28,816.66
	100	$400,000.00

The appellant therefore received a gross profit of $71,183.34 and a net profit of $56,183.34 which was added by the Minister to the appellant’s income for the 1959 taxation year.

The individuals who negotiated this transaction, Simonds and Candler, are real estate developers in Toronto and Leopold who, immediately prior to the purchase of the option, was in the hat business, had shortly prior thereto abandoned this business and had also become a real estate developer.

The appellant’s position, as expressed by Irwin Leopold, is that its sole intention when it entered into this deal in August and September 1958 was to invest in the purchase of this building and that its interest had been sold only because of a disagreement among its associates. He further stated that, although at the time of the signing of the option he had no monies to invest and even had to borrow from the bank the amount of $25,000 to cover the appellant’s share of the original deposit required and had no definite assurance that he could obtain the $500,000 additional monies to cover its share of the closing deal on January 2, 1959, he felt that he could have obtained a loan of $200,000 from a branch of the Canadian Imperial Bank of Commerce, situated at the corner of Ste-Catherine and St. Alexander streets in the city of Montreal, which, according to a Mr. John Walling, the manager of the bank at the time, the latter would have been prepared to advance him. The balance of $300,000, he says, he could have obtained from his mother who was wealthy and his father-in-law, who was also a person of means.

Counsel for the appellant pointed out that there was further indication that the intent of the taxpayer herein upon purchasing its rights under the option was to realize an investment in that there was some risk in undertaking to supply its share of the $200,000 deposit required at the signing of the option and that three days later the taxpayer sold at cost 614% of its share of the option rights which the taxpayer claims could only be consistent with an intention to pursue the investment. Had the appellant, he says, intended to sell its rights under the option, at a profit, it would have retained the original amount of its share and thus made a greater profit. The evidence also discloses that the associates paid a lawyer $25,000 of which the appellant’s share was $6,250 to draft a net lease and this also, according to appellant’s counsel, is not indicative of an urge to speculate.

The above would indeed seem to indicate an intent to invest although it appears to me that the risk assumed by the appellant in supplying $25,000 as its share of the deposit, was not very great considering the interest engendered in the Dominion Square Building as an attractive investment at the time as Leopold was prone to point out in his evidence. The evidence indeed discloses that Leopold and his Toronto partners knew that Hop- meyer had been trying to purchase this building for some considerable time prior to the signing of the option. There would, because of this, be very little danger of any of the partners losing whatever deposit they would make.

The appellant did sell 614% of its participation in the option rights to Four Winds Apt. Inc., and thereby did reduce the profit it could have made upon selling its rights. This also was not, however, necessarily inconsistent with an intent to sell these rights in view of the fact that the appellant at the time having no capital of its own had borrowed $37,500 from the bank and apparently was eager to reduce its indebtedness to $25,000 as it did three days after the signing of the option document. By doing this it merely reduced whatever risk it had undertaken by one third, and retained a two-thirds interest which was still large enough to assure it an interesting profit.

The appellant did cause a net lease to be prepared at a cost of $25,000 and although this was also in line with an intent to pursue the investment, it was not inconsistent with an intent to sell off its rights as it would still be useful to the purchaser, was in fact used by Hopmeyer and associates and the amount expended to prepare this document was eventually deducted from the profit made by the associates.

The profit realized by the taxpayer under the above described circumstances could still, however, have been held to be a non- taxable capital gain were it not for a number of other factors which lead one to conclude that the rights under the option were purchased by the taxpayer for the purpose of selling them at a profit which it did a month after their acquisition.

How indeed is it possible to come to any other conclusion when the taxpayer, at the time it acquired the option had only $700 in its bank account, needed $25,000 (which it borrowed from the bank) and its share of the $200,000 deposit and some $500,000 at the closing date and had no assurance of obtaining these amounts even if the evidence of Walling seems to indicate that Leopold might have obtained a loan of $200,000 from the bank and Leopold says that there were possibilities of obtaining $300,000 from his father-in-law and mother.

Such possibilities were far from certain at the time of the signing of the option and were discounted shortly thereafter as the associates including the taxpayer admitted in Exhibit. R9, the document where they sold their rights to Hopmeyer and associates, that the reason for selling their rights was because

All of the selling parties (including the appellant) with the exception of Joseph Hopmeyer were and are unable to raise and provide for their respective proportions of the said sum of $4.050,000’’. Leopold stated that the investment transaction was not pursued by the appellant and its associates because of a conflict of personality between Hopmeyer and Lipton, one of the American associates. There was no conflict, however, with Leopold and his Toronto associates, yet there is no insistence or perseverance as there could have been if the appellant had really wanted to make an investment to remain in the transaction with Hopmeyer and his associates and proceed to take over the building. Leopold and his Toronto associates, Simonds and Candler, were real estate developers and as such were in a position to run across this sort of a transaction which is closely allied to their every day activities. They had, as a matter of fact, done something very similar a few months prior to the present transaction in the case of the Norgate Shopping Center which they had bought and which they sold immediately after its purchase thus making a quick profit. They were assessed on this profit, appealed to the Tax Appeal Board where they were successful in obtaining what Leopold calls a favourable consent Judgment. This transaction, the appellant claims, was similar to the present one and he sees no reason why the latter should not be dealt with in the same manner. The answer of course is that the facts in the first case could have been different than in the present instance but even if they were similar it may well be that as this was their first bite no inference of trading could be drawn. We are now, however, dealing with a situation where the taxpayer has now taken a second bite which now happens to be sufficient to make one conclude or infer that having sold a similar right at a profit a few months before, he saw from this previous experience a possibility of a similar quick profit and was, therefore, motivated here when the option was signed by considerations of a business or trading nature. It is interesting to note that the appellant even charged and was paid by its associates a commission fee of $17,500 for its services in arranging for the profit realized by the parties in selling their rights under the option.

Finally, as the respondent in this case had the right to and did assume that the appellant acquired an interest in the said option with a view to trading, dealing or otherwise turning it to account, the appellant had the burden of rebutting this assumption.

From a consideration of the above circumstances and the totality of the factors concerning this transaction, I must. conclude that it has not succeeded in destroying the above assumption by establishing as it had to that it did not when it acquired its rights under the option, intend to sell these rights at a profit.

The appeal is dismissed with costs.

SHULAMIT ELFRIEDE VASKEVITCH, EXECUTRIX OF THE estate OF THEODORE VASKEVITCH, Appellant,

and

MINISTER OF NATIONAL REVENUE, Respondent.

Exchequer Court of Canada (Cattanach, J.), January 3, 1969, on appeal from an assessment of the Minister of National Revenue.

Estate tax—Federal—Estate Tax Act, S.C. 1958, c. 29—Section 3(1) (j)

—Accident insurance—Whether accident insurance was “purchased or provided” by deceased “in concert or by arrangement with” his wife.

In issue was whether the proceeds of two air flight policies for $95,000 purchased at the airport were properly included in the estate of the deceased under Section 3(1) (j) as “any annuity or other interest purchased or provided by the deceased either by himself alone or in concert or by arrangement with any other person”. The evidence showed that the two policies, though issued on the formal application of the deceased, were in fact purchased by his wife with her own money ($8) and that her husband’s consent had been passive.

HELD:

There was no doubt that an accident insurance policy was an “other interest” within the meaning of Section 3(1)(j). However, the policies were not purchased or provided by the deceased either alone or in concert or by arrangement with any other person. “In concert” presupposed some form of active participation rather than passive consent to a decision taken by another: person. Appeal allowed.

Wolfe D. Goodman, for the Appellant.

N. A. Chalmers, for the Respondent.

CASE REFERRED TO:

Lethbridge v. Attorney General, [1907] A.C. 19.

CATTANACH, J.:—This is an appeal from an assessment dated March 22, 1967 under the Estate Tax Act, chapter 29, Statutes of Canada, 1958 whereby the Minister assessed the appellant as executrix of the estate of her late husband, Theodore Vaskevitch, by adding to the aggregate net value of that estate the sum of $95,000 being the proceeds of two policies of accident insurance.

The facts giving rise to the assessment are relatively simple and straightforward and are, in the main, agreed upon between the parties with the exception of one major particular upon which I shall comment in detail later.

On Friday, February 25, 1966, Theodore Vaskevitch, the husband of the appellant, departed from Malton Airport at Toronto, Ontario by Canadian Pacific Airlines for the Orient.

Mr. Vaskevitch was an engineer engaged in the manufacture of electronics on his own account and in the course of his business he frequently flew to Europe and to Japan and Hong Kong.

Immediately prior to his departure, two policies of flight insurance were obtained, one being policy No. DC-11091668 issued by Fidelity and Casualty Company of New York in the principal sum of $75,000 (hereinafter called the Fidelity Policy) and the second being policy No. T18BAC-29826-A issued by Mutual of Omaha Insurance Company in the principal sum of $20,000 (hereinafter called the Omaha Policy). The term of the Fidelity policy was for the duration of Mr. Vaskevitch’s flight to the Orient and for the duration of his return flight, whereas the term of the Omaha policy was for a period of 14 days from February 25, 1966.

In each case the principal sum was payable in the event of the death of Theodore Vaskevitch and in the event of the loss of hands, eyes or feet and a lesser sum in respect of a loss of a single eye, hand or foot.

The appellant was named the beneficiary in both policies.

It was agreed by both parties that these policies were policies of accident insurance.

The aircraft in which Mr. Vaskevitch was a passenger crashed at Mount Fuji, Japan on March 5, 1966 killing him and many other passengers and members of the crew.

The principal sums payable under the policies of insurance were promptly paid to the appellant by the insurers, but the appellant, in completing an Estate Tax Return, did not include those amounts in her declared total value of the estate of the deceased.

The Minister, by his Notice of Assessment, dated March 22, 1967 did so.

The appellant filed a Notice of Objection.

The Minister confirmed the assessment on the ground that the proceeds of the two policies above mentioned was property passing on the death of the late Theodore Vaskevitch and the value of such property was properly included in computing the aggregate net value of the property so passing, pursuant to the provisions of Section 3(1) (j) of the Estate Tax Act.

The said Section 3(1) (j) reads as follows:

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, wherever situated, passing on the death of such person, including, without restricting the generality of the foregoing,

(j) any annuity or other interest purchased or provided by the deceased, either by himself alone or in concert or by arrangement with any other person, to the extent of the beneficial interest therein arising or accruing by survivorship or otherwise on the death of the deceased;

Under Section 3(1) (j) there are three conditions which must be present to give rise to estate tax being exigible on this part of the deceased’s estate:

(1) there must be an annuity or other interest,

(2) it must have been purchased or provided by the deceased either by himself alone or in concert or by arrangement with any other person, and

(3) a beneficial interest therein must accrue or arise by survivorship or otherwise on the death of the deceased.

There is no doubt in my mind and it was accepted by both parties that an accident policy is an ‘‘other interest’’ in property and the subject of duty, but the two other conditions above mentioned must also be present if the proceeds of these two particular accident insurance policies are to be taxable as part of the aggregate net value of the appellant’s husband’s estate.

Counsel for the appellant submitted that,

(1) the policies, here involved, were not purchased by the deceased alone or in concert or by arrangement with the appellant and that even if such had been the case, which he vigorously denied, then,

(2) there was no beneficial interest therein arising or accruing by survivorship or otherwise on the death of the deceased.

It is with respect to the facts upon which the appellant bases the first of the two above contentions that a controversy arises between the parties.

Therefore it is incumbent upon me to examine the evidence adduced in this regard with care.

On all previous business flights taken by the deceased the appellant had made all of her husband’s arrangements such as the flight booking, hotel reservations and the withdrawal of money for expenses. However the appellant was opposed to her husband going to the Orient. She had a prejudice against the country to which her husband was going. She thought it to be uncivilized, subject to earthquakes, tidal waves and like disasters. Furthermore, she had a premonition that her husband would not return from this particular trip. Her husband did not share the appellant’s apprehensions and apparently felt that this trip was necessary for his business interests To alleviate domestic friction he made the necessary arrangements himself which was contrary to their usual custom. It had also been the custom of the appellant and the deceased to take out flight insurance in the amount of $75,000. The appellant knew that her husband was going to take this trip, but he had kept his departure date secret from her in the interest of harmony and to postpone his wife’s inevitable protestations until the last possible moment.

On Wednesday, February 28, 1966, the appellant had received a cheque from the German Government in the amount of 5,000 marks in restitution of war damage suffered by her. During the morning of Thursday, February 24, 1966 the appellant cashed this cheque, rather than depositing it, the cheque having been drawn on a bank other than her own, and she received therefor approximately $1,300 in Canadian funds.

That evening the husband revealed his plan to leave for the Orient by air the next morning. He had exhausted his Canadian funds. Therefore the appellant gave him an uncertain amount of Canadian money from the proceeds of the cheque she had cashed that morning so that upon her husband’s return he would have Canadian funds in case she was prevented from meeting him at the Toronto airport because of the winter weather. While she did not know the precise amount she gave her husband, nevertheless, she did know that the smallest denomination of the bills she gave him was $20. This was confirmed by the contents of the deceased’s wallet which was returned to the appellant after his death in the crash and which contained no Canadian currency in smaller denominations than $20.

The appellant, as was her custom, drove her husband to the airport, all the while continuing her objections to him going on the trip.

After her husband had checked in for his flight at the Canadian Pacific Airlines counter and he and the appellant were on their way to the departure gate they stopped at the insurance counter.

Her husband, to placate the appellant and to allay her fears of disaster, suggested that he should take out a flight insurance policy for $300,000, an amount greatly in excess of the amount of $75,000 normally taken out.

The appellant rejected her husband’s suggestion that he should take out a policy in such a large amount on the ground that, as she put it, “it would put a jinx on the flight and I was against that’’. She then said to her husband, ‘‘I don’t want such a large policy. I will take out $75 myself.’’ (By $75 she meant $75,000.) This culmination of the dispute between the appellant and her husband took place as they made their way from the airline counter to the insurance counter.

As they approached the counter the appellant preceded her husband and announced, “I will take out $75,000.’’ Her husband said that she should do as she pleased.

At the insurance counter there was another customer being served by the attendant. While waiting the appellant in her own handwriting filled in a portion of the Fidelity policy for $75,000. The document which is admitted in evidence is a photostatic copy of the original. The original was surrendered to The Fidelity and Casualty Company of New York at the time that the claim for payment was made and it was retained by that Company for 18 months and then destroyed. The copy in evidence was made by the solicitor for the appellant immediately prior to sending it to the Company with his request for payment. In my opinion this is a clear case in which secondary evidence is properly admitted.

The appellant printed the first two lines in the spaces provided in a box at the top of the document. On the left-hand side of the first line she printed her husband’s name as the ‘‘name of the applicant’’ and on the right-hand side of the same line her own name as the ‘‘name of the beneficiary’’. The second line sets out their addresses which are the same and which were printed by the appellant. The information in the two bottom lines in the box was completed by the attendant at the insurance counter, except at the extreme right the deceased signed his name in the space entitled, ‘‘ Personal signature of the Applicant”. It is specifically stated at the end of the policy that the policy ‘‘shall not be binding on the Insurer unless the application is signed personally by the Applicant’’. On a previous policy for a prior trip, the deceased and the appellant had noticed that the deceased had failed to sign thereby avoiding liability on the part of the insurer. On this occasion they were careful not to repeat the former omission. Furthermore, they were informed at this time by the attendant that it was mandatory for the traveller to personally sign the application and the policy was placed before the deceased for that purpose. In the spaces filled in by the attendant it is indicated that the policy was taken out at 9 o’clock a.m. and that the premium was $2.50.

A second policy was also taken out at this time which was the Mutual of Omaha policy for the principal sum of $20,000. The appellant testified that this was done because of her aversion to the country her husband would visit. She was anxious to provide hospital expenses and the like against the event of injury befalling her husband in the “uncivilized” lands he would visit.

As in the former policy the appellant also printed and wrote the information required in a box entitled ‘‘Schedule’’ at the beginning of the document. However in this policy her husband is described as the ‘‘insured’’ rather than as the ‘‘applicant’’ as in the Fidelity policy. The attendant filled in the balance of the information which indicated, among other things, that the premium was $5.50 and that the policy was effective from 9:55 o’clock a.m. of that day. Again the deceased personally signed the policy as the ‘‘insured’’ at the request of the attendant. In this instance the original policy was introduced in evidence. Apparently Mutual of Omaha Insurance Company did not require the production of the original policy and its surrender as a condition precedent to payment thereof as was the case with Fidelity, although both policies were sold over the same counter by the same attendant.

The premiums for both policies totalled $8.

The appellant tendered the payment of that amount by producing a $10 bill from her purse, being part of the funds she had received upon cashing the cheque payable to her which she had received two days previously from the German government as restitution of war damages which she had incurred. The proffered $10 bill was accepted by the attendant who gave the appellant a $2 bill as change and the two policies were delivered to her which she kept and stored in a drawer at her home.

The appellant did not ask for nor obtain a receipt for the $8 she paid the attendant, nor did she have her husband execute a form of assignment. The attendant who sold these policies was called as a witness. She testified that the form of assignment was conclusive evidence that the assignee was the owner of the policy and that both forms, the receipt form and the form of assignment were available at the desk for persons who requested them, but that, as a matter of practice, she did not advise customers that such forms were available. It is only to the statement by the attendant that she neither advised Mr. and Mrs. Vaskevitch that such forms were available nor proffered them to them that I attach particular significance.

In my opinion it is quite understandable that the appellant would not request a receipt for the premiums paid unless prompted to do so. She had possession of the effective policies and a receipt would not be necessary to her. As to the form of assignment, it should be borne in mind that these policies are usually purchased in a hurry with an aircraft standing by to take off. I think it is understandable that the appellant, in the time available to her, would not think of requesting a form of assignment to be completed by her husband and the attendant did not offer her such a form. I do not think it would have occurred to the attendant to do so because (1) she would not have been aware of the circumstances leading to the purchase of the policies, and (2) as she testified, she never proffered this form of assignment unless requested to do so by the customer as she was not requested to do by the appellant or the deceased in this instance.

There were no forms available to cover the circumstance where a person other than the traveller took out the policy.

There are discrepancies in the appellant’s testimony to which counsel for the Minister referred as illustrative of the unreliability of her evidence as a whole.

He specifically pointed out that on the Fidelity policy the time of purchase inserted by the attendant as 9 a.m. and the Mutual of Omaha policy indicated it was effective from 9:55 a.m., which time was also inserted by the attendant. The appellant insisted that the second policy was bought immediately following the first and that in her recollection 9 o’clock a.m. would be approximately the correct time. She could offer no explanation for the apparent difference of fifty-five minutes between the purchase of the two policies. Furthermore, the appellant testified that the aircraft on which her husband travelled took off at 9 :30 or 9 :35 a.m., so it would have been impossible for her husband to have signed the second policy at 9 :55 a.m. She made this statement in her examination in chief. The matter arose again in cross-examination. Again she could offer no explanation for the difference in time. She volunteered the information that she wished to establish the precise time of take-off so she called Canadian Pacific Airlines and was informed that it was between 9 :30 and 9 :35 a.m. that the aircraft took off, although she could not recall which of the two times she was told.

I cannot be certain how far the appellant’s first evidence as to the departure time of the aircraft was influenced by the information she received pursuant to her telephone call to the airline. However she did drive her husband to the airport and she would have known the departure time and would have estimated the time required to ge there with some accuracy.

To the best of the appellant’s recollection the attendant at the insurance counter was wearing a uniform consisting of a skirt and jacket. The appellant said in response to a question put to her in cross-examination she thought the jacket was red in colour and that the attendant was blonde, although in both instances she prefaced her answers by stating that she could not recall with certainty. Her answers in these respects were only guesses on her part as she indicated they could only be.

As I have intimated before, the attendant was called as a witness. She testified that she wore a uniform consisting of a skirt and jacket, but that the jacket was blue. I observed that the attendant’s hair was raven black and she said that she had never been a blonde.

The attendant did not recall the sale of these two particular policies, but she was adamant in her insistence that she would have inserted the correct time in the second policy because it was her invariable practice to do so.

I accept the appellant’s testimony as to the time of purchase of the policies and there are good and valid reasons for doing so. This was an event of paramount importance in the appellant’s life whereas to the attendant it was merely a routine sale of two of many policies. Neither do I think that the attendant was infallible in inserting the times in the policies. A few minutes either way would be of no great significance to her. I am therefore certain that the attendant made a mistake and inserted the wrong time in the second policy purchased.

Neither do I think that the appellant’s vague and incorrect recollections of the colour of the attendant’s garb and hair is of particular significance. The appellant’s mind was directed to other matters of far more importance to her with respect to which I accept her testimony.

I think it is clear that it was the intention of the insurer, under both contracts of insurance herein, to enter into agreements only with the actual traveller, in this instance Mr. Vas- kevitch. There is no ambiguity in the language of the policies as to the parties thereto. In the Fidelity policy Mr. Vaskevitch is described as the applicant and he personally signed the application in that capacity. Similarly in the Mutual of Omaha policy he is described as the insured and he signed the application as such. It would appear that the insurer was willing to contract only with the actual traveller as is indicated by the form of the application and by the fact that it was a condition to the validity of the policies that the traveller should personally sign the applications.

Therefore as between the insurers and Mr. Vaskevitch there is no doubt that the insurer consider him to be the other contracting party, but this circumstance does not resolve the question of the ownership of the policies as between the appellant and her husband.

As I have accepted the appellant’s testimony it follows that she purchased both these accident policies on her husband’s life for which she paid the premiums with her own money. Because those monies were paid to a third party there can be no presumption of a loan to her husband and furthermore the evidence, in my view, effectively rebuts any presumption of a loan or gift to her husband if such should exist.

Section 3(1) (j) of the Estate Tax Act is enacted in language identical to that used in Section 2(1) (d) of the Finance Act of the United Kingdom. Therefore the English decisions on that section are applicable and helpful.

Lord Loreburn, L.C. said in Lethbridge v. Attorney General, [1907] A.C. 19 at 28, that the general purpose of the section is “to prevent a man escaping estate duty by subtracting from his means, during life, money or money’s worth which when he dies are to reappear in the form of a beneficial interest accruing or arising on his death”.

The facts as I have found them to be in the present case show that Theodore Vaskevitch did not ‘‘subtract from his means’’ for the purpose of paying the premiums in question. This was done by the appellant alone out of her own free property.

Accordingly it follows that the deceased, Theodore Vaskevitch, did not ‘‘purchase or provide’’ the two accident policies ‘‘by himself alone’’ within the meaning of the above quoted words as they appear in Section 3(1) (j).

However the question remains whether he ‘‘ purchased or provided” those policies ‘‘in concert or by arrangement with any other person’’ that is in the present instance, his wife, the appellant.

While it is true that the deceased initiated the discussion with his wife concerning the purchase of an accident policy for the substantial amount of $300,000 that suggestion was rejected by the appellant and from that point forward, as I view the evidence, all decisions and steps taken were those of the appellant to which the deceased merely consented and acquiesced. To act “in concert” or “by arrangement with another person’’, in my opinion, presupposes some form of active participation rather than passive consent to a decision taken by another person. It follows that the deceased did not purchase or provide the policies in question ‘‘ either by himself alone or in concert or by arrangement with any other person’’ which is a condition of the proceeds of these two particular accident insurance policies being properly included as part of the aggregate net value of the appellant’s husband’s estate.

Because of the conclusion I have reached it is not necessary for me to consider the second submission on behalf of the appellant that there was no beneficial interest in the two accident insurance policies arising or accruing by survivorship or otherwise on the death of the deceased.

Accordingly the appeal is allowed with costs.