Keith, J.:—In this matter counsel representing the estate of the late Edward Douglas Gibb who died on or about May 26, 1965 and counsel representing the Treasurer of Ontario have taken widely divergent positions in making submissions with respect to the incidence of taxation arising out of a rather simple set of facts.
The deceased during his lifetime was an actuary in the employ of the North American Life Assurance Company and had taken out a number of policies of insurance on his life with that company. In December 1960 he gave his wife a cheque for $3,8’80 and as the agreed statement of facts puts it this cheque was given and received upon the understanding that part of the proceeds would be used by Ruth Gibb to acquire from her husband Edward Douglas Gibb at a later date three of the policies of life insurance then owned by him at the sum of their eash surrender values and accumulated dividends as computed by the North American Life Assurance Company. This understanding was carried through on January 12, 1961. The actual values of the three policies computed on the basis just mentioned were as follows:
With respect to Policy #284494, the sum of $1,353.83
With respect to Policy #336698, the sum of $963.57, and
With respect to Policy #495450, the sum of $1,441.40.
It is common ground that up to the date that this transaction was concluded the deceased had paid the annual premiums on these policies, pursuant to an arrangement with the company and authorized by him and commonly known as a payroll deduction. Upon the conclusion of the transaction notice was given to the company formally of the acquisition by the wife of the deceased of the policies and in my view she may very well have been created a beneficiary for value. Whatever the rights as between husband and wife or as between husband and insurance company and wife and insurance company must arise from the documents that were executed by the insured at that particular time.
Regardless of what those rights were, however, no change was made in the payment of premiums and the husband continued to have his salary bear the cost of these premiums by payroll deductions as had occurred in the past.
The Treasurer of Ontario takes the position that he is not concerned with either the ownership of the policies or the status of the widow as being a beneficiary for value or a preferred beneficiary or whatever. His position may be succinctly stated as follows: that under the provisions of Section 1 (p) (iii) of The Succession Duty Act then in force, that is at the time of death, the deceased had himself paid all the premiums on the policies and hence there was no cause for apportionment as between the deceased’s use of his money in paying the premiums and the use of someone else’s money in paying the premiums.
When the matter first came for argument the appellant, who has appealed from the decision of the Minister in assessing tax on the full amount of the life insurance, which I might note at the time of death amounted to $35,675.09, took the position that the effect of the transaction in December 1960 and January 1961 was to reimburse the insured for the premiums that he had theretofore paid and that one ought only therefore to look at the premiums paid between January 1961 and the date of the death of the deceased as being premiums paid by the deceased. It was conceded in the agreed statement of facts that the insured had in fact paid those premiums and a calculation was then made applying the provisions of Section l(p)(iii) of The Succession Duty Act as to what portion of the ultimate value of the policy should be attributable to property passing on the death of the deceased under the terms of that section and hence subject to tax. That figure amounted to $16,796.83.
During the course of argument the Court raised with counsel for the appellant the possibility that there was another approach having regard to the fact that the cash surrender value of the three policies was very much less than the total of the premiums that had been paid by the deceased up to the time of the transaction. Those figures were considered on the basis that perhaps the difference could be accounted for as the exhausted cost of insuring during each annual period. It was further discussed during the course of argument as to whether or not the change of ownership might have had the effect of relieving the insured from the position of being charged with the premiums that he in fact paid after 1961 in view of the fact that effective ownership of the policies had changed and he might well be considered as having been making annual advances on behalf of his wife in order to keep the policies in force. If one eliminated the premiums paid after January 1961 and took the method of calculation suggested, that is, giving effect to the unrecovered portion of the premiums paid prior to that date one would come to a figure of $11,133 as the part that should be subject to tax.
In my view, however, the position of the Minister is correct in this case. Whatever the transaction was between the parties, whatever effect it had, I cannot find any evidence that supports the proposition that there had been a reimbursement of premiums by the wife to the deceased and in fact on the figures it is perfectly clear that it was not a total reimbursement, if it was a reimbursement at all. The transaction may very well have had the effect of affecting the rights of creditors of the deceased from attacking the proceeds of the policy or indeed of giving the wife of the deceased the right to take the cash surrender value and spend it as she would but there is no question on the facts but that the premiums as such and as defined in The Insurance Act and as properly meant to be interpreted, as I read the relevant section in The Succession Duty Act, were in fact paid by the deceased and by nobody else.
For these brief reasons and I reserve the right to extend and revise them of course in case the matter goes further, I would dismiss the appeal. Costs of the appeal fixed at $250 to the respondent.