JOHNSON, J.A.:—This is an appeal from an order made upon an application for the advice and direction of the Court concerning the estate of John Budnyk, deceased. There are two points for consideration: (1) whether the estate tax paid under the Estate Tax Act, S.C. 1958, c. 29, as amended, shall be charged to each legatee’s share of the estate or whether it shall be borne by the residuary estate, and (2) whether the devise of his home property to Mary Misyk ‘together with all the furniture and equipment of any kind therein’’ passed title to an automobile found in a garage located on the property. The learned Judge ruled that the tax be paid out of each beneficiary’s share ‘‘in the ratio that each such share bears to the total value of the assets available for distribution among all the beneficiaries’’. On the second question he ruled that Mary Misyk acquired no interest in the automobile.
There is no doubt that the various succession duty Acts—provincial and federal—are what they purport to be—taxes upon the succession of property, and unless the will or other document passing the property otherwise provides, they are payable by the persons receiving the property. Estate taxes, on the other hand, taxes the totality of the property left by the deceased and is paid as a debt of the estate. Until 1958 taxes were collected by the Government of Canada under the Dominion Succession Duty Act, S.C. 1940-41, c. 14. In that year that Act was super- seded by the Estate Tax Act, supra. À reading of this Act leaves no doubt in my mind that the tax, unlike that under the former Act, is not a tax upon the succession, but is a tax upon the estate. This is made clear by Sections 13 and 18 of the Act.
13. (1) The executor of the estate of a deceased, whether or not any notice of assessment has been sent to him by the Minister, is, from and after the death of the deceased, liable to pay as tax under this Part, and shall, within the time specified in paragraph (a) of subsection (1) of section 11 for filing a return of information relating to the deceased, pay to the Receiver General of Canada as tax under this Part, the part of the tax payable under this Part in respect of the death of the deceased that is applicable to the property under his control.
18. (1) Where any amount is payable as tax under this Part pursuant to section 13 by the executor of the estate of a deceased, that amount shall, for the purposes of any applicable statute or law relating to the administration of estates, be deemed to be a debt due to Her Majesty incurred by the deceased immediately prior to his death.
Any doubts which might linger after considering these sections are put to rest by Section 14. By that section each successor to property is made liable for the tax payable on the property he receives but where property comes to him through the executor of the estate the tax for which he is liable is payable ‘‘by him as surety only for the payment of that amount by the executor of the estate of the deceased as and when required by or pursuant to this Act’’. It follows that, when paid, such tax can be recovered from the executor.
The tax, being a debt of the estate, is payable out of the part of the estate that is not specifically devised or bequeathed if that part of the estate is sufficient to pay it.
There is no doubt that a testator can, by his will, transfer the ultimate liability for all or any part of his tax to the specific legatees. The Province, under its power to legislate as to property and civil rights, could, no doubt, accomplish the same result by legislation. There is no such legislation so far as I can find in this Province. If the Succession Duty Act of this Province had still been in force and its provisions could be interpreted as changing the ultimate liability for this tax (which I do not think was the case), the Act has been repealed for some time (1962 (Alta.), c. 86, Section 2(1) (c)).
Clause 5 of the will reads:
After payment of the aforementioned specific legacies which total the sum of $26,000.00, the whole residue of my estate (except my home property devised to Mary Misyk as in paragraph 3 herein set out) I give, bequeath and devise to my niece Angela Pawluk for her use and benefit and ownership, but she shall pay all the costs of my funeral and administration expenses out of such residue.
Unless costs of administration can be said to include the payment of these taxes, the will is silent as to any direction for their payment.
The fact that real property is devised does not, I suggest, alter the incidence of the tax. By the Devolution of Real Property Act, R.S.A. 1955, c. 83, Section 3, it is provided that real property notwithstanding any testamentary disposition shall devolve upon and vest in the personal representative and shall be dealt with and distributed as personal estate.
English decisions prior to 1949 were under Acts which in part at least taxed the succession. For instance, the Finance Act, 1894 (U.K.), c. 80, did not make an executor liable for the duty payable on real estate. This was payable by the devisee of the land and it was held that the same rule applied even where the devise was to the executor to sell the land and distribute the proceeds because it had earlier been held that Every person, taking an interest in the produce of land directed to be sold, is in truth a devisee, and not a legatee”: Re Spencer Cooper; Poe v. Spencer Cooper, [1908] 1 Ch. 130 at pp. 133-4. When the Administration of Estates Act, 1925 (U.K.), c. 28, enacted a provision similar to the section of the Devolution of Real Property Act referred to above, a provision was made in the Law of Property Act, 1925 (U.K.), ce. 20, that the personal representative should be accountable for all death duties (Section 16(1)), but went on to provide (Section 16(5)), that ‘‘nothing in this Part of this Act shall affect the liability of the persons beneficially interested or their respective interests in respect of any duty and they shall accordingly account for or repay the same and any interest and costs attributable thereto . . .” There is, of course, no similar provision in any Act in this jurisdiction so that cases dealing with the English Act will have no application.
Problems may arise in provinces which still tax the succession. If they do they can be taken care of by appropriate legislation. The possibility of such problems should not affect the interpretation of this Act if its intention is clear.
The appeal is accordingly allowed as to the first question and it is directed that the estate tax is payable as a debt of the estate and will accordingly come out of the residue going to Angela Pawluk.
At the close of argument, we dismissed the appeal as to the second point, holding that the devise of the home together with ‘fall the furniture and equipment of any kind therein’’ did not convey the automobile situate in the garage at the date of death.
Costs of the appellant and respondent will be paid out of the estate to be taxed on col. 2 of sch. C.