Gibson, J.A.:—This is an appeal by the Treasurer of Ontario from the judgment of Stewart, J., allowing the appeals from the statement of the Treasurer of Ontario levying certain succession duties in connection with the estate of the late Harry C. Hatch.
The late Mr. Hatch, who died on May 8, 1946, had on December 27, 1941, set up an irrevocable trust in favour of his four children Mildred Doyle, Carr Hatch, Clifford Hatch and Douglas Hatch, in which each was granted a. one-quarter interest, and on the same date he transferred 1,000 shares of preference stock of T. G. Bright & Co. Ltd., to the Toronto General Trusts Corporation as Trustee of the said trust. Further blocks of 1,000 shares each were added to the capital of the trust on January 2, 1942, and January 2, 1943, bringing to 3,000 the total number of shares of Bright preference stock held in the trust. At later dates other shares in various companies were added to the capital of the trust by Mr. Hatch.
Under the provisions of the trust agreement, the shares and the securities held by the trustee were to be divided into four equal parts and one part set aside for each child to whom the income from the shares and securities so allocated would be paid during his or her lifetime, and upon the death of such child his part would be divided equally amongst the issue of the child so dying; after allocation of the securities none was to be sold without the direction of the child for whom such securities were held.
In 1945 the T. G. Bright & Co. Ltd. redeemed its preference shares and on June 19, 1945, the trustee received the sum of $300,000 for the 3,000 preference shares held in the trust.
On July 3, 1945, the trustee invested the proceeds of the said redemption by purchasing 4,000 common shares of Hiram Walker-Gooderham & Worts Ltd. from Mr. Hatch at the price of $75 a share, which was from 1 to 114 points below the existing market value.
At the date of Mr. Hatch’s death in 1946, these shares had increased in value to $139.50 a share, having a total value of $558,000.
In placing a valuation on the capital of the said trust for succession duty purposes, the Treasurer of Ontario included this valuation of $558,000. The relevant taxing provisions covering this valuation are now found in The Succession Duty Act, R.S.O. 1950, c. 378 :
“1. (f) ‘disposition’ means,
(iv) any payment during the lifetime of the deceased to any person as a result of the creation of a trust by the deceased, exclusive of the payment of any income derived from any property in which such person had the beneficial interest,’’
“2. (1) For the purposes of this Act,
(b) the value of a disposition shall be the value at the date of death of the deceased of the property in respect of which such disposition is made, provided that,
(i) if such property has been sold for or converted into money during the lifetime of the deceased, the amount of such money shall be the value of such disposition.
On appeal it was held by Mr. Justice Stewart that Section 2(1) (b) and 2(l)(b)(i) of the Ontario Succession Duty Act apply.
Counsel for the Treasurer of Ontario advances the argument that unless the entire trust fund has been converted into money, Section 2(l)(b)(i) does not apply, and interprets the words ‘‘the property’’ in Section 2(1) (b) as meaning all the property comprising the dispositions, and the words ‘‘if such property’’ in Section 2(l)(b)(i) as meaning ‘‘if all such property’’ has been sold.
I cannot agree with these contentions, as paragraph (b) refers to ‘‘the value of a disposition’’. Here there were several dispositions made at different times and held by the trustees under the provisions of the trust agreement. Each was ‘‘a disposition’’. When the shares which had been transferred in 1941, 1942 and 1943 were redeemed in 1944 they were converted into money during the lifetime of the deceased, and the words in the Act ‘‘the amount of such money shall be the value of such disposition” means the value of each such disposition. If separate trust agreements had been executed respecting the shares transferred in 1941, 1942 and 1948, there would then have been three separate dispositions of property during the lifetime of the deceased and three separate conversions of such property into money during that time and the fact that each disposition in turn was made the subject matter of one trust instrument does not have the effect in law of making each and every separate disposition into one disposition only for the purposes of the Act.
Counsel for the Treasurer of Ontario also claims that succession duties are payable on income received from the trust by the three children in Ontario during the lifetime of the deceased.
Section 1(f) (iv) provides:
“any payment during the lifetime of the deceased to any person as a result of the creation of a trust by the deceased, exclusive of the payment of any income derived from any property in which such person had the beneficial interest’’.
It is argued that as each child had a life interest only in one- quarter of the income from the trust, none of the children of Mr. Hatch had the beneficial interest, as each had only a beneficial interest in the assets making up the trust.
Under the provision of the trust agreement the trustee was required to divide the securities making up the trust into four equal parts and to set aside one such part for each of Mr. Hatch’s four children. The net income from such part was to be paid to the child during his or her lifetime. There was a further direction that any securities held by the trustee should be ‘‘retained by the trustee and shall not be sold by the trustee except on the written direction of the child or issue for whom the said securities are so held’’.
From this it would appear that four separate trusts were created by the trust agreement and that each of the four children had the right to authorize changes in the capital investment of their respective trust funds.
As was stated by Kerwin, J. (as he then was), in M.N.R. v. National Trust Co., [1949] S.C.R. 127; [1948] C.T.C. 339:
‘‘The property, the subject matter of the gift . . . is the daughter’s equitable interest, and the daughter assumed bona fide possession and enjoyment of the property immediately upon the making of the gift as the nature of the gift and the circumstances permitted.
I am satisfied that, here, the daughter, through the trustees, had actual as well as bona fide possession and enjoyment of the property. ’ ’
Again in Commissioner for Stamp Duties of the State of New South Wales v. Perpetual Trustee Co. Ltd., [1943] 1 All E.R. 525. it was stated by Lord Russell of Killowen at p. 530 :
“The son was (through the medium of the trustee) immediately put in such bona fide beneficial possession and enjoyment of the property comprised in the gift as the nature of the gift and the circumstances permitted.”
I am satisfied that each of Mr. Hatch’s children received income derived from property in which he or she had the beneficial interest and that such income is exempt from taxation for succession duties under the provisions of Section l(f)(iv).
The appeal will be dismissed with costs.
LAIDLAW, J.A.;—I concur.
AYLESWORTH, J.A. :—I agree.
Appeal dismissed.