FERGUSON, J.:—This is an appeal under Section 32 of The Succession Duty Act, R.S.O. 1950, c. 378, by Edith Mae Thompson, residuary legatee under the will of Daniel Harris Williams, from the decision of the ‘Treasurer of Ontario with respect to the amount of succession duty payable by her as residuary legatee of the estate. Section 32 of the Act lays down the procedure for appeal from the Treasurer’s decision and under subsection 9 the proceedings become a cause for trial in the Supreme Court and may be set down or entered for trial by the appellant or by the Treasurer according to the Rules of Court and shall thereafter be proceeded with in the same manner as an action. No evidence was called as the solicitors for the Treasurer and for the appellant agreed to a statement of facts which was filed at the trial as exhibit 1.
Daniel Harris Williams died at London, Ontario, on September 29, 1950, domiciled in Ontario. He left a will which was probated in the Surrogate Court of the County of Middlesex. By the letters probate, issued on January 11, 1951, Edward Cayley Elwood, a solicitor, was appointed his executor. The aggregate value placed upon the deceased’s estate by the Succession Duty Department is $19,375.48. The deceased’s widow received certain benefits under the will and the appellant Edith Mae Thompson was named the residuary legatee. The widow was dissatisfied with the disposition made by her husband of his property with respect to her and she applied under The Dependants’ Relief Act, R.S.O. 1950, ce. 101,—to quote from the order issued—‘‘for an Order pursuant to the said Act for relief against the last Will and Testament of the deceased’’. Presumably this was intended to mean that the widow applied, as permitted by the statute, for an order charging the estate with payment of an allowance sufficient to provide for her maintenance. As a result of the proceedings taken before the Surrogate Court Judge, the executor was ordered to pay to the widow the sum of $38,000 out of the residue of the estate in addition to sums given to her by the will and the executor and the appellant were ordered to execute and deliver to the widow a conveyance of certain premises in which the deceased had an interest.
The order has been acted upon by all parties concerned and I proceed to consider the matter before me, assuming the order to be right in every particular. The result of the application before the Surrogate Court Judge is that the benefits received by the wife out of her husband’s estate are materially increased and the amount of the residue passing to the appellant Edith Mae Thompson is similarly reduced by about the sum of $4,000 in addition to the costs. The Succession Duty Department served a demand for payment of succession duties on the appellant as if the proceedings before the Surrogate Court Judge had never taken place and as if distribution of the estate had been made by the executor before such proceedings had taken place.
The demand served on Edith Mae Thompson is, on its face, served pursuant to Section 32 of The Succession Duty Act. That section authorizes the Treasurer to ‘‘serve any person by whom the duty, interest or penalties are claimed to be payable”. Although the statement served on the appellant does not in words demand payment, that is really what it is designed to do as every judgment or order given or made in this proceeding, which is commenced by service of the statement, may be enforced in the same manner and by the like process as a judgment or order.
The statute, in Section 32(2) requires the Treasurer to serve a copy of the statement on any of the persons acting in ‘‘the administration of the property passing on the death of the deceased”.
The appellant objects to paying succession duties on the deceased’s property which she has never received, contending that neither the deceased nor the Treasurer can, by an act to which she has not been a party, make her liable to pay any sum as succession duties.
The Treasurer’s case is that under The Succession Duty Act Edith Mae Thompson is liable to pay duties calculated upon distribution of the estate according to the last will and testament of the deceased and without reference to the terms of any order made by the Surrogate Court Judge under The Dependants’ Relief Act. In other words, the Treasurer contends that the effect of The Succession Duty Act is to make Miss Thompson liable as a legatee to pay succession duties on the sum of $12,764.94, of which about $4,533.33 has not been, and never will be, received by her. It is clear that this iniquitous result could be brought about only by legislation in clear and unambiguous language.
On the facts as outlined the only question to be determined is whether Edith Mae Thompson is personally liable to pay to the Treasurer the amount demanded by the Treasurer. It is no broader than that.
Although the Court’s duty is the same in all cases, whether the Act to be construed relates to taxation or to any other subject, namely, to give effect to the intention of the Legislature as that intention is to be gathered from the language employed: Attorney-General v. Carlton Bank, [1899] 2 Q.B. 158 at 164, yet it has been said over and over again by the most eminent judges that clear and unambiguous language is absolutely indispensable in a statute imposing a tax or charge.
In Attorney-General v. Milne et al., [1914] A.C. 765 at 772, Lord Atkinson said: ‘‘Judicial tribunals must, in interpreting these taxing Acts, stick to the letter of the statute’’, and in the same case Lord Parker of Waddington at p. 781 referred to the principle of interpretation as follows: ‘ ‘ The Finance Act is a taxing statute, and if the Crown claims a duty thereunder it must shew that such duty is imposed by clear and unambiguous words.”
It must therefore be made clear by the letter of the statute that Edith Mae Thompson is liable to pay duty on a sum which she never will receive.
Section 11(1) reads: ‘‘Every person resident in Ontario at the date of death of the deceased to whom or for whose benefit any property situate in Ontario passes on the death of the deceased shall be liable for the duty levied on the proportion of such property which so passes to him or for his benefit . . .’’
(The italics are mine.)
An executor or trustee as such is not personally liable for duty, but Section 24(1) imposes on the executor an obligation to deduct it from the legacy or collect it from the legatee : ‘‘. . . an executor, trustee or person in Ontario in whom any property passing on the death of the deceased or any property in respect of which a disposition is made, is at any time after the death of the deceased vested, or who has the management or control thereof, shall not transfer any such property to the person beneficially entitled thereto without deducting therefrom or collecting an amount sufficient to pay the duty and interest payable by such person.’’
The Treasurer relies on the case of Re Dunn Estate; Fennell et al. v. The Treasurer of Ontario, [1942] O.R. 635; [1943] 1 D.L.R. 92. That was a case in which the Treasurer attempted to collect succession duties from the widow in respect of the increased allowance granted to her by His Honour Judge Lee, a Surrogate Court Judge. It was held by Plaxton, J., who made an exhaustive review of the cases, that where a Surrogate Court Judge has increased the amount payable to the widow, the increase is not subject to succession duty because the amount charged upon the estate by the Surrogate Court Judge under The Dependants’ Relief Act is neither a “succession” nor “property passing on death”. Therefore, it would appear that the executor may pass the extra amount allowed to the widow without deducting therefrom any duty, as Section 24(1) only applies where there is “property passing on death’’ or ‘‘in respect of which a disposition is made’’. It is not necessary for me to decide what happens to the lien imposed on the property itself by Section 5.
In Re Dunn Estate Mr. Justice Plaxton’s formal order con tains the following clause :
“1. This Court doth DECLARE that the Succession Duty payable to the Treasurer of the Province of Ontario by the executors of the Estate of James A. Dunn, deceased, and any beneficiaries thereof is based and calculated upon distribution or the said Estate according to the last Will and Testament of the deceased and without reference to any terms of the Order made by His Honour Judge Lee on the second day of January, 1934, in proceedings under The Dependants 9 Relief Act, 1929, in the said Estate.”
Counsel for the Treasurer argues that I should make the same declaration in this case and that the rule of stare decisis requires me to do so. But a case is authority only for what it actually decides. The decision in Re Dunn Estate was that in the estate there under consideration the succession duty payable should be based and calculated as stated. It is not easy to understand why, in the formal judgment, the executors were by inference declared liable to pay duty when the statute states expressly that they were not liable for any duty. At any rate, the reasons for judgment and the record in the case show that the broad issue which appears to be decided by the formal judgment was not raised in the case at all.
In In re Jost Estate; The Eastern Trust Company v. Montreal Trust Company et al., [1942] S.C.R. 54; [1942] 1 D.L.R. 81, the Supreme Court of Canada dealt with The Succession Duty Act of Nova Scotia which contained a provision (corresponding to Section 1(g) of the Ontario Act) that in determining the aggregate value of the property the fair market value should be taken as at the date of the death of the deceased of all property passing on his death. Section 1(g) of the Ontario Act defines dutiable value as follows:
‘* 4 dutiable value’ of any property situate in Ontario passing on the death of the deceased, ‘dutiable value’ of a transmission, or ‘dutiable value’ of a disposition made in Ontario, means, respectively, the value of such property at the date of death of the deceased, the value of such transmission, and the value of such disposition, after allowance has been made for the debts, encumbrances and other allowances authorized by and in accordance with subsection 5 of section 2.”
The Nova Scotia Act contained a provision (Section 10(1)), similar to Section 11(1) of the Ontario Act, which read: ‘‘ Every person to or for whose benefit any property passes on the death of any other person shall be liable for the duty upon so much of the property as so passes to him.”
In the majority judgment in In re Jost Estate Mr. Justice Hudson, in discussing the meaning and effect of the above mentioned'provisions of the Nova Scotia Act, approves of the following from the judgment of the trial judge:
“The object and meaning of The Succession Duty Act must be gathered from the words of the statute. It is the purpose and intention of the Act that the two factors necessary to determine the duty—valuation and rates—shall be constant. Irrespective of market fluctuations, duty shall be levied upon the fair market value (less deductions) at the date of death. The rate is determined by the relationship or nature of the person for whose benefit property passed on the death. Computation is made by applying the appropriate rate of property passing to each person beneficially on the death of the testator. The duty is paid on the basis of the distribution intended by the testator. The executor deducts the amount which was payable on each legacy under Section 10(1). He must do this in order to carry on the administration of the estate. Succession duties are ‘a first lien upon the property in respect to which they are payable until they are paid’, and the executors cannot discharge their functions as executors until they have freed the assets of the estate from this lien and have paid the duties. ’ ’
But In re Jost Estate was a very different kind of case from the one I have to deal with. There the deceased died a short time prior to the financial crash in 1929. The executors paid succession duties based on the value of the securities at the date of death with the result that legatees—or some of them at least—received nothing. It was held that the executors were justified in paying the duties. That case is far from deciding that a legatee who receives nothing, though the will mentions a bequest to him, should pay a tax. That point was argued in the case and mentioned at p. 70 by Hudson, J., who delivered the majority judgment. He said :
“The argument is this: that in Section 10(1) obviously the words ‘passes on the death ’ must refer to the actual passing of property into the hands of the beneficiary as otherwise a beneficiary would be personally liable for a duty in respect of property which he had not received and might never receive, a result so manifestly unfair and unreasonable that the Legislature could not possibly have so intended.”
Hudson, J., does not expressly disapprove of this argument nor does he expressly dissent from the view of the Court of Appeal for Nova Scotia where the majority of the judges construed the words 41 passes on the death ’ ’ and the words “‘ passing on the death’’ as applicable only to the time when the property was distributed to the beneficiaries. He does not decide that a legatee who receives nothing is liable to pay duty and he is careful to point out that the direct application of Section 10 of the Nova Scotia Act is not in question.
Crocket, J., in his dissenting judgment, at p. 63, did express the opinion in the words following that the property passes to the beneficiary when it actually reaches him: ‘‘Graham, J., after referring to the relevant provisions of the Act, as set out in the judgment of his brother, Doull, distinctly held that property which ‘passes on the death of any person’ within the meaning of The Succession Duty Act means property which changes hands at the death, that it vests in the executor, though he has no beneficial interest in it; that it only actually ‘passes’ to the beneficiary when it reaches him; that it would be unreasonable and unjust to levy duty in respect of property that the beneficiary never received, and that it should only be levied if the Act, in the clearest terms, directed it. In this I fully agree with that learned judge.”’
Kerwin, J., also in a dissenting judgment, expressed his opinion at p. 66 : It is true, the fair market value of the property is to be taken as at the date of the death of the deceased. It must be borne in mind that we are dealing with general legacies of specific amounts, except, of course, the residuary bequest. The Regents of Mount Allison University, while ex- pecting to receive a substantial sum, actually received nothing, and it cannot be intended that they still would be liable for succession duty taxes. The University, of course, was outside Nova Scotia, but it cannot be held that an individual legatee resident in Nova Scotia, who actually received nothing although the will mentioned a bequest of a large sum, should pay a tax.”
Although these quotations are from dissenting judgments they are, nevertheless, the opinions of eminent judges and in the absence of any expressed authority to the contrary I should regard them as a valuable lead here.
I do not think the judgment in In re Jost Estate is inconsistent with that of Roach, J., in Re Wagstaff, [1941] O.R. 71: [1941] 2 D.L.R. 108, where after mentioning that apart from the conditional liability for payment imposed on the executor or trustee by Section 19, the only person liable for payment is the legatee under Section 12 (now Section 11), and the liability is limited to the duty on so much of the property as passes to him, he refers to Nevill v. Commissioners of Inland Revenue, [1924] A.C. 385 at 389, and Attorney-General v. Milne et al., supra, at p. 779, in which the words ‘‘passes’’ is defined as ‘changes hands’’, and continues with this statement:
“It is true that on the death of a person the title to property vested in him and with respect to which he has the power of disposal passes to and becomes vested in his personal representatives by virtue of The Devolution of Estates Act. That passing, however, is not the passing referred to in The Succession Duty Act. The personal representative is merely a trustee. He is the conduit through whom title passes, or more accurately may pass, to the persons beneficially entitled. Moreover, the same statute which vests the title in the personal representative makes that property liable for the payments of the debts of the deceased. Since that property would, in the lifetime of the deceased be liable for the payment of his debts, it is accurate to say that the statute preserves the right of the creditors in that respect.
“That being so, then, notwithstanding the solvency of the estate at the date of death, if during the course of the administration the estate becomes insolvent and the whole property of the estate is required to satisfy the creditors of the estate, then nothing passes to the beneficiaries or legatees. For the purposes of The Succession Duty Act, still regarding the personal representative as the conduit, it may be said that everything is drained out of the conduit on its way toward the beneficiaries or legatees and nothing ever reaches them.” I have also considered Re Drummond Estate; Minister of Finance for British Columbia v. Drummond et al., 50 B.C.R. 485, [1936] 2 W.W.R. 635; [1936] 4 D.L.R. 264, a decision under the British Columbia Succession Duty Act. The question in that case was whether the beneficiaries were liable for the duty before the property was vested in them. It was held that they were liable. But even that case only goes so far as to say that the liability to pay dates back to the date of death and recognizes that the demand for payment must, of necessity, be made some time later. It certainly is not authority for the proposition that the beneficiaries are liable as of the date of death in respect of property which never reaches them.
In my opinion Sections 11(1) and 1(g), when read together, means that that part of the deceased’s property which passes to the legatee, which changes hands, which actually reaches the legatee, is to be valued as at the date of death. On the value of that property he is liable to pay duty and not on property he never has received and never will receive.
It seems to me that to take the words of Hall, J., approved by Hudson, J., in In re Jost Estate, supra, namely : ‘‘The duty is paid on the basis of the distribution intended by the testator’’, and remove them from their context and apply them liberally would result in a flood of absurdities. The testator might not own the property mentioned in the will. Could the testator by making gifts of what he did not own make the object of the phantom gift liable to the Treasurer? Could a testator by his will make a gift of securities, sell the same before his death and cause his beneficiary to become liable to the Treasurer? Would the legatee be precluded from rejecting the gift?
Suppose A, a stranger, is bequeathed securities of the value of $3,000. The Surrogate Court Judge charges those securities with payment of $3,000 to the widow, with the result that A gets nothing and is required to pay duty on the $3,000.
These absurdities demonstrate that the Legislature intended that not only should there be a gift, but that the property given must exist. There must, in fact, be property passing.
When the Act is open to a reasonable interpretation I should reject an interpretation which leads to an absurdity.
My opinion is therefore that Edith Mae Thompson is not liable to pay the duty on the increase granted to the widow by the Surrogate Court Judge. Whether there is some other method of enforcing the payment of duty in respect of the increased allowance to the widow is not before me for determination.
The appeal will therefore be allowed with costs.
Appeal allowed with costs.