The estate of a deceased German resident sold three rental properties in BC. The estate added probate and legal fees that were paid in establishing the title of the estate to the properties to the adjusted cost base of the rental properties. The Minister denied the increase in adjusted cost base, and thereby reduced the estate's capital loss (which was deemed to be a capital loss of the deceased under s. 164(6).)
Webb J. found that as the fees were necessary in order for the estate to acquire a registrable interest in the properties, they were part of its acquisition cost. In the alternative, he noted that the fees could be characterized as outlays or expenses the estate incurred for the purpose of making a disposition of the rental properties, which would reduce the estate's proceeds of disposition under s. 40(1)(a), leading to the same capital loss that the deceased claimed.