Levine Estate (Appellants)
v.
Minister of National Revenue (Respondent)
Trial Division, Sweet D.J.—Fredericton, Febru-
'-ary 20, 21 and 22; Ottawa, March 21, 1973.
Income tax—Benefit conferred on shareholder—Rights
issue—Minority shareholder acquiring higher proportion of
shares—Whether "transaction by way of gift"—Income Tax
Act, secs. 137(2)(c) and 111(2)(b).
A was beneficial owner of 2,000 shares in a company and
his son W, who was his general manager, held the other 500
issued shares. A, as the controlling shareholder, out of a
paternal desire to benefit his son W, arranged for a rights
issue by the company. W subscribed for an additional 5,000
shares and A an additional 500 shares at $1.00 per share. W
then sold 1,500 of his shares to a family trust at $37.50 a
share.
Held, the allotment of the 5,000 shares through the rights
issue to W amounted to a transaction by way of gift by A to
W within the meaning of sections 137(2)(c) and 111(2)(b) of
the Income Tax Act.
M.N.R. v. Dufresne [1967] 2 Ex.C.R. 128, applied.
INCOME tax appeal.
COUNSEL:
William Hoyt, Q.C. and E. J. Mockler for
appellants.
F. J. Dubrule, Q.C. and John R. Power for
respondent.
SOLICITORS:
Hoyt, Mockler, Allen, Dixon and Godin,
Fredericton, for appellants.
Deputy Attorney General of Canada for
respondent.
SWEET D.J.—This is an appeal against a re
assessment in respect of the late Mr. Abe
Levine for the taxation year 1965.
Particulars in connection with the re-assess
ment were:
Total of gifts previously
declared $ 6,000.00
Add: Value of gift element in
transfer of shares of Abe
Levine & Sons to
Weldon $190,000.00
Gift element in sale of
shares to daughters-in-
law 30,000.00 220,000.00
Total value of gifts (revised) $226,000.00
Less exemption 7,119.99
Amount subject to gift tax at
20% $218,880.01
Respondent's counsel consented to the appeal
being allowed in respect of the item "Gift ele
ment in sale of shares to daughters-in-
law 30,000.00".
Counsel for the parties agreed (Exhibit 4):
(a) should it be this Court's decision that there was a gift
by Abe Levine to Weldon Levine in respect to 5000
shares of the capital stock of Abe Levine & Sons Ltd., the
amount of the gift is $121,250
(b) should it be this Court's decision that there was a gift
by Abe Levine to Weldon Levine in respect to 3500
shares of the capital stock of Abe Levine & Sons Ltd. the
amount of the gift is 70,000.
To understand what is really involved
requires recital of some history.
The late Mr. Abe Levine had become a man
of quite substantial affairs. The one of his enter
prises, which is particularly germane to this
case, was a business of buying and selling scrap
metal. In respect of that operation a company
was incorporated by letters patent dated the
23rd day of December, 1955, with the name
"ABE LEVINE & SONS LTD."
In the latter part of 1964 or the early part of
1965 Mr. E. J. Mockler, a barrister, was
retained to do, in connection with Mr. Levine's
affairs, what Mr. Mockler called "overall
planning".
Mr. Mockler worked out a rather far-reaching
plan which included provisions for wives of Mr.
Levine's, then married, sons, his grandchildren
and his son, Weldon Levine. On Mr. Levine's
instructions he drafted documents to implement
the plan.
Included in the planning was machinery for
the son Weldon increasing, and very substantial
ly, his interest in Abe Levine & Sons Ltd.
As originally incorporated the authorized
capital stock of that company was 2500 shares
without par value. Of these Mr. Abe Levine
held, at the time Mr. Mockler was called in,
1999 shares; his wife held 1 share, which it is
conceded she held as the nominee of Abe
Levine, and the son, Weldon, held 500 shares.
The plan to increase Weldon Levine's hold
ings in the company required a number of steps.
They start with supplementary letters patent
dated the 12th day of October 1965, increasing
the authorized capital stock of Abe Levine &
Sons Ltd. by an additional 25,000 shares with
out par value.
Exhibit 1, which contains what it has been
agreed are copies of a considerable amount of
documentation, includes a copy of what purport
to be minutes of a meeting of the board of
directors of Abe Levine & Sons Ltd. held on
the 22nd day of October, 1965. They indicate
that present were Abe Levine, Bessie Levine,
Weldon Levine and Harry Levine, said therein
to be all the directors of the company. Those
minutes indicate that a resolution was unani
mously passed which inter alia included:
Twenty-five thousand (25,000) common shares in the capital
stock of the Company (hereinafter called "the common
shares") be offered for subscription to the holders of record
of common shares of the Company at the close of business
on the 22nd day of October 1965 on the basis that such
holders of record of common shares shall be given the right
to subscribe for ten common shares of the Company at the
price (hereinafter sometimes called "the subscription price")
of One Dollar (51.00) per share (Canadian funds) for each
common share of the Company held at such time, ten rights
to subscribe to attach to each common share of the Compa
ny and each such right and One Dollar (51.0'0) be required to
subscribe for each common share of the Company;
It might be noted that although in those
minutes Harry Levine is referred to as a direc
tor this matter proceeded on the basis that at all
relevant times the only shareholders, until there
were subsequent assignments by Abe and
Weldon Levine, were they and Bessie Levine. It
is on that basis that this matter is being disposed
of.
By subscriptions dated the 3rd day of
November 1965 Weldon Levine exercised his
rights to subscribe for 5,000 shares and Abe
Levine subscribed for 500 shares. The result
was that, instead of shares being owned as
previously, shares of Abe Levine & Sons Ltd.
came to be owned as follows:
Weldon Levine-5,500 shares;
Abe Levine (assuming Bessie Levine was holding one
share for him)-2500 shares.
In connection with the acquiring of the addi
tional 5000 shares Weldon Levine was to pay
into the company the one dollar for each of
them and, Abe Levine, the one dollar for each
of his.
By agreement dated the 30th day of Novem-
ber 1965 Abe Levine agreed to sell to each of
Sarah Levine, Edith Levine and Betty Levine,
daughters-in-law of his, and they agreed to pur
chase 800 common shares in the capital stock of
Abe Levine & Sons Ltd. at a price of $30,000
each being $37.50 per share. That agreement
also contained:
It is hereby agreed that the fair market value of the shares
as of the date of this agreement is $90I,000.0'0; provided,
however, that if at any time in the future the Department of
National Revenue shall assign a different value to any of the
aforesaid shares as of the date of this agreement it is
mutually covenanted and agreed that the terms of this
agreement shall be adjusted accordingly, and that the Party
or Parties in whose favour such adjustment accrues shall be
entitled to recover as a debt due from the other Party or
Parties any excess in the value of the shares plus additional
consideration transferred or paid by him under this agree
ment over the value of the shares and other consideration
received by him.
By agreement dated the 30th day of Novem-
ber 1965 between Weldon Levine, therein
called the vendor, and John Page and Genevieve
Mclvers, trustees of the "Levine Family Trust"
therein called the purchasers the vendor agreed
to sell and transfer to the purchasers and the
purchasers thereby purchased 1500 common
shares of no par value in the capital stock of
Abe Levine & Sons Ltd. for a total price of
$56,250.00, being $37.50 per share. It also con
tained a provision regarding adjustment of
terms if at any time in the future the Depart
ment of National Revenue assigned a different
value to any of the shares similar to the one in
the previously mentioned agreement between
Abe Levine and Sarah, Edith and Betty Levine.
Accordingly at that stage the situation, so far
as Weldon Levine was concerned, was: he had
paid or agreed to pay to the company $1.00 for
each of 5000 shares; had agreed to sell 1500
shares at $37.50 each and after transfer of the
1500 shares would have remaining 4000 shares
including the 500 which he originally owned.
Those were one-half of the total issued shares
of the capital stock of Abe Levine & Sons Ltd.
Mr. Mockler was a witness. It was he who
advised on the planning previously referred to
and, as I gather from his evidence, actually
developed the plan. With leave he also acted as
one of the appellants' counsel.
Mr. Mockler argued from a number of aspects
stressing, however, three main positions:
(1) that the assessment could not stand
because it had been proven that it had been
made on an assumption of circumstances
which did not exist;
(2) that the acquisition of the shares by
Weldon Levine through the issuing of rights
had a commercial purpose;
(3) that if the acquisition of shares by
Weldon Levine did contain a gift element, it
applied only to 3500 shares and not to 5000
shares.
In connection with the first of these points
Mr. Mockler submitted that the respondent
assumed that there had been a transfer from
Abe Levine to Weldon Levine and, in his sub
mission, there was no such transfer.
He referred to the following in the judgment
of Jackett P., as he then was, in M.N.R. v.
Dufresne [1967] 2 Ex.C.R. 128 at page 140:
In my view, the onus was on the respondent to plead and
prove either
(a) that the assessment was not based on an assumption
that the result of the transactions set out in paragraph 4 of
the Notice of Appeal was that the respondent conferred a
benefit of $66,596.73 on the children; or
(b) that it was not, in fact, a result of such transactions
that the respondent conferred a benefit in that amount on
the children.
Mr. Mockler submitted that what he claimed
was the Minister's incorrect assumption is made
manifest by the following wording in the notice
of re-assessment: "Value of gift element in
transfer of shares of Abe Levine & Sons to
Weldon." and in wording of the notification by
the Minister under section 58 of the Act
namely, "in respect of the gift element of $220,-
000.00 in the transfer of shares of Abe Levine
& Sons Limited to the taxpayer's son and
daughters-in-law".
Reference was also made to the following
questions and answers in the examination for
discovery of Joseph Blanchard, an officer of the
Department of National Revenue.
Q. In this letter of July 17, 1969, on page 2, you state "It
is our opinion that the change in Weldon Levine's
ownership from 20% of the issued common shares on
November 1, 1965 to 68.75% on November 4, 1965
constitutes a transfer from Abe Levine to Weldon—
which is subject to tax under Section 111 of the
Income Tax Act."
A. Yes.
Q. Now when you wrote that letter, I take it that the basis
upon which you were making the assessment was that
a gift had been made by Abe Levine to Weldon
Levine, is that correct?
A. Yes.
and
Q. Let's get this clear. At the time you would have got
Estate and Gift Tax involved in this, the decision to
assess would have been made—in other words,
November 1969, the decision to assess would have
been made at that point, is that correct?
A. Yes.
Q. And now were you the person who would have made
that decision?
A. Yes, that the amount was taxable, that the gift was
taxable. Yes, I would say.
Q. And you did it on the assumptions we talked about
earlier?
A. Yes.
and also
Q. And this T-7-W8 also explains how the minister or the
assessor has arrived at his conclusion to tax, it is an
explanation of the assumption he has made for the tax
or for the assessment, is that correct?
A. Yes.
Abe Levine did not assign to Weldon Levine
any shares of the capital stock of Abe Levine &
Sons Ltd. issued by that Company to Abe
Levine. It was the Company, and not he, who
received payment for the shares issued to
Weldon Levine pursuant to the rights.
As I understand the Dufresne case it is there
made quite clear that when a shareholder, who
has effective control of a company, causes, by a
"rights issue", whereby shares can be acquired
by shareholders at a price less than their actual
value, equity in that company to flow from him
to another shareholder, there can be a gift ele
ment or "benefit" involved in the acquisition,
by that other, of shares issued pursuant to the
rights. This is so though the controlling share
holder did not assign any shares issued to him
and the company, and not he, received payment
for the shares issued by the company pursuant
to the rights.
In the Dufresne case (p. 129) there is:
The question raised by the appeal relates to the acquisi
tion, on two separate occasions, by each of the respondent's
five children of shares in a company in which the respond
ent was the controlling shareholder in circumstances which
resulted in the children having an interest in the capital
stock of the company, relative to that of the respondent,
that was greater than the interest that they had, relative to
his, prior to such acquisition.
Commencing at page 138 of that authority
there is:
The second question is whether, if that result—acquisition
at a cost of $7,500 of a holding of 6 / 1 7 of the stock of the
company in place of the 1/12 previously held was a "bene-
fit" to the children, was that benefit conferred on them by
the respondent?
That question cannot, in my view, be realistically
answered by an analysis of each of the respective steps
taken without taking account of the ordinary well known
facts of life in the world of affairs. The resolution granting
the "rights" was, it is true, passed by the Board of Direc
tors; and the respondent was only one director and had in
the proceedings of the Board only one vote. There is noth
ing, moreover, to show that the wife and children did not
each act independently in deciding their respective courses
of action in the whole series of events. Nevertheless, in the
absence of any evidence by the respondent or on his behalf
to show what in fact happened, I am of the view that the
balance of probability is that he, as the owner of practically
all the shares in the company and the head of the family,
had the controlling influence in the determination of the
course of events with which we are concerned. The
sequence of events bears all the earmarks of a series of
company transactions that had been arranged in advance by
the major shareholder and father, after taking appropriate
professional advice, with a view to achieving the result of
increasing the children's proportions in the ownership of the
stock of the company. That that is what in fact happened is
corroborated by the evidence given before the Tax Appeal
Board. There was very little, if any, consultation in advance
between the children and the respondent, who, in effect,
presented them with what he had arranged for their benefit
and assumed that they would accept it, which they did.
Moreover, the benefit, if it was one, was an increase in the
proportions of the children almost entirely at the expense of
the decrease in the respondent's.
There is no doubt in my mind that, if the result of the
transaction was a benefit to the children, it was conferred on
them by the respondent.
In this connection counsel for the appellants
attempted to distinguish the Dufresne case on
the ground, among others, that the Dufresne
case was decided on an interpretation of subsec
tion (2) of section 137 of the Income Tax Act
and that under the circumstances of this case
that provision is not available to the respondent.
He submitted, indeed, that the Dufresne case
itself made that reasoning inapplicable to sec
tion 111 of the Income Tax Act. For this he
relied on the following in Dufresne (p. 129):
By virtue of subsection (1) of section 111 of the Income
Tax Act, a tax is payable upon the gifts made in a taxation
year by an individual resident in Canada. (An extended
meaning is given, for this purpose, to the word "gift" by
subsection (2) of section 111, but it has not been suggested
that that subsection has any application to the determination
of the question raised by this appeal.) The tax on gifts
imposed by section 111 is, by virtue of section 114, payable
by the donor.
It seems to me that all that passage does is to
indicate that the learned and distinguished Presi
dent of the Exchequer Court was simply not
dealing with section 111.
Subsection (2) of section 137 is:
(2) Where the result of one or more sales, exchanges,
declarations of trust, or other transactions of any kind
whatsoever is that a person confers a benefit on a taxpayer,
that person shall be deemed to have made a payment to the
taxpayer equal to the amount of the benefit conferred
notwithstanding the form or legal effect of the transactions
or that one or more other persons were also parties thereto;
and, whether or not there was an intention to avoid or evade
taxes under this Act, the payment shall, depending upon the
circumstances, be
(a) included in computing the taxpayer's income for the
purpose of Part I,
(b) deemed to be a payment to a non-resident person to
which Part III applies, or
(c) deemed to be a disposition by way of gift to which
Part IV applies.
Section 111 of the Income Tax Act is:
(1) A tax shall be paid as hereinafter required upon the
gifts made in a taxation year by an individual resident in
Canada or a personal corporation.
(2) For the purpose of this section, "gift" includes a
transfer, assignment or other disposition of property (wheth-
er situate inside or outside Canada) by way of gift, and
without limiting the generality of the foregoing, includes
(a) the creation of a trust of, or an interest in, property by
way of gift, and
(b) a transaction or transactions whereby a person dis
poses of property directly or indirectly by way of gift.
I think that the Dufresne case makes it clear
that if the evidence were to disclose that in
making the assessment the Minister did in fact
rely on an assumption which the evidence dis
closes was incorrect the assessment cannot
stand. However, in my view the evidence here
does not disclose that the Minister assumed a
situation which did not exist.
The letter dated July 17, 1969 from Mr.
Blanchard to which reference is made in his
examination for discovery, (and one of the
items on which the appellants appear to rely)
shows that Mr. Blanchard was not under any
misconception as to how the substantial change
in the shareholding of Abe Levine & Sons Ltd.
came about and that there was no assumption
that Abe Levine had assigned to his son,
Weldon, any shares issued by the company to
Abe Levine. The letter itself shows that the
Minister's officer was fully aware that the pur
pose sought to be accomplished was effected by
means of the issuing of rights to subscribe for
shares.
A photocopy of that letter is part of Exhibit 2.
It contains inter alia:
The events or transactions leading to the change in owner
ship were as follows:
October 12, 1965. Supplementary Letters Patent were
obtained increasing the capital stock from 2500 to 27,500
common shares.
October 22, 1965. Rights were issued to purchase at $1.0'0
per share for each old common share held, 10 shares of the
new common shares authorized.
November 3, 1965. Abe Levine subscribed for 500 shares
and Weldon Levine subscribed for 5,000 shares, all at $1.00
per share.
November 5, 1965. The remaining 19,500 rights issued to
Abe Levine expired.
In that letter Mr. Blanchard said "It is our
opinion that the change in Weldon Levine's
ownership from 20% of the issued common
shares on November 1, 1965 to 68.75% on
November 4, 1965 constitutes a transfer from
Abe Levine to Weldon Levine by gift which is
subject to tax under Section 111 of the Income
Tax Act." The wording "constitutes a transfer
from Abe Levine to Weldon Levine" is not
synonymous with a wording such as "resulted
from a transfer from Abe Levine to Weldon
Levine of his shares of capital stock".
A change in the percentages of ownership of
shares of the capital stock of the company by
the method employed so that Weldon Levine's
holdings relative to the total issued shares
would be increased was part of the "overall"
plan devised by Mr. Mockler.
I find, on the evidence, that as part of the
"overall" plan Abe Levine, using the control
which he then had in Abe Levine & Sons Ltd.,
caused rights to be made available to the share
holders with the intention that Weldon Levine
would subscribe for the rights which he did and
that Abe Levine would refrain from subscribing
for all of the rights for which he might have
subscribed so that in the result Weldon Lévine
would have 5500 shares instead of the 500 he
previously held and that Abe Levine, including
the share held by his wife, would have 2500
shares instead of the 2000 shares he previously
had. The increase to Weldon Levine was, to use
the words of my Lord Jackett in the Dufresne
case, "at the expense of a decrease" in Abe
Levine's percentage of ownership of the equity
in the company.
There is no essential difference in what was
done in this case than if Abe Levine had actual
ly transferred shares of the capital stock held by
him to Weldon Levine so that after such trans
fer Weldon Levine would have owned 68.75%
of the issued shares of the capital stock of the
company.
The reference by Mr. Blanchard in his letter
of July 17, 1969 to section 111 of the Income
Tax Act did not and could not make subsection
(2) of section 137 unavailable to the Minister.
Furthermore it is my opinion that the wording
in the notification by the Minister under section
58 of the Act: "confirms the said assessment as
having been made in accordance with the provi
sions of the Act and in particular on the ground
that gift tax has been properly levied in accord
ance with the provisions of Part IV of the Act"
does not make section 137 inapplicable even
though that section is in Part VI and not Part
IV. I do not consider that the particularizing
regarding Part IV limits the immediately prior
general, all-inclusive wording, "in accordance
with the provisions of the Act". Moreover, in
my opinion, paragraph (c) of subsection (2) of
section 137: "deemed to be a disposition by
way of gift to which Part IV applies" makes
Part IV relevant to the situation disclosed by the
evidence here.
There is no reference to either section 111 or
section 137 in the notice of re-assessment.
I am of the opinion that section 137 is avail
able to the respondent. I am also of the opinion
that the evidence discloses a transaction the
result of which was that Abe Levine conferred a
benefit on Weldon Levine under circumstances
contemplated by that paragraph (c).
In any event, it is my opinion that even if
subsection (2) of section 137 were not available
to the respondent the reasoning in Dufresne
relating to subsection (2) of section 137 is also
applicable to paragraph (b) of subsection (2) of
section 111. I find that there was a transaction
within the meaning of paragraph (b) of subsec
tion (2) of section 111 whereby Abe Levine,
through the planned rights issue, disposed of
property, if not directly, at least indirectly, by
way of gift.
When Abe Levine put into operation, as I find
he did, the prearranged plan over which, and in
the implementation of which, he had control, by
which the percentage of the holding by Weldon
Levine of the issued shares was increased at the
expense of his own holding Abe Levine dis
posed of property by way of gift within the
meaning of section 111(2)(b). Abe Levine was,
in effect, the donor and Weldon Levine, the
donee. What was given was the increase in the
ownership of the equity in the company.
I find the circumstances, as disclosed by the
evidence, fit both section 137(2)(c) and section
111(2)(b) and, in my view, both or either were
available to the respondent and that Abe Levine
was properly assessable under either of them.
I was referred to Craddock v. M.N.R. [1969]
1 Ex.C.R. 23 in which Gibson J. said [at page
32]:
Finally, in cases such as this (and generally in all income
tax cases), the Minister in his pleadings and evidence at trial,
is not bound by the assumptions made by the assessor in
making the assessment or re-assessment and the Minister is
also not restricted to relying on the reasons stated in the
Notices of Assessment or Re-Assessment or the section or
sections of the Income Tax Act therein relied upon but,
instead, is entitled to allege in his pleadings other facts and
to plead any other alternative or additional section or sec
tions of the Income Tax Act, and to adduce evidence in
support thereof, provided however, if the latter situation
obtains the onus of proof is on the Minister.
Even if the Minister had made an incorrect
assumption he has in his reply to the notice of
appeal adequately pleaded to come within the
requirements enunciated by Gibson J. and the
evidence adduced is sufficient, in my opinion, to
discharge the onus which Gibson J. said would
be on the Minister.
I find the permitted acquisition of shares did
not have a commercial purpose so far as Abe
Levine was concerned.
At one point Mr. Mockler's evidence was to
the effect that the factors motivating Abe
Levine in doing what he did to change the
shareholding of Weldon Levine were:
1. What Mr. Mockler referred to as Abe
Levine's general philosophy which envisaged
equality among his children or their families.
2. The contributions those children had made
to the businesses.
3. The importance of maintaining the benefits
for the company which would flow from
Weldon Levine remaining with it.
Previously Mr. Mockler said in effect that
when discussing the situation with Mr. Levine
he indicated concern about there being relative
equality among his four sons and he acknowl
edged that each had worked with him and each
had contributed to the growth of the enterprises
and he indicated he considered it an obligation
to see that they were equally treated. I am
satisfied that at the time of the interviews which
Mr. Mockler had with Abe Levine both Abe
Levine and Weldon Levine felt that that equal
ity had then not yet been achieved and that
Weldon Levine had then not yet been the object
of Abe Levine's bounty to the extent that his
other three sons had been. I am satisfied, too,
that the real purpose behind the issue of rights
to the holders of shares of Abe Levine & Sons
Ltd. to subscribe for additional shares was to
achieve that equality.
No doubt Weldon Levine's services were of
value. He had become general manager. How
ever valuable service is what a company is
entitled to expect from its general manager.
There is no suggestion that his salary was inade
quate. Neither is there any suggestion that there
was any binding, enforceable agreement that he
would receive the shares which he did.
No doubt he was disgruntled. He did give
evidence to the effect that if he had not
received the 5000 shares he would not have
stayed on. He may even have made such a
threat to his father. Nevertheless I do not think
that he would have left the company if he had
not received the 5000 shares. His association
with the company was close and of long stand
ing. It was not likely easily to be severed. He
had a not insignificant interest in it, being the
owner of one-fifth of its issued shares,—a valu
able property. I do not think the evidence as a
whole points to Abe Levine being motivated by
any threat by Weldon Levine to leave. Certainly
it was not to Abe Levine's financial interest to
become a minority shareholder as he did. Fur
thermore as part of the overall plan Abe
Levine's interests in the company would still
further be reduced. By an agreement dated the
30th day of November, 1965 he agreed to sell
800 of his shares to each of Sarah Levine, Edith
Levine and Betty Levine at $37.50 per share.
This left him with only 100 shares out of a total
of 8,000 issued shares.
It is not the nature of business to make a
general manager, however valuable, the majori
ty shareholder, with 68.75% of the issued
shares of a prosperous company either as a
reward for past services or because he threatens
to leave, or both.
I find that the whole plan was conceived and
implemented on the basis of gratuity.
I pass now to the third main point submitted
on behalf of the appellant, namely that if the
acquisition of shares by Weldon Levine did
contain a gift element it applied only to 3500
shares.
Presumably this submission was made
because of the transfer of 1500 shares by
Weldon Levine to the Trustees of the Levine
Family Trust pursuant to the agreement dated
November 30, 1965.
According to the documentation:
1. On November 3, 1965, Weldon Levine,
exercising his rights, subscribed for 5000
shares at $1.00 per share, not 3500 shares.
2. On November 30, 1965, Weldon Levine
agreed to sell 1500 shares at $37.50 per share
subject to the provision for adjustment if the
Department of National Revenue assigned a
different value to any of the said shares.
3. Weldon Levine previously had held 500
shares. Accordingly, following the completion
of the sale pursuant to the agreement of
November 30, 1965, he would hold 4000
shares and also be entitled to $56,250.00
from the purchasers subject to any adjust
ment to be made as above stated.
I do not see any merit in the submission that
if the acquisition of shares by Weldon Levine
contained a gift element it applied only to 3500
shares.
In the result:
1. On agreement through counsel the appeal
is allowed in respect of the item "Gift element
in sale of shares to daughters-in-law
30,000.00".
2. It being found that there was a gift by Abe
Levine to Weldon Levine in respect of 5000
shares of the capital stock of Abe Levine &
Sons Ltd. the amount of the gift, on the
agreement of counsel, (Exhibit 4) is to be
taken as $121,250.00.
3. The appeal, accordingly, is allowed in part
namely to the extent sufficient to provide for
the foregoing set out in paragraphs numbered
1 and 2 immediately above and in all other
respects the appeal is dismissed.
The matter is referred back for re-assessment
on the bases set out above.
On agreement through counsel the respondent
shall pay to the appellants by way of costs the
fixed sum of $1500 and there is no further order
as to costs.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.