Drescher v. The Queen, 85 DTC 5064, [1985] 1CTC 229 (FCTD)

Muldoon, J:—This is an appeal by the plaintiff from a decision of the Tax Review Board, rendered on October 26, 1982. By consent, the transcript of the previous proceedings was filed as Exhibit A, and an agreed book of documents was filed as Exhibit B.

A ticket in “The Provincial” lottery whose number, was entered in draws on April 30, 1978 and May 28, 1978, was bought by some unknown one of the three members of the plaintiffs family, either himself, his wife Edith, or their daughter Evelyn. The ticket bore a winning number, 4132507, for which the sum of $1,000,000 was paid by the Interprovincial Lottery Corporation.

The issue to be determined is: whether the sum of $49,458.91 earned in the 1978 taxation year as interest on term deposits and for which T-5 statements of investment income were issued by the paying banks in the plaintiffs name as recipient was interest income taxable in his hands only; or whether it was he, his wife and their daughter, who are each taxable equally on one-third of the interest.

In reassessing the plaintiff for the 1978 taxation year, the Minister of National Revenue assumed, inter alia

(a) at all material times the plaintiff was the owner and holder of “The Provincial” lottery ticket No 4132507,

(b) on May 28, 1978, the plaintiff won $1,000,000 in the draw as owner of the winning ticket,

(c) on May 30, 1978, the Interprovincial Lottery Corporation issued a cheque drawn payable in favour of the plaintiff in the said amount,

(d) that cheque was deposited by the plaintiff, during the 1978 taxation year, in a thirty-day term deposit in his own name with the Royal Bank of Canada,

(e) when the above mentioned deposit’s term matured, the plaintiff, still during the 1978 taxation year, invested the sum of $1,000,000 in a term deposit in his own name with the Toronto-Dominion Bank,

(f) in the 1978 taxation year the plaintiff received interest income from the $1,000,000 lottery prize, as follows:

(g) in the 1978 taxation year the plaintiff received the full amount of $49,458.91 as, on account or in lieu of payment of, or in satisfaction of, interest,

(h) in the 1978 taxation year the plaintiff had the absolute and unrestricted right to the $49,458.91 interest income.

By contrast, and despite the Minister’s assumptions, it is contended by the plaintiff that the winning ticket, the million-dollar prize it yielded and, accordingly, the interest income of $49,458.91 were all and always the common property of the Drescher family. The plaintiff contends in consequence that only one-third of the interest income should be attributed to the plaintiff because, as he contends, his wife Edith had one-third of it as her income, and their daughter Evelyn had the remaining one-third of it as her income. It is incumbent upon the plaintiff to point to the facts which, by themselves or by inference, support his contention and, either alone or with others, or by logical inferences, demolish the Minister’s assumptions.

In this the plaintiff succeeds on this appeal.

By way of background it is noted that the plaintiff, or the plaintiff and his wife, had been successfully in business for 23 years prior to the hearing before the Tax Review Board — or since about 1959 — after coming to Canada. Elmcrest Furniture Ltd was one of their enterprises operating quite successfully in Winnipeg. Its shares were, at the material time, owned in the following proportions: 65 per cent by the plaintiff, 30 per cent by his wife, and five per cent by their daughter. The plaintiffs wife Edith worked alongside him, at and in Elmcrest Furniture Ltd, being its secretary-treasurer and doing “95 per cent of all the banking things” according to the plaintiffs estimate. As she did previously and has done since, Edith Drescher worked at Elmcrest Furniture Ltd throughout the 1978 taxation year and earned a gross salary of $24,000 in that year. Daughter Evelyn also earned a salary from Elmcrest Furniture Ltd and was on the premises from time to time when not pursuing her studies at the university. She was over 18 years of age in 1978.

The plaintiff and his wife came to Canada from Germany. They married in 1954. The tenor of the evidence indicates a close, sharing couple and, after the arrival of their daughter Evelyn, a close, sharing family. They were close and sharing obviously by choice, because the family property regime in Manitoba at the material time was one of separation of family property until the family — meaning the marriage — were dissolved either by death or decree. Thereupon certain forced sharing provisions of legislation would come into operation but they are of no concern here. While separation of property during the currency of the family’s legal integrity was and is the norm, it did and does not prevent spouses and their offspring from maintaining closer sharing arrangements according to their choice and their own concept and perception of themselves as a family. That this was the Dreschers’ concept and perception of themselves is abundantly clear from the evidence, falling short only of a written general declaration to that effect, of which there is, not surprisingly, no evidence.

There were however certain kinds of specific written “declarations” to that effect. Thus, the three Dreschers were the equal shareholders and owners of an investment corporation, Royal Elm Canada Ltd and those three were also equal partners in Elmcrest Stables, a registered partnership. There was a further corporation, Royal Upholsterers (1965) Ltd in which the plaintiff, his wife and their daughter were equal shareholders.

The Dreschers were habitual lottery ticket buyers starting in Germany before the two adults came to Canada. They continued to buy lottery tickets of all kinds, as a regular practice over the years. In addition to the plaintiff’s testimony on this subject, Edith Drescher testified that both she and daughter Evelyn over the years had purchased all types of tickets such as Winsday, Lotto, Provincial, football and community club tickets. At first the tickets were bought at various locations, sports clubs, business clubs and government agencies and outlets which sell lottery tickets.

Then, along came Ron Bunio who started work as credit manager of Elmcrest Furniture Ltd in 1977. He was a booster of the Winnipeg Jets hockey club. Indeed Ron Bunio “had a facility” from the Jets Booster Club to sell lottery tickets, which he proceeded to do approximately three or four months after coming to work at Elmcrest. In the 1977 and 1978 taxation years. Mr Bunio was selling basically three types of lottery tickets: Super-Lotto, The Provincial and Winsday. These tickets were in effect bearer tickets in that the purchaser’s name (or purchasers’ names) did not need to be recorded, and were not recorded by the vendor. The tickets differed in price being $10, $5 and $1 respectively.

The Provincial lottery tickets were the primary ones sold by Mr Bunio and he usually sold those tickets once per month. Mr Bunio testified that the winning Provincial ticket, 4132507, must have been sold by him because: the stamp on the ticket specified that it was a Jets Booster Club ticket; and he was the only one in the building occupied by Elmcrest Furniture Ltd who had access to lottery tickets as a vendor. Mr Bunio further testified that he sold tickets only to the people at Elmcrest Furniture Ltd in the Elmcrest building.

The Dreschers usually bought lottery tickets once a month from Ron Bunio. On different occasions he was paid for the tickets by each one of the three Dreschers, but less often — “seldom”, indeed — by Evelyn the daughter. Mr Bunio would take a quantity of tickets in pouches in a box, usually to the plaintiffs office on the premises, but sometimes to Edith Drescher’s office. If the plaintiff or his wife or their daughter were present they would all join in to select tickets. But, about half of the time he would leave the tickets in one or other of the offices — usually the plaintiffs — and afterwards one of the Dreschers — usually either the plaintiff or Mrs Drescher — would come out of the office and give Mr Bunio the money. He could not know from whom the money was coming when the tickets were purchased. Mrs Drescher testified that oftentimes the selection of tickets would constitute their lunchtime recreation.

It is just possible that daughter Evelyn was present when the winning ticket was bought, likely prior to April 30, 1978, according to the witnesses. Mrs Drescher testified as follows:

Q. So, during that period of time, the three or four months before that period of time, your daughter Evelyn would have been at school. That would be a fair statement? She was at the university at that period of time or attending university?

A. She was attending university, but then you are not there 8 hours a day.

The learned member of the Tax Review Board made the correct finding on this matter when, as reported in [1982] CTC 2769; 82 DTC 1769 at 2770; 1770, he wrote:

The evidence of Mr Bunio, together with that of both the Appellant and his wife, points to a conclusion that the purchaser of the winning ticket can never be identified with certainty. Mr and Mrs Drescher both testified they did not know who bought it. It might have been any one of the three members of the family. The uncertainty arises from the fact that all three were habitual buyers of lottery tickets and that all three made a practice of placing the tickets which they had purchased on a clip kept in the family home. None of them made any attempt to identify or differentiate between tickets bought by any one member of the family as opposed to the other two.

That is the proper conclusion in this matter: no one can ever know which of the three Dreschers selected the winning ticket. It is, however, as certain as can be that one of them did.

During the 1978 taxation year all three Dreschers resided at 841 Chalmers Street, in Winnipeg. All tickets and coupons purchased by either the plaintiff or Edith Drescher or Evelyn Drescher were placed on a clip (presumably some device which grasped papers between spring-powered jaws or pincers) in the family room of the house, where there is a wall-unit. In one corner of the wallunit there was a certain place [the clip] where all tickets were placed so that access could be had to them on draw days. No note or registration or record was kept by the Dreschers of which particular tickets were purchased by which of the three family members. The winning lottery ticket was kept on the clip in the family room; it could have been either the plaintiff or Mrs Drescher who placed it there.

Over the years small prizes of about $10 or $25 had been won and, when asked what had been done with the proceeds of those prizes, the plaintiff testified: “Mostly we reinvested them’’. He testified that by “we”, he was “referring to the family”. They never really expected to win a big prize, because chances of winning were so little. So, perhaps it is not surprising that the plaintiff and his wife and their daughter never expressly discussed among themselves what would happen if they won anything of significance.

Then, one day after May 28, 1978, the plaintiff was looking through the daily newspaper which published the number of the winning ticket in the Interprovincial lottery, and he found that the winning ticket was reposing on the clip in the family room. The next morning the plaintiff called by telephone to the Lottery Commission and verified that number.

The plaintiff and his wife Edith together went down to the Lottery Commission office. At that time Evelyn Drescher was writing an examination at the university and she could not come along with her parents. They were interviewed by the media at the lottery office, and their picture was taken and published. (Ex B-3)

There was no discussion between the plaintiff and Edith Drescher as to whose name should be put on the stub of the winning ticket. At the lottery office, the plaintiff printed his name on the stub (Ex B-2, second page) without asking his wife, but she “did not see any reason why he shouldn’t” do just that, according to her testimony. The plaintiff was asked by lottery officials, or, the plaintiff and Edith Drescher were asked, to whom to make out the cheque for the $1,000,000 prize, and the answer was, “Rolf Drescher”. The Provincial Lottery Commission inevitably paid any prize to the holder of the corresponding winning ticket and, by regulation “holder” was defined as “a person or persons having possession of a ticket sold under a lottery”. At that time, of course, the Dreschers had not entered into any written syndicate agreement as could have been made available to them for the buying of tickets and the sharing of prizes.

The Provincial Lottery Commission informed the plaintiff and his wife that the cheque for $1,00,000 would be on an Air Canada flight from Toronto, later that day. All three Dreschers went to the Winnipeg airport to receive the cheque, Mrs Drescher circling about in the auto while father and daughter went inside to obtain the cheque — which, he testified, was placed into and almost lost in the garbage!

Now, as is clear upon the evidence, that cheque (Ex B-1) was drawn payable in favour of, and endorsed by, the plaintiff, Rolf Drescher. It did not enter into the minds of the Dreschers that the cheque should be made out to anybody else. Mrs Drescher testified that she knew the cheque would be payable to Mr Drescher because “it is the national [sic, presumably reporter’s error for natural] thing”. She also said there were no discussions on the point, “I would think it would go to Rolf because that’s the way it’s done.’’ The plaintiffs explanation about why the cheque was drawn in his favour was that, “This is the very custom, say in European families, that even the assets belong to the family and the head of the family is named in most money matters or other matters. It is just the habit of doing it.” Again, Edith Drescher testified on this point thus:

Q. Now, you said that — the cheque issued to your husband and the way it was done, what about the money? What were your thoughts on the money?

A. On the money I can only say that it was ours.

Q. Why is that?

A. Because all the things we do is for us.

Finally in cross-examination the plaintiff testified as follows:

Q. When you went down to the lottery office, at that particular time did you make any disclosure to them that anybody other than you owned the ticket?

A. Well, in all our comments, in all our conversation with the press and everybody else it was always “we won that $1 million.”’

Now, the Minister’s witness Edward Reger, director of administration of the Western Canadian Lottery Foundation, did testify that sometimes ticket stubs are filled out “Mr & Mrs”, and that in such instances the cheque is issued exactly as it reads. “We do not put their given names in. We just make it out to ‘Mr and Mrs Whatever’.” No doubt that testimony is true. Indeed, if they had known that, or stopped to think about it, maybe the senior Dreschers would have accepted that option, despite their old world customs. (Then, the issue might well have been as to their daughter’s inclusion in the windfall and its interest income in 1978.) However, the undoubted reality of that option does not in the least detract from the undoubted credibility of the senior Dreschers’ version of their intentions and of the events of that time.

The day after the cheque was received, the plaintiff telephoned the manager of his branch of the Royal Bank of Canada and said: “Look. I won $1 million. What should I do with it? We have no plans . . .”. It was Mrs Drescher’s testimony that the Dreschers together discussed the investment of the prize money. Under cross-examination, she was most emphatic that the plaintiff did not do what he alone saw fit, and that it was not only he who invested the money. “We invested the money”, she asserted. (Ex A, pages 65-66)

As a result of the discussion in the family and with the bank manager the plaintiff put the money into a 30-day term deposit with the Royal Bank in his own name alone. Neither Mrs Drescher nor Evelyn Drescher signed anything for that term deposit. In due course the plaintiff received from the Royal Bank of Canada a T-5 statement of investment income for $6,452.01, issued again in his own name alone. (Ex B-4)

Upon the expiration of the 30-day term deposit in the Royal Bank, according to the plaintiff on cross-examination, “We made the decision to take it out of the Royal Bank”, and “We purchased a term deposit with the Toronto- Dominion”. Once again the term deposit was taken out in the name of Rolf Drescher alone and neither Edith nor Evelyn Drescher signed anything. This deposit was maintained until the end of 1978. The plaintiff testified that “the term deposit was supposed to be registered under the name of Edith, Evelyn and Rolf Drescher”, however the plaintiff never really testified that he had given instructions to that effect. (Ex A, pages 36 and 37) The 1978 form of T-5 issued by the Toronto-Dominion Bank disclosed earned interest to be $43,006.86, and it too was issued in the plaintiffs name alone. Upon receiving this T-5 the plaintiff instructed the bank to change the T-5 to name all three Dreschers but that was not done, and the plaintiff apparently did not insist upon it.

Both sides submitted documentary evidence which was originally created after the 1978 taxation year, as it seems. As a result of a written request by the plaintiff, the 1979 form of T-5 (Ex B-6) was issued in all three names by the Toronto- Dominion Bank where the money earned further interest in 1979. Finally the money was lent to Royal Elm Canada Ltd, the shares of which are owned equally by the three Dreschers, and the loan was recorded as being advanced in equal amounts by them.

Again, probably subsequent to the 1978 taxation year, there was a declaration of trust (Ex B-7) drawn up by the plaintiffs late solicitor who indicated that there could be complications about the prize money, among which were the tax laws. In this regard, the learned member of the Tax Review Board wrote at [1982] CTC 2772; 82 DTC 1772, thus:

Having regard to the confusion as to who bought the lucky ticket and won the money, it might have been an entirely proper solution to resolve the question of ownership of the prize money by agreement made after winning it. In fact, a written Declaration of Trust was prepared and signed in 1979. Interestingly enough, that document recites not that the lottery tickets had been held in trust for all three and that the prize had been collected by the Appellant as trustee for all three, rather it recites that “*. . . it is expedient to construe the pooled lottery tickets as purchases on behalf of all of them jointly in equal shares”. [Emphasis added]

The learned member recounts and concentrates on the recital in the preamble of Exhibit B-7 about it being expedient to construe . . . etc. But that trust declaration, if it has any vitality in these proceedings, has more vitality than that which appears in the singularized passage. Apparently overlooked was the preamble’s very next recital:

AND WHEREAS the said Rolf Drescher . . . did receive a cheque in the same of. . . ($1,000,000.00) which, for convenience, was taken in the name of the said Rolf Drescher only, but on behalf of himself, his wife . . . and their daughter . . . [Emphasis added]

The operative provisions are to the same effect and disclose that the plaintiff was “not the beneficial owner of the entire sum . . . but holds one-third of same . . . in trust and as nominee of and for his wife . . . and holds one-third of same . . . in trust and as nominee of and for his daughter . . .” [Emphasis added]. Further provisions recite the plaintiffs willingness to account to his wife and their daughter and upon demand of either, to convey to her her undivided one-third interest in the principal and the interest. Appended is a form of consent signed by Edith and Evelyn Drescher releasing the plaintiff from any liability which he may incur for having their share of the sum, but holding him “responsible for his proportionate share of any loss or liability incurred”. So, if the learned member of the Tax Review Board descried a weakness in one preamble, it must nevertheless be noted that the entire instrument appears to be quite robust enough to stand firmly for its stated purpose. However, having been drawn up and executed so long after the date (June 1, 1978) which the plaintiff wrote therein for his own satisfaction (and perhaps as an aide-mémoire) the best use of it in this case would be only to demonstrate the continuity of the Dreschers’ intentions; but the important question revolves around their intentions from the beginning.

On this evidence there is virtually no doubt that in obtaining the cheque and in taking out the two term deposits in his name alone, the plaintiff was acting as the agent, the amanuensis, the nominee and trustee of the group consisting of himself, Edith Drescher and Evelyn Drescher. Any other conclusion goes against the evidence, the weight of evidence, logic, reason and human nature. On this evidence, had the plaintiff balked at according his wife and their daughter their equal, equitable and now legal shares, there is no doubt that they would have a formidable right of action which could be pursued successfully to judgment in law and in equity in their favour. Evidence of the three Dreschers’ prior conduct would be virtually conclusive against any one of them who might have acquired merely the apparent legal title and control of the prize money, as the plaintiff did, and who would have refused to disgorge in favour of the whole family.

The opposite conclusion is of necessity legalistic, but unreasonable and illogical. If one regards only the filling up of the ticket stub and the placing of the two term deposits in 1978, and disregards all of the surrounding evidence one would legalistically conclude that the plaintiff acted as if he alone was the winner and the investor. The evidence here lacks one main ingredient which alone could make it consistent with such conclusions: the plaintiffs stealth in all this, of which there was not only no evidence but plainly opposite and contrary evidence. In all of the circumstances of a close, sharing family so amply demonstrated in the evidence, the plaintiff could be considered to be acting solely on his own behalf only if he had obtained the prize stealthily and only if he had taken out the term deposits secretively. He certainly did not behave in that manner. In fact, the plaintiff and his wife went together to the lottery office, and then all three Dreschers went together to the airport to retrieve the cheque. There was no stealth at all, and that constitutes a salient gap in the evidence.

The Tax Review Board and this Court both concurrently find that while one of the three Dreschers selected and probably also bought the winning ticket, it is impossible to determine which of the three did that. The learned member of the Board found and concluded that one of the three, that is to say the plaintiff, arrogated to himself alone the interest income from the prize during the 1978 taxation year. If, in this situation of uncertainty, it were reasonably possible to say that some unknown and unknowable one of the three Dreschers solely owned the winning ticket, the prize and the proceeds, then one would be forced to conclude that there was two-thirds likelihood that the plaintiff did not own that ticket and only a one-third possibility that he did. One has then, in effect, to find that the plaintiff was wrongfully reckless as to whether or not he was confiscating the possible, nay probable, property of one of the other two Dreschers, in order to come to the conclusion that the plaintiff alone owned the prize and the interest. That is not a reasonable conclusion on the evidence presented.

In light of all this evidence, to make a finding and to arrive at a conclusion which would purport to have the plaintiff behaving both unlawfully and against his demonstrated nature, are simply illogical and unreasonable. It is a contorted conclusion too, for if the plaintiff really did own the ticket he might have put it in his wallet, instead of permitting it to be placed in the clip in the family room.

The plaintiff invokes the doctrines of equity to demonstrate the proper determination of this matter. His counsel cite several passages from Snell’s Principles of Equity, 28th Ed, 1982, (Baker & Langan) Sweet & Maxwell, London, England at and between 37 and 40, thus:

8. Equality is Equity. It has long been a principle of equity that in the absence of sufficient reasons for any other basis of division, those who are entitled to property should have the certainty and fairness of equal division; for “equity did delight in equality”. The maxim is “equality is equity”, and this has been applied in a variety of ways.

(a) Presumption of tenancy in common. The maxim has long been illustrated by equity’s dislike of a joint tenancy. On the death of one joint tenant, the whole estate belongs to the survivor, and the representatives of the deceased take nothing. There is here no equality except, perhaps, an equality of chance. Equity therefore leans in favour of a tenancy in common.

(3) Partnership. Where partners acquire property, they are presumed to hold it as beneficial tenants in common. Jus accrescendi inter mercatores locum non habet [The right of survivorship has no place among merchants (ie among partners in venture)]

(c) Equal division

(1) The principle. In addition to equity’s ancient dislike of a joint tenancy, the maxim “equality is equity” may be illustrated by a number of more modern instances. In general, the maxim will be applied whenever property is to be distributed between rival claimants and there is no other basis for division. “I think that the principle which applies here to Plato’s definition of equality as a ‘sort of justice’: if you cannot find any other equality is the proper basis.” (Jones v Maynard [1951] Ch 572 at 575, per Vaisey, J.

9. Equity looks to the intent rather than to the form. “Courts of Equity make a distinction in all cases between that which is matter of substance and that which is matter of form.; and if it find that by insisting on the form, the substance will be defeated, it holds it to be inequitable to allow a person to insist on such form, and thereby defeat the substance.” Thus if a party to a contract for the sale of land fails to complete on the day fixed for completion, at law he is in breach of his contract, and will be liable for damage, eg, for delay. Yet in equity it will usually suffice if he is ready to complete within a reasonable period thereafter, and thus the other party will not be able to avoid performance. Again, whether equity will regard an agreement as being negative depends not on the precise language but on the substance of the agreement. This maxim also lies at the root of the equitable doctrines governing precatory words, mortgages, penalties and forfeitures, all of which are fully considered in the later chapters of this book.

Another aspect of the maxim is shown by equity’s impatience with mere technicalities. Equity was never much impressed by a deed . . . .

The maxim that “equality is equity” is a fundamental principle which was recently invoked by the Manitoba Court of Appeal in Ranjoy Sales & Leasing Ltd v Down et al, [1983] 1 WWR 213. There, in analogous circumstances of uncertainty of ownership but no uncertainty of the identity of the whole group of claimants, the former Chief Justice of Manitoba, Freedman, CJM, with whom the present Chief Justice, Monnin, JA (as he then was) concurred held as follows (at 218):

In the light of the facts emerging from that extract, it would be grossly unfair to give a preferred position to those who happened to have been allocated “good” mortgages, and a subordinate position to those who were allocated “bad” mortgages. Our disposition of the controversy should reflect two things — (1) the intention of the parties when the transactions were entered into, and (2) the necessity for fairness in the ultimate result. Concerning the first, it cannot be doubted that if, on the day before the bubble burst, the investors had all been asked whether each of them stood on the same level as the others, the answer would assuredly have been in the affirmative. An answer suggesting that the investors stood on different levels would have been inconsistent with the intention both of the investors and of the companies. As for the second, to make preferred creditors out of those who by sheer luck received “good” mortgages would be to make ourselves slaves to contingency and to deny ourselves the power to do justice in accordance with the maxim that equality is equity. I would treat all the investors equally by pooling the available assets and dividing them among the investors according to their respective claims as proved.

In the circumstances revealed by the evidence the intention of the three Dreschers is clear. Moreover, in such circumstances, since equity exacts that they take an equal proprietary interest in the prize money, any purported investment of it by the plaintiff in his name alone will be regarded as constituting either an express or an implied trust for all three. Indeed the continuation of their intention is demonstrated by their subsequent and last disposition of the money in a loan to Royal Elm Canada Ltd and is perfectly consistent with the reality of three equal beneficial owners in common.

Thus it is apparent that while the plaintiff was not the sole beneficial owner of the winning ticket, he was its rightful “holder” in so far as the lottery foundation was concerned. In fact it was concerned not to have an adverse claimant, but given that the three Dreschers were acting in sweet accord, the foundation was not concerned about their respective shares or interests. In any event, it is quite certain that payment of the prize money to the holder in no way voided, reduced or otherwise affected the proprietary interests which other persons — Edith and Evelyn Drescher — had in the prize money. (See Re Wozney and Wozney et al (1974), 44 DLR (3d) 637 — Man QB.)

Counsel for the defendant cites the case of Frank Sura v MNR, [1962] CTC 1; 62 DTC 1005, a 1961 decision of the Supreme Court of Canada. She cites it as authority for the proposition that the basis of taxation is not ownership of property, but rather who gets the income, asserting that Rolf Drescher got the income according to the T-5 forms in the 1978 taxation year. The Sura case is instructive in two ways.

First is the statement in its original French by Mr Justice Taschereau for the court, at 4 [1011], to the effect that:

Rien . . . ne change le principe que ce n’est pas la propriété d’un bien qui est taxable, mais que la taxe est imposée sur un contribuable, et est déterminée par le revenu que l’emploi, les entreprises, les biens, ou la propriété procurent à celui qui en est le bénéficiaire légal. [Emphasis added]

That means that the tax is determined by the income which . . . goods or property yield to him (or her) who is the legal beneficiary of them. Once the application of equitable principles has sorted out the beneficiaries’ interest in the property, as in the instant case, each may properly be regarded as the legal beneficiary of the property, in the words of Taschereau, J. Taschereau there was construing the import of the community of property marital regime in the context of the private law of Québec. He was not there concerned with making nice distinctions between rules of law and principles of equity such as have been raised in the case at bar. He meant by “bénéficiaire légal” the real, effective or genuine owner who is entitled to the income yielded by the goods or other property. In that sense, the Sura judgment rather begs the question here — at least until the finding is made that, along with the plaintiff, his wife and their daughter the beneficial co-owners of the ticket, the prize and its interest income. That they clearly were. Surely Edith and Evelyn Drescher are comprehended in the expression of the cited statement.

The other instructive aspect of the Sura case is that the determination of interests in the goods or property is established according to the law of property (including equity where applicable) of the province in which the goods or property are located. Manitoban jurisprudence is of persuasive authority here.

Law and equity are both applicable in Manitoba to the determination of a question of property and interest in a winning ticket leading to property and interest in the prize money and interest generated thereby. Consideration of the then existing state of family property law of the province, and the private common property arrangements which it did not forbid, as for example the pooling of prospects and realizations in lotteries, is germane to the question. Quite appropriate too is consideration of equitable jurisprudence in the courts of Manitoba, in which principles and maxims of equity are judicially applied to analogous circumstances. The invocation of the doctrines of equity and trusts here is accordingly unexceptionable, even though the operation of income tax law per se is said to be quite unconcerned with and free of equitable principles.

In order to succeed in a case such as this, it is crucial that the Minister’s be correct. If not his defence fails. In conclusion it is apparent that assumptions (a) and (b) fail because the plaintiff was not the owner of the winning ticket, even though he was the holder, and he alone did not win the prize as is amply demonstrated by the evidence. Assumption (c) about the issuance of the cheque drawn payable in favour of the plaintiff, in so far as it is not merely an innocuous statement of fact, fails to support the Minister’s reassessment because in obtaining the cheque the plaintiff was the amanuensis of the group of which he was himself a member. The same must be said of assumptions (d) and (e) about the two term deposits in the plaintiffs own name. Assumption (f) about the plaintiffs purportedly receiving the interest income, likewise fails if it is intended thereby to imply, as is also assumed in (g) and (h), that the plaintiff alone had the absolute and unrestricted right to the interest income. He was a trustee of convenience for and with the knowledge and consent of his wife and their daughter. At worst, he was a trustee de son tort, but that is hardly so, given the aforesaid knowledge and consent.

If the Dreschers had articulated their intentions in a crystallized written form, early in their course of buying lottery tickets, this case would not have arisen. Like most quite normal and ordinary people they did not think to do so because they always understood among themselves that all gains are “for us”, meaning all three, as Mrs Drescher testified. Without such a written entente it takes a great deal more time and effort to determined their intentions from evidence of their conduct. That is what has been required here.

The plaintiff is required therefore to include in his return of income for 1978 only one-third of the interest income of $49,458.91 for that taxation year. The plaintiff is entitled to his costs of this action to be paid after taxation by the defendant.