Date: 20021025
Docket: A-642-00
Neutral citation: 2002 FCA 408
CORAM: DÉCARY J.A.
BETWEEN:
TELEGLOBE INC.
(formerly, inter alia, TELEGLOBE CANADA INC.)
Appellant
- AND -
HER MAJESTY THE QUEEN
Respondent
Heard at Montreal, Quebec, on September 18, 2002.
Judgment delivered at Ottawa, Ontario, on October 25, 2002.
REASONS FOR JUDGMENT BY: PELLETIER J.A.
CONCURRED IN BY: DÉCARY J.A.
LÉTOURNEAU J.A.
Date: 20021025
Docket: A-642-00
Neutral citation: 2002 FCA 408
CORAM: DÉCARY J.A.
BETWEEN:
TELEGLOBE INC.
(formerly, inter alia, TELEGLOBE CANADA INC.)
Appellant
- AND -
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
[1] In 1987, the Government of Canada (Canada) decided to privatize a number of crown corporations, including Teleglobe Canada, Canada's exclusive overseas telecommunications carrier. In a nutshell, privatization was accomplished by the sale of the assets of Teleglobe Canada (Old Teleglobe) to Teleglobe Canada Inc., the appellant (also referred to as New Teleglobe), a corporation with share capital, in return for the assumption of certain liabilities, a promissory note and the issuance of common and special shares. The common voting shares were then sold by a bid process to the highest bidder, Memotec Data Inc. (Memotec) for $488,300,000.
[2] The appellant maintains that in the course of acquiring the assets of Old Teleglobe, it incurred or made an expense or outlay of $130,000,000 with respect to goodwill. It therefore claimed a deduction from income of part of that amount for the taxation years 1987 to 1995. The Minister takes the position that the appellant made no expenditure with respect to goodwill and disallowed the deduction. The appellant claims that its cost for all of the assets of Old Teleglobe was some $660,000,000 while the Minister says that the price was approximately $530,000,000. The dispute as to the price is the result of the difference in the way in which the parties calculate the cost to the appellant of the shares which it issued in partial payment of the assets. The major issue in the appeal is the manner of determining that cost.
[3] In technical terms, the appellant argued that it had made eligible capital expenditures, within the meaning of paragraph 14(5)(b) of the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1 (the ITA) which were to be included in its cumulative eligible capital, as defined in paragraph 14(5)(a) of the ITA, a portion of which was deductible from income pursuant to paragraph 20(1)(b) of the ITA. Overall, the eligible capital expenditure was the excess of the purchase price, alleged to be $660,601,000, over the tangible assets of the company, $530,547,000, a difference of $130,054,000. This amount was made up of an "excess profits" dividend of some $16,500,000 and a claim that the cost of issuing the shares was $113,500,000 more than the issue price of the shares. The taxpayer's appeal of the Minister's decision disallowing the deductions was heard by his Honour Judge G. Rip of the Tax Court of Canada who dismissed the taxpayer's appeal. Teleglobe Canada Inc. v. R., [2000] D.T.C. 2493. This is an appeal of that decision.
[4] In addition to obtaining a fair price for the assets of Old Teleglobe, Canada also had policy objectives in the transaction, namely bringing the privatized company, New Teleglobe, under the regulatory authority of the Canadian Radio Telecommunications Commission (CRTC) and reducing the rates charged for international telecommunications services. To achieve the rate reduction in a manner consistent with the CRTC's treatment of comparable carriers (Bell Canada and B.C. Tel), it was necessary for New Teleglobe's opening balance sheet to show a long term debt to equity ratio of 45:55 which would require a new valuation of Old Teleglobe's fixed assets. Consequently, the transaction was structured so as to yield a privatized carrier with a balance sheet which, applying the CRTC's rate setting rules, would result in a specific rate structure. Canada disclosed to potential purchasers its proposed opening balance sheet for New Teleglobe showing assets valued at $533,837,000, liabilities of $299,083,000 (including the promissory note to be issued as part of the transaction) and share capital of $234,753,000. (Appeal Book, Vol. 12. Tab 131 p.3077).
[5] A corollary of the first objective was to ensure that the purchase of New Teleglobe did not get the benefit of the higher rates which would be in effect until the rates contemplated by Canada came into effect. In order to recoup these amounts, Canada would cause New Teleglobe to issue 1,000 Special Shares in partial payment of the assets, but these shares would be charged with the payment of an "excess profits" dividend in the approximate amount of the excess profits
arising from the higher rates, some $16,000,000. These shares would be retained by Canada and would not be sold with the common shares.
[6] Notionally, the privatization was a two step process: the sale of Old Teleglobe assets to New Teleglobe for consideration including substantially all of the voting shares in New Teleglobe and, secondly, the sale of the shares in New Teleglobe to a private sector purchaser. However, the architects of the privatization collapsed the two transactions into a single agreement (the Purchase Agreement) between Canada, as the owner of Old Teleglobe, and Memotec, as the purchaser of the voting common shares in New Teleglobe. (Appeal Book, Volume 2 Tab 8 p. 145). That agreement sets a series of pre-conditions to the sale of shares in New Teleglobe. Those pre-conditions, found at section 3.02 of the Purchase Agreement, effectively define the terms of the transaction between Old Teleglobe and New Teleglobe, a corporation incorporated and, until the share purchase, controlled by Old Teleglobe. The Purchase Agreement also deals with other elements which are relevant to the asset purchase transaction, such as the form of the promissory note to be given by New Teleglobe in partial payment of the assets (Schedule 7). The only documents to which Old Teleglobe and New Teleglobe are parties are the various conveyances by which the assets of Old Teleglobe are conveyed to New Teleglobe, such as the General Conveyance of Assets (Appeal Book, Vol. 4 Tab 71 p. 930) and the various conveyances of title to real property.
[7] As a result, an inquiry into the intentions of Old Teleglobe and New Teleglobe is somewhat artificial, as the relevant intentions were those of Canada and Memotec. Given the fact
that at all material times Canada wholly controlled both Old Teleglobe and New Teleglobe, it was in a position to dictate to both of these parties the terms of the transaction between them. However, those terms were within the ambit of negotiations between Canada and Memotec. Consequently, the terms of the agreement between Old Teleglobe and New Teleglobe are to be found in the Purchase Agreement, and in the conveyances which give effect to that agreement.
[8] The form of the agreement also explains a temporal anomaly which is that Canada and Memotec agreed to the purchase and sale of shares in New Teleglobe for $448,268,000 on April 1, 1987 even though New Teleglobe was not incorporated until April 2, 1987 and the assets of Old Teleglobe were not conveyed to New Teleglobe until April 3, 1987.
[9] That said, the consideration for the purchase of the assets of Old Teleglobe was set out at paragraph 3.02(a) of the Purchase Agreement. It provided that New Teleglobe would assume certain obligations of Old Teleglobe and that the balance of the consideration, defined as the Excess of Assets over Assumed Monetary Liabilities, was to be dealt with as follows:
(vii) for the balance ( the "Excess of Assets over Assumed Monetary Liabilities") of such values of such assets of Teleglobe Canada [Old Teleglobe] transferred to New Teleglobe over the value of the assumed monetary liabilities referred to in Paragraph 3.02 (a) (vi), New Teleglobe will issue to Teleglobe Canada:
A) that number of Common Shares of New Teleglobe (the "Purchased Shares"); plus
B) 1,000 Special Shares of New Teleglobe at an issue price and stated capital of $1.00 per share; plus
C) a non-interest bearing, negotiable promissory note of New Teleglobe (the "Purchased Note"), payable one year plus one day following demand, such note to be substantially in the form of the unexecuted promissory note annexed hereto as Schedule 7, in an aggregate principal amount;
such that the ratio of the value of long-term debt (being the Purchased Note plus the long-term debt of Teleglobe Canada assumed by New Teleglobe, as referred to in Paragraph 3.02 (a) (vi)) to the value of equity (being the aggregate of the stated capital of the Purchased Shares plus the stated capital of the 1,000 Special Shares) is 45:55.
[10] Upon closing, New Teleglobe assumed obligations of approximately $155,765,000. It also delivered a promissory note in the amount of $143,394,000 and issued 1,000 special shares with an issue price of $1 as well as 233,228,000 common shares with an issue price of $1. Memotec acquired the common shares and the promissory note (the Purchased Securities) upon payment of $448,260,000.
[11] The transaction closed on the basis of Canada's best estimate of Old Teleglobe's closing balance sheet. The agreement provided that a Closing Date Balance sheet would be prepared after closing and that adjustments would be made on the basis of that balance sheet. The adjustment clauses provided as follows:
4.04 Adjustments to Preliminary Purchase Price.
(a) Within 90 days of the Closing Date the purchaser will cause New Teleglobe, in consultation with the Auditor General of Canada and a firm of chartered accountants selected by the Purchaser, who shall conduct a joint audit for such purpose, to prepared a draft balance sheet of New Teleglobe prepared as of the Closing Date ( the "Closing Date Balance Sheet") such Closing Date Balance Sheet to be prepared in accordance with the same accounting principles heretofore used by Teleglobe Canada in the preparation of the 1986 Financial Statements, subject to the adjustments contemplated in Section 3.02. ...
...
(c) If the Excess of Assets over Assumed Monetary Liabilities as of the Closing Date, based upon the Closing Date Balance Sheet, is at least two per cent (2%) more or less than the amount of $378,021,000, then:
(i) the Purchaser [Memotec] shall forthwith pay to the Crown, in cash the full amount by which such Excess of Assets over Assumed Monetary Liabilities as of the Closing Date exceeds the amount of $378,021,000; or
(ii) the Crown shall forthwith pay to the Purchaser, in cash, the full amount by which such Excess of Assets over Assumed Monetary Liabilities is less than the amount of $378,021,000;
and the Purchase Price allocated to the Purchased Shares shall be adjusted, upward or downward, as the case may be, dollar for dollar to the extent of any such adjustment.
[12] One notes that the value of the Excess of Assets over Assumed Monetary Liabilities was fixed at $378,021,000 and that adjustments were to be made if the final values varied from this amount. As a result of these adjustments, New Teleglobe passed certain corporate resolutions to bring its balance sheet into line with the adjusted values:
That the Balance Sheet as at April 3, 1987, a copy of which is attached hereto as Annex "A" be
and it is hereby approved as being the "Closing Date Balance Sheet" contemplated under
paragraph 4.04(a) of the Purchase Agreement between the Crown and Memotec Data Inc. made on April 1st, 1987; and
That Messrs. Jean-Claude Delorme and William McKenzie be and they are hereby authorized to evidence such approval on behalf of the Board of Directors by signing the Balance Sheet as at April 3, 1987; and
That pursuant to the finalization of the Balance Sheet as at April 3rd, 1987, the final aggregate amount of the Promissory Note authorized by a Resolution of the Directors of this Corporation at its meeting of April 3rd, 1987 be and it is hereby fixed at $143,382,433 notwithstanding the amount indicated in paragraph 3 of said Resolution; and
That pursuant to the finalization of the Balance Sheet as at April 3rd, 1987, the final consideration for which the 233,228,100 common shares were issued be and it is hereby fixed at $231,397,979 notwithstanding the amount indicated in paragraph 4 of a Resolution adopted by the Board of Directors of this Corporation at its meeting of April 3rd, 1987.
Appeal Book, Volume 12 Tab 147 page 3301.
[13] The balance sheet approved by the Board of Directors showed the stated capital of the common shares to be $231,397,979 and the stated capital of the Special Shares to be $1,000. On or about December 31, 1987, New Teleglobe issued a dividend in the amount of $16,567,272 with respect to the special shares, which were then redeemed for the sum of $1,000. (Appeal Book, Volume 12 Tab 149 p. 3312).
[14] In the period of time immediately following the transaction, the appellant claimed as a deduction an amount for cumulative eligible capital based upon the dividend paid with respect to the Special Shares. But in 1993, following a change of advisers, the appellant asserted that the cost to it of the shares issued as part of the asset purchase was not the $231,397,979 indicated in its corporate minutes and financial statements but rather approximately $344,885,000, and that it was entitled to treat the excess as a payment for goodwill, thereby increasing the amount of its cumulative eligible capital and the amount of its deduction.
[15] The appellant's argument was that the cost to it of issuing shares in exchange for property was the value to the vendor of the property for which the shares were issued. In other words, the transaction was an exchange. In this case, the value of the acquired property (the Old Teleglobe assets) can be determined by the price paid by Memotec to acquire the common shares in the appellant which can be taken to represent the value of the assets of Old Teleglobe. Given that the purchase price paid by Memotec was for the promissory note and the common shares, the value which Memotec attributed to the common shares is the difference between the purchase price and the value of the note:
Purchase price of Purchased Securities
(Promissory note and common shares) $ 488,268,000
Minus value of Promissory note 143,382,433
Equals cost of common shares $ 344,885,567
[16] If one calculates the purchase price of the assets of Old Teleglobe on the basis proposed by the appellant, the purchase price is:
Liabilities assumed $ 155,765,000
Promissory Note 143,382,433[1]
Special Shares 16,568,272
Common shares 344,885,295
Total $ 660,601,000
[17] Since the appellant's Opening Balance Sheet values the assets of the company at $530,547,000, without allowing for goodwill, the difference between the purchase price and the value of the assets is goodwill which the appellant claims as an eligible capital expenditure.
[18] The Minister's position is that the cost to the appellant of the shares issued as part consideration for the Old Teleglobe assets is the amount agreed upon between the parties, or, in the absence of an agreement, the amount which the corporation gave up in issuing the shares without payment in cash. The Minister's position is that there was an agreement between the
parties as to the value of the shares. That agreement was based upon an agreed purchase price fixed by reference to the balance sheet of New Teleglobe (Appeal Book, volume12 Tab 131 page 3077). The projected balance sheet showed assets valued at $533,837,000. After allowing for the assumption of liabilities and the delivery of a promissory note, the balance attributable to the shares was approximately $230,000,000. If the court should find that there was no agreement as to the purchase price, the amount which the corporation gave up when it issued the shares without cash payment was the issue price of one dollar per share. In either case, the cost of the shares to the appellant is approximately $230,000,000 and not the $344,000,000 claimed by the appellant.
[19] The learned trial judge rejected the appellant's argument based upon the theory that the transaction was an exchange within the meaning of the Civil Code of Lower Canada as it then existed. He found that the corporation never owned the shares which it issued to acquire the assets of Old Teleglobe. Prior to being issued the shares did not exist. Upon being issued, they belonged to the person to whom they were issued, Old Teleglobe. At no point in time were they the property of the corporation: Ord Forest Pty. Ltd. v. Federal Commissioner of Taxation (1974), 130 C.L.R. 124 (H.Ct). The learned trial judge found that there can be no exchange if the party does not own the property which is exchanged. He also found that because the shares could not be issued until the consideration was fully paid, a requirement of subsection 25(3) of the Canada Business Corporations Act, R.S.C. 1985, c. C-44, there could be no simultaneous satisfaction of each party's obligations, which he characterized as an essential element of an exchange. The learned trial judge relied upon the authority of Boudreau-Barrette c. Québec (Sous-ministre du Revenu), [1994] R.D.F.Q. at 13-14 (C.A.) as to the characteristics of an exchange.
[20] The trial judge also found that paragraph 3.02 of the Purchase Agreement set out the consideration to be paid for the assets of Old Teleglobe, a consideration determinable in money, even if no specific price is mentioned. He also found that the Canada Business Corporations Act required the corporation to record the full amount of the consideration which it received for the shares in the capital account for that class of shares (subsection 26(1.1)) and no more than the amount of consideration which it had received (subsection 26(1.3)).
| 26. (1) A corporation shall maintain a separate stated capital account for each class and series of shares it issues.
(1.1) A corporation shall add to the appropriate stated capital account the full amount of any consideration it receives for any shares it issues.
(1.2) Notwithstanding subsection 25(3) and subsection (2), where a corporation issues shares
(a) in exchange for (i) property of a person who immediately before the exchange did not deal with the corporation at arm's length within the meaning of that term in the Income Tax Act, or
(ii) shares of a body corporate that immediately before the exchange or that, because of the exchange, did not deal with the corporation at arm's length within the meaning of that term in the Income Tax Act, or
(b) pursuant to an agreement referred to in subsection 182(1) or an arrangement referred to in paragraph 192(1)(b) or (c) to shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated body corporate, the corporation may, subject to subsection (4), add to the stated capital accounts maintained for the shares of the classes or series issued the whole or any part of the amount of the consideration it received in the exchange.
(1.3) On the issue of a share a corporation shall not add to a stated capital account in respect of the share it issues an amount greater than the amount of the consideration it received for the share. |
26. (1) La société tient un compte capital déclaré distinct pour chaque catégorie et chaque série d'actions.
(1.1) La société verse au compte capital déclaré pertinent le montant total de l'apport reçu en contrepartie des actions qu'elle émet.
(1.2) Nonobstant le paragraphe 25(3) et le paragraphe (2), la société qui émet des actions_:
a) soit en échange, selon le cas_: (i) de biens d'une personne avec laquelle elle a, au moment de l'échange, un lien de dépendance au sens de la Loi de l'impôt sur le revenu,
(ii) d'actions d'une personne morale avec laquelle elle a, soit au moment de l'échange, soit immédiatement après l'échange et en raison de celui-ci, un lien de dépendance au sens de la Loi de l'impôt sur le revenu;
b) soit à des actionnaires d'une personne morale fusionnante qui reçoivent ces actions en plus ou en remplacement de valeurs mobilières de la personne morale issue de la fusion, en conformité avec une convention visée au paragraphe 182(1) ou avec un arrangement visé aux alinéas 192(1)b) ou c),
peut, sous réserve du paragraphe (4), verser aux comptes capital déclaré afférents à la catégorie ou à la série d'actions émises, la totalité ou une partie de la contrepartie qu'elle a reçue dans l'échange.
(1.3) À l'émission d'une action, la société ne peut verser à un compte capital déclaré un montant supérieur à la contrepartie reçue pour cette action.
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[21] The learned trial judge also rejected the appellant's argument that it was entitled to record an amount less than the consideration received for the issue of its shares because the transaction was between parties who were not acting at arm's length. He found that it was in fact a transaction between parties acting at arm's length, i.e. Canada and Memotec, and therefore did not fall within subsection 26(1.2) of the Canada Business Corporations Act.
[22] The learned trial judge then reviewed the authorities relied upon by the appellant and found that they went no further than to establish that the value of the shares issued by a company for property is the value of the property to the issuing company, as reflected in the agreed consideration. Stanton v. Drayton Commercial Investment Co. Ltd., [1982] All E.R. 942 (H.L.) was relied upon by the appellant for the proposition that where shares are issued by a corporation in exchange for property, the cost of the property to the corporation is not limited to the par value of the shares. In that case, the taxpayer acquired a bundle of securities from another company in return for the issuance of a number of its shares. The agreement between the parties was the securities were to be acquired "at the price of ... £ 3,937,962 ... to be satisfied by the allotment ... by [the taxpayer] ... of 2,461,226 ... Ordinary shares of twenty five pence each in [the taxpayer
company] the issue price of each such Share for the purpose of satisfying the consideration being ... 160p ... The said Ordinary shares ... when issued will be credited as fully paid up ...". The House of Lords held that, since the transaction was at arm's length and otherwise unimpeachable, the cost of the shares was the consideration agreed between the parties and not the par value, or market value of the shares. Lord Tullybelton expressed himself thus:
But, provided the agreed value has been honestly reached by a bargain at arm's length, it must, in my opinion, be final and it is not open to attack by the Revenue
Stanton v. Drayton at p. 948.
[23] The learned judge then went on to consider the significance of the stated capital of the shares as shown in a corporation's financial records. He found that once the directors determined the consideration for the issuance of the shares, the corporation waived its right to ask for more money or property. That consideration is reflected in the stated capital of the share class. Consequently, the consideration received was "referable to the stated capital of the shares being issued as determined by the directors."
[24] It followed from this that the cost to the appellant of the shares issued was the amount shown in the appellant's financial statements as the stated capital of the common shares, and not the value of the assets as evidenced by the price which Memotec was prepared to pay for the shares by which it acquired them. On this analysis, the purchase price of the Old Teleglobe assets was the following:
Assumption of liabilities $ 155,765,000
Promissory note 143,383,000
Common shares 231,397,000
Rounding error 1,000
Total $ 530,547,000
[25] The appellant's opening balance sheet shows assets of $530,547,000 without allowance for goodwill. It follows that the purchase price is fully allocated and that there is no amount to be allocated to the acquisition of goodwill. Hence the learned trial judge's conclusion:
[102] The outlay or expense made or incurred by new Teleglobe for the Teleglobe business is the consideration determined by the parties and reflected in the director's resolution and in the increase in the stated capital of the relevant shares of new Teleglobe. The appellant did not make or incur an outlay or expense in acquiring any goodwill from Old Teleglobe.
[26] On the issue of the "excess profit" dividend, the learned judge found that the same principles applied and that the cost to the company was reflected in the stated capital of the class of Special Shares, and was not the amount of the dividend. (Reasons for Decision para. 97). Consequently, there was no outlay or expense in respect of goodwill in relation to the dividend.
[27] In my view, it is evident from the agreement itself that the parties had agreed on a purchase price for the shares. The provisions of paragraph 3.02 of the Purchase Agreement provided a framework by which that price could be calculated. The two elements of the calculation are the assumed liabilities and the Excess of Assets over Assumed Monetary
Liabilities. The amount which the parties contemplated as the Excess of Assets over the
Assumed Monetary Liabilities is the amount which appears in Section 4.04 of the Agreement, the adjustment clause. It is there provided that if the calculation of the Excess Assets over Assumed Monetary Liabilities based on the Closing Date Financial Statements varies by more than 2% from $378,021,000, the purchase price of the shares will be adjusted. Since the Excess of Assets over Assumed Monetary Liabilities was to be made up of the promissory note, the Special Shares and the common shares, the value of the two classes of shares is the difference between $378,021,000 and the amount of the promissory note, or approximately $234,000,000.
[28] The decision in Stanton v.Drayton is consistent with the jurisprudence of the Supreme Court of Canada on this issue. In Shell Canada Ltd v.Canada, [1999] 3 S.C.R. 622 at 641 MacLachlin J. (as she then was) held that, in the absence of a sham or a specific legislative provision to the contrary, the legal relationships established by taxpayers are to be respected.
... this Court has never held that the economic realities of a situation can be used to recharacterize a taxpayer's bona fide relationships. To the contrary, we have held that, absent a specific provision of the Act to the contrary or a finding that they are a sham, the taxpayer's legal relationships must be respected in tax cases... .
[29] The same principle was reiterated in Singleton v. Canada, [2001] 2 S.C.R. 1046 at para. 27 and again in Ludco Enterprises Ltd. v. Canada, [2001] 2 S.C.R. 1082 at para 39. While these comments were made in the context of an attempt by the Minister to look behind the taxpayer's transaction, they apply with equal force to persons other than the Minister.
[30] Notwithstanding the fact that New Teleglobe and Old Teleglobe were not at arm's length, this was a single transaction negotiated between parties who were dealing at arm's length,
Canada and Memotec. It was their agreement which fixed the values in question. The fact that those values may have been responsive to considerations other than the market value of the assets simply means that market value was not the measure of the value of these assets to these parties. There is no sham here, and the deeming provisions of the Income Tax Act would not work in favour of the appellant.
[31] Absent factors which would make the transaction impeachable, the agreement of the parties determines the cost to the corporation of issuing shares in exchange for property. By statute, the corporation is bound to reflect the true consideration received for the issuance of the shares in its capital accounts. As a result, while one can say that the capital accounts are an indication of the agreement between the parties, it is the agreement of the parties, not the capital accounts which is determinative of the cost. Consequently, the trial judge was correct in saying that the consideration was the amount agreed between the parties and "reflected" in the director's resolution and in the increase the stated capital of the classes of shares issued (see paragraph 12 above).
[32] It follows from this that the cost to the appellant of issuing shares as part consideration for the assets of Old Teleglobe is the amount agreed between the parties, as evidenced by the stated capital of the common shares in the appellant. Consequently, the purchase price of the assets is equal to the value of the tangible assets, so that the appellant made or incurred no outlay or expense to acquire goodwill. The appeal should be dismissed with costs.
"J.D. Denis Pelletier" J.A.
"I agree
Robert Décary J.A."
" I agree
Gilles Létourneau J.A."
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET : A-642-00
STYLE OF CAUSE : Teleglobe Canada Inc.
v.
Her Majesty the Queen
PLACE OF HEARING : Montreal, Quebec
DATE OF HEARING : September 18, 2002
REASONS FOR JUDGMENT BY : Pelletier J.A.
CONCURRED IN BY : Décary J.A.
Létourneau J.A.
APPEARANCES :
Mr. André P. Gauthier FOR THE APPELLANT
Mr. Guy Laperrière FOR THE RESPONDENT
Mr. Yannick Houle
SOLICITORS OF RECORD:
Heenen Blaikie FOR THE APPELLANT
Montreal, Québec
Morris Rosenberg FOR THE RESPONDENT
Deputy Attorney General of Canada
Ottawa, Ontario
[1]One presumes that the when the formula specified in paragraph 3.02(a) was applied to the Closing Date
Balance Sheet, the amounts of the note and the common shares required to satisfy the formula varied from the values used for closing purposes. Consequently, the parties appear to have retroactively adjusted those values to conform with the Closing Date Balance Sheet. The details of the Closing Date Balance Sheet and the adjustments are not included in the Appeal Book so that one cannot reconcile the numbers.