Mahoney,
J:—This
is
an
appeal
from
a
decision
of
the
Tax
Review
Board,
[1974]
CTC
2095;
74
DTC
1054,
upholding
a
determination
that,
for
its
1966,
1967
and
1968
taxation
years,
the
plaintiff
was
an
associated
company
with
Imperial
Optical
Co
Ltd,
(hereafter
“Imperial”),
and
Standard
Optical
Company
Limited,
(hereafter
“Standard”),
which
are
themselves
associated
companies
by
virtue
of
them
both
being
controlled
by
the
same
person.
The
provision
of
the
Act
in
issue
is
paragraph
139(5d)(b).
(b)
a
person
who
had
a
right
under
a
contract,
in
equity
or
otherwise,
either
immediately
or
in
the
future
and
either
absolutely
or
contingently,
to,
or
to
acquire,
shares
in
a
corporation,
or
to
control
the
voting
rights
of
shares
in
a
corporation,
shall,
except
where
the
contract
provided
that
the
right
is
not
exercisable
until
the
death
of
an
individual
designated
therein,
be
deemed
to
have
had
the
same
position
in
relation
to
the
control
of
the
corporation
as
if
he
owned
the
shares;
If
the
conditions
of
that
provision
are
met,
there
is
no
dispute
that
other
provisions
of
the
Act
have
been
properly
applied
in
arriving
at
the
determination.
Standard
was,
at
all
material
times,
beneficial
owner
of
50%
of
the
plaintiff’s
outstanding
shares.
The
balance
were
owned
by
Arthur
J
Crockett
(hereafter
“Crockett”).
By
an
agreement
dated
June
18,
1963,
Crockett
and
Imperial
agreed,
inter
alia,
to
Crockett’s
employment
as
president
and
manager
of
the
plaintiff
and,
further:
7.
...
At
the
end
of
twelve
months
of
such
illness,
unless
the
parties
should
otherwise
agree,
Crockett
for
the
purpose
of
this
Agreement
shall
then
be
deemed
to
be
permanently
incapable
of
carrying
on
his
duties
with
the
Company,
whereupon
Crockett
convenants
and
agrees
to
sell
and
Imperial
covenants
and
agrees
to
purchase
Crockett’s
shareholder’s
equity
in
the
Company
at
a
cash
purchase
price
determined
as
follows:
The
greater
of:
(a)
One
and
three-tenths
(1.3)
times
Crockett’s
total
shareholder’s
equity
in
the
Company
at
the
date
of
sale,
or
(b)
The
sum
of
$75,000
times
the
earned
surplus
of
the
Company
at
the
end
of
the
month
preceding
such
sale,
divided
by
the
earned
surplus
of
the
Company
at
January
31st,
1963,
($49,009.54).
8.
Crockett
may
retire
from
active
participation
in
the
business
of
the
Company
on
ninety
(90)
days
written
notice
to
Imperial,
and
in
the
event
of
such
notice
being
given
after
the
lapse
of
five
years
from
the
date
of
this
Agreement,
Crockett
covenants
and
agrees
to
sell
and
Imperial
covenants
and
agrees
to
purchase
Crockett’s
shareholder’s
equity
in
the
Company
at
the
same
cash
purchase
price
as
set
out
in
the
immediately.
preceding
paragraph
of
this
Agreement.
In
the
event
of
such
a
sale,
Crockett
covenants
with
Imperial
that
he
will
not
without
the
consent
in
writing
of
Imperial,
either
directly
or
indirectly,
either
as
principal
or
agent,
or
as
director
or
manager
of
any
Company
or
otherwise
carry
on
or
be
engaged
in
the
business
of
a
dispensing
optician
in
the
said
City
of
Edmonton,
for
a
period
of
five
years
from
the
date
of
the
said
sale,
provided,
however,
that
this
covenant
shall
have
no
application
to
employment
by
or
association
with
the
Company.
9.
For
purposes
of
this
Agreement,
“shareholder’s
equity”
is
defined
as
meaning
both
the
book
value
of
Crockett’s
shares
and
the
amount
of
any
loan
at
his
credit
or
minus
the
amount
of
any
loan
at
his
debit.
Clause
6
gives
Crockett’s
personal
representative
the
option,
after
his
death,
to
offer
his
“shareholder’s
equity”
to
Imperial
and
obliges
Imperial
to
accept
such
offer
at
a
price
determined
in
the
same
manner
as
under
clauses
7
and
8.
Nowhere
does
the
agreement
state
explicitly
that
what
Imperial
has
a
right
to
acquire
under
clauses
7
and
8
includes
the
shares,
or
control
of
the
voting
rights
attaching
to
them.
The
narrow
issue
is
whether,
on
a
proper
construction
of
the
agreement,
the
“shareholder’s
equity”
which
Imperial
might
buy
includes
the
shares
or
the
attached
voting
rights.
It
is
obvious
that
the
definition
of
“shareholder’s
equity”
in
clause
9
is
not
determinative
of
the
question.
If
one
substitutes
that
definition
for
the
words
“shareholder’s
equity”
in
the
first
paragraph
of
clause
8
or
in
the
initial
part
of
clause
7,
the
result
is
nonsense.
The
definition
makes
sense
only
when
applied
in
subparagraph
(a)
of
clause
7;
it
defines
“shareholder’s
equity”
from
the
point
of
view
of
value
rather
than
its
composition.
While
the
agreement
is
by
no
means
as
precisely
drawn
as
one
might
expect,
Imperial
bound
itself
to
buy
Crockett’s
shares
with
all
rights
attaching
to
them
in
circumstances
within
the
contemplation
of
paragraphs
139(5d)(b).
To
hold
that
to
be
its
effect
is
not
to
add
to
the
terms'
of
the
agreement
or
to
the
rights
or
obligations
of
the
parties;
it
is
merely
to
state
its
manifest,
if
not
express,
intent.
The
action
will
be
dismissed
with
costs.
Appeal
dismissed.
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