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MIL (INVESTMENTS) S.A.,
HER MAJESTY THE QUEEN,
Appeal heard on July 17, 18, 19, and 20, 2006 at Vancouver,
By: The Honourable Justice R.D. Bell
Counsel for the Appellant:
Warren J.A. Mitchell, Q.C.
Counsel for the Respondent:
The appeal from the reassessment made under the Income Tax Act for the 1997 taxation year is allowed and the reassessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the Reasons for Judgment.
The Appellant is entitled to costs.
This further Amended Judgment and Amended Reasons for Judgment are issued in substitution for the Amended Judgment and Amended Reasons for Judgment issued the 5th day of September, 2006.
Signed at Ottawa, Canada, this 27th day of September, 2006.
MIL (INVESTMENTS) S.A.,
HER MAJESTY THE QUEEN,
AMENDED REASONS FOR JUDGMENT
 The issue is:
Whether the Appellant is exempt from Canadian income tax in respect of the capital gain of $425,853,942 arising in its 1997 taxation year on the sale of shares of Diamond Field Resources Inc. by virtue of the Canadian Income Tax Act and theConvention Between Canada and The Grand Duchy of Luxembourg for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital ("Treaty").
 All section numbers refer to sections of the Income Tax Act ("Act") unless otherwise specified.
 The Canada-Luxembourg Tax Convention is referred to as the Treaty.
 I shall summarize, for ease of comprehension, the facts upon which my conclusions are based. Those facts, together with related facts, are set forth in Appendix A and Appendix B attached hereto and forming part of these Reasons for Judgment. They include the PARTIAL AGREED STATEMENT OF FACTS filed by counsel, a presentation of oral and documentary evidence produced at the hearing, and a lengthy quote from a Management Information Circular, more fully described below.
 Jean-Raymond Boulle ("Boulle"), in 1993, began acquiring shares of Diamond Field Resources Ltd. ("DFR"), a public company incorporated in Canada and traded on the Toronto Stock Exchange.
 On March 10, 1993, Boulle transferred his DFR shares, being 29.4% of those issued, to the Appellant, a newly incorporated Cayman Islands company, wholly owned by him.
 Prior to November 1994, DFR acquired, explored and developed diamond properties. By sheer chance it discovered a major deposit of nickel, copper and cobalt near Voisey's Bay, Labrador ("Property").
 The Property attracted so much interest that DFR was contacted by 18 mining companies from around the world. In March, 1995, the stock traded at $19 or $20 per share.
 Boulle and Robert Friedland ("Friedland") together had about 30% of DFR, Robertson Stephens Funds ("Stephens") had 10% and Ed Mercaldo ("Mercaldo") had 1.5%. Their collective total could not have blocked a hostile takeover.
 In that month, Teck Corporation ("Teck") paid $108,000,000 for 10% of DFR, did not require the appointment of a director, agreed to provide extensive technical advice and assured DFR it could do maximum drilling and exploration for at least three or four summers without DFR having to raise more money. Within one week after this transaction it was trading at $47 per share.
 Teck entered into a voting trust with Friedland, and alternatively, Boulle, if Friedland was not available, to vote its DFR shares with management on any major issue, thus avoiding a potential hostile takeover. DFR also had a "stand still" agreement with Teck under which Teck agreed not to buy more shares without DFR's permission.
 In order to develop the Property, DFR then hired, inter alia, Dr. John Paterson ("Paterson") a Ph.D. metallurgist from Queen's University, as Executive Vice President and Cliff Carson ("Carson") as President, a former Vice President of Marketing at Falconbridge Limited ("Falconbridge").
 In May 1995, Inco Limited ("Inco"), of whom Mike Sopko ("Sopko") was Chairman and Chief Executive Officer, was interested in acquiring 100% of the Voisey's Bay interest but Mercaldo, effectively rejecting such a sale, said:
we still felt that we had just scratched the surface as to the potential of Voisey's Bay
 However, DFR was willing to sell Inco a minority stake in the Property. In order to maintain control, DFR sold, under a June 8, 1995 agreement, effective June 28, 1995, 25% of the shares of its new wholly owned subsidiary corporation Voisey's Bay Nickel Company Limited ("VBNC") to which DFR had transferred the Property. Inco entered into a "stand still" agreement whereby it agreed not to acquire any DFR shares, other than the 2,000,000 shares described below, until certain events occurred. Inco paid DFR with $386,700,000 preferred shares, paid $25,000,000 to VBNC for funding costs, including obtaining marketing rights for 25 years, et cetera. The foregoing funds being in US dollars, Inco's investment, according to Mercaldo, amounted to well over $700,000,000 Canadian.
 At that time, Inco bought 1,297,000 DFR shares from Stephens for cash and the Appellant exchanged, under section 85.1, 703,000 DFR shares for 1,401,218 common shares of Inco.
 Prior to that date, the Appellant had 11.9% and Boulle had 0.485% of the DFR shares and after that date the Appellant's shareholding was 9.817%.
 On July 17, 1995, the Appellant was continued in Luxembourg.
 Between August 14, 1995 and August 17, 1995, the Appellant disposed of the 1,401,218 common shares of Inco for proceeds of $65,466,895 and claimed exemption from Canadian tax on the resulting capital gain of $64,982,713 under Article 13 of the Treaty.
 The Appellant was not reassessed in Canada on that gain and paid no tax in Luxembourg because the cost basis of the share for the Luxembourg tax purposes was the value at the time of the continuance which exceeded the sale price.
 On September 14, 1995, the Appellant disposed of 50,000 DFR shares for $4,525,000 with an adjusted cost base of $32,444 and claimed exemption from Canadian tax on the gain of $4,492,556 under Article 13 of the Treaty. It was not assessed in Canada respecting that gain and paid no tax in Luxembourg.
 Mercaldo testified that after the sudden and tragic death of Paterson in October, 1995, the DFR directors:
realized that it was going to be very difficult to maintain our independence with this key person gone, although we were going to give it the best try possible. ... I was in ... after we buried John, in early October, I was in Toronto and I visited with Mike Sopko over lunch, and as I said, John had been a friend of his, and I told Mike
'you know, Mike, we thought you're wanting to take the whole company, but if there was ever a time that we might consider something like that, it would be now, since John is gone.'
 In December 1995, Inco made an offer of $31 ($124) per share which DFR rejected.
 In mid January 1996, Falconbridge made an offer of $36.50 ($146) per share which the DFR directors voted to accept and to recommend to its shareholders.
 The day before the DFR shareholders' vote on the proposed Falconbridge deal, Inco increased its offer of $43.50 ($174) per share.
 On May 22, 1996, the DFR shareholders approved the Inco acquisition of all DFR shares to take effect on August 21, 1996. The Appellant received proceeds of disposition in the amount of $427,475,645 for its DFR shares.
 The Appellant claimed an exemption from Canadian tax on the resulting capital gain of $425,853,942 under Article 13 of the Treaty. This gain is the subject of the appeal.
ANALYSIS AND CONCLUSIONS
Application of Section 245 to Tax Treaties
 The issue, restated, is:
1. Does section 245 apply to deny the exemption from tax on a capital gain of $425,853,942 arising in the Appellant's 1997 taxation year on the sale of DFR shares pursuant to the Treaty? ("Sale")
2. If not, is there an inherent anti-abuse rule in the Treaty which would deny that exemption?
 Section 4.1 of the Income Tax Conventions Interpretation Act, R.S.C., 1985, c I-4 and section 245 of the Act were retroactively amended effective September 12, 1988 to make explicit reference to tax treaties.44
 In Canada Trustco v. Canada, 2005 DTC 5523, the Supreme Court of Canada, in paragraph 7, said:
In our view, this amendment to s. 245 serves inter alia to make it clear that the GAAR applies to tax benefits conferred by Regulations enacted under the Income Tax Act.
 These amendments, made in 2005, are retroactive to transactions completed some 17 years ago. Retroactive legislation, although within the power of Parliament is legal but undesirable.  The inappropriateness of reassessing taxpayers who completed transactions in accordance with the law in force at the time of those transactions without any expectation of adverse retroactive effect is self-evident.
 In my view, the impact of the amendments to section 245 is that tax treaties must be interpreted in the same manner as domestic legislation when analyzing potentially abusive avoidance transactions.
 This analysis considers two sales which will, at this point, be dealt with separately.
(1) the roll-over by the Appellant of some of its DFR shares for Inco shares on June 8, 1995, and
(2) the sale by all shareholders, including the Appellant, of DFR shares in August 1996. The taxation of the gain respecting the Saleis the subject of this appeal.
 Paragraph 17 of Canada Trustco sets out the general framework of a section 245 analysis:
The application of the GAAR involves three steps. The first step is to determine whether it is a 'tax benefit' arising from a 'transaction' under s. 245(1) and (2). The second step is to determine whether the transaction is an avoidance transaction under s. 245(3), in the sense of not being 'arranged primarily for bona fide purposes other than to obtain the tax benefit. The third step is to determine whether the avoidance transaction is abusive under s. 245(4). All three requirements must be fulfilled before GAAR can be applied to deny a tax benefit.
 The term "tax benefit" is defined in s. 245 (1) as:
a reduction, avoidance or deferral of tax or other amount payable under this Act or an increase in a refund of tax or other amount under this Act, and includes a reduction, avoidance or deferral of tax or other amount that would payable under this Act but for a tax treaty or an increase in a refund of tax or other amount under this Act as a result of a tax treaty.
 Appellant's counsel's written brief states that:
For the purposes of this Appeal, the Appellant admits that in this case the application of the Treaty afforded the Appellant a tax benefit.
 Section 245(3) defines "avoidance transaction" as follows:
An avoidance transaction means any transaction
a) that, but for this section, would result, directly or indirectly, in a tax benefit, unless the transaction may reasonably be considered to have been undertaken or arranged primarily for bona fide purposes other than to obtain the tax benefit.
b) that is part of a series of transactions, which series, but for this section, would result, directly or indirectly, in a tax benefit, unless the transaction may reasonably be considered to have been undertaken or arranged primarily for bona fide purposes other than to obtain the tax benefit.
 Respecting the non-tax reasons for the Sale, the sale of DFR shares to Inco was a sale by all shareholders. This was a result of the bidding war between Inco and Falconbridge, Inco's final offer of approximately $4.6 billion dollars eventually being accepted by the DFR shareholders.
 The Management Information Circular ("Circular") involving Inco and DFR, which set out the terms of the offer, provided that 75% of the shares voted at a meeting of shareholders for the purpose of approving Inco's offer must be obtained. At that time, the shares of DFR held by Friedland, Boulle, Teck and Inco were as follows:
This Circular was part of a series of documents outlining in detail Inco's proposed purchase of all shares of DFR. Attached as Appendix B and forming part of these Reasons for Judgment is a copy of pages 29 through 36 of that Circular, entitled BACKGROUND TO THE ARRANGEMENT.
 The above group, with the addition of Mercaldo, held 41.4% according to the Circular. It said that:
Friedland, Boulle and Mercaldo declared their interest... and refrained from voting on the transaction. The Board of Directors then unanimously accepted the Inco proposal and approved the execution, delivery and performance of the Arrangement Agreement.
 Prior to the directors' vote to recommend the Inco offer to DFR shareholders, DFR received oral opinions from both Nesbitt Burns and First Boston that the offer would be fair to shareholders other than Inco. Boulle did not have the ability to organize and effect a favourable vote for the sale to Inco, not being entitled to vote on the directors' recommendation, and being a minority shareholder. In any event, in the circumstances, it is unimaginable that Boulle could have persuaded sophisticated shareholders such as Inco, Teck, Friedland and Mercaldo, to vote in favour of the Sale simply because he alone might enjoy a tax benefit.
 I have determined, therefore, that it is reasonable to conclude that the Sale, on its own, was undertaken or arranged primarily for a bona fide purpose other than to obtain the tax benefit.
Series Of Transactions
 I now turn to a consideration of the Respondent's definition of the series of transactions ("Series"). The Respondent has included in the series the June 8, 1995 rollover of 703,000 shares of DFR to Inco for 1,401,218 common shares of Inco, and two other transactions, the final Sale being excluded. Respondent's counsel's written submission states:
The following transactions resulted, directly or indirectly, in a tax benefit to the Appellant and are the avoidance transactions in this case:
a) the reduction of the Appellant's and Boulle's combined ownership of DFR to below 10% in June 1995;
b) the Final Dividend; and
c) the continuation of the Appellant into Luxembourg;
(collectively, the "Transactions")
Accepting the Series as submitted by Respondent's counsel as consisting of the aforesaid three transactions, is that series, or any transaction in that series, an avoidance transaction within the meaning of paragraph 245(3)(b)?
 Paragraphs 27-32 in Canada Trustco, are of great assistance in the consideration of this question. The pertinent portions read as follows:
5.4.2 Primarily for Bona Fide Purposes
 According to s. 245(3), the GAAR does not apply to a transaction that "may reasonably be considered to have been undertaken or arranged primarily for bona fide purposes other than to obtain the tax benefit". If there are both tax and non-tax purposes to a transaction, it must be determined whether it was reasonable to conclude that the non-tax purpose was primary. If so, the GAAR cannot be applied to deny the tax benefit.
 While the inquiry proceeds on the premise that both tax and non-tax purposes can be identified, these can be intertwined in the particular circumstances of the transaction at issue. It is not helpful to speak of the threshold imposed by s. 245(3) as high or low. The words of the section simply contemplate an objective assessment of the relative importance of the driving forces of the transaction.
 Again, this is a factual inquiry. The taxpayer cannot avoid the application of the GAAR by merely stating that the transaction was undertaken or arranged primarily for a non-tax purpose. The Tax Court judge must weigh the evidence to determine whether it is reasonable to conclude that the transaction was not undertaken or arranged primarily for a non-tax purpose. The determination invokes reasonableness, suggesting that the possibility of different interpretations of the events must be objectively considered.
 The courts must examine the relationships between the parties and the actual transactions that were executed between them. The facts of the transactions are central to determining whether there was an avoidance transaction. It is useful to consider what will not suffice to establish an avoidance transaction under s. 245(3). The Explanatory Notes state at p. 464:
Subsection 245(3) does not permit the 'recharacterization' of a transaction for the purposes of determining whether or not it is an avoidance transaction. In other words, it does not permit a transaction to be considered to be an avoidance transaction because some alternative transaction that might have achieved an equivalent result would have resulted in higher taxes.
 According to the Explanatory Notes, Parliament recognized the Duke of Westminster principle "that tax planning - arranging one's affairs so as to attract the least amount of tax - is a legitimate and accepted part of Canadian tax law". Despite Parliament's intention to address abusive tax avoidance by enacting the GAAR, Parliament nonetheless intended to preserve predictability, certainty and fairness in Canadian tax law. Parliament intends taxpayers to take full advantage of the provisions of the Income Tax Act that confer tax benefits. Indeed, achieving the various policies that the Income Tax Act seeks to promote is dependent on taxpayers doing so.
 Section 245(3) merely removes from the ambit of the GAAR transactions that may reasonably be considered to have been undertaken or arranged primarily for a non-tax purpose. Parliament did not intend s. 245(3) to operate simply as a business purpose test, which would have considered transactions that lacked an independent bona fide business purpose to be invalid.
 The first transaction was a sale of 703,000 DFR shares for 1,401,218 common shares of Inco  whose value at that time was approximately $65 million dollars. The "roll-over" resulted in a deferral of Canadian tax until such time as MIL sold the Inco shares.
 In determining the primary purpose of any transaction the credibility of witnesses is extremely important. Throughout the hearing, I observed and assessed, on a continuous basis, Boulle's demeanor, his delivery, his constant unchanging colour, his facial expressions and the absence of fidgeting, nervous behaviour. I also listened carefully to all his responses, both to the questions of his own counsel and on cross-examination. I concluded that he was credible. Respondent's counsel said that he was not. He submitted that:
... the Appellant's suggestion that it sold the shares to pay off a line of credit is not plausible. At the time of the share exchange the amounts owing were a little over a million dollars in total. At that time, the value of the shares was approximately 65 million dollars. You're going to sell 65 million dollars worth of shares to pay off a one million dollar line of credit?
 Boulle's evidence, which I accept, was that he wanted to pay off "over a million dollars of debt" and wanted to "get back to exploring and building mines in Africa." When, on cross-examination it was suggested to him that the credit line was not the main purpose he replied:
I had no other income ... my whole well-being, if you want to call it fortune, was tied up in these shares.
 Boulle's rationale for exchanging DFR shares for Inco shares was that he would have been "conflicted" by taking cash, even if available, for his DFR shares at the time he exchanged them for Inco shares. That is consistent with the commercial reality that a co-chairman of the board and major shareholder of DFR would, by selling for cash, if available, give a negative signal to the stock market - especially given the normal securities' legislation requiring disclosure of an "insider" transaction.
 The second transaction in that "series", namely, "the Final Dividend" was an arrangement for Luxembourg tax purposes only and had no tax effect whatsoever in Canada.
 The final transaction was the continuation of the Appellant to Luxembourg. In addition to the Treaty tax purpose, Appellant's counsel submitted that Luxembourg was a better jurisdiction than the Cayman Islands in which to carry on a mining business in Africa. Shortly after moving the Appellant, Boulle continued another Cayman Islands company, Gondwana, with mining activities in Africa, to Luxembourg for the same reasons.
 It is apparent from the evidence that the reason for the sale was to realize a gain on the sale of a small portion of his DFR shares. Boulle was a "paper millionaire" with financial burden, his entire wealth being held in non-liquid shares of DFR. There was always the possibility of a substantial diminution in the value of his investment which had risen inordinately quickly in value. The sale ensured him of financial security, a bona fide purpose, regardless of the success or failure of DFR. This is the "why" for each transaction in the series. The "how" of the series was the implementation of a complex plan formulated by Appellant's Canadian tax counsel. 
 The Respondent's written submission focuses on the tax plan by saying:
The tax-deferred sale of 703,000 DFR shares is the transaction upon which the Appellant's entire plan was predicated. This transaction was clearly undertaken in anticipation of MIL continuing into a jurisdiction where it could claim a treaty exemption for the future sale of DFR shares. This transaction that enabled MIL to reduce its shareholding in DRF below the 10% threshold in Article 13(4) of the Treaty, which permitted a tax-exempt sale of the DFR shares after continuing in to Luxembourg...
It is clear from those memoranda that the Appellant's decision to sell 703,000 shares was based solely on the need to get under the 10% threshold.
 The Appellant submitted that the gain on a sale of DFR shares would have been exempt under the Treaty regardless of the 10% threshold. The reason advanced was that under Article 13 of the Treaty, although the value of the DFR shares was derived principally from "immoveable property" in Canada, the term "immoveable property" did not include property in which the business of the company was carried on.
Respondent's counsel submitted:
whether this is true or not, the important point is that there is no evidence that the Appellant or its advisors believed this at the time, or that it was a consideration in the Appellant's decision to sell the 703,000 shares.
Appellant's counsel responded with:
In all fairness, the great thing about the 10% or substantial interest is that it is a bright line test. The other, you can get into a substantive debate of "Are you carrying on business or are you not?", but the 10% is a bright line test. But we pass both tests.
 I find it clear that, despite the possibility of the DFR shares already being exempt under the Treaty, one of the "driving forces" of the transactions was the Appellant's desire to ensure the sale of its shares in a tax effective manner. I conclude, however, that the "how" is subordinate to the "why" of the sale.
 This finding is consistent with the established jurisprudence on the legitimacy of seeking out tax planning, for example, Geransky v. H.M.Q., 2001 DTC 243 established that:
... a purely commercial transaction conceived by business persons without any particular tax motivation and carried out with the assistance of tax professionals in a manner that is designed to achieve that result with the least unfavorable tax consequences
is not an avoidance transaction.
This is complemented by the unappealed decision in Evans v. H.M.Q., 2005 DTC 1762 where Chief Justice Bowman of this Court said:
I find as a matter of fact that the primary purpose of the series of transactions with which we are concerned here was to put the corporate funds in Dr. Evans' hands. The method chosen was one designed to enable him to do so at the least tax cost.
and by Jabs Construction Limited v. H.M.Q., 1999 DTC 729 in which this Court said:
Section 245 is an extreme sanction. It should not be used routinely every time the Minister gets upset just because a taxpayer structures a transaction in a tax effective way, or does not structure it in a manner that maximizes the tax.
 This principle derives from the seminal case of IRC v. Duke of Westminster (1935), 19 T.C. 490 where Lord Tomlin said:
Every man is entitled if he can to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioner of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax.
 As noted earlier at paragraph 31 of Canada Trustcothe Supreme Court of Canada referred to the Explanatory Notes for section 245 saying that Parliament recognized:
... the Duke of Westminster principle 'that tax planning - arranging one's affairs so as to attract the least amount of tax - is a legitimate and accepted part of Canadian tax law'
 In light of the foregoing, the Appellant having had a bona fide commercial reason for selling, it was open to it to seek tax advice respecting the appropriate structure for concluding that Sale.
Can the Series include the Sale?
 It should be noted that the Minister of National Revenue ("Minister") did not reassess the Appellant in respect of the Series. Now, however, the Respondent seeks to use that very same Series in order to prevent the Salefrom exemption under the Treaty. In attempting to deny the Treaty benefit derived from the Sale, the Respondent has argued that the denial would be a reasonable tax consequence of the Series under subsection 245(2). Counsel submitted that the wording of subsection 245(2) permits the inclusion of the Salesince the income was "sheltered".
Subsection 245(2) reads as follows:
Where a transaction is an avoidance transaction, the tax consequences to a person shall be determined as is reasonable in the circumstances in order to deny a tax benefit that, but for this section, would result, directly or indirectly, from that transaction or from a series of transactions that includes that transaction.
The terms "tax consequences" and "tax benefit" are defined in subsection 245(1) as:
"tax consequences" to a person means the amount of income, taxable income, or taxable income earned in Canada of, tax or other amount payable by or refundable to the person under this Act, or any other amount that is relevant for the purposes of computing that amount;
"tax benefit" means a reduction, avoidance or deferral of tax or other amount payable under this Act or an increase in a refund of tax or other amount under this Act, and includes a reduction, avoidance or deferral of tax or other amount that would be payable under this Act but for a tax treaty or an increase in a refund of tax or other amount under this Act as a result of a tax treaty;
 My reading of the legislation is that "tax consequences" simply refers to the manner in which section 245 can be used to deny an otherwise available tax benefit. This reading is supported by subsection 245(5):
(5) Determination of tax consequences
Without restricting the generality of subsection (2), and notwithstanding any other enactment,
(a) any deduction, exemption or exclusion in computing income, taxable income, taxable income earned in Canada or tax payable or any part thereof may be allowed or disallowed in whole or in part,
(b) any such deduction, exemption or exclusion, any income, loss or other amount or part thereof may be allocated to any person,
(c) the nature of any payment or other amount may be recharacterized, and
(d) the tax effects that would otherwise result from the application of other provisions of this Act may be ignored,
in determining the tax consequences to a person as is reasonable in the circumstances in order to deny a tax benefit that would, but for this section, result, directly or indirectly, from an avoidance transaction.
 The tax benefit for the Respondent's Series is the amount of tax that would otherwise be payable under this Act, but for that Series. The proper comparable is the amount of tax which would have been payable had the Appellant sold the 703,000 shares of DFR on June 28, 1995 for cash. In that circumstance, the Appellant, then being a resident of Cayman Islands would not have been protected by the Treaty and would have been subject to Canadian tax on the capital gain of that sale. The tax benefit therefore ends with the Series, and cannot be extended to the final Saleunless that Sale is found to be a part of the series.
 Respondent's counsel did not initially advance the argument that the Sale was a part of the "series" of transactions. It was only in response to Appellant's counsel's reference to the series being limited to three transactions that he strayed slightly from that primary position. Appellant's written submission reads as follows:
Even if the three transactions were a series (they were not), and even if one of the three transactions was an avoidance transaction (none were), the sale by the Appellant of the DFR shares in August 1996 was not part of the series, and it is that sale from which the tax benefit arose.
In response thereto, Respondent's counsel's written argument said:
67. The Appellant also asserts that the August 1996 sale was neither preordained nor contemplated when the Transactions were undertaken. However, common sense and evidence point to DFR being a willing takeover target:
 The reference to the terms "preordained" and "contemplated" are references to the tests for determining a "series of transactions" as described by the Supreme Court at paragraph 25 of Canada Trustco:
The meaning of the expression 'series of transactions' under s.245(2) and (3) is not clear on its face. We agree with the majority of the Federal Court of Appeal in OSFC and endorse the test for a series of transactions as adopted by the House of Lords that a series of transactions involves a number of transactions that are 'pre-ordained in order to produce a given result' with 'no practical likelihood that the pre-planned events would not take place in the order ordained': Craven v. White,  A.C. 398, at p. 514, per Lord Oliver; see also W.T. Ramsay Ltd. v. Inland Revenue Commissioners,  1 All E.R. 865.
 The fuller quote from Craven v. White reads:
As the law currently stands, the essentials emerging from Furniss v. Dawson, [1984 A.C. 474], appear to me to be four in number:
1) that the series of transactions was, at the time when the intermediate transaction was entered into, pre-ordained in order to produce a given result;
2) that that transaction had no other purpose than tax mitigation;
3) that there was at that time no practical likelihood that the pre-planned events would not take place in the order ordained, so that the intermediate transaction was not even contemplated practically as having an independent life, and
4) that the pre-ordained events did in fact take place.
Subsection 248(10) reads as follows:
For the purposes of this Act, where there is a reference to a series of transactions or events, the series shall be deemed to include any related transactions or events completed in contemplation of the series.
 In paragraph 26 of Canada Trustco the Supreme Court of Canada said:
Section 248(10) extends the meaning of 'series of transactions' to include 'related transactions or events completed in contemplation of the series'. The Federal Court of Appeal held, at para. 36 of OSFC, that this occurs where the parties to the transaction 'knew of the ... series, such that it could be said that they took it into account when deciding to complete the transaction'. We would elaborate that 'in contemplation' is read not in the sense of actual knowledge but in the broader sense of 'because of' or 'in relation to' the series. The phrase can be applied to events either before or after the basic avoidance transaction found under s.245(3).
 There must be a strong nexus between transactions in order for them to be included in a series of transactions. In broadening the word "contemplation" to be read in the sense of "because of" or "in relation to the series", the Supreme Court cannot have meant mere possibility, which would include an extreme degree of remoteness. Otherwise, legitimate tax planning would be jeopardized, thereby running afoul of that Court's clearly expressed goals of achieving "consistency, predictability and fairness".
 The Respondent's principal argument for the connection between the Sale and the Series seems to be that DFR was a willing takeover target and that, therefore, a sale of the company was contemplated by the Appellant at the time of the Series. Paragraph 67 of the counsel's submission reads:
a) shortly after November 1994, when drilling confirmed the existence of a major nickel-copper-cobalt deposit at Voisey's Bay, market interest in DFR shares intensified and public trading prices increased significantly. Further, DFR was approached by numerous Canadian and international mining companies with respect to the property;
b) the Board of DFR adopted a shareholders rights plan ("poison pill") in December 1994 in order to give the Board of DFR time to maximize shareholder value and to ensure that all shareholders would be treated equally and fairly with respect to any takeover offers;
DFR's "poison pill" was its reaction to the unsolicited interest of eighteen courting companies. This is simply normal commercial practice to prevent an undesired take-over.
c) DFR hired Nesbit Burns and Credit Suisse First Boston in August 1995 as advisors to advise on any takeover bids;58
This footnote referred to the August 26, 1995 Minutes of the meeting of the Board of DFR. Those Minutes, which made no reference to potential takeover bids, read as follows:
Financial Advisory roles were reviewed by Mr. Mercaldo with respect to First Marathon, Nesbitt Burns and CS First Boston. Upon motion duly made and seconded IT WAS UNANIMOUSLY RESOLVED THAT MANAGEMENT BE AUTHORIZED TO ENTER INTO AGREEMENTS WITH EACH OF THESE ADVISORS FOR ONGOING FINANCIAL SERVICES.
d) the subject of a further acquisition came up between DFR and Inco as early as a meeting in September 1995, barely two months after the June 28, 1995 deal, and was informally discussed throughout October and November 1995;59
The referenced words of Feiner read as follows:
We had a dinner meeting in early September, 1995, in Toronto, where the issue of Inco's interest in acquiring that portion of the Voisey's Bay deposit that it did not then own was broached with some of the Diamond Fields people.
Teck, Falconbridge, and Inco had each pursued the potential acquisition of the full Voisey's Bay interest prior to this date and all such overtures had been rejected by DFR. This cannot be construed as evidence of a desired sale.
e) the minutes of the meetings of the directors of DFR held on August 26, 1995, February 9, 1996 and April 1996, and the directors resolution dated October 17, 1995 all focus on the company as a takeover target rather than on developing a mine. Nor is there evidence that the directors of DFR discussed issues resulting from serious concerns raised by the Government of Newfoundland and various local aboriginal groups, which issues were apparent by June of 1995. Those issues ultimately took Inco more than five years to resolve; and
Mercaldo's evidence clearly explained those "single-purpose meetings". In cross-examination he said:
... the points that you're bringing up were things that we did everyday.
This exchange then followed:
Q. The same question. I'm just going to ask you the same question, that there wasn't any kind of discussion with respect to this resolution regarding any kind of drilling, exploration results or the hiring of experts and mining people.
A. Right. The fact is that we didn't run this company by board or committee meetings. We ran the company. We did -- we brought those items that we needed to bring to the Board, at the appropriate time. ... The Board delegated to me the responsibility to develop the drilling program, to hire the people and so forth. I hired Mr. Paterson, I negotiated his contract with him. I hired Mr. Carson, I negotiated his contract with him, et cetera. ... you know, we didn't run the company by committee. ... we documented what we were supposed to have documented, we got authority when we needed to get it but we were given broad authority that covered long periods of time.
f) there is no evidence that, by June 1995 when Inco provided $25 million for a feasibility study, DFR had completed even a pre-feasibility study, and by April 1996, when Inco agreed to acquire the remaining shares of DFR, a feasibility study had not been done and most work had still been exploration.
Mercaldo had said that a feasibility study is done after the determination of reserves. He then explained, in detail, what is involved in that process respecting "amazingly complex stuff because you are trying to eliminate the guess work and be able to predict ... what your cash flow stream will be, what your cash costs of operating will be, what your depreciation and amortization will be." Respondent's witness, Feiner, agreed that a feasibility study is a key document to support the development of a mining project, particularly:
...you would not move forward with making any significant capital expenditures relating to the development of a deposit until such time as the feasibility study had been completed and had confirmed the economics, operational and other key parameters for the project. ... It would not be a preliminary step. The preliminary step would be what people commonly refer to as a pre-feasibility site which would again look at some of the same key areas that one would have a feasibility study cover but not in the same depth. Once that pre-feasibility study were completed and there was, you know, satisfactory results, then one would normally move to a feasibility study.
 The evidence clearly showed that DFR took active steps to prevent any purchase. For example, the arrangements with both Teck and Inco included "standstill agreements" which bound them to vote in accordance with DFR management and prohibited them from purchasing further shares of DFR without DFR management's consent. Furthermore, the Inco arrangement involved an acquisition of 25% of Voisey's Bay, a subsidiary of DFR rather than shares of DFR itself. The reason for this, as Mercaldo's evidence indicates, was to control "our own destiny" and to protect themselves when dealing with Inco. I find that at the end of the series of transactions DFR management, including co-chairman Boulle, and therefore, the Appellant, had no intention of selling.
 Mercaldo, when asked, on cross-examination, whether in August 1995 there was a "very good possibility" that there would be a future sale of all the remaining shares of DFR to one of the suitors, he responded:
No, I would think that absolutely there was not. We had - John Paterson was on board. We had just hired on the 3rd of August Harvey Keats. We were in negotiation -- John was in negotiations with Mike Young and with Ken ... from Noranda Research. ... we were trying to figure out the fastest way we could get this thing into production. We had done our deal with Inco and we were driving towards that. Only when Mr. Paterson died did that change.
He also said:
Well, we were very concerned about maintaining our independence and controlling this mega company so that they couldn't tie us up and in fact run the show. So what we agreed to do was to sell them 25 percent of the Voisey's Bay Nickel Company Limited, which was a 100 percent owned subsidiary of Diamond Fields. ... we didn't want to sell Inco 25 percent of our shares, because then they would have had an effective control block in the company ... we offered them the 25 percent of Voisey's Bay Nickel Company and 25 percent of the seats on the board of that company, so that in effect we didn't have -- we made control of our destiny.
It was not until the death of Paterson in October, 1995 that DFR decided to consider sale. Mercaldo described Paterson's death as:
devastating. John was an amazing human being, and a very, very talented man, and he brought a lot of leadership into the company. And he died - he had an appendicitis attack on the plane. By the time he got operated on in - he was flying from London to St. John's. By the time they operated on him, the following day, his appendix had burst, and he spent a week in the hospital there, came back here and he was having technical meetings with his people in North Van at his home, a week later he ended up in the Lion's Gate Hospital and they released him two days later, couldn't find anything wrong with him, and he died in the parking lot of a pulmonary embolism.
Paterson's death, despite being just months after the June rollover, was a significant change in DFR's circumstances, a change which bears no relationship to the Series of transactions as conceived by the Appellant in June, 1995.
 Accordingly, having found that, at the time of the Series, DFR had no desire of allowing itself to be sold to any buyer, I conclude that the Sale cannot be included in that series because of a mere possibility of a future potential sale of any shares.
Abusive Avoidance under the Treaty
 Having found that the Sale and none of the transactions in the Series are avoidance transactions, it is not necessary for me to analyze whether any of those transactions is abusive under subsection 245(4). If I were to do such an analysis, however, I would focus on whether a specific provision or article of the Treaty or Act was misused or abused. In the Appellant's case, I would consider specifically, the exemptions relied upon by the Appellant in Article 13(4).
 An example of potential abuse can be found in RMM Canadian Enterprises v. MNR, 97 DTC 302. There, the Appellant attempted to structure a "surplus-stripping" transaction as a capital gain in order to have an exemption pursuant to Article XIII of the Canada-US treaty as opposed to a dividend which would be treated less favourably under Article X. In such circumstances, it would not necessarily be unreasonable to apply section 245 to recharacterize the capital gain as a dividend for the purposes of denying the Treaty benefit.
 In written argument, Respondent's counsel argued that 'treaty shopping' is an abuse of bilateral tax conventions and that this is recognized by the Supreme Court of Canada. In oral argument, the following passage from Crown Forest Industries Limited v. The Queen,  2 S.C.R. 802 at page 825, was quoted to establish that if the Supreme Court had access to section 245, it would have used that section to deny a benefit from "treaty shopping":
It seems to me that both Norsk and the respondent are seeking to minimize their tax liability by picking and choosing the international tax regimes most immediately beneficial to them. Although there is nothing improper with such behaviour, I certainly believe that it is not to be encouraged or promoted by judicial interpretation of existing agreements...
I do not agree that Justice Iaccobucci's obiter dicta can be used to establish a prima facie finding of abuse arising from the choice of the most beneficial treaty. There is nothing inherently proper or improper with selecting one foreign regime over another. Respondent's counsel was correct in arguing that the selection of a low tax jurisdiction may speak persuasively as evidence of a tax purpose for an alleged avoidance transaction, but the shopping or selection of a treaty to minimize tax on its own cannot be viewed as being abusive. It is the use of the selected treaty that must be examined.
 Canada has negotiated a broad network of carefully negotiated tax conventions with many different nations. Prior to negotiating the Treaty, Canada undoubtedly had knowledge of Luxembourg's treatment of capital gains. Article 13 which pertains to the taxation of capital gains under the Treaty reads as follows:
1. Gains derived by a resident of a Contracting State from the alienation of immovable property situated in the other Contracting State may be taxed in that other State...
4. Gains derived by a resident of a Contracting Statefrom the alienation of:
(a) shares forming part of a substantial interest in the capital stock of a company which is a resident of the other Contracting State the value of which shares is derived principally from immovable property situated in that other State; or
(b) an interest in a partnership, trust or estate, the value of which is derived principally from immovable property situated in that other State, may be taxed in that other State. For the purposes of this paragraph, the term "immovable property"... does not include property (other than rental property) in which the business of the company, partnership, trust or estate was carried on; and a substantial interest exists when the resident and persons related thereto own 10 per cent or more of the shares of any class of the capital stock of a company.
5. Gains from the alienation of any property, other than that mentioned in paragraphs 1 to 4 shall be taxable only in the Contracting State of which the alienator is a resident.
6. The provisions of paragraph 5 shall not affect the right of either of the Contracting States to levy, according to its law, a tax on gains from the alienation of any property derived by an individual who is a resident of the other Contracting State and has been a resident of the first-mentioned State at any time during the six years immediately preceding the alienation of the property.
The general rule, contained in Article 13(5) of the Treaty, is that capital gains are taxable only in the country in which the taxpayer is resident (Luxembourg). An exception is made for the taxation of immovable property situated in the Other State (Canada). Exempt from Canada's right to tax the capital gain on immovable property are two further restrictions found in Article 13(4). These are the right to tax immoveable property from which a business is carried on and the right to tax immovable property in which the taxpayer owns less than a substantial interest (less than 10%).
 The two exemptions found in Article 13(4) are not found in the OECD model convention upon which the Treaty is based. In drafting those exemptions it must be presumed that Canada had a valid reason to allow Luxembourg to retain the right to tax capital gains in those specific circumstances, for example, the desire to encourage foreign investment in Canadian property. The Appellant's reliance upon a Treaty provision as agreed upon by both Canada and Luxembourg cannot be viewed as being a misuse or abuse. Canada, if concerned with the preferable tax rates of any of its treaty partners, instead of applying section 245, should seek recourse by attempting to renegotiate selected tax treaties.
 Furthermore, the unique circumstances of this case should be noted. The Appellant at all times was a non-resident of Canada. The decision to continue from the Cayman Islands to Luxembourg did not change the reality that the Appellant was a foreign company owning shares of a Canadian corporation. If a resident of Canada were to move to Luxembourg in order to obtain the preferred treatment of capital gains, it would still be subject to Canadian tax for two reasons. First, under the Act, a Canadian taxpayer who emigrates from Canada will be deemed to have made a disposition pursuant to paragraph 128.1(4)(b) which allows Canada to tax any accretion in the value of capital property while the resident was situated in Canada. Secondly, Article 13(6) of the Treaty would give Canada the right to tax any gains made by former Canadian residents during the first six years after moving to Luxembourg.
The Alternative Argument: Inherent Abuse Rule
 The Respondent presented the alternative written argument that:
Even if the GAAR does not apply to deny the treaty benefit in this case, it is still possible to deny the treaty based on the anti-abuse rule inherent within the Treaty itself.
 In order to establish an "inherent rule" the Minister presented an expert from Luxembourg, Professor Alain Steichen ("Steichen"). He was qualified as an expert in Luxembourg tax law and income tax treaties to which Luxembourg is a party and also as an expert on international law as it applies to income tax treaties to which Luxembourg is a party.
 Steichen's inherent anti-abuse test is that a specific treaty benefit may be denied in situations where both Canadian and Luxembourg domestic anti-avoidance rules would deny that benefit. In order to establish his opinion that Luxembourg law would apply to deny the Appellant a treaty benefit, Steichen was asked by the Minister to review the "reversed scenario" in which MIL continued into Canada from the Cayman Islands in order to use the Treaty.
 Before the Treaty benefit could be denied under Steichen's test it would have to be established that both Canadian and Luxembourg domestic anti-avoidance rules would apply in the circumstances. Even if Steichen's test is accepted, the inherent anti-abuse rule could not be applied without first finding the existence of an abusive avoidance transaction in Canada.
 In order to establish his inherent anti-abuse rule, Steichen refers to international legal principles. His starting point is the Vienna Convention on the Law of Treaties,  Can T.S. No. 37, ("Vienna Convention"). The Vienna Convention to which Canada was an original signatory has been found to be the correct starting approach for interpreting a treaty to which Canada is a party. Specifically mentioned are articles 26, 31 and 32:
Pacta sunt servanda
Every treaty in force is binding upon the parties to it and must be performed by them in good faith.
SECTION 3. INTERPRETATION OF TREATIES
General rule of interpretation
1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in light of its object and purpose.
2. The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes:
(a) any agreement relating to the treaty which was made between all the parties in connection with the conclusion of the treaty;
(b) any instrument which was made by one or more parties in connection with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty.
3. There shall be taken into account, together with the context:
(a) any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions;
(b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation;
(c) any relevant rules of international law applicable in the relations between the parties.
4. A special meaning shall be given to a term if it is established that the parties so intended.
Supplementary means of interpretation
Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31:
(a) leaves the meaning ambiguous or obscure; or
(b) leads to a result which is manifestly absurd or unreasonable.
 Steichen, in reviewing the ordinary meaning of the Treaty, found that:
Neither Article 13 nor any other article of the Tax Treaty appears to be providing for a specific anti-treaty shopping provision eventually explicitly authorizing Luxembourg under the reversed scenario to deny the Treaty Benefits under Article 13(5). Only the preamble to the Tax Treaty referring to the prevention of tax avoidance might be relied upon. That however in my opinion, does not constitute an anti-treaty shopping provision on which Luxembourg could rely upon in order to deny treaty benefits to tax payers that would on all other grounds would be entitled to them. For this to be the case the preamble would need to be backed up by provisions in the tax treaty itself defining the various elements of avoidance transactions enabling Luxembourg to deny treaty benefits to one of the residents in Canada.
 When asked at the hearing, whether a reading of the Treaty and the principle of pacta sunt servanda would imply that the Appellant should receive the Treaty benefit, Steichen replied "yes". When asked if the Vienna Convention was the only applicable source of international public law that Luxembourg would consider, his response was:
It is the most relevant source, being the written words in the treaty, and it's the preferred choice for interpreting a treaty, that it should contain whatever is relevant in the treaty itself. But only in case of ambiguity under the treaty, one should refer to other principles in international public law to confer the proper meaning of the treaty.
 At the time that Canada and Luxembourg concluded the Treaty in 1990, both countries had domestic anti-avoidance rules (1941 for Luxembourg and 1988 for Canada) and yet the Treaty made no reference to them.
 Steichen's opinion was that silence in a treaty equals ambiguity. Asked on cross-examination how the Treaty could have avoided ambiguity, Steichen replied:
You might want to write in the treaty that local GAAR cannot affect the validity of the application of the treaty. That would be a clear statement, in which case we would not have to, in my opinion, argue about whether that implicit anti-abuse provision exists or not.
Appellant's counsel then presented Professor Steichen with paragraph 7 of the commentary to the 1977 OECD model, which reads:
The purpose of double tax conventions is to promote by, eliminating international double taxation... they should not, however, help tax avoidance or evasion. True, taxpayers have the possibility, double taxation conventions being left aside, to exploit the differences in tax levels as between States and the tax advantages provided by various countries' taxation laws, but it is for the States concerned to adopt provisions in their domestic law, to counter possible manoeuvres. Such states will then wish, in their bilateral double taxation conventions, to preserve the application of a provision of this kind contained in their domestic laws.
When asked by Appellant's counsel whether that paragraph meant "if you want an anti-avoidance rule in the treaty, you should put it in the treaty?"
I would agree with that, yes.
The exchange continued:
Q. At the time this treaty was put together, the contemporaneous material specifically said, 'If you want to put an anti-abuse provision in a treaty, you must specifically do so.' Would you agree with that?
A. That's right.
 In CrownForest, Justice Iacobucci of the Supreme Court of Canada endorsed the use of the OECD commentary writing:
In order to help illustrate and illuminate the intention of the parties to the Canada-United States Income Tax Convention (1980) articles 31 and 32 of the Vienna Convention on the Law of Treaties indicate that reference may be made to these types of extrinsic materials when interpreting international documents such as tax convention. ...
Of high persuasive value in terms of defining the parameters of the Canada-United States Income Tax Convention (1980) is the OECD model double-taxation convention on income and on capital. As noted by the Court of Appeal it served as the basis for the Canada-United States Income Tax Convention and also has world wide recognition as a basic document of record in the negotiation, application and interpretation of multilateral or bilateral conventions.
 The Respondent presented the 2003 revisions to the OECD commentary as support for the existence of an inherent anti-abuse rule in tax treaties. Article 31(1)(c) of the Vienna Convention states "there shall be taken into account, together with the context, any relevant rules of international law applicable in the relations between the parties." I interpret that to mean that one can only consult the OECD commentary in existence at the time the Treaty was negotiated without reference to subsequent revisions. The Respondent's own expert on cross-examination agreed that subsequent revisions should be ignored:
Q First, I understand that using the commentaries that came out in 2003 to the OECD Convention, the Article 1 commentaries, I think we both agree that trying to apply those commentaries to interpret a treaty that was put in place in 1989 is nonsense. Would you agree with that?
A That is correct.
 Overall, I found Steichen's opinion and testimony not substantively convincing. In particular, in light of the OECD commentary and the decision by Canada and Luxembourg not to include an explicit reference to anti-avoidance rules in their carefully negotiated Treaty, I find there is no ambiguity in the Treaty permitting it to be construed as containing an inherent anti-abuse rule. Simply put, the "ordinary meaning" of the Treaty allowing the Appellant to claim the exemption must be respected.
 Accordingly, the appeal will be allowed and costs will be awarded to the Appellant.
APPENDIX A ATTACHED TO AND FORMING PART OF THE REASONS FOR JUDGMENT
PARTIAL AGREED STATEMENT OF FACTS
 This STATEMENT is reproduced as follows:
The parties hereto by their respective solicitors agree on the following facts, provided that this agreement is made for the purpose of this Appeal only and may not be used against either party on any other occasion, and provided that the parties may add further and other evidence relevant to the issues and not inconsistent with this agreement.
1. At all material times prior to June 1995, Jean-Raymond Boulle ("Boulle") was a resident of Belize, Central America. In or about 1995, and at all material times thereafter, Boulle has been a resident of Monaco.
2. Beginning in January 1993, Boulle, on behalf of an as yet unincorporated company, began acquiring shares of Diamond Field Resources Ltd. ("DFR") a public company incorporated in Canadaand traded on the Toronto Stock Exchange.
3. As at March 3, 1993, Boulle held 29.4% of the issued shares of DFR. On March 10, 1993, the Appellant was incorporated under the laws of the Cayman Islands as an exempted company. The DFR shares, acquired on its behalf, were transferred by Boulle to the Appellant.
4. Following the incorporation, Boulle held the two issued shares of the Appellant and at all material times has controlled the Appellant.
5. Prior to November 1994, the business of DFR consisted of the acquisition, exploration and development of diamond properties. In the course of conducting an exploration program in November 1994, DFR discovered a major nickel-copper-cobalt near Voisey's Bay in northern Labrador(the "Property").
6. In April 1995, Teck Corporation agreed to invest $108,000,000 for 10% of the shares of DFR and also agreed to provide technical support to assist DFR in the engineering, project design and conceptual planning of the Voisey's Bay project.
7. By agreement of June 8, 1995, between DFR and Inco:
a. DFR agreed to incorporate a subsidiary company, Voisey's Bay Nickel Company Limited ("VBNC") and to transfer the Property to that company.
b. Inco agreed to buy 25% of the shares of VBNC for U.S.$386,700,000, to be satisfied by the issuance to DFR of Inco preferred shares.
c. Inco agreed to pay VBNC $25,000,000 "for purposes of funding the costs to be incurred by VBNC of production and completing a Feasibility Study and of continuing exploration work on its project".
d. Inco obtained rights to market product mined from the property for 25 years.
e. Inco and DFR entered into an agreement for the continued financing, development and operation of the Property.
f. Inco and DFR entered into a "stand still" agreement whereby other than the 2,000,000 DFR shares described below, Inco agreed not to acquire any DFR shares until the first to occur of
i) a DFR change of control;
ii) the shareholding of certain DFR shareholders being less than 2,000,000; or
iii) 25 years.
8. Also, on June 8, 1995, Inco agreed to acquire a total of 1,297,000 shares of DFR from the Robertson Stephens Orphan Fund and The Robertson Stephens Contrarian Fund and 703,000 shares of DFR from the Appellant. As a result of that agreement, on June 28, 1995, the Appellant exchanged on a tax-deferral basis pursuant to s.85.1 of the Income Tax Act (the "Act"), 703,000 DFR shares for 1,401,218 common shares of Inco.
9. Prior to June 28, 1995, the Appellant had held 3,252,273 common shares and Boulle had held 132,500 common shares of DFR representing 11.90% and 0.485% interest in that company respectively. After June 28, 1995, the Appellant held 2,549,273 and Boulle held 132,500 shares of DFR representing 9.332% and 0.485% interest in that company. The combined interest of the Appellant and Boulle was 9.817%.
10. On June 25, 1995, the directors of the Appellant resolved that a final dividend (the "Final Dividend") equal to the value of its interest in the Voisey's Bay property and retained earnings as at July 14, 1995 be declared and paid by way of the issue on July 14, 1995 of two interest bearing promissory notes in the principal amount of $37,863,874 ("Promissory Note 1") and $214,561,960 ("Promissory Note 2").
11. Promissory Note 1 was contributed by Boulle to the Appellant on July 14, 1995, in consideration of the issue of 49,998 common shares of the Appellant to Boulle. This was done in order to meet Luxembourg capital requirements and minimize capital tax in Luxembourgby ensuring that the Appellant's share capital represented at least 15% of the value of its capital.
12. Promissory Note 2 was transferred by Boulle to JRB Holdings I Limited ("JRBI") by an agreement dated July 14, 1995. JRBI was incorporated on June 23, 1995, under the laws of the Cayman Islandsand was, at all material times, owned and controlled solely by Boulle. The purpose of incorporating JRBI was to hold Promissory Note 2.
13. The intention was for the Appellant to repay Promissory Note 2 as expeditiously as possible. The Appellant sought and received confirmation from the Luxembourg authorities that any interest and principal payments on Promissory Note 2 would be free of Luxembourgwithholding tax.
Between March 8, 1996 and January 5, 1999, it was fully repaid as follows:
May 8/96 US$ 2,000,000
July 29/96 US$ 12,000,000
Aug. 9/96 US$ 1,000,000
Nov. 5/96 CDN$120,000,000
Jan. 5/96 US$ 61,500,000
14. JRBI used the funds from the repayment of Promissory Note 2 to lend US$750,000 to Gondwana (Investments) S.A., another company controlled by Boulle, and US$9.2 million to the Appellant. The remainder was paid to or for Boulle or invested by JRBI in portfolio investments outside Luxembourg. None of the remainder went to Luxembourgcompanies or back into Luxembourgduring the period preceding 2000.
15. On July 14, 1995, on the advice of Luxembourgcounsel, Boulle transferred his 50,000 shares of the Appellant, representing all of the issued and outstanding shares of the Appellant, to 5 holding companies (collectively the "Holdcos") as follows:
a. Globe Flower Holdings Limited, incorporated under the laws of Tortola, BVI - 16,600 shares;
b. Auk Limited, incorporated under the laws of the Bahamas- 16,600 shares;
c. Stormdust Limited, incorporated under the laws of St. Helier, Jersey Channel Islands - 16,600 shares;
d. JBS Holdings II Limited, incorporated under the laws of the Cayman Islands - 100 shares;
e. JRB Holdings III Limited, incorporated under the laws of the Cayman Islands - 100 shares.
16. At all material times, Boulle was the sole shareholder and controller of the Holdcos.
17. On July 17, 1995, the Appellant was continued into Luxembourg.
18. Subsequent to July 17, 1995, the Appellant was a resident of Luxembourgfor the purposes of Article 4(1) of the Canada-Luxembourg Tax Convention (the "Treaty").
19. In accordance with the common practice of Luxembourglawyers, the Appellant's year-end was changed to July 31st, with the first year ending July 31, 1995. Under Luxembourgtax law, certain gains are not subject to tax if a company holds a minimum participation in another company. However, for the participation exemption to apply it was necessary that the Appellant was a resident and held the shares for a full fiscal year before the sale was made.
20. On July 17, 1995, the Holdcos transferred the shares of the Appellant to MIL (Holdings) S.A., a Luxembourgcorporation, except for 1 share which was retained by JRB Holdings III Limited.
21. Boulle was never a resident of Luxembourgand only travelled to Luxembourgto attend directors' and shareholders' meetings.
22. Between August 14, 1995 and August 17, 1995, the Appellant disposed of the 1,401,218 common shares of Inco previously acquired on June 28, 19951 for proceeds of $65,466,895 (the "Inco Proceeds"). The Appellant claimed an exemption from Canadian tax on the resulting capital gain of $64,982,7132 (the "First Inco Gain") under Article 13 of the Convention. The Appellant was not reassessed in Canada with respect to the gain, and did not pay tax in Luxembourgbecause the cost basis of the shares for Luxembourgtax purposes was the value at the time of continuance which exceeded the sale price.
23. On September 14, 1995, the Appellant disposed of 50,000 shares of DFR to three individuals for services rendered to the Holdcos. The Appellant reported proceeds of disposition of $4,525,000 and an ACB of $32,444 and claimed an exemption from Canadian tax on the resulting capital gain of $4,492,556 (the "First Diamond Field Gain") under Article 13 of the Convention. The Appellant was not reassessed in Canada with respect to the gain and did not pay tax in Luxembourg.
24. As of September 24, 1995, the Appellant and Boulle held 2,499,273 and 132,500 common shares of DFR, respectively. On September 25, 1995, the common shares of DFR were split on a four for one basis giving the Appellant and Boulle a total of 10,527,092 common shares of DFR.
25. On May 22, 1996, the shareholders of DRF approved the acquisition of the outstanding shares of DFR by Inco to take effect on August 21, 1996. Existing shareholders of DFR were to receive the following consideration for each DFR share held:
a. .557 of a common share of Inco or, if the shareholder elected, $26.39 cash or a combination of cash and shares with the aggregate cash available to DFR shareholders being limited to $350,000,000;
b. .25 of an Inco Class VBN share;
c. .091 of 5.5% convertible Series E preferred share of Inco; and
d. One Diamond note, which was non-interest bearing, and had a principal equal to the book value of Diamond Fields Intl. Ltd., a subsidiary of DFR which held the diamond assets, which note was to be satisfied by the delivery of one share of the capital stock of that corporation.
26. As of August 20, 1996, the Appellant held 9,997,092 common shares of DFR, representing 9.1476% of the common share capital of DFR, and Boulle owned 530,000 common shares of DFR, representing 0.485% of the common share capital of DFR.
27. On August 21, 1996, in exchange for its remaining 9,997,092 DFR shares, the Appellant received proceeds of disposition from Inco in the amount of $427,475,645 in the following form:
a. 5,568,379 common shares of Inco;
b. 9,997,092 Diamond Notes;
c. 2,499,273 Class VBN shares of Inco; and
d. 909,734 Inco convertible Series F preferred shares.
28. The Appellant claimed an exemption from Canadian tax on the resulting capital gain of $425,853,9423 (the "Second Diamond Field Gain") under Article 13 of the Convention. It is this gain that is the subject of this appeal.
29. On August 21, 1996, in exchange for his remaining 530,000 DFR shares, Boulle received proceeds of disposition from Inco in the amount of $22,662,800 in the following form:
a. 295,210 common shares of Inco;
b. 530,000 Diamond Notes;
c. 132,500 Class VBN shares of Inco; and
d. 48,230 Inco convertible Series B preferred shares.
30. Boulle filed an election pursuant to subsection 85(1) of the Act on the basis of an agreed amount of $84,800, representing the fair market value of the 530,000 Diamond Notes.
31. The Diamond Notes received by the Appellant and Boulle were subsequently exchanged for shares of Diamond Fields Intl. Ltd.
32. During October 1996, the Appellant disposed of 3,888,426 common shares of Inco for proceeds of disposition of US$118,726,102 (the "Second Inco Gain") and received a total of US$3,058,135 in dividends from its participation in Inco.
ORAL AND DOCUMENTARY EVIDENCE
 The Appellant's first witness was Ed Mercaldo ("Mercaldo") who had been a very experienced investment banker before joining DFR. He then assisted DFR in arranging several financings including one in March 1994 of $15 million, the largest investor in that being Robertson Stephens Fund ("Stephens") in San Francisco. He was also involved in other exploratory and entrepreneurial activities on behalf of DFR. The two principal founder shareholders of DFR were Jean-Raymond Boulle ("Boulle") and Robert Friedland ("Friedland"). Boulle testified that he had joined DFR on February 13, 1995 and that although he had been offered the presidency of the company he felt that he would better serve it as Executive Vice President and Chief Financial Officer and as a Director of the company.
 He then described how the deposits of copper, nickel and cobalt were found at Voisey's Bay in Labrador. He explained that the announcement of this discovery "set the mining world and the market a-buzz". He also stated that the stock, at the time of the discovery, was trading around $4 a share in mid November. He then said that it "went on a rampage" and by Christmas time was around $13 a share. Additional drilling rigs and crews were hired to test the limits of the deposits and to determine if it was economically feasible to develop a mine in that very remote location.
 Mercaldo testified that DFR was contacted by eighteen mining companies from around the world, the deposit being "in many people's words a world class discovery". He said that at the Annual Prospector's Convention in Torontoin March (presumably 1995) the stock was around $19 or $20 a share. He then said that by the end of April when 10% of DFR was sold to Teck Corporation ("Teck") the market value of the stock was "around $33 a share". He said that when "Teck did the deal, financing at $36 a share plus some other concessions, the market deemed Teck to have paid around $39 a share and within a week of that, by the end of April, it was $47 per share."
 Mercaldo stated that, at that time, Boulle and Friedland together had about 30% of the shares of DFR, Stephens had 10% and he, Mercaldo, had 1.5%, the total being about 40%. He said that with that percentage, the group could not have blocked a hostile takeover.
 Mercaldo then testified that Teck paid $108 million for 10% of DFR, not requiring the appointment of a Director but providing technical advice and assistance estimating reserves, et cetera but he said that Teck assured them that it could do the maximum amount of drilling and exploration possible on the property for at least three, and more likely, four summers without DFR having to raise additional money. He said:
This was very important that we would take 10% dilution and be basically covered as far as - - and I say the amount we could spend, because we were controlled by how many drill rigs we could obtain, how many skilled people we could obtain, and how many permits we could get from the Government of Newfoundland and Labrador and that was running - - all those constraints meant we couldn't spend much more than $25 million or $28 million per annum in developing the program.
Teck also entered into a voting trust with Friedland, and alternatively Boulle, if Friedland was not available, to vote its shares with management on any major issue, thus avoiding a potential hostile takeover. He stated that Teck gave DFR incredible support in terms of people who had built mines, who knew exactly what they were doing and how to go about developing a mine plan et cetera. He said that Teck gave them very sophisticated programs on reserve calculations and modelling and pit modelling and other matters. He said further that Teck gave DFR:
incredible credibility in the financial markets, because Teck was considered to be a very smart company.
Mercaldo then said that DFR had a "stand still" agreement with Teck and that Teck had agreed not to buy any more shares without DFR's permission.
 Mercaldo described the development of staff. He said that the "first major hire was Dr. John Paterson as Executive Vice President for nickel operations. He had been the head of the Mining and Metallurgy Department at Queen's University and was a "Ph.D. Metallurgist".
 Mercaldo testified that Mike Sopko ("Sopko") was the Chairman and Chief Executive Officer of Inco Limited ("Inco") in 1995. He also said that Cliff Carson ("Carson") was hired as President of DFR, he having been a Senior Vice President of Marketing at Falconbridge Limited ("Falconbridge"). He stated that the value of the reserve, in gross metal terms, in mid May 1995 was about $12 billion. Mercaldo also said that, at that time, Inco controlled 25% of the world's production of nickel. Further, he said that Inco was interested in acquiring 100% of the Voisey's Bay interest but at that time:
we still felt that we had just scratched the surface as to the potential of Voisey's Bay.
He said that a deal with someone like Inco would result in faster production, Inco having had depths of technical management, including engineers, metallurgists and "that sort of thing" as well as the market.
 Mercaldo then testified that, being concerned about maintaining independence and controlling DFR, it agreed to sell 25% of Voisey's Bay Nickel Company Limited ("Voisey's Bay"), a wholly owned subsidiary of DFR. He stated that they did not want to sell Inco 25% of DFR shares because that would have given it effective control of DFR together with seats on the board of directors. He said that he was not involved in the sale of 2 million shares by Stephens and Boulle to Inco because those shares were not from the company's treasury. He said that at the time of the purchase of those shares by Inco, they had an agreement with Inco as to how it would vote its shares so that control was not only not given up, but control was increased to over 50%.
 Mercaldo said that Inco paid about $500 million Canadian and contributed $50 million to DFR for exploration and technical work, adding that overall Inco paid well over $700 million. He also described the expanding exploration research and potential development of the mining property with technical assistance and a substantially extended number of employees.
The following exchange took place:
Q. Now ... in August ... you hired -- I think it's Credit Suisse First Boston and Nesbitt Burns. What was that about?
A. Well, we had hired -- one of the things that we wanted -- was -- since it was, we thought, really an international story, was good exposure in the international markets. I'm a firm believer that when you have a public company, you want to spread your sphere of influence as wide as possible because it looked like we had something that's going to require a lot of capital some day to build. It was getting bigger every -- virtually every day.
We hired Credit Suisse First Boston. The CEO was a former colleague of mine at Banker's Trust, and they agreed to give us research coverage and to take us on a road show and to give us good financial advice. We hired them. And then later -- that was in June of 1995, and in August we made a similar arrangement with Nesbitt. Since we were a Canadian company, this was going to be our base of operations. We interviewed a whole of series of investment banks here in Canada.
Q. Okay. That's fine. And now, in -- and I'm not sure whether it was late September or early October -- Dr. Paterson died.
MR. MITCHELL: What effect did that have on your operation?
A. Well, it was devastating. John was an amazing human being, and a very, very talented man, and he brought a lot of leadership into the company. And he died -- he had an appendicitis attack on the plane. By the time he got operated on in -- he was flying from London to St. John's. By the time they operated on him, the following day, his appendix had burst, and he spent a week in the hospital there, came back here and he was having technical meetings with his people in North Van at his home, a week later he ended up in the Lions Gate Hospital and they released him two days later, couldn't find anything wrong with him, and he died in the parking lot of a pulmonary embolism.
Q. What effect did that have on the company?
A. Well, we had -- you know, he had hired some very good people, but basically John was the guy that pulled it together. And I had conversations with Robert, and Jean, and with Robert Friedland, and Jean Boulle, and other directors, and we realized that it was going to be very difficult to maintain our independence with this key person gone, although we were going to give it the best try possible.
Q. Okay. When did you first start into negotiations with Inco?
A. I was in -- after we buried John, in early October, I was in Toronto and I visited with Mike Sopko over lunch, and as I said, John had been a friend of his, and I told Mike, 'You know, Mike, we thought you're wanting to take the whole company, but if there was ever a time when we might consider something like that, it would be now, since John is gone.'
He then said that Inco, in December, advised that after a board meeting it was authorized to "talk to us about a possible deal". He stated that Inco approached DFR in December 1995 and offered a price which they felt was "not something we could defend with our shareholders". This offer was $31 per share, the shares having been split on a one for four basis, amounting to a price of approximately $124 per original share.
 Falconbridge, in mid January 1996, made an offer of $36.50 per DFR share and the DFR board recommended it to its shareholders. The day before the shareholder vote Inco increased its offer to $43.50 per share. Due to a share split this represented $174 for an original share.
 On cross-examination, Mercaldo was asked whether he had had any experience in any kind of mining operation. His reply was:
I had commenced many mining operations ... both as an investment banker and as a commercial banker at the Bank of Montreal. Project Financing reported to me, and I had financed or led financing for several major mining projects around the world, including a $660 million project in Mexico, a copper project, several developments in the uranium fields in Canada, and Bank of Montreal was one of the leading banks in Canada for that sort of financing.
 Mercaldo also said that he had been asked to become President of DFR and was reluctant to do so saying that it was not in the best interests of the company for him to be in that role and have people question whether "we knew what we were doing". He said that Friedland and Boulle said to him:
Ed, you know more about the company than anybody and we have great confidence in your ability and your judgment.
 Mercaldo also, on cross-examination, gave evidence as to his long association with Friedland for whom he had raised capital for various mining companies et cetera.
 Mercaldo also described a visit to Inco's Sudburyoperations saying that they wanted to
show us how big they were, how well run they were, the size of their smokestack, which is, I understand, one of the biggest in North America if not the world.
He then said that Falconbridge, two days later, was demonstrating to them why it would be the partner of first choice for DFR. This was in early May 1995.
 Mercaldo said that DFR made a deal with Inco because it assured it that the mine could be built, providing a substantial amount of cash or near cash for its treasury. He said that with the Teck money and the Inco deal, DFR had about $800 million and control of its own destiny, having market credibility and an abundance of technical expertise.
 On cross-examination also, Mercaldo was asked whether in August, 1995 there was a "very good possibility" that there would be a future sale of all the remaining shares of DFR to one of the suitors. His response was:
No, I would think that absolutely there was not. We had - - John Paterson was on board. We had just hired on the 3rd of August Harvey Keats. We were in negotiation - - John was in negotiations with Mike Young and with Ken ... from Noranda Research ... we were trying to figure out the fastest way we could get this thing into production. We had done our deal with Inco and we were driving towards that. Only when Mr. Paterson died did that change.
 Mercaldo also stated that the Chairman of Teck and the Chief Executive Officer of Cominco4 visited Friedland advising that they would like "to joint venture the project with" DFR and put up all the capital for so doing. He then said that they were told that DFR "can't respond". He then explained the reason for that response was that it did not really know what they were "sitting on yet". He then said that in the fall of 1995 DFR still didn't know the extent of the discovery but that it was "a very large transaction still" and so "we were motivated to discuss" sale of the remaining shares. Mercaldo said:
...after Mr. Paterson died, I did have - - I think, I seem to recall it was a lunch meeting with Mr. Sopko, and I said, 'You know your good friend, my good friend John, you know, has passed away.' I said, 'its really a major blow to us, and if there was ever a time when we'd be in the mood to consider, you know, an alternative to going forward ourselves, this would be it.'
He said that he believed that there were no discussions after "we had done our deal" until that meeting with Sopko after Paterson's death.
 When asked whether he was suggesting that Patersonwas the only person in the world who could spearhead the project, Mercaldo replied:
No sir, I'm not suggesting that. I'm just saying that we thought he had a unique combination of knowledge and skills, and that, in his position, he was with a prominent university that's well known for its expertise in that area, that he would have seen the broadest possible selection of projects and technologies and so forth. He was at the cutting edge of the industry.
When asked, on cross-examination, whether there was any attempt made to find someone else who might be able to spearhead the project prior to entering into negotiations with Inco again in December, he replied in the negative.
 The Appellant's second witness was Jean-Raymond Boulle. Boulle testified that he was born in Mauritiusand had a busy career with De Beers Diamond Company, having become the youngest manager at the age of twenty-three. He left De Beers to start his own company, and moved to the USAin 1980. He established a business of selling diamonds and jewellery and started a business exploring for kimberlites which he described as "another rock of diamonds", and diamonds, in the USA. He then explained the process of diamond formation and described also his quest for the discovery of diamonds in different parts of the world.
 Boulle testified that he visited Vancouverand was referred by geologists to an attorney, Greg Sedun ("Sedun") and that he hired Sedun, asked him to start looking for a company and that Sedun started looking for shells. He found one, namely Rutherford Ventures which he acquired for Boulle. Boulle then explained that a "shell" was a company like Rutherfordwhich has had projects in the past which haven't worked out so that the company was left with virtually no assets but had a distribution of public shareholders. This occurred in 1993. He and Friedland, he stated, owned about 30% of the shares of that company whose name was changed to Diamond Fields Resources.
 Boulle explained that he incorporated the Appellant in the Cayman Islands, his explanation being that he lived in Texas for a time, found it a very litigious society and wanted to protect himself from liability and so bought a "shelf" company, Maria Investments Ltd. in the Cayman Islands to hold his interest in the public company, Rutherford.
 Boulle said that he had never been a resident of Canada but that he filed a tax return in 1994 because he had spent so much time working in Labrador and Vancouver.
 Boulle explained how the discovery of nickel, copper and cobalt was made in Labrador, the activity having been initiated by a search for diamonds.
 He then described the spectacular rise in the market value of DFR's shares and stated that his net worth in May/June of 1995 was around $250,000,000. He said that in spite of the net worth he had no cash but had debt. In response to Appellant's counsel's question as to whether he had been informed of the tax disadvantages of having this held by a Cayman company his answer was "yes". He said that he had "over a million dollars of debt" and that he "wanted to pay that debt off" and that he then wanted to explore and build mines in Africa. He said that it would be logical to have his operations based in Europewhich "is where most very large mining companies are based.", other than Canadian. He also stated that he had been advised that in Europe, the European companies had treaties with Canadathat would reduce the withholding tax on dividends and make the gain on the sale of shares tax free.
 He described a trip made by him and Friedland to visit Inco in Sudbury. He said that they had advised Inco that DFR did not want to sell more than 25% of the ore body. He then testified that Inco wrote to DFR stating that it wanted to buy 25% of
Voisey's Bay nickel and join the ore body and then another two million shares to bring them up to a third. We had to get ... there was a reason why the company itself didn't want to do it and I don't remember what it was. So we had to get volunteers amongst our shareholders. The big shareholders were Friedland, myself and Paul Stephens with his two funds. Friedland didn't want to do it and Paul Stephens opted to sell a number of shares and whatever he didn't sell I filled in.
When asked why Stephens' funds sold 1,297,000 shares and the Appellant sold 703,000 shares, those being odd numbers, he replied:
I believe that they came back and said what they would do and then I filled in the rest.
When asked the purpose of him selling he said that he wanted to
get some cash to pay back my debt, ... and in addition I wanted to start a new company to go back into Africa, which I did.
 In response to Appellant's counsel's query as to whether he was advised that he should continue the corporation somewhere in Europe he responded in the affirmative. The following exchange then took place.
Q. ... Did you know at the time you agreed to sell the shares that Luxembourg had a ten percent threshold in the Canada-Luxembourg Treaty?
A. No sir, I did not. Inco offered to buy the shares and I agreed to it and I called my advisors and the -- and I said, 'I'm selling those shares. Is that a problem?' And they said 'No it's not a problem.'
He said that at the time he sold he "didn't even know what the percentage was" and that he was "just happy to sell some shares."
This exchange followed:
Q. Was the deal -- when you sold your shares to Inco, did you take back cash or shares from Inco?
A. I took shares. In fact, the whole transaction with me and Paul Stephens was supposed to be in shares. At the very last minute, I remember it was 3:00 in the morning, he called and said he wanted cash, and so I had to call Mike Sopko and I said to him, 'It's a deal breaker. The whole deal is falling apart. Paul Stephens wants cash and he won't back off so you've got to do something.' So he called, improvised a board meeting at 3:00 in the morning, and they agreed to pay Paul cash. And obviously I couldn't make a demand like that and didn't.
Q. Okay. Did you know that the shares you got, or that when you swapped shares for shares, that it would be tax free, it would be a tax free roll-over for Canadian purposes?
A. I believed so but -- I believed so. ... I believe the answer is yes because I got some advice on it, so.
Boulle also said that he believed that the sale of the Inco shares that he had received was after the company was continued in Luxembourg. He stated further that he claimed the exemption of the Canada-Luxembourg tax convention.
 Boulle then, in response to counsel's query stated that MIL paid a special dividend, big two promissory notes, to him prior to the continuation in Luxembourg. He said that one promissory note was for about 15% and that it was contributed "back to the company". He also testified, as is contained in the Agreed Statement of Facts that five holding companies were established. He said that the purpose was to be able to liquidate those companies, "thereby getting the cash out without paying withholding tax in Luxembourg."
 In response to a question as to the Appellant's activities since being continued in Luxembourg, Boulle replied:
The company in Luxembourg have got about 2500 square feet. We have four employees and a number of consultants and it's very much the administrative mother company, and we have done a tremendous amount of projects, everything from starting a titanium mine in Sierra Leone to starting a Bauxite aluminum mine in Sierra Leone. Both of these mines, in fact now account for 75 percent of the export revenue of the country, helping the country get back on its feet. ... And we've done projects in the Congo. It used to be Zaire. It's now the Congo. We've done projects in Norway and Lofton Islands. We've done projects in Zambia, next door to the Congo, and I can go on quite a long time, but basically the way it works is that we will initiate projects either with governments or by buying assets. That goes through to MIL. Someone will call with a project in Zambia to Audrey at MIL. We then -- she screens the person, I talk to them, then we start looking into it. And once we've made a decision to go for it, then we will negotiate an agreement and subsequently we will put in a standalone company, the idea of having a standalone company being able to do joint ventures or whatever we want to do, or taking it public, for instance.
So, MIL is very much at the heart of everything that we do. We coordinate everything through MIL in Luxembourg. If somebody has malaria on the border of Liberia, as we had last week, they don't call one of the companies, one of the sub-companies, they directly call Audrey at MIL or Natalie and say, 'We've got a problem, we have somebody with malaria, we've got to get him out of here. Audrey, get us a helicopter.' And she'll organize a helicopter.
And if we are working on a deal, all documents go to MIL Luxembourg. All the documents, all the companies of all the deals we've ever done, lots and lots of them, are all resident in Luxembourg at MIL. ... So, it's very much the mother administrative company which is in the forefront of everything we do.
Boulle then testified that a gentleman named Armand van Dorb ("Dorb") employed by MIL and being a qualified accountant, does the accounting for all the companies. He said that Audrey Richardson ("Richardson") does everything, being the backbone of the organization, coordinating all travel, taking care of all documents non stop. He said that Edmond Van De Kelft ("Kelft"), from Belgiumworked with him, Boulle, at De Beers for a number of years. Boulle said that Kelft goes to the office two or three times a week and attends meeting "in Luxemboug with us". He stated that they generally have regular board meetings and have done so since the beginning. He said:
What we'll do is we'll go to Luxembourg, spend two or three days there and what other business we have, if we have somebody from Zimbabwe wants to come and talk to us, or from Congo or wherever, we bring everybody in. So we have all our meetings in Luxembourg and try to -- in those three days have as many meetings as -- as many projects as possible.
 On cross-examination, Boulle said that DFR has subsidiaries with offices in Namibia and in Cape Town, South Africa.
The following exchange took place:
Q. I would also suggest to you, Mr. Boulle, that it was DFR's negotiation position that Inco would buy the 703,000 shares belonging to yourself and to your company, that that was initiated by DFR not Inco.
A. I believe that Inco wanted to buy the 2 million shares in addition to the 25 percent, which is what they did.
Q. Okay, but what I've asked you is that that was -- that it was DFR's initiation. It was their negotiation position that Inco would buy the 703,000 shares from you, and not the other way around.
A. I don't believe that at all. I think I would have -- in my own mind I don't think it would have been right for me to try and sell my shares at the same time the deal was being done with the corporation. I would have been conflicted. And as I said earlier, we did it to help out. We asked the main shareholders, 'Who can help out?' Stephens came up with those shares that they wanted to let go, and it suited me and I put my hand up. But most other shareholders didn't want to sell because -- because Mr. Friedland, for instance, they felt that once the Inco deal was done the share price would go up not down.
 In response to Respondent's counsel's question Boulle said that he wanted to pay off his credit line debt of about $1,000,000 and wanted to get back into "doing mining deals in Africa." When asked if the credit line wasn't the main purpose for the sale, Boulle responded:
It was part of it, yes. I mean, I had no other, you know, I had no other income other than, you know, my whole well-being, if you want to call it fortune, was tied up in these shares.
 With respect to the disposition by Boulle of 703,000 shares, on cross- examination, this exchange respecting the sale of shares by Stephens took place:
Q. And eventually, he was able to get cash for his sale of shares to Inco.
A. That's correct. I've answered that.
Q. And so notwithstanding -- and I would suggest that that same opportunity would have been available to yourself and MIL to get cash.
A. It wasn't.
Q. You would have been aware that if cash was provided that it would have been considered to be a taxable gain. You were aware of that.
A. Yes, I was made aware of that.
Q. And you would have been made aware of that by your tax advisor.
A. Yes, but again I'm saying what I said earlier, that it was bad enough that I had to ask Mr. Sopko to come up with cash for Paul Stephens. I didn't feel that I was in the position to myself make -- blow up the deal even more by me asking him for cash. So it wasn't -- I wouldn't have done that.
Q. I think you --
A. I had some responsibility to the company. ...
Q. I think what you said in your evidence was that you had felt what Mr. Stephens requested itself might have even jeopardized the deal.
A. That's true.
Q. And I would suggest to you that Inco would have been prepared to pay cash all along, and that it was -- Mr. Stephens' request would in no way jeopardize the deal.
A. Well, you're asking me to speculate but I don't -- I think that Mr. Sopko had gone as far as he was going to go, and it's -- you're speculating. Maybe you are right, but I don't know. I don't think so. I think we were at the end of the road.
Q. All right.
A. He certainly didn't offer me any cash.
Q. Well, I would suggest to you that it was your, or DFR's negotiation position that you would be given Inco shares rather than cash, and not the other way around.
A. Inco offered their shares, which is why I had to call Sopko to call a Board of Director's meeting at three o'clock in the morning.
Q. And I would suggest that the reason that you --
A. Three answers back.
Q. And I would suggest the reason that you got - that you made a share for share exchange rather than cash was to avoid paying tax on the resulting gains in tens of millions of dollars.
A. I don't agree with you.
 On further cross-examination Boulle stated that he believed the sale price of shares to Inco was approximately $65,000,000.
 Boulle agreed with counsel's suggestion that MIL pledged some shares as security for the line of credit giving rise to the approximate million dollar debt referred to by him. Boulle also acknowledged that under the appropriate company law provisions he, as a director of MIL, undertook to give twenty days notice of the proposed continuation to Luxembourg, to secured creditors of MIL. That was as of June 25, 1995. This exchange took place:
Q. It would appear that the -- that Cayman Islands law required you to give notice to secured creditors. You had to deal with that secured line somehow, and would it --
A. That's what it says.
Q. Yeah. So it's quite possible that one of the motivating factors for paying off that credit line was because it was part of the process of deregistering in Luxembourg -- or in the Cayman Islands.
A. Yes. I don't think I liked owing First Marathon a million dollars and I wanted to pay them back. But obviously I was given advice in addition to that that I should pay it off. Then I would have taken the advice.
Q. You certainly didn't need to sell $65 million of shares to pay off a $1 million credit line.
A. I've already addressed that, sir. I've already explained that I wanted to start up a company to go back and do African exploration. So, and I said that it was -- pay off a debt and to go back into Africa. Is that what you're asking me?
Q. Well --
A. I'm not sure what the question is.
Q. The $65 million was because of the 703,000 which were -- that that was the value of 703 shares that were sold at the time.
A. That's coreect.
Q. ... Now, just in terms of the Cayman Islands, you had mentioned as well a family trust. I think it was the Jean Boulle family trust that was based in the Cayman Islands?
A. That's correct.
Q. And I think that what you had said yesterday, that it was shortly before the close of the sale to -- or sometime before the close of the sale to Inco, that your advisors were viewing the status of that family trust that was established in Cayman Islands?
A. I think it was just after I hired Thorsteinssons, which perhaps you are going to get later on anyway.
Q. I think in terms of the process, the way it was described yesterday is that the family trust stood above the company because it held the shares in the company.
A. At the time.
 Boulle stated that Thorsteinssons, who had been engaged in April 1995 were attempting to establish the validity of the Family Trust and were also providing a planning memorandum referring to proposed transactions.
This exchange took place:
Q. As a result of continuing into Luxembourg, no tax was paid on the disposition of the Inco shares, or any of the other shares that formed the basis for the second transaction with Inco.
A. I'm not sure, but I'm aware that there was some sort of exemption which helped with the taxes.
 On re-examination by Appellant's counsel, a reference was made to 1997 financial statements. An enclosure to these showed that the following amounts in American dollars were paid out:
salaries $ 64,833
office rent $ 54,259
advisory fees $1,381,975
After this, Boulle explained that:
we have a number of consultants who work for us on these various projects and they're to be paid. ... the specialist consultants in mining, mining engineers and geologists and so on, you know, with the right depth of knowledge, act as one would think.
 On the equivalent July 31, 1998 statements, salaries were shown as $166,000, provision for value adjustment failing security as $120,341, office rent as $34,069, advisory fees as $430,799 and other expenses as $501,791.
 Respondent's counsel, introduced in evidence as exhibits four documents, each being a copy of a Memorandum to File prepared by Appellant's counsel. Two of them were dated May 15, 1995, one was dated June 6, 1995 and the fourth was dated June 22, 1995. Although Appellant's counsel initially claimed solicitor-client privilege with respect to them, he abandoned that position and delivered them to Respondent's counsel.
The first memorandum stated that Boulle had indicated that, under arrangements with Inco, no shareholder was bound to sell shares to Inco. It said that DFR was providing an undertaking to facilitate on "a best-efforts basis" the sale of up to 2 million shares from existing shareholders to Inco.
The second memorandum says that, in respect of third parties wanting to acquire an interest in DFR, it was anticipated that the acquisition would be achieved by a combination of the issue of shares from DFR treasury (to a maximum of 1 million shares) and by the sale of shares by existing shareholders (to a maximum of an additional 2 million shares). It then said that Boulle anticipated that the Appellant would sell between 500,000 and 1,000,000 common shares under that arrangement.
The third memorandum stated that the objective of the re-organization was to afford the Appellant the protection of the Canada-Luxembourg Treaty in respect of its dealings in the shares of DFR. It then set forth a proposal that the Appellant would exchange 703,000 of its DFR shares for Inco shares, bringing the DFR shareholdings of the Appellant and Boulle below 10%. It also stated that the Appellant would be continued in Luxembourg.
The fourth memorandum was a description of the proposed re-organization in some detail.
 Stuart Franklin Feiner ("Feiner"), a witness for the Respondent, is Executive Vice-President, Corporate Affairs for Inco Limited. He testified that in April, 1995 Inco's management team decided that the company was very interested in acquiring as large an interest in the Voisey's Bay deposit as "might be available." He said that when this was communicated to Friedland, Friedland indicated that DFR was only interested in selling a minority interest in the deposit. He stated that Inco purchased 25% of the shares of Voisey's Bay and 2 million shares of DFR from DFR shareholders. He said that his recollection with respect to that share purchase was that Friedland indicated to Inco that he believed that there were some shareholders of DFR who were interested in obtaining some liquidity for a portion of their DFR holdings. He said that, from Inco's standpoint, the acquisition of Voisey's Bay shares and those DFR shares were not contingent on each other.
 Feiner was examined respecting the 2 million shares and respecting the 703,000 shares sold by the Appellant and the balance of the 2 million shares. The following exchange took place:
Q. Now, that's rather an odd number. Do you know how that number was arrived at?
A. No, I do not.
Q. The other shares, the 1,297,000, came from the Robertson Stephens funds in San Francisco. You remember that?
A. Do not remember how that number was arrived at.
Q. So presumably then, if Diamond Fields shareholders had tabled 3 million shares, Inco would have purchased them.
A. Directly, yes.
 When asked whether it was correct that Inco purchased shares from Stephens for cash but exchanged Inco's shares for Boulle's shares of DFR he replied that it was correct. The following exchange then took place:
Q. From Inco's perspective, was Inco concerned with whether it would pay cash or shares for either the Stephens fund or the Boulle company's shares?
A. I don't think we were concerned about whether it would be -- the consideration would be cash or shares of Inco Limited.
Q. Do you know why Mr. Boulle's sale was ultimately shares for shares and not shares for cash?
A. My recollection was that that was something that Mr. Boulle had requested.
Q. Do you remember when that aspect of the deal was raised?
A. I don't remember the exact timeframe.
Q. Now, I also understand that originally the Robertson Stephens funds were going to receive shares as well. Is that correct?
A. I don't recall that.
Q. We've heard that sort of at the last minute, Paul Stephens, who managed those funds, informed Inco that he wanted cash instead of shares, and that that led to quite a flurry of activity. Do you recall that?
A. I don't recall that.
Q. Now, after those two transactions in June of 1995, was it Inco's expectation that Voisey's Bay Nickel would proceed with the project and actually build the mine at Voisey's Bay?
A. That was the position taken by Diamond Fields Resources, and we certainly assumed, unless they changed their position, that was their intention.
 Feiner then testified that Inco began commercial production in the fall of 2005, "reaching pretty much full production, around this time." On cross-examination Appellant's counsel referred Feiner to a thirty page Letter Agreement dated June 8, 1995 and executed by Inco Limited and Diamond Fields Resources Inc. which had attached to it, inter alia, a SHAREHOLDERS' AGREEMENT. The following exchange then took place:
Q. ... Is it fair to say, with that agreement, that when that agreement was put together, you had no assurance you would ever be able to get any more of Diamond Fields?
A. That is correct.
Q. And as I read this agreement, this is an agreement that says, 'Starting here, we're going to put an agreement together that will bring this joint venture to fruition, even to the point where it contemplated the payment of dividends from an operating mine.' Is that your understanding --
A. That is correct.
Q. -- of the agreement.
Q. So, if I assume that you, and probably Dale Ponder or whoever else was in from the Inco side, would have to be assured that this is an agreement you could live with if you continued on with 25 percent of the mine, and Diamond Fields had 75 percent of the mine, and you were the developers. In 2006, if you were still in that position as you viewed this in 1995, you were -- this was drafted to be carried on into the future. Is that --
A. That is correct.
Q. Okay. ... my understanding is there was also a standstill agreement, that Inco said 'We will not buy any more shares.' And -- is that correct?
A. That is correct.
 Appellant's counsel then referred to Inco having laid out "about half a billion dollars" and said:
Q. Okay. So, I guess at that point in time, while nothing in this world is sure, you were very comfortable that this was going to be an ongoing mine at that time. Is that --
A. My recollection was, again, this agreement that you're pointing to -- were obviously -- Inco was a minority shareholder in Voisey's Bay Nickel Company Limited and therefore, this agreement was important to Inco in terms of protecting -
A. -- our rights as a minority shareholder in Voisey's Bay Nickel Company Limited. ...
Q. And if all went well, you would like to have bought more and more and more as time went on, but if that didn't happen, this was an agreement you could live with in the future.
A. There was nothing guaranteed that we would be able to acquire any greater interest in the deposit than what we did in June 1995.
APPENDIX B ATTACHED TO AND FORMING PART OF THE REASONS FOR JUDGMENT
BACKGROUND TO THE ARRANGEMENT
Voisey's Bay Discovery
Prior to November 1994, the business of Diamond Fields consisted of the acquisition, exploration and development of diamond properties. In the course of conducting a regional exploration program on behalf of Diamond Fields, Archean Resources Ltd. discovered a major nickel-copper-cobalt deposit near Voisey's Bay in northern Labrador, which was confirmed by drilling in November 1994.
As a result of this discovery, Diamond Fields focused its attention primarily on the exploration of the Voisey's Bay property in late 1994 and early 1995, to determine the nature and extent of the mineralized deposit. As more information became known respecting the size, quality and economic potential of the deposit, market interest in the Common Shares intensified, and public trading prices increased significantly. Based on economic importance of the Voisey's Bay project relative to Diamond Fields' diamond assets, Diamond Fields decided to focus primarily on its new base metal exploration and development business. In this regard, Diamond Fields sought to develop a high level of management expertise in the base metal mining industry and to develop strategic relationships within the industry that would assist in the development of the Voisey's Bay property.
Discussions with Third Parties
Diamond Fields was approached by approximately 18 Canadian and international mining companies with respect to the Voisey's Bay property and, in furtherance of its objective of developing strategic relationships, Diamond Fields entered into serious discussions with nine such companies. Interested parties were provided with access to information and site visits following their agreement to maintain confidentiality, to permit them to evaluate the possibility of entering into an arrangement for participation in the Voisey's Bay project. They also agreed not to acquire any voting securities of Diamond Fields, or to take any steps to influence or attempt to influence the voting of any such securities, or otherwise to seek to control Diamond Fields. These discussions ultimately led to agreements with Teck and Inco, as set forth below.
Implementation of Shareholder Rights Plan
To ensure that all Shareholders would, to the extent possible, be treated equally and fairly in connection with any control transaction relating to the Common Shares, the Board of Directors adopted the Shareholder Rights Plan in December 1994. The adoption of the Shareholder Rights Plan was ratified by the Shareholders in April 1995 and an amendment was approved in September 1995. The Shareholder Rights Plan was designed to discourage discriminatory or unfair take-over offers for Diamond Fields and to give the Board of Directors time, if appropriate, to pursue alternatives to maximize Shareholder value in the event of an unsolicited take-over bid or other form of offer to acquire voting securities of Diamond Fields.
Agreements with Teck
In April 1995, Teck agreed to invest $108 million in Diamond Fields by subscribing for 12 million Common Shares at $9 per share (after giving effect to the four-for-one subdivision of Common Shares effective September 25, 1995). Teck also agreed to provide technical support, at Diamond Fields' request and at no cost, to assist Diamond Fields with engineering, project design and conceptual planning during the pre-feasibility stage of the Voisey's Bay project.
In connection with Teck's subscription agreement, Teck agreed to certain "standstill" restrictions in respect of acquisitions of additional Common Shares and other securities of Diamond Fields, the voting or attempting to influence the voting thereof, and Teck's right to dispose of Common Shares. Teck also agreed to vote its Common Shares in respect of every resolution of the Shareholders (subject to certain exceptions), in the manner directed by a majority of the Board of Directors who are independent of Teck.
Teck also granted Friedland (and, in certain specified circumstances, Boulle) the right to control the votes of the Common Shares owned by Teck in the event of certain "Extraordinary Transactions" (including the Arrangement), and to determine whether or not Teck would tender its Common Shares in the event of a take-over bid provided that such direction is consistent with action to be taken by Friedland (and, in certain specified circumstances, Boulle) with respect to such events. See "Information Concerning Diamond Fields - Development of the Business of Diamond Fields."
Agreements with Inco
In June 1995, Diamond Fields sold an indirect 25% interest in the Voisey's Bay project to Inco through the sale to Inco of 25% of the shares of Diamond Fields' then wholly-owned subsidiary, VBN. In exchange for this interest, Inco issued Inco Series D Preferred Shares to Diamond Fields. Inco also agreed to contribute an additional $25 million, to be used for continuing exploration expenditures and the preparation of a feasibility study with respect to the Voisey's Bay project, to provide, without charge, certain engineering, mining and other technical services, and to be responsible for arranging project financing. In addition, Diamond Fields and Inco agreed that Inco would market all nickel and cobalt production from Voisey's Bay during the first five years of production and a minimum of 133 million pounds of refined nickel (and associated cobalt) per year for a further 15 years.
Inco also agreed to certain "standstill" restriction in respect of acquisitions of additional Common Shares and other securities of Diamond Fields, the voting or attempting to influence the voting thereof, and Inco's right to dispose of Common Shares.
In separate and concurrent transactions, Inco purchased a total of eight million Common Shares from three existing shareholders of Diamond Fields (including a company controlled by Boulle), representing approximately 7% of the outstanding Common Shares.
Under a separate and concurrent agreement between Friedland and Inco, Inco granted to Friedland (and, in certain specified circumstances, Boulle) the right to direct the voting of Inco's Common Shares in respect of "Extraordinary Transactions" (including the Arrangement) and to determine whether Inco will tender Inco's Common Shares to any take-over bid for Diamond Fields, provided that such direction is consistent with the action to be taken by Friedland (and, in certain specified circumstances, Boulle) with respect to such events. See "Information Concerning Diamond Fields - Development of the Business of Diamond Fields."
Further Discussions with Inco
During the early fall of 1995, informal discussions were held between Inco and Diamond Fields from time to time in connection with a possible acquisition by Inco of a larger interest in Diamond Fields, but formal negotiations were not commenced and no offers were received. Following the sudden and unexpected death in October 1995 of Dr. John Paterson, Diamond Fields' Executive Vice-President Nickel Operations and a key member of Diamond Field's management team, the Board of Directors reviewed Diamond Fields' strategic alternatives, and decided to give more serious consideration to the possibility of a further transaction involving the Voisey's Bay project, including a merger transaction. The Board of Directors determined that Diamond Fields would continue to develop the project under its current ownership, but that it would entertain any offers as they arose in order to maximize shareholder value.
On December 12, 1995, Diamond Fields and Inco commenced a series of meetings to explore the possibility of a transaction between the two companies. Several proposals were exchanged, but the parties were unable to agree on the key elements of a transaction and no offer was made by either party. No further discussions were held between Diamond Fields and Inco subsequent to the announcement of the Falconbridge Arrangement and prior to March 26, 1996.
Discussions and Agreements with Falconbridge
On January 13, 1996, Friedland, in his capacity as Co-Chairman of Diamond Fields, received an unsolicited enquiry from financial advisors representing Falconbridge as to the possibility of pursuing a combination of the two companies. Diamond Fields retained Nesbitt Burns and First Boston to act as its financial advisors in connection with any proposed sale or merger, and such advisors proceeded with a preliminary analysis of the feasibility and acceptable terms of any proposed Diamond Fields/Falconbridge transaction. Between January 13 and February 9, 1996, frequent and extensive meetings took place between Diamond Fields, Falconbridge and their respective legal and financial advisors (from the date of their respective engagement), during which all aspects of the proposed transaction were thoroughly negotiated. Diamond Fields senior management and advisors kept members of the Board of Directors apprised of developments during this period.
On February 8 and 9, 1996, the Board of Directors met to review the terms of the proposed Falconbridge transaction. Under the merger proposal from Falconbridge, upon completion thereof, Falconbridge would acquire all of the shares of Diamond Fields, thereby acquiring indirect ownership of 75% of the Voisey's Bay property. The Falconbridge Arrangement Agreement provided that each Common Share would be acquired for one Falconbridge class A subordinate voting share (or $31.25 in cash subject to a maximum aggregate cash payment, determined by formula, of approximately 15% of the value of the aggregate consideration paid), one Falconbridge class B subordinate voting share and one diamond note of Falconbridge which would immediately be paid with one Diamondco Share. Each class A subordinate voting share was convertible into one Falconbridge common share after the fifth anniversary of issuance. Each class B subordinate voting share was convertible on the same day into a minimum of .15 and a maximum of .30 Falconbridge common shares, the conversion rate being based on the results of exploration on the Voisey's Bay project outside a defined area of exclusion. On February 9, 1996, Nesbitt Burns provided the Board of Directors with its oral opinion that, as of such date, the merger proposal from Falconbridge was fair from a financial point of view to Shareholders. On the same day, First Boston provided the Board of Directors with its oral opinion that, as of such date, the consideration to be received by Shareholders pursuant to the merger proposal from Falconbridge was fair to such Shareholders from a financial point of view. Based on the oral opinions provided by Diamond Fields' financial advisors and pre-announcement share prices, the Board of Directors concluded that the Falconbridge merger proposal valued Diamond Fields at approximately $4 billion. The Board of Directors also concluded that under the Falconbridge merger proposal the value offered for the Common Shares was substantially in excess of the value that had been discussed with Inco.
Friedland, Boulle and Mercaldo advised the Board of Directors that they had agreed to support the transaction and to various limitations on voting and disposition of the Falconbridge shares to be received by them and acquisition of additional shares. Having declared their interest, Friedland, Boulle and Mercaldo refrained from voting on the transaction.
The Board of Directors then unanimously accepted the Falconbridge merger proposal and approved the execution, delivery and performance of an agreement (the "Merger Offer Delivery Agreement") between Diamond Fields and Falconbridge which contemplated the Falconbridge Arrangement.
Diamond Fields paid Falconbridge a fee (the "Falconbridge Commitment Fee") of approximately $28 million upon execution of the Merger Offer Delivery Agreement. Diamond Fields also agreed to pay to Falconbridge an additional fee (the "Falconbridge Termination Fee") of approximately $73 million in the event that a party other than Falconbridge announces, commences or makes a competing offer or proposes an alternative company transaction for Diamond Fields within six months of the date of the Falconbridge Arrangement Agreement, which transaction is completed thereafter. The amounts and the circumstances of payment of the Falconbridge Commitment Fee and the Falconbridge Termination Fee were extensively negotiated between the parties, and Diamond Fields believes that Falconbridge would not have entered into the Falconbridge Arrangement Agreement with Diamond Fields' agreement to pay such fees.
Under its existing agreement with Inco, Diamond Fields agreed to provide Inco with reasonable notice of transactions such as that contemplated by the Falconbridge Arrangement Agreement and an opportunity to make an alternative offer prior to Diamond Fields entering into definitive agreements in respect thereof. Accordingly, the Merger Offer Delivery Agreement contemplated a process (which was, in all respects, thoroughly negotiated between Falconbridge and Diamond Fields) pursuant to which Diamond Fields could satisfy these obligations to Inco. On February 9, 1996, Inco was provided until 6:00 p.m. on February 14, 1996 to deliver to Diamond Fields an alternative offer. On February 14, 1996, Inco issued a press release confirming that Inco would not be delivering an alternative offer by 6:00 p.m. on February 14, 1996, but reserving its rights to make a competing offer for the Common Shares or assets of Diamond Fields at any time in the future. Consequently, in accordance with the terms of the Merger Offer Delivery Agreement, on February 15, 1996, Diamond Fields and Falconbridge executed the Falconbridge Arrangement Agreement, effective as of February 9, 1996. The Board of Directors' approval of the Falconbridge Arrangement Agreement was subject to the satisfaction of all necessary conditions, including the approval of the shareholders of Diamond Fields and Falconbridge, the approval of the Court, regulatory approvals, and confirmation of financial advisors' fairness opinions.
In accordance with the terms of the Falconbridge Arrangement Agreement, on February 16, 1996, the Board of Directors resolved to waive the application of the Shareholder Rights Plan with respect to Falconbridge and the transactions contemplated by the Falconbridge Arrangement Agreement.
Under the terms of the Falconbridge Arrangement Agreement, Diamond Fields agreed not to solicit competing bids or other proposals. The Board of Directors did, however, maintain the right to respond to unsolicited bids or proposals and complete alternative transactions which it determined to be in the best interests of Shareholders.
In separate agreements entered into with Falconbridge, Friedland and Boulle (who were represented by legal counsel independent of Diamond Fields and Falconbridge), each agreed to support the Falconbridge Arrangement. Falconbridge, Noranda Inc. (the major shareholder of Falconbridge), Friedland, Boulle and Mercaldo also agreed to various limitations on voting and disposition of the Falconbridge shares to be received by them under the terms of the Falconbridge Arrangement. Friedland, Boulle and Mercaldo also agreed to certain limitations on the acquisition of additional Falconbridge shares by them. In addition, Noranda Inc. agreed to vote its Falconbridge common shares in favour of the special resolution and to take such other actions as Falconbridge required to be taken by Noranda Inc. in favour of the Falconbridge Arrangement.
Friedland and Boulle retained the right to withdraw their support of the Falconbridge Arrangement in the event that the Falconbridge Arrangement Agreement was terminated in accordance with its terms, including where the Board of Directors in the exercise of its fiduciary duties determined to recommend a competing transaction.
Subject to his right to withdraw his support of the Falconbridge Arrangement, Friedland agreed with Falconbridge to cause Teck and Inco, in accordance with Friedland's rights in respect therof, to vote all of their Common Shares in favour of the Falconbridge Arrangement.
Following execution of the Falconbridge Arrangement Agreement, Falconbridge and Diamond Fields conducted a series of information meetings for investors in connection with the Falconbridge Arrangement. In accordance with Diamond Fields' agreement with Falconbridge, no competing bids or other proposals were solicited, and Diamond Fields conducted no further discussions with Inco.
Proposed Inco-Falconbridge Transaction
On March 1, 1996, Mercaldo was contacted by Franklin G.T. Pickard, the Chief Executive Officer of Falconbridge, who advised Mercaldo of a proposed transaction between Falconbridge and Inco (the "Proposed Transaction") pursuant to which, on the day following the effective date of the Falconbridge Arrangement, there would be significant amendments to the Product Purchase Agreement and shareholders agreement with Inco, Diamond Fields and VBN that were stated to be intended to take into account the changed business circumstances at VBN that would result from Falconbridge inheriting the existing agreements, and Inco would acquire from Falconbridge an additional 25% of the shares of VBN. The purchase price for the additional 25% interest was to be determined by a formula which Diamond Fields was advised would have aggregated $944 million in cash plus one-third of all of Falconbridge's costs relating to the Falconbridge class B subordinate voting shares. Diamond Fields understands that the formula price would have been a "pass through" of one-third of Falconbridge's effective indirect acquisition cost, pursuant to the Falconbridge Arrangement, of the 75% equity interest in the VBN owned by Diamond Fields. In accordance with existing obligations, the Inco Series D Preferred Shares held by Diamond Fields would be converted into Inco Common Shares and be sold.
On March 4, 1996, Falconbridge forwarded to Diamond Fields a series of draft agreements that set out the Proposed Transaction and explained to Diamond Fields that any arrangements for restructuring the Voisey's Bay relationship would be contingent upon a favourable reaction from Diamond Fields.
The Board of Directors met with Diamond Fields' advisors to consider the Proposed Transaction on March 4, 1996. Based on the discussion with Diamond Fields' financial advisors, and after careful consideration, the Board of Directors concluded that the Proposed Transaction would represent a material change from the original terms of the merger proposal from Falconbridge, and was not in the best interests of Diamond Fields and its Shareholders and therefore determined not to consent to the Proposed Transaction. The determination of the Board of Directors was forthwith communicated to Mr. Pickard, on behalf of Falconbridge, by Friedland and Mercaldo.
On March 5, 1996, Falconbridge advised Mercaldo orally and then confirmed to Diamond Fields in writing that Falconbridge had advised Inco that Falconbridge had terminated discussions with Inco with respect to the Proposed Transaction, and that such discussions would not be resumed.
On March 26, 1996, Friedland, in his capacity as Co-Chairman of Diamond Fields, was contacted by Dr. Michael D. Sopko, the Chairman and Chief Executive Officer of Inco, who advised Friedland that Inco was contemporaneously announcing an offer to acquire all of the Common Shares which Inco does not currently own pursuant to a plan of arrangement. Inco's formal offer was received by Diamond Fields on March 27, 1996, and a copy was delivered by Diamond Fields to Falconbridge and its legal and financial advisors, to enable Diamond Fields to comply with its obligations in that regard under the Falconbridge Arrangement Agreement. Between March 27 and April 2, 1996, the Inco offer was carefully reviewed by Diamond Fields and its advisors and a series of meetings took place between Diamond Fields, Inco and their respective legal and financial advisors during which the terms of Inco's offer were thoroughly negotiated. In addition, Diamond Fields and its advisors conducted a series of meetings with Falconbridge and its advisors to discuss the Inco offer and the possibility of a revised Falconbridge offer. Diamond Fields' senior management and advisors kept members of the Board of Directors apprised of developments during this period, and meetings of the Board to discuss the Inco offer were held on April 1 and 2, 1996.
Revised Falconbridge Offer
On April 2, 1996 Mercaldo was contacted by a representative of CIBC Wood Gundy Securities Inc., financial advisors to Falconbridge, who advised him that Falconbridge had publicly announced a revised offer (the "Revised Falconbridge Offer"). A copy of Falconbridge's press release and a letter formally setting forth the terms and conditions of the Revised Falconbridge Offer were then delivered to Diamond Fields.
In the Revised Falconbridge Offer, Falconbridge offered to amend the Falconbridge Arrangement Agreement to provide for a cash payment of $620 million (representing $5.50 per Common Share), $1.241 billion in 6.5% five year retractable preferred voting shares of Falconbridge (representing $11 per Common Share), $2.368 billion of Falconbridge subordinated voting shares (representing 0.75 Falconbridge shares per Common Share) and one diamond note to be repaid by one Diamondco Share per Common Share, for an aggregate consideration valued by Falconbridge of $38 per Common Share. The offer permitted Shareholders to select a combination of consideration subject to the above total amounts.
The Revised Falconbridge Offer was conditional upon acceptance by Inco, and approval by Diamond Fields, of a contemporaneous offer by Falconbridge to Inco to restructure the ownership, governance and operations of VBN on substantially similar terms as those contained in the draft agreements between Inco and Falconbridge considered by the Board of Directors of Diamond Fields on March 4, 1996 and described above under "Proposed Inco - Falconbridge Transaction". Under the Revised Falconbridge Offer, Falconbridge proposed that Inco would acquire a further 25% direct interest in VBN from Falconbridge at an acquisition price to Inco based on Falconbridge's acquisition cost. Falconbridge and Inco would then each own 50% of the shares of VBN.
Pursuant to the Revised Falconbridge Offer, the restructuring of the ownership, governance and operations of VBN, which would have taken effect upon completion of the Revised Falconbridge Offer, would have involved replacing Inco's current right to all production from the Voisey's Bay project for the first five years with an equal offtake arrangement whereby each of Inco and Falconbridge would have the right and the obligation to purchase 50% of the annual production from the project. The restructuring proposal also provided for changes to the governance of VBN consistent with the 50/50 ownership interests of Inco and Falconbridge.
The revised Falconbridge Offer was open for acceptance by Diamond Fields and Inco until April 10, 1996, until which time the existing Falconbridge Arrangement Agreement remained in full force and effect. Falconbridge stated that it intended to proceed with its annual and special meetings on April 12, 1996. The Revised Falconbridge Offer also provided that Inco and Falconbridge would, until completion of the transactions, remain free to bid or propose alternative arrangements to Diamond Fields.
The Board of Directors met with Diamond Fields' advisors on April 2, 1996 to consider the Revised Falconbridge Offer. The Board fully discussed the Revised Falconbridge Offer, and carefully considered the advice of its legal counsel and financial advisors. Based on the discussion with Diamond Fields' financial advisors, the Board concluded that the value being offered for the Common Shares by Inco was in excess of the value being offered by the Revised Falconbridge Offer in its revised proposal, and that the Revised Falconbridge Offer, which would result in Falconbridge and Inco each owning 50% of the common shares of VBN, represented a material change from the original terms of the Falconbridge Arrangement Agreement, and not merely an increase in the consideration being offered for the Common Shares. The Board concluded that the Revised Falconbridge Offer was not in the best interests of Diamond Fields and its Shareholders and therefore resolved to reject the Revised Falconbridge Offer.
Agreement with Inco
Following completion of the meeting of the Board of Directors on April 2, 1996, Diamond Fields' senior management and advisors met with Inco's senior management and advisors to complete negotiations and settle definitive documentation for consideration by the companies' board of directors. As a result of these negotiations which began on April 1, 1996, certain refinements were made to the offer made by Inco on March 26, 1996. The Inco Class VBN Shares were provided with a minimum dividend of 80% of the regular cash dividends paid on the Inco Common Shares in any year for the first ten years from the Effective Date, whereas no minimum dividend had been initially offered by Inco. The time at which the Inco Class VBN Shares could be converted by Inco into Inco Common Shares was extended from the fifth to the tenth anniversary of the Effective Date. Holders of Inco Class VBN Shares became entitled to require the conversion of the shares into Inco Common Shares if Inco sells more than 24% of the shares of VBN (a reduction from 50%). The dividend policy of Inco's Board of Directors respecting the Inco Class VBN Shares was amended to include participation in Diamond Fields' existing properties in Greenland and Norway and those parts of Labrador outside the Voisey's Bay project. Inco committed to spend a minimum of $80 million in exploration expenses (including development drilling) in Labrador, and on existing Diamond Fields properties in Greenland and Norway over five years in order to maximize the potential of these assets, a commitment which had not been initially offered by Inco. Holders of the Inco Class VBN Shares also became entitled, as a class, to elect two Directors of Inco. Holders of the Inco Series E Preferred Shares became entitled to one vote per share, whereas only one-tenth of a vote had been initially offered.
On April 3, 1996, the Board of Directors met to review the terms of the proposed Inco transaction.
Under the proposal from Inco, Inco would acquire Diamond Fields' 75% ownership of VBN, thereby becoming 100% owner of the Voisey's Bay project. The transaction would enable Shareholders to continue their participation in the benefits of 75% ownership of the Voisey's Bay project as Inco Common Shareholders, and moreover would enable Shareholders to receive Inco Class VBN Shares which are intended to reflect a 25% financial interest in the Voisey's Bay project. At the April 3, 1996 meeting, Nesbitt Burns provided the Board of Directors with its oral opinion that, as of such date, the proposal from Inco was fair from a financial point of view to Shareholders other than Inco. At the same meeting, First Boston also provided the Board with its oral opinion that, as of such date, the consideration to be received by Shareholders pursuant to the proposal from Inco was fair to such Shareholders, other than Inco, from a financial point of view. Based on the oral opinions provided by Diamond Fields' financial advisors and pre-announcement share prices, the Board of Directors concluded that the Inco proposal valued Diamond Fields at approximately $4.3 billion for the shares of Diamond Fields not already owned by Inco (valuing 100% of Diamond Fields at approximately $4.6 billion). The Board also concluded that under the Inco proposal the value offered for the Common Shares was substantially in excess of the value that had been previously agreed with Falconbridge and the value offered under the Revised Falconbridge Offer.
Friedland, Boulle and Mercaldo declared their interest, as a result of their agreements relating to the Falconbridge Arrangement, and refrained from voting on the transaction.
The Board of Directors then unanimously accepted the Inco proposal and approved the execution, delivery and performance of the Arrangement Agreement. The Board also withdrew its recommendation of the plan of arrangement contemplated by the Falconbridge Arrangement Agreement. See "Recommendation of the Board of Directors."
Under the terms of the Arrangement Agreement, Diamond Fields agreed to pay Inco a fee (the "Termination Fee") of $115 million, plus reimbursement (to a maximum of $15 million) for actual documented expenses incurred by Inco in the event that a party other than Inco acquires control of Diamond Fields or takes up shares of Diamond Fields pursuant to a take-over bid made within five months of the date of the Arrangement Agreement for less than all of the shares of Diamond Fields. The amounts and the circumstances of payment of the Termination Fee were extensively negotiated between the parties, and Diamond Fields believes that Inco would not have entered into the Arrangement Agreement without Diamond Fields' agreement to pay such fee. Payment of the Termination Fee in the event that Common Shares are taken up under a partial bid is intended to address Inco's concern that, given the 75% shareholder approval requirement for the Arrangement Resolution, a successful partial bid for the Common Shares could make this condition of the Arrangement impossible to satisfy. In considering the Termination Fee, the Board also noted that the aggregate amount thereof was not sufficiently large in the context of the overall value of the Inco proposal to provide, in the opinion of the Board and its advisors, a meaningful deterrent to a bona fide Competing Offer or Alternative Company Transaction, and the amount potentially payable to Inco was a comparatively small fraction of the increase in overall value to Shareholders represented by the Inco proposal relative to the Falconbridge Arrangement or the value offered under the Revised Falconbridge Offer. See "The Arrangement Agreement - Non-Completion."
The Board of Directors' approval of the Arrangement Agreement was subject to the satisfaction of all necessary conditions, including the approval of the shareholders of Diamond Fields and Inco, the approval of the Court, regulatory approvals, and confirmation of financial advisors' fairness opinions. See "The Arrangement Agreement - Conditions."
Under the terms of the Arrangement Agreement, Diamond Fields agreed not to solicit competing bids or other proposals. The Board does, however, have the right to respond to unsolicited bids or proposals and complete alternative transactions which it determines to be in the best interests of Shareholders. See "The Arrangement Agreement - Covenants" and "The Arrangement Agreement - Fiduciary Duties."
Following the approval of their respective board of directors, Inco and Diamond Fields executed the Arrangement Agreement, effective as of April 3, 1996.
In accordance with the terms of the Arrangement Agreement, on April 3, 1996 the Board of Directors resolved to extend the time for separation of the rights prescribed by the Shareholder Rights Plan resulting from the announcement of the offer by Inco to enter into the transaction contemplated by the Arrangement Agreement to May 31, 1996 or such other date as the Board may determine. On April 17, 1996, the Board further resolved to waive the application of the Shareholder Rights Plan with respect to Inco and the transactions contemplated by the Arrangement Agreement. See "The Arrangement Agreement - Covenants."
Under the Falconbridge Arrangement Agreement, Diamond Fields had agreed to notify Falconbridge in the event that Diamond Fields approved, acting in good faith, an "Alternative Company Transaction," as defined in and for the purposes of the Falconbridge Arrangement Agreement, and to deliver to Falconbridge a copy of the definitive agreement providing for such Alternative Company Transaction. Falconbridge then had the right to deliver to Diamond Fields an amended plan of arrangement increasing the consideration payable by Falconbridge to Shareholders pursuant to the Falconbridge Arrangement Agreement. Notice of the Arrangement Agreement was delivered by Diamond Fields to Falconbridge on April 3, 1996. On April 9, 1996, Falconbridge gave notice to Diamond Fields that it did not intend to deliver an amended plan of arrangement. Pursuant to an amendment to the Falconbridge Arrangement Agreement, executed on April 9, 1996, Diamond Fields and Falconbridge agreed to the termination of the Falconbridge Arrangement Agreement. As a result of such termination, Falconbridge was entitled to retain the Falconbridge Commitment Fee, and will be entitled to receive the Falconbridge Termination Fee if a competing offer for, or business combination involving, Diamond Fields (including the Arrangement) is announced before August 31, 1996 and thereafter completed.
On April 11, 1996 the Board of Directors met to consider, among other things, the two nominees it should designate to be the initial class directors of the Inco Class VBN Shares on Inco's Board of Directors. The Board of Directors resolved to designate Friedland, or his nominee, and Boulle, or his nominee, as such initial representatives. Friedland indicated to the Board of Directors that it was his intention, for personal and business reasons, to designate Mercaldo as his nominee. Diamond Fields subsequently advised Inco that Mercaldo and Boulle should be designated as the initial class directors of the Inco Class VBN Shares on Inco's Board of Directors.
As a result of the negotiations in respect of the Inco Offer, Inco received the right to terminate the Arrangement Agreement if Friedland and Boulle had not entered into agreements with Inco prior to 9:00 a.m. (Toronto time) on April 15, 1996 irrevocably committing them to support the Arrangement. As a result of the termination of the Falconbridge Arrangement Agreement, their agreements to support the Falconbridge Arrangement lapsed, and Friedland and Boulle (who were represented by legal counsel independent of Diamond Fields and Inco) entered into separate agreements with Inco prior to 9:00 a.m. on April 15, 1996 pursuant to which they each agreed to irrevocably support the Arrangement. Friedland also agreed to cause Teck, in accordance with Friedland's rights in respect thereof, to vote all of its Common Shares in favour of the Arrangement. See "Support Agreements".
Friedland, Boulle and Mercaldo have advised the Board of Directors that they do not have any present intention to make the cash election described below under "The Arrangement - Cash Election."
All of the directors and officers of Diamond Fields have indicated their intention to vote or cause to be voted all Common Shares which they own or over which they exercise control or direction in favour of the Arrangement.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors has unanimously determined (Friedland, Boulle and Mercaldo declaring their interest arising from agreements to support the Falconbridge Arrangement and refraining from voting theron) that the consideration to be exchanged by Inco for Common Shares under the Arrangement is fair to Shareholders, that the acquisition by Inco under the Arrangement of all of the Common Shares other than those held by Inco is in the best interests of Diamond Fields and its Shareholders, that the Arrangement is fair to Shareholders and that the recommendation of the Falconbridge Arrangement by the Board of Directors be withdrawn. The Board of Directors unanimously recommends that Shareholders vote in favour of the Arrangement Resolution at the Meeting.
In reaching its determination to recommend approval of the Arrangement, the Board of Directors consulted with Diamond Fields' management, as well as its legal counsel and its financial advisors and considered the following factors:
(a) the consideration offered by Inco valued 100% of Diamond Fields at approximately $4.6 billion, or approximately $41.00 per share based on the closing price of an Inco Common Share on the TSE on April 2, 1996, which represents a premium of approximately 27% over the trading price of the Common Shares on the TSE on February 8, 1996, the day prior to the public announcement of the Falconbridge Arrangement, a premium of approximately $5.00 per share (14%) over the stated value of the consideration per Common Share under the Falconbridge Arrangement, and a premium of approximately $3.00 per share (8%) over the stated value of the consideration per Common Share under the Falconbridge Revised Offer;
(b) the Arrangement offers Shareholders the opportunity (i) to hold an interest in a company which on the Effective Date will hold 100% of the Voisey's Bay project, (ii) to obtain a security intended to reflect a 25% interest in the financial performance of the Voisey's Bay project, all future discoveries in Labrador and Diamond Fields' existing exploration properties in Norway and Greenland through the Inco Class VBN Shares; and (iii) to maintain an interest in Diamond Fields' Diamond Assets;
(c) the form of the consideration offered by Inco will enable most Shareholders who so desire to effect the transaction on a tax deferred basis;
(d) the ability of those Shareholders who so desire to receive a portion of the consideration (subject to a maximum of $350 million) in cash;
(e) the nature and scope of the present business of Inco and the quality and breadth of its assets, its financial condition, management, competitive position and prospects and the ability of Shareholders to participate in these assets through an equity interest in Inco in the form of the Inco Common Shares, Inco Class VBN Shares and Inco Series E Preferred Shares;
(f) the oral opinion of Nesbitt Burns given on April 3, 1996 that, as of such date, the Arrangement is fair from a financial point of view to the Shareholders other than Inco and the further oral opinion of First Boston given on April 3, 1996 that, as of such date, the consideration to be received by Shareholders under the Arrangement is fair to such Shareholders, other than Inco, from a financial point of view, which oral opinions were subsequently confirmed by delivery of written opinions dated April 17, 1996, which written opinions are attached to this Circular as Exhibits E and F;
(g) the Arrangement Agreement does not prohibit or restrict the Board of Directors from supporting or facilitating any Competing Offer or Alternative Company Transaction in the fulfillment of its fiduciary duties; and
(h) the determination by the Board of Directors that, while interested parties would not be precluded from subsequently proposing a more favourable transaction, the Arrangement was the best alternative among the opportunities then available to Diamond Fields and its Shareholders.
In view of the variety of factors considered in connection with its valuation of the Arrangement, the Board of Directors did not quantify or otherwise attempt to assign relative weights to the specific factors considered in reaching its determination.
This further Amended Judgment and Amended Reasons for Judgment are issued in substitution for the Amended Judgment and Amended Reasons for Judgment issued the 5th day of September, 2006.
Signed at Ottawa, Canada, this 27th day of September, 2006.
FILE NO.: 2004-3354(IT)G
STYLE OF CAUSE: MIL (INVESTMENTS) S.A. AND HER MAJESTY THE QUEEN
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: July 17-20, 2006
FOR JUDGMENT BY: The Honourable Justice R.D. Bell
DATE OF AMENDED JUDGMENT: September27th, 2006
Counsel for the Appellant:
Warren J. A. Mitchell, Q.C.
Counsel for the Respondent:
COUNSEL OF RECORD:
For the Appellant:
Name: Warren J. A. Mitchell, Q.C.
For the Respondent: John H. Sims, Q.C.
Deputy Attorney General of Canada
 Mercaldo, who joined DFR on February 13, 1995, an experienced investment banker and was the Executive Vice President and Chief Financial Officer and Director of DFR.
 On September 25, 1995 the common shares of DFR had been split on a 4 for 1 basis.
44 Budget Implementation Act, 2004, No. 2, S.C. 2005, c.19 at s.52 and s.60
 The majority of those shares were held by the Appellant.
 Section 85.1, under which this "roll-over" was effected, refers to Inco as the "Purchaser" and to MIL as the "Vendor".
 Respondent's Counsel called Stuart Feiner, Executive Vice-President, Corporate Affairs for Inco Limited in New York in an effort to compromise Boulle's credibility respecting the reason for Boulle choosing to sell his DFR shares for Inco shares in lieu of cash. It is apparent to me that Feiner may well have been unaware of the details of all negotiations which took place between Boulle and Inco. In these circumstances, having no reason to doubt Feiner's credibility, I find that neither Boulle nor Feiner was unbelievable.
 For example, section 87 of the British Columbia Securities Act, [RSBC 1996] CHAPTER 418, respecting insider trading.
 The Appellant introduced in evidence several planning memoranda from its Canadian tax counsel. The planning memoranda are described in greater detail in Appendix A.
 The tax benefit for that series being the treaty exempted sale for approximately $65,000,000 to Inco.
 I accept, without reservation, all of Mercaldo's evidence.
 The appeals in Crown Forestarise from taxation years beginning prior to the passage of section 245.
 The proposed inherent anti-abuse test and reversed scenario are described as follows in Steichen's report:
in view of the fact, that the tax treaty is a contract between two countries the denying of tax treaty benefits on the grounds of treaty abuse should be limited to such situations where both contracting states consider their own domestic anti-abuse provisions to apply...
In order for me to issue that opinion, you have asked me to consider as to whether the benefits of the Tax Treaty could be denied in Luxembourg under the reversed scenario... I considered as the reversed scenario a hypothetical situation where the same CaymanIsland company would have allegedly moved its statutory seat... to Canada in order to avoid the Luxembourg domestic capital gains taxation... pursuant to the provisions of Article 13 of the Tax Treaty.
 Beame v. Canada,  F.C.J. No 237 at paragraph 13.
 The preamble to the Treaty applicable to the taxation year in question stated in its English translation that "The Government of Canada and the Government of the Grand Duchy of Luxembourg desiring to conclude a Convention for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and on capital, have agreed as follows:"
The French translation used, instead of the term "fraud fiscale" which is the proper translation for the English "fiscal evasion", "évasion fiscale" which is the French equivalent of the word avoidance. Arguably the use of the French term "évasion fiscale" imports into the preamble the goal of tax avoidance in addition to tax evasion.
It should be noted that in the new version of the Canada-Luxembourg Treaty, which came into force, on October 17, 2000 addressed this inconsistency by now using the term "fiscal evasion" in the English and the proper translation "fraud fiscale" in the French.
 The Respondent presented Cudd Pressure Control Inc. v. The Queen, 98 DTC 6630 (FCA) to support the notion that subsequent commentary may be relied upon. The referenced page, however, reads as follows:
 The relevant commentaries on the OECD Convention were drafted after the 1942 Convention and therefore their relevance becomes somewhat suspect. In particular, they cannot be used to determine the intent of the drafters of the 1942 Convention.
 Furthermore, Steichen's report stated:
Another corollary is the principle of contemporaneity: the language of the treaty must be interpreted in light of the rules of general international law in force at the time of its conclusion, and also in light of the contemporaneous meaning of terms.
2 The reported ACB of the shares was $456,158 and $28,024 in associated expenses and outlay related to the sale were claimed.
3 The reported ACB of the shares was $1,621,712
4 Teck controlled Cominco.