An individual ("Outerbridge") had a company controlled by him ("Littlefield") sell shares of another corporation ("Harvey") to his son-in-law for a sale price that was less than their fair market value. The difference between the fair market value of the shares of Harvey and their sale price was included in Outerbridge's income pursuant to s. 56(2).
Marceau J.A. found that although "when the doctrine of 'constructive receipt' is not clearly involved, because the taxpayer had no entitlement to the payment being made or the property being transferred, it is fair to infer that subsection 56(2) may receive application only if the benefit conferred is not directly taxable in the hands of the transferee" (p. 6684), in this case it was clear that the son-in-law (who held 0.01% of the shares of Littlefield) entered into the transaction qua son-in-law and not qua shareholder of Littlefield, so that the son-in-law could not have been assessed with respect to the transaction under s. 15(1). Accordingly, s. 15(1) did not override s. 56(2).