Petro-Canada v. The Queen, 2003 DTC 94 (TCC), aff'd supra.

Bowie T.C.J. rejected the evidence of a expert witness on the basis that the witness made frequent reference to both factual material that had been provided to him by consultants and also to matters of judgment as to which he had sought their opinions. Bowie T.C.J. noted that he knew nothing of the qualifications of the consultants, had not had an opportunity to assess their competence and they had not been subject to cross-examination.

In valuing seismic data, Bowie T.C.J. took into account that in large transactions, such as those before him, purchasers would negotiate various substantial discounts given that in a large block it was unlikely that all the data would be useful.

In order that Canadian exploration expenses of another oil and gas company ("Phillips" could be transferred to the taxpayer for purposes of the Act, it and Phillips established a joint exploration company (the "JEC"), and the JEC purchased seismic data from Phillips and renounced CEE to the taxpayer. The taxpayer and Phillips each appointed two directors to the board of the JEC. (Similar transactions were entered into with another petroleum company.)

In finding that the JEC and Phillips were not dealing at arm's length, Bowie T.C.J. noted (at p. 109) that

"Notwithstanding the high purchase price $26.5 million no care was taken to see that the data was useful to the JEC, the price was not vigorously negotiated, that it was in the mutual interest of the two shareholder corporations that the price paid for the seismic data be as high as could be justified, and that JEC's in this and the other transaction "were, so far as the acquisition of seismic was concerned, simply pawns of their shareholders, the three acting in concert to achieve a common goal."