An individual ("Friedland") carried on his business of economics consulting through a corporation ("SFRA"). When dissatisfied clients brought action against SFRA and Friedland, and the OSC charged Friedland with acting as an unlicensed securities adviser, SFRA incorporated a subsidiary ("Comar") which continued carrying on the consulting business.
The payment by Comar of all the related legal expenses did not give rise to shareholder benefits. "If all those proceedings had not been defended, or unsuccessfully defended, it is obvious, from a practical business point of view, Professor Friedland's services to clients and potential clients would have been tarnished and diminished. Comar's business would then have been affected."
The payment by Comar of various expenses associated with the use by Friedland of a Rolls and BMW for commuting to work assignments downtown and at York University also did not give rise to a shareholder benefit.