Rowe
D.J.T.C.:
Pursuant
to
an
Order
of
the
Honourable
Judge
Rip.
T.C.C.,
dated
June
7,
1996,
the
appeals
were
heard
on
common
evidence.
The
appellant,
William
Norton,
represented
himself
and
all
other
appellants
were
represented
by
Counsel.
In
returns
of
income
for
the
1990
taxation
year
and,
in
some
cases,
also
for
the
1991
taxation
year,
the
appellants
claimed
certain
amounts
as
a
share
of
loss
from
an
alleged
business
of
publishing
information
guides
resulting
from
participation
in
a
partnership
known
as
the
Hospitality
Guide
Partnership
(HGP).
The
Minister
of
National
Revenue
(the
“Minister”)
disallowed
the
losses
as
claimed
by
each
appellant
in
the
applicable
taxation
year
on
the
basis
that
the
transactions
entered
into
by
the
appellants
and
HGP
-
a
purported
partnership
in
the
eyes
of
the
Minister
-
had
no
business
purpose
and
were
designed
solely
to
produce
a
reduction
in
income
tax.
In
addition,
the
Minister
took
the
position
that
the
purported
business,
in
any
event,
did
not
have
a
reasonable
expectation
of
profit
and
that
if
certain
expenses
were
incurred
by
HGP
-
which
were
not
proven
-
then
the
amounts
were
unreasonable
under
the
circumstances
and
the
deduction
of
an
alleged
advance
royalty
expense
was
prohibited
by
subsection
18(9)
of
the
Income
Tax
Act
because
it
would
be
an
amount
of
a
royalty
not
due
until
after
the
end
of
the
year
in
which
it
was
claimed.
The
appellants’
position
is
that
the
business
was
a
legitimate
and
viable
publishing
enterprise
carried
out
by
them
by
means
of
a
legal
partnership
and
that,
at
times
material,
the
business
had
a
reasonable
expectation
of
profit.
The
following
entities
were
involved
in
the
HGP
publishing
venture:
-Applied
Research
Ltd.
(Applied)
-
a
Grand
Cayman
company
incorporated
December
1,
1981.
Henry
Nicholas
Thill
(Thill)
was
given
Power
of
Attorney
over
the
affairs
of
Applied
on
August
4,
1983.
-Thill
Financial
Group
Inc.
(Thill
Financial)
-
a
British
Columbia
company
incorporated
June
28,
1989.
Thill
was
President
and
a
director.
-409672
Alberta
Ltd.
(409672)
-
an
Alberta
company
incorporated
October
16,
1989
-
which
operated
under
the
name
of
Hospitality
Information
Guide.
Thill
was
a
director
and
sole
shareholder.
-Sanders-Lake
Marketing
Ltd.
(SLML)
-
a
Bermuda
corporation
for
which
Thill
Financial
acted
as
agent
in
Canada
and
the
United
States.
H.N.
Thill
&
Associates
Inc.
(Thill
Inc.)
-
a
British
Columbia
corporation
of
which
Henry
Thill
was
President
and
major
shareholder.
Counsel
for
the
appellants
organized
the
exhibits
to
be
entered
into
evidence
on
behalf
of
his
clients
as
follows:
Exhibit
A-4
is
comprised
of
two
binders
with
Volume
1
(Vol.
1)
containing
material
at
Tabs
1-66,
inclusive,
and
Volume
2
(Vol.
2)
containing
material
at
Tabs
67-166,
inclusive.
In
the
event
it
is
necessary
to
refer
to
the
original
of
a
document,
or
in
some
instances
to
inspect
a
document
because
the
entry
at
a
Tab
number
in
the
particular
Volume
of
Exhibit
A-4
directs
one
to
the
original
rather
than
reproducing
the
material
and
including
it
therein,
then
the
material
is
organized
inside
cartons
as
follows:
Exhibit
A-l
is
a
carton
containing
material
reproduced
or
referred
to
in
Exhibit
A-4,
Vol.
1
and/or
Vol.
2,
relating
to
Tabs
1-14
inclusive,
16-21
inclusive,
25,
29,
36,
42,
66-104
inclusive,
and
120-164
inclusive.
Exhibit
A-2
is
a
carton
containing
material
reproduced
or
referred
to
in
Exhibit
A-4,
Vol.
1,
relating
to
Tabs
44-65
inclusive,
with
some
material
bearing
a
number
being
divided
and
labelled
as
Part
1
and/or
Part
II.
Exhibit
A-3
is
a
carton
containing
material
reproduced
or
referred
to
in
Exhibit
A-4,
Vol.
2,
relating
to
Tabs
105-119
inclusive.
Counsel
for
the
respondent
entered
-
as
Exhibit
R-1
-
four
binders
containing
documents
tabbed,
in
total,
1-44
inclusive,
with
Volume
1
containing
material
at
Tabs
1-33,
Vol.
2
with
continuation
of
material
-
banking
records
-
at
Tab
33,
Vol
3,
a
continuation
of
banking
documents
and
related
records,
still
at
Tab
33,
and
Vol.
4,
containing
material
at
Tabs
38-44
inclusive.
David
Bruce
Bremner
testified
he
resides
in
Vancouver,
British
Columbia
and
was
involved
with
a
publication
known
as
Hospitality
Guide
since
its
inception.
It
is
a
marketing
tool
aimed
at
travellers
who
are
staying
in
hotels/
motels
in
an
urban
municipality.
It
is
a
two-sided
single
piece
of
paper,
in
colour,
containing
information
about
a
particular
hotel/motel
on
one
side
and
on
the
other
displaying
a
map
of
the
immediate
area
of
the
facility
together
with
10
advertisements
of
businesses
offering
products
or
services
of
interest
to
the
traveller.
Filed
as
Exhibit
A-5,
was
a
bundle
of
individual
issues
of
Hospitality
Guide,
The
initial
approach
would
be
made
by
Bremner
to
a
hotel
with
the
offer
that
the
guides
would
be
distributed
free
to
guests
at
the
reception
desk
as
they
were
registering
in
order
to
assist
them
in
providing
a
concise
map
to
the
immediate
area.
The
brochures
could
also
be
put
on
display
in
the
lobby.
The
guide
provided
information
about
the
hotel
together
with
a
map
of
the
adjoining
area
and
locations
of
the
businesses
of
the
advertisers
were
circled
and
numbered
to
assist
the
reader.
Some
versions
of
Hospitality
Guide
were
printed
in
Japanese
and
the
intention
was
to
produce
versions
in
Spanish
for
distribution
in
the
United
States
and
in
French
for
hotels
and
motels
in
Quebec.
Bremner
stated
he
developed
the
idea
of
Hospitality
Guide
to
make
it
an
effective
marketing
device
as
most
publications
were
too
bulky
or
complicated
and
were
not
designed
from
the
perspective
of
the
hotel
to
provide
information
concerning
products
or
services
available
in
nearby
neighbourhoods,
for
example,
a
car
rental
company
which
would
use
a
map
or
guide
covering
a
much
larger
area.
Prior
to
starting
to
sell
and
promote
Hospitality
Guide,
he
had
worked
in
sales
and
marketing
in
the
radio
industry
in
Toronto,
Calgary
and
Vancouver.
He
visited
hotels
to
determine
if
the
management
would
be
interested
in
handing
out
the
publication
at
the
front
desk
as
opposed
only
to
making
it
available
in
a
rack
along
with
hundreds
of
other
pamphlets
and
brochures.
Early
in
1990,
he
test-marketed
his
idea
for
Hospitality
Guide
in
the
renowned
ski
resort
village
of
Whistler,
north
of
Vancouver.
Four
hotels
agreed
to
participate
in
the
concept
and
he
put
together
a
“mock-up”
based
on
an
artist’s
rendering
of
what
the
actual
publication
would
look
like
and
then
began
to
knock
on
doors
to
solicit
advertising
from
local
businesses.
In
order
to
make
publication
of
the
first
issue
viable,
he
decided
he
needed
to
sell
$12,000
in
advertising
but
upon
reaching
the
$11,000
mark
elected
to
go
ahead
and
print
the
first
issue
in
April,
1990.
In
February,
1990,
he
had
made
a
presentation
to
American
Express
-
Exhibit
A-4,
Vol.
2,
at
Tab
68
-
on
Thill
Inc.
letterhead
as
he
was
using
office
space
in
that
corporation’s
leased
premises.
The
proposal
was
based
on
the
thought
there
would
be
a
natural
tie-in
between
American
Express
cardholders
and
the
listed
four
hotels
at
Whistler
and
a
particular
issue
of
Hospitality
Guide
could
be
customized
to
that
end.
American
Express
did
not
agree
to
participate
and
Bremner
stated
it
was
probably
because
his
venture
was
new
and
did
not
have
a
track
record.
At
this
point,
he
was
a
sole
proprietor
and
borrowed
letterhead
from
Thill
Inc.
purporting
to
operate
under
the
name
Hospitality
Information
Guide
-
A
Division
of
Travel
&
Tourism
Publishing
Inc.,
an
entity
that
may
or
may
not
have
been
incorporated
but,
in
any
event,
not
by
him.
At
Tab
76
of
Exhibit
A-4,
Vol.
2,
Bremner
referred
to
a
letter
dated
April
20,
1990
on
letterhead
of
an
entity
called:
hospitality
information
guide
-
showing
the
address,
phone
number
and
fax
number
of
the
offices
of
Thill
Inc.
The
letter
was
sent
for
the
purpose
of
enclosing
copies
of
the
guide
designed
for
Whistler
Resort
to
prove
that
publication
had
been
accomplished.
For
that
particular
run,
10,000
copies
had
been
produced
for
each
of
the
four
participating
hotels
in
Whistler
for
a
total
of
40,000
copies.
Later
on,
he
decided
that
it
was
more
efficient
to
tailor
the
number
of
copies
in
a
print
run
in
accordance
with
the
size
of
the
establishment
and/or
the
number
of
guests
renting
rooms
on
an
annual
basis.
It
took
only
a
slight
deviation
in
design
to
accommodate
each
hotel
as
they
were
usually
in
the
same
area.
The
name
of
the
individual
hotel
was
printed
on
the
paper
which,
when
folded,
faced
outwards.
After
his
experience
in
Whistler,
he
decided
to
expand
to
the
Vancouver
market.
He
had
worked
in
Whistler
on
the
basis
of
a
100-day
cycle
from
inception
to
publication
and
he
was
satisfied
that
he
had
a
salable
product
but
soon
realized
that
advertisers
would
prefer
to
place
an
advertisement
in
a
guide
which
would
be
circulated
out
of
the
larger
hotels.
This
was
an
important
point
because
revenue
was
generated
solely
from
sale
of
advertising.
Each
issue
of
Hospitality
Guide
was
designed
to
carry
a
minimum
of
10
advertisements
with
the
capacity
to
expand
to
12
but
it
had
to
be
designed
in
accordance
with
the
most
economical
paper
size
which
was
8
'/2
by
14
inches.
Therefore,
an
8-panel
brochure,
printed
on
both
sides,
was
the
most
efficient
form
of
publication.
He
chose
to
print
Hospitality
Guide
on
a
24-
pound
bond,
non-glossy
paper,
so
a
person
could
write
on
it
easily
with
a
pen
or
pencil
and
it
was
designed
to
last
three
or
four
days.
The
concept
permitted
hotel
staff
to
hand
out
the
guide
to
registering
guests
instead
of
spending
time
answering
questions
or
giving
directions
to
certain
types
of
shops
or
restaurants.
Bremner
stated
he
had
worked
in
Vancouver
and
knew
many
of
the
managers
of
the
larger
hotels.
He
contacted
the
manager
of
the
Holiday
Inn
-
Downtown
and
was
able
to
convince
him
to
allow
10,000
copies
of
Hospitality
Guide
to
be
designed
for
that
facility.
Later
on,
special
issues
were
produced
for
other
large
well-known
hotels
in
Vancouver,
Victoria,
Calgary
and
Banff,
samples
of
which
are
located
at
Tab
133,
Vol.
2
of
Exhibit
A-4.
The
publication
was
well-received
by
hotels
generally
and
the
General
Manager
of
the
Holiday
Inn
-
Vancouver
Downtown
-
wrote
a
letter
to
Hospitality
Guide
Services
on
June
26,
1991
expressing
satisfaction
with
the
guide
(Exhibit
A-4,
Vol.
2,
Tab
73).
At
that
time,
Bremner
had
hired
Rick
McMorran
to
work
for
the
business
and
sometime
in
late
1990,
the
name
had
been
modified
to
remove
the
word
“information”
from
the
working
name
of
the
business.
Bremner
stated
he
had
been
successful
dealing
with
the
larger
well-known
hotel
chains
and
wanted
to
expand
into
Toronto,
beginning
with
the
Royal
York
Hotel.
He
found
that
even
when
negotiating
with
a
hotel
which
was
part
of
a
chain
he
still
had
to
deal
directly
with
the
general
manager
of
a
specific
establishment.
As
a
result
of
having
been
in
the
radio
business
in
Calgary,
he
knew
many
of
the
managers
of
the
larger
hotels
and
was
able
to
sell
the
guide
to
The
Palliser.
In
April,
1990,
he
contacted
the
Director
of
Sales
of
the
Capri
Hotel
in
Kelowna
and
enclosed
a
sample
which
had
been
recently
completed
for
the
Delta
Mountain
Inn
in
Whistler.
However,
no
arrangement
with
the
Capri
was
concluded
because
he
was
unable
to
hire
a
part-time
advertising
salesperson
in
Kelowna
to
sell
the
concept
to
local
advertisers.
In
Vancouver
and
some
of
the
other
cities
where
Hospitality
Guide
was
being
distributed,
he
was
able
to
hire
several
young
persons
as
commission
salespeople
to
sell
the
advertising.
The
graphic
design
to
produce
a
particular
issue
was
sub-contracted
out
along
with
the
printing.
For
hotels
in
the
Canadian
Pacific
chain,
a
smaller
guide
was
produced
to
fit
inside
an
envelope
which
held
the
room
key
given
to
a
guest
following
registration.
On
occasion,
a
participating
hotel
would
assist
in
the
design
of
a
particular
issue
in
order
to
highlight
a
special
service
illustrated
on
the
floorplan.
Bremner
stated
his
background
was
in
radio,
as
opposed
to
print,
and
he
had
to
learn
as
he
went
along
how
to
create
a
useable
map
of
a
vicinity
near
a
hotel
and
not
infringe
on
the
copyright
of
existing
publishers
of
maps
and
guides.
He
was
able
to
convince
the
Director
of
Sales
&
Marketing
for
The
Palliser
in
the
Canadian
Pacific
group
to
hold
a
reception
in
the
hotel
and
to
invite
potential
advertisers
to
attend
for
the
purpose
of
learning
about
the
product.
A
letter
dated
September
27,
1991
-
Exhibit
A-4,
Vol.
2,
Tab
72,
was
sent
out
on
the
basis
that
the
40
persons
attending
could
be
explained
the
concept
of
the
publication
at
the
same
time
instead
of
contacting
them
on
an
individual
basis.
The
guides
designed
for
Calgary
hotels
were
printed
in
Calgary
from
separations
produced
in
Vancouver.
The
Palliser
Hotel
was
very
satisfied
with
Hospitality
Guide
and
wrote
a
letter
to
that
effect
on
January
28,
1992.
In
1990,
one
of
the
proposals
for
the
Ming
Court
Hotel
in
Vancouver
was
based
on
a
print
run
of
6,000
copies
with
a
$330
cost
to
an
advertiser
for
a
panel
on
the
brochure.
In
June,
1990,
a
guide
proposed
for
the
Pacific
Palisades
in
Vancouver
featured
an
advertising
rate
of
$550
based
on
a
print
run
of
10,000.
In
the
case
of
a
$330
per
advertisement
issue
featuring
12
spaces,
the
total
revenue
would
be
in
the
sum
of
$3,960.
At
Tab
89,
Vol.
2
of
Exhibit
A-4,
Bremner
referred
to
a
proposal
to
sell
advertising
at
a
rate
of
$250
per
ad
to
be
placed
in
five
separate
guides
having
a
total
circulation
of
50,000
and
stated
it
was
usual
to
offer
a
discount
to
an
advertiser
in
exchange
for
an
agreement
to
advertise
in
several
issues.
On
October
29,
1990
Bremner
sent
a
letter
to
a
resort
in
Phoenix,
Arizona
offering
to
produce
a
guide
and
also
contacted
a
hotel
in
St.
John’s,
Newfoundland.
By
that
time,
the
business
producing
Hospitality
Guide
had
obtained
its
own
telephone
number
but
earlier
had
been
using
one
of
the
phone
numbers
assigned
to
Thill
Inc.
At
the
beginning
of
1990,
there
had
been
a
lot
of
down-sizing
taking
place
in
various
industries
and
people
were
becoming
available
to
start
their
own
home-based
businesses.
He
believed
that
franchising
was
no
longer
as
popular
as
it
had
once
been
but
believed
he
could
sell
the
concept
of
recruiting
someone
within
an
urban
community
who
could
deal
with
the
hotel
managers
and
then
sell
advertising
to
potential
customers
so
that
a
guide
could
be
produced.
He
placed
ads
in
certain
publications
and
became
aware
of
enterprises
known
as
out-placement
agencies
which
find
candidates
for
an
investment
in
order
to
secure
some
form
of
revenue
for
people
whose
job
had
been
terminated.
He
conceived
of
persons,
whom
he
referred
to
as
Joint
Venture
Operators
or
JVO’s,
who
would
be
willing
to
invest
the
sum
of
$30,000
in
order
to
carry
on
the
business
of
selling
Hospitality
Guide
within
their
own
community.
Bremner’s
Vancouver
operation
would
offer
advice,
leads,
assistance
in
production
design
and
would
do
the
artwork
and
the
printing.
The
J
VO
would
then
share
in
the
revenue
produced.
An
information
package
was
prepared
to
assist
in
selling
the
concept
to
potential
investors
(
Exhibit
A-4,
Vol.
2,
Tab
129).
Only
one
such
investor
-
in
Portland,
Oregon
-
was
found.
Bremner
stated
that
a
population
base
of
one
million
people
-
in
an
area
having
10
hotels,
each
with
more
than
300
rooms
-
was
a
requirement
in
order
to
make
the
investment
viable.
In
this
type
of
urban
area,
each
hotel
would
probably
want
one
issue
produced
per
year
and
the
print
run
could
be
adjusted
depending
on
the
turnover
of
guests
or
the
number
of
rooms.
By
September,
1990
Bremner
indicated
he
had
come
to
the
conclusion
that
participation
by
a
facility
having
at
least
200
rooms
was
required
in
order
to
make
an
issue
of
Hospitality
Guide
attractive
to
potential
advertisers.
At
the
outset
of
the
venture,
he
had
offered
advertisers
discounts
of
10%
or
15%
if
payment
for
advertising
in
a
guide
was
paid
in
advance
or
if
the
ads
had
to
be
placed
through
an
advertising
agency
which
charged
a
commission
to
the
hotel.
Bremner
stated
that
he
had
talked
to
various
hotel
executives
in
Seattle,
Portland,
San
Francisco,
Phoenix,
Dallas,
San
Antonio,
Houston,
New
Orleans,
Palm
Springs,
and
Clearwater,
Florida
in
an
effort
to
promote
the
concept
of
Hospitality
Guide.
Generally,
users
of
the
publication
and
the
participating
hotels
were
extremely
pleased
with
the
guide
and
provided
letters
to
that
effect
which
he
used
in
preparing
a
review
of
operations
of
the
partnership
-
HGP
-
which
was
included
in
material
sent
to
partners
on
March
18,
1993
using
the
covering
letterhead
of
Thill
Financial
under
the
signature
of
Ken
Holloway
on
behalf
of
the
Management
Committee
of
the
partnership
(Exhibit
A-4,
Vol.
1,
Tab
8).
In
the
report
Bremner
had
prepared,
he
referred
to
a
recent
commitment
from
Travelodge
to
have
Hospitality
Guide
produced
for
the
500
hotels
and
motels
in
the
chain
throughout
Canada
and
the
United
States.
A
client
list
indicating
the
identity
and
location
of
participating
hotels
and
the
number
of
issues
or
pieces
produced
was
prepared
by
him
and
is
found
at
Tab
36,
Vol.
1
of
Exhibit
A-4.
It
stated
the
number
of
pieces
produced
since
the
first
publication
in
April,
1990
was
800,000
and
it
also
listed
840,000
pieces
as
being
in
progress
for
the
1992-1993
period.
Bremner
explained
that
a
hotel
or
motel
would
be
approached
to
participate
in
the
program
by
having
an
issue
of
Hospitality
Guide
produced
for
that
facility
and
then
an
attempt
would
be
made
to
sell
sufficientadvertising
to
cover
the
cost
of
production
and
to
earn
a
profit.
On
occasion,
not
enough
advertisers
would
purchase
space
in
the
proposed
brochure
and
the
hotel
would
be
informed
that
the
publication
of
that
particular
issue
had
to
be
cancelled.
Bremner
stated
he
had
conceived
of
the
idea
of
Hospitality
Guide
during
the
Christmas
season
of
1989
and
believed
that
it
filled
a
niche
in
the
marketplace.
The
cost
to
advertisers
was
reasonable
but
he
realized
he
required
capital
in
order
to
develop
and
promote
the
concept.
He
had
several
contacts
within
the
radio
business
and
also
had
some
limited
exposure
to
the
publishing
business
when
he
worked
selling
advertising
for
a
business
directory.
One
of
his
acquaintances
suggested
that
Henry
Thill
would
be
someone
to
speak
to
about
raising
money
for
the
venture.
Bremner
met
with
Thill
and
his
solicitor
at
the
end
of
1989
and
was
informed
of
the
existence
of
Sanders-
Lake
Marketing
Ltd.
(SLML).
As
a
result
of
those
discussions,
on
February
1,
1990,
he
assigned,
absolutely,
all
of
his
right
in
the
copyright
to
Hospitality
Guide
unto
SLML
for
the
sum
of
one
($1)
dollar
(Exhibit
A-4,
Vol.
2
,
Tab
153).
He
undertook
that
assignment
of
copyright
in
exchange
for
receiving
financial
support
from
SLML
to
fund,
adequately,
the
development
of
the
guide
and
other
related
publications
which
could
be
added
in
the
future.
His
experience
in
promoting
the
publication
at
Whistler
had
convinced
him
the
idea
was
workable
but
he
also
knew
that
capital
was
required
to
carry
out
further
development
and
promotion.
In
his
view,
he
was
not
merely
looking
at
creating
a
job
for
himself
by
limiting
publication
of
various
issues
of
Hospitality
Guide
to
Victoria
and
Vancouver.
Because
he
had
travelled
extensively
for
business
purposes
throughout
his
working
life,
he
believed
the
concept
could
be
expanded
throughout
North
America.
In
his
experience
travellers
are,
for
the
most
part,
the
same
and
the
guide
would
appeal
to
a
broad
sector.
Between
August
and
November,
1993,
he
wrote
a
series
of
memos
concerning
the
state
of
the
business,
copies
of
which
went
to
Ken
Holloway,
member
of
the
Management
Committee
of
HGP
(Exhibit
A-4,
Vol.
2,
Tab
120).
Since
1990,
he
had
been
concerned
with
attempting
to
raise
money
by
selling
the
joint
venture
operations
-
JVO’s
-
because
he
found
it
was
difficult
to
locate
people
in
a
particular
city
who
were
interested
in
selling
the
advertising
which
was
vital
to
the
production
of
a
specific
issue
of
Hospitality
Guide
which
would
be
designed
for
a
particular
establishment.
By
1991,
it
was
easier
to
have
hotels
participate,
probably
because
he
was
able
to
produce
letters
from
managers
of
hotels,
motels
and
lodges
who
had
participated
earlier
and
were
satisfied
with
the
product.
He
had
been
condacted
by
the
Burnaby
Chamber
of
Commerce
to
design
a
combination
map
and
guide
for
that
municipality.
He
agreed
to
produce
the
publication
on
the
basis
this
kind
of
work
could
become
a
secondary
profit
line
for
HGP.
He
sold
advertising
in
the
publication
and
later
produced
a
similar
one
for
businesses
in
the
New
Westminster
Quay
(Samples
of
these
issues
are
in
the
material
in
Exhibit
A-
4,
Vol.
2,
Tab
133).
Revenue
from
sale
of
advertising
in
these
publications
was
deposited
to
the
bank
account
of
409672
and
commissions
were
paid
to
salespeople
and
for
costs
of
production
and
royalties
to
SLML.
The
appellant,
William
Norton,
left
the
Courtroom
shortly
after
Bremner
began
his
testimony
and
had
not
returned
to
exercise
any
right
to
cross-
examine.
In
cross-examination,
Bremner
advised
Counsel
for
the
respondent
that
the
publications
described
generically
as
commerce
guides
or
business
guides
later
became
the
subject
of
another
venture
promoted
by
Thill
and
Thill
Inc.
under
the
name
Commerce
Guide
Partnership.
The
publications
for
Burnaby
and
New
Westminster
were
done
in
1990
as
part
of
the
same
organization
-
the
numbered
company,
409672
-
publishing
Hospitality
Guide.
Then,
Bremner
stated
a
Hospitality
Guide
1991
Partnership
was
formed
as
were
other
partnerships
in
subsequent
years
for
the
purpose
of
producing
a
variety
of
publications
under
different
names.
In
1990,
he
had
purchased
a
partnership
unit
in
HGP
and
may
have
invested
in
other
partnerships,
all
of
which
were
promoted
by
Thill.
A
partnership
known
as
Hospitality
Guide
1991
Partnership
was
formed
and
he
was
a
member
of
the
Management
Committee
established
to
manage
the
business
affairs.
He
was
also
a
member
of
the
Management
Committee
of
HGP,
the
partnership
which
is
the
subject
matter
of
the
within
appeals.
He
was
involved
in
the
development
and
promotion
of
the
1991
Hospitality
Guide
Partnership
because
the
degree
of
success
achieved
during
1990
in
promoting
and
publishing
Hospitality
Guide
had
caused
him
to
believe
that
the
concept
could
be
expanded.
There
was
no
effective
competition
and
there
had
been
good
feedback
from
the
hotels,
their
guests
and
advertisers.
He
stated
that
he
involved
himself
with
the
operational
side
of
the
publishing
business
so
that
HGP
could
succeed.
He
was
unable
to
locate
any
HGP
financial
statements
for
1990.
He
left
the
organization
in
1994
in
order
to
promote
the
Grey
Cup
but
intended
to
continue
to
perform
some
services
in
relation
to
the
production
of
Hospitality
Guide.
His
duties
as
General
Manager
were
taken
over
by
Michael
Bendall.
Bremner
stated
he
had
never
been
a
shareholder
of
409672
and
had
not
seen
any
financial
statements
pertaining
to
that
corporation.
Bremner
was
referred
to
the
T2
income
tax
return
of
409672
for
the
1990
taxation
year
-
Exhibit
R-1,
Vol.
1,
Tab
11
-
which
indicated
that
Henry
Thill
owned
100%
of
the
issued
shares
in
the
corporation.
Bremner
stated
he
had
no
part
in
the
filing
of
that
return.
The
Statement
of
Income
and
Deficit
accompanying
the
tax
return
showed
sales
in
the
sum
of
$66,994,
including
the
sum
of
$19,800
for
an
item
identified
as
“distribution
rights.”
Management
fees
were
in
the
sum
of
$62,500
and
Bremner
stated
that
at
least
one-half
of
that
amount
had
been
paid
to
him
for
his
services
but
he
had
no
idea
what
was
meant
by
the
term
“distribution
rights”.
Bremner
was
referred
to
a
document
entitled
Management
Agreement
dated
June
1,
1990
between
HGP
and
409672
(
Exhibit
R-l,
Vol.
4,
Tab
40).
He
identified
his
signature
which
he
provided
on
behalf
of
409672
and
Ken
Holloway
and
Henry
Thill
signed
on
behalf
of
HGP.
In
paragraph
4
of
the
agreement,
it
provided
that
the
net
revenues
after
payment
of
expenses
and
royalties
would
be
divided
equally
between
409672
and
HGP.
Bremner
stated
that
HGP,
by
agreement,
was
required
to
pay
royalties
of
$800
per
print
run
of
10,000
copies
to
SLML
and,
therefore,
409672
had
to
pay
that
$800
royalty
to
HGP
before
any
division
of
net
profits
took
place.
He
was
providing
information
to
the
accountants,
practicing
at
C.
Buckley
&
Co.
Inc.,
who
had
been
retained
by
Thill.
He
was
also
signing
cheques
on
behalf
of
409672,
drawn
on
an
account
at
the
Bank
of
Nova
Scotia
for
the
purpose
of
settling
accounts
arising
out
of
the
production
of
various
issues
of
Hospitality
Guide.
Monies
came
into
the
409672
account
from
sale
of
advertising
and
also
from
one
or
more
of
the
companies
operated
by
Thill
and
forming
part
of
what
was
referred
to
by
Thill
as
the
Thill
Group.
Bremner
was
referred
to
a
document
-
Exhibit
R-1,
Vol.
4,
Tab
44
-
the
financial
statement
of
HGP
for
1990
-
which
listed
revenue
in
the
sum
of
$19,800
for
sales
which
he
thought
related
to
receipt
of
payments
in
the
sum
of
$900
per
10,000
print
run
based
on
22
runs.
The
financial
statement
also
listed
the
sum
of
$5,280,000
as
the
amount
of
royalties
having
been
paid
by
HGP.
The
HGP
financial
statement
for
1991
-
also
at
Tab
44
-
showed
sales
in
the
sum
of
$21,600
-
based
on
24
print
runs
at
a
$900
payment
per
run.
There
had
been
only
46
print
runs
of
Hospitality
Guide
produced
since
April,
1990
and
Bremner
agreed
that
“it
was
badly
under
performing”.
The
HGP
statement
for
1992
-
still
at
Tab
44
-
showed
sales
of
$27,450,
based
on
30.5
runs
and
the
1993
statement
indicated
there
were
no
Sales
at
all
during
that
year.
Bremner
explained
that
he
had
been
spending
a
lot
of
his
time
trying
to
sell
the
JVO
concept
to
potential
investors.
Counsel
put
this
question
to
Bremner:
Q.
How
was
this
fulfilling
409672’s
obligations
as
per
the
agreement
with
HGP?
Bremner
replied:
Revenues
were
not
good
and
we
were
on
a
failure
course
and
under
scrutiny
from
Revenue
Canada.
Bremner
agreed
that
409672
was
in
business
to
produce
publications
and
to
pay
the
required
royalties
to
HGP.
Bremner’s
recollection
was
that
409672
had
to
pay
HGP
the
sum
of
$900
in
royalties
for
each
print
run
but
that
HGP
had
already
paid
the
sum
of
$800
per
print
run
in
advance
to
SLML.
He
was
referred
to
the
documents
forming
the
Partnership
Proposal
in
Exhibit
A-4,
Vol.
1,
Tab
1,
which
included
a
Table
of
projected
revenue
and
expense.
In
Year
1,
there
was
a
projection
of
1,200
runs
of
10,000
copies
each,
followed
by
10,000
runs
in
Year
2,
12,500
runs
in
Year
3
and
thereafter
until
the
end
of
year
10.
However,
by
taking
the
total
sales
revenue
shown
in
HGP
financial
statements
for
the
years
1990,
1991
and
1992
and
then
dividing
that
amount
by
$900,
Bremner
agreed
the
actual
print
runs
were
as
follows:
1990
-
22
1991
-
24
1992
-
30.5
However,
Bremner
stated
there
were
a
number
of
reasons
why
the
projections
had
not
been
met,
one
of
which
was
the
inability
to
guarantee
salaries
to
salespeople
as
it
was
not
possible
to
hire
them
on
a
straight
commission
basis.
It
was
not
possible
to
raise
sufficient
capital
to
pay
those
salaries
and
so
the
salesforce
could
not
be
put
into
action.
According
to
the
projections
contained
in
the
Partnership
Proposal,
in
Year
2,
100
million
separate
pieces
of
paper
would
be
produced
if
10,000
print
runs
of
10,000
copies
each
had
been
produced
and
in
Year
3,
that
number
would
rise
to
125
million
pieces
based
on
12,500
print
runs.
In
order
to
achieve
100
million
pieces
it
would
take
2,500
hotels
requiring
40,000
pieces
per
year
-
or
4
print
runs
-
and
Bremner
agreed
that
the
projections
had
been
“too
optimistic”.
He
commented
further
that
to
reach
those
totals
it
would
require
1,000
people
with
high-level
skills
in
marketing
to
persuade
the
required
number
of
different
hotels
to
participate
and
then
to
sell
the
necessary
advertising
to
make
each
print
run
of
Hospitality
Guide
profitable.
He
did
not
know
what
the
reference
was
in
the
1990
HGP
financial
statement
as
it
related
to
insurance
payments.
He
was
not
able
to
identify
what
may
have
been
included
in
the
sum
of
$70,000
pertaining
to
organization
costs
or
the
amount
of
$50,000
for
administration
or
any
of
the
other
items
listed
as
expenses
of
HGP
for
that
fiscal
period.
He
agreed
that
he
was
a
member
of
the
Management
Committee
of
HGP
and
that
he,
together
with
Thill
and
Ken
Holloway,
had
been
the
founding
partners.
(Exhibit
A-4,
Vol.
1,
Tab
2).
He
was
aware
of
the
obligation
of
HGP
to
pay
the
sum
of
$5.28
million
in
advance
royalties
to
SLML
for
the
right
to
use
the
copyright
to
Hospitality
Guide
which
it
owned.
The
1990
HGP
financial
statement
indicated
that
the
sum
of
$25,000
had
been
paid
for
office
rent
over
a
six-month
period
between
the
date
of
the
formation
of
HGP
on
June
1,
1990
and
December
31,
1990.
He
stated
the
rent
must
have
been
paid
to
Thill
Inc.
since
meeting
rooms
and
boardrooms
were
required
from
time
to
time
in
order
to
conduct
business
as
well
as
the
usual
space
used
by
him
to
carry
out
his
duties
as
General
Manager
for
409672.
The
1991
HGP
financial
statement
indicated
that
office
rent
for
the
entire
year
had
been
reduced
to
the
sum
of
$1,200
and
Bremner
stated
that
the
landlord
-
Thill
Inc.
-
had
probably
given
HGP
a
break
in
light
of
poor
revenues
having
been
produced
in
1990.
On
February
1,
1990
-
when
he
assigned
his
copyright
in
Hospitality
Guide
to
SLML
-
he
had
an
artist’s
rendering
of
the
proposed
guide
and
graphic
design
people
had
been
retained.
He
recalled
that
Thill,
through
one
of
his
many
companies,
may
have
loaned
him
money
for
this
disbursement
and
other
developmental
expenses
and
he
used
the
offices
of
Thill
Inc.
and
its
letterhead
for
the
business
purposes
of
the
new
venture.
By
February
1,
1990,
he
estimated
that
nearly
$10,000
had
been
spent
on
the
concept
of
Hospitality
Guide
and
although
he
sold
all
his
interest
in
the
copyright
to
SLML
for
only
$1
-
he
did
so
in
order
to
raise
capital
so
the
venture
could
proceed.
Only
a
few
months
later,
he
agreed,
as
a
member
of
HGP
and
a
partner
serving
on
the
Management
Committee,
to
pay
the
sum
of
$5.28
million
in
advance
royalties
to
SLML
for
the
right
to
use
that
same
copyright.
When
asked
to
explain
that
seemingly
peculiar
sequence
of
events,
Bremner
stated,
“it
looks
ridiculous
right
now”
to
have
participated
in
such
an
arrangement
as
almost
nothing
had
happened
in
the
interim
to
justify
such
a
huge
increase
in
value
of
the
copyright
and
he
was
the
person
in
charge
of
production
of
the
publication.
As
for
an
interest
expense
in
the
sum
of
$235,200
showing
up
in
the
1991
HGP
financial
statement,
he
stated
he
was
not
familiar
with
any
borrowing
done
by
HGP
but
that
it
might
have
related
to
a
debt
arising
from
the
requirement
to
pay
the
sum
of
$5.28
million
in
advance
royalties
to
SLML.
There
was
reference
in
the
documents
referred
to
earlier
as
Partnership
Proposal
-
Exhibit
A-4,
Vol.
1,
Tab
1,
in
which
it
was
indicated
to
potential
investors
that
HGP
would
enter
into
arrangements
with
an
offshore
lender
and
that
such
loans
-
part
7
of
the
proposal
-
would
be
in
the
sum
of
$8.5
million
at
an
interest
rate
of
approximately
8%
per
annum.
Bremner
stated
that
he
could
not
produce
any
documents
relating
to
receipt,
by
HGP,
of
loan
proceeds
but
thinks
he
once
saw
a
letter
to
that
effect.
He
has
not
been
asked
to
pay
any
share
of
that
loan
by
reason
of
being
a
member
of
HGP.
He
did
not
participate
in
any
activities
relating
to
the
securing
of
an
insurance
policy
or
payment
of
premiums
but
recalled
that
the
premium
paid
was
less
than
the
projected
amount
shown
in
the
proposal.
He
remembered
seeing
documents
from
Leonine
Insurance
Company
from
George
Town,
Grand
Cayman
Island,
British
West
Indies,
which
was
insuring
his
own
life
for
the
sum
of
$500,000
in
his
capacity
as
a
partner
pursuant
to
the
Group
Creditor
Insurance
Policy
found
in
Exhibit
R-1,
Vol.
4,
at
Tab
41.
There
was
also
a
Performance
Insurance
Policy
-
Tab
42
-
which
called
for
a
premium
to
be
paid
in
the
sum
of
$165,000
in
return
for
guaranteeing
payment
if
less
than
1,650
print
runs
were
produced
by
HGP
as
a
result
of
its
contractual
arrangement
with
409672.
Bremner
stated
he
thought
the
entry
in
the
sum
of
$500,000
in
the
1991
HGP
financial
statement
under
the
category
“Other
Income”
related
to
insurance
proceeds
coming
to
HGP
as
a
result
of
the
death
of
a
partner.
The
documents
pertaining
to
the
insurance
policies
were
dated
January
1,
1991
and
had
been
signed
by
Henry
Thill
on
behalf
of
HGP.
The
sale
of
the
partnership
units
in
HGP
were
handled
by
Ken
Holloway.
The
sales
projections
of
Hospitality
Guide
were
based
on
securing
only
10%
of
the
market
in
North
America
as
there
was,
according
to
his
information,
a
total
of
125,000
hotels
and
motels
and
it
should
not
have
been
difficult
to
sign
up
12,500
of
those
hospitality
businesses
and
produce
12,500
print
runs
of
10,000
copies
each.
In
the
spring
of
1992,
Bremner
was
promoting
the
sale
of
the
concept
to
joint
venture
operators
-
JVO’s
-
through
the
vehicle
of
Hospitality
Publishing
Systems
Inc.,
a
Nevada
corporation
that
had
changed
its
name
from
Hospitality
Guide
Services
Inc.,
as
originally
incorporated
in
September,
1990.
In
Canada,
Bremner,
on
behalf
of
409672,
promoted
the
various
partnerships
and
409672
filed
a
financial
statement
along
with
a
tax
return
for
the
1991
taxation
year
-
Exhibit
R-1,
Vol.
1,
Tab
12
-
stating
that
it
operated
under
the
name,
Hospitality
Information
Guide.
Bremner
was
referred
to
a
letter
dated
July
30,
1992
-
Exhibit
A-4,
Vol.
2,
Tab
94,
directed
to
members
of
HGP
which
went
out
under
his
signature
referring
to
the
change
of
name
to
Hospitality
Publishing
Systems
Inc.
He
conceded
this
statement
was
incorrect
and
that
it
was
not
409672
which
had
changed
its
name,
rather
it
was
the
Nevada
corporation.
However,
in
his
opinion,
his
efforts
were
always
directed
towards
selling
the
concept
of
Hospitality
Guide
and
attempting
to
expand
its
territory.
He
thought
it
was
more
businesslike
to
use
an
American
corporation
to
facilitate
expansion
efforts
into
the
United
States
rather
than
an
Alberta
numbered
company.
On
numerous
occasions,
he
requested
money
from
Thill
to
make
the
system
of
publishing
Hospitality
Guide
more
effective
but
Thill’s
response
was
to
urge
a
different
approach
be
undertaken
which
was
to
market
the
concept
to
new
investors.
The
revenue
projections
were
incorrect
and
should
have
been
based
on
50
print
runs
of
10,000
copies
each
in
60
separate
territories.
Vancouver
had
served
as
a
test
market
and
it
would
have
been
more
reasonable
to
build
up
the
business
and
then
attempt
to
move
it
to
other
locations.
He
had
consulted
with
an
individual
in
San
Diego
about
the
method
of
doing
projections
but
no
written
memorandum
exists
with
regard
to
that
discussion.
In
his
career
as
an
advertising
salesman
for
radio
stations
or
for
a
directory
known
as
the
Pink
Pages,
he
came
to
the
conclusion
that
small
businesses
located
close
to
a
major
hotel
would
advertise
in
a
cost-
effective
publication.
He
agreed
that
one
mailout
to
partners
in
HGP
indicated
that
a
total
of
800,000
pieces
had
been
produced
plus
an
additional
840,000
in
progress
for
a
total
of
1,640,000
which,
divided
by
print
runs
of
10,000,
would
indicate
that
164.5
runs
had
been
produced.
However,
at
best,
only
76.5
runs
could
be
accounted
for
from
the
sales
figures
in
HGP
financial
statements.
On
that
basis,
765,000
pieces
in
total
would
have
been
produced
which
was
less
than
the
stated
production
figure
of
800,000,
without
adding
in
the
purported
work-in-progress
of
a
greater
amount.
The
client
list
in
Exhibit
A-4,
Vol.
2.
Tab
149
indicated
an
issue
of
Hospitality
Guide
had
been
produced
for
29
separate
hotels
for
a
total
of
68
print
runs
up
to
August,
1992.
Bremner
stated
he
had
received
a
commitment
from
a
manager
at
the
Royal
York
Hotel
in
Toronto
to
allow
a
presentation
to
be
made
in
one
of
the
conference
rooms
but
nothing
came
of
it
or
from
any
of
the
other
establishments
shown
on
the
mailout
as
being
participants
in
various
publications
of
issues
of
Hospitality
Guide
comprising
the
840,000
pieces
supposedly
in
progress
at
the
time
of
the
report
to
partners
in
HGP.
In
1991,
24
runs
of
10,000
were
produced
as
opposed
to
the
projection
of
10,000
runs
of
10,000
each
and
Bremner
reluctantly
conceded
when
presented
with
these
figures
that
his
organization
in
charge
of
production
was
“probably
underperforming
a
little
bit”.
He
believed
that
lack
of
operating
capital
was
always
a
problem
but
now
has
come
to
the
conclusion
that
more
money
would
not
have
made
any
difference
in
the
final
result.
In
answer
to
a
question
from
the
Bench
as
to
how
it
made
any
sense
for
HGP
to
pay
$5.28
million
for
the
right
to
use
a
copyright
he
had
sold
four
months
earlier
for
the
sum
of
$1,
Bremner
stated
that
he
could
not
explain
it
other
than
to
say
he
was
never
involved
1
in
the
financial
end
of
the
business.
Denis
Gaudet
testified
that
he
is
a
resident
of
Calgary,
Alberta
and
is
an
engineer
with
extensive
experience
in
the
oilpatch
since
1973.
He
is
an
appellant
-
95-1476
(IT)G
as
a
result
of
having
purchased
two
units
in
HGP.
During
the
summer
of
1990,
he
was
introduced
to
David
Newton-Wakely
who
provided
documents
pertaining
to
an
investment
opportunity
involving
the
publishing
of
Hospitality
Guide.
Gaudet
stated
he
took
the
information
to
his
accountant
to
discuss
the
matter
and
received
advice
that
the
projections
appeared
to
be
optimistic
but
he
proceeded
to
purchase
two
units
in
HGP.
At
the
time,
he
had
been
receiving
advice
from
a
financial
counsellor
and
that
individual
had
been
satisfied
that
participation
in
HGP
was
a
good
investment.
Gaudet
stated
he
had
inspected
and
read
the
material
regarding
the
proposal
to
potential
partners
in
HGP
and
took
notes
during
his
meeting
with
Newton-Wakely.
He
thought
that
even
if
the
projections
were
10
times
too
high
he
could
still
pay
back
his
initial
investment
within
five
years.
He
discussed
the
matter
with
his
wife
and
then
signed
the
necessary
documents
to
purchase
two
units
in
HGP
at
$5,000
each.
He
recalled
receiving
a
letter
from
Ken
Holloway
urging
partners
to
be
as
active
as
possible
in
promoting
the
business
of
the
partnership
(Exhibit
A-4,
Vol.
1,
Tab
4).
Gaudet
stated
he
took
an
active
role
and
spent
time
talking
to
managers
of
various
hotels
in
Calgary
and
restaurant
operators
whom
he
saw
as
potential
advertisers.
As
an
experienced
business
traveller,
he
thought
the
publication
Hospitality
Guide
was
an
excellent
idea.
He
kept
track
of
the
time
he
spent
promoting
the
concept
and
recorded
it
on
the
activity
report
which
had
been
sent
to
him
by
Holloway.
Gaudet
explained
that
he
worked
from
a
list
of
hotels
and
restaurants
he
had
prepared
from
his
own
resources
and
from
consulting
the
Yellow
Pages.
He
sent
this
list
to
the
office
of
Thill
Inc.
in
Vancouver
to
the
attention
of
Ken
Holloway
in
his
capacity
as
one
of
the
managing
partners
of
HGP.
When
Gaudet
went
on
visits
to
hotels
or
to
discuss
the
concept
with
potential
advertisers
he
would
bring
a
copy
of
a
Hospitality
Guide
for
demonstration
purposes
but
he
assumed
his
initial
contacts
would
be
followed
up
by
HGP
or
someone
in
the
Thill
Inc.
office
in
Vancouver.
He
applied
for
life
insurance
and
thinks
that
a
para-medical
person
came
to
his
house
to
take
blood
pressure
readings
and
pulse
count
as
part
of
the
process.
He
received
a
letter
from
Thill
Financial
dated
April
23,
1992
requesting
that
he
complete
a
form
by
providing
information
concerning
his
date
and
place
of
birth,
occupation
and
social
insurance
number.
He
filled
in
the
required
information
and
returned
the
form
to
the
office
of
Thill
Financial.
In
reviewing
his
records,
he
discovered
a
partnership
review
dated
June
26,
1991
identical
to
the
one
found
in
Exhibit
A-4,
Vol.
1,
Tab
11.
In
the
Notice
To
Reader
portion
of
the
report,
he
noticed
that
HGP
had
a
contract
with
Hospitality
Guide
Services
Incorporated
to
provide
direct
marketing
of
the
guide.
Gaudet
also
invested
with
Thill
in
a
venture,
through
a
partnership,
for
the
purpose
of
publishing
a
magazine
called
Events
Today.
He
thought
it
was
normal
business
practice
to
pay
money
in
advance
to
acquire
the
right
to
distribute
Hospitality
Guide.
As
for
the
life
insurance
policy,
he
did
not
recall
ever
receiving
a
copy
of
it
but
understood
that
the
benefit
payable
in
the
event
of
his
death
was
to
HGP
which
satisfied
him
and
his
accountant
as
they
had
been
worried
about
the
potential
risk
flowing
from
membership
in
a
partnership.
He
had
made
his
investment
in
the
partnership
formed
in
relation
to
Events
Today
prior
to
having
received
a
five-page
letter
from
Mr.
Holmes
at
Revenue
Canada
on
October
19,
1992
to
the
effect
that
an
audit
was
being
conducted
concerning
his
investment
in
HGP.
On
October
27,
1992
he
received
a
letter
from
Thill
Inc.
attaching
a
letter
from
the
accountants
at
C.
Buckley
&
Co.
Inc.
disputing
the
position
taken
by
Mr.
Holmes
at
Revenue
Canada.
He
identified
a
group
of
documents
pertaining
to
his
investment
which
were
filed
as
Exhibit
A-6.
In
cross-examination
by
Counsel
for
the
respondent,
Gaudet
was
asked
why,
in
his
opinion,
he
thought
it
was
reasonable
for
the
partnership
to
pay
royalties
on
10,000
runs
of
10,000
copies
each
and
he
replied
that
he
had
not
been
aware
of
the
exact
number
of
runs
covered
by
the
payment
but
he
did
know
that
royalties
had
to
be
paid.
Gaudet
was
referred
to
his
notes
-
part
of
Exhibit
A-6
-
taken
by
him
during
his
meeting
with
Newton-Wakely
which,
on
the
left
side
of
the
lined
sheet
at
the
top,
had
the
notation
“90”
and
underneath
that
it
read
“29,000
Refund”.
Gaudet
stated
he
was
aware
the
investment
would
produce
a
tax
refund
for
him
in
the
1990
taxation
year
but
that
the
remainder
of
his
notes
indicate
that
he
spent
a
considerable
amount
of
time
calculating
future
return
on
investment
and
other
methods
of
carrying
out
an
active
participation
by
him
in
the
partnership.
He
stated
he
had
never
been
contacted
with
regard
to
paying
his
share
of
the
HGP
loan.
He
did
not
enquire
about
the
number
of
print
runs
produced
in
1990
and
made
his
investment
on
the
basis
of
a
calculation
that
even
if
10%
of
the
projected
runs
were
achieved
he
could
still
make
a
profit
from
his
membership
in
HGP.
He
thought
the
number
of
participating
hotels
projected
over
the
next
few
years
was
far
too
optimistic
but
he
had
a
limited
understanding
of
the
publishing
business.
David
Bremner
had
assured
him
that
Thill
Inc.
was
legitimate
and
showed
him
a
copy
of
the
golf
magazine,
Fore!,
which
was
being
published
by
a
partnership
organized
by
Thill.
Gaudet
stated
he
was
not
aware
of
any
problems
with
a
Thill-promoted
tax
shelter
known
as
Speed
Read.
He
spent
a
substantial
amount
of
time
making
“cold
calls”
on
hotels
and
restaurants.
He
had
received
a
letter
from
Thill
Financial,
dated
April
23,
1992,
enclosing
several
documents
including
an
application
for
life
insurance.
He
understood
that
300
partners
were
needed
to
raise
the
sum
of
$1.5
million
as
collateral
for
a
loan
to
pay
advance
royalties.
He
was
aware
that
the
cost
of
an
advertisement
in
an
issue
of
Hospitality
Guide
would
be
approximately
$300
and
when
he
made
contacts
within
the
hotel
or
restaurant
industry
he
notified
Holloway
in
Vancouver
and
expected
that
HGP
or
its
employees
would
be
following
up
on
the
leads
he
had
developed
on
his
own
time.
When
he
finally
checked
back
with
those
leads
more
than
eighteen
months
later,
he
discovered
there
had
been
no
further
contact
with
those
persons
by
anyone
operating
out
of
Vancouver
or
elsewhere
on
behalf
of
HGP
or
the
people
responsible
for
the
actual
production
of
Hospitality
Guide.
He
thought
the
income
produced
by
HGP
was
very
low
and
spoke
to
Holloway
and
Bremner
about
it
and
was
assured
by
them
that
“things
were
starting
to
happen”.
Shortly
after
receiving
such
assurance,
he
was
informed
by
Revenue
Canada
that
his
investment
in
HGP
was
under
investigation.
Henry
Nicholas
Thill
testified
he
lives
in
Richmond,
British
Columbia.
He
worked
previously
as
a
financial
consultant
and
carried
on
business
as
Thill
Financial
Group
which
was
comprised
of
several
individual
businesses
carried
out
through
several
corporations
in
Vancouver
until
his
retirement
in
September,
1995.
He
purchased
three
units
in
HGP
and
had
been
an
appellant
from
a
reassessment
by
the
Minister
with
regard
to
his
1990
taxation
year
but
withdrew
his
appeal
at
the
commencement
of
the
hearing
of
the
within
appeals.
Thill
stated
he
was
a
shareholder
in
Applied
and
did
business
in
Canada
under
Power
of
Attorney,
dated
August
4,
1983
granted
to
him
by
Applied
(Exhibit
A-7).
He
was
not
a
shareholder
in
the
Bermuda
corporation,
SLML,
and
doubted
that
he
was
ever
a
Director.
However,
he
did
act
as
agent
for
SLML
and
signed
the
Assignment
of
Copyright
from
Bremner
on
behalf
of
SLML.
He
did
not
know
whether
he
had
written
permission
to
do
so
but
he
had
received
authority
to
execute
the
document
on
behalf
of
that
corporation.
Thill
stated
that
Hospitality
Guide
was
a
brochure
used
by
hotels
to
assist
their
guests
in
locating
places,
close
to
the
hotel,
such
as
restaurants,
drycleaners,
gift
shops,
and
similar
retail
outlets.
He
was
President
and
principal
shareholder
of
Thill
Financial
Group
Inc.
The
brochure,
Hospitality
Guide,
was
produced
by
HGP
and
Hospitality
Guide
Publishing
Systems
was
another
separate
entity.
The
partnership
-
HGP
-
had
been
formed
to
market
Hospitality
Guide
to
the
hotel
industry
and
to
earn
revenue
from
sale
of
advertising.
In
order
to
do
so,
HGP
obtained
the
right
to
use
the
copyright
held
by
SLML.
He
estimated
that
more
than
100
persons
participated
in
the
partnership.
Thill
was
referred
to
the
documents
forming
the
Partnership
Proposal
in
Exhibit
A-4,
Vol.
1,
Tab
1,
and
stated
that
Thill
Financial
had
been
responsible
for
organizing
the
partnership.
Units
in
the
partnership
were
sold,
primarily,
to
existing
clients
of
Thill
Financial
or
Thill
Inc.
Most
of
the
sales
were
handled
by
Ken
Holloway
on
a
one-on-one
basis
when
people
would
visit
the
offices
of
Thill
Inc.
in
connection
with
another
matter
as
the
business
of
Thill
Inc.
included
provision
of
financial
advice
and
preparation
of
income
tax
returns.
Thill
was
referred
to
a
document
dated
July
1,
1990
-
Exhibit
A-
4,
Vol.
2,
Tab
154
-
entitled
Business
Consultant
Agreement
which
had
been
entered
into
by
SLML
and
Thill
Financial.
He
executed
the
agreement
on
behalf
of
Thill
Financial
but
did
not
know
who
had
signed
on
behalf
of
SLML.
The
term
of
the
agreement
was
one
year,
with
provision
for
automatic
renewal,
unless
otherwise
terminated.
He
met
with
someone
in
Bermuda
from
SLML
-
whom
he
cannot
now
recall
-
and
received
instructions
as
to
certain
matters
he
was
to
attend
to,
as
agent,
on
behalf
of
that
corporation.
Thill
was
also
shown
a
document,
referred
to
therein
as
a
License
Agreement,
dated
June
1,
1990
-
Exhibit
A-4,
Vol.
2,
Tab
155
-
made
between
SLML
and
HGP.
He
and
Ken
Holloway
signed
the
agreement
in
their
capacity
as
members
of
the
Management
Committee
of
HGP
and
someone
-
whom
he
cannot
now
identify
-
signed
on
behalf
of
SLML.
The
agreement
gave
HGP
the
right
to
use
the
copyright
to
Hospitality
Guide
for
a
10-year
term
and
required
payment
of
an
advance
royalty
to
SLML
in
the
sum
of
$800
per
run
-
defined
as
10,000
copies
-
for
each
of
the
first
6,600
runs
for
a
total
of
$5,280,000
and
thereafter
at
the
rate
of
$400
per
run
until
the
end
of
the
term
of
the
license.
Thill
was
shown
an
agreement
dated
March
27,
1991
-
Exhibit
A-4,
Vol.
2,
Tab
156
-
which
was
an
agreement
between
SLML
and
392444
B.C.
Ltd.
in
which
SLML
granted
the
exclusive
license
and
right
to
use
the
copyright
held
by
it
on
Hospitality
Guide
to
that
numbered
company
in
the
assigned
areas
of
Texas,
Louisiana
and
Iowa.
Thill
stated
that
his
signature
did
not
appear
on
the
document
but
he
understood
William
Norton
to
have
been
the
principal
shareholder
in
392444
B.C.
Ltd.
Thill
stated
the
sale
of
units
in
HGP
at
$5,000
each
was
handled
by
Ken
Holloway
and
there
was
an
arrangement
by
which
the
partners
could
pay
in
installments
but
there
was
an
additional
cost
of
$200
for
financing
and
administration
costs.
Holloway
was
responsible
for
the
day-to-day
operations
of
HGP
and
was
the
author
of
the
material
sent
to
investors
including
the
advice
that
they
should
be
as
active
as
possible
in
promoting
and
advancing
the
business
of
the
partnership
including
recruitment
of
additional
partners
and
contacting
hotels
and
potential
advertisers.
In
his
opinion,
a
salesperson
working
on
commission
should
be
able
to
sign
up
a
hotel
and
then
go
out
and
sell
the
required
advertising
within
one
week
and
a
print
run
of
10,000
copies
of
Hospitality
Guide
would
be
the
result.
He
referred
to
one
person
who
had
signed
up
16
hotels
in
four
months
in
1990
and
had
sold
all
the
advertising
needed
for
those
issues.
David
Bremner
had
sold
advertising
for
Hospitality
Guide
issues
produced
for
four
hotels
in
Whistler
and
it
had
taken
him
only
one
month.
He
stated
that
Bremner’s
success
in
Whistler
had
been
used
as
the
basis
for
sales
projections.
In
1990,
HGP
borrowed
the
sum
of
$5.28
million
from
Applied
and
Euro
Bank
Corporation
in
the
Grand
Cayman
in
order
to
pay
the
required
advance
royalties
to
SLML
pursuant
to
the
agreement.
He
knew
a
Director
and
also
the
Manager
of
Euro
Bank
but
otherwise
had
no
relationship
to
it.
HGP
borrowed
money
from
Thill
Financial
because
Thill
Financial
had
borrowed
the
money
from
Euro
Bank
on
the
basis
that
the
loan
was
secured
by
Applied
and
SLML.
Some
of
the
money
was
used
to
market
Hospitality
Guide
through
the
American
corporation
in
Nevada,
of
which
he
was
the
President
and
major
shareholder.
Thill
was
shown
a
letter
dated
July
8,
1992
on
the
letterhead
of
Thill
Financial,
signed
by
him,
in
which
he
had
written
to
David
Bremner
advising
that
Thill
Financial
agreed
to
extend
a
line
of
credit
in
the
sum
of
$500,000
US
for
the
expansion
of
Hospitality
Publishing
Systems
Inc.
(Exhibit
A-4,
Vol.
2,
Tab
142).
Thill
agreed
the
corporation
had
changed
its
name
from
Hospitality
Guide
Services
Inc.
but
the
Nevada
corporation
had
done
business
in
Canada
under
both
names.
He
was
shown
a
Promissory
Note
dated
December
30,
1990
-
Exhibit
A-4,
Vol.
2,
Tab
160
-
which
he
identified
as
having
been
signed
by
him
on
behalf
of
Thill
Financial
to
secure
a
loan
from
Applied
in
the
sum
of
$600,000
at
8%
interest
per
annum.
Thill
identified
a
Direction
to
Pay
(December
30,
1990)
and
a
Pay
Order/Assignment(
March
27,
1991)
-
Exhibit
A-4,
Vol.
2,
Tab
159,
signed
by
him
and
by
Holloway
and
him,
respectively,
on
behalf
of
HGP
and
Thill
Financial
which
instructed
Euro
Bank
Corporation
to
pay
the
sum
of
$600,000
directly
to
SLML
on
behalf
of
Thill
Financial,
the
borrower
together
with
Applied.
He
stated
that
Euro
Bank
Corporation
is
a
financial
institution
of
considerable
substance
in
Grand
Cayman.
At
Tab
161,
Vol.
2
in
Exhibit
A-4,
Thill
identified
a
document
entitled
Pay
Order/Assignment
dated
March
27,
1991,
to
pay
proceeds
of
the
loan
transaction
between
Thill
Financial
and
Applied,
in
the
sum
of
$5.28
million
directly
to
SLML
on
behalf
of
HGP
in
order
to
pay
the
required
advance
royalties
owed
by
HGP.
Thill
stated
that
the
document
was
signed
by
him
at
the
insistence
of
Euro
Bank.
He
stated
that
Thill
Financial
did
not
have
any
direct
obligation
to
Euro
Bank
in
relation
to
the
loan
of
$5.28
million
and
that
it
was
required
to
repay
Applied
who
was
the
direct
borrower.
He
stated
he
was
not
able
to
produce
any
agreements
between
HGP
and
Thill
Financial
authorizing
the
borrowing
of
$5.28
million
to
pay
over
to
SLML.
In
cross-examination
by
Counsel
for
the
respondent,
Thill
confirmed
that
he
was
a
shareholder
in
Applied
and
that
he
has
had
extensive
dealings
with
Applied
over
many
years.
He
stated
Thill
Financial
once
had
copies
of
documents
pertaining
to
the
loan
arranged
by
Applied
from
Euro
Bank
and
that
his
lawyers
and
accountants
had
them
on
file
but
for
some
reason
the
documents
cannot
be
located.
He
had
supplied
various
documents
to
Revenue
Canada
and
could
not
explain
why
none
related
to
the
Euro
Bank
loan
to
Applied
as
he
was
certain
there
had
been
documentation
of
that
loan
contained
in
the
“boxes
and
boxes”
of
material
provided
to
Revenue
Canada.
He
was
not
able
to
produce
any
records
to
prove
HGP
had
paid
the
sum
of
$5.28
million
to
SLML
but
expressed
the
opinion
there
must
have
been
documents
proving
SLML
had
received
the
money.
In
response
to
the
question
as
to
what
collateral
was
given
by
Thill
Financial
to
Applied
in
order
to
obtain
a
loan
in
the
sum
of
$5.28
million,
Thill
replied,
“just
its
good
name”.
He
explained
that
HGP
had
acknowledged
the
transaction
whereby
the
loan
was
used
to
pay
the
advance
royalties
to
SLML
so
it
could
have
the
right
to
publish
Hospitality
Guide.
However,
HGP
had
not
been
required
to
pay
back
the
loan
because
it
had
not
produced
sufficient
revenue
from
its
operations
and
remarked
that
one
“cannot
collect
blood
from
a
stone”.
After
Thill
Financial
ceased
carrying
on
business
in
September,
1995,
Applied
never
attempted
to
collect
from
that
corporation
any
part
of
the
$5.28
million
loan
so
Thill
Financial,
in
turn,
never
had
to
seek
repayment
from
HGP
through
contributions
from
the
individual
partners
who
held
units
in
the
partnership.
He
was
unable
to
recall
details
of
the
insurance
premiums
paid
by
HGP
but
at
one
point
had
met
with
the
Superintendent
of
Insurance
in
George
Town,
Grand
Cayman
who
advised
him
that
Leonine
Insurance
Limited
could
not
perform
as
promised
and
Thill
left
with
the
distinct
impression
that
the
Superintendent
was
“not
happy”
with
the
activities
of
the
Leonine
Insurance
Corporation.
Thill
was
referred
to
documents
in
Exhibit
R-1,
Vol.
4,
Tabs
41
and
42,
relating
to
the
purported
insurance
policies
issued
by
Leonine.
Thill
acknowledged
he
had
signed
the
agreements
on
behalf
of
HGP
and
that
the
total
amount
of
the
premiums
in
the
sum
of
$600,000
was
paid
by
means
of
the
loan
in
that
amount
obtained
by
Thill
Financial
from
Applied.
He
agreed
that
the
appropriate
regulatory
body
in
British
Columbia
had
prohibited
Thill
Financial
from
selling
insurance
within
the
province.
Thill
stated
he
had
read
the
constitution
of
Leonine
and
had
met
with
the
manager,
Costas
Takkas,
through
an
introduction
arranged
by
Thill’s
solicitor
and
an
individual
from
Euro
Bank.
He
agreed
there
was
no
proof
the
premium
of
$600,000
had
ever
been
paid
but
stated
he
had
never
been
aware
that
this
aspect
of
the
matter
was
of
any
interest
to
the
auditor
from
Revenue
Canada.
He
also
agreed
there
was
no
method
of
proving
HGP
had
ever
received
the
sum
of
$500,000
in
insurance
proceeds
as
reported
in
one
of
the
financial
statements
of
HGP.
Also,
there
was
no
proof
that
any
payments
under
the
performance
bond
policy
had
ever
been
paid
by
Leonine
to
HGP
as
a
result
of
409672
having
failed
to
produce
a
minimum
of
1,650
runs
of
Hospitality
Guide
as
required
under
its
contract
with
HGP.
However,
Thill
surmised
that
it
may
have
been
because
HGP
owed
money
to
Thill
Financial
which
was
the
actual
payee
for
purposes
of
payment
for
any
loss
occurring
under
the
policy.
Thill
was
referred
to
financial
statements
of
HGP
for
1990
and
1991
found
in
Exhibit
R-l,
Vol.
4,
Tab
44.
He
was
asked
to
explain
the
details
of
the
items
listed
as
expenses,
including
the
sums
of
$70,000
for
organization
cost,
$50,000
for
administration,
$35,000
for
wages
and
salaries
and
$25,000
for
rent.
He
replied
he
did
not
know
the
nature
of
those
expenses
but
HGP
had
occupied
three
offices
in
the
space
rented
by
Thill
Inc.
and
also
had
access
to
the
boardroom.
Thill
was
asked
why
HGP
would
have
any
expenses
involved
in
carrying
on
any
business
when
it
had
contracted
with
409672
to
undertake
the
actual
production
and
distribution
of
Hospitality
Guide.
Thill
replied
that
HGP
should
not
have
had
any
expenses
other
than
payment
of
royalties
and
some
legal
and
accounting
expenses.
He
stated
he
was
familiar
with
the
documents
contained
in
the
Partnership
Proposal
including
the
projections
of
revenue
and
expenses
and
as
a
member
of
the
Management
Committee
of
HGP
he
had
never
questioned
the
expenditures
shown
on
the
financial
statements.
He
knew
that
Bremner
had
sold
the
copyright
in
Hospitality
Guide
to
SLML
for
the
sum
of
one
dollar
and
other
valuable
consideration
but
he
did
not
know
what
that
other
consideration
might
have
been.
In
his
opinion,
it
was
completely
reasonable
for
HGP
to
pay
the
sum
of
$5.28
million
to
SLML
for
advance
royalties.
He
pointed
out
that
this
sum
was
the
amount
which
had
been
agreed
upon
by
HGP
and
SLML
following
certain
negotiations.
After
reviewing
all
of
the
figures
it
seemed
feasible
that
the
net
profit
to
the
partnership
from
participating
in
the
venture
would
be
in
the
approximate
sum
of
$800
per
print
run
after
paying
all
expenses
and
royalties.
The
intention
was
for
HGP
to
have
100
salesmen
in
the
field
selling
enough
advertising
to
publish
one
issue
of
Hospitality
Guide
per
week
or,
at
a
minimum,
collectively
selling
enough
advertising
to
permit
40,000
runs
per
year
to
be
produced
for
participating
hotels.
He
did
not
understand
the
reason
for
Bremner’s
inability
to
hire
a
sufficient
number
of
persons
to
handle
the
selling.
He
stated
the
various
companies
in
Thill
Financial
Group
had
provided
a
lot
of
money
in
order
that
the
project
could
succeed.
He
agreed
he
was
the
sole
shareholder
of
409672,
the
company
under
contract
with
HGP
to
produce
Hospitality
Guide.
However,
he
explained
there
were
two
main
problems,
one
of
which
was
that
the
design
of
the
brochure
was
never
fixed
and
revisions
cost
a
lot
of
money
and
also
used
up
time
better
spent
in
developing
a
sales
organization.
The
other
difficulty
was
that
Bremner
was
unable
to
acquire
an
adequate
salesforce
to
make
the
project
work.
In
retrospect,
Thill
stated
he
should
have
fired
Bremner
for
non-performance.
Thill
was
shown
the
income
tax
returns
and
financial
statements
of
409672
-
Exhibit
R-1,
Vol.
1,
Tabs
11
and
12,
and
he
identified
his
signatures
on
the
returns.
He
stated
the
financial
problems
could
have
been
overcome
by
increasing
the
volume
of
sales.
At
that
point
HGP
had
done
all
it
could
by
paying
the
advance
royalties
to
SLML
and
retaining
409672
under
contract
to
produce
the
publication.
Thereafter,
HGP
was
passive
and
even
though
Thill
was
the
sole
shareholder
of
409672
and
provided
money
to
it
through
Thill
Financial,
which
he
controlled,
the
required
production
was
still
not
achieved
under
Bremner’s
management.
In
Thill’s
view,
“
You
get
good
salesmen
on
commission,
not
by
paying
a
salary”.
Thill
was
shown
an
invoice,
on
the
letterhead
of
Thill
Financial,
totalling
$147,000,
addressed
to
HGP
for
the
year
ending
December
31,
1990.
(Exhibit
R-1,
Vol.
3,
Tab
34).
The
invoice
-
covering
the
six-month
period
from
the
formation
of
HGP
on
June
1,
1990
to
December
31,
1990
-
referred
to
expenses
paid
on
behalf
of
HGP
by
Thill
Financial
including
$50,000
for
organization,
$35,000
for
administration,
$25,000
for
wages
and
salaries,
$15,000
for
office
rent,
$10,000
for
legal
and
accounting
and
$12,000
for
travel
and
office.
Thill
stated
that
it
was
“most
likely”.
Thill
Financial
received
payment
of
the
full
amount
of
the
invoice
from
HGP.
Thill
Inc.
-
not
Thill
Financial
-
was
the
lessee
of
the
office
space
and
Thill
Financial
was
the
active
corporation
in
relation
to
the
business
of
HGP
since
Thill,
personally,
had
been
introduced,
through
his
own
solicitor
or,
perhaps,
someone
at
Applied,
to
the
persons
controlling
SLML.
The
consultant
agreement
in
Exhibit
A-4,
Vol.
2,
Tab
154,
was
merely
a
document
formalizing
previous
instructions
of
agency
he
had
received
and
which
he
had
carried
out
by
signing,
as
agent
for
SLML,
the
assignment
of
copyright
to
it
from
David
Bremner.
Under
the
consultant
agreement,
Thill
Financial
was
entitled
to
a
commission
of
15%
as
compensation
for
services
rendered.
He
stated
that
HGP,
through
the
Management
Committee,
of
which
he
was
a
member,
agreed
to
pay
the
sum
of
$5.28
million
to
SLML
in
advance
royalties
and
denied
designing
that
system
whereby
those
advance
royalties
could
be
used
to
create
a
large
loss
for
HGP
which
could
then
be
used
by
each
partner
to
reduce
income
tax
for
the
1990
taxation
year.
Counsel
handed
Thill
a
document
on
which
was
printed
a
list
of
what
was
characterized
therein
as:
Tax
Shelter
Schemes
Promoted
By
The
Thill
Group
Of
Companies
(Exhibit
R-2).
Thill
was
asked
to
confirm
that
a
common
feature
in
all
of
these
various
promotions
-
20
in
total
from
1983-1994,
inclusive
-
was
to
operate
through
various
corporations
controlled
by
him
and
to
have
investors
pay
advance
royalties
to
offshore
corporations
and
then
to
obtain
licenses
from
those
entities
to
produce
or
market
a
product
through
means
of
contracting
with
other
corporations
to
carry
out
production.
Thill
stated
he
did
not
recall
details
of
evidence
he
had
given
in
the
case
of
Watson
v.
/?.
but
agreed
that
one
of
the
main
endeavours
of
companies
in
the
Thill
Group
was
to
market
partnership
units
and
he
agreed
that
his
companies
had
promoted
six
different
partnerships
in
1991
and
five
in
1992.
The
publication,
Hospitality
Guide,
was
the
product
marketed
by
HGP
-
the
subject
of
the
within
appeals
-
and
also
of
partnerships
formed
in
1991
under
the
names,
Hospitality
Guide
1991
Partnership,
Hospitality
Guide
Ontario
Partnership,
and
in
1992,
Hospitality
Guide
East
Partnership
and
Hospitality
Guide
Mid-West
Partnership.
He
was
referred
to
a
document
in
Exhibit
R-1,
Vol.
3,
Tab
36,
dated
June
1,
1990
whereby
SLML
sold
to
HGP
the
right
to
use
the
copyright
in
Hospitality
Guide
in
certain
territories
as
set
out
in
paragraph
1.1.
He
was
also
requested
to
read
a
portion
of
the
partnership
Proposal
-
Exhibit
R
-3
relating
to
the
Hospitality
Guide
East
Partnership
in
which
it
was
stated,
in
Part
3,
that
the
partnership
would
distribute
the
publication
throughout
the
States
of
Maryland,
Delaware,
Washington,
DC
(sic),
Ohio,
West
Virginia
and
Virginia.
In
addition,
Thill
was
shown
the
Partnership
Proposal
-
Exhibit
R-
4
-
relating
to
the
Hospitality
Guide
Mid-West
Partnership
in
which
the
partnership
would
acquire
a
license
to
market
Hospitality
Guide
throughout
the
States
of
Michigan,
Illinois,
Indiana
and
Wisconsin.
It
was
pointed
out
to
Thill
that
most
of
the
areas
supposedly
sold
by
SLML
to
the
new
partnerships
in
1992
had
in
fact
already
been
sold
for
a
ten-year
period
to
HGP
pursuant
to
the
agreement
dated
June
1,
1990.
Under
that
agreement,
certain
areas
in
Canada
and
the
United
States
were
excepted
from
the
granting
of
the
exclusive
license
to
market
Holiday
Guide
and,
by
not
having
been
excluded,
would
be
included
all
of
the
geographical
territorial
designations
covered
by
the
agreement
which
was
supposed
to
have
been
in
place
according
to
the
documents
in
Exhibit
R-3
and
encompassing,
as
well,
all
of
the
areas
covered
by
the
proposed
partnership
in.
Exhibit
R-4.
The
only
explanation
Thill
offered
was
that
HGP
-
the
1990
version
-
must
have,
at
some
point,
given
up
its
rights
so
that
SLML
could
once
again
make
certain
areas
available
to
new
partnerships
which
Thill,
through
his
various
companies,
continued
to
promote.
Thill
stated
that
no
one
ever
noticed
that
the
partnerships
,
following
1990,
were
based
on
acquiring
a
license
to
distribute
Hospitality
Guide,
using
the
copyright
held
by
SLML,
for
areas
which
had
already
been
sold
to
earlier
partnerships
in
return
for
payment
of
large
amounts
of
advance
royalties.
Thill
was
shown
a
document
entitled
“Summary
Of
Deposits:
Thill
Financial
Group
Inc.”
pertaining
to
the
operation
of
an
account
-
84500-8
in
the
North
Shore
Credit
Union
in
Vancouver
during
the
period
July
13,
1989
to
December
31,
1991.
He
was
also
shown
another
document
entitled
“Summary
Of
Disbursements:
Thill
Financial
Group
Inc.”,
relating
to
monies
flowing
out
of
the
same
account
during
the
period
September
1,
1989
to
December
31,
1991.
Thill
agreed
account
84500-8
had
been
used
to
receive
monies
from
investors
purchasing
units
in
various
promotions
handled
through
Thill
Inc.
or
Thill
Financial
and
he
did
not
disagree
with
the
amounts
shown
which
indicated
that
$1,676,152
had
been
received
by
Thill
Financial
from
which
total
the
sum
of
$770,850
was
attributable
to
investment
in
HGP
by
the
partners.
The
Summary
of
Disbursements
-
Exhibit
R-6
-
listed
disbursements
totalling
$1,397,385,
of
which
the
sum
of
$39,346
was
paid
to
the
Edelweiss
Credit
Union.
Thill
stated
that
sum
was
made
up
of
payments
on
a
mortgage
on
his
wife’s
house
because
she
had,
in
the
past,
loaned
some
monies
to
one
of
the
companies
in
the
Thill
Group.
The
sum
of
$18,910
paid
to
the
Westminster
Credit
Union
was
for
lease
payments
on
the
BMW
and
the
Mercedes
driven
by
him
and
Ken
Holloway.
The
amount
of
$153,398
was
paid
out
for
legal
and
accounting
fees
and
Holloway
received
$128,490
as
salary.
Thill,
personally,
received
the
sum
of
$29,894
and
$11,600
went
to
Thill
Inc.
while
another
$78,785
was
paid
in
commissions
to
people
in
connection
with
the
sale
of
a
variety
of
partnership
units.
The
sum
of
$90,750
was
paid,
in
total,
to
TD
Visa
and
to
Mastercard,
and
$39,000
went
to
Maturity
magazine.
Hospitality
Information
Guide
-
actually
409672
operated
by
David
Bremner
-
received
the
sum
of
$110,800
and
393461
B.C.
Ltd.
-
owned
by
William
Norton
-
was
paid
$54,616
as
compensation
for
promoting
Hospitality
Guide
in
Texas
and
Missouri
and
may
also
have
been
paid
some
money
for
promotional
efforts
relating
to
another
Thill-promoted
venture
called
Enjoy
US.
Hospitality
Information
Guide
received
$110,800.
Thill
stated
he
had
never
bothered
to
attribute
or
allocate
expenses
to
a
particular
partnership
or
project
since
all
of
them
were
promoted
by
him
and/or
one
or
more
of
his
companies
and
records
were
kept
at
the
offices
of
Thill
Inc:
Thill
stated
there
were
no
deposits
of
payments
from
SLML
to
Thill
Financial
as
required
by
the
agreement
based
on
the
15%
commission
but
SLML
allowed
Thill
and
his
companies
to
use
the
money
as
he
saw
fit.
Thill
was
again
referred
to
Exhibit
A-4,
Vol.
2,
Tab
161
_—
the
Pay
Order/Assignment
-
by
which
SLML
supposedly
received
full
payment
of
advance
royalties
in
the
sum
of
$5.28
million
through
receiving
the
proceeds
of
a
loan
made
by
Applied
to
Thill
Financial.
In
view
of
that
apparent
full
satisfaction
of
any
obligation
due
from
HGP,
Thill
was
asked
the
destination
of
the
payments
of
$5,000
per
unit
from
investors
in
HGP
to
which
Thill
replied
that
all
of
the
$770,850
which
was
paid
in
by
those
investors
was
owed
to
SLML
and,
in
turn,
was
due
to
him
from
SLML
for
services
rendered,
so
he
just
kept
the
money.
He
agreed
that
his
commission,
pursuant
to
his
consultant
agreement
with
SLML,
was
15%
of
$5.28
million
-
the
amount
of
the
advance
royalties
-
which,
on
calculation,
was
$792,000
but
stated
the
narrow
range
between
these
amounts
was
purely
a
coincidence.
He
agreed
that
for
the
period
covered
by
Exhibit
R-5,
all
but
the
sum
of
$1,081,
or
99.9%
of
revenues
of
Thill
Financial
were
derived
from
sale
of
partnership
units
in
various
projects.
Counsel
pointed
out
to
Thill
that
the
July
1,
1990
contract
between
Thill
Financial
and
SLML
had
nothing
whatsoever
to
do
with
selling
partnerships
in
HGP.
Thill
agreed
that
his
arrangement
with
SLML
had
not
been
disclosed
to
the
partners
in
HGP.
As
for
the
line
of
credit
in
the
sum
of
$500,000
US
supposedly
available
to
Bremner
pursuant
to
the
letter
of
July
8,
1992,
-
Exhibit
A-4,
Vol.
2,
Tab
142
-
Thill
explained
that
in
the
event
the
funds
were
drawn
down
in
accordance
with
promotional
requirements,
Thill
Financial
could
have
obtained
those
funds
through
the
Nevada
corporation
or
from
other
sources.
During
re-examination
by
Counsel
for
the
appellants,
Thill
stated
that
409672
had
operated
an
account
at
the
Bank
of
Nova
Scotia.
He
stated
he
had
met
twice
with
the
Superintendent
of
Insurance
in
George
Town,
Grand
Cayman
in
1993
and
1995.
The
accounting
for
the
Thill
Group
was
done
by
employees
of
C.
Buckley
&
Co.
Inc.
and
there
was
usually
one
person
from
that
firm
physically
present
in
the
offices
of
Thill
Inc.
to
do
the
necessary
work.
Thill
explained
there
were
probably
too
many
different
marketing
proposals
of
varying
concept
which
were
short
term
and
not
properly
followed
through,
although
David
Bremner
had
done
so
in
the
early
stages
when
he
contacted
hotels
and
then
sold
the
necessary
advertising.
Joy
Ganeev-Davies
testified
she
is
self-employed
and
lives
in
Richmond,
British
Columbia.
She
had
been
a
Business
Development
Officer
at
a
community
college
when
she
was
introduced
to
the
concept
of
Hospitality
Guide.
In
1991,
she
became
employed
by
the
organization
producing
the
publication
to
put
into
place
a
marketing
strategy.
As
part
of
her
employment
package
she
received,
free
of
charge,
a
unit
in
a
partnership.
Her
function
was
to
put
together
a
data-client
base
of
hotels
and
also
to
become
involved
in
selling
an
investor
in
a
joint
venture
operation
or
J
VO
in
which
that
person
could
sell
Hospitality
Guide
within
an
assigned
territory.
She
wrote
marketing
strategy
and
recruiting
packages
to
be
used
when
attempting
to
sell
the
J
JVO
concept
to
an
investor.
She
did
not
have
anything
to
do
with
the
financial
side
of
the
business.
Advertisements
had
been
placed
in
newspapers
offering
to
provide
additional
information
to
investors
about
a
joint
venture
operation
and
when
a
response
was
received
she
would
follow
up
and
deal
with
the
interested
party.
David
Bremner
was
her
immediate
supervisor.
She
believed
she
was
working
for
an
entity
called
Hospitality
Publishing
Systems.
She
sold
a
J
VO
to
a
person
in
Portland,
Oregon
at
a
price
of
$6,000
-
approved
by
Bremner
-
even
though
the
investment
opportunity
had
been
advertised
at
a
range
between
$30,000
to
$50,000.
She
was
not
able
to
segregate
her
duties
between
the
1990
and
1991
partnerships
involved
with
the
distribution
of
Hospitality
Guide
and
all
of
her
efforts
were
directed
towards
selling
the
J
VO
concept
in
the
United
States.
David
Bremner
prepared
the
spreadsheets
showing
the
potential
returns
available
to
investors.
She
left
the
employ
of
Hospitality
Publishing
Systems
in
September,
1993.
She
prepared
the
list
of
client
hotels
-
Exhibit
A-4,
Vol.
2,
Tab
149
on
the
basis
of
certain
numbers
which
had
been
provided
to
her.
Counsel
for
the
respondent
did
not
cross-examine
and
William
Norton,
the
self-represented
appellant,
was
still
not
present.
Michael
Bendall
testified
he
is
a
manager
of
project
resources
and
works
in
data
collection
systems
for
industry.
He
is
familiar
with
Hospitality
Guide
and
is
an
investor
in
HGP.
He
is
an
appellant
in
a
case
to
be
heard
later
arising
from
a
reassessment
by
the
Minister
disallowing
certain
business
losses.
As
of
1990,
Bendall
stated
he
had
known
Henry
Thill
for
six
years
and
had
dealt
with
Thill
Inc.
while
making
other
investments.
He
recalled
having
looked
at
the
material
contained
in
the
Partnership
Proposal
and
had
told
Thill
at
some
point
in
their
relationship
that
he
was
available
on
a
part-time
basis
to
work
for
one
or
more
of
the
partnerships.
In
1993,
he
became
involved
with
Hospitality
Guide
from
the
viewpoint
of
determining
whether
or
not
it
was
economically
viable.
He
reviewed
available
material
and,
in
1995,
was
asked
by
Thill
to
operate
Hospitality
Guide,
a
duty
he
undertook
between
March
and
September.
During
that
period
he
approached
hotels
in
Victoria
and
Vancouver
and
was
able
to
sign
up
six
hotels
and
produced
24
print
runs
for
a
total
of
240,000
pieces.
He
sold
advertising
to
30
separate
businesses.
He
had
one
part-time
employee
to
assist
him.
The
Empress
Hotel
in
Victoria
participated
in
a
publication
involving
70,000
pieces
and
other
hotels
had
issues
produced
which
were
in
the
range
of
30,000-40,000
pieces.
There
was
one
20,000
piece
publication
in
Japanese.
He
discovered
that
the
hotels
were
enthusiastic
about
the
concept
but
it
was
not
easy
to
sell
advertising
because
by
June,
1995,
most
of
the
potential
customers
had
already
committed
to
an
advertising
budget
for
the
year.
However,
many
of
these
individuals
expressed
interest
in
Hospitality
Guide.
The
advertisements
sold
for
amounts
between
$750
and
$1,500,
depending
on
the
number
of
runs
and/or
pieces
per
hotel.
The
bank
account
for
the
operation
had
already
been
established
at
the
Bank
of
Nova
Scotia.
He
was
referred
to
a
Deposit
Book
in
the
name
of
Hospitality
Publishing
Systems
-
Exhibit
A-4,
Vol.
1,
Tab
44
-
which
he
identified
as
the
one
he
used
to
deposit
advertising
revenue
into
the
account.
He
had
joint
signing
authority
along
with
either
Thill
and/or
Bremner.
He
did
not
receive
any
financial
assistance
from
any
external
source.
He
started
from
scratch
and
could
not
locate
the
plates
or
graphics
that
had
obviously
been
used
to
produce
numerous
publications
of
Hospitality
Guide
since
1990.
At
the
end
of
September,
1995
he
was
offered
a
full-time
job
and
quit
working
for
Hospitality
Publishing
Systems.
He
continued
to
believe
that
if
the
business
was
properly
managed
it
had
the
potential
to
earn
profit
for
the
partners.
Prior
to
running
Hospitality
Guide
on
a
day-to-day
basis,
he
had
not
been
involved
in
sales
and
the
student
he
hired
in
Victoria
worked
on
a
commission.
Total
revenue
for
the
period
March-September
1995,
was
in
the
sum
of
$25,000
and
expenses
amounted
to
$29,000.
He
was
operating
out
of
his
own
house
and
did
not
charge
any
rent
or
other
related
costs
to
the
business.
He
had
to
prepare
floorplans
and
local
maps
of
areas
surrounding
participating
hotels
without
benefit
of
the
previous
material
which
should
have
been
on
file.
As
a
result,
he
had
additional
costs
associated
with
graphic
design
which
would
have
been
reduced
in
the
future.
On
a
number
of
occasions
he
had
asked
Thill
and/or
Bremner
for
computer
data
files,
disks
or
other
material
such
as
film
and
he
was
always
told
this
information
was
not
available.
He
discovered
that
hotels
which
had
previously
been
the
subject
of
an
issue
of
Hospitality
Guide
were
very
satisfied
and
even
though
the
projections
were
“somewhat
optimistic”
he
felt
enough
hotels
could
be
convinced
to
take
part
in
the
program
that
there
was
still
room
for
profit.
He
thought
it
was
a
viable
business
in
spite
of
HGP
having
to
pay
the
sum
of
$5.28
million
in
advance
royalties.
He
stated
he
was
not
overly
concerned
with
such
kind
of
“high-level”
financial
affairs.
When
he
purchased
his
unit
in
HGP
in
1990,
he
did
not
understand
the
nature
of
the
activity
of
HGP
or
the
organization
actually
producing
Hospitality
Guide
compared
to
what
he
later
learned
while
actually
running
the
operation
in
1995.
In
cross-examination
by
Counsel
for
the
respondent,
Bendall
stated
he
thought
his
investment
in
HGP
in
1990
would
be
passive.
Prior
to
participating
in
that
partnership,
he
had
purchased
units
in
Speed
Read,
Enjoy
U.S.,
Enjoy
Partnership,
and
thereafter
made
investments
in
Commerce
Guide
West
Partnership
in
1992.
He
agreed
that
not
one
of
these
ventures
was
still
in
existence
and
that
when
he
purchased
his
unit
in
HGP
in
1990
he
took
into
account
the
past
failures
of
other
Thill-promoted
tax
shelter
programs.
He
stated
the
decision
of
the
trial
judge
in
the
Moloney
case
had
caused
him
some
concern
so
he
spoke
to
Ken
Holloway
and
asked
for
assurance
that
the
problems
associated
with
earlier
promotions
would
not
be
repeated
and
the
businesses
would
be
run
properly.
Holloway
assured
him
the
current
partnerships
would
not
experience
those
difficulties
and
that
David
Bremner
was
well
qualified
to
conduct
the
business
relating
to
Hospitality
Guide.
When
Bendall
agreed,
in
1995,
to
run
the
business
of
Hospitality
Guide
Thill
told
him
the
Thill
corporations
would
take
care
of
any
shortfall
in
revenue.
Despite
not
taking
any
wages
and
operating
out
of
his
own
home,
there
was
still
a
loss
as
a
result
of
operations
and
Thill
did
not
make
good
on
his
promise.
Only
$29,000
in
revenue
was
produced
from
24
runs,
partially
because
the
publication
done
for
the
Empress
Hotel
was
70,000
pieces
and
a
discount
had
to
be
given
to
advertisers,
so
the
average
advertisement
produced
only
$120
per
run
instead
of
$300
which
would
have
been
the
case
if
only
separate
runs
of
10,000
pieces
had
been
done.
No
royalties
were
paid
to
HGP
for
any
of
the
runs
produced
by
him
in
1995
even
though
he
was
aware
of
the
requirement
to
pay
$800
for
every
run
of
10,000
pieces.
Initially,
when
he
agreed
with
Thill
to
carry
on
the
business
of
publishing
Hospitality
Guide
the
arrangement
was
that
he
could
retain
all
profits
after
payment
of
expenses,
including
royalties.
Counsel
for
the
appellant
filed
the
affidavit
of
John
Usher,
an
officer
of
the
Department
of
National
Revenue
which
stated
an
examination
of
the
records
showed
that,
subsequent
to
the
1991
income
tax
return,
409672
Alberta
Ltd.
did
not
file
any
other
returns.
Also,
the
affidavit
of
Robert
J.
Hobart
was
filed.
Mr.
Hobart
is
the
Superintendent
and
Chief
Executive
Officer
of
the
Financial
Institutions
Commission
in
Vancouver,
British
Columbia
and
deposed
that
at
no
time
did
Leonine
Insurance
Corporation
receive
a
business
authorization
from
the
Financial
Institutions
Commission
as
required
by
statute
and
further
that
in
his
capacity
as
Superintendent,
in
April
1995,
he
caused
a
cease
and
desist
order
to
be
issued
against
Leonine
Insurance
Corporation
pursuant
to
subsection
243(2)
of
the
Financial
Institutions
Act
which
order
included
the
ground
that
Leonine
Insurance
Corporation
was
carrying
on
the
insurance
business
in
the
Province
of
British
Columbia
while
prohibited,
that
is,
without
obtaining
a
business
authorization
from
the
Financial
Institutions
Commission.
The
affidavit
of
John
Palmer
was
also
filed.
Mr.
Palmer
deposed
that
he
is
the
Superintendent
of
Financial
Institutions
appointed
in
1994
by
the
Governor
in
Council
pursuant
to
subsection
5(1)
of
the
Office
of
the
Superintendent
of
Financial
Institutions
Act
(OSFI)
and
that
at
no
time
did
any
entity
named
Leonine
Insurance
Corporation
have
any
authority
to
carry
on
the
business
of
insuring
risks
in
Canada.
Spencer
William
Holmes
testified
he
has
been
a
Chartered
Accountant
for
25
years
and
for
the
past
12
years
has
worked
as
an
auditor
at
Revenue
Canada
in
the
Tax
Avoidance
Section.
He
conducted
an
audit
of
the
books
and
records
of
HGP.
He
had
previously
conducted
audits
on
other
Thill-
promoted
tax
shelter
programs
generally
known
as
Speed
Read,
U.S.
Enjoy,
Enjoy
Canada
and
Enjoy
Partnership.
He
met
with
Henry
Thill,
Ken
Holloway
and
David
Bremner
in
their
capacity
as
members
of
the
Management
Committee
of
HGP.
HGP
was
formed
on
June
1,
1990
and
he
obtained
records
from
the
North
Shore
Credit
Union
pertaining
to
an
account
operated
by
Thill
Financial
Group
Inc.
After
performing
an
analysis
of
those
records,
he
prepared
a
Summary
of
Deposits
-
Exhibit
R-5
-
relating
to
account
#84500-8.
He
referred
to
the
deposit
book
in
order
to
list
the
various
deposits
and
then
prepared
a
spreadsheet
allocating
deposits
to
a
source
of
funds.
He
discovered
that
funds
paid
in
by
investors
for
various
partnerships
were
commingled
with
other
funds
flowing
into
Thill
Financial.
He
was
not
provided
with
any
separate
banking
records
for
HGP.
There
was
one
deposit
in
the
sum
of
$20,000
identified
only
by
the
word
Hospitality
and
did
not
indicate
the
name
of
the
specific
investor.
Generally,
he
was
able
to
know
the
name
of
an
investor
in
HGP
or
other
partnerships
because
it
was
written
on
the
deposit
slips.
During
the
month
of
December,
1991,
approximately
$300,000
came
into
the
Thill
Financial
account
from
individual
investors
in
the
Hospitality
Guide
1991
Partnership
and/or
Hospitality
Guide
Ontario
Partnership.
Holmes
stated
he
also
prepared
a
Summary
of
Disbursements
-
Exhibit
R-6
-
on
the
same
account
covering
the
period
September
1,
1989
to
December
31,
1991.
He
had
access
to
cheque
stubs,
bank
statements
and
cancelled
cheques
and
prepared
a
spreadsheet
in
which
he
allocated
payments
into
categories
by
using
the
date
of
payment
and
the
identity
of
the
payee.
The
total
of
all
disbursements
from
that
account
was
in
the
sum
of
$1,397,385.
The
total
of
deposits
to
that
account
for
the
period
July
13,
1989
to
December
31,
1989
was
$1,676,152.
Holmes
pointed
out
there
was
approximately
$260,000
in
the
account
on
December
31,
1991
which
would
account
for
most
of
the
difference
in
the
totals
of
the
deposits
and
disbursements.
Holmes
tracked
payments
of
$110,800
from
Thill
Financial
to
409672,
operating
as
Hospitality
Information
Guide.
There
was
a
total
of
$6,966
paid
to
Activity
Printing
but
some
of
the
individual
cheques
were
marked
“loan”.
The
sum
of
$149,127
was
attributable
to
withholding
of
income
tax
from
employees
of
Thill
corporations.
The
TD-Visa
and
Mastercards
were
in
the
name
of
Henry
Thill,
personally,
and
charges
to
these
accounts
totalled
$90,750
with
no
allocation
to
any
particular
project.
There
were
a
variety
of
payments
for
repairs
on
automobiles,
coffee
and
office
supplies,
lease
payments
on
expensive
cars.
He
was
never
provided
with
any
banking
records
on
any
accounts
operated
by
409672
and
he
inspected
records
of
other
accounts
operated
by
Thill
Financial
but
there
was
almost
no
activity
in
them
during
the
period
covered
by
his
audit.
Holmes
was
referred
to
a
document
in
Exhibit
R-l,
Vol.
4,
Tab
39,
prepared
by
him,
which
was
a
summary
of
cash
flow
into
the
accounts
of
H.N.
Thill
&
Associates
(Thill
Inc.)
and
Thill
Financial
Group
Inc.
(Thill
Financial).
Holmes
discovered
that
by
mid-1990
the
Thill
Inc.
account
-
#84396-1
-
at
the
North
Shore
Credit
Union
was
being
used
less
frequently
and
the
account
-
#84500-8
-
also
at
North
Shore
Credit
Union,
in
the
name
of
Thill
Financial,
was
becoming
active.
He
prepared
the
document
at
Tab
39
as
a
position
paper
in
order
to
assist
in
identifying
sources
of
deposits
and
the
account
in
which
they
were
placed
and
the
nature
of
disbursements.
Holmes
explained
that
he
had
recently
concluded
an
audit
of
Enjoy
Partnership
prior
to
the
HGP
audit
and
mistakenly
referred
to
deposits
having
been
made
from
contributions
of
investors
to
Enjoy
Partnership
when
they
were
actually
for
HGP.
He
was
aware
of
the
alleged
payment,
by
HGP,
of
$5.28
million
in
royalties
to
SLML
but
was
unable
to
find
any
evidence
it
had
ever
been
paid.
Similarly,
he
could
find
no
proof
that
any
payment
had
been
made
by,
or
on
behalf
of,
HGP
in
relation
to
any
insurance
premiums.
When
he
requested
some
documentation
from
Thill
that
might
prove
such
payment,
Thill
gave
him
the
promissory
notes
from
HGP
to
Thill
Financial.
Holmes
stated
he
could
not
find
any
proof
of
any
loan
from
Euro
Bank
Corporation
and
when
he
phoned
George
Town,
Grand
Cayman
and
inquired
about
a
telephone
listing
for
that
entity,
he
was
advised
there
was
none.
He
requested
Thill
provide
him
with
documents
supporting
the
making
of
the
alleged
loan
by
Applied
to
Thill
Financial
together
with
the
General
Ledger
of
Thill
Inc.
and
Thill
Financial
but
Thill
provided
nothing
in
response.
There
were
no
banking
records
or
anything
else
to
support
the
alleged
receipt
of
the
sum
of
$500,000
shown
on
HGP
financial
statements
as
having
been
received
in
the
form
of
insurance
proceeds.
In
cross-examination
by
Counsel
for
the
appellants,
Holmes
stated
that
at
the
office
of
C.
Buckley
&
Co.
Inc.-
Thill’s
accountants
-
he
had
seen
a
variety
of
documents
pertaining
to
investments
by
partners,
including
an
insurance
policy
issued
by
Leonine
Insurance
Corporation.
During
the
period
July
13,
1989
to
December
31,
1991,
Thill
Financial
received
the
sum
of
$30,000
from
Applied
and
the
cheques
were
usually
signed
by
Henry
Thill.
There
were
payments
made
to
various
people
which
appeared
to
be
for
wages
or
salary
but
he
was
unable
to
ascertain
what
portion
of
expenses,
such
as
telephone,
might
be
properly
allocated
to
HGP
as
there
was
no
means
of
doing
so.
Wherever
possible,
he
used
notations
on
deposit
slips
or
cheque
stubs
to
identify
the
contributor
or
payee
and
then
make
an
allocation
to
a
category
in
a
spreadsheet.
Counsel
for
the
appellants
submitted
the
partnership
-
HGP
-
was
properly
formed
for
the
purpose
of
carrying
on
the
business
of
producing
and
distributing
Hospitality
Guide.
David
Bremner
had
created
a
prototype
based
on
an
artist’s
rendering
and
successfully
promoted
the
idea
to
four
hotels
in
Whistler
and
then
sold
enough
advertising
to
fill
up
each
issue
and
make
it
viable.
Bremner
did
not
have
sufficient
capital
to
pursue
the
development
of
the
business
and
chose
to
assign
his
copyright
to
SLML.
Michael
Bendall
was
still
carrying
on
the
business,
in
1995,
of
producing
and
marketing
Hospitality
Guide,
so
there
was
obviously
a
business
in
existence
and
the
fact
it
failed
in
the
end
does
not
mean
there
was
no
reasonable
expectation
of
profit
in
1990
and/or
1991.
Counsel
for
the
respondent
submitted
there
was
no
real
business
to
the
partnership.
Thill
controlled
409672
which
was
solely
responsible
for
the
production
of
Hospitality
Guide.
He
controlled
the
flow
of
funds
from
his
various
corporations
and
merely
created
the
illusion
of
activity
by
HGP
in
order
to
proceed
to
sell
new
promotions
to
other
investors.
Counsel
pointed
out
the
records
indicated
that
less
than
$110,000
from
a
total
of
$770,850
was
expended
on
production
of
the
publication,
much
of
which
was
payment
of
wages
to
Bremner
who
was
occupied
in
marketing
other
publications
or
investments
having
nothing
to
do
with
HGP.
The
assumption
by
the
Minister
that
SLML
was
also
controlled
by
Thill
was
not
rebutted
and
he
admitted
to
acting
as
agent.
There
was
no
difference
in
this
tax
shelter
scheme
and
others
which
had
been
found
by
the
Tax
Court
to
have
had
no
business
purpose
whatsoever
and
the
so-called
expenses,
if
incurred,
were
unreasonable,
not
proven,
and
the
deduction
of
the
advance
royalty
payment,
except
on
the
basis
of
$800
per
print
run
when
actually
done,
was
prohibited
by
virtue
of
subsection
18(9)
of
the
Income
Tax
Act
because
it
would
be
an
amount
of
a
royalty
not
due
until
after
the
end
of
the
year
in
which
it
was
claimed.
In
the
case
of
Watson
v.
R.
[1995]
2
C.T.C.
2460
(T.C.C.),
the
Honourable
Judge
Hamlyn,
Tax
Court
of
Canada,
considered
the
appeals
of
taxpayers
who
had
invested
with
Thill
in
the
Enjoy
magazine
venture
in
the
United
States.
In
that
case,
Judge
Hamlyn
found
there
had
only
been
one
issue
of
Enjoy
printed
but
less
than
20%
of
the
copies
actually
distributed.
In
the
appeal
of
Lorenz
v.
R.
(November
13,
1996),
Doc.
95-358(IT)G,
95-
364(IT)G,
95-368(IT)G,
95-462(IT)G
(T.C.C.)
-
heard
by
me
-
the
taxpayers
had
invested
in
the
Enjoy
Canada
tax
shelter
promotion
marketed
by
Thill
and
the
evidence
disclosed
there
had
been
no
magazine
produced
at
all.
In
that
case
I
held
there
was
no
business
in
existence
and
that
the
entire
purpose
of
the
scheme
was
to
provide
the
investor
with
a
reduction
in
income
tax.
In
Lorenz
et
al.
there
was
no
opportunity
for
anyone
other
than
Thill
and
his
corporations
to
make
any
profit.
Later,
I
heard
the
case
of
taxpayers
-
Nicols
v.
R.
(February
14,
1997),
Doc.
94-2146(IT)G,
94-
2148(IT)G,
94-2149(IT)G,
95-892(IT)G,
95-895(IT)G,
95-900(IT)G,
95-
901(IT)G,
95-904(IT)G,
95-956(IT)G,
95-957(IT)G,
95-958(IT)G,
95-
960(IT)G,
95-960(IT)G,
95-962(IT)G,
95-963(IT)G,
95-963(IT)G,
95-
966(IT)G,
95-967(IT)G,
95-968(IT)G,
95-969(IT)G,
95-987(IT)G,
95-
988(IT)G,
95-993(IT)G,
95-996(IT)G,
95-997(IT)G,
95-998(IT)G,
95-
999(IT)G,
95-1000(IT)G,
95-1001(IT)G,
95-1002(IT)G,
95-1003(IT)G,
95-
1024(IT)G,
95-1025(IT)G,
95-1026(IT)G,
95-1027(IT)G,
95-1029(IT)G,
95-1030(IT)G,
95-1031(IT)G,
95-1033(IT)G,
95-1034(IT)G,
95-
1O35(IT)G,
95-1097(IT)G,
95-1098(IT)G,
95-1102(IT)G,
95-1104(IT)G,
95-1107(IT)G,
95-1110(IT)G,
95-1147(IT)G,
95-1148(IT)G,
95-
1149(IT)G,
95-1150(IT)G,
95-1151
(IT)G,
95-1152(IT)G,
95-1154(IT)G,
95-1155(IT)G,
95-1156(IT)G,
95-1157(IT)G,
95-1160(IT)G,
95-
1162(IT)G,
95-1163(IT)G,
95-1164(IT)G,
95-1165(IT)G,
95-1334(IT)G,
95-1493(IT)G,
95-1513(IT)G,
95-1518(IT)G,
95-153O(IT)G,
95-
1594(IT)G,
95-1605(IT)G,
95-1606(IT)G,
95-1609(IT)G,
95-1686(IT)G,
95-1688(IT)G,
95-1689(IT)G,
95-1840(IT)G,
95-1904(IT)G,
95-2172(IT)G
(T.C.C.)
-
who
had
invested
in
the
Enjoy
Partnership,
promoted
by
Thill.
That
partnership
had
been
formed
for
the
purpose
of
marketing
publications
including
Fore!
and
Far
&
Wide.
There
was
no
proof
any
issue
of
Far
&
Wide
had
ever
been
produced
and
there
was
no
reasonable
expectation
of
profit
-
from
the
perspective
of
the
members
of
Enjoy
Partnership
-
flowing
from
publication
of
Fore
because
the
entire
venture,
as
structured
and
controlled
by
Thill,
left
no
possibility
for
anyone,
other
than
him
and
others
employed
by
his
various
corporations,
to
earn
any
profit.
In
that
case,
as
with
all
of
the
Thill-promoted
tax
shelters,
there
was
a
large
advance
royalty
payment
allegedly
made
to
an
offshore
corporation
and
Applied
Research
Ltd.
was
a
major
player
in
the
scheme.
Despite
variations
in
facts
in
various
appeals
by
taxpayers
from
reassessments
by
the
Minister
disallowing
business
losses
from
programs
promoted,
managed
and
controlled
by
Thill
and
his
corporations,
the
same
basic
purpose
is
always
present,
that
is,
the
need
for
investors
to
incur
a
huge
loss
in
the
year
of
their
investment,
and
following,
so
as
to
bleed
off
otherwise
taxable
income
and
receive
a
reduction
in
tax
or
a
large
refund.
Therefore,
the
judgment
of
Hamlyn,
J.T.C.C.
is
extremely
helpful
wherein
he
analyzed
the
facts
before
him
in
context
of
relevant
statutory
provisions
in
the
Income
Tax
Act
and
jurisprudence
stemming
from
similar
tax
shelters
promoted
by
Thill.
At
page
2467,
and
following,
of
his
judgment
he
stated:
Computation
of
loss
from
a
business
Section
3
of
the
Act
sets
out
the
rules
to
determine
a
taxpayer’s
income.
A
business
loss
is
taken
into
account
by
virtue
of
paragraph
3(d)
which
states
that
any
positive
amount
determined
under
paragraph
3(c)
is
reduced
by
“the
aggregate
of
all
amounts
each
of
which
is
his
loss
for
the
year
from
...
business.”
The
provisions
of
the
Act
that
apply
to
the
computation
of
a
loss
from
a
business
are
those
that
apply
to
the
computation
of
income
from
a
business,
or
in
the
words
of
subsection
9(2):
9(2)
a
taxpayer’s
loss
for
a
taxation
year
from
a
business
or
property
is
the
amount
of
his
loss,
if
any,
for
the
taxation
year
from
that
source
computed
by
applying
the
provisions
of
this
Act
respecting
computation
of
income
from
that
source...
The
general
provision
of
the
Act
for
calculating
business
income
(and
therefore
a
business
loss)
is
subsection
9(1)
which
states
that:
9(1)
a
taxpayer’s
income
for
a
taxation
year
from
a
business
or
property
is
his
profit
therefrom
for
the
year.
In
calculating
this
profit
(or
loss)
paragraph
18(1
)(a)
stipulates
that
no
deduction
shall
be
made
in
respect
of:
18(l)(a)an
outlay
or
expense
except
to
the
extent
that
it
was
made
or
incurred
by
the
taxpayer
for
the
purpose
of
gaining
or
producing
income
from
the
business
or
property.
Even
if
an
outlay
or
expense
is
made
for
that
purpose,
it
still
is
subject
to
the
general
limitation
of
section
67
that:
no
deduction
shall
be
made
in
respect
of
an
outlay
or
expense
...
except
to
the
extent
that
the
outlay
or
expense
was
reasonable
in
the
circumstances.
For
the
taxation
year
in
issue,
the
version
of
subsection
245(1)
that
applied
also
disallowed
deductions
made:
in
respect
of
a
disbursement
or
expense
made
or
incurred
in
respect
of
a
transaction
or
operation
that,
if
allowed,
would
unduly
or
artificially
reduce
the
income.
Meaning
of
business
In
any
event,
a
loss
from
a
business
presupposes
that
there
is
a
business.
Subsection
248(1)
gives
an
extended
definition
of
“business”
as
including
a
profession,
calling,
trade,
manufacture
or
undertaking
of
any
kind
whatever
and
...
an
adventure
or
concern
in
the
nature
of
trade...
However,
in
this
case,
it
is
the
ordinary
meaning
of
“business”
which
is
relevant.
In
Moloney,
supra,
it
was
noted
at
pages
C.T.C.
227-28,
D.T.C.
6570
that
for
an
activity
to
be
a
business
it
must
produce
income
in
its
own
right
and
not
merely
from
applying
the
Act:
While
it
is
trite
law
that
a
taxpayer
may
so
arrange
his
business
as
to
attract
the
least
possible
tax^,
it
is
equally
clear
in
our
view
that
the
reduction
of
his
own
tax
cannot
by
itself
be
a
taxpayer’s
business
for
the
purpose
of
the
Income
Tax
Act.
To
put
the
matter
another
way,
for
an
activity
to
qualify
as
a
“business”
the
expenses
of
which
are
deductible
under
paragraph
18(
1
)(a)^,
it
must
not
only
be
one
engaged
in
by
the
taxpayer
with
a
reasonable
expectation
of
profit,
but
that
profit
must
be
anticipated
to
flow
from
the
activity
itself
rather
than
exclusively
from
the
provisions
of
the
taxing
statute.
More
recently,
in
Bendall
v.
Canada,
[1995]
2
C.T.C.
2172
(T.C.C.),
this
Court
addressed
the
meaning
of
business.
Judge
Bonner
wrote:
The
issue
here
is
whether
the
appellant
carried
on
a
“business”
within
the
meaning
of
the
Income
Tax
Act.
That
word
is
to
be
given
its
ordinary
meaning^
and
that
meaning
does
not
include
a
tax
avoidance
scheme
which
is
nothing
more
than
a
pale
imitation
of
a
business.
The
appellant
was
not
involved
in
a
commercial
activity
either
directly
or
through
Omni
as
his
agent.
The
objective
evidence
regarding
the
manner
in
which
the
scheme
operated
and
the
actions
and
inaction
of
the
parties
point
clearly
to
a
conclusion
that
both
the
appellant
and
the
promoters
of
the
scheme
were
indifferent
to
the
marketing
of
the
speed
reading
course
and
to
the
earning
of
profits
from
that
activity.
There
can
be
no
doubt
that
what
was
sought
was
a
tax
deduction
which
would
result
in
a
refund
part
of
which
was
to
go
to
enrich
the
promoters
of
this
scheme
and
the
remainder
of
which
was
to
go
to
the
appellant.
I
disbelieve
the
appellant’s
testimony
as
to
his
subjective
intention.
As
noted
in
Symes,
E.C.
v.
Canada,
[1993]
4
S.C.R.
695,
[1994]
1
C.T.C.
40,
94
D.T.C.
6001,
per
lacobucci
J.,
at
page
736
(C.T.C.
58;
D.T.C.
6014):
As
in
other
areas
of
law
where
purpose
or
intention
behind
actions
is
to
be
ascertained,
it
must
not
be
supposed
that
in
responding
to
this
question,
courts
will
be
guided
only
by
a
taxpayer’s
statements,
ex
post
facto
or
otherwise,
as
to
the
subjective
purpose
of
a
particular
expenditure.
Courts
will,
instead,
look
for
objective
manifestations
of
purpose,
and
purpose
is
ultimately
a
question
of
fact
to
be
decided
with
due
regard
for
all
of
the
circumstances.
In
my
view
the
deduction
of
the
component
elements
of
the
“losses”
is
prohibited
by
paragraph
18(1
)(a)
of
the
Act.
The
ratio
of
the
decision
of
the
Court
of
Appeal
in
Moloney
is
contained
in
the
following
passage
at
page
6571:
In
our
view
the
judgment
under
appeal
is
based
on
the
trial
judge’s
findings
of
fact,
notably
that
the
appellant
never
intended
to
carry
on
the
business
of
marketing
the
speed
reading
course
himself
or
through
Omni,
that
neither
the
appellant
nor
Omni
had
the
means
or
the
ability
to
do
so,
and
that
the
sole
purpose
of
the
scheme
was
to
obtain
tax
refunds
and
nothing
else.
That
decision
is
none
the
less
applicable
despite
the
absence
in
this
case
of
evidence
showing
the
“circularity
and
simultaneity
of
the
transactions
between
the
related
companies”.
The
essential
facts
in
this
case
and
in
Moloney
are
the
same.
I
will
therefore
dismiss
the
appeals
with
costs.
Then,
having
reviewed
the
jurisprudence,
Hamlyn,
J.T.C.C.
continued
as
follows:
Analysis
The
appellants
primarily
bought
a
tax
reduction
scheme.
The
assertion
that
an
investment
of
$500
would
provide
retirement
or
future
income
does
not
stand
the
test
of
reality.
The
appellants
did
nothing
other
than
sign
documents
and
pay
the
licence
fee.
No
investigation
took
place
by
them,
no
research
was
conducted
by
them,
no
business
plan
was
developed
by
them
and
certainly
they
made
no
efforts
to
operate
a
business.
The
activities
of
Thill
and
Plymouth
beyond
the
limited
appellants’
efforts
necessitate
examination
because
of
the
operating
agreement
between
Plymouth
and
the
appellants.
I
conclude
that
the
operating
mind
behind
the
scheme
was
Mr.
Thill.
Because
of
his
interrelationships
with
the
corporations
and
the
individuals
involved,
this
fact
leads
to
a
conclusion
that
the
relationships
among
Applied,
Cawin,
Thill,
Federated
and
Plymouth
were
at
non-arm’s
length
and
Mr.
Thill
and
Thill
controlled
the
tax
scheme
throughout.
The
tax
scheme
is
essentially
the
same
as
that
before
the
Court
in
Moloney,
supra,
and
the
Federal
Court
of
Appeal
has
pronounced
on
that.
As
to
the
development,
production
and
distribution
of
Enjoy
by
Plymouth,
from
the
evidence,
I
conclude
there
was
insufficient
capitalization
to
undertake
the
business
proposal
that
was
outlined.
Moreover,
there
was
no
documentary
or
other
evidence
to
support
the
assertion
of
Mr.
Thill
that
sufficient
capital
was
always
available.
In
any
event,
either
way,
insufficient
capital
or
unlimited
funds,
the
control
actions
of
Thill
lead
to
a
conclusion
that
profit
was
not
the
objective
of
Plymouth.
The
activities
of
Plymouth
were
directed
to
enhance
the
marketing
activities
of
Thill
in
the
selling
of
licences
and
not
per
se
to
represent
the
appellants’
business
under
the
licences.
The
fact
that
Plymouth
forfeited
the
performance
bonds
and
that
Federated
forgave
the
promissory
notes
from
the
appellants
supports
a
conclusion
the
activity
was
that
of
a
tax
scheme
and
not
that
of
a
business
of
developing,
publishing
and
distributing
a
magazine.
The
paper
entries
on
the
books
created
an
aura
of
a
substantial
enterprise
without
any
real
substance
behind
it.
This
illusion
brings
into
doubt
the
veracity
of
the
amounts
alleged
to
have
been
expended
on
Plymouth
by
Thill.
The
contin-
ued
marketing
of
the
licences
and
the
renewal
of
the
licences
after
the
project
had
failed
(appellant
Madayag),
the
payment
of
royalties
far
in
excess
of
what
copies
of
Enjoy
had
been
printed
and
farther
still
in
excess
of
what
was
distributed,
the
payment
of
income
that
could
not
be
reconciled
with
the
advertising
revenue,
and
the
ceasing
of
funding
after
the
initial
issue
run
are
all
indicia
of
a
scheme
to
create
the
impression
of
a
business
rather
than
a
business.
Moreover,
I
conclude
the
actions
of
Thill
in
view
of
the
evidence
of
Mr.
Frederickson-that
he
told
Mr.
Thill
what
was
really
involved
and
the
costs
to
expect
($3-
4,000,000)
and
Mr.
Thill’s
direction
to
carry
on
are
consistent
with
an
inference
the
enterprise
was
designed
and
destined
to
fail.
No
business
was
carried
on
by
Plymouth
or
Thill
that
enured
to
the
benefit
of
the
appellants.
Specifically,
I
conclude
that
the
fact
of
the
publication
of
one
issue
of
Enjoy
given
the
findings
herein
does
not
bring
this
case
outside
the
Moloney,
supra,
decision.
The
assumptions
of
the
Minister
have
not
been
dislodged.
I
therefore
conclude
the
alleged
expenses
reported
by
the
appellants
are
not
deductible
within
the
meaning
of
paragraph
18(
1
)(a)
of
the
Act.
The
appeals
are
therefore
dismissed
with
costs.
In
the
within
appeals,
despite
the
evidence
of
Denis
Gaudet
to
the
effect
he
made
a
sincere
attempt
to
promote
the
concept
of
Hospitality
Guide
to
hotels
and
potential
advertisers
in
Canada,
it
is
clear
he
was
strongly
motivated
by
the
knowledge
a
partnership
loss
would
result
in
a
substantial
tax
refund.
He
realized
the
projections
were
extremely
high
but
felt
that
even
if
10%
of
those
figures
could
be
attained
his
investment
was
still
profitable.
The
evidence
does
not
support
his
conclusion.
The
appellants
were
mainly
those
individuals
who
had
invested
in
other
schemes
previously
promoted
by
Thill
and
some
of
them
went
on
to
participate
in
other
schemes
Thill
peddled
in
the
years
subsequent
to
1990.
All
appellants
paid
their
money,
signed
the
necessary
documents,
including
the
partnership
agreement,
and
then
allowed
Thill
and
his
employees
Holloway
and
Bremner
to
serve
on
the
Management
Committee
of
the
partnership
with
full
authority
to
conduct
the
purported
business
of
HGP.
Thill,
as
in
the
other
cases
referred
to
herein,
controlled
all
of
the
participating
corporations
or
had
full
authority
to
act
on
behalf
of
those
entities,
as
in
the
case
of
Applied,
which
had
given
him
full
authority
pursuant
to
a
Power
of
Attorney.
Thill
was
the
sole
shareholder
and
President
of
409672
which
had
hired
Bremner
to
produce
Hospitality
Guide.
Bremner
testified
he
had
asked
Thill
for
enough
funding
to
hire
a
salesforce
but
Thill
never
provided
the
money.
Thill
choked
off
the
supply
of
funds,
diverted
it
to
other
schemes
he
was
promoting
or
simply
used
it,
as
he
saw
fit,
to
run
his
own
business
which
he
carried
out
through
the
corporations
Thill
Inc.,
Thill
Financial
and
others.
The
money
from
in-
vestors
in
HGP
-
at
$5,000
per
unit
-
went
into
an
account
of
Thill
Financial
-
in
essence
a
large
pot
-
into
which
funds
were
poured
from
a
variety
of
sources,
usually
from
persons
participating
in
other
tax
shelter
schemes
being
flogged
by
Thill,
his
agents,
servants,
and
employees.
Thill
used
the
money
to
pay
for
his
wife’s
mortgage,
lease
payments
on
a
Mercedes
and
a
BMW
for
himself
and
Holloway,
his
star
salesman,
and
for
other
purposes
as
he
determined
appropriate,
in
his
sole
discretion.
The
evidence
of
Michael
Bendall
was
that,
in
1995,
when
he
tried,
valiantly
and
with
good
intentions,
to
resurrect
Hospitality
Guide
on
his
own,
he
was
denied
access
to
the
previous
computer
files,
graphics
and
design
information,
which
had
obviously
been
used
to
produce
the
70-76
print
runs
produced
from
1990
to
the
end
of
1992.
The
excuse
given
to
him
by
Thill
and/or
Bremner
on
more
than
one
occasion
was
that
the
material
he
required
was
not
available.
It
may
well
be
that
Bendall,
in
1995,
was
not
working
in
pursuance
of
the
alleged
business
of
HGP,
formed
in
1990,
but
rather
for
Hospitality
Guide
1991
Partnership
or
some
other
scheme
promoted
by
Thill
in
the
years
intervening
since
the
last
issue
of
Hospitality
Guide
had
been
produced
in
1992.
Most
of
the
efforts
of
Bremner
and
an
employee,
Joy
Ganeev-Davies,
were
directed
towards
the
sale
of
franchise-like
investments
to
persons
in
the
United
States
instead
of
attempting
to
make
the
business
of
HGP
succeed.
The
scheme
promoted
by
Thill
in
forming
HGP
worked
this
way.
First,
Thill
used
his
list
of
people
who
were
clients
of
Thill
Inc.
-
the
tax
preparation
business
-
who
had
invested
with
him
in
previous
years.
Then,
he
sold
them
the
units
on
the
basis
a
large
loss
would
be
created
through
payment
of
an
advance
royalty
to
an
offshore
company
or
from
interest
charges
accruing
as
a
result
of
borrowing
money
from
an
offshore
source
to
pay
the
royalties.
Investors
could
put
in
the
sum
of
$5,000
late
in
December,
1990
and
then,
depending
on
their
tax
bracket,
after
filing
a
tax
return
before
April
30,
1991,
would
receive
a
reduction
in
income
tax
or
refund
resulting
from
claiming
a
business
loss
in
excess
of
$30,000
per
unit.
In
order
for
the
scheme
to
work,
a
large
loss
had
to
be
created
by
HGP
which,
when
divided
by
the
number
of
units,
had
to
be
in
the
range
of
$20,000
to
$30,000
in
order
to
be
worthwhile
as
a
mechanism
to
reduce
income
tax
otherwise
payable
on
other
income.
The
way
to
accomplish
this
requirement
was
to
set
it
up
so
HGP
had
to
pay
advance
royalty
payments
in
the
sum
of
$5.28
million
to
SLML,
the
Bermuda
corporation,
also
effectively
controlled
by
Thill
for
purposes
of
dealings
with
HGP.
By
creating
a
loss
in
this
fashion,
and
by
inventing
other
expenses
by
means
of
other
highly
creative
accounting
procedures,
Thill
could
ensure
that
HGP
incurred
an
operat-
ing
loss
large
enough
that
when
divided
by
the
number
of
units
sold
-
201
-
owned
by
136
individuals
-
each
loss
per
unit
would
be
adequate
to
produce
a
significant
reduction
in
income
tax.
Thill,
without
disclosing
it
to
his
fellow
partners
in
HGP
(when
he
was
bound
to
do
so
under
a
fiduciary
responsibility
to
them
as
their
partner
and
appointee
to
the
Management
Committee)
entered
into
an
agreement
with
SLML
-
which
he
controlled
-
whereby
his
corporation
-
Thill
Financial
-
controlled
by
him
-
would
receive
a
15%
commission,
apparently
based
on
the
sum
of
$5.28
million
paid
by
HGP
in
advance
royalties
for
use
of
the
copyright
to
Hospitality
Guide
which
Brem-
ner
had
sold
to
SLML
four
months
earlier
for
the
grand
sum
of
one
($1)
dollar.
A
calculation
of
15%
of
$5.28
million
results
in
the
sum
of
$792,000
which
is
only
$21,150
more
than
the
total
of
$770,850
paid
in
by
the
partners
in
HGP.
In
effect,
when
that
point
was
reached,
Thill
decided
it
was
close
enough
and
cashed
out.
He
then
went
on
to
promote
Hospitality
Guide
1991
Partnership
and
the
others
listed
in
Exhibit
R-2.
Later
on,
Thill
became
careless
and
was
selling
exclusive
licenses
to
market
and
distribute
Hospitality
Guide,
to
partnerships
he
had
formed,
within
geographical
areas
that
had
previously
been
sold
and
assigned
to
other
partnerships
promoted
by
him.
Thill’s
idea
to
insure
the
lives
of
partners
through
the
grandly-
named
Leonine
Insurance
Corporation
was
inspired,
although
transparent
when
subjected
to
examination.
He
then
created
a
mythical
loan
from
Euro
Bank
which,
despite
his
strong
protestations
that
it
was
an
institution
of
considerable
substance
in
Grand
Cayman,
apparently
has
an
unlisted
phone
number.
The
loan
for
the
insurance
premiums
on
the
policies
on
the
lives
of
the
partners
in
HGP,
as
well
as
the
performance
bond
to
ensure
that
409672
carried
out
its
obligations,
was
arranged
through
Applied
and
Thill
Financial.
Again,
it
must
be
pointed
out
that
Thill
was
the
sole
shareholder
in
409672
and,
therefore,
the
one
fixed
with
the
responsibility
of
discharging
obligations
arising
under
the
contract
with
HGP
which
was
to
produce
and
distribute
Hospitality
Guide.
Why
should
partners
in
HGP
pay
a
premium
on
a
policy
to
ensure
performance
of
a
contract
between
their
partnership
and
a
corporation
wholly
controlled
by
a
partner
and
a
member
of
the
Management
Committee
who
had
promoted
the
partnership
in
the
first
place?
Even
if
HGP
was
going
to
do
such
a
thing,
it
would
be
a
good
idea
to
have
chosen
an
insurance
company
that
-
if
it
existed
at
all
-
was
authorized
to
carry
on
business
in
the
Province
of
British
Columbia
or
some
other
jurisdiction
within
Canada.
The
purported
loan
arrangement
with
Applied
allegedly
borrowing
from
Euro
Bank
Corporation
and
then
making
the
funds
available
to
Thill
Financial
which,
in
turn,
was
acting
as
authorized
agent
for
HGP
(presumably
having
received
instructions
from
Thill
while
wearing
his
HGP
Management
Committee
hat)
and
then
transferring
those
funds
to
SLML
(Thill
is
the
agent)
as
payment
for
the
advance
royalties
owed
by
HGP
is
a
complete
sham.
There
is
no
proof
whatsoever
that
any
such
payment
was
made
for
advance
royalties
and
why
would
any
payment
ever
be
made
by
responsible
people
carrying
on
business?
The
copyright
was
worth
one
dollar
on
February
1,
1990
and
nothing
much
had
happened
in
the
interim
to
increase
the
value
to
$5.28
million.
There
was
some
activity
in
the
form
of
various
print
runs
of
Hospitality
Guide
being
produced
for
different
hotels
in
cities
in
Western
Canada
but
the
projections
used
in
the
document
referred
to
as
the
Partnership
Proposal
for
HGP
were
absolutely
unrealistic
and
not
borne
out
by
the
experience
of
David
Bremner
who
discovered
it
was
not
an
easy
matter
-
even
with
all
of
his
experience
-
to
sell
advertising
for
the
publication.
Bremner
knew
that
the
publication,
to
be
viable
for
an
investor
in
the
context
of
the
joint
venture
operation
or
JVO,
required
an
urban
area
of
nearly
one
million
people
in
which
there
was
at
least
10
hotels,
each
having
200-300
rooms,
in
order
to
create
enough
interest
in
potential
advertisers
which
would
translate
into
sales
sufficient
to
cover
costs
and
generate
profit.
The
entries
in
the
financial
statements
of
HGP
for
the
1990
and
1991
years
cannot
be
explained
and
are,
for
the
most
part,
not
worthy
of
consideration
as
there
is
usually
no
proof
of
revenue
coming
in
or
expenses
being
paid.
Not
only
was
there
not
any
insurance
policy
with
Leonine,
which
probably
never
existed
at
all,
and
if
it
did,
was
never
authorized
to
conduct
any
insurance
business
within
Canada,
but
no
payment
was
ever
received
under
the
policy
as
a
result
of
the
death
of
a
partner
because
no
partner
probably
died.
The
amounts
purportedly
paid
for
various
items,
including
rent
to
Thill
Inc.,
are,
in
any
event,
completely
unreasonable
and
there
is
no
reason
for
HGP
to
have
incurred
any
of
the
expenses
set
out
in
the
invoice
from
Thill
Financial
as
409672
had
the
responsibility
to
carry
out
production
of
Hospitality
Guide
and
to
pay
royalties
to
HGP.
Then,
if
a
profit
existed
at
the
end
of
the
year
-
after
payment
of
those
royalties
-
that
amount
was
to
be
divided
equally
between
409672
and
HGP.
Why
then
would
HGP,
for
a
six-month
period
in
1990,
have
expenses
totalling
$147,000?
Having
regard
to
all
of
the
evidence,
HGP
was
a
tax
shelter
scheme
invented,
promoted
and
totally
controlled
by
Thill,
and
had
no
real
business
purpose
behind
it.
The
appellants
paid
their
money
and
then
waited
for
a
tax
refund
or
the
right
to
calculate
a
lesser
amount
of
tax
owing
for
the
1990
year
on
the
basis
of
a
large
business
loss
flowing
from
participation
in
the
partnership.
The
appellant,
Denis
Gaudet,
is
affected
by
the
actions
of
Thill,
who
was
his
partner,
and
by
the
other
acts
or
omissions
of
HGP,
its
managers,
agents,
or
entities
with
which
it
contracted.
The
original
idea
of
Brem-
ner
had
considerable
merit
and,
in
the
hands
of
someone
interested
in
using
it
to
earn
a
profit
in
the
ordinary
course
of
a
responsible
business,
could
be
worthwhile.
That
concept,
when
transformed
into
a
scheme
manipulated
throughout
by
Thill,
became
nothing
more
than
another
ruse
which,
on
the
surface,
had
enough
substance
to
serve
as
a
springboard
for
fantastic,
incredible,
projections
swallowed,
without
question,
by
people
looking
for
a
fast
return
on
an
investment
by
using
provisions
of
the
Income
Tax
Act.
In
the
event
there
was
some
business
purpose
to
HGP,
which
I
did
not
find,
then
I
also
conclude
there
was
no
reasonable
expectation
of
profit
during
the
years
under
appeal
by
any
of
the
appellants.
The
Federal
Court
of
Appeal
in
Zonn
v.
R.,
(1995),
96
D.T.C.
6001
(Fed.
C.A.),
considered
an
appeal
by
taxpayers
who
had
their
appeal
dismissed
by
the
Tax
Court
of
Canada.
They
had
claimed
rental
losses
flowing
from
a
residential
property
and
Linden,
J.A.,
writing
for
the
Court,
undertook
a
review
of
the
various
relevant
provisions
of
the
Income
Tax
Act
together
with
the
legal
principles
applying
to
the
issue
of
reasonable
expectation
of
profit.
After
reviewing
the
case
law
in
which
he
found
the
cases
fell
into
two
groups
-
one
comprising
cases
where
the
alleged
business
activity
had
a
strong
personal
benefit
and
the
other
where
this
element
was
not
present
and
the
activity
was
clearly
for
a
commercial
purpose
-
Linden,
J.A.,
at
p.
6013
stated:
ANALYSIS
I
am
now
ready
to
decide
this
case.
A
variety
of
factors
have
been
proposed
over
the
years
by
which
objective
reasonability
might
be
demonstrated
in
given
circumstances.
In
the
original
Moldowan
decision,
these
factors
were
enumerated
as
follows:
The
following
criteria
should
be
considered:
the
profit
and
loss
experience
in
past
years,
the
taxpayer’s
training,
the
taxpayer’s
intended
course
of
action,
the
capability
of
the
venture
as
capitalized
to
show
a
profit
after
capital
cost
allowance.
The
list
is
not
intended
to
be
exhaustive.^
Another
listing
of
the
factors
to
be
assessed
was
set
out
in
Sipley
v.
Q.:
The
objective
test
includes
an
examination
of
profit
and
loss
experience
over
past
years,
also
an
examination
of
the
operational
plan
and
the
background
to
the
implementation
of
the
operational
plan
including
a
planned
course
of
action.
The
test
further
includes
an
examination
of
the
time
spent
in
the
activity
as
well
as
the
background
of
the
taxpayer
and
the
education
and
experience
of
the
taxpayer.^
Finally,
Landry
v.
Q.
suggests
the
following
items
to
consider:
Apart
from
the
tests
set
out
by
Mr.
Justice
Dickson,
the
tests
that
have
been
applied
in
the
case
law
to
date
in
order
to
determine
whether
there
was
a
reasonable
expectation
of
profit
include
the
following:
the
time
required
to
make
an
activity
of
this
nature
profitable,
the
presence
of
the
necessary
ingredients
for
profits
ultimately
to
be
earned,
the
profit
and
loss
situation
for
the
years
subsequent
to
the
years
in
issue,
the
number
of
consecutive
years
during
which
losses
were
incurred,
the
increase
in
expenses
and
decrease
in
expenses
in
the
course
of
the
relevant
periods,
the
persistence
of
the
factors
causing
the
losses,
the
absence
of
planning,
and
the
failure
to
adjust.
Moreover,
it
is
apparent
from
these
decisions
that
the
taxpayer’s
good
faith
and
reputation,
the
quality
of
the
results
obtained
and
the
time
and
energy
devoted
are
not
in
themselves
sufficient
to
turn
the
activity
carried
on
into
a
business.
These
quotations
suggest
that
the
list
of
relevant
factors
is
growing
and
that
it
may
continue
to
grow.
What
this
indicates
is
that
a
detailed
look
at
the
business
in
the
context
of
its
operations
is
what
is
required,
and
that
reasonableness
is
to
be
assessed
on
the
basis
of
all
the
relevant
factors,
both
the
already
listed
ones
and
any
new
ones
that
may
be
helpful.
As
should
be
readily
apparent,
the
most
important
factor
in
this
case
is
the
nature
of
the
operation
from
which
the
deductions
were
claimed.
This
operation
was
purely
commercial.
It
was
a
real
estate
venture,
and
did
not
involve
an
element
of
personal
satisfaction
for
those
operating
it.
By
personal
satisfaction,
of
course,
I
mean
that
the
rental
operation
had
neither
a
hobby
nor
a
personal
benefit
element
about
it.
The
taxpayers
purchased
the
property
as
a
form
of
business
investment.
It
was
not
a
residence
for
them.
It
was
not
a
future
retirement
home
in
some
balmy
southern
climate.
Neither
was
it
a
residence
for
children
or
other
relations.
It
was
a
residential
property
purchased
for
commercial
purposes.
There
was
nothing
suspicious
about
it.
Of
similar
importance
is
the
scale
of
the
operation,
the
people
involved
and
the
context.
The
property
in
question
was
a
residential
house.
It
was
purchased
at
a
time
when
real
estate
held
the
prospect
of
profitable
returns.
The
taxpayers
are
not,
and
never
presumed
to
be,
sophisticated
real-estate
investors.
No
elaborate
market
or
economic
analyses
were
undertaken
by
them.
No
complicated
marketing
study
was
performed.
The
taxpayers,
like
many
others
before
them,
simply
decided
to
purchase
a
house
for
the
purpose
of
gaining
income,
and
as
a
longterm
investment.
To
this
end
they
compared
in
general
terms
the
money
they
expected
to
spend
with
the
revenues
they
thought
they
might
earn,
and
took
a
chance.
They
were
optimistic,
perhaps
too
optimistic.
Nevertheless,
the
absence
of
a
more
professional
form
of
investment
analysis
does
not
necessarily
suggest
that
the
taxpayers
unreasonably
expected
profits
to
flow
from
the
enterprise.
The
taxpayers
erred
and
did
not
make
money,
as
they
had
hoped.
They
had
a
plan,
albeit,
a
rudimentary
one,
which
they
tried
to
follow.
They
may
have
based
their
expectations
on
misguided
assumptions.
One
such
assumption,
and
one
on
which
Crown
counsel
focussed
with
some
emphasis,
was
that
rents
would
increase
by
an
average
of
about
6%
per
year.
In
his
argument
on
this
point,
Mr.
Spiro
suggested
that,
because
the
taxpayers
offered
no
explanation
as
to
why
they
projected
this
increase,
the
expectation
cannot
be
seen
as
reasonable.
I
note,
however,
that
at
the
time
the
house
was
originally
purchased,
rental
increases
allowed
by
regulation
averaged
a
consistent
6%.^
It
was,
therefore,
not
an
unreasonable
assumption
to
think
that
this
trend
would
continue.
Unfortunately
for
them,
the
real
estate
market
went
sour.
Moreover,
in
1990,
the
newly
elected
provincial
government
announced
a
moratorium
on
rent
increases
and,
furthermore,
that
retroactive
statutory
guidelines
would
soon
be
enacted
to
restrict
rent
increases.
Such
legislation
came
as
promised
and
increases
were
restricted
to
less
than
5%.10
In
many
instances
this
legislation
imposed
rent
decreases
on
rental
units,
or
froze
rental
prices
for
an
unspecified
term.
Suffice
it
to
say
that
rental
prices
during
those
years
became
very
unpredictable
and
generally
went
into
decline.
Whether
the
slump
was
a
product
of
the
new
rent
legislation,
of
the
onset
of
a
deep
recession,
or
other
market
forces,
it
affected
the
taxpayers’
plans
negatively.
Another
factor
to
consider
is
the
“time
required
to
make
an
activity
...
profitable”.
The
three
taxation
years
in
question
were
the
initial
years
of
the
operation
of
the
venture.
The
jurisprudence
has
long
accepted
that
during
the
start-up
phase
of
a
business,
courts
will
be
lenient
in
applying
the
Moldowan
test.
The
leniency
is
only
fitting,
for
start-up
is
a
time
when
uncertainty
is
necessarily
great,
and
when
businesses
generally
sustain
the
heaviest
losses.
Due
to
these
reasons,
several
years
may
pass
before
one
can
tell
whether
a
business
will
be
profitable.
The
Courts
have
recognized
this
by
allowing
what
is
in
effect
a
grace
period
for
emerging
operations.
Encouraging
the
creation
of
new
businesses
makes
both
good
economic
and
tax
sense,
which
is
why
the
Act
contains
many
provisions
to
help
the
founding
of
new
enterprises.
The
basis
for
allowing
lee-
way
in
the
start-up
phase
of
an
operation
was
succinctly
stated
by
Bowman,
T.C.C.J.
in
Bélec
v.
Q.:
Many
businesses
are
risky
or
require
considerable
expenditure
at
the
outset.
Some
succeed,
some
fail.
It
would
be
manifestly
unfair
for
the
Minister
to
be
able
to
participate
in
the
profits
of
those
that
succeed
and
to
disallow
the
expenses
of
those
that
do
not
succeed
on
the
assumption
that
the
Minister,
with
his
business
hindsight,
should
be
able
to
consider
that
the
entrepreneur
did
not
have
a
reasonable
expectation
of
profit.
It
would
be
equally
unacceptable
to
permit
the
Minister
to
disallow
the
deduction
for
losses
at
the
beginning
of
a
business’s
activities
on
the
assumption
that
there
was
no
reasonable
expectation
of
profit,
and
then,
after
the
business
succeeded,
to
demand
part
of
the
profit
as
taxes
by
saying
to
the
taxpayer”
The
fact
that
you
lost
money
when
you
began
the
business
proves
that
you
did
not
have
a
reasonable
expectation
of
profit,
but
as
soon
as
you
earn
some
money,
it
proves
that
you
now
have
such
an
expectation.
1
1
These
considerations
apply
equally
to
a
rental
operation.
The
purchase
of
a
residential
unit
for
rental
purposes
requires
a
heavy
capital
outlay.
The
purchaser
is
not
necessarily
expected
to
cover
these
outlays
with
cash,
nor
is
it
necessary
to
demonstrate
profitability
right
away.
As
the
debt
is
paid
off,
the
cost
of
interest
reduces
and
the
profit
or
chance
thereof
increases.
The
taxpayers
were
not
given
enough
time
to
prove
the
viability
of
the
operation.
In
light
of
all
these
considerations,
I
cannot
conclude
that
the
property
was
purchased
for
any
motive.
except
to
make
profit.
What
reason,
if
not
commercial,
could
the
applicants
have
had
for
the
purchase
of
this
property?
In
this
respect
I
agree
with
what
was
stated
by
Bowman,
T.C.C.J.
in
Eleuteri
v.
Q.:^
Where
we
have
a
property
whose
purpose
is
the
production
of
rent
from
arm’s
length
tenants,
and
there
is
no
element
of
personal
use
or
enjoyment
involved,
the
question
must
be
asked
“If
the
purpose
of
the
expenditures
is
not
to
earn
income,
what
then
is
its
purpose?”
3
Furthermore,
the
taxpayers
were
reassessed
on
the
initial
years
of
the
operation,
during
which
time
measures
were
taken
to
counteract
the
unexpected
negative
revenue
situation
which
the
venture
presented.
I
notice
that
Mr.
Tonn’s
intention
to
pay
down
the
amount
owing
on
the
property
was
an
intention
he
developed
before
the
venture
began
accumulating
losses.
A
further
matter
worthy
of
mention
is
that
real
estate,
like
shares,
may
be
purchased
not
only
to
create
an
income
stream
but
with
an
eye
to
an
eventual
capital
gain.
Mr.
Tonn
testified
that
“real
estate
is
a
good
long
term
investment”.
One
reason
why
real
estate
and
securities
alike
present
good
investment
possibilities
is
that
they
offer
the
possibility
both
of
earning
income
and
of
obtaining
capital
gains
in
the
future.
Purchasers
usually
intend
to
profit
from
both
the
income
and
the
longer-term
capital
aspects,
and,
if
they
do,
they
pay
tax
on
both
sources
of
profit.
This
matter
was
the
subject
of
a
comment
by
Martland,
J.
in
Irrigation
Industries
Ltd.
v.
M.N.R.
14
where,
speaking
of
the
purchase
of
securities,
he
stated:
It
is
difficult
to
conceive
of
any
case,
in
which
securities
are
purchased,
in
which
the
purchaser
does
not
have
at
least
some
intention
of
disposing
them
if
their
value
appreciates
to
the
point
where
their
sale
appears
to
be
financially
desirable.^
DISPOSITION
My
disposition
of
this
case
is
therefore
as
follows.
The
Tax
Court
Judge
erred
in
principle
as
well
as
in
his
application
of
the
reasonable
expectation
of
profit
test,
as
it
is
now
understood.
He
did
not
consider
all
of
the
factors
he
should
have
considered,
nor
did
he
assess
the
context
fully.
The
evidence
clearly
showed
that
the
taxpayers
engaged
themselves
in
a
business
enterprise
and
their
expectations
of
profit
were
not
unreasonable
in
the
circumstances.
A
small
rental
business
was
launched
without
the
aid
of
sophisticated
market
analysis
at
a
time
when
the
rental
market
looked
promising.
Soon
after,
as
a
result
of
unforeseen
circumstances,
it
became
precarious.
No
personal
benefit
accrued
to
the
taxpayers
by
the
rental
arrangements.
The
property
was
not
a
vacation
site.
The
house
was
not
used
to
give
free
or
subsidized
housing
to
relatives
or
friends.
They
made
an
honest
error
in
judgment
and
lost
money
instead
of
earning
it.
It
is
not
for
the
Department
(or
the
Court)
to
penalize
them
for
this,
using
the
reasonable
expectation
of
the
profit
test,
without
giving
the
enterprise
a
reasonable
length
of
time
to
prove
itself
capable
of
yielding
profits.
These
three
applications
are
allowed,
the
decisions
of
the
Tax
Court
Judge
are
set
aside
and
the
cases
are
remitted
to
the
Tax
Court
to
be
sent
back
to
the
Minister
to
be
dealt
with
in
accordance
with
these
Reasons.
The
costs
of
this
application
and
the
hearing
in
the
Tax
Court
are
to
be
paid
to
the
applicants.
As
stated
earlier,
the
evidence
leads
me
to
conclude
that
the
appellants
participated
in
HGP
in
order
to
reduce
income
tax.
Otherwise,
there
was
no
hobby
motive
or
personal
element
to
the
investment
but
there
was
no
real
interest
by
any
appellant
in
investigating
the
nature
of
the
supposed
enterprise
or
to
subject
any
of
the
patently
ridiculous
suppositions
of
production
volume
to
any
reality
test.
Most
of
the
appellants
had
invested
in
earlier
schemes
promoted
by
Thill,
none
of
which
had
met
with
any
success
in
the
sense
of
producing
a
profit
other
than
a
temporary
reduction
of
tax
until
reassessed
by
the
Minister.
The
appellants
designated
certain
persons,
including
Thill
and
his
employees
Holloway
and
Bremner,
to
manage
the
affairs
of
HGP.
Why
would
any
business
pay
the
sum
of
$5.28
million
in
advance
royalties
for
the
right
to
produce
a
publication
which
had
barely
broken
even
or
probably
lost
money?
How
could
any
business
structured
to
produce
a
product
like
Hospitality
Guide
generate
a
profit
when
saddled
with
a
horrendous
burden
created
by
a
$5.28
million
loan
at
8%
interest
per
annum
supposedly
taken
out
to
pay
those
royalties?
The
publication
business
involving
production
of
a
brochure
like
Hospitality
Guide
is
dependent
on
participation
by
a
select
clientele
and
wholly
funded
by
sale
of
advertising
is
not
at
all
like
making
a
modest
investment
in
real
estate
for
rental
purposes.
Bremner
had
spent
most
of
his
working
life
selling
advertising
for
radio
stations
and
even
with
all
of
his
contacts
found
it
was
not
an
easy
task
on
an
ongoing
basis.
He
also
stated
that
it
was
not
possible
to
hire
salespeople
on
a
commission
basis
and
without
sales
there
was
no
point
in
printing
any
issues
of
Hospitality
Guide.
The
prospect
of
any
profit
flowing
to
investors
in
HGP
was
nil.
The
only
partner
who
was
destined
to
succeed
was
Thill
and
he
was
guaranteed
a
handsome
profit
from
the
outset
because
he
controlled
every
entity
participating
in
the
overall
scheme.
Again,
there
was
no
proof
that
expenses
as
shown
on
the
financial
statements
of
HGP
had
ever
been
paid
-
except
for
wages
to
Bremner
-
and
there
was
no
proof
of
any
payment
of
advance
royalties
or
insurance
premiums.
The
payments,
if
they
had
been
made,
were
unreasonable
under
the
circumstances
and
the
payment
of
advance
royalties
as
structured
was
prohibited
by
operation
of
subsection
18(9)
of
the
Income
Tax
Act.
The
agreement
by
which
HGP
was
to
pay
royalties
to
SLML
-
Exhibit
R-l,
Vol.
3,
Tab
36
-
referred
to
the
requirement
in
clause
3.1(a)
that
royalties
be
paid
as
calculated
on
a
monthly
basis
to
be
paid
within
20
days
of
the
end
of
each
calendar
month
during
the
term
with
interest
to
be
paid
on
overdue
accounts.
That
wording
is
not
consistent
with
paying
$5.28
million
in
advance
to
cover
royalties
over
the
next
10
years
of
the
agreement.
Counsel
for
the
appellants
wondered
whether
the
initial
$5,000
per
partnership
unit
might
be
treated
as
a
loss
but
the
business
test
would
still
have
to
be
met
and
it
would
be,
at
best,
a
capital
loss
and
the
income
tax
returns
were
not
filed
seeking
any
other
loss
than
a
business
loss
arising
from
the
investment
in
HGP.
The
HGP
promotion
by
Thill
was
a
scam,
pure
and
simple.
Every
time
one
looked
for
corroboration
on
some
point
or
for
a
reasonable
explanation
it
was
never
forthcoming
and
the
entire
venture
was
illusory
and
without
substance.
It
was
another
Thill
creation
with
a
slight
twist
but
it
did
not
change
the
basic
character
of
the
scheme
nor
imbue
it
with
any
more
legitimacy
than
past
tax
shelter
schemes
which
have
been
the
subject
of
numerous
previous
decisions.
When
Bendall
attempted,
in
1995,
to
revive
Hospitality
Guide,
Thill
did
not
provide
him
with
any
money,
did
not
make
available
the
information
needed
to
assist
in
production
and
then
resiled
on
an
undertaking
to
make
up
any
shortfall.
Again,
Thill
was
there
to
ensure
that
the
final
stake
was
driven
into
its
heart
-
even
though
it
had
ostensibly
been
dead
since
the
end
of
1992.
In
all
of
these
cases
where
Thill
has
promoted
tax
shelters,
his
modus
operandi
was
to
throw
both
ends
of
the
rope
to
a
drowning
venture
and
then
head
off
into
the
sunset
to
perform
yet
another
good
deed
by
relieving
people
of
their
money
in
return
for
a
few
tricks,
an
entertaining
magic
show
and,
at
the
end
of
the
rainbow,
a
few
Juicy
tax
refunds.
Failures
of
the
ventures
are
always
the
fault
of
some
other
entity
which,
in
every
case,
he
controls
absolutely,
because
that
is
the
essential
ingredient
needed
to
ensure
that
investors’
money
ends
up
being
completely
at
his
disposal
through
his
various
corporations.
The
appeals
of
all
appellants
for
each
and
every
taxation
year
under
appeal
are
hereby
each
dismissed
and
the
Respondent
is
entitled
to
costs
on
a
party-party
basis
taking
into
account
that
the
appeals
were
eventually
heard
on
common
evidence.
Appeal
dismissed.
Email this Content