Martin
J.:—The
issue
in
this
matter
is
whether
the
sums
of
$500,000
paid
by
the
plaintiff,
Oriole
Oil
&
Gas
Ltd.,
Ç
Oriole")
to
each
of
its
two
shareholders/
employees
were
sums
paid
to
discharge
the
company's
liability
under
bona
fide
employment
contracts
between
the
two,
Herbert
Charles
Flanagan
(”
Flanagan”)
and
Larry
Ross
Burroughs
(“
Burroughs")
for
their
prospective
loss
of
employment
or
office,
or
were
they
in
fact
and
in
substance
a
part
of
the
consideration
for
the
sale
by
Flanagan
and
Burroughs
of
their
shares
in
Oriole
to
Alberta
Eastern
Gas
Ltd.
('A.E.G.").
Oriole
was
incorporated
by
Flanagan
in
1972,
pursuant
to
Alberta
law,
to
engage
in
natural
gas-related
activities
in
Alberta.
Shortly
after
the
incorporation
Flanagan
was
joined
by
Burroughs
who,
until
the
two
sold
their
shares
in
the
company
to
A.E.G.
in
July
1976,
were
the
only
two
shareholders
of
the
company
and
who
acted
as
its
managers.
Both
Flanagan
and
Burroughs
were
experienced
businessmen
who
held
interests
in
other
companies
and
also
had
significant
experience
in
natural
gas-related
exploration,
drilling
and
development.
Although
experienced
in
these
areas
the
main
work
of
Oriole
consisted
of
acquiring
mineral
rights
to
a
fairly
large
area
and
subletting
those
rights
to
drilling
companies
while
retaining
for
Oriole
a
percentage
of
the
profits
of
any
producing
well
which
resulted
from
the
drilling
program.
The
work
thus
consisted
mainly
of
a
land
or
drilling
rights
assembly
program
and,
in
terms
of
staff,
only
required
the
services
of
Flanagan
and
Burroughs
and
no
other
employees.
The
two
men
were
extraordinarily
successful.
By
early
1974
they
had
pretty
well
completed
their
assembling
program.
They
had
interests
in
a
number
of
operating
wells
on
the
lands
over
which
they
held
the
drilling
rights.
Although
it
is
impossible
to
state
the
precise
value
of
the
shares
of
Oriole
at
this
time
it
is
fair
to
say
that
the
value
was
in
the
$4,000,000
to
$5,000,000
range.
It
was
at
that
time,
in
early
1974,
that
Flanagan
and
Burroughs
decided
they
would
sell
their
shares
in
the
company.
They
obtained
a
valuation
from
an
outside
firm
which
more
or
less
confirmed
their
own
evaluation.
They
also
decided,
presumably
for
income
tax
advantages,
they
would
sell
their
shares
and
not
the
assets
of
the
company.
It
appears
that
Flanagan
left
it
to
Burroughs
to
prepare
a
package
of
documents,
including
the
independent
evaluation,
which
they
could
present
to
prospective
purchasers.
Included
in
this
package
were
two
identical
employment
contracts
which
had
been
prepared
by
Burroughs,
or
prepared
by
someone
else
at
his
request.
They
were
prepared
without
any
prior
consent
from
Flanagan
either
as
to
their
general
form
or
the
amounts
and
times
set
out
in
the
contracts.
They
were
presented
by
Burroughs
to
Flanagan
early
in
1974,
at
about
the
same
time
that
the
two
had
decided
to
sell
their
shares,
and,
with
the
minimum
of
discussion
between
Flanagan
and
Burroughs,
in
fact
I
suspect
that
there
was
no
discussion
of
any
consequence
between
the
two,
the
contracts
were
signed.
Flanagan’s
contract,
identical
to
Burroughs’,
which
counsel
for
Oriole
himself
described
as
“
bizarre”,
although
purporting
to
be
made
effective
May
1,
1972,
was
not
in
fact
signed
until
early
1974.
It
was
in
the
following
terms:
Agreement
This
agreement
has
been
made
in
the
City
of
Calgary,
Province
of
Alberta,
effective
the
1st
day
of
May
1972
between:
Herbert
Charles
Flanagan
hereinafter
referred
to
as
the
"
employee"
-and
-
Oriole
Oil
and
Gas
Ltd.
hereinafter
referred
to
as
the
"employer"
The
employer
is
desirous
of
securing
the
services
of
the
employee
for
a
minimum
of
fifteen
years
from
the
date
hereof
and
the
employee
has
entered
into
this
agreement
under
the
following
terms:
1.
The
base
salary
for
the
first
year
shall
be
$25,000.00;
2.
The
base
salary
shall
be
increased
in
annual
increments
of
$10,000.00
to
a
maximum
of
$75,000.00.
3.
The
employer
will
pay
to
the
employee
an
annual
salary
of
$75,000.00
for
the
life
of
the
employee,
commencing
when
the
employee
attains
fifty-five
years
of
age,
or
becomes
totally
disabled
before
that
time,
or
retires
on
or
after
the
employee's
fifty-fifth
birthday.
4.
The
employer
will
pay
to
the
employee
an
annual
salary
of
$75,000.00
for
each
full
year
of
service,
prior
to
retirement
or
becoming
totally
disabled,
such
payments
to
commence
twelve
months
after
voluntary
withdrawal.
5.
The
employee
is
to
receive
a
bonus
of
71/2%
of
the
asset
value
of
the
employer
company
if
the
employer
sells
its
assets,
business,
etc.,
before
the
employee
attains
55
years
of
age.
Any
sale
of
the
employer's
shares
based
on
the
value
of
the
underlying
assets
will
be
treated
as
a
sale
of
assets.
Flanagan
said
that
the
contracts
gave
him
and
Burroughs
job
and
financial
security
as
well
as
a
percentage
of
the
assets
in
the
event
that
the
company
was
sold.
I
am
in
agreement
with
the
Tax
Court
judge
when
he
observed
that
a
similar
claim
made
by
Flanagan
before
him
that
the
employment
contracts
were
entered
into
for
monetary
protection
”
rings
hollow".
Whatever
financial
security
there
was
for
the
two
shareholders
it
was
in
the
value
of
the
shares
attributable
to
the
underlying
value
of
the
gas
wells.
The
contracts
did
not
in
any
way
enhance
this
security.
Similarly
the
job
security
was
not
dependent
upon
the
contracts.
The
company
was
basically
a
partnership
carried
on
under
the
guise
of
a
corporation.
Neither
partner
nor
manager
could,
without
consent
of
the
other,
dispense
with
his
services
because
they
were
equal
partners
in
the
enterprise
as
well
as
equal
shareholders.
If
differences
arose
which
could
not
be
resolved
and
the
company
could
not
function
without
the
resolution
of
those
differences
then
it
would
be
a
case
for
a
winding-up
order
and
distribution
of
the
assets
equally
between
the
two
shareholders.
The
job
security,
such
as
it
was,
was
in
the
partnership
or
equal
shareholder
relationship
funded
by
the
underlying
assets
and
was
not
enhanced
by
the
agreements.
Indeed
even
if
the
agreements
were
found
to
have
been
bona
fide
they
were
so
poorly
drafted
that
it
would
be
difficult
to
determine
precisely
what
rights
there
might
be
under
them.
The
final
reason
given
by
Flanagan
for
entering
into
the
agreements
was
that
they
provided
for
the
payment
to
the
employee
of
a
percentage
of
the
assets
in
the
event
that
the
company
was
sold.
I
fail
to
see
that
as
a
reason
for
the
agreement.
Whether
the
shares
of
the
company
or
its
assets
were
sold
the
employees,
Flanagan
and
Burroughs,
would
have
all
of
the
proceeds
of
the
sale,
not
just
71/2
per
cent,
either
by
way
of
a
direct
receipt
in
the
event
of
a
sale
of
their
shares
or
by
way
of
the
substitution
of
cash
for
an
asset
in
the
balance
sheet
of
the
company
and
the
consequent
enhanced
value
of
their
shares,
presuming
that
the
assets
were
sold
at
an
appreciated
value.
The
71/2
per
cent
bonus,
if
paid
to
Flanagan
or
Burroughs
as
employees,
would
only
diminish
by
an
equal
amount
the
value
of
their
shareholdings.
While
there
may
have
been
valid
reasons
for
entering
into
the
contracts
the
ones
given
by
Flanagan
are
not
convincing.
Not
only
were
those
reasons
not
convincing
but
in
my
view
the
contracts
were
not
bona
fide
employment
contracts
in
that
it
was
intended
by
any
of
the
parties
to
them
that
they
should
create
obligations
which
would
bind
the
others.
It
is
recited
that
the
employer
was
desirous
of
securing
the
services
of
the
employee
for
a
minimum
of
15
years
and
provision
was
made
for
retirement
at
age
55.
In
fact
Flanagan
was
44
years
of
age
at
the
time
he
signed
the
agreement
so
that
the
employer,
if
Flanagan
opted
to
retire
at
age
55,
would
only
have
had
his
services
for
11
years.
In
this
respect
Flanagan's
contract
does
not
accord
with
the
reality
of
the
situation.
According
to
paragraphs
1
and
2
of
the
contracts
the
amounts
the
shareholders
should
have
been
paid
by
way
of
salaries
for
the
following
years
were
as
follows:
1972:
$25,000;
1973:
$35,000;
1974:
$45,000;
1975:
$55,000;
1976:
65,000.
In
fact
the
salaries
of
Flanagan
and
Burroughs
remained
the
same,
$25,000,
for
each
of
those
years.
Flanagan
explained
this
failure
to
implement
the
terms
of
the
agreement
by
reason
of
a
poor
cash
flow
in
the
company's
operations.
However
a
review
of
the
company's
financial
statements
indicates
that
the
company
was
prepared
to
carry
on
its
balance
sheet
significant
and
increasing
amounts
of
money
due
to
the
directors
and
that
being
so
there
is
no
reason
why,
if
the
employment
agreements
were
bona
fide,
that
the
company
could
not
as
well
accrue
the
amounts
which
it
says
were
due
to
Flanagan
and
Burroughs
under
the
agreements.
This
is
particularly
evident
from
1974
on
because
at
that
time
the
parties
were
all
aware
of
the
real
worth
of
the
company
which
was
more
than
adequate
to
pay
by
way
of
accrued
debt
the
salaries
which
it
had
agreed
to
pay.
The
reason
that
the
company
did
not
do
so,
in
my
opinion,
was
because
it
was
never
intended
that
they
should
be
paid.
If
these
agreements
had
been
intended
to
be
bona
fide
employment
agreements
by
the
parties
to
them
then
they
would
have
represented
large
potential
liabilities
of
the
company
and
should
have
been
noted
in
the
company's
audited
financial
statements.
At
least,
there
should
have
been
noted
that
the
company
had
failed
to
pay
the
salaries
required
under
the
agreements
and,
in
the
absence
of
any
arrangements
to
the
contrary
by
the
parties
to
the
agreements,
the
shortfalls
in
salaries
due
should
have
been
noted
as
a
liability
on
the
balance
sheet
of
the
audited
financial
statements.
Flanagan
and
Burroughs
were
not
inexperienced
businessmen
and
were
no
doubt
aware
of
this.
As
nothing
appears
in
the
financial
statements
with
respect
to
the
contracts
of
employment
or
the
failure
of
the
company
to
make
the
payments
required
under
the
terms
of
the
contracts
I
can
only
conclude
that
the
auditors
were
not
informed
of
the
existence
of
the
contracts.
I
think
it
is
fair
from
that
conclusion
to
draw
the
further
conclusion
that
the
auditors
were
not
informed
because
it
was
never
the
intention
of
the
parties
to
the
contracts
that
they
should
create
binding
obligations.
Flanagan
and
Burroughs
finally
succeeded
in
finding
what
transpired
to
be
the
purchaser
of
their
shares.
Their
first
contact
with
A.E.G.
was
in
1976
and
they
dealt
almost
exclusively
with
a
Mr.
Frank
George
Vetsch
CVetsch")
who
was
at
that
time
the
president
of
A.E.G.
He
decided
that
the
purchase
of
the
shares
of
Oriole
at
a
maximum
price
of
4.8
million
dollars
"would
be
an
attractive
acquisition”.
Vetsch
had
discussed
the
matter
with
the
company's
auditors
in
late
April
1976
and
at
that
time,
on
April
22,
1976,
had
decided
to
make
an
offer
to
purchase
the
shares
of
the
company
for
$3,500,
000
made
up
of
a
$1,500,000
payment
in
cash
and
treasury
shares
of
A.E.G.
valued
at
$2,000,000.
It
was
anticipated
that
Oriole
would
use
the
$1,500,000
to
discharge
its
obligations
to
Flanagan
and
Burroughs
under
the
employment
contracts.
Alternatively
A.E.G.
might
consider
lending
the
$1,500,000
to
Oriole
so
that
it
could
use
that
money
to
settle
its
obligations
to
the
two
shareholders.
The
company's
auditors
were
concerned
about
the
characterization
of
the
management
contract
payments
both
as
to
their
reasonableness
and
deductibility
and
recommended
that
a
tax
ruling
be
obtained
prior
to
the
finalization
of
the
purchase
or
at
least
that
suitable
protective
clauses
be
incorporated
in
the
proposed
letter
of
intent
should
the
payments
not
stand
up
to
scrutiny
by
Revenue
Canada,
Taxation.
On
April
26,
1976
Vetsch
notified
his
Board
of
Directors
that
he
was
negotiating
with
the
two
shareholders
on
the
basis
of
a
share
purchase
and
employment
contract
pay-out
for
a
price
in
the
order
of
$3,000,000
to
$4,000,000.
It
is
apparent
that
at
this
stage
Vetsch
had
seen
the
two
employment
contracts
and
that
he
had
seen
them
as
creating
a
tax
advantage
for
A.E.G.
to
the
extent
that
any
portion
of
the
purchase
price
which
could
be
allocated
to
the
employment
contract
pay-out
as
opposed
to
the
price
of
the
shares
could
be
deducted
from
Oriole's
taxable
income.
His
concern
was
not
so
much
whether
the
contracts
were
bona
fide
contracts
but,
assuming
them
to
be
bona
fide,
how
much
of
a
pay-out
would
be
considered
reasonable
by
the
Tax
Department.
In
order
to
make
that
determination
some
reasonable
values
had
to
be
assigned
to
these
bizarre"
contracts.
I
can
only
surmise
that
A.E.G.'s
advisers
expressed
some
difficulty
in
assigning
realistic
values
to
the
contracts
because,
on
May
1,
both
Flanagan
and
Burroughs
signed
agreements
with
Oriole
that
substituted
for
the
rights
which
they
had
under
clause
3
of
the
contracts
the
right
to
receive
from
Oriole
life
annuities
of
$75,000
per
year
guaranteed
for
a
maximum
of
15
years
commencing
at
age
55.
Flanagan
had
no
recollection
of
these
amending
agreements
and
could
offer
no
explanation
for
them
other
than,
he
said,
there
was
never
any
intention
to
enforce
these
agreements
against
Oriole.
In
my
view
that
observation,
in
simple
terms,
really
describes
the
nature
of
both
the
original
employment
contracts
and
the
amending
agreements.
They
were
never
intended
to
be
acted
upon
vis-a-vis
Flanagan
and
Burroughs
on
the
one
hand
and
Oriole
on
the
other,
so
long
as
Flanagan
and
Burroughs
remained
employees
and
managers
of
Oriole.
The
contracts
were
intended
only
as
negotiating
devices
to
be
used
in
the
negotiations
for
the
sale
of
the
shares
of
Flanagan
and
Burroughs
so
as
to
induce
prospective
purchasers
to
characterize
a
part
of
the
purchase
price
as
a
settlement
of
employment
contracts
and,
if
successful
in
such
characterization,
to
receive
a
tax
advantage
which
the
purchasers
would
not
otherwise
have
received
had
the
full
purchase
price
been
attributed
to
the
shares
which
were
acquired.
I
have
no
hesitation
finding
that
if
the
agreement
for
the
sale
of
their
shares
to
A.E.G.
had
fallen
through
and
if
Flanagan
and
Burroughs
had
been
unsuccessful
in
finding
another
purchaser
for
their
shares
the
employment
contracts
would
simply
have
disappeared.
The
May
1
amendments
were
not
made
with
a
view
to
being
acted
upon
as
employment
contracts
but
with
a
view
to
providing
A.E.G.'s
advisers
with
a
means
of
justifying
in
some
particularity
the
amount
of
the
purchase
price
of
the
shares
which
it
would
allocate
to
the
pay-out
of
the
employment
contracts.
A
few
days
after
the
May
1
amendments,
A.E.G.'s
auditors
provided
some
rough
notes
on
the
present
value
of
each
of
the
annuities
represented
by
the
amendments
to
clause
3
of
the
original
contracts.
The
notes
are
not
completely
clear
to
me
but
it
appears
that
the
1976
value
of
Flanagan's
annuity
would
have
been
$388,000
and
Burroughs'
only
$219,000.
In
subsequent
evidence
at
the
hearing
before
me
I
was
told
that
the
1976
value
would
have
been
$790,000
in
the
case
of
Flanagan
and
$480,000
in
the
case
of
Burroughs
had
appropriate
tax
implications
been
considered.
Counsel
for
Oriole
submits
that
I
should
take
these
amounts
into
consideration
in
determining
whether
or
not
the
$1,000,000
pay-out
for
the
employment
contracts
represented
a
reasonable
figure.
As
I
have
already
indicated
I
do
not
regard
the
contracts
as
bona
fide
contracts
at
all.
When
I
consider
this
last
bit
of
evidence
it
only
confirms
once
again
that
the
May
1,1976
amendments
were
not
bona
fide
amendments
to
the
contracts
but
only
devices
so
that
the
portion
of
the
consideration
of
the
share
purchase
allocated
to
the
employment
contract
pay-outs
could
be
clothed
with
some
credibility.
The
unreality
of
the
alleged
employment
contract
pay-out
is
borne
out
in
two
details.
First
is
the
total
ignorance
of
the
amendment
by
one
of
the
parties
to
it.
Had
the
amendment
been
a
bona
fide
amendment
upon
which
the
amount
of
Flanagan's
retirement
annuity
was
to
be
fixed
I
have
no
doubt
that
Flanagan
would
have
paid
a
great
deal
of
attention
to
it
or
at
least
would
have
had
a
modest
recollection
of
the
nature
of
the
document.
Secondly,
and
even
more
significantly,
had
the
documents
been
bona
fide
documents
Flanagan
would
no
doubt
have
been
aware,
even
in
general
terms,
that
his
annuity
would
have
had
a
substantially
higher
present
value
than
Burroughs’
and
it
would
have
been
surprising
to
find
him
settling
for
an
identical
cash
payment
as
that
which
Burroughs
accepted.
I
agree
with
counsel
for
the
plaintiff
that
it
is
not
impossible
that
Flanagan
might
have
agreed
to
the
settlement
in
such
an
event
but
it
simply
points
out,
once
again,
to
me
at
least,
that
Flanagan
never
considered
the
agreements
as
employment
contracts
but
simply
as
negotiating
devices.
Flanagan
himself
said
he
expected
to
get
$4,000,000
for
the
sale
of
all
the
shares
of
the
company,
that
he
settled
on
$3,600,000
and
did
not
care
one
way
or
another
how
it
was
allocated
or
characterized.
In
any
event,
after
receiving
the
auditors’
values,
Vetsch,
on
May
6,
sent
a
letter
of
intent
to
Flanagan
and
Burroughs
in
which
he
agreed
to
purchase
their
shares
of
Oriole
for
$1,840,000
plus
55,000
treasury
shares
of
A.E.G.,
for
a
total
value
of
about
$3,600,000.
It
was
also
provided
in
the
letter
of
intent
that
Flanagan
and
Burroughs
had
agreed
to
settle
their
loss
of
office
claims
against
Oriole
for
$1,100,000
($1,000,000
of
this
latter
amount
was
subsequently
loaned
by
A.E.G.
to
Oriole
in
return
for
an
interest
free
demand
note
issued
by
Oriole
to
A.E.G.).
It
was
also
provided
in
the
letter
of
intent
that
it
was
subject
to
approval
of
the
Board
of
Directors
of
A.E.G.
and
that
the
closing
date
be
between
July
1,
1976
and
July
31,1976.
The
day
after
this
letter
was
issued,
as
far
as
the
record
discloses
and
prior
to
its
approval
by
the
Board
of
Directors,
A.E.G.'s
auditors
warned
that
the
employment
contracts
did
not
contain
some
of
the
terms
one
would
expect
to
find
in
normal
employment
contracts,
that
the
amount
of
$1,100,000
referred
to
as
the
contract
pay-off
might
be
disallowed
as
an
expense
as
not
laid
out
to
earn
income
and
alternatively
that
the
$1,100,000
payment
might
be
considered
to
be
as
payment
for
the
shares
of
Oriole.
Subsequently,
and
prior
to
confirmation
from
the
A.E.G.
Board
of
Directors,
it
appears
that
A.E.G.
received
similar
warnings
from
its
solicitors
who
recommended
the
way
to
eliminate
the
risk
would
be
to
obtain
a
tax
ruling.
Notwithstanding
the
warnings
received
A.E.G.
did
not
delay
the
matter
for
a
tax
ruling
but
went
ahead
with
the
purchase
on
July
28,
1976.
At
that
time
the
sum
of
$1,000,000
was
loaned
to
Oriole
which
in
turn
issued
cheques
for
$500,000
to
each
of
Flanagan
and
Burroughs
in
return
for
release
of
all
their
claims
which
each
of
them
had
under
their
employment
contracts.
A
curious
adjustment
occurred
shortly
before
the
closing.
There
was
some
difficulty
with
title
to
one
of
the
properties
owned
by
Oriole.
Under
the
circumstances
it
was
determined
that
the
purchase
price
of
the
shares
should
be
reduced
pending
proof
of
Oriole’s
title.
Not
only
was
the
price
of
the
shares
reduced
but
the
amount
of
the
employment
contract
pay-out
was
also
reduced.
As
the
value
of
the
employment
contract
pay-out
was
primarily
reached
by
taking
the
present
value
of
the
annuities
(which
apparently
made
no
distinction
between
the
values
assigned
to
Flanagan's
contract
as
opposed
to
Burroughs')
and
the
other
terms
of
the
contracts
and
as
those
did
not
change
as
a
result
of
the
doubts
as
to
title,
there
would
not
appear
to
be
any
justification
for
reducing
the
amount
of
the
employment
contract
pay-out.
This
is
particularly
so
where
there
was
more
than
ample
leeway
in
the
amount
allocated
to
the
purchase
of
the
shares
to
bear
the
whole
reduction
on
account
of
the
possibility
of
a
title
defect.
The
fact
that
the
employment
contract
pay-outs
were
reduced
because
of
the
partial
reduction
in
the
value
of
the
shares
tends
once
again
to
confirm
that
the
pay-out
allocated
to
the
employment
contracts
was
in
fact
a
part
of
the
consideration
for
the
payment
of
the
shares
which
the
parties
attempted
to
disguise
as
a
payment
for
the
loss
of
Flanagan's
and
Burroughs'
offices
or
employment
with
Oriole.
Counsel
for
Oriole
submits
that
as
bizarre
as
the
contracts
may
have
been
they
nevertheless
created
real
obligations
on
the
part
of
Oriole
to
Flanagan
and
Burroughs.
He
admits
that
the
two
contracts
were
tax-motivated
and
significantly
so
but
says,
and
I
agree
with
him,
that
tax
motivation
alone
is
no
reason
for
setting
aside
the
contracts
or
characterizing
them
any
differently
from
what
they
appear
to
be
on
their
faces.
Given
that
real
obligations
were
created
he
submits
that
the
purchaser
A.E.G.
acted
as
a
reasonable
and
prudent
purchaser
in
seeing
that
these
obligations
were
settled
prior
to
the
purchase
of
the
shares.
One
may
argue,
he
says,
that
the
payment
was
unreasonable
but
not
that
some
payment
had
to
be
made
to
release
Oriole
from
a
real
obligation.
In
such
an
event
the
most
the
defendant
can
ask
is
that
the
Court
disallow
as
a
deductible
expense
only
such
part
of
the
$1,000,000
as
it
finds
to
be
unreasonable.
Counsel's
argument
makes
a
great
deal
of
sense
but
only
if
I
find
that
the
employment
contracts
were
bona
fide
contracts
intended
to
create
obligations
between
the
parties
to
them.
However
as
I
have
already
found
that
they
were
not
bona
fide
contracts
and
as
it
was
never
intended
by
the
parties
to
them
that
they
should
be
acted
upon
as
employment
contracts
it
is
impossible
for
me
to
find
that
any
such
payment,
purportedly
made
in
discharge
of
a
non-existent
obligation,
can
be
characterized
as
a
deduction
made
or
incurred
by
the
plaintiff
for
the
purpose
of
gaining
or
producing
income.
As
the
payment
of
the
$1,000,000
constituted
partial
consideration
for
the
transfer
by
Flanagan
and
Burroughs
to
A.E.G.
of
their
shares
in
Oriole
it
was
not
an
expense
incurred
for
gaining
or
producing
income
from
a
business
within
the
meaning
of
paragraph
18(1)(a)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the"Act")
and
was
therefore
not
deductible
from
Oriole’s
taxable
income.
It
follows
from
what
I
have
said
that
the
plaintiff's
claim
will
be
dismissed
with
costs.
Appeal
dismissed.
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