The taxpayer agreed with a U.S. corporation ("Moore") that in consideration for an exclusive licence for the use in Canada by the taxpayer of Moore's technical information respecting methods for manufacturing and producing flexible tubes, the taxpayer would pay $25,000 on signing plus an additional formula royalty based on its sales from the related products. In finding that the $25,000 initial payment was a capital expenditure, Mr. Davis noted that no portion of this amount was refundable by Moore if the agreement were terminated, and that it was clear that the payment was not based on the use made of the information.