The auditing firm (“DMCL”) for the appellant (“IHI”) obtained the agreement of IHI, as evidenced by a December 7, 2007 email sent by DMCL to IHI, to fix the audit fee at a level higher than that originally estimated. In the meantime, some payments by IHI (including an initial “retainer” of $25,000) had been made in round figures, without any indication that GST at 6% had been added. About six months later, DMCL prepared an invoice which added GST at the post-2007 rate of 5%.
After noting that essentially noting (at para. 45) that “the Tendances et Concepts case may not carry as much weight now, given that it was based on a previous French version of the ETA, in which arrhes was used as the French equivalent for the English deposit” and that (notwithstanding North Shore Power) IHI’s making of interim payments could have been consistent with their being deposits, Sommerfeldt J stated (at para. 54):
[T]he payment structure set out in [the] email of December 7, 2007 has a broad similarity to the payment structure in North Shore Power. Accordingly, it may be arguable that, by December 11, 2007, the three payments made by IHI to DMCL may have been contractually characterized or recharacterized as payments on account of DMCL’s fee.