Wong J allowed the claim of the taxpayer, which was the only Canadian manufacturer of agricultural tractors, respecting a project to build a four-wheel drive tractor with 85 horsepower (or about 20%) above the current industry maximum.
She found in particular that here “the integration of non-trivial combinations of established (well-known) technologies and principles carried a major element of technological uncertainty” (para. 57) and that “with a horsepower increase of this magnitude, the obvious problems might not have had obvious solutions” (para. 58).
She further noted that the taxpayer “was systematic and methodical, but also creative” (para. 66) and, regarding the taxpayer’s use of the scientific method, in its “situation involving a system uncertainty, the appellant formulated and tested hypotheses involving individual uncertainties” (para. 68).
The costs for this qualifying project were pooled with two others involving developing models with horsepower close to that of competitors’ models, which were not demonstrated to have qualified. Since the cost allocation amongst the three projects was not established, Wong J allowed one-third of the pooled costs of $2.9 million, even though the qualifying project entailed the most work.