The appellant was assessed under s. 103(1). A representative of the appellant (Mr. Thompson, who wholly-owned it) refused to answer questions posed on his examination for discovery that were designed to elicit the reason or purpose for which various transactions were engaged in by the appellant and other companies in the group.
After referring to the “principal reason” test in s. 103(1), Sommerfeldt J stated (at para. 42):
At least one thesaurus indicates that purpose and reason are synonyms. Therefore, questions asking about the purpose of an agreement or transaction, as well as questions asking about the reason for an agreement or transaction, could come within the purview of subsection 103(1) … .
Sommerfeldt J quoted various authorities on determining the intention of a corporation including Roseland Farms and (at paras. 47 and 52):
... Canadian Dredge & Dock ... discussed the identity doctrine, which “merges the board of directors, the managing director, the superintendent, the manager or anyone else delegated by the board of directors to whom is delegated the governing executive authority of the corporation,” such that “the conduct of any of the merged entities is thereby attributed to the corporation.”
I do not think that the … Questions are improper merely because they seek to explore Mr. Thompson’s state of mind or (in his capacity as a director and officer of the Appellant) his reasons, purpose, intention or understanding in respect of the Transactions … .