Boyle J, after finding in McKesson that the taxpayer had been selling its trade receivable to its immediate Luxembourg parent (MIH) at discounts which were excessive from a transfer pricing perspective, recused himself from consideration of residual issues (respecting costs and the disposition of sealed documents) on the ground that he might no longer be considered to be impartial, as McKesson Canada, in its factum filed with the Federal Court of Appeal, had alleged that he was "untruthful and deceitful" in his reasons, stated "clear untruths" about him and alleged that he was not impartial (numerous paras. beginning at 4).
His explanation of the untruths included quotes from the extensive exchanges from the bench at trial:
- There, he expressed concern about the taxpayer, which began with a cost of funds of nearing 5%, quadrupling this cost on the basis of laying off risk to MIH (para. 54).
- The taxpayer's approach, that (ignoring MIH's knowledge and control as parent) MIH was "buying a pig in a poke," so that it was taking on a lot of risk, would mean that "virtually every Canadian subsidiary…[could] be re-pricing to 5 year junk rates" (para. 65).
- However, in his trial reasons, it had not been necessary to rely on the likely law that this parent-subsiadary relationship could be taken into account as under the terms of the receivables purchase agreement, MIH had an out once the collection performance began to deteriorate (para. 19).