The taxpayer advanced evidence to demonstrate that the proper characterization of a payment received by it from the Ontario government was compensation for the destruction of its business – notwithstanding that the agreement with the government provided for a taxpayer sale of land (which the extrinsic evidence showed had become worthless). In finding that the parol evidence rule did not apply to exclude this evidence, C Miller J found that:
- such evidence pertained to the factual matrix surrounding the agreement - that is, objective evidence of the parties' intentions - while the parol evidence rule only blocks evidence of the parties' subjective intentions (para. 88); and
- even if the parol evidence rule were to come into play, the agreement had not explicitly indicated an allocation amongst the assets being sold - so that evidence of the parties' subjective intentions would have been necessary to resolve the ambiguity (para. 98).
C Miller J also expressed reservations about the universal application of the parol evidence rule in the Tax Court, where poor or even misleading drafting could, absent the ability to consider extrinsic evidence, frustrate the Court's goal of accurately characterizing transactions for tax purposes (para. 89).
Press releases released by the federal and provincial government were accepted as evidence of the information contained therein, whereas affidavits of senior government officials did not satisfy the public documents exception to the hearsay rule (paras. 102, 109).