A subdivision property of the taxpayer, a developer, was blockaded by Six Nations protesters. To diffuse the conflict, the Ontario government passed a by-law prohibiting any use of the property (rendering it valueless), and then agreed to pay the taxpayer $15,800,000 in exchange for relinquishing its rights to the property and under a court order against the protesters, and for a release.
C Miller J found that although the taxpayer relinquished its claim to the property, it had not "received $15,800,000 for the sale of worthless land" (para. 163). The property also "lost its character as inventory by being made legally useless for development" (para. 168) so that, even if the payment were for the property, it would be taxable only as a capital gain (para. 169). He concluded (at para. 203):
Henco's business was destroyed. By the time it struck an arrangement with Ontario, Henco had no value as a business ... : there could not be and there was not a source of income. The capital receipt was non-taxable.