The taxpayer, who was an employee of a Norwegian multinational corporation ("Musnor") was transferred to Canada and issued 1/3 of the shares of a newly-incorporated Canadian subsidiary of Musnor ("Muscan"), and was found to have become an officer or other employee of Musnor. When the taxpayer acquired a house in April 1980, Musnor agreed to provide a loan to refinance the existing mortgage. The new mortgage loan was made by Muscan in September 1981 and the existing mortgage paid off in June 1982. The new mortgage loan was repayable if the taxpayer should leave the employ of Musnor or in the event of the resale or transfer of the house.
In first finding that the taxpayer was eligible to avail himself of the potential exemption in s. 15(2), Pratte, J.A. found that it was apparent from the list of the exceptions contained in s. 15(2)(a) that s. 15(2) "applies not only to loans made to shareholders as shareholders but also to loans made in the ordinary course of business to employees who happen to be shareholders." However, the new mortgage loan was not exempted under s. 15(2)(a) because the arrangements made at the time of the loan did not permit a determination with any certainty of the time within which the loan was to be reimbursed.