The taxpayer, as a member of a joint venture, bought an undivided interest in seismic data for $20,000 cash and an $85,000 limited-recourse promissory note. The Minister limited the taxpayer's deductions in connection with the note portion to the amount of licensing revenues ultimately received. After finding that the expenses connected with the note were reasonable (see summary under s. 67), Favreau J stated (at para. 78):
In my opinion, the Crown cannot apply the doctrine of sham to only a part of a particular transaction while considering another part of the same transaction as being legally valid and effective. For example, I have difficulty with the Crown being permitted to apply the doctrine of sham to only that part of the acquisition by the appellant of an undivided interest in the Seismic Data that was paid for by the appellant's Promissory Note.