A purported Barbados trust that was used in connection with a tax plan to avoid Canadian capital gains tax on the disposition of shares of a corporation was found not to exist at the time of a purported sale of shares by the purported trust given that the settler never intended to lose control of the shares to the Barbados trustee, or of the money resulting from their sale, he did not sign the trust deed until after the sale of the shares to the third party, and the shares were not validly transferred to the trust (and, in fact, at the relevant time, they could not be so transferred because they were subject to the security interest of a third party).
In going on to find that the purported trust also was a sham, Noël JA stated (at paras. 19, 20):
The Tax Court judge found as a fact that both the appellant and the trustee knew with absolute certainty that the latter had no discretion or control over the shares. Yet both signed a document saying the opposite. …[T]he Tax Court Judge misconstrued the notion of intentional deception in the context of a sham. …It suffices that parties to a transaction present it as being different from what they know it to be.