Each appellant (along with 600 other taxpayers over several taxation years in the 1980's) bought units in a limited partnership. Each of the 36 limited partnerships was to acquire a large yacht to be used for catered vacation charters. The general partner ("OCGC") engaged in marketing activities and purchased a smaller yacht to be used for the provisioning of supplies to the envisaged fleet, and belatedly bought two more yachts, although none of the yachts was acquired by any particular partnership (paras. 348, 402). As the unit purchases were mostly financed with interest-bearing promissory notes of the investors which were not paid, the capital raised was grossly insufficient for accomplishing the marketed objectives. Rossiter ACJ found (at para. 113, see also paras. 280, 261, 352) that "any yacht building and charter development efforts by OCGC and its related companies were mere window-dressing [to induce further investments]" and characterized the arrangements as a "Ponzi-like scheme [which] was set to collapse eventually" (para. 344, see also 356).
In confirming the Minister's denial of the partnership losses claimed by the taxpayers, Rossiter ACJ stated (at para. 329):
[T]he OCGC yacht chartering business was a fraudulent scheme from beginning to end throughout which the investors' contractual rights were not respected. As such, per... Johnson and Hammill, it cannot give rise to a source of income ... and cannot be considered a business under any definition.