On the same day that the owners of non-voting shares agreed to sell those shares and 49% of the voting shares of a corporation to a non-resident controlled purchaser, minority shareholders of the corporation entered into an Option Agreement to sell the balance of the voting shares along with some preferred shares, with such options being exercised approximately three months later in the subsequent taxation year.
In finding that s. 110.6(14)(b) applied to deem the corporation to be a Canadian-controlled private corporation notwithstanding the right to acquire control under the options, Tardif, J., after noting that the agreement for sale of shares referred to the Option Agreement, stated (at para. 32):
"thus, it is enough for the option to have been contemplated or envisaged in the purchase and sale agreement, and section 3.1 shows that the option in the instant case was so contemplated or envisaged."
Accordingly, the Option Agreements were rights "under" the Agreement of Purchase and Sale. Furthermore, the absence of more clear references under the Agreement of Purchase and Sale to the Option Agreement, so as to eliminate ambiguity in the relationship between the Agreement of Purchase and Sale and the Option Agreement, was a drafting error.