The taxpayer, a certified general accountant, guaranteed a loan to one of his clients ("Cuisine Gourmet"), for which he became liable to pay $5168.46. Lamarre J. found that, pursuant to s. 40(2)(g)(ii), this amount was not an allowable business investment loss.
As a guarantor, the taxpayer was not entitled to any interest, and in that sense his guarantee was analogous to the interest-free loan made by the taxpayer in Byram. However, unlike in Byram, the taxpayer had never been a shareholder of Cuisine Gourmet. The taxpayer's corporation was not affiliated with Cuisine Gourmet either. Lamarre J. found that there was not a "sufficient linkage between the taxpayer and the anticipated income from the corporate debtor" (paras. 20-21).
The ability of the taxpayer to collect professional fees from Cuisine Gourmet was "too indirect and far too removed to conclude that the appellant could expect to obtain income from the loan he guaranteed" (para. 23).