The taxpayer, which owned all of the issued common shares of a public utility company, incurred approximately $1.2 million in legal fees in a successful action to have B.C. statutes, which expropriated its shares of the public utility company, declared ultra vires. It was found that it brought the action in order to preserve its title to the shares, in order that it could dispose of those shares to the Crown at a more favourable price (which in fact occurred). Martland J. found that because "in essence, the main purpose and the result of the litigation was to improve the consideration received for the disposition of a capital asset" (pp. 5263-5264), and in light of the proposition established by the Dominion Natural Gas case that a legal expense incurred to protect a taxpayer's title to a capital asset is a capital expenditure, that the taxpayer's legal expenses were incurred on capital account.
Various costs of communications with the taxpayer's shareholders respecting the expropriation legislation and the litigation were deductible as "the reasonable furnishing of information from time to time to shareholders by a company respecting its affairs is properly a part of the carrying on of the company's business of earning income" (p. 5264, DTC).