The taxpayer transferred land to a partnership for consideration of $13.5 million which was satisfied by that amount being paid by the partnership, out of new partnership borrowings in excess of that amount, in order to discharge a mortgage owing by the taxpayer prior to the transfer on the transferred land. The Court reversed a finding that, for purposes of applying s. 97(2), the taxpayer had received only $6.75 million because it remained liable qua partner for 50% of the new loan negotiated in the partnership's name. Noël J.A. stated (at p. 5778):
"The suggestion that for tax purposes amounts disbursed by a partnership from borrowed funds in the discharge of an obligation owed to one of its partners retain their character as loan proceeds is, in my view, wholly without foundation ... . It necessarily follows that the legal character of amounts paid by a partnership to a partner is a function of the obligation being discharged irrespective of how the payment is funded."