In settling a dispute between the appellant and another insurance company, Canadian Group Underwriters Insurance Company ("Underwriters") as to the ownership of two trademarks, Underwriters' interest in the trademarks was first transferred under ITA s. 85 to an affiliated corporation ("NN Life") in order to access NN Life losses, and then sold on the same day by NN Life to the appellant for $5 million in cash. The appellant applied for a refund of the GST under s. 261 on the basis that the trademark had not been sold to it in the course of a commercial activity.
After finding that the sale by NN Life was not an adventure in the nature of trade or a business, and noting (at para. 53), that s. 141.1(2)(a) "seems to describe a purchase and resale that is not in the ordinary course of business," Woods J stated (at para. 54):
Although the scope of paragraph 141.1(2)(a) may be uncertain, it is clear that the provision does not apply unless the transaction has some connection to a business or an adventure in the nature of trade. The same is also true for paragraph 141.1(1)(a). There is no such connection in this case.
Accordingly, the purchase of the trademarks was not subject to GST.