The facts (see para. 29 of the Reasons, which states the opposite of para. 6 of the poorly-drafted Statement of Agreed Facts) appear to be that:
- an Alberta company ("Opco") sold all the common shares of another Alberta company ("Holdco"), having a modest value due to a recently completed transaction involving the conversion of most of its share capital to preferred shares, to a family trust (the "Brent Trust," namely, the taxpayer) of which it was one of the beneficiaries;
- Opco paid a dividend of $245,000 to another family trust (the "Kern Trust"), with the Kern Trust then distributing that amount to Holdco as one of its beneficiaries;
- Holdco paid a $245,000 dividend to the Brent Trust;
- the Brent Trust distributed this dividend amount to an individual beneficiary, who lent that amount to Opco.
The taxpayer contended that s. 75(2) applied to deem the dividend in 3. to have been received by Opco, so that Opco was eligible for the inter-corporate dividend deduction in s. 112.
Bocock J found, applying Sommerer, that as the shares of Holdco had been sold by Opco to the Brent Trust, s. 75(2) did not apply to attribute the $245,000 dividend income of the Brent Trust to Opco. Accordingly, any application of GAAR (s. 245) to the transactions was moot.
In the Federal Court of Appeal, Near JA stated (at para. 5), in response to a submission that Sommerer was "manifestly wrong," that "counsel...has not pointed to any fundamental matter that was overlooked sufficient to justify intervention."