The taxpayers were a married couple employed by a technology research corporation ("cStar"), and one taxpayer was also a shareholder. They lent a significant portion of their salaries back to cStar over several years. In 2005, citing an inability of cStar to meet its financial obligations, they wrote off the loans and claimed business investment losses.
D'Auray J agreed with the Minister that the losses should be denied. The bulk of the evidence showed that, despite various setbacks (e.g. the 2001 the dot-com bubble bust), cStar's financial health was in no worse condition than usual, it continued to attract investors in 2006, many of the setbacks had occurred well before 2005, and the taxpayers continued to lend their salaries.