Normal course dividends paid by two public corporations (“CU” and “CUH”) which gave rise to a Part IV tax refund were considered part of the series of transactions that included s. 85(3) deemed to be received by CU and CUH in connection with a reorganization of another public company (“ATCOR”) and an acquisition by a third party (“Forest”) because, although they had an independent purpose and existence, they were part of the series of transactions that included such deemed dividends received by CU and CUH, and were appropriately assessed pursuant to s. 55(2). Rothstein JA stated (at paras. 65, 67):
If the parties intend that a transaction with an independent purpose and existence will assist in achieving this composite result [of it and other transactions] and have the ability to ensure that the independent transaction is carried out and the transaction is in fact carried out, the independent transaction will be considered a part of the series. …
The facts that CU and CUH intended to use both the ATCOR/Forest transactions and the normal course dividends to achieve their tax avoidance objective, that they had the ability to ensure that all the transactions would occur, and that all the transactions did indeed occur as intended are sufficient to constitute them all part of a common law series for the purposes of subsection 55(2). It is of no consequence that one or more of the transactions had an independent purpose and existence.