The taxpayer owned a large portion of the non-voting shares in a corporation ("B&N"). The taxpayer lived in a property that B&N had purchased and rented out to him (i.e., a Declaration of Trust signed by B&N was ignored by it and discounted by VA Miller J - but the taxpayer thought he beneficially owned the property and that the monthly payments made by him were mortgage payments rather than rent). Preliminary to a subsequent sale by him of the house for $275,000, it was transferred to him by B&N, with an amount equal to the excess of its book value over the outstanding mortgage amount being treated in the B&N books as a shareholder loan. (Para. 15 appears to incorrectly ignore the mortgage amount.) However, the net fair market value of the property (based on its fair market value of $275,000) was $79,779 higher, and the taxpayer was assessed for this amount as a shareholder benefit.
In finding that there was no shareholder error (but with the understanding that the shareholder loan would be increased in order to correct the error), VA Miller J stated (at paras. 40-41):
The Appellant was not aware of the error in this case nor did he sanction the error. He believed that the Declaration of Trust was followed and that he already owned the Property.
It is clear that B&N did not intend to confer a benefit on the Appellant. It transferred the Property to him and included an amount with respect to the Property as a loan receivable from him. The problem was that the amount included was incorrect. This problem arose as a result of an error made by [the accountants] not from any intent of B&N or the Appellant to commit a fraud.