After a venture carried on through a U.S. subsidiary which was owned by the taxpayer and its Netherlands parent proved to be unsuccessful, the Netherlands parent advised the taxpayer's auditors that it had agreed to reimburse the taxpayer for 89% of the total loss, as a result of which the taxpayer's balance sheet showed an asset equal to the amount of the proposed reimbursement. Mogan TCJ. found that this "agreement" was "gratuitous and not enforceable" (p. 522), with the result that the promise to reimburse did not give rise to indebtedness of the Netherlands parent owing to the taxpayer for purposes of ss.15(2) and 214(3)(a).
Mogan TCJ. also stated (p. 523):
"In the absence of a special statutory definition, 'debt' means a sum payable in respect of a liquidated money demand, recoverable by action ..."