In the course of applying s. 245 to deny the recognition by the taxpayer of a capital loss, the Court considered and rejected the argument of the taxpayer's principal (Mr. Cross) that his primary intention in entering the series of transactions in issue (which effected a surplus strip) was creditor protection, and that "each and every step in the plan was essential" to achieving such protection. Sharlow J.A. stated (at para. 20):
Justice Paris followed the correct approach when he determined the purpose of the series of transactions on an objective basis – that is, by ascertaining objectively the purpose of each step by reference to its consequences – rather than on the basis of the subjective motivation of Mr. Cross, or his subjective understanding of what may or may not have been required to achieve creditor protection.