The taxpayer held an account in the name of her father's business. The father owed approximately $500,000 in taxes. He bought some germanium-rich waste for $31,762.50, and sold it for two payments of $43,200 and $24.817.74. He had the customer make the first payment into the taxpayer's account, and three days later she paid $31,762.50 to the supplier.
The taxpayer claimed that she had an enforceable verbal agreement to make the $31,762.50 payment, and therefore her $43,200 liability under s. 160(1) should be reduced by $31,762.50 of consideration. Hogan J. found this claim to be credible. The payments into and out of the account concerned the purchase and sale of the same germanium waste, and the two payments were made within three days of each other. It was a "reasonable inference" to find an enforceable verbal agreement, rather than the mere "moral obligation" contended by the Minister.