The taxpayer, a former president of a corporation, sought to deduct legal fees arising from his successful defence to an action, in which the corporation's shareholders attempted to recover the value of stock options that the taxpayer had accepted while allegedly knowing about a planned takeover bid for the corporation.
After noting (at para. 17) the question as to whether the action against the taxpayer sought to reclaim compensation paid or was a broader claim relating to alleged wrongdoing (insider trading), Boyle J. found that taxpayer's legal fees were spent to establish a right to salary or wages, and therefore deductible under s. 8(1)(b): "the claim against him related to the very issuance of the options to him upon his appointment as president and CEO."