The respondent purchased the appellant's business in exchange for securities, with the appellant becoming a minority shareholder.
The acquisition agreement contained a representation and warranty regarding tax pools.
Years later, the Canada Revenue Agency disallowed the respondent's use of the tax pools and assessed approximately $11.8 million in additional taxes, interest, and penalties.
The respondent invoked an indemnity from the appellant, who argued the respondent had breached the tax pools representation and warranty.
The motion judge granted summary judgment for the respondent, interpreting the representation and warranty as directed solely to the accurate identification of tax pools and their values at closing, not as a guarantee of future tax utilization.
The appeal was dismissed.
