COURT FILE NO.: CV-21-656645-00CP
DATE: 20220105
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Suzan Poirier
Plaintiff
– and –
Silver Wheaton Corp., Randy Smallwood, and Gary D. Brown
Defendants
Michael Robb, Alex Dimson and Jared S. Rosenbaum, for the plaintiff
Mark Gelowitz, Craig Lockwood and Lipi Mishra, for the defendants
HEARD: October 26, 27 and 28, 2021
Proceeding under the Class Proceedings Act, 1992
J.T. Akbarali J.
Overview
[1] The proposed representative plaintiff brings this motion, pursuant to Part XXIII.1 of the Securities Act, R.S.O. 1990, c. S.5, seeking leave to commence an action against the respondent, Silver Wheaton Corp. (now Wheaton Precious Metals Corp.), and two of its officers and directors, for alleged misrepresentations in its public disclosure documents and financial statements between August 14, 2013 and July 6, 2014. The plaintiff also seeks certification of a class proceeding advancing Securities Act claims, and common law claims in negligence and negligent misrepresentation.
[2] Put summarily, the plaintiff claims that Wheaton Precious Metals Corp. failed to recognize a tax liability in its financial statements that it was obliged to recognize, and misled the class about the likelihood that it would prevail in an audit underway by the Canada Revenue Agency (“CRA”). It states that once Wheaton Precious Metals Corp. issued a press release indicating that the CRA had delivered a proposal letter arising out of its audit process, the public was finally able to understand that there was a potential material negative impact arising out of the audit on Wheaton Precious Metals Corp., and the share price fell as a result, causing losses to the class.
[3] Wheaton Precious Metals Corp. denies that it made any misrepresentation, and, among other things, states that the CRA’s reassessment (which followed the proposal letter) led to litigation before the Tax Court of Canada that was eventually settled before trial on a non-material basis. It argues that its disclosures were accurate and consistent throughout, and it was never required to recognize a tax liability in its financial statements.
Brief Conclusion
[4] For the reasons that follow, I dismiss the plaintiff’s motion for leave to proceed with her claim under s. 138.3(1) of the Securities Act because there is no reasonable possibility that the action will be resolved at trial in favour of the plaintiff. I also decline to certify the plaintiff’s remaining claims as a class proceeding because a class action is not the preferable procedure to resolve the common law claims, and because no proposed representative plaintiff has a claim against the defendants that would allow a claim under s. 130 of the Securities Act to also proceed. Moreover, the common law claims and the s. 130 claim do not disclose a reasonable cause of action because the plaintiff has not pleaded a statement that is capable of being a misrepresentation.
Background to the Claim
[5] At this stage, I set out some basic facts to orient the reader to the background of the claim, and the motion. I address the facts in greater detail in my analysis of the legal issues.
[6] Wheaton Precious Metals Corp. is a corporation publicly traded on the Toronto, New York, and London stock exchanges. It is the parent company of the Silver Wheaton Group of Companies. Its subsidiary companies include Wheaton Precious Metals International Ltd., formerly known as Silver Wheaton (Caymans) Ltd. Wheaton Precious Metals International Ltd. is incorporated under the laws of the Cayman Islands.
[7] In these reasons I refer to Wheaton Precious Metals Corp. as Wheaton Canada, and Wheaton Precious Metals International Ltd. as Wheaton Cayman. I refer to the Silver Wheaton Group of Companies as the Wheaton Group.
[8] The Wheaton Group buys and sells precious metals that are acquired from mine operators or their affiliates pursuant to long-term contracts known as “streaming contracts”. Wheaton Canada buys and sell precious metals from Canadian mines. Its subsidiaries, including Wheaton Cayman, buy and sell precious metals from mines located outside of Canada.
[9] The Wheaton Group works together in these pursuits. Relevant for purposes of this motion, Wheaton Cayman contracts with Wheaton Canada to perform services for it including the identification of opportunities for streaming contracts in respect of mining properties, evaluation and valuation of mineral deposits, preliminary negotiation of streaming contracts, and legal and accounting services. Wheaton Cayman pays fees to Wheaton Canada in exchange for the services provided.
[10] Because Wheaton Cayman is a corporation related to Wheaton Canada that resides outside of Canada, Wheaton Canada is subject to transfer pricing rules under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.). Transfer pricing rules require that inter-corporate transactions, including the provision of services, between a Canadian corporation and its related foreign corporations, be conducted on arms-length terms. These rules are designed to ensure that income that is properly taxable in Canada is not diverted to foreign-domiciled corporations to avoid taxation in Canada.
[11] Wheaton Canada retained tax advisors at PriceWaterhouseCoopers (“PwC”) to advise it on the proper transfer pricing methodologies and calculations for the services it performed for Wheaton Cayman. PwC prepared annual transfer pricing studies and advised Wheaton Canada about the range of appropriate arms-length compensation for the services it provided to Wheaton Cayman. In accordance with PwC’s advice, Wheaton Cayman paid Wheaton Canada for the cost of services rendered, plus a 20% markup. In the course of its work, Wheaton Canada’s auditors, Deloitte LLP, reviewed the transfer pricing studies. Deloitte consistently provided unqualified audit opinions to Wheaton Canada.
[12] On October 27, 2009, the Minister commenced an audit of Wheaton Canada’s 2005-2008 taxation years. On March 2, 2012, the audit was extended to the 2009-2010 taxation years. Audits of public companies are not uncommon.
[13] The fact-gathering phase of the audit was extensive and took several years. Wheaton Canada disclosed in its 2011 annual report that the CRA was conducting an audit for the 2005 to 2010 taxation years. The disclosure was repeated in Management’s Discussion and Analysis (“MD&A”) and in the “contingencies” footnotes. Wheaton Canada’s ongoing public disclosures after the 2011 annual report were substantially similar to the 2011 disclosures. In my analysis of the legal issues, below, I deal with the precise wording of the disclosures at issue.
[14] Wheaton Canada did not disclose a tax liability related to the audit on its financial statements at any time.
[15] On July 6, 2015, Wheaton Canada received a proposal letter from the CRA proposing to reassess Wheaton Canada under the transfer pricing rules. The CRA’s proposal sought to increase Wheaton Canada’s income that was subject to tax in Canada for the 2005 to 2010 taxation years by about $715.3 million, which would result in federal and provincial taxes of about $201.3 million. In addition, the CRA’s proposal included transfer pricing penalties of about $71.5 million, and interest and other penalties of $80.6 million, for those taxation years.
[16] Wheaton Canada disclosed the receipt and thrust of the proposal letter in a press release issued on the same day it received the proposal letter. Following its disclosure, Wheaton Canada’s shares trading on the TSX dropped by almost 12%. The plaintiff claims that the proposed class lost millions of dollars as a result.
[17] The CRA reassessed Wheaton Canada’s 2005 to 2010 taxation years on the same basis as that contained in its proposal letter. The reassessments were disclosed by Wheaton Canada. Wheaton Canada filed notices of objection for each taxation year at issue, and subsequently filed a Notice of Appeal with the Tax Court of Canada. Wheaton Canada never restated its financial statements.
[18] The tax litigation lasted several years. It was scheduled for trial in September 2019. Ultimately, the CRA and Wheaton Canada reached a negotiated settlement on December 13, 2018, which provided that foreign income on earnings generated by Wheaton Canada’s wholly-owned foreign subsidiaries was not subject to tax in Canada, and which reversed the transfer pricing penalties. The service fees charged by Wheaton Canada to its foreign subsidiaries were adjusted, including by increasing the mark-up to 30% from the 20% that had been previously used under PwC’s transfer pricing studies. Interest was adjusted in accordance with the settlement. The parties also agreed that the transfer pricing principles agreed to in the settlement would apply to all taxation years after 2010, including the 2011 to 2015 taxation years which, at the time of the settlement, were under audit.
[19] Because Wheaton Canada had non-capital loss carry forwards, it was able to apply those to offset the increased tax liability. The end result, as disclosed in the company’s 2018 annual report, was a then-current tax liability to Wheaton Canada for the 2005 to 2017 taxation years of a non-cash income tax expense of $16 million, and a net cash related expense of $13 million, of which $4 million was current income taxes, $4 million was interest and penalties, and $5 million was professional fees. Plainly, the settlement was “miniscule” as compared to the amount of the initial assessment — a characterization accepted by the plaintiff’s proposed tax expert, Professor Vern Krishna, on cross-examination.
[20] The theory of the plaintiff’s case is that the settlement was provoked by the decision of the Tax Court of Canada in Cameco Corporation v. The Queen, 2018 TCC 195, in which the Tax Court of Canada reversed the Minister’s transfer pricing adjustments in her audit of Cameco. The plaintiff argues that Cameco changed the landscape of the transfer pricing litigation and, as a result, the CRA was urged by the case management judge assigned to the Wheaton Canada tax litigation to reconsider its position. The settlement of the Wheaton Canada tax litigation followed less than three months after the release of Cameco, by which time CRA had appealed the Cameco decision. The Cameco decision was eventually upheld by the Federal Court of Appeal in 2020: 2020 FCA 112. Leave to appeal was refused by the Supreme Court of Canada in February 2021: 2021 CanLII 10731.
[21] In this motion, the plaintiff relies on:
a. evidence from a former employee of Wheaton Cayman, Dawn Bryan Kats Hunter, about the relationship between Wheaton Canada and Wheaton Cayman;
b. proposed expert evidence from Professor Krishna, a tax lawyer (who is also trained as an accountant, but who has not been engaged as an accountant for many decades) about taxation issues, the CRA’s audit process, and procedural and substantive rules and processes in tax litigation, and
c. proposed expert evidence from Andrew Mintzer, a Chartered Professional Accountant, who opines on Wheaton Canada’s obligations under International Financial Reporting Standards (“IFRS”) to record a tax payable on its financial statements and disclose the tax liability.
[22] The import of the plaintiff’s evidence is that Wheaton Canada’s and Wheaton Cayman’s affairs were highly integrated, as deposed to by Ms. Hunter. In significant measure as a result of the facts Ms. Hunter deposes to, Professor Krishna opines that it was highly likely and probable that the CRA’s audit of Wheaton Canada would result in a significant transfer pricing reassessment of corporate taxes and the allocation of additional profits to Silver Wheaton. In reliance on Professor Krishna’s opinion, Mr. Mintzer opines that Wheaton Canada was obliged to record a tax payable on its financial statements and disclose the tax liability.
[23] The plaintiff argues that the fact that the end result of the settlement does not align with the conclusions drawn by Professor Krishna and Mr. Mintzer is of no moment; at the time of the disclosures, Wheaton Canada could not have known about the Cameco decision, and as a result, it was bound to disclose its tax liabilities. The plaintiff asserts that its failure to do so at the time caused the class losses.
Issues
[24] This motion requires me to address two issues:
a. Should the plaintiff be granted leave to commence a claim under the Securities Act?
b. Should the action, in whole or in part, be certified as a class proceeding pursuant to the Class Proceedings Act, 1992, S.O. 1992, c. 6.?
Leave under the Securities Act
[25] The statement of claim raises two claims under the Securities Act. It raises one claim under s. 130 (liability for misrepresentation in a prospectus). This claim relates to disclosure made in a prospectus filed by Wheaton Canada on SEDAR[^1] on March 9, 2015 in connection with a public offering of Wheaton Canada’s securities. Leave is not required for this claim. Accordingly, I return to it next in the context of my analysis on certification.
[26] The other claim raised under the Securities Act arises under s. 138.3(1) which provides, in part:
Where a responsible issuer or a person or company with actual, implied or apparent authority to act on behalf of the responsible issuer releases a document that contains a misrepresentation, a person or company who acquires or disposes of the issuer’s security during the period between the time when the document was released and the time when the misrepresentation contained in the document was publicly corrected has, without regard to whether the person or company relied on the misrepresentation, a right of action for damages against,
(a) the responsible issuer;
(b) each director of the responsible issuer at the time the document was released;
(c) each officer of the responsible issuer who authorized, permitted or acquiesced in the release of the document; …
[27] Under s. 138.8(1), leave is required to commence a claim under s. 138.3(1). Section 138.8(1) provides that the court shall grant leave only where it is satisfied that (a) the action is being brought in good faith, and (b) there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff.
[28] In this case, the defendants do not contest the good faith requirement. They join issue on whether there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff.
General Principles Applicable to the Leave Analysis
[29] Very recently, in Baldwin v. Imperials Metals Corporation, 2021 ONCA 838, at para. 16, the Court of Appeal described the purpose of Part XXIII.1 of the Securities Act, finding it was “aimed at deterring corporate nondisclosure, protecting investors, and incentivizing accurate and timely disclosure by public issuers, while avoiding the American experience of predatory ‘strike suits.’”
[30] In Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18, at paras. 36-38, the Supreme Court of Canada held that the leave requirement gives courts “an important gatekeeping role” in determining whether an action could be said to have a reasonable possibility of success. The Court found that the threshold should be more than a “speed bump”, and the courts must “undertake a reasoned consideration of the evidence to ensure that the action has some merit.” The Court described the legislative objective of the leave requirement as creating “a robust deterrent screening mechanism so that cases without merit are prevented from proceeding”. In Bradley v. Eastern Platinum Ltd., 2016 ONSC 1903, at para. 51, Rady J. held that the leave test “is not a low bar”.
[31] To establish a reasonable possibility of success, the claimant must “offer both a plausible analysis of the applicable legislative provisions, and some credible evidence in support of the claim.” However, the leave stage should not be treated as a mini-trial: Theratechnologies, at para. 39.
[32] In Paniccia v. MDC Partners Inc., 2018 ONSC 3470, at paras. 89-91, Perell J. held that a judge on a leave motion must be cognizant of the fact that full production has not been made. While the court is entitled to weigh the evidence of both parties having regard to the affidavits and cross-examinations, the court must also take into account that the leave motion “involves merely a paper record and that the statutory leave test sets a low evidentiary threshold.” As the Court of Appeal put it in Rahimi v. SouthGobi Resources, 2017 ONCA 719, at para. 48, the motion judge “is also obligated to consider what evidence is not before her.” Moreover, where there are contentious issues of credibility that impact on the decision whether to grant leave, “the motion judge must ask herself whether they can be resolved on the existing record”: SouthGobi, at para. 49.
[33] The analysis as to whether there is a reasonable possibility that the claim will be resolved at trial in favour of the plaintiff must be undertaken for each alleged misrepresentation: Paniccia, at para. 86; Kauf v. Colt Resources, Inc., 2019 ONSC 2179, at paras. 70-72.
The Alleged Misrepresentations
[34] At this stage, it is important to identify with precision the impugned disclosure, and put it in its context.
[35] The first disclosure of the CRA’s audit came in Wheaton Canada’s 2011 annual information form and annual report. The 2011 annual information form states:
The Company’s operating profit is derived primarily from its subsidiaries, Silver Wheaton Caymans and Silverstone Resources (Barbados) Corp., which are incorporated and operated in the Cayman Islands and Barbados, respectively, such that the Company’s profits are subject to minimal income tax.
The introduction of new tax laws or regulations, or changes to, or differing interpretation of, or application of, existing tax laws or regulations in Canada, the Cayman Islands, Luxembourg, Barbados, the Netherlands or any of the countries in which the Mining Operations are located or to which shipments of silver or gold are made, could result in an increase in the company’s taxes, or other governmental charges, duties or impositions. Due to the size, complexity and nature of the Company’s operations, various legal and tax matters are outstanding from time to time, including an audit by the Canada Revenue Agency of the Company’s international transactions covering the 2005 to 2010 taxation years. No assurance can be given that new tax laws or regulations will not be enacted or that existing tax laws or regulations will not be changed, interpreted or applied in a manner which could have a material adverse effect on the Company.
[36] Identical language was included in the 2011 annual report MD&A under the heading “taxes”. In addition, the MD&A includes the following statement, identified as a contingency, three times:
Due to the size, complexity and nature of the Company’s operations, various legal and tax matters are outstanding from time to time, including an audit by Canada Revenue Agency of the Company’s international transactions covering the 2005 to 2010 taxation years. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgments and estimates of the outcome of future events. Based on information available to management at March 22, 2012, the outstanding legal and tax matters are not expected to have a material adverse effect on the Company. However, if the Company is unable to resolve any of these matters favorably, there may be a material adverse impact on the Company’s financial performance, cash flows or results of operations. In the event that management’s estimate of the future resolution of these matters changes, the Company will recognize the effects of the changes in its consolidated financial statements in the period that such changes occur.
[37] These same statements were made in the 2012 annual information form and annual report, except that the MD&A was updated to reflect management’s expectation that the outstanding legal and tax matters were not expected to have a material adverse effect on Wheaton Canada based on information available to management at March 21, 2013.
[38] The annual information form for 2013 included the same language about taxes. It also included a cautionary note regarding forward-looking statements:
Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to: … expectations regarding the resolution of legal and tax matters, that Silver Wheaton will be successful in challenging any reassessment by the Canada Revenue Agency… Although Silver Wheaton has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate. Accordingly, readers should not place undue reliance on forward-looking statements and are cautioned that actual outcomes may vary.
[39] In the 2013 annual report, the company varied its disclosure slightly, as follows:
Due to the size, complexity and nature of the Company’s operations, various legal and tax matters are outstanding from time to time, including an audit (the “CRA Audit”) by the Canada Revenue Agency (the “CRA”) of the Company’s international transactions covering the 2005 to 2010 taxation years, which is currently ongoing. The Company has not received any notice of reassessment for the 2005 to 2010 taxation years in connection with the CRA Audit. In the event that CRA issues one or more notices of reassessment for material amounts of tax, interest and penalties, the Company is prepared to vigorously defend its position.
By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgement and estimates of the outcome of future events. Based on information available to management at March 20, 2014, the outstanding legal and tax matters are not expected to have a material adverse effect on the Company. However, if the Company is unable to resolve any of these matters favorably, or if CRA issues one or more notices of reassessment for material amount of tax, interest and penalties, there may be a material adverse impact on the Company’s financial performance, cash flows or results of operations. In the event that management’s estimate of the future resolution of these matters changes, the Company will recognize the effects of the changes in its consolidated financial statements in the appropriate period relative to when such changes occur.
[40] A footnote related to the above statement provides:
The assessment by management of the expected impact of the CRA Audit on the Company is “forward-looking information”. Statements in respect of the impact of the CRA Audit are based on the expectation that the Company will be successful in challenging any assessment by CRA. Statements in respect of the CRA Audit are subject to known and unknown risks including that the Company’s interpretation of, or compliance with, tax laws, is found to be incorrect. Please see “Cautionary Note Regarding Forward-Looking Statements” for material risks, assumptions and important disclosure associated with this information.
[41] The cautionary note referred to in the footnote includes the following statements:
The information herein contains “forward-looking statements”… Forward-looking statements, which are all statements other than statements of historical fact include, but are not limited to, statements with respect to …assessments of the impact of various legal and tax matters. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected” … “estimates”… “anticipates” or “does not anticipate”, or “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”… Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, operations, level of activity, performance or achievements of Silver Wheaton to be materially different from those expressed or implied by such forward-looking statements including, but not limited to: … differences in the interpretation or application of tax laws and regulations; and the company’s interpretation of, or compliance with, tax laws, is found to be incorrect… Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to: … expectations regarding the resolution of legal and tax matters, that the company will be successful in challenging any reassessment by the CRA and such other assumptions and factors as set out herein. Although Silver Wheaton has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate. Accordingly, readers should not place undue reliance on forward-looking statements and are cautioned that actual outcomes may vary.
[42] The notes to the consolidated financial statements for the years ended December 31, 2013 and 2012 include the same statements about contingencies set out above.
[43] With the exception of updating the date on which the best information available to management led to its expectation that the outstanding legal and tax matters would not have a material adverse impact on the company, the disclosure in 2014 mirrored the 2013 disclosure.
[44] In addition, throughout the relevant period, Wheaton Canada represented that its financial statements were prepared in accordance with IFRS, including in its MD&As and financial statements.
[45] Together with the failure to disclose a tax liability on Wheaton Canada’s financial statements, the above statements form the basis and context for the alleged misrepresentations.
[46] In the statement of claim, the plaintiff pleads that the defendants withheld material facts and made misrepresentations to class members regarding: (i) management’s belief that the CRA audit was not expected to have a material adverse effect on Wheaton Canada, and (ii) the compliance of Wheaton Canada’s financial statements with IFRS. In her pleadings and in argument, the plaintiff relies heavily on the phrase “[b]ased on information available to management at August 14, 2013, the outstanding legal and tax matters are not expected to have a material adverse effect on the Company.” Although the statement of claim alleges that the defendants are still liable for misrepresentations in forward-looking information because they had no reasonable basis for drawing the conclusions they drew, in argument, the plaintiff clarified her focus. She now argues that given the facts available to management and the defendants, there was no reasonable basis for drawing the conclusion that the CRA audit would not have a material adverse effect on Wheaton Canada. She does not argue that the defendants actually held a different view than the one they disclosed. She argues that the defendants did not take into account all of the information or evidence available to them when developing their expectation as to the effect that the outstanding legal and tax matters would have on Wheaton Canada. She argues that misrepresentation is a statement of current fact.
[47] It is instructive to review the press release that the plaintiff alleges forms the corrective disclosure. This is the July 6, 2014 press release in which Wheaton Canada announced it had received the proposal letter from the CRA. The press release states, in part:
[Wheaton Canada] announces that it has received a proposal letter dated July 6, 2015 (the “Proposal”) from the [CRA] in which the CRA is proposing to reassess [Wheaton Canada] under various rules contained in the Income Tax Act (Canada).
The Proposal outlines CRA’s position that the transfer pricing provisions of the Income Tax Act (Canada) relating to income earned by our foreign subsidiaries outside of Canada should apply such that the income of [Wheaton Canada] subject to tax in Canada should be increased for the 2005 to 2010 taxation years … by approximately Cdn$715 million (US$567 million). The issuance of the Proposal does not require the Company to pay any amount to the CRA at this time.
Management believes that the Company has filed its tax returns and paid applicable taxes in compliance with Canadian tax law. [Wheaton Canada] intends to vigorously defend its tax filing positions and is now in the process of preparing its response to the Proposal.
[48] The press release disclosed Wheaton Canada’s estimate that, if the CRA reassessed it on the basis outlined in its proposal letter, Wheaton Canada would be subject to approximately US $150 million in respect of the taxation years at issue. It also disclosed that the CRA was seeking to apply transfer pricing penalties of approximately Cdn $72 million. It noted that further taxation years subsequent to 2010 remained open to audit by the CRA.
[49] Wheaton Canada also stated its intention to file a notice of objection if it received notices of reassessment from the CRA.
Is there a credible evidentiary basis for the claim?
[50] As I have noted, the plaintiff relies on three main witnesses to establish a credible evidentiary basis to support its allegations that Wheaton Canada made misrepresentations as described above: Ms. Hunter, the former Wheaton Cayman employee, Professor Krishna, the proposed tax expert, and Mr. Mintzer, the proposed accounting expert.
[51] At this juncture, I summarize the evidence of these witnesses to explain the plaintiff’s evidentiary theory of the case. Thereafter, I turn to a more detailed review of the evidence and consider the admissibility of the expert evidence.
[52] Ms. Hunter’s evidence is to the effect that Wheaton Cayman was integrated with Wheaton Canada which directed and funded the management and operations of Wheaton Cayman.
[53] Professor Krishna relies on Ms. Hunter’s evidence to reach the conclusion that it was highly likely and probable during the class period that the CRA’s audit of Wheaton Canada would result in significant transfer pricing reassessments of corporate taxes and the allocation of additional profits to Wheaton Canada during the relevant period. In addition, Prof. Krishna notes that Wheaton Canada, as a corporation incorporated in Canada, would be deemed to be a resident of Canada and taxable in Canada on its worldwide income for each taxation year. He opines that, under the common law, a corporation can also be resident where its “central management and control” resides. He opines that it is a question of fact whether the central management and control of Wheaton Cayman was in Canada or in the Cayman Islands. Based on Ms. Hunter’s evidence, Prof. Krishna concludes that there was a substantial risk and probability that Wheaton Cayman would be considered a resident of Canada during the relevant period and as such, would have been reassessed on the basis that it is taxable in Canada on its worldwide income.
[54] I pause here to note how the transfer pricing provisions in the ITA work. The relevant statutory provision is found in s. 247(2) of the ITA. Under s. 247(2)(a) and (c) of the ITA, where two non-arm’s-length parties, one of which is a non-resident in Canada, participate in a transaction or series of transactions, and the terms or conditions made or imposed in the transaction(s) differ from those that would have been made between persons dealing at arm’s length, any amounts that would have been determined for purposes of the ITA shall be adjusted so that the terms and conditions made or imposed in respect of the transaction(s) are those that would have been made between people dealing at arm’s length.
[55] Under s. 247(2)(b) and (d) of the ITA, where two non-arm’s length parties, one of which is non-resident in Canada, participate in a transaction or series of transactions that would not have been entered into between persons dealing at arm’s length and can reasonably be considered not to have been entered into primarily for bona fide purposes other than to obtain a tax benefit, any amounts that would have been determined for purposes of the ITA shall be adjusted to the amounts that would have been determined if the transaction(s) had been the transaction(s) that would have been entered into between persons dealing at arm’s length, under terms and conditions that would have been made between people dealing at arm’s length.
[56] In other words, the regime under s. 247(2)(a) and (c) readjusts the terms and conditions made in a transaction between non-arm’s length parties to those that would have been made between arm’s length parties. The regime under s. 247(2)(b) and (d) adjusts a transaction, including its terms and conditions, that would not have been entered into between arm’s length parties to be a transaction that would have been entered into between arm’s length parties.
[57] Professor Krishna’s opinion identifies a third avenue for tax liability to arise. As I noted above, Professor Krishna concludes that Wheaton Canada exercised a level of control and management over Wheaton Cayman that made it highly likely and probable that Wheaton Cayman would be reassessed on the basis that it would be determined to be a resident of Canada for tax purposes.
[58] The distinction is important because the transfer pricing adjustments that are open to the CRA to make under s. 247(2) of the ITA could result in an increase in tax payable by Wheaton Canada if the adjusted transactions, or their terms and conditions, resulted in Wheaton Canada having to recognize more income. Presumably that would be the result of any application of s. 247 of the ITA by the CRA; it is difficult to imagine the CRA adjusting the terms or the transactions to allocate more income to a subsidiary resident in a low tax jurisdiction like Cayman Islands and to reduce the tax obligation of the Canadian resident taxpayer.
[59] In contrast, if the CRA reassessed the residency of Wheaton Cayman, that determination would not impact the income of Wheaton Canada, but rather it would subject the income of Wheaton Cayman to taxation in Canada at a much higher rate than it would pay in the Cayman Islands. Of course, a conclusion that Wheaton Cayman was a Canadian resident for tax purposes would have an impact on the Wheaton group as a whole.
[60] I note that Professor Krishna also concludes that the CRA audit of Wheaton Canada would also have focused on the appropriate arm’s length valuation of the transactions between Wheaton Canada and Wheaton Cayman with regard to s. 247(2) of the ITA. He ultimately concludes that it was highly likely and probable that the audit would result in significant transfer pricing reassessments of corporate taxes and the allocation of additional profits to Wheaton Canada, in addition to his conclusion about the reassessments likely to arise out of the determination of the residency of Wheaton Cayman for tax purposes.
[61] In reaching these conclusions, Professor Krishna identifies certain facts on which he relies. Of these, Wheaton Cayman’s domicile in the Cayman Islands and the corporate relationship between Wheaton Canada and Wheaton Cayman are not in dispute. On their own, these are neutral facts. The ITA does not make it legally impermissible or improper for a Canadian parent to have a subsidiary corporation resident in the Cayman Islands. The transfer pricing regime exists because such relationships are permissible.
[62] The other facts upon which Professor Krishna relies to ground his opinions flow from the affidavit of Ms. Hunter.
[63] Mr. Mintzer, in turn, relies on Professor Krishna’s conclusion that it was highly likely and probable that the audit would result in reassessments to conclude that Wheaton Canada failed to disclose liabilities that were reasonably expected to be due based on tax laws and regulations in effect. Moreover, he concludes that, in accordance with IFRS, Wheaton Canada should have recorded a tax payable on its financial statements.
[64] I observe at this stage that the evidence of these three witnesses is stacked like a precarious Jenga tower. Assuming that the proposed expert evidence is admissible, Ms. Hunter’s evidence has to be accepted to ground Professor Krishna’s opinion, and Professor Krishna’s opinion has to be accepted to ground Mr. Mintzer’s opinion.
(i) Is there a credible evidentiary basis to establish the control and management of Wheaton Canada over Wheaton Cayman such that it was highly likely and probable that Wheaton Cayman would be found to be a Canadian resident for tax purposes, or to establish highly likely and probable transfer pricing liabilities owing by Wheaton Canada?
[65] As I have noted, in large measure, the evidence on which the plaintiff relies to establish the degree of integration of Wheaton Canada and Wheaton Cayman to ground Professor Krishna’s opinion comes from the evidence of Ms. Hunter. In her motion record, the plaintiff originally attached a statutory declaration of Ms. Hunter dated July 22, 2016 as an exhibit to an affidavit of counsel. When it became apparent that the defendant would challenge the reliability of the evidence, in part because adducing Ms. Hunter’s evidence in this respect insulated her from cross-examination, the plaintiff filed a supplementary motion record attaching an affidavit from Ms. Hunter which is three paragraphs long and in which she attaches a copy of her earlier statutory declaration, reaffirms its contents, and indicates that she has read the affidavit of Nikola Tatarkin, one of the defendants’ affiants and the President of Wheaton Cayman, who directly engaged with Ms. Hunter’s narrative of events, but to which she did not respond in her affidavit.
[66] In the statutory declaration, Ms. Hunter deposes that she was employed as an accountant for Wheaton Cayman, and describes her tasks to include bookkeeping, bank reconciliation, accounts payable, accounts receivable, and data entry. Ms. Hunter deposes that because of the small size of the Wheaton Cayman’s office she had significant daily contact and interactions with its financial controllers, as well as with the executive director (and later president) of Wheaton Cayman, Mr. Tatarkin. She alleges that this contact provided her with “an intimate understanding of how Silver Wheaton Caymans operated and an intimate understanding of the relationship between Silver Wheaton [Canada] and Silver Wheaton Caymans.”
[67] Ms. Hunter deposes to the following:
a. It is her opinion that Wheaton Cayman could not have operated on an autonomous basis without Wheaton Canada’s oversight and financial support.
b. Wheaton Canada and Wheaton Cayman employees did not consider Wheaton Cayman to be a separate entity, but to be a branch office of Wheaton Canada.
c. All material operational and strategic decisions in respect of Wheaton Cayman were subject to the direction and approval of officers or employees of Wheaton Canada.
d. Substantially all material agreements to which Wheaton Cayman was a party were drafted by, and executed with the required approval of, officers or representatives of Wheaton Canada.
e. Employees of Wheaton Cayman had very limited meaningful strategic or managerial decision-making authority. Except for clerical employees (like Ms. Hunter), Wheaton Cayman employees directly reported to, or accepted instructions from, officers or employees of Wheaton Canada.
f. The chief financial officer of Wheaton Canada exercised final authority over accounting and financial matters at Wheaton Cayman.
g. It is her opinion that Wheaton Cayman’s Executive Director needed Wheaton Canada’s authority to approve financial matters such as salary advances for Wheaton Cayman’s employees.
h. Wheaton Cayman’s senior employees were reviewed by Wheaton Canada’s president and other executives.
i. An engineer from Wheaton Canada always accompanied Wheaton Cayman’s Executive Director on mine visits.
j. Wheaton Canada drafted contracts for Wheaton Cayman. Sometimes the president of Wheaton Canada signed Wheaton Cayman contracts.
k. Wheaton Cayman would wire significant amounts of money to Wheaton Canada every month but when Wheaton Cayman needed money for operations or to secure streaming contracts with mines, Wheaton Canada would wire the funds to Wheaton Cayman. She concludes that Wheaton Cayman “basically functioned as a conduit for money from Silver Wheaton to secure streaming contracts and silver mines and then money from the sale of silver from streaming contracts would flow through Silver Wheaton Caymans to Silver Wheaton [Canada].”
l. Wheaton Canada provided a significant amount, if not substantially all, material strategic, managerial and operational directions and funding relating to Wheaton Cayman’s operations.
m. In her opinion, the failure of senior Wheaton Cayman employees to answer her questions regarding the purpose of wire transfers from Wheaton Cayman to Wheaton Canada was suspicious. Moreover, she was instructed to make entries in the accounting system that lacked descriptive notes, which she also found suspicious. In her opinion, there would be no information explaining why the transfers were executed.
n. It is her opinion that millions of dollars in revenue were transferred to Wheaton Canada in small amounts so as not to seem suspicious.
o. She noticed that Wheaton Cayman never included the Canadian tax report in its quarterly financial reports, which she found strange.
p. In May 2011, Wheaton Canada sent a team of three internal accountants and auditors to prepare Wheaton Cayman employees before the CRA visited Wheaton Cayman as part of its tax audit. Prior to the CRA’s visit, her bosses behaved very suspiciously leading her to believe that Wheaton Canada had been dodging its taxes. She was given a “pamphlet” to study to prepare for her interview with the CRA officials. The pamphlet was later taken away from her.
q. She was instructed to give CRA officials answers that were brief and contained as little detail as possible. In her opinion, that was misleading. She was threatened with termination if she did not follow Wheaton Canada’s team’s instructions.
r. During the CRA audits, CRA officials told her they were there because they felt that Wheaton Canada had not been paying its taxes and they wanted to know she knew or saw anything to help them confirm this.
s. She was forced out of Wheaton Cayman after she reported the company to Cayman Island authorities over its failure to pay taxes and its failure to report how many locals it employed in its office. She references an October 2013 report in which she deposes she made these disclosures to the Cayman Islands Immigration Department, the Trade and Business License Department, the Permanent Resident of Immigration, and the Labor Department.
[68] I observe that Ms. Hunter’s affidavit includes much speculation and reads as unusually suspicious of normal things, like Wheaton Cayman calling a staff meeting. As I have noted, despite having available to her the affidavits of one or both of the defendants’ affiants, which directly engage with the evidence in her statutory declaration, she does not, in her affidavit, address their explanations or their disagreements with her evidence.
[69] Some of Ms. Hunter’s evidence is directly contradicted by the evidence of the defendants’ affiants. I do not propose to spend much time on those contradictions, bearing in mind the difficulty in evaluating credibility on a paper record when there are competing narratives, and the low evidentiary threshold on a leave motion. Even still, it is obvious that some of Ms. Hunter’s evidence is plainly wrong. A few examples will suffice.
[70] The October 2013 report that she references making about Wheaton Cayman is in the record, and does not relate in any way to any alleged failure to pay taxes or to any report about how many locals are employed in Wheaton Cayman’s office. Rather, it is a letter setting out her grievances against Wheaton Cayman and some of its employees. It includes allegations that the President, Director of Contract Compliance, and Financial Controller placed pressure on her which affected her physical and mental health, and her marriage and maternal responsibilities. She complained about being given an excess of duties, and stated that she was being subtly pushed out of her position. She complained about negative feedback in her annual reviews. She stated that she suffered two lost pregnancies because her job at Wheaton Cayman was affecting her health. She complained that upper management were unprofessional. She complained that Caymanian employees were treated unfairly.
[71] The record also includes a complaint to the Ministry of Education, Employment & Gender Affairs and the Chief Immigration Officer of the Cayman Islands, made in June 2014. There, Ms. Hunter claims she has been unable to get a job due to the bad reference she received from Wheaton Cayman. She states her home has fallen into collection, and her husband’s income cannot cover all their monthly expenses. She states she may have to take her son out of school. She blames Wheaton Cayman for damaging her son’s health, education and home life.
[72] There is also a substantial contradiction between her complaint that she was forced out of Wheaton Cayman after reporting it and her actual resignation, which is in the record, and in which she thanked the President for the opportunities for professional and personal development afforded to her over her tenure. She stated that she enjoyed working at Wheaton Cayman and appreciated the support she received from the President throughout. She stated that she enjoyed working with him, and offered to train the person who would take over her position.
[73] Thus, the documents authored by Ms. Hunter that are in the record contradict her statutory declaration and, along with other documents she authored that are also in the record, they suggest that Ms. Hunter blames Wheaton Cayman for the health, family, and financial struggles she was facing. While her statutory declaration implies that she is a whistleblower, the contemporaneous documents she authored suggest that is not a correct characterization; rather, she is a disgruntled former employee.
[74] Ms. Hunter was cross-examined on her affidavit. The cross-examination revealed different, and significant, problems with Ms. Hunter’s evidence.
[75] While she claims an “intimate understanding” of how Wheaton Cayman operated and its relationship with Wheaton Canada, the cross-examination transcript demonstrates that she had very little understanding of these matters. For example, she had no personal contact with any board member of Wheaton Cayman or Wheaton Canada. She did not negotiate any streaming contracts. Her bookkeeping entries were always reviewed, edited and corrected before they were posted. Wheaton Cayman’s President describes her as a low-level employee — a description that accords with her own description of her duties — but that does not support the intimate understanding of the sophisticated relationship between Wheaton Cayman and Wheaton Canada that she seeks to portray herself as having.
[76] Ms. Hunter did not know anything about the preparation of Wheaton Canada’s or Wheaton Cayman’s financial statements. She did not have any knowledge or information about their tax affairs. She did not know which accounting standards applied to Wheaton Canada’s consolidated financial statements. She did not know what a consolidated financial statement is. There is no shame in that, but her opinions about irregularities in the financial statements or recording of financial transactions mean nothing when she does not understand how the financial statements were prepared.
[77] Ms. Hunter could not describe the Wheaton Group’s corporate structure, or what a parent company or corporate affiliate is. She believed that Wheaton Cayman, Wheaton Canada’s wholly owned subsidiary, would own shares in Wheaton Canada.
[78] Her cross-examination revealed that she is not knowledgeable about corporate, corporate finance, or corporate tax, matters, and that she is unable to evaluate what she observed in the dealings between Wheaton Canada and Wheaton Cayman. Much of what she observed is easily explained by evidence from the defendants’ affiants deposing to run-of-the-mill corporate operations. For example, Ms. Hunter observed that Wheaton Canada drafted contracts for Wheaton Cayman. In fact, there is evidence that Wheaton Cayman had a significant role in the development of streaming contracts, which, at the concluding stages of the transaction, would be assembled with all of the schedules and ancillary documents by the legal department at Wheaton Canada and sent to Wheaton Cayman. Wheaton Cayman paid for Wheaton Canada’s legal services.
[79] Ms. Hunter observed that Wheaton Canada sent its engineers to go on visits to mines with Wheaton Cayman’s president. They did. Wheaton Cayman paid for that too.
[80] She observed that Wheaton Canada’s President signed some of Wheaton Cayman’s contracts. He did. He did so to signify Wheaton Canada’s agreement to be a guarantor.
[81] She observed that Wheaton Canada sent people to Wheaton Cayman to prepare its employees for the CRA auditors’ visit. Understandably, it did. It was Wheaton Canada that was under audit. It is not unusual for a company under audit to be involved in the preparation of employees, including employees of its subsidiaries, for interviews with tax authorities.
[82] She observed that material decisions were subject to the approval of Wheaton Canada. They were. Wheaton Canada is the sole shareholder of Wheaton Cayman. It is typical and practical, and consistent with good governance practice, that Wheaton Canada would approve any transaction that would be material to the Wheaton Group as a whole. In addition, Wheaton Cayman’s board would separately review proposed transactions and approve any streaming contracts to be entered into by Wheaton Cayman.
[83] Ms. Hunter observed that Wheaton Cayman did not include a Canada tax report in its quarterly financial statements. Wheaton Canada prepared consolidated financial statements.
[84] Ms. Hunter observed that Wheaton Cayman sent significant funds to Wheaton Canada. It did. It had to pay for Wheaton Canada’s services, and it had to repay inter-company loans.
[85] Ms. Hunter’s suspicions and opinions are readily explained, and there is no evidence that suggests that the reasonable explanations offered by the defendants are incorrect. But even considering Ms. Hunter’s evidence alone, without regard to the defendants’ explanations, Ms. Hunter is simply not qualified and lacks the knowledge base to be able to offer any reliable evidence, let alone opinions, about whether Wheaton Cayman engaged in suspicious behaviour.
[86] Even keeping in mind the fact that full production has not been made, and that the leave motion involves merely a paper record, in weighing the evidence put forward by the parties, I conclude that Ms. Hunter’s evidence is not reliable. She simply does not have the understanding to be able to reliably depose to the degree of control Wheaton Canada had over Wheaton Cayman, or to the inter-company arrangements between Wheaton Cayman and Wheaton Canada, to support the allegations on which Professor Krishna relies to ground his opinion.
[87] Moreover, I have concerns about Ms. Hunter’s credibility, given her allegations that Wheaton Cayman has caused her to have two pregnancy losses, damaged her health, financial well-being, and family relationships, and damaged her son’s health, education, and family life. The departures between the evidence in her statutory declaration and the contemporaneous documents that she herself authored bolster those credibility concerns.
[88] Ms. Hunter’s affidavit is admissible. But because it is neither credible nor reliable, I assign it no weight.
[89] I consider, below, in the context of discussing Professor Krishna’s evidence, the plaintiff’s argument that Professor Krishna’s conclusions are also supported by evidence from the defendant’s affiants as to the integration of Wheaton Cayman and the control of Wheaton Cayman by Wheaton Canada.
(ii) Is there credible evidence that it was highly likely and probable that the CRA’s audit of Wheaton Canada would result in significant transfer pricing reassessments of corporate taxes and the allocation of additional profits to Wheaton Canada during the relevant period, or that Wheaton Cayman would be found to be a Canadian resident for tax purposes?
[90] Whether it was highly likely and probable that the CRA’s audit of Wheaton Canada would result in tax liabilities requires a consideration of Professor Krishna’s proposed expert evidence. At the outset, I consider whether the proposed expert evidence is admissible.
[91] Determining whether to admit expert evidence is a two-stage analysis. In the first stage, there are four threshold requirements that must be established (White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, at paras. 19 and 23, citing R. v. Mohan, 1994 CanLII 80 (SCC), [1994] 2 S.C.R. 9, at pp. 20-25; see also R. v. Abbey, 2017 ONCA 640, at para. 48):
a. Relevance, which at this stage means logical relevance;
b. Necessity in assisting the trier of fact;
c. Absence of an exclusionary rule; and
d. A properly qualified expert, which includes the requirement that the expert be willing and able to fulfil the expert’s duty to the court to provide evidence that is impartial, independent and unbiased.
[92] If the threshold requirements are met, the court moves on to the second stage of the analysis. There, the judge, as gatekeeper, determines whether the benefits of admitting the evidence outweigh its potential risks, considering factors such as legal relevance, necessity, reliability, and absence of bias.
[93] I have several concerns with Professor Krishna’s report, and his reply report.
[94] First, Professor Krishna is offered as an expert “on matters relating to income tax and the resolution of income tax disputes in Canada.” “Income tax” covers a great deal of things. Transfer pricing is a specialized area within income tax. On cross-examination, Professor Krishna indicated that he has been engaged to give opinions on aspects of transfer pricing that were part of litigation with the CRA as part of the dispute resolution process about two or three times in the last half dozen years. He agreed that he does not hold himself out as an expert in transfer pricing. Rather, he holds himself out “to the extent that there is any holding out in tax law”. I do not know what that statement means, but it seems apparent to me that two to three briefs relating to transfer pricing over a six-year period does not lay a sufficient foundation for an expertise in transfer pricing.
[95] I note an aspect of Professor Krishna’s affidavit that is unexplained. Professor Krishna states in his report that, when considering the transfer pricing rules during its audit of Wheaton Canada, the CRA would have considered “whether the transactions would have been entered into between persons dealing at arm’s length to determine whether [Wheaton Canada] and [Wheaton Cayman] earned appropriate profits for their activities in line with arm’s length principles.” In fact, this is the standard which the Tax Court of Canada adopted against the arguments of the CRA in Cameco; the CRA argued that the question was not what persons at arm’s length would do, but what the parties to the transaction would do if they were operating at arm’s length. Although the court does not describe it in these words, I (through a civil litigation lens, and probably inelegantly) shortcut the description of this difference as the difference between an objective standard and a modified objective standard.
[96] The CRA appealed to the Federal Court of Appeal, including on this point, and lost. When Professor Krishna deposes that the CRA would have considered the transfer pricing regime using an objective standard (my paraphrasing), he seems to be using the guidance of the Tax Court and Federal Court of Appeal that came long after the CRA issued its proposal letter to Wheaton Canada[^2]. Given the CRA’s position in Cameco in support of a modified objective test, it is unclear, and counsel was unable to explain, why the CRA would have been employing an objective test at the time of the Wheaton Canada audit. Professor Krishna’s lack of explanation as to why he suggests the CRA, at the time of the Wheaton Canada audit, would have been using a standard different than that which it sought to have the court adopt in Cameco supports my concern that he does not have sufficient expertise in transfer pricing for me to accept his evidence about transfer pricing as coming from a qualified expert.
[97] Second, in his evidence, Professor Krishna indicated that he did not know whether he was being retained by the plaintiff as a lawyer or an accountant. At times, and particularly in his reply report, his evidence reads like a factum, with frequent reference to case law, on matters including basic law like the standard of appellate review. In his evidence, he opines on the legislative scheme and purports to draw legal conclusions about it.
[98] As the Federal Court of Appeal held in Syrek v. Canada, 2009 FCA 53, at para. 28, “[i]t is trite law that questions of law are not questions in respect of which courts will admit opinion evidence.” Foreign law is an exception, but Canadian income tax law, even if outside the jurisdiction of the Ontario Superior Court of Justice, is not foreign law in Ontario: Eco-Zone Engineering Ltd. v. Grand Falls – Windsor (Town), 2000 NFCA 21, at para. 15.
[99] Moreover, I note that Professor Krishna, in both his report and his reply report, relies on the evidence of Ms. Hunter. He does not, in his reply report, grapple at all with the impact of the evidence of the defendants’ affiants. I understand those were his instructions, and I do not fault him for following them. But the opinions are not helpful when they are based almost entirely on evidence that I have found to be unreliable and lacking in credibility. This raises the question: how can unhelpful opinions be necessary or relevant to the court?
[100] The plaintiff argued that Professor Krishna’s conclusions could also be established in reliance on only the defendants’ evidence. The plaintiff provided a chart setting out key facts on which Professor Krishna relied, including references to the defendants’ evidence which she says also supports those key facts. I disagree that the chart answers the concern. First, while the chart includes key facts on which Professor Krishna said he relied, he also said he relied on other key facts that are not contained in the chart[^3] and that are unsupported by the defendants’ evidence including, by way of example only:
a. that Ms. Hunter worked as an “accountant” for Wheaton Cayman — a fact Professor Krishna called “very relevant” (when her duties were more akin to bookkeeper and included office administration duties[^4]);
b. that the employees of Wheaton Cayman had very limited meaningful, strategic or managerial decision-making authority (when the defendants’ evidence indicates that, for example, relationships with streaming partners, ongoing contract management, and oversight, are fully managed by Wheaton Cayman);
c. that all budgetary increases for spending on office supplies had to be approved by Wheaton Canada (when the defendants’ evidence is that operating cash for Wheaton Cayman was approved by the President, the Financial Controller and the Operations Manager of Wheaton Cayman);
d. that Wheaton Canada’s manager of corporate accounting and CFO exercised final authority over accounting and financial matters at Wheaton Cayman (when the defendants’ evidence is that Wheaton Cayman’s President has the same financial authority as a director; if he needs access to funds greater than that contemplated by his delegated financial authority, he requires approval of the Wheaton Cayman board, not of Wheaton Canada).
[101] Second, while the defendants’ evidence accords in some respects with Ms. Hunter’s observations — for example, that Wheaton Canada sent personnel to Wheaton Cayman to prepare for the CRA audit, or that Wheaton Canada had to approve transactions that were material to the Wheaton Group as a whole — the defendants’ evidence does not support the innuendo in Ms. Hunter’s evidence, or the characterization of that evidence by Professor Krishna as establishing that Wheaton Cayman was a “shell company or ‘dummy office’”. The defendants’ evidence describes the operational relationship between Wheaton Cayman and Wheaton Canada, which is not unusual or suspicious, notwithstanding Ms. Hunter’s opinions. I also note that, although Ms. Hunter had the affidavit of Wheaton Cayman’s President, and Wheaton Canada’s Senior Vice President and CFO, which explained many of the “suspicious” things she had observed and addressed the corporate relationship between the entities, she did not engage with that evidence in her affidavit. She had the opportunity to explain why the defendants’ evidence was incorrect and she did not take it.
[102] Provided that the transactions between the entities were conducted on terms that would have been entered into between arm’s length parties, the operational arrangements between Wheaton Canada and Wheaton Cayman would not be in breach of the transfer pricing rules. With hindsight, we know that Wheaton Canada settled with the CRA by agreeing to an adjustment to the transfer pricing formula that it had been using that had a “miniscule” impact on Wheaton Canada as compared to the amount of tax the CRA originally sought to levy.
[103] Professor Krishna may have expertise about the residency for tax purposes of a corporation, an area he spends a great deal of time on in his report. Leaving aside the questions of law, and the mixed questions of law and fact on which he relies to opine that Wheaton Cayman’s residency for tax purposes was likely going to be determined to be Canada, we know that the CRA did not pursue that avenue of taxation at any time; even in its proposal letter, it makes no suggestion that Wheaton Cayman was a Canadian resident for tax purposes. While I appreciate that the CRA’s proposal letter does not definitively determine what risks Wheaton Canada would have reasonably perceived during the audit leading up to the proposal letter — that is, during the period of time when Wheaton Canada’s disclosures are in issue — the fact that the CRA did not pursue the residency argument at any time suggests that Wheaton Canada’s lack of concern about the residency status of Wheaton Cayman for tax purposes had some basis in fact, consistent with its evidence on this motion. In any event, these conclusions of Professor Krishna’s are largely based on legal analysis, and lead him to a conclusion of mixed fact and law; as such, they are inadmissible.
[104] To the extent that Professor Krishna’s evidence relates to the process of resolving disputes with the CRA, I accept that he has expertise. His regular practice involves resolving tax disputes with the CRA in a broad range of areas.
[105] Regrettably, in the context of this case, I also have concerns about Professor Krishna’s impartiality, which I describe below:
a. Tax disputes can only be settled on a principled basis. The Minister has a statutory duty to assess the tax payable on the facts and law before her; the Minister cannot implement a compromise settlement, or accede to a deal divorced from considerations arising out of the Act itself: Galway v. Minister of National Revenue, 1974 CanLII 2465 (FCA), [1974] 1 F.C. 600 (F.C.A.), at para. 7; CIBC World Markets v. The Queen, 2012 FCA 3, at paras. 22-23; Harris v. R., 2000 CanLII 15738 (FCA), [2000] 4 F.C. 37 (F.C.A.), at para. 37. Yet, on cross-examination, Professor Krishna would only state that the CRA’s own view of the merits of its position in tax litigation is one of the factors the CRA would consider in reaching a settlement; he explicitly disagreed that it was one of the most important factors.[^5]
b. In his original report, Professor Krishna opined that it was highly likely and probable that the CRA’s audit of Wheaton Cayman and Wheaton Canada would result in “significant transfer pricing reassessments of corporate taxes and the allocation of additional profits to Silver Wheaton” during the relevant period. The defendants’ expert accountant opined, in response to Professor Krishna and Mr. Mintzer, that the relevant question was not what reassessments might result, but rather what the ultimate tax debt would be. In his reply report, Professor Krishna adopted new language, and for the first time, focused on the “ultimate liability” which is relevant from an accounting perspective. Surely a tax expert involved in litigation, and especially one who is also a qualified accountant, knows the difference between a reassessment and an ultimate tax liability. I am troubled by Professor Krishna’s changing terminology to bolster the case in reply.
c. Professor Krishna did not make appropriate concessions on cross-examination, and appeared combative at times, insisting he did not understand questions that appear to be clear on the record. For example, he described as “very unclear” a question asking him to identify the facts arising out of Ms. Hunter’s affidavit that were crucial to his opinion.
[106] I conclude that Professor Krishna’s evidence is inadmissible. It fails to meet the threshold criteria under Mohan:
a. It is not necessary or admissible, because it deals principally with domestic law, and draws conclusions of law, and mixed law and fact;
b. It is not helpful, and thus neither necessary nor relevant, because its conclusions turn on the evidence of Ms. Hunter, which I have rejected, and its conclusions in significant measure are not supported by the evidence of the defendants’ affiants;
c. Professor Krishna is not a properly qualified expert to opine on the transfer pricing provisions; and
d. Professor Krishna is not a properly qualified expert because he, at times, acted as an advocate and not as an impartial expert.
[107] Even if I had admitted Professor Krishna’s report, an expert opinion founded on tenuous factual premises can support a conclusion that the plaintiff has not met its burden of establishing a reasonable possibility of success: Musicians’ Pension Fund of Canada (Trustee of) v. Kinross Gold Corp, 2014 ONCA 901 at paras. 64-69, aff’g 2013 ONSC 6864. It is apparent that I consider the factual premises that underlie Professor Krishna’s report to be tenuous at best. Professor Krishna’s evidence would not have assisted the plaintiff even if admitted.
(iii) Is there credible evidence that Wheaton Canada had an obligation under IFRS to disclose a tax liability related to the CRA audit?
[108] The evidence with respect to Wheaton Canada’s obligations under IFRS are dealt with by the plaintiff’s proposed accounting expert, Mr. Mintzer, and the defendant’s proposed accounting expert, Patricia O’Malley. I turn to consider the admissibility of their proposed evidence based on the criteria laid out in White Burgess, and Mohan, described above.
[109] I have concerns regarding the admissibility of Mr. Mintzer’s evidence, for the following reasons:
a. Mr. Mintzer’s accounting experience is mostly based on American GAAP and GAAS. He is qualified in British Columbia as an accountant, a qualification he obtained by taking a reciprocity exam for chartered accountants. He took a self-study course on IFRS on line three to four years ago, and then took a series of update refresher courses. He agreed the program he took describes itself as “basic.” He has never been involved in accounting advisory work to any Canadian or American company that uses IFRS. He has never been the engagement partner on the audit of a Canadian public company.
b. Mr. Mintzer’s evidence also includes statements regarding compliance with National Instruments, although he admitted on cross-examination that he does not hold himself out as a securities expert.
c. Mr. Mintzer’s evidence relies on the opinions of Professor Krishna, which I have not admitted. The centrality of Professor Krishna’s opinions to Mr. Mintzer’s report is plain; the reliance on those opinions is set out in the very first sentence under Mr. Mintzer’s “Summary of Opinions” in his report. He also explicitly relies on Ms. Hunter’s evidence in reaching his opinions. Thus, even if Mr. Mintzer was qualified to opine on an issuer’s obligations under IFRS, the foundation for Mr. Mintzer’s opinion has crumbled. His opinion is thus neither relevant nor necessary because it cannot assist the court.
d. Mr. Mintzer’s impartiality has also been called into question. In his reply report, responding to Ms. O’Malley’s report, he makes reference to IFRIC 23, an interpretation originated by the International Financial Reporting Interpretations Committee, about which Ms. O’Malley opines in her report. Mr. Mintzer states that IFRIC 23 requires that “an entity shall reflect the effect of uncertainty for each uncertain tax treatment by using either…the most likely amount — the single most likely amount in a range of possible outcomes (or) the expected value — the sum of the probability-weighted amounts in a range of possible outcomes.” He opines that IFRIC 23 is not applicable to this matter, as it was not effective during the class period, however, even if applied, “it would have required accrual and disclosure of the amounts described in Professor Krishna’s opening report.” In quoting IFRIC 23 in this manner, Mr. Mintzer omits the key preamble, the effect of which is that the obligation to record the effect of uncertainty for each uncertain tax treatment arises only “if an entity concludes that it is not probable that the taxation authority will accept an uncertain tax treatment.” Mr. Mintzer endeavoured to explain away the missing key language by calling it a drafting shortcut, but I have difficulty with that explanation. It is not a shortcut; it is a key omission, consistent with improper advocacy and not impartial expert evidence.
[110] I thus decline to admit Mr. Mintzer’s proposed expert evidence. He is not qualified, he has not behaved impartially, and his evidence is neither relevant nor necessary because it has no factual foundation in the admissible, credible, and reliable evidence.
[111] I reach a different conclusion with respect to Ms. O’Malley. Relevant to the proposed admission of her evidence, I note first, her significant relevant expertise and experience. Ms. O’Malley is eminently qualified to opine on an issuer’s obligations under IFRS. Between 1973 and 1999, she worked with KPMG Canada and its predecessors. Between 1982 and 1999, she worked as a partner in its National Department of Professional Practice, which is the group that provides advice to engagement partners on the application of the relevant accounting standards to their clients’ transactions and circumstances. She became chair of the Canadian Accounting Standards Board in 1999, and was selected to be one of the founding members of the International Accounting Standards Board in 2001. She was personally involved in the development and approval of, and proposals to amend, the IFRS. She has been qualified as an expert in IFRS in Canadian courts, including in this court and in the Tax Court of Canada.
[112] I accept that the application of IFRS is directly in issue in this motion and is a matter outside my expertise. Expert evidence about IFRS is thus necessary and relevant. Moreover, no one has raised any exclusionary rule that might apply to Ms. O’Malley’s evidence.
[113] Ms. O’Malley’s proposed expert evidence thus meets the threshold criteria. At the second stage of the analysis, I must consider whether the benefits of admitting her evidence outweigh its potential risks, considering factors such as legal relevance, necessity, reliability, and absence of bias. In my view, the benefits of admitting Ms. O’Malley’s evidence outweigh its potential risks, because the evidence is relevant, necessary, reliable, and offered by a properly qualified expert. Moreover, Ms. O’Malley made appropriate concessions on cross-examination, and unlike Mr. Mintzer or Professor Krishna, she considered all of the evidence in the record, and not only the evidence of one side, when reaching her conclusions.
[114] I thus admit Ms. O’Malley as an expert witness qualified to testify on the topic of whether Wheaton Canada’s financial statements and ancillary documents issued during the class period complied with applicable accounting standards (IFRS).
[115] Ms. O’Malley opines that Wheaton Canada was bound by IFRS. The upshot of her conclusion is that Wheaton Canada fully satisfied the requirements of IFRS.
[116] Ms. O’Malley’s report explains that, under International Accounting Standard 12, current tax liabilities shall be measured “at the amount expected to be paid to the taxation authorities, using the tax rates (and tax laws) that have been enacted…”
[117] Ms. O’Malley opines that the judgment the entity’s management must make is not whether it will be reassessed, as is the focus of Professor Krishna’s first report, but whether the entity will be successful in defending or appealing the reassessment. She summarizes the requirements as follows:
…if the entity believes it is probable that its filing position will be accepted, it recognizes income tax amounts in its financial statements based on that position. If the entity does not believe it is probable that its position will be accepted, it makes an estimate of the amount it will be required to pay to settle the tax liability and records it. In this analysis, there is no room for “contingent tax position liabilities” when the acceptability of the entity’s filing position is uncertain. A tax liability is either probable or it is not. If no such liability is probable, nothing is recorded.
In making its probability judgments, management will have regard to the results of the taxation authority’s actions with respect to other taxpayers in the same or similar circumstances, its knowledge of the authority’s basis for any possible action and the advice of its own tax personnel and professional advisors.
[118] Although I have not admitted Mr. Mintzer’s evidence, I note that the difference in opinion between them is, as the plaintiff notes in her factum, fundamentally premised on the assumptions upon which each relies. Both Ms. O’Malley and Mr. Mintzer agree that applicable accounting standards require that a probable tax liability has to be disclosed.
[119] Moreover, the evidence indicates that (i) Wheaton Canada recorded its transactions with Wheaton Cayman in a manner consistent with the transfer pricing memos prepared by PwC; (ii) Deloitte reviewed those memos and provided clean audit opinions; (iii) at no time, including after the CRA reassessed Wheaton Canada, did Deloitte require Wheaton Canada to restate its financial statements, and Wheaton Canada did not restate its financial statements; and (iv) Wheaton Canada did not recognize a tax liability on its financial statements related to the audit at any time, including after the reassessments, and Deloitte did not require it to.
[120] I conclude that there is no credible evidence that Wheaton Canada had a probable tax liability that it was required to disclose on its financial statements, or that the financial statements were not prepared in accordance with applicable accounting standards.
[121] Furthermore, there is no credible evidence before me to establish that, when Wheaton Canada disclosed that management did not believe the legal and tax matters would have a material adverse effect on the company, management had not taken into account all the information available to it.
[122] The import of the plaintiff’s argument, writ large, is inconsistent with the purpose behind Part XXIII.1 of the Securities Act. I reference again the recent words from the Court of Appeal in Imperial Metals, at para. 16 that Part XXIII.1 is “aimed at deterring corporate nondisclosure, protecting investors, and incentivizing accurate and timely disclosure by public issuers, while avoiding the American experience of predatory ‘strike suits’”.
[123] On the plaintiff’s theory, to avoid liability, the defendants should have disclosed that, based on the information available to management, a material tax liability related to the audit was probable. But the plaintiff does not argue that the defendants actually believed that a material tax liability was probable. Thus, the import of the plaintiff’s argument is that the defendants should have disclosed something that was not true (because management did not believe a material tax liability was probable) and that did not prove to be true in the end (given the non-material basis on which the tax litigation was settled).
[124] That would be an absurd result. Finding liability for accurately disclosing management’s real and, as proven in hindsight, reasonable, assessment of the potential tax liability would not incentivize accurate and timely disclosure by public issuers. Such a result would only confuse public issuers, leading to uncertainty that would most likely degrade the quality of disclosure issuers would provide to the market.
[125] I thus conclude that the plaintiff has not met her burden to establish that there is a reasonable possibility that the action will be resolved at trial in her favour.
[126] Given this conclusion, it is not necessary to proceed to consider the defences raised by the defendants. For sake of completeness, however, I will briefly consider the alleged public correction.
Was there a public correction?
[127] At the motion, the parties disagreed about the impact of a public correction, and whether it is an element of the statutory cause of action, or simply a time-post to allow identification of the class.
[128] The most recent guidance on public correction was released by the Court of Appeal while these reasons were under reserve. At my direction, counsel prepared brief submissions on the import of the decision in Imperial Metals to this issue.
[129] In Imperial Metals, the Court of Appeal did not find it necessary to determine whether public correction is an element of the statutory cause of action or simply a time-post to identify and delimit the members of the class. Rather, at para. 49, the court reiterated Hoy J.A.’s conclusion in Drywall Acoustic Lathing and Insulation, Local 675 Pension Fund v. Barrick Gold Corporation, 2021 ONCA 104, at para. 41, that in any event, public correction is a necessary part of the statutory scheme. The Court of Appeal went on to say, at para. 50, that “misrepresentation does the heavy lifting in the statutory cause of action. It is the wrong at issue”.
[130] In Imperial Metals, the Court of Appeal described the overarching question with respect to public correction for the purposes of the leave motion as “whether the alleged public correction was reasonably capable of being understood in the secondary market as correcting what was misleading in the impugned statement”: para. 47. There need only be some link or connection between the pleaded public correction and the misrepresentation: para. 54.
[131] I have already found that there is no credible evidence to support the plaintiff’s claims of misrepresentation. I also find that there is no public correction in this case. The alleged corrective disclosure cannot reasonably be said to be correcting anything. Rather, it is a disclosure that is consistent with the disclosure that preceded it. Wheaton Canada’s earlier disclosures indicated that it could be reassessed by the CRA, and if it were, it would vigorously defend its position. The alleged corrective disclosure continued that message. The only difference was that the reassessment at issue had gone from a potential event described in earlier disclosure, to a likely event, given the issuance of the proposal letter. The disclosure does not amount to “new information” that the “tax authorities were actively challenging Wheaton Canada’s tax position” as the plaintiff argues. Rather, I agree with the defendants’ argument that “[i]t defies logic to suggest that the manifestation of a risk that a prior public statement specifically flagged could ever reasonably be construed as a public correction.”
[132] The fact that I find that there is no public correction is not necessary to my conclusion that there is no reasonable possibility that the action will resolve in favour of the plaintiff, but it is consistent with my conclusion that there is no credible evidence supporting the plaintiff’s evidentiary theory about the alleged misrepresentation. Rather, the impugned statements are not capable of amounting to a misrepresentation in this case.
[133] For these reasons, I decline to grant leave to the plaintiff to proceed with the secondary market misrepresentation claims under the Securities Act.
Certification
[134] The parties agree that, where leave is not granted under s. 138.8 of the Securities Act, the secondary market claim cannot be certified. What remains to consider is whether the remaining pleaded claims — the statutory claim under s. 130 of the Securities Act, and the common law claims for negligence and negligent misrepresentation — meet the test for certification.
[135] Under s. 5(1) of the Class Proceedings Act, 1992, S.O. 1992, c. 6, the court shall certify a class proceeding if:
a. The pleadings or the notice of application discloses a cause of action;
b. There is an identifiable class of two or more persons that would be represented by the representative plaintiff or defendant;
c. The claims or defences of the class members raise common issues;
d. A class proceeding would be the preferable procedure for the resolution of the common issues; and
e. There is a representative plaintiff or defendant who,
i. would fairly and adequately represent the interests of the class,
ii. has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and
iii. does not have, on the common issues for the class, an interest in conflict with the interests of other class members.
[136] The defendants concentrate their objection to certification of the common law negligent misrepresentation and negligence claims (the latter of which is also grounded on the alleged misrepresentations) on the basis that (i) the claims do not disclose a reasonable cause of action because the plaintiff has failed to plead material facts in support of the class members’, or even her own, reasonable reliance on any alleged misrepresentations; (ii) the claims do not disclose a reasonable cause of action because the plaintiff has not pleaded a statement that is capable of being a misrepresentation; (iii) there is no evidence the plaintiff or any class members suffered harm as a result of the alleged misrepresentations, and (iv) certifying the common law claims would necessarily involve a multitude of individual trials on the issues of reliance, causation, and damages, such that a class proceeding is not the preferable procedure.
[137] The plaintiff argues that it is appropriate to certify the common law claims because those claims can proceed on the issues in common with the statutory claims. Because I have concluded leave ought not to be granted for the secondary market claim, this argument relies on the s. 130 cause of action for misrepresentation in a prospectus.
[138] The defendants argue that the claim under s. 130 cannot be certified for two reasons: (i) the claim does not disclose a reasonable cause of action because the plaintiff has not pleaded a statement that is capable of being a misrepresentation; and (ii) there is no plaintiff who purchased under the prospectus offering.
[139] The plaintiff relies on the Ragoonanan principle, set out in Ragoonanan Estate v. Imperial Tobacco Canada Ltd. (2000), 2000 CanLII 22719 (ON SC), 51 O.R. (3d) 603 (S.C.), that a representative plaintiff can assert a claim she does not personally have as long as it shares common issues of fact or law with the claim she does have. Thus, because the plaintiff has common law claims in negligence, she argues that she can assert the s. 130 claim.
[140] These issues are intertwined.
[141] I agree with the defendants that a class proceeding is not the preferable procedure for advancing the common law negligence and negligent misrepresentation claims. As the Court of Appeal held in Kinross, at paras. 128-129, in similar circumstances:
First, proof of reliance, causation and damages poses particular difficulties in this case. To establish these elements of the common law tort, individualized inquiries and fact-finding will be both necessary and unavoidable. For example, to establish reliance on Kinross’ alleged misrepresentations regarding the goodwill associated with the Tasiast mine and consequential damages, numerous investor specific questions arise. These include: 1) what representations were communicated or made known to each investor, and when; 2) what was the comparative experience level and degree of investment sophistication of each investor at the relevant times; 3) what investment recommendations were made to each investor; 4) what connection, if any, exists between Kinross’ alleged misrepresentations and each investor’s acquisition of Kinross shares; 5) how many Kinross shares were held, and when, by each investor; and 6) what was the date of acquisition, the acquisition price and the sale price for each investor’s shares?
Resolution of these questions does not lend itself to a class action. Rather, the need for a host of individual inquiries regarding reliance, causation and damages renders the common law claims unsuitable for certification. … At a minimum, the need for numerous individual inquiries undercuts the goal of judicial economy and could overwhelm the resolution of the common issues, producing an inefficient and unmanageable class proceeding.
[142] In my view these concerns arise squarely in the context of the common law claims advanced here. In order to determine the defendants’ liability for the common law claims of negligence and negligent misrepresentation, individual inquiries into each class member’s reliance on the alleged misrepresentations, causation and damages would overwhelm the common issues and lead to an inefficient and unmanageable class proceeding. A class proceeding is not the preferable procedure to advance the common law negligence and negligent misrepresentation claims.
[143] On the plaintiff’s theory, the preferability concerns with the common law negligence claims are addressed by the advancement of common issues with the s. 130 claim. However, without a plaintiff with a cause of action under s. 130, the plaintiff relies on the certification of the common law claims to invoke the Ragoonanan principle — that for a cause of action against a defendant to be certified under the Class Proceedings Act, 1992, there must be a representative plaintiff who personally has a cause of action against that defendant: Vecchio Longo Consulting Services Inc. v. Aphria Inc., 2021 ONSC 5405 at paras. 128, 180.
[144] The upshot of the argument is that the common law claims should be certified notwithstanding their preferability problems, because the s. 130 claim raises common issues with the common law claims. At the same time, the s. 130 claim should be certified in reliance on the Ragoonanan principle because the plaintiff can advance a s. 130 claim on behalf of the class as long as she has a claim against the defendants at common law.
[145] Each claim thus relies on the other. They are like two hobbled marathon runners, clinging to each other to find the strength to make it over the finish line.
[146] In my view, at least one of these claims must be able to be certified on its own steam before it can carry the other claim to certification. Here, neither claim can be certified individually. I thus conclude that they cannot be certified collectively.
[147] That conclusion is sufficient to dismiss the certification motions with respect to the common law claims and the s. 130 claim.
[148] It is not necessary to go further, but for completeness, I note that my analysis of the alleged misrepresentations in the context of the leave argument supports a conclusion that the claims do not disclose a reasonable cause of action because the plaintiff has not pleaded a statement that is capable of being a misrepresentation. The impugned disclosure described management’s assessment of the likely effect of the tax audit; there is no allegation that management’s assessment was different than that disclosed. The disclosure warned of possible future events, including a reassessment, which came to pass. The disclosure indicated that Wheaton Canada would vigorously defend its tax filing positions and believed they would prevail; they did, on both counts. No statement was ever corrected; rather, the messaging remained consistent throughout. There is no basis in fact which establishes that a statement capable of being a misrepresentation has been pleaded.
[149] Moreover, the objectives of the Class Proceedings Act, 1992 cannot be said to be furthered by certifying the common law or s. 130 claims; there is simply no behaviour that requires modification. Rather, the plaintiff’s theory of the alleged misrepresentations would lead to confusion and uncertainty, and likely lead to a deterioration in the quality of disclosure issuers would make to the market.
[150] I thus dismiss the plaintiff’s certification motion.
Costs
[151] If the parties are unable to agree on costs, they may deliver written submissions as follows:
a. The defendants shall deliver written submissions, not to exceed five pages, together with their bill of costs, and any offers to settle, within 14 days of the release of these reasons.
b. The plaintiff shall deliver responding submissions, not to exceed five pages, together with their bill of costs, and any offers to settle, within 10 days of the receipt of the defendants’ submissions.
c. The defendants may deliver reply submissions, not to exceed two pages, within five days of the receipt of the plaintiff’s submissions.
[152] Submissions shall be uploaded to Caselines, with a copy filed in the portal. Counsel shall advise my assistant by email once they have filed and uploaded their submissions as directed.
J.T. Akbarali J.
Released: January 5, 2022
COURT FILE NO.: CV-21-656645-00CP
DATE: 20220105
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Suzan Poirier
Plaintiff
– and –
Silver Wheaton Corp., Randy Smallwood, and Gary D. Brown
Defendants
REASONS FOR JUDGMENT
J. T. Akbarali, J.
Released: January 05, 2022
[^1]: The System for Electronic Document Analysis and Retrieval
[^2]: A review of the publicly available guidance from the CRA referred to in Professor Krishna’s report did not identify the standard that the CRA auditors would have been using at the time of the Wheaton Canada audit; however, not all the guidance referred to in Professor Krishna’s report was available publicly, and it was not attached to Professor Krishna’s affidavit. As I noted, counsel was unable to clarify for me the basis upon which Professor Krishna drew the conclusion that the CRA auditors would have been applying a standard different than the one the CRA contended for in the Cameco litigation.
[^3]: In cross-examination, he preferred to identify the facts in Ms. Hunter’s statutory declaration that he did not consider relevant to his conclusion. The chart the plaintiff has provided of key facts is thus incomplete.
[^4]: I understand that Ms. Hunter’s title was “accountant”, and that she accurately described her tasks, which are more akin to those of a bookkeeper. However, in finding that her role as accountant was “very relevant”, it appears that Professor Krishna did not understand the nature of her duties.
[^5]: To the extent the plaintiff argues that the settlement came about after the Tax Court released its decision in Cameco, I note that no submissions were made before me to explain why Cameco, as a matter of law, changed the landscape in transfer pricing litigation, or why the CRA would have altered its position based on Cameco when it had already appealed the decision at the time it settled with Wheaton Canada.