http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/110365/index.do 
Langard v. The Queen (June 25, 2015 – 2015 TCC 161, Paris J.).
Précis: Mr. Langard claimed business losses from trading in commodity futures in the amounts of $472,029.89 in 2006 and $151,551.06 in 2007. The trading occurred in an account of Bearsden Enterprises Ltd., (“Bearsden”); Mr. Langard was a director and president of Bearsden. The sole question before the Court was whether the losses were incurred by Mr. Langard or Bearsden.
In an nutshell the Court did not accept Mr. Langard’s evidence that he was using the Bearsden account to trade on his own behalf and that the losses were incurred by him personally. As a result the appeal was dismissed with costs.
Decision: Mr. Langard’s position was not complex:
[4] Mr. Langard maintains that he and Bearsden entered into an agreement that allowed him to trade commodities for himself using Bearsden’s account, and that the losses in issue were incurred during periods he was trading for himself. He says that the agreement with Bearsden is evidenced by documents including a Director’s Resolution and written notifications given by him to the company of his intention to begin and cease trading on his own behalf. He also says that he reimbursed Bearsden for all of the losses he incurred while trading for himself.
The Crown pleaded as an assumption that the Director’s Resolutions and notifications were not
bona fide; it also pleaded as material facts that they were shams and legally ineffective.
While the trial took three days and included expert evidence as to the dating of signatures on the documentation, it ultimately boiled down to whether Mr. Langard was a credible witness. The Court found him not to be credible:
[42] At the outset, I would make the following observation. The nature of the alleged agreement between Bearsden and Mr. Langard allowing him to trade in Bearsden’s account can only be characterized as highly unusual. Why would Mr. Langard choose to enter into this agreement, rather than set up his own commodity trading account? Why give up 25% of any profits while assuming 100% of any losses incurred? Unfortunately, no explanation for the existence of the arrangement was given by Mr. Langard, nor was any reason apparent from any other evidence that was presented.
[43] It was not suggested that Mr. Langard’s motivation to trade commodities in Bearsden’s account stemmed from fact that he had been barred from trading securities in Alberta for life by the Alberta Securities Commission in 1992. In fact, at the objection stage, Mr. Langard took the position that commodity futures were not “securities” and therefore that the ban on trading did not apply to that activity. However, even if the arrangement to trade commodities through Bearsden’s corporate account was intended to circumvent the ban, why would he not have chosen a corporate vehicle in which he (or family members) would have been entitled directly or indirectly to all of the profits? It does not appear that Mr. Langard lacked the capital needed to engage in the commodity trading since he had employment income in excess of $500,000 in 2006 and according to his testimony, he was also able to borrow $1 million.
[44] It does not appear that the arrangement was necessitated by any urgency on Mr.Langard’s part to begin trading, either, since the trading which he says was done on his own behalf did not commence until three and a half months after the Director’s Resolution of January 10, 2006.
[45] On the other hand, it appears more plausible to me that Mr. Langard was motivated by a desire to use for himself, personally, losses incurred by Bearsden that were not needed by Bearsden because its income was low in the years in issue. During the periods Mr. Langard says he was trading on his own behalf, there were substantial losses in the account: $472,029.89 in 2006 and $151,551 in 2007. When he claims to have been trading for Bearsden, there were gains: $627,481 in 2006 and $126,585 in 2007. It seems an unlikely coincidence that the amounts of losses suffered by Mr. Langard according to this arrangement were very close to equal his income from other sources in 2006 and 2007, so that he paid little tax in those years, while the net income of Bearsden in 2006 taking into account the commodity gains was $27,052 for the year ending January 1, 2007 and its net loss was $141,549 for the year ending January 1, 2008.
[46] In his testimony, Mr. Langard made the point that it would make no sense for him to absorb all of the losses from the commodity trading solely in order to obtain the tax losses personally, since the tax recovered by applying the losses would be less than the cost of reimbursing Bearsden for the losses. I agree that this is a critical point. What evidence is there then that Mr. Langard paid Bearsden the amount of the losses? He produced a copy of a loan agreement between himself and Mr. Thorpe and journal entries he made in the books of Bearsden showing a $1 million credit to account #1200 as well as debits for the commodity trading losses.
[47] The Respondent submits that these documents alone are insufficient to prove reimbursement of the losses by Mr. Langard. I agree. First, Mr. Thorpe was not called as a witness to verify that the loan was in fact made to Mr. Langard. Since the reimbursement of the trading losses by Mr. Langard is a critical element of his case and the loan agreement is self-serving evidence, I would have expected Mr. Langard to provide any corroboration of the loan and its reimbursement. It would seem to me to be a straight-forward matter to have the loan proved by calling Mr. Thorpe and to show the flow of funds from Mr. Thorpe to Bearsden on behalf of Mr. Langard. However Mr. Thorpe was not called as a witness and no reason was given for not calling him. I draw a negative inference from the fact that Mr. Thorpe did not testify and find that his evidence would not have assisted Mr. Langard. As well, the failure to document the initial receipt of the $1 million by Bearsden that Mr. Thorpe had allegedly put into the company at some point prior to September 2006 leads me to question whether Mr. Thorpe was owed $1 million by Bearsden at that time. This in turn leads me to doubt that the loan agreement represented a genuine transaction.
[48] In arriving at these conclusions, I find that Mr. Langard’s testimony was not reliable. I have already alluded to certain aspects of his testimony that I find implausible, and there were a number of inconsistencies in his testimony or between his testimony in Court and the answers he gave at his examination for discovery.
As a consequence the Court found that he had not met the onus of overcoming the Crown’s assumption that the Director’s Resolution was not
bona fide and his appeal was dismissed with costs:
[65] As a result of my determination that the testimony of Mr. Langard was not credible, and in light of the adverse inferences I have drawn, I find that he has not met the onus on him to show that the terms of the Directors’ Resolution dated January 10, 2006, setting out the trading agreement, were bona fide. Therefore, he has not shown that the losses incurred in Bearsden’s trading account during the relevant periods were incurred by him rather than by the company.
[66] Having reached this conclusion, it is unnecessary for me to deal with the evidence of Ms. Vallière. It is also unnecessary for me to address the Respondent’s alternative position that the written notices from Mr. Langard to Bearsden concerning the commencement and end of trading on his own behalf were legally ineffective.
[67] For all of these reasons, the appeal is dismissed, with costs to the Respondent.