Amtim Capital Inc. (Appellant) challenged a trial decision regarding financial disputes over management and sales services provided to ARCA’s Canadian subsidiary. The Appellant claimed ARCA allocated head office expenses to the subsidiary in a way that unfairly reduced its compensation.
Key Points:
The trial court found Amtim had not proven that ARCA’s allocation method was inconsistent with U.S. Generally Accepted Accounting Principles (GAAP) or that it unfairly reduced the net profit of ARCA Canada.
The expert for Amtim, Philip Dowad, could not definitively state that ARCA’s cost allocation method was non-compliant with U.S. GAAP, due to insufficient data from ARCA.
Amtim argued that the evidentiary gap was due to ARCA’s non-compliance with disclosure obligations. However, the trial judge noted Amtim did not use its contractual rights to access ARCA's records which could have potentially clarified the financial summaries.
The Court of Appeal agreed with the trial judge, emphasizing that Amtim bore the burden of proof to demonstrate the allocation was improper and had access to ARCA's records to support its claim.
Outcome:
The appeal was dismissed, upholding the trial court's decision. The trial judge's handling of the burden of proof and evidentiary requirements was found appropriate, and no adverse inferences against ARCA were drawn regarding the contested financial summaries.
Amtim was ordered to pay costs of $15,000 all-inclusive for the appeal and the costs of $281,368 awarded by the trial judge.
