A recent case from Canada[1] has highlighted the importance of always having in mind the primary purpose of the company or not-for-profit organisation when making decisions on its behalf.

Facts

Although the case is Canadian, it is nevertheless interesting. Its facts are as follows:

  • Guy Laliberte is the founder of Cirque de Soleil.
  • In 2009 he engaged a private space travel firm to take him on a 12 day trip to the International Space Station.
  • The trip was paid for by a company in the Cirque de Soleil corporate group. It cost almost $42 million!
  • Whilst he was in the space station he recited poetry, took photos, and filmed for a documentary and held a charity livestream, all intending to promote and support a charity, the Onedrop Foundation (founded by Laliberte and associated with Cirque de Soleil).

Was it a business expense?

 No – the Court held that it was overwhelmingly a personal trip and not a business expense. The Court only allowed a small deduction on behalf of the business.

Lesson

Although most people involved in a company or not-for-profit organisation are unlikely to be making decisions as to space travel, it is always important to keep in mind when making decisions – is it in the best interest of the company or organisation?

In this case, the answer was that it was fulfilling a long held personal dream of a shareholder of the company.

 

[1] Laliberte v Canada 2020 FCA 97

About the Author

Catherine Ballantyne

Partner
A business disputes specialist, Catherine is a trusted advisor to businesses and individuals in obtaining successful outcomes. Businesses rely on Catherine as a trusted advisor as well as lawyer in guiding them through complex litigation and disputes.

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