Before going on to find that the activities of the taxpayers (a couple) in raising, breeding and showing dogs and engaging in dog-show judging were a hobby rather than a business, so that their substantial losses could be denied but for statute-barring for some of their reassessed years, Sommerfeldt J first concluded that the Minister could not generally reassess (to deny all such losses) their taxation years that were outside the normal reassessment period. First, he quoted with approval (at para. 54) the finding in Petric (2006 TCC 306) that “[t]he question of whether a taxpayer has a business is “a controversial issue, to be settled on the basis of the interpretation of the facts in evidence” and that “unless it can be said that the appellants’ view … was so unreasonable that it could not have been honestly held, there was no real misstatement” before finding that the taxpayers’ filing positions, that their dog activities were a business, were not a misrepresentation. He further stated (at para. 75):
[I]n Ver, Justice Bowman indicated that the question of whether an expenditure was made for a business or a personal purpose is a matter of judgment, and not the subject of a misrepresentation within the meaning of subparagraph 152(4)(a)(i) … . I adopt that view, except to the extent that either of the Appellants has acknowledged, or it is patently obvious, that a particular expenditure was incurred for a personal purpose, or was not incurred for a business purpose … .
Furthermore, in finding that there was no carelessness or neglect in their position that they carried on a business, he stated (at para. 90):
[T]he Appellants thoughtfully and carefully considered the nature of the Dog Activities, and, in consultation with their accountants, concluded that those activities were a business. …[S]uch conclusion was based on a reasonable and bona fide believe, which they honestly held.
Accordingly, the reassessments were statute-barred except to the extent that they “were clearly personal, as distinct from those whose determination may have been ‘matters of judgment’ of the type discussed … in Ver” (para. 105).