The taxpayer was found to have made a misrepresentation attributable to neglect, carelessness or wilful default when it deducted "management fees" in its tax returns paid pursuant to a consulting agreement whose legal substance was the provision of consideration for the purchase of goodwill.
Bowman TCJ. also found that in a case (such as here) where there was not only an issue as to the correctness of the assessment but also as to whether there was a misrepresentation described in s. 152(4)(a)(i), the Crown should present evidence and argument first on the misrepresentation point in order to establish the Minister's right to assess.