The taxpayer was found to have committed "gross negligence" (which Bowman TCJ. stated (at p. 205) "implies conduct characterized by so high a degree of negligence that it borders on recklessness"), or to have knowingly made a false statement, when it deducted "management fees" in its tax returns pursuant to a consulting agreement whose legal substance was the provision of consideration for the purchase by the taxpayer of goodwill. Bowman J. also stated (at p. 205) that in a case entailing the application of s. 163(2):
"A court must, even in applying a civil standard of proof, scrutinize the evidence with great care and look for a higher degree of probability that would be expected where allegations of a less serious nature are sought to be established."