The taxpayer, who was a consultant, provided signed cheques to his accountant without filling in the recipient. The accountant misappropriated the funds, and apparently filed returns on behalf of the taxpayer which were different than the versions which he showed to the taxpayer. The taxpayer did not contact CRA after having received various demands from CRA and after having been told by the accountant that the accountant had lost his file yet again.
Tardif J found that penalties were not warranted, stating (at paras. 70, 74):
Although we cannot refer to mens rea, an essential element in criminal law, it seems important to me that to call for penalties in tax matters, the person in question must have shown, whether passively or actively, a minimal intention to hide certain data with a direct impact on his fiscal duty.
The taxpayer's confidence in his accountant, although reckless and lacking in vigilance, did not show such an intention (para. 74).