Bocock J found that the taxpayer, having failed to maintain adequate records and having engaged in "inscrutable" tracking of expenses, shareholder advances and shareholder benefits, could be reassessed beyond the normal period. Regarding gross negligence penalties, Bocock J stated (at para. 20):
[T]he Court finds that the lack of records or accounts produced at the Hearing did not factually appear to be the result of advertent acts of deceit, deliberate omissions or culpable intention on the part of the Appellant. ... The Appellant is likely the primary and largest victim of his own negligence and carelessness.
The taxpayer's appeal of s. 163(2) penalties was therefore allowed.