The taxpayer was convicted of fraud for arranging, in his capacity of manager of a company, for a sale of a property of the company at a substantial under-value to a purchaser in which his personal holding company had a 50% interest.
V.A. Miller J. found that the Minister had not met the burden under s. 152(4)(a)(i) to reassess the taxpayer for a benefit received beyond the normal reassessment period. The Minister had relied heavily on conclusions reached in the taxpayer's fraud trial. V.A. Miller J. stated (at paras. 42-43):
The statements, in McGarry J.'s Reasons for Judgment which the Respondent has relied on, ought to have been posed to the Appellant so that he could offer an explanation. It would then have been up to me whether or not I accepted that explanation.
The evidence relied on by the Minister has left me with more questions than it has answered. Did the Appellant seek advice prior to filing his 1999 income tax return? Was the Appellant's view of the transaction so unreasonable that it could not have been honestly held?