The appellant ("Prescient") and several other registered charities were intermediaries in a series of transactions (the "Farm Sale Transactions"), such that charitable receipts were generated on what was essentially a private sale of business assets. It also donated $500,000 to a non-qualified donee ("DATA"), a registered US non-profit organization whose principal mission was to alleviate property and disease in Africa. Mainville JA found that the donation to DATA was not grounds for revoking Prescient's charitable registration, but the Farm Sale Transactions were.
Mainville JA also agreed with the Minister's alternative argument that Prescient's charitable registration could be revoked because Prescient failed to maintain adequate records. In particular, the question was whether the Minister had acted reasonably given that charitable foundations are generally issued a warning regarding record-keeping lapses before their registrations are revoked. Mainville JA stated (at para. 56):
Though Prescient was remiss in maintaining proper records of the Farm Sale Transactions, the CRA auditor was nevertheless supplied with a considerable amount of information concerning these transactions which allwed her to understand both their scope and their nature. In my view, it would not have been reasonable for the Minister to revoke Prescient's registration on that basis alone. On the other hand, Prescient's failure to maintain adequate records and books of account showing that its contribution to DATA was made to an American charity, coupled with its failure to voluntarily and promptly disclose this fact to the auditor, constitutes a very serious matter.
Taking both failures together, Mainville JA concluded that the Minister's decision had been reasonable.