Hogan J. found that the taxpayer, who had failed to file two income tax returns and nine GST returns until they were requested by the Minister, was liable for late-filing penalties. Regarding the taxpayer's submission that it had reasonable grounds to believe that no taxes were owed in connection with the late-filed returns, Hogan J. stated:
To succeed with this defence, the taxpayer must show how the error was made and demonstrate that he relied on the error in deciding to postpone the filing of the returns beyond their due date. This is required in order to satisfy the subjective test. To satisfy the objective test, the taxpayer must then establish that a reasonable person would have made and relied on the same error in deciding to postpone the filing of the returns.
The taxpayer's evidence was vague and self-serving, and did not satisfy either test.