Rouleau,
J.:—This
is
an
appeal
by
way
of
trial
de
novo
from
the
judgment
of
the
Tax
Court
of
Canada
dated
September
23,
1986
dismissing
the
plaintiff's
challenge
to
the
notice
of
assessment
of
the
Minister
of
National
Revenue
("the
Minister”),
dated
February
29,
1984,
in
respect
of
the
1984
taxation
year.
The
plaintiff,
as
receiver
and
manager
of
a
company,
failed
to
remit
amounts
which
appeared
to
have
been
deducted
from
employees'
wages;
it
is
their
contention
that
since
no
amounts
were
ever
deducted,
there
is
therefore
no
obligation
to
remit.
The
facts
may
be
summarized
as
follows:
Comanche
Drilling
Ltd.
("Comanche")
was
put
into
receivership
by
an
order
of
the
Court
of
Queen's
Bench
of
Alberta
dated
January
27,
1984.
Under
the
terms
of
that
receivership
order,
the
plaintiff
was
appointed
as
receiver
and
manager
of
the
assets
of
Comanche
and
given
the
authority,
inter
alia,
to
pay
"such
debts
as
in
its
judgment
may
be
required
to
be
paid
in
order
to
properly
maintain
or
carry
on
the
business
and
.
.
.
to
protect
or
preserve
the
business
or
the
present
or
future
undertaking,
property
or
assets
.
.
.".
The
order
also
authorized
the
plaintiff
to
borrow
from
time
to
time
up
to
$1,000,000
“for
the
purpose
of
protecting
or
preserving
the
business
or
undertaking,
property
or
assets
of
Comanche."
As
of
January
27,
1984,
Comanche
had
employees
to
whom
wages
or
salaries
were
due
from
January
16,
but
which
it
was
unable
to
pay
on
account
of
its
insolvency.
Upon
assuming
its
role
as
receiver
and
manager,
the
plaintiff
decided
to
pay
to
the
employees
on
January
31,
1984
the
net
amount
of
unpaid
wages
then
owing
to
them.
This
course
of
conduct
was
pursued
in
order
to
maintain
the
trust
of
the
employees,
the
goodwill
of
the
company
and,
undoubtedly,
hoping
to
sell
the
business
as
a
going
concern.
Prior
to
receivership,
Comcheq
Services
Ltd.
prepared
the
payroll
for
Comanche
employees.
Upon
instructions
from
the
plaintiff,
just
as
it
had
done
in
the
past,
Comcheq
calculated
the
gross
pay
owing
to
each
em-
ployee,
and
determined
the
deductions
for
unemployment
insurance,
Canada
Pension
Plan
and
income
tax
to
arrive
at
a
net
amount
owing
to
each
of
them.
Comcheq
then
issued
cheques
for
the
net
amounts.
In
return,
the
plaintiff
then
issued
a
cheque
payable
to
Comcheq
in
the
amount
of
$15,057.60
to
cover
the
total
net
wages
paid
to
employees
for
the
period
ending
January
31,
1984.
The
plaintiff
made
no
remittance
of
income
tax
or
other
withheld
amounts
to
the
Minister.
By
notice
dated
February
29,
1984
the
Minister
assessed
the
plaintiff
for
amounts
owing
in
respect
of
the
deductions
calculated
from
the
gross
wages
of
the
employees
to
cover
income
tax,
unemployment
insurance
and
Canada
Pension
Plan,
as
well
as
a
penalty.
The
plaintiff
objected
to
this
assessment
which
was
confirmed
by
the
Minister
on
February
26,
1985.
The
dispute
turns
on
the
question
of
which
of
two
punitive
provisions
of
the
Income
Tax
Act
should
apply
to
the
plaintiff,
or
both.
Sections
153
and
227
of
the
Income
Tax
Act
as
they
applied
to
the
1984
taxation
year
read
in
part
as
follows:
153.(1)
Withholding.
—Every
person
paying
at
any
time
in
a
taxation
year
(a)
salary
or
wages
or
other
remuneration,
(b)
a
superannuation
or
pension
benefit,
(c)
a
retiring
allowance,
(d)
an
amount
upon
or
after
the
death
of
an
officer
or
employee,
in
recognition
of
his
service,
to
his
legal
representative
or
widow
or
to
any
other
person
whatsoever,
(d.i)
an
amount
as
a
benefit
under
the
Unemployment
Insurance
Act,
1971,
(e)
an
amount
as
a
benefit
under
a
supplementary
unemployment
benefit
plan,
(f)
an
annuity
payment,
(g)
fees,
commissions
or
other
amounts
for
services,
(h)
a
payment
under
a
deferred
profit
sharing
plan
or
a
plan
referred
to
in
section
147
as
a
revoked
plan,
(i)
a
training
allowance
under
the
National
Training
Act,
(j)
a
payment
out
of
or
under
a
registered
retirement
savings
plan
or
a
plan
referred
to
in
subsection
146(12)
as
an
''amended
plan”,
(k)
an
amount
as,
on
account
or
in
lieu
of
payment
of,
or
in
satisfaction
of,
proceeds
of
the
surrender,
cancellation
or
redemption
of
an
income-averaging
annuity
contract,
(l)
a
payment
out
of
or
under
a
registered
retirement
income
fund,
(m)
an
amount
as
a
benefit
under
the
Labour
Adjustment
Benefits
Act,
or
(n)
one
or
more
amounts
to
an
individual
who
has
elected
for
the
year
in
prescribed
form
in
respect
of
all
such
amounts,
shall
deduct
or
withhold
therefrom
such
amount
as
may
be
determined
in
accordance
with
prescribed
rules
and
shall,
at
such
times
as
may
be
prescribed,
remit
that
amount
to
the
Receiver
General
on
account
of
the
payee's
tax
for
the
year
under
this
Part.
(1.3)
Payments
by
trustee,
etc.
—For
the
purposes
of
subsection
(1),
where
a
trustee
who
is
administering,
managing,
distributing,
winding
up,
controlling
or
otherwise
dealing
with
the
property,
business,
estate
or
income
of
another
person
authorizes
or
otherwise
causes
a
payment
referred
to
in
subsection
(1)
to
be
made
on
behalf
of
that
other
person,
the
trustee
shall
be
deemed
to
be
a
person
making
the
payment
and
the
trustee
and
that
other
person
shall
be
jointly
and
severally
liable
in
respect
of
the
amount
required
under
subsection
(1)
to
be
deducted
or
withheld
and
to
be
remitted
on
account
of
the
payment.
(1.4)
Definition
of
"trustee".
—In
subsection
(1.3),
“trustee”
includes
a
liquidator,
receiver,
receiver-manager,
trustee
in
bankruptcy,
assignee,
executor,
administrator,
sequestrator
or
any
other
person
performing
a
function
similar
to
that
performed
by
any
such
person.
227.(8)
Idem.—Any
person
who
has
failed
to
deduct
or
withhold
any
amounts
as
required
by
this
Act
or
a
regulation
is
liable
to
pay
to
Her
Majesty
(a)
if
the
amount
should
have
been
deducted
or
withheld
under
subsection
153(1)
from
an
amount
that
has
been
paid
to
a
person
resident
in
Canada,
or
should
have
been
deducted
or
withheld
under
section
215
from
an
amount
that
has
been
paid
to
a
person
not
resident
in
Canada,
10%
of
the
amount
that
should
have
been
deducted
or
withheld,
and
(b)
in
any
other
case,
the
whole
amount
that
should
have
been
deducted
or
withheld,
together
with
interest
on
the
amount
that
should
have
been
deducted
or
withheld,
at
the
prescribed
rate
per
annum,
for
the
period
commencing
on
the
later
of
(c)
February
16,
1984,
and
(d)
the
15th
day
of
the
month
immediately
following
the
month
in
which
such
amount
should
have
been
so
deducted
or
withheld.
(9)
Idem.
—Every
person
who
has
failed
to
remit
or
pay
(a)
an
amount
deducted
or
withheld
as
required
by
this
Act
or
a
regulation,
or
(b)
an
amount
of
tax
that
he
is,
by
section
116
or
by
a
regulation
made
under
subsection
215(4),
required
to
pay,
is
liable
to
a
penalty
of
10%
of
that
amount
or
$10,
whichever
is
the
greater,
in
addition
to
the
amount
itself,
together
with
interest
on
the
amount
at
the
prescribed
rate
per
annum,
for
the
period
commencing
on
the
15th
day
of
the
month
immediately
following
the
month
in
which
such
amount
was
deducted
or
withheld.
At
trial
it
was
admitted
by
the
plaintiff
that
a
party
paying
salary
or
wages
[as
defined
by
subsections
153(1),
153(1.3)
and
153(1.4)]
is
required
to
withhold
from
those
wages
or
salary
amounts
to
cover
income
tax,
unemployment
insurance
and
Canada
Pension
Plan
and
remit
the
same
to
the
Receiver
General
of
Canada.
Having
failed
to
make
such
remittances,
a
party
Is
subjected
to
one
of
two
liabilities
prescribed
by
section
227
of
the
Act.
Subsection
227(8)
provides
that
any
person
who
fails
to
deduct
or
withhold
an
amount
as
prescribed
by
section
153
must
pay
a
penalty
equal
to
10
per
cent
of
the
amount
that
should
have
been
deducted
or
withheld.
Subsection
227(9)
provides
that
any
person
who
deducts
or
withholds
an
amount
as
prescribed
by
section
153
but
fails
to
remit
that
amount
shall
be
liable
for
both
that
amount
and
a
penalty
equal
to
10
per
cent
of
that
amount.
The
plaintiff
suggests
that
it
is
only
liable
for
the
penalty
prescribed
by
subsection
227(8)
for
failing
to
withhold
or
deduct
amounts
in
accordance
with
section
153.
It
argues
that
it
only
"intended"
to
pay
"net"
wages
and
that
any
"deductions"
which
show
up
on
the
records
prepared
by
Comcheq
are
simply
bookkeeping
entries
for
the
purpose
of
determining
the
amount
of
net
wages
owing
and
to
be
paid
to
each
employee.
Because
it
never
"intended"
to
make
deductions
and
in
fact
did
not
set
aside
or
put
into
a
separate
account
any
money
to
cover
any
amounts
so
deducted,
plaintiff
alleges
that
there
is
no
basis
or
obligation
for
a
finding
that
deductions
are
prescribed
and
should
be
remitted.
The
defendant,
on
the
other
hand,
submits
that
it
is
not
possible
to
change
one's
tax
status
through
"intention".
The
plaintiff
had
funds
available
to
pay
the
wages
of
the
Comanche
employees;
it
elected
to
keep
the
company
operating
as
a
going
concern
but
had
undoubtedly
undertook
to
pay
the
employees
their
full
wages
in
order
to
retain
their
good
will
and
maintain
the
insolvent
company
as
a
going
concern.
Comcheq
records
indicate
that
deductions
were
calculated
from
gross
wages
payable
to
each
employee
due
from
January
16
to
January
31,
1984
in
order
to
determine
the
amount
of
net
wages
payable.
It
is
no
defense
to
argue
that
no
separate
account
was
created
as
a
repository
of
these
amounts
or
that
banking
records
of
the
plaintiff
do
not
indicate
the
creation
of
such
an
account
(even
though
the
plaintiff
did
subsequently
begin
to
remit
deducted
or
withheld
amounts
to
the
Receiver
General
for
Canada
pursuant
to
section
153
of
the
Act.)
The
defendant
points
out
that
the
plaintiff
had
sufficient
funds
available
to
it
at
all
times
to
pay
the
remittance
to
the
Receiver
General.
The
resolution
of
the
present
dispute
is
obvious
according
to
the
plaintiff;
one
needs
only
apply
to
this
factual
situation
the
reasoning
from
the
decision
of
the
Federal
Court
of
Appeal
in
R.
v.
Coopers
&
Lybrand
Ltd.,
[1981]
2
F.C.
169;
[1980]
C.T.C.
367,
406;
80
D.T.C.
6281.
A
detailed
analysis
of
the
Coopers
&
Lybrand
case
is
essential
before
arriving
at
a
decision.
In
the
Coopers
&
Lybrand
case,
they,
as
trustees,
were
appointed
as
receivers
of
an
insolvent
company
called
Venus
Electric
Ltd.
It
was
not
a
court
ordered
appointment;
their
authority
to
take
charge
and
administer
the
financially
troubled
company
came
from
the
Mercantile
Bank
of
Canada,
the
debenture
holder
of
Venus
Electric
Ltd.
Initially,
there
had
been
default
and
subsequent
seizure.
The
Mercantile
Bank
had
determined
that
the
continued
operation
of
the
company
was
desirable
and
to
that
end
the
receiver
offered
to
pay
the
employees
the
amount
that
they
were
"out
of
pocket",
or
net
wages.
Prior
to
default,
Venus
Electric
Ltd.
had
relied
upon
the
payroll
services
of
the
Bank
of
Nova
Scotia,
to
issue
the
salary
cheques
to
its
employees.
They
provided
the
Bank
with
the
working
hours.
The
Bank,
in
turn,
then
calculated
gross
pay
and
deducted
amounts
for
income
tax,
unemployment
insurance
and
Canada
Pension
Plan
to
determine
the
net
amount
payable
to
each
employee.
Venus
Electric
Ltd.
would
then
issue
a
cheque
to
the
Bank
to
cover
the
aggregate
amount
of
these
net
wages.
Coopers
&
Lybrand
continued
to
avail
itself
of
this
service
after
assuming
control
so
that
employees
received
their
usual
amount
of
wages
accompanied
by
an
information
slip
showing
gross
wages,
deductions
and
a
net
amount
payable.
The
employees
also
received
a
document
from
the
receiver
which
acknowledged
that
they
were
owed
back
wages
and
that
the
payment
only
represented
the
amount
the
employee
was
"out
of
pocket".
The
letter
further
informed
them
that
the
receiver
was
in
a
dispute
with
Revenue
Canada
over
liability
for
source
deductions.
It
is
important
to
note
that
despite
the
issuance
of
the
information
slip
that
showed
that
deductions
were
withheld,
in
fact
no
money
was
ever
segregated
for
remittance.
What
is
crucial
and
distinguishable
is
the
fact
that
the
debenture
holder,
the
Mercantile
Bank
of
Canada,
forwarded
the
money
directly
to
the
Bank
of
Nova
Scotia
and
provided
them
with
only
sufficient
funds
to
pay
the
employees
their
net
wages.
Unlike
the
present
situation,
there
was
no
authority
given
to
Coopers
and
Lybrand
to
borrow
funds;
in
fact
the
net
wages
were
advanced
by
the
debenture
holder.
The
Minister
assessed
the
receiver,
Coopers
and
Lybrand,
claiming
that
it
had
failed
to
remit
what
it
had
deducted.
The
unanimous
decision
of
the
Court
of
Appeal
rendered
by
Deputy
Judge
Kelly
observed
that
if
the
only
evidence
before
the
Court
were
the
information
slips
and
T-4
tax
returns
relating
to
each
employee,
the
logical
conclusion
would
be
that
deductions
had
been
made
and
not
remitted.
However,
he
went
on
to
note
that
there
was
[C.T.C.
page
377]
uncontradicted
evidence
to
the
effect
that
the
aggregate
amount
of
money
which
was
provided
by
the
debenture
holder
to
the
respondent
for
the
purpose
of
“making
a
payment
to
each
employee
by
the
amount
of
which
they
(the
employees)
are
'out
of
pocket'
with
respect
to
work
done
for
the
company
as
a
result
of
the
company's
failure
and
the
company
could
not
pay"
was
the
net
amount
after
deduction,
which
the
employees
together
would
have
received
for
the
final
pay
period.”
[Emphasis
added.
I
Further
on
he
noted
that
the
aggregate
amount
of
gross
wages
for
the
period
in
question
was
in
excess
of
$230,000
and
[C.T.C.
page
377]
had
that
amount
actually
been
available
and
exhausted
on
payments
to
employees
and
segregation
of
amounts
authorized
to
be
deducted,
the
aggregate
of
the
deductions
for
income
tax
would
have
been
$28,449.78.
The
amount
which
the
respondent
had
available
to
pay
on
account
of
wages
was
however
$196.207.01
and
its
obligation
under
the
Income
Tax
Act
was
to
deduct
from
the
amount
thereof
apportioned
as
the
wages
of
each
employee,
the
appropriate
amount
for
income
tax
calculated
upon
the
portion
of
the
sum
of
$196,207.01
which
was
due
to
him
or
her.
[Emphasis
added.]
The
Court
allowed
the
appeal
and
ordered
a
reassessment
on
the
basis
of
a
failure
to
deduct
rather
than
a
failure
to
remit
deductions
already
made
and
the
Minister
was
not
successful
in
recovering
the
supposedly
withheld
amounts.
Counsel
for
the
plaintiff
argues
that
the
Coopers
&
Lybrand
decision
is
(as
nearly
as
possible)
on
all
fours
with
the
present
appeal.
While
I
agree
that
there
are
many
similarities
between
the
two
cases,
I
find
the
differences
between
the
two
factual
situations
to
be
more
compelling.
In
Coopers
&
Lybrand
the
receiver
was
appointed
and
directed
by
the
debenture
holder
and
not
by
court
order.
Strict
control
over
the
amount
of
money
available
to
the
receiver
for
the
management
of
the
affairs
of
the
insolvent
company
was
exercised
by
the
debenture
holder.
However,
in
this
appeal,
the
receiver
appointed
by
court
order
was
given
a
broad
mandate
to
preserve
and
protect
the
business
of
the
insolvent
company
and
was
guaranteed
access
to
a
$1
million
line
of
revolving
credit
that
they
could
borrow
and
expend
in
their
absolute
discretion.
To
my
mind,
these
are
the
decisive
distinctions.
In
both
cases,
the
prima
facie
evidence
provided
by
payroll
records
indicate
that
deductions
were
made.
In
Coopers
&
Lybrand,
however,
the
receiver
never
had
access
to
funds
to
pay
gross
wages,
let
alone
the
deductions;
in
fact
the
moneys
came
directly
from
the
debenture
holder
and
only
the
net
amount
was
provided.
In
the
present
appeal
there
is
no
evidence
to
rebut
the
prima
facie
inference
drawn
from
the
payroll
records.
Although
the
receiver
never
actually
set
money
aside,
funds
were
available
not
only
to
pay
wages
but
to
pay
the
remittance
to
the
Crown
on
account
of
the
deductions
it
calculated.
Counsel
for
the
plaintiff
stressed
that
only
nominal,
rather
than
actual,
deductions
were
made.
In
other
words,
they
were
only
bookkeeping
entries
to
enable
the
determination
of
net
wages.
As
persuasive
as
this
argument
may
first
appear,
I
do
not
accept
it.
In
pursuing
this
course
of
conduct,
the
receiver
raised
a
presumption,
albeit
rebuttable,
that
it
had
actually
withheld
amounts
on
account
of
income
tax,
which
it
would
then
be
liable
to
remit
at
the
prescribed
time.
I
would
note
that
this
presumption
would
prevail
in
the
minds
of
the
employees
who
received
wage
or
salary
cheques
in
the
usual
amount
accompanied
by
information
slips
indicating
that
deductions
had
been
duly
made.
To
rebut
this
presumption
and
cast
the
employees
with
the
burden
of
paying
an
amount
on
account
of
income
tax
which
they
had
every
reason
to
presume
had
already
been
paid
would
require
clear
evidence.
In
Coopers
&
Lybrand
employees
had
been
put
on
notice
that
there
was
a
dispute
with
National
Revenue
over
the
deductions,
but
more
importantly
the
receiver
was
neither
empowered,
nor
had
sufficient
funds
available,
to
remit
the
amounts
purportedly
deducted
on
account
of
income
tax.
The
plaintiff
had
the
authority
and
ample
funds
to
remit
the
amounts
which
the
records
indicated
had
been
deducted.
Accordingly,
it
has
failed
to
rebut
the
presumption
created
by
its
own
acts.
The
plaintiff
is
liable
pursuant
to
both
section
153
and
subsection
227(9)
of
the
Income
Tax
Act
for
amounts
deducted
and
not
remitted
as
well
as
to
penalty.
The
Minister's
assessment
in
respect
of
this
liability
is
confirmed
and
the
appeal
is
therefore
dismissed.
The
plaintiff
assumed
the
responsibility
of
directing
this
financially
plagued
company
undoubtedly
intending
to
maintain
it
as
a
going
concern
in
order
to
retain
the
goodwill
of
its
customers
and,
more
than
likely,
be
in
a
more
favourable
position
to
eventually
dispose
of
the
asset
to
the
greater
advantage
of
the
creditors.
Having
assumed
the
responsibility
of
an
employer
the
plaintiff
voluntarily
elected
to
pay
the
outstanding
wages
in
order
to
retain
the
staff.
To
suggest
that
mere
intention
is
sufficient
to
exonerate
an
employer
from
paying
what
is
rightfully
due
to
the
Minister
of
National
Revenue
is
ludicrous.
May
I
be
so
audacious
to
suggest
that
in
the
Coopers
&
Lybrand
case
the
Minister
may
have
perhaps
assessed
the
wrong
party.
Appeal
dismissed.
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