Rip, T.CJ.:—Harry Byrt ("Byrt") appeals from two assessments of tax, both made pursuant to subsection 227(10) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") arising out of the liability of directors of corporations described in subsection 227.1(1). One assessment, notice of which is dated December 31, 1986, is in respect of a purported liability of Byrt as director of Parthenon Building Systems Ltd. ("Parthenon") for failure by Parthenon in 1984 to pay to the Receiver General of Canada income tax withheld by Parthenon on payment of salary and wages ("source deductions"), including interest and penalties; the second assessment, notice of which is dated May 6, 1987, is in respect of a purported liability of Byrt as director of Parthenon for an amount of tax, including interest, Parthenon failed to pay in 1984 as required under Part VIII of the Act.
The appellant says that the assessments should be dismissed on the following grounds:
(a) he exercised the degree of care, diligence and skill to prevent the failures that a reasonably prudent person would have exercised in comparable circumstances pursuant to subsection 227.1(3) of the Act;
(b) section 227.1 and subsection 227(10) of the Act are invalid to the extent that pursuant to sections 24 and 52 of the Canadian Charter of Rights and Freedom ("Charter"), the sections are inconsistent with the appellant's rights guaranteed by sections 7, 8 and 15(1) of the Charter; and
(c) and that the assessment with respect to Part VIII tax should be dismissed since he ceased to be a director on January 24, 1985, more than two years before the issuance of the assessment.
The respondent denies the grounds relied on by the appellant and adds the appellant is estopped from alleging he resigned as a director of Parthenon on January 24, 1985.
A. Introductory Facts
Mr. Byrt has a grade ten education. He joined the Royal Canadian Air Force at age 17 in 1943 and was discharged after the war. He then returned to his hometown of Lloydminster, Alberta where he became a licensed automobile mechanic. Later he worked in the Alberta oil fields as a rig manager and eventually was one of two people who incorporated Tri City Drilling Company Ltd. The company owned ten rigs. In 1966 Byrt sold his interest in the company but stayed on as manager until 1970 when the company was sold again.
In 1970 Byrt and his wife acquired all of the shares of an aviation corporation carrying on the business of aircraft charters and fire fighting. They operated the corporation for four years. The Byrts sold the shares of the corporation in 1974 but Byrt stayed on as a pilot until 1985. In 1985 Byrt worked as a consultant in oil drilling in Scotland for three months. Presently he is manager of a geotechnical drilling company in Edmonton.
In 1978, while flying some potential investors from Edmonton to Melville Saskatchewan to hear a presentation by Mr. Hugh Vassos ("Vassos"), owner of Parthenon, Byrt was invited to join the group and meet Vassos. Apparently Vassos had developed a technique to use plastic forms for pouring concrete; the concrete, once dry, had a shiny and smooth finish. Byrt “was taken by the technique and presentation by the man".
Byrt described Vassos' presentation as "very impressive ... Vassos," he said, “was an eloquent speaker. . . appeared knowledgeable . . (and) . . .had an easy way of putting people at ease . . .." The presentation showed concrete houses built in Melville as well as patio blocks and other products made of concrete.
About two months later Byrt and other potential investors attended another presentation by Vassos in Edmonton. The reaction of those attending was enthusiastic, Byrt recalled. Another group of potential investors meeting in Calgary had a similar reaction. Finally “a vehicle was put together to invest" in Parthenon, Byrt said.
Byrt invested $100,000 notwithstanding he had no previous dealing with Vassos; he stated he relied solely on Vassos' presentation and predictions for the future. His was one of the larger investments and so he was asked to be a director of Parthenon Investment Corporation Ltd. (“Investment”), which was incorporated to receive the investments and hold 50 per cent of the shares of Parthenon. Vassos undertook to cause Parthenon to secure the funds advanced by the investors.
Byrt testified he soon became “disillusioned” since Parthenon had not put up security as promised and no financial statement of either Parthenon or Investment had been produced. Byrt and two other Alberta investors, a Mr. Williams of Grand Prairie and a Mr. Fetterly of Calgary, "decided to do something" to protect their interests and engaged the Regina law firm of MacPher- son, Leslie & Tyerman. Pressure was put on Vassos to honour his commitment, Byrt testified, and eventually a debenture and mortgage were created in favour of the investors; the security was land and building owned by Parthenon in Melville. Soon thereafter Parthenon and Investments amalgamated under the laws of Saskatchewan.
Byrt was elected director of the amalgamated corporation.
At all relevant times Parthenon had seven directors, at least four of whom were residents of Saskatchewan, including Vassos; Byrt and Fetterly were directors and Williams was a director until 1983. According to Byrt the day-to- day affairs of Parthenon were looked after by Vassos, his secretary and staff of four to five people. Byrt insisted he never was involved in the day-to-day affairs of the business.
At the beginning of 1982 Parthenon proposed a new share offering and to this end a prospectus, dated February 2, 1982 was prepared. The prospectus was signed by Byrt because "on the day the prospectus had to be signed I was around . . . (and) . . . I was aware what was in the prospectus . . .”, although he did not verify the information, including the declared liabilities of the company, contained in the document. The balance sheet in an audited financial statement contained in the prospectus showed Parthenon to be in a deficit position as at April 30, 1980, April 30, 1981 and September 30, 1981; the information as at the latter date was not audited and reflected a deficit of over $900,000. Because of the deterioration of financial markets later in 1982, no money was raised by Parthenon, according to Byrt.
The day-to-day bookkeeping of Parthenon was the responsibility of Ms. Bev Kreklewicn, who was treasurer of the corporation. Kreklewich worked at Parthenon's head office in Melville and was a full-time employee of Parthenon. Byrt testified that he "met her in excess of six or seven times between 1981 and 1984” but seldom, if ever, alone since Vassos was usually present. Byrt declared Kreklewich was "dominated" by Vassos. “She was a quiet spoken lady” who, Byrt said, "would make no statement without Vassos' approval". She never mentioned the company's poor financial state or its difficulty with creditors to Byrt.
Nevertheless Byrt acknowledged he did receive financial reports from Kreklewich "from time to time and never felt anything alarming" from what he read. For example, a statement reflecting cash flow and amounts paid out by Parthenon during the year July 1981 to June 1982 showed deposits of $1,410,324 and payments of $1,357,922. He said there always seemed to he money coming into the company. The balance sheet as at December 31, 1982 showed assets to be four times the liabilities. (The financial statements produced at trial were all unaudited, save for the statements contained in the prospectus.)
Byrt described Vassos as “financin the right to his system" through Parthenon. Vassos was attempting to sell franchises to the system in Canada,
United States and overseas, according to Byrt. However as early as October 23, 1981 it appears Parthenon was having financial problems. In a letter of that date from the Manager of the Melville District Credit Union the reader was informed that the writer had "no reservations to conduct business with Rarthenon Buildings Systems. The Company will become viable in a short time, if given half a chance".
At a directors' meeting of Parthenon on April 26, 1983 financial information was provided to the directors; Byrt "was not alarmed” at the information. The company's line of credit from the bank was reduced but, in Byrt's view, this was due to a general tightening of credit at the time. The directors also viewed a video presentation of a possible investment by Parthenon in a multi-million dollar development in Arizona.
All the while Vassos, according to Byrt, was on the road in the United States promoting the building system and sending glowing reports to Byrt. At times, Vassos would discuss on the telephone with Byrt potential contracts and Vassos would have Kreklewich send Byrt copies of correspondence he had with the potential customers, According to Byrt, before 1984 it appeared Parthenon was a "winner with good cash flow in the future".
Byrt indicated he was further comforted by a letter of March 16, 1984 from a firm of Regina solicitors, Griffin, Beke and Thorson, which described favourable negotiations between Parthenon and a "well established" contractor in Dallas, Texas. Byrt and other directors had been in the firm's office listening in on the speaker telephone to a conversation between the lawyer and Vassos with respect to these negotiations and, as a result of the telephone call, the directors were “upbeat” and confident "the corner was turned", notwithstanding there was “lots to yet accomplish”.
When Byrt started to query Vassos for the reason "things were not happening" Vassos, in a letter dated June 28, 1984, laid the problem to government bureaucracy.
B. Failure to Remit Source Deductions
Parthenon had been assessed on January 30, 1985 for failure to remit source deductions. By letter dated October 24, 1985 Mr. D.T. Ludwar, an officer of Revenue Canada, advised Byrt of his potential liability resulting from Parthenon's failure to remit taxes withheld from wages and salaries paid to employees. Byrt insisted this was the first occasion he became aware Parthenon ad not remitted source deductions. He stated he knew an employer had to withhold statutory deductions at source and remit them to the Receiver General for Canada. He had been involved in several businesses, he added, and had always made the remittances. He said he "never thought the company was not making the remittances". In cross-examination Byrt admitted that even though at the time he believed Vassos' integrity was questionable it never occurred to him Vassos would not cause Parthenon to remit the source deductions which, Byrt said, he personally considered to be property of the government.
Kreklewich, Byrt recalled, was still working at the Melville office in 1984 and when he visited the office in that year she did not say anything to him concerning source deductions, remittance problems or non-payments to other creditors, Byrt said he became aware in 1984 that a financial problem was starting to develop at Parthenon. He received a telephone call in November or December from Mr. S. Thorpe, a chartered accountant, who was trustee under the debenture in favour of the investors. Thorpe advised Byrt that Parthenon was in arrears for payment of property tax to the City of Melville and the city was preparing action against the property. Byrt telephoned Vassos and for the first time became aware of the company's precarious financial position. Previously Vassos had spoken of money coming into the company from contracts in the United States; now Vassos told him creditors of Parthenon were not being paid.
When Byrt had learned of Parthenon's property tax arrears he did nothing, he said, since any action "was up to Thorpe as trustee". At the time Byrt was negotiating to go to Scotland but was "concerned" with Parthenon's problem. He testified that on January 24, 1985 he wrote a letter to Vassos resigning as director of Parthenon, since amongst other things, he considered his "position as a director of Parthenon Building Systems Ltd. may place me in a conflict of interest with those debenture holders who by extraordinary resolution appointed me to represent their interests". Byrt produced a copy of the letter of resignation and an invoice dated January 24 from an office service corporation for the preparation and printing of two letters and a brief; one of the letters, Byrt stated, was the resignation sent to Vassos. At the time, Byrt said, his main concern was the security on his investment and gave no thought as to whether source deductions were being remitted. Byrt admitted that Vassos had never informed him of Parthenon's debt to the respondent and he never made inquiries to either Vassos or Kreklewich. Byrt stated that Vassos had not reported fully to the board of directors and since Vassos had voting control of the company—Byrt only owned seven per cent of the shares—there was no way he could have controlled Vassos. He learned later on in 1985 that employees of Parthenon had not been paid their wages and he himself paid some of them. Later in the trial Byrt said he did not remember speaking to Vassos again once he became aware of the fact the source deductions had not been remitted.
Byrt left for Scotland at the end of March. Between January and March the debenture holders had held several meetings. "Feelings were strong between Vassos and myself", Byrt said, since he felt Vassos had misled the investors. He recalled that he had "heated" discussions with Vassos before leaving for Scotland. He described Vassos as a person with a giant ego who could not accept criticism.
The debenture holders appointed Byrt to work with the trustee named in the debenture to determine what could be done to protect their interests as a result of Parthenon's default under the debenture. Eventually arrangements were made with the City of Melville, the property was sold, and Byrt recovered his funds.
Vassos was president and general manager of Parthenon. He ran Parthenon's business without any interference from anyone, including the directors. In cross-examination Byrt was asked "How could you stay on as director if you let Vassos do as he wished?” Byrt's reply was "You have to make a decision to carry on or not" and Byrt admitted he did not make a decision until much later.
Byrt testified Vassos supplied him with “lots of information which wasn't necessarily the answers to my question” while Byrt was a director. This "was not the style I was familiar with" since he had previously worked with conservative people, Byrt remarked. Byrt said he knew he was taking risks with Vassos but he is “the type of individual who makes wheels of industry turn . . . he had enthusiasm and optimism".
Byrt returned to Edmonton from Scotland in early July 1985. On August 1, he wrote another letter of resignation to Vassos, sending a copy to the solicitor for Parthenon. The latter letter did not refer to the earlier letter of resignation because, Byrt said, “I knew the importance of resigning at the time but not of the date . . . My only concern was to make sure I was not a director". He said he felt quite strongly he had resigned earlier and was concerned Vassos had not filed the earlier letter since it was never acknowledged. The letter of August 1 reads, in part, as follows:
It has become untenable for me to continue as a member of the Board of Directors of Parthenon Building Systems Ltd.
This letter is to give notice and is to be considered as my immediate resignation as a Director.
C. Failure to Pay Part VIII Tax
On October 30, 1985 Byrt replied to Ludwar's letter of October 24 informing him that he resigned as a director of Parthenon on August 1, 1985. He hoped Revenue Canada would accept his representations that he had no knowledge the source deductions were not remitted. He declared he had no idea Revenue Canada would rely on the date of his resignation, as stated in the letter, to prepare and issue any assessments.
Sometime in 1983 Vassos advised the directors of Parthenon he was undertaking the development of a wind turbine on behalf of the company. There was an energy crisis at the time, Byrt recalled, and Vassos believed he could develop a process to convert wind to cheap electrical energy. Byrt testified that at the directors' meeting he requested a professional engineer's report to determine if the process was viable but Vassos refused, saying the process was very technical and he did not want a competitor stealing his idea; Vassos did not disclose any technical information to the directors.
Byrt was aware in 1984 of the availability of research and development tax credits under the Act. Byrt understood that these credits were easy to obtain "if the right information was given” to Revenue Canada. He advised Vassos Parthenon may be able to obtain such credits for the wind turbine project and referred him to a chartered accountant in Edmonton "who negotiated the tax credits".
About two or three weeks later, in April, Vassos telephoned Byrt to advise him he, Vassos, had spoken by telephone to the accountant and they had arranged to meet in Edmonton. Byrt met Vassos on his arrival at the Edmonton airport and drove him to the meeting with the accountant. On the way to the accountant, Byrt said, he informed Vassos the approval of the directors would be necessary before the filing of the designation for the tax credits could be proceeded with. Vassos' attitude, according to Byrt, was that he was president and manager of the company and there was no time for a directors' resolution to be passed if the designation for the tax credit was to be filed quickly. Byrt nevertheless introduced Vassos to the accountant and remained for the meeting which took five minutes since all the papers were in order and ready for filing with the respondent.
Byrt testified he "knew certain things had to be put in place to meet the requirements of the Act to get the credits" and so advised Vassos in a letter. In cross-examination, Byrt replied that the filing of the designation “was not done with my approval although I made Vassos aware of it”. The directors never approved the designation; in fact, Byrt said, the other directors did not even know about the designation. Byrt insisted that once Vassos was determined to file the designation he could not "have stopped Vassos from going to the meeting with the accountant”. He never considered resigning as a director, he stated, until he was appointed representative of the debenture holders in January 1985.
On April 19, 1984 a law firm in Edmonton sent to Revenue Canada the designation of Parthenon, dated April 18, 1984, under section 194 of the Act for scientific research tax credit. The designated amount was $100,000; the Part VIII tax payable was $50,000. Revenue Canada accepted the designation by letter dated April 27, 1984. A demand debenture had been issued by Parthenon to an investor on April 18, 1984.
Byrt questioned Vassos to ensure the proper work was being performed so that the expenses would qualify under the Act as research and development expenses. He said he received assurances from Vassos that the expenses did qualify and not to worry." "We're making great strides," Vassos insisted. Vassos would send him newspaper clippings of the project, but nothing else. Vassos was always upbeat, according to Byrt. Byrt admitted that not only did he not visit the site where the development was taking place but he had never been informed of the location of the site. He understood the development was taking place somewhere in the Qu'Appelle Valley of Saskatchewan.
Because Byrt had been unsuccessful in obtaining information from Vassos he turned for assistance to the accountant in Edmonton who sent him a copy of the documentation that had been filed at Revenue Canada with designation. Byrt said he was comforted by the material and that nothing contained in the documentation gave him particular concern. However, he was, he said, becoming anxious concerning Parthenon's tax obligation as a result of the designation. He was aware that money had to be repaid if no research was done.
Parthenon failed to remit taxes in the amount of $50,000 in respect of the designation on May 31, 1984 and failed to expend $100,000 on qualified scientific research and development, thus becoming liable for tax in the amount of $50,000, less any amount it did in fact spend on research. Parthenon was struck off the register of corporations of Saskatchewan on December 31, 1985. Byrt was assessed the amount of $59,642.43, (tax of $40,296.50, penalty of $6,850.40 and interest of $12,495.53) owed by Parthenon to the Receiver General for Canada.
The notice of assessment issued to Byrt for failure of Parthenon to pay Part VIII tax is dated May 6, 1987, more than two years after the letter of January 24, 1985 but within the two-year period of the August 1, 1985 letter of resignation. The appellant's notice of appeal and amended notice of appeal both refer to Byrt resigning as director of Parthenon on August 1, 1985. At trial, the amended notice of appeal was further amended to read the resignation took place on January 24, 1985. In turn the respondent amended his reply to the amended notice of appeal to provide that, in assessing, the respondent relied on the representation of the appellant. He resigned as director on August 1, 1985. In cross-examination Byrt stated it was not until several days before the trial, when talking to his lawyer, that he realized the significance of the January 24,1985 letter "and that Revenue Canada would have acted quicker had they known of the January 24th date".
Ludwar testified on behalf of the respondent. In 1984 and 1985 he was a collections officer with Revenue Canada and Parthenon was his responsibility. He testified he wrote Byrt on October 24, 1985 that Parthenon was in arrears and received a reply from Byrt dated October 30, 1985, that he resigned as a director of Parthenon on August 1, 1985. "Based on the August 1st date”, Ludwar declared, “I knew we had two years from that date to issue assessments against Byrt". Ludwar said he followed Revenue Canada practice and diarized the August 1 date to bring forward the files of Parthenon for appropriate action to ensure assessments were issued within two years of August 1, 1985.
In cross-examination Ludwar acknowledged Byrt was not advised by the respondent until October 24,1985 of Parthenon's failure to remit. He recalled the June 1984 remittance cheque of Parthenon for source deductions was returned for insufficient funds in September of that year; this triggered subsequent events. Parthenon was carrying on business at the time ana discussions were held with Vassos. Vassos made promises, which Ludwar at the time thought were reasonable, that payment would be made through cash flow, amongst other things. These discussions continued into 1985 and only in January of 1985 did the respondent send a payroll auditor to audit the books and records of Parthenon. Vassos continued to make promises to pay until the summer of 1985 and only when officials of the respondent read a notice to creditors published in the Regina Leader Post newspaper that the debenture holders wished to sell the Melville property that Revenue Canada realized Vassos could not carry through on his promises.
Ludwar admitted in cross-examination that he never told Byrt that Revenue Canada was relying on the information contained in his letter of October 30, 1985.
D. Diligence by Director
(a) Submissions by Counsel
Subsection 227.1(1) of the Act provides that:
Where a corporation has failed to deduct or withhold an amount as required by subsection 135(3) or section 153 or 215 or has failed to remit such an amount, the directors of the corporation at the time the corporation was required to deduct or withhold the amount, or remit the amount, are jointly and severally liable, together with the corporation, to pay any amount that the corporation is liable to pay under this Act in respect of that amount, including any interest or penalties related thereto.
However subsection 227.1(3) provides that a director shall not be liable for any such amount if:
.. . he exercised the degree of care, diligence and skill to prevent the failure that a reasonably prudent person would have exercised in comparable circumstances.
Appellant's counsel described Vassos as a person dedicated to promoting his product but of poor integrity. His client constantly had to push Vassos to get things done. When Byrt requested information as to the Parthenon's progress, Vassos would send him glowing reports. Byrt was constantly requesting information from Vassos. Counsel submitted “he did not sit back”. Never was there any indication to Byrt the company had financial problems which could have affected its ability to remit source deductions.
With respect to the scientific research tax credit Byrt endeavoured to ensure “things were on the up and up”, counsel insisted. When he could not obtain information from Vassos he contacted the accountant for information. He did not advise the board of directors that a designation had been filed because, said counsel, "the horse was already out of the barn” and Vassos was not to be stopped. Counsel submitted that Byrt's only obligation was to advise Vassos to obtain the approval of the directors but he had no obligation to advise the other directors of the designation. He added that Byrt felt frustrated due to the fact the power of the corporation lay with Vassos and there was nothing he could do.
Byrt’s counsel conceded that perhaps Byrt made an error of judgment in staying on as a director of Parthenon. However, in his view, there was not a sufficient level of suspicion to alert Byrt that the source deductions or the amount due under Part VIII of the Act would not be paid. Byrt did what he could to prevent the default. Vassos was giving him reassurances research was being undertaken by Parthenon, even if Vassos, because of his desire for secrecy, did not allow Byrt or the other directors to observe the research. The appellant, counsel concluded, could not have done anything different to make sure research and development were done.
The appellant's counsel referred the Court to Romer, J.’s statement in Re City Equitable Fire Insurance Co.,  1 Ch. 407; affd  1 Ch. 500 (C.A.), concerning the general standard against which a director's conduct is to be measured where, at page 428, he stated:
A director (a) must act honestly, and (b) must exercise such degree of skill and diligence as would amount to the reasonable care which an ordinary man might he expected to take, in the circumstances, on his own behalf. But, (c) he need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and expertise, in other words, he is not liable for mere errors of judgment, (d) he is not bound to give continuous attention to the affairs of his company; his duties are of an intermittent nature to be performed at periodical board meetings, and at meetings of any committee in which he is appointed and though not bound to attend all such meetings he ought to attend them when reasonably able to do so, and (e) in respect of all duties which, having regard to the exigencies of business and the articles of association may properly be left to some other official, he is, in the absence of grounds for suspicion, justified in trusting that official to perform such duties honestly.
Counsel also cited Merson v. M.N.R.,  1 C.T.C. 2074; 89 D.T.C. 22 at 2083 (D.T.C. 28) as to the meaning to be given to the words "reasonably prudent" in subsection 227.1(3).
Counsel submitted that for a director to be held personally liable it is essential that he could have exercised freedom of choice. He referred to Addy, J. in Robitaille v. Canada,  1 C.T.C. 121; 90 D.T.C. 6059, at 126 (D.T.C. 6063), who wrote:
The term diligence, which is now codified, provides a higher objective standard than that imposed by the common law on directors generally.Although the test is to a large extent an objective one, the question remains, however, what a reasonably prudent person would do in the circumstances in which a director finds himself. These circumstances include subjective elements such as, degree of education, business knowledge and general ability of the director.
In my view Byrt is an intelligent, able and apparently decent individual who, since the end of World War II, has been successful in the majority of his business ventures. The evidence indicates he carried on business honestly and expected other people to do the same. This was the enesis of his problems. Vassos was, according to the evidence of both Byrt and Ludwar, an enthusiastic and smooth talking salesman who only communicated good news, without regard to the true state of affairs.
It may be that when Byrt first met Vassos he had no reason to doubt his sales pitch and warm to his personality and proposals. However almost immediately after Byrt advanced funds to Investment in 1978 or 1979—the date is not certain—his problems with Vassos began. It was necessary to retain the services of a Regina law firm to pressure Vassos to cause Parthenon to honour its commitment to grant security to the investors.
In February 1982 Byrt signed a certificate that the material facts in the prospectus were true without verifying the truth of its contents; he also knew, or ought to have known if he had read the prospectus, that Parthenon was in a deficit position. In 1983 Byrt observed first hand how Vassos operated when he first refused to allow the directors anything but the most basic information on the wind turbine project and then, in April 1984, Vassos refused not only to obtain directors’ approval for the filing of the designation for the scientific tax credit but to inform the directors of the designation. At the time Byrt knew Parthenon, as a result of making the designation, had a potential tax liability of $50,000 and did nothing about it.
Later on, whenever Byrt wished to discuss financial matters with Krek- lewich, he could do so only when Vassos was present. And when he requested information from Vassos, he received information, but not the information he was seeking. Surely he realized quite early that Vassos was keeping staff on a short leash and was not as forthcoming to a director as one reasonably would have expected from a senior officer and director of the corporation.
Realizing at the latest, in April 1984, that as far as Vassos was concerned he was answerable to no one and could do—and did do—as he wished, Byrt still took no steps to try to put some reins on Vassos or, if he thought it was hopeless to control Vassos, resign as director.
The Shorter Oxford English Dictionary on Historical Principles defines “diligence” as:
1. The quality of being diligent; industry, assiduity ... 3. Careful attention, heedfulness, caution . . . 4. Law. The attention and care due from a person in a given situation . . .”
The same dictionary defines “diligent” as:
. . . 2. Of actions, etc.: Constantly or steadily applied; prosecute with activity and perseverance; assiduous . . .
The word "skill", as a noun, is defined by the Shorter Oxford Dictionary on Historical Principles not only as "to have discrimination or knowledge, esp. in a specified matter", but also as “that which is reasonable, proper, right or just”.
I agree with counsel for respondent that Byrt was more interested in his own affairs and did not pay the attention a director ought to have paid to his duties as a director. He learned nothing from his first skirmish with Vassos, that is, the necessity for legal pressure to know an undertaking; he signed the prospectus in his capacity as director in a perfunctory manner; he did nothing when he saw the complete disregard Vassos had for the directors at the time designation for the tax credit was being prepared. To put it quite simply: Byrt heard warning bells quite early in his involvement with Vassos, but used very little care, diligence and skill to prevent Parthenon from failing to remit the source deductions and pay the Part VIII tax, even when the bells started to ring quite loudly. Byrt had no reason to place his complete faith in Vassos after these past experiences and I doubt a reasonably prudent person would have acted in the way Byrt did.
A director must be prudent. A director cannot ignore disturbing actions of a president of a corporation, even if the president also controls a majority of the shares of the company. The degree of prudence required by subsection 227.1(3) leaves no room for risk. In exercising the degree of care, diligence and skill to prevent a corporation's failure to remit source deductions as Part VIII tax, the director must heed what is transpiring within the corporation and his experience with the people who are responsible for the day-to-day affairs of the corporation. Once a director knows something negative about the corporation's affairs other directors do not know and he does not even attempt to inform the other directors, he is lacking a degree of care and diligence. He lacks skill, care and diligence when after querying the integrity and sincerity of a person, he does nothing to control the actions of that person. A prudent person, in such circumstances, would have become at least suspicious and the person's degree of care and diligence ought to have increased substantially if he chooses to remain a director of the corporation. A director cannot be said to have done anything which is reasonable, proper, right or just when he permits irregularities to continue.
Byrt was an experienced businessman who may have been taken by Vassos at the outset. However as events unfolded he, as director of Parthenon, ought to have been more cautious in his dealings with Vassos and Parthenon. Byrt did not exercise the degree of care, diligence and skill to prevent the failures that a reasonably prudent person would have exercised in comparable circumstances.
(a) Submissions by Counsel
Notwithstanding the allegation in his pleadings that he resigned as director of Parthenon on August 1, 1985 and his letter of October 30, 1985 informing the respondent he resigned as director on August 1, the appellant declared at trial that he resigned as director of Parthenon by letter dated January 24, 1985. Counsel for the respondent did not object to the appellant's evidence contradicting his pleadings and prior to argument consented to the appellant amending the amended notice of appeal. The question is whether the appellant may now affirm he resigned as director of Parthenon on January 24, 1985.
The significance in the dates is that subsection 227.1(4) of the Act provides that:
No action or proceedings to recover any amount payable by a director of a corporation under subsection (1) shall be commenced more than two years after he last ceased to be a director of that corporation.
The respondent has therefore submitted through counsel that the appellant is estopped, or prevented, from stating he resigned prior to August 1, 1985.
Halsbury, in Halsbury's Laws of England, 4th ed. vol. 16, no. 1501 page 1008 writes that estoppel is a rule of evidence which prevents a party to say a certain statement of fact is untrue, whether in reality it is true or not. There are several forms of estoppel; the form raised by the respondent referred to in these reasons is estoppel in pais, or estoppel by representation or conduct. The basis of the estoppel raised was a statement by the appellant to the respondent he resigned as director on August 1, 1985.
In order to found an estoppel a representation must be of an existing fact, not of mere intention, nor of a mere belief (Halsbury no. 1593). The person who has represented an existing state of things change cannot afterwards rid himself of that state of things so as to take advantage of its removal to the prejudice of another who has acted on the representation (/dem). The representation, however, must be clear and unambiguous and be understood by the person to whom it is made in the sense contended for.
In Greenwood v. Martins Bank Ltd.,  A.C. 51 (H.L.) at 57, Lord Tomlin defined the three essential elements which give rise to an estoppel:
(1.) A representation or conduct amounting to a representation intended to induce a course of conduct on the part of the person to whom the representation is made.
(2.) An act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation is made.
(3.) Detriment to such person as a consequence of the act or omission.
Halsbury adds the following proviso (Ibid, paragraph 1505):
The conduct relied upon as amounting to a representation may be negligence. This, also, can only give rise to an estoppel where there is a duty to the person complaining to use due care; and it is further necessary that the neglect should be in the transaction itself which is in dispute, calculated to lead, and in fact leading, as its real cause to the belief created.
Although a taxpayer is not permitted to estop the Crown there appears to be no reason why the Minister cannot estop a taxpayer if the requisite elements have all been satisfied. In fact, there are at least three instances in which the Minister has successfully used estoppel against a taxpayer: Syrico Corp. v. M.N.R.,  1 C.T.C. 2026; 88 D.T.C. 1001 at 2044 (D.T.C. 1012) (T.C.C.), Taras T. Hnatiuk v. The Queen,  C.T.C. 632; 76 D.T.C. 6376 (F.C.T.D.) and- Wilchar Construction v. The Queen,  C.T.C. 415; 81 D.T.C. 5318 (F.C.A.). None of these cases, however, was decided on facts similar to the present appeal. In each case the taxpayer was estopped from asserting facts which contradicted previously filed tax returns.
In the appeal at bar, if one accepts the evidence of Byrt that he actually resigned on January 24, 1985, there exists a statement of fact which was not true. The representation in issue is related to a past event. There is no ambiguity as to the nature and terms of the representation; the letter of October 30, 1985 states without qualification that the appellant resigned on August 1, 1985.
Counsel for the appellant argued that estoppel cannot lie if there was no intention by his client. A mere representation of fact is not estoppel unless there is intention. He stated that Byrt did not realize the weight of his representation and nobody at Revenue Canada informed him the date contained in the letter was being relied on in processing any assessment. According to Spencer Bower and Turner in The Law Relating to Estoppel by Representation, 3rd ed., London, Butterworths, 1977 at page 94:
There must have been an intention, actual or presumed, on the part of the representor to induce the particular representee, or a class to which he belongs, to act upon the representation, as well as the fact that the representee did act upon it.
The question of intent was addressed in Swanson v. Mollison (1907), 6 W.L.R. 678 (Alta.). In this case the plaintiffs’ answers to questions as to amounts owed to them were approximations and therefore the defendants were not entitled to rely upon them. At page 684, Stuart, J. said:
There is nothing to show that the plaintiffs knew that the defendants intended to rely upon the answers given and to alter their position in any way in consequence of them. If the defendants intended to alter their position and to rely upon the answers in doing so, it appears to me that it was their duty to inform the plaintiffs of that fact and thus to put them on their guard.
Similarly, in Pierson v. Altrincham Urban District Council (1917), 86 L.J.K.B. 969, the court dismissed the use of estoppel on the basis that no intent either actual or presumed had been proved. At page 972, Viscount Reading, C.J. said:
It may be inferred as a fact, and in many, perhaps in most, cases in which the court comes to the conclusion that a person has reasonably been induced to believe, as a reasonable man, that a certain state of facts existed, the Court would find that it was intended that he should act upon such a belief. But in a case of this kind it is, in my opinion, a significant factor that there is no such finding.
The question arises whether the appellant can be estopped unless he either intended or understood that the Minister would delay assessing in reliance on the information supplied by the appellant. The letter of October 30, 1985 was with respect to the proposed assessment on the failure of Parthenon to remit source deductions; the Part VIII assessment had not yet been proposed and it appears Byrt knew nothing about it; indeed at the time the respondent may not have been even considering such an assessment. This was not raised by counsel. The courts did not address the question of intent in Wilchar, Syrico or Hnatiuk. The mere fact that the taxpayers intended the Minister to rely upon their returns for the general purpose of assessing tax appears to have been sufficient.
In C.P.A. v. Continental Oil (1915), 8 W.W.R. 259 (Alta. C.A); revd 52 S.C.R. 605, Harvey, C.J., whose dissenting judgment was adopted by the Supreme Court of Canada on appeal, addressed the issue of whether the action taken by the representee must have been intended by the representor. He held that while the representor in that case did not intend the representee to act in a particular way, he was estopped on the basis that a reasonable man would nave expected the representation to be acted upon. He relied in part on Lord Parke’s pronouncement in Freeman v. Cooke (1848), 2 Ex. Ct. 654, at page 663:
If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would take the representations to be true, and believe that it was meant that he should act upon it, and did act upon it as true, the party making the representation will be equally precluded from contesting its truth.
In my view a representor need only intend that the representee act upon the representation in some way, and not in any particular way, to plant the seeds of estoppel. In addition, a representation need not be given wilfully as long as the representation is of such a character to induce a reasonable and prudent person to believe that it was meant to be acted on or it was made under such circumstances that he should have known that it was both natural and probable that it would be acted on.
The appellant hoped that the Minister would rely upon the representations in the letter of October 30 in assessing the appellant. At the bottom of the letter he concluded, "I request your consideration of the above facts before assessing me with any portion of Parthenon’s unpaid source deductions." Byrt's response in writing the letter was to convince the Minister he had ceased to be a director and informed the Minister of the effective date; with this information before the Minister, Byrt anticipated the Minister would not assess. Byrt obviously was not aware of subsection 227.1(4) but the element of intent was satisfied.
Whether or not the representation was acted upon to the detriment of the respondent is a question of fact. Ludwar testified the representation was acted upon by the respondent in making the Part VIII assessment when he did. The respondent was late in assessing because of the representation and this was to his determent because of subsection 227.1(4). There is no evidence the respondent suspected the representation was not true. The Minister's actions in assessing were based on the misrepresentation.
I find therefore the appellant is estopped from alleging he resigned as director on a day other than that set out in his letter of October 30, 1985.
(a) Submissions by Counsel
Counsel for the appellant submits that the combined effect of subsections 227.1(1) and 227.1(3) raises two issues which invite challenge under the Charter. These issues are firstly, since subsection 227.1(1) makes one taxpayer liable for the tax of another taxpayer and in effect lifts the corporate veil it is confiscatory and secondly, when the first issue is applied the "director who is deemed to become liable for the corporation's tax is in effect subject to a reverse onus as to whether or not an exemption applied". Counsel relies on sections 7 and 15 of the Charter and asks that subsection 227.1(1) be struck down as being unconstitutional.
Sections 7 and 15 of the Charter provide as follows:
7. Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.
15. (1) Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.
(2) Subsection (1) does not preclude any law, program or activity that has as its object the amelioration of conditions of disadvantaged individuals or groups including those that are disadvantaged because of race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.
Mr. Ottenbreit, appellant's counsel, argues that the corporate veil is pierced only when there is some kind of misconduct of shareholders or principals of a corporation: Big Bend Hotel Ltd. v. Security Mutual Consulting Co. (1980), 19 B.C.L.R. 102 (S.C.) and Oasis Hotel v. Zurich Insurance (1981), 28 B.C.L.R. 230 (C.A.). Subsection 227.1(1), he says, basically lifts the corporate veil without any reference to any fraud or misconduct on the part of the directors. The possible reference to any misconduct, if it can be called such, he stated, implicitly results from the presence of subsection 227.1(3); if a director acts without due diligence he always will be liable under subsection 227.1(1). Subsection 227.1(1), counsel submits, lifts the corporate veil in violation of section 7 of the Charter. He suggests subsection 227.1(1) would not violate section 7 if the respondent had the onus of proving the director lacked the due diligence; i.e., due diligence would be assumed.
Section 7 of the Charter provides that everyone has the right to liberty. Counsel for the appellant has referred the Court to the comments of Esson, J. in Skalbania v. Wedgewood (1989), 44 C.R.R. 341 (B.C.C.A.) on page 349, with respect to the meaning of the word “liberty” in section 7 of the Charter and, in particular, his view that the cases interpreting section 7 have generally accepted that the meaning of “liberty” goes beyond freedom from bodily restraint but have done so in a cautious way: see for example Wilson v. British Columbia Medical Service Commission,  2 W.W.R. 1.
Subsection 227.1(1), appellant's counsel submits, establishes as a fact that which is not necessarily a fact; the fact established by the subsection is that a director is liable for the tax payable by the corporation without any further proof required by the respondent. Unlike subsection 3(3) of the Bankruptcy Act, which deems certain situations to be a transaction open to judicial review, subsection 227.1(1), apart from the effect of subsection 227.1(3), is conclusive. In Skalbania, the court found the section of the Bankruptcy Act in issue was not a reverse onus since it did not require the court to find as a fact that what was not a fact. Subsection 227.1(1) does not require the Minister to do anything to establish his case as does subsection 3(3) of the Bankruptcy Act. With respect to the latter provision the person asserting the applicability to a reviewable transaction is required to address evidence showing that the reviewable transaction is contrary to the general scheme of the Bankruptcy Act. For this reason, counsel concludes, subsection 227.1(1) ought to be redrafted so that a director is liable if it is established he did not use due diligence; the onus would fall on the respondent to make such proof. The redrafted section, he suggests, would not infringe the aspect of “liberty, security of the person" nor would it offend the concepts of fundamental justice.
Mr. Ottenbreit also complains that section 227.1 infringes on equality rights under section 15 of the Charter since it makes an entire class liable for the tax of another taxpayer because the corporate veil is lifted. The submission with respect to section 7 of the Charter is valid here, too, counsel says. If subsection 227.1(1) imposes anything on a director, he says, it imposes a burden, obligation and disadvantage: Skalbania, supra, page 354:
The fact the onus is on the director does not afford him equal treatment under the law and amounts to discrimination on the basis he is part of a particular class of directors who, it can be inferred from subsection 227.1(1), did not act with due diligence and he is put in the position of proving that he in fact did.
Finally, appellant's counsel invokes section 1 of the Charter which reads as follows:
The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.
In The Queen v. Oakes (1986), 26 D.L.R. (4th) 200; 24 C.C.C. (3d) 321 the Supreme Court of Canada considered whether the guarantee of presumption of innocence in subsection 11(d) of the Charter is violated by section 8 of the Narcotic Control Act, R.S.C. 1970, c. N-1, which provides that where the accused is found in possession he must establish that he did not have the narcotic for the purpose of trafficking. Section 8 contains a reverse onus provision in which a mandatory presumption of law arises against the accused that he had the intention to traffic. Dickson, C.J.C., at page 228, asked if the reverse onus provision in section 8 is a reasonable limit on the right to be presumed innocent until proven guilty beyond a reasonable doubt as can be demonstrably justified in a free and democratic society. He replied in the negative. The Chief Justice stated Parliament must achieve its objectives with a sense of proportionality. There must be a rational connection between the basic fact of possession and the presumed fact of possession for the purpose of trafficking. Otherwise, the reverse onus clause could give rise to unjustified and erroneous convictions for drug trafficking of persons guilty only of possession of narcotics. It would be irrational to infer, the Chief Justice concluded, that a person had an intent to traffic based on the possession of a very small quantity of narcotics.
In counsel's submission the objective served by section 227.1 is to collect outstanding taxes in an expedient fashion "and avoid the necessity of the Minister having to prove anything other than the taxes are not collected from the corporation." This objective, he insists, is not sufficiently high to warrant the protection of section 1 of the Charter. He adds the means chosen to exercise the objective are not reasonable or demonstrably justified and is arbitrary since it singles out directors as opposed to officers of a corporation as being parties liable even though the officers are the individuals responsible for the day-to-day dealings of the corporation.
Counsel also argues that requiring the director to prove due diligence does not "impair" as little as possible the right of freedom in question. Also, he adds, there is not a proportionality between the objective of the provision and the consequence to the director: while it is important the tax be collected to preserve the integrity of the tax system, the director may face personal bankruptcy as a result of being jointly and severally liable for the tax liabilities of a third party, the corporation “to [sic] which he was a director after having to disprove the negative, i.e., that he did not act with due diligence".
Counsel for the respondent argues that the term "reverse onus", as applied to subsections 227.1(1) and (3) is a misnomer. The general rule in income tax cases is that the taxpayer has the onus of proving the assessment being appealed is wrong: Johnston v. M.N.R.,  C.T.C. 195; 3 D.T.C. 1182 (S.C.C.) and M.N.R. v. Pillsbury Holdings Ltd.,  C.T.C. 294; 64 D.T.C. 5184. He also states that the procedure contained in section 227.1, which imposes a tax on a person, the director, other than the original taxpayer, the corporation, is not an unusual provision in corporate law and should not give rise to concern in taxation law. Directors have many statutory duties and obligations. Counsel referred to section 112 of the Companies Act of Saskatchewan, R.S.S. 1978, c. 23, which provides that directors of companies are jointly and severally liable for Worker's Compensation Board assessments to the company and six months' wages for services performed to the company while they were directors. Section 227.1 provides for one more statutory duty of a director to exercise a certain degree of care, diligence and skill, and is not significantly different from other statutory duties, counsel adds.
Respondent's counsel also states that a director is not a member of an insular minority or group contemplated by section 15 of the Charter. The lifting of the corporate veil for tax liability is not protected by the Charter.
The Business Corporations Act of Saskatchewan provides that directors shall exercise the powers of the corporation and direct the management of the business and affairs of the corporation; the powers may be exercised by the director directly or indirectly through employees or agents of the corporation: R.S.S. 1978, c. B-10, s. 97.
A corporation, being a fictitious person, and not a natural person, can only act through the agency of natural persons and acts through its directors in all but exceptional circumstances. The officers of a corporation are under the control of its directors. It is the directors who, at the end of the day, are responsible for the management and affairs of the corporation. Section 97 of the Business Corporations Act of Saskatchewan is no different in this respect from similar legislation in other Canadian jurisdictions.
Parliament has legislated section 227.1 to make the directors liable for the failure of a person, a corporation, whose business and affairs they direct to remit source deductions and Part VIII tax, amongst other things. In so legislating Parliament has lifted the corporate veil. I believe it is not unreasonable to infer the reason Parliament has so legislated because it concluded the corporation's failure was due to the failure of the directors to properly manage the affairs of the company. The very fact the corporation has failed to observe a statutory obligation assumes the people through whom the corporation acts have not been diligent in performing their duties. A director may be freed of the liability imposed by subsection 227.1(1) if he can prove he exercised the degree of care, diligence and skill to prevent the failure that a reasonably prudent person would have exercised in comparable circumstances.
Counsel for the appellant has taken umbrage at the lifting of the corporate veil in section 227.1. The veil is lifted not only in cases of fraud, as pointed out by counsel, but is quite frequent in income tax matters. In Canada the rate of tax payable by a corporation depends on the residence of its shareholders; the veil is raised to determine if a corporation is Canadian controlled, for example. Also, the veil is lifted to determine what corporations are associated with each other. The lifting of the corporate veil in section 227.1 is only one more example of a common practice and makes the directors liable for their actions or omissions as directors of a corporation. They become liable for the taxes of another person because they managed the other person and could have caused that person to honour its liability under the Act. There is nothing confiscatory in subsection 227.1(1).
Section 7 guarantees the right not to be deprived of life, liberty and security of the person except in accordance with the principles of fundamental justice. The appellant claims that section 227.1 deprives him of his right to liberty. He relies for authority on Wilson v. B.C. Medical Service Commission and Skalbania v. Wedgewood, supra. In Wilson, the British Columbia Court of Appeal found the restriction in the right to participate in a provincial medical services pian was not the denial of a purely economic right, but in reality the denial of a right to practise one's chosen profession within the province. In Skalbania, the court remarked that liberty may go beyond freedom from bodily restraint, but the courts have been cautious in extending the doctrine. I have difficulty in appreciating the relevance either directly, or by analogy, of the Wilson case to the appeal at bar. The liberty of the appellant to seek directorships or to participate as a director is certainly not undermined by section 227.1. A person is free to become a director or reject the office; his liberty is not in issue. However, once he becomes a director he has certain statutory duties.
The appellant also contends that section 227.1 contravenes section 15 of the Charter on the basis that it treats the appellant as a director differently from other taxpayers. It is true, I suppose, that as a director, section 227.1 imposes additional duties on him that non-directors obviously do not have, but it is difficult to see how this amounts to discrimination under section 15. In Andrews v. Law Society of British Columbia (1989), 56 D.L.R. (4th) 1; 2 W.W.R. 289, Mcintyre, J. wrote (at D.L.R. 13) that:
It is not every distinction or differentiation in treatment at law which transgressed the equality guarantee of s. 15 of the Charter. It is, of course, obvious that legislatures may—and to govern effectively—must treat different individuals and different groups in different ways. Indeed, such distinctions are one of the main preoccupations of legislatures. The classifying of individuals and groups, the making of different provisions respecting such groups, the application of different rules, regulations, requirements and qualifications to apply to different persons is necessary for the governance of modern society.
La Forest, J. was convinced in Andrews, supra, at pages 329-30 (D.L.R. 38):
... that it was never intended in enacting s. 15 that it become a tool for the wholesale subjection to judicial scrutiny of variegated legislative choices in no way infringing on values fundamental to a free and democratic society. Like my colleague, I am not prepared to accept that all legislative classifications must be rationally supportable before the courts. Much economic and social policy- making is simply beyond the institutional competence of the courts: their role is to protect against incursions on fundamental values, not to second-guess policy decisions . . . it bears repeating that considerations of institutional functions and resources should make courts extremely wary about questioning legislative and governmental choices in such areas.
Wilson, J., at page 325 (D.L.R. 34), feared that:
If every distinction between individuals and groups gave rise to a violation of s. 15, then this standard might well be too stringent for application in all cases and might deny the community at large the benefits associated with sound and desirable social and economic legislation.
The discrimination complained of must be based on grounds enumerated in section 15 or on an analogous ground. This has had the effect of limiting the scope of judicial review to those distinctions based on personal characteristics. Second, to be unconstitutional, a law must not only treat people unequally, but do so in a discriminatory manner. Since section 227.1 does not discriminate on the basis of personal characteristics, the appellant is not entitled to any relief under section 15.
The appellant also claims that section 227.1 in combination with subsection 227.1(3) creates a reverse onus situation. His contention is that subsection 227.1(3) requires the Court to find as fact that which is not a fact. The reverse onus argument becomes important, in my view, only if he can show that section 227.1 infringes the right to liberty under section 7. It would be relevant only insofar as the deprivation of the right was not accomplished in accordance with the principles of fundamental justice.
Section 227.1 imposes liability on the persons who were directors of the corporation at the time of the failure to remit. To ensure persons who acted with a certain standard of care, duty and diligence are not to be burdened with a liability that they could not reasonably have been aware of, subsection 227.1(3) gives a director the opportunity to avoid liability by showing that he exercised that care, diligence or skill. The net effect of this provision is to hold a director liable for unpaid remittances if he did not take some steps to ensure the remittances were made. While this is technically a reverse onus, I think it is important to note that the burden of proof on the appellant does not necessarily render it unconstitutional. The appellant must snow that the effect of this provision violates a specific guarantee in the Charter.
The appellant's argument on the reverse onus issue is supported, in his submission, by the decision of the Supreme Court of Canada in The Queen v. Oakes, supra. The constitutionality of this provision was not measured against sections 7 or 15 of the Charter but against subsection 11(d).
Subsection 11(d) of the Charter provides that everyone has a right to be presumed innocent until proven guilty according to law. It is a right that is unique to the criminal justice system. The Supreme Court found that at a minimum, the right to be presumed innocent requires that the accused must be proven guilty beyond a reasonable doubt and that it is the state that must bear the burden of proof.
The appellant seems to conclude from Oakes that all reverse onus provisions are unconstitutional. This is certainly not the holding in Oakes. Counsel's argument addressed itself to the reverse onus contained in subsection 227.1(3). In the absence of subsection 227.1(3) there would be no reverse onus and a director would be liable under subsection 227.1(1) without being able to free himself of the liability, even if he was duly diligent.
Even if section 227.1 offends either section 7 or section 15 of the Charter, the provision may be reasonably and demonstrably justified under section 1. First, in accordance with the Oakes test, the provision itself is internally rational. There is a rational connection between the fact of being a director and the failure of the corporation to withhold and pay taxes. The directors have a responsibility to ensure that the corporation fulfils its statutory obligations and it is rational to conclude any failure to fulfil the obligations is due to the act or omission of the directors. The onus which is placed on the taxpayer to prove that he acted with due diligence is not unreasonable. Any information regarding his own actions would be within the sole knowledge of the appellant.
For these reasons the appeals are dismissed.