Couture,
C.J.T.C.:—These
appeals
were
heard
on
common
evidence
and
are
from
assessments
issued
by
the
respondent
in
accordance
with
the
provisions
of
subsection
227.1(1)
of
the
Income
Tax
Act
("the
Act").
Only
Jean-Pierre
Champeval
testified
at
the
hearing,
and
his
testimony
disclosed
the
following
facts:
He
and
his
wife
were
the
shareholders
in
a
company
incorporated
under
the
laws
of
Quebec
with
the
name
of
“Tradition
5
Inc.”
("the
company").
The
two
appellants
were
also
directors
and
managers
of
the
company.
From
what
I
could
understand
from
the
testimony,
it
was
in
the
business
of
making
shoes.
It
had
been
in
operation
since
around
1973.
The
events
which
largely
contributed
to
the
issuing
of
the
assessments
began
in
1983,
on
June
3,
when
the
company's
plant
was
completely
destroyed
by
fire.
Between
June
and
December
1983
the
appellants
and
their
employees
worked
without
pay,
at
first
in
the
appellant's
house
and
later
in
leased
premises
where
they
made
samples
to
be
used
for
sales.
Three
days
after
the
company
received
its
leather
inventory,
in
approximately
August
1983,
it
was
the
victim
of
a
break-in
and
this
inventory
was
stolen.
Despite
all
these
disastrous
events
production
resumed
at
the
factory
in
December
1983,
though
with
increased
financial
problems.
On
December
10,
1980
the
company
made
a
general
assignment
of
its
accounts
receivable
to
the
Canadian
Imperial
Bank
of
Commerce.
Additionally,
the
appellants
also
personally
stood
surety
for
the
company
to
the
bank.
The
appellant
explained
that
the
problems
with
source
deductions
from
employee
wages
had
started
before
the
fire,
when
the
bank
refused
to
grant
the
company
a
credit
line
for
one
of
its
accounts,
so
that
in
late
December
1982
it
was
approximately
$25,000
in
arrears
in
its
payment
of
source
deductions.
During
the
period
January
to
June
3,
1983,
the
company
was
in
full
operation
and
source
deductions
were
made
and
remitted
to
the
respondent.
It
was
also
able
to
make
some
payments
on
the
arrears
of
its
$25,000
debt.
After
the
fire
part
of
the
proceeds
of
the
insurance
was
attached
by
the
respondent
by
a
garnishment
of
the
insurance
company,
and
this
helped
to
wipe
out
the
company's
entire
debt
to
the
respondent.
The
source
deductions
for
January
1984
were
made
and
remitted
to
the
respondent.
In
February,
although
one
cheque
for
these
payments
was
received
by
the
respondent,
it
was
returned
by
the
bank
for
insufficient
funds.
In
May
1984,
an
audit
of
the
company's
books
was
made
by
an
employee
of
the
respondent,
and
at
his
request
the
appellant
issued
four
company
cheques
for
$2,220
each,
dated
May
30,
June
10,
June
17
and
June
25,
to
pay
off
deduction
arrears
for
February
and
for
subsequent
months
which
had
not
been
paid.
Three
of
these
cheques
were
again
returned
by
the
bank
for
insufficient
funds.
In
a
subsequent
audit
in
August
1984
the
appellant
gave
the
respondent's
representative
24
$500
cheques
to
pay
source
deductions
arrears.
These
cheques
were
dated
at
the
rate
of
one
per
week.
The
reasoning
behind
the
issuing
of
these
cheques
was
that
it
would
be
easier
to
persuade
the
bank
to
accept
a
$500
cheque
than
a
significantly
larger
amount.
It
was
admitted
that
only
three
of
these
cheques
were
honoured
by
the
bank.
For
subsequent
months,
namely
May,
June
and
July,
source
deductions
payments
were
not
made
by
the
company
on
the
ground
that,
according
to
the
witness,
the
credit
line
granted
by
the
bank
had
been
exceeded
and
experience
showed
that
the
cheques
would
not
be
honoured
by
the
bank
in
any
case.
The
witness
mentioned
that
he
contacted
his
bank
manager
daily
to
try
and
persuade
him
to
honour
the
company's
cheques,
and
that
he
never
advised
him
to
honour
suppliers'
cheques
rather
than
those
to
the
respondent,
or
suggested
that
he
do
so.
The
evidence
further
showed
that
the
company
owed
some
$102,000
to
the
bank
in
March
1984,
and
that
this
amount
was
reduced
to
$16,670
in
late
November,
the
witness’
explanation
being
that
during
this
period
the
bank
refused
to
honour
most
of
the
company's
cheques.
The
second
witness
heard
was
the
manager
of
the
Canadian
Imperial
Bank
of
Commerce
branch
at
Cowansville.
He
explained
that
he
had
been
in
charge
since
August
1983,
that
is
shortly
after
the
fire
when
the
factory
was
closed
down.
He
confirmed
the
appellant's
testimony
in
general.
In
August
1983,
the
company
had
no
accounts
receivable
but
had
received
a
loan
of
$60,000
guaranteed
by
the
Government
of
Quebec
so
that
it
could
start
its
business
again.
Since
December
1980,
the
bank
already
had
a
general
assignment
of
debts
("the
assignment”),
a
copy
of
which
was
filed
by
the
witness.
He
explained
that
the
bank
had
an
account
for
the
company
known
as
"operations",
and
all
amounts
received
by
the
company
from
its
sales
were
deposited
in
that
account
under
the
provisions
of
the
assignment.
These
deposits
were
applied
the
same
day
to
reduction
of
the
company's
debt
to
the
bank,
a
debt
established
by
the
credit
line
extended
to
it
by
the
bank.
The
amount
of
the
debt
accordingly
varied
daily,
depending
on
deposits.
The
bank
also
had
a
"disbursements"
account
for
the
company,
to
which
cheques
that
it
issued
were
debited.
There
was
also
a
“wages”
account,
to
which
cheques
for
employees'
wages
were
debited.
The
money
was
transferred
from
the
"operations"
account
to
the
"disbursements"
and
"wages"
accounts,
and
so
long
as
the
company
did
not
exceed
the
credit
line
issued
by
the
bank
cheques
drawn
by
it
were
honoured
by
the
bank,
whether
to
pay
suppliers
or
employees
or
any
other
charge,
including
the
Receiver
General
of
Canada.
If
the
"operations"
account
was
in
deficit,
the
bank
made
it
up
from
the
credit
line.
If
the
credit
line
had
been
exceeded,
the
bank
could
finance
the
difference
at
its
discretion
and,
to
use
the
witness'
words,
“it
was
up
to
me”.
At
the
outset,
that
is
in
August
1983,
with
the
government
loan
while
the
company
had
a
credit
line
of
$100,000,
the
business
had
no
financial
problems
with
the
bank.
This
credit
line
was
based
on
75
per
cent
of
the
value
of
accounts
receivable
under
90
days
and
50
per
cent
of
the
value
of
inventory.
Counsel
for
the
appellant
sought
to
make
the
witness
admit
that
when
the
facilities
of
the
credit
line
had
been
almost
exhausted
the
latter
made
a
choice
as
to
what
cheques
would
be
honoured
by
the
bank.
Though
his
replies
were
somewhat
evasive
on
this
point,
trying
to
indicate
that
the
appellant
was
consulted
on
the
cheques
which
had
to
be
sent
back,
he
nonetheless
did
not
say
that
the
appellant
had
the
final
decision.
Additionally,
in
answer
to
certain
questions
from
counsel
for
the
appellant
the
witness
said
“I
paid
the
cheques
which
were
important,
those
which
were
important
for
the
business,
the
suppliers"
(page
126
of
the
transcript).
To
another
question,
namely
between
a
cheque
made
out
to
the
government
and
a
cheque
for
wages
made
out
to
employees,
he
admitted
without
hesitation
"I
had
to
choose
the
wages"
(at
page
130).
He
added
“It
may
be
more
important
to
keep
a
supplier
paid
up,
and
of
course
wages
and
hydro,
and
cheques
which
are
quite
.
.
.
rental”.
The
witness
stated
that
some
years
ago
the
bank
changed
its
policy
and
it
now
must
ensure
that
deductions
from
the
wages
of
the
employees
of
a
business
are
paid:
currently
cheques
made
out
to
the
Receiver
General
in
the
company's
situation
in
1984
would
have
been
honoured
by
the
bank.
The
witness
confirmed
that
the
appellant
co-operated
completely
with
the
bank
and
was
in
daily
contact
with
him
in
an
effort
to
get
the
business
going
again.
The
company's
account
was
finally
referred
to
the
bank's
head
office
in
1984.
Finally,
on
September
24,
1984
the
bank
sent
the
appellants
a
letter
by
registered
mail
officially
asking
for
payment
of
the
company's
account,
which
was
$124,251
at
that
date,
plus
$1,865.70
interest.
This
amount
was
also
claimed
from
the
appellants
as
the
company's
sureties.
On
October
30,
1984
the
company
made
a
giving
in
payment
[dation
en
paiement]
of
its
property
in
favour
of
the
bank.
A
copy
of
the
document
to
this
effect
was
filed
at
the
hearing.
A
third
witness
was
called
by
counsel
for
the
respondent.
This
was
Mr.
Gilles
Desruisseaux,
a
collection
agent
with
the
respondent
who
was
responsible
for
the
file
on
the
appellants
and
the
company.
He
confirmed
what
the
appellant
said
regarding
the
company's
problems
with
the
respondent
as
to
source
deductions—the
fact
that
the
arrears
of
$25,000
were
finally
paid
in
late
September
1983
and
the
difficulties
which
occurred
in
1984.
He
referred
to
the
audit
done
in
May
and
the
agreement
negotiated
with
the
appellant
for
and
on
behalf
of
the
company
regarding
the
four
cheques
for
$2,220
for
arrears
for
February,
March
and
April.
He
also
referred
to
the
agreement
of
August
20,
1984
by
which
the
appellant
issued
24
cheques
to
the
respondent's
representatives
for
$500
each,
three
of
which
were
honoured
by
the
bank.
He
mentioned
that
on
November
8,
1984
a
new
audit
by
the
respondent's
representatives
established
the
company's
arrears
for
source
deductions
for
employee
income
tax
and
unemployment
insurance,
as
well
as
interest
and
penalties
on
these
deductions,
at
$9,250
for
the
period
from
May
to
September.
A
final
audit
done
on
May
27,
1985
set
arrears
at
$25,981.77,
again
including
income
tax,
unemployment
insurance,
penalties
and
interest.
Under
cross-examination
by
counsel
for
the
appellant,
he
admitted
that
in
the
audit
of
November
8,
1984
the
respondent's
representatives
found
that
the
company
had
ceased
its
operations,
namely
since
September
when
it
made
a
giving
in
payment
of
its
property.
The
following
are
some
of
his
answers
to
counsel's
questions:
(TRANSLATION)
Q.
But
you
admit
that
Mr.
Champeval
nevertheless
contacted
you
to
give
you
.
.
.
he
was
prepared
to
give
you
assets,
information
on
assets
held
by
the
company
from
which
the
government
could
obtain
payment.
A.
But
.
.
.
just
now
you
also
asked
me
why
we
waited
for
awhile
to
deal
with
it.
We
issued
writs
nevertheless
and
sent
a
bailiff
there
to
see
whether
the
property
was
still
there.
So,
I
agree
with
you
.
.
.
Q.
In
19862
A.
There
was
a
delay,
but
the
fact
remains
that
this
is
our
procedure.
We
cannot
go
there
at
a
moment's
notice
and
say
we
are
seizing
property.
We
still
have
to
follow
procedure.
Q.
I
entirely
agree,
except
that
you
admit
that
you
did
have
Mr.
Champeval's
cooperation
at
that
time.
A.
Yes,
but
.
.
.
what
a
person
thinks
and
what
is
feasible
are
sometimes
two
different
things.
Q.
No,
no,
I
understand
the
Department
may
have
had
difficulties
dealing
with
what
he
was
willing
to
give
you,
but
what
I
want
to
stress
is
that
he
did
offer
to
cooperate
with
you
at
that
time.
A.
Yes.
What
emerges
from
this
exchange
between
the
respondent's
witness
and
counsel
for
the
appellant
is
that
the
respondent's
representatives
knew
in
November
1984
that
the
company
had
ceased
its
operations
and
it
was
not
until
May
14,
1986
that
the
assessments
were
issued
against
the
appellants,
and
not
until
March
30,
1987
that
the
Minister's
notice
of
ratification
was
also
issued,
though
the
notice
of
objection
to
the
assessments
was
dated
August
13,
1986.
It
should
be
noted
that
the
witness
for
the
respondent
admitted
that
the
appellant
co-operated
with
its
representatives
at
all
times
throughout
this
difficult
period
for
the
company.
This
appeal
is
based
on
application
of
section
227.1
of
the
Act,
which
provides:
227.
(1)
Where
a
corporation
has
failed
to
deduct
or
withhold
an
amount
as
required
by
subsection
135(3)
or
section
153
or
215,
has
failed
to
remit
such
an
amount
or
has
failed
to
pay
an
amount
of
tax
for
a
taxation
year
as
required
under
Part
VII
or
VIII,
the
directors
of
the
corporation
at
the
time
the
corporation
was
required
to
deduct,
withhold,
remit
or
pay
the
amount
are
jointly
and
severally
liable,
together
with
the
corporation,
to
pay
that
amount
and
any
interest
or
penalties
relating
thereto.
(2)
A
director
is
not
liable
under
subsection
(1),
unless
(a)
a
certificate
for
the
amount
of
the
corporation's
liability
referred
to
in
that
subsection
has
been
registered
in
the
Federal
Court
of
Canada
under
subsection
223(2)
and
execution
for
such
amount
has
been
returned
unsatisfied
in
whole
or
in
part;
(b)
the
corporation
has
commenced
liquidation
or
dissolution
proceedings
or
has
been
dissolved
and
a
claim
for
the
amount
of
the
corporation's
liability
referred
to
in
that
subsection
has
been
proved
within
six
months
after
the
earlier
of
the
date
of
commencement
of
the
proceedings
and
the
date
of
dissolution;
or
(c)
the
corporation
has
made
an
assignment
or
a
receiving
order
has
been
made
against
it
under
the
Bankruptcy
Act
and
a
claim
for
the
amount
of
the
corporation's
liability
referred
to
in
that
subsection
has
been
proved
within
six
months
after
the
date
of
the
assignment
or
receiving
order.
(3)
A
director
is
not
liable
for
a
failure
under
subsection
(1)
where
he
exercised
the
degree
of
care,
diligence
and
skill
to
prevent
the
failure
that
a
reasonably
prudent
person
would
have
exercised
in
comparable
circumstances.
A
director's
responsibility
for
a
company
under
subsection
227.1(1)
is
not
absolute.
It
is
contingent,
that
is,
a
director
is
relieved
of
it
when
he
has
acted
with
the
degree
of
care,
diligence
and
skill
that
a
reasonable
person
would
have
exercised
in
comparable
circumstances.
If
one
is
to
be
able
to
determine
whether
a
director
exercised
the
degree
of
care,
diligence
or
skill
required
under
subsection
227.1(3),
that
director
must
have
had
a
free
choice
before
him.
If
he
did
not
have
a
free
choice
in
his
decisions
because
of
factors
completely
beyond
his
control,
he
cannot
be
bound
by
the
provisions
of
subsection
227.1(1),
because
the
provisions
of
subsection
(3)
relieve
him
of
all
personal
liability,
since
in
the
circumstances
a
reasonable
person
would
not
have
acted
otherwise.
In
a
recent
judgment,
Lucette
Robitaille
v.
Canada,
[1990]
1
C.T.C.
121;
90
D.T.C.
6059,
Addy
J.
of
the
Federal
Court
of
Canada
said
the
following
at
pages
125-26
(D.T.C.
6062-63)
regarding
a
director's
responsibility
under
subsection
227.1(1)
in
a
situation
in
which
a
bank
took
over
the
management
of
a
company:
Furthermore,
where
the
effective
control
of
the
corporation
has
been
taken
over
by
a
bank
such
as
in
the
case
under
appeal,
without
the
bank
being
requested
or
invited
to
do
so
by
the
directors,
and
where
the
decisions
as
to
what
cheques
will
or
will
not
be
issued
without
consultation
with
the
Board
of
Directors
are
exclusively
those
of
the
bank,
then
from
that
time
actions
of
the
corporation
regarding
the
payment
or
withholding
of
moneys
are
essentially
those
of
the
bank
and
I
would
be
prepared
to
hold
that,
even
without
considering
section
227.1(3),
there
would
be
no
liability
on
the
directors
under
section
227.1(1)
because
the
latter
obviously
contemplates
that
the
corporation
is
freely
acting
through
its
Board
of
Directors.
The
exercise
of
freedom
of
choice
on
the
part
of
the
director
is
essential
in
order
to
establish
personal
liability.
In
the
situation
at
issue
in
this
appeal,
it
must
be
recalled
that
in
1980
the
company
had
made
a
general
assignment
of
its
accounts
receivable
pursuant
to
subsection
173(1)
of
the
Bank
Act.
The
purpose
of
this
measure
at
that
time
was
not
to
relieve
it
of
its
obligations
to
its
creditors,
but
to
enter
into
a
commitment
which
was
of
common
practice
that
would
enable
it
to
finance
and
carry
on
with
its
operations
using
loans
from
the
bank.
This
commitment
to
the
bank
is
contained
in
a
document
which
provides:
(TRANSLATION)
GENERAL
ASSIGNMENT
FOR
VALUABLE
CONSIDERATION
receipt
of
which
is
acknowledged,
the
undersigned
Tradition
5
Inc.
hereby
sells,
assigns
and
transfers
to
the
CANADIAN
IMPERIAL
BANK
OF
COMMERCE
(hereinafter
referred
to
as
"the
Bank”)
all
accounts,
debts,
claims
and
monies
that
are
currently
or
at
any
time
hereafter
may
become
due
to
the
undersigned,
or
can
be
claimed
by
the
undersigned
or
the
property
of
the
undersigned,
and
all
securities,
bills
of
exchange,
promissory
notes
and
other
documents
which
are
currently
or
may
at
any
time
hereafter
be
taken,
held
or
acquired
by
the
undersigned
with
respect
to
the
said
accounts,
debts,
claims
and
monies
or
any
part
thereof,
and
any
related
books
and
documents,
providing
evidence
of
or
concerning
the
said
accounts,
debts,
claims
and
monies
or
any
part
thereof
(hereinafter
referred
to
as
the
“interests
transferred”),
and
it
is
hereby
agreed
that:
1.
the
Bank
may
collect,
realize
on
or
otherwise
use
the
interests
transferred
in
such
way
at
at
such
time
as
it
sees
fit
and
any
amounts
received
by
the
undersigned
shall
be
held
in
trust
for
the
Bank;
as
soon
as
the
Bank
has
received
the
interests
transferred
in
partial
payment,
the
Bank
undertakes
to
allocate
an
amount
equal
to
the
sum
received
against
such
part
of
the
debts
and
obligations
of
the
undersigned
as
it
sees
fit,
without
prejudice
to
its
claims
against
the
undersigned
for
any
failure
to
do
so;
the
Bank
may
grant
delays,
take
and
give
securities,
agree
to
compromises,
grant
remissions
and
releases
and
act
in
any
other
manner
with
the
debtors
of
the
interests
transferred
and
with
third
parties
and
with
the
interests
transferred,
as
the
Bank
sees
fit,
without
reducing
the
debts
and
obligations
of
the
undersigned
to
the
Bank;
2.
the
Bank
shall
not
be
liable
nor
required
to
account
for
any
failure
to
collect,
realize
on
or
obtain
payment
for
the
interests
transferred
or
any
part
thereof,
nor
for
instituting
court
proceedings
to
do
so
in
order
to
preserve
the
Bank's
rights
or
the
rights
of
the
undersigned
or
any
other
person
to
the
interests
transferred;
the
Bank
may
request
on
its
own
behalf
and
also
pay
other
persons
reasonable
amounts
for
services
rendered
and
expenses
incurred
in
collecting,
realizing
on
or
requiring
payment
for
the
interests
transferred
or
any
part
thereof,
and
the
Bank
may
add
these
amounts
to
the
debt
of
the
undersigned;
3.
the
undersigned
shall
from
time
to
time
as
required
by
the
Bank
provide
to
the
Bank
in
writing
any
information
requested
regarding
the
interests
transferred,
and
the
Bank
shall
from
time
to
time
be
entitled
to
examine
any
accounts,
securities,
bills
of
exchange,
promissory
notes,
books,
correspondence,
papers
and
documents
relating
to
the
interests
transferred
and
make
copies
thereof,
and
for
this
purpose
the
Bank
shall
have
access
to
any
premises
occupied
by
the
undersigned;
at
the
request
of
the
Bank
all
the
said
contracts,
securities,
bills
of
exchange,
promissory
notes,
books,
correspondence
and
documents
shall
be
delivered
to
the
Bank
forthwith.
SIGNED
at
Cowansville,
province
of
Quebec,
December
18,
1980.
Before:
(SEAL)
CANADIAN
IMPERIAL
BANK
OF
COMMERCE
by
'Signature
illegible
In
view
of
such
an
agreement,
it
is
clear
that
the
company
gave
the
bank
effective
control
over
all
moneys
it
might
receive
in
future,
and
that
its
function
with
respect
to
these
funds
was
that
of
a
trustee
acting
for
and
on
behalf
of
the
bank.
In
law
the
bank
was
owner
of
this
money.
In
return,
the
bank
undertook
to
grant
the
company
a
credit
line
in
accordance
with
quite
specific
requirements,
as
explained
by
the
bank's
representative
in
his
testimony.
The
events
which
followed
can
easily
be
explained.
As
long
as
the
loans
made
by
the
bank
to
the
company
remain
within
the
limits
of
the
credit
line
determined
by
its
accounts
receivable
and
inventory,
the
appellant
as
manager
of
the
company
performed
the
fiduciary
duties
undertaken
by
the
company
for
the
bank
in
December
1980.
As
such,
and
clearly
with
the
bank's
tacit
authority,
he
could
dispose
of
money
received
by
the
company
which
was
legally
owed
to
the
bank
in
order
to
finance
its
operations.
Unfortunately,
as
a
result
of
the
disastrous
events
in
1983
the
company’s
operations
deteriorated
badly
and
finally
came
to
an
end
in
September.
From
February
1984
onward
the
bank
exercised
its
rights
under
the
assignment
of
December
1980
and
honoured
the
company's
cheques
which,
as
the
bank’s
manager
admitted,
were
likely
to
benefit
its
operations.
In
these
circumstances
it
was
ridiculous
for
him
to
suggest
in
his
testimony,
as
he
tried
to
do,
that
the
appellant
took
an
active
part
in
the
final
decision
as
to
which
cheques
would
be
honoured
by
the
bank.
The
provisions
of
the
assignment
gave
the
bank
absolute
control
over
all
money
received
by
the
company,
and
its
purpose
was
first
to
protect
its
interests
from
the
securities
held
by
it,
an
approach
which
it
was
quite
legitimate
for
it
to
take.
For
this
reason
the
bills
which
it
felt
were
essential
if
the
company
was
to
continue
operations
were
paid
and
the
others
were
delayed.
It
should
also
be
noted
that
the
appellant
twice
attempted
to
settle
the
company’s
problems
with
the
Department,
in
May
1984
when
he
deposited
four
cheques
of
$2,200
each,
only
one
of
which
was
honoured
by
the
bank,
and
in
August
of
that
year
when
he
submitted
24
cheques
of
$500
each,
three
of
which
were
honoured
by
the
bank.
Additionally,
as
admitted
by
Mr.
Gilles
Desruisseaux,
a
witness
for
the
respondent,
the
appellant
co-operated
fully
with
its
representatives.
All
these
factors
regarding
the
appellant's
behaviour
with
respect
to
the
Department
and
the
efforts
made
by
him
to
try
and
deal
with
the
problems
of
deductions
from
the
wages
of
company
employees
clearly
indicate,
first,
that
he
was
aware
of
the
situation,
and
that
he
at
least
tried
to
correct
it
so
far
as
possible
in
the
circumstances.
Unfortunately,
he
was
not
free
to
make
the
final
decision.
In
Lucette
Robitaille,
supra,
Addy,
J.
explained
the
application
of
this
subsection
very
clearly
when
he
said:
.
.
.
there
would
be
no
liability
on
the
directors
under
section
227.1(1)
because
the
latter
obviously
contemplates
that
the
corporation
is
freely
acting
through
its
Board
of
Directors.
The
exercise
of
freedom
of
choice
on
the
part
of
the
director
is
essential
in
order
to
establish
personal
liability.
In
Perri
v.
M.N.R.,
[1990]
1
C.T.C.
2071;
89
D.T.C.
723,
in
which
the
facts
were
quite
similar
to
those
at
bar,
the
Associate
Chief
Judge
of
this
Court
recognized
in
that
situation
that
the
authority
or
powers
of
the
appellants
as
directors
of
the
company
had
been
given
to
a
receiver
or
judicial
administrator
appointed
to
administer
its
operations.
In
the
appellant's
situation,
the
company
gave
up
freedom
of
choice
in
the
administration
of
its
operations
to
the
bank
in
1980
for
purely
business
reasons,
which
did
not
have
and
should
not
have
any
consequences
for
its
obligations
under
the
Act.
When
the
bank
exercised
its
rights
under
the
assignment,
it
had
the
full
and
complete
freedom
of
choice
referred
to
by
these
recent
cases,
which
is
essential
for
subsection
227.1(1)
to
apply.
For
these
reasons
the
appeals
are
allowed
with
costs;
however,
the
fees
of
one
counsel
only
are
awarded
for
the
hearing
of
the
appeals.
Appeals
allowed.
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