Shindle v. The Queen, 95 DTC 5502, [1995] 2 CTC 227 (FCTD)

Heald D.J.:—Pursuant to section 172 of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the ’’Act”), the plaintiff appeals a notice of reassessment dated October 31, 1990, in the amount of $302,223.94? [1] The reassessment relates to unpaid deductions, interest and penalties said to be payable by Silverwood Enterprises Ltd. (the company) and was levied against the plaintiff in her capacity as a director of the company, pursuant to subsection 227.1(1) of the Income Tax Act.

The statutory scheme

The following provisions of the Income Tax Act are relevant to the issues in this action:

153(1) Withholding.-Every person paying at any time in a taxation year

(a) salary or wages or other remuneration,

shall deduct or withhold therefrom such amount as is determined in accordance with prescribed rules and shall, at such time as is prescribed, remit that amount to the Receiver General on account of the payee’s tax for the year under this Part or Part XI.3, as the case may be, and, where at that prescribed time the person is a prescribed person, the remittance shall be made to the account of the Receiver General at a financial institution (within the meaning that would be assigned by the definition "financial institution" in subsection 190(1) if that definition were read without reference to paragraphs (d) and (e) thereof).

227.1(1) Liability of directors for failure to deduct .-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) Limitations on liability.-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 under section 223 and execution for that 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 and Insolvency 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 the director exercised the degree of care, diligence and skill to prevent the failure that a reasonably prudent person would have exercised in comparable circumstances.

The The facts

The plaintiff and her husband, Ervin Shindle, were born and raised at Springside, Saskatchewan, a small village near the city of Yorkton, Saskatchewan. They have permanently resided in Yorkton since 1946. The plaintiff took her high school training at Springside, graduating from grade

12. She does not have any other formal education.

In 1972, Mr. and Mrs. Shindle became real estate developers and brokers at Yorkton. Ervin concentrated on the construction of residential and commercial properties, while Beatrice involved herself in the operation of Century 21 Broadway Park Realty. In 1978, Ervin ceased his involvement in the development of residential and commercial properties. Since 1978, his major efforts have been directed to their farming operation, while Beatrice continued operating the real estate business in Yorkton.

Evan Shindle, the son of Beatrice and Ervin, is 41 years old. He completed grade 12 in Yorkton and attended university for three years in Saskatoon. In the late 70s, Evan owned and operated a clothing store in Yorkton. The clothing business was sold in 1981 or 1982. Thereafter, he became involved in residential construction in Yorkton. This business was owned and operated solely by Evan Shindie. On June 20, 1983, he registered the trade name of Silverwood Enterprises under the provisions of the Partnership Act of Saskatchewan. The business was said to have been commenced on May 1, 1983. On November 20, 1984, this business was incorporated by Evan Shindie under the name of Silverwood Enterprises Ltd. (the company), pursuant to the provisions of the Business Corporations Act of Saskatchewan. The company did not hold the required initial meeting of directors and shareholders coincident with the incorporation or at any time thereafter. Evan Shindie held 18 shares, his mother Beatrice Shindie held one share and his father Ervin Shindie held one share. Evan was president of the company, and a director. Both of his parents were directors as well. When asked why his parents were directors, he testified that their lawyer was of the view that ’’...there had to be three people on for a corporation’’. [2] He also testified that his parents did not invest any money in the company, nor did they receive any income from the company at any time.

Mr. and Mrs. Shindle spent several months in Florida in the winter of 1986-87. Mr. Shindle became seriously ill in January 1987. He received medical treatment in Florida until about March 1, 1987. Thereafter, the Shindies journeyed to Rochester, Minnesota, where Mr. Shindie was treated for his illness. While the Shindies were still in Florida, they received a phone call from Evan in Yorkton. This phone call likely took place in January 1987. He advised them that the economy in Yorkton was bad, that he couldn’t meet his obligations with his bank, that he was going to Toronto to start a new company in partnership with Donald Spilchen, a friend from Yorkton, and that they were going to do concrete work (the construction of foundations for residential and commercial properties). At about the same time (January 1987), Evan contacted Richard Yaholnitsky, a lawyer practising in Yorkton. He told Mr. Yaholnitsky "...that he was in Ontario starting business there...and he wanted me to get the Ontario forms for him so that he can incorporate or register Silverwood Enterprises Ltd. in Ontario’’. [3] Mr. Yaholnitsky was also asked, when giving evidence in the proceedings before the Tax Court of Canada (which evidence was made a part of the record in this action with the consent of counsel for both parties), whether he ever had any discussions with either Ervin or Beatrice Shindie concerning the extraprovincial registration of Silverwood Enterprises. His response was in the negative, to which was added the following comment: "Evan told me that it was his company, that he’d look after the minutes and everything. He had apparently been doing that for several years."

The company was registered to carry on business in Ontario on February 23, 1987. Neither a shareholders’ nor a directors’ meeting was held to ratify the registration of the Saskatchewan company to carry on business in Ontario, nor did Evan ever advise either of his parents of the extraprovincial registration of the company in Ontario. His evidence was to the effect that he and Don Spilchen "...were setting up a company to do work in Ontario". He also testified that he had asked Mr. Yaholnitsky "to set up a company for me to do business in Ontario". From his evidence it is apparent that there was no intention on his part to involve his parents in the new business which he and Don Spilchen were establishing in Ontario. It is equally apparent that he did not properly appreciate or understand the legal implications of what was taking place. At page 21 of his examinationin-chief, he was asked (at line 8): "Did you know or did you understand that that company was being registered to do business in Ontario? A. I thought it was a separate company doing business in Ontario. It was a different type of business." Consistent with this answer was his further answer that he had never advised his parents of the extraprovincial registration of the Saskatchewan company since, by his understanding, they were not involved in the "separate company" incorporated in and doing business in Ontario. Evan’s belief appears to be corroborated at least to some extent. [4]

On April 3, 1987, Evan’s Yorkton solicitors, at his instruction, prepared a joint venture agreement between the company and Don Spilchen. By that agreement, the company and Spilchen agreed to construct foundations for residential and commercial properties.” Mr. and Mrs. Shindie were not advised of nor provided with a copy of the joint venture agreement. Mrs. Shindie was asked whether she received any information from Evan as to the terms of his agreement with Don Spilchen. She replied: "all Evan told us is that him and Don had made an agreement and had started a new company." [6]

Mr. and Mrs. Shindie supported Evan financially in the Toronto business venture: a line of credit in the sum of $20,000 was made available to Evan through the Canadian Imperial Bank of Commerce and guaranteed by Mr. and Mrs. Shindie; and a further sum of $40,000 (U.S.) was lent to Evan by his parents for use in his Toronto company (Exhibit P-11).

Before long, the joint venture between the company and Don Spilchen in Ontario failed. Subsequently Evan Shindie caused a new Ontario company to be incorporated by the name of Silverwood Structural Ltd. ("Structural") on September 20, 1988. Evan Shindie was the sole director.

Before Evan left Saskatchewan for Ontario in 1987, he controlled the daily operations of the company. He also had exclusive cheque signing authority on all bank accounts maintained by the company in Saskatchewan. Through the payroll system devised in Saskatchewan, the required payroll deductions and remissions were made relative to the company’s operations in Saskatchewan.

When Evan left for Toronto, his parents disposed of two houses which represented the remaining assets of the company in Saskatchewan. The proceeds were insufficient to pay the company’s Saskatchewan creditors in full. The Shindies paid off all the creditors of the Saskatchewan operation. There still remained an outstanding loan to the Canadian Imperial Bank of Commerce (CIBC) which was personally guaranteed by Mr. and Mrs. Shindie. They arranged with the Bank to repay that loan over a period of time. Based on what they knew, they believed that all of the company’s debts had been paid.

At all relevant times, the company’s financial statements were prepared by Mr. Jack McKay, C.A., a partner with the chartered accounting firm of Parker and Quine, in Yorkton. Mr. McKay had performed the required accounting work for Mr. and Mrs. Shindie since 1969 and, as well, for the company since its incorporation. While the company operated in Saskatchewan, the necessary accounting information was provided to Mr. McKay by Evan Shindie and his local bookkeeper. After Evan left Saskatchewan, the information was provided by Elsie Palmeruk, who worked for the Shindies at Century 21. The necessary information relative to the Ontario business came from Evan Shindle, his bookkeeper, and Eric Blashke, his chartered accountant in Ontario. Mr. McKay did not know of any unremitted source deductions in respect of the Saskatchewan operations of the company. He knew nothing of the company’s Ontario remittance problems until Revenue Canada assessed the Shindies by an assessment dated April 24, 1990, in the sum of $222,931.74 (Exhibit P-8). Mr. McKay was in touch with Mr. Blashke, Evan’s Ontario chartered accountant, who forwarded the financial information to him. At no time did Mr. Blashke inform the Shindies or Mr. McKay about the unremitted source deductions. At no time prior to April 24, 1990, had Revenue Canada contacted the Shindles or Mr. McKay about the unremitted source deductions in Ontario. The annual returns of the company, required pursuant to the Business Corporations Act of Saskatchewan, were filed for the years 1987 and 1988 by Mrs. Shindle. It was Mrs. Shindie’s belief that, by December 1989, the company had been wound up, since all of its creditors had been paid excepting the bank, and, as noted earlier, the bank indebtedness had been assumed by Mr. and Mrs. Shindie personally. A certificate of dissolution of the company was issued on February 14, 1990, by the Province of Saskatchewan. It was only when Mr. and Mrs. Shindie received the notice of assessment in April 1990 that they discovered that the Saskatchewan company had been extraprovincially registered in Ontario and that Evan was using that company rather than a new company for his Ontario business.

Prior to their receipt of Revenue Canada’s assessment in April 1990, Mr. and Mrs. Shindie visited Evan in Toronto on two occasions. He took them to his office and to a work site. His office displayed a sign reading "Silverwood Structural". There was no evidence of Silverwood Enterprises Ltd. being in operation at that office. Likewise the work shacks at the work site displayed Structural signing only. The workmen there wore t-shirts and hats bearing the Structural name. While she was visiting in Ontario, Mrs. Shindle never attended at any banks utilized by the company or by Structural. She did not have any signing authority on any accounts in Ontario banks. In cross-examination, she denied that their two short Toronto visits were in any way related to the company business.

Analysis

The issue

Simply stated, the issue in this action is whether, in this factual situation, the plaintiff Beatrice Shindie is personally liable as a director of Silverwood Enterprises Ltd., for the amount of unpaid employee deductions, interest and penalties payable by that company to the Receiver General of Canada in respect of its operations in Ontario, pursuant to the provisions of subsection 227.1(1) of the Income Tax Act. The answer to this issue depends upon the determination of a second issue, namely, whether in the circumstances of this case, this plaintiff can escape personal liability under subsection 227.1(1) because she exercised the degree of care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances pursuant to the provisions of subsection 227.1(3).

Counsel for both parties were in agreement that the result in this action will revolve around the credibility of Beatrice Shindie and Evan Shindle, and, to a lesser extent, the credibility of Jack McKay and Ervin Shindie as well.

The evidence of Beatrice Shindie

Mrs. Shindie was asked in her examination-in-chief, whether she ever caused a company to be incorporated outside the Province of Saskatchewan. Her answer was: "No, we had no reason to". She also answered in the negative when asked whether she was ever involved in extraprovincially registering a company outside the Province of Saskatchewan. She stated that she had never operated a business in another province. With respect to the company, she said that she had never attended a shareholders’ meeting of that company and that she had never signed any shareholders’ minutes or "anything" with respect to the incorporation of the company. When asked why she agreed to become a director, she said the company’s solicitor had advised that the company needed three directors and that was the only reason she and her husband let their names stand. She and her husband had never invested any money in the company. She didn’t pay for her share. Her son Evan had sole signing authority in respect of the company’s bank account. She and her husband were asked to guarantee the company’s indebtedness with the Imperial Bank of Commerce in Yorkton, Saskatchewan. This was the loan necessary for Evan to operate his business in Saskatchewan. She was in no way involved with the operation of the company, insofar as keeping books and preparing financial statements were concerned. By January 1987, Evan was unable to pay his loan with CIBC which his parents had guaranteed. He then advised his parents that he and his friend Spilchen were going to do concrete work in Toronto and "were starting a new company". She was never told nor did she understand that the joint venture agreement was actually between the company and Spilchen. Evan borrowed $20,000 from the Bank of Commerce to start the new business in Ontario. His parents guaranteed the bank loan and, probably, the guarantee was signed by them at the Yorkton branch of the Bank. Mrs. Shindle said that, as of February 1990, she thought the company’s Only outstanding indebtedness was to the bank. Her examination-in-chief Closed with the following questions and answers: "Q. And did you have any knowledge that Silverwood Enterprises Ltd. had anything going on other than the Yorkton business that you’ve referred to? A. No." "Q. And up to that point in time, had anyone from Revenue Canada contacted you about any problems associated with Silverwood Enterprises Ltd. A. We never got anything ’til that letter we thought was a mistake." In cross- examination, she once again positively stated that she "had no idea the company was operating in Toronto”.

I accept Beatrice Shindie’s evidence. I found her to be a very credible witness. The principal business of Beatrice and Ervin Shindie since the 1970s has been the operation of a successful real estate business in Yorkton. They were a hard working couple who were successful in business because of their industry. I formed a favourable impression of both Mr. and Mrs. Shindle from the perspective of integrity as well. On discovery Mrs. Shindie was asked: "So you’re hard working business people?" To which she answered: "We work every day and when we make a commitment, we make a commitment." [7]

However, Mr. Gosman, counsel for the defendant, questions the credibility of Mrs. Shindie’s evidence in a number of areas. Specifically, he challenges her assertion that she had no knowledge that Silverwood Enterprises Ltd. was actively operating in Ontario. He referred to the evidence of Mr. McKay, the Shindies’ auditor and trusted financial adviser. Mr. McKay testified that he would have met with the Shindies during the years 1987, 1988 and 1989, at least 50 times per year in each of those years! After stating that Mr. McKay was perfectly aware that the company was operating in Ontario, counsel suggested that it was highly unlikely that Mr. McKay wouldn’t have mentioned this circumstance to Mrs. Shindie on one or more occasions. I agree that everybody knew that Evan was doing business in Toronto. What was not established by the evidence was that it was known by the Shindies that Evan was doing business in Ontario through the vehicle of Silverwood Enterprises Ltd. Mr. McKay never testified that the Shindies knew that the Saskatchewan company, Silverwood Enterprises Ltd. was doing business in Ontario. He said that it never specifically came up in his conversations.

Counsel for the defendant also referred to Exhibit P-6, the overdraft agreement which was entered into at about the time the company was going to Toronto. The plaintiff signed this agreement, which amounts to a guarantee of an additional $20,000 loan from the CIBC. In counsel’s submission, this documentation establishes that Beatrice Shindie was aware of the fact that the company was operating in Ontario. I do not agree. The $20,000 loan was an operating loan put on the books in Saskatchewan. Its purpose was to enable Evan to do business but it was a Yorkton loan. His parents also advanced a further $40,000 to get the Ontario operation in gear. Likewise this circumstance only supports the view that Evan personally was doing business in Ontario and not the company.

Similarly, counsel for the defendant submitted that Mrs. Shindie had signed correspondence and filed annual returns for the company; she had also ’’fended off" the bankers and provided cash for the operations of the Toronto office. In counsel’s submission, ’’...these are all activities which are consistent with what directors do and frankly, it’s a great deal more than most directors do."

With every deference, I take a different view of the evidence with respect to Evan Shindie’s operations in Ontario and the participation in those operations by his parents. It will be recalled that Beatrice and Ervin Shindie paid out approximately $100,000 to satisfy Evan’s creditors from the failure of his Yorkton business.

When considered in total perspective, the actions of Beatrice Shindle with respect to the Ontario operations were the actions, not of a company director, but, rather, those of a substantial creditor doing her very best to keep the Ontario operation going so that, hopefully, it could become a profitable operation from which, in time, the profits could be employed in repaying Evan’s large indebtedness to his parents.

I believe Beatrice Shindie when she swears that she didn’t know the company was doing business in Ontario. She knew of course, that Evan was doing business in Ontario, but I am satisfied that she did not know or understand the legal technicality of how a company, incorporated in Saskatchewan, could be registered to do business in Ontario. I am also satisfied on the evidence that the Shindies had not been contacted by Revenue Canada about any unremitted source deductions.

The evidence of Evan Shindie

The evidence of Evan Shindie corroborates the evidence of his mother, Beatrice Shindie. His evidence was clear that he intended the Ontario business to be his own company. This intent is supported by the evidence of his solicitor, Mr. Yaholnitsky. He did not contact the Shindies about the extraprovincial registration of the company in Ontario because he understood from Evan that he was to be the only person involved in the Ontario operation. These facts are also corroborated by the records at Revenue Canada. Exhibit P-22-A establishes that, early in 1988, Evan and Don Spilchen were the only directors of the company. Exhibit P-31 shows that the next audit, performed in April 1989, reports only one director namely Evan Shindie. While this document doesn’t alter the legal position as to who the company directors were, it does support Evan’s evidence that, in his own mind, his parents were not directors of the company that he was operating in Ontario.

The application of subsection 227.1(3) to the facts of this case and the relevant jurisprudence

I turn now to a consideration of the applicable authorities and to the facts at bar.

In addition to the extensive facts recited, supra, the following additional facts are germane. Revenue Canada’s audit material for 1987, 1988 and 1989 shows Evan Shindie as the company’s sole director. None of their material shows Beatrice and Ervin Shindle as directors. Revenue Canada did not contact Mr. and Mrs. Shindie or attend at Yorkton concerning the unremitted source deductions until 1990. Relying on Evan’s statements to them, his parents firmly believed that he was operating a new business in Ontario, separate and distinct from the company. Accordingly, they would have no reason to be concerned about unremitted source deductions in Ontario.

Before Evan Shindie left for Toronto, none of the Shindie family, including Evan, were ever involved in a company that wasn’t a family business. They had never carried on business outside of the Yorkton area. They had never before been involved in an extraprovincial corporation. Mr. and Mrs. Shindie employed a chartered accountant at all times to keep their financial matters in order. Evan also employed a chartered accountant in Ontario to handle his affairs there.

Evan Shindie did not advise his parents of the extraprovincial registration of the company in Ontario. Similarly, neither of the accountants, Jack McKay in Yorkton, nor Eric Blashke in Toronto advised Mr. and Mrs. Shindle of the registration of the company in Ontario, nor were they advised of the unremitted source deductions in Ontario. Likewise, there is no evidence on the record to suggest that the solicitor Mr. Yaholnitsky alerted them as to potential liability as directors for unremitted source deductions pursuant to subsection 227.1(1). Since the company had never experienced source deduction problems when the company was being managed by Evan in Saskatchewan, Mr. and Mrs. Shindie had no reasonable grounds for suspecting that such a problem would occur as a result of the company’s operation in Ontario. Even if she had been aware that the company was operating in Ontario, she could not have anticipated a remittance problem since the Ontario company had its own accountant, Mr. Blashke.

I turn now to the applicable jurisprudence. In the Tax Court case of Cybulski v. M.N.R., [1988] 2 C.T.C. 2180, 88 D.T.C. 1531. Christie A.C.J.T.C. stated:

In my opinion, the general principle that ignorance of the law is no excuse, can have no application here. In enacting subsection 227.1(3), Parliament established an exonerating standard of conduct the presence of which is to be determined in particular cases by the actual relevant facts and not by fixing to a taxpayer knowledge of a somewhat esoteric point of corporate law that in reality is probably not within the actual knowledge of a good number of legal practitioners. While at first blush subsection 227.1(3) supports a requirement for positive assertion on the part of the taxpayer in order to bring himself within its ambit, this is not necessarily so in all situations. /t may well be that a taxpayer would not take positive steps in some circumstances and still be correctly regarded as having "exercised" that degree of care, diligence and skill expected of a reasonably prudent person that creates the protection from liability afforded by the subsection.

[Emphasis added. ]

As pointed out by counsel, even if Mrs. Shindie had known the company was operating in Ontario, she could not reasonably be expected to anticipate a remittance problem, given her positive experience with the Saskatchewan operation in this area. None of the information received from the Ontario auditor indicated any cause for concern.

Also apposite to the factual situation at bar is the decision of the Tax Court of Canada in Merson v. M.N.R., [1989] 1 C.T.C. 2074, 89 D.T.C. 22. In that case, it was held that a director who had set up a good system to ensure timely remittance and who was no longer in a position in the company to ensure that the system be employed, was not liable for unremitted source deductions. In this case, while the company was operating in Saskatchewan under the supervision of Mrs. Shindie, a proper system of payroll deductions and remissions was maintained. Since Mr. and Mrs. Shindie were unaware of the Ontario registration of the company, it follows that they were not in a position to cause or influence the company to continue with the source deduction remittances there. Pursuant to the Merson decision, supra, no liability for non remittance should attach to the plaintiff.

It is clear from the record that Mr. and Mrs. Shindie did not consent to continue to act as directors of the company, since they were not actually aware that the company was continuing to operate after the spring of 1987. They believed that their final acts as directors of the company related to the winding up of the company’s operations in Saskatchewan.

Counsel for the defendant suggests that since Mrs. Shindle dealt with CIBC in 1988, it must be inferred that she knew the company was doing business in Ontario at that time. I disagree. As noted earlier, Mrs. Shindie’s activities at this time were directed at the indebtedness created by the Saskatchewan operation in which she and her husband were guarantors. She was understandably concerned about the CIBC loan. It was, naturally, her earnest hope and belief that, given a successful Ontario operation, Evan would be able to repay this indebtedness.

The defendant’s counsel relied on the Byrt case in the Tax Court of Canada (91 D.T.C. 923). In that case, the director knew or ought to have known that the president of the company had not been attending to the company’s tax affairs in a proper manner. That is an entirely different situation from the factual scenario in this case, where the plaintiff did not know that the company was carrying on business in Ontario and there had been no contact from Revenue Canada concerning unremitted source deductions.

I noted earlier that the result in this case might well revolve around the credibility of Beatrice Shindie, Evan Shindie, and to a lesser extent, the credibility of Jack McKay and Ervin Shindie. As noted, supra, I found Beatrice Shindie to be a very credible witness. I found Ervin Shindie to be a very credible witness as well. He confirms and supports his wife’s evidence that neither of them were involved in Evan’s business in Toronto and that neither of them knew that the company was doing business in Ontario. Ervin Shindle went a step further. He stated that he said to his son ’’They can’t use the regular company from home.” [8] This supported his belief that Evan was using a different company in Ontario.

In his evidence, Evan Shindie also said that he was under the impression that the corporation operating in Ontario was "...a whole new one registered in Ontario ..." and that "it was doing a different type of work altogether.’’ [9] Insofar, as the credibility of Evan Shindie is concerned, I found him to be a credible witness. Bearing in mind that he had exposed his parents to losses in the hundreds of thousands of dollars, there was likely an element of remorse in his response to the questions asked of him. Nevertheless, I found his evidence in general to be consistent and responsive. His evidence supports the testimony of his parents with respect to the company’s operations in Ontario.

Coming now to the evidence of the chartered accountant, Jack McKay, I also found him to be a credible witness. He said that the company’s incorporation was mainly Evan’s idea and that he wanted to use the company for his construction work. Mr. McKay said that the main contribution to the company by Evan’s parents was that they helped him finance the company. He advised Evan to use the company in his projected operations in Ontario. He testified that he had advised Evan that the company should be incorporated extraprovincially. He further advised Evan that he should ensure that it was legal for the company to operate in Ontario. Mr. McKay had no conversations with Mr. and Mrs. Shindie concerning the Toronto operation. He obtained all that information from Evan. Generally speaking, then, his evidence supports that of Mr. and Mrs. Shindie.

Conclusion

In conclusion, on this record and for the reasons given herein, I am persuaded that the plaintiff Beatrice Shindle meets the requirements set out in subsection section 227.1(3) of the Act. In the circumstances of this case she acted as any reasonably prudent person would act and in so doing she exercised that degree of care, diligence and skill expected of such a person. Accordingly, Assessment No. 34540 dated October 31, 1990, and issued against the plaintiff by the Minister of National Revenue is set aside. The plaintiff is entitled to her costs of the action against the defendant.

Appeal allowed.