Noel
J.A.
(Desjardins
J.A.
concurring):
These
are
appeals
from
the
October
3,
1997
decision
of
O’Connor
T.C.C.J.
of
the
Tax
Court
of
Canada,
wherein
he
allowed
an
appeal
by
the
respondents
from
an
assessment
pursuant
to
subsection
227.1(1)
of
the
Income
Tax
Act
(the
“/7A”)
for
unremitted
federal
income
tax
withheld
from
the
wages
paid
to
the
employees
of
Louisbourg
Harbourfront
Park
Ltd.
(the
“Corporation”).
The
appeals
were
heard
together
and
these
Reasons
for
Judgment
are
applicable
to
all.
One
set
of
Reasons
will
be
issued
and
will
be
filed
in
each
of
these
cases.
The
Corporation
was
incorporated
in
1980
under
the
Companies
Act,
R.S.N.S.
1967
c.42,
as
amended
(the
“Act”).
It
was
a
non-profit
corporation
whose
mandate
was
the
enhancement
and
development
of
economic
activity
in
the
Town
of
Louisbourg.
At
all
relevant
times
to
this
appeal,
the
Louisbourg
Harbourfront
Society
(the
“Society”)
owned
96%
of
the
shares
of
the
Corporation,
with
the
remaining
4%
being
held
by
prior
directors
of
the
Corporation
in
trust
for
the
Society.
The
Articles
of
Association
of
the
Corporation
(“Articles”)
limited
the
number
of
directors
to
a
maximum
of
seven
and
required
that
each
director
hold
at
least
one
share
of
the
Corporation.
None
of
the
respondents
owned
a
share
of
the
Corporation
as
required
by
the
Articles
but
all
acted
as
directors.
Further,
by
March
1993,
there
were
nine
directors.
No
remuneration
was
paid
to
the
respondents
in
respect
of
their
services.
During
the
period
January
1992
to
October
1993,
the
Corporation
failed
to
remit
to
the
Receiver
General
of
Canada
federal
income
tax
withheld
from
the
wages
paid
to
the
Corporation’s
employees
in
the
amount
of
$17,886.91.
Pursuant
to
subsection
227.1(1)
of
the
/TA
the
respondents
Corsano,
Wheeliker
and
Maindiratta
were
assessed
by
the
Minister
of
National
Revenue
(the
“Minister”)
for
source
deductions
not
remitted
for
the
period
from
January
1992
to
October
1993.
The
respondents
Lawrence,
MacDonald
and
Parsons
were
assessed
for
the
period
from
November
1992
to
October
1993.
Section
227.1
of
the
/TA
reads:
(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
VIT
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.
(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.
[emphasis
added]
(1)
Lorsqu’une
corporation
a
omis
de
déduire
ou
de
retenir
une
somme,
tel
que
prévu
au
paragraphe
135(3)
ou
à
l’article
153
ou
215,
ou
a
omis
de
remettre
cette
somme
ou
a
omis
de
payer
un
montant
d’impôt
en
vertu
de
la
Patrie
VII
ou
de
la
Partie
VIII
pour
une
année
d’imposition,
les
administrateurs
de
la
corporation,
à
la
date
à
laquelle
la
corporation
était
tenue
de
déduire,
de
retenir,
de
verser
ou
de
payer
la
somme,
sont
solidairement
responsables,
avec
la
corporation,
du
paiement
de
cette
somme,
incluant
tous
les
intérêts
et
toutes
les
pénalités
s’y
rapportant.
[...]
(3)
Un
administrateur
n’est
pas
responsable
de
l’omission
visée
au
paragraphe
(1)
lorsqu'il
a
agi
avec
le
degré
de
soin,
de
diligence
et
d’habilité
pour
prévenir
le
manquement
qu’une
personne
raisonnablement
prudente
aurait
exercé
dans
des
circonstances
comparables.
[mon
souligné]
O’Connor
T.C.C.J.,
relying
on
the
decision
of
this
Court
in
Kalef
v.
/?.,
held
that
the
definition
of
“director”
for
the
purposes
of
subsection
227.1(1)
means
a
de
jure
director
as
defined
by
the
incorporating
legislation
of
the
corporation.
While
stating
that
“there
[was]
little
doubt
the
[respondents]
acted
as
directors
by
attending
directors’
meetings
and
managing
the
Corporation,”
O’Connor
T.C.C.J.
held
both
that
the
respondents
were
not
de
jure
directors
as
defined
by
the
Act
and
that
de
facto
directors
were
not
directors
under
the
Act.
As
a
result,
the
respondents
were
not
subject
to
the
vicarious
liability
imposed
by
subsection
227.1(1)
of
the
/TA.
The
ITA
does
not
define
“director”
either
for
the
purposes
of
the
ITA
as
a
whole
or
for
the
purposes
of
section
227.1.
As
this
Court
held
in
Kalef,
it
is
therefore
appropriate
to
look
to
the
Corporation’s
incorporating
legislation
for
guidance
as
to
who
is
a
“director”
for
the
purposes
of
section
227.1.
Under
paragraph
2(1
)(f)
of
the
Act,
“director”
includes
any
person
occupying
the
position
of
director
by
whatever
name
called;
[emphasis
added]
I
agree
with
the
conclusion
of
the
Tax
Court
judge
that
the
words
“occupying
the
position
of
director
by
whatever
name
called”
brings
within
the
definition
a
director
irrespective
of
how
this
position
may
be
designated.
This
is
consistent
with
the
approach
of
the
Chancery
Division
in
Lo-Line
Electric
Motors
Ltd.,
Re
where
the
Court
interpreted
the
identical
definition
under
the
U.K.
Companies
Act,
1985.
According
to
the
Court:
...the
words
“by
whatever
named
called”
show
that
the
subsection
is
dealing
with
nomenclature;
for
example
where
the
company’s
articles
provide
that
the
conduct
of
the
company
is
committed
to
“governors”
or
“managers.”
As
section
2(1
)(f)
speaks
simply
to
nomenclature
and
is
inclusive,
it
is
therefore
necessary
look
to
the
provisions
of
the
Act
to
determine
the
legislative
intent
with
respect
to
those
who
have
under
the
law
the
status
of
“director.”
Before
turning
to
the
relevant
provisions,
I
note
that
the
Act
nowhere
speaks
of
de
facto
or
de
jure
directors.
Rather
it
uses
the
term
director
in
various
contexts,
some
of
which
suggest
a
reference
to
a
director
who
is
qualified
to
act
as
such
under
the
Act,
and
others
which
refer
to
a
person
who
in
fact
acts
as
such
without
being
so
qualified.
The
question
to
be
answered
is
whether
the
word
director
only
connotes
a
person
qualified
to
act
as
such
under
the
Act.
A
useful
starting
point
is
a
consideration
of
the
qualifications
imposed
by
the
Act.
Section
95
is
the
most
important
provision
in
this
respect.
It
provides
in
part
that:
(1)
It
shall
be
the
du
f
every
director
who
is
by
the
regulations
of
the
com-
pany
required
to
hold
a
specified
share
qualification,
and
who
is
not
already
qualified,
to
obtain
his
qualification
within
three
months
after
his
appointment,
or
such
shorter
time
as
is
fixed
by
the
regulations
of
the
company.
(3)
The
office
of
director
of
a
company
shall
be
vacated.
if
the
director
does
not
within
three
months
from
the
date
of
his
appointment,
or
within
such
shorter
time
as
if
fixed
by
the
regulations
of
the
company,
obtain
his
qualification,
or
if
after
the
expiration
of
such
period
or
shorter
time
he
ceases
at
any
time
to
hold
his
qualification,
and
a
person
vacating
office
under
this
Section
shall
be
incapable
of
being
re-appointed
director
of
the
company
until
he
has
obtained
his
qualification.
(4)
If,
after
the
expiration
of
the
said
period
or
shorter
time,
any
unqualified
person
acts
as
a
director
of
the
company,
he
shall
be
liable
to
a
penalty
not
exceeding
twenty-five
dollars
for
every
day
between
the
expiration
of
the
said
period
or
shorter
time
and
the
last
day
on
which
it
is
proved
that
he
acted
as
a
director.
[emphasis
added]
The
Articles
of
Association
provide
in
turn:
106.
The
qualification
of
a
Director
shall
be
the
holding
of
at
least
one
share
in
the
Company
of
a
class
entitled
to
vote
at
general
meetings
of
the
Company.
A
director
may
be
appointed
and
act
before
acquiring
a
qualifying
share,
but,
if
he
has
not
acquired
it
within
three
months
of
his
appointment
or
election,
he
shall
be
deemed
to
have
vacated
the
office
of
Director.
111.
The
office
of
a
Director
shall
ipso
facto
be
vacated:
(a)
if
he
becomes
bankrupt,
makes
an
authorized
assignment,
suspends
payment,
or
compounds
with
this
creditors;
or
(b)
if
he
is
found
a
lunatic
or
becomes
of
unsound
mind;
or
(c)
if
he
ceases
to
hold
the
number
of
shares
required
to
qualify
him
for
office
or
does
not
acquire
them
within
three
months
after
his
election
or
appointment;
or
(d)
if
by
notice
in
writing
to
the
Company
he
resigns
his
office;
or
(e)
if
he
is
removed
by
special
resolution
as
provided
by
Article
116.
[emphasis
added]
Subsection
95(1)
of
the
Act
imposes
upon
a
director
the
obligation
to
own
the
number
of
shares
prescribed
by
the
regulations
of
the
company
and
provides
for
a
grace
period
of
three
months
to
obtain
this
qualification.
Should
a
director
not
obtain
the
prescribed
share
qualification
within
the
specified
time,
or
should
he
or
she
lose
this
qualification,
subsection
95(3)
stipulates
that
“the
office
of
director
...
shall
be
vacated”
and
the
person
concerned
“shall
be
incapable”
of
holding
the
office
until
he
or
she
has
obtained
the
qualification.
The
Articles
reinforce
the
effect
of
the
disqualification
by
providing
that
the
person
concerned
“shall
be
deemed
to
have
vacated
the
office
of
Director”
and
“the
office
of
Director
shall
ipso
facto
be
vacated.”
However,
subsection
95(4)
acknowledges
that
persons
may
act
as
directors
without
being
qualified,
and
creates
a
liability
for
a
penalty
for
every
day
during
which
the
breach
persists.
The
Act
also
seeks
to
protect
those
who
in
good
faith
contract
with
persons
who
purport
to
act
as
directors
while
not
qualified
to
do
so.
Section
30
is
a
codification
of
the
common
law
“indoor
management
rule.”
It
provides:
A
company
or
a
guarantor
of
an
obligation
of
the
company
may
not
assert
against
a
person
dealing
with
the
company
or
with
any
person
who
has
acquired
rights
from
the
company
that...
(b)
the
persons
named
in
the
most
recent
notice
sent
to
the
Registrar
under
subsection
(1)
of
Section
98
are
not
the
directors
and
officers
of
the
company;...
Thus,
a
company
is
estopped
from
asserting
that
a
person
who
is
held
out
as
a
director
was
not
qualified
to
act
as
such.
The
result
is
that
in
such
circumstances,
the
company
will
be
bound
as
it
would
be
if
the
person
had
been
qualified.
Similarly,
section
97
validates
the
acts
of
a
director
despite
the
fact
that
it
is
later
found
that
he
or
she
lacked
qualification
at
the
relevant
time:
The
acts
of
a
director
or
manager
shall
be
valid
notwithstanding
any
defect
that
is
afterwards
discovered
in
his
appointment
or
qualification.
[emphasis
added]
Similar
provisions
are
common
in
Canadian
corporate
legislation
and
exist
so
as
to
protect
third
parties
and
ensure
a
degree
of
certainty
with
respect
to
the
effect
of
corporate
transactions.
However,
section
97
does
not
have
the
effect
of
validating
the
appointment
of
unqualified
directors;
rather
it
validates
the
“acts”
of
an
improperly
appointed
director.!!
It
is
therefore
apparent
that
the
Act
recognizes
that
persons
will
act
as
directors
without
being
qualified
to
do
so,
and
that
the
legislator
has,
despite
this
absence
of
qualification,
chosen
to
validate
those
acts
in
the
circumstances
that
we
have
seen.
The
question
then
becomes
whether
this
statutory
recognition
of
specified
acts
by
persons
who
act
as
directors
despite
their
lack
of
qualification
also
has
the
effect
of
making
them
directors
under
the
Act.
In
my
view,
section
95
of
the
Act
and
the
relevant
sections
of
the
Articles
would
be
rendered
meaningless
if
the
Act
was
construed
as
granting
the
status
of
director
to
those
who
are
not
qualified.
A
director
is
one
who
meets
the
requirements
imposed
under
the
Act
including
those
prescribed
by
section
95.
Indeed,
a
penalty
is
imposed
on
those
who
act
as
director
without
meeting
those
requirements.
It
would
be
odd
if
those
who
breach
the
Act
by
acting
as
directors
while
not
qualified
thereunder
would
nevertheless
have
the
status
of
director
under
the
Act.
As
a
matter
of
legislative
intent,
it
seems
unavoidable
that
only
those
who
meet
the
requirements
prescribed
by
the
Act,
are
directors
under
the
Act.
In
my
view,
the
Act
cannot
be
construed
as
giving
those
acting
as
directors
without
the
requisite
qualifications
the
status
of
director,
nor
can
it
be
said
that
the
common
law
has
provided
such
individuals
this
status.
What
the
courts
have
done
over
the
years,
however,
is
devise
remedies
to
assist
third
parties
who
deal
with
persons
who
act
as
directors
or
who
are
held
out
by
the
company
as
directors
although
they
lack
the
required
qualification
or
authority.
As
I
understand
it,
one
principle
underlying
these
common
law
remedies
is
that
a
person
who
has
not
obtained
the
requisite
qualifications,
is
prevented
from
pleading
this
failure
in
order
to
escape
liability
attaching
to
a
director.
As
held
by
Richards
J.A.
in
MacDonald
v.
Drake,
I
cannot
assent
to
the
contention
that
a
director,
who,
with
his
consent,
has
been
elected
and
has
acted
as
a
director,
should,
merely
because
he
was
not
qualified
to
hold
the
office,
escape
liability
that
he
would
have
incurred
if
he
had
been
qualified.
The
true
principle
seems
to
be
that
a
man
cannot
take
advantage
of
his
12
own
wrong.
It
being
recognized
in
this
instance
that
the
respondents
acted
as
directors,
in
conformity
with
the
will
of
the
shareholders,
I
see
no
reason
why
they
should
be
allowed
to
assert
their
lack
of
qualification
to
escape
the
liability
cast
upon
directors
by
virtue
of
section
227.1
of
the
ITA.
Thus,
while
I
would
agree
with
the
conclusion
of
the
Tax
Court
judge
that
those
acting
as
directors
without
having
the
requisite
qualifications
are
not
directors
under
the
Act,
I
do
not
believe
that
the
respondents
can
raise
this
lack
of
qualification
as
a
defence
to
their
liability
under
subsection
227.1(1)
of
the
ITA.
On
the
issues
of
the
applicable
standard
of
care
and
its
application
to
the
facts
of
this
case,
I
agree
with
the
reasons
of
my
colleague,
Létourneau
J.A.
and
would
dispose
of
these
appeals
as
he
suggests.
Létourneau
J.A.
(dissenting):
I
have
had
the
benefit
of
reading
the
reasons
prepared
by
my
colleague
Noël
J.A.
and
share
his
views
as
to
the
liability
of
the
respondents.
However,
I
have
come
to
such
conclusion
from
a
different
approach
which
needs
to
be
stated.
It
involves
legal
considerations
with
respect
to
the
interpretation
of
subsections
227.1(1)
and
(3)
of
the
Income
Tax
Act
(Act)
and
the
application
of
the
defense
of
due
care
and
diligence.
The
meaning
and
scope
of
the
term
“director”
in
subsection
227.1(1)
of
the
Income
Tax
Act
Subsection
227.1(1)
of
the
Act
holds
jointly
and
severally
liable
the
directors
of
a
corporation
who
have
failed
to
withhold,
deduct
and
pay
to
Revenue
Canada
the
taxes
due
on
salary
or
wages
when
so
required.
Sections
153
and
227.1
which
are
intertwined
read:
153(1)
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
may
be
determined
in
accordance
with
prescribed
rules
and
shall,
at
such
time
as
may
be
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,
...
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.
153(1)
Toute
personne
qui
verse
à
une
date
quelconque
d’une
année
d’imposition
a)
un
traitement,
un
salaire
ou
autre
rémunération,
doit
en
déduire
ou
en
retenir
la
somme
qui
peut
être
prescrite
et
doit,
au
moment
fixé
par
règlement,
remettre
cette
somme
au
receveur
général
au
titre
de
l’impôt
du
bénéficiaire
ou
du
dépositaire
pour
l’année
en
vertu
de
la
présente
partie
ou
de
la
partie
Xl.3.
227.1(1)
Responsabilité
des
administrateurs
pour
défaut
d’effectuer
les
retenues
-
Lorsqu’une
société
a
omis
de
déduire
ou
de
retenir
une
somme,
tel
que
prévu
au
paragraphe
135(3)
ou
à
l’article
153
ou
215,
ou
a
omis
de
remettre
cette
somme
ou
a
omis
de
payer
un
montant
d’impôt
en
vertu
de
la
partie
VII
ou
VIII
pour
une
année
d’imposition,
les
administrateurs
de
la
société,
au
moment
où
celle-ci
était
tenue
de
déduire,
de
retenir,
de
verser
ou
de
payer
la
somme,
sont
solidairement
responsables,
avec
la
société,
du
paiement
de
cette
somme,
y
compris
les
intérêts
et
les
pénalités
s’y
rapportant.
The
learned
Tax
Court
judge
adopted
the
respondents’
contention
that
the
notion
of
director
found
in
the
Nova
Scotia
Companies
Act
refers
to
the
concept
of
de
jure
director
only
and
does
not
incorporate
that
of
the
de
facto
administrator
recognized
by
the
common
law
in
Nova
Scotia.
On
appeal,
both
the
appellant
and
the
respondents
from
their
respective
perspective
have
argued
strenuously
against
and
in
support
of
this
legal
finding
by
the
Tax
Court
judge.
With
respect,
I
think
the
respondents’
contention
is
a
red
herring
which
has
contributed
to
mask
the
real
issue
in
the
present
instance
and
the
proper
approach
to
be
taken
to
the
determination
of
the
respondents’
liability
towards
Revenue
Canada
for
the
remittances
due.
As
is
often
the
case
with
a
red
herring,
it
gives
rise
to
most
stimulating
but
generally
irrelevant
discussions.
As
a
matter
of
fact,
the
governing
provision
which
is
in
dispute
here
is
subsection
227.1(1)
of
the
Act.
It
is
the
scope
of
this
provision
which
falls
to
be
determined,
not
the
scope
of
the
Nova
Scotia
Companies
Act.
Much
of
the
focus
has
been
put,
unnecessarily
in
my
view,
on
the
ambiguous
and
free
use
of
the
word
“director”
in
the
Nova
Scotia
Companies
Act
and
on
the
proper
scope
and
interpretation
of
that
Companies
Act.
This
is,
as
we
shall
see,
the
result
of
the
respondents
misconstruing
an
earlier
decision
of
this
Court
and
the
purpose
of
subsection
227.1(1)
of
the
Act.
Subsection
227.1(1)
of
the
Act
imposes
liability
on
all
the
directors
of
a
corporation
who
have
failed
to
remit
to
Revenue
Canada
the
sums
due.
The
word
“directors”
in
the
said
subsection
is
unrestricted
and
unqualified.
It
is
a
basic
rule
of
legislative
drafting,
based
on
the
corresponding
rule
of
interpretation
which
conditions
drafting,
that
the
use
of
a
generic
word
without
restrictions
or
qualifications
conveys
the
legislator’s
intention
that
the
word
be
given
a
broad
meaning.
Here,
by
using
the
word
“directors”
without
qualifications
in
subsection
227.1(1),
Parliament
intended
the
word
to
cover
all
types
of
directors
known
to
the
law
in
company
law,
including,
amongst
others,
de
jure
and
de
facto
directors.
It
bears
repeating
that
there
is
no
disagreement
between
the
parties,
and
the
Tax
Court
judge
so
found,
that
the
Nova
Scotia
common
law
has
developed
the
concept
of
de
facto
director.
I
hasten
to
add
that,
in
this
regard,
the
legal
situation
is
practically
the
same
in
all
common
law
jurisdictions
across
Canada.
Yet,
notwithstanding
that,
the
Tax
Court
judge
concluded
that
the
word
“directors”
in
subsection
227.1(1)
of
the
Act
refers
only
to
de
jure
directors.
In
coming
to
such
conclusion
he
relied
first
upon
the
decision
of
this
Court
in
Kalef
v.
R.;
to
which
he
gave
an
erroneous
interpretation.
This
is
apparent
from
the
following
excerpts
at
pages
8
and
9
of
his
decision:
Since
the
jurisprudence
is
clear
that,
for
the
purposes
of
subsection
227.1(1)
of
the
Act,
to
discover
the
meaning
of
“director”
one
must
look
to
the
incorporating
legislation
of
the
Corporation,
one
should
do
so
and
avoid
general
principles
of
common
law.
Therefore,
although
they
may
have
been
de
facto
directors
at
common
law,
they
were
not
under
the
Companies
Act
and
should
not
be
held
vicariously
liable
under
section
227.1
of
the
Act...
It
seems
clear
that
in
analyzing
the
definition
of
“director”
in
the
Ontario
Business
Corporations
Act,
which
definition
is
practically
identical
to
paragraph
2(1)(b)
of
the
Companies
Act.
the
Federal
Court
of
Appeal
found
that
the
definition
referred
to
a
de
jure
director.
Let
me
say
outright
that
our
Court
never
decided
in
the
Kalef
case
that
the
definition
in
the
Ontario
Business
Corporations
Act
referred
to
a
de
jure
director.
The
Court
was
called
upon
to
determine
if
the
director
of
a
corporation
ceases
to
be
a
director
for
the
purpose
of
subsection
227.1(4)
of
the
Act
when
a
Trustee
in
Bankruptcy
is
appointed.
It
concluded
that
Mr.
Kalef
did
not
fulfil
any
of
the
requirements
under
the
Ontario
Business
Corporations
Act
which
would
have
indicated
that
he
had
ceased
to
be
a
director.
Therefore,
he
had
remained
a
director
notwithstanding
the
appointment
of
a
Trustee.
In
addition,
our
Court
never
decided
that,
in
interpreting
the
word
“director”
in
subsection
227.1(1)
of
the
Act,
one
can
only
look
at
the
company’s
incorporating
legislation
and
not
at
the
common
law.
Here
is
what
our
colleague
McDonald
J.A.
wrote:
The
Income
Tax
Act
neither
defines
the
term
director,
nor
establishes
any
criteria
for
when
a
person
ceases
to
hold
such
a
position.
Given
the
silence
of
the
Income
Tax
Act,
it
only
makes
sense
to
look
to
the
company’s
incorporating
legislation
for
guidance.
(my
underlining)
There
was
no
need
in
that
case
to
look
at
the
common
law
because
the
statutory
law
determined
when
a
person
ceased
to
be
a
director.
In
addition,
as
our
Court
indicated,
the
statutory
law
is
to
be
looked
at
“for
guidance”.
It
is
certainly
not
exclusive
and
determinative,
especially
in
the
circumstances
of
the
present
appeal
where
the
issue
is
not
to
determine
for
the
purpose
of
section
227.1
of
the
Act
whether
a
person
had
ceased
to
be
a
director
(an
issue
generally
governed
by
statutory
provisions),
but
rather
whether
a
person
ostensibly
acted
as
a
director
and
therefore
was
a
de
facto
or
acting
director
(an
issue
generally
governed
by
common
law
principles).
To
use
the
terms
of
McDonald
J.A.,
“it
only
makes
sense
for
guidance”
to
look
at
the
body
of
law
which
can
provide
the
answer
to
the
silence
of
the
Act.
In
the
present
instance,
such
body
is
the
common
law.
I
should
reiterate
here
that
what
is
in
issue
through
subsection
227.1(1)
of
the
Act
is
the
liability
of
the
directors
of
a
company,
as
directing
minds
of
that
company,
for
their
own
failure
to
prevent
the
prohibited
act,
not
whether
they
engage
the
responsibility
of
the
company,
as
I
think
they
do.
As
early
as
1906,
the
Manitoba
Court
of
Appeal
in
Macdonald
v.
Drake^
rejected
the
defendants’
contention
that
a
statutory
provision
making
directors
jointly
and
severally
liable
for
unpaid
wages
could
only
be
enforced
against
de
jure
directors.
The
Court
found
that
although
the
defendants
were
not
de
jure
directors
because
they
did
not
hold
the
required
shares
in
their
own
right,
they
were
ostensibly
elected,
attended
and
took
part
in
the
meetings
as
well
as
acted
as
directors.
They
were
de
facto
directors
and,
therefore,
personally
liable.
Phippen
J.A.,
at
pages
229
and
230
wrote:
The
law
is
clear
that
the
actions
of
directors
“de
facto”
within
the
powers
of
the
Company
are
binding
upon
both
the
Company
and
the
directors...
I
do
not
think
these
defendants
can
now
be
permitted
to
set
up
a
defect
in
their
own
title
to
the
office,
of
which
they
have
enjoyed
the
benefit,
to
escape
a
debt,
which
I
do
not
consider
a
penalty,
to
employees
in
whose
favour
the
statute
grants
relief.
In
Northern
Trust
Co.
v.
Butcharf\
the
Chief
Justice
of
the
Manitoba
King’s
Bench
Court
stated
in
relation
to
an
allegation
of
misfeasance
and
breach
of
trust
against
the
directors
whom
he
found
jointly
and
severally
liable
for
these
acts:
Whether
they
were
legally
elected
or
not
makes
no
difference.
They
were
de
facto
directors,
and
for
all
acts
of
omission
or
commission
on
their
part,
they
are
liable
in
the
same
manner
and
to
the
same
extent
as
if
they
had
been
de
jure
as
well
as
de
facto
directors.
In
The
Law
of
Canadian
Companies^,
F.W.
Wegenast
writes:
The
objection
to
the
de
facto
directors
cannot,
of
course,
be
invoked
by
an
unauthorized
director
himself
as
for
example
to
escape
liability...
or
to
escape
a
statutory
liability
for
wages
of
workmen
or
for
failure
to
make
government
returns
…;
for
a
de
facto
director
is
in
the
same
position
as
an
executor
de
son
tort.
(my
emphasis)
The
Tax
Court
judge
also
concluded
that
the
term
“director”
in
subsection
227.1(1)
of
the
Act
is
to
be
given
a
narrow
meaning
because
that
subsection
imposes
vicarious
liability.
He
wrote
at
page
9
of
his
decision:
Subsection
227.1(1),
in
imposing
a
vicarious
liability,
refers
only
to
a
“director”.
Subsection
159(3)
also
imposes
vicarious
liability
on
certain
transferors
of
property.
It
is
notable
that
in
subsection
159(2)
the
Act
casts
a
very
wide
net
over
who
is
liable.
It
refers
to
“assignee,
liquidator,
receiver,
receiver-manager,
administrator,
executor
or
any
other
like
person”.
Surely
if
the
Minister
wanted
the
net
cast
by
subsection
227.1(1)
to
be
wide,
words
in
addition
to
“director”
could
have
been
used,
such
as
“whether
de
facto
or
de
jure
or
“including
persons
acting
as
directors”
or
“manager”,
“officer”
or
“any
other
like
person”.
In
my
opinion,
a
provision
imposing
vicarious
liability
should
be
strictly
construed
and
consequently
I
have
done
so.
I
have
already
pointed
out
that
if
Parliament
intended
in
subsection
227.1(1)
to
cover
all
kinds
of
directors,
it
needed
only
to
do
as
it
did,
that
is
to
say
use
the
word
“director”
without
restriction.
Looking
at
the
terms
“assignee,
liquidator,
receiver,
receiver-manager,
administrator
or
executor”
to
which
the
Tax
Court
judge
refers
in
the
passage
quoted,
it
begs
the
question
whether
Parliament
should
have
also
said
in
order
to
cast
a
very
wide
net:
“assignee
whether
de
facto
or
de
jure,
liquidator
whether
de
facto
or
de
jure
....
administrator
whether
de
facto
or
de
jure,
executor
whether
de
facto
or
de
jure?
To
put
the
question
is
to
answer
it.
In
drafting
subsection
227.1(1)
with
a
view
to
casting
a
wide
net,
should
Parliament
have
written,
at
the
sure
risk
of
forgetting
some
other
types
of
directors,
that
the
liability
extended
to
“the
directors
of
the
corporation,
whether
de
facto
or
de
jure,
whether
nominal,
passive
or
active
,
whether
volunteer
or
paid,
whether
inside
or
outside
directors
and
whether
directors
of
a
profit
or
a
not-for-
profit
corporation?
Or
is
it
not
reasonable
to
assume
that,
by
using
the
word
“director”
in
an
unrestricted
and
unqualified
manner,
Parliament
intended
to
cover
all
these
types
of
directors
as
well
as
all
those
who
may
exist
in
Canada
pursuant
to
provincial
laws,
including
statutory
laws?
That
Parliament
intended
to
give
a
broad
and
unrestricted
meaning
to
the
word
“director”
in
subsection
227.1(1)
is
evidenced
by
the
nature
of
the
obligation
put
on
the
corporation
and
its
directors,
the
nature
of
the
debt
owed
by
the
corporation
and
the
nature
of
the
relationship
between
the
corporation,
the
directors,
the
employees
and
the
Crown.
In
this
respect,
the
learned
Tax
Court
judge,
in
my
view,
lost
sight
of
these
elements
and,
as
a
result,
gave
too
restrictive
an
interpretation
to
subsection
227.1(1).
Indeed,
the
debts
owed
to
the
appellant
are
not
of
the
same
nature
as
the
commercial
debts
owed
to
suppliers
in
the
ordinary
course
of
business.
Furthermore,
contrary
to
a
supplier
who
elects
to
do
business
with
a
given
corporation,
the
Crown
is
an
involuntary
creditor
since
the
amount
and
extent
of
its
claim
are
determined
by
the
number
of
employees
that
the
corporation
hires
and
the
remuneration
it
pays.
In
addition,
the
sums
due,
which
generally
are
made
of
taxes
and
contributions
to
social
and
insurance
benefits,
are
for
the
benefit
of
both
the
employees
and
the
public.
Moreover,
they
are
not
moneys
earned
by
the
corporation
by
its
trading
activities.
It
is
for
these
reasons
that
the
Courts
in
England
have
treated
these
debts
owed
to
the
Crown
as
“quasi-trust”
moneys.
In
Lo-Line
Electric
Motors
Ltd.,
Re^,
Sir
Nicolas
Browne-Wilkinson
V-C
stressed
this
fact
and
the
prejudice
resulting
to
a
company’s
employees.
He
quoted
with
approval
the
following
excerpt
from
the
decision
of
Vinelott
J.
in
Stanford
Services
Ltd.,
Re^\
The
directors
of
a
company
ought
to
conduct
its
affairs
in
such
a
way
that
it
can
meet
these
liabilities
when
they
fall
due,
not
only
because
they
are
not
moneys
earned
by
its
trading
activities,
which
the
company
is
entitled
to
treat
as
part
of
its
cash
flow
(entitled
that
is
in
that
the
persons
with
whom
it
deals
expect
the
company
to
do
so)
but,
more
importantly,
because
the
directors
ought
not
to
use
moneys
which
the
company
is
currently
liable
to
pay
over
to
the
Crown
to
finance
its
current
trading
activities.
If
they
do
so
and
if,
in
consequence,
PAYE,
national
insurance
contributions
and
VAT
become
overdue
and,
in
a
winding
up,
irrecoverable,
the
court
may
draw
the
inference
that
the
directors
were
continuing
to
trade
at
a
time
when
they
ought
to
have
known
that
the
company
was
unable
to
meet
its
current
and
accruing
liabilities,
and
was
unjustifiably
putting
at
risk
moneys
which
ought
to
have
been
paid
over
to
the
Crown
as
part
of
the
public
revenues
to
finance
trading
activities
which
might
or
might
not
produce
a
profit.
It
is,
I
think,
misleading
(or
at
least
unhelpful)
to
ask
whether
a
failure
to
pay
debts
of
this
character
would
be
generally
regarded
as
a
breach
of
commercial
morality.
A
director
who
allows
such
a
situation
to
arise
is
either
in
breach
of
his
duty
to
keep
himself
properly
informed,
with
reasonable
accuracy,
as
to
the
company’s
current
financial
position
...
or
is
acting
improperly
in
continuing
to
trade
at
the
expense
and
jeopardy
of
moneys
which
he
ought
not
to
use
to
finance
the
company’s
current
trade.
In
my
view,
subsection
227.1(1)
ought
not
to
have
been
given
an
unduly
restrictive
interpretation
which
had
the
effect
of
compromising
the
valid
social
objectives
sought
to
be
attained
by
the
provision.
The
fact
that
it
imposes
liability
on
the
directors
personally
for
their
own
failure
to
act
does
not
justify
the
restrictive
interpretation
put
on
the
word
“director”
by
the
learned
Tax
Court
judge.
In
view
of
the
broad
wording
of
“director”
in
subsection
227.1(1),
a
failure
to
recognize
the
responsibility
and
liability
of
persons
acting
as
de
facto
directors
amounts
to
condoning
and
inviting
the
performance
of
acts
and
omissions
by
such
persons
which
are
detrimental
to
employees
and
the
public
in
a
trust-like
situation.
The
words
of
Hodgins
J.A.
in
Owen
Sound
Lumber
Co.,
Re
®
are
quite
appropriate:
As
to
the
second
point,
I
agree
with
the
view
of
Middleton
J.,
that,
when
the
directors
assumed
the
fiduciary
office
of
director,
they
became
liable
in
all
respects
as
though
rightly
appointed
to
that
office.
To
hold
otherwise
would
be
to
say
that
a
man
might
do
wrongful
acts
affecting
the
company’s
assets,
and
yet
enjoy
immunity
if
he
could
show
some
defect
in
his
appointment.
If
this
were
the
case,
it
would
become
fashionable
to
usurp
the
office
on
these
terms
rather
than
to
accept
it
in
a
legitimate
but
less
favoured
way.
In
my
respectful
view,
this
is
even
truer
when,
in
a
trust-like
situation,
the
wrongful
acts
are
prejudicial
to
both
the
employees
and
the
public.
The
standard
of
care
and
diligence
applicable
in
the
present
instance
The
learned
Tax
Court
judge
was
of
the
view,
at
pages
19
and
20
of
his
decision,
that
the
standard
of
care
applicable
to
the
directors
of
a
not-for-
profit
corporation,
such
as
the
Louisbourg
Harbourfront
Park
Limited
Corporation
(Corporation),
was
a
standard
less
rigorous
than
the
one
governing
the
directors
of
corporations
run
for
profit.
He
relied
upon
the
decision
of
this
Court
in
Soper
v.
R.2!
that
he
understood
to
mean
that
there
were
“different
standards
of
care
applicable
to
inside
and
outside
directors”
.
I
note
in
passing
that
this
Court
in
Soper
expressly
stated
that
it
did
not
establish
a
different
standard
of
care
for
inside
and
outside
directors.
Robertson
J.A.,
at
p.
156,
wrote:
At
the
outset,
I
wish
to
emphasize
that
in
adopting
this
analytical
approach
I
am
not
suggesting
that
liability
is
dependent
simply
on
whether
a
person
is
classified
as
an
inside
as
opposed
to
an
outside
director.
Rather,
that
characterization
is
simply
the
starting
point
of
my
analysis.
Relying
upon
the
decision
in
Soper
,
the
respondents
argued
that
the
standard
of
care
found
in
subsection
227.1(3)
of
the
Act
is
inherently
flexible
and,
therefore,
there
are
different
standards
to
meet
different
situations.
Accordingly,
there
would
be
one
standard
for
inside
directors,
one
for
outside
directors,
one
for
directors
of
a
not-for-profit
corporation,
one
for
volunteer
directors
and
another
one
for
paid
directors.
To
accept
this
approach
begs
the
thorny
question:
which
of
all
these
different
standards
should
a
Court
apply
if
one
is,
at
the
same
time,
an
outside
director
acting
without
remuneration
in
a
not-for-profit
corporation?
It
is
true
that
in
Soper,
this
Court
wrote
that
“the
standard
of
care
laid
down
in
subsection
227.1(3)
of
the
Act
is
inherently
flexible”
.
It
is
obvious,
however,
on
the
reading
of
the
decision,
that
it
is
the
application
of
the
standard
that
is
flexible
because
of
the
varying
and
different
skills,
factors
and
circumstances
that
are
to
be
weighed
in
measuring
whether
a
director
in
a
given
situation
lived
up
to
the
standard
of
care
established
by
the
Act.
For,
subsection
227.1(3)
statutorily
imposes
only
one
standard
to
all
directors,
that
is
to
say
whether
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.
I
agree
with
counsel
for
the
appellant
that
the
rationale
for
subsection
227.1(1)
is
the
ultimate
accountability
of
the
directors
of
a
company
for
the
deduction
and
remittance
of
employees’
taxes
and
that
such
accountability
cannot
depend
on
whether
the
company
is
a
profit
or
not-for-profit
company,
or
I
would
add
whether
the
directors
are
paid
or
not
or
whether
they
are
nominal
but
active
or
merely
passive
directors.
All
directors
of
all
companies
are
liable
for
their
failure
if
they
do
not
meet
the
single
standard
of
care
provided
for
in
subsection
227.1(3)
of
the
Act.
The
flexibility
is
in
the
application
of
the
standard
since
the
qualifications,
skills
and
attributes
of
a
director
will
vary
from
case
to
case.
So
will
the
circumstances
leading
to
and
surrounding
the
failure
to
hold
and
remit
the
sums
due.
In
my
respectful
view,
it
was
an
error
for
the
Tax
Court
judge
to
conclude
that
the
standard
of
care
was
different
and
less
rigorous
in
not-for-
profit
corporations.
As
a
result,
he
misinterpreted
and
misapplied
the
evidence
that
was
before
him.
Application
of
the
standard
of
care
and
diligence
to
the
respondents
In
the
present
instance,
the
failure
to
withhold
and
remit
the
sums
due
to
the
Crown
began
in
November
1992.
Some
of
the
respondents
(Lawrence,
Parsons,
MacDonald
and
Wheeliker)
learned
of
it
at
the
January
13,
1993
meeting
of
the
directors
while
the
others
(Corsano
and
Maindiratta)
were
appraised
of
the
fact
at
a
subsequent
meeting
on
February
3,
1993.
In
the
case
of
respondents
Corsano,
Wheeliker
and
Maindiratta,
they
knew
of
the
financial
difficulties
of
the
Corporation
as
of
November
1992.
Yet,
somewhat
surprisingly,
the
failure
to
withhold
and
remit
the
sums
due
lasted
until
October
1993
when
the
Corporation
finally
went
bankrupt.
This
means
that,
as
of
their
learning
of
the
financial
difficulties
of
the
Corporation
or
its
failure
to
remit,
all
the
respondents
were
under
a
positive
duty
to
act
to
prevent
failure
to
make
current
and
future
remittances
and
not
simply
to
cure
default
after
the
fact
.
At
best,
the
duty
existed
for
some
directors
for
nine
months.
At
worst,
for
others,
the
omission
to
prevent
failure
lasted
12
months.
The
evidence
revealed
that
no
positive
steps
were
taken
to
prevent
the
Corporation’s
failure
to
remit
current
and
future
source
deductions
when
it
started
to
experience
financial
difficulties.
At
the
January
13
and
February
3,
1993
meetings,
no
action
was
taken
by
the
directors
with
respect
to
the
matter.
At
the
March
3,
1993
meeting,
respondent
Corsano,
upon
becoming
aware
of
the
arrears
in
remittances,
gave
an
instruction
to
the
Manager
to
pay
such
arrears
with
a
receivable
that
the
corporation
was
expecting.
Again,
there
is
no
evidence
of
steps
or
measures
taken
to
address
the
problem
for
current
and
future
remittances.
Numerous
cheques
were
co-signed
by
the
directors
up
to
September
1993
and
remitted
to
suppliers.
The
May
meeting
of
the
Board
of
Directors
also
gave
rise
to
no
corrective
measures
to
prevent
additional
failures.
There
was
no
follow-up
on
the
direction
to
pay
past
dues
given
at
the
March
meeting.
At
the
July
meeting,
respondent
Corsano
allegedly
learned
for
the
first
time
that
his
March
direction
to
the
Manager
had
not
been
implemented
and,
therefore,
that
the
previous
sums
were
still
owing
to
the
Crown.
He
also
became
aware
that
throughout
the
period,
the
current
remittances
too
had
not
been
paid.
He
instructed
that
every
cent
be
sent
to
the
Crown.
This,
however,
was
not
meant
to
be
what
it
said
since
the
suppliers
were
nonetheless
to
be
paid
in
order
to
keep
the
business
going
.
Indeed,
shortly
after
the
meeting,
he
interceded
with
the
Manager
to
ensure
payment
of
a
supplier’s
invoice
to
the
detriment
of
Revenue
Canada
.
Therefore,
as
the
evi-
dence
reveals,
payment
of
the
Crown’s
debts
was
not
made
and
there
was
no
follow-up
of
any
kind
to
ensure
the
implementation
of
such
direction.
Moreover,
once
again,
no
positive
steps
were
taken
such
as
setting
up
controls
to
account
for
remittances,
asking
for
regular
reports
from
the
manager
on
the
ongoing
use
of
such
controls
and
ensuring
at
regular
intervals
that
the
remittances
have
taken
place.
And
the
failure
continued
to
occur
for
some
more
months.
In
fact,
the
directors
delegated
their
authority
on
this
matter
to
the
Manager,
but
literally
failed
to
control
its
exercise
notwithstanding
clear
evidence
of
repeated
omissions
and
failures
on
the
Manager’s
part.
The
delegation
amounted
to
nothing
less
than
abdication.
The
learned
Tax
Court
judge
gave
a
number
of
reasons
to
support
his
conclusion
that
the
respondents
had
exercised
the
degree
of
care,
diligence
and
skills
required
in
the
circumstances.
First,
he
concluded
that
the
freedom
of
the
Board
to
act
was
curtailed
to
a
large
extent
by
the
Louisbourg
Harbourfront
Park
Society
(Society)
which
owned
96%
of
the
shares
of
the
Corporation.
Such
finding
is
not
supported
by
the
evidence
with
respect
to
the
issue
at
stake.
It
is
true
that
the
Society
would
not
relinquish
its
shares
in
the
Corporation
to
let
it
go
private.
But
this
is
a
far
cry
from
interfering
with
the
Corporation’s
obligations
under
subsection
227.1(1)
of
the
Act.
In
his
testimony,
Mr.
Wheeliker,
who
was
the
chairman
of
the
Board,
admitted
in
cross-examination
that
the
Society
did
not
prevent
the
Board
from
exercising
its
control
over
the
Corporation
.
Nor
did
it
get
involved
in
the
policy
decisions
made
by
the
Board
or
interfere
with
the
day
to
day
operations
of
the
Corporation
.
Although
there
was
undoubtedly
a
desire
by
the
Society
to
keep
the
Corporation
going,
there
was
no
evidence
of
the
Society
preventing
the
Corporation
from
withholding
and
remitting
to
Revenue
Canada
the
source
deductions.
Second,
the
Tax
Court
judge
found
some
comfort
in
the
fact
that,
at
the
March
meeting,
the
Board
instructed
the
Manager
to
send
to
Revenue
Canada
a
receivable
expected
from
Enterprise
Cape
Breton
Corporation.
In
my
view,
this
fails
to
address
the
issue.
Such
payment
would
have
corrected
default
and
paid
the
past
remittances,
but
the
issue
of
the
current
withholding
and
remittances
was
left
unaddressed.
No
steps
were
taken
to
put
an
end
to
the
on-going
failures
and
to
prevent
the
likely
on-coming
failures.
Third,
the
Tax
Court
judge
considered
as
a
positive
factor
the
fact
that
the
Board
had
taken
great
care
in
hiring
a
qualified
person
as
Manager
and
were
justified
in
trusting
him.
With
respect,
there
was
evidence
that
the
directors
knew
early
in
the
process
of
the
failures
to
remit
sums
to
Revenue
Canada.
In
addition,
according
to
the
directors,
the
Manager
did
not
follow
their
instructions
to
pay
Revenue
Canada.
Yet,
no
swift
and
diligent
measures
were
taken
to
address
this
alleged
disobedience
by
the
Manager
and
correct
the
situation
for
the
past
and
the
future.
In
his
testimony,
Mr.
Cor-
sano
admitted
that
he
had
serious
concerns
about
the
Manager’s
ability
to
run
the
company,
especially
as
he
was
disregarding
the
directives
of
the
directors,
but
yet,
as
a
principal
director,
he
did
not
call
a
meeting
of
the
Board
to
discuss
the
issue
and
take
the
necessary
appropriate
corrective
measures
.
Fourth,
in
assessing
the
respondent’s
due
diligence,
the
Tax
Court
judge
took
in
consideration
the
fact
that
the
directors
were
satisfied
that
the
asset
values
of
the
Corporation
would
be
sufficient
to
meet
the
claims
of
all
creditors,
including
Revenue
Canada.
With
respect,
this
is
an
irrelevant
consideration.
The
obligation
on
the
directors
is
to
prevent
a
failure,
not
to
condone
it
systematically,
as
the
respondents
did,
in
the
hope
of
eventually
correcting
it
because
there
would
be
enough
money
in
the
end
to
pay
all
the
creditors.
Fifth,
he
was
satisfied
that
the
directors
made
inquiries
at
the
meetings
of
the
Board
with
respect
to
the
status
of
remittances.
He
may
have
been
satisfied
that
such
behaviour
was
sufficient
to
meet
the
less
rigorous
test
that
he
was
applying
to
the
situation.
However,
this
is
obviously
not
enough
to
meet
the
burden
imposed
by
subsection
227.1(3).
Finally,
he
considered
the
fact
that
the
Society
dismissed
all
the
directors
of
the
Corporation
and
send
it
into
bankruptcy,
thereby
preventing
these
directors
from
continuing
to
try
and
keep
the
business
going
and
getting
in
a
healthier
financial
position.
Again,
this
is,
in
my
view,
an
improper
consideration
to
take
into
account
in
assessing
the
degree
of
care
and
diligence
exercised
by
the
directors.
At
the
time
of
their
removal,
they
had
been
in
default
of
withholding
and
remitting
the
source
deductions
for
almost
one
year.
As
the
Court
said
in
Stanford
Services
Ltd.,
Re
(supra),
in
the
passage
previously
quoted,
the
directors
ought
to
have
conducted
the
affairs
of
the
Corporation
in
such
a
way
that
it
could
“meet
these
liabilities
when
they
fall
due...
because
the
directors
ought
not
to
use
moneys
which
the
company
is
currently
liable
to
pay
over
to
the
Crown
to
finance
its
current
trading
activities”.
In
conclusion,
I
believe
the
learned
Tax
Court
judge
took
into
consideration
factors,
which
either
taken
in
isolation
or
as
a
whole,
cannot
justify
his
conclusion
with
respect
to
the
liability
of
directors
pursuant
to
subsections
227.1(1)
and
(3)
of
the
Act.
As
sad
as
it
may
be,
especially
with
respect
to
the
respondents
who
acted
as
benevolent
directors
and
gave
their
time,
it
is
simply
not
possible
to
find
that
they
have
exercised
the
degree
of
care
and
diligence
expected
to
prevent
a
failure
to
withhold
and
remit
when
such
known
failure
was
allowed
to
repeat
itself
uninterruptedly
for
one
year.
This
Court
would
be
remiss
of
its
duty
to
enforce
the
law
if
it
were
to
condone
acts
or
omissions
performed
by
experienced,
informed
and
warned
directors
which
fall
below
the
standard
of
care,
diligence
and
skill
expected
from
them
pursuant
to
subsection
227.1(3)
of
the
Act.
For
these
reasons,
I
would
allow
these
appeals,
I
would
set
aside
the
decisions
of
the
Tax
Court
judge,
and
I
would
dismiss
the
appeals
by
the
respondents
Wheeliker,
Corsano
and
Maindiratta
from
the
assessments
made
by
the
Minister
of
National
Revenue
pursuant
to
subsection
227.1(1)
of
the
Income
Tax
Act.
With
respect
to
the
respondents
Lawrence,
Parsons
and
MacDonald,
I
would,
rendering
the
decisions
that
the
Tax
Court
judge
ought
to
have
rendered,
allow
their
appeals
in
part
and
refer
the
assessments
back
to
the
Minister
for
reconsideration
and
reassessment
on
the
basis
that
the
liability
of
these
three
respondents
for
failure
to
withhold
and
remit
begins
as
of
January
13,
1993.
As
the
appellant
is
not
seeking
costs,
I
would
issue
no
order
as
to
costs.
Appeal
allowed
in
part.
[1999]
2
C.T.C.
Tax
Court
Decisions
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