Rip,
T.C.J.:—Norman
S.
Thomas
and
Catherine
M.
Thomas
(the
"appellants")
appeal
notices
of
assessment
issued
by
the
Minister
of
National
Revenue,
the
respondent,
on
July
13,
1987,
by
virtue
of
subsection
227(10)
of
the
Income
Tax
Act
("Act")
following
garnishment
proceedings
against
the
appellants
in
accordance
with
subsection
224(1)
of
the
Act
after
failure
of
the
appellants
to
comply
with
the
requirement
to
pay.
Subsection
224(1)
reads
as
follows:
Where
the
Minister
has
knowledge
or
suspects
that
a
person
is
or
will
be,
within
90
days,
liable
to
make
a
payment
to
another
person
who
is
liable
to
make
a
payment
under
this
Act
(in
this
section
referred
to
as
the
“tax
debtor"),
he
may,
by
registered
letter
or
by
a
letter
served
personally,
require
that
person
to
pay
forthwith,
where
the
moneys
are
immediately
payable,
and,
in
any
other
case,
as
and
when
the
moneys
become
payable,
the
moneys
otherwise
payable
to
the
tax
debtor
in
whole
or
in
part
to
the
Receiver
General
on
account
of
the
tax
debtor's
liability
under
this
Act.
Subsection
224(4)
provides
that:
Every
person
who
fails
to
comply
with
a
requirement
under
subsection
(1)
.
.
.
is
liable
to
pay
to
Her
Majesty
an
amount
equal
to
the
amount
that
he
was
required
under
subsection
(1)
.
.
.
to
pay
to
the
Receiver
General.
The
appeals
were
heard
on
common
evidence.
The
facts
are
not
in
issue.
The
appellants
were
the
sole
directors,
shareholders
and
officers
of
Norman's
Pharmacy
Ltd.
("company")
which
was
incorporated
in
1956
under
the
British
Columbia
Company
Act,
R.S.R.C.,
1979,
c.
59,
(“B.C.
Act").
The
company
operated
a
pharmacy
business
in
Kimberley,
British
Columbia.
The
appellants
are
husband
and
wife.
Mr.
Thomas
owned
51
per
cent
of
the
shares
of
the
company
and
Mrs.
Thomas
49
per
cent
of
the
shares.
In
1973
the
company
advanced
to
the
appellants,
or
to
one
of
them,
the
sum
of
$33,472
to
assist
in
the
construction
of
a
home
("housing
loan”).
The
housing
loan
was
repayable
in
monthly
instalments
of
$273,
including
interest
at
eight
per
cent
per
annum.
As
at
December
31,
1981,
the
loan
balance
was
$25,857.
The
company
sold
its
business
and
ceased
operations
in
August,
1978.
Mr.
and
Mrs.
Thomas
subsequently
moved
to
Vancouver;
the
head
office
of
the
company
remained
in
Kimberley.
Over
the
period
1976
to
December
31,
1982,
there
were
a
series
of
advances
to
and
from
the
company
by
both
appellants
as
shareholders
of
the
company.
As
at
December
31,
1980,
the
company's
receivable
from
shareholders
was
$125,148.
On
December
20,
1982,
the
directors
of
the
company
passed
a
resolution
authorizing
the
payment
of
a
dividend
in
the
aggregate
amount
of
$48,505
to
be
paid
out
of
the
company's
capital
dividend
account
on
December
31,
1982,
to
shareholders
of
record
on
December
20th.
The
dividend
was
applied
to
credit
Mr.
Thomas'
loan
account
with
$24,737.55
and
Mrs.
Thomas'
account
with
$23,767.45.
Norman
Thomas'
shareholder
account
debit
balance
on
December
31,1982,
was
$27,662.45
and
Catherine
Thomas'
debit
balance
at
that
date
was
$57,669.55.
The
Registrar
of
Companies
of
British
Columbia
struck
the
company
off
the
company
register,
thus
dissolving
the
company,
on
December
20,
1982,
pursuant
to
section
281
of
the
B.C.
Act,
the
company
had
for
two
years
failed
to
file
with
the
registrar
the
annual
report
required
by
statute
to
be
filed.
Mr.
Thomas
stated
he
was
not
aware
the
company
was
dissolved
until
sometime
later
when
he
was
advised
by
his
lawyer.
The
date
of
the
declaration
of
the
capital
dividend
and
the
date
of
the
company's
dissolution
appear
to
be
coincidental.
The
company's
fiscal
year
ended
on
December
31
of
each
calendar
year.
On
November
27,
1981,
the
company
paid
all
outstanding
taxes
owing
at
that
time.
Income
tax
returns
for
1980
and
1981
were
filed
and
taxes
assessed,
although
the
company
had
not
paid
its
tax
liability
which,
together
with
interest,
was
$33,991.93
as
at
May
1,
1986.
According
to
the
company's
1981
financial
statement
its
only
assets
were
the
loans
due
from
the
appellants
and
an
automobile.
The
respondent
was,
and
remains,
of
the
view
that
the
loans
due
to
the
company
by
the
appellants
were
payable
to
the
company
when
the
company
was
dissolved
but
the
appellants
failed
to
repay
the
loans.
Thus,
the
respondent
concluded,
each
of
the
appellants
was
a
person
liable
to
make
a
payment
to
the
company,
which
was
liable
to
make
a
payment
under
the
Act.
The
respondent
pleads
these
facts
were
within
his
knowledge
on
May
1,
1986.
By
registered
letter
dated
May
1,
1986,
the
respondent
required
each
of
the
appellants
to
pay
forthwith,
in
accordance
with
subsection
224(1),
the
moneys
otherwise
payable
to
the
company
to
the
Receiver
General
on
account
of
the
company's
liability
under
the
Act.
When
the
appellants
failed
to
pay
the
Receiver
General
the
amounts
indicated
in
the
letters
of
May
1,
1986,
the
respondent
issued
the
notices
of
assessment
under
appeal.
Mr.
Thomas
was
assessed
$27,662.45
and
Mrs.
Thomas
was
assessed
$33,991.93.
The
appellants'
appeals
are
based
on
both
procedural
and
substantive
grounds.
Their
substantive
argument
was
an
amount
could
be
due
in
one
day
but
not
payable
until
a
later
day
and
therefore
the
words
“liable
to
make
payment"
in
subsection
224(1)
may
contemplate
a
payment
being
made
beyond
the
90-day
period
even
though
the
payment
is
due
within
the
90
days.
However,
during
the
course
of
his
submissions
counsel
for
the
appellants
agreed
that
the
company
could
have
demanded
payment
of
the
advances
at
any
time
and
they
would
have
been
payable
forthwith
and
conceded
that
his
procedural
argument
was
the
preferable
basis
of
the
appeals.
The
appellants’
procedural
submission
follows:
the
respondent
must
follow
proper
procedures
before
making
a
demand
on
third
parties
pursuant
to
subsection
224(1).
The
Thomases
were
correct
in
refusing
to
pay
the
Receiver
General
because
they
were
not
liable
to
make
payment
to
the
company
on
May
1,
1986,
and
did
not
intend
to
make
such
a
payment
within
the
next
90
days.
The
appellants’
counsel
referred
the
Court
to
two
decisions
of
the
British
Columbia
County
Court
in
support
of
his
submission.
In
The
Queen
v.
Kalvin
Gill
(1989),
40
B.C.L.R.
(2d)
360;
52
C.C.C.
(3d)
349,
the
Court
was
of
the
view
a
corporation
is
a
creature
of
statute.
“It
is
born
on
incorporation:
it
dies
upon
dissolution.”
Once
a
corporation
is
dissolved
it
is
incapable
of
any
activity.
In
Olympia
&
York
Developers
Ltd.
v.
Price,
[1976]
5
W.W.R.
347
at
349,
Darling,
C.C.J.
held
that
upon
dissolution
a
corporation's
life
is
rendered
moribund
and
remains
so
until
some
interested
party
has
the
corporation
restored.
"Moribund"
is
defined
by
the
Shorter
Oxford
English
Dictionary
on
Historical
Principles
as
.
.
at
the
point
of
death;
in
a
dying
state
.
.
.”.
The
respondent's
position,
as
explained
by
counsel,
Ms.
Clare,
is
that
as
at
December
15,
1982,
a
time
prior
to
dissolution
I
assume,
there
was
an
existing
person,
the
company
which
was
owed
money
by
Mr.
and
Mrs.
Thomas.
At
any
time
thereafter
the
respondent
could
order
Mr.
and
Mrs.
Thomas
to
make
payment
instead
to
the
Receiver
General.
The
liabilities
of
the
appellants
to
the
company
and
of
the
company
to
the
Crown
continue
notwithstanding
the
dissolution
of
the
company.
Counsel
advised
the
Court
she
“could
not
find
any
case
directly
on
point”
to
support
her
submission.
I
must
comment
that
Ms.
Clare
was
not
prepared
for
this
hearing
and
her
conduct
was
not
becoming
competent
counsel.
Not
only
did
she
appear
late
for
the
trial
but
her
cross-
examination
of
Mr.
Thomas
was
conducted
apparently
without
any
prior
review
of
the
file.
Minutes
intervened
between
questions
and
documents
submitted
to
the
witness
were
in
disorder.
Witnesses
before
this
Court
are
deserving
of
greater
respect.
In
any
event,
the
respondent's
position
is
that
the
liability
from
Mr.
and
Mrs.
Thomas
to
the
company
continued
to
exist
after
December
20,
1982.
Sections
280
to
289
of
the
B.C
Act
describe
the
conditions
under
which
a
corporation
may
be
dissolved
and
revived.
The
provisions
relevant
to
the
appeal
at
Bar
are
as
follows:
281.(1)
Where
(a)
a
company
or
an
extraprovincial
company
has
for
2
years
failed
to
file
with
the
registrar
the
annual
report
or
any
other
return,
notice
or
document
required
by
this
Act
to
be
filed
by
it;
the
registrar
shall
mail
to
the
company
or
extraprovincial
company
a
registered
letter
notifying
it
of
its
failure
or
of
his
belief,
and
of
his
powers
under
subsection
(3).
(3)
Where,
within
one
month
after
the
registrar
mails
the
letter
referred
to
in
subsection
(1)
or
(2),
he
does
not
receive
a
response
that
(a)
indicates
that
the
failure
has
been
or
is
being
remedied,
or
is
otherwise
satisfactory
to
him;
.
.
.
the
registrar
may
publish
in
the
Gazette
a
notice
that,
at
any
time
after
the
expiration
of
one
month
from
the
date
of
publication
of
the
notice,
the
company
will,
unless
cause
is
shown
to
the
contrary,
be
struck
off
the
register
and
dissolved,
(4)
At
any
time
after
one
month
after
the
date
of
publication
of
the
notice
referred
to
in
subsection
(3)
the
registrar
may,
unless
good
cause
to
the
contrary
is
shown
to
him,
strike
the
company
off
the
register
and,
thereon,
the
company
is
dissolved,
.
.
.
284.
The
liability
of
every
director,
officer,
liquidator
and
member*
of
a
company
that
is
struck
off
the
register.
.
.
pursuant
to
section
280,
281,
283
or
344
shall
A
member
is
a
shareholder.
continue
and
may
be
enforced
as
if
the
company
had
not
been
struck
off
the
register,
.
.
.
285.(1)
Where
a
company
has
been
dissolved
.
.
.
the
court
may,
if
it
is
satisfied
that
it
is
just
that
the
company
.
.
.
be
restored
to
the
register,
not
more
than
10
years
after
the
date
of
the
dissolution
.
.
.
on
application
by
the
liquidator,
a
member,
a
creditor
of
the
company
or
extraprovincial
company,
or
any
other
interested
person,
make
an
order,
subject
to
the
conditions
and
on
the
terms
the
court
considers
appropriate,
restoring
the
company
.
.
.
to
the
register.
(2)
Where
a
company
or
an
extraprovincial
company
is
restored
to
the
register
under
subsection
(1),
the
company
shall
be
deemed
to
have
continued
in
existence.
.
.and
proceedings
may
be
taken
as
might
have
been
taken
if
the
company
had
not
been
dissolved.
.
.
.
The
task
before
me
is
to
determine
whether
the
appellants,
on
May
1,
1986,
were
or
would
be,
within
90
days,
“liable
to
make
payment
to"
the
company
and
if
so,
whether,
at
the
time,
the
company
was
“liable
to
make
a
payment"
under
the
Act.
The
operating
words
of
section
281
of
the
B.C.
Act
relevant
to
the
appeal
are
found
in
subsection
(4),
to
wit:
”.
.
.
the
company
is
dissolved
.
.
.".
Halsbury
wrote
that
dissolution
puts
an
end
to
the
existence
of
a
company
and
unless
and
until
the
dissolution
has
been
set
aside,
it
prevents
any
proceedings
being
taken
against
directors
or
officers
of
the
company
to
recover
money
or
property
due
or
belonging
to
it
or
to
prove
a
debt
due
from
it.
Dissolution
in
British
Columbia
is
not
identical
to
dissolution
in
the
United
Kingdom;
for
example,
in
the
United
Kingdom,
as
I
understand
it,
a
liquidation
is
involved
in
the
dissolution
of
a
corporation.
However,
in
both
jurisdictions
it
is
clear
the
corporate
entity
ceases
to
exist
until
action
is
taken
to
annul
the
dissolution.
In
the
course
of
preparing
these
reasons
for
judgment,
the
Supreme
Court
of
Canada
decision
in
A.-G.
British
Columbia
v.
Royal
Bank
et
al.,
[1937]
S.C.R.
459;
[1937]
3
D.L.R.
393
(“Royal
Bank")
came
to
my
attention.
Copies
of
the
reasons
for
judgment
were
sent
to
counsel
for
their
comments.
The
Supreme
Court
of
Canada
held
that
on
the
proper
construction
of
sections
199
and
200
of
the
British
Columbia
Companies
Act
of
1929
(c.
11),
the
doctrine
of
bona
vacantia
does
not
apply
so
as
to
include
moneys
of
an
incorporated
company
which
had
its
name
stricken
from
the
register
under
the
provisions
of
the
British
Columbia
Companies
Act
of
1929
(sections
167
and
168
of
c.
38),
the
predecessor
provision
to
section
281
of
the
B.C.
Act,
and
restored
under
the
provisions
of
the
1929
Act.
Such
company,
while
“dissolved”,
cannot
be
considered
to
be
dead
for
all
purposes
when,
inter
alia,
by
the
very
part
of
the
Act
that
refers
to
dissolution
(subsection
199(1)
of
the
Act
of
1929),
provision
is
also
made
enabling
the
company
to
apply
to
the
court
for
an
order
of
revivor,
with
the
express
enactment
that,
upon
the
order
being
made,
"the
company
shall
be
deemed
to
have
continued
in
existence
.
.
.
as
if
it
had
not
been
struck
off".
When
the
Royal
Bank
case
was
brought
to
the
attention
of
the
respondent's
counsel
she
wrote
to
the
Court
that
the
case
is
“binding
authority
for
the
proposition
that
the
technical
striking
off
imposed
by
section
281
of
the
1929
Act
is
not
"an
end
of
the
company
for
all
purposes"
(per
Kerwin,
J.
at
D.L.R.
page
406)
and
the
company
"cannot
be
taken
to
be
dead
for
all
purposes
when,
by
the
very
part
of
the
Act
that
refers
to
dissolution,
provision
is
also
made
for
an
order
of
revivor,
with
the
consequence
that
the
company
is
deemed
to
have
continued
in
existence
as
if
it
had
not
been
struck
off"
(per
Kerwin,
J.
at
D.L.R.
page
407).
She
added
that
since
Part
9
of
the
B.C.
Act
is
entitled
“Dissolution
and
Restoration"
and
is
separated
into
“Division
(1)
—
Cancellation”,
“Division
(2)—Restoration"
and
“Division
(3)—Winding
up",
“it
is
only
a
winding
up
under
Division
3
which
achieves
a
complete
dissolution".
In
his
written
submission
to
the
Court,
counsel
for
the
appellants
referred
to
several
references
Kerwin,
J.
to
the
fact
that
the
Act
of
1929
allowed
the
company
itself
to
apply
to
the
court
to
be
restored
and
also
permitted
the
company,
for
that
purpose,
to
hold
meetings
and
take
proceedings
as
if
it
had
not
been
dissolved.
He
concludes
that
the
Supreme
Court
of
Canada
based
its
decision
in
the
Royal
Bank
case
that
a
company,
once
dissolved,
is
not
dead
for
all
purposes,
on
the
fact
that
under
the
provisions
of
the
Act
of
1929
a
company
could
apply
on
its
own
for
restoration
to
the
company
register.
This
is
not
available
under
the
provisions
of
the
B.C.
Act.
The
company
therefore
“died”
on
dissolution
and
therefore
no
person
existed
as
contemplated
under
subsection
224(1)
of
the
B.C.
Act.
It
is
clear
that
since
the
company
could
be
restored
the
dissolution
was
not
the
end
of
the
company
for
all
purposes:
Royal
Bank,
supra,
S.C.R.
pages
469,
471-472
per
Kerwin,
J.
During
the
period
the
corporation
is
dissolved
pursuant
to
section
281
of
the
B.C.
Act
and
the
last
day
it
may
be
restored
to
the
company
register
in
accordance
with
section
286
of
the
B.C.
Act,
it
is
not
dead
absolutely.
The
existence
of
the
corporation
is
suspended;
the
corporation
is
a
non-entity
lacking
any
capacity.
Only
when
the
corporation
is
restored
to
the
register
is
it
"deemed
to
have
continued
in
existence"
(subsection
286(2)).
So
long
as
the
corporation
is
not
restored
to
the
register
and
is
thus
not
deemed
to
continue
in
existence,
it
is
not
in
existence.
A
corporation
requires
action
by
a
person
other
than
itself
to
be
restored
to
the
register:
only
the
liquidator
of
the
corporation,
a
member,
a
creditor
of
the
corporation
or
any
other
interested
person
may
apply
to
the
court
to
be
restored
to
the
register
(subsection
286(1)).
There
is
no
provision
in
the
B.C.
Act,
as
there
was
in
the
Act
of
1929,
allowing
the
corporation
itself
to
apply
to
the
Court
to
be
restored.
The
present
Act
contains
no
provision
for
a
corporation,
once
struck
from
the
register
and
dissolved,
to
hold
a
meeting
for
any
purpose.
In
my
view
the
words
“any
other
interested
person"
in
subsection
286(1)
includes
such
persons
who
may
have
a
right
to
any
property
of
the
corporation
that
has
not
been
distributed
and
is
still
available
to
pay
its
liabilities,
but
not
the
corporation
itself.
Thus
on
its
own,
the
corporation
lacks
the
capacity
to
do
anything.
When
a
corporation's
existence
is
in
a
state
of
suspense
it
cannot
carry
on
activity
normally
carried
on
by
a
corporation
because
it
lacks
the
legal
capacity
and
competence
to
do
so.
It
cannot,
for
example,
sue
a
debtor
or
enter
into
a
contract.
For
this
reason
the
company,
on
May
1,
1986,
was
not
liable
to
make
a
payment
under
the
Act
to
the
Receiver
General
for
Canada:
it
lacked
the
capacity
to
"make"
a
payment.
That
the
company
was
liable
to
the
Receiver
General
for
payment
under
the
Act
is
not
disputed,
but
the
company
at
the
time
lacked
the
capacity
to
"make"
a
payment.
Similarly
it
is
doubtful
either
of
the
appellants,
on
May
1,
1986,
or
within
90
days,
could
"make
a
payment
to"
the
company
since
the
company
did
not
have
the
capacity
to
receive
the
payment.
The
respondent
is
a
creditor
of
the
company.
The
respondent
may
still
have
the
right
in
accordance
with
subsection
286(1)
to
apply
to
a
court
of
competent
jurisdiction
to
have
the
company
restored
to
the
register.
The
respondent
has
no
special
privileges
under
the
B.C.
Act
and
any
enforcement
of
payment
of
assessments
issued
by
it
must
be
in
accordance
with
the
law:
the
respondent
cannot
ignore
the
laws
of
the
corporation's
corporate
jurisdiction
because
he
is
a
Minister
of
the
Crown.
There
may
be
avenues
available
to
him
to
collect
taxes
owing
from
the
company
but
to
pursue
these
avenues
he
must
follow
proper
procedures.
The
Minister
demands
this
from
taxpayers;
taxpayers
can
expect
nothing
less
from
the
Minister.
It
may
well
be
that
once
the
company
is
restored
to
the
register,
the
respondent
may
again
commence
a
process
that
will
culminate
in
the
issuance
of
assessments
to
the
appellants
but
the
assessments
actually
issued
have
no
legal
foundation.
The
appeals
are
allowed
with
costs.
The
assessments
will
be
vacated.
Appeals
allowed.
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