Trann v. Canada (Attorney General), 2004 FCA 138

Date: 20040330

Docket: A-239-03

Citation: 2004 FCA 138

CORAM:        STRAYER J.A.

NOËL J.A.

SEXTON J.A.

BETWEEN:

                                                        JOHN PATRICK TRANN

                                                                                                                                            Applicant

                                                                           and

                                         THE ATTORNEY GENERAL OF CANADA

                                                                                                                                        Respondent

                                 Heard at Vancouver, British Columbia on March 30, 2004.

            Judgment delivered from the Bench at Vancouver, British Columbia on March 30, 2004.

REASONS FOR JUDGMENT OF THE COURT BY:                                                  SEXTON J.A.

Date: 20040330

Docket: A-239-03

Citation: 2004 FCA 138

CORAM:        STRAYER J.A.

NOËL J.A.

SEXTON J.A.

BETWEEN:

                                                        JOHN PATRICK TRANN

                                                                                                                                            Applicant

                                                                           and

                                         THE ATTORNEY GENERAL OF CANADA

                                                                                                                                        Respondent

                                     REASONS FOR JUDGMENT OF THE COURT

             (Delivered from the Bench at Vancouver, British Columbia on March 30, 2004)

SEXTON J.A.

[1]                The Applicant owned 60% of the shares of Conag Alignment Products Ltd. (the Company). His wife owned 20% and his brother owned the remaining 20% of the shares. The Applicant was the sole director and was the manager of the Company. In effect he ran the Company.

[2]                The Company was a registrant under Part IX of the Excise Tax Act and was required to file Goods and Services Tax (GST) returns on a quarterly basis.

[3]                In 1996 and 1997 the Company ran into financial problems and Canada Customs and Revenue Agency (CCRA) contacted the Company about unfiled returns.

[4]                The Applicant was aware of the Company's financial problems and sought to borrow money to alleviate the problem.

[5]                The Company did not have a separate bank account for the GST trust funds and remittances for GST were not being made.

[6]                As a consequence of complaints by CCRA the Applicant arranged for the Company to provide post-dated cheques to CCRA to cover the arrears. However before all of these could be honoured the Company went to the Receivership and in 1998 the Company filed an assignment in bankruptcy.

[7]                The Minister assessed the Applicant for the arrears of GST, plus interest and penalties.

[8]                The Tax Court Judge dismissed the Applicants appeal. While he did not, in his reasons, advert to the defence of due diligence, it is clear from the evidence that this issue was raised by the judge with the Applicant. Indeed it seems to have been the sole issue before the Tax Court Judge.

[9]                The Applicant argues that the Tax Court Judge failed to consider the efforts of the Applicant made after default in GST payments to remedy the situation. This, however, is beside the point.

[10]            The Applicant was obliged to demonstrate that he acted with due diligence by taking partial steps to prevent the failure to remit GST.

[11]            The Applicant, as sole director and manager had the responsibility to ensure that the remittances were made. His belated attempts to remedy the situation subsequent to the failure to remit the GST funds as they became due are not sufficient to meet the due diligence test in the Act.

[12]            We are unable to conclude that the Tax Court Judge made any palpable and overriding error in his conclusion.

[13]            The application will therefore be dismissed.

                                                                                                                       (Sgd.) "J. Edgar Sexton"

                                                                                                                                                      J.A.

                                                  FEDERAL COURT OF APPEAL

                            NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                                                               A-239-03

APPEAL FROM A JUDGEMENT OF THE TAX COURT OF CANADA DATED 25-APR-2003 FOR FILE NO. 2002-4071(GST)I .

STYLE OF CAUSE:    J. PATRICK TRANN and HER MAJESTY THE QUEEN                 

PLACE OF HEARING:                                                         VANCOUVER, B.C.

DATE OF HEARING:                                                           30-MAR-2004

REASONS FOR JUDGMENT OF THE COURT:              STRAYER, NOËL, SEXTON JJ.A.

DELIVERED FROM THE BENCH BY:                             SEXTON J.A.

DATED:                                                                                  30-MAR-2004

APPEARANCES:

SOLICITOR OF RECORD: