Archambault v. Agence du revenu du Québec, 2018 QCCQ 3291

The taxpayer, a painter and plasterer who read only haltingly, was persuaded to let a rogue (“Bellefleur”) to acquire (together with Bellefleur’s son) a majority interest in a corporation owned by the taxpayer (that was dormant, but which held a useful building licence). The taxpayer remained as a director of “Xcalibur,” but Xcalibur‘s registered address was changed from the home address of the taxpayer to that of Bellefleur.

In purported compliance with s. 24.0.1(a) of the Tax Administration Act (Quebec), which references the situation “where the notice of execution of a seizure of movable property in respect of the corporation is returned unfulfilled in whole or in part following a judgment rendered under section 13,” the certificate and judgement issued under s. 13 as well as the writ of execution referred to the home address of the taxpayer rather than the registered address of the corporation (being the home address of Bellefleur). The ARQ proceeded in this manner because, due to prior experiences with Bellefleur, they surmised correctly that neither he nor the corporation run by him that was delinquent in its remittances (Xcalibur) had any assets, so that it wished to pursue the taxpayer for recovery of the unpaid amounts of Xcalibur.

In granting the taxpayer’s appeal, Bourgeois JCQ stated (at para. 71, TaxInterpretations translation):

In this instance, the Court cannot arrive at the conclusion that the preliminary condition was satisfied for the issuance of a notice of assessment against Archambault, as Revenu Québec had proceeded to execution not at the registered office of Xcalibur, but instead the personal address of Archambault, which did not only not conform with the rules for the execution of judgment against a corporation, but also did not conform with paragraph 24.0.1(a) of the TAA.

The Quebec equivalent of ETA s. 323(2)(a) (in s. 24.0.1(a) of the Quebec Tax Administration Act) requires as a precondition to assessing a director for unremitted corporate source deductions or QST that “the notice of execution of a seizure of movable property in respect of the corporation is returned unfulfilled in whole or in part following a judgment rendered under section 13 [of the TAA]” (subject to an alternate procedure applying). Bourgeois JCQ found that this precondition was not satisfied where the certificate and judgement issued under s. 13 as well as the writ of execution referred to the home address of the taxpayer rather than the registered address of the corporation (being the home address of the other director, whom the ARQ knew to be a deadbeat). The taxpayer’s appeal was allowed.