Kempo,
T.C.J.:—This
appeal
is
not
in
respect
of
any
particular
taxation
year
of
the
appellant
but
rather
concerns
an
assessment
dated
August
30,
1983
which
reads
as
follows:
This
assessment
is
issued
pursuant
to
the
provisions
of
Subsections
227(10)
and
227.1
of
the
Income
Tax
Act
and
is
in
respect
of
Federal
Income
Tax
deducted
at
source
from
the
employees
of
W.S.W.
Tool
&
Die
Company
Limited,
in
the
month
of
April,
1982
and
not
remitted
to
the
Receiver
General
for
Canada
on
or
by
May
15,
1983.
The
issue
is
whether
the
appellant
is
liable
thereunder.
The
assessed
amount
is
$15,154.22
together
with
penalty
and
interest
of
$4,097.90
for
a
total
of
$19,252.12.
The
Appellant’s
Position
The
appellant
has
raised
the
following
objections
to
the
assessment.
(1)
The
respondent
has
not
complied
with
requisite
conditions
precedent
in
order
to
impose
liability
upon
the
appellant
in
that:
(a)
the
reference
in
the
notice
of
assessment
to
the
employees
of
W.S.W.
Tool
and
Die
Company
Limited
is
a
fatal
error
because
such
corporation
was
then
non-existent.
The
name
of
the
corporation
from
October
10,
1981
to
the
present
was
W.S.W.
Tool
Inc.
The
certificate,
writ
of
execution
and
nulla
bona
from
the
Sheriff
all
name
W.S.W.
Tool
and
Die
Company
Limited
and
not
W.S.W.
Tool
Inc.
(b)
the
notice
of
assessment
is
defective
and
is
null
and
void
because
it
is
factually
premised
on
employee
deductions
for
the
month
of
April
1982
as
not
being
remitted
on
or
before
May
15,
1983.
This
allegation
is
contrary
to
Regulation
108(1)
of
the
Income
Tax
Regulations
and
is
a
fatal
error.
No
amendment
has
been
requested
prior
to
or
during
the
hearing.
(c)
the
notice
of
assessment
is
outside
the
six-month
period
of
limitation
prescribed
in
paragraph
27.1
(2)(b)
of
the
Act
and
is
thereby
statute
barred.
(2)
Alternatively,
the
appellant
was
not
a
director
of
the
corporate
taxpayer
on
the
date
the
employee
deductions
for
income
tax
were
to
have
been
remitted
to
the
Receiver
General
for
Canada.
(3)
Alternatively,
the
appellant
is
exempt
from
personal
liability
by
virtue
of
the
exemptions
provided
in
subsection
227.1(3)
of
the
Act.
(4)
Alternatively,
the
respondent
is
not
entitled
to
impose
a
penalty
and
interest
as
reflected
in
the
notice
of
assessment
because
the
calculation
period
is
unknown.
Further
he
is
estopped
from
their
imposition
by
operation
of
the
doctrine
of
laches.
The
Respondent's
Position
(1)
As
to
the
alleged
non-compliance
with
respect
to
the
requisite
conditions
precedent:
(a)
The
change
of
corporate
name
does
not
affect
the
corporation’s
liability.
The
writ
of
execution
is
valid
if
the
execution
debtor
is
reasonably
identifiable.
Further,
reliance
is
placed
on
the
doctrine
of
estoppel
by
representation.
In
the
absence
of
prejudice
and
where
the
corporate
identity
is
simply
merged,
the
Court
should
amend.
(b)
The
notice
of
assessment
incorrectly
makes
reference
to
the
year
1983.
It
is
a
minor
error
which
is
capable
of
correction.
(c)
The
subsections
contained
within
227.1(2)
are
in
the
alternative
and
provide
a
means
of
dealing
with
different
situations.
The
227.1
(2)(b)
six-month
period
is
not
of
application
to
compliance
with
227.1
(2)(a).
(2)
As
to
the
appellant’s
second
submission:
(a)
The
liability
to
remit
or
pay
the
tax
withheld
crystallizes
as
soon
as
the
tax
is
deducted
even
though
it
is
given
a
period
of
time
during
which
the
tax
must
be
forwarded.
Regulation
108
states
that
subsection
153(1)
of
the
Act,
amounts
shall
be
remitted
on
or
before
the
15th
day
of
the
next
month.
(b)
The
corporation
and
its
directors
by
failing
to
establish
a
separate
trust
account
pursuant
to
subsection
227(5)
breached
their
duty
as
trustee
to
Her
Majesty
created
by
subsection
227(4)
and
thereby
failed
to
withhold
the
amount
contemplated
by
the
legislation.
(3)
As
to
the
appellant’s
third
submission:
(a)
Subsection
227.1(3)
excuses
the
director
from
absolute
liability
but
the
degree
of
care,
diligence
and
skill
required
must
be
measured
against
the
duties
of
the
director
as
trustee
as
opposed
to
any
other
function
of
the
director
which
may
tolerate
a
lower
standard
of
care.
(b)
Lawyers,
especially
if
they
are
active
in
the
management
of
the
company
are
subject
to
a
higher
standard
because
of
their
skills.
If
a
lawyer/director
is
simply
negligent,
he
cannot
be
said
to
have
acted
with
due
diligence.
(4)
In
all
issues,
including
the
calculation
of
tax
and
interest
as
indicated
in
the
assessment,
the
burden
of
proof
is
upon
the
appellant
which
burden
he
has
failed
to
discharge.
The
Applicable
Fiscal
Provisions
The
Income
Tax
Act
Sec.
227(10)
(10)
Assessment.
The
Minister
may
assess
any
person
for
any
amount
payable
by
that
person
under
Part
XIII,
this
section,
section
227.1,
234.1
or
235
and,
upon
his
sending
a
notice
of
assessment
to
that
person,
Divisions
I
and
J
of
Part
I
are
applicable
with
such
modifications
as
the
circumstances
require.
Sec.
227.1.
Liability
of
Directors.
(1)
Where
a
corporation
has
failed
to
deduct
or
withhold
an
amount
as
required
by
subsection
135(3)
or
section
153
or
215
or
has
failed
to
remit
such
an
amount,
the
directors
of
the
corporation
at
the
time
the
corporation
was
required
to
deduct
or
withhold
the
amount,
or
remit
the
amount,
are
jointly
and
severally
liable,
together
with
the
corporation,
to
pay
any
amount
that
the
corporation
is
liable
to
pay
under
this
Act
is
respect
of
that
amount,
including
any
interest
or
penalties
related
thereto.
Sec.
227.1(2)
(2)
Limitations.
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
of
Canada
under
subsection
223(2)
and
execution
for
such
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
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.
Sec.
227.1(3)
(3)
Idem.
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.
Subsections
227.1(1),
(2)
and
(3)
were
added
by
S.C.
1980-81-82-83,
c.
140,
s.
124(1)
applicable
with
respect
to
amounts
required
to
be
deducted
and
remitted,
or
withheld
and
remitted,
after
November
12,
1981.
Sec.
223.
Certificates.
(1)
An
amount
payable
under
this
Act
that
has
not
been
paid
or
such
part
of
an
amount
payable
under
this
Act
as
has
not
been
paid
may
be
certified
by
the
Minister
(a)
where
there
has
been
a
direction
by
the
Minister
under
subsection
158(2),
forthwith
after
such
direction,
and
(b)
otherwise,
upon
the
expiration
of
30
days
after
the
default.
Sec.
223(2)
(2)
Judgments.
On
production
to
the
Federal
Court
of
Canada,
a
certificate
made
under
this
section
shall
be
registered
in
the
Court
and
when
registered
has
the
same
force
and
effect,
and
all
proceedings
may
be
taken
thereon,
as
if
the
certificate
were
a
judgment
obtained
in
the
said
Court
for
a
debt
of
the
amount
specified
in
the
certificate
plus
interest
to
the
day
of
payment
as
provided
for
in
this
Act.
The
Income
Tax
Regulations
108.
(1)
Amounts
deducted
or
withheld
under
subsection
153(1)
of
the
Act
shall
be
remitted
to
the
Receiver
General
on
or
before
the
15th
day
of
the
month
next
following
the
month
in
which
the
amounts
were
deducted
or
withheld.
The
Facts
The
basic
and
essential
facts
have
been
collated
in
the
appellant's
written
argument
and
are
numbered
for
identification.
To
complete
the
picture
the
interspersed
unnumbered
paragraphs
are
additional
factual
circumstances
of
relevance.
1.
The
Appellant,
Michael
M.
Walters,
is
a
solicitor,
practising
commercial
and
corporate
law
in
the
City
of
Kitchener.
He
has
practised
for
33
years.
The
appellant
and
his
wife
are
the
controlling
shareholders
of
a
company
named
W3
Holdings
Limited,
which
company
in
turn
acquired
ten
per
cent
of
the
common
shares
of
W.S.W.
Tool
Inc.
(hereinafter
referred
to
as
“the
Company”)
at
the
cost
of
$8,000.
Michael
M.
Walters
became
a
director
of
the
Company
and
an
officer,
holding
the
position
of
secretary-treasurer
and
acted
as
solicitor
for
the
Company.
On
April
22,
1982
Michael
M.
Walters
resigned
as
a
director.
The
appellant’s
professional
work
for
the
Company
was
not
done
solely
on
a
solicitor-client
basis
but
as
an
employee
for
$200
per
week
in
an
advisory
Capacity
on
an
ongoing
basis.
2.
The
Company
was
started
by
Henry
Wink,
a
tool
and
die
maker
in
1969.
The
Company
was
first
incorporated
on
December
1,
1969
under
the
name
of
W.H.W.
Tool
&
Die
Company
Limited
and
was
changed
to
W.S.W.
Tool
&
Die
Company
Limited
in
1979
and
subsequently
on
October
10,
1981
to
W.S.W.
Tool
Inc.
3.
The
share
holdings
of
the
Company
were
as
follows:
Henry
Wink
—
60
per
cent
Mrs.
Wink
—
10
per
cent
Gerhard
Schaefer
—
20
per
cent
W3
Holdings
Limited
—
10
per
cent
4.
Henry
Wink
was,
at
all
material
times,
the
president
and
managing
director.
Gerhard
Schaefer
was
the
vice-president
but
held
no
directorship.
His
major
function
was
production
supervisor.
5.
The
office
manager,
Maria
Pauli,
supervised
Mary
Ann
Cavan,
the
payroll
clerk,
and
Donna
Scott,
the
accounts
payable
clerk.
As
between
the
three
of
them
they
managed
and
administered
the
payroll
records,
accounts
payable
and
receivables
and
attended
to
making
bank
deposits.
In
the
day-to-day
operation
of
the
business,
Maria
Pauli
worked
in
concert
with
and
was
answerable
to
Henry
Wink,
the
managing
director.
In
addition,
Maria
Pauli
worked
closely
with
the
corporate
accountants
and
the
corporate
banker.
Maria
Pauli
was
educated
in
Germany
as
a
bookkeeper,
having
an
education
and
qualifications
comparable
to
a
registered
industrial
accountant.
6.
Until
May
of
1981,
the
Company
conducted
its
banking
business
with
the
Royal
Bank
of
Canada
and
the
Mercantile
Bank.
At
that
time
a
change
was
made
to
the
Canadian
Imperial
Bank
of
Commerce,
Fairview
Shopping
Mall
Plaza;
Kitchener,
(hereinafter
referred
to
as
“the
Bank’’).
As
a
part
of
its
service,
the
Bank
offered,
and
the
Company
accepted
new
financing.
The
state
of
this
financing
consisted
of
long-term
debt,
operating
capital
and
overdraft
privileges.
On
April
20,
1982
the
indebtedness
of
the
Company
to
the
Bank
was
as
follows:
(a)
One
Million
—
($1,000,000.00)
—
Dollars
—
long-term
debt;
(b)
Five
Hundred
Thousand
—
($500,000.00)
—
Dollars
—
long-term
debt;
(c)
Five
Hundred
Thousand
—
($500,000.00)
—
Dollars
—
long-term
debt;
(d)
One
Million
—
($1,000,000.00)
—
Dollars
—
operating
loan
(also
referred
to
as
the
“Bank
loan’’).
7.
On
April
20,
1982,
the
ledgers
of
the
Company
contain
entries,
under
the
hand
of
Maria
Pauli,
showing
the
general
bank
balance
under
the
heading
“‘Bank
Loan"
at
just
a
little
over
$1,060,000.00.
8.
The
indebtedness
of
the
Company
to
the
Bank
was
secured
by
a
demand
debenture
dated
the
20th
day
of
August,
1981
and
registered
as
Instrument
No.
714326,
securing
the
sum
of
$6,000,000.00
and
a
general
assignment
of
book
debts.
9.
Shortly
before
Christmas,
1981,
the
Company
experienced
some
difficulty
in
meeting
its
payroll
obligations
but
managed
to
clear
this
obstacle
after
Henry
Wink
provided
a
personal
guarantee
to
the
Bank.
As
a
result
of
this
guarantee,
the
operating
loan
of
$1,000,000.00
was
increased,
permitting
overdraft
privileges,
which
together
with
the
said
operating
loan,
resulting
in
the
line
of
credit
under
this
heading
to
$1,370,000.00
as
shown
in
the
corporate
bookkeeping
as
of
April
20,
1982.
Upon
deposits
being
made
by
the
Company,
the
Bank
would
apply
such
proceeds
to
the
reduction
of
the
overdraft
and
the
balance
against
the
operating
loan.
The
appellant
was
aware
of
the
payroll
difficulties
in
December
of
1981
and
that
the
Company
had
previously
been
experiencing
cash
flow
problems.
He
did
not
wish
to
give
any
personal
guarantees
to
the
Bank
as
he
was
in
no
position
to
control
the
Company.
However
the
evidence
was
that
he
was
not
indifferent
to
any
possible
jeopardy
to
the
employees
at
any
time.
10.
The
Company
had
only
one
account
with
the
Bank
to
which
account
all
deposits
were
made
and
through
which
all
payments
flowed.
At
the
time
of
commencement
of
banking
relations
with
the
Bank,
the
Company
was
offered
and
accepted,
for
a
fee,
the
Bank’s
payroll
service.
This
was
a
computerized
service
which
contained
the
employees’
data,
including
rate
of
pay.
The
computer
program
would
automatically,
upon
the
insertion
of
the
hours
worked
by
each
individual
employee,
calculate
for
such
employee
the
gross
pay
and
deductions
including
unemployment
insurance
benefits,
Canadian
Pension
Plan
contributions,
holiday
pay
and
the
applicable
Income
Tax
deductions.
The
program
was
also
designed
to
issue
a
cheque
for
the
net
take-home
pay
to
each
employee.
The
individual
employee
pay
cheques
were
printed
by
the
computer
with
a
tear-off
portion
containing
particulars
of
deductions.
The
various
employee
deductions
were
calculated
and
entered
into
the
corporate
books
of
account.
The
total
of
the
monthly
deductions
was
then
tabulated
at
month’s
end
and
the
cheque
for
such
amount,
as
calculated,
was
remitted
to
the
Receiver
General
on
the
15th
day
following
the
month
end.
11.
To
generate
the
cheques
for
the
employees,
the
payroll
clerk,
Mary
Ann
Cavan,
would
receive
the
work
records
from
the
foremen
and
manually
prepare
the
information
as
to
the
hours
worked.
This
information
was
then
delivered
on
Mondays
to
the
Bank’s
offices
in
Kitchener.
By
Wednesday
the
cheques
had
been
prepared
on
the
Bank’s
computerized
system
and
given
to
the
Company.
The
payroll
clerk,
in
turn,
would
distribute
the
same
to
the
foremen
for
further
distribution
to
the
individual
employees.
12.
The
cheques
were
for
a
two-week
work
period
ending
on
Saturdays,
with
the
cheques
being
given
to
the
employees
on
the
subsequent
Wednesday.
The
employees’
pay
calculation
periods,
germane
to
this
appeal,
were
the
following
Saturdays:
March
27th,
April
10th
and
April
24th,
1982
The
employees’
deductions
for
the
month
of
March,
1982
were
calculated
and
a
cheque
for
the
total
of
deductions
as
shown
in
the
corporate
bookkeeping
was
remitted
to
the
Receiver
General
of
Canada.
For
the
pay
calculation
period
ending
on
March
27,
1982,
a
cheque
in
the
amount
of
$71,880.85
was
remitted
to
the
Receiver
General
on
April
15,
1982.
This
cheque
was
honoured
by
the
Canadian
Imperial
Bank
of
Canada.
[sic]
13.
For
the
pay
calculation
period
from
and
including
April
11
to
April
24,
1982
an
unknown
amount
of
deductions
was
made
and
paid
to
the
Receiver
General
of
Canada
by
Peat
Marwick
Ltd.
The
employee
deductions
for
income
tax
for
the
pay
calculation
period
from
and
including
March
28,
1982
to
and
including
April
10,
1982
have
been
calculated
by
the
respondent
in
the
sum
of
$15,154.22
and
are
the
object
of
this
appeal,
together
with
the
interest
calculated
thereon
in
the
sum
of
$4,097.90,
for
a
total
assessment
against
the
Appellant
in
the
sum
of
$19,252.12.
The
Notice
of
Assessment
is
dated
the
30th
day
of
August,
1983
and
the
amount
assessed
was
paid
by
the
Appellant
within
30
days
of
receipt
of
the
said
Notice
of
Assessment.
14.
The
corporate
year
end
was
September
30th.
The
Financial
Statement
for
the
year
end
of
September
30,
1981
was
not
finalized
until
March
of
1982.
The
delay
in
finalization
was
caused
by
the
uncooperativeness
and
obstructiveness
of
Henry
Wink
who
did
not
agree
with
the
proposed
re-evaluation
of
work
in
progress
and
finished
product
by
the
accountants.
A
preliminary
report
was
prepared
by
the
Company’s
accountants
showing
a
loss
of
$830,349.00.
This
loss
was
the
subject
of
a
meeting
of
shareholders
held
November
28,
1981.
The
secretary
of
the
Company,
Michael
M.
Walters,
suggested
that
Henry
Wink
resign
as
President,
but
as
no
other
person
could
be
found
to
replace
him,
Wink
stayed
on,
particularly
in
light
of
Wink’s
promise
to
exercise
better
control
and
supervision
over
the
affairs
of
the
Company.
15.
The
final
statement
for
the
year
end
in
question
was
not
completed
until
March,
1982.
This
statement
showed
a
decline
in
the
value
of
the
assets
of
the
Company.
The
decline
was
attributed
to
the
re-evaluation
of
work
in
progress
and
finished
product.
16.
At
the
request
of
the
Bank,
the
Company,
on
the
advice
of
the
Appellant,
acquiesced
to
a
study
of
its
financial
affairs
by
Peat
Marwick
Limited.
As
a
result
of
such
study,
a
report
dated
February
5,
1982,
written
by
Robert
W.
Chambers,
was
submitted.
It
contained
a
series
of
recommendations
of
which
two
were
met
and
five
others
were
not.
One
of
the
recommendations,
to
hire
a
controller,
was
advocated
by
the
Appellant,
Michael
M.
Walters,
who
had
felt
that
the
Company,
by
reason
of
its
growth,
required
a
person
more
qualified
and
experienced
than
Maria
Pauli,
to
supervise
and
manage
the
financial
affairs.
The
controller,
Dennis
Harlock,
R.I.A.,
was
in
the
employ
of
the
Company
during
the
months
of
March
and
April
of
1982.
17.
Another
of
the
recommendations
contained
in
the
aforesaid
report
called
for
the
infusion
of
a
further
sum
of
Five
Hundred
Thousand
($500,000.00)
Dollars.
Between
the
dates
of
the
report
and
the
20th
day
of
April,
1982,
the
Bank
manager,
Mr.
Stevens,
was
virtually
in
daily
contact
with
Henry
Wink
and
Michael
M.
Walters.
Mr.
Stevens
is
said
to
have
demanded
personal
guarantees
from
Mr.
Wink
and
Mr.
Walters.
Mr.
Wink
did
provide
further
personal
guarantees
which
seemed
to
satisfy
the
Bank.
18.
In
response
to
the
Bank’s
request
for
further
infusion
of
capital,
a
shareholders’
meeting
was
called
on
March
11,
1982.
Various
avenues
for
the
obtaining
of
additional
financing,
including
the
giving
of
personal
guarantees
were
considered
by
the
shareholders
and
directors.
The
Appellant,
Michael
Walters,
approached
Saudi
Arabia
investors
and
the
employees
of
the
Company
and
other
prospective
investors,
but
the
attempt
proved
to
be
fruitless;
particularly
the
attempt
to
obtain
financing
through
employees’
participation
since
the
Bank
declined
to
assure
the
employees
but
they,
the
employees,
would
not
rank
ahead
of
the
bank’s
security.
19.
During
the
months
of
March
and
April,
1982,
the
financial
affairs
of
the
Company
were
monitored
by
Peat
Marwick
Limited
on
the
instructions
of
the
Bank.
Although
the
Bank
had
demanded
a
further
infusion
of
funds
or
guarantees
and
a
reduction
of
the
overdraft,
the
Bank
continued
to
extend
overdraft
privileges,
honoured
cheques
and
continued
to
do
business
without
intervention
until
April
21,
1982.
20.
The
assets
of
the
Company
were
valued
at
$3,000,000.00.
The
receivables,
as
of
April
20,
1982,
were
in
the
sum
of
$1,470,000.00
of
which
$1,250,000.00
was
collected,
after
April
21,
1982,
including
an
amount
from
Massey-Ferguson
which
the
Bank
had
written
off
as
uncollectible.
.
.
.
The
working
capital
and
overdraft
arrangement
provided
a
line
of
financing
to
the
sum
of
$1,360,000.00
of
which
the
sum
of
$1,060,000.00
had
been
used
on
April
20,
1982.
On
this
aforesaid
date
the
Bank
delivered
to
Henry
Wink
a
letter
demanding
payment
of
the
indebtedness
of
the
Company
in
the
amount
of
$3,062,740.06.
21.
Although
the
Company
had
experienced
temporary
difficulties
with
pay
cheques
prior
to
Christmas,
1981,
no
further
difficulty
was
encountered.
The
office
manager
and
bookkeeper,
Maria
Pauli,
monitored
the
accounts
payable
with
the
bank
manager,
Mr.
Stevens,
and
in
fact,
cleared
cheques
for
payment
with
him.
The
bank
manager
was
in
constant
contact
with
the
Company
through
Maria
Pauli,
Henry
Wink
and
Michael
M.
Walters.
22.
The
shareholders
and
directors
of
the
Company
had
no
reason
to
apprehend
bank
intervention.
The
indebtedness
of
the
corporation
was
secured
by
assets,
receivables
and
the
bank
loan
was
guaranteed
to
the
extent
of
$1,000,000.00
by
the
Ontario
Development
Corporation.
.
.
.
The
Company
started
to
make
money
in
March
of
1982
and
recoup
its
expenditures
for
research
and
development,
the
cost
of
which
had
contributed
to
the
loss
shown
on
the
preliminary
financial
statement.
The
Company
continued
to
meet
its
financial
obligations
although
under
the
close
supervision
and
in
co-operation
with
the
Bank.
On
April
15,
1982
the
Bank
honoured
a
cheque
in
the
sum
of
$71,880.85
to
the
Receiver
General
for
employee
deductions
for
the
month
of
March,
1982.
23.
The
affairs
of
the
Company
were
managed
by
Henry
Wink.
The
two
directors
of
the
Company,
Henry
Wink
and
Michael
M.
Walters,
received
monthly
financial
statements
and
conducted
meetings
with
respect
to
the
same.
The
preliminary
financial
statement
for
the
year
end
of
September
30th,
1981
was
reviewed
by
the
directors
and
shareholders.
The
demands
of
the
Bank
as
stated
in
a
letter
of
February
25,
1982
were
treated
at
a
shareholders'
meeting
on
March
1,
1982.
The
relationship
between
the
two
directors
had
become
strained
in
the
period
between
September,
1981
and
April,
1982.
At
the
November
28,
1981
meeting
of
shareholders,
Michael
M.
Walters,
had
asked
Henry
Wink
to
resign
as
the
president,
but
Henry
Wink
prevailed.
Mr.
Wink
not
only
managed
but
also
controlled
the
affairs
of
the
Company
by
virtue
of
the
70%
shareholdings
held
by
him
and
his
wife.
24..
The
name
of
the
Company
was
changed
from
W.S.W.
Tool
and
Die
Company
Limited
to
W.S.W.
Tool
Inc.
for
reasons
of
convenience
and
with
the
knowledge
and
consent
of
the
Bank.
The
report
of
Peat
Marwick
Limited
dated
February
5,
1982
makes
special
mention
of
the
change
of
name.
The
payroll
cheques
and
general
account
cheques
continued
to
show
the
former
name
of
the
Company.
The
cheque
writer
imprinted
the
name
of
W.S.W.
Tool
Inc.
on
the
cheques.
New
stationery
had
been
ordered
but
due
to
the
expense,
the
old
stationery,
cheques
and
invoices
continued
to
carry
the
former
name.
Notice
of
the
Change
of
Name
was
published
in
the
Ontario
Gazette.
No
other
notice
of
change
was
given
to
the
Receiver
General
or
the
Minister
of
National
Revenue
by
the
Appellant.
The
appellant
agreed
that
W.S.W.
Tool
and
Die
Company
Limited
and
W.S.W.
Tool
Inc.
were
one
and
the
same
company
performing
one
and
the
same
functions
with
one
and
the
same
liabilities.
25.
On
April
21,
1982
Peat
Marwick
Ltd.
was
appointed
Receiver-Manager
of
the
Company
by
the
Bank
pursuant
to
a
general
assignment
of
accounts
given
by
the
Company
and
pursuant
to
the
terms
of
the
general
security
agreementdebenture.
Robert
W.
Chambers
C.A.
acted
as
the
representative
of
the
receivermanager
and
by
letter
dated
April
23,
1982
informed
all
suppliers
of
W.S.W.
Tool
Inc.
of
the
appointment
of
the
receiver-manager
and
his
intention
to
continue
the
operation
of
the
Company
as
an
ongoing
business
pending
the
location
of
a
suitable
purchaser.
26.
On
April
21,
1982
Chambers
met
with
the
employees
of
the
Company
and
informed
them
that
nothing
would
change
and
that
he
would
continue
to
manage
the
business
and
that
he
was
working
for
the
Bank.
Henry
Wink
was
asked
to
vacate
his
office.
All
mail,
save
and
except
advertisements,
were
intercepted
by
the
receiver-manager.
Mr.
Wink
was
kept
on
the
premises
but
had
lost
all
authority
and
had
been
displaced
from
management
and
control
of
the
operation
of
the
Company
by
the
said
Chambers.
Mr.
Chambers
caused
all
accounts
at
the
Bank
to
be
closed,
monitored
all
payments
of
accounts
and
took
full
charge
of
the
receivables.
All
obligations
in
the
continued
operation
of
the
Company
were
met
by
the
receiver-manager
from
corporate
income.
The
receiver-manager
was
not
required
to
borrow
any
money
to
fund
the
continued
operation
of
the
Company.
27.
Michael
M.
Walters
tendered
his
resignation
as
a
director
of
the
Company
by
letter
dated
April
22,
1982
and
delivered
the
same
to
Henry
Wink
in
the
afternoon
of
April
22,
1982
at
the
premises
of
the
Company.
He
further
addressed
and
delivered
copies
of
the
letter
of
resignation
to
the
Bank
and
the
receivermanager.
28.
The
affairs
of
the
Company,
with
respect
to
employee
deductions,
were
investigated
in
May
of
1982
by
Mr.
Paul
Jenkins,
an
assessor
in
the
Ministry
of
Revenue.
After
considerable
resistance,
the
Minister
of
Revenue
was
paid
all
employee
deductions
by
the
receiver-manager
for
the
month
of
April,
1982,
save
and
except
the
amount
assessed
against
the
Appellant.
The
receiver-manager
relied
solely
on
its
own
calculations
in
arriving
at
the
amount
to
be
paid.
.
..
Neither
Henry
Wink
nor
Michael
Walters
had
any
knowledge
of
the
unpaid
amount
until
Michael
Walters
received
the
Notice
of
Assessment
dated
August
30,
1983.
29.
On
June
3,
1983
a
Certificate
pursuant
to
section
223
of
the
Income
Tax
Act
was
registered
in
the
Federal
Court
in
respect
of
the
debt
of
W.S.W.
Tool
and
Die
Company
Limited
and
a
Writ
of
Fieri
Facias
against
the
same
company
was
directed
to
the
Sheriff
of
the
Judicial
District
of
Waterloo.
The
Sheriff’s
Report
of
Nulla
Bona
against
the
Company
as
described
herein
was
returned
on
July
14,
1983.
Analysis
The
preliminary
issues
raised
by
the
appellant
are
highly
innovative
and
very
persuasive.
With
reference
to
the
first
issue,
the
sum
total
of
all
of
the
evidence
is
that
as
of
October
10,
1981
the
only
material
change
that
had
been
made
to
the
Company
was
in
respect
of
its
name.
W.S.W.
Tool
&
Die
Company
Limited
was
thereafter
W.S.W.
Tool
Inc.
However
the
certificate
that
was
prepared
by
the
respondent
and
registered
by
him
on
June
3,
1983
in
the
Federal
Court
of
Canada,
the
writ
of
execution
and
the
report
of
nulla
bona
were
all
in
the
former
company
name.
This
occurred
long
after
the
articles
of
amendment
of
the
corporate
change
of
name
had
been
registered
in
the
Ontario
Companies
Services
Branch,
had
been
published
in
the
Ontario
Gazette
and
after
the
corporate
minute
book
containing
the
special
resolution
and
articles
of
amendment
had
been
in
the
possession
of
Mr.
Paul
Jenkins,
the
investigator
and
employee
of
the
respondent
who
was
involved
in
the
whole
affair
since
May
of
1982.
He
received
the
corporate
minute
book
in
or
about
November
of
1982.
It
is
my
opinion
that,
given
all
of
the
circumstances,
knowledge
of
the
true
state
of
affairs
must
be
imputed
to
the
respondent
during
the
material
time
and
that
the
matter
cannot
be
saved
by
invocation
and
application
of
the
doctrine
of
estoppel
by
representation
as
has
been
urged
by
counsel.
The
governing
principle
of
this
doctrine
was
stated
in
Spencer
Bower
on
Estoppel
by
Representation
and
adopted
by
Sir
Raymond
Evershed,
M.R.
in
Hopgood
v.
Brown,
[1955]
1
All
E.R.
550
(C.A.)
thusly
at
599:
.
.
.
where
one
person
(“the
representor”)
has
made
a
representation
to
another
person
(“the
representee”)
in
words
or
by
acts
or
conduct,
or
(being
under
a
duty
to
the
representee
to
speak
or
act)
by
silence
or
inaction,
with
the
intention
(actual
or
presumptive),
and
with
the
result,
of
inducing
the
representee
on
the
faith
of
such
representation
to
alter
his
position
to
his
detriment,
the
representor,
in
any
litigation
which
may
afterwards
take
place
between
him
and
the
representee,
is
estopped,
as
against
the
representee,
from
making,
or
attempting
to
establish
by
evidence,
any
averment
substantially
at
variance
with
his
former
representation,
if
the
representee
at
the
proper
time,
and
in
the
proper
manner,
objects
thereto.
While
in
this
case
W.S.W.
Tool
Inc.
may
have
authored
some
uncertainty
or
confusion
by,
inter
alia,
allowing
the
utilization
of
its
former
name
on
remittance
cheques
to
Revenue
Canada
(Exhibits
A-1
and
A-2),
it
nonetheless
does
not
exculpate
the
respondent's
neglect
in
failing
to
see
what
was
so
obviously
in
his
possession
in
the
corporate
minute
book.
Indeed,
if
there
was
any
confusion
or
uncertainty
on
the
part
of
the
respondent
as
to
the
correct
name,
the
answer
was
easily
in
front
of
him
and
was
readily
available.
Accordingly,
I
am
unable
to
conclude
that
a
representation
had
been
made
by
anyone
to
the
respondent
with
the
intent
and
having
the
result
of
inducing
him
to
alter
his
position
to
his
detriment.
The
facts
of
this
case
preclude
the
application
of
this
doctrine.
The
certificate
and
writ
of
execution
registered
in
the
Federal
Court
of
Canada
bearing
the
wrong
corporate
name
goes
beyond
simple
error
or
omission.
The
situation
is
not
one
involving
correction.
It
is
one
requiring
substitution.
The
following
words
of
Buckley,
L.J.
in
Oxley
v.
Link
(1914),
2
K.B.
734
at
741
are
particularly
apt:
To
my
mind
an
error
in
something
means
that
the
thing
of
which
you
are
speaking
contains
parts
which
are
right
and
parts
which
are
wrong,
and
that
you
are
going
to
alter
so
much
of
it
as
is
wrong.
It
is
not
correcting
an
error
in
a
thing
which
is
wrong
from
beginning
to
end
to
substitute
for
it
something
which
is
rig
t.
Counsel
for
the
respondent
submits
that
because
the
identity
of
the
corporate
debtor
is
reasonably
identifiable
the
writ
of
execution
is
valid
and
cites
in
support
the
case
of
Giguere
v.
Pilon,
66
D.L.R.
(3d)
693.
He
submits
that
the
Court
should
amend
where
the
opposite
party
has
not
been
prejudiced
and
particularly
in
the
case
where,
as
is
here,
the
corporate
identity
has
merged.
In
this
respect
he
relies
on
Witco
v.
Corp.
of
Oakville,
[1975]
1
S.C.R.
273;
43
D.L.R.
(3d)
413.
The
difficulty
posed
in
this,
which
to
my
mind
is
insurmountable,
is
that
he
does
not
particularize
which
document
should
be
amended
or
indeed
which
one
is
even
capable
of
amendment
by
this
Court
so
as
to
affect
the
requested
cure-all.
It
has
been
authoritatively
held
that
the
certificate
emanating
from
the
Minister
and
registered
in
the
Federal
Court
of
Canada
is
not
a
judgment
of
that
Court,
and
that
it
is
incumbent
upon
the
respondent
and
his
officials
to
“fully
appreciate
its
use
and
to
be
meticulous
and
accurate
in
the
detail
of
using
it”;
viz.,
Cattanach,
J.
in
The
Queen
v.
Star
Treck
Holdings
Ltd.,
[1977]
C.T.C.
621
at
629;
77
D.T.C.
5311
at
5316.
His
concluding
remarks
are
of
obvious
interest
in
the
matter
before
me
and
underscore
the
serious
reservations
that
I
have
in
being
able
to
grant
the
remedy
being
sought
by
the
respondent's
counsel
in
this
respect.
Cattanach,
J.
stated:
.
.
.
I
have
been
unable
to
find
in
the
Income
Tax
Act
any
provision
under
which
the
Minister
may
move
to
correct
errors
in
a
certificate
compiled
by
him
which
have
been
found
to
exist
after
registration
nor
has
any
such
provision
been
cited
to
me.
Accordingly,
for
the
foregoing
reasons,
the
application
to
correct
the
certificate
is
refused
and
it
follows
from
such
refusal
that
the
consequential
application
to
correct
the
writ
of
fieri
facias
is
likewise
refused
for
the
additional
reason
that
no
error
has
occurred
in
the
issuance
of
that
writ
by
the
registry
officials.
The
error
in
the
certificate
is
an
insignificant
one
but
the
principle
involved
in
the
motion
is
not.
While
it
is
not
my
function,
at
this
time,
to
say
it
might
well
be,
since
the
error
in
the
certificate
is
the
addition
of
a
single
letter
of
the
alphabet
to
one
word
in
the
corporate
name
of
one
taxpayer,
comprised
of
four
words
and
many
letters,
which
operates
presumably
as
an
individual
carrying
on
business
under
other
names
in
which
no
error
has
been
made,
that
the
taxpayers
against
whom
execution
is
sought
are
sufficiently
identified
to
permit
the
sheriff
to
execute
the
writ
against
those
taxpayers
who
are
correctly
identified
as
well
as
the
taxpayer
whose
name
includes
a
slight
error
which
might
not
be
sufficient
to
destroy
the
identification
of
that
taxpayer.
This
is
a
gratuitous
comment
and
is
not
to
be
construed
as
binding
or
authoritative
in
any
way.
In
the
light
of
the
dismissal
of
the
motion
herein
what
further
course
or
courses
to
be
adopted
remain
the
decision
of
the
applicant.
For
all
of
the
aforementioned
reasons,
I
am
satisfied
that
the
appellant
has
shown
that
the
respondent
failed
to
comply
with
the
conditions
precedent
to
the
imposition
of
liability
upon
him
as
a
director
of
the
corporate
debtor
as
named
in
the
notice
of
assessment.
As
this
is
sufficient
to
dispose
of
the
appeal
there
is
no
need
to
deal
with
any
of
the
other
issues
that
have
been
raised
and
argued.
The
appeal
is
allowed
and
the
assessment
is
to
be
vacated.
Costs
are
awarded
to
the
appellant
on
a
party-and-party
basis
as,
in
my
view,
no
exceptional
circumstances
existed
in
this
appeal
warranting
an
award
on
the
requested
solicitor-client
basis.
Appeal
allowed.
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