Mustard,
P.C.J.:—On
November
1991,
Revenue
Canada
Taxation
issued
and
served
six
demands
under
paragraph
231.2(1)(a)
on
both
the
corporate
accused
("the
corporation”)
and
George
Whissell
("VVhissell"),
whereby
each
accused
was
required
to
provide
within
75
days,
signed
T2
income
tax
returns
for
the
corporation
for
each
of
its
fiscal
years
ending
December
31,
1986
to
1990
inclusive.
As
permitted
under
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act"),
service
of
the
demands
was
proved
by
affidavit
and
further
affidavits
established
that
as
late
as
May
2,
1992
none
of
the
requested
returns
of
the
corporation
had
been
filed.
It
was
established
beyond
a
reasonable
doubt
that
apart
from
the
corporation's
lawyer,
Whissell
was
the
only
director,
the
sole
directing
mind
of
the
corporation
and
aware
of
the
nonfiling
of
the
returns,
the
absence
of
records
and
so
forth.
The
issues
The
defence
was
based
on
two
grounds.
First,
as
a
result
of
financial
difficulties
over
the
period
in
question
the
corporation
was
unable
to
maintain
sufficient
accounting
staff
to
keep
records
of
the
corporation's
affairs,
although
the
corporation
continued
to
operate
during
that
period,
generating
at
least
three
and
a
half
million
dollars
in
sales
annually.
Since
1989
Whissell
had
retained
tax
lawyers
and
accountants
to
assemble
records
and
prepare
returns
and,
although
Whissell
and
his
other
corporations
had
expended
approximately
$150,000
in
the
process,
the
returns
were
not
prepared
and
filed
by
the
end
of
January
1992
deadline,
or
indeed
up
to
the
present
time.
Lack
of
funds
had
prevented
completion.
Based
on
these
facts
the
defence
claimed
that
the
75-day
deadline
was
unreasonable.
In
respect
to
Whissell
personally
it
was
alleged
that
he
lacked
the
expertise
to
prepare
and
file
the
returns
himself
without
expert
legal
and
accounting
assistance.
Second,
it
was
alleged
that
in
proceeding
under
paragraph
231.2(1)(a)
the
Crown
had
proceeded
under
the
wrong
section
and
instead
should
have
made
a
demand
upon
the
corporation
only,
and
under
subsection
150(1).
Those
provisions
read
in
part
as
follows:
231.2
(1)
Notwithstanding
any
other
provision
of
this
Act,
the
Minister
may
.
.
.
for
any
purpose
relating
to
the
administration
or
enforcement
of
this
Act,
by
notice
served
personally
or
by
registered
or
by
certified
mail
require
that
any
person
provide,
within
such
reasonable
time
as
is
stipulated
in
the
notice,
(a)
any
information
or
additional
information,
including
a
return
of
income
or
a
supplementary
return.
.
.
.
150
(2)
Whether
or
not
he
is
liable
to
pay
tax
under
this
Part
for
a
taxation
year
and
whether
or
not
a
return
has
been
filed
under
subsection
(1)
or
(3),
every
person
shall,
on
demand
from
the
Minister,
served
personally
or
by
registered
letter,
file,
within
such
reasonable
time
as
may
be
stipulated
therein,
with
the
Minister
in
prescribed
form
and
containing
prescribed
information,
a
return
of
the
income
for
the
taxation
year
designated
therein.
As
part
of
their
defence,
Counsel
claimed
that
Revenue
Canada
has
no
right
to
require
a
director
to
file
a
corporate
return,
that
was
the
responsibility
of
the
corporation.
Counsel
further
alleged
that
section
150
could
require
the
corporation
to
prepare
and
file
a
return
whereas
paragraph
231.2(1)(a)
could
only
require
a
filing
of
an
existing
return
but
not
require
its
preparation
as
well.
Counsel
stressed
that
the
charge
was
not
one
of
failing
to
file
returns,
but
rather
failure
to
respond
to
a
demand
requiring
the
filing
of
returns.
In
my
opinion
this
last
is
a
distinction
without
a
difference
and
I
was
provided
with
no
authority
to
support
the
previous
suggestion.
It
was
established
as
a
fact
that
the
corporation
and
a
number
of
related
corporations
controlled
by
Whissell
were
generating
something
in
the
order
of
75
million
dollars
in
sales
annually
prior
to
1982
and
subsequently
as
much
as
ten
million
dollars
per
annum.
Over
the
six-year
period
in
question
the
corporation
alone
had
a
gross
sales
in
the
order
of
three
and
one
half
million
dollars
annually.
Decision
Dealing
first
with
the
question
of
reasonableness
of
notice,
it
was
established
that
in
1989,
in
response
to
pressure
from
Revenue
Canada,
Whissell
began
seriously
to
reconstruct
the
records
of
the
corporation
to
enable
returns
to
be
filed.
He
engaged
tax
counsel
and
accountants
to
do
this.
At
the
time
of
trial
about
90
per
cent
of
the
work
necessary
to
complete
and
prepare
and
file
the
returns
had
been
completed
and
financial
arrangements
made
to
enable
accountants
to
finish
the
job.
It
is
contended
that
neither
Whissell
nor
the
corporation
should
be
punished
for
lack
of
funds,
having
already
spent
large
amounts
personally
to
bring
the
records
to
their
current
state.
Defence
claimed
that
originally
there
had
been
some
40
corporations
under
the
Whis-
sell
canopy,
of
which
20
required
returns.
Of
these
Whissell
had
filed
all
but
two,
of
which
the
corporation
was
one.
In
respect
to
reasonableness
of
the
compliance
period
set
forth
in
the
demands,
I
rely
on
the
decisions
in
R.
v.
Gill,
(unreported),
B.C.C.C.,
Harris,
C.C.J.,
October
19,
1989,
and
R.
v.
Leibel,
(unreported)
P.C.
Linn,
Prov.
J.,
August
23,
1990.
As
authority
for
the
proposition
that
neither
the
corporation
nor
Whissell
can
rely
on
poor
records
and
lack
of
funds
as
a
defence,
the
Judgment
of
Harris,
C.C.J.
in
Gill
states
the
position
exactly.
The
Honourable
Judge
at
page
8
says
as
follows:
I
have
noted
the
evidence
of
Mr.
Leonard
McIntosh,
C.A.
for
the
defence
to
the
effect
that
the
books
of
the
various
companies
at
the
time
the
demands
were
served
were
in
a
mess
and
would
have
required
four
to
six
months
of
professional
work
and
a
cost
of
between
$25,000
and
$40,000
to
do
a
proper
full
return
situation.
That
in
my
view
does
not
constitute
a
valid
defence
to
any
of
the
charges:
The
operator
of
any
business
(whether
an
individual
or
limited
company)
is
under
a
duty
to
maintain
such
proper
books
of
account
and
financial
records
as
to
enable
that
person
to
comply
with
his
or
its
statutory
reporting
duties
to
the
Revenue
authorities:
If
a
taxpayer
fails
regularly
to
maintain
its
records,
and
allows
them
to
get
in
such
a
state
that
his
or
its
income
tax
obligations
can
only
be
fulfilled
through
a
lengthy
and
costly
investigation
which
the
taxpayer
may
have
difficulty
in
affording,
the
taxpayer
does
so
at
his
peril.
The
Gill
case
was
similar
in
facts
to
the
present
except
that
the
relevant
demand
documents
were
addressed
only
to
Gill
as
a
director
requiring
him
to
file
the
corporate
returns.
This
was
so
because
at
the
time
of
the
service
of
the
demands
all
the
corporations
were
non-existing,
each
having
been
struck
from
the
Register
and
not
reinstated.
But
for
that,
and
the
fact
that
there
was
no
officer
in
existence
capable
in
law
of
signing
a
return,
nor
a
Board
capable
in
law
of
authorizing
any
other
person
to
sign
a
return
for
the
defunct
corporations,
it
would
appear
that
the
director
would
have
been
found
liable
in
that
case.
Subsection
231.5(2)
excuses
anyone
from
doing
what
he
would
otherwise
be
obliged
to
do
if
he
is
"unable
to
do
so”.
Further
in
the
Gill
case
the
Court
found
that
at
all
material
times
Gill
was
"unable
to
so
do"
in
the
wording
of
subsection
231.5(2)
but
quoting
from
the
decision:
Not
because
time
and
a
shortage
of
money
prevented
the
preparation
of
income
tax
returns,
but
because
as
a
matter
of
law
for
the
reason
set
out
above
he
was
incapable
of
complying
with
the
demands.
In
the
case
of
Leibel
the
Provincial
Court
for
Saskatchewan
on
facts
similar
to
the
present
case
also
found
the
time
for
filing
in
response
to
the
demand
reasonable.
On
page
6
of
that
judgment,
Linn,
P.C.J.
stated:
I
agree
with
Crown
Counsel's
submission
that
the
accused
is
obliged
to
keep
books
and
records
regarding
his
tax
affairs
and
further
obliged
to
file
his
tax
return
without
demand
by
the
Minister.
Given
these
obligations
I
do
not
find
that
the
time
limits
on
the
letters
of
requirement
were
unreasonable.
In
all
the
circumstances
I
find
the
75-day
period
for
filing
in
the
present
case
was
not
unreasonable.
In
respect
to
the
second
issue
I
refer
to
the
decision
of
Wilson,
J.
in
R.
v.
Slupek,
an
unreported
decision
of
the
Court
of
Queen's
Bench
of
Alberta
dated
January
13,
1992,
wherein
the
accused
was
found
guilty.
Counsel
have
advised
me
that
the
Court
of
Appeal
upheld
the
decision
of
the
trial
judge
but
the
transcript
is
not
yet
available
to
me.
The
Slupek
case
differs
from
the
facts
of
the
present
case
to
the
extent
that
there
were
no
corporate
taxpayers
involved
in
that
case,
the
demand
being
addressed
to
the
accused
individual
and
what
was
required
of
him
was
the
filing
of
his
personal
returns.
Mr.
Erler,
counsel
for
the
accused
in
the
present
matter,
was
also
counsel
for
Mr.
Slupek.
While
no
reference
was
made
in
argument
by
either
counsel
to
the
question
of
whether
the
Crown
had
established
a
genuine
and
ongoing
investigation
into
the
tax
liabilities
of
the
corporation
or
the
enforcement
of
the
Act
against
the
corporation,
I
find
as
a
fact
that
such
was
the
case.
The
corporation
is
therefore
guilty
as
charged.
No
authority
has
been
cited
to
satisfy
me
whether
paragraph
231.2(1)(a)
is
broad
enough
to
require
from
a
director
of
a
corporation
(in
this
case
one
who
by
his
own
admission
is
the
directing
mind
of
that
corporation)
signed
T2
returns
for
that
corporation
and
failing
that
to
make
the
director
guilty
under
subsection
238(1)
for
breach
of
the
earlier
section.
Neither
the
Slupek
case
nor
the
case
of
R.
v.
Dakus
87
A.R.
374,
Girgulis,
J.Q.B.A.,
July
7,
1988
assist
me
in
this
respect.
In
both
those
cases
demands
were
made
under
paragraph
231.2(1)(a)
or
its
earlier
equivalent,
but
on
individuals,
and
not
corporations,
and
only
in
respect
to
the
individual's
return.
Both
Leibel
and
Gill
dealt
with
demands
made
on
directors
in
respect
of
filing
returns
of
the
corporations
with
respect
to
which
the
individuals
were
directors
and
the
sole
directing
mind
of
the
corporation.
In
Gill
the
director
escaped
liability
for
the
reasons
already
stated.
In
Leibel
no
demand
for
the
corporate
returns
was
made
upon
the
corporation
itself,
only
on
the
director
requiring
him
to
deliver
signed
corporate
returns
for
the
corporation.
The
Court
failed
to
deal
directly
with
the
issue
of
whether
Revenue
Canada
can
under
paragraph
231.2(1)(a)
require
a
director
to
file
a
corporate
return.
Instead
the
Court
found
Leibel
guilty
as
a
party
under
section
242
of
the
Act.
For
the
reasons
already
stated
I
am
not
satisfied
that
the
Crown
has
met
its
obligations
of
proof
in
respect
to
counts
one
to
six
as
against
Whissell
for
failing
to
personally
respond
to
the
demands
under
paragraph
231.2(1)(a)
to
file
the
corporate
returns
of
the
corporation
and,
as
such,
is
not
guilty
as
a
principal
of
the
offences
as
charged.
However,
on
the
evidence,
the
only
inference
that
can
be
drawn
is
that
Whissell,
in
his
capacity
as
a
director
and
the
sole
directing
mind
of
the
corporation,
directed,
authorized
or
assented
to,
or
at
the
very
least
acquiesced
or
participated
in
whatever
the
corporation
did
or
failed
to
do
in
committing
the
offences
of
which
I
found
the
corporation
guilty
by
virtue
of
subsection
238(1).
Section
242
makes
any
such
officer
or
director
a
party
to
the
corporate
offence,
guilty
of
the
offence
and
upon
conviction
liable
to
the
same
punishment
provided
for
the
offence.
Here
the
accused
Whissell
dealt
with
Revenue
Canada
and
its
officers,
was
aware
of
the
failure
to
file
the
1985
to
1990
corporate
returns,
was
personally
served
with
the
demands
upon
the
corporation
and
upon
himself
in
his
capacity
as
director
of
the
corporation,
was
involved
since
1989
and
before
in
dealing
with
the
tax
lawyers
and
accountants
to
try
to
put
together
the
records
necessary
to
produce
the
requested
returns.
I
have
no
doubt
whatsoever
that
George
Whissell
falls
within
section
242
and
therefore
I
find
him
guilty
as
a
party
to
each
offence
committed
by
the
corporation.
While
not
argued
because
the
issue
only
arose
in
preparation
of
this
decision,
it
should
be
noted
that
it
is
not
necessary
that
the
information
charge
Whissell
as
a
party.
It
is
enough
that
the
full
offence
be
charged
and
that
is
sufficient
to
support
a
conviction
of
an
accused
as
a
party,
even
though
the
accused
may
not
be
guilty
of
the
offence
as
a
principal,
or
that
he
be
incapable
of
committing
the
offence
as
principal
or
even
that
no
one
charged
is
capable
of
being
convicted
as
a
principal.
R.
v.
Harder,
[1956]
S.C.R.
489,23
C.R.
295,
114
C.C.C.
129,
4
D.L.R.
(2d)
150
in
the
Supreme
Court
of
Canada
is
authority
for
that
proposition.
That
was
a
case
where
the
accused
was
charged
with
rape
as
it
then
was
but
there
was
no
evidence
that
"he
as
a
man,
had
sexual
intercourse
with
a
female,
not
his
wife",
as
charged.
However,
there
was
evidence
of
his
participation
in
the
offence
as
an
aider
or
abettor
and
under
section
21
he
was
properly
convicted
as
a
party.
It
would
be
equally
true
that
if
that
accused
had
been
a
female,
similarly
charged,
with
like
participation
as
an
aider
or
abettor,
she,
would
likewise
be
properly
found
guilty
under
section
21,
even
though
incapable
of
committing
the
full
offence
as
charged.
Section
242
of
the
Income
Tax
Act
should
have
the
same
effect.
Accused
convicted.