Tremblay
T.C.J.:
Issue
According
to
the
Notice
of
Appeal
and
the
Reply
to
the
Notice
of
Appeal,
the
issue
is
whether
the
appellant
was
a
director
of
133139
Canada
Limitée
from
1990
to
1994
and
therefore
liable
for
the
debt
of
$131,435.35
under
subsection
227.1(1)
of
the
Income
Tax
Act
(the
Act).
The
appellant
argued
that
he
was
never
a
director
of
that
corporation,
even
though,
as
an
employee,
he
played
an
important
role
in
its
operations.
The
respondent
argued
that
the
appellant
was
a
de
facto
director.
Burden
of
proof
The
appellant
bears
the
burden
of
showing
that
the
respondent’s
assessments
are
unfounded.
This
burden
of
proof
derives
from
a
number
of
judicial
decisions,
including
that
of
the
Supreme
Court
of
Canada
in
Johnston
v.
Minister
of
National
Revenue)
In
Johnston,
the
Supreme
Court
held
that
the
facts
assumed
by
the
respondent
in
support
of
assessments
or
reassessments
are
presumed
to
be
true
until
proven
otherwise.
In
the
case
at
bar,
the
facts
assumed
by
the
respondent
are
set
out
in
subparagraphs
(a)
to
(h)
of
paragraph
6
of
the
Reply
to
the
Notice
of
Appeal,
which
paragraph
reads
as
follows:
[TRANSLATION]
6.
In
assessing
the
appellant
under
section
227.1(1)
of
the
Income
Tax
Act,
the
Minister
of
National
Revenue
assumed,
inter
alia,
the
following
facts:
(a)
Jean-Eudes
Lalancette
was
a
director
and
the
sole
shareholder
of
the
J.E.
Lalancette
Inc.
construction
company,
which
went
bankrupt.
[denied]
(b)
133139
Canada
Ltée
was
incorporated
on
June
4,
1984
and
is
in
the
residential
construction
business.
[It
is
a
shelf
company
acquired
in
1990.
I
(C)
The
1990
annual
report
lists
Stéphane
Lalancette,
Jean-Eudes
Lalancette’s
18-year-old
son,
as
the
only
director
of
the
new
company,
133139
Canada
Ltée.
[admitted]
(d)
Jean-Eudes
Lalancette
makes
all
decisions
concerning
the
corporation,
since
it
is
he
who
has
the
necessary
expertise.
|
denied
|
(e)
Jean-Eudes
Lalancette
co-signed
the
corporation’s
cheques
and
signed
a
number
of
legal
documents
as
president
of
the
corporation.
[admitted,
but
had
authorization]
(f)
All
of
the
company’s
assets
were
owned
by
Jean-Eudes
Lalancette,
who
put
them
all
at
the
company’s
disposal
free
of
charge.
[admitted:
form
panels,
small
tools]
(g)
Jean-Eudes
Lalancette
signed
all
relevant
documents,
such
as
bids,
issued
receipts
on
the
company’s
behalf,
signed
declarations
of
lien
and
was
listed
as
the
company’s
principal
shareholder,
chief
executive
officer
and
president,
without
his
son
Stéphane
appearing
as
a
second
signatory,
[denied,
he
had
authorization]
(h)
A
writ
of
fieri
facias
was
issued
on
November
15,
1994,
and
a
nulla
bona
return
was
issued
on
January
5,
1995.
[admitted,
the
private
dwelling
is
owned
by
his
spouse]
Facts
in
evidence
The
appellant
argued
that
133139
Canada
Limitée
was
owned
by
his
son
Stéphane
and
that
he
himself
was
merely
an
employee.
The
corporation
carried
on
a
construction
business.
Because
of
his
experience,
however,
and
after
having
a
heart
attack,
the
appellant
was
appointed
by
his
son
Stéphane
to
handle
the
paperwork:
making
bids,
signing
contracts.
His
salary
was
that
established
by
the
decree
for
the
construction
industry.
His
son
worked
on
the
building
sites.
The
mandate
conferred
on
the
appellant
by
his
son
on
September
9,
1990,
reads
as
follows
(Exhibit
I-1,
Tab
62):
[TRANSLATION]
1,
Stéphane
Lalancette,
president
of
133139
Canada
Ltée,
authorize
Jean-Eudes
Lalancette
to
sign
bids
and
contracts
for
the
above-mentioned
company,
and
I
have
signed.
Stéphane
Lalancette,
President
The
witness
maintained
that
the
company
was
unable
to
remit
source
deductions
because
of
losses
resulting
from
the
fact
that
money
was
not
received
for
work
done.
His
son
tried
everything
to
avoid
bankruptcy,
but
he
had
to
face
facts.
His
son
also
had
to
declare
personal
bankruptcy.
During
cross-examination,
the
respondent
filed
as
Exhibit
1-1
a
book
containing
73
documents.
Tabs
24
and
25
relate
to
the
computation
of
the
$131,435.35
debt,
including
capital,
penalties
and
interest.
The
quantum
is
not
in
dispute.
Counsel
for
the
respondent
drew
the
appellant’s
attention
to
the
way
in
which
he
was
designated
or
to
his
signature
in
the
following
documents
from
Exhibit
I-1:
|
[TRANSLATION]
|
|
|
Tab
5:
Certificate
and
agreement,
Bank
of
Montreal
|
|
|
Bank
of
Montreal
|
Business
corporation
|
|
Certificate
and
Agreement
|
|
|
At
the
BANK
OF
MONTREAL
|
|
|
l,
the
undersigned,
certify
THAT:
|
|
|
A.
BANK
RESOLUTION
|
|
this
is
a
true
copy
of
a
resolution
duly
adopted
on
June
1,
1990,
by
the
directors
of
133139
Canada
Ltée
(hereinafter
referred
to
as
“the
Corporation”),
doing
business
as
*
Trade
Name
(hereinafter
referred
to
as
“Trade
Name”)
and
that
this
resolution
is
applicable
at
the
present
time.
It
is
resolved
that:
I.
The
Bank
of
Montreal
(hereinafter
referred
to
as
“the
Bank”)
be
the
Corporation’s
banker.
2.
The
Corporation
authorize
**
Stéphane
Lalancette
and
Jean-Eudes
Lalancette
-
2
signatures
required.
Tab
46:
Copy
of
a
declaration
of
general
contractor’s
lien
made
on
September
10,
1991,
by
Jean-Eudes
Lalancette
for
and
on
behalf
of
133139
Canada
Ltée
at
the
registration
division
for
the
district
of
Chicoutimi
in
connection
with
a
construction
contract
with
Pierre
Tremblay
et
al.
CANADA
PROVINCE
OF
QUEBEC
DISTRICT
OF
CHICOUTIMI
REGISTRATION
DIVISION
OF
CHICOUTIMI
Declaration
of
General
Contractor's
Lien
],
the
undersigned,
Jean-Eudes
Lalancette,
domiciled
and
residing
at
358
Tadoussac
Blvd.
in
the
town
and
district
of
Chicoutimi,
being
duly
sworn
on
the
New
Testament,
declare
and
say:
1.
I
am
the
chief
executive
officer
and
principal
shareholder
of
13313
CANADA
LTEE,
a
legally
incorporated
entity
having
its
place
of
business
at
358
Tadoussac
Blvd.
in
the
town
and
district
of
Chicoutimi,
G7H
5A8;
2.
By
contract
entered
into
with
175744
Canada
Ltée
on
or
about
November
11,
1990,
it
was
agreed
that
133139
CANADA
LTÉE,
as
general
contractor,
would,
for
a
price
of
$966,000,
perform
the
various
kinds
of
work
described
in
the
said
contract
on
immovables
whose
street
addresses
are
336
and
338
Jacques-Cartier
Street
East
in
the
town
and
district
of
Chicoutimi,
which
are
owned
by
175744
Canada
Ltée,
whose
president
is
Pierre
Tremblay,
and
which
are
designated
below;
IN
WITNESS
WHEREOF,
I
HAVE
SIGNED
(s)
Jean-Eudes
Lalancette
JEAN-EUDES
LALANCETTE
Tab
47:
Copy
of
an
extract
from
133139
Canada
Ltée’s
statement
of
claim
in
its
lawsuit
against
Pierre
Tremblay
et
al.
(file
no.
150-02-001219-913)
LAVAL
GAUTHIER,
ROBERT
TREMBLAY
AND
PIERRE
TREMBLAY,
doing
business
under
the
firm
name
LES
IMMEUBLES
ROBERT
ENR.,
324
Lafontaine
Street,
town
and
district
of
Chicoutimi,
c/o
PIERRE
TREMBLAY,
4326
St-Bernard
Street,
Portage
des
Roches,
Laterriére,
district
of
Chicoutimi
GOV
1K0.
Defendants.
Statement
of
Claim
IN
SUPPORT
OF
ITS
ACTION,
THE
PLAINTIFF
RESPECTFULLY
STATES
AS
FOLLOWS:
1.
On
October
I,
1990,
Jean-Eudes
Lalancette,
in
his
capacity
as
authorizing
person
for
the
plaintiff,
the
construction
company
133139
Canada
Ltée,
agreed
in
writing
with
the
defendant
Pierre
Tremblay
to
build
a
twenty-four
foot
(24')
by
twenty-six
foot
(26')
garage
for
a
fixed
price
of
twenty-one
thousand
dollars
($21,000),
the
said
immovable
to
be
built
at
Laterrière
on
property
belonging
to
the
said
defendant
and
his
spouse,
the
defendant
Annie
Tremblay.
The
plaintiff
is
filing
as
Exhibit
P-l
the
contract
entered
into
at
that
time,
which
filing
is
to
have
the
same
effect
as
setting
out
the
said
contract
here
in
full;
NINETEEN
HUNDRED
AND
NINETY-TWO,
the
fourteenth
day
of
October.
BEFORE
ANDRE
LESSARD,
notary,
at
Chicoutimi,
Province
of
Quebec.
APPEARANCE:
“133139
CANADA
LTÉE”,
a
legally
incorporated
entity
having
its
head
office
at
358
Tadoussac
Boulevard,
Chicoutimi,
represented
herein
by
Jean-Eudes
Lalancette,
its
president,
who
has
been
duly
authorized
to
act
for
the
purposes
hereof
by
a
resolution
of
the
board
of
directors
adopted
at
a
meeting
held
on
the
thirteenth
day
of
October
nineteen
hundred
and
ninety-two,
a
copy
of
which
has
been
appended
to
the
original
hereof
after
being
acknowledged
to
be
authentic
by
the
said
Jean-
Eudes
Lalancette
and
having
been
signed
by
him
and
the
undersigned
notary
for
purposes
of
identification;
Tab
48:
Copy
of
an
extract
from
the
minutes
of
a
meeting
of
the
board
of
directors
of
133139
Canada
Ltée
on
October
13,
1992,
at
which
was
adopted
a
resolution
providing
for
a
release
with
respect
to
the
contractor’s
lien
of
September
10,
1991,
and
discontinuing
the
lawsuit
against
Pierre
Tremblay
et
al.
(file
no.
150-05-000627-911)
“133139
Canada
Ltée”
EXTRACT
from
the
minutes
of
a
meeting
of
the
board
of
directors
of
“133139
CANADA
LTÉE”
held
at
the
company’s
head
office
on
the
thirteenth
day
of
October
nineteen
hundred
and
ninety-two.
ON
A
MOTION
DULY
SECONDED,
It
is
Unanimously
Resolved:
THAT
JEAN-EUDES
LALANCETTE,
president
of
“133139
Canada
Ltée”,
be,
and
hereby
is,
authorized
to
sign
the
notarized
Release
required
for
the
above
purposes
and
to
include
any
provisions
therein
that
he
considers
necessary
and....
THE
APPEARER
abandons
outright
all
of
its
rights
resulting
from
the
above-
mentioned
actions,
Superior
Court
for
the
district
of
Chicoutimi,
file
number
150-05-000627-911,
code
BG-0876.
RECORDED
AT
CHICOUTIMI
under
number
thirteen
thousand
seven
hundred
and
thirty-six
(13,736)
of
my
originals.
AFTER
READING,
the
appearer,
duly
represented,
signed
in
the
presence
of
the
undersigned
notary.
“133139
CANADA
LTÉE”
PER:
/s/
Jean-Eudes
Lalancette
JEAN-EUDES
LALANCETTE
/s/
A.
Lessard,
notary
ANDRE
LESSARD,
NOTARY
Tab
53:
Copy
of
an
affidavit
by
Jean-Eudes
Lalancette
dated
August
28,
1992,
accompanying
133139
Canada
Ltée’s
statement
of
defence
in
the
lawsuit
by
Excavations
Roger
Piché
Inc.
against
133139
Canada
Ltée
(file
no.
-()2-
-92
AFFADAVIT
I,
the
undersigned,
Jean-Eudes
Lalancette,
domiciled
at
78
Tadoussac
Blvd.,
Chicoutimi,
Quebec,
do
solemnly
declare
as
follows:
1.
L
am
the
chief
executive
officer
of
133139
Canada
Ltée,
the
defendant
in
this
case.
2.
I
have
personal
knowledge
of
the
facts
of
this
case.
3.
All
of
the
facts
set
out
in
this
pleading
are
true.
4.
133139
Canada
Ltée’s
defence
is
serious.
In
witness
whereof,
I
have
signed
at
Chicoutimi
this
August
28,
1992.
/s/
Jean-Eudes
Lalancette
Jean-Eudes
Lalancette
Tab
54:
Copy
of
a
motion
dated
April
22,
1993,
by
Excavations
Roger
Piché
Inc.
for
a
warrant
for
the
arrest
of
Jean-Eudes
Lalancette
in
the
lawsuit
by
Excavations
Roger
Piché
Inc.
against
133139
Canada
Ltée
(file
no.
150-02-
000846-922)
CANADA
PROVINCE
OF
QUEBEC
DISTRICT
OF
CHICOUTIMI
COURT
OF
QUEBEC
(Civil
Division)
No.:
150-02-000846-922
Cl.
BF-0109
LES
EXCAVATIONS
ROGER
PICHÉ
INC.,
Plaintiff-Applicant,
-VS-
133139
CANADA
LTÉE,
Defendant-Respondent.
*
Mot
ion
for
Arrest
Warrant*
(Art.
284
C.C.P.)
TO
ONE
OF
THE
HONOURABLE
JUDGES
OF
THE
COURT
OF
QUEBEC
SITTING
IN
CHAMBERS
IN
AND
FOR
THE
DISTRICT
OF
CHICOUTIMI,
THE
PLAINTIFF-APPLICANT
STATES
AS
FOLLOWS:
I.
The
defendant-respondent,
through
its
president,
Jean-Eudes
Lalancette,
was
summoned
to
appear
before
the
clerk
of
this
Court
on
March
31,
1993,
at
11:00
a.m.
to
be
examined
in
accordance
with
article
543
of
the
Code
of
Civil
Procedure,
as
can
be
seen
from
the
writ
of
summons
for
examination
and
the
certificate
of
service
already
filed
in
the
record
of
this
Court;
2.
Travelling
expenses
were
advanced
to
the
said
representative
of
the
defendant-respondent,
as
can
be
seen
from
the
said
certificate
of
service;
3.
On
March
31,
1993,
the
said
defendant-respondent,
through
its
president,
failed
to
appear,
as
can
be
seen
from
the
certificate
of
default
filed
in
the
Court’s
record;
4.
It
is
necessary
that
the
said
defendant-respondent,
through
its
president,
be
examined
and
give
evidence
in
this
case;
5.
This
motion
is
well
founded
in
fact
and
in
law:
For
These
Reasons,
May
It
Please
The
Court:
TO
GRANT
this
motion;
TO
ISSUE
an
arrest
warrant
ordering
the
defendant-respondent,
133139
Canada
Ltée,
through
its
president,
Jean-Eudes
Lalancette,
to
appear
before
the
clerk
of
this
Court
to
be
examined
under
article
543
of
the
Code
of
Civil
Procedure
or,
failing
that,
to
be
dealt
with
according
to
the
law.
THE
WHOLE
with
costs.
CHICOUTIMI,
April
22,
1993
(s)
CAIN,
LAMARRE,
WELLS
CAIN,
LAMARRE,
WELLS
Attorneys
for
the
plaintiff-applicant
Tab
55:
Copy
of
the
arrest
warrant
issued
on
April
23,
1993,
by
a
judge
of
the
Court
of
Quebec
for
the
district
of
Chicoutimi
against
Jean-Eudes
Lalancette
in
connection
with
the
lawsuit
by
Excavations
Roger
Piché
Inc.
against
133139
Canada
Ltée
(file
no.
150-02-000846-922)
CANADA
PROVINCE
OF
QUEBEC
DISTRICT
OF
CHICOUTIMI
COURT
OF
QUEBEC
(Civil
Division)
No.:
150-02-000846-922
LES
EXCAVATIONS
ROGER
PICHE
INC.
Plaintiff-Applicant,
-vs-
133139
CANADA
LTEE,
Defendant-Respondent.
*
A
rrest
Warrant
and
Order
of
Imprisonment
*
TO
THE
SHERIFF,
ONE
OF
THE
SHERIFF’S
OFFICERS
OR
ANY
BAILIFF
IN
THE
DISTRICT
OF
CHICOUTIMI
CONSIDERING
the
judgment
appended
hereto
on
the
plaintiffs
motion
for
an
arrest
warrant
pursuant
to
articles
284
and
545
of
the
Code
of
Civil
Procedure;
NOW
THEREFORE,
this
is
to
order
you,
in
the
name
of
Her
Majesty,
to
arrest
the
president
of
the
defendant-respondent,
JEAN-EUDES
LALANCETTE,
78
Tadoussac
Boulevard,
Chicoutimi,
between
7:00
a.m.
and
9:30
a.m.
on
April
27,
1993,
or
any
other
following
juridical
day,
at
any
place
where
the
said
defendant
is
present
and
to
immediately
bring
him
before
the
Court
of
Quebec
or
its
authorized
clerks
at
the
courthouse
in
Chicoutimi
and
to
detain
him
until
he
is
released
on
giving
good
and
sufficient
security
for
his
remaining
at
the
disposal
of
the
Court,
or
until
he
undergoes
the
examination
for
which
he
was
summoned.
GIVEN
UNDER
MY
HAND
at
Chicoutimi
this
April
23,
1993.
JUDGE
OF
THE
COURT
OF
QUEBEC
Tab
56:
Copies
of
resolutions
by
the
directors
of
133139
Canada
Ltée
dated
July
22,
1992
Resolution
by
the
Directors
of
133139
Canada
Ltée
Adopted
at
Chicoutimi
on
July
22,
1992
Re:
Purchase
of
Shares
Specified
to
be
Purchasable
(s.
34)
Share
Purchase
WHEREAS
1800
class
A
shares
of
the
corporation’s
capital
stock
have
been
issued
and
are
currently
outstanding;
WHEREAS
the
rights,
privileges
and
restrictions
attaching
to
the
class
A
shares
entitle
the
corporation
to
purchase
all
or
part
of
its
shares
by
mutual
agreement
at
the
best
possible
price;
WHEREAS
it
would
be
appropriate
for
the
corporation
to
purchase
part
of
the
outstanding
class
A
shares
by
mutual
agreement;
WHEREAS
one
of
the
holders
of
the
outstanding
class
A
shares
is
prepared
to
sell
600
shares
to
the
corporation
for
a
price
of
$1.00
for
his
600
shares
and
the
return
of
the
property
(tools)
used
to
pay
for
the
600
class
A
shares;
WHEREAS
the
corporation’s
financial
situation
enables
it
to
make
this
purchase
without
violating
the
provisions
of
section
34(2)
of
the
Canada
Business
Corporations
Act;
WHEREAS
all
the
holders
of
the
outstanding
class
A
shares
consent
to
the
corporation
purchasing
class
A
shares
at
the
above-mentioned
price
otherwise
than
in
proportion
to
the
outstanding
class
A
shares,
and
more
specifically
from
the
persons
and
in
the
proportions
indicated
below,
as
attested
by
their
signatures
affixed
below;
/s/
Stéphane
Lalancette
/s/
Jean-Eudes
Lalancette
Tab
61:
Copy
of
a
declaration
made
on
August
2,
1990,
by
Stéphane
Lalancette
to
the
prothonotary
of
the
Superior
Court
for
the
district
of
Chicoutimi
for
and
on
behalf
of
133139
Canada
Ltée
“Declaration
to
the
Prothonotary*
CANADA
PROVINCE
OF
QUEBEC
DISTRICT
OF
CHICOUTIMI
SUPERIOR
COURT
Declaration
133139
Canada
Ltée
133139
CANADA
LTÉE
was
incorporated
in
the
province
of
Quebec
by
certificates
of
incorporation
issued
on
June
4,
1984,
under
the
Canada
Business
Corporations
Act
(CBCA).
Its
principal
place
of
business
is
at
358
Tadoussac
Blvd.,
Chicoutimi,
Quebec
07H
5A8.
IN
WITNESS
WHEREOF,
this
declaration
quadruplicate
is
made
and
signed
by
me,
STEPHANE
LALANCETTE,
president
of
the
said
corporation,
at
Chicoutimi
this
2nd
day
of
August
1990.
AND
I
HAVE
SIGNED
/s/
Stéphane
Lalancette
Stéphane
Lalancette
At
Tab
58,
there
is
a
copy
of
the
register
of
directors
of
133139
Canada
Limitée
dated
July
27,
1990.
Stéphane
Lalancette
is
the
only
person
named
as
a
director.
On
July
22,
1992,
the
appellant
assigned
all
of
his
shares
to
the
company
(Tab
56,
Exhibit
I-1).
On
October
13,
1992,
according
to
the
minutes
(Tab
48,
Exhibit
I-1),
the
appellant
was
considered
to
be
the
company’s
president.
As
well,
on
August
28,
1992
(Tab
53,
Exhibit
I-1),
he
signed
an
affidavit
on
behalf
of
133139
Canada
Ltée
as
chief
executive
officer.
Case
law
and
other
authorities
The
case
law
and
other
authorities
cited
by
the
respondent
are
as
follows:
1.
Adey
v.
Minister
of
National
Revenue,
91
D.T.C.
964
(T.C.C.
90-
1563(IT));
2.
Deschênes
v.
Minister
of
National
Revenue,
90
D.T.C.
1342
(T.C.C.
87-1364(IT));
3.
Hébert
v.
Le
sous-ministre
du
Revenu
du
Quebec,
[1993]
R.D.F.Q.
18-27;
4.
Irvine
v.
Minister
of
National
Revenue,
91
D.T.C.
91
(T.C.C.);
5.
Leung
v.
Minister
of
National
Revenue,
91
D.T.C.
1020
(T.C.C.);
6.
Myers
v.
The
Queen,
98
D.T.C.
1057
(T.C.C.
95-3664(IT)G
and
95-
3763(IT)G);
7.
Pedneault
v.
Minister
of
National
Revenue,
91
D.T.C.
463
(T.C.C.);
8.
Premachuk
v.
Minister
of
National
Revenue,
91
D.T.C.
1436
(T.C.C.);
9.
Warner
v.
Minister
of
National
Revenue,
91
D.T.C.
87
(T.C.C.);
10.
Revenue
Canada,
Information
Circular
No.
89-2R,
June
27,
1997;
11.
La
compagnie
au
Québec,
Volume
I,
Les
aspects
juridiques,
Éditions
Wilson
&
Lafleur,
Martel
Ltée,
April
1998,
source
deductions,
pp.
574-574.7.
The
main
cases
and
the
other
authorities
can
be
summarized
as
follows:
Case
law
Adey
v.
Minister
of
National
Revenue
([16]:
1)
The
appellant
argued
that
he
was
merely
a
silent
partner
and
did
not
participate
in
the
company’s
activities.
He
did
not
know
that
he
was
a
director.
His
signature
was
not
in
the
minute
book,
but
he
was
the
secretary-treasurer
of
the
company
and
he
had
the
power
to
bind
it
by
his
signature.
He
was
kept
informed
of
the
company’s
situation
and
he
even
tried
to
raise
money
to
repay
its
debts.
The
Court
dismissed
the
appeal
and
held
that
the
appellant
was
a
director
in
fact
and
in
law
because
of
his
activities
on
behalf
of
the
company.
[Emphasis
added.
I
Deschénes
v.
Minister
of
National
Revenue
([16]:
2)
The
appellant
argued
that
he
did
not
manage
the
day-to-day
operation
of
the
business
and
did
not
participate
in
the
business
and
that
his
diligence
had
to
be
judged
as
that
of
an
investor.
The
appellant
owned
50
percent
of
the
company.
He
was
a
notary
practising
commercial
law.
He
was
the
company’s
legal
adviser.
In
his
testimony,
the
appellant
said
that
he
had
chosen
not
to
pay
source
deductions.
That
calculated
risk
was
contrary
to
what
should
be
done
by
a
diligent
director
to
prevent
the
failure
contemplated
by
subsection
227.1(1)
of
the
Act.
Hébert
v.
Le
sous-ministre
du
Revenu
du
Québec
([16]:
3)
The
Lalonde
85
company
made
an
assignment
in
bankruptcy
without
remitting
the
amounts
it
had
collected
under
the
Fuel
Tax
Act.
The
evidence
showed
that
the
applicant
was
always
involved
in
the
important
actions
taken
within
the
company,
such
as
purchasing
the
business,
financing
that
purchase,
selecting
shareholders
and
managing
the
business.
The
appellant
therefore
had
to
be
considered
a
de
facto
director
and
to
assume
the
responsibilities
imposed
on
him
by
law.
[Emphasis
added.]
Myers,
J.D.
and
Wasserfall,
William
v.
The
Queen
([16]:
6)
Adelaide
Electric
Limited
failed
to
remit
source
deductions
from
the
wages
paid
to
its
employees.
A
receiving
order
was
later
made
against
it.
The
appellant
[William
Wasserfall
held
all
of
the
company’s
shares.
The
appellant
Myers]
argued
that
he
was
not
a
director.
He
argued
that
he
was
an
employee
of
Adelaide
Electric
Limited.
The
appellant
Myers
knew
that
the
company
was
indebted
to
Revenue
Canada,
but
he
recognized
the
importance
of
maintaining
Mr.
Wasserfall
in
place
as
director/president.
He
sought
legal
advice
and
was
careful
not
to
hold
himself
out
as
a
director.
When
an
incorrect
notice
was
filed
showing
himself
as
a
director,
the
appellant
Myers
had
it
rectified.
The
appellant
Myers
was
therefore
not
a
de
facto
or
de
jure
director
and
his
appeal
was
allowed.
Mr.
Wasserfall’s
appeal
was
dismissed.
[Emphasis
added.]
Other
authorities
Revenue
Canada,
Information
Circular
No.
89-2R,
June
27,
1997
([16]:
10)
De
Facto
Directors
10
Officers,
employees,
and
others
who
are
not
legally
appointed
as
directors,
but
who
perform
the
functions
that
directors
would
perform,
may
be
liable.
La
compagnie
au
Québec,
Volume
I,
Les
aspects
juridiques
([16]:
11)
p.
574.4
[TRANSLATION]
The
status
of
director
is
assessed
on
the
basis
of
the
law
and
also
on
the
basis
of
the
facts.
What
is
important
is
that
the
director
actually
hold
or
appear
to
hold
that
position,
even
if
he
has
not
given
any
written
consent
or
signed
any
resolutions.
It
is
not
enough
to
assert
that
the
minutes
do
not
prove
he
is
a
director:
1
must
rather
be
shown
that
they
prove
he
is
not.
[Emphasis
added.]
Analysis
In
this
case,
the
appellant
was
not
listed
as
a
director
in
the
1990
annual
report
([5]:
6(c))
or
the
declaration
made
to
the
prothonotary
on
August
2,
1990
([12]:
Tab
61).
However,
based
on
a
review
of
the
above
evidence
in
the
light
of
the
case
law
and
other
authorities,
the
appellant
must
be
considered
a
de
facto
director,
whether
or
not
he
is
a
shareholder
or
de
jure
director.
The
fundamental
principle
is
that
the
appellant
holds
himself
out
to
third
parties
as
the
company’s
chief
executive
officer,
principal
shareholder
and
president.
Having
done
so
he
cannot
then
cast
aside
his
responsibilities
towards
third
parties.
This
is
an
application
of
estoppel
in
commercial
matters.
The
Minister
of
National
Revenue,
who
is
responsible
for
administering
the
Income
Tax
Act,
is
a
third
party.
Conclusion
The
appeal
is
dismissed.
Appeal
dismissed.
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