Zen (G.) v. Canada, [1994] 2 CTC 2153

Rowe D.J.T.C.C.:—The appellant appealed from an assessment dated December 8, 1986, assessing him for income taxes, interest and penalties in the sum of $103,463.32, payable by Pacific Refineries Inc. on the basis that at all material times the appellant was a director of the corporation, said liability being imposed pursuant to the provisions of subsection 227.1(1) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act").

The appellant is also the appellant in another appeal, 89-2506 and Moreno Zen is an appellant in appeal 89-2507 arising from the same set of facts. Both Moreno Zen and Giovanni Zen were assessed on March 23, 1988, pursuant to subsection 227.1(1) of the Act, in the amount of $500,000 for liability as a director of Zen Precious Metals Ltd. which failed to pay for 1985 as required under Part VIII of the Act.

Because counsel represented all the appellants and counsel for the respondent had conduct of these matters, for the sake of convenience the applications made on behalf of the appellants were heard together. The material before the Court consists of the pleadings, affidavits and the written arguments on behalf of the appellants.

I will deal first with application regarding the appeal of Giovanni Zen— 87-1633. Counsel for the appellant, by way of preliminary objection, applied to the Court for an order vacating the assessment on the basis that it was confusing, incomplete, failed to provide the necessary information to the appellant and prejudiced him as a result.

On January 6, 1986, the collections section of Revenue Canada wrote to Giovanni Zen stating that, in connection with Pacific Refineries Inc., the corporation was indebted to the Department of National Revenue for payroll source deductions in the amount of $107,743.54 and that it was considering assessing him personally for that sum. On February 3, 1986, the appellant wrote to Revenue Canada requesting details of the assessment under consideration and asking for copies of audit files and/or working papers, which were not received. On February 19, 1986, the collections section of Revenue Canada wrote to the appellant’s representative, Mr. Moran, enclosing a statement of accounts and referring to an indebtedness in the sum of $117,120.12. Mr. Moran responded by letter dated March 4, 1986 stating he did not agree with the amount claimed as owing and requested working papers, which were not forthcoming. On May 29, 1986 a certificate was filed in the Federal Court under section 223 of the Act and an order was issued against Pacific Refineries Inc. in the amount of $89,262.80 together with interest in the amount of $58,351.98 for a total of $147,614.78. The certificate also set out certain amounts owing under the Canada Pension Plan, R.S.C. 1985, c. C-8, and the Unemployment Insurance Act, R.S.C. 1985, c. U-1, said liability arising as at certain specified dates. On December 8, 1986 a notice of assessment was sent to the appellant indicating that he owed $103,463.32. The appellant filed a notice of objection on December 24, 1986, the first reason being that “insufficient information has been provided with respect to the amounts shown as outstanding—despite several requests". On July 3, 1987 there was notification of confirmation by the Minister of the December 8, 1986 assessment. In paragraph 4 of the reply to notice of appeal, the amount of the assessment is stated to have been calculated as follows:

In paragraph 7 of the reply to notice of appeal, the respondent submits that "the appellant, to the extent of $72,927.72 (being the total of tax, interest and penalties), has been properly assessed as he was a director of Pacific Refineries nc. at the time it was required to remit the aforesaid amount withheld and, therefore, is jointly and severally liable to pay the tax and any interests [sic] and penalties relating thereto pursuant to section 227.1 of the Income Tax Act’.

Counsel for the appellant submitted that the decision of the Honourable Judge Rip, Tax Court of Canada, in Leung v. M.N.R., then unreported, but now found at [1991] 2 C.T.C. 2268, 91 D.T.C. 1020, was binding on me. In Leung, the appellant had been assessed under subsection 227.1(1) of the Act, section 36(a) of the Income Tax Act of Ontario, R.S.O. 1980, c. 213, section 22.1 of the Canada Pension Plan and section 60.1 of the Unemployment Insurance Act for a total amount of $66,775.15 being the amount of unpaid deductions, penalties and interest payable by a corporation, of which the appellant was a director. Judge Rip vacated the assessment on the basis that an assessment must clearly set forth the amount assessed so as to properly inform the taxpayer and if supplementary information is required to clarify an assessment then it is not complete. In the present appeal, the notice of assessment is reproduced here [not reproduced].

The position of counsel for the appellant is that there are obvious errors underlying the particular notice of assessment and there are issues arising as to the nature of the liability, the foundation of said liability pursuant to different statutes and the matter of when the liability arose so as to impinge on the ultimate liability of the appellant in his capacity as director of the corporation. The appellant was concerned about the deficiencies, and the notice of assessment and the following notification of confirmation were not capable of providing any additional detail to answer the concerns of the appellant. Accordingly, the assessment cannot be cured later by providing further information, often inconsistent, to rectify a defect that results in the assessment being void.

The decision of Judge Rip in Leung, supra, was appealed to the Federal Court of Canada-Trial Division—and the matter came before Joyal J., the resulting decision being reported as Leung v. M.N.R., [1993] 2 C.T.C. 284, 93 D.T.C. 5467. At pages 300-03 (D.T.C. 5478) and following, Joyal J. stated:

Findings on validity of the assessment

I should first observe that in dealing with a section 227 process, the amounts claimed in an assessment are not the usual kind of debt owed by one taxpayer for which another taxpayer might be held vicariously liable. The amounts in the assessment before me are trust funds which the corporation withheld and which were not remitted to the Crown. Such conduct might be regarded at best as a serious breach of trust and at worse misappropriation of funds belonging to someone else. There is no evidence before me as to what is the mental state of corporation directors or managers when these things happen, but if one considers the frequency of cases where section 227 is used, one might conclude that such trust funds are often treated with reprehensible banality. Deductions at the source can never be used to ease cash flow problems.

The second observation is that recourse to a section 227 assessment is only available when the Crown has absolutely no hope of recovery. This is made clear by the provisions of subsection 227.1(2) where directors' liability only applies when the conditions set out therein are met.

The third observation is that liability under subsection 227.1(3) and subsection 227.1(4) does not attach to a director juris et de jure. A director may establish that he was not a director, or that he exercised due diligence, or that the two-year limitation applies.

The fourth observation is that the imposition of that kind of liability on a third person, keeping in mind that a corporation is a distinct entity from its directors, is not unique under the Income Tax Act, but it is nevertheless exceptional. It opens the door to some speculation as to whether in any particular case, the requirements of a notice of assessment may be more stringent or whether it might only be a matter of additional burden of proof on the Crown.

With these observations in mind, it is evident that a section 227 assessment issued to a director cannot be treated lightly. Any individual director might not have been aware of section 227 of the Act and of the liability that might attach to him by reason of the corporation's default. This is not surprising. Even sophisticated individuals who have sat for years on boards of public and private companies have often been taken by surprise. Recent developments in directors' personal liability for certain corporate debts have raised hackles among them and indeed, a new industry has been created dealing with “bullet-proof” protection for them.

As in the case before me, is it open to a taxpayer on receiving a notice of assessment to adopt a passive attitude and then argue that the Notice, wanting in particulars, should be declared null and void and of no effect? Perhaps the answer to this cannot be provided in black and white terms. As the Honourable Judge Rip of the Tax Court of Canada suggested in Roll v. M.N.R., [1992] 2 C.T.C. 2060, 92 D.T.C. 1446 at pages 2064-65 (D.T.C. 1450), the presence or absence of prejudice to a taxpayer will depend on the facts surrounding the issuance of the assessment.

A careful reading of the admitted facts discloses a prior notice of intention by the Crown, dated January 29, 1986, to assess the defendant under section 227.1 of the Act. The defendant did not respond to it by way of a reply or other inquiries. A notice of assessment was issued several months later, namely September 9, 1986. This was followed on November 7, 1986, by a notification for payment. Again the defendant remained silent for a long period of time. It was on June 5, 1987, that he attended upon Revenue Canada and undertook to provide a statement of his due diligence by July 15, 1987. On August 10, 1987, counsel tor the defendant also met with Revenue Canada. He was given all of the information he requested, except information relating to Mr. Sloss, the president of the defunct corporation, which the Crown quite properly refused to divulge.

On September 9, 1987, one year after the assessment date, counsel for the defendant applied to the Tax Court of Canada for an extension of time to file a notice of objection, which should otherwise have been filed by December 6, 1986. The application came before Rip J.T.C.C. who, on May 30, 1988, granted leave for late filing.

The notice of objection was subsequently filed, the defendant later confirmed the assessment and on May 8, 1989, the plaintiff filed his notice of appeal with the Tax Court of Canada. This notice of appeal was later amended, the plaintiff's reply was likewise amended and the issue finally came for trial before the Tax Court on March 21, 1991.

On the foregoing facts, I cannot conclude, whatever shortcomings might be alleged with respect to the notice of assessment, that they caused any prejudice to the defendant.

Generally speaking, one should eschew an overly formalistic approach to a notice of assessment. The Income Tax Act is not a penal statute (although it was so characterized many years ago) and a notice of assessment is neither similar or analogous to a charge or count on a criminal indictment. The hardened and extremely inflexible rules which apply to criminal proceedings do not and should not apply to a notice of assessment or to the proceedings which flow from it.

It may be assumed that Parliament had a purpose in enacting subsection 152(3) and subsection 152(8). That purpose, in my view, was to ensure that in the process of issuing millions of assessments yearly, many of these involving complex statutory provisions and equally complex calculations, technical accuracy or a peremptory level of disclosure, reference and source would not be imposed on the assessor. The notice of assessment is an administrative procedure and reliance on technical rules applicable to other processes to defeat it ab initio is not necessarily warranted.

In my opinion, the whole scheme of taxation presumes that a taxpayer will react to an assessment as would any reasonable person. He is not expected to sit back grinning like a Cheshire cat and, three years later, pounce on the seeming illegality or invalidity of the assessment because he has not been sufficiently informed and he has thereby suffered prejudice.

Furthermore, the taxpayer has administrative and more formal processes open to him. In the case before me, the defendant was given notice of an intention to assess, was later assessed and was given every opportunity to have the assessment particularized to his liking. It is noted in that connection that the defendant conceded in the agreed statement of facts that any information he requested of the plaintiff was provided, that he never asked for a determination of the amounts under each of the several statutes mentioned in the assessment and he did not ask for nor was he provided with copies of the corporate assessments or of the certificates filed in court. Perhaps his situation was not so much that he wanted to know all about the assessment and was afraid to ask, but that he wanted to ask about the assessment and was afraid to know.

Subsection 152(3) of the Act specifically states that a tax liability is not affected by an incorrect or incomplete assessment. Subsection 152(8) further declares that an assessment is deemed to be valid notwithstanding any error, defect or omission therein. It seems to be that such clear provisions in a statute must be given some weight and they cannot be disregarded many months or years following an assessment, simply on a bare allegation by the taxpayer that he was misled, or surprised, or unable to instruct counsel.

In my view, the notice of assessment has the essential ingredients which the statute obviously contemplates. It claims the total amount due in unremitted funds, including interest and taxes, it cites the statutory provision under which the vicarious responsibility of a director is attached, the various statutory sources under which the sums were deducted and not paid out, and the particular notices of assessment sent to the corporation as well as the dates thereof. This is sufficient to put a taxpayer on notice that a particular amount is claimed. The piece of paper is not called a notice of assessment for nothing.

To those, however, who might harbour a more confrontational attitude and allege that the Crown's clout in issuing an assessment has been exercised irresponsibly and gratuitously, thereby causing prejudice to a taxpayer, it could be suggested that the normal rules of the game in contesting such an assessment do not necessarily apply. A taxpayer, on receiving an incomplete assessment or one where the grounds are not sufficiently particularized, does not face heavy artillery leaving him with only small arms fire with which to respond. The relief, in my respectful view, is not so much by way of inflicting a mortal wound on an impoverished notice of assessment, but rather of imposing on the assessor a burden of proof which he would not otherwise have to bear.

Then, at pages 304-05 (D.T.C. 5481), Joyal J. continued as follows:

Conclusion

I have gone to some length in referring to any number of judgments in which the validity of an assessment has been challenged. Many of them deal specifically with a section 227.1 assessment, witness the number of cases in the Tax Court of Canada which have substantially followed the reasoning of Rip J.T.C.C. in the Leung case, supra. It is with great respect, therefore, that I find myself in disagreement with that line of cases.

First of all, I find more persuasive, and more in keeping with the nature of a notice of assessment, the reasoning of the Federal Court of Appeal in the Optical Recording, Riendeau, Stephens and Hillsdale Shopping Centre cases to which I have already referred. This leads me to conclude that in the absence of any statutory condition as to the form or content of a notice of assessment, and in the light of subsection 152(3) and subsection 152(8) of the statute, the notice of assessment issued to the defendant is valid.

Secondly, I find the clear and succinct comments of Rip J.T.C.C. in the Rolls case, supra, particularly appropriate to a more realistic view of a notice of assessment. They bear repeating here (C.T.C. 2064, D.T.C. 1449):

The notice of assessment states the appellant has been assessed under the Income Tax Act. The appellant knew, from reading the notice, the statute under which he is being assessed. If the amount assessed included a liability under another statute, the amount assessed is in error and the Court would allow the appeal and vary the assessment, reducing the quantum to the extent of the amount included under the other statute. It is under the provisions of the Income Tax Act that the appellant is to challenge the assessment; he is not prejudiced in preparing his case that a quantum of the assessment is wrong.

Such is the case before me. If it should be found that the amounts claimed under other statutes than the Income Tax Act cannot properly be the subject of a section 227 assessment, an opinion which Rip J.T.C.C. seems to have adopted in the above comments and with which I do not necessarily agree, it is open to a Court to reduce them and vary the assessment accordingly.

The decision of Joyal J. was appealed to the Federal Court of Appeal but the appeal was discontinued on March 8, 1994. The Federal Court of Appeal, on April 13, 1994 decided the case of Attorney General of Canada v. ISC International Systems Consultants Ltd., File No. A-267-93 (F.C.A.), April 13, 1994 (Linden, MacGuigan, Mahoney, JJ.A.) (unreported). In that case, the learned Tax Court Judge had vacated certain assessments under the Unemployment Insurance Act on the basis that they also included amounts levied pursuant to the Canada Pension Plan and that the assessments, lumping together the interest and penalties under both statutes, on one notice resulted in a defective notice leading to the determination that the assessments were null and void. At page 6 of the judgment, Mahoney J.A., writing for the Court, stated:

The notices of assessment were found insufficient and fatal to the assessments only by reason of the failure to allocate the interest and penalties separately to the UI premiums and the CPP contributions assessed. Yet the Tax Court judge found, correctly, that the interest rates and penalty rates as to each are identical. A cursory inspection of the notices discloses that the total penalty assessed is, in each case, ten per cent of the total of the two principal amounts. Its allocation ought not have challenged the respondent. The allocation of the interest to each ought also to be a simple arithmetic exercise.

Verification of the correctness of the interest assessed, of course, depends not only on the rates prescribed for particular periods but on knowing the days upon which remittance of portions of the principal amounts was required and the amounts required to have been remitted on those days. The respondent is certainly entitled to the Minister’s information needed to permit it to verify that the interest charged was correctly calculated according to the law that prescribed it and to challenge any assumptions it wishes. That information may be obtained upon inquiry after the notice of assessment has been delivered. The failure to deliver it before confirmation of an assessment is not fatal to the assessment. A notice of assessment is not deficient because it does not provide such information on its face or does not allocate interest and penalty assessed among the principal items assessed as being in arrears.

The fact is that the rates of interest, as of the penalty, are prescribed by law. So, too, are the quarterly periods for which and the days upon which remittances were required and the rules for calculating the amounts thereof. The respondent is deemed to know the law.

I would allow this application, set aside the decision of the Tax Court of Canada dated March 1, 1993, and remit the matter to the Tax Court for a continuation of the hearing on the basis that the assessments in issue are not invalid by reason either of their having been made without proper authority or any deficiency in the notices of assessment. I see no special reason within the contemplation of Rule 1618 for an award of costs.

It may be that the trier of fact will have some concern that the notice of assessment dated December 8, 1986, although referring in the body thereof to previous notices of assessment dated April 20, 1982, September 24, 1982, December 20, 1982, May 16, 1983 and July 26, 1984, did not provide copies of those documents to the appellant along with the notice of assessment appealed from.

The assessment complained of did not, on its face, purport to establish liability pursuant to different statutes, although a perusal of the material contained in the affidavits filed indicates there was a considerable amount of confusion over the amount alleged to be owing by the appellant, and it may be that part of the difference in the sums involved arises out of an inability at that time to impose vicarious liability on a director for unpaid Canada Pension Plan and unemployment insurance premiums. However, that is a matter for the trier of fact when the appeal is heard on its merits.

The application to vacate the assessment of December 8, 1986 is hereby dismissed. The appeal of Giovanni Zen — 87-1633 — will proceed to trial on the questions relating to the liability of the appellant pursuant to subsection 227.1(3) of the Act and any other related matters that arise from the pleadings.

I turn now to the application of counsel for the appellants Giovanni Zen — 89-2506 and Moreno Zen — 89-2507 to vacate in each instance, the assessment against each dated March 23, 1988, pursuant to liability under subsection 227.1(1) of the Act in the amount of $500,000 being the amount of tax Zen Precious Metals Ltd. (Precious Metals) had failed to pay for 1985 as required under Part VIII of the Act.

The grounds for the application were that:

1. The Minister, in all the circumstances, failed to act with “all due dispatch".

2. The issuing of the notice of assessment against the appellants and the notifications of confirmation, in all of the circumstances, constitutes an abuse of process and/or a denial of natural justice.

3. The issuing of the notice of assessment against the appellants and the further notification of confirmation contravenes section 7 of the Charter of Rights and Freedoms.

Counsel submitted that the Minister delayed without just cause in proceeding and further failed to consider, prior to assessing each appellant, whether the expenditures claimed by Precious Metals were qualified as scientific research and experimental development procedures as provided in the Act. In effect, the submission is that the Minister failed to consider whether Precious Metals owed the tax, when confirming the notices of assessment against the appellants, thereby breaching principles of natural justice. On March 23, 1988, a notice of assessment was sent to Giovanni Zen and Moreno Zen in connection with the 1985 taxation year assessment of Precious Metals. On May 6, 1988 a notice of objection was filed by each appellant stating, inter alia, that Precious Metals is not liable for the tax. On June 30, 1989, the Minister issued notifications of confirmation wherein he confirms the March 23, 1988 notices of assessment but, counsel submits, in so doing, the Minister did not review the question of whether Precious Metals itself owes the tax.

Counsel for the respondent pointed out that at paragraphs 5(d) and 5(e) of the reply to each appeal, there was an incorrect reference to the "appellant" when it properly should have referred to "Zen Precious Metals Ltd.". It was Precious Metals that had earlier filed a notice of objection, received a confirmation, and had neglected to appeal therefrom. In addition, at paragraph 7 of the reply to each appeal, the respondent stated:

The respondent submits that as Zen Precious Metals Ltd. did not appeal its assessment of Part VIII tax, this assessment Cannot now be appealed by the appellant.

Counsel for the respondent advised the Court that the Minister now abandons that position and at trial each appellant would be able to argue, apart from their due diligence defence under subsection 227.1(3) of the Act, that the expenditures incurred by Precious Metals did in fact qualify as scientific research and experimental development. Permission is hereby granted to the respondent to amend paragraphs 5(a) and 5(e) of each reply to correct the error and any amended reply should then delete paragraph 7 as the Minister no longer intends to rely on the proposition stated therein.

Pursuant to subsection 152(1) of the Act “The Minister shall, with all due dispatch, examine a taxpayer's return of income for a taxation year, assess the tax for the year, the interest and penalties, if any, payable and determine The present appeals do not arise from filing any return of income. Rather, they flowed from the provisions of subsection 227.1(1) of the Act arising from the failure of the corporation to remit the Part VIII tax liability having to do with a scientific research tax credit under section 194 of the Act. The Zens each filed a notice of objection to the assessment each received, dated March 23, 1988. Pursuant to subsection 165(3) of the Act, upon receipt of a notice of objection under this section the Minister shall, “with all due dispatch reconsider the assessment and vacate, confirm or vary the assessment or reassess, or . . . ." It is apparent from the affidavit of Jose Antonio Remedios, filed, that as a senior appeals officer of the Department of National Revenue, he deposed, inter alia (tabs E to O, inclusive, attached to the affidavit), that the Minister considered the objection to the subsection 227.1(1) assessment, reconsidered the assessment and decided to confirm the assessment on the basis that Giovanni Zen was a director at all material times and that other conditions of the section 227 had been met including that of the lack of "due diligence” by the appellants. Due to the passage of time, other directors could not be proceeded against under the same provisions of the Act.

The appellants, pursuant to section 169 of the Act, could have proceeded to appeal the assessment upon the expiry of 90 days following the service of the notice of objection and did not have to wait until the Minister responded by way of notification of confirmation on June 30, 1989. In any event, the delay was not "undue delay” and the fact that other directors of Precious Metals may be able to escape exposure due to the passage of time or due to a decision of the Minister not to pursue them for other reasons, does not affect, without more, the validity of the assessment against the appellants. The liability of directors is, after all, joint and several, together with the corporation.

Zen Precious Metals Ltd. was assessed on October 6, 1986, Part VIII tax, late filing penalties and interest in the amount of $690,780.38. The Minister had concluded that the expenditures claimed did not qualify as scientific research and experimental development expenditures as provided in the Act. Precious Metals objected to the assessment on December 24, 1986 and by notification of confirmation, dated September 18, 1987, the Minister confirmed the assessment. Precious Metals did not appeal. A certificate was then registered with the Federal Court of Canada, a writ of fieri facias issued on June 29, 1987 and was returned nulla bona by the Vancouver sheriff's office on December 15, 1987. By letter, dated August 19, 1987 each appellant was advised by the Minister of his liability as a director of Precious Metals. No response was received. On March 23, 1988 each appellant was assessed regarding the Part VIII liability of Precious Metals.

The position of counsel for the appellants is that the Minister should have been compelled, under the Act, to reinvent the wheel. I cannot see any reason that would compel the Minister to undertake a fresh examination as to whether or not Precious Metals had qualified under the Act in terms of its alleged expenditures for scientific research merely because efforts to collect the Part VIII tax liability — which the corporation did not appeal — were unsuccessful and now the appellants, as directors, were being pursued under the vicarious liability provisions of the Act. If a dog escapes and kills some chickens and an owner is liable by statute, then should a different owner or a co-owner subsequently be ascertained, there is no need to reexamine all of the facts to decide again whether or not the same dog got out through the same hole in the same fence and destroyed the same chickens. That is not the issue. The question is whether the charging authority can establish vicarious liability against the various parties. In the present appeals, the appellants have their defences under subsection 227.1(3) and others that may be otherwise available to them. There has not been any denial of natural justice by the Minister in undertaking his duty.

There is no real issue raised under section 7 of the Charter of Rights and Freedoms. It is not applicable to the circumstances of the application.

In Curylo v. M.N.R., [1992] 1 C.T.C. 2389, 92 D.T.C. 1250, the Honourable Judge Beaubier, Tax Court of Canada, dealt with the matter of notices of assessment against a director for Part VIII liability. At pages 2392-93 (D.T.C. 1255) of his judgment he stated:

The appellants’ third issue argued is that the notice of assessment to each appellant fails to provide sufficient information as required by the principles set out in Leung v. M.N.R., [1991] 2 C.T.C. 2268, 91 D.T.C. 1020.

In respect to this issue it should first be noted that the assessment in Leung, supra, involved federal income tax, unemployment insurance, Canada pension, and the Income Tax Act of Ontario moneys. Judge Rip stated at page 2274 (D.T.C. 1025):

A taxpayer assessed under four different statutes ought to be informed of the amount assessed under each statute.

Here the notice of assessment of the appellants only related to subsection 227.1(1) of the Income Tax Act. Each notice of assessment states that the balance for which liability is assessed is ”. . . $2,701,921.88 being the amount of the tax 281215 British Columbia Ltd. has failed to pay for 1985 as required under Part VIII . . . ”. It also refers to liability for ”’. . .interest related thereto" but no amount is stated.

Thus the appellants are each assessed for tax under the Income Tax Act of $2,701,921.88. They can dispute that amount. They were directors at the time that amount came in to question and they may have full knowledge respecting that amount. They may have had a duty as directors to have full knowledge respecting that amount. In any event, they can subpoena witnesses and documents in this Court for the purposes of any dispute they may have respecting that amount of tax and the Court has jurisdiction to issue those subpoenas and hear that dispute.

There are a number of questions that arise respecting the allegations in the notices of assessment respecting ".. . interest related thereto” that can be determined in the course of a hearing before this Court.

In Leung, supra, Judge Rip stated at page 2277 (D.T.C. 1027):

The Act provides for the Minister to assess a person for an amount payable under a provision of the Act. I ask myself if the appellant, reading the notice with respect to the assessment in issue, can reasonably determine the amount he was assessed under the Act and the reason for the assessment.

In the cases of the appellants, the Court finds that they can. Nothing more is necessary to be contained in the notice of assessment.

The final argument of the appellants is that the assessment procedure is incomplete since the Minister failed to consider the notice of assessment of the corporation dated February 11, 1988.

Subparagraph 14(k) of the Minister’s assumptions in his reply to amended notice of appeal reads:

(k) the liability of the company was determined as follows:

Part VIII tax (50 per cent) of	$7,188,000.00	$3,594,000.00
Recoveries
— Escrow Funds	$1,275,790.19
— Furniture	16,127,49	$1,291,917.68
Subtotal		$2,302,082.32
Interest		399,839.56
Balance Outstanding — Sept. 6 1988		$2,701,921.88

In argument, counsel for the Minister demonstrated a different method of calculating the amounts assessed against the appellants. However, that remains to be proved.

What is in evidence is the amount of tax assessed against the appellants and the assumption which indicate that the amount of tax for which the “liability of the company was determined” is $2,302,082.32. The assumptions do not include a reference to the corporation Part VIII refund of $394,142.60 by the assessment of February 11, 1988.

The amount in the notice of assessment is the amount which the appellants are entitled to appeal. The onus respecting proof as to the amount will vary in accordance with the assumptions of the Minister.

If the assessment procedure is incomplete and it is to the appellants’ advantage as determined at trial, then they are entitled to that advantage and it is the duty of the Court to see that they receive that advantage. But that is not fatal to the assessment procedure or to the notice of assessment of each of the taxpayers before this Court.

The application of the appellant, Giovanni Zen — 89-2506 and the appellant, Moreno Zen — 89-2507 for an order that the Court vacate the assessment of March 23, 1988 made against each of them is hereby dismissed. These appeals will be set down for trial and will proceed on the questions relating to the liability of the appellants pursuant to subsection 227.1(3) and any other matters raised by the pleadings.

Application dismissed.