O’Connor
T.C.J.:
These
appeals
were
heard
on
common
evidence
at
Sydney,
Nova
Scotia,
from
August
18
through
August
22,
continuing
on
August
24
and
August
25,
1997
pursuant
to
the
General
Procedure
of
this
Court.
Numerous
exhibits
were
filed.
Two
counsel
were
present
for
the
Respondent.
Corsano
was
represented
by
one
counsel,
Wheeliker
was
represented
by
one
counsel
and
Lawrence,
Parsons
and
MacDonald
were,
together,
represented
by
one
counsel.
Maindiratta
acted
on
his
own
behalf.
The
Appellants
were
six
of
the
apparent
directors
of
Louisbourg
Harbourfront
Park
Limited
(“Corporation”).
Testimony
was
given
by
each
of
the
six
Appellants,
by
two
former
managers
of
the
Corporation,
namely,
Jean
Pearl
and
Florie
Sullivan-Currie,
by
Bruce
Jardine,
the
General
Manager
of
the
Corporation
during
the
period
in
question,
also
by
Margaret
Marshall,
another
director
of
the
Corporation
(whose
director’s
liability
assessment
had
been
dropped
by
Revenue
Canada),
by
Gerry
Porter,
the
manager
of
the
Royal
Bank
at
Louisbourg
and
by
Victor
Hanham,
Mayor
of
Louisbourg
from
October,
1991
to
August,
1995.
Issue
The
issue
is
whether
the
Appellants
are
liable
for
the
Corporation’s
failure
to
remit
payroll
deductions
for
the
period
January,
1992
to
October,
1993
(the
“Period”).
The
appeals
relate
only
to
unremitted
federal
tax
totalling
$17,896.64
and
associated
penalties
and
interest.
The
outcome
of
these
appeals
however
will
also
affect
the
Appellants’
liability
for
unremitted
provincial
tax
and
Canada
Pension
Plan
and
Unemployment
Insurance
premiums
and
associated
penalties
and
interest.
The
assessments
against
the
Appellants
were
based
on
the
following
provisions
of
the
Income
Tax
Act
(“Act’):
153(1)
Every
person
paying
at
any
time
in
a
taxation
year
(a)
salary
or
wages
or
other
remuneration,
shall
deduct
or
withhold
therefrom
such
amount
as
may
be
determined
in
accordance
with
prescribed
rules
and
shall,
at
such
time
as
may
be
prescribed,
remit
that
amount
to
the
Receiver
General
on
account
of
the
payee’s
tax
for
the
year
under
this
Part
or
Part
XI.3,
as
the
case
may
be...
227.1(1)
Where
a
corporation
has
failed
to
deduct
or
withhold
an
amount
as
required
by
...
section
153
or
...
has
failed
to
remit
such
an
amount
...
the
directors
of
the
corporation
at
the
time
the
corporation
was
required
to
deduct,
withhold,
remit
or
pay
the
amount
are
jointly
and
severally
liable,
together
with
the
corporation,
to
pay
that
amount
and
any
interest
or
penalties
relating
thereto.
227.1(2)
A
director
is
not
liable
under
subsection
(1),
unless
(a)
[not
applicable]
(b)
[not
applicable]
(c)
the
corporation
has
been
made
an
assignment
or
a
receiving
order
has
been
made
against
it
under
the
Bankruptcy
and
Insolvency
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.
227.1(3)
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.
227.1(7)
A
director
who
has
satisfied
a
claim
under
this
section
is
entitled
to
contribution
from
the
other
directors
who
were
liable
for
the
claim.
The
Appellants
submit
that
the
employees
in
question
were
not
really
employees
of
the
Corporation
but
rather
were
employees
of
Louisbourg
Harbourfront
Park
Society
(“Society”),
the
shareholder
of
the
Corporation
and
therefore
they
are
not
liable
for
the
unremitted
source
deductions.
They
also
submit
there
were
serious
irregularities
in
their
appointments
as
directors
with
the
result
that
they
were
not
directors.
Lastly,
they
allege
that
they
exercised
the
degree
of
care,
diligence
and
skill
to
prevent
the
failure
to
remit
by
the
Corporation
that
a
reasonably
prudent
person
would
have
exercised
in
comparable
circumstances.
The
Corporation
was
incorporated
in
1980
pursuant
to
the
laws
of
Nova
Scotia,
with
head
office
at
Louisbourg
in
Cape
Breton.
It
was
a
not
for
profit
corporation.
The
Society
owned
96%
of
the
shares
of
the
Corporation.
The
other
4%
was
held
by
four
early
directors
of
the
Society
in
trust
for
the
Society.
Thus
the
Society
controlled
the
Corporation.
The
Society
was
incorporated
in
1981
pursuant
to
the
Nova
Scotia
Societies
Act.
The
members
of
the
Society
were
the
incumbent
members
of
the
Planning
Commission
of
the
Town
of
Louisbourg
(“Commission”).
The
Commission
was
incorporated
in
1963
by
the
Louisbourg
District
Planning
and
Development
Commission
Act,
1963,
Statutes
of
Nova
Scotia.
ch.
6.
Were
the
employees
employees
of
the
Corporation?
I
find
that
the
evidence
demonstrates
they
were
employees
of
the
Corporation.
Some
grants
with
respect
to
employees
were
processed
by
the
Society
but
the
Corporation
hired
the
employees,
paid
them
and
controlled
them.
Did
the
appointment
irregularities
result
in
the
Appellants
not
being
directors?
The
Appellants
pointed
to
three
irregularities;
(1)
none
of
them
had
a
share
in
the
Corporation;
(2)
the
Articles
of
Association
(“Articles”)
provided
for
a
maximum
of
seven
directors
but
during
the
Period
or
substantially
all
of
the
Period,
there
were
nine;
and
(3)
the
Appellants
were
appointed
directors
only
by
the
Society
not
by
all
the
shareholders
of
the
Corporation.
Since
the
remaining
4%
shareholders
held
their
shares
in
trust
for
the
Society,
I
do
not
believe
the
third
irregularity
would
render
the
directors’
appointments
null.
To
analyze
the
other
irregularities
it
is
necessary
to
examine
the
applicable
legislation.
Section
95
of
the
Companies
Act
provides
as
follows:
(1)
It
shall
be
the
duty
of
every
director
who
is
by
the
regulations
of
the
company
required
to
hold
a
specified
share
qualification,
and
who
is
not
already
qualified,
to
obtain
his
qualification
within
three
months
after
his
appointment,
or
such
shorter
time
as
is
fixed
by
the
regulations
of
the
company.
(3)
The
office
of
director
of
a
company
shall
be
vacated,
if
the
director
does
not
within
three
months
from
the
date
of
his
appointment,
or
within
such
shorter
time
as
is
fixed
by
the
regulations
of
the
company,
obtain
his
qualification,
or
if
after
the
expiration
of
such
period
or
shorter
time
he
ceases
at
any
time
to
hold
his
qualification,
and
a
person
vacating
office
under
this
Section
shall
be
incapable
of
being
re-appointed
director
of
the
company
until
he
has
obtained
his
qualification.
The
Articles
provide
as
follows:
103.
Unless
otherwise
determined
by
general
meeting,
the
number
of
Directors
shall
not
be
less
than
two
or
more
than
seven.
106.
The
qualification
of
a
Director
shall
be
the
holding
of
at
least
one
share
in
the
Company
of
a
class
entitled
to
vote
at
general
meetings
of
the
Company.
A
director
may
be
appointed
and
act
before
acquiring
a
qualifying
share,
but,
if
he
has
not
acquired
it
within
three
months
of
his
appointment
or
election,
he
shall
be
deemed
to
have
vacated
the
office
of
Director.
111.
The
office
of
a
Director
shall
ipso
facto
be
vacated:
(a)
if
he
becomes
bankrupt,
makes
an
authorized
assignment,
suspends
payment,
or
compounds
with
his
creditors;
or
(b)
if
he
is
found
a
lunatic
or
becomes
of
unsound
mind;
or
(c)
if
he
ceases
to
hold
the
number
of
shares
required
to
qualify
him
for
office
or
does
not
acquire
them
within
three
months
after
his
election
or
appointment;
or
(d)
if
by
notice
in
writing
to
the
Company
he
resigns
his
office;
Counsel
for
the
Respondent
stated
correctly
that
since
the
Act
does
not
define
the
term
“director(s)”,
the
incorporating
legislation
of
the
Corporation
should
be
looked
to
for
guidance
as
to
what
“director(s)”
means
in
the
context
of
the
Act.
Counsel
referred
to
section
97
of
the
Companies
Act
and
section
132
of
the
Articles
which
provide
as
follows:
97.
The
acts
of
a
director
or
manager
shall
be
valid
notwithstanding
any
defect
that
is
afterwards
discovered
in
his
appointment
or
qualification.
132.
All
acts
done
at
any
meeting
of
the
Directors
or
of
a
committee
of
Directors
or
by
any
person
acting
as
a
Director
shall,
notwithstanding
that
it
is
afterwards
discovered
that
there
was
some
defect
in
the
appointment
of
the
Directors
or
persons
so
acting,
or
that
they
or
any
of
them
were
disqualified,
be
as
valid
as
if
every
such
person
had
been
duly
appointed
and
was
qualified
to
be
a
Director.
I
do
not
agree
that
section
97
of
the
Companies
Act
and
section
132
of
the
Articles
resolve
the
issue.
In
my
opinion
these
provisions
validate
acts
of
persons
who
are
not
de
jure
directors
but
who
act
as
directors
anyway.
The
provisions
are
meant
to
protect
third
parties
dealing
in
good
faith
with
such
persons
by
validating
their
acts.
They
do
not
relate
to
imposing
a
vicarious
tax
liability
on
a
person
for
a
failure
to
act;
i.e.,
a
failure
to
remit
source
deductions.
Were
the
Appellants
de
jure
directors?
To
qualify
a
director
had
to
have
a
share.
None
of
the
Appellants
did.
Most
significantly,
section
111
of
the
Articles
says
“The
office
of
a
Director
shall
ipso
facto
be
vacated”
if
a
director
became
bankrupt,
is
found
to
be
a
lunatic
or
resigns
and
also
“if
he
ceases
to
hold
the
number
of
shares
required
to
qualify
him
for
office
or
does
not
acquire
them
within
three
months
after
his
election
or
appointment”.
The
fact
of
not
having
a
share
is
lumped
in
with
three
other
obvious
and
common
causes
of
disqualification,
thus
demonstrating
its
importance
at
the
time.
The
condition
of
share
ownership
no
longer
exists
for
a
Nova
Scotia
company
but
it
did
at
the
time
the
Corporation
was
incorporated.
Consequently,
I
conclude
that
the
Appellants
were
not
de
jure
directors.
In
view
of
this
conclusion,
I
find
it
unnecessary
to
comment
on
the
irregularity
of
there
being
nine
directors
rather
than
seven
or
less.
Counsel
for
the
Respondent
also
argued
that
even
if
the
Appellants
were
not
de
jure
directors
because
of
the
irregularities
in
their
appointments,
they
were
nevertheless
de
facto
directors.
In
a
written
submission,
counsel
stated
as
follows:
13.
Paragraph
2(1
)(f)
of
the
Companies
Act
defines
“director”
as,
“includes
any
person
occupying
the
position
of
director
by
whatever
name
called;”
14.
Thus,
in
accordance
with
this
statutory
definition
of
director,
any
person
occupying
the
position
of
director
is
a
director.
15.
Whether
each
of
the
appellants
then
did,
during
the
relevant
times,
“occupy
the
position
of
director”
is
a
question
of
fact.
In
this
regard
the
evidence
is
clear
and
uncontroverted.
At
all
material
times
each
appellant
was,
and
allowed
himself
to
be,
identified
as
a
director
of
the
Corporation
and
regularly
attended
meetings
described
in
minutes
as
meetings
of
the
directors
of
the
Corporation.
At
these
meetings
business
was
conducted
by
them
compatible
with
the
discharge
of
responsibilities
of
directors.
Further,
each
was
publicly
identified
as
director
in
annual
corporate
filings
on
behalf
of
the
Corporation
with
the
Nova
Scotia
Registrar
of
Joint
Stock
Companies.
Apart
from
certain
individuals
who
also
attended
the
said
meetings
of
directors
and
were
similarly
identified
as
such
in
the
public
annual
filings
with
the
Nova
Scotia
Registrar
of
Joint
Stock
Companies,
no
other
individual
held
him/herself
out
as,
or
was
otherwise
identified
as,
a
director
of
the
Corporation.
Also,
at
no
time
prior
to
the
present
proceeding
did
the
appellants,
or
any
of
them,
request
that
they
not
be
recognized
or
acknowledged
as
directors
of
the
Corporation.
-Exhibit
A-1,
Tabs
17,
49,
50,
51,
52,
53
and
54
16.
Accordingly,
the
evidence
is
clear
and
uncontradicted
that
each
appellant
did
“occup[y]
the
position
of
director”
of
the
Corporation,
and
so
met
the
statutory
definition
stipulated
by
the
Companies
Act
definition
of
“director”
for
being
a
director
of
the
Corporation.
17.
As
such,
each
appellant
is
a
director
for
purposes
of
the
Act,
including
subsection
227.1(1)
thereof.
18.
It
seems
apparent
that
what
the
Companies
Act
definition
in
effect
“includes”
as
directors
are
de
facto
directors,
that
is,
directors
through
their
actions
rather
than
pursuant
to
appointment.
The
common
law
has
long
recognized
de
facto
directors,
as
distinct
from
de
jure
directors.
De
facto
directors
include
those
persons
who
take
upon
themselves
the
office
of
director
without
proper
appointment.
-see,
generally,
Lo-Line
Electric
Motors
Ltd.,
Re,
[1988]
Ch.
477
(Eng.
Ch.
Div.)
19.
De
facto
directors
are
specifically
acknowledged
in
Nova
Scotia
common
law.
In
Knox
v.
Interprovincial
Engineering
Ltd.
the
Nova
Scotia
Supreme
Court
considered
the
declaration
of
a
bonus
by
an
alleged
corporate
director
who
at
the
relevant
time
had
failed
to
acquire
a
qualifying
corporate
share
required
by
the
company
for
qualification
as
a
director.
The
Court
nevertheless
upheld
the
declared
bonus,
noting
that
the
alleged
director
had
acted
as
“a
de
facto
director
and
shareholder”.
‘Knox
v.
Interprovincial
Engineering
Ltd.
(1993),
120
N.S.R.
(2d)
288
(N.S.
S.C.)
at
298
20.
Common
law
stipulates
that
de
facto
directors
may
not
escape
liability
as
directors,
such
as
for
breach
of
duty
or
other
mismanagement,
by
arguing
that
their
appointment
was
invalid.
-Northern
Trust
Co.
v.
Butchart,
[1917]
2
W.W.R.
405
(Man.
K.B.)
at
42]
21.
By
virtue
of
their
having
presumed
to
act
as
directors,
they
are
estopped
from
challenging
the
validity
of
their
appointment.
The
Ontario
Court
of
Appeal
stated:
As
to
the
second
point,
I
agree
with
the
view
of
Middleton,
J.,
that,
when
the
directors
assumed
the
fiduciary
office
of
director,
they
became
liable
in
all
respects
as
though
rightly
appointed
to
that
office.
To
hold
otherwise
would
be
to
say
that
a
man
might
do
wrongful
acts
affecting
the
company’s
assets,
and
yet
enjoy
immunity
if
he
could
shew
some
defect
in
his
appointment.
If
this
were
the
case,
it
would
become
fashionable
to
usurp
the
office
on
these
terms
rather
than
to
accept
it
in
a
legitimate
but
less
favoured
way.
-Owen
Sound
Lumber
Co.,
Re
(1917),
38
O.L.R.
414
(Ont.
C.A.)
at
421
22.
[This
contains
a
reference
to
paragraph
123
of
the
Articles].
23.
Thus
the
common
law
pertaining
to
de
facto
directors
also
points
to
the
appellants
being
directors
for
purposes
of
the
Act
including
section
227.1
thereof.
Counsel
then
reviewed
certain
decisions
of
this
Court
and
concluded:
29.
Thus
it
is
submitted
that
each
of
the
appellants,
on
the
evidence,
occupied
the
position
of
director
of
the
Corporation
at
all
relevant
times,
and
SO
was
in
law
a
director
pursuant
to
the
Nova
Scotia
Companies
Act
and
accordingly
also
for
purposes
of
section
227.1
of
the
Act.
30.
Alternatively
it
is
submitted
that
the
appellants
are
directors
pursuant
to
section
227.1
of
the
Act
on
the
basis
that
the
Companies
Act
definition
of
“director”
continues
the
common
law
concept
of
de
facto
director
in
Nova
Scotia
law.
That
concept
does
not
permit
persons
to
their
knowledge
held
out
as
directors
to
subsequently
dodge
liability
qua
directors
by
raising
some
imperfection
in
their
appointment
processes.
The
question
thus
narrows
down
to
whether
the
Appellants
were
de
facto
directors
and
is
this
sufficient
to
render
them
liable?
In
my
opinion,
there
is
little
doubt
the
Appellants
acted
as
directors
by
attending
directors’
meetings
and
managing
the
Corporation.
Indeed
there
were
no
other
persons
carrying
out
these
functions
except
the
two
directors
who
were
not
assessed.
I
believe,
however,
at
this
stage
a
distinction
must
be
made.
Were
they
de
facto
directors
by
virtue
of
the
provisions
of
the
Companies
Act
or
because
of
principles
of
common
law.
Counsel
for
the
Respondent
argues
firstly
that
the
concept
of
de
facto
director
originates
with
the
definition
of
“director”
in
paragraph
2(1
)(f)
of
the
Companies
Act
as
including
any
person
occupying
the
position
of
director
by
whatever
name
called.
I
do
not
agree.
This
provision
does
not
say
“carrying
out
the
functions
of
a
director”
nor
“acting
as
a
director”.
The
words
are
“occupying
the
position”.
That
connotes
to
me
the
concept
of
having
the
title
of
director
rather
than
simply
behaving
like
a
director.
Moreover,
the
additional
words
“by
whatever
name
called”
are
consistent
with
this
view.
The
person
contemplated
is
a
de
jure
director
and
remains
such
even
though
he/she
may
be
labelled
“General
Manager”,
“Officer”
or
any
other
title.
I
believe
the
French
language
version
of
the
definition
of
“director”
contained
in
the
Canada
Business
Corporations
Act,
(“C.B.C.A.”),
R.S.C.
1985,
c.
C-44,
s.
2(1)
supports
this
view.
The
definition
in
the
English
version
of
the
C.B.C.A.
is
practically
identical
to
the
defintion
in
subparagraph
2(1
)(f)
of
the
Companies
Act.
The
French
version
reads:
«administrateur»
Indépendamment
de
son
titre,
le
titulaire
de
ce
poste...
Since
the
jurisprudence
is
clear
that,
for
the
purposes
of
subsection
227.1(1)
of
the
Act,
to
discover
the
meaning
of
“director”
one
must
look
to
the
incorporating
legislation
of
the
Corporation,
one
should
do
so
and
avoid
general
principles
of
common
law.
Therefore,
although
they
may
have
been
de
facto
directors
at
common
law,
they
were
not
under
the
Companies
Act
and
should
not
be
held
vicariously
liable
under
section
227.1
of
the
Act.
In
Kalefv.
R.,
[1996]
2
C.T.C.
1
(Fed.
C.A.),
the
Federal
Court
of
Appeal
held
a
director
liable
under
subsection
227.1(1)
even
though
a
bankruptcy
trustee
had
taken
control
of
the
assets
of
the
corporation
more
than
two
years
before
the
Minister’s
assessment
against
the
director,
thus
making
it
impossible
for
the
director
to
carry
out
any
duties
of
a
director.
MacDonald,
J.A.
stated
at
page
4:
The
Income
Tax
Act
neither
defines
the
term
director,
nor
establishes
any
criteria
for
when
a
person
ceases
to
hold
such
a
position.
Given
the
silence
of
the
Income
Tax
Act,
it
only
makes
sense
to
look
to
the
company’s
incorporating
legislation
for
guidance.
Bynamics
was
incorporated
under
the
Ontario
Business
Corporations
Act,
S.O.
1982,
c.
4.
Subsection
1(1)
of
the
Ontario
Business
Corporations
Act
defines
the
term
“director”
as
follows:
1(1)
“director”
means
a
person
occupying
the
position
of
director
of
a
corporation
by
whatever
name
called
and
“directors”
and
“board
of
directors”
include
a
single
director.
Pursuant
to
subsection
1(1)
of
that
statute,
if
a
person
is
“occupying
the
position
of
director
of
a
corporation”
he
or
she
is
a
director.
The
definition
is
quite
pas-
sive.
There
is
no
requirement
that
the
person
exercise
the
power
of
a
director
or
exert
direct
control
over
the
company’s
assets
in
order
to
be
a
“director”.
It
seems
clear
that
in
analyzing
the
definition
of
“director”
in
the
Ontario
Business
Corporations
Act,
which
definition
is
practically
identical
to
paragraph
2(1
)(f)
of
the
Companies
Act,
the
Federal
Court
of
Appeal
found
that
the
definition
referred
to
a
de
jure
director.
Subsection
227.1(1),
in
imposing
a
vicarious
liability,
refers
only
to
a
“director”.
Subsection
159(3)
also
imposes
vicarious
liability
on
certain
transferors
of
property.
It
is
notable
that
in
subsection
159(2)
the
Act
casts
a
very
wide
net
over
who
is
liable.
It
refers
to
“assignee,
liquidator,
receiver,
receiver-manager,
administrator,
executor
or
any
other
like
person”.
Surely
if
the
Minister
wanted
the
net
cast
by
subsection
227.1(1)
to
be
wide,
words
in
addition
to
“director”
could
have
been
used,
such
as
“whether
de
facto
or
de
jure”
or
“including
persons
acting
as
directors”
or
“manager”,
“officer”
or
“any
other
like
person”.
In
my
opinion
a
provision
imposing
vicarious
liability
should
be
strictly
construed
and
consequently
I
have
done
so.
I
realize
that
the
foregoing
analysis
may
be
debatable
and
that
certain
other
judgments
of
this
Court
appear
to
have
reached
a
different
conclusion,
without
however
analyzing
the
issue
in
depth.
Because
of
this
I
also
examined
the
Appellants’
defence
of
due
diligence.
Did
the
Appellants
exercise
due
diligence?
I
find
the
following
facts
to
be
relevant.
The
Corporation
had
as
its
principal
mandate
the
enhancement
and
development
of
regional
economic
activity
in
Louisbourg
including
in
particular
promotion
of
tourism
and
providing
employment
for
local
residents.
The
Memorandum
and
Articles
of
the
Corporation
includes
as
one
of
its
powers
the
following:
(g)i
To
act
as
a
management
company
for
the
Louisbourg
District
Planning
and
Development
Commission
or
any
other
Commission,
Municipal
body,
Provincial
body
or
Federal
body
and
the
like
and
to
erect
and
maintain
buildings
on
the
land
owned
by
any
such
bodies.
To
establish
sales
and
marketing
outlets
within
such
buildings
for
the
purpose
of
merchandising
all
manners
of
products,
crafts,
foodstuffs,
building
materials,
machinery,
equipment
and
the
like.
The
Corporation’s
facilities
in
the
Town
of
Louisbourg
comprised
a
small
complex
of
buildings
and
a
courtyard.
Production
activities
were
carried
on
therein
of
various
items
such
as
silk
screening
of
T-shirts
and
textile
production
of
bags
and
other
articles.
This
operation
was
carried
on
under
the
name
“Louisbourg
Craft
Workshops”.
A
retail
sales
operation
was
also
present
in
the
gift
store
on
the
premises
where
items
produced
were
sold.
This
operation
was
carried
on
under
the
name
“Louisbourg
Market
Square”.
Other
parts
of
the
complex
were
rented
out
to
other
retailers.
A
fire
destroyed
the
craft
workshops
in
the
complex
in
May
of
1990.
They
were
rebuilt
and
completed
in
the
spring
of
1991.
Many
original
records
were
destroyed
which
greatly
contributed
to
inadequate
financial
record
keeping
and
reporting.
In
the
years
immediately
preceding
the
appointment
of
one
Bruce
Jardine,
the
managers
of
the
Corporation
had
been
Florie
Sullivan-Currie
and
Jean
Pearl.
Their
titles
referred
to
the
Workshops
operation
but
their
involvements
extended
to
all
operations.
During
the
tenures
of
Sullivan-Currie
and
Pearl,
in
1989,
1990
and
1991
Revenue
Canada
deductions
and
remittances
had
always
been
made
and,
with
few
exceptions,
precisely
on
time.
The
operations
were
always
run
on
a
tight
budget
and
were
highly
reliant
upon
grants
from
Atlantic
Canada
Opportunities
Agency,
Enterprise
Cape
Breton
Corporation
(“ECBC”)
and
other
agencies,
plus
bank
loans
and
a
line
of
credit
from
the
Royal
Bank
of
Canada
(“Bank”)
in
Louisbourg.
There
were
revenues
from
sales
but
grants
and
bank
financing
were
always
necessary
to
keep
the
business
operating.
Many
grants
were
made
to
allow
the
Corporation
to
pay
the
salaries
of
certain
employees
from
time
to
time.
Jean
Pearl
resigned
as
manager
sometime
in
1992.
A
hiring
committee
including
Wheeliker,
Maindiratta,
and
Corsano
was
formed
to
find
a
new
manager
possessing
the
skills
required
to
improve
the
financial
situation
of
the
Corporation
and
to
enhance
product
marketing.
The
hiring
committee
placed
ads
in
the
local
newspapers.
Approximately
four
or
five
candidates
applied.
Jardine
applied
by
letter
dated
April
27,
1992.
After
examining
his
resume
and
references
and
his
educational
and
business
background,
he
was
considered
quite
acceptable.
He
was
employed
as
General
Manager
effective
as
of
May
1,
1992.
His
education
included
a
Masters
of
Business
Administration
and
he
had
some
apparently
good
business
experience.
The
directors
felt
they
could
trust
him.
The
relevant
portions
of
the
Employment
Agreement
between
the
Corporation
and
Jardine
were
as
follows:
1.02
The
Employee
shall
serve
the
Company
in
the
capacity
of
General
Manager
and
shall:
(a)
perform
and
discharge
well
and
faithfully
all
duties
which
may
be
assigned
to
him
and
all
orders
given
to
him
by
the
Board
of
Directors
of
the
Company
and
to
do
all
such
things
reasonably
expected
of
a
person
holding
such
a
position;
(b)
the
Employee
shall
use
his
best
efforts
to
promote
and
extend
the
Company’s
business
and
interests
and
shall
report
on
the
Company’s
operations
to
the
Board
of
Directors
upon
their
request;
(c)
reside
mainly
in
the
locality
of
the
Company,
i.e.
the
Town
of
Louis-
bourg,
in
the
County
of
Cape
Breton,
Province
of
Nova
Scotia,
and
at
all
reasonable
times
be
available
to
the
directors
of
the
Company
for
the
purpose
of
consultation
and
direction.
Although
the
testimony
is
not
unanimous
on
this
point,
I
find
as
a
fact
that
Jardine
was
made
aware
of
the
Corporation’s
financial
situation
when
he
was
hired.
Wheeliker,
Maindiratta
and
Corsano
were
directors
of
the
Corporation
during
the
entire
Period.
Lawrence,
Parsons
and
MacDonald
were
appointed
on
November
10,
1992
and
attended
their
first
Board
meeting
on
January
13,
1993.
No
directors’
fees
or
any
other
remuneration
was
paid
to
any
of
the
directors.
A
thumbnail
sketch
of
the
directors
follows.
Wheeliker
completed
grade
eleven
and
took
some
marketing
courses.
His
business
experiences
were
not
extensive.
He
had
been
with
the
Ottawa
City
Police
and
later
the
Louis-
bourg
Police.
He
was
mayor
of
Louisbourg
for
at
least
the
period
1989
to
October
of
1991
and
while
mayor
he
was
also
Chairman
of
the
Society
and
Chairman/President
of
the
Corporation.
He
continued
as
Chair-
man/President
of
the
Corporation
during
the
Period.
He
was
the
director
most
involved
with
the
Bank
and
the
seeking
of
grants.
He
signed
or
cosigned
many
of
the
Corporation’s
cheques.
Maindiratta
received
a
Bachelor
of
Science
in
Pharmacology
in
1983
and
later
worked
as
a
pharmacist.
He
had
some
business
experience
and
knew
something
about
financial
statements.
He
served
on
various
committees.
He
was
an
officer
of
the
Corporation
and
signed
or
co-signed
many
of
the
Corporation’s
cheques.
Corsano
was
a
lawyer,
admitted
to
the
Nova
Scotia
Bar
in
1986.
He
gave
some
legal
advice
to
the
Society
and
the
Commission
and
was
the
agent
(for
service
of
writs,
etc.)
of
the
Corporation
and
the
Society.
Lawrence
completed
grade
12.
He
worked
at
various
jobs,
including
being
a
clerk
and
a
meat
cutter.
In
1992
he
operated
a
café
in
Louisbourg
Market
Square.
He
served
as
a
member
of
many
associations
including
the
Lion’s
Club
and
several
other
volunteer
projects.
Parsons
had
a
grade
12
education
and
eventually
became
a
carpenter.
Most
recently
he
was
a
merchant
in
a
hardware
business.
MacDonald
had
been
operating
a
commercial
fishery
off
the
east
coast
of
Cape
Breton
for
18
years.
He
described
himself
as
the
“token
fisherman”
on
the
Board.
The
Bank
supported
the
Corporation
from
the
beginning.
As
of
April,
1993
the
Bank
had
advanced
a
net
total
of
$250,000
consisting
of
$170,000
long
term
debt,
$50,000
operating
credit
and
$30,000
current
account
overdraft.
Also,
the
Corporation
being
short
of
funds
in
1993
borrowed
from
Wheeliker
and
Maindiratta
a
total
of
approximately
$8,000.
These
were
used
to
pay
for
C.O.D.
pickups
of
T-shirts
at
the
Post
Office.
The
Corporation
repaid
these
loans
either
wholly
or
substantially.
Wheeliker,
Lawrence,
Parsons
and
MacDonald
became
aware
on
January
13,
1993
that
the
Corporation
was
in
arrears
with
respect
to
remittances
to
Revenue
Canada
and
the
other
Appellants
became
aware
in
February
or
March,
1993.
At
a
meeting
of
the
board
held
on
February
3,
1993,
Jardine,
on
being
questioned,
said
the
arrears
were
about
$13,000.
The
actual
amount
was
closer
to
$18,000.
At
this
meeting
Jardine
produced
a
statement
which,
amongst
other
items,
contained
Jardine’s
projections
of
how
Revenue
Canada
was
to
be
paid
approximately
$13,600
over
the
period
February
1
to
March
20,
1993.
This
would
cover
some
arrears
as
well
as
current
remittances.
The
directors
at
or
about
the
time
of
a
Board
meeting
in
March
of
1993
directed
Jardine
that
a
receivable
from
ECBC
of
approximately
$20,000
was
to
be
directed
to
Revenue
Canada,
i.e.
used
to
pay
the
arrears.
However,
ECBC,
instead
of
paying
the
Corporation
alone
issued
three
cheques,
payable
jointly
to
the
Corporation
and
three
of
its
suppliers.
Thus,
the
$20,000
which
the
directors
had
intended
be
used
to
pay
Revenue
Canada
could
not
be
because
of
the
co-payees
on
those
cheques.
The
directors,
after
hearing
about
this,
were
distressed.
Corsano
was
described
as
livid
and
on
behalf
of
the
Board
at
a
meeting
held
July
5,
1993
instructed
Jardine
to
“pay
every
cent
coming
in
to
Revenue
Canada”
thinking
this
was
possible
because
July
and
August
comprised
the
peak
of
the
tourist
season.
One
or
more
of
the
Appellants
questioned
Jardine
about
the
state
of
the
remittances
at
the
Board
meetings.
The
former
managers,
Pearl
and
Sullivan-Currie,
stated
that
during
their
tenures
the
issue
was
always
raised,
usually
as
the
first
question.
Jardine
gave
assurances
that
a
Mr.
Gunn
at
Revenue
Canada
was
not
pressing
the
issue.
Some
of
the
directors
also
felt
that
the
matter
was
not
all
that
serious
because
the
assets
of
the
Corporation
were
certainly,
in
their
opinion,
valuable
enough
to
easily
ensure
payment
of
all
creditors,
including
Revenue
Canada.
Jardine
also
succeeded
in
allaying
the
Appellants’
anxieties
because
once
a
restructuring
of
the
Corporation
was
accomplished
and
capital
injected
there
would
be
no
further
problems.
The
restructuring
concept
was
under
discussion
constantly
after
Jardine
was
hired.
The
Society’s
cooperation,
however,
was
necessary.
At
a
meeting
of
the
Board,
held
May
12,
1993,
the
following
was
stated:
Chairman
Wheeliker
explained
the
reasons
for
calling
a
special
meeting
which,
in
the
main,
concerned
the
request
made
on
April
13
to
the
Society
regarding
the
privatization
of
Louisbourg
Harbourfront
Park
Ltd.
At
that
time
the
Society
was
requested
to
return
a
minimum
of
51%
ownership
(51
shares
of
100)
to
the
company
treasury.
The
Board
of
Louisbourg
Harbourfront
Park
Ltd.
had
recommended
this
in
order
to
restructure
using
in
part
funds
from
private
investors.
This
action
was
the
result
of
discussions
with
both
Federal
and
Provincial
funding
agencies
and
the
company’s
bank.
All
three
had
indicated
an
unwillingness
to
support
the
company
further
unless
shares
were
held
in
the
majority
by
private
investors.
The
Society’s
position
is
recorded
in
its
letters
to
the
Corporation
dated
April
20,
1993
and
May
12,
1993
and
in
minutes
of
a
Society
meeting
held
May
11,
1993.
The
April
20,
1993
letter
reads:
Louisbourg
Harbourfront
Park
Society
April
20,
1993
Louisbourg
Harbourfront
Park
Limited
P.O.
Box
83
Louisbourg,
Nova
Scotia
BOA
1M0
Attention:
Mr.
Bruce
Jardine,
General
Manager
Dear
Mr.
Jardine:
The
Society,
at
a
meeting
held
April
19,
1993,
considered
your
request
that
a
minimum
of
51%
of
the
Society’s
shares
in
Louisbourg
Harbourfront
Park
Limited
be
transferred
to
private
investors.
Unfortunately,
a
legal
opinion
on
certain
matters
related
to
the
transfer
of
shares
was
not
yet
available,
and
as
a
result
a
final
decision
on
the
matter
could
not
be
made.
Prior
to
making
a
decision
on
this
request,
the
Society
also
requests
that
copies
of
the
following
be
made
available
to
all
Society
members:
(1)
a
written
explanation
of
how
the
company’s
current
debt
load
was
accumulated,
including
detailed
financial
statements
going
back
to
at
least
January
1,
1991.
(2)
the
business
plan,
including
the
marketing
strategy
that
Louis-
bourg
Harbourfront
Park
Limited
is
using
for
the
current
year
I
would
request
that
to
ensure
a
swift
decision
on
your
request
that
the
above
information
be
submitted
to
me
or
to
Mr.
McCready
by
May
4,
1993.
The
Society
expects
to
meet
on
May
11
and
make
a
final
decision
at
that
time.
Your
cooperation
and
understanding
in
this
matter
is
greatly
appreciated.
Yours
very
truly,
“signature”
William
Mullins
Chairman
(Acting)
Louisbourg
Harbourfront
Park
Society
The
May
11,
1993
minutes
read:
Harbourfront
Park
Society
Minutes
May
11,
1993
Present:
Acting
Chairman
Bill
Mullins,
Charles
Burke,
Stewart
Why-
nott,
Mary
MacMullin,
Carlo
Lunn,
Charles
Peck,
Olive
Spawn,
Rick
McCready,
Debbie
Martel
Call
to
Order
The
Harbourfront
Park
Society
meeting
was
called
to
order
by
Acting
Chairman
Mullins
at
10:10
pm.
Mr.
McCready
explained
that
all
members
had
a
package
that
included
the
financial
records
for
the
last
three
years
for
the
Louisbourg
Market
Square.
Stewart
Whynott
pointed
out
that
the
documents
from
LT
Short
Management
were
not
audits,
Mr.
McCready
agreed.
The
bottom
line
is
that
the
Harbourfront
Park
Limited
want
the
Harbourfront
Park
Society
to
free
51%
of
their
shares
in
the
Limited
Company
so
that
they
can
sell
them
to
raise
$150,000
for
working
capital.
The
Harbourfront
Park
Society
has
a
couple
of
options.
One
is
not
to
do
anything,
if
Market
Square
goes
under
financially
the
bank
will
take
control.
Two
is
to
privatize
and
give
the
shares
to
the
limited
company
and
make
a
motion
to
dissolve
the
Society
and
wash
our
hands
of
it.
Moved
by
Charles
Peck
and
seconded
by
Olive
Spawn
that
the
Harbourfront
Park
Society
meet
next
Monday,
May
17th
at
7:00
pm,
to
discuss
this
matter
with
the
Board
of
Harbourfront
Park
Limited,
the
manager
of
Louisbourg
Market
Square
and
our
solicitor.
Motion
Carried
Moved
by
Stewart
Whynott
and
seconded
by
Carlo
Lunn
that
on
behalf
of
the
Harbourfront
Park
Society,
Mr.
McCready
obtain
Mr.
Jardine’s
employment
contract
and
information
regarding
monies
owed
by
Harbourfront
Park
Limited
to
Revenue
Canada.
Motion
Carried
Adjournment
Upon
motion,
the
meeting
adjourned
at
11:33
Bill
Mullins
Acting
Chairman
The
May
19,
1993
letter
reads:
Louisbourg
Harbourfront
Park
Society
May
19,
1993
Louisbourg
Harbourfront
Park
Limited
P.O.
Box
83
Louisbourg,
Nova
Scotia
BOA
IMO
Attention:
Mr.
George
Wheeliker,
Chairman
Dear
Mr.
Wheeliker:
Please
be
advised
that
at
a
meeting
of
the
Society
held
Monday,
May
17,
1993
the
following
resolution
was
passed:
MOVED
by
Commissioner
Whynott
and
seconded
by
Commissioner
Burke
that
the
Society
agree
that
the
limited
company
be
authorized
to
seek
private
investors
to
acquire
all
of
the
Society’s
shares
in
the
company,
or,
in
the
alternative,
to
establish
a
process
whereby
the
Society’s
shares
shall
be
redeemed
by
the
company
to
the
end
that
the
Society
shall
no
longer
hold
any
interest
in
the
company,
and
that
within
60
days
the
results
of
the
share
offering
be
presented
to
the
Society,
and
that
at
that
time
the
limited
company
provide
to
the
Society
the
following:
(1)
proof
satisfactory
to
the
Society
that
sufficient
private
investment
has
been
raised
(2)
an
outline
of
the
arrangements
that
have
been
made
to
pay
off
outstanding
debts,
in
particular
but
not
limited
to
statutory
remittances
owed
to
the
Receiver
General
of
Canada
(3)
an
audit
prepared
by
a
certified
Chartered
Accountant,
of
the
company’s
financial
position
as
of
March
31,
1993
MOTION
CARRIED
If
you
have
any
additional
questions
or
require
any
further
clarification
please
do
not
hesitate
to
contact
the
Chairman,
Mr.
Bill
O’Shea,
at
your
convenience.
Yours
very
truly,
“signature”
William
Mullins
Vice-Chairman
Louisbourg
Harbourfront
Park
Society
copy:
All
members,
Louisbourg
Harbourfront
Park
Society
Mr.
Bruce
Jardine,
General
Manager
Louisbourg
Harbourfront
Park
Limited
Concerns
had
arisen
about
Jardine.
These
concerns
arose
from
a
series
of
events,
including
(a)
his
inability
to
cause
the
$20,000
cheque
to
be
sent
to
Revenue
Canada;
(b)
his
failure
to
supply
accurate
statements
showing
the
financial
condition
of
the
Corporation;
(c)
the
fact
that
without
Board
authorization
Jardine
hired
his
wife
as
an
employee
of
the
Corporation;
(d)
his
authorization
to
pay
the
sum
of
approximately
$10,000
to
Green,
Haley
&
Pye
for
a
restructuring
report
without
receiving
Board
authorization;
(e)
his
alleged
verbal
abuse
of
certain
production
employees
of
the
Corporation;
(f)
his
general
habit
of
running
the
Corporation,
making
decisions
and
enforcing
certain
procedures
without
alerting
the
Board;
and
(g)
his
rosy
projections
of
increased
numbers
of
tourist
buses
and
increased
sales
to
customers,
including
a
major
customer,
Jean
Depot,
which
projections
did
not
materialize.
These
concerns
were
exacerbated
when
Jardine,
without
Board
authorization
(but
with
the
cooperation
of
Wheeliker),
was
instrumental
in
granting
to
the
Bank
a
third
fixed
and
floating
charge
Debenture
placed
on
assets
of
the
Corporation
in
August,
1993.
Counsel
for
the
Minister
questioned
why
the
Board,
having
these
concerns
about
Jardine,
did
not
fire
him
in
the
spring
of
1993.
The
explanation
given
by
several
of
the
Appellants
was
that
that
was
the
commencement
of
the
tourist
season
and
to
fire
a
manager
at
that
stage
would
necessitate
replacing
him,
which
might
have
taken
a
considerable
period
of
time
and
the
Corporation’s
sales
would
suffer.
Prior
to
September,
1993,
Parsons
had
grave
concerns
over
Jardine’s
management
including
in
particular
Jardine’s
hiring
of
his
own
wife
and
his
treatment
of
employees.
A
meeting
was
arranged
amongst
Parsons,
Maindiratta
and
Corsano
and
four
members
of
the
Society,
including
the
then
Chairman
of
the
Society
and
Mayor
of
Louisbourg,
Victor
Hanham,
to
complain
that
Jardine
was
essentially
out
of
control.
By
this
time
two
camps
had
formed
amongst
the
directors
of
the
Corporation.
Three
of
them,
namely,
Wheeliker,
MacDonald
and
a
non-assessed
director,
John
Morrison,
were
pro-Jardine
and
the
remainder
of
the
directors
were
anti-Jardine.
It
was
the
view
of
this
anti-Jardine
camp
that
Jardine
had
to
go
but
that
to
get
rid
of
him
it
might
be
necessary
to
have
the
Society
remove
the
members
of
the
pro-Jardine
camp
from
the
Board.
This
was
suggested
to
the
Society.
What
happened
instead
was
that
the
Society,
for
its
own
reasons,
by
shareholder
resolution
adopted
October
6,
1993,
removed
all
of
the
Corporation’s
directors,
replacing
them
with
members
of
the
Society.
Those
new
directors
essentially
did
nothing
to
keep
the
Corporation
going
with
the
result
that
the
Corporation
made
an
assignment
in
bankruptcy
on
November
29,
1993.
The
trustee
in
bankruptcy
disposed
of
the
Corporation’s
assets
and
the
net
proceeds
thereof
were
paid
to
the
Bank
which
was
the
only
creditor
to
receive
anything.
Revenue
Canada
proved
its
claim
as
required
by
subsection
227.1(2)
of
the
Act.
Analysis
Re
Due
Diligence
For
the
following
principal
reasons,
I
have
concluded
that
the
Appellants
did
exercise
the
degree
of
care,
diligence
and
skill
to
prevent
the
failure
to
remit
by
the
Corporation
that
a
reasonably
prudent
person
would
have
exercised
in
comparable
circumstances.
Those
principal
reasons
are
as
follows:
1.
All
cases
of
this
nature
turn
on
their
particular
facts.
This
case
presents
an
extremely
unique
set
of
facts,
especially
with
respect
to
the
nature
of
the
Corporation,
its
shareholding
and
its
relationship
with
the
Town
of
Louisbourg.
The
Corporation
was
non-profit
and
the
directors
were
non-remunerated
volunteers.
It
was
not
a
normal
business
corporation.
Its
main
focus
was
improving
the
community
and
providing
local
employment.
The
Bank
gave
it
a
fairly
good
rating
as
a
credit
risk
because,
as
Mr.
Porter
testified,
the
Bank
considered
that
the
Town
of
Louisbourg,
through
the
Commission
and
the
Society,
would
always
be
behind
the
Corporation.
In
my
view,
the
Corporation
was,
in
effect,
an
agent
of
the
Town
through
the
Society
and
the
Commission.
The
Society
had
no
purpose
or
function
other
than
to
control
and
direct
the
Corporation.
There
was
testimony
to
the
effect
that
the
Board
was
influenced
by
the
Society
(therefore
also
by
the
Commission
and
the
Town
of
Louisbourg)
to
continue
the
Corporation’s
operations.
The
Board
did
so
notwithstanding
the
difficult
financial
problems
it
was
encountering.
The
Corporation,
although
in
existence
from
1980,
never
acquired
title
to
the-
complex
from
the
Town
until
1990.
Several
meetings
of
the
Society
and
of
the
Board
indicate
the
presence
thereat
of
a
Mr.
McCready.
Apparently
Mr.
McCready
was
the
expert
at
obtaining
and
processing
grants
and
knowing
which
grantors
to
approach.
He
thus
played
a
very
important
role
both
for
the
Society
and
for
the
Corporation.
This
further
demonstrates
the
dependence
of
the
Corporation
on
the
Town.
Thus,
the
freedom
of
the
Board
to
act
was
curtailed
to
a
large
extent.
2.
At
its
meeting
in
March
of
1993,
the
Board
instructed
Jardine
to
ensure
that
the
$20,000
receivable
expected
from
ECBC
was
to
be
paid
to
Revenue
Canada.
This
did
not
happen
but
nevertheless
the
instructions
had
been
given.
3.
The
Board,
through
its
hiring
committee,
took
great
care
in
hiring
what
they
thought
was
a
qualified
person
(Jardine)
as
General
Manager.
For
a
long
while
they
relied
on
him,
trusted
him
and
certainly
considered
him
capable
of
handling
accounting
functions
including
remittances.
Further,
they
relied
on
the
assurances
given
by
Jardine
that
Mr.
Gunn
of
Revenue
Canada
was
not
really
pressing
the
issue
and
that,
had
the
contemplated
restructuring
and
private
investment
occurred,
there
would
have
been
no
problem
in
paying
all
creditors,
including
Revenue
Canada.
4.
The
directors
were
also
satisfied
that
the
asset
values
of
the
Corporation
would
be
sufficient
to
meet
the
claims
of
all
creditors,
including
Revenue
Canada.
5.
The
directors
made'
inquiries
at
the
meetings
of
the
Board
with
respect
to
the
status
of
remittances.
6.
The
Corporation
is
a
not-for-profit
corporation.
I
believe
the
expression
“in
comparable
circumstances”
in
subsection
227.1(3)
allows
me
to
consider
this
aspect.
In
Soper
v.
R.,
(1997),
149
D.L.R.
(4th)
297
(Fed.
C.A.),
the
Federal
Court
of
Appeal
analyzed
the
different
standards
of
care
applicable
to
inside
and
outside
directors
and
concluded
that
inside
directors
have
a
higher
threshold
to
meet.
There
is
no
discussion
in
Soper
as
to
how
volunteer
directors
of
nonprofit
corporations
should
be
treated.
However,
in
my
opinion
the
standard
demanded
of
them
should
not
be
as
rigorous
as
the
standard
applied
to
directors
of
normal
corporations
run
for
profit.
In
an
article
entitled
“Liability
of
Directors
and
Officers
of
Charitable
and
Non-Profit
Corporations”
in
13
Estates
and
Trusts
Journal,
page
1
and
following
and
also
at
page
151
and
following,
William
I.
Innis
states
at
page
17:
It
is
very
difficult
to
express
with
any
degree
of
certainty
what
amounts
to
due
diligence
for
the
purposes
of
s.
227.1(3)
of
the
Income
Tax
Act.
The
reported
cases
on
s.
227.1
since
it
was
first
introduced
are
myriad
and
difficult
to
reconcile.
For
the
purposes
of
this
article,
it
is
probably
sufficient
to
state
that
the
courts
have
imposed
a
relatively
stringent
standard
of
diligence
upon
directors
assessed
under
this
provision
although
there
is
some
indication
in
the
caselaw
of
an
element
of
subjectivity
in
the
test
imposed.
Thus,
it
may
be
that
volunteer
directors
are
held
to
a
somewhat
less-rigorous
standard
than
that
imposed
upon
business
people
and
professionals.
I
am
of
the
opinion
that
volunteer
directors
should
be
subject
to
such
a
“less-rigorous
standard”
and
that
the
actions
of
the
Appellants
in
these
appeals
met
that
standard.
The
Appellants’
education
and
work
backgrounds
generally
are
not
extensive.
The
directors’
meetings
themselves
appear
to
have
been
more
in
the
nature
of
meetings
of
members
of
a
club,
as
opposed
to
a
meeting
of
directors
of
a
corporation.
The
minutes
recording
the
meetings
are
extremely
brief
and
lack
detail.
7.
As
mentioned,
the
question
concerning
remittances
was
raised
often.
Further
it
was
the
testimony
of
Pearl
and
Sullivan-Currie
that
the
question
was
raised
almost
as
the
first
question
of
every
meeting
during
their
tenures.
Also,
during
their
tenures,
the
Corporation
constantly
faced
financial
problems
but
nevertheless
got
by
and
remittances
were
always
made.
This
fact
supports
the
belief
of
the
Appellants
that
they
thought
they
would
be
able
to
continue
to
get
by,
including
making
remittances.
8.
Significantly,
the
Society
in
abruptly
dismissing
all
of
the
directors,
including
the
Appellants
and
sending
the
Corporation
into
bankruptcy,
prevented
those
directors
from
continuing
to
try
and
keep
the
business
going,
get
into
a
healthier
financial
position,
whether
through
restructuring,
improved
marketing
or
otherwise
and
pay
remittances
as
they
had
always
been
paid
in
pre-Jardine
days.
In
conclusion,
for
the
above
reasons,
the
appeals
are
allowed
and
the
assessments
are
vacated.
The
Registry
of
this
Court
shall,
on
or
before
October
9,
1997,
contact
all
counsel
and
Sanjiv
Maindiratta
to
fix
a
convenient
date
for
a
telephone
conference
call
to
address
the
matter
of
costs.
Appeal
allowed.
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