Docket: A-177-16
Citation:
2017 FCA 21
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CORAM:
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STRATAS J.A.
WEBB J.A.
SCOTT J.A.
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BETWEEN:
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THOMAS HELGESEN
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Appellant
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and
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HER MAJESTY
THE QUEEN IN RIGHT OF CANADA
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Respondent
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REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Edmonton, Alberta, on
February 1, 2017).
SCOTT J.A.
[1]
In reasons cited as 2016 TCC 114, Ouimet J. (the
Judge) of the Tax Court of Canada found that M. Thomas Helgesen (the appellant)
was liable as a director of 1072519 Alberta Ltd. (the corporation) for tax and
unremitted payroll deductions pursuant to section 227.1 of the Income Tax
Act, R.S.C. 1985, c. 1 (5th Supp.) (the ITA); section 21.1 of the Canada
Pension Plan, R.S.C. 1985, c. C-8 (the CPP); section 83 of the Employment
Insurance Act, S.C. 1996, c. 23; and section 77 of the Alberta Personal
Income Tax Act, RSA 2000, c. A-26. The Judge confirmed the Minister’s
assessment that the appellant owed $111,482.41 for unremitted payroll
deductions, including related interest and penalties.
[2]
In coming to his decision, the Judge determined
that the appellant, an experienced businessman, failed to act the way a
reasonably prudent person would have in comparable circumstances in order to
prevent the corporation’s failure to remit. According to the Judge, since subsection
227.1(3) of the ITA provides for a defence to the specific liability set out in
subsection 227.1(1) (Buckingham v. Canada, 2011 FCA 142, [2013] 1 F.C.R.
86), it was incumbent on the appellant to establish that he turned his
attention to the required remittances with a view to preventing a failure by
the corporation to remit the amounts owed.
[3]
The appellant challenges the Judge’s decision,
arguing that he incorrectly applied the due diligence test as set out in
subsection 227.1(3) of the ITA by failing to consider contextual and
subjective circumstances, and more specifically, the malfeasance of the other
director of the corporation as a defence. He also claims that the evidence in
the record supported the appellant’s defence under subsection 227.1(3).
[4]
An appeal from a decision of the Tax Court
determining whether a due diligence defence under subsection 227.1(3) of the
ITA has been established, requires the application of a legal standard to a set
of facts. It is, therefore, a question of mixed fact and law which is
reviewable on a standard of overriding and palpable error, unless the appellant
can show an error of law or extricable principle of law, which he has not done
here (Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 at
paragraphs 26-37; Canada v. Chriss, 2016 FCA 236 at paragraph 7, [2017]
1 C.T.C. 107).
[5]
In the present appeal, despite the able
submissions from counsel for the appellant, we are all of the view that the
Judge did not make a palpable and overriding error in reaching his
determination. The appellant has failed to establish that a reasonably prudent
person would rely simply on third party assurances that remittances were being
made when it was clear that these persons had misled him about making
remittances in the past. Moreover, the appellant knew that remittances were not
made as he received letters from the Canada Revenue Agency to that effect on
July 16, July 18, and August 2, 2008. He failed to take any direct action to
ensure that the corporation made its remittances as required.
[6]
Before us, the appellant suggested that in
paragraph 27 of the reasons that the Judge said he should have made a personal
payment in fulfillment of his duty. We do not agree that the Judge said this.
[7]
For these reasons, the appeal will be dismissed
with costs fixed at $500.00, all inclusive.
"A.F. Scott"
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