Teskey,
T.C.J.:—The
appellant
appeals
from
assessment
number
551029,
dated
November
30,
1987,
made
pursuant
to
subsection
227(10)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act"),
being
the
amount
of
unpaid
deductions,
interest
and
penalties
payable
by
C.L.M.
Manufacturing
Ltd.
(C.L.M.").
No
evidence
was
adduced
by
either
the
appellant
or
the
respondent;
therefore,
all
the
facts
assumed
in
the
respondent's
reply
are
deemed
correct.
The
only
issue
argued
is
whether
the
appellant
is
responsible
for
interest
accruing
on
the
amount
owing
by
C.L.M.
after
February
14,
1987,
the
date
a
certificate
was
filed
in
the
Federal
Court
of
Canada.
The
appellant
asked
to
allow
the
appeal
and
refer
the
matter
back
to
the
Minister
for
reconsideration
and
reassessment
on
the
basis
that
he
is
to
deduct
all
interest
after
February
14,
1987,
and
to
order
that
no
interest
is
to
accrue
on
the
new
assessment.
The
respondent
submits
the
appeal
should
be
dismissed.
This
assessment
arises
by
the
Minister
applying
a
combination
of
several
subsections
of
the
Act.
Subsection
153(1)
requires
employers
to
withhold
from
employees
a
percentage
of
the
employee's
wages
and
to
remit
these
amounts
to
the
Receiver
General.
Subsection
227(9)
levies
interest
and
a
penalty
against
the
employer
who
fails
to
remit
these
amounts.
Section
227.1
makes
directors
of
employer
corporations
vicariously
liable
for
these
amounts.
This
section
may
be
paraphrased
to
read:
Where
a
corporation
has
failed
to
remit
the
employee
deductions,
the
Directors
are
jointly
and
severally
liable,
together
with
the
corporation,
to
pay
that
amount,
and
any
interest
or
penalties
relating
thereto.
Subsection
227.1(2)
provides
a
condition
precedent
to
liability
imposed
by
section
227.1.
There
are
three
circumstances
set
out
in
this
subsection
in
paragraphs
(a),
(b)
and
(c).
Unless
one
of
the
events
as
described
in
either
(a)
or
(b)
or
(c)
has
occurred,
a
director
is
not
liable
pursuant
to
the
provisions
of
this
subsection.
Paragraph
(a)
is
the
only
pertinent
paragraph
to
this
appeal.
Shortened,
the
subsection
reads:
A
director
is
not
liable
under
subsection
227.1(2),
unless
(a)
a
certificate
for
the
amount
of
the
corporation's
liability
has
been
registered
in
the
Federal
Court
of
Canada
and
execution
for
such
amount
has
been
returned
unsatisfied
in
whole
or
in
part.
Obviously,
if
the
execution
is
satisfied
in
full,
the
matter
is
at
an
end.
Since
no
evidence
was
presented
by
the
appellant,
subsection
227.1(3),
a
defence
subsection
available
to
a
director,
is
not
relevant.
Subsection
227.1(4),
a
limitation
section,
is
not
relevant
to
this
appeal.
Subsection
227.1(5)
limits
the
amount
recoverable
from
a
director
and
reads:
(5)
Where
execution
referred
to
in
paragraph
2(a)
has
issued,
the
amount
recoverable
from
a
director
is
the
amount
remaining
unsatisfied
after
execution.
Section
223
and
its
subsections
are
those
provisions
in
the
Act
that
allow
the
Minister
of
National
Revenue
to
issue
a
certificate
as
to
what
is
owing
by
an
employer
corporation
(in
this
case,
C.L.M.).
Upon
filing
the
same
with
the
Federal
Court
of
Canada,
it
is
the
same
as
a
judgment
and
provides
that
interest
is
payable
thereon.
After
all
these
provisions
have
been
complied
with,
the
Minister
then
may
issue
an
assessment
against
directors,
pursuant
to
subsection
227(10).
Paraphrased,
this
reads:
The
Minister
may
assess
(a)
any
director
for
any
amount
payable
under
section
227.1,
and,
where
he
sends
Notices
of
Assessment
to
that
director,
Divisions
(I)
and
(J)
of
Part
1
are
applicable
with
such
modifications
as
the
circumstances
require.
Divisions
(I)
and
(J)
of
Part
1
have
nothing
to
do
with
the
issue
as
to
whether
interest
accrues
against
the
directors.
I
am
satisfied
that
the
combined
effect
of
these
provisions
of
the
Act
make
the
appellant
herein
vicariously
liable
for
that
amount
of
money
owing
by
C.L.M.
(which
includes
accruing
interest),
after
deducting
therefrom
any
amount
received
on
the
execution.
Subsection
227.1(5)
has
no
other
effect
than
to
give
to
the
director
a
credit
for
any
amount
of
money
received
or
recovered
on
the
return
of
the
execution.
In
no
way
can
it
be
interpreted
to
preclude
the
accrual
of
interest
until
payment
is
made.
For
the
above
reasons,
the
appeal
is
dismissed.
For
the
purpose
of
the
record,
in
the
Johnson
file,
English
file
and
Smith
file,
it
will
be
shown
that
for
the
reasons
given
in
Green
v.
M.N.R.,
quoting
file
#88-1744(IT),
the
appeals
are
dismissed.
Appeal
dismissed.
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