Lamarre
Proulx,
T.C.J.:—These
appeals
were
heard
on
common
evidence
and
concerned
the
liability
of
directors
under
subsection
227.1(1)
of
the
Income
Tax
Act
(the
"Act").
The
facts
on
which
the
respondent,
the
Minister
of
National
Revenue,
relied
in
assessing
the
appellants
are
described
in
paragraph
5
of
the
reply
to
the
notice
of
appeal:
[Translation]
In
assessing
the
appellant,
the
respondent,
the
Minister
of
National
Revenue,
relied,
inter
alia,
on
the
following
facts:
(a)
Acier
NB
Inc.
is
a
company
incorporated
under
the
Canada
Business
Corporations
Act;
(b)
At
the
time
the
assessment
in
dispute
was
issued,
Acier
NB
Inc.
owed
the
Department
of
National
Revenue
a
sum
of
$21,978.46;
(c)
The
sum
of
$21,978.46
consisted
of
source
deductions
of
income
tax
and
unemployment
insurance
contributions,
plus
penalties
and
interest,
for
the
months
of
August,
September,
October
and
November
1984;
(d)
Acier
NB
Inc.
failed
to
remit
to
the
Receiver
General
of
Canada
within
the
prescribed
time
the
above-mentioned
source
deductions
and
unemployment
insurance
contributions;
(e)
On
May
23,
1985,
given
the
default
of
Acier
NB
Inc.
the
Department
of
National
Revenue
filed
a
certificate
in
the
Registry
of
the
Federal
Court
pursuant
to
subsection
223(2)
of
the
Income
Tax
Act;
(f)
On
May
23,
1985
the
Federal
Court
issued
a
writ
of
fieri
facias
ordering
seizure
of
the
assets
of
Acier
NB
Inc.
to
satisfy
the
debt;
(g)
On
June
17,
1985
a
bailiff
who
had
acted
in
the
matter
reported
to
the
respondent
that
there
had
been
a
total
failure
to
execute
the
certificate
and
the
writ
of
fieri
facias;
(h)
On
December
16,
1985
a
receiving
order
was
made
against
Acier
NB
Inc.
and
the
date
of
the
bankruptcy
was
November
14,
1985;
(i)
On
March
7,1986
an
employee
responsible
for
collections
with
the
Department
of
National
Revenue
submitted
on
behalf
of
Her
Majesty
the
Queen
in
Right
of
Canada
proof
of
a
claim
in
the
bankruptcy
of
Acier
NB
Inc.;
(j)
The
appellant
was
a
director
of
Acier
NB
Inc.
on
the
dates
on
which
this
company
was
required
to
pay
the
sums
of
money
in
question
to
the
Receiver
General
for
Canada;
(k)
As
an
employer,
Acier
NB
Inc.
was
required
by
law
to
deduct,
retain
and
remit
to
the
Receiver
General
of
Canada
the
source
deductions
from
the
salaries
and
other
remuneration
of
its
employees;
(l)
As
a
director
of
Acier
NB
Inc.,
the
appellant
did
not
act
with
the
degree
of
care,
diligence
and
skill
to
prevent
the
default
that
a
reasonably
prudent
person
would
have
exercised
in
similar
circumstances;
(m)
The
appellant
in
particular
did
not
make
the
necessary
arrangements
to
prevent
the
default
of
Acier
NS
Inc.,
which
related
to
the
months
of
August,
September,
October
and
November
1984.
The
bankruptcy
of
Acier
NB
Inc.,
hereinafter
called
“the
corporation",
was
dated
November
14,
1985.
The
assessments
were
dated
February
9,
1988.
The
principal
argument
of
counsel
for
the
appellants
involved
the
limitation
period
in
subsection
227.1(4)
of
the
Act:
227.1(4)
No
actions
or
proceedings
to
recover
any
amount
payable
by
a
director
of
a
corporation
under
subsection
(1)
shall
be
commenced
more
than
two
years
after
he
last
ceased
to
be
a
director
of
that
corporation.
The
appellants
testified
that
they
had
resigned
in
January
1986.
There
was
no
document
to
support
their
testimony.
Mr.
Serge
Nantel
testified
that
he
kept
a
record
of
the
minutes
and
that,
after
the
arrival
of
the
receiver,
who
completely
emptied
the
premises
of
the
corporation,
he
never
found
it
again.
He
said
that
this
document,
which
was
signed
by
the
four
directors,
had
been
included
in
the
record
of
the
minutes.
An
employee
of
the
trustee
brought
the
documents
in
his
possession
and
the
record
of
minutes
was
not
one
of
them.
All
the
appellants
testified
that
they
had
signed
a
document
stating
that
they
resigned.
However,
they
heard
the
testimony
of
the
other
witnesses
as
appellants
and
were
entitled
to
remain
in
the
court.
Mr.
Nantel
testified
that
at
the
time
of
the
bankruptcy
he
had
consulted
counsel,
who
had
advised
him
to
resign
as
a
director
of
the
corporation.
With
some
reluctance
I
admit
that
this
document
was
signed.
I
would
perhaps
have
been
more
reluctant
to
accept
the
fact
that
the
directors
had
resigned,
had
it
not
been
for
the
total
inaction
of
the
appellants
as
directors.
Their
conduct
was
in
accordance
with
the
legal
situation
they
described.
Mr.
Bricteux
began
full-time
work
for
another
company
in
January
1986.
He
called
Mr.
Nantel
from
time
to
time
to
find
out
what
was
happening.
This
was
the
extent
of
his
activity
with
respect
to
the
corporation.
Mrs.
Bricteux
did
not
perform
any
activities.
Mr.
Nantel
does
not
seem
to
have
done
anything
other
than
to
call
the
trustee
from
time
to
time
to
find
out
what
was
happening.
Mrs.
Nantel
does
not
seem
to
have
performed
any
activities
with
respect
to
the
corporation.
In
fact,
for
all
the
appellants,
the
bankruptcy
of
the
corporation
meant
the
end
of
their
activities
as
directors
thereof.
I
am
of
the
opinion
that
the
appellants
ceased
to
be
directors
for
the
last
time
in
January
1986
and
that
the
assessments
were,
consequently,
not
correct
in
law,
given
the
limitation
period
laid
down
in
subsection
227.1(4)
of
the
Act.
The
appeals
are
allowed
with
costs.
Appeals
allowed.
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