Evans
J.:
A.
Introduction
The
recession
that
hit
the
construction
industry
in
Newfoundland
in
the
1980s
left
many
casualties
in
its
wake.
One
of
them
was
the
B.
&
R.
Short
Construction
Limited,
which
went
out
of
business
at
the
end
of
1986
owing
approximately
$40,000.00
for
source
deductions
from
its
employees’
wages
in
that
year
that
it
had
failed
to
remit
to
Revenue
Canada.
The
deductions
were
for
federal
and
provincial
income
tax,
unemployment
insurance
premiums,
and
Canada
Pension
Plan
contributions.
Since
it
was
clear
that
the
debt
would
not
be
paid
by
the
company,
Revenue
Canada
looked
for
payment
to
Bronson
Short,
the
president
of
the
company
and
a
co-director
with
his
wife.
Subsection
227.1(1)
of
the
Income
Tax
Act
imposes
liability
on
the
directors
of
a
company
for
amounts
that
the
company
has
deducted
from
its
employees’
wages
but
failed
to
remit
to
Revenue
Canada
as
required
by
the
Act.
The
notice
of
assessment
issued
in
1989
by
Revenue
Canada
with
respect
to
the
tax
year
1986
showed
Mr.
Short
as
owing
$52,
589.49
in
respect
of
non-remitted
deductions,
interest
charges
and
late
payment
penalties.
Mr.
Short’s
appeal
to
the
Tax
Court
against
this
notice
of
assessment
was
dismissed,
and
he
has
appealed
to
this
Court
against
that
decision.
Subsection
227.1(3)
provides
a
due
diligence
defence
to
a
director
whom
Revenue
Canada
seeks
to
hold
liable
under
subsection
(1).
The
only
issue
in
this
appeal
is
whether
Rip
T.C.J.
erred
when
he
decided
that
Mr.
Short
had
not
satisfied
the
due
diligence
standard
when
he
continued
to
operate
the
company
throughout
1986
when
the
financial
position
of
B.
&
R.
Short
Construction
Limited
was
deteriorating,
and
took
no
effective
measures
to
prevent
the
company
from
incurring
additional
liability
to
Revenue
Canada
which
it
was
unlikely
to
be
able
to
discharge.
The
parties
agree
upon
the
legal
principles
applicable
to
this
appeal,
commenced
by
way
of
a
statement
of
claim,
and,
for
the
most
part,
they
agree
on
the
primary
facts.
Where
they
disagree
is
on
the
application
of
the
statute
to
those
facts.
I
heard
from
two
witnesses:
Mr.
Short,
on
his
own
behalf,
and
Mr.
O’Brien,
a
collection
officer
with
Revenue
Canada
in
St.
John’s,
who
was
responsible
for
the
company’s
tax
file
from
August
21
to
November
21,
1986.
An
inordinate
length
of
time
has
been
allowed
to
elapse
since
Rip
T.C.J.
rendered
his
decision,
late
in
1990.
This
is
attributed
to
several
factors:
sporadic
settlement
discussions
between
the
parties,
a
decision
to
await
the
result
of
potentially
relevant
litigation,
and
a
change
of
the
solicitors
of
record
representing
Mr.
Short.
In
these
circumstances
it
is
not
surprising
that
Mr.
Short’s
recollection
of
all
the
details
of
what
occurred
thirteen
years
ago
is
not
perfect.
On
some
matters
he
admitted
that
he
was
no
longer
sure,
and
on
another
a
letter
put
into
evidence
by
the
Crown
proved
that
he
had
been
mistaken
in
the
evidence
that
he
gave.
Mr.
O’Brien,
however,
had
made
contemporaneous
notes
of
the
conversations
that
he
had
with
Mr.
Short
and
his
bank
in
1986.
The
notes
were
available
to
him
as
he
testified,
which
he
did
in
a
considered
and
forthright
manner.
Accordingly,
I
have
preferred
the
evidence
of
Mr.
O’Brien
to
the
extent
that
it
differs
from
that
given
by
Mr.
Short.
Neither
side
called
as
a
witness
a
representative
of
the
Bank
of
Montreal
with
which
Mr.
Short
dealt.
No
doubt
in
the
thirteen
years
that
have
passed
since
the
tax
year
in
question
several
managers
have
come
and
gone
and
there
is
no
one
at
the
bank
with
personal
knowledge
of
B.
&
R.
Short
Construction’s
financial
situation
at
the
relevant
time.
B.
The
factual
background
Since
leaving
school
in
1970
on
completing
grade
11,
Mr.
Short
has
spent
nearly
all
his
working
life
in
the
construction
business
in
Newfoundland.
He
worked
first
as
a
labourer
for
a
contractor
who
also
employed
his
father.
In
the
late
1970s
Mr.
Short
and
his
father
started
up
their
own
contracting
business,
which
they
incorporated
in
1980.
To
assist
him
in
his
new
responsibilities,
Mr.
Short
attended
night
classes
in
business
accounting
offered
through
the
extension
programme
at
Memorial
University.
Mr.
Short
and
his
wife
did
the
bookkeeping
for
the
company
which
at
that
time
undertook
small
contracts
for
repairs
and
maintenance,
and
some
house
building.
From
the
late
1970s
to
the
early
1980s
the
company’s
annual
revenue
grew
from
$40,000.00
to
$150,000.00.
At
this
latter
point
the
senior
Mr.
Short
decided
to
retire
from
the
business:
his
“pay
out”
included
the
cash
assets
of
the
company.
Its
only
other
assets
were
a
pick-up
truck
and
a
few
tools.
However,
it
had
no
debt
and
had
been
able
to
finance
the
start
up
costs
at
the
beginning
of
each
new
construction
season
from
the
surplus
left
over
from
the
previous
year.
It
was
after
the
departure
of
Mr.
Short’s
father
that
the
business
started
to
take
a
new
direction:
it
sub-contracted
to
supply
labour
for
larger
jobs.
By
1984
its
annual
revenue
had
increased
to
$500,000.00
as
a
result
of
obtaining
a
contract
to
supply
labour
to
L.
D.
Fahey
Construction
Co.
Ltd.,
the
general
contractor
for
the
construction
of
senior
citizens’
homes.
B.
&
R.
Short
was
still
operating
with
few
assets,
and
with
no
outside
sources
of
finance.
In
mid-1985
the
company
became
a
sub-contractor
for
Fahey
for
the
construction
of
a
fishermen’s
service
centre
in
Punch
Bowl,
Labrador,
an
isolated
community,
on
a
site
owned
by
the
federal
Crown
and
being
developed
by
the
Department
of
Public
Works.
At
this
time
the
company
employed
around
8
employees
during
the
construction
season,
which
typically
ran
from
May
until
December.
The
company
was
always
able
to
meet
its
net
payroll,
but
relied
on
progress
payments
on
its
contracts
to
enable
it
to
make
its
remittances
to
Revenue
Canada
on
the
15
of
the
month
for
the
payroll
deductions
for
the
previous
month.
In
other
words,
it
did
not
transfer
the
amount
of
the
deductions
from
its
general
account
into
a
separate
account,
for
the
simple
reason
that
it
generally
did
not
have
the
money
available
to
do
so.
This
system
worked
satisfactorily
as
long
as
contract
payments
came
in
when
due.
However,
the
company
was
late
in
making
several
of
its
remittance
payments
to
Revenue
Canada
in
1985,
although
by
early
1986
it
had
cleared
off
the
arrears.
The
principal
source
of
the
problem
appears
to
have
been
some
missed
progress
payments
in
the
latter
part
of
1985
by
Fahey,
which
was
getting
into
financial
difficulties.
In
order
to
deal
with
B.
&
R.
Short’s
cash
flow
problem
Mr.
Short
negotiated
a
$15,000.00
line
of
credit
with
the
Bank
of
Montreal
in
1985,
which
he
had
used
up
by
early
1986.
As
a
result
of
Fahey’s
failure
to
make
the
scheduled
progress
payments
for
the
work
done
by
the
company
at
Punch
Bowl,
Mr.
Short
attempted
to
place
a
lien
on
the
site
for
$12,000.00,
but
was
told
that
Crown
property
was
exempt
from
liens.
He
testified
that
an
official
of
Public
Works
told
him
at
that
time
that
he
would
be
paid.
When
Mr.
Short
contacted
Fahey’s
bonding
company
he
was
advised
that,
if
he
wanted
his
money,
he
should
complete
the
contract.
On
the
basis
of
what
he
thought
were
assurances
of
payment
from
Public
Works
and
the
bonding
company,
Mr.
Short
decided
to
complete
the
contract.
His
belief
that
he
would
be
paid,
despite
the
financial
difficulties
into
which
Fahey
also
Construction
had
evidently
fallen,
also
rested
on
the
fact
that
Mr.
Fahey
owned
a
concrete
business
in
St.
John’s,
and
a
stevedoring
business
and
a
hotel
in
Goose
Bay.
Accordingly,
Mr.
Short
increased
his
line
of
credit
with
the
bank
to
$30,000.00
which
he
used
to
finance
the
completion
of
the
Punch
Bowl
contract.
This
involved
chartering
a
plane
and
flying
in
employees,
equipment
and
supplies
for
the
three
weeks
or
so
that
it
took
to
do
the
work.
The
contract
was
completed
by
early
June
and,
meanwhile,
Mr.
Short
had
obtained
another
contract
on
a
site
being
developed
by
the
provincial
government.
However,
no
payments
were
forthcoming
for
the
completion
of
the
Punch
Bowl
contract
and
Mr.
Short
issued
a
statement
of
claim
against
Fahey,
which
he
was
ultimately
unable
to
prosecute
for
lack
of
money.
Visits
to
Mr.
Fahey
produced
only
promises
that
the
money
would
be
paid.
When
Mr.
Short
approached
Public
Works,
he
was
told,
not
surprisingly,
that
its
liability
was
to
Fahey,
the
contractor,
and
not
to
B.
&
R.
Short,
the
subcontractor.
Since
Public
Works
was
apparently
satisfied
with
the
completed
contract,
the
bonding
company
lost
any
interest
in
Mr.
Short’s
predicament.
By
mid-June
of
1986
the
financial
position
of
Mr.
Short’s
company
was
far
from
rosy.
It
owed
$34,000.00
to
the
Bank
of
Montreal
on
the
overdraft
and
approximately
$6,000.00
to
suppliers.
It
had
made
no
remittance
to
Revenue
Canada
for
the
deductions
from
the
May
payroll.
Furthermore,
as
Mr.
Short
testified,
the
recession
continued
to
make
the
prospects
for
the
construction
business
in
Newfoundland
distinctly
unfavourable.
And
the
likelihood
of
recovering
anything
for
Fahey
was
fading
as
the
months
passed.
Nonetheless,
he
stated
that
he
remained
optimistic
that
the
Fahey
debt
would
be
paid,
and
that
he
should
just
put
his
head
down
and
“push
ahead”.
In
fact,
B.
&
R.
Short
at
this
time
had
two
contracts.
However,
since
the
provincial
government,
the
site
owner
for
one
of
the
contracts,
took
ten
weeks
to
make
the
first
progress
payment,
this
contract
did
little
to
ease
Mr.
Short’s
immediate
cash
flow
problem.
Not
surprisingly,
the
Bank
of
Montreal
was
less
sanguine
about
the
situation
than
Mr.
Short
professed
to
be,
and
took
steps
to
protect
itself.
First,
it
required
a
list
of
the
company’s
receivables
and
payables,
and
then
later
in
June
it
took
over
the
receivables
and
applied
them
to
reduce
the
company’s
overdraft.
According
to
Mr.
Short,
he
was
required
to
notify
the
bank
weekly
of
any
change
in
the
company’s
receivables
and
payables,
and
was
permitted
to
write
cheques
only
to
meet
the
net
payroll
and
to
service
the
debts
of
the
suppliers
so
as
to
ensure
that
the
company
had
the
equipment
it
needed
to
complete
its
outstanding
contracts.
In
August
the
company
received
a
progress
payment
of
some
$30,000.00
on
one
of
the
contracts,
and
in
September
it
remitted
more
than
$11,000.00
to
Revenue
Canada
to
cover
the
August
deductions.
Meanwhile,
Mr.
O’Brien
had
taken
charge
of
the
company’s
file
for
Revenue
Canada
and
was
assured
by
Mr.
Short
at
the
end
of
August
that
the
company
would
be
remitting
the
deductions
for
May,
June
and
July
from
money
collected
from
the
provincial
government.
Mr.
Short
testified
that
he
had
tried
previously
to
contact
Revenue
Canada
to
discuss
his
arrears,
but
had
not
been
able
to
speak
to
anyone
who
was
knowledgeable
about
the
situation
because
the
file
was
constantly
being
shuffled
from
officer
to
officer.
I
think
it
unlikely
that
Mr.
Short
made
very
strenuous
efforts
in
this
regard.
On
September
22,
1986
Mr.
O’Brien
came
up
with
a
repayment
package
to
clear
off
the
company’s
remittance
arrears
to
date.
First,
he
called
the
Bank
of
Montreal
and
was
advised
that
no
money
would
be
forthcoming
in
response
to
the
requirement
to
pay
that
Revenue
Canada
had
issued
to
the
bank
in
respect
of
the
arrears
owed
by
B.
&
R.
Short.
Second,
he
had
a
conversation
with
Mr.
Short
in
which
he
proposed
that
the
company
would
provide
a
cheque
for
$6,900.00
and
three
post-dated
cheques
for
$8,000.00,
which
together
would
discharge
his
liability
to
Revenue
Canada
by
the
end
of
the
year
if
the
company
also
made
its
remittances
for
the
deductions
from
the
month
of
September
onwards.
Mr.
Short
agreed
to
this
proposal.
Third,
Mr.
O’Brien
spoke
again
to
the
branch
manager
of
the
Bank
of
Montreal,
who
approved
the
agreement,
and
said
that
the
bank
would
honour
the
cheques
drawn
in
favour
of
Revenue
Canada.
I
should
note
here
that
Mr.
Short
testified
that
he
had
not
made
remittances
to
Revenue
Canada
earlier
because,
after
the
bank
took
over
the
company’s
receivables
in
late
June,
it
only
permitted
cheques
to
be
written
for
the
company’s
net
payroll
and
to
service
the
debts
that
it
owed
to
the
suppliers.
However,
Mr.
Short
did
not
specifically
discuss
with
the
bank
the
possibility
of
paying
the
arrears
to
Revenue
Canada,
and
the
bank’s
agreement
at
the
end
of
September
to
honour
the
cheques
written
to
pay
the
debt
to
Revenue
Canada
suggests
that
it
would
have
honoured
cheques
drawn
in
favour
of
Revenue
Canada
earlier
if
Mr.
Short
had
asked
it
to
do
so.
But
he
did
not.
On
October
20,
1986
the
company’s
cheque
for
$6,900.00
to
Revenue
Canada
was
cleared,
as
was
the
cheque
for
$8,000.00
on
November
20.
However,
despite
Mr.
Short’s
undertaking,
the
company
did
not
make
remittances
on
the
amounts
due
for
the
deductions
made
in
September
and
October.
As
a
result,
Revenue
Canada
informed
Mr.
Short
in
a
letter
of
December
23,
1986
that,
because
he
had
not
complied
with
this
aspect
of
the
agreement,
it
was
returning
the
other
two
post-dated
cheques.
In
his
testimony,
Mr.
Short
had
said
that
the
cheques
were
returned
by
Revenue
Canada
because
the
Bank
had
not
honoured
them.
However,
the
letter
clearly
demonstrated
that
he
was
mistaken
about
this.
In
any
event,
when
Fahey
Construction
went
into
receivership
in
December,
thus
extinguishing
whatever
faint
glimmer
of
hope
there
had
been
that
the
company
would
be
paid
what
Mr.
Short
said
was
owing
to
it,
the
bank
“closed
down”
B.
&
R.
Short
Construction
by
revoking
its
line
of
credit.
Nonetheless,
Mr.
Short
managed
to
pay
off
the
money
owing
to
the
suppliers,
and
to
the
bank.
I
should
also
add
that
Mr.
Short
testified
that
he
and
his
wife
had
often
not
drawn
their
salaries
during
the
months
when
the
cash
flow
was
particularly
acute,
even
though
the
company’s
books
showed
the
salaries
as
payables.
The
bank
had
exercised
its
rights
under
the
personal
guarantee
of
the
company’s
overdraft
that
Mr.
Short
had
been
required
to
give
and
debited
his
personal
account
for
$10,000.00,
which
it
credited
against
the
overdraft
liability.
Furthermore,
Mr.
Short
had
been
forced
to
mortgage
property
that
he
owned
in
order
to
deal
with
his
debts,
and
to
support
his
family.
Except
for
the
payments
that
I
have
already
mentioned,
Mr.
Short
made
no
other
remittances
to
Revenue
Canada
with
respect
to
the
tax
year
1986
because,
as
he
put
it
in
his
evidence,
he
did
not
feel
personally
responsible
for
the
debt.
He
seems
to
have
regarded
the
money
claimed
by
Revenue
Canada
as,
in
some
sense,
offset
by
the
amount
that
he
believed
that
he
should
have
received
on
completion
of
the
Punch
Bowl
project
from
another
branch
of
the
federal
government,
the
Department
of
Public
Works.
Finally,
I
should
note
that
the
$52,589.42
for
which
Mr.
Short
was
assessed
in
1989
for
the
tax
year
1986
has
now
more
than
doubled
as
a
result
of
accumulating
interest
and
late
payment
penalties.
C.
The
Tax
Court’s
decision
On
facts
essentially
as
I
have
described,
Rip
T.C.J.
held
that
Mr.
Short
had
not
succeeded
in
bringing
himself
within
the
statutory
due
diligence
defence.
He
emphasized
two
aspects
of
the
facts
in
reaching
this
conclusion.
First,
Rip
T.C.J.
characterized
as
“playing
with
fire”
Mr.
Short’s
method
of
financing
the
remittance
to
Revenue
Canada
for
the
previous
month’s
deductions,
namely
his
reliance
on
the
receipt
of
payments
due
in
the
following
month
on
the
company’s
contracts.
The
problem
with
this,
he
noted,
was
that
there
was
always
a
“reasonable
probability”
that
a
progress
or
final
payment
would
not
be
forthcoming
and
the
company
would
be
unable
to
make
its
remittance
on
time.
Having
assumed
this
risk,
Mr.
Short
could
not
subsequently
be
heard
to
say
when
the
inevitable
happened
that
he
had
acted
with
due
diligence
to
prevent
his
company’s
default,
since
he
had
not
put
in
place
any
system
for
dealing
with
such
an
eventuality.
Second,
the
company
was
operating
without
adequate
capital
and
hence
was
very
vulnerable
if
any
of
the
contractors
to
which
it
supplied
labour
got
into
difficulties.
And
when
this
happened
to
Fahey
there
was
no
evidence
by
the
summer
of
1986
that
B.
&
R.
Short
Construction
was
financially
viable.
For
Mr.
Short
nonetheless
to
continue
to
accumulate
debt
to
Revenue
Canada
was
not
consistent
with
due
diligence.
D.
The
law
The
only
immediately
relevant
provision
of
the
Income
Tax
Act
is
subsection
227.1(3):
A
director
is
not
liable
for
a
failure
[to
remit
deductions]
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.
Un
administrateur
n’est
pas
responsable
de
l’omission
visée
au
paragraphe
(1)
lorsqu'il
a
agi
avec
le
degré
de
soin,
de
diligence
et
d’habileté
pour
prévenir
le
manquement
qu’une
personne
raisonnablement
prudente
aurait
exercé
dans
des
circonstances
comparables.
Although
there
is
no
shortage
of
reported
cases
dealing
with
this
provision,
most
simply
provide
examples
of
its
application
to
particular
situations.
Since
these
decisions
are
inevitably
fact-driven
they
have
little
precedential
value,
and
I
do
not
intend
to
discuss
them
individually.
However,
some
of
the
cases
brought
to
my
attention
deal
with
situations
which
in
their
essentials
are
not
unlike
the
case
before
me,
and
I
have
found
these
helpful
in
indicating
the
facts
to
which
I
should
pay
particular
attention
when
determining
whether
Mr.
Short
has
established
the
due
diligence
defence.
More
general
guidance,
however,
is
provided
by
the
very
useful
judgment
of
Robertson
J.A.
in
what
is
now
the
leading
case
of
Soper
v.
R.
(1997),
[1998]
1
F.C.
124
(Fed.
C.A.),
where
the
standard
established
by
subsection
227.1(3)
was
described
as
“subjective-
objective”.
This
means
that
whether
the
director
exercised
the
care,
diligence
and
skill
of
a
reasonably
prudent
person
is
to
be
determined
by
taking
into
account
some
at
least
of
the
personal
characteristics
of
the
individual
in
question.
Thus,
the
statutory
comparator
is
the
reasonably
prudent
person
in
“comparable
circumstances”
to
the
director
in
question.
This
requires
the
Court
to
take
into
consideration
such
things
as
the
knowledge,
experience
and
general
business
sophistication
of
the
director
and,
I
would
have
thought,
the
business
circumstances
under
which
the
director
was
operating.
There
is
thus
to
be
a
flexibility
in
the
application
of
the
standard,
without
at
the
same
time
its
degeneration
into
a
defence
of
“I
did
my
best”.
E.
Application
of
the
law
Applying
the
statutory
standard
as
elaborated
in
Soper
to
the
facts
of
this
case,
I
have
taken
into
account
that
Mr.
Short
did
not
finish
high
school,
and
had
acquired
no
more
than
an
elementary
knowledge
of
bookkeeping
through
attending
night
classes.
On
the
other
hand,
he
had
considerable
practical
knowledge
of
the
construction
industry
in
Newfoundland
and
was,
of
course,
intimately
familiar
with
the
situation
of
his
own
company
which
he
had
been
running,
either
alone
or
with
his
father,
for
eight
or
nine
years
prior
to
1986.
Having
had
the
benefit
of
seeing
and
hearing
Mr.
Short
give
his
evidence
I
have
the
impression
of
an
intelligent
person
with
a
good
knowledge
of
his
business.
Counsel
for
Mr.
Short
relied
heavily
upon
the
fact
that,
from
the
time
that
the
Bank
of
Montreal
intervened
in
late
June
to
take
“control”
of
the
company,
Mr.
Short
was
himself
no
longer
a
free
agent.
In
particular,
when
the
bank
took
over
the
receivables
to
reduce
the
amount
of
the
company’s
overdraft,
and
permitted
cheques
to
be
written
only
to
cover
the
net
payroll
and
to
make
payments
to
suppliers
that
were
necessary
to
enable
the
company
to
continue
to
work,
Mr.
Short
ceased
to
be
responsible
for
the
company’s
failure
to
remit
the
source
deductions.
On
the
other
hand,
for
all
intents
and
purposes
counsel
conceded
that
Mr.
Short
was
liable
for
the
unremitted
deductions
for
the
months
of
May
and
June,
because
these
failures
occurred
at
a
time
when
he
was
free
to
decide,
not
only
whether
to
continue
operating
the
company,
but
also
which
debts
the
company
would
pay,
and
when.
After
examining
the
evidence
carefully
and
reading
the
authorities
provided
by
counsel,
I
have
concluded
that
Mr.
Short
did
not
show
the
degree
of
care,
diligence
and
skill
required
by
subsection
227.1(3)
in
the
other
months
either.
First,
there
was
no
formal
assignment
to
the
Bank
of
Montreal
and
the
evidence
about
the
degree
of
control
that
it
in
fact
exercised
was
by
no
means
clear.
In
particular,
Mr.
Short
did
not
specifically
raise
with
the
branch
manager
the
question
of
whether
the
bank
would
honour
cheques
drawn
in
favour
of
Revenue
Canada
to
meet
the
source
deductions.
Nor
am
I
satisfied
that
he
made
the
appropriate
efforts
to
discuss
the
situation
with
Revenue
Canada
in
a
timely
fashion.
If
it
was
possible
for
the
bank,
Revenue
Canada
and
Mr.
Short
to
agree
on
a
repayment
package
late
in
September,
I
do
not
see
why
a
similar
agreement
could
not
have
been
made
much
earlier
if
Mr.
Short
had
taken
the
proactive
steps
required.
Second,
the
under-capitalization
of
the
company,
and
the
absence
of
a
sufficiently
reliable
method
for
ensuring
that
the
source
deductions
were
remitted,
despite
the
chill
winds
then
blowing
through
the
construction
business
in
Newfoundland,
suggest
that
Mr.
Short
failed
to
take
the
positive
steps
required
of
a
director
to
prevent
the
failure
to
remit.
Indeed,
although
B.
&
R.
Short
had
operated
for
some
years
by
covering
the
deductions
from
subsequent
receivables,
the
company
had
run
into
difficulties
with
making
remittances
on
time
in
several
months
in
1985.
Mr.
Short
should
have
learned
from
this
experience,
and
put
the
company’s
financial
position
on
a
more
stable
basis
for
the
1986
construction
season.
Third,
Mr.
Short
did
not
comply
with
important
aspects
of
the
arrangements
made
with
Revenue
Canada
in
September
1986:
that
is,
he
did
not
honour
his
undertaking
to
remit
the
source
deductions
made
for
the
current
months.
On
the
other
hand,
I
have
no
doubt
that
Mr.
Short
was
telling
the
truth
when
he
gave
evidence
that
he
and
his
wife
had
foregone
salary
payments
and
that
the
collapse
of
B.
&
R.
Short
had
caused
them
personal
hardship.
This
is
not
a
case
where
the
director
has
looked
after
his
own
interest
at
the
expense
of
Revenue
Canada’s.
F.
Conclusion
It
is
impossible
not
to
feel
sympathy
for
Mr.
Short,
who
has
worked
hard
and
has
been
overwhelmed
by
circumstances
that
are
by
no
means
all
of
his
own
making.
Nevertheless,
the
responsibilities
of
a
corporate
director
require
more
than
an
honest
effort
to
do
one’s
best,
and
a
willingness
to
oil
the
squeaky
wheels
by
complying
with
the
demands
of
the
company’s
most
immediately
demanding
creditors,
and
ignoring
the
obligations
owed
to
the
public,
represented
by
Revenue
Canada.
For
these
reasons
the
appeal
is
dismissed.
Appeal
dismissed.
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