Kyte v. Canada
A-785-95
Robertson J.A.
2/12/96
6 pp.
Appeal, cross-appeal from trial judgment on special case-Trial Judge holding certificate issued by Minister in amount of $500,000 for Hitec's liability under Income Tax Act, Part VIII, satisfied preconditions of s. 227.1(2)(a) for imposing "vicarious liability" on director of corporation even though certificate not in correct amount-Taxpayer appealing conclusion error excused by operation of s. 166-By way of cross-appeal, Minister disputing Trial Judge's finding certificate in error, but maintaining Trial Judge properly invoking s. 166-On January 1, 1985, Hitec issued Scientific Research Promissory Note for $1 million-Liable to pay Part VIII tax of $500,000 by February 28, 1985-On October 25, 1988, Minister assessing taxpayer, director of Hitec, for $298,473.30, representing Hitec's unpaid Part VIII tax for 1985 plus interest-Amount for which taxpayer assessed reflecting refund of $284,826.50 of Part VIII tax allowed by Minister in notice of assessment-Pursuant to s. 227.1(2)(a), director not liable for corporation's unpaid tax unless Minister: (1) registering certificate for amount of corporation's liability with Court; (2) attempting to collect amount owing from defaulting corporation i.e. Minister obligated to exhaust remedies against Hitec before proceeding against taxpayer-Minister registered certificate against Hitec in amount of $500,000, but unsuccessful in collecting any monies-Certificate not taking into account tax refund Trial Judge holding deemed to have been paid as of February 28, 1986-Appeal dismissed; cross-appeal dismissed without consideration of merits-Minister entitled to rely on s. 166-Taxpayer arguing onus on Minister to prove failure to comply with s. 227.1(2)(a) arising as result of irregularity, informality, omission or error-Case below proceeded on basis of exhaustive agreed statement of facts-No evidence suggesting bad faith, unfairness, injustice by Minister or prejudice to Hitec-Minister not expected to adduce evidence necessary to discharge onus of proof issue raised and pursued after agreed statement of facts concluded when agreement prohibiting parties from adducing further evidence-Taxpayer also arguing certificate must set out "correct amount" and if does not then liability not attaching to director-S. 227.1(2)(a) not specifying certificate be for "correct" amount-Sufficient ambiguity to warrant further consideration of Parliament's intent-S. 166 expressly requiring Court to determine whether s. 227.1(2)(a) "directory"-As amount owing often fluid, error in certificate not causing prejudice to taxpayer, Trial Judge's finding requirement to state amount of tax liability of corporation in certificate directory rather than mandatory correct-Income Tax Act, R.S.C., 1985 (5th Supp.), c. I-1, ss. 166, 227.1(2)(a).