Drover v. Canada
A-331-97
Robertson J.A.
13/5/98
7 pp.
Taxpayer director of Conestoga Inn Ltd.-Conestoga required to remit goods and services tax (GST) on quarterly basis-Taxpayer lost control of Conestoga in December 1992; Conestoga declared bankrupt one week later-In arrears with respect to remittance obligation-Minister held taxpayer personally liable as director of Conestoga pursuant to Act, s. 323(1)-Tax Court concluding taxpayer not satisfying due diligence defence set out in s. 323(3)-Taxpayer conceding liability for $7,887.42 in arrears; Minister conceding taxpayer not liable for GST owing for final reporting period not required to be remitted until after taxpayer lost control of company-$18,296 in dispute, representing GST assessed as owing for January 1991 to December 1992-Common ground Tax Court Judge applied wrong test when determining whether taxpayer should be absolved of liability under due diligence defence; not having benefit of Soper v. Canada, [1998] 1 F.C. 124 (C.A.) setting out relevant principles concerning director's liability, due diligence defence-Present case adding further dimension to principles set out in Soper-Directors obliged not only to exercise requisite standard of care in ensuring GST remitted, but also to exercise same standard with respect to ensuring GST properly calculated-To interpret s. 321(1) (or Income Tax Act, s. 227.1(1)) in contrary manner would undermine purpose of section-Carelessness in calculation as unacceptable as carelessness in remittance-Other persons, including accountant, responsible for calculating, remitting all taxes-No evidence taxpayer actually aware of problem with respect to proper calculation of GST-Difficulties with submission taxpayer precluded from raising due diligence defence herein in context of amount in dispute because failed to raise it before Tax Court: (1) doubtful taxpayer would have settled as quickly with respect to other amounts if had known right to raise due diligence defence would be inadvertently eliminated; (2) argument ignores fact Tax Court Judge committed reviewable error-At same time, difficult to accept Court's role on judicial review application to arrive at finding of mixed fact, law when Tax Court Judge not asked to address what parties would later identify as pivotal issue, particularly as taxpayer's plea of due diligence resting on transcript evidence-Matter referred back to Tax Court for determination with respect to amount in dispute-Excise Tax Act, R.S.C., 1985, c. E-15, s. 323(1) (as enacted by S.C. 1990, c. 45, s. 12), (3) (as enacted idem).