http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/100274/index.do 
Andrew v. The Queen (January 2, 2015 – 2015 TCC 1, Paris J.).
Précis: This was an appeal of assessments of director’s liability for unremitted GST for two corporations in which Mr. Andrew acted as the sole director, president and CEO. He raised a defence of due diligence based on his belief that one of the corporations and another related corporation were entitled to GST refunds. The Court rejected his evidence of a reasonable belief that such refunds were owing.
Decision: This is a case involving three director’s liability assessments against Mr. Andrew:
[1] These are appeals from three assessments made against Donald Andrew as director of Andrew Paving and Engineering Ltd. (“Andrew Paving”) and 1555223 Ontario Inc. (“155”). Mr. Andrew was the president and CEO and the sole director of each corporation.
[2] By notice dated April 23, 2008, Mr. Andrew was assessed pursuant to section 323 of the
Excise Tax Act (“ETA”) for Goods and Services Tax (“GST”) which Andrew Paving allegedly failed to remit for its reporting periods ending between September 30, 2000 and September 30, 2006. The amount of this assessment is $190,413.45, inclusive of interest and penalties.
[3] By notice dated December 13, 2007, Mr. Andrew was assessed pursuant to section 323 of the
Excise tax Act (“ETA”) for GST which 155 allegedly failed to remit for its reporting periods ending June 30, 2003 September 30, 2003 and December 31, 2003. The amount of this assessment was $112,807.03 inclusive of interest and penalties.
[4] By notice dated April 23, 2008, Mr. Andrew was assessed pursuant to section 227.1 of the
Income Tax Act (“ITA”) for source deductions which Andrew Paving allegedly failed to remit for the years 2005 and 2006. This assessment was for $166,591.81, inclusive of interest and penalties.
[5] The issues in this appeal are:
i) whether the amounts of the underlying liabilities of Andrew Paving and 155 for which the Minister seeks to hold Mr. Andrew liable are correct;
ii) whether the respondent has the onus to prove the amount of the underlying corporate liabilities; and
iii) whether Mr. Andrew exercised due diligence to prevent any failures by Andrew Paving and 155 to remit the amounts in issue.
In a very lengthy set of reasons Justice Paris rejected Mr. Andrew’s claims under points i) and ii), in each case preferring the evidence of CRA witnesses.
On the defence of due diligence Mr. Andrew claimed that he had an honest belief that Andrew Paving and a related company, Meld Development Inc., were entitled to GST refunds. The Court rejected that defence:
[112]I agree with the appellant that if a director reasonably believed that a corporation had a credit balance available in its GST account, this would amount to a reasonable belief that the corporation had sufficient funds available to pay future GST remittances as they came due, or even that the future remittances had in effect already been satisfied. Like in Worrell and Buckingham, relevant efforts of a director to prevent a failure to remit would include steps taken to have funds available to pay remittances on time. That those funds would be obtained by means of a credit for prior overpayments of tax rather than by means of a capital investment by an investor is immaterial.
[113]I am not satisfied, however, that the appellant has shown that his belief that Meld and Andrew Paving were entitled to additional GST credits was objectively reasonable.
Again Justice Paris preferred the evidence of CRA witnesses to that of Mr. Andrew:
[134]Furthermore, despite his insistence that he was never given answers by the CRA to his concerns that Meld and Andrew Paving had overpaid tax, starting from the first returns filed in the early 1990s, there is evidence that Andrew Paving, at its request, was sent a statement of its GST account in October 2002. In 2003, e [sic] met with Mr. Schafer who appears to have provided explanations concerning amounts owing. In April 2004, the Minister allowed parts of the fairness requests made by Andrew Paving and Meld and included a breakdown of the total interest and penalties charged on the accounts since 1991. Subsequent to receiving the fairness relief, the appellant’s complaint with the tax liability shown for Andrew Paving focused on three items: the Meld letter amount and two amounts he said should be credited to Andrew Paving’s and Meld’s accounts in respect of a second fairness review. This is apparent from his letters to the CRA collections officers in 2005 and in 2006. It was also Mr. Jarman’s opinion that in 2008, the appellant was not contesting the amount of Andrew Paving’s GST liability. While counsel for the appellant referred Mr. Jarman to a letter from the appellant to the CRA that appeared to show the amount was in dispute, that letter was sent to another collections officer well before Mr. Jarman was assigned the file. Mr. Jarman also dealt with the appellant’s concern that certain payments made by Andrew Paving on Meld’s GST account in 2003 had not been credited to Meld’s account. It was not disputed that Mr. Jarman was able to show the appellant where the credits had been applied.
[135]It is apparent, though, that the Director of the North Toronto Tax Services Office failed to respond to the appellant’s letter regarding the Meld letter and that no explanation of the Minister’s position on the matter was provided until 2008. Without a doubt, the Director’s failure to respond was one of the major causes of the appellant’s frustration in his dealings with the CRA and in these proceedings. No explanation was ever given why the Director never responded to the appellant’s letter. This treatment of the appellant is deplorable, regardless of the strength of the appellant’s claim concerning the Meld letter. Unfortunately, the conduct of the CRA is not something over which this Court has jurisdiction:
Main Rehabilitation Co. v. Canada, 2004 FCA 403, 247 D.L.R. (4th) 597.
In the result the appeals were allowed only to the extent of very minor adjustments agreed to by the Respondent. One set of costs were awarded to the Respondent for both appeals.
Comment: This case is somewhat difficult to place. It seems relatively clear from the jurisprudence that the due diligence defence in the context of believing a corporation to be solvent is one based on objective reasonableness, not factual correctness. It is unclear whether Justice Paris was applying the former test or the latter, but a reasonable observer could conclude that he applied the factual correctness test. The comments in paragraph [135] above seem to suggest that Mr. Andrew’s state of mind was of little relevance in the ultimate determination. The decision would benefit from a review by the Federal Court of Appeal.