http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/232379/index.do
Grant v. The Queen (June 22, 2017 – 2017 TCC 121, Smith J.).
Précis: Mr. Grant was the director of a company, RII Holdings Inc. (“RII”), that went through a long, messy and convoluted bankruptcy proceeding. He attempted to resist liability on the basis of a number of complex defences, including arguing that he had resigned as a director more than two years before the date of the assessment, none of which were accepted by the Court. The Court did take the somewhat unusual step of recommending that the Minister consider waiving penalties and interest because of “unacceptable processing delay on the part of CRA”. As a result the appeal was dismissed but there was no order of costs even though this was a general procedure appeal.
Decision: The taxpayer’s defences were very inventive and carefully thought out:
[3] The Appellant challenges the Notice of Assessment on the basis of the following alternative arguments:
1. that the Minister failed to file a proper proof of claim with the trustee in bankruptcy, contrary to paragraph 227.1(2)(c) of the Act;
2. that he exercised the degree of care, diligence and skill to prevent the failure that a reasonably prudent person would have exercised in comparable circumstances, in accordance with subsection 227.1(3) of the Act;
3. that he was assessed more than two years after the last ceased to be a director of the Corporation, contrary to subsection 227.1(4) of the Act; and finally
4. that the Minister failed to issue a Notice of Assessment “with all due dispatch”, contrary to subsection 152(1) of the Act.
Nevertheless the Court found that he filed to establish any of these defences on the merits.
Nonetheless the entire bankruptcy process for RII was overly protracted and fraught with error as well as what the Court found to be “unacceptable processing delay” on the part of CRA. As a result, the Court did took the somewhat unusual step of recommending that the Minister consider waiving penalties and interest. The appeal was dismissed but there was no order of costs even though this was a general procedure appeal.