http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/127827/index.do
Marra v. The Queen (January 26, 2016 – 2016 TCC 24, Rip J.).
Précis: Ms. Marra was a director of Sani-Clean Systems Incorporated (“Sani-Clean”) and, as such, was assessed for unremitted GST of Sani-Clean and unremitted amounts under the Income Tax Act. She appealed to the Tax Court which accepted her evidence that she had given her resignation to Claudio Polsinelli, who acted as the lawyer for Sani-Clean, more than two years prior to the date of the assessment. The Crown took the position that the resignation was ineffective.
The Court agreed with Ms. Marra’s counsel that the delivery of the letter to Mr. Polsinelli was an effective resignation and therefore the assessments under appeal were statute barred. The appeals were allowed with one set of costs.
Decision: The facts were not complex:
[37] Mr. Polsinelli kept notes in a Hillary Notebook that was kept beside his office telephone. He recorded telephone discussions into the notebook. The notebook essentially contained all matters pertaining to clients. He recalled the telephone conversation with Ms. Marra in January 2007 and “probably said ‘Just send me a note that you’re resigning’.” He stated that the resignation letter was prepared “on my advice.”
[38] Ms. Marra’s letter of resignation sent to Mr. Polsinelli was never placed in the company’s minute book since the minute book was in Mr. La Foso’s office, Mr. Polsinelli explained. He confirmed that no notice of resignation by Ms. Marra was filed with the Ministry. He said he would “probably” have placed the letter in the minute book when it was to be returned by Mr. La Foso and then file a notice with the Ministry. When the minute book was returned “nobody recalled the letter” and no notice of change of director was sent to the Ministry.
The Crown’s position was somewhat one dimensional:
[50] The respondent’s position is that the appellant’s “purported” resignation was ineffective as Sani‑Clean never received it. The letter of resignation was not sent to the corporation’s registered head office or any other place where the corporation operated, nor was the letter ever sent to an officer or director of Sani‑Clean and no officer or director was informed of the resignation. It was, submits respondent’s counsel, a “secret resignation”, not at all similar to a situation where a person resigns orally before all directors, officers and principals who become aware of the resignation.
[Footnote omitted]
The Court’s response was succinct:
[51] So let’s be practical, look at the law and put ourselves in Ms. Marra’s shoes. Her husband tells her there is trouble with Sani‑Clean and that she may be liable on account of these problems, and that she should get in touch with their lawyer who is also Sani‑Clean’s lawyer. The lawyer tells her she has to resign. She could send a letter of resignation to either of the two remaining directors, one is Ms. Sili who probably has no idea what is occurring. The other director is Mr. Manankil who is being sued by the Marras and Sani‑Clean. He also has jumped ship as far as Sani‑Clean is concerned. No comfort would be gained in sending the letter of resignation to him.
[52] The only alternative, therefore, is to send the letter of resignation to the lawyer who has always acted for Sani‑Clean and who has, or should have, possession of Sani‑Clean’s corporate records. This is not necessarily a question of whether Mr. Polsinelli is agent of Sani‑Clean; it is a question of wanting to resign as director and sending the letter of resignation to the person who has any remaining responsible connection with Sani‑Clean and, in the circumstances, that was Mr. Polsinelli, Sani‑Clean’s lawyer.
[53] Ms. Marra’s letter of resignation as director of Sani‑Clean was effective as at the date it was received by Mr. Polsinelli. There is no reason to consider the appellant’s alternate submission that she exercised the degree of care, diligence and skill to prevent Sani‑Clean’s failures to remit tax.
The appeals were allowed with one set of costs.