Adams v. Anderson, 2011 ONCA 381
COURT OF APPEAL FOR ONTARIO
Armstrong, Juriansz and Watt JJ.A.
BETWEEN
Glenn Adams
Plaintiff (Appellant)
and
James Anderson, Richard Baird, Michael Budden, Allison Laing and Jim Blencoe
Defendants (Respondents)
Jeffrey Radnoff, for the appellant
Gordon Hills, for the respondent Jim Blencoe
Scott A. Rosen, for the respondent Allison Laing
Heard: March 23, 2011
On appeal from the judgment of Justice D.A. Wilson of the Superior Court of Justice dated April 7, 2010, with reasons reported at 2010 ONSC 1999.
ENDORSEMENT
1The appellant, Glenn Adams, is a former director of Wray’s Fire Protection Ltd. who completely paid the company’s outstanding GST and payroll remittances. He appeals from the judgment of Wilson J., dated April 7, 2010, dismissing his claim for contribution from the respondents, Allison Laing and Jim Blencoe, who he alleges were also directors of the company at the time it failed to make the remittances.
2The appellant’s claim was based on provisions of the Excise Tax Act, R.S.C. 1985, c. E-15 (GST) and the Income Tax Act, R.S.C. 1985, c. 1 (payroll remittances), which provide that a director who pays the GST or payroll remittances may claim contribution from the other directors who were liable for the claims. In the alternative, the appellant claims that Laing and Blencoe were unjustly enriched by the payments that he made.
3The trial judge made findings of fact that Blencoe had not been a director of the company, and that Laing had resigned as a director before the remittances were due. She also found there was no basis for the claim of unjust enrichment.
4The trial judge’s reasoning has been largely overtaken by this court’s recent decision in Danso-Coffey v. Ontario, 2010 ONCA 171. In Danso-Coffey, this court found that the application judge erred by purporting to determine a person’s liability as a director for retail sales tax remittances, but rather should have applied the Minister’s determination under the comprehensive statutory tax regime. Like the Retail Sales Tax Act, R.S.O. 1990, c. R.31, both the Excise Tax Act and the Income Tax Act have schemes that provide that assessments of tax, subject to being varied or vacated under the process within the tax regime, shall be deemed to be valid and binding despite any error, defect or omission. In this case, the trial judge should not have embarked on an inquiry as to the actual tax liability of the respondents Blencoe and Laing. Rather, she should have accepted their tax liability as determined under the Excise Tax Act and Income Tax Act regimes. Blencoe’s and Laing’s liability under the Excise Tax Act and the Income Tax Act was required to support the appellant’s claim for contribution against each of them. Section 323(8) of the Excise Tax Act and section 227.1(7) of the Income Tax Act are almost identical in providing: “A director who satisfies a claim under this section is entitled to contribution from the other directors who were liable for the claim” (emphasis added).
5Ignoring the trial judge’s analysis and applying the approach required by Danso-Coffey, we would nevertheless dismiss the appeal.
6While the respondent Blencoe did initially receive assessments under both tax statutes, the Canada Revenue Agency (“CRA”) subsequently reassessed him as having no liability. Since he had no liability for the tax, the appellant has no claim for contribution from him.
7The respondent Laing also initially received assessments under both statutes. She provided information to the CRA that she resigned as a director on May 20, 1992. The CRA wrote to her on October 1, 2008, advising her that she had provided sufficient documentation to support her position that she was “not an active director at the time the original debt arose.”
8After the hearing of the appeal, Laing brought an application to admit fresh evidence. The fresh evidence consists of a letter from the CRA dated March 31, 2011. The letter states that the April 9, 1997 Assessments made against Laing had been issued in error, that the correspondence that Laing had sent to the CRA in April, 1997 proved that she had not been a director of the company at the time it failed to remit the required source deductions and GST, and that as a result the CRA had never pursued collection of the assessment issued against her.
9We do not admit the fresh evidence for several reasons. First, it is not supported by an affidavit. Second, as Laing’s counsel advises, the letter was a result of representations made to the CRA after the hearing of the appeal. The hearing of an appeal should be the final step in the final determination of all issues. Parties should not expect the opportunity to buttress their positions based on how the court responded to the arguments advanced at the hearing of the appeal. Here, it was known that the appellant would rely on this court’s decision in Danso-Coffey; Laing had ample opportunity to obtain the letter prior to the hearing of the appeal. Third, and most importantly, the March 31, 2011 letter is not a reassessment and cannot be expected to affect the result. It adds little to the October 1, 2008 letter already in the record.
10The appeal may be determined on the basis of the October 1, 2008 letter. Counsel for the appellant does not place any reliance on the fact that the letter does not use the word “reassessment”. At the hearing of the appeal he accepted the letter as a determination of the comprehensive statutory scheme to determine tax liability. Consequently, it is unnecessary on this appeal to consider the import of the fact that the letter is not a formal reassessment. Counsel argues that what is significant is that the letter simply accepts that Laing was not an “active director”. He submits that even a passive director remains liable for remittances not made by the company, though the standard for avoiding liability by the exercise of due diligence may be different. While the trial judge had to defer to the CRA’s determination of Laing’s tax liability and could not determine that tax liability herself, she had to construe the CRA’s letter to Laing. She determined that Laing sent the CRA “the documentation confirming her resignation as director and this was accepted by Revenue Canada and they withdrew from their initial position that she was liable for the debt.” On this finding, the appellant’s claim for contribution from Laing fails because it was not established that she was liable for the remittances under the tax statutes.
11We see no merit in the appellant’s claim for unjust enrichment. As neither Blencoe nor Laing had any liability for the remittances, the appellant’s payment was of no benefit to them.
12The appeal is dismissed. Costs in favour of each of the respondents are fixed in the amount of $2,500 inclusive of disbursements and applicable taxes. In respect of the fresh evidence application, costs in favour of the appellant against Laing are fixed in the amount of $750 inclusive of disbursements and applicable taxes.
“R.P. Armstrong J.A.”
“R.G. Juriansz J.A.”
“David Watt J.A.”