Savoy v. The Queen, 2011 TCC 35, should be required reading for anyone called on to defend an individual from an assessment for unremitted source deductions.
Mr. Justice Hershfield decided the case on a relatively narrow ground, namely that the assessment in issue had not satisfied the requirements of paragraph 323(2)(b) of the Excise Tax Act, which prohibits an assessment against a director unless
the corporation has commenced liquidation or dissolution proceedings or has been dissolved and a claim for the amount of the corporation’s liability referred to in subsection (1) has been proved within six months after the earlier of the date of commencement of the proceedings and the date of dissolution
The corporation of which Mr. Savoy had been the sole director ceased to exist on March 13, 2006. A Writ of Seizure and Sale issued under the certificate registered with the Federal Court was dated April 4, 2007. Mr. Justice Hershfield held that the registration of the certificate more than a year after the involuntary dissolution of the corporation did not satisfy the requirements of paragraph 323(2)(b).
Mr. Justice Hershfield, however, went on to consider numerous other aspects of the case, including when an incorporating director can be said to resign if the corporation is never organized (Answer: never!), the possible consequences where the CRA destroys records that are relevant to the underlying assessment and the propriety of the Crown refusing to produce records that haven’t been destroyed. His ruminations were obiter, strictly speaking, but they appear to be carefully considered and could provide useful guidance for future cases where the points raised are in issue.
Savoy needs to be treated with caution now in light of the Federal Court of Appeal decision in Madison v. Canada, 2012 FCA 80. See especially para. 21.