Court of Appeal of Quebec

Gilbert c. Agence du revenu du Québec

October 26, 2018


Hilton, Ruel, Gagné

Appeal from a judgment of the Court of Quebec dismissing an appeal from assessments. Dismissed. 

The appellant was assessed by the Agence du revenu du Québec (ARQ) for the tax debts of corporations that had declared bankruptcy and of which he was the director. He objected to the assessments, invoking s. 24.0.2 of the Tax Administration Act, but the ARQ refused to exempt him and the Court of Quebec dismissed his appeal. He submits that the judge erred in not distinguishing between provincial tax legislation and federal legislation, in applying an objective rather than a mixed standard to the analysis of his conduct, and in concluding that the defences in s.24.0.2 of the Act do not apply. 

The judge did not err in finding that the standard applicable to the analysis of a reasonable dispatch defence based on s. 24.0.2 of the Act is an objective standard applied while taking all the circumstances into consideration. The Quebec legislature’s clear intention in enacting this provision was to prevent directors of business corporations from misappropriating taxes and source deductions. There is no fundamental difference between s. 24.0.2 of the Act and the federal provisions (s. 227.1(3) of the Income Tax Act and s. 323(3) of the Excise Tax Act). Although the wording may differ, these provisions all refer to the objective standard of the reasonable person placed in the same circumstances. The judge did not err in applying the objective standard set out by the Federal Court of Appeal in Canada v. Buckingham. Finally, the judge also did not err in rejecting the appellant’s defence based on s. 24.0.2 of the Tax Administration Act. The appellant hired professionals to correct his companies’ financial situation, but was not sufficiently diligent because he failed to verify their accounting and left the entire responsibility in the hands of these professionals. He took no measures to ensure that taxes and source deductions were paid to the ARQ. The facts that he was the victim of a malicious co-director and that he had surrounded himself with people responsible for correcting the situation do not in themselves constitute valid grounds for exemption. A reasonable director and company owner cannot validly delegate the entirety of such an important ultimate responsibility to a third party because he is otherwise occupied or lacks the means to become better informed.

*Summary by SOQUIJ
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