Case information

Commercial law — Corporations – Directors — Liability — Director of company intending to resign from her position shortly after her appointment as director — What are the precise documentary requirements of a “written resignation” for the purposes of the Ontario Business Corporations Act, R.S.O. 1990, c. B.16 or similar legislation? — What are the precise requirements for such a resignation to be “received by the corporation”?

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In 2001, the applicant’s husband directed his accountant to incorporate a company on his behalf. The accountant incorporated Cliff Crucibles Inc. under the Business Corporations Act, R.S.O. 1990, c. B.16. Mr. and Ms. Cliff were the shareholders of the corporation, and appointed themselves as the corporation’s directors effective May 18, 2001. From the outset, however, Ms. Cliff was adamant that she was only willing to be a director on a temporary basis and that on the day she signed documentation to become a director, she told Mr. Cliff that she wanted to be removed as a director. Mr. Cliff asked the accountant to remove the applicant as a director of the corporation. A “Form 1 — Initial Return/Notice of Change” was prepared by the accountant’s office. The document stated that Ms. Cliff’s directorship started on September 4, 2003 and ceased on December 12, 2003. A copy was placed in the corporation’s minute book. The Form 1 was then submitted to the Ontario Ministry of Consumer and Commercial Relations. There was no explanation for the discrepancy between the date of Ms. Cliff’s appointment on Form 1 and the OBCA public registry which reflected the date of the resolution in the minute book. No written resignation was received by the corporation. Cliff Crucibles Inc. was dissolved in 2013, at which time it had outstanding tax liabilities under the Excise Tax Act R.S.C., 1985, c. E-15 (“ETA”) and the Income Tax Act, R.S.C., 1985, c. 1 (5th Supp.) (“ITA”). The Minister of National Revenue assessed Ms. Cliff and Mr. Cliff, as directors of Cliff Crucibles Inc., for unremitted net tax under the ETA and for the unremitted source deductions under the ITA of the corporation. For a director to be liable to be assessed under s. 227.1 of the ITA and s. 323 (1) of the ETA, the assessment had to have been made within two years after a director’s resignation. The applicant filed notices of objection and subsequently notices of appeal to the Tax Court. The sole issue was whether the applicant had resigned as a director of Cliff Crucibles Inc. in accordance with s. 121(2) of the OBCA more than two years prior to the date on which she was assessed.