In this case, the assessed director’s estate tried to claim that he never agreed to be a director. But that argument was only made by a late amendment to the notice of appeal and had never been raised earlier with the CRA. So it failed because of lack of evidence. However, in dismissing this argument, the FCA gave this useful advice:
Dans les provinces de common law, l’administrateur de jure d’une société est celui qui a expressément ou implicitement consenti à sa nomination. Cette règle est généralement suivie en matière fiscale fédérale (Hay c. La Reine, 2004 CCI 51 au para. 34 ; MacDonald au para. 35).
[In the common law provinces, a de jure director of a corporation is one who has explicitly or implicitly agreed to his appointment. That rule is generally followed in federal tax matters (Hay c. La Reine, 2004 CCI 51 au para. 34 ; MacDonald au para. 35).]
Hay, a decision of Justice Archambault, has this at paragraph 34:
[34] However, it cannot be inferred from the wording of subsection 106(9) CBCA that the legislator intended provisional directors to be appointed directors without their consent.[18] In the common law, it has been recognized that a director must consent either explicitly or implicitly in order to be considered a director. In West Leechburg Steel Co. (referred to in De Witt)[19], the Supreme Court of Michigan cited with approval the following statements, at pages 183 and 184:
“The person who never accepted the office of director, but was simply held out as such by others without his knowledge, cannot be held liable for any failure on the part of the board to comply with the statute.” 2 Thompson on Corporations (3d Ed.), p. 1010, § 1450.[20]
. . .
“To make one an officer of a corporation, his consent, as well as an appointment or election is necessary. A person who is elected without his knowledge, and who does not accept the office, or act as an officer, is not an officer, although he may have received stock after his election. . . .” 2 Fletcher Cyclopedia Corporations (Perm. Ed.), p. 71, § 314.
Hay v. The Queen, 2004 TCC 51 (CanLII), at para 34, <https://canlii.ca/t/1g7bq#par34>
In MacDonald, Rossiter ACJ follows Hay:
[35] In Hay v. Canada, 2004 TCC 51, the Minister argued that Mr. Hay was a de jure director. However, Mr. Hay claimed he was never a director because he never agreed to act in that capacity. Apparently Mr. Hay was named as a provisional director by virtue of a form provided with the articles of incorporation despite never having authorized the incorporator to designate him as such and was only made aware of this designation three of four years later. In Hay, Mr. Justice Archambault recognized that in the common law a director must consent either explicitly or implicitly in order to be considered a director. He held that because Mr. Hay’s designation as a provisional director was made by the incorporator without his consent, the designation was not valid and he therefore could not be considered a de jure director.
[36] The evidence in this appeal discloses that there was no director’s meeting, of any nature or kind whatsoever, by which directors were appointed. There were no dossiers signed by the Appellant consenting to do any business as a director. In fact, the Appellant did not even know he was a director even though he signed some documents to that effect. According to his own evidence, he was just signing documents, some of which required two signatures, when asked. The Appellant specifically acknowledged he was one of two persons with signing authority for cheques for the GCPI but stated firmly and repeatedly that he did not consent to be a director nor did he intend to be a director at any time for the corporation. The evidence presented showed that the directorship appointment of the Appellant was not carried out in accordance with the applicable statute. Also, there was nothing in the corporate minute book that showed that his appointment as a director was proper and carried out in accordance with subsection 63(3) of the Business Corporations Act of New Brunswick. In April 2012, the shareholders of the GCPI passed a resolution confirming the Appellant was never a director of the corporation at any time.
[37] Based on the evidence it is clear that the Appellant had not consented to be a director. The Appellant did not know he was a director until 2010, he did not execute the appropriate documentation to be a director, and proper steps were not taken by the corporation to appoint the Appellant as a director. Under the Business Corporations Act of New Brunswick, the Appellant therefore could not have been and was not a de jure director.
MacDonald v. The Queen, 2014 TCC 308 (CanLII), at paras 35-37, <https://canlii.ca/t/gf32f#par35>
From the foregoing, you can conclude that a director will be liable only if he consents to his appointment but that his consent may be implied and accepted by the court if he knew about the appointment (and presumably, did not object). It’s also interesting that MacDonald escaped, even though he did sign documents agreeing to be a director.
A peculiar feature of Québec corporate law observed by the FCA in Gagne is that consent need not be in writing, unlike other provinces, among which the court especially noted Ontario and New Brunswick.
Here, Gagne’s Estate argued that there was no evidence he ever agreed to be a director. The FCA acknowledged that but said there was no evidence he did not agree. The FCA said the Crown was entitled to rely on the public register because of its presumed validity in favour of innocent third parties, under Québec law.
In Ontario, there is a similar rule under s. 20(2) of the Corporations Information Act, which makes a certificate of the Minister overseeing the Act, attesting to the status of the person as a director or officer, “proof, in the absence of evidence to the contrary, of the facts so certified.”
Nonetheless, a putative director in a common-law province could say he never agreed to be director and, possibly, succeed unless the Crown can show a written consent. After all, how could the putative director prove that there was no written consent? The court might ask where minute books are. But very often they don’t exist. Nonetheless, the defending taxpayer may have to show some effort to get the minute books. However, if he does, the court may accept that the defending taxpayer has disproved the public record, as the court did in MacDonald (although, there were minute books produced in that case.).