Director - Re: Change of (Corporate Law)

Marra v. The Queen, 2016 TCC 24 (CanLII)

[28] On their return to Toronto, Ms. Marra “did not follow up” the resignation, assuming Mr. Polsinelli had taken care of it. The Marras never followed up anything with Mr. Polsinelli, she said. No other director of Sani‑Clean was informed of Ms. Marra’s resignation. Apparently, according to Mr. Marra, the only director was Mr. Manankil who was being sued by the Marras and Sani‑Clean. (There is no evidence when or if Ms. Sili resigned as director.) No Notice of Change of Directors was sent as required by the Ontario Corporations Information Act (“OCIA”).

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[43] Subsection 4(1) of the OCIA states that

(1) Every corporation shall file with the Minister a notice of change for every change in the information filed under this Act, within 15 days after the day the change takes place.[4]

[44] Failure to file a notice of change of director does not negate the change of director or director’s resignation; Laprise v. Julio’s Pizza & Spaghetti Parlour. The consequences for failing to file such notice may include penalties and fines.

[45] The issue these appeals are concerned with is did Sani‑Clean receive Ms. Marra’s resignation on January 11, 2007, or, on the facts, is receipt of a letter of resignation by a lawyer for the corporation receipt of the resignation by the corporation? The alternative submission by the appellant was whether she was duly diligent in preventing Sani‑Clean’s failures to remit tax.

[46] In January 2007, the Marras and Sani‑Clean were involved with legal action against Mr. Manankil, who, along with Ms. Sili, were the two directors of Sani‑Clean. Ms. Sili, according to the appellant, was not an active director and was not involved in the operation of Sani‑Clean. Therefore, the appellant claims, it would be useless to send the letter of resignation to a director against whom you have taken legal action or to a director who had absolutely no involvement with the company. Mr. Polsinelli advised Ms. Marra to send the letter of resignation to him. In the appellant’s view the delivery of the letter of resignation to Mr. Polsinelli as corporate counsel was the best available method to notify Sani‑Clean of her resignation.

[47] Counsel referred to Hart v. Lefebvre where Mesbur J. of the Ontario Superior Court of Justice considered section 108 of the Canada Business Corporation Act, that resignation of a director is effective at the time a written resignation is sent to a corporation. There is no requirement where the resignation is to be sent and the trial judge assumed “the underlying principle is one of notice or meaningful communication with the corporation”. In Hart, the letter of resignation was sent to the Trustee in bankruptcy which, the trial judge found, “was the best available method for the defendant to actually notify the corporation” since “the Trustee was the only entity with any remaining connection to or for the corporation”. The trial judge therefore held that the letter of resignation sent to the Trustee on May 17, 1991 was effectively sent to the corporation on that date and the date of resignation was May 17, 1991.