The Queen v. Hughes & Co. Holdings Ltd., 94 DTC 6511, [1994] 2 CTC 170

Muldoon J.:—The Crown appeals by way of proceedings de novo, and states its case in its amended statement of claim, to which the defendant responds with marvellous brevity, but fully in five paragraphs on one page and a half. Counsel informed the Court that they had no agreed statement of agreed facts, but the defendant's pleadings most helpfully express its admission of the first five paragraphs of the statement of claim. Here are the essentials:

1. This is an appeal . . . from a Judgment of the Tax Court [1990] 1 C.T.C. 2013, 89 D.T.C. 702 . . . which allowed the appeal of the defendant herein from an assessment . . . by the [M.N.R.] in respect of the defendant's 1985 taxation year.

2. . . . the defendant was . . . duly incorporated under . . . the laws of Manitoba.

3. In computing its taxable income for the 1985 taxation year, the defendant deducted the small business deduction on the basis that its income was from an active business.

4. By notice of reassessment dated October 19, 1987, the Minister of National Revenue disallowed the small business deduction on the basis that the defendant's income was Canadian Investment Income.

5. In so reassessing, the Minister . . . proceeded, inter alia, on the basis that:

(a) the principal purpose of the defendant's business in its 1985 taxation year was to derive income from property,

(b) in the business, the defendant did not employ more than five full-time employees throughout its 1985 taxation year.

The Minister, according to the Crown's pleading ”. . . relies, . . on sections 3 and 9 and subsections 125(1), 129(4), 129(4.1) and 248(1) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") and on paragraphs 125(7)(a) and 125(7)(e), as they read and applied in 1985.”

The defendant denies the remaining allegations expressed in the amended statement of claim, averring (1) that its business was that of operating an active business which consisted of property management and farming interests, and (2) that during 1985 it employed throughout the year more than five full-time employees. The defendant then adopts, for its pleading, the decision and reasoning of the Tax Court herein, and asks that they be affirmed, and that the Crown's appeal be dismissed.

The references in the pleadings to more than five full-time employees and to the two paragraphs of subsection 125(7) of the Act are directed to this statutory text:

(a) “active business carried on by a corporation" means any business carried on by the corporation other than a specified investment business or a personal services business and includes an adventure or concern in the nature of trade.

(e) “specified investment business” carried on by a corporation in a taxation year means a business (other than a business carried on by a credit union or a business of leasing property other than real property) the principal purpose of which is to derive income from property (including interest, dividends, rents or royalties, unless

(i) the corporation employs in the business throughout the year more than five full-time employees, or

(ii) in the course of carrying on an active business, any other corporation associated with it provides managerial, administrative, financial, maintenance or other similar servicesto the corporation in the year and the corporation could reasonably be expected to require more than five full-time employees if those services had not been provided.

The parties put into contention three issues: two pleaded, and one opportunistic raised on the documentary evidence by the defendant.

The two pleaded issues are these:

1. A question more of fact than of law; was the defendant's director and president, Joseph Barry Hughes, a practising lawyer of Winnipeg, a full-time employee of the defendant in contemplation of subparagraph 125(7)(e)(i) of the Act?

If that question be resolved in the affirmative, then the defendant employed five full-time employees throughout 1985.

2. A question of law; how is subparagraph 125(7)(e)(i) to be interpreted, that is, how many employees does it take to comply with the exemption from being a “specified investment business” within the meaning of subparagraph (i)?

Unless the defendant employed in its business, throughout 1985, "more than five full-time employees”, it was a "specified investment business” and ineligible to deduct the small business deduction.

3. Did the plaintiff make an admission against interest, of which the defendant may take the advantage of employing it as concluded proof of an affirmative answer to issue 1., because, in correspondence (Exhibits 4 and 15), the plaintiff wrote ”. . . since the taxpayer employed only five full-time employees.”

It is convenient to consider first the third unpleaded issue which seemed to be taken by the defendant as a target of opportunity — that is, the plaintiff's alleged admission against interest. This issue is clearly to be resolved against the plaintiff, whose counsel raised it.

However, since the third issue bears upon the first enumerated above, and, if successful could thereby dispense with the need for proof at trial, it should be viewed with a little more attention to detail than might otherwise be the case, since it is a matter which was intensely litigated at trial. It is well illustrated in the copy of an otherwise useless exhibit herein, the defendant's president's letter dated November 28, 1988 to the registrar of the Tax Court: Exhibit 1.

Exhibit 1 sets out the essence of the defendant's contentions, thus:

The taxpayer [defendant herein] carries on a property ownership and management business which it has done since incorporation in the late 19205. It has and its founder, Joseph Henry Hughes caused actual construction and development of a number of properties in the City of Brandon, mainly on 10th Street. These buildings are now quite old and require a great deal of management and maintenance. This is accomplished by a full-time property manager, full-time bookkeeper secretary, a permanent part-time secretary, full-time maintenance man, full-time caretaker, regular part-time help in the summer and constant full-time supervision by the president who is the registered real estate broker.

The taxpayer manages its own property and manages numerous outside properties, mainly for the Brandon General Hospital.

It also is in the farming business as the owner and landlord of farm land.

The assessments have been done on the basis of the corporation being covered by the “specified investment business” description. The exemption to this description is subparagraph 125(7)(e)(i) which states in part:

. . .. the corporation employs in the business throughout the year more than five full-time employees.

Any more employees than five full-time employees must meet the definition otherwise the act would have so specified.

The taxpayer did have five full-time employees plus one permanent part-time employee, as well as additional part-time employees during the 1984 and 1985 taxation years.

The question to be resolved by this Court is does “more than five full-time employees" mean "six or more full-time employees” within the provisions of subparagraph 125(7)(e)(i).

The taxpayer claims it does not and that it should not be taxable in 1984 [later conceded by the taxpayer and dismissed] and 1985 as a specified investment business.

This letter bears an illegible signature for the taxpayer's president, but the Court knows it to be that of J. Barry Hughes who was also, at all material times, the taxpayer's solicitor. Mr. Hughes however, did not write the letter, Exhibit 1, in his capacity as such solicitor.

In the well-known text book The Law of Evidence in Civil Cases, Butterworths & Co. (Canada) Ltd. 1974, by Sopinka and Lederman, it is stated at the beginning of chapter 4, page 355-56:

Formal admissions made for the purpose of dispensing with proof at trial are conclusive as to the matters admitted. As to these matters other evidence is precluded, but, if such evidence is adduced the court is bound to act on the admission even if the evidence contradicts it. A formal admission should be distinguished from an informal admission. The latter is admitted into evidence as an exception to the Hearsay Rule and does not bind the party making it, if it is overcome by other evidence.

A formal admission may be made: (1) by a statement in the pleadings or by failure to deliver pleadings; (2) by an agreed statement of facts filed at the trial, (3) by an oral statement made by counsel at trial, or even counsel's silence in the face of statements made to the trial judge by the opposing counsel with the intention that the statements be relied on by the judge, (4) by a letter written by a party's solicitor prior to trial, (5) by a reply to a notice to admit facts. A formal admission of fact, as distinct from an admission of law, cannot be withdrawn except with leave of the court or the consent of the parties in whose favour it was made. An admission relating solely to a question of law, on the other hand, may be withdrawn at any time, even in the Court of Appeal. Leave to withdraw an admission should not be granted, however, unless the admission was made clearly without authority or by mistake.

It will be noted that a formal admission may be made ”. . (4) by a letter written by a party's solicitor prior to trial. . . .”

Here is how this issue specifically arose. A tax consultant, one Sam T. Yuar, wrote to the plaintiff’s chief of appeals on the letterhead of a firm of chartered accountants (among whom he is not listed) on January 14, 1988. Within that letter, Exhibit 3, the tax consultant wrote this on the defendant's behalf:

Within this context, I interpret the laid-down requirement of "five" full-time employees to mean that all five be working full-time. Since the situation we have here certainly meets this test, the addition of any part-time help is very definitely more than five and meets the legislative intent.

In regard to this putative interpretation of a question of law, the local office in Winnipeg posed the question to Head Office Appeals Branch and in doing so paraphrased Mr. Yuar's contentions. Such memo was not exhibited, but the Court draws the inference from what follows.

Thus, on May 11, 1988, a memo, Exhibit 15, was received in the Winnipeg district office from Ottawa in which the following sentence appears in the second paragraph in which the writer sets out the legal issue:

The representative [i.e. Sam Yuar] is of the view that the taxpayer meets this test [in subparagraph 125(7)(e)(i) of the Act] since it employed five full-time employees plus part time help.

In our view, the test has not been met since the taxpayer employed only five full-time employees.

So far, this is correspondence within the plaintiff's organization. In any event, the first above quoted statement is surely attributed to the defendant's "representative", Yuar, and the Court holds that the second statement has the same basic origin, shown in its grammatical construct.

Finally on June 17, 1988, the plaintiff, through its Winnipeg district office wrote to the defendant's representative, Sam Yuar, Exhibit 4, giving the response to the February 1988 request for a legal opinion from head office, saying: "Their reply is enumerated [sic] in part below.”

It is our opinion that the test requires more than five employees employed full-time. Perhaps the legislation might be clearer if it read "at least six or more full-time employees". In our view, the test has not been met since the taxpayer employed only five full-time employees.

The above quoted statements do not constitute an unpleaded admission. They both take up the representative's own assertions quoted in Exhibit 3 and recited above. Both mention, in effect, what Mr. Yuar asserted, and which were then directed back to him in Exhibit 4. Both repeat Mr. Yuar’s own grammatical construct: "Since [the taxpayer employed]. . . ." No one thought to reword, or individualize the statement by saying “because. . .”, but the defendant's officials slavishly repeated "since. . .” from Mr. Yuar's letter, Exhibit 3.

The Court concludes that any admission contained in the letters, especially Exhibit 4, addressed to the defendant's representative, is unconscious or inadvertent, and was never intended to constitute an admission for the purpose of litigation. Such alleged admission was not subsequently pleaded in the Tax Court nor asserted in the taxpayer's statement of defence in this Court. The defendant's letter to Mr. Yuar was not formulated by the defendant's solicitors. Finally evidence was led by the plaintiff, in contemplation of its amended statement of claim, paragraph 8, formally denied but without any averment of an admission, in the statement of defence. Certainly, the Court holds, the taxpayer as defendant was never misled by the plaintiff’s inadvertent phraseology, but rather held it out as a target of opportunity at trial, no discoveries having been held by the parties prior to trial. It is not a genuine issue which the defendant's counsel has raised, and the Court adjudicates it adversely to the defendant. The plaintiff is, then, free of any such admission as alleged on the defendant's behalf.

The first enumerated issue to be resolved for the parties is exactly that which the defendant alleges the plaintiff had admitted: was the defendant's president and director, Joseph Barry Hughes, a full-time employee of the defendant within the contemplation of subparagraph 125(7)(e)(i) of the Act? This issue is raised by the pleadings, including the learned Tax Court Judge’s reasons which the defendant adopts in and into its statement of defence in paragraph 5, thereof.

The Court concludes that Mr. Hughes was not, in the year 1985, a full-time employee of the defendant, the taxpayer. There is no point in attempting to distort the meaning of such simple clear words as "a full-time employee". So, ne was not the fifth such employee.

Mr. Hughes was the taxpayer corporation's president. For the purposes of the Act, by Part XVII, in subsection 248(1), “employee” includes officer, that is, president. So nothing prevents the president from being an employee, according to the Act's own text. The question, which the Court resolves in the negative, is whether he was "a full-time employee".

In preparation for this trial de novo the plaintiff obtained the defendant's telephone service records for 1988, Exhibit 11. Mr. Hughes in cross-examination (transcript: pages 49, 50, 57 and 58) in effect, and without too much hedging, if any, indicated that to the best of his very vacant memory about the matter, his telephone communications with the defendant's property manager in Brandon would have been — in effect, were — much the same in 1988 as in 1985. So said the defendant, by its manager, to a servant of the plaintiff. As Mr. Hughes acknowledged, the Manitoba Telephone System records speak for themselves. The Court acknowledges that Mr. Hughes’ inability to recall in detail the events of his activities on the taxpayer' service back in 1985 seems quite normal; it would be remarkable, if not downright suspicious, if he could recall them in detail.

Philip Gary Halprin, (Halprin), an auditor for the MNR (taxation), a servant of the plaintiff, testified on the matter of the incidence of telephone calls from Mr. Joseph Perry, the defendant’s manager in Brandon to Mr. Hughes at his law firm in Winnipeg. This evidence is not reliant on fallible memory, but on documents created at the material times.

Halprin notes that 222 calls were logged from the plaintiff's telephone in Brandon to Mr. Hughes’ law office in Winnipeg, for a total time of 796 minutes for the year 1988, which was the near equivalent of 1985. Of those 222 telephone calls, 142 were of one minute or less in duration. So 80 calls exceeded one minute in duration, and they took a total time of 654 minutes. This time period amounts to a shade under 11 hours for the year. Halprin took note of the telephone service charges for long distance calling levied by Manitoba Telephone System (MTS) over each year from and including 1985-88 and found that they were increasing in amount of money charged by MIS from the plaintiff (transcript: pages 109-12).

Halprin was able to find and record the period from Mr. Hughes' telephone at his law firm in Winnipeg to the plaintiff's telephone in Brandon charged to the plaintiff's account, as seen in Exhibit 11, page 541. Halprin went through the statements which Mr. Hughes provided and tried to detail the number of telephone calls wherever possible, but most entries had just a dollar amount. For 1985, the records were available only from July to December. The total cost of that long-distance telephone service was $48.72, for calls made by Mr. Hughes to, or on behalf of the defendant. In succeeding years (for purposes of extrapolation) the same kind of telephone charges were: 1986—$206.09; 1987—$452.15; 1988— $276.15; and 1989—$473.42. Halprin explained, as recorded in the transcript at pages 112-15, that taking into account the rates charged and noting that the first minute costs more, plus seven per cent provincial sales tax, he calculated 759 minutes, or 12.65 hours in 1988 which is equivalent to 1985, the material time herein.

Now Halprin made some speculative calculations about this business by telephone, and the Court reminds the reader that he was not called as an expert witness and his conclusions must therefore meet the standard of the kind of common sense which the Court itself would apply to the facts, or they must be utterly disregarded. The Court finds that Halprin’s conclusions to be consonant with common sense, and therefore quite acceptable, because reasonable.

The distance between the cities of Brandon and Winnipeg is about 201 km, and so here is Halprin's testimony, revealing his reasoning, taken from page 116 et seq. of the transcript:

. . . perceived it to be difficult for Mr. Hughes to be in full-time occupation in his law practice in Winnipeg, and in full-time employ of a company in Brandon 125 miles away, and the travel time in between made it difficult, so I could conceive the telephone calls as being one possible way for him to have come up with a number of hours.

407 Q. And other than just your own deductive process, was there any other reason you might have thought this?

A. I just in talking to Mr. Perry, he suggested that he talks to Mr. Hughes on the telephone.

408 Q. Let's go to the first page then on Exhibit 11. “The taxpayer's manager, Mr. Perry, explained that Mr. Hughes calls the company in Brandon about the same length of time the company calls him.” Okay. "Total number of telephone calls made by the company to Mr. Hughes in 1988, 222." The next line, "Number of calls that were one minute that were probably unsuccessful in contacting Mr. Hughes.”

A. There were [sic] usually another longer telephone call on the same day also billed by Hughes & Co. So, I concluded that the first phone call he got the receptionist, Mr. Hughes was talking to a client, Mr. Hughes was on the phone, and he called back half an hour, an hour, two hours later and got Mr. Hughes that same day.

Q. So what have you done with 142 calls then?

A. I assume that that 142 minutes of calls were unsuccessful. It was Mr. Perry talking to the receptionist, leaving a message and I simply deducted them from the number of calls to come up with 80 minutes [sic] of calls that were over one minute long, 80 . . . calls, successful telephone calls, where Mr. Perry had discussed something —. . .

411 Q. Okay. What was the duration of those 80 calls, we know the duration of 142 one- minute calls was 142 minutes, what was the duration of the 80 calls.

A. That was 654 minutes, 10.9 hours, just under 11 hours. Okay, and now the 12.65 hours, I seem to remember hearing that figure from —412 Q. When Mr. Hughes was calling on the company business.

A. Page 541.

Q. Yes, 541 at the bottom of the column for 1988, 12.65 hours. What do you do with those two figures?

A. I looked at those two figures, and then I said for someone to make a telephone call, they have to think of what they are going to be talking about beforehand, think about what they are going to be talking about after it, and then I just said well, how many telephone calls were made? The company made 80 telephone calls to him, I said he made the same number of telephone calls to the company, so, multiply [sic] 80 plus 80 is 160 telephone calls. And then I said, say one sixth of an hour would have to be time that Mr. Hughes would be sitting thinking about what he said on the telephone, thinking about what he is going to say on the telephone before he picks up the telephone to make the telephone call, because it is long distance. And I came up with an estimate of 26.7 hours of thinking time done by Mr. Hughes before, and after each of the successful telephone calls. I then added that to the amount of the length of time of the telephone calls, and came up with fifty and one quarter hours a year spent by Mr. Hughes on these telephone calls.

414 Q. And that is the calls going both ways?

A. That is the calls going both ways.

415 Q. Now, you have another number down at the bottom of the page?

A. This is the [alternative] estimate where assuming that all of the one-minute telephone calls made by Hughes & Co. Holdings were successful, and had contacted Mr. Hughes, then the total time of those calls would have been thirteen and one quarter hours. The calls made by Mr. Hughes to the company remains the same at 12.65 hours, and then the time Mr. Hughes had to think about a telephone call, well suddenly there were 222 calls each way, times ten minutes per call thinking time before and after, to give us 76 hours of thinking time and that comes up to 100 hours a year. I think it is 101 and some decimal hours a year.

The defendant's counsel’s cross-examination of Halprin established that the witness had no information or material to show what Mr. Hughes did, if anything, of a time-consuming effort apart from, but as a follow-up on, those telephone calls. Nor did Mr. Hughes provide any such information when called in rebuttal. His brief and only testimony was to the effect that he had, as shown, called the defendant from Honolulu while he was on vacation, and he testified ”. . . it gives an indication of the fact that even on holiday, I was involved in the company's business”. So much for the rebuttal of Halprin’s oral and documentary evidence.

The Court regards Halprin's testimony to be reasonable, if not somewhat generous especially in the alternative, and quite credible. It is true that Mr. Hughes testified that he was sometimes called at his home, evenings and weekends by the plaintiff's Brandon manager, but he could not quantify those calls or their duration, and he did not assert any grand estimation, so the Court concludes that they are just more than negligible, enough to be remembered in testimony. In conclusion, it appears that Mr. Hughes was truly engaged for 10.9 hours of counted incoming substantive telephone calls and for 12.65 hours of outgoing calls, for a total of 23.55, say 23 '/2 hours of telephone time in 1988 (like unto 1985) in the taxpayer's employ. That count ought to be arbitrarily rounded up to 28 hours to account for the just more than negligible amount of time taken by telephone conversations at home and on vacation.

Now the alternative count, assuming some substance to the one-minute, or less than one-minute calls — that which Mr. Hughes himself did not assert — was 101 hours, similarly rounded up to 105 hours. The Court does not find any good reason to accept the greater time calculation, given Mr. Hughes’ opportunity to testify in rebuttal; and so, finds the true telephone time count to be 28 hours in the year.

Mr. Hughes also visited the defendant's office in Brandon from time to time in order to confer with Joe Perry, the property manager, or to speak with the defendant's principal tenant, Doigs—the department store proprietors. Mr. Hughes testified, with some vagueness, that he visited Brandon from time to time, on average in 1985, he could not say (transcript: page 49) and he was unable to estimate now long he spent on inspections or in conversation with Mr. Perry, the property manager (transcript: pages 66-74), and the time he spent remonitoring the end-of-the-month expense statements was ”. . . not a great deal . . . half an hour tops" (transcript: page 76).

There is no doubt that Mr. Hughes spent some time as the plaintiff's principal officer and employee. His visits to Brandon were frequently timed according to the travelling in western Manitoba he undertook for one of the major clients of his law practice as he is recorded as testifying on page 41 of the transcript. When Mr. Hughes’ working time for the taxpayer is all added up for 1985, it comes to part- time, not full-time. He was not even engaged on commercial lease renewals in 1985.

Additionally, the annual honorarium of $8,250 (on which he overdrew in 1985) paid to Mr. Hughes for his services falls far below full-time remuneration, indeed far below what the statisticians regard as the poverty line, a concept of which the Court may take judicial notice. Mr. Hughes paid back the overdraft. It takes some boldness to try to persuade this Court that a practising lawyer who is paid $8,250 per year to perform employment services is a full-time employee, unless he is donating sums not paid, which the employer ought to have taken into revenue for the year. (Transcript: pages 38-39.)

Mr. Hughes, during all of 1985, was practising law full-time in and with the Winnipeg law firm of which he was a senior partner. Such practice was the central activity of his earned income. He could not say how many hours per week he invested in his practice (transcript: pages 36-37) nor did he produce any account of his billable hours, nor his gross or net income from his practice of law. There is no doubt, however, that he testified to being a full-time lawyer as recorded in the transcript at page 35, lines 13-15.

The case of Simpson v. Toronto Factory Properties Ltd. (1974), 4 O.R. (2d) 357, 48 D.L.R. (3d) 48 (Ont. H.C.), was cited for the defendant. It stands for the undoubted proposition that a full-time employee can also be engaged in other part-time employment, and not for the proposition that one person can simultaneously be two full-time employees. The latter proposition, not established in the Simpson case is not impossible of achievement for someone who "moonlights" at a second job and who works at least 16 hours per day, but Mr. Hughes obviously was not such a one, “workaholic” lawyer though he professed himself to be. The case of Taylor v. M.N.R., [1988] 2 C.T.C. 2227, 88 D.T.C. 1571, simply confirmed that an officer of a corporation is to be considered to be its employee, but it does not really deal with paid or unpaid, full-time or part-time employees, as could throw much useful light on the contentions at hand. A A third case, cited for the taxpayer corporation, exists in the realm of criminal law Rex v. Shenowski, [1932] 1 W.W.R. 192, 40 Man. R. 218 (Man. K.B.). Mr. Justice Dysart expressed the law in a way, which, by direct analogy operates against the defendant taxpayer's contentions. It will be examined later herein.

In its quest for a hopefully favourable definition of “full-time” employment, the defendant had resort to volume 17A of Words and Phrases, West Publishing Co., St. Paul, Minnesota, in the United States of America. It runs:

Phrase “full-time employment” does not mean full-time pay but means being available for full employment, and “full employment" does not mean a hand at the helm throughout the entire voyage but means standing by to take over when the exigencies of the passage require application of skill acquired over many journeys of the past. Harlan v. Washington Nat. Ins. Co., 130 A.2d 140, 143, 388 Pa. 88.

This quaint nautical parable must mean “standing by” aboard the vessel in question: its context clearly does not mean “standing by” while putting in a full watch or shift at the helm of another more or less distant vessel!

The analogy is imperfect for Mr. Hughes was not standing by in order to steer a vessel, but rather, to give advice and directions by telephonic communication. Such an imperfect analogy cannot be “boot-strapped” into a meaningful argument in the present circumstances.

Mr. Hughes was at the material times a "workaholic" barrister and solicitor — an undoubtedly full-time practising lawyer or perhaps a more-than-full-time practising lawyer. The other services which ne rendered to the taxpayer were not such as one pursues as full-time employment either in terms of time invested or remuneration received.

The plaintiff also resorts to the definition of the expression “full-time”, found in three other sources of authoritative dictionaries:

The Oxford English Dictionary, 2nd ed. 1989, Clarendon:

Full time. The total number of hours normally allotted to daily or weekly work, etc. Chiefly attrib. (hyphened) and advb., esp. in sense that occupies all one's time, that engages one to the exclusion of other activities.

Webster's Ninth New Collegiate Dictionary:

Full-time. employed for or involving full time (—employees) (—work)

Full time: the amount of time considered the normal or standard amount for working during a given period.

Dictionary of Canadian Law, Dukelow & Nuse, Carswell:

FULL-TIME BASIS. In relation to an employee of a particular class, means engaged to work, throughout the year, all or substantially all of the normally scheduled hours of work established for persons in that class of employees.

FULL-TIME EMPLOYEE. An employee whose regular work week exceeds thirty hours.

FULL TIME EMPLOYMENT. var. FULL-TIME EMPLOYMENT. 1. Employment requiring continuous service in an office or position, where the employee is normally required to work the minimum number of hours prescribed by the person having authority to establish the hours of such employment. 2. . . . [public service]. . . .

The Court finds that Mr. Hughes' employment with the taxpayer corporation was not full-time within the meaning of that adjectival phrase revealed in the above cited reasonable and authoritative sources. The defendant's assertion of the meaning of full-time usurps the meaning of "part-time". Dukelow & Nuse, in their cited work, give full meaning to the adjectival expression part-time employee:

1. A person employed for irregular hours of duty or for specific intermittent periods, or both, during a day, week, month or year and whose services are not required for the normal work day, week, month or year, as the case may be. 2. A person who is regularly employed to work less than the full number of working hours in each working day or less than the full number of regular working days in each month.

That is just what describes Mr. Hughes' employment with the defendant corporation. He was employed to work "for irregular hours of duty": his services were "not required for the normal work day, week, month or year": he was regularly employed to work fewer than the regular working hours of each working day, if indeed his services were performed each and every day. Parliament expressed the term “full-time employee” in the ordinarily understood use of the words.

Therefore, Mr. Hughes was not a “full-time employee” of the taxpayer within the meaning of subparagraph 125(7)(e)(i) of the Act. This resolves the first enumerated matter of contention between the parties.

The second enumerated matter of contention, the last remaining one, the third one having already been disposed, is how many employees does it take to comply with the exemption from being "a specified investment business” in contemplation of subparagraph 125(7)(e)(i)?

In view of the finding that Mr. Hughes was not a full-time employee, this matter could be avoided entirely because the parties acknowledge that, on the uncon- troverted evidence the taxpayer corporation employed only four full-time employees, without Mr. Hughes being so characterized and counted among the full- time employees. Four full-time employees do not constitute a sufficient number for the exemption accorded in subparagraph 125(7)(e)(i). However, lest an appellate Court conclude, on appeal, that Mr. Hughes was, in fact, a full-time employee, it behooves this Court to make a determination of this second matter of contention presented by the parties, in order to avoid the risk of renewed litigation. The matter is already before this Court at this time.

The statutory provision prescribes that “the corporation employs in the business throughout the year more than five full-time employees”. The defendant's view of this is that Parliament really meant to express the notion of "employment" in a fluid-measure sense, like "more water", "more wheat”, or indeed “less water" or "less wheat, oats, barley" and so on, instead of meaning individual employees. The defendant's view seemed to be that one could have "more than five full-time employees” by supplementing, complementing or "topping up" the five with a few part-timers. That might well produce more employment than that needed for more than five full-time employees, but that is not what Parliament meant as this Court construes subparagraph 125(7)(e)(i). The statutory phrase yields its (quite transparent) meaning by keeping all the words and introducing no new ones, but by re-arranging the word order, thus “full-time employees, more than five". It means more full-time employees than five [full-time employees]. The subject matter bears no reference to any employees other than full-time employees: it does not even contemplate part-time employees.

A most telling judicial interpretation of the same construction, but in a different subject matter, was performed by Mr. Justice Dysart in the Shenowski case, supra, cited by the defendant. He was construing the 1931 version of section 750 of the Criminal Code, which provided that:

(a) if a conviction or order is made more than 14 days before a sittings of the court to which an appeal is given, such appeal shall be made to that sittings; but if. . . .

Now, it having been established in this case that subparagraph 125(7)(e)(i) does not even contemplate a part-time employee, much less a part or fraction of an employee, it is instructive to note how Dysart J. construed the above-recited paragraph 750(a) of the Code at pages 193-94 (W.W.R.):

The phrase "more than 14 days before?' has been held by Supreme Court of Nova Scotia to mean at least 15 clear days: Rex v. Johnston (1908), 42 N.S.R. 537, 13 C.C.C. 179 (N.S.C.A.); and there is no authority cited to me, or known to me, which is at variance with that decision.

It follows that the phrase “14 days before the sittings" means 14 whole days exclusive of any part of the day of the sittings; and that, because there are no fractions of days “more than 14 days” must mean at least 15 whole days.

So it is here mutatis mutandis. Subparagraph 125(7)(e)(i) could have been more felicitously phrased to state "no fewer than six full-time employees” or “at least six. . .”, for that is exactly what it means. More full-time employees than five full- time employees always means "no fewer than six” or “at least six". The word "more" modifies “full-time employees" understood. One cannot “top up” five full-time employees with a few part-time employees to fill the statutory quota.

Thus even if Mr. Hughes were the fifth full-time employee that would have been of no comfort or use to the taxpayer, for the subparagraph exacts "more than five full-time employees”, not just five. It exacts six, at least. Thus is the second enumerated matter of contention between the parties resolved.

All of the matters of contention are resolved herein, and without any joy on the Court's part, resolved against the defendant taxpayer. The plaintiff's action on appeal is allowed with costs.

In accordance with Rule 337(2)(b), the Court now indicates that the plaintiff's solicitors may prepare a draft of an appropriate judgment to implement the Court's conclusions and, if the defendant's solicitors accord their approval as to form, may submit it for signature. If, as is their right, the defendant's solicitors decline such, or any, approval, the plaintiff may move for judgment accordingly.

Appeal allowed.