Bhatti v. M.N.R., docket 97-1155-UI

Date: 19980417

Docket: 97-1155-UI

BETWEEN:

KULBIR KAUR BHATTI,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

(Delivered orally from the Bench on January 14, 1998, at Vancouver, British Columbia)

MARGESON, J.T.C.C.

[1] The matter before the Court for decision at this time is that of Kulbir Kaur Bhatti and The Minister of National Revenue, 97-1155(UI).

[2] The sole question before the Court is whether or not the Appellant was engaged in insurable employment under the Unemployment Insurance Act (the Act), while allegedly employed by Sahota Farms during the period from July 3, 1995, to November 11, 1995, the period in question.

[3] Evidence was given in the matter by Kulbir Kaur Bhatti, who basically said that she worked the period in question. She came to Canada in 1986 and worked for Sahota Farms in 1987. She worked for it for 10 to 11 years, from 1987 to 1997. In 1995, the year in issue, she started on July 3, 1995 and worked until November 11, 1995. She was paid $500 a week.

[4] She described a wide range of duties which she was supposed to perform. There was no great specificity as to what she was to do but, needless to say, the duties that she outlined were considerable and included the following: driving the tractor and trowelling; hoeing and digging; punching time cards; supplying flats; taking water out to the fields; picking corn and peas; supplying pea boxes; driving the corn wagon; delivering broccoli to the processing plant; helping with the cauliflower and picking berries. She basically said that she did anything, anywhere.

[5] One would expect that in a situation where one is hired as an employee that there would be a certain amount of specificity to her duties. However, the Appellant's position was that she did all of these things and she was expected to do so. She worked 50 or 60 hours a week.

[6] She worked in 1995 all during the period in issue. At some point in time she said that she realized that other people were working as contractors of farm labour and she believed that there was a benefit for her to get involved and that is why she started her business. She talked to her husband and in spite of the fact that her husband did not appear to be too keen on the idea because there was too much risk, she went ahead and did it anyway. She then hired her husband to manage the labour contracting business. But it was her business, it was her licence.

[7] She said that her husband did the management work while the Appellant continued to work outside and indeed worked, she says, for the alleged employer here under a contract of service during the period in issue.

[8] It was her husband who hired Gurpal Sahota on July 10, 1995, that is the party with whom the exchange of work was alleged to have taken place. The periods during which Gurpal Sahota worked and the periods during which the Appellant worked were very close. They were not exactly the same, but they were very close to each other and the amount of time that each worked was fairly close, three weeks in the difference. The pay was $400 for Ms. Sahota and $500 for Ms. Bhatti, which was very close to the same amount.

[9] Ms. Bhatti was asked why she did not work for herself when she was working for Sahota Farms and she said that she was receiving $500 from Sahota Farms and her business only had to pay Ms. Sahota $400. That was the only reason she gave as to why she would work for another business when she was in business herself. She also said that Sahota Farms found her to be a valuable employee and they did not want to let her go. Further she said that Ms. Sahota could not do the work that she did.

[10] That was her evidence in direct.

[11] In cross-examination she confirmed that she started working on July 3, 1995 and worked until November 11. The farm was operated by Ms. Sahota, who gave testimony. She described what work Bhatti Labourers performed and that was the supply of labour to various farms. There was no doubt that there was a major contract with Sahota Farms during the year in question, a considerable amount of money was allegedly paid by Sahota Farms to Bhatti Labourers for the supply of labour during that year. A considerable portion of the total income of Bhatti Labourers during that year certainly came from Sahota Farms.

[12] She ran Sahota Farms but she was not hired by Bhatti Labourers to work on Sahota Farms, that was the thrust of her evidence.

[13] It was confirmed that Ms. Sahota started work on July 10, 1995 and worked to about November 14. The period of her work was basically one week different from the period of work during which the Appellant was supposed to have worked for Sahota Farms.

[14] Ms. Bhatti said that she did not work for her company at all. She worked outside. She did do some work at home. Her husband managed her business. He supervised the employees and she was paid $500 a week when she worked at Sahota Farms.

[15] Her evidence was that Bhatti supplied approximately eight labourers to Sahota Farms during the period in issue although she was not sure about that. The labour was worth a lot of money but she was not sure exactly how much, something around $40,000. The labourers supplied by Bhatti to Sahota were paid by Bhatti.

[16] Her position was that she supervised the labourers at Sahota Farms or her sister may have done it. She was paid by Sahota Farms to supervise and that was her work.

[17] Exhibits R-1, R-2, R-3 and R-4 were introduced by consent. Exhibit R-2, the Record of Employment (ROE), showed that the Appellant claimed to have worked 20 weeks, from July 3 to November 11. Exhibit R-3 were the cheques signed by Sahota Farms and Exhibit R-4 was also a cheque signed by Sahota Farms. These are of some significance and the Court will deal with those in a moment.

[18] The witness did admit that she received a cheque for $1,035 which was dated May 17, 1995. The evidence indicated that this cheque was issued a considerable amount of time prior to the date when she allegedly started work, which was November 11, 1995. She was also issued a cheque on November 17, 1995, for $4,300. She was also issued a cheque on December 10, 1995 for $2,665. In total, she would have received $8,000.

[19] The T-4 from Sahota showed $10,000 as the amount of her insurable employment. She was expected to receive $7,619.50 net, but she received $8,000, which is a difference of some $380.50. Cheque number 48770, dated November 2, 1995, showed that she paid back to Sahota Farms, $380.50. This apparently was an overpayment of her wages. This was on November 2, 1995, which was actually prior to the date at which she completed her work which was November 11, 1995. This was pointed out to her and she said that it was before she received the bulk of her wages.

[20] In re-direct she said that she did supervisory work at Sahota Farms. There were three other contractors who provided work for Sahota Farms in addition to Bhatti. Sometimes there might be as many as 700 to 800 workers supplied by the various contractors. She did not supervise Ms. Sahota. She did not work on that farm during that period of time under the Bhatti contract.

[21] Gurpal Sahota also gave testimony. She was asked why she had not worked on her own farm and why she worked outside of her farm. Her answer was that she always worked outside because she made less money at home and she liked working outside. She started working the farm in 1988 and she said that Ms. Bhatti worked there since 1987.

[22] Again, she reiterated some of what was said by the earlier witness with respect to the duties of the Appellant: driving the tractor; everything that was required; dealing with other people; talking to people; carrying on communications for others where the witness was not able to do so; delivering products; picking products, things that the witness said she could not do although she was a farm labourer as well.

[23] She said that the farm either owned or leased approximately 200 acres. It grew strawberries, raspberries, cauliflower, corn, peas and broccoli. She worked in 1995. She was paid $400 a week. She worked at the Apple Farm basically. She pulled weeds, she did pruning. She did not work for Sahota Farms under the Bhatti contract.

[24] In 1996 she did not work outside because the farm apparently made a profit and she did not need to work outside.

[25] In cross-examination she agreed that Ms. Bhatti worked for her farm in 1987, but the witness operated Sahota Farms since 1988 and in 1995. She worked outside and signed the cheques, but basically that is all that she did, even though all the income was claimed by her through her business.

[26] She hired the Appellant in 1995 to act as supervisor on her farm and she contracted Bhatti Labourers to supply labour to her farm.

[27] She was somewhat uncertain about how much money was paid by her farm, Sahota Farms to Bhatti Labourers in 1995, but she basically admitted that it was around $40,000, which was a considerable amount.

[28] She denied that she worked at Sahota Farms during the year in question. She said that she worked for Bhatti Labourers from July 10, 1995 to November 11, 1995, then she said, no, until November 4th. That seemed to be the period of her work up to November 4th. She again reiterated her wages of $400 a week and then indicated that possibly it was an hourly wage, but finally said no, it was $400 a week.

[29] In other evidence, Opinder Singh Bhatti gave testimony. He was a farm labourer contractor. His spouse was the Appellant. He did not start a business because he thought it was too risky and he told his wife that. But then he told her to go ahead, she could go ahead if she wanted to, take the chance and he would manage the business.

[30] He managed Bhatti Labourers. He hired the employees to get the work done. He also tried to find work. He could not sign cheques.

[31] In 1995, on behalf of Bhatti, he hired Ms. Sahota and she worked during the period that was referred to already. He said that she worked the first or second week in July to the first week in November. She worked at Apple Farm mainly. He also gave people work to do in his garden and his house. He had a three-quarter acre garden. It was not clear as to whether Ms. Sahota worked there in the garden or not, but that is not relevant. She was paid $400 a week and she never worked at Sahota Farms.

[32] In cross-examination he said that his wife owned Bhatti Labourers and he managed it.

Argument of the Appellant

[33] In argument, the Appellant's agent said that the Appellant worked during the period in question. She started working for the farm in 1987, for the Payor, thereafter until 1997. She even expects to work in 1998.

[34] During the period in question, July 3, 1995 to November 11, 1995, the Appellant worked as a normal employee with the Payor and was paid $400 a week.

[35] On July 10, 1995, Ms. Sahota was hired by Bhatti Labourers. This was not an exchange of work. They received different amounts. One party, Ms. Sahota, could only work as a labourer. She could not do all the work that the Appellant could do. The Appellant was an employee of Sahota Farms during the period in question. The appeal should be allowed.

Argument of the Respondent

[36] Counsel for the Respondent said that this was not insurable employment. It was not work under a contract of service because it was excepted employment. He referred to paragraph 3(2)(h) of the Act.

(2) Excepted employment is

. . . . .

(h) employment that constitutes an exchange of work or services; and;

. . . . .

[37] He said that that is what we have here. Basically we have an exchange of work and if it was an exchange of work, then it is excepted employment and it is not insurable employment.

[38] The Court has to look at the evidence in light of the purpose of the section. The section is meant to exclude from insurable employment work that is performed where the parties get together and exchange services so that they can obtain unemployment insurance benefits.

[39] In this case, the purpose of Bhatti was to supply farm labour. Bhatti was owned by the Appellant, controlled by the Appellant and managed by her husband. Ms. Sahota was employed by Bhatti, yet she ran a farm and decided to work outside the farm and not work on the farm. This is suspicious.

[40] The remuneration of Ms. Sahota and the Appellant was quite close. The difference was only $100.

[41] The time periods during which the two of them worked were basically the same. There was only a week difference. The time period of work of one was completely included in the work period of the other, although one did not work as much as the other.

[42] The type of work that the parties supplied was basically the same, although there is no doubt that the evidence, if believed, was that Ms. Bhatti did a lot more work or perhaps different work than Ms. Sahota did. In spite of that the job description was remarkably similar.

[43] The work dates of the workers overlapped completely.

[44] There were two businesses. The Appellant was the employer in one case. She and the owner of Sahota Farms, who was the alleged employer in the other case, had businesses. Each worked outside of their respective businesses so that they could qualify for unemployment insurance. That was the purpose of it. This was excepted employment, the appeal should be dismissed.

[45] Counsel quoted a number of cases which are significant. The first one was Lévesque v. Canada (Minister of National Revenue), [1987] T.C.J. No. 430 where the Court said:

The two families involved in the appeal operated two businesses, a farming business and a butcher shop. The farmer worked for the butcher, and the butcher worked for the farmer, for services of equal value. The two wives worked for each other's husbands, for equal value.

. . . . .

The Court found that the periods of work in question were the exact periods the employees needed to qualify for unemployment insurance benefits, and that the alleged employers did not supervise the workers. The Court held that the services rendered were not hired out, but were exchanged, and that if there were employment, it was excepted employment as an exchange of services. Referring to the arrangement as a ruse and not a contract of service, the Court accordingly dismisses the appellant’s appeals.

[46] Counsel for the Respondent said that this case applies to the case at bar and that this Court should follow the decision in that case.

[47] In another case, Anne Gaudet v. The Minister of National Revenue, the Court held that:

The rather coincidental fact that the periods during which each of the women worked for her respective brother-in-law lasted just long enough to make each of them eligible for unemployment insurance benefits -- provided everything else was in accordance with the Act -- does raise the inference that their so-called working periods were intentionally planned by them so as to enable them to apply for insurance benefits.

And further in that case the Court held that:

Given the facts proved, namely, the same amounts for services rendered by Antoine and Omer Lévesque, that is $3,850.00, the amounts for services rendered by Mona and Frances Lévesque, within $9.00 [of each other], the periods of employment that were exactly those required for unemployment insurance benefits, the termination of the employment after these periods and no employment previously, it seems clear to me that this was a ruse by the appellants and not a contract of service.

In the case of Allain v. Canada (Minister of National Revenue), which the counsel for the Respondent also referred to, the Court held that:

The Court reasoned that the appellants entered into this arrangement in order to achieve unemployment insurance benefits they could not have obtained if they had worked for their own husbands, that they were inexperienced workers, and that they were therefore involved in an exchange of services.

[48] Counsel also referred to Cameron v. Canada (The Minister of National Revenue) at page 30:

The Court also notes that the salaries were identical, that the periods of employment were almost identical and that the nature of the work was similar. In addition, there are periods of employment which correspond to the minimum number of weeks of work which the workers had to accumulate in order to be eligible to receive unemployment insurance benefits.

After hearing all the evidence and argument by counsel, the Court finds that, on the preponderance of the evidence, there was an exchange of work and that the appellants' employment is excepted under paragraph 3(2)(h) of the Act.

[49] The appeal should be dismissed and the Minister’s determination confirmed.

Analysis and Decision

[50] In a case of this nature, of course, the Appellant must establish on a balance of probabilities that this was insurable employment. If it were excepted employment, then it was certainly not insurable employment.

[51] The Minister has relied upon the provisions of 3(2)(h) that this was an exchange of work and services. He has set forward in the Reply presumptions of fact or assumptions that he relied upon in making the determination that he did.

[52] There was some evidence given about the nature of the working arrangement, but there was no attempt made to address specifically the references in the Reply. Where they were not addressed, they certainly were not rebutted. Some of those presumptions in the Reply were:

(b) Sahota operates a farm on 250 acres, some of which she owned and some which she leased;

(c) in the Period and in the ten preceding years, the Appellant had been employed by Sahota as a supervisor of Sahota’s farm workers;

(d) in 1995, the Appellant started a business called Bhatti Labourers;

(e) the nature of the Appellant's business was to provide labourers to various farms for a predetermined rate per each worker supplied;

(f) the Appellant engaged her spouse, Opinder Bhatti, to manage Bhatti Labourers;

(g) Sahota was engaged by Bhatti Labourers on July 10, 1995 as a farm worker and was sent to work on her own farm;

That has been disputed and so to that extent the Court does not accept that presumption. The rest of it has fairly well been established.

(h) Sahota was paid $400.00 per week by Bhatti Labourers to work on her own farm under the supervision of the Appellant, who had been hired as a supervisor;

(i) the Appellant was engaged by Sahota on July 3, 1995 and was paid $500.00 per week by Sahota to supervise farm workers, one of whom was Sahota, who were supplied by the Appellant’s own business; and

(j) the employment of the Appellant represented an exchange of work or services between the Appellant and Sahota.

There are some suspicious circumstances with respect to this alleged contract of service.

[53] The Court accepts the argument of counsel for the Respondent that the purpose of Bhatti being established was to supply farm labour and the purpose of the farm, of course, was to produce farm products and to use farm labour.

[54] The Court is satisfied that the remuneration paid to Ms. Sahota, the alleged worker and the Appellant who was the owner of “Sahota” was certainly very similar. There was only $100 difference between the two remunerations.

[55] The time periods during which the two parties worked were very similar. There was only a week difference. The work period of Ms. Sahota certainly was completely included within the period of time during which the Appellant worked. That raises some suspicions.

[56] The job description of the two parties was somewhat similar. It is true that there was some evidence that it was not exactly the same, that Ms. Bhatti did some different work than Ms. Sahota did, but nonetheless, the type of work they did was substantially the same. The evidence showed that the work was similar enough to raise suspicions.

[57] Two businesses were operated, one by the Appellant and one by the party who was alleged to have been involved in a work exchange program. Those businesses were quite similar, at least the work provided was similar. One hired the other to work for the other business during the period in issue.

[58] It is highly suspicious that this was a work exchange program and the Court has to look at the evidence “in toto” in order to decide whether that is the case. The total factual situation is highly suspicious.

[59] On top of that, in this particular case there are some anomalies. For instance, the evidence indicated that the Appellant did indeed receive a considerable amount of her remuneration on November 17 and December 10, 1995. The work period was considerably different than that. There were only three cheques which were issued during the whole period of time although the manner of pay was described as being a weekly salary. The cheques indicated that the pay was received in lump sums, large amounts.

[60] Another anomaly, of course, was the fact that the Appellant wrote a cheque to the purported employer on November 2, 1995 for $380.50. It is strange, first of all, that there would be an overpayment of wages. If a person was being paid $500 a week, one would expect that there would be no problem in deciding how much was owed at any particular point in time. It is even stranger that the Appellant would write a cheque back for what was purportedly an overpayment of her wages on November 2, when she did not even complete her employment until November 11, 1995.

[61] It would be even stranger, that the Appellant, if this was a normal employer/employee relationship, would have received a cheque for $1,035 on May 17, 1995, when her work was not even due to start until July 3, 1995 and she actually was not employed until then.

[62] The Court finds that under the circumstances disclosed by the evidence here, bearing in mind the cases that have been referred to, although the factual situation here is not exactly the same as in those cases, it is not on all fours, those cases and the present case are similar enough to lead the Court to conclude that those cases are quite applicable on the present facts.

[63] Even though the time periods here were not exactly the same and the amounts of pay were not exactly the same, when the Court looks at all of the evidence, gives to the evidence the weight that it deserves, looks at the anomalies which the Court has described, the Court is satisfied that what took place here was an exchange of work or service during the periods of the engagement.

[64] As in the cases referred to, this Court is satisfied that the Appellants entered into this arrangement in order to achieve unemployment insurance benefits for each other, which they could not have achieved had they been working for their own businesses or worked for their own husbands.

[65] In this particular case, of course, both of these workers were experienced workers, not inexperienced workers as they might have been in Allain, supra, but that is not a sufficient difference to find that that case is not applicable to the factual situation here.

[66] The Court finds that on the preponderance of the evidence there was an exchange of work and that the Appellant's employment is excepted under paragraph 3(2)(h) of the Act.

[67] The appeal is dismissed and the Minister's determination is confirmed.

Signed at Ottawa, Canada, this 17th day of April 1998.

J.T.C.C.