Benguaich v. M.N.R., docket 97-366-UI

Date: 19980820

Docket: 97-366-UI

BETWEEN:

MIRIAM BENGUAICH,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Rowe, D.J.T.C.C.

[1]            The appellant appeals from a decision (in the form of a determination) dated December 4, 1996 wherein the Minister of National Revenue (the "Minister") decided the appellant's employment with Trinkets Incorporated from June 9, 1994 to June 8, 1995 was not insurable because she was not dealing at arm's length with her employer nor was she deemed to have been dealing at arm's length pursuant to subparagraph 3(2)(c) of the Unemployment Insurance Act (the "Act").

[2]            Sara Benaim testified she is the President, Director and sole shareholder in Trinkets Incorporated (Trinkets) which she formed in 1980. The corporation carries on the jewellery business and the first store was opened in the Dufferin Mall at Bloor and Dufferin in Toronto. The business grew until there were a total of nine Trinkets retail outlets and the payroll was $220,618.23 in 1991 - Exhibit A-2 - compared to only $24,000 per annum several years later as a result of severe downsizing of the business and closures of outlets as set forth in a list filed as Exhibit A-1. The Head Office of the corporation was located in a premise purchased for that purpose at 150 Spinnaker Way, Concord, Ontario. The appellant is the mother of Sara Benaim. Sara Benaim stated the appellant began working for Trinkets in the outlet located in Dufferin Mall. The Head Office - a strata-title property - was rented out and then sold, at a loss, in 1996. An extract from the financial statement of Trinkets for the year ending September 30, 1990 - Exhibit A-3 - revealed sales of $1,378,791.00, slightly higher than sales for the corresponding period in 1989. The financial statement for 1991 - Exhibit A-4 - showed sales in the sum of $1,071,936.00 while the financial statement for 1993 - Exhibit A-5 - indicated sales had fallen to $800,806.00 from $848,910.00 in 1992. Sales for the year ending September 30, 1994 had declined further and were only $781,211.00 as set forth in the financial statement filed as Exhibit A-6. Sara Benaim stated she hired the appellant in 1981. At that time, the appellant had been working for Bi-Way as a salesperson and cashier. Once employed by Trinkets, the appellant acted as manager of the retail outlet and handled all transactions involving the gold items which had to be weighed, priced and properly recorded on specialized inventory records. Sara Benaim testified the appellant had considerable linguistic skills which permitted her to transact business in several languages and, as a consequence, to develop a loyal customer base. The appellant worked Monday to Friday from 9:30 a.m. to 4:30 p.m. but was required to remain at the store until the work was completed and the part-time help arrived after school was finished for the day. The requirements of operating a store in Dufferin Mall were such that the store had to be open until 10:00 p.m. six days a week, later expanded to seven days a week with closing time amended to 9:00 p.m. While other staff could do much of the work, Sara Benaim explained it was necessary for Miriam Benguaich to do the pricing. The merchandise offered for sale covered a spectrum from $15 chains to $4,000 diamond rings. The Trinkets store was a 200 square-foot kiosk in the middle of the Mall near the Food Court. As a result of the small space and the location, all inventory had to be put away each night and locked in a safe as a precaution and to satisfy requirements of the insurance company insuring various perils. Sara Benaim stated the appellant was paid by cheque every two weeks, "like everyone else". The salary was $700 bi-weekly including a bonus to be paid at year end. Some staff members at that store and at other outlets were paid commissions in addition to wages and others were rewarded with bonuses based on performance which could be taken in cash or in jewellery. One year, the appellant chose an emerald ring as payment of a bonus while another manager chose a watch. The nature of the jewellery business was such that as much as 63% of annual sales occurred during the Christmas shopping season. Many of the staff employed by Trinkets had been there for several years and there was opportunity for flexibility in working hours to accommodate a variety of personal situations. The basic pay was $6.85 per hour which could be supplemented by commissions. An extract taken from payroll records of Trinkets, prepared by Sara Benaim, was filed as Exhibit A-7, and photocopies of pay cheques to the appellant - issued by Trinkets - were filed as Exhibit A-8. As sales declined and it became necessary to reduce expenses, Sara Benaim stated she became more involved in doing the paperwork required to maintain company books and records. The appellant was laid off by Trinkets on June 8, 1995. Sara Benaim stated she had requested the appellant to hold off cashing her pay cheques due to the precarious financial situation facing Trinkets and that other employees were issued post-dated cheques or were paid - much later - salary owing for a particular pay period. However, she stated the appellant was always paid for work done and was never paid for work not done. The appellant was paid a salary - as opposed to an hourly rate - because she worked full time and other employees in the Dufferin Mall outlet were part-time staff who made up their own work schedules. Sara Benaim referred to one employee - Sandy Prescott - who, over a period of 10 years, worked for Trinkets part time, then full time, then part time and again full time. On one occasion, Dolores Massey - a manager at another outlet - had accepted an offer to be paid a weekly salary but she soon discovered the long hours involved - up to 50 hours a week- resulted in lower pay per hour than the basic hourly rate and chose to be paid at an increased rate of $9.00 per hour as recorded in the extract - Exhibit A-9 - taken from the payroll record for October, 1989. Trinkets laid off several employees and the relevant Records of Employment were filed as Exhibit A-10. When Trinkets had operated 9 stores, there were 6 employees, full-time and part-time, for a total of 54. The flexibility in the working schedule was feasible because many employees were mothers with school-age children, others were university students who worked additional hours during the summer months and some people took extended winter holidays. Each store looked after its own staffing schedule under the supervision of Sara Benaim or her father, Isaac Benguaich who was also employed by Trinkets. Sara Benaim stated she remitted the appellant's deductions for unemployment insurance for 14 years and only after the appellant attempted to collect benefits following her layoff did the subject arise on the matter of being related and not at arm's length. In order to demonstrate her point, she related having telephoned - one week prior to the hearing of this appeal - a Revenue Canada office requesting an explanation of requirements for unemployment insurance deductions if a person were related to the employer and she specifically mentioned paragraph 3(2)(c) of the Unemployment Insurance Act. She was told that so long as the related person was not a shareholder she had to remit the deductions for unemployment insurance, Canada Pension Plan and income tax. She stated she maintained records as best she could under difficult circumstances and provided all books and records of Trinkets to the auditor from Revenue Canada as it related to the investigation of the employment of her mother, Miriam Benguaich and later her father, Isaac Benguaich. During the time Trinkets operated its stores, Sara Benaim stated she had paid penalties on various occasions for not having remitted the employee deductions in a timely fashion.

[3]            In cross-examination, Sara Benaim stated the appellant worked, on average, 40 hours per week because, on occasion, she had to stay late and this added to her regular 32.5 hour per week schedule. In 1995, the appellant's hours were reduced and many times she was paid only $700 per month instead of her regular salary of $700 every two weeks and she was also requested to hold off cashing her pay cheques. Sara Benaim stated she would prepare the Trinkets payroll - including calculating the necessary deductions to be remitted to Revenue Canada - and would then examine the state of the company bank account to determine which cheques would clear and some staff were asked to delay negotiating a pay cheque or would be issued a post-dated cheque on pay-day. However, the cheques for her mother, the appellant and her father, Isaac Benguaich, would not be issued in strict accordance with a pay period for hours worked but they would be remunerated in full at a later date. As an example, the appellant was laid off on June 8, 1995 but she received a pay cheque following the pay period ending June 26, 1995 but it was in payment for work done for the two-week period ending January 23, 1995 for which she had not been paid earlier. Sara Benaim explained that between her and her mother they were well aware of the pay periods the appellant had worked for which she had not received payment. As well, due to the pressures of the declining state of the business, there were some inconsistencies in the payroll records. The non interest-bearing demand loan by her father and mother to Trinkets, secured by a mortgage against their home, was made in order to inject capital into the business through a line of credit at the bank and, as shown on the financial statement - Exhibit A-4 - had a balance owing of $43,353.00 on September 30, 1991. The bank had loaned Trinkets the sum of $90,000 and had taken security against inventory together with the pledge of a term deposit. The bank had been owed approximately $200,000 and when it called in the demand loan and the real estate owned by the corporation could not be readily sold in response, it was necessary for Sara Benaim to re-mortgage her principal residence and to rent out the office premises until it could be sold. Later, she was able to repay her parents and it was only in 1990 - when business began to decline - that she had needed to turn to them for financial assistance in the form of a loan.

[4]            Miriam Benguaich testified she is the appellant and has lived in Canada for 35 years. She was born in Tangiers, Morocco. After emigrating to Canada she worked in a factory and then at the Richmond Hill Bi-Way store where she became a manager. Later, in 1981, she began working for Trinkets as manager of the outlet in Dufferin Mall. She stated she " did everything " from pricing, recording inventory to customer service and was alone all day long. She would arrive at work early in order to clean up, open the safe, remove the inventory and display it properly before the arrival of customers once the kiosk was open for business. She spoke English, French and Spanish fluently from childhood and learned sufficient Italian and Portuguese from her customers to enable her to conduct business in the language preferred by the client. All letters from the management of Dufferin Mall intended for Trinkets - examples of which were filed as Exhibits A-11 and Exhibit A-12 - were addressed to her. During the Christmas season she would work 12 hours per day and, although her ordinary work day should have commenced at 9:00 a.m. and ended at 4:00 p.m., she discovered she was unable to leave the store until she was able to finish dealing with certain customers and explaining various matters to the incoming staff member. When she applied for unemployment insurance benefits, the appellant stated she wrote down on the form that she was not related to her employer. During an interview with a Claims Officer shortly thereafter, she advised that Trinkets was owned by a relative. She stated she would hold off cashing a cheque or would not receive the cheque, at all, until much later. However, she was aware of the amount she was owed for wages at any given point and was eventually paid for every hour she had worked. She identified her Application for Unemployment Insurance Benefits - Exhibit R-1. She agreed the Record of Employment - Exhibit R-2 - was not correct in setting out she had been earning the sum of $1,200 every two weeks. Her salary was $700 bi-weekly but was intended to be brought up to the amount declared in the Record of Employment by way of bonuses paid at the end of the year. She stated she regretted she had not completed the Application for Unemployment Insurance Benefits accurately by disclosing her relationship to Sara Benaim. Counsel for the respondent did not object to the filing of the Affidavit of Deanne Kong Ting as Exhibit A-13 or the Affidavit of Sandy Prescott as Exhibit A-14 by way of evidence pursuant to Rule 25(1) of the Tax Court of Canada Rules respecting Unemployment Insurance Act appeals.

[5]            Counsel for the respondent did not cross-examine or call any witnesses.

[6]            Counsel for the appellant submitted it was evident the Minister had not considered relevant facts in arriving at the determination. The duration of employment - 14 years - was not properly taken into account and there was ample evidence to support the position that the appellant was always treated as an ordinary employee, albeit in a managerial position, and the Minister failed to take into account the valid reasons for the appellant having been paid a monthly salary as opposed to an hourly rate for the part-time staff who worked irregular hours, mostly of their own choosing. As well, counsel pointed to the importance of the work performed by the appellant and her linguistic skills which were of great advantage to the employer in selling jewellery. In addition, counsel submitted the lay off of the appellant was caused by a severe economic downturn and the employment of many other employees of Trinkets was also terminated.

[7]            Counsel for the respondent referred to the interest-free loan to Trinkets which had been made by the appellant and her husband, Isaac Benguaich. The appellant's Record of Employment completed by Ruth Soussan - sister of Sara Benaim and mother of the appellant - on behalf of Trinkets reported insurable earning of $1,200 every two weeks which was not correct and a non-related worker would not have received such a document. Counsel submitted there were inconsistencies in the payroll records but it was apparent other workers had been paid regularly and there was no valid reason for the appellant to have been paid a salary when all non-related employees were paid on an hourly basis. Counsel concluded by submitting the decision should be affirmed.

[8]            The relevant provision of the Unemployment Insurance Act is paragraph 3(2)(c) which reads as follows:

                                "(2) Excepted employment is

                                ...

                                (c)            subject to paragraph (d), employment where the employer and employee are not dealing with each other at arm's length and, for the purposes of this paragraph,

                                                (i)             the question of whether persons are not dealing with each other at arm's length shall be determined in accordance with the provisions of the Income Tax Act, and

                                                (ii)            where the employer is, within the meaning of that Act, related to the employee, they shall be deemed to deal with each other at arm's length if the Minister of National Revenue is satisfied that, having regard to all the circumstances of the employment, including the remuneration paid, the terms and conditions, the duration and the nature and importance of the work performed, it is reasonable to conclude that they would have entered into a substantially similar contract of employment if they had been dealing with each other at arm's length ..."

[9]            On the matter of the exercise of ministerial discretion pursuant to paragraph 3(2)(c) of the Act, Chief Justice Isaac in Attorney General of Canada v. Jencan Ltd., (1997) 215 N.R. 352, a decision of the Federal Court of Appeal, at p. 363 and continuing, stated:

"The sheer number of appeals from ministerial determinations made pursuant to subparagraph 3(2)(c)(ii) since the Tignish decision suggests that the law requires further clarification. For this reason, I set out below the principles which may fairly be derived from the authorities in this court with respect to subparagraph 3(2)(c)(ii).

The decision of this Court in Tignish, supra, requires that the Tax Court undertake a two-stage inquiry when hearing an appeal from a determination by the Minister under subparagraph 3(2)(c)(ii). At the first stage, the Tax Court must confine the analysis to a determination of the legality of the Minister's decision. If, and only if, the Tax Court finds that one of the grounds for interference are established can it then consider the merits of the Minister's decision. As will be more fully developed below, it is by restricting the threshold inquiry that the Minister is granted judicial deference by the Tax Court when his discretionary determinations under subparagraph 3(2)(c)(ii) are reviewed on appeal. Desjardins, J.A., speaking for this Court in Tignish, supra, described the Tax Court's circumscribed jurisdiction at the first stage of the inquiry as follows:

Subsection 71(1) of the Act provides that the Tax Court has authority to decide questions of fact and law. The applicant, who is the party appealing the determination of the Minister, has the burden of proving its case and is entitled to bring new evidence to contradict the facts relied on by the Minister. The respondent submits, however, that since the present determination is a discretionary one, the jurisdiction of the Tax Court is strictly circumscribed. The Minister is the only one who can satisfy himself, having regard to all the circumstances of the employment, including the remuneration paid, the terms and conditions and importance of the work performed, that the applicant and its employee are to be deemed to deal with each other at arm's length. Under the authority of Minister of National Revenue v. Wrights' Canadian Ropes Ltd., contends the respondent, unless the Minister has not had regard to all the circumstances of the employment (as required by subparagraph 3(2)(c)(ii) of the Act), has considered irrelevant factors, or has acted in contravention of some principle of law, the court may not interfere. Moreover, the court is entitled to examine the facts which are shown by evidence to have been before the Minister when he reached his conclusion so as to determine if these facts are proven. But if there is sufficient material to support the Minister's conclusion, the court is not at liberty to overrule it merely because it would have come to a different conclusion. If, however, those facts are, in the opinion of the court, insufficient in law to support the conclusion arrived at by the Minister, his determination cannot stand and the court is justified in intervening.

                In my view, the respondent's position is correct in law...

In Ferme Émile Richard v. M.N.R., this Court confirmed its position. In obiter dictum, Décary J.A. stated the following:

As this court recently noted in Tignish Auto Parts Inc. v. Minister of National Revenue, July 25, 1994, A-555-93, F.C.A., not reported, an appeal to the Tax Court of Canada in a case involving the application of s. 3(2)(c)(ii) is not an appeal in the strict sense of the word and more closely resembles an application for judicial review. In other words, the court does not have to consider whether the Minister's decision was correct: what it must consider is whether the Minister's decision resulted from the proper exercise of his discretionary authority. It is only where the court concludes that the Minister made an improper use of his discretion that the discussion before it is transformed into an appeal de novo and the court is empowered to decide whether, taking all the circumstances into account, such a contract of employment would have been concluded between the employer and employee if they had been dealing at arm's length.

Section 70 provides a statutory right of appeal to the Tax Court from any determination made by the Minister under section 61, including a determination made under subparagraph 3(2)(c)(ii). The jurisdiction of the Tax Court to review a determination by the Minister under subparagraph 3(2)(c)(ii) is circumscribed because Parliament, by the language of this provision, clearly intended to confer upon the Minister a discretionary power to make these determinations. The words "if the Minister of National Revenue is satisfied" contained in subparagraph 3(2)(c)(ii) confer upon the Minister the authority to exercise an administrative discretion to make the type of decision contemplated by the subparagraph. Because it is a decision made pursuant to a discretionary power, as opposed to a quasi-judicial decision, it follows that the Tax Court must show judicial deference to the Minister's determination when he exercises that power. Thus, when Décary J.A. stated in Ferme Émile, supra, that such an appeal to the Tax Court "more closely resembles an application for judicial review", he merely intended, in my respectful view, to emphasize that judicial deference must be accorded to a determination by the Minister under this provision unless and until the Tax Court finds that the Minister has exercised his discretion in a manner contrary to law.

If the Minister's power to deem "related persons" to be at arm's length for the purposes of the UI Act is discretionary, why, one might ask, does the right of appeal to the Tax Court under section 70 apply to subparagraph 3(2)(c)(ii) at all? The answer is that even discretionary powers are subject to review to ensure that they are exercised in a judicial manner or, in other words, in a manner consistent with the law. It is a necessary incident of the rule of law that all powers granted by Parliament are of an inherently limited nature. In D.R. Fraser and Co. Ltd. v. Minister of National Revenue, Lord Macmillan summarized the legal principles which ought to govern such review. He stated:

The criteria by which the exercise of a statutory discretion must be judged have been defined in many authoritative cases, and it is well settled that if the discretion has been exercised bona fide, uninfluenced by irrelevant considerations and not arbitrarily or illegally, no court is entitled to interfere even if the court, had the discretion been theirs, might have exercised it otherwise.

Lord Macmillan's comments were quoted with approval by Abbott J. of the Supreme Court in Boulis v. Minister of Manpower and Immigration. See also Friends of the Oldman River Society v. Canada (Minister of Transport) and Canada v. Purcell.

Thus, by limiting the first stage of the Tax Court's inquiry to a review of the legality of ministerial determinations under subparagraph 3(2)(c)(ii), this Court has merely applied accepted judicial principles in order to strike the proper balance between the claimant's statutory right to have a determination by the Minister reviewed and the need for judicial deference in recognition of the fact that Parliament has entrusted a discretionary authority under this provision to the Minister.

On the basis of the foregoing, the Deputy Tax Court Judge was justified in interfering with the Minister's determination under subparagraph 3(2)(c)(ii) only if it was established that the Minister exercised his discretion in a manner that was contrary to law. And, as I already said, there are specific grounds for interference implied by the requirement to exercise a discretion judicially. The Tax Court is justified in interfering with the Minister's determination under subparagraph 3(2)(c)(ii) - by proceeding to review the merits of the Minister's determination - where it is established that the Minister: (i) acted in bad faith or for an improper purpose or motive; (ii) failed to take into account all of the relevant circumstances, as expressly required by paragraph 3(2)(c)(ii); or (iii) took into account an irrelevant factor."

[10]          In the case of Elia (supra) at page 2 of the certified translation - after observing the Tax Court Judge had misunderstood the decisions of the Court - Pratte, J.A. stated:

"Contrary to what the judge thought, it is not necessary, in order for the judge to be able to exercise that power, for it to be established that the Minister's decision was unreasonable or made in bad faith having regard to the evidence before the Minister. What is necessary is that the evidence presented to the judge establish that the Minister acted in bad faith, or capriciously or unlawfully, or based his decision on irrelevant facts or did not have regard to relevant facts. The judge may then substitute his decision for that of the Minister."

[11]          The evidence before me did not disclose that the Minister acted in bad faith, capriciously or unlawfully. However, it is apparent the Minister was in error in assuming the appellant was employed as a salesperson when she was the manager of the Trinkets outlet in Dufferin Mall. The Minister failed to take into account another person working as a Store Manager, at another outlet, had been offered a weekly salary instead of an hourly rate but upon finding that arrangement to be disadvantageous had chosen to revert to the former method of pay. The Affidavit of Deanne Kong Ting referred to the flexibility of working hours permitted by Trinkets. Sandy Prescott deposed in her Affidavit, dated December 3, 1997 that she had worked as a full-time employee for Trinkets for 8 years and the appellant had been her manager. She related her experience at Trinkets and the flexibility of her schedule - depending on the season and her personal wishes - and stated, in paragraph 9 of Exhibit A-14:

                "To my knowledge, all Trinkets' staff members received the same flexibilityand accommodation with respect to working hours."

[12]          There was uncontradicted evidence given by Sara Benaim that other workers were given post-dated cheques or were requested, on occasion, to delay cashing them. The evidence of the appellant and Sara Benaim was that the appellant received payment for all the hours she had worked prior to her lay off on June 8, 1995 and that, although she was paid later for an earlier pay period, she was not paid for any hours worked following her lay off because she did not work any hours at all - either with or without pay. The bonus paid to the appellant was one which was paid to an employee who had been a hard-working manager of a Trinkets store - since 1981 - while most other employees were young mothers or students changing from part-time to full-time work as it suited their personal needs. The appellant had worked for 5 years as a manager and salesperson for Bi-Way and was well-experienced in retail, possessed special language skills and was knowledgeable in pricing gold and maintaining a record of specialized inventory. The appellant worked for Trinkets for more than 14 years. The loan made by the appellant was primarily arranged by her husband, Isaac Benguaich, but it necessarily involved her as joint owner of the matrimonial home which was put up as security for a line of credit being advanced by a bank to Trinkets. That loan arrangement occurred in 1990, 9 years after the appellant had begun working for Trinkets and was done in response to an emergency caused by the bank suddenly calling in demand loans owed by Trinkets. The loan was repaid when the premise previously used as the corporate Head Office was sold. It is apparent the Minister was not pleased with the failure by the appellant to disclose - on her application form for benefits - that she was related to the sole shareholder of Trinkets and the Minister also regarded the erroneous statement of salary during the previous 20 weeks of employment for purposes of the Record of Employment as having a high degree of relevance to the issue whether or not the appellant had been engaged in insurable employment. This is borne out by the contents of paragraph 10 of the Reply to Notice of Appeal which reads as follows:

                "Both the Appellant and Payor were notified that the facts provided in the R.O.E. and the Application for Unemployment Insurance Benefits did not reflect the Appellant's true employment situation and that the true (sic) facts indicate that the Appellant's employment was not insurable for the period from June 9, 1994 to June 8, 1995."

[13]          In my view, that was not a relevant factor to be taken into account when making the decision. There may be appropriate penalties to be levied against the employer for having prepared a Record of Employment in that form or against the appellant for not having placed a mark in the "NO" box in response to the question: "Are you related to any of your employers by blood, marriage, (including common law) or adoption". However, that is not the same as using the lack of full disclosure by the appellant and the deceptive statement of the amount of salary by another employee of Trinkets to punish the appellant by painting her entire employment history - including the period specifically covered by the decision - as one to be retroactively converted into excepted employment. The circumstances surrounding the loan were put before the Minister and should not have been particularly significant in arriving at the decision. On all of the evidence, I find the Minister failed to take into account all of the relevant circumstances of the appellant's employment including the duration, nature and importance of the work performed, her special skills and the method by which remuneration was paid including bonuses. A substantial number of assumptions on which the Minister relied in making the decision were disproved in whole or to a significant extent. Therefore, that amalgam of failing to take into account relevant circumstances and basing the decision, in large measure, on irrelevant facts requires that I interfere with the Minister's decision under subparagraph 3(2)(c)(ii) of the Act. I do so only after concluding there is not, otherwise, sufficient material, in law, before the Minister to support the conclusion expressed in the decision.

[14]          The evidence I examined in order to decide whether or not to intervene in the Minister's decision is the same evidence that I now must use in the course of arriving at a conclusion using the criteria set out in subparagraph 3(2)(c)(ii) of the Act.

[15]          There is no question the appellant worked hard and efficiently for 14 years at the Trinkets store and that she used special skills in performing services for her employer, including the duties of manager supervising other staff. Along with other employees not related to the employer's sole shareholder, she was the victim of tough times as jewellery sales dropped dramatically over a 3 or 4 year period. She had to wait for her pay cheques longer than other workers but she was a manager and a long-term employee who was in a better position to do so than a young mother or a student, especially if working part time. The terms and conditions of the appellant's employment were reasonable and consistent with what one would expect to see between the employer and a similarly qualified non-related person who was willing to work extra hours when necessary to serve the customers and assist temporary staff, especially in the context of an employee who had been involved with the store since the first day it was open for business in the Dufferin Mall. The remuneration was stated by the appellant to have been $700 bi-weekly during the relevant period covered by the appeal. Some of the payroll records indicate the pay was $600 bi-weekly but most times it is based on the figure of $700. The evidence was that, with bonuses, the amount actually paid was $700 bi-weekly and it is clear the Record of Employment is inaccurate when it purported to state the appellant's salary for 20 weeks prior to lay off was in the sum of $1,200 bi-weekly. The explanation by Sara Benaim - in an attempt to justify using that amount on the basis that supposed bonuses were to be paid from a failing business at a later date - is rejected as not plausible. However, the actual pay received by the appellant was reasonable and not connected in any relevant way to her being related to the sole shareholder of her employer. Whether or not she received a bonus of $3,200 in December 1994 - based on sales volumes at her store - while other non-related workers were paid bonuses from $10.00 to $175.00 is not relevant to the circumstances of the appellant's employment during the period covered by the decision. Further, the evidence of Sara Benaim was that other persons received bonuses in the form of jewellery or commissions based on sales. I doubt we have yet reached the point where it is the business of the Minister of National Revenue - while issuing decisions - to decide on appropriate bonus limits or methods of calculating same for employees within certain categories. The Minister also failed to consider the nature of the retail business and its reliance on part-time help who chose to be paid on an hourly basis.

[16]          Having regard to all of the evidence pertaining to the circumstances of employment including the enumerated indicia in the relevant subparagraph of the Act, I find the employment of the appellant was not excepted employment and that she and her employer would have entered into a substantially (emphasis added) similar contract of employment if they had been dealing with each other at arm's length. Therefore, I find she was engaged in insurable employment with her employer, Trinkets Incorporated, during the period June 9, 1994 to June 8, 1995. Since it is not possible under the provisions of subsection 103(3) of the Employment Insurance Act to refer the matter back to the Minister for a new decision on the basis the salary of the appellant during the period covered by this appeal was $700 every two weeks, the appeal is allowed and the decision is varied as follows:

                the appellant was engaged in insurable employment with Trinkets Incorporated from June 9, 1994 to June 8, 1995 and was earning the sum of $700 bi-weekly during said period.

Signed at Toronto, Ontario, this 20th day of August 1998.

"D.W. Rowe"

D.J.T.C.C.