Hollett v. M.N.R., docket 98-90-UI

Date: 19980821

Docket: 98-90-UI

BETWEEN:

THOMAS HOLLETT,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Cuddihy, D.J.T.C.C.

[1] This appeal was heard in St. John’s, Newfoundland, on July 8, 9 and 10, 1998.

I- The appeal

[2] This is an appeal from a decision by the Minister of National Revenue (the "Minister") of January 19, 1998, where it was determined that the employment of the Appellant with Mall Cabs Ltd. (the "Payor"), from July 10 to November 24, 1995 and from July 1 to November 2, 1996, was not insurable within the meaning of the Unemployment Insurance Act (the "old Act") now known as the Employment Insurance Act (the "new Act ") because, according to the Minister, the Appellant and the Payor were not dealing with each other at arm’s length within the meaning of subparagraph 3(2)(c)(ii) of the old Act and paragraph 5(2)(i) and subsection 5(3) of the new Act and thus the said employment was excepted.

II- The facts

[3] In rendering his decision the Minister relied on the facts and reasons outlined in his Reply to the Notice of Appeal and particularly in paragraph 17 as follows:

"(a) the Payor is a corporation duly registered in the province of Newfoundland and wholly owned by Lockey Haven Ltd., whose sole shareholder is Jacqueline Hollett;

(b) at all relevant times, Jacqueline Hollett was the Appellant's spouse;

(c) the Appellant and his spouse have lived apart since approximately October 1995 but were not legally divorced from each other as of the time of the Minister's decision;

(d) the Appellant is sole shareholder of Jiffy Cabs (1993) Ltd., whose name was changed to Solidarity Cabs Ltd. on or about January 16, 1995;

(e) in January 1995, an agreement was drawn up between the Appellant and his spouse by which the Appellant relinquished the use of the name Jiffy Cabs as well as its business phone number to the Payor for $1.00;

(f) the Appellant also agreed to the transfer of 22 of the 42 taxi licenses owned by Jiffy Cabs (1993) Ltd. to the Payor for $1.00;

(g) the Appellant changed the name of Jiffy Cabs (1993) Ltd. to Solidarity Cabs Ltd. following the transfer of assets;

(h) during each of the periods in question, the Appellant was hired by the Payor as a sales and marketing manager;

(i) during the periods in question, the Appellant's duties consisted of maintaining winter capacity, negotiating for services at conventions and conferences, doing promotional work, checking the conditions of the cars, inspecting the drivers and their attire, finding new operators, negotiating the purchase of new licenses, finding new clientele, organising new telephone lines, parking locations and handling customer complaints;

(j) the Appellant received a weekly salary of $850.00 allegedly for 50 hours of work each week, giving an hourly rate of $17.00;

(k) outside the periods in question, the Appellant is reported in the Payor's payroll book from March 2, 1996 until July 1, 1996, for 10 hours per week at the rate of $10.00 an hour, every week except weeks ending April 13 and 20;

(l) the Appellant returned to full-time work with the Payor on July lst, 1996;

(m) the Appellant was not required to report his hours of work to the Payor;

(n) the number of taxi licenses issued to the Payor and to Jiffy Cabs, the Appellant's company, have not changed substantially after the transfer agreement as shown in the following:

Dec 31, 1994 total

Jiffy Cabs 34

Mall Cabs 5 39

March 28, 1995 total

Jiffy Cabs 32

Mall Cabs 8 40

Dec 31, 1995 total

Jiffy Cabs 35

Mall Cabs 15 50

March 22, 1996 total

Jiffy Cabs 33

Mall Cabs 14 47

(o) contrary to the allegations made by the Appellant and the Payor, the Appellant's employment did not have a major effect on the Payor's business;

(p) from June 6, 1994 to October 22, 1994, Jiffy Cabs (1993) Ltd., the Appellant's business, employed a sales and marketing manager at the weekly salary of $500.00;

(q) from May 12, 1997 to September 27, 1997, the Payor employed a sales and marketing manager other than the Appellant, at the weekly salary of $500.00;

(r) the Appellant's salary was substantially higher than the salary paid to the non-related workers hired for a similar position;

(s) the Appellant's wages were excessive;

(t) the Appellant's employment period was determined by the need to establish his claim for employment insurance benefits and not by the business need of the Payor;

(u) the taxi licenses registered under the trade name of Jiffy Cabs, which were not part of the transfer agreement mentioned above, are still registered under the name of Jiffy Cabs and not under the name of Solidarity Cabs;

(v) Mall Cabs Ltd did not purchase the shares of Solidarity Cabs Ltd.;

(w) Mall Cabs Ltd. is using, for business purposes, taxi licenses which should be registered and operated under the name of Solidarity Cabs Ltd., which is the Appellant's business;

(x) the Appellant is related to the Payor within the meaning of the Income Tax Act as amended;

(y) the Appellant is not dealing with the Payor at arm's length;

(z) 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 not reasonable to conclude that the Appellant and the Payor would have entered into a substantially similar contract of employment if they had been dealing with each other at arm's length."

[4] The Appellant, through his counsel, admitted the allegations subparagraphs a), h), i), j), p) and q). The allegations in subparagraphs b) to d), k), l) and v) were admitted with explanations to be given at the hearing. The allegations in subparagraphs e) to g), m) to o), r) to u) and w) to z) were denied.

III- The Law and Analysis

[5] i) Definitions from the Employment Insurance Act

"employment" means the act of employing or the state of being employed;

"Insurable employment" has the meaning assigned by section 5;

Paragraph 5(1)(a) of the new Act reads as follows:

"5. (1) Subject to subsection (2), insurable employment is

(a) employment in Canada by one or more employers, under any express or implied contract of service or apprenticeship, written or oral, whether the earnings of the employed person are received from the employer or some other person and whether the earnings are calculated by time or by the piece, or partly by time and partly by the piece, or otherwise;

..."

[6] "Excluded employment"

Paragraph 5(2)(i) and subsection 5(3) of the new Act read as follows:

"(2) Insurable employment does not include

...

(i) employment if the employer and employee are not dealing with each other at arm’s length.

(3) For the purposes of paragraph (2)(i)

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

(b) if the employer is, within the meaning of that Act, related to the employee, they are 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."

[7] ii) Definitions from the Income Tax Act

Arm's length and Related persons

Section 251 of the Income Tax Act reads in part as follows:

"Section 251. Arm's length.

(1) For the purposes of this Act,

(a) related persons shall be deemed not to deal with each other at arm's length; and

(b) it is a question of fact whether persons not related to each other were at a particular time dealing with each other at arm's length.

(2) Definition of "related persons". For the purpose of this Act, "related persons", or persons related to each other, are

(a) individuals connected by blood relationship, marriage or adoption;

(b) a corporation and

(i) a person who controls the corporation, if it is controlled by one person,

(ii) a person who is a member of a related group that controls the corporation, or

(iii) any person related to a person described in subparagraph (i) or (ii) ..."

"Subsection 252 (3) Extended meaning of "spouse" and "former spouse".

Subsection 252 (4) Idem. In this Act,

"(a) words referring to a spouse at any time of a taxpayer include the person of the opposite sex who cohabits at that time with the taxpayer in a conjugal relationship and

(i) has so cohabited with the taxpayer throughout a 12-month period ending before that time, or

(ii) is a parent of a child of whom the taxpayer is a parent (otherwise than because of the application of subparagraph (2)(a)(iii))

and, for the purposes of this paragraph, where at any time the taxpayer and the person cohabit in a conjugal relationship, they shall, at any particular time after that time, be deemed to be cohabiting in a conjugal relationship unless they were not cohabiting at the particular time for a period of at least 90 days that includes the particular time because of a breakdown of their conjugal relationship;

(b) references to marriage shall be read as if a conjugal relationship between 2 individuals who are, because of paragraph (a), spouses of each other were a marriage;

(c) provisions that apply to a person who is married apply to a person who is, because of paragraph (a), a spouse of a taxpayer; and

(d) provisions that apply to a person who is unmarried do not apply to a person who is, because of paragraph (a), a spouse of a taxpayer."

[8] The Appellant had the burden of proving his case. Each appeal however must be decided on the facts particularly established and on its own merits.

[9] The Court therefore has a duty to scrutinize with care the conditions of the relations between a worker and a payor in every case.

[10] The Appellant, Jacqueline Hollett representing the Payor, Gerald Smith, the accountant for both the Appellant and the Payor, were heard in support of the appeal. Deborah Burton, the Appeals' Officer, was heard on behalf of the Respondent. Exhibits A-1 to A-28 and R-1 to R-7 were filed in the Court record.

Brief summary of testimonial evidence

[11] The Appellant and his wife Jacqueline Hollett, who married in 1977, operated and/or worked for a taxi dispatching business under various names either together or separately between maybe 1979 and the present day in the City of St. John’s, Newfoundland.

[12] The present owner Jacqueline Hollett, the wife of the Appellant, said that the Payor was incorporated in 1979 when she bought it from the Hollett family. She also said that she acquired the Payor in the fall of 1994 when problems with the Union caused her to go out and buy a taxi business through Lockey Haven Ltd., her holding company. The Appellant also says that the Payor was incorporated in 1979 and that his wife bought the Payor from the Hollett family in 1994 through Lockey Haven Ltd. for the price of $122,000.00 and that he was kept in the dark as to this acquisition by his wife. In 1988, the Appellant bought a taxi business called Jiffy Cabs Ltd. His wife worked with him in that business.

[13] The records of employment and the application for benefits of the Appellant (Exhibits R-2, R-3, R-4) indicate that the Appellant was working for the Payor called "The Mall Cabs Ltd." during various periods in 1995 and 1996.

[14] No payroll books, which could have shown all the employees and for whom they worked, or minute books, or disbursement books or any relevant data concerning the financial situation or workings of any of the various companies mentioned in the evidence were shown to the Court. The Payor’s business hires from eight to nine employees

[15] An investigation carried out by the Respondent concluded that the Appellant and the Payor were not at arm’s length and the employment of the Appellant was excluded. The report of the Appeals' Officer was filed as Exhibit R-7.

[16] The gist of the Appellant’s argument is that he was no longer cohabiting with his wife when her company (the Payor) hired him in July of 1995, that he had sold to the Payor on April 1, 1995 any shares he had in his dispatching business and was at arm’s length, that he was hired at a salary of $850.00 a week, which was not excessive, that all his expenses were paid, that he was hired by Wilson Smith, the manager of the Payor and that he had no direct dealings with his wife. He was offered the position of Sales Co-ordinator/Marketing at $500.00 a week. He asked for $1,000.00, the Payor accepted to pay $850.00. He also worked part time in 1996, at the request of Wilson Smith. Various descriptions of his part-time employment were given at the hearing. Wilson Smith was not heard at the hearing due to illness.

Analysis

[17] The Federal Court of Appeal in Attorney General of Canada and Jencan Limited [1] has outlined the principles which must guide the Tax Court when dealing with an appeal under subparagraph 3(2)(c)(ii) of the Act as follows:

“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 had 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...[2]

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., ... 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.[3]

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.[4]

Lord Macmillan’s comments were quoted with approval by Abbott J. of the Supreme Court in Boulis v. Minister of Manpower and Immigration.[5] See also Friends of the Oldman River Society v. Canada (Minister of Transport)[6] and Canada v. Purcell.[7]

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.”

[18] The Tax Court in dealing with an appeal under subparagraph 3(2)(c)(ii) or paragraph 5(2)(i) and subsection 5(3) of the Acts must undertake a two-stage inquiry.

[19] The Tax Court is justified in interfering with the Minister’s decision only if it is established that the Minister exercised his discretion in a manner that was contrary to law. The Tax Court is justified in interfering with the Minister’s decision under subparagraph 3(2)(c)(ii) or paragraph 5(2)(i) and subsection 5(3) by proceeding to review the merits of the 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 subparagraph 3(2)(c)(ii) or paragraph 5(2)(i) and subsection 5(3); or (iii) took into account an irrelevant fact".

[20] The Appellant contends that he was an unrelated person according to the provisions of the Income Tax Act, because during his periods of employment under review, although he was not divorced, he was not cohabiting with his wife.

[21] The Appellant was married to Jacqueline Hollett in 1977. The evidence indicates that they are still married, that they ceased to cohabit on or about January 16, 1995, that an effort at reconciliation was made and they dated till sometime in October 1995. A petition for divorce (Exhibit A-15) was filed in the Supreme Court of Newfoundland on June 30, 1998. In this document (Exhibit A-15) both parties allege that they "have entered into one agreement dated January 16, 1995, wherein we divided our business assets".

[22] Subsections 251(2), 251(6) and 252(3) of the Income Tax Act are the relevant provisions dealing with "related persons" or "persons related to each other".

[23] In subsection 251(2) of the Income Tax Act, we read in part, that related persons or persons related to each other are individuals connected by blood relationship, marriage or adoption. Paragraph 251(6)(b) reads that for the purposes of the Act, persons are connected by marriage if one is married to the other. This paragraph makes no reference to married persons living or not living together.

[24] Subsections 252(3) and 252(4) of the Income Tax Act deal with the extended meaning of "spouse" and "former spouse". I submit that these two subsections do not apply to married persons. These two subsections however include certain taxpayers as spouses when cohabiting in a conjugal relationship over a period of time. These subsections also provide that when there is a breakdown of this type of conjugal relationship, these spouses are deemed to be cohabiting for a 90-day period after they have ceased to cohabite as a result of the breakdown of the relationship.

[25] The Appellant and Jacqueline Hollett during the relevant periods were married persons. They attempted to reconcile and were dating according to the Appellant until October 1995. According to Jacqueline Hollett, they were in counselling until June of 1995. A letter filed at the hearing (Exhibit A-14) indicates that Tom and Jackie Hollett attended counselling sessions in August, 1995. In the context of that evidence, the allegation in subparagraph 17(c) of the Reply to the Notice of Appeal to the effect that they had lived apart since approximately October of 1995 and were not legally divorced is supported by the evidence.

[26] As to subparagraph 17(d), the Appellant alleges it is incorrect. The Respondent’s position is that the Appellant, at the time the Reply to the Notice of Appeal was drafted, was the sole shareholder of Jiffy Cabs (1993) Ltd., whose name was changed to Solidarity Cabs Ltd. on or about January 16, 1995.

[27] The existence of Solidarity Cabs, the date of its incorporation, the purpose of its existence and the role it played in the business of the Appellant was not too clear. At the request of the Court, after some lengthy questioning, the Appellant produced written details of his ownership of shares in the two companies (Exhibit A-28). He described the first company, as "Jiffy Cabs Limited" and the second company, as "Jiffy Cabs "1993" Limited/Solidarity Cabs Ltd.", the latter was incorporated in January of 1993, as one single company; so the Appellant did not change the name to Solidarity Cabs Ltd. on January 16, 1995: what he did was in fact use the words Solidarity Cabs Ltd. as they were already part of the name of the company described by him as "Jiffy Cabs "1993" Limited/Solidarity Cabs Ltd." (Exhibit A-28).

[28] This strategy was deceptive in that it lead the Respondent and the Court to believe that Jiffy Cabs (1993) Limited and Solidarity Cabs Ltd. were two different companies when, according to the Appellant’s writing (Exhibit A-28), they were not. Further when the Appeals' Officer on August 18, 1997 (Exhibit A-21) requested that the Appellant explain in detail the interrelationship across Mall Cabs Ltd., Jiffy Cabs (1993) Ltd., Solidarity Cabs Ltd. and Lockey Haven Ltd., he failed to reply. In the answer he gave on September 18, 1997 (Exhibit A-21), the Appellant directs the Appeals' Officer to Jacqueline Hollett, alleging that he was not sure of how the accountants and lawyers of Mrs. Hollett had arranged her affairs. The only accountant for all the companies during the relevant periods was Gerald Smith who was also the accountant of the Appellant, and a very close friend of both Tom and Jacqueline Hollett. As a result of what I heard, I respectfully say that the Appellant misled the Appeals' Officer and failed to provide information that he was personally aware of. This led the Appeals' Officer to Jacqueline Hollett, the owner of the Payor. She also refrained from providing information to the Appeals' Officer on the advice of her lawyer and at the hearing could not inform the Court as to her own salary or those of her few employees. The Appeals' Officer also contacted Gerald Smith the accountant who clearly avoided to meet or provide any information. At the hearing the Appellant blames the Appeals' Officer for not having gone back to him for more information. In fact he is now blaming the Appeals' Officer for his own failures. The Appellant was running this dispatching business for some years and knew all about the business. In fact when the time came to hire a sales co-ordinator manager, Jacqueline Hollett said that the Appellant had the most experience and contacts.

[29] Secondly, the Appellant also misled the Appeals' Officer when he indicated in the same letter (Exhibit A-21) that there was a name change and that the Payor, "the Mall Cabs Ltd., acquired the shares and is the owner of Solidarity Cabs Ltd. in January of 1995". At the hearing the Appellant and his witnesses indicated that the share transfer from the Payor to Solidarity Cabs Ltd. took place on April 1, 1995. The documentation provided to the Court (Exhibits A-2 to A-10 - none of which bear any date of incorporation for any of the various companies) which was made up only on June 9, 1998 also indicate April 1, 1995. Why do we have these two dates for the sale and/or the transfer of shares? Surely, if the transaction took place on April 1, 1995 the Appellant would or should have known that, when he met with his lawyer in 1997, to respond to the Appeals' Officer (Exhibit A-21).

[30] Further in the petition for divorce (Exhibit A-15), he states: "We have entered into one agreement dated January 16, 1995, wherein we divided our business assets". That statement may be what he and his wife had intended, but it certainly did not convey that meaning to the Court especially when read in conjunction with the second agreement (Exhibit A-12) and the description of the parties as a purchaser on the one hand and a vendor on the other. So on January 16, 1995, the Appellant was still operating his dispatching business; so when did the Payor actually acquire full ownership of the dispatching business of the Appellant? This is difficult to say when you have two conflicting dates, contradictory evidence and every witness in his own fashion keeping away or avoiding the Appeals' Officer and not a piece of documentary evidence to help us, except a series of documents made up by the accountant Gerald Smith on June 9, 1998, some three years later without the assistance of any notes or any other documents. When the Appeals' Officer could find no record of the transaction with the Registry of deeds or the name of Solidarity Cabs Ltd., at the City of St. John’s, could one not wonder whether the event ever took place? That is what it looks like. Why was the City of St. John’s not advised of the change in the operating licenses? If no change took place there would be no necessity to advise the City. Is that what took place at the time? These questions remained unanswered.

[31] I have accepted the evidence of the Appeals' Officer as truthful. She could not have decided the issue in any other way.

[32] No evidence was put forward that the Minister acted in bad faith or for an improper purpose, he took into account all of the relevant circumstances; the salary, the hours worked, the salary of another person doing essentially the same type of work, the fact that the Appellant worked for other weeks during 1996 for the same employer. He also took into account the nature and the importance of the work performed by the Appellant.

[33] According to Gerald Smith, the Appellant was doing the same type of work whether full time or part time. The Appellant himself in his statement dated April 26,1996 (Exhibit A-18) said that he started working part time in January 1996, that "he supervised himself as he was so experienced" and that he was in Florida from April 1 to 18,1996. The payroll (Exhibit A-17) shows that the Appellant was not working in January 1996. At the hearing, the Appellant says that he reported to and was supervised by Wilson Smith (who received much less pay than the Appellant) the former employee of the Appellant in the same Cab dispatching business. Truly it appeared that the Appellant was the key to this business all along. Who gave the Appellant permission to leave the country in 1996 when he was supposed to be available for work? Why did he not inform the unemployment office of his unavailability for work? Why would the Appellant be paid expenses by the Payor even when he is not on the payroll? These factors would not have escaped the attention of the Appeals' Officer when looking at the arm’s length situation.

[34] May I add that if any allegations of the Respondent were incorrect, it was as a direct result of the doings of those who willingly failed to provide the real information to the Appeals' Officer and thus created the resulting confusion which has not been dispelled significantly by their evidence. The Appeals' Officer never met with the Appellant personally as she was instructed to communicate with him through his counsel. Counsel for the Appellant did cooperate with the Appeals' Officer in answering the correspondence, however, after seeing and hearing the Appellant and his witnesses, I have viewed their evidence with caution and have not accepted it.

[35] The Appellant has failed in my view to demonstrate any real reason to intervene in this matter. Even if, one were to accept the argument of the Appellant that he was not related (which is not the decision of this Court) he has not established on a balance of probabilities that he and the Payor did in fact deal at arm's length and therefore cannot qualify to receive benefits under the Act.

IV- Decision

[36] The appeal is dismissed and the Minister’s decision is upheld.

Signed at Dorval, Quebec, this 21st day of August 1998.

"S. Cuddihy"

D.J.T.C.C.

---