Côté v. M.N.R., docket 97-218-UI

Date: 19981027

Docket: 97-218-UI

BETWEEN:

NICOLE BERNATCHEZ CÔTÉ,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

TRANSPORT EN COMMUN CÔTÉ INC.,

Intervener.

Reasons for Judgment

Prévost, D.J.T.C.C.

[1]            This appeal was heard at Ste-Anne-des-Monts, Quebec, on September 15, 1998.

[2]            It came before the undersigned following an order by the Honourable Chief Judge of this Court dated July 7, 1998, which reads as follows:

[TRANSLATION]

WHEREAS the Federal Court of Appeal stated the following in a judgment dated May 13, 1998:

The application for judicial review is allowed, the decision of the Tax Court of Canada is set aside and the matter is referred back to it to be retried by a different judge.

IT IS ORDERED AND ADJUDGED that the judgment dated October 9, 1997, be set aside and that this case be heard on Tuesday, September 15, 1998, at 9:30 a.m. by the Tax Court of Canada sitting at the Provincial Court, Édifice des Monts, 10, boul. Ste-Anne, Ste-Anne-des-Monts, Quebec.

[3]            The appeal is from a decision by the Minister of National Revenue ("the Minister") dated December 20, 1996, determining that the appellant's employment with the intervener (the payer) from July 12 to September 24, 1993, December 20, 1993, to September 2, 1994, November 21, 1994, to September 8, 1995, and December 18, 1995, to September 6, 1996, was not insurable because the employee and employer were not dealing with each other at arm's length.

[4]            Paragraph 7 of the Reply to the Notice of Appeal reads as follows (following an amendment to subparagraph (l) authorized by consent):

[TRANSLATION]

In making his decision, the respondent Minister of National Revenue relied, inter alia, on the following facts:

(a)            The payer operated a business transporting people by bus over long distances. (A)

(b)            The payer owned three "Chevy Van" type vehicles, one of which had 11 seats and the other two 14, adapted for persons with disabilities. (A)

(c)            The payer operated its business year-round: allegedly its busy times were during the summer (June to September) and mid-December to mid-January. (A)

(d)            Jean-Claude Côté, the appellant's husband, was the payer's sole shareholder. (A)

(e)            The appellant had worked for the payer since 1985 as a secretary-accountant. (ASA)

(f)             The appellant's duties amounted to keeping the payer's accounts, taking telephone calls and taking reservations. (ASA)

(g)            The appellant worked in the payer's office, located in her private home: the home was owned by the appellant personally and the payer paid her no financial compensation for use of the office and garage located on the same lot. (ASA)

(h)            The appellant alleged she worked between 50 and 60 hours a week during the periods when she was on the payer's payroll. (A)

(i)             During the periods when she was not on the payroll, the appellant collected unemployment insurance benefits and alleged that she did about four hours a week for the payer without pay. (DAW)

(j)             The appellant was entirely free to set her hours of work and the payer exercised no control over the hours she allegedly worked or the way in which she did her work. (DAW)

(k)            In the periods at issue, the appellant received fixed gross weekly earnings of $395 regardless of the hours actually worked. (ASA)

(l)             During the periods at issue, the appellant said she worked in the following periods:

                - from July 12 to September 24, 1993, the appellant allegedly worked 11 consecutive weeks, that is, the minimum required, and collected 29 weeks of benefits;

                - from December 20, 1993, to September 2, 1994, the appellant allegedly worked 18 non-consecutive weeks and collected benefits for 32 weeks (the maximum being 35);

                - from November 21, 1994, to September 8, 1995, the appellant allegedly worked 15 non-consecutive weeks and collected benefits for 31 weeks (the maximum to which she was entitled);

                - from December 18, 1995, to September 6, 1996, the appellant allegedly worked 15 non-consecutive weeks (her benefits were suspended). (A)

(m)           The payer's sales volume and other income was stable throughout the year. (DAW)

(n)            The cash receipts/disbursements journal showed more or less the same number of entries every month whether or not the appellant was employed by the payer. (DAW)

(o)            The appellant performed services for the payer outside her alleged periods of employment while collecting unemployment insurance benefits. (DAW)

(p)            The worker's alleged periods of employment did not coincide with the periods she actually worked or with the appellant's periods of activity. (D)

(q)            During the period at issue, the appellant was related to the payer within the meaning of s. 251 of the Income Tax Act. (A)

(r)             The payer would never have hired an unrelated person on terms substantially similar to those offered the appellant. (D)

[5]            The Reply to the Notice of Intervention is identically worded.

[6]            At that point in the hearing, the parties, through their counsel, agreed that the Court could take cognizance of the testimony given at the previous hearing on June 20, 1997, and of that given before the undersigned on September 15, 1998.

[7]            Following each subparagraph in the above passage from the Reply to the Notice of Appeal, the Court has indicated in parentheses the comments made by counsel for the appellant and for the intervener at the start of the hearing, as follows :

(A)                                           =                               admitted

(ASA)                     =                               admitted subject to amplification

(D)                                           =                               denied

(DAW)                    =                               denied as written

Appellant's Evidence

According to Jean-Claude Côté, president of the intervener, testifying at the first hearing

[8]            He was the payer's sole shareholder.

[9]            The reason he hired the appellant was that a secretary was needed to do the paperwork and answer the telephone.

[10]          He asked her if she wanted to do the work, and she said yes.

[11]          She handled the gasoline invoices and so on, and everything that had to do with the accounting.

[12]          He needed a secretary especially during the busy periods, namely the summer and the holiday season.

[13]          From his point of view, summer lasted from the time classes ended until school started again.

[14]          Things were also busier during the school break in February.

[15]          Although customers could come to the office to make reservations, they did so mainly by telephone.

[16]          The payer had two telephone lines, a 1-800 line and a local line.

[17]          It transported people primarily on the Gaspé Peninsula and in Québec and Montréal.

[18]          People could call, for example, from Montréal to go to Ste-Anne-des-Monts, and in such cases they used the 1-800 line.

[19]          The telephone numbers were published.

[20]          During the busy periods, there might be 40 to 50 calls a day, but it all depended: it was never the same.

[21]          When things were less busy, there might be about 10 calls a day.

[22]          The appellant worked at home, where there was a room for the telephones and papers, the office.

[23]          In that room were the telephones, a fax machine, filing cabinets and folders, as shown in photographs.

[24]          The appellant worked during the busy periods.

[25]          She might work about 40 or 50 hours a week.

[26]          Mr. Côté was the one who had decided this.

[27]          During rush periods, it was necessary to be there from morning till night, except at mealtimes, to answer the telephone.

[28]          The appellant thus worked from 9:00 a.m. until about 9:00 p.m., and she did so in the office; it was Mr. Côté who had so decided and who controlled her, as it were.

[29]          After a certain time, it was no longer necessary to exercise as much control, because it was known that she was doing her job.

[30]          When he was working at the garage, Mr. Côté went into the house and saw that she was sitting at her desk and working.

[31]          Mr. Côté moreover had to go to the office often.

[32]          He also controlled the appellant by telephone: he called her, and if she answered right away, he could tell that she was sitting at her desk.

[33]          He is able to say that the appellant did in fact spend the number of hours asked of her at the company's office.

[34]          He knew that she was there.

[35]          During the busy periods, he could not be everywhere, and if he was in Montréal, he could not answer the telephone.

[36]          During the slower periods, he also had to travel, although much less often.

[37]          At such times, he did the office work and used the telephones in his garage so that he could operate from there.

[38]          During those periods, the appellant's presence was essential, and he does not think that he could have managed alone.

[39]          During the off-peak periods, he did not travel to Montréal.

[40]          Jean-Paul Savoie, Paul Côté and Jacques Côté did it for him.

[41]          Jean-Paul worked for the payer year-round.

[42]          The business telephones lines rang only in the office and the garage, not throughout the house.

[43]          During the busy periods, his spouse could not attend to her household chores during working hours because there were more vehicles on the road and thus more expenses, more gasoline invoices, more people travelling and more accounting to do.

[44]          At such times, the appellant had enough work to do during her working hours.

[45]          In 1997, they had two children, aged 20 and 13.

[46]          When the children were younger, they had had a babysitter or Mr. Côté's mother looked after them during the busy periods.

[47]          The appellant's accounting work involved taking care of invoices, taxes and everything that has to be done in a company.

[48]          Mr. Côté checked up on things once or twice a week and found out about the state of the payer's business.

[49]          The payer had employed another receptionist-accountant, Claudette Pelletier, in 1992 (from the end of June until September); it had hired her because Mr. Côté's wife had found a job with the Ministère du Loisir, de la Chasse et de la Pêche (MLCP) that paid a lot more.

[50]          Claudette Pelletier worked 40 hours a week, starting in the morning and finishing at 5:00 p.m.

[51]          Mr. Côté took over in the evening.

[52]          Claudette Pelletier earned a little less, $240 a week, because she worked fewer hours; his spouse earned $375 or $380 a week.

[53]          The reason the appellant stopped working at the MLCP was that there was no longer any extra work there.

[54]          Mr. Côté intended to rehire her even if her employment was not declared insurable.

[55]          She was paid by cheque and did not give Mr. Côté the proceeds.

[56]          From 1983 on, he might have cashed the appellant's paycheque for her two or three times.

[57]          The office did not have a separate entrance and was located on the upper floor of the bungalow they lived in.

[58]          The payer had a piece of land measuring 200 by 400 feet beside the house, and it could easily put its vehicles there.

[59]          The appellant owned the house and the payer did not give her any direct monetary compensation for the use of the premises.

[60]          The payer's other employees were drivers; in 1993, Jean-Paul Savoie earned $395 gross a week, while Mr. Côté took $300 a week for himself.

[61]          In 1995, Jean-Paul Savoie earned $400 a week, Jacques Côté $380 and Régis Gagnon $425.

[62]          In 1993, Annie Savoie earned $228 a week in a student job; she answered the telephone a little to help out; she also cleaned the vehicles; she worked at the same time as the appellant that year; she earned less because there were two of them working.

[63]          It normally took nine hours to go to Montréal and nine to come back; the drivers slept in Montréal in an apartment Mr. Côté had there.

[64]          In 1992, Claudette Pelletier earned $240 a week for 40 hours of work, or $6 an hour.

[65]          The appellant earned $375 for 50 hours, or $7.75 an hour, because she had more experience.

[66]          She was the one who entered data in the payroll and the ledger.

[67]          Mr. Côté no longer has the 1992 ledger but believes it was Claudette Pelletier who made most of the entries in it.

[68]          There were 30 to 54 entries in the ledger every month; there were fixed costs that had to be taken into account.

[69]          The appellant performed services for the payer even when she was not employed by it; she did so for three or four hours a month, without pay.

[70]          Mr. Côté did not know much about accounting, and the accountant checked the books at the end of the year to make sure that everything was in order.

[71]          The appellant did not have another job between the periods when she was employed by the payer, but she was looking for one.

[72]          During the busy months, there was obviously more accounting work to be done.

[73]          In addition to the accounting, the appellant had to handle the gasoline invoices for the purposes of tax returns and the accounts receivable from social service centres.

[74]          Between 9:00 a.m. and 9:00 p.m., the appellant took one hour for lunch and another for supper.

[75]          If the appellant had not been there, Mr. Côté absolutely would have needed another employee.

According to the appellant, testifying at the first hearing

[76]          When working for the payer, she answered the telephone, took reservations, gave customers the information they needed, entered the accounts receivable and accounts payable and noted the number of passengers; she also went to pick up parts.

[77]          Initially, the business was owned by her father-in-law, and it was her mother-in-law who showed her how to do the paperwork; the appellant also went to see the accountant, who showed her how to make entries in the ledger.

[78]          She worked for the payer only during the busiest times, which were in December and then from St. Jean Baptiste Day until school started again; the payer was also busy during the school break in February or March, but, in that regard, it was not always the same every year.

[79]          Her husband determined when she worked; she thus did in fact work 50 hours a week from 9:00 a.m. to 9:00 p.m., as her husband had instructed.

[80]          When she was in the office, she could not attend to household chores.

[81]          The payer did indeed have two telephone lines, a 1-800 service and another line for local calls; people called from Québec, from Montréal and from the local area; the payer might get 600 calls a month on the 1-800 line and about the same number on the local line, which served the area from Cap north to Matane.

[82]          There were some very short calls, but others were very long, since customers wanted a great deal of information.

[83]          Customers' calls could be taken only in the office or the garage, not in the other rooms of the house.

[84]          When her children were young, her niece Brenda came to look after them for $50 a week; her mother-in-law also looked after them occasionally.

[85]          The appellant did not have time to look after her children while she was working in the office.

[86]          In 1992, she worked for the MLCP because her job there was better paid: she earned $13 an hour there; Claudette Pelletier, who replaced her at the payer business, did the same work as the appellant, although perhaps not all of it: for example, she did not touch the ledger or the month-end work.

[87]          When she was not at the office, it was because things were quiet and her husband was able to take any calls in the garage or the office.

[88]          She was indeed paid by cheque; she cashed her cheques at the credit union or the grocery store and she did not give the money back to anyone else.

[89]          Her husband checked her work; he inquired about the week's income and the expenses incurred.

[90]          The payer's annual income must have been in the neighbourhood of $160,000, depending on the year.

[91]          Profits are an accounting matter, and there were years when they were up and others when they were down.

[92]          When Claudette Pelletier left at 5:00 p.m., her husband might be in the house or the garage, or else the answering machines were turned on.

[93]          The appellant also sometimes answered the phone after finishing work at the MLCP; she was not paid for this, but she was making very good money at the MLCP at the time.

[94]          When she was employed by the payer, the appellant turned on the answering machines during her meal breaks and later returned the calls.

[95]          When she was on the payer's payroll and the telephone rang at 8:00 a.m., she might answer it if it rang 20 times, thinking that it might be an emergency, but otherwise customers had to wait until 9:00 a.m.

[96]          She obviously got four percent vacation pay on top of her gross salary of $375 a week.

[97]          She made the ledger entries all year, but during the slow periods, it might have taken her three or four hours a month.

[98]          When there were many invoices, during the busy periods, those entries took a lot more time.

[99]          She did indeed own the house in which the payer's office was located. She did not receive any direct compensation for this space, but her husband provided her with firewood for the entire winter.

[100]        The reason she was paid more than Ms. Pelletier was that Ms. Pelletier did not really do all the accounting work the appellant did.

[101]        At the first hearing, counsel for the respondent admitted that Claudette Pelletier's evidence would have been to the same effect if she had testified.

[102]        The same witnesses testified at the new hearing on September 15, 1998.

Jean-Claude Côté gave the same version of the facts

But clarified it as follows:

[103]        After buying the business from his father, he tried to improve it.

[104]        Rather than having a direct telephone line to Montréal and another to Québec, he had a 1-800 line set up.

[105]        The payer picked up its passengers at their door and dropped them off at their exact destination.

[106]        One, two or all three of its vehicles could be on the road at a time, depending on how busy things were.

[107]        The payer had its vehicles inspected every six months, and Mr. Côté repaired them himself in his garage or, if necessary, he went to an accredited garage.

[108]        Mr. Côté had a card that authorized him to carry out the inspections.

[109]        The two photographs (Exhibit A-1A) show the payer's equipped office.

[110]        The appellant sometimes worked up to 60 hours a week in the office.

[111]        According to the payroll (Exhibit I-1), Mr. Côté was paid $300 a week in 1993 and then $400 starting in mid-April 1994.

[112]        The appellant's wages were always $380 a week when she was employed by the payer.

[113]        When Mr. Côté went on the road, his trips lasted about two days.

[114]        The payer's financial statements (Exhibit I-2) to May 31, 1993, show a net profit of $13,806.

[115]        Those to May 31, 1994 (Exhibit I-3) show a net loss of $6,361, while those to May 31, 1995 (Exhibit I-4) show a net loss of $4,507.

[116]        Even so, Mr. Côté kept the appellant's wages at the same level.

[117]        He himself paid for the electricity for the house, and the account was even in his name.

[118]        When his father died, his mother sold him his father's house, and they then had two houses; he sold his parents' house and built a garage with the proceeds.

[119]        The appellant gave the same version of the facts.

However, she clarified it as follows:

[120]        She herself prepared a statement (Exhibit A-2) showing the payer's monthly sales from 1992 to 1996, based on its books; it shows the payer's income from 1992 to the end of 1995; it also indicates the months when she worked and the months when Claudette Pelletier worked. That statement reads as follows:

[TRANSLATION]

'92

June         15,010                      1 week                                     July '95 20,452                      Nicole

July          25,839                      Nicole & Claudette               August                   15,543                      Nicole

August 18,318                      Claudette                                Sept.                        15,370                      Nicole

Sept.        11,684                      Claudette                                Oct.                          11,131

Oct.          15,828                                                                      Nov.                        10,971

Nov.        8,049                                                                        Dec.                         15,396                      Nicole

Dec.         14,922                      CSST Claude                          Jan. '96    13,725                      Nicole

                                                                                                                Feb.                         9,668

'93                                                                                            March                     13,772

Jan.          13,629                      CSST Claude                          April                        12,432

Feb.         12,278                                                                      May                         12,972     

March     15,692                                                                      June                         12,909                      Nicole

April        13,245                                                                      July                          17,354                      Nicole

May         10,652                                                                      August                   18,635                      Nicole

June         11,741                                                                      Sept.                        11,673                      Nicole

July          17,759                      Nicole                                      Oct.                          13,340

August 14,549                      Nicole                                      Nov.                        9,619

Sept.        12,500                      Nicole                                      Dec.                         15,643                      Nicole

Oct.          8,394

Nov.        9,448

Dec.         14,909                      Nicole

Jan. '94    17,730                      Nicole

Feb.         8,629                        Nicole Claude gone

March     14,637

April        10,958

May         13,459

June         10,988                      Nicole

July          25,014                      Nicole

August 20,603                      Nicole

Sept.        11,915                      Nicole

Oct.          10,982

Nov.        10,545                      Nicole

Dec.         19,871                      Nicole

Jan. '95    14,219                      Nicole

Feb.         11,490                      Nicole

March     14,379                      Nicole

April        12,146

May         9,228

June         16,760

[121]        She was the one who made the payments on the house and paid for the insurance on it.

[122]        The house always remained her property, since transferring ownership would have meant incurring needless costs for a notary.

[123]        She held no interest in the intervener.

[124]        The ledger (Exhibit I-5) was in her handwriting.

[125]        The reason there were always several entries was that there were expenses that were incurred every month.

[126]        She did not show Claudette Pelletier all aspects of the bookkeeping because she did not have time.

[127]        Customers paid the drivers directly.

[128]        A trip to Montréal cost each passenger $90, taxes included.

[129]        The payer's vehicles could accommodate 11 or 14 people each.

[130]        The appellant sometimes answered the telephone during periods when she was not drawing a salary, but very rarely, and if she had something else to do she simply did not answer.

[131]        The payer had a permit from the Commission des transports du Québec.

[132]        Travail-Québec was one of the payer's customers.

[133]        The parties, through their counsel, again admitted that, if Claudette Pelletier had testified, she would have corroborated the testimony of Jean-Claude Côté and the appellant.

Argument

According to counsel for the appellant and the intervener:

[134]        The payer's profits and losses are of little importance to the insurability of the employment; sometimes there were losses, and sometimes there were profits.

[135]        The financial statements to May 31, 1995 (Exhibit I-3) show an investment of $89,670 for the purchase of fixed assets, and that necessarily had an impact on future years.

[136]        The appellant's wages were very reasonable, and the reason she earned a little more than Claudette Pelletier was that she had more experience and worked more hours.

[137]        Jean-Claude Côté's wages are of little importance, since he was the president and owner of the intervener.

[138]        In Jolyn Sports Inc. v. M.N.R. (95-1206(UI)), the Honourable Judge Terrence P. O'Connor of this Court wrote the following:

Although for most of the period in question, the worker's salary was the same as her husband's, who owned all the shares of the company, this in my opinion is not enough to conclude that the worker was overpaid. The husband was perfectly entitled to receive further benefits by way of dividends or increase in the value of the shares. Relatives were paid more than other employees, but their duties and responsibilities were also greater.

[139]        The Federal Court of Appeal dismissed the appeal (A-96-96). Hugessen J.A. wrote for that Court (p. 4):

                In every appeal under section 70 the Minister's findings of fact, or "assumptions", will be set out in detail in the reply to the Notice of Appeal. If the Tax Court judge, who, unlike the Minister, is in a privileged position to assess the credibility of the witnesses she has seen and heard, comes to the conclusion that some or all of those assumptions of fact were wrong, she will then be required to determine whether the Minister could legally have concluded as he did on the facts that have been proven. That is clearly what happened here and we are quite unable to say that either the judge's findings of fact or the conclusion that the Minister's determination was not supportable, were wrong.

[140]        The drivers earned about $400 a week, and the appellant could not always earn the minimum wage.

[141]        When she went to work elsewhere, Claudette Pelletier replaced her; the same sequence of events occurred year after year; the president of the intervener knew when he needed to hire his spouse; door-to-door service in Montréal necessarily took longer, and he could not be in two places at once.

[142]        The Côtés had two houses at one point, and Jean-Claude decided to sell his father's house and build a garage; these facts are not relevant in deciding this case.

[143]        Sales volume was not always stable, and the best month was July 1994, when sales totalled $25,014.

[144]        The entries in the ledger are not significant, since there was just one entry whether for $4,000 or for $1,000 worth of gasoline.

[145]        The appellant rarely answered the telephone when she was not being paid, and she said that she simply did not answer if she had something else to do.

[146]        In Claude Champagne v. M.N.R. (92-1002(UI)), the Honourable Judge Garon of this Court wrote the following (pp. 4-5):

The appellant's work outside the period was negligible. The Minister should not have attached any importance to this aspect of the case.

                It follows from the foregoing that the Minister of National Revenue exercised the discretion conferred upon him by paragraph 3(2)(c) of the Unemployment Insurance Act in a wilful or arbitrary manner, not taking sufficient account of a substantial part of the appellant's work and wrongly considering the work that was performed on a volunteer basis by the appellant as an important element.

                It is therefore my opinion that if the Minister of National Revenue had correctly assessed all the relevant facts concerning the appellant's employment, he would have had to conclude that a substantially similar contract could have been entered into by two persons dealing with each other at arm's length.

[147]        Moreover, the appellant was not obliged to answer the telephone outside the relevant periods.

[148]        A Statistics Canada publication entitled Labour Force Update: A New Perspective on Wages (Summer 1998) shows that the average wage in Quebec in 1997 was $406 in the "Other services" category and $424 in the "Clerical & related" category.

[149]        Jolyn Sports, supra, clearly illustrates this Court's power to intervene.

[150]        In Madeleine Sabourin v. M.N.R. (95-1255(UI)), all of the facts alleged by the Minister were admitted and the Honourable Judge Lucie Lamarre of this Court wrote the following (p. 6):

In view of the evidence, I am of the opinion that the appellants have shown on a balance of probabilities that the Minister exercised his discretion arbitrarily in that, by failing to take into account all the circumstances surrounding the employment in question, he did not draw the appropriate conclusions from the facts he had before him.

[151]        The Federal Court of Appeal subsequently dismissed the application for judicial review (A-641-96).

[152]        In Aline Duchesne v. M.N.R. (96-1143(UI)), the Honourable Judge Guy Tremblay of this Court wrote the following (p. 12):

It is also true that a number of the facts alleged by the respondent involve an inherently negative aspect: 5(d), (e), (f), (j), (k), (m), (n), (o), (p) and (q). However, it seems to the Court that the evidence adduced changes the nature of the negative aspects by providing an explanation of the situation that is plausible and favourable to the appellant. Moreover, most of the exhibits were filed by the respondent. He therefore had them in his possession. In this case, as in many others, the respondent's investigation was conducted by telephone in the interest of economy. This is not a criticism, but the procedure does have its drawbacks.

[153]        While it is true that the burden of proof is on the appellant, that judgment shows that the burden is not insurmountable.

[154]        The facts must always be placed in the proper perspective.

[155]        The intervener's business will always be difficult because of its seasonal nature.

[156]        In Jean Croteau v. M.N.R. (95-609(UI)), the Honourable Judge Alain Tardif of this Court wrote the following (p. 5):

The evidence showed that the work done free of charge before and after the periods at issue was marginal: it accounted for an entirely negligible amount of time.

[157]        In Louise Daoust-Mainville v. M.N.R. (93-1445(UI)), the undersigned wrote the following (p. 12):

. . . the payer's activities were seasonal and there is no evidence in the record from which the Court can conclude that the payer would not have granted similar conditions to an unrelated person.

[158]        In Claude Charron v. M.N.R. (95-1125(UI)), the Honourable Judge Dussault of this Court wrote the following (p. 7):

. . . I would . . . add that, as the Federal Court of Appeal noted in Navennec . . . there is nothing to stop an individual seeking to secure the benefits conferred by the Act by working for the required number of weeks, provided that the contract of service submitted by the parties is genuine and contains the essential components.

[159]        The decision under appeal therefore cannot stand.

According to counsel for the respondent:

[160]        Subparagraph 7(e) cited above was admitted subject to amplification, no doubt because the appellant was replaced by Claudette Pelletier for a time.

[161]        Subparagraph (g) was also admitted subject to amplification, no doubt because Jean-Claude Côté paid for the firewood and electricity for the entire house.

[162]        Subparagraph (i) was denied as written, no doubt because, according to the evidence, the appellant did not work without pay for four hours a week but rather three or four hours a month.

[163]        However, there is still enough material to support the decision.

[164]        There was little control.

[165]        Jean-Claude Côté required the appellant to work more hours a week than Claudette Pelletier.

[166]        It is true that the statement (Exhibit A-2) shows some variations in sales, but not many.

[167]        The Statistics Canada publication was valid for 1997, and there are areas in Quebec where wages are higher or lower.

[168]        The appellant's wages were too high in view of what Claudette Pelletier was paid.

[169]        Based on what he had before him, the Minister decided correctly, and he did not take account of irrelevant facts.

[170]        There is thus no need for the Court to intervene.

According to counsel for the appellant in reply:

[171]        Subparagraph (g) is irrelevant, as the history of the two houses clearly proves.

[172]        As regards subparagraph (i), there is a big difference between four hours a week and three or four hours a month.

[173]        As regards subparagraph (j), the appellant did in fact have a fixed work schedule.

[174]        Subparagraph (k) is very hard to understand given the evidence adduced.

[175]        The periods of employment did correspond to the periods when the payer was very busy.

Analysis

[176]        It is clear that, in the Reply to the Notice of Appeal, the Minister did not consider the fact that Claudette Pelletier replaced the appellant when she found another job.

[177]        Nor did he consider the fact that, in addition to her work at the office, she went to pick up parts when they were needed.

[178]        He did not take account of the fact that Jean-Claude Côté himself paid for the wood and electricity for the entire house, which could have compensated for the use of the office space.

[179]        He thought that the land where the garage was located was owned by the appellant, whereas Jean-Claude Côté specified that it belonged to the payer.

[180]        While she was collecting benefits, the appellant worked just three or four hours a month, which is negligible, whereas the Minister claimed that she worked four hours a week.

[181]        Contrary to what the Minister wrote, the appellant was not free to set her hours of work and Jean-Claude Côté controlled her by being at the office and by calling her when he was on the road.

[182]        The appellant's earnings were always $380 a week and not $395; it is probably by adding the four percent vacation pay that the Minister arrived at that first figure.

[183]        Moreover, contrary to what is stated in subparagraph (k), there is no doubt — based on uncontradicted evidence — that the appellant was not paid without regard to the hours she actually worked.

[184]        The Minister wrote that the sales volume and other income were stable throughout the year, but the statement (Exhibit A-2) shows variations from $8,049 in November 1992 to $25,014 in July 1994.

[185]        In such a business, it is normal for there to be expenses that recur every month, and the respondent was wrong to write subparagraph (n), cited above, as he did.

[186]        The statement (Exhibit A-2) clearly shows that the worker's periods of employment coincided with the periods when the payer was very busy.

[187]        According to the evidence, those periods also coincided with the periods actually worked by the appellant.

[188]        There is no doubt that the payer needed an employee at its office during the busy periods, and the fact that Claudette Pelletier was hired proves this.

[189]        With 40 or 50 calls a day, it is clear that Jean-Claude Côté could not manage alone given everything else he had to do.

[190]        There is no doubt that Jean-Claude Côté was the one who decided when the appellant was hired and laid off.

[191]        It is natural that there should have been less need for control after a number of years, but the power to control did exist.

[192]        When the appellant was not working, Jean-Claude Côté was well organized with telephones at the garage and he could handle things alone.

[193]        It is significant that the business telephone lines did not ring throughout the house, that the appellant could not even attend to her household chores while working and that the children, when young, had to be looked after by a babysitter when the appellant was at the office.

[194]        It is natural that Claudette Pelletier should have earned less than the appellant given her lack of experience and the fact that she spent less time at the office; the reason Jean-Claude Côté did without her services in the evening was no doubt that she did not want or was unable to work.

[195]        It is also significant that Jean-Claude Côté wanted to rehire his spouse in 1997 even if her employment was not considered insurable.

[196]        The appellant's wages seem reasonable, and those of the president of the intervener are irrelevant to this case.

[197]        Annie Savoie's employment is not to be considered in reaching a conclusion in this case.

[198]        Who completed the ledger in 1992 is of little importance.

[199]        There is uncontradicted evidence that the appellant was always paid her wages.

[200]        The supply of firewood and electricity could validly compensate for the use of office space in the appellant's home.

[201]        It is true that there may be profits or losses in any business, and no conclusion can be drawn on that basis; in the case at bar, it is significant that considerable investments were made in 1994 and that this could have had an impact on future years.

[202]        The fact that the appellant held no interest in the intervener has not been contradicted.

[203]        The decision on appeal in Jolyn Sports, supra, shows that the Court may and must intervene.

[204]        The issue of the use of the office is really irrelevant in reaching a conclusion given the history of the two houses involved.

[205]        As in Champagne, supra, it must be concluded that the Minister exercised his discretion in a wilful or arbitrary manner, not taking account of all the appellant's work and wrongly considering the small amount of work that was performed on a volunteer basis by the appellant as an important element.

[206]        The same conclusion is also reached in Sabourin, supra.

[207]        As in Aline Duchesne, supra, the evidence before this Court has changed the nature of the negative aspects alleged in the Reply to the Notice of Appeal by providing an explanation of the situation that is plausible and favourable to the appellant.

[208]        All seasonal businesses, or some of them, are generally difficult to run.

[209]        As in Croteau, supra, the work done by the appellant before and after the periods at issue was very marginal.

[210]        As noted in Claude Charron, supra, there is nothing to stop an individual seeking to secure the benefits conferred by the Act, provided that the contract of service is genuine and contains the essential components. That is the case here.

[211]        There is no longer enough material to support the decision under appeal.

[212]        The Côtés seemed to the Court to be very sincere people who were always anxious to tell the truth.

[213]        During the two hearings, they gave the same testimony, aside from a few clarifications provided at the second hearing; there were however no contradictions.

[214]        The Minister did not take into account all of the relevant circumstances but did consider irrelevant factors; the investigation seems to have been botched, and the Court must intervene by assessing the balance of probabilities itself. The Court is satisfied that the intervener would have hired an unrelated person on substantially similar terms.

[215]        The employment was therefore insurable.

[216]        With great respect for the contrary opinion, the appeal must therefore be allowed and the decision under appeal vacated.

Signed at Laval, Quebec, this 27th day of October 1998.

"A. Prévost"

D.J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]

Translation certified true on this 21st day of June 1999.

Erich Klein, Revisor