Citation: 2011 TCC 23
Date: 20110117
Dockets: 2010-1087(CPP)
2010-1088(CPP)
BETWEEN:
HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Rip C.J.
[1]
The appellant, Her
Majesty the Queen in Right of Ontario, is appealing from decisions of the
Minister of National Revenue, the respondent, dated January 15, 2010, that
the tenures of office of Roger Davidson and Gail Stiffler during the
periods January 1, 2005 to December 31, 2007 and January 1, 2006
to December 31, 2008, respectively, were pensionable under
paragraph 6(1)(a) of the Canada Pension Plan ("Plan").
According to the Minister of National Revenue ("Minister") during the
respective periods Mr. Davidson and Ms. Stiffler each received
remuneration that was "fixed and ascertainable" within the meaning of
the subsection 2(1) definition of "office" and
"officer". The appeals were heard together on common evidence.
[2]
The appellant was
represented by the Ontario Ministry of the Attorney General ("MAG")
who is responsible for administering justice in Ontario
and for the running of the courts of the province.
[3]
There is no dispute as
to facts. The respondent admitted all the facts alleged by the appellant in his
notice of appeal which include the following:
…
2) In 1988, the Attorney General announced a
three‑year pilot project to try a different model of appointment for
Provincial Court Judges. The Judicial Appointments Advisory Committee (JAAC)
mandate was, "First, to develop and recommend comprehensive, sound and
useful criteria for selection of appointments to the judiciary, ensuring that
the best candidates are considered; and, second, to interview applicants selected
by it or referred to it by the Attorney General and make recommendations."
3. Between 1990 and 1995, the size of the
pilot committee grew from 9 to 13 persons and the committee worked at
developing criteria and procedures which were reviewed, refined and eventually
publicized. JAAC was formally established on February 28, 1995 by
proclamation of the Courts of Justice Act amendment passed in 1994.
4. The Courts of Justice Act, section 43(1)
to (14) sets out the structure and role of the JAAC.
5. Vacancies on the Bench are advertised in
the Ontario Reports as the need arises. Candidates must submit 14 copies
of a prescribed application form. These applications are reviewed by the
Committee and a short list is prepared. The Judicial Appointments Advisory
Committee meets to select candidates for interviews from the short list. After
reference checks, confidential inquiries and interviews, the Committee sends a
ranked list of its recommendations to the Attorney General who is required to
make the appointment from that list.
6. The JAAC is independent of the Ministry of
the Attorney General and the Government.
7. The composition of the JAAC is to reflect
the diversity of Ontario's
population, including gender, geography, racial and cultural minorities. In
addition to seven (7) lay members who are appointed by the Attorney General,
two (2) judges are appointed by the Chief Justice of the Ontario Court of
Justice, one (1) member is appointed by the Ontario Judicial Council and three
(3) from the legal community are appointed by the Law Society of Upper Canada,
Ontario Bar Association and the County and District Law President's
Association, respectively. All members serve for a term of three (3) years and
may be re‑appointed.
8. Mr. Davidson was first appointed as a
lay person member to the JAAC for a three year term to the JAAC effective
March 1, 2004 pursuant to an Order‑in‑Council
("OIC"). An OIC appointment is at the pleasure of Her Majesty the
Queen in Right of Ontario. On March 1, 2007, Mr. Davidson was
reappointed for another three year term.
9. Mr. Davidson is not an employee of
the MAG. There is no control exercised over Mr. Davidson and he does not
report to a supervisor or manager at MAG. He utilizes his own equipment in
carrying out his duties, does not have fixed place of employment with MAG and
has a large degree of autonomy in carrying out his duties. There is no
opportunity for promotion within MAG, he is not listed on the employee
directory and MAG does not pay health premiums or remit workers compensation
for him.
10. From March 1, 2004 to March 9,
2007, Mr. Davidson was paid at the per diem rate of 100.00 dollars
pursuant to OIC No. 1423/93. On March 1, 2007, OIC No. 993/2007
revoked OIC No. 1423/93 and the per diem rate increased from 100.00
dollars to 355.00 dollars.
11. Mr. Davidson is paid 355.00 dollars
per diem for his services, without statutory deductions. In order to receive
remuneration, he is required to provide an invoice to the Office of Judicial
Support Services, and is paid out of its budget.
12. When a judicial vacancy occurs,
Mr. Davidson and other JAAC members would be required to review the
applications from candidates, conduct reference checks on certain candidates,
interview candidates and then meet with the other JAAC members to discuss the
recommendations that will be made to the Attorney General. Mr. Davidson
would be paid for these activities at the per diem rate.
…
[4]
The facts described in
paragraphs 2 to 7 of Mr. Davidson's notice of appeal are similar to
the following alleged facts in Ms. Stiffler's notice of appeal and are
also admitted:
…
8. Ms. Stiffler was first appointed as a
lay person member to the JAAC for a three year term effective March 1,
2004 pursuant to an Order‑in‑Council ("OIC"). An OIC
appointment is at the pleasure of Her Majesty the Queen in Right of Ontario. On
March 1, 2007, Ms. Stiffler was reappointed for another three year
term.
9. Ms. Stiffler is not an employee of
the MAG. There is no control exercised over Ms. Stiffler and she does not
report to a supervisor or manager at MAG. She utilizes her own equipment in
carrying out her duties, does not have fixed place of employment with MAG and
has a large degree of autonomy in carrying out her duties. There is no
opportunity for promotion within MAG, she is not listed on the employee
directory and MAG does not pay health premiums or remit workers compensation
for her.
10. From March 1, 2004 to March 9,
2007, Ms. Stiffler was paid at the per diem rate of 100.00 dollars
pursuant to OIC No. 1423/93. On May 9, 2007, OIC No. 993/2007
revoked OIC No. 1423/93 and the per diem rate increased from 100.00
dollars to 355.00 dollars.
11. Ms. Stiffler is paid 355.00 dollars
per diem for her services, without statutory deductions. In order to receive
remuneration, she is required to provide an invoice to the Office of Judicial
Support Services, and is paid out of its budget.
12. When a judicial vacancy occurs,
Ms. Stiffler and other JAAC members would be required to review the
applications from candidates, conduct reference checks on certain candidates,
interview candidates and then meet to discuss the recommendations that will be
made to the Attorney General. Ms. Stiffler would be paid for these
activities at the per diem rate.
[5]
The number of days
worked by each of Mr. Davidson and Ms. Stiffler is as follows:
|
Year
|
Davidson
|
Stiffler
|
|
2005
|
124
|
—
|
|
2006
|
135
|
132
|
|
2007
|
91
|
96
|
|
2008
|
—
|
118
|
[6]
The Crown relies on
paragraph 6(1)(a) of the Plan which states that
"pensionable employment is employment in Canada
that is not exempted employment". However, nowhere in its reply to the notice
of appeal does the Crown plead that either Mr. Davidson or
Ms. Stiffler, or both, were not engaged in excepted employment. As a
matter of fact the Crown has admitted the appellants' allegation that they are
not employees of MAG. Notwithstanding the facts alleged or admitted in the
pleadings, subsection 2(1) of the Plan states that "'employee'
includes officer" and "'employment' means the performance of services
under an express or implied contract of service …, and includes the tenure of
an office".
[7]
The only issue raised
by the parties in these appeals is whether the stipend or remuneration received
by Mr. Davidson and Ms. Stiffler was "fixed and
ascertainable" for the purposes of the definitions of "office" and
"officer" in subsection 2(1) of the Plan:
|
“office” means the position of an
individual entitling him to a fixed or ascertainable stipend or remuneration
and includes … , and “officer” means a person holding such an office;
|
Le poste qu’occupe un particulier, lui
donnant droit à un traitement ou à une rémunération déterminée ou
constatable. Sont visés par la présente définition une charge […];
« fonctionnaire » s’entend d’une personne détenant une telle
fonction ou charge.
|
[8]
The courts have not
been consistent in their views as to the meaning of "ascertainable"
or, in the French version of the Plan, "constatable" in
subsection 2(1) of the Plan. In Merchant v. M.N.R. Reed J.
took the word "ascertainable"
… to mean that the amount to be paid is capable of being made certain,
or capable of being determined but not that a definite sum be known by
the office-holder at the commencement of holding office. The word has to have
some meaning beyond "fixed" or else it is completely redundant.
(Emphasis added.)
[9]
The issue in Merchant
was whether expenses for a campaign for leader of a political party were
deductible in computing income from a business for purposes of the Income
Tax Act. The leader of the political party was provided with a stipend that
varied between $20,000 and $40,000 but sometimes was nothing. In the Minister's
view the income as party leader would be income from an office within the
meaning of subsection 248(1) of the Income Tax Act.
[10]
Justice Reed
considered the provisions of subsection 248(1) of the Income Tax Act,
in particular the definitions of "office" and "officer".
The definitions of office and officer in the Income Tax Act are similar
to those in the Plan; that the individual be entitled to a "fixed
or ascertainable stipend or remuneration" is required in the definitions
of "office" and "officer" in both statutes. However, in the
immediately preceding paragraph of the reasons I cite in paragraph 8,
Justice Reed asserted that:
… In order to be classified as income from an office the remuneration must
be fixed and ascertainable.
(Underline added.)
[11]
Reed J. disagreed
with the opinion of the Chairman of the Income Tax Appeal Board in 1952 that
"By 'position entitling one to a fixed and ascertainable stipend or
remuneration', Parliament, … meant a position carrying such a remuneration that
when accepting it a person knows exactly how much he will receive for the
services he is called upon to render..."
[English translation.] She was not convinced that at the time of taking office
the taxpayer must know how much he will receive. "… It seems to me",
she declared, "that a per diem rate, or a specified amount per
sitting renders the income sufficiently ascertainable to meet the definition in
subsection 248(1) …"
[12]
The word "fixed"
is given several meanings in the Shorter Oxford Dictionary. For our
purposes, the Short Oxford Dictionary's definition that
"fixed" means "stationary or unchanging" appears
appropriate. A fixed stipend or remuneration is one that the worker and employee
know at the outset. In the French version of subsection 2(1) the word
"déterminée" is used where "fixed" is
in English. The word "fixed", as "déterminée", more than suggests an amount known at the outset of
the tenure of office.
[13]
The reasons for judgment
of my former colleague Justice Dussault in Payette v. M.R.N.
are quite relevant to the appeal before me. Mr. Payette, a lawyer, was a
member of the review committee of the Commission des services juridiques of Quebec. This Commission sat on an irregular basis to review
eligibility decisions under Quebec's legal aid regime. Members of the
Committee were paid an honorarium of $50 per hour on days they provided
services. Dussault J. had to interpret the meaning of the word
"ascertainable" on the facts before him and reasoned as follows:
24 However,
in commenting on the decision in Guérin (supra), Reed J. appears
to assume that in that case the remuneration was not ascertainable mainly
because of the expenses the appellant was obliged to incur. The Court does not
agree with that position. The words "stipend" and
"remuneration" mean gross income, not income net of expenses. This is
clear from the wording of subsection 5(1) of the Income Tax Act. As
well, the Court considers that the descriptor "ascertainable" must
refer to something that can be ascertained a priori; otherwise it would
have no meaning since everything can be ascertained a posteriori. Thus
if the "stipend" or "remuneration" is not fixed, it must
still be ascertainable in advance with at least some degree of accuracy by
using some formula or by referring to certain set factors. The Court considers
that this is the meaning of the decisions in Guérin and MacKeen (supra).
…
26 …
[I]t is not enough to occupy a position: the position must entitle the person
to a "fixed or ascertainable stipend or remuneration",
according to the definition set out in subsection 2(1) of the Canada Pension
Plan. In the present case, it is clear that the position does not entitle a
person to a fixed remuneration or stipend. The Court also considers it
impossible to conclude that the remuneration is ascertainable since in this
regard the facts set out in the Notice of Appeal, the truth of which the
respondent has admitted, are insufficient. It is not known how many times each
member is called upon to sit on the review committee or how many days or hours
are spent on this activity in a given year. The information about the number of
review committee sittings held and the number of review applications heard each
year does not provide a reliable factor for individual members. The Court has
no idea of the "stipend" or the "remuneration" that the
members of the review committee were likely to receive for rendering their
services; nor has any such information been adduced, except that the members
are paid on a fee basis at a rate of $50 per hour. The Court considers that
merely indicating the hourly rate set by the Commission des services juridiques
is insufficient to establish that the position itself makes a member eligible
for a "fixed or ascertainable stipend or remuneration". …
[14]
The reasons in Payette
were followed by Beaubier J. in Churchman v. R. on substantially
a similar fact situation as in Payette and in the appeal at bar.
[15]
The word
"ascertainable is defined in the Oxford English Dictionary
as "1. Capable of being fixed, settled, or decided. 2. Capable of being
discovered or learned by agreement, examination, or investigation." The
Dictionary of Canadian Law
defines "ascertainable" as "capable of being made certain or
being determined."
[16]
The word used in the
French version of the definition of "office" and "officer"
in subsection 2(1) of the Plan for "ascertainable" is
"constatable". Le Grand Robert de la Langue Française
defines "constatable" as "qui peut être constaté". Le Grand
Robert defines "constater" as "1. Établir par
experience directe la vérité, la validité de; se rendre compte de …". Dictionaire
Encyclopédique Quillet's
definition of "constater" includes "vérifier la réalité d'un
fait, s'en assurer … Établir la réalité d'un fait, montrer, prouver …".
According to Larousse Trois Volumes "constater" means among
other things, "Prendre connaissance de … Établir la vérité de …" Lexis
Larousse de la langue Française defines "constater" as
"remarquer objectivement …"
[17]
In Merchant, Justice Reed
conjoined "fixed" and "ascertainable" and thus concluded
that the word "ascertainable" "has to have some meaning beyond
'fixed' or else it would be completely redundant." The words "fixed"
and "ascertainable" in the definitions of both the Plan and
the Income Tax Act are not conjoined. The stipend or remuneration may be
either fixed or ascertainable. The words "fixed" and
"ascertainable", in my view, are not redundant. In any event
Reed J.'s comments cited earlier were obiter. She concluded that on
the facts before her it was difficult to determine whether the sums paid were
ascertainable and assumed that they were not. She decided the appeal on other
grounds.
[18]
The Federal Crown
relied heavily on the reasons for judgment in Vachon (Succession de) v. Canada,
a decision of the Federal Court of Appeal. The taxpayers were the central
councils for two unions and 14 of their individual officials. The officials
were elected to their positions and were otherwise employed in local chapters
of the union. They received two to five days leave per week to carry out their
union activities and duties and were paid during that time pursuant to their
employers collective agreements. The employer was reimbursed by the local
chapter, who was in turn reimbursed by the central council. In addition, the
union officials also received allowances for the meal, travel and child care
expenses incurred in the course of their union work. The Minister determined
that the allowances paid by the central councils to the union officials were
taxable and were insurable earnings. The Court found that the allowances in
question were neither taxable nor insurable, as they were paid not in the
course of an office or employment but, rather, for the performance of union duties
on a volunteer basis. The judge found that the officials did not occupy an
office, as their activities did not entitle them to fixed or ascertainable
remuneration. The assessments were ordered vacated and the Minister appealed.
[19]
The Federal Court of
Appeal found that the union officials held an office within the meaning of
s. 248(1) of the Income Tax Act and s. 2(1) of the Plan.
The officials were all elected to the positions they held. Their positions
entitled them to a fixed or ascertainable stipend or remuneration. The union
officials knew of the monetary conditions associated with their leave when they
applied for the union position. The allowances were paid to the officials as
union officials during their leave to conduct activities associated with their
elected positions. They received their usual remuneration during their union
leave that they would otherwise receive in the course of their normal
employment. The fact that the remuneration was paid by employers rather than
the central councils did not change the analysis, as the payments were made on
behalf of the councils.
[20]
The Court of Appeal considered
whether the remuneration was fixed or ascertainable at paragraph 38 of its
reasons:
|
L'existence de ce deuxième critère est assujettie à deux
conditions. La charge ou le poste occupé doit « donner droit » à
une rémunération, et cette rémunération doit être « fixe ou vérifiable »
ou « déterminée ou constatable ». L'aspect fixe ou vérifiable de la
rémunération semble acquis puisque les militants connaissaient avec précision
les conditions monétaires rattachées à leur libération syndicale dès qu'ils
posaient leur candidature à un poste syndical (Témoignage de Pierre Morel,
dossier d'appel, vol. III, p. 707).
|
There
are two requirements for meeting this second test. The office or position
held must "entitle" the individual to remuneration, and this
remuneration must be "fixed or ascertainable". The fixed or
ascertainable aspect of the remuneration seems to have been met, since the union
officials knew exactly what the monetary conditions associated with their
union leave were when they applied for a union position (Testimony of Pierre
Morel, appeal book, Vol. III, p. 707).
|
[21]
Counsel for the
respondent submitted that Vachon is very similar to the case at bar. In
his view, "those persons who were members, specifically these workers
here, knew what the monetary conditions were. They knew that they were going to
be paid a set rate."
[22]
In Vachon the
union officials were permitted to be absent from their regular employment
obligations in order to attend to union duties. Under the collective agreement
it was established that the union officials would not be penalised monetarily
for their commitment to their union positions. As such, no matter how many days
they spent fulfilling union duties, they would always be assured of receiving
the full amount of their employment salary. They could not receive more
remuneration by engaging in union activities more frequently. Neither would
they receive less if their union duties were not particularly onerous. The only
differences were the amounts they received as allowances for travel, meals and
childcare.
[23]
The remuneration of the
union members in Vachon was "fixed or ascertainable" because
the remuneration could not vary from their actual salary (other than by the
amount of the allowances). The union officials always knew in advance what
their salary would be for the year. The total compensation that the union
officials would receive was always fixed at the beginning of the year. It did
not exceed or fall short of their base salary. The only unknown was what
percentage would be paid by the employer and what would be paid by the union.
This is consistent with the reasoning in Payette.
[24]
I agree with the
reasons of Dussault J. in Payette. The time when an amount of
remuneration or stipend is to be ascertained for the purpose of
subsection 2(1) is at the beginning of the term of the employment when,
for example, the payer has to begin to withhold amounts from remuneration paid
to the employee and make contributions to the Canada Pension Plan on its own
account. The fact that one part of the formula to determine the amount of
remuneration or stipend, in the appeals at bar, the per diem rate,
is known at the commencement of the employment does not make the amount
ascertainable. As Dussault J. pointed out such a definition would strip
any meaning from the term "ascertainable", since everything can be
known a posteriori.
[25]
For the purposes of
subsection 2(1) of the Plan the stipend or remuneration must be ascertainable;
they must be known to both the payer and payee or be calculable to a reasonable
degree of certainty before the term of office begins. Remuneration is ascertainable
for example if a person knows or reasonably expects that he or she will be
called upon to attend approximately 20 meetings of a committee during the
year and will receive payment of $100 for each meeting. The person would know with
a reasonable degree of certainty that the remuneration from the office will be approximately
$2,000 for the year. If at the commencement of the year or beginning of the
tenure of the position, the person has no idea how many meetings he or she will
attend in a year, there is no way to reasonably ascertain the stipend or
remuneration. In the appeals at bar, the days either appellant would attend
meetings during the year would depend on the number of judicial vacancies in
the year, among other things. The evidence at bar was that the number of days
the appellants be required to fulfill their obligations as members of JAAC
varied significantly from year to year. To ascertain their income from JAAC at
the beginning of any year would not be a reasonable exercise.
[26]
The appeals are
allowed.
Signed at Ottawa, Canada, this 17th day of January, 2011.
"Gerald J. Rip"
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