Docket: 2007-4751(EI)
BETWEEN:
ARNOLD WILK TRUCKING LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the
appeals of
Dale Wilk, 2007-4753(EI)
and Darren Wilk, 2007-4763(EI)
on November 28, 2008 at Regina, Saskatchewan
Before: The Honourable
Justice G. A. Sheridan
Appearances:
|
Counsel for the Appellant:
|
Kerry
R. Chow
|
|
|
|
|
Counsel for the Respondent:
|
Anne Jinnouchi
|
____________________________________________________________________
JUDGMENT
The appeal is dismissed and the decision of the
Minister is confirmed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 9th day of April, 2009.
“G. A. Sheridan”
Docket: 2007-4753(EI)
BETWEEN:
DALE WILK,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the
appeals of
Arnold Wilk Trucking Ltd., 2007-4751(EI)
and Darren Wilk, 2007-4763(EI)
on November 28, 2008 at Regina, Saskatchewan
Before: The Honourable Justice G. A. Sheridan
Appearances:
|
Counsel for the
Appellant:
|
Kerry R. Chow
|
|
|
|
|
Counsel for the
Respondent:
|
Anne Jinnouchi
|
____________________________________________________________________
JUDGMENT
The appeal is dismissed and the decision of the
Minister is confirmed in accordance with the attached Reasons for Judgment.
Signed at
Ottawa, Canada, this 9th day of April, 2009.
“G. A. Sheridan”
Docket: 2007-4763(EI)
BETWEEN:
DARREN WILK,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the
appeals of
Arnold Wilk Trucking Ltd., 2007-4751(EI)
and Dale Wilk, 2007-4753(EI)
on November 28, 2008 at Regina, Saskatchewan
Before: The Honourable Justice G. A.
Sheridan
Appearances:
|
Counsel for the
Appellant:
|
Kerry R. Chow
|
|
|
|
|
Counsel for the
Respondent:
|
Anne Jinnouchi
|
____________________________________________________________________
JUDGMENT
The appeal is dismissed and the decision of the
Minister is confirmed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 9th day of April, 2009.
“G. A. Sheridan”
Citation: 2009TCC191
Date: 20090409
Docket: 2007-4751(EI)
BETWEEN:
ARNOLD WILK TRUCKING LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
Docket: 2007-4753(EI)
AND BETWEEN:
DALE WILK,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
Docket: 2007-4763(EI)
AND BETWEEN:
DARREN WILK,
Appellant
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Sheridan, J.
[1] The Appellants,
Dale Wilk and Darren Wilk, are appealing the decision of the Minister of
National Revenue that their employment with the third Appellant, Arnold Wilk
Trucking Ltd.[1], was excluded from the definition of “insurable
employment” under paragraphs 5(2)(i) and 5(3)(b) of the Employment
Insurance Act.
[2] Dale and Darren
are the sons of Arnold Wilk, the majority shareholder of Arnold Wilk Trucking
Ltd., a company based in Moose Jaw,
Saskatchewan that hauls aggregate for
use in road construction throughout the province. There is no dispute that Dale[2] and Darren[3]
were employees of Arnold Wilk Trucking Ltd. or that they were not dealing at
arm’s length with Arnold Wilk Trucking Ltd. The only issue is whether the
Minister properly exercised his discretion under paragraph 5(3)(b)
of the Employment Insurance Act:
(3) Arm’s
length dealing – For the purposes of paragraph (2)(i),
…
(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.
[3] Dale, who has a
Class 1-A licence, was employed primarily as a truck driver but was also
responsible for managing job sites and some mechanic work in the off‑season.
Darren is an apprentice mechanic and worked as such in the company shop. He
also handled some management and administrative duties. During the relevant
period, there were approximately 12 arm's length employees one of whom was a
journeyman mechanic; the rest worked as truck drivers. Given the seasonal
nature of their work, each year all of the company’s arm's length employees except
the journeyman mechanic were laid off from freeze up to spring thaw.
[4] Dale and Darren
were also laid off and at some point, applied for employment insurance
benefits. Human Resources and Skills Development Canada sought from the Canada
Revenue Agency a ruling on the insurability of their employment.
[5] Thus it was that
Melodee Wells, a Canada Revenue Agency Coverage Officer, came to review the
Appellants’ files. Ms. Wells was called by the Respondent; she was a credible
witness who gave her evidence in a straight‑forward manner. In making her
ruling, she reviewed the notes of the original investigating official from whom
she had received the Wilks’ files. She also spoke by telephone with Arnold,
Dale and Darren Wilk because it is her view (one I share) that an interview provides
a better opportunity for more thorough answers than does a standard form
questionnaire. After recounting the statutory criteria to be applied generally in
making such a ruling, Ms. Wells explained the specific factors that had formed
the basis of her decision regarding Dale and Darren’s employment: their
remuneration, including the receipt of bonuses; loans and advances; and the
circumstances of their lay offs.
[6] Before reviewing
the evidence at the hearing in respect of these headings, it is useful to
recall the role of the Tax Court of Canada in its review of the Minister’s
decision:
15 The function of an appellate judge is thus not
simply to consider whether the Minister was right in concluding as he did based
on the factual information which Commission inspectors were able to obtain and
the interpretation he or his officers may have given to it. The judge's
function is to investigate all the facts with the parties and witnesses called
to testify under oath for the first time and to consider whether the Minister's
conclusion, in this new light, still seems "reasonable" (the word
used by Parliament). The Act requires the judge to show some deference towards
the Minister's initial assessment and, as I was saying, directs him not simply
to substitute his own opinion for that of the Minister when there are no new
facts and there is nothing to indicate that the known facts were misunderstood.
However, simply referring to the Minister's discretion is misleading.
[7] It must also be
borne in mind that the Appellants bear the onus of showing the Minister’s
assumptions to be incorrect. Arnold Wilk and the Appellants, Dale and Darren
testified at the hearing; their evidence and its effect will be considered
under the criteria considered by Ms. Wells to determine whether in the “new
light” of the hearing, the conclusion reached by the Minister still seems
reasonable.
Remuneration
[8] Counsel for the
Appellant submitted that the fact that the Appellants Dale and Darren were paid
a set monthly salary regardless of the number of hours actually worked while
the arm's length employees received an hourly wage based on their recorded
hours did not justify the conclusion that they were on a different footing. While
that may be theoretically true, the evidence presented by the Appellants did
not provide any clear picture to explain the difference in how Dale and Darren
were paid. Nor do I see what the evidence that the arm's length employees were
paid at different hourly rates depending on their experience has to do with why
the Appellants were paid a set salary regardless of the hours worked.
[9] It
seems to me that the explanation lies in Dale and Darren’s connection to the
family business. I accept the Appellants’ evidence that Dale and Darren often
worked in excess of a forty hour week. They struck me as hard-working fellows,
fully committed to the family enterprise, who (if ever they did take time off
for recreational or other reasons) could be relied upon to make sure any
outstanding work still got done. That is why it was unnecessary for them to log
their hours like the arm's length employees. None of that is bad, quite the
contrary. However, it tends to show as reasonable the Minister’s conclusion
that the difference in the payment of their earnings had to do with their
non-arm's length relationship with their employer.
[10] As for the matter
of bonuses, the Minister assumed, and the Appellants admitted, that in 2004, Dale
and Darren had received bonuses of $5,525[5]
and $1,700[6], respectively. Arnold Wilk testified that the arm's
length employees had also received bonuses (albeit on an ad hoc basis)
in the past and that in 2008, a more formal bonus structure had been
established. As none of this information regarding bonuses pertains to the
relevant periods, I do not see how they assist in the determination of the
question under consideration.
Loans
and Advances
[11] Ms. Wells
testified that she took into account the fact that Arnold Wilk Trucking Ltd.
had lent $8,000, without interest, to Dale for the purchase of a truck and other
amounts to Darren to tide him over pending the resolution of his entitlement to
employment insurance benefits. Although Dale had been making monthly payments
on the truck loan, those were put in abeyance while he was laid off. As for
Darren, Arnold Wilk testified that he expected full repayment from Darren if he
was successful in his appeal; otherwise, the amounts would be deducted from his
future earnings. He also said that the company had from time to time made loans
to arm's length employees; these were often repaid by deducting amounts from
their wages. In at least one instance, no repayment was ever made. Ms. Wells
had interpreted these “loans” as advances on salary. That does not strike me as
unreasonable; at the hearing, there was no documentary evidence to corroborate
any loans made to arm's length employees. Nor did the Appellants’ evidence
convince me that there was any reason to overturn the Minister’s conclusion that,
but for the family relationship, the company would have been unlikely to lend
such amounts and on such generous terms to Dale and Darren.
Circumstances
of Lay Off
[12] Ms. Wells
testified that she had taken into account the seasonal nature of the work and
the fact that the arm's length employees had no choice as to whether they would
be laid off as soon as the weather made it impossible to continue roadwork. Her
information with respect to Dale and Darren was that Darren preferred to be
laid off and that Dale took over his shop duties in the off-season. She was
also of the view that because Darren was the one with shop and management
experience and was paid a lower wage, but for the family connection, the
company would have been more likely to keep Darren on and lay off Dale.
[13] Counsel for the
Appellant argued that that decision was a managerial one and it was not for the
Minister to second guess the company. He submitted further that Ms. Wells ought
to have taken into account that Dale, as a trucker with site management
experience and some mechanical skills, could play a dual role and was,
therefore, the better candidate for the kind of work done in the off-season.
Again, this is not an unreasonable argument but there was little evidence in support
of it. Darren denied that he preferred to be laid off. Dale denied that he was
“replacing” his brother. But neither they nor their father could explain the rationale
for the lay off plan other than to say that Dale was able to drive the trucks
that were being certified in the off-season. The Minister was aware of these
facts when he made his decision. In these circumstances, I am unable to justify
interfering with the Minister’s conclusion.
[14] As Ms. Wells noted at the hearing, in exercising his
discretion under paragraph 5(3)(b), the Minister considers the
cumulative effect of the facts gathered in respect of the statutory criteria. For the reasons set out above, the Appellants have not
persuaded me that it was not reasonable for the Minister to conclude that the
employment of the Appellants, Dale Wilk and Darren Wilk, was excluded from
insurable employment. The appeals are, therefore, dismissed.
Signed at Ottawa,
Canada, this 9th day of April, 2009.
“G. A. Sheridan”
CITATION: 2009TCC191
COURT FILE NOS.: 2007-4751(EI); 2007-4753(EI);
2007-4763(EI)
STYLE OF CAUSE: ARNOLD WILK TRUCKING LTD. AND THE MINISTER OF
NATIONAL REVENUE AND BETWEEN DALE WILK AND THE MINISTER OF NATIONAL REVENUE AND
BETWEEN DARREN WILK AND THE MINISTER OF NATIONAL REVENUE
PLACE OF HEARING: Regina, Saskatchewan
DATE OF HEARING: November 28, 2008
REASONS FOR JUDGMENT BY: The
Honourable Justice G. A. Sheridan
DATE OF JUDGMENT: April 9, 2009
APPEARANCES:
|
Counsel for the
Appellants:
|
Kerry R. Chow
|
|
|
|
|
Counsel for the
Respondent:
|
Anne Jinnouchi
|
COUNSEL OF RECORD:
For the Appellants:
Name: Kerry R. Chow
Firm: Chow
& Co.
Moose Jaw, Saskatchewan
For the
Respondent: John H. Sims, Q.C.
Deputy
Attorney General of Canada
Ottawa,
Canada
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