Docket: 2006-3793(EI)
BETWEEN:
ZAVECO LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on April 25, 2007 at Montreal, Quebec
Before: The Honourable Justice G. A. Sheridan
Appearances:
|
Counsel for the
Appellant:
|
Laddie H. Schnaiberg
|
|
|
|
|
Counsel for the
Respondent:
|
Isabelle Pipon, Student at Law
|
____________________________________________________________________
JUDGMENT
In accordance with the attached Reasons for
Judgment, the appeal is allowed, and the
decision of the Minister of National Revenue is vacated.
Signed
at Ottawa, Canada, this 5th day of September, 2007.
"G. A. Sheridan"
Citation: 2007TCC529
Date: 20070905
Docket: 2006-3793(EI)
BETWEEN:
ZAVECO LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Sheridan, J.
[1] The issue in
this appeal is whether the Minister of National Revenue properly calculated the
insurable earnings and accordingly, the employer premiums, of the Appellant,
Zaveco Ltd., in respect of its employee Shameer Ally.
[2] Mr. Ally was
employed as a superintendent in an apartment building owned by the Appellant
during the period December 12, 2005 to June 16, 2006. He was paid $450 per week,
$30 of which was attributed to the value of the apartment the Appellant
provided to him as part of the job. The Minister adjusted this amount on the
basis that the apartment's value ought to be proportionally equal to the rent
charged to tenants for apartments of the same square footage and layout in the
building. These were rented for approximately $650 per month. The Minister
increased the apartment component of Mr. Ally's weekly salary from $30 to
$150; his insurable earnings for the period were likewise increased from
$12,412 to $16,200. The Appellant was reassessed accordingly for the
employer's premiums. It is from that assessment that the Appellant appeals.
[3] The amount of
insurable earnings is calculated in accordance with the provisions of the Insurable
Earnings and Collection of Premiums Regulations as set out below:
2.(1) For the
purposes of the definition "insurable earnings" in subsection 2(1) of
the Act and for the purposes of these Regulations, the total amount of earnings
that an insured person has from insurable employment is
(a) the
total of all amounts, whether wholly or partly pecuniary, received or enjoyed
by the insured person that are paid to the person by the person's employer in
respect of that employment, and
...
(3) For the
purposes of subsections (1) and (2), "earnings" does not include
(a) any
non-cash benefit, other than the value of either or both of any board or
lodging enjoyed by a person in a pay period in respect of their employment if
case remuneration is paid to the person by their employer in respect of the pay
period;
[4] Testifying on
behalf of the Appellant was Zave Aberman, its principal and the manager of the
company's rental property business. At the hearing, Mr. Aberman made no
secret of his unhappiness with the Respondent's position, often disrupting the
testimony of the Respondent's witnesses by making noises and pulling faces. It
finally became necessary for the proper conduct of the hearing to have him remove
himself from the counsel table to sit in the public gallery.
[5] Notwithstanding
such foolish behaviour, Mr. Aberman was nonetheless credible in his evidence
regarding the property management practices in Montreal. He has some 30 years'
experience in the business. I accept his evidence that landlords routinely
provide rental accommodation, as part of their remuneration, to their building
superintendents. As well as being an incentive for accepting a demanding, but
modestly paid, position, this practice ensures there is a company
representative on hand to respond to tenants' needs and to the protect the
landlord's property.
[6] The Respondent
called Mr. Ally. He was originally hired as the building super in 1999. While
not officially on duty "24-7", he was required to live in the
building and to make himself generally available to tenants and prospective
renters. His duties included maintaining the building and grounds, as well as
seeing to emergency maintenance problems, collecting rent, showing rental units
and accepting rental applications. He also had to be available to the demanding
Mr. Aberman, who made the rounds of his apartment buildings on a daily
basis, and presented himself at Mr. Ally's apartment every morning at eight o’clock.
The rental applications that Mr. Ally had to provide to prospective tenants,
rent collection records and similar documents were kept in the apartment;
janitorial tools and equipment were apparently stored elsewhere in the
building.
[7] The Respondent's
other witness was Mr. Henriot Cléophat, the Appeals Officer. I accept his
evidence that upon receiving the Appellant's objection to the Minister's
determination, Mr. Cléophat tried to meet with Mr. Aberman to discuss his
concerns. Mr. Aberman refused to do so, telling him to "talk to his lawyer".
His lawyer, the same counsel who represented the Appellant at the hearing, neglected
to file his materials within the time provided by Mr. Cléophat. On cross‑examination
of Mr. Cléophat, counsel took the unusual tack of blaming him for his own
short-comings in this regard. In any event, Mr. Cléophat quite rightly
made his deliberations based on what he had on the file: essentially, that Mr.
Ally occupied a 4½-room apartment in a building where apartments of the same
square footage and layout commanded a monthly rent of $650 per month. As a
result, the Minister determined that the Appellant's provision of an apartment
ought to be valued at $150 per week rather than $30.
[8] Had Mr. Aberman
behaved more sensibly at the beginning, Mr. Cléophat might have had a more
complete picture. In any case, having had the benefit of the Appellant's and
Respondent's evidence, I am of the view that a proper assessment of the value
of the apartment provided by the Appellant cannot be made strictly on the basis
of square footage. While I accept that tenants occupying an apartment of
equivalent size were paying approximately $150 per week, what they got for that
price included the peaceful and private enjoyment of their premises. The same
cannot be said for Mr. Ally's apartment. The evidence of both Mr. Aberman and
Mr. Ally supports the conclusion that the super's apartment was effectively a
branch plant of the Appellant's property management office. Its lower rental
value was the result of the onerous conditions that applied to its occupancy:
being constantly available to receive Mr. Aberman on his daily visits and to
deal with tenant complaints, as well as collecting rent, cleaning the building,
shovelling snow, cutting grass and screening new renters. Counsel for the
Appellant is correct in his submission that for an accurate evaluation to be
made, like must be compared with like: because of the obligations that came
with the super's apartment, Mr. Ally's apartment was not "like"
the similarly sized apartments occupied by non-employee tenants.
[9] In support of
the Minister's contention that the value of the apartment ought to be the fair
market value of a similar apartment, counsel for the Respondent referred the
Court to the decision in Résidence au Fil de l’Eau Inc. v. Canada
(Minister of National Revenue). In that case, however, the Court specifically found
that the employer had failed to adduce sufficient evidence to satisfy its onus
of showing "an adjustment for loss of enjoyment and privacy of [the
employees'] apartments".
That is not the case here. For the reasons set out above, I am satisfied that
the Appellant has met its onus of showing the value it attributed to the
accommodation was the correct one. The appeal is allowed on the basis that
Mr. Ally's insurable earnings from December 12, 2005 to June 16, 2006 were
$12,412.
Signed at Ottawa,
Canada, this 5th day of September, 2007.
"G. A. Sheridan"
CITATION: 2007TCC529
COURT FILE NO.: 2006-3793(EI)
STYLE OF CAUSE: ZAVECO LTD. AND THE MINISTER OF NATIONAL REVENUE
PLACE OF HEARING: Montreal,
Quebec
DATE OF HEARING: April 25, 2007
REASONS FOR JUDGMENT BY: The
Honourable Justice G. A. Sheridan
DATE OF JUDGMENT: September 5, 2007
APPEARANCES:
|
Counsel for the
Appellant:
|
Laddie H. Schnaiberg
|
|
|
|
|
Counsel for the
Respondent:
|
Isabelle Pipon, Student at Law
|
COUNSEL OF RECORD:
For the Appellant:
Name: Laddie H. Schnaiberg
Firm: Laddie
Schnaiberg
Montreal, Quebec
For the
Respondent: John H. Sims, Q.C.
Deputy
Attorney General of Canada
Ottawa,
Canada
Email this Content