|
Citation: 2008 TCC 456
|
|
Date: 20080812
|
|
Dockets: 2007-2655(EI)
2007-2656(CPP)
|
|
BETWEEN:
|
|
SHERRY PAI,
|
|
Appellant,
|
|
and
|
|
|
|
THE MINISTER OF NATIONAL REVENUE,
|
|
Respondent.
|
REASONS FOR JUDGMENT
Rowe D.J.
[1] The Appellant appealed from two decisions, both dated March 12, 2007,
issued by the Minister of National Revenue (the “Minister”) pursuant to the Employment
Insurance Act (the “Act”) and the Canada Pension Plan (the “Plan”)
wherein the Minister decided the Appellant, Sherry Pai (“Pai”), was not engaged
in insurable or pensionable employment with Regions Group of Companies International
Trading Ltd. (“Regions”) from May 6 to October 18, 2002.
[2] Counsel for the parties agreed both appeals could be heard together.
[3] On consent of counsel for the Respondent, counsel for the Appellant
filed (Exhibit A-1) a binder with documents at Tabs 1 to 27, inclusive.
[4] On consent of counsel for the Appellant, counsel for the Respondent
filed (Exhibit R-1) a binder with documents at Tabs 1 to 62, inclusive.
[5] Soraya Motameni was called to the stand by Gregory Bruce, counsel
for Pai. Motameni testified she works as a store manager in Burnaby but was employed by Regions as the
Managing Director (“Director”) of an English as a Second Language (ESL) school
that operated at 900 West Hastings Street, Vancouver, British Columbia. She was aware Samir Fawaz (“Fawaz”) was the owner and in control
of Regions which also operated the language school under the name Regions
Training Institute (“RTI”). She started working at RTI early in 2001, at which
point there were about 18 classrooms and more than 100 students. As Director,
Motameni was in charge of hiring and firing language teachers, scheduling
morning and afternoon classes and generally assuring the operation ran
smoothly. There were about 20 teachers and the students were mainly from Japan,
South Korea, Taiwan and China. Motameni stated the Appellant, Pai,
worked as her assistant and performed administrative duties such as scheduling
teachers and allocating classrooms. Counsel referred Motameni to an information
sheet (Exhibit A-1, Tab 1) in which answers were provided to certain
questions concerning RTI, and to several sheets (Exhibit A-1, Tab 2) one of
which contained a message of welcome to incoming students and to other pages
which pertained to program information, enrolment applications and contracts,
and the last one which identified Motameni as Managing Director and Sherry
Pai as Director’s Assistant. Motameni stated these documents were typical as
part of the operation of the school but had no current specific recollection of
them. Although Motameni did not participate in the establishment of a website,
she was certain the documents (Exhibit A-1, Tab 3) related to it and was
aware an attractive brochure had been produced for the purpose of supplying
them to prospective students. Although Motameni was not involved in the
production of other documents, such as the Notice to Students (Exhibit A-1, Tab
4), nor the document in Chinese characters (Exhibit A‑1, Tab 5), nor
the documents relating to Home Stay (Exhibit A‑1, Tab 6),
nor the Dismissal Policy and Procedures (Exhibit A‑1, Tab 7),
she was aware they were part of the set of documents provided to students.
Motameni recalled that Regions had issued her several pay cheques which
were returned NSF, but made good later, and on other occasions her pay was
late, particularly during the period commencing about six months after the
attack on the World Trade Center on September 11, 2001 because foreign student
enrolment dropped sharply. Motameni recalled that Pai also worked from 8:00
a.m. to 5:00 p.m. during the week.
[6] Motameni was cross-examined by Bruce Senkpiel, co-counsel for the Respondent.
Motameni stated her memory was not good with respect to dates but believed she
started working for RTI in 2000. Motameni recalled a telephone interview with
Susan Lazic (“Lazic”), an investigator, in May 2005 who asked her questions
about her employment at RTI. Counsel pointed out that when asked to provide
names of co-workers, she mentioned Maria, a receptionist, and Cyrus Zahedi
but did not mention Pai. Motameni explained she is forgetful but asserted Pai
did work for RTI. Counsel informed Motameni that when speaking later to
Carin Amber (“Amber”), Appeals Officer, she told Amber that Pai was
already working at RTI before she was hired as Director. Counsel also advised
Motameni that Amber’s notes of the interview indicated Motameni stated she did
not interact with Pai in the course of her work. Motameni responded by saying
that “seven or eight years have passed and my Regions Training School
experience was the worst experience of my life. I try to forget everything that
went on in there and I moved on. I may have said something that’s contradicting
what I’m saying today but Sherry Pai was working at Regions Training Institute.
Whether as my assistant or as someone else’s, she was working and she was
reporting to me”. Motameni stated she assigned tasks to Pai and supervised her
work but could not recall many aspects of the RTI business operation until
shown certain documents in the course of her testimony. Motameni stated she had
not hired Pai and did not interview her as that task was undertaken by Fawaz.
[7] During re-examination by counsel for the Appellant, Motameni stated
she could not recall any government official having requested a complete list
of every person who worked at the office occupied by the group of companies
operating as Regions.
[8] Hassan Yazdani testified he is a certified machinist and is the
husband of Sherry Pai. They were married in 2000 but had known each other since
1993. Although Yazdani has worked for the same employer for 15 years, Monday to
Friday, in February 2003, he incorporated RHS Services Ltd. (“RHS”) to carry on
a machining business and built a workshop in their family home. Pai did the
necessary paperwork in connection with the services provided by RHS to its
customers and this sideline business currently provides about one-third of
Yazdani’s annual revenue. Starting about 1994, Yazdani hired Fawaz as his
accountant to do bookkeeping and to file personal income tax returns and
visited him three or four times a year. Yazdani was referred to a Report of
Interview (Exhibit A-1, Tab 27) prepared by Susan Lazic in relation to a
telephone interview on May 3, 2005 concerning a Record of Employment (“ROE”)
that had been issued by RHS to Lilian Liu (“Liu”) purporting that she had
worked 267 hours and had insurable earnings in the sum of $4,980.00. Yazdani
recalled the interview and that he informed Lazic that RHS had no employees and
that he did not know Lilian Liu. He explained to Lazic that when contacted
about the matter, he called Fawaz who assured him it was a mistake and that Liu
had worked on RHS files for accounting and income tax purposes but she had
worked 26.7 hours instead of 267, the number stated in the ROE by mistake.
Yazdani stated he was assured by Fawaz the matter would be corrected. Yazdani
stated that after that event, he did not want Fawaz working on his tax returns
in the future. Yazdani stated Pai had worked at different translation jobs from
time-to-time but had been looking for steady work when she showed him a
newspaper advertisement placed by a language school located at 900 West Hastings Street in Vancouver. Yazdani stated he recognized the
name Regions as that of the accounting business he visited when taking his tax
and accounting material to Fawaz. During those visits, he had observed several
people on the premises. After Pai was hired by RTI to work at the school, he
understood her role was to coordinate schedules and to work with students
regarding administration. Because he also speaks Farsi, he carried on some
conversations with Motameni who worked at the school. He was aware that
Kathleen Owens, the wife of Fawaz, also worked there in some capacity. At some
point in 2002, Pai mentioned there was a lack of students and a resulting
reduced cash flow to the school because of travel restrictions imposed
following September 11, 2001. Yazdani stated he was concerned because they had
purchased a house in 2002 and were undertaking an expensive renovation and two
incomes were required to make the payments on the credit card which had been
used to pay certified trades people. In November 2002, their son was born and
Yazdani’s mother came to Canada
to help care for the child while Pai searched for work following the expiration
of maternity leave.
[9] Hassan Yazdani was cross-examined by Carl Januszczak, co-counsel for
the Respondent. Yazdani agreed he is the sole director and shareholder of RHS
and stated Fawaz handled all documents and required filings for the
corporation. Yazdani was referred to an ROE (Exhibit R-1, Tab 53) apparently
issued by RHS Services Ltd., Coquitlam, B.C., from the same address as the
one registered with the British Columbia Ministry of Finance, Corporate and
Personal Property Registries. The ROE purported Lilian Liu had been employed by
RHS from December 15, 2003 to April 16, 2004. A payroll number for RHS was
included in the ROE which Yazdani stated was filled out and signed by someone
other than him. He had not requested any blank ROE forms from Human Resources
Development Canada (“HRDC”), as it then was, nor did he request Fawaz to obtain
a payroll number and recalled he had obtained a form which he completed and
returned to Canada Revenue Agency (“CRA”) for the purpose of advising that RHS
did not have any employees. When interviewed by Lazic at the HRDC office in Burnaby, he produced various documents to
prove the signature on the ROE was not his own. He recalled advising someone
during an interview that he had been upset with Fawaz and had attempted to
contact him repeatedly and left messages to that effect and had been assured
later by Fawaz that this mistake concerning Lilian Liu’s ROE would be
corrected. Counsel advised Yazdani that Nazrin Yazdani (“Nazrin”) had
allegedly worked for Aberdeen Financial Services (“Aberdeen”) one of the entities operating
within Regions. Yazdani confirmed that Nazrin was his sister and had lived in
the same house with him and Pai. Yazdani stated that when Pai showed him the
Regions newspaper advertisement, he recognized the name and when he telephoned
the number therein and heard the receptionist’s voice, knew it was Maria with
whom he set up an appointment for an interview with his wife. He told Pai the
language school was operated by the same group of companies, Regions, that did
his accounting. Yazdani recalled there was much less activity at the Regions
premises when he attended there at the end of February 2002 in connection with
the preparation of his income tax return for the 2001 taxation year. Yazdani
agreed that Fawaz also prepared the T-1 tax return for Pai (Exhibit R-1, Tab 47)
for the 2004 taxation year which Pai signed and was received by the CRA on June
1, 2005. The preparer was shown as Aberdeen Financial Services Inc. which
Yazdani understood to be one of the companies associated with Regions that
Fawaz used to perform accounting work for clients and that Fawaz had not worked
personally on those returns. Yazdani stated he was aware that HRDC was seeking
repayment of about $20,000.00 in UI maternity leave benefits because of the
decision by the Minister that she was not employed by Regions during the period
claimed.
[10] Sherry Shih-Wei Pai testified she is currently
a homemaker looking after three young children, all under age six, and lives
with her husband, Hassan Yazdani, in Coquitlam, British Columbia. She was born in Taiwan but immigrated to Canada in 1991 and became a citizen in 1997. She obtained a Bachelor of
Arts from the University of
British Columbia with a double major in psychology and Chinese studies. She
returned to Taiwan for three
years where she worked for an international consulting firm and also taught
English. She took human resources classes at National Sun Yat-Sen
University in Taiwan which has
exchange programs with the University of Victoria. Her work history is included in her resumé (Exhibit
A-1, Tab 9) and after her marriage to Yazdani in 2000 she remained in Canada and worked as an independent
contractor doing translations for a property management firm. She looked for
work by reading newspapers and searching the Internet. She saw the
advertisement placed by Regions and recognized the name but only in connection
with the accounting business that prepared her husband’s tax returns. Pai
stated she was interviewed by Motameni who telephoned later to inform her that
she was hired. Pai stated she started working for RTI on May 6, 2002, at the 4th
floor premises in the building at 900 West
Hastings Street. On that floor, there were several
small rooms each capable of holding six to eight people. There was a central
office area with computers and other equipment. Later, the language school
moved to another premises at 889 West Pender Street and she helped to move certain items and worked in the new location
for a while prior to the end of her employment. Pai stated the 900 West Hastings Street location had
businesses other than the language school operating out of it. Her office was
at the rear and she worked as an assistant to Motameni. The language classes
changed every two weeks and this transition involved discussions with the
teachers who assessed proficiency of each student prior to permitting that
student to progress to another level of training. There were between 20 and 25
teachers who worked either in the morning or afternoon. Pai stated she also
worked on the RTI website and did translations and prepared a brochure and
other promotional material. She handled inquiries from local agencies who were
searching for language schools in Vancouver and delivered brochures so they could be distributed to potential
clients in Asia. She prepared the material in Exhibit A-1, Tab 1, undertook
revisions to the information sheets (Exhibit A-1, Tab 2) and to the website
content (Exhibit A-1, Tab 3), prepared the Notice to Students (Exhibit A-1, Tab
4) and prepared other documents at subsequent Tabs 5 to 8 (Exhibit A-1), inclusive.
Pai stated there was administrative work required as it related to the
students. She reported to Motameni and was assigned duties by her. Pai recalled
Fawaz was in the building and knew he was the owner of Regions which included
RTI, the language school. Pai stated she worked at RTI until her pregnancy was
nearing completion and received an ROE (Exhibit A-1, Tab 10) on
October 18, 2002. Although her pay cheques were late from time‑to‑time
and some were returned NSF, Pai confirmed she received the amount of $19,494.40
as stated in her ROE and that she worked 964.8 insurable hours. Her pay
stubs (Exhibit A-1, Tab 11) were based on an hourly rate of $20.20 and of the two
photocopies of four pay cheques, three cheques bear the notation “advance” on
the memorandum line. Pai was referred by her counsel to statements (Exhibit
A-1, Tab 13) issued by her financial institution, President’s Choice Financial,
a member of the CIBC group of companies. On August 28, 2002, she deposited a
cheque (Exhibit A-1, Tab 12) issued by Regions Group of Certified
Accountants W.L.L. Samir Fawaz in the sum of $540.00. Sometimes, she used
the automated banking machine (“ABM”) to make deposits into the account and
other times obtained cash which was used to pay contractors working on their
house renovation or for other household expenses including purchases for their
infant. Pai stated that because of her Asian upbringing, it was not an
extraordinary event to negotiate a pay cheque, as in Exhibit A-1, Tab 12, in
the sum of $3,402.24, dated August 7, 2002, by taking away cash. Pai explained
that paying bills in cash was not unusual in Taiwanese culture and even though
she tried to adjust to commercial customs after moving to Canada, in some respects she was not
“completely Canadian” and often used cash to pay bills or make purchases. The
account was in the name of Shih S. Pai and Pai stated transfers in and out may
have been to a joint account she had with her husband, Hassan Yazdani. Another
account statement (Exhibit A-1, Tab 14) pertained to a savings account at the
same financial institution and covers the period from March 28, 2002 to March
31, 2003. Another statement (Exhibit A-1, Tab 15) is in relation to an account
at President’s Choice, apparently in the sole name of Hassan Yazdani. Pai
stated this account is actually a joint account and that her husband had his
own account and also a commercial account he used for his business, RHS. Pai
identified a letter (Exhibit A-1, Tab 16) she sent to Susan Lazic at HRDC on
February 23, 2005 because she was not satisfied with the interview that took
place on December 9, 2004 and disputed the accuracy of Lazic’s notes (Exhibit
R-1, Tab 6) because she was upset at the time and had two young children with
her. In Pai’s opinion, she had provided a more complete explanation than was
noted about her relationship with Fawaz in that she indicated although she did
not know him personally, she was aware Regions was owned by him and that he had
an accounting business. Pai stated she also worked for Aberdeen Financial
Services (“Aberdeen”) from
February 2 to August 31, 2004, but only dealt with Pierre Lopez and did
not find out until later that Fawaz was involved with that entity. She was
aware Lopez had a full-time job selling medical equipment and supplies. Pai
stated she worked at home and reported to Lopez from time to time at an office
located in a building at 666 Burrard Street, Vancouver. Pai stated she never saw Fawaz
at that office and worked eight hours a day at home including sometimes late in
the evening when she made telephone calls to countries in Asia in order to
conform with business hours there due to the time difference. Pai stated she
received a letter from Lazic at HRDC dated February 9, 2005 (Exhibit R-1, Tab 8)
pertaining to her claim for UI benefits following the termination of her
employment with Aberdeen. Pai
replied by letter dated February 23, 2005 (Exhibit A-1, Tab 16) and
enclosed all her pay slips and bank deposit statements for the period ending
August 2004. On September 1, 2006, Pai was interviewed by Beverly Smith,
Appeals Officer, whose notes are in Exhibit R-1, Tabs 21 and 22. Pai also
responded to an inquiry from Carin Amber, Appeals Officer, in the form of a
letter dated January 22, 2007 (Exhibit A-1, Tab 17) pertaining to her claim
arising from her employment with Aberdeen. Pai stated she was paid a monthly
salary of $3,650.00 to provide her services to Aberdeen. Pai stated the Minister decided she was not engaged in insurable
employment with Aberdeen and she appealed from that decision but withdrew her
appeal shortly before trial on the advice of counsel because her working
relationship with Aberdeen had
a substantial number of indicia that pointed towards independent
contractor status rather than that of employee.
[11] Sherry Pai was cross-examined by Bruce
Senkpiel. Pai stated she thought she had informed Motameni during the interview
at the RTI premises that she was pregnant as it would not have been obvious
until much later. Nazrin Yazdani, Pai’s sister-in-law, lived with Pai and her
husband while also providing services to Aberdeen in relation to some e-commerce projects. Pai stated she did not
communicate with Nazrin about work matters as their relationship was not
friendly. Pai stated she was aware at the outset that the head teacher at RTI
was Kathleen Owens who was married to Fawaz at that time. The school
changed locations at the end of August 2002 and Pai assisted in that process
although she moved only text books and other light material in view of her
advancing pregnancy. Concerning the Aberdeen office in 2004, Pai stated it was on the 34th floor of
the building and some stairs led to another level where she worked on occasion
in a small office. Pai stated that when interviewed by Lazic about the Aberdeen employment situation, she stated
that Lopez was the person who provided her with instructions and that she did
not know Fawaz was involved and had she known that, she would not have accepted
the position. At some point in the working relationship, she was aware that
Lopez reported to an owner. Pai was referred to her T-1 General tax return for
the 2002 taxation year and to the Statement of Employment Expenses contained
therein in which a total of $1,609.50 was claimed as expenses against income.
Pai stated that although she had provided her husband with some receipts, she
had no specific recollection of having claimed those expenses including
parking: $360.00; postage: $362.00 and work-place-in-the-home expense of
$887.50. Pai acknowledged she signed that tax return on June 3, 2003 and by so
doing had certified that the information contained therein was correct.
Although there was no T-4 slip from Regions included in the return, Pai
reported employment income in the sum of $19,494.80, based on the amount of
insurable earnings stated in her ROE. Pai identified her tax return for the
2004 taxation year (Exhibit R-1, Tab 47) which she signed and was received
by the CRA on June 1, 2005. In that return, a Statement of Employment Expenses
detailed various expenses totalling $10,145.25 which sum was claimed against
income of $23,459.02 and resulted in a refund in the sum of $3,579.88 based on
information in said return. Included in those expenses were the following:
accounting and legal: $1,800.00; advertising and promotion: $2,726.59;
travel: $717.00; cell phone: $1,928.62 and parking: $183.13. Pai
stated she used supplies at the Aberdeen office or at home for which she was reimbursed. She did not claim
any amount for a home office in 2004. Pai identified her signature on the Questionnaire
dated November 13, 2006 (Exhibit R-1, Tab 31) pertaining to her 2002 employment
at RTI in which she stated at page 7 that everything required to perform her
tasks was provided by her employer, Regions, and that she had not incurred any
expenses. When completing the Questionnaire (Exhibit R-1, Tab 32) pertaining to
her employment situation with Aberdeen, Pai stated she worked primarily from
her home but also worked in the Aberdeen office and that everything was
provided by the payor so no expenses were incurred by her for automobile use or
travel and any work-related expense was reimbursed. Pai stated the office
located at Suite #3509, 666
Burrard Street had one desk, one credenza and three chairs. Pai stated Lopez
told her Aberdeen had other offices
elsewhere and left the office when she needed to use the desk. The office had
about 100 square feet but was equipped with a computer, printer, filing
cabinets and telephone. Pai confirmed that her 2003 tax return (Exhibit R-1, Tab
46) was prepared by Aberdeen Financial, an entity located at Suite #3400, 666 Burrard Street.
Pai agreed she signed this tax return on March 8, 2004 and started working for Aberdeen on February 2. The tax return did
not contain any reference to Fawaz but the ROE (Exhibit A-1, Tab 10) received
by mail from Regions was signed by Fawaz. Pai was referred to the account
statement (Exhibit A-1, Tab 15) and to an entry dated May 8, 2002 that
recorded an ABM deposit in the sum of $2,000.00 and another ABM deposit of
$3,000.00 on May 14, 2002, followed by a transfer on May 15 in the sum of
$2,000.00 out of the account to Regions and a transfer in from an unidentified
source on May 17, 2002. Pai stated she started working at RTI on May 6, 2002,
so is not aware why she would receive any cheque from Regions five days later.
Pai stated she did not know why the notation “advance” had been written on the
memorandum line of some of her cheques. Pai also stated that the Regions Group
of Certified Accountants W.L.L. Samir Fawaz cheque in the sum of $540.00 (Exhibit
A-1, Tab 12) with the notation “In Acc” had no connection with any
services provided by her to any accounting business operated by Fawaz. Pai was
referred to her pay stubs (Exhibit A-1, Tab 11) which showed Pai’s address
on French Street in Vancouver until after the May 24, 2002 pay
period when it was changed to the Linton Street address in Coquitlam. Pai stated Motameni provided her with a pay stub
for a particular pay period even when it was not accompanied by a pay cheque.
Counsel pointed out that the pay stubs produced by Pai and contained in Exhibit
A-1, Tab 11 for the period following May 2002, show RTI was located at 800-889 West Pender Street even though that
location had not been used until August. Pai stated she may have requested
Motameni print out all her pay stubs after the relocation had taken place and
the new RTI address was used as a result. Pai stated she did not receive any
pay stubs after June 28, 2002. According to the notes taken by Lazic (Exhibit
R-1, Tab 6), Pai did not mention working at the new West Pender location of RTI
and claimed to have worked out of the 900 West Hastings office until
her final day on October 18, 2002. Lazic recorded Pai’s responses that she
could name only two employees other than Motameni and that she deposited her
pay cheques regularly. Pai stated she was not asked by Lazic to name any of the
teachers at RTI and did not review the notes taken by Lazic following
termination of the interview. Pai stated she knew the names of the teachers at
RTI, their countries of origin and their family situations. Pai stated that
when questioned about the Aberdeen employment in 2004, she doubts she told Lazic she was hired by “a
friend of a friend” and does not know a person named Queena and to the best of
her recollection did not tell Lazic that Queena was her friend. Pai stated she
had not intended to convey the impression she did not know Fawaz and has no
recollection of that portion of the interview. Pai stated it may have been that
Fawaz told Lopez what instructions to pass along to her but she did not have
any contact with Fawaz when working for the Aberdeen entity. Pai stated she relieved Maria Malabanan on occasion by
taking over receptionist duties so Maria could have lunch or at other times as
required. The receptionist answered the telephones of various tenants in the
small offices located in the Regions premises, including those numbers assigned
to RTI, the language school, and other companies within the group called
Regions. Pai stated Lopez informed her that Aberdeen wanted to import products from China including electronics and that
there were people in Canada who
were interested in investing in such a venture. Pai stated she researched the
markets relating to cellular telephones, small home appliances, medical
supplies and visited various websites and made telephone calls to certain
contact numbers in China to
inquire about prices and availability of models, colours, function and quality
of cellular telephones. Pai stated she understood it was the intent of Aberdeen to import quantities of between
1000 and 4000 units and to make a profit by purchasing them at a reduced price
directly from the Chinese manufacturing source. Pai stated that as a Mandarin-speaking
person familiar with international business, she could obtain a better price.
Pai agreed she may have told Beverly Smith, Appeals Officer, that she was
pregnant when hired by Lopez to work for Aberdeen and that he was aware of her condition. Pai agreed she told Smith
she did not have any contact with Fawaz in respect of the Aberdeen China
project. Pai stated she produced banking records to the best of her ability but
the statements did not provide sufficient detail in many instances as to the
source of a deposit or transfer in or out of the account. Pai denied the
suggestion of counsel that her ROE pertaining to her work at RTI for Regions
was incorrect in that it inflated her insurable hours and insurable earnings.
She denied that she worked part-time only and asserted she worked on a full-time
basis for the period stated in the ROE. With respect to the ROE issued for her
work for Aberdeen in 2004, Pai
stated it was accurate and that she had received payment for the money shown on
the pay stubs produced in Exhibit A-1, Tab 21.
[12] Pai was re-examined by her counsel, Gregory
Bruce. Pai stated her sister‑in‑law, Nazrin Yazdani, lived with her
and her husband until 2004 and that Nazrin was unmarried and had a Master
degree from a foreign university. At the Regions premises, Pai distributed mail
to the various tenants by placing it in the appropriate box. Pai stated her
life was stressful due to the financial strains associated with the house
renovation and caring for two infants but she provided Lazic with the
appropriate material and attempted to persuade her that HRDC was “going after
the wrong person”, referring to herself. Pai stated she met Lopez to submit
reports and described him as tall, about 40-45 years old with a strong build
and dark complexion and that she also met his father at the office. Pai stated
her salary at Aberdeen was
based on a 40-hour week and when she prepared reports for Lopez she used
software such as Microsoft Word or Excel and provided commentary, observations
and conclusions based on her analysis but only made recommendations and was not
involved in any negotiations with foreign suppliers.
[13] Samir Fawaz testified he has lived in Vancouver since 1988 and is a businessman.
He stated he obtained a Bachelor and Master of Business Administration from the
University of Hamburg where he
studied after leaving his native Syria. He started an accounting business in Vancouver in 1993 and utilized Regions as a shipping agent for cargo lines.
In 1996, Regions began operating a business centre at 900 West Hastings and occupied the entire fourth
floor. In 1998, Regions also operated a tour business dealing mainly with
business people from Germany
and Japan. On February 1, 2001,
Regions opened the language school, RTI, at 789 West
Pender Street. In 2004, Regions used Aberdeen as an operating
name to search for trade opportunities, including importation of dental
supplies, in China, Dubai and Ireland. When RTI began operations, his
wife at that time, Kathleen Owens, handled day-to-day operations until Motameni
was hired to assume that role and Owens then worked as a language teacher.
Fawaz stated Motameni contacted him from time-to-time about matters pertaining
to the school and he attended every business day at the same premises whether
at the initial location or later at 900 West Hastings and finally at 889 West Hastings after the end of August 2002. Fawaz was referred to the school
brochure (Exhibit A-2) and the Registration Certificate (Exhibit A-3) issued by
the Private Post-Secondary Education Commission of British Columbia and to other
material within the Exhibit including a 2001 business licence issued by the
City of Vancouver. Fawaz stated
Regions invested approximately $400,000.00 to start the language school. Fawaz
identified Pai as one of the RTI staff present during a student field trip to
Harrison Hot Springs as reproduced by printing pages from the school
website (Exhibit A-1, Tab 3). Fawaz stated that a spreadsheet (Exhibit A-4) was
prepared by someone versed in that skill and was used by Motameni and others
under her direction. According to the Regions Income Statement (Exhibit A-5)
for the period 01/01/2001 to 31/12/2001, RTI had total revenue of $661,096.45
after deducting promotional discounts in the sum of $244,836.54 and incurred
expenses in the sum of $961,804.37 resulting in an operating loss of
$300,707.92. The total payroll was $379,764.81 which was paid mainly to the 20
or 25 language teachers and to Motameni, $3,500.00 per month, and to her
assistant, Pai. Fawaz stated he did not recall hiring Pai and that this task
fell within the area of responsibility assigned to Motameni. He was aware Pai
spoke Mandarin and worked to liaise between students, teachers and agents who
were interested in recruiting foreign students, mostly Asian, to come to
Vancouver to study English. Fawaz identified Pai in a bundle of photocopied
pictures (Exhibit A-6) taken of either teachers or teachers and students during
activity trips in 2002. Fawaz was referred to an Agency Phone List (Exhibit
A-1, Tab 8), which he identified as a spreadsheet Pai had prepared in
connection with a project designed to find agents willing to enter a contract, Independent
Agent Agreement, with RTI to recruit students who would enrol in the school.
Fawaz stated Pai worked at RTI Monday to Friday, 9:00 a.m. to 5:00 p.m., and
had worked the number of hours stated in her ROE (Exhibit A-1, Tab 10). The ROE
was prepared by Cyrus Zahedi, an employee of Regions, and the corporate address
provided in the ROE was 14 floor, 400 Burrard Street, Vancouver. Fawaz stated that two computers were used by Regions
and the information in one of them may have been different but when the ROE was
issued, the language school was operating from 889 West Hastings. Some students were being taught
at that address in May 2002 but by the end of August the entire school had been
relocated there from the 900 West Hastings premises. Fawaz stated RTI suffered cash flow problems due to
declining enrolment and that it was not possible to meet payroll demands on a
timely basis. Some pay cheques bounced and the lines of credit were utilized to
the maximum in an effort to permit the school to continue. Enrolment declined
by more than 50% in a short period due to several factors including the impact
of travel restrictions following September 11, 2001, and RTI closed down the
school at the end of 2002. Fawaz stated he prepared the income tax returns of
Hassan Yazdani since the 1990s and saw him two or three times a year in
connection with accounting matters but had no social contact. With respect to
the business operation known as Aberdeen, it rented a small office and work station in a building located at
666 Burrard. Aberdeen was
involved in e‑commerce and research was undertaken to source medical
supplies. Fawaz asked Pierre Lopez to look after this business operation and
believes Lopez obtained the services of Pai who was suited to the task since
she was a hard worker and spoke Mandarin and English. Fawaz stated he and Lopez
were looking at importing several products, including cement and medical
supplies such as gloves, known commonly as rubber gloves, used in medical and
dental offices, hospitals and by others concerned with hygiene and protection.
Fawaz stated Lopez had a full-time job as a medical supply salesman and asked
him to pass on instructions to Pai. Fawaz stated he received information
gathered by Pai in the form of an e-mail and read reports that contained
contact names, prices and related details which he forwarded to certain
overseas clients. Fawaz explained that neither Aberdeen Financial Services nor
Aberdeen Financial Group was incorporated as a company because the name Aberdeen was not available. As a result, Aberdeen was used as a name to signify a
division within Regions. However, a limited company called Abardeen, with an a,
Financial Group Inc. was formed and its head office was at Suite 3400, 666
Burrard, the same address used by the accounting business known as Aberdeen
Financial. Fawaz stated Pai was paid by Regions and a copy of the payroll
journal was sent by Regions’ solicitor by letter dated September 14, 2005 (Exhibit
A-1, Tab 26) to Susan Lazic at Human Resources and Skills Development Canada (“HRSDC”)
previously known as HRDC. Fawaz stated the Aberdeen division conducted some
business in 2003 and 2004 including the export of some motor vehicles to Syria but a potentially profitable crude
oil deal fell apart at the last moment and the Aberdeen venture ended up losing several hundred thousand dollars.
[14] Samir Fawaz was cross-examined by Carl
Januszczak. Fawaz stated his marriage to Kathleen Owens broke down in 2002. He
was acquainted with an individual named Qin Han, also known as Queena, but was
not living with her at an address on Russet Way in West Vancouver
in 2004 when Han issued a personal cheque to Lilian Liu in the sum of $800.00,
a copy of which is located in Exhibit R-1, Tab 61. Fawaz stated some of
Regions records and documents were left behind at the 900 West Hastings office
when the entire operation moved at the end of August 2002. There had been an
arrangement made with a moving company to move additional items during
September. Fawaz stated the lack of a complete set of documents and records was
attributable to the following sequence of events: Regions had a 10-year lease
on its premises but became involved in a dispute with the new owner of the
building when the classification of the building was raised from “C” to “B”, a
higher level, due to certain renovations. As a result, new space in the
building was rented out at $22.00 per square foot instead of the much lower
rate payable pursuant to the lease held by Regions. A dispute arose with the
new landlord and the landlord decided the school was not permitted to continue
its operation in that space although the other businesses operated by Regions
could remain. Fawaz stated he surrendered the lease on the expectation a buyer
would take over the operation of the school but that did not take place and the
landlord gave notice the premises used by RTI for the language school would be
locked at the end of August 2002. Some of the individual businesses that rented
space from Regions on the 4th floor or 5th floor at 900
West Hastings moved out rather than be caught in the middle of a dispute
between Regions and the new landlord. Fawaz stated the complete telephone
system installed by Regions was left behind but some computers were moved to
the new address at 889 West Hastings. At that point, Regions also carried on business from offices in
Kelowna and elsewhere in British Columbia and these were supervised by
Fawaz from his office at 900 West Hastings. During the fullest part
of the RTI school operation, there were 10 to 12 classes operating daily with
five or six students in each class. Fawaz stated he saw Pai around the office
several times during 2002 and although he had his own separate office, he
thought most employees should have known him. At one point, Regions employed
about 50 people in addition to the 20 to 25 language teachers who worked for
the RTI division but many of the employees working on projects for Regions were
in the premises for only a few minutes as their work was carried out elsewhere.
Fawaz identified a Notice of Bankruptcy (Exhibit R-2) filed on his behalf by a
bankruptcy trustee on February 27, 2008. The total of liabilities was
$3,032,359.13, including nearly 1.5 million dollars owed to CRA, and the total
of his assets was $2,611.00. Monthly income from business was shown as $3,000,
minus a theoretical instalment of $600.00 for income tax. Fawaz acknowledged that
among the creditors listed on page 5 of the Notice were Soraya Motameni
and Frank Motameni who claimed they were owed the sum of $45,200.00. Fawaz
stated that amount was not connected with Motameni’s duties as Director of the
language schools but arose from an investment by her and her husband in a taxi
venture while she was employed at RTI. Fawaz acknowledged that when signing his
application for the bankruptcy he was certifying under oath or affirmation that
the information provided therein was correct. Fawaz stated he had lived in Canada since 1991 and filed personal income
tax returns thereafter until 1996 but did not file any subsequent returns of
income until 2008. The Regions group of companies did not file any corporate
tax returns. Fawaz identified his signature on a Lease Agreement (Exhibit R-3)
between Aberdeen Financial Group Inc. and Insignia Corporate
Establishments (Eight) Inc. for the premises described as Suite 3509, 35th floor Park Place, 666
Burrard Street, Vancouver,
British Columbia. The lease was dated January 26,
2004 and Fawaz also signed other documents including those within said exhibit pertaining
to Internet connection, telecommunications set up and a security pass and key
request. Fawaz conceded the lessee, Aberdeen, did not exist as a corporation since the name had been refused by
the company branch. Fawaz stated that although the form indicated he was the
only holder of a security pass and key, he obtained an extra one for himself
and also gave one to Lopez. Fawaz stated Lopez came to that office now and then
to do some business for their import venture and sometimes used a work station
for which the landlord charged an hourly or daily rate. A request for usage was
directed to the receptionist on the 34th floor. Fawaz acknowledged
he pleaded guilty to four counts of GST fraud contrary to the Excise Tax Act
on September 12, 2005 and then had attempted to change his plea before the
presiding Provincial Judge and thereafter by way of appeal to the Supreme Court
of British Columbia. The appeal was dismissed in accordance with the Reasons
for Judgment (Exhibit R-4) of The Honourable Mr. Justice Goepel. The
amount of the fraud was $82,537.23 and arose between December 31, 1996 and
February 29, 2000. Fawaz was sentenced to pay a fine in the sum of $82,000.00
and to serve a conditional sentence in his residence in accord with certain
restrictions on his movements. Fawaz stated he prepared and signed the ROE (Exhibit
A-1, Tab 10) issued to Pai and inserted the number of insurable hours and
amount of insurable earnings based on information provided to him by Cyrus
Zahedi. Some documents and information had been transferred to the new location
before Regions and RTI had to move out of 900 West Hastings. Fawaz stated he did not know Pai was pregnant when she starting
working for RTI and that he may have met her earlier in the course of doing
accounting work for her husband, Yazdani. He agreed he probably knew they had
purchased a new house. He denied the suggestion by counsel that the hours and
insurable earnings stated in Pai’s ROE were inflated or otherwise not correct
and asserted Pai performed the work at RTI and had not entered into any sham
arrangement that would enable her to collect UI benefits based on maternity
leave. Fawaz conceded he had prepared and issued the ROE to Lilian Liu (Exhibit R-1,
Tab 53) which purported she had worked 267 hours and had insurable
earnings in the sum of $4,980.00 in the course of her employment with RHS
Services Ltd. The ROE was signed by Jumah (Jack) Sultan, a director
of Regions but Fawaz listed his own name as the contact person. Fawaz stated he
knew RHS was a limited company owned by Pai’s husband, Yazdani, and decided to
issue the ROE in that corporate name because Liu had worked on the RHS
corporate, accounting and tax files and Aberdeen, the accounting division of Regions, had hired her on behalf of
RHS. Fawaz stated the amount of Liu’s hours (267 hours) stated in her ROE was
not correct nor was the stated amount of her insurable earnings, and he
prepared an amended ROE (Exhibit R-5) also in the name of RHS, in
which the insurable hours were stated as 26.92 and the insurable earnings as
$498.00. He denied knowing Liu was pregnant when he hired her to do some
accounting work. He denied having participated in any discussion with Liu about
his ability to issue her with an ROE that would serve to maximize the amount of
her UI maternity benefits and denied she paid him the sum of $1,369.50, alleged
to represent the Regions contribution, as employer, of her EI premiums, CPP
contributions and income tax. Fawaz stated he did not receive any cheque from
Liu and did not return the sum of $520.00 in cash to her on or about May 2005.
He agreed there was a cheque in the sum of $800.00 dated December 31, 2002
issued by Qin Han to Lilian Liu on which there is a notation on the memorandum
line “80 hours” and that said cheque may have been written by Han because
he did not have a bank account at that time. According to the amended ROE
purported to have been issued by RHS, Liu’s last day of work was April 18, 2004
yet the unsigned ROE was dated December 23, 2004.
[15] Samir Fawaz was re-examined by counsel for the
Appellant. Fawaz agreed that Yazdani was not pleased about what he had done in
issuing an ROE to Lilian Liu based on purported employment with RHS.
[16] In response to questions posed from the Bench,
Fawaz stated he did not find it unusual or improper to issue an ROE using the
name of one of his accounting clients as the purported employer to an employee
and accounting business entities within Regions who had worked many hours on
files pertaining to that particular person or corporation. As a result, he
issued an ROE to Liu using the name of RHS, Yazdani’s limited company, because
she had worked on RHS accounting and tax matters. However, he made a mistake as
to the number of hours and amount of insurable earnings and corrected it later
by issuing an amended ROE using, again, the name of RHS as the employer.
[17] Pierre Lopez was examined in direct by counsel
for the Respondent, Bruce Senkpiel. Lopez stated he was a salesman for a
medical supply company and had worked there full-time for about 14 years. Fawaz
had been his accountant and tax preparer for about eight years and they
discussed a venture that could generate revenue by importing medical supplies.
He met with Fawaz at the Regions premises at 900 West Hastings and dealt with Maria Malabanan, the receptionist. He stated that a
company, Abardeen, was incorporated to use as a vehicle to conduct business
operations from a small office in a building situated at 666 Burrard which
offered package offices with appropriate equipment and telecommunication
service. There was a common reception area with many offices. Lopez stated the
space, Suite 3509, was leased
by Fawaz and he did not use a desk nor rent any work station. He did not
remember Pai and when he saw her outside the 701 West
Georgia Street building the day before testifying, he
asked her if she was Sherry Pai because she was standing beside her counsel and
Fawaz. Lopez stated he did not hire Pai nor supervise her and that she did not
do any work for him. He stated he has no memory of having met her. He agreed China was discussed as a potential supplier
of medical supplies and had obtained some information in that regard from Fawaz
but did not have any contact with Pai nor did he provide her with any
instructions.
[18] In cross-examination by counsel for the Appellant,
Lopez described his job as a salesman of a vast array of disposable products
used in the medical field. In the past, he had attempted to start his own
business and was interested in doing so with Fawaz but it never “amounted to
anything more than just talk.” No results had been achieved and he had reviewed
some sales brochures and agreed he ascribed to the theory that if there was no
end product capable of producing profit, or at least some revenue, then nothing
worthwhile had taken place. Lopez acknowledged he had been angry at Pai and
swore at her outside the 701 West Georgia building the day previously because he considered she had involved
him in her litigation and he had been inconvenienced. He also acknowledged he
had hired Fawaz to file an appeal to Tax Court of Canada concerning a
reassessment of income tax but had discontinued the appeal and is dealing with
CRA to pay the income tax arrears. He denied having any ill feeling towards
Fawaz even though he admitted having sworn at him at the same time as he was
directing invective towards Pai.
[19] Maria Malabanan was examined in direct by
Bruce Senkpiel. She testified she is currently employed as a customer sales
representative but worked as a receptionist for Regions from the fall of 1998
to about September 2002. She answered calls for several companies that were
logged into the phone system and handled the mail. She did typing for different
tenants who rented the small offices on the premises and scheduled meetings and
did some administrative work for Dean Powers, one of the tenants. She was
interviewed by both Powers and Fawaz but Fawaz made the decision to hire her to
work at the Regions office space at 900 West Hastings and later at 889 West Pender for a brief period following the move
at the end of August 2002. Malabanan stated she knew Fawaz was in charge of the
Regions Executive Offices function and saw him almost daily. The language
school, RTI, was operated from the 900 West Hastings location until it moved to
the West Pender premises. With respect to Regions, that group had only Fawaz,
Zahedi and Malabanan as employees but the school hired several teachers. She
was paid by cheque every two weeks and worked full-time but there were
occasions when her cheques were returned NSF and towards the end of her
employment she was not paid for some work periods. Zahedi was responsible for
accounting and payroll. Malabanan stated that during lunch hour or other breaks
that took her away from the reception desk, she was replaced by Kathleen Owens
or by Pai. She was aware that Owens, married to Fawaz at that time, also did
some teaching. Malabanan recalled that Pierre Lopez attended at the Regions
office and had meetings with Fawaz. Malabanan stated Soraya Motameni and her
husband, Frank, came to the office and met with Fawaz in one of the rooms.
Malabanan stated her recollection is that Motameni came to the office only
occasionally by herself and that Pai was dealing with “lots of paperwork” and
was sorting out bills and filing them and handing them to Fawaz. She recalled
Pai came to work several times a week and “eventually she was regular I think
until she gave birth”. Malabanan was referred to the notes of Lazic (Exhibit
R-1, Tab 13) pertaining to her interview on June 17, 2005. When asked by Lazic
to name her co-workers, Malabanan mentioned Owens, Zahedi and a female named
Rose and told Lazic that Motameni did not work there but only saw Fawaz about
taxes. Malabanan stated she saw Pai working at the office in the context of
helping Fawaz at tax time and at other times saw her come and go but did not
know her hours of work as that was the responsibility of either Zahedi or
Fawaz.
[20] Malabanan was cross-examined by counsel for
the Appellant. Malabanan stated that early in 2002, there were 60 to 80
students and several teachers all of whom had to pass by her reception desk. At
that time, Fawaz appeared to have a partner, Pierre Nadeau (“Nadeau”), in the
language school and Nadeau was at the office regularly during a certain period.
Pai collected mail from the reception desk that pertained to RTI and she
recalled speaking with Pai sometimes.
[21] In response to questions from the Bench,
Malabanan stated she understood the administrative work pertaining to RTI was
performed in or near the office occupied by Fawaz or the one utilized by Nadeau
when he was part of that business operation. Although there were only six business
tenants in the space, Regions also operated a telephone answering service and
during tax season, lots of people were coming to see Fawaz. Malabanan stated
that when RTI started operations, the premises on the 4th floor of
900 West Hastings became a very
busy place. Malabanan recalled Pai was expecting her first baby and was excited
about it and understood she worked until shortly before she gave birth. When
informed that the ROE stated Pai worked until October 18, 2002, Malabanan
stated she had left her employment with Regions in September and had not been
aware of how long thereafter Pai continued to work.
[22] Susan Lazic testified she is employed by
Service Canada, the current name of the agency previously known by many names
including HRSDC and HRDC. She has worked for Service Canada and its
predecessors for 20 years starting in a clerical role and then assuming a
supervisory role. She currently works as an Investigator, a function formerly
known as an Investigation and Control Officer or ICO. Lazic stated she
investigated a claim by Fawaz for UI benefits based on his alleged employment
with Regions. The problem was that the SIN used by Fawaz had been assigned to a
female with the surname, Jones. A print-out (Exhibit R-1, Tab 1) was identified
by Lazic as a Record of Employment Distribution Request indicating Fawaz
personally picked up and signed for 15 ROEs together with one Guide and 10
envelopes on September 23, 2002. According to the information on the form,
Regions had 45 insured employees at that time. The information recorded by HRDC
indicated 20 ROEs had been ordered by Fawaz on May 25, 2001. The ROEs were
assigned serial numbers and the one issued to Pai on September 9, 2004 (Exhibit A-1,
Tab 20) was within the range of numbers of the forms provided to Fawaz on
September 23, 2002. The purported employee was Aberdeen Financial Group and the
Canada Customs and Revenue Agency (“CCRA”), as it then was, reference
number used in Box 5 of the ROE
was not the number previously assigned to Regions. The ROE issued purportedly
by RHS to Lilian Liu (Exhibit R-1, Tab 53) bore a serial number within the
range of numbers on the ROE forms issued to Fawaz on May 25, 2001. Lazic stated
she reviewed the numbers on the ROEs issued and the identity of applicants for
UI benefits and discovered they were Lilian Liu, Sherry Pai, Kathleen
Owens, Christine Appelt and Samir Fawaz. Lazic stated it became apparent an
investigation was required and questions were prepared in advance and varied to
suit the occasion when these individuals were interviewed. Her practise was to
type the answers directly into her computer during an interview. Lazic
identified the notes of her interview with Pai on December 9, 2004 (Exhibit
R-1, Tab 6). Pai brought her two children whom Lazic considered were
well-behaved and had not caused any disturbance. Lazic stated she was concerned
when Pai stated she did not know Fawaz. Lazic stated that after conducting
interviews with Pierre Lopez, Soraya Motameni and Maria Malabanan, she
formed the opinion these individuals were not truthful about the identity of
their supervisor or employer. Lazic, in the presence of ICO Michael Kingsley,
interviewed Lilian Liu on May 6, 2005 and Lazic’s notes (Exhibit R-1, Tab 57)
recorded Liu’s admission that she did not work for the purported employer, RHS,
as stated in her ROE. Instead, Liu worked for Fawaz only a few times in January
2004 doing data entry and had earned about $500.00. On May 16, 2005, Lazic
stated Liu sent her an e-mail (Exhibit R-1, Tab 50) explaining how she had
met Fawaz around 2002 when he was introduced to her as the boyfriend of her
best friend and that she understood Fawaz was a professional accountant and had
overseas businesses. Liu explained in the e-mail that she did data entry on three
boxes of files and was paid $450.00 in cash and that Fawaz had known she was
pregnant, had a student loan and a mortgage on a newly purchased house and
suggested she could maximize her UI maternity leave benefits to $499.00 per
week instead of $413.00, which was the entitlement based on her previous
employment in Ontario. In return for an ROE that would accomplish this purpose,
Liu stated Fawaz required her to pay the sum of $1,369.50 which would cover the
employer’s portions of EI premium, CPP contribution and income tax to be
withheld. Liu stated in the e-mail that she requested a breakdown of that total
by separating those amounts but the breakdown was not forthcoming from Fawaz.
In the e-mail, Liu stated she wrote a cheque for the amount requested by Fawaz
and issued it in his name. Lazic submitted seven Requests for Insurability (Exhibit
R-1, Tab 14), including one for Liu and one for Pai.
[23] Lazic was cross-examined by counsel for the Appellant.
Lazic stated the application for UI benefits dated June 26, 2003 submitted by
Fawaz using the identity of a female named Jones was based on 10 years alleged
employment with Regions. Lazic stated a review of data indicated Fawaz was not
a landed immigrant in Canada
and that he did not have a work permit. Lazic stated that some of the ROE forms
provided to Fawaz have not been used. Lazic stated she did not know where
Regions did its banking and that precise information in that regard is a
prerequisite to issuing a Requirement to Produce Documents to a financial
institution. Lazic acknowledged receipt of Pai’s letter dated February 23, 2005
(Exhibit A-1, Tab 16) that enclosed pay slips and bank deposit statements
pertaining to her 2004 employment with Aberdeen and that Pai mentioned in said
letter she was not able to locate all the pay slips and cheques paid to her by
Regions almost three years earlier. Lazic agreed she had reviewed the three
cheques (Exhibit A-1, Tab 11) drawn on the Bank of Montreal, First Bank Tower Branch
and issued by Regions Training Institute. There was also a cheque issued by RTI
on the Vancouver City Savings Credit Union, Pender and Hornby Community Branch.
Lazic stated there was no problem with Malabanan’s claim for UI benefits but
considered Pai was evasive about several matters and was not forthright when
responding to straightforward questions. Lazic estimated the interview with Pai
lasted 30 to 40 minutes and was certain Pai did not mention the name of Fawaz
as someone involved in the language school. Lazic agreed that in Pai’s letter (Exhibit A-1,
Tab 16) she stated Fawaz was the owner of Regions but had not been aware of any
connection between him and Aberdeen, her employer in 2004. On February 9, 2005, Lazic sent a letter to
Pai (Exhibit R-1, Tab 8) informing her that her claim for UI benefits was
suspended due to an investigation and that her previous claim based on
employment with Regions was also being investigated. Lazic stated that by the time
she received Pai’s letter dated February 23, 2005 she had sent the Request for
Insurability to CCRA.
[24] Carin Amber testified she has been employed by
CRA and its predecessor agencies for 22 years and has worked as an EI/CPP
Appeals Officer for the past 17 years. She stated the bulk of her workload
is generated by appeals from a decision by a Rulings Officer and that she received
several appeals involving Regions, including the one filed by Pai. Amber stated
she reviewed several files and examined material and gathered information in an
effort to obtain a fresh perspective. Although Questionnaires were sent to
Regions, there was no response. Pai completed and returned two Questionnaires,
one pertaining to her employment with Regions (Exhibit R-1, Tab 31) concerning
the language school, RTI, and another one relating to services provided to
Aberdeen in 2004 (Exhibit R-1, Tab 32). Amber sent Pai a letter dated
January 2, 2007 (Exhibit R-1, Tab 33) in which she requested additional
information. Amber stated she spoke on the telephone with Fawaz, Lopez and
Motameni in the course of her review and made notes (Exhibit R-1, Tab 36) to summarize
those conversations. Amber determined that Lopez was the sole director of a
corporation called Abardeen Financial Group Inc. Amber noted that Lopez
told her he was trying to do some business and would call Pai sometimes to
translate for him and that he dealt with her mostly by telephone but did not
know the extent of her duties since she did not report to him. Amber referred
to a photocopy of a T-4 slip (Exhibit R-1, Tab 37) issued by Regions to Pai for
the 2002 taxation year. It indicated her gross earnings were $19,494.00 and
that income tax in the sum of $3,442.35 had been withheld together with CPP
contributions in the sum of $751.76 and EI premiums in the sum of $428.89 which
had been remitted, allegedly, on her behalf. Amber stated that to the best of
her knowledge, Regions did not remit any amounts to CRA on behalf of any
employees during the periods at issue. Amber prepared a CPT 110 report (Exhibit
R-1, Tab 39) with respect to Pai’s 2002 employment and another report (Exhibit
R-1, Tab 40) pertaining to the 2004 work performed for Aberdeen under the
Regions umbrella. Amber commented (Exhibit R-1, Tab 39, page 4) that the
alleged remittance of tax did not match the purported salary paid to Pai
according to her T‑4. Amber concluded there was too much conflicting
information provided to her and others in respect of the matters and that many
of the persons interviewed were not credible. In her opinion, there was no
tangible proof that wages had been paid as alleged or at all. As a result, she
recommended to the Minister that a decision be issued finding Pai was not in
insurable employment with Regions in 2002 or in 2004.
[25] In cross-examination by counsel for the Appellant,
Amber stated she was aware of Pai’s 2005 letter to Lazic (Exhibit A-1, Tab 16) but
did not consider it for purposes of preparing her report. She could not recall
if Pai’s tax return for 2002 included a copy of the T-4 and thought it may not
have been inserted because Regions closed down the language school as of
December 31, 2002 and T-4s are sent out by employers in February of the
following year. Amber sent a letter to Pai (Exhibit A-1, Tab 18) requesting
certain information concerning her 2004 employment and received a reply (Exhibit
A-1, Tab 19) and acknowledged Pai was cooperative. Amber stated that according
to the payroll journal provided to her by Regions solicitors, Pai earned
$21,900.00 but the T-4 issued to her had stated her gross earning were
$18,250.00 and that income tax in the sum of $4,306.75 was deducted. She agreed
the amount of insurable earnings stated in Pai’s ROE (Exhibit A-1, Tab 10)
was $19,494.40 and that the ROE (Exhibit A-1, Tab 20) in respect of the 2004
employment with Aberdeen indicated insurable earnings were in the sum of
$25,550.00 and that said amount was reported by Pai in her 2004 tax return.
Amber acknowledged she stated in her CPT 110 report (Exhibit R-1, Tab 40)
that the copies of banking records submitted by Pai permitted her to identify
seven deposits from Regions, operating as Aberdeen, between February 2 and August 31, 2004. Amber also noted in the
report that another bank draft dated July 28, 2004 in the sum of $2,318.12 did
not appear to have been deposited to Pai’s bank account. In the letter to Amber
dated January 22, 2007, Pai provided the names of several language teachers at
RTI and stated that Soraya Motameni was the School Director and that she
reported to her and received directions. Amber acknowledged that information
was consistent with statements made to that effect during Pai’s interview with
Lazic. Amber noted (Exhibit R-1, Tab 36, page 12) details of her telephone
conversation with Motameni wherein Motameni stated Pai was already working at
the language school when she started and agreed this statement was not correct.
Motameni also told her Pai worked in a different office and that she did not
interact with her, nor supervise her, nor assign tasks to her. Amber stated her
sense of the Regions situations was that it was far-reaching and operated
through a series of interwoven entities. She considered the language school,
RTI, to have been a legitimate business operation or at least a functioning
entity. At one point, Fawaz told her Regions had a source of income from China but there were no documents to prove
that assertion. Fawaz blamed CRA for having seized certain documents in
connection with the agency investigation concerning the GST fraud of which he
was later convicted.
[26] Carin Amber was re-examined by Bruce Senkpiel.
She was referred to Exhibit A-1, Tab 22 which contained copies of Royal Bank of
Canada drafts payable to Pai at various times in 2004. Amber stated she did not
have any concerns about the legitimacy of the bank drafts but considered those
payments may have been returned by Pai to Regions or to Fawaz or one of his
entities as part of a scheme to defraud the EI system.
[27] Beverly Smith testified she has been employed
by CRA for 23 years in various capacities including Compliance Officer and is
currently working as a CPP/EI Rulings Officer. Her job requires her to
determine whether a working relationship constitutes insurable employment and
in the course of carrying out that function examines material and gathers
information. She received a Request (Exhibit R-1, Tab 18) from Michael Kingsley
at HRDC in respect of Pai’s purported employment with Regions in 2002 and
another Request (Exhibit R-1, Tab 19) concerning her work with Aberdeen in 2004. There were other Requests
pertaining to other employees who claimed they had worked for Regions. Smith
stated she interviewed Pai on September 1, 2006 and typed notes (Exhibit R-1, Tab 20)
contemporaneously in response to the questions which had been inserted earlier
in the computer file. Smith also interviewed Fawaz and Liu. Smith had access to
Pai’s application for UI benefits (Exhibit R-1, Tab 2) pertaining to employment
with RTI in which Pai stated her monthly salary was $3,500.00. Smith stated
that in her opinion there was too much conflicting information and insufficient
supporting documentation to permit her to issue a ruling that Pai had been
employed by Regions in either of those instances.
[28] Smith was cross-examined by counsel for the Appellant.
Smith agreed that as a Rulings Officer she had the statutory authority to
compel production of Regions’ banking records. She acknowledged Pai was
cooperative throughout their dealings. As part of the Case Management System
Text Summary concerning Pai’s file (Exhibit R-1, Tab 30) Smith stated
information had been gathered, entries 040 to 043, which indicated Fawaz had
been convicted of GST fraud, had filed for UI benefits using another person’s
name and SIN, had never filed T-2 Corporation tax returns for any of the
companies in Regions and had an expired SIN, did not hold a valid work permit
and had held himself out to be a Certified Management Accountant which was not
true. Further information revealed Fawaz had applied several times for refugee
status in Canada all of which
had been refused.
[29] Lilian Liu testified she resides in Burnaby and works as a financial advisor.
She does not know Pai nor her husband, Yazdani. She met Fawaz in 2003 when a
close female friend introduced him as a boyfriend and a couple of months later
her friend telephoned to ask if Liu was interested in doing some data entry for
Fawaz. Liu stated she met Fawaz who stated he was a Certified General
Accountant (“CGA”) and had many clients. Liu started working for Fawaz at
the office located on the 35th floor of the Park
Place building at 666 Burrard. She attended at the
Fawaz residence to collect a box of documents and used her computer to make
entries and saved the file to diskette which she returned to Fawaz together
with the box of documents. In total she worked to enter data from documents
contained in three boxes. The work was performed between November 3, 2003
and February 2004. She was pregnant at the time and the baby was due in April.
Fawaz paid her, in cash, the sum of $150.00 per box of documents for a total of
$450.00. Liu stated she and her husband had full-time jobs but their household
expenses were high and she spoke with Fawaz about some matters concerning their
income tax. During these discussions, the subject of Liu’s maternity leave
arose and Fawaz did some calculations and determined the amount of her
potential maximum UI weekly benefit but did not explain how that could be
achieved. After her son was born in mid-April, Fawaz visited her in the
hospital and raised the subject again and spoke with Liu’s husband. Fawaz
explained he could issue an ROE to Liu that would entitle her to the maximum
maternity leave UI benefit but it would require her to pay him the employer’s
portion of income tax, CPP and EI which amounted to the sum of $1,369.50. A
couple of weeks after these discussions, she received an ROE by mail (Exhibit
R-1, Tab 53) which stated she had worked 267 insurable hours for RHS Services
Ltd. and had insurable earnings in the sum of $4,980.00. Liu stated she did not
know anything about RHS and had never seen that name when making data entries
from three boxes of documents. She attempted to telephone the number provided
on the ROE but no one answered. She telephoned Fawaz to request a breakdown of
the $1,369.50 payment but none was provided and in the course of the
conversation he told her RHS was his client. Later, when HRDC began
investigating her UI claim, she attempted to contact Fawaz and left messages
but he did not respond. Liu was interviewed by Lazic and Kingsley at HRDC on
May 6, 2005 and confirmed the notes taken by Lazic accurately record the
substance of their conversation. At the bottom of page 3 of the said notes
(Exhibit R-1, Tab 57), Liu identified her handwriting where she wrote: “[He]
knew I would have maternity leave soon, and made this suggestion”, referring to
Fawaz. Liu stated she reviewed the notes (Exhibit R-1, Tab 49) made by Beverly
Smith of the interview on September 1, 2006 and is satisfied the notes are
accurate and confirmed that her answers were truthful. Liu stated the poor
quality of the photocopy of her cheque number 276 (Exhibit R-1, Tab 60) does
not indicate clearly the amount of $1,369.50 paid to Fawaz but the bank
statement in the previous Tab (Exhibit R-1, Tab 59) has an entry indicating
cheque 00000276 in that exact sum cleared her account and that this pertains to
the cheque issued to Fawaz. Liu stated she was entitled to maternity leave UI
benefits based on her employment as reflected in the ROE (Exhibit R-1, Tab 52)
issued by her employer in Ontario but she had earned only about $9.00 per hour
at that job. According to the T-4 issued to Liu (Exhibit R-1, Tab 58) she
earned the sum of $4,980.00 from which $240.00 in income tax had been withheld.
Liu stated the T-4 is not correct and that following the interview with Lazic
she spoke on the telephone with Fawaz and was angry with him and demanded an
explanation for his conduct in issuing her that ROE in the name of RHS and also
requested the return of the money she had paid to him. Liu stated she went to
the office at 666 Burrard and the receptionist handed her an envelope with
$500.00 in cash and gave her a cheque in the sum of $800.00 and that she
deposited these items on May 9, 2005. Those transactions are recorded in her
bank statement at Exhibit R-1, Tab 62. The cheque she received was dated
December 31, 2004 and was issued by Qin Han.
[30] In cross-examination by counsel for the Appellant,
Liu stated she has a Bachelor of Science degree from Wuxi University in China
and has been in Canada for 10
years and that her husband is employed as a laboratory technician.
[31] Counsel for the Appellant submitted the
overarching issue was credibility and that the Appellant and her husband
provided credible testimony that was supported by other witnesses, including
some called by the Respondent. Counsel pointed out that both Amber and Smith,
Appeals Officers, found Pai to have been cooperative and consistent in
providing information to them during interviews and through letters in which
information was provided and documents were submitted. Counsel acknowledged
there was a divergence in testimony between his client and the evidence
provided by Lazic both on the stand and according to her notes of the interview
with Pai. Counsel pointed out that although Pai had withdrawn her appeal
concerning the 2004 working relationship with Regions, operating as Aberdeen,
on the basis she was probably an independent contractor rather than an
employee, a great deal of time was spent during trial examining the details of
that work situation. It was the theory of the Respondent that the 2004 scenario
was a repeat of Pai’s 2002 employment because in each case Pai was pregnant and
it was merely a re-run of a scam to defraud the EI system that had been
concocted by Fawaz and Pai and others had participated. Counsel referred to the
evidence of the bank drafts and the bank deposits shown on Pai’s account
statements that demonstrated she had been paid for her efforts in 2004 when she
undertook market research for the entity she knew only as Aberdeen without any connection to Regions.
With respect to the testimony of Lopez, counsel characterized it as hostile and
referred to the admission by Lopez that he expressed his hostility towards both
Pai and Fawaz by swearing at them outside the 701 West Georgia building prior
to attending Court to testify. Counsel submitted that the testimony of Lopez
was not credible when he purported he had not known Pai earlier and had not
dealt with her in respect to any business matters involving research of various
products with the intent Aberdeen import them from China.
[32] With respect to the 2002 employment at the
language school, RTI, operated by Regions, counsel submitted there was ample
evidence to support the contention Pai was employed there for the period stated
in her ROE and that she earned the amount of insurable earnings reported therein.
The Director of the school, Motameni, testified Pai worked there and even the
receptionist, Malabanan, agreed Pai was present and sometimes provided relief
at the desk during lunch or other breaks, although Malabanan was under the
impression Pai’s duties involved helping Fawaz mainly during tax season.
Counsel pointed out that the failure of HRDC to obtain banking records on the
accounts operated by Regions had prejudiced the Appellant and that the fact Pai
took out relatively large sums in cash when negotiating pay cheques on occasion
was consistent with her Taiwanese heritage and that Pai and her husband were
renovating their home and required additional money to pay for supplies and
labour. Counsel submitted there was no evidence whatsoever to link Pai with
Liu’s participation in the scheme concocted by Fawaz to maximize her maternity
leave UI benefits, nor was there any proof that Yazdani had anything to do with
the use, by Fawaz, of the limited company, RHS, as a purported employer of Liu
for purposes of the scheme. Counsel referred to Pai’s background, education and
previous employment, all of which were consistent with her employment in 2002
and the services she provided to Aberdeen in 2004. Counsel submitted the evidence had established Pai was employed
in 2002 by Regions which operated a language school, RTI, that ultimately
failed. He submitted the fraudulent activities of Fawaz and his business
failures should not be used to implicate Pai when she was merely a worker
caught up in the overall network of fraud and deception masterminded by Fawaz
over the course of several years.
[33] Counsel for the Respondent, Carl Januszczak,
stated the position of the Respondent was that the hours and insurable earnings
were inflated in the ROE issued to Pai in respect of her 2002 employment.
Further, the 2004 working relationship with Aberdeen was a repeat of the earlier scam only this time Lopez was named as
the alleged supervisor instead of Motameni. Counsel pointed out that Owens, the
ex-wife of Fawaz, was not called as a witness by the Appellant nor was Zahedi,
the Regions internal bookkeeper. Counsel acknowledged Motameni’s memory was
somewhat fallible in that she had difficulty recalling when she worked there
and thought Pai had started earlier but submitted Motameni’s testimony at trial
has to be weighed in the context of her interview with Lazic during which she
did not mention Pai even as an employee of the language school let alone her
assistant. The situation was complicated further by the testimony of the
receptionist, Malabanan, who stated Pai only assisted Fawaz from time to time
and that she could not rely on her to provide relief during lunch breaks and
that Motameni did not attend at RTI that often considering her alleged role as
Director. Counsel conceded there were numerous inconsistencies throughout the
testimony of most, if not all, of the witnesses who testified at trial.
Malabanan told Lazic that Motameni did not work at the 900 West Hastings
premises. Counsel conceded that HRDC/Services Canada did not obtain banking
records of Regions but pointed out Pai had not provided full bank statements
and pay information concerning her 2002 employment. Counsel submitted there
were problems associated with the testimony of Pai in several areas and that
Motameni’s evidence failed to corroborate many aspects of Pai’s descriptions of
her work at RTI. He referred to Pai’s reluctance to disclose any knowledge of
Fawaz as having any connection with Aberdeen in 2004 and her statement to Lazic
that she worked at the 900 West Hastings location until the termination of her
employment on October 18, 2002 when the school had moved to the West Pender
premises at the end of August and thereafter in September the former landlord
had padlocked the West Hastings office, according to Fawaz. Counsel suggested
it was reasonable to infer that Pai never worked at the new location and that
it was not reasonable for her not to have named Malabanan as a co-employee
during her interview with Lazic.
[34] Co-counsel for the Respondent, Bruce Senkpiel,
stated the President’s Choice statements (Exhibit A-1, Tab 12) were not
provided by Pai’s counsel until the first day of trial and it disclosed
that none of the six cheques received by Pai in 2002 were deposited to that
account. Further, there was no explanation for the entry in the statement in
the same exhibit (Exhibit A-1, Tab 15) indicating there was a transfer in the
sum of $2,000.00 on May 15, 2002 from the account in the name of Pai’s husband,
Yazdani, to Regions followed by a $3,000.00 transfer into the account on May 17,
2002 from an unidentified source. With respect to the 6 cheques (Exhibit A-1, Tab
11) allegedly paid by Regions to Pai, three of them bore the notation “advance”
on the memorandum line and there was no evidence presented that was capable of
proving how and where those cheques were negotiated. There were no
corresponding entries in the bank statements at (Exhibit A-1, Tab 14) to
indicate two cheques issued on August 7 in the respective sums of
$2,501.12 and $3,402.24, for a total of $5,903.36, were deposited to any of
Pai’s accounts, although the statement did have deposit entries matching the
May 24, 2002, cheque in the sum of $600.00, the $1,000.00 cheque dated June 17,
and the July 12 cheque in the sum of $600.00 which was returned NSF. Counsel
admitted this sum was replaced by Regions and received by Pai and that she also
deposited to her account the cheque dated August 28 in the sum of $540.00.
Counsel stated the total of those cheques that can be traced to deposits by Pai
was only $2,740.00 which would cause one to wonder why she would regularly
deposit small cheques yet take out nearly $6,000.00 in cash by negotiating two
cheques on the same day. Counsel submitted the facts established that Motameni
did not work for Regions as a supervisor or a Director and that Lopez did not
play any role with respect to Pai’s alleged employment with Aberdeen in 2004. The position of the Respondent
is that Fawaz had a prior relationship with Pai’s husband, Yazdani, from preparing
his income tax returns for several years and upon learning Pai was pregnant in
2002 and that they had recently purchased a home that was being renovated,
offered Yazdani and Pai the opportunity to participate in a scheme whereby she
would work some hours at RTI and be issued an ROE that would entitle her to
claim maternity leave UI benefits. In 2004, a similar plan was carried out
using Lopez as the alleged supervisor and this ruse was strikingly similar to
the one which Fawaz perpetrated to increase Liu’s UI payments by issuing her an
ROE using the name of RHS, a limited company owned by Yazdani. Counsel referred
to the evidence concerning the income tax returns prepared by Fawaz and
certified to be accurate by Pai whereby Pai received a refund that she did not
deserve because she had claimed expenses that were not paid by her in the
course of earning income as purported on the statement enclosed in her returns
for 2002 and 2004.
[35] Counsel for the Appellant advised he had
issued a subpoena to Kathleen Owens who had contacted him and expressed
her anger and an unwillingness to appear in a forum involving her ex-husband,
Fawaz, and as a result had elected not to pursue the matter.
[36] The relevant assumptions of fact set forth in
the Reply to Notice of Appeal in appeal 2007-2655(EI) as they pertain to Pai
are as follows:
(d) the Appellant is married to Hassan Yazdani
(“Hassan”);
(g) Hassan and Fawaz were involved in business
together;
(h) the Appellant alleged that she did not know
who Fawaz was;
(i) the Appellant received a record of
employment (“ROE”) from the Payor for the 2002 taxation year alleging income of
$19,494.40;
(j) the Appellant’s 2002 ROE from the Payor
alleged 964.8 insurable hours of employment;
(m) the Appellant alleged that in 2002 she was
supervised by Soraya Motameni (“Motameni”), however Motameni alleged that she
did not supervise the Appellant;
(o) in 2002 the Appellant applied for maternity
benefits based on her employment with the Payor;
(p) the Appellant’s ROE from the Payor was for
the approximate number of hours required to establish a maternity claim;
(w) The Payor failed to provide documentation to
support the alleged payment of wages to the Appellant;
(x) the Payor and the Appellant have given
inconsistent and contradictory information at each stage of review;
(y) the Appellant did not work the number of
hours alleged in the ROE issued by the Payor for the Period; and
(z) the ROE issued to the Appellant by the
Payor for the Period is false.
2004 Employment – Aberdeen
[37] The matter of Pai’s 2004
working relationship with the Aberdeen entity was relevant to the issue of credibility in the context of
the Respondent’s theory that it was a repeat of the 2002 employment scam
involving the language school, RTI, operated by Regions. The Respondent’s
theory received a boost when it was ascertained that Fawaz had maximized Liu’s
UI maternity leave benefits by issuing her with a phoney ROE using Yazdani’s
corporation, RHS, as the employer. In the course of further investigation, CRA
Appeals Officers discovered Fawaz had been convicted of GST fraud and had
attempted to collect UI benefits for himself by using the name and SIN of a
female.
[38] In my view of the matter, the Respondent
considered relevant material but was working backwards from facts by making
subsequent assumptions designed to operate retroactively based on information
that, without more, was capable of supporting the overall conspiracy theory
involving Pai, her husband and Fawaz. The fact that Pai’s sister-in-law also
worked for Aberdeen in 2004
while living with Pai and her husband was a significant factor taken into
account by the Minister. Insofar as the 2004 scenario has a bearing on the
within appeal with respect to the issue of credibility, I am satisfied Pai had
a legitimate working relationship with Aberdeen for the following reasons. First, the testimony of Fawaz in this
regard is believable because he knew her to be a hard worker and as someone who
spoke Mandarin and could deal with businesses overseas. Second, there is proof
that she was paid for her work as established by the duplicate bank drafts and
Amber, Appeals Officer, was satisfied the drafts were legitimate even though
she suspected that, by some means or other, some or all of that money was
returned by Pai to Fawaz or to Regions. There is no evidence to support that
allegation and I accept the testimony of Pai with respect to the work done by
her for Aberdeen and find she
was paid for her work at the stated salary. In so doing, I reject the testimony
of Lopez whose entire attitude and bearing was one of outright hostility
towards Pai and the within litigation which, to him, was a waste of his
valuable time. I find that Fawaz instructed Lopez to hire Pai and to provide
her with instructions to research markets in China and elsewhere in Asia with the expectation that Aberdeen or,
perhaps the real corporation, Abardeen, could generate substantial revenue by
importing various goods from China and selling them in Canada or in Europe. The fact that no significant revenue resulted from the
Aberdeen/Abardeen adventure should come as no surprise to anyone who ever dealt
with Fawaz. However, the reaction of Lopez was to deny any activities had taken
place involving Liu and to write off his limited participation with Fawaz as an
exercise constituting “nothing but talk”. In the course of her testimony, Pai
described Lopez accurately before he had confronted her on the sidewalk or
testified in the within appeal. Lopez denied he had ever met Pai.
[39] The testimony of Pai’s husband, Yazdani, was
that he never met Liu and she testified she never met Yazdani and had not done
any work at all on any files involving his company, RHS. It is obvious Fawaz
used RHS as a purported employer to carry out the scheme to maximize Liu’s UI
maternity leave benefits by using an ROE form he had obtained in person from an
HRDC office on the basis Regions employed 45 people at that time. I accept the
evidence of Yazdani that there was never any permission either express or implied
for Fawaz to issue an ROE in the name of RHS and that he was angry and
frustrated with his attempts to obtain an explanation from Fawaz who ultimately
promised Yazdani he would correct the matter. Yazdani was forthright during his
interview with Lazic and Kinglsey at the HRDC office and produced documentation
with his signature thereon to demonstrate he had not signed the ROE issued to
Liu. The testimony of Liu and others and the documentary evidence leads me to
conclude the scheme was hatched by Fawaz alone without any participation by
Yazdani and that Liu and her husband were persuaded to participate by paying
the amount requested by Fawaz allegedly to compensate Regions for the
employer’s portions of CPP, EI and income tax. The explanation provided by
Fawaz in the course of his testimony that it was not abnormal in his accounting
practice to issue an ROE in the name of one of his clients to some clerk or
data entry person who worked on the file, is ridiculous even for someone who
merely pretends to be a certified accountant.
2002 Employment
with RTI
[40] The Respondent conceded there was evidence
which established Pai worked at the language school but argued she had not
worked the number of hours nor had she earned the amount of insurable earnings
stated in her ROE. Although Pai had deposited some pay cheques to her account,
the Minister was not satisfied she earned the amount stated in her T-4 and
believed Pai had negotiated two large cheques in August 2002 by taking cash for
the purpose of paying Fawaz or Regions as part of the scheme to inflate her
hours and earnings so she could collect maternity leave UI benefits.
[41] As counsel for the Respondent conceded, there
are some “nuggets of truth” in the testimony of Fawaz. I characterize most of
it as a mixture of fog, smoke and dust, a patchwork of arrogant
self-justification, ego-driven pap and pure lies. It is obvious Pai was present
at the school in a capacity relating to administration and had participated in
a student outing as featured in the photographs entered as an exhibit. When
Motameni spoke with Lazic or later with the Appeals Officer, she was not under
oath. It was apparent she did not want to deal squarely with the matter of her
involvement with Fawaz as an employee of RTI nor did she mention participating
as a co-venturer with her husband in a failed taxi cab venture leaving them
with the dubious honour of being listed as one of the creditors on the Fawaz
bankruptcy application. Motameni admitted her memory was not reliable with
respect to dates and the fact she told Amber that Pai was already working there
when she started as Director seriously undercut Pai’s assertion that she had
been hired by Motameni and had worked as her Assistant. The fact is Motameni
was working for RTI since 2000 or early 2001, more than a year before Pai
started. When speaking with Lazic at HRDC, Motameni did not mention Pai as her
assistant and explained in her testimony that she merely forgot to do so. She
testified Pai worked for RTI and reported to her concerning schedules and that
her recollections were imperfect when speaking with investigators she wanted to
put the entire RTI experience behind her.
[42] The testimony of Malabanan, receptionist, was
a bit odd. According to her, Motameni was not actively working at RTI on a
regular basis but visited the premises with her husband, Frank, and met with
Fawaz in an office. Malabanan confirmed that Pai worked at the 900 West
Hastings office and relieved her at the reception desk from time to time but
did not consider her to have been available on a regular basis to assume that
role. Malabanan thought Pai’s work involved the accounting business operated by
Fawaz but was not certain as to her exact function with Regions. Malabanan
testified Pai was working at that location until the move at the end of August.
Her own employment ended shortly thereafter so she was not able to say how long
Pai worked at the new location. It is obvious Malabanan was an extremely busy
person in 2002 at the height of the school’s operation with more than a hundred
people a day coming and going to the school in addition to those attending to
see Fawaz about accounting or business matters. She had to answer telephones
for RTI and for tenants in the executive offices operated by Regions. I would
not expect her to have kept track of Pai or others during the day and if she
was not involved in the actual operation of the school there was no need for
her to have been aware of the nature of the tasks carried out by Pai.
[43] Although I have some reservations about Pai’s
conduct when interviewed by Lazic, I am satisfied she told the truth during her
testimony. Her subsequent actions in providing information and documentation to
the best of her ability to Lazic or to Amber and Smith, Appeals Officers, was
beyond reproach. Pai is an intelligent, well-educated woman with a degree from
UBC and has work experience compatible with her employment at RTI in 2002.
Where there is a conflict between her evidence and that of Fawaz, I accept her
version. I accept Pai’s description of her duties at RTI including various
aspects of administration, scheduling of classes and teachers, preparation of
working documents for the business, working on the website and dealing with
agents to recruit foreign students for the school. I accept Pai’s evidence in
preference to that of Malabanan who suggested she only did some accounting work
for Fawaz. Any anomalies inherent in her income tax returns for the 2002 and
2004 taxation years are grist for another mill and it is not unreasonable to
infer from the overall conduct of Fawaz that the statement of so‑called
expenses was not included in the forms when Pai signed them. It is reasonable
for her to have relied on their accuracy since they were prepared by Fawaz,
supposedly a properly accredited accountant with membership in a professional
organization who had prepared tax returns for her husband for several years
previously.
[44] It is not a mystery why the Appeals Officers
recommended the Minister should decide the employment of Pai with Regions in
2002 and Aberdeen in 2004 was
not insurable employment. The activities carried out by Fawaz through various
interwoven entities and his conviction for GST fraud in the context of his
fraudulent attempt to collect EI for himself and his scheme involving Liu would
cause any reasonable person to examine closely the file of anyone purportedly
employed by Fawaz or one of his businesses. The Minister had no doubts about
the legitimacy of Malabanan’s employment nor do I. It was the unfortunate circumstance
of the ROE to Liu having been issued in the name of RHS, Pai’s husband’s
corporation, that even if not icing on the cake, was the blazing sparkler on
top which could not be ignored. In my view, the analysis undertaken by Amber
and Smith was reasonable based on the information before them. However, when
matters are dealt with in Court by way of trial, the process can produce a
different perspective and enable an in-depth evaluation of the totality of
evidence, whether documentary or adduced through testimony. Often, there is a
vast gulf between what people say in a cavalier fashion during a telephone
interview a year or more after the event or even in a face-to-face interview
with an HRDC investigator or Appeals Officer because there is a desire to gloss
over matters that may put them in a bad light or bring back memories of an
unpleasant work experience consigned to the past.
[45] I find the Appellant has proven her case on a
balance of probabilities and that her employment with Regions, operating as RTI,
was genuine and that the ROE issued to her accurately stated the number of
insurable hours and the amount of insurable earnings. I have taken into account
the evidence that the working hours were approximately 40 hours per week and
that Pai may have worked some extra hours in the course of accompanying
students and teachers on field trips. The period of employment stated in her
ROE consists of 23 weeks and four days which is 40.5 hours per week on average
during the period of her employment as stated in her ROE. Her salary of $20.20
per hour is reasonable bearing in mind her qualifications and her language
skills, Mandarin, including her ability to read Japanese characters. According
to Fawaz, the hours worked by employees were recorded by Zahedi who was
responsible for the payroll. There is nothing in the evidence to suggest Zahedi
was not keeping accurate records and the number of hours and the amount of
insurable earnings are consistent with the particular duties carried out by
Pai. The language school had a gross income of $856,578.54 in 2002 according to
the Income Statement, excluding the sum paid to agents for promotional
discounts. Obviously, that enterprise required teachers and administrators to
keep it functioning on a daily basis.
[46] Both appeals, EI and CPP, are allowed and both
decisions of the Minister are varied to find that Sherry Pai was engaged in
both insurable and pensionable employment with Regions Group of Companies
International Trading Ltd. from May 6, 2002 to October 18, 2002 pursuant to
paragraph 5(1)(a) of the Employment Insurance Act and paragraph 6(1)(a)
of the Canada Pension Plan.
Signed at Sidney, British Columbia,
this 12th day of August 2008.
Rowe
D.J.
Email this Content