Citation: 2008TCC277
Date: 20080501
Docket: 2007-3500(EI)
BETWEEN:
MODELERIE DORVAL INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Lamarre J.
[1]
This is an appeal from
a decision of the Minister of National Revenue (“Minister”), who determined
that Joseph Cassis (“Worker”) held insurable employment while working for the
appellant during the period from January 1, 2003 to December 31, 2005.
[2]
In making his
determination, the Minister relied upon the assumptions of fact found in
paragraph 13 of the Reply to the Notice of Appeal, which reads in part as
follows:
a)
the Appellant, incorporated in 1987, operates in
the field of industrial design;
b)
the Appellant manufactures prototypes and
specialized parts (for planes and trains) for companies like Bombardier;
c)
the Appellant prepares molds and manufactures
castings;
d)
the three shareholders, Rui Cassis, Mario Claro
and the Worker, had signed the line of credit and sanctioned loans of the
Appellant;
e)
the shareholders could sign cheques on behalf
of the Appellant; two signatures were needed;
f)
the opening hours of the Appellant’s office were
from 7 a.m. to 5 p.m.;
g)
the annual level of business activity of the
Appellant ranged from $ 1 249 587 to $ 1 500 000;
h)
there was no written employment contract between
the Appellant and the Worker during the period under review;
i)
the Worker was like the general manager of the
Appellant and was involved in all aspects of the operation;
j)
the Worker was involved in all areas of the
operation: the engineering, sales, finance and could do maintenance work;
k)
the decisions are taken by the 3 shareholders
but Mr. Rui Cassis has the last word;
l)
during the period under review, the Worker did
not have a regular schedule of work to meet, he could work anywhere between 40
and 60 hours per week;
m)
during the period under review, the Worker
received a fixed weekly salary of $ 920, or $ 48 000 annually;
n)
the Worker’s salary was exactly the same as the
one paid to M. Mario Claro, shareholder not related to the Appellant;
o)
the Worker had the same employment conditions
and the same salary as that of Mario Claro; the Appellant treated them the same
way.
[3]
Counsel for the appellant
indicated at the beginning of the hearing that he did not dispute that the
Worker was hired under a contract of service within the meaning of
paragraph 5(1)(a) of the Employment Insurance Act (“Act”).
He argued, however, that the Worker and the appellant were not at arm’s length
and that they should not be deemed to have been dealing with each other at
arm’s length within the meaning of paragraphs 5(2)(i) and 5(3)(b)
of the Act.
[4]
Ms. Camille Ledoux, an
appeals officer for the respondent, explained why she was of the opinion that
the Worker and the appellant were deemed to be dealing at arm’s length within
the meaning of paragraphs 5(2)(i) and 5(3)(b) of the Act.
[5]
Ms. Ledoux made that
decision on the basis that the Worker and the other minority shareholder, Mario
Claro, were receiving approximately the same salary during the period at issue.
[6]
Joseph Cassis testified
that during the years at issue he was managing the business practically on his
own. His father was getting older and was not as familiar as Joseph with the
new computerized tools now used in the business. His father spent four or five
months in Portugal every year. Joseph testified that he
consulted his father and Mario Claro on important decisions, but his father was
interested mainly in the profitability of the business and delegated its
management to his son.
[7]
Joseph testified that
he worked very hard in the business, that he accepted a low salary because he
considered the business as his own, and that he reinvested the profits in it.
[8]
Although he received
approximately the same salary as Mario Claro, Joseph testified that Mario Claro
specialized in the molding of the parts manufactured by the appellant and
worked solely at that. The evidence did not disclose that the respondent
considered the number of hours worked by Mario Claro and by Joseph Cassis.
From the assumptions of fact set out above and considering all the aspects of
the business in which Joseph was involved, it would seem that Joseph Cassis
was working longer hours than Mario Claro.
[9]
Furthermore, the
evidence revealed that Joseph Cassis had to go to the work site on
weekends for security reasons, and he was the one who would be called if there
was any problem on the work site outside of business hours. Ms. Ledoux also
admitted in her report (Exhibit R-1), that Joseph’s hours of work were not
subject to any control.
[10]
From all the above, it
can be inferred that Joseph was paid the same salary as the other minority
shareholder, Mario Claro, but worked longer hours and had more
responsibilities.
[11]
On that basis, I find
that Joseph Cassis did not have the same conditions of employment as Mario
Claro, the other shareholder chosen by Ms. Ledoux for the purposes of her
comparison.
[12]
In Bélanger v.
Canada, [2003] F.C.J. No. 1774 (QL), the Federal Court of Appeal again
stated the role assigned to this Court by the Act when it considers appeals
from ministerial determinations under paragraph 5(3)(b) of the Act,
as follows:
2 The
judge did not assume the role assigned to him by the Employment Insurance Act
and redefined in the case law by our Court in Pérusse v. Canada (Minister of
National Revenue - M.N.R.),
[2002] 261
N.R. 150, application for leave to appeal to the Supreme Court of
Canada denied, and Légaré v. Canada (Minister of National Revenue - M.N.R.), [1999] 246
N.R. 176. These judgments were later followed in Valente v. Canada
(Minister of National Revenue - M.N.R.), [2003] FCA
132 and Massignani v. Canada (Minister of National Revenue -
M.N.R.), [2003] FCA
172.
3 As
this Court stated in Massignani, supra, at paragraph 2, "This role does
not allow the judge to substitute his discretion for that of the Minister, but
it does encompass the duty to 'verify whether the facts inferred or relied on
by the Minister are real and were correctly assessed having regard to the
context in which they occurred, and after doing so, ... decide whether the
conclusion with which the Minister was "satisfied" still seems
reasonable'".
[13]
In my opinion, the
facts relied on by the Minister were not correctly assessed having regard to
the context in which they occurred.
[14]
I therefore conclude
that the Minister’s decision to consider Joseph Cassis as being deemed to
have dealt at arm’s length with the appellant during the period at issue was
not appropriate in the circumstances and consequently was not reasonable.
[15]
As a result, the appeal
is allowed and the Minister's decision is varied on the basis that, by virtue
of paragraphs 5(2)(i) and 5(3)(b) of the Act, Joseph Cassis
was not employed in insurable employment during the period at issue.
Signed at Ottawa, Canada, this
1st day of May 2008.
“Lucie Lamarre”
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