Citation: 2007CCI204
Date : 20070503
Dockets: 2005-4322(EI)
2006-1808(EI)
BETWEEN:
LUC LÉTOURNEAU,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL
ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Deputy Judge Savoie
[1] These appeals were
heard on common evidence at Québec, Quebec, on February 8, 2007.
[2] The issue is the insurability of the
Appellant's employment with Linda
Kielbinski, doing business as Médailles et Porte-Clefs, the Payer, from June 29
to October 17, 2003 (docket 2006‑1808(EI)) and from September 20 to
November 26, 2004 (docket 2005‑4322(EI)), the periods at issue.
[3] In docket 2006-1808(EI), the Minister of
National Revenue (the “Minister”) informed the Appellant by letter dated June
1, 2006 of his decision to the effect that the Appellant did not hold insurable
employment during the period at issue. The Minister made the same decision in
docket 2005‑4322(EI), informing the Appellant thereof in his letter dated
September 14, 2005.
[4] The Minister based
his decision in docket 2006-1808(EI)
on the following assumptions of fact:
a)
the Payer’s company was registered on July 13,
1995; (admitted)
b)
the Payer operated a business selling medals,
trophies, plaques, keychains, pins and promotional items; (admitted)
c)
the Payer’s place of business is located at the
residence of the Proprietor and the Appellant; (admitted)
d)
for the years 2001 to 2004, the Payer reported
the following income:
|
|
Gross income
|
Net income
|
|
2001
|
$51,787
|
$23,866
|
|
2002
|
$88,092
|
$14,684
|
|
2003
|
$109,904
|
$21,666
|
|
2004
|
$96,809
|
$8,482
|
(admitted)
e)
May through October constitutes the Payer’s
busiest period; (admitted)
f)
the Appellant had been working for the Payer
since 2001; (admitted)
g)
the Appellant was in charge of bagging, which
included the placement of stickers and ribbons on the medals, and transporting
merchandise; (admitted)
h)
on April 20, 2003, the Appellant and the Payer
signed an employment contract, and this was the only year in which the
Appellant signed an employment contract with the Payer; (admitted)
i)
according to this employment contract, the
Appellant was responsible for fulfilling the terms of the contract signed on
March 23, 2003 with Fêtes de la Nouvelle-France, making deliveries, bagging
50,000 pieces, and renovating the basement office; (admitted)
j)
the duration of the contract was between 10 and
14 weeks, at 40 hours per week at an hourly rate of $8.75; (admitted)
k)
the Appellant’s hours of work were not recorded
by the Payer; (denied)
l)
on February 28, 2006, the Payer stated to a
representative of the Respondent that the Appellant did not need to be supervised
at work because he knew what needed to be done; (denied)
m)
the Appellant was paid by cheque on a biweekly
basis in the amount of $700 gross, representing 80 hours at $8.75 per hour;
(admitted)
n)
the Appellant always received the same pay,
regardless of the number of hours he actually worked during the pay period;
(denied)
o)
on February 28, 2006, the Payer stated to a
representative of the Respondent that if there was a rush, the Appellant would
work longer hours, but he would only be paid for 40 hours; (denied)
p)
on February 28, 2006, the Payer stated to a
representative of the Respondent that the Appellant was not paid for any
overtime worked; (denied)
q)
on February 28, 2006, the Payer stated to a
representative of the Respondent that the Appellant went to get the first box
of medals for the Fêtes de la Nouvelle-France in the first week of May and the
last box in early July; (denied)
r)
on February 28, 2006, the Payer stated to a
representative of the Respondent that the Appellant went to Montréal two to three
times a week to get the medals for the Fêtes de la Nouvelle-France; (admitted)
s)
from May to July 2003, the Appellant went two to
three times per week from Québec to Montréal, transporting between 1,000 and
1,200 pounds of medals per trip; (admitted)
t)
on February 27, 2006, the Appellant stated to a
representative of the Respondent that he made deliveries twice a week for the
Payer throughout the year; (denied)
u)
the Appellant, not the Payer, determined the
duration of employment with the Payer; (denied)
v)
on February 28, 2006, the Payer stated to a
representative of the Respondent that if her husband had not been available to
do the renovations she would have waited until he was; (denied)
w)
the Appellant used his own tools to do the
renovation work; (admitted)
x)
most of the invoices for the basement renovation
materials were dated outside of the period at issue; (denied)
y)
on February 5, 2004, the Payer gave the
Appellant a record of employment showing June 29, 2003 as the first day of work
and October 17, 2003 as the last day of work, the total number of
insurable hours of employment as 640 hours and the total insurable earnings as
$5,600; (admitted)
z)
the Appellant rendered services to the Payer
throughout the year; (denied)
aa)
the Appellant’s record of employment does not
reflect reality with respect to the periods of employment and hours worked;
(denied)
bb)
the Appellant and the Payer entered into an
arrangement concerning the Appellant’s period of employment; (denied)
[5] The Appellant and
the Payer are related persons
within the meaning of the Income Tax Act (the “Act”) because:
A)
Linda Kielbinski is the sole proprietor of the
Payer’s company; (admitted)
B)
Linda Kielbinski has been married to the
Appellant since 1976; (admitted)
C)
the Appellant is related to the Payer by
marriage; (admitted)
[6] Moreover, the
Minister determined that the Appellant and the Payer were in a non-arm’s length relationship in the
context of the employment and that it was not reasonable to infer that they would have
entered into a substantially similar contract of employment if they had been
dealing with each other at arm’s length, taking the following circumstances into account:
a)
in 2001, the Appellant worked from September 17
to November 23; in 2002, the Appellant was not hired by the Payer; in 2003, the
year at issue, the Appellant worked from June 29 to October 17; and in 2004,
the Appellant worked from September 23 to November 26; (admitted)
b)
during the year at issue and the other years,
the Appellant’s alleged period of employment did not correspond with the
Payer’s busiest season; (denied)
c)
the Appellant and the Payer had entered into an
agreement with respect to the start, end and duration of the Appellant’s
employment; (denied)
d)
the Appellant rendered services to the Payer and
did not report any earnings; (denied)
e)
the Appellant’s record of employment does not
reflect the actual number of hours worked or the actual period worked; (denied)
f)
the period allegedly worked does not match the
period during which the Appellant actually worked; (denied)
g)
a person in an arm’s length relationship would
not have had a duration of employment or conditions of employment similar to
those of the Appellant; (denied)
[7] The Minister based his decision in docket 2005-4322(EI) on the following
assumptions:
a)
on July 13, 1995, the Payer registered her
company under the name Médailles et Porte Clefs; (admitted)
b)
the Payer operated a business selling medals,
trophies, plaques, keychains and pins; (admitted)
c)
the Payer’s main suppliers were CFGL in
Montréal, PDU in Toronto and Catellina in Québec; (admitted)
d)
the company’s place of business was located in
the personal residence of the Payer; (admitted)
e)
the Payer operated her business throughout the
year, but there was a busy period starting in late July and ending in early
September, owing to soccer season, and a lull during the winter; (denied)
f)
the Payer was the only person who made decisions
on behalf of the company and the only person with signing authority for the
company bank account; (admitted)
g)
the Appellant started rendering services to the
company during the 2001 season (from September 17 to November 23); (admitted)
h)
the Worker was hired to go pick up the medals
from the suppliers in Montréal and Toronto; he was responsible for having the
medals engraved and attaching the ribbons; (denied)
i)
in 2004, during the period at issue, the Worker
travelled once to Toronto and did the Québec-Montréal run approximately fifteen
times; (admitted)
j)
there was no written employment contract between
the parties; (admitted)
k)
the Worker worked in part on the road and in
part at the Payer’s place of business; (admitted)
l)
the Worker was not entitled to 4% vacation pay
and the Payer did not offer him any benefits package; (denied)
m)
the Worker’s hours of work were not recorded by
the Payer and, because of the differing versions received, it is difficult to
determine the hours actually worked by the Worker during the period in
question; (denied)
n)
the Worker’s hours of work varied a great deal,
but during the period in question he received a fixed gross salary of $700
every two weeks for allegedly 40 hours per week even though he asserted that he
was being paid $10 an hour; (denied)
o)
the period of employment indicated on the record
of employment issued to the Worker by the Payer does not reflect the busiest
period of the Payer’s company. (denied)
[8] The Appellant and
the Payer are related persons
under the Act because:
a)
the Payer was the sole proprietor of the
company; (admitted)
b)
the Worker is the Payer’s spouse; (admitted)
c)
the worker is related to a person who controls
the Payer’s company. (admitted)
[9] Moreover, the
Minister determined that the Appellant and the Payer were in a non-arm’s length relationship in the
context of the employment and that it was not reasonable to infer that they would have
entered into a substantially similar contract of employment if they had been
dealing with each other at arm’s length, taking the following circumstances into account:
a)
the Worker received a set remuneration
regardless of the hours actually worked; (denied)
b)
in 2001, the Worker was on the Payer’s payroll
from September 17 to November 23, in 2002 he did not render any service, in
2003 he was on the payroll from early July to mid-October, and in 2004, from
September 20 to November 26; (admitted)
c)
the Worker rendered services and was remunerated
by the Payer irrespective of the company’s busiest periods (from late July to
early September); (denied)
d)
the Worker was not on the Payer’s payroll in May
and August 2004 while the company was making its biggest sales; (denied)
e)
the Worker was rendering services to the Payer
during periods when he was not on the Payer’s payroll. (denied)
[10] It must be observed that the two cases are
similar. What differentiates them is the period at issue and the Appellant’s
duties.
[11] I shall begin by
examining docket 2006-1808(EI)
and the Minister’s assumptions denied by the Appellant and the Payer. It was
established that the Appellant’s hours of work were not recorded. In his
statement to the investigators, the Appellant said that he had presumed the
Payer, his wife, was keeping track of his hours. For her part, the Payer
confirmed that the hours of work were in fact not recorded anywhere.
[12] As the Minister
stated in his assumptions, the
Payer stated that the Appellant did not need any supervision because he [translation] “knew what he was supposed
to do.” On the other hand, the Appellant stated that the Payer regularly
supervised him and approved his work because she was working 50 to 60 hours a week
at the company.
[13] Moreover, the Payer informed the Minister that the
Appellant usually worked Monday to Friday from 8:00 a.m. to 4:30 p.m., but that
if there was a rush, he would work longer hours, although he would only be paid
for 40 hours. He worked weekdays or weekends, as circumstances required. The
Payer confirmed that the Appellant rendered services and was not paid for any
overtime he did.
[14] The Appellant’s
wage, according to the Payer,
was $8.75 an hour for 40 hours a week. He was paid by cheque every two
weeks.
[15] The Appellant revealed to the Minister’s
investigator that his duties involved bagging, which includes putting stickers
and ribbons on the medals. He also had to go to Montréal twice a week to pick
up merchandise. He stated that he transported between 1,000 to 1,200 lbs
of medals per trip and that he was responsible for deliveries all year long,
about twice a week. He also revealed to the investigators that he was doing
renovations in the basement, which he divided into two rooms, one for the
office and the other for storage. He also explained that he laid carpet, hung
wallpaper and installed a suspended ceiling. He stated that this work was done
over a three-week period of intense work, at a rate of 40 hours per week.
[16] The Minister
contends that the Payer hired
the Appellant according to his availability and willingness to work. Indeed,
Ms. Kielbinski stated to the investigators on February 28, 2006 that if the
Appellant had not been available to do the renovations, she would have waited
until he was. For his part, the Appellant said that he asked the Payer for a
job because needed 40 hours to qualify for employment insurance benefits.
[17] Exhibit I-4, introduced at the hearing, revealed
that most of the invoices for the basement renovation materials are dated
outside the period at issue. The purchase of the carpet, for instance, was made
on January 30, 2002, whereas the renovation work was supposedly carried out in
September and October 2003. The explanation provided by the Payer, i.e.,
that the Appellant was not available to do the work, is hardly credible since
it has been established that it was during the busiest period of the Payer’s
year that this renovation work was performed.
[18] The Minister
determined therefore that the Appellant and the Payer had entered into an agreement regarding the start, end and duration of the Appellant’s
employment. Moreover, the
Minister contends that the record of employment does not reflect the actual
number of hours worked or the actual period worked. And further, the Minister
is of the view that the alleged period of employment was not the Appellant’s
actual period of employment.
[19] The Minister
illustrated these assertions by means of the tables set out below:
38. Print-outs from CRA’s RAPID System
(option C) showing business income reported in years 2000 to 2004 inclusive:
|
Year
|
Gross Income
|
Net Income
|
|
2000
|
$80,611
|
$25,702
|
|
2001
|
$51,787
|
$23,866
|
|
2002
|
$88,092
|
$14,684
|
|
2003
|
$109,904
|
$21,666
|
39. Print-out from general ledger account: Sales Revenues
(year 2004):
(document provided by
Payer)
|
January
|
$3,358
|
|
February
|
$4,606
|
|
March
|
$8,850
|
|
April
|
$7,307
|
|
May
|
$23,608
|
|
June
|
$8,180
|
|
July
|
$4,541
|
|
August
|
$13,012
|
|
September
|
$8,398
|
|
October
|
$5,334
|
|
November
|
$6,508
|
|
December
|
$3,102
|
40. Print-out from general ledger account: Sales Revenues
(year 2002) :
(document
provided by Payer)
|
January
|
$5,954
|
|
February
|
$1,783
|
|
March
|
$3,925
|
|
April
|
$14,399
|
|
May
|
$9,379
|
|
June
|
$19,093
|
|
July
|
$6,293
|
|
August
|
$11,174
|
|
September
|
$4,407
|
|
October
|
$4,448
|
|
November
|
$4,815
|
|
December
|
|
N.B. According to 2002 GST report available in CRA’s GST system,
December sales revenues were $2,430.
41. Print-out from general ledger account: Sales Revenues
(year 2001) :
(document
provided by Payer)
|
January
|
$3,863
|
|
February
|
$4,694
|
|
March
|
$6,298
|
|
April
|
$1,066
|
|
May
|
$7,197
|
|
June
|
$3,581
|
|
July
|
$5,746
|
|
August
|
$5,682
|
|
September
|
$6,697
|
|
October
|
$1,990
|
|
November
|
$2,750
|
|
December
|
$2,221
|
42. Print-out from CRA’s GST report (year 2003) :
According to this print-out, the year’s highest revenues were
achieved in July, August and September 2003.
[20] It should be
emphasized that the above tables were produced from the data found in the
Payer’s documents.
[21] As for docket 2005-4322(EI), the evidence revealed that,
based on a statement made by the Payer to the investigators, her business runs
all year long but that in the winter there is a slow period because the company
does not have any contracts to make hockey medals; on the other hand, as of
late July and until early September, there is a lot of work, owing to soccer
tournaments. The Payer also stated to the investigators that the Appellant had
been hired to pick up and transport the medals from the suppliers in Montréal
and Toronto because they were too heavy to be shipped by mail. In 2004, he went
to Toronto once and did the Québec–Montréal trip approximately 15 times. The
Appellant was also the one who transported the medals to get them engraved. As
well, he was responsible for attaching the ribbons to the medal and,
occasionally, putting stickers on the back.
[22] The Respondent
established in evidence that the Appellant was not covered by any benefits
plan, apart from his contributions to the Employment Insurance scheme, which
were deducted at the source. It was established that the Payer kept no record
of the Appellant’s hours of work.
[23] In her statement to the investigators, the
Payer asserted that the Appellant was required to work a minimum of 35 to 40
hours per week, that he sometimes worked three days non-stop and that he might
work 70 hours over the course of a week. On June 30, 2005, she stated to the
investigator that her husband had worked between 60 and 75 hours the previous
week. She added that he was not paid for overtime, adding, [translation] “other people wouldn’t
work for nothing.” She stated that the Appellant was paid by cheque and
received $400 gross per week, regardless of the number of hours he actually
worked. She added that it would have been different with a third party, who
would not have worked for so little pay. For his part, the Appellant stated to
the investigators that he was required to work a minimum of 80 hours every two
weeks. He testified at the hearing that, initially, he had been supposed to earn
an hourly wage of $10, but it was later cut to $8.75.
[24] In her call report,
exhibit I-2, France Vigneault
wrote that when she had contacted the Appellant the first time to set up an
appointment for a telephone interview, he had informed her that during the
period at issue he might work 12 hours one week and 15 hours another week, that
sometimes he worked many more hours than that, but that he was always paid for
40 hours a week. Ms. Vigneault stated that when she actually conducted the
telephone interview with the Appellant, she reminded him of what he had said
previously; at that point, he told her to disregard what he had said and told
her that he was required to work 80 hours a week during his biweekly pay
period.
[25] Repeatedly
throughout her testimony, the Payer
stated that a third party would not have worked for the wage she was paying the
Appellant. Among other things, she stated:
[translation]
“A stranger wouldn’t have worked for nothing.”
“A stranger wants to get paid for the work he does.”
“He’s my husband; it’s to save money.”
“He [the Appellant] often helps me for no pay.”
[26] The Payer told the investigators that the
Appellant was laid off on November 26, 2004 because business had slowed
down and the snow removal contract had started. He also stated to the
investigators that in September, the soccer tournaments were over and business
normally slowed down after Labour Day and she is able to handle things on her
own. The investigator asked her why then she waited until November 26 to lay
her husband off. The Payer, Ms. Kielbinski replied, [translation] “I don’t know. He must have had something
to do.” And then she added, “It’s been a year; I don’t remember.”
[27] As an explanation,
the Appellant entered exhibit
A-2 to prove the real need for his services in October and November 2004.
However, the Payer’s documents examined by the Respondent do not reveal any
unusual work for that period. Below are the relevant data:
|
2004
|
|
May 2004
|
$23,608
|
|
August 2004
|
$13,012
|
|
September 2004
|
$8,398
|
|
October 2004
|
$5,334
|
[28] In testimony, the
Appellant’s and the Payer’s versions regarding the Appellant’s 4% vacation pay
were confusing. It was
asserted that vacation time was paid to the Appellant, then it was asserted
that it was not paid to him, and then, finally, it was asserted that it was
included in his pay.
[29] The Appellant
maintained that he carried out renovations in the Payer’s building in September
and October 2003. According to
the Appellant’s testimony, this work necessitated three weeks of intensive
labour at the rate of 40 hours per week. As for the Payer, he stated first of
all that the renovation work was carried out from mid-September until late
October 2003. He then stated that it lasted one month. Finally, he stated that
it lasted two months. Regarding the purchase of materials for this work, many
were made long before the work started; for instance, some of the work was done
in May 2003 and the carpet was purchased in January 2002.
[30] It should be pointed out that the Appellant’s
period of employment, both in 2003 and 2004, does not correspond with the
Payer’s busiest season. That fact was demonstrated in the table shown above.
[31] The Appeals Officer
noted in her report, exhibit I-1,
that she pointed out to the Payer the fact that the Appellant’s period of
employment was quite different in 2003 and 2004. She asked the Payer for an
explanation. Ms. Kielbinski replied, [translation] “It depends when he is available.”
[32] In her testimony,
Ms. Kielbinsky stated that she
worked for her company 50 to 60 hours per week and paid herself a certain
amount of salary as needed. However, exhibits I-7 and I-8, being her reported
income for the years 2003 and 2004, do not indicate any salary paid to her or
the Appellant. On the other hand, exhibit I-7 contains a statement that a
commission of $6,075.65 was paid. Ms. Kielbinsky, in her testimony, was unable
to name the person to whom this commission was paid.
[33] At the hearing, the
Appellant introduced some new evidence that he had not previously revealed to
the investigators regarding the Payer’s use of volunteer services. This was
offered to explain why the Appellant did not work for the Payer in 2002. According to the Appellant, members of the
soccer team and the Appellant’s children worked on a volunteer basis for the
Payer that year.
[34] It should be noted that the figures
produced at the hearing do in fact demonstrate the company’s precarious
financial situation, but at the same time, they raise the question as to why
the company did not use volunteers after 2002, preferring instead to pay the
Appellant a salary.
[35] According to the
Appeals Officer, the numerous
contradictions revealed over the course of the investigation justify the
recommendation she made to the Minister in these dockets.
[36] On the basis of
these recommendations, the Minister determined that the Appellant’s employment was not insurable
during the two periods at issue because he did not meet the requirements of a
contract of service under paragraph 5(1)(a) of the Employment
Insurance Act. The Minister also determined that the Appellant’s employment
was excluded from insurable employment because of the non-arm’s length
relationship between the Appellant and the Payer pursuant to sections 251 and
252 of the Income Tax Act and paragraphs 5(2)(i) and 5(3)(b)
of the Employment Insurance Act.
[37] The issue is the
insurability of the employment. The parties to the contract are related persons
according to the definition set out in the Income Tax Act, paragraphs 251(1)(a) and 251(2)(a):
251. Arm’s length.
(1) For the purposes of this Act,
(a) related persons shall be deemed not
to deal with each other at arm's length;
[...]
(2) for the purpose of this Act,
“related persons,” or persons related to each other, are
(a) individuals connected by blood
relationship, marriage or common-law partnership or adoption;
[38] Moreover, employment
in which the employer and the employee are not dealing with each other at arm’s
length is excluded from insurable employment under the Employment Insurance
Act. Thus, paragraph 5(2)(i) stipulates as follows:
5(2) Insurable employment does not include
(i) employment if the employer and
employee are not dealing with each other at arm’s length.
[39] Under such
circumstances, the Employment Insurance Act prescribes, in paragraph
5(3)(b) of the Act, the manner in which the Minister must exercise his
discretion to determine whether or not the employment is insurable:
(3) For the purposes of paragraph (2)(i) :
[...]
b) if the employer is, within the meaning of that Act, related to the
employee, they are deemed to deal with each other at arm’s length if the
Minister of National Revenue is satisfied that, having regard to all the
circumstances of the employment, including the remuneration paid, the terms and
conditions, the duration and the nature and importance of the work performed,
it is reasonable to conclude that they would have entered into a substantially
similar contract of employment if they had been dealing with each other at
arm’s length.
Duration of Employment
[40] The Appellant has
worked for the Payer since 2001. His periods of employment for each of these
have been as follows:
2001: from
September 17 to November 23
2002: the
Appellant did not work for the Payer
2003: from June
29 to October 17
2004: from
September 20 to November 26
[41] The Payer explained
to the investigators that the Appellant’s periods of employment depended on his
availability. Ms. Kielbinski also informed the investigators that the period
from late July to early September was very busy. There was a lot of work.
Following that, she revealed that the months of August and September were very
busy as well. Finally, she said that after Labour Day business is slow and she
can handle things on her own.
[42] It is reasonable to
doubt that an employee working at arm’s length with his employer would have
enjoyed such privileges and then worked during such a slow period.
Remuneration Paid
[43] The Appellant was
paid $700 gross every two weeks by cheque regardless of how many hours he
actually worked. He sometimes worked as much as 70 hours a week but was not
paid for more than 40 hours. He was not paid for overtime. The Appellant stated
that in 2003: [translation] “we sat around on weekends with our camping buddies
and had fun putting ribbons or stickers on the medals.” He added that Linda
Kielbinski’s daughter also worked on a volunteer basis.
Nature and Amount of Work and
Conditions of Employment
[44] According to the
Payer, the Appellant transported products related to the fabrication and
distribution of medals. He went to pick up the medals, according to the Payer,
in the first week of May. This was in 2003. However, his employment commenced
on June 29. The Appellant also did product deliveries throughout the year.
Regarding the renovation work he did in 2003, several different versions were
given as to the period in which it was done, and the purchase dates for certain
materials he used in the renovation cast doubt on the period alleged.
[45] The Payer also
stated that if her husband had not been available to do the work, she would
have waited until he was.
[46] According to the
Appellant, the busiest time of year for the Payer was May to October, but
according to the Payer, the Appellant’s employment periods depended on his
availability.
[47] The sales revenue
account in the Payer’s general ledger establishes that the Appellant was hired
at a time in 2004 that did not correspond with the busiest months of the year,
and the same in 2001. It is also noteworthy that the Appellant was hired in
2001, whereas in 2002, he was not. Indeed, there were no employees in 2002, yet
sales for 2002 exceeded sales in 2001 by $36,000.
[48] There is no doubt
that such working conditions would not have existed in an arm’s length
employment relationship.
[49] It is clearly
unreasonable to believe that a third party would have been granted working
conditions similar to those enjoyed by the Appellant. Accordingly, the
Appellant’s employment during the two periods at issue is excluded from
insurable employment under paragraph 5(2)(i) of the Employment
Insurance Act.
[50] The Court has
analyzed the facts of this case in the light of the legislative provisions
reprinted above.
[51] The Court also
examined the Minister’s exercise of discretionary power conferred upon him by
Parliament.
[52] In Légaré v. Canada (Minister of National Revenue), no. A-392-98 [1999] F.C.J. no. 878, Marceau J.A. of the Federal Court of Appeal, in a
judicial review of the Minister’s decision, wrote as follows at paragraph 4
with respect to the power conferred upon the Minister:
The Act requires the Minister to make a determination
based on his own conviction drawn from a review of the file. The wording used
introduces a form of subjective element, and while this has been called a
discretionary power of the Minister, this characterization should not obscure
the fact that the exercise of this power must clearly be completely and
exclusively based on an objective appreciation of known or inferred facts. And
the Minister’s determination is subject to review. In fact, the Act confers the
power of review on the Tax Court of Canada on the basis of what is discovered
in an inquiry carried out in the presence of all interested parties. The Court
is not mandated to make the same kind of determination as the Minister and thus
cannot purely and simply substitute its assessment for that of the Minister:
that falls under the Minister’s so-called discretionary power. However, the
Court must 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, it must decide whether the conclusion with which
the Minister was “satisfied” still seems reasonable.
[53] At the conclusion of
this analysis, the Court is of the view that the Minister exercised his power
in accordance with the legislation and the case law.
[54] Moreover, I find
that the facts inferred or
relied on by the Minister were real and correctly assessed having regard to the
context in which they occurred, and the conclusion with which the Minister was satisfied
still seems reasonable.
[55] Accordingly, the
appeals are dismissed and the decisions of the Minister are confirmed.
Signed at Grand-Barachois (New Brunswick), this 3rd
day of May 2007.
“S.J. Savoie”
Translation
certified true,
this 25th day of
September 2007
Stefan Winfield,
Translator
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