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Citation: 2004TCC677
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Date: 20041029
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Docket: 2003-4461(EI)
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BETWEEN:
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CAMILLE MONGER,
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Appellant,
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and
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THE MINISTER OF NATIONAL REVENUE,
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Respondent.
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[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
ParisJ.
[1] The appellant has appealed a
decision of the Minister of National Revenue that his employment
at Scierie Mécatina Inc. ("the payor") from
November 22, 1999, to February 26, 2000,
November 27, 2000, to March 3, 2001, and
February 25, 2002, to June 1, 2002, was not insurable
employment under paragraph 5(2)(i) of the Employment
Insurance Act ("the Act") because he and the payor
were not dealing with each other at arm's length. The
appellant, his brother Marcel, and his sister Mélanie were
the payor's only shareholders.
[2] When an employer and worker are
not dealing with each other at arm's length, the Minister
must determine, under paragraph 5(3)(b) of the Act,
whether, having regard to all the circumstances of the
employment, 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. In the
instant case, the Minister determined that it was not reasonable
to conclude that the payor and the appellant would have entered
into a substantially similar contract.
[3] The only question that the Court
must decide in the instant case is whether the Minister's
determination was reasonable. In order to do so, I 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 . . .
decide whether the conclusion with which the Minister was
"satisfied" still seems reasonable."[1]
[4] If I find that the conclusion is
not reasonable, I must reassess all the circumstances of the
employment and render the decision that the Minister should have
rendered pursuant to paragraph 5(3)(b).
[5] The appeal was heard on common
evidence with the appeal of
Melita F. Bursey-Monger.
[6] The facts on which the Minister
relied are set out in paragraph 6 of the Reply to the Notice
of Appeal. I propose to reproduce the statements of fact and
examine the evidence regarding each such
statement.
[TRANSLATION]
(a) The payor
operates a sawmill, cuts timber and maintains snowmobile
trails;
[7] This fact was not contested. The
evidence showed that, in the fall of 1998, the payor obtained two
contracts from The Ministère du Transport for the
maintenance of roughly 400 km of snowmobile trials
connecting several small villages in the area of
Tête-à-la-Baleine, where the
appellant lived. Both contracts were performed simultaneously
over three winters. The payor bid on the same work for the
subsequent period, which began in 2001, but its bid was not
considered because of an error with respect to the deposit that
was to accompany it.
[8] The appellant operated two
sawmills. One mill was located approximately 7 km from the
village of Tête-à-la-Baleine and
the other was located roughly 15 km from that village.
The latter sawmill was accessible only by snowmobile in the
winter, or by 4X4 in the summer. The timber destined to that
mill, and the lumber it produced, could only be transported to
and from the mill in the wintertime.
[TRANSLATION]
(b) the payor owns
two sawmills, one running on diesel and the other on electric
power; two Alpin snowmobiles; eight "white track"
snowmobiles; and snow-pushers and sledges for transporting
logs;
[9] This fact was not contested.
[TRANSLATION]
(c) in the fall of
1998, the payor obtained two three-year contracts for the
winters of 1999, 2000 and 2001, from The Ministère du
Transport for the maintenance of snowmobile trails;
[10] This fact was not contested.
[TRANSLATION]
(d) each contract
covered four snowmobile trails and spanned from Kegaska to
Vieux-Fort;
[11] This fact was not contested. The
evidence showed that the payor employed eight workers to maintain
the snowmobile trails. The workers generally worked 14 weeks
for the payor each winter. Marcel Monger, the
appellant's brother, was one of the workers, and was in
charge of supervising the maintenance of the
trails.
[TRANSLATION]
(e) the payor's
place of business was located in Tête-à-la-Baleine
at the personal residence of Jules and Nicole Monger, the
parents of the payor's three shareholders;
[12] This fact was not contested.
[TRANSLATION]
(f) during the
periods when he was listed in the payor's payroll journal,
the appellant performed numerous services without taking account
of the hours worked;
[13] The appellant stated that he worked an
average of 10 hours per day for the payor during the periods
of employment in issue.
[TRANSLATION]
(g) the appellant
cut timber in the winter, brought it out using snowmobiles and
hauled it to the sawmill; he carried out mechanical maintenance
on the snowmobiles and several small related tasks;
[14] Referring to the periods of employment
in 1999-2000 and 2000-2001, the appellant said that
he began working for the payor in November, when he tuned up and
repaired the snowmobiles and the train maintenance equipment. He
also cut the posts used to mark the trails. After the trails were
opened, he performed maintenance work only on an occasional
basis, devoting most of his time to cutting timber and
transporting it to the sawmill. He also said he did any
mechanical work needed to prepare the sawmill and carried out the
requisite repairs at the mill. Two other workers apparently
operated the mill. The appellant also said that he transported
the lumber from the mill to the village wharf so that it could be
delivered to the customers.
[TRANSLATION]
(h) in 2002, no
timber was cut and the appellant performed repairs at the
mill;
[15] Since the payor did not obtain the
trail maintenance contract in 2001, the appellant only began
working at the sawmill in February 2002. The appellant
testified that he operated the mill using only timber accumulated
during the two previous winters, and that he carried out
mechanical work at the mill, transported lumber orders and
cleaned the sawmill at the end of the period. In an interview
with Annie Leclerc, the officer with Human Resources Development
Canada who did the initial examination of his claim for
employment insurance benefits, the appellant said the work he did
for the payor in 2002 consisted of [TRANSLATION] "repairs to
the mill, there was a motor to change, improvements to the
building . . . no timber was cut; there was
just a bit of wood to deal with and some things to fix at the
mill."[2]
[TRANSLATION]
(i) the
appellant had no set work schedule and the payor did not record
his hours;
[16] The evidence did not show that the
payor imposed a set schedule on the appellant or that his working
hours were recorded anywhere. It appears that the appellant knew
what he had to do and worked an average of 50 hours per
week.
[TRANSLATION]
(j) the
appellant provided unpaid services to the payor at times other
than when he was listed on the payroll journal;
[17] The appellant told Ms. Leclerc
that he helped the payor from time to time by transporting wood
outside his period of employment. This issue was not addressed at
the hearing, and there is no cause to believe that the appellant
performed much unpaid work for the payor.
[TRANSLATION]
(k) according to the
payor's payroll journal, with respect to the period ending in
2000, the appellant supposedly finished five weeks before the
other employees who worked at the sawmill, and, with respect to
the period ending in 2001, he supposedly finished six weeks
before them; and yet, the appellant is the last to finish at the
sawmill every year because he does the cleaning;
[18] The evidence discloses that, during the
periods ending in 2000 and 2001, the appellant finished working
for the payor before the other two sawmill workers finished.
The appellant stated that his work at the time consisted of
cutting the wood so that it could be processed at the mill, and
that his employment ended when that work was done. The other
workers then milled the wood for several additional weeks. It is
only in 2002 that the appellant cleaned the mill.
[TRANSLATION]
(l) during the
periods in issue, the appellant's pay was a fixed $700 per
week, allegedly for 50 hours of work, which corresponds to
$14.50 an hour, and this was without regard to the number of
hours actually worked;
[19] The amounts received by the appellant
are not contested. As stated above, the appellant said that he
worked 50 hours per week for that pay.
[TRANSLATION]
(m) for each of the
periods in issue, the appellant was listed on the payor's
payroll journal for a fixed period of 14 weeks a year at
50 hours a week, with no basis to justify the hours actually
worked;
[20] It is admitted that the appellant was
listed on the payor's payroll journal for the stated periods
and hours, but the appellant says that this truly reflects the
hours worked.
[TRANSLATION]
(n) the appellant
always worked for the number of hours needed to become eligible
for unemployment benefits;
[21] The evidence shows that this was the
case for each period of employment. It also appears that
almost all the payor's workers were hired for 14 weeks
(the number of weeks needed to qualify for employment
insurance benefits) because the workers in the area did not agree
to work unless those weeks were guaranteed.
[TRANSLATION]
(o) the
appellant's periods of employment and the number of hours he
supposedly worked do not coincide with the needs of the
payor's business but rather, with the appellant's need to
qualify for employment insurance benefits.
[22] The evidence discloses that the
payor's business was seasonal-it was operated almost
exclusively during the winter-and that its operations were those
described in the evidence examined above. The evidence also
showed that the appellant's period of employment fell within
the periods of winter operations in 1999-2000 and
2000-2001. The payor's activities changed considerably
in 2002 because of the loss of the snowmobile trail maintenance
contract and the absence of forestry operations.
Analysis
[23] Counsel for the appellant submits that
the Minister did not consider the relevant aspects of the
appellant's employment by the payor, including his work
cutting the snowmobile trail markers during the first two periods
of employment and the fact that his employment during both these
periods ended because his work on cutting and transporting wood
for the sawmill was completed. The duration of his employment
depended on the work to be done, not simply on the number of
weeks required to qualify for employment insurance benefits.
Counsel also said that nothing suggested that the appellant did
much unpaid work for the payor outside his periods of
employment.
[24] I agree that the Minister did not take
the factors invoked by the appellant's counsel into account
when he rendered his decision, even though he should have done
so. Consequently, I agree that the decision ultimately rendered
with respect to the first two periods of employment in question
is an unreasonable one.
[25] In deciding whether persons dealing
with each other at arm's length would have entered into an
employment contract substantially similar to the one that this
appellant and this payor entered into, the question whether the
employment meets a real economic need of the payor must be given
a good deal of importance. Here, the Minister specifically
assumed that the appellant's employment did not coincide with
the payor's needs. However, based on the evidence as a whole,
and the circumstances surrounding the employment held by the
appellant from November 22, 1999, to
February 26, 2000, and from
November 27, 2000, to March 3, 2001, it does
in fact appear that the employment coincided with the normal
operations of the payor's business and met the payor's
needs. The mere fact that the appellant's employment lasted
14 weeks during each of the periods in issue does not make it
different from the jobs of all the employees who were dealing
with the payor at arm's length. In addition, the
appellant's rate of pay, his hours and the nature of his work
were essentially similar to those of the workers who were dealing
with the payor at arm's length and were employed at roughly
the same time.
[26] However, with respect to the period of
employment which began on February 25, 2002, and ended
on June 1, 2002, I am not satisfied that the
appellant's employment coincided with the payor's needs
in the same way as his employment during the previous periods.
The payor had to reduce its activities significantly during the
2001-2002 season because of the loss of the snowmobile
trail maintenance contact, and there was not much work at the
sawmill. The payor did not hire any arm's length employees
that season, and, based on the appellant's own testimony,
there was only a small amount of wood to mill. In my opinion, the
appellant has not succeeded in rebutting the Minister's
presumption that the main purpose of his work during this period
was to qualify for employment insurance benefits. For these
reasons, I am of the opinion that the Minister reasonably
concluded that the payor would not have hired a person at
arm's length to do the same work as the appellant under the
same conditions during that period.
[27] The appeal is allowed in part, and the
matter is remitted to the Minister for a redetermination on the
basis that the appellant's employment with the payor from
November 22, 1999, to February 26, 2000,
and from November 27, 2000, to February 26, 2001,
constituted insurable employment under the Employment
Insurance Act.
Signed at Ottawa, Canada, this 29th day of October 2004.
Paris J.
Translation certified true
on this 21st day of December 2004.
Jacques Deschênes, Translator
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