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Citation: 2004TCC673
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Date: 20041029
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Docket: 2003-4459(EI)
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BETWEEN:
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MELITA F. BURSEY-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
Paris J.
[1] The appellant has
appealed a decision of the Minister of National Revenue that her employment at Scierie Mécatina Inc. ("the
payor") from August 30, 1999, to November 20, 1999,
November 13, 2000, to December 9, 2000, and
August 5, 2002 to November 9, 2002, was not insurable
employment under paragraph 5(2)(i) of the Employment Insurance
Act ("the Act") because she was not dealing with the payor at
arm's length. The appellant was Marcel Monger's spouse. Marcel Monger, his
brother Camille and his sister Mélanie were the payor's only shareholders.
[2] When an employer
and a 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 case at bar, the Minister was not
satisfied that it was reasonable to do so.
[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."
[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 Camille 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.
[TRANSLATION]
(b) timber cutting
and trail maintenance are only done in the wintertime and the sawmill functions
only intermittently based on demand;
[8] These facts were
not contested, except in relation to the sawmill's operations. It appears that
two employees operated the sawmill for 14 continuous weeks during the winters
of 1999‑2000 and 2000‑2001. Camille Monger operated the sawmill, albeit in a
limited fashion, during the winter of 2001‑2002.
[TRANSLATION]
(c) the payor owns
two sawmills; two Alpin snowmobiles; eight "white track" snowmobiles;
and snow‑pushers and sledges for transporting logs;
[9] This fact was not
contested.
[TRANSLATION]
(d) 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;
[10] This fact was not
contested.
[TRANSLATION]
(e) during the 1999
and 2000 periods, the appellant was responsible for some of the accounting,
took orders, did pick‑ups at the mill and answered the telephone;
[11] These facts are true
of the appellant's period of employment in 1999, when she also designed a logo
for the payor, created an advertising flyer and had 3,000 copies of that flyer
distributed in the neighbouring villages. She said she was not involved in
accounting in 2000. She explained that when she received an order for lumber,
she went from the town to the mill (roughly 16 km), loaded the lumber onto
the truck and transported it to the town's wharf, where it was shipped to the
customer by boat. She also cleaned the sawmill and transported refuse to the
depot during her periods of employment in 1999 and 2000.
[TRANSLATION]
(f) during the 2002
period, the appellant mostly worked on preparing a legal claim against a credit
union and occasionally answered the telephone;
[12] The appellant stated
that she had duties other than those mentioned above, specifically, keeping the
payor's books and receiving and fulfilling orders for lumber. The claim against
the credit union was related to the loss of the snowmobile trail maintenance
contract. The appellant assembled the information and documents required for
the proceedings and photocopied the files that were in the payor's
possession.
[TRANSLATION]
(g) the appellant
worked at the payor's place of business and used the payor's equipment;
[13] This was admitted.
[TRANSLATION]
(h) the appellant had
no set work schedule and the payor did not record her hours;
[14] The evidence did not
indicate that the payor imposed a fixed schedule on the appellant or that her
hours of work were recorded anywhere. The appellant stated that she worked from
Monday to Saturday and started at 8:00 a.m.
[TRANSLATION]
(i) during the
periods when she was listed in the payor's payroll journal, the appellant was
the payor's only employee;
[15] No evidence was
adduced to the contrary.
[TRANSLATION]
(j) the appellant
claims that the payor hired her when the accounting workload increased due to
the award of snowmobile trail snow removal contracts, and yet the appellant was
not at work during the winter months;
[16] At the hearing, the
appellant was not questioned about this statement regarding an increase in
workload caused by the snowmobile trail maintenance contract. The evidence
disclosed that the work on these contracts began only after the appellant was
laid off in 1999 and 2000.
[TRANSLATION]
(k) the appellant claims that she
worked 50 hours a week during the periods when she was listed on the payor's
payroll journal, but the payor did not record her hours;
[17] In addition to the
evidence discussed in relation to paragraph (h) above there is the
testimony of the appellant, who said that she worked 50 hours a week for
the payor.
[TRANSLATION]
(l) the appellant
claims that there was usually someone else with her at the office, and yet, for
each of the periods in question, she was the only person listed in the payor's
payroll journal;
[18] Although the
appellant made such a claim to the appeals officer, it is not known whether she
was referring to another of the payor's workers being at the office, or a
member of the Monger family being there. In any event, it is clear that no other worker was
listed in the payor's payroll journal while the appellant was working.
[TRANSLATION]
(m) in 1999, the
appellant was paid $700 per week, supposedly for 50 hours; in 2000, she was
paid $600, and in 2002, she was paid $725, and all of this was without regard
to the hours actually worked;
[19] The appellant has
acknowledged that she was paid these amounts. As stated above, she said that
she worked 50 hours a week for those wages.
[TRANSLATION]
(n) the appellant was
listed in the payor's payroll journal only for the number of hours necessary to
be eligible for unemployment benefits;
[20] This was shown to be
true in relation to the 1999 and 2002 periods of employment. In 2000, the
appellant first worked for another employer for 10 weeks and then worked
for the payor for four weeks. Thanks to the weeks she worked for the payor, the
appellant had exactly the number of hours required to be entitled to employment
insurance benefits.
[TRANSLATION]
(o) the appellant's periods of
employment and the number of hours she 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.
[21] The appellant
tendered no evidence concerning the relationship between her periods of
employment and the payor's business activities, and no one representing the
payor was called as a witness.
[22] The appeals officer
testified that she obtained the payor's sales figure from its 1999‑2002
quarterly GST returns. The amounts are found in her report, which she tendered
as Exhibit R‑3. However, she admitted that she did not know when the
payor invoiced for lumber sales, which meant that there was no way to establish
a correlation between the sales reported for GST purposes and the payor's true
business activities.
[23] The respondent
sought to adduce conversations between the appeals officer and Mélanie Monger (who was representing
the payor at that stage) but that evidence was determined inadmissible because
it was hearsay.
Additional facts
[24] I must also take
into account any additional fact that was not considered by the Minister and
would establish whether or not the conclusion he reached with respect to the
appellant's employment was reasonable.
[25] The respondent also
made the following allegation in the Reply to the Notice of Appeal:
[TRANSLATION]
The appellant claims that she
devoted 25 hours a week to accounting, but the payor had no economic
activity during the periods in question.
[26] This new fact is
combined with the facts that the Minister assumed to be true when he made his
decision, so it is up to the respondent to prove it. As I have said, no
evidence of the payor's level of business during a given period was adduced in
this Court. Consequently, I find that this new fact has not been proven.
[27] The appellant also
testified that she worked during the periods in question in 1999 because nobody
else spoke English. Since the residents of most of the villages surrounding Tête‑à‑la‑Baleine are
English‑speaking, the payor had to offer services in English to customers
from those villages.
[28] The appellant also
said that she was laid off in 1999 and 2000 because she was pregnant. She gave
birth to her first son on June 16, 2000, and to her second son on
August 14, 2001.
Analysis
[29] Counsel for the
appellant submitted that the Minister failed to take account of certain
relevant facts concerning the appellant's employment with the payor.
In his submission, the Minister did not recognize that the payor needed an
English‑speaking worker to look after orders from neighbouring villages
and to produce advertising flyers in English. He also said that the Minister
did not take account of the fact that the appellant had to leave her employment
with the payor in 1999 and 2000 because she was pregnant (and not simply
because she had worked enough hours to receive benefits). Lastly, he argued
that the evidence regarding the GST returns filed by the appellant did not
necessarily support the assertion that the payor's business slowed down during
the period when the appellant worked.
[30] I certainly agree
that the first two factors invoked by counsel for the appellant were not taken
into account by the Minister when he made his decision, and that the
information related to the GST was not interpreted correctly. However, these
defects do not render the ultimate decision unreasonable.
[31] 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. The burden is therefore on the appellant
to show that the Minister erred in relying on this fact or that this fact was
not true. The appellant has not discharged this burden.
[32] The evidence in this
case actually tends to support the respondent's position. It shows that the
appellant only worked when the payor had no other employees, and that the payor
did not consider it necessary to hire someone to replace her even though its
business activities were continuing without interruption. Thus, the payor was
able to operate most of the time from 1999 to 2002 without an English‑speaking
worker, and, in 2001, it was able to operate without any worker to perform the
duties that were assigned to the appellant during the other years.
[33] The fact that the
payor did not replace the appellant was not explained, but it is clearly unrelated
to the seasonal nature of its business. The appellant's employment never
coincided with the periods of greatest activity for the payor. These factors
strongly suggest that the main purpose of the appellant's employment was to
qualify for employment insurance benefits, not to meet the true needs of the
payor's business. I have no doubt that the appellant actually worked for the
payor, but I find it reasonable to conclude that the payor would not have
remunerated a person with whom it was dealing at arm's length to perform the
same work as the appellant under the same conditions.
[34] For these reasons,
the appeal is dismissed.
Signed at Ottawa, Canada, this 29th day of October 2004.
Paris J.
Translation
certified true
on this 29th day of
December 2004.
Jacques Deschênes,
Translator
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