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Citation: 2004TCC255
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Date: 20040331
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Docket: 2002-1130(EI)
2002-1374(EI)
2002-1375(EI)
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BETWEEN:
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BHAJAN SINGH UPPAL,
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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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REASONS FOR JUDGMENT
Mogan J.
[1] The Appellant has three separate
appeals before the Court identified by the following Court File
Numbers: 2002-1130; 2002-1374; and 2002-1375. All three appeals
were heard together on common evidence. The issues in those
appeals are whether the Appellant was engaged in insurable
employment in the following four periods:
1996
April 15 to August 31
1997
April 7 to August 23
1998
June 29 to October 24
1999
June 24 to October 8
[2] For each period, the Minister of
National Revenue concluded that the Appellant's employment
was excluded from insurable employment because (i) the Appellant
was not at arm's length with his employer; and (ii) the
Minister was not satisfied that the Appellant and his respective
employer would have entered into a substantially similar contract
of employment if they had been dealing at arm's length. The
Appellant admits that, for each period, he and his respective
employer were not at arm's length. The only question then,
for each period, is whether the Appellant and the employer would
have entered into a substantially similar contract of employment
if they had been dealing at arm's length. These appeals arise
out of the following provisions of the Employment Insurance
Act:
5(1) Subject to
subsection (2), insurable employment is
(a) employment in
Canada by one or more employers, under any express or implied
contract of service or apprenticeship, written or oral, whether
the earnings of the employed person are received from the
employer or some other person ...
(b)
...
5(2) Insurable employment does
not include
(a) ...
(i)
employment if the employer and employee are not dealing with each
other at arm's length.
5(3) For the purposes of
paragraph (2)(i),
(a) the
question of whether persons are not dealing with each other at
arm's length shall be determined in accordance with the
Income Tax Act; and
(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.
[3] Paragraph 5(3)(b) and its
predecessor in the Unemployment Insurance Act
(subparagraph 3(2)(c)(ii)) have been the subject of much
litigation. The decision of the Federal Court of Appeal in
Tignish Auto Parts Inc. v. M.N.R., [1994] F.C.J. No. 1130,
established the principle that the Minister has a discretion
under paragraph 5(3)(b). That principle was explained by
Isaac C.J. as follows in Jencan Ltd. v. Attorney General of
Canada, [1997] F.C.J. No. 876:
31
The decision of this Court in Tignish, supra,
requires that the Tax Court undertake a two-stage inquiry when
hearing an appeal from a determination by the Minister under
subparagraph 3(2)(c)(ii). At the first stage, the Tax
Court must confine the analysis to a determination of the
legality of the Minister's decision. If, and only if, the Tax
Court finds that one of the grounds for interference are
established can it then consider the merits of the Minister's
decision. As will be more fully developed below, it is by
restricting the threshold inquiry that the Minister is granted
judicial deference by the Tax Court when his discretionary
determinations under subparagraph 3(2)(c)(ii) are reviewed
on appeal. ...
33 ... The
jurisdiction of the Tax Court to review a determination by the
Minister under subparagraph 3(2)(c)(ii) is circumscribed
because Parliament, by the language of this provision, clearly
intended to confer upon the Minister a discretionary power to
make these determinations. The words "if the Minister of
National Revenue is satisfied" contained in subparagraph
3(2)(c)(ii) confer upon the Minister the authority to
exercise an administrative discretion to make the type of
decision contemplated by the subparagraph. Because it is a
decision made pursuant to a discretionary power, as opposed to a
quasi-judicial decision, it follows that the Tax Court must show
judicial deference to the Minister's determination when he
exercises that power. ...
37 On the basis of
the foregoing, the Deputy Tax Court Judge was justified in
interfering with the Minister's determination under
subparagraph 3(2)(c)(ii) only if it was established that
the Minister exercised his discretion in a manner that was
contrary to law. And, as I already said, there are specific
grounds for interference implied by the requirement to exercise a
discretion judicially. The Tax Court is justified in interfering
with the Minister's determination under subparagraph
3(2)(c)(ii) (by proceeding to review the merits of the
Minister's determination) where it is established that the
Minister: (i) acted in bad faith or for an improper purpose or
motive; (ii) failed to take into account all of the relevant
circumstances, as expressly required by paragraph
3(2)(c)(ii); or (iii) took into account an irrelevant
factor.
[4] As I understand the law, the first
stage of the inquiry is to determine the legality of the
Minister's decision. In other words, did the Minister (i) act
in bad faith or for an improper purpose; (ii) fail to consider
all relevant circumstances; or (iii) take into account an
irrelevant factor? If I conclude that the Minister exercised his
discretion within the law, then his decision must stand. But if I
conclude that the Minister exercised his discretion in a manner
contrary to law, then I may embark upon the second stage to
consider the merits of the Minister's decision. In theory,
the two-stage inquiry for appeals under paragraph 5(3)(b)
is clearly the correct approach but, in practice, when a judge
starts on the first stage of the inquiry, he or she must review
all of the evidence and, in doing so, the judge consciously or
subconsciously is involved in the second stage of considering the
merits of the Minister's decision.
[5] I will first consider whether the
Minister exercised his discretion within the law. The Appellant
has made no allegation of bad faith or improper purpose against
the Minister. Therefore, I will consider only whether the
Minister failed to consider all relevant circumstances or took
into account any irrelevant factor. Although the Appellant admits
that he was not at arm's length with his employer in any
relevant period, it is necessary to set out the details of the
non-arm's length relationships.
[6] The Appellant and his wife,
Jagrajbir Uppal, lived at 387 Defehr Road, Abbotsford, British
Columbia at all relevant times from after the early 1990s. The
property at 387 Defehr Road comprised five acres on which the
Appellant and his wife grew blueberries to sell. They had two
sons: Pavenvir born in 1980 and Gurminder born in 1983. In 1995,
the Appellants' wife and her sister, Mrs. Bhalvinder Thandi,
purchased a 20-acre farm near Mission, British Columbia.
Abbotsford and Mission are adjoining municipalities in the lower
Fraser Valley of British Columbia about 20 kilometres apart. The
Appellant's wife and Mrs. Thandi operated their new farm
under the business name "B & J Farms". It was not a
corporation. The Appellant was employed by B & J Farms for
the following two periods which are part of these appeals;
1996
April 15 to August 31
- 139
days (20 weeks)
1999
June 24 to October 8
- 107
days (15 weeks)
[7] Kanwarbir Randhawa is the
Appellant's brother-in-law being the brother of the
Appellant's wife and Mrs. Thandi. Mr. Randhawa operated a
farm and he also carried on a contractor business providing farm
labour to various farms in the lower Fraser Valley. The
contractor business was carried on by Randhawa Farm Contractors
Ltd., a corporation owned by Mr. Randhawa. In 1997, the Appellant
was employed by Randhawa Farm Contractors Ltd. and, in 1998, he
was employed by Randhawa Farms which was Mr. Randhawa's farm
at 221 Defehr Road, Abbotsford. The relevant working periods
were:
1997
April 7 to August 23
- 139
days (20 weeks)
1998
June 29 to October 24
- 118
days (17 weeks)
Employment in 1996 and 1999
[8] Having regard to the facts
summarized in paragraphs 6 and 7 above, the Minister made his
determinations under paragraph 5(3)(b), or its
predecessor, denying insurable employment to the Appellant. I
propose to consider first the Appellant's employment by B
& J Farms in 1996 and 1999 because those two periods include
the first year under appeal. The Appellant's appeal for 1996
and 1999 is Court File Number 2002-1374. The Respondent's
Reply in Court File 2002-1374 sets out the assumptions of
fact relied on by the Minister. Those facts taken from paragraph
3 of the Reply are:
a) B & J
Farms operates greenhouses located in the Matsqui Flats area of
the Fraser Valley;
b) the
greenhouses take up approximately 2½ acres of a 20 acre
parcel of land;
c) B & J
Farms is a partnership between the Appellant's spouse,
Jagrajbir Uppal and the Appellant's sister-in-law, Bhalvinder
Thandi;
d) the
greenhouse crop consists mainly of peppers;
e) the
Appellant's duties during the Periods were to straighten out
the water pipes, tighten clamps, check the crop for disease,
fertilize the crop, remove the picked peppers, supervise and
other general duties;
f) the
Appellant kept track of his hours and handed this record to B
& J Farms at the end of each week;
g) B & J
Farms owned all the tools and equipment necessary for the
Appellant to perform his duties;
h) before the
Appellant was hired and subsequent to his being laid off his
duties were performed by family members;
i) the
Appellant worked between 9 and 11 hours per day;
j) B
& J Farms set the Appellant's wage at $7.00 per hour and
this rate was later increased to $9.00 per hour;
k) most of the
non-related workers were paid the minimum hourly wage during the
Periods;
l) the
Appellant was not paid by B & J Farms on a regular or timely
basis;
m) B & J Farms
issued a cheque to the Appellant dated August 11, 1998 for the
amount of $4,000.00 and this cheque was cashed on October 4,
1999;
n) the
non-related workers were paid on a regular basis by B &
J Farms;
o) the
Appellant performed duties for B & J Farms before and after
the Period and he was not paid for these duties nor was he shown
as being on B & J Farms payroll for this work;
p) the
Appellant and his souse, Jagrajbir Uppal operated their own farm
during the 1996, 1997, 1998, 1999 and 2000 taxation years;
q) the
Appellant was related to B & J Farms within the meaning of
subsection 251(2) of the Income Tax Act (the "IT
Act");
r) the
Appellant and B & J Farms were not dealing with each other at
arm's length within the meaning of section 251 of the IT
Act during the Period; and
s) having
regard to all the circumstances of employment, including the
remuneration paid, the terms and conditions of employment, the
duration and the nature and importance of the work performed, the
Appellant and B & J Farms would not have entered into a
substantially similar contract of employment had the Appellant
and B & J Farms been dealing at arm's length.
[9] The Appellant was employed by B
& J Farms in 1995 but that period of employment is not
involved in these appeals. The Appellant did not participate in
the business (profit or loss) of B & J Farms and he did not
do any bookkeeping or provide any administration. The Appellant
does not read or write and he speaks very little English although
he has resided in Canada since 1979. Most of his evidence was
given through a Punjabi interpreter. He has a driver's
licence and a special licence which permits him to transport
passengers (up to 15) in a van. In 1996, all of the B & J
Farms land was used to grow strawberries. The Appellant was paid
a salary of $600 per week to perform the following tasks:
- each day, he
picked up and dropped off four workers using his own car;
- he and
others picked strawberries;
- he delivered
strawberries to the cannery;
- he sprayed
the plants and did some digging.
[10] The first page of Exhibit A-1 is the
Appellant's Record of Employment ("ROE") for 1996
showing that he worked 20 weeks and earned $12,000 which is
consistent with his weekly salary of $600. The remaining pages in
Exhibit A-1 are the ROEs for the other five employees of B &
J Farms in 1996. Combining Exhibit A-1 with Exhibit A-7, the
following facts are established for the six employees of B &
J Farms in 1996:
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Name
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No. of Weeks
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Pay Per Week
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Last Day of Work
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B.Uppal
(Appellant)
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20
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$600
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Aug. 31
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J. Dherari
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3
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$400
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Aug. 31
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D. Sahota
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20
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$400
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Sept. 21
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P. Sahota
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20
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$400
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Sept. 21
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A. Sahota
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20
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$350
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Sept. 21
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B. Sahota
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26
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$420
*
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Oct. 5
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* $7.50 per hour for 56-hour
week
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[11] There is a problem comparing the facts
assumed by the Minister with the evidence concerning the
Appellant's employment at B & J Farms because, in the
Respondent's Reply for Court File No. 2002-1374, the same
facts appear to have been assumed for both 1996 and 1999 when the
evidence disclosed different circumstances for those years. For
example, when the Appellant's wife and Mrs. Thandi
purchased the 20 acres near Mission in 1995, there was no
greenhouse and they grew only strawberries. They built their
first one-acre greenhouse in 1997 and added a 1½-acre
greenhouse in 1999. The Appellant claims to have had different
responsibilities in those years. I will consider only those facts
assumed by the Minister which appear to distinguish the Appellant
from other employees at B & J Farms.
[12] The Minister assumed the following
facts already set out in paragraph 8 above:
m) B & J Farms
issued a cheque to the Appellant dated August 11, 1998
(sic) for the amount of $4,000.00 and this cheque was
cashed on October 4, 1999;
n) the
non-related workers were paid on a regular basis by B &
J Farms;
These facts make it appear that the Appellant was paid on a
less frequent basis than non-related workers. The evidence for
1996 clearly contradicts those assumed facts. Exhibit A-8 shows
that the five non-related workers were all paid on a delayed
basis and the Appellant on a less delayed basis. The facts in
Exhibit A-8 are as follows:
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Name
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Employment Period
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Net Wages
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Payment Dates
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B. Uppal (Appellant)
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Apr 14-Aug 31
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$9,800.81
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July 19: 5,000.00
Aug 14: 2,000.00
Sept 5: 2,800.81
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J. Dherari
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Aug 12-Aug 31
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$1,076.63
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Sept 5: 1,076.63
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D. Sahota
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May 5-Sept 21
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$7,096.00
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Sept 5: 4,000.00
Sept 19: 2,000.00
Sept 24: 1,096.00
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P. Sahota
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May 5-Sept 21
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$7,096.00
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Sept 5: 4,000.00
Sept 19: 2,000.00
Sept 24: 1,096.00
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A. Sahota
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May 5-Sept 21
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$6,263.70
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Sept 5: 4,000.00
Sept 19: 1,500.00
Sept 24: 763.70
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B. Sahota
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Apr 7-Oct 5
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$9,303.35
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Sept 5: 4,000
Sept 19: 2,000
Oct 7: 3,303.35
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[13] It is a fact, however, that the
Appellant was paid about 50% more than any other worker in 1996
(see paragraph 10 above) and he denied having any supervisory or
foreman-like duties at B & J Farms. Throughout 1996 and 1999
inclusive, Mrs. Thandi and her sister, the Appellant's wife,
worked full-time (not seasonal) for their brother, Mr. Randhawa.
They would work for Mr. Randhawa from early morning until
mid-afternoon when they would go to their 20-acre farm near
Mission. In late afternoon, Mrs. Thandi would issue instructions
to the workers for the next day and the Appellant's wife, who
had some computer skills, would do some administrative
duties.
[14] The Appellant stated that his only
extra duty in 1996 was to drive the four Sahota family workers in
his own car from their home on Defehr Road (near where the
Appellant lived) to B & J Farms near Mission, about a
30-minute drive. No one explained how the Sahota family got to
work after August 31, 1996 when the Appellant was laid off by B
& J Farms. Three of the Sahotas continued to work at B &
J Farms until September 21 and the fourth worked until October 5.
The Sahota family workers would not have been transported by
Mrs. Thandi or the Appellant's wife because they (the
two sisters) worked full-time for their brother, Mr.
Randhawa, throughout 1996 to 1999.
[15] The Appellant's wife and Mrs.
Thandi both testified in these appeals. They confirmed that they
worked full-time for Mr. Randhawa throughout 1996 to 1999. Mrs.
Thandi stated that B & J Farms built the first one-acre
greenhouse in 1997. They added another 1½-acre greenhouse
in 1999. They were required to keep the greenhouse heated all
year round, maintaining a constant temperature of 24 or 25
degrees Celsius. The boilers which maintained the temperature
were operated by a thermostat and computer. If the boiler
stopped, an alarm would go off at a local security company which
would call the Appellant's home and, if no person answered,
there were other cellular numbers as backup.
[16] The Appellant stated that it was easy
to re-start the boiler if a call came from the security company
to say that the boiler was off. Someone had to attend at the
greenhouse and press a green button or switch. He said that if
the boiler stopped on an evening or weekend while he was employed
at B & J Farms, he would drive (about 30 minutes) from his
home on Defehr Road to the B & J Farms greenhouse to restart
the boiler. He further stated that if the boiler stopped on an
evening or weekend while he was not employed at B & J Farms,
he would not go to the greenhouse to restart it. This last
statement is simply not credible. All indications in Court were
that the Appellant and his wife and their two sons lived in a
harmonious relationship at the family home on Defehr Road. I do
not believe that the Appellant would have his wife make a
one-hour round trip to the B & J Farms greenhouse in the
middle of the night to restart the boiler.
[17] Exhibit A-5 contains the
Appellant's Application for Unemployment Benefits for 1999.
The first page of the Application shows that he worked a six-day
week at nine hours per day and $9.00 per hour. His evidence is
that he worked mainly in the greenhouse in 1999 repairing and
strapping the pipes; spraying for bugs and delivering peppers
(the only product of the greenhouse). Although the Appellant
worked from June 24 to October 8, 1999 earning net take home pay
of $7,871.03, he was paid only three cheques in the following
amounts:
August 11, 1998
(sic)
$4,000.00
September 20,
1999
$2,000.00
October 15,
1999
$1,871.03
The August 11 cheque was not cashed until October 4, 1999. The
Appellant said that he might have forgotten to cash it but he
might also have been offering some financial accommodation to B
& J Farms.
[18] One of the Appellant's duties at B
& J Farms was to deliver strawberries to the cannery. He used
his pickup truck to deliver the strawberries. He said that he had
both a car and a pickup truck and that he left his pickup at B
& J Farms all the time. Because the delivery of strawberries
was essential to the operation of B & J, the
Appellant's pickup truck at B & J was important. The
Appellant and his wife and Mrs. Thandi all agreed that he was the
only "family" person employed at B & J Farms in the
summers of 1996 and 1999.
[19] The Appellant may well have been in
attendance at B & J Farms all or substantially all of the
time when he claims to have been employed there in the summers of
1996 and 1999. I find, however, that he was there in a management
capacity and not as an ordinary employee. He was the only person
in attendance throughout the day who was related to the owners.
He delivered the strawberries to the cannery with his own truck
which he left at B & J Farms all the time. The delivery of
the strawberries (from the field) and peppers (from the
greenhouse) served an important audit function for B & J
Farms because it was the only source of revenue. The Appellant
could ensure for the benefit of the owners that all of the
berries or peppers went only to the cannery or market; that he
knew the quantity of berries and peppers delivered; and that he
would obtain a receipt for the correct quantity. This was an
important function in the management of B & J Farms; and the
Appellant was the only family member who was there each day to
perform it.
[20] When Mrs. Thandi was asked at the
beginning of her testimony what the Appellant did for B & J
Farms, she answered:
At that time there was strawberry. He used to pick strawberry
and that there were four or five people that he used to bring, to
deliver the berry, too. And it was his responsibility to look
after the people.
(Transcript page 140)
I interpret Mrs. Thandi's last sentence to mean that the
Appellant was responsible for supervising the workers because
there was no one else in attendance representing the owners. In
1996, he was paid about 50% more than other workers, consistent
with his responsibilities. But in 1999, he appears to have been
paid at about the same level as other workers, not consistent
with his responsibilities.
[21] Counsel for the Respondent brought out
some interesting facts which must have been known to the Minister
of National Revenue although they do not appear in the
Respondent's pleadings. In the Appellant's income tax
returns for 1995, 1996 and 1999, he reported the following
amounts as gross revenues which he and his wife received from
farming blueberries on the five acres adjoining their home:
1995
$44,000
1996
65,000
1999
80,000
[22] Blueberries are picked from July to
early September. The Appellant and his wife rely on a contractor
to provide workers to pick the berries. Sometimes there could be
as many as 50 workers picking blueberries on their small farm. It
happens that the season to pick blueberries (July to early
September) is a time when the Appellant and his wife were
employed away from their home in the summers of 1996 to 1999.
When asked who supervised the workers picking blueberries, the
Appellant answered that his two sons did. In 1996, the older son
Pavenvir was 16 and the younger son Gurminda was 13. It seems
like a significant responsibility to impose on two teenage boys
to supervise a brief harvesting operation which would produce
about $50,000 in gross revenue.
[23] With respect to the years 1996 and
1999, I cannot find that the Minister failed to consider all
relevant circumstances or that he took into account irrelevant
factors. Even if I could conclude that the Minister had exercised
his discretion in a manner contrary to law, I would find it
difficult to reverse the Minister's decision on the merits of
the case. The Appellant has a serious credibility problem.
Exhibit A-3 includes the Appellant's Application for
Unemployment Benefits for the 20 weeks in 1997 when he was
employed by Randhawa Farm Contractors Ltd. The Application
contains the following question number 35 with two small squares
for answer marked "Yes" or "No":
35. Were you related to
your employer or to one or more of its majority shareholders, by
blood, marriage (including common-law) or adoption?
The Appellant placed an "x" in the square marked
"No" although he was clearly related to Mr. Randhawa
(the majority shareholder of Randhawa Farm Contractors Ltd.) by
marriage (the Appellant's wife is Mr. Randhawa's
sister).
[24] Exhibit A-4 includes the Application
for Unemployment Benefits for 1998 when the Appellant worked for
Randhawa Farms; and Exhibit R-1 is the same Application for 1999
when the Appellant worked for B & J Farms. Both Applications
contain the same question number 35 and the Appellant has
answered "No" although, in each year, he was clearly
related to his employer. The Appellant stated that his wife
completed his Applications for Unemployment Benefits because he
could not read or write. When the Appellant's wife testified,
the following exchange took place in cross-examination:
Q. If I could refer
you to Exhibit A-4 and specifically to Mr. Uppal's
unemployment benefits application in Exhibit 4. And this was the
application that he submitted in 1998.
A. Yes.
Q. Do you recognize
the writing on this form to be your writing?
A. Mine.
Q. So you filled out
this application for him?
A. I did.
Q. And again in
question number 35 on page 2, you indicated that Mr. Uppal
was not related to Randhawa Farms.
A. I was thinking
the blood relation. I was thinking it was the blood relation they
are talking about, either a brother or a sister.
(Transcript page 180)
Q. And I refer you
to Exhibit A-3. And again I'm showing you Mr. Uppal's
application for unemployment insurance benefits for '97. And
is this - do you recognize the writing on this application to be
yours?
A. Yes.
Q. So you understood
enough to fill out this application?
A. Yes. Then again I
would have probably there, too, I was thinking it was the blood
they are talking about.
Q. Well, why would
you think it's just the blood they're talking about when
question number 35 specifically says marriage, and you marked
"No", on Mr. Uppal's application for the year that
he worked for you?
A. That's my
mistake. I was just thinking it was a blood relation they're
talking about. I was just thinking it was blood relation
they're talking
about.
(Transcript page 181)
I do not believe Mrs. Uppal's explanation for the totally
inaccurate answers to question number 35.
[25] The Appellant's wife helped him to
complete his applications for unemployment benefits in each of
the years 1995 to 1999 inclusive but the applications for 1995
and 1996 are not in evidence. She stated that she did not know
how many weeks her husband was required to work each year in
order to qualify for unemployment insurance benefits. I do not
believe her answer. A person cannot participate in the
unemployment insurance scheme for five years in a particular area
of Canada (i.e. the lower Fraser Valley of BC) and not know the
minimum number of work weeks required to qualify for unemployment
benefits in that area.
[26] The evidence of the Appellant and his
wife does not have a true ring. They both worked away from their
family farm (five acres of blueberries) in the summers of 1996,
1997, 1998 and 1999 when many contract workers came to pick their
blueberries. According to the Appellant's evidence, gross
revenue from their blueberries was $65,000 in 1996 and $80,000 in
1999. His ROE from B & J Farms for 1996 (Exhibit
A-1) described him as a "Labourer". His ROE for 1999
described him as "Supervisor/Labour" and his
Application for Benefits in 1999 (Exhibit R-1) described his job
title as "Greenhouse". I am asked to believe that the
Appellant worked for 15 weeks (June 24 to October 8) at B & J
Farms in the summer of 1999 as "supervisor/labour" to
earn $8,332.74 (see Exhibit A-5) while his two teenage sons
stayed at home to supervise the harvest of blueberries having a
value of $80,000. I find that proposition not believable in all
the circumstances of this case.
[27] If the Appellant worked at B & J
Farms in the summer of 1999, it was in a proprietary sense as
spouse of a co-owner and not as a labourer. For most of each day,
he was the only person in attendance representing the owners. He
was the only person delivering the product to market and
recording the owners' entitlement to gross revenue. He had
co-signed the mortgage in 1996 borrowing money to build the first
greenhouse. I do not accept the statement of the Appellant's
hours worked each day (part of Exhibit A-5) as if he were a
common labourer punching a time clock when there must have been
times when he would have to go back to 387 Defehr Road to check
on the blueberry harvest.
[28] As I stated in paragraph 23 above, I
cannot conclude that the Minister exercised his discretion in a
manner contrary to law for 1996 and 1999. And even if I could,
the evidence on the merits supports the Minister for 1996 and
1999. Appeal No. 2002-1374 is dismissed.
Employment in 1997 and 1998
[29] Appeal No. 2002-1130 is about the
Appellant's employment by Randhawa Farm Contractors Ltd. (the
"Company") in 1997, and Appeal No. 2002-1375 is about
the Appellant's employment by Randhawa Farms in 1998. Because
the Appellant had two different employers for those two years,
the facts assumed by the Minister are different for each case.
Mr. Randhawa testified at the hearing of the appeals. His
evidence and that of the Appellant may be summarized as
follows.
[30] Exhibit A-3 contains photocopies of
three documents: (i) a payroll book showing the hours worked each
day from April 7 to August 23, 1997; (ii) the Appellant's ROE
for working at the Company in 1997; and (iii) the Appellant's
Application for Unemployment Benefits in 1997. The payroll book
shows the precise hours per day; a rate of $7.00 per hour; the
calculation of gross earnings at $7,614.25; and an amount $3,000
with the word "bonus". Mr. Randhawa explained that the
$3,000 amount was not a bonus but compensation (under the column
"other earnings" in the payroll book) at the rate of
$25 per day for driving a van to transport 15 contract workers to
different farm locations in the lower Fraser Valley. Compensation
for driving at $25 per day for a six-day week would be $150 per
week, and $3,000 for 20 weeks. The arithmetic in the exhibit is
consistent with Mr. Randhawa's testimony.
[31] Exhibit A-6 shows that the Appellant
received seven cheques from the Company in 1997 paying him in
aggregate his net take-home pay. Details of those cheques are as
follows:
May
31
$1,500
June
30
2,000
October
31
2,000
November
30
900
November
30
900
November
30
900
November
30
779.48
The first six cheques in round numbers were like an
employer's advance. Mr. Randhawa stated that the last
cheque for a precise amount took into account all of the source
deductions for income tax, CPP, etc. In the Respondent's
Reply for Appeal 2002-1130, the following facts assumed by the
Minister as set out in paragraph 3 are relevant:
(m) Randhawa paid the
Appellant $3,000 in addition to his net wages;
...
(o) the Appellant
was not paid on a regular basis;
(p) the non-related
workers were paid on a regular basis by Randhawa;
(q) the non-related
workers were paid on hourly rate of pay basis and the majority of
non-related workers were paid at the rate of $7.00 per hour;
[32] Having regard to the above assumed
facts, the Appellant and Mr. Randhawa have explained to my
satisfaction the $3,000 amount in (m). The assumed facts in (o)
and (q) are true but the assumed fact in (p) is clearly not true.
Exhibit A-6 shows that a number of non-related workers were paid
with more than one cheque on particular dates like October 31 and
November 30. Mr. Randhawa stated that his delayed payments
to workers in 1997 were in breach of a provincial law, and his
company had its license revoked for contract farm workers. The
Company went out of business; and the Appellant was employed
directly by Randhawa Farms in 1998.
[33] Bella Black, an investigation and
control officer for Human Resources Development Canada testified
in these appeals. She had reviewed the payroll books for the
Company and Randhawa Farms and, as a result, had prepared
Exhibits R-2 and R-3 which showed the payroll list for Randhawa
Farms in 1997 (Exhibit R-3) and the payroll list for the Company
in 1998 (Exhibit R-2). In Exhibit R-3, the Appellant's name
appears as employee no. 20 beginning to work in April. Ms. Black
stated that the Appellant's name appeared to be out of order
in Exhibit R-3 with respect to some other workers who began to
work in January but who came after the Appellant in the list.
That may be true but I would observe that (i) a number of
employees in Exhibit R-3 are out of order with respect to their
employee number and the month when they began work; and (ii)
there are no employees ahead of the Appellant (no. 20) who began
to work after April 1997.
[34] In my view, the Minister was too
preoccupied with delayed payments to the Appellant alone and his
place on the payroll list. When many employees are paid late, the
late payments to the Appellant are less significant. Also, the
order of names on the payroll list is not consistent for many
employees with respect to the month when they began work.
Therefore, the payroll list is not significant to show that the
Appellant was treated differently from an arm's length
employee.
[35] I find that the Minister, when
exercising his discretion for 1997, failed to consider relevant
circumstances pertaining to employees other than the Appellant
which showed that the Appellant and other employees were treated
the same with respect to delayed payments and the place of
employee names on the payroll list. Accordingly, I may consider
the merits of the Minister's decision. On the merits, I
conclude that the Company would have entered into a substantially
similar contract of employment if the Company and the Appellant
had been dealing at arm's length. I reach this conclusion
notwithstanding the Appellant's untruthful answer to question
35 on his 1997 Application for Unemployment Benefits. Appeal No.
2002-1130 is allowed.
[36] Appeal No. 2002-1375 is about the
Appellant's employment by Randhawa Farms in 1998. As in 1997,
the Appellant was required to drive the employer's van to
pick up and drop off workers. He also worked in the greenhouse.
He was paid at the rate of $10 per hour (up from $7 in 1997) but
there was no additional compensation for driving the workers (he
had been paid an additional $25/day in 1997). Exhibit A-4
contains photocopies of various documents all relating to the
Appellant's employment by Randhawa Farms in 1998: (i) a
payroll book showing the hours worked each day from June 29 to
October 24, 1998; (ii) the Appellant's ROE for working at
Randhawa Farms in 1998; (iii) the Appellant's Application for
Unemployment Benefits; and (iv) nine cheques issued between July
6 and November 7, 1997. Details of the nine cheques are as
follows:
|
Date on Cheque
|
Amount
|
Date Cashed
|
|
July 6, 1998
|
$204.33
|
December 29, 1998
|
|
July 20, 1998
|
1,500.00
|
October 28, 1998
|
|
August 6, 1998
|
619.37
|
December 29, 1998
|
|
August 20, 1998
|
1,500.00
|
October 27, 1998
|
|
September 6, 1998
|
554.75
|
December 23, 1998
|
|
September 20, 1998
|
1,500.00
|
October 26, 1998
|
|
October 7, 1998
|
575.30
|
December 23, 1998
|
|
October 15, 1998
|
1,000.00
|
December 29, 1998
|
|
November 7, 1998
|
541.66
|
December 30, 1998
|
[37] I find it interesting that not one of
the above nine cheques was cashed until after the Appellant's
last day of work, October 24. The three largest cheques for
$1,500 each were cashed on October 26, 27 and 28. The other large
cheque ($1,000) and the five smaller cheques were all cashed in
the last few days of December. In the Respondent's Reply for
Appeal 2002-1375, the following facts assumed by the Minister as
set out in paragraph 3 are relevant:
(g) the
Appellant's wage was set at $10 per hour;
(h) the non-related
workers were paid the minimum hourly wage of $7.15 during the
1998 taxation year;
...
(j) the
Appellant was not paid by Randhawa on a regular or timely
basis;
(k) the cheques the
Appellant received from Randhawa were as follows:
(Details set out in paragraph 36 above)
(l) the
non-related workers were paid on a regular basis for
Randhawa;
(m) the Record of
Employment indicated that the Appellant was laid off due to a
shortage of work;
(n) Randhawa's
1998 payroll record indicates that out of 34 workers
25 continued to work beyond the Appellant's last day of
work;
[38] Having regard to the above assumed
facts in (g) and (h), the higher hourly wage paid to the
Appellant was explained by Mr. Randhawa on the basis that, in
1997, the Appellant was paid the basic wage of $7.00 per hour
with an extra $25 for driving the van. In 1998, Mr. Randhawa
decided to pay the Appellant $10 per hour but cancelled the extra
$25 for driving the van. For an eight or nine-hour day, the
difference in the hourly rates ($10 or $7) is $24 or $27. This
compares favourably with the additional $25 which the Appellant
was paid in 1997. I accept Mr. Randhawa's explanation.
[39] Considering the assumed facts in (j)
and (k), cheques were issued in the Appellant's name on a
regular or timely basis but they were not cashed until after his
last day of work. The Appellant said that the cheques were
delivered to him on a timely basis but that his delay in cashing
them was simply neglect. I do not believe him. The Appellant and
his wife were raising two teenage boys in 1998 (one was 18 and
the other 15). Cash flow must have been a concern when the
Appellant was laid off on October 24 and applied for unemployment
benefits. The only inference I can draw is that the Appellant had
an arrangement with his brother-in-law (Mr. Randhawa) that he
would help finance Randhawa Farms in 1998 by not cashing any
cheques until after October 26 when Randhawa Farms would have
received most of the proceeds from the delivery of its crops.
[40] The delay in the cashing of the cheques
was known to the Minister. If the Minister concluded that an
arm's length employee would not have delayed the cashing of
all cheques until after the last day of employment, the Minister
was entitled to draw that adverse inference against the
Appellant.
[41] Having regard to the assumed facts (l),
(m) and (n), there are no documents to indicate when the
non-related workers were paid. The onus of proof was on the
Appellant. In the absence of documentary evidence, I will accept
the fact assumed in (l), making a significant distinction between
the Appellant and the non-related workers. Mr. Randhawa stated
that the Appellant was laid off on October 24, 1998 because of
some problem in his relationship with his brother-in-law, the
Appellant. The Appellant testified first (witnesses were
excluded) and made no allusion to such problem. If there were any
problem between the Appellant and Mr. Randhawa, I think the
Appellant would have gone to the bank and cashed all of his
cheques immediately after October 24 if the cheques were in his
possession. As I have indicated above, the Appellant's
credibility in these appeals was a continuing problem.
[42] I cannot conclude that the Minister
exercised his discretion in a manner contrary to law for 1998.
And even if I could, the evidence on the merits supports the
Minister. Appeal No. 2002-1374 is dismissed.
Signed at Ottawa, Canada, this 31st day of March, 2004.
J.T.C.C.
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