[OFFICIAL ENGLISH TRANSLATION]
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Citation: 2004TCC279
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Date: 20040427
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Docket: 2001-1012(EI)
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BETWEEN:
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ANDRÉE BELLERIVE,
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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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AND
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Docket: 2001-1100(EI)
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DANIEL FILION,
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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
Deputy Judge Savoie
[1] These appeals were heard on common
evidence at Trois-Rivières, Quebec, on December 1,
2003.
[2] The issue is to determine whether
the employment held by Andrée Bellerive, the
Appellant, with Daniel Filion, the Payer, from September 18 to
October 6, 2000, was insurable employment within the meaning of
the Employment Insurance Act (the "Act").
[3] The Minister of National Revenue
(the "Minister") informed the Appellant on March 6, 2001, that
the employment at issue had not been deemed insurable employment
because after reviewing the terms and conditions of the
employment, it is reasonable to conclude that the Payer and the
Appellant would not have entered into a substantially similar
contract of employment if they had been dealing with each other
at arm's length.
[4] The Minister based the decision on
the following presumptions of fact:
a) The Payer
was running the Gestion D.P. 2002 Enr. snack bar in Radisson,
James Bay (admitted);
b) The Payer,
the Appellant's common-law spouse, was the sole proprietor of the
snack bar (denied);
c) The Payer
ran his business from mid-April to mid-October every year
(admitted);
d) Since the
1997 season, the Payer had hired the Appellant to manage the
snack bar; she worked there under a contract of employment
(admitted);
e) On July 8,
2000, the Payer stopped running his snack bar because he had in
his possession an order of intent to purchase the business
(admitted);
f) On
July 8, 2000, the Appellant stopped working for the Payer and
submitted a claim for employment insurance benefits
(admitted);
g) On July 14,
2000, the Payer issued the Appellant a Record of Employment on
which was indicated that she had worked from April 30 to July 8,
2000, and had accumulated 500 hours of insurable employment
(admitted);
h) On August
21, 2000, the Appellant submitted a claim for employment
insurance benefits (admitted);
i) On
September 14, 2000, HRDC informed the Appellant that it could not
pay her benefits because she needed 910 hours of insurable
employment to be eligible for benefits (admitted);
j) In
reality, the Appellant needed only 525 hours to qualify
(admitted);
k) On
September 16, 2000, the Appellant returned to Radisson alone and
did a great deal of work on the Payer's snack bar before its
probable sale (admitted);
l) The
Appellant washed the walls, mirrors, seats, various pots, the
hood over the stove, refrigerator and freezer in the snack bar
(admitted);
m) The snack bar
consisted of three habitation modules, one of which was used
exclusively for storage (admitted);
n) The
Appellant worked in the snack bar alone and slept there because
the mobile home had been taken back to Shawinigan-Sud
(admitted);
o) The
Appellant claims to have worked 50 hours a week for three weeks
preparing the snack bar; she was alone and her hours of work were
not accounted for (admitted);
p) During the
period at issue, the Appellant received $500 a week, plus 4%
vacation pay from the Payer, who had stopped running the snack
bar on July 8 when the snack bar was running a deficit
(admitted);
q) An
excessive number of hours was claimed given the work done
(denied).
[5] It should be noted that all the
Minister's presumptions were admitted, except (b) and (q).
[6] The evidence showed that the
Appellant, Andrée Bellerive, worked as a manager in the
snack bar owned by Mr. Daniel Filion, the Payer. The snack
bar closed on July 8, 2000. However, the Payer hired the
Appellant from September 18 to October 6, 2000, to clean the
snack bar in preparation for its eventual sale.
[7] The Appellant and Payer lived at
the same residential address. The Payer, Daniel Filion, provided
P.O. Box 55, Radisson, as his address, while the Appellant
provided 80 Iberville, Radisson. The Minister took note of this
specific detail, but in this Court's opinion, this fact was not
in and of itself very important.
[8] The Appellant strenuously denied
that she was the spouse of Mr. Filion, the Payer. At the
hearing, four witnesses testified for the Appellant in connection
with the Minister's allegation in paragraph 5(b) of the response
to the notice of appeal. For her part, the Appellant
testified that she has never been the Payer's spouse. She
stated that the Payer had his room, and she had hers. She
also stated that she is homosexual, has her own medical insurance
policy, and paid for her own food. She said that she was
not involved in any of the Payer's activities, and they never
travelled together. She denied that she had gone to Florida
with the Payer, but said that he went alone.
[9] The Payer, Daniel Filion,
testified that he and the Appellant were not spouses. He
stated that he was aware that the Appellant is homosexual.
He said that he went about his business, and she went about
hers.
[10] The Court heard, during testimony from
Cathy Roberge, a bar maid and former hair stylist, that the
Appellant had told her she was homosexual and was not the Payer's
spouse.
[11] Réal Lafrenière, a friend
of the Payer's, testified that he knew Mr. Filion very well and
that he was in fact not the Appellant's spouse. He stated
that they did not go out together and that Mr. Filion always
visited him alone, without the Appellant. He added that the
Appellant went out with her female friends.
[12] However, the Minister's counsel stated
that based on the report on an appeal (Exhibit I-7), two of the
Payer's former employees, Nancy Bluteau and Stéphanie
Fortin, both testified that the Appellant and Payer were spouses
and lived at the same address. Ms Bluteau added that they
went south together every year.
[13] Still based on the foregoing report on
an appeal, Ms Céline Leclerc, an employee of the
municipality of Radisson, stated that the Appellant and the Payer
acted like and appeared to be spouses.
[14] The evidence provided by the Appellant,
particularly that provided by the Appellant herself and the
Payer, is direct evidence and the Appellant's counsel is right in
pointing out that its probative value exceeds that provided by
the Minister.
[15] Given the evidence provided in this
regard, this Court must conclude that, based on the evidence, the
Appellant and the Payer are not spouses, and are therefore not
related within the meaning of the Income Tax Act.
[16] However, this Court also concludes that
even if they had been related, the Minister's review of the
circumstances provided for in paragraph 5(3)(b) of the
Act, specifically, the remuneration the Appellant was paid, the
terms and conditions of employment, and the duration, nature and
significance of the work performed, should have led the Minister
to conclude that unrelated parties could have signed a contract
of employment with similar conditions.
[17] The Appellant was paid $10 an hour for
50 hours of work a week. She received the same salary as
she was receiving before in her capacity as snack bar
manager. The snack bar closed in July 2000. The Payer
had received a verbal purchase offer from Aboriginals and
business was dropping off, in a deficit, according to the
Minister. Human Resources Development Canada (HRDC) deemed
that the Appellant had held insurable employment until July 8,
2000, but, because her duties were different during the period at
issue, HRDC deemed her employment not to be insurable
employment. Her duties had changed because the Payer's
needs had changed: the snack bar needed to be cleaned to make it
acceptable to the new owner. The Appellant's salary for
this new work, in her new capacity, was the same as she received
before, that is, $10 an hour. She also continued to work 50
hours a week as she had when she was the snack bar
manager.
[18] In January 1998, the Appellant
guaranteed a loan for the Payer. The Appellant said she had
signed on the condition that the loan be insured. The
Minister's decision was based in part on this fact.
However, in Nicole Guindon-Lalonde v. Canada (Minister of
National Revenue - M.N.R.) [1995] F.C.A. No 1348, the Federal
Court of Appeal did not accept this argument and overturned the
decision of Justice Tremblay of this Court, [1995] T.C.J. No 72,
based in part on this fact, in determining that: "It would be
difficult to conclude that this was a normal situation for an
employee. What was involved was rather an interest in
an adventure in the nature of trade." The Federal Court of
Appeal therefore dismissed this argument. The oral evidence
provided by the Appellant showed that the Payer went to the snack
bar in Radisson twice a week or a total of four or five times
during the duration of the employment. The Payer said he
trusted the Appellant. He had told her what to do and she
knew her job. She worked 50 hours a week performing her
duties.
[19] In her report on an appeal, the Appeals
officer points out that the Appellant was working for the
purposes of her employment insurance benefits, not the
business. She added that the Appellant had apparently gone
back to the snack bar in September to clean for three weeks
because she had just found out that she needed more hours to
qualify for employment insurance benefits. The Appellant's
evidence showed, however, that she was unaware of the contents of
the HRDC letter dated September 14, 2000, in which she is
informed that she needed 910 hours of insurable employment to
qualify for benefits. She had only 500. It would be
interesting to know what impact this information would have had
on her because, based on the HRDC letter of September 14, 2000,
the 150 hours she claimed would have been worthless to her.
[20] If consideration is given to the nature
and importance of the work performed, it was directly related to
the employer's need to ensure that the snack bar was in
acceptable condition to the buyer.
[21] From a standpoint of the nature and
importance of the work performed, the evidence showed that the
duties carried out by the Appellant during the period at issue
were carried out by the Payer in previous years and they took him
one month to complete. Further, he had hired the Appellant
for one month because he knew from experience that this was how
much time was required, but the Appellant completed the duties in
three weeks. The Minister maintained that without any other
evidence, the remuneration and the period claimed by the
Appellant to perform this work, which was directly related to the
employer's need for the snack bar to be in acceptable condition
to the buyer, were excessive.
[22] In my opinion, the Appellant showed on
the balance of evidence that the Minister's decision was
unfounded.
[23] Under similar conditions, during a
previous period of work, the Minister deemed that the Appellant's
employment was insurable employment because he met the
requirements of a contract of employment. The Appellant had
worked for the Payer since 1997, and worked in his snack bar as a
manager. However, HRDC deemed that the Appellant's
employment during the period at issue was not insurable
employment on the grounds that she performed different
duties. In other words, since the Payer's mission had
changed, the Appellant performed the work with a view to meeting
the requirements of this new mission, thereby becoming
uninsurable. This conclusion, based on the reasons provided
is, in my opinion, erroneous.
[24] In my opinion, it was shown that the
Appellant's employment was insurable because it met the
requirements of a contract of employment.
[25] I need not reiterate all the facts that
led HRDC, in a previous request by the Appellant, to conclude
that a contract of employment existed. Granted, the
Minister is not bound by an HRDC decision, but in the opinion of
this Court, when the facts are analyzed in light of the criteria
set out in the jurisprudence, this Court must conclude that the
Minister's decision was unfounded.
[26] The Minister's decision, when examined
in light of the principle set forth in the case law, specifically
in Légaré v. Canada (Minister of National
Revenue - M.N.R.), [1999] F.C.A. No 878, leads to the
conclusion that the facts retained by the Minister were not
correctly assessed, based on the context within which they
occurred. Consequently, the conclusion with which the
Minister was "satisfied" does not still seem reasonable. In
paragraphs 3 and 4 of this decision, Federal Court of Appeal
Justice Marceau ruled that:
While the applicable principles for resolving these problems
have frequently been discussed, judging by the number of disputes
raised and opinions expressed, the statement of these principles
has apparently not always been completely
understood. For the purposes of the applications
before us, we wish to restate the guidelines which can be drawn
from this long line of authority, in terms which may perhaps make
our findings more meaningful.
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.
[27] Based on Justice Marceau's
instructions, after completing this analysis, it is this Court's
opinion that the Minister did not correctly assess the facts
retained or presumed. Consequently, the conclusion with
which the Minister was "satisfied" no longer seems
reasonable.
[40] Consequently, the appeals are allowed
and the Minister's decisions overturned.
Signed at Grand-Barachois, New Brunswick, the 27th
day of April, 2004.
Savoie, D.J.
Certified true translation
Colette Beaulne
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