|
[OFFICIAL ENGLISH
TRANSLATION]
|
|
|
|
Citation: 2003TCC404
|
|
Date: 20030610
|
|
Docket: 2002-3350(EI)
|
|
|
|
BETWEEN:
|
|
|
|
JOCELYNE ROBITAILLE,
|
|
Appellant,
|
|
and
|
|
|
|
THE MINISTER OF
NATIONAL REVENUE,
|
|
Respondent.
|
REASONS
FOR JUDGMENT
Somers,
D.J.T.C.C.
[1] This
appeal was heard at Québec, Quebec on May 8, 2003.
[2] The
appellant institutes an appeal from the decision of the Minister of National
Revenue (the "Minister") that the employment held with J.A. Roby
Inc., the payer, during the periods in issue, from December 2, 1997, to
November 10, 2000, and from March 30 to December 16, 2001, is
excluded from insurable employment within the meaning of the Employment
Insurance Act (the "Act") on the ground that the appellant
and the payer were not dealing with each other at arm's length.
[3] Subsection 5(1)
of the Act reads in part as follows:
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 and whether the earnings are calculated by time or by the
piece, or partly by time and partly by the piece, or otherwise;
[. . .]
[4] Subsections 5(2) and 5(3) of the Employment
Insurance Act read in part as follows:
(2) Insurable employment does not include
[. . .]
(i) employment if
the employer and employee are not dealing with each other at arm's length.
(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;
(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.
[5] Section 251 of the Income Tax Act reads in
part as follows:
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) Relationship
defined. For the purpose of this Act "related
persons", or persons related to each other, are
(a) individuals connected by
blood relationship, marriage or adoption;
[. . .]
[6] The
burden of proof is on the appellant. He has to show on a balance of
probabilities that the Minister's decision is unfounded in fact and in law.
Each case stands on its own merits.
[7] In
making his decision, the Minister relied on the following assumptions of fact,
which the appellant admitted or denied:
[TRANSLATION]
(a) The payer, which has been
incorporated since 1984, operates a fireplace and wood-burning stove
manufacturing and sales business; it also distributes chimneys and accessories.
(admitted)
(b) Alain Robitaille, the
appellant's spouse, was the sole shareholder of the payer. (admitted)
(c) The payer operates its business
year-round, with peak stove and chimney sales periods. (admitted)
(d) Fireplaces and wood stoves are
manufactured from August to November, while sales are made year-round.
(admitted)
(e) The payer's turnover is approximately
$1.3 million. (admitted)
(f) The payer employs two to
12 persons. (admitted)
(g) The payer occupies a building in
which the manufacturing plant and display room are on the ground floor and
administrative offices on the second. (admitted)
(h) The appellant has rendered services
to the payer as an accounting clerk since 1989. (admitted)
(i) The appellant's main duties were to
do the payer's bookkeeping, using the computer, and to perform some secretarial
duties (statements of account, deposits). (denied)
(j) In addition to the appellant, the
payer hired an outside accountant to prepare the year-end financial statements
and, until 2000, to do the month-ends. (admitted)
(k) In 1999, the payer hired
Josée Boudreau to assist the appellant with the accounting. (admitted)
(l) Ms. Boudreau was paid $11.50 an
hour. (admitted)
(m) On December 13, 2001, the
appellant stated in a signed statutory declaration that Josée Boudreau was
more qualified than she. (denied)
(n) From the moment another person was
hired in accounting, the appellant mainly did secretarial work. (admitted)
(o) In 2001, the appellant purportedly
redid the payer's product catalogue and price lists and managed collections.
(admitted)
(p) Unlike the payer's other workers, the
appellant did not have to record her hours of work; her schedule could vary
with the payer's needs. (admitted)
(q) In 1999, the appellant's remuneration
increased from $13.29 an hour to $15 an hour on May 10 and to $20 an hour
on October 25. (denied)
(r) In 1999, the appellant received a
$5,000 bonus on August 22 and a second bonus of $2,000 on
December 19. (denied)
(s) In 2000, the appellant worked for the
payer without remuneration from February 21 to May 21 because the
payer was experiencing financial problems. (admitted)
(t) The appellant's remuneration then
rose from $250 a week from May 22 to July 30 to $400 a week from
August 1 to 27, to $600 a week from August 28 to September 17
and to $800 a week from September 18 to November 12. (admitted)
(u) In addition, in 2000, the appellant
received a $1,000 bonus on August 27 and a bonus of $1,000 a week between
September 17 and October 29, in addition to a bonus of $2 an hour
between May 29 and November 12. (admitted)
(v) On November 10, 2000, the appellant
was laid off. (admitted)
(w) In 2001, the appellant resumed work at
a rate of six hours a week between March 25 and June 2, 20 hours
a week between June 3 and July 14 and, lastly, 40 hours a week
from June 15 to November 17, without any justified change in her
duties. (denied)
(x) In 2001, the appellant received
remuneration of $16 an hour; she also received a bonus of $1 an hour from
September 16 to November 17, a $2,000 bonus on September 22 and
bonuses of $753 on November 10 and 17. (denied)
(y) The payer closed its doors for the
two-week construction holiday, and, unlike the other workers, the appellant
continued receiving her remuneration during that period. (denied)
[8] The
appellant alone testified in support of her appeal.
[9] The
payer, which has been incorporated since 1984, operates a fireplace and
wood-burning stove manufacturing sales business; it also distributes chimneys
and accessories. The appellant's spouse was the sole shareholder of the payer.
[10] The
payer's business is operated year-round, with peak stove and chimney sales
periods. Fireplaces and wood stoves are manufactured from August to November,
while sales are made year-round. The payer employs two to 12 persons and
has turnover of approximately $1 million. The manufacturing plant and
showroom are on the ground floor and administrative offices on the second.
[11] The
appellant has rendered services to the payer as an accounting clerk since 1989.
Her main duties were to do the payer's bookkeeping, using the computer, perform
some secretarial duties (statements of account, deposits), establish the price
list and promote the payer's products to customers.
[12] The
payer hired an outside accountant to prepare the year-end financial statements
and, until 2000, to do the month-ends. In 1999, Josée Boudreau was hired
to assist the appellant in her accounting duties. Ms. Boudreau received
remuneration of $11.50 an hour from the payer.
[13] The
appellant admitted that she had signed a statutory declaration in which she
said that Josée Boudreau was more qualified than she, and she stated in
her testimony in Court that Ms. Boudreau spoke better English than she
did, which, in her view, made her more qualified.
[14] From
the moment another person was hired in accounting, the appellant mainly did
secretarial work. In 2002, she purportedly redid the payer's product catalogue
and price lists and managed collections.
[15] Unlike
the payer's other workers, the appellant did not have to record her hours of
work; her schedule could vary with the payer's needs.
[16] In
2000, the appellant worked for the payer without remuneration from
February 21 to May 21 because the payer was experiencing financial
problems. The appellant's remuneration then rose from $250 a week from
May 22 to July 30 to $400 a week from August 1 to 27, to $600
from August 28 to September 17 and to $800 a week from
September 18 to November 12. In addition, in 2000, the appellant
received a $1,000 bonus on August 27 and a bonus of $1,000 a week between
September 17 and October 29, in addition to a bonus of $2 an hour
between May 29 and November 12.
[17] The
appellant stated that, in 1999, her hourly wage was $14 for approximately
15 weeks, $15 starting on May 10 and $20 as of October 30. As to
her bonuses, she explained that she had received $5,000 in December 1999 and
that the other $2,000 represented the eight percent of her wages for
vacation pay.
[18] The
appellant stated that, in 2001, she resumed work on March 25 and worked
six days a week until June 2; she worked 20 hours a week from
June 3 until July 14 and 40 hours a week between July 15
and November 17, performing the same duties.
[19] Again
in 2001, the appellant received remuneration of $16 an hour, a bonus of $1 an
hour from September 16 to November 17, a $2,000 bonus on
September 22 and bonuses of $753 on November 10 and 17.
[20] In
cross-examination, the appellant explained that other employees of the payer
had also received bonuses based on the work overload and their performance.
[21] According
to a document entitled "Jocelyne Robitaille's Income", filed as
Exhibit A‑1, the appellant received $20,656.78 in bonuses and
$31,822.88 in "vacation pay" during the years 1998 to 2001.
[22] According
to another document entitled "Michel Côté's Income" filed as
Exhibit A‑2, that worker, who had been employed by the payer for six
years and was in charge of production and orders, received $3,282.50 in bonuses
and $21,761.84 in "vacation pay" from 1998 to 2001. According to that
same document (Exhibit A‑2), another employee of the payer,
Richard Racine, received $2,169 in bonuses and $19,108.51 in vacation pay
for those same years. Josée Boudreau, who was hired by the payer to assist
the appellant, received $55 in bonuses and $4,039.66 in vacation pay in 1999
and 2000.
[23] The
appellant admitted she had received an $8,000 bonus in the fall of 2000 to
compensate for the weeks she had worked without pay in the spring of that same
year; however, she admitted that the wages owed her for the said weeks amounted
to $11,000.
[24] The
appellant admitted that the business was not in operation during the two-week
construction holiday and that the employees on vacation had received their
four percent vacation pay, whereas she had received her full wages. She
added that she had at times received four percent vacation pay. She also
admitted that the hourly bonuses granted to the payer's other employees were
lower than hers.
[25] The
appellant also admitted that Michel Côté, an employee of the payer for six
and a half years, had received an hourly wage of $15, whereas hers had varied
between $13.29 and $20, and she explained that her wage was higher because it
was based on her seniority (14 years in the payer's service).
[26] Nathalie Dorais‑Pagé,
an appeals officer, testified at the hearing of this appeal and filed her
report on an appeal in evidence (Exhibit I‑1) along with a table
(Exhibit I‑2) and excerpts from the payroll journal (Exhibit I‑3)
showing the amounts paid to the workers, to the appellant and to
Alain Robitaille, the appellant's spouse and sole shareholder of the
payer. According to the appeals officer who met Alain Robitaille and the
appellant, the appellant had enjoyed better conditions than the payer's other
employees. The appellant admitted that she had been treated differently from
the other employees and explained that that was as a result of her
14 years of service with the payer.
[27] The
appeals officer stated that the workers employed by the payer had had to punch
a time card, whereas the appellant was not subject to that obligation.
According to the facts gathered, the appellant's wage was determined on the
basis of the payer's financial situation, her bonuses were higher than those
awarded to the other employees, and she received her full wages during the
Christmas vacation, unlike the other workers.
[28] In
2000, the appellant and her spouse were on the payroll, whereas the other
employees were not. From February 27 to May 21, 2000, the appellant
and her spouse were not paid, whereas the appellant worked and, during that
same period, Josée Boudreau was on the payroll.
[29] In Ferme
Émile Richard et Fils Inc. v. The Minister of National Revenue, [1994]
F.C.J. No. 1859, the Federal Court of Appeal held that, in determining
whether subparagraph 3(2)(c)(ii) of the Unemployment Insurance
Act, now paragraph 5(3)(b) of the Employment Insurance Act,
applies, the Court must consider whether the Minister's decision resulted from
a proper exercise of his discretion. The Court must first require that the
appellant "present evidence of wilful or arbitrary conduct by the
Minister".
[30] The
appellant referred to the decision by Associate Chief Justice Bowman of
our Court in Judy A. Steeves and M.N.R. of March 20, 2001
(docket 2000‑3619(EI)). I note the following principles stated in
that decision:
The Federal Court of Appeal has said on a
number of occasions that the words "if the Minister is satisfied
[. . .]" confer on him a form of administrative discretion and
that a two-step process is required in appeals from such a determination.
The first step is to decide whether discretion
has been properly exercised. If it has been, the Court has no right to
substitute its judgment for that of the Minister.
[31] The
Court must acknowledge that the facts set out in Steeves, supra,
are not similar to those in the case under study.
[32] The
appellant's wage increased with the payer's financial capability, whereas
Josée Boudreau's wage was stable. The appellant explained that her wages
were higher than the payer's other employees because of her 14 years of
service with the payer, not because of her duties. The payer's employees were
always remunerated, whereas the appellant worked without pay for a period in
2000.
[33] The
appellant admitted that she was treated differently from the other employees.
The payer's other employees had to punch a time card, whereas the appellant was
not subject to that obligation. The appellant received considerably higher
bonuses than those paid to the other employees, particularly Michel Côté.
During the construction holiday, the appellant received her full wages. The
other workers received only four percent of their pay in lieu of vacation,
whereas the appellant received eight percent.
[34] For the
aforementioned reasons, the appellant did not show on a balance of
probabilities that the Minister acted in a wilful or arbitrary manner. The
appellant's conditions of employment would not have been similar if she and the
payer had been dealing with each other at arm's length.
[35] Accordingly,
the appellant's employment is excluded from insurable employment under
paragraph 5(2)(i) and subsection 5(3) of the Act.
[36] The
appeal is dismissed, and the decision rendered by the Minister is confirmed.
Signed at Ottawa, Canada, this
10th day of June 2003.
D.J.T.C.C.
Email this Content