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Citation: 2003TCC339
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Date: 20030606
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Docket: 2001‑3747(EI)
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BETWEEN:
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LISE MOREAU,
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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]
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REASONS FOR JUDGMENT
Tardif, J.T.C.C.
[1] This is an appeal
from a determination of the decision rendered by the Minister of National
Revenue (the "Minister") dated April 11, 2001. Under that
determination, the work performed by the appellant for 9061‑1542 Québec
Inc. from May 21 to September 23, 2000, was to be excluded from
insurable employment.
[2] In making and
justifying his decision, the respondent made the following assumptions of fact:
[TRANSLATION]
(a) The payer, which was incorporated on April 17, 1998,
operated the "Motel du Rivage", consisting of 20 rooms, a bar
and a dwelling adjacent to the bar.
(b) Nobert Deschênes, the appellant's de facto spouse, was the
sole shareholder of the payer.
(c) Mr. Deschênes and the appellant lived in the dwelling
adjacent to the motel bar.
(d) During the period in issue, the appellant made the purchases,
rented the motel rooms, answered the telephone, took the bar's inventory, made
the deposits and did the housekeeping.
(e) During the period in issue, the appellant claims that she
worked 60 hours a week, mainly from Monday to Friday, but also on Saturday
and Sunday.
(f) During the period in issue, the appellant received fixed gross
remuneration of $480 a week at a rate of $8 an hour.
(g) The appellant rendered services to the payer without remuneration
before and after the period in issue.
(h) From January to September 2000, the payer's income was:
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January
February
March
April
May
June
July
August
September
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$41,466
$42,206
$46,813
$41,784
$38,382
$39,735
$48,831
$42,587
$48,535
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(i) The appellant's period of employment did not coincide with the
period of activity of the payer's business or with the period actually worked
by the appellant.
[3] Paragraphs (a),
(b), (c), (e), (f) and (h) were admitted, whereas the others were denied.
[4] The respondent
contends that the work performed by the appellant during the period in issue
was not insurable, relying mainly on paragraph 5(2)(i) of the Employment
Insurance Act (the "Act"). That paragraph of the Act
provides that work performed by a person not dealing at arm's length with the
person who, as the payer, hires him, shall be excluded from insurable
employment unless, in exercising the discretion conferred upon him by the
legislator, the person responsible for the case concludes that the work performed
was similar to the work that would have been done if performed by a person
dealing at arm's length with his employer.
[5] The instant case
is precisely one in which the respondent concluded, in exercising his
discretion, that the work performed by the appellant outside the period in
issue was to be excluded from insurable employment on the ground that the
requirements and terms and conditions were not substantially similar to those
to which persons dealing at arm's length would have agreed.
[6] The officer
responsible for the case stated that he had communicated with the appellant,
her spouse, the payer and the accountant for the purpose of verifying whether
the facts and circumstances of the work performed had been changed since those
at the origin of the decision of this Court in which the work was found to be
uninsurable.
[7] Mr. Létourneau,
the respondent's witness, stated that he had observed only one minor change,
that the appellant had since completed a time sheet. He obtained a record from
the accountant stating the turnover for the period from January to September
2000.
[8] It appears on the
face of it that the turnover of the business did not in any way justify hiring
the appellant since the income showed no significant increase during the period
in issue.
[9] After the
appellant was laid off, once again, the income of the business showed no
decline that could justify or explain the termination of her employment.
[10] The appeals
officer concluded from these two findings that the work performed by the
appellant was to be excluded from insurable employment since it did not meet
the requirements, terms and conditions of a contract of employment performed by
a third party in similar circumstances.
[11] The appellant
described her workload, which proved to be consistent with what was assumed and
reproduced in the Notice of Appeal. She emphasized that her work was related
exclusively to the motel's operations and that she was not involved in or
associated with the operations of the bar.
[12] Her spouse, the
payer, confirmed the appellant's testimony, and he explained that, over the
years, he had invested a great deal in the development of the bar, the capacity
of which was expanded from a few seats to approximately 100.
[13] He stated that the
stable nature of the business's turnover can simply be explained by its dual
purpose. During the summer, when the appellant worked, the emphasis was on
renting the motel's rooms. The bar's operations took over during the rest of
the year.
[14] He moreover mentioned
that the activities were incompatible since bar traffic undermined the proper
operation of the room rentals because of the noise and constant comings and
goings very late at night, since the bar closed at 3:00 a.m.
[15] The bar work was
assigned to waitresses because, according to the payer, the appellant did not
have the qualifications or, in particular, the age for that type of work.
[16] When the Court
stated that the conduct of the investigation had been very superficial and
possibly incomplete, the respondent answered that the burden of proof was on
the appellant and the payer from the stage of the investigation that was to
lead to the determination here under appeal.
[17] Every employer and
employee must of course answer questions, provide information and comply with
every request for information when their case is under review.
[18] However, I do not
believe that they must, on their own initiative, do the work of the person
responsible for the case. The analyst must assume leadership in handling a case
and, in exercising his responsibility must attempt to obtain all available and
relevant information; the legislator has given him an obligation to conduct a
full analysis of all the facts to justify a determination based on his
discretion. This is not a mere intuitive exercise.
[19] Determining
whether an employment is insurable is a difficult matter requiring that many
factors be taken into consideration. As a result I think it essential that the
person responsible for a case do what is necessary to gather all the relevant
facts so that a reasonable and legal decision can be made.
[20] The idea is not to
seek out a few facts in order to confirm an essentially intuitive decision. The
person responsible has a duty to conduct a serious and full analysis of the
facts from all persons who may have relevant information.
[21] In general,
persons concerned by a decision on employment insurability are not in a
position to know all the relevant conditions and requirements. However, they
may refuse to cooperate, demonstrate bad faith, wilfully conceal certain facts
and/or distort the truth, in which case they must accept the consequences.
[22] In this case, the
appellant's testimony was credible and beyond reproach. She explained her job
description and admitted that she had occasionally rendered services without
remuneration, in particular by answering the telephone when she was on the
premises. She said these were minor and very occasional acts.
[23] The payer, for his
part, confirmed the appellant's testimony and explained in a very reasonable
manner why the appellant had had no significant effect on the business's
turnover, which ultimately remained comparable whether or not the appellant was
on the job.
[24] The appellant's
services were required as part of the operations of the motel, the turnover of
which dropped off considerably after the summer; the appellant's work was no
longer required once the summer season was over, and the bar operations took
over in generating turnover. The appellant did not work in the bar.
[25] The only weakness
in the evidence brought by the appellant was her admission that she had
occasionally performed certain minor jobs without remuneration, such as
answering the telephone when she was in the room where the telephone was
located.
[26] Occasional
collaboration without pay in her spouse's business does not automatically
disqualify employment from insurability. For that to be the case, the evidence
must show that the person performed, on a repeated and ongoing basis, substantially
the same work, in terms of quantity and quality, as that for which that person
was paid during a certain period.
[27] The evidence in
this case showed no such thing; it instead emphasized that the appellant acted
reasonably having regard to the circumstances of time and place.
[28] The question of
volunteer or unpaid work performed during periods when remuneration is paid to
a worker was considered by the Federal Court of Appeal in Théberge v.
Canada (Minister of National Revenue (M.N.R.)), [2002] F.C.A.
No. 464 (Q.L.)., from which I cite the following passage:
7. The
judge therefore proceeded to examine the evidence given before him and
concluded that the employment had to be excepted. With respect, I am of the
opinion that this Court must intervene. The judge erred by failing to consider
both the Minister's allegations and the criteria referred to in
paragraph 3(2)(c): the remuneration paid, the terms and conditions, the
duration and the nature and importance of the work performed. He also erred by
considering almost exclusively the duration and the nature and importance of
the work performed outside of the periods of employment at issue.
…
18. Furthermore, and
contrary to the opinion of the judge, who placed conclusive weight on the wood cutting
and sugar bush work, that work was minimal, and obviously, confined to very
short periods of time.
19. What a claimant does outside the period
during which he or she is employed in what the Minister considers to be
insurable employment can be relevant, for example, to verify that the claimant
is unemployed, to determine the amount of his or her benefits, or to establish
his or her period of unemployment. However, for the purposes of the exception
provided in paragraph 3(2)(c) of the Act, what a claimant does outside
of his or her period of employment will be of little relevance when, as in this
case, it is not alleged that the salary paid during the period of employment
took into account the work performed outside of that period, that the applicant
had included, in the hours spent on his or her insurable employment, hours
worked outside of the period, or that work performed outside of his or her
period of employment had been included in the work performed during his or her
period of employment. It seems to me to be self-evident, and this is confirmed
by the evidence, that in the case of family businesses engaged in seasonal
work, the minimal amount of work that remains to be done outside the active
season is usually performed by family members, without pay. Excepting seasonal
employment, in a family farm business, on the ground that cows are milked
year-round amounts, for all practical purposes, to depriving family members who
qualify by working during the active season of unemployment insurance and to
overlooking the two main characteristics of such a business: that it is a
family business and a seasonal business.
20. A claimant is not required to remain
completely inactive while he or she is receiving benefits. Under section 10 of
the Act, benefits are payable for each "week of unemployment"
included in the benefit period and a "week of unemployment" is a week
during which the claimant does not work a full working week. …
21. Getting
back to this particular case, the fact that the applicant worked without pay
for ten to fifteen hours each week outside the active season and while he was
receiving benefits may indicate that he would not have performed that unpaid
work if he had not been his employer's son. However, that is not the work we
are concerned with, and the judge erred by taking it into account in the
absence of any indication that the insurable employment at issue was subject to
special terms and conditions that were attributable services being rendered
outside the period of employment.
[29] The Court cannot
disregard this decision, even though it was not unanimous.
[30] It may not
interfere and substitute itself for the respondent in reanalyzing the case
unless it is established by a preponderance of proof that the respondent
exercised his discretion in a non-judicial, capricious and/or unreasonable
manner.
[31] In the instant
case, there was a preponderance of proof that the person responsible for the
appellant's case conducted an analysis that was so succinct and summary that it
ruled out highly material factors.
[32] Assuming that it
was previously held in a decision of this Court that the appellant's employment
with the same payer was not insurable, he limited his investigation and quickly
concluded that there had been no major change except that the appellant was now
completing a time sheet.
[33] He made no attempt
to understand or take the necessary steps to obtain an explanation why the
turnover had remained stable. And yet a mere question would have made it
possible to learn that extensive work had been done to expand the bar so as to
generate increasingly large income. He did nothing to determine that,
preferring to rely on the facts gathered in the previous investigation for an
entirely different period.
[34] The legislator
provided for discretion on the assumption that discretion would be exercised
judicially and that each case would be subject to a thorough and serious
analysis in an attempt to obtain all the information necessary to be in a
position to draw well-founded conclusions.
[35] In the instant
case, disproportionate importance was attached to a judgment of this Court
concerning an entirely different period and, which is more serious, in which
the facts were entirely different. Considering that judgment was not
reprehensible in itself, but it called for a more elaborate investigation of
all the facts pertaining to the period in issue in this appeal. It definitely
was not enough to ask a few questions, as the auditor did.
[36] Consistent with
the case law of the Federal Court of Appeal, I conclude, first, that the
respondent's agents did not exercise their discretion reasonably. The evidence
established that that discretion was exercised in an incomplete, capricious and
biased manner.
[37] That being the
case, I find that the appellant discharged the burden of proof that was on her
by showing that she had performed adequately remunerated work meeting the
requirements of a genuine contract of service. The appellant in fact performed
work in accordance with terms and conditions comparable or similar to those
that would have prevailed if the same work had been assigned to a third party.
[38] For these reasons,
the appeal is allowed on the basis that the work performed by the appellant
from May 21 to September 23, 2000, constituted a genuine contract of
service and, accordingly, insurable employment.
Signed at Ottawa,
Canada, this 6th day of June 2003.
J.T.C.C.
Translation certified true
on this 3rd day of February 2004.
John March,
Translator
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