|
Citation: 2003TCC551
|
|
Date: 20030801
|
|
Docket: 2002-4201(EI)
|
|
BETWEEN:
|
|
DONALD MACINTYRE,
|
|
Appellant,
|
|
and
|
|
|
|
THE MINISTER OF NATIONAL REVENUE,
|
|
Respondent,
|
|
and
|
|
|
|
MAUREEN MACINTYRE, O/A MAC'S CABINETS,
|
|
Intervener.
|
|
AND
|
|
|
|
Citation: 2003TCC554
|
|
|
Docket: 2002-4235(EI)
|
|
BETWEEN:
|
|
MAUREEN MACINTYRE O/A MAC'S CABINETS,
|
|
Appellant,
|
|
and
|
|
|
|
THE MINISTER OF NATIONAL REVENUE,
|
|
Respondent,
|
|
and
|
|
|
|
DONALD MACINTYRE,
|
|
Intervener.
|
REASONS FOR JUDGMENT
Rip, J.
[1] Donald
MacIntyre and his wife Maureen MacIntyre appeal a determination by the Minister
of National Revenue, dated September 24, 2002, that Donald MacIntyre's
employment with Maureen MacIntyre from February 26, 2001 to
April 6, 2001 ("period") was not insurable employment, as defined by
subsection 5(1) of the Employment Insurance Act, for the
reason that the appellants were not dealing with each other at arm's length,
and it is reasonable to conclude that they would not have entered into a
substantially similar contract of employment if they had been dealing at arm's
length with each other for the period: paragraphs 5(2)(i) and 5(3)(b)
of the Act.
[2] Each
of the appellants intervened in the other's appeal; the appeals were heard on
common evidence.
[3] In
an appeal from a determination by the Minister under paragraph 5(3)(b)
of the Act, a judge of this Court must first assess the legality of the
Minister's determination, that is, whether the Minister properly exercised her
discretion in making the determination. If the Minister exercised her
discretion in accordance with the law, then notwithstanding whether the judge
agrees or does not agree with the decision of the Minister, the judge must
accord judicial deference to the Minister's decision. In Jencan the Chief Justice of
the Federal Court of Appeal, at the time, stated that the jurisdiction of this
Court to review a determination by the Minister under subparagraph 3(2)(c)(ii)
is circumscribed by the discretionary power conferred upon her to make such a
determination. However, discretionary powers, he explained, are subject to
review to ensure that they are exercised in a manner consistent with the law.
In assessing the manner in which the Minister has exercised her statutory
discretion, the Tax Court, the Chief Justice added, may have regard to the
facts that have come to its attention during the hearing of the appeal.
[4] The
Tax Court may intervene and consider the merits of the Minister's decision if
one of the following grounds for interference is established: (a) if the
Minister acted in bad faith or for an improper purpose or motive; or (b) if she
failed to take into account all of the relevant circumstances, as expressly
required by subparagraphs 3(2)(c)(ii) or (iii); or (c) the Minister
considered an irrelevant factor.
[5] In
making her decision in accordance with paragraph 5(3)(b) of the Act,
the Minister relied on the following facts which she assumed to be true:
a)
The
Appellant [Mrs. MacIntyre] is the Worker's [Mr. MacIntyre] spouse;
b)
The
Appellant operates a business involved in the manufacture and installation of
wood cabinets in residential homes and in commercial buildings;
c)
The
Worker's duties included removing old cabinets, and manufacturing and
installing new cabinets;
d)
At
all material time, the Appellant only had one small contract to build cabinets
in a residential property;
e)
In
2001, the Worker was the only person employed by the Appellant;
f)
The
Appellant was employed full-time elsewhere and exercised little or no
supervision of the Worker, which is not common when parties are dealing at
arm's length;
g)
The
Worker performed his duties partly in a shop located in his home, and on the
job sites;
h)
the
Worker was paid for a 40 hour week regardless of the hours he actually worked;
i)
the
Worker was not always paid on a timely basis, which is not common when parties
are dealing at arm's length;
j) the Worker is not dealing with
the Appellant at arm's length;
[6] Mr. MacIntyre
is an experienced carpenter who, after business difficulties 17 years ago,
joined the Sudbury local of the carpenters' union and began to practice his
trade in Sudbury and other areas of Ontario. During the period the union local
had agreements in the industrial, commercial and institutional ("I.C.I.")
sector and the heavy construction sector; it also had an agreement with Ontario
Hydro. During the period, the local had no residential sector construction
agreements. A carpenter's hourly rate of pay depended on the sector of
construction worked: the I.C.I sector paid the most, the residential sector (in
Toronto) paid the least.
[7] In
2001, according to Mr. MacIntyre, the union hourly rate in the
I.C.I. sector varied between $20 and $25.
[8] Mrs. MacIntyre
operated Mac's Cabinets, a business that included the manufacture and
installation of wood cabinets in private homes and commercial buildings. In
1999, she also built and installed signage at Sudbury Downs Racetrack slot
machine facility in Sudbury, Ontario as a subcontractor for the Ontario Lottery
Corporation.
[9] In
1999, Mrs. MacIntyre signed a letter of agreement with the carpenters'
union. Union members built and installed the signage at Sudbury Downs. At
the time Mrs. MacIntyre started the contract at Sudbury Downs,
Mr. MacIntyre was not employed. Mr. MacIntyre explained his wife
called the union hall for workers and three or four union members were sent to
the site and reported to the foreman. The foreman and the carpenters were
employees of Mrs. MacIntyre. Carpenters are assigned work according to the
order their names are placed on a hiring list. The employer may hire one
carpenter not on the list; Mrs. MacIntyre had hired Mr. Blinder, the
foreman. It was four weeks after work started at Sudbury Downs that
Mr. MacIntyre's name was taken from the hiring list and for ten days he
worked for his wife at Sudbury Downs.
[10] In early 2001, Mr. MacIntyre was temporarily unemployed and was
receiving employment insurance benefits. His wife had a contract with one
Robert DeForge to build and install kitchen cabinets in the DeForge
residence. Mrs. MacIntyre engaged Mr. MacIntyre to do the work for
$18 an hour. Mr. MacIntyre said he would not work for less than $18 per
hour, the rate that was paid at the time in Toronto for residential sector
work. He acknowledged that health and welfare benefits are added to the union
hourly rate but these benefits were not included in the consideration he
received from his wife.
[11] The contract with Mr. DeForge was for the price of $6,420, of
which $1,000 was paid when the contract was signed by Mr. DeForge on
February 24, 2001 and the balance was to be paid as to $2,420 upon
the delivery of the material and the balance of $3,000 upon completion of the
contract. Mrs. MacIntyre said the work took about "five to six
weeks" and was completed about April 3, 2001, the date the
$3,000 was deposited in the Mac's Cabinets' bank account.
Mrs. MacIntyre recalled "some touch-up" took place later which
took about two or three days.
[12] At the time of the DeForge contract and throughout most of 2000 and
2001 Mrs. MacIntyre worked seasonally for the federal government and when
she worked, she was paid every two weeks. She may have to wait 30 days to get
her first pay cheque from the government. She also had other jobs, sometimes
working at two jobs at a time. She planned on paying Mr. MacIntyre every
two weeks. Union members are paid weekly. Mrs. MacIntyre was late on
"five or six occasions". Mrs. MacIntyre did pay
Mr. MacIntyre "but at times [the situation] was out of control" and
Mr. MacIntyre had "to address the matter to get paid". When
Mr. MacIntyre does not get paid on union jobs, he complains to the
Business Agent of the union. There have been cases, he said, when a contractor
goes bankrupt and he does not get paid for his work.
[13] Mr. MacIntyre stated he worked for his wife each day, during the
period Monday to Friday, from 8:00 a.m. to 4:30 p.m. He took 15 minute paid
breaks every two hours and was off one-half hour for lunch during which time he
was not paid. He worked 40 hours each week.
[14] Nobody supervised Mr. MacIntyre when he worked for
Mrs. MacIntyre. He did not record his hours. At the end of the week he
told his wife the hours he worked. Mrs. MacIntyre said she recorded her
husband's hours on time sheets, "probably" when the "work was
over" for the week. Even on a union job he does not sign in or sign out,
Mr. MacIntyre declared. "They see me work ... they trust me...".
Mr. MacIntyre said he is assigned certain work and he does it. "Most
of what I do is visible" so the employer sees him working. A questionnaire
sent to him by the Canada Customs and Revenue Agency, he complained, "does
not deal with the structure [I] work under." He added that when one hires
a journeyman carpenter "you do not expect to look over his shoulder ...
he is not an apprentice ... ." When he builds cabinets, he does not
expect to be supervised.
[15] Counsel for the respondent queried Mr. MacIntyre concerning the
tardiness in cashing pay cheques from Mrs. MacIntyre. For example, cheques
each in the amount of $1,164.97 dated May 1 and May 15, 2001, were both cashed
on May 23, 2001. Mr. MacIntyre explained that he has a habit of
cashing cheques late, although he insists on receiving the cheques on time. He
declared that he has no immediate need for money and does not run to the bank;
he attends at his bank infrequently.
[16] I note that on May 1 and May 15, 2001 there were sufficient funds in
the bank account of Mac's Cabinets to honour the cheques.
[17] Among the exhibits produced by the respondent was a purported receipt,
dated April 17, 2001, for $1,164.97 representing Mr. MacIntyre's net pay in
cash for the two week period February 26 to March 9, 2001. The receipt is not
signed by Mr. MacIntyre but by "Mac's Cabinets ... M. MacIntyre",
Mr. MacIntyre's wife. Mr. MacIntyre said it was "not unheard of
to get paid in cash". I note that Mac's Cabinets' bank account had a
balance of $3,204.93 on April 3, 2001; no cheque or withdrawal of funds from
this account was made during the period April 4 to 30, 2001.
[18] Mrs. MacIntyre testifed that Mr. DeForge made the first two
payments under the contract in cash and she applied the cash to purchase
material for the contract. She acknowledged that she did not pay her husband
until May. On April 17, 2001, she paid him for the work he performed in
February; she said she had to "wait for the money to come in". She
did not identify the source of funds used to pay her husband on April 17, 2001.
The money did not come out of her bank account.
[19] Mrs. MacIntyre registered the firm name Mac's Cabinets on
September 8, 1999. She placed an advertisement in the 2001 yellow
pages telephone directory. She has separate telephones for the business and for
the family. Recently the business has been "on hold" until the appeal
at bar is determined. She "wants to know where [she] stands" with
respect to her husband's eligibility for insurable employment by her.
[20] It appears Mrs. MacIntyre did not carry on the business of Mac's
Cabinets on a continuous basis. She had only two contracts since she started in
business, one with the Ontario Lottery Commission in 1999 and the second
contract with Mr. DeForge in 2001.
[21] Mrs. MacIntyre asserted that she owned the tools in the
woodworking shop in the basement of her home. These included small tools such
as a jointer, planer and sander. Both Mr. and Mrs. MacIntyre purchased tools
and it was "difficult to tell who owned what", she stated.
[22] Mr. MacIntyre's tools included his tool belt, hammer, pliers,
screwdrivers and other hand tools usually supplied by carpenters.
[23] According to the evidence before me the Minister, in making her
determination, erred in assuming the truth of the following facts:
a) Mrs. MacIntyre
exercised little or no supervision of Mr. MacIntyre which is not common when
the parties are dealing at arm's length.
The evidence, which was not contradicted by any witness, was that even in
arm's length union contracts Mr. MacIntyre is not supervised.
b)
Mr. MacIntyre was
paid for a 40 hour week regardless of the hours he actually worked.
This fact was vigorously denied by Mr. MacIntyre. He said he got paid
for the hours he worked. The respondent did not produce any evidence suggesting
otherwise.
[24] The appeals ought to be dismissed for the reason, as expressed in
paragraph 5(2)(i) and subsection 5(3) of the Act:
Mr. and Mrs. MacIntyre were not dealing with each other at arm's
length during the period and from the evidence at trial it was reasonable for
the Minister to conclude that Mr. and Mrs. MacIntyre would not have
entered into a substantially similar contract of employment if they had been
dealing with each other at arm's length.
[25] There are, of course, certain terms and conditions in the employment
contract between Mr. and Mrs. MacIntyre that the Minister overlooked,
namely, that it was acceptable that Mr. MacIntyre not be supervised even
when working in normal union jobs and that it was probable that he worked 40
hours a week for Mrs. MacIntyre.
[26] However, what I find crucial in arriving at my conclusion is
Mrs. MacIntyre's testimony that she will carry on business only if
Mr. MacIntyre can perform the work for her. This is the reason, she said,
the business has been "on hold". If Mrs. MacIntyre is truly
operating a business, she would not put the business "on hold"
waiting to see if her husband's employment by her is "included
employment" for purposes of the Act. There is no evidence that
Mrs. MacIntyre, during the period, was prepared to enter into a
substantially similar contract of employment with a carpenter similarly
qualified as her husband but with whom she dealt with at arm's length. She did
so in 1999, when she had a subcontract – her first contract – for work at
Sudbury Downs but was not prepared to do so, I regretfully conclude, in 2001.
At the same time Mr. MacIntyre was prepared to waive his rights to health
and other union benefits when working for Mrs. MacIntyre; he was satisfied
with getting paid $18.00 an hour only, provided the employment would count for
employment insurance benefits.
[27] The appeals are dismissed.
Signed at Ottawa, Canada, this 1st day of
August, 2003.
Rip,
J.
Email this Content