[OFFICIAL
ENGLISH TRANSLATION]
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Citation: 2003TCC643
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Date: 200309
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Docket: 1999-3411(EI)
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BETWEEN:
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JOSÉE GIRARD,
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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
Paris, J.T.C.C.
[1] This
is an appeal from a decision of the Minister of National Revenue (the
"Minister"), made on May 19, 1999, that the employment of the
Appellant by Gertrex R.S.I. Inc., the "Payor", during the periods
from May 6 to August 2, 1991; September 3 to November 8, 1991; March 26,
1992, to June 11, 1993; and March 15, 1995, to March 15, 1996, was not
insurable employment under paragraph 3(2)(c) of the Unemployment
Insurance Act and subsection 5(3) of the Employment Insurance Act.
[2] The
fact that the Appellant worked for the Payor during these periods under a
contract of service is not at issue. Rather, the issue is whether the Minister
properly exercised his discretion in determining that the Appellant and the
Payor would not have entered into a substantially similar contract of
employment if they had been dealing at arm's length.
[3] The
facts relied upon by the Minister in making his decision are set out in
paragraph 5 of the Reply to the Notice of Appeal. They are as follows:
[TRANSLATION]
(a) The payor,
incorporated on November 12, 1986, operates a renovation and interior designing
business for commercial and industrial buildings.
(b) Pauline
Tremblay, the appellant's mother-in-law, was the sole shareholder of the payor.
(c) Gilles A.
Tremblay, spouse of Pauline Tremblay and the appellant's father-in-law, was the
director of the payor; it was he who ensured that the corporation was in
compliance with the Régie de la Construction du Québec.
(d) The
corporation is the owner of the building in which it is located and in which it
leases six other commercial units.
(e) The appellant
worked for a number of years as a secretary-receptionist at the payor's head
office.
(f) During the
periods in issue, the appellant apparently lent the payor up to $7,000
interest-free.
(g) The appellant
claimed that her hours of work were tallied up by the payor whereas Gilles A.
Tremblay, sole director of the payor, did not know the appellant's work hours.
(h) The appellant
claimed that she worked Monday to Friday, from 8:30 a.m. to 4:30 p.m., during
the periods in issue whereas she worked only a few hours a week during the
periods where she received unemployment/employment insurance benefits.
(i) When she was
entered on the payroll full-time, the appellant was receiving a weekly fixed
salary of $500 without the hours she actually worked being considered.
(j) During the
periods in issue, in addition to her salary, the appellant received $4,700 in
1993 and $2,000 in 1995 from the payor.
(k) The appellant
was entered on the payor's payroll when her spouse was not
and was not entered when her husband was entered full-time.
(l) The
appellant rendered services to the payor year-round; there was an arrangement
between her and the payor so as to enable her to qualify for
unemployment/employment insurance benefits between her alleged periods of
employment.
(m) The records of
employment submitted by the appellant do not reflect reality with respect to
the periods she worked and the salary she earned.
[4] The
evidence adduced by the parties shows that subparagraphs 5(a), (b), (c) and (e)
were accepted as true by the Appellant. Subparagraph 5(d) was also accepted as
true by the Appellant except that the Payor leased only five rather than six
other units in the building it owned. The Appellant also admitted lending money
to the Payor (subparagraph 5(f)) and said that the money referred to in
subparagraph 5(j) was a repayment of the money she had lent the Payor. I accept
her evidence on this point.
[5] With
respect to the Appellant's hours of work and salary, she testified that she
worked as many hours per week as was necessary to get the work done. She said
that some weeks she worked 30 hours while others she worked more than 40 hours.
Her salary was set at $500 per week, but there were times when she was paid
less because the Payor was short of funds.
[6] The
Minister's assumption in subparagraph 5(k) was based on the evidence. Linda
Bousquet, an Appeals Officer for the Canada Customs and Revenue Agency (CCRA)
who handled the Appellant's file, was called as a witness. She produced a chart
(Exhibit I-5) in which she recorded the periods during which the Appellant and
her spouse, Mario Tremblay, worked for the Payor and the periods during which
they were laid-off and collected unemployment and employment insurance
benefits. This table confirmed that the Appellant worked for the Payor for
substantial periods when her spouse was unemployed and receiving benefits and
that, when her spouse was working for the Payor, she was unemployed and
receiving benefits. The Appellant was not replaced when she was laid-off by the
Payor. Instead, she continued to do the Payor's work, sometimes on a voluntary
basis and sometimes receiving $100 per week.
[7] Ms.
Bousquet testified that the Appellant told her that when her spouse (Tremblay)
was working for the Payor, there was enough work to keep her busy full time.
When her spouse was not working for the Payor, her father-in-law, Gilles
Tremblay, would sometimes get work for the Payor but this did not usually
result in enough work to keep her occupied full time. Ms. Bousquet was not
cross-examined on this point and the Appellant, although recalled to give
additional evidence, was not questioned about her earlier statements. The
evidence confirmed that Mario Tremblay was primarily responsible for the
operations of the Payor, which included obtaining and executing the
construction contracts, and that Gilles Tremblay played only a minor role and
was away four months of every year.
[8] The
periods of the Appellant's employment did not coincide with the periods of
employment of her spouse by the Payor. For the most part, in fact, the contrary
was true. The Appellant worked for the Payor when her spouse was collecting
benefits and was laid off during the periods when her spouse was working for
the Payor.
[9] With
respect to the Minister's assumption set out in subparagraph 5(l), the evidence
is clear that the Appellant continued to work for the Payor after she was laid
off. The Appellant said that she worked less during those periods, but this is
inconsistent with the fact that the Payor's work was generated by
Mario Tremblay and that he was employed by the Payor for substantial
periods when the Appellant was laid off. I am satisfied by the evidence that
the arrangement referred to in that subparagraph did exist and that there was
little correlation between the periods worked by the Appellant and the amount
of work to be done for the Payor.
[10] In summary, I am not satisfied that the Appellant has shown that the
Minister erred in the exercise of his discretion pursuant to paragraph 3(2)(c)
of the Unemployment Insurance Act and subsection 5(3) of the Employment
Insurance Act for the relevant periods. Only two minor assumptions (subparagraphs
5(f) and (j)) were shown to be erroneous, and this alone is not sufficient to
interfere with the discretion exercised by the Minister. The remaining factors
taken into account were all relevant and there is no evidence of bad faith on
the part of the Minister. Given my finding relating to the exercise of the
Minister's discretion, it is not necessary for me to consider whether the
Minister's conclusion that the parties would not have entered into a
substantially similar contract of employment if they had been dealing at arm's
length was founded.
[11] Counsel for the Appellant raised one final issue concerning the
Minister's jurisdiction to make the decision that is the subject of this
appeal. Mr. Poulin produced a letter dated June 17, 1995, in which a claims
officer at the CCRA informed the Appellant that the employment at issue in this
appeal was insurable. Two years later another claims officer reached the
opposite conclusion, which led to this appeal. Counsel argued that it is not
open to the Minister to reverse the earlier decision. He stated that the
Appellant had been prejudicially affected in that she is now out of time to
request a refund of the unemployment insurance contributions she made in
respect of the early periods of employment because the time limit for doing so
is three years. Had she been told in June 1996 that her employment was not
insurable, she would have applied for a refund at that time.
[12] However, in the case of Breault v. M.N.R. [1990] F.C.J. No 286,
the Federal Court of Appeal held that the fact that an earlier decision
regarding insurability has been made by a claims officer does not preclude a
second, new decision on the matter from being made at a later date. The
Minister does not lose jurisdiction because of an earlier position taken.
[13] For all of these reasons, the appeal is dismissed.
Signed at Ottawa, Canada, this 17th
day of September 2003.
J.T.C.C.
Translation certified true
on this 15th day of September
2003.
Sophie Debbané,
Revisor
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