Dac Aviation International Ltée v. M.N.R., docket 2000-3806-EI

Date: 20010821

Dockets: 2000-3806-EI

BETWEEN:

DAC AVIATION INTERNATIONAL LTÉE,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

GLENN JONES,

Intervenor.

Reasons for Judgment

Somers, D.J.T.C.C.

[1]            This appeal was heard in Montreal, Québec, on May 30, 2001.

[2]            On January 3, 2000, Mr. Glenn Jones, the Worker, filed an application to determine whether he held insurable employment while allegedly working for DAC Aviation International Ltée, the Appellant, from August 28, 1998 to August 4, 1999.

[3]            By letter dated June 6, 2000, the Minister of National Revenue (the "Minister") informed the Appellant and the Worker that the employment was included in insurable employment during the period under review based on the following: the Worker normally resides in Canada; he was employed by an employer who is resident and has a place of business in Canada; he would be employed in insurable employment if such employment were in Canada; and he is not employed in employment that was insurable under the laws of the country in which he was employed.

[4]            Paragraph 5 of the Employment Insurance 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;

(b)            employment in Canada as described in paragraph (a) by Her Majesty in right of Canada;

(c)            service in the Canadian Forces or in a police force;

(d)            employment included by regulations made under subsection (4) or (5); and

...

[5]            The burden of proof is on the Appellant. It must show on a balance of probabilities that (the "Minister") erred in fact and in law in his decision. Each case stands on its own merits.

[6]            In reaching his decision, the Minister relied on the following assumptions of fact:

a)              The Appellant is a company offering services in the aviation industry.

b)             The Appellant operates from an office located in Montreal, Canada; the Appellant also operated a branch, "Trident Enterprises" in Kenya.

c)              The Worker, a resident of British Columbia, Canada, was hired by the Appellant to provide services as an aircraft mechanic/engineer at Lokichokio, Kenya.

d)             The Worker signed a written agreement with the Appellant to provide services in Kenya: he entered into and was paid under an implied contract of service.

e)              The Appellant paid all costs associated with meals, transportation and accommodations during the period the Worker worked for him.

f)              During the litigation period, the Worker received a gross salary of $50,000 US per year, paid on a monthly basis, from the Appellant.

g)             The Worker was paid directly, by transfer pay draft, to his bank account in British Columbia, either prepared by the Appellant or "Trident Enterprises".

h)             During the litigation period, the Worker was supervised by the Payor's chief engineer in Kenya.

i)               The Appellant provided all the tools and parts to the Worker to perform his duties; he also provided employment benefits which included medical, dental and life insurance to the Worker.

[7]            At the beginning of the hearing before this Court, Eric Lane, the agent for the Appellant, denied all of the above assumptions of fact.

[8]            The witnesses heard at this hearing were: Eric Lane, Manager of the Appellant, Emmanuel Anassis, President of the Appellant, Luc Desrochers, the Appeals Officer from Canada Customs and Revenue Agency and Pierre Poirier, the Appellant's chartered accountant. Glenn Jones, the Worker and Intervenor, in this appeal, was not present in Court to testify.

[9]            Eric Lane's testimony was very short in context. He stated that the Appellant was in the business of repairing aircrafts and emphasized that it was not in the business of flying them. Trident Enterprises Limited (Trident) operated aircrafts out of Kenya. The Appellant is a Canadian company with its head office in Montreal, Quebec. Trident was a company incorporated and operating in Africa. These two companies are two separate legal entities. The Appellant bought Trident in January 1999.

[10]          According to Mr. Lane, the Worker was hired by Trident as a mechanic to maintain and repair its aircrafts. The reason the Worker was hired by Trident was for income tax purposes; the Worker made that choice for the reason given above. However, Mr. Lane stated that the Worker's wife was paid the latter's salary at one time or another, for convenience sake. The Appellant invoiced the amount to Trident which in turn reimbursed the Appellant. This is a resume of Mr. Lane's testimony.

[11]          Eric Lane, in a manuscript signed on September 5, 2000 and produced as Exhibit A-1, makes a statement of the relevant facts and reasons in support of the appeal. It is useful to totally incorporate the statement in this judgment:

                The worker Glenn Jones was employed in Kenya by Trident Enterprises Limited. He was recruited here in Canada by DAC Aviation but he worked as an aircraft mechanic under contract to Trident, in Nairobi and in Lokichokio, Kenya.

                Mr. Jones made specific arrangements with Trident to be paid by Trident bank draft in U.S. dollars, overseas, in order to avoid any deductions from his contract payments.

                When he was laid off, Mr. Jones attempted to take advantage of the fact that Mr. Emmanuel Anassis is the President of DAC Aviation and the President of Trident Enterprises. DAC Aviation does not own or operate aircraft. Trident Enterprises operates aircraft in Kenya and elsewhere in Africa.

                Mr. Jones was a contract worker for Trident, in the capacity of aircraft maintenance engineer, working on Trident aircraft during a busy year of operations for that Kenya company.

                When that busy period ended Mr. Jones was laid off. Subsequently his claim for unemployment insurance was disallowed by Canadian authorities at the Department of Human Resources Development in Abbottsford, B.C.

                Mr. Jones then filed a complaint with the Surrey B.C. office of H.R.D.C. but that complaint was overruled by the H.R.D.C. Labour Directorate, 715 Peel St. Montreal.

                Mr. Jones then requested a further review and the result appears to be a ruling from Canada Customs and Revenue Agency, Appeals Division, Vancouver, dated June 6, 2000 or a ruling from the Montreal Tax Services Office dated 14 August 2000. Copies of both ruling (?) letters are attached.

                Mr. Emmanuel Anassis recruited Mr. Jones for the position of contract aircraft maintenance engineer with Trident. Mr. Jones worked for Trident and was paid by Trident in Africa. Not by DAC.

[12]          Emmanuel Anassis is the President of the Appellant. He was also an officer of Trident during the period in question. In January 1999, the Appellant purchased Trident and as of that date Mr. Anassis was President of both companies.

[13]          According to Mr. Anassis, the Worker, a Canadian citizen, was employed as a mechanical engineer by Trident Engineering Limited. There was no mention before, at this hearing, of this new legal entity under the name of Trident Engineering Limited a company incorporated in Kenya.

[14]          Mr. Anassis received the Worker's name through a reference and hired him to go to Kenya. According to this witness the Appellant did not have a representative in Kenya and had to subcontract the services. The Appellant received a contract from the Canadian Government to supply services in Africa under the auspices of the United Nations organization.

[15]          It is to be noted at this point that the Appellant specialized in maintaining and repairing aircrafts and Trident operated aircrafts and retained services from other companies for servicing aircrafts.

[16]          A questionnaire, produced as Exhibit A-3 and supplied to the Appellant, was answered by Emmanuel Anassis the President of the Appellant. In the handwritten replies there is no mention of this third company Trident Engineering Limited. It is mentioned that the Worker was employed as a Trident mechanic on Trident aircrafts.

[17]          In a letter dated August 24, 1998, (Exhibit A-8), Emmanuel Anassis, as President of the Appellant, offered the Worker a position as an engineer. It is important to incorporate in this decision the terms of the agreement:

Dear Mr. Jones,                                                     24 August 1998

This is to confirm the acceptance of your position as an engineer with our company. As I indicated to you by our telecon of today a formal contract will be presented to you in due course. However, as an interim measure please accept this as recognition of the basic terms and conditions that we will base the formal contract on.

Position

Contract Engineering staff.

Base

Lokichokio, Kenya.

Salary

Gross US $50,000.00, some deductions may apply. Paid monthly over the twelve-month period.

Leave

3 months on 1 month off.

Airline Travel

100% payable by DAC.

Benefits

Group insurance plan, basic policy paid by DAC.

Accommodation and Expenses

100% payable by DAC while at base or in Nairobi on behalf of the company and payable upon presentation of invoice.

Should accept these conditions please sign the bottom and fax to the office.

Thank you and we look forward to working with you.

Regards,

Emmanuel Anassis

President

I accept this interim contract and the conditions set forth within.

                                                                Glenn Jones

[18]          In this signed contract there is no mention of Trident Enterprises Limited or Trident Engineering Limited. Mr. Anassis produced as Exhibit A-5 a document from the Department of Immigration of Nairobi entitled Notification of an approval for an entry permit as well as a document entitled Special Pass in the name of the Worker. This last document is purported to be a work permit for the Worker. It stipulates that:

                This pass may be cancelled at any time and is issued subject to the following conditions:

allowed to work with M/S Trident Air Enterprises as engineer.

[19]          A bank statement produced as Exhibit A-7 shows that the Iyske Bank addressed a note called Debit-note to Trident Enterprises Limited, making a transfer payment of $3,566.00 to Glenn and Wendy Jones on September 1, 1999. Other payments were made in January, March, April and May 1999.

[20]          On the Appellant's stationery dated May 20, 1998 produced as Exhibit R-1, Emmanuel Anassis, President, states:

Please transfer the following funds from our account and send by wire transfer to the following accounts:

Amount:                                                 $2,500.00 USD

Credit: Mrs. Wendy Jones

To:           Toronto Dominion Bank

                Washington Park Shopping Center

                789 Ryan Road, Unit A

                Courtenay, B.C.

                V9N 3R6

Account #: 7102147

Transit #: 90750

Regards,

Emmanuel Anassis

President

Mr. Anassis acknowledged that he requested payment to Mrs. Wendy Jones, the Worker's wife, because she needed money. According to the witness, Trident reimbursed the Appellant for the payment of $2,500.

[21]          Three other payments, produced as Exhibit R-2 were ordered by the Appellant to Glenn and Wendy Jones. Mr. Anassis admits that these payments were made directly to the beneficiaries, Glenn and Wendy Jones. According to him those payments were made to help Mrs. Jones.

[22]          Mr. Anassis admitted that the Appellant paid the Worker's travel expenses. On examining a photocopy of the air itinerary produced as Exhibit R-3, which was addressed to the Appellant, Mr. Anassis said, "we did not pay for travel expenses", then said, "I don't know if DAC bought the air fare", and then said "we may have bought the air fare on August 24, 1998". He does not know either if Trident paid for the Worker's airfare in August 1998.

[23]          Luc Desrochers, the Appeals Officer, stated he based his decision on information obtained from the Worker. Some of the exhibits were obtained from the Worker. He did not receive any information from the Appellant even though he had tried to communicate with the representative of the company. The questionnaire produced as Exhibit A-3 was received from the company after the decision was taken.

[24]          The Respondent attempted to produce correspondence received from the Worker. Mr. Lane, from the Appellant, objected to such evidence since the Worker was not present to identify the correspondence. The Court must maintain the objection since the Appellant did not have the opportunity to cross-examine the Worker.

[25]          Pierre Poirier, accountant, testified on behalf of the Appellant. He stated that the Appellant's accounting was done by him. He recognized the three salary payments indicated in Exhibit R-2, which were made to Glenn and Wendy Jones by the Appellant in the amounts of $4,166, $4,166 and $300. These amounts were then charged to Trident. No document was produced to prove these amounts were ever paid by Trident.

[26]          The evidence has shown that the Worker was an employee working for a company. The issue in this appeal is to determine whether the Worker worked for the Appellant or Trident.

[27]          A contract of employment was signed by Glenn Jones and Emmanuel Anassis on August 24, 1998, as it appears in Exhibit A-8. No contract of employment was signed between the Worker and Trident. The contract of service signed on August 24, 1998 is a valid contract which has not been refuted by the Appellant. On this document above, The Court must conclude that the Worker was employed by the Appellant during the period in question.

[28]          However, other corroborative evidence confirms the contractual relationship between the two parties. The Appellant was in the business of repairing aircrafts. Trident was in the operation of flying aircrafts and not repairing them; thus the necessity of requiring the services provided by the Appellant. It is therefore logical that the Worker, as a mechanical engineer, was hired by the Appellant.

[29]          Mr. Anassis, President of the Appellant and eventually of Trident, intimated that there existed another company operating under the name of Trident Engineering Ltd. Mr. Anassis stated that there were three companies; therefore, three legal entities, but with all the documentation produced, there was never any reference to Trident Engineering Ltd.

[30]          The Appellant attempted to prove that the Worker was hired by Trident because a Kenyan work permit was issued allowing him to work with Trident. However, this work permit does not prove that there was a contractual relationship between the Worker and Trident. The work permit does repudiate the existing contract between the Worker and the Appellant. It is odd that a contract was signed by the Worker and Mr. Anassis on behalf of the Appellant and no contract was signed between the Worker and Trident. If such a contract existed, Mr. Anassis would have had access to it since he has been the President of Trident since January 1999.

[31]          Other corroborating evidence that proves the Worker was the Appellant's employee was the paid airfare to Kenya. The Court cannot rely on Mr. Anassis' testimony as to who paid for the airfare. Mr. Anassis said in his testimony that the Appellant paid for the travel expenses; then he said that the Appellant did not pay for the travel expenses; then he said he did not know and again said the Appellant may have bought the ticket. The contract produced under Exhibit A-8 says that airline travel was paid 100% by the Appellant. It is logical to conclude that the Worker was employed by the Appellant.

[32]          Some bank transfer payments were made to Glenn and Wendy Jones' bank account representing his salary. This was confirmed by documents produced and the accountant's testimony.

[33]          It is quite telling by Mr. Lane's testimony that there should be documents showing that the Worker was hired by a foreign company for income tax purposes.

[34]          Taking into consideration all of the circumstances, including the testimonies and the documentary evidence, particularly the employment contract signed by the Appellant and the Worker, there existed an insurable employment based on the fact that the Worker, a Canadian citizen, was employed by a Canadian employer who had a place of business in Montreal, Quebec.

[35]          The appeal is dismissed.

Signed at Ottawa, Canada, this 21st day of August 2001.

"J.F. Somers"

"J.F. Somers"

D.J.T.C.C.

COURT FILE NO.:                                                 2000-3806(EI)

STYLE OF CAUSE:                                               DAC Aviation and M.N.R. and

                                                                                                Glenn Jones

PLACE OF HEARING:                                         Montreal, Quebec

DATE OF HEARING:                                           May 30, 2001

REASONS FOR JUDGMENT BY:      The Honourable Deputy Judge J.F. Somers

DATE OF JUDGMENT:                                       August 21, 2001

APPEARANCES:

Agent for the Appellant:                     Eric M. Lane

Counsel for the Respondent:              Claude Lamoureux

For the Intervenor:                                                No one appeared

COUNSEL OF RECORD:

For the Appellant:                

Name:                               

Firm:

For the Intervenor:

For the Respondent:                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                Ottawa, Canada

2000-3806(EI)

BETWEEN:

DAC AVIATION INTERNATIONAL LTÉE,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

GLENN JONES,

Intervenor.

Appeal heard on May 30, 2001 at Montreal, Québec, by

the Honourable Deputy Judge J.F. Somers

Appearances

Agent for the Appellant:             Eric M. Lane

Counsel for the Respondent:      Claude Lamoureux

For the Intervenor:                     No one appeared

JUDGMENT

          The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment.

Signed at Ottawa, Canada, this 21st day of August 2001.

"J.F. Somers"

D.J.T.C.C.