Lalancette v. The Queen, docket 98-2403-IT-G

Date: 20010314

Docket: 98-2403-IT-G

BETWEEN:

JULES LALANCETTE,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasonsfor Judgment

Lamarre Proulx, J.T.C.C.

[1]            These appeals concern the 1994 to 1996 taxation years.

[2]            The issue is whether the remuneration received by the appellant in the years at issue is income from employment with a prescribed international organization within the meaning of subparagraph 110(1)(f)(iii) of the Income Tax Act (the "Act") and section 8900 of the Income Tax Regulations (the "Regulations").

[3]            The witnesses for the appellant were O'Neil Pouliot, the appellant himself and Sylvain Murray, while the witnesses for the respondent were Peter Miller and Richard Veillette.

Testimony of O'Neil Pouliot

[4]            O'Neil Pouliot is retired. In 1994, he was Chief Superintendent with the Royal Canadian Mounted Police (the "RCMP"). On September 14 of that year, he, the appellant and two other members of the RCMP met in New York with the heads of United Nations (the "UN") peacekeeping missions from all over the world. The purpose of the meeting was to work out the role to be played by civilian police in the UN peacekeeping mission in Haiti. The administrative rules and code of conduct for members of the peacekeeping mission had to be known and agreed upon.

[5]            On or about September 25, 1994, Mr. Pouliot and 12 other members of the RCMP left for Haiti. There, Mr. Pouliot acted as the United Nations Civilian Police Commissioner. For the operations in Haiti, he reported to the UN Security Council Special Representative. In 1994 and 1995, 21 countries and 920 police officers took part, including 100 Canadians.

[6]            Initially, the appellant was Mr. Pouliot's assistant in setting up the mission. Then, in March 1995, the appellant became the officer in charge of the metro Port-au-Prince division. (There were five divisions: metro Port-au-Prince, Port-au-Prince surrounding area, Cap-Haïtien, Gonaïves and Les Cayes). The appellant was also the commander of the Canadian contingent in Haiti. Being in charge of the metro Port-au-Prince division, the appellant had 300 police officers under his command.

[7]            Tab 10 of Exhibit A-1 contains a UN civilian police guide for the mission to Haiti. The document is entitled "United Nations Mission in Haiti (UNMIH) - Notes for the Guidance of UNCIVPOL on Assignment" (the "Guide"). It is dated September 23, 1994. It also bears the notation "Civilian Police Unit, Department of Peace-keeping Operations, United Nations, New York". UNCIVPOL is the acronym for United Nations Civilian Police.

[8]            Appendix I of the Guide contains a document entitled "Text of the Undertaking to be Signed by United Nations UNCIVPOL". That undertaking had to be signed by every police officer who wanted to be a part of the peacekeeping mission in Haiti. Apart from that undertaking, there were no other UN documents to be signed by the police officers. It should also be noted that the undertaking was signed only by the civilian police officers.

[9]            Counsel for the appellant asked Mr. Pouliot to read and explain section 13 of the Guide for the police officers on the peacekeeping mission. Section 13 reads as follows:

13.            UNCIVPOL shall, during the term of their appointment, discharge their functions and regulate their conduct with the interests of the United Nations only in view and shall not seek or accept instructions in respect of the performance of their duties from their own Government or from any other authority external to the United Nations.

The explanation he gave was that there had been instances in the past where police officers had received instructions from their own countries to act in a certain way and that this had caused conflicts in the missions.

[10]          On cross-examination, counsel for the respondent referred to section 11 of the Guide and asked the witness for his interpretation thereof.

11.            UN Civilian Police personnel are police officers assigned to serve with the United Nations on a loan basis by Governments of Member States at the request of the Secretary-General.

The witness explained that what was being referred to was a loan of personnel by the countries participating in the peacekeeping mission. When he volunteered for the mission, he informed the RCMP of his intention. He did not approach the UN directly. The mission was a collaborative effort by the Canadian government, the RCMP and the United Nations. If there were any salary increases during their absence, the police officers were entitled to receive them. Police officers who were sent back to their own countries for disciplinary reasons returned to their own police force.

The appellant's testimony

[11]          It is common ground that, during the years in question and going back to 1965, the appellant was a member of the RCMP. In 1994, the appellant was the officer in charge of federal operations in "C" Division, that is, in Quebec. He had volunteered for the peacekeeping mission in writing.

[12]          As Mr. Pouliot testified, on March 31, 1995, the appellant became the commander of the metro Port-au-Prince division. In this capacity, he was in charge of police operations, that is, police operational work as well as administration with the respect to the police officers in the division. This included the management of leave, looking after work schedules and handling the co-ordination of police officers working in the field with what remained of the Haitian armed forces, which had been responsible for law enforcement under the former regime.

[13]          The appellant had to ensure that the mandate of the UN mission was carried out. A daily report was sent from his headquarters to mission headquarters where Mr. Pouliot had his offices. During his time in Haiti, the appellant said, he received no directives from the RCMP.

[14]          The appellant did not really explain his role as head of the Canadian contingent. He did however mention that, as head of the contingent, he telephoned a contact officer in Ottawa perhaps once or twice a week.

[15]          Civilian police officers worked for periods of 30 consecutive days, followed by a six-day leave period. Leave could not be accumulated.

[16]          The vehicles of the civilian police were UN vehicles. They were white cars bearing the words "United Nations". A UN licence was needed to drive them. They were mainly four-wheel-drive vehicles of the Trooper or Land Cruiser type.

[17]          As for equipment, Canada provided camp boxes, plus sleeping bags, mosquito nets, first aid kits and uniforms. The equipment is described in Appendix IV of the Guide (Exhibit A-1, Tab 10).

[18]          The police officers kept the uniform of their own country. However, they wore a blue armband with the UN emblem and a blue beret. They also had to carry an identity card showing that they were members of the UN mission. At the end of the mission, police officers had to return the identity cards and driver's licences to the United Nations.

[19]          The premises used by the police officers flew the United Nations flag. The radios, telephones, fax machines and stationery belonged to the United Nations.

[20]          Health services were provided by the United Nations.

[21]          The appellant shared a villa with some colleagues. They were responsible for the rent.

[22]          Sections 18 and 19 of the Guide (Exhibit A-1, Tab 9) granted civilian police the diplomatic immunity that is given to United Nations experts.

[23]          In 1994, the appellant's remuneration was $85,503. From September 20 to the end of December, there were 100 days, so that the amount of remuneration was $23,425 for that period in 1994. In 1995, the claim was for January 1 to September 25, or 37.5 weeks. The corresponding amount of remuneration would be $62,157. There was no evidence concerning 1996, because the appellant returned to Canada on September 25, 1995.

Testimony of Sylvain Murray

[24]          The witness Sylvain Murray is an employee of the RCMP. In 1994, he was section head of a unit responsible for negotiating funding for major projects. He explained that the RCMP was fully reimbursed by the Canadian International Development Agency ("CIDA"), in particular for salaries, travel and medical expenses. The Canadian contingent included not only members of the RCMP members but also police officers from various municipal forces. Those municipal forces invoiced the RCMP, which in turn invoiced CIDA. In the case of the RCMP, the budget allocated to the division concerned was not affected. The manager had the option to either replace the absent employee or to pay overtime.

Testimony of Peter Miller

[25]          Peter Miller is a member of the RCMP. He is currently in charge of all peacekeeping missions of Canadian police officers throughout the world. The RCMP co-ordinates the participation of all police officers from Canada in the peacekeeping missions. It selects the police officers and trains them before they go out on missions. Mr. Miller is responsible for logistics and for providing equipment to the police officers. They receive some equipment from the United Nations, but by far the bulk of it is provided by the RCMP.

[26]          He personally has been on two missions: in Haiti for a nine-month stint in 1996-97 and in the western Sahara from November 1997 to November 1998. During his time in Haiti, Mr. Miller was the mission's assistant commissioner and head of the Canadian contingent. He stated that every Canadian police officer on a mission is subject to the United Nations code of conduct as well as to the code of conduct of his own police force in Canada.

[27]          Mr. Miller testified that, although police officers on a mission received their instructions from the UN, their other master was the police force they had come from. The head of a country's contingent could order a police officer to return to his own country if he thought the officer had caused embarrassment to his country. The heads of the contingents reported to Mr. Miller.

[28]          Members of the RCMP did not sign a contract when they left on a mission. The municipal and provincial police forces signed agreements with the RCMP. Retired members did sign contracts, either with the RCMP or with other organizations such as the UN.

[29]          The years served on missions count for seniority in the RCMP for the purposes of the pension fund and salary increases. Vacation leave continues to be credited, and vacation taken while on mission is not counted.

[30]          In Haiti, the civilian police officers received a "Mission Subsistence Allowance" (the "MSA") from the UN; it was US$123 for the first 30 days and US$83 for each day thereafter. In addition to this per diem, Canadian police officers received what is known as the "foreign-service premium" and the "differential allowance". The total of these two amounts would be approximately CAN$1,000 per month. This amount is added to their cheques but is not taxable. It therefore does not appear on the T4s.

[31]          Police officers are now entitled to paid travel either to return home themselves or to have their families or spouses come to visit them. In the appellant's time, this was not the case.

Testimony of Richard Veillette

[32]          Richard Veillette is the director of financial services at CIDA. CIDA financed the project to send RCMP officers to Haiti out of its own budget. The way it proceeded was to reimburse the expenses connected with this project. The CIDA funds were thus transferred to the Solicitor General of Canada to cover the expenses related to the mission.

Submissions

[33]          Counsel for the appellant argued that, when the appellant was in Haiti, he was under UN authority. The line relationship, the working conditions and the rules and directives were those of the UN. Police officers taking part in the mission answered not to their own national authorities but to the UN. It was the UN representative who determined the police officers' assignments. Counsel referred, inter alia, to sections 8, 12, 13 and 17 of the Guide for civilian police officers (Exhibit A-1, Tab 10):

8.              UNMIH will be headed by the Special Representative of the Secretary General (SRSG). The Civilian Police component element will comprise 567 UNCIVPOLS.

. . .

12.            While in the mission area, UNCIVPOL are under the command of the Police Commissioner (PC) and are directly answerable to him for their conduct and the performance of their duties. The PC is directly under the command of the SRSG. He is authorized to accord official recognition of the service merits of the UNCIVPOL, as well as to enforce discipline in the police component.

13.            UNCIVPOL shall, during the term of their appointment, discharge their functions and regulate their conduct with the interests of the United Nations only in view and shall not seek or accept instructions in respect of the performance of their duties from their own Government or from any other authority external to the United Nations.

. . .

17.            UNCIVPOL are assigned to UNMIH headquarters or other division as decided by the PC.

[34]          Counsel also stated that sections 18 and 19 deal with the privileges and immunities granted to police officers who were members of the UN force. According to him, this was exceptional: the immunities the police officers enjoyed were not accorded by the Canadian government but were those granted to UN officials. Counsel continued with his review of the Guide: section 20 provides that police officers are required to pay the UN for the losses-such as damage to vehicles-they cause the UN in the course of their activities; section 26 sets the police officers' hours of work; section 27 deals with vacation; and section 29 deals with compensatory leave. Sections 31, 32 and 33 set out the conditions regarding passports and visas. They provide that police officers must obtain diplomatic passports, the identity card being issued by the UN. Section 59 lays down dress requirements. Section 66 provides that the UN must pay police officers US$200 for clothing and equipment.

[35]          Counsel for the appellant submitted that the salary paid by the RCMP was a governmental accommodation in respect of UN missions. Furthermore, according to counsel for the appellant, it was not inconsistent for the appellant to maintain an employment relationship with the RCMP while entering into another such relationship with the UN.

[36]          Counsel for the appellant referred in that regard to the decision of the Federal Court-Trial Division in Scott v. The Queen, 91 DTC 5268, a case involving a person who was employed by a corporation and whose services were loaned to another corporation. Those services were provided under the direction of a third entity. His salary was paid by the first corporation. The stock options that were granted to him by the second entity had to be included in his income as income from employment.

[37]          An employee is defined as a person in the service of another person who has a right of control and direction over that first person. Direction and control are key elements of the concept of employment.

[38]          Counsel for the appellant also argued that the purpose of paragraph 110(1)(f) of the Act is to favour citizens who work at the international level.

[39]          Counsel for the respondent referred to section 11 of the Guide for civilian police officers and said that the police officers provided services to the UN on the basis of a loan to that organization by their government. The police officers continued to be employees of their countries of origin. The salaries of Canadian police officers continued to be paid by their employer. The years spent on a mission counted toward seniority; contributions went on being made to their pension funds and vacation leave continued to be credited. RCMP officers could take their vacation on their return to their duties with the RCMP. RCMP officers did not tender their resignation to the RCMP before leaving to work abroad. Nor did they sign personal contracts with the UN. They received the same salary treatment as their colleagues in Canada but were paid special compensation for work abroad. Their uniforms and other equipment were provided. Counsel referred to section 59 of the Guide, which sets out a dress code that includes national identification to be sewn on the uniform:

59.            United Nations Civilian Police Officers are expected to wear their national uniforms during the performance of their duties. The United Nations will provide a blue beret, peak cap, cap badge, neck scarf and six shoulder patches to be sewn on the upper right sleeve of the uniform shirt or jacket. A national identification symbol, normally a small national flag, should be sewn on the upper left sleeve of the uniform shirt and jacket. A detailed guide to clothing and equipment is contained in Annex IV to the present notes.

[40]          Counsel referred to the decision of this Court in Creagh v. The Queen, [1996] T.C.J. No. 1404 (Q.L.).

¶ 27         Employment is defined in paragraph 248(1) of the Act as follows:

                "employment" means the position of an individual in the service of some other person (including Her Majesty or a foreign state or sovereign) and "servant" or "employee" means a person holding such a position.

               

¶ 28         The term "employment" is used several times in the Act, and when it is used, it always means the contractual relationship of an employer and an employee as is the case when this term is used in any legal text. It does not mean an activity in which a person engages. The preposition "with" cannot change the meaning of the word "employment" in the Act. If the legislator had wanted to provide for the case of work activity and not for the case of employment, it would have used the former expression and not the latter. It has been admitted by the Appellants and it is also abundantly clear from the evidence, that the Appellants were employees of Canadian Helicopters and that, this company was their employer. The appeals consequently fail on this point.

[41]          In rebuttal, counsel for the appellant argued that, in Creagh, supra, there was a contract between Canadian Helicopters and the UN, and that here there is no contract between the RCMP and the UN.

Conclusion

[42]          Paragraph 110(1)(f) of the Act and section 8900 of the Regulations read as follows:

110(1)      For the purpose of computing the taxable income of a taxpayer for a taxation year, there may be deducted such of the following amounts as are applicable:

                . . .

(f)             . . . or any amount that is

. . .

(iii)           income from employment with a prescribed international organization . . .

to the extent that it is included in computing the taxpayer's income for the year.

8900         For the purposes of paragraph 110(1)(f) of the Act:

(a)            the United Nations, and any specialized agency that is brought into relationship with the United Nations in accordance with Article 63 of the Charter of the United Nations, are prescribed international organizations . . . .

[43]          I have set out the evidence in some detail. However, an essential element is missing in the evidence that was submitted, namely, the presence of a UN representative or the filing of a UN document attesting that the appellant was or might have been a permanent or temporary employee of that organization. Employment requires intent on the part of two contracting parties. A person may not unilaterally declare himself to be a UN employee. I am certain that the UN, just like governments, has rules respecting employment, whether it be permanent or temporary. Those rules have not been submitted in evidence.

[44]          In Creagh, supra, the appellants did not attempt to declare themselves UN employees but did try to argue that the words "employment with a prescribed international organization" could be interpreted as meaning work activities with an organization, even if these activities are carried on by a person employed by someone other than the international organization. The Court did not agree with this for the reasons provided in the passage cited above.

[45]          I do not see in the Guide (Exhibit A-1, Tab 10) any acceptance on the part of the UN of the view that civilian police officers on a mission in Haiti are UN employees.

[46]          Thus, for example, the privileges and immunities that they were granted (section 18) were those granted to experts on a mission for the UN, not those given to UN officials. Section 18 of the Guide refers to Article VI of the Convention on the Privileges and Immunities of the United Nations. It is Article V of the Convention that provides for the diplomatic immunities of officials. Under section 22 in Article VI of the Convention, experts (other than officials coming within the scope of Article V) performing missions for the United Nations are to be accorded such privileges and immunities as are necessary for the independent exercise of their functions during the period of their missions, including the time spent on journeys in connection with their missions. Section 17 in Article V of the Convention reads as follows:

The Secretary-General will specify the categories of officials to which the provisions of this Article and Article VII shall apply. He shall submit these categories to the General Assembly. Thereafter these categories shall be communicated to the Governments of all Members. The names of the officials included in these categories shall from time to time be made known to the Governments of Members.

[47]          Section 19 of the Guide provides that privileges and immunities are granted in the interests of the UN and not for the personal benefit of the individuals themselves. That section also provides that the authorities of the police officer's country may take disciplinary or legal action against him in accordance with the laws and regulations of the country.

[48]          I see nothing in the evidence before me that could support a conclusion that a contract of employment existed between the UN and the appellant. (1) The UN is an institution that necessarily has rules concerning its employees' employment, whether permanent or temporary. Normally, one would have referred to the provisions under which the appellant could be considered a UN employee. Since this was not done, none having been presented as evidence, I can only think that there were no such provisions. (2) Nor do I see any contract between the UN and the appellant. The undertaking signed by police officers, the text of which appears in Appendix I of the Guide for police officers (Exhibit A-1, Tab 10), is not a contract of employment. It is merely a unilateral commitment not to use for purposes not authorized by mission authorities information obtained in the course of the mission. (3) The privileges and immunities granted are not those granted to officials but those granted to experts performing work for the UN. (4) The appellant was subject to two codes of conduct, the UN's and that of his own police force. While identified as belonging to the UN civilian police, he was at the same time identified as a police officer from his own country through the wearing of his national uniform. (5) The appellant was not entitled to any remuneration from the UN, or to participate in the UN pension plan, or to receive other benefits granted by the UN to its employees.

[49]          The appellant was clearly not an official of the UN. He was to act within the scope of a mission the parameters of which were determined by the UN, but that cannot be enough to make him an employee of the UN, otherwise, UN employees would be legion. The appellant was an employee of the Canadian government loaned by his country for a peacekeeping mission.

[50]          The appeals for the 1994 and 1995 taxation years are dismissed for the above reasons and the appeal for the 1996 taxation year is dismissed because the appellant returned to Canada on September 25, 1995, the whole with costs.

Signed at Ottawa, Canada, this 14th day of March 2001.

[OFFICIAL ENGLISH TRANSLATION]

"Louise Lamarre Proulx"

J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]

98-2403(IT)G

BETWEEN:

JULES LALANCETTE,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeals heard on November 22 and 23, 2000, at Montréal, Quebec, by

the Honourable Judge Louise Lamarre Proulx

Appearances

Counsel for the Appellant:                             Jacques Renaud

Counsel for the Respondent:                        Marie Bélanger

JUDGMENT

          The appeals from the assessments made under the Income Tax Act for the 1994, 1995 and 1996 taxation years are dismissed, with costs, in accordance with the attached Reasons for Judgment.

Signed at Ottawa, Canada, this 14th day of March 2001.

"Louise Lamarre Proulx"

J.T.C.C.