Date: 20010123
Dockets: 1999-3785-EI, 1999-3786-CPP
BETWEEN:
ROTARY AIR FORCE MANAGEMENT INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
PETER G. HASELOH, LINDA M. LAFLEUR, DONALD N. LAFLEUR,
Intervenors.
Reasons for Judgment
Rowe, D.J.T.C.C.
[1]
On June 4, 1999 the Minister of National Revenue (the
"Minister") issued letters of decision to Rotary Air
Force Management Inc. (RAF) - the payor - and to each of the
intervenors deciding they had been engaged in insurable
employment with RAF pursuant to the provisions of the
Employment Insurance Act (the "Act")
during the period from January 1, 1997 to September 10, 1998. In
each instance, the Minister decided the intervenors had been
employed by the payor pursuant to a contract of service and the
Minister was satisfied each intervenor would have entered into a
substantially similar contract of employment had they been
dealing with the payor at arm's length. The Minister had
issued - on June 4, 1999 - a letter of decision concerning Daniel
Haseloh wherein the Minister found Daniel Haseloh to have been in
insurable employment with the payor during the period January 1,
1997 to June 6, 1998. However, Daniel Haseloh died in an accident
and the Notice of Appeal written on the letterhead of the
appellant - filed on August 26, 1999 - was signed by Donald
Lafleur, Peter Haseloh, Linda Lafleur, and Linda Lafleur on
behalf of Daniel Haseloh, deceased. The Notice of Appeal was
accepted by the Registry of the Tax Court of Canada on the basis
it was an appeal by RAF and on October 13, 1999, Revenue Canada
sent out notices to the signatories informing them of the appeal
and advising they could participate by filing a Notice of
Intervention. On November 24, 1999, a Notice of Intervention was
filed but only on behalf of Linda Lafleur, Donald Lafleur
and Peter Haseloh. There was no representation on behalf of the
Estate of Daniel Haseloh, deceased. Thereafter, the Reply to
Notice of Intervention referred only to the parties named in the
said Notice.
[2]
The Minister - on June 4, 1999 - issued letters of decision to
RAF and to the named intervenors wherein the Minister found them
to have been in pensionable employment with the payor during the
period from January 1, 1997 to September 10, 1998 on the
basis they were employed pursuant to a contract of service. The
same procedures were followed with respect to the appeal process
as noted above and the separate appeal by RAF - 1999-3786(CPP) -
was followed by a Notice of Intervention, filed in the same
manner as the within appeal. On June 4, 1999 the Minister also
issued a letter to the appellant deciding Daniel Haseloh had been
engaged in pensionable employment from January 1, 1997 to June 6,
1998. Donald Lafleur - acting as agent for RAF - and counsel
for the respondent agreed the evidence taken on the within appeal
would be applied to the appeal filed pursuant to the Canada
Pension Plan.
[3]
Donald Lafleur testified he resides in Kindersley, Saskatchewan
and is the General Manager of the appellant corporation. He
confirmed the share structure of RAF - during the relevant period
- was as set forth in the Reply to Notice of Appeal, as follows:
Daniel Haseloh - 32.8%; Linda Lafleur - 16.8%;
Donald Lafleur - 16.9%; Peter Haseloh - 28.5% and Les Brown
- 5%. Brown was not included in the Minister's decision.
Today, Lafleur stated he and his wife - Linda - each own 25% of
the shares, Peter Haseloh - with his wife - owns 40% and Les
Brown holds the remaining 10%. RAF was created in 1987 but the
same people had operated the business before incorporation. The
Head Office of the corporation was in Kindersley, Saskatchewan
and RAF carried on the business of manufacturing a kit aircraft,
known as a gyroplane, examples of which were illustrated in a
calendar for the year 2000 issued by RAF and filed as Exhibit
A-1. The manufacturing portion of the business was carried on by
a corporation - Rotary Air Force Engines Inc. -
and the shareholders were the same as in RAF except that the
Saskatchewan Diversification Corporation held shares as part of a
financing mechanism. The original design for the aircraft was
created by Bernard Haseloh, an uncle to Linda Lafleur and
her brothers, Daniel Haseloh and Peter Haseloh. Donald Lafleur
stated that about 5% of corporate revenue was gained from
machining parts for use in the oil field but the remaining
portion was attributable to the manufacture and sale of the
aircraft kit which was unique. The RAF shop at Kindersley
employed 22 people who worked operating a lathe mill, various
saws and computer-aided machines. These workers were paid an
hourly wage and an individual fulfilling the role of Sales
Coordinator was considered to be an independent contractor.
Donald Lafleur stated he and his wife - Linda - had worked in the
Yukon operating an electrical business and Peter Haseloh was a
heavy duty mechanic. As a result of being involved in those
trades, they were accustomed to earning substantial incomes.
Daniel Haseloh had been a sales agent and had earned a good
income. The parties decided to take the gyroplane design of
Bernard Haseloh and to add some comforts such as a heated cabin
in order to appeal to potential customers. Beginning in 1987,
they all worked extremely hard to promote the product and - in
1988 - the model designated as RAF 1000 was introduced, followed
by another version - RAF 2000 - in 1990. The later version was a
two-place machine and was created to satisfy a demand in the
marketplace. At that time, RAF was operating out of premises in
Ponoka, Alberta. After a failed attempt to secure some funding
from the provincial government, the business was re-located to
Kindersley, Saskatchewan where the required financing was
obtained through the mechanism of a municipal bond program
supported by the Province of Saskatchewan. One of the conditions
of the financing program was that the shareholders of RAF were
required to enter into a shareholder's agreement in which
they all agreed not to receive any vacation or overtime pay in
order to ensure that the salary of each shareholder employed by
the corporation would not exceed the sum of $3,000.00 per month.
Additional restrictions were set forth in various clauses of said
agreement - filed as Exhibit A-2 - including the requirement the
shareholders transfer to RAF all proprietary property such as
patents, trademarks, licensing agreements, etc. currently
standing in any of their names. During this period, RAF had 20
employees and they were paid overtime and for extra duties
pertaining to attendance on weekends at air shows where the
RAF-manufactured aircraft would be on display. The original model
- RAF 1000 - was taken to an air show in Florida and responses
began to come in to the Kindersley office resulting in the sale
of 14 machines. Later, the RAF 2000 was introduced into the
marketplace and 24 units were sold. Currently, the appellant
sells an updated version with a different engine. Donald Lafleur
stated the community bonds were redeemed by RAF during 1997 so
all the restrictions imposed by the agreement - Exhibit A-2 -
were no longer in place following that event. However, RAF became
involved in litigation in the United States and a condition was
imposed in the course of that process which required a
continuation of substantially the same restrictions as contained
in the said shareholder's agreement until the matter was
ultimately resolved in September, 1998. On June 6, 1998, Daniel
Haseloh died as a result of a mid-air collision while carrying
out an aerial photography assignment during the process of making
a promotional video. Daniel had performed demonstrations of the
gyroplanes at airshows in order to attract potential buyers. Once
salary restrictions had been removed, the shareholders in RAF had
held a meeting and examined the levels of risk and stress
affecting the performance of each member of the family group and
used that factor in order to determine amounts to be taken out of
the corporation in the form of salary. Daniel earned the most due
to his input and the risk factor inherent in his work. Examples
of Order Forms including a portion devoted to details concerning
a Free Introductory Flight offer were filed as Exhibit A-3. All
sales of the RAF product were in the form of a kit and in order
to comply with regulations set by the appropriate branch of the
federal government, 51% of the assembly work had to be performed
by the purchaser. In order to assist buyers in this process, RAF
developed a set of manuals and videos which could be used during
construction of the kit aircraft and purchasers without
mechanical training could still assemble the unit. RAF was not
permitted to undertake the assembly for the customer because
federal legislation regarded gyroplanes as amateur-built
aircraft. RAF - as part of a marketing strategy - designed a
program whereby a gyroplane owner could demonstrate - and then
sell - an aircraft kit to an interested party and obtain a
commission arising from the sale. An agreement
- Exhibit A-4 - was drafted for that purpose and was
usually entered into by individuals who were flight instructors
for fixed-wing aircraft but there were also others who had been
trained to fly only on gyroplanes. The qualifications required in
order to fly the aircraft produced by the RAF kit was 12 hours
dual instruction followed by 12 hours solo flight in the context
of a total of 45 hours flight experience and 40 hours of ground
school. The Ministry of Transport appoints an examiner for the
purpose of carrying out the process of determining whether a
candidate is to be issued a license and this may involve an
actual check ride or merely observation from the ground while the
aircraft operator carries out specific manoeuvres. In order to
train pilots, a flight instructor was required to have
250 hours flying time. Turning once again to the
circumstances surrounding the relocation of the RAF business to
Kindersley, Donald Lafleur stated one of the requirements of the
bond-financing arrangement was that the corporation retain the
services of a qualified accountant. As a result, the accountant
advised RAF to treat the intervenors and Daniel Haseloh as
employees and to take deductions on the basis they were insurable
employees. Although, the intervenors were reluctant to follow
this advice, part of the financing agreement involved an
oversight function carried out by a Bond Board composed of 10
persons drawn from the Kindersley community of which any two
members were entitled to sit in on any business meetings held by
RAF. The advice offered by the Board was to avoid any disputes
with Revenue Canada until the bond financing had been repaid in
full and the shareholders of the appellant accepted that
recommendation. A document setting forth the annual earnings of
the owners of RAF between 1991 and 1999 was filed as Exhibit A-5.
Donald Lafleur stated his opinion that no person not related to
the appellant would work in a senior management position for
$3,000.00 per month without any possibility of receiving a raise
for an indeterminate lengthy period, especially when it was not
uncommon to work 80 hours a week. Prior to becoming involved in
the family business - later transformed into RAF - he had been a
maintenance electrician which according to his reference to
statistics issued by the Labour Standards Branch of Saskatchewan
would permit him to earn $31.29 per hour based on a 40-hour week
resulting in a net monthly salary of over $4,200.00. Peter
Haseloh is a qualified heavy-duty mechanic and could earn a wage
of $26.03 per hour. Linda Lafleur had worked as an administrator
and the type of services performed by her for RAF would probably
entitle her to a salary of $55,000.00 per year. During the period
the restrictions imposed by the financing mechanism were in
effect, RAF paid premiums for life insurance on the shareholders
as well as in relation to a group dental plan and the
Workers' Compensation Board. Lafleur stated all shareholders
anticipated being rewarded for their efforts as a result of
increased value of the corporation. An individual working as
Sales Coordinator - during his first year - earned the sum of
$40,000.00. The employees working in the shop earned between
$10.00 and $16.00 per hour based on a 40-hour week.
Donald Lafleur referred to a letter dated April 29, 1998 -
Exhibit A-6 - issued on the letterhead of the Canadian Imperial
Bank of Commerce in Kindersley setting forth the list of
guarantees granted in favour of the bank by the intervenors and
Daniel Haseloh with respect to various loans to RAF in the sum of
nearly $30,000.00. Referring to paragraphs 7(e) to 7(j),
inclusive of the Reply to Notice of Appeal, Donald Lafleur agreed
the facts set forth - therein were accurate, as follows:
"(e) the
Appellant's business provided capital assets and management
skills to a subsidiary company;
(f)
Daniel was involved in all facets of the business and his duties
included test pilot services, signing authority, hiring, firing,
cash management, bill payment, bank deposits, exchange rates,
marketing, sales literature, construction materials, customer
correspondence, pricing inventory, purchasing materials,
production, manufacturing, investment packages, loan
applications, trade account applications, and flight
characteristics;
(g)
Linda was involved in all facets of the business and her duties
included administration services, signing authority, hiring,
firing, cash management, bill payment, bank deposits, exchange
rates, marketing, sales literature, construction materials,
customer correspondence, pricing inventory, purchasing materials,
production, manufacturing, investment packages, loan
applications, trade account applications, and flight
characteristics;
(h)
Peter was involved in all facets of the business and his duties
included production and design manager services, signing
authority, hiring, firing, cash management, bill payment, bank
deposits, exchange rates, marketing, sales literature,
construction materials, customer correspondence, pricing
inventory, purchasing materials, production, manufacturing,
investment packages, loan applications, trade account
applications, and flight characteristics;
(i)
Donald was involved in all facets of the business and his duties
included general sales manager services, signing authority,
hiring, firing, cash management, bill payment, bank deposits,
exchange rates, marketing, sales literature, construction
materials, customer correspondence, pricing inventory, purchasing
materials, production, manufacturing, investment packages, loan
applications, trade account applications, and flight
characteristics;
(j)
the shareholders' salaries were determined by the unanimous
consent of the shareholders;"
[4]
Referring to paragraph 7(m) of the said Reply, Donald Lafleur
stated the profit split was paid out by way of dividend to the
shareholders based on the number of shares held by each recipient
and was not in the form of a salary bonus. The corporation paid
income tax on $200,000.00 in order to take advantage of a lower
rate and the remainder was paid out to the shareholders. The
salaries paid to himself, his wife - Linda - and to Daniel
Haseloh and Peter Haseloh were set by them as a group decision in
amounts as set forth in paragraph 7(n) of the Reply. Each
shareholder - in 1996 and 1997 - could draw the sum of $3,000.00
per month from the corporation whether or not any services had
been provided. In the event one of the four members of the family
group was absent, then the remainder would assume those duties
and would work additional hours without any extra compensation.
There was no set schedule for working hours and no restrictions
on taking holidays and the family members were free to come and
go as they chose. Each of them possessed skills which could
enable them to earn additional money by providing services to
others. Donald Lafleur stated he and the others were always faced
with the potential for extensive joint and several liability
arising out of their participation in RAF. In order to obtain the
bond financing for RAF following the establishment of the
business in Kindersley, each family member had to pledge personal
assets as security. The Bond Corporation then sold shares to
members of the public on the basis of 100 shares being the
minimum purchase and the maximum sale to any individual could not
exceed the sum of $10,000.00. In total, 700 bondholders
participated in the financing scheme and were entitled to be paid
out in full or could convert the bonds to shares in RAF. The
majority of the bondholders accepted a payout and those that
chose to convert bonds to shares were later bought out so that
RAF remained a family-owned and controlled corporation. Referring
again to salaries and wages in the marketplace relevant for
purposes of comparison to the intervenors, Donald Lafleur filed
as Exhibit A-7 a bundle of sheets received from Saskatchewan
Labour, Planning and Policy Branch.
[5]
In cross-examination, Donald Lafleur stated his duties with RAF
are managerial in nature but also include matters relating to
sales, financing and administration. All the necessary tools and
equipment for the business are owned by the corporation and he
uses a company credit card for expenses related to the business.
Although he does work in the business year-round, he could have
chosen not to do so as he was at all times a Director and
shareholder in RAF even though there may have been periods during
which he was not an Officer of the corporation. He agreed with
counsel that in the Financing Agreement -
Exhibit A-2 - he had been referred to
therein as an employee of RAF.
[6]
Karen Klassen testified she began working for Canada Customs and
Revenue Agency (CCRA) - formerly known as Revenue Canada - in
1998 and is currently a Rulings Officer for purposes of the
Employment Insurance Act and Canada Pension Plan.
She was responsible for the ruling issued on September 10, 1998
which was later confirmed by the Minister in the letter dated
June 4, 1999, said decision being the subject of the within
appeal. Karen Klassen stated that whenever her office was
required to make a ruling the first step was to examine whether
or not there was a contract of service or a contract for
services. In the circumstances involving the intervenors and RAF,
it was decided - in accordance with the usual tests - that they
were employees working pursuant to a contract of service. She
stated the next stage in the process was to examine the
Act in terms of the exclusions created by the shareholding
structure. In the within matter, she determined no shareholder
controlled more than 40 per cent of the voting shares in RAF and
was, therefore, not excluded from insurable employment. Since the
intervenors and Daniel Haseloh were related persons as defined by
the Income Tax Act, and were, therefore, deemed not to be
dealing with each other at arm's length, it was necessary for
the Minister to use the discretion required by the provisions of
paragraph 5(3)(b) of the Act in order to be
satisfied that it is reasonable to conclude the parties would
have entered into a substantially similar contract of employment.
Once so satisfied, then it could be concluded that the parties
were dealing with each other at arm's length. Klassen stated
that in the Saskatoon office the practice utilized is to refer to
section 251 of the Income Tax Act which defines
relationships and to then refer to section 69 of the Income
Tax Act which deals with inadequate considerations of various
sorts occurring in transactions between persons dealing with each
other non-arm's length. Klassen stated that in her view this
provision of the Income Tax Act is concerned with
fraudulent transactions and the purpose of the non-arm's
length legislation contained therein is to exclude fraudulent
transactions. In terms of examining the circumstances surrounding
employment situations, Klassen stated she followed office policy
which was to believe the intent of the legislation was to exclude
employments that are fraudulent, fabricated or - as termed by the
office Technical Advisor - any employment that was
"untoward". Therefore, Klassen stated she was looking
to exclude fraudulent employment and pointed out individuals did
not have the option of choosing whether or not they wished to be
in insurable employment under the Act. Klassen stated she
then considered the remuneration paid, the terms and conditions,
the duration and nature and importance of the work performed
prior to making the ruling. (At this point in the testimony I
began asking questions of Klassen for purposes of clarification
and it is important to quote directly from the transcript. The
only editing done is in relation to syntax, punctuation, grammar
or in eliminating repetitive words, portions of phrases,
questions or responses uttered solely in acknowledgement or
confirmation and the testimony - as set forth in the relevant
portions of the exchanges between the witness and the Court - is
as follows:)
"His Honour: So
your view really is if there is a family home business as
legitimate employment, then there's insurable employment?
Ms. Klassen:
Our view is that if it's legitimate employment and it is not
untoward, it is not fabricated, general overall, then yes, it
should be legitimate employment and included under the
Employment Insurance Act.
His
Honour:
What's the point of looking at those factors set out in the
legislation?
Ms. Klassen:
Because there are many times when we look at those factors, that
we find that it is not a legitimate employment. Take
remuneration, for example, I personally have dealt on cases
where, yes, everything else is above board and reasonable, but
has that person truly been paid, and I have personally worked on
cases where on paper - or they may tell me - they got
$3,000 a month. Well, did they have rights to those funds? Did
they receive a cheque? No, it's a paper transaction and that
money was never in that person's hand; they never had any
rights to that money and therefore were not remunerated.
His
Honour:
Right. So those indicia set out in paragraph 3(b), if I
understand you correctly, are looked at only in the process of or
the context of determining the legitimacy of the employment to
ensure that it's not a sham?
Ms. Klassen:
In essence, that is a large part to do with it, yes. What we want
to include is valid legitimate employments and we believe that is
the intent of the legislation, that the legislation is not an
optional program.
His
Honour: But
it is not the people out there who have made this up, it is
Parliament that has decided certain people will be included, but
then later will be excluded if they don't meet the test of
certain standards, so I mean, the individuals aren't choosing
whether or not to participate.
Ms. Klassen:
What we have found is that individuals, particularly
shareholders, whether or not they are related, have applied for
the exclusion simply because they do not want to pay the EI
benefits for a variety of reasons. One of the reasons often that
we hear is this person can never be fired, even if they own only
two percent of the shares. The legislation tells us that we
exclude individuals when they own in excess of 40 percent of the
shares. If a person does not have legal control of that
corporation, who is to say that they cannot be fired? Again, I
have worked on a situation where we had a family business and
that family business ...
The
Court:
Right, but when you look at whether an outsider would enter into
a substantially similar contract, as the Appellant said on the
witness stand, who is going to work that hard for that
remuneration with those qualifications, contractually agree not
to have any overtime pay, vacation pay and never to get a raise,
and what employee on that shop floor is going to put his or her
name to documents which might give them potentially millions of
dollars of liability? I mean, who is going to do that?
Ms. Klassen: I
would like to address the first part of your question. It is not
uncommon for non-related shareholders to enter into an agreement
of the nature that these individuals have entered into whether or
not they're related. Again, I personally know of shareholders
who own 10 percent of those shares, they work 60 or 70 hours a
week. They don't take Saturdays, they don't take Sundays.
Why would they do this? Because they are also a shareholder in
addition to being a worker. If they are a shareholder, they have
a common interest of insuring the prosperity of that particular
business.
His
Honour:
But, unless they're defined as related persons, then it
doesn't matter. You only get kicked out of the inclusion if
you meet the definition of related persons. You can have 10
percent of the shares - you're not a related person
- and it doesn't matter. It only matters if you fall
into the category of a related person, in which case you're
deemed to be in excepted employment unless and until the Minister
makes a decision to get a person back into the category again, so
that's the only time it applies.
Ms. Klassen:
Well, that's true, and if a related shareholder is performing
services under circumstances which are comparable to unrelated
shareholders, why should they not be included? That business can
still fail.
His
Honour: So
your view of it is - and you can correct me if I'm
wrong - and this is obviously the view of your office, that
fundamentally unless and until there is evidence the employment
is not legitimate, that the people who are employed by that
company are engaged in insurable employment, right?
Ms. Klassen:
If they meet the other provisions, yes.
His
Honour: But
you said earlier that the other provisions are fundamentally
looked at only in the context of determining ... that it is
legitimate, not untoward, and not fabricated, that is what you
said.
Ms. Klassen: I
did say that, Your Honour. What I meant in this situation was if
they own in excess of 40 percent of the shares, then, of course,
it would not be included as per the legislation.
His
Honour: But
that's not what you said. You said, you believe the intent of
the legislation is to exclude fraudulent employment only.
Ms. Klassen:
Yes.
His
Honour: So
if there is legitimate employment and it is not untoward -
whatever that means - or fabricated, then it should be
included in insurable employment.
Ms. Klassen:
Yes.
His
Honour: You
then said the indicia I referred to, "mostly", you said
"only" first, and when I pressed you, you said
"mostly", in the process of determining whether the
employment is legitimate. That's what you said.
Ms. Klassen:
Going through the legislation, we come to the factor of
shareholdings prior to looking at non-arm's length,
right?
His
Honour:
Yes.
Ms. Klassen:
So if they own in excess of 40 percent of the shares, we
don't even have to look at arm's length, they're
already excluded.
His
Honour:
Right, but I'm talking about the indicia in paragraph
5(3)(b), the duration, the employment, the comparability.
Ms. Klassen:
Right.
His
Honour:
Your comment was that it is mostly looked at in combination with
section 69 of the Act, which somehow you make apply.
Ms. Klassen:
No, I didn't - it wasn't in section 69 of the
Act, sorry, sir, if I am - if I am being vague
...
His
Honour: All
right. What's the reference to section 69?
Ms. Klassen:
Section 69 refers to the type of transactions that are - I
hate to use the word untoward again because it is my technical
advisor's term, but -
His
Honour: All
right, but why do you use section 69 of the Income Tax
Act?
Ms. Klassen:
Because ...
His
Honour:
What gives you the right to do that?
Ms.
Klassen
What I'm saying is that's the type of things that the
Income Tax Act relates non-arm's length transactions
to.
His
Honour:
Yes, all right.
Ms. Klassen:
What types of things are we looking at? Well, it's talking
about transactions at non-arm's length where it's meant
to contravene the legislation."
[7]
Counsel for the respondent resumed questioning of Ms. Klassen and
Klassen stated she considered the duration of the employment and
found RAF operated year-round. In terms of remuneration, in 1998
the intervenors and Daniel Haseloh were paid a fixed salary
regardless of the number of hours worked and the three men
received a salary of $5,000.00 per month while Linda Lafleur
received a salary of $3,000.00 per month. Klassen stated it was
not unreasonable for workers who are shareholders in a
corporation to receive a fixed salary regardless of the number of
hours worked because as a shareholder it is in their interest to
ensure the prosperity of that particular business and to "do
what it takes" to achieve that end. She stated that in her
opinion while there may not have been a particular employee - at
RAF - who was performing exactly the same services under the same
terms and conditions, it was not fair to compare the shareholders
- who were the subject of her ruling - with other regular
employees because it was quite common to look at other businesses
and to expect individuals employed in managerial capacities to be
working extended hours. Klassen stated she considered the aspect
of the importance of the work involved and concluded the
intervenors were vital to the operation of the appellant's
business and found they were performing valid and reasonable
duties. She stated that before coming to the decision that the
affected individuals would have entered into a substantially
similar contract of employment with RAF had they been non-related
persons, she had the particular file reviewed by the Technical
Advisor and also followed office practice of reviewing the case
extensively with other CCRA employees carrying out a similar
function in order to ensure the decision was made in a fair
manner. (At this point, there was a further exchange between the
witness and the Court and the relevant portions of the transcript
- reproduced in accordance with the earlier stated method - are
as follows:)
" His Honour: But,
here is the test; whether it's reasonable to conclude that
they would have entered into a substantially similar contract of
employment if they had been dealing with each other at arm's
length. Your test is whether another group of shareholders
somewhere else would have likely operated in the same fashion
with their company because they're shareholders as these
people were, that's what you use.
Ms. Klassen:
We're looking to see whether or not there's a valid and
genuine employment.
His
Honour: But
you can't compare shareholders, the section doesn't ask
you to compare shareholders of other companies with shareholders
of this company. It asks you to compare whether or not it's
reasonable to conclude that these people, if they hadn't been
related to the corporation by virtue of the Income Tax
Act, would have entered into a substantially similar contract
of employment if they had, in fact, been dealing at arm's
length. So don't you have to look at somebody coming off the
street, applying for a job - doing what these people were
doing - as an arm's length person and then saying,
would this person work that hard for $3,000 a month and put
themselves on the hook to that extent? Isn't that the
comparison that should be made?
Ms. Klassen:
The comparison that I would make in that situation is could an
unrelated person enter into that type of a relationship in
managerial capacity, and would they be expected to work that hard
if they were a manager? Yes, they would be expected to work that
hard.
His
Honour: For
that amount of money?
Ms
Klassen:
It's possible, yes.
His
Honour:
Yes, but is it probable?
Ms. Klassen:
My husband does it.
...
Ms. Klassen:
These individuals also have their shareholder role as well. As a
worker, yes, they may have made $30,000, although in the year in
question that I looked at, three out of four of them were making
$60,000."
[8]
In cross-examination by Donald Lafleur, Karen Klassen stated she
regarded it reasonable for a person to work long hours for
$3,000.00 a month without a raise for years if one believed in
the product and the business organization even if required to
place personal assets at risk.
[9]
Donald Lafleur, agent for the appellant corporation, submitted
the evidence demonstrated the business organization was the
culmination of a dream and the intervenors and Daniel Haseloh
were all members of a related team operating as a family unit in
a manner unlike a working relationship between parties dealing
with each other at arm's length.
[10] Counsel
for the respondent submitted the decision of the Minister was
within the bounds permitted by the relevant jurisprudence and
there was no need for intervention by the Court.
[11] Pursuant
to paragraph 5(2)(i) of the Act, insurable
employment does not include "employment if the employer and
employee are not dealing with each other at arm's
length". At this point - without more - the intervenors and
Daniel Haseloh were all related persons employed by a
related corporation as defined by section 251 of the
Income Tax Act and would fall into the category of
excluded employment or - more precisely - employment that was not
included in the category of insurable employment. However, that
is not the end of the process and the Minister is required by
paragraph (3)(b) of section 5 of the Act to examine
certain indicia of the said employment in accordance with the
language of the provision as follows:
"if the employer is, within the meaning of that Act,
related to the employee, they are deemed to deal with
each other at arm's length if the Minister of National
Revenue is satisfied that, having regard to all the circumstances
of the employment, including the remuneration paid, the terms and
conditions, the duration and the nature and importance of the
work performed, it is reasonable to conclude that they
would have entered into a substantially similar contract
of employment if they had been dealing with each
other at arm's length." (emphasis added)
[12] For
reasons which I hope will become apparent, I have added emphasis
to the above provision and will refer to the precision of the
wording in the course of undertaking an analysis of the
evidence.
[13] The first
matter to be decided is whether or not there is any basis
disclosed by the evidence for me to intervene in the decision of
the Minister.
[14] In the
case of Crawford and Company Ltd. and M.N.R., reported,
[1999] T.C.J. No. 850 (QL), a decision of Porter, D.J.T.C.C.
issued December 8, 1999, Judge Porter considered the appeals of
three employees of the corporation, of whom two were brothers,
falling into the category of related persons within the meaning
of the Income Tax Act. The remaining appellant was not a
related person to the corporation and this required a separate
examination of the facts as no discretion had been exercised by
the Minister pursuant to paragraph 5(3)(b) of the
Employment Insurance Act. The analysis undertaken by Judge
Porter, as it pertained to the two brothers is extensive, and is
relevant to the requisite analysis undertaken in the within
appeal. For that reason, I am quoting extensively from the
Crawford judgment because it accords with my understanding of the
law and the facts in that case are substantially similar to the
within appeal. At page 21, commencing at paragraph 58, Judge
Porter stated:
"[58] In the scheme
established under the EI Act, Parliament has made
provision for certain employment to be insurable, leading to the
payment of benefits upon termination, and other employment which
is "not included" and thus carrying no benefits upon
termination. Employment arrangements made between persons, who
are not dealing with each other at arm's length, are
categorized as not included. Brothers and corporations controlled
by them are deemed not to be dealing with each other at arm's
length pursuant to subsection 251(1) of the Income Tax
Act, which governs the situation. Quite clearly the original
purpose of this legislation was to safeguard the system from
having to pay out a multitude of benefits based on artificial or
fictitious employment arrangements, see the comments of the
Federal Court of Appeal in Paul v. The Minister of National
Revenue, (A-223-86) unreported, where Hugessen J.
said:
We are all prepared to assume, as invited by appellant's
counsel, that paragraph 3(2)(c) of the
Unemployment Insurance Act, 1971, and
subsection 14(a) of the Unemployment Insurance
Regulations have for at least one of their purposes the
prevention of abuse of the Unemployment Insurance Fund through
the creation of so-called
"employer-employee" relationships between persons
whose relationship is, in fact, quite different. That purpose
finds obvious relevance and rational justification in the case of
spouses who are living together in a marital relationship. But
even if, as appellant would have us do, we must look only at
spouses who are legally separated and may be dealing at arm's
length with one another, the nature of their relationship as
spouses is such as, in our view, to justify excluding from the
scheme of the Act the employment of one by the other.
...
We do not exclude the possibility that the provisions may have
other purposes, such as a social policy decision to remove all
employment within the family unit from the operation of the
Unemployment Insurance Act, 1971, as was suggested by
respondent's counsel.
[59] The
harshness of this situation has however been tempered by
paragraph 5(3)(b) of the EI Act, which
provides for such employment between related persons to be deemed
to be at arm's length and thus in turn to be treated as
insurable employment, if it meets all the other provisions, where
the Minister is satisfied having regard to all the circumstances
of the employment, including the remuneration paid,
theterms and conditions, the duration and the
nature and importance of the work performed, that it is
reasonable to conclude that they would have entered into a
substantially similar contract if they had (in fact) been dealing
with each other at arm's length.
[60] It may be
helpful to reframe my understanding of this section. For people
related to each other the gate is closed by the statute to any
claim for insurance benefits unless the Minister can be satisfied
that in effect the employment arrangement is the same as that
which unrelated persons, that is persons who are clearly at
arm's length, would have made. If it is a substantially
similar contract of employment, Parliament has deemed it to be
only fair that it should be included in the scheme. However, the
Minister is the gatekeeper. Unless he is so satisfied the gate
remains closed, the employment remains excepted and the employee
is not eligible for benefits.
[61]
Subsection 93(3) of the EI Act deals with appeals to and
the determination of questions by the Minister. It requires that
"the Minister shall decide the appeal within a reasonable
time after receiving it and shall notify the affected persons of
the decision".
[62] Thus, the
Minister has no discretion whether or not to decide the question.
He is required by law to do so. If he is not satisfied, the gate
remains closed and the employee is not eligible. If however he is
satisfied, without more ado or any action on the part of the
Minister (other than notification of the decision) the employee
becomes eligible for benefits, provided he is otherwise
qualified. It is not a discretionary power in the sense that if
the Minister is satisfied he may then deem
the employment to be insurable. He must "determine the
question" and depending on that determination the law deems
the employment to be either at arm's length or not at
arm's length. In this sense the Minister has no discretion
to exercise in the true sense of the word, for in making his
decision he must act quasi-judicially and is not free to choose
as he pleases. The various decisions of the Federal Court of
Appeal on this issue reveal that the same test applies as to a
myriad of other officials making quasi-judicial decisions in many
different fields. See Tignish Auto Parts Inc. v. M.N.R.,
185 N.R. 73, Ferme Émile Richard et Fils Inc. v.
M.N.R., 178 N.R. 361, Attorney General of Canada and
Jencan Ltd., (1997) 215 N.R. 352 and Her Majesty the Queen
and Bayside Drive-in Ltd., (1997) 218 N.R. 150."
[15] In the
case of Adolfo Elia v. M.N.R., [1998] F.C.J. No. 316 (QL),
a decision of the Federal Court of Appeal dated March 3, 1998, at
page 2 of the certified translation Pratte, J.A. stated:
"Contrary to what the judge thought, it is not necessary,
in order for the judge to be able to exercise that power, for it
to be established that the Minister's decision was
unreasonable or made in bad faith having regard to the evidence
before the Minister. What is necessary is that the evidence
presented to the judge establish that the Minister acted in bad
faith, or capriciously or unlawfully, or based his decision on
irrelevant facts or did not have regard to relevant facts. The
judge may then substitute his decision for that of the
Minister."
[16] In
Légaré v. Canada (Minister of National
Revenue), [1999] F.C.J. No. 878 - another decision of the
Federal Court of Appeal - Marceau, J.A. speaking for the
Court stated at page 2 of the judgment:
"In this matter, the Court has before it
two applications for judicial review against two judgments
by a judge of the Tax Court of Canada in related cases heard on
the basis of common evidence which raise yet again the problems
of interpretation and application of the saving provision,
subparagraph 3(2)(c)(ii). I say yet again because since its
passage in 1990, several decisions of the Tax Court of Canada and
several judgments of this Court have already considered what
workable meaning could be given to subparagraph 3(2)(c)(ii).
In reading the text, the problems it poses beyond its deficient
wording are immediately obvious, problems which essentially
involve the nature of the role conferred on the Minister, the
scope of the Minister's determination and, by extension, the
extent of the Tax Court of Canada's general power of review
in the context of an appeal under sections 70 et seq. of the
Act.
While the applicable principles for resolving these problems have
frequently been discussed, judging by the number of disputes
raised and opinions expressed, the statement of these principles
has apparently not always been completely understood. For the
purposes of the applications before us, we wish to restate the
guidelines which can be drawn from this long line of authority,
in terms which may perhaps make our findings more meaningful.
The Act requires the Minister to make a determination based on
his own conviction drawn from a review of the file. The wording
used introduces a form of subjective element, and while this has
been called a discretionary power of the Minister, this
characterization should not obscure the fact that the exercise of
this power must clearly be completely and exclusively based on an
objective appreciation of known or inferred facts. And the
Minister's determination is subject to review. In fact, the
Act confers the power of review on the Tax Court of Canada on the
basis of what is discovered in an inquiry carried out in the
presence of all interested parties. The Court is not mandated to
make the same kind of determination as the Minister and thus
cannot purely and simply substitute its assessment for that of
the Minister: that falls under the Minister's so-called
discretionary power. However, the Court must verify whether the
facts inferred or relied on by the Minister are real and were
correctly assessed having regard to the context in which they
occurred, and after doing so, it must decide whether the
conclusion with which the Minister was "satisfied"
still seems reasonable."
[17] In the
within appeal, Karen Klassen, the Rulings Officer who made the
ruling later confirmed by the Minister, provided an insight into
the policy, procedure and the rationale for determining that the
intervenors and Daniel Haseloh were in insurable employment with
the appellant corporation. As Judge Bowman, Tax Court of Canada,
in the case of Donald Persaud v. M.N.R. - 96-1987(UI) -
dated January 7, 1998 - at page 12 stated:
"It is strange that the first time an appellant is told
what these so-called assumptions are is when the
Attorney-General files the reply to the notice of appeal. They
are not, as I understand it, normally communicated to the
appellant prior to the determination nor is the appellant (at
that state the applicant) given any opportunity to rebut them or
to state why the determination unfavourable to him or her should
not be made."
[18] An
appellant could make application pursuant to the Access to
Information Act, R.S.C. 1980-81-82-83, c. 111, Sch. 1
"1" in order to obtain documents such as the Report on
a Determination or Appeal - known as a CPT 110 - together with
other relevant information gathered during the process leading to
the confirmation of the ruling by the Minister. In addition, an
appellant could apply to the Court pursuant to the provisions of
Rule 18 of the Tax Court of Canada Rules (E.I.) for an
Order directing a discovery under oath of a named party including
the production of documents. However, these procedures are rarely
followed and it is common for the respondent in these appeals to
not adduce any evidence at all so the assumptions of fact as
stated in the Reply to Notice of Appeal are the sole basis of
examining the reasoning that must have preceded the decision. In
the event the decision issued by the Minister is one which merely
determines the status of an individual in a working relationship
as being either pursuant to a contract of service or a contract
for services, the facts - as assumed - usually speak for
themselves and there is no real element of analysis or use of
discretion in arriving at a decision. On the other hand, when the
Minister is required by the legislation to be
"satisfied" that a certain situation existed which will
- in effect - "undeem" that which has been deemed - no
mean feat in itself - different considerations apply and it would
be useful to have some insight into the process utilized by the
Minister. I will begin by setting forth the assumptions of fact
contained in paragraph 8 of the Reply, as follows:
"In so deciding as he did, the Minister considered the
following assumptions of fact in support of the reason that
Daniel, Linda, Peter, and Donald were deemed to deal at arm's
length with the Appellant:
(a)
the assumptions of fact above;
(b)
Daniel, Linda, Peter, and Donald received their full salary and
bonus;
(c)
Daniel, Linda, Peter, and Donald controlled their own hours and
days;
(d)
Daniel, Linda, Peter, and Donald worked between 60 and 85 hours
per week;
(e)
Daniel, Linda, Peter, and Donald were not paid overtime;
(f)
the Appellant stated that the other employees worked regular
hours and days and received overtime pay when applicable;
(g)
Daniel, Linda, Peter, and Donald but (sic) not receive
sick leave or vacation pay;
(h)
Daniel, Linda, Peter, and Donald continued to receive their full
wage even when they were absent;
(i)
if a shareholder was absent for an extended period they would not
be replaced, another shareholder would complete the duties;
(j)
Daniel, Linda, Peter, and Donald were not supervised;
(k)
Daniel, Linda, Peter, and Donald chose the jobs they would work
on and they controlled their own work;
(l)
Daniel, Linda, Peter, and Donald could not be fired;
(m)
Daniel, Linda, Peter, and Donald had the freedom to work for
others;
(n)
the shareholders are liable for corporate losses;
(o)
the Minister was satisfied that it was reasonable to conclude the
Appellant would have entered into a substantially similar
contract of employment with Daniel, Linda, Peter, and Donald if
they had been dealing with each other at arm's
length."
[19] The
salaries of the parties for most of the relevant period were
limited by the shareholder's agreement required by the
mechanics of the bond financing and subsequently by certain
aspects of litigation issued in the United States against RAF
which also involved the intervenors as individuals. The
restriction was not only relevant to receiving dividends on
shares but applied to salaries, bonuses or other remuneration.
Certainly, the parties received their full salaries - as opposed
to the corporation being in arrears of payment - but they also
worked in an environment markedly different from other employees
and this was accepted by the Minister as evidenced by the wording
of the assumptions referred to above. It is difficult to
comprehend how after digesting the specific assumptions contained
in paragraphs 8(b) to 8(n), inclusive, the Minister arrived
at the conclusion - stated as a fact - that it was reasonable to
conclude the appellant (RAF) would have entered into a
substantially similar contract of employment with Daniel Haseloh,
Peter Haseloh, Donald Lafleur and Linda Lafleur if they had
been dealing with each other at arm's length.
[20] The
answer to the enigma may be forthcoming by returning to the
evidence of Karen Klassen, Rulings Officer, whose ruling was
confirmed by the Minister on June 4, 1999. In my view - to put it
bluntly - the method utilized by her - in accordance with office
policy - was to regard the relevant provisions of the
Employment Insurance Act in a manner consistent with a
regime borne of a mandate to impose a payroll tax but that is not
- at this point - the purpose of that legislation. It is apparent
in her testimony that the overarching purpose of the Act
is to regard the employment of related persons as being included
in insurable employment provided the work was legitimately
performed and there is no evidence of fraud or transactions
fraught with inadequate considerations as outlined in some detail
in section 69 - and 14 subsections - of the Income Tax
Act. It is also clear the comparison made by Karen Klassen
was based on an interpretation of working conditions between the
intervenors and Daniel Haseloh and a scenario where other persons
may have worked for a corporation in which they also held shares,
albeit not in an amount exceeding 40% so as to remove them from
the category of insurable employment. Certainly, there can be
reference to other workers in other similar industries in order
to have another tool with which to undertake the analysis of the
various indicia set forth in paragraph 5(3)(b) of the
Act. However, the final determination of the issue - in
order that the Minister be "satisfied" - must be based
on a consideration of whether a non-related person - a stranger -
with similar skills and experience could reasonably be expected
to provide services to the appellant corporation under
substantially similar working conditions having regard to the
amount of pay, method of payment, opportunity for increased or
additional remuneration, hours and conditions of work and the
element of risk to personal assets apart from that normally
associated with being a shareholder. The test is not whether some
other shareholder with more or less than 40% of the shares in
some other corporation would be likely to work as hard and assume
personal risk for the greater good of that corporate entity in
the hopes of a future reward but whether it is reasonable to
conclude Donald and Linda Lafleur and Daniel Haseloh and Peter
Haseloh would have entered into a substantially similar contract
of employment with RAF had they not been related and - instead -
had been dealing with the corporation at arm's length. It is
obvious from the whole of the evidence that I must intervene in
the decision of the Minister on the basis the Minister used
irrelevant facts, did not have regard to relevant facts and
misapplied the law in attempting to discharge the duty required
by paragraph 5(3)(b) of the Act. When there is an
accumulation of red herrings sufficient to obscure the desired
rainbow trout, then one must empty the net and start sorting all
over again. Having decided to intervene, I must examine the
evidence in order to decide whether or not the named individuals
were in insurable employment with RAF during the relevant period
contained in each letter of decision.
[21] In the
case of David Putter v. M.N.R. - 1999-457(EI) - heard
together with the appeals of Daniel Putter v. M.N.R. -
1999-456(EI) - and Equinox Industries Ltd. v. M.N.R. -
1999-458(EI) - I considered the situation of two brothers working
over an extended period of time in a family business and
concluded they were not employed in insurable employment. At page
16 - paragraph 18 - I wrote the following:
"I do not intend to reiterate the evidence in the within
appeals because I have examined it in the course of the process
leading up to my decision to intervene. It is reasonable to
conclude that after 21 years and 15 years with the
corporation, David and Daniel Putter, respectively, were not
employed under circumstances - including consideration of their
payment of salary (below industry standard), the amount of work
performed, lack of holiday time, the ability to control their
remuneration, the absence of any need to follow dictates of
corporate structure in accordance with majority shareholding by
others and, over the course of many years, putting themselves at
personal risk for company debt, clearly established they would
not have entered into a similar contract of employment with
Equinox if they had been dealing with the corporation at
arm's length. It strikes me it is difficult - on an objective
basis - to assess whether it is reasonable to conclude that the
parties would have entered into a substantially similar contract
of employment unless there is some evidence before the Minister
as to comparable salaries or working conditions within the same -
or related - industry. There is obviously room for using a
yardstick against which a particular employment is to be measured
because the alternative would be to permit the parties themselves
to put forward the proposition that, notwithstanding the
deviation from normal business practices in a similar
marketplace, they still would have entered into the contract of
employment on a purely subjective basis. Certainly, that is how
the process works when the shoe is on the other foot and benefits
have been denied to claimants because their conditions of work
for a related employer do not - when all the facts have been
considered - measure up to the usual or normal conditions that
applied - or could be expected to apply - to non-related
workers under a substantially similar contract of employment.
"
[22] In a
recent decision, Jason Miller et al. v. M.N.R. -
2000-2373(EI) - I considered the situation of a family business
where three sons each held 16% of the outstanding shares of the
employer corporation while the remaining 52% was controlled by a
corporation in which the shares were owned equally by their
mother and father. In that case, at pages 16-17 I stated:
"I point out that in considering this matter, it is not
my function to substitute my opinion for that of the Minister.
Whether or not I would have arrived at the same conclusion in the
first instance is irrelevant. The relevant jurisprudence requires
the threshold for any intervention to be established as a
consequence of finding the Minister acted in bad faith,
capriciously or unlawfully, or based the decision on irrelevant
facts or ignored relevant facts."
[23] The
difference between one instance where a Court will intervene in
the decision of a Minister and another case where there is no
intervention may seem slight, on occasion. Moreover, it may
become apparent in the course of reasons for judgment that the
judge would probably have come to a different conclusion than the
Minister had there been the right - as a matter of law - to
embark on that so-called de novo procedure.
[24] Returning
to the facts in the within appeal, it does not seem reasonable
that the individuals affected by the decision of the Minister
would agree to an ongoing restriction on their salaries - for the
benefit of the corporation - or that they would work between 60
and 85 hours per week without any overtime pay, unless they were
willing to do so within the context of a family enterprise on a
non-arm's length basis. The shop employees - some of whom
earned $16.00 per hour - would be earning nearly $5,000.00 per
month for working that much and they most certainly would not
have been paid for not working. For the most part of the relevant
period, there were severe restrictions imposed on the parties in
their capacity - as workers - to negotiate a reasonable rate of
compensation with the corporation. The terms and conditions of
the work - apart from the remuneration and excessive hours - were
otherwise reasonable except that non-related persons engaged in a
managerial capacity would probably not have their working
conditions inextricably bound up with certain other commitments
required as a consequence of being a shareholder in the
corporation. The employment was full time and had resulted from
the Lafleurs' and the Haselohs' having incorporated a
family business based on an invention - by their uncle - of a
type of aircraft. While there was adherence to a corporate
structure due to the peculiarities of the financing scheme and
subsequent events, the family members carried out the pursuit of
their long-held dream primarily within the context of that
family relationship and eschewed other high-paying employment for
which they were all well qualified and experienced in order to
make the business a success. The work being carried out was
necessary and important and was vital to the operation of the RAF
business. As stated by Donald Lafleur in his evidence, he and the
other family members - for business reasons - earlier had chosen
to follow the advice of the Bond Board and not rock the boat when
Revenue Canada had assessed RAF for premiums on the basis
the intervenors and Daniel Haseloh were engaged in insurable
employment. In the case of The Minister of National Revenue v.
Emily Standing, 147 N.R. 238, F.C.A., Stone J.A. at
pp. 239-240 stated:
"...There is no foundation in the case law for the
proposition that such a relationship may exist merely because the
parties choose to describe it to be so regardless of the
surrounding circumstances when weighed in the light of the
Wiebe Door test." (87 DTC 5025)
[25] Although
the usual context in which the above quotation is placed involves
the characterization of a working relationship between that of an
employee or an independent contractor, the point is applicable to
the within appeal in that parties cannot choose to be included or
not in the category of insurable employment as it is not a
voluntary scheme and inclusion will be determined by the
legislation and relevant jurisprudence. Further, each relevant
period has to be assessed on its own, although preceding and
subsequent events and situations are often relevant in assisting
with the determination of an issue.
[26] The point
is that in examining - overall - the working relationship of the
intervenors and Daniel Haseloh with RAF in the within appeal, it
does not strike me as a situation where it is reasonable to
conclude that a non-related person would have entered into a
substantially similar contract of employment with RAF had they
actually been dealing with each other at arm's length. Once
the restrictions on salary had been removed as a result of being
able to see an end to the litigation, then the remuneration was
increased dramatically on the basis of a family meeting and the
payments were the subject of T4 slips issued to the recipients.
That form of salary catch-up would not normally be expected where
persons were dealing at arm's length. It is apparent their
economic interests were bound up with those of the corporation
much like the situation in Crawford, supra -
wherein Judge Porter at paragraph 93 stated:
"I am of the view that there did not exist between each
of the workers in these appeals and the Appellant Corporation,
the degree of adverse economic interest such that one could say
that there were separate interests. Their economic interests were
clearly linked so closely with those of the Corporation, that the
latter could not be said to be acting with a separate mind. The
same kind of bona fide negotiating that would take place between
those traders, strangers in the marketplace, to which I referred
above, was not present in these arrangements. There was not the
kind of independence of thought or purpose between the
Corporation and the three individuals that one could say that
they were dealing with each other at arm's length.
Accordingly, I hold that none of them were employed in insurable
employment."
[27] As a
consequence of the conclusions drawn as stated in the within
reasons, the appeal is allowed and each decision of the Minister
- dated June 4, 1999 - is varied, to find as follows:
-
Daniel Haseloh was employed by Rotary Air Force Management Inc.
pursuant to a contract of service for the period from January 1,
1997 to June 6, 1998 but he was not engaged in insurable
employment because he and the corporation were not dealing with
each other at arm's length.
-
Peter Haseloh, Donald Lafleur and Linda Lafleur were each
employed by Rotary Air Force Management Inc. pursuant to a
contract of service for the period from January 1, 1997 to
September 10, 1998 but none of them was engaged in insurable
employment because none of them was dealing with the corporation
at arm's length.
[28] The
parties agreed the evidence taken in the within appeal would
apply to appeal - 1999-3786(CPP). There is no doubt on the
evidence that Daniel Haseloh, Peter Haseloh, Donald Lafleur and
Linda Lafleur were all employees of RAF pursuant to a contract of
service. There is no provision in the Canada Pension Plan
comparable to that of paragraph 5(3)(b) of the
Employment Insurance Act and unless persons are excluded
by subsection 6(2) of the Canada Pension Plan then, as
employees, they are included. The named individuals were engaged
in pensionable employment with RAF and the decisions - dated June
4, 1999 - issued by the Minister to that effect are confirmed. As
a result, appeal 1999-3786(CPP) is hereby dismissed.
Signed at Vancouver, British Columbia, this 23rd day of
January 2001.
"D.W. Rowe"
D.J.T.C.C.
COURT FILE
NO.:
1999-3785(EI)
STYLE OF
CAUSE:
Rotary Air Force Management Inc. and
M.N.R. and Peter G. Haseloh,
Linda M. Lafleur, Donald N. Lafleur
PLACE OF
HEARING:
Saskatoon, Saskatchewan
DATE OF
HEARING:
November 22, 2000
REASONS FOR JUDGMENT BY: The
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
January 23, 2001
APPEARANCES:
Agent for the
Appellant:
Donald N. Lafleur
Counsel for the
Respondent:
Suzanne Lalonde
Agent for the Intervenors: Donald N. Lafleur
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
For the Intervenors:
COURT FILE
NO.:
1999-3786(CPP)
STYLE OF
CAUSE:
Rotary Air Force Management Inc. and
M.N.R. and Peter G. Haseloh,
Linda M. Lafleur, Donald N. Lafleur
PLACE OF
HEARING:
Saskatoon, Saskatchewan
DATE OF
HEARING:
November 22, 2000
REASONS FOR JUDGMENT BY: The
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
January 23, 2001
APPEARANCES:
Agent for the
Appellant:
Donald N. Lafleur
Counsel for the
Respondent:
Suzanne Lalonde
Agent for the Intervenors: Donald N. Lafleur
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
For the Intervenors:
1999-3785(EI)
BETWEEN:
ROTARY AIR FORCE MANAGEMENT INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
PETER G. HASELOH, LINDA M. LAFLEUR, DONALD N.
LAFLEUR,
Intervenors.
Appeal heard on common evidence with the appeal
of Rotary Air Force Management Inc. (1999-3786(CPP)) on
November 22, 2000 at
Saskatoon, Saskatchewan, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Agent for the
Appellant:
Donald N. Lafleur
Counsel for the Respondent: Suzanne
Lalonde
Agent for the
Intervenors:
Donald N. Lafleur
JUDGMENT
The
appeal is allowed and the decision of the Minister is varied in
accordance with the attached Reasons for Judgment.
Signed at Vancouver, British Columbia, this 23rd day of
January 2001.
D.J.T.C.C.
Email this Content