Docket: IMM-4936-10
Citation: 2011 FC 995
Ottawa, Ontario, August 12, 2011
PRESENT: The Honourable Justice Johanne Gauthier
BETWEEN:
|
RAJENDRA GOVIND DURVE
|
|
|
Applicant
|
and
|
|
THE MINISTER OF CITIZENSHIP AND
IMMIGRATION
|
|
|
Respondent
|
|
|
|
REASONS FOR ORDER AND ORDER
[1]
Mr.
Durve seeks judicial review of the decision of the Appeal Division of the Immigration
and Refugee Board of Canada [IAD] upholding the decision of a visa officer that
refused to renew his permanent resident status because he had failed to comply
with the residency obligations set out in section 28 of the Immigration and
Refugee Protection Act, SC 2001, c 27 [IRPA].
[2]
The
applicant argues that the IAD failed to consider all the evidence on file,
particularly his testimony, and that it misconstrued the facts. Moreover, it
appears to have a preconceived (and allegedly misconceived) idea of how a small
company such as his should operate. As a result, its essentially one-page reasons for
rejecting his appeal cannot be reasonable.
[3]
These
issues of facts or mixed facts and law are reviewable on the standard of
reasonableness (Dunsmuir v New Brunswick, 2008 SCC 9 at para 47;
Ambat v Canada (MCI), 2011 FC 292 at para 15
[Ambat]).
[4]
For
reasons that follow, the Court agrees with the applicant that this decision
should be set aside.
[5]
In
the decision, the IAD recognizes that Mr. Durve, who came to Canada under the
Federal Skilled Worker program on May 25, 2002, has spent only 319 days in Canada in the five
years immediately preceding his application for renewal in 2008. It notes that
his absences were largely as a result of the operation of his Canadian
business. This last statement is based on the applicant’s testimony whose
credibility is not challenged in the decision.
[6]
After
citing section 28 of IRPA and subsections 61(1) and (2) of the Immigration
and Refugee Protection Regulations, SOR/2002-227 [the Regulations],
the IAD mentions that the Canadian corporation was incorporated in 2004, that
the appellant’s job is as a taxation and financial advisor and that his
business is advising companies and individuals overseas of the benefits of
conducting business in Canada and assisting them to negotiate the financial
aspect of carrying-on business here.
It notes that the appellant provided a letter from two such businesses but that
those businesses were clients of the appellant prior to his immigration to Canada. Also, from
the bank statements of the company from 2005 to 2009, one can see that monies
were deposited consistently throughout the period. Although Notices of
Assessment for 2005 and 2006 were filed, the IAD appears concerned by the
absence of tax returns issued after 2006 and of financial statements or
documentation demonstrating the business operations such as contracts between
the numbered companies and its clients because this allegedly makes it
difficult to know the source of the monies deposited in the business account.
[7]
It
then goes on to say that this is particularly problematic because there is
little other indicia of the company being operated within Canada as “the
business premises of the company is a friend’s address; there are no employees
and the person who fields the telephone calls is not doing so pursuant to any
contractual agreement”. Finally, the amounts deposited in the company account
are said to be relatively small considering the nature of the business. It
concludes that the appellant’s company has been set up as a business to serve
primarily to allow the appellant to comply with his residency obligations.
[8]
The
most relevant provisions, for the purposes of this decision, are subparagraph
28(2)(a)(iii) of IRPA and subsections 61(1) and (2) of the Regulations
which read as follows:
Immigration
and Refugee Protection Act
28. (1) A permanent resident must comply
with a residency obligation with respect to every five-year period.
Application
(2)
The following provisions govern the residency obligation under subsection
(1):
(a) a permanent resident
complies with the residency obligation with respect to a five-year period if,
on each of a total of at least 730 days in that five-year period, they are
[…]
(iii) outside Canada employed on a full-time
basis by a
Canadian business or in the federal public administration or the public
service of a province,
[My
emphasis]
[…]
Immigration
and Refugee Protection Regulations
Residency
Obligation
Canadian
business
61. (1) Subject to subsection (2), for
the purposes of subparagraphs 28(2)(a)(iii) and (iv) of the Act and of
this section, a Canadian business is
(a) a corporation that is
incorporated under the laws of Canada
or of a province and that has an ongoing operation in Canada;
[My emphasis]
(b) an enterprise, other than a
corporation described in paragraph (a), that has an ongoing operation
in Canada and
(i) that is capable of generating
revenue and is carried on in anticipation of profit, and
(ii) in which a majority of voting or
ownership interests is held by Canadian citizens, permanent residents, or
Canadian businesses as defined in this subsection; or
(c) an organization or
enterprise created under the laws of Canada or a province.
Exclusion
(2) For greater certainty, a Canadian
business does not include a business that serves primarily to allow a
permanent resident to comply with their residency obligation while
residing outside Canada.
[My emphasis]
|
Loi
sur l’immigration et la protection des réfugiés
28. (1) L’obligation de résidence est
applicable à chaque période quinquennale.
Application
(2)
Les dispositions suivantes régissent l’obligation de résidence :
a) le résident permanent se conforme à
l’obligation dès lors que, pour au moins 730 jours pendant une période
quinquennale, selon le cas :
[…]
(iii) il travaille, hors du Canada,
à temps plein pour une entreprise canadienne ou pour l’administration
publique fédérale ou provinciale,
[Mon
souligné]
[…]
Règlement
sur l’immigration et la protection des réfugiés
Obligation
de résidence
Entreprise
canadienne
61. (1) Sous réserve du paragraphe (2),
pour l’application des sous-alinéas 28(2)a)(iii) et (iv) de la Loi et
du présent article, constitue une entreprise canadienne :
a) toute société constituée sous le
régime du droit fédéral ou provincial et exploitée de façon continue au
Canada;
[Mon souligné]
b) toute entreprise non visée à l’alinéa
a) qui est exploitée de façon continue au Canada et qui satisfait aux
exigences suivantes :
(i) elle est exploitée dans un but
lucratif et elle est susceptible de produire des recettes,
(ii) la majorité de ses actions avec
droit de vote ou titres de participation sont détenus par des citoyens
canadiens, des résidents permanents ou des entreprises canadiennes au sens du
présent paragraphe;
c) toute organisation ou entreprise
créée sous le régime du droit fédéral ou provincial.
Exclusion
(2)
Il est entendu que l’entreprise dont le but principal est de permettre
à un résident permanent de se conformer à l’obligation de résidence tout en
résidant à l’extérieur du Canada ne constitue pas une entreprise
canadienne.
[Mon
souligné]
|
[9]
There
is little guidance as to how section 61 of the Regulations is actually
applied to small businesses in the Operation Manual ENF-23, however, it is
noted that those provisions are meant to apply to large as well as small
companies. This obviously means that the indicia one is looking for should be
those one would normally expect an active company of the size under review
would have.
[10]
The
Court asked the parties to provide more information or case law as to what
criteria are generally used in determining whether a Canadian corporation has
an “ongoing operation”. They pointed to some cases, such as Ambat and Faeli
v Canada (MCI), [2005] IADD
No 267 [Faeli]. They also referred to case law under the Income Tax
Act, RSC, 1985, c 1 (5th Supp) [the Income Tax Act] such as Timmins
v Canada, [1999] 2 FC 563 (CA) at paragraphs 9, 10, and 13 in particular, as
the Court had indicated that this may shed some light on the matter. However, considering
the recent decision of Justice Donald Rennie in Martinez-Caro v Canada (MCI),
2011 FC 640 and upon reviewing the case law provided under the Income Tax
Act the Court finds that, in fact, this case law is not particularly helpful.
The Court agrees with the parties that this is essentially a question of fact
to be determined by the nature and the degree of activity of the companies in
each individual case and no particular indicia is determinative.
[11]
Certainly,
the facts in the present matter are quite different from those reviewed by my
colleagues in Ambat and Faeli. In Ambat, the applicant
worked for a company, Conares Metal Supply Limited in Dubai. That
company wished to expand into Canada and the applicant helped them do that by
incorporating a sister company in Canada, Conares Canada Ltd. In 2006, he
became a consultant for Conares Canada Ltd. but continued to work in the United Arab
Emirates
[UAE] and to be paid by Conares Metal Supply Limited. In that case it was evident
that the incorporation in Canada was really on behalf of the applicant’s
employer in UAE. Also, as noted by Justice David Near, the fact that Conares
Canada Ltd.’s incorporation coincided with the applicant landing in Canada strongly
indicated, in those circumstances, that it was a business of convenience
serving primarily to allow the applicant to meet his residency obligations
while living outside of Canada.
[12]
The
Court understands that here, all the consulting fees were paid to the Canadian
corporation; there is no evidence of any salary being paid by any other company
to the applicant. Moreover, the incorporation of the Canadian company did not
coincide with the applicant’s entry in Canada. In his
testimony, he indicated that he had failed to find suitable work in his
particular field of expertise in Canada and thus decided to “go
on his own” (Certified Tribunal Record [CTR] page 382).
[13]
In
Faeli, the applicant was an Iranian businessman who incorporated a
company in Canada to export
goods obtained internationally from Canada to Iran through the
UAE. In rejecting his appeal, the IAD found that the applicant’s company had not
been incorporated primarily for the purpose of allowing the applicant to
meet his residency obligations. However, the IAD found that the applicant’s
business had not been ongoing during the required time period. To come to that
conclusion it noted that the appellant was operating his business in Iran with travel
to Dubai and China, not to Canada. Relying on
his testimony that he would like to set up a retail business for baby and
children’s clothing, a different business entirely from the appellant’s
allegedly ongoing Canadian operation, it held that the current Canadian company
was not ongoing.
[14]
Paragraph
29 of that decision is of interest:
29 The panel acknowledges that an
entrepreneurial lifestyle can be very difficult, especially one that is
operated among various countries. Nevertheless, the term "ongoing"
must have some meaning. It is relatively easy in Ontario, or under the federal
jurisdiction in Canada, to incorporate a business. It is really
only a matter of some minor paperwork and a fee. Therefore, for a business to
be "...an ongoing operation in Canada", there must be more to it. There
was more to it in the appellant's situation for a time. But once he returned to
Iran in 2001, the business incorporated in Canada ceased to be ongoing. The appellant returned to Iran to try
to salvage money and resources and deals there, as well as to try to generate
new ones in the hope of eventually returning to Canada.
He did not accomplish this in a timely framework to avoid violating the
residency obligation.
[15]
This
passage underlines the importance of examining the nature of an applicant’s
activities while outside of Canada in relation to the business of his or her
Canadian company. It also makes it clear that the application of subsections 61(1)
and 61(2) of the Regulations involves two distinct concepts. A company
that does not have an ongoing operation is not necessarily a company
incorporated primarily for the purpose of allowing an applicant to meet its
residency obligations.
[16]
That
said, in the present instance, the IAD does not refer at all to the Mr. Durve’s
evidence indicating that he had Canadian and American clients who wanted to do
business in India and that he does accounting work for Skyport Financial
Corporation Inc., a Canadian company that wanted to do business with a Canadian
corporation even if the work was to be carried out in India (presumably at
Indian prices) (CTR pages 383-385, 394, 402-403, 411-412, 415). Also, the Court
notes that, apart from the applicant’s testimony in that respect, written
evidence was produced to the visa officer who initially refused to renew the applicant’s
visa and is described in some detail in the Computer Assisted Immigration
Processing System [CAIPS] notes before the IAD.
[17]
It
is also not clear why the IAD expressly refers to the fact that the authors of
the two customer letters filed before it were clients of the applicant before
he immigrated to Canada. Was this meant to signal that the IAD did not
believe the applicant’s evidence and his counsel’s argument that he ceased
doing work with his former clients who had no interest in doing business in
Canada and that the services he now renders to the Indian companies that he
kept as clients (those with intent to do business in Canada) were different
from those he rendered when in India? Or, does it mean that it found it suspicious
for an entrepreneur to market his new services to people he already knew and
with whom he had already worked in the past, albeit in a different capacity and
thus an indication that the exclusion of subsection 61(2) applied?
[18]
In
the first case, the decision would be deficient as there is no explanation as
to why the credibility of the applicant is put in doubt while in the second
alternative, without further explanation, the Court simply cannot understand
the reasoning of the decision maker.
[19]
With
respect to the IAD’s statement that it is difficult to know the source of the
monies deposited in the company’s bank account in the absence of financial
statements, written contracts between the numbered company and its clients, or
tax returns for 2007 and 2008, again the IAD does not deal at all with the
applicant’s testimony in that respect, including the fact that during his
testimony he clearly stated that he actually had these documents with him at
the hearing and that some invoices and contracts with an American and a
Canadian company had been provided to the visa officer as reflected in the
CAIPS notes.
[20]
This
is again troubling; especially when one considers that the reasons given in
paragraph 11 of the decision do not accord with the evidence before the IAD. In
effect, there is simply no evidence that the business premises of the Canadian
corporation is a “friend’s” address. Mr. Durve testified that the company’s
address at the time of its incorporation was the address where he lived. He was
renting a room from Mr. Kapoor (also written “Kapur” in some documentation),
the owner of KNS Marketing and Consulting Services, the company he initially hired
and paid to help him with his settlement in Canada. The
company also had an office at 2354 Derry Road. It appears from the
CAIPS notes before the IAD that the two-year rental agreement dated August 1,
2007 for that space was provided to the visa officer (CTR page 31).
[21]
Moreover,
although the small company
had no employees in Canada on its payroll, it certainly had a verbal
agreement
with Mr. Kapoor to whom it paid a retainer every year to provide various
services such as collecting mail, fielding telephone calls, dealing with the
bank, etc. These fees were paid by company cheques.
[22]
Finally,
the Court does not understand the IAD’s comments that the revenues of the
company are relatively small when one considers the nature of its business
activities. This is especially so given that the applicant explained how the
implementation of most of the projects he had been working on with Indian
clients had been delayed because of the economic situation. That said, it is
also far from clear whether the IAD concluded that the applicant’s company was
set up as a business that served primarily to allow him to comply with his
residency obligations because it is not an ongoing operation or whether it
actually considered these two concepts separately. If the latter, there is no
explanation as to why it concluded that the exclusion applied. Also,
considering that the applicant had sold his properties in India, including
the condo where he lived in Bombay, it would have been helpful to mention where
he resided outside of Canada (see last words of subsection 61(2) of the
Regulations).
[23]
In
the circumstances, the Court finds that the presumption that the decision maker
has considered all the evidence has been rebutted. Also, the Court concludes
that the decision does not meet the requirements of justification and
transparency applicable under the standard of reasonableness.
[24]
The
decision should thus be set aside and the matter reconsidered by a new panel
after the applicant has had an opportunity to file again any and all relevant
documentation, it being clear that this will likely be his last opportunity to
do so.
[25]
Nothing
in my decision should be construed as implicitly accepting that Mr. Durve’s
company falls within the parameters of subsection 61(1) of the Regulations
and that it is not excluded under subsection 61(2) of the Regulations or
even that the applicant would meet the requirement of subparagraph 28(2)(a)(iii)
of IRPA. The Court simply finds that this matter has not been properly
assessed on the basis of all the facts and the evidence before the decision
maker and that the said decision maker has not sufficiently explained its
reasoning to enable the Court to properly assess the validity of its
conclusion. In that respect, I note that it would be helpful if the IAD could
be more precise as to the indicia it will look at when considering the
application of the above-mentioned provisions to businesses started by new
permanent residents on a very small scale and which involve developing
clientele abroad. For example, if a one-man operation is not acceptable, it
should be clearly spelled out.
[26]
The
parties did not propose any question for certification and the Court is
satisfied that this case turns on its own facts.
ORDER
THIS COURT
ORDERS that:
1.
The
application is granted;
2.
The
matter shall be reconsidered by a different panel of the IAD.
“Johanne
Gauthier”