A-770-95
BETWEEN:
SURJIT KAUR SIDHU
Applicant
- and -
THE MINISTER OF NATIONAL REVENUE
Respondent
Heard at Vancouver, B.C., on Friday, January 17, 1997.
Delivered from the bench at Vancouver, B.C., on Friday, January 7, 1997.
REASONS FOR JUDGMENT OF THE COURT DESJARDINS J.A.
A-770-95
BETWEEN:
SURJIT KAUR SIDHU
Applicant
- and -
THE MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the bench on Friday, January 17, 1997)
DESJARDINS J.A.
This is an application for judicial review of a decision rendered by the Tax Court of Canada which confirmed a determination by the Minister of National Revenue (the "Minister") that the applicant was not employed in an insurable employment during the time of her employment with Badesha, Brahm, Sagar Farms (the "payor") between May 19, 1993, and October 19, 1993.
The sole issue raised by the applicant is whether the Tax Court judge erred in confirming the Minister's determination that the applicant and the payor were not dealing at arm's length during the relevant period.
The payor is a partnership. The applicant is the mother-in-law of one of the partners. She was hired to work for the partnership, but by a partner who was not her son-in-law. The partnership is composed of four people who are brothers and sister.
The applicant attacks the finding of the Tax Court judge who held that, by virtue of section 7 of the Partnership Act1 of British Columbia, read in conjunction with paragraphs 251(2)(a) and 251(6)(b) of the Income Tax Act,2 the applicant and the partnership were not dealing with each other at arm's length within the meaning of subparagraph 3(2)(c)(i) of the Unemployment Insurance Act.3
Her counsel contends that, as a matter of law, there is no provision in the Income Tax Act which imputes the relatedness that exists between one partner and an outsider to any or all of the other partners of the partnership. The Income Tax Act, he says, deal with individuals, not with partnership. On the other hand, section 7 of the Partnership Act, on which the Tax Court judge relied, deals with the concept of agency and not with that of relatedness. Therefore, relatedness between individuals established under the Income Tax Act, does not reach the partnership.
We see no merit in the argument.
Under the common law and the Partnership Act, a partnership does not constitute a legal entity. The act performed by one member in the course of business binds all partners who, together, make the partnership.
If, as here, the applicant is hired by a partner who is not her son-in-law, her employment contract, nevertheless, binds all the members of the partnership. This includes her status with one of the partners which permeate the whole contract. As a result, the applicant was employed by her son-in-law and was indeed working for her son-in-law.
It follows that the Tax Court judge was correct in concluding that the applicant's employment was an excepted one under the Unemployment Insurance Act.
This application for judicial review will be dismissed.
"Alice Desjardins"
J.A.
A-770-95
BETWEEN:
SURJIT KAUR SIDHU
Applicant
- and -
THE MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT
__________________
1 R.S.B.C. 1979, c. 312, subsection 2(1), sections 5 and 7:
2. (1) Partnership is the relation which subsists between persons carrying on business in common with a view of profit.
5. Persons who have entered into partnership with one another are for the purposes of this Act called collectively a "firm" and the style or name under which their business is carried on is called the "firm name".
7. Every partner is an agent of the firm and his other partners for the purpose of the business of the partnership. The acts of every partner who does any act for carrying on in the usual way business of the kind carried on by the firm of which he is a member bind the firm and his partners, unless the partner so acting has in fact no authority to act for the firm in the particular matter, and the person with whom he is dealing either knows that he has no authority, or does not know or believe him to be a partner.
2 251. (2) ... For the purpose of this Act "related persons", or persons related to each other, are (a) individuals connected by blood relationship, marriage or adoption; ...
251. (6) ... For the purpose of this Act, persons are connected by (b) marriage if one is married to the other or to a person who is so connected by blood relationship to the other;
3 3. (1) Insurable employment is employment that is not included in excepted employment and is... (2) Excepted employment is...(c) ... where the employer and employee are not dealing with each other at arm's length and, for the purposes of this paragraph,
(i) the question of whether persons are not dealing with each other at arm's length shall be determined in accordance with the provisions of the Income Tax Act, and (ii) where the employer is, within the meaning of that Act, related to the employee, they shall be 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;
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