A-177-96
CORAM: HUGESSEN J.A.
DÉCARY
J.A.
CHEVALIER
D.J.
BETWEEN: EDDY SORENSEN
Applicant
- AND -
THE
ATTORNEY GENERAL OF CANADA
Respondent
REASONS
FOR JUDGMENT OF THE COURT
(Delivered
from the bench at Québec
on April 29, 1997)
CHEVALIER D.J.
This is an application for judicial review of a
decision by the Tax Court of Canada dismissing the applicant’s appeal of a
decision of the Minister of National Revenue declaring that he did not hold
insurable employment within the meaning of the Unemployment Insurance Act,
R.S.C. 1988, c. U-I.
The Minister concluded
that no employer-employee relationship existed between the applicant and the
payer, that the wage report and record of employment from the payer were merely
a pretence in order to make the applicant eligible for unemployment insurance
benefits, and that it was not reasonable to conclude that an employment
contract similar to theirs would have existed if they had been dealing with
each other at arm’s length.
The Minister’s decision
covers three periods: from July 30 to November 2, 1990, from May 20
to July 19, 1991, and from October 14 to November 8, 1991.
As regards the first
period, it is admitted and established that paragraph 3(2)(c) of
the Act was not yet in force at the time. The conclusions in the judgment with
respect to that period should therefore be rejected.
As for the other two
periods, the Deputy Judge of the Tax Court of Canada held, first of all, that
the payer was operating a business and that there existed a genuine
relationship of subordination and a real contract of employment between the
payer and the applicant.
Turning next to the
interpretation of subparagraph 3(2)(c)(ii) of the Act and to its
application, the Deputy Judge simply stated that “having regard to all the
circumstances, including the endorsement of the payer’s $50,000 debt by the
appellant, the payer and the appellant would never have entered into a similar
contract of employment if they had been dealing with each other at arm’s length”
and that, accordingly, “the decision by the Minister . . . resulted
from a proper exercise of his discretionary authority”.
With respect, we are of
the view that this judgment is incorrect for the following two reasons:
First, the record contains
uncontradicted, corroborated and at first blush conclusive evidence that the
remuneration paid to the applicant, the terms and conditions of employment and
the importance of the work performed by him are circumstances from which it may
reasonably be inferred that parties dealing with each other at arm’s length
would have entered into a substantially similar contract of employment within
the meaning of subparagraph 3(2)(c)(ii).
As regards the reference
in the judgment to the endorsement of the payer’s $50,000 debt by the applicant,
not only did the Minister fail to mention this in stating the facts on which he
had based his decision, but the only evidence in the record on this point
demonstrates precisely the opposite. It was in fact established that, when a
loan was taken out to pay for, among other things, certain renovations to a building
belonging to the payer, no personal undertaking was given to guarantee its
repayment, and that the only security given in the circumstances was an
airplane belonging to the payer.
It is true that one of the
facts raised by the Minister in support of his determination was that on
another occasion, and with two other people, the applicant had guaranteed a
$15,000 line of credit. The Deputy Judge of the Tax Court made no reference to
this, and it is impossible for us to say what effect such an act might have had
on his decision.
For these reasons, the
application will be allowed, the decision of the Tax Court of Canada will be
set aside, and the matter will be referred back to that Court for
redetermination on the basis that the applicant held insurable employment in
1990.
François Chevalier
D.J.
Certified true translation
Erich Klein
Court No.
A-177-96
BETWEEN:
EDDY SORENSEN
Applicant
- AND -
THE ATTORNEY GENERAL OF CANADA
Respondent
REASONS FOR JUDGMENT OF THE COURT
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF
RECORD
COURT FILE NO.: A-177-96
STYLE OF CAUSE: EDDY SORENSEN
Applicant
-
AND -
THE ATTORNEY GENERAL OF CANADA
Respondent
PLACE OF HEARING: Québec
REASONS FOR JUDGMENT OF THE COURT BY:
Hugessen J.A.
Décary
J.A.
Chevalier
D.J.
DATED:
April 29, 1997
APPEARANCES:
Jérôme Carrier
For the applicant
Paul Plourde For
the respondent
SOLICITORS OF RECORD:
ROCHON, BELZILE, CARRIER,
AUGER & ASS.
1085 Avenue de la Tour
Québec, Quebec
G1R 2W8 For
the applicant
DEPARTMENT OF JUSTICE
222 Queen Street
Suite 1118
Ottawa, Ontario
K1A 0H8 For
the respondent
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