Date: 20031128
Docket: A-47-03
Citation: 2003 FCA 461
CORAM: LINDEN J.A.
SEXTON J.A.
MALONE J.A.
BETWEEN:
QUIGLEY ELECTRIC LTD.
Applicant
and
THE MINISTER OF NATIONAL REVENUE
Respondent
Heard at Winnipeg, Manitoba, on November 26, 2003.
Judgment delivered at Winnipeg, Manitoba, on November 28, 2003.
REASONS FOR JUDGMENT BY: MALONE J.A.
CONCURRED IN BY: LINDEN J.A.
SEXTON J.A.
Date: 20031128
Docket: A-47-03
Citation: 2003 FCA 461
CORAM: LINDEN J.A.
SEXTON J.A.
MALONE J.A.
BETWEEN:
QUIGLEY ELECTRIC LTD.
Applicant
and
THE MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT
MALONE J.A.
[1] This is an application for judicial review of a decision made by Tax Court Judge J.E. Hershfield (the Judge) dated December 19, 2002 and reported as [2002] T.C.J. No. 674. The Judge confirmed the Minister's ruling that Jean Quigley was employed in insurable employment under the deeming provision of subsection 5(3) of the Employment Insurance Act, S.C. 1996, c.23 (the Act); notwithstanding that she was related to the applicant, Quigley Electric Ltd.
[2] Subsections 5(2) and (3) of the Act read as follows:
| (2) Insurable employment does not include
. . .
(i) employment if the employer and employee are not dealing with each other at arm's length.
(3) For the purposes of paragraph (2)(i),
(a) the question of whether persons are not dealing with each other at arm's length shall be determined in accordance with the Income Tax Act; and
(b) 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.
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(2) N'est pas un emploi assurable:
. . .
i) l'emploi dans le cadre duquel l'employeur et l'employé ont entre eux un lien de dépendance.
(3) Pour l'application de l'alinéa (2)i) :
a) la question de savoir si des personnes ont entre elles un lien de dépendance est déterminée conformément à la Loi de l'impôt sur le revenu;
b) l'employeur et l'employé, lorsqu'ils sont des personnes liées au sens de cette loi, sont réputés ne pas avoir de lien de dépendance si le ministre du Revenu national est convaincu qu'il est raisonnable de conclure, compte tenu de toutes les circonstances, notamment la rétribution versée, les modalités d'emploi ainsi que la durée, la nature et l'importance du travail accompli, qu'ils auraient conclu entre eux un contrat de travail à peu près semblable s'ils n'avaient pas eu de lien de dépendance.
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[3] The applicant advances a number of grounds upon which it is argued that the Judge's decision should be set aside. The standard for my review is that established by the Supreme Court of Canada in Housen v. Nikolaisen [2002] S.C.R. 235. Questions of law are to be reviewed on a standard of correctness, while the Judge's findings of fact may only be disturbed if we perceive that a palpable and overriding error has been committed. The standard of palpable and overriding error also applies to questions of mixed law and fact, unless a legal question can be isolated and then answered on a standard of correctness.
[4] I am of the view that there were no factual or legal errors committed by the Tax Court Judge and also that he observed all of the principles of natural justice and procedural fairness in reaching his decision. Several arguments of the applicant do, however, bear specific comment.
[5] The respondent called as a witness Patricia Anderson, the officer who had recommended on the basis of the written material before the Minister, that Mrs. Quigley be deemed to be employed in insurable employment. Following questions from the Judge, Ms. Anderson advanced that opinion that the evidence given by Mrs. Quigley was not relevant to the Minister's earlier decision. The applicant now argues that despite the fact that the Judge indicated that he would ignore the opinion, he did in fact rely on it in his judgment by referring twice to the fact that Ms. Anderson did not consider the new information relevant. It is said that the opinion was never challenged by counsel because the Judge had indicated that it would not be relied upon. Reliance on the opinion is therefore, contended in these circumstances, to be contrary to natural justice and the decision should be set aside.
[6] A review of the transcript indicates that the Judge was not asking for Ms. Anderson's opinion. Rather he was suggesting that the Minister and counsel should discuss whether the new evidence would have changed the determination. The implicit basis to that suggestion was that if the decision would have been different, then the matter should not have been pursued in court. In any event, on my view of the evidence, it is apparent that the Judge did not place any reliance on Ms. Anderson's opinion. The Judge thoroughly analysed the facts and law before reaching an independent decision. Although he refers to Ms. Anderson's opinion, there is no indication that it played any role in his decision. I am accordingly satisfied that no breach of natural justice or procedural fairness has occurred in this case.
[7] A legal error of law is also said to have been committed when the Judge failed to apply the legal test outlined by this Court in Légaré v. Canada (Minister of National Revenue) (1999) 246 N.R. 176 (F.C.A.) and Perusse v. Canada (2000) 261 N.R. 150 (F.C.A.). That test is whether, considering all of the evidence, the Minister's decision was reasonable.
[8] Specifically, it is argued that the Judge circumscribed the scope of his review function when, after finding that the Minister clearly did not have all the facts before him he stated:
. . . That is not to say that on reviewing new information, I am then precluded from finding that the Minister did not have, after all, sufficient information to exercise his mandate as he did without my interference. This would simply mean that I have found that the new factors not considered were not relevant.
[9] According to the applicant, the proper question was not whether the Minister had sufficient information to make a decision, notwithstanding the evidence of Mrs. Quigley; rather the question was whether, considering all the evidence, the Minister's decision still seemed reasonable. Instead, the applicant asserts that the Judge carried out an irrelevant examination of whether Mrs. Quigley was a "principal" or a "subordinate" of Quigley Electric Ltd.
[10] In my analysis, the Judge correctly followed the approach advanced by this Court in Canada (A.G.) v. Jencan Ltd. [1998] 1 F.C. 187 (C.A.), namely, that the Minister's exercise of discretion under paragraph 5(3)(b) can only be interfered with if she acted in bad faith, failed to take into account all relevant circumstances or took into account an irrelevant factor.
[11] Bad faith on the part of the Minister is not an issue in this case.
[12] While the reasons for decision are lengthy, it is clear that the Judge was analysing the oral evidence of Jean Quigley in conjunction with paragraph 5(3)(b); namely, whether having regard to all of 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. After reviewing other authorities in the Tax Court, the Judge rejected any suggestion that Mrs. Quigley could be termed a principal of Quigley Electric Ltd. and in turn dismissed her examples of special treatment within the company as arising from her personal relationship with the controlling shareholder and not to her employment contract.
[13] He concluded by indicating that the factors considered by the Minister, as set out earlier in his reasons, were the relevant factors for his consideration. That, in the context of this case, can only mean that the Minister's decision was reasonable considering all of the evidence. I can discern no legal error in this analysis or conclusion.
[14] I would dismiss the application for judicial review with costs.
"B. Malone"
J.A.
"I agree"
A.M. Linden J.A.
"I agree"
J. Edgar Sexton J.A.
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-47-03
STYLE OF CAUSE: Quigley Electric Ltd., v. The Minister of National Revenue
PLACE OF HEARING: Winnipeg, Manitoba
DATE OF HEARING: November 26, 2003
REASONS FOR JUDGMENT OF THE COURT: LINDEN J.A., SEXTON J.A., MALONE J.A.
DELIVERED FROM THE BENCH BY: MALONE J.A.
APPEARANCES:
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Deryk W. Coward
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FOR THE APPLICANT
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Brooke Sittler
Department of Justice
211 Bank of Montreal Bldg
Edmonton, AB T5J 3Y4
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FOR THE RESPONDENT
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SOLICITORS OF RECORD:
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D'Arcy & Deacon
Barristers & Solicitors
1200 - 330 St. Mary Avenue
Winnipeg, MB R3C 4E1
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FOR THE APPLICANT
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Morris Rosenberg
Deputy Attorney General of Canada
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FOR THE RESPONDENT
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