Comité Paritaire De L’industrie De (’automobile De Montreal Et Du District v. Minister of National Revenue, [1980] CTC 2983, 80 DTC 1857

Roland St-Onge [TRANSLATION]:—The appeal by the Comité paritaire de l’industrie de l’automobile de Montreal et du district came before me on November 7, 1979 in the city of Montreal, Quebec, and the issue is whether the appellant, which is not an employer, was required under the Income Tax Act to withhold and remit to the Receiver General for Canada the taxable portion of the salaries of the employees of Boulevard Dodge Chrysler Limitée for the 1977 taxation year.

At the hearing, the lawyers agreed on the following facts.

Notice of appeal

4. The appellant is a quasi-public corporation established under the Collective Agreement Decrees Act, RSQ 1964, c 143 as amended;

5. Pursuant to the powers conferred on it by this Act, the appellant claimed and collected from Boulevard Dodge Chrysler Limitée the salaries and vacation pay of the employees of the said company who were entitled thereto under Decree 184 as amended respecting garage employees;

Reply to the notice of appeal

7.(a) During 1977, Boulevard Dodge Chrysler Ltée was in serious financial difficulty and its assets were held by the trustee Gérard Blais for liquidation;

(b) The company’s employees, who had not received their salary for the last two weeks nor their vacation pay, complained to the Comité paritaire de l’industrie de l’automobile in an attempt to recover these amounts;

(c) Following these requests, the Comité paritaire de l’industrie de l’automobile held an inquiry, prepared an assessment and submitted it to the trustee Gérard Blais;

(d) After receiving the necessary amounts, the trustee Gérard Blais issued a cheque on June 23, 1977 in the amount of $63,646.42 payable to the Comite paritaire de l’industrie de l’automobile;

(e) This amount of $63,646.42 represented the employees’ total salaries in the amount of $53,039.53 plus a statutory allowance of $10,606.89.

They then asked the Board for permission to plead in writing, which was granted. The lawyer for the appellant pleaded the following:

(1) that subsection 153(1) must be restrictively interpreted: he referred the Board to Maxwell on The Interpretation of Statutes at p 259 and to volume 2, 1953, pp 17, 19, 28, 29 and 32. He also referred to E A Driedger, Canadian Legal Manual Series, The Construction of Statutes, volume 3, pp 6 and 30;

(2) he then interpreted the Act and the Regulations as if the legislator wanted paragraph 153(1 )(a) to cover the actual employer and any person who pays the employee the remuneration owing to him on behalf of the actual employer;

(3) he argued that paragraph 153(1)(a) and the Regulations exclude ipso facto the employee receiving the remuneration as well as any person representing the employee with respect to the receipt of this remuneration;

(4) paragraph 153(1 )(a) mentions every person paying remuneration: pursuant to subsection 100(1) of the Regulations, the employer pays and the employee receives;

(5) in the context of the statute, it is clear that the appellant is not the actual employer of the employees concerned and it does not make any payment to the employees because, according to paragraph 20(a) of the Collective Agreement Decrees Act, it represents the person of the employee and therefore is the employee, ie the one receiving the remuneration;

(6) the obligation under the Act to make payments and withhold deductions was that of:

(a) Boulevard Dodge Chrysler Limitée;

(b) The trustee Gerard Blais.

He concluded by stating that the Comité paritaire de l’industrie de l’automobile de Montréal et du district (hereinafter referred to as the “parity committee’’) is not the employer of the employees nor the representative of the employer; that the employees have not performed any duties and functions for the parity committee; and that section 153 and the Regulations envisage a close connection between the person paying the remuneration and the person for whom the employee performs his duties and functions.

The respondent’s lawyer admitted that the appellant is not the actual employer of the employees in question, but he submitted that the expression “every person paying salary or wages” can be applied to persons other than the actual employer or a person connected with him. (See: In re Bankruptcy of G & G Equipment Co Ltd, 74 DTC 6407 at 6408, per Mr Justice Berger of the British Columbia Supreme Court.)

The respondent’s lawyer emphasized that the parity committee, an agency whose existence is provided for in the Collective Agreement Decrees Act, RSQ 1964C, is a person within the meaning of subsection 248(1) and paragraph 153(1 )(a) of the Income Tax Act, and that it alone has In fact paid the salaries to the employees of Boulevard Dodge Chrysler Limitée. This company has not paid anything to its employees, nor has the trustee Gérard Blais, who has paid the sums to the appellant, the parity committee.

He also submitted that section 20 of the Collective Agreement Decrees Act does not establish any legal subrogation in favour of the Parity Commit- L’Automobile de Montréal et du District v MNR (TRB)

tee, which accordingly cannot be considered as the employee; and that there is no mandate under the civil law because, under the Collective Agreement Decrees Act, the parity committee may exercise the remedies arising from the decree despite the express opposition of the unpaid worker.

Then, before the appellant’s lawyer replied to the respondent’s arguments, the respondent sent the Board two recent decisions with his comments and certain extracts reading as follows:

First, the decision of the Supreme Court of Canada in Dauphin Plains Credit Union Ltd and Xyloid Industries v The Queen, rendered on March 18, 1980, now reported in 80 DTC 6123: Mr Justice Pigeon, writing for the majority, expressed the opinion in an obiter dictum that the expression “Every person paying salary or wages .. .’’in subsection 153(1) of the Income Tax Act is broad enough to cover a receiver, a person who is not, strictly speaking, connected with the actual employer:

The trial judge held that the receiver in this case was not a person within the meaning of subsection 153(1) of the Income Tax Act. For this conclusion he relied on the decision of the Ontario Court of Appeal in Royal Trust Co v Montex Apparel Industries Ltd (1972, 3 OR 132). But, in that case the question was whether the receiver came within the provisions of subsection 50(9) of the Excise Tax Act reading:

When the Minister has knowledge that any person has received from a licensee any assignment of any book debt . . .

Here the question is whether the receiver comes within the words “Every person paying salary or wages ..and I fail to see any reason for holding that the receiver did not come within the terms of this provision. There is no need to consider the definition of “person” in the Act. In any case this definition is not a restrictive but an extensive definition due to the word “includes”, (p 6127 of the DTC edition; the emphasis is ours)

Mr Justice Estey, dissenting, for reasons concurred in by Mr Justice Chouinard, was also of the same opinion, although it was only an obiter dictum, as in the case of Mr Justice Pigeon; in fact, he wrote in his reasons:

It has been found in other courts (vide Aylesworth, JA in Royal Trust v Montex (1972) 3 OR 132) that “person” as defined in paragraph 2(1)(c) of the Excise Tax Act does not include a Receiver. The definition in the present Income Tax Act, which is about the same as that in the Excise Tax Act, reads as follows:

“a person” or any word or expression descriptive of a person, includes any body corporate and politic, and the heirs, executors, administrators, or other legal representatives of such person according to the law of that part of Canada to which the context extends.

No explanation is found in the judgment for this conclusion, but the trial judge in these proceedings applied the case and reached the same conclusion. I do not find it necessary to determine whether “person” includes a Receiver, but if such a conclusion were necessary, I would be inclined to believe that applying the definition in s 248 to the operative words of subsection 153(1), in term “person” does include a Receiver in the circumstances here present, (p 6133 of the DTC edition).

We believe that this tends to dispose of the appellant’s argument to the effect that subsection 153(1) of the Act covers only the actual employer or a person connected with him.

On the other hand, we would like to direct the Board’s attention to the fact that Mr Justice Addy, sitting as an Umpire under the Unemployment Insurance Act, 1971, rendered judgment in a case involving the same parties who are now before the Board. The issue before the Umpire was whether the appellant, the parity committee, had to make deductions at source for unemployment insurance out of the salaries of the employees of Boulevard Dodge Chrysler Ltée. Mr Justice Addy held that the parity committee should have made these deductions. Although the relevant provisions are different from those in the Income Tax Act, we believe it is useful to forward a copy of the decision to the Board.

Conclusion

There is no basis in fact or in law to find that the parity committee was subrogated in the rights of the employees or that it was their mandatary; but it is an exaggeration to say that the parity committee is an employee.

Taking the facts as they are, the parity committee is the artificial person (248) who paid the salary to the employees. As I have already stated, it is unnecessary for there to be an employer-employee relationship between the person paying and the person receiving, because paragraph 153(1)(a) mentions:

(1) Every person paying

(a) salary or wages or other remuneration to an officer or employee

and not “to his officer or employee”.

Accordingly, this distinction the appellant is not the actual employer is useless and unnecessary. I have already reached the same decision in the case of J M Fowlis (Mackenzie Air Ltd) Marwick Ltd v MNR, [1979] CTC 2433; 79 DTC 369, and I do not see anything in the present case to make me change my opinion.

On the contrary, the recent decisions to which the respondent’s lawyer referred the Board in his letter dated May 13, 1980 indicate to me that I must reach the same decision.

Accordingly, the appeal is dismissed.

Appeal dismissed.