Louis C Remesz v. Minister of National Revenue, [1977] CTC 2362, 77 DTC 256

Roland St-Onge (orally: May 19, 1977):—The appeal of Mr Louis C Remesz came before me on May 17, 1977 at the City of Edmonton, Alberta.

The appellant, a lawyer practising in Edmonton, was reassessed by the Minister for an employee income tax deduction for the month of April 1974. The reassessment was issued in the name of Remesz and Mousseau.

In his notice of appeal the appellant admits that both lawyers conducted a law practice from the same office, but he also alleged that each one had his own staff for which he was responsible.

In his reply to the notice of appeal, the respondent alleged the following paragraphs, which were admitted at the hearing by the appellant:

2. Prior to September 12, 1973 the Appellant and Mr J B Feehan had carried on the practice of law under partnership and Messrs Mousseau, Margolis and Wild were employed by the partnership.

3. On September 12, 1973 Mr J B Feehan was appointed as a Judge to District Court of the District of Northern Alberta with the result that the files which Mr Feehan had the conduct of, being transferred to the management and control of Messrs Mousseau, Margolis and Wild.

4. Subsequent to Mr J B Feehan being appointed to the District Court of Alberta, Mousseau along with Remesz carried on the practice of law under the name and style of Remesz & Mousseau.

5. On April 30, 1974 Remesz and Mousseau ceased to carry on the practice of law. . . .

7. On the 24th day of September, 1975 the Respondent issued a Notice of Assessment against both the Appellant and Mousseau for $2,338.20.

9. The Respondent relies, inter alia, upon subsections 227(9) and 227(10) of the Income Tax Act, SC 1970-71-72, c 63 as amended.

The appellant testified that during the month of April 1974 he was not an employer because all of Mr Feehan’s files were assigned to Mr Mousseau who looked after the said files with his own employees.

Upon cross-examination he explained that he had been practising law in partnership with Mr Feehan for some 15 years; that the latter brought Mr Mousseau into the firm on a salary basis of $2,000 a month; that the partnership profit was split on the following basis: 38% for the appellant and 62% for Mr Feehan.

He also stated that his partnership with Mr Feehan was not dissolved until July of 1974, and that Mr Mousseau was never a partner with him, and that the leases, trust account, bank account, letterheads were always in the name of the partnership Feehan and Remesz, until July of 1974.

Counsel for the respondent showed a series of cheques dated from April 10 to 17, 1974 in payment of salaries to Messrs Mousseau, Margolis, Wild and others, and made by the partnership Feehan and Remesz.

According to the appellant’s notice of objection, subsequent to April of 1974 the appellant and Mr Mousseau operated independently with Mr Mousseau forming a partnership with the other lawyers and assuming the benefit of all work in progress. Then, according to an undated letter filed as Exhibit R-2, the appellant wrote to the Department of National Revenue to state that the firm of Remesz & Mousseau ceased business operations as at March 31, 1974. Also, according to an agreement between Feehan and Remesz of the first part, Louis C Remesz of the second part, J Bernard Feehan of the third part, and Mousseau, Margolis and Wild of the fourth part, it seems that the partnership ceased on April 30, 1974.

Finally, the appellant stated that the partnership ceased on April 15, 1974, when he closed the Feehan and Remesz bank account and opened his own account.

It is also in evidence that the appellant still retained Mr Bobowski to prepare the T4 slip which was refused by Mr Wild because of an error in the figures.

Four witnesses were heard on behalf of the respondent: Mr Mousseau, Mr Wild, Mr Margolis and Mr Hazlett, an employee of the Source Deduction Section of the Department of National Revenue.

Mr Mousseau testified that he was approached by Mr Feehan to join the Feehan and Remesz firm as an employee and litigation lawyer at a salary of $2,000 a month; that he never received more than $2,000 a month and that he had signing authority but was never a partner either with the firm of Feehan and Remesz or with Mr Remesz; that even after the appointment of Mr Feehan the firm kept only one set of books and that Mr Remesz signed all the cheques when he was available.

He also said that there was no money to pay the employees on April 22, 1974 because of a large overdraft and that he had to co-sign at the bank in order to pay the employees.

Mr Wild testified that after the appointment of Mr Feehan he remained an employee of Mr Remesz and was paid by him, and that he never considered Mr Mousseau his employer.

Heard as a witness, Mr Margolis corroborated Mr Wild’s testimony and added that he never considered Mr Mousseau his employer and that he had received a raise from Mr Remesz after the appointment of Mr Feehan.

Mr Hazlett testified that after an investigation an amended T4 was prepared for Mr Wild and the name of Mr Mousseau was added arbitrarily, without consulting Mr Mousseau, because the original T4 was made out in both names.

According to the evidence adduced it appears that the appellant does not know when he ceased to be the employer of Mr Mousseau, Mr Wild and Mr Margolis. As a matter of fact, there are three different dates mentioned by the appellant: March 31, April 15 and September 12, 1974 when Mr Feehan was appointed. On the other hand, Mr Mousseau testified that he was not a member of the partnership Feehan and Remesz; that he never received any profits from the said partnership, except a salary for 10 months at $2,000 a month. Also, Messrs Wild and Margolis testified that they were the employees of Mr Remesz and never considered Mr Mousseau as their employer.

Besides this testimony there is an abundance of evidence to show that the appellant was the sole individual in charge of the partnership of Feehan and Remesz during the month of April 1974. The fact that Messrs Wild and Margolis were advised by Mr Mousseau on questions of litigation does in no way whatsoever alter the status of employer of Mr Remesz for the month of April 1974.

Because of the explanations given by Mr Hazlett, the T4 slip must bear only one name as employer, that of Mr Remesz.

For these reasons, the appeal is dismissed.

Appeal dismissed.