C.A. Matheson Enterprises Ltd. v. M.N.R., docket 96-1338-UI

Date: 19981030

Dockets: 96-1338-UI; 96-1341-UI

BETWEEN:

C.A. MATHESON ENTERPRISES LTD.

CHERYL PHILLIPS,

Appellants,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

CHERYL PHILLIPS

C.A. MATHESON ENTERPRISES,

Intervenors.

___________________________________________________________________

Counsel for the Appellant: Eric Atkinson

Counsel for the Respondent: Dominique Gallant

For the Intervenor (Cheryl Phillips): The Intervenor herself

Counsel for the Intervenor (C.A. Matheson Enterprises Ltd.): Eric Atkinson

___________________________________________________________________

Reasons for Judgment

(delivered orally from the Bench on June 29, 1998 at New Glasgow, Nova Scotia)

Margeson, J.T.C.C.

[1] There are two matters before the Court at this time for decision, that of C.A. Matheson Enterprises Ltd. v. Minister of National Revenue, Cheryl Phillips, Intervenor (96-1338(UI)), and the matter of Cheryl Phillips v. Minister of National Revenue, C.A. Matheson Enterprises, Intervenor, (96-1341(UI)).

[2] It was agreed at the outset that both cases would be heard on common evidence and indeed the employer and the employee in both cases are exactly the same. In one case the worker is the Appellant and the employer is the Intervenor, and in the other case the employer is the Appellant and the worker is the Intervenor.

[3] The sole issue for the Court's decision is whether or not during the periods January 12, 1994 to February 11, 1995 and from March 12, 1995 to November 18, 1995, the worker was engaged in insurable employment while allegedly employed by the employer C.A. Matheson Enterprises Ltd.

[4] The parties further agreed at the outset that the only issue before the Court was that presented by subparagraph 3(2)(c)(ii) of the Unemployment Insurance Act (the "Act"), that is, the so-called “non-arm's length situation,” the Minister's position being that this was excepted employment under the Act because the parties were not dealing with each other at arm's length, they being related under the Income Tax Act and that the contract that existed was not a one which would have been entered into with parties who were unrelated.

[5] There was no argument at all under paragraph 3(1)(a) that there was not a contract of service.

[6] Cheryl Phillips was the Appellant in this case and the business was that of service station repairs. C.A. Matheson Enterprises Ltd. was a body corporate in which the chief shareholder and chief operator was a person by the name of Charles Matheson. It was obviously a one-man business in the sense that he had complete control over all of the shares in the company and he also had complete control of the business.

[7] There was no indication whatsoever that the Appellant had any share whatsoever in the ownership, management or control of this company or any of the shares of the company and she received nothing by way of remuneration from the company other than the remuneration she received by way of salary.

[8] There is clear evidence that in spite of the fact that the Appellant worker was a daughter of the chief shareholder of the company, there had been some lack of immediate contact and interaction between the parties for some period of time. The Appellant had been self-sufficient for a number of years, having gone out of town to take a dental assistant's course for a year and then coming back and working at that in the Pictou County area. She described herself as being financially independent from her father. She never received financial assistance from her mother or father after she came back to this area and she never lived with either one of them. She has been married since 1986. The relationship, as she described it, between her father and herself was more professional than it was personal. In spite of the fact that they get together over the Christmas season, they do not go back and forth to each others residences frequently.

[9] The evidence of Mr. Matheson later on made it clear that the relationship that existed since her return was a closer relationship than before she started working there but, nonetheless, there was nothing to contradict her evidence that their personal interaction took place basically at Christmas time.

[10] A number of documents were introduced by consent, the C.V. of the Appellant herself, which does show that she had taken a number of courses. She was quite highly educated, quite highly trained in any event and certainly qualified for a number of different jobs, but certainly she appeared to be well qualified for the job which she took on which gives rise to this present Appeal. She said that she started with the employer in 1991. She has been working full-time now since 1996. She has claimed Unemployment Insurance before the present claims arose. She never made any claim for Unemployment Insurance while she was working.

[11] She said that she worked “blocks of time”. This gave rise to a kind of adverse perception, on behalf of the Minister. It may be suspicious at first blush and other evidence has to be looked at to decide what it means in the end and whether the Minister looked at this factor reasonably.

[12] A calendar for 1994 and 1995 was introduced. On January 1994 she worked 12 weeks. The 12th was a qualifying week. She only needed 10. That was her evidence. Both periods of time when she worked and attempted to qualify for Unemployment Insurance were close to the period required to qualify but they were not exact. She said: "I was paid for the hours worked, $10 an hour."

[13] The payroll ledger was kept by a person by the name of Don Gardiner, who was retained from outside to look after some of the records. The record of the Appellant’s hours was kept on a schedule and she gave it to the bookkeeper, Mr. Gardiner. Also, Exhibit A-4 was introduced by consent, her record. "The work schedule was prepared before I worked," she said. There were some changes made to it after she started working if she took an hour off for lunch or something of that nature which she did not claim. "I was not paid for lunch," she said. The records were given to the bookkeeper and he put them in his ledger and then they were destroyed.

[14] The 1994 and 1995 records were apparently not available. She said, "Don Gardiner did the pay." Her father does not do it. "Usually I get paid every week," she said. There are exceptions if Mr. Gardiner is not present. He is usually there, but if he is not present on a weekend she does not get paid. One time, she had the company hold back her pay so that she could pay for her wood but the company was only used as a means of saving her money so that she could pay this bill. Nothing turns on that and the Court is satisfied that there were no other motives for holding that pay cheque back.

[15] Evidence was given with respect to the cheques that were given to her in '94 and '95, Exhibit A-5. They were signed by Don Gardiner. Her father did not sign her cheques. He did sign for the other people.

[16] Exhibit A-7 was admitted by consent, which was a letter dated June 23rd, 1996 to the Appeals Division from her. She was attempting, by forwarding that information to provide wanted information to match up the cheques to the weeks worked. She was never asked to postpone receipt of her pay. It was her decision with respect to the wood, to hold the cheque back to help her save the money for it. "Mr. Gardiner may have been away," she said. "I may have requested to be paid for two weeks in one cheque." She did admit the other workers were paid on Thursdays. Initially she said that she was paid on Saturdays normally. But then the evidence was that she did not always get paid on Saturday, so that statement was changed to that effect. "Presently," she said, "I am paid every Saturday, but I may not get one if he is away." By that she meant Don Gardiner, I believe, and that was in 1996 and afterwards, since she became a full-time employee. "I may not have had the cheque when I made the list,"(referring to one of the cheques). There never was an N.S.F. cheque. There did not appear to be any financial difficulties with the payor.

[17] The evidence of Mr. Matheson was to the effect that there was no cash flow problem. The business seemed to be at least holding its own.

[18] The rate of wage was ten dollars ($10) an hour. Paul Judge (another worker) was paid eight fifty an hour according to her. Mr. Matheson relied to a large extent upon the Appellant and Don Gardiner, who was a co-signee on the bank account. Paul Judge was a labourer.

[19] The hours of operation now are from Monday to Saturday, from 8:00 a.m. to 6:00 p.m., and open Wednesday, Thursday and Friday evenings until 9:00 p.m.. A change took place between 1993 and 1995. Originally, the business' open hours were regulated by the Retail Gas Dealers' Association. "Now we are in the era of deregulation and people with stations can stay open as long as they want to, whenever they want to”, according to the witness.

[20] She introduced Exhibit A-8 which was a calendar at the service station. She was familiar with it. There were notes on it about the gas tank readings and the times of the gas tank readings. She took them and others did as well. It was done once a day when the station was open. Initially the open week changed every six weeks, that was in the old days but then it changed. In October 1994, they were open every two weeks. On occasion, the business would stay open during other periods of time. For instance, it opened on Saturday in November after the Remembrance Day weekend had taken place, so as to gain extra business. After December of 1994, it was open every Saturday during Christmas season, to correspond to the other businesses downtown.

[21] Exhibit A-9 was admitted in by consent, the 1995 calendar. In 1994 or 1995 Mr. Matheson asked her to work. She was not involved in the decision as to when the business would stay open. He told her when she was at the gas station, he would call her and tell her or tell her when he saw her. She was asked about the circumstances of her work. She said that at first she filled in for others, for holidays, extended hours, during bereavement. "I did not always work during the extended hours." Mr. Matheson would do it instead of requiring her. She never discussed Unemployment Insurance eligibility with Mr. Matheson. She said that she did prepare a summary of the time when she worked and the proof thereof for 1994 and 1995, which are the years in issue.

[22] Exhibit A-10 was put into evidence by consent. It was a work schedule of other workers and A-11 was a schedule for 1994. Exhibit A-12 was a calendar for Cheryl Philipps from 1995 to 1996 and the December period corresponded to the open hours “downtown”.

[23] Exhibit A-14 was admitted subject to proof and weight. It was done on the basis of the records filed. The witness was referred specifically to certain dates when she worked for Paul, which are not that relevant here and other times when Barry was on vacation. It was obvious from the evidence that she did not always work when everybody went on vacation or necessarily at other times when other people were not available. She was asked why she did not work in the summer of 1993, that was not one of the years in issue, but she said that she attended a course subsidized by Unemployment Insurance which ran through September and she left that course early to fill in occasionally for Paul Judge. The work is full-time now. She was asked why? She said that it freed up Mr. Matheson and Mr. Judge to do other jobs. They are now interrupted less.

[24] She referred to a picture which she identified which showed a number of workers that the business has had for some period of time. One of the reasons why she is on full-time now is that she deals considerably with Irving Oil. She orders supplies. Paul Judge does not do this type of thing. Paul Judge basically works on grease and oil changes and tire changes. From 1994 to 1995 she did appointments for the garage only. She did not know how busy the station was and had nothing to do with that. She was asked about profit and loss. She had no idea about that.

[25] In cross-examination she did not know how many weeks she needed for Unemployment Insurance. She could have called and tried to find out. "I do not know what I needed to qualify in 1993." She said that she was paid on Saturdays.

[26] "If Mr. Gardiner was going to be away," she said, "I may have received my cheque for predetermined hours." That would be hours that they knew when she was going to work or how much she was going to work, so she might have received a cheque before Mr. Gardiner went away. Exhibits A-14 and A-8 were just comparisons.

[27] She started part-time in 1991. No one was hired to replace the other people who left the business. She was asked why she was laid off. She said she was a casual employee, she was not full-time. She was the junior employee.

[28] Exhibit R-1 was put in by consent. This was the questionnaire. It referred to "Master technicians" Barry and Butch. "How did you replace them?" she was asked. She said that she did not replace them. There was no indication that she was replacing them but her presence would free up Mr. Matheson to take their position when they were not there or if they were not available. She did other work and Mr. Matheson was freed up to do master technician's work. She was asked why she did not get the benefit plan. She said that she could not afford it. Mr. Gardiner does the payroll for others. A person by the name of Shirley writes up the cheques and Mr. Matheson signs them. She met with Beverley Gaudet from one of the government departments.

[29] Exhibit R-2 was introduced by consent. It was a questionnaire and the answers that she gave to questions put to her. She was asked why her cheque was different than some of the others, i.e., why she received the cheque at different times and she said that her hours were different. "Their hours were sort of regular." Her hours changed. "I just got straight time."

[30] Mr. Charles Matheson, the employer, gave testimony. He was the sole shareholder of the employer company incorporated in 1981. He was a mechanic. In 1994 and 1995, the years in question, he had five to six employees, without Cheryl. He had an apprentice, three mechanics and a pump attendant. Mechanics received $15 an hour, according to him. That was a bit different than what was suggested earlier, but that is what he said they received in those years. Cheryl started in '92 and '93. She received $10 an hour. He was asked how much she receives now and he said not any more. She became independent at 19 or 20. "Why was she hired?" She was not working and he had problems with the part-time staff. He needed somebody when he was busy or when people were on vacation or when the business got extraordinarily busy.

[31] His position was that he called her up, he needed someone. Around 1994 Bernie left. He was asked why she was taken on full-time in 1996. He said, "She became indispensable to my business. She is the backbone of my business." She participates in some of the service functions by putting oil in cars, topping up fluids, measuring fluids. She deals with the public. She has a good personality. She has a good smile. She is a good P.R. person. "Paul cannot do anything with the books. He is not good at P.R. or appointments." The Appellant orders parts, deals with Irving Oil. Normally, Paul or somebody like Paul would receive $5-$6 an hour, but he receives eight fifty per hour.

[32] In 1994 and 1995 he set up the schedule. That would be the Appellant's schedule. He was asked if the Appellant worker was ever paid for something she did not do. His answer was no. "When it was busy I called her in. I had to do mechanical work so I needed her up front," so to speak. "I had no discussions about Unemployment Insurance benefits with her. She never gave me back any money. I looked at her as a worker more than as a daughter." There has been an improvement in their personal relationship since she started working there but that did not affect the work that he expected of her. He looked to her for at least as much as other people, maybe more. He was asked, "Would you hire someone else under the same conditions?", He said that he would have.

[33] Initially the creation of the extended hours was the reason why she was working. He said, "She always worked when the guys were on holidays." That is not exactly what other evidence indicated, but she did work sometimes while others were on holidays. She did not do any of their work. "Why does Don Gardiner sign the cheques?" he was asked. He indicated that every Saturday he is not there. "Don Gardiner signs the cheques because I am often away on the weekends. If Donnie was not around, Cheryl maybe would not get paid." He never had to hold back any money, hold back any cheque or payment. There were no cash flow problems.

[34] He was referred to Exhibit R-3, which was a questionnaire. "When is your busy time?" he was asked. He said, “when the first snow comes and also sometimes in the spring, also I get very busy sometimes when I am booked ahead and somebody does not show up and then I end up having more work to do during the period than I thought I was going to have to do. Also, late in the spring and early fall, when tire changes are very frequent.”

Argument on behalf of the Appellant

[35] In argument, counsel for the Appellant said that the only issue here is paragraph 3(2)(c) of the Unemployment Insurance Act. Reference to the exhibits and to the evidence shows that there was no scheme involved here.

[36] Reference to Exhibit A-15 shows that there was involved here, $7,000-$10,000, during the periods in issue. This was a lot of money to pay to someone who did not work, he said. The only two items in the reply that are really in issue are in paragraphs (h) and (i). He agreed with all of the presumptions of fact contained in the Reply with the exception of paragraphs (h), (i) and (l). (h) was an allegation that:

The Appellant did not receive her pay cheque ...

[37] In paragraph (i):

Once the Appellant had accumulated sufficient weeks to qualify for Unemployment Insurance benefits she was laid off and a Record of Employment was issued by the payor.

[38] Counsel argued that she was not paid like others, exactly the same as the others, but there was nothing untoward about that. Her father did not sign her cheque. Don Gardiner did. There was nothing untoward about that. She received her cheque on different dates. There was sufficient explanation given for that. There was nothing wrong with it. She was remunerated periodically even though the periods might have been different.

[39] Exhibit A-7 was explained. One cheque was given two months later and it was explained why that was so, so that she could pay for her wood. With respect to paragraph (i), this allegation has been rebutted. Her employment was dictated by the conditions of the business, the needs of the business, by Mr. Matheson.

[40] There was sufficient evidence before the Court as to why she was retained when she was. The business was cyclical and her work schedule paralleled with the needs of the business.

[41] With respect to Exhibit A-14, these were apparent inconsistencies, but they do not mean that the employment was not genuine. There were weeks when she was not there. There is evidence as to why she was not there. That has been explained.

[42] The Minister's determination was erroneous in law. The Minister did not consider all the facts. The facts upon which he relied do not support the finding that he made. The Minister improperly considered some facts. The Minister improperly interpreted the facts and made an error in law. There are two stages that the Court must look at in deciding an issue under subparagraph 3(2)(c)(ii).

[43] The Court must first decide whether or not it should conclude that the Minister was incorrect in making the decision that he did, so that the Court can then go on to a consideration of the evidence in toto to decide whether or not the contract of service, (which was admitted existed), was one which would have been entered into with parties unrelated. That is a two-stage process. The appeal should be allowed and the Minister's determination should be reversed.

Argument on behalf of the Respondent

[44] Counsel for the Respondent said that the Minister relied upon information which was sent to the Minister in support of the presumptions that he made and in support of his decision that this was not insurable employment. It was a non-arm's length situation.

[45] The presumption under subparagraph 3(2)(c)(ii) applies. The information that the Minister relied upon was before him. These were letters and materials sent upon request, the questionnaires. These were factors that the Minister relied upon in making the decision and he was right to do so. The question is, was he justified, in the decision that he made. The burden is on the Appellant to establish that the decision should not stand. Was there bad faith? Did he consider all relevant information? Did he not take into account some information which was relevant or did he consider information which was not relevant? Was his decision unreasonable?

[46] The Court should consider all of the circumstances of the employment. This is ministerial discretion. The Court should not interfere with it lightly. She was the junior employee and she was the first one to be laid off. The Minister had the payroll records. There was no overtime paid. She worked long hours. She worked in groups of hours, suggestive of the position that she worked so that she could gain higher benefits, work long periods of time over shorter spans. She would work long periods of time and then be off for a considerable period of time. There is something wrong with this. It is suspicious. It was suggestive of a scheme. It was enough for the Minister to conclude that there was a scheme. It was not normal for her not to be supervised for long periods of time. That was in evidence. There was no supervision for long periods of time. The terms and conditions were such that one might conclude that it was a scheme.

[47] The Court should consider also the duration of her work periods. The Court has before it the information marked on the calendars, some indications with respect to when her benefits period was running out. She admitted herself that she put that on there. It is suspicious that her claim was soon to run out. When the claim ran out she was qualified for another claim, she had sufficient weeks to qualify.

[48] The evidence is that the periods were close but it was not exactly the number of weeks required. This was not always the case. Sometimes she was not called in for vacation periods. Sometimes she was not called in to replace someone else when they were off. There were weekends when the business worked when she was not there. She worked basically 14 weeks during the period in question, at least during one of the periods.

[49] The 1995 records show that the garage was open almost every Saturday and she was not needed to be there all the time. Why not? The conditions of the employer changed but her hours of work did not. If it got busier at certain times of the year, tire changing time, why was she not there working? The duties were important to the garage. She admitted that. If they were so important, why did they only need her 14 weeks? She only came in for a full week at a time. She did not come in for a certain number of hours at a time. That is suspicious. There was more than enough information there for the Minister to make the decision that he did. There is no argument about the Minister acting in bad faith.

[50] She referred to Attorney General of Canada v. Jencan Ltd., A-599-96, Federal Court of Appeal, June 24, 1997 at page 25, and Wilga Parrill and M.N.R., T.C.C. 95-2644(UI) Dec, 16, 1996. The Minister in the case at bar had sufficient information to make the decision that he did. The Court should not interfere with it. This was excepted employment.

[51] She compared the information contained in Exhibits A-8 and Exhibits A-9 to A-14. She argued that the result is that the whole factual situation is suspicious. She did not work vacations always. She did not work when the other people were away. She did not work always during open weeks, she did not work when there was extra work to do.

[52] The appeal should be dismissed and the Minister's determination confirmed.

[53] In reply, counsel for the Appellant referred to the Jencan decision, supra. We must look at all of the evidence. The witnesses here were credible. There were no inconsistencies between the evidence of the Appellant and the employer. There was nothing suspicious about the number of weeks that were worked. That has been explained.

[54] With respect to the extended hours in 1995, there were not many weekends that the garage was open. There certainly was not enough of an inconsistency there to allow the Court to be suspicious.

Analysis and decision

[55] It is trite to say that in a case of this nature the duty is on the Appellant to establish on a balance of probabilities that this was insurable employment. If it is excepted employment it is obviously not insurable employment. In the case before this Court the sole issue is subparagraph 3(2)(c)(ii).

[56] The parties admit that paragraph 3(1)(a) is not in issue. That means that there was a contract of service in existence. The Court has two questions to decide. Under subparagraph 3(2)(c)(ii), should it interfere with the Minister's decision that this was not employment under a contract of service similar to that which would have been entered into with parties unrelated. The Appellant has to show that it was and that the Court should open up the Minister's decision

[57] The Court is satisfied that the cases have held that at this stage of the proceedings, immaterial of what you call it, whether it is ministerial discretion or whether it is something akin to ministerial discretion, there can be no doubt that the section provides that the Minister has the right to conclude that in a given situation it was a non-arm's length situation. Then the presumption kicks in. Unless the Minister decides that the terms and conditions were such that a similar contract of service would have been entered into with parties unrelated, then the Minister can decide that this was excepted employment.

[58] The question is, was he right in doing so here? The Court is satisfied that at that first stage, before the Court overturns the Minister's decision, that it has to be satisfied that the Minister failed to consider the proper facts, that he considered improper facts, that he did not act judicially, that he did not act reasonably, or that the decision that he made was unreasonable, having regard to all of the evidence.

[59] The Court is satisfied that in order for the Minister's decision to be overturned it need not be satisfied that all of the facts upon which the Minister relied have been disproved. In the present case there is very little in the presumptions that were not agreed to. The only matters that were disagreed with were paragraph 11(h) and (i). The Reply itself of course does not set out all of the facts. There were a great deal of facts not referred to in the Reply.

[60] The Minister's presumptions are interesting because the Minister obviously made a decision based upon a number of the presumptions which are contained in the Reply. The ones in issue are of course (h), which says:

The Appellant did not receive her pay cheque on a regular basis as did the rest of the workers of the payor.

[61] The Court is satisfied on the basis of the evidence that the Appellant did receive her pay cheque on a regular basis. It may not have been the same as the other workers received theirs, the same date and it may not have been signed by the same party. It was obvious that her father signed the other workers' cheques and Mr. Gardiner signed hers. But the Court is satisfied that there was nothing untoward about that under the circumstances. It has been explained.

[62] The Court is satisfied that the Minister obviously looked at that as being a very suspicious circumstance and that was one of the basis upon which the Minister made the decision. The Court is satisfied that there was nothing wrong with that being done. So the Minister could not have made a reasonable decision upon that presumption.

[63] The Minister also concluded or presumed, and it was one of the bases for his decision, that:

once the Appellant had accumulated sufficient weeks to qualify for Unemployment Insurance benefits she was laid off and her Record of Employment was issued by the payor.

[64] This was not completely correct but if it were, that does not mean that there was anything untoward about that happening. There could be something untoward about it and there might not be something untoward about it. Here the Court has to look at all of the evidence that was given in the case and decide whether or not it was reasonable for the Minister to rely upon that presumption and to make a decision based upon that presumption, amongst other things. The Court is satisfied the Minister did rely upon that as being something untoward but this Court is satisfied that it was not.

[65] On the basis of the evidence given before the Court, the Court is satisfied that the Appellant did not receive exactly the number of weeks that she needed to qualify for Unemployment Insurance benefits. There were at least two weeks in the difference. That may be close enough for the Minister to be suspicious but to be suspicious is not sufficient. That suspicion is dissipated when the Court looks at all of the evidence and when it considers the credibility that it attaches to the evidence of Mr. Matheson and the Appellant herself. There was more than sufficient explanation given to show that there was nothing untoward about that happening at all.

[66] The Minister also made a presumption in paragraph (e), for whatever weight he placed upon it, but obviously he must have placed some weight upon it, that:

for weeks prior to, during and subsequent to the periods in question, when the Appellant was not engaged by the payor, no other person was engaged to perform her duties and those duties were performed by other workers of the payor or by her father.

[67] That is true. But even without the evidence that was introduced into Court today, the Court fails to see how that would have led the Minister to reasonably conclude that there was anything wrong with that happening. It is one of those things where there might be something wrong and there might not be something wrong. The evidence before the Court today shows that there was nothing wrong with it. Further, in paragraph (f):

the Appellant worked for no other person during the years 1993, 1994 and 1995.

[68] Again, that's correct. There's no doubt about that. That might be suspicious if there were other circumstances suggesting that all was not on the up and up but there was not. She was looking for work. It was not a matter of refusing work with others so as to take advantage of her position with a person with whom she was related so that she could qualify herself for Unemployment Insurance benefits. If there had been something like that in the allegation and some evidence had been introduced to that effect, it would have been of more significance. But that allegation in itself, if relied upon by the Minister, and it obviously was, was not a reasonable basis for the Minister to conclude that this was not a type of contract of service which would have been entered into with parties who were unrelated.

[69] Paragraph (g):

the Appellant was paid at the rate of ten dollars ($10) per hour for actual hours worked.

[70] That in itself is not a damning conclusion to make. The Court can not see how the Minister could rely upon that in any way to conclude that the Appellant was engaged in excepted employment.

[71] In (h), as I have already said:

the Appellant did not receive her pay cheque on a regular basis ...

[72] That has been disputed. The Court is satisfied the Minister relied upon that. That was an incorrect conclusion for the Minister to draw. The facts show that that was not correct, so the Minister relied upon improper considerations.

[73] Paragraph (i):

once the Appellant had accumulated sufficient weeks to qualify...

[74] That was an incorrect conclusion for the Minister to make. He obviously relied upon it. It was not proper, even without the evidence given today. The evidence showed that this was incorrect. She was not laid off because she acquired the number of weeks necessary for benefits. The weeks were close to the number required and again there was no evidence to indicate that that was the reason for her being laid off.

[75] If there were something more in the presumption upon which the Minister could rely and that had not been rebutted, then the Court would be in a different situation, but there was not. Paragraph (l) of course is a question of law which the Court has to decide.

[76] The Court finds that the Minister was incorrect in making the decision that he did. The Court has taken into account all of the cases that have been referred to.

[77] In the Attorney General v. Jencan Ltd., sworn, the Court of Appeal, referring back to the Trial Division, said:

Having found that certain assumptions relied upon by the Minister were disproved at trial, the Deputy Tax Court Judge should have then asked whether the remaining facts which were proved at trial were sufficient in law to support the Minister's determination that the parties would not have entered into a substantially similar contract of service if they had been at arm's length.

[78] Now, in the case at bar the Court is satisfied on the basis of the presumptions first of all and secondly on the basis of the evidence, that there were not sufficient remaining facts proved at trial which were sufficient in law for the Minister to reach the determination that he did. Consequently he did not act judiciously and consequently his decision cannot stand. There was not sufficient material to support the Minister's determination as far as the Court is concerned even if the Court had found that the presumptions were correct.

[79] The Court is satisfied that the Minister's determination lacked a reasonable evidentiary foundation and that this Court is entitled to intervene and this case warrants intervention.

[80] That brings us to the second matter then which the Court must consider. Upon all of the evidence, would parties unrelated have entered into a substantially similar contract of service? The Court is more than satisfied that they would have.

[81] Here the Court takes into account the normal terms and conditions of employment and the salary. The salary was not an unwarranted salary. There was sufficient evidence before the Court to satisfy it that the salary was not unreasonable. The salary was paid. Although the pay cheque was not signed by the same people, there was nothing as far as the Court is concerned which would cause it to question the fact that Don Gardiner signed her cheque rather than somebody else, rather than her father, whereas her father signed for the other employees. There was nothing in the rate of pay which would cause the Court to be suspicious. It is true that Paul Judge received less money. He was obviously there a longer period of time. But there has been sufficient explanation as to why Paul Judge received the amount of money that he did. His job could in no way correspond to that of the Appellant.

[82] Mr. Matheson said that Paul Judge probably would not have received that amount of money if he had worked for somebody else. It would be $5 or $6 an hour. That may be correct or incorrect, but that was his position.

[83] The Court is satisfied that there were sufficient and substantial records kept to support the position that the Appellant worked, that she was paid, that she never gave up her right to receive pay, that she was never paid when she was not working and that she was paid on time. The Court is satisfied that she was supervised by Mr. Matheson, that he supervised her considerably, he had control over her schedule, he decided whether or not she was to be hired, in spite of the fact that she had some input. She at least discussed with him the salary and she said that she wanted $10 an hour. There is usually a bargaining back and forth between employer and employee on the wage. In this particular case it is obvious that the Appellant suggested to her employer what she wanted due to her experience and training and it was not found to be excessive. This was a reasonable conclusion by the employer.

[84] The Court is satisfied that the worker’s experience and training would have dictated that she should receive $10 an hour under the circumstances. There was no evidence as to what the normal rate of wage was for that particular job. The Appellant worker could not say. She said that she discussed it with people but she was not able to find out what other people in the same circumstances were receiving. But be that as it may the Court is satisfied that the amount of money that she received was reasonable under the circumstances. There was no evidence whatsoever before the Court that the amount that she was paid was not reasonable.

[85] With respect to the hours of work, there are certainly some parts of the evidence which caused the Minister to have some concern and not unreasonably so. Perhaps to a minor extent the schedules caused some concern and the fact that she had her cheques signed by somebody else other than Mr. Matheson. She may not have worked every day when there was extra work to be done. She may not have worked every vacation period. She may not have worked every time somebody was off but there were sufficient explanations given for these apparent anomalies.

[86] Overall the Court is satisfied that the Appellant worked a reasonable number of hours, she was paid a reasonable wage, she was paid for what she did, she was not paid for otherwise. The Court is satisfied that she was not hired nor maintained in her employment because she was related to the payor. She was not taken on merely for the purpose of allowing her to qualify for Unemployment Insurance benefits, although the periods of time when she worked were very close to the minimum qualifying periods.

[87] Bearing in mind the evidence of Mr. Matheson and the Appellant worker and the credibility that the Court attaches to their evidence, the Court is satisfied that her schedule, her hours of work, length of the periods of time she worked and when she worked were dictated by the needs of the business and by the needs of Mr. Matheson who ran the business as he saw fit.

[88] The Court can find no reason to discredit the evidence of either one of these parties. In spite of the fact that looking at it at first blush red flags might have been raised, they certainly were not sufficient for the Minister to make the decision that he did. This Court is satisfied too, on the basis of all of the evidence, that a similar contract of service would have been entered into with parties unrelated.

[89] The Court will allow the appeals and reverse the Minister's decisions.

Signed at Ottawa, Canada, this 30th day of October 1998.

J.T.C.C.