Mann v. M.N.R., docket 98-36-UI

Date: 19980430

Docket: 98-36-UI

BETWEEN:

MOHINDER KAUR MANN,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Beaubier, J.T.C.C.

[1]This appeal from a determination of the Minister of National Revenue dated December 19, 1997 was heard at Penticton, British Columbia on April 21, 1998. The Appellant testified as did her sister-in-law, Mrs. Bahniwal. Mrs. Bahniwal owned all of the shares in Sukhi Orchards Ltd. ("Sukhi") during the period from August 7, 1995 to November 18, 1995 when Sukhi employed Mrs. Mann.

[2]Mrs. Mann is an immigrant and appears to be of Sikh or East Indian origin. She has worked as an agricultural labourer in tomato fields and orchards in the Oliver region of British Columbia for 10 years. She appears to be in her early 30's. The period in question is the only year in which she worked for her sister-in-law or Sukhi. All of this is described because Mrs. Mann's English is very limited and that affects her appeal and under paragraph 3(2)(c) of the Unemployment Insurance Act. She has appealed a determination which stated:

Revenue Canada

Revenu Canada

Mohinder Kaur Mann Mailing date

P.O. Box 1954, Dec 19 1997

Oliver, BC L. Callegari

V0H 1T0 Appeals Division

Section 430-25

Dear Madam:

This letter concerns your request for a determination on the insurability, for employment insurance purposes, of your employment with Sukhi Orchards Ltd. from August 7, 1995 to November 18, 1995.

It has been decided that this employment was not insurable for the following reasons:

You were employed in excepted employment. This is because you and Sukhi Orchards Ltd. were not dealing with each other at arm's length. The Minister is not satisfied that you and Sukhi Orchards Ltd. would have entered into a substantially similar contract of employment if you had been dealing with each other at arm's length.

If you disagree with this decision, you may appeal to the Tax Court of Canada within 90 days of the mailing date of this letter. Details on how to initiate an appeal can be found in the enclosed attachment.

The decision in this letter is issued pursuant to Section 93 of the Employment Insurance Act and is based on paragraph 5(2)(i) of the Employment Insurance Act.

Yours sincerely,

"signature"

J. Kalla

Assistant Director, Appeals

Vancouver Taxation Services Office

[3]The Employment Insurance Act became effective June 30, 1996 so the period of employment is subject to paragraph 3(2)(c) of the Unemployment Insurance Act although the procedure of the appeal is under the Employment Insurance Act.

[4]Mrs. Mann testified. She does not understand or use English idioms or slang or most multi-syllable words. Her husband wrote and signed her name to the questionnaire sent to her by Unemployment Insurance. A third party also wrote the questionnaire sent to her by Revenue Canada which she signed; it was not exhibited. She can follow numbers. She was not asked to read or write. She was cross-examined with leading questions based on box numbers. She was clear and honest in her answers. Her evidence is accepted in its entirety and any discrepancies are based on her confusion rather than evasions or dishonesty. Upon observing her in Court, this Court finds that she is illiterate in the English language. Her communications to the Respondent were in English. It is clear from the questions put to Mrs. Mann by Respondent's counsel that no one in the government realized Mrs. Mann's limitations or the fact that the writing they received on her behalf was not Mrs. Mann's.

[5]Subparagraph 3(2)(c)(ii) of the Unemployment Insurance Act is the basis of the determination. It is paraphrased in subparagraph 6(l) of the assumptions. Subparagraph 3(2)(c)(ii) reads:

where the employer is, within the meaning of that Act, related to the employee, they shall be 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.

[6] To fall with paragraph 3(2)(c) of the Unemployment Insurance Act, Mrs. Mann could have been engaged in insurable employment, but due to the circumstances described in subsection 3(2), was excepted from being insurable. The only the evidence of the factual basis for the determination which Mrs. Mann appealed is in paragraphs 5 and 6 of the Reply. They read:

5. In response to an appeal of a ruling by the Appellant pursuant to section 91 of the Employment Insurance Act, S.C. 1996, c.23 (the "EI Act") the Respondent determined that the Appellant was not employed in insurable employment with Sukhi Orchards Ltd. (the "Payer") during the period from August 7, 1995 to November 18, 1995 (the "Period").

6. In making his decision referred to in paragraph 5. herein, the Respondent relied upon the following assumptions of fact:

(a) the Payer corporation operates an orchard;

(b) the sole shareholder in the Payer is Nirmaljeet Bahniwal, who is the sister-in-law of the Appellant;

(c) during the Period, the Appellant's duties were to pick and pack fruits and vegetables;

(d) the Appellant was paid at the rate of $8.00 per hour, which was the same as other workers doing the same job;

(e) the Appellant was employed by the Payer in the Period under a contract of service;

(f) the Appellant's earnings for the Period were $7,654.00;

(g) the Appellant did not receive any remuneration for her services until December 10, 1996, at which time she received a cheque in the amount of $8,500.00;

(h) the other workers did not get paid regularly, however, they were all paid in full for their services no later than 2 months after their employment ended;

(i) there were sufficient funds in the Payer's bank account from August to December, 1995 to pay the Appellant's wages;

(j) the Appellant is related to the Payer within the meaning of the Income Tax Act;

(k) at all times material hereto, the Appellant was not dealing with the Payer at arm's length; and

(l) 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 not reasonable to conclude that the Appellant and the Payer would have entered into a substantially similar contract of employment if they had been dealing with each other at arm's length.

[7]All of the assumptions in subparagraphs 6(a) to 6(k) inclusive are factual and correct. Before considering the evidence it is required that this Court must determine from the evidence before the court whether the Minister was guilty of wilful or arbitrary conduct (See Ferme Emile Richard et Fils Inc. v. Minister of National Revenue (1994) 178 N.R. 361 (F.C.A.)

[8]The Respondent's Reply refers to paragraph 3(2)(c) in its reliance on the law. However, the pleadings themselves do not plead that Mrs. Mann's employment was determined to constitute "excepted employment". Paragraph 5 states that it was determined that "she" was not employed in insurable employment. In these circumstances, and based on The Queen v. Schnurer Estate (F.C.A.) (1997) 208 N.R. 339, this Court must find evidence of wilful or arbitrary conduct by the Minister in arriving at the determination in order to undertake a review of the validity of the Minister's determination.

[9]Subparagraph 3(2)(c)(ii) requires the Minister to have regard to all the circumstances of Mrs. Mann's employment including:

1. the remuneration paid,

2. the terms and conditions,

3. the duration, and

4. the nature and importance of the work performed.

Upon doing so the Minister must be satisfied that 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.

[10]Referring to the enumerated inclusions, Mrs. Mann's remuneration ($8.00 per hour) was the same as Sukhi's other field employees. Mrs. Mann contracted to be paid, like the other field employees, shortly after harvest. But she was paid 11 months after the other field employees of Sukhi were paid. Her terms and conditions of employment were the same as the others and others in the fruit farming industry. The duration of her employment was seasonal, the same as other employees of Sukhi and in the industry. The nature and importance of the work she performed was the same as that of the other field workers employed by Sukhi and in the industry.

[11]Upon considering all the circumstances the Minister must be satisfied that it is reasonable to conclude that they (that is both the employer and the employee) would have entered into a substantially similar contract (that is, prospectively, they would both have initially committed to their contract of employment) if they had been dealing with each other at arm's length.

[12]The evidence is that the contract of employment between Sukhi and Mrs. Mann, including the condition that they would be paid shortly after harvest, was also entered into by four other employees of Sukhi. It was a common contract in the fruit growing industry in the Okanagan Valley near Oliver, British Columbia, where this contract was made.

[13]Mrs. Mann was paid about 11 months after the other workers. She never worked for Sukhi again, although she worked for other farmers near Oliver both before and after the period in question.

[14]It is clear that the determination was made on the basis that Sukhi would not have paid an unrelated person thirteen months after the work was performed. However, that was what Sukhi did to Mrs. Mann. Sukhi paid her late. That is not the contract that she entered into with Sukhi. Sukhi and Mrs. Mann contracted that she would be paid, like the rest of Sukhi's employees, about two months after harvest.

[15]The Minister was guilty of arbitrary conduct in failing to look at the contract that Sukhi and Mrs. Mann ("They") entered into together. Rather, the Minister looked at what one party (Sukhi) did when it breached the contract by late payment of Mrs. Mann's wages after harvest.

[16]On this basis, the Court finds that it is entitled to review the Minister's determination based upon its validity.

[17]The only fact which the Minister found as a variance from the ordinary contract that Sukhi and other growers had with field workers in the Oliver area was the late payment to Mrs. Mann and the fact that the late payment was in the amount of $8,500.

[18]Mrs. Mann stated that she phoned frequently to demand payment. When she was paid, she said the extra money was interest. The Court believes her. Mrs. Mann is an illiterate farm worker. Mrs. Mann's sister-in-law, Mrs. Bahniwal, testified. She said that Sukhi had the money to pay Mrs. Mann but used it as a reserve so that Mrs. Bahniwal's family could holiday in India for a number of months after harvest. Subsequently Sukhi used it as a reserve for farming purposes. Sukhi obviously felt that it could pay Mrs. Mann whenever it felt like doing so. Sukhi treated her as a poor relative who was subject to Mrs. Bahniwal's whims. This finding is verified by Sukhi's late payment and by the fact that Mrs. Mann never worked for Sukhi again. The Minister failed to look at Mrs. Mann's contract of employment and did not make a sufficient inquiry to find out about Mrs. Mann's limitations in the English language or to learn that the writing he received was not Mrs. Mann's.

[19]The contract that they entered into was substantially similar to the contract of employment they would have entered into if they had been dealing with each other at arm's length. But Sukhi and Mrs. Bahniwal took advantage of Mrs. Mann and abused her by paying her wages 11 months late.

[20]The appeal is allowed.

Signed at Ottawa, Canada, this 30th of April 1998.

"D.W. Beaubier"

J.T.C.C.