Demma v. M.N.R., docket 96-2459-UI

Date: 19980223

Docket: 96-2459-UI

BETWEEN:

HELEN DEMMA,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

ABCO TOOL-DIE & MACHINE MANUFACTURING LTD.,

Intervenor.

Reasons for Judgment

Porter, D.J.T.C.C.

[1] This appeal was heard at Toronto, Ontario on January 20, 1998. The Appellant appeals the determination of the Minister of National Revenue (the "Minister") dated November 6, 1996 that the employment of the Appellant with Abco Tool-Die and Machine Manufacturing Ltd. (the "Company") from August 16, 1991 to August 20, 1992, and October 1, 1993 to August 25, 1994 was not insurable employment under the Unemployment Insurance Act (hereinafter referred to as the "Act"). The reason given for the determination was that:

"... you were not employed under a contract of service as there was no employee/employer relationship between you and Abco Tool-Die & Machine Mfg Ltd. Furthermore, if you were considered to have been employed under a contract of service, your employment was excepted from insurable employment because you were not dealing at arm’s length, nor are you deemed to have been dealing at arm’s length, with Abco Tool-Die & Machine Mfg. Ltd."

[2] I might say at the outset that although the decision of the Minister was twofold in that it made a determination first that there was not a contract of service and secondly, if there was, it was "excepted employment", the appeal proceeded on the basis of the second aspect alone. There was no reference to the first aspect of the determination in the Reply to the Notice of Appeal filed on behalf of the Minister nor was any reference made to it by counsel for the Minister during the hearing of the appeal. I have taken it that this aspect of the determination was abandoned. However to the extent that I am in error in doing so I can say quite categorically and in summary fashion that there was ample evidence of a contract of service and the decision of the Minister was wrong in holding otherwise. My reasons for so holding will become apparent as I review the evidence. I will thus deal with the appeal on the basis of the second aspect of the determination that the employment was "excepted employment".

[3] The established facts reveal that the Appellant is the daughter of Romuald Azgin who at the material times owned a majority of the outstanding shares of the Company. Thus, pursuant to section 3 of the Act and subsection 251(1) of the Income Tax Act, as related persons they are in law deemed not to deal with each other at arm’s length. It follows that, subject to the exception contained in subparagraph 3(2)(c)(ii) of the Act, the employment in question is categorized as "excepted employment", that is to say it is not employment which triggers the payment of unemployment insurance benefits upon its termination. The Minister has determined that the employment does not fall within the exception and the Appellant has challenged that decision.

The Law

[4] In the scheme established under the Act, Parliament has made provision for certain employment to be insurable, leading to the payment of benefits upon termination, and other employment to be "excepted" and thus carrying no benefits upon termination. Employment arrangements made between persons who are not dealing with each other at arm’s length, are categorized as "excepted employment". Parents and their children are deemed not to be dealing with each other at arm’s length pursuant to subsection 251(1) of the Income Tax Act, which governs the situation. Quite clearly the purpose of this legislation is to safeguard the system from having to pay out a multitude of benefits based on artificial or fictitious employment arrangements.

[5]The harshness of this situation has however been tempered by subparagraph 3(2)(c)(ii) of the Act, which provides for such employment between related persons to be deemed to be at arm’s length and thus in turn to be treated as insurable employment, as long as it meets all the other requirements, where the Minister is satisfied having regard to all the circumstances (including those items that are set out) that it is reasonable to conclude that they would have entered into a substantially similar contract if they had (in fact) been dealing with each other at arm’s length. It may be helpful to reframe my understanding of this section. For people related to each other the gate is closed by the Act to any claim for insurance benefits unless the Minister can be satisfied that in effect the employment arrangement is the same as that which unrelated persons, that is persons who are clearly at arm’s length, would have made. If it is a substantially similar contract of employment, Parliament has deemed it to be only fair that it should be included in the scheme. However the Minister is the gatekeeper. Unless he is so satisfied the gate remains closed, the employment remains excepted and the employee is not eligible for benefits.

[6]Section 61 of the Act deals with appeals to and determination of questions by the Minister. Subsection 61(6) requires that:

"The Minister shall with all due despatch determine the question raised in the application ...."

[7]Thus the Minister has no discretion whether or not to decide the question. He is required by law to do so. If he is not satisfied, the gate remains closed and the employee is not eligible. If however he is satisfied, without more ado or any action on the part of the Minister (other than notification of the decision) the employee becomes eligible for benefits, provided he is otherwise qualified. It is not a discretionary power in the sense that if the Minister is satisfied he may then deem the employment to be insurable. He must "determine the question" and depending on that determination the law deems the employment to be either at arm’s length or not at arm’s length. In this sense the Minister has no discretion to exercise in the true sense of the word, for in making his decision he must act quasi-judicially and is not free to choose as he pleases. The various decisions of the Federal Court of Appeal on this issue reveal that the same test applies to a myriad of other officials making quasi-judicial decisions in many different fields. See Tignish Auto Parts Inc. v. M.N.R., 185 N.R. 73, Ferme Émile Richard et Fils Inc. v. M.N.R., 178 N.R. 361, Attorney General of Canada and Jencan Ltd., (1997) 215 N.R. 352 and Her Majesty the Queen and Bayside Drive-in Ltd., (1997) 218 N.R. 150.

[8]The function of this Court then, upon appeal, is to review the decision of the Minister and decide whether it was arrived at lawfully that is in accordance with the Act and with the principles of natural justice. In the case Her Majesty the Queen v Bayside et al., supra, the Federal Court of Appeal laid out certain matters which should be considered by this Court when hearing these appeals. These were: (i) whether the Minister acted in bad faith or for an improper purpose or motive, (ii) whether the Minister failed to take into account all of the relevant circumstances as especially required by subparagraph 3(2)(c)(ii) or (iii) whether the Minister took into account an irrelevant factor.

[9]The Court went on to say:

"It is only if the Minister made one or more of these reversible errors that it can be said that his discretion was exercised in a manner contrary to law and ... the trial court judge would be justified in conducting his own assessment on the balance of probabilities as to whether the respondents would have entered into substantially similar contracts of service, if they had been at arm’s length".

[10]It has been submitted by counsel for the Appellant that the decision of the Minister in the case before me, was based upon erroneously stated facts. Again I remind myself, when reviewing these submissions, that it is not for this Court to substitute its opinion of the evidence for that of the Minister. However, if his or her manner of arriving at the decision was unlawful in the context of the judgments set out above, those affected parts of the stated facts may be disregarded and I must then consider whether that which is left affords justifiable grounds for the decision. If those grounds, standing alone, are sufficient for the Minister to form a decision, albeit that the Court may not agree with it, the decision must stand. If on the other hand there is no basis left upon which the Minister might lawfully make such a decision, from an objective and reasonable point of view, then such decision may be struck down and the Court can consider the evidence before it on appeal and make its own decision. In summary then, if there are sufficient facts before the Minister for his decision, it is his or her determination to make and if he or she is "not satisfied" it is not for this Court to substitute its view of those facts and say he of she should have been satisfied. Similarly, if he or she was satisfied it is not for this Court to substitute its view that he or she should not have been satisfied (an unlikely scenario in any event). Only if the decision is reached in an improper manner and it is unreasonable, from an objective point of view, on the basis of the facts which were properly before the Minister, may the Court interfere.

[11] I am fortified in this approach by a number of decisions of various Courts of Appeal across the country and the Supreme Court of Canada in related decisions concerning the issue of various processes under the Criminal Code, which subsequently came to be reviewed by the Courts and are in my view analogous to the present situation. The standard of review of the validity of a search warrant was set out by Cory, J.A. (as he then was) in Times Square Book Store, Re (1985) 21 C.C.C. (3d) 503 (C.A.), where he said that it was not the role of the reviewing judge to look at or consider the authorization of a search warrant de novo and it was not open to the reviewing judge to substitute his or her own opinion for that of the issuing judge. Rather, on review, the first issue to be decided was whether or not there was evidence upon which a justice of the peace, acting judicially, could determine that a search warrant should be issued.

[12]The Ontario Court of Appeal reiterated and expanded upon this point of view in R. v. Church of Scientology of Toronto and Zaharia (1987) 31 C.C.C. (3d) 449 C.A. leave to appeal refused. In suggesting that the reviewing court look at the "totality of the circumstances" the court said at 492:

"Obviously if there is not such evidence to provide a basis for such a belief (that a criminal offence had been committed) it cannot be said that in those circumstances the justice should be satisfied. There will, however, be cases where such evidence (showing reasonable grounds) does exist and the justice could be satisfied but where he or she is not satisfied and does not exercise his or her discretion in favor of issuing a search warrant. In these circumstances, the reviewing judge must not say that the justice should have been satisfied and should have issued the warrant. Similarly, if the justice in such circumstances says that he or she is satisfied and issues the warrant, the reviewing judge must not say that the justice should not have been so satisfied".

[13]The Supreme Court of Canada endorsed this approach in R. v. Garofoli (1990) 2 S.C.R. 1421. The late Mr Justice Sopinka, when dealing with the review of the issue of an authorization to wiretap, then said:

"...While a judge exercising this relatively new power need not comply with the Wilson criteria, he should not review the authorization de novo. The correct approach is set out in the reasons of Martin J.A. in this appeal. He states:

If the trial judge concludes that, on the material before the authorizing judge, there was no basis upon which he could be satisfied that the pre-conditions for the granting of the authorisation exist, then, it seems to me that the trial judge is required to find that the search or seizure contravened s. 8 of the Charter.

The reviewing judge does not substitute his or her view for that of the authorizing judge. If, based on the record which was before the authorizing judge as amplified on the review, the reviewing judge concludes that the authorizing judge could have granted the authorization, then he or she should not interfere. In this process, the existence of fraud, non-disclosure, misleading evidence and new evidence are all relevant, but, rather than being a prerequisite to review, their sole impact is to determine whether there continues to be any basis for the decision of the authorizing judge".

[14]This approach appears to have been adopted by almost every appellate court in the country. It seems to me most relevant to a review of the Minister’s determination, which is itself a quasi-judicial decision. (See R. v. Jackson (1983) 9 C.C.C. (3d) 125 (B.C. C.A.); R. v. Conrad et al. (1989) 99 A.R. 197; 79 Alta. L.R.; (2d) 307; 51 C.C.C. (3d) 311 (C.A.); Hudon v. R. (1989) 74 Sask. R. 204 (C.A.); and R. v. Turcotte (1988) 60 Sask. R. 289; 39 C.C.C. (3d) 193 (C.A.); R. v. Borowski (1990) 66 Man. R. (2d) 49; 57 C.C.C. (3d) 87 (C.A.); Bâtiments Fafard Inc. et autres c. Canada et autres (1991) 41 Q.A.C. 254 (C.A.); Société Radio-Canada v. Nouveau-Brunswick (Procureur général) et autres (1991) 104 N.B.R. (2d) 1; 261 A.P.R. 1; 55 C.C.C. (3d) 133 (C.A.); R. v. Carroll and Barker (1989) 88 N.S.R. (2d) 165; 225 A.P.R. 165; 47 C.C.C. (3d) 263 (C.A.); R. v. MacFarlane (K.R.) (1993) 100 Nfld. & P.E.I.R. 302; 318 A.P.R. 302; 76 C.C.C. (3d) 54 (P.E.I. C.A.).

Stage 1 - Analysis of the Minister’s decision

[15] I turn now to consider in detail how the Appellant through her counsel challenges the decision of the Minister. It was apparent from the evidence that the facts upon which the Minister relied to form his determination, were assembled from a five-minute telephone conversation between the Appellant and a government official named V. Harrypersad, and the answers to a standard questionnaire sent out to the Appellant by the appeals division at Revenue Canada. This was entered as exhibit R-1 by counsel for the Minister. The contents of the five-minute telephone conversation were not put before the Court, no reference was made to it and I deduct that nothing of any significance arose from it.

[16] The stated facts upon which the Minister relied are set out in paragraph 5 of the Reply to the Notice of Appeal. They are as follows:

"(a) the Payor was incorporated on January 25, 1978 and operates a machine shop which specializes in tool-die and supplying or reworking automotive parts;

(b) the Payor’s business operates year-round;

(c) the Payor/Corporation’s share structure was the following:

Shareholder % of shares

Romuald Azgin    76½

857011 Ontario Ltd.    23½

(d) the Payor/Corporation’s majority shareholder, Romuald Azgin, is the Appellant’s father;

(e) all business decisions, financial or administrative, were made by the Payor/Corporation’s majority shareholder;

(f) the Payor/Corporation’s majority shareholder controlled every aspect of the day-to-day operation of the Payor’s business;

(g) during the periods in question, the Payor had between 15 and 35 workers on its payroll at any given time;

(h) during the periods under review, any arrangements between the Payor and the Appellant was verbal and the Payor did not have a written contract or agreement with the Appellant;

(i) the Appellant’s alleged duties included the following:

(i) answer correspondence,

(ii) prepare government filings, returns and queries,

(iii) prepare financial reports, records and year-end procedures,

(iv) liaise with accountants, lawyers, bankers, and builders,

(v) supervise clerical staff, correct errors and share bookkeeping;

(j) the Payor engaged the services of three other individuals to take care of the office work; two unrelated individuals, an office manager and a clerical office worker, and the Appellant’s mother;

(k) unlike the Appellant, the unrelated clerical office worker worked continuously for the Payor from January 1, 1992 to December 31, 1994 and was not laid off due to shortage of work.

(l) unlike the Appellant, the unrelated office manager worked continuously for the Payor from August 1, 1992 to December 31, 1994 and was not laid off due to shortage of work.

(m) unlike the unrelated office workers, the Appellant worked 4 days a week from her personal residence and 1 day a week from the Payor’s office;

(n) the duties accomplished by the Appellant were not sufficient to have her occupied on a full-time basis;

(o) during the first under review, from August 16, 1991 to August 20, 1992, the Appellant’s services were engaged by the Payor for a total of 52 weeks; she received a weekly salary of $500.00 for the first 42 weeks and a weekly salary of $700.00 for the last 10 weeks.

(p) there was no material difference between the duties of the Appellant during her first 42 weeks of work and the last 10 weeks and therefore, the ensuing 40% pay increase was excessive;

(q) unlike the Appellant, the Payor’s unrelated office workers did not receive 40% pay increases;

(r) unlike the Payor’s unrelated workers, the Appellant was neither supervised by the Payor with respect to the day-to-day performance of her duties nor was she controlled by the Payor with respect to the manner in which she worked;

(s) the Appellant had full control with respect to the terms and conditions of her employment with the Payor;

(t) the Appellant, even when she was not on the Payor’s payroll and was not paid to do so, performed services for the Payor before and after the periods in question;

(u) the Appellant is related to the individual who controls the Payor/Corporation and is accordingly related to the Payor within the meaning of the Income Tax Act;

(v) the Appellant is not dealing with the Payor at arm’s length;

(w) 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 Payor would have entered into a substantially similar contract of employment if they had been dealing with each other at arm’s length."

[17] The Appellant, her father Romuald Azgin and Allan Dean the sales manager at the Company also gave evidence.

[18] The Appellant takes no issue with items 5(a), (b), (c), (d), (e), (f), (h) or (u). She does take issue with items 5(g), (i), (j), (k), (l), (m), (n), (p), (q), (r), (s), (t), (v) and (w).

[19] I do make the general comment that the manner in which the stated facts were assembled and put before the Minister is somewhat strange. The Appellant was given no opportunity to challenge them before the decision was made and indeed the first time that she became aware of them was after she filed her appeal and received a reply to that appeal from the Deputy Attorney General of Canada. Who assembled the original set of facts and the form in which they were put before the Minister remains a mystery. What is clear is that the Appellant had no opportunity to challenge or comment upon them before the decision of the Minister was taken. This would hardly seem to accord with the rules of natural justice. In any event that is how it was done. As it turns out, however, the evidence before me clearly revealed that many of the stated facts are completely and utterly wrong. They simply do not accord with the evidence. I will deal with each of them in turn:

[20] Item (g): the number of employees working in the factory side of the operation varied considerably from time to time. In the office there was Romuald Azgin, who went about running the business, Allan Dean who was the sales manager and who spent 50% of his time out of the office at the Chrysler Corporation plant, the Appellant who was the office manager/financial comptroller and Janine Pilarsky who started as a general help on the factory floor and was subsequently trained by the Appellant to do some types of office work. She had limited experience and ability.

[21] Item (i): the Appellant takes issue with the word "alleged" which has no place in the formulation of facts. It is a judgmental word, an opinion, revealing that the assembler of facts does not believe the Appellant. Surely that rather tends to usurp the function of the Minister. The words "stated duties" might have been more appropriate and would have displayed considerably less bias.

[22] The Appellant does not dispute that the duties, as set out, were her duties. However the statement of facts underemphasises the extent of those duties which were to run the office, set up systems, computer programmes and generally attend to all the accounting, financial, employee and administrative needs of the business. She holds a degree in Business Management and a Fellowship from the Institute of Canadian Bankers. She had in fact been a bank manager at the Royal Bank before moving over to her father’s business in 1988. Thus she was well qualified for the position and her duties were considerably more substantial than are made to appear in the statement of facts. The additional information in her letter of July 1, 1996 was omitted from the statement of facts and that information was highly relevant to the decision the Minister was required to make. One can only say of this paragraph that, if it was not incorrect, it was extremely slanted and did not convey a correct and full understanding of the situation as revealed by the evidence. It was prone to leave an erroneous impression.

[23] Item (j): This stated fact is wrong. The Company did not engage three other individuals to take care of the office work. This paragraph appears to make the assumption that other people did the work claimed by the Appellant. Clearly nothing could be further from the truth. Allan Dean worked in sales and had nothing to do with the running of the office. The Appellant’s mother, if she came to the office at all, which was rare, came to help her husband on the business side and had little or nothing to do with the office other than to answer the telephone upon occasion. Janine Pilarsky had other outside duties, was a trainee under the Appellant and not competent or capable of taking on the work done by her.

[24] Item (k): Whilst Janine worked continuously from January 1, 1992 to December 31, 1994 she had been away or laid off through other periods of time. Limiting the period in the statement of facts was misleading as it tended to convey the impression that she had worked throughout.

[25] Item (l): There was no unrelated office manager. If this refers to Allan Dean then it is clearly incorrect as he had nothing to do with running of the office. Thus an entirely erroneous impression is left by this stated fact which was irrelevant anyway.

[26] Item (m): This is entirely untrue and mistaken. The evidence clearly shows that the Appellant worked regular hours on a daily basis at the office five days per week and only on occasion and usually only on some Thursday mornings worked at home on her computer. The type of work in which she was engaged sometimes lent itself to being done like this. There is nothing in the evidence before the Minister which could justify the conclusion that she worked four days a week at home.

[27] Item (n): Quite clearly this is also wrong. This conclusion or opinion on the part of the assembler of facts is totally unjustified by the evidence. The Appellant’s duties were extensive and occupied her on a full-time basis. When she was absent it is clear that a certain amount of chaos ensued at the office and the Company’s financial affairs fell into disorder, almost forcing the business to close.

[28] Items (o) and (p): When originally engaged by her father in 1988 she was probably underpaid having regard to her qualifications and experience. However the work was more convenient for her than her other employment at the bank. She felt she would be more appreciated and thus for the sake of better working conditions she changed her employment. That was surely a business decision she had to make balancing working conditions against salary and nothing untoward can be read into this. In 1992 the father recognised that she was underpaid and raised her salary. It was the first raise in four years (three years of actual work). It did come at a difficult time financially for the company and it did occur three months before she left on maternity leave. That would naturally arouse suspicions. However the evidence was clear that the raise was justified and commensurate with her responsibilities and experience. It was the only raise she had over a seven-year period and put into that context rather than the one year set out in the stated facts can be seen in a totally different light. The slant in the stated facts of putting one year as opposed to the longer period of seven years is erroneous and misleading. The assembler of facts again, rather than limiting himself to facts, has sought to express a negative opinion which may well have influenced unfairly the decision of the Minister. It shows bias and is not well-founded. It was for the Minister to form his own opinion based on the whole and complete facts.

[29] Item (q): This is wrong. The employee Janine started in 1988 at a salary of $300.00 per week and over the years went up to $450.00 per week, i.e. a 50% increase. This was clear from the payroll records and it was misleading to the Minister for the assembler of facts to say this.

[30] Item (s): This is in error. Her terms and conditions of employment were clearly spelled out by her father, subject to the flexibility accorded to her management position. There was nothing untoward or unusual about this arrangement and again this statement of fact is wrong and at the best misleading.

[31] Item (t): The only evidence is that when she was away from the office on maternity leave etc., she was able and willing to give her father verbal advice and assistance with particular problems which arose. This was not onerous and was probably perfectly normal.

[32] Item (v): The Appellant takes issue with this conclusion, arrived at by the assembler of facts, which is not a fact. She points to all aspects of her employment which she says indicates otherwise. Again there is confusion as to what is fact and what is an opinion or conclusion based on fact. The former is for the person assembling the facts to put together. The latter is for the Minister to form based on those facts. It becomes confusing when opinions and conclusions are put before the Minister and then called facts upon which he is supposed to base his opinion.

[33] Item (w): Again this is not a fact but the very decision which the Minister was required to make based upon the facts.

[34] What then is the effect of all this. Any one of these errors in the statement of facts made alone and out of context would and could not lead the Court to the conclusion that the decision of the Minister was not lawfully made. However the whole tenor of the statement of facts put before the Minister was to the effect that the Appellant was not carrying out the stated duties, whereas quite clearly the evidence reveals that in fact she was. Those duties were said to be "alleged"; she was said to be working at home four days per week; it was said that her duties would not keep her occupied on a full-time basis; her duties and responsibilities were understated; the wrongful statement was made that others were performing her duties when clearly they were not; her salary was termed "excessive" whereas it was less than her experience and qualifications might have dictated. When put together all of these create a totally and utterly incorrect impression of the actual evidence. It was a complete distortion of the evidence and the reality of the situation was not conveyed to the Minister. This is not a question of weighing the evidence. The stated facts put before the Minister were clearly wrong. Take out all the incorrect facts and there is nothing left upon which the Minister could have reasonably and objectively come to the conclusion that he did. The Minister was misled. I hesitate to use the word bad faith; perhaps it was more a matter of incompetence. I say again that the Court does not know how these stated facts were put together, by whom or when. It is however perfectly clear that in this case there was a substantial distortion of the true facts. Clearly, to the extent that erroneous facts, opinions and conclusions were put before the Minister, he was misled. He, also for the same reasons, did not take into account the relevant true facts. For whatever reason this employment was portrayed in this manner to the Minister, these circumstances lead me to the inalienable conclusion that his decision was not properly or lawfully taken. It smacks of some form of bias in the process by which it was taken. The decision of the Minister is accordingly not sustainable in law and I must now advance to the second stage of the appeal process and decide whether on all of the evidence, the parties, had they been at arm’s length, would have entered into a substantially similar contract of employment, taking into account all of the circumstances including those specifically set out in paragraph 3(2)(c) of the Act.

Stage 2 - Review of the evidence

[35] I was most impressed by the evidence of the Appellant and her father. They struck me as being very honest and trustworthy. They obviously feel frustrated as they believe the Minister, through his officials, has not listened to them. Their evidence was corroborated by Allan Dean the sales manager of the Company. The Appellant was obviously well qualified for the position of office manager and financial controller of this Company. She had previously been a bank manager. The Company also quite obviously needed someone with her sort of qualifications to look after the office and its financial affairs. During her absences it is evident that there was considerable chaos in the office and the company was involved in some serious financial problems relating to receivables and the like. Quite clearly she was needed. I accept without any reservation whatsoever her evidence that she did the job, and she did it by going, for the vast majority of the time involved, to the office to work. Only on occasion did she take work home and do it on her computer, when that particular work lent itself to that. I do not think that is all that uncommon. This kind of work can often be best done at home uninterrupted. She held a genuine position in the business and she did genuine work. She enjoyed a certain amount of autonomy as befits a professional manager. However there was no doubt in my mind that her father called the shots and she was certainly under his general direction. In listening to him give his evidence in this respect I had no doubt on that point. Her salary was a little on the low side compared with what she had been earning at the Bank. However the working conditions were more convenient to her, with less stress and it was her decision to accept a lower salary in those circumstances. She cannot be penalised for that. That was what the company could afford to put into that position. If she had received more would the Minister have said that she was disqualified because the job was not worth that much. In my view she took the position at what it was worth to the Company at the initial stages, proved her worth and then negotiated an increase in salary as would normally be done by any other independent and competent employee. She received no more and no less than any outsider would have done. She did genuine work in a genuine position in the company. The view of the Minister’s officials that she did not genuinely do the work is totally unsupported by the evidence and in my view was completely unfounded.

[36] After considering all of the evidence, both oral and written and the exhibits entered before me, I am well satisfied on the balance of probabilities that indeed the arrangement was genuine, that it was a contract of service and one which, 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 they would have entered into had they been at arm’s length, or at least a substantially similar one.

[37] The appeal is accordingly allowed and the decision of the Minister is vacated.

Signed at Toronto, Ontario, this 23rd day of February 1998.

"Michael H. Porter"

D.J.T.C.C.