Citation: 2011 TCC 104
Date: 20110216
Dockets: 2010-2212(EI)
2210-2213(EI)
BETWEEN:
RAYNALD BOUCHARD AUTOMOBILE INC.,
GUYLAINE PLOURDE,
Appellants,
and
MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Paris, J.
[1]
The appellants are
appealing from the respondent's decision that the employment of the appellant
Guylaine Plourde with the appellant Raynald Bouchard Automobile Inc. (the
payer) did not constitute insurable employment for the purposes of the Employment
Insurance Act (the Act). The Minister decided that her employment was
excluded under paragraph 5(2)(i) of the Act for the following
periods: January 15 to December 14, 2007, February 3 to
December 13, 2008, and May 3 to November 27, 2009.
[2]
Paragraph 5(2)(i)
of the Act states that employment is not insurable employment "if the
employer and employee are not dealing with each other at arm's length". It
is not disputed that the appellant and the payer were not dealing with each
other at arm's length. Raynald Bouchard, Ms. Pourde's spouse, held
all of the payer's shares.
[3]
However, when applying
paragraph 5(2)(i), the Minister may take into account the exception
in paragraph 5(3)(b) of the Act, which reads as follows:
5(3) For the purposes of paragraph (2)(i),
. . .
(b) if the employer is, within the meaning of that
Act, related to the employee, they are 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.
[4]
In this case, the Minister
decided that it was 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.
[5]
The only issue before
the Court in this case is whether the Minister's conclusion was reasonable. To
decide on this, I must "verify whether the facts inferred or relied on by
the Minister are real and were correctly assessed having regard to the context
in which they occurred, and after doing so, . . . decide whether the conclusion
with which the Minister was "satisfied" still seems reasonable".
[6]
In making his decision,
the respondent based himself on the following facts stated in paragraph 6 of
the two Replies to the Notice of Appeal:
[Translation]
(6) The Minister determined that [Ms. Plourde] and the payer
were not dealing with each other at arm's length in the employment. The
Minister was satisfied that it was not reasonable to conclude that
[Ms. Plourde] and the payer would have entered into a substantially
similar contract if they had been dealing with each other at arm's length,
having regard to the following circumstances:
(a) The payer was incorporated on February 7, 1990.
(b) The payer operated a car repair and maintenance garage.
(c) The payer sold tires, inspected air conditioners, repaired
Duro-Vitre glass and offered a towing service with a response time of 30
minutes or less in the west of the valley.
(d) The payer's garage has three doors and can take up to three
vehicles at a time.
(e) The payer's only shareholder is Raynald Bouchard.
(f) The payer is active year-round but is busiest from mid-October
to the end of November because of switching tires.
(g) The payer's hours of operation are Monday to Friday, 8 a.m.
to 5 p.m., and Saturday, 8 a.m. to noon.
(h) In addition to the shareholder, the payer employs two mechanics
and [Ms. Plourde].
(i) Only one signature is needed for the payer's cheques.
(j) The payer's cheques were most often signed by the shareholder,
who also prepared the employees' paycheques, completed invoices and submissions
to the clients, dealt exclusively with part inventory as well as with the
towing service.
(k) If the shareholder was absent for towing, the payer's calls were
forwarded to his cell phone during the garage's hours of operation and to his
home phone if the garage was closed.
(l) A person outside the payer, named Brigitte Roy, did the payer’s
bookkeeping.
(m) Ms. Roy visited the payer 4 to 5 days per month to do the
bookkeeping.
(n) The payer paid Ms. Roy $12 per hour.
(o) [Ms. Plourde] has worked for the payer for about 18 years.
(p) [Ms. Plourde] is authorized to sign the payer's cheques.
(q) [Ms. Plourde's] tasks were to answer the telephone; enter
suppliers' invoices, namely, the account telephone number and the amount before
tax into the computer; arrange invoices in alphabetical order; cash clients'
payments; fold statements of account; and enter inventory, namely, the
supplier's name and quantity. Occasionally, she went to pick up parts, took
personal and business mail to the post office, did some cleaning such as
dusting the counter and made appointments for the clients.
(r) While varied, [Ms. Plourde's] work is minimal and often casual.
(s) Although the payer stated that [Ms. Plourde's] work was
accumulated to provide a full week's worth of work, it appears that the
majority of her tasks were required every day.
(t) The parties agree that [Ms. Plourde's] periods of employment
were distributed as follows throughout the year:
·
From January to April: 1 week every two
months;
·
From May to September: 1 week per month,
except for a period of 2 or 3 consecutive weeks at the end of the
summer; and
·
From October to December: full time because it
is a peak period.
(u) The 2007 and 2009 payroll journals show that this was not so, as
[Ms. Plourde] worked 1 week per month from January to May
in 2007 and not at all for the same period in 2009 because the
shareholder could handle the work alone.
(v) In 2009, [Ms. Plourde] worked fewer weeks even though the sole
shareholder was sick in the summer of 2009.
(w) [Ms. Plourde] received a weekly gross salary of $390 + 4% during
the periods at issue, that is, $11.15 per hour.
(x) The payer's mechanic is paid $12 per hour; the mechanic in
training is paid $10.50 per hour, and the bookkeeper is paid $12 per hour.
(y) Given her non-specialization, the payer explains [Ms. Plourde's]
high salary by the fact that she is more than just a receptionist, but a
versatile and trustworthy employee.
(z) in 2007, cheques were issued by the payer to [Ms. Plourde] for
the weeks ending on March 17, April 28 and May 12, while she was not
on the payroll.
[7]
Most of these facts
were not challenged by the appellants.
[8]
Concerning paragraph
(f), Mr. Bouchard explained that the business's peak period could begin in
September depending on the weather. He said that, at the start of the fall,
clients would order tires and ask for advice. In addition, tire inventory had
to be done.
[9]
Mr. Bouchard added,
with respect to paragraph (j), that Ms. Plourde helped him inventory the
parts at the end of June or beginning of July.
[10]
With respect to
paragraph (k), Mr. Bouchard specified that, when Ms. Plourde was
working, she took messages instead of forwarding the calls to his cell phone.
[11]
As for paragraphs (q), (r) and (s), Mr. Bouchard and
Ms. Plourde both insisted that Ms. Plourde worked hard during all the
weeks that she worked for the payer and that her work was important to it. They
showed the Court a list of Ms. Plourde's 22 duties, which they had given
to the Canada Revenue Agency's appeals officer at the time of the
investigation. In addition to the duties listed in paragraph (q),
Ms. Plourde ordered parts on Mr. Bouchard's instructions and informed
clients when the parts were in; sorted the parts received from suppliers;
prepared simple invoices and started more complicated ones, which
Mr. Bouchard finished; made bank deposits; helped with inventory and
followed up on client accounts.
[12]
They also said that,
during the months that Ms. Plourde did not work every week, part of her
work, namely, filing documents and data entry, was accumulated by the payer.
The rest of her work consisted of daily tasks that Mr. Bouchard would
otherwise have to do himself. According to him and Ms. Plourde, he worked
70 to 90 hours per week for the business and needed help during the
weeks that she worked in order to free him from certain tasks and enable him to
catch up on the administrative work that had accumulated.
[13]
Mr. Bouchard
acknowledged that Ms. Plourde did not work at all from January to
May 2009. He explained that, during that period, his workload was reduced
and that he needed no help. Normally, at the beginning of the year, the payer
renegotiates contracts with car insurance companies, but, in 2009, the
contracts were renewed without changes. The winter of 2009 was milder than
usual, which had an impact on the payer's revenue. At the start of 2009, the
payer also lost a tire repair contract with a local plant. In addition, because
of almost $13,000 in losses the payer experienced the previous year, it gave
Ms. Plourde less work.
[14]
With respect to the
appellant's hourly rate, Mr. Bouchard testified that the two mechanics in fact
earned between $12.72 and $13 per hour because, in addition to their hourly
rate, they received commission. He said that, according to his research, the
current rate for a receptionist was $12 per hour.
[15]
Mr. Bouchard also
testified that Ms. Plourde's three paycheques mentioned in paragraph (z)
had been omitted from the payroll journal by mistake and that that mistake had
been corrected.
Analysis
[16]
The appellants' counsel
claimed that, in making his decision, the Minister failed to take into account
all the relevant facts concerning the nature, importance, duration and terms
and conditions of the work performed by Ms. Plourde and the remuneration
she received. According to him, the evidence showed that she worked only when
the payer needed her. Her salary was lower than that of the other people
working for the payer and her hourly rate was reasonable given her experience
and her availability to work intermittently for a significant part of the
year.
[17]
I agree with the
appellants' counsel. It seems to me that, in this case, the Minister did not
take into account important facts that would enable him to understand
Ms. Plourde's role in the payer's business. The Minister acknowledged that
the payer needed Ms. Plourde during its peak period in the fall, but
concluded that, during the rest of the year, there was not enough work to
justify employing her. However, the Minister did not understand that the payer
employed Ms. Plourde
outside of the peak period not only to file accumulated documents and enter
accumulated data but also to help Mr. Bouchard: to free him from having to
do everyday tasks for a week at a time in order to give him time to concentrate
on running the business. That is what emerged from Mr. Bouchard and
Ms. Plourde’s testimony, and their credibility was not disputed. I accept
that Mr. Bouchard worked very long hours to ensure the business's success.
In addition, it seems quite reasonable to me that he would occasionally
delegate some of his tasks to a temporary employee. I also acknowledge that it
was because of unusual circumstances that the payer did not require
Ms. Plourde's services for the period from January to May 2009.
[18]
It also seems to me
that the Minister did not take into account all of the tasks performed by
Ms. Plourde for the payer. In addition to the tasks listed in
paragraph (q) of the Reply, Ms. Plourde did invoicing, dealt with
ordering and receiving parts and helped with inventory and with collecting
accounts receivable. When all of Ms. Plourde's responsibilities are taken
into account, they cannot be described as [Translation]
"minimal and casual".
[19]
Finally, I find that
Ms. Plourde's hourly rate was not excessive in relation to her tasks,
responsibilities and experience. The evidence shows that her rate was lower
than that which the payer paid the other employees and was within the standard
for a receptionist in that area.
[20]
For all of these
reasons, after reviewing all of the evidence, I am of the opinion that the
Minister's conclusion in this case was not reasonable. After examining the
background to Ms. Plourde's employment with the payer, I am satisfied that
the appellant and the payer would have entered into a substantially similar
contract if they had been dealing with each other at arm's length.
[21]
The appeal is allowed.
Signed at Ottawa, Canada, this 16th day of February
2011.
"Brent Paris"
on this 31st day of March 2011
Margarita
Gorbounova, Translator
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