Citation: 2011 TCC 198
Date: 20110406
Docket: 2010-1001(EI)
BETWEEN:
RITA BEAULIEU,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Paris, J.
[1] The appellant is appealing
from a decision of the Minster of National Revenue (the Minister) stating that
the employment she held with Maçonnerie Rivière-du-Loup (1994) Inc. (the payer)
from August 4, 2008, to August 7, 2009, was not insurable under
paragraph 5(2)(i) of the Employment Insurance Act (the Act)
because she was not dealing with the payer at arm's length. The appellant's husband,
Jean-Louis Beaulieu, was the payer's sole shareholder.
[2] Under paragraph 5(3)(b),
when an employer and an employee are not dealing with each other at arm's
length, the Minister must determine, having regard to all of the circumstances,
whether 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. In this
case, the Minister determined that it was not reasonable to conclude that the
payer and the appellant would have entered into a substantially similar
contract.
[3] The only issue before the Court
in this case is whether the Minister's conclusion was reasonable. To determine
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".
[4] The facts on which the
Minister relied are found in paragraph 6 of the Reply to the Notice of
Appeal, and I will first reproduce those admitted by the appellant:
[Translation]
(a) The payor was
incorporated on April 18, 1994;
(b) The payer did only
commercial masonry.
(c) The payer's balance
sheets for fiscal years ending on February 28 or 29 contained the
following data:
|
2004
|
$277,559
|
$13,607
|
|
2005
|
$259,335
|
$11,380
|
|
2006
|
$251,160
|
$21,815
|
|
2007
|
$747,525
|
$31,392
|
|
2008
|
$383,745
|
$18,370
|
|
2009
|
$1,244,325
|
$196,370
|
(d) The payer issued 17
T4 slips in 2008 and 16 T4 slips in 2009 including his own and the appellant's.
(e) From October 2008 to
February 2009, the payer had a big contract at the arena in La Pocatière, and
in May 2009 it did exterior masonry work.
(f) For that contract,
the payer did business with the supplier Turcotte from Trois‑Pistoles for
blocks and with another company from Québec for other materials.
(g) The payer had other
contracts, but it cannot quantify them.
. . .
(i) The payer's offices
are located in the basement of the appellant's personal residence.
. . .
(k) The payer's
shareholder uses a cell phone, the number for which is written on the bids, so
that he can be contacted right away.
(l) The appellant has
been working for the payer since the payer first started its activity, that is,
before its incorporation.
(m) The appellant has no
background in accounting or information technology.
. . .
(o) During the period at
issue, on average, 70 cheques per month were issued to pay expenses and
employee salaries.
(p) There were 19
invoices in 2008, and 13 invoices in 2009, all handwritten with very
little text.
(q) Since her layoff,
the appellant has been accumulating work in order to do it over a few days at
the end of the month, though the payer stated that the appellant worked
3 to 4 hours per month.
. . .
(s) The appellant was
paid for 40 hours per week during the entire period at issue.
. . .
(u) The appellant's
gross pay during the period at issue was $399.20, that is, 20% lower than in
2004, because, in order to receive her pension from the Régie des Rentes du
Québec, the appellant had to reduce her salary by 20%.
(v) The appellant was
paid weekly based on a 40-hour week, that is, at the rate of $10 per hour,
while, according to Emploi Québec, the salary for a secretary is set between
$12 and $20 per hour.
(w) During the period at
issue, the appellant was the payer's only employee to be paid for 40-hour weeks
without interruptions.
(x) From
February 24 to March 29, 2008, the appellant was the only paid
employee, except for one week when the shareholder was also paid.
. . .
(z) Since her layoff,
the appellant received a 40-hour pay on September 20, November 1 and December
13, 2009.
(aa) The payer earned no
revenue in March, April and July 2009, while the appellant's full-time
employment had been maintained.
[5] Now I will list the facts
that Ms. Beaulieu did not admit:
[Translation]
(h) The payer usually
obtains its contracts in January or February by submitting bids although it
could also obtain them during other months because there were allegedly 4 or 5
bids during the period at issue.
According to Ms. Beaulieu, she
prepared about 10 bids for the payer during the period at issue, and each
one took her 2 to 3 days. The payer obtained 5 of those contracts.
[Translation]
(j) The home phone is
also used for the payer’s needs: to make telephone calls as well as send faxes.
Ms. Beaulieu also testified that
the payer had its own telephone line.
[Translation]
(n) The appellant's
tasks were to submit the workers' hours of work to the accountant, who would
advise her of their wages so that she could prepare the paycheques. She was
present to answer the telephone and prepared bids with the shareholder in the
evenings. She also looked through newspapers for invitations to tender in which
the payer could participate. She also prepared cheques for suppliers and wrote
invoices for clients.
Ms. Beaulieu said that she had more
tasks than just those. In addition to preparing the bids, she personally
delivered them to Rimouski, which took three hours return trip. After submitting the bids, she
followed up on them and withdrew them if they were too low. At the start of
each job, she had to call suppliers to arrange delivery of materials, and at
the end she prepared letters of compliance for the CSST and CCQ. She dealt with
insurance and permits, answered calls from clients and suppliers and completed
bank deposits. Counsel for the respondent did not dispute Ms. Beaulieu's
testimony on these points.
[Translation]
(r) The appellant
usually worked from 8 a.m. to 3 p.m., although her hours were shortened, which
made it possible for her to do daily housework, and prepared bids by hand with
the shareholder in the evening.
(s) The appellant was
paid for 40 hours per week during the entire period at issue;
Ms. Beaulieu explained that she had
a fixed weekly salary, which was not based on the number of hours worked. Her
hours of work varied: sometimes she worked more than 40 hours per week,
sometimes less than that and sometimes she worked exactly 40 hours per week.
However, the payer's payroll journals
indicated that she was paid on the basis of a 40-hour week.
[Translation]
(t) The appellant
received her salary even in March and April 2009, while the payer was inactive.
(y) For the weeks of
December 21 and 28, 2008, the appellant was the only employee on the payroll.
(aa) The payer had no
revenue in March, April and July 2009, while the appellant's full-time
employment had been maintained.
Ms. Beaulieu did not recall the
payer's periods of inactivity or the time she was the payer's only employee.
However, a summary of the payer's payroll journals, prepared by the appeals
officer from the Canada Revenue Agency, showed that, during the weeks of
December 21 and 28, Ms. Beaulieu was the only employee, and
that, from February 2009 to April 19, 2009, Ms. Beaulieu
and Mr. Beaulieu were the only employees. According to the journals,
Ms. Beaulieu worked 40 hours per week during those periods, and
Mr. Beaulieu worked 20 hours per week. The journals also showed that
the payer had no revenue in March, April and June 2009. Mr. Beaulieu
testified that he had decided to pay his spouse her full salary during those
periods and that she had worked, but he did not specify what work she did.
Analysis
[14] The appellant simply stated
that she should be entitled to employment insurance benefits because she had
worked throughout the entire period at issue. She stated that it was unfair to
deprive her of them simply because she had worked for her husband's company.
[15] Although it may seem
unfair, the Employment Insurance Act provides that an employment where
the payer and the worker are not dealing with each other at arm's length is
excluded from insurable employment unless the Minister is satisfied that the
parties would have entered into a substantially similar contract if they had
been dealing with each other at arm's length.
[16] In Pérusse, Justice Marceau wrote the following at
paragraph 29:
I do not
think that persons connected by family ties, and so subject to natural and
legal obligations to each other, could reasonably be surprised or upset that
Parliament felt the need to determine, where a contract of service is
concerned, whether such ties, perhaps even without their knowledge, could have
influenced the working conditions laid down.
[17] As I indicated earlier in
these reasons, I must decide whether the Minister's decision still seems
reasonable in light of all of the facts in evidence.
[18] First, it seems clear to me
that the Minister did not take into account all of the relevant aspects of the
appellant's employment with the payer, including her additional tasks stated at
paragraph 8 and the fact that she had prepared 10 bids rather than 4
or 5 of them as the Minister claimed.
[19] According to the appeals
officer's report, the appellant's tasks were to be present to answer the phone,
prepare around 70 cheques per month, do a little invoicing and prepare
several bids, which she completed based on the information provided by her
spouse. The
officer concluded that [Translation] "those few tasks
could not justify employing the appellant full time".
[20] I accept that the
appellant's tasks during her employment were more varied and complex and would
take more time to complete than the officer had believed and, thus, that she
poorly assessed the importance of the appellant's work. However, even if that
is the case, I must still consider whether the remaining facts proved at trial
are sufficient in law to support the Minister's determination that the parties
would not have entered into a substantially similar contract if they had been
at arm's length.
[22] In deciding whether persons
dealing with each other at arm's length would have entered into a substantially
similar contract of employment to that existing in this case between the
appellant and the payer, a great deal of importance must be attributed to the
issue of whether the employment meets a real economic need of the payer. In this case, the Minister assumed
precisely that the appellant's employment did not coincide with the payer's
needs because the appellant continued working during periods when the payer was
inactive. The appellant was unable to show that this was false. The payer's
payroll journals showed that she received her full salary during periods
totalling over three months per year when there were no other employees or
only Mr. Beaulieu, who worked part time. Neither Mr. Beaulieu nor
Ms. Beaulieu explained why the payer needed her services full time during
those periods. The journals also showed that in September and
October 2009, while Ms. Beaulieu worked only 40 hours per month,
the payer had between two and four employees, that is, more than it
had had in March, April and between mid-July and August 9, when
Ms. Beaulieu continued to work full time.
[23] Thus, although the
importance of Ms. Beaulieu’s tasks was underestimated, in light of all of
the evidence and circumstances surrounding the appellant’s employment,
sufficient facts remain to support the Minister’s decision. For these reasons,
I find reasonable the Minister’s determination that the payer would not have
hired a person at arm’s length to do the same work as the appellant on the same
conditions during the period at issue.
[24] The appeal is therefore
dismissed.
Signed at Ottawa, Canada, this 6th day of April 2011.
"B.Paris"
on this 13th
day of May 2011
Margarita
Gorbounova, Translator
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