Citation: 2009 TCC 611
Date: 20091207
Docket: 2009-120(EI)
BETWEEN:
YVES GAGNÉ,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Bédard J.
[1]
The appellant is
appealing from the decision of the Minister of National Revenue (the Minister).
The Minister found that Yves Gagné (the "worker") did not hold
insurable employment when he was working for the company 9180‑9210 Québec
Inc. (the "payor") for the period of December 10, 2007, to June 6,
2008; the Minister found that it was excluded employment because a
substantially similar contract of employment would not have been entered into
if the worker and the payor had been dealing with each other at arm's length.
[2]
When making his
decision, the Minister determined that the worker, when working for the payor,
was related to the payor within the meaning of the Income Tax Act (the
ITA) by relying on the following presumptions of fact:
[translation]
a.
Mélissa Gagné and Stéphane Dion are the payor's
sole shareholders; (admitted)
b.
the appellant is Mélissa Gagné's father, and
Stéphane Dion's father-in-law; (admitted)
c.
the appellant is related to persons who control
the payor; (ignored)
[3]
When making his
decision, the Minister also determined that the payor and the worker
[translation] "had a relationship of dependence between them in the
employment context" and that it was not reasonable to find that the payor
would have entered into [translation] "a substantially similar contract of
employment if they had had an arm's length relationship," considering the
following circumstances:
[translation]
i.
the payor was incorporated on March 30, 2007; (no
knowledge)
ii.
the payor operated a forestry business that
harvested and transported wood to logging roads; (admitted)
iii.
the payor's statements of income and expenses
were: (no knowledge)
|
|
Income
|
Net benefit
|
|
to December 31, 2007
|
$517,978.00
|
$72,213.00
|
|
to June 30, 2008
|
$153,688.00
|
($72,666.00)
|
iv.
on May 1, 2007, the payor signed a purchase
agreement for machinery, namely a Timberjack feller buncher, a Timberjack log
forwarder and two Ford trucks from the company Multi R.M. Inc. (Multi), a
company whose sole shareholder was Rachel Munger; (admitted)
v.
Rachel Munger is the appellant's spouse and
Mélissa Gagné's mother; (admitted)
vi.
on May 1, 2007, the payor signed a purchase
agreement with Multi, stating that the payor would hire the appellant during
the spring thaw to perform maintenance on the machinery sold by Multi, for a
period of 5 years; (admitted)
vii.
the appellant had been working in the forestry
industry since 1981; (admitted)
viii.
according to the appellant, from December 2007
to March 2008, his duties for the payor consisted of going to Monts Valins on
Sunday, more than three hours' drive from his residence, to plug machinery in
to a generator, so the machinery would be operational on Monday morning when
the other workers arrived; according to the payor, in January and February
2008, the payor's forestry contract was in Santerre [sic] in Abitibi,
more than 8 hours' drive from the appellant's residence; (denied)
ix.
the appellant never told the respondent that the
duties were in Abitibi, an 8 hours' drive from his residence; (denied)
x.
according to the appellant and the payor, wood
harvesting at the end of 2007 was done for the company Produits forestiers
Saguenay Inc., whereas the director of forestry operations at Produits
forestiers Saguenay Inc. indicated the payor did not harvest wood for the
company during that period; (denied)
xi.
for many weeks during the period of December
2007 to March 2008, the appellant was the only employee in the payor's payroll
journal and his duties for the payor, plugging machinery in for the other workers,
is not supported by the facts; (denied)
xii.
from March 2008 to June 2008, the appellant's
duties were to perform maintenance on two machines in a garage; (admitted)
xiii.
the payor gave the appellant $12,366.00 in
compensation during this 12‑week period, for 47 hours of work, for a
total of 564 hours; (admitted)
xiv.
Stéphane Dion, the payor's shareholder, received
unemployment insurance benefits from February 24, 2008, to July 17, 2008, while
the appellant worked full time for the payor; (denied)
xv.
Mélissa Gagné informed the respondent's
determination officer that Stéphane Dion had mechanical skills but preferred
that the appellant perform the maintenance; (denied)
xvi.
from December 22, 2007, to February 9, 2008,
Stéphane Dion was listed in the payor's payroll journal as a mechanic; (denied)
xvii.
Stéphane Dion worked as a mechanic when the
payor's machinery was in Abitibi, and did so without the appellant's help; (denied)
xviii.
the payor, despite its statement of loss, chose
to have the appellant work while the shareholder, Stéphane Dion, received
unemployment insurance benefits; (denied)
xix.
on June 10, 2008, the payor issued the
appellant, as operator, a record of employment that indicated the first day of
work as September 10, 2007, and the last day as June 6, 2008; the number of
insurable hours was 629 and insured earnings was in the amount of $13,737.36; (admitted)
xx.
the purpose of the contracts between the payor
and Multi, associated companies, were for the appellant to qualify for
unemployment–insurance benefits; (denied)
xxi.
the appellant's employment conditions were based
on the relationship between the parties; (denied)
[4]
The payor's payroll
journal (Exhibit I‑4) indicates that:
1.
during the weeks ending
December 15, 2007, December 22, 2007, and December 29, 2007, the worker worked
16 hours a week for the payor;
2.
during the weeks ending
January 5, 2008, January 19, 2008, January 26, 2008, February 2, 2008, February
9, 2008, February 16, 2008, February 23, 2008, and March 1, 2008, the worker
worked 8 hours a week for the payor;
3.
from March 25, 2008, to
June 6, 2008, the worker worked for the payor for 12 weeks at 47 hours a week;
4.
during the week ending
December 15, 2007, the worker was the only employee linked to the payor's
forestry activities listed in the payor's payroll journal;
5.
during the weeks ending
December 22, 2007, and December 29, 2007, the worker and Stéphane Dion were the
only employees linked to the payor's forestry activities listed in the payor's
payroll journal;
6.
during the week ending
January 5, 2008, the worker was the only employee linked to the payor's
forestry activities listed in the payor's payroll journal;
7.
during the weeks ending
January 19, 2008, January 26, 2008, February 2, 2008, and February 9, 2008, the
worker and five other employees linked to the payor's forestry activities were
listed in the payor's payroll journal. It must be noted that during these
weeks, the payor was working on a timber-cutting contract in Santerre [sic],
in Abitibi;
8.
during the weeks ending
February 16, 2008, February 23, 2008, and March 1, 2008, the worker was the
only employee linked to the payor's forestry activities listed in the payor's
payroll journal;
9.
from March 25, 2008, to
June 6, 2008, the worker was also the only employee linked to the payor's
forestry activities listed in the payor's payroll journal.
Testimony of the worker
[5]
The worker's testimony
regarding the nature of his duties for the payor during the periods he was
listed on the payroll can be summarized as follows: in December 2007, his work
consisted of going to Monts Valins on Sundays (three hours' drive from his
residence) to plug the payor's machinery in to a generator so that this
machinery would be operational when the payor's forestry employees went to the
payor's work site in Monts Valins on Monday morning. During this period, his
work also consisted of running errands for the payor. During the week ending
January 5, 2008, he prepared machinery for its transfer to Santerre [sic],
in Abitibi, where the payor was to carry out a timber-cutting contract in
January and February 2008. After the contract in Abitibi (around February 9,
2008) until March 25, 2008, he cleaned the payor's machinery for the
maintenance and repair work he was to perform, which he allegedly did between
March 25, 2008, and June 6, 2008, and that allegedly required 564 hours of
work. Moreover, the appeal report prepared by the worker (Exhibit I‑5)
on November 25, 2008, indicates the following statements were given to the
appeals officer regarding the nature of his work during the periods he was
listed on the payroll:
[translation]
(29) From December 2007 to
February 2008, the payor's harvesting work was done for Produits forestiers
Saguenay inc.
(30) In December 2007 to February 2008, he
had to go to the forest (Monts Valins) on Sundays to collect [sic] the
machinery to the generator so the machinery would be operational when the other
workers arrived on Monday morning. To get to Monts Valins, the worker had to
drive more than 3 hours.
(31) On Monday morning, the worker crossed paths
with the other workers as they arrived. Some weeks, the worker took 16 hours
because it took longer. Moreover, he ran errands for Stéphane Dion to get parts
because the payor was away.
(32) The other 8-hour weeks were weeks when it
was milder, and therefore there was less work.
(33) From March 2008 to June 2008, the worker
did maintenance on two machines in a garage. He rebuilt the machinery, changed
the valves and cylinders.
At the least, we can say that the worker's statements
during his testimony regarding the nature of his duties was rather different
than his statements of November 25, 2008, on the same subject; in particular:
(i)
the worker's testimony
was that he went to Monts Valins on Sunday evenings only in December 2007,
whereas his November 25, 2008, statements clearly indicate that from December
2007 to February 2008, he went to Monts Valins on Sunday evenings. Moreover, I
strongly doubt that the worker went to Monts Valins in December 2007 to plug
machinery in to the generator because in the Reply to the Notice of Appeal (see
subparagraph 6(k) of the Reply to the Notice of Appeal and paragraph 20 of
Exhibit I-5), the Minister alleged that in December 2007, the payor was not
even cutting wood in Monts Valins. The worker's evidence against this claim by
the Minister relied on the testimony of his daughter and his son-in-law, who
cannot be qualified as independent witnesses in this case, and on the
submission of an invoice to evidence (Exhibit A‑2) that does not
mean anything in itself. The worker could have asked the head of the company
Produits forestiers Saguenay Inc. to testify that the payor was carrying out a
timber-cutting contract in Monts Valins in December 2007 and that he had to
plug the machinery in to a generator during that period. The worker could also
have established his credibility with the testimony of an independent witness
who had knowledge of such travel to Monts Valins in December 2007. The worker
did not do this. I assume that this evidence would not have been favourable to
him.
(ii)
on November 25, 2008,
the worker did not declare to the appeals officer that during the week ending
February 5, 2008, he had prepared machinery in preparation for its transfer to
Santerre [sic], in Abitibi.
(iii)
on November 25, 2008,
the worker did not declare to the appeals officer the nature of his activities
after the end of the contract in Abitibi (in this case, on or around February
9, 2008), a period during which only the worker was listed in the payor's
payroll journal.
Testimony of Mélissa Gagné and Stéphane
Dion
[6]
Ms. Gagné essentially
gave the same testimony as the worker regarding the duties he carried out
during the periods he was listed in the payor's payroll journal, although her
knowledge of the worker's hours of work were essentially based on reports
provided by Stéphane Dion, the worker's son-in-law, who was also his immediate
boss. Stéphane Dion also gave the same testimony as the worker regarding the
duties he carried out during the periods he was listed in the payor's payroll
journal.
[7]
We will recall that the
respondent determined this employment was not insurable under
paragraphs 5(2)(i) and 5(3) of the Act because he was convinced
that it was not reasonable to conclude that a substantially similar contract of
employment would not have been entered into if the worker and the payor had
been dealing with each other at arm's length.
[8]
The Federal Court of
Appeal has repeatedly defined the role conferred on Tax Court of Canada
judges by the Act. That role does not allow such judges to substitute their
discretion for that of the Minister, but it carries with it the obligation to
"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." (see
Légaré v. Canada, [1999] F.C.J. No. 878 (QL), para. 4).
[9]
In other words, before
deciding whether the Minister's conclusion still seems reasonable, I must, in
light of the evidence before me, verify whether the Minister's conclusions are
valid, considering the factors set out in paragraph 5(3)(b) of the Act.
It should be asked whether the payor and the worker would have entered into a
substantially similar contract of employment if they had been dealing with each
other at arm's length.
[10]
In this case, the
worker had the burden of proving, on a balance of probabilities, that the facts
inferred or relied on by the Minister were not real or were incorrectly assessed
having regard to the context in which they occurred. The worker simply did not
meet his burden. The worker's evidence was essentially based on his testimony,
which I considered had little probative value considering the distortions and
contradictions between his statements on November 25, 2008, to the appeals
officer and his testimony regarding the duties carried out for the payor and
the time of their execution. In the circumstances, it is very difficult to
grand any probative value to the testimony of his daughter and his son-in-law,
although they essentially gave the same testimony as the worker. The worker had
the opportunity in this case to establish his credibility by having independent
witnesses testify regarding some of his duties. Unfortunately, he did not do
this. In all, I strongly doubt that the worker carried out all the duties he
claims to have carried out for the payor, and that he spent so many hours doing
so.
[11]
In light of the
evidence before me, after reviewing the factors stated at paragraph 5(3)(b)
of the Act and after verifying their validity, the Minister's findings seem
reasonable to me.
[12]
For these reasons, the
appeal is dismissed.
Signed at Ottawa, Canada, this 7th day of December 2009.
"Paul Bédard"
Translation certified
true
on this 24th day
of December 2009.
Elizabeth Tan,
Translator
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