Citation: 2010 TCC 8
Date: 20100107
Docket: 2009-142(EI)
BETWEEN:
CENTRAL ISLAND REALTY LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Paris J.
[1] This is an appeal from a ruling by the Minister of
National Revenue that Denise Dumbrell’s employment with the Appellant for the
period January 1, 2004 to November 8, 2007 was insurable under the Employment
Insurance Act. The Appellant corporation is wholly owned by Ms. Dumbrell’s
father, Wayne Dumbrell, and therefore, her employment would normally be
excluded from insurable employment under paragraph 5(2)(a) of the Act
which provides that insurable employment does not include employment where
the employer and employee do not deal at arm’s length. There is no dispute that
but for paragraph 5(3)(b), Denise Dumbrell and the Appellant would
not have been dealing with each other at arm’s length. However, paragraph 5(3)(b)
of the Act goes on to state that:
5(3) For the purposes of paragraph (2)(i),
(a) …
(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.
In this case, the Minister was satisfied that the parties
would have entered into a substantially similar contract of employment if they
had been acting at arm’s length.
[2] The only issue in appeal is whether in light of all of
the facts, the Minister’s decision under paragraph 5(3)(b) is
reasonable. The Appellant at the hearing, conceded that Ms. Dumbrell’s
employment was insurable for the period January 2, 2004 to August 31,
2004. The relevant period for the purposes of the appeal is, therefore,
September 1, 2004 to November 8, 2007.
[3] The facts relied upon by the Minister in arriving at his
decision are set out in paragraph 6 of the Reply to the Notice of Appeal. The
relevant portions of paragraph 6 read as follows:
6. In determining that the Worker was employed in insurable
employment with the Appellant during the Period, the Minister relied on the
following assumptions of fact:
a) ...
Licensed
Realtor
p) in 2003
the Worker became a licenses realtor;
q) the Worker’s duties, similar to other employee realtors with
the Appellant, was selling real estate and assisting with the Appellant’s administrative work;
r) during
the Period, the Appellant employed a receptionist, a bookkeeper, an office
manager, and assistant and realtors working as employees or self employed;
s) the
Worker and all employee realtors were accountable to the office manager;
t) during
the Period, the Worker and other employee realtors were responsible for
providing administrative support work where the self employed realtors with the
Appellant were not required to perform these duties;
u) the
Worker and other unrelated realtors were accountable to the office manager;
Hours and Pay
v) all
realtors, whether self employed or working as employees of the Appellant were
paid on a commission basis;
w) only
the Appellant’s office staff and the office manager were paid on an hourly rate;
x) the Worker and all
unrelated realtors’ hours varied and all were on call;
y) there is no
written agreement between the Appellant and the realtors;
z) the
Worker was paid a sales commission of a 60/40 split whereas some of the other
unrelated realtors were paid on a 70/30 split;
aa) the
Worker’s commission rate would be increased to a 70/30 split once the worker increased
her sales volume;
Other
bb) the
Worker did not have signing authority on the Appellant’s business bank accounts;
cc) as with all
realtors, no benefits were provided other than WCB;
dd) …
(hh) the
Worker was treated in the same manner as all unrelated realtors were treated; …
Analysis
[4] According to the Federal Court
of Appeal, the role of this Court with respect to the Minister’s decision under
paragraph 5(3)(b) is to verify whether the facts relied upon by the
Minister were true and correctly assumed, having regard to the context in which
they arose, and after doing so, it must decide whether the conclusion with
which the Minister was satisfied still appears reasonable. See Legaré v. Canada (Minister of National Revenue).
[5] In Pérusse
v. Canada (Minister of National
Revenue),
the Federal Court of Appeal also said at paragraph 15:
15 The function of an
appellate judge is thus not simply to consider whether the Minister was right
in concluding as he did based on the factual information which Commission
inspectors were able to obtain and the interpretation he or his officers may
have given to it. The judge's function is to investigate all the facts with the
parties and witnesses called to testify under oath for the first time and to
consider whether the Minister's conclusion, in this new light, still seems
"reasonable" (the word used by Parliament). The Act requires the
judge to show some deference towards the Minister's initial assessment and, as
I was saying, directs him not simply to substitute his own opinion for that of
the Minister when there are no new facts and there is nothing to indicate that
the known facts were misunderstood. However, simply referring to the Minister's
discretion is misleading.
[6] At the hearing, the Appellant
called Ms. Dumbrell to testify, and the Respondent called Richard Blakely and Linda
Wik, the rulings officer and the appeals officer, respectively, with the Canada
Revenue Agency.
[7] Ms. Dumbrell’s evidence was
that her terms and conditions of employment with the Appellant as well as her
rate of pay, were much different than those of other arm’s length realtors who
worked for the Appellant.
[8] However, Ms. Dumbrell’s
credibility was undermined by inconsistencies between her testimony before the Court
and her earlier statements to Mr. Blakely, as well as between her evidence and
information provided to Ms. Wik by Wayne Dumbrell and to Mr. Blakely by Wayne
Dumbrell's spouse, (Ms. Dumbrell’s mother), Sharon Dumbrell, who was also
involved in the Appellant’s business and worked as a realtor with the Appellant.
[9] Firstly, Ms. Dumbrell stated
at the hearing that her share of the commission on properties she sold was not
fixed, but was decided by her father, depending on her needs at the time, and upon
how much work she had done on the sale, as well as upon his mood. However, she
had told Mr. Blakely in a telephone interview that she received 60% of the
commission on properties sold, with 40% going to the Appellant. This commission
split (60/40) was confirmed by Sharon Dumbrell in a phone interview with Mr.
Blakely, and by Wayne Dumbrell in a phone interview with Ms. Wik.
[10] Secondly, Ms. Denise Dumbrell
testified that the Appellant provided her with a vehicle, a truck. However, Ms.
Dumbrell had told Mr. Blakely that she made the payments on the truck. Sharon Dumbrell
also told Mr. Blakely that her daughter made the payments on the truck. Mr.
Dumbrell told Ms. Wicks that his daughter was required to provide and pay for
her own transportation.
[11] Thirdly, the evidence given by
Denise Dumbrell concerning her duties for the Appellant was inconsistent with
what she had told Mr. Blakely in a phone interview. When asked by Mr. Blakely
to describe a typical day of work and what her duties were, Ms. Dumbrell
replied “selling real estate, all aspects of selling real estate”. At the
hearing, Ms. Dumbrell said that in addition to selling real estate, her duties
included anything her father told her to do or what needed doing, including
running errands, delivering documents to other locations at which the Appellant
had offices, training new employees, cleaning the office including vacuuming
and cleaning the bathrooms, making real estate signs and assisting other
realtors and looking after the office while her parents were away. She
estimated that she spent 20 to 25 hours per week on tasks unrelated to selling
real estate, and often worked late in the evening and on weekends.
[12] Fourthly, Denise Dumbrell
testified that she never reported to the Appellant’s office manager, but only reported
to her father. She told Mr. Blakely that she dealt with her father more than
the office manager. Sharon Dumbrell said that Denise reported to both Wayne
Dumbrell and the office manager.
[13] Finally, in her testimony before
the Court, Denise Dumbrell said that her mother initiated the Appellant’s
application for a refund of employment insurance premiums paid in relation to
her employment. He mother told Mr. Blakely, though, that Denise had inquired about
the possibility of a refund with Grants International Inc., a firm that on its
letterhead
refers to itself as “The Employment Insurance Refund Specialists”.
[14] Beyond specific inconsistencies
in the evidence and statements given by Denise Dumbrell, I am also struck by the
contrast between the picture given by her of her duties, and conditions of
employment with the Appellant in her interview with Mr. Blakely and her testimony
in Court. She told Mr. Blakely that she signed cheques, looked after the office
and was on call at all times when her parents were away, and might spend 20
hours a month on unpaid tasks for the Appellant at other times. At the hearing,
Ms. Dumbrell estimated that she spent 20 to 25 hours a week on “non-realtor
duties” for the Appellant for which she was not paid. She described herself as
her father’s “personal slave” and said that as family she felt obligated to do
what he asked her. She also said that other realtors in the office referred to her
as “superwoman”. When asked about the telephone interview with Mr. Blakely,
Denise Dumbrell said she did not recall it. I find this surprising since it
appears to have been a fairly lengthy and detailed interview.
[15] Furthermore, the evidence of
Ms. Dumbrell regarding the extent of her non-realtor duties for the Appellant does
not coincide with the information given by her parents to the rulings officer
and appeals officer. Neither mentioned any unpaid extra work performed by Ms.
Dumbrell except for periods while they were on holidays, which Sharon Dumbrell
said happened periodically.
[16] Given my finding that Denise
Dumbrell was not a credible witness, the Appellant has not succeeded in
providing the Court with any new facts concerning her employment with the Appellant,
nor (with one exception) has it succeeded in disproving the assumptions made by
the Minister concerning the terms and conditions of her employment. It appears
that the majority of those terms and conditions were substantially similar to
the other realtors working for the Appellant. While Denise Dumbrell’s commission
split with the Appellant was lower (at 60/40) than the other realtors (whose
split was 70/30), Sharon Dumbrell explained that this took into account extra
expenses that the Appellant assumed on Denise’s behalf, such as long distance
calls, cell phone charges, signage and advertising that it did not pay for the
other realtors. Mr. Dumbrell said that her commission split would also increase
when her volume of sales increased. These considerations all appear to indicate
the financial terms of their relationship were substantially similar to what
would have existed in an arm’s length relationship.
[17] I accept that Denise Dumbrell
did take on extra unpaid work for the Appellant while her parents were away,
but it is not clear from the evidence how often this happened or how
significant the extra work was. Contrary to the assumption set out in paragraph
6(bb) of the Reply, the evidence did show that Ms. Dumbrell was given signing
authority on certain of the Appellant’s bank accounts to be exercised while her
parents were away. However, again, it is not clear how often she signed cheques
for the Appellant. Ultimately, the Appellant has not shown that this extra work
was sufficient to render the Minister’s decision concerning the employment
contract unreasonable.
[18] For these reasons, the appeal
is dismissed.
Signed
at Ottawa, Canada, this 7th day of January, 2010.
“B.Paris”
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