Citation: 2006TCC492
Date: 20061010
Docket: 2006-1132(EI)
BETWEEN:
JANE SHATTLER,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Bédard J.
[1] This is an appeal
against a decision by the respondent that the appellant did not hold insurable
employment during the period from May 15 to July 30, 2005 (the "relevant
period") while working for 9036-8556 Québec Inc. (the "payer").
[2] To justify and
explain his decision, the respondent relied on the following assumptions of
fact:
5)
The Appellant was
related to the Payer within the meaning of the Income Tax Act because:
a)
the company has been
incorporated on June 4, 1996;
b)
during the period
under review, the shareholders of the payer were:
·
the Appellant with
32% of the shares,
·
Brian Shattler,
Appellant’s father, with 17% of the shares,
·
Sally Kippen,
Appellant’s mother, with 17% of the share [sic],
·
Stacey Shattler,
Appellant’s sister, with 34% of the shares;
c) the Appellant
was related to a group of person [sic] who controls the Payer;
d) the Appellant
is in a non arm’s length relationship with the Payer as defined in section 251
of the Income Tax Act.
6) In reaching his
determination, the Respondent, the Minister of National Revenue, relied on the
following assumptions of fact:
a) the Payer
operated a fishing boat under the name of "le C.J. Stacey";
b) the Payer
fishes turbot, halibut and few wrinkles [sic] in the Sept‑Îles
zones;
c) during the 2004
season, the members of the crew were: Brian Shattler, Captain of the boat,
Charlene Shattler, Brent Anderson and the Appellant, fishermen’s helpers;
d) during the 2005
season, the members of the equipage (crew) were: Brian Shattler, Captain
of the boat ; Charlene Shattler and Brent Anderson, fishermen’s helpers;
e) during the
period under review, the Appellant did not work on the boat, she never went out
fishing because she was pregnant;
f) during that
period, the appellant worked for the Payer as a clerk or secretary;
g) the duties of
the Appellant were:
·
wash clothes (laundry
work) after each catch (her father [sic] and sister’s clothes only, for
approximately one hour of work at each time),
·
prepare meals prior
to each catch (in fact sandwiches for 3 persons for an average of one hour
of work at each time),
·
made deposit at bank
(always made by her father, she only accompanied him),
·
prepare the cheques
for the bills to be paid (without no [sic] signing authority).
h) previously to
the period under review, the Payer never hired anyone to do those duties;
i) those duties were done by her
father;
j) during the
period under review, the Appellant generally worked at her father’s house;
k) the Appellant
did not have any schedule of work to follow;
l) the Payer did
not have any control of the hours worked by the Appellant;
m) during the
period under review, the Appellant received a fixed salary of $900 per week,
regardless of hours (60 hours per week at $15 per hour);
n) the Appellant
had a verbal agreement with the Captain and all members of the boat that
everyone would receive the same salary during the fishing season;
o) her salary
remained unchanged whether she did same hours as other fishermen or not;
p) she kept her
fisherman [sic] salary as a clerk because it was easier to calculate;
q) considering the
small duties of the Appellant, her salary was not reasonable;
r) considering
her small workload, it is not reasonable to conclude that the Payer would have
hired an other person, at the same salary, to do those tasks.
[3] All the facts
alleged in paragraphs 5 and 6 of the Reply to the Notice of Appeal were
admitted except those in subparagraphs 5(b), 6(g), 6(q) and 6(r), which were
denied.
[4] During the relevant
period, the appellant received a fixed salary of $900 per week for a total of
$9,900. The appellant claimed that she worked an average of 60 hours per week
for a total of 660 hours.
[5] It must be noted
that the respondent determined that this employment was not insurable because
it was subject to paragraph 5(2)(i) of the Employment Insurance Act
(the "Act"). The respondent submitted 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 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.
[6] 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 the judges to substitute their
discretion for that of the Minister of National Revenue (the "Minister"),
but 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 … to decide whether
the conclusion with which the Minister was "satisfied" still seems
reasonable."
[7] In other words,
before deciding that the conclusion with which the Minister was satisfied still
seems reasonable, I must, in light of the evidence before me, verify whether
the Minister’s assumptions are, in spite of everything, valid in whole or in
part, considering the factors stated in paragraph 5(3)(b) of the Act.
[8] Therefore, it is
appropriate to ask whether 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.
[9] The appellant had
the burden of proving that in the present case the Minister did not exercise
his discretionary power in accordance with the applicable principles, that is,
of showing that he did not examine all the relevant facts, or has failed to
take into account elements that were relevant, or took into account facts that
were not real. In this case, only the appellant testified in support of her
position.
Appellant’s testimony
[10] The appellant testified
that during the relevant period:
(i)
her
duties and responsibilities went far beyond those alleged in subparagraphs 6(f)
and 6(g) of the Reply to the Notice of Appeal. She explained that she made 45
new fishing nets, repaired fishing nets, cleaned the payer’s fishing boat and
office and, lastly, did some administrative work such as paying bills and
making entries in the logbook;
(ii)
she
spent 360 hours making those 45 new fishing nets -- she explained that it takes
an average of one hour to make one net;
(iii)
she
spent 22 hours repairing fishing nets;
(iv)
she
spent 22 hours cleaning the payer’s boat;
(v)
she
also spent 22 hours cleaning the payer’s office;
(vi)
she spent
34 hours doing laundry work -- she explained that after each catch she washed
her father’s and sister’s clothes and that it took her an average of one hour to
do so;
(vii)
she
spent 34 hours preparing meals -- she explained that before each catch she spent
an average of one hour preparing meals for the members of the crew;
(viii)
she
spent 5 hours making 5 bank deposits -- she testified that she drove her father
to the bank since he was too tired to drive himself;
(ix)
the
payer would have had to hire someone else to do her job if she had been unable
to accept the position;
(x)
only
Brent Anderson (a fisherman is helper and the only employee dealing at arm’s length
with the payer) was paid weekly on a regular basis.
[11] It is worth
mentioning that the appellant gave birth to a child on July 31, 2005,
a day after quitting her job.
Previous declaration
[12] On September 20,
2005, the appellant filled out a questionnaire
at the request of Human Resources and Skills Development Canada (the "questionnaire").
It is worth citing a few excerpts therefrom:
Question #2
What was your job title? / And what were
your main duties?
Clerk / 40 nets are done in March – @ 7
hours each (During season: wash clothes after each catch, prepared meals prior
to each catch), make deposits at bank, & pay bills.
Question #13
Are your hiring conditions (such as
salary, schedule, insurance salaries, bonuses, or other..) in which you may
receive, being granted to all other employees equally in the same way? (Kindly
specify)
My salary remained unchanged – whether I
did same hours as other fisherman or not. I kept my fishermans salary [sic] as clerk because it was
easier to calculate.
Question #17
What methods are used to register your
hours? (Clocking in (punch card), time sheets, calendar where hours scheduled
and worked marked in, .. other) (Kindly specify)
no hours recorded for anybody. (March-hours
included in salary paid during fishing season.) I went to Dads when I wanted.
Question #23
To the best of your knowledge, would the
business have had to hire someone else to do your job if you were unable to
accept the position?
…NO…
Dad would have done it
like before.
Question #26
Who occupied this position before you
did?
3 years ago, My Mom (didn’t get salary
received bonus year end via profits), since then Dad did it on his own.
Is this person still employed with the
business?
...NO…
Mom took ill 3 years ago. When she did
it, she was not on payroll. Dad paid her personally at year End. (Maybe via
dividends??).
Analysis and conclusion
[13] I note that the
appellant’s testimony contradicts her previous statements in the questionnaire regarding the
period of the year in which the new fishing nets were made (in March as
opposed to the relevant period), the number of nets that were made (45 as opposed
to 40), and the number of hours needed to make a new fishing net (7 as
opposed to 8 hours). It is also hard to believe that the new fishing nets were made,
if any were actually made, during the relevant period (the fishing season)
rather than before the opening of the fishing season, in the month of March for
instance.
[14] I also note that the
appellant testified that the payer would have had to hire someone else to do
her job if she had been unable to accept the position. Again, the appellant’s
testimony clearly contradicts the answer she had given previously in responding
to question 23 of the questionnaire.
[15] Concerning the tasks
related to the cleaning of the payer’s boat and office, I would point out that
those tasks were mentioned neither in the questionnaire nor in the notice of appeal.
[16] As to the number of
hours spent doing laundry work (34 hours) and preparing meals (34 hours), I
find it remarkable that the appellant could come up with the exact number of hours
there and yet could not remember the number of catches that took place in the
relevant period when cross-examined by respondent’s counsel.
[17] The appellant simply
did not convince me that her duties and responsibilities went beyond those
alleged in subparagraphs 6(f) and 6(g) of the reply to the notice of appeal and
consequently that she spent 360 hours making new fishing nets during the
relevant period, 22 hours repairing fishing nets and 44 hours cleaning the payer’s
boat and office.
[18] In fact, the
appellant did not convince me that the Minister did not examine all the
relevant facts, or that he failed to take into account elements that were
relevant, or that he took into account facts that were not real. I am of the
opinion, after reviewing the evidence, that the appellant and the payer would
not have entered into a similar contract of employment if they had been dealing
with each other at arm’s length.
[19] In light of the
evidence before me and after reviewing the factors stated in paragraph 5(3)(b)
of the Act and verifying the validity of the Minister’s claim, the
conclusion with which the Minister was satisfied seems reasonable to me.
[20] For these reasons,
the appeal is dismissed.
Signed at Ottawa, Canada, this 10th day of October 2006.
"Paul Bédard"
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