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Citation: 2003TCC777
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Date: 20031118
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Docket: 2002‑4860(EI)
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BETWEEN:
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GINO DUVAL,
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Appellant,
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and
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THE MINISTER OF NATIONAL REVENUE,
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Respondent.
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REASONS FOR JUDGMENT
Savoie, D.J.
[1] This
appeal was heard at Québec, Quebec, on July 29, 2003.
[2] This
appeal concerns the insurability of the employment held by the Appellant,
Gino Duval, when he was engaged by André Duval, the
"Payor," during the periods at issue, that is, from January 4 to
October 30, 1998, from January 24 to
February 13, 1999, from August 2 to November 5, 1999,
from January 9 to March 25, 2000, from October 2 to
November 3, 2000, from December 10 to
December 16, 2000, from January 14 to
March 10, 2001, and from September 10, 2001 to
March 29, 2002, within the meaning of the Employment Insurance Act
(the "Act").
[3] On
December 9, 2002, the Minister of National Revenue
(the "Minister") informed the Appellant of his decision that,
upon reviewing the terms and conditions of employment for the periods at issue,
this employment was not insurable because the Payor and the Appellant would not
have entered into a substantially similar contract of employment if they had
been dealing with each other at arm's length.
[4] In
rendering his decision, the Minister relied on the following presumptions of
fact, which the Appellant admitted or denied:
[translation]
(a) The Payor has
operated a timber transport company in Canada and the United States for 30 years;
(admitted)
(b) In addition,
the Payor executed snow removal contracts; (admitted)
(c) The Payor
possessed three trucks and a loader; (admitted)
(d) The Appellant
is the Payor's son; (admitted)
(e) The Appellant
has worked as a truck driver for the Payor since 1998; (admitted)
(f) The
Appellant's duties consisted of locating timber in American forests and
transporting it to Canadian paper manufacturers; (admitted subject to
amplification)
(g) The Payor
hired another truck driver, in addition to his son, Gino; (admitted)
(h) Since 2000,
the Appellant is the only one from among the Payor's workers who is authorized
to cross the U.S.
border for the Payor; (admitted)
(i) In his
statutory declaration to HRDC, the Appellant stated that he worked for the
Payor from 40 to 65 hours per week, for eight to nine months of the
year; (denied)
(j) When the
Appellant was listed in the payroll journal, he allegedly received fixed
remuneration from week to week, whereas in reality, the Appellant did not receive
all of the remuneration recorded in the Payor's payroll journal; (denied)
(k) During
certain months of the years at issue, the Payor's income exceeded
$20,000.00 per month and no employees were listed on the payroll; (denied)
(l) The
Appellant rendered services to the Payor outside the periods at issue, with no
reported income; (denied)
(m) The Appellant
was not listed on the payroll during the Payor's busiest periods; (denied)
(n) The periods
that the Appellant allegedly worked do not correspond to the periods he
actually worked; (denied)
(o) On
November 3, 1998, the Payor issued a record of employment to the
Appellant, for the period starting on January 4, 1998 and ending on
October 30, 1998, indicating 1,035 insurable hours and total
insurable earnings of $7,475.00; (admitted)
(p) On
November 11, 1999, the Payor issued a record of employment to the
Appellant, for the period starting on August 2, 1999 and ending on
November 5, 1999, indicating 450 insurable hours and total
insurable earnings of $5,740.00; (admitted)
(q) On
November 10, 2000, the Payor issued a record of employment to the
Appellant, for the period starting on October 2, 2000 and ending on
November 3, 2000, indicating 225 insurable hours and total
insurable earnings of $3,000.00; (admitted)
(r) On
April 2, 2002, the Payor issued a record of employment to the
Appellant, for the period starting on September 10, 2001 and ending
on March 29, 2002, indicating 1,215 insurable hours and total
insurable earnings of $16,200.00; (admitted)
(s) The records
of employment do not reflect the actual period worked or the actual
remuneration paid. (denied)
[5] The
evidence revealed that the Appellant was the driver of a truck used to
transport timber from American forests to Canadian paper manufacturers on
behalf of the Payor.
[6] It
was proved at the hearing that André Duval, the Payor, is responsible for
operating the loader. He described his company's operations, specifying that
operations ceased in the fall, during hunting season. He added that operations
also ceased in the spring, during the thawing period, that is, around February
and March, due to the poor condition of the logging roads. He confirmed that he
controlled the Appellant's work, by communicating with him using a cellular
telephone. He stated that he maintained the equipment, trucks, etc., in his
garage; Gino Duval was not responsible for any maintenance. He does not
like the garage. He stated that the Appellant was paid weekly, by cheque,
during the work periods.
[7] André Duval
stated that he works at the mill with his loader and that he is paid $100.00 to
$125.00 per hour for 40 to 45 hours per week, for total weekly earnings of
approximately $5,000.00. He confirmed that he is paid weekly, with a one‑week
delay. He claimed that his trucks never break down, because he possesses new
trucks and he keeps them well‑maintained.
[8] He
added that the loader is operated four to five months per year.
[9] The
Payor reported that the Appellant works 40, 45, and sometimes up to
50 hours per week, adding that if a day is lost, it is worked at a later
date. He confirmed that the Appellant was paid a fixed salary, regardless of
the number of hours he worked. The evidence revealed that the Appellant started
working with the Payor in 1998. At that time, he was paid $326.00 gross per
week. His salary increased from $326.00 to $600.00 gross per week after
51 weeks of work, representing a 46% increase upon acquiring work
experience. He received the same salary regardless of the number of hours he
worked.
[10] In his review of the file, the Minister collected the following data
(appeal report–Exhibit I‑3) from Human Resources
Development Canada (HRDC), the investigation of which revealed the dates
on which the Appellant applied for benefits as well as the weeks for which the
Appellant received employment insurance benefits:
[translation]
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Year
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1998
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1999
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2000
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2002
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BPC
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1,115
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1,168
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1,220
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1,294
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DATE
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01‑11‑98
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07‑11‑99
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05‑11‑00
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07‑04‑02
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Number of hours required to qualify
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595
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665
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420
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420
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Number of hours worked
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1,035
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789
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651
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1,215
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Number of eligible benefit weeks
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24
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17
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35
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Number of benefit weeks paid
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22
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7
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33
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[11] Based on this data, the Minister determined that the Worker applied
for employment insurance when the Payor was still in his busy season.
[12] Gino Duval worked sufficient hours to qualify and he distributed
his benefits based on his own needs and not based on the Payor's actual needs.
Upon analyzing the documentation, particularly the payroll journal, the
evidence revealed that in 1999, Gino Duval was listed on the payroll for
17 weeks, whereas the active season spanned 36 weeks. In 2000, the
worker was listed on the payroll for 17 weeks and the active season
represented 43 weeks. In 2001, Gino Duval was listed on the payroll
for 23 weeks, while the company's active season spanned 44 weeks. For
2002, the worker was listed for 12 weeks, whereas from January 1 to
August 31, the Payor's operations were spread out over 34 weeks.
[13] The Minister had difficulty establishing proof that the Appellant's
salary had been paid. In this process, the insurability file produced the
following table:
[translation]
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Year
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Weekly Salary
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Weeks Worked According to
the Payroll Journal
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Number of Weeks With Proof
of Payment
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Payment Details
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1998
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$250
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24
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2
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2 cheques: $250
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1999
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Jan. to March: $250
Aug. to Dec.: $400
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17
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4
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4 cheques: $250
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2000
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$402.58
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17
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0
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-
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2001
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Jan. to March: $473.05
Sept. to Dec.: $454.41
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23
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2
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2 withdrawals: $473.05
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2002
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$450 gross
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12
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-
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-
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[14] In light of the foregoing, the Minister determined the following:
Gino Duval applied for benefits on November 1, 1998, while the
Payor was still in his active season.
[15] For the months of January, February and March 1999, the Payor had snow
removal contracts in addition to the contracts with the United States. The worker was listed on the payroll
from January 31 to March 20, 1999.
[16] When the active season resumed its operations in July 1999, the
worker terminated his employment insurance benefits before returning to work on
August 8. Subsequently, the worker applied for benefits on
November 8, 1999, while the Payor was still in the active season,
which lasted from July until March.
[17] According to information provided by the Payor, there was more work at
the company since 2000, which explained why there were two full‑time
truck drivers. However, there were, in fact, 28 weeks for which no worker
was listed in the payroll journal. In 2001, there were 29 weeks for which
no worker was listed on the payroll.
[18] According to the appeal report (Exhibit I‑3), the second
driver, Martin Bélanger, was listed on the payroll; however, he did not
travel to the United States because he had a criminal record.
Furthermore, according to Huguette Blanchette, the wife of
André Duval, the Payor, her husband has not been permitted to cross the
border for approximately two years, for the same reason as
Mr. Bélanger.
[19] It is appropriate to emphasize that 80% of the Payor's income came
from transporting timber from the United States,
and that since 2000, the Appellant, who does not have a criminal record, is the
only person permitted to go there.
[20] To this, it is appropriate to add that the worker has contradicted the
declaration he made to investigators concerning a number of points,
particularly with regard to the duration of his employment.
[21] Moreover, the Payor waited until the hearing to report that his
company received additional income from work performed with the loader and from
the sale of timber on his land. This information was never disclosed to investigators,
in spite of the fact that the Payor had three opportunities to do so prior
to the hearing.
[22] The Appellant asked the Court to interfere and to reverse the
Minister's decision. However, nearly all of the Minister's assumptions were
proved by all of the evidence submitted.
[23] It is appropriate to refer to jurisprudence regarding the review of
determinations of the Minister under paragraph 5(2)(i) of the Act.
In Attorney General of Canada and Jencan Ltd.,
[1998] 1 F.C. 187, the Federal Court of Appeal
circumscribed the power of this Court concerning the exercise of the Minister's
discretionary authority under this paragraph. The Court stated:
The decision of this Court in Tignish,
. . . (185 N.R. 73 (F.C.A.)) requires that the
Tax Court undertake a two‑stage inquiry when hearing an appeal from
a determination by the Minister under subparagraph 3(2)(c)(ii). At
the first stage, the Tax Court must confine the analysis to a
determination of the legality of the Minister's decision. If, and only if, the
Tax Court finds that one of the grounds for interference are
established can it then consider the merits of the Minister's decision. As will
be more fully developed below, it is by restricting the threshold inquiry that
the Minister is granted judicial deference by the Tax Court when his
discretionary determinations under subparagraph 3(2)(c)(ii) are
reviewed on appeal. Desjardins J.A., speaking for this Court in Tignish,
supra, described the Tax Court's circumscribed jurisdiction at the
first stage of the inquiry as follows:
Subsection 71(1) of the Act provides that the
Tax Court has authority to decide questions of fact and law. The
applicant, who is the party appealing the determination of the Minister, has
the burden of proving its case and is entitled to bring new evidence to
contradict the facts relied on by the Minister. The respondent submits,
however, that since the present determination is a discretionary one, the
jurisdiction of the Tax Court is strictly circumscribed. The Minister is
the only one who can satisfy himself, having regard to all the circumstances of
the employment, including the remuneration paid, the terms and conditions and
importance of the work performed, that the applicant and its employee are to be
deemed to deal with each other at arm's length. Under the authority of Minister of
National Revenue v. Wrights' Canadian Ropes Ltd.,
contends the respondent, unless the Minister has not had regard to all the
circumstances of the employment (as required by subparagraph 3(2)(c)(ii)
of the Act), has considered irrelevant factors, or has acted in contravention
of some principle of law, the court may not interfere. Moreover, the court is
entitled to examine the facts which are shown by evidence to have been before
the Minister when he reached his conclusion so as to determine if these facts
are proven. But if there is sufficient material to support the Minister's
conclusion, the court is not at liberty to overrule it merely because it would
have come to a different conclusion. If, however, those facts are, in the
opinion of the court, insufficient in law to support the conclusion arrived at
by the Minister, his determination cannot stand and the court is justified in
intervening.
In my view, the respondent's position is correct in law. . . .
In Ferme Émile Richard et Fils Inc. v.
Minister of National Revenue et al., this Court
confirmed its position. In obiter dictum, Décary J.A. stated
the following:
. . . As this court recently noted in Tignish Auto Parts Inc.
v. Minister of National Revenue,
July 25, 1994, A‑555‑93, F.C.A., not reported, an appeal
to the Tax Court of Canada in a case involving the application
of s. 3(2)(c)(ii) is not an appeal in the strict sense of the word
and more closely resembles an application for judicial review. In other words,
the court does not have to consider whether the Minister's decision was
correct: what it must consider is whether the Minister's decision resulted from
the proper exercise of his discretionary authority. It is only where the court
concludes that the Minister made an improper use of his discretion that the
discussion before it is transformed into an appeal de novo and the
court is empowered to decide whether, taking all the circumstances into
account, such a contract of employment would have been concluded between the
employer and employee if they had been dealing at arm's length.
[24] It is the opinion of this Court that it is not appropriate to
interfere with the exercise of the Minister's discretion in this case. The
Appellant had the burden of proving that the Minister, in exercising his
discretionary authority, has not had regard to all the
circumstances of the employment, has considered irrelevant factors, or has
acted in contravention of some principle of law. He did not do so.
[25] In Légaré v. Canada, [1999] F.C.J. No. 878,
Marceau J., of the Federal Court of Appeal, expressed the same
opinion in different words. He wrote:
The Act requires the Minister to make a
determination based on his own conviction drawn from a review of the
file. The wording used introduces a form of subjective element, and while
this has been called a discretionary power of the Minister, this
characterization should not obscure the fact that the exercise of this power
must clearly be completely and exclusively based on an objective appreciation
of known or inferred facts. And the Minister's determination is subject to
review. In fact, the Act confers the power of review on the
Tax Court of Canada on the basis of what is discovered in an
inquiry carried out in the presence of all interested parties. The Court
is not mandated to make the same kind of determination as the Minister and thus
cannot purely and simply substitute its assessment for that of the Minister:
that falls under the Minister's so‑called discretionary
power. However, the Court 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, it must decide whether the
conclusion with which the Minister was "satisfied" still seems
reasonable.
[26] Consequently, the appeal is dismissed and the
Minister's decision is confirmed.
Signed at Grand‑Barachois, New Brunswick, this 18th day of November 2003.
Savoie, D.J.
on this 20th
day of April 2004.
Sharlene Cooper, Translator
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