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Citation: 2003TCC57
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Date: 20030224
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Docket: 2002-3474(EI)
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BETWEEN:
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ÉMILE VIENNEAU,
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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
Angers,
J.T.C.C.
[1] The
appellant has appealed from the decision by the Minister of National Revenue
("the Minister") that his employment by
Gabriel Haché Limitée ("the payor corporation")
from July 30 to November 3, 2001 was not insurable since
the appellant and the payor corporation were not dealing with each other at
arm's length within the meaning of paragraph 5(2)(i) of the Employment
Insurance Act ("the Act").
[2] In
reaching his decision, the Minister relied on the following assumptions of
fact, each of which the appellant admitted or denied as indicated below:
(a) the payor is
a corporation; its sole shareholder is Paul Haché, the appellant's
brother-in-law; (admitted)
(b) the payor
corporation's business consists of a service station, a car wash, a convenience
store, and the delivery of heating oil (fuel oil) and diesel oil; the payor
corporation also sells gravel; (denied)
(c) for several
years, the appellant has been employed by the payor corporation as a general
worker for a few weeks per year; (admitted)
(d) the
appellant's duties consist of maintenance and sometimes delivery work;
(admitted)
(e) each year,
the work accumulates until the appellant returns to work; (admitted)
(f) each year,
the start date of the appellant's employment is determined by the end of his
employment insurance benefits; (denied)
(g) the end date
of the appellant's employment after 14 weeks corresponds to the number of
weeks on which Human Resources Development Canada bases employment insurance
benefits; (denied)
(h) during the
period at issue, the appellant was paid at a rate of $12 per hour and worked
60 hours per week, which entitled him to the maximum employment insurance
benefits; (denied)
(i) the
appellant's conditions of employment were set according to the appellant's
needs for employment insurance, not according to the payor corporation's needs;
(denied)
(j) the
appellant and the payor corporation are related persons within the meaning of
the Income Tax Act; (admitted)
(k) the appellant
and the payor corporation are not dealing with each other at arm's length;
(admitted)
(l) 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 not
reasonable to conclude that the appellant and the payor corporation would have
entered into a substantially similar contract of employment if they had been
dealing with each other at arm's length. (denied)
[3] The
appellant has acknowledged that he is a person related to the payor corporation
within the meaning of the Income Tax Act and that he and the payor
corporation are therefore not dealing with each other at arm's length. At
issue, then, is whether, 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 not reasonable to conclude that the appellant and the payor corporation
would have entered into a substantially similar contract of employment if they
had been dealing with each other at arm's length, as set out in paragraph 5(3)(b) of the Act.
[4] This
determination must be made in the context established by the case law,
particularly the Federal Court of Appeal decision in Jencan, to which I
shall refer later in my Reasons for Judgment.
[5] The
appellant testified that his work for the payor corporation consisted in doing
maintenance work at the convenience store and on the delivery trucks,
delivering petroleum products, maintaining the car wash, and performing any
duties required of him.
[6] The
appellant worked for the payor corporation for 17 weeks in 1999,
eight weeks in 2000, 20 weeks in 2001, and 10 weeks in 2002. In
2001, there were two work periods: the first from the beginning of January
through February 10; and the second, which is the period at issue, from July 30 to
November 3. The appellant adduced in evidence an
October 11, 2002 letter from Human Resources Development Canada
indicating that his most recent benefit application covered the period starting
on February 11, 2001 and ending on February 8, 2002, which
allowed him to establish that after he was laid off on
November 3, 2001 he continued to receive employment insurance
benefits earned during the period of employment preceding the period at issue.
[7] The
appellant works six days per week, 10 hours per day. He is paid at the rate
of $12 per hour. He has been paid at this rate for four years. However, over
the years the number of hour of work per week has gradually increased, from
44, to 50, and then to 60 hours per week.
[8] According
to the appellant, his weekly wages are not excessive. He adduced as
Exhibit A‑3 a document from Human Resources Development Canada: a
request for information about the conditions of employment, particularly the
hourly wages, for positions similar to his. The information provided indicates,
for employment of a part-time day worker by a single employer for seven to
eight weeks per year, a rate of between $13 and $14 per hour. This document
also indicates median wages of $9 per hour for maintenance work. The
appellant stated that the payor corporation set his work schedule and number of
hours of work.
[9] Under
cross-examination, the appellant acknowledged that his main workplace was the
payor corporation's convenience store. He also acknowledged that in 2001 he
performed work at the home of the payor corporation's sole shareholder but was
paid by the payor corporation. He explained that, being a general worker, he
did what he was asked to do. He does not know the name of the owner of the
house where the payor corporation's sole shareholder lived.
[10] The respondent called Martial McLaughlin, an Investigation and Control
Officer, as a witness. Mr. McLaughlin met with the appellant on
May 23, 2002. At that time, the appellant told him that he started
working for the payor corporation in 1995. His duties were to do general
maintenance work, cut the lawn, repair the roof, and look after the car wash.
These duties were the same each year. In 1996, the appellant apparently did not
work because of back pain. Where wages were concerned, the appellant told Mr. McLaughlin
that, instead of increasing his hourly rate, the payor corporation increased
his hours of work.
[11] The appellant is the only employee of the payor corporation who works
60 hours per week and does not work all year. His work is to do maintenance
work for the payor corporation's business, which is operated year-round. In
2001, he worked for 14 weeks. He spent two weeks
digging a ditch in order to install underground cables for the gasoline pumps,
and the other 10 weeks performing other duties, such as painting truck
bodies and making deliveries. Mr. McLaughlin wondered whether the work was so urgent that the
appellant was required to work 60 hours per week, given that working
60 hours per week at the rate of $12 per hour allowed the appellant to
receive the maximum employment insurance benefits in 2001.
[12] Barbara Comeau, an Investigation and Control Officer, travelled
to the appellant's workplaces and met with Léo Paul Robichaud, who
has been the payor corporation's comptroller for 26 years. Ms Comeau
reconstituted the appellant's periods of employment and unemployment in chart
form (Exhibit I‑1). For example, for the year 2000 the appellant's
employment began on October 14, 2000 and ended on
February 10, 2001. For the year 2001 it began on August 4 and
ended on November 3, 2001. Ms Comeau wondered whether the
appellant's duties and work corresponded to the needs of the business. She
asked the comptroller this question, requesting further clarification of the
appellant's period of employment. The comptroller was unable to justify the
period of employment, but did explain that when the appellant was not present
his work was done by the other employees, or that sometimes the work was not
done until the appellant returned to work, as was the case with the spring
cleaning, for example. According to Ms Comeau, usually maintenance and
cleaning should be done in April and May, but at those times the appellant was
receiving employment insurance benefits. She confirmed that all the weeks of
employment insurance benefits to which the appellant was entitled were paid to
him.
[13] Under cross-examination, Ms Comeau confirmed that the payor
corporation had 19 employees, some of whom earned less than $12 per
hour and others more, without specifying amounts. She confirmed that the owner
and the comptroller earned more than the appellant, even though they worked
40 hours per week. Jean Victor, who has been employed full-time as a
trucker by the payor corporation for 25 years, earns $13.06 per hour
and works 44 hours per week.
[14] Louise Gauthier Boudreau is an Appeals Officer for the Canada Customs
and Revenue Agency. She adduced as Exhibit I‑2 her report, which
includes a summary of the facts and the analysis on which the Minister relied
in exercising his discretionary authority. The fact that the employment is
governed by a contract of service is not at issue. The appellant has admitted
that there is a non-arm's length relationship.
[15] Ms Boudreau examined each element of the contract in order to
determine whether a similar contract could have been entered into between
unrelated persons.
[16] Concerning wages, on the basis of the average wages of $9 per
hour for this type of work, Ms Boudreau concluded that the appellant's
hourly wages were already higher than average, given that he had worked for the
payor corporation only since 1995. Jean Victor, who has been employed by the
payor corporation as a trucker for 25 years, is paid at the rate of
$13.06 per hour. Nor was the payor corporation able to explain why the
appellant was required to work 60 hours per week when he was working, and
it was even less able to explain why it did not need a general worker for the
rest of the year.
[17] Concerning conditions of employment, the appellant is the only
employee who works 60 hours per week. The duration of the employment is
questionable. The 14 weeks of work during the period at issue entitled the
appellant to the maximum employment insurance benefits. Ms Boudreau's interview with the payor corporation provided no explanation of the
duration of the appellant's employment; as well, his duties should have been
performed in the spring and early summer, rather than during the period at
issue.
[18] Given the nature and the importance of the appellant's duties,
Ms Boudreau concluded that the payor corporation would not have employed
an unrelated person to perform these duties for the same duration. The payor
corporation admitted that it had to let work accumulate for the appellant to do
during his period of employment. The appellant and the payor corporation were
not in complete agreement concerning the appellant's hours of work, a fact that
gives rise to doubt: the appellant described his work schedule as being from
8:00 a.m. to 8:00 p.m., Monday to Friday and sometimes Saturday,
while the payor corporation stated that his work schedule was from
8:00 a.m. to 9:00 p.m., Monday to Friday.
[19] Before considering whether the Minister's
decision was justified, I must ask myself whether that decision resulted from the proper exercise of the Minister's discretionary
authority. Did the Minister act in bad faith or for an improper purpose? Did
the Minister fail to take into account all of the relevant circumstances, or
did the Minister take into account an irrelevant factor? Unless I find that the Minister exercised his
discretionary authority improperly, I have no jurisdiction to determine
whether, having regard to all the circumstances, it is
reasonable to conclude that the employer and the employee would have entered
into a substantially similar contract of employment if they had been dealing
with each other at arm's length (see Canada v. Jencan Ltd. (C.A.), [1998] 1 F.C. 187).
[20] The onus is on the appellant to adduce evidence that will allow me to
move on to the second stage, that of the hearing de novo. In this case,
the appellant has not discharged this burden of proof. Nothing in the evidence
allows me to find that the Minister failed to take into account certain
relevant circumstances or took into account an irrelevant factor. The fact that
when the appellant was laid off he received employment insurance benefits
already earned does nothing to alter the fact that he was entitled to
additional benefits. In my view, that fact is not a factor allowing me to find
that the Minister exercised his discretionary authority improperly. Since the
truth of all the assumptions of fact on which the Minister relied has been
established, I am unable to intervene. For these reasons, I have no
jurisdiction to vary the Minister's decision, and I must therefore confirm it.
Consequently, the appeal is dismissed.
Signed at Edmundston, New Brunswick, this
24th day of February, 2003.
J.T.C.C.
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