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Citation: 2003TCC167
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Date:20030327
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Dockets:2002-2984(EI)
2002-2986(CPP)
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BETWEEN:
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SARBJEET CHEEMA,
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Appellant,
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and
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THE MINISTER OF NATIONAL REVENUE,
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Respondent,
and
WARIA HOLDINGS LTD.,
Intervener.
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REASONS FOR JUDGMENT
Little, J.
A. FACTS:
[1] The Appellant was born in
India.
[2] The Appellant married Balbir
Wariach ("Balbir") in India in 1982 and they have three
children.
[3] The Appellant, Balbir and their
children immigrated to Canada in 1986.
[4] The Appellant and Balbir were
divorced in 1989.
[5] The Appellant lived at the
following locations in Canada:
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Calgary
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1986 - 1995
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Penticton
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1995 - 1997
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Kelowna
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1997 -
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[6] In 1993 Balbir married
Preminderjeet Wariach ("Preminderjeet").
[7] Waria Holdings Ltd.
("Waria") was incorporated under the British
Columbia Company Act in 1999. The shares of Waria were owned
as follows:
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Balbir
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50%
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Preminderjeet
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50%
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[8] In August 1999 property consisting
of 90 acres and located on MacKenzie Avenue in Kelowna (the
"MacKenzie Property") was purchased. The MacKenzie
Property was owned as follows:
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Balbir
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50%
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Preminderjeet
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50%
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[9] The MacKenzie Property consisted
of approximately two acres of apples and cherries and 88 acres of
rolling farm land. The testimony indicated that the apples were
grown on 60-70 mature MacIntosh apple trees.
[10] In the 1999 year and from January until
July 2000 the Appellant lived in a home located at
421 Wigglesworth Crescent in Kelowna. The Appellant
testified that the Wigglesworth Crescent property was owned by
her former husband, Balbir, and that she lived in a separate,
private suite in the home.
[11] In July 2000 Waria purchased 10 acres
of land located on Webster Road, Kelowna (the "Webster
Property"). The Webster Property consisted of 10 acres of
land. An orchard of Prune Plums was located on approximately
2½ acres of the Webster Property and approximately
7½ acres of the Webster Property was planted in
Alfalfa.
[12] The Appellant gave the following
evidence:
(a) Commencing on March 27, 2000
the Appellant worked six days per week, approximately eight hours
per day at a rate of $10.00 per hour, at the MacKenzie Property
as a farm labourer;
(b) The Appellant said that she
carried out the following tasks on the MacKenzie Property:
- mending the fence
that surrounded the 90-acre MacKenzie Property;
- pruning the 60-70
old, large MacIntosh apple trees and disposing of the
trimmings;
- assisting with the
irrigation of the two acres of orchard;
- hand
fertilizing;
- thinning the
apples;
- picking the
cherries and the apples;
- cleaning up the
property after the harvest.
(c) In late July 2000 the Appellant
moved to a house located on the Webster Property and lived on the
Webster Property throughout the remainder of the year 2000.
Commencing at the end of July 2000 the Appellant said that she
carried out the following tasks on the Webster Property:
(i) irrigating the Alfalfa that was
growing on the 7½-acre parcel of land;
(ii) hand fertilizing the
Alfalfa;
(iii) some pruning of the plum trees
and disposing of the trimmings;
(iv) picking the prune plums;
(v) cleaning up after the harvest.
[13] The Appellant testified that Balbir
gave her instructions on the daily work that she should do either
on the MacKenzie Property or on the Webster Property.
[14] The Appellant testified that she was
paid $14,400.00 for the services that she provided on the
MacKenzie Property and the Webster Property in 2000. A T-4
slip was issued (Exhibit A-1). The Appellant filed a tax return
showing that she had received $14,400.00 in income in the year
2000.
[15] The Appellant applied for benefits
under the Employment Insurance Act for the 2000 year and
the Minister determined that the Appellant was not entitled to
receive any benefits under the Employment Insurance
Act.
B. ISSUES:
[16] Is the Appellant entitled to claim
benefits under the Employment Insurance Act for the 2000
period?
[17] Was the Appellant employed in
pensionable employment within the meaning of subsections 2(1) and
6(1) of the Canada Pension Plan?
C. ANALYSIS:
[18] In a letter from Ruth Elsworth of the
Canada Customs and Revenue Agency ("CCRA") to the
Appellant dated November 05, 2001 the following comments are
made:
Your relationship with Waria Holdings Ltd. during the period
under review cannot be considered as insurable employment as you
were not an employee performing services under a contract of
service.
It has been determined that you were not an employee for the
following reasons:
Waria Holdings Ltd. did not exercise control over you and your
work because
- You have not provided conclusive evidence that you were an
employee under a contract of service with Waria Holdings Ltd.
[19] The Appellant filed an appeal to the
CCRA. In a letter dated June 26, 2002 from Rodger Mack of
the Appeals Division of the CCRA the following comments were
made:
It has been decided that this employment was not pensionable
or insurable for the following reason. Sarbjeet Cheema was
not employed under a contract of service and is, therefore, not
considered to have been an employee.
. . .
The decision in this letter is issued pursuant to
subsection 27.2(3) of the Canada Pension Plan and subsection
93(3) of the Employment Insurance Act and is based on paragraph
6(1)(a) of the Canada Pension Plan and paragraph 5(1)(a) of the
Employment Insurance Act.
[20] The Appellant filed Notices of Appeal
to the Court.
[21] In the Reply issued by the Agent of the
Appellant the following statements are made:
4(b) Waria claimed no wage expense deductions in its 2000
income tax return.
Comment - Waria filed an Amended Return (Exhibit-9) with
the CCRA which indicated that it had paid $7,200.00 as custom
contract work in the year 2000. Balbir testified that this
expense related to the work performed for Waria by the
Appellant.
Note: Paul Neustaedter, C.A. testified on behalf of the
Appellant. Mr. Neustaedter said that on the 7th day of
November 2001 a T-1 Adjustment Request for the 2000 taxation year
was delivered to the CCRA. This document stated that the amount
of $7,200.00 was for contract work. Mr. Neustaedter said that
this adjustment was necessary to show that one-half of the
Appellant's wages were charged to the farm owned by Balbir
and Preminderjeet and that one-half of the Appellant's wages
were charged to Waria.
[22] The Reply also contained the following
statement:
4(m) Waria has no records indicating
the days or hours purportedly worked by the Appellant.
Comment - Exhibit A-1 is an amended T-4 slip issued by Waria
which stated that Waria paid the Appellant $14,400.00 in
2000.
Exhibit I-1 is a copy of 18 forms which contain information on
the number of days worked by the Appellant from March 27, 2000 to
October 21, 2000.
[23] Mr. Brad Novikoff, an official of Human
Resources Development Canada, was called as a witness by counsel
for the Respondent. Mr. Novikoff produced a Report dated
April 19, 2001 (Exhibit R-5) that he had prepared following a
meeting with Mr. Wariach. Mr. Novikoff's Report
indicates that he asked Mr. Wariach various questions to
confirm statements that had been made by the Appellant at a
meeting with officials of the CCRA on March 13, 2001. (Note - a
Report was also prepared by Narinder Bansel of Human Resources
Development Canada on March 13, 2001 (see Exhibit I-2).
[24] In Exhibit R-5 and Exhibit I-2 it is
stated that the Appellant only worked on the Mackenzie Property.
In other words there was no recognition by the CCRA that the
Appellant worked on the Webster Property in 2000. However, the
evidence of the Appellant and Balbir clearly indicates that the
Appellant worked at the MacKenzie Property and the Webster
Property in 2000.
[25] It should also be noted that Balbir
testified that Waria paid $6,042.56 to the CCRA in connection
with deductions for the Appellant. Balbir testified that
officials of the CCRA objected to Waria paying all of the
deductions since one-half of the Appellant's work was
done on property owned by Balbir and his wife (the Webster
Property) and one-half of the Appellant's work was done on
the MacKenzie Property (owned by Waria). Balbir testified that an
adjustment to the tax returns was made which removed one-half of
the amount paid to the Appellant by Waria and transferred
one-half of the wage to Balbir and his wife Preminderjeet in
connection with the Webster Property.
[26] After considering all of the evidence I
have accepted the testimony of the Appellant that she worked for
Waria and for Balbir and Preminderjeet in the year 2000. I have
also accepted the reported hours for the year 2000.
[27] I have therefore concluded that there
was a contract of employment between the Appellant and Waria in
the 2000 taxation year.
[28] This decision applies to the relevant
facts for the 2000 taxation year. Balbir stated that the year
2000 was the first year that Waria had filed tax returns. I wish
to note that Waria and Balbir must ensure that all information
filed with the CCRA for years subsequent to 2000 must be filed in
a timely manner and must contain detailed information so the
problems that were encountered with this appeal will not happen
in the future.
[29] Before concluding my remarks, I wish to
note that Mr. Novikoff and Ms. Bansel and their colleagues
at Human Resources Development Canada perform a very important
and difficult job. Their job is made more difficult because many
of the employers in the orchard business do not keep proper
records. I refer to the decision of my colleague Judge Campbell
Miller in Khunkhun v. The Queen, [2002] T.C.J. No. 483
where he comments on the problems that he encountered in
reviewing a claim involving the number of hours worked by an
employee. If the employers in the orchard business fail to
recognize their responsibility to maintain proper records they
will only have themselves to blame when officials of Human
Resources Development Canada and officials of the CCRA challenge
the records that are submitted.
[30] The appeal is allowed and the decision
of the Minister is vacated. This decision applies to the appeal
filed under the Canada Pension Plan and the appeal filed
under the Employment Insurance Act.
Signed at Vancouver, British Columbia, this 27th day of March
2003.
J.T.C.C.
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