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Citation: 2003TCC126
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Date: 20030328
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Docket: 2002-181(EI)
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BETWEEN:
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MADELEINE LAFLAMME,
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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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and
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GABRIEL GÉHU AND
JEAN-MARC GÉHU,
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Interveners.
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REASONS FOR JUDGMENT
Deputy Judge Savoie, T.C.C.
[1] This appeal was
heard at Matane, Quebec, on October 29, 2002.
[2] The appellant
appealed the decision of the Minister of National Revenue (the “Minister”) that
the employment she held with Gabriel Géhu and Jean‑Marc Géhu
(the “payer”) during the period from July 1 to August 4, 2001, was not
insurable because, inter alia, the appellant and the payer would not
have entered into a similar contract of employment if they had been dealing at
arm’s length. The Minister further explained that this employment did not meet
the requirements of a contract of service.
[3] In making his
decision, the Minister relied on the following assumptions of fact set out in
paragraph 5 of the Reply to the Notice of Appeal:
[Translation]
(a) Gabriel Géhu and Jean-Marc Géhu were co-owners of a 42-foot fishing
vessel, the “Linda Daniel”;
(b) Gabriel Géhu and Jean-Marc Géhu were equal partners in a crab
and turbot fishing enterprise;
(c) the appellant is the spouse of Gabriel Géhu and the mother of
Jean‑Marc Géhu;
(d) the crab fishing period was the month of May and the turbot
fishing season was from July to September;
(e) the payer sold the crab to Pêcherie B.S.R. Inc. and the turbot
to Poissonnerie Blanchette;
(f) the appellant was hired as a fisherman’s helper for both
fishing periods;
(g) the appellant did not work in the week of July 22 to 28, 2001;
(h) during the period at issue, the appellant’s duties consisted of
preparing sandwiches for the crew and gutting fish;
(i) Poissonnerie Blanchette issued pay statements based on the
information provided by the payer;
(j) according to the pay statements of Poissonnerie Blanchette,
the appellant received a fixed salary of $450 a week;
(k) on October 17, 2001, in his statement to a representative of
the respondent, the appellant said that, during the period at issue, that is,
during the turbot fishing period, there were three people on the vessel: the
appellant, her husband, Gabriel Géhu, and her son, Jean‑Marc Géhu,
while according to Poissonnerie Blanchette’s pay statements, during the weeks
ending on July 7, 14, and 21, 2001, there was a fourth crew member, namely,
Jean‑Claude Géhu;
(l) according to Poissonnerie Blanchette’s pay statements, Jean‑Claude
Géhu’s salary varied between $157 and $450 a week while the appellant’s salary
was fixed;
(m) during part of the period at issue, the appellant worked as an
assistant cook for another employer, namely, Relais Chic-Choc St-Octave Inc.;
(n) on July 9, 2001, Relais Chic-Choc St-Octave Inc. issued a
record of employment to the appellant for the period from June 29, 2001, to
July 7, 2001, which showed the total insurable hours as 53.25 and the total
remuneration as $387.66;
(o) the appellant could not work for two employers at the same
time;
(p) on August 28, 2001, the payer issued a record of employment to
the appellant for the period from July 1, 2001, to August 4, 2001, which showed
the total insurable hours as 230 and the total remuneration as $1,800 over four
weeks;
(q) the appellant’s record of employment does not reflect reality
with regard to the period actually worked or the number of insurable hours;
(r) on September 25, 2001, in her statement to a representative of
the respondent, the appellant said that she had worked for two weeks on the
vessel without being paid because the catches were insufficient;
(s) on October 18, 2001, in her statement to a representative of
the respondent, the appellant said that she helped out without being paid in
the winter of 2000‑2001 by assisting the payer in painting the vessel;
(t) on October 18, 2001, in his statement to a representative of
the respondent, Gabriel Géhu said that the appellant gave him some help in
maintaining the vessel during the winter;
(u) on October 18, 2001, in his statement to a representative of
the respondent, Gabriel Géhu stated that the appellant also handled the
correspondence and filing the payer’s papers;
(v) the appellant provided services to the payer before and after
the period at issue without reported remuneration;
(w) the period allegedly worked by the appellant did not correspond
to the period actually worked.
[4] The appellant
admitted the assumptions of the Minister that were set out in subparagraphs (a)
to (c), (e) to (g), (i), (j), (m) to (p) and (r) to (v); she denied those set
out in subparagraphs (q) and (w) and denied those set out in subparagraphs
(d), (h), (k) and (l) as written.
[5] It must be
explained at the outset that the evidence as a whole did not confirm the
appellant’s allegations concerning the Minister’s assumptions except as regards
her duties described in subparagraph (h), which, in addition to those the
subparagraph describes, include her help in lifting nets with the winch,
putting the catches in the hold and removing crab from the nets. The other
assumptions of the Minister that were doubted by the appellant were established
by the oral evidence that was gathered and the documentation submitted at the
hearing, including pay statements, statutory declarations, fish plant reports,
and so on.
[6] The issue in the
case at bar arose when Human Resources Development Canada (HDRC) became aware
that two records of employment, one from Relais Chic-Choc and the other from
the payer, had been issued in the appellant’s name for the same period,
including the period at issue.
[7] The appellant and
the payer admitted the ambiguity; they argued that a mistake had been made
either by Relais Chic-Choc or by the payer. However, they were unable to tender
any documents or other evidence to corroborate their version and support their
claim. The statements gathered attest that the appellant worked from June 29 to
July 7, 2001, at Relais Chic-Choc St-Octave Inc. According to the appeal report
(Exhibit I-3), prepared by March Tremblay, an appeals officer with the Canada
Customs and Revenue Agency, Caroline Tremblay, in telephone conversations, was
definite about the worker’s period of employment. She even specified the
appellant’s shifts and her hours of work each day, as well as her remuneration.
[8] The investigation
by the appeals officer disclosed that, during the period from June 29 to July
7, 2001, when the appellant was employed with Relais Chic-Choc St‑Octave
Inc., she was supervised by Micheline Sergerie Lavoie. The appellant’s pay stub
for this period of employment at Relais Chic-Choc shows that she was paid on July
12.
[9] In making her
claim for employment insurance benefits to HRDC, the appellant provided a
record of employment issued by the payer for services provided to the payer
between July 1 and August 4, 2001, (Exhibit A-1).
[10] The evidence
disclosed that the pay statements for the fishers on board the
“Linda Daniel” were prepared for the period at issue by Poissonnerie
Blanchette based on the information provided to it by Gabriel Géhu, but
fish plant personnel did not verify who was on board the vessel.
[11] The Minister’s
suspicions were further aroused by noting the contradictions in the appellant’s
statements relating, for example, to the location where she prepared the meals
for the crew members, the complete silence about the employment of a fourth
fisher on board, during the period at issue, who performed the same tasks as
the appellant did for less pay. The appellant also said that she had no memory
for dates.
[12] The Minister
proved that the appellant’s record of employment did not reflect reality as to
the period actually worked and the number of insurable hours. Moreover, the
period allegedly worked by the appellant does not correspond to the period
actually worked.
[13] The “fishers’ pay
report” of Poissonnerie Blanchette (Exhibit A‑3) for the period at
issue was prepared on the basis of the information provided by
Gabriel Géhu, the appellant’s husband, and Jean‑Marc Géhu, the
appellant’s son.
[14] The Court finds
itself facing an unlikely scenario, one that tends to establish that the appellant
was employed by two businesses at the same time, namely, by Relais Chic‑Choc
as an assistant cook and as a fisherman’s helper on the vessel “Linda Daniel”
during the period from July 1 to August 4, 2001.
[15] The information
pertaining to the appellant’s employment at Relais Chic-Choc and with the payer
comes from their respective employees. When the source of that information is
considered, the question that has to be asked concerns the appellant’s place of
work. It is true that this Court does not have to decide the question, but it
must be remembered that the appellant and the payer could not explain this
implausible situation except to allege, without further details, that one of
the employers had made a mistake.
[16] It should be noted
that the evidence presented by Relais Chic-Choc St‑Octave Inc. was clear,
objective, transparent and unambiguous. Unfortunately, this Court cannot say as
much of the overall case presented by the appellant. In weighing the
appellant’s evidence, this Court considered the following factors, inter
alia:
1. The appellant
admitted to the investigators that she did not remember the dates;
2. no evidence was
adduced by the appellant or the payer to corroborate their claim that a mistake
had been made by Relais Chic‑Choc or the payer;
3. the appellant and the
payer made a false statement about the number of crew members on the vessel
“Linda Daniel” during the period at issue;
4. the evidence
disclosed that, for equal work, Jean-Claude Géhu received less pay than the appellant
did;
5. the appellant
admitted that in some weeks she had worked for the payer without pay.
[17] The above can only
lead this Court to conclude that the evidence adduced by the appellant was, to
a large extent, calculating and self-interested, if not suspect.
[18] The Minister first
justified his decision under the provisions of paragraphs 5(2)(i) and
5(3)(b) of the Employment Insurance Act (the “Act”), as
follows:
(2) Insurable
employment does not include
[...]
(i) employment
if the employer and employee are not dealing with each other at arm’s length.
(3) For
the purposes of paragraph (2)(i):
[...]
(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.
[19] It is therefore
appropriate to consider the legality of the Minister’s exercise of his
discretion under paragraph 5(3)(b) of the Act, having regard to
the circumstances described, such as the remuneration paid, the duration and
the nature and importance of the work performed by the appellant.
[20] The evidence
established that the appellant received weekly remuneration of $450, while
Jean-Claude Géhu, who performed the same tasks under the same conditions,
received less remuneration for the same period.
[21] Moreover, the
appellant enjoyed the same conditions of employment as the payer’s other
employees.
[22] The evidence
disclosed that the appellant worked at two different places during the same
period. The evidence adduced provides more support to her employment with
Relais Chic-Choc, because it is corroborated by the documents submitted and by
the testimony of a number of people who were independent, disinterested and not
related to the appellant.
[23] According to the
indications obtained by the Minister, the worker would have had enough hours to
qualify for employment insurance benefits since she had accumulated 521.25
hours. However, she needed all of her weeks of work to reach the target of 490
hours of work so she could receive a higher rate of benefit. Thus, each week of
employment in the period at issue mattered.
[24] The evidence
adduced by the appellant supported her claim that her employment was necessary
to the payer’s business. However, she limited herself to proving that three
people were required for operations on the vessel, while documents from
Poissonnerie Blanchette clearly showed that the crew consisted of not three but
four people and that it was this fourth person, namely, Jean-Claude Géhu, who
had been hired for three of the four weeks in the period at issue.
[25] The appellant asks
this Court to vacate the Minister’s decision. The jurisdiction and role of this
Court in a case like this were described by the Federal Court of Appeal in Attorney
General of Canada v. Jencan Ltd. [1998] 1 F.C. 187. This oft-cited case
represents the state of the law in this area. At paragraph 29 of this case,
Isaac C.A. asked the question as follows:
...The critical issue in
this application for judicial review is whether the Deputy Tax Court Judge
erred in law in interfering with the discretionary determination made by the
Minister under subparagraph 3(2)(c)(ii). This provision gives the Minister the
discretionary authority to deem "related persons" to be at arm's
length for the purposes of the UI Act where the Minister is of the view that
the related persons would have entered into a substantially similar contract of
service if they had been at arm's length.
[26] Continuing his
analysis, Isaac C.J. stated:
The decision of this Court in
Tignish, supra, 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.
[27] The Federal Court
of Appeal, per Décary J., expressed similar views in Ferme Émile Richard et Fils
Inc. v. Minister of National Revenue et al. (178 N.R. 361).
[28] At paragraph 33 of
Jencan supra, Isaac, C.J. continued his review and stated:
...The jurisdiction of
the Tax Court to review a determination by the Minister under subparagraph
3(2)(c)(ii) is circumscribed because Parliament, by the language of this
provision, clearly intended to confer upon the Minister a discretionary
power to make these decisions…
[29] Chief Justice
Isaac, at paragraph 37 of Jencan, describes the power of this Court in a
case with similar circumstances as follows:
On the basis of the
foregoing, the Deputy Tax Court Judge was justified in interfering with the
Minister's determination under subparagraph 3(2)(c)(ii) only if it was
established that the Minister exercised his discretion in a manner that was
contrary to law. And, as I already said, there are specific grounds for
interference implied by the requirement to exercise a discretion judicially.
The Tax Court is justified in interfering with the Minister's determination
under subparagraph 3(2)(c)(ii)-by proceeding to review the merits of the
Minister's determination-where it is established that the Minister: (i) acted
in bad faith or for an improper purpose or motive; (ii) failed to take into
account all of the relevant circumstances, as expressly required by paragraph
3(2)(c)(ii); or (iii) took into account an irrelevant factor.
[30] It must be
recognized that this Court is bound under the doctrine of stare decisis
by the authority of the Federal Court of Appeal. Jencan makes it clear
that
... 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...
[31] Having regard to
the above, specifically the evidence gathered, the appellant’s admissions, the
unrefuted assumptions of fact of the Minister, the contradictions between the
evidence at the hearing and the earlier declarations, this Court does not see
that its intervention is warranted.
[32] Furthermore, this
Court is of the opinion that the Minister, in the exercise of his discretion
under subsections 5(3) and 93(3) of the Employment Insurance Act met the
requirements of the Act by having regard to all the circumstances of the appellant’s
employment, as laid down in Jencan, supra.
[33] The onus was on
the appellant to prove her case and she was entitled to adduce new evidence to
contradict the facts relied on by the Minister to justify his decision; she did
not do so.
[34] This Court must
therefore conclude that, taking all the circumstances into account, it was
reasonable for the Minister to decide that the appellant and the payer would
not have entered into a substantially similar contract had they been dealing
with each other at arm’s length within the meaning of paragraph 5(3)(b)
of the Employment Insurance Act.
[35] Consequently, the
appeal is dismissed and the Minister’s decision is confirmed.
Signed at Grand-Barachois,
New
Brunswick,
this 28th day of March 2003.
D.J.T.C.C.
Translation certified
true
on this 30th day of
January 2004.
Leslie
Harrar, Translator
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