Tapp v. M.N.R., docket 2000-5019-EI

Date: 20010525

Docket: 2000-5019-EI

BETWEEN:

GRAZIELLA TAPP,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasonsfor Judgment

Tardif, J.T.C.C.

[1]            This is an appeal from a determination dated December 1, 2000, that the work performed by the appellant during the period in issue, from April 24 to August 26, 2000, for "Poissonnerie Le Gaspésien" was not insurable because      the persons involved were not dealing at arm's length; the non-arm's length dealing resulted from the fact that the appellant was the mother of the owner of the business, Bertrand Boulay.

[2]            After being sworn in, the appellant admitted the following facts:

[TRANSLATION]

(a)            The payer operated a fish market under the firm name "Poissonnerie Le Gaspésien".

(b)            The fish market occupied a booth rented at the public market "Les Halles de Chicoutimi".

(c)            The fish market was in its first season of operation and had to be operated solely during the summer season.

(d)            At the start of the period in issue, the payer actively managed his business; he went to pick up the fish himself in Gaspé or in Québec City.

(e)            Starting in July, since the payer had begun to work full time for a paving company, the suppliers delivered the fish directly to the business.

(f)             The fish market was open from 9:00 a.m. to 9:00 p.m., seven days a week, for a total of 84 hours a week.

(g)            The fish market sold only fresh products.

(h)            On April 18, 2000, the payer made his first inventory purchases.

(i)             On May 7, 2000, the fish market opened for business and made its first sale.

(j)             On August 14, 2000, the fish market made its last sales.

(k)            During the period in issue, the payer hired four different employees.

(l)             For six weeks during the period in issue, the business employed only one person, the appellant.

(m)           For nine weeks during the period in issue, the payer had two employees, including the appellant.

(n)            For three weeks during the period in issue, the business employed three persons, including the appellant.

(o)            The appellant is the payer's mother.

(p)            The appellant held the position of manager-salesperson and handled everything in the payer's business.

(q)            The appellant had to perform the following duties:

                - prepare the orders and check them upon delivery;

                - make the bank deposits;

                - prepare ready-made dishes;

                - serve clients at the counter;

                - clean the business premises.

(r)             In addition, the appellant supervised the other employees and set their work schedules.

(v)            On August 26, 2000, the payer issued a record of employment in the appellant's name stating that she had worked 940 hours from April 24 to August 26, 2000, and that she had received $10,669.24 in insurable earnings.

(y)            According to the record of employment and the payer's payroll, the appellant was allegedly paid $558.58 a week for 14 weeks, which represents net wages of $401.19, and $712.28 a week for four weeks, which represents net wages of $481.69, whereas all the pay cheques issued by the payer to the appellant were for $401.19.

(z)             For the 18 weeks covered by the record of employment, the appellant cashed only two of the pay cheques at the bank.

(aa)          The appellant claims that she endorsed and drew most of her pay cheques directly from the business's cash, whereas most of the cheques were not endorsed by the appellant.

However, she denied the following allegations:

[TRANSLATION]

(s)            The appellant worked seven days a week from the time the fish market opened until it closed, that is, 84 hours a week.

(t)             The appellant personally paid the rent of the booth for the season, that is, $1,326.78.

(u)            The appellant personally paid $533.40 for the fish market's purchases and $453.20 for the wages of another employee.

(w)           The alleged period of employment does not correspond with the period when the fish market was open.

(x)             The alleged remuneration does not correspond with the remuneration actually paid to the appellant.

[3]            The facts assumed by the respondent and denied by the appellant are fundamental and were, without the slightest doubt, decisive points in the determination under appeal. This was moreover very clear from the testimony of Danielle Chouinard, appeals officer responsible for the appellant's case.

[4]            The respondent admitted that the appellant had indeed worked¾that she had the ability and qualifications to perform the work she carried out for her son.

[5]            To support the validity of the determination, the respondent contended that the appellant's period of work had clearly been shorter than the one stated in the record of employment. Emphasizing the fact that the appellant had been out of the labour market for a number of years and, for that reason, needed more hours to qualify for employment insurance benefits, the respondent wanted to establish that the start and end of the period of employment had been altered to the appellant's benefit and that this situation had only been made possible as a result of a non-arm's length dealing. The respondent furthermore found that the appellant's wages were too high.

[6]            The appellant testified in a simple and direct manner. She explained that she had vast and lengthy experience in the seafood industry, having worked in processing plants for a number of years.

[7]            She also explained that she had worked in the restaurant business, in which she developed her knowledge of meal preparation and acquired a taste for working with the public.

[8]            Having the knowledge and experience, she quickly accepted the offer of her son, who had invited her to manage his new fresh seafood sales business in the Saguenay region, even though she and her spouse lived far away from there in Rivière au Renard, Gaspé.

[9]            She and her spouse, who own a trailer, therefore made arrangements to move to the Chicoutimi region, where the fresh seafood and fish sales business of her son Bertrand Boulay was located.

[10]          Regardless of what the respondent may have thought, the employer-payer, the appellant's son, testified in a frank and direct manner, providing plausible, reasonable and intelligent answers to all the assumptions raised.

[11]          A heavy equipment operator, he explained that his work had taken him to the Saguenay, Lac St-Jean region, although he was originally from Gaspé. Every weekend, his co-workers would ask him to buy them fresh fish. As a result, he brought back orders worth several hundred dollars of fresh fish for his co-workers each time he travelled home to Gaspé.

[12]          His working life was disrupted when he had a work accident and suffered a serious permanent partial disability to one arm. He received compensation from the Commission de la santé et de la sécurité au travail (the "C.S.S.T.").

[13]          Following a difficult period, he decided to put his life in order and invest most of the substantial amount of C.S.S.T. compensation in a fresh seafood sales business in the Saguenay region after conducting a serious market study, the findings of which were highly favourable.

[14]          The opening of the business proved to be very difficult as a result of numerous problems, some of which resulted from competitors frustrated in seeing a new vendor arrive, while others stemmed from his difficult financial situation, which was aggravated by the fact that he was not known in the Chicoutimi area. In addition to all these problems, he had no experience at all with the demands of his new business.

[15]          In the interviews to hire the staff needed, he made two observations: no one available had any essential knowledge in the seafood industry; and the persons interviewed were young and not very responsible. The appellant's son was quite troubled at the thought of entrusting them with the business in which he had invested everything. For these reasons, he therefore decided to trust his mother, who met all his expectations with regard to reliability and ability and knowledge in the seafood industry.

[16]          The appellant's salary, which was determined with the help of the accountant on the basis of the appellant's qualifications and skills, was very reasonable. The appellant and her son were in constant communication and, based on the evidence, the son never neglected or gave up his responsibilities as owner of the business.

[17]          The appellant's explanation that she had not paid the amount of $1,326.78 was confirmed by her son. It was shown that the appellant had acted essentially as an intermediary in this matter; the money came from the payer's sister, Marie-Anne Boulay (Exhibit A-1).

[18]          There is no significant evidence respecting the other expenses that the appellant allegedly made for and on behalf of the employer. As to the periods of employment, it was very satisfactorily established on the balance of evidence that the appellant's claims were correct and true. Moreover, those claims had been questioned not on the basis of facts, but rather on the basis of deductions and intuitions.

[19]          This Court has often been reminded by case law that it may not vary a determination resulting from the exercise of discretion unless it is shown on the balance of evidence that the exercise of the discretion had been vitiated by a major error or an unreasonable assessment of the facts.

[20]          In the instant case, the evidence has satisfied me that the respondent drew conclusions from facts that were not as material as she suggested or as clear and revealing as she contended.

[21]          The fact that the appellant's record of employment stated exactly the number of hours she needed to qualify for employment insurance benefits creates suspicions and a strong presumption that may cast doubt on the truth of the information therein respecting the duration of the work. However, hasty conclusions based more on intuition than on the facts could not be made or warranted on the basis of this observation.

[22]          The respondent gave disproportionate weight to the lack of sales in the first two weeks. From the lack of sales, she immediately concluded that the appellant therefore must not have worked since no sales were made. The same table used, in which the data came from the same source, that is, the business's accountant, shows purchases worth more than $5,000 for those same two weeks.

[23]          I believe it is worth mentioning that the purpose of this business was to sell fresh fish, which must generally be disposed of in the hours or days immediately following reception. The purchase of inventory worth as much as $5,000 thus creates a very strong presumption that economic activity involving the sale of fish took place during those two weeks. The respondent's claims are thus utterly unjustified and indeed even somewhat irrational. The respondent gave a very significant amount of weight to the fact that the records make no mention of sales; furthermore, she entirely disregarded the inventory purchases.

Payer's explanations

[24]          In the initial days of operation, a number of corrections and purchases were required. Since the business did not have the funds available to make them, the money needed was taken out of the cash. In my view, the respondent should have known that a business of this nature cannot be operated within the hour after the decision is made. Preparing the premises, installing the equipment, receiving the inventory and setting up all the contents of the premises requires a great deal of work and adjustment. The respondent overlooked all of these details.

[25]          On a number of occasions, counsel for the respondent seemed surprised by the answers to her questions, even asking witness Boulay why he had not provided details during the investigation.

[26]          There is reason to believe that the respondent conducted his investigation in and for the exercise of his discretion, focusing especially on the elements that justified or confirmed hasty conclusions dictated by intuition.

[27]          The table (Exhibit I-8) prepared by the respondent, which constitutes the key exhibit in justifying the determination, is reproduced below:

[TRANSLATION]

Week ending	Mélanie Tremblay		Karine Gauthier		Simone Cleworth		Graziella Tapp		Sales	Inventory purchases
	wages	hrs	wages	hrs	wages	hrs	wages	hrs
29-04-00							508.58	50	0	4,412.56
16-05-00							508.58	50	0	140.42
13-05-00	287.41	41					508.58	50	2,535	2,409.60
20-04-00	287.41	41					508.58	50	1,165	1,768.18
27-05-00	287.41	41					508.58	50	1,536	9.28
03-06-00	210.00	30	210.00	30			508.58	50	922	1,507.21
10-06-00							508.58	50	2,266	1,730.61
17-06-00							508.58	50	1,276	1,085.07
24-06-00	98.00	14			241.50	35	508.58	50	1,770	1,934.05
01-07-00	177.80	18			241.50	35	508.58	50	1,192	1,589.12
07-08-00					241.50	35	508.58	50	1,362	1,453.80
15-07-00					241.50	35	508.58	50	1,582	1,222.97
22-07-00					241.50	35	508.58	50	0	1,086.61
29-07-00					241.50	35	508.58	50	0	1,129.35
05-08-00					241.50	35	712.28	60	630	848.08
12-08-00					241.50	35	712.28	60	992	651.89
19-08-00							712.28	60	245	0
26-08-00							712.28	60	0	0
TOTAL	1,346.80	210	185.00	30	1,932.00	280	10,669.24	940	17,473	22,978.80

[28]          The table shows that there were no sales in the week of April 29 and May 6, 2000. The conclusion drawn was that there were no sales and the appellant did not work.

[29]          At the end of the period, the table shows sales of $245 for the week of August 19, 2000, and no sales for the week of August 26, 2000. It was further concluded that the appellant must not have worked since very minimal sales were made, and, if she did work, she could not have worked 120 hours.

[30]          Both the appellant and her son explained that they had cleared all of the products, after which they had closed the place to thoroughly wash and clean the premises, having regard to the equipment and products sold.

[31]          In light of all the evidence, even though the number of hours reported were equal to what the appellant needed to qualify for employment insurance benefits, it was not shown on the balance of evidence that the conclusion reached could be made or was warranted. The evidence clearly showed that the discretionary power had been exercised in an arbitrary manner that warranted the intervention of this Court.

[32]          The facts revealed by the evidence show that the appellant actually performed her work under a true contract of service. Indeed, it was shown that the trust that can exist between a mother and her son had been a positive consideration in entering into a contract of service. This is a quality, not a fault.

[33]          The legislator did not and does not require parties related to one another to repudiate and renounce their relationship. In the instant case, the relationship in no way affected or influenced the quality of the contract of service with respect to terms and conditions, duration and remuneration.

[34]          For these reasons, the appeal is allowed on the basis that the work performed by the appellant during the period in issue was carried out under a genuine contract of service.

Signed at Ottawa, Canada, this 25th day of May 2001.

"Alain Tardif"

J.T.C.C.

Translation certified true on this 11th day of December 2002.

Sophie Debbané, Revisor

[OFFICIAL ENGLISH TRANSLATION]

2000-5019(EI)

BETWEEN:

GRAZIELLA TAPP,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Appeal heard on May 1, 2001, at Chicoutimi, Quebec, by

the Honourable Judge Alain Tardif

Appearances

For the Appellant:                                                                 The Appellant herself

Counsel for the Respondent:                              Stéphanie Côté

JUDGMENT

The appeal is allowed in accordance with the attached Reasons for Judgment.

Signed at Ottawa, Canada, this 25th day of May 2001.

"Alain Tardif"

J.T.C.C.

Translation certified true on this 11th day of December 2002.

Sophie Debbané, Revisor

[OFFICIAL ENGLISH TRANSLATION]