Date: 20000221

Docket: 1999-857-EI

BETWEEN:

UNIVERSITÉ LAVAL,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

THE ESTATE OF HÉLÈNE C. GAGNON,

and

ANGE-AIMÉE THIBODEAU,

Interveners.

Reasons for Judgment

Lesage, D.J.T.C.C.

[1]            By letter dated December 4, 1998 from the Assistant Director of Appeals at Revenue Canada, the more than 800 employees concerned of the appellant were informed of this appeal and of their right to intervene. The Court file shows only the two interveners who did not present any argument at the hearing. The interventions were along the same lines as the appeal and, by putting forward the appellant's allegations and the relief sought, counsel for the appellant also protected and asserted the rights of the interveners and of the other employees affected by the decision of the Minister of National Revenue (the "Minister").

[2]            The case was heard at Québec on December 15, 1999. Counsel for the parties presented their arguments orally. The Court requested a transcript of those arguments, which was received on January 12, 2000.

[3]            The parties agree that the evidence established the truth of the facts alleged in the notice of appeal, the notices of intervention and the respondent's replies to those notices.

[4]            The following facts are therefore considered to be proven:

[TRANSLATION]

By notice of assessment dated May 11, 1998, the Minister of National Revenue assessed the appellant for employment insurance and unemployment insurance premiums, including applicable interest, for 1995, 1996 and 1997.

This notice of assessment concerned wage loss insurance benefits paid to certain employees of the appellant for the years in issue under the appellant's short-term wage loss insurance plan (the "insurance plan").

The insurance plan provides for the payment of a weekly benefit equal to 85% of the employee's wages for the first 26 weeks and 80% for the following 26 weeks.

The insurance plan is the subject of an insurance contract with Assurance Vie Desjardins-Laurentienne.

The appellant appealed from the notice of assessment to the Appeals Branch of Revenue Canada.

On December 4, 1998, the Appeals Branch of Revenue Canada rendered a decision confirming the notice of assessment.

[5]            The Minister admits the facts alleged in paragraphs 1 to 6 of the notice of appeal.

[6]            By notice of assessment dated May 11, 1998, the respondent assessed the appellant for 1995, 1996 and 1997 for unpaid employer and employee unemployment and employment insurance premiums in respect of 895 employees (hereinafter the "workers"), a list of whom is appended to the Reply to the Notice of Appeal, and for related penalties and interest. The assessment was determined as follows:

for 1995

                                unemployment insurance    =               $93,704.93

                                penalty                                    =               $00.00

                                interest                                    =               $20,756.00

                for 1996

                                employment insurance         =               $99,301.36

                                penalty                                    =               $00.00

                                interest                                    =               $10,876.00

                for 1997

                                employment insurance         =               $84,365.21

                                penalty                                    =               $00.00

                                interest                                    =               $2,267.00

                for a total of                                                                           $311,270.50

[7]            On July 13, 1998, the appellant asked the respondent to reconsider the assessments of May 11, 1998.

[8]            By letter dated December 4, 1998, the respondent informed the appellant that it had been determined that the assessments would be confirmed on the ground that the benefits which the appellant had paid to the workers under the short-term wage loss insurance plan were insurable earnings.

[9]            By notice of appeal filed January 22, 1999, the appellant instituted an appeal before this Court from the Minister's decision of December 4, 1998.

[10]          In making the assessments, the Minister had relied on the following assumptions of fact:

[TRANSLATION]

(a)            the appellant employed support and office employees;

(b)            on February 26, 1991, the appellant signed a collective agreement with the workers' representatives;

(c)            during the years assessed, that agreement was still in effect;

(d)            under that agreement, the appellant maintained a wage loss insurance plan for the workers in case of accident or illness, which provided coverage for the first 52 weeks of disability or illness;

(e)            under paragraph 31.01 of the agreement, the plan was entirely paid for by the appellant;

(f)             the appellant had signed an agreement with the Assurance Vie Desjardins-Laurentienne insurance company (hereinafter the "insurer");

(g)            the agreement between the appellant and the insurer stated that the appellant was self-insured;

(h)            the appellant could issue cheques on behalf of the insurer;

(i)             the insurer opened a bank account on which the appellant drew cheques;

(j)             an employee of the appellant signed the cheques;

(k)            the insurer calculated the amounts to be paid into the account by the appellant;

(l)             the interest was credited to the appellant by the insurer on the amounts paid into the account up to the time the benefits were paid;

(m)           at the end of the year, if there was a surplus in the account, the appellant could keep the amount on deposit or be reimbursed;

(n)            at the end of the year, if there was a deficit in the account, the appellant had to repay it with interest;

(o)            the insurer acted merely as the account administrator and assumed no financial risk;

(p)            the insurer charged the appellant administrative fees for managing the account;

(q)            the appellant's wage loss insurance plan was self-financed by the appellant;

(r)             the appellant decided who was eligible to receive benefits, not the insurer;

(s)            workers on sick leave were still employed by the appellant;

(t)             workers on sick leave continued to accumulate vacation leave credits;

(u)            the benefits paid by the appellant constituted a continuation of the workers' remuneration.

[11]          Under the terms of the collective agreement with its employees, the appellant provided them with a wage loss insurance plan in case of accident or illness for the first 52 weeks of disability or illness. An insurer provides all the necessary services for the administration of the plan and the appellant pays all benefits provided for under the plan for the employees. The appellant also pays for the services rendered by the insurer under the A.S.O. (Administrative Services Only) system.

[12]          The employment held by the employee constitutes insurable employment under the Unemployment Insurance Act and/or the Employment Insurance Act.

[13]          The appellant's position is that the payments made to its employees under its health and disability insurance plan do not constitute insurable and contributory earnings because those payments are not made in consideration of corresponding work. The appellant relies on the "time worked, time paid" principle.

[14]          The collective agreement between the appellant and its employees includes the obligation to pay those employees for vacation leave and for days not worked due to illness or disability in addition to paying them for time worked.

[15]          The Unemployment Insurance (Collection of Premiums) Regulations provide that a person's earnings are any remuneration, whether wholly or partly pecuniary, received or enjoyed by him, paid to him by his employer in respect of his employment (subsection 3(1) of the Unemployment Insurance (Collection of Premiums) Regulations).

[16]          The Insurable Earnings and Collection of Premiums Regulations provide:

For the purposes of the definition "insurable earnings" in subsection 2(1) of the Act and for the purposes of these Regulations, the total amount of earnings that an insured person has from insurable employment is

(a)            the total of all amounts, whether wholly or partly pecuniary, received or enjoyed by the insured person that are paid to the person by the person's employer in respect of that employment, and

[17]          In addition to all the conditions of employment accepted by the employees, including the agreed-upon pay rate, there are also other benefits including paid leave (no work performed) and the right to short-term health and disability insurance (no work performed).

[18]          The provisions of the unemployment insurance and employment insurance regulations regarding insurable earnings are clear. The word "enjoyed" is employed so that benefits other than salary based on time worked are included.

[19]          The employment of the interveners and of all the employees bound by the appellant's collective agreement with its unionized employees is insurable and contributory employment within the meaning of the Unemployment Insurance Act and the Employment Insurance Act and their regulations.

[20]          The evidence did not show that the Minister acted in bad faith, or capriciously or unlawfully, or based his decision on irrelevant facts or did not have regard to relevant facts (see Elia v. M.N.R., [1998] F.C.J. No. 316). This comment by the Federal Court of Appeal applies to the instant case.

[21]          The judgments rendered in the following cases were brought to the attention of the Court, which considered them carefully:

                -                Kawa v. M.N.R., [1987] T.C.J. No. 528 (Q.L.)

                -                Rousseau v. M.N.R., [1995] T.C.J. No. 1066 (Q.L.)

                -                Bédard c. M.R.N., [1996] A.C.I. n^o 125 (Q.L.)

                -                Bouffard c. M.R.N., [1998] A.C.I. n^o 308 (Q.L.)

               -                 Minister of National Revenue v. Visan, [1983] 1 F.C. 820 (Q.L.)

                -                Brière c. Canada (M.R.N.), [1998] A.C.I. n^o 111 (Q.L.)

                -                Wong v. Canada (M.N.R.), [1995] F.C.J. No. 984 (Q.L.)

                -                Gagné v. Canada (M.N.R.), [1998] T.C.J. No. 12 (Q.L.)

The decision reached in the instant case is consistent with the principles stated in the above cases.

                The appeal is dismissed and the Minister's decision is confirmed.

Signed at Sillery, Quebec, this 21st day of February 2000.

"A.J. Lesage"

D.J.T.C.C.

Translation certified true on this 19th day of February 2001.

Erich Klein, Revisor

[OFFICIAL ENGLISH TRANSLATION]

1999-857(EI)

BETWEEN:

UNIVERSITÉ LAVAL,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

THE ESTATE OF HÉLÈNE C. GAGNON,

and

ANGE-AIMÉE THIBODEAU,

Interveners.

Appeal heard on December 15, 1999, at Québec, Quebec, by

the Honourable Deputy Judge A.J. Lesage

Appearances

Counsel for the Appellant:                    Martin Rochette

Counsel for the Respondent:                Diane Lemery

For the Interveners:                              Jacqueline Gagnon (agent for the         Estate of Hélène C. Gagnon)

          No one appeared for

          Ange-Aimée Thibodeau

JUDGMENT

          The appeal is dismissed and the Minister's decision confirmed in accordance with the attached Reasons for Judgment.

Signed at Sillery, Quebec, this 21st day of February 2000.

D.J.T.C.C.

Translation certified true

on this 19th day of February 2001.

Erich Klein, Revisor

[OFFICIAL ENGLISH TRANSLATION]