Cauchon v. M.N.R., docket 1999-1795-EI

Date: 20000313

Dockets: 1999-1795-EI,

1999-1799-EI

BETWEEN:

HÉLÈNE CAUCHON,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

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

[1]      These appeals were heard at Québec, Quebec, on February 17, 2000.

[2]      The same judgment will deal with both appeals.

[3]      The Appellant's alleged periods of work and unemployment are:

            Payer                                        Work period                 Number of        Number of

                                                                                                weeks/insur.      weeks/unemp.

            La Pomme de Terre                   09/09/91-25/01/92                    20                     47

            La Pomme de Terre                   04/01/93-14/05/93                    19                     48

            La Belle Couture                       02/05/94-14/10/94                    24                     30

            La Belle Couture                       22/05/95-20/10/95                    22                     37

            La Belle Couture                       08/08/96-20/12/96                    24                     34

            La Pomme de Terre                   18/08/97-03/01/98                    800 hrs.

[4]      With respect to appeal No. 1999-1795(EI) concerning the employment with La Belle Couture Inc., the payer, the conditions of that employment are described in subparagraphs (a) to (n) inclusive of paragraph 5 of the Reply to the Notice of Appeal, as follows:

            [TRANSLATION]

(a)         The payer was incorporated on April 21, 1993.

(b)         The payer operated a sewing business.

(c)         The payer's shareholders were Justin Cauchon (33.3%), Denis Noël (33.3%) and Florent Genest (33.3%).

(d)         During the periods at issue, Justin Cauchon was the appellant's spouse.

(e)         The payer employed approximately 50 seamstresses at its place of business and 8 home-based seamstresses.

(f)          La Pomme de Terre St-Ubalde Inc. employed approximately 15 workers.

(g)         The shareholders of La Pomme de Terre St-Ubalde Inc. were Justin Cauchon (33.3%), Benoit Cauchon (33.3%) and François Trudel (33.3%).

(h)         La Pomme de Terre St-Ubalde Inc. operated a potato sorting and packaging business.

(i)          The appellant alternately provided services to the payer and to La Pomme de Terre St-Ubalde Inc.

(j)          The appellant received higher wages than the other workers when she provided services to the payer or to La Pomme de Terre St-Ubalde Inc.

(k)         While the seamstresses working at home worked the whole year and received irregular wages, the appellant, who also worked at home, worked only enough weeks to qualify for unemployment or employment insurance benefits and she received fixed wages of $468.00 per week.

(l)          When the appellant was receiving unemployment insurance benefits, she drew the maximum amount to which she was entitled and she was immediately entered on the payer's or La Pomme de Terre St-Ubalde Inc.'s payroll as soon as the benefits ceased.

(m)        From November 30 to December 7, 1996, the appellant was in Fort Lauderdale while she was entered on the payer's payroll.

(n)         The appellant's employment periods do not coincide with the payer's busiest periods.

[5]      With respect to appeal No. 1999-1799(EI) concerning the employment with La Pomme de Terre St-Ubalde Inc., the conditions of that employment are described in subparagraphs (a) to (n) inclusive of paragraph 5 of the Reply to the Notice of Appeal, as follows:

            [TRANSLATION]

(a)         The payer was incorporated on April 21, 1993.

(b)         The payer operated a potato sorting and packaging business.

(c)         The payer's shareholders were Justin Cauchon (33.3%), Benoit Cauchon (33.3%) and François Trudel (33.3%).

(d)         During the periods at issue, Justin Cauchon was the appellant's spouse.

(e)         The appellant alternately provided services to the payer and to La Belle Couture Inc.

(f)          La Belle Couture Inc. operated a sewing business.

(g)         The payer employed approximately 15 workers.

(h)         The shareholders of La Belle Couture Inc. were Justin Cauchon (33.3%), Denis Noël (33.3%) and Florent Genest (33.3%).

(i)          La Belle Couture Inc. employed approximately 50 seamstresses at its place of business and 8 home-based seamstresses.

(j)          The Appellant received higher wages than those of the other workers when she provided services to the payer or to La Belle Couture Inc.

(k)         While the seamstresses working at home worked the whole year and received irregular wages, the appellant, who also worked at home, worked enough weeks to qualify for unemployment or employment insurance benefits and she received a fixed wage of $468.00 per week.

(l)          The appellant provided a sufficient number of weeks of service to the payer to qualify for unemployment or employment insurance benefits.

(m)        When the Appellant was receiving unemployment or employment insurance benefits, she drew the maximum amount to which she was entitled and she was immediately entered on the payer's or La Belle Couture Inc.'s payroll as soon as the benefits ceased.

(n)         The 1997-1998 period does not coincide with the payer's busiest period.

[6]      These descriptions of the appellant's employment are substantially consistent with the testimony given and the written evidence filed at the hearing.

[7]      The provisions of both subparagraph 3(2)(c)(ii) of the Unemployment Insurance Act and paragraph 5(3)(b) of the Employment Insurance Act apply to the present appeals:

          Section 3(2) of the Unemployment Insurance Act reads in part as follows:

(2)         Excepted employment is

                        . . .

                        (c)         subject to paragraph (d), employment where the employer and employee are not dealing with each other at arm's length and, for the purposes of this paragraph,

                                    (i)          the question of whether persons are not dealing with each other at arm's length shall be determined in accordance with the provisions of the Income Tax Act, and

(ii)                 where the employer is, within the meaning of that Act, related to the employee, they shall be 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;

                        . . .

[8]      The Minister of National Revenue (the "Minister") is satisfied that the appellant's non-arm's-length relationship with her employers, of which the husband is a shareholder and chief officer, played a role such that the employment held by the appellant would not have been offered, and in actual fact was not offered, to another person under the same conditions.

[9]      The Minister noted, among other things, the salary, which was higher than that given all the other workers performing the same duties.

[10]     The fact that the appellant could work at home for La Belle Couture Inc. without any control being exercised over the hours worked and under circumstances where the results alone were quantifiable, and the fact that she worked for La Pomme de Terre St-Ubalde Inc. for better pay than the other workers and without being subject to any control over her hours worked, are factors the Minister had to take into account.

[11]     Moreover, the appellant had a period of paid vacation. She is the only one to have enjoyed such a benefit and in addition to that there was the payment of her airline ticket to Florida.

[12]     The appeals officer noted the existence of more favourable employment conditions for the appellant as compared with the other employees performing the same duties, which conditions can only be explained by the non-arm's-length relationship.

[13]     The Minister's investigation revealed that the appellant's hiring was more to serve her personal needs with respect to qualifying for unemployment and/or employment insurance benefits, depending on the dates, than to meet the needs of the businesses managed by her husband.

[14]     On the strength of the conclusions based on the facts in the two appeals, the Minister determined that the appellant's employment with La Belle Couture Inc. and La Pomme de Terre St-Ubalde Inc. was not insurable.

[15]     It is not for the Court to interfere with a decision that is the Minister's to make and which he has made in the judicious exercise of his duties and powers under the Act.

[16]     The appeals are dismissed.

Signed at Sillery, Quebec, this 13th day of March 2000.

"A.J. Lesage"

D.J.T.C.C.

Translation certified true

on this 20th day of December 2001.

Erich Klein, Revisor

[OFFICIAL ENGLISH TRANSLATION]

1999-1795(EI)

1999-1799(EI)

BETWEEN:

HÉLÈNE CAUCHON,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Appeals heard on February 17, 2000, at Québec, Quebec, by

the Honourable Deputy Judge A.J. Lesage

Appearances

Counsel for the Appellant:                    Jérôme Carrier

Counsel for the Respondent:                Alain Gareau

JUDGMENT

          The appeals are dismissed and the decisions of the Minister are confirmed in accordance with the attached Reasons for Judgment.

Signed at Sillery, Quebec, this 13th day of March 2000.

"A.J. Lesage"

D.J.T.C.C.

Translation certified true

on this 20th day of December 2001.

Erich Klein, Revisor

[OFFICIAL ENGLISH TRANSLATION]