Stuckless v. M.N.R., docket 96-980-UI

Date: 19971223

Docket: 96-980-UI

BETWEEN:

JEANETTE STUCKLESS,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

MEC CONSTRUCTION LTD.

Intervenor.

Reasons for Judgment

Bell, J.T.C.C.

ISSUES:

[1] There are two issues:

1. Was the Appellant, within the meaning of section 3(1) of the Unemployment Insurance Act ("Act"), in employment by one or more employers, under any express or implied contract, written or oral?

2. If so, was the Appellant in excepted employment within the meaning of section 3(2)(c)(ii) of the Act in that she was not dealing at arm's length with her employer and the Minister of National Revenue (the "Minister") exercised his discretion properly in satisfying himself 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;

FACTS:

[2] The Appellant testified that she had worked since 1981 for a company known as MEC Construction Ltd. ("the company"), that she owned 32% of the issued shares of the company and that her husband owned 67.75% of the shares of the company. There are two pay periods in question, namely,

1. September 25, 1991 to April 23, 1993, and

2. December 5, 1993 to January 13, 1995.

She said that she worked during those periods and that she "drew UI" when not working during the first period and sometimes during the second period. She stated that she worked when she was required to work in those periods. She stated that she was laid off for lack of work and that the duties normally performed by her included signing cheques, preparing tender documents, looking after shop drawings, dealing with sub-trades, all typing, all payables, answering the phone and dealing with the accountant. She said that she basically ran the "whole show" when the owner[1] was away. She gave other details of her duties. She stated that she never went away without permission and that she was supervised by the owner but that he was not always around. She said that he trusted her to do the work and that he required the work to be done properly. She stated that the company determined her salary and her hours of work and work-load. She said that she had signing authority because the owner was out of town from time to time. She stated that she received varying amounts of money in the periods in question and that not the same amount of money was received every month. For example, in one month she received the sum of $10,000.

RESPONDENT'S SUBMISSION:

[3] Respondent's counsel urged the Court to conclude that because of the variation in the amounts of money she received, and the fact that she was not required to record her hours and was not paid by the hour that she was not an employee and that there was no contract of employment.

ANALYSIS AND CONCLUSION:

[4] Respecting the first issue, the fact that she was a shareholder and a signing officer of the company did not forestall her being an employee. She had worked for the company since 1981. The irregular amounts received by her for her services do not disqualify her. Nor does the lack of hourly records disqualify her. I find that she was an employee.

[5] Respecting the second issue, I must comment on the Reply to the Notice of Appeal. After setting forth what are described as "facts", (when they are a combination of facts and assumptions of fact) the Respondent states that

there was no contract of service between the Payor and the Appellant;

and

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 not reasonable to conclude that the Appellant and the Payor would have entered into a substantially similar contract of employment if they had been dealing with each other at arm's length.

These are not facts. They are conclusions of law.

[6] The following comments respecting the facts are,

a) The Appellant was on the payroll from 1981 when the Respondent says she was not on it until 1991.

b) The Respondent says that the Appellant received payments from the Payor "but not as wages or salaries". That is not a fact. Why was it stated?

c) The Appellant denied the accuracy of the statement that she decided what she would be paid in any given week. She said that the owner made those decisions. It seems, given his position, that he would, at least, have had some input in same.

d) The Appellant said that she did not, as stated in the "facts" decide when she would be paid for services performed.

e) The "facts" state that the Appellant's rate of pay was excessive considering the nature and importance of the work. That is speculation.

f) The Appellant denied that she determined what tasks she should complete and when they should be completed. She stated clearly that the owner told her what to do and that she performed those tasks.

g) She refuted the stated "fact" that

the Appellant worked without supervision.

h) She refuted the "fact" that she was not required to obtain permission to take time off or change her hours of work.

Overall, the recitation of "facts" is wanting.

[7] In examining the second issue, in spite of the foregoing shortcomings in the Reply setting out what facts influenced the Minister in making his decision, I conclude that I should not interfere with his exercise of discretion. I have already determined that the Appellant was an employee. If not an employee, the Respondent could not have exercised his discretion. It is highly unlikely that an arm's length contract of employment would have permitted an employee to have the freedom of movement and remuneration extended to the Appellant by her husband. It was demonstrated that the following "fact", namely

the Appellant performed services without compensation from the Payor both before and after periods where she was on the Payor's payroll

was correct. Indeed, the Appellant was signing cheques for other employees' salaries when she was receiving Unemployment Insurance. It seems not untoward, given her evidence, that as she did all the payroll deductions during periods of employment, she could well have done so during periods of unemployment. A discharged employee would not normally perform those services for no recompense.

[8] Further, the Appellant's husband, her employer, did not testify. In a case entitled Estate of John Sedelnick v. The Minister of National Revenue, 86 DTC 1563, at page 1565, the Court said

It brings to mind this passage from Evidence in Civil Cases, by Sopinka and Lederman at pages 535-6:

In Blatch v. Archer, ((1774), 1 Cowp. 63 at p. 65) Lord Mansfield stated:

“It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted.”

The application of this maxim has led to a well-recognized rule that the failure of a party or a witness to give evidence, which it was in the power of the party or witness to give and by which the facts might have been elucidated, justifies the court in drawing the inference that the evidence of the party or witness would have been unfavourable to the party to whom the failure was attributed. In the case of a plaintiff who has the evidentiary burden of establishing an issue, the effect of such an inference may be that the evidence led will be insufficient to discharge the burden.

[9] And similar language is found in the case of Markakis, 86 DTC 1237, and comments at 1241

I have difficulty in accepting Mr. Markakis’ evidence he had to go to Chicago to convert Greek funds to Canadian currency, and the absence of Mrs. Tsimiklis’ testimony in respect of the $10,800 leads me to infer that her evidence would have been unfavourable to Mr. Markakis.

And he goes on to say

Mr. Markakis has not convinced me that Revenue Canada has erroneously added $10,800 to his income. ...

Mr. Giannoukos was not called as a witness, and this too has caused me some concern.

[10] This absence of evidence, together with the above, leads me to conclude that the Minister has not exercised his discretion improperly 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.

[11] The appeal is dismissed.

Signed at Ottawa, Canada this 23rd day of December, 1997.

"R.D. Bell"

J.T.C.C.

---