REASONS
FOR JUDGMENT
Boyle J.
[1]
The only issue to be decided in the appeal of Mme
Belzile heard earlier this week in Montréal is whether, having heard and seen
the evidence at the hearing, the Minister would have ruled that it was
reasonable to conclude for employment insurance purposes that Mme Belzile and
her family-owned company would not have entered into a substantially similar
contract of employment for 2014 had they been dealing at arm’s length.
[2]
91973164 Québec Inc. operates a business under
the name Pavage Casabella (“Casabella”). The business has been
operating for 28 years and was incorporated about 10 years ago. It is owned as
to one-third each by each of the Appellant, her common-law husband
Antonio Castronovo and their daughter Alexandra Castronovo. Each of
these three worked for the company. Pavage Casabella is very much a
family-owned and run business. Their late son also worked for Casabella until
last year.
[3]
In addition, Casabella employs another five or
six arm’s length workers. Casabella’s business is landscaping. The business
lays paving stones, asphalt and lawns. It also does the preparatory excavation and
foundation or bedding work. It has expanded into other similar landscaping
work. It is a seasonal business starting in May and ending in October or
November, depending upon the weather.
[4]
The Appellant and her husband testified on the
Appellant’s behalf. They are Québec Inc.’s president and vice-president
respectively.
[5]
The Respondent did not call any witness or put
in any evidence through the Appellant’s witnesses beyond cross-examinations. This
means I do not know what was before the Minister of National Revenue (“Minister”)
that formed the basis of his decision beyond what is pleaded in the reply,
which was not prepared by a lawyer.
[6]
There was no dispute that Mme Belzile was an
employee of the company, that she genuinely worked for the company, and that
she provided service to the company that was worth what she was paid.
[7]
Hers was a new position in 2014. It was created
with a view to growing the business and to lighten some of the burdens on
Mr. Castronovo, freeing his time to focus on dealing with clients and
potential clients to generate new contracts, and on ensuring the contracted
work was done.
[8]
Mme Belzile was
hired as an employee of the company and commenced her employment on April 28th,
2014. Mme Belzile’s
function and responsibilities were clearly and consistently described. About
two-thirds of her time was delivering promotional pamphlets, primarily in the
new subdivisions in the Montreal area north of Autoroute 40, and
conducting telephone solicitations to people in those neighborhoods.
[9]
Pamphlet distribution would normally be done in
the afternoons and telephone solicitations in the late afternoons and early
evenings. Up until then, pamphlet distribution had been done by Mr. Castronovo
and Alexandra Castronovo. Since 2014 it has been done by Mme Belzile and
Alexandra Castronovo. Alexandra Castronovo has other responsibilities
including, accounting, bookkeeping, HR, payroll, payables and receivables-type
functions. Pamphlet distribution and telephone solicitations generated
contracts for the current season and, later in the season, generated work for
the following season.
[10]
The company had not been engaged in telephone
solicitations prior to Mme Belzile’s
hiring. Alexandra Castronovo was also involved in the telephone
solicitation activities. These efforts were successful for the company. It
increased its volumes of excavation and asphalt work and it got more contracts
in the targeted areas. These efforts continue.
[11]
The other third of Mme Belzile’s time and responsibility was for on-site work. In
jobs involving a significant amount of paving stone, she was responsible for
finishing the installation by applying and distributing the polymer sand and
soaking it into place. She would be notified when jobs were otherwise nearing
completion. She was also responsible for the project cleanup of the
considerable mortar dust which would settle on plants, yards, decks, patio
furniture, et cetera, when paving stones are cut. Prior to the hiring of Mme Belzile,
this finishing work had been done by the other employed workers.
[12]
Her other on‑site responsibilities
included acting as essentially a runner to pick up and deliver missing, broken
or extra material, equipment or supplies, customers’ final drawings and plans,
and collecting payment. These tasks had also been done previously by the
company’s other employees ranging from Mr. Castronovo, le gérant du chantier, or one of the
labourers.
[13]
It was agreed that the company would pay Mme Belzile for a 40-hour workweek at
$17 per hour. The evidence is that this reflected about what everyone else employed
by the company was paid. Mme Belzile
recorded her hours and her activities at least weekly. This included keeping
track of where she went so she could return to deliver another flyer two or
three weeks later.
[14]
She was paid a regular salary for a 40-hour
week. The Appellant generally worked 40 hours per week. She always worked more
than 35 hours and occasionally worked a few additional hours beyond 40 hours in
a week. She was paid weekly by cheque and was always paid on time.
[15]
I do not know the specifics of how the other
employees were paid. Since Mme Belzile’s
pay was set to reflect what others were paid, it would be a reasonable
inference that they were also paid for a fixed number of hours of work per week
with a reasonable degree of flexibility reflecting such things as workload and
weather.
[16]
Mme Belzile began
to work for the company on April 28th, 2014. She was laid off on October 17th,
2014 and expected to return to work in April or May of 2015, which she did. She
continues to work for the company in this position.
[17]
Mme Belzile had not worked for the company
before this. She had owned and operated a tanning salon for the eight or nine
prior years. She had decided to get out of the tanning salon business and work
at their other family business. This was done to lighten the load on her
husband, who by then had to work too much and was never home. The tanning salon
was closed on May 30th at the end of its lease. The Minister’s assumption is
that the tanning salon business was sold by the Appellant and that she ceased
operating it on May 30th. That is not necessarily inconsistent with the
Appellant’s testimony.
[18]
For her first month working for the company, Mme Belzile had scaled back the tanning
salon’s hours and was not open Saturdays, Sundays or Mondays. May is
traditionally a slow month for tanning salons. She would also close for the
afternoons at times that month. In order to wind down her involvement with the
tanning salon and fulfill her employment commitments to the company, Mme Belzile
had to juggle a lot of things and be both flexible and very busy. The
Minister’s assumptions are consistent with her evidence that she made this
transition month work. The Minister assumed that she did her work for the
company in the afternoons and evenings in May.
[19]
The Minister also assumed the company allowed
her to alter her schedule for the first four weeks because she was his spouse. The
evidence is that her work was largely to be done in the afternoons and
evenings. Obviously, she was not the company’s spouse. Her spouse was the
vice-president of the company of which she was president. There was no evidence
this determined how she was treated by her employer in her first month of
working for the company. It would be entirely reasonable in an arm’s‑length
setting to expect a reasonable degree of flexibility and transitioning at the
outset of a new hire’s onboarding process.
[20]
During 2014, Mme Belzile took one week’s vacation for which she was not paid. A
week’s summer vacation even in a seasonable job appears reasonable in an
arm’s-length situation and there is no evidence this was not an available
option to the other employees of the company.
[21]
Mme Belzile did not
receive vacation pay in 2014. She agreed to defer it to 2015. The other
employees did receive their vacation pay regularly in 2014 which means that if
they also took a week off, it would have been unpaid as well. While deferring
her vacation pay would not generally be expected in an arm’s-length situation,
certainly that alone would not be sufficient to conclude that Mme Belzile and the company, had they
been dealing at arm’s length, would not have agreed to an employment contract
that, overall, was substantially similar to the one they had.
[22]
Mme Belzile was
laid off by the company on October 17th. The other employees were laid off on
October 10th. There was no suggestion this was done for
Employment Insurance or other non-business purposes. This additional week
is consistent with the fact that she was responsible throughout for doing the
finishing, setting and cleaning up after the other employees had finished
laying the paving stone. She was also involved in closing up the company’s
rented storage lot of machinery, equipment and material at the end of the
season. It is reasonable that an arm’s-length employee with her same
responsibilities would stay on for a number of days beyond other workers whose
work was finished for the season.
[23]
Mme Belzile mostly used her personal
vehicle for her work for the company. There was a company pickup truck stored
at the company’s rental lot which she would use only if it was needed to
deliver machinery, equipment or supplies. She was reimbursed by the company for
her actual use of her own vehicle. That appears to be a reasonable arm’s-length
approach. There was no suggestion other employees were not similarly
reimbursed. There was no suggestion of any personal benefit or abuse of her
access to the pickup truck.
[24]
The standard of review in an appeal such as this
involving paragraph 5(3)(b) of the Employment Insurance Act is whether
the Minister’s decision to uphold its ruling was properly arrived at and is
reasonable in light of the evidence before the Minister and as supplemented
before the Court. See for example the Federal Court of Appeal decisions in Légaré
in 1999
and Pérusse in 2000
as well as this Court’s 2005 decision in Birkland.
[25]
In light of all of the above, it is my
assessment that if the Minister had the benefit of all of the evidence before
the Court, the Minister could not reasonably have failed to conclude that the
company and an arm’s-length employee would have entered into a substantially
similar contract of employment to that between the company and Mme Belzile.
[26]
As the Minister’s decision was not reasonable in
light of the fullness of the evidence, I will be ordering that the Minister’s
decision be varied to reflect that Mme Belzile was in insurable employment in 2014.
Signed at Ottawa,
Canada this 21st day of June 2016.
“Patrick Boyle”
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