REASONS
FOR JUDGMENT
Masse D.J.
[1]
These two appeals were heard together since they
involve exactly the same issues:
a)
Was the Appellant employed in pensionable
employment with her employer within the meaning of the Canada Pension Plan,
R.S.C., 1985, c. C-8 (the “CPP”)
during the period from August 15, 2012 to November 16, 2012
(the “Period”)?
b)
Was the Appellant employed in insurable
employment with her employer within the meaning of the Employment Insurance
Act, S.C. 1996, c. 23 (the “EIA”)
during the period from August 15, 2012 to
November 16, 2012?
[2]
The simple answer to both these questions is “No”. Consequently, both of these appeals must be dismissed.
Factual Context
[3]
The Appellant is a teacher by profession, having
exercised this profession since the mid-80s.
[4]
The Employer, Oxstand-Bond International College
(henceforth “Oxstand”), operated a school that
provided students in the People’s Republic of China with the Ontario curriculum
and authorized high school credits towards the Ontario Secondary School
Diploma. Oxstand is registered with the Ontario Ministry of Education through
the Ontario Ministry’s Overseas School Division. Oxstand is a registered
business in China and is located at 2040 Buxin Road, Luohu District,
Shenzhen, in the People’s Republic of China. Oxstand does not have a business
presence in Canada although related entities, such as Bond International
College, Bond Schools International and Bond Education Group, do have a
business presence in Canada.
[5]
The Intervenor, Bond International College
(henceforth “BIC”), is located at
1500 Birchmount Road in Toronto. It is a private school registered with
the Ontario Ministry of Education. BIC is authorized to grant credits towards
the Ontario Secondary School Diploma. BIC is categorical in its assertion that
it is not and never was the Appellant’s employer.
[6]
Bond Schools International (henceforth “BSI”), also located at 1500 Birchmount Road in Toronto, provides
advice to schools in China that want to offer a Canadian curriculum and
Canadian Secondary School Diplomas in China. BSI is a registered business in
China and I find that BSI also has a business presence in Canada. BSI has
an agreement with Oxstand to recruit and recommend teachers from Ontario who
want to teach in China.
[7]
Bond Education Group (henceforth “BEG”) is also located at 1500 Birchmount Road in Toronto, Canada.
Mr. Hugh McKeown is the Director of International Programs for BEG
and he is also the Canadian Superintendent on behalf of Oxstand.
Mr. McKeown had the task of assuring parents that there was a Canadian
educator providing advice on behalf of Oxstand. According to Mr. McKeown,
BEG is an umbrella group.
[8]
On July 23, 2012, the Appellant
entered into a contract with Oxstand whereby she agreed to go to the People’s
Republic of China in order to teach (see Exhibit A‑1). This contract was for
a term of two years commencing August 15, 2012 through to
August 15, 2014. This contract of employment was quite comprehensive
including provisions for airfare, accommodations, medical benefits, and so on.
Oxstand agreed to provide all reasonable assistance to the Appellant to obtain
a visa, work permit or resident card and to pay all related fees. Oxstand also
agreed to pay on behalf of the Appellant all relevant Chinese taxes. The
parties to this contract agreed that the contract “shall be governed by and construed in
accordance with the laws of the Peoples’ [sic] Republic of China” and the parties “submit to the jurisdiction of the Courts of the
Peoples’ [sic] Republic of China in respect to liabilities and claims
hereunder.” The Appellant signed the contract on
her own behalf and Mr. Hugh McKeown, of BEG, signed for and on behalf
of Oxstand. Mr. McKeown states that he and BEG were authorized by Oxstand
to recruit, contract for and obtain the services of Ontario qualified teachers
to go and teach in China. However, Mr. McKeown is firm that neither he,
BEG, BIC nor BSI were the Appellant’s employer; Mr. McKeown and BEG only
acted as agent for Oxstand to recruit the services of teachers for and on
behalf of Oxstand.
[9]
The Appellant did in fact leave Canada and go to
China in order to teach in accordance with her contract with Oxstand. She began
her duties on August 27, 2012 and she continued in her role as a
teacher until November 16, 2012 on which date she was terminated for
reasons that are not relevant to the issues this Court has to decide. It is
clear that the Appellant has many unresolved issues with Mr. McKeown but
none of these issues have any bearing on whether or not her employment was
pensionable under the CPP or insurable under the EIA.
[10]
The Appellant was required to leave China
purportedly because she was in violation of her visa status in China and was
deemed to be in China illegally. On her return to Canada, the Appellant applied
for Canadian Employment Insurance benefits in January 2013. A referral was
made for a ruling on the status of her employment with Oxstand during the
period of August 15, 2012 to November 16, 2012. On
May 8, 2013, a ruling was rendered by which it was decided that the
Appellant’s employment with Oxstand was not pensionable under the CPP
and not insurable under the EIA since her employment services were
performed outside Canada and could therefore not be included in pensionable or
insurable employment. She appealed this ruling to the Minister of National
Revenue (the “Minister”) but the ruling was confirmed
on October 31, 2013. The Appellant further appealed to this Court.
[11]
It is evident from the pleadings, the documents
reviewed and the testimony heard that the Appellant was employed under a
contract of service with Oxstand in Shenzhen, China. Oxstand treated the
Appellant as an employee withholding and paying on her behalf Chinese income
taxes. There is no social security agreement between Canada and China that
would allow the Appellant to include her employment with Oxstand in insurable
or pensionable employment. The true issue is whether or not Oxstand is a
Canadian employer, and whether or not the Appellant was ordinarily resident in
Canada thereby placing her in pensionable and insurable employment.
Legislative
Provisions
[12]
The applicable provision of the CPP is as
follows:
6(1) Pensionable
employment — Pensionable employment is
(a) employment
in Canada that is not excepted employment;
. . .
[13]
Section 16 of the Canada Pension Plan
Regulations, C.R.C., c. 385 (the “CPPR”) provides in part as follows:
16(1) Pensionable employment includes employment outside Canada
(except employment in international transportation) that would be pensionable
employment if it were in Canada, if the employee employed therein
(a) ordinarily
reports for work at an establishment in Canada of his employer;
(b) is
resident in Canada and is paid at or from an establishment in Canada of his
employer;
. . .
[14]
Paragraph 5(1)(a) of the EIA
provides the following:
5(1) Types of insurable employment
— Subject to subsection (2) [not applicable here], insurable employment is
(a) employment
in Canada by one or more employers, under any express or implied contract of
service or apprenticeship, written or oral, whether the earnings of the
employed person are received from the employer or some other person and whether
the earnings are calculated by time or by the piece, or partly by time and
partly by the piece, or otherwise;
. . .
[15]
Section 5 of the Employment Insurance
Regulations, SOR/96-332 (the “EIR”)
provides as follows:
5. Employment outside Canada, other than employment on a ship
describe in section 4, is included in insurable employment if
(a) the
person so employed ordinarily resides in Canada;
(b) that
employment is outside Canada or partly outside Canada by an employer who is
resident or has a place of business in Canada;
(c) the
employment would be insurable employment if it were in Canada; and
(d) the employment is not insurable employment under the
laws of the country in which it takes place.
Analysis
[16]
Generally, employment has to take place in
Canada to be pensionable or insurable under the CPP or the EIA.
There are certain exceptions where a worker is working outside Canada for the
Canadian government or for a company who is resident in Canada or who has a place
of business in Canada. In such a case, the worker must be ordinarily resident
in Canada, must ordinarily report for work at an establishment in Canada of the
employer and be paid at or from an establishment in Canada of the employer.
Canada has social security agreements with many countries that allow for
employment outside Canada to be pensionable when certain conditions are met.
China is not one of those countries.
[17]
The Appellant, for some reason, seems to be of
the view that the Intervenor, BIC, was her employer. However, BIC takes the
position that the Appellant was never employed by it but was in fact employed
at all material times by Oxstand. Although Oxstand might have some connection
with Mr. McKeown, BSI, BIC or BEG, it is a separate and legal entity in
its own right. An employment contract with Oxstand is not a contract with BIC.
I agree. The contract of employment is very specific that Oxstand, of the
People’s Republic of China, and not BIC was the employer. It is difficult to
understand why BIC is involved in these proceedings at all.
[18]
The Respondent takes the position that the
Appellant was not employed in pensionable or insurable employment with her
employer during the period in question because the employer was not a resident
of Canada and did not have a place of business in Canada. In addition, the
Appellant at the time was not ordinarily resident in Canada and the work was
performed entirely outside of Canada. I agree.
[19]
Oxstand was not a Canadian resident employer and
did not have a business presence in Canada. Oxstand was a registered business
in China and its place of business was located at 2040 Buxin Road, Luohu
District, Shenzhen, in the People’s Republic of China. This is how Oxstand is
described in the contract of employment. In my view, the Appellant had an
agreement with Oxstand to provide services as a teacher in China. Her contract
of employment was with Oxstand and with no one else. She was supervised,
controlled and paid by Oxstand in Chinese currency that was deposited to a bank
account in China. Oxstand paid all applicable Chinese taxes on her behalf and
did not pay any Canadian taxes or make or remit any other at source deductions
to the government of Canada or the government of any province of Canada. All of
Oxstand’s books, records, company seal, articles of incorporation and bank
accounts were located in China. In my view, it is incontestable that Oxstand
was an employer resident in the People’s Republic of China, was not in any way
resident in Canada and did not carry on business in Canada.
[20]
I also come to the conclusion that the Appellant
was not resident in Canada nor was she employed in Canada during the relevant
period. All of her duties had to be performed at the employer’s school in
Shenzhen, China. She lived in a home/condo in China. She was paid in Chinese
currency that was deposited in her Chinese bank account in Shenzhen, China. She
did not pay any Canadian taxes nor did she pay any CPP or EI premiums while she
worked in China. She had ceased to live in Canada and had made a commitment to
live and work in Shenzhen, China, for an initial period of two years and
perhaps longer. When she filed her 2012 Canadian income tax return, she did not
report the foreign income she claimed while living in China. As it turns out,
she only filed an adjustment to her 2012 income tax return reporting her
foreign earned income the day before this hearing. It is overwhelmingly clear
that, during the period in question, the Appellant was not resident in Canada,
did not work in Canada, and was prepared to be absent from Canada for at least
two years.
[21]
To repeat, I am in agreement with the
Minister’s decision that the employer, Oxstand, did not have a place of
business in Canada during the Period and that the Appellant was not ordinarily
resident in Canada during the Period. The Appellant’s employment services were
performed outside Canada with a non‑Canadian employer, and could not be
included in pensionable or insurable earnings. Therefore, the Appellant’s
employment did not meet the requirements of subs. 16(1) of the CPPR
or s. 5 of the EIR during the Period. Therefore, the Appellant was
not employed in pensionable employment within the meaning of the CPP or
insurable earnings within the meaning of the EIA during the Period.
Conclusion
[22]
For all of the foregoing reasons, these appeals
are dismissed.
Signed at Kingston, Ontario, this 27th day of April 2015.
“Rommel G. Masse”
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