AND BETWEEN:
4453761
MANITOBA LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
AMENDED
REASONS FOR ORDER
Bocock J.
I. Introduction
3.
The present appeals are brought by 4453761
Manitoba Ltd. (“445”) against the Minister’s decision that 445 and one, Gary
Robinson, (the “Worker”) were in an employer/employee or contract of service
relationship for the period October 1, 2009 to September 30, 2010 (the “Period”).
The Worker provided certain daily services to 445 as an “off-site”
superintendent of sorts for a residential apartment building (the “Building”).
A written agreement purported to provide the subjective intention of the parties
regarding their relationship. The parties’ dealings provide the practical
objective reality against which the agreement is to be measured: 1392644
Ontario Inc. o/a Connor Homes v the Minister of National Revenue, 2013 FCA
85 at paragraphs 39 and 40.
II. Preliminary
Jurisdictional Issue
4.
Before the Court can turn its attention to that
analysis, it is required to decide a jurisdictional issue concerning whether
the Appellant filed its appeals of the Minister’s decision in compliance with
the requisite appeal period mandated under the Employment Insurance Act,
SC 1996, c 23 (the “EI Act”) and Canada Pension Plan (R.S.C.,
1985, c. C-8) (“CPP”). The Respondent brings this motion to quash the
appeals on the basis that the Court did not have jurisdiction to hear the
appeals because they were not timely filed.
(a) Statutory
References
5.
Statutorily, the relevant legislation provides
as follows:
a)
as to the EI Act,
Appeal to the Tax Court of Canada
103. (1) The
Commission or a person affected by a decision on an appeal to the Minister
under section 91 or 92 may appeal from the decision to the Tax Court of Canada
in accordance with the Tax Court of Canada Act and the applicable rules of
court made thereunder within 90 days after the decision is communicated to the
Commission or the person, or within such longer time as the Court allows on
application made to it within 90 days after the expiration of those 90 days.
Communication of decision
(2) The determination of the time at which a
decision on an appeal to the Minister under section 91 or 92 is communicated to
the Commission or to a person shall be made in accordance with the rule, if
any, made under paragraph 20(1.1)(h.1) of the Tax Court of Canada Act.
Notification of appeal
93. (1) The
Minister shall notify any person who may be affected by an appeal of the
Minister’s intention to decide the appeal, including the Commission in the case
of an appeal of a ruling, and shall give them an opportunity to provide
information and to make representations to protect their interests, as the
circumstances require.
[…]
Notification
(4) If the Minister is required to notify
a person who may be or is affected by an appeal, the Minister may have the
person notified in such manner as the Minister considers adequate.
;
b) as to the CPP,
Notification of appeal
27.2 […]
(3) The Minister
shall decide the appeal within a reasonable time after receiving it and shall
notify the affected persons of the decision in any manner that the Minister
considers adequate.
Appeal to Tax Court
of Canada
28. (1) A person affected by a decision on an appeal to the Minister
under section 27 or 27.1, or the person’s representative, may, within 90 days
after the decision is communicated to the person, or within any longer time
that the Tax Court of Canada on application made to it within 90 days after the
expiration of those 90 days allows, appeal from the decision to that Court in
accordance with the Tax Court of Canada Act and the applicable rules of court
made thereunder.
(1.1) The
determination of the time at which a decision on an appeal to the Minister
under section 27 or 27.1 is communicated to a person shall be made in
accordance with the rule, if any, made under paragraph 20(1.1)(h.1) of the Tax
Court of Canada Act.
; and,
c)
as to the Tax Court of Canada Act and Rules
of the Tax Court of Canada (the “Rules”),
Rules
20. (1) […]
(1.1) […]
(h.1) prescribing,
for the purposes of subsection 28(1) of the Canada Pension Plan or subsection
103(1) of the Employment Insurance Act, when a determination or a decision on
an appeal to the Minister of National Revenue under section 27 of the Canada
Pension Plan or section 93 of the Employment Insurance Act, as the case may be,
is communicated to a person;
FILING A NOTICE OF
APPEAL
5. (1) An appeal by an appellant from a decision on an appeal to the
Minister shall be instituted within the time period set out in subsection
103(1) of the Act, which is 90 days after the decision is communicated to the
appellant, or within such longer time as the Court may allow on application
made to it within 90 days after the expiration of those 90 days.
(2) Where a decision
referred to in subsection (1) is communicated by mail, the date of
communication is the date it is mailed and, in the absence of evidence to the
contrary, the date of mailing is the date specified on the decision.
General
27. […]
(3) The Court may,
where and as necessary in the interests of justice, dispense with compliance
with any rule at any time.
FILING A NOTICE OF
APPEAL
5. (1) An appeal by an appellant from a ruling or a decision made by,
or a decision on an appeal to, the Minister shall be instituted within the time
period set out in subsection 28(1) of the Act, which is 90 days after the
ruling or decision is communicated to the appellant, or within any longer time
that the Court on application made to it within 90 days after the expiration of
those 90 days allows.
(2) Where a ruling or
decision referred to in subsection (1) is communicated by mail, the date of
communication is the date it is mailed and, in the absence of evidence to the
contrary, the date of mailing is that date specified on the ruling or decision.
General
27. […]
(3) The Court may,
where and as necessary in the interests of justice, dispense with compliance
with any rule at any time.
(b) Facts
6.
445 is related to several other companies which also
own and operate residential apartment buildings in the city of Winnipeg. On February 27, 2012, in reply to 445’s administrative objection to the
Minister’s initial ruling regarding a contract of service or an employee/employer
relationship, the Minister purportedly provided notice of the decision by sending
it by pre-paid first class mail to 445’s address maintained on file. The CRA’s
file copy of the letter adduced at the hearing correctly showed 445’s address.
The rulings officer at the time, Ms. Yu, testified at the hearing as to the four
step standard process involved in the mailing of such notices: signing, dating
and copying; delivery to out-going mail collection area; stamping and postage
application and delivery to Canada Post pick-up bins where the outgoing mail is
retrieved by Canada Post. It was a signed copy of the actual decision letter
which was retained in the CRA file and produced at the hearing.
7.
Notwithstanding this elaborate procedure, 445
has no record of receiving the original decision letter dated February 27, 2012
(the “445 Decision Letter”). With respect to a related company, 3588883
Manitoba Ltd. (“358”), a similar decision letter was mailed by Canada Revenue
Agency (“CRA”) on March 12, 2012 (the “358 Decision Letter”). The Appellant
contends it also never arrived. When collection proceedings commenced almost a
year later against 358, a representative of 358 contacted Ms. Yu to indicate no
decision notification letter was received. Utilizing standard procedure, Ms. Yu
reviewed the file copy of the 358 Decision Letter and determined that it contained
an incorrect address: the postal code was wrong. The Minister utilized her
discretion and, because of the incorrect address, reissued a then currently updated
decision notification letter to 358 to its corrected address. Upon receipt, 358
appealed that decision.
8.
When a similar inquiry was made in May of 2013
regarding 445, CRA again reviewed the file and the copy of the 445 Decision
Letter. It contained no address errors. However, CRA re-sent the file copy of
the original 445 Decision Letter with a covering letter enclosing and
identifying the February 27, 2012 letter. The 445 Decision Letter, unlike that
of 358, was not updated with respect to the Appellant. The Respondent’s motion
to quash the appeal is brought on the basis of the Court’s lack of jurisdiction
given the plain wording of the various legislation cited above, the Rules
of this Court and the relevant case law concerning the deemed receipt by a taxpayer
of notification letters when such letters are mailed by the CRA.
(c) Authorities
9.
The leading authority, although decided on
historically analogous statutory provisions, is Canada v Vaillancourt,
1992 CarswellNat 1115. In overturning a decision of this Court, Marceau J.A.
said at paragraph 3 of Vaillancourt:
The Attorney
General’s first argument was that the trial judge exceeded his jurisdiction by
ruling on the merits of the appeals, as these appeals were brought after the
deadline allowed for the purpose by s. 70(1) of the Act had expired. We
consider that this argument is conclusive. The judge had no choice but to allow
the applications to dismiss made by the Minister. This Court has held, inter
alia in Attorney General of Canada v. Denyse Blais (1986), 64 N.R. 378
(F.C.A.), that a deadline like the one in s. 70(1) is a strict deadline and any
proceeding begun after it has expired can only be struck out, unless an
extension has previously been granted.
10.
This line of authority ends with the Federal
Court of Appeal in the Minister of National Revenue v Quinton, 2011 FCA
195 where Sexton J.A. on behalf of the Court, stated:
Although we have
some sympathy with the Respondent and therefore understand the motive of the
learned Tax Court Judge, we are bound by the legislation to disagree with his
results.
Section 70(1) in
combination with Rule 5(2) does not permit any appeal beyond the expiration of
90 days from the date of mailing of the determination letter or such longer
time as the Tax Court may allow upon application made to it within the 90 days.
No such application was made in the present case.
As long as the determination letter is mailed
to the correct address, […]
(d) The Parties’ Positions
11.
In reply to the above-noted legal authorities
cited by the Respondent and although not providing any authority of his own, 445’s
counsel suggested:
a)
the combined effect of non-delivery of the 445
Decision Letter and the “deemed receipt” of same raises a general unfairness argument
because the combination prevents 445 an opportunity to reasonably dispute
delivery; and,
b) the May 20th, 2013 covering letter sent with a copy of
the 445 Decision Letter constitutes a sufficiently vague non-response and
therefore it reasonably constitutes a republication and updating of the 445
Decision Letter in respect of which this appeal was filed;
c)
it is unfair that no justification in the May
20, 2013 covering letter is given in the absence of proof of receipt where such
a laborious and antiquated mode of delivery is chosen, such as regular mail; and,
d) in any case, subsection 27(3) of the Rules ought to apply and
allow this Court, on the basis of fairness and the Court’s own inherent
jurisdiction to govern its own process, to conclude that the 445 Decision
Letter was never sent.
12.
In reply, the Respondent noted the case of Lebron
v Minister of National Revenue, 2005 TCC 648 and specifically referenced paragraphs
22 and 25 to 28 in respect of Rule 27(3) which provide:
[22] For
instance, it has been argued that form should not prevail over substance.
Subsection 27(3) of the Tax Court of Canada Rules of Procedure respecting the
Employment Insurance Act, SOR/60-690, was argued, unsuccessfully, in Letemplier
v. Canada (Minister of National Revenue - M.N.R.), [1995] T.C.J. No. 1709 (QL).
InPye v. Canada (Minister of National Revenue - M.N.R.), [1995] T.C.J. No. 1248
(QL), paragraph 3, Taylor J. said:
There may be
circumstances under which Section 27(3) of the Tax Court Act Rules (above)
could be used to provide certain relief, but I am not persuaded that this
simple application - and the lack of regular compliance with the 90 day
limitation is one of those. Even if there existed substantial evidence of a
real attempt to file by the Applicant - and it was not demonstrated in Court -
that would not be of value in overcoming the time limit under Section 70(1) of
the Act.
[…]
[25] Where a
time is stated or defined in a statute, each day is counted: Horowitz v.
M.N.R., 62 DTC 1038; Lamarre v. Canada (Minister of National revenue - M.N.R.),
[1997] T.C.J. No. 1063 (QL), paragraph 9; Chouinard v. Canada (Minister of National Revenue - M.N.R.), [1996] T.C.J. No. 1026 (QL).
[26] In
addition, the requirement that the Rules be "liberally construed" has
also been cited, to ensure that [TRANSLATION] "the persons concerned are
able to exercise their rights under subsection 5(1)".[1]
[27] Lamarre
Proulx J. did not accept that argument, relying on the decision of the Federal
Court of Canada in Canada v. Blais, 64 N.R. 378, paragraphs 8 and 10, in which
the issue was a mandatory time limit that could not be extended at the
discretion of the Court, and adding that [TRANSLATION] "[a] regulation
obviously cannot amend legislation".
[28] As Léger J.
rather colourfully remarked in Landry v. Canada (Minister of National Revenue -
M.N.R.), [1993] T.C.J. No. 98 (QL), paragraph 18:
[TRANSLATION] And so
I'm sorry, but I am bound by the decisions of the Court. You see, this is so
that there will be an end to it. ... [I]f you do not do it within 90 days, then
goodbye, it's over and it's final. You are not entitled to be heard.
(e) Analysis and Decision
13.
Factually, the Court notes that this appeal does
not contain the usual exceptions the Tax Court has accepted when ignoring or
avoiding “the presumed receipt when sent by mail” rule. This matter concerns a
single decision letter under the EI Act and CPP, not bulk batch
mailings of notices of assessment under the Income Tax Act. The address
of the Appellant, as reproduced in the retained file copy in CRA’s file, was
the correct, authorized mailing address CRA had on file. The Appellant does not
dispute this. In fact, within the 358 Decision Letter, an address error was
identified by the CRA (and not the Appellant), discretion was utilized by the
Minister, the decision letter was then currently re-dated and the appeal rights
of the Appellant were novated.
14.
Again, unlike the 358 Decision Letter, the
covering letter with respect to the 445 Decision, did not identify that “the 90
day time frame to appeal the decision starts on the date indicated on the
attached ministerial notification letter”. The covering letter republishing the
358 Decision Notification Letter did just that. In fact, the May 20, 2013 cover
letter was sent 3 days after 445 requested a copy of the 445 Decision. Again,
CRA was obliging the request of the Appellant for a copy of that original
decision letter. The May 20, 2013 enclosure letter was sent by the very CRA
official who last handled all of the decision letters with respect to 445 and
358 and who understood how the individual decision letters, which she last
handled, would be processed as mail within the Winnipeg tax service office.
15.
In conclusion, although certain authorities
exist with respect to notices of reassessment before this Court, each when
granting relief to an appellant did so on the basis of some deficiency in the
evidence, knowledge or notice otherwise provided by CRA to the taxpayer.
Moreover, no such cases involve single decision CPP/EI notification letters,
sent from the desk of the effective decision maker by regular pre-paid first
class mail to the taxpayer’s correct address.
16.
While the line of authorities, clear language of
the Act and the concordant presumption regarding deemed receipt when
sent by mail may seem to be inequitable and somewhat arbitrary, cumulatively they
nonetheless comprise the law with respect to appeals regarding decision
notification letters under the EI Act and CPP. Accordingly, the
appeals are quashed for lack of jurisdiction by the Court to hear the appeals of
the Appellant.
III. Substantive
Issue
(a) Relevant Facts and Documents
17.
The Court notes that it reserved its decision at
the outset of the hearing on the preliminary jurisdictional issue. Therefore,
with the consent of both counsel, it proceeded to hear testimony from the Worker,
who was the sole witness in respect of the substantive issue. It also heard the
balance of the submissions with respect to the substantive matter in order that
all issues might be heard in a single day of hearing, irrespective of the
outcome of the reserved preliminary jurisdictional issue.
18.
Although, unnecessary, the Court wishes to
summarize what would have been its findings of fact and outcome had it not
ruled in these reasons as it has on the jurisdictional issue. It does so
through the two pronged analysis outlined at the outset of these reasons in its
reference to Connor Homes.
19.
The agreement itself is entitled “residential
property management agreement” and outlines specific obligations of the Worker
and 445. Under the leasing and management topic within the agreement, the terms
included the following duties: rent collection, preparation of property condition
reports, delivery of notices to tenant, receiving rental application, credit
checks, parking assignment, advertising of vacancies, rent maintenance, routine
maintenance, day-to-day repairs and up-keep, meter reading, snow removal,
elevator maintenance, vehicle supervision, oversight of public and common
facilities and a prime contact person for tenants, security/emergency services,
supervisor changeover and key master.
20.
With respect to the following activities,
consent prior approval or agreement of 445 was required: third party service
providers, hiring replacements during holidays and supplementary third party
maintenance providers.
21.
As payment for the services, the Worker received
$500 per month during the Period. The Worker indicated at that at the time the
agreement was settled, he was to be entitled to a $300 increase in payment after
the first three months, but the Worker never received same.
22.
The Worker testified that he did not sign the
agreement or negotiate it. He indicated, when asked on cross-examination that
“I guess I was independent contractor”. He did acknowledge receipt of a copy of
the agreement.
23.
In terms of the objective reality, the rent
cheques, rental agreements and deposits were collected by the Worker, but all were
immediately sent to a different worker of 445, because, according to the Worker’s
testimony, he did not have authority to process such documents. He did not
perform credit checks. He worked the hours of his choice. He had few tools (which
was true of the job in any event) and he requisitioned repairs, snow removal
and other such services from a 445 pre-approved service provider list. Major
repairs were undertaken and paid for by 445. The Worker did work at another job
which was also within a 3 minute walk of his house and the Building.
(b) Analysis
24.
The substantive intention within the written
agreement is not entirely clear given the unilateral imposition of its terms,
the Worker’s own expressed uncertainty about his legal relationship, the fact
that the agreement was never executed by the Worker and the level of approval
required from 445 for various services contracted for within the agreement.
25.
The objective reality of an independent contract
for services, otherwise marginally present under the terms of the agreement, is
simply not supportable by the facts. There is an absence of the usual hallmarks
of a separate business: no GST registration and payment, no rendered invoices, no
similar services to other third parties and no ability to sub-contract at will.
As well, the opportunity to profit by adjusting costs inputs and the use of
alternative labour services and products do not exist. The absence of these
factors simply does not sufficiently support the already wobbly subjective
intention existing within the first stage analysis of the agreement between the
parties. Instinctively, this is not someone operating a business on his own
account, but a part-time employee with flexible hours of work.
26.
Therefore, again although moot, had the
Appellant succeeded on the jurisdiction argument, it would not have succeeded
on the merits of this appeal.
Signed at Vancouver, British Columbia, this 31st day of October
2014.
“R.S. Bocock”
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