Sidhu v. Minister of National Revenue, [1997] 2 CTC 85

Desjardins J A. (Marceau, McDonald JJ.A., concurring):

This is an application for judicial review of a decision rendered by the Tax Court of Canada which confirmed a determination by the Minister of National Revenue (the “Minister”) that the applicant was not employed in an insurable employment during the time of her employment with Badesha, Brahm, Sagar Farms (the “payor”) between May 19, 1993, and October 19, 1993.

The sole issue raised by the applicant is whether the Tax Court judge erred in confirming the Minister’s determination that the applicant and the payor were not dealing at arm’s length during the relevant period.

The payor is a partnership. The applicant is the mother-in-law of one of the partners. She was hired to work for the partnership, but by a partner who was not her son-in-law. The partnership is composed of four people who are brothers and sister.

The applicant attacks the finding of the Tax Court judge who held that, by virtue of section 7 of the Partnership Act^ [1] of British Columbia, read in conjunction with paragraphs 251(2)(a) and 251(6)(b) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), [2] the applicant and the partnership were not dealing with each other at arm’s length within the meaning of subparagraph 3(2)(c)(i) of the Unemployment Insurance Act, R.S.C. 1985, c. U-1. [3]

Her counsel contends that, as a matter of law, there is no provision in the Income Tax Act which imputes the relatedness that exists between one partner and an outsider to any or all of the other partners of the partnership. The Income Tax Act, he says, deal with individuals, not with partnership. On the other hand, section 7 of the Partnership Act, on which the Tax Court judge relied, deals with the concept of agency and not with that of relatedness. Therefore, relatedness between individuals established under the Income Tax Act, does not reach the partnership.

We see no merit in the argument.

Under the common law and the Partnership Act, a partnership does not constitute a legal entity. The act performed by one member in the course of business binds all partners who, together, make the partnership.

If, as here, the applicant is hired by a partner who is not her son-in-law, her employment contract, nevertheless, binds all the members of the partnership. This includes her status with one of the partners which permeate the whole contract. As a result, the applicant was employed by her son-in- law and was indeed working for her son-in-law.

It follows that the Tax Court judge was correct in concluding that the applicant’s employment was an excepted one under the Unemployment Insurance Act.

This application for judicial review will be dismissed.

Application dismissed.