[OFFICIAL ENGLISH TRANSLATION]
2000-2493(EI)
BETWEEN:
PLANCHERS DE BOIS FRANC 2000 (LAVAL) INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
JOHANNE LEPAGE,
Intervenor.
Appeal heard on May 28, 2001, at Montréal, Quebec, by
the Honourable Deputy Judge J. F. Somers
Appearances
Agent for the Appellant: Maurice Lepage
Counsel for the Respondent: Marie-Aimée Cantin
For the Intervenor: The Intervenor herself
JUDGMENT
The appeal is allowed and the Minister's decision is varied in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 18th day of July 2001.
|
"J. F. Somers" |
D.J.T.C.C.
Translation certified true
on this 20th day of January 2003.
Sophie Debbané, Revisor
[OFFICIAL ENGLISH TRANSLATION]
Date: 20010718
Docket: 2000-2493(EI)
BETWEEN:
PLANCHERS DE BOIS FRANC 2000 (LAVAL) INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
JOHANNE LEPAGE,
Intervenor.
REASONS FOR JUDGMENT
Somers, D.J.T.C.C.
[1] This appeal was heard at Montréal, Quebec, on May 28, 2001.
[2] The appellant is appealing from the decision of the Minister of National Revenue (the "Minister") according to which the employment held by Johanne Lepage, the worker, with the appellant during the period in issue, from January 1 to November 10, 1999, was insurable on the ground that the appellant and the worker were bound by a contract of service within the meaning of the Employment Insurance Act (the "Act").
[3] On November 10, 1999, an authorized officer of the Canada Customs and Revenue Agency informed the appellant that the worker had held insurable employment within the meaning of the Act while in its service during the period from January 1, 1996, to December 31, 1998. The officer further informed the appellant that, since it had not sent its request before June 30, 1999, no right of appeal to the Minister was granted for that period (Exhibit I-3).
[4] At the hearing, the worker admitted that she had not appealed from the decision, respecting the periods prior to 1999, ruling that her employment was insurable since it had been held under a contract of service. In 1995, the worker received unemployment insurance benefits while on maternity leave.
[5] The Court has no jurisdiction respecting the periods prior to January 1, 1999, since the Minister did not render any decision concerning those periods.
[6] The Court must rule on the insurability of the employment solely for the period from January 1 to December 10, 1999. In another letter (Exhibit I-2) dated November 10, 1999, an officer of the Canada Customs and Revenue Agency informed the appellant that the worker's employment was insurable. That letter reads in part as follows:
[TRANSLATION]
. . . Although her employment with you was held under a contract of service, you and Johanne Lepage were not dealing with each other at arm's length for the purposes of the Employment Insurance Act. Despite this fact, having regard to all the circumstances of the employment, we find that you and Johanne Lepage would have entered into a substantially similar contract of employment if you had been dealing with each other at arm's length, and pursuant to paragraph 5(3)(b) of the Employment Insurance Act, you and Johanne Lepage are deemed to be dealing with each other at arm's length for the purposes of the Employment Insurance Act.
[7] In his decision dated April 13, 2000, the Minister found that the worker's employment was insurable since it met the requirements of a contract of service.
[8] Subsection 5(1) of the Act reads in part as follows:
5(1) Subject to subsection (2), 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;
...
[9] Subsections 5(2) and (3) of the Act read in part:
5(2) Insurable employment does not include
...
(i) employment if the employer and employee are not dealing with each other at arm's length....
(3) For the purposes of paragraph (2)(i),
(a) the question of whether persons are not dealing with each other at arm's length shall be determined in accordance with the Income Tax Act; and
(b) if the employer is, within the meaning of that Act, related to the employee, they are deemed to deal with each other at arm's length if the Minister of National Revenue is satisfied 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.
[10] Section 251 of the Income Tax Act reads in part as follows:
251. Arm's length.
(1) For the purposes of this Act,
(a) related persons shall be deemed not to deal with each other at arm's length; and
...
(2) Definition of "related persons". For the purpose of this Act, "related persons", or persons related to each other, are
(a) individuals connected by blood relationship, marriage or adoption;
...
[11] The onus of proof is on the appellant. It has to show on the balance of evidence that the Minister's decision is unfounded in fact and in law. Each case stands on its own merits.
[12] In making his decision, the Minister relied on the following facts which were either admitted or denied by the Appellant:
[TRANSLATION]
(a) the appellant was incorporated on February 21, 1989; (admitted)
(b) during the period in issue, the appellant's shareholders were:
Maurice Lepage 55% of the voting shares
Suzanne René 45% of the voting shares; (admitted)
(c) the worker is Maurice Lepage's daughter; (admitted)
(d) the appellant operated a year-round retail hardwood flooring and stairway sales business; (admitted)
(e) the appellant had one sales office in Laval and another in Longueuil; (admitted)
(f) the worker had worked for the appellant's business for eight years; (admitted)
(g) the worker was general manager of the Laval office; (denied)
(h) the worker's duties were to do all the accounting and to manage the staff, purchases and inventories; (denied)
(i) the worker worked at the appellant's store; (denied)
(j) the worker had a regular schedule of 40 to 50 hours a week which corresponded to the store's business hours; (denied)
(k) all the equipment used by the worker in performing her duties belonged to the appellant; (admitted)
(l) the worker incurred no expenses in performing her duties; (admitted)
(m) the worker received a fixed salary of $825 every two weeks paid by direct deposit; (admitted)
(n) the worker invested nothing and did not stand surety for the appellant; (admitted)
(o) the worker had no chance of profit or risk of loss; (admitted)
(p) the worker's work was integrated into the appellant's activities. (denied)
[13] According to the notice of appeal dated May 31, 2000, the appellant claims a right of appeal for the period from January 1, 1996, to December 31, 1998, whereas, on November 10, 1999, an officer of the Canada Customs and Revenue Agency informed the appellant (Exhibit I-3) that, since it had not sent its request before June 30, 1999, no right of appeal would be granted for that period.
[14] Subsections 90(1) and (2) of the Act read in part as follows:
(1) An employer, an employee, a person claiming to be an employer or an employee or the Commission may request an officer of the Department of National Revenue authorized by the Minister to make a ruling on any of the following questions:
...
(2) The Commission may request a ruling at any time, but a request by any other person must be made before the June 30 following the year to which the question relates.
[15] In Lamarre v. Canada (Minister of National Revenue - M.N.R.), [1998] F.C.J. No. 831, the Federal Court of Appeal held as follows:
There is no question, ever since this Court's decision in Vaillancourt, [(Canada (A.G.) v. Vaillancourt, [1992] F.C.J. No. 447)] that the 90-day time limit set by subsection 70(1) of the Unemployment Insurance Act for an appeal from a decision of the Minister is a strict time limit which the Tax Court of Canada is unable to extend.
[16] In view of the strict time limit, this Court can only rule on the period from January 1 to November 10, 1999.
[17] Maurice Lepage, the worker's father, testified at the hearing of the appeal. He stated that the worker's employment was not insurable because he and the worker were not dealing with each other at arm's length during the period in issue and the worker would not have enjoyed similar working conditions if they had been dealing with each other at arm's length.
[18] Maurice Lepage testified that the worker had been the manager of the Laval and Longueuil offices for eight years. Her duties consisted in doing the accounting, managing personnel and making purchases and sales. The worker also managed inventory-taking and coordinated the schedules of six or seven seasonal employees.
[19] The worker worked both in and outside the store, that is, she could do the accounting at home in the evenings, on weekends and even during her holidays, or after her regular hours of work, without being remunerated for overtime. According to the witness, the worker regularly worked 50 hours a week. The payer provided the worker with a vehicle for the needs of the company and for her personal needs.
[20] According to Maurice Lepage, the worker's responsibilities increased over the years. Her salary was set at $21,000 a year and she received that same salary during both peak and slow periods. A certain Mr. Blouin, a sales clerk, received a salary of $26,000, even though he had fewer responsibilities than the worker. According to Maurice Lepage, given her responsibilities, the worker should receive $10,000 to $15,000 more per year.
[21] The worker corroborated her father's testimony. She stated that her responsibilities had increased over the years and admitted that she had received unemployment insurance benefits during her maternity leave in 1995. She also admitted that she had not exercised her right of appeal for the previous years.
[22] The evidence showed that there was a contract of service between the appellant and the worker during the period from January 1 to November 10, 1999. The Minister did not rule on the working conditions or on the non-arm's length dealing between the parties.
[23] It should be noted that Mr. Blouin enjoyed more favourable working conditions than the worker. The worker also worked at home in the evenings, on weekends and even during her holidays without being remunerated.
[24] It is reasonable to conclude that the worker would not have been hired on the same working conditions if she had been dealing with the appellant at arm's length. Having regard to all the circumstances, the Court finds that the worker did not hold insurable employment within the meaning of paragraph 5(2)(i) of the Act since she and the appellant were not dealing with each other at arm's length.
[25] Accordingly, the appeal is allowed and the Minister's decision is varied on the basis that the worker did not hold insurable employment during the period from January 1 to November 10, 1999.
Signed at Ottawa, Canada, this 18th day of July 2001.
|
"J.F. Somers" |
D.J.T.C.C.
Translation certified true
on this 20th day of January 2003.
Sophie Debbané, Revisor