Tax Court of Canada Judgments

CERTIFICATION OF TRANSCRIPT OF

REASONS FOR JUDGMENT

Let the attached certified transcript of my Reasons for Judgment delivered orally from the Bench at Toronto, Ontario, on September 24, 2007, be filed.

Weisman D.J.

Signed in Toronto, Ontario, this 21st day of November, 2007.

Citation: 2007TCC670

Court File No. 2006-1034(EI)

                                                 TAX COURT OF CANADA

IN RE:   the Employment Insurance Act

BETWEEN:

                                                          OLIVER BAJOR

                                                                                                                                  Appellant

                                                                    - and -

                                  THE MINISTER OF NATIONAL REVENUE

                                                                                                                              Respondent

* * * * *

REASONS FOR JUDGEMENT BY

THE HONOURABLE MR. JUSTICE WEISMAN

                                             in the Courts Administration Service,

                                    Federal Judicial Centre, 180 Queen Street West,

                                                            Toronto, Ontario

                                               on Monday, September 24, 2007

                                                                  * * * * *

APPEARANCES:

Mr. Oliver Bajor                                                                                               for the Appellant

Mr. Brandon Siegel                                                                                       for the Respondent

Also Present:

Ms. Roberta Colombo                                                                                        Court Registrar

                                        A.S.A.P. Reporting Services Inc. 8 2007

200 Elgin Street, Suite 1004                          130 King Street West, Suite 1800

Ottawa, Ontario K2P 1L5                              Toronto, Ontario M5X 1E3

(613) 564-2727                                               (416) 861-8720

                                                                                     Toronto, Ontario

--- Upon commencing Reasons for Judgment on Monday,

    September 24, 2007.

JUSTICE WEISMAN:  Over two Court sittings, I have entertained an appeal by
Mr. Oliver Bajor against a determination by the Minister of National Revenue (the “Minister”) that he was not in insurable employment within the meaning of the Employment Insurance Act by virtue of the fact that there was no contract of service between him and his alleged employer, ART UK Limited, during the period in question, which is April 4, 2004, to March 30, 2005.

The Minister's assumptions point to the allegation that there was no contract of service because there was no evidence that the employer, namely ART UK, operated in Canada and no evidence that the appellant performed any services for that company in Canada, and no evidence of any remuneration from the company to the appellant. In their view, all that is buttressed by the fact that the appellant did not file any income tax returns for the years under review, and actually did not file returns -- it says here from 1994 to 2004, but the period under review is 2004 and 2005.  And there was a return filed in 2005, but all that was declared by the appellant was $3,266.00 in social assistance; and finally, they rely on the fact that no T4s were issued to the appellant by ART UK for the years under review, 2004, 2005.

The issue before the Court will revolve around whether any services were performed by the appellant for ART UK in Canada between the period April 4, 2004, and March 30, 2005 and, secondly, whether he was remunerated either in cash or in kind for those services.

There was a considerable question as to whether he did, in fact, perform services for the company during the period in question.  Until the Minister's witness, Mrs. Bajor, on June 18, 2003, on cross-examination by the appellant said:  “Yes, in 2004, you tried really, really hard to generate business on the phone.  You tried your best.  Luck was not on our side”.  And then she added that:  “Also, at the same time, on company time, you were writing your book.  You felt badly and tried to pay me back.  You were working very diligently”, which is very clear evidence from the sole shareholder of the company, ART UK, that he, indeed, performed services.  Whether or not they resulted in generation of revenue for the company is not relevant.  There was consideration passing from him to the company which leads to the second relevant determination as to whether or not the company remunerated him for those services.

Now. Mr. Bajor, has testified that during the period under review, he was remunerated both in cash and in kind:  Sometimes directly by the company, ART UK; sometimes by his use of corporate credit cards; sometimes by the use of Mrs. Bajor's personal Visa card; that he sometimes just used the card for purchases and other times he withdrew sums of cash on both cards to use both for corporate purposes and for his own.

He was good enough to supply a list of expenditures or, as he calls it, remuneration as follows.

The one fact that has not been disputed throughout these hearings is that ART UK in UK paid something called Bradshaw's for the storage of Mr. Bajor's goods until such time as they could be transported to Canada.  Mrs. Bajor would have preferred that they just simply be transported to Canada because the cost of that would have been cheaper than the monthly charge of $255.30 on the average, Canadian, but acquiesced in ART UK directly paying Bradshaw's for the storage of Mr. Bajor's goods.  And over the period in question, that amounted to $3,063.60.  He also says that he had his rent paid while he was living here in Toronto at 36 Doncrest (phon.) in Thornhill with his mother and that he attributes $4,800.00 a month as remuneration in kind for that.

In perusing these four sources that I have previously alluded to, the company ART UK credit card, corporate cash, his mother's personal Visa card, and cash out of his mother's Visa card, he claims that he bought food in the amount of $12,000.00, clothing in the amount of $500.00, medication in the amount of $1,200.00, eye care in the amount of $1,200.00, cash of $6,000.00, car expenses in the amount of $3,600.00, travel expenses, $3,600.00, and the miscellaneous expenses at $2,400.00, totalling some $27,287.10.

Unfortunately, the actual amount is indeterminate on the evidence that I have heard because it was the evidence of Mrs. Bajor, the sole shareholder of ART UK and the owner of this personal Visa card that while Mr. Bajor was authorized to use these cards for business expenses and for personal expenses, she has no idea of how much the card was used for what.  She would simply get the Visa bills and had no idea of the breakdown and what part was corporate and what part was personal.

She did say that she would send money to Lloyd's in London to replenish monies that the corporation needed in order to pay its cards before they were ultimately recalled by the bank and the bank line of credit was cut off; that Mr. Bajor would contact her saying that he needed to use her Visa number for corporate expenses; that prior to that, she had withdrawn the card from him because the amounts that he was charging in her view were excessive; and that she authorized him to use the number for business expenses but was disappointed to find that he was using it for his own personal expenses as well.

So of this $27,287.10, it is not possible to ascertain what part was remuneration and what part was expenditures on behalf of the corporation.  I am quite clear that the amount claimed, the $4,800.00 as rent, should not be included in the total because this was clearly a mother allowing her son to live in her home in Thornhill and had nothing to do with the corporation that was not qua employee, but qua son; and also, the allocation of $400.00 a month towards the rent is totally arbitrary and I, therefore, disallow it.

Mr. Bajor was forthright and candid in that he originally claimed that a cash contribution by his mother in the amount of $1,500.00 was remuneration, but he did not include that in this list and he did not include it in the total of $27,287.10.  And for that, I give him credit because, again, I find that that was simply a gift from mother to son in order to help him establish his ART Canada and write the books necessary for that endeavour.

But so far as concluding whether or not Mr. Bajor was remunerated by the company, I point again, to the one very clear issue which is that the company on a monthly basis paid $255.30 for the storage of Mr. Bajor's goods.  And that was remuneration in kind for services that he performed in Canada as testified to by Mrs. Bajor back on the first day of this hearing of this appeal on June 18, 2003.

So there being evidence that there was consideration flowing from Mr. Bajor to ART UK in the effort that he expended in trying to arrange seminars in Canada, that he was remunerated at least in the amount of $3,063.60 plus some unascertainable portion of the remaining odd $22,000.00 after deducting the rent, I have to conclude that there was an insurable contract of service, an employer/employee relationship between ART UK and the appellant, Mr. Bajor.

And therefore, looking at the Minister's assumptions in the Reply to the Notice of Appeal wherein there is a burden upon the appellant to rebut paragraph 5:  a) says that at all material times, there is no evidence the employer operated in Canada.  That has been demolished; b) at all material times there is no evidence to support the appellant performed any services for the employer in Canada.  That has been demolished; c) at all material times, there is no evidence to support the appellant was paid any remuneration by the employer.  That is demolished; d) the appellant did not report any employment income, nor did he file the income tax returns of Canada for the years 1994 to 2004.  That has not been disputed; e) the only income reported by the appellant on his 2005 income tax return is $3,266.00 in social assistance has not been disputed; f) no T4s were issued to the appellant by the employer for the years 2004 and 2005.  That has not been disputed.

So with assumptions a, b, and c, being the material assumptions having been demolished, and the remaining assumptions, which are not really contested and not being sufficient to support the Minister's determination, and there being new facts heard at this trial, I conclude as well that the known facts were not correctly assessed by the Minister, and his decision was, therefore, objectively unreasonable.  And in the result, the appeal will be allowed, and the decision will be vacated.  I thank you both.

--- Whereupon proceedings adjourned at 4:14 p.m.

I HEREBY CERTIFY THAT I have, to the best

of my skill and ability, accurately recorded

by shorthand and transcribed therefrom, the foregoing proceeding.

          Alex Walker