9089-4114 Québec Inc. c. M.R.N.

9089-4114 Québec Inc. c. M.R.N. Court (s) Database Tax Court of Canada Judgments Date 2003-12-09 Neutral citation 2003 TCC 875 File numbers 2001-3321(EI) Judges and Taxing Officers Sylvio J. Savoie Subjects Employment Insurance Act Decision Content [OFFICIAL ENGLISH TRANSLATION] Docket: 2001-3321(EI) BETWEEN: 9089-4114 QUÉBEC INC., Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and MANON LABERGE, Intervenor. ____________________________________________________________________ Appeal heard on common evidence with the appeals of Carl Tremblay (2001-3322 (EI)) and Manon Laberge (2001-3324 (EI)) and (2001-3325(EI)), on August 19, 2003, at Chicoutimi, Quebec. Before: The Honourable S.J. Savoie, Deputy Judge Appearances: Counsel for the Appellant: Me Frédéric Masson Counsel for the Respondent: Me Julie David Counsel for the Intervenor: Me Frédéric Masson ____________________________________________________________________ JUDGMENT The appeal is dismissed and the Minister's decision upheld pursuant to the attached Reasons for Judgment. Signed at Grand-Barachois, New Brunswick, the 9th day of December, 2003. "S.J. Savoie" Savoie, D.J. Certified true translation Colette Beaulne [OFFICIAL ENGLISH TRANSLATION] Citation: 2003TCC875 Date: 20031209 Docket: 2001-3321(EI) BETWEEN: 9089-4114 QUÉBEC INC., Appellant, And THE MINISTER OF NATIONAL REVENUE, Respondent, And MANON LABERGE, Intervenor, AND Docket: 2001-3322(EI) CARL TREMBLAY, Appellant, And THE MINISTER OF NATIONAL REVENUE, Respondent, And MANON LABERGE, Intervenor, AND Docket: 2001-3324(EI) MANON LABERGE, Appellant, And THE MINISTER OF NATIONAL REVENUE, Respondent, And CARL TREMBLAY OPÉRANT RÉNO-CONCEPT C.T., Intervenor, AND Docket: 2001-3325(EI) MANON LABERGE, Appellant, And THE MINISTER OF NATIONAL REVENUE, Respondent, And 9089-4114 QUÉBEC INC., Intervenor. REASONS FOR JUDGMENT Deputy Judge Savoie [1] These appeals were heard on common evidence based on the main dockets 2001-3324(EI) and 2001-3325(EI). [2] These appeals concern the insurability of the employment of the Appellant, Manon Laberge, with Carl Tremblay and 9089-4114 Québec Inc., the "Payers" during the periods at issue, that is, from May 24 to November 19, 1999, and from May 22 to November 10, 2000, respectively. [3] On August 23, 2001, the Minister of National Revenue (the "Minister") informed the Appellant of the decisions rendered to the effect that after reviewing the terms and conditions of employment, these employments were not insurable employment during the periods at issue because it is reasonable to conclude that the Appellant and the Payer would not have entered into a substantially similar contract of employment if they had been dealing with each other at arm's length. [4] The Minister based the decision on the following presumptions of fact set out in paragraph 5 of the Reply to the Notice of Appeal in docket 2001-3324(EI): (a) the Payer ran a residential, commercial and industrial construction firm; (accepted) (b) the name of the firm was "Réno-Concept C.T. "; (accepted) (c) the Payer was the sole proprietor of the firm; (accepted) (d) the Appellant was Carl Tremblay's common-law spouse; (accepted) (e) the Payer was a full-time employee of the Chicoutimi school board; (denied) (f) the Payer refused on several occasions to provide documents required for the Respondent's investigation; (denied) (g) the Payer's office was located in his residence, which he shared with the Appellant; (denied) (h) the Payer did not have a separate telephone line for the business and used his residential telephone line; (denied) (i) the Appellant was the firm's secretary-receptionist; (denied) (j) the Appellant's duties consisted in doing the firm's accounting, answering the telephone, writing letters and running errands; (accepted) (k) the Appellant's work schedule varied and was not monitored; (denied) (l) the Appellant was on the payroll as receiving a fixed weekly salary of $480 regardless of the number of hours actually worked; (denied) (m) no proof of the Appellant receiving the salary was provided; (denied) (n) due to the Payer's refusal to provide the requested documents, the Respondent was unable to rationalize the Appellant's salary based on the Payer's activities and the quantity and volume of the Appellant's duties; (denied) (o) the Appellant provided the Payer with services before and after the period at issue; (denied) (p) the period allegedly worked by the Appellant is not the same as the period during which she actually worked; (denied) (q) the Payer and the Appellant entered into an arrangement with a view to ensuring the Appellant qualified for employment insurance benefits and continued to work for the Payer. (denied) [5] The presumptions of fact set out in paragraph 5 of the Reply to the Notice of Appeal in docket 2001-3325(EI) are the same as the foregoing. [6] The evidence provided by the Appellant did not prove that the Minister's presumptions in paragraphs (e), (g), (i), (l), (o) and (p) are false. [7] Further, it was shown that the residential telephone line was also used for business purposes. The Appellant's and the Payers' cellular telephones were also used for business purposes. [8] It was shown that the Appellant's work schedule was flexible and varied depending on the Appellant, provided that her duties were carried out. [9] The presumption in paragraph (m) was true as of the date of the Reply to the Notice of Appeal, that is, as of November 13, 2001. [10] In connection with the Minister's presumption in paragraphs (f) and (n), which describe the impact of this refusal, the Appellant put forward a motion to reopen the matter with a view to enabling the Appellant to provide proof to refute the content of paragraph (f). [11] This unusual motion was granted by the Court after the parties' arguments were heard. [12] It was made clear at the outset when the matter was reopened that the parties could not provide evidence or arguments that exceeded the parameters of the presumption of fact set out by the Minister in paragraph 5(f) of the Reply to the Notice of Appeal which reads as follows: [translation] the Payer refused on several occasions to provide documents required for the Respondent's investigation. [13] The documentation provided by the Payers' counsel, Me Masson, consisted of a letter he and the Canada Customs and Revenue Agency (CCRA) exchanged between May 28 and August 24, 2001. [14] In her letter of May 28, 2001, to Me Masson, Lyne Courcy, CCRA appeals officer, asked the Payers to provide certain documents, including income and expenditure records, bank statements and financial statements for Réno-Concept C.T. and 9089-4114 Québec Inc. for 1999 and 2000. [15] When counsel for the Payers received this letter, he questioned the relevance of the requested documents. For her part, Ms Courcy warned the Appellant, who she said refused to provide the requested documentation, and informed the Payers' counsel that the Minister could render decisions that did not take the scope of the requested documents into account because they had not been provided. However, counsel for the Payers claims that he never refused to provide the documents and the wording of his letters confirms this to the point where one might perhaps wonder if he did not betray his intention when he wrote the following on June 6, 2001: [translation] We do not refuse, but your few arguments show us that there is no reason to do so at present; and in his letter of June 12, 2001: [translation] However, the questions you asked during our telephone conversations concerning the documents that you would like to obtain have no bearing on or relevance to the said questions. In her letter of June 18, 2001, Ms Courcy wrote that [translation] regardless of whether an officer of the Minister acts in a quasi-judicial role or in an inspection role, it is up to him or her to determine the best way to ascertain the truth in accordance with the standards of what is reasonable. [16] On June 21, 2001, Me Masson faxed Ms Courcy a letter in which he asked her to provide a reference to support this claim and a definition for the concept of "standards of what is reasonable". [17] In her response, the Minister's counsel provided Me Masson with this Court's reasons for judgment in Berthiaume v. Canada (Minister of National Revenue - M.N.R.), [1998] T.C.J. No. 1067. [18] At first glance, it would seem that the Payers' counsel received a complete, proper and reasonable response to all the questions he asked the Minister's counsel. Every time he was given more time, he was told that if he continued to refuse, the Minister could render a decision without taking the documents requested and not provided into account. [19] It must therefore be determined whether, under all the circumstances of the case at hand, the Minister, through the appeals officer, exceeded the Minister's authority, acted arbitrarily and not within the meaning of subsection 88(5) of the Employment Insurance Act. The Minister's discretionary authority is described in subsection 88(5) as follows: Notwithstanding any other provision of this Act, but subject to subsection (6), the Minister may for any purpose relating to the administration or enforcement of this Part, by notice served personally or by confirmed delivery service, require that any person provide, within such reasonable time as is stated in the notice, (a) any information or additional information, including any information return or supplementary return; or (b) any document. [20] Madam Justice Lamarre Proulx of this Court explained the application and scope of this subsection in the afore-mentioned Berthiaume decision. [21] It is interesting to note that the Court does not deem the Minister's discretionary authority, through the appeals officer, to be subject to the Appellant's will. The following are the Justice's words in paragraph 32: [...]The Minister's appeals officer must render a decision after forming an opinion on the case. His is a quasi-judicial role. However, regardless of whether an officer of the Minister acts in a quasi-judicial role or in an inspection role, it is up to him to determine the best way to ascertain the truth in accordance with the standards of what is reasonable. It seems clear to me that a meeting or at least a telephone conversation with the appellants was necessary to enable him to assess the grounds of appeal and to allow the appellants to be heard. Indeed, appellants do not always find a telephone conversation sufficient to fully express their point of view. However, this method may be acceptable for purposes of efficiency. But there is definitely no obligation for the appeals officer to proceed by means of a written questionnaire if he deems that this is not how he will best shed light on a case. In my opinion, in view of his lack of cooperation, the appellant cannot complain that there was no investigation. In any case, I find that the Minister had sufficient information to be able to render his decision. [22] An analysis of these facts shows that the Appellant's position is not in keeping with the principle established in Berthiaume (supra). [23] This Court must therefore conclude in connection with the foregoing that the Appellant did not prove that paragraph 5(f) of the Reply to the Notice of Appeal was false. [24] The Appellant was paid $480 a week regardless of the number of hours she worked. She was paid $12 an hour like the installers. According to the Minister, her salary is not justifiable. Further, it was established that based on the financial statements, Réno-Concept C.T. was running a deficit during the fiscal years in which the periods at issue occurred. [25] It was further established at the hearing that the Appellant started working for the Payers six weeks after the other employees and stopped before them. She also worked for the Payers before and after the periods at issue. [26] Based on the Appellant's proof, she continued to carry out certain duties during her benefit period, such as preparing the employees' pay cheques which took her at most five minutes on the computer. There is nothing, however, in the evidence about what happened to her other duties, such as contacts with clients, site visits, errands, office work and duties involving the Payers' 100 suppliers, in short, the many duties the Appellant cited to argue that her work is essential to the Payers' firm, even if the firm's activities decrease during certain periods. [27] The Payers have a foreman on the worksite, but Carl Tremblay, the Payers' sole shareholder, maintains that the Appellant must be present because the foreman on the worksite cannot leave. The Payers' most active period is between May and November. This was confirmed by the Appellant and Carl Tremblay. However, in 1998 and 1999, the Appellant worked from October to January. The Appellant simply explained that her services were required because there were winter contracts. [28] The analysis of the evidence shows that sometimes the explanation provided by the Appellant raises other questions and it becomes confusing. In other words, the Appellant's answer to a specific question seems satisfactory at first glance, but when the evidence is analyzed in its entirety, its credibility becomes questionable. [29] The Appellant cited Théberge v. Canada (Minister of National Revenue - M.N.R.), [2002] F.C.J. No 464, to argue that the work the Appellant performed outside the periods at issue, since it is minimal, cannot justify the conclusion that her employment is excepted from insurable employment. [30] In Théberge (supra), the Federal Court of Appeal examined a case similar to the case at hand and had the following characteristics: a) the dates when the active season started and ended varied over the years; b) the applicant worked the minimum number of weeks required and drew the maximum benefits from the unemployment insurance scheme. That is common in seasonal employment, however, and is not explained by the non-arm's length dealing; c) that the applicant expected to take over the farm, is typical of family businesses and explains perhaps why a father would hire his son rather than a stranger, but does not in any way show that the terms and conditions of employment are more favourable; d) with respect to the bookkeeping, the evidence showed that it required "between half an hour and one hour per month". That is an insignificant amount of work for the purposes of this proceeding. e) "to help out" their father. That was "pretty much what everybody" did; it was "pretty much" how things worked "on every farm" [31] I think it goes without saying, and the evidence bears this out, that in the case of a family business involved in seasonal pursuits, the family members are not usually paid to perform the little work that has to be done outside the active period. [32] A claimant is not required to be completely inactive during his or her benefit period. The foregoing constitutes some of the facts retained by the Court of Appeal, which, in the final analysis, overturned the trial court judge's decision to uphold the Minister's decision that the worker's employment was excepted from insurable employment. [33] In response to this argument, the Minister's counsel maintained that the Théberge decision is an individual case and does not apply to the case at hand. The Minister's counsel referred to 2759-4605 Québec Inc. v. Canada (Minister of National Revenue - M.N.R.)[2002] T.C.J. No 566 and cited the following written by Justice Somers: [Translation] The Appellant's counsel refers the Court to the Carol Théberge v. Canada decision [...], in which the Federal Court of Appeal ruled that the fact that the son of a farmer worked without pay on the family farm while he was receiving unemployment insurance benefits could not affect the insurability of his employment because it was a family business involved in seasonal pursuits. This jurisprudence is a particular case and should not apply to the case at hand. The Appellant corporation was run year-round and had a particular vocation. [34] The Appellant was asking the Court to overturn the Minister's decision. It is therefore appropriate to examine the circumstances under which this Court can intervene and grant the Appellant's request. [35] In Canada (Attorney General) v. Jencan Ltd., [1998] 1 F.C. 187 (C.A.), the Federal Court of Appeal established the parameters for this by stating the following in paragraph 31: The decision of this Court in Tignish [...] requires that the Tax Court undertake a two-stage inquiry when hearing an appeal from a determination by the Minister under subparagraph 3(2)(c)(ii). At the first stage, the Tax Court must confine the analysis to a determination of the legality of the Minister's decision. If, and only if, the Tax Court finds that one of the grounds for interference are established can it then consider the merits of the Minister's decision. As will be more fully developed below, it is by restricting the threshold inquiry that the Minister is granted judicial deference by the Tax Court when his discretionary determinations under subparagraph 3(2)(c)(ii) are reviewed on appeal. [...] [36] Chief Justice Isaac continued his analysis by stating the following in paragraph 33: [...] Because it is a decision made pursuant to a discretionary power, as opposed to a quasi-judicial decision, it follows that the Tax Court must show judicial deference to the Minister's determination when he exercises that power. Thus, when Décary J.A. stated in Ferme Émile, supra, that such an appeal to the Tax Court "more closely resembles an application for judicial review", he merely intended, in my respectful view, to emphasize that judicial deference must be accorded to a determination by the Minister under this provision unless and until the Tax Court finds that the Minister has exercised his discretion in a manner contrary to law. [37] The Federal Court of Appeal summarized the authority of this Court as follows in paragraphs 36 and 37 in Jencan (supra): Thus, by limiting the first stage of the Tax Court's inquiry to a review of the legality of ministerial determinations under subparagraph 3(2)(c)(ii), this Court has merely applied accepted judicial principles in order to strike the proper balance between the claimant's statutory right to have a determination by the Minister reviewed and the need for judicial deference in recognition of the fact that Parliament has entrusted a discretionary authority under this provision to the Minister. On the basis of the foregoing, the Deputy Tax Court Judge was justified in interfering with the Minister's determination under subparagraph 3(2)(c)(ii) only if it was established that the Minister exercised his discretion in a manner that was contrary to law. And, as I already said, there are specific grounds for interference implied by the requirement to exercise a discretion judicially. The Tax Court is justified in interfering with the Minister's determination under subparagraph 3(2)(c)(ii)-by proceeding to review the merits of the Minister's determination-where it is established that the Minister: (i) acted in bad faith or for an improper purpose or motive; (ii) failed to take into account all of the relevant circumstances, as expressly required by paragraph 3(2)(c)(ii); or (iii) took into account an irrelevant factor. [38] As demonstrated above, the authority of this Court are established as specified in the Jencan (supra) decision, where it was ruled that this Court is justified in interfering with the Minister's decision pursuant to subparagraph 3(2)(c)(ii) of the Unemployment Insurance Act, now subparagraph 5(3)(b) of the Employment Insurance Act, by reviewing the merits of the Minister's decision where it is established in the particular case that the Minister: (i) acted in bad faith or for an improper purpose; (ii) failed to take into account all of the relevant circumstances as expressly required by subparagraph 3(2)(c)(ii); and, (iii) took into account an irrelevant factor. [39] The burden of proof was on the Appellant to prove that these specific grounds for interference existed and the Appellant did not do so. Chief Justice Isaac ruled in paragraph 42 of the Jencan decision: [...] Thus, while the Tax Court must exhibit judicial deference with respect to a determination by the Minister under subparagraph 3(2)(c)(ii)-by restricting the threshold inquiry to a review of the legality of the Minister's determination-this judicial deference does not extend to the Minister's findings of fact. To say that the Deputy Tax Court Judge is not limited to the facts as relied upon by the Minister in making his determination is not to betray the intention of Parliament in vesting a discretionary power in the Minister. [See Note 26 below] In assessing the manner in which the Minister has exercised his statutory discretion, the Tax Court may have regard to the facts that have come to its attention during the hearing of the appeal. As Desjardins J.A. stated in Tignish: [...] the court is entitled to examine the facts which are shown by evidence to have been before the Minister when he reached his conclusion so as to determine if these facts are proven. But, if there is sufficient material to support the Minister's conclusion, the court is not at liberty to overrule it merely because it would have come to a different conclusion. [40] In the opinion of this Court, the Appellant did not prove the grounds for interference as required pursuant to the principle established in Jencan (supra). Under the circumstances, this Court must conclude that the grounds for interference were not demonstrated by the Appellant. Consequently, the appeals are dismissed and the Minister's decisions upheld. Signed at Grand-Barachois, New Brunswick, the 9th day of December 2003. "S.J. Savoie" Savoie, D.J. Certified true translation Colette Beaulne