Monger c. M.R.N.

Monger c. M.R.N. Court (s) Database Tax Court of Canada Judgments Date 2004-10-29 Neutral citation 2004 TCC 677 File numbers 2003-4461(EI) Judges and Taxing Officers Brent Paris Subjects Employment Insurance Act Decision Content Docket: 2003-4461(EI) BETWEEN: CAMILLE MONGER, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] Appeal heard on common evidence with the appeal of Melita F. Bursey-Monger (2003-4459(EI)) on June 3, 2004, at Sept-Îles, Quebec. Before: The Honourable Justice B. Paris Appearances: Counsel for the Appellant: Daniel Jouis Counsel for the Respondent: Emmanuelle Faulkner JUDGMENT The appeal is allowed in part and the decision of the Minister is varied in accordance with the attached Reasons for Judgment. Signed at Ottawa, Canada, this 29th day of October 2004. "B. Paris" Paris J. Translation certified true on this 21st day of December 2004. Jacques Deschênes, Translator Citation: 2004TCC677 Date: 20041029 Docket: 2003-4461(EI) BETWEEN: CAMILLE MONGER, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] REASONS FOR JUDGMENT ParisJ. [1] The appellant has appealed a decision of the Minister of National Revenue that his employment at Scierie Mécatina Inc. ("the payor") from November 22, 1999, to February 26, 2000, November 27, 2000, to March 3, 2001, and February 25, 2002, to June 1, 2002, was not insurable employment under paragraph 5(2)(i) of the Employment Insurance Act ("the Act") because he and the payor were not dealing with each other at arm's length. The appellant, his brother Marcel, and his sister Mélanie were the payor's only shareholders. [2] When an employer and worker are not dealing with each other at arm's length, the Minister must determine, under paragraph 5(3)(b) of the Act, whether, having regard to all the circumstances of the employment, 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. In the instant case, the Minister determined that it was not reasonable to conclude that the payor and the appellant would have entered into a substantially similar contract. [3] The only question that the Court must decide in the instant case is whether the Minister's determination was reasonable. In order to do so, I must "verify whether the facts inferred or relied on by the Minister are real and were correctly assessed having regard to the context in which they occurred, and after doing so . . . decide whether the conclusion with which the Minister was "satisfied" still seems reasonable."[1] [4] If I find that the conclusion is not reasonable, I must reassess all the circumstances of the employment and render the decision that the Minister should have rendered pursuant to paragraph 5(3)(b). [5] The appeal was heard on common evidence with the appeal of Melita F. Bursey-Monger. [6] The facts on which the Minister relied are set out in paragraph 6 of the Reply to the Notice of Appeal. I propose to reproduce the statements of fact and examine the evidence regarding each such statement. [TRANSLATION] (a) The payor operates a sawmill, cuts timber and maintains snowmobile trails; [7] This fact was not contested. The evidence showed that, in the fall of 1998, the payor obtained two contracts from The Ministère du Transport for the maintenance of roughly 400 km of snowmobile trials connecting several small villages in the area of Tête-à-la-Baleine, where the appellant lived. Both contracts were performed simultaneously over three winters. The payor bid on the same work for the subsequent period, which began in 2001, but its bid was not considered because of an error with respect to the deposit that was to accompany it. [8] The appellant operated two sawmills. One mill was located approximately 7 km from the village of Tête-à-la-Baleine and the other was located roughly 15 km from that village. The latter sawmill was accessible only by snowmobile in the winter, or by 4X4 in the summer. The timber destined to that mill, and the lumber it produced, could only be transported to and from the mill in the wintertime. [TRANSLATION] (b) the payor owns two sawmills, one running on diesel and the other on electric power; two Alpin snowmobiles; eight "white track" snowmobiles; and snow-pushers and sledges for transporting logs; [9] This fact was not contested. [TRANSLATION] (c) in the fall of 1998, the payor obtained two three-year contracts for the winters of 1999, 2000 and 2001, from The Ministère du Transport for the maintenance of snowmobile trails; [10] This fact was not contested. [TRANSLATION] (d) each contract covered four snowmobile trails and spanned from Kegaska to Vieux-Fort; [11] This fact was not contested. The evidence showed that the payor employed eight workers to maintain the snowmobile trails. The workers generally worked 14 weeks for the payor each winter. Marcel Monger, the appellant's brother, was one of the workers, and was in charge of supervising the maintenance of the trails. [TRANSLATION] (e) the payor's place of business was located in Tête-à-la-Baleine at the personal residence of Jules and Nicole Monger, the parents of the payor's three shareholders; [12] This fact was not contested. [TRANSLATION] (f) during the periods when he was listed in the payor's payroll journal, the appellant performed numerous services without taking account of the hours worked; [13] The appellant stated that he worked an average of 10 hours per day for the payor during the periods of employment in issue. [TRANSLATION] (g) the appellant cut timber in the winter, brought it out using snowmobiles and hauled it to the sawmill; he carried out mechanical maintenance on the snowmobiles and several small related tasks; [14] Referring to the periods of employment in 1999-2000 and 2000-2001, the appellant said that he began working for the payor in November, when he tuned up and repaired the snowmobiles and the train maintenance equipment. He also cut the posts used to mark the trails. After the trails were opened, he performed maintenance work only on an occasional basis, devoting most of his time to cutting timber and transporting it to the sawmill. He also said he did any mechanical work needed to prepare the sawmill and carried out the requisite repairs at the mill. Two other workers apparently operated the mill. The appellant also said that he transported the lumber from the mill to the village wharf so that it could be delivered to the customers. [TRANSLATION] (h) in 2002, no timber was cut and the appellant performed repairs at the mill; [15] Since the payor did not obtain the trail maintenance contract in 2001, the appellant only began working at the sawmill in February 2002. The appellant testified that he operated the mill using only timber accumulated during the two previous winters, and that he carried out mechanical work at the mill, transported lumber orders and cleaned the sawmill at the end of the period. In an interview with Annie Leclerc, the officer with Human Resources Development Canada who did the initial examination of his claim for employment insurance benefits, the appellant said the work he did for the payor in 2002 consisted of [TRANSLATION] "repairs to the mill, there was a motor to change, improvements to the building . . . no timber was cut; there was just a bit of wood to deal with and some things to fix at the mill."[2] [TRANSLATION] (i) the appellant had no set work schedule and the payor did not record his hours; [16] The evidence did not show that the payor imposed a set schedule on the appellant or that his working hours were recorded anywhere. It appears that the appellant knew what he had to do and worked an average of 50 hours per week. [TRANSLATION] (j) the appellant provided unpaid services to the payor at times other than when he was listed on the payroll journal; [17] The appellant told Ms. Leclerc that he helped the payor from time to time by transporting wood outside his period of employment. This issue was not addressed at the hearing, and there is no cause to believe that the appellant performed much unpaid work for the payor. [TRANSLATION] (k) according to the payor's payroll journal, with respect to the period ending in 2000, the appellant supposedly finished five weeks before the other employees who worked at the sawmill, and, with respect to the period ending in 2001, he supposedly finished six weeks before them; and yet, the appellant is the last to finish at the sawmill every year because he does the cleaning; [18] The evidence discloses that, during the periods ending in 2000 and 2001, the appellant finished working for the payor before the other two sawmill workers finished. The appellant stated that his work at the time consisted of cutting the wood so that it could be processed at the mill, and that his employment ended when that work was done. The other workers then milled the wood for several additional weeks. It is only in 2002 that the appellant cleaned the mill. [TRANSLATION] (l) during the periods in issue, the appellant's pay was a fixed $700 per week, allegedly for 50 hours of work, which corresponds to $14.50 an hour, and this was without regard to the number of hours actually worked; [19] The amounts received by the appellant are not contested. As stated above, the appellant said that he worked 50 hours per week for that pay. [TRANSLATION] (m) for each of the periods in issue, the appellant was listed on the payor's payroll journal for a fixed period of 14 weeks a year at 50 hours a week, with no basis to justify the hours actually worked; [20] It is admitted that the appellant was listed on the payor's payroll journal for the stated periods and hours, but the appellant says that this truly reflects the hours worked. [TRANSLATION] (n) the appellant always worked for the number of hours needed to become eligible for unemployment benefits; [21] The evidence shows that this was the case for each period of employment. It also appears that almost all the payor's workers were hired for 14 weeks (the number of weeks needed to qualify for employment insurance benefits) because the workers in the area did not agree to work unless those weeks were guaranteed. [TRANSLATION] (o) the appellant's periods of employment and the number of hours he supposedly worked do not coincide with the needs of the payor's business but rather, with the appellant's need to qualify for employment insurance benefits. [22] The evidence discloses that the payor's business was seasonal-it was operated almost exclusively during the winter-and that its operations were those described in the evidence examined above. The evidence also showed that the appellant's period of employment fell within the periods of winter operations in 1999-2000 and 2000-2001. The payor's activities changed considerably in 2002 because of the loss of the snowmobile trail maintenance contract and the absence of forestry operations. Analysis [23] Counsel for the appellant submits that the Minister did not consider the relevant aspects of the appellant's employment by the payor, including his work cutting the snowmobile trail markers during the first two periods of employment and the fact that his employment during both these periods ended because his work on cutting and transporting wood for the sawmill was completed. The duration of his employment depended on the work to be done, not simply on the number of weeks required to qualify for employment insurance benefits. Counsel also said that nothing suggested that the appellant did much unpaid work for the payor outside his periods of employment. [24] I agree that the Minister did not take the factors invoked by the appellant's counsel into account when he rendered his decision, even though he should have done so. Consequently, I agree that the decision ultimately rendered with respect to the first two periods of employment in question is an unreasonable one. [25] In deciding whether persons dealing with each other at arm's length would have entered into an employment contract substantially similar to the one that this appellant and this payor entered into, the question whether the employment meets a real economic need of the payor must be given a good deal of importance. Here, the Minister specifically assumed that the appellant's employment did not coincide with the payor's needs. However, based on the evidence as a whole, and the circumstances surrounding the employment held by the appellant from November 22, 1999, to February 26, 2000, and from November 27, 2000, to March 3, 2001, it does in fact appear that the employment coincided with the normal operations of the payor's business and met the payor's needs. The mere fact that the appellant's employment lasted 14 weeks during each of the periods in issue does not make it different from the jobs of all the employees who were dealing with the payor at arm's length. In addition, the appellant's rate of pay, his hours and the nature of his work were essentially similar to those of the workers who were dealing with the payor at arm's length and were employed at roughly the same time. [26] However, with respect to the period of employment which began on February 25, 2002, and ended on June 1, 2002, I am not satisfied that the appellant's employment coincided with the payor's needs in the same way as his employment during the previous periods. The payor had to reduce its activities significantly during the 2001-2002 season because of the loss of the snowmobile trail maintenance contact, and there was not much work at the sawmill. The payor did not hire any arm's length employees that season, and, based on the appellant's own testimony, there was only a small amount of wood to mill. In my opinion, the appellant has not succeeded in rebutting the Minister's presumption that the main purpose of his work during this period was to qualify for employment insurance benefits. For these reasons, I am of the opinion that the Minister reasonably concluded that the payor would not have hired a person at arm's length to do the same work as the appellant under the same conditions during that period. [27] The appeal is allowed in part, and the matter is remitted to the Minister for a redetermination on the basis that the appellant's employment with the payor from November 22, 1999, to February 26, 2000, and from November 27, 2000, to February 26, 2001, constituted insurable employment under the Employment Insurance Act. Signed at Ottawa, Canada, this 29th day of October 2004. "B. Paris" Paris J. Translation certified true on this 21st day of December 2004. Jacques Deschênes, Translator CITATION: 2004TCC677 COURT FILE NO.: 2003-4461(EI) STYLE OF CAUSE: Camille Monger and M.N.R. PLACE OF HEARING: Sept-Îles, Quebec DATE OF HEARING: June 3, 2004 REASONS FOR JUDGMENT BY: The Honourable Justice B. Paris DATE OF JUDGMENT: October 29, 2004 APPEARANCES: For the Appellant: Daniel Jouis For the Respondent: Emmanuelle Faulkner COUNSEL OF RECORD: For the Appellant: Name: Daniel Jouis Firm: Jouis Tremblay Lapierre Sept-Îles, Quebec For the Respondent: Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada [1] According to Mr. Justice Marceau of the Federal Court of Appeal in Légaré v. Canada (Minister of National Revenue), [1999] F.C.J. No. 878 (QL), at paragraph 4. [2] Exhibit I-1, at page 9.